SANTA ANA, Calif., Oct. 21, 2004 (PRIMEZONE) -- Powerwave Technologies, Inc. (Nasdaq:PWAV) today reported net sales of $138.3 million for its third quarter ended October 3, 2004, compared to third quarter fiscal 2003 revenues of $63.2 million. Powerwave also reported third quarter net income of $2.8 million, which includes a total of $4.4 million of acquisition related restructuring charges and intangible asset amortization. Powerwave's net income equates to a diluted earnings per share of 3 cents for its fiscal third quarter, compared to a net loss of $5.7 million, or a basic loss per share of 9 cents for the prior year period. The third quarter 2003 loss included a restructuring and impairment charge of approximately $0.9 million related to the restructuring of the Company's manufacturing operations. Powerwave completed the acquisition of LGP Allgon Holding AB during the second quarter of 2004 and the results reported herein include the results of LGP Allgon Holding AB for the entire third quarter of fiscal year 2004. For the third quarter of fiscal 2004, excluding the restructuring and acquisition related charges and intangible asset amortization, Powerwave would have reported operating income of $7.8 million, net income after taxes of $6.0 million and diluted earnings per share of 5 cents.
For the first nine months of fiscal 2004, Powerwave reported total net sales of $317.5 million compared with $166.8 million for the first nine months of fiscal 2003. The first nine months of 2004 include the results of LGP Allgon from May 2004. Powerwave also reported a total net loss for the first nine months of fiscal 2004 of $30.6 million, or a basic loss per share of 35 cents, compared to a net loss of $31.5 million or a basic loss per share of 48 cents for the first nine months of fiscal 2003. The results for the first nine months of 2004 include $34.1 million of acquisition and restructuring related amortization, charges and expenses, and the results for the first nine months of 2003 include $16.4 million of restructuring expenses, impairment charges and intangible asset amortization.
"We are excited to report our first profitable quarterly financial results that include our recent combination with LGP Allgon AB," stated Bruce C. Edwards, Chief Executive Officer of Powerwave Technologies. "We are well on our way to leveraging one of the broadest portfolios of products and services in the wireless industry while working to enhance our leadership position in both the OEM and direct to operator channels. We are continuing to implement our integration plans and fully expect to achieve our annual synergy cost savings target of at least $30 million beginning in fiscal year 2005. We remain extremely positive with regards to our longer term outlook for increasing demand within the wireless communications infrastructure industry."
For the third quarter of 2004, total Americas revenues were $32.3 million or approximately 23% of revenues, as compared to $29.5 million or approximately 47% of revenues for the third quarter of 2003. Total sales to customers based in Asia accounted for approximately 12% of revenues or $16.0 million for the third quarter of 2004, compared to 17% of revenues or $10.9 million for the third quarter of 2003. Total Europe, Africa and Middle East revenues for the third quarter of 2004 were $90.0 million or approximately 65% of revenues, as compared to $22.8 million or approximately 36% of revenues for the third quarter of 2003.
For the third quarter of 2004, sales of antenna systems totaled $38.9 million or 28% of total revenues, base station subsystems sales totaled $68.8 million or 50% of revenues, coverage solutions sales totaled $23.3 million or 17% of revenues, and contract manufacturing accounted for $7.3 million or 5% of total revenues for the third quarter.
For the third quarter of 2004, Powerwave's largest customers included Nortel Networks Corporation, which accounted for approximately 16% of revenues and Nokia Corporation, which accounted for approximately 10% of revenues. In terms of customer profile for the third quarter of 2004, our total OEM sales accounted for approximately 42% of total revenues, total direct and operator sales accounted for approximately 53% of revenues, and contract manufacturing accounted for 5% of revenues for the quarter.
Balance Sheet
At October 3, 2004, Powerwave had total cash and cash equivalents of $124.0 million, which does not include additional restricted cash of $6.2 million. Total assets were $852.9 million with net inventories of $61.1 million and net accounts receivable of $129.0 million.
LGP Allgon Acquisition
Powerwave completed the exchange offer for all of the shares of LGP Allgon Holding AB on May 3, 2004. At October 3, 2004 Powerwave owned approximately 98.3% of the total outstanding voting rights and share capital of LGP Allgon Holding AB. Powerwave has initiated compulsory acquisition procedures under Swedish law with respect to the remaining shares of LGP Allgon Holding AB that have not yet been acquired by the Company. Powerwave anticipates spending approximately $7.1 million to acquire the remaining outstanding shares of LGP Allgon Holding AB.
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 acquisition of LGP Allgon, including restructuring charges and the amortization of certain intangible assets resulting from the purchase accounting valuation of LGP Allgon. Management of Powerwave believes that these items should be excluded when comparing our current operating results with those of prior periods as the restructuring charge will not impact future operating results and the amortization of intangible assets is a non-cash expense.
Purchase Accounting for LGP Allgon Acquisition Powerwave has made a preliminary allocation of the purchase consideration for the LGP Allgon acquisition to tangible and intangible assets 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 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, 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 for the third quarter ended October 3, 2004.
Conference Call
Powerwave is providing a simultaneous Webcast and live dial-in number of its third quarter fiscal 2004 financial results conference call on Thursday, October 21, 2004, at 9:00 AM Eastern time. To access this audio Webcast, select the Investor Relations page at www.powerwave.com and select the Powerwave Technologies Q3 earnings conference call. The call will last for approximately 1 hour. To listen to the live call, please call (617) 847-8705 and enter reservation number 97634188. 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 11:00 AM Eastern time on October 21, 2004 through October 30, 2004 by calling (617) 801-6888 and entering reservation number 79602601.
Forward-Looking Statements
The foregoing statements regarding the outlook for increasing demand in the wireless communications infrastructure industry, projected costs savings through acquisition synergies, and the total price to be paid for the remaining shares of LGP Allgon Holding AB 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 and difficulties in integrating the operations of LGP Allgon which would negatively impact projected cost savings; the possibility that an arbitration tribunal in the Swedish compulsory acquisition proceedings fixes a price for the LGP Allgon shares different than that expected by the Company; delays or cancellations of wireless network capacity expansions and buildouts for both existing 2G and 2.5G networks and 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; 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 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-K for the fiscal year ended December 28, 2003 and Form 10-Q for the quarter ended July 4, 2004, 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.
Company Contact: Kevin Michaels (714) 466-1608
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