Exhibit 99.1
ESI Announces Preliminary Fiscal 2003 Third Quarter Financial Results,
Accounting Review of Prior Fiscal 2003 Quarters
and Postponement of Conference Call
PORTLAND, Ore.--(BUSINESS WIRE)--March 20, 2003--Electro
Scientific Industries, Inc. (Nasdaq:ESIO) announced preliminary
results for its fiscal 2003 third quarter ended March 1, 2003. Third
quarter sales were $34.7 million, compared with sales in the prior
year's third quarter of $36.4 million. The company reported a net loss
for the third quarter of fiscal 2003 of $10.3 million or $0.37 per
diluted share. Third quarter expenses include $2.9 million of
restructuring expenses included in operating expenses. The quarter
also includes $6.9 million in cost of sales related to warranty
expenses and inventory write-downs. The latest quarter compares with
net income of $1.7 million or $0.06 per diluted share in the prior
year's third quarter.
The company also announced that it intends to restate its
financial statements for the quarters ended Aug. 31, 2002, and Nov.
30, 2002, as a result of an ongoing review of accounting matters.
Although the review is ongoing and the company's independent auditors
have not completed its review, the company currently expects its
results for the first quarter will be restated to a net loss of $1.0
million or $0.04 per share, compared with the previously reported net
income of $0.2 million or $0.01 per share; and the company currently
expects its results for the second quarter will be restated to a net
loss of $11.5 million or $0.42 per share from the previously reported
loss of $9.5 million or $0.34 per share.
Presently the company believes net sales in its restated financial
statements will be reduced by $0.1 million in the first quarter and
$0.2 million in the second quarter. Thus far, known adjustments
affecting the restatements do not impact the company's recognition of
net sales in fiscal year 2003 other than as previously described. The
company also plans to restate cost of sales that was understated by
approximately $1.6 million in the first quarter and $2.5 million in
the second quarter primarily due to errors in manufacturing overhead
absorption and warranty expense, as well as an addition of $0.1
million to selling, service and administrative expense for the second
quarter. At the request of the company its independent auditors and
legal counsel are conducting an ongoing review primarily focused on
the company's financial statements for fiscal 2003. The completion of
the review could result in a determination to further restate the
company's financial statements other than as described above which
could have a material adverse effect on its reported financial
results. Thus far, known adjustments affecting the restatements do not
impact the company's cash balances or net cash flows for these
periods. Further, the company is not presently aware of any adjustment
that would materially affect its financial statements for its fiscal
year 2002. When the review is completed, management will comment
further on the company's results, and will schedule a conference call
with investors. Until that time, the company will make no further
comment regarding its financial results and operations. Accordingly,
the conference call previously scheduled for today at 1:45 p.m. PST
has been postponed.
This press release includes forward-looking statements, which are
subject to the Safe Harbor provisions created by the Private
Securities Litigation Reform Act of 1995. Such statements are subject
to a number of risks and uncertainties that may causes actual results
to differ from the forward-looking statements. The risks and
uncertainties include new information that may arise as independent
auditors and legal counsel complete their review of the company's
results, as well as continued weakness in the electronic capital goods
industry. Other risks are discussed in more detail in the Company's
Annual Report on Form 10-K and interim reports on Form 10-Q.
About ESI
ESI, headquartered in Portland, Ore., supplies high-value,
high-technology manufacturing equipment to the global electronics
market. Using its expertise in laser/material interaction, small parts
handling, machine vision and real-time control systems, the company
enables the production of leading-edge products for customers in the
semiconductor, passive component and electronic interconnect markets.
ESI's web site is http://www.esi.com.
Electro Scientific Industries, Inc.
Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
------------------ -------------------
March 1, March 2, March 1, March 2,
2003 2002 2003 2002
--------- -------- --------- ---------
Net sales $34,736 $36,381 $120,699 $125,494
Cost of sales 31,694 19,006 93,333 66,997
--------- -------- --------- ---------
Gross margin 3,042 17,375 27,366 58,497
Operating expenses:
Selling, service and
administrative 15,305 14,468 45,765 51,661
Research, development and
engineering 5,729 7,773 20,342 29,299
--------- -------- --------- ---------
Total operating expenses 21,034 22,241 66,107 80,960
Operating loss (17,992) (4,866) (38,741) (22,463)
Interest income 2,729 2,235 8,631 5,792
Interest expense (1,810) (1,571) (5,591) (1,649)
Other income (expense), net (224) (83) 41 (105)
--------- -------- --------- ---------
Loss before income taxes (17,297) (4,285) (35,660) (18,425)
Benefit for income taxes (6,962) (6,014) (12,837) (10,680)
--------- -------- --------- ---------
Net income (loss) $(10,335) $1,729 $(22,822) $(7,745)
========= ======== ========= =========
Net loss per share - basic $(0.37) $0.06 $(0.82) $(0.28)
========= ======== ========= =========
Net loss per share - diluted $(0.37) $0.06 $(0.82) $(0.28)
========= ======== ========= =========
Weighted average number of
shares - basic 27,782 27,392 27,715 27,263
Weighted average number of
shares - diluted 27,782 28,087 27,715 27,263
Certain amounts in prior periods have been reclassified to conform
with current period presentation.
Electro Scientific Industries, Inc.
Supplemental Financial and Other Information
(In thousands)
(Unaudited)
Three Months Ended Nine Months Ended
------------------ -------------------
March 1, March 2, March 1, March 2,
2003 2002 2003 2002
--------- -------- --------- ---------
Net sales by product line:
Semiconductor yield
improvement systems $14,004 $13,563 $49,895 $52,522
Electronic component
manufacturing systems 6,604 11,110 22,294 33,377
Advanced electronic
packaging systems 7,123 2,585 22,441 12,151
Circuit fine tuning
systems 3,776 5,418 16,691 18,664
Vision and inspection
systems 3,229 3,705 9,378 8,780
--------- -------- --------- ---------
Total $34,736 $36,381 $120,699 $125,494
========= ======== ========= =========
Gross margin % 8.8% 47.8% 22.7% 46.6%
Selling, service and
administrative expense % 44.1% 39.8% 37.9% 41.2%
Research, engineering and
development expense % 16.5% 21.4% 16.9% 23.3%
Operating loss margin % -51.8% -13.4% -32.1% -17.9%
Effective tax rate % 40.2% 140.4% 36.0% 58.0%
Certain amounts in prior periods have been reclassified to conform
with current period presentation.
Electro Scientific Industries, Inc.
Condensed Consolidated Summary Balance Sheet Data
(In thousands)
(Unaudited)
March 1, Nov. 30, June 1,
2003 2002 2002
------------ ------------ ----------
Cash and S/T investments $249,324 $262,276 $216,807
Trade receivables, net 49,737 52,471 55,810
Income tax refund receivable 22,450 14,719 13,948
Inventory 47,216 53,086 63,690
Deferred income taxes 7,630 7,630 7,630
Other current assets 5,298 7,199 5,260
------------ ------------ ----------
Total current assets 381,655 397,381 363,145
Long-term securities 48,552 47,485 85,492
Property and equipment, net 57,136 57,277 58,784
Other assets 12,953 15,712 17,826
------------ ------------ ----------
Total assets $500,297 $517,855 $525,247
============ ============ ==========
Current liabilities $21,555 $24,430 $21,256
Convertible subordinated
notes 141,675 146,347 145,897
Shareholders' equity 337,067 347,078 358,094
------------ ------------ ----------
Total liabilities and equity $500,297 $517,855 $525,247
============ ============ ==========
Certain amounts in prior periods have been reclassified to conform
with current period presentation.
CONTACT: Electro Scientific Industries
Fletcher Chamberlin, 503/671-5233