Alvarion Reports Second Quarter 2006 Results; WiMAX Grows 23% Sequentially; Breakeven Non-GAAP EPS.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 and specialized spe·cial·ize v. spe·cial·ized, spe·cial·iz·ing, spe·cial·iz·es v.intr. 1. To pursue a special activity, occupation, or field of study. 2. mobile networks, today announced financial results for the second quarter ended June June: see month. 30, 2006. Q2 highlights: --Continued sequential One after the other in some consecutive order such as by name or number. growth to $50.5 million --BreezeMAX revenue increased 23% over Q1 to one-third of total revenue --Breakeven non-GAAP EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. (GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). loss of $0.45 per share) --Self-install CPE (Customer Premises Equipment) Communications equipment that resides on the customer's premises. CPE - Customer Premises Equipment and high power base stations began shipping in Q2 --First order for 802.16e-capable solution from Tier 1 carrier --Demonstrated 802.16-e mobile WiMAX See WiMAX and 802.16. base station interoperability The capability of two or more hardware devices or two or more software routines to work harmoniously together. For example, in an Ethernet network, display adapters, hubs, switches and routers from different vendors must conform to the Ethernet standard and interoperate with each other. with various mobile WiMAX devices Revenue for the second quarter reached $50.5 million, up 5% sequentially se·quen·tial adj. 1. Forming or characterized by a sequence, as of units or musical notes. 2. Sequent. se·quen from $48.1 million in the first quarter of 2006. Revenue in Q2 2006 increased 7% from $47.0 million in the second quarter of 2005. On a GAAP basis, the company reported a net loss of $(27.6) million, or $(0.45) per share, compared with a net loss of $(5.0) million, or $(0.08) per share in Q1 2006, and net loss of $(3.6) million, or $(0.06) per basic and 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. share in the second quarter of 2005. During the early part of the second quarter, the rate of order intake intake /in·take/ (in-tak´) the substances, or the quantities thereof, taken in and utilized by the body. intake, n the substance or quantities thereof taken in and used by the body. in Alvarion's cellular mobile unit (CMU CMU - Carnegie Mellon University ) was lower than anticipated. As a result, management decided to refocus Verb 1. refocus - focus once again; The physicist refocused the light beam" focus - cause to converge on or toward a central point; "Focus the light on this image" 2. the business to concentrate on generating positive cash flow and conducted an impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. analysis of goodwill and other intangibles Property that is a "right" such as a patent, Copyright, or trademark, or one that is lacking physical existence, such as good will. . As a result, the net loss in Q2 2006 includes a non-cash goodwill impairment charge of $23.4 million. In addition, Q2 includes a 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. of $1.1 million relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the re organizing and refocusing Noun 1. refocusing - focusing again focalisation, focalization, focusing - the act of bringing into focus of the cellular mobile unit around its 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. business aimed at enabling this unit to be cash flow positive as soon as possible. Q2 net loss also includes amortization of deferred stock compensation of $1.7 million, and amortization of acquired intangibles of $1.1 million. Q2 of 2005 includes amortization of deferred stock compensation of $11,000 and amortization of acquired intangibles of $1.1 million. Excluding amortization of acquired intangibles and deferred stock compensation, and one time charges, on a non-GAAP basis, Q2 2006 net loss was reduced to $(242,000), or ($0.00) per share, compared with a net loss of ($2.4) million, or ($0.04) per share in the first quarter of 2006, and a non-GAAP net loss of $(2.5) million, or $(0.04) per share in Q2 of 2005. For supplemental information to facilitate evaluation of the impact of non-cash charges Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. and comparisons with historical results, see the attached table showing the detailed reconciliation of GAAP to non-GAAP for Q2 2006. Comments of Management "We are pleased with our progress in Q2," said Tzvika Friedman Fried·man , Milton Born 1912. American economist. He won a 1976 Nobel Prize for his theories of monetary control and governmental nonintervention in the economy. Noun 1. , President 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. of Alvarion. "We achieved our major objectives and exceeded several of our targets for Q2. Our revenue growth and high gross margin, combined with our success in reducing operational losses in the cellular mobile unit, enabled us to reach breakeven breakeven 1. The level of output or sales necessary to cover fixed expenses. Companies in industries that have high fixed costs and, consequently, high breakevens, such as automobile and steel manufacturing, are likely to exhibit large fluctuations EPS on a non-GAAP basis. We are committed to profitability and generating cash, and this quarter represents solid progress. "Alvarion continues to lead the industry in the adoption of WiMAX (World Interoperability for Microwave Access, Inc., www.wimaxforum.org) An organization founded in 2001 that promotes the IEEE 802.16 wireless broadband standard and provides certification for devices for compliant devices. ," continued Mr. Friedman. "In Q2, WiMAX solutions contributed $17 million, about 33% of total revenue. Among our more than 70 commercial deployments are some of the largest and most successful anywhere in the world. We are please to see several satisfied customers expanding their networks for the second or third time, as new customers begin commercial deployment with smaller purchases, mostly of infrastructure. "During Q2, we announced commercial availability of our self-install CPE based on Intel's Rosedale Rosedale is the name of more than one place. Australia
