Powerwave Technologies Reports Third Quarter Results.SANTA ANA Santa Ana, city, El Salvador Santa Ana (sän'tä ä`nä), city (1993 pop. 129,873), W El Salvador. It is the second largest city in the country and the commercial and processing center for a sugarcane, coffee, and cattle region. , Calif. -- Powerwave Technologies, Inc. (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 :PWAV) today reported net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight of $217.8 million for its third quarter ended October October: see month. 2, 2005, compared to third quarter fiscal 2004 revenues of $138.3 million. Powerwave also reported third quarter net income of $13.1 million, which includes a pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta total of $5.7 million of acquisition related charges and expenses, including costs and expenses resulting from a preliminary purchase price allocation The apportionment or designation of an item for a specific purpose or to a particular place. In the law of trusts, the allocation of cash dividends earned by a stock that makes up the principal of a trust for a beneficiary usually means that the dividends will be treated as of the acquisition of selected assets and liabilities of REMEC, Inc.'s Wireless Systems Business (the "REMEC Acquisition"), which closed on September September: see month. 2, 2005. For the third quarter of 2005, Powerwave's net income equates to diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of of 11 cents, and basic earnings per share of 13 cents for the same period. This compares to net income of $2.8 million, or basic and diluted earnings per share of 3 cents for the prior year period. Powerwave completed the acquisition of LGP LGP Linux Game Publishing LGP Low Ground Pressure LGP Local Governance Program (Iraq) LGP LG.Philips LGP Lysosomal Membrane Glycoprotein LGP Linux Global Partners LGP Left-Green Alliance (Iceland) Allgon Holding AB during the second quarter of 2004 and, therefore, the results reported herein include the results of LGP Allgon Holding AB for the entire third quarter of both fiscal year 2004 and 2005. Powerwave completed the REMEC Acquisition on September 2, 2005 and, therefore, the results reported herein include the results of the selected wireless assets of REMEC, Inc. only for the month of September 2005, and are not included for fiscal year 2004. For the third quarter of fiscal 2005, excluding all acquisition related charges and expenses, Powerwave would have reported operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. of $22.0 million, net income after taxes of $18.2 million and diluted earnings per share of 15 cents. For the first nine months of fiscal 2005, Powerwave reported total net sales of $566.3 million compared with $317.5 million for the first nine months of fiscal 2004. The first nine months of 2005 include the results of LGP Allgon for the entire period while the first nine months of 2004 only include the results of LGP Allgon from May 2004. The results of the REMEC Acquisition are only included for the month of September 2005. Powerwave reported total net income for the first nine months of fiscal 2005 of $31.5 million, or diluted earnings per share of 27 cents, compared to a net loss of $30.6 million or a 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. loss per share of 35 cents for the first nine months of fiscal 2004. The results for the first nine months of 2005 include $13.6 million of acquisition related charges and expenses, and the results for the first nine months of 2004 include $33.3 million of acquisition 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). related charges and expenses. "For our third quarter, we are happy to report the successful completion of our acquisition of selected wireless assets and liabilities from REMEC as well as extremely proud to report sequential One after the other in some consecutive order such as by name or number. quarterly revenue growth and, once again, a record revenue quarter for Powerwave," stated Ronald Buschur, President and Chief Executive Officer of Powerwave Technologies. "While we are focused on integrating our recent acquisition of the selected assets and liabilities of REMEC's wireless business, we continue to refine our manufacturing excellence as well as drive additional synergies and improvements through our global organization. We believe that we are poised to build upon our market leading position and product portfolio with the addition of REMEC's wireless product portfolio to Powerwave's existing suite of global wireless infrastructure products and services. This will further enhance our leadership position in both the 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 and direct to operator markets." For the third quarter of 2005, total Americas A·mer·i·cas , the See America. revenues were $95.0 million or approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 44% of revenues, as compared to $32.3 million or approximately 23% of revenues for the third quarter of 2004. Total sales to customers based in Asia accounted for approximately 8% of revenues or $17.5 million for the third quarter of 2005, compared to 12% of revenues or $16.0 million for the third quarter of 2004. Total Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). , Africa and Middle East revenues for the third quarter of 2005
