YDI Wireless Announces Record Revenues and Second Quarter 2003 Financial Results
Contact: David L. Renauld
(Vice President, Corporate Affairs)
Phone: 413-665-8551
Falls Church, Virginia — July 31, 2003: YDI Wireless, Inc. (OTCBB:YDIW), a leading developer and supplier of broadband wireless solutions, today reported its financial results for the second quarter ended June 30, 2003.
There was significant activity for the company in the second quarter of 2003. On April 1, 2003, Young Design, Inc. and Telaxis Communications Corporation combined to form YDI Wireless. At the annual stockholders meeting on June 24, 2003, the company's stockholders approved a reverse/forward stock split, the reincorporation of the company from Massachusetts to Delaware, and the formal change of the company's name to "YDI Wireless, Inc." These changes became effective July 9, 2003.
As a result of the acquisition, the recently completed quarter was the first quarter of combined operations of Young Design and Telaxis. Given the extent of the ownership of Young Design's stockholders in the combined company upon completion of the transaction, Young Design is considered to be the acquirer for accounting purposes and the transaction is accounted for in the financial statements of the company as a reverse acquisition of Telaxis by Young Design. The results of operations of Telaxis are included in the consolidated financial statements from April 1, 2003, the closing date of the acquisition. The acquisition was accounted for as a purchase and the excess of net assets over the purchase price was recorded as negative goodwill and immediately recognized into income as required by generally accepted accounting principals.
Financial Results
Revenue for the quarter ended June 30, 2003 was $7.2 million, an increase of 13% over the revenue of $6.4 million for the quarter ended March 31, 2003 and an increase of 47% over the revenue of $4.9 million for the quarter ended June 30, 2002.
Gross profit for the quarter was $2.3 million, an increase of 15% over the gross profit of $2.0 million for the quarter ended March 31, 2003 and an increase of 35% over the gross profit of $1.7 million for the quarter ended June 30, 2002.
The net income for the second quarter of 2003 was $3.6 million or $0.06 per share, dilutive, compared to net income of $0.1 million or $0.01 per share, dilutive, for the first quarter of 2003 and net income of $0.4 million or $0.02 per share, dilutive, for the second quarter of 2002. The net income for the second quarter 2003 resulted from the immediate recognition of the negative goodwill from the Young Design-Telaxis transaction. This recognition resulted in a one-time gain of $4.7 million.
"We are extremely happy with our top line growth in the second quarter and with the speed of the integration of YDI and Telaxis." states Robert Fitzgerald, Chief Executive Officer, who adds, "Although we are not surprised by the operating loss, we are not happy about it. YDI's heritage is that of a profitable company and we fully intend to get back in that position sooner rather than later. Our second quarter results include significant expenses related to the merger of YDI and Telaxis and the subsequent restructuring. Through additional top line growth and a continuous re-examination of operating expenses and opportunities for margin improvement, we are firmly committed to being profitable and cash flow positive.
Going forward, we see the license free wireless industry to be sufficiently healthy and robust to support YDI's expansion plans and one that holds real promise of significant improvement. We believe that further consolidation in the license free wireless equipment manufacturer segment is inevitable and we are actively looking at opportunities that will complement our efforts. We hold to our basic beliefs that we must offer our customers the best price/performance package and the best service on a daily basis and that we must maintain sufficient financial strength to be able to honor this commitment. We believe that we are well positioned for the future."
YDI Wireless, Inc. is a world leader in providing extended range, license free wireless data equipment and is the result of the recent combination of Young Design, Inc. and Telaxis. This combination brought together Young Design's license-free products that extend the range of IEEE 802.11 wireless local area network systems, point-to-point wireless backhaul products, diverse and broad customer base, and deep market and industry experience with Telaxis' high-frequency millimeter-wave expertise and FiberLeap™ and EtherLeap™ products. In addition, YDI Wireless is a leading designer of turn-key long distance wireless systems ranging from 19.9 kbps to 1 Gbps for applications such as wireless Internet, wireless video, wireless LANs, wireless WANs, wireless MANs and wireless virtual private networks. Additional information about YDI Wireless as well as its complete product line can be found at the Company's web site located at www.ydi.com or by contacting the company by telephone at 413-665-8551 or by email at IR@ydi.com.
