UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 2
TO
FORM 10-K
(Mark One)
/X/ Annual Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the fiscal year ended March 31, 2003 or
/ / Transition Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from to .
-------- ----------
Commission file number: 0-27266
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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.
Indicate by check mark whether the registrant is an accelerated filer as defined
be rule 12b-2 of the Act. Yes No X
The registrant estimates that the aggregate market value of the registrant's
Class A Common Stock held by non-affiliates (within the meaning of the term
under the applicable regulations of the Securities and Exchange Commission) on
September 30, 2002 (based upon an estimate that 70% of the shares are so owned
by non-affiliates and upon the average of the high and low prices for the Class
A Common Stock on the NASDAQ National Market on that date) was approximately $64
million. Determination of stock ownership by non-affiliates was made solely for
the purpose of responding to this requirement and registrant is not bound by
this determination for any other purpose.
As of June 9, 2003, 48,417,967 shares of the registrant's Class A Common Stock
were outstanding and 17,650,860 shares of registrant's Class B Common Stock
(which automatically converts into Class A Common Stock upon a transfer of such
stock except transfers to certain permitted transferees) were outstanding.
EXPLANATION FOR AMENDMENT:
The Amendment to the Annual Report on Form 10-K of Westell
Technologies, Inc. (the "Form 10-K") for the fiscal year ended March 31, 2003 is
being filed with the SEC to include the items required to be disclosed under
Part III of the Form 10-K. In connection with these amendments, the registrant
is also amending the Exhibit Index in Item 15 to include the certifications
required by 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, as Exhibit 99.1, which is being filed as an exhibit
to this Amendment No. 2.
As originally filed, the Form 10-K incorporated the information
required by Part III by reference to the Company's proxy statement for its 2003
annual meeting, as permitted by Instruction G(3). Because the proxy is not
expected to be filed with the SEC within 120 days of the end of Westell's fiscal
year, Part III of the Form 10-K is hereby being amended.
PART III.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
DIRECTOR
NAME AND AGE SINCE PRINCIPAL OCCUPATION AND OTHER INFORMATION
John W. Seazholtz (67) 1997 John W. Seazholtz has served as Director of the Company since December 1997 and
was elected Chairman in April 2000. Mr. Seazholtz was President and Chief
Executive Officer of Telesoft America, Inc. from May 1998 to May 2000. In April
1998, Mr. Seazholtz retired as Chief Technology Officer - Bell Atlantic where he
served since June 1995. Mr. Seazholtz previously served as Vice President
Technology and Information Services - Bell Atlantic and in other executive
capacities with Bell Atlantic beginning in 1962. Mr. Seazholtz currently serves
as a Director for Odetics, Inc., a supplier of digital data management products
for the security, broadcast and computer storage markets, and for ASC-Advanced
Switching Communications, an ATM network equipment developer. He is Chairman of
eWay Group, a private consulting firm. He is on the Board of Overseers of N.J.
Institute of Technology.
Melvin J. Simon (58) 1992 Melvin J. Simon has served as Assistant Secretary of the Company since July 1995
and as a Director of the Company since August 1992. From July 1995 to April 2003,
Mr. Simon served as Assistant Treasurer of the Company. From August 1992 to July
1995, Mr. Simon served as Secretary and Treasurer of the Company. A Certified
Public Accountant, Mr. Simon founded and has served as President of Melvin J.
Simon & Associates, Ltd., a public accounting firm, since May 1980. Mr. Simon
serves as a Director of the Company's 95% owned subsidiary Conference Plus, Inc.
Paul A. Dwyer (69) 1996 Paul A. Dwyer has served as a Director of the Company since January 1996 and as a
Director of Westell, Inc., a wholly owned subsidiary of the Company, since
November 1995. Mr. Dwyer, now retired, served as Chief Financial Officer of Henry
Crown and Company, a private investment firm from February 1981 to December 1999,
and as Vice President -- Administration of Longview Management Group, LLC, a
registered investment advisor, from October 1998 to December 1999. Mr. Dwyer
serves as a Director for McHenry Savings Bank, Rush Computer Rental and
Valuemetrics Advisors.
Robert C. Penny III (50) 1998 Robert C. Penny III has served as a Director of the Company since September 1998.
He has been the managing partner of P.F. Management Co., a private investment
company, since May 1980.
Thomas A. Reynolds, III (51) 2000 Thomas A. Reynolds has served as Director of the Company since January 2000. He is
a partner with Winston & Strawn, an international law firm headquartered in
Chicago and currently serves as a member of the Board of Directors of Smurfit
Stone Container Corporation and serves as a Trustee of the Brain Research
Foundation.
Bernard F. Sergesketter (67) 2000 Bernard F. Sergesketter has served as a Director of the Company since March 2000.
Mr. Sergesketter is Chairman and Chief Executive Officer of Sergesketter &
Associates, a marketing consulting firm, since 1994. He served as a Vice
President of AT&T from January 1983 to August 1994. Mr. Sergesketter was a
Director of Teltrend, Inc, a wholly owned subsidiary of the Company, from January
1996 to March 2000 and currently serves as a Director of Solar Communications
Inc., the Illinois Institute of Technology and The Sigma Chi Foundation.