were $105.3 million or approximately 48% of revenues, as compared to
$90.0 million or approximately 65% of revenues for the third quarter of
2004.For the third quarter of 2005, sales of antenna systems totaled $77.5 million or 36% of total revenues, base station systems sales totaled $107.6 million or 49% of revenues, coverage systems sales totaled $22.9 million or 11% of revenues, and contract manufacturing accounted for $9.8 million or 4% of total revenues for the third quarter. For the third quarter of 2005, Powerwave further diversified diversified (di·verˑ·s its customer base with only two customers each accounting for over 10% of sales for the quarter. Powerwave's largest individual customers for the third quarter were Cingular Wireless, which accounted for approximately 17% of revenues, and Nokia Nokia (nō`kēä), town (1996 pop. 26,326), Western Finland prov., SW Finland, on Lake Näsijärvi. It is an industrial community where wood and rubber products are manufactured. , which accounted for over 10% of revenues. In terms of customer profile for the third quarter of 2005, our total OEM sales accounted for approximately 39% of total revenues, total direct and operator sales accounted for approximately 57% of revenues, and contract manufacturing accounted for 4% of revenues for the quarter. Balance Sheet At October 2, 2005, Powerwave had total cash and cash equivalents of $224.4 million, which included restricted cash of $6.6 million. Total net inventories were $111.8 million and net accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying were $210.9 million. Non-GAAP Financial Information This press release includes certain non-GAAP financial information as defined by the U.S. Securities and Exchange Commission Regulation G. Pursuant to the requirements of this regulation, a reconciliation of this non-GAAP financial information to our financial statements as prepared 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 in 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. (GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ) is included in this press release. Powerwave's management believes that the presentation of this non-GAAP financial information is useful to our investors and the investment community since it excludes certain 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 expenses arising from the acquisitions of LGP Allgon, Kaval The kaval [kaˈval] is a chromatic end-blown flute traditionally played throughout Azerbaijan, Turkey, Bulgaria, Republic of Macedonia, Kosovo / Albania (Kavall), northern Greece (Kavali or Dzhamara), southern Romania Wireless and the REMEC Acquisition, including restructuring charges 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. and the amortization of certain 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. resulting from the purchase accounting valuation of these acquisitions. Management of Powerwave believes that these items should be excluded when comparing our current operating results with those of prior periods as the restructuring charges will not impact future operating results and the amortization of intangible assets is a non-cash expense Noun 1. non-cash expense - an expense (such as depreciation) that is not paid for in cash disbursal, disbursement, expense - amounts paid for goods and services that may be currently tax deductible (as opposed to capital expenditures) . Purchase Accounting for REMEC Wireless Acquisition Powerwave has made a preliminary allocation of the purchase consideration for the selected assets and liabilities of the wireless systems business of REMEC, Inc. to tangible Possessing a physical form that can be touched or felt. Tangible refers to that which can be seen, weighed, measured, or apprehended by the senses. A tangible object is something that is real and substantial. An automobile is an example of tangible Personal Property. and intangible assets and liabilities based on an estimate of the fair value determined by management with the assistance of independent valuation specialists. This allocation is preliminary and subject to change and any change might impact depreciation and amortization of certain tangible and intangible assets for future periods. Company Background Powerwave Technologies, Inc. is a global supplier of end-to-end end-to-end a pattern of anastomosis in which severed ends are matched and united, in contrast with other patterns such as end-to-side or side-to-side. Usually applied to anastomosis of the intestine. wireless solutions for wireless communications wireless communications System using radio-frequency, infrared, microwave, or other types of electromagnetic or acoustic waves in place of wires, cables, or fibre optics to transmit signals or data. networks. Powerwave designs, manufactures and markets antennas, boosters, combiners, filters, repeaters, multi-carrier RF power amplifiers An RF power amplifier is a type of electronic amplifier used to convert a low-power radio-frequency signal into a larger signal of significant power, typically for driving the antenna of a transmitter. and tower-mounted amplifiers and advanced coverage solutions, all for use in cellular, 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. and 3G networks throughout the world. Corporate headquarters are located at 1801 E. St. Andrew Place, Santa Ana, Calif. 