<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
----------------------------------
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
or
[ ] 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 0-26858
BLUE WAVE SYSTEMS INC.
(Exact name of registrant as specified in its charter)
Delaware 41-1425902
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
2410 Luna Road 75006
Carrollton, Texas (Zip Code)
(Address of principal executive offices)
(972) 277-4600
(Registrant's telephone number)
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), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Outstanding at
Class November 7, 2000
----- ----------------
Common Stock, par value $0.01 per share 15,756,183
<PAGE>
Blue Wave Systems Inc.
Form 10-Q
For the Quarter Ended September 30, 2000
INDEX
Page No.
--------
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Balance Sheets
September 30 and June 30, 2000 3
Statements of Operations
for the three months ended September 30, 2000 and 1999 4
Statements of Cash Flows
for the three months ended September 30, 2000 and 1999 5
Notes to Interim Consolidated Financial Statements 6-8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9-11
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 12
SIGNATURE 13
2
<PAGE>
Blue Wave Systems Inc.
Consolidated Balance Sheets
(in thousands, except par value per share)
<TABLE>
<CAPTION>
September 30, June 30,
2000 2000
------------- -------------
(unaudited)
ASSETS
------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 7,889 $ 6,120
Restricted cash 480 491
Accounts receivable, net of allowances of $115 and $137, respectively 5,669 8,616
Inventories, net 6,864 6,231
Prepaid expenses and other 802 935
Deferred tax asset 271 271
------------- -------------
Total current assets 21,975 22,664
------------- -------------
Plant and equipment:
Machinery and equipment 7,503 7,432
Furniture and fixtures 2,524 2,568
------------- -------------
10,027 10,000
Less accumulated depreciation (7,560) (7,398)
------------- -------------
Plant and equipment, net 2,467 2,602
------------- -------------
Deferred tax asset-noncurrent 1,619 1,602
------------- -------------
Total assets $ 26,061 $ 26,868
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Accounts payable $ 4,623 $ 4,257
Accrued compensation 405 491
Other accrued liabilities 1,676 1,795
Deferred revenue 535 431
------------- -------------
Total current liabilities 7,239 6,974
------------- -------------
Deferred income taxes 788 788
Other noncurrent liabilities 28 43
Long-term debt, net of current maturities 480 491
------------- -------------
Total liabilities 8,535 8,296
------------- -------------
Commitments and contingencies
Stockholders' equity:
Preference stock, $.01 par value; 1,000 shares authorized; no shares
issued and outstanding at September 30 and June 30, 2000, respectively - -
Common stock, $.01 par value; 50,000 shares authorized; 16,258 and 16,207
shares issued; 15,598 and 15,548 shares outstanding at September 30 and
June 30, 2000, respectively 163 162
Additional paid-in capital 31,521 31,498
Accumulated deficit (11,889) (11,394)
Accumulated other comprehensive loss (1,180) (605)
------------- -------------
18,615 19,661
------------- -------------
Less -- treasury stock, at cost (1,089) (1,089)
------------- -------------
Total stockholders' equity 17,526 18,572
------------- -------------
Total liabilities and stockholders' equity $ 26,061 $ 26,868
============= =============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
3
<PAGE>
Blue Wave Systems Inc.
Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)
Three Months Ended
September 30,
2000 1999
-------- --------
Net sales $ 6,586 $ 7,391
Cost of sales 3,301 3,358
-------- --------
Gross margin 3,285 4,033
Operating expenses:
Product development and engineering 1,663 1,352
Sales and marketing 1,192 1,505
General and administrative 1,001 846
-------- --------
Total operating expenses 3,856 3,703
-------- --------
Operating income (loss) (571) 330
-------- --------
Other income (expense):
Interest expense (1) (52)
Interest income 82 3
Other, net - 19
-------- --------
Total other income (expense) 81 (30)
-------- --------
Income (loss) before provision for income taxes (490) 300
Provision for income taxes 5 28
-------- --------
Net income (loss) $ (495) $ 272
======== ========
Basic net income (loss) per share $ (0.03) $ 0.02
======== ========
Diluted net income (loss) per share $ (0.03) $ 0.02
======== ========
Weighted average common shares outstanding:
Basic 15,707 13,639
======== ========
Diluted 15,707 14,053
======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
4
<PAGE>
Blue Wave Systems Inc.
Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
September 30,
2000 1999
-------- -------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (495) $ 272
Adjustments to reconcile net income (loss) to net cash
used by operating activities -
Depreciation 272 309
Deferred tax provision (17) 24
Changes in assets and liabilities -
Accounts receivable, net 2,947 (567)
Inventories, net (633) (1,409)
Prepaid expenses and other 133 88
Accounts payable and accrued liabilities 250 (917)
-------- -------
Net cash provided (used) by operating activities 2,457 (2,200)
-------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of machinery, equipment, furniture and fixtures (187) (93)
-------- -------
Net cash used by investing activities (187) (93)
-------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Sale of common stock and warrants (net of expenses) - 2,929
Exercise of stock options 24 56
Net reductions associated with bank borrowings - (401)
-------- -------
Net cash provided by financing activities 24 2,584
-------- -------
Effect of translation rates on cash (525) 23
NET INCREASE IN CASH AND CASH EQUIVALENTS 1,769 314
CASH AND CASH EQUIVALENTS, beginning of period 6,120 551
-------- -------
CASH AND CASH EQUIVALENTS, end of period $ 7,889 $ 865
======== =======
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Cash paid for income taxes $ - $ 2
Cash paid for interest 9 64
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
5
<PAGE>
Blue Wave Systems Inc.
Notes to Interim Consolidated Financial Statements
1. Basis of Presentation
While the accompanying interim consolidated financial statements are
unaudited, they have been prepared by the Company pursuant to the rules and
regulations of the Securities and Exchange Commission. In the opinion of the
Company, all material adjustments and disclosures necessary to fairly present
the results of such periods have been made. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to the rules and regulations of the Securities and Exchange Commission.
These consolidated financial statements should be read in conjunction with the
consolidated financial statements and notes thereto for the year ended June 30,
2000, as included in Form 10-K, previously filed. Certain previously reported
amounts have been reclassified to conform with current year presentation. The
interim results of operations for the period ended September 30, 2000, are not
necessarily indicative of results to be expected for the year ending June 30,
2001.
2. Inventories
Inventories at September 30 and June 30, 2000, consisted of the following
(in thousands):
September 30, 2000 June 30, 2000
------------------ -------------
Raw materials $3,400 $3,135
Work-in-process 3,295 2,636
Finished goods 1,154 1,258
Reserves (985) (798)
------ ------
Inventories, net $6,864 $6,231
====== ======
3. Debt
Lines of Credit
The Company utilizes credit facilities to support its operations. As of
September 30, 2000, there were no loans outstanding under a facility with a
commercial bank in the United Kingdom, with approximately $1,500,000 in
aggregate availability under such credit facility. This facility is
collateralized by the assets of the Company's European operations, guaranteed by
the U.S. parent company, bears interest at the bank's base rate plus 1.75% and
is due on demand. As of September 30, 2000, there were no loans outstanding
under a $3,500,000 facility with a commercial bank in the United States. This
facility is collateralized by the assets of the Company's U.S. operations, bears
interest at the bank's base rate plus 1% and contains financial covenants. As
of September 30, 2000, the Company was in compliance with all its financial
covenants under its agreements with both banks.
Long-term Debt
In connection with the establishment of an employee stock ownership plan
("ESOP"), which provides for the issuance of stock options for the benefit of
employees of the Company's UK subsidiary, the Company has guaranteed the debt of
the ESOP. The guarantee required the Company to place cash in escrow in an
amount equal to the debt, which was $480,000 at September 30, 2000. Such cash
has been reflected as restricted cash in the accompanying consolidated balance
sheets. The guarantee is reflected as long-term debt in the accompanying
consolidated balance sheets. This debt consists of a note payable to a
commercial bank with interest at the bank's base rate (6.0% at September 30,
2000) plus 1.5%, for a total rate of 7.5% at September 30, 2000. The note is
subject to renewal annually. The debt agreements related to this note contain
warranties and financial covenants and require maintenance of certain financial
ratios. Default on any warranty or covenant could, if not waived or corrected,
accelerate the maturity of any borrowings outstanding. As of September 30, 2000,
the Company was in compliance with such warranties and financial covenants under
its agreement with the bank.
6
<PAGE>
Blue Wave Systems Inc.
