SANTA CLARA, Calif. — BUSINESS WIRE — October 31, 2005
Intevac, Inc. (Nasdaq:IVAC) reported financial results for the third quarter and nine months ended October 1, 2005.
Revenues for the third quarter of 2005 were $43.5 million, including $41.5 million of Equipment revenues and $2.0 million of Imaging revenues. Equipment revenues consisted of nine magnetic media manufacturing systems; one flat panel manufacturing system; disk lubrication systems; equipment upgrades; spares; consumables; and service. The flat panel manufacturing system, the last to be shipped of the discontinued product line, involved high installation and acceptance testing costs and did not contribute significantly to gross profit. Imaging revenues were primarily from research and development contracts. In the third quarter of 2004, revenues were $35.0 million, including $32.6 million of Equipment revenues and $2.4 million of Imaging revenues. Equipment revenues increased from the same quarter last year due to higher sales of magnetic media manufacturing equipment and recognition of revenue on the flat panel manufacturing system. Imaging revenues decreased as a result of lower revenues from research and development contracts.
Consolidated, Equipment, and Imaging gross margins for the third quarter of 2005 were 31.2%, 32.0% and 13.8%, respectively. On a non-GAAP basis -- i.e., excluding the effect of the flat panel system -- consolidated and Equipment gross margins were 33.9% and 35.0%, respectively. Consolidated gross margins for the quarter improved from 18.3% in third-quarter 2004 due primarily to lower manufacturing costs and a higher average selling price for 200 Lean systems.
Operating expenses for the third quarter were $7.6 million versus $5.1 million in third quarter 2004. Operating expenses increased as the result of provisions for employee profit sharing and bonus plans, increased R&D spending in Equipment and Imaging, and higher costs in Equipment related to business development, customer service, and support.
Net profit for the third quarter of 2005 was $6.2 million, or $0.29 per diluted share, on 21.4 million weighted-average shares outstanding, compared to net profit of $1.4 million, or $0.07 per diluted share on 20.4 million weighted-average shares outstanding, in the third quarter of 2004.
Revenues for the first nine-months of 2005 rose 43% to $84.5 million from $59.2 million in the first nine-months of 2004. Equipment revenues were $78.4 million, compared to $52.2 million in the prior-year period. The increase was attributable to higher sales of magnetic media manufacturing systems and components, the sale of the flat panel manufacturing system referred to above, and a flat panel technology license. Imaging revenues for the first nine-months of 2005 were $6.1 million, down from $7.0 million in the prior-year period, due to lower revenues from research and development contracts.
Net income for the first nine-months of 2005 was $6.2 million, or $0.29 per diluted share on 21.1 million weighted-average shares outstanding, compared to net loss of $1.3 million, or $0.07 per diluted share on 19.6 million weighted-average shares, for the same period in 2004. The improvement was attributable to an increase in Equipment business gross margins to 31.2% from 24.7% in the prior year period, higher sales of magnetic disk manufacturing equipment, the sale of a flat panel technology license, and higher interest income. This increase was partially offset by provisions for employee profit sharing and bonus plans, higher research and development expenses in Imaging, increased costs in Equipment related to business development, customer service and support, and increased audit costs related to testing of internal controls.
Order backlog totaled $65.4 million on October 1, 2005, compared to $65.4 million on July 1 2005, and $16.3 million on September 25, 2004.
Intevac Chief Executive Kevin Fairbairn commented: "We are pleased to report excellent third quarter results, which are a record for us in terms of both revenue and profitability. We achieved these results by delivering systems to four different customers in six different locations. This was a terrific accomplishment by our factory and field operations groups that resulted in $6.2 million of net income, or 29 cents per share.
"In Q3, we also demonstrated continuing progress on our product cost reduction activities, which led to higher gross margins and improved financial performance relative to 2004. We believe there is opportunity for improvement and have initiatives in place aimed at further reducing product cost in 2006.
"The transition to perpendicular technology will be the prime driver for growing our business in 2006. All of our 200 Lean customers have informed us of their plans to add perpendicular capable capacity in 2006 and we expect to see an increase in 200 Lean shipments in 2006 relative to 2005."
Conference Call Information
The Company will discuss its financial results in a conference call today at 1:30 p.m. PDT (4:30 p.m. EDT). 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 3:30 p.m. PDT. You may access the playback by calling 800-642-1687 or, for international callers 706-645-9291, and providing conference ID 1305952.
About Intevac
Intevac is the world's leading supplier of disk sputtering equipment to manufacturers of magnetic media used in hard disk drives and a developer and provider of leading edge extreme low light imaging sensors, cameras and systems. For more information please visit our website at www.intevac.com.