92705. For more information on Powerwave's advanced wireless coverage and capacity solutions, please call (888)-PWR-WAVE (797-9283) or visit our web site at www.powerwave.com. Powerwave, Powerwave Technologies and the Powerwave logo are registered trademarks of Powerwave Technologies, Inc. Attached to this news release are preliminary unaudited consolidated financial statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge for the third quarter ended October 2, 2005. Conference Call Powerwave is providing a simultaneous Webcast and live dial-in number of its third quarter fiscal 2005 financial results conference call on Thursday Thursday: see week. , November November: see month. 3, 2005, at 2:00 PM Pacific time. To access this audio Webcast, select the Investor Relations Investor relations The process by which the corporation communicates with its investors. page at www.powerwave.com and select the Powerwave Technologies third quarter conference call. The call will last for approximately 1 hour. To listen to the live call, please call (617) 213-8899 and enter reservation A clause in a deed of real property whereby the grantor, one who transfers property, creates and retains for the grantor some right or interest in the estate granted, such as rent or an Easement ,a right of use over the land of another. number 48011402. A replay of the Webcast will be available beginning approximately 2 hours after completion of the initial Webcast. Additionally, an audio playback Playback could mean:
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. The foregoing statements regarding experiencing increasing demand in the wireless communications infrastructure industry and the ability to further enhance our leadership position in both the OEM and direct to operator markets due to the acquisition of REMEC's Wireless business are both "forward-looking statements." These statements are subject to numerous risks and uncertainties which could cause our actual results to differ materially from those projected or implied Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. . Such potential risks and uncertainties include, but are not limited to, in no particular order: delays or cancellations of wireless network capacity expansions and buildouts for both existing 2G and 2.5G networks and new 3G networks; we require continued success in the design of new wireless infrastructure products and such products must be manufacturable and of good quality and reliability; the inability to realize anticipated costs savings and synergies from the acquisition of REMEC's wireless business; difficulties integrating the REMEC Wireless business; our dependence on single source suppliers for certain key components used in our products exposes us to potential material shortages; our business requires continued favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. business conditions and growth in the wireless communications market. Powerwave also notes that its reported financial performance and period to period comparisons are not necessarily indicative indicative: see mood. of the results that may be expected in the future and Powerwave believes that such comparisons cannot be relied upon as indicators of future performance. Powerwave also notes that the market price of its Common Stock has exhibited high levels of volatility Volatility 1. A statistical measure of the tendency of a market or security to rise or fall sharply within a period of time. 2. A variable in option pricing formulas that denotes the extent to which the return of the underlying asset will fluctuate between now and the and therefore may not be suitable for all investors. More detailed information on these and additional factors which could affect Powerwave's operating and financial results are described in the Company's 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 the fiscal year ended January January: see month. 2, 2005, the Form 10-Q Form 10-Q See 10-Q. for the quarterly period ended July July: see month. 3, 2005, both of which are filed with the Securities and Exchange Commission, and other risks detailed from time to time in the Company's reports filed with the Securities and Exchange Commission. Powerwave urges all interested parties to read these reports to gain a better understanding of the many business and other risks that the Company faces. Additionally, Powerwave undertakes no obligation to publicly release the results of any revisions to these forward-looking statements which may be made to reflect events or circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or occurring after the date hereof here·of adv. Of this. hereof Adverb Formal or law of or concerning this Adv. 1. hereof - of or concerning this; "the twigs hereof are physic" or to reflect the occurrence of unanticipated events.
