Terabeam Announces Fourth Quarter and Full Year 2006 Financial Results

  
    
  
  
    
      Terabeam, Inc. (NASDAQ:TRBM), a global pioneer and leading developer and 
      supplier of Mesh, WiMAX, Wi-Fi and Millimeter Wave wireless products 
      and solutions, today reported its unaudited financial results for the 
      fourth quarter and year ended December 31, 2006.
    
    
      Revenue for the quarter ended December 31, 2006 was approximately $18.2 
      million, a decrease of approximately 33% from the revenue of $27.1 
      million for the quarter ended December 31, 2005 and an increase of 
      approximately 2% from the revenue of $17.9 million for the quarter ended 
      September 30, 2006. Revenue for the year ended December 31, 2006 was 
      $75.4 million, an increase of approximately 28% from the revenue of 
      $59.0 million for the year ended December 31, 2005.
    
    
      Operating loss for the quarter ended December 31, 2006 was $2.1 million 
      compared to operating income of $657,000 for the quarter ended December 
      31, 2005 and an operating loss of $13.7 million for the quarter ended 
      September 30, 2006. Net loss for the quarter ended December 31, 2006 was 
      $2.0 million ($0.09 per share-diluted) compared to net income of 
      $810,000 ($0.04 per share-diluted) for the quarter ended December 31, 
      2005 and net loss of $13.7 million ($0.63 per share-diluted) for the 
      quarter ended September 30, 2006. The third quarter 2006 operating loss 
      and net loss included non-cash charges totaling approximately $10.4 
      million (approximately $0.48 per share-diluted), consisting of an 
      inventory reserve of approximately $1.5 million and an impairment charge 
      related to intangible assets of approximately $8.9 million.
    
    
      The net loss for the year ended December 31, 2006 was $23.2 million 
      ($1.08 per share-diluted), including the previously discussed non-cash 
      charges in the third quarter 2006, compared to a net loss of $11.2 
      million ($0.51 per share-diluted), including $7.8 million of 
      restructuring provisions and charges as a result of the purchase of the 
      operations of Proxim Corporation, for the year ended December 31, 2005.
    
    
      Robert Fitzgerald, Terabeam’s Chief Executive 
      Officer, stated, “The fourth quarter of 2006 
      demonstrates further stabilization of the company. Our product 
      development is on track, and we believe that we have a real winner with 
      the Tsunami 5012 that we introduced in the fourth quarter. The primary 
      challenge going forward is to build from our base and ramp revenue. With 
      the introduction of MeshMax™ as well as the 
      success we are seeing with our pre-WiMAX, WiMAX and Mesh products, we 
      believe that we are well positioned to deliver sustainable growth.”
    
    
      Conference Call Information
    
    
      Terabeam 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 February 28, 2007 starting at 5:00 p.m. Eastern 
      Time. The discussion may include forward-looking information.
    
    
      To participate in this conference call, please dial 800-210-9006 (or 
      719-457-2621 for international callers), confirmation code 3496855 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’s website at http://www.terabeam.com 
      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 3496855 for 
      all callers, and over the Internet for approximately 90 days at Terabeam’s 
      website at http://www.terabeam.com.
    
    
      About Terabeam
    
    
      Terabeam, Inc. has two primary subsidiaries Proxim Wireless Corporation 
      and Ricochet Networks, Inc. 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. 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 [e-mail].
    
    
      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’s 
      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 and arising from the ongoing uncertainty in 
      the telecommunications industry and larger economy; the intense 
      competition in our industries and resulting impacts on our pricing, 
      gross margins, and general financial performance; difficulties or delays 
      in developing and supplying new products with the contemplated or 
      desired features, performance, compliances, certifications, cost, price, 
      and other characteristics; the difficulties in predicting Terabeam’s 
      future financial performance; and the impacts and effects of any other 
      strategic transactions Terabeam may evaluate or consummate. Further 
      information on these and other factors that could affect Terabeam’s 
      actual results is and will be included in filings made by Terabeam from 
      time to time with the Securities and Exchange Commission and in its 
      other public statements.
    
    
      
        
          TERABEAM, INC.
        
