-----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, H0HOTszvMYC/r26EtOmsqbz42IRy1ROUInlX+Y4BEhEPG7OaLZCkqP3oXaHl2OBY dYQrpyjyVFWxPQzExnqJqg== 0001157523-07-003417.txt : 20070410 0001157523-07-003417.hdr.sgml : 20070410 20070410160611 ACCESSION NUMBER: 0001157523-07-003417 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20070410 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Other Events ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20070410 DATE AS OF CHANGE: 20070410 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: 07759006 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 a5374232.txt ELECTRO SCIENTIFIC INDUSTRIES, INC. 8K 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): April 10, 2007 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 April 10, 2007, Electro Scientific Industries, Inc. (the "Company") announced its financial results for the third 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 8.01. Other Events On April 10, 2007, the Company announced that its Board of Directors authorized on March 9, 2007 the repurchase of up to $50 million in shares of the Company's outstanding common stock during the nine-month period following the Company's announcement of its financial results for the third quarter of fiscal 2007. The repurchases will occur from time to time as market conditions warrant through transactions in the open market or in negotiated transactions with brokers or shareholders. The Company expects that the share purchase transactions will be effected pursuant to a plan in conformity with Rule 10b5-1 under the Securities Exchange Act of 1934. This rule allows public companies to adopt written, pre-arranged stock trading plans when they do not have material, non-public information in their possession. The adoption of this stock trading plan will allow the Company to repurchase its shares during periods when it otherwise might be prevented from doing so under insider trading laws or because of self-imposed trading blackout periods. Item 9.01. Financial Statements and Exhibits. (d) Exhibits 99.1 Press release dated April 10, 2007 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: April 10, 2007 Electro Scientific Industries, Inc. By /s/ John Metcalf ----------------------------------------------- John Metcalf Senior Vice President of Administration, Chief Financial Officer and Corporate Secretary EXHIBIT INDEX Exhibit Description - ------- ----------- 99.1 Press release dated April 10, 2007. EX-99.1 2 a5374232ex991.txt EXHIBIT 99.1 Exhibit 99.1 ESI Announces Third Quarter Fiscal 2007 Results with 17% Increase in Orders and $50 Million Share Repurchase Program PORTLAND, Ore.--(BUSINESS WIRE)--April 10, 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 third quarter ended March 3, 2007. Third quarter sales were $59.4 million, approximately flat compared to the second quarter results of $59.3 million and up 6% compared to prior year third quarter sales of $55.9 million. Operating income for the quarter was $4.0 million compared to $3.6 million in the second quarter and $4.9 million in the third quarter of fiscal 2006. Net income for the quarter was $5.6 million, or $0.19 per diluted share, compared with second quarter net income of $3.8 million, or $0.13 per diluted share, and $10.4 million, or $0.35 per diluted share in the third quarter of fiscal 2006. Included in the third quarter 2007 operating results was $0.7 million of stock-based compensation expense, down from $0.9 million in the second quarter. Orders for the third quarter were $73.0 million, an increase of 17% compared with $62.4 million in the second quarter and an increase of 38% compared with $53.0 million in the third quarter of fiscal 2006. Backlog of $55 million at the end of the third quarter was up from $42 million at the end of the prior quarter as a result of strong order growth. "We continue to see strong fundamental market conditions that drove demand for our products during the third quarter," ESI's CEO Nick Konidaris said. "In addition, our investment in research and development has expanded our product portfolio with new tools. The strength of the market, coupled with the execution of our development strategy, resulted in the continuation of ESI's string of consecutive order growth on a two quarter average. Sequentially, orders for Q3 grew 17% from Q2, driven by a strong increase in demand for memory repair systems from several of our key customers in Asia and Europe." Gross margin of 42% increased from 41% reported in the second quarter. Konidaris added, "As the sales mix moves to include more of our new products, we