-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CK/m8pOgNvMvV9NU7lHu3lspayAnY0R4zCVXzIqTOpwaJz3+YZ+3J5UX3audZsVN qYdO4DuFSrVmNrznRrxLeg== 0001157523-04-005993.txt : 20040629 0001157523-04-005993.hdr.sgml : 20040629 20040629160436 ACCESSION NUMBER: 0001157523-04-005993 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20040629 ITEM INFORMATION: FILED AS OF DATE: 20040629 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ELECTRO SCIENTIFIC INDUSTRIES INC CENTRAL INDEX KEY: 0000726514 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS ELECTRICAL MACHINERY, EQUIPMENT & SUPPLIES [3690] IRS NUMBER: 930370304 STATE OF INCORPORATION: OR FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-12853 FILM NUMBER: 04888725 BUSINESS ADDRESS: STREET 1: 13900 NW SCIENCE PARK DR CITY: PORTLAND STATE: OR ZIP: 97229 BUSINESS PHONE: 5036414141 MAIL ADDRESS: STREET 1: 13900 NW SCIENCE PARK DRIVE CITY: PORTLAND STATE: OR ZIP: 97229-5497 8-K 1 a4671368.txt ELECTRO SCIENTIFIC INDUSTRIES, INC. 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): June 29, 2004 ELECTRO SCIENTIFIC INDUSTRIES, INC. (Exact name of registrant as specified in its charter) OREGON 0-12853 93-0370304 (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.) 13900 NW Science Park Drive, Portland, Oregon 97229 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (503) 641-4141 No Change (Former name or former address, if changed since last report) Item 12. Results of Operations and Financial Condition. On June 29, 2004, Electro Scientific Industries, Inc. (the "Company") announced its financial results for fiscal year 2004 and the fourth quarter of that fiscal year. The Company's press release announcing these events is attached hereto as Exhibit 99.1 and incorporated herein by reference. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Date: June 29, 2004. Electro Scientific Industries, Inc. By /s/ J. Michael Dodson ---------------------------------------- J. Michael Dodson Senior Vice President of Administration, Chief Financial Officer and Secretary EXHIBIT INDEX Exhibit Description - ------- ----------- 99.1 Press release dated June 29, 2004. EX-99.1 2 a4671368ex991.txt EXHIBIT 99.1 Exhibit 99.1 ESI Announces Fiscal 2004 Fourth Quarter and Year-End Results PORTLAND, Ore.--(BUSINESS WIRE)--June 29, 2004--Electro Scientific Industries, Inc. (Nasdaq:ESIO), a leading provider of world-class production laser systems for micro-engineering applications, today announced results for its fiscal 2004 fourth quarter and fiscal year ended May 29, 2004. Fourth quarter sales were $81.8 million, up 39% compared to third quarter sales of $58.8 million and up 264% compared to prior year fourth quarter sales of $22.5 million. Operating income for the quarter was $16.8 million, compared with operating income of $4.4 million in the third quarter and an operating loss of $32.3 million in the fourth quarter a year ago. Net income for the quarter was $16.2 million, or $0.57 per basic share and $0.54 per diluted share, compared with net income of $10.0 million, or $0.36 per basic share and $0.34 per diluted share in the third quarter and a net loss of $20.8 million, or $0.75 per basic and diluted share in the fourth quarter a year ago. Included in the fourth quarter 2004 operating results was a $3.8 million charge relating to the settlement of the class action and derivative lawsuits, which remains subject to court approval. Included in the fourth quarter 2003 operating results was a $10.1 million impairment charge relating to certain long-term fixed assets. Net orders for the fourth quarter were $104.7 million, an increase of 71% compared with $61.2 million in the third quarter and an increase of 310% compared with $25.5 million in the fourth quarter of 2003. Backlog increased to $78.5 million at May 29, 2004 compared to $50.8 million at February 28, 2004. Deferred revenue decreased to $12.0 million at May 29, 2004 compared to $16.6 million at February 28, 2004. Fiscal year 2004 sales were $207.2 million, up 51% compared to fiscal year 2003 sales of $136.9 million. Operating income for the year was $2.6 million, compared with an operating loss of $81.9 million in the prior year. Net income for the year was $11.9 million, or $0.42 per basic and diluted share, compared with a net loss of $50.1 million, or $1.81 per basic and diluted share in the prior year. Net orders for fiscal year 2004 were $273.5 million, an increase of 106% compared with $133.0 million in fiscal year 2003. "We are very pleased with the company's performance during the fourth quarter," said Nick Konidaris, ESI's president and chief executive officer. "The business was strong, with orders growing at a 71% rate from the third quarter. Sequential order growth exceeded 