WJ Communications Announces Third Quarter Results

Pro Forma Loss is Reduced Sequentially by $600,000


SAN JOSE, Calif., Oct. 23, 2001 (PRIMEZONE) -- WJ Communications, Inc. (Nasdaq:WJCI) today announced results for its third quarter ended September 30, 2001.

Sales for the third quarter of 2001 were $15.5 million, compared to $16.7 million in the second quarter of 2001 and $34.9 million in the third quarter of last year. The third quarter loss from continuing operations excluding non-cash and non-recurring items was $1.9 million, or $0.03 per diluted common share. This represents a significant improvement of $600,000 compared to a net loss excluding non-cash and non-recurring items in the previous quarter of $2.5 million, or $0.05 per diluted common share.

"Our revenues during the third quarter continued to be impacted by the prolonged slowdown in the telecommunications equipment sector, as a 17% sequential increase in wireless product sales was offset by a tough market for both semiconductor and fiber optic products," said Malcolm Caraballo, Chief Executive Officer and President of WJ Communications. "However, we are very pleased with our progress in introducing new products and winning new customers, while also significantly improving our financial model. Our break-even point has been dramatically lowered over the past six months and we believe that we can quickly reach EBITDA positive on even a modest rebound in demand."

Recent highlights include:


 --  The Company today announced that Bill Slakey will join the
     management team as CFO. Bill brings over 17 years of technology
     and finance experience from leading technology companies, such as
     Apple, IBM, Palm Computing and 3Com.

 --  WJ introduced over ten new fiber optic products and has added
     over 20 customers in this market in 2001. Notably, WJ increased
     sales of its recently introduced fiber-optic product lines and
     OC-768 products by over 100% sequentially.

 --  During the third quarter, the Company introduced over six new
     semiconductor products, and the Company had 15 new socket wins at
     major OEMs.

 --  In the third quarter, WJ took aggressive steps to lower its cost
     structure, including writing off its excess facility in San Jose,
     reducing inventory and decreasing expenses.

"In light of the overall economy and the events of September 11th, we think it is wise to take a very conservative outlook and are forecasting flat to modest sequential revenue growth in the fourth quarter," continued Mr. Caraballo. "Over the next six months, we believe we can continue to improve the financial model, expanding gross margins and further driving down costs. Additionally, with $57 million in cash, we are well positioned to weather these tougher periods and believe that, with a broad product line and a diversifying customer base, we can emerge from the current downturn a significantly stronger company."

Reported results for the third quarter of 2001 are a net loss from continuing operations of $9.1 million, or $0.16 per diluted common share. This includes a one-time charge of $9.8 million reported on September 17, 2001, related to WJ's decision to abandon its excess facility. This compares to a net loss available to common stockholders of $10.1 million or $0.20 per diluted common share for the third quarter of 2000, which reflects a $10.0 million preferred stock dividend related to the assumed beneficial conversion of preferred stock, and a $2.1 million extraordinary item related to the write-off of unamortized deferred financing cost, net of taxes.

WJ Communications, Inc., headquartered in San Jose, California, designs, develops and manufactures innovative broadband communications products for the current and next generation fiber optic, broadband cable and wireless communications networks.

This release contains forward-looking statements including financial projections, statements as to the plans and objectives of management for future operations, and statements as to the Company's future economic performance, financial condition or results of operations. These forward-looking statements 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 those projected in these forward-looking statements as a result of a number of factors, including, but not limited to, the Company's ability to continue to successfully improve its financial model, expand gross margins and decrease expenses, the Company's ability to utilize its cash effectively, technological innovation in the wireless and fiber optic communications markets, the availability and the price of raw materials and components used in the Company's products, the demand for wireless and fiber optic systems and products generally as well as those of our customers, the adequacy of the Company's obsolete inventory reserve, the success of the Company's new product introductions and the Company's ability to expand its customer base, broaden its product offering and deepen its penetration into existing customers, general economic conditions including the global economic slowdown and such other factors as described from time to time in the Company's filings with the Securities & Exchange Commission. 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.


                WJ Communications Inc. and Subsidiaries
      Unaudited Pro Forma Consolidated Statements of Operations
               (in thousands, except per share amounts)

                         Three Months Ended       Nine Months Ended
                       ----------------------   ----------------------
                        Sept. 30,   Sept. 29,    Sept. 30,  Sept. 29,
                          2001        2000         2001        2000
                       ----------  ----------   ----------  ----------
 Sales
  Fiber Optics         $  2,405.9  $ 15,586.6  $  7,271.9  $ 34,043.1
  Wireless               10,114.3    13,451.7    25,195.3    29,600.1
  Semiconductor           2,938.0     5,910.8    15,737.3    15,984.4
                       ----------  ----------  ----------  ----------
 Total sales             15,458.2    34,949.1    48,204.5    79,627.6
                       ----------  ----------  ----------  ----------

