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, 2002 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 past 90 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.

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
June 21, 2002 (based upon an estimate that 70% of the shares are so owned by
non-affiliates and upon the average of the closing bid and asked prices for the
Class A Common Stock on the NASDAQ National Market on that date) was
approximately $66,805,670. 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 21, 2002, 45,907,065 shares of the registrant's Class A Common Stock
were outstanding and 19,014,869 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 by reference:
        Proxy Statement for 2002 Annual Meeting of Stockholders (Part III).

<PAGE>

           CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

        Certain statements contained in this Annual Report of Form 10-K (the
"Form 10-K") regarding matters that are not historical or that contain the words
"believe", "expect", "intend", "anticipate," "may," "will," "should," "expects,"
"plans," "anticipates," "believes," "estimates," "predicts," "potential,"
"continue," "projects," "intends" or the negative of such terms or other
comparable terminology or derivatives thereof, are forward looking statements.
These statements are only predictions. 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 "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

         The Company designs, manufactures, markets and services a broad range
of digital and analog products used by telephone companies and other
telecommunications service providers to deliver broadband services primarily
over existing copper telephone wires that connect end users to a telephone
company's central office. The copper wires that connect users to these central
offices are part of the telephone companies' networks and are commonly referred
to as the local loop or the local access network. Westell products and solutions
are deployed worldwide, but Westell realizes the majority of its revenues from
the North American market.

         Westell is a provider of broadband and digital subscriber line (DSL)
technology solutions that allow the transport of high-speed data over the local
loop and enable telecommunications companies to provide cost-effective and
high-speed services over existing copper infrastructure. In addition, Westell
also provides DSL products and solutions for businesses and enterprises such as
Internet Service Providers. The Company also designs, develops and sells Telco
Access Products (TAP) that monitor and maintain special service circuits in
telephone companies' local loops. These special service circuits, such as T-1,
are higher speed lines that provide voice and/or data services.

         Westell's 88.3% owned service subsidiary, Conference Plus, Inc.
provides audio, video, and web conferencing services. Businesses and individuals
use these services to hold voice, video or web conferences with many people at
the same time. Conference Plus sells its services directly to large customers,
including Fortune 100 companies and serves other customers indirectly through
its private reseller program.

THE COMPANY'S PRODUCTS

     Through its four broadband access product lines, the Company offers 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 four product lines include:

o    Customer Networking Equipment: Westell Customer Networking Equipment (CNE)
     products and solutions enable residential, small business and Small Office
     Home Office (SOHO) users to network multiple computers, telephones and
     other devices to access the Internet through the power of broadband xDSL
     solutions.
o    Carrier Transport & Multiplexer: Westell's Carrier Transport and
     Multiplexer (CTM) products enable our customers to deliver and manage a
     range of broadband services from the telco central office with interfaces
     to other carriers such as wireless as well as enterprise customers.
o    Carrier Service Access: Westell Carrier Service Access (CSA) products
     enable telco transmission, maintenance, and troubleshooting of multiple
     broadband solutions (telco services such as DS1, DS3, HDSL2, HDSL4, DDS and
     ISDN) from the customer access point to the serving telco central office.

                                     - 1 -

<PAGE>

o    OSP, Enclosures & Accessories: Westell Outside Plant (OSP) products and
     solutions focus on facilities equipment linking the telco's central office
     to the communications subscriber through various transmission technologies,
     such as analog, digital data, traditional repeatered T1, HDSL, HDSL2, and
     HDSL4.

         The Company reports results from these four product lines by two main
groups; Broadband Products and Telco Access Products ("TAP"). Broadband products
include CNE and CTM product lines and TAP products include CSA and OSP product
lines. The prices for the products within each market group varies 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 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. 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):

<TABLE>
<CAPTION>
                                                                                  Fiscal Year Ended March 31,
                                                                                  ------------------------------
                                                                                   2000       2001        2002
                                                                                   ----       ----        ----
                                                                                           (In thousands)
<S>                                                                               <C>       <C>           <C>
Broadband products.........................................................     $ 37,960   $198,660     $105,011
TAP products...............................................................       52,225    120,834       86,291

Broadband products % of total revenues.....................................        31.4%      55.0%        43.8%
TAP products % of total revenues...........................................        43.1%      33.4%        35.9%

</TABLE>

         Broadband Products. Westell's Broadband products allow the transport of
high-speed data over the local loop and enable telecommunications companies to
provide cost-effective and high-speed services over existing copper
infrastructure.

         Digital subscriber line 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 in one direction,
or 140 times faster than standard 56k modem service, and up to 1 Megabits per
second in the reverse direction, or 17 times faster than standard 56k modem
service, while also providing standard analog telephone service over a single
pair of copper wires at distances of up to 18,000 feet. With DSL technology, a
user can talk and have high-speed data transmissions at the same time over a
regular 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 telephone
companies to install second lines to support these services. DSL technology is
also known as Asymmetric Digital Subscriber Line (ADSL) when it refers to
products that provide bi-directional transmission capacity at varying speeds.



                                     - 2 -

<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 sits on a desktop next to a
personal computer.

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

<TABLE>
<CAPTION>

Product                   Description                                         Applications
-------                   -----------                                         ------------

<S>                       <C>                                                 <C>
WireSpeed(TM)ADSL Bridge  Asymmetrical Digital Subscriber Line (ADSL)         Enables a residential customer of ADSL
Modem                     customer premise equipment that is connected to a   service to connect a home PC to the
.......................    corresponding ADSL device in the service            ADSL service with a 10/100BT Ethernet
.......................    providers' central office. Users can achieve        connection.
.......................    speeds of up to 8 megabits per second downstream
.......................    and up to 1 megabit per second upstream.
.......................    Westell's WireSpeed Bridge ADSL Modem provides a
.......................    10/100BT Ethernet connection to the residential
.......................    home PC.

WireSpeedTM  ADSLCombo    Westell's WireSpeed Combo ADSL Modem provide a      Enable a residential customer of ADSL
Modem.................    10/100BT Ethernet connection and/or a USB           service to connect home PC's to the
.......................    connection to the residential home PC.              ADSL service by using the 10/100BT
.......................                                                        Ethernet port and/or the USB port.

WireSpeedTM  DSL Gateway  Westell's Data Gateway is a broadband high-speed    Enables residential, small office home
.......................    xDSL (ADSL and G.SHDSL) multi-user data platform    office (SOHO) and small businesses to
.......................    for residential, small office home office (SOHO)    network their broadband ADSL/G.SHDSL
.......................    and small businesses. The product offers 4 port     service to multiple PC's and other
.......................    10/100BT, a USB port HPNA and is 802.11b wireless   computing devices together.
                          ready.

WireSpeedTM  ADSL NAT     Westell's WireSpeed ADSL NAT Router offers 4 port   Enables residential and SOHO to
Router................    10/100BT NAT Router with NAT based firewall for     network they're broadband ADSL service
.......................    residential and SOHO.                               to multiple PC's and other computing
.......................                                                        devices via a 4 port 10/100BT Ethernet
.......................                                                        interface.

</TABLE>



                                     - 3 -

<PAGE>

         TAP Products. Provide telephone companies with cost-effective solutions
to transport, maintain and improve the reliability of high-speed services over
copper and fiber lines in the local access network. The following table sets
forth a representative list of the Company's products and their applications:

<TABLE>
<CAPTION>

Product                      Description                                    Applications
-------                      -----------                                    ------------

<S>                          <C>                                            <C>
HDSL2 transmission products  HDSL2 plug-in units provide                    Providing T1 circuits between Telco
.......................       single-cable-pair T1 circuits between  the     locations (CO, CEV, fiber-hut) and their
.......................       Telco and their T1 customer                    customers' premise.  Utilizes one pair
.......................                                                      of "last-mile" copper cable to
                                                                            cost-effectively set up the T1 line.

HDSL4 transmission products  HDSL4 plug-in units provide 2-cable-pair T1    Providing extended T1 circuits between
.......................       circuits between the Telco and their T1        Telco locations (CO, CEV, fiber-hut) and
.......................       customer for long distance circuits.           their customer premise.  This specific
.......................                                                      application focuses on distances that
.......................                                                      HDSL2 cannot reach.  Utilizes two pair
.......................                                                      of "last-mile" copper cable and
.......................                                                      specialized HDSL4 technology to cost
                                                                            effectively set up a T1 line.

Stiletto(TM).............    xDSL transmission system designed to offer     DS1 and SDSL services for businesses.
.......................       the service providers the most economical
.......................       service delivery currently available.
.......................       Service provider savings will be in terms of
.......................       both CapEx and OpEx.

NIU-PM (Network Interface    Network Interface Unit with Performance        Facilitates the maintenance and
Unit-Performance             Monitoring that stores circuit performance     performance monitoring of T-1
Monitoring)...........       and maintenance information for a single T1    facilities.  Provides a "demarcation
                             circuit.                                       point" between the Telco equipment and
                                                                            the customer's equipment.

MegaJack(TM)(Network         DS3 Network Interface Unit.  An electronic     Facilitates the maintenance and
Interface Unit).......       module located in the phone companies'         monitoring of DS3 transmission. Provides
.......................       central office or at a DS3 customer's          a "demarcation point" between the Telco
.......................       premise that provides maintenance              equipment and the customer's equipment.
.......................       capabilities for telephone lines providing
.......................       DS3 transmission.

Op-T-Span(TM)............    Fiber optic transmission device designed to    Most often used to provide service to
.......................       protect telephone company equipment and        wireless service providers and utility
.......................       employees operating in high voltage            companies whose sites are in high
.......................       environments.                                  voltage areas.

SmartLink(TM)............    Automatic protection system for up to 8 DS1    SmartLink provides a high-speed backup
.......................       lines.  SmartLink protects all DS1             for any critical DS1 circuits.
.......................       transmission technologies.                     SmartLink is often deployed to protect
.......................                                                      DS1 circuits serving financial
.......................                                                      institutions, customer service centers
                                                                            and wireless service providers.

NCTE Mountings &             Indoor and outdoor mechanical shelves and      Provides installation of end user
Enclosures (NCTE = Network   enclosures used to house Westell's and other   electronics.
Channel Terminating          companies' traditional and higher speed
Equipment)............       modules.

</TABLE>

                                     - 4 -

<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 2000 and 2002, the Company received $6.7 and $2.0 million,
respectively 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.

         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 optimize the opportunity to achieve the lowest cost
positions. The Company's strong quality record 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 and products under development 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 DMT technology. 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.

CUSTOMERS

         The Company's principal customers historically have been U.S. telephone
companies. 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 $10.9 million, $57.7 million and $15.5 million of the
Company's revenues in fiscal 2000, 2001 and 2002, respectively, accounting for
9.0%, 16.0% and 6.5% 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 51.4%, 50.6%
and 66.4% of the Company's revenues in fiscal 2000, 2001 and 2002, respectively.
Sales to the Company's largest two customers, Verizon and SBC accounted for 43%
and 15% of the Company's revenues in fiscal 2002, 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 Telco
access providers to seek out additional or alternative suppliers or to
undertake, as permitted under applicable regulations, the internal production of
products would have a material adverse effect on the Company's business and

                                     - 5 -

<PAGE>

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

         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 telcos, the Company must
undergo lengthy approval and purchase processes.

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, our 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
directly to end-users through the Company's website and certain retail outlets
such as Best Buy. 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 RBOC's 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.

                                     - 6 -

<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 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. The Company's
standard limited warranty for its DSL products ranges from one to five years.
Since the Company is continually introducing new products, it can not predict
the level of future warranty claims on its products. See "Risk Factors".

MANUFACTURING

         The Company utilizes a combination of internal manufacturing capability
and a set of turnkey contract manufacturers to satisfy its customers'
requirements. To meet demand, primarily for its DSL systems, the Company has
outsourced some its manufacturing requirements when customer demand exceeds
production capacity. 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."

         A substantial portion of the Company's shipments in any fiscal period
can relate to orders for products received in that period. Further, a
significant percentage of orders, such as Network Interface Units, or NIUs,
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 an agreement that the customer 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. The Company's domestic facilities and processes are certified
pursuant to ISO 9001.

COMPETITION

         The markets for the Company's products are intensely competitive and
the Company expects competition to increase in the future, especially in the
evolving broadband and DSL markets. Westell's primary competitors vary by market
segment. The Company's principal competitors with respect to its TAP business
unit are Adtran, Inc., ADC Telecommunications and HyperEdge. The Company's
current competitors in the CPE business unit are primarily Thomson, Siemens,
Creative Labs and 2 Wire.

         Products that increase the efficiency of digital transmission over
copper wire face competition from 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. In addition, the deployment of products and technologies for
copper wire may also reduce the demand for the types of products currently
manufactured by the Company. The deployment of HDSL2 and HDSL4 systems in the
U.S., while increasing the Westell sales of HDSL2 and HDSL4 equipment, also
reduces telephone companies' need for T-1 repeaters, which may result 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,

                                     - 7 -

<PAGE>

and will likely continue to decrease, as high capacity digital transmission
becomes less expensive and more widely deployed. See "Risk Factors."

TELECONFERENCE SERVICES

         Conference Plus, Inc (CPI), founded in 1988, is an application service
provider (ASP) or company that manages and hosts specific software and
applications, in this case relating to conferencing and meeting services.
Conference Plus is an 88.3% owned subsidiary of Westell and manages its
teleconferencing and meeting services through its operations center in
Schaumburg, Illinois and facilities in Lombard, Illinois and Dublin, Ireland.
Conference Plus services generated $30.8 million, $42.0 million and $48.5
million in revenues in fiscal 2000, 2001 and 2002, respectively.

         Conference Plus allows multiple individuals 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
its customers to share this blend of information, Conference Plus can 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.

         CPI is distinguished by three strategies:

         o  Re-seller Approach
         o  Carrier Neutral/Network Independent Strategy; and
         o  International Expansion

         RE-SELLER APPROACH

                  Conference Plus acts primarily as a re-seller of conferencing
         and meeting services, managing and hosting applications for major
         carrier and Fortune 100 companies. 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
         and video teleconferencing services to maintain continuity and save
         costs. Audio and video teleconferencing is a people intensive service,
         requiring high levels of concentration on the execution of each and
         every call. .................. ..................As a reseller,
         Conference Plus has developed back-office capabilities, providing
         reservation, confirmation, billing, accounting and quality functions
         for its customers that use their own brand name and sales and
         distribution channels and rely on Conference Plus to manage operations.
         The re-seller approach also demands very high quality standards and
         Conference Plus has received the first ISO 9002 certification in the
         audio and video conferencing services industry.

         CARRIER NEUTRAL/NETWORK INDEPENDENT STRATEGY

                  A critical part of Conference Plus' approach is its carrier
         neutral/network independent strategy. CPI is not aligned with any major
         carrier and can therefore serve as an application service provider,
         reselling its services to each of the major carriers as well as Fortune
         100 companies. Each customer can be assured that the voice and data
         traffic that is generated by their conferencing and meeting services
         stays on its own respective network and does not overflow to a
         competitor's network. CPI's unique architecture ensures that customers
         have access to all of CPI's capacity during any of their conference
         calls or meetings.

         INTERNATIONAL EXPANSION

                  Conference Plus currently serves its teleconferencing needs of
         customers headquartered in the United States from its Schaumburg,
         Illinois and Lombard, Illinois facilities. As these customers globalize
         their telecommunications services, Conference Plus will be required to
         expand its operational presence internationally to meet these needs.

                                     - 8 -

<PAGE>

         The CPI's facility in Dublin, Ireland was established to help meet this
         growing demand. In addition, 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. 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.

