Electro Scientific Industries (ESIO) 8-K ESI Announces Fourth Quarter and Full Year Fiscal 2010 Results

Exhibit 99.1

Brian Smith

ESI

503-672-5760

ESI Announces Fourth Quarter and Full Year Fiscal 2010 Results

Quarterly Revenues Grow Over 50% Sequentially

PORTLAND, Ore.—May 11, 2010—Electro Scientific Industries, Inc. (NASDAQ:ESIO), a leading provider of world-class laser-based microengineering systems, today announced results for its fiscal 2010 fourth quarter and year, ended April 3, 2010. Financial measures are provided on both a GAAP and non-GAAP basis, which excludes the impact of purchase accounting, equity compensation, restructuring costs, and non-recurring items.

Fourth quarter revenues were $59.6 million, up 53% from the third quarter and up 230% from the same quarter one year ago, driven largely by the shipment of the large micro-machining order received last quarter. On a GAAP basis, net income was $2.1 million or $0.07 per diluted share, compared to a net loss of $2.4 million or $0.09 per share in the prior quarter. On a non-GAAP basis, excluding the impact of purchase accounting, equity compensation, and non-recurring items, fourth quarter net income was $4.4 million or $0.16 per diluted share, compared to a loss of $0.9 million or $0.03 per share in the third quarter.

“This quarter was a tremendous finish to our fiscal year,” said Nick Konidaris, ESI president and CEO. “Revenues more than tripled from last year’s fourth quarter, and we delivered solid profits and cash flow.”

Revenues for the full fiscal year 2010 were $148.9 million, down 5% from 2009. On a GAAP basis, the fiscal 2010 net loss was $12.0 million or $0.44 per share, compared to a net loss of $51.0 million or $1.89 per share in the prior year. Non-GAAP net loss was $6.6 million or $0.24 per share, compared to a non-GAAP loss of $9.1 million or $0.34 per share in fiscal 2009.

13900 NW Science Park Drive | Portland, Oregon 97229 | 503.641.4141 | www.esi.com

ESI Announces Fourth Quarter and Full Year Fiscal 2010 Results

Orders for the fourth quarter were $54.2 million, compared to $61.2 million in the prior quarter and $16.1 million in the prior year quarter. Excluding the large order received last quarter, overall orders grew almost 50% sequentially.

“We saw solid demand for flex interconnect, LED scribing, and passive component test products, reflecting increased end-user demand and higher capacity utilization rates at our customers,” continued Konidaris. “In addition, our advanced micromachining business was strong, as we saw some follow-on business to the very large order for the ML5900 we received last quarter. Memory repair continued to be weak; however, we are seeing increased activity in this market and expect to begin seeing orders this quarter.”

Fourth quarter operating expenses were up sequentially due to the elimination of most of the temporary cost reduction measures and higher engineering project spending. Konidaris added, “Our top priority is to grow the company, and we are making a substantial investment in new product development to capture the many growth opportunities we see ahead.”

Balance Sheet and Cash Flow

At quarter end, cash and investments, including restricted cash, totaled $166.3 million, an increase of $3.5 million over last quarter. Cash flow from operations was $4.0 million as improved profitability and lower inventory levels offset other increases in working capital. “Despite the challenging environment over the past year, we are pleased that we were able to generate positive operating cash flow for fiscal 2010,” added Konidaris.

Q1 2011 Outlook

Based on current business conditions, ESI expects revenues for the first quarter of fiscal 2011 to be in the low- to mid-$50 million range and non-GAAP earnings per share of $0.01 to $0.06 excluding the impact of purchase accounting, equity compensation, and non-recurring items.

Konidaris concluded, “Since the market bottomed in 2009 we have delivered four quarters of solid sequential revenue growth. Over that time the markets have taken a step up. Where they go from here is still not clear. Most of our markets are strong, while DRAM remains weak; but we are looking for that market to begin to recover this quarter. Overall I feel good as we enter fiscal year 2011, and we expect to see strong revenue growth year over year. While we may see choppiness in some of our markets during the year, DRAM recovery and new products should help fuel our growth.

13900 NW Science Park Drive | Portland, Oregon 97229 | 503.641.4141 | www.esi.com

ESI Announces Fourth Quarter and Full Year Fiscal 2010 Results

“I would like to thank the many ESI employees and teams for their tremendous effort and sacrifice this year to deliver results and position us for future success.”

The company will hold a conference call today at 5:00 p.m. EDT. The session will include a review of the financial results, operational performance and business outlook, and also a question and answer period.

The conference call can be accessed by calling 800-688-0796 (domestic participants) or 617-614-4070 (international participants). The conference ID number is 30676834. A live audio webcast can be accessed atwww.esi.com. Upon completion of the call, an audio replay will be accessible through May 21, 2010 at 888-286-8010 (domestic participants) or 617-801-6888 (international participants), passcode 27187061. The webcast will be available on the ESI Web site for one year.

