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For Further Information Contact:
David Renauld
Vice President, Corporate Affairs
(413) 665-8551
FOR IMMEDIATE RELEASE
November 9, 2004
TERABEAM WIRELESS ANNOUNCES OPERATING RESULTS
FOR ITS THIRD QUARTER 2004
FALLS CHURCH, VA, November 9, 2004– Terabeam Wireless, the business name of YDI Wireless, Inc. (NASDAQ:YDIW), a leading developer and supplier of broadband wireless solutions, today announced reported its financial results for the third quarter ended September 30, 2004.
Revenue for the quarter ended September 30, 2004 was $6.4 million, an increase of approximately 36% from the revenue of $4.7 million for the quarter ended June 30, 2004 and a decrease of approximately 21% from the revenue of $8.0 million for the quarter ended September 30, 2003. The increase from the prior quarter resulted primarily from two factors: first, a full quarter of combined operations with the three companies Terabeam Wireless acquired in the second quarter of 2004 and second positive results of focusing our sales and marketing personnel on solution-based selling as opposed just selling equipment and adding solution-based sales personnel. The decrease from the preceding year resulted from a number of factors, including significant orders from a single customer in 2003 that were not repeated in 2004, increased competition, a general softness in the United States wireless market where Terabeam Wireless currently sells most of its products, and the uncertainty that resulted from Terabeam Wireless engaging in significant strategic transactions.
Revenue for the nine months ended September 30, 2004 was $17.1 million, a decrease of 21% from the revenue of $21.7 million for the nine months ended September 30, 2003. The decreases resulted from a number of factors, including significant orders from a single customer in 2003 that were not repeated in 2004, increased competition, a general softness in the United States wireless market where Terabeam Wireless currently sells most of its products, the uncertainty that resulted from Terabeam Wireless engaging in significant strategic transactions, and senior management’s focus on the three strategic transactions that were completed in the second quarter of 2004.
The net loss for the quarter ended September 30, 2004 was $2.4 million ($0.09 per share-diluted) compared to net loss of $1.6 million ($0.10 per share-diluted) for the quarter ended June 30, 2004 and net income of $1.1 million ($0.07 per share-diluted) for the quarter ended September 30, 2003. The third quarter 2004 loss per share was due, in large part, to the operating costs associated with the three companies Terabeam Wireless acquired in the latter part of the second quarter of 2004.
The net loss for the nine months ended September 30, 2004 was $3.7 million ($0.13 per share-diluted) compared to net income of $4.7 million ($0.38 per share) for the nine months ended September 30, 2003. The three main reasons that caused this decrease in income were reduced gross profit as a result of lower revenues, the significant increase in operating expenses due to the three companies acquired during the second quarter, and a one-time gain of $4.3 million during the same period of 2003 resulting from the immediate recognition of the negative goodwill from the Young Design-Telaxis transaction. The decrease was offset to some extent as a result of the sale in 2004 of excess test equipment and other assets held for sale.
Robert Fitzgerald, Terabeam Wireless Chief Executive Officer, stated, “We are pleased that our revenue increased over the preceding quarter. We will continue our efforts to grow our top line in this very competitive market. We historically have been a profitable company, and it is our driving goal to return to profitability.”
Terabeam Wireless Announces Operating Results
For Its Third Quarter 2004
November 9, 2004
Page 2
Conference Call Information
Terabeam Wireless will host a conference call to discuss this release, financial results, developments at the company, and other matters of interest to investors and others on November 10, 2004 starting at 8:30 a.m. Eastern Time. The discussion may include forward-looking information.
To participate in this conference call, please dial 800-967-7143 (or 719-457-2631 for international callers), confirmation code 966685 for all callers,atleast five minutes before start time. The conference call will also be broadcast live over the Internet, but only telephonic participants will be able to ask questions. Investors and others are invited to visit Terabeam Wireless’ website athttp://www.terabeam.com/corporate to access this Internet broadcast. Replays will be available telephonically for approximately one week by dialing 888-203-1112 for domestic callers and 719-457-0820 for international callers, confirmation code 966685 for all callers, and over the Internet for approximately 90 days at Terabeam Wireless’ website athttp://www.terabeam.com/corporate.
About Terabeam Wireless
Terabeam Wireless is the business name of YDI Wireless, Inc. Terabeam Wireless is a world leader in providing extended range, license-free wireless data equipment and is a leading designer of turnkey long distance wireless systems ranging from 9600 bps to 1.44 Gbps for applications such as wireless Internet, wireless video, wireless LANs, wireless WANs, wireless MANs, and wireless virtual private networks. Additional information about Terabeam Wireless as well as its complete product line can be found at the company’s website located athttp://www.terabeam.comor by contacting the company by telephone at 413-665-8551 or by email atIR@terabeam.com.
Terabeam Wireless Announces Operating Results
For Its Third Quarter 2004
November 9, 2004
Page 3
Safe Harbor Statement
Statements in this press release that are not statements of historical facts are forward-looking statements that involve risks, uncertainties, and assumptions. Terabeam Wireless’ actual results may differ materially from the results anticipated in these forward-looking statements. The forward-looking statements involve risks and uncertainties that could contribute to such differences including those relating to the downturn and ongoing uncertainty in the telecommunications industry and larger economy; the intense competition in Terabeam Wireless’ industries and resulting impacts on its pricing, gross margins, and general financial performance; difficulties in predicting Terabeam Wireless’ future financial performance; and risks arising from and relating to Terabeam Wireless’ recent acquisitions of Ricochet Networks, Inc., Terabeam Corporation, and KarlNet, Inc. and contemplated acquisition of Phazar Corp. Further information on these and other factors that could affect Terabeam Wireless’ actual results is and will be included in filings made by Terabeam Wireless from time to time with the Securities and Exchange Commission and in its other public statements.