         Conference Plus maintains 24 hour, 7 day a week telephone support and
provides on-site support for larger, more complex teleconferences. Conference
Plus also provides technical consulting, call planning assistance and usage
analysis to its customers with respect to the introduction, enhancement and
expanded utilization of its services.

         Competition in the teleconferencing business is intense and the Company
expects that competition will increase due to low barriers to 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 lifted certain restrictions on the
carriers' ability to provide interactive multimedia services including video on
demand. Under the Telecommunications Act, new regulations have been established
whereby carriers may provide various types of services beyond traditional voice
offerings.

         In addition, the Telecommunications Act 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 27
patents and has an additional 16 U.S. patents pending relating to its TAP and
DSL products. 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

                                     - 9 -

<PAGE>

transceiver suppliers fail to deliver implementable or standards compliant
transceiver solutions to the Company 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.

         Rapid technological evolution has resulted in the need to implement
strategic alliances with customers and 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.

EMPLOYEES

         As of March 31, 2002, the Company had 969 full-time employees.
Westell's equipment manufacturing business had a total of 679 full-time
employees, consisting of 144 in sales, marketing, distribution and service, 82
in research and development, 420 in manufacturing and 33 in administration.
Conference Plus had a total of 290 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.



                                     - 10 -

<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 before
purchasing our securities. If any of the following risks occurs, our business,
operating results or financial condition would likely suffer, and the market
price for our securities could decline and you could lose your investment.

WE HAVE INCURRED AND MAY CONTINUE TO INCUR LOSSES.

        Due to our significant ongoing investment in DSL and HDSL technology,
which can be used by telephone companies and other service providers to increase
the transmission speed and capacity of copper telephone wires, we have incurred
losses through fiscal 2002. To date, we have incurred operating losses, net
losses and negative cash flow on both an annual and quarterly basis. For the
year ended March 31, 2002, we had net losses of $93.9 million.

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

         o   creating sustainable DSL and HDSL sales opportunities;
         o   lowering our DSL and HDSL product costs through design and
             manufacturing enhancements and volume reductions;
         o   developing new and enhanced T-1 products; and
         o   developing other niche products for both DSL and T-1 markets.

         In addition, we expect to continue to evaluate new product
opportunities. As a result, we will continue to invest heavily in research and
development and sales and marketing, which could adversely affect our short-term
operating results. We can offer no assurances that we will achieve profitability
in the future.

OUR STOCK PRICE IS VOLATILE AND COULD DROP UNEXPECTEDLY.

         Like many technology stocks, our stock has demonstrated and likely will
continue to demonstrate extreme volatility as valuations, trading volume and
prices move significantly. This volatility may result in a material decline in
the market price of our securities, and may have little relationship to our
financial results or prospects.

Our class A common stock price has experienced substantial volatility in the
past and is likely to remain volatile in the future due to factors such as:

         o   Our actual and anticipated quarterly and annual operating results;
         o   Variations between our actual results and analyst and investor
             expectations;
         o   Announcements by us or others on developments affecting our
             business;
         o   Investor and analyst perceptions of our company and comparable
             public companies;
         o   Future sales of debt or equity securities;
         o   The activities of short sellers and risk arbitrageurs regardless of
             our performance; and
         o   Conditions and trends in the data communications and
             Internet-related industries.

Many of the factors listed above are not within our control. In the past,
companies that have experienced volatility in the market price of their stock
have been the subject of securities class litigation. If we were involved in
securities class litigation, we could incur substantial costs and our
management's attention could be diverted.

WE FACE SECURITIES CLASS LITIGATION WHICH COULD SIGNIFICANTLY HARM OUR BUSINESS.

In fiscal 2000, Westell Technologies, Inc. and certain of its officers and
directors were named in consolidated class actions. The cases allege generally
that the defendants violated the antifraud provisions of the federal securities
laws by allegedly issuing material false and misleading statements and/or
allegedly omitting material facts necessary to make the statements made not
misleading thereby allegedly inflating the price of Westell stock for certain
time periods. The cases seek damages allegedly sustained by plaintiffs and the
class by reason of the acts and transactions alleged in the complaints as well
as interest on any damage award, reasonable attorneys' fees, expert fees, and
other costs. We cannot predict what the outcome of these lawsuits will be. It is
possible that we may be required to pay substantial damages or settlement costs

                                     - 11 -

<PAGE>

in excess of our insurance coverage, which could have a material adverse effect
on our financial condition and results of operation. Any verdict against us
could harm our business. Even if we are meritorious in such litigation, we have
incurred and could incur in the future substantial legal costs and management's
attention and resources could be diverted from our business which could cause
our business to suffer.

WE MAY NEED ADDITIONAL FINANCING.

We must continue to enhance and expand our product and service offerings in
order to maintain our competitive position and to increase our market share. As
a result and due to our net losses, the continuing operations of our business
may require substantial capital infusions. Whether or when we can achieve cash
flow levels sufficient to support our operations cannot be accurately predicted.
Unless such cash flow levels are achieved, we may require additional borrowings
or the sale of debt or equity securities, sale of non-strategic assets, or some
combination thereof, to provide funding for our operations. In addition, if we
are unable to generate sufficient working capital or obtain alternative
financing, we may not be able to repay our debt under our existing credit
facilities when it becomes due. If we cannot generate sufficient cash flow from
our operations, or are unable to borrow or otherwise obtain additional funds to
finance our operations when needed, our financial condition and operating
results would be materially adversely affected and we would not be able to
operate our business.

WE HAVE AN ESTIMATED $67 MILLION OF TOTAL INDEBTEDNESS AT JUNE 27, 2002, WHICH
COULD HURT OUR ABILITY TO BORROW AND UTILIZE CASH FLOW AS NECESSARY AND RESTRICT
OUR OPERATIONS.

The degree to which we are leveraged could have important consequences,
including the following:

         o   our ability to borrow may be limited and additional amounts for
             working capital and capital expenditures may not be available;
         o   a substantial portion of our cash flows must be used to pay our
             interest expense and repay our debt, which reduces the funds that
             would otherwise be available for our operations or product
             development;
         o   we may be more vulnerable to economic downturns and competitive
             pressures and may have reduced flexibility in responding to
             changing business, regulatory and economic conditions; and
         o   fluctuations in market interest rates will affect the cost of our
             borrowings.

In addition, our credit facilities contain numerous covenants imposing financial
and operating restrictions on our business. These restrictions may affect our
ability to operate our business and may limit our ability to take advantage of
potential business opportunities as they arise. Our ability to meet the
financial ratios and tests and other provisions contained in our credit
facilities could be affected by changes in economic or business conditions or
other events beyond our control. Any failure to comply with the obligations in
our credit facilities could result in an event of default under our facilities,
which, if not cured or waived, could permit acceleration of our indebtedness
which could have a material adverse effect on us. In addition, our credit
facilities expire on June 30, 2003. If we do not obtain alternative financing or
generate sufficient working capital, our ability to refinance this debt could be
materially adversely affected.

DUE TO THE RAPID TECHNOLOGICAL CHANGES IN OUR INDUSTRY, OUR PRODUCTS MAY BECOME
OBSOLETE BEFORE WE CAN REALIZE SIGNIFICANT REVENUES FOR OUR PRODUCTS, WHICH
COULD CAUSE US TO INCUR CHARGES FOR EXCESS AND OBSOLETE INVENTORY AND MATERIALLY
HARM OUR BUSINESS.

The telecommunications industry is subject to rapid technological change and
volatile customer demands, which results in a short product commercial life
before a product becomes obsolete. As a result, we have in the past and may in
the future devote disproportionate resources to a product that has an unexpected
short commercial life and/or have to write off excess and obsolete inventory,
each of which would harm our operating results and financial condition and harm
our business. From time to time, we may need to write off inventory as excess or
obsolete. In the past, we have experienced such write-offs. For example, 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.

                                     - 12 -

<PAGE>

PRICING PRESSURES ON OUR DSL AND HDSL PRODUCTS MAY AFFECT OUR ABILITY TO BECOME
PROFITABLE.

We have and may in the future offer DSL and HDSL products based upon forward
pricing. Forward pricing will cause us to incur low margins on DSL and HDSL
product sales unless we can reduce manufacturing costs. We believe that
manufacturing costs may decrease if:

         o   more cost-effective transceiver technologies become available,
         o   product design efficiencies and component integration are obtained,
             and
         o   we achieve economies of scale related to increased volume.

There is no guaranty that we will be able to secure significant additional DSL
and HDSL orders and reduce per unit manufacturing costs that we have factored
into our forward pricing of DSL and HDSL products. As a result, we could incur
low margins in connection with sales of DSL and HDSL products even if our unit
volume increases. Low margins from our sales of DSL and HDSL products could
result in fluctuations in our quarterly operating results and would materially
and adversely affect our ability to achieve profitability and implement our
business goals.

OUR PRODUCTS FACE COMPETITION FROM OTHER EXISTING PRODUCTS, PRODUCTS UNDER
DEVELOPMENT AND CHANGING TECHNOLOGY, AND IF WE DO NOT REMAIN COMPETITIVE, OUR
BUSINESS WILL SUFFER AND WE WILL NOT BECOME PROFITABLE.

The markets for our products are characterized by:

         o   intense competition within the DSL and HDSL market and from other
             industries such as cable and wireless industries;
         o   rapid technological advances;
         o   evolving industry standards;
         o   changes in end-user requirements;
         o   frequent new product introductions and enhancements; and
         o   evolving customer requirements and service offerings.

New products introductions or changes in services offered by telephone companies
or over the Internet could render our existing products and products under
development obsolete and unmarketable. 2002, respectively. Further, we believe
that the domestic market for many of our traditional T-1 products is decreasing,
and will likely continue to decrease, as high capacity digital transmission
becomes less expensive and more widely deployed. Our future success will largely
depend upon our ability to continue to enhance and upgrade our existing
products, such as T-1 and DSL, and to successfully develop and market new
products, such a HDSL, on a cost-effective and timely basis.

In addition, our current product offerings primarily enable telephone companies
to deliver digital communications over copper telephone wires in the local
access network. Telephone companies also face competition in the delivery of
digital communications from cable operators, new telephone companies, and
wireless service providers. If end users obtain their high-speed data
transmission services from these alternative providers, then the overall demand
for DSL products will decline.

To remain competitive we must develop new products to meet the demands of these
emerging transmission media and new local access network providers. Our business
would be severely harmed if our products become obsolete or fail to gain
widespread commercial acceptance due to competing products and technologies.

EVOLVING INDUSTRY STANDARDS MAY ADVERSELY AFFECT OUR ABILITY TO SELL OUR
PRODUCTS AND CONSEQUENTLY HARM OUR BUSINESS.

Industry wide standardization organizations such as the American National
Standards Institute and the European Telecommunications Standards Institute are
responsible for setting transceiver technology standards for DSL and HDSL
products. We are dependent on transceiver technologies from third parties to
manufacture our products. If transceiver technologies needed for standards-based
products are not available to us in a timely manner and under reasonable terms,
then our revenues would significantly decrease and our business and operating
results would suffer significantly.

                                     - 13 -

<PAGE>

In addition, the introduction of competing standards or implementation
specifications could result in confusion in the market and delay decisions
regarding deployment of our products. Delay in the announcement of standards
would materially and adversely impact our product sales and would severely harm
our business.

ANY UNEXPECTED INCREASE IN DEMAND FOR DSL AND HDSL PRODUCTS COULD ADVERSELY
IMPACT OUR ABILITY TO MANUFACTURE SUFFICIENT QUANTITIES OF DSL AND HDSL
PRODUCTS, WHICH WOULD AFFECT OUR ABILITY TO ATTRACT AND RETAIN CUSTOMERS.

Any unexpected increase in demand for DSL and HDSL products could adversely
impact our ability to supply DSL and HDSL products in a timely manner, which
would harm our business. Without proper lead times, we may not have the ability
to, or may have to pay a premium to, acquire and develop the necessary
capabilities to satisfy an unexpected increase in demand for our products. We
may become dependent upon subcontractors to manufacture a portion of our DSL
products and expect that our reliance on these subcontractors will increase if
demand for our DSL products increases. Reliance on subcontractors involves
several risks, including the potential lack of adequate capacity and reduced
control over product quality, delivery schedules, manufacturing yields and
costs. The use of subcontractors could result in material delays or interruption
of supply as a consequence of required re-tooling, retraining and other
activities related to establishing and developing subcontractor relationships.
Any manufacturing disruption would impair our ability to fulfill orders, and if
this occurs, our revenues and customer relationships would be materially
adversely affected. Any material delays or difficulties in connection with
increased manufacturing production or the use of subcontractors could severely
harm our business. Our failure to effectively manage any increase in demand for
our products would harm our business.

WE ARE DEPENDENT ON THIRD PARTY TECHNOLOGY, THE LOSS OF WHICH WOULD HARM OUR
BUSINESS.

We rely on third parties to gain access to technologies that are used in our
current products and in products under development. For example, our ability to
produce DSL products is dependent upon third party transceiver technologies. Our
licenses for DSL transceiver technology are nonexclusive and the transceiver
technologies have been licensed to numerous other manufacturers. If our DSL
transceiver licensors fail to deliver commercially ready or standards compliant
transceiver solutions to us and other alternative sources of DSL transceiver
technologies are not available to us at commercially acceptable terms, then our
business and operating results would be significantly harmed.

Any impairment in our relationships with the licensors of technologies used in
our products would force us to find other developers on a timely basis or
develop our own technology. There is no guaranty that we will be able to obtain
the third-party technology necessary to continue to develop and introduce new
and enhanced products, that we will obtain third-party technology on
commercially reasonable terms or that we will be able to replace third-party
technology in the event such technology becomes unavailable, obsolete or
incompatible with future versions of our products. We would have severe
difficulty competing if we cannot obtain or replace much of the third-party
technology used in our products. Any absence or delay would materially adversely
affect our business and operating results.

WE ARE DEPENDENT ON SOLE OR LIMITED SOURCE SUPPLIERS, THE LOSS OF WHICH WOULD
HARM OUR BUSINESS.

Integrated circuits and other electronic components used in our products are
currently available from only one source or a limited number of suppliers. Our
inability to obtain sufficient key components or to develop alternative sources
for key components as required, could result in delays or reductions in product
deliveries, and consequently severely harm our customer relationships and our
business. Furthermore, additional sole-source components may be incorporated
into our future products, thereby increasing our supplier risks. If any of our
sole-source suppliers delay or halt production of any of their components, or
fail to supply their components on commercially reasonable terms, then our
business and operating results would be harmed.

In the past we have experienced delays in the receipt of key components which
have resulted in delays in related product deliveries. There is no guaranty that
we will be able to continue to obtain sufficient quantities of key components as
required, or that such components, if obtained, will be available to us on
commercially reasonable terms.

                                     - 14 -

<PAGE>

WE HAVE NO LONG TERM CONTRACTS OR ARRANGEMENT WITH SUPPLIERS WHICH COULD
ADVERSELY AFFECT OUR ABILITY TO PURCHASE COMPONENTS AND TECHNOLOGIES USED IN OUR
PRODUCTS.

We have no long-term contracts or arrangements with any of our suppliers. We may
not be able to obtain components at competitive prices, in sufficient quantities
or under other commercially reasonable terms. If we enter into a high-volume or
long-term supply arrangement and subsequently decide that we cannot use the
products or services provided for in the supply arrangement, then our business
would also be harmed.

WE WILL NOT BE ABLE TO SUCCESSFULLY COMPETE, DEVELOP AND SELL NEW PRODUCTS IF WE
FAIL TO RETAIN KEY PERSONNEL AND HIRE ADDITIONAL KEY PERSONNEL.

