what do you see? - Telular

what do you see?
Telular Corporation 2008 Annual Report

We see connections

Voice and Data Solutions
In 1983, analog cellular service, or Advanced Mobile
Phone Service (AMPS), was launched in Chicago, IL.
Just three years later, Telular launched the world’s first
fixed cellular terminal (FCT), changing the way the world
saw both the cellular phone and the traditional landline.
At every point in the history of cellular, our products
have always offered customers freedom from being
tethered to dial-tone. As cellular technology evolved
from analog to digital, Telular’s products evolved too.
Twenty-two years later, the Company remains the
leader in this market segment with the launch of the
Phonecell ® SX6 and Wi-PATH ® SX7.
Today, people use fixed cellular terminals in many
unique ways, indicating the robustness and flexibility
of these solutions. Throughout the Americas these
devices leverage local trends and become the preferred
solution to innumerable communication challenges and
limitations. They bring dial tone into the home where
landline service continues to remain out of reach; they
offer a company’s phone system seamless access to
inexpensive cellular rates while those on hard lines
increase; and, they enable businesses to remain agile and
establish remote office communications by simply
plugging in a power cord.
Telular has always offered fixed cellular terminals to
early Latin American adopters of second generation
cellular technologies (GSM and CDMA). As standards
progressed, more countries launched networks, making
new protocol features mandatory. Telular is responding
to this growth with the Phonecell SX6. Serving as a
technology platform for numerous product derivatives,
the SX6 contains the essential features necessary to
expand Telular’s fixed cellular terminal distribution from
five to fifteen Latin American countries.
In April 2008, Telular officially launched its first 3G
cellular product, the Wi-PATH SX7. Subsequently, the
SX7 has been eagerly accepted into the certification
programs of over ten of North America’s top cellular
carriers. In addition, the wireless industry has
acknowledged the value of the SX7 by honoring it with
the Best of CTIA Award by Laptop magazine and the
Product Innovation Award by the Network Product
Guide. As high-speed cellular connectivity becomes
more pervasive and cost-effective, many consumers and
businesses are considering cellular as the alternative to,
not only voice, but also wired broadband and dialup.
The SX7 provides both services in one portable and
budget-friendly platform.
Through constant technology advancements, Telular
continues to deliver on the promise of flexible and costeffective
wireless solutions.
Telular’s fixed cellular terminals are a flexible and costeffective
solution for wireline replacement, portable dial
tone and least-cost routing. These robust terminals bridge
or extend the physical range of analog phones and digital
communications allowing end users to send voice, fax,
and data over cellular networks. Ideal for retail, remote and
temporary offices, government and industrial controls,
these units are easy to install and highly portable.

We see security

Security Solutions
February 18, 2008 marked the end of the analog
cellular technology and, in turn, the booming hardware
replacement trend that propelled Telular to become
leader in Global System for Mobile Communications
(GSM) cellular alarm communicators. Notwithstanding
the waning of this trend, ABI Research predicted in 2008
that the wireless alarm system market would increase
nearly three hundred percent from 2007 to 2013. More
people are choosing to forego the often unnecessary
cost of a traditional phone line in favor of their cellular
phones; wired alarm systems hold them back. As this
trend continues to build, Telular’s Telguard ® products
will enable them to finally break free from a wired
phone bill and embrace a completely wireless home.
Security alarm dealers are loyal to the brands they
install every day. By working closely with over three
thousand Telguard dealers, we know that products
offering the best installation efficiency and minimal post
installation maintenance are the qualities most sought
after to increase the profit from a security dealer’s core
financial metric: recurring monthly revenue. In 2008,
Telular launched the Telguard Digital TG-11, a product
designed from the ground up to allow security dealers
to maximize the profit from installing a cellular alarm
communicator. Dealer input was crucial to accomplish
this goal. Eliminating unnecessary power systems,
designing a tool-free installation, reducing the overall
footprint and allowing over-the-air panel maintenance
were all requested, and then delivered, in the TG-11.
Beyond launching a new product, Telular created new
product bundles and introduced new pricing – the
end result being a product line which addresses the full
scope of alarm installations and builds deeper loyalty
to the Telguard brand.
The Telguard Digital line maintains a strong reputation
in the security industry and has provided a strong
foothold for Telular in the machine-to-machine (M2M)
marketplace throughout the years. Our investment in
cellular alarm technology and product improvements will
continue to allow Telular to provide M2M solutions into
adjacent emerging markets.
Telguard ® Digital provides UL listed primary, backup or
dual cellular alarm communication solutions for the residential,
VoIP, small business, financial, commercial and fire system
markets. These time-tested cellular communicators transmit
full data from virtually all security and fire systems to central
stations using the nationwide cellular network. Interoperable
with the widest range of alarm panels, Telguard protects
nearly half a million homes and businesses throughout the U.S.

