OTTAWA, ONTARIO -- (Marketwire) -- 05/03/12 -- DragonWave Inc. (TSX: DWI)(NASDAQ: DRWI) a leading global supplier of packet microwave radio systems for mobile and access networks, today announced financial results for the fourth quarter and full fiscal year 2012, ended February 29, 2012. All figures are in U.S. dollars and were prepared in accordance with U.S. generally accepted accounting principles.
Revenue for the fourth quarter of fiscal year 2012 was $9.2 million, compared with $11.8 million in the third quarter of fiscal year 2012 and $15.1 million in the fourth quarter of fiscal year 2011. Revenue from customers within North America was $4.8 million, compared with $8.2 million in the third quarter of this fiscal year and $10.2 million in the fourth quarter of fiscal year 2011. DragonWave had 2 customers who each contributed more than 10% of revenue in the fourth quarter.
Gross margin for the fourth quarter of fiscal year 2012 was 13%, compared with 41% in the third quarter of fiscal year 2012 and 29% in the fourth quarter of fiscal year 2011. The gross margins in the fourth quarters of fiscal years 2012 and 2011 reflect the inclusion of inventory impairment provisions of $1.7 million and $2.0 million respectively.
Net and comprehensive loss applicable to shareholders in the fourth quarter of fiscal year 2012 was $13.4 million or ($0.38) per basic and diluted share. This compares to a net and comprehensive loss applicable to shareholders of $8.0 million or ($0.23) per basic diluted share in the third quarter of fiscal year 2012 and net loss of $8.9 million or ($0.25) per basic and diluted share in the fourth quarter of fiscal year 2011.
"Earlier today, in a separate press release, we announced a transformational event for DragonWave - the amended agreement between DragonWave and Nokia Siemens Networks for DragonWave to acquire the Nokia Siemens Networks' microwave transport business and associated operational support system and support functions," said DragonWave President and CEO Peter Allen. "In addition, through this strategic partnership, DragonWave becomes the preferred strategic supplier of packet microwave solutions and related products to Nokia Siemens Networks, and the companies will jointly coordinate technology development activities.
"Nokia Siemens Networks is a leading global supplier of complete solutions for broadband mobile networks. The company is demonstrating strong momentum with numerous new LTE customer wins," continued Mr. Allen. "Industry-best high-capacity packet microwave backhaul from DragonWave will form a key component and strategic advantage of NSN's complete solution for broadband mobile networks."
Cash, cash equivalents, restricted cash, and short-term investments totaled $53.0 million at the end of the fourth quarter of fiscal year 2012, compared to $60.2 million at the end of the third quarter, and $89.7 million at the end of the fourth quarter of fiscal year 2011.
Revenue for the full fiscal year 2012 was $45.7 million, compared with $118.0 million for the prior fiscal year. Net and comprehensive loss applicable to shareholders for the full fiscal year 2012 was $33.5 million or ($0.94) per basic and diluted share.
Revenue Outlook for First Quarter Fiscal Year 2013
DragonWave expects revenue for the first quarter of fiscal year 2013 to be in the range of $12 million to $14 million.
Webcast and Conference Call Details:
The DragonWave management team will discuss the results on a webcast and conference call beginning at 8:30 a.m. Eastern Time today, May 3, 2012.
The live webcast and presentation slides will be available at the Investor Relations section of the DragonWave website at: http://investor.dragonwaveinc.com/events.cfm
An archive of the webcast will be available at the same link.
Conference call dial-in numbers:
-- Toll-free North America: (877) 312-9202 -- International: (408) 774-4000
U.S. Filings
DragonWave has filed its Form 40-F with the U.S. Securities and Exchange Commission (SEC). A copy of the Form 40-F is available on the DragonWave investor website at http://investor.dragonwaveinc.com/.
DragonWave shareholders may request a printed copy of the complete audited financial
statements, free of charge, at http://investor.dragonwaveinc.com/contactus.cfm, or by regular mail at Shareholder Services, DragonWave Inc., 411 Legget Drive, Suite 600, Ottawa, Ontario, K2K 3C9.
About DragonWave
DragonWave® is a leading provider of high-capacity packet microwave solutions that drive next-generation IP networks. DragonWave's carrier-grade point-to-point packet microwave systems transmit broadband voice, video and data, enabling service providers, government agencies, enterprises and other organizations to meet their increasing bandwidth requirements rapidly and affordably. The principal application of DragonWave's products is wireless network backhaul. Additional solutions include leased line replacement, last mile fiber extension and enterprise networks. DragonWave's corporate headquarters is located in Ottawa, Ontario, with sales locations in Europe, Asia, the Middle East and North America. For more information, visit http://www.dragonwaveinc.com.
DragonWave® is a registered trademark of DragonWave Inc.