Because of our need to continually evolve our business with new product
developments and strategies, our success is dependent on our ability to attract
and retain qualified technical, marketing, sales and management personnel. To
remain competitive we must maintain top management talent, employees who are
involved in product development and testing and employees who have developed
strong customer relationships. Because of the high demand to these types of
employees, it is difficult to retain existing key employees and attract new key
employees. Our inability to attract and retain additional key employees could
harm our ability to successfully sell existing products and develop new products
and implement our business goals.

OUR QUARTERLY OPERATING RESULTS ARE LIKELY TO FLUCTUATE SIGNIFICANTLY AND SHOULD
NOT BE RELIED UPON AS INDICATIONS OF FUTURE PERFORMANCE.

We may experience significant fluctuations in quarterly operating results. Due
to the risks identified below and elsewhere in "Risk Factors," sales to our
largest customers have fluctuated and could fluctuate significantly between
quarters. Sales to our customers typically involve large purchase commitments,
and customers purchasing our products may generally reschedule without penalty.
As a result, our quarterly operating results have fluctuated significantly in
the past. Other factors that have had and may continue to influence our
quarterly operating results include:

         o   the impact of changes in the DSL customer mix or product mix sold;
         o   timing of product introductions or enhancements by us or our
             competitors;
         o   changes in operating expenses which can occur because of product
             development costs, timing of customer reimbursements for research
             and development, pricing pressures; availability and pricing of key
             components;
         o   write-offs for obsolete inventory; and
         o   the other risks that are contained in this "Risk Factors" section.

Due to our fluctuations in quarterly results, we believe that period-to-period
comparisons of our quarterly operating results are not necessarily meaningful.
Our quarterly fluctuations make it more difficult to forecast our revenues. It
is possible that in some future quarters our operating results will be below the
expectations of securities analysts and investors, which may adversely affect
our stock price. As long as we continue to depend on DSL products and new
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

                                     - 15 -

<PAGE>

necessary to continue to successfully develop new products or to otherwise
successfully respond to changing technology standards and telephone company
service offerings. If we fail to deploy new products on a timely basis, then our
product sales will decrease, our quarterly operating results could fluctuate,
and our competitive position and financial condition would be materially and
adversely affected.

THE TELECOMMUNICATIONS INDUSTRY IS A HIGHLY COMPETITIVE MARKET AND THIS
COMPETITION MAY RESULT IN OPERATING LOSSES, A DECREASE IN OUR MARKET SHARE AND
FLUCTUATIONS IN OUR REVENUE.

We expect competition to increase in the future especially as the DSL market
develops. Because we are significantly smaller than most of our competitors, we
may lack the financial resources needed to increase our market share. Many of
our competitors are much larger than us and can offer a wider array of different
products and services required for a telephone company's business than we do.

We expect continued aggressive tactics from many of our competitors such as:

o        Forward pricing of products;
o        Early announcements of competing products;
o        Bids that bundle DSL products with other product offerings; and
o        Intellectual property disputes.

OUR LACK OF BACKLOG MAY AFFECT OUR ABILITY TO ADJUST TO AN UNEXPECTED SHORTFALL
IN ORDERS.

Because we generally ship products within a short period after receipt of an
order, we typically do not have a material backlog (or known quantity) of
unfilled orders, and our revenues in any quarter are substantially dependent on
orders booked in that quarter. Our expense levels are based on anticipated
future revenues and are relatively fixed in the short-term. Therefore, we may be
unable to adjust spending in a timely manner to compensate for any unexpected
shortfall of orders. Accordingly, any significant shortfall of demand in
relation to our expectations or any material delay of customer orders would have
an immediate adverse impact on our business and operating results.

INDUSTRY CONSOLIDATION COULD MAKE COMPETING MORE DIFFICULT.

Consolidation of companies offering high-speed telecommunications products is
occurring through acquisitions, joint ventures and licensing arrangements
involving our competitors, our customers and our customers' competitors. We
cannot provide any assurances that we will be able to compete successfully in an
increasingly consolidated telecommunications industry. Any heightened
competitive pressures that we may face may have a material adverse effect on our
business, prospects, financial condition and result of operations.

WE DEPEND ON A LIMITED NUMBER OF CUSTOMERS WHO ARE ABLE TO EXERT A HIGH DEGREE
OF INFLUENCE OVER US.

We have and will continue to depend on the large Regional Bell Operating
Companies as well as and other telephone carriers including smaller local
telephone carriers and new alternative telephone carriers, for substantially all
of our revenues. Sales to the Regional Bell Operating Companies accounted for
approximately 51.4%, 50.6% and 66.4% of our revenues in fiscal 2000, 2001 and
2002, respectively. Consequently, our future success will depend upon:

o        the timeliness and size of future purchase orders from the Regional
         Bell Operating Companies;
o        the product requirements of the Regional Bell Operating Companies;
o        the financial and operating success of the Regional Bell Operating
         Companies; and
o        the success of the Regional Bell Operating Companies' services that use
         our products.

The Regional Bell Operating Companies and our other customers are significantly
larger than we are and are able to exert a high degree of influence over us.
These customers may generally reschedule orders without penalty to the customer.
Even if demand for our products is high, the Regional Bell Operating Companies
have sufficient bargaining power to demand low prices and other terms and
conditions that may materially adversely affect our business and operating
results.

                                     - 16 -

<PAGE>

Any attempt by a Regional Bell Operating Company or our other customers to seek
out additional or alternative suppliers or to undertake the internal production
of products would have a material adverse effect on our business and operating
results. The loss of any or our customer could result in an immediate decrease
in product sales and materially and adversely affect our business.

Conference Plus's customer base is very concentrated as its top ten customers
represent a large portion of revenue. Customers of Conference Plus have expanded
their requirements for our services, but there can be no assurance that such
expansion will increase in the future. Additionally, Conference Plus's customers
continually undergo review and evaluation of their conferencing and meeting
services to evaluate the merits of bringing those services in-house rather than
outsourcing those services. There can be no assurance in the future that
Conference Plus's customers will bring some portion or all of their conferencing
and meeting services in-house. Conference Plus must continually provide higher
quality, lower cost services to provide maintain and grow its customer base. Any
loss of a major account, would have a material adverse effect on Conference
Plus. In addition, any merger or acquisition of a major customer could have a
material adverse effect on Conference Plus.

OUR CUSTOMERS HAVE LENGTHY PURCHASE CYCLES THAT AFFECT OUR ABILITY TO SELL OUR
PRODUCTS.

Prior to selling products to telephone companies, we must undergo lengthy
approval and purchase processes. Evaluation can take as little as a few months
for products that vary slightly from existing products or up to a year or more
for products based on new technologies such as DSL and HDSL products.
Accordingly, we are continually submitting successive generations of our current
products as well as new products to our customers for approval. The length of
the approval process can vary and is affected by a number of factors, including:

o        the complexity of the product involved;
o        priorities of telephone companies;
o        telephone companies' budgets; and
o        regulatory issues affecting telephone companies.

The requirement that telephone companies obtain FCC approval for most new
telephone company services prior to their implementation has in the past delayed
the approval process. Such delays in the future could have a material adverse
affect on our business and operating results. While we have been successful in
the past in obtaining product approvals from our customers, there is no guaranty
that such approvals or that ensuing sales of such products will continue to
occur.

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

International revenues represented 9.0%, 16.0% and 6.5% of our revenues in
fiscal 2000, 2001 and 2002, respectively. Because Conference Plus has expanded
its conference call business in Europe by opening offices in Dublin, Ireland, we
believe that our exposure to international risks may increase in the future.
These risks include:

o        foreign currency fluctuations;
o        tariffs, taxes and trade barriers;
o        difficulty in accounts receivable collection;
o        political unrest; and
o        burdens of complying with a variety of foreign laws and
         telecommunications standards.

The occurrence of any of these risks would impact our ability to increase our
revenue and become profitable, or could require us to modify significantly our
current business practices.

OUR SERVICES ARE AFFECTED BY UNCERTAIN GOVERNMENT REGULATION AND CHANGES IN
CURRENT OR FUTURE LAWS OR REGULATIONS COULD RESTRICT THE WAY WE OPERATE OUR
BUSINESS.

Many of our customers are subject to regulation from federal and state agencies,
including the FCC and various state public utility and service commissions.
While these regulations do not affect us directly, the effects of regulations on
our customers may adversely impact our business and operating results. For
example, FCC regulatory policies affecting the availability of telephone company

                                     - 17 -

<PAGE>

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.

INVESTORS COULD BE ADVERSELY AFFECTED BY FUTURE ISSUANCES AND SALES OF OUR
SECURITIES.

Sales of substantial amounts of our common stock in the public market could
adversely affect the market price of our securities. Westell has 64,921,934
shares of common stock outstanding as of June 21, 2002, and has the following
obligations to issue additional class A common stock as of June 21, 2002:

         o   options to purchase 11,749,273 shares of class A common stock,
             3,841,362 of which are currently exercisable;
         o   1,576,050 shares reserved for issuance under its employee stock
             purchase plan;
         o   warrants to purchase 909,000 shares of class A common stock for
             $5.92 per share; and
         o   warrants to purchase 512,820 shares of class A common stock for
             $1.95 per share

These obligations could result in substantial future dilution with respect to
our common stock.

WE RELY ON OUR INTELLECTUAL PROPERTY THAT WE MAY BE UNABLE TO PROTECT, OR WE MAY
BE FOUND TO INFRINGE THE RIGHTS OF OTHERS.

Our success will depend, in part, on our ability to protect trade secrets,
obtain or license patents and operate without infringing on the rights of
others. We rely on a combination of technical leadership, trade secrets,
copyright and trademark law and nondisclosure agreements to protect our
non-patented proprietary expertise. These measures, however, may not provide
meaningful protection for our trade secrets or other proprietary information.
Moreover, our business and operating results may be materially adversely
affected by competitors who independently develop substantially equivalent
technology.

In addition, the laws of some foreign countries do not protect our proprietary
rights to the same extent as U.S. law. The telecommunications industry is also
characterized by the existence of an increasing number of patents and frequent
litigation based on allegations of patent and other intellectual property
infringement. From time to time we receive communications from third parties
alleging infringement of exclusive patent, copyright and other intellectual
property rights to technologies that are important to us.

There is no guaranty that third parties will not:

o        assert infringement claims against us in the future, and that such
         assertions will not result in costly litigation; or

                                     - 18 -

o        that we would prevail in any such litigation or be able to license any
         valid and infringed patents from third parties on commercially
         reasonable terms.

Further, such litigation, regardless of its outcome, could result in substantial
costs to and diversion of our efforts. Any infringement claim or other
litigation against or by us could have a material adverse effect on our business
and operating results.

WE MAY ENGAGE IN FUTURE ACQUISITIONS THAT COULD DILUTE OUR CURRENT STOCKHOLDERS

We expect to continue to review potential acquisitions and we may acquire
businesses, products or technologies in the future. In order to fund such
acquisitions, we could:

o        issue equity securities that could dilute our current stockholders'
         percentage ownership;
o        incur substantial debt; or
o        assume contingent liabilities.

These events could harm our business and/or the price of our common stock.
Acquisitions also entail numerous integration risks that could adversely affect
our business, such as those listed as risks associated with the acquisition of
Teltrend.

CONFERENCE PLUS'S LARGE COMPETITORS COULD ADVERSELY AFFECT CONFERENCE PLUS'S
ABILITY TO MAINTAIN OR INCREASE ITS MARKET SHARE.

Conference Plus participates in the highly competitive industry of voice, video,
and multimedia conferencing and meeting services. Competitors include
stand-alone conferencing companies and major telecommunications providers.
Conference Plus's ability to sustain growth and performance is dependent on its:

o        maintenance of high quality standards and low cost position;
o        international expansion; and
o        evolving technological capability.

Any increase in competition could reduce our gross margin, require increased
spending on research and development and sales and marketing, and otherwise
materially adversely affect our business and operating results.

OUR PRINCIPAL STOCKHOLDERS CAN EXERCISE SIGNIFICANT INFLUENCE THAT COULD
DISCOURAGE TRANSACTIONS INVOLVING A CHANGE OF CONTROL AND MAY AFFECT YOUR
ABILITY TO RECEIVE A PREMIUM FOR CLASS A COMMON STOCK THAT YOU PURCHASE.

As of March 31, 2002, as trustees of a voting trust containing common stock held
for the benefit of the Penny family and the Simon family, Robert C. Penny III
and Melvin J. Simon have the exclusive power to vote over 60% of the votes
entitled to be cast by the holders of our common stock. In addition, all members
of the Penny family who are beneficiaries under this voting trust are parties to
a stock transfer restriction agreement which prohibits the beneficiaries from
transferring any class B common stock or their beneficial interests in the
voting trust without first offering such class B common stock to the other Penny
family members. Consequently, we are effectively under the control of Messrs.
Penny and Simon, as trustees, who have sufficient voting power to elect all of
the directors and to determine the outcome of most corporate transactions or
other matters submitted to the stockholders for approval. Such control may have
the effect of discouraging transactions involving an actual or potential change
of control, including transactions in which the holders of class B common stock
might otherwise receive a premium for their shares over the then-current market
price.


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 in Basingstoke, England for Westell Limited. As of March
31, 2002, the Company also leased facilities in Schaumburg, Illinois and
Lombard, Illinois for Conference Plus, and Dublin Ireland for Conference Plus'
international operations. The Aurora facility lease expires in 2017.

                                     - 19 -

<PAGE>

         As of March 31, 2002, the Company also owned property in St. Charles,
Illinois that was obtained as part of the Teltrend acquisition. The Company
expects to sell this property during fiscal year 2003.

         The Company's manufacturing facility is currently operating below
maximum capacity. The Company utilizes third-party subcontractors to help
fulfill fluctuations in customer demands that are, at times, beyond the
manufacturing capacity of the Aurora facility. The Company currently does not
plan to expand the manufacturing capacity of its Aurora facility.

ITEM 3.  LEGAL PROCEEDINGS

         Westell Technologies, Inc. and certain of its officers and directors
have been named in the following class actions:

1.       Schumaster v. Westell Technologies, Inc., et al., No. 00C7991 (filed
         December 26, 2000);
2.       Barton v. Westell Technologies, Inc., et al., No. 00C7765 (filed
         December 12, 2000);
3.       Hoffman v. Westell Technologies, Inc., et al., No. 00C7624 (filed
         December 4, 2000);
4.       PAS Mgmt. & Consulting Serv., Inc. v. Westell Technologies, Inc., et
         al., No. 00C7605 (filed December 4, 2000);
5.       Abdelnour v. Westell Technologies, Inc., et al., No. 00C7308 (filed
         November 20, 2000);
6.       Feinstein v. Westell Technologies, Inc., et al., No. 00C7247 (filed
         November 16, 2000);
7.       Lefkowitz v. Westell Technologies, Inc., et al., No. 00 C 6881 (filed
         November 2, 2000);
8.       Greif v. Westell Technologies, Inc., et al., No. 00 C 7046 (filed
         November 8, 2000);
9.       Seplow v. Westell Technologies, Inc., et al., No. 00 C 7019 (filed
         November 7, 2000);
10.      Llanes v. Westell Technologies, Inc., et al., No. 00 C 6780 (filed
         October 30, 2000); and
11.      Bergh v. Westell Technologies, Inc., et al., No. 00 C 6735 (filed
         October 27, 2000).

Each of these cases was filed in the United States District Court for the
Northern District of Illinois and alleges generally that the defendants violated
the antifraud provisions of the federal securities laws by allegedly issuing
material false and misleading statements and/or allegedly omitting material
facts necessary to make the statements made not misleading thereby allegedly
inflating the price of Westell stock for certain time periods. Each of these
cases allegedly arises from the same set of operative facts and seeks the same
relief -- 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.

