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Alvarion(R) Reports Record Revenues for First Quarter 2008
TEL AVIV, Israel --(Business Wire)-- Alvarion Ltd. (NASDAQ: ALVR), the world's leading provider of WiMAX(TM) and wireless broadband solutions, today announced financial results for the first quarter ended March 31, 2008.
Highlights:
-- Record revenues of $67.2 million, up 29% from Q1 2007
-- Non-GAAP EPS of $0.03; GAAP loss per share of ($0.01)
-- Cash reserves increased to $148 million
-- Record WiMAX revenues of $40 million, up 58% from Q1 2007
-- Cumulative WiMAX shipments of $300 million
In the first quarter of 2008, revenues increased to $67.2 million, a 29% increase from $52.1 million in the first quarter of 2007, and a 1% increase from $66.3 million in the fourth quarter of 2007. BreezeMAX(R) revenues in Q1 2008 were approximately $40 million, or about 60% of total revenues, compared to about $36 million or about 55% of total revenues, in Q4.
GAAP net loss in the first quarter of 2008 was ($601,000), or ($0.01) per share, compared to a GAAP net loss of ($623,000), or ($0.01) per share, in Q1 of 2007, and GAAP net income of $12.4 million, or $0.19 per share, in Q4 2007, which included non-recurring other income of $8.3 million, representing mainly the additional consideration received from the sale of Alvarion's equity investment in LGC Wireless Inc. (LGC) and the promissory notes and $3.6 million of income from discontinued operations.
Excluding discontinued operations, amortization of acquired intangibles, stock based compensation expenses and other income, the company reported a non-GAAP net profit of $2.0 million, or $0.03 per diluted share, compared with a non-GAAP net profit of $1.3 million, or $0.02 per diluted share, in Q1 2007, and $3.1 million, or $0.05 per diluted share, in the fourth quarter of 2007. The sequential decline in net income was primarily the result of unfavorable currency exchange rates.
During Q1 2008, the company generated positive cash flow of approximately $9.2 million, of which about $8.8 million was received from ADC Telecommunications Inc. (ADC), representing the remainder of the payment of the LGC notes the company held as a result of selling the CMU unit to LGC. The payment followed the acquisition of LGC by ADC in Q4 of 2007. Cash reserves as of March 31, 2008 totaled approximately $148 million, up from about $139 million in the previous quarter.
For supplemental information to facilitate evaluation of the impact of non-cash charges and comparisons with historical results of continuing and discontinued operations, see the attached table showing the detailed reconciliation of GAAP to non-GAAP results for Q1 2008 and the comparative periods.
Comments from Management
"We had a very good quarter demonstrating growth," said Tzvika Friedman, President and CEO of Alvarion. "Our team executed extremely well, and we achieved another quarter of record revenues, despite macro-economic conditions and seasonality. At the end of Q1, we had 225 commercial WiMAX deployments, which represent an important base of satisfied customers - many of them planning to expand their networks. In addition, we added several important new customers during the quarter, which demonstrates our ability to win, even as the competitive landscape changes. The higher level of business we are targeting will require a modest increase in certain operating expenses, and with the outlook for the dollar remaining weak, we will continue pursuing additional measures to further control costs in order to mitigate the impact."
"There are several factors increasing our confidence in the future," concluded Mr. Friedman. "Bookings in Q1 were strong and we see demand for WiMAX growing, our strategy is working, we have a better position in the market, and we have several important deal wins that will be reflected in our revenues in future quarters.
Q2 2008 Guidance
The company's revenue guidance for Q2 2008 is $67 to $71 million. Based on this revenue range, non-GAAP per share results for continuing operations are expected to range between $0.00 and $0.04 based on approximately 65.0 million of estimated weighted average number of diluted shares. GAAP per share results are expected to range between a loss of ($0.04) and $0.00.
Alvarion's management will host a conference call today, May 5, 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: (800)-954-1051, International: +1-(415)-226-5355.
