EX-99.1 2 a11-11343_6ex99d1.htm EX-99.1

Exhibit 99.1

GRAPHIC

 

FOR IMMEDIATE RELEASE

 

DRAGONWAVE ANNOUNCES FOURTH QUARTER AND FULL FISCAL YEAR 2011 RESULTS

 

OTTAWA, Canada, May 4, 2011 - DragonWave Inc. (TSX: DWI; NASDAQ: DRWI) a leading global supplier of packet microwave radio systems for mobile and access networks, today announced financial results for the fourth quarter and full fiscal year 2011, ended February 28, 2011.  All figures are in U.S. dollars and in accordance with Canadian generally accepted accounting principles.

 

Revenue for the full fiscal year 2011 was $118.0 million, compared with $158.0 million for the prior fiscal year.  Revenue from customers outside North America increased to $21.9 million or 18% of total revenue for the full fiscal year 2011, compared with $11.5 million or 7% of total revenue in the prior fiscal year.

 

Net income for the full fiscal year was $2.0 million or $0.05 per diluted share, compared with net income of $27.8 million or $0.85 per diluted share in the prior fiscal year.

 

Revenue for the fourth quarter of fiscal 2011 was $15.1 million, compared with $61.0 million in the fourth quarter of fiscal 2010.  Revenue from customers outside North America increased to $4.9 million, compared with $4.2 million in the third quarter of fiscal year 2011 and $2.8 million in the fourth quarter of the prior fiscal year.  DragonWave had two customers that contributed more than 10% of total revenue in the fourth quarter.

 

Net loss in the fourth quarter of fiscal year 2011 was $8.9 million or ($0.25) per diluted share, compared with net income of $12.8 million or $0.34 per diluted share in the fourth quarter of 2010.  Gross margin in the fourth quarter of fiscal year 2011 was 29%, compared with 43% in the fourth quarter of the prior fiscal year.  The gross margin in the fourth quarter of fiscal 2011 reflects the inclusion of an inventory impairment provision of $2.1 million, compared to $0.3 million in the fourth quarter of the prior fiscal year.

 

“We made progress this quarter to broaden our global market presence to address the burgeoning growth of data traffic for mobile operators,” said DragonWave President and CEO Peter Allen.  “We are actively engaged and well positioned with a number of major mobile operators in different geographies throughout the world and are working to expand channels and actively pursuing opportunities to make acquisitions.”

 

Cash, cash equivalents, restricted cash, and short-term investments totaled $89.7 million as of the end of Q4 FY2011, compared to $95.4 million at the end of Q3 FY2011 and $113.4 million at the end of Q4 FY2010.

 


 

Revenue Outlook for Q1 FY2012

 

DragonWave expects revenue for Q1 FY2012 to be approximately $15 million.

 

Conference Call Details:

 

The DragonWave management team will discuss the results on a conference call and webcast beginning at 8:30 a.m. Eastern Time, tomorrow, May 5, 2011.  The conference call can be accessed by dialing 877-312-9202 in North America, or 408-774-4000 outside North America.

 

The webcast link and presentation slides can be accessed at the investor relations section of the DragonWave website at http://investor.dragonwaveinc.com/events.cfm.  An archive of the webcast will be available at the same link.

 

About DragonWave

 

DragonWave® is a leading provider of high-capacity packet microwave solutions that drive next-generation IP networks.  DragonWave’s carrier-grade point-to-point packet microwave systems transmit broadband voice, video and data, enabling service providers, government agencies, enterprises and other organizations to meet their increasing bandwidth requirements rapidly and affordably.  The principal application of DragonWave’s products is wireless network backhaul.  Additional solutions include leased line replacement, last mile fiber extension and enterprise networks.  DragonWave’s corporate headquarters is located in Ottawa, Ontario, with sales locations in Europe, Asia, the Middle East and North America.  For more information, visit http://www.dragonwaveinc.com.

 

DragonWave® is a registered trademark of DragonWave Inc.

 

Forward-Looking Statements

 

Certain statements in this release, including the estimate of revenue for the first quarter of fiscal year 2012 provided above, constitute forward-looking statements or forward-looking information within the meaning of applicable securities laws.  These statements are subject to certain assumptions, risks and uncertainties.  Material factors and assumptions used to develop such estimates include:

 

·                  DragonWave’s expectations regarding network deployment plans of its existing and new customers; and

·                  DragonWave’s expectations regarding the volume and timing of anticipated order activity.

 


 

Readers are cautioned not to place undue reliance on such statements. These statements are provided to assist external stakeholders in understanding DragonWave’s expectations as of the date of this release and may not be appropriate for other purposes.

 

Actual results, performance, achievements or developments of DragonWave may differ materially from the results, performance, achievements or developments expressed or implied by such statements.  Risk factors that may cause the actual results, performance, achievements or developments of DragonWave to differ materially from the results, performance, achievements or developments expressed or implied by such statements can be found in DragonWave’s Annual Information Form dated May 4, 2011 and other public documents filed by DragonWave with Canadian and United States securities regulatory authorities, which are available at www.sedar.com and www.sec.gov, respectively, and include the following:

 

·                  DragonWave relies on a small number of customers for a large percentage of its revenue and DragonWave’s future growth depends on the success of its customer diversification efforts.

