SR Telecom Reports First Quarter Results
12 5월 2005 - 8:01PM
PR Newswire (US)
SR Telecom Reports First Quarter Results MONTREAL, May 12
/PRNewswire-FirstCall/ -- SR Telecom Inc. (TSX: SRX, NASDAQ: SRXA)
today reported its results for the first quarter of fiscal 2005
ended March 31, 2005. "During our fourth quarter conference call in
March we explained how the effect of reduced supplier credit would
result in a significant decrease in overall sales volumes in the
first quarter of the current fiscal year," said Pierre St-Arnaud,
SR Telecom's President and Chief Executive Officer. "However, we
are encouraged by the support we have received from our customers
and the current level of bookings. In fact, we have just delivered
our first equipment order for the major rural project in Mexico.
Once our recapitalization plan is finalized, we will be able to
resume production at a more normal level and we expect our sales
and deliveries to increase." Consolidated First Quarter Results
Consolidated revenues for the first quarter of fiscal 2005 totalled
$17.9 million, compared to $26.2 million in the first quarter of
fiscal 2004. The consolidated operating loss for the first quarter
of fiscal 2005 was reduced to $10.7 million, compared to an
operating loss of $13.6 million in the same period in 2004. The
consolidated net loss for the first quarter of 2005 was $13.8
million, compared to a consolidated net loss of $16.9 million in
the corresponding period in 2004. "Our gross margins were also
negatively impacted by the decreased sales volumes and
under-absorbed overhead costs related to lower manufacturing
volumes," Mr. St-Arnaud said. Wireless Telecommunications Products
Segment Revenues in SR Telecom's core wireless business segment for
the first quarter of fiscal 2005 were $12.8 million, compared to
$21.6 million reported during the same period in 2004. The net loss
for the first quarter of fiscal 2005 totalled $12.9 million,
compared to a $15.1 million net loss in the corresponding period
last year. Selling, general and administrative expenses in the core
wireless business segment decreased sharply to $9.8 million for the
first quarter of 2005, compared to $13.2 million for the same
period in 2004. This decrease was primarily due to the effects of
the restructuring that was implemented in the second and third
quarters of 2004. Research and development expenses in the core
wireless business segment also decreased significantly, from $7.3
million in the first quarter of 2004 to $3.5 million in the first
quarter of 2005. This decrease is also attributable to the
restructuring initiative that was implemented by the Corporation in
2004. At this time, the Corporation expects that R&D expenses
will remain stable in comparison to the first quarter levels. In
January 2005, SR Telecom took additional steps to align its costs
with current levels of business activity and temporarily laid-off
127 employees. The Corporation expects that employees will be
recalled as production returns to customary levels.
Telecommunications Service Provider ("CTR") Segment For the first
quarter of fiscal 2005, CTR's revenues increased to $5.1 million,
compared to $4.6 million in the same period last year. In peso
terms, net revenue in the first quarter of 2005 was 2,408 million
pesos, compared to 2,075 million pesos in the prior period. The
improvement is largely attributable to the increase in access
tariffs approved by the Chilean regulator, Subtel, which took
effect on March 1, 2004, and to the deployment of new lines in
urban areas of Chile. Operating earnings for CTR totalled $350,000
in the first quarter of fiscal 2005, compared to an operating loss
of $259,000 in the same period last year. CTR's net loss for the
first quarter of 2005 was $879,000 compared to a net loss of $1.8
million in the corresponding period in 2004. "As previously
forecast, we are confident that CTR will be able to continue to
realize positive EBITDA, and we expect it will generate
approximately $7 million of EBITDA in fiscal 2005," said Mr. Adams,
SR Telecom's Senior Vice-President, Finance and Chief Financial
Officer. Financial Position SR Telecom's consolidated cash and
short-term investment position, including restricted cash,
increased to $8.3 million at March 31, 2005, compared to $6.4
million at December 31, 2004. Subsequent to quarter end, SR
Telecom's Debenture Holders agreed to provide a five-year secured
Credit Facility of up to $50.0 million, subject to execution of
final documentation and the fulfillment of certain conditions. An
amount of up to $20.0 million will be available to the Corporation
as certain approvals are received. The balance will be available
over the next three quarters, subject to certain conditions. An
initial drawdown of this Credit Facility is anticipated in May
