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<PAGE>
Information Contact:
Frank E. Emery Watkins-Johnson 650-813-2752
Judy Brennan Sard Verbinnen 212-687-8080
FOR RELEASE AT 8:00 a.m. EASTERN TIME APRIL 13, 1999
WATKINS-JOHNSON REPORTS FIRST-QUARTER 1999 RESULTS
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Wireless Communications Continues Strong Sales Growth;
Semiconductor Equipment Group Continues to Rebound
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Progress on Sale of W-J Businesses to Maximize Shareholder Returns
PALO ALTO, Calif., April 13, 1999 -- Watkins-Johnson Company (NYSE: WJ), a high
technology company in wireless communications and semiconductor equipment, today
reported sales for the first quarter ending March 26, 1999, of $65.2 million,
compared with $68.7 million for the year-ago period. Net income was $2.9
million, or 43 cents per diluted share, compared to $9.7 million, or $1.15 per
diluted share in the first quarter of 1998. The first-quarter 1998 results
include a pre-tax gain of about $15 million for the sale of 15 acres of
undeveloped land in San Jose, Calif.
Firm backlog on March 26, 1999 stood at $98.3 million, compared to the March 27,
1998 backlog of $82.2 million.
"On March 1, we announced our intention to pursue the sale of the company. After
conducting a wide-ranging strategic review with our investment advisors, CIBC
Oppenheimer Corp., we concluded that selling the company in its entirety or as
separate businesses would create the most value for shareholders," said W. Keith
Kennedy, president and chief executive officer of Watkins-Johnson Company.
Kennedy continued: "We are pleased to report W-J's second consecutive quarter of
increasing sales and profits, and a healthy increase in our backlog. Our
Wireless
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Watkins-Johnson Company, page 2
Communications segment continues to enjoy orders growth, and our Semiconductor
Equipment segment is beginning to rebound."
"We are also pleased with the progress we've made toward the sale. On March 31,
we announced the completion of the sale of the Semiconductor Equipment Group's
high-density plasma chemical vapor deposition intellectual property assets and
associated hardware to Applied Materials. This sale will result in a second
quarter 1999 pre-tax gain of $9 million in income. We also entered into a
non-binding letter of intent with Silicon Valley Group to sell the balance of
the Semiconductor Equipment Group."
W-J's Wireless Communications segment, comprising the Wireless Products and
Telecommunications Groups, had sales of $34.7 million, a 16% increase over sales
of $30 million for the year-ago period. The Wireless Products Group received $24
million in commercial orders, well over its plan. The Telecommunications Group
received $17 million in orders for its communications surveillance equipment,
including a $7 million award from Wright Patterson Air Force Base.
The Semiconductor Equipment segment had sales of $30.5 million, down 21% from
the first-quarter 1998 sales of $38.7 million, but up 26% from the 1998
fourth-quarter sales of $24.2 million. First-quarter 1999 orders for
semiconductor equipment totaled $43 million, which included orders from two
major integrated circuit manufacturers in Korea and from a key semiconductor
foundry in Taiwan. Many of the orders were for the recently introduced WJ-1500;
a continuous process atmospheric pressure chemical vapor deposition system
developed for the 0.18-micron geometry semiconductor devices now entering
production.
Watkins-Johnson Company specializes in two high-technology business areas. WJ's
wireless-communications units produce radio-frequency components, subassemblies
and equipment for fixed and mobile networks worldwide. The company's
Semiconductor Equipment Group produces atmospheric pressure chemical vapor
deposition systems for high-volume integrated-circuit manufacturing. For more
information, visit http://www.wj.com.
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Watkins-Johnson Company, page 3
This news release, other than the historical information, contains
forward-looking statements that involve risks and uncertainties, which include
the risks of executing and closing a definitive agreement to sell the
Semiconductor Equipment Group's business, of the consummation of the sale of the
company or its component businesses, and the other risks detailed in the
company's SEC reports, including the report on Form 10-K for the year ended
December 31, 1998. Actual results may vary materially.
Summary of Results
First Quarter Ending March 1999 1998
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(Dollars in thousands except per-share amounts)
Revenue $ 65,181 $ 68,722
Net income 2,853 9,701
Basic per-share amounts:
Basic net income per share $ 0.44 $ 1.17
Basic shares outstanding 6,558,000 8,262,000
Diluted per-share amounts:
Diluted net income per share $ 0.43 $ 1.15
Diluted shares outstanding 6,645,000 8,416,000
# # #
Detailed Results Follow
Watkins-Johnson's consolidated statements of operations and consolidated balance
sheets appear on the following pages.
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Watkins-Johnson Company, page 4
<TABLE>
WATKINS-JOHNSON COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS*
For the periods ended March 26, 1999 and March 27, 1998
<CAPTION>
Three Months Ended
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(Dollars in thousands, except per share amounts) 1999 1998
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<S> <C> <C>
Sales:
Wireless communications $ 34,663 $ 30,006
Semiconductor equipment 30,518 38,716
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65,181 68,722
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Costs and expenses:
Cost of goods sold 42,298 42,546
Selling and administrative 10,247 15,821
Research and development 9,131 13,208
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61,676 71,575
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Income (loss) from operations 3,505 (2,853)
Other income (expense)-net 457 1,929
Gain on real property 14,783
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Income before federal, state and foreign income taxes 3,962 13,859
Income tax expense (1,109) (4,158)
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Net income $ 2,853 $ 9,701
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Per share amounts:
Basic net income per share $ 0.44 $ 1.17
Basic average common shares 6,558,000 8,262,000
Diluted net income per share $ 0.43 $ 1.15
Diluted average common shares 6,645,000 8,416,000
<FN>
*Unaudited
</FN>
</TABLE>
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Watkins-Johnson Company, page 5
<TABLE>
WATKINS-JOHNSON COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
As of March 26, 1999 and December 31, 1998
<CAPTION>
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(Dollars in thousands) 1999* 1998
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<S> <C> <C>
ASSETS
Current assets:
Cash and equivalents $ 15,395 $ 19,271
Short-term investments 40,014 45,353
Receivables 47,562 31,942
Inventories:
Finished goods 2,923 2,960
Work in process 8,917 11,954
Raw materials and parts 7,919 8,456
Deferred income taxes 31,557 32,288
Other 17,713 19,872
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Total current assets 172,000 172,096
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Property, plant, and equipment 140,849 140,224
Accumulated depreciation and amortization (79,157) (77,585)
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Property, plant, and equipment--net 61,692 62,639
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Other assets 10,714 10,743
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$ 244,406 $ 245,478
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LIABILITIES AND SHAREOWNERS' EQUITY
Current liabilities:
Payables $ 16,200 $ 15,704
Accrued liabilities 62,283 65,374
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Total current liabilities 78,483 81,078
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Long-term obligations 31,901 32,701
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Shareowners' equity:
Common stock 34,702 34,454
Retained earnings 101,138 99,073
Accumulated other comprehensive income (loss) (1,818) (1,828)
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Total shareowners' equity 134,022 131,699
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$ 244,406 $ 245,478
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<FN>
*Unaudited
</FN>
</TABLE>