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 11:00 a.m. ET on May 5, 2008 through 11:59 p.m. ET on June 2, 2008. To access the replay, please call USA: (800) 633-8284, International: +1(402)-977-9140. To access the replay, users will need to enter the following code: 21378855.
ALVARION LTD. & ITS SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (*)
U.S. dollars in thousands (except per share data)
Three Three Three
Months Months Months Year
Ended Ended Ended ended
March March December December
31, 31, 31, 31,
-------- -------- -------- --------
2008 2007 2007 2007
-------- -------- -------- --------
Sales $ 67,168 $ 52,077 $66,337 $236,573
Cost of sales 34,343 25,801 33,998 118,861
-------- -------- -------- --------
Gross profit 32,825 26,276 32,339 117,712
-------- -------- -------- --------
Operating expenses:
Research and development, net 15,113 11,774 13,818 51,389
Selling and marketing 14,654 12,644 14,968 55,943
General and administrative 4,613 3,913 3,780 15,426
Amortization of intangible assets 633 636 636 2,544
-------- -------- -------- --------
Total Operating expenses 35,013 28,967 33,202 125,302
-------- -------- -------- --------
Operating loss (2,188) (2,691) (863) (7,590)
Other income - - 8,265 8,265
Financial income, net 1,587 1,632 1,395 6,453
-------- -------- -------- --------
Income (Loss) from continuing
operations (601) (1,059) 8,797 7,128
-------- -------- -------- --------
Income from discontinued
operations, net - 436 3,609 5,413
-------- -------- -------- --------
Net income (loss) $ (601) $ (623) $12,406 $ 12,541
-------- -------- -------- --------
Basic net earnings (loss) per
share:
Continuing operations $ (0.01) $ (0.02) $ 0.14 $ 0.11
Discontinued operations $ - $ 0.01 $ 0.06 $ 0.09
Total $ (0.01) $ (0.01) $ 0.20 $ 0.20
======== ======== ======== ========
Weighted average number of shares
used in computing basic net
earnings (loss) per share 63,058 61,767 62,989 62,345
======== ======== ======== ========
Diluted net earnings (loss) per
share:
Continuing operations $ (0.01) $ (0.02) $ 0.13 $ 0.11
Discontinued operations $ - $ 0.01 $ 0.06 $ 0.08
Total $ (0.01) $ (0.01) $ 0.19 $ 0.19
======== ======== ======== ========
Weighted average number of shares
used in computing diluted net
earnings (loss) per share 63,058 61,767 65,189 64,626
======== ======== ======== ========
(*) Results of Cellular Mobile Unit that was sold in November 2006, are classified as discontinued operations and are not included in the results from continuing operations.
ALVARION LTD. & ITS SUBSIDIARIES
DISCLOSURE OF NON-US GAAP NET INCOME
FOR COMPARATIVE PURPOSES NET INCOME AND EARNINGS PER SHARE FROM
CONTINUING OPERATIONS EXCLUDING AMORTIZATION OF ACQUIRED INTANGIBLES,
STOCK BASED COMPENSATION EXPENSES, INCOME FROM DISCONTINUED
OPERATIONS AND OTHER INCOME
U.S. dollars in thousands (except per share data)
Three Three Three
Months Months Months Year
Ended Ended Ended ended
March March December December
31, 31, 31, 31,
------- ------- -------- --------
2008 2007 2007 2007
------- ------- -------- --------
Net income (loss) according to US
GAAP $ (601) $ (623) $ 12,406 $ 12,541
Amortization of acquired intangibles 633 636 636 2,544
Stock based compensation expenses
related to SFAS 123R 2,013 1,753 1,942 7,424