expect gross margins to improve. Additionally, we expect that favorable shifts in sales mix between product groups will also contribute to gross margin improvement." Operating expenses were $21.0 million, up $0.4 million from $20.6 million in the prior quarter. Excluding the benefit of a $1.0 million insurance recovery in the second quarter, net operating expenses were down $0.6 million from the prior quarter. Interest and other income of $2.7 million was up from $2.3 million in the second quarter due to higher average investment returns as well as interest received on a property tax refund. Cash and investments were $226 million, up $8 million from the end of the second quarter. The increase in cash was primarily generated from operating activities. Accounts receivable for the quarter were $54 million, up 1% compared to prior quarter. Inventories of $76 million increased $4 million from the prior quarter. The increase was primarily due to mid-quarter sales mix changes and the ramp in inventory for new product releases in both the semiconductor and component segments. During the third quarter, we recorded an immaterial revision to our first quarter results which decreased previously reported net income by approximately $0.6 million or $0.02 per diluted share. This revision is reflected in our results of operations for the nine months ended March 3, 2007. On March 9, 2007, the Board of Directors authorized a stock repurchase program which will purchase up to $50 million of ESI's Common Stock. ESI expects that such repurchases will be effected pursuant to a plan in conformity with Rule 10b5-1 over the next nine months. The share purchases will be made in either open market or private transactions. The size and timing of these purchases will depend on price, market, business conditions, and other factors. Konidaris continued, "While our industry is characterized by fluctuations in order timing, we expect that our customers will continue their DRAM expansion plans in the near-term. In addition, we expect our components business to improve from third quarter levels. Given existing backlog and order expectations, we believe fourth quarter shipments and revenue will be in the range of $60 million to $70 million. We expect the gross margin percentage in the fourth quarter to increase to the mid-40s percent range. Operating expenses are expected to be up slightly compared to prior quarter. Included in the gross margin and operating expense guidance is expected pre-tax stock compensation expense of approximately $0.8 million. We believe net interest and other income in the fourth quarter will be approximately $2.5 million. And lastly, we expect the tax rate for the fourth quarter to be approximately 31%." 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) with conference ID number 2390216. A live audio webcast can be accessed at www.esi.com. Upon completion of the call, an audio replay will be accessible through April 17, 2007, using conference ID number 2390216, 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, 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 -- 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. Electro Scientific Industries, Inc. FY 2007 Results (In thousands, except per share data) (Unaudited) Operating Results: Three Months Nine Months Ended Ended ------------------ ------------------- Mar. 3, Feb. 25, Mar. 3, Feb. 25, 2007 2006 2007 2006 -------- --------- --------- --------- Net sales $59,411 $55,937 $179,080 $149,088 Cost of sales 34,456 31,040 103,586 83,376 -------- --------- --------- --------- Gross profit 24,955 24,897 75,494 65,712 Operating expenses: Selling, service and administration 11,882 11,287 35,956 33,729 Research, development and engineering 9,122 8,708 28,043 24,520 Insurance recoveries - - (2,287) - -------- --------- --------- --------- Total operating expenses 21,004 19,995 61,712 58,249 -------- --------- --------- --------- Operating income 3,951 4,902 13,782 7,463 Interest and other income, net 2,695 1,799 7,785 5,310 -------- --------- --------- --------- Income before income taxes 6,646 6,701 21,567 12,773 Provision for (benefit from) income taxes 1,012 (3,656) 5,942 (2,119) -------- --------- --------- --------- Net income $5,634 $10,357 $15,625 $14,892 ======== ========= ========= ========= Net income per share - basic $0.19 $0.36 $0.54 $0.52 ======== ========= ========= ========= Net income per share - diluted $0.19 $0.35 $0.53 $0.51 ======== ========= ========= ========= Electro Scientific Industries, Inc. Analysis of FY 2007 Results (Dollars in thousands) (Unaudited) Three Months Nine Months Ended Ended ------------------ ------------------- Mar. 3, Feb. 25, Mar. 3, Feb. 25, 2007 2006 2007 2006 -------- --------- --------- --------- Sales detail: Semiconductor Group $33,891 $40,515 $95,215 $93,653 Passive Components Group 15,756 9,179 50,309 32,261 Electronic Interconnect Group 9,764 6,243 33,556 23,174 -------- --------- --------- --------- Total $59,411 $55,937 $179,080 $149,088 ======== ========= ========= ========= Gross margin % 42% 45% 42% 44% Selling, service and administration expense % (a) 20% 20% 19% 23% Research, development and engineering expense % 15% 16% 16% 16% Operating income % 7% 9% 8% 5% Effective tax rate % 15% -55% 28% -17% Average shares outstanding - basic 29,185 28,904 29,130 28,751 Average shares outstanding - diluted 29,584 29,256 29,378 29,022 End of period employees 590 601 590 601 (a) Includes insurance recoveries. Electro Scientific Industries, Inc. FY 2007 Results (Amounts in thousands) (Unaudited) Financial Position As Of: Mar. 3, Dec. 2, Jun. 3, 2007 2006 2006 -------- -------- -------- Assets Current assets: Cash and cash equivalents $ 93,589 $ 89,271 $ 79,961 Marketable securities 125,599 125,184 140,106 -------- -------- -------- Total cash and securities 219,188 214,455 220,067 Trade receivables, net 54,249 53,588 47,978 Income tax refund receivable 680 691 1,570 Inventories 76,252 71,900 63,834 Shipped systems pending acceptance 2,469 3,192 3,941 Deferred income taxes 11,640 12,104 11,982 Prepaid and other current assets 6,556 8,250 4,410 -------- -------- -------- Total current assets 371,034 364,180 353,782 Long-term marketable securities 6,671 3,009 9,265 Property, plant and equipment, net 44,269 45,050 43,338 Deferred income taxes, net 11,516 10,128 13,318 Other assets 30,179 31,222 17,762 -------- -------- -------- Total assets $463,669 $453,589 $437,465 ======== ======== ======== Liabilities and shareholders' equity Current liabilities: Accounts payable $ 13,506 $ 13,298 $ 11,272 Accrued liabilities 27,281 25,151 24,705 Deferred revenue 13,474 13,244 13,321 -------- -------- -------- Total current liabilities 54,261 51,693 49,298 Shareholders' equity: Preferred and common stock 171,528 169,492 166,459 Retained earnings 237,647 232,013 222,022 Accumulated other comprehensive income (loss) 233 391 (314) -------- -------- -------- Total shareholders' equity 409,408 401,896 388,167 -------- -------- -------- Total liabilities and shareholders' equity $463,669 $453,589 $437,465 ======== ======== ======== End of period shares outstanding 29,216 29,154 29,051 ======== ======== ======== Total cash and investments $225,859 $217,464 $229,332 ======== ======== ======== Electro Scientific Industries, Inc. FY 2007 Results (Amounts in thousands) (Unaudited) Consolidated Statements of Cash Flows: Nine Months Ended ----------------- Mar. 3, Feb. 25, 2007 2006 -------- -------- CASH FLOWS FROM OPERATING ACTIVITIES Net income $15,625 $14,892 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 6,294 5,872 Stock-based compensation expense 2,151 1,014 Tax benefit of stock options exercised - 1,525 Provision for doubtful accounts 30 (167) Loss on disposal of property and equipment 8 56 Insurance recovery on damaged equipment (1,287) - Deferred income taxes 2,123 2,347 Changes in operating accounts: Increase in trade receivables, net (6,477) (11,796) Decrease in income tax refund receivable 890 8,000 Increase in inventories (13,920) (685) (Increase) decrease in shipped systems pending acceptance 1,472 (686) Increase in prepaid and other current assets (2,118) (1,229) Increase in accounts payable and other current liabilities 5,086 579 Increase in deferred revenue 153 2,651 -------- -------- Net cash provided by operating activities 10,030 22,373 -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property, plant and equipment (7,089) (15,211) Minority equity investments (11,000) - Insurance recovery on damaged equipment 1,287 - Change in investments, net 17,623 26,579 Increase in other assets (65) (6,633) -------- -------- Net cash provided by investing activities 756 4,735 -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from exercise of stock options and stock plans 2,381 6,342 Tax benefit realized from share options exercise 461 - -------- -------- Net cash provided by financing activities 2,842 6,342 -------- -------- NET CHANGE IN CASH AND CASH EQUIVALENTS $13,628 $33,450 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD $79,961 $61,314 -------- -------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $93,589 $94,764 ======== ======== CONTACT: ESI Chris Butterfield, 503-672-5760 -----END PRIVACY-ENHANCED MESSAGE-----