Novatel Wireless Announces First Quarter Results; Company Has Signed Agreements With AT&T Wireless, Dell, Microcell, mmO2, Sprint PCS, and Voicestream.Business Editors/High-Tech Writers SAN DIEGO--(BUSINESS WIRE)--April 22, 2002 Novatel Wireless Novatel Wireless, Inc. (NASDAQ: NVTL) is a San Diego, California-based designer and manufacturer of wireless broadband access solutions. With European offices in United Kingdom, Germany, and France, Novatel Wireless owns 30 technology patents relating to wireless voice and , Inc. (Nasdaq:NVTL), a leading provider of wireless data communications data communications, application of telecommunications technology to the problem of transmitting data, especially to, from, or between computers. In popular usage, it is said that data communications make it possible for one computer to "talk" with another. access solutions, today reported financial results for the first quarter ended March 31, 2002. Net revenues for the first quarter were approximately $7.3 million, which are flat with $7.3 million in the immediately preceding quarter, nearly double the third quarter and down from $19.7 million in the same period of the prior year. Costs continue to drop dramatically, resulting in significant improvements to both reported and pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma bottom line numbers. Pro forma net loss excluding 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. improved by $961,000 sequentially and $5.7 million from the prior year, to $6.4 million or $0.11 per share. This compared to a pro forma net loss of $7.3 million, or $0.13 per share in the previous quarter and a pro forma net loss of $12.1 million, or $0.22 per share in the first quarter of 2001. Net loss under Generally Accepted Accounting Principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting was $8.0 million, or $0.13 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, compared to $22.4 million, or $0.41 per basic and diluted share, for the immediately preceding quarter and $25.3 million, or $0.47 per basic and diluted share for the first quarter of 2001. In the first quarter of 2002, the Company incurred amortization of deferred stock compensation of $1.3 million and restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). costs of $249,000. Net loss applicable to common shareholders under Generally Acceptable Accounting Principles was $16.1 million, or $0.27 per basic and diluted share, which includes $ 8.2 million for the accretion The act of adding portions of soil to the soil already in possession of the owner by gradual deposition through the operation of natural causes. The growth of the value of a particular item given to a person as a specific bequest under the provisions of a will between the of dividends and beneficial conversion feature on the December 2001 Series A Preferred Stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. Offering. "As we enter the second quarter, market conditions are now beginning to strengthen as major carriers worldwide begin to aggressively launch comprehensive 2.5G wireless services," commented John Major, Chairman and Chief Executive Officer of Novatel Wireless. "March sales were solid and 2.5G deployment is clearly growing. These positive trends are starting to translate into stronger orders, as evidenced by the recent receipt of $5 million in new purchase orders from a major wireless carrier." "We have made impressive progress and have now signed up three of the top six domestic wireless carriers; four of the top carriers in Europe and Canada; and one of the world's leading PC manufacturers," Mr. Major added. "In total, we have announced over 20 relationships worldwide on 2.5G with leading companies around the globe and are already shipping in volume to many of these partners. Additionally, we are in trials with over 20 customers for 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. 1xRTT and GPRS (General Packet Radio Service) The first high-speed digital data service provided by cellular carriers that used the GSM technology. GPRS added a packet-switched channel to GSM, which uses dedicated, circuit-switched channels for voice conversations. as carriers and equipments manufacturers around the world move forward on advanced wireless solutions for their customers." Recent highlights include: Carrier Deals -- During the quarter, Novatel Wireless announced initial shipments of GSM/GPRS wireless PC modems to Voicestream for use over its nationwide network, with over 7 million subscribers. -- On April 11, Novatel Wireless began commercial shipments to Microcell Solutions of its Merlin Merlin, in Arthurian legend, magician, seer, and teacher at the court of King Vortigern and later at the court of King Arthur. He was a bard and culture hero in early Celtic folklore. In Arthurian legend he is famous as a magician and as the counselor of King Arthur. G100(TM) Wireless PC Card Modem. Microcell Solutions Inc., a subsidiary of Microcell Telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. Inc., is a leading Canadian Canadian (kənā`dēən), river, 906 mi (1,458 km) long, rising in NE New Mexico. and flowing E across N Texas and central Oklahoma into the Arkansas River in E Oklahoma. provider of PCS (1) (Personal Communications Services) Refers to wireless services that emerged after the U.S. government auctioned commercial licenses in 1994 and 1995. This radio spectrum in the 1. under the Fido(R)brand name with over 1.2 million retail customers in Canada. Key Contracts and International Distribution -- The Company disclosed that it has signed an agreement with one of the world's leading PC manufacturers, Dell Computer Corporation (company) Dell Computer Corporation - One of the biggest US manufacturers of IBM PC compatibles. "From notebooks to networks", their slogan says. http://us.dell.com. . Novatel Wireless will provide Dell with the Merlin G201(TM) PC Card for selected laptops targeted at enterprise and small business customers, delivering a user experience some three times faster than dial up access. -- During the quarter, Novatel Wireless began to commercially ship the Merlin G201 to Brightpoint China Ltd. for GSM/GPRS modems. Brightpoint China is a joint venture between Chinatron Group Holdings Limited and Brightpoint, Inc. In related news, it was announced that the Merlin G201 will be available through CSL (Computerese as a Second Language) Said of people who love to speak high-tech words even though they often use them erroneously. See TLA. 1. CSL - Computer Structure Language. A computer hardware description language, written in BCPL. , the second largest operator in Hong Kong Hong Kong (hŏng kŏng), Mandarin Xianggang, special administrative region of China, formerly a British crown colony (2005 est. pop. 6,899,000), land area 422 sq mi (1,092 sq km), adjacent to Guangdong prov. with over 1 million subscribers. -- Novatel Wireless received type certification from the OFTA OFTA Office of the Telecommunications Authority in Hong Kong and from Infocomm Development Authority of Singapore The Infocomm Development Authority of Singapore (Abbreviation: IDA; Chinese: 新加坡资讯通信发展管理局; Malay: Penguasa Pembangunan Infokom Singapura . -- In addition, the Company announced a distribution agreement with Brightpoint Wireless Data Services in Australia and New Zealand New Zealand (zē`lənd), island country (2005 est. pop. 4,035,000), 104,454 sq mi (270,534 sq km), in the S Pacific Ocean, over 1,000 mi (1,600 km) SE of Australia. The capital is Wellington; the largest city and leading port is Auckland. for the Merlin GSM/GPRS Family of Wireless PC Cards. Technology Partnerships -- On March 14, Novatel Wireless and TrellisWare Technologies, Inc. signed a technology agreement to apply TrellisWare's GSM/GPRS technologies to the Novatel Wireless family of access solutions. This solution will enhance the capacity of wireless networks and increase data throughput The speed with which a computer processes data. It is a combination of internal processing speed, peripheral speeds (I/O) and the efficiency of the operating system and other system software all working together. 1. in areas with marginal signal conditions for an improved user experience. -- On March 20, Novatel Wireless announced their wireless compatibility with Palm, Inc.'s new m515 and m130 color handhelds. -- On March 26, the Company was chosen to participate in the Microsoft Mobility Partner Advisory Council, and on April 11 announced receipt of the Microsoft Designed for Windows Logo for Merlin G200 Series Wireless PC Card Modems. "As planned, we cleaned up our balance sheet, paying down over $5.4 million in current liabilities Current Liabilities Usually appearing on a company's balance sheet, it represents the amount owed for interest, accounts payable, short-term loans, expenses incurred but unpaid, and other debts due within one year. and debt during the quarter," Melvin Flowers, Chief Financial Officer added. "Cash flow was positive in March and cash used for operations dropped to approximately $5.3 million for the quarter. Product margins and gross margins, despite a change in