-----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, SCtxHLiXI3OlKtmL/UqO03+ARfkEtiLmao9gkkys46Oajg/gVjrnSYaxxaXfanuQ X+7Qgfoow5rzINo8FJpjXQ== 0001157523-06-009501.txt : 20060928 0001157523-06-009501.hdr.sgml : 20060928 20060928161122 ACCESSION NUMBER: 0001157523-06-009501 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20060928 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20060928 DATE AS OF CHANGE: 20060928 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: 061114136 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 a5237990.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): September 28, 2006 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) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: |_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 2.02. Results of Operations and Financial Condition. On September 28, 2006, Electro Scientific Industries, Inc. (the "Company") announced its financial results for the first quarter of fiscal year 2007. The Company's press release announcing this event is attached hereto as Exhibit 99.1 and incorporated herein by reference. Item 9.01. Financial Statements and Exhibits. (d) Exhibits ------------- 99.1 Press release dated September 28, 2006 2 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: September 28, 2006 Electro Scientific Industries, Inc. By /s/ John Metcalf --------------------------------------- John Metcalf Senior Vice President of Administration, Chief Financial Officer and Corporate Secretary 3 EXHIBIT INDEX Exhibit Description - ------- ----------- 99.1 Press release dated September 28, 2006. EX-99.1 2 a5237990ex99_1.txt EXHIBIT 99.1 PRESS RELEASE 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 -----END PRIVACY-ENHANCED MESSAGE-----