EX-99.1 2 v102087_ex99-1.htm Unassociated Document
 
 
News Release


Endwave Reports Fourth Quarter and Fiscal Year 2007 Financial Results

SAN JOSE, Calif., Feb. 5/PRNewswire-FirstCall/ -- Endwave Corporation (Nasdaq: ENWV), a leading provider of high frequency RF modules for telecommunications networks, defense electronics and homeland security systems, today reported financial results for its fourth quarter and full year of 2007, which ended on December 31, 2007.

Revenues were $14.4 million for the fourth quarter of 2007, compared with $13.3 million for the fourth quarter of 2006 and $13.8 million for the third quarter of 2007. Net loss, calculated in accordance with accounting principles generally accepted in the United States (GAAP), for the fourth quarter of 2007 was $1.1 million, or $0.09 per share, compared with net loss for the fourth quarter of 2006 of $870,000, or $0.08 per share, and net loss for the third quarter of 2007 of $1.7 million, or $0.14 per share.

Non-GAAP net income for the fourth quarter of 2007 was $282,000, or $0.02 per diluted share, compared with non-GAAP net income for the fourth quarter of 2006 of $229,000, or $0.02 per diluted share, and non-GAAP net loss for the third quarter of 2007 of $215,000, or $0.02 per share. For the fourth quarter of 2007, non-GAAP net income was calculated by excluding non-cash stock-based compensation expense of $1.0 million and amortization of intangible assets of $328,000. For the fourth quarter of 2006, non-GAAP net income was calculated by excluding non-cash stock-based compensation expense of $748,000, the expensing of $200,000 of capitalized transaction costs and amortization of intangible assets of $151,000. For the third quarter of 2007, non-GAAP net loss was calculated by excluding non-cash stock-based compensation expense of $1.1 million and amortization of intangible assets of $329,000.
 
Cash, cash equivalents and investments as of December 31, 2007 were $49.0 million, compared with $65.4 million at September 30, 2007, reflecting cash used by Endwave to repurchase 2,502,247 of its shares from the Wood River Funds on December 24, 2007, partially offset by cash generated from operations.

"As previously announced, we are pleased to have exceeded our revenue expectations for the fourth quarter, largely as a result of higher-than-anticipated revenues from Nokia Siemens Networks. We believe this renewed strength indicates that the impact of the merger of our two largest customers is normalizing," said Ed Keible, Endwave's CEO and President. “Furthermore, our non-telecom revenues grew 18% sequentially during the fourth quarter. Our improved year-end revenue performance gives us added confidence in our expectations for meaningful revenue growth in 2008.”
 
 
 
 
 
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Full Year 2007 Results
For the full year, total revenues were $56.5 million, compared with $62.2 million for 2006. For 2007, revenues attributable to customers in telecom markets were $44.3 million and revenues attributable to customers in defense electronics, homeland security and other non-telecom markets were $12.2 million.

GAAP net loss for the year ended December 31, 2007 was $5.4 million, or $0.47 per share, compared with GAAP net loss for 2006 of $1.3 million, or $0.12 per share. Non-GAAP net loss for the year ended December 31, 2007 was $208,000, or $0.02 per share, compared with a non-GAAP net income for the year ended December 31, 2006 of $2.9 million, or $0.21 per diluted share. For 2007, non-GAAP net income was calculated by excluding non-cash stock-based compensation expense of $4.1 million and amortization of intangible assets of $1.1 million.

In December, Endwave acquired and retired 2,502,247 shares of its common stock from the Wood River funds. In a separate transaction, the Wood River funds sold an additional 1.6 million shares of Endwave common stock to institutional investors. As a result of these two transactions, the Wood River funds no longer hold any Endwave shares. Reflecting the retirement of these shares, the total number of Endwave shares outstanding at year end were 12.1 million, including 3 million shares on an “as if” converted basis from the preferred stock held by Oak Investment Partners. Because the number of basic and diluted shares outstanding for financial statement purposes is calculated on a weighted-average basis, the impact of the repurchase on net income (loss) per share will be fully reflected for the first time in Endwave’s financial statements for the first quarter of 2008.

Conference Call
Endwave Corporation will hold a conference call to discuss its financial results today at 1:30 p.m. Pacific Time. Investors are invited to participate in the conference call by dialing (303) 262-2131 by 1:20 p.m. PT. Starting approximately one hour after the completion of the live call, a replay will also be available until February 12. To access the recording, dial (303) 590-3000 (Pass code: 11106008). Investors are also invited to listen to a live and/or archived webcast of Endwave's quarterly conference call on the investor relations section of the company's Web site at http://www.endwave.com. The webcast replay will be available for 90 days.

