Powerwave Technologies Reports Fourth Quarter Results
SANTA ANA, Calif. - Jan. 22, 2004 -
Powerwave Technologies, Inc. (NASDAQ:PWAV) today reported net sales of $72.2 million for its fourth quarter ended December 28, 2003, compared to fourth quarter fiscal 2002 revenues of $76.1 million. Powerwave also reported a fourth quarter net loss of $1.4 million, or a basic loss per share of 2 cents, compared to a net loss of $4.0 million, or a basic loss per share of 6 cents for the prior year period.
For the entire fiscal year 2003, Powerwave reported total revenues of $239.1 million, compared to total fiscal year 2002 revenues of $384.9 million. For all of fiscal 2003, Powerwave reported a total net loss of $32.9 million, or a basic loss per share of 51 cents, compared to net income of $4.1 million, or diluted earnings per share of 6 cents for fiscal 2002. Total fiscal 2003 results included restructuring and impairment charges of approximately $15.5 million related to the economic downturn that impacted demand in the wireless infrastructure industry and the restructuring of Powerwave’s manufacturing operations to reduce operating costs by outsourcing the majority of our production capability to contract manufacturers located primarily in Asia.
“Our fourth quarter 2003 financial results demonstrated continued improvement in our operating structure as we completed our aggressive move towards outsourced manufacturing,” stated Bruce C. Edwards, President and Chief Executive Officer. “Fiscal 2003 has represented a major transition year for Powerwave as we made significant improvements in our operating and expense structure on a go forward basis and further expanded our customer base.”
“On December 1, 2003, we announced an agreement to acquire LGP Allgon Holding AB in a strategic combination under which Powerwave will offer to exchange 1.1 newly issued Powerwave shares for each outstanding LGP Allgon share. We believe that the combination of Powerwave and LGP Allgon will extend our leadership in the wireless infrastructure industry across key products and solutions, including coverage and capacity solutions and key base station subsystems. We have received formal approval from the required antitrust regulators and we currently expect to begin the exchange offer during the month of February 2004 and complete the transaction prior to the end of our first quarter 2004.”
For the fourth quarter of 2003, North American revenues were $44.0 million or approximately 61% of revenues as compared to $46.0 million or approximately 60% of revenues for the fourth quarter of 2002. Total sales to customers based in Asia accounted for approximately 8% of revenues or $5.8 million for the fourth quarter of 2003, compared to 14% of revenues or $10.7 million for the fourth quarter of 2002. Total European and other international revenues for the fourth quarter of 2003 were $22.4 million or approximately 31% of revenues as compared to $19.4 million or approximately 26% of revenues for the fourth quarter of 2002.
For the fourth quarter of 2003, sales of Cellular products totaled $23.1 million or 32% of total revenues, PCS product sales totaled $39.2 million or 54% of revenues and 3G 2100 MHz W-CDMA product sales totaled $9.9 million or 14% of revenues.
Powerwave’s customer diversification for the fourth quarter of 2003 included Nokia Networks and AT&T Wireless Services which each accounted for 10% or more of revenues and Nortel Networks Corporation accounting for approximately 56% of revenues. In addition, our total sales to network operators accounted for approximately 27% of revenues in the fourth quarter of 2003.
Balance Sheet
At December 28, 2003, Powerwave had total cash and cash equivalents of approximately $260.5 million, which is an increase of $7.0 million from the September 28, 2003 balance of $253.5 million. This increase reflects Powerwave’s positive cash flow from operations during the quarter. Total assets were approximately $466.3 million with net inventories of $15.2 million and net accounts receivable of $56.3 million.
Company Background
Powerwave Technologies, Inc., a TL 9000 and ISO 9001 quality certified company, is a leading supplier of high performance RF power amplifiers for use in wireless communications networks. Powerwave designs, manufactures and markets both single carrier and multi-carrier RF power amplifiers for use in cellular, PCS and 3G base stations throughout the world. Corporate headquarters are located at 1801 E. St. Andrew Place, Santa Ana, Calif. 92705. Telephone (714) 466-1000. For more information on Powerwave’s high performance ultra-linear RF power amplifiers and amplifier systems, 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.
Conference Call
Powerwave is providing a simultaneous Webcast of its Fiscal 2003 Fourth Quarter financial results conference call on Thursday, January 22, 2004, at 2:00 PM Pacific Time. To access this audio Webcast, log onto www.powerwave.com/investor.asp and select the Powerwave Technologies FY2003 Q4 Conference Call. The call will last for approximately 1 hour. To listen to the live call, please call (719) 457-2618 and request the Powerwave Q4 Conference Call. A replay of the Webcast will be available beginning approximately 2 hours after completion of the initial Webcast. Additionally, an audio playback of the conference call will be available at approximately 5:00 PM Pacific Time on January 22, 2004 through January 31, 2004 by calling (719) 457-0820 or (888) 203-1112 and entering reservation number 319710.