E. Van Cullens (57) 2001 E. Van Cullens has served as President, Chief Executive Officer and Director of
the Company since July 2001. Prior to joining the Company, Mr. Cullens operated
Cullens Enterprises, LLC, a management consulting firm focused in
telecommunications, from June 2000 through June 2001. From June 1999 to May 2000,
Mr. Cullens served as President and Chief Operating Officer of Harris Corporation
and served as President, Communications Sector from May 1997 to June 1999. Mr.
Cullens served in various executive capacities with Siemens A. G. and affiliated
companies from January 1991 to April 1997. Mr. Cullens was with Stromberg-Carlson
from May 1984 until January 1991 when the Stromberg-Carlson was acquired by
Siemans. From May 1972 to April 1984, Mr. Cullens held various management
positions with GTE Corporation.
Roger L. Plummer (61) 2001 Roger L. Plummer has served as a Director of the Company since September, 2001.
Mr. Plumber currently serves as the Managing Director of the International
Engineering Consortium. Mr. Plummer also serves as a consultant in communication
technology and corporate organization and culture. Mr. Plummer previously served
in various executive capacities at Ameritech and its predecessor, Illinois Bell,
including President of the Ameritech Custom Business Services unit. Mr. Plummer
serves as a Board member of: DePaul University, University of Illinois
Foundation, Chicago public television Channel 11, Association of Public
Television Stations, Accreditation Council of Graduate Medical Education, Rush
Hospital Neurobehavioral Center, Chicago Symphony Orchestra Governing Members
Organization and the University of Illinois Medical Center.
The following sets forth certain information with respect to the current
executive officers of the Company. Please refer to the information contained
above for biographical information of executive officers who are also directors
of the Company.
Name Age Position
------------------------------- --- -----------------------------------------------------------
E. Van Cullens................. 56 President and Chief Executive Officer
Nicholas C. Hindman, Sr........ 51 Treasurer, Secretary, Senior Vice President and Chief Financial Officer
William J. Noll................ 60 Senior Vice President of Product Development and Chief Technology Officer
John C. Clark.................. 54 Senior Vice President of Operations
Nicholas C. Hindman, Sr. has served as Treasurer, Secretary, Vice
President and Chief Financial Officer since March, 2000 and as acting Treasurer,
Secretary, Vice President and Chief Financial Officer of the Company from May
1999 to February 2000. From October 1997 to April 1999, Mr. Hindman served as
General Manager of MFI Holdings, LLC, a manufacturer of consumer products. From
1992 through September 1997, Mr. Hindman operated an auditing and consulting
firm specializing in initial public offerings, private placement of securities
and business turnarounds.
John C. Clark has served as Senior Vice President of Operations since
April 2001. Prior to joining the Company, Mr. Clark was Vice President of
Manufacturing from September 1998 to October 2000 with 3COM. Mr. Clark was
Director of Material Management at US Robotics/3COM from January 1996 to
September 1998. From 1994 to 1996, Mr. Clark served as Area Vice President of
Operations for Caremark. He also served as Director of Materials Management for
Caremark from 1991 to 1996.
William J. Noll has served as Senior Vice President of Research and
Development and Chief Technology Officer of Westell, Inc. since May 1997. Prior
to joining the Company, Mr. Noll was Vice President and General Manager of
Residential Broadband at Northern Telecom from October 1995 to May 1997. Mr.
Noll held other various Vice President and Assistant Vice President positions at
Northern Telecom from June 1988 to October 1996, and was Vice President Network
Systems at Bell Northern Research from November 1986 to June 1988.
The Audit Committee (comprised of Messrs. Dwyer (Chair), Simon and
Sergesketter) met three times in fiscal 2003. The functions of the Audit
Committee consist of providing oversight to the Company's financial reporting
process through periodic meetings with the Company's independent auditors,
internal auditors and management to review accounting, auditing, internal
controls and financial reporting matters. Mr. Dwyer serves as the financial
expert of the audit committee and is an independent director as such term is
defined under NASD rules.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's officers and directors and persons who own more than 10
percent of a registered class of the Company's equity securities to file reports
of ownership and changes in ownership with the Securities and Exchange
Commission. During fiscal 2003, all such persons filed on a timely basis all
reports required by Section 16(a) of the Securities Exchange Act of 1934 with
the exception of Mr. Clark, who filed a Form 3 on May 2003 when it was due on
September 29, 2001 and reported five option grants on a Form 4 on May 30, 2003
when the option grants should have been reported on Form 4s in May 2002 and
March 2003.
ITEM 11. EXECUTIVE COMPENSATION
The following table sets forth information for the fiscal years ended
March 31, 2001, 2002 and 2003, with respect to all compensation paid or earned
for services rendered to the Company by individuals who served as the Company's
Chief Executive Officer in fiscal 2003 and the Company's other most highly
compensated executive officers who were executive officers at March 31, 2003
(together, the "Named Executive Officers") and one individual who served as an
executive officer in fiscal 2003 but who is no longer serving as such on March
31, 2003.
