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On a GAAP basis, the company reported a
net loss of $(5.5) million, or ($0.09) per share. This compares with net
loss of $(3.6) million, or $(0.06) per share in Q2 and net income of
$3.7 million, or $0.06 per diluted share in the third quarter of 2004.
Excluding amortization of acquired
intangibles and deferred stock compensation of an aggregate of $1.1
million in the third and second quarter of 2005, and $0.7 million in the
third quarter of 2004, on a non-GAAP basis, Q3 net loss was $(4.4)
million, or ($0.07) per share, compared with net loss of $(2.5) million,
or $(0.04) per share in the prior quarter, and a non-GAAP net profit of
$4.4 million, or $0.07 per diluted share in Q3 of 2004. See attached
table showing the reconciliation of GAAP to non-GAAP figures.
Comments of Management
"Q3 included several important achievements including the excellent
demand for our new subscriber unit using Intel's WiMAX chip during its
first month of availability and the recent large orders secured for our
cellular mobile solution," said Tzvika Friedman, CEO of Alvarion. "We
view these as positive signs for the future.
"We continue to invest aggressively for
our long-term future. Our increase in operating expenses versus a year
ago reflects our focus on the successful integration of the compact
cellular operations plus a very strong commitment to future versions of
the 802.16 standard and the development of portable and mobile WiMAX
solutions.
"From a strategic perspective, our
progress is demonstrated by more than 30 commercial deployments of our
solution based on the 802.16 WiMAX standard. BreezeMAX revenue grew
again in Q3 to reach 20% of total revenue. Our advanced, feature-rich
solution, combined with our depth of experience and clear roadmap, is
responsible for our leading the industry in commercial deployments and
WiMAX-related revenue. The next milestone will be the first shipments of
our advanced indoor self-install version of the Intel-based CPE with
switching antennas and subchannelization support. We believe that the
availability of self-install products will be a catalyst for growth of
the industry and of our growth next year."
Strategic Initiatives
"There are several elements of our strategy to grow revenue and improve
profitability," continued Mr. Friedman. "We plan to maintain and
reinforce our position as the market leader in fixed wireless broadband
by continuing to introduce standards-based, feature-rich solutions that
improve the business case of the operators. We also intend to leverage
our technology, know-how, brand name recognition, and our position as
the largest player in broadband wireless access business, plus our
field-experience and strategic relationships, to become an early leader
in the promising area of mobile WiMAX. Mobile broadband will be a very
large market and we believe that it will be served by multiple
technologies, including WiMAX. We see attractive opportunities in both
fixed and mobile WiMAX, and everything in-between such as portable
solutions, for years to come.
"To accelerate our growth in the
compact cellular market, we will continue utilizing our operating skills
to expand channels, improve processes, and continue product innovation.
Projects like the ones with Outremer and Cable & Wireless clearly
demonstrate that we are gaining traction and we are optimistic about
winning additional projects.
"Next year we will transition to a more
decentralized structure with fewer layers of management as part of
organizing the company to focus all types of fixed broadband wireless
access, portable and mobile WIMAX, and compact cellular solutions,"
added Mr. Friedman. "We will have three operating units: Broadband
Wireless Access, Cellular Mobile and Broadband Mobile, each with its own
R&D, business development and marketing functions and with a senior
executive in charge of the unit. In addition, we will have a single
sales and support unit that will be responsible for all customers across
all product lines, as well as a unified corporate operations group to
improve efficiency and promote best practices across the entire
organization. We are creating a structure that puts strong managers in
charge of each of our key initiatives, enables us to maintain the
flexibility to adjust to changing market dynamics, and supports our
future growth."
Q4 Guidance
The Company's revenue guidance for Q4 2005 is $45 million to $50
million. At this revenue range, per share results are expected to range
between a loss of 5 and 9 cents per share, while the non-GAAP loss per
share, which excludes amortization of intangibles and deferred stock
compensation, is expected to range between 3 and 7 cents.
Alvarion's management will host a
conference call today, November 9, at 9:00 a.m. Eastern Time to discuss
the quarter. To participate in the call, please dial one of the
following numbers approximately five minutes prior to the scheduled
start time: USA: (612) 332-0228; International: +1-(612) 332-0228.
The public is invited to listen to the
live webcast of the conference call. For details please visit Alvarion's
website at
www.alvarion.com. An archive of the on-line broadcast will be
available on the website. A replay of the call will be available from
12:30 p.m. EDT on November 9 through 11:59 p.m. EDT on November 16,
2005. To access the replay, please call USA: 320-365-3844,
International: +1-320-365-3844. To access the replay, users will need to
enter the following code: 798762.
