Exhibit 99.1
ESI Announces Fiscal 2007 Fourth Quarter and Year-End Results with
Strongest Fiscal Year since 2001
PORTLAND, Ore.--(BUSINESS WIRE)--July 12, 2007--Electro Scientific
Industries, Inc. (NASDAQ:ESIO), a leading provider of world-class
photonic and laser micro-engineering systems, today announced results
for its fiscal 2007 fourth quarter ended June 2, 2007.
Fourth quarter sales were $71.7 million, up 21% compared to third
quarter sales of $59.4 million and up 24% compared to prior year
fourth quarter sales of $57.9 million. Operating income for the
quarter was $10.5 million, compared with operating income of $4.0
million in the third quarter and operating income of $4.2 million in
the fourth quarter a year ago. Net income for the quarter was $7.9
million, or $0.27 per diluted share, compared with net income of $5.6
million, or $0.19 per diluted share, in the third quarter and $5.9
million, or $0.20 per diluted share, in the fourth quarter a year ago.
Fourth quarter orders were $72.3 million, up 18% compared with
$61.1 million in the fourth quarter of 2006. Although approximately
flat compared to the third quarter, orders exceeded $70 million for
two consecutive quarters for the first time since 2001. Orders for the
fourth quarter reflected an increase from the prior quarter in the
components and interconnect market segments. Semiconductor orders were
down sequentially due to the timing of large capacity purchases in the
third quarter; however, fourth quarter order activity in this segment
was the second highest level in the last six quarters. Deferred
revenue decreased slightly from the third quarter, ending the fourth
quarter at $12.3 million.
Fiscal year 2007 revenue was $250.8 million, up 21% compared to
$207.0 million in fiscal 2006. Operating income for the year was $24.2
million, more than double the $11.7 million from the prior year. Net
income for the year was $23.5 million, or $0.80 per diluted share,
compared with net income of $20.8 million, or $0.72 per diluted share
in the prior year.
Net orders for fiscal year 2007 were $275.3 million, an increase
of 29% compared with $213.8 million in fiscal year 2006.
"Continued strong performance through the fourth quarter resulted
in our best overall fiscal year since 2001," noted Nick Konidaris, ESI
president and CEO. "As a result of strong demand and the successful
introduction of key new products during 2007, we delivered significant
year-over-year gains in orders, sales and profitability to our
shareholders. The 29% growth in annual orders, coupled with 21% growth
in annual shipments, allowed us to finish the year with approximately
$57 million in backlog, an increase of 14% compared to fiscal year-end
2006."
Gross margin of 46% in the fourth quarter increased from 42% in
the third quarter. The increase in margins was due to a favorable
shift in sales mix combined with volume-related efficiencies.
Operating expenses were $22.8 million in the fourth quarter, up
$1.8 million from the prior quarter. The increase was primarily the
result of variable expenses related to the growth in business for the
fourth quarter. As a percent of revenue, operating expenses improved
four percentage points to 32%.
Other income of $2.6 million was down slightly from the third
quarter.
Income tax expense for the fourth quarter was $5.2 million, an
effective tax rate of 40%. The increase in the quarter's tax rate over
prior projections was primarily due to new technical guidance issued
by the IRS in June 2007. Consideration of this new guidance resulted
in an increase of $1 million in tax expense, or approximately 8% of
the fourth quarter's income before taxes. The effective annual tax
rate for fiscal year 2007 was approximately 32%.
Cash and investments were $229 million, up $3 million from the
third quarter of fiscal 2007. The increase was primarily the result of
cash provided by operating activities of $14 million, offset by ESI
share repurchases of $10 million. The company purchased approximately
500 thousand shares in the fourth quarter as part of its on-going
stock repurchase program, which began mid-quarter.
Accounts receivable for the quarter were $56 million, up slightly
compared to third quarter levels.
Inventories of $81 million increased $5 million from the prior
quarter, primarily in raw materials and work-in-process, due to the
expected ramp in activity over the next several months.
Due to the recently announced change in our fiscal year-end, the
following outlook is for the four-month period ending September 29,
2007.
Konidaris added, "Excluding the impact from the acquisition of New
Wave Research (NWR), for the upcoming four-month reporting period we
expect shipments and revenue to be approximately $85 to $95 million.
The gross margin percentage is expected to be approximately flat with
the fourth quarter. Operating expenses are expected to range from $30
to $31 million for the four-month period. We estimate net interest and
other income will be slightly less than $3 million. The effective tax
rate is anticipated to be approximately 36%."
