Endwave Corporation (Nasdaq:ENWV), a leading provider of
high-frequency RF solutions for mobile communications networks,
today reported financial results for its second quarter of 2009,
which ended on June 30, 2009.
On April 30, 2009, Endwave sold its defense electronics and
security (D&S) business for $28 million in cash. The Company’s
financial statements reflect D&S as a discontinued
operation.
Revenues from continuing operations for the second quarter of
2009 were $5.6 million. This compares with revenues from these same
operations of $7.2 million in the prior quarter and $12.1 million
in the year ago period. Net loss from continuing operations,
calculated in accordance with accounting principles generally
accepted in the United States (GAAP), for the second quarter of
2009 was $2.0 million, or $0.21 per share. Income from discontinued
operations of $18.6 million in the second quarter of 2009
represents the gain on the sale of the D&S business partially
offset by a loss from its operations.
Non-GAAP Results from Continuing Operations
Non-GAAP net loss in the second quarter of 2009 was $1.4
million, or $0.15 per share. This compares with non-GAAP net loss
of $919,000 in the prior quarter, or $0.10 per share, and non-GAAP
net income of $781,000 or $0.09 per share in the year ago period.
For the second quarter of 2009, non-GAAP net loss was calculated by
excluding income from discontinued operations of $18.6 million,
non-cash stock-based compensation expense of $407,000 and
restructuring charges of $166,000. For the first quarter of 2009,
non-GAAP net loss was calculated by excluding restructuring charges
of $1.1 million, loss from discontinued operations of $1.1 million
and non-cash stock-based compensation expense of $607,000. For the
second quarter of 2008, non-GAAP net loss was calculated by
excluding non-cash stock-based compensation expense of $829,000 and
loss from discontinued operations of $712,000.
Cash, cash equivalents and investments as of June 30, 2009 were
$68.7 million, compared with $40.6 million as of March 31, 2009.
The increase in cash is largely the result of the net cash
generated by the sale of the D&S business.
“Our key customers continue to experience a challenging
macroeconomic environment that ultimately slows near-term demand
for our products. Nevertheless, we remain focused on the
development of RF solutions for mobile communications networks, and
are steadfast in our objective to be a leading merchant supplier,”
said Ed Keible, Endwave's Vice Chairman and CEO. “We believe we are
positioning Endwave to accelerate revenue and improve our overall
financial performance as the worldwide economy recovers.”
Key Executive Change
“At this time, I would also like to announce a key executive
change within our organization. Effective immediately, Endwave’s
Chief Operating Officer, John Mikulsky, has been promoted to the
position of President, taking responsibility for all of the
company’s current operations and technology. John has been
instrumental in the planning and execution of our operating
strategy since 2005 and has been a valued member of the senior
management team since 1996,” said Keible. “With John taking the day
to day responsibility for the business, I will assume the
additional position as Vice Chairman of the Board with a mandate to
focus on strategic initiatives and structure for the company.”