product mix and the roll-out of our latest technology, were substantially improved from the same period last year. Moving forward, we expect to increase these margins significantly, while continuing to decrease costs. On this note, we reduced SG&A by 61% or $4.3 million from the prior year period and closed the quarter with over $14 million in cash, despite increasing Account Receivables account receivable Any amount owed to a business as the result of a purchase of goods or services from it on a credit basis. Although the firm making the sale receives no written promise of payment, it enters the amount due as a current asset in its books. and inventory by almost $3.5 million to reflect strong March orders." Novatel Wireless will host a conference call for analysts and investors to discuss its quarterly results at 5:00 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 April 22th, 2002. Open to the public, a live Web cast of the conference call will be accessible from the "Investor Relations Investor relations The process by which the corporation communicates with its investors. " section of Novatel Wireless's Web site (www.novatelwireless.com). Following the live Web cast, an archived version will be available on the Novatel Wireless Web site for 5 days. About Novatel Wireless, Inc. Novatel Wireless, Inc. is a leading provider of wireless data modems A modem used for sending data and not faxes. See modem and fax/modem. and software for use with handheld computing computing - computer devices and portable personal computers. The company delivers innovative and comprehensive solutions that enable businesses and consumers to access personal, corporate and public information through email, enterprise networks and the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the . Novatel Wireless also offers wireless data modems and custom engineering services for hardware integration projects in a wide range of vertical applications. The Novatel Wireless product portfolio includes the Minstrel(R) Family of Wireless Handheld Modems, Merlin(TM) Family of Wireless PC Card Modems, Sage(R) Wireless Serial Modems, Lancer 3W(TM) Family of Ruggedized Modems and Expedite ex·pe·dite tr.v. ex·pe·dit·ed, ex·pe·dit·ing, ex·pe·dites 1. To speed up the progress of; accelerate. 2. (TM) Family of Wireless Embedded Inserted into. See embedded system. Modems. Headquartered in San Diego, California “San Diego” redirects here. For other uses, see San Diego (disambiguation). San Diego is a coastal Southern California city located in the southwestern corner of the continental United States. As of 2006, the city has a population of 1,256,951. , Novatel Wireless is listed on The Nasdaq Stock Market Nasdaq stock market The first electronic stock market listing over 5000 companies. The Nasdaq stock market comprises two separate markets, namely the Nasdaq National Market, which trades large, active securities and the Nasdaq Smallcap Market that trades emerging growth companies. (Nasdaq:NVTL). For more information, please visit the Novatel Wireless Web site: www.novatelwireless.com or call 888/888-9231. Note to Editors: The Novatel Wireless logo, Minstrel, Merlin, Sage, Lancer 3W and Expedite are trademarks of Novatel Wireless, Inc. Minstrel and Sage are registered with the U.S. Patent and Trademark Office. All other brands, products and company names mentioned herein are trademarks of their respective holders. This release may contain 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. , which are made pursuant to 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 United StatesPrivate Securities Litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. Reform Act of 1995. These forward-looking statements involve risks and uncertainties. A number of important factors could cause actual results to differ materially from those in the forward-looking statements. These factors include risks relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc technological changes, continued acceptance of Novatel Wireless' products and dependence on intellectual property rights. These factors, as well as other factors that could cause actual results to differ materially, are discussed in more detail in Novatel Wireless' filings with the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. Securities and Exchange Commission and other regulatory agencies regulatory agency Independent government commission charged by the legislature with setting and enforcing standards for specific industries in the private sector. The concept was invented by the U.S. .
