Exhibit 99.1
ENDWAVE REPORTS SECOND QUARTER 2006 FINANCIAL RESULTS
Q2 REVENUES INCREASE 33% YEAR-OVER-YEAR, ACHIEVING HIGHEST QUARTERLY REVENUES
IN COMPANY HISTORY
SUNNYVALE, Calif., July 25 /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 second quarter ended June 30, 2006.
Revenues were $16.3 million for the second quarter of 2006, compared with
$12.2 million for the second quarter of 2005 and $13.7 million for the first
quarter of 2006. In accordance with accounting principles generally accepted in
the United States (GAAP), net loss for the second quarter of 2006 was $207,000,
or $0.02 per share, compared with net income for the second quarter of 2005 of
$318,000, or $0.03 per diluted share, and net loss for the first quarter of 2006
of $1.2 million, or $0.10 per share.
Non-GAAP net income for the second quarter of 2006 was $915,000, or $0.07
per diluted share, compared with non-GAAP net income for the second quarter of
2005 of $424,000, or $0.04 per diluted share, and non-GAAP net loss for the
first quarter of 2006 of $312,000, or $0.03 per share.
For the second quarter of 2006, non-GAAP net income was calculated by
excluding amortization of intangible assets of $150,000 and non-cash stock-
based compensation expense of $972,000 related to SFAS 123(R). For the second
quarter of 2005, non-GAAP net income was calculated by excluding the
amortization of intangible assets of $152,000, and a restructuring benefit of
$46,000. 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-
based compensation expense of $714,000 related to SFAS 123(R).
Cash, cash equivalents and short-term investments as of June 30, 2006 were
approximately $67 million, compared with $21.9 million at March 31, 2006.
Approximately $43 million of this increase resulted from the preferred financing
completed by Endwave during the quarter, and approximately $2 million was
generated by Company operations.
"We are pleased to see the strong year-over-year revenue growth, producing
the largest quarterly revenues in our history. In addition, we achieved improved
gross margin while continuing to introduce new products into both our telecom
and non-telecom markets," said Ed Keible, Endwave's Chief Executive Officer and
President.
Second Quarter Financial Highlights:
* Revenues were $16.3 million for the second quarter of 2006, up 33%
compared with the year ago period, and up 19% compared with the first quarter of
2006.
* Revenues were $30.1 million for the first six months of 2006, a 41%
increase over the first six months of 2005.
* The largest customers in the second quarter were Nera, Nokia and Siemens.
* Revenues attributable to customers in telecom markets were approximately
$14.3 million; revenues attributable to customers in defense electronics,
homeland security and other non-telecom markets were approximately $2.1 million.
* GAAP gross margin was 29%, and non-GAAP gross margin was 31%. Non-GAAP
gross margin is adjusted for amortization of intangible assets and non-cash
stock-based compensation expense.
Strategic Highlights:
* 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.
* Began initial production deliveries to L-3 SafeView for the newly designed
Phase II switch arrays.
* Delivered its first transceiver modules operating in the 70 and 80 GHz
bands, commonly referred to as "E-Band."
* Eight different MultiLithic MicroSystem (MLMS(TM)) circuits were
incorporated into RF module solutions and delivered to multiple customers this
quarter.
* Introduced its proprietary Epsilon(TM) Packaging to its fourth customer.
Conference Call
Endwave Corporation will hold a conference call to discuss the Company's
financial results today, at 1:30 p.m. Pacific Time. Those wishing to join should
dial (913) 981-4913 and enter the pass code "Endwave." A replay of the call will
be available approximately one hour following the conclusion of the call until
July 28. To access the replay, dial (719) 457-0820 (pass code 1829491). A live
and an archived webcast will also be available via the Company's Web site at
http://www.endwave.com/investors .