SUMMARY COMPENSATION TABLE
LONG TERM
ANNUAL COMPENSATION COMPENSATION
SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
FISCAL SALARY BONUS COMPENSATION OPTIONS(1) COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) (SHARES) ($)
--------------------------- ------- ---------- ---------- ----------------- ---------------- -----------
E.Van Cullens 2003 632,686 - - 195,541 -
President and Chief 2002 344,898 200,000 217,182(2) 1,876,923 -
Executive Officer 2001 - - - - -
John C. Clark 2003 239,239 - 31,714(2) 114,572 -
Senior Vice President 2002 234,519 2,500 - 122,632 -
of Operations 2001 - - - - -
Nicholas C. Hindman, Sr. 2003 196,854 - - 100,498 -
Treasurer, Secretary, Senior 2002 200,000 18,000 - 117,833 -
Vice President and Chief 2001 200,000 - - -
Financial Officer 39,200
William J. Noll 2003 183,938 38,333 - 94,581 -
Senior Vice President of 2002 222,000 143,600 - 135,402 -
Research & Development and 2001 184,711 186,500 - 85,750 2,302(3)
Chief Technology Officer
Richard P. Riviere(5) 2003 120,000 - - - 69,200(4)
Vice President of Transaction 2002 208,000 127,772 - - -
Services and Chief Executive 2001 196,712 120,442 - - -
Officer of Conference Plus,
Inc.
------------------
(1) Stock options granted were non-qualified stock options of Class A Common Stock and were issued under the 1995 Stock Incentive
Plan of the Company except for all options issued to Mr. Cullens in fiscal year 2002 which were issued outside of the 1995
Stock Incentive Plan.
(2) Represents reimbursed relocation expense and tax gross up.
(3) Represents matching contributions under the Company's 401(k) Profit Sharing Plan for fiscal 2002.
(4) Represents $56,000 paid in severance costs and $13,200 paid for accrued vacation.
(5) Mr. Riviere resigned from the Company in October 2002.
The following tables set forth the number of stock options granted to
each of the Named Executive Officers during fiscal 2003, the stock option
exercises by each Named Executive Officer and exercisable and unexercisable
stock options held by the Named Executive Officers as of March 31, 2003. For
purposes of table computations the fair market value at March 31, 2003 was equal
to $4.05 per share.
OPTION GRANTS IN THE LAST FISCAL YEAR
POTENTIAL REALIZABLE
VALUE AT ASSUMED ANNUAL
RATE OF STOCK PRICE
APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM(2)
----------------------------------------------------- --------------------------
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS
UNDERLYING GRANTED TO EXERCISE OR
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION
NAME GRANTED(#) FISCAL YEAR(1) ($/SH) DATE 5% 10%
-------------------------------- ---------- -------------- ----------- ---------- ----------- -----------
E. Van Cullens 95,541(3) 3.00% 1.570 04/01/12 94,334 239,060
100,000(5) 3.14% 1.305 12/24/12 82,071 207,893
Nicholas C. Hindman 10,000(4) 0.31% 1.570 04/01/12 9,874 25,022
10,000(4) 0.31% 3.000 04/01/12 - 10,722
73,248(3) 2.30% 1.570 04/01/12 72,322 183,279
7,250(4) 0.23% 1.570 04/01/12 7,158 18,141
John C. Clark 10,000(4) 0.31% 1.570 04/01/12 9,874 25,022
10,000(4) 0.31% 3.000 04/01/12 - 10,722
73,248(3) 2.30% 1.570 04/01/12 72,322 183,279
15,000(4) 0.47% 1.570 04/01/12 14,810 37,533
6,234(4) 0.20% 4.050 03/31/13 16,107 40,819
William J. Noll 10,000(4) 0.31% 1.570 04/01/12 9,874 25,022
10,000(4) 0.31% 3.000 04/01/12 - 10,722
73,248(3) 2.30% 1.570 04/01/12 72,322 183,279
1,333(3) 0.04% 1.315 08/02/12 1,102 2,794
Richard P. Riviere -- -- -- -- -- --
------------------
(1) Based on 3,182,681 total options granted to employees, including the Named Executive Officers, in fiscal 2003.
(2) The potential realizable value is calculated based on the term of the option at its time of grant (ten years). It is
calculated by assuming the stock price on the date of grant appreciates at the indicated annual rate compounded annually for
the entire term of the option and that the option is exercised and sold on the last day of its term for the appreciated stock
price.
(3) These options are performance-based and vest in full at the earlier of achievement of certain performance goals or eight
years after grant date.
(4) These options vest over a five-year period on the five anniversaries of the option grant with 20% vesting per year and have
a 10-year life subject to earlier termination upon the occurrence of certain events related to termination of employment.
(5) 95,834 of the shares covered by this option vest monthly over a two year period and 4,166 of the shares covered by this
option vested on issuance.
