Endwave Reports First Quarter 2001 Results

Apr 26, 2001, 01:00 ET from Endwave Corporation

    SUNNYVALE, Calif., April 26 /PRNewswire/ --
 Endwave Corporation (Nasdaq: ENWV), the leading provider of radio frequency
 (RF) subsystems for ultra-broadband wireless access networks, today reported
 its results for the quarter ended March 31, 2001.
     Net revenues for the first quarter of 2001 were $12.5 million, compared
 with pro forma revenues of $7.3 million for the same quarter last year,
 representing an increase of 71%. Pro forma net loss for the quarter ended
 March 31, 2001, which excludes amortization of intangibles, goodwill,
 restructuring and other non-recurring charges, was $8.6 million, or
 $0.25 per share, compared with a pro forma net loss of $8.5 million, or
 $0.37 per share, for the same quarter last year.
     "Although our first quarter revenues were somewhat below our expectations,
 tight cost controls enabled us to achieve our pro forma bottom line
 objectives," said Edward A. Keible, Jr., chief executive officer and president
 of Endwave. "The revenue shortfall was the result of weakness in the domestic
 CLEC multipoint market. In contrast, we have made progress in booking orders
 for our high data rate point-to-point access and mobile infrastructure
 products. Over the past few months, we have signed new contracts with certain
 customers in the mobile wireless market, such as Allgon, and added a
 significant new point-to-point customer."
     On April 25, 2001, Endwave announced that it has acquired certain assets
 of M/A-COM's broadband wireless business. With this acquisition, Endwave gains
 key high-performance YIG (Yttrium Iron Garnet) oscillator and synthesizer
 technology, an experienced RF and electrical engineering design team, and a
 highly experienced and specialized technical manufacturing team supporting the
 YIG synthesizer products.
     The acquisition is expected to add approximately $4 million to
 2001 revenues. The increased revenues will partially offset a revenue
 shortfall the company expects to experience from the weakness in the
 multipoint market, as the company's largest U.S.-based multipoint customer has
 put deliveries on indefinite hold due to slowing demand and inventory
 concerns. Additionally, a large European customer is adjusting inventory
 levels during the second quarter.
     Endwave projects revenues of between $40 million and $50 million for the
 fiscal year 2001. This forecast includes revenues resulting from the
 acquisition from M/A-COM and excludes any future business from all
 North America-based multipoint customers. Revenues in the second quarter are
 expected to be approximately $7 to $8 million, followed by a stronger
 second half, as shipments to both new and existing customers are expected to
 increase. The reduced revenues in the second quarter will result in a greater
 loss for that quarter than in the first quarter, but the company remains
 cautiously optimistic about achieving its stated operating objectives in the
 third and fourth quarters.
     "Weakness in the overall telecom equipment, and multipoint market
 specifically, is causing us to revise our 2001 top-line estimates, and we are
 maintaining a cautious outlook on business in the near-term," Keible said.
 "Yet, the acquisition of broadband wireless assets from M/A-COM positions us
 to take advantage of opportunities in the growing high data rate
 point-to-point market."
     Endwave is accelerating its manufacturing transition and cost reduction
 plans to compensate for the revenue shortfall, and is implementing other cost
 savings measures. Additionally, the acquisition from M/A-COM will provide the
 company with an integrated product offering that, once transitioned to its
 volume manufacturing facility in Diamond Springs, will contribute to an
 improvement in gross margin.
     Actual results for the first quarter 2001 include non-recurring charges of
 $13.2 million for restructuring costs associated with transitioning
 manufacturing to the Diamond Springs facility and the writedown of inventory
 and equipment associated with the multipoint market. Actual net loss for the
 first quarter 2001 was $29.2 million, or $0.85 per share, compared with a loss
 of $2.0 million for the same period last year. Additionally, due to the recent
 industry downturn, Endwave is currently evaluating the carrying value of
 certain long-lived assets consisting primarily of goodwill. The company may
 record additional charges to reduce the carrying value of these assets. These
 charges, if any, may be recorded as an adjustment to Endwave's financial
 statement at March 31, 2001, and the company would reflect such adjustments in
 subsequent SEC filings.
     Separately, Endwave announced that it will promote Julianne M. Biagini,
 effective May 1, to the position of Senior Vice President and Chief Financial
 Officer. Biagini has been with Endwave for seven years and has served as Vice
 President of Finance and Administration and Corporate Secretary for six years.
 Previously, she was the manager of accounting and tax at Exponent, Inc. and a
 tax specialist at KPMG Peat Marwick. She succeeds Bruce M. Margetson, who has
 chosen to pursue other business opportunities.
     "Bruce has made a significant contribution to Endwave," said Keible. "He
 managed our successful IPO, built a strong finance team and helped direct our
 business strategy. We wish him all the best in his new endeavors. We are very
 fortunate that we have Julie on board to fill Bruce's position and to make for
 a natural transition of our CFO responsibilities."
     Endwave will conduct a conference call at 1:30 p.m. PDT this afternoon,
 which will be available via webcast by logging in to the investor relations
 section of our website at www.endwave.com. The webcast replay will be
 available approximately one hour after the conclusion of the call and will
 remain available for seven days after the call.
 
