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, 2001 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 (including Class B Common Stock which automatically
converts into Class A Common Stock upon a transfer of such stock except
transfers to certain permitted transferees) held by non-affiliates (within the
meaning of the term under the applicable regulations of the Securities and
Exchange Commission) on June 15, 2001 (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 $91,227,678. 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 15, 2001, 45,787,705 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 2001 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 facts (as such term is
defined in the rules promulgated pursuant to the Securities Act of 1933, as
amended (the "Securities Act")) or that contain the words "believe", "expect",
"intend", "anticipate" or derivatives thereof, are forward looking statements.
Because such forward-looking statements include risks and uncertainties, actual
results may differ materially from those expressed in or implied by such
forward-looking statements. Factors that could cause actual results to differ
materially include, but are not limited to, those discussed herein under "Risk
Factors" set forth herein. 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 local exchange
carriers to deliver 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.

         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 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 ISDN or T-1 are
higher speed lines that provide voice and/or data services.

         On March 17, 2000, Westell completed the acquisition of Teltrend Inc.
Teltrend manufactured and marketed products to provide data and voice services
over the existing telephone network, primarily in the local loop. Teltrend also
manufactured a wide range of products that convert, change and amplify
transmission protocols and are used worldwide in public and private
communications networks.

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


Telecommunications Industry Overview

         Since the early 1980s, the telecommunications industry has experienced
an increased demand for the number of services provided to end-users.
Traditional telephone voice traffic has grown, and the demand for data services
that are carried over the Internet and private communications networks continues
to increase.

         The growth in the Internet is being fueled by the expanding range of
uses of the Internet such as e-mail, video broadcasts, e-commerce, commercial
services, transaction processing, independent bulletin boards and voice
transmissions.


                                      -1-
<PAGE>

         Both business and residential users are increasing their use of the
Internet and data networks. Businesses are using the Internet for electronic
commerce, Web hosting, supply chain management, customer support and
relationship management, inventory control and for creating secure data networks
known as virtual private networks. Residential based demand for
telecommunications, data and voice services is growing as service providers
increase their offerings of new interactive multimedia services, including data
and video applications such as high speed Internet access, local area network
extension, telecommuting and video conferencing.

         The size and rate of the content being transmitted demands more
bandwidth, or greater speed and capacity, on the telephone wires that connect a
telephone company's central office to the end user. To handle the growing volume
of data communications traffic and to provide faster and higher quality
transmission, telephone companies and service providers must continually upgrade
the capacity and speed of their networks by increasing their bandwidth
capabilities.

         To meet the growing demand for high-speed services, providers have
invested and installed high-speed switches and routers and fiber optic equipment
into the core or central parts of their communication networks. Although these
investments promote high-speed capabilities, there are still bottlenecks at the
ends of the network or the local loop. Deployment of fiber in the local access
network to connect end users to a telephone company's central office has proven
labor intensive, complicated, time consuming and expensive. Consequently, these
connections to end users still predominantly consist of low speed analog
transmission over copper wire.

         Given the challenges of widespread replacement of copper wire in the
local access network, telephone companies have turned to equipment suppliers for
cost-effective technology that can expand the ability of the existing copper
wire infrastructure to accommodate high-speed digital transmission. Digital
conversion of the analog network has been built on the aggregating or
multiplexing format known as T-1 in the U.S. and E-1 in most countries outside
of the U.S. T-1/E-1 transmission utilizes a data rate of 1.544 and 2.048 million
bits (megabits) per second, respectively, and the transmission can be aggregated
or subdivided into channels to deliver data communication services tailored to
specific end user requirements. For example, a T-1 line can transmit data at a
minimum of 24 times faster than a traditional phone line. Products enabling T-1
and E-1 transmission, however, have typically required extensive engineering and
installation, which make them cost prohibitive for residential and small
business use.

         Until recently, the incumbent local exchange carriers (ILECs) such as
SBC, Bell Atlantic, Bell South and US West were the sole providers of
communications services and the exclusive operators of the local loop. The
Federal Communications Commission (FCC) Act of 1996 opened an era of
deregulation, creating competition in this space. Deregulation allows telephone
carriers, information service providers and cable operators to deploy
competitive services in the local access network leading to a new class of
service providers known as a competitive local exchange carriers. Deregulation
also increased competition across industries. Cable operators are competing with
telephone companies in the delivery of high-speed digital transmission and seek
to compete in the delivery of traditional local telephone service as well.
Currently available high-speed cable modems enable cable operators to provide
data transmission services to customers in addition to standard television
services. Alternative telephone access providers have deployed fiber and
wireless systems for high volume data transmission to business centers and other
high-density metropolitan areas. The FCC is also requiring traditional carriers
to invest heavily in the deployment of broadband services as one of the
conditions for merging.

         In response to this competitive environment, in an effort to satisfy
regulatory conditions for mergers and in an attempt to retain customers and
increase revenues, the ILECs are investing resources to develop and deploy
high-speed data services over their existing asset base, the copper wires that
connect users to central offices. One of the primary technologies to provide
these services is DSL or digital subscriber line.

          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



                                      -2-
<PAGE>

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.

         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 that sits on a desktop next to a personal computer.

Westell Strategy

         Westell Technologies is comprised of a products subsidiary, Westell,
Inc. and a service subsidiary, Conference Plus, Inc. Westell, Inc. consists of
three primary business units: Transport Systems Group (TSG), Customer Premise
Equipment (CPE), and Telco Access Products (TAP). The CPE business unit and TSG
business unit provide broadband DSL solutions.

         The TSG business unit provides products and solutions for the service
providers' network, primarily on an indirect basis with a limited set of
partners. The TSG business unit is centered on developing superior networking
equipment with robust architecture and network interoperability for the service
providers' network. Its expertise is derived from its understanding of copper
variance characteristics of the local loop, which is factored into product
development. A very important part of the Transport System business unit
strategy is to partner rather than directly compete with very large, global
equipment providers. The Transport System business unit currently focuses on
supplying equipment indirectly, through partners such as Fujitsu Telecom Europe,
Limited (FTEL) or by directly providing products that address very specific
markets or niches. FTEL is currently supplying approximately 50% of the
equipment associated with British Telecom's DSL deployment in the United
Kingdom.

         Westell and FTEL are involved in a strategic alliance in which Westell
provides DSL engineering support and DSL products as part of FTEL's DSL
developments and offering. This multi-year arrangement includes manufacturing
agreements, royalty payments and funding by FTEL, for portions of Westell's
research and development. The alliance was expanded in March 2000 to include
next-generation DSL equipment.

         The Transport Systems business unit also develops niche network
products for the DSL marketplace. Its LinkReach(TM) product is designed to
deliver DSL service to the installed base of Digital Loop Carrier (DLC) systems
already in service providers' networks. The DLC systems are remote mini-switches
extending central office functionality that acts as a hubbing point for copper
lines in the local access network and are deployed throughout telephone
companies' networks. The mDSLAM is another niche product that provides a full
ADSL network access platform in a very compact package.

         The CPE business unit provides broadband solutions including DSL
products and software solutions designed for end-users. The CPE business unit
draws from the local loop expertise of the TSG business unit for data design to
develop and manufacture CPE products and applications that maximize performance
from the loop.

         Westell's Telco Access Products business unit supplies products that
enable transmission, monitoring and maintenance of high-speed digital services
between a service provider's central office, controlled environment vaults
(CEV), or fiber-hut locations and their end-user customers. Products such as the
Network Interface Unit (NIU) products allow customers to monitor transmission
conditions and to detect performance problems in T1 circuits from remote
locations. All of the Regional Bell Operating Companies have purchased the
Company's NIUs



                                      -3-
<PAGE>

in the past two years. The recently developed MegaJack DS-3 system provides
similar monitoring capability for DS-3 circuits, that are over 28 times faster
than T1 lines.

         On March 17, 2000, the Company completed the acquisition of Teltrend
Inc. The acquisition added new products to the TAP business unit's offering such
as the Advanced Span Termination System (ASTS(TM)) and new HDSL2 transmission
products and systems. These HDSL2 systems enable high-speed services (such as T1
access lines) to be deployed with a single copper cable pair (whereas at least
two pairs were necessary before).

The Company's Products

     Through its three products business units, the Company offers a broad range
of products that facilitate the transmission of high-speed digital and analog
data between a telephone company's central office and end-user customers. These
products can be categorized into two groups:

o    DSL Products: Products based on DSL technologies offered by the CPE and
     Transport Systems Group business units;
o    Telco Access Products (TAP): Products used by telephone companies to
     optimize high speed transmissions, for example T-1 transmission at
     approximately 1.5 megabits per second.

     The prices for the products within each of the product groups of the
Company vary based upon volume, customer specifications and other criteria and
are subject to change due to competition among telecommunications manufacturers.
Increasing competition, in terms of the number of entrants and their size, and
increasing size of the Company's customers because of mergers, continues to
exert downward pressure on prices for the Company's products. The following
table sets forth the revenues from Westell's two product groups for the periods
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):

                                               1999       2000         2001
                                               ----       ----         ----
                                                       (In thousands)
DSL Products...........................     $ 12,156    $37,960     $198,660
TAP Products...........................       57,207     52,225      120,8340

DSL Products % of total revenues.......        13.3%      31.4%        55.0%
TAP Products % of total revenues.......        62.2        43.1        33.4


                                      -4-
<PAGE>

         DSL Products. Westell's DSL 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. The
following table sets forth a representative list of the Company's DSL products
and their applications:

<TABLE>

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

<S>                            <C>                                              <C>
WireSpeed(TM)DSL Modems and    Digital Subscriber Line (DSL) customer premise   Enables end-users to receive DSL
Routers                        equipment that is connected to a corresponding   services to enable applications such
 ......................         DSL device in the service providers' central     as high-speed Internet access,
 ......................         office. Users can achieve speeds of up to 8      remote local area network access,
 ......................         megabits per second downstream and up to 1       and work at home, while providing
 ......................         megabit per second upstream. Can enable          simultaneous standard telephone
 ......................         multiple users to share a single Internet        service over copper telephone
 ......................         connection as well as dynamically select         wires.  Also enables multiple users
 ......................         between multiple service providers or            to access multiple Internet or
 ......................         corporate networks.                              corporate network locations
                                                                                simultaneously.

WebShare(TM)Software           WebShareTM is a networking software              Enables multiple users to
 ......................         application that extends the product life of     simultaneously share a single ADSL
 ......................         the WireSpeedTM modem in the market.             Internet connection, creating a
 ......................         WebShareTM works in conjunction with a Westell   cost-effective Broadband solution
 ......................         WireSpeed Ethernet DSL modem, and creates a      for small business and home users
 ......................         residential gateway providing access to up to    with multiple PCs.
 ......................         64 users. It can be downloaded from the
 ......................         Westell Web site.

WebShareTM Pro Software        WebShareTM Pro provides additional features      Enables same functionality as
 ......................         including: an integrated firewall that           WebShareTM with additional features
 ......................         protects all PCs on the local area network;      providing support of up to 253
 ......................         Virtual Private Network (VPN) support via        users. VPN support is for
 ......................         Point-To-Point Tunneling Protocol (PPTP); VPN    telecommuters who need to access
 ......................         support; Port Forwarding; and True Always On.    their corporate network from home or
 ......................         WebShareTM Pro creates a residential gateway     satellite offices; port forwarding
 ......................         providing access to up to 253 users to access    allows gaming while maintaining
 ......................         the Internet through a DSL connection. It also   security for the rest of the local
 ......................         can be downloaded from the Westell Web site.     network; and True Always On feature
 ......................                                                          memorizes the systems security
 ......................                                                          password so that users do not need
 ......................                                                          to re-enter it in the event that the
                                                                                router powers down.

</TABLE>


                                      -5-
<PAGE>



<TABLE>

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

<S>                            <C>                                              <C>
Access 4000TM Residential      Access 4000TM is a low-cost Broadband            Enables multiple application uses
Gateway                        residential gateway and multi-use platform       including networking, Internet
 ......................         that maximizes high-speed data, shared           access and communication services
 ......................         networking and voice services in one product.    via the users agreement with the
 ......................         Access 4000 TM provides multiple networking      selected telephone provider.
 ......................         options including HPNA, Wireless LAN, USB and    Designed for residential and small
 ......................         Ethernet, which can all be used simultaneously   business use. Multi-networking
 ......................         on a shared DSL connection via plug-in modules   options means end-users can draw
 ......................         and PCMCIA cards. Supports four channels of      upon the networking system they
 ......................         VoATM for Centrex calling features available     already have in place, simply by
 ......................         from telephone service providers.                adding the appropriate modules and
 ......................                                                          cards.


Access HRFTM                   A simple, wireless networking solution for       Enables wireless networking and
 ......................         laptop and desktop computers based on Home RF    combined wireless user Internet
 ......................         technology. Access HRFTM connects computers      access in residence or small
 ......................         together into a cordless 1.6 Mbps Ethernet       business applications. A solution
 ......................         local area network, enhancing the high-speed     that reduces the difficulty
 ......................         ADSL connection. It works by connecting the      of installing a home network by
 ......................         Access HRFTM Ethernet bridge to the DSL modem,   eliminating the need for inside
 ......................         one Access HRFTM USB adapter for each desktop    wiring.
 ......................         computer, one Access HRFTM PC card for each
 ......................         laptop computer, and performing a simple
 ......................         software configuration.
 ......................

