UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K
(Mark One)

/X/     Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange
         Act of 1934 for the fiscal year ended March 31, 2003 or

/ /     Transition Report pursuant to Section 13 or 15(d) of the Securities
         Exchange Act of 1934 for the transition period from         to        .
                                                             -------    -------

Commission file number:    0-27266
                           -------

                           WESTELL TECHNOLOGIES, INC.
             (Exact name of registrant as specified in its charter)

                  DELAWARE                                   36-3154957
     (State or other jurisdiction of                        (I.R.S. Employer
     incorporation or organization)                       Identification No.)

    750 N. COMMONS DRIVE
         AURORA, ILLINOIS                                      60504
(Address of principal executive offices)                     (Zip Code)

Registrant's telephone number, including area code:   (630) 898-2500

Securities registered pursuant to Section 12(b) of the Act: NONE Securities
registered pursuant to Section 12(g) of the Act:

                      CLASS A COMMON STOCK, $.01 PAR VALUE
                                (Title of Class)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past90 days.     Yes  /X/      No  / /

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (ss.229.405 of this chapter) is not contained herein, and will
not be contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K.  / /

Indicate by check mark whether the registrant is an accelerated filer as defined
be rule 12b-2 of the Act.    Yes  / /   No  /X/

The registrant estimates that the aggregate market value of the registrant's
Class A Common Stock held by non-affiliates (within the meaning of the term
under the applicable regulations of the Securities and Exchange Commission) on
September 30, 2002 (based upon an estimate that 70% of the shares are so owned
by non-affiliates and upon the average of the high and low prices for the Class
A Common Stock on the NASDAQ National Market on that date) was approximately $64
million. Determination of stock ownership by non-affiliates was made solely for
the purpose of responding to this requirement and registrant is not bound by
this determination for any other purpose.

As of June 9, 2003, 48,417,967 shares of the registrant's Class A Common Stock
were outstanding and 17,650,860 shares of registrant's Class B Common Stock
(which automatically converts into Class A Common Stock upon a transfer of such
stock except transfers to certain permitted transferees) were outstanding.

The following documents are incorporated into this Form 10-K (and any amendments
thereto) by reference:
        Portions of the Proxy Statement for 2003 Annual Meeting of Stockholders
        (Part III).


<PAGE>




                           WESTELL TECHNOLOGIES, INC.
                    2003 ANNUAL REPORT ON FORM 10-K CONTENTS


             Item                                                        Page
        ---------------                                                 --------

        PART I
             1.     Business................................................   1
                    Risk Factors............................................  14
             2.     Properties..............................................  22
             3.     Legal Proceedings.......................................  22
             4.     Submission of Matters to a Vote of Security Holders.....  23
        PART II
             5.     Market for the Registrant's Common Equity and Related
                         Stockholder Matters.......                           24
             6.     Selected Financial Data.................................  26
             7.     Management's Discussion and Analysis of Financial
                         Condition and Results of Operations................  27
             7A.    Quantitative and Qualitative Disclosure About Market
                         Risk.. ............................................  39
             8.     Financial Statements and Supplementary Data.............  39
             9.     Changes in and Disagreements with Accountants on
                         Accounting and Financial Disclosure................  39
        PART III
             10.    Directors and Executive Officers of the Registrant......  39
             11.    Executive Compensation..................................  40
             12.    Security Ownership of Certain Beneficial Owners and
                         Management and Related Stockholder Matters.........  40
             13.    Certain Relationships and Related Transactions..........  40
             14.    Controls and Procedures.................................  40
        PART IV
             15.    Exhibits, Financial Statement Schedules, and Reports
                         on Form 8-K........................................  40
                    Signatures..............................................  44
                    Certifications..........................................  45






<PAGE>





           CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

        Certain statements contained in this Annual Report of Form 10-K
regarding matters that are not historical facts or that contain the words
"believe", "expect", "continue," "intend", "anticipate" or derivatives thereof,
are forward looking statements. Because such forward-looking statements include
risks and uncertainties, actual results may differ materially from those
expressed in or implied by such forward-looking statements. Factors that could
cause actual results to differ materially include, but are not limited to, those
discussed herein under the section titled "Risk Factors" set forth herein and
elsewhere in this Annual Report on Form 10-K. Westell Technologies, Inc.
("Westell" or the "Company") undertakes no obligation to publicly update these
forward-looking statements to reflect events or circumstances after the date
hereof or to reflect the occurrence of unanticipated events.


                                     PART I

ITEM 1.  BUSINESS

         Westell Technologies, Inc., (the "Company") was incorporated in
Delaware in 1980 and its headquarters are located at 750 North Commons Drive,
Aurora, Illinois. The Company is comprised of two segments: equipment sales and
teleconference services. In the equipment segment, the Company designs,
manufactures, markets and services a broad range of digital and legacy 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
central office is a telephone company building where subscriber lines are joined
to switching equipment that can connect subscribers to each other. 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.

         The equipment manufacturing segment consists of two product lines:
Broadband products and Telephone Company Access Products (TAP). The Broadband
product line includes broadband and digital subscriber line (DSL) technology
products that allow the transport of high-speed data over the local loop and
enable telecommunications companies to provide high-speed services over existing
copper infrastructure. In addition, Westell also provides DSL products for
businesses and enterprises such as Internet Service Providers. The Company also
designs, develops and sells Telephone Company Access Products (TAP) that monitor
and maintain special service circuits in telephone companies' local loops.
Westell products are deployed worldwide, but Westell realizes the majority of
its revenues from the North American market.

         The Company's service segment is comprised of a 91.5% owned subsidiary,
Conference Plus, Inc. Conference Plus 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 1000
companies, and serves other customers indirectly through its private reseller
program.



                                      -1-
<PAGE>



     Revenues and total assets from Westell's two reportable segments for the
fiscal years ended March 31, 2003 are as follows (for more information also see
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the consolidated financial statements and note thereto included
in this Annual Report on Form 10-K):

<TABLE>

(dollars in thousands)                                      Fiscal year ended March 31,
                                        --------------------------------------------------------------------
Revenue:                                   2001           %        2002           %        2003           %
                                        ------------ -------    ------------ -------    ------------ -------
<S>                                        <C>          <C>        <C>          <C>        <C>          <C>
Telecom equipment ...................      $319,494     88%        $191,302     80%        $168,216     80%
Telecom services.....................        41,983     12%          48,521     20%          41,805     20%
                                        ------------            ------------            ------------
Total revenue                              $361,477                $239,823                $210,021
                                        ============            ============            ============

Assets:
Telecom equipment....................      $295,960     94%        $105,969     84%         $86,702     79%
Telecom services.....................        19,179      6%          20,184     16%          22,772     21%
                                        ------------            ------------            ------------
Total assets                               $315,139                $126,153                $109,474
                                        ============            ============            ============

</TABLE>

     Financial information for each of the Company's business and operations by
geographic area and segments is located in Note 9 of the consolidated financial
statements included in this Annual Report and is incorporated herein by
reference.

In fiscal 2003, the Company was profitable for the first time as a public
company. From fiscal 1996 through fiscal 2002, the Company reported net losses
and negative operating cash flow except for fiscal 1996, which had positive
operating cash flow. In fiscal 2003, a significant customer was lost in the
Company's services segment. In fiscal 2002 and 2003, the Company restructured
its business in response to the economic downturn in the telecommunications
industry. The economic downturn impacted units sold and pricing in the telecom
equipment segment of the business, particularly in the TAP products. Broadband
was impacted less by the downturn as demand for DSL products increased. The
Company was also able to increase profit margin in the telecom equipment
manufacturer segment through a reduction in material, labor and handling costs,
particularly in the broadband product lines. The fiscal 2003 gross margin was
positively effected by $2.2 million as the Company was able to sell modem
inventory which had been reserved as excess and obsolete based on the estimated
technological life of the modems at March 31, 2002. All of the above factors
contributed to the Company's ability to be profitable in fiscal 2003.

The Company's stock is divided into two classes. Class A common stock is
entitled to one vote per share while class B common stock is entitled to four
votes per share. The Company's largest stockholder is a voting trust that owned
as of June 9, 2003 49.8% of the voting control of the Company. The trust was
formed for the benefit of Robert C. Penny III and Melvin J. Simon and their
respective families. Certain Penny family members also own or are beneficiaries
of trusts that own shares outside of the voting trust. As trustees of the Voting
Trust and other trusts, Messrs. Penny and Simon control 54.5% of the voting
power of the Company and therefore effectively control the Company.



                                      -2-
<PAGE>



THE COMPANY'S PRODUCTS

     The equipment segment of the Company's business consists of two product
lines, offering a broad range of products that facilitate the broadband
transmission of high-speed digital and analog data between a telephone company's
central office and end-user customers. These two product lines are:

o    Broadband: Westell's family of broadband products enable the transport
     of high-speed data over existing local telephone lines and allow
     telecommunications companies to provide high-speed services using their
     current copper infrastructure. The Company's broadband products also enable
     residential, small business and Small Office Home Office (SOHO) users to
     network multiple computers, telephones and other devices to access the
     Internet. Digital Subscriber Lines (DSL) products make up the majority of
     the revenue in this product group.
o    Telephone Company Access Products (TAP): Westell's TAP product family
     consists of manageable and non-manageable transmission equipment for
     telephone services, and an array of products used for connecting telephone
     wires and cables. Network Interface Units (NIU) and NIU mounting products
     make up the majority of revenue from this product group.

     The following table sets forth the revenues from Westell's two product
groups for the fiscal years indicated (for more information also see
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" included in this Annual Report on Form 10-K):

                                                  Fiscal Year Ended March 31,
                                                  ------------------------------
                                                   2001       2002        2003
                                                   ----       ----        ----
                                                       (Dollars in thousands)
Broadband products............................ $ 198,660   $105,011     $111,146
TAP products..................................   120,834     86,291       57,070

Broadband products % of total revenues........     55.0%      43.8%        52.9%
TAP products % of total revenues..............     33.4%      35.9%        27.2%

     The prices for the products within each market group vary based upon
volume, customer specifications and other criteria and are subject to change due
to competition among telecommunications manufacturers. Increasing competition,
in terms of the number of entrants and their size, and increasing size of the
Company's customers because of past mergers, continues to exert downward
pressure on prices for the Company's products. The Company has also elected to
eliminate some products and exit some markets based on an analysis of current
and future prospects.

     Broadband Products. Westell's Broadband products allow the transport of
high-speed data over the local loop and enable telecommunications companies to
provide high-speed services over existing copper infrastructure. The Company's
broadband products also enable residential, small business and Small Office Home
Office (SOHO) users to network multiple computers, telephones and other devices
to access the Internet. Digital Subscriber Lines (DSL) products make up the
majority of the revenue in this product group.

     Digital subscriber line (DSL) technology uses complex modulation methods to
enable high-speed services over copper phone lines. DSL allows the simultaneous
transmission of data at speeds up to 8.0 megabits per second when receiving
information on the Internet, or 140 times faster than standard 56k modem dial up
service, and up to 1 megabits per second when sending information on the
Internet, or 17 times faster than standard 56k modem dial up service, while also
providing standard analog telephone service over a single pair of copper wires.
DSL operates at distances of up to 18,000 feet from the telephone company's
central office. With DSL technology, a user can talk on the telephone and
transmit high-speed data at the same time over the same copper phone line. DSL
products enable telephone companies to provide interactive multimedia services
over copper wire while simultaneously carrying traditional telephone services,
thus mitigating the need for the consumers to install second lines to provide
these services. DSL technology is also known as Asymmetric Digital Subscriber
Line (ADSL) when it refers to products that provide the ability to send and
receive information at varying speeds.



                                      -3-
<PAGE>



     The DSL connection or link is comprised of a DSL Access Multiplexer (DSLAM)
and equipment at the users location referred to as customer premise equipment
(CPE). The DSLAM is a piece of equipment that typically resides in the telephone
companies' central offices. It aggregates, or multiplexes, multiple DSL access
lines into a telephone company's high-speed line back to its core or central
network. As network service providers begin deploying DSL based services, the
need for DSL line concentration at the central offices increases. The CPE is
typically a small device enabling DSL services that sit on a desktop next to a
personal computer.

The following table sets forth a list of the Company's principal Broadband
products and their applications:


<TABLE>

Product                   Description                                         Applications
-------                   -----------                                         ------------
<S>                       <C>                                                 <C>
WireSpeed(TM)ADSL Modem.  Customer premise equipment (CPE) that is            Enables a residential customer of ADSL
.......................    connected to a telephone line that has been         service to connect a home PC to the
.......................    configured to provide Asymmetrical Digital          ADSL service for high speed Internet
.......................    Subscriber Line (ADSL) service from the telephone   access.
.......................    company.  This device is typically located in the
.......................    home or office of the customer.  Customer users
.......................    can achieve speeds of up to 8 megabits per second
.......................    when receiving information on the Internet and up
.......................    to 1 megabit per second when sending information
.......................    on the Internet. The target market for this
                          product is residential users.

WireSpeedTM  ADSL NAT     Westell's WireSpeed ADSL NAT Router is a simple     Offers residential and small office
Router................    plug-and-play device that offers Network Address    home office (SOHO) sophisticated
.......................    Translation (NAT) routing and a built-in            routing, security protection and easy
.......................    firewall.  NAT is a method of connecting multiple   installation all in one box.
.......................    computers to the Internet (or any other IP
.......................    network) using one IP address.  NAT routing also
.......................    provides security for devices on the local area
.......................    network (LAN). The target market for this product
.......................    is residential and small office home office
.......................    (SOHO).

Westell xDSL Gateway..    Westell's xDSL Gateway product line offers          Enables residential, SOHO, and small
.......................    support for either ADSL or other types of DSL       businesses to easily network their
.......................    service with a variety of wireline and wireless     broadband services to multiple PCs and
.......................    networking technologies. The target market for      other computing devices.
.......................    this product is residential, small office home
                          office (SOHO), and small business.


</TABLE>





                                      -4-
<PAGE>



     TAP Products. Westell's TAP products provide telephone companies with
products to transport, maintain and improve the reliability of services over
copper and fiber lines in the local access network. The following table sets
forth a list of the Company's principal TAP products and their applications:

<TABLE>

Product                      Description                                    Applications
-------                      -----------                                    ------------
<S>                          <C>                                            <C>
Network Interface Unit       The NIU is a T1 circuit termination device     Provides a "demarcation point" or
(NIU).................       that allows circuit loopback and access to     hand-off between the telephone company
.......................       historical circuit performance.                equipment and customer's equipment on T1
.......................                                                      circuits.  The NIU also functions as an
                                                                            maintenance tool that allows the telephone
                                                                            company to remotely drop the customer and
                                                                            test the line back toward the network. This
                                                                            functionality provides valued
                                                                            troubleshooting capability that helps the
                                                                            telephone company reduce maintenance costs
                                                                            and customer down-time.

NIU-PM (Network Interface    Network Interface Unit with Performance        In addition to the NIU capability, the
Unit with Performance        Monitoring that stores circuit performance     NIU PM units provide enhanced
Monitoring)...........       and maintenance information for a single T1    maintenance and remote performance
.......................       circuit.                                       monitoring of T1 circuits.  These units
.......................                                                      also provide enhanced data storage for
.......................                                                      better historical analysis of circuit
.......................                                                      performance.  Additionally, it creates
.......................                                                      an opportunity for preventive
.......................                                                      maintenance activities by the telephone
.......................                                                      company to improve their customer
.......................                                                      satisfaction.

NIU Mountings.........       NIU Mountings are electronic enclosures with   Deployed by telephone company at their
                             connectorized backplanes that house NIUs and   customer's premise locations to
                             NIU PM units                                   terminate their T1 circuits.

DS3 products..........       DS3 Network Interface Units with and without   Facilitates the maintenance, monitoring,
                             Performance Monitoring capability along with   extension, and demarcation of DS3
                             the Mountings to house these plug-in cards.    facilities.  Can be deployed in central
                                                                            offices to hand-off DS3s to alternate
                                                                            carriers and customer premise locations.

T1 Repeaters..........       T1 Office and Line Repeaters                   Facilitates the extension of T1 service
.......................                                                      to subscribers that are more than 3000
.......................                                                      feet* from the central office and those
.......................                                                      that are served beyond a fiber
                                                                            multiplexer. (*Distance will vary based on
                                                                            gauge of copper wire)

</TABLE>



                                      -5-
<PAGE>


RESEARCH AND DEVELOPMENT CAPABILITIES AND ENGINEERING BASE

         The Company believes that its future success depends, in part, on its
ability to maintain its technological leadership through enhancements of its
existing products and development of new products that meet customer needs.
Westell works closely with its current and potential customers as part of the
product development process.

         In fiscal 2002, the Company received $2.0 million from customers to
fund engineering projects, which was offset against research and development
expenses. The Company did not receive any funding from customers for engineering
projects in fiscal 2001 or 2003. In fiscal 2001, 2002 and 2003 the Company spent
approximately $33.3 million, $22.4 million and $16.5 million on research and
development activities, net of customer funding.

         The Company's engineering is conducted in accordance with ISO 9001,
which is the international standard for quality management systems for design,
manufacturing and service. The Company's research and development personnel are
organized into product development teams. Each product development team is
generally responsible for sustaining technical support of existing products,
decreasing manufacturing costs, conceiving new products in cooperation with
other groups within the Company and adapting standard products or technology to
meet new customer needs. In particular, each product development team is charged
with implementing the Company's engineering strategy of reducing product costs
for each succeeding generation of the Company's products in an effort to be a
highly valued, superior quality provider, without compromising functionality or
serviceability.

         The Company believes that the key to this strategy is choosing an
initial architecture for each product that enables engineering innovations to
result in performance enhancements and future cost reductions. Westell's
products are designed in conjunction with input from procurement and
manufacturing personnel to reduce costs. The Company believes it has a quality
record that is grounded in a solid interface and transference of knowledge
between design and manufacturing teams. Successful execution of this strategy
also requires that the Company continue to attract and recruit highly qualified
engineers.

         The Company's products are subject to industry wide standardization
organizations which include, the American National Standards Institute ("ANSI")
in the United States and the European Telecommunications Standards Institute
("ETSI") which are responsible for specifying transmission standards for
telecommunications technologies. The industry transmission standard for ADSL
adopted by ANSI and ETSI is based upon Discrete Multitone (DMT) technology. DMT
is technology that allows digital information to be sent at high-speeds over
copper phone lines and prevents the digital information from interfering with
other services provided on the same copper phone line. Westell incorporates DMT
technology into its DSL products. The Company has not developed a DMT
transceiver technology for its product offerings and is dependent on transceiver
technologies sourced from third parties. The Company has established multiple
strategic relationships with transceiver technology vendors for DSL chipsets to
be used in ADSL systems by the Company. Absent the proper relationships with key
silicon chipset vendors, the Company's products may not comply with standards
set forth by ANSI and ETSI. Should customers require standards based products
containing transceiver technology not available to the Company under reasonable
terms and conditions, the Company's business and results of operations would be
materially and adversely affected.



                                      -6-
<PAGE>

         The following table lists the principal products currently under
development along with their description and expected application:

<TABLE>

Product                      Description                                    Applications
-------                      -----------                                    ------------
<S>                          <C>                                            <C>
Next Generation ADSL Modem   New platform that incorporates key             Will enable residential customers of
Platform..............       technological advances (ADSL2 and ADSL2+) to   ADSL service to connect home personal
.......................       improve performance, reliability, and          computers to the Internet at high
.......................       manufacturability.                             speeds. The next generation product will
.......................                                                      also offer residential and small office home
.......................                                                      office (SOHO) sophisticated routing,
.......................                                                      security protection and easy installation.

Next Generation Wireless     Wi-Fi (Wireless Fidelity) Access Point with    Enables residential, SOHO, and small
Platform..............       an integrated ADSL modem.                      businesses to easily network their
.......................                                                      broadband services to multiple PC's and
.......................                                                      other computing devices using a wireless
.......................                                                      platform.  Will include routing, gaming,
.......................                                                      parental/access control and remote
.......................                                                      management

Next Generation S=1/2 ADSL   New platform to improve higher speed ADSL      Will include the functionality of the
Modem.................       modem used for video applications.             Next generation ADSL modem with the
.......................                                                      added feature of allowing broadcast TV
.......................                                                      and Video on Demand.

Managed Services......       System that provides ADSL service providers    Enables ADSL service providers to offer
.......................       with maintenance and diagnostic tools and a    various services to customers including
.......................       platform to provide enhanced services.         parental controls, improved security and
.......................                                                      firewalls, voice over Internet and video
.......................                                                      over Internet.


</TABLE>

         The Company currently anticipates that it will introduce the products
listed in the above table in late fiscal year 2004 and fiscal year 2005.
However, there can be no assurance that the Company will be able to introduce
such products as planned.

CUSTOMERS

         The Company's principal customers historically have been telephone
companies within the United States. In addition, Westell sells products to
several other entities, including public telephone administrations located
outside the U.S., independent domestic local exchange carriers, competitive
local exchange carriers, inter-exchange carriers, the U.S. federal government,
Internet service providers, and business enterprises. Revenues from
international customers represented approximately $57.7 million, $15.5 million
and $11.3 million of the Company's revenues in fiscal 2001, 2002 and 2003,
respectively, accounting for 16.0%, 6.5% and 5.4% of the Company's revenues in
such periods.

         The Company depends, and will continue to depend, on the Regional Bell
Operating Companies (RBOCs) and other independent local exchange carriers for
substantially all of its revenues. Sales to the RBOCs accounted for 50.6%, 66.4%
and 75.1% of the Company's revenues in fiscal 2001, 2002 and 2003, respectively.
Sales to the Company's largest three customers, Verizon, SBC and BellSouth,
accounted for 43%, 15% and 14% of the Company's revenues in fiscal 2003,
respectively. Consequently, the Company's future success will depend upon the
timeliness and size of future purchase orders from the RBOCs, the product
requirements of the RBOCs, the financial and operating success of the RBOCs, and
the success of the RBOCs' services that use the Company's products. Any attempt
by an RBOC or other telephone company access providers to seek out additional or
alternative suppliers or to undertake the internal production of products would
have a material adverse effect on the Company's business and results of
operations. In addition, the Company's sales to its largest customers have in
the past fluctuated and in the future are expected to fluctuate significantly
from quarter to quarter and year to year. The loss of such customers or



                                      -7-
<PAGE>

the occurrence of such sales fluctuations would materially adversely affect the
Company's business and results of operations.

         The Company's contracts with its major customers are primarily pricing
and product specification agreements that do not require a specific level of
quantities to be purchased. Each customer provides the Company with purchase
orders for units on an as needed basis.

         The RBOCs and the Company's other customers are significantly larger
than, and are able to exert a high degree of influence over, the Company. As a
result, our larger customers may be able to reschedule or cancel orders without
significant penalty. Prior to selling its products to telephone companies, the
Company must undergo lengthy approval and purchase processes which are discussed
in the section captioned "Marketing, Sales and Distribution".

