Aether Announces Fourth Quarter and Year-End 2004 Results.BALTIMORE Baltimore, city (1990 pop. 736,014), N central Md., surrounded by but politically independent of Baltimore co., on the Patapsco River estuary, an arm of Chesapeake Bay; inc. 1745. -- Aether aether: see ether, in physics and astronomy. Aether god of whole atmosphere. [Gk. Myth.: Jobes, 42] See : Air Systems, Inc. (Nasdaq:AETH) today reported financial results for the fourth quarter and the fiscal year ended December December: see month. 31, 2004.(1) Loss from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the for Q4 2004 was ($0.08) per share, or approximately ($3.7) million, which was down from ($0.13) per share, or approximately ($5.5) million in Q4 2003. In Q3 2004, loss from continuing operations was ($0.09) per share, or approximately ($4.0) million. Consistent with published guidance, the Company said its aggregate cash balance at December 31, 2004 totaled approximately $132 million, which included cash and cash equivalents, investments in residential mortgage-backed securities Residential mortgage-backed securities (RMBS) are a type of bond commonly issued in American security markets. They are a type of Mortgage-backed security which are backed by mortgages on residential rather than commercial real estate. and restricted cash. This balance is net of the October October: see month. 2004 redemption of the Company's remaining $155 million of outstanding 6% convertible subordinated notes. The Company said it expects this cash balance to remain at or above the $132 million level through the first quarter of 2005, as it completes its transitional activities relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the mobile and wireless data business segments sold in September September: see month. 2004 and more fully implements its new operating model Operating Model is a term that is used in many contexts. In essence an operating model describes how an organization operates across both business and technology domains. The Operating Model describes what is important for the organization. . "As we expected, the fourth quarter was another transitional one for Aether, as we further reduced staffing levels and ongoing operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. and moved closer to the expense levels we expect to have going forward," said David S. Oros, Aether's Chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. . "Because of certain costs related to the sales of our Transportation and Mobile Government businesses and the implementation of our new business strategy, our overall fourth quarter operating expenses, while consistent with our expectations, are expected to be lower in the future." Mortgage-Backed Securities Mortgage-backed securities (MSBs) Securities backed by a pool of mortgage loans. Interest income from our mortgage-backed securities ("MBS See Mb/sec. MBS - mobile broadband services ") and related investments was $672,000 for Q4 2004 and $928,000 for the year ended December 31, 2004. The Company's MBS assets had a fair value of approximately $62 million at December 31, 2004, with a weighted average yield during the fourth quarter of 3.65%. The Company said that due to market conditions it has not made additional MBS investments since October 2004 nor has it entered into any repurchase agreements Repurchase agreement An agreement with a commitment by the seller (dealer) to buy a security back from the purchaser (customer) at a specified price at a designated future date. to leverage its MBS portfolio. Accordingly, the Company indicated that it is unlikely to achieve previously announced target levels of total MBS investments by the end of Q1 2005. The Company said that while it will continue to monitor market conditions, as well as continue to confer with Verb 1. confer with - get or ask advice from; "Consult your local broker"; "They had to consult before arriving at a decision" consult ask, enquire, inquire - inquire about; "I asked about their special today"; "He had to ask directions several times" its outside advisors, it cannot predict when market conditions will warrant making additional MBS investments or leveraging the portfolio. The Company said that while it continues to focus on its MBS business, it is also evaluating additional real estate related business and investment opportunities being proposed to it by third parties. In considering such opportunities, which may complement its existing MBS business or diversify diversify To acquire a variety of assets that do not tend to change in value at the same time. To diversify a securities portfolio is to purchase different types of securities in different companies in unrelated industries. its business, the Company said it will continue to remain focused on its objectives of becoming profitable as quickly as possible and realizing the value of its significant net operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. and capital loss carryforwards Loss Carryforward An accounting technique with which a company applies net operating losses of the current year to future year's profits in order to reduce tax liability. Notes: . "Our strong cash position coupled with our significant loss carryforwards places us in a very unique position that we want to optimize optimize - optimisation for our shareholders," said David C. Reymann, Aether's Chief Financial Officer. "Working with our outside investment and financial advisors, we expect to continue to focus on our residential mortgage-backed securities strategy while we consider other strategies that might allow us to achieve our objectives more quickly." Additional Q4 Results Total operating expenses declined to approximately $3.5 million in Q4 2004, from approximately $4.8 million in Q4 2003. Total operating expenses increased by approximately $268,000 from Q3 to Q4 2004, as a result of a $406,000 restructuring charge restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. in Q4 2004 for costs relating to severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when payments and facility closures and an increase in depreciation expense resulting from a write-off Write-Off A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues. of certain