FISCAL YEAR-END VALUES
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES VALUE OPTIONS AT FISCAL YEAR END IN-THE-MONEY OPTIONS AT
ACQUIRED ON REALIZED (#) FISCAL YEAR END ($)
NAME EXERCISE (#) ($) (EXERCISABLE/UNEXERCISABLE) (EXERCISABLE/UNEXERCISABLE)(1)
--------------------------- -------------- -------------- --------------------------- -----------------------------
E. Van Cullens - - 317,344/1,755,120 674,260/2,918,720
Nicholas C. Hindman - - 112,669/171,712 92,944/387,718
John C. Clark - - 51,763/185,441 101,488/406,126
William J. Noll - - 303,162/182,571 115,628/385,245
Richard P. Riviere - - 21,600/0 0/0
(1) Value is calculated by subtracting the exercise price per share from $4.05, the closing price of the Company's Class A Common
Stock on March 31, 2003, and multiplying such amount by the number of shares subject to the option.
EMPLOYMENT AND SEVERANCE AGREEMENTS
The Company has a severance agreement with Mr. Cullens, the Chief
Executive Officer of the Company. The severance agreement provides that in the
event that Mr. Cullens is terminated without Cause (as defined therein) or he
resigns for Good Reason (as defined therein), the Company shall pay to Mr.
Cullens severance payments equal to his salary and bonus for the fiscal year in
which the termination occurs, and the severance agreement also provides for the
payment of certain amounts upon the occurrence of certain events. Mr Cullens
agreed not to compete with the Company and not to solicit any Company employees
for a period of one year in the event that his termination entitles him to
severance payments. The Company's severance payment obligations and Mr. Cullens'
right to this severance payment shall terminate upon Mr. Cullens' death,
resignation without Good Reason, retirement or termination for Cause.
The Company also has entered into a deferred compensation arrangement
with Mr. Cullens. The amount of deferred incentive compensation to be awarded to
Mr. Cullens in each year of his service as Chief Executive Officer of the
Company is to be based on the Company's consolidated net income before income
taxes as set forth in the Company's audited financial statements for March 31,
2004 and subsequent fiscal years plus any gain on the sale of the Company's
interest in Conference Plus, Inc., if any. The amount of the award shall be
determined as follows:
----------------------------------- --------- --------------------- ------------
CONSOLIDATED DEFERRED
COMPENSATION INCOME BEFORE CUMULATIVE
CUMULATIVE INCOME TAXES* RATE MAX AWARD MAXIMUM
----------------------------------- --------- --------------------- ------------
Up to $2,500,000 5% $125,000 $ 125,000
----------------------------------- --------- --------------------- ------------
Next $3,750,000 4% $150,000 $ 275,000
----------------------------------- --------- --------------------- ------------
Next $6,250,000 3% $187,500 $ 462,500
----------------------------------- --------- --------------------- ------------
Next $6,250,000 2% $125,000 $ 587,500
----------------------------------- --------- --------------------- ------------
Next $6,250,000 1% $ 62,500 $ 650,000
----------------------------------- --------- --------------------- ------------
All amounts awarded under the deferred compensation program shall vest
on March 31, 2006 as long as Mr. Cullens is employed by the Company on that
date. Any amounts earned by Mr. Cullens in the fiscal years ending after March
31, 2006 will be fully vested at the time the amounts are determined as set
forth above. The amounts earned under the program will also be fully vested in
the event of Mr. Cullens' death or termination of employment by permanent and
total disability prior to March 31, 2006 or upon a change in control of the
Company. Unless otherwise elected, the deferred incentive compensation earned by
Mr. Cullens and vested thereunder will be paid to Mr. Cullens upon his
retirement from the Company or other termination of employment. Mr. Cullens
shall also have the right to withdraw all vested amounts earned under the
program at any time, provided that 5% of the amount withdrawn shall be forfeited
to the Company. The Company shall establish a rabbi trust and pay to the trust
from time to time an amount equal to any amount earned under the deferred
incentive compensation program.
DIRECTOR COMPENSATION
Directors who are not employees of the Company each receive $20,000 per
year for services rendered as directors, except Robert C. Penny III, who
receives no compensation. In the fiscal year ended March 31, 2003, outside
directors, except for Robert C. Penny III were granted stock options to purchase
shares that vest annually over five years. John Seazholtz was granted stock
options to purchase 50,000 shares on April 1, 2002. Paul Dywer, Thomas Reynolds,
Melvin Simon and Bernard Sergesketter were granted options to purchase 25,000
shares on April 1, 2002. Roger Plummer was granted options to purchase 15,000
shares on April 1, 2002. The exercise price for such options was based on the
fair market value of the options on the day of grant. In addition, all directors
may be reimbursed for certain expenses incurred in connection with attendance at
Board and committee meetings. In addition, Mr. Simon also receives $1,250 each
quarter for his services as a director of Conference Plus, Inc., a subsidiary of
the Company. Other than as described in this paragraph, directors who are
employees of the Company do not receive additional compensation for service as
directors.
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
The Compensation Committee is currently composed of Messrs. Dwyer
(Chair), Penny, Seazholtz and Simon, the Assistant Secretary and Assistant
Treasurer of the Company. No interlocking relationship exists between the
Company's Board of Directors or Compensation Committee and the board of
directors or compensation committee of any other company, nor has any such
interlocking relationship existed in the past.
