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DragonWave Inc. TSX: DWI 
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DragonWave Announces Third Quarter Fiscal 2009 Results
OTTAWA, ONTARIO, CANADA--(Marketwire - Jan. 8, 2009) - DragonWave Inc. ("DragonWave"), (TSX:DWI) a leading global supplier of next-generation wireless networks, today issued financial results for its third quarter of fiscal year 2009 ended November 30, 2008. All figures are prepared in accordance with Canadian generally accepted accounting principles (GAAP) and are reported in Canadian dollars.
Revenue for the quarter was $10.7 million, compared with $10.6 million for the previous quarter. Revenue on a year to date basis was $32.0 million compared to $30.1 million in the previous year, a growth of 6.5%
Revenue from customers within North America was $6.4 million and represented 59% of total revenue for the quarter. Revenue from outside North America was $4.3 million and represented 41% of total revenue for the quarter.
Gross margin for the third quarter was 35%, compared to 34% in the previous quarter.
For the third quarter of fiscal year 2009, the loss from operations was $2.8 million, which was consistent with the loss in the second quarter of fiscal 2009. Expenses prior to the restructuring charge were $6.0 million compared to $6.5 million in the prior quarter. On December 1, 2008 the company announced restructuring measures and a one time charge of $0.5 million has been borne fully in the Q3 FY09 results. The net loss for the quarter was $0.2 million versus $1.7 million in Q2 fiscal 2009.
"DragonWave's results for the quarter showed the company's resilience as we maintained revenue, reduced the cash burn, and took restructuring measures to keep the business healthy. I am particularly pleased with DragonWave's ability to continue to attract new customers, with shipments to 14 new customers in the third quarter, 12 of which were located outside of North America." said Peter Allen, President and CEO of DragonWave.
The DragonWave management team will discuss the results on a conference call January 9, 2009 at 8:30 a.m. Eastern time.
Presentation material and a webcast link will be made available from the Investor Relations portal of DragonWave's web site at http://www.dragonwaveinc.com/irevents.asp
Conference Call Details:
- Beginning at 8:30 a.m., EDT
- Toronto Dial In Number: 416-883-7132
- Toll Free Dial In Number: 1-888-205-4499
- UK Dial In Number: 00-800-8358-7000
- Participant Pass Code: 37041#
For a replay of the call, it will be made available on DragonWave Inc. web site, through the Investor Relations portal.
To review Management's Discussion and Analysis for the quarter, please go to www.sedar.com.
About DragonWave
DragonWaveTM is a leading provider of high-capacity wireless Ethernet equipment used in emerging IP networks. DragonWave designs, develops, and markets carrier-grade microwave radio frequency networking equipment that wirelessly transmit broadband voice, video and other data. DragonWave's wireless Ethernet products, which are based on a native Ethernet platform, function as a wireless extension to an existing fibre-optic core telecommunications network. The principal application for DragonWave's products is the backhaul function in a wireless communications network. Additional applications for DragonWave's products include point-to-point transport in private networks, including municipal and enterprise networks. DragonWave's corporate headquarters is located in Ottawa, Ontario, with sales locations in Europe, Middle East and North America. The company's Web site is http://www.dragonwaveinc.com
FORWARD LOOKING STATEMENTS
This release contains certain forward-looking statements. Readers are cautioned not to place undue reliance upon any such forward-looking statements. Forward-looking statements are based on the company's current expectations and assumptions that are subject to a variety of risks and uncertainties that are difficult to predict and that may be beyond DragonWave's control.
Actual results could differ materially from those expressed in any forward-looking statements due to factors including the following:
- DragonWave's growth is dependent on the development and growth of the market for broadband wireless access.
- 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's success depends on its ability to develop new products and enhance existing products.
- DragonWave has a history of losses and cannot provide assurance that it will attain profitability.
- If DragonWave is required to change its pricing models to compete successfully, its margins and operating results may be adversely affected.
- DragonWave relies on a small number of customers for a large percentage of its revenue.
- DragonWave's ability to sell products and services is dependent upon it establishing and maintaining relationships with channel partners.
- DragonWave's quarterly revenue and operating results can be difficult to predict and can fluctuate substantially.
- DragonWave has a lengthy and variable sales cycle.
Additional risks which can also impact upon forward looking statements are identified in DragonWave's Annual Information Form which is available online at www.sedar.com. DragonWave assumes no obligation to update these forward-looking statements as a result of new information or future events.
DragonWave Inc.