SuperVision(R)DSLAM             Consolidates DSL lines into a single network     Enables multiple services and
 ......................         interface at the central office.  Users can      applications such as high-speed
 ......................         achieve speeds of up to 8 megabits per second    Internet access, remote local area
 ......................         downstream and up to 1 megabit per second        network access, and work at home,
 ......................         upstream.  Facilitates the connection between    while providing simultaneous
 ......................         copper wire digital transmission used in the     standard telephone service over
 ......................         local access network and the optical fiber       copper telephone wires.
 ......................         transmission in the telephone network.

LinkReach(TM)                  Provides DSL services from a digital loop        Enables multiple services and
 ......................         carrier (a remote mini-switch extending          applications such as high-speed
 ......................         central office functionality) environment.       Internet access, remote local area
 ......................         Users can achieve speeds of up to 8 megabits     network access, and work at home
 ......................         per second downstream and up to 1 megabit per    solutions to users who receive
 ......................         second upstream.                                 service from a digital loop carrier
 ......................                                                          rather than from a telephone
 ......................                                                          company's central office.

</TABLE>

         All of Westell's modems are equipped with additional memory that gives
users the capability to upgrade their devices by downloading software and not
purchasing additional hardware. These upgrades can convert a single user modem
into a multi-user device, often called a gateway.


                                      -6-
<PAGE>

         In the last five years, over 100 customers have purchased the Company's
ADSL systems to conduct technical and marketing trials for interactive
multimedia applications. Westell is currently involved in Bell Atlantic's
initial deployment of DSL systems as well as several other carriers including
Century Telephone and SaskTel. Through its partnership with Fujitsu Telecom
Europe, Ltd. (FTEL), Westell is involved in the initial deployment of DSL
products by British Telecom. Some of the products listed above, such as the
Access 4000(TM), the Residential Gateway and the Access HRF, will be marketed to
ISPs and enterprise customers and are not available on the webstore.

         Customers using the Company's DSL systems for initial service
deployments are not contractually bound for future deployments or product sales.
The Company's growth is dependent upon whether DSL technology gains widespread
commercial acceptance by telephone companies. The Company's ability to achieve
profitability or revenue growth in the future will be associated with market
acceptance of the Company's DSL systems and the development and market
acceptance of other DSL products introduced by the Company. See "Risk Factors."



                                      -7-
<PAGE>



         TAP Products. Westell's 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 TAP products
and their applications:

<TABLE>

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  Telco   locations (CO, CEV, fiber-hut) and their
 ......................       and their T1 customer                          customers' premise.  Utilizes one pair
 ......................                                                      of "last-mile" copper cable to
                                                                            cost-effectively set up the T1 line.

NIU-PM (Network Interface    Network Interface Unit with Performance        Facilitates the maintenance and
Unit)                        Monitoring that stores circuit performance     performance monitoring of T-1
 ......................       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.
 ......................       central office or at a DS3 customer's
 ......................       premise that provides maintenance
 ......................       capabilities for telephone lines providing
 ......................       DS3 transmission.

Advance Span Termination     Integrated mechanical shelves and electronic   Delivers multiple high capacity services
System (ASTS(TM))            modules.  Provides high-speed multiplexer      over local telephone lines in one
 ......................       interfaces such as DS3 and STS-1 (SONET).      chassis.  Typically located in the CO,
 ......................       Also provides T1, HDSL and HDSL2               CEV, or fiber-hut, this system provides
 ......................       transmission - 28 circuits per shelf.          integrated test access, 1:N protection
 ......................                                                      switching and direct connection to telco
                                                                            Operational Support  (OS) Systems.

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.

SmartLink(TM)                Automatic protection system for up to          Increases the reliability of T-1 and
 ......................       8-customer telephone lines providing T-1       other high-speed digital transmission.
 ......................       transmission.                                  Used for critical circuits such as those
 ......................                                                      used to provide service to cellular
 ......................                                                      telephone sites.


</TABLE>


                                      -8-
<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, the Company received $6.7 million from customers to
fund on-going engineering projects, which was offset against research and
development expenses. The Company did not receive any funding from customers for
on-going engineering projects in fiscal 1999 or 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 disciplines to optimize the opportunity to achieve the lowest cost
positions. The Company's outstanding 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. Telcos.
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
$8.5 million, $10.9 million and $57.7 million of the Company's revenues in
fiscal 1999, 2000 and 2001, respectively, accounting for 9.2%, 9.0% and 16.0% 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 46.6%, 51.4%
and 50.6% of the Company's revenues in fiscal 1999, 2000 and 2001, respectively.
Sales to the Company's largest three customers, Verizon, SBC, and FUJITSU
Telecommunications Europe Limited (FETL), accounted for 25.9%, 17.6% and 14.3%
of the Company's revenues in fiscal 2001, respectively. Consequently, the
Company's future success will depend upon the timeliness and size of future
purchase


                                      -9-
<PAGE>

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 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 Company's other principal customer is FTEL. Currently, the Company
is involved in the DSL deployment of British Telecom, selling its products to
FTEL, who then acts as a system integrator for British Telecom.

         The RBOCs and the Company's other customers are significantly larger
than, and are able to exert a high degree of influence over, the Company. Prior
to selling its products to telcos, the Company must undergo lengthy approval and
purchase processes. See Marketing, Sales and Distribution

Marketing, Sales and Distribution

         The Company sells its products in the U.S. through its domestic field
sales organization and selected distributors. The Company has had an established
sales force and channel to domestic service providers since its founding in
1980. As of March 31, 2001, the Company's equipment marketing, sales and
distribution programs were conducted by 174 employees.

         The Company markets its products internationally in over 40 countries
under various distribution arrangements that include strategic partnerships,
technology licenses and distributors. For large telephone companies, outside of
North America, the Company sells its DSL products indirectly through its
partners, principally FTEL. These large telephone companies purchase their DSL
products in a portfolio with other telecommunications products. Westell provides
DSL equipment and services for the central office and telephone company networks
to its strategic partners who then sell those products along with other related
products to the telephone companies.

         In North America, TAP products are sold directly to the service
providers or in some cases to distributors who service these carriers. Products
from the CPE business unit are sold directly to telephone carriers, to Internet
Service Providers who provide DSL services, and directly to end-users through
the Company's website. 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 CPE business unit sells its products through multiple channels. The
majority of products are currently sold directly to major service providers who
provide the modems to end-users as part of their service offering. The Company
also sells to Internet Service Providers (ISPs) who also offer Westell products
to their customers. Finally, through its on-line store, the Company also offers
modems and software directly to users.

         The Regional Bell Operating Companies 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:


                                      -10-
<PAGE>

         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.

         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 suppliers such as SBC and GTE.

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



                                      -11-
<PAGE>

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 a new
subcontractor relationship.

         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 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
business unit. 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 Alcatel
Network Systems, Efficient Networks, Cisco Systems, Intel and 3Com. Although the
Transport Systems business unit provides equipment in partnership with FTEL,
direct competitors in these markets include Alcatel, Nortel, Lucent, Cisco, and
Siemens.

         Most of the Company's competitors and potential competitors have
greater financial, technological, manufacturing, marketing and human resources
than the Company. Some of competitors include full network level system
suppliers who are much larger than the Company and can offer all elements of a
network solution. The Company has addressed this competition by entering into
strategic alliances, such as with FTEL, in which the network level system
supplier offers complete systems to telephone companies of which our DSL product
offering is a part. The Company's ability to compete with these larger system
suppliers will depend on the success of the alliances we form and the system
solutions created to meet customers needs. The inability to form successful
alliances and develop systems that meet customers' requirements will materially
adversely affect the Company's business and results of operations. Westell's CPE
business unit engages in business development opportunities and special project
development activities with a number of its CPE competitors.

         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. To the extent telephone companies decide not to aggressively
respond to this competition and fail to offer high speed digital transmission,
the overall demand for DSL products could decline. 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
systems in the U.S., while increasing the Westell sales of HDSL2 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 many
of its older, low speed TAP transmission products is decreasing, and will likely
continue to decrease, as high capacity digital transmission becomes less
expensive and more widely deployed. See 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.


                                      -12-
<PAGE>

Conference Plus services generated $19.8 million, $30.8 million and $42.0
million in revenues in fiscal 1999, 2000 and 2001, 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 reseller 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.
         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.


                                      -13-
<PAGE>

         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. Although the Company
regards some of its technology as proprietary, to date the Company has been
granted 21 patents and have an additional 30 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



                                      -14-
<PAGE>

cost-effective basis to meet changing customer needs and technological trends in
the telecommunications industry. Without third party transceiver technologies,
such as DMT technology, the Company would not be able to produce any of its DSL
systems. Consequently, if the Company's third party transceiver suppliers fail
to deliver 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 and
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, 2001, the Company had 1,327 full-time employees.
Westell's equipment manufacturing business had a total of 970 full-time
employees, consisting of 174 in sales, marketing, distribution and service, 218
in research and development, 529 in manufacturing and 49 in administration.
Conference Plus had a total of 357 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.


    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 continue to expect losses.

        Due to our significant ongoing investment in DSL 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 and
anticipate that our losses may extend at least 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, 2001, we had net losses
of $93.9 million.

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

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

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 will 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.





                                      -15-
<PAGE>

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 and 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 could incur charges for excess and obsolete inventory and for adjusting
inventory to net realizable value.

Due to rapidly changing technology and volatile customer demands, product cycles
tend to be short. Therefore, 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 $37.1 million
during fiscal year 2001. 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.

If DSL products fail to gain widespread commercial acceptance, we may not be
successful and our stock price would likely decline.

We expect to continue to invest significant resources in the development of DSL
products. The DSL market is still in the early stages of development. If the DSL
market fails to grow or grows more slowly than anticipated, then our business
and operating results would be materially adversely affected.

Commercial acceptance of DSL products depends on many factors, including the
following:

     o    Commercial viability and success of high speed transmission services
          enabled by DSL technology;
     o    The continued growth and use of the Internet;
     o    Significant improvements in the interoperability among vendors'
          equipment used in the delivery of high speed data transmission;
     o    The ability to continually improve DSL products to satisfy demands for
          increasing bandwidth over telephone wires; and


         Even if DSL technology gains commercial acceptance, our business will
suffer if our DSL sales do not increase. Our DSL revenues have been difficult to
forecast as our customers have only recently begun to consider implementing DSL
products in their networks. We have shipped most of our DSL products for trials
and early deployment. Even if our customers elect to commercially deploy DSL
products, our customers are not contractually bound to purchase our DSL systems
for commercial deployment. Our non-DSL products and services, such as our
Network Interface Units and our teleconferencing services, are not expected to
generate sufficient revenues or profits to offset any losses that we may
experience due to a lack of DSL product sales. If we fail to generate

                                      -16-
<PAGE>

significant revenues from DSL product sales, we will not be able to implement
our business goals and our business and operating results would suffer
significantly.

Pricing pressures on our products may affect our ability to become profitable.

Due to competition in the DSL market, many bids for recent trials and
deployments of DSL products reflect:

     o    the forward pricing of DSL products below production costs to take
          into account the expectation of large future volumes and corresponding
          reductions in manufacturing costs; and/or
     o    suppliers that provide DSL products at a lower price as part of a sale
          of a package of products and/or services.

We have and may in the future offer DSL products based upon forward pricing.
Forward pricing will cause us to incur losses on DSL products 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
orders and reduce per unit manufacturing costs that we have factored into our
forward pricing of DSL products. As a result, we could continue to incur losses
in connection with sales of DSL products even if our DSL unit volume increases.
Losses from our sales of DSL 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 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. For example High Bit-Rate DSL, a product
that enhances the signal quality of the transmission over copper telephone wire,
may reduce the demand for our Network Interface Units which provide performance
monitoring of copper telephone wires. Our Network Interface Units accounted for
approximately 50%, 35% and 16% of our revenues in fiscal 1999, 2000 and 2001,
respectively. Further, we believe that the domestic market for many of our
traditional analog 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 and to successfully develop and market
new products 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.



                                      -17-
<PAGE>

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 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 DSL
revenues would significantly decrease and our business and operating results
would suffer significantly.

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

Due to the rapid technological changes in our industry, our products may become
obsolete before we can realize significant revenues for our products, which
would harm our business.

The telecommunications industry is subject to rapid technological change, 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.

Any unexpected increase in demand for DSL products could adversely impact our
ability to manufacture sufficient quantities of DSL products, which would affect
our ability to attract and retain customers.

Any unexpected increase in demand for DSL products could adversely impact our
ability to supply DSL products in a timely manner, which would harm our
business. Without proper lead times, we may not have the ability to, or may have
to pay a premium to, acquire and develop the necessary capabilities to satisfy
an unexpected increase in demand for our products. We depend 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.

The failure to maintain and further develop partners and alliances would
adversely affect our business.

Instead of directly competing with large telecommunications equipment suppliers,
we have begun to develop and maintain partnerships and alliances with other
companies in order to secure complementary technologies, to lower costs, and to
better market and sell our products. These partnerships and alliances provide
important resources and channels for us to compete successfully. Some of our
partnerships provide us with third party technology that we



                                      -18-
<PAGE>

rely on to manufacture our products. In addition, instead of directly competing
with large suppliers such as Fujitsu in the DSL market, we have entered into
alliances with these companies to offer our products within a package of
products sold by these companies to telephone companies. We cannot provide any
assurances that these partnerships will continue in the future. As competition
increases in the DSL market, these alliances will become even more important to
us. A loss of one or more partnerships and alliances could affect our ability to
sell our products and therefore could materially adversely affect our business
and operating results.

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 materially and adversely affected.