MARKETING, SALES AND DISTRIBUTION

         The Company sells its products in the U.S. through its domestic field
sales organization and selected distributors. The Company has had an established
sales force and channel to domestic service providers since its founding in
1980.

         The Company markets its products domestically within the United States,
as well as in Canada and Europe. In North America, the Company's traditional TAP
products are sold directly to the service providers or in some cases to
distributors who service these carriers. The Company's Broadband products are
sold directly to telephone carriers, to Internet Service Providers who provide
DSL services, and certain retail outlets. The Company believes that the DSL
sales channels are very dynamic and continually looks to adapt and configure its
sales force and processes to meet these changes.

         The RBOCs and the Company's other customers are significantly larger
than, and are able to exert a high degree of influence over, the Company. Prior
to selling its products to telephone companies, the Company must undergo lengthy
approval and purchase processes. Evaluation can take as little as a few months
for products that vary slightly from existing products in the local access
network and a year or more for products based on new technologies. Accordingly,
the Company is continually submitting successive generations of its current
products as well as new products to its customers for approval.

         Although the telephone company approval processes may vary to some
extent depending on the customer and the product being evaluated, they generally
are conducted as follows:

         Laboratory Evaluation.  The product's function and performance are
         tested against all relevant industry standards.

         Technical Trial. A number of telephone lines are equipped with the
         product for simulated operation in a field trial. The field trial is
         used to evaluate performance, assess ease of installation and establish
         troubleshooting procedures.

         Marketing Trial. Emerging products such as DSL are tested for market
         acceptance of new services. Marketing trials usually involve a greater
         number of systems than technical trials because systems are deployed at
         several locations in the telephone company's network. This stage gives
         telephone companies an opportunity to establish procedures, train
         employees to install and maintain the new product and to obtain more
         feedback on the product from a wider range of operations personnel.

         Commercial Deployment. Commercial deployment usually involves
         substantially greater numbers of systems and locations than the
         marketing trial stage. In the first phase of commercial deployment, a
         telephone company initially installs the equipment in select locations
         for select applications. This phase is followed by general deployment
         involving greater numbers of systems and locations. Commercial
         deployment does not usually mean that one supplier's product is
         purchased for all of the telephone companies' needs throughout the
         system as telephone companies often rely upon multiple suppliers to
         ensure that their needs can be met. Subsequent orders, if any, are
         generally placed under single or multi-year supply agreements that are
         generally not subject to minimum volume commitments.


                                      -8-
<PAGE>

         The relationships that the Company establishes in this extensive
process are critical in almost every case. The Company has a history of working
closely with the service providers in this fashion and the Company has won
numerous quality awards from customers such as SBC and GTE (now Verizon).

TECHNICAL SUPPORT

         Westell maintains 24-hour, 7-day-a-week telephone support and provides
on-site support. The Company also provides technical consulting, research
assistance and training to some of its customers with respect to the
installation, operation and maintenance of its products.

         The Company has general purchase agreements with most of its major
customers. These agreements may require the Company to accept returns of
products or indemnify such customers against certain liabilities arising out of
the use of the Company's products. Although, to date, the Company has not
experienced any significant product returns or indemnification claims under
these contracts, any such claims or returns could have a material adverse effect
on the Company's business and results of operations.

         The Company's products are required to meet rigorous standards imposed
by its customers. Most of the Company's products carry a limited warranty
ranging from one to seven years, which generally covers defects in materials or
workmanship and failure to meet published specifications, but excludes damages
caused by improper use and all other warranties. In the event there are material
deficiencies or defects in the design or manufacture of the Company's products,
the affected products could be subject to recall. For the past five fiscal
years, the Company's warranty expenses have been insignificant. Since the
Company is continually introducing new products, it can not predict the level of
future warranty claims on its products. Potential product recalls and warranty
expense could adversely affect our ability to remain profitable. See the Risk
Factors.

MANUFACTURING

         The Company performs the majority of its manufacturing at its facility
in Aurora, Illinois. The Company is positioned to activate a subcontractor to
produce DSL products if demand were to significantly increase. The Company
subcontracts the production of a portion of its TAP products. Reliance on
third-party subcontractors involves several risks, including the potential
absence of adequate capacity and reduced control over product quality, delivery
schedules, manufacturing yields and costs. See "Risk Factors".

         The Company has purchase contracts with suppliers of material
components. Most purchased items are standard commercial components available
from multiple suppliers. There are also single sourced components needed to
produce products. There are two single sourced items in broadband consisting of
the transceiver and the license to run an operating platform. There are a number
of other suppliers in the market that could supply the Company with this same
technology, however, it would take the Company at least nine months to
reengineer the product and subsequently get product approval from customers.
This delay would materially adversely affect the Company's business. Broadband
product sales accounted for 53% of revenue in fiscal 2003. All purchase
contracts are short term in nature with the exception of one long-term
commitment to purchase memory chips. Under this long-term agreement, the Company
must purchase $13.5 million of products through December 2005 or pay a
cancellation fee of $800,000. It was determined in fiscal 2002 that this
purchase commitment would more than likely not be met and the Company therefore
accrued for the cancellation fee. Suppliers may terminate unfulfilled contracts
without penalty that are outside of contractual time periods.

         A substantial portion of the Company's shipments in any fiscal period
can relate to orders for products received in that period. The Company's
domestic facilities and processes are certified pursuant to ISO 9001. Further, a
significant percentage of orders, such as Network Interface Units, or NIUs, may
require delivery within 48 hours. To meet this demand, the Company maintains raw
materials inventory and finished goods inventory at its manufacturing
facilities. In addition, the Company maintains some finished goods inventory at
the customers' sites pursuant to agreements that the customers will eventually
purchase such inventory. Because of the rapid technological changes to our
products, the Company faces a reoccurring risk that the inventory it holds may
become obsolete.



                                      -9-
<PAGE>

COMPETITION

         The markets for the Company's products are intensely competitive and
the Company expects competition to increase in the future, especially in the
rapidly changing markets for broadband products. Westell's primary competitors
vary by market segment. The Company's principal competitors with respect to its
TAP products are Adtran, Inc., ADC Telecommunications, and HyperEdge
Corporation. The Company's principal competitors with respect to its Broadband
products are primarily Siemens Information and Communication Network Inc.
(Efficient), Netopia Inc., 2Wire Inc., Cisco Systems Inc. (Linksys), D-Link
Systems Inc., ActionTec Electronics Inc. and ZyXEL Communications Co. The
Company believes that it is currently one of the leading sellers of DSL products
in North America. However, many of the Company's competitors are significantly
larger and have more financial resources than the Company. To remain
competitive, the Company focuses on quality, time to market and the ability to
react quickly to market changes and believes that it has competitive advantages
in these areas because the Company;s operations are U.S. based. The Company
expects that new competitive pressure from Asian based manufactures will
continue downward pressure on pricing.

         Additional competition is seen from products that increase the
efficiency of digital transmission over copper wire such as fiber, wireless,
cable modems and other products delivering broadband digital transmission.
Telephone companies face competition from cable operators, new local access
providers and wireless service providers that are capable of providing high
speed digital transmission to end users. At the end of 2002, 11.3 million
customers used cable modems, in contrast to 6.1 million DSL users. By 2007, the
Yankee Group, a service that provides industry trend data, expects this gap to
narrow slightly and is forecasting there to be 25.5 million cable modem users
versus 16.6 million DSL users resulting in a 35% market share for DSL modems. In
addition, the deployment of products and technologies for copper wire may also
reduce the demand for other products currently manufactured by the Company. The
deployment of HDSL2 and HDSL4 systems in the U.S. reduces telephone companies'
need for T-1 repeaters, which results in a decrease in demand for Westell's more
traditional T-1 products such as its Network Interface Units. The Company
believes that the domestic market for some of its older, low speed TAP
transmission products is decreasing, and will likely continue to decrease, as
high capacity digital transmission becomes less expensive and more widely
deployed. See the risk factor captioned "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".

TELECONFERENCE SERVICES

         Conference Plus, Inc., founded in 1988, is a full service conferencing
company that manages and hosts specific software and applications relating to
conferencing and meeting services. Conference Plus is an 91.5% owned subsidiary
of Westell and manages its teleconferencing and meeting services through its
main operations center in Schaumburg, Illinois and a facility in Dublin,
Ireland. Conference Plus services generated $42.0 million, $48.5 million and
$41.8 million in revenues in fiscal 2001, 2002 and 2003, respectively.

         In June 2002, the Company retained Robert W. Baird & Company to act as
an advisor on a possible divestiture of the Company's services subsidiary,
Conference Plus, Inc. At this time, the Company is not actively pursuing any
divestiture but may do so in the future if adequate consideration can be
obtained and if the divestiture fits into the Company's strategic plans in the
future.

         Conference Plus allows multiple individuals, organizations and/or
businesses to conduct conference calls using a combination of voice, video or
data such as graphs or spreadsheets. Unlike a conference call of several years
ago, where participants dialed in on phones, today's meeting can include a blend
of audio, graphics, spreadsheets or other documents that can be carried over and
archived on the Internet to enhance the traditional voice conference call. By
enabling the sharing of this blend of information, Conference Plus can help
organizations increase productivity and save money by reducing travel time,
bringing down travel costs, and making it easier for people in remote locations
to work together. Teleconferencing and meeting services technologies also allow
organizations and individuals to collect and disseminate information faster,
more accurately and without the associated costs of face-to-face meetings.



                                      -10-
<PAGE>

         Conference Plus is distinguished by three strategies:

         o        Diverse Distribution Channels
         o        State of the Art Network and Integrated Systems
         o        International Reach

         DIVERSE DISTRIBUTION CHANNELS

         Conference Plus has historically acted as a provider of conferencing
and meeting services on a wholesale basis, managing and hosting applications for
major carriers and telecommunications resellers. A majority of Conference Plus'
revenues come from private label commercial teleconferencing services to
customers who market or use Conference Plus services under their own brand name.
Such companies choose to outsource and private label audio, web and video
teleconferencing services to maintain continuity, save costs and focus on their
core competencies.

         Conference Plus also sells its services directly to Fortune 1000
companies through its National Accounts Sales force. This area continues to be a
strong part of the growth of Conference Plus and the Company expects to continue
to invest resources in this area in order to maintain a diverse mix of
distribution.

         STATE OF THE ART NETWORK AND INTEGRATED SYSTEMS

         A critical part of Conference Plus' approach is its state of the art
network and integrated systems. Conference Plus has a state of the art network
infrastructure that enables it to take advantage of the relationships it has
with major telecommunications providers to provide quality service. Conference
Plus has a unique architecture that ensures customers have access to all of the
Conference Plus bridge and network capacity during any of their conference calls
or meetings.

         Conference Plus has built an integrated reservations, scheduling and
billing system called CRBS that is a significant differentiator in the
conferencing market. The CRBS system allows Conference Plus to leverage its
operations on a global basis. This reliable and scalable system is seamlessly
integrated in the operational environment from the point of reservation through
the billing process. This integration allows Conference Plus to enjoy scale
advantages and to be able to profitably provide resale service to its customers.

         INTERNATIONAL REACH

         As customers globalize their telecommunications services, Conference
Plus has expanded its operational presence internationally to meet these needs.
In addition to its main operational centers in Schaumburg, Illinois and Dublin,
Ireland, Conference Plus has teleconferencing bridges located in Lombard,
Illinois and London, England. Conference Plus is able to serve the
teleconferencing needs of customers headquartered anywhere in the world through
these facilities. The Conference Plus facility in Dublin, Ireland was
established in 1998 to help meet the growing demand for global conferencing
service. The international market for teleconferencing is expected to grow
substantially as a result of deregulation and improved networks with associated
reductions in end user costs.

         Conference Plus' private label customers and many of its other
customers are significantly larger than, and are able to exert a high degree of
influence over, Conference Plus. Conference Plus depends on two customers to
provide a significant percent of its revenues. A loss of one of these customers
would have a material adverse effect on Conference Plus's business. Prior to
selling its services, the Company must undergo lengthy approval and purchase
processes. Evaluation can take as little as a few months for services that vary
slightly from existing services used by the prospective customer to a year or
more for services based on technologies such as video or data teleconferencing
or which represent a new strategic direction for the customer, as in the case
with private labeling teleconference services for a Regional Bell Operating
Company.


                                      -11-
<PAGE>

         Competition in the teleconferencing business is intense and the Company
expects that competition will increase due to low barriers of entry and recent
entrants into the audio teleconferencing service market. Many of Conference
Plus' competitors, including AT&T, MCI Communications and Sprint Communications,
have much greater name recognition, more extensive customer service and
marketing capabilities and substantially greater financial, technological and
personnel resources than the Company. There can be no assurance that the Company
will be able to successfully compete in this market in the future or that
competitive pressures will not result in price reductions that would materially
adversely affect its business and results of operations.

GOVERNMENT REGULATION

         The telecommunications industry, including most of the Company's
customers, is subject to regulation from federal and state agencies, including
the FCC and various state public utility and service commissions. While such
regulation does not affect the Company directly, the effects of such regulations
on the Company's customers may, in turn, adversely impact the Company's business
and results of operations. For example, FCC regulatory policies affecting the
availability of telephone and communications services and other terms on which
service providers conduct their business may impede the Company's penetration of
certain markets. The Telecommunications Act of 1996 lifted certain restrictions
on the carriers' ability to provide interactive multimedia services including
video on demand. Under the Telecommunications Act of 1996, new regulations have
been established whereby carriers may provide various types of services beyond
traditional voice offerings.

         In addition, the Telecommunications Act of 1996 permits the carriers to
engage in manufacturing activities after the FCC authorizes a carrier to provide
long distance services within its service territory. A carrier must first meet
specific statutory and regulatory tests demonstrating that its monopoly market
for local exchange services is open to competition before it will be permitted
to enter the long distance market. When these tests are met, a carrier will be
permitted to engage in manufacturing activities, and the carriers, which are the
Company's largest customers, may become the Company's competitors as well. See
Risk Factors.

PROPRIETARY RIGHTS AND INTELLECTUAL PROPERTY

         The Company's success and future revenue growth will depend, in part,
on its ability to protect trade secrets, obtain or license patents and operate
without infringing on the rights of others. The Company relies on a combination
of technical leadership, copyright, patent, trademark, trade secret and other
intellectual property laws, nondisclosure agreements and other protective
measures to protect our unpatented proprietary know-how. The Company regards
some of its technology as proprietary and the Company has been granted 31
patents and has an additional 15 U.S. patents pending relating to its TAP and
DSL products. The expiration of any of the patents held by the Company would not
have a material impact on the Company. The Company expects to seek additional
patents from time to time related to its research and development activities.
See Risk Factors.

         Many of the Company's products incorporate technology developed and
owned by third parties. Consequently, the Company must rely upon third parties
to develop and to introduce technologies which enhance the Company's current
products and enable the Company, in turn, to develop its own products on a
timely and cost-effective basis to meet changing customer needs and
technological trends in the telecommunications industry. Without third party
transceiver technologies, such as DMT technology, the Company would not be able
to produce any of its DSL systems. Consequently, if the Company's third party
transceiver suppliers fail to deliver transceivers that meet the Company's
requirements or fail to deliver transceivers that meet industry standards and
other alternative sources of DSL transceiver technology are not available to the
Company at commercially acceptable terms, then the Company's business and
results of operations would be materially and adversely affected. The Company's
reliance on certain third party technology is also discussed above in "Research
and Development Capabilities and Engineering Base".

         Rapid technological evolution has resulted in the need to implement
strategic alliances with technology suppliers in order to accelerate the time to
market for new products. Without such relationships, due to the lengthy carrier
product approval and purchase cycles, the technology may be obsolete by the time
the Company completes the product approval and purchase cycles.



                                      -12-
<PAGE>

EMPLOYEES

         As of March 31, 2003, the Company had 853 full-time employees.
Westell's domestic equipment manufacturing business had a total of 591 full-time
employees, consisting of 133 in sales, marketing, distribution and service, 88
in research and development, 338 in manufacturing and 32 in administration.
Conference Plus had a total of 235 full-time employees. Westell Limited had a
total of 27 full-time employees. None of the Company's employees are represented
by a collective bargaining agreement nor has the Company ever experienced any
work stoppage. The Company believes its relationship with its employees is good.

ACCESS TO SEC REPORTS

         The Company makes available free of charge through its website,
www.westell.com, an automatic link to the SEC's website for the Company's annual
report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K
and all amendments to those reports as soon as reasonably practical after such
material is electronically filed with the Securities and Exchange Commission.
The Company's website and the information contained therein or incorporated
therein are not intended to be incorporated into this Annual Report on Form
10-K.



                                      -13-
<PAGE>



                                  RISK FACTORS

You should carefully consider the risks described below in addition to the other
information contained and incorporated by reference in this prospectus. 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 LOSSES IN THE PAST AND MAY INCUR LOSSES IN THE FUTURE.

        In the past, due to our significant ongoing investment in DSL and other
new technology, we have incurred losses through fiscal 2002. Through fiscal
2002, we have incurred operating losses, net losses and negative cash flow on
both an annual and quarterly basis. The Company had an accumulated deficit of
$321.4 million as of March 31, 2003.

         We believe that our future revenue growth and profitability will depend
on:

         o        creating sustainable product and service sales opportunities;
         o        lowering our DSL and TAP product costs through design and
                  manufacturing enhancements and volume efficiencies;
         o        developing new and enhanced products and services; and

         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 be profitable 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;
         o        Lack of success on winning new customers or the loss of an
                  existing customer;
         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.

WE HAVE AND COULD 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. Although these class
actions have settled, we could face securities litigation in the future which
could result in the payment of substantial damages or settlement costs in excess
of our insurance coverage. Any adverse outcome could harm our business. Even if
we were to be meritorious in any such litigation, we could incur substantial
legal costs and management's attention and resources could be diverted from our
business which could cause our business to suffer.


                                      -14-
<PAGE>


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, the Company 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 PRODUCTS MAY AFFECT OUR ABILITY TO BE PROFITABLE IN THE
FUTURE.

        We have and may in the future offer products and services based upon
forward pricing, which is the pricing of products below production costs to take
into account the expectation of large future volumes and corresponding reduction
of manufacturing costs. Forward pricing would cause us to incur lower margins on
product or service sales unless we can reduce the associated costs. We believe
that costs may decrease if:

         o        more cost-effective 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 business and reduce per unit costs that we have factored into our
forward priced products. As a result, we could incur low or negative margins in
connection with sales of forward priced products even if our unit volume
increases. Low margins from our sales of products and services could result in
fluctuations in our quarterly operating results and would materially and
adversely affect our 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 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. For example, our Network Interface Unit
product revenue decreased 12.8% in fiscal 2002 and an additional 16.7% in fiscal
2003. 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.

         In addition, our current product offerings primarily enable telephone
companies to deliver 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
transmission services from these alternative providers, then the overall demand
for DSL products will be impaired.


                                      -15-
<PAGE>

         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 other 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 PRODUCTS COULD ADVERSELY IMPACT OUR
ABILITY TO MANUFACTURE SUFFICIENT QUANTITIES OF DSL PRODUCTS, WHICH WOULD AFFECT
OUR ABILITY TO ATTRACT AND RETAIN CUSTOMERS.

         Any unexpected increase in demand for DSL products could adversely
impact our ability to supply DSL 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. For example, it would take us at least nine
months to reengineer the product and subsequently get product approval from
customers if the Company lost its existing licenses to the DSL technology and
operating platform used in its DSL products. 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.


                                      -16-
<PAGE>

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. For example, it
would take the Company at least nine months to reengineer the product and
subsequently get product approval from customers if the Company lost its
existing licenses to the DSL technology and operating platform used in its DSL
products.

         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 FEW LONG TERM CONTRACTS OR ARRANGEMENT WITH SUPPLIERS WHICH COULD
ADVERSELY AFFECT OUR ABILITY TO PURCHASE COMPONENTS AND TECHNOLOGIES USED IN OUR
PRODUCTS.

         We have few long-term contracts or arrangements with 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 enter into short term contracts with our
suppliers in the form of purchase orders. Purchase orders are often
non-cancelable within contractual time periods. These purchase orders are issued
to venders based on forecasted demand. If the forecasted demand is materially
incorrect, we may find that we cannot use the products ordered, 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 may be difficult to retain existing key employees and attract new
key employees. In addition we do not have non-compete contracts with most of our
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; availability
                  and pricing of key components;


                                      -17-
<PAGE>

         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 manufacturing and purchasing needs and 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
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 continuing competition 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 and service
                  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'


                                      -18-
<PAGE>

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.

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 50.6%, 66.4% and 75.1% of our revenues in
fiscal 2001, 2002 and 2003, 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 customers 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 total 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.

THE LOSS OF A MAJOR CUSTOMER COULD ADVERSELY IMPACT OUR BUSINESS.

         The loss of a top five customer by the Company or its subsidiary
Conference Plus could have a material adverse affect on our business and
operating results. The four Regional Bell Operating Companies account for over
75% of the Company's sales. In fiscal year 2003, Conference Plus lost a
significant portion of its business from one large customer which adversely
impacted operating results. The loss of any customers of the Company in the
future would have an immediate effect on revenues and harm the Company's
business.

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


                                      -19-
<PAGE>

         o        regulatory issues affecting telephone companies.

         The requirement that telephone companies obtain FCC or state regulatory
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.

OUR INTERNATIONAL OPERATIONS EXPOSE US TO THE RISKS OF CONDUCTING BUSINESS
OUTSIDE THE UNITED STATES.

         International revenues represented 16.0%, 6.5% and 5.4% of our revenues
in fiscal 2001, 2002 and 2003, 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.



                                      -20-
<PAGE>

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
66,068,827 shares of common stock outstanding as of June 9, 2003, and has the
following obligations to issue additional class A common stock as of June 9,
2003:

         o        options to purchase 10,537,861 shares of class A common stock,
                  5,023,829 of which are currently exercisable;
         o        warrants to purchase 915,000 shares of class A common stock
                  for $5.88 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 OR FUND RAISING ACTIVITY 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 addition, the
Company may decide to raise additional capital to fund its operations. In order
to accomplish these activities, acquisitions and fund raising, 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.



                                      -21-
<PAGE>

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;
o        marketing and sales effectiveness; 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 June 9, 2003, 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 49.8% 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. Certain Penny family members also own or are
beneficiaries of trusts that own shares outside of the voting trust. As trustees
of the Voting Trust and other trusts, Messrs. Penny and Simon control 54.5% of
the voting power of the Company. Consequently, we are effectively under the
control of Messrs. Penny and Simon, as trustees, who can effectively control the
election of all of the directors and 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 A common stock might otherwise receive a premium for their shares over the
then-current market price.


