EX-99 3 a4360522-991.txt EXHIBIT 99.1 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