     About Endwave
     Endwave Corporation is a provider of radio frequency (RF) subsystems that
 enable the transmission and reception of data signals in broadband wireless
 systems. The company develops and manufactures products used in high-speed
 cellular backhaul, point-to-point access and point-to-multipoint access
 applications. These products include RF-modules, synthesizers, integrated
 transceivers, broadband antennas and outdoor units. Endwave has more than
 30 issued patents covering its core technologies including semiconductor,
 circuit and antenna designs as well as its Flip-Chip Integrated Circuit (FCIC)
 technology. Endwave Corporation is headquartered in Sunnyvale, Calif.
 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:  Statements in this press release may contain forward-looking
 statements within the meaning of the Federal securities laws and are subject
 to the safe harbors created thereby. The following are among the factors that
 could cause actual results to differ materially from the forward-looking
 statements:  The risks that products will fail to achieve market acceptance,
 the timing of customer orders, delays in the design process, 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 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 report
 on form 10-K with the Commission for the year ended December 31, 2000.
 
                       PRO FORMA STATEMENTS OF OPERATIONS
               (in thousands, except share and per share amounts)
 
                                                           Quarter ended
                                                     March 31,       March 31,
                                                       2001            2000
     Revenues
     Total revenues                                   $12,533         $7,318
     Costs and expenses:
     Cost of product revenues                          16,572          9,245
     Research and development                           2,688          3,808
     Sales, general and administrative                  3,059          2,058
     Total costs and expenses                          22,319         15,111
     Loss from operations                              (9,786)        (7,793)
     Interest income (expense) and other, net           1,191           (677)
     Proforma net loss                                 (8,595)        (8,470)
     Proforma basic and diluted net loss per share     $(0.25)
     Weighted shares used in per-share calculation 34,150,086
 
         Basis of presentation:
         Pro forma excludes the amortization of intangibles, deferred stock
     compensation, restructuring reserves, and write down of inventory and
     assets.
 
                            STATEMENTS OF OPERATIONS
               (in thousands, except share and per share amounts)
 
                                                           Quarter ended
                                                     March 31,       March 31,
                                                       2001             2000
 