·                  DragonWave’s growth is dependent on the development and growth of the market for high-capacity wireless communications services.

·                  Network deployment plans by DragonWave’s existing and potential customers are capital intensive and the timing of such deployments is affected by such customers’ access to capital.

·                  DragonWave faces intense competition from several competitors and if it does not compete effectively with these competitors, its revenues may not grow and could decline.  DragonWave also faces competition from indirect competitors.

·                  DragonWave relies on its suppliers to supply components for its products and the Company is exposed to the risk that these suppliers will not be able to supply components on a timely basis, or at all.

·                  DragonWave may conduct acquisitions of products and businesses. There are risks associated with such acquisitions.

·                  DragonWave’s success depends on its ability to develop new products and enhance existing products.

·                  If DragonWave is required to change its pricing models to compete successfully, its margins and operating results may be adversely affected.

·                  DragonWave’s quarterly revenue and operating results can be difficult to predict and can fluctuate substantially.

·                  DragonWave has a lengthy and variable sales cycle.

 

DragonWave assumes no obligation to update or revise any forward-looking statements or forward-looking information, whether because of new information, future events or otherwise, except as expressly required by law.

 

Investor Contact:

 

Media Contact:

John Lawlor

VP, Investor Relations

DragonWave Inc.

jlawlor@dragonwaveinc.com

Tel: 613-895-7000

 

Nadine Kittle

Marketing Communications

DragonWave Inc.

nkittle@dragonwaveinc.com

Tel: 613-599-9991 ext. 2262

 

 


 

CONSOLIDATED BALANCE SHEETS

 

Expressed in US $000’s

 

 

 

As at

 

As at

 

 

 

February 28,

 

February 28,

 

 

 

2011

 

2010

 

Assets

 

 

 

 

 

Current Assets

 

 

 

 

 

Cash and cash equivalents

 

77,819

 

105,276

 

Restricted cash

 

714

 

—

 

Short term investments

 

11,181

 

8,074

 

Trade receivables

 

11,579

 

28,926

 

Inventory

 

28,204

 

23,910

 

Other current assets

 

5,306

 

2,522

 

Future income tax asset

 

553

 

436

 

 

 

135,356

 

169,144

 

Long Term Assets

 

 

 

 

 

Property and equipment

 

7,560

 

7,116

 

Future income tax asset

 

808

 

59

 

Intangible assets

 

14,929

 

430

 

Goodwill

 

11,927

 

—

 

 

 

35,224

 

7,605

 

 

 

 

 

 

 

Total Assets

 

170,580

 

176,749

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

Current Liabilities

 

 

 

 

 

Accounts payable and accrued liabilities

 

15,967

 

33,949

 

Income taxes payable

 

—

 

835

 

Deferred revenue

 

1,453

 

1,017

 

Contingent royalty

 

622

 

—

 

Contingent consideration

 

14,622

 

—

 

 

 

32,664

 

35,801

 

 

 

 

 

 

 

Long Term Liabilities

 

 

 

 

 

Contingent royalty

 

3,290

 

—

 

Other long term liabilities

 

1,999

 

2,102

 

 

 

 5,289

 

2,102

 

 

 

 

 

 

 

Shareholders’ equity

 

 

 

 

 

Capital stock

 

171,570

 

179,174

 

Contributed surplus

 

2,488

 

1,375

 

Deficit

 

(31,813

)

(32,085

)

Accumulated other comprehensive loss

 

(9,618

)

(9,618

)

 

 

132,627

 

138,846

 

 

 

 

 

 

 

Total Liabilities and Shareholders’ Equity

 

170,580

 

176,749

 

 

 

 

 

 

 

Shares issued & outstanding

 

35,421,893

 

36,934,917

 

 


 

CONSOLIDATED STATEMENTS OF OPERATIONS

 

AND COMPREHENSIVE INCOME (LOSS)

 

Expressed in US $000’s except share and per share amounts

 

 

 

Three months ended

 

Twelve months ended

 

 

 

February 28

 

February 28

 

 

 

2011

 

2010

 

2011

 

2010

 

 

 

 

 

 

 

 

 

 

 

REVENUE

 

15,105

 

60,973

 

118,010

 

157,989

 

Cost of sales

 

10,697

 

34,808

 

67,460

 

91,565

 

Gross profit

 

4,408

 

26,165

 

50,550

 

66,424

 

 

 

 

 

 

 

 

 

 

 

EXPENSES

 

 

 

 

 

 

 

 

 

Research and development

 

5,572

 

5,069

 

18,676

 

14,620

 

Selling and marketing

 

3,964

 

4,481

 

17,303

 

13,917

 

General and administrative

 

3,340

 

2,679

 

11,817

 

7,405

 

Government assistance

 