Income from discontinued operations - (436) (3,609) (5,413)
Other income - - (8,265) (8,265)
------- ------- -------- --------
Net Income from continuing
operations excluding amortization
of acquired intangibles, deferred
stock compensation, income from
discontinued operations and other
income $ 2,045 $ 1,330 $ 3,110 $ 8,831
======= ======= ======== ========
Basic net earnings per share from
continuing operations excluding
amortization of acquired
intangibles, deferred stock
compensation, income from
discontinued operations and other
income $ 0.03 $ 0.02 $ 0.05 $ 0.14
======= ======= ======== ========
Weighted average number of shares
used in computing basic net
earnings per share 63,058 61,767 62,989 62,345
======= ======= ======== ========
Diluted net earnings per share from
continuing operations excluding
amortization of acquired
intangibles, deferred stock
compensation, income from
discontinued operations and other
income $ 0.03 $ 0.02 $ 0.05 $ 0.14
======= ======= ======== ========
Weighted average number of shares
used in computing diluted net
earnings per share 64,532 63,942 65,189 64,626
======= ======= ======== ========
ALVARION LTD. & ITS SUBSIDIARIES
RECONCILIATION BETWEEN GAAP TO NON-GAAP STATEMENT OF INCOME (*)
U.S. dollars in thousands (except per share data)
Three Months Three Months
Ended Ended
March 31, December 31,
2008 2007
-----------------------------------------------
GAAP Adjustments Non-GAAP Non-GAAP
-------- --------------- --------- ------------
Sales $ 67,168 $ - $ 67,168 $ 66,337
Cost of sales 34,343 (167)(a) 34,176 33,836
-------- ------------ --------- ------------
Gross profit 32,825 167 32,992 32,501
-------- ------------ --------- ------------
Operating expenses:
Research and
development, net 15,113 (544)(a) 14,569 13,302
Selling and marketing 14,654 (505)(a) 14,149 14,509
General and
administrative 4,613 (797)(a) 3,816 2,975
Amortization of
intangible assets 633 (633)(b) - -
-------- ------------ --------- ------------
Total Operating
expenses 35,013 (2,479) 32,534 30,786
-------- ------------ --------- ------------
Operating profit
(loss) (2,188) 2,646 458 1,715
Financial income, net 1,587 - 1,587 1,395
-------- ------------ --------- ------------
Net income (loss) from
continuing operations
(a) $ (601) $ 2,646 $ 2,045 $ 3,110
-------- ------------ --------- ------------
Basic net earnings
(loss) per share from
continuing
operations: $ (0.01) $ 0.03 $ 0.05
======== ========= ============
Weighted average
number of shares used
in computing basic
net earnings per
share 63,058 63,058 62,989
======== ========= ============
Diluted net earnings
per share from
contiuing operations: $ (0.01) $ 0.03 $ 0.05
======== ========= ============
Weighted average
number of shares used
in computing diluted
net earnings per
share 63,058 64,532 65,189
======== ========= ============
(*) Results of Cellular Mobile Unit that was sold in November 2006, are classified in 2007 as discontinued operations and are not included in the results from continuing operations.
(a) The effect of stock-based compensation. The Company adopted the provisions of Statement of Financial Accounting Standards No. 123(R), "Share-Based Payment" on January 1, 2006 using the modified-prospective transition method.
(b) The effect of amortization of intangible assets.