     Revenues
     Product revenues                                 $12,454         $4,191
     Costs and expenses:
     Cost of product revenues, including
      $9.4 M and $0M in non-recurring inventory
      write offs, respectively                         26,017          4,465
     Research and development                           2,688            984
     Sales, general and administrative                  3,059            990
     Restructuring charges and asset write offs         3,715             --
     Amortizaton of goodwill and other intangible
      assets                                            4,802            384
     In-process research and development                   --             --
     Amortization of deferred stock compensation        2,633             --
     Total costs and expenses                          42,914          6,823
     Loss from operations                             (30,381)        (2,632)
     Interest income and other, net                     1,191             --
     Net loss before income tax benefit               (29,190)        (2,632)
     Income tax benefit                                    --            627
     Net loss                                        $(29,190)       $(2,005)
     Basic and diluted net loss per share              $(0.85)
     Weighted shares used in per-share
      calculation                                  34,150,086
 
 
         Basis of presentation:
         The net loss per share for the three months ended March 31, 2001 has
     been calculated using the net loss applicable to common stockholders and
     the weighted average actual outstanding stock of Endwave subsequent to the
     merger.Net loss per share has not been presented for periods prior to the
     merger as there were no common shares outstanding.
 
                            CONDENSED BALANCE SHEET
                                 (in thousands)
 
                                                     March 31,    December 31,
                                                       2001            2000
 
     Assets
     Current assets
     Cash and cash equivalents                        $68,383        $74,061
     Short-term investment                             17,724         26,559
     Accounts receivable, net                           7,664          7,761
     Inventories, net                                  12,246         19,828
     Other current assets                               1,250          1,364
     Total current assets                             107,267        129,573
     Property and equipment, net                       25,580         25,077
     Goodwill and Other intangibles, net               90,237         95,039
     Other assets, net                                    744            736
     Total assets                                    $224,002       $250,665
 
     Liabilities and stockholders' equity
     Current liabilities:
     Accounts payable                                   8,321         13,788
     Other accrued liabilities                          6,399          4,525
     Current portion of capital lease
      obligations                                       2,289          2,707
     Total current liabilities                         17,009         21,020
     Non current liabilities                            8,871          5,015
     Total stockholders' equity                       198,122        224,630
     Total liabilities and stockholders' equity      $224,002       $250,665
 