Forward-Looking Statements
Certain statements in this release, including the estimate of the revenue range for the first quarter of fiscal year 2013 and the statements regarding the transactions involving Nokia Siemens Networks (the "NSN Transactions"), constitute forward-looking statements or forward-looking information within the meaning of applicable securities laws. These statements are subject to certain assumptions, risks and uncertainties. Material factors and assumptions used to develop revenue estimates include DragonWave's expectations regarding: the network deployment plans of its existing and new customers, and the volume and timing of orders, shipments and revenue recognition. The NSN Transactions are subject to closing conditions, including no material adverse effect. Material factors and assumptions relating to the NSN Transactions include the parties' beliefs regarding the industry and markets in which the parties operate; successful completion of the proposed transaction; and expectations regarding potential synergies and prospects for the business if the transaction is closed. The NSN Transactions are subject to risks, including: the risks that the parties will not proceed with the transactions for any reason; that the ultimate terms of the transactions will differ from those that are currently contemplated; that if the transactions are completed, that expected synergies will not materialize; that unexpected costs will be incurred to integrate the business; or that end-customer demand will not meet expectations.
In particular, the completion of the NSN Transactions is subject to a number of terms and conditions, including, without limitation, no occurrence of a material adverse effect. These conditions to the transaction may not be satisfied, in which case the NSN Transactions could be modified, restructured or terminated. Material risks and uncertainties following closing of the NSN Transactions are described under the heading "Risks and Uncertainties" in the MD&A dated May 2, 2012 and material risks and uncertainties related to acquisitions generally are described on pages 20 and 21 of the Company's Annual Information Form, dated May 4, 2011. Readers are cautioned not to place undue reliance on forward-looking statements. These statements are provided to assist external stakeholders in understanding DragonWave's expectations as of the date of this release and may not be appropriate for other purposes. Actual results, performance, achievements or developments of DragonWave may differ materially from the results, performance, achievements or developments expressed or implied by such statements. Risk factors, in addition to those detailed above, that may cause the actual results, performance, achievements or developments of DragonWave to differ materially from the results, performance, achievements or developments expressed or implied by such statements can be found in DragonWave's Annual Information Form dated May 4, 2011 and other public documents filed by DragonWave with Canadian and United States securities regulatory authorities, which are available at www.sedar.com and www.sec.gov, respectively, and include the following:
-- DragonWave's growth is dependent on the development and growth of the
market for high-capacity wireless communications services.
-- DragonWave relies on a small number of customers for a large percentage
of its revenue and DragonWave's future growth depends on the success of
its customer diversification efforts.
-- Network deployment plans by DragonWave's existing and potential
customers are capital intensive and the timing of such deployments is
affected by such customers' access to capital.
-- DragonWave faces intense competition from several competitors and if it
does not compete effectively with these competitors, its revenues may
not grow and could decline. DragonWave also faces competition from
indirect competitors.
-- DragonWave relies on its suppliers to supply components for its products
and the Company is exposed to the risk that these suppliers will not be
able to supply components on a timely basis, or at all.
-- DragonWave's success depends on its ability to develop new products and
enhance existing products.
-- DragonWave's quarterly revenue and operating results can be difficult to
predict and can fluctuate substantially.
-- If DragonWave is required to change its pricing models to compete
successfully, its margins and operating results may be adversely
affected.
-- DragonWave has a lengthy and variable sales cycle.
DragonWave assumes no obligation to update or revise any forward-looking statements or forward-looking information, whether because of new information, future events or otherwise, except as expressly required by law.
CONSOLIDATED BALANCE SHEETS
Expressed in US $000's except share amounts
As at As at
February 29, February 28,
2012 2011
----------------------------
Assets
Current Assets
Cash and cash equivalents 52,798 77,819
Restricted cash 177 714
Short term investments - 11,181
Trade receivables 9,850 11,579
Inventory 26,994 28,204
Other current assets 5,501 5,306
Future income tax asset 69 553
----------------------------
95,389 135,356
Long Term Assets
Property and equipment 5,280 7,560
Future income tax asset 1,308 808
Intangible assets 6,217 14,929
Goodwill 11,927 11,927
----------------------------
24,732 35,224
Total Assets 120,121 170,580
----------------------------
----------------------------
Liabilities
Current Liabilities
Accounts payable and accrued liabilities 12,720 15,967
Deferred revenue 723 1,453
Contingent royalty 372 622
Contingent consideration 1,884 14,622
----------------------------
15,699 32,664
Long Term Liabilities
