NextWave Wireless Files First Quarter Fiscal 2010 Results
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SAN
DIEGO May 18, 2010 � NextWave Wireless, Inc.
(NASDAQ:WAVE) today announced that it has filed its Quarterly Report on Form
10-Q with the Securities and Exchange Commission for the first quarter of
fiscal 2010, ended April 3, 2010.
Results for the
first quarter generated net losses attributable to NextWave of $3.4 million for
the three months ended April 3, 2010, compared to a loss of $82.2 million for
the three months ended March 28, 2009. Net income from continuing operations
was $0.3 million for the three months ended April 3, 2010, which included a
$38.0 million noncash gain resulting from the debt modification of the Third
Lien Subordinated Secured Convertible Notes due 2011 (the 'Third Lien Notes')
in March 2010, which was treated as an extinguishment of debt for accounting
purposes. Without this one time gain, the Company would have reported a loss
from continuing operations of $37.7 million for the three months ended April 3
2010, compared to a loss of $60.6 million for the first quarter of 2009. This
one time gain will be amortized as interest expense each quarter until maturity
of the Third Lien Notes in accordance with US GAAP, which will significantly
increase the Company's interest expense for financial reporting purposes.
Total revenues
from continuing operations for the first quarter of 2010 were $17.9 million, as
compared to $16.9 million for 2009, an increase of $1.0 million. Total revenues
for both periods consist of revenues generated by the Company's Multimedia
segment. The increase in revenues was attributable to an increase in royalties
and nonrecurring engineering revenue from mobile carrier customers.
Total cost of
revenues from continuing operations as a percentage of the associated revenues
for the first quarter of 2010 was 30.5%, as compared to 36.7% for the first
quarter of 2009. The increase in gross margin in the current quarter is
primarily attributable to an increase in the product mix of royalty revenues as
compared to service revenues, which generally have lower margins.
The Company used
cash for operating activities of continuing operations of $7.3 million and
$31.7 million during the three months ended April 3, 2010 and March 28, 2009,
respectively. Total unrestricted cash and cash equivalents held by continuing
operations at April 3, 2010 totaled $7.9 million. The Company had a net working
capital deficit of $2.8 million at April 3, 2010. In April 2010, the Company
borrowed $7.0 million in cash and issued additional 15% Senior Secured Notes
due July 2011 in the same amount.
The decrease in
the Company's loss from continuing operations, prior to the one time accounting
adjustment for gain on extinguishment of debt, as well as the decline in cash
used for operations, reflects the strategic impact of the Company's cost
reduction activities and divestitures in connection with the Company's global
restructuring activities, initiated in the second half of 2008.
The Company has
substantial debt maturities in 2011 and must successfully monetize a
substantial portion of its wireless spectrum assets in order to retire its
debt. In addition, the Company has capital expenditure needs in 2010 associated
with certain build-out or substantial service requirements applicable to its
wireless spectrum assets. Investors should review the Form 10-Q filed
today for more information regarding the Company's liquidity and capital
resources.
The Form 10-Q is
available on the web site maintained by the Securities and Exchange Commission
at www.sec.gov
and on the NextWave website at www.nextwave.com
under the heading "Investor Relations - Financial Information - SEC
Filings." The financial information accompanying this press release should
be reviewed together with the Notes to Condensed Consolidated Financial
Statements, Management's Discussion and Analysis of Financial Condition and
Results of Operations and Risk Factors contained in the Form 10-Q.
About
NextWave Wireless
NextWave
Wireless Inc. is a wireless technology company that develops, produces and
markets mobile multimedia and consumer electronic connectivity products
including device-embedded software for mobile handsets, client-server media
platforms, media sharing software for consumer electronics and pocket-sized
mobile broadcast receivers. The company also manages and maintains worldwide
wireless spectrum licenses.
CONTACT
NextWave Wireless Investor Relations
Fran
Harding
Investor Relations
NextWave Wireless
(858) 731-5642
fharding@nextwave.com
NEXTWAVE
WIRELESS INC.