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. For
example, we currently depend on Alcatel, Microelectronics and Virata to provide
critical integrated transceiver circuits used in our DSL products. 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 and operating results. Furthermore, additional sole-source components
may be incorporated into our future products, thereby increasing our supplier
risks. If any of our sole-source manufacturers 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.

Some of the electronic components used in our products are currently in short
supply and are provided on an allocation basis to us and other users based upon
past usage. For example, integrated transceiver circuits and electronic
components are key components in all of our products and are fundamental to our
business strategy of developing new and succeeding generations of products at
reduced unit costs without compromising functionality or serviceability.

In the past we have experienced delays in the receipt of key components which
have resulted in delays in related product deliveries. We anticipate that
integrated circuit production capacity and availability of some electronic
components may be insufficient to meet the demand for such components in the
future. 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.


                                      -19-
<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. While most of our executive officers, have severance agreements in
which the officers agreed not to compete with us and not to solicit any of our
employees for a period of one year after termination of the officer's employment
in most circumstances, we do not have similar noncompetition and nonsolicitation
agreements for other employees who are important in our product development and
sales. 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 expect to continue to 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 are expected to
fluctuate significantly between quarters. Sales to our customers typically
involve large purchase commitments, and customers purchasing our products may
generally reschedule or cancel orders 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 likely 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:



                                      -20-
<PAGE>

     o    rapid technological changes in the telecommunications industry;
     o    our customers' lengthy product approval and purchase processes; and
     o    our reliance on third-party technology for the development of new
          products.

There can be no assurance that we will successfully introduce new products on a
timely basis or achieve sales of new products in the future. In addition, there
can be no assurance that we will have the financial and manufacturing resources
necessary to continue to successfully develop new products or to otherwise
successfully respond to changing technology standards and telephone company
service offerings. If we fail to deploy new products on a timely basis, then our
product sales will decrease, our quarterly operating results could fluctuate,
and our competitive position and financial condition would be materially and
adversely affected.

The telecommunications industry is a highly competitive market and this
competition may result in operating losses, a decrease in our market share and
fluctuations in our revenue.

We expect competition to increase in the future especially as the DSL market
develops. Because we are significantly smaller than most of our competitors, we
may lack the financial resources needed to increase our market share. Many of
our competitors are much larger than us and can offer a wide array of different
products and services that are required for all of a telephone company's
business. Conversely, our products are used to enhance transmission from the
telephone company's central office to the end user, which is just one element of
a telephone company's network. Our inability to form successful alliances
through which we can market our products, and develop systems that meet customer
requirements, will affect our ability to successfully compete in the DSL market
which would materially adversely affect our business and operating results.

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;
o    Customer financing assistance; 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.


                                      -21-
<PAGE>


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, those companies emerging from the break-up of AT&T, as well as and
other telephone carriers including smaller local telephone carriers and new
alternative telephone carriers such as Qwest, for substantially all of our
revenues. Sales to the Regional Bell Operating Companies accounted for
approximately 46.6%, 51.4% and 50.6% of our revenues in fiscal 1999, 2000 and
2001, 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.
Customers purchasing our products may generally reschedule orders without
penalty to the customer. Even if demand for our products is high, the Regional
Bell Operating Companies have sufficient bargaining power to demand low prices
and other terms and conditions that may materially adversely affect our business
and operating results.

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

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

Our customers have lengthy purchase cycles that affect our ability to sell our
products.

Prior to selling products to telephone companies, we must undergo lengthy
approval and purchase processes. Evaluation can take as little as a few months
for products that vary slightly from existing products or up to a year or more
for products based on new technologies such as DSL 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.


                                      -22-
<PAGE>


Our international operations expose us to the risks of conducting business
outside the United States.

International revenues represented 9.2%, 9.0% and 16.0% of our revenues in
fiscal 1999, 2000 and 2001, respectively. The Company also has a relationship
with Fujitsu Telecom Europe, Ltd. for the supply of DSL equipment to British
Telecom. Because Conference Plus has expanded its conference call business in
Europe by opening offices in Dublin, Ireland, we believe that our exposure to
international risks may increase in the future. These risks include:


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

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

Our services are affected by uncertain government regulation and changes in
current or future laws or regulations could restrict the way we operate our
business.

Many of our customers are subject to regulation from federal and state agencies,
including the FCC and various state public utility and service commissions.
While these regulations do not affect us directly, the effects of regulations on
our customers may adversely impact our business and operating results. For
example, FCC regulatory policies affecting the availability of telephone company
services and other terms on which telephone companies conduct their business may
impede our penetration of local access markets.

In addition, our business and operating results may also be adversely affected
by the imposition of tariffs, duties and other import restrictions on components
that we obtain from non-domestic suppliers or by the imposition of export
restrictions on products that we sell internationally. Internationally,
governments of the United Kingdom, Canada, Australia and numerous other
countries actively promote and create competition in the telecommunications
industry. Changes in current or future laws or regulations, in the U.S. or
elsewhere, could materially and adversely affect our business and operating
results.

Potential product recalls and warranty expenses could adversely affect our
ability to become profitable.

Our products are required to meet rigorous standards imposed by our customers.
Most of our products carry a limited warranty ranging from one to seven years.
In addition, our supply contracts with our major customers typically require us
to accept returns of products or indemnify such customers against certain
liabilities arising out of the use of our products. Complex products such as
those offered by us may contain undetected errors or failures when first
introduced or as new versions are released. Because we rely on new product
development to remain competitive, we cannot predict the level of these types of
claims that we will experience in the future. Despite our testing of products
and our comprehensive quality control program, there is no guaranty that our
products will not suffer from defects or other deficiencies or that we will not
experience material product recalls, product returns, warranty claims or
indemnification claims in the future. Such recalls, returns or claims and the
associated negative publicity could result in the loss of or delay in market
acceptance of our products, affect our product sales, our customer
relationships, and our ability to generate a profit.


                                      -23-
<PAGE>

Investors could be adversely affected by future issuances and sales of our
securities.

Sales of substantial amounts of our common stock in the public market could
adversely affect the market price of our securities. Westell has 64,802,574
shares of common stock outstanding as of June 15, 2001, and has the following
obligations to issue additional class A common stock as of June 15, 2001:

     o    options to purchase 8,297,600 shares of class A common stock,
          3,981,033 of which are currently exercisable;
     o    3,005,268 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 shares; and

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

We rely on our intellectual property that we may be unable to protect, or we may
be found to infringe the rights of others.

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

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

There is no guaranty that third parties will not:

o    assert infringement claims against us in the future, and that such
assertions will not result in costly litigation; or
o    that we would prevail in any such litigation or be able to license any
valid and infringed patents from third parties on commercially reasonable terms.

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

We 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 a consolidated class action filed in the United States
District Court for the Northern District of Illinois. The case 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. Two derivative actions have been filed against certain of our
officers and directors in the Court of Chancery for the State of Delaware, New
Castle County. The derivative cases allege 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 and allegedly
inflating the price of Westell stock for certain time periods, engaged in
insider trading, misappropriated corporate information, and breached their
fiduciary duties to our stockholders. 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. Certain



                                      -24-
<PAGE>

of the officers and directors of Westell were also named in another derivative
action filed in the United States District Court for the Northern District of
Illinois, alleging that the defendants made false and misleading statements and
omissions, misappropriated corporate information, and breached their fiduciary
duties to Westell's shareholders. In the Illinois derivative action the
plaintiff seeks the damages allegedly sustained by Westell by reason of the acts
and transactions alleged in the complaint, including pre-judgment interest, as
well as reasonable attorneys' fees and costs. In addition, certain of the
officers and directors of Westell were named in a derivative action filed in the
Circuit Court of Kane County, Illinois. This action is similar to the previously
filed derivative actions except for the addition of additional directors of
Westell as defendants.

We cannot predict what the outcome of these lawsuits will be. It is possible
that we may be required to pay substantial damages or settlement costs in excess
of our insurance coverage, which could have a material adverse effect on our
financial condition and results of operation. Any verdict against us could harm
our business. Even if we are meritorious in such litigation, we could also incur
substantial legal costs, and management's attention and resources could be
diverted from our business which could cause our business to suffer.

We face litigation from our suppliers which, if resolved against us, could
significantly harm our business and operating results.

Three of our subcontract suppliers sued us for breach of contract. Celsian
Technologies, Inc. sued us for approximately $13.4 million for nonpayment of
product delivered. Virata Corporation sued us for $6.4 million and unspecified
additional amounts for nonacceptance of products. Alcatel sued us for $13.0
million for nonpayment for delivered goods. We believe that the Celsian product
is defective and therefore that we have meritorious defenses to this lawsuit. We
are currently reviewing the Alcatel and Virata complaints. However, we cannot
guarantee that we will be meritorious in any of the lawsuits described above and
a verdict against us in any lawsuit could materially adversely affect our
business and operating results.
We will need additional financing if we do not meet our business plan or we will
not be able to fund our operations.

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, or some combination thereof, to
provide funding for our operations. 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 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.


                                      -25-
<PAGE>

Conference Plus's large competitors could adversely affect Conference Plus's
ability to maintain or increase its market share.

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

o    maintenance of high quality standards and low cost position;
o    international expansion; 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, 2001, 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. As
of March 31, 2001, 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.

         As of March 31, 2001, the Company also owned facilities in St. Charles,
Illinois which were obtained as part of the Teltrend acquisition. The Company
expects to sell the owned properties in St. Charles during fiscal year 2002. The
Company also leases a facility in Basingstoke, England for Westell Limited
(formerly Teltrend Limited).

         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);


                                      -26-
<PAGE>

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).

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

1.       Vukovich v. Zionts, et al., No. 18647 (filed January 26, 2001); and
2.       Dollens v. Zionts, et al., No. 18533 NC (filed December 4, 2000).

Each of these cases was filed in the Court of Chancery for the State of
Delaware, New Castle County. Each case alleges generally that the defendants
issued 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, engaged
in insider trading, misappropriated corporate information, and beached their
fiduciary duties to Westell Technology, Inc.'s shareholders. Each case allegedly
arises from the same set of operative facts and seeks the same relief -- damages
allegedly sustained by Westell 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.

         Certain of the officers and directors of Westell were also named in a
derivative action filed in the United States District Court for the Northern
District of Illinois, entitled The Ceyda Foundation Trust v. Zionts, et al., No.
01C2826 (filed April 20, 2001). The plaintiff alleges that the defendants made
false and misleading statements and omissions, misappropriated corporate
information, and beached their fiduciary duties to Westell's shareholders.
Plaintiff seeks the damages allegedly sustained by Westell by reason of the acts
and transactions alleged in the complaint, including pre-judgment interest, as
well as reasonable attorneys' fees and costs.

         In addition, certain of the officers and directors of Westell were
named in a derivative action filed in the Circuit Court of Kane County,
Illinois, entitled Rothchild v. Zionts, et al., Case No. 01LK259 (filed May 31,
2001). This action is similar to the previosly filed derivative actions except
for the addition of the following newly-named defendants: Paul A. Dwyer, John W.
Seazholtz and Bernard F. Sergesketter.

         The Company has been named as a defendant in Celsian Technologies, Inc.
v. Westell, Inc., Case No. 01 CC 03977, Superior Court of the State of
California, County of Orange, Central Justice Center, which was filed March 23,
2001. The complaint alleges nonpayment for delivered goods and seeks $13,400,000
in damages. The Company removed this case to federal court on April 30, 2001,
where it is now pending in the United States District



                                      -27-
<PAGE>

Court for the Central District of California as Case No. 01-3878 FMC. On May 29,
2001, Westell answered Celsian's complaint and filed a counterclaim against
Celsian for breach of contract and breach of express and implied warranties.
Westell's counterclaim seeks damages in an amount to be proven at trial but
presently believed to be in excess of $13,000,000. As of June 18, 2001, Celsian
has not yet responded to the counterclaim, but Celsian's response is due on or
before July 23, 2001. Discovery has not yet commenced.

         The Company has been named as a defendant in Virata Corporation v.
Westell Technologies, Inc., Case No. CV 797182, Superior Court of California,
County of Santa Clara, which was filed April 2, 2001. The complaint alleges
nonpayment for delivered goods and non-acceptance of goods and seeks in excess
of $6,400,000 in damages. The Company answered Virata's complaint on May 22,
2001. Discovery has commenced.

         The Company has been named as a defendant in PacTec, a division of La
France Corporation v. Celsian Technology, Inc. and Westell Technologies, Inc.
which was filed in May 1, 2001 in the Court of Common Pleas of Delaware County,
Pennsylvania. The complaint alleges nonpayment for goods delivered to Celsian
and claims liability of Westell in connection therewith and seeking $660,124.86
in damages. The Company removed this case to federal court on June 11, 2001,
where it is now pending in the United States District Court for the Eastern
District of Pennsylvania as Civil Action No. 01 CV 2836. The Company has not yet
responded to this complaint.

         The Company has been named as a defendant in Alcatel Microelectronics,
N.V. v. Westell, Inc., Case No. 01 C 3265, United States District Court,
Northern District of Illinois, which was filed in May 4, 2001. The complaint
alleges nonpayment for delivered goods and seeks in excess of $13,000,000 in
damages. On June 11, 2001, Westell filed a Motion to Dismiss Count III (unjust
enrichment) of the complaint. Westell did not answer Count I (breach of
contract) or Count II (account stated) of the complaint at that time. On June
19, 2001, Alcatel filed a Motion For Judgment By Default Against Westell on
Counts I and II of the complaint. By agreement of the parties, Westell will
answer Counts I and II of the complaint by July 9, 2001, Alcatel will
voluntarily dismiss Count III of the complaint, and both pending motions will be
withdrawn. There is a status conference scheduled for July 13, 2001.