(144

)

—

 

(390

)

—

 

 

 

12,732

 

12,229

 

47,406

 

35,942

 

Income (loss) before amortization of intangible assets and other items

 

(8,324

)

13,936

 

3,144

 

30,482

 

 

 

 

 

 

 

 

 

 

 

Amortization of intangible assets

 

(472

)

—

 

(893

)

(207

)

Accretion expense

 

(271

)

—

 

(393

)

—

 

Interest income

 

37

 

60

 

233

 

89

 

Investment gain

 

(161

)

—

 

7

 

—

 

Gain on sale of property and equipment

 

—

 

—

 

—

 

258

 

Foreign exchange gain (loss)

 

536

 

(991

)

678

 

(2,436

)

Income (loss) before income taxes

 

(8,655

)

13,005

 

2,776

 

28,186

 

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

235

 

203

 

801

 

341

 

Net and Comprehensive Income (Loss)

 

(8,890

)

12,802

 

1,975

 

27,845

 

 

 

 

 

 

 

 

 

 

 

Income (loss) per share

 

 

 

 

 

 

 

 

 

Basic

 

(0.25

)

0.35

 

0.06

 

0.88

 

Diluted

 

(0.25

)

0.34

 

0.05

 

0.85

 

 

 

 

 

 

 

 

 

 

 

Weighted Average Shares Outstanding

 

 

 

 

 

 

 

 

 

Basic

 

35,208,606

 

36,461,643

 

35,812,507

 

31,523,226

 

Diluted

 

35,208,606

 

37,914,914

 

36,741,961

 

32,635,342

 

 


 

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

Expressed in US $000’s

 

 

 

Three months ended

 

Year ended

 

 

 

February 28

 

February 28

 

 

 

2011

 

2010

 

2011

 

2010

 

 

 

 

 

 

 

 

 

 

 

Operating Activities

 

 

 

 

 

 

 

 

 

Net (loss) Income

 

(8,890

)

12,803

 

1,975

 

27,845

 

Items not affecting cash

 

 

 

 

 

 

 

—

 

Amortization of property and equipment

 

796

 

591

 

2,895

 

1,416

 

Amortization of intangible assets

 

445

 

62

 

893

 

207

 

Accretion expense

 

271

 

—

 

393

 

—

 

Non cash royalty amortization

 

(140

)

—

 

(266

)

—

 

Stock-based compensation

 

459

 

225

 

1,442

 

911

 

Unrealized foreign exchange loss

 

(156

)

1,443

 

134

 

1,995

 

Gain on sale of property and equipment

 

—

 

—

 

—

 

(258

)

Non cash future income tax expense

 

235

 

—

 

358

 

—

 

Benefit on recognition of future income tax asset

 

—

 

(242

)

—

 

(486

)

Inventory impairment

 

2,097

 

314

 

3,285

 

969

 

Accrued interest on short term investments

 

(5

)

(13

)

(5

)

(14

)

 

 

(4,727

)

15,183

 

11,104

 

32,585

 

 

 

 

 

 

 

 

 

 

 

Changes in non-cash working capital items

 

(1,052

)

580

 

(12,296

)

(4,682

)

 

 

(5,779

)

15,763

 

(1,192

)

27,903

 

 

 

 

 

 

 

 

 

 

 

Investing Activities

 

 

 

 

 

 

 

 

 

Acquisition of property and equipment

 

(631

)

(960

)

(3,839

)

(4,960

)

Acquisition of intangible assets

 

(330

)

(160

)

(867

)

(446

)

Acquisition of Axerra Networks Inc., net of cash acquired

 

—

 

—

 

(8,700

)

—

 

Purchase of short term investments

 

(11,513

)

—

 

(135,480

)

—

 

Maturity of short term investments

 

47,275

 

4,775

 

132,378

 

3,825

 

 

 

34,801

 

3,655

 

(16,508

)

(1,581

)

 

 

 

 

 

 

 

 

 

 

Financing Activities

 

 

 

 

 

 

 

 

 

Change in line of credit

 

—

 

—

 

—

 

(574

)

Share repurchase

 

—

 

—

 

(10,738

)

—

 

Issuance of common shares net of issuance costs

 

762

 

1,694

 

1,115

 

70,350

 

 

 

762

 

1,694

 

(9,623

)

69,776

 

 

 

 

 

 

 

 

 

 

 

Effect of foreign exchange on cash and cash equivalents

 

156

 

(1,443

)

(134

)

(1,995

)

Effect of functional currency change

 

—

 

 

 

—

 

4,480

 

 

 

 

 

 

 

 

 

 

 

Net increase (decrease) in cash and cash equivalents

 

29,940

 

19,669

 

(27,457

)

98,583

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents at beginning of period

 

47,879

 

85,607

 

105,276

 

6,693

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents at end of period

 

77,819

 

105,276

 

77,819

 

105,276

 

 

 

 

 

 

 

 

 

 

 

Cash paid during the period for interest

 

—

 

1

 

194

 

26