      
      
        
          CONSOLIDATED BALANCE SHEETS
        
      
      
        
          (in thousands)
        
      
      
        
        
        
        
        
          December 31,
        
        
        
        
          December 31,
        
      
      
        
        
        
        
        
          2006 
        
        
        
        
          2005 
        
      
      
        
          Assets
        
        
        
        
          (unaudited)
        
        
        
        
        
      
      
        
          Current assets:
        
        
        
        
        
        
        
        
        
      
      
        
          Cash and cash equivalents
        
        
        
        
          $10,290 
        
        
        
        
          $14,133 
        
      
      
        
          Investment securities – available-for-sale
        
        
        
        
          168 
        
        
        
        
          260 
        
      
      
        
          Accounts receivable, net
        
        
        
        
          5,539 
        
        
        
        
          8,378 
        
      
      
        
          Inventory
        
        
        
        
          10,142 
        
        
        
        
          10,070 
        
      
      
        
          Prepaid expenses
        
        
        
        
          1,246 
        
        
        
        
          1,045 
        
      
      
        
          Total current assets
        
        
        
        
          27,385 
        
        
        
        
          33,886 
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Property and equipment, net
        
        
        
        
          2,660 
        
        
        
        
          3,924 
        
      
      
        
          Other Assets:
        
        
        
        
        
        
        
        
        
      
      
        
          Restricted cash
        
        
        
        
          76 
        
        
        
        
          5,076 
        
      
      
        
          Goodwill
        
        
        
        
          7,922 
        
        
        
        
          7,380 
        
      
      
        
          Intangible assets, net
        
        
        
        
          11,545 
        
        
        
        
          23,817 
        
      
      
        
          Deposits and prepaid expenses
        
        
        
        
          287 
        
        
        
        
          675 
        
      
      
        
          Total other assets
        
        
        
        
          19,830 
        
        
        
        
          36,948 
        
      
      
        
          Total assets
        
        
        
        
          $49,875 
        
        
        
        
          $74,758 
        
      
      
        
          Liabilities and Stockholders’ Equity
        
        
        
        
        
        
        
        
        
      
      
        
          Current liabilities:
        
        
        
        
        
        
        
        
        
      
      
        
          Accounts payable and accrued expenses
        
        
        
        
          $13,887 
        
        
        
        
          $15,600 
        
      
      
        
          Deferred revenue
        
        
        
        
          2,198 
        
        
        
        
          2,503 
        
      
      
        
          License agreement payable - current maturities
        
        
        
        
          868 
        
        
        
        
          981 
        
      
      
        
          Current maturities of notes payable - other current liabilities
        
        
        
        
          - 
        
        
        
        
          - 
        
      
      
        
          Total current liabilities
        
        
        
        
          16,953 
        
        
        
        
          19,084 
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          License agreement payable, net of current maturities
        
        
        
        
          2,088 
        
        
        
        
          2,956 
        
      
      
        
          Total liabilities
        
        
        
        
          19,041 
        
        
        
        
          22,040 
        
      
      
        
          Commitments and contingencies
        
        
        
        
        
        
        
        
        
      
      
        
          Stockholders’ Equity
        
        
        
        
        
        
        
        
        
      
      
        
          
            Preferred stock, $0.01 par value;authorized 4,500,000, none 
            issued atDecember 31, 2006 and December 31, 2005
          
        
        
        
        
          - 
        
        
        
        
          - 
        
      
      
        
          
            Common stock, $0.01 par value, 100,000,000shares authorized, 
            21,552,572 issued andoutstanding at December 31, 2006 and21,446,217 
            issued and outstanding at December 31, 2005
          
        
        
        
        
          216 
        
        
        
        
          214 
        
      
      
        
          Additional paid-in capital
        
        
        
        
          57,976 
        
        
        
        
          56,638 
        
      
      
        
          Accumulated deficit
        
        
        
        
          (27,285)
        
        
        
        
          (4,122)
        
      
      
        
          Accumulated other comprehensive income:
        
        
        
        
        
        
        
        
        
      
      
        
          Net unrealized loss on available-for-sale securities
        
        
        
        
          (73)
        
        
        
        
          (12)
        
      
      
        
          Total stockholders’ equity
        
        
        
        
          30,834 
        
        
        
        
          52,718 
        
      
      
        
          Total liabilities and stockholders’ equity
        
        
        
        
          $49,875 
        
        
        
        
          $74,758 
        
      
    
    
      
        
          TERABEAM, INC.
        