Since 1984, Melvin J. Simon & Associates, Ltd. has provided accounting
and other financial services to the Company. Mr. Simon, a director and the
Assistant Secretary of the Company and Co-Trustee of the Voting Trust, is the
sole owner of Melvin J. Simon & Associates, Ltd. The Company paid Melvin J.
Simon & Associates, Ltd. approximately $18,236, $36,845 and $3,448 in fiscal
2001, 2002 and 2003, respectively, for its services. The Company believes that
these services are provided on terms no less favorable to the Company than could
be obtained from unaffiliated parties.
The Company has granted Robert C. Penny III and Melvin J. Simon, as
Trustees of the Voting Trust, certain registration rights with respect to the
shares of Common Stock held in the Voting Trust.
In June 2001, trusts for the benefit of Robert C. Penny III, a director
of the Company, and other Penny family members, entered into a guaranty of $10
million of the Company's obligations under its revolving credit facility. In
consideration of the guarantee, the Company has granted those trusts warrants to
purchase 512,820 shares of Class A Common Stock for a period of five years at an
exercise price of $1.95 per share (the fair market value on the date of grant)
and has registered the shares to be acquired upon exercise. This guarantee is no
longer in place.
The Company has a severance agreement and deferred compensation
arrangement with Mr. Cullens, the Chief Executive Officer of the Company. See
the related description above under "Employment and Severance Agreements."
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the beneficial holdings (and the
percentages of outstanding shares represented by such beneficial holdings) as of
July 21, 2003, of (i) each person (including any "group" as defined in Section
13(d)(3) of the Securities Exchange Act of 1934) known by the Company to own
beneficially more than 5% of either class of its outstanding Common Stock, (ii)
each director, (iii) each executive officer identified by name in the summary
compensation table below, and (iv) all directors and executive officers as a
group. Except as otherwise indicated, the Company believes that the beneficial
owners of the Common Stock listed below, based on information provided by such
owners, have sole investment and voting power with respect to such shares,
subject to community property laws where applicable. Under Rule 13d-3 of the
Exchange Act, persons who have the power to vote or dispose of Common Stock of
the Company, either alone or jointly with others, are deemed to be beneficial
owners of such Common Stock.
STOCKHOLDERS, NUMBER OF NUMBER OF PERCENT OF PERCENT OF PERCENT OF
NAMED EXECUTIVE CLASS A CLASS B CLASS A CLASS B TOTAL VOTING
OFFICERS AND DIRECTORS SHARES(1)(2) SHARES(2) COMMON STOCK COMMON STOCK POWER(3)
------------------------------- ------------------------------- ------------ ------------ -----------
Robert C. Penny III........... -- 14,826,886(4) -- 84.5% 49.7%
Melvin J. Simon............... 145,250(5) 16,201,848(4) (6) * 92.3% 54.4%
Becker Capital Management (7). 4,316,625 -- 8.8% -- 3.6%
E. Van Cullens..................... 948,799 -- 1.9% -- *
John W. Seazholtz............. 135,250 -- * -- *
Nicholas C. Hindman, Sr....... 189,061 -- * -- *
William J. Noll............... 288,226 -- * -- *
John C. Clark...................... 28,763 -- * -- *
Paul A. Dwyer................. 193,650 -- * -- *
Bernard F. Sergesketter....... 43,650 -- * -- *
Roger L. Plummer.................. 18,000 -- * -- *
All Directors and Executive
Officers as a group (13 Persons) 2,021,649 4.1% 1.7%
------------------
* Less than 1%
(1) Includes options to purchase shares that are exercisable within 60 days of July 21, 2003 as follows: Mr. Cullens: 901,799
shares; Mr. Simon: 133,750 shares; Mr. Noll: 270,750 shares; Mr. Dwyer: 176,650 shares; Mr. Seazholtz: 118,250 shares; Mr.
Sergesketter: 33,650 shares; Mr. Hindman: 179,061 shares; Mr. Clark: 28,763 shares; Mr. Plummer: 13,000 shares; and all
directors and officers as a group: 1,855,673 shares.
(2) Holders of Class B Common Stock have four votes per share and holders of Class A Common Stock have one vote per share. Class
A Common Stock is freely transferable and Class B Common Stock is transferable only to certain transferees but is convertible
into Class A Common Stock on a share-for-share basis.
(3) Percentage of beneficial ownership is based on 49,206,255 shares of Class A Common Stock and 17,550,860 shares of Class B
Common Stock outstanding as of July 21, 2003.
(4) Includes 14,826,886 shares of Class B Common Stock held by Messrs. Penny and Simon, as Trustees pursuant to a Voting Trust
Agreement dated February 23, 1994, as amended (the "Voting Trust"), among Robert C. Penny III and Melvin J. Simon, as
trustees (the "Trustees"), and certain members of the Penny family and the Simon family. The Trustees have joint voting and
dispositive power over all shares in the Voting Trust. Messrs. Penny and Simon each disclaim beneficial ownership with
respect to all shares held in the Voting Trust in which they do not have a pecuniary interest. The Voting Trust contains
3,158,631 shares held for the benefit of Mr. Penny and 237,804 shares held for the benefit of Mr. Simon. The address for
Messrs. Penny and Simon is Melvin J. Simon & Associates, Ltd., 4343 Commerce Court, Suite 306, Lisle, Illinois 60532.
