Terabeam Wireless, the business name of YDI Wireless, Inc.
(NASDAQ:YDIW), a leading developer and supplier of broadband
wireless solutions, today announced its financial results for its
third quarter ended September 30, 2005. These financial results
include, for the period beginning on July 27, 2005, results from
the operations that Terabeam Wireless acquired from Proxim
Corporation on July 27, 2005. Revenue for the quarter ended
September 30, 2005 was $18.1 million, an increase of approximately
151% from the revenue of $7.2 million for the quarter ended June
30, 2005 and an increase of approximately 183% from the revenue of
$6.4 million for the quarter ended September 30, 2004. The
significant increase in revenue over the prior quarter and prior
year resulted primarily from the acquisition of the operations of
Proxim Corporation that was completed in the third quarter 2005.
The net loss attributable to common shareholders computed in
accordance with generally accepted accounting principles (GAAP) for
the quarter ended September 30, 2005 was $10.0 million ($0.47 per
share-diluted) compared with a GAAP net loss of $987,000 ($0.04 per
share-diluted) for the quarter ended June 30, 2005 and a GAAP net
loss of $2.4 million ($0.09 per share-diluted) for the quarter
ended September 30, 2004. The third quarter 2005 GAAP net loss
attributable to common shareholders included $7.8 million of
restructuring provisions and charges as a result of the purchase of
the operations of Proxim Corporation by Terabeam Wireless. The
non-cash provisions and charges totaled $6.8 million and consisted
of (i) $2.1 million for excess and obsolete Terabeam inventory,
(ii) $3.6 million for impairment of our Terabeam trade name, and
(iii) approximately $1.1 million for the write-off of capitalized
Terabeam software development. In addition, there were one time
restructuring charges of approximately $944,000 relating to
severance and leased buildings that were vacated. Pro forma net
loss for the third quarter of 2005 was approximately $2.3 million
($0.11 per share-diluted), compared with a pro forma net loss for
the second quarter of 2005 of $987,000 ($0.04 per share-diluted)
and a pro forma net loss for the third quarter of 2004 of $2.4
million ($0.09 per share-diluted). These pro forma numbers are
intended to present what the company's net loss would have been
without the restructuring charges described in the preceding
paragraph. Management believes that presenting a GAAP to pro forma
net loss reconciliation may permit investors to better compare
results from period to period and more accurately assess the
company's prospects in a normal operating period. A detailed and
specific reconciliation is included in an accompanying financial
table. Robert Fitzgerald, Terabeam's Chief Executive Officer,
stated, "This quarter was an extremely exciting and challenging
quarter as we acquired and integrated the assets and operations of
Proxim Corporation. We are very pleased with the loyalty of
Proxim's customers and channel partners and the demand for our
products. We are working diligently to balance our cost structure
with our revenue level. We believe that we are positioned to
deliver much stronger results in the fourth quarter." Corporate
Name and Ticker Symbol Changes As previously announced, YDI
Wireless will be changing its corporate name to "Terabeam, Inc."
and its ticker symbol to "TRBM." These changes will become
effective shortly before markets open on Monday, November 7, 2005.
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 3, 2005 starting at 5:00 p.m.
Eastern Time. The discussion may include forward-looking
information. To participate in this conference call, please dial
800-946-0716 (or 719-457-2644 for international callers),
confirmation code 7450401 for all callers, at least ten minutes
before start time. The conference call will also be broadcast live
over the Internet. Investors and others are invited to visit
Terabeam Wireless' website at http://www.terabeam.com/corporate to
access this 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
7450401 for all callers, and over the Internet for approximately 90
days at Terabeam Wireless' website at
http://www.terabeam.com/corporate. About YDI Wireless / Terabeam
YDI Wireless, Inc. has been using Terabeam Wireless as a business
name and will soon be renamed Terabeam, Inc. The company's
subsidiary Proxim Wireless Corporation is a global leader in
providing Wi-Fi and other broadband wireless solutions to meet the
performance, scalability, and security requirements of enterprises,
government, and service providers. The company's subsidiary
Ricochet Networks, Inc. is a leading portable Wireless Internet
Service Provider (WISP) with operational markets in Denver and
Aurora, Colorado and San Diego, California. Additional information
about the company can be found at the company's website located at
http://www.terabeam.com or by contacting the company by telephone
at 413-584-1425 or by email at IR@terabeam.com. 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; difficulties or delays in developing and supplying new
products with the contemplated or desired features, performance,
cost, price, and other characteristics; difficulties in supplying
products at the times and in the quantities desired by customers;
risks arising from and relating to Terabeam Wireless' recent
acquisition of Proxim Corporation's operations, assets, and
relationships, including without limitation risks of patent
infringement claims and related litigation; and the impacts and
effects of any other strategic transactions Terabeam Wireless may