POWERWAVE TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
Three Months Ended Nine Months Ended
(unaudited) (unaudited)
Oct. 2, Oct. 3, Oct. 2, Oct. 3,
2005 2004 2005 2004
Net sales $217,823 $138,291 $566,336 $317,496
Cost of sales:
Cost of goods 160,217 101,901 416,110 246,422
Intangible asset
amortization 2,120 1,643 5,861 2,771
Acquired inventory
incremental costs(a) 1,405 - 1,405 506
Total cost of sales 163,742 103,544 423,376 249,699
Gross profit 54,081 34,747 142,960 67,797
Operating expenses:
Sales and marketing 10,037 9,818 28,681 19,672
Research and development 14,789 11,533 44,843 33,868
General and administrative 10,811 7,193 29,505 16,683
Intangible asset
amortization 2,031 2,666 5,892 4,434
In-process research and
development - - 350 23,450
Restructuring and
impairment charges 116 102 116 2,103
Total operating expenses 37,784 31,312 109,387 100,210
Operating income (loss) 16,297 3,435 33,573 (32,413)
Other income (expense) (1,736) (312) 1,416 24
Income (loss) before income
taxes 14,561 3,123 34,989 (32,389)
Provision (benefit) for income
taxes 1,456 324 3,499 (1,763)
Net income (loss) $13,105 $2,799 $31,490 $(30,626)
Earnings (loss) per share
- basic: $.13 $.03 $.31 ($.35)
- diluted(b): $.11 $.03 $.27 ($.35)
Weighted average common shares
used in computing per share
amounts - basic: 103,473 104,343 100,927 86,467
- diluted: 136,214 104,837 133,192 86,467
(a) This represents costs related to the write up of acquired REMEC
Wireless finished goods inventory to fair value in the third
quarter 2005, and for the first nine months of 2004 relates to the
write up of acquired LGP Allgon finished goods inventory to fair
value which were sold during the period.
(b) Diluted earnings per share include the add back of interest
expense costs associated with the assumed conversion of the
Company's outstanding convertible subordinated notes, which on a
pre-tax basis equals approximately $1.8 million for the third
quarter 2005 and approximately $5.3 million for the first nine
months of 2005. The third quarter 2004 earnings per share and the
first nine months of 2004 loss per share do not include an add
back as the effect would be anti-dilutive.
POWERWAVE TECHNOLOGIES, INC.
PERCENTAGE OF NET SALES
Three Months Nine Months
Ended Ended
(unaudited) (unaudited)
Oct. 2, Oct. 3, Oct. 2, Oct. 3,
2005 2004 2005 2004
Statement of Operations Data:
Net sales 100.0% 100.0% 100.0% 100.0%
Cost of sales:
Cost of goods 73.6 73.7 73.5 77.6
Intangible asset amortization 1.0 1.2 1.0 0.9
Acquired inventory incremental
costs 0.6 - 0.3 0.1
Total cost of sales 75.2 74.9 74.8 78.6
Gross profit 24.8 25.1 25.2 21.4
Operating expenses:
Sales and marketing 4.6 7.1 5.1 6.2
Research and development 6.8 8.3 7.9 10.7
General and administrative 4.9 5.2 5.2 5.3
Intangible asset amortization 0.9 1.9 1.0 1.3
In-process research and development - - 0.1 7.4
Restructuring and impairment
charges 0.1 0.1 - 0.7
Total operating expenses 17.3 22.6 19.3 31.6
Operating income (loss) 7.5 2.5 5.9 (10.2)
Other income (expense) (0.8) (0.2) 0.3 -
Income (loss) before income taxes 6.7 2.3 6.2 (10.2)
Provision (benefit) for income taxes 0.7 0.3 0.6 (0.6)
Net income (loss) 6.0% 2.0% 5.6% (9.6%)
POWERWAVE TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
RECONCILIATION OF PRO FORMA RESULTS
(in thousands, except per share amounts)
Three Months Ended
(unaudited)
Pro Forma
Oct. 2, Adjust- Oct. 2,
2005 ments 2005
Net sales $217,823 $217,823
Cost of sales:
Cost of goods 160,217 160,217 416,110
Intangible asset amortization 2,120 (2,120)(a) -
Acquired inventory incremental costs 1,405 (1,405)(b) -
Total cost of sales 163,742 (3,525) 160,217
Gross profit 54,081 3,525 57,606
