Electro Scientific Industries (ESIO) 8-K ESI Announces Fourth Quarter and Full Year Fiscal 2011 Results

Exhibit 99.1

Brian Smith

ESI

503-672-5760

smithb@esi.com

ESI Announces Fourth Quarter and Full Year Fiscal 2011 Results

Generates 72% Annual Revenue Growth and $51 Million Operating Cash Flow

PORTLAND, Ore. – May 10, 2011 –Electro Scientific Industries, Inc. (NASDAQ:ESIO), a leading supplier of innovative laser-based manufacturing solutions for the microtechnology industry, today announced results for its fiscal 2011 fourth quarter ended April 2, 2011. Financial measures are provided on both a GAAP and non-GAAP basis, which excludes the impact of purchase accounting, equity compensation and non-recurring items.

Revenue in the fourth quarter was $71.6 million, compared to $67.2 million in the third quarter of 2011 and $59.6 million in the same quarter one year ago. On a GAAP basis, net income was $6.0 million or $0.21 per diluted share, compared to $2.4 million or $0.08 per diluted 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 $6.5 million or $0.22 per diluted share, compared to $5.9 million or $0.21 per diluted share in the third quarter.

“The fourth quarter represented a strong finish to a great year for ESI,” stated Nick Konidaris, president and CEO of ESI. “We reported our highest quarterly revenue and operating profit in over three years, and we generated nearly $30 million in operating cash flow.”

Orders for the fourth quarter were $72.5 million, compared to $77.9 million in the prior quarter and up from $54.2 million in the corresponding quarter last year. Konidaris continued, “The Interconnect and Micromachining Group had its second highest order level, following record performance last quarter. In addition, strength in the DRAM and LED markets, especially mobile DRAM, drove higher orders in our semiconductor business.”

Revenue increased 6.5% sequentially, with strong shipments of interconnect and micromachining systems. Gross margin was 44%, compared to 45% last quarter and 43% in the prior year quarter.

Operating expenses decreased by $1.8 million sequentially driven by a reduction in legal settlement and restructuring charges. Excluding non-recurring items, stock compensation and purchase accounting, non-GAAP operating expenses were $23.7 million, up $0.4 million. Non-GAAP operating income was $8.3 million, or 12% of sales, up from $7.2 million or 11% of sales in the third quarter.

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

ESI Announces Fourth Quarter Fiscal 2011 Results

Full Year Fiscal 2011 Results

Fiscal 2011 revenue was $257 million, up 72% compared to $149 million in fiscal 2010. On a GAAP basis, fiscal 2011 net income was $7.9 million or $0.28 per diluted share, compared to net loss of $12.0 million or $0.44 per share in the prior year. On a non-GAAP basis, excluding the impact of purchase accounting, equity compensation and non-recurring items, net income was $16.0 million or $0.56 per diluted share, compared to a net loss of $6.6 million or $0.24 per share in 2010. Konidaris added, “Fiscal 2011 was an outstanding year for ESI, with dramatic improvement in all operating metrics. The investments we made in innovation and new initiatives are driving growth, and we believe position us well heading into 2012.”

Balance Sheet and Cash Flow

At quarter end, cash and investments totaled $205 million. Cash flow from operations was $29 million for the quarter and $51 million for fiscal year 2011, as a result of higher profitability and improved working capital efficiency.

Q1 2012 Outlook

Based on current business conditions, ESI expects revenues for the first quarter of fiscal 2012 to be between $75 and $80 million. Non-GAAP earnings per share are expected to be $0.24 to $0.28, excluding the impact of purchase accounting, equity compensation and non-recurring items.

Konidaris concluded, “Fiscal 2011 was a strong year for ESI, as we improved our profitability and increased our investment for growth. Looking forward into fiscal 2012, our markets are healthy and we continue to see strong demand for our industry-leading portfolio of products. We will continue to execute our strategy to drive revenue growth and improve profitability by growing our addressable market through entering new applications in the field of laser-based microengineering.”

