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 of 2008, which ended on September 30,
2008. Revenues were $17.0 million for the third quarter of 2008,
compared with $13.8 million for the third quarter of 2007 and $17.3
million for the second quarter of 2008. Net loss, calculated in
accordance with accounting principles generally accepted in the
United States (GAAP), for the third quarter of 2008 was $999,000,
or $0.11 per share, compared with net loss for the third quarter of
2007 of $1.7 million, or $0.14 per share, and net loss for the
second quarter of 2008 of $760,000, or $0.08 per share. Non-GAAP
net income for the third quarter of 2008 was $334,000, or $0.03 per
diluted share, compared with non-GAAP net loss for the third
quarter of 2007 of $215,000, or $0.02 per share, and non-GAAP net
income for the second quarter of 2008 of $648,000, or $0.05 per
diluted share. For the third quarter of 2008, non-GAAP net income
was calculated by excluding non-cash stock-based compensation
expense of $1.0 million and amortization of intangible assets of
$328,000. For the third quarter of 2007, non-GAAP net income was
calculated by excluding non-cash stock-based compensation expense
of $1.1 million and amortization of intangible assets of $329,000.
For the second quarter of 2008, non-GAAP net income was calculated
by excluding non-cash stock-based compensation expense of $1.1
million and amortization of intangible assets of $328,000. Cash,
cash equivalents and investments as of September 30, 2008 were
$44.1 million, comparable to the $44.0 million at June 30, 2008.
"We are pleased to have generated strong year-over-year revenue
gains driven by increased demand for our non-telecom products,
which represented over one third of our September quarter
revenues,� said Ed Keible, Endwave's CEO and President. �We believe
our strategy to diversify our product offerings beyond the telecom
market is beginning to provide the expected benefits. Although we
are in a challenging and uncertain credit environment, our cash
position remains strong and we are confident in our ability to
weather the current economic turbulence.� Conference Call Endwave
Corporation will hold a conference call to discuss its financial
results today at 1:30 p.m. Pacific time. Investors are invited to
participate in the conference call by dialing (303) 262-2140 by
1:20 p.m. Pacific time. Starting approximately one hour after the
completion of the live call, a replay will also be available until
October 28. To access the recording, dial (303) 590-3000 (Pass
code: 11120864 #). 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 website at
www.endwave.com. The webcast replay will be available for 90 days.
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 43 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 Endwave
can be accessed from its web site at www.endwave.com. Use of
Non-GAAP Financial Information To supplement Endwave's condensed
consolidated financial statements presented in accordance with
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 may 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 Endwave�s current financial performance and
Endwave�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: volatility resulting from consolidation of key
customers; 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) � � � �
September 30, 2008 � December 31, 2007 Assets � Current assets Cash
and cash equivalents $ 29,085 $ 38,992 Short-term investments
14,976 5,464 Accounts receivables, net 10,277 9,362 Inventories
15,670 12,434 Other current assets � 1,413 � � 1,168 Total current
assets 71,421 67,420 Long-term investments -�� 4,501 Property and
equipment, net 3,751 2,999 Other assets 239 212 Restricted cash 625
25 Goodwill and intangible assets, net � 6,489 � � 7,432 Total