         On January 11, 2001 Judge George W. Lindbergh of the federal district
court for the Northern District of Illinois consolidated these cases into one
lawsuit, captioned In re Westell Technologies, Inc., No 00 C 6735 (filed
February 1, 2001). The parties are engaged in discovery and settlement
negotiations. The case is set for trial on November 3, 2003.

         Certain of Westell Technologies, Inc.'s officers and directors have
been named in the following derivative actions:

1. The Ceyda Foundation Trust v. Ziontz, et al, No. 01C2826 (filed
   April 20, 2001);
2. Vukovich v. Zionts, et al., No. 18647 (filed January 26, 2001);
3. Dollens v. Zionts, et al., No. 18533 NC (filed December 4, 2000); and
4. Rothchild v. Zionts, et al., No. 01LK259.

On December 4, 2001, these cases were consolidated in the United District Court
for the Northern District of Illinois. Each case alleges 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, misappropriated corporate information, and beached their
fiduciary duties to the Company's shareholders. Each case allegedly arises from
the same set of operative facts and seeks the same relief -- damages allegedly
sustained by the Company by reason of the acts and transactions alleged in the
complaints, a constructive trust for the amount of profits the individual
defendants made on insider sales, reasonable attorneys' fees, expert fees, and
other costs. The Court appointed Dollens and Vukovich as lead plaintiffs. On
January 15, 2002, defendants filed a motion to dismiss the consolidated
derivative action. There has been no ruling yet on the motion to dismiss. The

                                     - 20 -

<PAGE>

parties are engaged in discovery and settlement negotiations. The case is set
for trial on November 3, 2003.

         Westell has settled its litigation with Celsian Technologies, Inc.,
Virata Corporation, PacTec, a division of La France Corporation and Alcatel
Microelectronics, N.V. Westell recorded $2.3 million one-time charges during
fiscal 2002 resulting from this settlement.

         The Company was named in a declaratory judgment action in the Circuit
Court of DuPage County, Wheaton, Illinois entitled WTI (IL) QRS 12-36, Inc.
("Landlord") vs. Westell, Inc. and Westell Technologies, Inc. Landlord is the
lessor of the Company's leased facilities in Aurora, Illinois. The covenants
under the lease agreement incorporate the covenants under the Company's credit
facility. Any amendments to the credit facility are deemed accepted by Landlord
as long as Landlord receives a corresponding fee based upon any amendment
consideration paid to the lenders by the Company. Landlord claims that it is
entitled to additional consideration in connection with the June 29, 2001
amendment due to the Penny family trusts' guarantee entered into on that date,
that it is thus not bound by the amendments on that date, and that the Company
is therefore in breach of its covenants under the lease. Landlord seeks
declaratory judgment that Landlord is due a $4,981,3000 secured guaranty by the
Penny family members, and that Landlord may declare the lease in default and
pursue any defaults remedies available thereunder. The Company has filed a
motion to dismiss on the grounds that the guaranties at issue have been released
by the senior lender.

         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.

         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. The complaint charges HyperEdge with infringing Westell's U.S. Patent
Number 5,444,776, which relates to an innovative bridge circuit technology often
used in a network interface unit and seeks injunctive relief and $6 million in
damages.

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



                                     - 21 -

<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 closing sale prices for the Class A Common Stock as
reported on the NASDAQ National Market.

<TABLE>
<CAPTION>
                                                                                 High                  Low
                                                                             --------------       ---------------
<S>                                                                             <C>                   <C>
Fiscal Year 2001
    First Quarter ended June 30, 2000..................................         $31.75                $12.75
    Second Quarter ended September 30, 2000............................          30.19                 12.25
    Third Quarter ended December 31, 2000..............................          13.25                  2.91
    Fourth Quarter ended March 31,2001.................................           5.88                  2.38

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 through June 21, 2002................................          $1.80                $ 1.09

</TABLE>

         As of June 21, 2002, there were approximately 797 holders of record of
the outstanding shares of Class A 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.

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.



                                     - 22 -

<PAGE>

ITEM 6.  SELECTED CONSOLIDATED FINANCIAL DATA.

         The following selected consolidated financial data as of March 31,
1998, 1999, 2000, 2001 and 2002 and for each of the five fiscal years in the
period ended fiscal year 2002 have been derived from the Company's consolidated
financial statements, which have been audited by Arthur Andersen LLP for fiscal
years 1998 through 2000 and by Ernst & Young LLP in fiscal years 2001 and 2002.
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 Form 10-K.

<TABLE>
<CAPTION>
                                                                        Fiscal Year Ended March 31,
                                                       -------------------------------------------------------------
                                                             1998        1999        2000       2001         2002
                                                            ------      ------      ------     ------       -----
Statement of Operations Data:                                    (in thousands, except per share data)

<S>                                                     <C>         <C>        <C>         <C>          <C>
Revenues.............................................   $86,595     $92,004    $120,993    $361,477     $239,823
Cost of goods sold...................................    58,764      66,816      89,969     331,319      205,793
                                                       ----------  ---------- -----------  ----------   ----------
     Gross margin....................................    27,831      25,188      31,024      30,158       34,030
                                                       ----------  ---------- -----------  ----------   ----------
Operating expenses:
  Sales and marketing................................    19,635      19,766      15,338      30,323       19,883
  Research and development...........................    26,558      26,605      10,789      33,308       22,444
  General and administrative.........................    13,151      13,117      14,003      24,254       24,028
                                                                                                                 -
  Goodwill amortization .............................      --          --         1,326      31,832       25,560
  Goodwill impairment ...............................      --          --          --           --        97,500
  Restructuring charge ..............................     1,383         800         550       1,700        6,258
                                                       ----------  ---------- -----------  ----------   ----------
     Total operating expenses........................    60,727      60,288      42,006     121,417      195,673
                                                       ----------  ---------- -----------  ----------   ----------
Operating loss.......................................    (32,896)   (35,100)     (10,982)    (91,259)    (161,643)
Other income (loss), net.............................    14,290         404       1,056            --        (222)
Interest expense.....................................       502         296       1,856       2,197        5,564
                                                       ----------  ---------- -----------  ----------   ----------
Loss before income taxes.............................    (19,108)   (34,992)    (11,782)    (93,456)     (167,429)
Benefit for income taxes.............................     (5,137)     --          (3,600)          --        --
                                                       ----------  ---------- -----------  ----------   ----------
Loss before cumulative effect of change in
  accounting principle...............................    (13,971)   (34,992)     (8,182)     (93,456)    (167,429)
Cumulative effect of change in accounting principle..         --           --           --         (400)         --
                                                       ----------  ---------- -----------  ----------   ----------
Net loss.............................................  $ (13,971) $ (34,992)   $ (8,182)   $ (93,856)  $ (167,429)
                                                       ==========  ========== ===========  ==========   ==========
Net loss per basic and diluted share:
Loss before cumulative effect of change in
  accounting principle...............................    $ (0.38)   $ (0.96)     $ (0.22)    $ (1.53)     $ (2.60)
Cumulative effect of change in accounting principle..      --          --          --          (0.01)       --
                                                       ----------  ---------- -----------  ----------   ----------
 Net loss per basic and diluted share................    $ (0.38)   $ (0.96)     $ (0.22)    $ (1.54)    $ (2.60)
                                                       ==========  ========== ===========  ==========   ==========

Average number of basic and diluted
   common shares outstanding.........................    36,348      36,427      37,658      61,072       64,317

                                                                              As of March 31,
                                                       -------------------------------------------------------------
                                                           1998        1999        2000        2001         2002
                                                           ----        ----        ----        ----         ----
Balance Sheet Data:
Working capital (deficit)............................    $ 47,481    $ 12,213    $ 64,335    $ 38,778   $ (21,688)
Total assets.........................................      98,405      64,407     342,570     315,139    126,153
Short term debt......................................       --            500       --          --           --
Long-term debt, including current portion............       4,420       4,814       2,750      28,554     50,655
Total stockholders' equity...........................      73,141      39,124     279,663     197,825     36,273
------------------------------

</TABLE>


                                     - 23 -

<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.

         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 Telco Access Products
(TAP) product lines, particularly the sale of Network Interface Units and
related products. NIU products accounted for approximately 35%, 16% and 21% of
revenues in fiscal years 2000, 2001 and 2002, respectively. The Company
introduced its first DSL products in fiscal 1993 and these products represented
approximately 27%, 55% and 38% of revenues in fiscal 2000, 2001 and 2002,
respectively. The Company has also provided audio teleconferencing services
since fiscal 1989, which constituted approximately 27%, 12% and 20% of the
Company's revenues in fiscal 2000, 2001 and 2002, respectively.

         On March 17, 2000, the Company acquired 100% of the outstanding shares
of Teltrend Inc., a designer, manufacturer and marketer of transmission products
used by telephone companies to provide voice and data service over the telephone
network.

         The Company's reportable segments are strategic business units that
offer different products and services. They 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 Telco Access Products and Broadband products, and
2)   A multi-point telecommunications service bureau, Conference Plus, Inc,
     specializing in audio teleconferencing, multi-point video conferencing,
     broadcast fax and multimedia teleconference services.

         The Company's customer base is comprised primarily of the Regional Bell
Operating Companies, 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 up front 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
expand its 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 2000, 2001 and 2002.

         The Company expects to continue to evaluate new product opportunities
and engage in extensive research and development activities and expects to
receive funding from certain partners to offset a portion of these development
costs. This will require the Company to continue to invest in research and
development and sales and marketing, which is expected to adversely affect
short-term results of operations. The Company believes that its future revenue
growth and profitability will principally depend on its success in increasing
sales of DSL products and developing new and enhanced TAP and other DSL
products. In view of the Company's reliance on the emerging DSL market for
growth and the unpredictability of orders and subsequent revenues, 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 NIU's have declined in recent
years as telcos 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.


                                     - 24 -
<PAGE>

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. Judgement 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 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 in 2003.

Warranty
The Company reserves for warranty costs based on expected return quantities and
expected material and labor costs to provide warranty services.

Goodwill and Intangibles
The Company reviews intangible assets and other long-lived assets 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 (or acquired business) are less than the carrying
value of the related asset. The impairment loss would adjust the asset to its
fair value. Effective April 1, 2002, the Company will adopt SFAS No. 142,
"Goodwill and Other Intangible Assets".
RESULTS OF OPERATIONS



                                     - 25 -


<PAGE>

         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>
<CAPTION>
                                                                                   Fiscal Year Ended March 31,
                                                                                   ---------------------------

                                                                                  2000         2001       2002
                                                                                  ----         ----       ----

<S>                                                                               <C>           <C>       <C>
Equipment .................................................................       74.5%         88.4%     79.8%
Services...................................................................       25.5          11.6      20.2
                                                                                ------        ------    -------
  Total revenues...........................................................      100.0         100.0     100.0

Cost of equipment..........................................................       58.7          84.7      73.4
Cost of services...........................................................       15.7           7.0      12.4
                                                                                ------         -----    ------
  Total cost of goods sold.................................................       74.4          91.7      85.8
                                                                                ------         -----     ------

    Gross margin...........................................................       25.6           8.3      14.2
                                                                                ------          ----     -----

Operating expenses:
  Sales and marketing......................................................       12.6           8.4       8.3
  Research and development.................................................        8.9           9.2       9.4
  General and administrative...............................................       11.6           6.7      10.0
  Goodwill amortization....................................................        1.1           8.8      10.6
  Goodwill impairment......................................................        --           --        40.7
  Restructuring charge.....................................................        0.5           0.5       2.6
                                                                                   ---       -------   -------

     Total operating expenses..............................................       34.7          33.6      81.6
                                                                                ------         -----     -----

Operating loss ............................................................       (9.1)        (25.3)    (67.4)
Other income (loss), net...................................................        0.9           0.0      (0.1)
Interest expense...........................................................        1.5           0.6       2.3
                                                                                 -----         -----     -----

Loss before income tax benefit.............................................       (9.7)        (25.9)    (69.8)
Benefit for income taxes...................................................       (3.0)         (0.0)     (0.0)
Cumulative effect of change in accounting principle........................        0.0          (0.1)     (0.0)
                                                                                 -------        -----    ------

Net loss...................................................................       (6.7)%       (26.0)%   (69.8)%
                                                                                ========     =========  ========
</TABLE>

FISCAL YEARS ENDED MARCH 31, 2000, 2001 AND 2002

         Revenues. Revenues were $121.0 million, $361.5 million and $239.8
million in fiscal 2000, 2001 and 2002 respectively. Revenues increased 198.8% in
fiscal 2001 and decreased by 33.7% in fiscal 2002, from the preceding years. The
fiscal 2001 increase of $240.5 million was primarily due to a $160.6 million
increase in DSL revenue from increased unit volume and a $68.7 million increase
in TAP revenue from increased volume as a result of the acquisition of Teltrend
Inc. The fiscal 2002 decrease of $121.6 million was primarily due to a $93.6
million decrease in DSL revenue and a $34.5 million decrease in TAP revenue due
to reduced demand resulting from the economic downturn in the telecommunications
industry. Service revenue increased $11.2 million or 36.3% in fiscal 2001 and
$6.5 million or 15.6% in fiscal 2002 due to increased audio conference calling
volume at Conference Plus, Inc.

         Gross Margin. Gross margin was $31.0 million, $30.2 million and $34.0
million and gross margin as a percentage of revenues was 25.6%, 8.3% and 14.2%
in fiscal 2000, 2001 and 2002, respectively. The fiscal 2001 decrease in gross
margin as a percent of revenue from the previous year was primarily the result
of 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
relates to inventory held during the year and $10.4 million relates to inventory
purchase commitments in excess of anticipated requirements. Before the impact of

                                     - 26 -

<PAGE>

these charges, gross margin as a percentage of sales for fiscal year 2001 was
18.6%. The decrease in gross margin as a percent of revenue before inventory
charges from the previous year was primarily the result of aggressive pricing of
DSL products and production inefficiencies caused by efforts to integrate the
manufacturing facility of Teltrend Inc. 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.
Before the impact of these items, gross margin as a percentage of sales for
fiscal year 2002 was 19.5%. 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.

         Sales and Marketing. Sales and marketing expenses were $15.3 million,
$30.3 million and $19.9 million in fiscal 2000, 2001 and 2002, respectively,
constituting 12.6%, 8.4% and 8.3% of revenues, respectively. In fiscal 2001,
sales and marketing expenses increased by $15.0 million or 97.7% from the
previous year. This increase was due primarily to the acquisition of Teltrend
Inc. 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 restructuring implemented in the
fourth quarter of fiscal 2001 and the second and fourth quarters of fiscal 2002.
The Company believes that continued investment in sales and marketing will be
required to expand its product lines, bring new products to market and service
customers.

         Research and Development. Research and development expenses were $10.8
million, $33.3 million and $22.4 million in fiscal 2000, 2001 and 2002,
respectively, constituting 8.9%, 9.2% and 9.4% of revenues, respectively. In
fiscal 2001, research and development increased by $22.5 million or 208.3% from
the prior year. This increase was primarily due to the acquisition of Teltrend
Inc. and to a lesser extent, due to the absence of funding from customers for
engineering projects. 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 restructuring
implemented in the fourth quarter of fiscal 2001 and the second and fourth
quarters of fiscal 2002. The Company believes that a continued investment in
research and development will be required for the Company to remain competitive.

         General and Administrative. General and administrative expenses were
$14.0 million, $24.3 million and $24.0 million in fiscal 2000, 2001 and 2002,
respectively, constituting 11.6%, 6.7% and 10.0% of revenues, respectively.
General and administrative expenses increased by $10.3 million or 73.6% in
fiscal 2001 due primarily to the acquisition of Teltrend Inc. General and
administrative expenses remained constant at approximately $24 million in fiscal
2002.