ITEM 2.  PROPERTIES

         The Company leases approximately 185,000 square feet of office,
development and manufacturing space in Aurora, Illinois, a suburb of Chicago,
and leases a facility of 12,540 square feet of office space in Basingstoke,
England for Westell Limited. As of March 31, 2003, the Company also leased
facilities of 41,860 and 14,131 square feet in Schaumburg, Illinois and Lombard,
Illinois, respectively, for Conference Plus' domestic operations. The Lombard
facility was substantially closed in fiscal 2003. The Company also leases 2,000
square feet in Dublin Ireland for Conference Plus' international operations. The
Aurora facility lease expires in 2017 and the lease in Basingstoke, England
expires in 2005. The leases for the properties in Schaumburg and Lombard,
Illinois expire in 2011 and 2008, respectively, and the lease for the facility
in Dublin, Ireland expires in 2024.

         The Company's Aurora, Illinois manufacturing facility is currently
operating below maximum capacity. The Company utilizes third-party
subcontractors to help fulfill fluctuations in customer demands that could be at
times beyond the manufacturing capacity of the Aurora facility. The Company has
a plan to expand the manufacturing capacity of its Aurora facility when and if
that is necessary.

ITEM 3.  LEGAL PROCEEDINGS

         Westell and certain of its officers and directors were named in In re
Westell Technologies, Inc. Securities Litigation, No 00 C 6735 (cons. complaint
filed February 1, 2001), filed in the United States District Court for the
Northern District of Illinois. This case was a consolidation of eleven cases
filed against Westell and certain of its officers and directors in the United
States District Court of the Northern District of Illinois in 2000. The case
alleged 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


                                      -22-
<PAGE>

statements made not misleading, thereby allegedly inflating the price of Westell
stock for certain time periods. The case claimed that, in 2000, certain officers
of Westell allegedly reassured analysts that Westell's sales were on track to
meet forecasts for the second quarter of fiscal 2001, when they knew that
Westell was experiencing a substantial shortfall in second quarter modem sales
due to decreased orders from a major customer, SBC Communications, Inc. The case
sought 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. The
parties reached a settlement agreement which was approved by the Court on June
18, 2003. The Court's order approving the settlement also dismissed all claims
against the defendants with prejudice. Under the terms of the settlement
agreement, all claims will be dismissed without any admission of liability or
wrongdoing by any defendant. Under the terms of the settlement, the liability
insurers of Westell and its directors and officers will pay a total of $3.95
million to the plaintiffs and their counsel. Westell does not expect to pay
anything in connection with the settlement. The shareholder class received $3.35
million out of which the Court was asked to award attorneys' fees and expenses
to class counsel. Counsel to plaintiffs in the derivative action received the
remaining $600,000 to settle the derivative claim. Beyond the financial
settlement, Westell agreed to adopt certain corporate governance and
communications procedures.

          Certain of Westell's officers and directors were also named in a
derivative action titled Dollens and Vukovich v. Zionts, et al., No. 01C2826,
filed December 4, 2001 in the United States District Court for the Northern
District of Illinois. The case alleged generally that the defendants issued
material false and misleading statements and/or allegedly omitted material facts
necessary to make the statements made not misleading thereby inflating the price
of Westell stock for certain time periods, engaged in insider trading, and
misappropriated corporate information. The allegations in support of the claims
were identical to the allegations in the Federal case described above. The case
sought damages allegedly sustained by Westell by reason of the acts and
transactions alleged in the complaint, a constructive trust for the amount of
profits the individual defendants made on insider sales, reasonable attorneys'
fees, expert fees and other costs. The case was a consolidation of four
derivative cases filed against Westell and certain of its officers and directors
in 2000 and 2001. The parties reached a settlement agreement which was approved
by the Court on June 18, 2003 as discussed in the paragraph immediately above.
The Court's order approving the settlement also dismissed all claims against the
defendants with prejudice.

         The action in which the Company was named in the Circuit Court of
DuPage County, Wheaton, Illinois entitled WTI(IL)QRS 12-36, Inc.("Landlord") v.
Westell, Inc.. and Westell Technologies, Inc. was dismissed with prejudice when
the parties reached a settlement agreement in November, 2002. There was no
admission of liability or fault by either party. In exchange for the Company's
payment of $625,000, the Landlord has accepted prepayment of landlord
consideration and waived any financial covenants incorporated into the lease
agreement for a period of ten years ending on October 21, 2012. The landlord
also released all claims, demands and causes of action for breach of financial
covenants under the lease.

         In May 2002, the Company filed a patent infringement lawsuit against
HyperEdge Corporation in the U.S. District Court for the Northern District of
Illinois (Civil Action No. 02-C-3496). The complaint charges HyperEdge with
infringing Westell's U.S. Patent Number 5,444,776, under theories of direct
infringement and inducement of infringement by others. Westell seeks injunctive
relief, trebled damages for willful infringement, and attorney fees. HyperEdge
has asserted affirmative defenses and counterclaims that include, but are not
limited to, non-infringement, invalidity, and unfair competition. Westell has
moved to dismiss certain of HyperEdge's counterclaims. Westell's 5,444,776
patent relates to an innovative bridge circuit technology often used in network
interface units. The case is currently in discovery.

         In the opinion of the Company, although the outcome of any legal
proceedings set forth above cannot be predicted with certainty, the liability of
the Company in connection with its legal proceedings could have a material
effect on the Company's financial position.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.



                                      -23-
<PAGE>

                                     PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

         The Company's Class A Common Stock is quoted on the NASDAQ National
Market under the symbol "WSTL." The following table sets forth for the periods
indicated the high and low sale prices for the Class A Common Stock as reported
on the NASDAQ National Market.
                                                             High         Low
                                                           ---------    --------
Fiscal Year 2002
    First Quarter ended June 30, 2001..................      $3.30       $1.32
    Second Quarter ended September 30, 2001............       2.01        0.87
    Third Quarter ended December 31, 2001..............       2.85        1.01
    Fourth Quarter ended March 31, 2002................       3.70        1.25

Fiscal Year 2003
    First Quarter ended June 30, 2002..................      $1.90       $1.01
    Second Quarter ended September 30, 2002............       1.80        1.02
    Third Quarter ended December 31, 2002..............       1.85        1.10
    Fourth Quarter ended March 31, 2003................       4.50        1.15

Fiscal Year 2004
    First Quarter through June 9, 2003.................      $8.94       $3.71

         As of June 1, 2003, there were approximately 799 holders of record of
the outstanding shares of Class A Common Stock and 13 holders of Class B Common
Stock.

         During 2001, the Company issued an aggregate of approximately 34,982
unregistered shares of common stock pursuant to its employees stock purchase
plan. The shares were issued at prices ranging from $1.31 to $2.12 per share for
aggregate consideration of $50,131.

         The following table summarizes information as of March 31, 2003,
relating to equity compensation plans of the Company pursuant to which common
stock is authorized for issuance (for more information on the Company's equity
compensation plans see Note 8 to the Consolidated Financial Statements of the
Company which is incorporated herein by reference):

<TABLE>

                                                      Equity Compensation Plan Information
<CAPTION>

                              Number of securities to   Weighted average exercise   Number of securities remaining
                              be issued upon exercise      price of outstanding      available for future issuance
                              of outstanding options,     options, warrants and          (excluding securities
Plan category                   warrants and rights               rights            reflected in the first column)
---------------------------- -------------------------- --------------------------- --------------------------------
<S>                                          <C>                             <C>                          <C>
Equity compensation plans                    9,546,876                       $5.03                        1,733,149
approved by security
holders

Equity compensation plans                    1,976,923                        2.55                               --
not approved by security
holders*
                             -------------------------- --------------------------- --------------------------------

Total                                       11,532,799                       $4.60                        1,733,149

                             ========================== =========================== ================================

*Reflects non-qualified stock options of Class A Common Stock granted to E. Van
Cullens and one other employee in fiscal 2002. 1.1 million of these options vest
over a four-year period with 25% vesting per year. The remainder are performance
based and vest at the earlier of achievement of certain performance goals or
eight years. The strike price on 1.1 million, 0.4 million and 0.4 million and .1
million of the options is $1.95, $2.00, $5.00 and $1.32 per share, respectively.

</TABLE>


                                      -24-
<PAGE>

Dividends

         The Company has never declared or paid any cash dividends on its common
stock and does not anticipate paying any cash dividends in the foreseeable
future. The Company currently intends to retain any future earnings to finance
the growth and development of its business. In addition, the Company's credit
facility restricts the Company's ability to pay dividends.



                                      -25-
<PAGE>



ITEM 6.  SELECTED CONSOLIDATED FINANCIAL DATA.

         The following selected consolidated financial data as of March 31,
1999, 2000, 2001, 2002 and 2003 and for each of the five fiscal years in the
period ended fiscal year 2003 have been derived from the Company's consolidated
financial statements, which have been audited by Arthur Andersen LLP for fiscal
years 1999 and 2000 and by Ernst & Young LLP for fiscal years 2001 through 2003.
The data set forth below is qualified by reference to, and should be read in
conjunction with, "Management's Discussion and Analysis of Financial Condition
and Results of Operations," the Consolidated Financial Statements and the
related Notes thereto and other financial information appearing elsewhere in
this Annual Report on Form 10-K.

<TABLE>

                                                                         Fiscal Year Ended March 31,*
                                                    -------------------------------------------------------------------
                                                           1999         2000       2001         2002       2003
                                                          ------       ------     ------       -----      -----
<S>                                                     <C>        <C>         <C>         <C>            <C>
Statement of Operations Data:                                    (in thousands, except per share data)
Revenues.............................................   $92,004    $120,993    $361,477    $239,823       $210,021
Cost of goods sold...................................    66,816      89,969     331,319     205,793        146,261
                                                        -------    --------    --------    --------       --------
     Gross margin....................................    25,188      31,024      30,158      34,030         63,760
                                                        -------    --------    --------    --------       --------
Operating expenses:
  Sales and marketing................................    19,766      15,338      30,323      19,883         16,017
  Research and development...........................    26,605      10,789      33,308      22,444         16,483
  General and administrative.........................    13,117      14,003      24,254      24,028         17,513
  Goodwill and intangible amortization ..............      --         1,326      31,832      25,560          1,766
  Goodwill impairment ...............................      --          --           --       97,500           --
  Restructuring charge ..............................       800         550       1,700       6,258          1,678
                                                        -------    --------    --------    --------       --------
     Total operating expenses........................    60,288      42,006     121,417     195,673         53,457
                                                        -------    --------    --------    --------       --------
Operating profit (loss)..............................   (35,100)    (10,982)    (91,259)   (161,643)        10,303
Other income (expense), net..........................       404       1,056            --      (222)          (9)
Interest expense.....................................       296       1,856       2,197       5,564          2,648
                                                        -------    --------    --------    --------       --------
Income (loss) before income taxes....................   (34,992)    (11,782)    (93,456)   (167,429)        7,646
Income tax expense (benefit).........................     --         (3,600)          --        --            372
                                                        -------    --------    --------    --------       --------
Income (loss) before cumulative effect of change in
  accounting principle...............................   (34,992)     (8,182)    (93,456)   (167,429)        7,274
Cumulative effect of change in accounting principle..        --           --       (400)         --           --
                                                         -------    --------    --------    --------      --------
et income (loss)....................................  $ (34,992)   $ (8,182)  $ (93,856) $ (167,429)      $ 7,274
                                                      ==========   ========== =========== ===========    =========
Net loss per basic share:
Income (loss) before cumulative effect of change in
  accounting principle...............................   $ (0.96)    $ (0.22)    $ (1.53)    $ (2.60)       $  0.11
Cumulative effect of change in accounting principle..      --          --         (0.01)     --            --
                                                        -------    --------    --------    --------       --------
 Net income (loss) per basic share...................   $ (0.96)    $ (0.22)    $ (1.54)    $ (2.60)       $  0.11
                                                        ========    ========    ========   =========     =========
Average number of basic common shares
   outstanding.......................................    36,427      37,658      61,072      64,317         64,925

Net income (loss) per diluted share:
Income (loss) before cumulative effect of change in
  accounting principle...............................   $ (0.96)    $ (0.22)    $ (1.53)    $ (2.60)       $  0.11
Cumulative effect of change in accounting principle..      --          --         (0.01)        --           --
                                                         -------    --------    --------    --------      --------
 Net income (loss) per diluted share.................   $ (0.96)    $ (0.22)    $ (1.54)    $ (2.60)       $  0.11
                                                        ========    ========    ========   =========      ========
Average number of diluted common shares
   outstanding.......................................    36,427      37,658      61,072      64,317         65,126

                                                                              As of March 31,
                                            ----------------------------------------------------------------------------------
                                                           1999        2000        2001        2002          2003
                                                           ----        ----        ----        ----         -----
Balance Sheet Data:
Working capital......................................  $ 12,213    $ 64,335    $ 38,778    $ 16,811        $ 5,661
Total assets.........................................    64,407     342,570     315,139     126,153        109,474
Short term debt......................................       500       --          --          --             5,000
Long-term debt, including current portion............     4,814       2,750      28,554      50,655         29,817
Total stockholders' equity...........................    39,124     279,663     197,825      36,273         43,493

 * Fiscal years 2001, 2002 and 2003 results reflect the acquisition of Teltrend
Inc. which occurred in March 2000.

</TABLE>

                                      -26-
<PAGE>


ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.

OVERVIEW

         The following discussion should be read together with the Consolidated
Financial Statements and the related Notes thereto and other financial
information appearing elsewhere in this Form 10-K. All references herein to the
term "fiscal year" shall mean a year ended March 31 of the year specified.

         The Company commenced operations in 1980 as a provider of
telecommunications network transmission products that enable advanced
telecommunications services over copper telephone wires. Until fiscal 1994, the
Company derived substantially all of its revenues from its Telephone Company
Access Products (TAP) product lines, particularly the sale of Network Interface
Unit (NIU) products and related products. NIU products accounted for
approximately 16%, 21% and 20% of revenues in fiscal years 2001, 2002 and 2003,
respectively. The Company introduced its first DSL products in fiscal 1993 and
these products accounted for approximately 55%, 38% and 48% of revenues in
fiscal 2001, 2002 and 2003, respectively. NIU products and DSL products are the
two major products within the Company's telecom equipment business. Telecom
equipment constituted approximately 88%, 80% and 80% of revenues in fiscal 2001,
2002 and 2003, respectively. The Company has also provided audio
teleconferencing services since fiscal 1989, which constituted approximately
12%, 20% and 20% of revenues in fiscal 2001, 2002 and 2003, respectively.

         The Company has two reportable segments. These segments are strategic
business units that are managed separately because each business requires
different technologies and market strategies. They consist of:

1)   A telecommunications equipment manufacturer of local loop access products,
     which include Telephone Company Access Products (TAP) and Broadband
     products. TAP products are primarily Network Interface Unit (NIU) products
     and Broadband products are primarily DSL; and
2)   A multi-point telecommunications service bureau, operated through the
     Company's subsidiary Conference Plus, Inc. Conference Plus, Inc.
     specializes in audio teleconferencing, multi-point video conferencing,
     broadcast fax and multimedia teleconference services.

Below is a table that compares annual revenue from the company's two reportable
segments and the two main equipment product groups.

<TABLE>

                                      Fiscal        % of          Fiscal         % of          Fiscal         % of
                                        2001     revenue            2002      revenue            2003      revenue
                                -------------   ---------    ------------    ---------    ------------    ---------
<S>                                <C>               <C>       <C>                <C>       <C>                <C>
Broadband equipment............    $ 198,660         55%       $ 105,011          44%       $ 111,146          53%
TAP equipment..................      120,834         33%          86,291          36%          57,070          27%

                                -------------   ---------    ------------    ---------    ------------    ---------
   Total equipment segment.....      319,494         88%         191,302          80%         168,216          80%

   Services segment............       41,983         12%          48,521          20%          41,805          20%

                                -------------                ------------                 ------------
      Total revenue............    $ 361,477                   $ 239,823                    $ 210,021
                                =============                ============                 ============

</TABLE>


         The Company's operating results during fiscal years 2001, 2002 and 2003
were adversely effected by the downturn in general economic conditions and more
specifically, the downturn in the telecommunications industry. As a result of
the economic downturn, the Company has experienced competitive pricing pressures
and less than anticipated sales in both of its business segments. Telephone
companies have reduced spending on low speed TAP transmission products although
the Company believes that spending on broadband has been impacted to a lessor
extent by the economic downturn. The Company had excess inventory and less than
anticipated customer sales during fiscal 2002. The decline in product prices in
fiscal year 2002 due to the recession resulted in portions of the Company's
inventory to be stated above the estimated selling prices less cost to sell.
Accordingly, the Company recognized an inventory adjustment to net realizable
value, charges for excess and obsolete inventory, and the write off of fixed
assets of $14.5 million in fiscal year 2002. As a result of the economic
downturn, the Company initiated a realignment in the second quarter of fiscal
year 2002. Certain products, projects and a customer relationship were


                                      -27-
<PAGE>

discontinued. The Company incurred reorganization charges of $6.3 and $1.7
million in fiscal 2002 and 2003 respectively, in its efforts to realign the
Company's operating expenses with its revenues. To offset the effects of the
recession and the discontinued customer relationship, in fiscal 2003, the
Company has maintained a lower level of inventory, adjusted its forecasting
process to account for the impact of the recession and continued to reduce
costs. If the Company has not adjusted its operations to adequately take into
account the impact of the continued economic downturn or if the downturn
worsens, then the Company could experience less than anticipated unit sales and
increased inventory balances, which would adversely affect the Company's
business. In addition, in fiscal 2003, the Company's operating results were
negatively impacted by the loss of a significant customer in the Company's
services segment. Additional customer losses or the inability to add new
customers could negatively impact the Company's financial condition and
operating results.

         The Company's customer base is comprised primarily of the Regional Bell
Operating Companies (RBOCs), independent domestic local exchange carriers and
public telephone administrations located outside the U.S. Due to the stringent
quality specifications of its customers and the regulated environment in which
its customers operate, the Company must undergo lengthy approval and procurement
processes prior to selling its products. Accordingly, the Company must make
significant upfront investments in product and market development prior to
actual commencement of sales of new products. In addition, to remain
competitive, the Company must continue to invest in new product development and
invest in targeted sales and marketing efforts to cover new product lines. As a
result of the significant increases in research and development and sales and
marketing expenses related to new product and market development, the Company's
results of operations were adversely impacted in fiscal 2001 and 2002. Research
and development and sales and marketing expenses decreased in fiscal 2003 as the
Company focused its expenditures in these areas on targeted product areas but
the expenditures remained consistent as a percentage of revenue.

         The Company expects to continue to evaluate new product opportunities
and engage in extensive research and development activities. This will require
the Company to continue to invest in research and development and sales and
marketing, which could adversely affect short-term results of operations. In
view of the Company's reliance on the DSL market for revenues and the
unpredictability of orders and pricing pressures, the Company believes that
period to period comparisons of its financial results are not necessarily
meaningful and should not be relied upon as an indication of future performance.
Revenues from TAP products such as NIUs have declined in recent years as
telephone companies continue to move to networks that deliver higher speed
digital transmission services. Failure to increase revenues from new products,
whether due to lack of market acceptance, competition, technological change or
otherwise, would have a material adverse effect on the Company's business and
results of operations.

CRITICAL ACCOUNTING POLICIES

         The Company uses estimates and judgements in applying its accounting
policies which have a significant impact on the results reported in the
consolidated financial statements. The following are the Company's most critical
accounting policies.

         Accounts receivable
         The Company sells products primarily to various telecommunications
providers and distributors. Sales to these customers have varying degrees of
collection risk associated with them. Judgment is required in assessing the
realization of these receivables based on aging, historical experience and
customer's financial condition.

         Inventory reserves
         The Company reviews ending inventory for excess quantities and
obsolescence based on its best estimates of future demand, product lifecycle
status and product development plans. The Company also evaluates ending
inventory for lower of cost or market. Prices related to future inventory demand
are compared to current and committed inventory values.

         Inventory purchase commitments
         In the normal course of business, the Company enters into commitments
for the purchase of inventory. The commitments are at market rates and normally
do not extend beyond one year. Should there be a dramatic decline in revenues,
as there was in fiscal 2002, the Company may incur excess inventory and
subsequent losses as a result of these commitments. The Company has established
reserves for anticipated losses on such commitments.



                                      -28-
<PAGE>

         Goodwill and Intangibles
         Under new accounting rules, which became effective in fiscal 2003,
goodwill and other indefinite-lived intangibles are no longer amortized but
subject to annual impairment tests. The Company determined that it operated in
two reporting units for the purpose of completing the impairment test of
goodwill. These reporting units are telecom equipment and telecom services. The
Company utilizes the comparison of its market capitalization and third party
appraisal of its telecom services reporting unit to book value as an indicator
of potential impairment. The Company performed its annual impairment test in the
fourth quarter of fiscal 2003. These tests showed no impairment of goodwill. On
an ongoing basis, the Company reviews intangible assets and other long-lived
assets other than goodwill for impairment whenever events and circumstances
indicate that carrying amounts may not be recoverable. If such events or changes
in circumstances occur, the Company will recognize an impairment loss if the
undiscounted future cash flows expected to be generated by the asset are less
than the carrying value of the related asset. The impairment loss would adjust
the asset to its fair value.

RESULTS OF OPERATIONS

         The following table sets forth the percentage of revenues represented
by certain items in the Company's statements of operations for the periods
indicated:

<TABLE>

                                                           Fiscal Year Ended March 31,
                                                           ---------------------------

                                                            2001      2002       2003
                                                            ----      ----       ----

<S>                                                        <C>         <C>         <C>
Equipment .........................................        88.4%       79.8%       80.1%
Services ..........................................        11.6        20.2        19.9
                                                           ----        ----        ----
  Total revenues ..................................       100.0       100.0       100.0

Cost of equipment .................................        84.7        73.4        56.7
Cost of services ..................................         7.0        12.4        12.9
                                                           ----        ----        ----
  Total cost of goods sold ........................        91.7        85.8        69.6
                                                           ----        ----        ----

    Gross margin ..................................         8.3        14.2        30.4
                                                            ----        ----        ----

Operating expenses:
  Sales and marketing .............................         8.4         8.3         7.6
  Research and development ........................         9.2         9.4         7.8
  General and administrative ......................         6.7        10.0         8.3
  Goodwill and intangible amortization ............         8.8        10.6         0.7
  Goodwill and intangible impairment ..............         --         40.7         0.0
  Restructuring charge ............................         0.5         2.6         0.7
                                                           ----        ----        ----

     Total operating expenses .....................        33.6        81.6        25.3
                                                            ----        ----        ----

Operating income (loss) ...........................       (25.3)      (67.4)        4.9
Other income (expense), net .......................         0.0        (0.1)       (0.0)
Interest expense ..................................         0.6         2.3         1.3
                                                           ----        ----        ----

Income (loss) before income taxes .................       (25.9)      (69.8)        3.6
Income taxes ......................................        (0.0)       (0.0)        0.1
Cumulative effect of change in accounting principle        (0.1)       (0.0)       (0.0)
                                                           ----        ----        ----

Net income (loss) .................................       (26.0)%     (69.8)%       3.5%
                                                          =====       =====       =====

</TABLE>


                                      -29-
<PAGE>

FISCAL YEARS ENDED MARCH 31, 2001, 2002 AND 2003

         Revenues. Revenues were $361.5 million, $239.8 million and $210.0
million in fiscal 2001, 2002 and 2003, respectively. Revenues decreased 33.7%
and 12.4% in fiscal 2002 and 2003, respectively, from the preceding years. The
fiscal 2002 decrease of $121.6 million was primarily due to a $93.6 million
decrease in broadband revenue. Broadbank revenue was impacted by a $43.1 million
reduction in sales to an international customer. This reduction resulted from
technological advances that reduced the demand for the Company's product. TAP
revenue decreased $34.5 million due to reduced demand resulting as telephone
companies continue to transition to networks that deliver higher speed digital
transmission services as well as the economic downturn in the telecommunications
industry. The fiscal 2003 decrease of $29.8 million was primarily due to a $29.2
million decrease in TAP revenue due to reduced demand resulting from the
economic downturn in the telecommunications industry offset by a $6.1 million
increase in DSL revenue due primarily to higher unit volume. Service revenue
increased $6.5 million or 15.6% in fiscal 2002 compared to fiscal 2001 due to
increased audio conference calling volume. Service revenue decreased $6.7
million or 13.8% in fiscal 2003 compared to fiscal 2002 due to a reduction in
call minutes resulting from the economic downturn and the loss of one major
customer that resulted in a $6.3 million revenue reduction. This was offset in
part by an increase in teleconferencing minutes due to customers choosing to
hold meetings using teleconference services instead of traveling because of war,
health concerns around travelling to locations with outbreaks of communicable
diseases and terrorist threats.