                      MAKE YOUR OPINION COUNT - Click Here
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SOURCE Endwave Corporation
    SUNNYVALE, Calif., April 26 /PRNewswire/ --
 Endwave Corporation (Nasdaq: ENWV), the leading provider of radio frequency
 (RF) subsystems for ultra-broadband wireless access networks, today reported
 its results for the quarter ended March 31, 2001.
     Net revenues for the first quarter of 2001 were $12.5 million, compared
 with pro forma revenues of $7.3 million for the same quarter last year,
 representing an increase of 71%. Pro forma net loss for the quarter ended
 March 31, 2001, which excludes amortization of intangibles, goodwill,
 restructuring and other non-recurring charges, was $8.6 million, or
 $0.25 per share, compared with a pro forma net loss of $8.5 million, or
 $0.37 per share, for the same quarter last year.
     "Although our first quarter revenues were somewhat below our expectations,
 tight cost controls enabled us to achieve our pro forma bottom line
 objectives," said Edward A. Keible, Jr., chief executive officer and president
 of Endwave. "The revenue shortfall was the result of weakness in the domestic
 CLEC multipoint market. In contrast, we have made progress in booking orders
 for our high data rate point-to-point access and mobile infrastructure
 products. Over the past few months, we have signed new contracts with certain
 customers in the mobile wireless market, such as Allgon, and added a
 significant new point-to-point customer."
     On April 25, 2001, Endwave announced that it has acquired certain assets
 of M/A-COM's broadband wireless business. With this acquisition, Endwave gains
 key high-performance YIG (Yttrium Iron Garnet) oscillator and synthesizer
 technology, an experienced RF and electrical engineering design team, and a
 highly experienced and specialized technical manufacturing team supporting the
 YIG synthesizer products.
     The acquisition is expected to add approximately $4 million to
 2001 revenues. The increased revenues will partially offset a revenue
 shortfall the company expects to experience from the weakness in the
 multipoint market, as the company's largest U.S.-based multipoint customer has
 put deliveries on indefinite hold due to slowing demand and inventory
 concerns. Additionally, a large European customer is adjusting inventory
 levels during the second quarter.
     Endwave projects revenues of between $40 million and $50 million for the
 fiscal year 2001. This forecast includes revenues resulting from the
 acquisition from M/A-COM and excludes any future business from all
 North America-based multipoint customers. Revenues in the second quarter are
 expected to be approximately $7 to $8 million, followed by a stronger
 second half, as shipments to both new and existing customers are expected to
 increase. The reduced revenues in the second quarter will result in a greater
 loss for that quarter than in the first quarter, but the company remains
 cautiously optimistic about achieving its stated operating objectives in the
 third and fourth quarters.
     "Weakness in the overall telecom equipment, and multipoint market
 specifically, is causing us to revise our 2001 top-line estimates, and we are
 maintaining a cautious outlook on business in the near-term," Keible said.
 "Yet, the acquisition of broadband wireless assets from M/A-COM positions us
 to take advantage of opportunities in the growing high data rate
 point-to-point market."
     Endwave is accelerating its manufacturing transition and cost reduction
 plans to compensate for the revenue shortfall, and is implementing other cost
 savings measures. Additionally, the acquisition from M/A-COM will provide the
 company with an integrated product offering that, once transitioned to its
 volume manufacturing facility in Diamond Springs, will contribute to an
 improvement in gross margin.
     Actual results for the first quarter 2001 include non-recurring charges of
 $13.2 million for restructuring costs associated with transitioning
 manufacturing to the Diamond Springs facility and the writedown of inventory
 and equipment associated with the multipoint market. Actual net loss for the
 first quarter 2001 was $29.2 million, or $0.85 per share, compared with a loss
 of $2.0 million for the same period last year. Additionally, due to the recent
 industry downturn, Endwave is currently evaluating the carrying value of
 certain long-lived assets consisting primarily of goodwill. The company may
 record additional charges to reduce the carrying value of these assets. These
 charges, if any, may be recorded as an adjustment to Endwave's financial
 statement at March 31, 2001, and the company would reflect such adjustments in
 subsequent SEC filings.
     Separately, Endwave announced that it will promote Julianne M. Biagini,
 effective May 1, to the position of Senior Vice President and Chief Financial
 Officer. Biagini has been with Endwave for seven years and has served as Vice
 President of Finance and Administration and Corporate Secretary for six years.
 Previously, she was the manager of accounting and tax at Exponent, Inc. and a
 tax specialist at KPMG Peat Marwick. She succeeds Bruce M. Margetson, who has
 chosen to pursue other business opportunities.
     "Bruce has made a significant contribution to Endwave," said Keible. "He
 managed our successful IPO, built a strong finance team and helped direct our
 business strategy. We wish him all the best in his new endeavors. We are very
 fortunate that we have Julie on board to fill Bruce's position and to make for
 a natural transition of our CFO responsibilities."
     Endwave will conduct a conference call at 1:30 p.m. PDT this afternoon,
 which will be available via webcast by logging in to the investor relations
 section of our website at www.endwave.com. The webcast replay will be
 available approximately one hour after the conclusion of the call and will
 remain available for seven days after the call.
 
     About Endwave
     Endwave Corporation is a provider of radio frequency (RF) subsystems that
 enable the transmission and reception of data signals in broadband wireless
 systems. The company develops and manufactures products used in high-speed
 cellular backhaul, point-to-point access and point-to-multipoint access
 applications. These products include RF-modules, synthesizers, integrated
 transceivers, broadband antennas and outdoor units. Endwave has more than
 30 issued patents covering its core technologies including semiconductor,
 circuit and antenna designs as well as its Flip-Chip Integrated Circuit (FCIC)
 technology. Endwave Corporation is headquartered in Sunnyvale, Calif.
 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:  Statements in this press release may contain forward-looking
 statements within the meaning of the Federal securities laws and are subject
 to the safe harbors created thereby. The following are among the factors that
 could cause actual results to differ materially from the forward-looking
 statements:  The risks that products will fail to achieve market acceptance,
 the timing of customer orders, delays in the design process, 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 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 report
 on form 10-K with the Commission for the year ended December 31, 2000.
 
