Exhibit 99.1
3560 Bassett Street, Santa Clara CA 95054 |
Charles Eddy | Dan Matsui/Gene | |
Heller | ||
Chief Financial Officer | Silverman Heller | |
Associates | ||
(408) 986-9888 | (310) 208-2550 |
INTEVAC INC. REPORTS FINANCIAL RESULTS FOR THIRD-QUARTER 2006
Revenue and Net Income Significantly Exceed Expectations
Revenue and Net Income Significantly Exceed Expectations
Santa Clara, Calif.—Oct. 30, 2006—Intevac, Inc. (Nasdaq: IVAC) reported financial results for the third quarter and nine months ended September 30, 2006.
Net income for the quarter was $9.0 million, or $0.41 per diluted share on 21.9 million weighted-average shares outstanding, which included $878,000 of non-cash stock-based compensation expense. For third-quarter 2005, net income was $6.2 million, or $0.29 per share on 21.4 million weighted-average shares outstanding, which did not include non-cash stock-based compensation expense.
Revenues for the quarter were $54.8 million, including $51.6 million of Equipment revenues and $3.2 million of Imaging revenues. Equipment revenues consisted of nine magnetic media manufacturing systems, disk lubrication systems, equipment upgrades, spares, consumables, and service. Imaging revenues consisted of $2.7 million of research and development contracts and $465,000 of product sales. In third-quarter 2005, net revenues were $43.5 million, including $41.5 million of Equipment revenues and $2.0 million of Imaging revenues, which included $343,000 of product sales.
Equipment gross margins for the quarter rose to 42.5% from 32.0% in third-quarter 2005, and Imaging gross margins increased to 41.1% from 13.8% in third-quarter 2005. Equipment margins improved primarily from lower manufacturing costs, higher average selling prices for 200 Lean® systems, and higher sales of spares and upgrades. Imaging margins improved primarily as the result of favorable adjustments related to closing our prior year government rate audits and a higher percentage of revenue being derived from fully funded development contracts. Consolidated gross margins improved to 42.5% from 31.2% in third-quarter 2005.
Operating expenses for the quarter totaled $14.1 million, or 26% of revenues, versus $7.6 million, or 18% of revenues, in third-quarter 2005. Operating expenses increased as the result of higher spending in Equipment related to research and development and business development, provisions for employee profit sharing and bonus plans, and the inclusion of stock-based compensation expense in third-quarter 2006 results.
Net income for the first nine months of 2006 was $25.4 million, or $1.16 per diluted share on 21.9 million weighted-average shares outstanding, which included $2.0 million of non-cash stock-based compensation expense. For the first nine-months of 2005, net income was $6.2 million, or $0.29 per diluted
share on 21.1 million weighted-average shares outstanding, which did not include non-cash stock-based compensation expense.
Revenues for the first nine months of 2006 were $164.0 million, including $155.7 million of Equipment revenues and $8.3 million of Imaging revenues. Equipment revenues consisted of 29 magnetic media manufacturing systems, disk lubrication systems, equipment upgrades, spares, consumables, and service. Imaging revenues consisted of $7.0 million of research and development contracts and $1.3 million of product sales. In the first nine months of 2005, net revenues were $84.5 million, including $78.4 million of Equipment revenues and $6.1 million of Imaging revenues.
Equipment and Imaging gross margins for the first nine-months of 2006 increased to 38.0% and 31.6%, respectively, from 31.2% and 12.7%, respectively, in the first nine months of 2005. Equipment margins for the quarter improved primarily from lower manufacturing costs, higher average selling prices for 200 Lean® systems, and increased sales of spares and upgrades. Imaging margins improved primarily as the result of favorable adjustments related to closing our prior year government rate audits and a higher percentage of revenue being derived from fully funded development contracts. Consolidated gross margins improved to 37.7% from 29.8% in the first nine months of 2005.
Order backlog totaled $129.7 million on September 30, 2006, compared to $96.2 million on July 1, 2006, and $65.4 million on October 1, 2005. Backlog as of September 30, 2006, included twenty-four 200 Lean systems and excludes orders for two 200 Lean systems subsequently received.
Intevac Chief Executive Kevin Fairbairn commented: “This was a tremendous quarter for Intevac. We delivered significantly more revenue and net income than we expected at the beginning of the quarter. Our Imaging business significantly improved its financial performance and received its first volume production order for LIVAR® cameras. Good progress was made in both Equipment and Imaging in new product development activities that will drive the future growth of the company.”