Discussion of Non-GAAP Financial Measures

In this press release, we have presented financial measures which have not been determined in accordance with generally accepted accounting principles (GAAP) and are therefore non-GAAP financial measures. Non-GAAP financial measures exclude the impact of purchase accounting, equity compensation, restructuring costs, and non-recurring items. We believe that this presentation of non-GAAP financial measures allows investors to better assess the company’s operating performance by comparing it to prior periods on a more consistent basis. We have included a reconciliation of various non-GAAP financial measures to those measures reported in accordance with GAAP. Because our calculation of non-GAAP financial measures may differ from similar measures used by other companies, investors should be careful when comparing our non-GAAP financial measures to those of other companies.

About ESI

ESI is a pioneer and leading supplier of world-class production laser systems that help its microelectronics customers achieve compelling yield and productivity gains. The company’s industry-leading, application-specific products enhance electronic-device performance in three key sectors—semiconductors, passive components and electronic interconnect—by enabling precision fine-tuning of device micro-features in high-volume manufacturing environments. Founded in 1944, ESI is headquartered in Portland, Ore. More information is available atwww.esi.com.

13900 NW Science Park Drive | Portland, Oregon 97229 | 503.641.4141 | www.esi.com

ESI Announces Fourth Quarter and Full Year Fiscal 2010 Results

Forward-Looking Statements

This press release includes forward-looking statements about the markets we serve, orders, revenue, growth, earnings growth, and earnings per share. These forward-looking statements are based on information available to us on the date of this release and we assume no obligation to update these forward-looking statements for any reason. Actual results may differ materially from those in the forward-looking statements. Risks and uncertainties that may affect the forward-looking statements include: the risk that anticipated growth opportunities may be smaller than anticipated or may not be realized; risks related to the relative strength and volatility of the electronics industry—which is dependent on many factors including component prices, global economic strength and political stability, and overall demand for electronic devices (such as capacitors, semiconductor memory devices and advanced electronic packages) used in wireless telecommunications equipment, computers and consumer and automotive electronics; the health of the financial markets and availability of credit for end customers and related effect on the global economy; the volatility associated with the semiconductor industry which includes the relative level of capacity and demand, and financial strength of the manufacturers; the risk that customer orders may be canceled or delayed; the ability of the company to respond promptly to customer requirements; the risk that the company may not be able to ship products on the schedule required by customers, whether as a result of production delays or otherwise; the ability of the company to develop, manufacture and successfully deliver new products and enhancements; the risk that customer acceptance of new or customized products may be delayed; the risk that large orders and related revenues may not be repeated; the company’s need to continue investing in research and development; the company’s ability to hire and retain key employees; the company’s ability to create and sustain intellectual property protection around its products; foreign currency fluctuations; the company’s ability to utilize recorded deferred tax assets; taxes, interest or penalties resulting from tax audits; changes in tax laws or the interpretation of such tax laws; and future liquidity and valuation of auction rate securities.

13900 NW Science Park Drive | Portland, Oregon 97229 | 503.641.4141 | www.esi.com

ESI Announces Fourth Quarter and Fiscal 2010 Results

Electro Scientific Industries, Inc.

Fourth Quarter and Fiscal 2010 Results

(In thousands, except per share data)

(Unaudited)

	Fiscal quarter ended									Fiscal year ended
	Apr 3, 2010			Jan 2, 2010			Mar 28, 2009			Apr 3, 2010			Mar 28, 2009
Operating Results:
Net sales	$	59,604		$	39,048		$	18,061		$	148,893		$	157,313
Cost of sales		33,943			24,231			13,424			93,028			98,895
Gross profit		25,661			14,817			4,637			55,865			58,418
Operating expenses:
Selling, service and administration		13,300			11,910			10,352			48,536			51,260
Research, development and engineering		9,929			8,793			12,136			33,618			38,179
Restructuring costs		—			—			1,976			—			4,011
Merger transaction costs (termination proceeds), net		—			—			1,850			(4,516	)		1,850
Goodwill impairment charge		—			—			—			—			17,396
Net operating expenses		23,229			20,703			26,314			77,638			112,696
Operating income (loss)		2,432			(5,886	)		(21,677	)		(21,773	)		(54,278	)
Non-operating income (expense):
Other-than-temporary impairment of auction rate securities		(1,347	)		—			(1,096	)		(1,347	)		(13,593	)
Interest and other income, net		289			369			196			1,358			3,194
Total non-operating (expense) income		(1,058	)		369			(900	)		11			(10,399	)
Income (loss) before income taxes		1,374			(5,517	)		(22,577	)		(21,762	)		(64,677	)
Benefit from income taxes		(704	)		(3,104	)		(7,652	)		(9,778	)		(13,627	)
Net income (loss)	$	2,078		$	(2,413	)	$	(14,925	)	$	(11,984	)	$	(51,050	)
Net income (loss) per share - basic	$	0.08		$	(0.09	)	$	(0.55	)	$	(0.44	)	$	(1.89	)
Net income (loss) per share - diluted	$	0.07		$	(0.09	)	$	(0.55	)	$	(0.44	)	$	(1.89	)

13900 NW Science Park Drive | Portland, Oregon 97229 | 503.641.4141

ESI Announces Fourth Quarter and Fiscal 2010 Results

Electro Scientific Industries, Inc.

