Alvarion® Reports Q3 2010 Results
Business continues gradual improvement; cash flow turns positive
TEL AVIV, Israel--(BUSINESS WIRE)-- Alvarion Ltd. (NASDAQ:ALVR), the world’s leading provider of 4G networks in the Broadband Wireless Access (BWA) market, today announced financial results for the third quarter of 2010.
Q3 Highlights:
- Shipments of $63 million, a 9.1% sequential increase
- Revenues of $54.0 million, a 10.2% sequential increase
- GAAP net loss of ($0.10) per share; non-GAAP net loss of ($0.09) per share.
In the third quarter of 2010, total revenues were $54.0 million, an increase of 10.2% from $49 million in the second quarter of 2010, and a decrease of 7.5% from $58.4 million in the third quarter of 2009.
The decline in gross margin to 31.2% from 36.1% in the second quarter of 2010 and 47.2% in the third quarter of 2009 reflected a continued high proportion of third-party equipment, including subscriber devices, in the revenue mix, as well as greater impact from large projects compared with the prior period and the same quarter in 2009.
GAAP net loss in the third quarter of 2010 was ($6.1) million, or ($0.10) per share. This compares to a net loss of ($10.6) million, or ($0.17) per share in Q2 2010, including charges of approximately $3.6 million. GAAP net loss in the third quarter of 2009 was ($1.0) million, or ($0.02) per share.
Excluding the amortization of intangibles, stock based compensation, restructuring and other charges, net, on a non-GAAP basis, the company reported net loss of ($5.4) million in the third quarter of 2010, or ($0.09) per diluted share, compared with non-GAAP net loss of ($6.7) million, or ($0.11) per diluted share in the second quarter of 2010, and non-GAAP net income of $0.2 million, or $0.00 per diluted share in the third quarter of 2009.
Please refer to the accompanying financial table for reconciliation of GAAP financial information to non-GAAP for the third quarter of 2010 and the comparative periods.
Cash provided by operations was $2.2 million. As of September 30, 2010, cash, cash equivalents and investments totaled $93 million.
“We are pleased with the sequential increase in shipments and revenues from existing customers continuing to expand their networks and preparing to serve more subscribers,” said Eran Gorev, President and CEO of Alvarion. “These operators are satisfying increasing demand and implementing successful business models. We are also pleased with the progress we are making on our strategy to expand our relationship with our customers by supplying a complete turnkey solution. For example, after supplying equipment only for its initial deployment, we have now been engaged for a complete turnkey project for Linkem’s second phase. In addition, we continue to make progress on a number of large projects in various regions, as evidenced by our recent deal with Barrett Xplore in Canada. On this project, we expect to begin recognizing significant revenues only in 2011. We are proud of our team’s demonstrated ability to win highly-competitive deals facing world-class competition, at times even prevailing over an incumbent vendor. We are all working together to build on this success.”
Q4 2010 Guidance
Management continues to expect gradual improvement in shipments. Meanwhile, the company is not giving detailed guidance for Q4 because the timing of revenue from various projects cannot be predicted with accuracy.
Alvarion management will host a conference call today, November 3, at 9:00 a.m. Eastern time to discuss the results and other matters.
| Please call the following dial in number to participate: |
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USA: (800) 230-1766; International: +1(612) 332-0335. |
| The public is invited to listen to the live webcast of the conference call. |
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For details please visit Alvarion’s website at www.alvarion.com. |
| An archive of the online broadcast will be available on the website. |
A replay of the call will be available from 11:00 a.m. EDT on November 3, 2010 through 11:59 a.m. EDT on December 3, 2010.
| To access the replay, please call: |
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USA: (800) 475-6701 |
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International: +1(320) 365-3844. |
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To access the replay, users will need to enter the following code: 173235. |
Alvarion has scheduled dates for the earnings announcements during 2010 and this schedule is available on the website at http://www.alvarion.com/index.php/en/investors.
