Exhibit 99.1
NEWS RELEASE
Contact:
Mary McGowan
Summit IR Group Inc.
Phone: 408-522-3100 x7702
mary@summitirgroup.com
FOR IMMEDIATE RELEASE
ENDWAVE REPORTS FOURTH QUARTER AND FISCAL YEAR 2005 FINANCIAL RESULTS
Achieves Year-Over-Year Revenue Growth of 47% for Fiscal 2005
SUNNYVALE, Calif. - Feb. 2, 2006 - 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 fiscal year ended December 31, 2005.
Revenues were $13.1 million for the fourth quarter of 2005, compared with $11.4
million for the fourth quarter of 2004 and $14.3 million for the third quarter
of 2005. In accordance with U.S. Generally Accepted Accounting Principles
(GAAP), net loss for the fourth quarter of 2005 was $152,000, or $0.01 per
share, compared with net income for the fourth quarter of 2004 of $238,000, or
$0.02 per diluted share, and net loss for the third quarter of 2005 of $193,000,
or $0.02 per share.
Non-GAAP net income for the fourth quarter of 2005 was $78,000, or $0.01 per
diluted share, compared with non-GAAP net income for the fourth quarter of 2004
of $459,000, or $0.04 per diluted share, and non-GAAP net income for the third
quarter of 2005 of $732,000, or $0.06 per diluted share.
For the fourth quarter of 2005, non-GAAP net income was calculated by excluding
transaction costs of $78,000 for a suspended secondary offering and amortization
of intangible assets of $152,000. For the fourth quarter of 2004, non-GAAP net
income was calculated by excluding the amortization of intangible assets of
$221,000. For the third quarter of 2005, non-GAAP net income was calculated by
excluding transaction costs of $773,000 for a suspended secondary offering and
amortization of intangible assets of $152,000.
For the full year, total revenues were $48.7 million, compared with $33.2
million for 2004. GAAP net loss for the year ended December 31, 2005 was
$874,000, or $0.08 per share, compared with GAAP net loss for 2004 of $4.4
million, or $0.45 per share. Non-GAAP net income for the year ended December 31,
2005 was $562,000, or $0.05 per diluted share, compared with a non-GAAP net loss
for the year ended December 31, 2004 of $691,000, or $0.07 per share.
For fiscal 2005, non-GAAP net loss was calculated by excluding transaction costs
of $851,000, amortization of intangibles assets of $631,000 and the benefit from
the reversal of $46,000 of restructuring charges. For fiscal 2004, non-GAAP net
loss was calculated by excluding from net loss $2.9 million of impairment and
restructuring charges, $690,000 of amortization of intangibles and in-process
research and development, $105,000 gain on the sale of land, and $204,000 of
amortization of deferred stock compensation.
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Cash, cash equivalents and short-term investments as of December 31, 2005
increased by approximately $500,000 to $22.4 million from a balance of $21.9
million as of September 30, 2005.
"We are pleased with Endwave's strong fiscal year 2005 revenue growth of more
than 45 percent driven by revenue increases across all of our market segments.
Our Defense Systems Division, with nearly 65 percent year-over-year growth,
contributed to this strong performance and validated our strategic efforts to
expand beyond the telecommunications network business," said Ed Keible,
Endwave's CEO and President.
"As we enter 2006, we are excited about the expanding market opportunities for
our high-frequency RF modules. Going forward, we anticipate that growth in our
telecom revenues will continue to outpace that of the overall cellular
infrastructure market. In the defense electronics and homeland security markets,
we expect to see increased demand for high performance, microwave and
millimeter-wave subsystems that are Endwave's specialty," said Mr. Keible.
FOURTH QUARTER HIGHLIGHTS:
o Revenues were $13.1 million, 15% higher than the fourth quarter of
2004.
o Products were shipped to approximately 100 customers during the
quarter. The largest customers in Q4 were Nera, Nokia, and Siemens.
o Revenues attributable to customers in defense, homeland security, and
other non-telecom markets comprised 22 percent of total revenues, or
$2.8 million.
o Overall gross margin was 28 percent in the fourth quarter, and,
excluding development fees and amortization expense, was 27 percent
for the same period.
o Executed a long-term frame purchase agreement with Nokia Corporation,
providing continuity with the previous multi-year purchase agreement
between the companies.
o Partnered with Loea Corporation on 70/80 GHz multi-gigabit radios,
powered by Endwave's advanced Epsilon(R) Packaging and MLMS(R) IC
technology.
o Awarded a follow-on order from AAI Corporation for amplifiers used to
power the video downlink system used in the Shadow(R) Tactical
Unmanned Aerial Vehicle (TUAV) program.
o Extended the company-wide ISO 9001-2000 quality standard to include
the more stringent Aerospace Standard AS9100 certification.
o Completed Supplier Excellence Alliance (SEA) training after being
recommended by major defense primes for participation in the unique
SEA lean enterprise initiative.
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CONFERENCE CALL
Endwave Corporation will host the earnings call for the fourth quarter and year
ended December 31, 2005, today at 1:30 p.m. Pacific Standard Time. Investors are
invited to participate in the conference call by accessing one of two methods:
first, investors can listen to a live audio webcast of Endwave's quarterly
conference call on the investor relations section of the company's Web site at
http://www.endwave.com/investors. The webcast replay will be available on-line
after the earnings call at approximately 2:30 p.m. Pacific Standard Time, and
will continue to remain available for 90 calendar days after the call.