 Cost of goods sold      12,351.3    21,917.3    39,678.1    49,458.3
                       ----------  ----------  ----------  ----------

 Gross margin             3,106.9    13,031.8     8,526.4    30,169.3

 Research &
  development             3,722.0     4,820.0    13,483.4    13,584.7

 Selling &
  administrative          3,120.5     4,773.2    10,388.2    11,061.0
                       ----------  ----------  ----------  ----------
 Income (loss) from
  operations before
  nonrecurring and
  noncash items          (3,735.6)    3,438.6   (15,345.2)    5,523.6

 Interest income
  (expense), net            542.8       (59.9)    2,409.1    (1,017.6)

 Other income
  (expense) net             345.0      (176.4)      696.5      (867.7)
                       ----------  ----------  ----------  ----------
 Income (loss) from
  continuing operations
  before income taxes    (2,847.8)    3,202.3   (12,239.6)    3,638.3

 Income tax expense
  (benefit)                (929.5)      950.0    (4,484.6)      989.6
                       ----------  ----------  ----------  ----------
 Proforma gain (loss)
  from continuing
  operations before
  noncash and
  nonrecurring items   $ (1,918.3) $  2,252.3  $ (7,755.0) $  2,648.7
                       ==========  ==========  ==========  ==========
 Proforma diluted
  average shares
  outstanding              55,814      61,874      55,566      75,767
                       ==========  ==========  ==========  ==========
 Proforma diluted
  gain (loss) per
  share from continuing
  operations before
  nonrecurring and
  noncash items        $    (0.03) $     0.04  $    (0.14) $     0.03
                       ==========  ==========  ==========  ==========

  Note 1: Certain prior year amounts have been reclassified to
          conform with current year presentation.



                WJ Communications Inc. and Subsidiaries
           Unaudited Consolidated Statements of Operations
               (in thousands, except per share amounts)

                       Three Months Ended        Nine Months Ended
                     ----------------------   -----------------------
                      Sept. 30,   Sept. 29,    Sept. 30,    Sept. 29,
                        2001        2000         2001         2000   
                     ----------  ----------   ----------   ----------
  Sales
   Fiber Optics      $  2,405.9  $ 15,586.6   $  7,271.9   $ 34,043.1
   Wireless            10,114.3    13,451.7     25,195.3     29,600.1
   Semiconductor        2,938.0     5,910.8     15,737.3     15,984.4
                     ----------  ----------   ----------   ----------
  Total sales          15,458.2    34,949.1     48,204.5     79,627.6
                     ----------  ----------   ----------   ----------
  Cost of goods
   sold                12,721.9    21,917.3     47,008.5  49,458.3(a)
                     ----------  ----------   ----------   ----------
  Gross margin          2,736.3    13,031.8      1,196.0     30,169.3
  Research &
   development          3,722.0     4,820.0     13,483.4     13,584.7
  Selling &
   administrative       3,513.7     4,773.2     10,869.1     11,061.0
  Amortization of
   deferred stock
   compensation           143.0       329.1        526.6        846.4
  Restructuring
   charge               9,796.5        --        9,796.5         --
  Recapitalization
   merger                  --          --           --       35,452.9
                     ----------  ----------   ----------   ----------
 Income (loss) from
  operations          (14,438.9)    3,109.5    (33,479.6)   (30,775.7)
 Interest income
  (expense), net          542.8       (59.9)     2,409.1     (1,017.6)
 Other income
  (expense) net           345.0      (176.4)       696.5       (867.7)
 Gain on disposition
  of real properties       --          --          325.5        808.2
                     ----------  ----------   ----------   ----------
 Income (loss) from
  continuing
  operations before
  income taxes        (13,551.1)    2,873.2    (30,048.5)   (31,852.8)
 Income tax
  provision
  (benefit)            (4,410.9)      950.0    (11,009.8)    (8,423.8)
                     ----------  ----------   ----------   ----------
 Income (loss) from
  continuing
  operations           (9,140.2)    1,923.2    (19,038.7)   (23,429.0)

 Discontinued
 operations:
  Gain on
   dispositions,
   net of taxes            --          --           --       30,918.5
                     ----------  ----------   ----------   ----------
 Income (loss)
  before
  extraordinary
  item                 (9,140.2)    1,923.2    (19,038.7)     7,489.5

 Extraordinary item
  - loss on early
  extinguishment
  of debt                  --      (2,050.1)        --       (2,050.1)
                     ----------  ----------   ----------   ----------

