Alvarion Again Achieves Record Results for the Third Quarter of 2004; Revenues Up 7%, Net Income Increased 47% Sequentially.TEL AVIV Tel Aviv (tĕl əvēv`), city (1994 pop. 355,200), W central Israel, on the Mediterranean Sea. Oficially named Tel Aviv–Jaffa, it is Israel's commercial, financial, communications, and cultural center and the core of its largest , Israel Israel, in the Bible Israel (ĭz`rēəl, ĭz`rāəl) [as understood by Hebrews,=he strives with God], according to the book of Genesis, name given to Jacob as eponymous ancestor of the Hebrews, the chosen people of God. -- Alvarion Alvarion ltd. (NASDAQ:ALVR) is a global broadband wireless systems manufacturer formed by the merger of two Israeli companies, BreezeCOM and Floware. Alvarion has its global HQ in Tel-Aviv, Israel and has offices in 23 countries. Ltd. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : ALVR), the leading provider of wireless broadband High-speed wireless transmission of data. What is "high" speed is always a changing number. Wireless systems are typically slower than land-based, wireline networks. In the past, wireless broadband started at 250 Kbps, whereas land-based broadband was generally considered to start at T1 solutions worldwide, today announced financial results for the third quarter ended September September: see month. 30, 2004. Revenues for the third quarter of 2004 rose to a record $52.2 million, an increase of 7% compared to $48.8 million in the second quarter of 2004, and up 52% from $34.3 million in the third quarter of 2003. Gross margin increased for the 12th consecutive quarter, reaching 44.3% compared to 43.2% in the second quarter of 2004 and 41.1% in the third quarter of 2003. According to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. US GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). , net income increased to $3.7 million or $0.06 per share on a fully diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. basis for the third quarter of 2004. GAAP net income for the second quarter of 2004 was $2.5 million, or $0.04 per share on a fully diluted basis, and GAAP net loss for the third quarter of 2003 was $(2.1) million, or $(0.04) per share. Revenues for the first 3 quarters of 2004 totaled to $145.6 million, an increase of 66% compared with revenues of $87.7 million in the same period in 2003. During the first 3 quarters of 2004, net income totaled to $7.6 million compared to a net loss of $(11.9) million in the same period of 2003. Results for all periods include expenses attributable to the amortization of intangible assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. and amortization of deferred stock compensation, which totaled $680,000 in the second and third quarters of 2004, and $790,000 in the third quarter of 2003. Excluding all aforementioned a·fore·men·tioned adj. Mentioned previously. n. The one or ones mentioned previously. aforementioned Adjective mentioned before Adj. 1. amortizations, the Company's non-GAAP net income for the third quarter of 2004 was $4.4 million, or $0.07 per diluted share. For the second quarter of 2004 non-GAAP net income was $3.2 million, or $0.05 per diluted share, and for the third quarter of 2003 non-GAAP net loss was $(1.3) million, or $(0.02) per share. The Company generated $6.3 million in cash provided by operating activities in the third quarter and the balance sheet remained very strong with its cash position reaching a record $170 million at September 30, 2004. DSO See CSO. was a record low of 35 days. Comments of Management "Both technological and market leadership combined with strong execution led to another outstanding quarter for the company," said Zvi Slonimsky, 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. of Alvarion. "Once again we achieved improvement in all financial measurements. "We are continuing to enhance our position as the leader in both broadband wireless See wireless broadband. access and the adoption of the WiMAX standard. Our broad-based broad-based Of or relating to an index or average that provides a good representation of the overall market. The S&P 500 and NYSE Composite are generally regarded as broad-based stock indexes, while the popular Dow Jones Industrial Average is biased growth in Q3 again reflected the increase in worldwide demand for wireless broadband solutions. We also continue to see a high degree of interest in the WiMAX standard. We were extremely gratified grat·i·fy tr.v. grat·i·fied, grat·i·fy·ing, grat·i·fies 1. To please or satisfy: His achievement gratified his father. See Synonyms at please. 