tr.v. ful·filled, ful·fill·ing, ful·fills also ful·fils 1. To bring into actuality; effect: fulfilled their promises. 2. our commitment to the certification process. In addition, our 100+ active trials now include evaluations of our 802,16e-capable systems, as the market shifts its attention toward the 802.16e-2005 standard for all types of applications. We are pleased to report that we received our first order for a system based on the "e" standard during Q2 from a Tier 1 operator in the US. We believe our proven ability to deliver working solutions in a variety of frequencies on a timely basis, our large base of satisfied customers and extensive field experience will provide a significant advantage in competing with smaller competitors introducing 802.16-2004 based solutions as well as larger vendors coming into the market for the first time with 802-16e-2005 based solutions. We also believe our track record makes us an attractive partner for operators, system integrators See systems integrator. , device manufacturers and other participants in the WiMAX ecosystem, and we are very focused on further developing these relationships. "As the WiMAX technology leader, we were the first to reach another important milestone “Milemarker” redirects here. For the American indie rock band, see Milemarker (band). A milestone or kilometre sign is one of a series of numbered markers placed along a road at regular intervals, typically at the side of the road or in a median. in Q2 by achieving interoperability between BreezeMAX and a variety of WiMAX mobile devices. BreezeMAX is the Radio Access Network of 4Motion, our complete WiMAX 802.16e-2005 solution portfolio that we are developing in conjunction with leading providers of core network and IP technology to make personal broadband broadband Term describing the radiation from a source that produces a broad, continuous spectrum of frequencies (contrasted with a laser, which produces a single frequency or very narrow range of frequencies). anywhere a reality. We continue to target improved financial performance while devoting substantial resources to the development of mobile WiMAX in order to enhance our long term growth prospects." Q3 Guidance The Company's revenue guidance for Q3 2006 is $50 million to $54 million. At this revenue range, non-GAAP per share results are expected to range between ($0.01) and $0.02, GAAP per share results are expected to range between ($0.03) and ($0.06). Alvarion's management will host a conference call today, Aug 2, 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: 612-288-0329, International: +1-612-288-0329. 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 11:45 a.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 August 2, 2006 through 11:59 p.m. EDT on August 9, 2006. 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: 835663. About Alvarion With more than 2 million units deployed in 150 countries, Alvarion is the world's leading provider of innovative wireless network solutions enabling personal broadband services See broadband and broadband service provider. to improve lifestyles and productivity with portable and mobile data, VoIP, video and other applications. Providing systems to carriers, ISPs and private network operators, the company also supplies solutions to extend coverage of GSM 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. mobile networks to developing countries and other hard to serve areas. Leading the WiMAX revolution, Alvarion has the most extensive deployments and proven product portfolio in the industry covering the full range of frequency bands with both fixed and mobile solutions. 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 (1) The geographic boundary covered by a Wi-Fi (802.11) wireless access point. Typically set up for Internet access, anyone entering the hotspot with a Wi-Fi-based laptop can connect to the Internet, providing the access point is configured to advertise its presence and 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. , public safety communications, and mobile voice and data. Alvarion works with several global 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 more than 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 more than 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 in deploying OFDM-based systems, the Company's prominent work in the WiMAX Forum(TM) is focused on increasing the widespread adoption of standards-based products in the wireless broadband market and leading the entire industry to mobile WiMAX solutions. For more information, visit Alvarion's World Wide Web site at www.alvarion.com This press release contains forward -looking statements 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 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. : 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 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 Deville may refer to:
The process by which the corporation communicates with its investors. : carmen.deville@alvarion.com or +1.650.314.2653.
