Company Also Announces Additional RecoveryPLUS Agreement in Q1 2006
DALLAS, Feb. 16 /PRNewswire-FirstCall/ -- Somera Communications
(NASDAQ:SMRA), a global provider of telecommunications equipment,
asset management, and recovery services, today announced financial
results for the fourth quarter and 2005 fiscal year ended December
31, 2005. Total revenue for the fourth quarter of 2005 was $16.1
million, compared with $23.2 million in the fourth quarter of 2004
and $21.8 million in the third quarter of 2005, the decrease due to
softer end of year demand for both new and refurbished equipment.
Program and service revenues continued to grow, by 31% over the
fourth quarter of 2004 and by 14% over the third quarter of 2005.
In addition, new clients continued to engage the RecoveryPLUS
program with a new client added in the fourth quarter of 2005.
Further, in the first quarter of 2006, the company engaged another
major U.S. wireless carrier to the company's existing
RecoveryPLUS(TM) program clients. Net loss was $4.5 million, or
($0.09) per share for the fourth quarter of 2005, compared with a
net loss of $6.2 million, or ($0.12) per share, for the fourth
quarter of 2004 and a net loss of $4.2 million, or ($0.08) per
share, for the third quarter of 2005. Gross margin for the fourth
quarter of 2005 was 32%, compared with a gross margin of 27% in the
fourth quarter of 2004 and 33% in the third quarter of 2005. While
gross margins slightly dipped sequentially due to lower volume,
overall gross margin is higher year over year. Operating expenses
for the fourth quarter of 2005 were $9.6 million, compared with
$12.9 million in the fourth quarter of 2004 and $11.5 million in
the third quarter of 2005. The reduction in operating expenses in
the sequential and year-over-year quarterly results is primarily
attributable to cost actions taken at end of third quarter in 2005
and lower variable selling expenses due to the reduced volume. The
company's balance sheet at December 31, 2005 included $17.8 million
in cash, cash equivalents, and short-term investments, a current
ratio of 1.73 and no long-term debt. Somera total revenue for
fiscal year 2005 was $77.1 million, compared with $100.0 million
for 2004. Net loss on a GAAP basis was $19.9 million, or a loss of
($0.40) per share, compared with a net loss of $22.6 million, or a
loss of ($0.45) per share, for the prior year. Somera is in the
process of executing its previously disclosed restructuring plan,
the goal of which is to reduce operating costs so that the Company
is positioned to achieve breakeven at $16-$18 million in quarterly
revenues. In the first quarter of 2006, the Company expects to
complete the elimination of 70-80 positions, rationalize leased
facilities and re-assess the carrying value of certain of its
assets including inventory and fixed assets in light of the new
operating plan. The final charges associated with these actions
have yet to be determined. "Given the positive response to the
RecoveryPLUS program and its potential contribution to our
business, our recent cost reduction actions better position the
Company for a return to profitability," commented David Heard, CEO
of Somera. "This restructuring affords us the financial flexibility
to operate efficiently while RecoveryPLUS adoptions continue to
mature, ultimately impacting our income statement." Conference Call
and Webcast Management will hold a teleconference with simultaneous
webcast today at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time) to
discuss fourth quarter results. Please dial 866-249-5225 for
domestic callers, or 303-262-2131 for international callers. The
call will be webcast on the Investor Relations page of the Somera
web site at http://www.somera.com/. A telephonic replay will be
available from one hour after the call ends through February 23,
2006, at 800-405-2236 for domestic callers, or 303-590-3000 for
international callers, passcode 11053978. About Somera Somera
Communications is a telecom asset management firm that assists
service providers generate greater value from their network assets
in the form of lower operating costs, longer product life, higher
productivity, and real measurable savings. Somera provides
immediate availability of quality, warranted new and refurbished
equipment at savings of 25% to 60%. Extending these benefits is
Somera RecoveryPLUS, which deploys knowledgeable personnel, proven
processes and proprietary software to each client location to
provide professional discovery, valuation and asset cataloging,
thereby enhancing ongoing network efficiency while improving the
accuracy and quality of reports required of today's regulatory
environment. In addition, Somera offers outsourced network
operations, logistics, and technical service, as well as
comprehensive repair services for wireless, wireline, and data
products -- all at significant savings and reduced cycle times.
Founded in 1995, Somera has developed an impressive base of over
1,100 customers worldwide, including the industry leaders from each
segment of the telecommunications market. Visit Somera on the web
at http://www.somera.com/. Investors should note that the audit by
our independent accounting firm of our financial results reported
in this press release has not yet been completed. The preparation
of final audited financial results requires a substantial amount of
subjective judgment, which must be reviewed and approved by our
Audit Committee and audited by our independent accounting firm.