Conference Call Information
The Company will discuss its financial results in a conference call today at 1:30 p.m. PST (4:30 p.m. EST). 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. PST. You may access the playback by calling (800) 642-1687 or, for international callers (706) 645-9291, and providing conference ID 8532356.
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 atwww.intevac.com.
200 Lean®and LIVAR®are registered trademarks of Intevac, Inc.
[Financial tables on following pages]
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(In thousands, except per share amounts)
3 months ended | 9 months ended | |||||||||||||||
Sept. 30, | Oct. 1, | Sept. 30, | Oct. 1, | |||||||||||||
2006 | 2005 | 2006 | 2005 | |||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||
Net revenues | ||||||||||||||||
Equipment | $ | 51,625 | $ | 41,519 | 155,663 | $ | 78,392 | |||||||||
Imaging | 3,204 | 1,988 | 8,328 | 6,138 | ||||||||||||
Total net revenues | 54,829 | 43,507 | 163,991 | 84,530 | ||||||||||||
Gross profit | 23,280 | 13,554 | 61,848 | 25,210 | ||||||||||||
Gross margin | ||||||||||||||||
Equipment | 42.5 | % | 32.0 | % | 38.0 | % | 31.2 | % | ||||||||
Imaging | 41.1 | % | 13.8 | % | 31.6 | % | 12.7 | % | ||||||||
Consolidated | 42.5 | % | 31.2 | % | 37.7 | % | 29.8 | % | ||||||||
Operating expenses | ||||||||||||||||
Research and development | 8,571 | 3,897 | 20,422 | 10,435 | ||||||||||||
Selling, general and administrative | 5,565 | 3,746 | 15,683 | 9,678 | ||||||||||||
Total operating expenses | 14,136 | 7,643 | 36,105 | 20,113 | ||||||||||||
Operating income/(loss) | ||||||||||||||||
Equipment Products | 9,833 | 7,177 | 29,287 | 9,178 | ||||||||||||
Imaging | (673 | ) | (1,415 | ) | (3,701 | ) | (3,874 | ) | ||||||||
Corporate | (16 | ) | 149 | 157 | (207 | ) | ||||||||||
Total operating profit | 9,144 | 5,911 | 25,743 | 5,097 | ||||||||||||
Other income | 1,113 | 438 | 2,440 | 1,292 | ||||||||||||
Profit before provision for income taxes | 10,257 | 6,349 | 28,183 | 6,389 | ||||||||||||
Provision for income taxes | 1,244 | 158 | 2,826 | 168 | ||||||||||||
Net income | $ | 9,013 | $ | 6,191 | $ | 25,357 | $ | 6,221 | ||||||||
Income per share | ||||||||||||||||
Basic | $ | 0.43 | $ | 0.30 | $ | 1.21 | $ | 0.30 | ||||||||
Diluted | $ | 0.41 | $ | 0.29 | $ | 1.16 | $ | 0.29 | ||||||||
Weighted average common shares outstanding | ||||||||||||||||
Basic | 21,082 | 20,567 | 20,967 | 20,400 | ||||||||||||
Diluted | 21,889 | 21,438 | 21,888 | 21,138 |
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CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(In thousands)
Sept 30, | Dec. 31, | |||||||
2006 | 2005 | |||||||
(Unaudited) | ||||||||
ASSETS | ||||||||
Current assets | ||||||||
Cash, cash equivalents and short term investments | $ | 85,857 | $ | 49,731 | ||||
Accounts receivable, net | 33,999 | 42,847 | ||||||
Inventories | 41,372 | 24,837 | ||||||
Deferred tax assets | 2,479 | — | ||||||
Prepaid expenses and other current assets | 2,272 | 1,814 | ||||||
Total current assets | 165,979 | 119,229 | ||||||
Long term investments | 4,000 | — | ||||||
Property, plant and equipment, net | 11,392 | 7,980 | ||||||
Investment in 601 California Avenue LLC | 2,431 | 2,431 | ||||||
Other long-term assets | 1,770 | 804 | ||||||
Total assets | $ | 185,572 | $ | 130,444 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Current liabilities | ||||||||
Accounts payable | $ | 17,924 | $ | 7,049 | ||||
Accrued payroll and related liabilities | 8,026 | 5,509 | ||||||
Other accrued liabilities | 6,383 | 6,182 | ||||||
Customer advances | 33,849 | 23,136 | ||||||
Total current liabilities | 66,182 | 41,876 | ||||||
Other long-term liabilities | 955 | 694 | ||||||
Shareholders’ equity | ||||||||
Common stock | 100,193 | 97,165 | ||||||