         We are currently reviewing the Alcatel, Celsian, PacTec and Virata
complaints. However, we cannot guarantee that we will be meritorious in any of
the lawsuits described above and a verdict against us in any of the lawsuits
could materially adversely affect our business and operating results.

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

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



                                      -28-
<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.
                                                              High        Low
                                                          -----------   --------
Fiscal Year 2000
    First Quarter ended June 30, 1999..................   $ 11 3/16    $ 3 7/8
    Second Quarter ended September 30, 1999............      9 1/2       6 7/8
    Third Quarter ended December 31, 1999..............     13           6 7/16
    Fourth Quarter ended March 31, 2000................     40 3/4       9

Fiscal Year 2001
    First Quarter ended June 30, 2000..................     31 3/4      12 3/4
    Second Quarter ended September 30, 2000............     30 3/16     12 1/4
    Third Quarter ended December 31, 2000..............     13 1/4       2 29/32
    Fourth Quarter ended March 31, 2001................      5 7/8       2 3/8

Fiscal Year 2002
    First Quarter through June 25, 2001.................     3 19/64     1 21/64


         As of 06/25/01, there were approximately 729 holders of record of the
outstanding shares of Class A Common Stock.


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.



                                      -29-
<PAGE>



ITEM 6.  SELECTED FINANCIAL DATA.

         The following selected consolidated financial data as of March 31,
1997, 1998, 1999, 2000 and 2001 and for each of the five fiscal years in the
period ended fiscal year 2001 have been derived from the Company's consolidated
financial statements, which have been audited by Arthur Andersen LLP for fiscal
years 1997 through 2000 and by Ernst & Young LLP in fiscal year 2001. 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>

                                                                        Fiscal Year Ended March 31,
                                                       -------------------------------------------------------------
                                                            1997 (2)    1998 (2)    1999 (2)    2000 (2)     2001
                                                           ------      ------      ------      ------       -----
Statement of Operations Data:                                    (in thousands, except per share data)
<S>                                                      <C>         <C>         <C>         <C>          <C>
Revenues.............................................    $79,710     $86,595     $92,004     $120,993     $361,477
Cost of goods sold...................................     57,832      58,764      66,816       89,969      331,319
                                                         --------     -------     -------     -------    ---------
     Gross margin....................................     21,878      27,831      25,188       31,024       30,158
                                                         --------     -------     -------     -------    ---------
Operating expenses:
  Sales and marketing................................     16,539      19,635      19,766       15,338       30,323
  Research and development...........................     21,994      26,558      26,605       10,789       33,308
  General and administrative.........................      9,757      13,151      13,117       14,003       24,254
  Goodwill amortization .............................      --          --          --           1,326       31,832
  Restructuring charge ..............................      --          1,383         800          550        1,700
                                                         --------     -------     -------     -------    ---------
     Total operating expenses........................     48,290      60,727      60,288       42,006      121,417
                                                         --------     -------     -------     -------     --------
Operating loss from continuing
  operations.........................................    (26,412)    (32,896)    (35,100)     (10,982)     (91,259)
Other income, net....................................      2,221      14,290         404        1,056       --
Interest expense.....................................        330         502         296        1,856        2,197
                                                         --------     -------     -------     -------    ---------
Loss from continuing operations before
  income taxes.......................................    (24,521)    (19,108)    (34,992)     (11,782)     (93,456)
Benefit for income taxes.............................     (9,820)     (5,137)      --          (3,600)        --
                                                         --------     -------     -------     -------    ---------
Loss from continuing operations......................    (14,701)    (13,971)    (34,992)      (8,182)     (93,456)
Discontinued operations (loss).......................         (5)       --           --            --         --
                                                         --------     -------     -------     -------    ---------
Loss before cumulative effect of change in
  accounting principle...............................    (14,706)    (13,971)    (34,992)      (8,182)     (93,456)
Cumulative effect of change in accounting principle..       --         --          --           --            (400)
Net loss............................................. $  (14,706)  $ (13,971)  $ (34,992)  $   (8,182)   $ (93,856)
                                                      ===========  ========== ==========   ========== ============
Net loss per basic and diluted share: (1)
Loss before cumulative effect of change in
  accounting principle............................... $  (  0.41)    $ (0.38)  $   (0.96)     $ (0.22)     $ (1.53)
Cumulative effect of change in accounting principle..       --         --           --          --           (0.01)
 Net loss per basic and diluted share................ $  (  0.41)    $ (0.38)  $   (0.96)     $ (0.22)     $ (1.54)
                                                      ===========    ========   ========     ========    =========
Dividends declared per share.........................$       --    $     --    $     --    $     --      $     --
Average number of basic and diluted
   common shares outstanding (1).....................     35,940      36,348      36,427       37,658       61,072

                                                                              As of March 31,
                                            -------------------------------------------------------------------------
                                                           1997        1998        1999        2000         2001
                                                           ----        ----        ----        ----         ----
Balance Sheet Data:
Working capital......................................   $ 65,105    $ 47,481    $ 12,213    $  64,335    $  38,778
Total assets.........................................    108,049      98,405      64,407      342,570      315,139
Short term debt......................................       --          --           500        --             --
Long-term debt, including current portion............      6,487       4,420       4,814        2,750       28,554
Total stockholders' equity...........................     86,188      73,141      39,124      279,663      197,825
-----------------------------
(1)  Adjusted to reflect the two for one stock split of the Company's Class A
     Common Stock effected June 7, 1996.
(2)  Revenues and sales and marketing costs have been restated for the impacts
     of the adoption of EITF Issue 00-10.


</TABLE>

                                      -30-
<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 50%, 35% and 16% of
revenues in fiscal years 1999, 2000 and 2001, respectively. The Company
introduced its first DSL products in fiscal 1993 and these products represented
approximately 13.0%, 26.9% and 55.0% of revenues in fiscal 1999, 2000 and 2001,
respectively. The Company has also provided audio teleconferencing services
since fiscal 1989 which constituted 22.9%, 26.6% and 11.6% of the Company's
revenues in fiscal 1999, 2000 and 2001, 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 includes the Telco Access Products, Transport Systems products and
     CPE 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 1999, 2000 and 2001.

         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.
Results of Operations


                                      -31-
<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>

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

                                                                 1999         2000       2001
                                                                 ----         ----       ----

<S>                                                              <C>           <C>       <C>
Equipment .................................................      78.5%         74.5%     88.4%
Services...................................................      21.5          25.5      11.6
                                                               ------        ------    -------
  Total revenues...........................................     100.0         100.0     100.0

Cost of equipment..........................................      60.2          58.7      84.7
Cost of services...........................................      12.4          15.7       7.0
                                                               ------        ------     -----
  Total cost of goods sold.................................      72.6          74.4      91.7
                                                                -----         -----     ------

    Gross margin...........................................      27.4          25.6       8.3
                                                                 ----         -----      ----

Operating expenses:
  Sales and marketing......................................      21.5          12.6       8.4
  Research and development.................................      28.9           8.9       9.2
  General and administrative...............................      14.3          11.6       6.7
  Goodwill amortization....................................      --             1.1       8.8
  Restructuring charge.....................................       0.8           0.5       0.5
                                                             --------        ------   -------

     Total operating expenses..............................      65.5          34.7      33.6
                                                                 ----         -----     -----

Operating loss ............................................     (38.2)         (9.1)    (25.3)
Other income, net..........................................       0.5           0.9       0.0
Interest expense...........................................       0.3           1.5       0.6
                                                                -----         -----     -----

Loss before income tax benefit.............................     (38.0)         (9.7)    (25.9)
Benefit for income taxes...................................      (0.0)         (3.0)     (0.0)
Cumulative effect of change in accounting principle........       0.0           0.0      (0.1)
                                                                -------      --------   ------

Net loss...................................................     (38.0)%        (6.7)%   (26.0)%
                                                               ========       =======  ========

</TABLE>

Fiscal Years Ended March 31, 1999, 2000 and 2001

         Revenues. Revenues were $92.0 million, $121.0 million and $361.5
million in fiscal 1999, 2000 and 2001 respectively. Revenues increased 31.5% and
198.8% in fiscal 2000 and 2001, respectively, from the preceding years. The
fiscal 2000 increase of $29.0 million was primarily due to an increase of $25.9
million resulting from increased shipments of DSL products. These increases were
offset in part by a decrease of $5.1 million in sales of the TAP products due
primarily to competitive pressures and product mix. 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 an $68.7 million increase in TAP revenue from
increased volume as a result of the acquisition of Teltrend Inc. Service revenue
increased $11.0 million, or 55.5% in fiscal 2000 and $11.2 million, or 36.3% in
fiscal 2001 due to increased audio conference calling volume at Conference Plus,
Inc.



                                      -32-
<PAGE>



         Gross Margin. Gross margin was $25.2 million, $31.0 million and $30.2
million and gross margin as a percentage of revenues was 27.4%, 25.6% and 8.3%
in fiscal 1999, 2000 and 2001, respectively. The fiscal 2000 decrease in gross
margin as a percent of revenue from the previous year was primarily the result
of aggressive pricing of DSL products in the CPE and Transport Systems business
units and continued competitive pricing pressures and product mix changes in the
TAP business unit. 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 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 in the CPE
and Transport Systems business units and production inefficiencies caused by
efforts to integrate the manufacturing facility of Teltrend Inc.

         Sales and Marketing. Sales and marketing expenses were $19.8 million,
$15.3 million and $30.3 million in fiscal 1999, 2000 and 2001, respectively,
constituting 21.5%, 12.7% and 8.4% of revenues, respectively. In fiscal 2000,
sales and marketing decreased $4.4 million. This decrease was primarily due to
cost reductions resulting from management initiatives undertaken late fiscal
1999 to streamline DSL sales efforts. In fiscal 2001, sales and marketing
expenses increased by $15.0 million due primarily to the acquisition of Teltrend
Inc. 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 $26.6
million, $10.8 million and $33.3 million in fiscal 1999, 2000 and 2001,
respectively, constituting 28.9%, 8.9% and 9.2% of revenues, respectively. In
fiscal 2000, research and development expenses decreased $15.8 million or 59.4%
from the previous year. This decrease was due primarily to receiving $6.7
million in fiscal 2000 from customers to fund on-going engineering projects,
which was offset against research and development expenses. Additionally, cost
savings had resulted from the absence of costs related to the Company's European
operation, Westell Europe Limited, which was eliminated early in fiscal 2000. 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. 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
$13.1 million, $14.0 million and $24.3 million in fiscal 1999, 2000 and 2001,
respectively, constituting 14.3%, 11.6% and 6.7% of revenues, respectively.
General and administrative expenses increased $900,000 in fiscal 2000 from the
previous year due primarily to increases related to information systems
enhancements and non-employee stock option grants which were offset in part by
cost reductions resulting from management initiatives undertaken late fiscal
1999 to streamline DSL efforts. General and administrative expenses increased by
$10.3 million or 73.6% in fiscal 2001 due primarily to the acquisition of
Teltrend Inc.

         Restructuring charge. The Company recognized restructuring charges of
$800,000, $550,000 and $1.7 million in fiscal 1999, 2000 and 2001, respectively.
The fiscal 1999 and fiscal 2001 charges included personnel, facility, and
certain development contract costs related to restructuring global operations.
As of March 31, 2001, the Company has paid $631,000 and $0 of the restructuring
costs charged in fiscal 1999 and 2001, respectively. During the three months
ending December 31, 1999, management determined that essentially all
restructuring payments had been completed for fiscal year 1999 therefore the
remaining restructuring accrual balances of approximately $169,000 was reversed
into income.

         The fiscal 1999 restructuring plan was to decrease costs, primarily by
reducing the workforce by approximately 11%, and focusing DSL sales efforts on
indirect sales to the major phone companies through licensing and OEM
arrangements with strategic partners. The fiscal 2001 restructuring plan was to
further decrease



                                      -33-
<PAGE>

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.

         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 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, 2001, $1.6 million of these costs
have been paid.

         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, net. Other income, net was $404,000, $1.1 million and
$0.0 million for fiscal years 1999, 2000 and 2001, 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 these one-time
benefits, Other income, net would have been $406,000 for fiscal year ended March
31, 2000. Excluding these one time items, Other income, net for the years ended
March 31, 1999 and 2000 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 $296,000, $1,856,000 and
$2,197,000 for fiscal 1999, 2000 and 2001, respectively. The fiscal 2000
increase in interest expense was a result of interest from the Company's
subordinated secured convertible debentures, warrants to purchase Class A common
stock and net obligations outstanding during the year under promissory notes and
equipment borrowings. The fiscal 2001 increase in interest expense was a result
of increased usage of bank debt.

         Benefit for Income Taxes. Benefit for income taxes was $3.6 million in
fiscal 2000. No tax benefit was recorded in fiscal year 1999 or 2001. In each of
these fiscal years, in addition to the tax benefit generated by the loss before
income taxes, the Company was able to generate $750,000, $662,000 and $500,000,
respectively, in tax credits primarily generated by increasing research and
development activities. The Company recorded valuation allowances of $12.3
million in fiscal 1999, $900,000 in fiscal 2000 and $27.7 million in fiscal 2001
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 $4.8 million in income tax credit carry forwards and a tax benefit
of $46.8 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.