Operating expenses:
Sales and marketing 10,037 10,037
Research and development 14,789 14,789
General and administrative 10,811 10,811
Intangible asset amortization 2,031 (2,031)(c) -
Restructuring & impairment charges 116 (116)(d) -
In-process R&D - - -
Total operating expenses 37,784 (2,147) 35,637
Operating income 16,297 5,672 21,969
Other income (expense) (1,736) (1,736)
Income before income taxes 14,561 5,672 20,233
Provision for income taxes 1,456 567 (f) 2,023
Net income $13,105 5,105 $18,210
Earnings per share - basic: $.13 $.18
- diluted(g): $.11 $.15
Weighted average common shares used in
computing per share amounts - basic: 103,473 103,473
- diluted: 136,214 136,214
Nine Months Ended
(unaudited)
Pro Forma
Oct. 2, Adjust- Oct. 2,
2005 ments 2005
Net sales $566,336 $566,336
Cost of sales:
Cost of goods 416,110
Intangible asset amortization 5,861 (5,861)(a) -
Acquired inventory incremental costs 1,405 (1,405)(b) -
Total cost of sales 423,376 (7,266) 416,110
Gross profit 142,960 7,266 150,226
Operating expenses:
Sales and marketing 28,681 28,681
Research and development 44,843 44,843
General and administrative 29,505 29,505
Intangible asset amortization 5,892 (5,892)(c) -
Restructuring & impairment charges 116 (116)(d) -
In-process R&D 350 (350)(e) -
Total operating expenses 109,387 (6,358) 103,029
Operating income 33,573 13,624 47,197
Other income (expense) 1,416 1,416
Income before income taxes 34,989 13,624 48,613
Provision for income taxes 3,499 1,362 (f) 4,861
Net income $31,490 12,262 $43,752
Earnings per share - basic: $.31 $.43
- diluted(g): $.27 $.36
Weighted average common shares used in
computing per share amounts - basic: 100,927 100,927
- diluted: 133,192 133,192
(a) This represents costs related to the amortization of acquired
technology.
(b) This represents costs related to the write up of acquired REMEC
Wireless finished goods inventory to fair value which were sold
during the period.
(c) This represents costs related to the amortization of other
identified intangible assets.
(d) This represents a restructuring charge related to the REMEC
Wireless acquisition included in operating expenses.
(e) This represents the charge for the acquired in-process research
and development associated with the Kaval Wireless acquisition.
(f) This represents the change in the provision for income taxes
related to the preceding pro forma adjustments to arrive at an
assumed effective tax rate of 10%.
(g) Diluted earnings per share include the add back of interest
expense costs associated with the assumed conversion of the
Company's outstanding convertible subordinated notes, which on a
pre-tax basis equals approximately $1.8 million for the third
quarter 2005 and approximately $5.3 million for the first nine
months of 2005.
POWERWAVE TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
Oct. 2, 2005 Jan. 2, 2005
ASSETS: (unaudited)(a) (audited)(b)
Cash and cash equivalents $217,843 $147,451
Short-term investments - 135,200
Restricted cash 6,550 6,815
Accounts Receivable, net 210,866 133,060
Inventories, net 111,846 65,819
Property, plant and equipment, net 178,831 146,430
Other assets 392,498 385,996
Total assets $1,118,434 $1,020,771
LIABILITIES AND SHAREHOLDERS' EQUITY:
Accounts payable $103,254 $79,534
Long-term debt 330,000 330,000
Accrued expenses and other liabilities 114,873 95,625
Total shareholders' equity 570,307 515,612
Total liabilities and shareholders' equity $1,118,434 $1,020,771
(a) October 2, 2005 balances are preliminary and subject to purchase
accounting and reclassification adjustments.
(b) January 2, 2005 balances were derived from audited financial
statements.
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