Paid in Capital – Stock Compensation | 2,119 | — | ||||||
Accumulated other comprehensive income | 295 | 238 | ||||||
Retained earnings (deficit) | 15,828 | (9,529 | ) | |||||
Total shareholders’ equity | 118,435 | 87,874 | ||||||
Total liabilities and shareholders’ equity | $ | 185,572 | $ | 130,444 | ||||
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS RECONCILIATION TO GAAP
(in thousands, except per share data)
(Unaudited)
(in thousands, except per share data)
(Unaudited)
Three-Months Ended Sept. 30, 2006 | ||||||||||||
GAAP | Non-GAAP Adjustment | Non-GAAP | ||||||||||
Revenues | $ | 54,829 | $ | 54,829 | ||||||||
Cost of revenue | 31,549 | (70 | )A | 31,479 | ||||||||
Gross profit | 23,280 | 70 | 23,350 | |||||||||
Gross margin | 42.5 | % | 42.6 | % | ||||||||
Operating expense | ||||||||||||
Research and development | 8,571 | (376 | )A | 8,195 | ||||||||
Selling, general and administrative | 5,565 | (432 | )A | 5,133 | ||||||||
Total operating expense | 14,136 | (808 | ) | 13,328 | ||||||||
Operating income | 9,144 | 878 | 10,022 | |||||||||
Other income | 1,113 | 1,113 | ||||||||||
Profit before provision for income taxes | 10,257 | 878 | 11,135 | |||||||||
Provision for income taxes | 1,244 | 106 | 1,350 | |||||||||
Net Income | $ | 9,013 | $ | 772 | $ | 9,785 | ||||||
Income per share | ||||||||||||
Basic | $ | 0.43 | $ | 0.03 | $ | 0.46 | ||||||
Diluted | $ | 0.41 | $ | 0.04 | $ | 0.45 | ||||||
Weighted average common shares outstanding | ||||||||||||
Basic | 21,082 | 21,082 | ||||||||||
Diluted | 21,889 | 21,889 |
Footnotes — for the three-months ended September 30, 2006
ATo exclude stock-based compensation expense (Cost of Revenue $70, Research and Development $376, Selling, General and Administrative $432) for the three-months ended September 30, 2006.
Nine-Months Ended Sept. 30, 2006 | ||||||||||||
GAAP | Non-GAAP Adjustment | Non-GAAP | ||||||||||
Revenues | $ | 163,991 | $ | 163,991 | ||||||||
Cost of revenue | 102,143 | $ | (242 | )A | 101,901 | |||||||
Gross profit | 61,848 | 242 | 62,090 | |||||||||
Gross margin | 37.7 | % | 37.9 | % | ||||||||
Operating expense | ||||||||||||
Research and development | 20,422 | (908 | )A | 19,514 | ||||||||
Selling, general and administrative | 15,683 | (884 | )A | 14,799 | ||||||||
Total operating expense | 36,105 | (1,792 | ) | 34,313 | ||||||||
Operating income | 25,743 | 2,034 | 27,777 | |||||||||
Other income | 2,440 | 2,440 | ||||||||||
Profit before provision for income taxes | 28,183 | 2,034 | 30,217 | |||||||||
Provision for income taxes | 2,826 | 203 | 3,029 | |||||||||
Net Income | 25,357 | $ | 1,831 | $ | 27,188 | |||||||
Income per share | ||||||||||||
Basic | $ | 1.21 | $ | 0.09 | $ | 1.30 | ||||||
Diluted | $ | 1.16 | $ | 0.08 | $ | 1.24 | ||||||
Weighted average common shares outstanding | ||||||||||||
Basic | 20,967 | 20,967 | ||||||||||
Diluted | 21,888 | 21,888 |
Footnotes — for the nine-months ended September 30, 2006
ATo exclude stock-based compensation expense (Cost of Revenue $242, Research and Development $908, Selling General and Administrative $884 for the nine-months ended September 30, 2006.
The non-GAAP measures provided herein exclude the impact of non-cash charges related to stock-based compensation expense. We believe these measures are useful to investors because they provide an alternative method for measuring the operating performance of the Company’s business, excluding stock-based compensation expense, and provide for comparability between periods due the absence of stock-based compensation in comparative prior year periods.
The non-GAAP financial measures are not prepared in accordance with generally accepted accounting principles and may be different from non-GAAP financial measures used by other companies. Non-GAAP financial measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP.