Exhibit 99.1
NEWS RELEASE
CONTACTS:
Julianne Biagini Mark Hebeisen
Chief Financial Officer VP Marketing
Endwave Corporation Endwave Corporation
408-522-3105 978-686-4400 x105
FOR IMMEDIATE RELEASE
ENDWAVE REPORTS THIRD QUARTER 2005 FINANCIAL RESULTS
ENDWAVE GENERATED 89% YEAR-OVER-YEAR REVENUE GROWTH AND INCREASED
PRO-FORMA PROFITABILITY IN Q3
SUNNYVALE, CA - October 18, 2005 - 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 third quarter ended September 30, 2005.
Endwave reported revenues of $14.3 million for the third quarter of 2005,
compared with revenues of $7.6 million for the third quarter of 2004 and $12.2
million for the second quarter of 2005. Cash, cash equivalents and short-term
investments as of September 30, 2005 were $21.9 million compared with a balance
of $22.0 million at June 30, 2005.
Net loss for the third quarter of 2005 was $193,000, or a loss of $0.02 per
share, compared with a net loss for the third quarter of 2004 of $2.0 million,
or a loss of $0.21 per share, and net income for the second quarter of 2005 of
$318,000, or earnings of $0.03 per diluted share.
Pro forma net income for the third quarter of 2005 was $732,000, or earnings of
$0.06 per diluted share, compared with a pro forma net loss for the third
quarter of 2004 of $1.2 million, or a loss of $0.12 per share, and pro forma net
income for the second quarter of 2005 of $424,000, or earnings of $0.04 per
diluted share.
For the third quarter of 2005, pro forma net income was calculated by excluding
the expensing of transaction costs for a suspended secondary offering of
$773,000 and amortization of intangible assets of $152,000. For the third
quarter of 2004, pro forma net loss was calculated by excluding the amortization
of intangible assets of $148,000, a write-off of in-process research and
development of $320,000, a write-off for the impairment of long lived assets of
$389,000, and a restructuring benefit of $4,000. For the second quarter of 2005,
pro forma net income was calculated by excluding the amortization of intangible
assets of $152,000 and a restructuring benefit of $46,000. Management believes
that excluding the items described above may permit investors to better compare
results from period to period and more accurately assess the company's
prospects.
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"In what is typically a seasonally slow quarter, I am pleased to report that
Endwave's growth continues at a rapid pace - and at $14.3 million in third
quarter revenues, this represents the largest quarterly revenue total in our
company's history," said Ed Keible, Endwave's CEO and President. "We have
already exceeded our entire year 2004 revenues in just the first nine months of
2005, with a strong fourth quarter projected to follow," added Keible.
ENDWAVE THIRD QUARTER 2005 SUMMARY:
- Recorded quarterly revenues of $14.3 million, 89% higher than the
third quarter of 2004, and 17% higher than the second quarter of 2005.
- Increased revenues from sales to customers in defense electronics,
homeland security systems and other non-telecom markets to $2.3
million, or 16% of total revenues, in the third quarter of 2005. This
represents 51% growth in non-telecom market revenues as compared to
the third quarter of 2004.
- Delivered products to over 100 customers during the quarter. The
largest customers for the quarter were Nokia, Nera and Siemens.
- Achieved gross margin of 32.5% in the third quarter of 2005, and
profitability during the quarter increased to 5% of revenues, on a pro
forma basis.
- Expensed $773,000 of transaction costs incurred for a secondary
offering that will be postponed until further notice.
- Appointed senior managers to critical new positions, including Chief
Operating Officer, General Managers for both the Telecom and Defense
Business Units, and Vice President of Marketing and Business
Development.
- Secured follow-on orders from Raytheon Company for RF subsystems for
Smart-T, an advanced satellite defense communications program.
- Received additional orders from SafeView for switch arrays used in
SafeScout(TM), its advanced personnel screening portal.
- Announced the commercial introduction of a proprietary integrated
transceiver board solution, Epsilon(TM) Packaging, which significantly
reduces the cost, size, and weight of typical RF subsystems.
FOLLOW-ON OFFERING - UPDATE
The company also announced today that it will postpone its planned secondary
offering until further notice. The company intends to convert the registration
statement on Form S-3 that it recently filed with the Securities and Exchange
Commission into a "shelf" registration statement, giving Endwave greater
flexibility to complete an offering of securities in the future when market
conditions are conducive to such an offering. Due to the suspension of the
planned secondary offering, all accumulated transaction costs were expensed in
the third quarter. A registration statement relating to these securities has
been filed with the Securities and Exchange Commission but has not yet become
effective. These securities may not be sold nor may offers to buy be accepted
prior to the time the registration statement becomes effective. This press
release shall not constitute an offer to sell or the solicitation of an offer to
buy nor shall there be any sale of these securities in any state in which such
offer, solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such state.
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Endwave will hold its regularly scheduled third quarter earnings call today at
1:30 p.m. Pacific Daylight Time, which will be available via web cast by logging
on to the investor relations section of our website at
http://www.endwave.com/investors. The web cast replay will be available on-line
after the earnings call at approximately 2:30 p.m. Pacific Daylight Time, and
will continue to remain available for approximately 90 calendar days after the
call. An audio telephone replay of the conference call will also be available
approximately one hour following the conclusion of the call, and will continue
to be available for five calendar days by dialing 888-203-1112 (domestically) or
719-457-0820 (internationally), and entering the confirmation code 9966749.
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.