         Goodwill and intangible Amortization. Intangible assets include
goodwill, synergistic goodwill and product technology related to the Teltrend
acquisition. The purchase price of approximately $238.2 million exceeded the
fair market value of net assets acquired, resulting in goodwill , synergistic
goodwill , and product technology. These items were amortized on a straight-line
basis over an average life of approximately 10 years.

         Goodwill and intangible impairment. Due to the restructuring the
Company implemented, along with current and expected market conditions in the
T-1 line repeater and low speed digital data products portion of the business
acquired from Teltrend, it became apparent the goodwill acquired with the
Teltrend acquisition was impaired. . In accordance 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.

         Restructuring charge. The Company recognized restructuring charges of
$0.6 million, $1.7 million and $6.3 million in fiscal 2000, 2001 and 2002,
respectively. The fiscal 2000 charge was for personnel, legal, and other related
costs to eliminate redundant employees due to the acquisition of Teltrend Inc.
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. The Company estimated the costs of these activities to
be $2.9 million. Approximately $2.4 million of the total cost was capitalized as
part of the purchase price of Teltrend Inc., primarily related to Teltrend Inc.
employees involuntarily terminated. The remaining cost of $0.6 million was
charged to operations and relates to Westell employees involuntarily terminated

                                     - 27 -

<PAGE>

and other costs. As of March 31, 2002, $2.0 million of these costs have been
paid.

         The fiscal 2001 charge included personnel, facility, and certain
development contract costs related to restructuring global operations. As of
March 31, 2002, the Company has paid all of the restructuring costs charged in
fiscal 2001.

         The fiscal 2002 charge included personnel, facility, and other costs
related to restructuring global operations to realign the Company's cost
structure with the anticipated business outlook. As of March 31, 2002, the
Company has paid $3.0 million of the restructuring costs charged in fiscal 2002.

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

         Other income (loss), net. Other income (loss), net was income of $1.1
million, $0.0 million and a loss of $222,000 for fiscal years 2000, 2001 and
2002, respectively. In fiscal 2000, the Company recognized other income of
$650,000 for a foreign currency gain from the liquidation of Westell Europe Ltd.
Excluding the effects of this one-time benefit, Other income (loss), net would
have been $406,000 for fiscal year ended March 31, 2000. Other income (loss),
net for fiscal 2002 was primarily comprised of interest income earned on
temporary cash investments, the elimination of minority interest and unrealized
gains of losses on intercompany balances denominated in foreign currency.

         Interest Expense. Interest expense was $1.9 million, $2.2 million and
$5.6 million for fiscal 2000, 2001 and 2002, respectively. The fiscal 2001 and
2002 increases in interest expense were a result of increased usage of bank debt
and interest accrued on past due accounts payable.

         Benefit for Income Taxes. Benefit for income taxes was $3.6 million in
fiscal 2000. No tax benefit was recorded in fiscal years 2001 or 2002. In each
of these fiscal years, in addition to the tax benefit related to the loss before
income taxes, the Company was able to generate $662,000, $500,000 and $846,000,
respectively, in tax credits resulting primarily from research and development
activities. The Company recorded valuation allowances of $900,000 in fiscal
2000, $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. The Company has approximately
$6.8 million in income tax credit carry forwards and a tax benefit of $65.4
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.



                                     - 28 -

<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>
<CAPTION>
                                                                 Quarter Ended
                           -----------------------------------------------------------------------------------------
                                               Fiscal 2001                                 Fiscal 2002
                           -------------------------------------------   -------------------------------------------

                              June 30, Sept. 30,   Dec. 31,   Mar. 31,   June 30,  Sept. 30,   Dec. 31,  Mar. 31,
                                2000      2000       2000       2001       2001        2001      2001       2002
                                ----      ----       ----       ----       ----        ----      ----       ----
                                                                   (in thousands)
<S>                          <C>        <C>       <C>        <C>        <C>        <C>       <C>         <C>
Equipment .................  $93,954    $96,041   $69,465    $60,034    $50,207    $46,319   $55,207     $39,569
Services...................    9,389      9,961    10,406     12,227     13,091     13,102    11,805      10,523
                             --------- --------- ---------- ---------- ---------- ---------- ----------- ----------
   Total revenues..........  103,343    106,002    79,871     72,261     63,298     59,421    67,012     50,092

Cost of equipment..........   75,611     79,221    61,237     90,104     43,105     40,637    47,971     44,449
Cost of services...........    5,739      6,011     6,321      7,075      7,875      8,579     5,655      7,522
                             --------- --------- ---------- ---------- ---------- ---------- ----------- ----------
   Total cost of goods sold   81,350     85,232    67,558     97,179     50,980     49,216    53,626     51,971
                             --------- --------- ---------- ---------- ---------- ---------- ----------- ----------
     Gross margin..........   21,993     20,770    12,313    (24,918)    12,318     10,205    13,386     (1,879)
                             --------- --------- ---------- ---------- ---------- ---------- ----------- ----------

Operating expenses:
  Sales and marketing......    8,199      6,362     8,381      7,381      5,915      4,806     4,740      4,422
  Research and
    development............    7,438      7,509     8,655      9,706      7,990      5,935     3,543      4,976
  General and
    administrative.........    5,664      6,539     5,928      6,123      5,680      6,207     5,555      6,586
 Goodwill amortization.....    7,958      7,958     7,958      7,958      7,953      7,953     7,953      1,701
 Goodwill impairment.......      --        --         --         --         --         --     90,500      7,000
  Restructuring charge.....      --        --         --       1,700        --       2,200       --       4,058
    Total operating
      expenses.............   29,259     28,368    30,922     32,868     27,538     27,101   112,291      28,743
                             --------- --------- ---------- ---------- ---------- ---------- ----------- ----------
Operating loss ............   (7,266)    (7,598)  (18,609)   (57,786)   (15,220)   (16,896)  (98,905)    (30,622)
                             --------- --------- ---------- ---------- ---------- ---------- ----------- ----------

Other income (expense), net      169       (105)      104       (168)      (257)       (16)     (259)        310
Interest expense...........      119        331     1,073        674      1,359      1,208     1,650        1,347
                             --------- --------- ---------- ---------- ---------- ---------- ----------- ----------

Loss before
  income taxes.............   (7,216)    (8,034)  (19,578)   (58,628)   (16,836)   (18,120) (100,814)     (31,659)

Benefit for
  income taxes.............      --         --        --        --        --         --          --          --

Cumulative effect of
   change in accounting
   principle...............     (400)       --        --        --        --         --          --           --
                             --------- --------- ---------- ---------- ---------- ---------- ----------- ----------
Net loss...................  $ (7,616) $ (8,034) $ (19,578) $ (58,628) $ (16,836) $ (18,120) $ (100,814) $ (31,659)
                             ========= ========= ========== ========== ========== ========== =========== ==========

                                     - 29 -

<PAGE>

                                                                 Quarter Ended
                           -----------------------------------------------------------------------------------------
                                               Fiscal 2001                                 Fiscal 2002
                           -------------------------------------------   -------------------------------------------


                              June 30, Sept. 30,   Dec. 31,   Mar. 31,   June 30,  Sept. 30,  Dec. 31,   Mar. 31,
                               2000      2000       2000      2001        2001       2001      2001       2002
                               ----      ----       ----      ----        ----       ----      ----       ----

Equipment....................   90.9%      90.6%      87.0%      83.1%      79.3%    78.0%      82.4%      79.0%
Service....................      9.1        9.4       13.0       16.9       20.7     22.0       17.6       21.0
                              ------     ------     ------    -------     ------   ------     ------     ------
  Total revenues...........    100.0      100.0      100.0      100.0      100.0    100.0      100.0      100.0

Cost of equipment sales....     73.2       74.7       76.7      124.7       68.1     68.4       71.6       88.7
Cost of services...........      5.5        5.7        7.9        9.8       12.4     14.4        8.4       15.0
                              ------     ------     ------     ------     ------   ------     ------    -------
Total cost of goods sold...     78.7       80.4       84.6      134.5       80.5     82.8       80.0      103.7
                              ------     ------     ------     ------     ------    -----      -----     ------
  Gross margin.............     21.3       19.6       15.4     (34.5)       19.5     17.2       20.0      (3.7)
                              ------     ------     ------    -------     ------    -----      -----    -------

Operating expenses:
  Sales and marketing......      7.9        6.0       10.5       10.2        9.4      8.1        7.1        8.8
  Research and
    development............      7.2        7.1       10.8       13.4       12.6     10.0        5.3        9.9
  General and
    administrative.........      5.5        6.2        7.4        8.5        9.0     10.5        8.3       13.2
  Goodwill amortization....      7.7        7.5       10.0       11.0       12.6     13.4       11.9        3.4
  Goodwill impairment......      0.0        0.0        0.0        0.0        0.0      0.0      135.0       14.0
  Restructuring charge.....      0.0        0.0        0.0        2.4        0.0      3.7        0.0        8.1
                               -----      -----      -----      -----      -----    -----      -----      -----

    Total operating
      expenses.............     28.3       26.8       38.7       45.5       43.6     45.7      167.6       57.4
                              ------     ------      -----      -----      -----   ------     ------      -----

Operating loss.............    (7.0)      (7.2)     (23.3)     (80.0)     (24.1)   (28.5)    (147.6)     (61.1)
                               -----     ------    -------    -------    -------  -------   --------    -------
Other income (expense), net    0.2        (0.1)      0.1        (0.2)      (0.4)    (0.0)      (0.4)      0.6
Interest expense...........    0.0        0.3        1.3        0.9        2.1      2.0        2.4        2.7
                               -----    -------    -------    -------    -------  -------    -------    -------

Loss before
  income taxes.............    (7.0)      (7.6)     (24.5)     (81.1)     (26.6)   (30.5)    (150.4)     (63.2)
Benefit for
  income taxes.............    (0.0)      (0.0)     (0.0)       (0.0)      (0.0)    (0.0)     (0.0)       (0.0)
Cumulative effect of change
  in accounting principle..    (0.6)      --         --         --         --       --         --          --
                               -----   --------   --------   --------   -------- --------   --------    -------

Net loss.....................  (7.6)%      (7.6)%  (24.5)%      (81.1)%    (26.6)%   (30.5)%   (150.4)%    (63.2)%
                              ========    =================   =========  ========= ========= ==========  =========
</TABLE>

                                     - 30 -

<PAGE>

         The Company's quarterly equipment revenues have varied from quarter to
quarter due primarily to quarterly fluctuations in DSL revenues. TAP revenues in
the second and third quarters of fiscal 2001 were negatively affected by lost
production capacity during the integration of the Teltrend Inc. manufacturing
facility with the Westell facility in Aurora, Illinois. Conference Plus service
revenues have seen steady growth through each quarter of fiscal 2001 and 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 due to the slowing economy.

         Gross margin as a percentage of revenue has also varied from quarter to
quarter. The low margins in the fiscal 2001 and fiscal 2002 quarters are
primarily a result of the increased volume in DSL products that have relatively
low margins. In the fourth quarter of fiscal 2001, the Company recognized an
inventory adjustment to market value and excess inventory charge of $30.8
million of which $20.4 million relates to inventory on hand and $10.4 million
relates to inventory purchase commitments in excess of anticipated requirements.
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. Fiscal year 2001 margins were also
negatively affected by production inefficiencies related to the integration of
Teltrend Inc, which was acquired by the Company during March 2000. The Teltrend
Inc. manufacturing facility was combined with the Westell facility in Aurora,
Illinois during the second quarter of fiscal 2001 and caused production
inefficiencies during the second and third quarters of fiscal 2001.
Additionally, the Company's Conference Plus, Inc. subsidiary made additional
infrastructure enhancements to handle increased call minutes, which also
impacted margins in fiscal 2001. The Company believes that its gross margin in
future periods will depend on a number of factors, including market demand for
the Company's DSL products, pricing pressures, competitive technologies and
manufacturing expenses. There can be no assurance that the Company will be able
to increase gross margins in future periods due to these factors, even if its
DSL products achieve market acceptance.

         Operating expenses decreased in the fiscal 2002 quarters compared to
fiscal 2001 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.

         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 on its ability to
achieve profitability.

                                     - 31 -

LIQUIDITY AND CAPITAL RESOURCES

         At March 31, 2002, the Company had $6.7 million in cash and cash
equivalents consisting primarily of federal government agency instruments and
the highest rated grade corporate commercial paper. As of March 31, 2002, the
Company had $26.1 million outstanding under its secured revolving promissory
note facility. As of March 31, 2002, the Company had approximately $6.3 million
available under the secured revolving promissory note facility.

         The Company has an asset based revolving credit facility providing for
total borrowing based upon 85% of eligible accounts receivable and 30% of
eligible inventory not to exceed $7.9 million. The $7.9 million inventory
limitation is reduced by $.1 million on the first day of each month The facility
provides for maximum borrowings of up to $35.0 million. Borrowings under this
facility provide for the interest to be paid by the Company at prime plus 1%.
This revolving credit facility requires, among other things, the maintenance of
target EBITDA and tangible net worth. The Company was not in compliance with the
covenants under the revolving credit facility at March 31, 2002. The Company and
its lenders have entered into an amendment and waiver under which the covenant
violations were waived.

         On June 28, 2002, the Company amended the revolving credit facility.
The amendment provides for a $5 million non-amortizing term loan and a $30
million revolving credit facility, both due June 30, 2003. The term loan is
secured by, among other things, a security interest in certain collateral
granted by certain stockholders. The amendment also terminates the $10 million
guarantee provided by trusts of Robert C. Penny III and other Penny family
members. Trusts of Robert C. Penny III and other Penny family members are
participants to the amended revolving credit facility. This new amendment
provides for covenants regarding EBITDA, tangible net worth and maximum capital
expenditures. Management expects to be in compliance with the covenants for the
term of the debt. The Company had $25.6 million outstanding under its revolving
credit facility and was eligible to borrow an additional $4.0 million as of July
2, 2002.

         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 is 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 between the parties was signed on June 3, 2002 in the amount of
$1.3 million and is payable monthly over one year. This note was part of the
settlement of litigation with Celsian. All three notes bear an interest rate of
prime plus 2.5%.

         At March 31, 2002 the company had various operating leases for
facilities and equipment. The total minimum future rental payments are $5.3
million, $4.3 million, $3.5 million, $3.5million, $3.4 million and $26.0 million
for fiscal years 2003, 2004, 2005, 2006, 2007 and thereafter, respectively.

         The Company's operating activities used cash of $22.3 million and $38.6
million in fiscal 2000 and 2001, respectively and generated cash of $10.3
million in fiscal 2002. Cash used by operations in fiscal 2000 resulted
primarily from a pre-tax loss from continuing operations of $3.3 million (net of
depreciation and amortization) and working capital requirements. Cash used by
operations in fiscal 2001 resulted primarily from a loss from continuing
operations of $49.9 million (excluding depreciation and amortization) and
working capital requirements. Cash generated by operations in fiscal 2002
resulted primarily from a reduction in inventories and accounts receivable. This
was offset by a net loss of $29.7 million (excluding depreciation and
amortization). Working capital was affected primarily by decreases in inventory
and receivables offset by a decrease in accounts payable and accrued
compensation.

         Capital expenditures in fiscal 2000, 2001 and 2002 were $11.4 million,
$22.2 million and $9.2 million, respectively. These expenditures were
principally for machinery, computer and research equipment purchases. The
Company expects to spend approximately $6.5 million in fiscal 2003 for capital
equipment.

