WJ Communications Announces Fourth Quarter and Fiscal Year 2005 Results13 March 2006
WJ Communications, Inc. (NASDAQ: WJCI), aleading designer and supplier of RF solutions for the wirelessinfrastructure and RFID reader markets, today announced results for itsfourth quarter and fiscal year ended December 31, 2005.
Revenue for the fourth quarter of 2005 was $11.7 million up 45%sequentially from $8.1 million in the prior quarter, and above thepreviously raised fourth quarter guidance range of $10.0 to $10.5 million.Fourth quarter revenue is up 48% from $7.9 million in the same period lastyear, which consisted of $7.7 million from the core business and $0.2million from the legacy wireless assembly business. Legacy businesscontribution in the fourth quarter of 2005 was negligible.
Fourth quarter gross margin was reported at 49.5%, down sequentially from53.4% reported in the prior quarter. This result includes an inventorywrite-down of approximately $400,000, which resulted in an approximate 3.4%decline to the fourth quarter reported gross margin. The Company expectsthat gross margins will be in the low 50% range in future quartersdepending on product mix and excluding the impact of FAS 123R.
The Company reported a net loss of $2.1 million for the fourth quarter of2005, or $0.03 per common share which, included a charge of $260,000related to employee separation and the inventory write-down of $400,000.This compares to a net loss of $3.4 million or $0.05 per common share inthe prior quarter, which included a charge of $400,000 related to employeeseparation and a tax benefit of $0.1 million and compares to a net loss of$4.0 million or $0.07 per common share for the fourth quarter of 2004.
Revenues for the year ended December 31, 2005 were $31.6 million comparedto $32.3 million for the year ended 2004. Reported results for the yearended 2005 were a net loss of $21.0 million, or $0.33 per common sharewhich compares to net loss for the year ended 2004 of $9.1 million or $0.15per common share.
As of December 31, 2005, the Company had cash, cash equivalents andshort-term investments of $30.2 million with no long-term debt outstanding.
"We were pleased with our fourth quarter revenue which was significantlyabove our upward revised guidance given in December," said Bruce Diamond,the Chief Executive Officer and President of WJ Communications. "We sawstrong sequential improvements in our wireless infrastructure business,driven by our large North American and European telecom equipment OEMs asthey ordered more products in support of new 3G network build outs. Inaddition, we had a substantial increase in sales from a leading Chinese PHSOEM and also continued to see solid demand from our customers in Korea.Our RFID business performed well during the quarter, and we made strongprogress in developing partnerships with leading companies focused on RFID,such as our announcement today with Intelleflex.
"Internally, our operations showed dramatic improvement demonstrated by ourability to service a 45% sequential increase in sales this quarter,"continued Mr. Diamond. "We are also pleased to announce today asecond-source strategic foundry relationship with GCS. This relationshipwill give us more flexibility as we develop the most optimal manufacturingstructure for WJ and for our customers. For the year, we are planning anumber of innovative new products for our wireless infrastructure businessand continue to focus internally on accelerating the time to market oftheir release."
"Our ability to control expenses and strong revenue performance reduced ouroperating loss by $1.4 million sequentially," added Rainer Growitz, InterimChief Financial Officer of WJ Communications. "Looking forward, we havestrong business prospects and expect the seasonally soft first quarter tobe somewhat flat to slightly ahead of our strong fourth quarter. Thisleads us to revenue guidance for the first quarter of 2006 in the range of$11.5 million to $12.0 million."WJ Communications will host a conference call for analysts and investors todiscuss its quarterly results today at 5:00 p.m. ET. The Company's 2005financial performance and certain additional first quarter and full year2006 guidance, including the impact of FAS 123R and certain expenses willbe discussed on the conference call. A live Webcast of the conference callwill also be accessible from the "Investor Relations" section of the WJCommunications Website (www.wj.com). Following the live Webcast, anarchived version will be available on the WJ Communications website.
About WJ Communications
WJ Communications, Inc. is a leading provider of radio frequency (RF)solutions serving multiple markets targeting wireless communications, RFidentification (RFID), and broadband cable. WJ addresses the RF challengesin these multiple markets with its highly reliable amplifiers, mixers, RFintegrated circuits (RFICs), RFID reader modules, chipsets, and multi-chip(MCM) modules. For more information visit www.wj.com or call 408-577-6200.