"We believe the addition of NWR will contribute an additional $7
to $8 million in revenue from the anticipated closing date in the
third week of July through the period ending September 29, 2007,"
Konidaris continued. "Associated gross margin for NWR is expected to
be in the range of 45-50% before the impact of purchase-accounting
adjustments. Operating expenses are expected to be approximately 40%
of revenue, excluding integration costs. The impact of
purchase-accounting adjustments to our consolidated financial results
will not be finalized until after the transaction closes."
"Moving forward, we are positioned to grow in new and exciting
markets as well as our existing markets. We look forward to another
successful year in 2008."
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 5182159. A live audio Web cast can be
accessed at www.esi.com. Upon completion of the call, an audio replay
will be accessible through July 26, 2007 at 800-642-1687 (domestic
participants) or 706-645-9291 (international participants). The audio
replay will also be available on the ESI Web site.
About ESI
ESI is a pioneer and leading supplier of world-class production
laser systems that help its microelectronics customers achieve
compelling yield and productivity gains. The company's
industry-leading, application-specific products enhance
electronic-device performance in three key sectors--semiconductors,
components and electronic interconnect--by enabling precision
fine-tuning of device microfeatures in high-volume manufacturing
environments. Founded in 1944, ESI is headquartered in Portland, Ore.
More information is available at www.esi.com.
Forward-Looking Statements
This press release includes forward-looking statements concerning
the markets we serve, shipments and revenue, gross margins, operating
expenses, the impact of the NWR acquisition, 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 timing of the closing of the NWR acquisition; the
company's ability to successfully integrate NWR; the risk of
disruptions to the business of NWR resulting from the acquisition; 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.
Electro Scientific Industries, Inc.
FY 2007 Results
(In thousands, except per share data)
(Unaudited)
Operating Results: Three Months Ended Twelve Months Ended
------------------------- -------------------------
Jun. 2, 2007 Jun. 3, 2006 Jun. 2, 2007 Jun. 3, 2006
------------ ------------ ------------ ------------
Net sales $ 71,744 $ 57,918 $ 250,824 $ 207,006
Cost of sales 38,468 32,142 142,054 115,518
------------ ------------ ------------ ------------
Gross profit 33,276 25,776 108,770 91,488
Operating
expenses:
Selling, service
and
administration 13,163 12,226 49,119 45,955
Research,
development and
engineering 9,660 9,317 37,703 33,837
Insurance
recoveries - - (2,287) -
------------ ------------ ------------ ------------
Total operating
expenses 22,823 21,543 84,535 79,792
------------ ------------ ------------ ------------
Operating income 10,453 4,233 24,235 11,696
Interest and other
income, net 2,607 2,281 10,392 7,591
------------ ------------ ------------ ------------
Income before
income taxes 13,060 6,514 34,627 19,287
Provision for
(benefit from)
income taxes 5,161 583 11,103 (1,536)
------------ ------------ ------------ ------------
Net income $ 7,899 $ 5,931 $ 23,524 $ 20,823
============ ============ ============ ============
Net income per
share - basic $ 0.27 $ 0.20 $ 0.81 $ 0.72
============ ============ ============ ============
Net income per
share - diluted $ 0.27 $ 0.20 $ 0.80 $ 0.72
============ ============ ============ ============
Electro Scientific Industries, Inc.
Analysis of FY 2007 Results
(Dollars and shares in thousands)
(Unaudited)
Three Months Ended Twelve Months Ended
------------------------- -------------------------
Jun. 2, 2007 Jun. 3, 2006 Jun. 2, 2007 Jun. 3, 2006
------------ ------------ ------------ ------------
Sales detail:
Semiconductor
Group $ 50,166 $ 33,029 $ 145,381 $ 126,682
Passive
Components
Group 12,784 14,044 63,093 46,305
Electronic
Interconnect
Group 8,794 10,845 42,350 34,019
------------ ------------ ------------ ------------
Total $ 71,744 $ 57,918 $ 250,824 $ 207,006
============ ============ ============ ============
Gross margin % 46% 45% 43% 44%
Selling, service
and
administration
expense % (a) 18% 21% 19% 22%
Research,
development and
engineering
expense % 13% 16% 15% 16%
Operating income % 15% 7% 10% 6%
Effective tax rate
% 40% 9% 32% -8%
Average shares
outstanding -
basic 29,111 29,024 29,125 28,823
Average shares
outstanding -
diluted 29,457 29,236 29,379 29,078
End of period
employees 585 603 585 603
(a) Includes insurance recoveries.
