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Press ReleasesNov 6, 2003 Alvarion Reports Results For The Third Quarter Of 2003
Financial Results Revenues for the third quarter of 2003 rose to a record $34.3 million, an increase of 11% compared to $31.0 million in the second quarter of 2003, and 59% compared to $21.6 million in the third quarter of 2002. Gross margin increased for the 8th consecutive quarter, reaching 41.2% compared to 40.1% in the second quarter of 2003 and 38.4% in the third quarter of 2002. Net loss for the third quarter of 2003 decreased to $(2.1) million, or $(0.04) per share, compared to $(5.9) million, or $(0.11) per share, for the second quarter of 2003, and $(4.8) million, or $(0.09) per share, for the third quarter of 2002. Results from all periods include expenses attributable to the amortization of current technology, which totaled $650,000 in both the second and third quarters of 2003, and $600,000 in the third quarter of 2002. The results also include amortizations of deferred stock compensation, which totaled $140,000 in both the second and third quarters of 2003, and $141,000 in the third quarter of 2002. In addition, the results for the second quarter of 2003 include one-time charges of $2.2 million related to the acquisition of InnoWave. Had the amortization of current technology and deferred stock compensation and the one-time charges been excluded from the Company's results of operations for all periods, the Company's non-GAAP net loss for the third quarter of 2003 would have been $(1.3) million, or $(0.02) per share, compared to a non-GAAP net loss of $(2.9) million, or $(0.06) per share for the second quarter of 2003. For the nine month period ended September 30, 2003, revenues were $87.7 million, compared with revenues of $66.5 million for the comparable period in 2002. Net loss for the first nine months of 2003 was ($11.9) million, or ($0.23) per share, compared with a net loss of $(15.3) million, or $(0.28) per share for the nine months ended September 30, 2002. Had the amortization expenses at the total amount of $2.3 and $2.2 million in the first nine months of 2003 and 2002 and the InnoWave acquisition charges of $2.2 million been excluded from the Company's results of operations for all periods, the Company's non-GAAP net loss for the first nine months of 2003 would have been $(7.4) million, or $(0.14) per share, compared to a non-GAAP net loss of $(13.1) million, or $(0.24) per share for the comparable period in 2002. The results for the second and third quarters of 2003 include the activity added as a result of the acquisition of most of the assets and liabilities of InnoWave ECI Wireless Systems Ltd. (“InnoWave”) on April 1, 2003. Comments of Management Zvi Slonimsky, CEO of Alvarion, commented, “We are pleased to report that the Alvarion team has delivered another quarter of good results marked by record revenues, rising gross margins, and a significant reduction in operating and net loss. We are on track with our plan to return to profitability. “We are very pleased to see such broad-based revenue growth across most products and regions. In the U.S. market we experienced growing demand for broadband access. Our U.S. sales increased by about 15% during the quarter, reflecting positive market response to our new products introduced last quarter in the 5 GHz and 900 MHz bands. “During the third quarter, we received a very large order from a Latin American operator, which has been recently increased to a total of about $40 million, as part of a massive initiative to bring fast-Internet access and carrier-class telephony to underserved rural and suburban areas.” Mr. Slonimsky continued, “As leaders of the WiMAX Revolution, we are encouraged to see that WiMAX is gaining momentum. With worldwide demand for broadband on the rise, a growing number of incumbents and established operators are recognizing BWA as an important solution for bringing broadband connectivity to areas that wireline DSL and cable modems cannot reach. Mr. Slonimsky concluded, “Overall, we are pleased by the activities of the quarter, encouraged by favorable trends, and working to extend our market leadership.” Guidance The Company expects fourth quarter revenues to range between $36 million and $40 million. This range reflects the assumption that sequential growth will continue to be broadly based across products and regions and that a significant part of the revenue from the Latin American carrier order will occur during 2004. Net earnings per share is expected to range between a net loss of 2 cents and net earnings of 1 cent, while non-GAAP net earnings per share, excluding amortizations of current technology and deferred stock-based compensation, is expected to range between a net loss of 1 cent and net earnings of 2 cents. The Company will hold a teleconference today, November 6, 2003, at 9:00 a.m. Eastern Time to discuss the quarter's results. To participate in the call, please dial (+1) 612-332-0228 approximately five minutes prior to the scheduled call start time. The call will also be available live as a Webcast on the Investor Relations section of www.alvarion.com, where it will be archived and available for replay for 30 days. A replay of the call can also be accessed via telephone from 4 p.m. Eastern Time on November 6, 2003 through 11:59 p.m. on November 12, 2003 by calling (+1) 320-365-3844 and entering the following access code: 702068. About Alvarion Having recently acquired InnoWave's wideband access portfolio and expertise, Alvarion provides a complete wireless solution that supports a wide range of frequency bands, customer profiles and service types. This press release may contain 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 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 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. To supplement its consolidated financial statements presented on a GAAP basis, Alvarion may use non-GAAP measures of operating results, net income/loss and income/loss per share, which are adjusted to exclude certain costs, expenses, gains and losses that it believes are appropriate to enhance the overall understanding of its financial performance. These adjustments to Alvarion's GAAP results are made with the intent of providing both management and investors a supplemental understanding of its underlying operational results and trends. Adjusted non-GAAP results are among the primary indicators management uses as a basis for planning and forecasting Alvarion's business. The presentation of this additional information is not meant to be considered in isolation or as a substitute for Alvarion's financial results prepared in accordance with generally accepted accounting principles in the United States. You may register to receive Alvarion's future press releases or to download a complete Digital Investor Kit(TM) including press releases, regulatory filings and corporate materials by contacting Carmen Deville, Investor Relations: carmen.deville@alvarion.com or 760-517-3188.
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