                                      -34-
<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. All periods have been
revised to reflect the adoption of EITF 00-10 "Accounting for Shipping and
Handling Fees and Costs" to record such costs billed to customers as revenue. In
addition, the quarters ended June 30, 2000, September 30, 2000 and December 31,
2000 have been restated to reflect the effects of adopting SAB 101, Revenue
Recognition in Financial Statements. These adjustments are not considered
material. The Company believes that the information regarding each of these
quarters is prepared on the same basis as the audited Consolidated Financial
Statements of the Company appearing elsewhere in this Form 10-K. In the opinion
of management, all necessary adjustments (consisting only of normal recurring
adjustments) have been included to present fairly the unaudited quarterly
results when read in conjunction with the audited Consolidated Financial
Statements of the Company and the Notes thereto appearing elsewhere in this Form
10-K. These quarterly results of operations are not necessarily indicative of
the results for any future period.

<TABLE>

                                                                 Quarter Ended
                     ----------------------------------------------------------------------------------------------
                                               Fiscal 2000                              Fiscal 2001
                     ----------------------------------------------------------------------------------------------

                              June 30,  Sept. 30,  Dec. 31,   Mar. 31,   June 30,  Sept. 30,   Dec. 31,  Mar. 31,
                                1999      1999      1999       2000       2000        2000      2000       2001
                                ----      ----      ----       ----       ----        ----      ----       ----
                                                                   (in thousands)
<S>                            <C>       <C>        <C>        <C>        <C>        <C>       <C>       <C>
Equipment .................    $17,243   $17,421    $22,044    $33,477   $93,954    $96,041   $69,465   $ 60,034
Services...................      6,612     7,241      7,673      9,282     9,389      9,961    10,406     12,227
                               -------   -------    -------    -------   -------    -------   -------   --------
   Total revenues..........     23,855    24,662     29,717     42,759   103,343    106,002    79,871     72,261

Cost of equipment..........     11,890    14,358     16,755     27,961    75,611     79,221    61,237     90,104
Cost of services...........      4,405     4,584      4,618      5,398     5,739      6,011     6,321      7,075
                               -------   -------    -------    -------   -------    -------   -------   --------
   Total cost of goods sold     16,295    18,942     21,373     33,359    81,350     85,232    67,558     97,179
                               -------   -------    -------    -------   -------    -------   -------   --------
     Gross margin..........      7,560     5,720      8,344      9,400    21,993     20,770    12,313    (24,918)
                               -------   -------    -------    -------   -------    -------   -------   --------

Operating expenses:
  Sales and marketing......      3,752     3,509      3,934      4,143     8,199      6,362     8,381      7,381
  Research and
    development............      3,597     1,619      2,967      2,606     7,438      7,509     8,655      9,706
  General and
    administrative.........      3,240     3,377      2,902      4,484     5,664      6,539     5,928      6,123
 Goodwill amortization.....       --        --         --        1,326     7,958      7,958     7,958      7,958
  Restructuring charge.....       --        --         --          550      --         --        --        1,700
    Total operating
      expenses.............     10,589     8,505      9,803     13,108    29,259     28,368    30,922     32,868
                               -------   -------    -------    -------   -------    -------   -------   --------
Operating loss ............     (3,029)   (2,785)    (1,459)    (3,709)   (7,266)    (7,598)  (18,609)   (57,786)
                               -------   -------    -------    -------   -------    -------   -------   --------

Other income (expense), net        (24)       74        854        151       169       (105)      104       (168)
Interest expense...........        379       348        690        438       119        331     1,073        674
                               -------   -------    -------    -------   -------    -------   -------   --------

Loss before
  income taxes.............     (3,432)   (3,059)    (1,295)    (3,996)   (7,216)    (8,034)  (19,578)   (58,628)

Benefit for
  income taxes.............       --          --        --      (3,600)       --         --       --        --

Cumulative effect of
   change in accounting
   principle...............       --          --        --         --       (400)       --        --         --
                                -------   -------    -------    -------   -------    -------   -------   --------


                                      -35-
<PAGE>

Net loss...................  $  (3,432) $ (3,059) $  (1,295)   $  (396)  $(7,616)  $ (8,034) $(19,578) $ (58,628)
                             =========  ========= ==========   ========  ========= ========= ========== =========

</TABLE>


                                      -36-
<PAGE>

<TABLE>


                                                                Quarter Ended
                      ---------------------------------------------------------------------------------------------
                                                 Fiscal 2000                         Fiscal 2001
                      ---------------------------------------------------------------------------------------------

                              June 30, Sept. 30,   Dec. 31,   Mar. 31,   June 30,  Sept. 30,  Dec. 31,   Mar. 31,
                                1999     1999       1999       2000       2000       2000      2000       2001
                                ----     ----       ----       ----       ----       ----      ----       ----

<S>                             <C>        <C>        <C>        <C>        <C>       <C>        <C>        <C>
Equipment..................     72.3%      70.6%      74.2%      78.3%      90.9%     90.6%     87.0%      83.1%
Service....................     27.7       29.4       25.8       21.7        9.1      9.4       13.0       16.9
                              ------     ------     ------     ------      -----    -----     ------       ----
  Total revenues...........    100.0      100.0      100.0      100.0      100.0    100.0      100.0      100.0

Cost of equipment sales....     49.8       58.2       56.4       65.4       73.2     74.7       76.7      124.7
Cost of services...........     18.5       18.6       15.5       12.6        5.5      5.7        7.9        9.8
Total cost of goods sold...     68.3       76.8       71.9       78.0       78.7     80.4       84.6      134.5
                                ----      -----      -----      -----      -----    -----      -----     ------
  Gross margin.............     31.7       23.2       28.1       22.0       21.3     19.6       15.4     (34.5)
                                ----      -----      -----      -----      -----    -----      -----    -------

Operating expenses:
  Sales and marketing......     15.7       14.2       13.2        9.7        7.9      6.0       10.5       10.2
  Research and
    development............     15.1        6.6       10.0        6.1        7.2      7.1       10.8       13.4
  General and
    administrative.........     13.6       13.7        9.8       10.5        5.5      6.2        7.4        8.5
  Goodwill amortization....    (0.0)      (0.0)      (0.0)        3.1        7.7      7.5       10.0       11.0
  Restructuring charge.....      0.0        0.0        0.0        1.3        0.0      0.0        0.0        2.4
                               -----      -----      -----      -----      -----    -----      -----      -----

    Total operating
      expenses.............     44.4       34.5       33.0      30.7        28.3     26.8       38.7       45.5
                                ----      -----      -----      -----      -----     ----      -----      -----

Operating loss.............   (12.7)     (11.3)      (4.9)      (8.7)      (7.0)    (7.2)     (23.3)     (80.0)
                              ------    -------     ------     ------     ------   ------    -------    -------
Other income (expense), net    (0.1)        0.3        2.8        0.4        0.2    (0.1)        0.1      (0.2)
Interest expense...........      1.6        1.4        2.3       1.0         0.0      0.3        1.3      0.9
                                 ---      -----      -----    -------      -----    -----      -----    -------

Loss before
  income taxes.............   (14.4)     (12.4)      (4.4)      (9.3)      (7.0)    (7.6)     (24.5)     (81.1)
Benefit for
  income taxes.............    (0.0)      (0.0)     (0.0)       (8.4)      (0.0)    (0.0)      (0.0)      (0.0)
Cumulative effect of change
  in accounting principle..    --         --         --         --         --       --         --         (0.6)
                            --------   --------  ---------   --------   -------- --------   --------   --------

Net loss..................... (14.4)%     (12.4)%   (4.4)%       (0.9)%     (7.0)%    (7.6)%    (24.5)%    (81.7)%
                             =========   ========   =======      ======     ======    ======   ========    =======

</TABLE>


                                      -37-
<PAGE>



         The Company's quarterly equipment revenues have varied from quarter to
quarter due primarily to quarterly fluctuations in DSL revenues. A majority of
DSL shipments were for initial service deployments and therefore have not yet
created steady or predictable demand for these products on a quarter to quarter
basis. CPE and Transport Systems product revenues have increased fairly steadily
in fiscal 2000 and 2001 due to increased demand for DSL products. Revenues from
Telco Access Products increased in fiscal 2001 due to the acquisition of
Teltrend Inc. 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 throughout
the eight quarters presented due primarily to increased audio conference calling
traffic volume.

         Gross margin as a percentage of revenue has also varied from quarter to
quarter. The low margins in the fiscal 2000 and fiscal 2001 quarters are
primarily a result of the increased volume in DSL products that have relatively
low margins. Due to changes in anticipated demand 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. 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 2000 and 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 increased in the fiscal 2001 quarters compared to
fiscal 2000 primarily due the acquisition of Teltrend Inc. Operating expenses
were also higher due to the absence of payments from customers to fund on-going
engineering projects in fiscal 2001, which were offset against research and
development expenses. As a percentage of revenue, operating expenses decreased
in the first two quarters of fiscal 2001 due to the increased revenue from DSL
equipment sales and then increased in the second two quarters as a percent of
sales due to the decrease in DSL equipment sales.

         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 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



                                      -38-
<PAGE>

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.

Liquidity and Capital Resources

         At March 31, 2001, the Company had $405,000 in cash and cash
equivalents consisting primarily of federal government agency instruments and
the highest rated grade corporate commercial paper. As of March 31, 2001, the
Company had $28.4 million outstanding balance under its secured revolving
promissory note facility. As of March 31, 2001, the Company had approximately
$6.6 million available under the secured revolving promissory note facility.

         The secured revolving credit facility requires, among other things, the
maintenance of a minimum interest coverage ratio, a minimum net worth, a maximum
capital expenditures and target EBITDA. The Company's failure to meet these
quarterly financial covenants would allow the lenders to demand repayment of all
amounts outstanding under the credit facility. The Company was not in compliance
with target EBITDA and the interest coverage ratio at March 31, 2001. The
Company and its lenders have entered into an amendment and waiver under which
the covenant violations discussed above were waived. The amendment and waiver
amends covenants regarding EBITDA, interest coverage ratio and minimum net
worth, and eliminates the LIBOR interest rate option. In addition, the amendment
and waiver require the Company to raise $25 million in equity financing by June
30, 2001, of which $5 million must be raised by May 15, 2001 and pay such
amounts to the lenders. In addition, the amendment required the Company to
deliver to the lenders by May 15, 2001, a favorable opinion from a consultant
approved by the lenders as to the reasonableness and achievability of the
Company's projections. The Company raised $6 million in equity financing in May
2001 and delivered the favorable consultants opinion. The remaining financing
obligations under the amendment were subsequently amended as set forth in the
next paragraph.

         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 $9.0 million and 70% of the guarantee described below.
The $9.0 million inventory limitation is reduced by $.1 million on August 1,
2001, and shall be reduced by an additional $.1 million on the first day of each
month thereafter. The Company was eligible to borrow an additional $6.6 million
as of March 31, 2001. 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 has
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. Any future equity financing will also reduce dollar for dollar the amount
of the guaranty. Borrowings under this facility provide for the interest to be
paid by the Company at prime plus 1%. This new amendment provides for covenants
regarding EBITDA and tangible net worth. Management expects to be in compliance
with the covenants for the term of the debt.

         The Company's operating activities used cash of $31.3 million, $22.3
million and $38.6 million in fiscal 1999, 2000 and 2001, respectively. Cash used
by operations in fiscal 1999 resulted primarily from a loss from continuing
operations of $28.0 million (net of depreciation) and working capital required
by increases in prepaid expenses and receivables, and a decrease in accrued
compensation offset by an increase in accounts payable. 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. Working capital was affected
primarily by increases in inventory and offset by an increase in accounts
payable and accrued compensation.



                                      -39-
<PAGE>

         Capital expenditures in fiscal 1999, 2000 and 2001 were $6.0 million,
$11.4 million and $22.2 million, respectively. These expenditures were
principally for machinery, computer and research equipment purchases. The
Company expects to spend approximately $15.5 million in fiscal 2002 for capital
equipment.

         At March 31, 2001, the Company's principal sources of liquidity were
$405,000 of cash and cash equivalents and $6.6 million under its secured
revolving promissory notes facility. To meet the Company's cash needs for fiscal
year 2002 the Company is exploring various alternatives including; an increased
line of credit from its current bank group, a larger line of credit from new
asset based lenders replacing the current bank credit line, and some type of
equity or subordinated debt offering. Cash in excess of operating requirements
will be 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 $72.0 million at
March 31, 2001. This deferred tax asset relates to (i) tax credit carryforwards
of approximately $4.8 million, (ii) a net operating loss carryforward tax
benefit of approximately $46.8 million and (iii) temporary differences between
the amount of assets and liabilities for financial reporting purposes and such
amounts measured by tax laws. Of such tax credit carryforwards, the first
$243,000 of credits expire in 2008 and $722,000 of credits may be carried
forward indefinitely. 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.

         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, the Company has incurred operating losses for the 1999, 2000 and 2001
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. A
portion of these deferred tax assets are expected to be utilized, prior to their
expiration, through a tax planning strategy available to the Company. At March
31, 1999 and March 31, 2001, management determined that the strategy was no
longer sufficient to realize the amount deferred tax assets recorded and as such
the Company recorded a valuation allowance of $12.3 million and $27.7 million
respectively. At March 31, 2000, management re-assessed the valuation of the
Company's deferred tax asset and determined that the tax planning strategy was
sufficient to record additional tax assets of $3.6 million. 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.
The Company also has accounts receivable denominated in British pounds. The
Company at times uses foreign currency derivatives to manage the exposure to
changes in the exchange rate on accounts receivable. No derivatives were used in
fiscal 2001.

         As of March 31, 2001, the balance in the cumulative foreign currency
translation adjustment account, which is a component of stockholders' equity,
was an unrealized loss of $34,000.