Fourth Quarter and Fiscal 2010 Results

(Amounts in thousands)

(Unaudited)

Financial Position As Of:	Apr 3, 2010		Jan 2, 2010		Mar 28, 2009
Assets
Current assets:
Cash and cash equivalents	$	39,335	$	52,642	$	153,538
Restricted cash		10,824		10,824		—
Short-term investments		116,140		99,287		2,380
Total cash, restricted cash and investments		166,299		162,753		155,918
Trade receivables, net		38,061		22,436		18,847
Inventories		72,090		78,610		84,882
Shipped systems pending acceptance		4,106		1,858		2,072
Deferred income taxes, net		7,232		8,746		6,298
Other current assets		8,677		12,947		10,594
Total current assets		296,465		287,350		278,611
Auction rate securities		5,021		7,007		6,007
Property, plant and equipment, net		40,590		40,027		43,005
Non-current deferred income taxes, net		31,079		31,346		22,620
Acquired intangible assets, net		8,255		8,785		9,972
Other assets		13,008		13,305		24,032
Total assets	$	394,418	$	387,820	$	384,247
Liabilities and shareholders’ equity
Current liabilities:
Accounts payable	$	14,607	$	11,388	$	7,492
Accrued liabilities		14,937		21,046		12,958
Deferred revenue		13,193		7,327		11,251
Total current liabilities		42,737		39,761		31,701
Non-current income taxes payable		9,019		8,793		9,023
Shareholders’ equity:
Preferred and common stock		142,369		140,274		133,808
Retained earnings		199,486		197,408		211,085
Accumulated other comprehensive income (loss)		807		1,584		(1,370	)
Total shareholders’ equity		342,662		339,266		343,523
Total liabilities and shareholders’ equity	$	394,418	$	387,820	$	384,247
End of period shares outstanding		27,665		27,565		27,184

13900 NW Science Park Drive | Portland, Oregon 97229 | 503.641.4141

ESI Announces Fourth Quarter and Fiscal 2010 Results

Electro Scientific Industries, Inc.

Analysis of Fourth Quarter and Fiscal 2010 Results

(Dollars and shares in thousands)

(Unaudited)

	Fiscal quarter ended									Fiscal year ended
	Apr 3, 2010			Jan 2, 2010			Mar 28, 2009			Apr 3, 2010			Mar 28, 2009
Sales detail:
Semiconductor Group	$	5,645		$	9,906		$	5,073		$	28,525		$	44,855
Passive Components Group		10,105			10,344			4,692			31,697			29,243
Interconnect Micro-Machining Group		43,854			18,798			8,296			88,671			83,215
Total	$	59,604		$	39,048		$	18,061		$	148,893		$	157,313
Gross margin %		43	%		38	%		26	%		38	%		37	%
Selling, service and administration expense %		22	%		31	%		57	%		33	%		33	%
Research, development and engineering expense %		17	%		23	%		67	%		23	%		24	%
Operating income (loss) %		4	%		(15	)%		(120	)%		(15	)%		(35	)%
Effective tax rate %		(51	)%		56	%		34	%		45	%		21	%
Average shares outstanding - basic		27,619			27,517			27,133			27,449			27,079
Average shares outstanding - diluted		27,924			27,517			27,133			27,449			27,079
End of period employees		581			573			567			581			567

13900 NW Science Park Drive | Portland, Oregon 97229 | 503.641.4141

ESI Announces Fourth Quarter and Fiscal 2010 Results

Electro Scientific Industries, Inc.