CONDENSED
CONSOLIDATED BALANCE SHEETS
(in thousands, except par value data)
(unaudited)
|
|
April 3, 2010 |
January 2, 2010 |
|
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$7,893 |
$20,157 |
|
Restricted cash and marketable
securities |
26,119 |
24,477 |
|
Accounts
receivable, net of allowance for doubtful accounts of $16 and $23 at April 3,
2010 and January 2, 2010, respectively |
3,025 |
5,115 |
|
Accounts receivable related party |
2,243 |
- |
|
Wireless spectrum licenses held for
sale |
62,773 |
62,868 |
|
Deferred contract costs |
1,261 |
1,632 |
|
Prepaid expenses and other current
assets |
4,088 |
4,467 |
|
Current assets of discontinued operations |
9,070 |
9,520 |
|
Total
current assets |
116,472 |
128,236 |
|
Wireless spectrum licenses, net �
continuing operations |
407,241 |
409,156 |
|
Goodwill |
38,181 |
38,899 |
|
Other intangible assets, net |
13,376 |
14,674 |
|
Property and equipment, net |
3,422 |
3,729 |
|
Other
assets, including assets measured at fair value of $1,134 and $1,227 at April
3, 2010 and January 2, 2010, respectively |
7,696 |
8,096 |
|
Total assets |
$586,388 |
$602,790 |
|
LIABILITIES AND
STOCKHOLDERS� DEFICIT |
|
|
|
Current
liabilities: |
|
|
|
Accounts payable |
$2,746 |
$ 1,952 |
|
Accrued expenses |
10,317 |
13,358 |
|
Current portion of long-term
obligations |
86,222 |
86,154 |
|
Deferred revenue |
4,817 |
4,786 |
|
Deferred revenue related party |
2,211 |
6,797 |
|
Other current liabilities |
559 |
10,803 |
|
Current liabilities of discontinued
operations |
12,350 |
12,383 |
|
Total
current liabilities |
119,222 |
136,233 |
|
Deferred income tax liabilities |
90,200 |
89,701 |
|
Long-term obligations, net of current
portion |
648,675 |
641,950 |
|
Other liabilities |
5,551 |
10,563 |
|
Commitments and contingencies |
|
|
|
Stockholders�
deficit: |
|
|
|
Preferred
stock, $0.001 par value; 25,000 shares authorized; 355 shares designated as
Series A Senior Convertible Preferred Stock; no other shares issued or
outstanding |
- |
- |
|
Common
stock, $0.001 par value; 400,000 shares authorized; 157,459 and 157,037
shares issued and outstanding at April 3, 2010 and January 2, 2010,
respectively |
157 |
157 |
|
Additional paid-in-capital |
885,545 |
884,321 |
|
Accumulated other comprehensive income |
14,567 |
14,437 |
|
Accumulated deficit |
||
|
Stockholders�
deficit attributed to NextWave |
(293,601) |
(291,605) |
|
Noncontrolling interest in
subsidiary |
16,341 |
15,948 |
|
Total
stockholders� deficit |
(277,260) |
(275,657) |
|
Total
liabilities and stockholders� deficit |
$586,388 |
$602,790 |
NEXTWAVE
WIRELESS INC.
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
|
|
Three Months Ended |
|
|
|
April 3, 2010 |
March 28, 2009 |
|
Revenues |
$10,836 |
$16,911 |
|
Revenues �
related party |
7,069 |
- |
|
Total revenues |
17,905 |
16,911 |
|
|
|
|
|
Cost of revenues |
5,151 |
6,208 |
|
Cost of revenues related party |
303 |
- |
|
Engineering, research and development |
5,256 |
6,095 |
|
Sales and marketing |
2,797 |
2,834 |
|
General and administrative |
8,810 |
11,798 |
|
Asset
impairment charges (credits) |
(4) |
9,479 |
|
Restructuring
charges (credits) |
(7) |
2,758 |
|
Total operating
expenses |
22,306 |
39,172 |
|
Gain on sale of
wireless spectrum licenses |
164 |
3 |
|
Loss from operations |
(4,237) |
(22,258) |
|
Other income
(expense): |
|
|
|
Interest income |
95 |
224 |
|
Interest
expense |
(44,090) |
(36,740) |
|
Gain on
extinguishment of debt |
37,988 |
- |
|
Other income
(expense), net |
10,793 |
(1,686) |
|
Total other
income (expense), net |
4,786 |
(38,202) |
|
Income (loss)
from continuing operations before income taxes |
549 |
(60,460) |
|
Income tax
provision |
275 |
187 |
|
Net income (loss) from continuing
operations |
274 |
(60,647) |
|
Loss from discontinued operations, net
of losses on divestiture of discontinued operations of $1 and $53 and income
tax benefits of $178 and $0, respectively |
(3,190) |
(21,532) |
|
Net loss |
(2,916) |
(82,179) |
|
Less net income attributed to noncontrolling interest in subsidiaries continuing
operations |
(434) |
- |
|
Net loss
attributed to NextWave |
$(3,350) |
$(82,179) |
|
Amounts
attributed to NextWave common shares: |
|
|
|
Loss from
continuing operations, net of tax |
$(160) |
$(60,647) |
|
Loss from
discontinued operations, net of tax |
(3,190) |
(21,532) |
|
Net loss
attributed to NextWave common shares |
$(3,350) |
$(82,179) |
|
Net loss per
share attributed to NextWave common shares basic and diluted |
|
|
|
Continuing operations |
$- |
$(0.42) |
|
Discontinued
operations |
(0.02) |
(0.15) |
|
Net loss |
$ (0.02) |
$ (0.57) |
|
Weighted average shares used in per
share calculation |
169,625 |
145,028 |
NEXTWAVE
WIRELESS INC.