                                      -40-
<PAGE>

         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. 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 9.0% to
approximately 19.0%) average interest rate on the Company's debt. If such an
increase occurred, the Company would incur approximately $2.4 million per annum
in additional interest expense based on the average debt borrowed during the
twelve months ended March 31, 2001. The Company does not feel such additional
expense is significant.

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

ITEM 8     FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         The Company's Consolidated Financial Statements required by Item 8,
together with the reports thereon of the independent auditors set forth on pages
46-68 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 69 and 71 of this report and should be read in
conjunction with the financial statements.

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

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



                                      -41-
<PAGE>

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 2001 under the caption "Ownership of the Capital Stock of the
         Company," 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 2001 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, 2001, together with the Report of Independent
                           Public Accountants, are set forth on pages 46 through
                           68 of this Report.

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

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

                           The following are included in Part IV of this Report
                           for each of the years ended March 31, 1999, 2000 and
                           2001 as applicable:

                           Report of Independent Auditors - page 69 and 70

                           Schedule II - Valuation and Qualifying Accounts -
                           page 71

                           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
                           --------

                           2.1      Agreement and Plan of Merger, dated December
                                    13, 1999, among Teltrend Inc., Westell
                                    Technologies Inc. and Theta Acquisition
                                    Corp. (incorporated herein by reference to
                                    Exhibit 99.2 to Westell Technologies, Inc.'s
                                    Report on Form 8-K filed December 17, 1999).
                           3.1      Amended and Restated Certificate of
                                    Incorporation, as amended (incorporated
                                    herein by reference to Exhibit 3.1 to
                                    Westell Technologies, Inc.'s Report on Form
                                    10-K for the year ended March 31, 2000).
                           3.2      Amended and Restated By-laws.
                           4.1      Form of Stock Purchase Warrant dated April
                                    15, 1999 by and among Westell Technologies,
                                    Inc., Castle Creek Technology Partners LLC
                                    (409,091 shares), Marshall Capital
                                    Management, Inc. (272,727 shares), and
                                    Capital Ventures



                                      -42-
<PAGE>

                                    International (227,273 shares) (incorporated
                                    herein by reference to Westell Technologies,
                                    Inc.'s Report on Form 8-K dated April 20,
                                    1999).
                           4.2      Amended and Restated Certificate of
                                    Incorporation, as amended (See exhibit 3.1).
                           4.3      Amended and Restated By-laws (see Exhibit
                                    3.2).
                           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     Share Purchase Agreement dated May 7, 2001
                                    by and between Westell Technologies, Inc.
                                    and the State of Wisconsin Investment Board.
                           10.2     Stock Transfer Restriction Agreement entered
                                    into by members of the Penny family, as
                                    amended, (incorporated herein by reference
                                    to Exhibits 10.4 and 10.16 to Westell
                                    Technologies, Inc.'s Registration Statement
                                    on Form S-1, as amended, Registration No.
                                    33-98024).
                           10.3     Form of Registration Rights Agreement among
                                    the Company and Robert C. Penny III and
                                    Melvin J. Simon, as trustees of the Voting
                                    Trust dated February 23, 1994 (incorporated
                                    herein by reference to Exhibit 10.5 to
                                    Westell Technologies, Inc.'s Registration
                                    Statement on Form S-1, as amended,
                                    Registration No. 33-98024).
                           *10.4    1995 Stock Incentive Plan (incorporated
                                    herein by reference to Exhibit 10.6 to
                                    Westell Technologies, Inc.'s Registration
                                    Statement on Form S-1, as amended,
                                    Registration No. 33-98024).
                           *10.5    Employee Stock Purchase Plan (incorporated
                                    herein by reference to Exhibit 10.7 to
                                    Westell Technologies, Inc.'s Registration
                                    Statement on Form S-1, as amended,
                                    Registration No. 33-98024).
                           *10.6    Teltrend Inc. 1995 Stock Option Plan.(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)
                           *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     Lease Agreement dated July 15, 1986 between
                                    Kendall Point Associates, Ltd. and Westell,
                                    Inc., as amended on August 26, 1991
                                    (incorporated herein by reference to
                                    Exhibit 10.9 to Westell Technologies, Inc.'s
                                    Registration Statement on Form S-1, as
                                    amended, Registration No. 33-98024).
                           10.10    Limited Liability Company Operating
                                    Agreement dated as of September 23, 1995
                                    by Westell, Inc. and Kingsland Properties,
                                    Ltd. (incorporated herein by reference to
                                    Exhibit 10.10 to Westell Technologies,
                                    Inc.'s Registration Statement on Form S-1,
                                    as amended, Registration No. 33-98024).
                           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.
                           *10.14   Agreement dated September 13, 1988 between
                                    Richard Riviere and Westell Technologies,
                                    Inc., as amended (incorporated herein by
                                    reference to Exhibit


                                      -43-
<PAGE>

                                    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.
                           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.
                           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
                                    Exhibit 10.18 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).
                           10.21    Loan Accommodation dated June 29, 2001 among
                                    the Company and certain Penny family trusts
                                    (with the Form of Warrant attached).
                           21.1     Subsidiaries of the Registrant.
                           23.1     Consent of Ernst & Young LLP.
                           23.2     Consent of Arthur Andersen LLP.

                           ----------

                           *Management contract or compensatory plan or
                            arrangement.


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

          The following reports were filed on Form 8-K for the three months
ended March 31, 2001:

           1.  Form 8-K filed on February 23, 2001 relating to the change in the
               Company's certifying accountants.

           2.  Form 8-K filed on March 6, 2001 announcing that Marc Zionts,
               Westell's former Chief Executive Officer, was leaving the
               Company.


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

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


                                      -44-
<PAGE>

   (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.



                                      -45-
<PAGE>




                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized on June 29, 2001.

                                               WESTELL TECHNOLOGIES, INC.

                                               By  /s/ J. W. Nelson
                                                   ----------------
                                                   J. W. Nelson, Chief Executive
                                                        Officer


Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on June 29, 2001.

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


/s/  J. W. Nelson                      Chief Executive Officer and Director
-----------------------------------
         J. W. Nelson

/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 Vice
-----------------------------------    President (Principal Financial Officer
         Nicholas C. Hindman           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/ Howard L. Kirby, Jr.               Director
-----------------------------------
            Howard  L. Kirby,  Jr.

/s/ Bernard F. Sergesketter            Director
-----------------------------------
           Bernard F. Sergesketter



                                      -46-
<PAGE>


<TABLE>

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
                             AND SUPPLEMENTARY DATA
<CAPTION>


Item                                                                                                           Page
----                                                                                                           ----

<S>                                                                                                              <C>
Consolidated Financial Statements:

Public Accountants and Auditors.........................................................................         46
Consolidated Balance Sheets -- March 31, 2000 and 2001..................................................         48
Consolidated Statements of Operations for the years ended March 31, 1999, 2000 and 2001.................         50
Consolidated Statements of Stockholders' Equity for the years ended March 31, 1999, 2000 and 2001.......         51
Consolidated Statements of Cash Flows for the years ended March 31, 1999, 2000 and 2001.................         52
Notes to Consolidated Financial Statements..............................................................         53


Financial Statement Schedules:

Report of Independent Public Accountants and Auditors...................................................         69
Schedule II -- Valuation and Qualifying Accounts........................................................         71

</TABLE>


                                      -47-
<PAGE>






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






                                      -48-
<PAGE>




Report of Independent Auditors

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

We have audited the accompanying consolidated balance sheet of Westell
Technologies, Inc. and subsidiaries as of March 31, 2001 and the related
consolidated statements of operations, stockholders' equity and cash flows for
the year 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 audit.

We conducted our audit 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 audit provides 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, 2001 and the consolidated
results of their operations and their cash flows for the year 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.

Chicago, Illinois
June 18, 2001, Except for Note 2, as to which the date is
June 29, 2001





                                      -49-
<PAGE>


<TABLE>

                   WESTELL TECHNOLOGIES, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

                                     ASSETS

<CAPTION>

                                                                                                   March 31,
                                                                                              2000         2001
                                                                                              ----         ----
                                                                                                (in thousands)
<S>                                                                                        <C>       <C>
Current assets:
  Cash and cash equivalents..............................................................  $  27,258 $       405
  Short-term investments.................................................................      1,951      --
  Accounts receivable (net of allowance of $855,000 and $1,363,000, respectively)........     42,025      34,906
  Inventories............................................................................     30,741      73,068
  Prepaid expenses and other current assets..............................................      2,200       2,124
  Refundable income taxes................................................................      6,222         --
  Deferred income tax asset..............................................................      3,319      10,500
  Land and building held for sale........................................................      3,309       2,980
                                                                                         -----------   ---------

           Total current assets..........................................................    117,025     123,983
                                                                                          ----------    --------

Property and equipment:
  Machinery and equipment................................................................     34,686      42,077
  Office, computer and research equipment................................................     18,682      29,847
  Leasehold improvements.................................................................      3,436       6,032
                                                                                           ---------   ---------
                                                                                              56,804      77,956

  Less accumulated depreciation and amortization.........................................     30,435      41,726
                                                                                           ---------   ---------

    Property and equipment, net..........................................................     26,369      36,230
                                                                                           ---------   ---------

Goodwill and intangibles, net............................................................     175,482    139,373
                                                                                              -------  ---------

Deferred income tax asset and other assets...............................................     23,694      15,553
                                                                                          ----------  ----------

           Total assets..................................................................  $ 342,570   $ 315,139
                                                                                           =========   =========




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

</TABLE>


                                      -50-
<PAGE>


<TABLE>

                   WESTELL TECHNOLOGIES, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

                      LIABILITIES AND STOCKHOLDERS' EQUITY
<CAPTION>

                                                                                                    March 31,
                                                                                                    ---------
                                                                                              2000         2001
                                                                                              ----         ----
                                                                                                (in thousands)
<S>                                                                                         <C>          <C>
Current liabilities:
  Accounts payable.......................................................................  $ 21,528      $57,577
  Accrued expenses.......................................................................    22,591       22,838
  Accrued compensation...................................................................     6,938        4,687
  Current portion of long-term debt......................................................     1,633          103
                                                                                           --------    ---------

           Total current liabilities.....................................................    52,690       85,205
                                                                                           ---------     -------

Long-term debt...........................................................................     1,117       28,451
                                                                                          ----------   ---------

Convertible debt, net of debt discount of $669,000 at March 31, 2000.....................     6,611          --
                                                                                          ----------   ---------

Other long-term liabilities..............................................................     2,489        3,658
                                                                                          ----------   ---------

Stockholders' equity:
Class A common stock, par $0.01..........................................................       402          425
  Authorized -- 85,000,000 shares
  Issued and outstanding - 40,179,110 at March 31, 2000 and 42,472,787 at March 31,
    2001
Class B common stock, par $0.01..........................................................       190          190
  Authorized -- 25,000,000 shares
  Issued and outstanding -- 19,051,369 at March 31, 2000 and 19,014,869 at March 31,
    2001
Preferred stock, par $0.01...............................................................        --           --
  Authorized -- 1,000,000 shares
  Issued and outstanding -- none
Deferred compensation....................................................................      840           854
Additional paid-in capital...............................................................  345,485       357,684
Cumulative translation adjustment........................................................      184          (34)
Accumulated deficit......................................................................  (67,438)    (161,294)
                                                                                         -----------  ----------

      Total stockholders' equity.........................................................   279,663      197,825
                                                                                         -----------  ----------

           Total liabilities and stockholders' equity....................................$  342,570    $ 315,139
                                                                                         ===========   =========


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

</TABLE>


                                      -51-
<PAGE>


<TABLE>

                   WESTELL TECHNOLOGIES, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS

<CAPTION>

                                                                                    Fiscal Year Ended March 31,
                                                                                 ---------------------------------
                                                                                   1999       2000        2001
                                                                                   ----       ----        ----
                                                                                         (in thousands,
                                                                                     except per share data)

<S>                                                                              <C>        <C>        <C>
Equipment revenue.............................................................   $72,187    $90,185    $319,494
Service revenue...............................................................    19,817     30,808      41,983
                                                                                --------   --------    --------
   Total revenues.............................................................    92,004    120,993     361,477
                                                                                --------  ---------     -------

Cost of equipment sales.......................................................    55,439     70,965     306,143
Cost of services..............................................................    11,377     19,004      25,176
                                                                                --------   --------    --------
   Total cost of goods sold...................................................    66,816     89,969     331,319
                                                                                --------   --------    --------

    Gross margin..............................................................    25,188     31,024      30,158
                                                                                --------   --------    --------
Operating expenses:
  Sales and marketing.........................................................    19,766     15,338      30,323
  Research and development....................................................    26,605     10,789      33,308
  General and administrative..................................................    13,117     14,003      24,254
                                                                                                               -
  Goodwill amortization.......................................................       --       1,326       31,832
  Restructuring charge........................................................       800        550       1,700
                                                                                --------   --------    --------

     Total operating expenses.................................................    60,288     42,006      121,417
                                                                                --------   --------    --------

Operating loss................................................................   (35,100)  (10,982)     (91,259)
Other income, net.............................................................       404      1,056        --
Interest expense..............................................................       296      1,856        2,197
                                                                                --------   --------    --------

Loss before income tax benefit................................................   (34,992)  (11,782)     (93,456)
Benefit for income taxes......................................................      --     (3 ,600)           --
                                                                                --------   --------    --------
Loss before cumulative effect of change in accounting principle...............   (34,992)    (8,182)    (93,456)
Cumulative effect of change in accounting principle...........................        --         --        (400)
                                                                                 --------   --------    --------

