EX-99 3 a4452878ex991.txt EXHIBIT 99.1 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