Published: March 23, 2006
Airspan Networks Announces Fourth Quarter and Full Year 2005 Financial Results
Record Quarterly and Annual Revenue Levels; Significant Growth Forecast for First Half of 2006
Airspan Networks Inc. (NASDAQ: AIRN) today
announced its fourth quarter and full year financial results for the period
ending December 31, 2005. The Company reported record revenues for the
fourth quarter of $37.9 million, up 24% versus the third quarter of 2005
and up 1% versus the final quarter of 2004. The net loss attributable to
common stockholders for the fourth quarter was $(0.08) per share versus a
profit of $0.07 per share in the fourth quarter of 2004. Full year reported
revenues for 2005 were also a record at $111.0 million, up 17% versus the
$94.6 million reported for 2004. The net loss per share for the full year
2005 was $(0.39), versus $(0.56) for 2004 that included a cost of $(0.29)
for the deemed dividend associated with beneficial conversion of preferred
stock.
Fourth Quarter Business Highlights
-- WiMAX
-- Announcement of general commercial availability of AS.MAX, the
world’s first end-to-end fixed and nomadic WiMAX product portfolio
-- Significant progress at CETECOM with WiMAX certification,
which was granted in March 2006
-- Continuing inflow of orders from both direct and indirect channels,
including Russia’s first WiMAX network in Samara
-- Launch of Yozan’s WiMAX network in Japan
-- Strategic technology relationship with iDirect Technologies to
enable the delivery of seamless broadband communications using
a combination of AS.MAX and satellite-based technologies
-- Successful Plugfest in November when Airspan base stations and
customer premises equipment (CPE) achieved interoperability with
the equipment from several other vendors
-- WipLL
-- WipLL enjoyed its sixth consecutive quarter of growth, producing
record revenue and margin levels
-- Established and new customers continued to buy this cost-effective
and highly reliable product
-- Proximity
-- In November, Airspan delivered more than 16,000 CPE units, the
highest-ever monthly number
-- ASX
-- The legacy product produced its highest quarterly revenue in two
years as customers, particularly in Europe and Africa, rediscovered
the versatility of this DSL-type product for voice and data services
-- ASNET
-- The Radionet acquisition in November gave Airspan access to the
growing market for the deployment of 802.11-based Hotzone networks.
Airspan’s WiMAX products complement Radionet’s Wi-Fi systems with
the most flexible combination of access and backhaul for IP based
voice and data services
-- Joined the Wi-Fi Alliance, demonstrating commitment to delivering
interoperable Wi-Fi solutions.
Financial Results
Fourth quarter revenue of $37.9 million was 24% higher than the $30.5
million in the third quarter of 2005, and 1% higher than the $37.5 million
we reported in the fourth quarter of 2004. We also exceeded the guidance
of $33 million provided earlier in the year for the fourth quarter of 2005.
The Company recorded a gross profit of $10.1 million in the quarter, and
gross profit as a percentage of revenue (the "gross profit margin") was
27%. This compared to a gross profit of $9.1 million and a gross profit
margin of 30%, for the third quarter of 2005, and a gross profit of $10.5
million, and a gross profit margin of 28% recorded for the fourth quarter
of 2004. The lower gross profit margin in the fourth quarter of 2005
resulted primarily from a negative book to physical inventory adjustment at
our Israeli facility, and lower margins on our Proximity product.
Gross profit for 2005 of $31.5 million was 15% higher than the $27.4
million recorded in 2004. The gross profit margin for 2005 was 28% versus
29% in 2004. The overall gross profit margin level remained relatively
constant during this transition year as higher margins generated by
increased WipLL sales and from the introduction of products from
acquisitions in 2005 were offset by lower pricing of ASX and Proximity
products.
The Company's fourth quarter 2005 operating expenses of $13.8 million were
32% greater than the fourth quarter 2004 operating expenses of $10.4
million and $1.6 million greater than the prior quarter's operating
expenses. Full year operating expenses were $48.5 million, an increase of
14% over the total of $42.5 million recorded in 2004. The major factors
behind the growth in operating expenses were the additional headcount from
our acquisitions, costs for the development of our WiMAX products and
increased audit expenses.
Net loss for the fourth quarter of 2005 was $(3.3) million, or $(0.08) per
common share, compared to a net profit of $3.3 million, or $0.07 per common
share, in the fourth quarter of 2004 and a net loss of $(2.1) million or
$(0.05) per share in the third quarter of 2005. The net loss for the full
year 2005 was $(15.1) million, or $(0.39) per common share compared to a
2004 full year net loss of $(20.4) million or $(0.56) per common share.
Results in 2005 included a tax credit of $0.5 million, compared to $2.0
million in 2004.
At the end of 2005, the Company's held cash and cash equivalents,
restricted cash and short term investments, of $53.5 million. In 2005, the
company used $14.5 million of its cash, including $5.9 million spent on
acquisitions.