         Gross Margin. Gross margin was $30.2 million, $34.0 million and $63.8
million and gross margin as a percentage of revenues was 8.3%, 14.2% and 30.4%
in fiscal 2001, 2002 and 2003, respectively. The fiscal 2001 gross margin was
negatively effected by an adjustment to record inventory at net realizable value
and charges for excess and obsolete inventory of $37.1 million. Of this charge,
$26.7 million related to inventory held during the year and $10.4 million
related to inventory purchase commitments in excess of anticipated requirements.
The fiscal 2002 gross margin was negatively effected by additional adjustments
to record inventory at net realizable value and charges for excess and obsolete
inventory of $13.9 million and positively impacted by a $1.2 million benefit
recorded related to resolution of a disputed expense with a supplier in the
Conference Plus Inc. subsidiary. The increase in gross margin as a percent of
revenue before inventory charges from the previous year was primarily the result
of improved product mix. The fiscal 2003 gross margin was positively effected by
$2.2 million as the Company was able to sell modem inventory which had been
reserved as excess and obsolete based on the estimated technological life of the
modems at March 31, 2002. The improved gross margin in fiscal 2003 was primarily
due to reduced material, labor, and handling costs, particularly in the
broadband product group. The Company believes continued pricing pressures
affecting its equipment segment could continue to adversely impact margins in
the future. The Company expects that any anticipated price reductions will be
offset in part with continued cost reductions and efficiencies.

         Sales and Marketing. Sales and marketing expenses were $30.3 million,
$19.9 million and $16.0 million in fiscal 2001, 2002 and 2003, respectively,
constituting 8.4%, 8.3% and 7.6% of revenues, respectively. In fiscal 2002,
sales and marketing expenses decreased by $10.4 million or 34.4% from the
previous year. This decrease was due primarily to cost reductions resulting from
management initiatives and the restructuring implemented in the fourth quarter
of fiscal 2001 and the second and fourth quarters of fiscal 2002. In fiscal
2003, sales and marketing expenses decreased by $3.9 million or 19.4% from the
previous year. The Company reduced warranty reserves by $874,000 in fiscal 2003
resulting from actual warranty costs being less than estimated at the end of
fiscal 2002. The remainder of the decrease was due primarily to the fiscal 2002
reorganizations, which reduced employee related expenses and outside consulting
expenses, and other cost-cutting measures that were taken as a result of the
economic downturn in the telecommunications industry. The Company believes that
sales and marketing expense in the future will continue to be a significant
percent of revenue and will be required to expand its product lines, bring new
products to market and service customers. The Company believes the reduced sales
and marketing spending in fiscal 2003 will not have an adverse effect on the
Company's future earnings.

         Research and Development. Research and development expenses were $33.3
million, $22.4 million and $16.5 million in fiscal 2001, 2002 and 2003,
respectively, constituting 9.2%, 9.4% and 7.8% of revenues, respectively. In
fiscal 2002, research and development decreased by $10.9 million or 32.7% from
the prior year. This decrease was primarily due to cost reductions resulting
from management initiatives and the restructuring implemented in the fourth
quarter of fiscal 2001 and the second and fourth quarters of fiscal 2002. In
addition, the company received $2.0 million from a customer to fund engineering
projects in fiscal 2002 compared to none in fiscal 2001. In fiscal 2003,
research and development decreased by $5.9 million or 26.3% from the prior year.
This



                                      -30-
<PAGE>

decrease was due primarily to the fiscal 2002 reorganizations, which reduced
employee related expenses and outside consulting expenses, and other
cost-cutting measures that were taken as a result of the economic downturn in
the telecommunications industry. There were no customer funded engineering
projects in fiscal 2003. The Company believes that research and development
expenses will be a significant percent of revenue and will be required for the
Company to remain competitive. The Company believes the reduced research and
development spending in fiscal 2003 will not have an adverse effect on the
Company's future earnings.

         General and Administrative. General and administrative expenses were
$24.3 million, $24.0 million and $17.5 million in fiscal 2001, 2002 and 2003,
respectively, constituting 6.7%, 10.0% and 8.3% of revenues, respectively.
General and administrative expenses remained constant at approximately $24
million in fiscal 2002 when compared to the previous fiscal year. In fiscal
2003, general and administrative expenses decrease by $6.5 million or 27.1% from
the prior year. The decrease in general and administrative expenses was
primarily due to the fiscal 2002 reorganizations, which were a result of the
economic downturn in the telecommunications industry. The Company believes that
the reduced general and administrative spending in fiscal 2003 will not have an
adverse effect on the Company's operations.

         Goodwill and intangible Amortization. Intangible assets include
goodwill, synergistic goodwill and product technology related to the March 17,
2000 acquisition of Teltrend Inc. for 20.2 million shares of class A common
shares valued at $213.6 million. Goodwill and intangible amortization expense
decreased from fiscal 2002 to fiscal 2003 due to adoption of the Statements of
Financial Accounting Standards (SFAS) 142 issued by the Financial Accounting
Standards Board (FASB). Under the new rules, goodwill and other indefinite lived
intangibles are no longer amortized but are subject to annual impairment tests.
The Company performed the first impairment test as of April 1, 2002 and its
annual impairment review during the fourth quarter of fiscal 2003 and no write
down was required.

         Goodwill and intangible impairment. After the fiscal 2002
reorganizations, and given the current and expected market conditions in the NIU
and low speed digital data products portion of the business acquired from
Teltrend, it became apparent that the goodwill acquired with the Teltrend
acquisition was impaired. In accordance with its policies, the Company completed
an evaluation of the fair value of the Teltrend long-lived assets (including
goodwill) during the quarters ended December 31, 2001 and March 31, 2002. The
Company reported non-cash charges of $90.5 million and $7.0 million,
respectively, to reduce the carrying value of recorded goodwill and intangibles
related to the Teltrend acquisition to their estimated fair value.

         Restructuring charge. The Company recognized restructuring costs of
$2.9 million in the three months ended March 31, 2000. Approximately $2.4
million of the total restructuring cost had been accrued in connection with the
purchase of Teltrend Inc. and related primarily to the termination of
approximately 30 Teltrend Inc. employees. The remaining $0.5 million of the
restructuring costs has been charged to operations and related to personnel,
legal, and other related costs incurred in order to eliminate redundant
employees due to the acquisition of Teltrend Inc. The goal of the restructuring
plan was to combine and streamline the operations of the two companies and to
achieve synergies related to the manufacture and distribution of common product
lines. As of March 31, 2003, $2.6 million of these restructuring costs had been
paid leaving a balance of approximately $0.3 million.

         The Company recognized a restructuring charge of $6.3 million in fiscal
year 2002. These charges included personnel, facility and certain development
contract costs. The purpose of the fiscal 2002 restructuring plan was to
decrease costs primarily by a workforce reduction of approximately 200 employees
and to realign the Company's cost structure with the Company's anticipated
business outlook. During fiscal year 2003, a portion of a leased facility
previously vacated was sublet resulting in a reversal of $0.9 million of
facility lease costs accrued in fiscal 2002. As of March 31, 2003, $4.4 million
of the fiscal 2002 restructuring costs had been paid leaving a balance of
approximately $1.0 million.

          The Company recognized a net restructuring expense of $1.7 million
consisting of a charge of $2.6 million offset by an $855,000 reversal in fiscal
year 2003. This charge included personnel and facility costs related primarily
to the closing of a Conference Plus, Inc. facility and personnel and facility
charges at Westell Limited. The reversal relates to a reduction in an accrual
for lease costs due to the sublet of a leased facility at Conference Plus, Inc.
in fiscal 2002. Approximately 25 employees were impacted by these
reorganizations. As of March 31, 2003, the Company paid approximately $0.9
million of these accrued restructuring costs leaving a balance of $1.6 million.



                                      -31-
<PAGE>

         A table which summarizes the restructuring charges and their
utilization can be found in Note 10 to the Consolidated Financial Statements of
the Company and is incorporated herein by reference.

         Other expense, net. Other expense, net was $222,000 and $9,000 for
fiscal years 2002 and 2003, respectively. Other expense, net for fiscal 2002 and
fiscal 2003 was primarily comprised of interest income earned on temporary cash
investments, the elimination of minority interest in Conference Plus, Inc. and
unrealized gains or losses on intercompany balances denominated in foreign
currency.

         Interest Expense. Interest expense was $2.2 million, $5.6 million and
$2.6 million for fiscal 2001, 2002 and 2003, respectively. The fiscal 2002
increase in interest expense was a result of increased usage of bank debt and
interest accrued on past due accounts payable, most of which was converted to a
vendor notes payable in June 2002. The fiscal 2003 decrease in interest expense
was a result of reducing bank and vendor debt.

         Income Taxes. No income tax was recorded in fiscal years 2001 or 2002.
An income tax charge of $372,000 was recorded in fiscal 2003 due to the results
on an Internal Revenue Service audit on Teltrend Inc. for pre-acquisition
periods. In fiscal 2001, 2002, and 2003 the Company was able to generate
$500,000, $846,000 and $170,000 respectively, in tax credits resulting primarily
from research and development activities. The Company has approximately $6.7
million in income tax credit carry forwards and a tax benefit of $66.1 million
related to a net operating loss carryforward that is available to offset future
taxable income. The tax credit carryforwards begin to expire in 2008 and the net
operating loss carryforward begins to expire in 2012. The Company recorded
valuation allowances of $27.7 million in fiscal 2001 and $21.4 million in fiscal
2002 which represents the amount that the deferred tax benefit exceeded the
value of the tax planning strategy available to the Company. In fiscal 2003, the
Company's deferred tax assets decreased primarily due to the reduction of
inventory reserves. As such, the Company utilized $11.5 million of recorded
valuation reserves as less valuation reserves were required to record the
deferred tax assets at an amount realizable by the company's tax planning
strategy.



                                      -32-
<PAGE>


QUARTERLY RESULTS OF OPERATIONS

         The following tables present the Company's results of operations for
each of the last eight fiscal quarters and the percentage relationship of
certain items to revenues for the respective periods. The Company believes that
the information regarding each of these quarters is prepared on the same basis
as the audited Consolidated Financial Statements of the Company appearing
elsewhere in this Form 10-K. In the opinion of management, all necessary
adjustments (consisting only of normal recurring adjustments) have been included
to present fairly the unaudited quarterly results when read in conjunction with
the audited Consolidated Financial Statements of the Company and the Notes
thereto appearing elsewhere in this Form 10-K. These quarterly results of
operations are not necessarily indicative of the results for any future period.

<TABLE>

                                                                 Quarter Ended
                             -----------------------------------------------------------------------------------
                                               Fiscal 2002                           Fiscal 2003
                             -----------------------------------------------------------------------------------

                             June 30,  Sept. 30,   Dec. 31,  Mar. 31,   June 30,  Sept. 30,   Dec. 31,  Mar. 31,
                               2001       2001       2001      2002       2002       2002       2002      2003
                               ----       ----       ----      ----       ----       ----       ----      ----
                                                                   (in thousands)
<S>                          <C>       <C>        <C>        <C>        <C>        <C>       <C>        <C>
Equipment .................  $50,207   $46,319    $55,207    $39,569    $39,030    $46,235   $39,121    $43,830
Services...................   13,091    13,102     11,805     10,523     10,775      9,936    10,082     11,012
                             -------   -------    -------    -------    -------    -------   -------    -------
   Total revenues..........   63,298    59,421     67,012     50,092     49,805     56,171    49,203     54,842

Cost of equipment..........   43,105    40,637     47,971     44,449     28,956     32,717    28,181     29,295
Cost of services...........    7,875     8,579      5,655      7,522      6,838      6,984     6,577      6,713
                              -------   -------    -------    -------    -------    -------   -------    -------
  Total cost of goods sold    50,980    49,216     53,626     51,971     35,794     39,701    34,758     36,008
                             -------   -------    -------    -------    -------    -------   -------    -------
     Gross margin..........   12,318    10,205     13,386     (1,879)    14,011     16,470    14,445     18,834
                             -------   -------    -------    -------    -------    -------   -------    -------

Operating expenses:
  Sales and marketing......    5,915     4,806      4,740      4,422      4,333      4,615     3,535      3,534
  Research and
    development............    7,990     5,935      3,543      4,976      3,446      4,178     4,097      4,762
  General and
    administrative.........    5,680     6,207      5,555      6,586      4,651      4,126     3,486      5,250
  Goodwill and intangible
    amortization...........    7,953     7,953      7,953      1,701        389        389       389        599
  Goodwill impairment......      --        --      90,500      7,000         --         --       --         --
  Restructuring charge.....      --      2,200        --       4,058         --      1,742       180       (244)
    Total operating
      expenses.............   27,538    27,101    112,291     28,743     12,819     15,050    11,687     13,901
                             -------   -------    -------    -------    -------    -------   -------    -------
Operating income (loss) ...  (15,220)  (16,896)   (98,905)   (30,622)     1,192      1,420     2,758      4,933
                             -------   -------    -------    -------    -------    -------   -------    -------

Other income (expense), net     (257)      (16)      (259)       310         50         61        17       (137)
Interest expense...........    1,359     1,208      1,650      1,347        783        685       517        663
                              -------   -------    -------    -------    -------    -------   -------    -------

Income (loss) before
  income taxes.............  (16,836)  (18,120)  (100,814)   (31,659)       459        796     2,258      4,133

Income taxes...............      --       --        --           --          --         --        --        372
Net income (loss)..........$ (16,836) $(18,120) $(100,814)  $(31,659)     $ 459       $796   $ 2,258    $ 3,761
                             =======   =======    =======    =======    =======    =======   =======    =======

Net income (loss) per common share:
   Basic...................   $(0.27)   $(0.28)    $(1.55)    $(0.49)     $0.01      $0.02     $0.03      $0.06
   Diluted.................   $(0.27)   $(0.28)    $(1.55)    $(0.49)     $0.01      $0.02     $0.03      $0.06




                                      -33-
<PAGE>


                                                                 Quarter Ended
                             -----------------------------------------------------------------------------------
                                               Fiscal 2002                             Fiscal 2003
                             -----------------------------------------------------------------------------------
                              June 30, Sept. 30,   Dec. 31,   Mar. 31,   June 30,  Sept. 30,  Dec. 31,   Mar. 31,
                               2001      2001       2001      2002        2002       2002      2002       2003
                               ----      ----       ----      ----        ----       ----      ----       ----

Equipment....................   79.3%     78.0%      82.4%      79.0%      78.4%      82.3%     79.5%      79.9%
Service....................     20.7      22.0       17.6       21.0       21.6       17.7      20.5       20.1
                             -------   -------    -------    -------    -------    -------   -------    -------
  Total revenues...........    100.0     100.0      100.0      100.0      100.0      100.0     100.0      100.0

Cost of equipment sales....     68.1      68.4       71.6       88.7       58.1       58.2      57.3       53.4
Cost of services...........     12.4      14.4        8.4       15.0       13.7       12.4      13.3       12.3
                             -------   -------    -------    -------    -------    -------   -------    -------
Total cost of goods sold...     80.5      82.8       80.0      103.7       71.9       70.7      70.6       65.7
                             -------   -------    -------    -------    -------    -------   -------    -------
  Gross margin.............     19.5      17.2       20.0      (3.7)       28.1       29.3      29.4       34.3
                             -------   -------    -------    -------    -------    -------   -------    -------

Operating expenses:
  Sales and marketing......      9.4       8.1        7.1        8.8        8.7        8.2       7.2        6.4
  Research and
    development............     12.6      10.0        5.3        9.9        6.9        7.4       8.3        8.7
  General and
    administrative.........      9.0      10.5        8.3       13.2        9.3        7.3       7.1        9.6
  Goodwill and intangible
    amortization...........     12.6      13.4       11.9        3.4        0.8        0.7       0.8        1.1
  Goodwill impairment......      0.0       0.0      135.0       14.0        0.0        0.0       0.0        0.0
  Restructuring charge.....      0.0       3.7        0.0        8.1        0.0        3.1       0.4       (0.4)
                             -------   -------    -------    -------    -------    -------   -------    -------

    Total operating
      expenses.............     43.6      45.7      167.6       57.4       25.7       26.8      23.8       25.3
                             -------   -------    -------    -------    -------    -------   -------    -------

Operating income (loss)....    (24.1)    (28.5)    (147.6)     (61.1)       2.4        2.5       5.6        9.0
                             -------   -------    -------    -------    -------    -------   -------    -------
Other income (expense), net     (0.4)     (0.0)      (0.4)       0.6        0.1        0.1       0.0       (0.2)
Interest expense...........      2.1       2.0        2.4        2.7        1.6        1.2       1.0        1.2
                             -------   -------    -------    -------    -------    -------   -------    -------

Income (loss) before
  income taxes.............    (26.6)    (30.5)    (150.4)     (63.2)       0.9        1.4       4.6        7.6

Income taxes...............     (0.0)     (0.0)      (0.0)      (0.0)       0.0        0.0       0.0        0.7
Net income (loss)............  (26.6)%   (30.5)%   (150.4)%    (63.2)%      0.9%       1.4%      4.6%       6.9%
                             =======   =======    =======    =======    =======    =======   =======    =======

</TABLE>


                                      -34-
<PAGE>


         The Company's quarterly equipment revenues have varied from quarter to
quarter due primarily to quarterly fluctuations in Broadband revenues and
continued reduction in TAP revenues. Quarterly broadband revenues increased
during fiscal 2002 and fiscal 2003 due to increased unit sales of DSL products.
TAP revenues decreased during the fiscal 2002 and 2003 quarters due to reduced
unit sales. Conference Plus service revenues experienced steady growth through
the first two quarters of fiscal 2002 due primarily to increased audio
conference calling traffic volume. Service revenues decreased in the final two
quarters of fiscal 2002 and the first two quarters of fiscal 2003 due to the
slowing economy and the loss of one large customer. Service revenue increased in
the final two quarters of fiscal 2003 due to increased call minutes. The
increase in teleconferencing minutes was due in part to customers choosing to
hold meetings using teleconference services instead of traveling because of war,
health concerns around travelling to locations with outbreaks of communicable
diseases and terrorist threats.

         Gross margin as a percentage of revenue has also varied from quarter to
quarter. The low margins in the fiscal 2002 quarters are primarily a result of
the increased volume in DSL products that have lower percent margins. Due to
anticipated slow demand in certain products in the fourth quarter of fiscal
2002, the Company recognized an inventory adjustment to market value and excess
inventory charge of $13.9 million. The September 30, 2002 gross margin was
positively effected by $2.2 million as the Company was able to sell modem
inventory which had been reserved as excess and obsolete based on the estimated
technological life of the modems at March 31, 2002. The improved gross margin in
fiscal 2003 was primarily due to reduced material, labor, and handling costs,
particularly in the broadband product group. The Company believes continued
pricing pressures affecting its equipment segment will continue to adversely
impact margins in the future. The Company expects that these anticipated price
reductions will be offset in part with continued cost reductions and
efficiencies.

         Operating expenses decreased in the fiscal 2003 quarters compared to
fiscal 2002 primarily due to the restructuring the Company has implemented in
response to the slowing economy and lack of general demand in the Telecom
industry. As a percentage of revenue, operating expenses increased in the last
three quarters of fiscal 2002 due to goodwill impairment and restructuring
charges taken during the quarters. During fiscal 2003, quarterly operating
expenses remained relatively flat except for the fourth quarter, which was
impacted by the Company recording a $1.7 million bonus for selected employees
and profit sharing contribution expense for all employees offset by a $782,000
reduction in warranty reserves in its equipment segment.

         The Company expects to continue to experience significant fluctuations
in quarterly results of operations. The Company believes that fluctuations in
quarterly results may cause the market price of the Class A Common Stock to
fluctuate, perhaps substantially. Factors which have had an influence on and may
continue to influence the Company's results of operations in a particular
quarter include the size and timing of customer orders and subsequent shipments,
customer order deferrals in anticipation of new products, timing of product
introductions or enhancements by the Company or its competitors, market
acceptance of new products, technological changes in the telecommunications
industry, competitive pricing pressures, accuracy of customer forecasts of
end-user demand, write-offs for obsolete inventory, changes in the Company's
operating expenses, personnel changes, foreign currency fluctuations, changes in
the mix of products sold, quality control of products sold, disruption in
sources of supply, regulatory changes, capital spending, delays of payments by
customers, working capital deficits and general economic conditions. Sales to
the Company's customers typically involve long approval and procurement cycles
and can involve large purchase commitments. Accordingly, cancellation or
deferral of one or a small number of orders could cause significant fluctuations
in the Company's quarterly results of operations. As a result, the Company
believes that period-to-period comparisons of its results of operations are not
necessarily meaningful and should not be relied upon as indications of future
performance.

         Because the Company generally ships products within a short period
after receipt of an order, the Company typically does not have a material
backlog of unfilled orders, and revenues in any quarter are substantially
dependent on orders booked in that quarter. The Company's expense levels are
based in large part on anticipated future revenues and are relatively fixed in
the short-term. Therefore, the Company 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 the Company's expectations or
any material delay of customer orders would have an almost immediate adverse
impact on the Company's business and results of operations and profitability.