(5) Includes 9,500 shares owned by Stacy L. Simon, Melvin J. Simon's daughter, and 2,000 shares held in trust for the benefit of
Makayla G. Penny, Mr. Penny's daughter, for which Mr. Simon is trustee and has sole voting and dispositive power; Mr. Simon
disclaims beneficial ownership of these shares.
(6) Includes 45,980 shares held in trust for the benefit of Sheri A. Simon and 45,980 shares held in trust for Stacy L. Simon,
Melvin J. Simon's daughters, for which Natalie Simon, Mr. Simon's wife, is custodian and has sole voting and dispositive
power. Includes: 1,283,002 shares held in trust for the benefit of Mr. Penny's children for which Mr. Simon is trustee and
has sole voting and dispositive power. Mr. Simon disclaims beneficial ownership of these shares.
(7) The Class A Common stock listed in the table is owned of record by clients of Becker Capital Management, Inc. In its capacity
as an investment advisor, Becker Capital Management, Inc. may be deemed to beneficially own the shares listed in the table.
The address for this stockholder is 1211 SW 5th Avenue, Portland, Oregon 97204.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Since 1984, Melvin J. Simon & Associates, Ltd. has provided accounting
and other financial services to the Company. Mr. Simon, a director and the
Assistant Secretary of the Company and Co-Trustee of the Voting Trust, is the
sole owner of Melvin J. Simon & Associates, Ltd. The Company paid Melvin J.
Simon & Associates, Ltd. approximately $18,236, $36,845 and $3,448 in fiscal
2001, 2002 and 2003, respectively, for its services. The Company believes that
these services are provided on terms no less favorable to the Company than could
be obtained from unaffiliated parties.
The Company has granted Robert C. Penny III and Melvin J. Simon, as
Trustees of the Voting Trust, certain registration rights with respect to the
shares of Common Stock held in the Voting Trust.
In June 2001, trusts for the benefit of Robert C. Penny III, a director
of the Company, and other Penny family members, entered into a guaranty of $10
million of the Company's obligations under its revolving credit facility. In
consideration of the guarantee, the Company has granted those trusts warrants to
purchase 512,820 shares of Class A Common Stock for a period of five years at an
exercise price of $1.95 per share (the fair market value on the date of grant)
and agreed to grant registration rights with respect to shares acquired upon
exercise. This guarantee is no longer in place.
The Company has a severance agreement and deferred compensation
arrangement with Mr. Cullens, the Chief Executive Officer of the Company. See
"Executive Compensation."
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) (1) Financial Statements (previously filed)
--------------------
The consolidated financial statements of Westell
Technologies, Inc. at March 31, 2003 and 2002 and for
each of the three fiscal years in the period ended
March 31, 2003, together with the Report of
Independent Auditors, are set forth on pages 46
through 71 of this Report.
The supplemental financial information listed and
appearing hereafter should be read in conjunction
with the consolidated financial statements included
in the report.
(2) Financial Statement Schedule (previously filed)
----------------------------
The following are included in Part IV of this Report
for each of the years ended March 31, 2001, 2002 and
2003 as applicable:
Schedule II - Valuation and Qualifying Accounts -
page 71
Financial statement schedules not included in this
report have been omitted either because they are not
applicable or because the required information is
shown in the consolidated financial statements or
notes thereto, included in this report.
(3) Exhibits
--------
3.1 Amended and Restated Certificate of
Incorporation, as amended (incorporated
herein by reference to Exhibit 3.12 to the
Company's Quarterly Report on Form 10-Q for
the quarter ended December 31, 2001).
3.2 Amended and Restated By-laws laws
(incorporated by reference to Exhibit 3.1 to
the Company's Annual Report on Form 10-K for
the year ended March 31, 2001).
4.1 Form of Stock Purchase Warrant dated April
15, 1999 by and among Westell Technologies,
Inc., Castle Creek Technology Partners LLC
(409,091 shares), Marshall Capital
Management, Inc. (272,727 shares), and
Capital Ventures International (227,273
shares) (incorporated herein by reference to
Westell Technologies, Inc.'s Report on Form
8-K dated April 20, 1999).
4.2 Amended and Restated Certificate of
Incorporation, as amended (See exhibit 3.1).
4.3 Amended and Restated By-laws (see
Exhibit 3.2).
4.4 Form of Warrant granted to certain Penny
family trusts on June 29, 2001 (incorporated
herein be reference to Exhibit 10.21 to the
Company's Annual Report on Form 10-K for the
year ended March 31, 2001).
9.1 Voting Trust Agreement dated February 23,
1994, as amended (incorporated herein by
reference to Exhibit 9.1 to Westell
Technologies, Inc.'s Registration Statement
on Form S-1, as amended, Registration No.
33-98024).