About Endwave
Endwave Corporation designs, manufactures and markets RF modules that enable the transmission, reception and processing of high-frequency signals in telecommunications networks, defense electronics and homeland security systems. These RF modules include high-frequency integrated transceivers, amplifiers, synthesizers, oscillators, up and down converters, frequency multipliers and microwave switch arrays. Endwave has 42 issued patents covering its core technologies including semiconductor and proprietary circuit designs. Endwave Corporation is headquartered in San Jose, CA, with operations in Diamond Springs, CA; El Dorado Hills, CA; Andover, MA; and Chiang Mai, Thailand. Additional information about Endwave can be accessed from its web site at http://www.endwave.com.
 
 
 
 
 
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Use of Non-GAAP Financial Information
To supplement Endwave's condensed consolidated financial statements presented in accordance with GAAP, Endwave uses certain measures of financial performance that are non-GAAP financial measures within the meaning of Regulation G promulgated by the Securities and Exchange Commission. These non-GAAP measures may include gross margin, net income (loss) and net income (loss) per share data that are adjusted from results based on GAAP to exclude certain expenses, gains and losses. These non-GAAP measures are provided to enhance investors’ overall understanding of Endwave’s current financial performance and Endwave’s prospects for the future. Specifically, Endwave believes the non-GAAP measures provide useful information to both management and investors by excluding certain expenses that may not be indicative of its core operating results. These measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP results. These non-GAAP measures included in this press release have been reconciled to the GAAP results in the attached tables.

“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995:
This press release and the conference call referred to in this press release may contain forward-looking statements within the meaning of the Federal securities laws and is subject to the safe harbor created thereby. Any statements contained in this press release or on the conference call that are not statements of historical fact may be deemed to be forward-looking statements. Words such as “plans,” “intends,” “expects,” “believes” and similar expressions are intended to identify these forward-looking statements. Information contained in forward-looking statements is based on current expectations and is subject to change. Actual results could differ materially from the forward-looking statements due to many factors, including the following: volatility resulting from consolidation of key customers; our ability to achieve revenue growth and maintain profitability; our customer and market concentration; our suppliers’ abilities to deliver raw materials to our specifications and on time; our successful implementation of next-generation programs, including inventory transitions; our ability to penetrate new markets; fluctuations in our operating results from quarter to quarter; our reliance on third-party manufacturers and semiconductor foundries; acquiring businesses and integrating them with our own; component, design or manufacturing defects in our products; our dependence on key personnel; and fluctuations in the price of our common stock. Forward-looking statements contained in this press release and on our conference call should be considered in light of these factors and those factors discussed from time to time in Endwave's public reports filed with the Securities and Exchange Commission, such as those discussed under “Risk Factors” in Endwave’s most recent Annual Report on Form 10-K and subsequently-filed reports on Form 10-Q. Endwave does not undertake any obligation to update such forward-looking statements.

Contact:
Mary McGowan
Summit IR Group Inc.
(408) 404-5401
mary@summitirgroup.com

 
 
 
 
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)

   
December 31,
2007
  
December 31,
2006
  
Assets
  
 
  
 
  
Current assets
  
 
  
 
  
Cash and cash equivalents
  
$
38,992
  
$
26,176
  
Short-term investments
    
5,464
   
41,411
 
Accounts receivables, net
    
9,362
   
8,713
 
Inventories
    
12,434
   
17,127
 
Other current assets
    
1,168
   
640
 
Total current assets
    
67,420
   
94,067
 
Long-term investments
    
4,501
   
-
 
Property and equipment, net
    
2,999
   
2,024
 
Other assets
    
212
   
110
 
Restricted cash
    
25
   
261
 
Goodwill and intangible assets, net
    
7,432
   
4,191
 
Total assets
  
$
82,589
  
$
100,653
  
 
          
Liabilities and stockholders' equity
          
Current liabilities:
          
Accounts payable
  
$
3,422
  
$
4,280
  
Accrued warranty
    
2,712
   
2,928
 
Accrued compensation
    
2,240
   
2,652
 
Other current liabilities
    
2,251
   
1,164
 
Total current liabilities
    
10,625
   
11,024
 
 
          
Other long-term liabilities
    
116
   
231
 
Total stockholders' equity
    
71,848
   
89,398
 
Total liabilities and stockholders' equity
  
$
82,589
  
$
100,653
  
 
 
ENDWAVE CORPORATION confidential                 2/5/2008
 
Page 1
 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share amounts)
(unaudited)

   
Three months ended
  
Twelve months ended
  
   
Dec. 31, 2007
 
Dec. 31, 2006
 
Dec. 31, 2007
 
Dec. 31, 2006
 
Total revenues
  
$
14,392
  
$
13,318
  
$
56,476
  
$
62,226
  
Costs and expenses:
                  