                                      -35-
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

         At March 31, 2003, the Company had $11.5 million in cash and cash
equivalents consisting primarily of federal government agency instruments and
the highest rated grade corporate commercial paper. At March 31, 2003, the
Company had $5.0 million outstanding under its term loan and $15.0 million
outstanding and $8.1 million available under its secured revolving credit
facility. The $5 million term loan and the credit facility are shown as notes
payable and long term debt respectively on the balance sheet.

         At March 31, 2002, the Company had a revolving credit facility that
provided for maximum borrowings of up to $35 million. This asset based revolving
credit facility provided for total borrowings based upon 85% of eligible
accounts receivable and 30% of eligible inventory not to exceed $8.3 million.
The facility was guaranteed by trusts for the benefit of Robert C. Penny III and
other family members and was supported by their brokerage account totaling
approximately $10 million. On June 28, 2002 the Company amended the revolving
credit facility. The amendment provided for a $5 million non-amortizing term
loan and a $30 million asset based revolving credit facility, both due June 30,
2003. The amended asset based revolving credit facility provided for total
borrowings based upon 85% of eligible accounts receivable and 30% of eligible
inventory not to exceed $6.4 million as of March 31, 2003. The $6.4 million
inventory limitation is reduced by $0.1 million on the first day of each month.
Borrowings under this facility provide for the interest to be paid by the
Company at the prime rate plus 1%. The term loan was secured by, among other
things, a security interest in certain collateral granted by certain
stockholders consisting of trusts of Robert C. Penny III and other family
members. Trusts of Robert C. Penny III and other Penny family members were
participants to the amended revolving credit facility. The amended credit
facility requires the revolving loan to be paid in full before any payments are
applied to the term loan. This credit facility contains covenants regarding
EBITDA, tangible net worth and maximum capital expenditures. The Company was in
compliance with the covenants contained in the credit facility at March 31,
2003.

         On June 26, 2003, the Company amended the revolving credit facility to
remove the $5 million non-amortizing term loan as well as the security interest
granted by certain stockholders. The term on the credit facility was extended to
June 30, 2006. Borrowings under this facility provide for the interest to be
paid by the Company at the prime rate or Libor rate plus 2.5%. The Company paid
a $300,000 restructuring fee to the lenders in connection with this amendment to
the credit facility. Management expects to be in compliance with the covenants
for the term of the debt. Amounts available under the revolving credit facility
at June 26, 2003 was $14.5 million. Due to this amendment, the Company has
classified the entire revolving credit facility as non-current in the March 31,
2003 balance sheet.

         On May 30, 2002, the Company signed two subordinated promissory notes
with Solectron Technology SDN BHD. One note in the amount of $5.0 million is for
the payment of inventory held by Solectron that the Company was committed to
buy. The second note in the amount of $16.6 million is for the payment of
accounts payable and accrued interest. Both notes require a weekly principal and
monthly interest payment and are payable over 2.3 years. A third subordinated
secured promissory note in the amount of $1.3 million made by the Company and
payable to Solectron Technology SDN BHD was entered into on June 3, 2002 and is
payable monthly over one year. This note was part of the settlement of
litigation with Celsian Technologies, Inc. All three notes bear interest at the
prime rate plus 2.5%. $22.9 million and $12.4 million were outstanding under
these notes as of May 30, 2002 and 2003 respectively.

         In connection with the Company's management changes implemented at its
subsidiary Conference Plus, Inc., in fiscal 2003, the Company purchased 3.2% of
the outstanding shares of common stock of Conference Plus, Inc. from former
officers of Conference Plus, Inc. for approximately $1.6 million. The purchase
price was based upon the minority interest value set forth in the annual
appraisal of Conference Plus, Inc. obtained by the Company that is completed by
an independent financial advisor. As of March 31, 2003, the Company had paid
$459,000 in cash for these shares with the remainder to be paid over a one to
three year term.

         At March 31, 2003 the Company had various operating leases for
facilities and equipment. The total minimum future rental payments are $4.6
million, $3.7 million, $3.5 million, $3.4 million, $3.4 million and $22.6
million for fiscal years 2004, 2005, 2006, 2007, 2008 and thereafter,
respectively.


                                      -36-
<PAGE>

         The Company's operating activities used cash of $38.6 million and $13.3
million in fiscal 2001 and 2002, respectively and generated cash of $22.7 in
fiscal 2003. Cash used by operations in fiscal 2001 resulted primarily from net
loss and increases in inventory in the equipment segment offset in part by net
income in the services segment, non-cash depreciation and amortization and
increased accounts payable in both segments. The increased inventory and
accounts payable were a result of the actual product demand being less than
anticipated demand. Cash used by operations in fiscal 2002 resulted primarily
from net loss and reductions in accounts payable in the equipment segment offset
in part by net income in the services segment, non-cash depreciation and
amortization and decreased inventory in the equipment segment. The decrease of
inventory resulted from using inventory in fiscal 2002 that was on hand at the
end of fiscal 2001. The decrease in accounts payable resulted from converting
accounts payable to vendor debt in the equipment segment. Cash generated by
operations in fiscal 2003 resulted primarily from net income, non-cash
depreciation and amortization in both segments and reductions in inventory
offset in part by reductions in accounts payable in the equipment segment. The
inventory reductions were achieved by selling products throughout the year that
were in inventory at March 31, 2002. The Company believes that its current
inventory level is necessary to satisfy ongoing business operations .

         Capital expenditures in fiscal 2001, 2002 and 2003 were $22.2 million,
$9.2 million and $3.4 million, respectively. The equipment segment capital
expenditures in fiscal 2001, 2002, and 2003 were $15.8 million, $2.3 million and
$1.9 million, respectively. Of the $15.8 million spent in fiscal 2001, $6.5 was
for computer hardware and software to increase the Enterprise Resource Planning
(ERP) system infrastructure required by the increased number of employees due to
the Teltrend acquisition and to fund e-commerce projects. The remainder was
spent on leasehold improvements and machinery and equipment. The 2002 and 2003
capital expenditures in the equipment segment were primarily for machinery and
research and development equipment purchases. The services segment capital
expenditures in fiscal 2001, 2002 and 2003 were $6.4 million, $6.9 million and
$1.5 million, respectively. These expenditures were primarily for teleconference
bridge equipment.

         At March 31, 2003, the Company's principle sources of liquidity were
$11.5 million of cash and the secured revolving credit facility under which the
Company was eligible to borrow up to an additional $8.1 million based upon
receivables and inventory levels. Cash in excess of operating requirements, if
any, will be used to pay down debt or invested on a short-term basis in federal
government agency instruments and the highest rated grade commercial paper. The
Company believes that future cash requirements will be satisfied by cash
generated from operations and its current credit facility for the next twelve
months.

         In June 2002, the Company retained Robert W. Baird & Company to act as
an advisor on a possible divestiture of the Company's services subsidiary,
Conference Plus, Inc. At this time, the Company is not actively pursuing any
divestiture transactions but may do so in the future if adequate consideration
can be obtained and if the Company has use for the proceeds.

Future obligations and commitments consisted of the following:

<TABLE>

                                                                Payments due by year
                                  ----------------------------------------------------------------------------------
(in thousands)                      Total        2004        2005       2006        2007       2008     Thereafter
--------------------------------  -----------  ----------  ---------  ----------  ---------  ---------  ------------
<S>                                  <C>         <C>         <C>        <C>       <C>            <C>           <C>
Debt...........................      $34,817     $17,057     $2,478     $15,282   $     --       $ --          $ -
Future minimum lease payments
   for operating leases........
                                      41,185       4,558      3,737       3,511      3,350      3,390        22,639
                                  ----------------------------------------------------------------------------------
Future obligations and
   commitments.................      $76,002     $21,615     $6,215     $18,793     $3,350     $3,390       $22,639

</TABLE>

         In the normal course of business operations, the Company also has
purchase commitments related to certain raw materials in the equipment segment
and local and long distance telephone service commitments in the service segment
that are not included in the table above.


         The Company had a deferred tax asset of approximately $81.5 million at
March 31, 2003. The Company has recorded a valuation allowance reserve of $56.1
million to reduce the recorded deferred tax asset to $25.2 million. The net
operating loss carryforward begins to expire in 2012. Realization of deferred
tax assets associated with the Company's future deductible temporary
differences, net operating loss carryforwards and tax credit


                                      -37-
<PAGE>

carryforwards is dependent upon generating sufficient taxable income prior to
their expiration. Although realization of the deferred tax asset is not assured
as the Company has incurred tax operating losses for the 2001, 2002 and 2003
fiscal years, management believes that it is more likely than not that it will
generate taxable income sufficient to realize a portion of the tax benefit.
Portions of these deferred tax assets are expected to be utilized, prior to
their expiration, through a tax planning strategy available to the Company. The
tax planning strategy upon which the Company is relying involves the potential
sale of the Company's 91.5% owned Conference Plus Inc. subsidiary that the
Company might pursue depending upon its strategic plans and cash needs. The
estimated gain generated by the sales of this business would generate sufficient
taxable income to offset the recorded deferred tax assets. The Company obtained
an independent appraisal of the value of the business in the fourth quarter of
fiscal year 2003. This appraisal, which is based on discounted future cash
flows, was used in the Company's evaluation of the recorded net deferred tax
assets and it was determined that the tax planning strategy was sufficient to
support the realization of the recorded deferred income tax assets. On a
quarterly basis, management will assess whether it remains more likely than not
that the net deferred tax asset will be realized. If the appraised value of
Conference Plus Inc. is not sufficient to generate taxable income to recover the
deferred tax benefit recorded, an increase in the valuation allowance will be
required through a charge to the income tax provision. However, if the Company
achieves sufficient profitability or has available additional tax planning
strategies to utilize a greater portion of the deferred tax asset, a reduction
in the valuation allowance will be recorded.



                                      -38-
<PAGE>


ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

         Westell is subject to certain market risks, including foreign currency
and interest rates. The Company has foreign subsidiaries in the United Kingdom
and Ireland that develop and sell products and services in those respective
countries. The Company is exposed to potential gains and losses from foreign
currency fluctuations affecting net investments and earnings denominated in
foreign currencies. The Company's future primary exposure is to changes in
exchange rates for the U.S. dollar versus the British pound and the Irish pound.

         As of March 31, 2003, the balance in the cumulative foreign currency
translation adjustment account, which is a component of stockholders' equity,
was an unrealized loss of $168,000.

         The Company does not have significant exposure to interest rate risk
related to its debt obligations, which are primarily U.S. Dollar denominated.
The Company's market risk is the potential loss arising from adverse changes in
interest rates. As further described in Note 2 to the Consolidated Financial
Statements included herein at Part II, Item 8 of this Annual Report, the
Company's debt consists primarily of a floating-rate bank line-of credit and
subordinated term notes. Market risk is estimated as the potential decrease in
pretax earnings resulting from a hypothetical increase in interest rates of 10%
(i.e. from approximately 6.3% to approximately 6.9%) average interest rate on
the Company's debt. If such an increase occurred, the Company would incur
approximately $240,000 per annum in additional interest expense based on the
average debt borrowed during the twelve months ended March 31, 2003. The Company
does not feel such additional expense is significant.

         The Company does not currently use any derivative financial instruments
relating to the risk associated with changes in interest rates.

ITEM 8     FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         The Company's Consolidated Financial Statements required by Item 8,
together with the reports thereon of the independent auditors set forth on pages
46-71 of this report. The Consolidated Financial Statement schedule listed under
Item 15(a)2, is set forth on page 71 of this report and should be read in
conjunction with the financial statements.

ITEM 9.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
           FINANCIAL DISCLOSURE.

         On February 23, 2001, the Company filed a Form 8-K relating to the
change in the Company's certifying accountants to Ernst & Young LLP

                                    PART III

ITEM 10.   DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

(a)      Directors of the Company

         The information required by this Item is set forth in registrant's
         Proxy Statement for the Annual Meeting of Stockholders to be held in
         September 2003 under the caption "Election of Directors," which
         information is incorporated herein by reference.

(b) Executive officers of the Company

         The information required by this Item is set forth in registrant's
         Proxy Statement for the Annual Meeting of Stockholders to be held in
         September 2003 under the caption "Executive Officers," which
         information is incorporated herein by reference.


                                      -39-
<PAGE>


ITEM 11.  EXECUTIVE COMPENSATION

         The information required by this Item is set forth in registrant's
         Proxy Statement for the Annual Meeting of Stockholders to be held in
         September 2003 under the caption "Compensation of Directors and
         Executive Officers," and "Report of the Compensation Committee of the
         Board of Directors," which information is incorporated herein by
         reference.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
          RELATED STOCKHOLDER MATTERS

         The information required by this Item is set forth in registrant's
         Proxy Statement for the Annual Meeting of Stockholders to be held in
         September 2003 under the caption "Ownership of the Capital Stock of the
         Company," which information is incorporated herein by reference. The
         "Equity Compensation Plan Information" required by Item 201(d) of Form
         10-K is set forth in Item 5 of this Form 10-K.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         The information required by this Item is set forth in registrant's
         Proxy Statement for the Annual Meeting of Stockholders to be held in
         September 2003 under the caption "Certain Relationships and Related
         Transactions," which information is incorporated herein by reference.

ITEM 14.  CONTROLS AND PROCEDURES

         (a)  Evaluation of Disclosure Controls and Procedures

         The Company's Chief Executive Officer and Chief Financial Officer have
         reviewed and evaluated the effectiveness of the Company's disclosure
         controls and procedures as defined in the Securities Exchange Act of
         1934 Rules 13a-14(c) and 15d-14(c) as of a date within 90 days of the
         filing date of this annual report on Form 10-K (the "Evaluation Date").
         Based on their review and evaluation, the Chief Executive Officer and
         Chief Financial Officer have concluded that, as of the Evaluation Date,
         the Company's disclosure controls and procedures were adequate and
         effective to ensure that material information relating to the Company
         and its consolidated subsidiaries would be made known to them by others
         within those entities in a timely manner, particularly during the
         period in which this annual report on Form 10-K was being prepared, and
         that no changes are required at this time.

         (b)  Changes in Internal Controls

         There were no significant changes in the Company's internal controls or
         in other factors that could significantly affect the Company's internal
         controls subsequent to the Evaluation Date, or any significant
         deficiencies or material weaknesses in such internal controls requiring
         corrective actions. As a result, no corrective actions were taken.

                                     PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

         (a)      (1)      Financial Statements
                           --------------------

                           The consolidated financial statements of Westell
                           Technologies, Inc. at March 31, 2003 and 2002 and for
                           each of the three fiscal years in the period ended
                           March 31, 2003, together with the Report of
                           Independent Auditors, are set forth on pages 46
                           through 71 of this Report.

                           The supplemental financial information listed and
                           appearing hereafter should be read in conjunction
                           with the consolidated financial statements included
                           in the report.

                  (2)      Financial Statement Schedule
                           ----------------------------

                           The following are included in Part IV of this Report
                           for each of the years ended March 31, 2001, 2002 and
                           2003 as applicable:

                           Schedule II - Valuation and Qualifying Accounts -
                           page 71



                                      -40-
<PAGE>

                           Financial statement schedules not included in this
                           report have been omitted either because they are not
                           applicable or because the required information is
                           shown in the consolidated financial statements or
                           notes thereto, included in this report.

                  (3)      Exhibits
                           --------

                           3.1      Amended and Restated Certificate of
                                    Incorporation, as amended (incorporated
                                    herein by reference to Exhibit 3.12 to the
                                    Company's Quarterly Report on Form 10-Q for
                                    the quarter ended December 31, 2001).
                           3.2      Amended and Restated By-laws laws
                                    (incorporated by reference to Exhibit 3.1 to
                                    the Company's Annual Report on Form 10-K for
                                    the year ended March 31, 2001).
                           4.1      Form of Stock Purchase Warrant dated April
                                    15, 1999 by and among Westell Technologies,
                                    Inc., Castle Creek Technology Partners LLC
                                    (409,091 shares), Marshall Capital
                                    Management, Inc. (272,727 shares), and
                                    Capital Ventures International (227,273
                                    shares) (incorporated herein by reference to
                                    Westell Technologies, Inc.'s Report on Form
                                    8-K dated April 20, 1999).
                           4.2      Amended and Restated Certificate of
                                    Incorporation, as amended (See exhibit 3.1).
                           4.3      Amended and Restated By-laws (see Exhibit
                                    3.2).
                           4.4      Form of Warrant granted to certain Penny
                                    family trusts on June 29, 2001 (incorporated
                                    herein be reference to Exhibit 10.21
                                    to the Company's Annual Report on Form 10-K
                                    for the year ended March 31, 2001).
                           9.1      Voting Trust Agreement dated February 23,
                                    1994, as amended (incorporated herein by
                                    reference to Exhibit 9.1 to Westell
                                    Technologies, Inc.'s Registration Statement
                                    on Form S-1, as amended, Registration No.
                                    33-98024).
                           10.1     Intentionally omitted.
                           10.2     Stock Transfer Restriction Agreement entered
                                    into by members of the Penny family, as
                                    amended, (incorporated herein by reference
                                    to Exhibits 10.4 and 10.16 to Westell
                                    Technologies, Inc.'s Registration Statement
                                    on Form S-1, as amended, Registration No.
                                    33-98024).
                           10.3     Form of Registration Rights Agreement among
                                    the Company and Robert C. Penny III and
                                    Melvin J. Simon, as trustees of the Voting
                                    Trust dated February 23, 1994 (incorporated
                                    herein by reference to Exhibit 10.5 to
                                    Westell Technologies, Inc.'s Registration
                                    Statement on Form S-1, as amended,
                                    Registration No. 33-98024).
                           *10.4    1995 Stock Incentive Plan (incorporated
                                    herein by reference to Exhibit 10.6 to
                                    Westell Technologies, Inc.'s Registration
                                    Statement on Form S-1, as amended,
                                    Registration No. 33-98024).
                           *10.5    Employee Stock Purchase Plan (incorporated
                                    herein by reference to Exhibit 10.7 to
                                    Westell Technologies, Inc.'s Registration
                                    Statement on Form S-1, as amended,
                                    Registration No. 33-98024).
                           *10.6    Teltrend Inc. 1995 Stock Option Plan
                                    (incorporated by reference to the Teltrend,
                                    Inc.'s Registration Statement on Form S-1,
                                    as amended (Registration No. 33-91104),
                                    originally filed with the Securities and
                                    Exchange Commission April 11, 1995)
                           *10.7    Teltrend Inc. 1996 Stock Option Plan
                                    (incorporated by reference to the Teltrend
                                    Inc.'s Quarterly Report on Form 10-Q for the
                                    quarterly period ended April 26, 1997).
                           *10.8    Teltrend Inc. 1997 Non-Employee Director
                                    Stock Option Plan (incorporated by reference
                                    to the Teltrend Inc.'s Definitive Proxy
                                    Statement for the Annual Meeting of
                                    Stockholders held on December 11, 1997).
                           *10.9    Form of Deferred Compensation Arrangement
                                    between  Westell Technologies, Inc. and E.
                                    Van Cullens.
                           *10.10   Severance Agreement between Conference Plus,
                                    Inc. and Tim Reedy.


                                      -41-
<PAGE>

                           10.11    Lease dated September 25, 1995 between
                                    Westell-Meridian LLC and Westell, Inc.
                                    (incorporated herein by reference to Exhibit
                                    10.11 to Westell Technologies, Inc.'s
                                    Registration Statement on Form S-1, as
                                    amended, Registration No. 33-98024)
                           10.12    Amended and Restated Loan and Security
                                    Agreement dated August 31, 2000 among
                                    LaSalle National Bank, Harris Bank National
                                    Association, Westell Technologies, Inc.,
                                    Westell, Inc., Westell International, Inc.,
                                    Conference Plus, Inc. and Teltrend, Inc.
                                    (incorporated by reference to the like
                                    numbered exhibit to Company's Annual Report
                                    on Form 10-K for the year ended March 31,
                                    2001).
                           10.14    Intentionally omitted.
                           10.15    Revolving Note dated as of June 29, 2001
                                    payable to LaSalle National Bank and made by
                                    Westell Technologies, Inc., Westell, Inc.,
                                    Westell International, Inc., Conference
                                    Plus, Inc. and Teltrend, Inc. (incorporated
                                    by reference to the like numbered exhibit to
                                    Company's Annual Report on Form 10-K for the
                                    year ended March 31, 2001).
                           10.16    Amended and Restated Loan and Security
                                    Agreement dated June 29, 2001 among LaSalle
                                    National Bank, Westell Technologies, Inc.,
                                    Westell, Inc., Westell International, Inc.,
                                    Conference Plus, Inc. and Teltrend, Inc.
                                    (incorporated by reference to the like
                                    numbered exhibit to Company's Annual Report
                                    on Form 10-K for the year ended March 31,
                                    2001).
                           10.17    Lease for Three National Plaza at Woodfield
                                    dated December 24, 1991 by and between the
                                    First National Bank of Boston, as Trustee
                                    pursuant to that certain Pooling and
                                    Security Agreement dated April 1, 1988, and
                                    Conference Plus, Inc., as amended and
                                    modified. (incorporated herein by reference
                                    to Exhibit 10.17 to the Company's Form 10-K
                                    for fiscal year ended March 31, 1996).
                           10.18    Lease dated December 10, 1993 between
                                    LaSalle National Trust, N.A., as Trustee
                                    under Trust Agreement dated August 1, 1979,
                                    known as Trust No. 101293, and Westell
                                    Incorporated, as amended and modified
                                    (incorporated herein by reference to the
                                    exhibit of equal number to the Company's
                                    Form 10-K for fiscal year ended March 31,
                                    1996).
                           10.19    Amendment to Amended and Restated Loan and
                                    Security Agreement dated February 15, 2001
                                    among LaSalle National Bank, Harris Trust
                                    and Savings Bank, Westell Technologies,
                                    Inc., Westell, Inc., Westell International,
                                    Inc., Conference Plus, Inc., and Teltrend,
                                    Inc. (incorporated by reference to Exhibit
                                    10.1 to the Company's Form 10-Q for the
                                    period ended December 31, 2000).
                           10.20    Amendment to Amended and Restated Loan and
                                    Security Agreement dated April 13, 2001
                                    among LaSalle National Bank, Harris Trust
                                    and Savings Bank, Westell Technologies,
                                    Inc., Westell, Inc., Westell International,
                                    Inc., Conference Plus, Inc., and Teltrend,
                                    Inc. (incorporated by reference to Exhibit
                                    10.18 to the Company's Report on Form 8-K
                                    filed on April 17, 2001).
                           10.21    Sixth Amendment to the Amended and Restated
                                    Loan and Security Agreement dated as of June
                                    29, 2001 among LaSalle National Bank, Harris
                                    Trust and Savings Bank, the Company,
                                    Westell, Inc., Westell International, Inc.,
                                    Conference Plus, Inc. and Teltrend,
                                    Inc. (incorporated by reference to Exhibit
                                    10.21 to the Company's Annual Report on Form
                                    10-K for the year ended March 31, 2002).
                           10.22    Amendment To Amended And Restated Loan And
                                    Security Agreement dated as of October 30,
                                    2001, among LaSalle Bank National
                                    Association, Westell Technologies, Inc.,
                                    Westell International, Inc., Conference
                                    Plus, Inc. and Teltrend, Inc. (incorporated
                                    herein by reference to Exhibit 10.22 to the
                                    Company's Quarterly Report on Form 10-Q for
                                    the quarter ended September 30, 2001).
                           *10.23   Severance Agreement date June 28, 2001, by
                                    and between Westell, Inc and E. Van Cullens
                                    (incorporated herein by reference to Exhibit
                                    10.23 to the Company's Quarterly Report on
                                    Form 10-Q for the quarter ended September
                                    30, 2001).