10.1 Intentionally omitted.
10.2 Stock Transfer Restriction Agreement entered
into by members of the Penny family, as
amended, (incorporated herein by reference
to Exhibits 10.4 and 10.16 to Westell
Technologies, Inc.'s Registration Statement
on Form S-1, as amended, Registration No.
33-98024).
10.3 Form of Registration Rights Agreement among
the Company and Robert C. Penny III and
Melvin J. Simon, as trustees of the Voting
Trust dated February 23, 1994 (incorporated
herein by reference to Exhibit 10.5 to
Westell Technologies, Inc.'s Registration
Statement on Form S-1, as amended,
Registration No. 33-98024).
*10.4 1995 Stock Incentive Plan (incorporated
herein by reference to Exhibit 10.6 to
Westell Technologies, Inc.'s Registration
Statement on Form S-1, as amended,
Registration No. 33-98024).
*10.5 Employee Stock Purchase Plan (incorporated
herein by reference to Exhibit 10.7 to
Westell Technologies, Inc.'s Registration
Statement on Form S-1, as amended,
Registration No. 33-98024).
*10.6 Teltrend Inc. 1995 Stock Option
Plan.(incorporated by reference to the
Teltrend, Inc.'s Registration Statement on
Form S-1, as amended (Registration No.
33-91104), originally filed with the
Securities and Exchange Commission April 11,
1995)
*10.7 Teltrend Inc. 1996 Stock Option Plan
(incorporated by reference to the Teltrend
Inc.'s Quarterly Report on Form 10-Q for the
quarterly period ended April 26, 1997).
*10.8 Teltrend Inc. 1997 Non-Employee Director
Stock Option Plan (incorporated by reference
to the Teltrend Inc.'s Definitive Proxy
Statement for the Annual Meeting of
Stockholders held on December 11, 1997).
*10.9 Deferred Compensation Arrangement between
Westell Technologies, Inc. and E. Van
Cullens.+
*10.10 Severance Agreement between Conference Plus,
Inc. and Tim Reedy.+
10.11 Lease dated September 25, 1995 between
Westell-Meridian LLC and Westell, Inc.
(incorporated herein by reference to Exhibit
10.11 to Westell Technologies, Inc.'s
Registration Statement on Form S-1, as
amended, Registration No. 33-98024)
10.12 Amended and Restated Loan and Security
Agreement dated August 31, 2000 among
LaSalle National Bank, Harris Bank National
Association, Westell Technologies, Inc.,
Westell, Inc., Westell International, Inc.,
Conference Plus, Inc. and Teltrend, Inc.
(incorporated by reference to the like
numbered exhibit to Company's Annual Report
on Form 10-K for the year ended March 31,
2001).
10.14 Intentionally omitted.
10.15 Revolving Note dated as of June 29, 2001
payable to LaSalle National Bank and made by
Westell Technologies, Inc., Westell, Inc.,
Westell International, Inc., Conference
Plus, Inc. and Teltrend, Inc. (incorporated
by reference to the like numbered exhibit to
Company's Annual Report on Form 10-K for the
year ended March 31, 2001).
10.16 Amended and Restated Loan and Security
Agreement dated June 29, 2001 among LaSalle
National Bank, Westell Technologies, Inc.,
Westell, Inc., Westell International, Inc.,
Conference Plus, Inc. and Teltrend, Inc.
(incorporated by reference to the like
numbered exhibit to Company's Annual Report
on Form 10-K for the year ended March 31,
2001).
10.17 Lease for Three National Plaza at Woodfield
dated December 24, 1991 by and between the
First National Bank of Boston, as Trustee
pursuant to that certain Pooling and
Security Agreement dated April 1, 1988, and
Conference Plus, Inc., as amended and
modified. (incorporated herein by reference
to Exhibit 10.17 to the Company's Form 10-K
for fiscal year ended March 31, 1996).
10.18 Lease dated December 10, 1993 between
LaSalle National Trust, N.A., as Trustee
under Trust Agreement dated August 1, 1979,
known as Trust No. 101293, and Westell
Incorporated, as amended and modified
(incorporated herein by reference to the
exhibit of equal number to the Company's
Form 10-K for fiscal year ended March 31,
1996).
10.19 Amendment to Amended and Restated Loan and
Security Agreement dated February 15, 2001
among LaSalle National Bank, Harris Trust
and Savings Bank, Westell Technologies,
Inc., Westell, Inc., Westell International,
Inc., Conference Plus, Inc., and Teltrend,
Inc. (incorporated by reference to Exhibit
10.1 to the Company's Form 10-Q for the
period ended December 31, 2000).
10.20 Amendment to Amended and Restated Loan and
Security Agreement dated April 13, 2001
among LaSalle National Bank, Harris Trust
and Savings Bank, Westell Technologies,
Inc., Westell, Inc., Westell International,
Inc., Conference Plus, Inc., and Teltrend,
Inc. (incorporated by reference to Exhibit
10.18 to the Company's Report on Form 8-K
filed on April 17, 2001).