Notes to Interim Consolidated Financial Statements
4. Income Taxes
At fiscal year-end 2000, Blue Wave had federal and foreign net operating
loss (NOL) carryforwards of approximately $12,000,000 and $2,000,000,
respectively, which begin to expire in 2002. Research and development tax credit
carryforwards of approximately $41,000 at fiscal year end 2000, were also
available to reduce future federal income taxes. Pursuant to Section 382 of the
Internal Revenue Code, the Company's annual U. S. utilization limitation related
to its net federal operating loss carryforward is now $1,373,000.
Blue Wave had net deferred tax assets of $1,085,000 at fiscal year end 2000
and $1,102,000 at September 30, 2000, which is reflected in the accompanying
consolidated balance sheets. Deferred tax assets are reflected net of a
valuation allowance. In accordance with the criteria contained in SFAS no. 109,
Accounting for Income Taxes, the Company has recorded a valuation allowance
against the majority of its NOL. The Company believes it is more likely than not
that it will realize the benefit of the net deferred tax asset, and accordingly
no valuation allowance has been provided on this portion of the asset. Among the
factors the Company considers when making this evaluation are (1) the
realignment of the Company including its strategy to expand its markets in the
telecommunications industry, (2) the introduction of new products based upon new
DSP microprocessors, (3) the limitation of the net operating loss carryforwards,
as described above, related to the LSI merger, and (4) projections of sufficient
taxable US income to fully realize the net recognized deferred tax asset by the
end of 2001. Management continually evaluates the realizability of the net
deferred tax assets and the need for a valuation allowance on such assets.
5. Income (Loss) Per Share
Basic and diluted net loss per share for the three months ended September
30, 2000 were computed by dividing net loss by the weighted average number of
shares of common stock outstanding during the period. Basic net income per share
for the three months ended September 30, 1999 was computed by dividing net
income by the weighted average number of shares of common stock outstanding
during the period. Diluted net income per share for the three months ended
September 30, 1999 was computed by dividing net income by the weighted average
number of shares of common stock and common stock equivalents outstanding during
the period presented. Common stock equivalents included in diluted net income
per share are stock options and warrants calculated under the treasury stock
method using the prevailing average market price for the period presented.
Shares used in basic and diluted net income (loss) per share calculations are as
follows (in thousands):
<TABLE>
<CAPTION>
Three Months Ended
September 30,
2000 1999
------ ------
<S> <C> <C>
Basic:
-----
Weighted average common stock outstanding during the period 15,707 13,639
====== ======
Diluted:
-------
Weighted average common stock outstanding during the period 15,707 13,639
Other dilutive securities of stock option/warrant programs N/A 414
------ ------
Shares used in calculation of diluted net income (loss) per share 15,707 14,053
====== ======
</TABLE>
Dilutive securities equivalent to approximately 564,000 shares of common
stock were outstanding during the three months ended September 30, 2000, but
were not included in the computation of diluted EPS because the Company incurred
a net loss. The inclusion of these options would have been anti-dilutive to EPS.
Stock options scheduled to expire within the five years following September 30,
2000, aggregate 405,001 underlying shares, exercisable for a total of
approximately $158,000, and begin to expire in 2003. Additional disclosures
regarding the stock option plan activity during the past three fiscal years is
disclosed in Note 13 to the consolidated financial statements in the Company's
Form 10-K for the year ended June 30, 2000.
7
<PAGE>
Blue Wave Systems Inc.
