Powerwave Technologies Reports First Quarter Results
SANTA ANA, Calif. - May. 02, 2006 -
Powerwave Technologies, Inc. (NASDAQ:PWAV) today reported net sales of $193.1 million for its first quarter ended April 2, 2006, compared to first quarter fiscal 2005 revenues of $162.2 million. Powerwave also reported first quarter net loss of $2.3 million, which includes a pre-tax total of $5.3 million of acquisition related charges and intangible asset amortization. For the first quarter, the net loss equates to a basic loss per share of 2 cents for the first quarter. This compares to net income of $5.4 million, or diluted earnings per share of 5 cents for the prior year period. For the first quarter of fiscal 2006, excluding all acquisition related charges and expenses, Powerwave would have reported operating income of $2.4 million, net income after taxes of $2.8 million and diluted earnings per share of 3 cents.
"I want to stress that we at Powerwave are extremely disappointed with our results for the first quarter and we are utilizing all of our resources to ensure that we get back on track starting with our second quarter,” stated Ronald Buschur, President and Chief Executive Officer of Powerwave Technologies. “While we did encounter an unexpected slowdown in our North American business, we do believe that the wireless infrastructure industry has a number of growth opportunities and we continue to believe that Powerwave is in excellent position to build upon and capture these opportunities in our markets throughout the world."
For the first quarter of 2006, total Americas revenues were $58.2 million or approximately 30% of revenues, as compared to $48.5 million or approximately 30% of revenues for the first quarter of 2005. Total sales to customers based in Asia accounted for approximately 13% of revenues or $24.3 million for the first quarter of 2006, compared to 10% of revenues or $16.6 million for the first quarter of 2005. Total Europe, Africa and Middle East revenues for the first quarter of 2006 were $110.6 million or approximately 57% of revenues, as compared to $97.0 million or approximately 60% of revenues for the first quarter of 2005.
For the first quarter of 2006, sales of antenna systems totaled $51.2 million or 26% of total revenues, base station systems sales totaled $112.1 million or 58% of revenues, coverage systems sales totaled $18.5 million or 10% of revenues, and contract manufacturing accounted for $11.3 million or 6% of total revenues for the first quarter.
For the first quarter of 2006, Powerwave’s largest customers included Nokia, which accounted for approximately 15% of revenues, and Siemens, which accounted for over 10% of revenues for the quarter, and Cingular Wireless, which accounted for 10% of revenues for the quarter. In terms of customer profile for the first quarter of 2006, our total OEM sales accounted for approximately 53% of total revenues, total direct and operator sales accounted for approximately 41% of revenues, and contract manufacturing accounted for 6% of revenues for the quarter.
Equity Compensation Expense
Powerwave implemented SFAS 123R, Share-Based Payment, effective for the first quarter of fiscal 2006. Accordingly, the results reported herein include approximately $1.0 million of pre-tax compensation expense, almost all of which is included in operating expenses.
Balance Sheet
At April 2, 2006, Powerwave had total cash and cash equivalents of $244.5 million, which includes restricted cash of $5.1 million. Total net inventories were $117.3 million and net accounts receivable were $213.1 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 in the United States (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 and expenses arising from the acquisitions of LGP Allgon Holding AB, Kaval Wireless and the selected assets and liabilities of REMEC’s Wireless Systems Business, including restructuring charges and the amortization of certain intangible 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.
Company Background
Powerwave Technologies, Inc., is a global supplier of end-to-end wireless solutions for wireless communications networks. Powerwave designs, manufactures and markets antennas, boosters, combiners, filters, repeaters, multi-carrier RF power amplifiers and tower-mounted amplifiers and advanced coverage solutions, all for use in cellular, PCS 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, pl
POWERWAVE TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
Three Months Ended
(unaudited)
April 2, April 3,
2006 2005
Net sales $ 193,065 $162,179
Cost of sales:
Cost of goods sold 152,051 119,036
Intangible asset amortization 3,042 1,921
Total cost of sales 155,093 120,957
Gross profit 37,972 41,222
Operating expenses:
Sales and marketing 8,811 9,495
Research and development 15,464 14,629
General and administrative 14,309 8,615
Intangible asset amortization 2,076 1,986
In-process research and development - 350
Restructuring and impairment charges 171 -
Total operating expenses 40,831 35,075
Operating income (loss) (2,859) 6,147
Other income 854 233
Income (loss) before income taxes (2,005) 6,380
Provision for income taxes 275 1,009
Net income (loss) $ (2,280) $ 5,371
Earnings (loss) per share - basic: ($.02) $.05
- diluted:(1) ($.02) $.05
Weighted average common shares used in
computing per share amounts - basic: 111,660 99,574
- diluted:(1) 111,660 131,229
1Diluted 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 first quarter 2005. The first quarter 2006 loss per
share does not include an add back as that would be anti-dilutive.