Cost of product revenues
    
10,448
   
9,526
   
41,216
   
43,771
 
Cost of product revenues, amortization of intangible assets
    
149
   
112
   
548
   
449
 
Research and development
    
2,801
   
2,277
   
10,707
   
8,856
 
Selling, general and administrative
    
2,754
   
2,844
   
12,463
   
12,689
 
Transaction costs
    
-
   
200
   
-
   
200
 
Amortization of intangible assets
    
179
   
39
   
531
   
156
 
Total costs and expenses
    
16,331
   
14,998
   
65,465
   
66,121
 
Loss from operations
    
(1,939
)
  
(1,680
)
  
(8,989
)
  
(3,895
)
Interest and other income, net
    
882
   
907
   
3,590
   
2,648
 
Loss before provision for income taxes
  
$
(1,057
)
$
(773
)
$
(5,399
)
$
(1,247
)
Provision for income taxes
    
2
   
97
   
2
   
97
 
Net loss
  
$
(1,059
)
$
(870
)
$
(5,401
)
$
(1,344
)
Basic and diluted net loss per share
  
$
(0.09
)
$
(0.08
)
$
(0.47
)
$
(0.12
)
Shares used in calculating basic and diluted net loss per share
    
11,484,687
   
11,508,255
   
11,563,716
   
11,429,860
 
 
 
ENDWAVE CORPORATION confidential                2/5/2008
 
Page 2
 

NON-GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (1)
(in thousands, except share and per share amounts)
(unaudited)

   
Three months ended
  
Twelve months ended
  
   
Dec. 31, 2007
 
Dec. 31, 2006
 
Dec. 31, 2007
 
Dec. 31, 2006
 
Total revenues
  
$
14,392
  
$
13,318
  
$
56,476
  
$
62,226
  
Costs and expenses:
                  
Cost of product revenues
    
10,282
   
9,425
   
40,555
   
43,336
 
Research and development
    
2,568
   
2,146
   
9,862
   
8,316
 
Selling, general and administrative
    
2,140
   
2,328
   
9,855
   
10,352
 
Total costs and expenses
    
14,990
   
13,899
   
60,272
   
62,004
 
Income (loss) from operations
    
(598
)
  
(581
)
  
(3,796
)
  
222
 
Interest and other income, net
    
882
   
907
   
3,590
   
2,732
 
Income (loss) before provision for income taxes
  
$
284
  
$
326
  
$
(206
)
$
2,954
  
Provision for income taxes
    
2
   
97
   
2
   
97
 
Net income (loss)
  
$
282
  
$
229
  
$
(208
)
$
2,857
  
Basic net income (loss) per share
  
$
0.02
  
$
0.02
  
$
(0.02
)
$
0.25
  
Diluted net income (loss) per share
  
$
0.02
  
$
0.02
  
$
(0.02
)
$
0.21
  
Shares used in calculating basic net income (loss) per share
    
11,484,687
   
11,508,255
   
11,563,716
   
11,429,860
 
Shares used in calculating diluted net income (loss) per share
    
14,634,551
   
14,804,635
   
11,563,716
   
13,837,555
 

Basis of presentation:
1. Non-GAAP operating results exclude amortization of intangible assets, loss on sale of assets, transaction costs and non-cash stock compensation expense.
 
 
ENDWAVE CORPORATION confidential                2/5/2008
 
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GAAP TO NON-GAAP NET LOSS RECONCILIATION
(in thousands)
(unaudited)

   
Three months ended
  
Twelve months ended
  
   
Dec. 31, 2007
 
Dec. 31, 2006
 
Dec. 31, 2007
 
Dec. 31, 2006
 
GAAP net loss
 
$
(1,059
)
$
(870
)
$
(5,401
)
$
(1,344
)
Cost of product revenues, amortization of intangible assets
    
149
   
112
   
548
   
449
 
Cost of product revenues, stock-based compensation expense
    
166
   
101
   
661
   
435
 
Amortization of intangible assets
    
179
   
39
   
531
   
156
 
Research and development, stock-based compensation expense
    
233
   
131
   
845
   
540
 
Selling, general and administrative, stock-based compensation expense
    
614
   
516
   
2,608
   
2,337
 
Transaction costs
    
-
   
200
   
-
   
200
 
Loss on sale of assets
    
-
   
-
   
-
   
84
 
Non-GAAP net income (loss)
  
$
282
  
$
229
  
$
(208
)
$
2,857
  
 
 
ENDWAVE CORPORATION confidential                2/5/2008
 
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