About Alvarion
With more than 2 million units deployed in 130 countries, Alvarion is
the worldwide leader in wireless broadband, providing systems to
carriers, ISPs and private network operators, and also in extending
coverage of GSM and CDMA mobile networks to developing countries and
other hard to serve areas.
Leading the WiMAX revolution, Alvarion
has the most extensive deployments and proven product portfolio in the
industry covering the full range of frequency bands with both fixed and
mobile solutions. Alvarion's products enable the delivery of business
and residential broadband access, corporate VPNs, toll quality
telephony, mobile base station feeding, hotspot coverage extension,
community interconnection, public safety communications, and mobile
voice and data. Alvarion works with several global OEM providers and
more than 200 local partners to support its diverse global customer base
in solving their last-mile challenges.
As a wireless broadband pioneer,
Alvarion has been driving and delivering innovations for more than 10
years from core technology developments to creating and promoting
industry standards. Leveraging its key roles in the IEEE and HiperMAN
standards committees and experience in deploying OFDM-based systems, the
Company's prominent work in the WiMAX Forum(TM) is focused on increasing
the widespread adoption of standards-based products in the wireless
broadband market and leading the entire industry to mobile WiMAX
solutions.
For more information, visit Alvarion's
World Wide Web site at
www.alvarion.com
This press release contains
forward-looking statements within the meaning of the "safe harbor"
provisions of the Private Securities Litigation Reform Act of 1995.
These statements are based on the current expectations or beliefs of
Alvarion's management and are subject to a number of factors and
uncertainties that could cause actual results to differ materially from
those described in the forward -looking statements. The following
factors, among others, could cause actual results to differ materially
from those described in the forward-looking statements: inability to
further identify, develop and achieve market success for new products,
services and technologies, including the WiMAX and cellular mobile
product offerings; increased competition and its effect on pricing,
spending, third-party relationships and revenues, as well as the in
ability to establish and maintain relationships with commerce,
advertising, marketing, and technology providers and other risks
detailed from time to time in filings with the Securities and Exchange
Commission. In addition, our limited history in completing acquisitions
may adversely impact our ability to successfully integrate the business
of Alvarion and interWAVE, we may face liabilities and expenses in
excess of those currently anticipated with respect to the acquisition of
interWAVE; and we may be unable to retain key personnel of interWAVE.
Certain information set forth in this
press release pertaining to third parties has not been independently
verified by Alvarion and is based solely on publicly available
information or on information provided to Alvarion by such third parties
for inclusion in this press release. The web sites appearing in this
press release are not and will not be included or incorporated by
reference in any filing made by Alvarion with the Securities and
Exchange Commission, which this press release will be a part of.
You may request Alvarion's future press
releases or a complete Investor Kit by contacting Carmen Deville,
Investor Relations:
carmen.deville@alvarion.com or +1.650.314.2653.
ALVARION LTD.& ITS SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands
September 30, December 31,
2005 2004
------------- -------------
ASSETS
Cash, cash equivalents, short-term and
long-term investments $ 121,354 $ 132,682
Trade receivables 37,121 28,148
Other accounts receivable 7,238 6,492
Inventories 45,592 41,328
Severance pay fund 7,532 7,025
Long-term receivables 365 456
PROPERTY AND EQUIPMENT, NET 11,624 11,925
GOODWILL AND OTHER INTANGIBLE ASSETS 97,203 100,479
------------- -------------
TOTAL ASSETS $ 328,029 $ 328,535
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Trade payables $ 35,177 $ 26,481
Other accounts payable and accrued
expenses 53,451 55,611
------------- -------------
Total current liabilities 88,628 82,092
LONG TERM LIABILITIES 1,725 3,505
ACCRUED SEVERANCE PAY 10,614 10,126
------------- -------------
TOTAL LIABILITIES 100,967 95,723
SHAREHOLDERS' EQUITY 227,062 232,812
------------- -------------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $ 328,029 $ 328,535
============= =============
ALVARION LTD.& ITS SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
U.S. dollars in thousands (except per share data)
Nine Nine Three Three Three
Months Months Months Months Months
Ended Ended Ended Ended Ended
September September September September June
30, 30, 30, 30, 30,
--------- --------- --------- --------- --------
2005 2004 2005 2004 2005
--------- --------- --------- --------- --------