ALVARION LTD.& ITS SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands
June 30, December 31,
2006 2005
----- ----
ASSETS
Cash, cash equivalents, short-term and long-term
investments $107,450 $114,320
Trade receivables 44,441 39,271
Other accounts receivable 6,709 6,179
Inventories 36,661 43,363
Severance pay fund 8,190 7,685
PROPERTY AND EQUIPMENT, NET 10,685 11,072
GOODWILL AND OTHER INTANGIBLE ASSETS 70,552 96,112
-------- --------
TOTAL ASSETS $284,688 $318,002
----- ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Trade payables $ 25,071 $ 29,093
Other accounts payable and accrued expenses 49,567 51,820
-------- --------
Total current liabilities 74,638 80,913
-----
LONG TERM LIABILITIES - 1,749
ACCRUED SEVERANCE PAY 11,649 11,007
-------- --------
TOTAL LIABILITIES 86,287 93,669
-----
SHAREHOLDERS' EQUITY 198,401 224,333
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $284,688 $318,002
----- ======== ========
ALVARION LTD.& ITS SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
U.S. dollars in thousands (except per share data)
Six Six Three Three Three
Months Months Months Months Months
Ended Ended Ended Ended Ended
June 30, June 30, June 30, June 30, March 31,
-------- -------- -------- ------- --------
2006 2005 2006 2005 2006
-------- -------- -------- ------- -------
Sales $ 98,530 $104,216 $ 50,471 $46,983 $48,059
Cost of sales 51,886 55,891 25,874 25,152 26,012
-------- -------- -------- ------- -------
Gross profit 46,644 48,325 24,597 21,831 22,047
-------- -------- -------- ------- -------
Operating expenses:
Research and development,
net 22,281 19,394 11,275 10,038 11,006
Selling and marketing 24,361 24,060 12,236 12,071 12,125
General and administrative 7,320 6,315 3,859 2,935 3,461
Amortization of acquired
current technology,
customer relationships and
trademarks 2,182 2,187 1,091 1,093 1,091
Acquisition related
expenses - 868 - - -
Impairment of goodwill 23,378 - 23,378 - -
Restructuring related
expenses 1,148 - 1,148 - -
-------- -------- -------- ------- -------
Total Operating expenses 80,670 52,824 52,987 26,137 27,683
-------- -------- -------- ------- -------
Operating loss (34,026) (4,499) (28,390) (4,306) (5,636)
Financial income, net 1,492 1,294 824 745 668
-------- -------- -------- ------- -------
Net loss $(32,534)$ (3,205)$(27,566)$(3,561)$(4,968)
-------- -------- -------- ------- -------
Basic loss per share $ (0.54)$ (0.06)$ (0.45)$ (0.06)$ (0.08)
======== ======== ======== ======= =======
Weighted average number of
shares used in computing
basic loss per share 60,501 58,274 60,806 58,463 60,192
======== ======== ======== ======= =======
Diluted loss per share $ (0.54)$ (0.06)$ (0.45)$ (0.06)$ (0.08)
======== ======== ======== ======= =======
Weighted average number of
shares used in computing
diluted loss per share 60,501 58,274 60,806 58,463 60,192
======== ======== ======== ======= =======
ALVARION LTD.& ITS SUBSIDIARIES
DISCLOSURE OF NON-US GAAP NET INCOME (LOSS)
FOR COMPARATIVE PURPOSES NET INCOME (LOSS) AND EARNINGS (LOSS) PER
SHARE EXCLUDING AMORTIZATION OF ACQUIRED INTANGIBLES, DEFERRED STOCK
COMPENSATION, GOODWILL IMPAIRMENT AND OTHER RESTRUCTURING AND
ACQUISITION RELATED EXPENSES
U.S. dollars in thousands (except per share data)
Six Six Three Three Three
Months Months Months Months Months
Ended Ended Ended Ended Ended
June 30, June 30, June 30, June 30, March 31,
-------- ------- -------- ------- ---------
2006 2005 2006 2005 2006
-------- ------- -------- ------- ---------
Net loss according to US
GAAP $(32,534)$(3,205)$(27,566)$(3,561)$(4,968)
Amortization of acquired
current technology,
customer relationships and
trademarks 2,182 2,187 1,091 1,093 1,091
Amortization of deferred
stock compensation 3,218 541 1,707 11 1,511
Acquisition related
expenses - 868 - - -
Impairment of goodwill 23,378 - 23,378 - -
Restructuring related
expenses 1,148 - 1,148 - -
-------- ------- -------- ------- -------
Net Income (loss) excluding
amortization of
intangibles and deferred
stock compensation,
acquisition related
expenses, goodwill
impairment and
