Press Releases

Alvarion Reports Fourth Quarter and Full Year 2001 Results

Tel – Aviv, Israel, February 6, 2002 – Alvarion Ltd. (NASDAQ: ALVR), a leading provider of Broadband Wireless Access (BWA) solutions, today announced its financial results for the fourth quarter and full year ended December 31, 2001.

The Company was formed on August 1, 2001 as a result of the merger of BreezeCOM Ltd. and Floware Ltd. As such, the Company’s results for the full year include the results of BreezeCOM Ltd. only from January 1, 2001 through the merger date and the results of the merged company from the merger date through the end of the year. The pro-forma results, which reflect the full-year contributions of both BreezeCOM and Floware as if the merger were completed on January 1, 2001, are presented for informational purposes only. In addition, the pro-forma results for the three months ended December 31, 2001 exclude non-recurring expenses totaling $10.1 million. These consist of $3.6 million in restructuring costs related to the workforce reduction announced in November, and $6.5 million related to early repayment of royalties to Israel’s Office of the Chief Scientist (see below).

Revenues for the fourth quarter of 2001 (which, as noted above, include revenues from both the former BreezeCOM and the former Floware) were $25.2 million, compared with revenues (for BreezeCOM alone) of $32.4 million reported in the fourth quarter of 2000. Net loss and net loss on a pro forma basis for the fourth quarter were ($16.6) million and ($5.6) million, or ($0.30) and ($0.10) per basic and diluted share, respectively, compared with net income of $3.9 million (or $0.12 per diluted share) reported in the fourth quarter of 2000.

Revenues for the twelve months ended December 31, 2001 were $99.0 million (and, on a pro forma basis, $137.1 million), compared with revenues (for Breezecom alone) of $101.5 million reported in the same period last year.

Basic and diluted loss per share for the twelve months ended December 31, 2001 was ($2.80) and, on a pro forma basis, ($0.30), compared with diluted earnings per share of $0.33 (for BreezeCOM alone) reported in the same period last year.

Zvi Slonimsky, CEO of Alvarion, stated, "2001 was a challenging year characterized by extraordinary strategic progress. The central event of the year was the merger, which has positioned Alvarion as the industry’s leading BWA player. We are proud to have sold over 150,000 units -- valued at more than $137 million on a pro forma basis -- during 2001. With more than one-half million products installed and supported all over the world, Alvarion has the largest BWA deployed base by far, and is the most experienced player in the BWA industry. Especially today when customers are looking to reduce risk, Alvarion’s proven technologies, strong research and development capabilities, extensive product offering and massive deployment base are significant assets. We continue to work on all fronts to fully capitalize on our positioning as the market leader.

"The sales and marketing strategy outlined last quarter is proving itself, especially in developing regions such as Latin America, Eastern Europe and Asia. Sales into these regions accounted for approximately 50% of our revenues during the fourth quarter. We continue to target operators in two segments, namely, established carriers on the one hand, and service providers and independent local operators on the other. Established cellular carriers, like Paraguay’s Telecel, are leveraging tower and rooftop rights with parallel Alvarion networks which they are using to provide Internet access to their customers. Service providers and independent local operators, like India’s Gateway Systems, Uruguay’s Multitel and many others, are penetrating new markets with quick deployments of BWA networks in unlicensed bands. In the U.S., our revenues derive from sales to many independent telcos, giving us a broad market presence that will prove beneficial when the U.S. market recovers."

Mr. Slonimsky continued, "A key to our success has always been our exceptional R&D, together with our proven ability to read market trends at an early stage. We have recently become one of the first to introduce a commercial OFDM solution, the fruit of an early OFDM development initiative. By eliminating line of sight requirements, OFDM allows operators to offer simplified CPE installation, critical in the quest to reduce installation bottlenecks and prices. In addition, in response to customer requests, we are nearing the completion of the integrated WALKair-BreezeACCESS base station, which will enable operators to leverage a single base station investment to serve a much wider range of business and residential subscribers."

Recently, Alvarion reached an agreement with the Office of the Chief Scientist (OCS) of the Israeli Ministry of Industry and Commerce for entering into a new program. The program calls for the early repayment of royalties and enables companies to join a special royalty-free program for generic projects. Pursuant to the agreement, Alvarion will pay the OCS a total amount of approximately $6.5 million during a period of up to 5 years as a settlement of future royalty obligations. This amount is reflected as a one-time charge in the Company’s statement of operations for the fourth quarter of 2001.

Mr. Slonimsky added, "The cost reductions put into place in November have already begun to improve our operational model, lower our breakeven point and secure our cash resources. Our operating expenses in 1Q02 will further reflect the impact of these steps."

Mr. Slonimsky concluded, "Although 2001 was a challenging year and visibility is still limited, our sound strategy and comprehensive range of products, together with determined execution, enabled us to maintain our leadership of the BWA market. The success of our many customers and the continued rollout of their networks validate the BWA value proposition and serves as an example for others considering the BWA option. We are proud of our progress during this exceptional year, and feel well positioned for the year 2002."

The Company will hold a teleconference today, February 6th, at 9:00 a.m. EST to discuss the quarter’s results. To participate in the call, please dial (877) 780-2276 (in the U.S.), or (973) 628-9554 (internationally), approximately five minutes prior to the scheduled call start time. This call will also be available live as a Webcast on www.kcsa.com and www.alvarion.com. The Webcast will be archived and available for replay for 30 days.

About Alvarion
Alvarion is a powerhouse of point-to-multipoint Broadband Wireless Access (BWA) solutions for telecom carriers, service providers, and enterprises worldwide. Alvarion’s systems are used for providing Internet access and voice and data services for subscribers in the last mile, for feeding of cellular networks, for building-to-building connectivity and for wireless local area network (LAN).

The merger of BreezeCOM and Floware to form Alvarion has created a company with the broadest range of BWA solutions by market segment and frequency band, designed to address all carriers’ and service providers’ business models. With its combined market experience, strong customer base, diversified distribution channels and field-proven deployments, Alvarion is a leading BWA pure play provider for every end user profile, from residential subscribers to business customers. For more information, please visit Alvarion’s website at http://www.alvarion.com.

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.

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