Santa Clara, CA — Business Wire — July 28, 2008
Intevac, Inc. (Nasdaq:IVAC) today reported financial results for the quarter and six months ended June 28, 2008.
Net loss for the quarter was $937,000, or $0.04 per diluted share, on 21.7 million weighted-average shares outstanding. The net loss included $1.6 million of equity-based compensation expense, equivalent to $0.05 per diluted share. For the second quarter of 2007, net income was $11.6 million, or $0.52 per diluted share, on 22.1 million weighted average shares outstanding, which included $1.4 million of equity-based compensation expense, equivalent to $0.05 per diluted share. Effective in the second quarter of 2008, Intevac renamed the Imaging Instrumentation segment to Intevac Photonics.
Revenues for the quarter were $32.1 million, including $25.7 million of Equipment revenues and Intevac Photonics revenues of $6.4 million. Equipment revenues consisted of four 200 Lean® systems, as well as upgrades, spares and service. Intevac Photonics revenues consisted of $4.0 million of research and development contracts and $2.4 million of product sales. In the second quarter of 2007, revenues were $72.1 million, including $68.5 million of Equipment revenues and $3.6 million of Intevac Photonics revenues, which included $1.1 million of product sales.
Equipment and Intevac Photonics gross margins for the second quarter of 2008 were 42.4% and 34.9%, respectively, compared to 43.0% and 38.9% in the second quarter of 2007. The decrease in Equipment gross margin reflected lower revenues and factory absorption, partially offset by higher-margin technology upgrades. The decrease in gross margin for Intevac Photonics reflected lower factory utilization in our Creative Display Systems business. Consolidated gross margins were 40.9%, compared to 42.8% in the second quarter of 2007.
Operating expenses for the quarter totaled $15.8 million, or 49.3% of revenues, compared to $17.5 million, or 24.3% of revenues, in the second quarter of 2007 and $16.5 million, or 50.0% of revenues, in the first quarter of 2008. Operating expenses declined compared to the first quarter of 2008 and the second quarter of 2007 as a result of lower R&D expenditures and legal costs as well as overall cost-reduction initiatives.
Net income for the first six months of 2008 was $626,000, or $0.03 per diluted share, on 22.1 million weighted-average shares outstanding. Net income included $3.2 million of equity-based compensation expense, equivalent to $0.09 per diluted share. For the first six months of 2007, net income was $21.4 million, or $0.97 per diluted share, on 22.2 million weighted average shares outstanding, which included $2.7 million of equity-based compensation expense, equivalent to $0.09 per diluted share.
Revenues for the first six months of 2008 were $65.3 million, including $52.7 million of Equipment revenues and $12.6 million of Intevac Photonics revenues. Equipment revenues consisted of six 200 Lean® systems as well as disk lubrication systems, equipment upgrades, spares, consumables and service. Intevac Photonics revenues consisted of $8.2 million of research and development contracts and $4.4 million of product sales. In the first six months of 2007, revenues were $148.5 million, including $141.0 million of Equipment revenues and $7.5 million of Intevac Photonics revenues, which included $2.2 million of product sales.
Equipment and Intevac Photonics gross margins for the first six months of 2008 increased to 44.8% and 38.4%, respectively, from 43.1% and 37.7% in the first six months of 2007. Equipment margins improved primarily due to the high proportion of technology upgrades and spares relative to system sales. Intevac Photonics margins increased primarily as a result of an increased percentage of revenue derived from higher-margin product shipments. Consolidated gross margins improved to 43.6%, from 42.8% in first six months of 2007.
Operating expenses for the first six months of 2008 totaled $32.3 million, or 49.4% of revenues, compared to $37.2 million, or 25.0% of revenues, in the first six months of 2007. Operating expenses declined primarily as the result of decreased spending on development of new Equipment products and decreased legal expenses associated with patent litigation, partially offset by increased business development expense and higher equity-based compensation expense.
Order backlog totaled $27.7 million on June 28, 2008, compared to $43.5 million on March 29, 2008 and $57.5 million on June 30, 2007. Backlog as of June 28, 2008 includes four 200 Lean(R) systems, compared to seven on March 29, 2008 and four on June 30, 2007.
"In this challenging business climate, we delivered better than expected results for the quarter. Our first 200 Lean® Gen II system shipped in the first quarter and was accepted by the customer ahead of our original schedule," commented Kevin Fairbairn, president and chief executive officer of Intevac. "Intevac Photonics revenues continue to grow each quarter, and we are receiving positive feedback on our digital night vision products across our customer base."
The company will discuss its financial results and outlook in a conference call today at 1:30 p.m. PT (4:30 p.m. ET). To participate in the teleconference, please call toll-free (800) 291-8929 prior to the start time. For international callers, the dial-in number is (706) 634-0478. You may also listen live via the Internet at the company's website, www.Intevac.com, under the Investors link, or at www.earnings.com. For those unable to attend, these web sites will host an archive of the call. Additionally, a telephone replay of the call will be available for 48 hours beginning today at 7:30 p.m. ET. You may access the playback by calling (800) 642-1687, or for international callers (706) 645-9291, and providing conference ID 55160186.
Intevac was founded in 1991 and has two businesses: Equipment and Intevac Photonics.
Equipment Business: We are a leader in the design, manufacture and marketing of high-productivity lean manufacturing systems and have been producing Lean Thinking platforms since 1994. We are the leading supplier of magnetic media sputtering equipment to the hard disk drive industry and offer advanced etch technology systems to the semiconductor industry.
Intevac Photonics: We are a leader in the development of leading edge, high-sensitivity imaging products, vision systems and miniature Raman instruments. Markets addressed include military, industrial, physical science and life science.