Sales $ 149,232 $ 145,629 $ 45,016 $ 52,178 $46,983
Cost of sales 80,808 82,413 24,917 29,049 25,152
--------- --------- --------- --------- --------
Gross profit 68,424 63,216 20,099 23,129 21,831
--------- --------- --------- --------- --------
Operating expenses:
Research and
development, net 29,142 20,218 9,748 6,744 10,038
Selling and marketing 36,210 29,036 12,150 10,543 12,071
General and
administrative 8,967 7,019 3,193 2,412 2,924
Amortization of
acquired current
technology, customer
relationships and
trademarks 3,278 2,007 1,091 669 1,093
Amortization of
deferred stock
compensation 552 33 11 11 11
Acquisition related
expenses 868 - - - -
--------- --------- --------- --------- --------
Total Operating
expenses 79,017 58,313 26,193 20,379 26,137
--------- --------- --------- --------- --------
Operating income
(loss) (10,593) 4,903 (6,094) 2,750 (4,306)
Financial income, net 1,870 2,702 576 920 745
--------- --------- --------- --------- --------
Net Income (loss) $ (8,723)$ 7,605 $ (5,518)$ 3,670 $(3,561)
--------- --------- --------- --------- --------
Basic earnings (loss)
per share $ (0.15)$ 0.14 $ (0.09)$ 0.06 $ (0.06)
========= ========= ========= ========= ========
Weighted average
number of shares
used in computing
basic earnings
(loss) per share 58,513 56,190 58,983 56,885 58,463
========= ========= ========= ========= ========
Diluted earnings
(loss) per share $ (0.15)$ 0.12 $ (0.09)$ 0.06 $ (0.06)
========= ========= ========= ========= ========
Weighted average
number of shares
used in computing
diluted earnings
(loss) per share 58,513 63,598 58,983 63,837 58,463
========= ========= ========= ========= ========
ALVARION LTD. & ITS SUBSIDIARIES
DISCLOSURE OF NON-US GAAP NET INCOME (LOSS)
FOR COMPARATIVE PURPOSES NET INCOME (LOSS) AND EARNINGS (LOSS) PER
SHARE EXCLUDING AMORTIZATION OF ACQUIRED INTANGIBLES, DEFERRED STOCK
COMPENSATION AND OTHER ACQUISITION RELATED EXPENSES
U.S. dollars in thousands (except per share data)
Nine Nine Three Three Three
Months Months Months Months Months
Ended Ended Ended Ended Ended
September September September September June
30, 30, 30, 30, 30,
--------- --------- --------- --------- -------
2005 2004 2005 2004 2005
--------- --------- --------- --------- -------
Net Income (loss)
according to US GAAP $ (8,723) $ 7,605 $ (5,518) $ 3,670 $(3,561)
Amortization of
acquired current
technology, customer
relationships and
trademarks 3,278 2,007 1,091 669 1,093
Amortization of
deferred stock
compensation 552 33 11 11 11
Acquisition related
expenses 868 - - - -
--------- --------- --------- --------- -------
Net Income (loss)
excluding
amortization of
intangibles and
deferred stock
compensation and
acquisition related
expenses $ (4,025) $ 9,645 $ (4,416) $ 4,350 $(2,457)
========= ========= ========= ========= =======
Basic net earnings
(loss) per share,
excluding
amortization of
intangibles and
deferred stock
compensation and
acquisition related
expenses $ (0.07) $ 0.17 $ (0.07) $ 0.08 $(0.04)
========= ========= ========= ========= =======
Weighted average number
of shares used in
computing basic net
earnings (loss) per
share 58,513 56,190 58,983 56,885 58,463
========= ========= ========= ========= =======
Diluted net earnings
(loss) per share,
excluding
amortization of
intangibles and
deferred stock
compensation and
acquisition related
expenses $ (0.07) $ 0.15 $ (0.07) $ 0.07 $(0.04)
========= ========= ========= ========= =======
Weighted average number
of shares used in
computing diluted net
earnings (loss) per
share 58,513 63,598 58,983 63,837 58,463
========= ========= ========= ========= =======
ALVARION LTD.& ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
Three
Months ended
September 30,
--------------
2005
--------------
Cash flows from operating activities:
Net loss $ (5,518)
Adjustments to reconcile net income to net cash used
by operating activities:
Depreciation 1,341
Amortization of deferred stock compensation 11
Unrealized gain from derivative financial instruments 191
Amortization of intangibles 1,091
Increase in trade receivables (694)
Increase in other accounts receivable and prepaid
expenses (1,428)
Increase in inventories (5,950)
Increase in trade payables 3,166
Decrease in Long term receivables 26
Increase in other accounts payables and accrued
expenses 4,969
Accrued severance pay, net (126)
--------------
Net cash used in operating activities (2,921)
Cash flows from investing activities:
Purchase of fixed assets (1,051)
--------------
Net cash used in investing activities (1,051)
Cash flows from financing activities:
Proceeds from exercise of employees' stock options 408
--------------
Net cash provided by financing activities 408
--------------
Decrease in cash, cash equivalents, short-term and
long-term investments (3,564)
--------------
Cash, cash equivalents, short-term and long-term
investments at the beginning of the period 124,918
--------------
Cash, cash equivalents, short-term and long-term
investments at the end of the period $ 121,354
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