 Net Income (loss)     (9,140.2)     (126.9)   (19,038.7)     5,439.4

 Assumed stock
  dividend -
  beneficial
  conversion               --      (9,982.0)        --       (9,982.0)
                     ----------  ----------   ----------   ----------
 Net loss available
  for common
  shareholders       $ (9,140.2) $(10,108.9)  $(19,038.7)  $ (4,542.6)
                     ==========  ==========   ==========   ==========
 Basic per share
 amounts:
  Loss from
   continuing oper-
   ations            $    (0.16) $    (0.16)  $    (0.34)  $    (0.51)
  Gain on dispo-
   sitions of
   discontinued
   operations              --          --           --           0.47
  Extraordinary item
   - loss on early
   extinguishment
   of debt                 --         (0.04)        --          (0.03)
                     ----------  ----------   ----------   ----------
 Net loss available
  for common
  shareholders       $    (0.16) $    (0.20)  $    (0.34)  $    (0.07)
                     ==========  ==========   ==========   ==========
 Basic average
  shares                 55,814      51,176       55,566       66,093
                     ==========  ==========   ==========   ==========
 Diluted per share
  amounts:
   Loss from
    continuing
    operations       $    (0.16) $    (0.16)  $    (0.34)  $    (0.51)
   Gain on
    dispositions of
    discontinued
    operations             --          --           --           0.47
   Extraordinary
    item - loss on
    early extin-
    guishment
    of debt                --         (0.04)        --          (0.03)
                     ----------  ----------   ----------   ----------
 Net loss available
  for common
  shareholders       $    (0.16) $    (0.20)  $    (0.34)  $    (0.07)
                     ==========  ==========   ==========   ==========
 Diluted average
  shares                 55,814      51,176       55,566       66,093
                     ==========  ==========   ==========   ==========


 Note: Certain prior year amounts have been reclassified to
       conform with current year reporting

 (a)  Includes a $6.6m provision for excess and obsolete inventory


               WJ Communications Inc. and Subsidiaries
           Unaudited Reconciliation of Pro Forma Adjustments
               (in thousands, except per share amounts)

                         Three Months Ended       Nine Months Ended
                     -----------------------   -----------------------
                      Sept. 30,    Sept. 29,    Sept. 30,   Sept. 29, 
                        2001         2000         2001        2000
                     ----------   ----------   ----------   ----------

 Income (loss)
  from continuing
  operations
  before income
  taxes              $(13,551.1)  $  2,873.2  $ (30,048.5) $(31,852.8)

 Add:
  Amortization of
   deferred stock
   compensation           143.0        329.1       526.6        846.4
  Severance
   related cost           763.8         --       1,244.0         --
  Inventory
   provision               --           --       6,567.3         --
  Restructuring
   charge               9,796.5         --       9,796.5         --
  Recapital-
   ization and
   merger cost             --           --          --       35,452.9

 Less:
  Gain on
  disposition of
  real property            --           --        (325.5)      (808.2)
                     ----------   ----------   ----------   ----------
 Income (loss)
  from continuing
  operations
  before income
  taxes, as
  adjusted             (2,847.8)     3,202.3   (12,239.6)     3,638.3

 Proforma income
  tax provision
  (benefit)              (929.5)       950.0    (4,484.6)       989.6
                     ----------   ----------   ----------   ----------

 Net Income
  (loss), as
  adjusted           $ (1,918.3)  $  2,252.3  $ (7,755.0)  $  2,648.7
                     ==========   ==========   ==========   ==========
 Diluted average
  shares
  outstanding            55,814       61,874      55,566       75,767
                     ==========   ==========   ==========   ==========
 Earnings (loss)
  per share as
  adjusted           $    (0.03)  $     0.04  $    (0.14)  $     0.03
                     ==========   ==========   ==========   ==========





                WJ Communications Inc. and Subsidiaries
                 Condensed Consolidated Balance Sheets
                            (in thousands)


                                           Sept. 30,         Dec. 31,
                                             2001             2000 (1)
                                            --------          --------
 ASSETS                                   (unaudited)

  Cash and Short-term
   Investments                             $ 57,031          $ 89,785

  Accounts Receivable, net                    9,009            22,549

  Inventory, net                             14,473            14,457

  Other Current Assets                       13,481             9,356
                                           --------          --------
  Total Current Assets                       93,994           136,147

  Property, Plant and
   Equipment                                 32,880            29,260

  Other Assets                                6,072             2,091
                                           --------          --------
  Total Assets                             $132,946          $167,498
                                           ========          ========

  LIABILITIES AND STOCKHOLDERS'
   EQUITY

  Current Liabilities                      $ 13,319          $ 37,270

  Other Long-Term Obligations                17,687            10,840

  Stockholders' Equity                      101,940           119,388
                                           --------          --------
  Total Liabilities
   and Stockholders'
   equity                                  $132,946          $167,498
                                           ========          ========

 Note: Certain prior year amounts have been reclassified to
 conform with current year reporting.

 (1) Derived from the Company's audited consolidated financial
  statements included in our annual report on Form 10-K for the
  year ended December 31, 2000.

            

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