Exhibit 99.1
NEWS RELEASE
Contact:
Mary McGowan
Summit IR Group Inc.
408-404-5401
mary@summitirgroup.com
FOR IMMEDIATE RELEASE
ENDWAVE REPORTS FIRST QUARTER 2006 FINANCIAL RESULTS
Q1 REVENUES INCREASE MORE THAN 50% YEAR-OVER-YEAR
SUNNYVALE, Calif. - April 25, 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 quarter ended March 31, 2006.
Revenues were $13.7 million for the first quarter of 2006, compared with $9.1
million for the first quarter of 2005 and $13.1 million for the fourth quarter
of 2005. In accordance with accounting principles generally accepted in the
United States (GAAP), net loss for the first quarter of 2006 was $1.2 million,
or $0.10 per share, compared with net loss for the first quarter of 2005 of
$847,000, or $0.08 per share, and net loss for the fourth quarter of 2005 of
$152,000, or $0.01 per share.
Non-GAAP net loss for the first quarter of 2006 was $312,000, or $0.03 per
share, compared with non-GAAP net loss for the first quarter of 2005 of
$672,000, or $0.06 per share, and non-GAAP net income for the fourth quarter of
2005 of $78,000, or $0.01 per diluted share.
For the first quarter of 2006, non-GAAP net loss was calculated by excluding
amortization of intangible assets of $152,000 and non-cash stock compensation
expense of $714,000 related to the adoption of SFAS 123(R). For the first
quarter of 2005, non-GAAP net income was calculated by excluding the
amortization of intangible assets of $175,000. 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.
Cash and cash equivalents, restricted cash and short-term investments as of
March 31, 2006 were approximately $22.0 million, compared with $22.4 million at
December 31, 2005.
"We are pleased to have delivered over 50% year-over-year revenue growth in the
first quarter of 2006, making this the highest Q1 revenue in our history, in
spite of what is typically a slower quarter due to seasonal factors," said Ed
Keible, Endwave's Chief Executive Officer and President. "Sales growth was led
by strong demand from Siemens and Nera, and was driven primarily by 3G network
expansion in Europe."
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"In addition, our quarterly revenues in defense and homeland security markets
were up more than 70% year-over-year as we continued to execute on our strategy
to extend our reach into new growth markets," added Mr. Keible.
FIRST QUARTER FINANCIAL HIGHLIGHTS:
o Revenues were $13.7 million, up 51% compared with the year ago period,
and up 5% compared with the fourth quarter of 2005.
o The largest customers in the first quarter were Nera, Nokia and
Siemens.
o Revenues attributable to customers in defense electronics, homeland
security and other non-telecom markets grew to 23% of total revenues.
o GAAP gross margin was 26%, and non-GAAP gross margin was 28%. Non-GAAP
gross margin is adjusted for amortization of intangible assets and
non-cash stock compensation expense.
STRATEGIC HIGHLIGHTS:
o Entered into a multi-year agreement with Siemens for microwave radio
modules.
o Renewed a long-term supply agreement with Nokia that includes
next-generation products.
o Received customer qualification of the first products based on
Endwave's Epsilon(R) Packaging technology.
o Secured production orders from L-3 Communications SafeView for
next-generation Phase II switch arrays.
o Delivered its first RoHS-compliant transceiver for the wireless
industry in anticipation of the upcoming European Union deadlines.
o On April 24, 2006, Endwave sold preferred stock and warrants to Oak
Investment Partners XI, Limited Partnership for gross proceeds of $45
million to fund future growth and acquisitions.
CONFERENCE CALL
Endwave Corporation will report financial results for the first quarter of 2006
at 1:30 p.m. Pacific Time on April 25, 2006. 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 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) 981-5550, 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 three calendar
days by dialing (719) 457-0820, and entering the passcode 1428473.
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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 39 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 accounting principles generally accepted in the United States
(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 include accounting
principles generally accepted in the United States for gross margin, net loss
and net loss per share data, and may be 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, 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: 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. Endwave does not undertake
any obligation to update such forward-looking statements.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
MARCH 31, 2006 DECEMBER 31, 2005
-------------- -----------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 8,007 $ 8,456
Restricted cash 25 25
Short-term investments 13,927 13,959
Accounts receivables, net 11,092 10,487
Inventories 11,766 13,448
Other current assets 586 560
-------------- -----------------
Total current assets 45,403 46,935
Property and equipment, net 1,100 1,321
Other assets, net 97 97
Goodwill and intangible assets 4,644 4,796
-------------- -----------------
Total assets $ 51,244 $ 53,149
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 2,530 $ 2,954
Warranty accrual 3,149 3,257
Accrued compensation 1,746 2,494
Other accrued liabilities 809 976
-------------- -----------------
Total current liabilities 8,234 9,681
Other long-term liabilities 346 385
Total stockholders' equity 42,664 43,083
-------------- -----------------
Total liabilities and stockholders' equity $ 51,244 $ 53,149
============== =================
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share amounts)
(unaudited)
THREE MONTHS ENDED
-------------------------------
MARCH 31, 2006 MARCH 31, 2005
-------------- --------------
Total revenues $ 13,746 $ 9,100
COSTS AND EXPENSES:
Cost of product revenues 9,996 6,175
Cost of product revenues, amortization of intangible assets 113 113
Research and development 2,079 1,492
Sales, general and administrative 2,958 2,274
Amortization of intangible assets 39 62
Total costs and expenses 15,185 10,116
Loss from operations (1,439) (1,016)
Interest and other income, net 261 169
Net loss $ (1,178) $ (847)
Basic and diluted net loss per share $ (0.10) $ (0.08)
Weighted shares used in per-share calculation 11,364,680 10,518,656
NON-GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (1)
(in thousands, except share and per share amounts)
(unaudited)
THREE MONTHS ENDED
-------------------------------
MARCH 31, 2006 MARCH 31, 2005
-------------- --------------
Total revenues $ 13,746 $ 9,100
COSTS AND EXPENSES:
Cost of product revenues 9,908 6,175
Research and development 1,959 1,492
Sales, general and administrative 2,452 2,274
Total costs and expenses 14,319 9,941
Loss from operations (573) (841)
Interest and other income, net 261 169
Net loss $ (312) $ (672)
Basic and diluted net loss per share $ (0.03) $ (0.06)
Weighted shares used in per-share calculation 11,364,680 10,518,656
Basis of presentation:
- ----------------------
1.Non-GAAP operating results exclude amortization of intangible assets and
non-cash stock compensation expense.
GAAP TO NON-GAAP NET LOSS RECONCILIATION
(in thousands)
(unaudited)
THREE MONTHS ENDED
-------------------------------
MARCH 31, 2006 MARCH 31, 2005
-------------- --------------
GAAP net loss $ (1,178) $ (847)
Cost of product revenues, amortization of intangible assets 113 113
Cost of product revenues, stock compensation expense 88 -
Amortization of intangible assets 39 62
Research and development, stock compensation expense 120 -
Selling, general and administrative, stock
compensation expense 506 -
Non-GAAP net loss $ (312) $ (672)