Alvarion(R) Reports Q3 2009 Results

November 4, 2009 2:00 AM EST

TEL AVIV, Israel--(BUSINESS WIRE)-- Alvarion Ltd. (NASDAQ: ALVR), the world's leading provider of WiMAX(TM) and wireless broadband solutions, today announced financial results for the third quarter ended September, 30, 2009.

Business highlights include:

    --  Selected as vendor to Clearwire International
    --  Implementing turnkey projects in U.S., Taiwan, Italy and Kenya
    --  Two new customer wins through expanded NSN partnership
    --  Introduced outdoor macro base station and WiMAX solution for license
        exempt frequencies

Q3 Financial Highlights:

    --  Returned to Non-GAAP Profitability in Q3 and Year-to-Date Results
    --  Revenues stable sequentially
    --  GAAP net loss of ($0.02) per share; Non-GAAP net income of $0.00 per
        share
    --  WiMAX shipments down 4% sequentially to $37.5 million, reflecting
        project delays
    --  WiMAX revenues down 10% sequentially to $40.5 million
    --  Order pattern continues gradual improvement

In the third quarter of 2009, total revenues were $58.4 million, a decrease of 0.6% from $58.7 million in the second quarter of 2009, and a decrease of 21% from $74.3 million in the third quarter of 2008.

GAAP net loss in the third quarter of 2009 was ($1.0) million, or ($0.02) per share, compared to net loss of ($4.0) million, or ($0.06) per share in Q2 2009. GAAP net income in the third quarter of 2008 was $0.8 million, or $0.01 per share.

Excluding the amortization of intangibles, stock based compensation expenses and other charges, net, on a non-GAAP basis, the company reported net income in the third quarter of 2009 of $0.2 million, or $0.00 per diluted share, compared with non-GAAP net loss of ($0.6) million, or ($0.01) per diluted share in the second quarter of 2009, and non-GAAP net income of approximately $3.0 million, or $0.05 per diluted share in the third quarter of 2008. Please refer to the accompanying financial table for reconciliation of GAAP financial information to non-GAAP for the third quarter of 2009 and the comparative periods.

Cash used in operations was ($4.7) million. As of September 30, 2009, cash, cash equivalents and investments were $125 million.

Comments from Management

"We achieved non-GAAP breakeven results on approximately the same level of revenues as the second quarter, as a result of higher gross margin from a favorable revenue mix combined with our success in improving operating leverage," said Tzvika Friedman, president and CEO of Alvarion. "Our challenge in Q3 related mainly to the impact on revenues of regulatory delays in making spectrum available and the tight credit environment which slowed the pace of some deployments. Meanwhile, fundamental demand remains robust, the WiMAX ecosystem is expanding, and operators are experiencing subscriber growth. As a result, operators' interest in our solution is also growing, and we continue to be encouraged by the gradual improvement in order intake.

"We expect a similar quarter in Q4, followed by a gradual recovery which is expected to begin during the first half of 2010 based on improving demand, plus our ability to reach revenue recognition milestones on projects already won. Catalysts for improving demand may include easing of tight credit conditions, new projects funded under the U.S. broadband stimulus program, and WiMAX license auctions in India. By the end of 2009, the result of streamlining and simplifying the organization will have taken full effect, bringing our revenue breakeven level to approximately $58 million. This will position us to benefit from further operating leverage as revenues improve.

"Longer term, we expect continued growth in demand for WiMAX based on low broadband penetration in many countries and continuing growth in demand for data-intensive applications on mobile platforms, aided by additional spectrum availability and the proliferation of new devices."

Q4 2009 Guidance.

The company's revenue guidance for Q4 2009 is from $55 to $63 million. Based on the indicated revenue range, Q4 non-GAAP per share results are expected to range between a loss of ($0.04) and profit of $0.02. GAAP per share results are expected to range between a loss of ($0.07) and ($0.01).

Alvarion management will host a conference call today, November 4, at 9:00 a.m. Eastern time to discuss the quarter.

Please call the following dial in number to participate:

USA: (800) 230-1074; International: +1(612) 332-0820.

The public is invited to listen to the live webcast of the conference call.

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. EST on November 4, 2009 through 11:59 p.m. EST on December 4, 2009.

To access the replay, please call:

USA: (800) 475-6701

International: +1(320) 365-3844.

To access the replay, users will need to enter the following code: 117463.

