WJCI WJ Communications (MM)

WJ Communications, Inc. (NASDAQ: WJCI), a leading designer and supplier of radio frequency (RF) solutions for the wireless infrastructure and radio frequency identification (RFID) reader markets, today announced results for the fourth quarter and fiscal year ended December 31, 2007. Financial and Business Highlights: Recorded fourth quarter 2007 revenue of $10.6 million, representing a sequential increase of 7.7 percent Received first production order for a TD-SCDMA Multi Chip Module chipset for delivery in the first quarter of 2008 Achieved EBITDA positive results for the third consecutive quarter Generated approximately $3.5 million in cash Released 18 new products during the second half, resulting in a total of 35 products for the full year of 2007 �During the fourth quarter we continued to benefit from our strategic initiatives and delivered our third consecutive quarter of EBITDA positive results and improved cash by $3.5 million,� commented Bruce Diamond, President and Chief Executive Officer of WJ Communications. �Our focused execution on our cost saving initiatives throughout the past year has resulted in a much lower cost business model that will provide substantial upside on incremental revenue improvements. Looking forward, we remain excited about the pending TD-SCDMA rollout in China, for which we recently received our first production order for a Multi Chip Module. Throughout 2008, we expect to continue to execute on our strategic initiatives and further improve our cost structure, while driving additional opportunities through the continued introduction of new and innovative products to the market.� Revenue for the fourth quarter of 2007 was $10.6 million compared to revenue of $9.8 million in the third quarter of 2007 and $11.3 million in the same period one year ago. Net loss for the fourth quarter of 2007 was $802,000, or ($0.01) per share. This compared to a net loss of $1.3 million, or ($0.02) per share, in the third quarter of 2007 and a net loss of $2.9 million, or ($0.04) per share, in the fourth quarter of 2006. Stock compensation charges were $843,000 in the fourth quarter of 2007 compared to $909,000 in the third quarter of 2007 and $1.1 million in the year ago period. EBITDA for the fourth quarter was $620,000. This compares to EBITDA of $366,000 in the third quarter of 2007 and a loss of ($939,000) in the same period one year ago. Gross margin for the fourth quarter of 2007 was 47.5 percent, compared to 48.9 percent in the third quarter of 2007 and 45.0 percent in the same period a year ago. Operating expenses for the quarter totaled $5.9 million, which included a restructuring benefit of $669,000. This compares to $6.3 million in the previous quarter, which included a restructuring benefit of $139,000, and $8.2 million in the same period one year ago. For the twelve months ended December 31, 2007, total revenue was $43.9 million compared to $48.8 million in 2006. Gross margin for the full year of 2007 was 48.5 percent compared to 51.4 percent for the full year 2006. Net loss for 2007 was $7.0 million, or ($0.10) per share, compared to a net loss of $8.4 million, or ($0.13) per share in 2006. The net loss for 2007 included approximately $3.9 million of stock compensation expenses, compared to $2.3 million for the year 2006. Operating expenses for 2007 totaled $29.0 million, compared to $35.9 million for 2006. Cash, cash equivalents and short-term investments as of December 31, 2007 were $16.7 million, compared to $13.2 million as of September 30, 2007 and $25.4 million as of December 31, 2006. A reconciliation of non-GAAP to GAAP results is provided in the table below and on the Company�s website. Business Outlook WJ Communications� Chief Executive Officer, Bruce Diamond, and Chief Financial Officer, Greg Miller, will provide a business update and guidance for the first quarter of 2008 during their financial results conference call today. Projections and guidance are estimates only and actual performance could differ. Fourth Quarter and Full Year 2007 Financial Results Conference Call WJ Communications will host a conference call and Web cast with investors today, Wednesday, February 27, 2008, at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time) to discuss the fourth quarter and full year 2007 financial results and the outlook for the first quarter of 2008. Investors and other interested parties may access the call by dialing 800-257-6566 (+1-303-262-2131 outside of the U.S.), with the Reservation ID 11109485, at least 10 minutes prior to the start of the call. In addition, an audio Web cast will be available in the Investor Relations section of the Company�s Web site at www.wj.com. Following the live Web cast, an archived version will be available on the Company�s Web site. Forward-Looking Statements This release contains a forward-looking statement as to a certain Company action and goal. This forward-looking statement and others made by the Company are not historical facts but rather are based on current 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 to identify forward-looking statements. The Company's actual results may differ materially from these forward-looking statements as a result of a number of factors, including, but not limited to, the Company�s actual performance in