ENWV Endwave Corp. (MM)

Endwave Reports Second Quarter 2004 Financial Results Endwave Grows Revenues, Meets Guidance, and Generates $4.7 Million in Cash SUNNYVALE, Calif., July 28 /PRNewswire-FirstCall/ -- Endwave Corporation (NASDAQ:ENWV), a leading provider of radio frequency (RF) subsystems for carrier-class cellular backhaul infrastructure, broadband wireless networks, homeland security and defense systems, today reported financial results for its second quarter ended June 30, 2004. Endwave reported revenues of $7.6 million for the second quarter of 2004, compared with revenues of $6.6 million for the first quarter of 2004 and $8.5 million for the second quarter of 2003. Cash, cash equivalents and short-term investments as of June 30, 2004 increased by $4.7 million to $31.6 million from a balance of $26.9 million at March 31, 2004. GAAP net loss for the second quarter of 2004 was $429,000, or $0.04 loss per share, compared with GAAP net loss for the first quarter of 2004 of $2.2 million, or $0.23 loss per share and a GAAP net loss for the second quarter of 2003 of $1.9 million, or $0.21 loss per share. Pro forma net loss for the second quarter of 2004 was $344,000, or $0.04 loss per share, compared with pro forma net income for the first quarter of 2004 of $375,000, or $0.04 fully diluted earnings per share, and a pro forma net loss for the second quarter of 2003 of $1.8 million, or $0.20 loss per share. For the second quarter of 2004, pro forma net loss was calculated by excluding the amortization of deferred stock compensation charge of $85,000. For the first quarter of 2004, pro forma net income was calculated by excluding the net adjustments for a lease termination of $2.9 million, as well as recovery of loss on a sublease of $359,000, amortization of deferred stock compensation charges of $119,000 and a gain on the sale of land of $105,000. For the second quarter of 2003, pro forma net loss was calculated by excluding the amortization of deferred stock compensation charge of $84,000. Management believes that excluding the items described above may permit investors to better compare results from period to period and more accurately assess the company's prospects. "Revenues rebounded in the second quarter, and we also significantly increased our total cash position, including over $1 million generated by operations," said Ed Keible, Endwave's CEO and President. "With the acquisition of JCA Technology and growth in our core business, Endwave is projecting $18 to $20 million of revenue during the second half of 2004," added Keible. Endwave Second Quarter 2004 Summary: -- Revenues were $7.6 million, an increase of 14% from the first quarter of 2004. -- Revenues attributable to sales to customers in defense, homeland security, and other non-telecom markets comprised 10% of total revenues for the second quarter of 2004, or $762,000. -- Shipped products to 25 customers during the quarter, including 5 new customers. Our largest customers for the quarter were Nokia and Nera. -- Gross margin was 31% in the second quarter. -- Generated $4.3 million of cash from the sale and leaseback of real estate in Diamond Springs, California, resulting in a deferred gain of $777,000. -- Secured a next-generation supply agreement with a major European wireless telecom OEM for the production of integrated transceivers for advanced PDH radios. -- Furthered the development of lower frequency transceiver platforms for key customers to address the growing market demand for cellular infrastructure deployments in emerging markets. -- Completed the design and manufacture of prototype units of the RF distribution and switching network for design qualification and system testing with SafeView, Inc. -- Executed a development contract with a major defense contractor for a key microwave sub-system. -- Received purchase orders from Ceragon for transceivers to be used in their FibeAir(TM) Point-to-Point SDH radios for high-capacity network connectivity of mobile cellular infrastructure, fixed networks and private networks. Endwave will hold its regularly scheduled second quarter earnings call today at 1:30 p.m. Pacific Time, which will be available via web cast by logging on to the investor relations section of our website at http://www.endwave.com/investors . The web cast replay will be available online after the earnings call at approximately 2:30 p.m. Pacific Time, and will continue to remain available for 90 calendar days after the call. 