"We were very pleased to have ended 2005 with continuing strong revenue
growth," said Eric Stonestrom, Airspan's president and chief executive
officer. "We saw strength in all product lines, and revenue growth in all
geographic regions. Sales exceeded our expectations and order intake,
particularly for WiMAX, has been excellent. Our new WiMAX products have
opened up many sales opportunities and we continue to work to be first to
market with innovative standards-compliant WiMAX products."
"We believe our development work and recent acquisitions have kept us at
the forefront of the broadband wireless technology race, and our product
range today gives us a unique ability to leverage our WiMAX products with
voice over the Internet and Wi-Fi capabilities. Our acquisitions and WiMAX
development activities have driven increased operational spending this
year. We anticipate our current level of spending will place us in a
strong position for the year to come."
"We have successfully met most of our goals in this transition year," said
Peter Aronstam, chief financial officer. "Our revenues from legacy
products more than held up, and our sales and orders for WiMAX have taken
off more sharply than anticipated. We are very pleased to have exceeded
our quarterly and full year revenue guidance and to be able to report
another record quarter of revenue as well as a full year growth of more
than 17%. The Israeli inventory adjustment adversely impacted and delayed
the announcement of what were otherwise strong results. We have now
instituted changes and new controls in areas related to inventory
management. We end the year with a strong cash position and exciting plans
for 2006."
Outlook
Mr. Stonestrom commented that the Company expects revenues for the first
quarter of 2006 to be between $25 - $27 million, which would give rise to a
loss of approximately 15 cents per common share. This loss would include
approximately $0.9 million of non-cash charges, arising from both the new
accounting rule FAS123R to report the cost of stock options and other
equity compensation from January 1st 2006, and higher amortization expenses
in the first quarter resulting from our 2005 acquisitions. "We anticipate
a record first half for revenue, with growth of approximately 50% to $65
million versus the first half of 2005."
Investor Conference
The Company has scheduled an investor conference call for 5 p.m. EST today.
The dial-in numbers for the live conference call are as follows: US
toll-free number is 866-814-1918; international access dial-in number is
1-703-639-1362. Reference the Airspan Networks quarterly conference call.
Investors may register for the live webcast of the conference call under
the 'financial calendar' tab of the investor relations section of the
Airspan Web site at http://www.airspan.com; or at
http://www.visualwebcaster.com/event.asp?id=32827.
For those who cannot listen to the live broadcast, an audio replay of the
call will be available on the Airspan Web site for 30 days. The US
toll-free number for the replay is 1-888-266-2081; international access
number for the replay is 1-703-925-2533. Please use access code 871817.
About Airspan Networks
Airspan Networks provides fixed and wireless voice and data systems and
solutions, including Voice Over IP (VoIP). Its wireless products serve
operators around the world in both licensed and unlicensed frequency bands
between 700 MHz and 6 GHz, including both PCS and 3.5GHz international
bands. Airspan has a strong wireless product roadmap that includes
offerings compliant with the new WiMAX 802.16-2004 standard, and software
upgradeability to 802.16e from the time the WiMAX products are introduced.
Airspan is on the Board and a founder member of the WiMAX Forum. Through
its newly acquired Radionet division, the company also offers 802.11-based
metrozone networks and applications for various enterprise vertical
markets. The Company has deployments with more than 350 operators in more
than 100 countries. Airspan's wireless systems are based on radio
technology that delivers excellent area coverage, high security and
resistance to fading. These systems can be deployed rapidly and cost
effectively, providing an attractive alternative to traditional wired
communications networks. Airspan's new AS.Tone VoIP system is a carrier
class, turnkey solution that provides carriers with Class 4, Class 5 and
IP-Centrex solutions and has a Softswitch and Gateways supporting SIP/H323
and SIP. AS.Tone's design provides customers, carriers, next-generation
telcos, cellular providers and ITSP with a wide range of solutions with the
best price/performance system for IP telephony. Airspan also offers radio
planning, network installation, integration, training and support services
to facilitate the deployment and operation of its systems. Airspan is
headquartered in Boca Raton, Florida with its main operations center in
Uxbridge, United Kingdom.
More information on Airspan can be found at http://www.airspan.com
This press release contains forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. All statements, other than statements of
historical facts, including statements regarding our strategy, future
operations, financial position, future revenues, projected costs,
prospects, plans and objectives of management, may be deemed to be
forward-looking statements. The words "anticipates," "believes,"
"estimates," "expects," "intends," "may," "plans," "projects," "will,"
"would" and similar expressions or negative variations thereof are intended
to identify forward-looking statements, although not all forward-looking
statements contain these identifying words. We may not actually achieve
the plans, intentions or expectations disclosed in our forward-looking
statements and you should not place undue reliance on our forward-looking
statements. There are a number of important factors that could cause actual
results or events to differ materially from the plans, intentions and
expectations disclosed in the forward-looking statements we make. Investors
and others are therefore cautioned that a variety of factors, including
certain risks, may affect our business and cause actual results to differ
materially from those set forth in the forward-looking statements. These
risk factors include, without limitation, (i) a slowdown of expenditures by
communication service providers; (ii) increased competition from
alternative communication systems; (iii) the failure of our existing or
prospective customers to purchase products as projected; (iv) our inability
to successfully implement cost reduction or containment programs; (v) a
loss of any of our key customers; (vi) our ability to retain Axtel as the
largest customer of Proximity products; and (vii) specific to this press
release, continued growth of our product revenues to be able to meet the
revenue and earnings forecasts. The Company is subject to the risks and
uncertainties described in its filings with the Securities and Exchange
Commission, including its Annual Report on Form 10-K, as amended by
Amendment No.1 on Form 10-K/A, for the year ended 31 December, 2004. You
should read those factors as being applicable to all related
forward-looking statements wherever they appear in this press release. We
do not assume any obligation to update any forward-looking statements.
