EXHIBIT 99.1
ESI Announces Fiscal 2006 First Quarter Results
PORTLAND, Ore.--(BUSINESS WIRE)--Sept. 22, 2005--ESI (Nasdaq:ESIO)
today announced results for its fiscal 2006 first quarter ended August
27, 2005.
First quarter sales were $44.5 million, down 3% compared to fourth
quarter sales of $45.7 million and down 39% compared to prior year
first quarter sales of $72.6 million. Operating income for the quarter
was $0.7 million, compared with operating income of $2.0 million in
the fourth quarter and operating income of $15.4 million in the first
quarter a year ago. Net income for the quarter was $1.3 million, or
$0.05 per basic and diluted share, compared with a net loss of $0.8
million, or $0.03 per basic and diluted share, in the fourth quarter
and net income of $10.6 million, or $0.38 per basic share and $0.36
per diluted share, in the first quarter a year ago.
Included in the fourth quarter 2005 results was a $4.1 million
charge resulting from the redemption of all of the outstanding 4 1/4%
Convertible Notes, which eliminated all of ESI's long-term debt.
Net orders for the first quarter were $34.8 million, a decrease of
33% compared with $52.0 million in the fourth quarter and a decrease
of 49% compared with $67.6 million in the first quarter of 2005.
Deferred revenue remained flat, ending the quarter at $13.1 million.
"The company continued to operate effectively despite uncertain
industry conditions," noted Nick Konidaris, ESI's president and chief
executive officer. "During the first quarter we met our revenue target
and exceeded our earnings target, delivered a seventh consecutive
quarterly operating profit, generated cash, and continued to position
the company for the future."
Konidaris continued, "Although the order rate declined in the
first quarter, we believe it was largely influenced by the timing of
semiconductor orders."
Mike Dodson, ESI's chief financial officer added, "Gross margin of
44 percent during the quarter was down from 45 percent in the prior
quarter, but higher than the guidance we provided. The sequential
decrease in gross margin was primarily due to lower overhead
absorption on reduced production levels. Gross margin exceeded
guidance due to both a higher margin sales mix than expected and a
delay in the sale of previous generation Interconnect product with
less favorable margins."
"Operating expenses were $19 million in the first quarter, flat
with the prior quarter. Within the operating expense total, research
and development spending increased to $8 million, representing its
highest level over three years. This planned increase in research and
development spending is to fund the development of new products in
existing and emerging markets," added Dodson.
"Our balance sheet remained strong during the quarter. Cash and
investments at the end of the quarter were $221 million as compared to
$219 million at the end of the prior quarter. Cash increased primarily
due to a decrease in inventory from the prior quarter," concluded
Dodson.
Konidaris added, "Although visibility beyond the current quarter
remains limited, we believe second quarter shipments and revenue will
increase from the first quarter and be in the range of $45 million to
$55 million. As the result of the anticipated sale of previous
generation Interconnect product, we expect margins in the second
quarter to be in the low to mid-40% range. We expect operating expense
to be in the range of $19 million to $20 million. The effective tax
rate for the second quarter is expected to be approximately 25%,
excluding an income tax charge of approximately $1.1 million related
to a recent change in Oregon tax law."
The company will hold a conference call today at 5:00 p.m. Eastern
Time. The session will include a review of the financial results,
operational performance, business outlook, and a question and answer
period.
The conference call can be accessed by calling 800-374-2470
(domestic participants) or 706-634-5108 (international participants).
A live audio webcast can be accessed at www.esi.com. Upon completion
of the call, an audio replay will be accessible through October 6,
2005 at 800-642-1687 (domestic participants) or 706-645-9291
(international participants), with conference ID number 9540645. The
audio replay will also be available on the ESI website.
Forward-Looking Statements
This press release includes forward-looking statements concerning
the markets we serve, shipments and revenues, gross margins, operating
expenses, and tax rates. Actual results may differ materially from
those in the forward-looking statements. Risks and uncertainties that
may affect the forward-looking statements include: 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 ability of the
company to respond promptly to customer requirements; the ability of
the company to develop, manufacture and successfully deliver new
products and enhancements; the ability of the company to achieve
anticipated cost reductions and savings; 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
company's ability to utilize recorded deferred tax assets; taxes,
interest or penalties resulting from tax audits; and changes in tax
laws or the interpretation of such tax laws.
About ESI
ESI is a global supplier of manufacturing equipment to increase
productivity for customers in the semiconductor, passive components
and electronic equipment markets. As an innovator in the electronics
industry, ESI has a legacy of technology firsts and customer
recognition for product excellence. The advanced electronic devices
you see and use around the world today -- cell phones, personal
computers, digital cameras, PDAs, even automotive electronics --
contain components that were likely manufactured with ESI equipment.
The company was founded in 1944 and is headquartered in Portland,
Oregon. ESI's web site is http://www.esi.com.