CONSOLIDATED BALANCE SHEETS
(Expressed in Cdn $000's)
(unaudited)
As at As at
November 30, February 29,
2008 2008
$ $
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ASSETS
Current
Cash and cash equivalents 10,306 1,551
Short term investments 14,914 31,908
Accounts receivable 10,787 11,433
Other receivables 2,057 1,092
Inventory 14,816 10,584
Prepaid expenses 374 424
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Total current assets 53,254 56,992
Property and equipment 2,848 2,823
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2,848 2,823
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Total Assets 56,102 59,815
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Line of credit 631 550
Accounts payable and
accrued liabilities 8,236 9,055
Deferred revenue 1,957 1,713
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Total current liabilities 10,824 11,318
Commitments
Shareholders' equity
Capital stock 119,920 119,435
Contributed surplus 1,068 933
Deficit (75,710) (71,871)
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Total shareholders' equity 45,278 48,497
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56,102 59,815
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On behalf of the Board:
(s) Gerry Spencer (s) Claude Haw
Director Director
DragonWave Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS, COMPREHENSIVE LOSS AND DEFICIT
(Expressed in Cdn $000's except share and per share amounts)
(unaudited)
Three months ended Nine months ended
November 30 November 30
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2008 2007 2008 2007
$ $ $ $
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REVENUE 10,704 11,548 32,001 30,062
Cost of sales 7,000 7,016 20,289 18,894
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Gross profit 3,704 4,532 11,712 11,168
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EXPENSES
Research and development 2,427 2,662 8,152 7,572
Selling and marketing 2,789 2,392 8,196 6,130
General and
administrative 765 846 3,028 2,894
Investment tax credits 18 (50) (82) (442)
Restructuring charges 484 - 484 -
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6,483 5,850 19,778 16,154
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Loss from operations (2,779) (1,318) (8,066) (4,986)
Interest income 177 350 610 655
Interest expense (7) (34) (25) (192)
Interest expense on
debt component of
preferred shares and
convertible debt - - - (500)
Foreign exchange gain
(loss) 2,399 (206) 3,664 (981)
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Loss before income taxes (210) (1,208) (3,817) (6,004)
Income Taxes (11) - (22) -
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Net and
Comprehensive Loss (221) (1,208) (3,839) (6,004)
Deficit,
beginning of period (75,489) (68,415) (71,871) (63,619)
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Deficit,
end of period (75,710) (69,623) (75,710) (69,623)
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Loss per share
Basic and fully diluted (0.01) (0.04) (0.13) (0.27)
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Basic and diluted
weighted average
number of shares
outstanding 28,555,716 27,646,025 28,530,688 22,063,836
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DragonWave Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in Cdn $000's except share and per share amounts)
(unaudited)
Three months ended Nine months ended
November 30 November 30
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2008 2007 2008 2007
$ $ $ $
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OPERATING ACTIVITIES
Net loss (221) (1,208) (3,839) (6,004)
Items not affecting cash:
Amortization of property
and equipment 287 159 782 366
Interest expense
on debt component
of preferred shares - - - 350
Interest expense
on debt component
of convertible debt - - - 150
Stock-based
compensation expense 159 191 462 264
Warrant expense - - 2 -
Unrealized
foreign exchange
(gain) loss (1,121) 145 (1,185) 459
Accrued interest on
fair value of short term
investments (78) (85) 72 (85)
Changes in non-cash
working capital items (2,625) (968) (5,075) 1,149
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Cash flows
used in
operating activities (3,599) (1,766) (8,781) (3,351)
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INVESTING ACTIVITIES
Acquisition of
property and
equipment (136) (678) (806) (1,985)
Investment/Maturity
of short
term investments (14,836) (34,351) 16,922 (34,351)
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Cash flows (used in)
provided by
investing activities (14,972) (35,029) 16,116 (36,336)
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FINANCING ACTIVITIES
Change in line of credit 55 (1,889) 81 (3,887)
Exercise of warrants - - 150 -
Issuance of common stock net
of stock issuance costs 4 22,103 4 49,037
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Cash flows provided by
financing activities 59 20,214 235 45,150
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Effect of
foreign exchange on
cash and cash equivalents 1,121 (145) 1,185 (459)
Net increase (decrease)
in cash and
cash equivalents (17,391) (16,726) 8,755 5,004
Cash and cash equivalents
at beginning of period 27,697 23,064 1,551 1,334
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Cash and cash equivalents
at end of period 10,306 6,338 10,306 6,338
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Cash paid during the period
for:
Interest 7 34 25 192
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For more information, please contact
DragonWave Inc.Russell Frederick
Chief Financial Officer
613-599-9991 ext. 2253
rfrederick@dragonwaveinc.com
www.dragonwaveinc.com