For more information call 408-986-9888, or visit the company's website at www.intevac.com.
200 Lean® is a registered trademark of Intevac, Inc.
This press release includes statements that constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Reform Act"). Intevac claims the protection of the safe-harbor for forward-looking statements contained in the Reform Act. These forward-looking statements are often characterized by the terms "may," "believes," "projects," "expects," or "anticipates," and do not reflect historical facts. Specific forward-looking statements contained in this press release include, but are not limited to; expected revenue growth of its products, success of night vision products and management of the company's operating expenses. The forward-looking statements contained herein involve risks and uncertainties that could cause actual results to differ materially from the company's expectations. These risks include, but are not limited to: failure to increase Intevac Photonics revenues, manage operating expenses or introduce new products, each of which could have a material impact on our business, our financial results, and the company's stock price. These risks and other factors are detailed in the company's regular filings with the U.S. Securities and Exchange Commission.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
Three months ended Six months ended
------------------ ------------------
June 28, June 30, June 28, June 30,
2008 2007 2008 2007
------------------ ------------------
Net revenues
Equipment $25,730 $68,519 $52,703 $140,965
Intevac Photonics 6,402 3,586 12,604 7,514
------------------ ------------------
Total net revenues 32,132 72,105 65,307 148,479
Gross profit 13,133 30,827 28,444 63,609
Gross margin
Equipment 42.4% 43.0% 44.8% 43.1%
Intevac Photonics 34.9% 38.9% 38.4% 37.7%
------------------ ------------------
Consolidated 40.9% 42.8% 43.6% 42.8%
Operating expenses
Research and development 8,418 9,648 17,806 21,840
Selling, general and
administrative 7,413 7,839 14,477 15,352
-------------------------------------
Total operating expenses 15,831 17,487 32,283 37,192
Operating income (loss)
Equipment (633) 15,842 (137) 30,831
Intevac Photonics (1,070) (1,515) (1,891) (3,115)
Corporate (995) (987) (1,811) (1,299)
------------------ ------------------
Total operating profit
(loss) (2,698) 13,340 (3,839) 26,417
Interest and other income 806 1,538 2,217 2,858
------------------ ------------------
Profit (loss) before provision
for income taxes (1,892) 14,878 (1,622) 29,275
Provision (benefit) for income
taxes (955) 3,326 (2,248) 7,878
------------------ ------------------
Net income (loss) $ (937) $11,552 $ 626 $ 21,397
========= ======== ======== =========
Income (loss) per share
Basic $ (0.04) $ 0.54 $ 0.03 $ 1.00
Diluted $ (0.04) $ 0.52 $ 0.03 $ 0.97
Weighted average common shares
outstanding
Basic 21,691 21,396 21,669 21,345
Diluted 21,691 22,146 22,115 22,167
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
June 28, Dec. 31,
2008 2007
(see Note)
-----------------------
(Unaudited)
ASSETS
Current assets
Cash, cash equivalents and short-term
investments $ 37,908 $138,658
Accounts receivable, net 29,111 14,142
Inventories 25,730 22,133
Deferred tax assets 4,981 3,609
Prepaid expenses and other current assets 3,189 4,162
-----------------------
Total current assets 100,919 182,704
Long-term investments 78,195 2,009
Property, plant and equipment, net 15,404 15,402
Deferred tax assets 5,168 3,740
Goodwill 7,905 7,905
Other long-term assets 3,220 3,653
-----------------------
Total assets $ 210,811 $215,413
========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Note payable $ 1,952 $ 1,992
Accounts payable 6,155 7,678
Accrued payroll and related liabilities 4,971 8,610
Other accrued liabilities 4,912 5,454
Customer advances 3,858 4,340
-----------------------
Total current liabilities 21,848 28,074
Other long-term liabilities 271 2,176
Stockholders' equity
Common stock ($0.001 par value) 22 22
Paid in Capital 124,153 120,056
Accumulated other comprehensive income
(loss) (623) 571
Retained earnings 65,140 64,514
-----------------------
Total stockholders' equity 188,692 185,163
-----------------------
Total liabilities and stockholders' equity $ 210,811 $215,413
========== ===========
Note: Amounts as of December 31, 2007 are derived from the December
31, 2007 audited consolidated financial statements.
SUPPLEMENTAL INFORMATION REGARDING EQUITY-BASED COMPENSATION EXPENSE
(In thousands, except per share amounts)
(Unaudited)
The effect of recording equity-based compensation for the three- and
six-month periods ended June 28, 2008, and June 30, 2007 were as
follows:
Three Months Six Months Ended
Ended
--------------- ----------------
June June June 28, June
28, 30, 2008 30,
2008 2007 2007
Equity-based compensation by type of
award:
Stock options $1,325 $1,169 $ 2,649 $2,314
Employee Stock Purchase Plan 297 214 500 427
Amounts (capitalized as inventory)
released to cost of sales 20 1 89 (3)
------- ------- -------- -------
Total equity-based compensation 1,642 1,384 3,238 2,738
Tax effect on equity-based
compensation (640) (305) (1,263) (737)
------- ------- -------- -------
Net effect on net income $1,002 $1.079 $ 1,975 $2,001
======= ======= ======== =======
Effect on earnings per share:
Basic $ 0.05 $ 0.05 $ 0.09 $ 0.09
Diluted $ 0.05 $ 0.05 $ 0.09 $ 0.09
CONTACT: Intevac, Inc.
Jeff Andreson, 408-986-9888 (Chief Financial Officer)
Claire McAdams, 530-274-0551 (Investor Relations)
