ENDWAVE CORP - 10-Q Quarterly Report

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2002

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

(Commission file number)

ENDWAVE CORPORATION

(Exact name of registrant as specified in its charter)

Delaware		95-4333817
(State of incorporation)		(I.R.S. Employer Identification No.)

990 Almanor Avenue, Sunnyvale, CA		94085
(Address of principal executive offices)		(Zip code)

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) Yes x No ¨, and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨.

The number of shares outstanding of the Registrant’s Common Stock as of October 31, 2002 was 8,944,981 shares.

ENDWAVE CORPORATION

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

ENDWAVE CORPORATION

CONDENSED BALANCE SHEETS

(In thousands, except share amounts)

	September 30, 2002			December 31, 2001
	(unaudited)			(1)
ASSETS
Current assets:
Cash and cash equivalents	$	14,601		$	21,303
Short-term investments		17,062			35,860
Accounts receivable, net		2,887			2,794
Accounts receivable from related party—TRW, Inc.		65			0
Inventories		13,704			17,166
Other current assets		97			413

Total current assets		48,416			77,536

Property, plant and equipment, net		13,506			20,366
Other assets, net		251			1,135

	$	62,173		$	99,037

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	661		$	2,807
Accounts payable to related party—TRW Inc.		1,817			3,076
Accrued liabilities		8,389			8,817
Capital lease obligations, current		1,825			2,712
Other current liabilities		491			655

Total current liabilities		13,183			18,067

Capital lease obligations, less current portion		1,068			2,882
Other long-term liabilities		198			959

Commitments and contingencies

Stockholders’ equity:
Common stock, $0.001 par value per share; 100,000,000 authorized, 8,944,981 and 8,904,377 issued and outstanding, respectively		9			9
Additional paid-in capital		304,932			304,815
Deferred stock compensation		(3,490	)		(5,516	)
Accumulated deficit		(253,665	)		(222,179	)
Treasury stock, at cost, 19,950 shares held at September 30, 2002		(62	)		—

Total stockholders’ equity		(47,724	)		77,129

	$	62,173		$	99,037

Derived from the Company’s audited financial statements as of December 31, 2001.

See accompanying notes.

ENDWAVE CORPORATION

CONDENSED STATEMENTS OF OPERATIONS

(In thousands, except share and per share amounts)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2002			2001			2002			2001
				(As restated)						(As restated)
Revenues:
Product revenues ($104, $0, $710 and $1,259 from related party—TRW Inc., respectively)	$	4,603		$	6,426		$	15,226		$	26,137
Development fees		351			—			351			619

Total revenues		4,954			6,426			15,577			26,756

Costs and expenses:
Cost of product revenues ($30, $0, $208 and $1,632 from related party—TRW Inc., respectively)		9,782			12,148			23,796			49,777
Research and development		2,137			3,674			7,901			10,307
Selling, general and administrative		2,233			3,082			6,933			9,317
Impairment of long-lived assets		—			—			—			90,411
Restructuring charge		4,860			868			7,893			6,743
Amortization of goodwill and other intangible assets		—			595			—			5,872
Amortization of deferred stock compensation		(20	)		856			2,026			5,273

Total costs and expenses		18,992			21,223			48,549			177,700

Loss from operations		(14,038	)		(14,797	)		(32,972	)		(150,944	)
Other income, net		97			504			1,485			2,296

Net loss	$	(13,941	)	$	(14,293	)	$	(31,487	)	$	(148,648	)

Basic and diluted net loss per share	$	(1.56	)	$	(1.62	)	$	(3.53	)	$	(17.06	)

Shares used in computing of basic and diluted net loss per share		8,944,981			8,839,575			8,922,995			8,711,511


* Amortization of deferred stock compensation:
Cost of product revenues	$	(449	)	$	211		$	140		$	1,552
Research and development		178			227			792			1,341
Selling, general and administrative		251			418			1,094			2,380

	$	(20	)	$	856		$	2,026		$	5,273

See accompanying notes.

ENDWAVE CORPORATION

CONDENSED STATEMENTS OF CASH FLOWS

	Nine Months Ended September 30,
	2002			2001
				(As restated)
Operating activities:
Net loss	$	(31,486	)	$	(148,648	)
Adjustments to reconcile net loss to net cash used by operating activities:
Depreciation		3,484			5,024
Amortization of goodwill and other intangible assets		—			5,872
Amortization of deferred stock compensation		2,026			5,273
Loss on the disposal of equipment		12			194
Impairment of long-lived assets		—			90,411
Restructuring charge		7,893			6,743
Changes in operating assets and liabilities:
Accounts receivable, net		(158	)		7,675
Inventories		5,618			4,608
Other assets		900			(2,764	)
Accounts payable		(2,161	)		(2,144	)
Accounts payable, related parties		(1,260

		Page
PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements	3

	Condensed Balance Sheets as of September 30, 2002 (unaudited) and December 31, 2001	3

	Unaudited Condensed Statements of Operations for the three and nine months ended September 30, 2002 and 2001	4

	Unaudited Condensed Statements of Cash Flows for the nine months ended September 30, 2002 and 2001	5

	Notes to Condensed Financial Statements	6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	11

Item 3.	Qualitative and Quantitative Disclosures about Market Risk	16

Item 4.	Controls and Procedures	16

PART II.	OTHER INFORMATION

Item 6.	Exhibits and Reports on Form 8-K	17

SIGNATURE		18

CERTIFICATION		19

EXHIBITS		21

Table of Contents

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Table of Contents

Table of Contents

Table of Contents