2. by the outstanding customer response to the BreezeMAX 3500, our new WiMAX-ready system. Exemplifying ex·em·pli·fy tr.v. ex·em·pli·fied, ex·em·pli·fy·ing, ex·em·pli·fies 1. a. To illustrate by example: exemplify an argument. b. the strong response were two new BreezeMAX customers announced recently - Altitude altitude, vertical distance of an object above some datum plane, such as mean sea level or a reference point on the earth's surface. It is usually measured by the reduction in atmospheric pressure with height, as shown on a barometer or altimeter. Telecom, an independent operator in France planning a nationwide WiMAX network, and MobileCity, which is deploying the first WiMAX-ready network in Scandinavia. During Q3, we received the first sample chips from Intel for the standard CPE (Customer Premises Equipment) Communications equipment that resides on the customer's premises. CPE - Customer Premises Equipment . We are pleased with the progress that Intel is making and we are on track for having an Intel-based CPE in the market by mid-year 2005. "During the third quarter, we continued to see strong demand for all product groups from operators around the world. We were pleased by the follow-on orders from existing Tier 1 incumbent carriers See ILEC. in Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. , Europe, South Africa South Africa, Afrikaans Suid-Afrika, officially Republic of South Africa, republic (2005 est. pop. 44,344,000), 471,442 sq mi (1,221,037 sq km), S Africa. , and China," continued Mr. Slonimsky. "We expect these regions to continue to be sources of strong growth going forward. On October 16, 2004, we 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. the amalgamation amalgamation /amal·ga·ma·tion/ (ah-mal´gah-ma´shun) trituration (3). amalgamation ( agreement with interWAVE Communications International Ltd., a leading supplier of compact cellular network infrastructure based on GSM (Global System for Mobile Communications) A digital cellular phone technology based on TDMA that is the predominant system in Europe, but also used worldwide. Developed in the 1980s, GSM was first deployed in seven European countries in 1992. and CDMA (Code Division Multiple Access) A method for transmitting simultaneous signals over a shared portion of the spectrum. The foremost application of CDMA is the digital cellular phone technology from QUALCOMM that operates in the 800 MHz band and 1.9 GHz PCS band. 2000 technology that is particularly well-suited for rural areas in developing regions. We are currently awaiting approval of the deal by interWAVE shareholders and, once completed, this acquisition will complement our existing wireless solutions with a cost effective fixed and mobile solution to serve the need for voice and data in regions of the world that need telecommunication telecommunication Communication between parties at a distance from one another. Modern telecommunication systems—capable of transmitting telephone, fax, data, radio, or television signals—can transmit large volumes of information over long distances. infrastructure. We intend to apply our experience in integrating acquisitions to realize the benefits of the combined company," concluded Mr. Slonimsky. Q4 2004 Guidance The Company expects Q4 2004 revenues to range between $54 million and $56 million. At this revenue range, net earnings per share are expected to range between 7 and 8 cents while non-GAAP net earnings per share, which excludes amortization of intangible assets and deferred stock-based compensation, is expected to range between 8 and 9 cents. The fourth quarter guidance also excludes any impact on results of operations and any one time transaction-related charges associated with the acquisition of interWAVE Communications International Ltd., which the company hopes to close by the end of Q4. Alvarion's management will host a conference call today, November 3, 2004, at 9:00 a.m. Eastern Time to discuss the quarter's results. To participate in the call, please dial one of the following numbers approximately five minutes prior to the scheduled start time: USA: (480) 629-9034; International: +1-480-629-9034. 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 2:15 p.m. EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT on November 3, 2004 through 11:59 p.m. EDT on November 10, 2004. 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: 750667. 