| ALVARION LTD. & ITS SUBSIDIARIES | ||||||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||||||
| U.S. dollars in thousands (except per share data) | ||||||||||||||||||||
| Nine | Nine | Three | Three | Three | ||||||||||||||||
| Months Ended | Months Ended | Months Ended | Months Ended | Months Ended | ||||||||||||||||
| September 30, | September 30, | September 30, | September 30, | June 30, | ||||||||||||||||
| 2010 | 2009 | 2010 | 2009 | 2010 | ||||||||||||||||
| Sales | $ | 154,981 | $ | 184,998 | $ | 54,030 | $ | 58,383 | $ | 49,013 | ||||||||||
| Cost of sales | 98,286 | 100,252 | 37,251 | 30,925 | 31,401 | |||||||||||||||
| Gross profit | 56,695 | 84,746 | 16,779 | 27,458 | 17,612 | |||||||||||||||
| Operating expenses: | ||||||||||||||||||||
| Research and development, net | 29,772 | 39,749 | 8,639 | 12,330 | 9,669 | |||||||||||||||
| Selling and marketing | 32,952 | 39,165 | 9,959 | 12,824 | 11,144 | |||||||||||||||
| General and administrative | 11,886 | 11,503 | 3,911 | 3,757 | 3,931 | |||||||||||||||
| Amortization of intangible assets | 99 | 99 | 33 | 33 | 33 | |||||||||||||||
| Restructuring and other charges (*) | 3,573 | 919 | - | - | 3,573 | |||||||||||||||
| Total Operating expenses | 78,282 | 91,435 | 22,542 | 28,944 | 28,350 | |||||||||||||||
| Operating loss | (21,587 | ) | (6,689 | ) | (5,763 | ) | (1,486 | ) | (10,738 | ) | ||||||||||
| Other loss | - | (749 | ) | - | - | - | ||||||||||||||
| Financial income, net | 576 | 1,551 | 124 | 454 | 102 | |||||||||||||||
| Net loss before Tax | (21,011 | ) | (5,887 | ) | (5,639 | ) | (1,032 | ) | (10,636 | ) | ||||||||||
| Income Tax | 583 | - | 438 | - | (36 | ) | ||||||||||||||
| Net loss | (21,594 | ) | (5,887 | ) | (6,077 | ) | (1,032 | ) | (10,600 | ) | ||||||||||
| Basic net loss per share: | $ | (0.35 | ) | $ | (0.09 | ) | $ | (0.10 | ) | $ | (0.02 | ) | $ | (0.17 | ) | |||||
| Weighted average number of shares used in computing basic net loss per share | 62,182 | 61,999 | 62,213 | 62,054 | 62,182 | |||||||||||||||
| Diluted net loss per share: | ||||||||||||||||||||
| $ | (0.35 | ) | $ | (0.09 | ) | $ | (0.10 | ) | $ | (0.02 | ) | $ | (0.17 | ) | ||||||
| Weighted average number of shares used in computing diluted net loss per share | 62,182 | 61,999 | 62,213 | 62,054 | 62,182 | |||||||||||||||
| (*) Results of the organizational change and other charges. | ||||||||||||||||||||
| ALVARION LTD. & ITS SUBSIDIARIES | ||||||||||||||||||
| RECONCILIATION BETWEEN GAAP TO NON-GAAP STATEMENT OF INCOME | ||||||||||||||||||
| U.S. dollars in thousands (except per share data) | ||||||||||||||||||
| Three | Three | |||||||||||||||||
| Months Ended | Months Ended | |||||||||||||||||
| September 30, | June 30, | |||||||||||||||||
| 2010 | 2010 | |||||||||||||||||
| GAAP | Adjustments | Non-GAAP | Non-GAAP | |||||||||||||||
| Sales | $ | 54,030 | $ | - | $ | 54,030 | $ | 49,013 | ||||||||||
| Cost of sales | 37,251 | (86 | ) | (a) | 37,165 | 31,320 | ||||||||||||
| Gross profit | 16,779 | 86 | 16,865 | 17,693 | ||||||||||||||
| Operating expenses: | ||||||||||||||||||
| Research and development, net | 8,639 | (88 | ) | (a) | 8,551 | 9,556 | ||||||||||||
| Selling and marketing | 9,959 | (180 | ) | (a) | 9,779 | 11,275 | ||||||||||||
| General and administrative | 3,911 | (339 | ) | (a) | 3,572 | 3,642 | ||||||||||||
| Amortization of intangible assets | 33 | (33 | ) | (b) | - | - | ||||||||||||
| Total Operating expenses | 22,542 | (640 | ) | 21,902 | 24,473 | |||||||||||||
| Operating loss | (5,763 | ) | 726 | (5,037 | ) | (6,780 | ) | |||||||||||
| Financial income, net | 124 | - | 124 | 102 | ||||||||||||||
| Net loss before Tax | (5,639 | ) | 726 | (4,913 | ) | (6,678 | ) | |||||||||||
| Income Tax | 438 | - | 438 | (36 | ) | |||||||||||||
| Net loss | (6,077 | ) | 726 | (5,351 | ) | (6,642 | ) | |||||||||||
| Basic net loss per share | $ | (0.10 | ) | $ | (0.09 | ) | $ | (0.11 | ) | |||||||||
| Weighted average number of shares used in computing basic net loss per share | 62,213 | 62,213 | 62,182 | |||||||||||||||
| Diluted net loss per share | $ | (0.10 | ) | $ | (0.09 | ) | $ | (0.11 | ) | |||||||||