                       PRO FORMA STATEMENTS OF OPERATIONS
               (in thousands, except share and per share amounts)
 
                                                           Quarter ended
                                                     March 31,       March 31,
                                                       2001            2000
     Revenues
     Total revenues                                   $12,533         $7,318
     Costs and expenses:
     Cost of product revenues                          16,572          9,245
     Research and development                           2,688          3,808
     Sales, general and administrative                  3,059          2,058
     Total costs and expenses                          22,319         15,111
     Loss from operations                              (9,786)        (7,793)
     Interest income (expense) and other, net           1,191           (677)
     Proforma net loss                                 (8,595)        (8,470)
     Proforma basic and diluted net loss per share     $(0.25)
     Weighted shares used in per-share calculation 34,150,086
 
         Basis of presentation:
         Pro forma excludes the amortization of intangibles, deferred stock
     compensation, restructuring reserves, and write down of inventory and
     assets.
 
                            STATEMENTS OF OPERATIONS
               (in thousands, except share and per share amounts)
 
                                                           Quarter ended
                                                     March 31,       March 31,
                                                       2001             2000
 
     Revenues
     Product revenues                                 $12,454         $4,191
     Costs and expenses:
     Cost of product revenues, including
      $9.4 M and $0M in non-recurring inventory
      write offs, respectively                         26,017          4,465
     Research and development                           2,688            984
     Sales, general and administrative                  3,059            990
     Restructuring charges and asset write offs         3,715             --
     Amortizaton of goodwill and other intangible
      assets                                            4,802            384
     In-process research and development                   --             --
     Amortization of deferred stock compensation        2,633             --
     Total costs and expenses                          42,914          6,823
     Loss from operations                             (30,381)        (2,632)
     Interest income and other, net                     1,191             --
     Net loss before income tax benefit               (29,190)        (2,632)
     Income tax benefit                                    --            627
     Net loss                                        $(29,190)       $(2,005)
     Basic and diluted net loss per share              $(0.85)
     Weighted shares used in per-share
      calculation                                  34,150,086
 
 
         Basis of presentation:
         The net loss per share for the three months ended March 31, 2001 has
     been calculated using the net loss applicable to common stockholders and
     the weighted average actual outstanding stock of Endwave subsequent to the
     merger.Net loss per share has not been presented for periods prior to the
     merger as there were no common shares outstanding.
 
                            CONDENSED BALANCE SHEET
                                 (in thousands)
 
                                                     March 31,    December 31,
                                                       2001            2000
 
     Assets
     Current assets
     Cash and cash equivalents                        $68,383        $74,061
     Short-term investment                             17,724         26,559
     Accounts receivable, net                           7,664          7,761
     Inventories, net                                  12,246         19,828
     Other current assets                               1,250          1,364
     Total current assets                             107,267        129,573
     Property and equipment, net                       25,580         25,077
     Goodwill and Other intangibles, net               90,237         95,039
     Other assets, net                                    744            736
     Total assets                                    $224,002       $250,665
 
     Liabilities and stockholders' equity
     Current liabilities:
     Accounts payable                                   8,321         13,788
     Other accrued liabilities                          6,399          4,525
     Current portion of capital lease
      obligations                                       2,289          2,707
     Total current liabilities                         17,009         21,020
     Non current liabilities                            8,871          5,015
     Total stockholders' equity                       198,122        224,630
     Total liabilities and stockholders' equity      $224,002       $250,665
 
                      MAKE YOUR OPINION COUNT - Click Here
                http://tbutton.prnewswire.com/prn/11690X63048650
 
 SOURCE  Endwave Corporation