                                      -42-
<PAGE>

                           *10.24   Employment Letter dated June 28, 2001
                                    between Westell Technologies, Inc. and E.
                                    Van Cullens (incorporated herein by
                                    reference to Exhibit 10.24 to the Company's
                                    Quarterly Report on Form 10-Q for the
                                    quarter ended September 30, 2001).
                           10.25    Seventh Amendment to the Amended and
                                    Restated Loan and Security Agreement dated
                                    as of June 26, 2003 among LaSalle National
                                    Bank, the Company, Westell, Inc, Westell
                                    International, Inc. Conference Plus, Inc.
                                    and Teltrend, Inc.
                           21.1     Subsidiaries of the Registrant (incorporated
                                    by reference to Exhibit 21.1 to the
                                    Company's Annual Report on Form 10-K for the
                                    year ended March 31, 2001).
                           23.1     Consent of Ernst & Young LLP.
                           99.1     Certification of the Chief Executive Officer
                                    and Chief Financial Officer.

                           ----------------

                           *Management contract or compensatory plan or
arrangement.

   (b)     Reports on Form 8-K
           -------------------

           None

   (c)     Exhibits
           --------

              The exhibits filed as part of this Annual Report on Form 10-K are
as specified in Item 14(a)(3) herein.

   (d)     Financial Statement Schedules
           -----------------------------

                      The financial statement schedules filed as part of this
              Annual Report on Form 10-K are as specified in Item 14(a)(2)
              herein.



                                      -43-
<PAGE>



                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized on June 30, 2003.

                                                  WESTELL TECHNOLOGIES, INC.

                                                  By  /s/ E. Van Cullens
                                                      --------------------------
                                                      E. Van Cullens  President,
                                                      Chief Executive Officer


Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on June 30, 2003.

               Signature                                    Title
               ---------                                    -----


/s/  E. Van Cullens                       President, Chief Executive Officer and
--------------------------------------    Director
         E. Van Cullens                   (Principal Executive Officer)

/s/ John W. Seazholtz                     Chairman of the Board of Directors
--------------------------------------
          John W. Seazholtz

/s/ Melvin J. Simon                       Assistant Secretary and Director
--------------------------------------
           Melvin J. Simon

/s/ Nicholas C. Hindman, Sr.              Chief Financial Officer, Treasurer
--------------------------------------    and Senior Vice President
         Nicholas C. Hindman, Sr.         (Principal Financial Officer and
                                          Principal Accounting Officer)

/s/ Robert C. Penny III                   Director
--------------------------------------
          Robert C. Penny III

/s/ Paul A. Dwyer                         Director
--------------------------------------
          Paul A. Dwyer

/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



                                      -44-
<PAGE>



                                  CERTIFICATION


                I, E. Van Cullens, certify that:
         1.  I have reviewed this annual report on Form 10-K of Westell
             Technologies, Inc.;
         2.  Based on my knowledge, this annual report does not contain any
             untrue statement of a material fact or omit to state a material
             fact necessary to make the statements made, in light of the
             circumstances under which such statements were made, not misleading
             with respect to the period covered by this annual report;
         3.  Based on my knowledge, the financial statements, and other
             financial information included in this annual report, fairly
             present in all material respects the financial condition, results
             of operations and cash flows of the registrant as of, and for, the
             periods presented in this annual report;
         4.  The registrant's other certifying officers and I are responsible
             for establishing and maintaining disclosure controls and procedures
             (as defined in Exchange Act Rules 13a-14 and 15d-14) for the
             registrant and have:
         a)  designed such disclosure controls and procedures to ensure that
             material information relating to the registrant, including its
             consolidated subsidiaries, is made known to us by others within
             those entities, particularly during the period in which this annual
             report is being prepared;
         b)  evaluated the effectiveness of the registrant's disclosure controls
             and procedures as of a date within 90 days prior to the filing date
             of this annual report (the "Evaluation Date"); and
         c)  presented in this annual report our conclusions about the
             effectiveness of the disclosure controls and procedures based on
             our evaluation as of the Evaluation Date;
         5.  The registrant's other certifying officer and I have disclosed,
             based on our most recent evaluation, to the registrant's auditors
             and the audit committee of registrant's board of directors (or
             persons performing the equivalent functions):
         a)  all significant deficiencies in the design or operation of internal
             controls which could adversely affect the registrant's ability to
             record, process, summarize and report financial data and have
             identified for the registrant's auditors any material weaknesses in
             internal controls; and
         b)  any fraud, whether or not material, that involves management or
             other employees who have a significant role in the registrant's
             internal controls; and
         6.  The registrant's other certifying officers and I have indicated in
             this annual report whether there were significant changes in
             internal controls or in other factors that could significantly
             affect internal controls subsequent to the date of our most recent
             evaluation, including any corrective actions with regard to
             significant deficiencies and material weaknesses.

                           Date:  June 30, 2003

                                                     /s/ E. VAN CULLENS
                                                     ---------------------------
                                                     E. Van Cullens
                                                     President and Chief
                                                     Executive Officer



                                      -45-
<PAGE>



                                  CERTIFICATION

                           I, Nicholas C. Hindman, Sr., certify that:
         1.  I have reviewed this annual report on Form 10-K of Westell
             Technologies, Inc.;
         2.  Based on my knowledge, this annual report does not contain any
             untrue statement of a material fact or omit to state a material
             fact necessary to make the statements made, in light of the
             circumstances under which such statements were made, not misleading
             with respect to the period covered by this annual report;
         3.  Based on my knowledge, the financial statements, and other
             financial information included in this annual report, fairly
             present in all material respects the financial condition, results
             of operations and cash flows of the registrant as of, and for, the
             periods presented in this annual report;
         4.  The registrant's other certifying officers and I are responsible
             for establishing and maintaining disclosure controls and procedures
             (as defined in Exchange Act Rules 13a-14 and 15d-14) for the
             registrant and have:
         a)  designed such disclosure controls and procedures to ensure that
             material information relating to the registrant, including its
             consolidated subsidiaries, is made known to us by others within
             those entities, particularly during the period in which this annual
             report is being prepared;
         b)  evaluated the effectiveness of the registrant's disclosure controls
             and procedures as of a date within 90 days prior to the filing date
             of this annual report (the "Evaluation Date"); and
         c)  presented in this annual report our conclusions about the
             effectiveness of the disclosure controls and procedures based on
             our evaluation as of the Evaluation Date;
         5.  The registrant's other certifying officer and I have disclosed,
             based on our most recent evaluation, to the registrant's auditors
             and the audit committee of registrant's board of directors (or
             persons performing the equivalent functions):
         a)  all significant deficiencies in the design or operation of internal
             controls which could adversely affect the registrant's ability to
             record, process, summarize and report financial data and have
             identified for the registrant's auditors any material weaknesses in
             internal controls; and
         b)  any fraud, whether or not material, that involves management or
             other employees who have a significant role in the registrant's
             internal controls; and
         6.  The registrant's other certifying officers and I have indicated in
             this annual report whether there were significant changes in
             internal controls or in other factors that could significantly
             affect internal controls subsequent to the date of our most recent
             evaluation, including any corrective actions with regard to
             significant deficiencies and material weaknesses.

                           Date: June 30, 2003

                                                    /s/ NICHOLAS C. HINDMAN, Sr.
                                                    ----------------------------
                                                    Nicholas C. Hindman, Sr.
                                                    Treasurer, Secretary, Senior
                                                    Vice President and Chief
                                                    Financial Officer




                                      -46-
<PAGE>



                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
                             AND SUPPLEMENTARY DATA


Item                                                                    Page
----                                                                    ----
Consolidated Financial Statements:
Report of Independent Auditors......................................      48
Consolidated Balance Sheets -- March 31, 2002 and 2003..............      49
Consolidated Statements of Operations for the years
  ended March 31, 2001, 2002 and 2003...............................      51
Consolidated Statements of Stockholders' Equity for the
  years ended March 31, 2001, 2002 and 2003....... .................      52
Consolidated Statements of Cash Flows for the years ended
  March 31, 2001, 2002 and 2003................. ...................      53
Notes to Consolidated Financial Statements..........................      54


Financial Statement Schedule:

Schedule II -- Valuation and Qualifying Accounts....................      72



                                      -47-
<PAGE>



                         Report of Independent Auditors


To the Board of Directors and the Stockholders
Westell Technologies, Inc.

We have audited the accompanying consolidated balance sheets of Westell
Technologies, Inc. and subsidiaries as of March 31, 2003 and 2002, and the
related consolidated statements of operations, stockholders' equity and cash
flows for each of the three years ended March 31, 2003. Our audit also included
the financial statement schedule listed in the Index at Item 15(a)(2). These
financial statements and schedule are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and schedule based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the
audits to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Westell
Technologies, Inc. and subsidiaries at March 31, 2003 and 2002, and the
consolidated results of their operations and their cash flows for the three
years then ended, in conformity with accounting principles generally accepted in
the United States. Also, in our opinion, the related financial statement
schedule when considered in relation to the basic financial statements taken as
a whole presents fairly in all material respects the information set forth
therein.

As discussed in Note 1 to the consolidated financial statements, in fiscal year
2001 the Company changed its method of revenue recognition and in fiscal year
2003 changed its method of accounting for goodwill and other intangibles.




Chicago, Illinois
May 16, 2003, except for Notes 2 and 3, as to which the date is June 26, 2003




                                      -48-
<PAGE>


                   WESTELL TECHNOLOGIES, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

                                     ASSETS


                                                                  March 31,
                                                            --------------------
                                                             2002         2003
                                                             ----         ----
                                                               (in thousands)
Current assets:
  Cash and cash equivalents .............................   $  6,687   $ 11,474
  Accounts receivable (net of allowance of $1,531,000 and
    $905,000, respectively) .............................     25,266     22,633
  Inventories ...........................................     18,174     11,843
  Prepaid expenses and other current assets .............      2,169      1,532
  Deferred income tax asset .............................      7,830      2,300
  Land and building held for sale .......................      2,052       --
                                                            --------   --------

           Total current assets .........................     62,178     49,782

Property and equipment:
  Machinery and equipment ...............................     45,148     42,819
  Office, computer and research equipment ...............     30,873     25,301
  Leasehold improvements ................................      7,634      7,731
                                                            --------   --------
                                                              83,655     75,851

  Less accumulated depreciation and amortization ........     54,029     55,417
                                                            --------   --------

    Property and equipment, net .........................     29,626     20,434

Goodwill ................................................      5,938      6,990
Intangibles, net ........................................     10,374      8,408

Deferred income tax asset and other assets ..............     18,037     23,860
                                                            --------   --------

           Total assets .................................   $126,153   $109,474
                                                            ========   ========




        The accompanying notes are an integral part of these Consolidated
                             Financial Statements.



                                      -49-
<PAGE>

<TABLE>

                   WESTELL TECHNOLOGIES, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

                      LIABILITIES AND STOCKHOLDERS' EQUITY
<CAPTION>

                                                                                                    March 31,
                                                                                            --------------------
                                                                                              2002         2003
                                                                                              ----         ----
                                                                                                (in thousands)
<S>                                                                                         <C>          <C>
Current liabilities:
  Accounts payable.......................................................................   $ 15,702     $11,802
  Accrued expenses.......................................................................     16,105      10,775
  Accrued compensation...................................................................      2,374       4,487
  Current portion of long-term debt and notes payable....................................     11,186      17,057
                                                                                            --------    --------

           Total current liabilities.....................................................     45,367      44,121

Long-term debt...........................................................................     39,469      17,760

Other long-term liabilities..............................................................      5,044       4,100
                                                                                           ---------   ---------

           Total liabilities.............................................................     89,880      65,981
                                                                                           ---------   ---------

Stockholders' equity:
Class A common stock, par $0.01..........................................................        459         460
  Authorized -- 109,000,000 shares
  Issued and outstanding - 45,907,065 at March 31, 2002 and 45,966,440 at March 31,
    2003
Class B common stock, par $0.01..........................................................        190         190
  Authorized -- 25,000,000 shares
  Issued and outstanding -- 19,014,869 at March 31, 2002 and March 31, 2003
Preferred stock, par $0.01...............................................................        --           --
  Authorized -- 1,000,000 shares
  Issued and outstanding -- none
Deferred compensation....................................................................         46          46
Additional paid-in capital...............................................................    364,566     364,661
Treasury stock at cost 93,000 shares.....................................................       (247)       (247)
Cumulative translation adjustment........................................................        (18)       (168)
Accumulated deficit......................................................................   (328,723)   (321,449)
                                                                                          ----------  ----------

      Total stockholders' equity.........................................................     36,273      43,493
                                                                                          ----------  ----------

           Total liabilities and stockholders' equity....................................$  126,153   $  109,474
                                                                                         ===========  ==========


        The accompanying notes are an integral part of these Consolidated
                             Financial Statements.

</TABLE>


                                      -50-
<PAGE>


<TABLE>

                   WESTELL TECHNOLOGIES, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
<CAPTION>


                                                                                    Fiscal Year Ended March 31,
                                                                                 ---------------------------------
                                                                                   2001       2002        2003
                                                                                   ----       ----        ----
                                                                                         (in thousands,
                                                                                     except per share data)

<S>                                                                          <C>          <C>          <C>
Equipment revenue ........................................................   $ 319,494    $ 191,302    $ 168,216
Service revenue ..........................................................      41,983       48,521       41,805
                                                                             ---------    ---------    ---------
   Total revenues ........................................................     361,477      239,823      210,021
                                                                             ---------    ---------    ---------

Cost of equipment sales ..................................................     306,143      176,162      119,149
Cost of services .........................................................      25,176       29,631       27,112
                                                                             ---------    ---------    ---------
   Total cost of goods sold ..............................................     331,319      205,793      146,261
                                                                             ---------    ---------    ---------

    Gross margin .........................................................      30,158       34,030       63,760
                                                                             ---------    ---------    ---------
Operating expenses:
  Sales and marketing ....................................................      30,323       19,883       16,017
  Research and development ...............................................      33,308       22,444       16,483
  General and administrative .............................................      24,254       24,028       17,513
  Goodwill and intangible amortization ...................................      31,832       25,560        1,766
  Goodwill and intangible impairment .....................................        --         97,500         --
  Restructuring charge ...................................................       1,700        6,258        1,678
                                                                             ---------    ---------    ---------

     Total operating expenses ............................................     121,417      195,673       53,457
                                                                             ---------    ---------    ---------

Operating loss ...........................................................     (91,259)    (161,643)      10,303
Other expense, net .......................................................        --           (222)          (9)
Interest expense .........................................................       2,197        5,564        2,648
                                                                             ---------    ---------    ---------

Income (loss) before income tax benefit ..................................     (93,456)    (167,429)       7,646
Income taxes .............................................................        --           --            372
                                                                             ---------    ---------    ---------
Income (loss) before cumulative effect of change in accounting principle .     (93,456)    (167,429)       7,274
Cumulative effect of change in accounting principle ......................        (400)        --           --
                                                                             ---------    ---------    ---------

Net income (loss) ........................................................   $ (93,856)   $(167,429)   $   7,274
                                                                             =========    =========    =========

Income (loss) per share:
  Income (loss) before cumulative effect of change in accounting principle   $   (1.53)   $   (2.60)   $    0.11
  Cumulative effect of change in accounting principle ....................        (.01)        --           --
                                                                             ---------    ---------    ---------

Net income (loss) per common share:
  Basic ..................................................................   $   (1.54)   $   (2.60)   $    0.11
                                                                             =========    =========    =========
  Diluted ................................................................   $   (1.54)   $   (2.60)   $    0.11
                                                                             =========    =========    =========

Weighted average number of common shares:
  Basic ..................................................................      61,072       64,317       64,925
                                                                             =========    =========    =========
  Diluted ................................................................      61,072       64,317       65,126
                                                                             =========    =========    =========




        The accompanying notes are an integral part of these Consolidated
                             Financial Statements.

</TABLE>


                                      -51-
<PAGE>

<TABLE>

                                     WESTELL TECHNOLOGIES, INC. AND SUBSIDIARIES

                                   CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

<CAPTION>


                                      Common   Common Additional Cumulative                                Total
                       Comprehensive  Stock    Stock   Paid-in  Translation Deferred  Accum.    Treasury  Stockholders'
                       Income (loss) Class A   Class B  Capital  Adjustment  Comp.    Deficit     Stock    Equity
                       ---------------------   -------  -------  ----------  -----    -------     -----    ------
                                                                (in thousands)

<S>                      <C>             <C>       <C>   <C>          <C>     <C>    <C>            <C>  <C>
Balance, March 31, 2000                  402       190   345,485      184     840    (67,438)       --   279,663
Net loss.............    $ (93,856)       --        --        --       --      --    (93,856)       --   (93,856)
    Translation adjustment    (218)       --        --        --     (218)     --         --        --      (218)
                         ----------
Total Comprehensive loss           $ (94,074)
                                     ========
Class B Stock Converted to
     Class A Stock...                      0        (0)       --       --      --         --        --        --
Conversion of subordinated
     debentures......                     13        --     6,202       --      --         --        --     6,215
Options Exercised....                     10        --     5,757       --      --         --        --     5,767
 Shares sold under Employee
     Stock Purchase Plan                   0        --       240       --      --         --        --       240
Deferred Compensation                     --        --        --       --      14         --        --        14
                                     -------    ------    ------ --------    ----   --------      ----   -------

Balance, March 31, 2001                  425       190   357,684      (34)    854   (161,294)       --   197,825
Net loss.............   $ (167,429)       --        --        --       --      --   (167,429)       --   167,429)
    Translation adjustment      16        --        --        --       16      --         --        --       16
                        ----------
Total Comprehensive loss           $(167,413)
                                   =========
Issuance of Class A Common
    Stock ...........                     33        --     5,844       --      --         --        --     5,877
Options Exercised....                               --        10       --      --         --        --        10
 Shares sold under Employee
     Stock Purchase Plan                   1        --       151       --      --         --        --       152
Treasury stock.......                     --        --        --       --      --         --      (247)     (247)
Deferred Compensation                     --        --       877       --    (808)        --        --        69
                                    --------    ------  -------- --------   -----   --------    ------   -------

Balance, March 31, 2002             $    459  $    190 $ 364,566 $    (18)  $  46  $(328,723)  $  (247)  $36,273
                                    --------  -------- --------- --------  ------  ---------   -------   -------
Net income...........      $ 7,274        --        --        --       --      --      7,274        --     7,274
    Translation adjustment    (150)       --        --        --     (150)     --         --        --      (150)
                           -------
Total Comprehensive income $ 7,124
                           =======
Options Exercised....                      1        --        95       --      --         --        --        96

Balance, March 31, 2003             $    460  $    190 $ 364,661 $   (168)  $  46  $(321,449)  $  (247)  $43,493
                                    --------  -------- --------- --------  ------  ---------   -------   -------





        The accompanying notes are an integral part of these Consolidated
                             Financial Statements.



</TABLE>






                                      -52-
<PAGE>

<TABLE>

                   WESTELL TECHNOLOGIES, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>

                                                                                     Fiscal Year Ended March 31,
                                                                                 ----------------------------------
                                                                                   2001       2002        2003
                                                                                   ----       ----        ----
                                                                                         (in thousands)
<S>                                                                               <C>          <C>          <C>
Cash flows from operating activities:
  Net income (loss) ...........................................................   $ (93,856)   $(167,429)   $   7,274
  Reconciliation of net income (loss) to net cash (used in) provided by
     operating activities:
       Depreciation and amortization ..........................................      43,941       40,222       13,318
       Goodwill and intangible impairment .....................................        --         97,500         --
       Deferred taxes .........................................................        --            350          230
       Deferred compensation ..................................................          14         (807)        --
       Loss on sale of fixed assets and asset impairment ......................        --          2,014          824
       Other ..................................................................         147          (71)         200
  Change in assets and liabilities:
     Accounts receivable ......................................................       7,045        9,656        2,483
     Inventories ..............................................................     (42,451)      54,894        6,363
     Prepaid expenses and other current assets ................................          75          (44)         637
     Refundable income taxes ..................................................       9,323         --           --
     Other assets .............................................................         429         (164)        (523)
     Accounts payable and accrued expenses ....................................      38,969      (47,152)     (10,175)
     Accrued compensation .....................................................      (2,251)      (2,313)       2,113
                                                                                  ---------    ---------    ---------

          Net cash (used in) provided by operating activities .................     (38,615)     (13,344)      22,744
                                                                                  ---------    ---------    ---------

Cash flows from investing activities:
   Purchases of property and equipment ........................................     (22,172)      (9,205)      (2,766)
   Proceeds from sale of equipment ............................................         190           62        1,977
   Purchase of subsidiary stock ...............................................        --           --           (459)
   Decrease in short-term investments .........................................       1,951         --           --
                                                                                  ---------    ---------    ---------

          Net cash used in investing activities ...............................     (20,031)      (9,143)      (1,248)
                                                                                  ---------    ---------    ---------

Cash flows from financing activities:
   Net borrowing (repayment) under revolving promissory notes .................      28,400       (2,310)      (6,134)
   Borrowing of long-term debt and leases payable .............................         193       24,890        1,724
   Repayment of long-term debt and leases payable .............................      (2,792)        (479)     (12,363)
   Proceeds from issuance of Common Stock including tax benefit on options ....       6,008        6,668           96
                                                                                  ---------    ---------    ---------

          Net cash provided by (used in) financing activities .................      31,812       28,769      (16,677)
                                                                                  ---------    ---------    ---------

Effect of exchange rate changes on cash .......................................         (19)        --            (32)
                                                                                                            ---------
          Net increase (decrease) in cash and cash equivalents ................     (26,853)       6,282        4,787
Cash and cash equivalents, beginning of period ................................      27,258          405        6,687
                                                                                  ---------    ---------    ---------

Cash and cash equivalents, end of period......................................     $    405    $   6,687    $  11,474
                                                                                   =========   =========    =========

        The accompanying notes are an integral part of these Consolidated
                             Financial Statements.