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 gross
margin, net loss and net 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 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, 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)
June 30, December 31,
2006 2005
------------ ------------
Assets
Current assets
Cash and cash equivalents $ 30,097 $ 8,456
Short-term investments 36,853 13,959
Accounts receivables, net 11,921 10,487
Inventories 13,420 13,448
Other current assets 479 560
Total current assets 92,770 46,910
Property and equipment, net 1,940 1,321
Other assets, net 129 97
Restricted cash 261 25
Goodwill and intangible assets, net 4,494 4,796
Total assets $ 99,594 $ 53,149
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 6,239 $ 2,954
Warranty accrual 3,048 3,257
Accrued compensation 1,935 2,494
Other accrued liabilities 1,040 976
Total current liabilities 12,262 9,681
Other long-term liabilities 308 385
Total stockholders' equity 87,024 43,083
Total liabilities and stockholders'
equity $ 99,594 $ 53,149
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share amounts)
(unaudited)
Three months ended Six months ended
---------------------------- ----------------------------
June 30, June 30, June 30, June 30,
2006 2005 2006 2005
------------ ------------ ------------ ------------
Total revenues $ 16,326 $ 12,242 $ 30,072 $ 21,342
Costs and expenses:
Cost of product revenues 11,434 7,959 21,430 14,134
Cost of product revenues,
amortization of intangible
assets 111 113 224 226
Research and development 2,111 1,619 4,190 3,111
Selling, general and
administrative 3,534 2,459 6,492 4,733
Amortization of intangible
assets 39 39 78 101
Restructuring charges, net (46) (46)
Total costs and expenses 17,229 12,143 32,414 22,259
Income (loss) from operations (903) 99 (2,342) (917)
Interest and other income, net 696 219 957 388
Net income (loss) $ (207) $ 318 $ (1,385) $ (529)
Basic net income (loss) per
share $ (0.02) $ 0.03 $ (0.12) $ (0.05)
Diluted net income (loss) per
share $ (0.02) $ 0.03 $ (0.12) $ (0.05)
Weighted shares used in
basic per share
calculation 11,410,087 10,659,553 11,387,384 10,589,105
Weighted shares used in
diluted per share
calculation 11,410,087 11,699,649 11,387,384 10,589,105
NON-GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (1)
(in thousands, except share and per share amounts)
(unaudited)
Three months ended Six months ended
---------------------------- ----------------------------
June 30, June 30, June 30, June 30,
2006 2005 2006 2005
------------ ------------ ------------ ------------
Total revenues $ 16,326 $ 12,242 $ 30,072 $ 21,342
Costs and expenses:
Cost of product revenues 11,308 7,959 21,216 14,134
Research and development 1,951 1,619 3,910 3,111
Sales, general and
administrative 2,848 2,459 5,300 4,733
Total costs and expenses 16,107 12,037 30,426 21,978
Income (loss) from operations 219 205 (354) (636)
Interest and other income, net 696 219 957 388
Net income (loss) $ 915 $ 424 $ 603 $ (248)
Basic net income (loss)
per share $ 0.08 $ 0.04 $ 0.05 $ (0.02)
Diluted net income (loss)
per share $ 0.07 $ 0.04 $ 0.05 $ (0.02)
Weighted average shares
used in basic per share
calculation 11,410,087 10,659,553 11,387,384 10,589,105
Weighted average shares
used in diluted per share
calculation 14,048,008 11,699,649 12,859,352 10,589,105
Basis of presentation:
1. Non-GAAP operating results exclude amortization of intangible assets,
restructuring charges, and non-cash stock compensation expense.
GAAP TO NON-GAAP NET LOSS RECONCILIATION
(in thousands)
(unaudited)
Three months ended Six months ended
---------------------------- ----------------------------
June 30, June 30, June 30, June 30,
2006 2005 2006 2005
------------ ------------ ------------ ------------
GAAP net income (loss) $ (207) $ 318 $ (1,385) $ (529)
Cost of product revenues,
amortization of intangible assets 111 113 224 226
Cost of product revenues, stock-based
compensation expense 126 -- 214 --
Amortization of intangible assets 39 39 78 101
Restructuring charges, net -- (46) -- (46)
Research and development, stock-based
compensation expense 160 -- 280 --
Selling, general and administrative,
stock-based compensation expense 686 -- 1,192 --
Non-GAAP net income (loss) $ 915 $ 424 $ 603 $ (248)
SOURCE Endwave Corporation
-0- 07/25/2006
/CONTACT: Mary McGowan of Summit IR Group Inc., +1-408-404-5401, or
mary@summitirgroup.com, for Endwave Corporation/
/Web site: http://www.endwave.com /
(ENWV)