assets $ 82,525 � $ 82,589 � Liabilities and stockholders' equity
Current liabilities: Accounts payable $ 4,264 $ 3,422 Accrued
warranty 2,672 2,712 Accrued compensation 3,134 2,240 Other current
liabilities � 762 � � 2,251 Total current liabilities 10,832 10,625
� Other long-term liabilities 24 116 Total stockholders' equity �
71,669 � � 71,848 Total liabilities and stockholders' equity $
82,525 � $ 82,589 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share amounts) (unaudited) � �
� � � � � � Three months ended Nine months ended � � Sept. 30, 2008
� Sept. 30, 2007 Sept. 30, 2008 � Sept. 30, 2007 Total revenues � $
16,979 � � $ 13,794 � $ 48,440 � � $ 42,084 � Costs and expenses: �
� � � � � � Cost of product revenues � � 11,798 � � � 9,940 � �
33,529 � � � 30,768 � Cost of product revenues, amortization of
intangible assets � � 149 � � � 149 � � 447 � � � 399 � Research
and development � � 2,943 � � � 2,792 � � 8,715 � � � 7,906 �
Selling, general and administrative � � 3,200 � � � 3,230 � � 9,927
� � � 9,709 � Amortization of intangible assets � � 179 � � � 180 �
� 537 � � � 352 � Total costs and expenses � � 18,269 � � � 16,291
� � 53,155 � � � 49,134 � Loss from operations � � (1,290 ) � �
(2,497 ) � (4,715 ) � � (7,050 ) Interest and other income, net � �
291 � � � 842 � � 1,042 � � � 2,708 � Loss before provision for
income taxes � � (999 ) � � (1,655 ) � (3,673 ) � � (4,342 )
Provision for income taxes � � -�� � � � -�� � � 22 � � � -�� � Net
loss � $ (999 ) � $ (1,655 ) $ (3,695 ) � $ (4,342 ) Basic and
diluted net loss per share � $ (0.11 ) � $ (0.14 ) $ (0.40 ) � $
(0.37 ) Shares used in calculating basic and diluted net loss per
share � � 9,216,760 � � � 11,618,746 � � 9,182,041 � � � 11,590,059
� 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, 2008 �
Sept. 30, 2007 Sept. 30, 2008 � Sept. 30, 2007 Total revenues � $
16,979 � $ 13,794 � $ 48,440 � � $ 42,084 � Costs and expenses: � �
� � � � � Cost of product revenues � � 11,610 � � 9,740 � � 32,975
� � � 30,273 � Research and development � � 2,718 � � 2,562 � �
8,021 � � � 7,294 � Selling, general and administrative � � 2,608 �
� 2,549 � � 8,085 � � � 7,715 � Total costs and expenses � � 16,936
� � 14,851 � � 49,081 � � � 45,282 � Income (loss) from operations
� � 43 � � (1,057 ) � (641 ) � � (3,198 ) Interest and other
income, net � � 291 � � 842 � � 1,042 � � � 2,708 � Income (loss)
before provision for income taxes � � 334 � � (215 ) � 401 � � �
(490 ) Provision for income taxes � � -�� � � -�� � � 22 � � � -��
� Net income (loss) � $ 334 � $ (215 ) $ 379 � � $ (490 ) Basic net
income (loss) per share � $ 0.04 � $ (0.02 ) $ 0.04 � � $ (0.04 )
Diluted net income (loss) per share � $ 0.03 � $ (0.02 ) $ 0.03 � �
$ (0.04 ) Shares used in calculating basic net income (loss) per
share � � 9,216,760 � � 11,618,746 � � 9,182,041 � � � 11,590,059 �
Shares used in calculating diluted net income (loss) per share � �
12,344,673 � � 11,618,746 � � 12,330,665 � � � 11,590,059 � � �
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 Nine
months ended � � Sept. 30, 2008 � Sept. 30, 2007 Sept. 30, 2008 �
Sept. 30, 2007 GAAP net loss � $ (999 ) � $ (1,655 ) $ (3,695 ) � $
(4,342 ) Cost of product revenues, amortization of intangible
assets � � 149 � � � 149 � � 447 � � � 399 � Cost of product
revenues, stock-based compensation expense � � 188 � � � 200 � �
554 � � � 495 � Amortization of intangible assets � � 179 � � � 180
� � 537 � � � 352 � Research and development, stock-based
compensation expense � � 225 � � � 230 � � 694 � � � 612 � Selling,
general and administrative, stock-based compensation expense � �
592 � � � 681 � � 1,842 � � � 1,994 � Non-GAAP net income (loss) �
$ 334 � � $ (215 ) $ 379 � � $ (490 )
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