POWERWAVE TECHNOLOGIES, INC.
PERCENTAGE OF NET SALES
Three Months Ended
(unaudited)
April 2, April 3,
Statement of Operations Data: 2006 2005
Net sales 100.0% 100.0%
Cost of sales:
Cost of goods sold 78.7 73.4
Intangible asset amortization 1.6 1.2
Total cost of sales 80.3 74.6
Gross profit 19.7 25.4
Operating expenses:
Sales and marketing 4.6 5.9
Research and development 8.0 9.0
General and administrative 7.4 5.3
Intangible asset amortization 1.1 1.2
In-process research and development - 0.2
Restructuring and impairment charges 0.1 -
Total operating expenses 21.2 21.6
Operating income (loss) (1.5) 3.8
Other income 0.4 0.1
Income (loss) before income taxes (1.1) 3.9
Provision for income taxes 0.1 0.6
Net income (loss) (1.2%) 3.3%
POWERWAVE TECHNOLOGIES, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
RECONCILIATION OF PRO FORMA RESULTS
(in thousands, except per share amounts)
Three Months Ended
(unaudited) Pro Forma
April 2, April 2,
2006 Adustments 2006
Net sales $193,065 $193,065
Cost of sales:
Cost of goods sold 152,051 152,051
Intangible asset amortization 3,042 (3,042)1 -
Total cost of sales 155,093 (3,042) 152,051
Gross profit 37,972 3,042 41,014
Operating expenses:
Sales and marketing 8,811 8,811
Research and development 15,464 15,464
General and administrative 14,309 14,309
Intangible asset amortization 2,076 (2,076)2 -
Restructuring and impairment charges 171 (171)3 -
Total operating expenses 40,831 (2,247) 38,584
Operating income (loss) (2,859) 5,289 2,430
Other income 854 854
Income (loss) before income taxes (2,005) 5,289 3,284
Provision for income taxes 275 1754 450
Net income (loss) $ (2,280) 5,114 $ 2,834
Earnings (loss) per share - basic: ($.02) $.03
- diluted:5 ($.02) $.03
Weighted average common shares used in
computing per share amounts - basic 111,660 111,660
- diluted 111,660 144,406
1This represents costs related to the amortization of acquired technology.
2This represents costs related to the amortization of other identified
intangible assets.
3This represents a restructuring charge related to the REMEC Wireless
acquisition included in operating expenses.
4This 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 13.7% for the first quarter 2006.
5Diluted 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 first quarter 2006. This add back only occurs in the pro forma
calculation, as the GAAP basis would be anti-dilutive.
POWERWAVE TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
April 2, 2006 January 1, 2006
ASSETS: (unaudited)1 (audited)2
Cash and cash equivalents $ 239,383 $ 232,519
Restricted cash 5,081 5,002
Accounts Receivable, net 213,088 233,726
Inventories, net 117,265 100,453
Property, plant and equipment, net 162,832 172,426
Other assets 395,980 386,124
Total assets $1,133,629 $1,130,250
LIABILITIES AND SHAREHOLDERS' EQUITY:
Accounts payable $ 99,021 $ 106,864
Long-term debt 330,000 330,000
Accrued expenses and other liabilities 113,488 112,125
Total shareholders' equity 591,120 581,261
Total liabilities and
shareholders' equity $1,133,629 $1,130,250
1April 2, 2006 balances are preliminary and subject to purchase accounting
and reclassification adjustments.
2January 1, 2006 balances were derived from audited financial statements.
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