ALVARION LTD. & ITS SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands
March 31, December 31,
2008 2007
------------ ------------
ASSETS
Cash, cash equivalents, short-term and long-
term investments $ 148,115 $ 138,874
Trade receivables 34,564 31,224
Other accounts receivable 7,777 16,250
Inventories 43,118 42,746
Severance pay fund 12,812 11,667
INVESTMENT IN AFFILIATES 906 605
PROPERTY AND EQUIPMENT, NET 14,089 13,078
GOODWILL AND OTHER INTANGIBLE ASSETS 58,066 58,699
------------ ------------
TOTAL ASSETS $ 319,447 $ 313,143
-------------------------------------------- ============ ============
LIABILITIES AND SHAREHOLDERS'
EQUITY
CURRENT LIABILITIES
Trade payables $ 28,951 $ 24,091
Other accounts payable and accrued expenses 50,541 52,257
------------ ------------
Total current liabilities 79,492 76,348
--------------------------------------------
ACCRUED SEVERANCE PAY 18,031 16,242
------------ ------------
TOTAL LIABILITIES 97,523 92,590
--------------------------------------------
SHAREHOL
DERS' EQUITY 221,924 220,553
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 319,447 $ 313,143
-------------------------------------------- ============ ============
ALVARION LTD.& ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
U.S. dollars in thousands
Three
Months ended
March 31, 2008
--------------
Cash flows from operating activities:
Net loss $ (601)
Adjustments to reconcile net loss to net cash used by
operating activities:
Depreciation 1,317
Stock based compensation expenses related to SFAS 123R 2,013
Amortization of intangibles assets 633
Increase in trade receivables (3,340)
Increase in other accounts receivable and prepaid
expenses (512)
Increase in inventories (372)
Increase in trade payables 5,605
Decrease in other accounts payables and accrued
expenses (1,716)
Accrued severance pay, net 644
--------------
Net cash provided by operating activities from
continuing operations 3,671
==============
Cash flows from investing activities:
Purchase of fixed assets (3,073)
Proceeds from sale of investment 8,846
Investment in affiliates (301)
--------------
Net cash provided by investing activities from
continuing operations 5,472
==============
Cash flows from financing activities:
Proceeds from exercise of employees' stock options 98
--------------
Net cash provided by financing activities from
continuing operations 98
==============
Increase in cash, cash equivalents, short-term and
long-term investments from continuing operations 9,241
==============
Cash, cash equivalents, short-term and long-term
investments at the beginning of the period 138,874
--------------
Cash, cash equivalents, short-term and long-term
investments at the end of the period $ 148,115
==============
About Alvarion
Alvarion is the largest WiMAX pure player, ensuring customer long-term success with fixed and mobile solutions for the full range of frequency bands. Based on its OPEN(TM) WiMAX strategy, the company offers superior wireless broadband infrastructure and an all-IP best-of-breed ecosystem in cooperation with its strategic partners. Alvarion boasts over 200 commercial WiMAX deployments worldwide.
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: the failure of the market for WIMAX products to develop as anticipated; Alvarion's inability to capture market share in the expected growth of the WIMAX market as anticipated, due to, among other things, competitive reasons or failure to execute in our sales, marketing or manufacturing objectives; inability to further identify, develop and achieve success for new products, services and technologies; increased competition and its effect on pricing, spending, third-party relationships and revenues; as well as the inability to establish and maintain relationships with commerce, advertising, marketing, and technology providers and other risks detailed from time to time in the Company's 20-F Annual Report Risk Factors section as well as in other filings with the Securities and Exchange Commission.
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.
In addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP, Alvarion uses non-GAAP measures of net income, operating income and earnings per share, which are adjustments from results based on GAAP to exclude non-cash equity-based compensation charges in accordance with SFAS 123R, amortizations of intangibles and results of discontinued operations. Alvarion's management believes the non-GAAP financial information provided in this release is useful to investors' understanding and assessment of Alvarion's on-going operations and prospects for the future. The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP. Management uses both GAAP and non-GAAP information in evaluating and operating business internally and as such has determined that it is important to provide this information to investors.
You may request Alvarion's future press releases or a complete Investor Kit by contacting Kika Stayerman kika.stayerman@alvarion.com or +972.3.767.4159.
"WiMAX Forum" is a registered trademark of the WiMAX Forum. "WiMAX," the WiMAX Forum logo, "WiMAX Forum Certified" and the WiMAX Forum Certified logo are trademarks of the WiMAX Forum.
"Alvarion" and "BreezeMAX" are the registered trademarks of Alvarion Ltd.
"OPEN" is a trademark of Alvarion Ltd.
All other companies' names, products, services may be the properties of their respective owners.
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