Notes to Interim Consolidated Financial Statements
6. Comprehensive Income
SFAS No. 130, Reporting Comprehensive Income, establishes standards for
reporting and display of comprehensive income and its components in a full set
of general-purpose financial statements. Comprehensive income is defined as the
total of net income (loss) and all other non-owner changes in equity. Excluding
net income (loss), the Company currently has one type of non-owner change in
equity, which is foreign currency translation gains and losses. The computation
of comprehensive income (loss) for the three months ended September 30, 2000 and
1999 follows (in thousands):
Three Months Ended
September 30,
2000 1999
-------- --------
Net income (loss) $ (495) $ 272
Foreign currency translation adjustment (575) 135
-------- --------
Total comprehensive income (loss) $ (1,070) $ 407
======== ========
7. Operating Segments
The Company's net sales, operating income (loss), capital expenditures,
depreciation and identifiable assets by operating segment were as follows (in
thousands):
<TABLE>
<CAPTION>
For the quarter ended September 30,
-----------------------------------------------------------------------------------------------------
2000 1999
----------------------------------------------- ------------------------------------------------
North Outside of North Outside of
America North America Total America North America Total
-------------- ------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Net sales $ 2,422 $ 4,164 $ 6,586 $ 4,962 $ 2,429 $ 7,391
Operating income (loss) (586) 15 (571) 182 148 330
Capital expenditures 36 151 187 31 62 93
Depreciation 68 204 272 96 213 309
Identifiable assets 10,446 15,615 26,061 7,697 12,426 20,123
</TABLE>
8. Recent Accounting Pronouncements
In June 1998, Financial Accounting Standards Board Statement 133,
Accounting for Derivative and Similar Financial Instruments For Hedging
Activities ("SFAS 133"), was issued. SFAS 133 requires all derivatives to be
recognized as either assets or liabilities in the statement of financial
position and measured at fair value. In addition, SFAS 133 specifies the
accounting for changes in the fair value of a derivative based on the intended
use of the derivative and the resulting designation. The Company does not have
any derivatives and SFAS 133 does not have a material impact on the Company's
financial position or disclosures. SFAS 133, as amended by SFAS 137 and SFAS
138, is effective for all quarters in fiscal year 2001.
In December 1999, the SEC staff issued SAB 101, Revenue Recognition in
Financial Statements. SAB 101 provides guidance on applying generally accepted
accounting principles to revenue recognition issues in financial statements.
SAB 101 is effective in our fourth fiscal quarter of 2001. Management does not
believe the adoption of SAB 101 will have a material impact on the Company's
financial position or results of operations.
8
<PAGE>
Management's Discussion and Analysis of Financial Condition
and Results of Operations
The following table expresses the Company's statements of operations as a
percentage of net sales.
<TABLE>
<CAPTION>
Three Months Ended
September 30,
2000 1999
-------- --------
<S> <C> <C>
Net sales 100% 100%
Cost of sales 50% 45%
-------- --------
Gross margin 50% 55%
Operating expenses:
Product development and engineering 25% 19%
Sales and marketing 18% 20%
General and administrative 15% 11%
-------- --------
Total operating expenses 58% 50%
-------- --------
Operating income (loss) (8%) 5%
Total other income (expense) 1% (1%)
-------- --------
Income (loss) from continuing operations
before provision for income taxes (7%) 4%
Provision for income taxes 0% 0%
-------- --------
Net income (loss) (7%) 4%
======== ========
</TABLE>
Results of operations for the three months ended September 30, 2000 compared to
the three months ended September 30, 1999.
For the three months ended September 30, 2000 (first quarter of fiscal
2001), the Company reported net sales of $6,586,000, compared to $7,391,000 in
the same period last year. Net sales from the ComStruct line of
telecommunications products represented 50% of total net sales during the first
fiscal quarter. When compared to the same quarter last fiscal year, net sales
from the ComStruct product line grew 422%. The ComStruct telecommunications
product line incorporates a new generation of DSP microprocessors (digital
signal processor) developed by Texas Instruments ("TI"). Net sales from the
Company's military/aerospace and industrial businesses combined represented 50%
of revenues during the first fiscal quarter. When compared to the same quarter
last fiscal year, net sales from these combined businesses decreased 52%,
primarily as a result of the planned shipment schedules on these products. The
level of shipments in the next few quarters for the military/aerospace and
industrial businesses is projected to be higher than it was in the first fiscal
quarter.
Gross margin percentage for the three months ended September 30, 2000, was
50%, compared to 55% in the same period last year. This decrease is due
primarily to the impact of our fixed cost base of manufacturing expenses being
spread over a smaller net sales amount. The Company's historical gross margin
percentage has also varied by quarter in both a positive and negative fashion
due to volume-related efficiencies, changes in product and customer mix, and
provisions for manufacturing scrap and obsolescence.
During the three months ended September 30, 2000, product development and
engineering expenses were $1,663,000, or 25% of net sales, compared to
$1,352,000, or 19% of net sales, during the same period last year. The increase
in absolute spending is the result of the Company's focus on continued
development and expansion of the telecommunications product line and an increase
in headcount to facilitate that focus.
During the three months ended September 30, 2000, sales and marketing
expenses were $1,192,000, or 18% of net sales, compared to $1,505,000, or 20% of
net sales, during the same period last year. The reduction in absolute spending
is the result of the Company's focus on specific vertical markets, the lower
amount of commissions associated with the lower amount of net sales and reduced
marketing expenditures during the quarter. Sales and marketing expenses are
expected to return to historical levels in future quarters.