Electro Scientific Industries, Inc.
FY 2007 Results
(Amounts in thousands)
(Unaudited)
Financial Position As Of: Jun. 2, 2007 Mar. 3, 2007 Jun. 3, 2006
------------ ------------ ------------
Assets
Current assets:
Cash and cash equivalents $ 100,462 $ 93,589 $ 79,961
Marketable securities 124,607 125,599 140,106
----------- ----------- -----------
Total cash and securities 225,069 219,188 220,067
Trade receivables, net 55,722 54,249 47,978
Income tax refund receivable 696 680 1,570
Inventories 80,981 76,252 63,834
Shipped systems pending
acceptance 1,817 2,469 3,941
Deferred income taxes, net 9,504 9,240 9,682
Prepaid and other current
assets 5,080 6,556 4,410
----------- ----------- -----------
Total current assets 378,869 368,634 351,482
Long-term marketable securities 3,622 6,671 9,265
Property, plant and equipment,
net 43,859 44,269 43,338
Deferred income taxes, net 11,246 13,916 15,618
Other assets 28,072 30,179 17,762
----------- ----------- -----------
Total assets $ 465,668 $ 463,669 $ 437,465
=========== =========== ===========
Liabilities and shareholders'
equity
Current liabilities:
Accounts payable $ 13,826 $ 13,506 $ 11,272
Accrued liabilities 31,222 27,281 24,705
Deferred revenue 12,290 13,474 13,321
----------- ----------- -----------
Total current liabilities 57,338 54,261 49,298
Shareholders' equity:
Preferred and common stock 162,719 171,528 166,459
Retained earnings 245,546 237,647 222,022
Accumulated other comprehensive
income (loss) 65 233 (314)
----------- ----------- -----------
Total shareholders'
equity 408,330 409,408 388,167
----------- ----------- -----------
Total liabilities and
shareholders' equity $ 465,668 $ 463,669 $ 437,465
=========== =========== ===========
End of period shares
outstanding 28,766 29,216 29,051
=========== =========== ===========
Total cash and investments $ 228,691 $ 225,859 $ 229,332
=========== =========== ===========
Electro Scientific Industries, Inc.
FY 2007 Results
(Amounts in thousands)
(Unaudited)
Consolidated Statements of Cash Flows: Twelve Months Ended
-------------------------
Jun. 2, 2007 Jun. 3, 2006
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 23,524 $ 20,823
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 8,370 7,914
Stock-based compensation expense 2,884 1,353
Tax benefit of stock options exercised - 1,630
Provision for (recovery of) doubtful
accounts 103 (153)
Loss on disposal of property and
equipment 2 79
Insurance recovery on damaged equipment (1,287) -
Deferred income taxes 4,516 2,451
Changes in operating accounts:
Increase in trade receivables, net (8,085) (11,329)
Decrease in income tax refund receivable 874 7,657
Increase in inventories (16,343) (3,709)
Decrease in shipped systems pending
acceptance 2,124 73
Increase in prepaid and other current
assets (792) (1,125)
Increase in accounts payable and other
current liabilities 8,884 2,506
Increase (decrease) in deferred revenue (1,031) 335
------------ ------------
Net cash provided by operating activities 23,743 28,505
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment (8,407) (18,293)
Proceeds from the sale of property, plant
and equipment 6 -
Minority equity investments (11,000) -
Insurance recovery on damaged equipment 1,287 -
Change in investments, net 21,522 8,076
Increase in other assets (652) (6,750)
------------ ------------
Net cash provided by (used in) investing
activities 2,756 (16,967)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from exercise of stock options and
stock plans 3,318 7,109
Tax benefit realized from share options
exercise 488 -
Share repurchases (9,804) -
------------ ------------
Net cash provided by (used in) financing
activities (5,998) 7,109
------------ ------------
NET CHANGE IN CASH AND CASH EQUIVALENTS $ 20,501 $ 18,647
CASH AND CASH EQUIVALENTS AT BEGINNING OF
PERIOD $ 79,961 $ 61,314
------------ ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 100,462 $ 79,961
============ ============
CONTACT: Electro Scientific Industries, Inc.
Chris Butterfield, 503-672-5760