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. Leading the WiMAX revolution, Alvarion has the most extensive deployments and proven product portfolio in the industry covering the full range of frequency bands. Alvarion's products enable the delivery of business and residential broadband access See broadband and wireless broadband. , corporate VPNs, toll quality telephony Meaning "sound over distance," it refers to electronically transmitting the human voice. In the beginning, telephony dealt only with analog signals in the circuit-switched networks of the telephone companies. , mobile base station feeding, Hotspot coverage extension, community interconnection in·ter·con·nect v. in·ter·con·nect·ed, in·ter·con·nect·ing, in·ter·con·nects v.intr. To be connected with each other: The two buildings interconnect. v.tr. , and public safety communications. Alvarion works with several top OEM (Original Equipment Manufacturer) The rebranding of equipment and selling it. The term initially referred to the company that made the products (the "original" manufacturer), but eventually became widely used to refer to the organization that buys the products and providers and over 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 over 10 years from core technology developments to creating and promoting industry standards. Leveraging its key roles in the IEEE (Institute of Electrical and Electronics Engineers, New York, www.ieee.org) A membership organization that includes engineers, scientists and students in electronics and allied fields. and HiperMAN standards committees and experience deploying OFDM-based systems, the company's prominent work in the WiMAX Forum(TM) is focused on increasing widespread adoption of standards-based products in the wireless broadband market. For more information, visit Alvarion's World Wide Web site at www.alvarion.com. This press release contains forward-looking statements 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. within the meaning of the "safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. " provisions of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and 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 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. In addition, if interWAVE does not receive required shareholder approvals or either company fails to satisfy other conditions to closing, the transaction will not be consummated con·sum·mate tr.v. con·sum·mat·ed, con·sum·mat·ing, con·sum·mates 1. a. To bring to completion or fruition; conclude: consummate a business transaction. b. . Factors affecting interWAVE's business generally include those set forth in interWAVE's filings with the SEC, including its Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for its most recent fiscal year and its most recent Quarterly Report on Form 10-Q Form 10-Q See 10-Q. and its Current Reports on Form 8-K Form 8-K The form required by the SEC when a publicly held company incurs any event that might affect its financial situation or the share value of its stock. Form 8-K See 8-K. . Certain information set forth in this press release pertaining per·tain intr.v. per·tained, per·tain·ing, per·tains 1. To have reference; relate: evidence that pertains to the accident. 2. to third parties has not been independently verified ver·i·fy tr.v. ver·i·fied, ver·i·fy·ing, ver·i·fies 1. To prove the truth of by presentation of evidence or testimony; substantiate. 2. 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 Carmen throws over lover for another. [Fr. Lit.: Carmen; Fr. Opera: Bizet, Carmen, Westerman, 189–190] See : Faithlessness Carmen the cards repeatedly spell her death. [Fr. Deville, Investor Relations Investor relations The process by which the corporation communicates with its investors. : carmen.deville@alvarion.com or +1 760-517-3188.
ALVARION LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands
September December
30, 31,
2004 2003
--------- --------
ASSETS
Cash, cash equivalents, short-term and long-term
investments $ 169,928 $153,616
Trade receivables 20,047 21,199
Other accounts receivable 9,662 4,499
Inventories 35,678 36,981
Severance pay fund 6,496 5,493
Long-term receivables 460 834
PROPERTY AND EQUIPMENT, NET 10,838 11,939
GOODWILL AND OTHER INTANGIBLE ASSETS 48,389 50,396
--------- --------
TOTAL ASSETS $ 301,498 $284,957
========= ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Trade payables $ 15,081 $ 23,780
Other accounts payable and accrued expenses 38,837 27,959
--------- --------
Total current liabilities 53,918 51,739
LONG TERM LIABILITIES 3,484 5,248
ACCRUED SEVERANCE PAY 8,892 7,768
--------- --------
TOTAL LIABILITIES 66,294 64,755
SHAREHOLDERS' EQUITY 235,204 220,202
--------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 301,498 $284,957
========= ========
ALVARION LTD.