This release contains forward-looking statements including financialprojections, statements as to the plans and objectives of management forfuture operations, and statements as to the Company's future economicperformance, financial condition or results of operations. Theseforward-looking statements are not historical facts but rather are based oncurrent expectations and our beliefs. Words such as "may," "will,""expects," "intends," "plans," "believes," "seeks," "could" and "estimates"and variations of these words and similar expressions are intended toidentify forward-looking statements. The Company's actual results maydiffer materially from those projected in these forward-looking statementsas a result of a number of factors, including, but not limited to, thesuccess of the GCS foundry relationship, our ability to develop the mostoptimal manufacturing structure for WJ and customers, actual businesstrends, gross margin and revenues for the first quarter of 2006, the riskfactors contained in the Company's Form 10-K for year ended 2004 and suchother factors as described from time to time in the Company's filings withthe Securities & Exchange Commission which are available on the SEC websiteat www.sec.gov. Readers of this release are cautioned not to place unduereliance on these forward-looking statements. The Company undertakes noobligation to publicly update or revise the forward-looking statementscontained herein to reflect changed events or circumstances after the dateof this press release.
WJ Communications Inc. and Subsidiaries Unaudited Consolidated Statements of Operations (in thousands, except per share amounts)
Three Months Ended Year Ended ----------------------------------- ---------------------- December 31, October 2, December 31, December 31, December 31 2005 2005 2004 2005 2004 ---------- ---------- ---------- ---------- ----------Sales Core business (1) $ 11,653 $ 8,044 $ 7,686 $ 31,201 $ 29,808 Legacy (2) 53 50 235 396 2,528 ---------- ---------- ---------- ---------- ----------Total sales 11,706 8,094 7,921 31,597 32,336
Cost of goods sold 5,914 3,774 4,240 16,906 15,278 ---------- ---------- ---------- ---------- ----------
Gross profit 5,792 4,320 3,681 14,691 17,058
Operating expenses:
Research & development 4,480 4,451 4,650 18,070 17,238
Selling &administrative 3,650 3,632 3,176 15,295 12,503
Acquired in-process research & development - - - 3,400 8,500
Restructuring reversals - - - - (3,845) ---------- ---------- ---------- ---------- ----------Total operating expenses 8,130 8,083 7,826 36,765 34,396 ---------- ---------- ---------- ---------- ----------Loss from operations (2,338) (3,763) (4,145) (22,074) (17,338)
Interest income, net 255 243 163 952 578
Other income, net 3 3 5 14 5 ---------- ---------- ---------- ---------- ----------
Income (loss) before income taxes (2,080) (3,517) (3,977) (21,108) (16,755)
Income tax benefit 3 (123) - (120) (7,674) ---------- ---------- ---------- ---------- ----------
Net loss $ (2,083) $ (3,394) $ (3,977) $ (20,988) $ (9,081) ========== ========== ========= ========== ==========Basic and diluted net loss per share $ (0.03) $ (0.05) $ (0.07) $ (0.33) $ (0.15) ========== ========== ========== ========== ==========Basic and diluted weighted average shares 65,084 64,516 60,968 64,162 60,397 ========== ========== ========= ========== ==========
(1) Core business sales includes sales of our semiconductor components, multi-chip modules and RFID reader modules.
(2) Legacy sales includes sales of our wireless and fiber optic products.
WJ Communications Inc. and Subsidiaries Condensed Consolidated Balance Sheets (in thousands)
December 31, December 31, 2005 (1) 2004 (2) ------------ ------------ASSETS
Cash and cash equivalents $ 14,169 $ 24,392
Short-term investments 16,052 18,732
Accounts receivable, net 7,135 6,841
Inventory 4,826 5,148
Other current assets 2,632 3,183 ------------ ------------
Total current assets 44,814 58,296
Property, plant and equipment 7,919 9,679
Goodwill 6,806 1,368
Intangible assets, net 1,884 180
Other assets 221 210 ------------ ------------
Total assets $ 61,644 $ 69,733 ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $ 16,452 $ 11,572
Long-term obligations 14,075 16,864
Stockholders' equity 31,117 41,297 ------------ ------------
Total liabilities and stockholders' equity $ 61,644 $ 69,733 ============ ============
(1) Unaudited
(2) Derived from the Company's audited consolidated financial statements included in the Company's annual report on Form 10-K for the year ended December 31, 2004.
WJ CommunicationsRainer GrowitzInterim Chief Financial Officer408-577-6200www.wj.com
Investor Relations Contacts:Chris DanneThe Blueshirt Group for WJ Communications415-217-7722Email Contact
Rakesh MehtaThe Blueshirt Group for WJ Communications415-217-7722Email Contact
SOURCE: WJ Communications
Source: marketwire
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