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 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 58389369. A live audio webcast can be accessed atinvestors.esi.com. Upon completion of the call, an audio replay will be accessible through May 20, 2011, at 888-286-8010 (domestic participants) or 617-801-6888 (international participants), passcode 19442599. The webcast will be available on ESI’s website for one year.

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

ESI Announces Fourth Quarter Fiscal 2011 Results

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, 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 leading supplier of innovative laser-based manufacturing solutions for the microtechnology industry. Our systems enable precise structuring and testing of micron to submicron features in semiconductors, electronic devices, LEDs and other high-value components. We partner with our customers to make breakthrough technologies possible in the semiconductor, microelectronics and other emerging industries. Founded in 1944, ESI is headquartered in Portland, Ore, with global operations from the Pacific Northwest to the Pacific Rim. More information is available atwww.esi.com.

Forward-Looking Statements

This press release includes forward-looking statements about the markets we serve, revenue, new products and markets, 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, supply 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; the risk that competing or alternative technologies could reduce demand for our 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 2011 Results

Electro Scientific Industries, Inc.

Fourth Quarter and Fiscal 2011 Results

(In thousands, except per share data)

(Unaudited)

	Fiscal quarter ended									Fiscal year ended
	Apr 2, 2011			Jan 1, 2011			Apr 3, 2010			Apr 2, 2011		Apr 3, 2010
Operating Results:
Net sales	$	71,577		$	67,209		$	59,604		$	256,811	$	148,893
Cost of sales		40,129			37,182			33,943			147,862		93,028
Gross profit		31,448			30,027			25,661			108,949		55,865
Operating expenses:
Selling, service and administration		15,199			15,172			13,300			58,262		48,536
Research, development and engineering		10,457			10,210			9,929			41,095		33,618
Legal settlement costs		56			1,311			—			1,367		—
Restructuring costs		(30	)		827			—			797		—
Merger termination proceeds, net		—			—			—			—		(4,516	)
Net operating expenses		25,682			27,520			23,229			101,521		77,638
Operating income (loss)		5,766			2,507			2,432			7,428		(21,773	)
Non-operating income (expense):
Sale of previously impaired auction rate securities		708			—			—			708		—
Other-than-temporary impairment of auction rate securities		—			—			(1,347	)		—		(1,347	)
Interest and other (expense) income, net		(18	)		(39	)		289			188		1,358
Total non-operating income (expense)		690			(39	)		(1,058	)		896		11
Income (loss) before income taxes		6,456			2,468			1,374			8,324		(21,762	)
Provision for (benefit from) income taxes		463			117			(704	)		390		(9,778	)
Net income (loss)	$	5,993		$	2,351		$	2,078		$	7,934	$	(11,984	)
Net income (loss) per share - basic	$	0.21		$	0.08		$	0.08		$	0.28	$	(0.44	)
Net income (loss) per share - diluted	$	0.21		$	0.08		$	0.07		$	0.28	$	(0.44	)

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

ESI Announces Fourth Quarter and Fiscal 2011 Results

Electro Scientific Industries, Inc.

Fourth Quarter and Fiscal 2011 Results

(Amounts in thousands)

(Unaudited)

Financial Position As Of:

	Apr 2, 2011		Jan 1, 2011		Apr 3, 2010
Assets
Current assets:
Cash and cash equivalents	$	116,412	$	47,061	$	39,335
Restricted cash		10,769		10,769		10,824
Short-term investments		69,245		104,949		116,140
Total cash, restricted cash and investments		196,426		162,779		166,299
Trade receivables, net		44,100		44,630		38,061
Inventories		65,362		70,180		72,090
Shipped systems pending acceptance		5,289		4,744		4,106
Deferred income taxes, net		9,892		7,931		7,232
Other current assets		6,784		8,593		8,677
Total current assets		327,853		298,857		296,465
Non-current assets:
Auction rate securities		5,166		6,211		5,021
Non-current investments		8,097		14,550		—
Property, plant and equipment, net		39,661		38,840		40,590
Non-current deferred income taxes, net		30,822		34,062		31,079
Goodwill		4,014		4,014		—
Acquired intangible assets, net		10,035		10,446		8,255
Other assets		14,519		14,050		13,008
Total assets	$	440,167	$	421,030	$	394,418
Liabilities and shareholders’ equity
Current liabilities:
Accounts payable	$	18,650	$	16,057	$	14,607
Accrued liabilities		33,425		27,949		14,937
Deferred revenue		16,039		12,513		13,193
Total current liabilities		68,114		56,519		42,737
Non-current income taxes payable		9,754		9,706		9,019
Shareholders’ equity:
Preferred and common stock		153,189		150,433		142,369
Retained earnings		207,420		201,427		199,486
Accumulated other comprehensive income		1,690		2,945		807
Total shareholders’ equity		362,299		354,805		342,662
Total liabilities and shareholders’ equity	$	440,167	$	421,030	$	394,418
End of period shares outstanding		28,299		28,184		27,665

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

ESI Announces Fourth Quarter and Fiscal 2011 Results

Electro Scientific Industries, Inc.

Analysis of Fourth Quarter and Fiscal 2011 Results

(Dollars and shares in thousands)

(Unaudited)

	Fiscal quarter ended									Fiscal year ended
	Apr 2, 2011			Jan 1, 2011			Apr 3, 2010			Apr 2, 2011			Apr 3, 2010
Sales detail:
Semiconductor Group	$	16,848		$	29,674		$	5,645		$	78,739		$	28,525
Components Group		14,322			7,755			10,105			54,184			31,697
Interconnect/ Micromachining Group		40,407			29,780			43,854			123,888			88,671
Total	$	71,577		$	67,209		$	59,604		$	256,811		$	148,893
Gross margin %		44	%		45	%		43	%		42	%		38	%
Selling, service and administration expense %		21	%		23	%		22	%		23	%		33	%
Research, development and engineering expense %		15	%		15	%		17	%		16	%		23	%
Operating income (loss) %		8	%		4	%		4	%		3	%		(15	%)
Effective tax rate %		7	%		5	%		(51	%)		5	%		45	%
Average shares outstanding - basic		28,245			28,132			27,619			28,045			27,449
Average shares outstanding - diluted		28,956			28,667			27,924			28,608			27,449
End of period employees		648			638			581			648			581

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

ESI Announces Fourth Quarter and Fiscal 2011 Results

Electro Scientific Industries, Inc.

Fourth Quarter and Fiscal 2011 Results

(In thousands, except per share data)

(Unaudited)

Reconciliation of GAAP to Non-GAAP Financial Measures:

	Fiscal quarter ended									Fiscal year ended
	Apr 2, 2011			Jan 1, 2011			Apr 3, 2010			Apr 2, 2011			Apr 3, 2010
Gross profit per GAAP	$	31,448		$	30,027		$	25,661		$	108,949		$	55,865
Add back:
Purchase accounting included in cost of sales		289			289			289			1,157			1,155
Equity compensation included in cost of sales		256			252			242			1,084			1,059
Total non-GAAP adjustments to gross profit		545			541			531			2,241			2,214
Non-GAAP gross profit	$	31,993		$	30,568		$	26,192		$	111,190		$	58,079
Non-GAAP gross margin		44.7	%		45.5	%		43.9	%		43.3	%		39.0	%
Operating expenses per GAAP	$	25,682		$	27,520		$	23,229		$	101,521		$	77,638
Less:
Purchase accounting included in operating expenses:
Selling, service and administration		112			135			189			576			1,020
Research, development and engineering		58			36			36			166			134
Subtotal - purchase accounting included in operating expenses		170			171			225			742			1,154
Equity compensation included in operating expenses:
Selling, service and administration		1,412			1,414			1,038			6,688			5,306
Research, development and engineering		358			420			334			1,554			1,355
Subtotal - equity compensation included in operating expenses		1,770			1,834			1,372			8,242			6,661
Acquisition costs (settlement proceeds) included in operating expenses:
Selling, service and administration		—			17			—			(592	)		—
Subtotal - acquisition costs (settlement proceeds) included in operating expenses		—			17			—			(592	)		—
Other non-recurring items included in operating expenses:
Legal settlement costs		56			1,311						1,367
Restructuring costs		(30	)		827			—			797			—
Merger termination proceeds, net		—			—			—			—			(4,516	)
Subtotal - other non-recurring items included in operating expenses		26			2,138			—			2,164			(4,516	)
Total non-GAAP adjustments to operating expenses		1,966			4,160			1,597			10,556			3,299
Non-GAAP operating expenses	$	23,716		$	23,360		$	21,632		$	90,965		$	74,339
Operating income (loss) per GAAP	$	5,766		$	2,507		$	2,432		$	7,428		$	(21,773	)
Non-GAAP adjustments to gross profit		545			541			531			2,241			2,214
Non-GAAP adjustments to operating expenses		1,966			4,160			1,597			10,556			3,299
Non-GAAP operating income (loss)	$	8,277		$	7,208		$	4,560		$	20,225		$	(16,260	)
Non-operating income (expense), net per GAAP	$	690		$	(39	)	$	(1,058	)	$	896		$	11
Non-GAAP adjustment for sale of previously impaired auction rate securities		(708	)		—			—			(708	)		—
Non-GAAP adjustment for impairment of auction rate securities		—			—			1,347			—			1,347
Non-GAAP non-operating (expense) income	$	(18	)	$	(39	)	$	289		$	188		$	1,358
Net income (loss) per GAAP	$	5,993		$	2,351		$	2,078		$	7,934		$	(11,984	)
Non-GAAP adjustments to gross profit		545			541			531			2,241			2,214
Non-GAAP adjustments to operating expenses		1,966			4,160			1,597			10,556			3,299
Non-GAAP adjustments to non-operating expenses		(708	)		—			1,347			(708	)		1,347
Income tax effect of non-GAAP adjustments		(1,329	)		(1,148	)		(1,186	)		(4,025	)		(1,452	)
Non-GAAP net income (loss)	$	6,467		$	5,904		$	4,367		$	15,998		$	(6,576	)
Basic Non-GAAP net income (loss) per share	$	0.23		$	0.21		$	0.16		$	0.57		$	(0.24	)
Diluted Non-GAAP net income (loss) per share	$	0.22		$	0.21		$	0.16		$	0.56		$	(0.24	)

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

ESI Announces Fourth Quarter and Fiscal 2011 Results

Electro Scientific Industries, Inc.

Fourth Quarter and Fiscal 2011 Results

(Amounts in thousands)

(Unaudited)

Consolidated Condensed Statements of Cash Flows:

	Fiscal quarter ended									Fiscal year ended
	Apr 2, 2011			Jan 1, 2011			Apr 3, 2010			Apr 2, 2011		Apr 3, 2010
Net income (loss)	$	5,993		$	2,351		$	2,078		$	7,934	$	(11,984	)
Non-cash adjustments and changes in operating activities		23,347			6,007			1,942			42,656		14,839
NET CASH PROVIDED BY OPERATING ACTIVITIES		29,340			8,358			4,020			50,590		2,855
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES		39,405			(2,335	)		(17,797	)		23,952		(118,955	)
NET CASH PROVIDED BY FINANCING ACTIVITIES		730			562			505			1,511		822
Effect of exchange rate changes on cash		(124	)		56			(35	)		1,024		1,075
NET CHANGE IN CASH AND CASH EQUIVALENTS		69,351			6,641			(13,307	)		77,077		(114,203	)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		47,061			40,420			52,642			39,335		153,538
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	116,412		$	47,061		$	39,335		$	116,412	$	39,335

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