Subject: [NEXTEL-1] interWAVE Announces First-Quarter of Fiscal 2003 Results

From: Marcel <[email-masked]>
Date: Sat, 09 Nov 2002 16:41:49 -0500

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interWAVE Announces First-Quarter of Fiscal 2003 Results

- $3.0 million in equity raised from strategic investment by UTStarcom
- Quarterly R&D and SG&A operating expenses reduced by $2.4 million, a
21% improvement
- CDMA-2000 products added to product offering through acquisition of
the assets of GBase Communications

MENLO PARK, Calif., Nov. 6 /PRNewswire-FirstCall/ --
interWAVE(R) Communications International, Ltd. (Nasdaq: IWAV), a pioneer in
compact wireless voice communications systems, today announced financial
results for the first fiscal quarter ended September 30, 2002. The Company
reported total revenues of $7.0 million, compared to $7.2 million in the prior
quarter and $9.8 million for the comparable quarter last year. interWAVE
reported a pro forma net loss for the first quarter of $9.1 million, or
$(0.16) per share, compared to a pro forma net loss of $19.8 million, or
$(0.35) per share, for the prior quarter, and a pro forma net loss of
$10.9 million, or $(0.20) per share for the first quarter of last fiscal year.
The Company reported a net loss under United States generally accepted
accounting principles (GAAP) of $9.6 million, or $(0.16) per share, compared
to a net loss under GAAP of $39.0 million, or $(0.70) per share, for the prior
quarter and $13.2 million, or $(0.24) per share, for the first quarter last
year. The Company's combined cash balances at the end of September were
$11.4 million, comprising cash and cash equivalents, short-term investments,
and restricted cash. Accounts receivable collections were $9.7 million for
the quarter.
Priscilla Lu, chairman and chief executive officer of interWAVE,
commented, "This quarter's revenue numbers are nearly flat compared to prior
June 2002 quarter. The gross margins for this quarter were negatively
affected by cost of revenues of approximately $0.6 million for shipments that
were made this quarter while $1.3 million from those shipments is anticipated
to be reflected as revenue in future quarters. Deferred revenue as of
September 30, 2002 increased to $3.2 million from $2.3 million as of June 30,
2002."
She continued, "Our R&D expenses for this quarter declined $0.8 million or
18% compared with the prior quarter and declined $2.4 million or 40% when
contrasted with the comparable quarter last year. Our SG&A expenses for this
quarter declined by $1.6 million or 23% compared with the prior quarter and
declined $2.2 million or 30% when contrasted with the comparable quarter last
year. The Company anticipates further reductions in expenses as the Company
derives the full extent of savings from the reductions that took effect part
way through the quarter. And in light of the continuing difficulties in the
economy, we have also taken additional steps to cut expenses even further
-- in October, we implemented cuts in headcount and other expenses, which are
targeted to provide an additional 20 percent reduction in expenses. These
additional reductions were made to further sharpen our focus on the Company's
key goals of growing revenues and achieving profitability at modest revenue
levels. We are, at the same time, realigning our sales and engineering teams
for those markets in which we are strong and channeling resources only for
those products that we see as contributing to near-term revenue success."

Operating Results Outlook
"As previously announced, we are very pleased with the strategic
investment by UTStarcom of $3.0 million in interWAVE equity during the
September quarter," added Dr. Lu. "We believe that UTStarcom's strong
position in China and the rest of the world will assist in favorably
positioning interWAVE's CDMA-2000 products worldwide. Our acquisition of the
assets of GBase Communications using shares opens up a new avenue for growth
in the CDMA-2000 market, which we believe to be significant in the next two
years. International Data Corporation, a leading telecom industry analyst,
projects 2003 infrastructure spending for CDMA-2000 to be in excess of
$6 billion, fueled by both upgrades being made in U.S., Japan and China, and
the need for cost efficiencies for voice networks and performance requirements
for data services.
Lu concluded, "The breadth, depth and expertise of the people we now have
in place, coupled with our technology, help position interWAVE for potential
year-over-year sales growth, and continuing improvement in our bottom line as
we advance toward future profitability with differentiated leading
technologies. Given the economic climate, we see the potential for revenues
having a growth rate ranging from modest to comparable with the last fiscal
year's equivalent quarters, while we drive for improved results from expense
reductions. Both should contribute toward our goal of achieving cash flow
breakeven and profitability."