10.21 Sixth Amendment to the Amended and Restated
Loan and Security Agreement dated as of June
29, 2001 among LaSalle National Bank, Harris
Trust and Savings Bank, the Company,
Westell, Inc., Westell International, Inc.,
Conference Plus, Inc. and Teltrend,
Inc.(incorporated by reference to Exhibit
10.21 to the Company's Annual Report on Form
10-K for the year ended March 31, 2002).
10.22 Amendment To Amended And Restated Loan And
Security Agreement dated as of October 30,
2001, among LaSalle Bank National
Association, Westell Technologies, Inc.,
Westell International, Inc., Conference
Plus, Inc. and Teltrend, Inc. (incorporated
herein by reference to Exhibit 10.22 to the
Company's Quarterly Report on Form 10-Q for
the quarter ended September 30, 2001).
*10.23 Severance Agreement date June 28, 2001, by
and between Westell, Inc and E. Van Cullens
(incorporated herein by reference to Exhibit
10.23 to the Company's Quarterly Report on
Form 10-Q for the quarter ended September
30, 2001).
*10.24 Employment Letter dated June 28, 2001
between Westell Technologies, Inc. and E.
Van Cullens (incorporated herein by
reference to Exhibit 10.24 to the Company's
Quarterly Report on Form 10-Q for the
quarter ended September 30, 2001).
10.25 Seventh Amendment to the Amended and
Restated Loan and Security Agreement dated
as of June 26, 2003 among LaSalle National
Bank, the Company, Westell, Inc, Westell
International, Inc. Conference Plus, Inc.
and Teltrend, Inc. (incorporated by
reference to Exhibit 10.25 to the Company's
Annual Report on Form 10-K for the year
ended March 31, 2003).
21.1 Subsidiaries of the Registrant (incorporated
by reference to Exhibit 21.1 to the
Company's Annual Report on Form 10-K for the
year ended March 31, 2001).
23.1 Consent of Ernst & Young LLP +.
32 Certification of the Chief Executive Officer
and Chief Financial Officer.
+Previously filed.
*Management contract or compensatory plan or
arrangement.
(b) Reports on Form 8-K
-------------------
None
(c) Exhibits
--------
The exhibits filed as part of this Annual Report on Form 10-K are
as specified in Item 15(a)(3) herein.
(d) Financial Statement Schedules
-----------------------------
The financial statement schedules filed as part of this Annual Report
on Form 10-K are as specified in Item 14(a)(2) herein.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
and Exchange Act of 1934, the registrant has duly caused this amendment to its
report on Form 10-K to be signed on its behalf by the undersigned, thereunto
duly authorized on July 29, 2003.
WESTELL TECHNOLOGIES, INC.
/s/ Nicholas C. Hindman
Chief Financial Officer
Date: July 30, 2003
CERTIFICATION
I, E. Van Cullens, certify that:
1. I have reviewed this amendment to the annual report on Form 10-K of
Westell Technologies, Inc.;
2. Based on my knowledge, this amendment to the annual report does not
contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of
the circumstances under which such statements were made, not
misleading with respect to the period covered by this amendment to
the annual report;
3. Based on my knowledge, the financial statements, and other
financial information included in this amendment to the annual
report, fairly present in all material respects the financial
condition, results of operations and cash flows of the registrant
as of, and for, the periods presented in this amendment to the
annual report;
4. The registrant's other certifying officers and I are responsible
for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-14 and 15d-14) for the
registrant and have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
amendment to the annual report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date
of this amendment to the annual report (the "Evaluation Date"); and
c) presented in this amendment to the annual report our conclusions
about the effectiveness of the disclosure controls and procedures
based on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed,
based on our most recent evaluation, to the registrant's auditors
and the audit committee of registrant's board of directors (or
persons performing the equivalent functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in
this amendment to the annual report whether there were significant
changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date of
our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Date: July 30, 2003
/s/ E. VAN CULLENS
------------------
E. Van Cullens
President and Chief Executive Officer
CERTIFICATION
I, Nicholas C. Hindman, Sr., certify that:
1. I have reviewed this amendment to the annual report on Form 10-K of
Westell Technologies, Inc.;
2. Based on my knowledge, this amendment to the annual report does not
contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of
the circumstances under which such statements were made, not
misleading with respect to the period covered by this amendment to
the annual report;
3. Based on my knowledge, the financial statements, and other
financial information included in this amendment to the annual
report, fairly present in all material respects the financial
condition, results of operations and cash flows of the registrant
as of, and for, the periods presented in this amendment to the
annual report;
4. The registrant's other certifying officers and I are responsible
for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-14 and 15d-14) for the
registrant and have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
amendment to the annual report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date
of this amendment to the annual report (the "Evaluation Date"); and
c) presented in this amendment to the annual report our conclusions
about the effectiveness of the disclosure controls and procedures
based on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed,
based on our most recent evaluation, to the registrant's auditors
and the audit committee of registrant's board of directors (or
persons performing the equivalent functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in
this amendment to the annual report whether there were significant
changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date of
our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Date: July 30, 2003
/s/ NICHOLAS C. HINDMAN, Sr.
-----------------------------
Nicholas C. Hindman, Sr.
Treasurer, Secretary, Senior Vice President
and Chief Financial Officer