TESSCO Finalizes Acquisition of Two Leading WLAN Businesses26 April 2006
TESSCO Technologies Incorporated (Nasdaq: TESS), a value-added supplier of the product solutions needed to design, build, run, maintain, and use wireless systems, today announced that it has closed its previously announced acquisition of the assets of TerraWave Solutions, Ltd. and its commonly owned affiliate, GigaWave Technologies, Ltd.
The TerraWave and GigaWave businesses will be integrated into TESSCO to achieve operating synergies, to better service the customer and to gain productivity. The team members previously associated with TerraWave Solutions, Ltd. and GigaWave Technologies, Ltd. will be responsible for managing three new TESSCO business units. The TerraWave product business unit will be responsible for the development of proprietary, TerraWave-branded, products which will be sold by TESSCO's sales organization. The GigaWave services business unit will be responsible for the development and execution of GigaWave-branded WLAN (wireless local area network) training service offerings. The WLAN product business unit will be responsible for designing and merchandising a complete WLAN solution offering consisting of products from leading manufacturers. These product and service business units will operate from Texas and all distribution, logistics and administration functions have already been transferred to TESSCO's existing Maryland and Nevada facilities.
Robert B. Barnhill, TESSCO's chairman, president and CEO commented, "We are pleased that the TerraWave and GigaWave business units are now part of TESSCO. The acquisition is representative of our growth strategy of enhancing our wireless products and service offering, expanding our customer base, and recruiting and developing people committed to delivering value to our customers, manufacturers and shareowners. The acquisition brings to TESSCO, WLAN technology expertise, proprietary WLAN product and training offerings, an expanded, diverse customer base, and an experienced and capable team."
Under the final terms of the agreement, TESSCO purchased the non-cash assets and businesses of TerraWave and GigaWave for an initial cash payment of approximately $3.8 million, and additional cash earn-out payments over a four- year period contingent on the achievement of certain minimum earnings thresholds. ($1.5 million of the cash paid at closing is a prepayment of future earn-out payments.) The maximum amount of contingent earn-out payments (after subtracting the $1.5 million prepayment) is $15.5 million. The combined, unaudited revenues of TerraWave Solutions, Ltd. and GigaWave Technologies, Ltd. were approximately $12 million in calendar 2005. TESSCO expects the TerraWave/GigaWave business units to contribute positive earnings and operating cash flows during the current fiscal year.
About TESSCO
TESSCO Technologies Incorporated is a value-added supplier of the product solutions needed to design, build, run, maintain and use wireless systems. TESSCO is committed to delivering, fast and complete, the product needs of wireless system operators, program managers, contractors, resellers, and self- maintained utility, transportation, enterprise and government organizations. As Your Total Source(R) supplier of mobile and fixed-wireless network infrastructure products, mobile devices and accessories, and installation, test and maintenance equipment and supplies, TESSCO assures customers of on- time availability, while streamlining their supply chain process and lowering inventories and total costs. To learn more, please visit TESSCO.com.
Forward-Looking Statements
This press release may contain "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act as amended. These forward-looking statements may generally be identified by the use of the words "may," "will," "expects," "anticipates," "believes," "estimates," and similar expressions, and involve a number of risks and uncertainties. For a variety of reasons, actual results may differ materially from those described in or contemplated by any such forward-looking statement. Consequently, the reader is cautioned to consider all forward-looking statements in light of the risks to which they are subject.
Without limiting the foregoing, the statements in this press release regarding TESSCO acquiring the business assets of TerraWave and GigaWave, TESSCO's ability to benefit from the acquisition and the acquired businesses and relationship assets, and any implication as to possible contributions to TESSCO's revenues resulting from the acquisition are "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act as amended. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated by the forward-looking statement as a result of a number of factors, including the risks that any expected benefits from the acquisition may not be realized, as well as all other risks to which our business and operating results are generally subject.
We are not able to identify or control all circumstances that could occur in the future that may adversely affect our business and operating results. Included among the risks that could lead to a materially adverse impact on our business or operating results are the termination or non-renewal of limited duration agreements or arrangements with our vendors and affinity partners which are typically terminable by either party upon several months notice; loss of significant customers or relationships, including affinity relationships; loss of customers either directly or indirectly as a result of consolidation among large wireless service carriers and others within the wireless communications industry; the strength of the customers', vendors' and affinity partners' business; economic conditions that may impact customers' ability to fund purchase of our products and services; our dependence on a relatively small number of suppliers and vendors, which could hamper our ability to maintain appropriate inventory levels and meet customer demand; failure of our information technology system or distribution system; technology changes in the wireless communications industry, which could lead to significant inventory obsolescence and/or our inability to offer key products that our customers demand; third-party freight carrier interruption; increased competition from competitors, including manufacturers or national and regional distributors of the products we sell and the absence of significant barriers to entry which could result in pricing and other pressures on profitability and market share; the possibility that, for unforeseen reasons, we may be delayed in entering into or performing, or may fail to enter into or perform, anticipated contracts or may otherwise be delayed in realizing or fail to realize anticipated revenues or anticipated savings; and inability to protect certain intellectual property, including systems and technologies on which we rely. TESSCO does not undertake any obligation to update forward-looking or other statements in this release.
Source: prnewswire
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