2005. Subject to final documentation and registration of the Credit
Facility, the Convertible Debentures, and the CTR loan
restructuring, SR Telecom will have sufficient cash and cash
equivalents, short-term investments, and cash from operations going
forward to satisfy its working capital requirements and continue
operations as a going concern for the next twelve months. Recent
Events - On April 22, 2005, a restricted group representing
approximately 75% of the outstanding 8.15% debentures (the
"Debenture Holders"), agreed to waive compliance with certain
covenants and extended the maturity and interest payment dates to
the earlier of June 30, 2005 and the closing of the proposed
re-capitalization plan. - On April 18, 2005, SR Telecom announced
that it had entered into an agreement in principle with the
Debenture Holders regarding a proposed re-capitalization plan. The
terms of the plan include the exchange of the outstanding $71.0
million of principal and approximately $2.9 million of accrued
interest into 47,266,512 common shares and approximately $63.9
million of new 10% Convertible Redeemable Secured Debentures, due
in 2010. Each $1,000 in principal amount of new Convertible
Debentures may be converted at the option of the Debenture Holders
into 4,727 common shares, representing a conversion price of $0.21
per common share. The debenture exchange is expected to close in
June 2005, subject to the approval of the lenders of CTR. - On
April 18, 2005, SR Telecom also announced that the Debenture
Holders agreed to provide a five-year secured Credit Facility of up
to $50.0 million, subject to execution of final documentation and
the fulfillment of certain conditions. An amount of up to $20.0
million will be available to the Corporation as certain approvals
are received. The balance will be available over the next three
quarters, subject to certain conditions. An initial drawdown of
this Credit Facility is anticipated in May 2005. - On April 18,
2005, SR Telecom announced the intention to file a preliminary
prospectus relating to Rights Offering to existing shareholders.
Pursuant to the Rights Offering, the Corporation will offer to
existing shareholders the right to subscribe up to $40.0 million of
new common shares at a price to be determined, but no less than
$0.254 per share. The funds raised from the Rights Offering will be
used for working capital and general corporate purposes and the
pro-rata redemption of the new Convertible Debentures and the CTR
US debt at 95% of their face value. - On April 18, 2005, SR Telecom
announced that it has engaged Mr. William Aziz, Managing Partner of
Blue Tree Advisors, as Chief Restructuring Officer on a contract
basis to assist in identifying and implementing strategies to
capitalize on opportunities for the enhancement of operating
performance. - On April 4, 2005, SR Telecom announced that it had
received purchase orders valued at approximately $11 million from
Siemens for the ongoing Telefonica TRAC initiative. The new orders
are for the WiMAX-ready symmetry(TM) solution, which Telefonica
intends to use for the rest of the TRAC deployment. Deliveries are
scheduled to commence immediately. - On March 21, 2005, SR Telecom
announced that it had received follow-on purchase orders valued at
approximately $4 million of SR500(TM) from Sonatel, the national
telecommunications provider in Senegal as part of a universal
access program. Deliveries are scheduled to commence in the second
quarter of 2005. - On February 14, 2005, SR Telecom engaged Genuity
Capital Markets to act as financial advisor and investment banker
to assist the Corporation in its refinancing activities. Since its
engagement, Genuity and the Corporation have commenced and are
continuing discussions with the Debenture Holders with respect to a
proposed re-capitalization of the Corporation. - On February 14,
2005, SR Telecom reached an agreement with the lenders of
Comunicacion y Telefonia Rural S.A. (CTR), its service provider
subsidiary in Chile. Pursuant to the agreement, CTR's lenders have
waived compliance with certain financial and operational covenants
contained in CTR's loan documents to May 16, 2005. The Corporation
and the CTR lenders are in discussions regarding the proposed
re-capitalization plan and the restructuring of the debt at CTR. -
On January 26, 2005, SR Telecom announced it had taken steps to
reduce its costs in order to align them with the current level of
business activity and laid-off an additional 127 employees on a
temporary basis. The Corporation expects to recall employees as
soon as production returns to normal volumes. - On January 26,
2005, SR Telecom announced follow-on orders for 15 angel(TM) base
stations from Siemens for the ongoing Telefonica TRAC project.