Accordingly, once the audit of our financial statements is
completed the actual audited results may vary from the results
reported in this press release. This news release contains
forward-looking statements as that term is defined in Section 27A
of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, including the
following statements: * The benefits to be obtained as a result of
the organizational restructuring * Our ability to achieve the
breakeven model and, if obtained, whether we can be profitable with
this operating model * The amount and nature of any non-recurring
charges which may be incurred in the future Actual results in
future periods are subject to risks and uncertainties that could
cause actual results to differ materially from those projected in
the forward-looking statements contained in this release,
including, but not limited to, general economic conditions
particularly affecting the telecommunications industry; capital
equipment spending levels in the telecommunications industry,
including the risk of continued customer spending delays associated
with carrier consolidation; the impact of competition in the market
for supplying equipment and equipment lifecycle management services
to telecommunications operators; the risk of potential shortage of
product supply; and Somera's ability to build its lifecycle
management services capabilities; and other factors fully described
in the company's reports to the Securities and Exchange Commission
(SEC), including but not limited to, the Annual Report on Form 10-K
for the fiscal year ended December, 31, 2004, and Quarterly Reports
on Form 10-Q. The company does not undertake to update any
forward-looking statements that may be made by or on behalf of the
company. Copies of Somera's Securities & Exchange Commission
filings may be obtained by contacting Financial Relations Board at
617-520-7064 or by visiting the Investor section of Somera's web
site at http://www.somera.com/. Contact: Jim Gardner Vice
President, Marketing and Investor Relations Somera Communications
972-304-5660, ext. 317 SOMERA COMMUNICATIONS, INC. CONSOLIDATED
BALANCE SHEETS (in thousands) (Unaudited) Dec. 31, Dec. 31, 2005
2004 ASSETS Current Assets: Cash and cash equivalents $6,613 $7,654
Short-term investments 11,200 32,757 Accounts receivable, net
13,773 16,217 Inventories, net 16,959 10,027 Other current assets
1,410 1,876 Total current assets 49,955 68,531 Property and
equipment, net 3,834 4,600 Other assets 4,399 148 Intangible assets
-- 1,810 Total assets $58,188 $75,089 LIABILITIES AND STOCKHOLDERS'
EQUITY Current Liabilities: Accounts payable $14,865 $12,396
Accrued compensation 1,701 2,503 Other accrued liabilities 8,999
11,139 Deferred revenue 3,232 723 Total current liabilities 28,797
26,761 Stockholders' Equity 29,391 48,328 Total liabilities and
stockholders' equity $58,188 $75,089 SOMERA COMMUNICATIONS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per
share data) (Unaudited) For the For the For the For the Three
Months Three Months Twelve Months Twelve Months Dec. 31, 2005 Dec.
31, 2004 Dec. 31, 2005 Dec. 31, 2004 Equipment Revenue $12,785
$20,624 $66,622 $87,120 Service and Program Revenue 3,351 2,562
10,506 12,914 Total Revenue $16,136 $23,186 $77,128 $100,034
Equipment Cost of Revenue $9,106 $15,073 $45,066 $67,008 Service
and Program Cost of Revenue 1,921 1,925 5,803 9,479 Total Cost of
Revenue $11,027 $16,998 $50,869 $76,487 Gross profit $5,109 $6,188
$26,259 $23,547 Operating expenses: Selling, general &
administrative 9,560 12,914 42,904 46,693 Impairment of goodwill --
-- 1,760 -- Other operating expense -- 17 1,306 67 Total operating
expenses $9,560 $12,931 $45,970 $46,760 Loss from operations
$(4,451) $(6,743) $(19,711) $(23,213) Interest and other income
(expense), net 77 552 (10) 643 Loss before income taxes $(4,374)
$(6,191) $(19,721) $(22,570) Income tax provision 98 16 135 58 Net
loss $(4,472) $(6,207) $(19,856) $(22,628) Net loss per share -
basic and diluted $(0.09) $(0.12) $(0.40) $(0.45) Weighted average
number of shares outstanding: Basic and diluted 50,203 49,871
49,936 49,739 DATASOURCE: Somera Communications CONTACT: Jim
Gardner, Vice President, Marketing and Investor Relations of Somera
Communications, +1-972-304-5660, ext. 317 Web site:
http://www.somera.com/
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