Airspan Networks Inc
Consolidated Balance Sheets
(in thousands)
December 31, December 31,
2004 2005
------------ ------------
(unaudited)
ASSETS
Current Assets
Cash and cash equivalents $ 66,296 $ 44,140
Restricted cash 1,687 3,335
Short term investments - 6,020
Accounts receivable 20,947 24,054
Unbilled accounts receivable 43 567
Inventory 12,834 16,850
Deferred tax asset - -
Prepaid expenses and other current assets 5,702 3,722
------------ ------------
Total Current Assets 107,509 98,688
Property, plant and equipment, net 3,707 5,268
Goodwill, net 789 10,231
Intangible assets, net 1,672 3,865
Long-term accounts receivable 305 -
Other non-current assets 1,216 2,400
------------ ------------
Total Assets $ 115,198 $ 120,452
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 24,615 $ 24,678
Short term debt - -
Accrued taxes 653 1,156
Deferred revenue 627 1,514
Customer Advances 4,789 13,935
Other accrued expenses 11,349 13,113
Current portion of capital lease obligations - -
Current portion of long-term debt - 96
------------ ------------
Total Current Liabilities 42,033 54,492
------------ ------------
Non Current Liabilities
Note payable to DSC Telcom L.P. - -
Other long-term debt - 1,296
Accrued interest on long-term debt - 53
Capital lease obligations - -
------------ ------------
Total Non Current Liabilities - 1,349
------------ ------------
Stockholders' Equity
Preferred Stock - -
Common stock 11 12
Note receivable - stockholder (87) (87)
Additional paid in capital 260,356 267,426
Treasury stock - -
Other comprehensive income 418 (130)
Accumulated deficit (187,533) (202,610)
------------ ------------
Total Stockholders' Equity 73,165 64,611
------------ ------------
------------ ------------
Total Liabilities and Stockholders'
Equity $ 115,198 $ 120,452
============ ============
Airspan Networks Inc
Consolidated Statements of Income
(in thousands except for share and per share data)
Three months ended Year to date
December December December December
31, 2004 31, 2005 31, 2004 31, 2005
---------- ---------- ---------- ----------
(unaudited) (unaudited)
Revenue $ 37,523 $ 37,894 $ 94,647 $ 110,966
Cost of revenue (26,975) (27,756) (66,144) (79,467)
Inventory provision - - (1,099) -
---------- ---------- ---------- ----------
Gross profit 10,548 10,138 27,404 31,499
---------- ---------- ---------- ----------
Operating expenses:
Research and development 4,510 6,099 18,794 21,157
Sales and marketing 2,919 3,359 11,013 11,464
Bad debt provision - 313 549 1,115
General and administration 2,821 3,636 11,042 12,682
Amortization of intangibles 144 349 723 942
Restructuring provision - - 413 1,150
---------- ---------- ---------- ----------
Total operating expenses 10,394 13,756 42,534 48,510
---------- ---------- ---------- ----------
Loss from operations 154 (3,618) (15,130) (17,011)
Net interest and other income 1,133 320 3,217 1,388
---------- ---------- ---------- ----------
Loss before tax 1,287 (3,298) (11,913) (15,623)
---------- ---------- ---------- ----------
Income tax charge / (credit) (1,988) 16 (1,938) (546)
---------- ---------- ---------- ----------
Loss before extraordinary
item (701) (3,282) (13,851) (16,169)
---------- ---------- ---------- ----------
Extraordinary item
Gain on extinguishment
of debt - - - -
Income tax charge - - - -
---------- ---------- ---------- ----------
Gain after tax - - - -
---------- ---------- ---------- ----------
Net loss 3,275 (3,314) (9,975) (15,077)
Preferred stock deemed
dividend - - (10,439) -
---------- ---------- ---------- ----------
Net loss attributable to
common stock holders $ 3,275 $ (3,314) $ (20,414) $ (15,077)
========== ========== ========== ==========
Loss before
extraordinary item $ 0.07 $ (0.08) $ (0.27) $ (0.39)
Extraordinary item,
net of taxes - - - -
Net loss per share - basic $ 0.07 $ (0.08) $ (0.56) $ (0.39)
Weighted average shares
outstanding - basic
and diluted 44,560,000 39,515,854 36,441,932 38,886,939
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