evaluate or consummate. 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. Use of Pro Forma Financial Information To
supplement our consolidated financial statements presented on a
GAAP basis, Terabeam Wireless has presented non-GAAP, or pro forma,
measures of net loss and loss per share, which are adjusted to
exclude certain costs, expenses, gains and losses that we believe
are useful to enhance the overall understanding of our financial
performance. These adjustments to our GAAP results are made with
the intent of providing investors a supplemental understanding of
Terabeam Wireless' underlying operational results and trends. The
presentation of this additional information is not meant to be
considered in isolation or as a substitute for Terabeam Wireless'
financial results prepared in accordance with GAAP in the United
States of America. -0- *T YDI WIRELESS, INC. CONSOLIDATED BALANCE
SHEETS (in thousands, except per share data) September 30, December
31, 2005 2004 --------------- ------------- (unaudited) Assets
Current assets: Cash and cash equivalents $8,743 $35,368 Investment
securities - available-for- sale 263 5,369 Accounts receivable, net
8,973 2,972 Refundable income taxes 0 151 Inventory 9,252 7,442
Prepaid expenses 1,131 253 --------------- ------------- Total
current assets 28,362 51,555 Property and equipment, net 4,152
2,511 Other Assets: Restricted cash 5,076 5,136 Goodwill 6,663
6,072 Intangible assets, net 20,924 11,919 Deposits 388 91
--------------- ------------- Total other assets 33,051 23,218
--------------- ------------- Total assets $65,565 $77,284
=============== ============= Liabilities and Stockholders' Equity
Current liabilities: Accounts payable and accrued expenses $11,810
$6,965 Deferred revenue 1,673 159 Current maturities of notes
payable 135 2,899 --------------- ------------- Total current
liabilities 13,618 10,023 Notes payable, net of current maturities
97 1,270 --------------- ------------- Total liabilities 13,715
11,293 Commitments and contingencies Stockholders' Equity Preferred
stock, $0.01 par value; authorized 4,500,000, none issued at
September 30, 2005 and December 31, 2004 - - Common stock, $0.01
par value, 100,000,000 shares authorized, 21,408,910 issued and
outstanding at September 30, 2005 and 22,845,847 issued with
22,345,847 outstanding at December 31, 2004 214 228 Additional
paid-in capital 56,580 59,637 Retained earnings (4,933) 7,277
Treasury stock 0 (1,155) Accumulated other comprehensive income:
Net unrealized gain (loss) on available-for-sale securities (11) 4
--------------- ------------- Total stockholders' equity 51,850
65,991 --------------- ------------- Total liabilities and
stockholders' equity $65,565 $77,284 =============== =============
YDI WIRELESS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (in
thousands, except per share data) (unaudited) For the Three For the
Nine Months Ended Months Ended September 30, September 30,
------------------ ------------------ 2005 2004 2005 2004 ---------
-------- --------- -------- Revenues $18,147 $6,370 $31,909 $17,120
Cost of goods sold 10,503 3,682 17,509 10,426 Restructuring
provision for excess and obsolete inventory 2,143 0 2,143 0
--------- -------- --------- -------- Gross profit 5,501 2,688
12,257 6,694 Operating expenses: Selling costs 3,800 879 5,831
1,799 Restructuring charges 944 0 944 0 Restructuring charge for
impairment of intangible assets 4,664 0 4,664 0 General and
administrative 3,342 3,381 8,627 7,288 Research and development
2,788 1,069 4,438 2,038 --------- -------- --------- -------- Total
operating expenses 15,538 5,329 24,504 11,125 --------- --------
--------- -------- Operating income (loss) (10,037) (2,641)
(12,247) (4,431) Other income (expenses): Interest income 122 360
612 410 Interest expense (4) (76) (140) (139) Other income (loss)
10 6 (106) 509 --------- -------- --------- -------- Total other
income (expenses) 128 290 366 780 --------- -------- ---------
-------- Income (loss) before income taxes (9,909) (2,351) (11,881)
(3,651) Benefit (provision) for income taxes (3) 0 11 (2) ---------
-------- --------- -------- Income (loss) before minority interest
(9,912) (2,351) (11,870) (3,653) Minority interest in net income of
Merry Fields (101) 0 (101) 0 --------- -------- --------- --------
Net income (loss) ($10,013) ($2,351) ($11,971) ($3,653) =========
======== ========= ======== Weighted average shares - basic and
diluted 21,163 26,218 21,932 18,788 --------- -------- ---------
-------- EPS, basic and diluted ($0.47) ($0.09) ($0.55) ($0.19)
========= ======== ========= ======== YDI WIRELESS, INC. GAAP to
Pro Forma Net Loss Reconciliation (in thousands, except per share
data) (unaudited) For the Three For the Nine Months Ended Months
Ended September 30, September 30, ------------------
------------------ 2005 2004 2005 2004 --------- -------- ---------
-------- GAAP net income (loss) ($10,013) ($2,351) ($11,971)
($3,653) Restructuring provision for excess and obsolete inventory
2,143 0 2,143 0 Restructuring charges relating to operating
expenses: Severance for personnel 279 0 279 0 Lease reserves for
unutilized facilities 665 0 665 0 Impairment for Terabeam trade
name 3,600 0 3,600 0 Write-off of capitalized software development
1,064 0 1,064 0 --------- -------- --------- -------- Pro forma net
income (loss) ($2,262) ($2,351) ($4,220) ($3,653) ---------
-------- --------- -------- --------- -------- --------- --------
Weighted average shares - basic and diluted 21,163 26,218 21,932
18,788 --------- -------- --------- -------- Pro forma EPS, basic
and diluted ($0.11) ($0.09) ($0.19) ($0.19) ========= ========
========= ======== *T
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