Safe Harbor Statement
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, product cost reductions in the Equipment business and increased shipments of 200 Leans in 2006. 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 achieve planned product cost reductions and revenue levels. Any of these risks could have a material impact on our business, our financial results and our 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)
3 months ended 9 months ended
----------------------- -----------------------
Oct. 1, Sept. 25, Oct. 1, Sept. 25,
2005 2004 2005 2004
----------- ----------- ----------- -----------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Net revenues
Equipment $41,519 $32,636 $78,392 $52,192
Imaging 1,988 2,393 6,138 7,036
----------- ----------- ----------- -----------
Total net revenues 43,507 35,029 84,530 59,228
Gross profit (loss) 13,554 6,410 25,210 13,709
Gross margin
Equipment 32.0% 19.1% 31.2% 24.7%
Imaging 13.8% 7.7% 12.7% 11.4%
----------- ----------- ----------- -----------
Consolidated 31.2% 18.3% 29.8% 23.1%
Operating expenses
Research and
development 3,897 2,831 10,435 8,972
Selling, general and
administrative 3,746 2,316 9,678 6,709
----------- ----------- ----------- -----------
Total operating
expenses 7,643 5,147 20,113 15,681
Operating income/(loss)
Equipment Products 7,177 1,803 9,178 1,123
Imaging (1,415) (905) (3,874) (2,736)
Corporate 149 365 (207) (359)
----------- ----------- ----------- -----------
Total operating
profit/(loss) 5,911 1,263 5,097 (1,972)
Other income 438 223 1,292 763
----------- ----------- ----------- -----------
Profit/(Loss) before
provision for income
taxes 6,349 1,486 6,389 (1,209)
Provision for
(Benefit from)
income taxes 158 115 168 103
----------- ----------- ----------- -----------
Net income/(Loss) $6,191 $1,371 $6,221 ($1,312)
=========== =========== =========== ===========
Income (loss) per share
Basic $0.30 $0.07 $0.30 ($0.07)
Diluted $0.29 $0.07 $0.29 ($0.07)
Weighted average common
shares outstanding
Basic 20,567 20,104 20,400 19,617
Diluted 21,438 20,387 21,138 19,617
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
ASSETS Oct. 1, Dec. 31,
2005 2004
----------- --------
(Unaudited)
Current assets
Cash, cash equivalents and short term
investments $45,444 $42,034
Accounts receivable, net 33,029 4,775
Inventories - production 24,689 9,120
Inventories - pending acceptance at customer
site 7,977 6,255
Prepaid expenses and other current assets 1,334 956
----------- --------
Total current assets 112,473 63,140
Property, plant and equipment, net 6,835 5,996
Long-term investments - 8,052
Investment in 601 California Avenue LLC 2,431 2,431
Other long-term assets 503 3
----------- --------
Total assets $122,242 $79,622
=========== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $10,470 $1,647
Accrued payroll and related liabilities 3,125 1,617
Other accrued liabilities 4,632 2,943
Customer advances 25,605 3,833
----------- --------
Total current liabilities 43,832 10,040
Other long-term liabilities 686 207
Shareholders' equity
Common stock 96,954 94,802
Accumulated other comprehensive income 229 253
Retained earnings (deficit) (19,459) (25,680)
----------- --------
Total shareholders' equity 77,724 69,375
----------- --------
Total liabilities and shareholders' equity $122,242 $79,622
=========== ========
GROSS MARGIN RECONCILIATION
(In thousands)
3 months ended October 1, 2005
------------------------------------
Equipment Imaging Consolidated
(unaudited) (unaudited) (unaudited)
Revenue on a GAAP basis $41,519 $1,988 $43,507
Less: Flat panel system revenue 3,580 3,580
----------- ----------- ------------
Revenue on a non-GAAP basis 37,939 1,988 39,927
Gross profit on a GAAP basis 13,280 274 13,554
Less: Gross profit on flat panel
system 20 0 20
----------- ----------- ------------
Gross profit on a non-GAAP basis $13,260 $274 $13,534
Gross margin
On a GAAP basis 32.0% 13.8% 31.2%
On a non-GAAP basis 35.0% 13.8% 33.9%
This non-GAAP financial information supplements our GAAP financial
data by eliminating the effect of a flat panel manufacturing system
that the company has not sold since 2003. Management believes that
this non-GAAP financial data provides investors with a clearer picture
of the performance of the Equipment business as it currently exists,
without the holdover effects related to recognition of revenue in the
current period from a product line discontinued in 2003. The
presentation of this additional information is not meant to be
considered in isolation or as a substitute for results prepared in
accordance with GAAP.
CONTACT: Intevac, Inc.
Charles Eddy, 408-986-9888
or
Silverman Heller Associates
Dan Matsui/Gene Heller, 310-208-2550
SOURCE: Intevac, Inc. 