</TABLE>


                                      -53-
<PAGE>



                   WESTELL TECHNOLOGIES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

         Description of Business

         Westell Technologies, Inc. (the "Company") is a holding company. Its
wholly owned subsidiaries, Westell, Inc. and Teltrend LLC (formerly Teltrend
Inc.), design, manufacture and distribute telecommunications equipment which is
sold primarily to major telephone companies. Teltrend LLC was acquired on March
17, 2000. Conference Plus, Inc., a 91.5%-owned subsidiary, provides
teleconferencing, multipoint video conferencing, broadcast fax and web
teleconferencing services to various customers.

         Principals of Consolidation

         The accompanying consolidated financial statements include the accounts
of the Company and its subsidiaries. All significant intercompany accounts and
transactions have been eliminated in consolidation.

         Cash and Cash Equivalents

         Cash and cash equivalents generally consist of cash, certificates of
deposit, time deposits, commercial paper, short-term government obligations and
other money market instruments. The Company invests its excess cash in deposits
with major financial institutions, in government securities and the highest
grade commercial paper of companies from a variety of industries. These
securities have original maturity dates not exceeding three months. Such
investments are stated at cost, which approximates fair value, and are
considered cash equivalents for purposes of reporting cash flows.

         Inventories

         Inventories are stated at the lower of first-in, first-out (FIFO) cost
or market. The components of inventories are as follows:

                                                                     March 31,
                                                           ---------------------
                                                              2002         2003
                                                              ----         ----
                                                                 (in thousands)

        Raw materials..................................... $ 22,721    $ 9,340
        Work in process...................................       39          4
        Finished goods....................................   14,889      7,945
        Reserve for excess and obsolete
           inventory and net realizable value.............  (19,475)     (5,446)
                                                           ---------    --------

                                                            $18,174    $ 11,843

         During the fiscal year ended March 31, 2002, the Company recorded a
charge of $13.9 million to reduce the carrying value of certain inventory and
inventory purchase commitments to net realizable value. This adjustment was
required due to a significant reduction in the selling prices of certain
products and a reduction in orders for certain products resulting in increased
excess and obsolete inventory reserves. Accrued purchase commitments totaled
$8.3 million at March 31, 2002.

         During the fiscal year ended March 31, 2003, gross margin was
positively effected by $2.2 million as the Company was able to sell modem
inventory which had been reserved as excess and obsolete based on the estimated
technological life of the modems at March 31, 2002. Accrued purchase commitments
totaled $91,000 at March 31, 2003.


                                      -54-
<PAGE>

         Property and Equipment

         Property and equipment are stated at cost. Depreciation is provided
over the estimated useful lives of the assets which range from 2 to 10 years
using the straight-line method for financial reporting purposes and accelerated
methods for tax purposes. Leasehold improvements are amortized over the lives of
the respective leases, or the useful life of the asset, whichever is shorter.
Depreciation expense was $12.1 million, $14.7 million and $11.6 million for
fiscal 2001, 2002 and 2003, respectively.


         Goodwill and Intangibles

         On April 1, 2002, the Company adopted the Financial Accounting
Standards Board Statements of Financial Accounting Standards (FASB) No. 141,
Business Combinations, and No. 142, Goodwill and Other Intangible Assets. Under
the new rules, goodwill and other indefinite-lived intangibles are no longer
amortized but subject to annual impairment tests. Other intangible assets will
continue to be amortized over their useful lives. Upon adoption of this
standard, the Company was required to perform an impairment test of goodwill.
The Company determined that it operated in two reporting units for the purpose
of completing the impairment test of goodwill. These reporting units are telecom
equipment and telecom services. The Company utilizes the comparison of its
market capitalization and third party appraisal of its telecom services
reporting unit to book value as an indicator of potential impairment. The
Company also performed its annual impairment test in the fourth quarter of
fiscal 2003. These tests showed no impairment of goodwill. The adoption of the
provisions for amortization of intangible assets did not impact the Company's
amortization of these assets. The following table discloses pro forma results
for net income and earnings per share had FASB No. 142 been applied in fiscal
2001 and 2002.

                                                        Fiscal year ended
                                                 ------------------------------
(In thousands, except per share amounts)              2001           2002
                                                 -------------    -------------

Reported net loss.............................      $(93,856)       $(167,429)
Add back: Goodwill amortization...............        15,680           12,473
                                                 -------------    -------------
Proforma net loss.............................      $(78,176)       $(154,956)
                                                 =============    =============

Reported basic and diluted loss per share.....        $(1.54)          $(2.60)
Add back: Goodwill amortization per share.....           .26              .19
                                                 -------------    -------------
Proforma basic and diluted loss per share.....        $(1.28)          $(2.41)
                                                 =============    =============


         Goodwill increased by $1.1 million during fiscal 2003 due to the
purchase of common stock of the Conference Plus, Inc. subsidiary. Goodwill
amortization expense in fiscal years 2001 and 2002 was $15.7 million and $12.5
million, respectively.

         As of March 31, 2003, the Company has finite lived intangible assets
with an original carrying value of $32.9 million, accumulated amortization of
$21.1 million and impairment expense of $3.4 million. As of March 31, 2002, the
Company has finite lived intangible assets with an original carrying value of
$32.9 million, accumulated amortization of $19.3 million and impairment expense
of $3.4 million. These assets consist of product technology acquired from
Teltrend Inc. on March 17, 2000. The net carrying value of these assets was
$10.2 million and $8.4 million as of March 31, 2002 and 2003, respectively.
These intangibles are being amortized over a period of 5 to 7 years. Finite
lived intangible amortization included in expense was $16.1 million, $13.1
million and $1.8 million in fiscal year 2001, 2002 and 2003 respectively. The
estimated amortization expense for the next five years is $1.5 million per year.

         On an ongoing basis, the Company reviews intangible assets and other
long-lived assets other than goodwill for impairment whenever events and
circumstances indicate that carrying amounts may not be recoverable. If such
events or changes in circumstances occur, the Company will recognize an
impairment loss if the undiscounted future cash flows expected to be generated
by the asset are less than the carrying value of the related asset. The
impairment loss would adjust the asset to its fair value.


                                      -55-
<PAGE>

         Due to the restructuring the Company implemented in fiscal 2002, along
with then current and expected market conditions in the network interface unit
and low speed digital data products portion of the business acquired from
Teltrend, it became apparent that the goodwill acquired with the Teltrend
acquisition was impaired. In accordance with its policies, the Company completed
evaluations of the fair value of the Teltrend long-lived assets (including
goodwill) during the quarters ended December 31, 2001 and March 31, 2002 and
reported non-cash charges of $90.5 million and $7.0 million, respectively, to
reduce the carrying value of recorded goodwill and intangibles to their
estimated fair value.


         Revenue Recognition

         Revenue is recognized when title has passed to the customer. On certain
sales contracts where new products are built to customer specifications, revenue
is not recognized until the customer has tested and determined it to function as
intended.

         The Company's product return policy allows customers to return unused
equipment for partial credit if the equipment is currently being manufactured.
Credit is not offered on returned products that are no longer manufactured. The
Company has recorded a reserve for returns that is not significant.

         The Company's subsidiary Conference Plus, Inc. recognizes revenue for
conference calls and other services upon completion of the conference call or
services.


         Product Warranties

         Most of the Company's products carry a limited warranty ranging from
one to seven years. The Company accrues for estimated warranty costs as products
are shipped. The warranty expense and the related accrual are not significant to
the consolidated financial statements.


         Research and Development Costs

         Engineering and product development costs are charged to expense as
incurred.


         Stock Based Compensation

         The Company has elected to follow Accounting Principle Board Opinion
No. 25 "Accounting for Stock Issued to Employees" (APB No. 25) and related
interpretations in accounting for its employee stock options and awards. Under
APB No. 25, employee stock options are valued using the intrinsic method, and no
compensation expense is recognized since the exercise price of the options
equals or is greater than the fair market value of the underlying stock as of
the date of the grant. The following table shows the effect on net income (loss)
and earnings (loss) per share if the Company had applied the fair value
recognition provisions of FASB Statement NO. 123, "Accounting for Stock Based
Compensation."


                                      -56-
<PAGE>

<TABLE>

                                                     Year ended March 31,
                                             (in thousands except per share data)
                                             2001            2002            2003
                                         --------------  --------------  --------------
<S>                                          <C>            <C>                <C>
Net income (loss), as reported..........     $(93,856)      $(167,429)         $ 7,274
Deduct:  Total stock based employee
compensation expense determined under
fair value based method for all awards,
net of the related tax effect...........       14,729          10,695            3,599
                                         --------------  --------------  --------------
Pro forma net income (loss).............    $(108,585)      $(178,124)         $ 3,675
                                         ==============  ==============  ==============

Basic and diluted earnings (loss) per
share, as reported......................      $ (1.54)        $ (2.60)          $ 0.11
Basic and diluted earnings (loss) per
share, Pro forma........................      $ (1.78)        $ (2.77)          $ 0.06

</TABLE>

See Note 8 for further discussion of the Company's option plans.

         Supplemental Cash Flow Disclosures

         The following represents supplemental disclosures to the consolidated
statements of cash flows:

<TABLE>

                                                                                                March 31,
                                                                                   -----------------------------
                                                                                   2001       2002        2003
                                                                                   ----       ----        ----
                                                                                         (in thousands)

<S>                                                                              <C>           <C>     <C>
Schedule of non-cash investing and financing activities:
           Conversion of subordinated debentures and accrued interest, net of
             related debt issuance costs of $531 and debt discount of $669 for
             the year ended March 31, 2001....................................   $ 6,215       $  --   $    --

Cash paid for:
          Interest............................................................    $ 1,964    $ 2,653   $ 6,406
          Income taxes........................................................         37         17       375

</TABLE>

         Disclosures about Fair Value of Financial Instruments

         The following methods and assumptions were used to estimate the fair
value of each class of financial instrument held by the Company:

                  Cash and cash equivalents, trade receivables and trade
         payables: the carrying amounts approximate fair value because of the
         short maturity of these items.

                  Revolving promissory notes and installment notes payable: due
         to the floating interest rate on these obligations, the carrying
         amounts approximate fair value.


         Use of Estimates

         The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and revenue and expenses during the period reported.
Actual results could differ from those estimates. Estimates are used when
accounting for the allowance for uncollectable accounts receivable, net
realizable value of inventory, product warranty accrued, depreciation, employee
benefit plans cost, income taxes, and contingencies, among other things.


                                      -57-
<PAGE>

         Foreign Currency Translation

         The financial position and the results of operations of the Company's
foreign subsidiaries are measured using local currency as the functional
currency. Assets and liabilities of these subsidiaries are translated at the
exchange rate in effect at the end of each period. Income statement accounts are
translated at the average rate of exchange prevailing during the period.
Translation adjustments arising from differences in exchange rates from period
to period are included in the foreign currency translation adjustment account in
stockholders' equity.

         The Company records transaction gains or losses within Other income
(expense), net for fluctuations on foreign currency rates on accounts receivable
and cash and for fluctuations on foreign currency rates on intercompany accounts
anticipated by management to be settled in the foreseeable future.


         Computation of Net Loss Per Share

         The computation of basic earnings per share is computed using the
weighted average number of common shares outstanding during the period. Diluted
earnings per share includes the number of additional common shares that would
have been outstanding if dilutive potential common shares had been issued. The
effect of this computation on the number of outstanding shares is antidilutive
for the periods ended March 31, 2001, and 2002, and therefore the net loss per
basic and diluted earnings per share are the same.


         New Accounting Pronouncements

         During the first quarter of fiscal 2003, the Company adopted SFAS 144,
Accounting for the Impairment - Disposal of Long Lived Assets. SFAS No. 144
provides a single accounting model for long-lived assets to be disposed of and
replaces SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and
Long-Lived Assets to be Disposed Of. Adoption of this statement did not have a
material effect on the Company's financial statements.

         In June 2002, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 146, Accounting for Costs
Associated with Exit or Disposal Activities, effective for exit or disposal
activities initiated after December 31, 2002. The Company's current
restructuring plan, initiated in September of 2002, was not accounted for under
SFAS 146. The Company accrued a pre-tax charge of $1.7 million when Company
management approved the current restructuring plan. If the Company had accounted
for this restructuring plan under SFAS 146, $1.3 million of the $1.7 million
charge would have been recognized as expense in the third quarter of fiscal 2003
when incurred. For more information, see Note 10, Restructuring charge.

         In November of 2002, the FASB issued FASB Interpretation No. (FIN) 45,
Guarantor's Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others. This interpretation requires
companies to recognize an initial liability for the fair value of an obligation
assumed when issuing a guarantee. The provision for initial recognition and
measurement of the liability will be applied on a prospective basis to
guarantees issued or modified after December 31, 2002. The adoption of FIN 45
did not materially affect the Company's consolidated financial statements.

         In December 2002, the Financial Accounting Standards Board (FASB)
issued Statement of Financial Accounting Standards (SFAS) No. 148, Accounting
for Stock-Based Compensation Transition and Disclosure. SFAS 148 amends SFAS
123, Accounting for Stock-Based Compensation, to provide alternative methods of
transition to SFAS 123's fair value method of accounting for stock-based
employee compensation. SFAS 148 does not require companies to account for
employee stock options using the fair value method but does require additional
footnote disclosures. The Company adopted these disclosure requirements
beginning in the fourth quarter of fiscal 2003. The adoption of SFAS 148 did not
impact the Company's results of operations.


                                      -58-
<PAGE>

         Change in Accounting Principle

         Effective April 1, 2000, the Company changed its method of accounting
for recognizing revenues for product sales. Effective with this change, the
Company recognizes revenue based upon the respective terms of delivery for each
sale agreement. This change was required by Staff Accounting Bulletin (SAB) No.
101 issued by the Securities and Exchange Commission.

         For the restated three-month period ended June 30, 2000 and the year
ended March 31, 2001, the Company recognized sales of $2,500,000 and the related
operating income of $400,000 resulting from the change in accounting method;
these amounts were previously recognized in sales and income in fiscal 2000
under the Company's previous accounting method. These sales and the related
income also account for the cumulative effect of the change in accounting method
in prior years, which resulted in a charge to net income of $400,000, or $.01
per share. This charge reflects the adoption of SAB No. 101 and is included in
the restated three-month period ended June 30, 2000 and the year ended March 31,
2001.

         See Goodwill and intangible discussed previously for the change in
accounting principle required by the adoption of SFAS No. 141 and 142.


         Reclassification of Accounts

         Certain prior year amounts have been reclassified in order to conform
to the current-year presentation.



                                      -59-
<PAGE>


NOTE 2. REVOLVING CREDIT AGREEMENTS:

         As of March 31, 2002, the Company had a revolving credit facility that
provided for maximum borrowings of up to $35 million. This asset based revolving
credit facility provided for total borrowings based upon 85% of eligible
accounts receivable and 30% of eligible inventory not to exceed $8.3 million.
The facility was guaranteed by trusts for the benefit of Robert C. Penny III and
other family members and was supported by their brokerage account totaling
approximately $10 million. Borrowings under this facility bore interest at prime
plus 1%. The Company had $26.1 million outstanding under the revolving credit
facility as of March 31, 2002.

         On June 28, 2002 the Company amended the revolving credit facility. The
amendment provided for a $5 million non-amortizing term loan and a $30 million
asset based revolving credit facility, both due June 30, 2003. The amended asset
based revolving credit facility, which is secured by substantially all assets of
the Company, provided for total borrowings based upon 85% of eligible accounts
receivable and 30% of eligible inventory not to exceed $6.4 million as of March
31, 2003. The $6.4 million inventory limitation is reduced by $0.1 million on
the first day of each month. Borrowings under this facility provide for the
interest to be paid by the Company at the prime rate plus 1%. The term loan is
secured by, among other things, a security interest in certain collateral
granted by certain stockholders consisting of trusts of Robert C. Penny III and
other family members. Trusts of Robert C. Penny III and other Penny family
members are participants to the amended revolving credit facility. The Company
paid a $350,000 restructuring fee to the lenders in connection with the
amendments to the credit facility. The amended credit facility requires the
revolving loan to be paid in full before any payments are applied to the term
loan. This credit facility contains covenants regarding EBITDA, tangible net
worth and maximum capital expenditures. The Company was in compliance with the
covenants contained in the credit facility at March 31, 2003. On March 31, 2003,
the Company had $5.0 million outstanding under its term loan and $15.0 million
outstanding and $8.1 available under its secured revolving credit facility.

         On June 26, 2003, the Company amended the revolving credit facility.
The amendment removes the $5 million non-amortizing term loan as well as the
security interest granted by certain stockholders. The $30 million asset based
revolving credit facility remains in place and is due on June 30, 2006.
Borrowings under this facility provide for the interest to be paid by the
Company at the prime rate or Libor rate plus 2.5%. The Company paid a $300,000
restructuring fee to the lenders in connection with this amendment to the credit
facility. This new amendment provides for covenants regarding EBITDA and
tangible net worth which the Company was in compliance at June 26, 2003 and
expects to be in compliance for the term of the debt. Amounts available under
the revolving credit facility at June 26, 2003 was $14.5 million. Due to this
amendment, the Company has classified the entire balance outstanding under the
revolving credit facility as long-term debt in the March 31, 2003 balance sheet.


NOTE 3. LONG-TERM DEBT AND NOTES PAYABLE:

         Long-term debt and notes payable consists of the following:

<TABLE>

                                                                         March 31,
                                                                  ---------------------
                                                                    2002         2003
                                                                    ----         ----
                                                                      (in thousands)
<S>                                                               <C>           <C>
Capitalized lease obligations secured by related equipment.....   $  1,687      $1,314
Revolving Promissory note payable..............................     21,090      14,956
Term notes payable to a bank...................................      5,000       5,000
Term notes payable.............................................       --         1,158
Vendor notes payable...........................................     22,878      12,389
                                                                    ------      ------


                                                                    50,655      34,817

        Less current portion...................................    (11,186)    (17,057)
                                                                 ----------   --------

                                                                   $39,469     $17,760
</TABLE>


                                      -60-
<PAGE>

         Future maturities of long-term debt at March 31, 2003 are as follows
(in thousands):

        2004...................................................... $  17,057
        2005......................................................     2,478
        2006......................................................    15,282
                                                                    --------
                                                                    $ 34,817
                                                                    ========

         On May 30, 2002, the Company signed two subordinated vendor notes with
Solectron Technology SDN BHD. One note in the amount of $5.0 million is for the
payment of inventory held by Solectron that the Company was committed to buy.
The second note in the amount of $16.6 million is for the payment of accounts
payable and accrued interest. Both notes require a weekly principal and monthly
interest payment and are payable over 2.3 years. A third subordinated secured
vendor note in the amount of $1.3 million made by the Company and payable to
Solectron Technology SDN BHD was entered into on June 3, 2002 and is payable
monthly over one year. This note was part of the settlement of litigation with
Celsian Technologies, Inc. All three notes bear interest at the prime rate plus
2.5%. At March 31, 2002 and 2003 there was $22.9 million and $12.4 million
outstanding under these notes respectively.

         In connection with the Company's management changes implemented at its
subsidiary Conference Plus, Inc., the Company purchased 3.2% of the outstanding
shares of common stock of Conference Plus, Inc. from former officers of
Conference Plus Inc. for approximately $1.6 million. The purchase price was
based upon the minority interest value set forth in the annual appraisal of
Conference Plus Inc. obtained by the Company that is completed by an independent
financial advisor. As of March 31, 2003, the Company had paid $459,000 in cash
for these shares with the remainder in the form of a term note payable bearing
an interest rate of 3.5% per annum to be paid over a one to three year term.

NOTE 4. CONVERTIBLE DEBENTURES AND WARRANTS:

         In April 1999, the Company completed a subordinated secured convertible
debenture private placement totaling $20 million. In connection with the
financing, the Company issued five-year warrants for approximately 909,000
shares of Class A Common stock at an exercise price equal to $8.921 per share,
which was approximately 140% of the initial conversion price of the debentures.
These warrants were determined to have a fair market value of $1 million.
Subsequently, in December 1999, the Company repriced the warrants from $8.921 to
$5.92 per share and, due to this debt modification, increased the value of the
warrants by approximately $838,000. The total value of the warrants,
approximately $1.8 million, was recorded as a debt discount in the March 31,
2000 consolidated balance sheet and was being amortized over the life of the
convertible debentures of five years. This unamortized amount was recorded to
equity on a pro rata basis as debentures converted.

         As of March 31, 2000, holders of these debentures converted an
aggregate principal amount of $12,720,000 and the accrued interest thereon of
approximately $110,000 into 2,013,548 shares of Class A common stock at a
conversion price of $6.372 per shares. The amount converted to equity is net of
a pro rata portion of the total debt discount and debt issuance costs in the
amounts of $1,168,788 and $639,279, respectively.

         During fiscal year 2001, the remaining debentures, with a principal
amount of $7,280,000 and accrued interest of approximately $135,000 were
converted into 1,163,620 shares of Class A common stock at a conversion price of
$6.372 per share. The amount converted to equity is net of a pro rata portion of
the total debt discount and debt issuance costs in the amounts of $668,929 and
$530,708 respectively.

         On June 29, 2001, in consideration of a guarantee given by several
shareholders to support the credit facility, the Company granted warrants to
purchase 512,820 shares of Class A common stock at a conversion price of $1.95
per share. The warrants are exercisable at any time until June 29, 2006. The
total value of the warrants, approximately $46,000, was recorded as expense.

         As of March 31, 2003, all warrants were outstanding.


                                      -61-
<PAGE>

NOTE 5. INCOME TAXES:

         The Company utilizes the liability method of accounting for income
taxes and deferred taxes are determined based on the differences between the
financial statements and tax basis of assets and liabilities given the
provisions of the enacted tax laws. The income tax benefits charged to net
income are summarized as follows:

                                                   Fiscal Year Ended March 31,
                                                 ------------------------------
                                                  2001       2002        2003
                                                  ----       ----        ----
                                                        (in thousands)
        Federal:
          Current............................    $   --    $     -- $     372
          Deferred...........................         --         --        --
                                                 -------    -------   ---------

                                                     --          --       372
                                                --------    -------  ----------

        State:
          Current............................        --          --        --
          Deferred...........................        --          --        --
                                                  ------     ------    --------

                                                     --          --        --
                                                 -------     ------    --------

             Total...........................   $    --     $    --  $    372
                                                ========    =======  ==========

         The Company utilizes the flow-through method to account for tax
credits. In fiscal 2001, 2002 and 2003, the Company generated approximately
$500,000, $846,000 and $170,000, respectively, of tax credits.