the first quarter of 2008 and fiscal year 2008, the success of the Company�s new product introductions, the ability to meet its projected schedule for product introductions, any loss of or reduction in orders from the Company�s re-engaged key customer for any reason, the Company�s actual sales to the re-engaged key customer, that the Company will continue to realize the benefits of its cost savings initiatives and the actual amounts, that the Company�s lower cost business model will provide substantial upside on incremental revenue improvements and the actual amounts, the actual timing of the TD-SCDMA rollout in China and its actual impact on the Company�s 2008 results, the ability to maintain its listing on the NASDAQ Global Market by regaining compliance with Market Place Rule 4450(a)(5) on or before June 17, 2008, the results of the Company�s current evaluation of strategic alternatives and the success of any action taken as a result of that evaluation, the future success of our current business model and the risk factors contained in the Company's Form 10-K for year ended 2006, Form 10-Q, and such other factors as described from time to time in the Company's filings with the Securities & Exchange Commission, which are available on the SEC Web site at www.sec.gov. Readers of this release are cautioned not to place undue reliance on these forward-looking statements. The Company undertakes no obligation to publicly update or revise the forward-looking statements contained herein to reflect changed events or circumstances after the date of this press release. About WJ Communications WJ Communications, Inc. is a leading provider of radio frequency (RF) solutions serving multiple markets targeting wireless communications, RF identification (RFID), and WiMax. WJ addresses the RF challenges in these multiple markets with its highly reliable amplifiers, mixers, RF integrated circuits (RFICs), RFID reader modules, chipsets, and multi-chip (MCM) modules. For more information visit www.wj.com. All trademarks used, referenced, or implicitly contained herein are used in good faith and highlighted to give proper public recognition to their respective owners � WJ COMMUNICATIONS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) � � � � Three Months Ended Twelve Months Ended December 31, December 31, December 31, December 31, 2007 2006 2007 2006 � � � � � Net sales $ 10,599 $ 11,285 $ 43,944 $ 48,779 � Cost of goods sold � 5,565 � � 6,203 � � 22,645 � � 23,704 � Gross profit � 5,034 � � 5,082 � � 21,299 � � 25,075 � Operating expenses: Research and development 3,095 4,305 14,904 18,329 Selling and administrative 3,480 4,189 15,200 17,869 Restructuring charges (credits) (669 ) (286 ) (171 ) (286 ) Gain on the sale of assets held for sale � - � � - � � (901 ) � - � Total operating expenses � 5,906 � � 8,208 � � 29,032 � � 35,912 � Loss from operations (872 ) (3,126 ) (7,733 ) (10,837 ) Interest income 151 327 793 1,241 Interest expense (23 ) (23 ) (78 ) (83 ) Other income (expense) - net � (1 ) � (97 ) � 123 � � (91 ) Loss before income taxes (745 ) (2,919 ) (6,895 ) (9,770 ) Income tax expense (benefit) � 57 � � - � � 57 � � (1,366 ) Net loss $ (802 ) $ (2,919 ) $ (6,952 ) $ (8,404 ) � Basic and diluted net loss per share $ (0.01 ) $ (0.04 ) $ (0.10 ) $ (0.13 ) Basic and diluted average weighted shares � 68,392 � � 67,229 � � 68,011 � � 66,408 � � WJ Communications Inc. and Subsidiaries Unaudited Reconciliation of Non-GAAP Financial Measures (in thousands) � � Three Months Ended � Twelve Months Ended April 1, 2007 � July 1, 2007 � September 30, 2007 � December 31, 2007 � December 31, 2006 December 31, 2007 � December 31, 2006 (1) � GAAP loss from operations $ (4,770 ) $ (592 ) $ (1,499 ) $ (872 ) $ (3,126 ) $ (7,733 ) $ (10,837 ) � Depreciation and amortization expense 1,202 667 956 649 1,136 $ 3,474 4,236 � Stock-based compensation 875 1,273 909 843 1,051 $ 3,900 2,329 � � � � � � � EBITDA $ (2,693 ) $ 1,348 � $ 366 � $ 620 � $ (939 ) $ (359 ) $ (4,272 ) � � (1) Twelve months ended December 31, 2006 depreciation and amortization expense includes $637 write-off of an intangible asset � WJ COMMUNICATIONS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) � � � December 31, � 2007 � � 2006 � � ASSETS � CURRENT ASSETS: Cash and cash equivalents $ 14,018 $ 17,024 Short-term investments 2,698 8,399 Receivables (net of allowances of $440 and $417, respectively) 6,977 5,759 Inventories 6,443 5,281 Other current assets � 1,144 � � 1,563 � Total current assets � 31,280 � � 38,026 � PROPERTY, PLANT AND EQUIPMENT, net 5,511 7,232 Goodwill 6,834 6,834 Intangible assets, net 692 960 Other assets � 179 � � 181 � $ 44,496 � $ 53,233 � � LIABILITIES AND STOCKHOLDERS� EQUITY � CURRENT LIABILITIES: Accounts payable 3,926 4,522 Accrued liabilities 2,932 4,080 Income tax contingency liability 54 419 Deferred margin on distributor inventory 2,687 2,824 Restructuring accrual � 3,182 � � 3,212 � Total current liabilities � 12,781 � � 15,057 � Restructuring accrual 7,941 12,006 Other long-term obligations � 597 � � 580 � Total liabilities � 21,319 � � 27,643 � � STOCKHOLDERS� EQUITY: Common stock 709 693 Treasury stock (24 ) (20 ) Additional paid-in capital 212,972 208,840 Accumulated deficit � (190,480 ) � (183,923 ) Total stockholders� equity � 23,177 � � 25,590 � $ 44,496 � $ 53,233 