Net loss......................................................................  $(34,992)  $(8,182)    $(93,856)
                                                                                =========  ========    =========

Loss per share:
  Loss before cumulative effect of change in accounting principle.............   $ (0.96)   $ (0.22)    $ (1.53)
  Cumulative effect of change in accounting principle.........................       --         --        (0.01)
                                                                                --------   --------    --------

  Net loss per basic and diluted common share.................................   $ (0.96)  $ (0.22)     $ (1.54)
                                                                                 ========  ========     ========

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


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

</TABLE>


                                      -52-
<PAGE>


                   WESTELL TECHNOLOGIES, INC. AND SUBSIDIARIES
<TABLE>

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<CAPTION>


                                         Common Stock
                                         Shares Issued
                                              and                         Additional  Cumulative                          Total
                         Comprehensive     Outstanding       Par Value      Paid-in Translation  Deferred    Accum.    Stockholders'
                              Loss     Class A  Class B   Class A   Class B Capital  Adjustment   Comp.     Deficit       Equity
                              ----     -------  -------   -------   ------- -------  ----------   -----     -------       ------
                                                       (in thousands)

<S>                          <C>        <C>      <C>        <C>      <C>   <C>       <C>           <C>                    <C>
Balance, March 31, 1998                 15,372   21,031     $154     $210  $97,254   $(213)          --     $(24,264)    $73,141
  Net loss...........        $ (34,992)    --       --        --       --       --      --           --      (34,992)    (34,992)
  Translation adjustment           668     --       --        --       --       --     668           --           --         668
                              ---------
Total Comprehensive Loss     $ (34,324)
                               ========
  Class B Stock Converted to
     Class A Stock...                    1,503   (1,503)      15      (15)      --      --           --           --          --
  Options Exercised..                       11       --       --       --      108      --           --           --         108

  Shares sold under Employee
     Stock Purchase Plan                    42       --       --       --      199      --           --           --         199

Balance, March 31, 1999                 16,928   19,528      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...                      477     (477)       5       (5)      --      --           --           --          --
  Issuance of Class A Common
    Stock and Issuance of stock
    options for acquisition             20,196       --      202       --  227,564      --           --           --     227,766
  Options exercised including
    tax benefit......                      551       --        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.......        2,014       --       20       --   11,002      --           --           --      11,022
Shares sold under Employee
     Stock Purchase Plan                    13       --       --       --      135      --                        --         135
Deferred Compensation                       --       --       --       --       --      --          840           --         840

Balance, March 31, 2000                 40,179   19,051      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...                       36      (36)       0      (0)       --      --           --           --          --
Conversion of subordinated debentures    1,164       --       13       --    6,202      --           --           --       6,215
Options Exercised....                    1,044       --       10       --    5,757      --           --           --       5,767
 Shares sold under Employee
     Stock Purchase Plan                    50       --        0       --      240      --           --           --         240
Deferred Compensation                       --       --       --       --       --      --           14           --          14

Balance, March 31, 2001                 42,473    19,015 $   425 $    190  $357,684 $  (34)      $  854   $ (161,294) $  197,825

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

</TABLE>

<PAGE>

<TABLE>

                   WESTELL TECHNOLOGIES, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>

                                                                                     Fiscal Year Ended March 31,
                                                                                 ----------------------------------
                                                                                   1999       2000        2001
                                                                                   ----       ----        ----
                                                                                         (in thousands)
<S>                                                                             <C>        <C>         <C>
Cash flows from operating activities:
  Net loss....................................................................  $(34,992)  $(8,182)    $(93,856)
  Reconciliation of net loss to net cash used in
     operating activities:
       Depreciation and amortization..........................................     7,022     8,439       43,941
       Deferred taxes.........................................................        -     (7,222)          -
       Gain on liquidation of Westell Europe Ltd..............................        -       (426)          -
       Accrued interest expense on debentures converted.......................        -        110           -
       Deferred compensation..................................................        -        840           14
       Other..................................................................        -          -          147
  Change in assets and liabilities:
     Decrease (increase) in accounts receivable...............................    (1,441)  (16,811)       7,045
     Increase in inventories..................................................      (552)   (7,271)     (42,451)
     Decrease (increase) in prepaid expenses and other current assets.........    (1,008)      113           75
     Decrease (increase) in refundable income taxes...........................        50       (15)       9,323
     Decrease in other assets.................................................        -         -           429
     Increase in accounts payable and accrued expenses........................       984     7,890       38,969
     Increase (decrease) in accrued compensation..............................    (1,359)      277      (2,251)
                                                                                 -------  ---------    ---------

          Net cash used in operating activities...............................   (31,296)  (22,258)     (38,615)
                                                                                 -------  ---------    ---------

Cash flows from investing activities:
   Purchases of property and equipment........................................    (5,985)  (11,434)     (22,172)
   Proceeds from sale of equipment............................................        -        432          190
   Decrease (increase) in other assets........................................        16        (8)         -
   Decrease in short-term investments.........................................       684         -        1,951
   Cash acquired in acquisition...............................................        -     29,805          -
                                                                                 -------  ---------    ---------

          Net cash provided by (used in) investing activities.................    (5,285)   18,795     (20,031)
                                                                                 --------  --------   ----------

Cash flows from financing activities:
  Net borrowing under revolving promissory notes..............................        -          -       28,400
  Repayment of long-term debt and leases payable..............................      (506)   (2,064)      (2,596)
  Proceeds from issuance of convertible debt..................................        -     18,542           -
  Proceeds from issuance of Common Stock including tax benefit on options.....       307     7,526        6,008
                                                                                --------- ----------  ----------

          Net cash (used in) provided by financing activities.................      (199)   24,004       31,812
                                                                                ---------  ---------  ----------

Effect of exchange rate changes on cash.......................................       (20)        2          (19)
          Net increase (decrease) in cash and cash equivalents................   (36,800)   20,543      (26,853)
Cash and cash equivalents, beginning of period................................    43,515     6,715       27,258
                                                                                 -------  ---------    ---------

Cash and cash equivalents, end of period......................................  $  6,175  $ 27,258    $     405
                                                                                ========= =========   =========

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


</TABLE>


                                      -54-
<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 Inc., design, manufacture
and distribute telecommunications equipment which is sold primarily to major
telephone companies. Teltrend Inc. 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, 1998. 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,         March 31,
                                1999              2000
                            -------------     -------------
Revenue................        $ 201,214         $ 215,367
Net loss...............         (56,230)          (30,676)
Loss per share.........           (0.99)            (0.50)


                                      -55-
<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:

                                                                   March 31,
                                                                   ---------
                                                             2000         2001
                                                             ----         ----
                                                               (in thousands)

        Raw materials.................................... $ 19,248     $ 47,989
        Work in process..................................    1,934           26
        Finished goods...................................   13,707       51,153
        Reserve for excess and obsolete inventory and
          net realizable value...........................   (4,148)     (26,100)
                                                           --------    ---------

                                                            $30,741      $73,068
                                                            =======      =======

         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.

         The finished goods value as of March 31, 2000 included a $970,000
step-up for inventory revaluation due to the Teltrend Inc. acquisition all of
which was expensed as cost of sales in fiscal year 2001.

         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.


                                      -56-
<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, 2001, 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.........             (33,158)
                                                    --------
        Net............................            $ 139,373
                                                   =========


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. No such adjustments have been required to date.

         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.

         Effective April 1, 1999, in an effort to associate the transfer of
title of forward priced DSL products to the customer with the recognition of the
loss, the Company began recording losses due to forward pricing upon shipment to
the customer. As of April 1, 1999, the Company did not record any cumulative
effect of this change in accounting method, as the effects prior to March 31,
1999 were immaterial. As of March 31, 2001 the Company has not committed to any
binding purchases from customers priced below production costs.

         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.

         Research and Development Costs

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


                                      -57-
<PAGE>

         Supplemental Cash Flow Disclosures

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

<TABLE>

                                                                                                March 31,
                                                                                   ----------------------------
                                                                                   1999       2000        2001
                                                                                   ----       ----        ----
                                                                                         (in thousands)

<S>                                                                                  <C>   <C>           <C>
Schedule of noncash investing and financing activities:
          Property purchased under equipment notes............................       $900  $     --      $   --
          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............................................................      $ 236     $1,207     $ 1,964
          Income taxes........................................................          5         29          37


</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, short-term investments, 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 uncollectible 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



                                      -58-
<PAGE>

 exchange prevailing during the period.
Translation adjustments arising from differences in exchange rates from period
to period are included in the foreign currency translation adjustments account
in stockholders' equity.

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

         Computation of Net Loss Per Share

         The computation of basic earnings per share is computed using the
weighted average number of common shares outstanding during the period. Diluted
earnings per share includes the number of additional common shares that would
have been outstanding if 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, 1999, 2000 and 2001, and therefore
the net loss per basic and diluted earnings per share are the same.

         New Accounting Pronouncements

         In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities", which addresses the accounting for
derivative instruments. SFAS No. 133 is effective for financial statements for
the Company's fiscal year ended March 31, 2001. SFAS No. 133 did not have a
significant effect on its current financial reporting.

         In the March 31, 2001 quarter, the Company adopted the Emerging Issues
Task Forces (EITF) Issue 00-10, Accounting for Shipping and Handling Fees and
Costs. Issue 00-10 requires companies to classify as revenue amounts billed to
customers for shipping and handling charges. Prior to the adoption of Issue
00-10, the Company netted these billings against shipping and handling costs in
the Sales and marketing line item. Prior year amounts have been reclassified to
reflect the adoption of Issue 00-10. Total revenues for the years ended March
31, 1999, 2000 and 2001 include shipping and handling revenue of $324,000,
$530,000, and $1,380,000, respectively. Shipping and handling costs included in
Sales and marketing expense for the years ended March 31, 1999, 2000 and 2001
were $655,000, $878,000, and $2,814,000, respectively.

         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, 2001 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.


Note 2. Revolving Credit Agreements:


                                      -59-
<PAGE>

As of March 31, 2000, the Company had a revolving promissory note that enabled
the Company to borrow up to $16.0 million and was due on demand and an equipment
borrowing facility. The revolver bore interest at the bank's prime rate (9.0% at
March 31, 2000) or Libor rate plus 2.5%. The equipment borrowing facility
allowed the Company to borrow up to $4.1 million. Borrowings under the equipment
borrowing facility totaled $2.8 million at March 31, 2000 and are included as
installment notes payable described in Note 3.

During the fiscal year 2001, the Company replaced the above agreements with a
$45 million revolving credit facility that 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.

The facility in place as of March 31, 2001 required, among other things, the
maintenance of a minimum interest coverage ratio, a minimum net worth, a maximum
capital expenditures and target EBITDA. The Company was not in compliance with
the target EBITDA and the interest coverage ratio covenants at March 31, 2001.
On April 13, 2001, the Company and its lender entered into an amendment and
waiver under which these covenant violations were waived. The amendment and
waiver amended certain covenants and required the Company to raise equity
funding of $5.0 million on or before May 15, 2001 and an additional $20.0
million on or before June 30, 2001. The Company raised $6.0 million in May and
the requirement for additional equity funding was waived as a part of the
amended credit facility described below.

On June 29, 2001, the Company amended the revolving credit facility, replacing
the $45 million revolver with an asset based lending facility providing for
total borrowing based upon 85% of eligible accounts receivable and 30% of
eligible inventory not to exceed $9.0 million, and 70% of the outstanding
balance of the guarantee described below. The $9.0 million inventory limitation
is reduced by $.1 million on August 1, 2001, and shall be reduced by an
additional $.1 million on the first day of each month thereafter. The Company
was eligible to borrow an additional $6.6 million as of March 31, 2001. This
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 up to a maximum of
$10.0 million by several stockholders and is supported by such stockholders'
brokerage account totaling approximately $10.0 million. In consideration of the
guarantee, the Company has 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. Any future equity financing obtained by the
Company will be applied to the outstanding bank indebtedness and will reduce,
dollar for dollar, the maximum amount of the facility to $25 million. Future
equity financing will also reduce, dollar for dollar, the maximum amount of the
guarantees. Borrowings under this facility provide for the interest to be paid
by the Company at prime plus 1%. This new amendment provides for covenants
regarding EBITDA and tangible net worth. Management expects to be in compliance
with the covenants for the term of the debt.



                                      -60-
<PAGE>

Note 3. Long-Term Debt:

<TABLE>

         Long-term debt consists of the following:
<CAPTION>

                                                                                                     March 31,
                                                                                              2000         2001
                                                                                              ----         ----
                                                                                                (in thousands)
<S>                                                                                            <C>          <C>
Capitalized lease obligations secured by related equipment...............................      $--          $154
Revolving Promissory note payable, interest at prime plus 1%, secured by
   substantially all assets of the Company, due through August 2003......................                 28,400
Installment notes payable to a bank, interest LIBOR +2.5% on March 31, 2000,
   secured by substantially all assets of the Company, repaid in 2001....................      2,750        --
                                                                                            -------- -----------
                                                                                               2,750      28,554

        Less current portion.............................................................    (1,633)       (103)
                                                                                            --------   ---------

                                                                                              $1,117    $ 28,541
                                                                                              ======    ========

         Future maturities of long-term debt at March 31, 2001 are as follows (in thousands):

        2002.............................................................................  $     103
        2003.............................................................................     28,451

                                                                                             $28,554
</TABLE>

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.


