Airspan Reports Q2

BOCA RATON, Fla. -- Airspan Networks Inc. (NASDAQ:AIRN - News) today announced second quarter financial results for the period ending July 2, 2006. The Company reported revenues for the second quarter of $45.4 million, up 124% versus the second quarter of 2005. The net loss attributable to common stockholders for the second quarter was $(0.19) per share versus a loss of $(0.17) per share in the second quarter 2005.

Business Highlights

Financial Results

Second quarter revenue of $45.4 million was 124% higher than the $20.3 million reported in the second quarter of 2005. Year to date revenues totaled $69.2 million, exceeding the guidance provided earlier in the year. The Company recorded a gross profit of $8.7 million in the quarter, and gross profit as a percentage of revenue (the "gross profit margin") was 19%. This compared to a gross profit of $5.4 million and a gross profit margin of 27% for the second quarter of 2005, and a gross profit of $6.4 million and a gross profit margin of 27% recorded for the first quarter of 2006. The gross profit figures for the second quarter included provisions of approximately $4.4 million for excess inventory and purchase commitment cancellations arising mainly from changes to the Yozan supply agreement, which reduced the gross profit margin in the second quarter from 29% to 19%.

The Company's second quarter 2006 operating expenses of $17.0 million were up $4.8 million from the second quarter 2005 and up $1.8 million from the prior quarter's operating expenses. Year on year increases resulted mainly from an increase in headcount brought about by acquisitions we made in 2005, from costs related to new product roll-out and from expenses related to stock-based compensation. Increases versus the previous quarter were largely due to increased selling costs associated with the increased revenue and to currency fluctuations.

Net loss for the second quarter of 2006 was $(7.7) million, or $(0.19) per share, compared to a net loss of ($6.7) million, or $(0.17) per share, in the second quarter of 2005.

At the end of the second quarter, the Company's cash balance, including restricted cash, was $23.1 million. Since the end of the second quarter, the Company has announced plans to improve cash reserves by raising additional capital. On August 7, 2006, the Company announced the signing of a Loan and Security Agreement with Silicon Valley Bank for up to $10 million, subject to the terms and conditions of that agreement. In addition, on July 31, 2006, the Company announced the signing of a Preferred Stock Purchase Agreement with Oak Investment Partners XI, Limited Partnership ("Oak"), under which the Company will seek shareholder approval to allow Oak to purchase new preferred shares for $29 million.

"We are pleased to report yet another record quarter of revenues," said Eric Stonestrom, Airspan's president and chief executive officer. "WiMAX is gaining broad market acceptance and we are seeing the results of a strong product portfolio. While we are disappointed at our reduced expectations from the Yozan contract, we are encouraged by the widespread adoption of WiMAX and expect to achieve full year revenue growth despite an expected decline in the legacy Proximity business of more than 50%. We now expect full year revenues will be in the range of $120 million - $130 million."

"Record revenues were achieved due to the delivery of new WiMAX products to a wide range of customers," said Peter Aronstam, chief financial officer. "These activities drove higher product and operational costs in the quarter. While we are encouraged by our market success, there are expense trends we need to reverse to achieve profitability. Accordingly, we intend to institute a company-wide restructuring program, the goal of which will be to reduce operating expenses. The cost reduction will be accomplished primarily as a result of reduction in worldwide headcount."

Mr. Aronstam continued that "the Company is pleased with the recent announcements regarding new financing. The additional cash will give us more flexibility to continue with our WiMAX rollout plans, which are essential for our future growth."

Airspan Networks Inc. (Nasdaq: AIRN)