         The statutory federal income tax rate is reconciled to the Company's
effective income tax rates below:

<TABLE>

                                                               Fiscal Year Ended March 31,
                                                               ---------------------------
                                                              2001        2002       2003
                                                              ----        ----       ----

        <S>                                                   <C>        <C>        <C>
        Statutory federal income tax rate...............      (34.0)%    (34.0)%    34.0%
        Meals and entertainment.........................        0.1        0.1       0.7
        State income tax, net of federal tax effect.....       (4.9)      (4.9)      4.9
        Income tax credits recognized...................       (0.5)      (0.3)     (2.3)
        Valuation allowance.............................       26.0       10.5     (40.1)
        Goodwill amortization...........................       13.2       28.5       6.1
        Other...........................................        0.1        0.1       1.6
                                                             ------    -------   -------

                                                                0.0%       0.0%      4.9%
                                                             =======   ========  ========

</TABLE>


                                      -62-
<PAGE>

Components of the net deferred income tax asset are as follows:

                                                                March 31,
                                                           ---------------------
                                                           2002         2003
                                                           ----         ----

                                                              (in thousands)
         Deferred income tax assets:
           Allowance for doubtful accounts ............   $    683    $    329
           Alternative minimum tax credit .............        998         998
           Research and development credit carryforward      5,835       5,674
           Capital loss carryforward ..................      2,328        --
           Compensation accruals ......................      1,223         854
           Inventory reserves .........................     11,247       3,014
           Warranty reserve ...........................      1,203         500
           Net operating loss carryforward ............     65,460      66,127
           Accrued interest ...........................      1,164        --
           Property ...................................        770       1,264
           Other ......................................      2,309       2,705
                                                          --------    --------
                                                            93,220      81,465
         Deferred income tax liabilities:
           Property and equipment .....................        159         111
           Other ......................................         11           9
                                                          --------    --------
                                                               170         120

            Valuation allowance .......................    (67,605)    (56,130)
                                                          --------    --------

              Net deferred income tax asset ...........   $ 25,445    $ 25,215
                                                          ========    ========


         Income tax expense was recorded for the fiscal year ended March 31,
2003 due to the results on an Internal Revenue Service audit on Teltrend Inc.
for pre-acquisition periods.

         Realization of deferred tax assets associated with the Company's future
deductible temporary differences, net operating loss carryforwards and tax
credit carryforwards is dependent upon generating sufficient taxable income
prior to their expiration. Although realization of the net deferred tax asset is
not assured and the Company has incurred taxable losses for the 2001, 2002 and
2003 fiscal years, management believes that it is more likely than not that it
will generate taxable income sufficient to realize a portion of the tax benefit
associated with future temporary differences, net operating loss carryforwards
and tax credit carryforwards prior to their expiration through a tax planning
strategy available to the Company. The tax planning strategy upon which the
Company is relying involves the potential sale of the Company's 91.5% owned
Conference Plus Inc. subsidiary. The estimated gain generated by the sale of
this business would generate sufficient taxable income to offset the recorded
net deferred tax assets. In fiscal 2003, the Company wrote off a fully reserved
capital loss carryforward obtained in the Teltrend acquisition and a fully
reserved foreign net operating loss carryforward. These carryforwards were
deemed to have no value as the Company has no ability to create a capital gain
or qualified foreign income to use the credits. In addition, the Company reduced
the recorded valuation allowance such that approximately $25 million of recorded
net deferred tax asset is supported by the tax planning strategy. The Company
based its estimate upon an independent appraisal of the value of the business in
the fourth quarter of fiscal year 2003. This appraisal, which is based on
discounted future cash flow, was used in the Company's evaluation of the
recorded net deferred tax assets and it was determined that the tax planning
strategy was sufficient to support the realization of the recorded deferred
income tax assets. On a quarterly basis, management will assess whether it
remains more likely than not that the net deferred tax asset will be realized.
If the appraised value of Conference Plus Inc. is not sufficient to generate
taxable income to recover the deferred tax benefit recorded, an increase in the
valuation allowance will be required through a charge to the income tax
provision. However, if the Company achieves sufficient profitability or has
available additional tax planning strategies to utilize a greater portion of the
deferred tax asset, a reduction in the valuation allowance will be recorded.



                                      -63-
<PAGE>

         The Company has approximately $6.7 million in income tax credit
carryforwards and a tax benefit of $66.1 million related to a net operating loss
carryforward that is available to offset taxable income in the future. The tax
credit carryforwards begin to expire in 2008 and the net operating loss
carryforward begins to expire in 2012.



                                      -64-
<PAGE>


NOTE 6. COMMITMENTS:

         The Company leases a 185,000 square foot corporate facility in Aurora,
Illinois to house manufacturing, engineering, sales, marketing and
administration pursuant to a lease that runs through 2017.

         The Company also has lease commitments to lease other office and
warehouse facilities at various locations. All of the leases require the Company
to pay utilities, insurance and real estate taxes on the facilities. In
addition, the Company has leases for manufacturing equipment, computer
equipment, photocopiers and autos. Total rent expense was $5.3 million, $6.7
million and $7.1 million for 2001, 2002, and 2003, respectively.


     Total minimum future rental payments at March 31, 2003 are as follows (in
thousands):

        2004................................................  $  4,558
        2005................................................     3,737
        2006................................................     3,511
        2007................................................     3,350
        2008................................................     3,390
        Thereafter..........................................    22,639
                                                              --------
                                                              $ 41,185
                                                              ========


NOTE 7. CAPITAL STOCK AND STOCK RESTRICTION AGREEMENTS:

Capital Stock Activity:

         On October 25, 2001 at the Annual Meeting of Stockholders, the
stockholders approved an amendment to the Company's Amended and Restated
Certificate of Incorporation to increase the number of shares of Class A Common
Stock authorized for issuance from 85,000,000 to 109,000,000.

         The Board of Directors has the authority to issue up to 1,000,000
shares of preferred stock in one or more series and to fix the rights,
preferences, privileges and restrictions thereof, including dividend rights,
conversion rights, voting rights, terms of redemption, liquidation preferences,
sinking fund terms and the number of shares constituting any series or the
designation of such series, without any further vote or action by stockholders.

Stock Restriction Agreements:

         The members of the Penny family (major stockholders) have a Stock
Transfer Restriction Agreement which prohibits, with limited exceptions, such
members from transferring their Class A Common Stock or Class B Common Stock
acquired prior to November 30, 1995, without first offering such stock to the
other members of the Penny family. A total of 18,824,908 shares of Common Stock
are subject to this Stock Transfer Restriction Agreement.




                                      -65-
<PAGE>



Shares issued and outstanding:

The following table summarizes Common Stock transactions for fiscal years 2001,
2002 and 2003.

                                                      Common Stock
                                                      Shares Issued
                                                         and
                                                      Outstanding
                                                      -----------       Treasury
                                                   Class A  Class B      Stock
                                                   -------  -------      -----
                                                           (in thousands)

Balance, March 31, 2000 .......................    40,179    19,051       --
Class B Stock Converted to Class A Stock ......        36       (36)      --
Conversion of subordinated debentures .........     1,164      --         --
Options Exercised .............................     1,044      --         --
Shares sold under Employee Stock Purchase Plan         50      --         --
                                                  -------   -------    -------

Balance, March 31, 2001 .......................    42,473    19,015       --
Issuance of Class A Common Stock ..............     3,315      --         --
Options Exercised .............................         5      --         --
 Shares sold under Employee Stock Purchase Plan       114      --         --
Treasury stock ................................      --        --          (93)
                                                  -------   -------    -------

Balance, March 31, 2002 .......................    45,907    19,015        (93)
Issuance of Class A Common Stock ..............      --        --         --
Options Exercised .............................        59      --         --
 Shares sold under Employee Stock Purchase Plan      --        --         --
Treasury stock ................................      --        --         --
                                                  -------   -------    -------

Balance, March 31, 2003 .......................    45,966    19,015        (93)
                                                  =======   =======    =======


NOTE 8. EMPLOYEE BENEFIT PLANS:

         401(k) Benefit Plan:

         The Company sponsors a 401(k) benefit plan (the "Plan") which covers
substantially all of its employees. The Plan is a salary reduction plan that
allows employees to defer up to 15% of wages subject to Internal Revenue Service
limits. The Plan also allows for Company discretionary contributions. The
Company provided for discretionary and matching contributions to the Plan
totaling approximately $1.3 million, $487,000 and $926,000 for fiscal 2001, 2002
and 2003, respectively.

         Employee Stock Purchase Plan:

         The Company maintains a stock purchase plan that allows participating
employees to purchase, through payroll deductions, shares of the Company's Class
A Common Stock for 85% of the average of the high and low reported sales prices
at specified dates. Under the stock purchase plan, 217,950 shares are
authorized. As of March 31, 2001 there were 76,781 shares available for future
issuance. As of March 31, 2002 and March 31, 2003 no shares were available for
issuance.



                                      -66-
<PAGE>


         Employee Stock Incentive Plan:

         In October 1995, the Company adopted a stock incentive plan (SIP plan)
that permits the issuance of Class A Common Stock, restricted shares of Class A
Common Stock, nonqualified stock options and incentive stock options to purchase
Class A Common Stock, performance awards and stock appreciation rights to
selected employees, officers, non-employee directors of the Company and advisory
board members and consultants. No stock awards were issued in fiscal 2001, 2002
or 2003.

         During March 2000, as part of the Teltrend merger (see Note 1), the
Company adopted the following three stock options plans (collectively the "three
adopted option plans"): Teltrend Inc. 1995 Stock Option Plan (the "1995 Stock
Option Plan"), Teltrend Inc. 1996 Stock Option Plan (the "1996 Stock Option
Plan"), and Teltrend Inc. 1997 Non-Employee Director Stock Option Plan (the
"1997 Director Option Plan"). Under both the 1995 and 1996 Stock Option Plans
nonqualified stock options were granted to key employees. Nonqualified stock
options were granted to Non-Employee Directors under the 1997 Director Option
Plan.

         Under the Company's SIP, the 1995 Stock Option Plan, the 1996 Stock
Option Plan, and the 1997 Director Option Plan ("all stock plans"), 13,000,000
shares were authorized and there were 1,733,149 shares available for further
issuance at March 31, 2003. The stock option activity under all stock plans is
as follows:

                                                 Outstanding    Weighted Average
                                                   Options        Exercise Price
                                                   -------        --------------

        Outstanding at March 31, 2000........     5,837,212            $7.17

                  Granted....................     3,859,650            11.79
                  Exercised..................    (1,043,826)            5.53
                  Expired....................        --                --
                  Canceled...................    (1,293,708)            9.75
                                              -------------         --------
        Outstanding at March 31, 2001........     7,359,328          $  9.37

                  Granted....................     5,726,973             1.94
                  Exercised..................        (5,000)            2.12
                  Expired....................        --                --
                  Canceled...................    (3,863,173)             7.35
                                              -------------         --------
        Outstanding at March 31, 2002........     9,218,128          $  5.61

                  Granted....................     3,181,671             2.01
                  Exercised..................       (59,375)            1.50
                  Expired....................        --                --
                  Canceled...................      (807,625)            6.08
                                                -----------         --------
        Outstanding at March 31, 2003........    11,532,799          $  4.60


         The exercise price of the stock options granted is generally
established at the market price on the date of the grant. The Company has
reserved Class A Common Stock for issuance upon exercise of these options
granted.

         During fiscal 2001 and 2002, respectively, the Company granted 3,000
and 30,000 stock options to non-employee advisory board members or consultants.
Compensation expense of $13,545 and $23,871 was recognized for the issuance of
these non-employee stock options under Statement of Financial Accounting
Standards No. 123 "Accounting for Stock-Based Compensation" FAS 123 for fiscal
2001and 2002 respectively. There were no non-employee grants in fiscal year
2003.

          In computing the fair value of stock options granted as disclosed in
Note 1, the fair value of each option is estimated on the date of grant based on
the Black-Scholes option pricing model, with the exception of the options
assumed in the acquisition which are described in Note 1. The estimate assumes,
among other things, a risk-free interest rate of 2.8% for fiscal year 2003 and
6.5% for fiscal years 2002 and 2001 and no dividend yield; expected volatility
of 98% for fiscal year 2003 and 73% for fiscal years 2002 and 2001 and an
expected life of 7 years. A majority of the options granted to employees in
fiscal 2001 vest ratably over five years. A majority of the options



                                      -67-
<PAGE>

granted to employees in fiscal 2002 vest ratably over two to five years. In
fiscal year 2003, approximately half of the options issued vest upon the earlier
of the achievement of company and individual goals established or 8 years. The
majority of the remaining options issued in fiscal year 2003 vest over five
years. The weighted average fair value of the options granted during the years
ended March 31, 2001, 2002 and 2003 were $8.43, $1.94 and $2.01, respectively.

The following table summarizes information about all stock options outstanding
as of March 31, 2003:

<TABLE>

                                         Options Outstanding                                Options Exercisable
                                         -------------------                                -------------------

      Range of            Number                               Weighted-           Number            Weighted
      Exercise        Outstanding at        Remaining           Average        Exercisable at         Average
       Prices             3/31/03              Life         Exercise Price         3/31/03        Exercise Price
       ------             -------              ----         --------------         -------        --------------

   <S>                   <C>                   <C>                <C>                <C>              <C>
   $1.07 - $1.57         3,674,491             8.81 yrs           $ 1.38             329,013          $ 1.18
    1.60 -   2.19        2,677,652             8.20 yrs             2.03             826,722            2.08
    2.21 -   5.03        3,043,551             7.54 yrs             4.23           1,175,045            4.47
    5.04 -  35.65        2,130,905             5.86 yrs            13.83           1,955,565           13.71
    36.18 - 36.18            6,200             6.97 yrs            36.18               3,720           36.18
                       -----------           ----------       ----------            --------      ----------

    $1.07 - 36.18       11,532,799             7.79 yrs           $ 4.60           4,290,065          $ 7.99

</TABLE>


NOTE 9. SEGMENT AND RELATED INFORMATION:

         Operating Segments:
         -------------------

         Westell's reportable segments are strategic business units that offer
different products and services. They are managed separately because each
business requires different technology and market strategy. They consist of:

                1)   A telecommunications equipment manufacturer of local loop
                     access products, and
                2)   A multi-point telecommunications service bureau
                     specializing in audio teleconferencing, multi-point video
                     conferencing, broadcast fax and multimedia teleconference
                     services.

Performance of these segments is evaluated utilizing, revenue, operating income
and total asset measurements. The accounting policies of the segments are the
same as those described in the summary of significant accounting policies.
Segment information for the fiscal years ended March 31, are as follows:

<TABLE>

                                                        Telecom          Telecom      Consolidated
                                                       Equipment        Services         Total
                                                       ---------        --------         -----
<S>                                                      <C>             <C>           <C>
2001
      Revenues.......................................    $319,494        $41,983       $361,477
      Operating income (loss)........................    (99,387)          8,128       (91,259)
      Depreciation and amortization..................      40,553          3,388         43,941
      Total assets...................................     295,960         19,179        315,139

2002
      Revenues.......................................    $191,302        $48,521       $239,823
      Operating income (loss)........................   (166,063)          4,420      (161,643)
      Depreciation and amortization..................      35,847          4,375         40,222
      Total assets...................................     105,969         20,184        126,153

2003
      Revenues.......................................    $168,216        $41,805       $210,021
      Operating income...............................       8,001          2,302         10,303
      Depreciation and amortization..................       8,843          4,475         13,318
      Total assets...................................      86,702         22,772        109,474

</TABLE>


                                      -68-
<PAGE>

Reconciliation of operating (loss) for the reportable segments to income (loss)
before income taxes:

                                                     Fiscal Year Ended March 31,
                                                     ---------------------------
                                                2001           2002       2003
                                                ----          ----        ----

Operating income (loss)....................  $ (91,259)   $ (161,643)   $10,303
Other expense, net.........................          --         (222)        (9)
Interest expense...........................       2,197         5,564     2,648
                                                  -----       -------   --------

Income (loss) before income taxes..........  $ (93,456)   $ (167,429)   $ 7,646
                                             ==========   ===========   ========

         Enterprise-wide Information:
         ----------------------------

         The Company's revenues are primarily generated in the United States.
More than 90% of all revenues were generated in the United States in fiscal
years 2002 and 2003 and approximately 84% in fiscal year 2001.

Significant Customers and Concentration of Credit:

         The Company is dependent on certain major telephone companies that
represent more than 10% of the total revenue. Sales to major customers and
successor companies that exceed 10% of total revenue are as follows:

                                                            Fiscal Year Ended
                                                                 March 31,
                                                          ----------------------
                                                          2001     2002     2003
                                                          ----     ----     ----
        Verizon.......................................     25.9%   43.2%   42.5%
        SBC...........................................     17.6    14.9    15.2
        BellSouth.....................................      1.6     0.7    13.9
        Fujitsu Telecommunications Europe Limited.....     14.3     3.5     1.8



                                      -69-
<PAGE>


         Major telephone companies comprise a significant portion of the
Company's trade receivables. Receivables from major customers that exceed 10% of
total accounts receivable balance are as follows:
                                                               Fiscal Year Ended
                                                                   March 31,
                                                                   ---------
                                                                2002     2003
                                                                ----     ----
        Verizon.............................................    46.5%     50.3%
        SBC.................................................    12.6      22.7
        Fujitsu Telecommunications Europe Limited...........    10.4       1.3

         Geographic Information

         The Company's financial information by geographic area was as follows
for the years ended March 31:

                                            Domestic  International  Total
                                            --------  -------------  -----
                                                      (in thousands)
2001
        Revenue...........................$ 303,758    $ 57,719   $ 361,477
        Operating loss....................  (88,394)     (2,865)    (91,259)
        Identifiable assets...............  313,067       2,072     315,139

2002
        Revenue...........................$ 224,341    $ 15,482   $ 239,823
        Operating loss.................... (161,513)       (130)   (161,643)
        Identifiable assets...............  124,045       2,108     126,153

2003
        Revenue...........................$ 198,771    $ 11,250   $ 210,021
        Operating income (loss)...........   11,511      (1,208)     10,303
        Identifiable assets...............  106,591       2,883     109,474


         International identifiable assets and operating loss are related to
Westell Ltd., which is located in the United Kingdom and Conference Plus Global
Services, Ltd., which is located in Dublin Ireland.

NOTE 10. RESTRUCTURING CHARGE:

         The Company recognized restructuring costs of $2.9 million in the three
months ended March 31, 2000. Approximately $2.4 million of the total
restructuring cost had been accrued in connection with the purchase of Teltrend
Inc. and related primarily to the termination of approximately 30 Teltrend Inc.
employees. The remaining $0.5 million of the restructuring costs has been
charged to operations and related to personnel, legal, and other related costs
incurred in order to eliminate redundant employees due to the acquisition of
Teltrend Inc. The goal of the restructuring plan was to combine and streamline
the operations of the two companies and to achieve synergies related to the
manufacture and distribution of common product lines. As of March 31, 2003, $2.6
million of these restructuring costs had been paid leaving a balance of
approximately $0.3 million.

         The Company recognized a restructuring charge of $6.3 million in fiscal
year 2002. These charges included personnel, facility and certain development
contract costs. The purpose of the fiscal 2002 restructuring plan was to
decrease costs primarily by a workforce reduction of approximately 200 employees
and to realign the Company's cost structure with the Company's anticipated
business outlook. During fiscal year 2003, a portion of a leased facility
previously vacated was sublet resulting in a reversal of $0.9 million of
facility lease costs accrued in fiscal 2002. As of March 31, 2003, $4.4 million
of the fiscal 2002 restructuring costs had been paid leaving a balance of
approximately $1.0 million.

         The Company recognized a net restructuring expense of $1.7 million
consisting of a charge of $2.6 million offset by an $855,000 reversal in fiscal
year 2003. This charge included personnel and facility costs related primarily
to the closing of a Conference Plus, Inc. facility and personnel and facility
charges at Westell Limited. The reversal relates to a reduction in an accrual
for lease cost due to the sublet of a leased facility at Conference Plus,



                                      -70-
<PAGE>

Inc. in fiscal 2002. Approximately 25 employees were impacted by these
reorganizations. As of March 31, 2003, the Company paid approximately $0.9
million of these accrued restructuring costs leaving a balance of $1.6 million.

The restructuring charges and their utilization are summarized as follows:

<TABLE>

                    Accrued                     Accrued                      Accrued       2003           Accrued
(Dollars in            at                          at                           at      Charged              at
thousands)         March 31      2001     2001  March 31      2002     2002  March 31   net of      2003  March
                     2000     Charged  Utilized   2001     Charged  Utilized   2002     reversal Utilized 31 2003
------------------ ---------- -------- -------- ---------- -------- -------- ---------- -------- -------- ---------
<S>                  <C>      <C>      <C>        <C>      <C>       <C>       <C>       <C>      <C>        <C>
Employee costs.......$ 2,604  $ 1,550  $ 1,552    $ 2,602  $ 4,066   $4,629    $ 2,039   $1,120   $2,390     $ 769
Legal, other and
facility costs......     300      150       55        395    2,191      412      2,174      552      650     2,076
------------------ ---------- -------- -------- ---------- -------- -------- ---------- -------- -------- ---------
Total................$ 2,904  $ 1,700  $ 1,607    $ 2,997  $ 6,257  $ 5,041    $ 4,213  $ 1,672  $ 3,040   $ 2,845
================== ========== ======== ======== ========== ======== ======== ========== ======== ======== =========

</TABLE>


NOTE 11. OTHER INCOME(EXPENSE), NET:

         Other income (expense), net for the years ended March 31, 2002 and 2003
was primarily due to interest income, unrealized gains and losses on
intercompany balances denominated in foreign currency, and the elimination of
minority interest.


NOTE 12.  EARNINGS PER SHARE

<TABLE>

                                                                       Year ended March 31,
                                                       ------------------------------------------------
Dollars in thousands, except per share amounts             2001             2002              2003
                                                       -------------    --------------    -------------
<S>                                                      <C>              <C>                  <C>
BASIC EARNINGS (LOSS) PER SHARE:
Net income (loss)                                        $ (93,856)       $ (167,429)          $ 7,274
Average basic shares outstanding                            61,072            64,317            64,925
Basic net income (loss) per share                          $ (1.54)          $ (2.60)           $ 0.11

DILUTED EARNINGS (LOSS) PER SHARE:
Net income (loss)                                        $ (93,856)       $ (167,429)          $ 7,274
Average diluted shares outstanding                          61,072            64,317            64,925
    Effect of dilutive securities: stock options                 -                 -              201
     and warrants
                                                       -------------    --------------    -------------
                                                            61,072            64,317            65,126
                                                       -------------    --------------    -------------
Diluted net income (loss) per share                        $ (1.54)          $ (2.60)           $ 0.11

</TABLE>


                                      -71-
<PAGE>


                   WESTELL TECHNOLOGIES, INC. AND SUBSIDIARIES

                SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS

                         ACCOUNTS RECEIVABLE ALLOWANCES
                                 (IN THOUSANDS)


                                                         2001     2002     2003
                                                         ----     ----     ----

Balance at beginning of year.........................    $855   $1,363   $1,531
Provision for doubtful accounts......................     627      971      623
Write-offs of doubtful accounts, net of recoveries...    (119)    (803)  (1,249)

Balance at end of year...............................  $1,363   $1,531     $905
                                                       ======   ======   ======







                                      -72-