Exhibit 99.1
ENDWAVE REPORTS THIRD QUARTER 2006 FINANCIAL RESULTS
COMPANY ACHIEVES RECORD REVENUES AND NET INCOME;
Q3 REVENUES INCREASE 32% YEAR-OVER-YEAR
SAN JOSE, Calif., Oct. 24 /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 third quarter ended September 30, 2006.
Revenues were $18.8 million for the third quarter of 2006, compared with
$14.3 million for the third quarter of 2005 and $16.3 million for the second
quarter of 2006. Net income, calculated in accordance with accounting principles
generally accepted in the United States (GAAP), for the third quarter of 2006
was $911,000, or $0.06 per diluted share, compared with net loss for the third
quarter of 2005 of $193,000, or $0.02 per share, and net loss for the second
quarter of 2006 of $207,000, or $0.02 per share.
Non-GAAP net income for the third quarter of 2006 was $2.0 million, or $0.14
per diluted share, compared with non-GAAP net income for the third quarter of
2005 of $732,000, or $0.06 per diluted share, and non-GAAP net income for the
second quarter of 2006 of $915,000, or $0.06 per diluted share.
For the third quarter of 2006, non-GAAP net income was calculated by
excluding amortization of intangible assets of $152,000, non-cash stock-based
compensation expense of $878,000 incurred as a result of the company's adoption
of SFAS 123R, and loss on sale of assets of $84,000 related to the relocation of
company headquarters. For the third quarter of 2005, non-GAAP net income was
calculated by excluding the expensing of transaction costs for a withdrawn
secondary offering of $773,000 and amortization of intangible assets of
$152,000. For the second quarter of 2006, non-GAAP net loss was calculated by
excluding amortization of intangible assets of $150,000 and non-cash stock-based
compensation expense of $972,000 incurred as a result of the company's adoption
of SFAS 123R.
Cash, cash equivalents and short-term investments as of September 30, 2006
were $66.7 million, compared with $67.0 million at June 30, 2006.
"We experienced record revenues and profits this quarter based on strong
customer demand for our mobile infrastructure products," said Ed Keible,
Endwave's Chief Executive Officer and President. "In addition, non-telecom
revenues increased 15 percent sequentially due to increased sales for our
high-frequency defense and homeland security sub-systems."
Third Quarter Highlights:
-- Revenues were $18.8 million for the third quarter of 2006, up 32%
compared with the year ago period, and up 15% compared with the second
quarter of 2006.
-- Revenues attributable to customers in telecom markets were approximately
$16.5 million; revenues attributable to customers in defense electronics,
homeland security and other non-telecom markets were approximately $2.4
million.
-- GAAP gross margin was 31%, and non-GAAP gross margin was 33%. Non-GAAP
gross margin was adjusted for amortization of intangible assets and
non-cash stock-based compensation expense.
-- The largest customers in the third quarter were Nera, Nokia and Siemens.
-- For the first nine months of 2006, revenues were $48.9 million, a 37%
increase over the first nine months of 2005.
-- The company began production of the complete RF mast system for L-3
SafeView's security portal scanner.
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) 981-5523 and enter the pass code "Endwave." A replay of the call will
be available approximately one hour following the conclusion of the call until
October 27. To access the replay, dial (719) 457-0820 (pass code 4329974). A
live and an archived webcast will also be available via the company's Web site.