Forward-looking statements and actual results may differ materially, as
discussed more fully below under "Forward Looking Statements.

interWAVE Plans To Appeal Nasdaq Determination
interWAVE is also announcing today that it plans to appeal the Nasdaq
Staff Determination letter, received November 1, 2002, stating that the
Company's failure to comply with the minimum closing bid requirement of
Marketplace Rule 4450(a)(5) subjects the Company's securities to delisting
from the Nasdaq National Market as of November 11, 2002, unless the Company
requests a hearing by November 8, 2002. Under the Nasdaq rules, the scheduled
delisting will be stayed pending the outcome of the hearing. interWAVE has
requested a hearing before a Nasdaq Listing Qualifications Panel (the "Panel")
to present a plan for meeting the continued listing requirements of The Nasdaq
National Market. The hearing date will be determined by Nasdaq, and is
expected to he held within the next 30 to 45 days. There can be no assurance
the Panel will grant the Company's request for continued listing after the
hearing. In the event that the Panel does not grant the request for continued
listing on The Nasdaq National Market, interWAVE plans to apply for transfer
to the Nasdaq Small Cap Market.

Management's Teleconference To Be Held Later Today
interWAVE management's teleconference will be held later today at
1:15 p.m. PT / 4:15 p.m. ET, and will be webcast live for all investors.
Interested parties can access the call by dialing (800) 967-7140 or by
accessing the web cast at http://www.iwv.com . A replay of the call will be
available at (719) 457-0820, access number 741185 for 7 days following the
call. To listen to the webcast or its replay, go to the Investor Relations
page of the interWAVE Communications site at http://www.iwv.com and click on the
webcast link. From there, you can listen to the teleconference, assuming that
your computer system is configured properly. A phone replay will also be
available for seven days after the live call at (719) 457-0820, code #741185.

The Company
interWAVE Communications International, Ltd. (Nasdaq: IWAV) is a global
provider of compact network solutions and services that offer innovative,
cost-effective and scalable networks allowing operators to "reach the
unreached." interWAVE solutions provide economical, distributed networks that
minimize capital expenditures while accelerating customers' revenue
generation. These solutions feature a product suite for the rapid and simple
deployment of end-to-end compact cellular systems and broadband wireless data
networks that deliver scalable IP, ATM broadband networks. interWAVE's highly
portable, mobile cellular networks and broadband wireless solutions provide
vital and reliable wireless communications capabilities for customers in over
50 countries. The Company's U.S. subsidiary is headquartered at
312 Constitution Drive, Menlo Park, California, and can be contacted at
http://www.iwv.com or at (650) 838-2100.

Editor's Note: interWAVE is a registered trademark of interWAVE
Communications International, Ltd.

Forward Looking Statements
This news release contains forward-looking statements that are subject to
known and unknown risks and uncertainties that could cause the results of
interWAVE Communications International, Ltd. to differ materially from
management's current expectations. These risks and uncertainties include, but
are not limited to, the risks relating to interWAVE's history of losses, the
expectation of future losses, potential lack of liquidity and capital
resources, reliance on a small number of customers, complexity of products,
difficulties in introducing new or enhanced products, compliance with
regulations and evolving industry standards, long sales cycles, intense
competition, management of global operations, the ability to retain and
motivate key employees, the potential of delisting from the Nasdaq National
Market, and acquisition related risk factors including potential asset
impairment, dilution of shares outstanding, cash outflow for acquisitions,
increases in debt absorbed and potential post-acquisition employee retention,
as well as the Risk Factors discussed in the filings and reports made from
time to time by interWAVE with the Securities and Exchange Commission.