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 888-203-1112 (domestically) or 719-457-0820 (internationally), and entering the confirmation code 319553. About Endwave Endwave Corporation develops and manufactures radio frequency (RF) subsystems for use in high-speed cellular backhaul networks, enterprise access, homeland security, defense electronics, commercial radar systems, and other broadband applications. These products include integrated transceivers, oscillators/synthesizers, high-power cellular switch-combiners, and RF modules (amplifiers, frequency multipliers, switches, and up/down-converters). Endwave has more than 35 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; San Jose, CA; Andover, MA; and Lamphun, Thailand. Additional information about the company can be accessed from the company's web site at http://www.endwave.com/ . "Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: 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. These statements include, but are not limited to, statements regarding forecasted future financial results. Actual results could differ materially from the forward-looking statements due to many factors, including the following: the risks that the integration of acquired business lines, products and subsidiaries will fail, products will fail to achieve market acceptance, the timing or existence of customer orders, market volatility and weakness, customer concentration, delays in the design process, production delays or cancellations due to product defects or defects in materials supplied by vendors, the length of our sales cycle, our ability to develop, introduce and market new products and product enhancements, changes in product mix or distribution channels; the demand for wireless networking products and end-user products that incorporate wireless technology; competitive technologies; and, technological difficulties and resource constraints encountered in developing, transitioning and/or introducing new products. Forward-looking statements contained in this press release 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 report on Form 10-K and subsequently filed reports on Form 10-Q. Condensed Balance Sheet (in thousands) June 30, December 31, 2004 2003 (unaudited) (audited) Assets Current assets Cash and cash equivalents $18,092 $13,408 Restricted cash -- 778 Short-term investments 13,486 15,890 Accounts receivables, net 5,537 6,581 Inventories, net 7,441 8,119 Other current assets 647 898 Total current assets 45,203 45,674 Property and equipment, net 2,778 7,260 Other assets, net 117 140 Total assets $48,098 $53,074 Liabilities and stockholders' equity Current liabilities: Accounts payable 1,618 3,088 Warranty accrual 4,754 5,835 Accrued compensation 946 1,139 Other accrued liabilities 948 1,090 Current portion of notes payable -- 516 Total current liabilities 8,266 11,668 Notes payable, less current portion -- 262 Other long-term liabilities 682 101 Total stockholders' equity 39,150 41,043 Total liabilities and stockholders' equity $48,098 $53,074 STATEMENTS OF OPERATIONS (in thousands, except share and per share amounts) (Unaudited) Three months ended Six months ended June 30, June 30, June 30, June 30, 2004 2003 2004 2003 Total revenues $7,576 $8,470 $14,193 $16,127 Costs and expenses: Cost of product revenues 5,257 6,190 9,228 13,192 Research and development 1,083 1,445 2,057 2,547 Sales, general and administrative 1,705 2,724 3,534 5,232 Loss (recovery) on building sublease and asset impairment -- (359) 3,071 Amortization of deferred stock compensation 85 84 204 596 Lease termination, net -- -- 2,899 -- Total costs and expenses 8,130 10,443 17,563 24,638 Loss from operations (554) (1,973) (3,370) (8,511) Interest and other, net 125 77 762 142 Net loss $(429) $(1,896) $(2,608) $(8,369) Basic and diluted net loss per share $(0.04) $(0.21) $(0.27) $(0.93) Weighted shares used in per- share calculation 9,655,341 9,056,441 9,563,724 9,035,666 PRO FORMA STATEMENTS OF OPERATIONS (1) (in thousands, except share and per share amounts) (Unaudited) Three months ended Six months ended June 30, June 30, June 30, June 30, 2004 2003 2004 2003 Total revenues $7,576 $8,470 $14,193 $16,127 Costs and expenses: Cost of product revenues 5,257 6,190 9,228 13,192 Research and development 1,083 1,445 2,057 2,547 Sales, general and administrative 1,705 2,724 3,534 5,232 Total costs and expenses 8,045 10,359 14,819 20,971 Loss from operations (469) (1,889) (626) (4,844) Interest and other, net 125 77 657 142 Net income (loss) $(344) $(1,812) $31 $(4,702) Basic net income (loss) per share $(0.04) $(0.20) $0.00 $(0.52) Diluted net income (loss) per share $(0.04) $(0.20) $0.00 $(0.52) Weighted shares used in basic per-share calculation 9,655,341 9,056,441 9,563,724 9,035,666 Weighted shares used in diluted per-share calculation 9,655,341 9,056,441 10,443,160 9,035,666 Basis of presentation: 1. Pro forma operating results exclude the amortization of deferred stock compensation, loss (recovery) on building sublease and asset impairment, net lease termination fee, and gain on sale of land. ACTUAL TO PRO FORMA NET LOSS RECONCILIATION (in thousands) (unaudited) Three months ended Six months ended June 30, June 30, June 30, June 30, 2004 2003 2004 2003 Net loss actual $(429) $(1,896) $(2,608) $(8,369) Loss (recovery) on building sublease and asset impairment -- -- (359) 3,071 Amortization of deferred stock compensation 85 84 204 596 Lease termination, net -- -- 2,899 -- Gain on sale of land -- -- (105) -- Net income (loss) pro forma $(344) $(1,812) $31 $(4,702) DATASOURCE: Endwave Corporation CONTACT: Julianne Biagini, Chief Financial Officer, +1-408-522-3105, or Mark Hebeisen, VP Marketing, +1-408-522-7702, both of Endwave Corporation Web site: http://www.endwave.com/

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