         At March 31, 2002, the Company's principal sources of liquidity were
$6.7 million of cash and cash equivalents and $6.3 million available under its
secured revolving promissory notes facility. To meet the Company's cash needs
for fiscal year 2003, the Company is exploring various alternatives including

                                     - 32 -

<PAGE>

the sale of non-strategic assets. Cash in excess of operating requirements 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 had a deferred tax asset of approximately $93.2 million at
March 31, 2002. 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 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 operating losses for the 2000, 2001 and 2002
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.
Management will continue to periodically assess whether it remains more likely
than not that the deferred tax asset will be realized. If the tax planning
strategy 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, an income tax benefit would
be recorded to decrease the valuation allowance.



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, 2002, the balance in the cumulative foreign currency
translation adjustment account, which is a component of stockholders' equity,
was an unrealized loss of $18,000.

         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 6.5% to approximately 7.2%) average interest rate on
the Company's debt. If such an increase occurred, the Company would incur
approximately $120,000 per annum in additional interest expense based on the
average debt borrowed during the twelve months ended March 31, 2002. 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
40-62 of this report. The Consolidated Financial Statement schedules listed
under Item 14(a)2, together with the reports thereon of the independent auditors
are set forth on pages 63 and 65 of this report and should be read in
conjunction with the financial statements.



                                     - 33 -

<PAGE>

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. There have
been no disagreements with accountants on accounting and financial disclosure.


                                    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 2002 under the caption "Election of Directors," which
         information is 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 2002 under the caption "Executive Officers," which
         information is herein by reference.


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 2002 under the caption "Compensation of Directors and
         Executive Officers," and "Report of the Compensation of the Board of
         Directors," which information is herein by reference.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         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 2002 under the caption "Ownership of the Capital Stock of the
         Company" and "Equity Compensation Plan Information" which information
         is herein by reference.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED PARTY 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 2002 under the caption "Certain Relationships and Related
         Transactions," which information is herein by reference.


                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

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

                           The consolidated financial statements of Westell
                           Technologies, Inc. for the fiscal year ended March
                           31, 2002, together with the Report of Independent
                           Public Accountants, are set forth on pages 42 through
                           67 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.

                                     - 34 -

<PAGE>

                  (2)      Financial Statement Schedules
                           -----------------------------

                           The following are included in Part IV of this Report
                           for each of the years ended March 31, 2000, 2001 and
                           2002 as applicable:

                           Report of Independent Auditors - page 63 and 64

                           Schedule II - Valuation and Qualifying Accounts -
                            page 65

                           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,
                                    Marshall Capital Management, Inc., and
                                    Capital Ventures International (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     Subordination Participation Agreement dated
                                    as of June 28, 2002, between LaSalle
                                    National Association and certain Penny
                                    family trusts.
                           10.2     Stock Transfer Restriction Agreements
                                    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.(2)
                                    (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)

                                     - 35 -

<PAGE>

                           *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     [Intentionally Omitted]
                           10.10    [Intentionally Omitted]
                           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   Agreement dated September 13, 1988 between
                                    Richard Riviere and Westell Technologies,
                                    Inc., as amended (incorporated herein by
                                    reference to Exhibit 10.14 to Westell
                                    Technologies, Inc.'s Registration Statement
                                    on Form S-1, as amended, Registration No.
                                    33-98024).
                           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 21, 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 21,
                                    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).

                                     - 36 -

<PAGE>

                           10.21    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 herein by reference to Exhibit
                                    10.16 to the Company's Annual Report on Form
                                    10-K for the year ended March 31, 2001).
                           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 dated 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).
                           *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    Sixth Amendment to the Amended and Restated
                                    Loan and Security Agreement dated as of June
                                    28, 2002 among LaSalle National Bank, Harris
                                    Trust and Savings Banks, the Company,
                                    Westell, Inc., Westell International, Inc.,
                                    Conference Plus Inc., and Teltrend, Inc.
                           21.1     Subsidiaries of the Registrant (incorporated
                                    herein 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.

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

                           *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.



                                     - 37 -

<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 July 16, 2002.

                                      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 July 16, 2002.

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


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

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

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

/s/ Nicholas C. Hindman                     Chief Financial Officer and Senior
----------------------------------------    Vice President
         Nicholas C. Hindman                (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



                                     - 38 -

<PAGE>

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
                             AND SUPPLEMENTARY DATA

Item                                                                        Page
----                                                                        ----
Consolidated Financial Statements:
Report of Independent Public Accountants and Auditors...................      40
Consolidated Balance Sheets -- March 31, 2001 and 2002..................      42
Consolidated Statements of Operations for the years ended
   March 31, 2000, 2001 and 2002........................................      44
Consolidated Statements of Stockholders' Equity for the years ended
  March 31, 2000, 2001 and 2002.........................................      45
Consolidated Statements of Cash Flows for the years ended
  March 31, 2000, 2001 and 2002.........................................      46
Notes to Consolidated Financial Statements..............................      47


Financial Statement Schedules:

Report of Independent Public Accountants and Auditors...................      63
Schedule II -- Valuation and Qualifying Accounts........................      65



                                     - 39 -

<PAGE>

We have not been able to obtain, after reasonable efforts, the re-issued report
or consent of Arthur Andersen LLP related to the March 31, 2000 financial
statements. Therefore, we have included a copy of their previously issued
report.


REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



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


We have audited the accompanying consolidated balance sheet of WESTELL
TECHNOLOGIES, INC. (a Delaware corporation) and Subsidiaries as of March 31,
2000, and the related consolidated statements of operations, stockholders'
equity and cash flows for the years ended March 31, 2000 and 1999. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements 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 audit
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 financial position of Westell Technologies, Inc. and
Subsidiaries as of March 31, 2000, and the results of their operations and their
cash flows for the years ended March 31, 2000 and 1999 in conformity with
accounting principles generally accepted in the United States.




/s/ Arthur Andersen LLP

Chicago, Illinois
May 10, 2000



                                     - 40 -

<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, 2002 and 2001 and the
related consolidated statements of operations, stockholders' equity and cash
flows for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements 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 audit
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, 2002 and 2001 and the
consolidated results of their operations and their cash flows for the years then
ended, in conformity with accounting principles generally accepted in the United
States.

As discussed in Note 1 to the financial statements, in fiscal year 2001 the
Company changed its method of revenue recognition.


ERNST & YOUNG LLP

Chicago, Illinois
May 21,2002, Except for Notes 2 and 3, as to which the date is
June 28, 2002



                                     - 41 -

<PAGE>

<TABLE>

                                     WESTELL TECHNOLOGIES, INC. AND SUBSIDIARIES

                                             CONSOLIDATED BALANCE SHEETS

                                                       ASSETS

<CAPTION>

                                                                                                   March 31,
                                                                                             ----------------------
                                                                                              2001         2002
                                                                                              ----         ----
                                                                                                (in thousands)
<S>                                                                                       <C>        <C>
Current assets:
  Cash and cash equivalents.............................................................. $      405 $     6,687
  Accounts receivable (net of allowance of $1,363,000 and $1,531,000, respectively)......     34,906      25,266
  Inventories............................................................................     73,068      18,174
  Prepaid expenses and other current assets..............................................      2,124       2,169
  Deferred income tax asset..............................................................     10,500       7,830
  Land and building held for sale........................................................      2,980       2,052
                                                                                         -----------   ---------

           Total current assets..........................................................    123,983      62,178
                                                                                          ----------   ---------

Property and equipment:
  Machinery and equipment................................................................     42,077      45,148
  Office, computer and research equipment................................................     29,847      30,873
  Leasehold improvements.................................................................      6,032       7,634
                                                                                           ---------   ---------
                                                                                              77,956      83,655

  Less accumulated depreciation and amortization.........................................     41,726      54,029
                                                                                           ---------   ---------

    Property and equipment, net..........................................................     36,230      29,626
                                                                                           ---------   ---------

Goodwill and intangibles, net............................................................    139,373      16,312
                                                                                           ---------   ---------

Deferred income tax asset and other assets...............................................     15,553      18,037
                                                                                           ---------   ---------

           Total assets..................................................................  $ 315,139   $ 126,153
                                                                                           =========   =========



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

</TABLE>

                                     - 42 -

<PAGE>

<TABLE>
                                     WESTELL TECHNOLOGIES, INC. AND SUBSIDIARIES

                                             CONSOLIDATED BALANCE SHEETS

                                        LIABILITIES AND STOCKHOLDERS' EQUITY

<CAPTION>
                                                                                                    March 31,
                                                                                             ----------------------
                                                                                              2001         2002
                                                                                              ----         ----
                                                                                                (in thousands)
<S>                                                                                        <C>          <C>
Current liabilities:
  Accounts payable.......................................................................  $ 57,577     $ 15,702
  Accrued expenses.......................................................................    22,838       16,105
  Accrued compensation...................................................................     4,687        2,374
  Current portion of long-term debt......................................................       103       11,186
                                                                                           --------    ---------

           Total current liabilities.....................................................    85,205       45,367
                                                                                           --------    ---------

Long-term debt...........................................................................    28,451       39,469
                                                                                           --------    ---------

Other long-term liabilities..............................................................     3,658        5,044
                                                                                           --------    ---------

Stockholders' equity:
Class A common stock, par $0.01..........................................................       425          459
  Authorized -- 109,000,000 shares
  Issued and outstanding - 42,472,787 at March 31, 2001 and 45,907,065 at March 31,
    2002
Class B common stock, par $0.01..........................................................       190          190
  Authorized -- 25,000,000 shares
  Issued and outstanding -- 19,014,869 at March 31, 2001 and 19,014,869 at March 31,
    2002
Preferred stock, par $0.01...............................................................        --           --
  Authorized -- 1,000,000 shares
  Issued and outstanding -- none
Deferred compensation....................................................................       854          46
Additional paid-in capital...............................................................   357,684     364,566
Treasury stock at cost -- 0 and 93,000 shares, respectively..............................        --        (247)
Cumulative translation adjustment........................................................       (34)        (18)
Accumulated deficit......................................................................  (161,294)   (328,723)
                                                                                           --------    ---------

      Total stockholders' equity.........................................................   197,825     36,273
                                                                                           --------    ---------

           Total liabilities and stockholders' equity....................................$  315,139  $ 126,153
                                                                                           ========    =========


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

</TABLE>

                                     - 43 -

<PAGE>

<TABLE>
                                     WESTELL TECHNOLOGIES, INC. AND SUBSIDIARIES

                                        CONSOLIDATED STATEMENTS OF OPERATIONS

<CAPTION>

                                                                                    Fiscal Year Ended March 31,
                                                                                 ---------------------------------
                                                                                   2000       2001        2002
                                                                                   ----       ----        ----
                                                                                         (in thousands,
                                                                                     except per share data)

<S>                                                                              <C>        <C>         <C>
Equipment revenue.............................................................   $90,185    $319,494    $191,302
Service revenue...............................................................    30,808      41,983      48,521
                                                                                --------    --------    --------
   Total revenues.............................................................   120,993     361,477     239,823
                                                                                --------    --------    --------

Cost of equipment sales.......................................................    70,965     306,143     176,162
Cost of services..............................................................    19,004      25,176      29,631
                                                                                --------    --------    --------
   Total cost of goods sold...................................................    89,969     331,319     205,793
                                                                                --------    --------    --------

    Gross margin..............................................................    31,024      30,158      34,030
                                                                                --------    --------    --------
Operating expenses:
  Sales and marketing.........................................................    15,338      30,323      19,883
  Research and development....................................................    10,789      33,308      22,444
  General and administrative..................................................    14,003      24,254      24,028
                                                                                                               -
  Goodwill and intangible amortization........................................     1,326      31,832      25,560
  Goodwill and intangible impairment..........................................      --         --         97,500
  Restructuring charge........................................................       550       1,700       6,258
                                                                                --------    --------    --------

     Total operating expenses.................................................    42,006     121,417     195,673
                                                                                --------    --------    --------

Operating loss................................................................   (10,982)    (91,259)   (161,643)
Other income (expense), net...................................................     1,056        --          (222)
Interest expense..............................................................     1,856       2,197       5,564
                                                                                --------    --------    --------

Loss before income tax benefit................................................   (11,782)    (93,456)   (167,429)
Benefit for income taxes......................................................   (3 ,600)       --          --
                                                                                --------    --------    --------
Loss before cumulative effect of change in accounting principle...............    (8,182)   (93,456)   (167,429)
Cumulative effect of change in accounting principle...........................       --        (400)       --
                                                                                --------    --------    --------

Net loss......................................................................  $ (8,182)  $(93,856)  $(167,429)
                                                                                ========   =========  ==========

Loss per share:
  Loss before cumulative effect of change in accounting principle.............   $ (0.22)   $ (1.53)    $ (2.60)
  Cumulative effect of change in accounting principle.........................       --       (0.01)      --
                                                                                --------    --------    --------

  Net loss per basic and diluted common share.................................  $ (0.22)    $ (1.54)    $ (2.60)
                                                                                ========    ========    ========

Average number of basic and diluted common shares outstanding ................    37,658      61,072      64,317
                                                                                ========    ========    ========


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

</TABLE>

                                     - 44 -

<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'
                               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, 1999                   $  169  $  195   $ 97,561    $  455     $  --   $ (59,256) $  --     $  39,124
  Net loss...........       $  (8,182)        --      --         --        --        --      (8,182)    --        (8,182)
  Translation adjustment         (271)        --      --         --      (271)       --          --     --          (271)
                            ---------
Total Comprehensive Loss $     (8,453)
                            ==========
  Class B Stock Converted to
     Class A Stock...                          5      (5)        --        --        --          --     --            --
  Issuance of Class A Common
    Stock and Issuance of stock
    options for acquisition                  202      --    227,564        --        --          --     --       227,766
  Options exercised including
    tax benefit......                          6      --      7,385        --        --          --     --         7,391
 Warrants issued with
   Subordinated debentures                    --      --      1,838        --        --          --     --         1,838
 Conversion of Subordinated
     Debentures and accrued
     interest, net of related
     debt issuance costs of
     $639 and debt discount
     of $1,169.......                         20      --     11,002        --        --         --      --        11,022
Shares sold under Employee
     Stock Purchase Plan                      --      --        135        --                   --      --           135
Deferred Compensation                         --      --         --        --       840         --      --           840
                                           -----   -----  ---------     ------    -----  ----------- -------    --------

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

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

</TABLE>

                                     - 45 -

<PAGE>

<TABLE>

                                     WESTELL TECHNOLOGIES, INC. AND SUBSIDIARIES

                                        CONSOLIDATED STATEMENTS OF CASH FLOWS

<CAPTION>

                                                                                  Fiscal Year Ended March 31,
                                                                              ----------------------------------
                                                                                2000       2001        2002
                                                                                ----       ----        ----
                                                                                       (in thousands)

<S>                                                                         <C>          <C>          <C>
Cash flows from operating activities:
  Net loss ..............................................................   $  (8,182)   $ (93,856)   $(167,429)
  Reconciliation of net loss to net cash (used in) provided by
     operating activities:
       Depreciation and amortization ....................................       8,439       43,941       40,222
       Goodwill and intangible impairment ...............................        --           --         97,500
       Deferred taxes ...................................................      (7,222)        --            350
       Gain on liquidation of Westell Europe Ltd. .......................        (426)        --           --
       Accrued interest expense on debentures converted .................         110         --           --
       Deferred compensation ............................................         840           14         (807)
       Loss on sale of fixed assets and asset impairment ................        --           --          2,014
       Other ............................................................        --            147          (71)
  Change in assets and liabilities:
     Accounts receivable ................................................     (16,811)       7,045        9,656
     Inventories ........................................................      (7,271)     (42,451)      54,894
     Prepaid expenses and other current assets ..........................         113           75          (44)
     Refundable income taxes ............................................         (15)       9,323         --
     Other assets .......................................................        --            429         (164)
     Accounts payable and accrued expenses ..............................       7,890       38,969      (47,152)
     Accrued compensation ...............................................         277       (2,251)      (2,313)
                                                                            ---------    ---------    ---------

          Net cash (used in) provided by operating activities ...........     (22,258)     (38,615)     (13,344)
                                                                            ---------    ---------    ---------

Cash flows from investing activities:
   Purchases of property and equipment ..................................     (11,434)     (22,172)      (9,205)
   Proceeds from sale of equipment ......................................         432          190           62
   Increase in other assets .............................................          (8)        --           --
   Decrease in short-term investments ...................................        --          1,951         --
   Cash acquired in acquisition .........................................      29,805         --           --
                                                                            ---------    ---------    ---------

          Net cash provided by (used in) investing activities ...........      18,795      (20,031)      (9,143)
                                                                            ---------    ---------    ---------

Cash flows from financing activities:
  Net borrowing (repayment) under revolving promissory notes ............        --         28,400       (2,310)
  (Repayment) borrowing of long-term debt and leases payable ............      (2,064)      (2,596)      24,411
  Proceeds from issuance of convertible debt ............................      18,542         --           --
  Proceeds from issuance of Common Stock including tax benefit on options       7,526        6,008        6,668
                                                                            ---------    ---------    ---------

          Net cash provided by financing activities .....................      24,004       31,812       28,769
                                                                            ---------    ---------    ---------

Effect of exchange rate changes on cash .................................           2          (19)        --
          Net increase (decrease) in cash and cash equivalents ..........      20,543      (26,853)       6,282
Cash and cash equivalents, beginning of period ..........................       6,715       27,258          405
                                                                            ---------    ---------    ---------

Cash and cash equivalents, end of period ................................   $  27,258    $     405    $   6,687
                                                                            =========    =========    =========

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

</TABLE>

                                     - 46 -

<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., an 88.3%-owned subsidiary, provides
teleconferencing, multipoint video conferencing, broadcast fax and multimedia
teleconferencing services to various customers.