Contingent royalty 1,292 3,290
Other long term liabilities 1,063 1,999
----------------------------
2,355 5,289
Commitments
Shareholders' equity
Capital stock 172,264 171,570
Contributed surplus 4,606 2,642
Deficit (65,448) (31,967)
Accumulated other comprehensive loss (9,695) (9,618)
----------------------------
Total Shareholder's equity 101,727 132,627
Non-controlling interests 340 -
----------------------------
Total Equity 102,067 132,627
Total Liabilities and Shareholder's equity 120,121 170,580
----------------------------
----------------------------
Shares issued & outstanding 35,586,206 35,421,893
CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME (LOSS)
Expressed in US $000's e and per share amounts
Three months ended Year ended
--------------------------------------------------------
February 29, February 28, February 29, February 28,
2012 2011 2012 2011
--------------------------------------------------------
REVENUE 9,150 15,105 45,656 118,010
Cost of sales 8,006 10,697 29,255 67,460
--------------------------------------------------------
Gross profit 1,144 4,408 16,401 50,550
--------------------------------------------------------
EXPENSES
Research and
development 5,400 5,952 24,023 19,056
Selling and
marketing 3,585 3,964 15,307 17,303
General and
administrative 4,735 3,332 16,528 11,785
Government
assistance - (144) (902) (390)
--------------------------------------------------------
13,720 13,104 54,956 47,754
--------------------------------------------------------
Income (loss) before
amortization of
intangible assets
and other items (12,576) (8,696) (38,555) 2,796
Amortization of
intangible assets (373) (472) (1,986) (893)
Accretion expense (38) (271) (650) (393)
Interest income 39 37 393 233
Investment gain 46 (161) 67 7
Impairment of
intangible assets - - (8,315) -
Gain on change in
estimate of
contingent
liabilities 623 - 15,146 -
Foreign exchange
gain 218 536 100 678
--------------------------------------------------------
Income (loss) before
income taxes (12,061) (9,027) (33,800) 2,428
Income tax expense
(recovery) 1,354 (145) (104) 421
--------------------------------------------------------
Net Income (loss) (13,415) (8,882) (33,696) 2,007
Net Loss
Attributable to
Non-Controlling
Interest 47 - 215 -
--------------------------------------------------------
Net Income (loss)
applicable to
shareholders (13,368) (8,882) (33,481) 2,007
Foreign currency
translation
differences for
foreign
operations 2 - 77 -
--------------------------------------------------------
Comprehensive Income
(Loss) applicable
to shareholders (13,370) (8,882) (33,558) 2,007
Income (loss) per
share
Basic (0.38) (0.25) (0.94) 0.06
Diluted (0.38) (0.25) (0.94) 0.05
Weighted Average
Shares Outstanding
Basic 35,573,810 35,208,606 35,506,689 35,812,507
Diluted 35,573,810 35,208,606 35,506,689 36,741,961
CONSOLIDATED STATEMENTS OF CASH FLOWS
Expressed in US $000's
Three months ended Year ended
----------------------------------------------------
February 29, February 28, February 29, February 28,
2012 2011 2012 2011
----------------------------------------------------
Operating Activities
Net Income (Loss) (13,415) (8,882) (33,696) 2,007
Items not affecting cash
Amortization of
property and
equipment 857 796 3,370 2,895
Amortization of
intangible assets 373 445 1,986 893
Accretion expense 38 271 650 393
Non cash royalty
amortization (67) (140) (490) (266)
Impairment of
intangible assets - - 8,315 -
Gain on change in
estimate of
contingent
liabilities (623) - (15,146) -
Stock-based
compensation 415 451 1,964 1,410
Unrealized foreign
exchange loss (92) (156) 38 134
Non cash future
income tax expense
(recovery) 1,416 235 (42) 358
Inventory impairment 1,741 2,097 2,020 3,285
----------------------------------------------------
(9,357) (4,883) (31,031) 11,109
Changes in non-cash
working capital items 3,203 (1,052) (3,437) (12,301)
----------------------------------------------------
(6,154) (5,935) (34,468) (1,192)
----------------------------------------------------
Investing Activities
Acquisition of
property and
equipment (147) (631) (1,090) (3,839)
Acquisition of
intangible assets (1,095) (330) (1,589) (867)
Acquisition of Axerra
Networks Inc., net of
cash acquired - - - (8,700)
Purchase of short term
investments - (11,513) (22,432) (135,480)
Maturity of short term
investments 2,123 47,431 33,613 132,378
----------------------------------------------------
881 34,957 8,502 (16,508)
----------------------------------------------------
Financing Activities
Share repurchase - - - (10,738)
Initial formation
contribution by non-
controlling interest
in DW-HFCL - - 555 -
Issuance of common
shares net of
issuance costs 55 762 505 1,115
----------------------------------------------------
55 762 1,060 (9,623)
----------------------------------------------------
Effect of foreign
exchange on cash and
cash equivalents 89 156 (115) (134)
Net decrease in cash and
cash equivalents (5,129) 29,940 (25,021) (27,457)
Cash and cash
equivalents at
beginning of period 57,927 47,879 77,819 105,276
---------------------------------------------------
Cash and cash
equivalents at end of
period 52,798 77,819 52,798 77,819
----------------------------------------------------
----------------------------------------------------
Cash paid during the
period for interest - - - 194
----------------------------------------------------
----------------------------------------------------
Contacts:
Investor Contact:
John Lawlor
VP, Investor Relations
DragonWave Inc.
jlawlor@dragonwaveinc.com
Tel: 613-895-7000
Media Contact:
Nadine Kittle
Marketing Communications
DragonWave Inc.
nkittle@dragonwaveinc.com
Tel: 613-599-9991 ext 2262
