Achieves Year-Over-Year Revenue Growth of 47% for Fiscal 2005
SUNNYVALE, Calif., Feb. 2 /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
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. 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: -- Revenues were $13.1 million,
15% higher than the fourth quarter of 2004. -- Products were
shipped to approximately 100 customers during the quarter. The
largest customers in Q4 were Nera, Nokia, and Siemens. -- Revenues
attributable to customers in defense, homeland security, and other
non-telecom markets comprised 22 percent of total revenues, or $2.8
million. -- Overall gross margin was 28 percent in the fourth
quarter, and, excluding development fees and amortization expense,
was 27 percent for the same period. -- Executed a long-term frame
purchase agreement with Nokia Corporation, providing continuity
with the previous multi-year purchase agreement between the
companies. -- Partnered with Loea Corporation on 70/80 GHz
multi-gigabit radios, powered by Endwave's advanced Epsilon(R)
Packaging and MLMS(R) IC technology. -- 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. -- Extended the company-wide ISO 9001-2000
quality standard to include the more stringent Aerospace Standard
AS9100 certification. -- Completed Supplier Excellence Alliance
(SEA) training after being recommended by major defense primes for
participation in the unique SEA lean enterprise initiative.
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. "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. CONDENSED CONSOLIDATED
BALANCE SHEETS (in thousands) (unaudited) December 31, 2005
December 31, 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 CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except share
and per share amounts) (unaudited) Three months ended Twelve months
ended Dec. 31, Dec. 31, Dec. 31, Dec. 31, 2005 2004 2005 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
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, Dec. 31, Dec. 31, Dec.
31, 2005 2004 2005 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. GAAP TO NON-GAAP NET INCOME
(LOSS) RECONCILIATION (in thousands) (unaudited) Three months ended
Twelve months ended Dec. 31, Dec. 31, Dec. 31, Dec. 31, 2005 2004
2005 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) FCMN Contact:
mark.hebeisen@endwave.com DATASOURCE: Endwave Corporation CONTACT:
Mary McGowan of Summit IR Group Inc., +1-408-522-3100, ext. 7702,
or , for Endwave Corporation Web site: http://www.endwave.com/
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