fixed assets fixed assets npl → activo sg fijo fixed assets npl → immobilisations fpl fixed assets fix npl → that would not continue to be used in the ongoing business, partially offset by overall reductions in SG&A costs resulting from lower expense levels associated with the new operating model. The Company said it expects total operating expenses to be substantially lower in Q1 2005. The total cost of the Company's redemption of its 6% convertible subordinated notes was approximately $157 million, which included principal repayment of approximately $154.9 million, accrued interest Accrued Interest The interest that has accumulated on a bond since the last interest payment up to but not including the settlement date. There are two methods for calculating accrued interest: 1) 360-day year method, used for corporate and municipal bonds. of approximately $310,000 and a $1.9 million prepayment Prepayment 1. The payment of a debt obligation prior to its due date. 2. The excess payment over a scheduled debt repayment amount. Notes: 1. Examples include deferred expenses such as rent and early loan repayments. 2. premium required by the terms of the notes. In Q4 2004, the Company recognized a charge of approximately $2.4 million in connection with this redemption, which includes the $1.9 million prepayment premium plus the write-off of deferred financing costs. Conference Call Aether will host a conference call on Friday Friday: see Sabbath; week. Friday young Indian rescued by Crusoe and kept as servant and companion. [Br. Lit.: Robinson Crusoe] See : Servant , February February: see month. 18, 2005 at 8:30 a.m., Eastern Time. Interested parties may access the call at www.aethersystems.com or by telephone at 800-500-0177. Please ask for the Aether Systems call. Replay of this call will be available until March 11, 2005, by calling 888-203-1112, access code 252482. About Aether Systems, Inc. Aether owns and manages a portfolio of residential mortgage-backed securities and other short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. government agency investments. Forward-Looking Statement forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. Disclosure This press release contains "forward-looking statements," as such term is used in the Securities Exchange Act of 1934, as amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. . Such forward-looking statements include those regarding the Company's expectations about anticipated future cash balances and expense reductions. When used herein, the words "anticipate," "believe," "estimate," "intend," "may," "will," and "expect" and similar expressions as they relate to the Company or its management are intended to identify such forward-looking statements. Forward-looking statements are based on current expectations and assumptions, which are subject to risks and uncertainties. They are not guarantees of future performance or results. The Company's actual results, performance or achievements could differ materially from the results expressed in, or implied by, these forward-looking statements. Factors that could cause or contribute to such differences include: (1) we may not be able to implement our MBS strategy successfully, or the results of such implementation may be inconsistent with our expectations; (2) our future financial results may be negatively affected by contingent or retained liabilities relating to businesses that we sold; (3) the MBS strategy we are implementing involves significant risks related to changes in interest rates and the complexities of managing the overall yield of a leveraged portfolio, and we have not yet fully implemented this strategy, as a result of market conditions, and cannot accurately predict the timing of additional investments in MBS or the implementation of portfolio leverage; (4) leverage that we incur To become subject to and liable for; to have liabilities imposed by act or operation of law. Expenses are incurred, for example, when the legal obligation to pay them arises. An individual incurs a liability when a money judgment is rendered against him or her by a court. to expand the size of the MBS portfolio may limit our financial flexibility and could have a substantial negative effect on our financial results if we do not successfully manage the risks of borrowing; (5) we may not be able to realize value from our accumulated ac·cu·mu·late v. ac·cu·mu·lat·ed, ac·cu·mu·lat·ing, ac·cu·mu·lates v.tr. To gather or pile up; amass. See Synonyms at gather. v.intr. To mount up; increase. loss carryforwards, because of a failure to generate sufficient taxable earnings, regulatory limits or both; (6) in managing the MBS portfolio, we will depend heavily on FBR FBR Friedman, Billings, Ramsey Group, Inc. (investment firm) FBR Fast Breeder Reactor FBR Federal Benefit Rate FBR Foundation for Biomedical Research FBR Foundation for Blood Research FBR Fluidized Bed Reactor Investment Management, Inc., who may choose to cease working with us, in which event our performance could be negatively affected; (7) we and the buyer of our Transportation segment are discussing disagreements over various post-closing adjustments and whether they support an increase or a decrease to the purchase price that we received, this disagreement may require arbitration arbitration Process of resolving a dispute or a grievance outside a court system by presenting it for decision to an impartial third party. Both sides in the dispute usually must agree in advance to the choice of arbitrator and certify that they will abide by the to be resolved, and if we do not prevail, we might not receive any additional cash consideration and could be required to make a cash payment to the buyer for the amount of any downward price adjustment; and (8) other factors discussed in our filings with the Securities and Exchange Commission. Aether undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
(1) In accordance with generally accepted accounting principles
("GAAP"), the results of Aether's Transportation and Mobile
Government segments, which were sold in September 2004, have been
presented as discontinued operations for all periods, so that
period-to-period comparisons are presented on a comparable basis.