Telefonica selected angel over a number of competing technologies
for an extensive multi-service Broadband Fixed Wireless Access
(BFWA) network, which will ultimately see the deployment of
approximately 100,000 lines throughout Spain. The TRAC initiative
will deliver high quality voice and high-speed data to suburban and
rural areas throughout the country. The entire TRAC project calls
for approximately 475 base stations. - On January 26, 2005, SR
Telecom announced that its airstar(TM) product was selected by
Teleunit S.P.A, a major Italian telecommunications operator, for
the deployment of its BFWA network in the Tuscany region. The total
value of the current phase of this project, which marks the first
extension of Teleunit's initial roll-out of airstar systems, is
approximately $1.2 million. Further expansions of the WLL
infrastructure in the Tuscany and Marche regions of Central Italy
are expected to take place throughout 2005. - On January 19, 2005,
SR Telecom received new orders valued at approximately $1 million
from PT Aplikanusa Lintasarta, the largest data and corporate
network communications provider in Indonesia. These add-on orders
are for a project initiated in September 2003. Lintasarta has
selected airstar wireless broadband solution to provide ATM, frame
relay and clear channel services to its customers in the Java,
Kalmantan and Sulawesi regions of Indonesia. With these orders,
Lintasarta will add airstar base stations and Customer Premises
Equipment to its growing network of airstar systems. - On January
19, 2005, SR Telecom announced the receipt of purchase orders
valued at approximately $10 million from a major telecommunications
operator in Latin America. These orders are part of a previously
announced frame contract under which the operator selected SR500
family of fixed wireless access systems. Deliveries are scheduled
to take place in the first half of 2005. Detailed financial results
for SR Telecom's first quarter of fiscal 2005 are filed with SEDAR
and EDGAR and are also available on the Company's website at
http://www.srtelecom.com/ . About SR Telecom SR TELECOM (TSX: SRX,
Nasdaq: SRXA) designs, manufactures and deploys versatile,
Broadband Fixed Wireless Access solutions. For over two decades,
carriers have used SR Telecom's products to provide field-proven
data and carrier-class voice services to end-users in both urban
and remote areas around the globe. SR Telecom's products have
helped to connect millions of people throughout the world. A
pioneer in the industry, SR Telecom works closely with carriers to
ensure that its broadband wireless access solutions directly
respond to evolving customer needs. Its turnkey solutions include
equipment, network planning, project management, installation and
maintenance. SR Telecom is a principal member of WiMAX Forum, a
cooperative industry initiative which promotes the deployment of
broadband wireless access networks by using a global standard and
certifying interoperability of products and technologies.
Conference Call SR Telecom will host a conference call on Thursday,
May 12, 2005 at 10:00 AM Eastern Standard Time to discuss these
results and update investors on operating progress. SR Telecom
President & CEO Pierre St-Arnaud and Senior VP Finance &
CFO David Adams will host the conference call, which will include a
question and answer session. Investors, analysts and media wishing
to participate in this call may dial (514) 807-8791 (Montreal and
overseas) or 1-800-814-4859 (elsewhere in North America) fifteen
minutes prior to the start time. For those who are unable to listen
to the call live, a replay will be available on Thursday, May 12,
2005 as of 12:00 PM until 11:59 PM on Thursday, May 19, 2005 at
1-877-289-8525 (passcode 21124458(pound key)). A live and archived
audio webcast of the call will also be available online at:
http://www.srtelecom.com/ . FORWARD-LOOKING STATEMENTS Except for
historical information provided herein, this press release may
contain information and statements of a forward-looking nature
concerning the future performance of the Company. These statements
are based on suppositions and uncertainties as well as on
management's best possible evaluation of future events. Such
factors may include, without excluding other considerations,
fluctuations in quarterly results, evolution in customer demand for
the Company's products and services, the impact of price pressures
exerted by competitors, and general market trends or economic
changes. As a result, readers are advised that actual results may
differ from expected results. SR TELECOM, SR500, ANGEL, AIRSTAR,
SWING and SYMMETRY are trademarks of SR Telecom Inc. All rights
reserved 2005. All other trademarks are property of their owners.