                                      -61-
<PAGE>

Note 5. Income Taxes:

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


                                                     Fiscal Year Ended March 31,
                                                   -----------------------------
                                                    1999       2000        2001
                                                    ----       ----        ----
                                                          (in thousands)
        Federal:
          Current..............................   $  --     $  (284)   $     --
          Deferred.............................       --      (2,866)        --
                                                    ------    -------   --------

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

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

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

             Total.............................   $   --   $ (3,600)    $    --
                                                  ======== ==========   ========

         The Company utilizes the flow-through method to account for tax
credits. In fiscal 1999, 2000 and 2001, the Company generated approximately
$750,000, $662,000 and $500,000, respectively, of tax credits.

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

<TABLE>

                                                                Fiscal Year Ended March 31,
                                                                ---------------------------
                                                               1999        2000       2001
                                                               ----        ----       ----

        <S>                                                    <C>        <C>       <C>
        Statutory federal income tax rate....................  (34.0)%    (34.0)%   (34.0)%
        Meals and entertainment..............................    0.7        0.6       0.1
        State income tax, net of federal tax effect..........   (4.9)      (4.9)     (4.9)
        Income tax credits recognized........................   (2.1)      (4.2)     (0.5)
        Valuation allowance..................................   40.5        7.6      26.0
        Goodwill amortization................................   -           4.2      13.2
        Other................................................   (0.2)       0.1       0.1
                                                              -------   -------   -------

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




                                      -62-
<PAGE>

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

<TABLE>

                                                                          March 31,
                                                                          ---------
                                                                    2000         2001
                                                                    ----         ----

                                                                      (in thousands)
        <S>                                                         <C>          <C>
        Deferred income tax assets:
          Allowance for doubtful accounts......................     $  226       $ 517
          Alternative minimum tax credit.......................        605         605
          Research and development credit carryforward.........      4,580       4,157
          Capital loss carryforward............................      2,345       2,328
          Compensation accruals................................        562       1,554
          Inventory reserves...................................      2,092      14,430
          Warranty reserve.....................................      1,077       1,198
          Net operating loss carryforward......................     30,544      46,819
          Property and equipment...............................        322          --
          Group Insurance......................................        462         121
          Non-employee stock options...........................        326         326
          Other................................................      1,154         215
                                                                 ---------   ---------
                                                                    44,295      72,270
        Deferred income tax liabilities:
          Property and equipment...............................       --           254
          Other................................................       --            16
                                                                  --------      ------
                                                                      --           270

           Valuation allowance.................................   (18,500)    (46,205)
                                                                ----------  ----------

             Net deferred income tax asset.....................   $ 25,795    $ 25,795
                                                                 =========   =========

</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 1999, 2000 and
2001 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 1999, 2000
and 2001 the Company increased the valuation allowances by $12.3 million,
$900,000 and $27.7 million, respectively. At March 31, 2001 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
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 $4.8 million in income tax credit
carryforwards and a tax benefit of $46.8 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.


                                      -63-
<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 $2.3 million, $2.5 million and $3.5 million for 1999, 2000, and
2001, respectively.


     Total minimum future rental payments at March 31, 2001 are as follows (in
thousands):

        2002.....................................................     $4,587
        2002.....................................................      3,801
        2004.....................................................      3,413
        2005.....................................................      3,428
        2006.....................................................      3,151
        Thereafter...............................................     29,659
                                                                   ---------

                                                                     $48,039
                                                                     =======


Note 7. Capital Stock and Stock Restriction Agreements:

Capital Stock Activity:


         On March 16, 2000 at a special 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 65,500,000 to 85,000,000.

         The Board of Directors has the authority to issue up to 1,000,000
shares of preferred stockin 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.

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 which
allows employees to defer up to 15% of wages subject to Internal Revenue Service
allowed limits. The Plan also allows for Company discretionary contributions.
The Company provided for



                                      -64-
<PAGE>

discretionary  and matching  contributions  to the Plan  totaling  approximately
$395,000,   $501,000  and  $1.3   million  for  fiscal  1999,   2000  and  2001,
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, 1999, 2000 and 2001 there were 139,936, 126,512 and
76,781 shares, respectively, available for future issuance.

         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
1999, 2000 or 2001.

         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.



                                      -65-
<PAGE>

         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 3,943,540 shares
available for further issuance at March 31, 2001. The stock option activity
under all stock plans is as follows:

<TABLE>

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

        <S>                                             <C>                   <C>
        Outstanding at March 31, 1998...............      2,665,420             $ 12.92

                  Granted...........................      3,068,876                7.12
                  Exercised.........................       (11,330)               9.53
                  Expired...........................        --                    --
                  Canceled..........................    (3,079,520)               12.43
                                                      -------------           ---------
        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


</TABLE>

         The exercise price of the stock options granted is generally
established at the market price on the date of the grant. On August 6, 1998,
nonqualified stock options issued to non-board members prior to August 6, 1998
were cancelled and reissued at the then current market price of $6.219. 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 and 2001, respectively, the Company granted 30,000
and 3,000 stock options to non-employee advisory board members or consultants.
Compensation expense of $840,000 and $13,545 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.

          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 $(44,349,000),
$(13,530,000) and $(108,585,384) and $(1.22), $(.36) and $(1.78) for fiscal
1999, 2000 and 2001, respectively.


                                      -66-
<PAGE>

The following table summarizes information about all stock options outstanding
as of March 31, 2001:

<TABLE>

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

      Range of            Number                               Weighted-           Number            Weighted
      Exercise        Outstanding at        Remaining           Average        Exercisable at         Average
       Prices             3/31/01              Life         Exercise Price         3/31/01        Exercise Price
    ------------    --------------------------------------  --------------   -------------------  --------------

   <S>                  <C>                   <C>                <C>                <C>              <C>
   $2.67 - $4.85         1,414,552             7.17 yrs           $ 4.18             891,646          $ 4.27
    4.86 -  5.03         1,826,500             9.57 yrs             5.03              25,150            4.91
    5.04 -  6.22         1,588,496             6.57 yrs             6.04           1,125,166            5.99
    6.36 -  21.00          905,360             7.97 yrs             9.31             602,090            7.89
    21.44 - 36.18        1,624,420             8.94 yrs            22.07              16,990           33.02
                      ------------           ----------       ----------           ---------      ----------

    $2.67 - 36.18        7,359,328             8.12 yrs           $ 9.37           2,661,042          $ 6.01

</TABLE>

         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 1999 and 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 vest
ratably over two - 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, 2000
and 2001 were $4.72, $5.52 and $8.43, respectively.

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.



                                      -67-
<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>

                                                              Telecom          Telecom      Consolidated
                                                             Equipment        Services         Total
                                                           ------------     ------------     ---------
<S>                                                            <C>            <C>            <C>
1999
      Revenues............................................     $ 72,187       $ 19,817       $ 92,004
      Operating income (loss).............................     (38,554)          3,454       (35,100)
      Depreciation and amortization.......................        5,327          1,695          7,022
      Total assets........................................       52,774         11,633         64,407

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

</TABLE>

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

<TABLE>

                                                                     Fiscal Year Ended March 31,
                                                                  ---------------------------------
                                                                1999             2000           2001
                                                                ----             ----           ----

<S>                                                          <C>           <C>             <C>
Operating loss from continuing operations.................   $ (35,100)    $ (10,982)      $ (91,259)
Other income, net.........................................         404          1,056           --
Interest expense..........................................         296          1,856          2,197
                                                               --------     ----------       --------

Loss from continuing operations before income taxes.......   $ (34,992)    $ (11,782)      $ (93,456)
                                                               ========      ========      ==========
</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 1999 and 2000 and approximately 84% in fiscal year 2001.




                                      -68-
<PAGE>

         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,
                                                     ---------------------------
                                                   1999        2000       2001
                                                   ----        ----       ----
        Customer A............................      16.2%      19.2%     17.6%
        Customer B............................      10.7        9.5       5.5
        Customer C............................       7.7       14.7      25.9
        Customer D............................       0.1        7.9      14.3

         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,
                                                                 ---------
                                                              2000       2001
                                                              ----       ----
        Customer I...........................                 20.6%        5.4%
        Customer II..........................                 18.7        41.2
        Customer III.........................                  9.1        25.1

         Geographic Information

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

<TABLE>

                                                            Domestic   International   Total
                                                            --------   -------------   -----
                                                                      (in thousands)
<S>                                                          <C>          <C>       <C>
1999
        Revenue...........................................   $ 83,533     $ 8,471   $ 92,004
        Operating loss from continuing operations.........   (26,208)     (8,892)    (35,100)
        Identifiable assets...............................     60,691       3,716      64,407

2000
        Revenue........................................... $ 110,124    $  10,869  $ 120,993
        Operating loss from continuing operations.........   (10,243)       (739)    (10,982)
        Identifiable assets...............................    334,907       7,663    342,570
                                                                                            =

2001
        Revenue........................................... $ 303,758     $ 57,719  $ 361,477
        Operating loss from continuing operations.........   (88,394)     (2,865)    (91,259)
        Identifiable assets...............................   313,067        2,072    315,139

</TABLE>

International identifiable assets for fiscal year 1999 are related to Westell
Europe, Ltd. which was sold during fiscal year 2000 and was located in the
United Kingdom. International identifiable assets for fiscal year 2000 and 2001
are related to Westell Ltd. (formerly Teltrend Ltd.) which was acquired as part
of the acquisition of Teltrend Inc. and is located in the United Kingdom and
Conference Plus Global Services, Ltd., which is located in Dublin Ireland.

Note 10. Restructuring charge:

         The Company recognized restructuring charges of $800,000 in fiscal year
1999 and $1.7 million in fiscal year 2001. These charges included personnel,
facility, and certain development contract costs related to restructuring global
operations. During the three months ending December 31, 1999, management
determined that essentially all restructuring payments had been completed for
fiscal year 1999 therefore the remaining restructuring



                                      -69-
<PAGE>

accrual balances of approximately  $169,000 was reversed into income. The fiscal
1999  restructuring  plan was to  decrease  costs,  primarily  by  reducing  the
workforce by approximately 11%, and focusing DSL sales efforts on indirect sales
to the  major  phone  companies  through  licensing  and OEM  arrangements  with
strategic  partners.  The fiscal 2001 restructuring plan was to further 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, 2001, none of
this restructuring cost has been paid.

         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, 2001, $1.6
million of these costs have been paid.

The restructuring charges and their utilization are summarized as follows:

<TABLE>

                        Accrued    1999     1999  Accrued       Teltrend     2000  2000      Accrued       2001      2001  Accrued
(Dollars in              at      Charged Utilized    at             Inc.  Charged  Utilized     at      Charged  Utilized     at
thousands)            March 31                    March 31   Involuntary                    March 31                       March
                        1998                        1999     Termination                      2000                         31 2001
--------------------- ---------- ------- -------- ---------- ------------ -------- -------- ---------- --------- --------- ---------
<S>                        <C>     <C>      <C>        <C>        <C>        <C>      <C>     <C>        <C>       <C>       <C>
Employee Costs.............$274    $690     $363       $601       $2,356     $250     $547    $ 2,604    $1,550    $1,552    $2,602
Contract Costs.............  89      --       --         89                    --       --         --        --        --        --
Legal and Other              63     110       19        154                   300      130        300       150        55       395
Costs......................
Charge reversal............  --      --       --         --                    --      169         --        --        --        --
--------------------- ---------- ------- -------- ---------- ------------ -------- -------- ---------- --------- --------- ---------
Total......................$426    $800     $382       $844       $2,356     $550     $846    $ 2,904   $ 1,700    $1,607    $2,997
===================== ========== ======= ======== ========== ============ ======== ======== ========== ========= ========= =========
</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, 1999 and 2000 was primarily due
to interest income earned on temporary cash investments made as a result of
investing available funds.


Note 12. Litigation:

         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.




                                      -70-
<PAGE>





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





                                      -71-
<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, 2001, and for the year then ended, and have
issued our report thereon dated June 18, 2001, except for Note 2, as to which
the date is June 29, 2001 (included elsewhere in this Registration Statement).
Our audit also included the 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 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
June 18, 2001




                                      -72-
<PAGE>



                   WESTELL TECHNOLOGIES, INC. AND SUBSIDIARIES

                SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS

<TABLE>

                         ACCOUNTS RECEIVABLE ALLOWANCES
                                 (In thousands)
<CAPTION>


                                                                      1999       2000        2001
                                                                      ----       ----        ----

<S>                                                                   <C>        <C>         <C>
Balance at beginning of year....................................      $730       $703        $855
Transfer from acquired company..................................        --        273          --
Provision for doubtful accounts.................................       168        223         627
Provision for discounts, allowances and rebates.................        --         --          --
Write-offs of doubtful accounts, net of recoveries..............     (195)      (344)       (119)
Discounts, allowances and rebates taken.........................        --         --          --

Balance at end of year..........................................      $703       $855      $1,363
                                                                      ====       ====      ======
</TABLE>





<TABLE>

                             RESTRUCTURING RESERVES
                                 (In thousands)
<CAPTION>


                                                                        1999       2000        2001
                                                                        ----       ----        ----

<S>                                                                   <C>          <C>       <C>
Balance at beginning of year.....................................     $  426       $844      $2,904
Purchase price adjustment........................................         --     2,356         --
Charges to Operating expenses....................................        800        550       1,700
Restructuring costs paid.........................................      (382)      (677)     (1,607)
Charge reversal..................................................         --      (169)        --

Balance at end of year...........................................       $844     $2,904      $2,997
                                                                        ====     ======      ======

</TABLE>