Aether sold its Enterprise Mobility Systems segment in January
2004, and that segment's results also have been presented as
discontinued operations for all prior periods, in accordance with
GAAP.
(Financial Information Follows)
AETHER SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS
(UNAUDITED)
Three Months Ended Twelve Months Ended
December 31, December 31,
------------------ -------------------
2004 2003 2004 2003
-------- --------- --------- ---------
in thousands except per share
data
Interest income from MBS
portfolio $ 672 $ - $ 928 $ -
Interest expense from MBS
portfolio - - - -
-------- --------- --------- ---------
Net interest income from
MBS portfolio 672 - 928 -
Gain on future purchase
commitments - - 1,826 -
Selling, general and
administrative expenses (2,475) (4,249) (12,150) (15,779)
Depreciation (664) (357) (2,212) (2,672)
Option and warrant expense (22) (221) (594) (928)
Impairment of intangibles and
other long-lived assets - - - (1,367)
Other operating income
(expense) 33 94 (60) (744)
Restructuring charge (406) (101) (1,054) (306)
-------- --------- --------- ---------
Total operating expenses (3,534) (4,834) (16,070) (21,796)
-------- --------- --------- ---------
Operating loss (2,862) (4,834) (13,316) (21,796)
Other income (expense):
Interest income from money
market accounts 285 1,269 3,508 6,003
Interest expense from
subordinated notes payable (106) (2,605) (7,917) (10,392)
Equity in losses of
investments - - - (97)
Loss on early extinguishment
of debt (2,419) - (2,419) -
Investment gain (loss),
including impairments, net 1,412 623 (3,559) 586
-------- --------- --------- ---------
Loss from continuing
operations (3,690) (5,547) (23,703) (25,696)
Loss from discontinued
operations - (6,841) (45,450) (23,756)
Gain (loss) on sale of
discontinued operations (202) - 20,825 -
-------- --------- --------- ---------
Net loss $(3,892) $(12,388) $(48,328) $(49,452)
======== ========= ========= =========
Loss per share - basic and
diluted - from continuing
operations $ (0.08) $ (0.13) $ (0.54) $ (0.60)
Loss per share - basic and
diluted - from discontinued
operations - (0.16) (1.04) (0.56)
Income per share - basic and
diluted - gain (loss) on sale
of discontinued operations (0.01) - 0.47 -
-------- --------- --------- ---------
Net loss per share - basic
and diluted $ (0.09) $ (0.29) $ (1.11) $ (1.16)
======== ========= ========= =========
Weighted average shares
outstanding - basic and
diluted 43,904 42,883 43,713 42,616
======== ========= ========= =========
AETHER SYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
December 31, December 31,
2004 2003
------------ ------------
in thousands (Unaudited)
Current assets:
Cash and cash equivalents $ 60,723 $ 26,222
Mortgage-backed securities, at fair value 62,184 -
Current assets from discontinued
operations - 53,616
Interest receivable 356 1,567
Prepaid expenses and other current assets 4,124 1,173
------------ ------------
Total current assets 127,387 82,578
Restricted cash 8,832 13,460
Investments available for sale - 220,849
Furniture, computers, and equipment, net 367 2,608
Non-current assets from discontinued
operations - 74,017
Other assets - 4,593
------------ ------------
$ 136,586 $ 398,105
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 3,494 $ 4,741
Current liabilities from discontinued
operations - 35,168
Restructuring accruals 259 1,407
Accrued employee compensation and benefits 186 538
Accrued interest payable - 2,529
------------ ------------
Total current liabilities 3,939 44,383
Long-term liabilities:
Convertible subordinated notes payable - 154,912
Restructuring accruals - 70
Non-current liabilities from discontinued
operations - 19,436
Other long-term liabilities 2,057 3
------------ ------------
Total liabilities 5,996 218,804
Stockholders' equity 130,590 179,301
Commitments and contingencies
------------ ------------
$ 136,586 $ 398,105
============ ============
|
|
||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion