Exhibit 99.1
ESI Announces Fiscal 2003 Third and Fourth Quarters and Full Year
Results and Previous Periods Financial Restatements
PORTLAND, Ore.--(BUSINESS WIRE)--Aug. 11, 2003--Electro Scientific
Industries, Inc. (Nasdaq:ESIOE) announced financial results for the
fiscal 2002 financial restatement, first and second quarter of fiscal
2003 financial restatement, third and fourth quarters of fiscal 2003
and fiscal year ended May 31, 2003. The company previously announced
the restated results on July 15, 2003. Updated financial results are
attached in a tabular format.
Fourth quarter 2003 sales were $22.5 million, compared with last
year's fourth quarter sales of $40.4 million. Sales for the full year
were $136.9 million, compared with $162.9 million in fiscal 2002. The
net loss for the fourth quarter was $20.8 million, or $0.75 per
diluted share, compared with net loss of $8.5 million, or $0.31 per
diluted share, in the fourth quarter of fiscal 2002. The net loss for
the full year was $50.1 million, or $1.81 per diluted share, compared
with a net loss in fiscal 2002 of $17.8 million, or $0.65 per diluted
share. In the fourth quarter of 2003, the company recorded an
impairment charge in the value of certain long-term fixed assets for a
total of $10.1 million. This impairment charge was primarily related
to the Klamath Falls consumables manufacturing site.
"Our year was very difficult, both in our external markets and in
our internal affairs," said Barry Harmon, president and chief
executive officer of ESI. "Now that we have completed the Audit
Committee investigation and reported our fiscal 2003 audited financial
results, the management team is focusing its attention on strategic
customer initiatives, operating plans and core business processes.
This work will clearly require an enormous effort as ESI recovers from
the impact of the accounting restatements and a prolonged trough in
the business cycle. That being said, we believe that the tone of our
business is improving during the first quarter of fiscal 2004. All
product groups are experiencing increased orders and the number of
active sales discussions are increasing, indicating that customer
capacity additions should occur at a faster rate than fiscal 2003."
Cash and investments as of May 31, 2003, were $308 million, up $6
million over the prior year.
Net orders for the latest quarter were $25.5 million, a decrease
of 18.2% compared with $31.2 million in the third quarter and a
decrease of 43.4% compared with $45.1 million in the fourth quarter of
fiscal 2002. Backlog was $11 million at May 31, 2003, as compared to
$22.6 million at June 1, 2002. The deferred revenue balance at May 31,
2003, was $13.2 million as compared to $5.3 million at June 1, 2002.
In conjunction with the filing of a current report on Form 8-K,
which includes this press release, ESI also filed with the Securities
and Exchange Commission a Form 10-K/A for fiscal 2002; amendments to
its quarterly reports on Form 10-Q/A for the first and second quarters
of fiscal 2003; and its quarterly report on Form 10-Q for the third
quarter of fiscal 2003.
This press release includes statements considered forward-looking
as defined within the Private Securities Litigation Reform Act of
1995. These statements include the prospect of customer capacity
additions in fiscal 2004. These statements are subject to risks and
uncertainties that could cause actual results to differ materially
from the statements made, including risks associated with general
economic conditions. Other risks may be detailed from time to time in
reports to be filed with the SEC. ESI does not undertake any
obligation to publicly update its forward-looking statement based on
events or circumstances after the date hereof.
About ESI
ESI, headquartered in Portland, Oregon, 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.
FY 2003 Results
(In thousands, except per share data)
(Unaudited)
Operating Results: Three Months Ended Year Ended
--------------------------------------
Restated Restated
May 31, June 1, May 31, June 1,
2003 2002 2003 2002
--------- -------- --------- ---------
Net sales $22,478 $40,415 $136,885 $162,885
Cost of sales 21,724 30,554 117,858 96,830
--------- -------- --------- ---------
Gross margin 754 9,861 19,027 66,055
Operating expenses:
Selling, service and
administrative 15,740 16,724 63,001 68,385
Research, engineering and
development 7,144 7,140 27,762 36,439
Special charges - Long
lived asset impairment 10,140 - 10,140 -
--------- -------- --------- ---------
Total operating expenses 33,024 23,864 100,903 104,824
--------- -------- --------- ---------
Operating loss (32,270) (14,003) (81,876) (38,769)
Net interest income 579 1,037 3,469 5,067
Other Expense (855) (510) (814) (615)
--------- -------- --------- ---------
Loss before income taxes (32,546) (13,476) (79,221) (34,317)
Benefit for income taxes (11,751) (4,966) (29,135) (16,540)
--------- -------- --------- ---------
Net loss $(20,795) $(8,510) $(50,086) $(17,777)
========= ======== ========= =========
Net loss per share - basic $(0.75) $(0.31) $(1.81) $(0.65)
========= ======== ========= =========
Net income loss per share -
diluted $(0.75) $(0.31) $(1.81) $(0.65)
========= ======== ========= =========
Certain amounts in prior periods have been reclassified to conform
with current period presentation.
Electro Scientific Industries, Inc.