Statements in this press release that are not statements of historical facts are forward-looking statements that involve risks, uncertainties, and assumptions. Our actual results may differ materially from the results anticipated in these forward-looking statements due to risks arising from and relating to the recent combination of Telaxis Communications and Young Design and our ability to achieve the contemplated benefits of that combination; the downturn and ongoing uncertainty in the telecommunications industry and larger economy; the intense competition in our industry and resulting impacts on our pricing, gross margins, and general financial performance; and the other factors discussed in our filings made from time to time with the Securities and Exchange Commission and in our other public statements.
YDI WIRELESS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
YDI Wireless, Young Design,
Inc. and Inc. and
Subsidiaries Subsidiaries
(Consolidated) (Consolidated)
June 30, December 31,
2003 2002
(unaudited)
Assets
Current assets:
Cash and cash equivalents $4,937 $939
Restricted cash 353 -
Marketable securities 1,611 -
Accounts receivable, net 2,607 1,686
Refundable income taxes 275 -
Other receivables 439 -
Inventory 2,291 2,386
Investment securities - trading 8 4
Deferred tax asset 142 142
Deposit 1 1
Prepaid expenses 200 451
Total current assets 12,864 5,609
Property and equipment, net 3,210 1,823
Other Assets:
Investment in unconsolidated subsidiaries - 36
Investment securities
- available-for-sale 1,013 841
Intangible assets, net 606 9
Deferred tax asset 245 245
Deposits 48 9
Other assets 3 -
Total other assets 1,915 1,140
Total assets $17,989 $8,572
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued expenses $3,772 $2,158
Current maturities of notes payable 851 495
Current deposit - non-refundable - 9
Total current liabilities 4,623 2,662
Notes payable, net of current
maturities 1,291 1,402
Total liabilities 5,914 4,064
Stockholders' Equity
Preferred stock, $0.01 par value;
authorized 4,500,000 shares at June 30,
2003 and December 31, 2002, none issued - -
Common stock, $0.01 par value,
authorized 100,000,000, issued
54,208,313 at June 30, 2003; $0.0001
par value, 30,000,000 shares
authorized, issued 15,000,000 at
December 31, 2002 544 2
Additional paid-in capital 3,684 449
Treasury stock (37) -
Retained earnings 7,747 4,066
Accumulated other comprehensive income:
Net unrealized gain/(loss) on
available-for-sale securities 137 (9)
Total stockholders' equity 12,075 4,508
Total liabilities and
stockholders' equity $17,989 $8,572
YDI WIRELESS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
YDI Wireless, Young Design, YDI Wireless, Young Design,
Inc. and Inc. and Inc. and Inc. and
Subsidiaries Subsidiaries Subsidiaries Subsidiaries
(Consolidated)(Consolidated)(Consolidated)(Consolidated)
For the Three Months For the Six Months
Ended June 30, Ended June 30,
2003 2002 2003 2002
(unaudited) (unaudited) (unaudited) (unaudited)
Revenues $7,229 $4,870 $13,665 $9,880
Cost of goods sold 4,961 3,176 9,399 6,463
Gross profit 2,268 1,694 4,266 3,417
Operating expenses:
Selling costs 536 289 1,003 574
General and
administrative 2,781 942 3,939 2,091
Research and
development 454 94 575 195
Total operating
expenses 3,771 1,325 5,517 2,860
Operating income
(loss) (1,503) 369 (1,251) 557
Other income
(expenses):
Interest income 146 14 111 22
Interest expense (34) (24) (63) (62)
Excess of
acquired net
assets over cost 4,747 - 4,747 -
Total other
income 4,859 (10) 4,795 (40)
Income before
income taxes,
extraordinary
gain, cumulative
effect of
accounting change
and minority
interests 3,356 359 3,544 517
Provision
(benefit) for
income taxes (259) - (177) -
Net income $3,615 $359 $3,721 $517
Shares
outstanding
as of
6/30/03: 54,208,313 15,000,000 23,664,355 15,000,000
EPS, basic $0.07 $0.02 $0.16 $0.03
EPS, diluted $0.06 $0.02 $0.14 $0.03
Contact:
YDI Wireless, Inc.
David L. Renauld, 413-665-8551