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
|
|
Three Months Ended |
|
|
|
April 3, 2010 |
March 28, 2009 |
|
OPERATING
ACTIVITIES |
|
|
|
Net loss |
$ (2,916) |
$ (82,179) |
|
Loss from
discontinued operations, net of tax |
(3,190) |
(21,532) |
|
Income (loss)
from continuing operations |
274 |
(60,647) |
|
Adjustments to reconcile income (loss)
from continuing operations to net cash used in operating activities of
continuing operations: |
|
|
|
Amortization of
intangible assets |
2,922 |
3,083 |
|
Depreciation |
418 |
430 |
|
Non-cash
share-based compensation |
1,448 |
890 |
|
Non-cash
interest expense |
43,871 |
34,383 |
|
Gain on
extinguishment of debt |
(37,988) |
- |
|
Asset
impairment charges |
- |
9,480 |
|
Other non-cash
adjustments |
(239) |
66 |
|
Changes in
operating assets and liabilities: |
|
|
|
Accounts
receivable |
(184) |
1,407 |
|
Deferred
contract costs |
(61) |
1,242 |
|
Prepaid
expenses and other current assets |
323 |
181 |
|
Other assets |
(551) |
165 |
|
Accounts
payable and accrued liabilities |
(13,595) |
(15,914) |
|
Deferred
revenue |
(4,157) |
(8,386) |
|
Other current
liabilities |
185 |
1,883 |
|
Net cash used in operating activities
of continuing operations |
(7,334) |
(31,737) |
|
INVESTING
ACTIVITIES |
|
|
|
�Proceeds from the sale of wireless spectrum
licenses |
164 |
1,740 |
|
Purchase of
property and equipment |
(148) |
(33) |
|
Other, net |
91 |
181 |
|
Net cash
provided by investing activities of continuing operations |
107 |
1,888 |
|
FINANCING
ACTIVITIES |
|
|
|
Payments on
long-term obligations |
(3,707) |
(1,321) |
|
Proceeds from
the sale of common shares |
141 |
- |
|
Net cash used
in financing activities of continuing operations |
(3,566) |
(1,321) |
|
Cash used by
discontinued operations: |
|
|
|
Net cash used
in operating activities of discontinued operations |
(1,297) |
(11,341) |
|
Net cash
provided by (used in) investing activities of discontinued operations |
118 |
(66) |
|
Net cash used
in financing activities of discontinued operations |
- |
(15) |
|
Net cash used
by discontinued operations |
(1,179) |
(11,422) |
|
Effect of
foreign currency exchange rate changes on cash |
(359) |
(13) |
|
Net decrease in
cash and cash equivalents |
(12,331) |
(42,605) |
|
Cash and cash
equivalents, beginning of period |
20,512 |
61,517 |
|
Cash and cash
equivalents, end of period |
8,181 |
18,912 |
|
Less cash and
cash equivalents of discontinued operations, end of period |
(288) |
(209) |
|
Cash and cash
equivalents of continuing operations, end of period |
$ 7,893 |
$ 18,703 |
|
NONCASH
FINANCING ACTIVITIES |
|
|
|
Senior, Second and Third Lien Notes
issued to noteholders in exchange for debt
modification fees |
$ 21,249 |
$ - |
�
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