| Weighted average number of shares used in computing diluted net loss per share | 62,213 | 62,213 | 62,182 | |||||||||||||||
| (a) The effect of stock-based compensation. | ||||||||||||||||||
| (b) The effect of amortization of intangible assets. | ||||||||||||||||||
| ALVARION LTD. & ITS SUBSIDIARIES | ||||||||||||||||||||
| DISCLOSURE OF NON-US GAAP NET INCOME | ||||||||||||||||||||
|
FOR COMPARATIVE PURPOSES NET INCOME AND EARNINGS PER SHARE FROM CONTINUING OPERATIONS EXCLUDING AMORTIZATION OF ACQUIRED INTANGIBLES, STOCK BASED COMPENSATION EXPENSES, RESTRUCTURING EXPENSES AND OTHER CHARGES |
||||||||||||||||||||
| U.S. dollars in thousands (except per share data) | ||||||||||||||||||||
| Nine | Nine | Three | Three | Three | ||||||||||||||||
| Months Ended | Months Ended | Months Ended | Months Ended | Months Ended | ||||||||||||||||
| September 30, | September 30, | September 30, | September 30, | June 30, | ||||||||||||||||
| 2010 | 2009 | 2010 | 2009 | 2010 | ||||||||||||||||
| Net loss according to US GAAP | $ | (21,594 | ) | $ | (5,887 | ) | $ | (6,077 | ) | $ | (1,032 | ) | $ | (10,600 | ) | |||||
| Amortization of acquired intangibles | 99 | 99 | 33 | 33 | 33 | |||||||||||||||
| Stock based compensation expenses related to ASC 718 | 2,193 | 4,447 | 693 | 1,177 | 352 | |||||||||||||||
| Restructuring and other charges (*) | 3,573 | 919 | - | - | 3,573 | |||||||||||||||
| Other loss | - | 749 | - | - | - | |||||||||||||||
| Net Income (loss) excluding amortization of acquired intangibles, stock based compensation and restructuring expenses | $ | (15,729 | ) | $ | 327 | $ | (5,351 | ) | $ | 178 | $ | (6,642 | ) | |||||||
| Basic net earnings (loss) per share excluding amortization of acquired intangibles, stock based compensation and restructuring expenses | $ | (0.25 | ) | $ | 0.01 | $ | (0.09 | ) | $ | 0.00 | $ | (0.11 | ) | |||||||
| Weighted average number of shares used in computing basic net earnings (loss) per share | 62,182 | 61,999 | 62,213 | 62,054 | 62,182 | |||||||||||||||
| Diluted net earnings (loss) per share excluding amortization of acquired intangibles, stock based compensation and restructuring expenses | $ | (0.25 | ) | $ | 0.01 | $ | (0.09 | ) | $ | 0.00 | $ | (0.11 | ) | |||||||
| Weighted average number of shares used in computing diluted net earnings (loss) per share | 62,182 | 64,073 | 62,213 | 64,605 | 62,182 | |||||||||||||||
| (*) Results of the organizational change and other charges. | ||||||||||||||||||||
| ALVARION LTD. & ITS SUBSIDIARIES | |||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||
| U.S. dollars in thousands | |||||||
| September 30, | June 30, | ||||||
| 2010 | 2010 | ||||||
| ASSETS | |||||||
| Cash, cash equivalents, short-term and long-term investments | $ | 92,700 | $ | 91,423 | |||
| Trade receivables | 59,600 | 61,823 | |||||
| Other accounts receivable | 10,225 | 7,553 | |||||
| Inventories | 51,174 | 46,047 | |||||
| LONG TERM INVESTMENT | 7,242 | 7,130 | |||||
| PROPERTY AND EQUIPMENT, NET | 14,901 | 15,588 | |||||
| GOODWILL AND OTHER INTANGIBLE ASSETS | 57,141 | 57,174 | |||||
|
TOTAL ASSETS |
$ | 292,983 | $ | 286,738 | |||
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||
| CURRENT LIABILITIES | |||||||
| Trade payables | $ | 54,001 | $ | 45,989 | |||
| Other accounts payable and accrued expenses | 36,730 | 35,197 | |||||
|
Total current liabilities |
90,731 | 81,186 | |||||
| LONG TERM LIABILITIES | |||||||
| Long term employees liabilities | 3,037 | 3,769 | |||||
| Long term liabilities others | 2,276 | 2,269 | |||||
|
Total long term liabilities |
5,313 | 6,038 | |||||
|
TOTAL LIABILITIES |
96,044 | 87,224 | |||||
| SHAREHOLDERS' EQUITY | 196,939 | 199,514 | |||||
|
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY |
$ | 292,983 | $ | 286,738 | |||
| ALVARION LTD.& ITS SUBSIDIARIES | ||||
| Consolidated Statement of Cash Flows | ||||
| U.S. dollars in thousands | ||||
| Three | ||||
| Months ended | ||||
| September 30, 2010 | ||||
| Cash flows from operating activities: | ||||
| Net loss | $ | (6,077 | ) | |