Analysis of FY 2003 Results
(Dollars in thousands)
(Unaudited)
Three Months
Ended Year Ended
----------------- -------------------
Restated Restated
May 31, June 1, May 31, June 1,
2003 2002 2003 2002
-------- -------- --------- ---------
Sales detail:
Electronic Interconnect
Group $5,681 $3,126 $24,949 $14,446
Semiconductor Products
Group 7,373 20,952 64,266 80,929
Passive Components Group 9,424 16,337 47,670 67,510
-------- -------- --------- ---------
Total $22,478 $40,415 $136,885 $162,885
======== ======== ========= =========
Gross margin % 3.4% 24.4% 13.9% 40.6%
Selling, service and
administrative expense % 70.0% 41.4% 46.0% 42.0%
Research, engineering and
development expense % 31.8% 17.7% 20.3% 22.4%
Operating income margin % -143.6% -34.6% -59.8% -23.8%
Effective tax rate % 36.1% 36.9% 36.8% 48.2%
Average shares outstanding -
basic 27,835 27,553 27,745 27,337
Average shares outstanding -
diluted 27,835 27,553 27,745 27,337
End of period employees n/a n/a 649 875
Certain amounts in prior periods have been reclassified to conform
with current period presentation.
Electro Scientific Industries, Inc.
FY 2003 Results
(Amounts in thousands)
(Unaudited)
Restated
Financial Position As Of: May 31, June 1,
2003 2002
--------- ---------
Cash and investments $308,252 $302,299
Trade receivables 37,160 55,810
Income tax refund receivable 16,499 14,402
Inventory 42,067 63,916
Shipped systems pending acceptance 7,058 2,007
Deferred tax assets 18,578 8,323
Property and equipment, net 43,043 58,046
Other assets 17,241 21,469
--------- ---------
Total assets $489,898 $526,272
========= =========
Current liabilities $24,468 $19,308
Deferred revenue 13,222 5,308
Long term debt 141,891 145,897
Shareholders' equity 310,317 355,759
--------- ---------
Total liabilities and equity $489,898 $526,272
========= =========
End of period shares outstanding 27,843 27,619
Certain amounts in prior periods have been reclassified to conform
with current period presentation.
Electro Scientific Industries, Inc.
FY2003 Results
(Amounts in thousands)
(Unaudited)
Twelve Months Ended
-------------------------
Consolidated Statements Restated
of Cash Flows: May 31, June 1,
2003 2002
CASH FLOWS FROM OPERATING ----------- -----------
ACTIVITIES
Net loss $(50,086) $(17,777)
Adjustments to reconcile net
loss to cash provided
by (used in) operating
activities:
Depreciation and amortization 10,352 10,526
Provison for doubtful accounts 1,173 1,029
Loss on disposal of property
and equipment 1,069 1,458
Impairment of long lived asset 10,140 -
Gain on debt extinguishment (218) -
Deferred income taxes (10,275) 1,508
Tax benefit of stock options
exercised 259 2,235
Changes in operating accounts:
Decrease in trade receivables 20,858 29,511
Decrease in inventories 19,550 7,741
Increase in income tax
receivable (2,097) (14,402)
(Increase) decrease in other
current assets 1,617 (2,962)
Increase in deferred revenue 7,914 3,923
Increase (decrease) in current
liabilities 1,785 (22,852)
----------- -----------
Net cash provided by (used in)
operating activities 12,041 (62)
----------- -----------
CASH FLOWS FROM INVESTING
ACTIVITIES
Purchase of property, plant and
equipment (9,270) (15,279)
Proceeds from the sale of
property, plant and equipment 1,183 633
Change in investments, net (16,561) (177,971)
Increase in other assets 2,516 (46)
----------- -----------
Net cash used in investing
activities (22,132) (192,663)
----------- -----------
CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds from convertible
subordinated notes issuance - 145,500
Purchase of ESI-issued
convertible notes (4,676) -
Proceeds from exercise of stock
options and stock plans 3,602 8,138
----------- -----------
Net cash provided by (used in)
financing activities (1,074) 153,638
----------- -----------
NET CHANGE IN CASH AND CASH
EQUIVALENTS $(11,165) $(39,087)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD $29,435 $68,522
----------- -----------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $18,270 $29,435
=========== ===========
Certain amounts in prior periods have been reclassified to conform
with current period presentation.
Electro Scientific Industries, Inc.
Supplemental Financial Information
(In thousands, except per share data)
(Unaudited)
Twelve Three Nine
Months Six Months Months Months
Ended Three Months Ended Ended Ended Ended
---------------------------- ------------------------------
June 1, Aug. 31, Nov. 30, Nov. 30, March 1, March 1,
2002 2002 2002 2002 2003 2003
--------- -------- --------- --------- --------- ---------
As Previously Reported (1):
Net sales $166,545 $42,961 $43,302 $86,263 n/a n/a
Net
income
(loss) $(15,961) $158 $(9,548) $(9,390) n/a n/a
Net income
(loss)
per share
- basic
and
diluted $(0.58) $0.01 $(0.34) $(0.34) n/a n/a
As Restated:
Net sales $162,885 $39,360 $43,416 $82,776 $31,631 $114,407
Net loss $(17,777) $(3,394) $(12,908) $(16,302) $(12,989) $(29,291)
Net loss
per share
- basic
and
diluted $(0.65) $(0.12) $(0.47) $(0.59) $(0.47) $(1.06)
(1) As previously reported in ESI's Form 10-K or Form 10-Q, as
applicable, for the relevant period.
CONTACT: Electro Scientific Industries, Inc.
Mike Dodson, 503/671-7028