Alternatively, investors may access the live conference call by dialing (913)
981-5581, and entering the passcode "Endwave". In addition, 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 5
calendar days by dialing (719) 457-0820, and entering the passcode 1363407.
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 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.
USE OF NON-GAAP FINANCIAL INFORMATION
To supplement the company's consolidated financial statements presented in
accordance with U.S. Generally Accepted Accounting Principles (GAAP), Endwave
Corporation uses non-GAAP measures of certain components of financial
performance, including net income (loss) and per share data, which 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
the Company's current financial performance and the Company's prospects for the
future. Specifically, the company believes the non-GAAP results 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.
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"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.
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CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
DECEMBER 31, DECEMBER 31,
2005 2004
------------- -------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 8,456 $ 14,158
Restricted cash 25 -
Short-term investments 13,959 10,979
Accounts receivable, net 10,487 8,688
Inventories, net 13,448 7,866
Other current assets 560 477
------------- -------------
Total current assets 46,935 42,168
Property and equipment, net 1,321 2,394
Other assets 97 125
Goodwill and other intangible assets, net 4,796 5,407
------------- -------------
Total assets $ 53,149 $ 50,094
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable 2,954 3,587
Warranty accrual 3,257 4,488
Accrued compensation 2,494 1,370
Other accrued liabilities 976 1,026
------------- -------------
Total current liabilities 9,681 10,471
Other long-term liabilities 385 559
Total stockholders' equity 43,083 39,064
------------- -------------
Total liabilities and stockholders' equity $ 53,149 $ 50,094
============= =============
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share amounts)
(unaudited)
THREE MONTHS ENDED TWELVE MONTHS ENDED
----------------------------- -----------------------------
DEC. 31, 2005 DEC. 31, 2004 DEC. 31, 2005 DEC. 31, 2004
------------- ------------- ------------- -------------
Total revenues $ 13,073 $ 11,375 $ 48,735 $ 33,162
COSTS AND EXPENSES:
Cost of product revenues 9,331 7,754 33,134 22,389
Cost of product revenues, amortization of intangible assets 113 112 452 187
Research and development 1,669 1,505 6,488 4,957
Selling, general and administrative 2,208 1,789 9,327 7,527
Transaction costs 78 - 851 -
In-process research and development - - - 320
Amortization of intangible assets 39 109 179 182
Restructuring charges, net - - (46) 2,895
Recovery on building sublease - - - (359)
Impairment of long lived assets and other - - - 389
Amortization of deferred stock compensation - - - 204
Total costs and expenses 13,438 11,269 50,385 38,691
Income (loss) from operations (365) 106 (1,650) (5,529)
Interest and other income, net 213 132 776 1,125
Net income (loss) $ (152) $ 238 $ (874) $ (4,404)
Basic net income (loss) per share $ (0.01) $ 0.02 $ (0.08) $ (0.45)
Diluted net income (loss) per share $ (0.01) $ 0.02 $ (0.08) $ (0.45)
Weighted shares used in basic per share calculation 11,307,102 10,274,008 10,891,431 9,824,633
Weighted shares used in diluted per share calculation 11,307,102 11,215,014 10,891,431 9,824,633
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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, 2005 DEC. 31, 2004 DEC. 31, 2005 DEC. 31, 2004
------------- ------------- ------------- -------------
Total revenues $ 13,073 $ 11,375 $ 48,735 $ 33,162
COSTS AND EXPENSES:
Cost of product revenues 9,331 7,754 33,134 22,389
Research and development 1,669 1,505 6,488 4,957
Sales, general and administrative 2,208 1,789 9,327 7,527
Total costs and expenses 13,208 11,048 48,949 34,873
Income (loss) from operations (135) 327 (214) (1,711)
Interest and other income, net 213 132 776 1,020
Net income (loss) $ 78 $ 459 $ 562 $ (691)
Basic net income (loss) per share $ 0.01 $ 0.04 $ 0.05 $ (0.07)
Diluted net income (loss) per share $ 0.01 $ 0.04 $ 0.05 $ (0.07)
Weighted shares used in basic per share calculation 11,307,102 10,274,008 10,891,431 9,824,633
Weighted shares used in diluted per share calculation 11,629,104 11,215,014 11,676,805 9,824,633
1. Non-GAAP 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.
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GAAP TO NON-GAAP NET INCOME (LOSS) RECONCILIATION
(in thousands)
(unaudited)
THREE MONTHS ENDED TWELVE MONTHS ENDED
----------------------------- -----------------------------
DEC. 31, 2005 DEC. 31, 2004 DEC. 31, 2005 DEC. 31, 2004
------------- ------------- ------------- -------------
Net income (loss) - GAAP $ (152) $ 238 $ (874) $ (4,404)
Cost of product revenues, amortization of intangible assets 113 112 452 187
Transaction costs 78 - 851 -
In-process research and development - - - 320
Amortization of intangible assets 39 109 179 182
Restructuring charges, net - - (46) 2,895
Recovery on building sublease - - - (359)
Impairment of long lived assets and other - - - 389
Amortization of deferred stock compensation - - - 204
Gain on sale of land - - - (105)
Net income (loss) - Non-GAAP $ 78 $ 459 $ 562 $ (691)