Electro Scientific Industries, Inc.
FY 2006 Results
(In thousands, except per share data)
(Unaudited)
Operating Results: Three Months Ended
------------------------
August 27, August 28,
2005 2004
------------ --------
Net sales $44,508 $72,620
Cost of sales 24,861 35,734
------------ --------
Gross profit 19,647 36,886
Operating expenses:
Selling, service and administration 11,077 14,878
Research, development and engineering 7,829 6,560
------------ --------
Total operating expenses 18,906 21,438
------------ --------
Operating income 741 15,448
Net interest income (expense) 1,454 (236)
Other expense, net (213) (133)
------------ --------
Income before income taxes 1,982 15,079
Provision for income taxes 635 4,433
------------ --------
Net income $1,347 $10,646
============ ========
Net income per share - basic $0.05 $0.38
============ ========
Net income per share - fully
diluted $0.05 $0.36
============ ========
Electro Scientific Industries, Inc.
Analysis of FY 2006 Results
(Dollars in thousands)
(Unaudited)
Three Months Ended
-------------------------
August 27, August 28,
2005 2004
------------ --------
Sales detail:
Semiconductor Group $27,901 $44,013
Passive Components Group 11,049 20,603
Electronic Interconnect Group 5,558 8,004
------------ --------
Total $44,508 $72,620
============ ========
Gross margin % 44% 51%
Selling, service and administrative expense % 25% 20%
Research, development and engineering expense % 18% 9%
Operating income % 2% 21%
Effective tax rate % 32% 29%
Average shares outstanding - basic 28,642 28,216
Average shares outstanding - fully diluted 28,799 32,279
End of period employees 563 628
Electro Scientific Industries, Inc.
FY 2006 Results
(Amounts in thousands)
(Unaudited)
Financial Position As Of: August 27, May 28,
2005 2005
------------ --------
Assets
Current assets:
Cash and cash equivalents $ 88,144 $ 61,314
Marketable securities 120,421 137,753
------------ --------
Total cash and securities 208,565 199,067
Trade receivables 37,177 36,163
Income tax refund receivable 7,977 9,227
Inventories 53,728 59,533
Shipped systems pending acceptance 4,498 4,014
Deferred income taxes 13,439 10,930
Prepaid and other current assets 3,322 3,169
------------ --------
Total current assets 328,706 322,103
Long-term marketable securities 12,830 19,834
Property, plant and equipment, net 35,658 32,959
Deferred income taxes 15,112 16,955
Other assets 12,827 11,706
------------ --------
Total assets $ 405,133 $403,557
============ ========
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 4,019 $ 3,961
Accrued liabilities 27,512 29,455
Deferred revenue 13,118 12,986
------------ --------
Total current liabilities 44,649 46,402
Shareholders' equity:
Preferred and common stock 158,642 156,367
Retained earnings 202,546 201,199
Accumulated other comprehensive loss (704) (411)
------------ --------
Total shareholders' equity 360,484 357,155
------------ --------
Total liabilities and
shareholders' equity $ 405,133 $403,557
============ ========
End of period shares outstanding 28,672 28,615
============ ========
Total cash and investments $ 221,395 $218,901
============ ========
Electro Scientific Industries, Inc.
FY2006 Results
(Amounts in thousands)
(Unaudited)
Consolidated Statements of Cash Flows: Three Months Ended
-------------------------
August 27, August 28,
2005 2004
------------ --------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $1,347 $10,646
Adjustments to reconcile net income to
cash provided by operating activities:
Depreciation and amortization 2,602 2,255
Tax benefit of stock options exercised 727 503
Provision for doubtful accounts (144) 99
Loss on disposal of property and equipment 7 54
Deferred income taxes (558) 4,303
Changes in operating accounts:
Increase in trade receivables (1,336) (9,734)
Decrease in income tax refund receivable 1,250 55
(Increase) decrease in inventories 5,097 (7,077)
Increase in shipped systems pending
acceptance (484) (2,778)
Increase in other current assets (168) (1,855)
Decrease in other current liabilities (1,711) (1,041)
Increase in deferred revenue 132 5,202
------------ --------
Net cash provided by operating activities 6,761 632
------------ --------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment (4,645) (882)
Proceeds from sale of property and equipment - 76
Proceeds from sale of assets held for sale - 2,361
Change in investments, net 24,269 4,547
Increase in other assets (425) (582)
------------ --------
Net cash provided by investing activities 19,199 5,520
------------ --------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from stock plans 870 2,219
------------ --------
Net cash provided by financing activities 870 2,219
------------ --------
NET CHANGE IN CASH AND CASH EQUIVALENTS $26,830 $8,371
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD $61,314 $80,358
------------ --------
CASH AND CASH EQUIVALENTS AT END OF
PERIOD $88,144 $88,729
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CONTACT: ESI
Mike Dodson, 503-671-7028
Craig Stoehr, 503-671-7061