– Financial Tables follow –
Terabeam Wireless Announces Operating Results
For Its Third Quarter 2004
November 9, 2004
Page 4
YDI WIRELESS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
| (unaudited) September 30, | | December 31, | ||||||
|---|---|---|---|---|---|---|---|---|
| 2004 | 2003 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 22,995 | $ | 8,990 | ||||
| Restricted cash | 5,176 | -- | ||||||
| Investment securities - available-for-sale | 18,157 | -- | ||||||
| Accounts receivable, net | 3,213 | 2,511 | ||||||
| Refundable income taxes | 151 | 226 | ||||||
| Inventory | 6,502 | 3,134 | ||||||
| Assets held for sale | -- | 790 | ||||||
| Prepaid expenses | 302 | 162 | ||||||
| Total current assets | 56,496 | 15,813 | ||||||
| Property and equipment, net | 2,617 | 1,747 | ||||||
| Other Assets: | ||||||||
| Investment securities - available-for-sale | 1,053 | 2,316 | ||||||
| Investment securities at cost | 311 | 311 | ||||||
| Goodwill | 15,207 | -- | ||||||
| Intangible assets, net | 4,457 | 483 | ||||||
| Deposits | 91 | 49 | ||||||
| Total other assets | 21,119 | 3,159 | ||||||
| Total assets | $ | 80,232 | $ | 20,719 | ||||
| Liabilities and Stockholders' Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | 10,469 | $ | 3,023 | ||||
| Deferred revenue | 167 | -- | ||||||
| Current maturities of notes payable | 2,781 | 213 | ||||||
| Total current liabilities | 13,417 | 3,236 | ||||||
| Notes payable, net of current maturities | 1,494 | 1,298 | ||||||
| Total liabilities | 14,911 | 4,534 | ||||||
| Commitments and contingencies | -- | -- | ||||||
| Stockholders' Equity | ||||||||
| Preferred stock, $0.01 par value; authorized 4,500,000, none issued at | ||||||||
| September 30, 2004 and December 31, 2003 | -- | -- | ||||||
| Common stock, $0.01 par value, 100,000,000 shares authorized, 27,018,855 issued | ||||||||
| and 22,835,672 outstanding at September 30, 2004; 14,179,882 issued and | ||||||||
| outstanding at December 31, 2003 | 270 | 142 | ||||||
| Additional paid-in capital | 66,079 | 6,173 | ||||||
| Retained earnings | 4,970 | 8,673 | ||||||
| Treasury stock | (6,500 | ) | -- | |||||
| Accumulated other comprehensive income: | ||||||||
| Net unrealized gain on available-for-sale securities | 502 | 1,197 | ||||||
| Total stockholders' equity | 65,321 | 16,185 | ||||||
| Total liabilities and stockholders' equity | $ | 80,232 | $ | 20,719 | ||||
Terabeam Wireless Announces Operating Results
For Its Third Quarter 2004
November 9, 2004
Page 5
YDI WIRELESS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
(unaudited)
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2004 | 2003 | 2004 | 2003 | |||||||||||
| Revenues | $ | 6,370 | $ | 8,029 | $ | 17,120 | $ | 21,694 | ||||||
| Cost of goods sold | 3,682 | 3,741 | 10,426 | 13,140 | ||||||||||
| Gross profit | 2,688 | 4,288 | 6,694 | 8,554 | ||||||||||
| Operating expenses: | ||||||||||||||
| Selling costs | 879 | 698 | 1,799 | 1,701 | ||||||||||
| General and administrative | 3,381 | 1,470 | 7,288 | 5,023 | ||||||||||
| Research and development | 1,069 | 706 | 2,038 | 1,280 | ||||||||||
| Total operating expenses | 5,329 | 2,874 | 11,125 | 8,004 | ||||||||||
| Operating income (loss) | (2,641 | ) | 1,414 | (4,431 | ) | 550 | ||||||||
| Other income (expenses): | ||||||||||||||
| Interest income | 360 | 81 | 410 | 112 | ||||||||||
| Interest expense | (76 | ) | (32 | ) | (139 | ) | (94 | ) | ||||||
| Other income (expense) | 6 | -- | 509 | 10 | ||||||||||
| Total other income (expense) | 290 | 49 | 780 | 28 | ||||||||||
| Income (loss) before income taxes and extraordinary gain | (2,351 | ) | 1,463 | (3,651 | ) | 578 | ||||||||
| Provision (benefit) for income taxes | -- | 410 | 2 | 233 | ||||||||||
| Income (loss) before extraordinary gain | (2,351 | ) | 1,053 | (3,653 | ) | 345 | ||||||||
| Extraordinary gain (loss) | -- | -- | -- | 4,347 | ||||||||||
| Net income (loss) | $ | (2,351 | ) | $ | 1,053 | $ | (3,653 | ) | $ | 4,692 | ||||
| Weighted average shares - basic | 26,218 | 13,576 | 28,285 | 12,168 | ||||||||||
| EPS, basic | $ | (0.09 | $ | 0.08 | $ | (0.13 | ) | $ | 0.39 | |||||
| Weighted average shares - diluted | 26,692 | 14,071 | 28,890 | 12,288 | ||||||||||
| EPS, diluted | $ | (0.09 | ) | $ | 0.07 | $ | (0.13 | ) | $ | 0.38 | ||||