Conference Call
Endwave Corporation will hold a conference call to discuss its
financial results today at 1:30 p.m. Pacific time (PT). Investors
are invited to participate in the conference call by dialing (480)
629-9867 (Conference ID: 4107653) by 1:20 p.m. PT. Starting
approximately one hour after the completion of the live call, a
replay will also be available until August 4. To access the
recording, dial (303) 590-3030 (Access Code: 4107653). 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
solutions that enable the transmission, reception and processing of
high-frequency signals in mobile communications networks. Endwave
has 41 issued patents covering its core technologies including
semiconductor and proprietary circuit designs. Endwave Corporation
is headquartered in San Jose, CA, with operations in Salem, NH 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 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: global economic
conditions and their impact on our customers; 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) June 30, 2009
December 31, 2008 Assets
Current assets Cash and cash equivalents $ 49,191 $ 33,998
Short-term investments 19,476 11,350 Accounts receivables, net
4,374 4,762 Inventories 4,984 14,454 Other current assets
927 738
Total current assets 78,952
65,302 Property and equipment, net 1,976 4,220 Other assets
171 218 Restricted cash - 600
Total
assets $ 81,099 $ 70,340
Liabilities and stockholders' equity Current
liabilities: Accounts payable $ 1,184 $ 2,263 Accrued warranty
1,262 2,439 Accrued compensation 768 2,811 Other current
liabilities 982 713
Total current
liabilities 4,196 8,226 Other long-term
liabilities 99 73 Total stockholders' equity 76,804
62,041
Total liabilities and stockholders' equity
$ 81,099 $ 70,340 CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except
share and per share amounts) (unaudited)
Three months ended
Six months ended
June 30, 2009 June 30, 2008
June 30, 2009 June 30, 2008 Total
revenues $ 5,580 $
12,093 $ 12,822 $
22,553 Costs and expenses:
Cost of product
revenues 4,237 7,976
9,056 15,095 Research and
development 1,306 1,680
3,011 2,841 Selling, general and
administrative 1,935 2,757
4,293 5,536 Restructuring
166 - 1,233
-
Total costs and expenses
7,644 12,413
17,593 23,472
Loss from continuing operations (2,064
) (320 ) (4,771
) (919 ) Interest and other
income, net 94 294
200 733
Loss from continuing
operations before provision for income taxes $
(1,970 ) $ (26 ) $
(4,571 ) $ (186 )
Provision for income taxes (13 ) 22
(21 ) 22
Loss from continuing
operations $ (1,957 )
$ (48 ) $ (4,550 )
$ (208 ) Income (loss) from discontinued
operations, net of tax 18,597
(712 ) 17,530 (2,488 )
Net income
(loss) $ 16,640 $
(760 ) $ 12,980 $
(2,696 )
Basic and diluted net loss per share from
continuing operations $ (0.21 )
$ (0.01 ) $ (0.48
) $ (0.02 ) Basic and diluted
net income (loss) per share from discontinued operations
$ 1.97 $ (0.08 )
$ 1.86 $ (0.27 )
Basic and diluted net income (loss) per share
$ 1.76 $ (0.08 )
$ 1.38 $ (0.29 )
Shares used in calculating basic and diluted net income (loss)
per share 9,460,395
9,187,183 9,403,482
9,164,682 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, 2009 June 30, 2008
June 30, 2009 June 30, 2008 Total
revenues $ 5,580 $
12,093 $ 12,822 $
22,553 Costs and expenses:
Cost of product revenues
4,208 7,876 8,946
14,909 Research and development 1,246
1,515 2,823 2,522
Selling, general and administrative 1,617
2,193 3,577 4,440
Total costs and expenses 7,071
11,584 15,346
21,871 Income (loss) from operations
(1,491 ) 509
(2,524 ) 682 Interest and other
income, net 94 294 200
733
Income (loss) before provision for
income taxes $ (1,397 )
$ 803 $ (2,324 ) $
1,415 Provision for income taxes (13 )
22 (21 ) 22
Net income (loss)
$ (1,384 ) $ 781
$ (2,303 ) $ 1,393
Basic and diluted net income (loss) per share
$ (0.15 ) $ 0.09 $
(0.24 ) $ 0.15 Shares used in
calculating basic and diluted net income (loss) per share
9,460,395
9,187,183 9,403,482
9,164,682
Basis of presentation:
1. Non-GAAP operating results
exclude non-cash stock compensation expense, restructuring and
discontinued operations.
GAAP TO NON-GAAP NET INCOME (LOSS) RECONCILIATION (in
thousands) (unaudited)
Three months ended Six months
ended June 30, 2009 June 30,
2008 June 30, 2009 June 30, 2008 GAAP
net income (loss ) $ 16,640
$ (760 ) $ 12,980
$ (2,696 ) Cost of product revenues,
stock-based compensation expense 29
100 110 186
Research and development, stock-based compensation expense
60 165 188
319 Selling, general and administrative, stock-based
compensation expense 318 564
716 1,096 Restructuring
166 - 1,233
- (Income) loss from discontinued operations,
net of tax (18,597 ) 712
(17,530 ) 2,488
Non-GAAP net income
(loss) $ (1,384 ) $
781 $ (2,303 ) $
1,393
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