ALVARION LTD. & ITS SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

U.S. dollars in thousands (except per share data)

                    Nine         Nine         Three        Three        Three

                    Months       Months       Months       Months       Months
                    Ended        Ended        Ended        Ended        Ended

                    September    September    September    September    June 30,
                    30,          30,          30,          30,

                    2009         2008         2009         2008         2009

Sales             $ 184,998    $ 211,187    $ 58,383     $ 74,279     $ 58,741

Cost of sales       100,252      109,032      30,925       39,098       32,089

Gross profit        84,746       102,155      27,458       35,181       26,652

Operating
expenses:

Research and
development,        39,749       45,033       12,330       14,129       12,779
net

Selling and         39,165       45,612       12,824       16,054       12,970
marketing

General and         11,503       14,040       3,757        4,731        3,723
administrative

Amortization
of intangible       99           1,594        33           328          33
assets

Restructuring
and other           919          -            -            -            919
related
expenses (*)

Total
Operating           91,435       106,279      28,944       35,242       30,424
expenses

Operating loss      (6,689  )    (4,124  )    (1,486 )     (61    )     (3,772 )

Other loss          (749    )    -            -            -            (749   )

Financial           1,551        3,514        454          864          518
income, net

Net income          (5,887  )    (610    )    (1,032 )     803          (4,003 )
(loss)

Basic net
earnings          $ (0.09   )  $ (0.01   )  $ (0.02  )   $ 0.01       $ (0.06  )
(loss) per
share:

Weighted
average number
of shares used
in computing        61,999       63,123       62,054       63,170       61,995
basic net
earnings
(loss) per
share

Diluted net
earnings
(loss) per
share:

                  $ (0.09   )  $ (0.01   )  $ (0.02  )   $ 0.01       $ (0.06  )

Weighted
average number
of shares used
in computing        61,999       63,123       62,054       64,392       61,995
diluted net
earnings
(loss) per
share

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
                                                       Non-
                        GAAP        September 30,                  June 30, 2009
                                                       GAAP
                                    2009                           Non

                                    Adjustments                    -GAAP

Sales                 $ 58,383    $ -                  58,383    $ 58,741

Cost of sales           30,925      (93    )      (a)  30,832      31,946

Gross profit            27,458      93                 27,551      26,795

Operating
expenses:

Research and            12,330      (493   )      (a)  11,837      12,234
development, net

Selling and             12,824      (357   )      (a)  12,467      12,464
marketing

General and             3,757       (234   )      (a)  3,523       3,220
administrative

Amortization of         33          (33    )      (b)  -           -
intangible assets

Total Operating         28,944      (1,117 )           27,827      27,918
expenses

Operating profit        (1,486 )    1,210              (276   )    (1,123 )
(loss)

Financial income,       454         -                  454         518
net

Net income (loss)       (1,032 )    1,210              178         (605   )

Basic net earnings    $ (0.02  )                       0.00      $ (0.01  )
(loss) per share

Weighted average
number of shares
used in computing       62,054                         62,054      61,995
basic net earnings
(loss) per share

Diluted net
earnings (loss)       $ (0.02  )                       0.00      $ (0.01  )
per share

Weighted average
number of shares
used in computing       62,054                         64,605      61,995
diluted net
earnings (loss)
per share

(a)  The effect of stock-based compensation. The Company adopted the provisions
     of Statement of Financial Accounting

     Standards No. 123(R), "Share-Based Payment" on January 1, 2006 using the
     modified-prospective transition method.

(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 ONE TIME CHARGES

U.S. dollars in thousands (except per share data)

                   Nine         Nine         Three        Three        Three

                   Months       Months       Months       Months       Months
                   Ended        Ended        Ended        Ended        Ended

                   September    September    September    September    June 30,
                   30,          30,          30,          30,

                   2009         2008         2009         2008         2009

Net income
(loss)           $ (5,887 )   $ (610   )   $ (1,032 )   $ 803        $ (4,003 )
according to
US GAAP

Amortization
of acquired        99           1,594        33           328          33
intangibles

Stock based
compensation
expenses           4,447        5,772        1,177        1,892        1,697
related to
SFAS 123R

Restructuring
and other          919          -            -            -            919
related
expenses (*)

Other loss         749          -            -            -            749

Net Income
(loss)
excluding
amortization
of acquired
intangibles,     $ 327        $ 6,756      $ 178        $ 3,023      $ (605   )
stock based
compensation
and
restructuring
expenses

