ENWV Endwave Corp. (MM)

Company Achieves Year-Over-Year Revenue Growth of 7% SAN JOSE, Calif., April 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 first quarter ended March 31, 2007. Revenues were $14.8 million for the first quarter of 2007, compared with $13.7 million for the first quarter of 2006 and $13.3 million for the fourth quarter of 2006. Net loss, calculated in accordance with accounting principles generally accepted in the United States (GAAP), for the first quarter of 2007 was $780,000, or $0.07 per share, compared with net loss for the first quarter of 2006 of $1.2 million, or $0.10 per share, and net loss for the fourth quarter of 2006 of $870,000, or $0.08 per share. Non-GAAP net income for the first quarter of 2007 was $214,000, or $0.01 per diluted share, compared with non-GAAP net loss for the first quarter of 2006 of $312,000, or $0.03 per share, and non-GAAP net income for the fourth quarter of 2006 of $229,000, or $0.02 per diluted share. For the first quarter of 2007, non-GAAP net income was calculated by excluding non-cash stock-based compensation expense of $842,000 and amortization of intangible assets of $152,000. As of March 31, 2007, Endwave's total assets were $98.5 million, including $66.7 million in cash, cash equivalents and investments. "We are pleased to report an increase in revenues of 7% year-over-year and 11% sequentially. This was achieved in a quarter that is typically slower and where we also faced the uncertainties associated with a merger of the Company's two largest customers," said Ed Keible, Endwave's CEO and President. "Earlier this month, we announced the acquisition of ALC Microwave, Inc., a leading supplier of high-precision logarithmic amplifier products for major defense contractors. ALC's technology enables us to offer RF subsystems for a broader range of defense electronics platforms and enhances Endwave's ability to further penetrate this market." Highlights: -- Q1 revenues were $14.8 million, an increase of 7% from the year ago period, and up 11% sequentially. -- Revenues attributable to customers in telecom markets were approximately $12.5 million; revenues attributable to customers in defense electronics, homeland security and other non-telecom markets were approximately $2.2 million. -- GAAP gross margin was 27% and non-GAAP gross margin was 29%. Non-GAAP gross margin was adjusted for amortization of intangible assets and non-cash stock-based compensation expense. -- Endwave was selected by a major wireless telecom OEM to design microwave radio transceivers for a new, software-defined, radio platform. -- On April 19, 2007, the Company announced the acquisition of ALC Microwave Inc., a leading supplier of logarithmic amplifier products used in electronic countermeasures, threat detection equipment, early warning radar and missile guidance systems for the defense market. Conference Call Endwave Corporation will hold a conference call to discuss the Company's financial results today, at 1:30 p.m. Pacific Time. Investors are invited to participate in the conference call by dialing 913-981-5543 (Pass code: Endwave) by 1:20 p.m. PT on April 24. Starting approximately one hour after the completion of the live call, a replay will also be available until April 27. To access the recording, dial (719) 457-0820 (Pass code: 6416329). Investors are also invited to listen to a live and/or archived webcast of Endwave's quarterly conference call on the investor relations section of the Company's Web site. The webcast replay will be available for 90 days. Upcoming Investor Conferences Endwave management will be presenting at the AeA MicroCap Investor Conference in Monterey, CA on May 7 and at the Piper Jaffray Semiconductor & Communications Conference in New York on May 9. Those wishing to listen to live and/or archived webcasts of available management presentations may do so at http://www.endwave.com/. 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 42 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; El Dorado Hills, 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 condensed 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. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) (unaudited) March 31, 2007 December 31, 2006 Assets Current assets Cash and cash equivalents $26,683 $26,176 Short-term investments 33,597 41,411 Accounts receivables, net 10,913 8,713 Inventories 14,159 17,127 Other current assets 491 640 Total current assets 85,843 94,067 Long-term investments 6,431 - Property and equipment, net 1,903 2,024 Other assets 112 110 Restricted cash 143 261 Goodwill and intangible assets 4,039 4,191 Total assets $98,471 $100,653 Liabilities and stockholders' equity Current liabilities: Accounts payable $2,978 $4,280 Accrued warranty 2,933 2,928 Accrued compensation 2,071 2,652 Other current liabilities 712 1,164 Total current liabilities 8,694 11,024 Other long-term liabilities 192 231 Total stockholders' equity 89,585 89,398 Total liabilities and stockholders' equity $98,471 $100,653 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except share and per share amounts) (unaudited) Three months ended March 31, 2007 March 31, 2006 Total revenues $14,751 $13,746 Costs and expenses: Cost of product revenues 10,620 9,996 Cost of product revenues, amortization of intangible assets 113 113 Research and development 2,405 2,079 Sales, general and administrative 3,199 2,958 Amortization of intangible assets 39 39 Total costs and expenses 16,376 15,185 Loss from operations (1,625) (1,439) Interest and other income, net 845 261 Net loss $(780) $(1,178) Basic and diluted net loss per share $(0.07) $(0.10) Weighted shares used in per-share calculation 11,549,789 11,364,680 NON-GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (1) (in thousands, except share and per share amounts) (unaudited) Three months ended March 31, 2007 March 31, 2006 Total revenues $14,751 $13,746 Costs and expenses: Cost of product revenues 10,515 9,908 Research and development 2,254 1,959 Sales, general and administrative 2,613 2,452 Total costs and expenses 15,382 14,319 Loss from operations (631) (573) Interest and other income, net 845 261 Net income (loss) $214 $(312) Basic net income (loss) per share $0.02 $(0.03) Diluted net income (loss) per share $0.01 $(0.03) Weighted shares used in basic per- share calculation 11,549,789 11,364,680 Weighted shares used in diluted per- share calculation 14,832,462 11,364,680 Basis of presentation: 1. Non-GAAP operating results exclude amortization of intangible assets and non-cash stock compensation expense. GAAP TO NON-GAAP NET INCOME (LOSS) RECONCILIATION (in thousands) (unaudited) Three months ended March 31, 2007 March 31, 2006 GAAP net loss $(780) $(1,178) Cost of product revenues, amortization of intangible assets 113 113 Cost of product revenues, stock compensation expense 105 88 Amortization of intangible assets 39 39 Research and development, stock compensation expense 151 120 Selling, general and administrative, stock compensation expense 586 506 Non-GAAP net income (loss) $214 $(312) Contact: Mary McGowan Summit IR Group Inc. Phone: 408-404-5401 DATASOURCE: Endwave Corporation CONTACT: Mary McGowan of Summit IR Group Inc., +1-408-404-5401, or , for Endwave Corporation Web site: http://www.endwave.com/

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