| Adjustments to reconcile net loss to net cash provided by operating activities: | ||||
| Depreciation | 1,653 | |||
| Stock based compensation expenses ASC 718 | 693 | |||
| Accrued interest from long term investment | (112 | ) | ||
| Amortization of intangibles assets | 33 | |||
| Decrease in trade receivables | 2,223 | |||
| Increase in other accounts receivable and prepaid expenses | (1,010 | ) | ||
| Increase in inventories | (5,127 | ) | ||
| Increase in trade payables | 8,012 | |||
| Increase in other accounts payables and accrued expenses | 2,658 | |||
| Decrease in long term employees liabilities | (732 | ) | ||
| Increase in long term liabilities | 7 | |||
| Net cash provided by operating activities | 2,221 | |||
| Cash flows from investing activities: | ||||
| Purchase of fixed assets | (966 | ) | ||
| Net cash used in investing activities | (966 | ) | ||
| Cash flows from financing activities: | ||||
| Proceeds from exercise of employees' stock options | 22 | |||
| Net cash provided by financing activities | 22 | |||
| Increase in cash, cash equivalents, short-term and long-term investments | 1,277 | |||
| Cash, cash equivalents, short-term and long-term investments at the beginning of the period | 91,423 | |||
| Cash, cash equivalents, short-term and long-term investments at the end of the period | $ | 92,700 | ||
About Alvarion
Alvarion (NASDAQ:ALVR) is a global 4G communications leader with the industry’s most extensive customer base, including hundreds of commercial 4G deployments. Alvarion’s industry leading network solutions for broadband wireless technologies WiMAX, TD-LTE and WiFi, enable broadband applications for service providers and enterprises covering a variety of industries such as mobile broadband, residential and business broadband, utilities, municipalities and public safety agencies. Through an open network strategy, superior IP and OFDMA know-how, and ability to deploy large scale end-to-end turnkey networks, Alvarion is delivering the true 4G broadband experience today (www.alvarion.com).
This press release contains forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act 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: potential impact on our business of the current global recession, the inability of our customers to obtain credit to purchase our products as a result of global credit market conditions, the failure to fund projects under the U.S. broadband stimulus program, continued delays in 4G license allocation in certain countries; the failure of the market for 4G products to develop as anticipated;, Alvarion’s inability to capture market share in the expected growth of the 4G market as anticipated, due to, among other things, competitive reasons or failure to execute in our sales, marketing or manufacturing objectives; the failure of Alvarion’s strategic initiatives to enable Alvarion to more effectively capitalize on market opportunities as anticipated; 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 the Company’s 20-F Annual Report Risk Factors section as well as in other filings with the Securities and Exchange Commission.
Information set forth in this press release pertaining to third parties has not been independently verified 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 Shirley Farhi, Shirley.farhi@alvarion.com or +972.3.767.4159.
Alvarion®, its logo and all names, product and service names referenced herein are either registered trademarks, trademarks, trade names or service marks of Alvarion Ltd. in certain jurisdictions. All other names are or may be the trademarks of their respective owners. “WiMAX Forum” is a registered trademark of the WiMAX Forum. “WiMAX,” the WiMAX Forum logo, “WiMAX Forum Certified” and the WiMAX Forum Certified logo are trademarks of the WiMAX Forum.
CONTACT:
Investors:
Efrat Makov, CFO, +972.3.645.6252
+1.760.685.2007
efrat.makov@alvarion.com
or
Claudia Gatlin, +1.212.830.9080
claudia.gatlin@alvarion.com
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INDUSTRY KEYWORDS: Technology Networks Software Telecommunications Other Technology
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