Exhibit 99.1
ESI Announces Fiscal 2007 First Quarter Results
PORTLAND, Ore.--(BUSINESS WIRE)--Sept. 28, 2006--Electro
Scientific Industries, Inc. (NASDAQ:ESIO) today announced results for
its fiscal 2007 first quarter ended September 2, 2006.
First quarter sales were $60.2 million, up 4% compared to fourth
quarter sales of $57.9 million and up 35% compared to prior year first
quarter sales of $44.5 million. Operating income for the quarter was
$7.1 million, compared with operating income of $4.2 million in the
fourth quarter and operating income of $0.7 million in the first
quarter a year ago. Net income for the quarter was $6.8 million, or
$0.23 per basic and diluted share, compared with net income of $5.9
million, or $0.20 per basic and diluted share, in the fourth quarter
and net income of $1.3 million, or $0.05 per basic and diluted share,
in the first quarter a year ago.
Included in the first quarter 2007 results was $0.6 million of
stock-based compensation expense, included in cost of sales and
operating expenses, in accordance with the implementation of FAS 123R.
Additionally, we received a $1.3 million insurance recovery which
reduced operating expenses in the first quarter of 2007.
Net orders for the first quarter were $67.6 million, an increase
of 11% compared with $61.1 million in the fourth quarter and an
increase of 94% compared with $34.8 million in the first quarter of
fiscal 2006. Net orders for the first quarter increased in each market
segment over the fourth quarter. Deferred revenue decreased $1.1
million from the fourth quarter, ending the first quarter at $12.3
million.
"Industry demand expanded in each of our markets during the
quarter, as the steady growth we have experienced continued, resulting
in the highest quarterly order rate of the past two years," noted Nick
Konidaris, ESI's president and chief executive officer. "The
semiconductor business sustained its recent strength as memory
manufacturers ramp capacity in anticipation of the upcoming release of
Microsoft's Windows Vista(TM) operating system. In addition, the
component business maintained momentum with orders coming in at twice
the rate of a year ago and the interconnect business recorded the
highest level of quarterly orders it has received over the past five
years."
Konidaris continued, "Financially, we met our quarterly revenue
target and exceeded our profit target, increased gross margins
sequentially, and delivered operating profits of over $7 million."
Gross margin of 45 percent was up slightly from the fourth
quarter. Despite the lower percentage of semiconductor revenue, ESI's
highest margin business, overall margin rates were up primarily due to
manufacturing efficiencies.
Operating expenses were $20.2 million, down $1.3 million from
$21.5 million in the prior quarter. The decrease was primarily the
result of a $1.3 million insurance recovery.
Interest and other income of $2.9 million was up from $2.3 million
in the fourth quarter due primarily to interest received on tax
refunds.
Cash and investments were $213 million, down approximately $16
million from the end of the fourth quarter. The decrease in cash was
due to an increase in working capital, a strategic equity investment
made during the quarter, and capital expenditures. The decrease was
partially offset by the net income earned during the quarter.
Accounts receivable increased $12 million during the quarter to
$60 million. The increase was primarily due to a large percentage of
the quarter's shipments occurring late in the quarter.
Konidaris added, "In an environment of healthy industry
fundamentals and growth, we expect to continue to experience
fluctuations in order timing that may affect the level of orders in
the second quarter. As a result, we believe second quarter shipments
will once again be in the range of $55 million to $65 million. We
believe revenue will be in the range of $50 million to $60 million as
we expect to defer revenue on several shipments of new products at
second quarter-end. We expect the gross margin percentage in the
second quarter to be approximately 45%. We believe pre-tax stock
compensation expense will increase to $900 thousand in the second
quarter. We expect operating expenses to be flat sequentially,
excluding the impact of the $1.3 million insurance recovery in the
first quarter. We expect net interest and other income in the second
quarter to be approximately $2.3 million. And lastly, we expect the
tax rate for the second quarter to be approximately 34%."
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).
The conference ID number is 7068245. A live audio webcast can be
accessed at www.esi.com. Upon completion of the call, an audio replay
will be accessible through October 5, 2006 at 800-642-1687 (domestic
participants) or 706-645-9291 (international participants). 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 revenue, gross margins, operating
expenses, stock compensation expense, non-operating income, 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 risk that customer orders may
be canceled or delayed; 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 risk that customer acceptance of new or customized products may be
delayed; 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
Electro Scientific Industries, Inc. (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 2007 Results
(In thousands, except per share data)
(Unaudited)
Operating Results: Three Months Ended
-------------------
Sept. 2, Aug. 27,
2006 2005
---------- --------
Net sales $60,164 $44,508
Cost of sales 32,883 24,861
---------- --------
Gross profit 27,281 19,647
Operating expenses:
Selling, service and administration 12,158 11,077
Research, development and engineering 9,304 7,829
Insurance recovery (1,287) -
---------- --------
Total operating expenses 20,175 18,906
---------- --------
Operating income 7,106 741
Interest and other income, net 2,910 1,241
---------- --------
Income before income taxes 10,016 1,982
Provision for income taxes 3,244 635
---------- --------
Net income $6,772 $1,347
========== ========
Net income per share - basic $0.23 $0.05
========== ========
Net income per share - fully diluted $0.23 $0.05
========== ========
Electro Scientific Industries, Inc.
