Tuesday October 14 8:03 AM EDT
Company Press Release
Watkins-Johnson Reports Third-Quarter Results
PALO ALTO, Calif.--(BUSINESS WIRE)--Oct. 14, 1997--Watkins-Johnson Company (NYSE:WJ) today reported sales of $100,376,000 and net
income of $3,590,000, or 42 cents per share, for the third quarter of 1997, ended September 26.
In 1996, third-quarter sales amounted to $94,962,000 and net income totaled $2,832,000, or 33 cents per share.
Sales for the first nine months of 1997 totaled $286,971,000, with net income of $9,150,000, or $1.07 per share. In 1996, sales for the first nine
months amounted to $344,151,000 and net income totaled $9,624,000, or $1.12 per share.
Firm backlog on September 26, 1997 stood at $190,243,000, compared to the September 27, 1996 backlog of $197,850,000. The portion of the
current backlog shippable within 12 months is 83 percent, compared to 89 percent one year ago.
Divestiture Nears Completion
On September 2, 1997, the company announced that it reached a definitive agreement with Mentmore Holdings Corporation, a privately held
investment company headquartered in New York, to acquire WJ's Palo Alto, Calif.-based defense-electronics business for $103 million. The
divested business will operate as Stellex Microwave Systems, Inc.
The divestiture, which is expected to be complete by October 31, 1997, will enable Watkins-Johnson to concentrate its resources more narrowly on
only two chosen areas of technology: semiconductor-manufacturing equipment and wireless-infrastructure products.
Earnings Over Plan
Revenue was on plan and net income exceeded its planned level in the third quarter. Sales increased 5 percent over the second quarter and 6
percent over the year-earlier period. Net income was up from the last quarter and year-ago period by 16 percent and 27 percent, respectively.
Profitability increased as manufacturing processes were improved and the company continued to keep a close eye on costs.
During the third quarter, WJ produced two WJ-2000 single-wafer cluster platforms for delivery to Asia. Taiwan-based United Semiconductor
Corp. (USC) ordered a WJ-2000H high-density plasma (HDP) chemical-vapor-deposition (CVD) system for use at its wafer-fabrication facility in
the Science Park of Hsinchu, Taiwan. This system is currently being installed in USC's facility.
A second HDP system was up and running in September at WJ's Asian Technology Center in Kawasaki, Japan. It is being used as a
process-development and evaluation tool for both intermetal-dielectric (IMD) and shallow-trench-isolation (STI) device structures by the
company's customers in the Asia/Pacific region.
At quarter-end, following an exhaustive competition among all leading CVD-equipment manufacturers, Watkins-Johnson's atmospheric-pressure
CVD process was selected by Atmel to perform challenging STI steps at that company's 150mm fabrication facilities in the United States and its
new 200mm facility in France.
WJ unveiled a new family of cell-extender products at the Personal Communications Showcase, PCS '97, during September. These cell-extender
products -- repeaters, power amplifiers and tower-top amplifiers -- are aimed at personal communications services (PCS) applications to increase
the geographic coverage of existing cells for service providers.
High-volume production rates on WJ's wireless CDMA and TDMA subassemblies returned to their peak level in the third quarter, and rapid
expansion of the PCS market suggests a promising future for these commodity parts.
Background
Watkins-Johnson is a high-technology corporation specializing in semiconductor-manufacturing equipment and radio-frequency products for the
wireless-infrastructure market. Sales in 1996 exceeded $438 million.
Forward-Looking Statements
This news release, other than historical financial information, includes forward-looking statements that involve risks and uncertainties, including
quarterly fluctuations in results, the timely availability of new products, general market conditions governing supply and demand, the impact of
competitive products and pricing, and the other risks detailed in the company's SEC reports, including the report on Form 10-Q for the quarter
ended September 26, 1997. Actual results may vary materially.
Summary of Results
Quarter Ending September 1997 1996
Revenue $100,376,000 $94,962,000
Net Income 3,590,000 2,832,000
Earnings per Share 0.42 0.33
Shares(a) 8,528,000 8,458,000
Nine Months Ending September 1997 1996
Revenue $286,971,000 $344,151,000
Net Income 9,150,000 9,624,000
Earnings per Share 1.07 1.12
Shares(a) 8,572,000 8,560,000
(a) Average common and common-equivalent shares outstanding for
earnings-per-share computation
Detailed Results Follow
WATKINS-JOHNSON COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS(a)
For the periods ended September 26, 1997 and September 27, 1996
(Dollars in thousands, except per share amounts)
Three Months Ended Nine Months Ended
1997 1996 1997 1996
Sales:
Semiconductor Equipment $ 50,323 $ 58,588 $142,476 $231,456
Wireless Communications 20,681 11,441 51,498 30,460
Government Electronics 29,372 24,933 92,997 82,235
________ ________ ________ ________
100,376 94,962 286,971 344,151
Costs and expenses:
Cost of goods sold 63,941 60,921 187,563 222,712
Selling and administrative 18,810 16,535 52,144 62,428
Research and development 12,048 13,629 34,022 44,661
________ ________ ________ ________
94,799 91,085 273,729 329,801
Income from operations 5,577 3,877 13,242 14,350
Interest and other income
(expense)_net (16) 784 1,067 768
Interest expense (358) (556) (1,048) (1,169)
________ ________ ________ ________
Income from operations
before Federal and
foreign income taxes 5,203 4,105 13,261 13,949
Federal and foreign
income taxes (1,613) (1,273) (4,111) (4,325)
________ ________ ________ ________
Net income $ 3,590 $ 2,832 $ 9,150 $ 9,624
Fully diluted net income
per share (difference
between fully diluted
and primary earnings
per share is not
material) $ .42 $ .33 $ 1.07 $ 1.12
Average common and
equivalent shares
outstanding 8,528,000 8,458,000 8,572,000 8,560,000
(a) Unaudited
WATKINS-JOHNSON COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
As of September 26, 1997 and December 31, 1996
(Dollars in thousands) 1997(a) 1996
ASSETS
Current assets:
Cash and equivalents $ 43,418 $ 15,702
Receivables 71,695 95,717
Inventories:
Finished goods 4,414 4,005
Work in process 31,937 35,000
Raw materials and parts 32,116 30,153
Deferred income taxes 18,440 17,795
Other 4,417 5,471
________ ________
Total current assets 206,437 203,843
Property, plant, and equipment 228,538 231,318
Accumulated depreciation
and amortization (125,587) (127,748)
________ ________
Property, plant and equipment
-net 102,951 103,570
Other assets 3,465 6,960
________ ________
$312,853 $314,373
LIABILITIES AND SHAREOWNERS' EQUITY
Current liabilities:
Payables $ 18,449 $ 18,960
Accrued liabilities 60,160 61,901
________ ________
Total current liabilities 78,609 80,861
Long-term obligations 36,858 38,801
Shareowners' equity:
Common stock 40,191 38,998
Retained earnings 157,195 155,713
________ ________
Total shareowners' equity 197,386 194,711
________ ________
$312,853 $314,373
(a) Unaudited |