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,
-----------------------------------------------
2004 2003 2004 2003 2004
--------- --------- --------- --------- -------
Sales $ 145,629 $ 87,712 $ 52,178 $ 34,291 $48,772
Cost of sales 82,413 52,347 29,049 20,181 27,710
--------- --------- --------- --------- -------
Gross profit 63,216 35,365 23,129 14,110 21,062
--------- --------- --------- --------- -------
Operating expenses:
Research and
development, net 20,218 17,416 6,744 6,132 6,860
Selling and marketing 29,036 23,992 10,543 8,684 9,506
General and
administrative 7,019 4,583 2,412 1,729 2,367
Amortization of
intangibles 2,007 1,900 669 650 669
Amortization of
deferred stock
compensation 33 420 11 140 11
Acquisition related
expenses - 2,201 - - -
--------- --------- --------- --------- -------
Total Operating
expenses 58,313 50,512 20,379 17,335 19,413
--------- --------- --------- --------- -------
Operating income
(loss) 4,903 (15,147) 2,750 (3,225) 1,649
Financial income, net 2,702 3,254 920 1,162 850
--------- --------- --------- --------- -------
Net Income (loss) $ 7,605 $ (11,893)$ 3,670 $ (2,063)$ 2,499
--------- --------- --------- --------- -------
Basic earnings (loss)
per share $ 0.14 $ (0.23)$ 0.06 $ (0.04)$ 0.04
========= ========= ========= ========= =======
Weighted average number
of shares used in
computing basic
earnings (loss) per
share 56,190 51,759 56,885 52,254 56,488
========= ========= ========= ========= =======
Diluted earnings
(loss) per share $ 0.12 $ (0.23)$ 0.06 $ (0.04)$ 0.04
========= ========= ========= ========= =======
Weighted average number
of shares used in
computing diluted
earnings (loss) per
share 63,598 51,759 63,837 52,254 63,651
========= ========= ========= ========= =======
ALVARION LTD.
DISCLOSURE OF NON-US GAAP NET INCOME (LOSS)
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,
--------- --------- --------- --------- -------
2004 2003 2004 2003 2004
--------- --------- --------- --------- -------
Net Income (loss)
according to US GAAP $ 7,605 $ (11,893)$ 3,670 $ (2,063)$ 2,499
Amortization of
intangibles 2,007 1,900 669 650 669
Amortization of
deferred stock
compensation 33 420 11 140 11
Acquisition related
expenses - 2,201 - - -
--------- --------- --------- --------- -------
Net Income (loss),
excluding
amortization of
intangibles and
deferred stock
compensation and
acquisition related
expenses $ 9,645 $ (7,372)$ 4,350 $ (1,273)$ 3,179
========= ========= ========= ========= =======
Basic net earnings
(loss) per share,
excluding
amortization of
intangibles and
deferred stock
compensation and
acquisition related
expenses $ 0.17 $ (0.14)$ 0.08 $ (0.02)$ 0.06
========= ========= ========= ========= =======
Weighted average number
of shares used in
computing basic net
earnings (loss) per
share 56,190 51,759 56,885 52,254 56,488
========= ========= ========= ========= =======
Diluted net earnings
(loss) per share,
excluding
amortization of
intangibles and
deferred stock
compensation and
acquisition related
expenses $ 0.15 $ (0.14)$ 0.07 $ (0.02)$ 0.05
========= ========= ========= ========= =======
Weighted average number
of shares used in
computing diluted net
earnings (loss) per
share 63,598 51,759 63,837 52,254 63,651
========= ========= ========= ========= =======
ALVARION LTD.
CONSOLIDATED STATEMENT OF CASH FLOWS
U.S. dollars in thousands
Three
Months
ended
September
30,
---------
Cash flows from operating activities:
Net Income $ 3,670
Adjustments to reconcile net income to net cash used by
operating activities:
Depreciation 1,557
Amortization of deferred stock compensation 11
Unrealized gain from derivative financial instruments 58
Amortization of intangibles 669
Increase in trade receivables (338)
Decrease in other accounts receivable and prepaid expenses 955
Increase in inventories (52)
Decrease in trade payables (1,019)
Decrease in Long term receivables 272
Increase in other accounts payables and accrued expenses 520
Accrued severance pay, net 1
---------
Net cash provided by operating activities 6,304
Cash flows from investing activities:
Purchase of fixed assets (970)
Cash and cash equivalents used for the acquisition of
interWAVE (3,247)
---------
Net cash used in investing activities (4,217)
Cash flows from financing activities:
Proceeds from exercise of employees' stock options, net of
expenses 232
---------
Net cash provided by financing activities 232
---------
Increase in cash, cash equivalents, short-term and long-
term investments 2,319
Cash, cash equivalents, short-term and long-term investments
at the beginning of the period 167,609
---------
Cash, cash equivalents, short-term and long-term
investments at the end of the period $ 169,928
=========
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