Endwave Corporation (Nasdaq: ENWV), a leading provider of
high-frequency RF solutions for mobile communications networks,
today reported financial results for its third quarter of 2009,
which ended on September 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 the D&S business as a discontinued
operation.
Revenues from continuing operations for the third quarter of
2009 were $3.1 million. This compares with revenues from these same
operations of $5.6 million in the prior quarter and $10.9 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 third quarter of 2009
was $2.6 million, or $0.27 per share. This compares with a net loss
from continuing operations of $2.0 million, or $0.21 per share, in
the prior quarter, and a net loss from continuing operations of
$173,000, or $0.02 per share in the year ago period.
Non-GAAP Results from Continuing Operations
Non-GAAP net loss in the third quarter of 2009 was $1.7 million,
or $0.18 per share. This compares with non-GAAP net loss of $1.4
million, or $0.15 per share in the prior quarter and non-GAAP net
income of $599,000, or $0.05 per diluted share in the year ago
period.
For the third quarter of 2009, non-GAAP net loss was calculated
by excluding non-cash stock-based compensation expense of $939,000,
income from discontinued operations, net of tax of $41,000 and the
reversal of certain restructuring charges that resulted in a gain
of $21,000. 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 third
quarter of 2008, non-GAAP net loss was calculated by excluding
non-cash stock-based compensation expense of $772,000 and loss from
discontinued operations of $826,000.
Cash, cash equivalents and investments as of September 30, 2009
were $68.2 million, compared with $68.7 million as of June 30,
2009.
“We are pleased with our management of cash flow in spite of the
reduced level of revenue during the quarter,” said Curt Sacks,
Endwave’s Senior Vice President and Chief Financial Officer. “In
the face of the current economic challenges we will continue to
carefully manage our cash and maintain a strong balance sheet.”
“While we are disappointed in our revenues for the third
quarter, we continue to position ourselves for long-term success,”
noted John Mikulsky, Endwave’s President and Chief Operating
Officer. “As announced in September, we have launched a new product
line of microwave and millimeter wave integrated circuits with the
goal of expanding our business opportunities, and driving revenue
as the economy improves.”
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)
629-9726 (Conference ID: 4164788) by 1:20 p.m. PT. Starting
approximately one hour after the completion of the live call, a
replay will also be available until November 3. To access the
recording, dial (303) 590-3030 (Access Code: 4164788). 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) September 30, 2009
December 31, 2008 Assets
Current assets Cash and cash equivalents $ 46,507 $ 33,998
Short-term investments 21,731 11,350 Accounts receivables, net
2,069 4,762 Inventories 6,155 14,454 Other current assets
1,025 738
Total current assets 77,487
65,302 Property and equipment, net 1,891 4,220 Other assets
190 218 Restricted cash - 600
Total
assets $ 79,568 $ 70,340
Liabilities and stockholders' equity Current
liabilities: Accounts payable $ 1,589 $ 2,263 Accrued warranty
1,162 2,439 Accrued compensation 712 2,811 Other current
liabilities 718 713
Total current
liabilities 4,181 8,226 Other long-term
liabilities 111 73 Total stockholders' equity 75,276
62,041
Total liabilities and stockholders' equity
$ 79,568 $ 70,340 CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except
share and per share amounts) (unaudited) Three
months ended Nine months ended
September 30, 2009 September 30, 2008
September 30, 2009 September 30, 2008 Total
revenues $ 3,126 $
10,871 $ 15,948 $
33,424 Costs and expenses:
Cost of product revenues 2,369
7,005 11,425
22,100 Research and development 1,452
1,736 4,463 4,577
Selling, general and administrative 1,968
2,595 6,261 8,131
Restructuring (21 ) -
1,212 -
Total costs and expenses
5,768 11,336
23,361 34,808
Loss from continuing operations (2,642
) (465 ) (7,413
) (1,384 ) Interest and other
income (expense), net (3 ) 292
197 1,025
Loss from continuing
operations before provision for income taxes
(2,645 ) (173 )
(7,216 ) (359 ) Provision
(benefit) for income taxes (11 ) (32 )
22
Loss from continuing operations
(2,634 ) (173 )
(7,184 ) (381 )
Income (loss) from discontinued operations, net of tax 41
(826 ) 17,571
(3,314 )
Net income (loss) $ (2,593 )
$ (999 ) $ 10,387
$ (3,695 )
Basic and diluted net loss per share from
continuing operations $ (0.27 )
$ (0.02 ) $ (0.76 )
$ (0.04 ) Basic and diluted net
income (loss) per share from discontinued operations $
0.00 $ (0.09 ) $
1.85 $ (0.36 ) Basic
and diluted net income (loss) per share $ (0.27
) $ (0.11 ) $ 1.10
$ (0.40 ) Shares used in
calculating basic and diluted net income (loss) per share
9,625,583 9,216,760
9,477,516
9,182,041 NON-GAAP CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS (1) (in thousands, except share and
per share amounts) (unaudited)
Three months ended
Nine months ended September 30, 2009
September 30, 2008 September 30, 2009
September 30, 2008 Total revenues $
3,126 $ 10,871 $
15,948 $ 33,424 Costs and
expenses: Cost of
product revenues 2,289 6,901
11,235 21,810 Research and development
1,266 1,585 4,089
4,107 Selling, general and administrative 1,295
2,078 4,872 6,518
Total costs and expenses 4,850
10,564 20,196
32,435 Income (loss) from operations
(1,724 ) 307
(4,248 ) 989 Interest and other
income (expense), net (3 ) 292 197
1,025
Income (loss) before provision for
income taxes (1,727 )
599 (4,051 ) 2,014
Provision (benefit) for income taxes (11 ) -
(32 ) 22
Net income (loss) $
(1,716 ) $ 599 $
(4,019 ) $ 1,992 Basic net
income (loss) per share $ (0.18 )
$ 0.06 $ (0.42 ) $
0.22 Diluted net income (loss) per share $
(0.18 ) $ 0.05 $
(0.42 ) $ 0.16 Shares used in
calculating basic net income (loss) per share
9,625,583 9,216,760
9,477,516 9,182,041 Shares
used in calculating diluted net income (loss) per share
9,625,583 12,344,673
9,477,516 12,330,665
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 Nine months ended
September 30, 2009 September 30, 2008
September 30, 2009 September 30, 2008 GAAP net
income (loss ) $ (2,593 ) $
(999 ) $ 10,387 $
(3,695 ) Cost of product revenues, stock-based
compensation expense 80 104 190
290 Research and development, stock-based
compensation expense 186 151 374
470 Selling, general and administrative,
stock-based compensation expense 673 517
1,389 1,613 Restructuring
(21 ) - 1,212 - (Income)
loss from discontinued operations, net of tax (41 )
826 (17,571 ) 3,314
Non-GAAP net
income (loss) $ (1,716 ) $
599 $ (4,019 ) $
1,992
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