Fourth Quarter and Fiscal 2010 Results

(In thousands, except per share data)

(Unaudited)

Reconciliation of GAAP to Non-GAAP Financial Measures:
	Fiscal quarter ended									Fiscal year ended
	Apr 3, 2010			Jan 2, 2010			Mar 28, 2009			Apr 3, 2010			Mar 28, 2009
Gross profit per GAAP	$	25,661		$	14,817		$	4,637		$	55,865		$	58,418
Add back:
Purchase accounting included in cost of sales		289			288			289			1,155			1,157
Equity compensation included in cost of sales		242			252			114			1,059			713
Total non-GAAP adjustments to gross profit		531			540			403			2,214			1,870
Non-GAAP gross profit	$	26,192		$	15,357		$	5,040		$	58,079		$	60,288
Non-GAAP gross margin		43.9	%		39.3	%		27.9	%		39.0	%		38.3	%
Operating expenses per GAAP	$	23,229		$	20,703		$	26,314		$	77,638		$	112,696
Less:
Purchase accounting included in operating expenses:
Selling, service and administration		189			190			221			1,020			1,171
Research, development and engineering		36			36			33			134			14
Subtotal - purchase accounting included in operating expenses		225			226			254			1,154			1,185
Equity compensation included in operating expenses:
Selling, service and administration		1,038			1,030			579			5,306			2,748
Research, development and engineering		334			370			300			1,355			918
Subtotal - equity compensation included in operating expenses		1,372			1,400			879			6,661			3,666
Write-off of material from an RD&E program
Research, development and engineering		—			—			4,084			—			4,084
Subtotal - write-off of material from an RD&E program included in operating expenses		—			—			4,084			—			4,084
Other items included in operating expenses:
Merger transaction costs (termination proceeds), net		—			—			1,850			(4,516	)		1,850
Restructuring costs		—			—			1,976			—			4,011
Goodwill impairment charge		—			—			—			—			17,396
Subtotal - other non-recurring items included in operating expenses		—			—			3,826			(4,516	)		23,257
Total non-GAAP adjustments to operating expenses		1,597			1,626			9,043			3,299			32,192
Non-GAAP operating expenses	$	21,632		$	19,077		$	17,271		$	74,339		$	80,504
Operating income (loss) per GAAP	$	2,432		$	(5,886	)	$	(21,677	)	$	(21,773	)	$	(54,278	)
Non-GAAP adjustments to gross profit		531			540			403			2,214			1,870
Non-GAAP adjustments to operating expenses		1,597			1,626			9,043			3,299			32,192
Non-GAAP operating income (loss)	$	4,560		$	(3,720	)	$	(12,231	)	$	(16,260	)	$	(20,216	)
Non-operating (expense) income, net per GAAP	$	(1,058	)	$	369		$	(900	)	$	11		$	(10,399	)
Non-GAAP adjustment for impairment of auction rate securities		1,347			—			1,096			1,347			13,593
Non-GAAP non-operating income	$	289		$	369		$	196		$	1,358		$	3,194
Net income (loss) per GAAP	$	2,078		$	(2,413	)	$	(14,925	)	$	(11,984	)	$	(51,050	)
Non-GAAP adjustments to gross profit		531			540			403			2,214			1,870
Non-GAAP adjustments to operating expenses		1,597			1,626			9,043			3,299			32,192
Non-GAAP adjustments to non-operating expense		1,347			—			1,096			1,347			13,593
Income tax effect of non-GAAP adjustments		(1,186	)		(641	)		(2,694	)		(1,452	)		(5,698	)
Non-GAAP net income (loss)	$	4,367		$	(888	)	$	(7,077	)	$	(6,576	)	$	(9,093	)
Basic Non-GAAP net income (loss) per share	$	0.16		$	(0.03	)	$	(0.26	)	$	(0.24	)	$	(0.34	)
Diluted Non-GAAP net income (loss) per share	$	0.16		$	(0.03	)	$	(0.26	)	$	(0.24	)	$	(0.34	)

13900 NW Science Park Drive | Portland, Oregon 97229 | 503.641.4141

ESI Announces Fourth Quarter and Fiscal 2010 Results

Electro Scientific Industries, Inc.

Fourth Quarter and Fiscal 2010 Results

(Amounts in thousands)

(Unaudited)

Consolidated Condensed Statements of Cash Flows:
	Fiscal quarter ended									Fiscal year ended
	Apr 3, 2010			Jan 2, 2010			Mar 28, 2009			Apr 3, 2010			Mar 28, 2009
Net income (loss)	$	2,078		$	(2,413	)	$	(14,925	)	$	(11,984	)	$	(51,050	)
Non-cash adjustments and changes in operating activities		1,942			3,337			9,395			14,839			68,812
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		4,020			924			(5,530	)		2,855			17,762
NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES		(17,797	)		(33,964	)		20,443			(118,955	)		432
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES		505			433			433			822			(1,924	)
Effect of exchange rate changes on cash		(35	)		(42	)		(599	)		1,075			(3,791	)
NET CHANGE IN CASH AND CASH EQUIVALENTS		(13,307	)		(32,649	)		14,747			(114,203	)		12,479
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		52,642			85,291			138,791			153,538			141,059
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	39,335		$	52,642		$	153,538		$	39,335		$	153,538

13900 NW Science Park Drive | Portland, Oregon 97229 | 503.641.4141