--Financial Statements Attached--

interWAVE Communications International, Ltd.
Pro Forma Condensed Consolidated Statements of Operations
Excluding Deferred Stock Compensation Expense, Amortization of Intangibles,
In Process Research & Development, Losses on Asset Impairments and Sales
and Restructuring Charges
(In thousands, except per share amounts - Unaudited)

Three Months Ended
September 30,
2002 2001

Total revenues $ 6,953 $ 9,796
Total cost of revenues 7,213 7,688

Gross profit (loss) (260) 2,108

Pro forma operating expenses
Research and development 3,700 6,130
Selling, general and administrative 5,105 7,324
Total pro forma operating expenses 8,805 13,454

Pro forma loss from operations (9,065) (11,346)

Interest income, net 98 541
Other losses, net (23) (60)

Pro forma net loss before income taxes (8,990) (10,865)

Income taxes (78) (77)

Pro forma net loss $(9,068) $(10,942)

Pro forma net loss per share,
basic and diluted $(0.16) $(0.20)

Weighted average common shares
outstanding, basic and diluted 58,266 55,602

See Accompanying Reconciliation of Pro Forma Net Loss
to Net Loss under GAAP

interWAVE Communications International, Ltd.
Condensed Consolidated Statements of Operations
Under Generally Accepted Accounting Principles (GAAP)
(In thousands, except per share amounts - Unaudited)

Three Months Ended
September 30,
2002 2001

Total revenues $6,953 $9,796
Total cost of revenues 7,213 7,688

Gross profit (loss) (260) 2,108

Operating expenses
Research and development 3,700 6,130
Selling, general and administrative 5,105 7,324
Deferred stock compensation expense 55 220
Amortization of intangible assets -- 1,579
Restructuring charges 485 442
Total operating expenses 9,345 15,695

Loss from operations (9,605) (13,587)

Interest income, net 98 541
Other losses, net (23) (60)

Net loss before income taxes (9,530) (13,106)

Income taxes (78) (77)

Net loss $(9,608) $(13,183)

Net loss per share, basic and diluted $(0.16) $(0.24)

Weighted average common shares outstanding,
basic and diluted 58,266 55,602

See Accompanying Reconciliation of Pro Forma Net Loss
to Net Loss under GAAP

interWAVE Communications International, Ltd.
Reconciliation of Pro Forma Net Loss to Net Loss under GAAP
(In thousands, except per share amounts - Unaudited)

Three Months Ended
September 30,
2002 2001

Pro forma net loss $(9,068) $(10,942)

Net loss reconciling items (elements of
operating expenses under GAAP):
Deferred stock compensation expense (55) (220)
Amortization of intangible assets -- (1,579)
Restructuring charges (485) (442)

Total net loss reconciling items (540) (2,241)

Net loss under GAAP $(9,608) $(13,183)

Pro forma net loss per share,
basic and diluted $(0.16) $(0.20)

Net loss reconciling items per share,
basic and diluted (0.00) (0.04)

Net loss under GAAP per share,
basic and diluted $(0.16) $(0.24)

Weighted average common shares outstanding,
basic and diluted 58,266 55,602

interWAVE Communications International, Ltd.
Condensed Consolidated Balance Sheets
Under Generally Accepted Accounting Principles (GAAP)
(In thousands, Unaudited)

September 30, June 30,
2002 2002

Assets:
Current assets:
Cash, cash equivalents and short-term
investments (including restricted cash,
current portion) $10,738 $15,682
Trade receivables, net 7,743 10,034
Inventory, net 11,684 13,665
Prepaids and other current assets 3,082 3,509
Total current assets 33,247 42,890

Restricted cash, long term portion 684 684
Property and equipment, net 6,294 6,999
Intangible assets, net 8,876 1,660
Other assets 278 394
Total assets $49,379 $52,627

Liabilities and Shareholders' Equity:
Current liabilities:
Accounts payable $6,528 $7,972
Accrued expenses 6,167 8,893
Current portion of notes and leases payable 684 562
Deferred revenue 3,172 2,283
Income taxes payable 342 268
Total current liabilities 16,893 19,978

Other long term liabilities 2,327 2,502
Total liabilities 19,220 22,480

Shareholders' equity:
Common stock, net 338,798 329,437
Accumulated deficit (308,255) (298,647)
Other (384) (643)
Total shareholders' equity 30,159 30,147

Total liabilities and shareholders'
equity $49,379 $52,627

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SOURCE interWAVE Communications International, Ltd.

Web Site: http://www.iwv.com

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