         Business Acquisition

         On March 17, 2000, the Company acquired 100% of the outstanding shares
of Teltrend Inc., a designer, manufacturer and marketer of transmission products
used by telephone companies to provide voice and data service over the telephone
network. Each outstanding share of Teltrend Inc. was converted into 3.3 shares
of the Company's class A common stock. Total consideration included the issuance
of 20,196,427 shares of class A common shares valued at $213,575,312 and
$10,475,940 in transaction costs. The Company also assumed 605,000 options to
purchase Teltrend common stock and converted such options to Company options to
purchase approximately 2.0 million shares of class A common stock, which are
included in the stock option activity table illustrated in Note 8. The exercise
prices of the options assumed range from $3.7121 to $15.5303 and have an average
exercise price of $5.6989. The fair value of the options assumed was $14,190,621
and is included in the purchase price and as a component of stockholders' equity
in the consolidated financial statements. The fair value of the options assumed
was estimated using the Black-Scholes option pricing model.

         The acquisition was accounted for as a purchase and, accordingly, the
acquired assets and assumed liabilities have been recorded at their estimated
fair market values at the date of the acquisition. The results of operations
have been included in the consolidated financial statements since the date of
acquisition. The estimated fair market values of certain assets were based upon
preliminary appraisal reports. The purchase price of approximately $238,241,873
exceeded the final fair market value of net assets acquired, resulting in
goodwill of $59,931,000 and synergistic goodwill of $57,000,000 which is being
amortized on a straight-line basis over an average of approximately ten years.

         In connection with the acquisition of Teltrend, the Company
involuntarily terminated certain employees of Teltrend and recorded
approximately $2.4 million in severance benefits, which is included in the
$10,475,940 transaction costs described above. See Note 10 for further
discussion.

         The following unaudited pro forma consolidated results of operations
data (in thousands, except per share data) assumes the business acquisition
described above occurred on April 1, 1999. The pro forma results below are based
on historical results of operations including adjustments for interest,
depreciation and amortization and do not necessarily reflect actual results that
would have occurred.

                                                            March 31,
                                                              2000
                                                          -------------
                              Revenue................        $ 215,367
                              Net loss...............         (30,676)
                              Loss per share.........           (0.50)



                                     - 47 -

<PAGE>

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.

         Short-Term Investments

         Short-term investments generally consist of certificates of deposit,
time deposits, commercial paper and short-term government obligations. These
securities have original maturity dates exceeding three months and less than one
year. Such investments are stated at cost, which approximates fair value.

         Inventories

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

<TABLE>
<CAPTION>
                                                                                                 March 31,
                                                                                          ----------------------
                                                                                           2001         2002
                                                                                           ----         ----
                                                                                             (in thousands)

        <S>                                                                               <C>         <C>
        Raw materials.................................................................... $ 47,989     $ 22,721
        Work in process..................................................................       26           39
        Finished goods...................................................................   51,153       14,889
        Reserve for excess and obsolete inventory and net realizable value...............  (26,100)     (19,475)
                                                                                          ---------    ---------

                                                                                          $ 73,068     $ 18,174
                                                                                          =========    =========
</TABLE>

         During the fiscal year ended March 31, 2001, the Company recorded a
charge of $26.7 million to reduce the carrying value of certain inventory 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. The
Company also recorded a charge of $10.4 million related to inventory purchase
commitments in excess of anticipated requirements. Such commitments totaled
$37.7 at March 31, 2001.

         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.

         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.

                                     - 48 -

<PAGE>

         Goodwill and Intangibles

         Intangible assets include goodwill, synergistic goodwill and product
technology related to the Teltrend acquisition. Intangible assets are being
amortized on a straight-line basis over their estimated useful lives. At March
31, 2002, the cost basis and useful lives of intangible assets consist of the
following:

                                                 Cost Basis              Life
                                                 ----------              ----
                                                (in thousands)

Goodwill.................................          $ 59,931          15 years
Synergistic goodwill.....................            57,000           5 years
Product technology.......................            55,600         2 - 7 years
                                                   --------
    Total................................           172,531
Less: accumulated amortization...........           (58,719)
Less: impairment.........................           (97,500)
                                                   --------
        Net..............................          $ 16,312
                                                   ========

         On an ongoing basis, the Company reviews intangible assets and other
long-lived assets 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 (or
acquired business) are less than the carrying value of the related asset. The
impairment loss would adjust the asset to its fair value.

         Due to the restructuring the Company implemented, along with current
and expected market conditions in the T-1 line repeater 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.

See "New Accounting Pronouncements" for pending accounting change concerning
goodwill and intangibles.

         Revenue Recognition

         Revenue is recognized when title has passed to the customer. On certain
sales contracts, revenue is not recognized until specific customer product
acceptance terms have been met.

         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.

         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.

         Deferred Revenue

         Deferred revenue represents customer prepayments for goods or services.

                                     - 49 -

<PAGE>

         Research and Development Costs

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

         Supplemental Cash Flow Disclosures

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

<TABLE>
<CAPTION>
                                                                                                March 31,
                                                                                   ------------------------------------
                                                                                   2000       2001        2002
                                                                                   ----       ----        ----
                                                                                         (in thousands)

<S>                                                                           <C>           <C>         <C>
Schedule of non-cash investing and financing activities:
Warrants issued with subordinated debentures..................................$   1,838     $     --    $     --
          Conversion of subordinated debentures and accrued interest, net of
             related debt issuance costs of $639 and $531 and debt discount of
             $1,169 and $669 for the years ended March 31, 2000
             and 2001, respectively...........................................   11,022        6,215          --

 Acquisition of Teltrend Inc.
             Fair value of assets acquired ...................................$ 252,132     $     --   $      --
             Liabilities assumed..............................................  (24,366)          --          --
             Common stock issued and options assumed.......................... (277,766)          --          --

Cash paid for:
          Interest............................................................$   1,207     $  1,964   $   2,653
          Income taxes........................................................       29           37          17

</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 to a
         bank: 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 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.

         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.

                                     - 50 -

<PAGE>

         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 the 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 2000, 2001 and 2002, and therefore
the net loss per basic and diluted earnings per share are the same.

         New Accounting Pronouncements

         In June 2001, the Financial Accounting Standards Board (FASB) issued
Statements of Financial Accounting Standards (SFAS) No. 141, Business
Combinations, and No. 142, Goodwill and other Intangible Assets, effective for
fiscal years beginning after December 15, 2001. Under the new rules, goodwill
will no longer be amortized but will be subject to annual impairment tests.
Other intangible assets will continue to be amortized over their useful lives.
The Company plans to adopt these new standards on April 1, 2002. Adoption of
SFAS 142 will eliminate the amortization of goodwill and is expected to reduce
the amortization of other identifiable intangible assets to approximately $2
million for fiscal 2003. During fiscal 2003 the Company will perform the first
of the required impairment tests as of April 1, 2002 and has not yet determined
the effect that these tests will have on the earnings and financial position of
the Company.

         In June 2001, the FASB issued SFAS No. 143, Accounting for Asset
Retirement Obligations. In August 2001, the FASB issued SFAS 144, Accounting for
the Impairment - Disposal of Long Lived Assets. The Company will adopt these
standards on April 1, 2002. The Company doesn't expect that the adoption of
these statements will have a material effect on the Company's financial
statements.

         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.

         Reclassification of Accounts

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



                                     - 51 -

<PAGE>

NOTE 2. REVOLVING CREDIT AGREEMENTS:

As of March 31, 2001, the Company had a revolving promissory note that enabled
the Company to borrow up to $16.0 million and was due August 31, 2003. The
revolver bore interest at the bank's prime rate (8% at March 31, 2001) plus 1%
and was secured by substantially all of the assets of the Company. The Company
had $28.4 million of borrowings under the revolving credit facility as of March
31, 2001.

On June 29, 2001, the Company amended the revolving credit facility, resulting
in an asset-based, revolving lending facility providing for total borrowing
based upon 85% of eligible accounts receivable and 30% of eligible inventory not
to exceed $8.3 million and 70% of the guarantee described below. The$8.3 million
inventory limitation is reduced by $.1 million on the first day of each month.
The Company was eligible to borrow an additional $6.3 million as of March 31,
2002. Up to $10,000,000 of the facility is collateralized by substantially all
assets of the Company and will remain available until June 30, 2002. The
facility provides for maximum borrowings of up to $35.0 million. The facility is
guaranteed by trusts for the benefit of Robert C. Penny III and other Penny
family members and is supported by their brokerage account totaling
approximately $10.0 million. In consideration of the guarantee, the Company
granted these stockholders 512,820 warrants to purchase shares of Company Class
A Common Stock for a period of five years at an exercise price of $1.95 per
share. Borrowings under this facility provide for the interest to be paid by the
Company at prime plus 1%. This revolving credit facility requires, among other
things, the maintenance of target EBITDA and tangible net worth. The Company was
not in compliance with these covenants at March 31, 2002. The Company and its
lenders have entered into an amendment and waiver under which the covenant
violations were waived.

On June 28, 2002, the Company amended the revolving credit facility. The
amendment provides for a $5 million non-amortizing term loan and a $30 million
revolving credit facility, both due June 30, 2003. The term loan is secured by,
among other things, a security interest in Collateral granted by certain
stockholders. The amendment also terminates the $10 million guarantee provided
by trusts of Robert C. Penny III and other Penny family members. This new
amendment provides for covenants regarding EBITDA, tangible net worth and
maximum capital expenditures. Management expects to be in compliance with the
covenants for the term of the debt.


NOTE 3. LONG-TERM DEBT:

         Long-term debt consists of the following:

<TABLE>
<CAPTION>
                                                                                                   March 31,
                                                                                              ------------------
                                                                                              2001         2002
                                                                                              ----         ----
                                                                                                (in thousands)
<S>                                                                                           <C>         <C>
Capitalized lease obligations secured by related equipment...............................     $  154      $1,687
Revolving Promissory note payable, interest at prime plus 1%, secured by
   substantially all assets of the Company, due through  June 2003.......................     28,400      26,090
Vendor notes payable.....................................................................         --      22,878

                                                                                              28,554      50,655

        Less current portion.............................................................       (103)    (11,186)
                                                                                            --------  ----------

                                                                                             $28,541     $39,469
                                                                                            ========  ==========
</TABLE>

         Future maturities of long-term debt at March 31, 2002 are as follows
(in thousands):

        2003.......................................................  $  11,186
        2004.......................................................     36,013
        2005.......................................................      3,456
                                                                   ------------
                                                                     $  50,655

At March 31, 2002 the Company has provided for inventory purchases from
Solectron Technology SDN BHD.

On May 30, 2002 the Company signed two subordinated promissory notes with
Solectron . One note in the amount of $5.0 million is for the payment of
inventory held by Solectron that the Company is committed to buy. The second

                                     - 52 -

<PAGE>

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 between the parties was signed on June 3, 2002 in the amount of $1.3
million and is payable monthly over one year. This note was part of the
settlement of litigation with Celsian. All three notes bear and interest rate of
prime plus 2.5%.


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 accompanying
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 Class A common shares 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 Class A common shares 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 shares 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, 2002, all warrants were outstanding.


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:

<TABLE>
<CAPTION>
                                                                                    Fiscal Year Ended March 31,
                                                                                  ------------------------------
                                                                                   2000       2001        2002
                                                                                   ----       ----        ----
                                                                                         (in thousands)
        <S>                                                                     <C>         <C>       <C>
        Federal:
          Current.............................................................  $  (284)    $     --  $     --
          Deferred............................................................   (2,866)          --        --
                                                                                  -------    -------   ---------

                                                                                 (3,150)          --        --
                                                                                 --------    -------   ---------

        State:
          Current.............................................................      (40)          --        --
          Deferred............................................................     (410)          --        --
                                                                                   ------     ------    --------

                                                                                   (450)          --        --
                                                                                   ------     ------    --------

             Total............................................................ $ (3,600)     $    --   $    --
                                                                               ==========    =======   =========
</TABLE>

                                     - 53 -

<PAGE>

         The Company utilizes the flow-through method to account for tax
credits. In fiscal 2000, 2001 and 2002, the Company generated approximately
$662,000, $500,000 and $846,000, respectively, of tax credits.