We see Efficiency

Machine to Machine Solutions
Many industries have started to look beyond the factory
floor for ways to achieve just-in-time efficiencies and
cost savings from their supply chains. Rising transportation
costs have further highlighted the need for improvements
beyond basic delivery route optimization for the
manufacturers and distributors of petroleum, chemicals
and other bulk commodity products. Leveraging today’s
pervasive cellular coverage, these companies finally
have access to solutions that can supply the essential
information needed to manage remote product
inventories.
In October 2008, Telular acquired SupplyNet, a leading
provider of remote monitoring solutions for inventory
management, replenishment and supply-chain applications.
Through this acquisition, Telular is positioned as a key
player in the use of machine-to-machine (M2M) wireless
solutions to improve supply chain efficiency. SupplyNet’s
TankLink solution consists of a specialty cellular
communicator that fits onto tanks and interfaces with
level sensors for bulk solids and liquids. The communicator
sends readings from those sensors over the cellular
network to Telular’s message processing center. From
there, the level readings are formatted and made
available to the tank owner, who then determines the
optimal delivery time for refilling the tanks. To match the
wide variability of both tanks and the materials they
contain, SupplyNet created a full range of tank monitors
suitable for indoor, outdoor and explosive environments.
They also provide the necessary features for remote
operation: multi-year battery life, weather proof
enclosures, local wireless networking, and text displays for
local supervision. In all, SupplyNet’s solution leverages the
same fundamentals of our Telguard security solutionspecialized
device, wireless network, and backend alerting.
Over the years, Telular has honed its experience at
operating the core building blocks of traditional M2M
solutions by managing hundreds of thousands of turnkey
Telguard connections. More than devices, networks and
data centers, Telular also operates a twenty-four hour
customer service and support facility. The scale achieved
by the Telguard solution is rare among the industry’s
existing specialized M2M solution providers. As we
bring additional M2M solutions to the market, our scale
will provide operational efficiencies and customer care
that exceed what can be achieved by today’s niche
M2M providers.
TankLink is a completely wireless tank-level monitoring
system for inventory management, replenishment and
supply-chain applications. Using state-of-the-art digital cellular
monitors, inventory levels are communicated in real-time
from storage tanks over the cellular network to the tank
owner, helping optimize the product replenishment process.
TankLink solutions serve a variety of markets including
chemicals, fuels, lubricants, bulk foods and commodities.

We see wireless communications,
s e c u r i t y a n d m o n i to r i n g s o l u t i o n s
for markets around the world.

Dear Shareholder
The past year has been an important one for Telular.
Since I assumed the role of CEO at the beginning of the
year, we finalized our exit of the fixed phone business;
capitalized on the long-awaited analog to digital
conversion in our Telguard business; began repurchasing
stock under a newly instituted share repurchase plan;
and just after the fiscal year ended, we closed an
acquisition in our key growth area – machine-tomachine
(M2M) communications. From a financial
perspective, we increased our income from continuing
operations in 2008 over 2007, despite somewhat lower
revenue; and more than doubled our cash position.
This is a tribute to the team’s careful management of
operating costs and dedicated focus on profitability.
We started 2008 with M2M as the new strategic focus
for Telular and we based this strategy on our key
strengths as a company:
• Designing specialty electronics for transmitting voice
and data over cellular
• The provision of cellular data services via resale
arrangements
• Operating a real-time, message and event
processing system
We have honed these strengths to a great extent
through the operation of our Telguard line of business
for the past ten years. It is our view that our success in
one of the oldest and largest M2M vertical markets –
security monitoring – indicates that we can achieve
even further success as more and more vertical
markets, outside of security, become economically
addressable as M2M applications.
In our Telguard business, we had sold a substantial
number of new units in advance of the analog sunset
date in February 2008. Afterwards, we experienced
a reduction in demand; most likely due to a
combination of factors, including conclusion of the
analog sunset peak demand, weakening of the housing
market, and increased competition. Nevertheless, we
ended fiscal 2008 with a record subscriber base of
427,000, an increase of 26% over fiscal 2007. Looking
forward, we continue to enhance our Telguard offering
and expect to grow its subscriber base and recurring
income stream for years to come. More importantly,
perhaps, is the fact that we can replicate the business
model for Telguard into other M2M applications,
such as tank-level monitoring.
Joseph A. Beatty