During the three months ended September 30, 2000, general and
administrative expenses were $1,001,000, or 15% of net sales, compared to
$846,000, or 11% of net sales, during the same period last year. The increase in
spending is the result of increased costs associated with the annual report and
the shareholders' meeting, recruitment fees, and compensation related to vesting
of stock options given to a former employee.
During the three months ended September 30, 2000, total other income was
$81,000, as compared to total other expense of $30,000 during the same period
last year. As a result of receiving the approximately $6.9 million in net
proceeds
9
<PAGE>
from the private placement and the subsequent exercise of the warrants issued in
conjunction with the private placement in the first half of fiscal 2000, short-
term borrowings have been eliminated and interest income was generated from the
investment of excess available cash. In the same period last year, interest
expense was incurred on the Company's credit facilities with two commercial
banks.
The Company reported a net loss of $(495,000) for the three months ended
September 30, 2000, compared to net income of $272,000 during the same period
last year. The decrease in the Company's net operating result is primarily
attributable to the 11 percent decrease in net sales.
Liquidity and Capital Resources
The Company's total cash and cash equivalents, including restricted cash,
was $8,369,000 at September 30, 2000, as compared to $6,611,000 at June 30,
2000. Net working capital at September 30, 2000, was $14,736,000, as compared to
$15,690,000 at June 30, 2000, a decrease of $954,000. Accounts receivable
decreased at September 30, 2000 due to the collection of amounts due at June 30,
2000 and the lower amount of net sales in the quarter ended September 30, 2000.
Inventories at September 30, 2000 increased since June 30, 2000 due to the high
level of order backlog and the long completion time associated with complex
products.
Expenditures for capital equipment were $187,000 for the three months ended
September 30, 2000, as compared to $93,000 in the same period of the prior year.
The Company utilizes credit facilities to support its operations. As of
September 30, 2000, there were no loans outstanding under a facility with a
commercial bank in the United Kingdom, with approximately $1,500,000 in
aggregate availability under such credit facility. This facility is
collateralized by the assets of the Company's European operations, guaranteed by
the U.S. parent company, bears interest at the bank's base rate plus 1.75% and
is due on demand. As of September 30, 2000, there were no loans outstanding
under a $3,500,000 facility with a commercial bank in the United States. This
facility is collateralized by the assets of the Company's U.S. operations, bears
interest at the bank's base rate plus 1% and contains financial covenants. As
of September 30, 2000, the Company was in compliance with all its financial
covenants under its agreements with both banks.
In connection with the establishment of an employee stock ownership plan
("ESOP"), which provides for the issuance of stock options for the benefit of
employees of the Company's UK subsidiary, the Company has guaranteed the debt of
the ESOP. The guarantee required the Company to place cash in escrow in an
amount equal to the debt, which was $480,000 at September 30, 2000. Such cash
has been reflected as restricted cash in the accompanying consolidated balance
sheets. The guarantee is reflected as long-term debt in the accompanying
consolidated balance sheets. This debt consists of a note payable to a
commercial bank with interest at the bank's base rate (6.0% at September 30,
2000) plus 1.5%, for a total rate of 7.5% at September 30, 2000. The note is
subject to renewal annually. The debt agreements related to this note contain
warranties and financial covenants and require maintenance of certain financial
ratios. Default on any warranty or covenant could, if not waived or corrected,
accelerate the maturity of any borrowings outstanding. As of September 30, 2000,
the Company was in compliance with such warranties and financial covenants under
its agreement with the bank.
Management believes that through its current cash resources and currently
available debt facilities it will have adequate resources to fund the Company's
2001 operating plan. If the Company incurs significant losses during fiscal year
2001, liquidity could be significantly impaired if the Company's debt facilities
are materially altered or cancelled. In the event this occurred, the Company may
find it necessary to secure other sources of working capital.
The Company will, from time to time, evaluate potential strategic
transaction opportunities including acquisitions and joint ventures. In order to
fund such a transaction the Company may find it necessary to seek additional
working capital via a borrowing transaction or consider raising additional funds
through an equity offering. The Company is also considering selling or otherwise
disposing of its non-strategic legacy product lines. Should this occur during
fiscal 2001, the Company currently anticipates that it may begin generating
operating losses due to a potential lower level of net sales but no significant
reduction in operating expenses.