NOVATEL WIRELESS, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31, December 31,
2002 2001
---------------------------------
ASSETS:
Current assets:
Cash and cash equivalents $ 14,137,000 $ 29,229,000
Accounts receivable, net 9,432,000 6,706,000
Accounts receivable
- related parties 539,000 778,000
Inventories 7,452,000 6,470,000
Prepaid expenses and other 1,984,000 2,194,000
---------------------------------
Total current assets 33,544,000 45,377,000
Property and equipment, net 6,805,000 7,744,000
Intangible assets 6,559,000 6,596,000
Other assets 192,000 192,000
---------------------------------
$47,100,000 $59,909,000
=================================
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable $ 10,930,000 $ 12,321,000
Accrued liabilities 2,148,000 2,261,000
Current portion of inventory
purchase commitments 5,000,000 11,749,000
Line of credit 2,081,000 1,560,000
Restructuring accrual 1,474,000 1,764,000
Deferred revenues 286,000 336,000
Current portion of capital
lease obligations 162,000 159,000
---------------------------------
Total current liabilities 22,081,000 30,150,000
---------------------------------
Long-term inventory
purchase commitments 2,000,000 4,000,000
Capital lease obligations, net of
current portion 130,000 171,000
Convertible and redeemable Series A
preferred stock 1,071,000 161,000
Stockholders' equity:
Common stock 67,000 55,000
Additional paid-in capital 218,738,000 208,649,000
Deferred stock-based compensation (3,942,000) (6,341,000)
Accumulated Deficit (193,045,000) (176,936,000)
---------------------------------
Total stockholders' equity 21,818,000 25,427,000
---------------------------------
$47,100,000 $59,909,000
=================================
NOVATEL WIRELESS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended
March 31,
---------------------------------
2002 2001
---------------------------------
Revenue $ 7,272,000 $ 18,257,000
Revenue - related parties 1,480,000
---------------------------------
Total revenue 7,272,000 19,737,000
---------------------------------
Cost of revenue 6,719,000 23,587,000
Cost of revenue - related parties 1,334,000
---------------------------------
Total cost of revenue 6,719,000 24,921,000
---------------------------------
---------------------------------
Gross margin 553,000 (5,184,000)
---------------------------------
Operating costs and expenses:
Research and development 4,148,000 6,622,000
Sales and marketing 1,419,000 4,635,000
General and administrative 1,310,000 2,387,000
Restructuring charges 249,000 3,900,000
Amortization of deferred
stock compensation(a) 1,343,000 3,319,000
---------------------------------
Total operating costs
and expenses 8,469,000 20,863,000
---------------------------------
Operating loss (7,916,000) (26,047,000)
Other income (expense):
Interest income 104,000 807,000
Interest expense (142,000) (64,000)
Other, net (2,000)
---------------------------------
Net loss $ (7,954,000) $ (25,306,000)
=================================
Net loss applicable to
common stockholders $ (16,109,000) $ (25,306,000)
Weighted average shares used
in computation of basic and
diluted net loss per common share 59,321,623 54,103,324
Basic and diluted net loss
per common share $ (0.27) $ (0.47)
(a) Amortization of deferred
stock compensation:
Cost of revenue 280,000 125,000
Research and development 97,000 331,000
Sales and marketing 94,000 322,000
General and administrative 872,000 2,541,000
---------------------------------
$ 1,343,000 $ 3,319,000
=================================
NOVATEL WIRELESS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Pro forma, Excluding Amortization of Deferred Compensation,
Restructuring and Inventory Expenses)
(Unaudited)
Three months ended
March 31,
---------------------------------
2002 2001
---------------------------------
Revenue $ 7,272,000 $ 18,257,000
Revenue - related parties 1,480,000
---------------------------------
Total revenue 7,272,000 19,737,000
---------------------------------
Cost of revenue 6,719,000 17,587,000
Cost of revenue - related parties 1,334,000
---------------------------------
Total cost of revenue 6,719,000 18,921,000
---------------------------------
Gross margin 553,000 816,000
---------------------------------
Operating costs and expenses:
Research and development 4,148,000 6,622,000
Sales and marketing 1,419,000 4,635,000
General and administrative 1,310,000 2,387,000
---------------------------------
Total operating costs
and expenses 6,877,000 13,644,000
---------------------------------
Operating loss (6,324,000) (12,828,000)
Other income (expense):
Interest income 104,000 807,000
Interest expense (142,000) (64,000)
Other, net (2,000)
---------------------------------
Net loss $ (6,362,000) $ (12,087,000)
=================================
Shares used in computation of
pro forma basic and diluted
net loss per share 59,321,623 54,103,324
Pro forma basic and diluted
net loss per share $ (0.11) $ (0.22)
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