Basic net
earnings
(loss) per
share
excluding
amortization
of acquired      $ 0.01       $ 0.11       $ 0.00       $ 0.05       $ (0.01  )
intangibles,
stock based
compensation
and
restructuring
expenses

Weighted
average
number of
shares used
in computing       61,999       63,123       62,054       63,170       61,995
basic net
earnings
(loss) per
share

Diluted net
earnings
(loss) per
share
excluding
amortization
of acquired      $ 0.01       $ 0.10       $ 0.00       $ 0.05       $ (0.01  )
intangibles,
stock based
compensation
and
restructuring
expenses

Weighted
average
number of
shares used
in computing       64,073       64,496       64,605       64,392       61,995
diluted net
earnings
(loss) per
share

(*) Results of the organizational change performed in April 2009.

ALVARION LTD. & ITS SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

U.S. dollars in thousands

                                                      Sept. 30,    June 30,

                                                      2009         2009

ASSETS

Cash, cash equivalents, short-term and long-term    $ 125,294    $ 131,579
investments

Trade receivables                                     53,330       49,348

Other accounts receivable                             10,483       9,805

Inventories                                           40,153       48,619

Severance pay fund                                    14,250       12,847

PROPERTY AND EQUIPMENT, NET                           17,412       17,686

GOODWILL AND OTHER INTANGIBLE ASSETS                  57,273       57,306

TOTALASSETS                                         $ 318,195    $ 327,190

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES

Trade payables                                      $ 35,720     $ 47,281

Other accounts payable and accrued expenses           44,750       46,231

Total current liabilities                             80,470       93,512

ACCRUED SEVERANCE PAY                                 18,616       17,534

TOTALLIABILITIES                                      99,086       111,046

SHAREHOLDERS' EQUITY                                  219,109      216,144

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY          $ 318,195    $ 327,190

ALVARION LTD.& ITS SUBSIDIARIES

Consolidated Statement of Cash Flows

U.S. dollars in thousands

                                                              Three

                                                              Months ended

                                                              September 30, 2009

Cash flows from operating activities:

Net loss                                                    $ (1,032  )

Adjustments to reconcile net loss to net cash provided
by operating activities:

Depreciation                                                  1,905

Stock based compensation expenses related to SFAS 123R        1,177

Amortization of intangibles assets                            33

Increase in trade receivables                                 (3,982  )

Decrease in other accounts receivable and prepaid             2,101
expenses

Decrease in inventories                                       8,466

Decrease in trade payables                                    (11,561 )

Decrease in other accounts payables and accrued expenses      (1,481  )

Accrued severance pay, net                                    (321    )

Net cash used in operating activities                         (4,695  )

Cash flows from investing activities:

Purchase of fixed assets                                      (1,631  )

Net cash used in investing activities                         (1,631  )

Cash flows from financing activities:

Proceeds from exercise of employees' stock options            41

Net cash provided by financing activities                     41

Decrease in cash, cash equivalents, short-term and            (6,285  )
long-term investments

Cash, cash equivalents, short-term and long-term              131,579
investments at the beginning of the period

Cash, cash equivalents, short-term and long-term            $ 125,294
investments at the end of the period

About Alvarion

Alvarion (NASDAQ: ALVR) is the largest WiMAX pure-player with the most extensive WiMAX customer base and over 250 commercial deployments around the globe. Committed to growing the WiMAX market, the company offers solutions for a wide range of frequency bands supporting a variety of business cases. Through its OPEN(TM) WiMAX strategy, superior IP and OFDMA know-how, and ability to deploy end-to-end turnkey WiMAX projects, Alvarion is shaping the new wireless broadband experience (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 WiMAX license allocation in certain countries, the failure of the market for WIMAX products to develop as anticipated; Alvarion's inability to capture market share in the expected growth of the WiMAX market as anticipated, due to, among other things, competitive reasons or failure to execute in our sales, services provisioning, marketing or manufacturing objectives; 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 Kika Stayerman, kika.stayerman@alvarion.com or +972.3.767.4159.

"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.

"Alvarion" and "4Motion" are the registered trademarks of Alvarion Ltd. "OPEN" is the trademark of Alvarion Ltd.

All other companies' names, products, services may be the properties of their respective owners.

    Source: Alvarion Ltd.

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