10
<PAGE>
Quantitative and Qualitative Disclosures about Market Risk
Interest Rate Risk. The Company generally invests cash balances in excess of
operating requirements in money market funds. The Company's investments in these
funds are subject to interest rate fluctuations, but management believes this
risk is immaterial due to the nature of these investments. If the Company were
to experience a 1% change in the effective interest rate, the effect on annual
interest income would be approximately $50,000. The carrying value of the funds
would not be affected. The Company's lines of credit provide for borrowings
which bear interest at a variable rate equal to the prime rates of the lenders.
As of September 30, 2000, the Company did not have any borrowings outstanding
under the credit agreements. The Company has a note payable which bears interest
at a variable rate equal to the prime rate of the lender. If the Company were
to experience a 5% change in the variable rate of interest, the effect on
interest expense would be approximately $25,000 annually. The Company believes
that the effects, if any, of possible near-term changes in interest rates on the
Company's financial position, results of operations and cash flows should not be
material.
Foreign Currency Risk. The operations of the Company's international
subsidiaries are primarily conducted in their respective local currencies. The
Company is exposed to foreign exchange rate fluctuations since the financial
results of foreign subsidiaries are translated into U.S. dollars in
consolidation. As exchange rates vary, these results, when translated, may vary
from expectations and adversely impact overall expected profitability and
financial position. If the Company were to have experienced a 10% change in the
United Kingdom pound sterling to US dollar foreign exchange rate, there would
have been no impact on the results of operations for the first fiscal quarter of
2001 and the impact for the fiscal year ended June 30, 2000 would have been
approximately $100,000. The effect of foreign exchange rate fluctuations on the
Company's operations in the first fiscal quarter of 2001 and for fiscal year
2000 was not material. The Company, to date, has not attempted to hedge foreign
currency exposures. The Company does not enter into financial instrument
transactions for trading or other speculative purposes.
Cautionary Statement for Purposes of the "Safe Harbor" Provisions of the Private
Securities Litigation Reform Act of 1995
This Form 10-Q contains forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. Similar forward-looking
statements are made periodically in reports to the Commission, press releases,
reports and documents and in written and oral presentations to investors,
shareholders, analysts and others, regarding future results or expected
developments. Words such as "anticipates," "believes," "estimates," "expects,"
"foresees," "forecasts," "goal," "intends," "is likely," "plans," "predicts,"
"projects," and variations of such words and similar expressions are intended to
identify such forward-looking statements. Similarly, such statements herein that
describe the Company's business strategy, outlook, objectives, plans, intentions
or goals also are forward-looking statements. All such forward-looking
statements are subject to certain risks and uncertainties that could cause
actual results to differ materially from those in forward-looking statements.
These risk factors include, but are not limited to, rapid technological change,
quarterly fluctuations, integration of Mizar and Loughborough Sound Images,
dependence on the defense industry, commercial market uncertainties, dependence
upon key suppliers, customers, subcontractors and employees, competition, and
potential future operating losses. The foregoing list should not be construed as
exhaustive and the Company disclaims any obligation subsequently to revise
forward-looking statements to reflect unanticipated events. For a further
explanation of risk factors, please see the Company's most recent SEC filings.
The Company further cautions users who may utilize published bookings and
backlog information as tools to forecast the Company's revenue during a given
timeframe since certain purchase orders may be subject to cancellation and/or
revision to delivery schedules.
11
<PAGE>
Blue Wave Systems Inc.
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits (exhibit reference numbers refer to Item 601 of Regulation S-K)
11(a) Computation of Per Share Net Income (Loss) for the three months ended
September 30, 2000 and 1999.
27 Financial Data Schedule (filed electronically only).
(b) Reports on Form 8-K
None.
12
<PAGE>
Blue Wave Systems Inc.
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Blue Wave Systems Inc.
Date: November 13, 2000 By /s/ Donald B. Crosbie
-----------------------
Donald B. Crosbie
Chief Financial Officer and President of
North American Operations (Principal
Financial Officer)
13
<PAGE>
Exhibit Index
Exhibit No. Description
----------- --------------------------------
11(a) Computation of Per Share Net Income (Loss) for the three months
ended September 30, 2000 and 1999.
27 Financial Data Schedule (filed electronically only).
14