      
      
        
          CONSOLIDATED STATEMENTS OF OPERATIONS
        
      
      
        
          (in thousands, except per share data)
        
      
      
        
           
        
      
      
        
        
        
        
        
          For the Three Months Ended
        
        
        
        
          For the Year Ended
        
      
      
        
          December 31,
        
        
          December 31,
        
      
      
        
        
        
        
        
          2006 
        
        
        
        
          2005 
        
        
        
        
          2006 
        
        
        
        
          2005 
        
      
      
        
          (unaudited)
        
        
          (unaudited)
        
        
          (unaudited)
        
        
           
        
      
      
        
          Revenues
        
        
        
        
          $18,222 
        
        
        
        
          $27,073 
        
        
        
        
          $75,384 
        
        
        
        
          $58,982 
        
      
      
        
          Cost of goods sold
        
        
        
        
          9,983 
        
        
        
        
          14,421 
        
        
        
        
          42,745 
        
        
        
        
          31,930 
        
      
      
        
          Restructuring provision for excess and obsolete inventory
        
        
        
        
          - 
        
        
        
        
          - 
        
        
        
        
          1,502 
        
        
        
        
          2,143 
        
      
      
        
          Gross profit
        
        
        
        
          8,239 
        
        
        
        
          12,652 
        
        
        
        
          31,137 
        
        
        
        
          24,909 
        
      
      
        
          Operating expenses:
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          Selling costs
        
        
        
        
          4,589 
        
        
        
        
          3,958 
        
        
        
        
          18,008 
        
        
        
        
          9,789 
        
      
      
        
          Restructuring charges
        
        
        
        
          - 
        
        
        
        
          - 
        
        
        
        
          116 
        
        
        
        
          944 
        
      
      
        
          Restructuring charge for impairment of intangible assets
        
        
        
        
          - 
        
        
        
        
          - 
        
        
        
        
          8,874 
        
        
        
        
          4,664 
        
      
      
        
          Impairment of service reporting unit goodwill
        
        
        
        
          - 
        
        
        
        
          200 
        
        
        
        
          - 
        
        
        
        
          200 
        
      
      
        
          General and administrative
        
        
        
        
          2,681 
        
        
        
        
          4,275 
        
        
        
        
          13,493 
        
        
        
        
          12,902 
        
      
      
        
          Research and development
        
        
        
        
          3,049 
        
        
        
        
          3,562 
        
        
        
        
          14,520 
        
        
        
        
          8,000 
        
      
      
        
          Total operating expenses
        
        
        
        
          10,319 
        
        
        
        
          11,995 
        
        
        
        
          55,011 
        
        
        
        
          36,499 
        
      
      
        
          Operating income (loss)
        
        
        
        
          (2,080)
        
        
        
        
          657 
        
        
        
        
          (23,874)
        
        
        
        
          (11,590)
        
      
      
        
          Other income (expenses):
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          Interest income
        
        
        
        
          65 
        
        
        
        
          83 
        
        
        
        
          368 
        
        
        
        
          695 
        
      
      
        
          Interest expense
        
        
        
        
          (39)
        
        
        
        
          (21)
        
        
        
        
          (190)
        
        
        
        
          (161)
        
      
      
        
          Other income (expense)
        
        
        
        
          49 
        
        
        
        
          87 
        
        
        
        
          601 
        
        
        
        
          (19)
        
      
      
        
          Total other income (expenses)
        
        
        
        
          75 
        
        
        
        
          149 
        
        
        
        
          779 
        
        
        
        
          515 
        
      
      
        
          Income (loss) before income taxes
        
        
        
        
          (2,005)
        
        
        
        
          806 
        
        
        
        
          (23,095)
        
        
        
        
          (11,075)
        
      
      
        
          Benefit (provision) for income taxes
        
        
        
        
          (26)
        
        
        
        
          5 
        
        
        
        
          (68)
        
        
        
        
          16 
        
      
      
        
          Income (loss) before minority interest
        
        
        
        
          (2,031)
        
        
        
        
          811 
        
        
        
        
          (23,163)
        
        
        
        
          (11,059)
        
      
      
        
          Minority interest in net income of Merry Fields
        
        
        
        
          - 
        
        
        
        
          - 
        
        
        
        
           
        
        
        
        
          (101)
        
      
      
        
          Net income (loss)
        
        
        
        
          ($2,031)
        
        
        
        
          $811 
        
        
        
        
          ($23,163)
        
        
        
        
          ($11,160)
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Weighted average shares - basic
        
        
        
        
          21,548 
        
        
        
        
          21,414 
        
        
        
        
          21,523 
        
        
        
        
          21,801 
        
      
      
        
          Earnings (loss) per share - basic
        
        
        
        
          ($0.09)
        
        
        
        
          $0.04 
        
        
        
        
          ($1.08)
        
        
        
        
          ($0.51)
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Weighted average shares -diluted
        
        
        
        
          21,548 
        
        
        
        
          21,589 
        
        
        
        
          21,523 
        
        
        
        
          21,801 
        
      
      
        
          Earnings (loss) per share - diluted
        
        
        
        
          ($0.09)
        
        
        
        
          $0.04 
        
        
        
        
          ($1.08)
        
        
        
        
          ($0.51)