Through our October 1st acquisition of SupplyNet
Communications, we are a key player in the use of
M2M wireless solutions to improve supply chain
efficiency. SupplyNet’s TankLink solution mirrors the
functionality of our Telguard security solution but for a
different purpose – optimizing supply chain logistics.
We think it is an ideal M2M vertical market for us to
pursue and we are pleased to have partnered with
SupplyNet, through the acquisition, to enter this market.
Part of our success in any M2M vertical market will
be our ability to incorporate or develop a specialty
terminal product that will interface effectively and
efficiently with the asset that is being monitored. For
example, in our Telguard solution, we make terminals,
also called cellular communicators, which uniquely
interface with security panels. Similarly, in our TankLink
solution, we develop specialty terminals which fit
onto tanks and interface with liquid level sensors. This
expertise has been developed within Telular due to
our longstanding participation in the Fixed Cellular
Terminal (FCT) business. In our Terminals line of
business, we produce and market a line of general
purpose FCTs which allow end users to send voice, fax,
and data over cellular networks. These terminals are
used in developing countries that have inferior wireline
networks and in developed countries for specialty
applications, such as mobile command centers and
remote offices. Recently, we have refreshed our FCT
product line and we expect this line of business to
deliver strong revenue growth and continued
profitability in 2009.
Looking ahead, we plan to enter additional vertical
markets within M2M. Positively, we are well positioned
for expansion, with a very strong balance sheet
comprised of over $20 million in cash and no debt.
Moreover, we established a new $10 million
credit facility during fiscal 2008, should we require
additional capital.
In conclusion, I am very excited about the direction
in which Telular is moving. The Company is focused on
a number of strategic initiatives including broadening
our product lines, developing new partnerships,
expanding internationally, and advancing into new
verticals. We remain fully committed to repurchasing
stock under our share repurchase plan, maintaining a
strong balance sheet and executing on behalf of our
shareholders. We believe the combination of our solid,
core businesses layered with new growth initiatives
will position us for long-term growth and profitability.
I am thankful to our shareholders and employees for
their ongoing support and dedication.
Best Regards,
Joseph A. Beatty
President and Chief Executive Officer

Board of
M a n ag e m e n t
Investor
C o n tac t
Directors
team
Information
Information
John E. Berndt
Chairman of the Board
Telular Corporation
Lawrence S. Barker
President and
Chief Executive Officer
Aptela Corporation
Joseph A. Beatty
President and
Chief Executive Officer
Telular Corporation
Betsy J. Bernard
Former President
AT&T Corporation
Brian J. Clucas
V.P. Audit Services
Illinois Tool Works
Larry J. Ford
Former Senior Vice President
ADC Telecommunications, Inc.
M. Brian M c Carthy
President and
Chief Executive Officer
Trax Technologies Inc.
Joseph A. Beatty
President and Chief
Executive Officer
Christopher Bear
Vice President,
Product Development
George S. Brody
Senior Vice President,
Terminals and Telguard
Jonathan Charak
Senior Vice President and
Chief Financial Officer
John Crump
Vice President,
M2M Sales and Services
Jerry Deutsch
Senior Vice President,
Manufacturing & Operations
Corporate Headquarters:
311 South Wacker Drive
Suite 4300
Chicago, Illinois 60606
www.telular.com
Registrar and Transfer
Agent:
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Services
2 North LaSalle Street
Chicago, Illinois 60602
Stock Exchange Listing
Nasdaq: WRLS
Investor Relations
Blueshirt Group
456 Montgomery Street,
11th Floor
San Francisco, California 94104
phone: 1-415-217-7722
Telular Corporation
Corporate Headquarters
phone: 1-800-TELULAR
email: sales@telular.com
Latin America – International
phone: 1-954-217-0522
email: miami@telular.com
Telguard Security
Products
phone: 1-800-229-2326
email: TelguardSales@telular.com
Shawn Welsh
Vice President, Marketing &
Business Development
Please e-mail all Investor
Relations questions to
investor@telular.com
o’connor design, glen ellyn, IL
Robert L. Deering
Controller, Treasurer and
Chief Accounting Officer