Our RF modules are typically used in high-frequency applications and include
integrated transceivers, amplifiers, synthesizers, oscillators, up and down
converters, frequency multipliers and microwave switch arrays. Endwave has 38
issued patents covering its core technologies including semiconductor and
proprietary circuit designs. Endwave Corporation is headquartered in Sunnyvale,
CA, with operations in Diamond Springs, CA; Andover, MA; and Chiang Mai,
Thailand. Additional information about the company can be accessed from the
company's web site at http://www.endwave.com.
"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: our ability to achieve
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 quarterly report on Form 10-Q.
Endwave does not undertake any obligation to update such forward-looking
statements.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
SEPTEMBER 30, DECEMBER 31,
2005 2004
-------------- --------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 8,890 $ 14,158
Short-term investments 12,995 10,979
Accounts receivable, net 11,459 8,688
Inventories, net 15,642 7,866
Other current assets 343 477
-------------- --------------
Total current assets 49,329 42,168
Property and equipment, net 1,574 2,394
Other assets 104 125
Goodwill and other intangible assets, net 4,949 5,407
-------------- --------------
Total assets $ 55,956 $ 50,094
============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable 5,137 3,587
Warranty accrual 3,943 4,488
Accrued compensation 2,702 1,370
Other accrued liabilities 932 1,026
-------------- --------------
Total current liabilities 12,714 10,471
Other long-term liabilities 423 559
Total stockholders' equity 42,819 39,064
-------------- --------------
Total liabilities and stockholders' equity $ 55,956 $ 50,094
============== ==============
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share amounts)
(unaudited)
THREE MONTHS ENDED NINE MONTHS ENDED
---------------------------- ----------------------------
SEPT. 30, SEPT. 30, SEPT. 30, SEPT. 30,
2005 2004 2005 2004
------------ ------------ ------------ ------------
Total revenues $ 14,320 $ 7,594 $ 35,662 $ 21,787
COSTS AND EXPENSES:
Cost of product revenues 9,669 5,407 23,803 14,635
Cost of product revenues,
amortization of intangible assets 113 75 339 75
Research and development 1,708 1,395 4,819 3,452
Selling, general and administrative 2,386 2,204 7,119 5,738
Transaction costs 773 - 773 -
In-process research and development - 320 - 320
Amortization of intangible assets 39 73 140 73
Restructuring charges, net - (4) (46) 2,895
Recovery on building sublease - - - (359)
Impairment of long lived assets and other - 389 - 389
Amortization of deferred stock compensation - - - 204
Total costs and expenses 14,688 9,859 36,947 27,422
Income (loss) from operations (368) (2,265) (1,285) (5,635)
Interest and other income, net 175 231 563 993
Net income (loss) $ (193) $ (2,034) $ (722) $ (4,642)
Basic net income (loss) per share $ (0.02) $ (0.21) $ (0.07) $ (0.48)
Diluted net income (loss) per share $ (0.02) $ (0.21) $ (0.07) $ (0.48)
Weighted shares used in basic per share calculation 11,078,344 9,897,077 10,752,423 9,674,842
Weighted shares used in diluted per share calculation 11,078,344 9,897,077 10,752,423 9,674,842
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (1)
(in thousands, except share and per share amounts)
(unaudited)
THREE MONTHS ENDED NINE MONTHS ENDED
---------------------------- ----------------------------
SEPT. 30, SEPT. 30, SEPT. 30, SEPT. 30,
2005 2004 2005 2004
------------ ------------ ------------ ------------
Total revenues $ 14,320 $ 7,594 $ 35,662 $ 21,787
COSTS AND EXPENSES:
Cost of product revenues 9,669 5,407 23,803 14,635
Research and development 1,708 1,395 4,819 3,452
Sales, general and administrative 2,386 2,204 7,119 5,738
Total costs and expenses 13,763 9,006 35,741 23,825
Income (loss) from operations 557 (1,412) (79) (2,038)
Interest and other income, net 175 231 563 888
Net income (loss) $ 732 $ (1,181) $ 484 $ (1,150)
Basic net income (loss) per share $ 0.07 $ (0.12) $ 0.05 $ (0.12)
Diluted net income (loss) per share $ 0.06 $ (0.12) $ 0.04 $ (0.12)
Weighted shares used in basic per share calculation 11,078,344 9,897,077 10,752,423 9,674,842
Weighted shares used in diluted per share calculation 11,856,369 9,897,077 11,358,463 9,674,842
1. Pro forma operating results exclude transaction costs, restructuring
charges, recovery on building sublease, amortization of deferred stock
compensation gain on sale of land, in-process research and development,
impairment of long lived assets and other and amortization of intangible
assets.
ACTUAL TO PRO FORMA NET LOSS RECONCILIATION
(in thousands)
(unaudited)
THREE MONTHS ENDED NINE MONTHS ENDED
---------------------------- ----------------------------
SEPT. 30, SEPT. 30, SEPT. 30, SEPT. 30,
2005 2004 2005 2004
------------ ------------ ------------ ------------
Net income (loss) - actual $ (193) $ (2,034) $ (722) $ (4,642)
Cost of product revenues,
amortization of intangible assets 113 75 339 75
Transaction costs 773 - 773 -
In-process research and development - 320 - 320
Amortization of intangible assets 39 73 140 73
Restructuring charges, net - (4) (46) 2,895
Recovery on building sublease - - - (359)
Impairment of long lived assets and other - 389 - 389
Amortization of deferred stock compensation - - - 204
Gain on sale of land - - - (105)
Net income (loss) - pro forma $ 732 $ (1,181) $ 484 $ (1,150)