50% in each of our three businesses, indicative of the continued strength of the current cycle. In addition to the sizeable order growth, both sequential shipments and sequential revenues grew 39%. Gross margins were 53%, driving operating income of 21%, including the $4 million legal settlement." Konidaris continued, "While orders were quite strong in each of our businesses, the overall order volume of $105 million included a benefit from the timing of DRAM and passive components customer orders during the quarter. This was the highest quarterly order rate in three and a half years." Mike Dodson, ESI's chief financial officer added, "Gross margins of 53% during the quarter were up from 40% in the third quarter. Margins benefited from high shipment levels and a favorable sales mix. In addition, gross margins benefited approximately 3% from the sale of inventory that had been previously reserved. Operating expenses were $27 million in the quarter, up $8 million from the third quarter. Excluding the $4 million settlement of the class action lawsuit, operating expenses were $23 million, up $4 million from the third quarter. The primary drivers of the increase were higher variable selling and administrative expenses related to the significant expansion in business levels as well as an increase in research and development expenses to fund the development of next-generation products." Dodson continued, "We recorded income tax expense of $1 million during the quarter, a rate of 4.4%. The low tax rate resulted primarily from resolution of various state and federal tax matters during the quarter and the benefit of research and foreign tax credits. Going forward, we believe the effective tax rate for fiscal 2005 will be approximately 29%." "Our balance sheet remains strong. Cash and investments were $333 million at the end of the quarter, up $38 million from the third quarter. The increase was due to tax refunds of $24 million, the sale of a building in Escondido, California for $7 million and the remainder of the increase is due to the strong operating performance. Operating cash flow was positive for both the fourth quarter and the full fiscal year," concluded Dodson. Konidaris added, "Given the very strong order volume in the fourth quarter, we continue to believe the business cycle is in an upturn. Due to the significant timing benefits we experienced in our order volume during the fourth quarter, we expect orders in the first quarter to be in the range of $75 million to $85 million. As we continue to ramp production to meet customer requirements, we expect both shipments and revenues to be in the $80 million to $90 million range. We expect gross margins to be approximately 50% in the first quarter. We also expect operating expenses to be approximately flat compared with the fourth quarter, excluding the class action settlement." 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, 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 April 14 at 800-642-1687 (domestic participants) or 706-645-9291 (international participants), with conference ID number 6325191. 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, orders, shipments, revenues, gross margins, 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 company's need to continue investing in research and development; and the company's ability to create and sustain intellectual property protection around its products. About ESI Electro Scientific Industries, Inc. (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. Founded in 1944, ESI is headquartered in Portland, Ore. More information is available at www.esi.com. Electro Scientific Industries, Inc. FY 2004 Results (In thousands, except per share data) (Unaudited) Operating Results: Three Months Ended Year Ended -------------------------------------- May 29, May 31, May 29, May 31, 2004 2003 2004 2003 -------- --------- --------- --------- Net sales $81,843 $ 22,478 $207,242 $136,885 Cost of sales 38,192 21,724 119,762 117,858 ------- -------- -------- -------- Gross margin 43,651 754 87,480 19,027 Operating expenses: Selling, service and administrative 15,833 15,740 57,241 63,001 Research, engineering and development 7,241 7,144 23,834 27,762 Special charges - Settlement of class action and derivative lawsuit 3,800 3,800 Special charges - Long lived asset impairment 10,140 10,140 -------- --------- --------- --------- Total operating expenses 26,874 33,024 84,875 100,903 ------- -------- -------- -------- Operating income (loss) 16,777 (32,270) 2,605 (81,876) Net interest income 322 86 383 2,175 Other income (expense) (202) (362) (409) 480 ------- -------- -------- -------- Income (loss) before income taxes 16,897 (32,546) 2,579 (79,221) Provision (benefit) for income taxes 742 (11,751) (9,308) (29,135) ------- -------- -------- -------- Net income (loss) $16,155 $(20,795) $ 11,887 $(50,086) ======= ======== ======== ======== Net income (loss) per share - basic $ 0.57 $ (0.75) $ 0.42 $ (1.81) ======= ======== ======== ======== Net income (loss) per share - diluted $ 0.54 $ (0.75) $ 0.42 $ (1.81) ======= ======== ======== ======== Certain amounts in prior periods have been reclassified to conform with current period presentation. Electro Scientific Industries, Inc. Analysis of FY 2004 Results (Dollars in thousands) (Unaudited) Three Months Ended Year Ended ------------------ ------------------- May 29, May 31, May 29, May 31, 2004 2003 2004 2003 -------- --------- --------- --------- Sales detail: Electronic Interconnect Group $ 8,581 $ 5,681 $ 31,922 $ 24,949 Semiconductor Products Group 54,077 7,373 125,018 64,266 Passive Components Group 19,185 9,424 50,302 47,670 ------- ------- -------- -------- Total $81,843 $22,478 $207,242 $136,885 ======= ======= ======== ======== Gross margin % 53.3% 3.4% 42.2% 13.9% Selling, service and administrative expense % 19.3% 70.0% 27.6% 46.0% Research, engineering and development expense % 8.8% 31.8% 11.5% 20.3% Operating income margin % 20.5% -143.6% 1.3% -59.8% Effective tax rate % 4.4% 36.1% -360.9% 36.8% Average shares outstanding - basic 28,131 27,835 27,983 27,745 Average shares outstanding - diluted 32,203 27,835 27,983 27,745 End of period employees 623 649 623 649 Certain amounts in prior periods have been reclassified to conform with current period presentation. Electro Scientific Industries, Inc. FY 2004 Results (Amounts in thousands) Financial Position As Of: May 29, May 31, 2004 2003 --------- --------- Cash and investments $332,754 $308,252 Trade receivables 51,696 37,160 Income tax refund receivable 7,466 27,795 Inventory 58,627 42,067 Shipped systems pending acceptance 4,391 7,058 Deferred tax assets 33,726 19,982 Property and equipment, net 33,531 36,592 Assets held for sale 2,391 6,451 Other assets 12,604 17,241 -------- -------- Total assets $537,186 $502,598 ======== ======== Current liabilities $ 55,629 $ 37,168 Deferred revenue 11,985 13,222 Long term debt 142,759 141,891 Shareholders' equity 326,813 310,317 -------- -------- Total liabilities and equity $537,186 $502,598 ======== ======== End of period shares outstanding 28,175 27,843 Certain amounts in prior periods have been reclassified to conform with current period presentation. Electro Scientific Industries, Inc. FY2004 Results (Amounts in thousands) Consolidated Statements of Cash Flows: Twelve Months Ended ------------------- May 29, May 31, 2004 2003 --------- --------- CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) $ 11,887 $(50,086) Adjustments to reconcile net income (loss) to cash provided by operating activities: Depreciation and amortization 10,008 10,352 Provision for doubtful accounts 95 1,173 (Gain) loss on disposal of property and equipment (1) 1,069 Impairment of long lived asset - 10,140 Gain on debt extinguishment - (218) Deferred income taxes (13,774) (11,679) Tax benefit of stock options exercised 859 259 Changes in operating accounts: (Increase) decrease in trade receivables (14,020) 20,858 (Increase) decrease in inventories (15,128) 24,601 (Increase) decrease in shipped systems pending acceptance 2,667 (5,051) (Increase) decrease in income tax refund receivable 20,329 (6,978) Decrease in other current assets 70 1,617 Increase (decrease) in deferred revenue (1,237) 7,914 Increase in accounts payable and accrued liabilities 17,863 8,070 -------- -------- Net cash provided by operating activities 19,618 12,041 -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property, plant and equipment (4,859) (9,270) Proceeds from the sale of property, plant and equipment 23 1,183 Proceeds from the sale of assets held for sale 6,562 - Change in investments, net 22,583 (3,814) Decrease in other assets 234 2,516 -------- -------- Net cash provided by (used in) investing activities 24,543 (9,385) -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES Purchase of ESI-issued convertible notes - (4,676) Proceeds from exercise of stock options and stock plans 5,180 3,602 -------- -------- Net cash provided by (used in) financing activities 5,180 (1,074) -------- -------- NET CHANGE IN CASH AND CASH EQUIVALENTS $ 49,341 $ 1,582 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD $ 31,017 $ 29,435 -------- -------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 80,358 $ 31,017 ======== ======== Certain amounts in prior periods have been reclassified to conform with current period presentation. CONTACT: Electro Scientific Industries, Inc. Mike Dodson, 503-671-7028 Craig Stoehr, 503-671-7061 -----END PRIVACY-ENHANCED MESSAGE-----