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 San Jose, 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 income (loss) and net income (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)
September 30, December 31,
2006 2005
------------- -------------
Assets
Current assets
Cash and cash equivalents $ 31,030 $ 8,456
Short-term investments 35,658 13,959
Accounts receivables, net 12,822 10,487
Inventories 15,298 13,448
Other current assets 530 560
Total current assets 95,338 46,910
Property and equipment, net 1,941 1,321
Other assets 133 97
Restricted cash 261 25
Goodwill and intangible assets, net 4,342 4,796
Total assets $ 102,015 $ 53,149
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 5,556 $ 2,954
Warranty accrual 2,973 3,257
Accrued compensation 3,120 2,494
Other accrued liabilities 1,150 976
Total current liabilities 12,799 9,681
Other long-term liabilities 269 385
Total stockholders' equity 88,947 43,083
Total liabilities and stockholders' equity $ 102,015 $ 53,149
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,
2006 2005 2006 2005
------------ ------------ ------------ ------------
Total revenues $ 18,836 $ 14,320 $ 48,908 $ 35,662
Costs and expenses:
Cost of product revenues 12,815 9,669 34,245 23,803
Cost of product revenues,
amortization of
intangible assets 113 113 337 339
Research and development 2,389 1,708 6,579 4,819
Selling, general and
administrative 3,353 2,386 9,845 7,119
Transaction costs -- 773 -- 773
Amortization of intangible
assets 39 39 117 140
Restructuring charges, net -- -- -- (46)
Total costs and expenses 18,709 14,688 51,123 36,947
Income (loss) from operations 127 (368) (2,215) (1,285)
Interest and other income, net 784 175 1,741 563
Net income (loss) $ 911 $ (193) $ (474) $ (722)
Basic net income (loss)
per share $ 0.08 $ (0.02) $ (0.04) $ (0.07)
Diluted net income (loss)
per share $ 0.06 $ (0.02) $ (0.04) $ (0.07)
Weighted shares used in basic
per share calculation 11,436,417 11,078,344 11,403,728 10,752,423
Weighted shares used in diluted
per share calculation 14,676,969 11,078,344 11,403,728 10,752,423
NON-GAAP 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,
2006 2005 2006 2005
------------ ------------ ------------ ------------
Total revenues $ 18,836 $ 14,320 $ 48,908 $ 35,662
Costs and expenses:
Cost of product revenues 12,695 9,669 33,911 23,803
Research and development 2,260 1,708 6,170 4,819
Sales, general and
administrative 2,724 2,386 8,024 7,119
Total costs and expenses 17,679 13,763 48,105 35,741
Income (loss) from operations 1,157 557 803 (79)
Interest and other income, net 868 175 1,825 563
Net income (loss) $ 2,025 $ 732 $ 2,628 $ 484
Basic net income (loss)
per share $ 0.18 $ 0.07 $ 0.23 $ 0.05
Diluted net income (loss)
per share $ 0.14 $ 0.06 $ 0.19 $ 0.04
Weighted average shares used
in basic per share calculation 11,436,417 11,078,344 11,403,728 10,752,423
Weighted average shares used in
diluted per share calculation 14,780,725 11,856,369 13,515,196 11,358,463
Basis of presentation:
1. Non-GAAP operating results exclude amortization of intangible assets,
loss on sale of fixed assets related to the relocation of our corporate
headquarters, transaction costs, restructuring charges, and non-cash 2006
stock compensation expense.
GAAP TO NON-GAAP NET LOSS RECONCILIATION
(in thousands)
(unaudited)
Three months ended Nine months ended
--------------------------- ---------------------------
Sept. 30, Sept. 30 Sept. 30, Sept. 30
2006 2005 2006 2005
------------ ------------ ------------ ------------
GAAP net income (loss) $ 911 $ (193) $ (474) $ (722)
Cost of product revenues,
amortization of intangible assets 113 113 337 339
Cost of product revenues,
stock-based compensation expense 120 -- 334 --
Amortization of intangible assets 39 39 117 140
Restructuring charges, net -- -- -- (46)
Loss on sale of assets 84 -- 84 --
Transaction costs -- 773 -- 773
Research and development,
stock-based compensation expense 129 -- 409 --
Selling, general and administrative,
stock-based compensation expense 629 -- 1,821 --
Non-GAAP net income $ 2,025 $ 732 $ 2,628 $ 484
SOURCE Endwave Corporation
-0- 10/24/2006
/CONTACT: Mary McGowan of Summit IR Group Inc., +1-408-404-5401, or
mary@summitirgroup.com, for Endwave/
/Web site: http://www.endwave.com/