restructuring related
expenses $ (2,608)$ 391 $ (242)$(2,457)$(2,366)
======== ======= ======== ======= =======
Basic net earnings (loss)
per share, excluding
amortization of
intangibles and deferred
stock compensation,
acquisition related
expenses, goodwill
impairment and
restructuring related
expenses $ (0.04)$ 0.01 $ (0.00)$ (0.04)$ (0.04)
======== ======= ======== ======= =======
Weighted average number of
shares used in computing
basic net earnings (loss)
per share 60,501 58,274 60,806 58,463 60,192
======== ======= ======== ======= =======
Diluted net earnings (loss)
per share, excluding
amortization of
intangibles and deferred
stock compensation,
acquisition related
expenses, goodwill
impairment and
restructuring related
expenses $ (0.04)$ 0.01 $ (0.00)$ (0.04)$ (0.04)
======== ======= ======== ======= =======
Weighted average number of
shares used in computing
diluted net earnings (loss)
per share 60,501 60,630 60,806 58,463 60,192
======== ======= ======== ======= =======
ALVARION LTD.& ITS SUBSIDIARIES
RECONCILIATION BETWEEN GAAP TO NON- GAAP STATEMENT OF INCOME
U.S. dollars in thousands (except per share data)
Three
Months
Ended
Three Months Ended March 31,
June 30, 2006 2006
------------------------------ -------
GAAP Adjustments Non-GAAP Non-GAAP
-------- -------------- ---------------
Sales $ 50,471 $ - $50,471 $48,059
Cost of sales 25,874 (131)(a) 25,743 25,897
-------- ----------- ------- -------
Gross profit 24,597 131 24,728 22,162
-------- ----------- ------- -------
Operating expenses:
Research and development, net 11,275 (395)(a) 10,880 10,679
Selling and marketing 12,236 (380)(a) 11,856 11,824
General and administrative 3,859 (801)(a) 3,058 2,693
Amortization of acquired (b)
current technology, customer
relationships and trademarks 1,091 (1,091) - -
Impairment of goodwill 23,378 (23,378)(c) - -
Restructuring related (c)
expenses 1,148 (1,148) - -
-------- ----------- ------- -------
Total Operating expenses 52,987 (27,193) 25,794 25,196
-------- ------- -------
Operating loss (28,390) (1,066) (3,034)
Financial income, net 824 824 668
-------- ------- -------
Net loss $(27,566) $ (242)$(2,366)
-------- ------- -------
Basic loss per share $ (0.45) $ (0.00)$ (0.04)
======== ======= =======
Weighted average number of
shares used in computing
basic loss per share 60,806 60,806 60,192
======== ======= =======
Diluted loss per share $ (0.45) $ (0.00)$ (0.04)
======== ======= =======
Weighted average number of
shares used in computing
diluted loss per share 60,806 60,806 60,192
======== ======= =======
(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.
(c) The effect of the CMU's restructuring charges and goodwill
impairment.
ALVARION LTD.& ITS SUBSIDIARIES
Consolidated Statements of Cash Flows
U.S. dollars in thousands
Three
Months ended
June 30, 2006
-------------
Cash flows from operating activities:
Net loss $(27,566)
Adjustments to reconcile net income to net cash used by
operating activities:
Depreciation 1,147
Amortization of deferred stock compensation 1,707
Amortization of intangibles assets 1,091
Impairment of intangible assets 23,378
Restructuring related expenses 955
Increase in trade receivables (3,456)
Increase in other accounts receivable and prepaid expenses (638)
Decrease in inventories 1,508
Increase in trade payables 108
Increase in other accounts payables and accrued expenses 143
Accrued severance pay, net (169)
--------
Net cash used in operating activities (1,792)
Cash flows from investing activities:
Purchase of fixed assets (734)
--------
Net cash used in investing activities (734)
Cash flows from financing activities:
Proceeds from exercise of employees' stock options 557
--------
Net cash provided by financing activities 557
--------
Decrease in cash, cash equivalents, short-term and long-term
investments (1,969)
--------
Cash, cash equivalents, short-term and long-term investments
at the beginning of the period 109,419
--------
Cash, cash equivalents, short-term and long-term investments
at the end of the period $107,450
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