Forward-Looking Statements
The foregoing statements regarding improvement in our operating structure; the proposed benefits of the exchange offer for the LGP Allgon shares; and the projected timing of the commencement and closing of the exchange offer for the LGP Allgon shares are “forward looking statements.” All of these statements are subject to risks and uncertainties which could cause our actual results to differ materially from those projected or implied. Such potential risks and uncertainties include, but are not limited to, in no particular order: delays or failure to obtain stockholder approval for the exchange offer; problems in integrating the business of Powerwave and LGP Allgon following completion of the exchange offer; 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 amplifier products and such products must be manufacturable and of good quality and reliability; unexpected difficulties and delays in transitioning products to contract manufacturers which could limit overall cost reductions through the use of contract manufacturers; variability in our gross margins on new products which could result in a negative impact on our operating results; our business requires continued favorable 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 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 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-Q for the quarterly period ended September 28, 2003 and the Form 10-K for the fiscal year ended December 29, 2002, 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 occurring after the date hereof or to reflect the occurrence of unanticipated events.
POWERWAVE TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
Three Months Ended Year Ended
(unaudited) (unaudited) (audited)(a)
Dec. 28, Dec. 29, Dec. 28, Dec. 29,
2003 2002 2003 2002
Net Sales $72,248 $76,136 $239,069 $384,889
Cost of Sales 59,105 67,253 222,854 322,107
Gross Profit 13,143 8,883 16,215 62,782
Operating Expenses:
Sales and Marketing 2,956 2,379 11,557 11,384
Research and Development 9,343 8,234 38,928 33,087
General and Administrative 3,522 3,722 13,946 14,401
Restructuring and
Impairment - - 7,608 -
Total Operating Expenses 15,821 14,335 72,039 58,872
Operating Income (Loss) (2,678) (5,452) (55,824) 3,910
Other Income (Expense), net 421 (247) 2,394 1,963
Income (Loss) before Income
Taxes (2,257) (5,699) (53,430) 5,873
Provision (Benefit) for
Income Taxes (869) (1,710) (20,571) 1,762
Net Income (Loss) $(1,388) $(3,989) $(32,859) $4,111
Net Income (Loss) per Share
(basic): ($0.02) ($0.06) ($0.51) $0.06
(diluted): ($0.02) ($0.06) ($0.51) $0.06
Weighted Average Common
Shares used in computing
per Share Amounts (basic): 63,174 65,707 64,667 65,485
(diluted): 63,174 65,707 64,667 66,230
POWERWAVE TECHNOLOGIES INC.
PERCENTAGE OF NET SALES
Three Months Ended Year Ended
(unaudited) (unaudited) (audited)(a)
Dec. 28, Dec. 29, Dec. 28, Dec. 29,
2003 2002 2003 2002
Statement of Operations Data:
Net Sales 100.0% 100.0% 100.0% 100.0%
Cost of Sales 81.8 88.3 93.2 83.7
Gross Profit 18.2 11.7 6.8 16.3
Operating Expenses:
Sales and Marketing 4.1 3.1 4.8 3.0
Research and Development 12.9 10.8 16.3 8.6
General and Administrative 4.9 4.9 5.8 3.7
Restructuring and Impairment - - 3.2 -
Total Operating Expenses 21.9 18.8 30.1 15.3
Operating Income (Loss) (3.7) (7.1) (23.3) 1.0
Other Income (Expense), net 0.6 (0.3) 1.0 0.5
Income (Loss) before Income
Taxes (3.1) (7.4) (22.3) 1.5
Provision (Benefit) for Income
Taxes (1.2) (2.2) (8.6) 0.4
Net Income (Loss) (1.9)% (5.2)% (13.7)% 1.1%
POWERWAVE TECHNOLOGIES INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands)
Dec. 28, 2003 Dec 29, 2002
ASSETS (unaudited) (audited)(a)
Current Assets:
Cash and cash equivalents $260,528 $162,529
Accounts receivable, net 56,278 53,264
Inventories, net 15,187 29,921
Other current assets 13,353 16,219
Total Current Assets 345,346 261,933
Property, plant and equipment, net 67,975 84,822
Other non-current assets 52,936 22,418
Total Assets $466,257 $369,173
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $48,942 $26,842
Accrued expenses and other liabilities 16,159 16,508
Current portion of long-term debt - 79
Total Current Liabilities 65,101 43,429
Long-term debt 130,000 -
Other non-current liabilities 119 83
Total Liabilities 195,220 43,512
Shareholders' Equity:
Total Shareholders' Equity 271,037 325,661
Total Liabilities and Shareholders' Equity $466,257 $369,173
(a)Dec. 29, 2002 information was derived from audited financial
statements.
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