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

<TABLE>
<CAPTION>
                                                                                      Fiscal Year Ended March 31,
                                                                                      ---------------------------
                                                                                     2000        2001       2002
                                                                                     ----        ----       ----

        <S>                                                                          <C>        <C>       <C>
        Statutory federal income tax rate....................................        (34.0)%    (34.0)%   (34.0)%
        Meals and entertainment..............................................          0.6        0.1       0.1
        State income tax, net of federal tax effect..........................         (4.9)      (4.9)     (4.9)
        Income tax credits recognized........................................         (4.2)      (0.5)     (0.3)
        Valuation allowance..................................................          7.6       26.0      10.5
        Goodwill amortization................................................         4.2       13.2       28.5
        Other................................................................          0.1        0.1       0.1
                                                                                    ------    -------   -------

                                                                                     (30.6)%      0.0%      0.0%
                                                                                  ==========  ========  ========
</TABLE>

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

<TABLE>
<CAPTION>
                                                                                                    March 31,
                                                                                             -----------------------
                                                                                              2001         2002
                                                                                              ----         ----

                                                                                                (in thousands)
        <S>                                                                                   <C>          <C>
        Deferred income tax assets:
          Allowance for doubtful accounts................................................     $  517       $ 683
          Alternative minimum tax credit.................................................        605         998
          Research and development credit carryforward...................................      4,157       5,835
          Capital loss carryforward......................................................      2,328       2,328
          Compensation accruals..........................................................      1,554       1,223
          Inventory reserves.............................................................     14,430      11,247
          Warranty reserve...............................................................      1,198       1,203
          Net operating loss carryforward................................................     46,819      65,460
          Accrued interest...............................................................         --       1,164
          Other..........................................................................        662       3,079
                                                                                           ---------   ---------
                                                                                              72,270      93,220
        Deferred income tax liabilities:
          Property and equipment.........................................................        254         159
          Other..........................................................................         16          11
                                                                                          ---------- -----------
                                                                                                 270         170

           Valuation allowance...........................................................    (46,205)    (67,605)
                                                                                          ----------  ----------

             Net deferred income tax asset...............................................   $ 25,795    $ 25,445
                                                                                           =========   =========
</TABLE>

         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 operating losses for the 2000, 2001 and
2002 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, NOL carryforwards and tax credit
carryforwards prior to their expiration through a tax planning strategy
available to the Company. At March 31, 1998, management determined that the
strategy was not sufficient to realize all of the net deferred tax asset and as
such the Company recorded a valuation allowance. During fiscal years 2000, 2001
and 2002 the Company increased the valuation allowances by $900,000, $27.7
million and $21.4 million, respectively. At March 31, 2002 management
re-assessed the valuation of the net deferred tax asset and determined that the
tax planning strategy was sufficient to support the realization of the recorded
net deferred income tax asset. 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 tax planning strategy is not sufficient to generate taxable

                                     - 54 -

<PAGE>

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.

         The Company has approximately $6.8 million in income tax credit
carryforwards and a tax benefit of $65.4 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.



                                     - 55 -

<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 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. Total rent
expense was $2.5 million, $3.5 million and $4.5 million for 2000, 2001, and
2002, respectively.

     Total minimum future rental payments at March 31, 2002 are as follows (in
thousands):

        2003......................................................   $  5,295
        2004......................................................      4,287
        2005......................................................      3,513
        2006......................................................      3,494
        2007......................................................      3,356
        Thereafter................................................     26,047
                                                                    ---------

                                                                     $ 45,992


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 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 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.



                                     - 56 -

<PAGE>

Shares issued and outstanding:

The following table summarizes Common Stock transactions for fiscal years 2000,
2001 and 2002.

<TABLE>
<CAPTION>
                                                                  Common Stock
                                                                 Shares Issued
                                                                      and
                                                                  Outstanding
                                                          ---------------------------            Treasury
                                                              Class A           Class B            Stock
                                                              -------           -------            -----
                                                                          (in thousands)

<S>                                                            <C>             <C>                    <C>
Balance, March 31, 1999..............................          16,928          19,528                 --
Class B Stock Converted to Class A Stock.............             477            (477)                --
Issuance of Class A Common Stock and Issuance of
    stock options for acquisition....................          20,196               --                --
Options exercised....................................             551               --                --
Conversion of Subordinated Debentures ...............           2,014               --                --
Shares sold under Employee Stock Purchase Plan.......              13               --                --
                                                           ----------         --------         ---------

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)
                                                            ========         =========     =============
</TABLE>

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 $501,000, $1.3 million and $487,000 for fiscal 2000, 2001
and 2002, 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, 2000 and 2001 there were 126,512 and 76,781 shares,
respectively, available for future issuance. As of March 31, 2002 no shares were
available for issuance.

                                     - 57 -

<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. During
fiscal 2000, the SIP plan was amended to allow the issuance of stock options to
advisory board members and consultants. No stock awards were issued in fiscal
2000, 2001 or 2002.

         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 Stock Incentive Plan, 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 4,079,740 shares
available for further issuance at March 31, 2002. The stock option activity
under all stock plans is as follows:

<TABLE>
<CAPTION>
                                                         Outstanding        Weighted Average
                                                           Options           Exercise Price
                                                           -------           --------------

       <S>                                                <C>                      <C>
        Outstanding at March 31, 1999...............      2,643,446                6.69

                  Granted...........................      4,287,827                7.11
                  Exercised.........................      (551,041)                6.07
                  Expired...........................         --                  --
                  Canceled..........................      (543,020)                5.49
                                                        -----------           ---------
        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

</TABLE>

         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.

         As part of the Teltrend merger on March 17, 2000, the vested options
under the three adopted option plans were exchanged at a ratio of 3.3 shares of
Westell common stock for each share of Teltrend common stock and the option
strike price was adjusted by that same ratio. These options are included in the
granted totals above for the year ended March 31, 2000.

         During fiscal 2000, 2001 and 2002, respectively, the Company granted
30,000, 3,000 and 30,000 stock options to non-employee advisory board members or
consultants. Compensation expense of $840,000, $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 2000 and 2001 respectively.

                                     - 58 -

<PAGE>

          The Company accounts for employee stock options under APB Opinion 25,
as permitted under generally accepted accounting principles. Accordingly, no
compensation cost has been recognized in the accompanying financial statements
related to options granted to "employees" as defined in APB Opinion 25. Had
compensation cost for these options been determined consistent with ("SFAS
123"), which is an accounting alternative that is permitted but not required,
the Company's net loss and net loss per share would have been $(13,530,000),
$(108,585,000) and $(178,124,000) and $(0.36), $(1.78) and $(2.77) for fiscal
2000, 2001 and 2002, respectively.

         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 6.5% and no dividend yield;
expected volatility of 73% and an expected life of 7 years. A majority of the
options granted to employees in fiscal 2001 vest ratably over five years.
Options granted in fiscal 2000 related to the Teltrend merger were fully vested
due to the change in control provision in the three adopted plans. A majority of
the remaining options granted to employees in fiscal 2000 and 2002 vest ratably
over two to five years. Certain options vest upon the earlier of the achievement
of individual goals established or 8 years. The weighted average fair value of
the options granted during the years ended March 31, 2000, 2001 and 2002 were
$5.52, $8.43 and $1.94, respectively.

The following table summarizes information about all stock options outstanding
as of March 31, 2002:

<TABLE>
<CAPTION>
                                         Options Outstanding                         Options Exercisable
                     -----------------------------------------------------   -----------------------------------

      Range of            Number                               Weighted-           Number            Weighted
      Exercise        Outstanding at        Remaining           Average        Exercisable at         Average
       Prices             3/31/02              Life         Exercise Price         3/31/02        Exercise Price
    ------------    -----------------    -----------------  --------------   -------------------  --------------

   <S>                   <C>                   <C>                <C>                <C>              <C>
   $1.07 - $1.95         2,903,817             9.38 yrs           $ 1.47                   0          $ 0.00
    1.96 -   4.00        2,237,135             8.40 yrs             2.64             677,935            3.81
    4.02 -   5.34        1,930,295             7.88 yrs             5.02             706,087            5.03
    5.44 -  21.44        2,070,331             6.95 yrs            14.21           1,375,785           12.41
    22.44 - 36.18          76,550             7.93 yrs            31.49              34,300           32.11
                      ------------           ----------       ----------           ---------      ----------

    $1.07 - 36.18        9,218,128             8.27 yrs           $ 5.61           2,795,107          $ 8.70

</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.



                                     - 59 -

<PAGE>

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>
<CAPTION>
                                                              Telecom          Telecom      Consolidated
                                                             Equipment        Services         Total
                                                           ------------     ------------     ---------
<S>   <C>                                                      <C>             <C>           <C>
2000
      Revenues............................................      $90,185        $30,808       $120,993
      Operating income (loss).............................     (16,264)          5,282       (10,982)
      Depreciation and amortization.......................        6,085          2,354          8,439
      Total assets........................................      321,921         20,649        342,570

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

</TABLE>

Reconciliation of Operating loss for the reportable segments to Loss before
income taxes:

<TABLE>
<CAPTION>
                                                                     Fiscal Year Ended March 31,
                                                                  ---------------------------------
                                                                2000             2001           2002
                                                                ----             ----           ----

<S>                                                         <C>             <C>           <C>
Operating loss............................................  $ (10,982)      $ (91,259)    $ (161,643)
Other income, net.........................................       1,056              --          (222)
Interest expense..........................................       1,856           2,197         5,564
                                                               --------        -------       --------

Loss before income taxes..................................  $ (11,782)      $ (93,456)    $ (167,429)
                                                              ========      ==========    ===========
</TABLE>

         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 for in fiscal
years 2000 and 2002 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,
                                                       2000  2001   2002
                                                       ----  ----   ----
Customer A............................................ 14.7% 25.9% 43.2%
Customer B............................................ 19.2  17.6  14.9
Customer C............................................  7.9  14.3   3.5

                                     - 60 -

<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,
                                                             ----------------
                                                             2001       2002
                                                             ----       ----
        Customer I..................................         41.2%       46.5%
        Customer II.................................          5.4        12.6
        Customer III................................         25.1        10.4

         Geographic Information

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

                                           Domestic   International   Total
                                           --------   -------------   -----
                                                     (in thousands)
2000
        Revenue.......................... $ 110,124    $  10,869  $ 120,993
        Operating loss...................   (10,243)       (739)    (10,982)
        Identifiable assets..............    334,907       7,663    342,570
                                                                           =

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


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 a restructuring charge of $550,000 in the three
months ended March 31, 2000. This charge was for personnel, legal, and other
related costs to eliminate redundant employees due to the acquisition of
Teltrend Inc. 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. The Company estimates the
costs of these activities will be $2.9 million. Approximately $2.4 million of
the total cost has been capitalized as part of the purchase price of Teltrend
Inc primarily related to Teltrend Inc. employees involuntarily terminated. The
remaining cost of $550,000 has been charged to operations and relates to Westell
employees involuntarily terminated and other costs. As of March 31, 2002, $2.0
million of these costs have been paid.

         The Company recognized restructuring charges of $1.7 million in fiscal
year 2001 and $6.3 million in fiscal year 2002. These charges included
personnel, facility, and certain development contract costs related to
restructuring global operations. The fiscal 2001 restructuring plan was to
decrease costs by workforce reduction. The 2001 restructuring was focused
primarily on the sales and marketing functions and is expected to generate a
payroll cost savings of approximately $2.5 million annually. As of March 31,
2002, $1.7 million and $3.0 million of restructuring cost has been paid for
charges taken in fiscal 2001 and 2002 respectively. The fiscal 2002
restructuring plan was to further decrease costs primarily by workforce
reduction where approximately 200 employees were impacted and to realign the
Company's cost structure with the anticipated business outlook.

The restructuring charges and their utilization are summarized as follows:

                                     - 61 -

<PAGE>

<TABLE>
<CAPTION>

                   Accrued    Teltrend        2000  2000      Accrued       2001     2001  Accrued        2002      2002  Accrued
(Dollars in           at      Inc.         Charged  Utilized     at      Charged  Utilized    at       Charged  Utilized     at
thousands)         March 31   Involuntary                    March 31                      March 31                       March
                     1999     Termination                      2000                          2001                         31 2002
-----------------------------------------------------------------------------------------------------------------------------------
<S>                  <C>          <C>         <C>      <C>     <C>       <C>      <C>        <C>       <C>        <C>      <C>
Employee costs...... $601         $2,356      $250     $547    $ 2,604   $ 1,550  $ 1,552    $ 2,602   $ 4,066    $4,629   $ 2,039
Contract costs......   89                       --       --         --        --       --         --        --        --        --
Legal, other and
facility costs......  154                      300      130        300       150       55        395     2,191       412     2,174

Charge reversal.....   --                       --      169         --        --       --         --        --        --        --
-----------------------------------------------------------------------------------------------------------------------------------
Total............... $844         $2,356      $550     $846    $ 2,904   $ 1,700  $ 1,607    $ 2,997   $ 6,257   $ 5,041   $ 4,213
===================================================================================================================================

</TABLE>

NOTE 11. OTHER INCOME, NET:

         In fiscal 2000, the Company recognized other income of $650,000
resulting from foreign currency gain from the liquidation of Westell Europe Ltd.
Excluding the effect of this one time benefit, Other income, net would have been
$426,000 for fiscal year ended March 31, 2000. Excluding this one time item,
Other income, net for the years ended March 31, 2001 and 2002 was primarily due
to interest income earned on temporary cash investments made as a result of
investing available funds.

NOTE 12. LITIGATION:

The Company is a party to various legal actions arising in the normal course of
business and to class action shareholder suits against the Company and current
and former officers thereof. These suits are at various stages of legal
proceeding. Management, after taking into consideration legal counsel's
evaluation, is unable to determine the likely outcome of these actions, but
believes the outcome of one or more of the actions could have a material adverse
effect on the Company's financial position.



                                     - 62 -

<PAGE>

We have not been able to obtain, after reasonable efforts, the re-issued report
or consent of Arthur Andersen LLP related to the March 31, 2000 financial
statements. Therefore, we have included a copy of their previously issued
report.

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



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


We have audited, in accordance with auditing standards generally accepted in the
United States, the financial statements as of March 31, 2000 and for the years
ended March 31, 2000 and 1999, included in WESTELL TECHNOLOGIES, INC.'S Annual
Report in this Form 10-K and have issued our report thereon dated May 10, 2000.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. Schedule II, Valuation and Qualifying
Accounts, included herein is the responsibility of the Company's management and
is presented for purposes of complying with the Securities and Exchange
Commission's rules and is not part of the basic financial statements. This
schedule has been subjected to the auditing procedures applied in the audit of
the basic financial statements and, in our opinion, fairly states in all
material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.




/s/ Arthur Andersen LLP

Chicago, Illinois
May 10, 2000



                                     - 63 -

<PAGE>

                         REPORT OF INDEPENDENT AUDITORS

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

         We have audited the consolidated financial statements of Westell
Technologies, Inc. as of March 31, 2002 and 2001, and for the years then ended,
and have issued our report thereon dated May 21, 2002, except for Notes 2 and 3,
as to which the date is June 28, 2002 (included elsewhere in this Registration
Statement). Our audit also included the 2002 and 2001 information on the
financial statement schedule listed in Item 16(b) of this Registration
Statement. This schedule is the responsibility of the Company's management. Our
responsibility is to express an opinion based on our audit.

In our opinion, the 2002 and 2001 information on the financial statement
schedule referred to above, when considered in relation to the basic financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.

                                                     ERNST & YOUNG LLP



Chicago, Illinois
May 21, 2002



                                     - 64 -

<PAGE>

<TABLE>
                   WESTELL TECHNOLOGIES, INC. AND SUBSIDIARIES

                SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS

                         ACCOUNTS RECEIVABLE ALLOWANCES
                                 (IN THOUSANDS)

<CAPTION>

                                                                                   2000       2001        2002
                                                                                   ----       ----        ----

<S>                                                                                <C>        <C>       <C>
Balance at beginning of year..................................................     $703       $855      $1,363
Transfer from acquired company................................................      273         --          --
Provision for doubtful accounts...............................................      223        627         971

Write-offs of doubtful accounts, net of recoveries............................     (344)      (119)       (803)

Balance at end of year........................................................     $855     $1,363      $1,531
                                                                                   ======   ========    ========
</TABLE>



<TABLE>
                                               RESTRUCTURING RESERVES
                                                   (IN THOUSANDS)

<CAPTION>

                                                                                   2000      2001        2002
                                                                                   ----      ----        ----

<S>                                                                             <C>        <C>         <C>
Balance at beginning of year..................................................  $   844    $ 2,904     $ 2,997
Purchase price adjustment.....................................................    2,356         --          --
Charges to operating expenses.................................................      550      1,700       6,257
Restructuring costs paid......................................................     (677)    (1,607)     (5,041)
Charge reversal...............................................................     (169)        --          --

Balance at end of year........................................................  $ 2,904    $ 2,997     $ 4,213
                                                                                =========    =======   =========
</TABLE>




                                     - 65 -