Analysis of FY 2007 Results
(Dollars in thousands)
(Unaudited)
Three Months Ended
-------------------
Sept. 2, Aug. 27,
2006 2005
---------- --------
Sales detail:
Semiconductor Group $31,743 $27,901
Passive Components Group 18,632 11,049
Electronic Interconnect Group 9,789 5,558
---------- --------
Total $60,164 $44,508
========== ========
Gross margin % 45% 44%
Selling, service and administration expense % 20% 25%
Insurance recovery % -2% 0%
Research, development and engineering expense % 15% 18%
Operating income % 12% 2%
Effective tax rate % 32% 32%
Average shares outstanding - basic 29,076 28,642
Average shares outstanding - fully diluted 29,243 28,799
End of period employees 619 563
Electro Scientific Industries, Inc.
FY 2007 Results
(Amounts in thousands)
(Unaudited)
Financial Position As Of: Sept. 2, June 3,
2006 2006
---------- --------
Assets
Current assets:
Cash and cash equivalents $ 75,326 $ 79,961
Marketable securities 135,552 140,106
---------- --------
Total cash and securities 210,878 220,067
Trade receivables, net 60,112 47,978
Income tax refund receivable 978 1,570
Inventories 67,445 63,834
Shipped systems pending acceptance 3,382 3,941
Deferred income taxes 12,279 11,982
Prepaid and other current assets 6,033 4,410
---------- --------
Total current assets 361,107 353,782
Long-term marketable securities 2,504 9,265
Property, plant and equipment, net 45,710 43,338
Deferred income taxes, net 10,399 13,318
Other assets 26,451 17,762
---------- --------
Total assets $ 446,171 $437,465
========== ========
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 14,848 $ 11,272
Accrued liabilities 22,760 24,705
Deferred revenue 12,259 13,321
---------- --------
Total current liabilities 49,867 49,298
Shareholders' equity:
Preferred and common stock 167,750 166,459
Retained earnings 228,794 222,022
Accumulated other comprehensive loss (240) (314)
---------- --------
Total shareholders' equity 396,304 388,167
---------- --------
Total liabilities and shareholders' equity $ 446,171 $437,465
========== ========
End of period shares outstanding 29,097 29,051
========== ========
Total cash and investments $ 213,382 $229,332
========== ========
Electro Scientific Industries, Inc.
FY2007 Results
(Amounts in thousands)
(Unaudited)
Consolidated Statements of Cash Flows: Three Months Ended
-------------------
Sept. 2, Aug. 27,
2006 2005
---------- --------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $6,772 $1,347
Adjustments to reconcile net income to cash
provided by (used in) operating activities:
Depreciation and amortization 1,969 1,924
Stock-based compensation expense 577 678
Tax benefit of stock options exercised - 727
Provision for doubtful accounts 104 (144)
Loss on disposal of property and equipment - 7
Insurance recovery (1,287) -
Deferred income taxes 2,711 (558)
Changes in operating accounts:
Increase in trade receivables (12,717) (1,336)
Decrease in income tax refund receivable 592 1,250
(Increase) decrease in inventories (7,147) 5,097
(Increase) decrease in shipped systems pending
acceptance 559 (484)
Increase in other current assets (1,716) (168)
(Increase) decrease in other current liabilities 1,996 (1,711)
(Increase) decrease in deferred revenue (1,062) 132
---------- --------
Net cash provided by (used in) operating
activities (8,649) 6,761
---------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment (4,285) (4,645)
Change in investments, net 11,578 24,269
Omniguide Stock Investment (6,000) -
Insurance recovery 1,287 -
Increase in other assets 729 (425)
---------- --------
Net cash provided by investing activities 3,309 19,199
---------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from stock plans 705 870
---------- --------
Net cash provided by financing activities 705 870
---------- --------
NET CHANGE IN CASH AND CASH EQUIVALENTS $(4,635) $26,830
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD $79,961 $61,314
---------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $75,326 $88,144
========== ========
CONTACT: Electro Scientific Industries, Inc.
Craig Stoehr, 503-671-7061