Intevac
Apr 27, 2009

Intevac Announces First Quarter 2009 Financial Results

SANTA CLARA, Calif.--(BUSINESS WIRE)--Apr. 27, 2009-- Intevac, Inc. (Nasdaq:IVAC) today reported financial results for the quarter ended March 28, 2009.

The net loss for the quarter was $5.8 million, or $0.26 per diluted share, on 21.9 million weighted-average shares outstanding. The net loss included $1.4 million of pre-tax equity-based compensation expense, equivalent to $0.05 per diluted share. For the first quarter of 2008, net income was $1.6 million, or $0.07 per diluted share, on 22.1 million weighted-average shares outstanding, which included $1.6 million of pre-tax equity-based compensation expense, equivalent to $0.05 per diluted share.

Revenues for the quarter were $12.3 million, including $6.1 million of Equipment revenues and Intevac Photonics revenues of $6.2 million. Equipment revenues consisted of disk lubrication systems, equipment upgrades, spares and service and did not include any 200 Lean® systems. Intevac Photonics revenues consisted of $3.6 million of research and development contracts and a record $2.6 million of product sales. In the first quarter of 2008, revenues were $33.2 million, including $27.0 million of Equipment revenues and $6.2 million of Intevac Photonics revenues, which included $2.0 million of product sales.

Equipment gross margins were 29.9%, compared to 41.4% in the fourth quarter of 2008 and 47.1% in the first quarter of 2008. The decrease in Equipment gross margin reflected lower revenues, changes in product mix and lower factory utilization. Intevac Photonics gross margins were 39.4%, compared to 19.5% in the fourth quarter of 2008 and 42.0% in the first quarter of 2008. The sequential improvement in Photonics gross margin reflected lower warranty expense and improved factory utilization, while the year-over-year decrease in Photonics gross margin was due to changes in product mix. Consolidated gross margins were 34.7%, compared to 46.2% in the first quarter of 2008.

Operating expenses for the quarter totaled $13.7 million, or 112% of revenues, versus $16.5 million, or 50% of revenues, in the first quarter of 2008. Total operating expenses decreased versus the first quarter of 2008 as a result of cost savings from the global cost reduction plan initiated in the fourth quarter of 2008.

Order backlog totaled $17.0 million on March 28, 2009, compared to $20.2 million on December 31, 2008 and $43.5 million on March 29, 2008. Backlog at quarter end includes one 200 Lean® system, compared to one on December 31, 2008 and seven on March 29, 2008.

“As expected, our Equipment business had a challenging quarter due to the global economic environment. However, on the positive side, our Photonics business had a strong quarter with record product sales, driven by the proliferation of our unique digital low light sensors and cameras into multiple programs,” commented Kevin Fairbairn, president and chief executive officer of Intevac. “While our Photonics business is strong and growing, we have implemented further cost reductions in 2009 in response to the continued downturn in our Equipment business. The global cost reduction plan that began in the fourth quarter of 2008 is expected to realize over $15 million in annualized cost savings. For the remainder of 2009, we expect technology system orders to drive our Equipment business with continued strong growth in our Photonics business.”

Conference Call Information

The company will discuss its financial results and outlook 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 7:30 p.m. EDT. You may access the playback by calling (800) 642-1687, or for international callers (706) 645-9291, and providing conference ID 93129953.

About Intevac

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 and manufacture of leading edge, high-sensitivity imaging products and vision systems, as well as table-top and portable Raman instruments. Markets addressed include military, law enforcement, 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.

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; our hard disk customers’ investments in technology, impact of the company’s global cost reduction plan, and new product development success. 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 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)

  Three months ended


Mar. 28,



 

Mar. 29,

2009

 

2008

(Unaudited)

(Unaudited)
Net revenues

Equipment $6,118 $26,973
Intevac Photonics 6,190     6,202  


Total net revenues
12,308

33,175


 
Gross profit 4,265 15,311
Gross margin

Equipment

29.9%

47.1%
Intevac Photonics

39.4%    

42.0%  
Consolidated 34.7% 46.2%


 


Operating expenses


Research and development 8,030 9,388
Selling, general and administrative 5,709  

 
7,064  
Total operating expenses 13,739

16,452
 
Operating income (loss)


Equipment
(6,811)

496


Intevac Photonics
(1,221)

(821)


Corporate
(1,442)     (816)  
Total operating loss (9,474) (1,141)


 
Interest and other income 430

 
  1,411

 
Profit (loss) before income taxes (9,044) 270
Benefit from income taxes 3,271     1,293  


Net income (loss)

$(5,773)



$1,563
 
Income (loss) per share


Basic
$(0.26)

$0.07


Diluted
$(0.26)

$0.07


Weighted average common shares outstanding


Basic 21,882 21,647
Diluted 21,882 22,053




































































 

CONDENSED CONSOLIDATED BALANCE SHEETS



(In thousands, except per share amounts)

 

 

ASSETS



Mar. 28,



Dec. 31,



 

2009



 

2008

(Unaudited) (see Note)
Current assets

Cash, cash equivalents and short-term investments

$33,869

$39,201
Accounts receivable, net

9,217

15,014
Inventories

17,178

17,674
Deferred tax assets

3,801

3,204
Prepaid expenses and other current assets

4,803    

4,806  
Total current assets 68,868 79,899


 


Long-term investments
66,961

66,328


Property, plant and equipment, net
14,417

14,886


Deferred tax assets
17,227

14,765


Goodwill
7,905

7,905


Other intangible assets, net
3,813

4,054


Other long-term assets
1,202     1,332  
Total assets $180,393 $189,169


 
LIABILITIES AND STOCKHOLDERS’ EQUITY



 


Current liabilities


Note payable $— $2,000
Accounts payable 4,305 4,214
Accrued payroll and related liabilities 2,927 3,395
Other accrued liabilities 2,504 3,175
Customer advances 1,071  

 
2,807  
Total current liabilities 10,807

15,591
 
Other long-term liabilities 384 509
Stockholders’ equity


Common stock ($0.001 par value)
22

22


Paid in capital
130,485

128,686


Accumulated other comprehensive loss
(4,701)

(4,808)


Retained earnings
43,396     49,169  
Total stockholders’ equity 169,202     173,069  
Total liabilities and stockholders’ equity

$180,393

$189,169

Note: Amounts as of December 31, 2008 are derived from the December 31, 2008 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 expense for the three-month periods ended March 28, 2009 and March 29, 2008 were as follows:































  Three Months Ended

Mar. 28,



 

Mar. 29,

2009



2008

(Unaudited)

(Unaudited)
Equity-based compensation by type of award:

Stock options $1,112 $1,325
Employee Stock Purchase Plan 234 202
Amounts charged from inventory 51 69
Total equity-based compensation 1,397 1,596
Tax effect on equity-based compensation 404 493
Net effect on net income (loss) $993 $1,103


 
Effect on income (loss) per share:


Basic
$0.05

$0.05
Diluted

$0.05
$0.05

Source: Intevac, Inc.

Intevac, Inc.
Jeff Andreson, 408-986-9888
Chief Financial Officer
Claire McAdams, 530-265-9899
Investor Relations