Intevac
Feb 1, 2011

Intevac Announces Fourth Quarter and Full Year 2010 Financial Results

SANTA CLARA, Calif.--(BUSINESS WIRE)-- Intevac, Inc. (Nasdaq:IVAC) today reported financial results for the fourth quarter and year ended December 31, 2010.

Highlights include:

"We delivered strong results in 2010 that well exceeded our expectations going into the year. Equipment revenues increased 227% from 2009, while Photonics revenues grew 29% to another record year," commented Kevin Fairbairn, president and chief executive officer of Intevac. "Strong operational performance resulted in $1.22 in net earnings per share as well as a significant increase in our cash and investments in 2010. Our highly flexible operational model once again demonstrated our ability to quickly ramp production in order to meet our hard drive customers' demand in the second and third quarter of this year.

"As we look into 2011 for our Equipment business, we will introduce several new products to expand our product portfolio for the large and growing solar cell manufacturing market, while maintaining our technology and operational leadership in the hard disk drive media processing market. In the first quarter, we expect to ship our first Lean SolarTM crystalline silicon deposition system, and to recognize revenue on our first ContinuumTM semiconductor mainframe shipments. In our Photonics business, we expect to continue to ramp our product based revenue," concluded Mr. Fairbairn.

Fourth Quarter 2010 Summary

Net income was $1.1 million, or $0.05 per diluted share, compared to net income of $2.0 million, or $0.09 per diluted share, in the fourth quarter of 2009.

Revenues were $36.2 million, including $26.8 million of Equipment revenues and Intevac Photonics revenues of $9.4 million. Equipment revenues consisted of four 200 Lean® systems, upgrades, spares and service. Intevac Photonics revenues consisted of $4.2 million of research and development contracts and $5.1 million of product sales or 54.9% of Photonics revenues. In the fourth quarter of 2009, revenues were $34.2 million, including $26.9 million of Equipment revenues and Intevac Photonics revenues of $7.3 million, which included $2.7 million of product sales.

Equipment gross margin was 47.7%, compared to 48.8% in the fourth quarter of 2009, primarily as a result of a higher mix of system shipments partially offset by improved factory utilization. Intevac Photonics gross margin of 19.1% decreased compared to 29.2% in the fourth quarter of 2009, reflecting the higher initial production costs of our digital night-vision camera module to our NATO customer and lower margins on technology development programs. Consolidated gross margin was 40.3%, compared to 44.6% in the fourth quarter of 2009. Operating expenses were $14.5 million, compared to $11.2 million in the fourth quarter of 2009.

Order backlog totaled $46.7 million on December 31, 2010, compared to $64.9 million on October 2, 2010 and $73.8 million on December 31, 2009. Backlog as of December 31, 2010 includes two 200 Lean systems, compared to six on October 2, 2010 and ten on December 31, 2009.

Fiscal Year 2010 Summary

Net income was $28.0 million, or $1.22 per diluted share, compared to a net loss of $10.1 million, or $0.46 per diluted share, for 2009.

Revenues were $202.5 million, including $168.3 million of Equipment revenues and Intevac Photonics revenues of $34.3 million, compared to revenues of $78.0 million, including $51.4 million of Equipment revenues and Intevac Photonics revenues of $26.6 million, for 2009.

Equipment gross margin improved to 47.2%, compared to 45.3% in 2009, primarily as a result of increased revenues and improved factory utilization. Intevac Photonics gross margin of 23.9% decreased compared to 35.6% in 2009, reflecting the higher initial production costs of our digital night-vision camera module to our NATO customer and lower margins on technology development programs. Consolidated gross margin improved to 43.3%, compared to 42.0% in 2009. Operating expenses were $56.4 million, compared to $50.1 million in 2009 with the increase primarily due to the reinstatement of our variable compensation programs.

Conference Call Information

The company will discuss its financial results and outlook 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 (877) 334-0811 prior to the start time. For international callers, the dial-in number is (408) 427-3734. 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. EST. You may access the replay by calling (800) 642-1687 or, for international callers, (706) 645-9291, and providing Replay Passcode 37358116.

About Intevac

Intevac was founded in 1991 and has two businesses: Equipment and Intevac Photonics.

Equipment Business: We are a leader in the design, development and marketing of high productivity lean manufacturing systems and have been producing Lean Thinking platforms since 1994. We provide process manufacturing equipment solutions to the hard disk drive industry, high-productivity process manufacturing equipment and inspection solutions to the solar photovoltaic industry and wafer handling platforms 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 handheld Raman instruments. Markets addressed include military, industrial, medical and scientific.

For more information call 408-986-9888, or visit the company's website at www.intevac.com.

200 Lean® is a registered trademark, and ContinuumTM and LEAN SOLARTM are trademarks, 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 financial performance in 2010, our ability to maintain technical and operational leadership in the hard drive industry, our ability to introduce new products, industry acceptance of our new products, and the expected momentum of the Photonics business. 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: adjustments to 2010 financial results in connection with preparation of the company's 10-K, a slowdown in demand for hard drives, a lack of penetration of our new products and the failure to achieve historical growth rates for the Photonics business, 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.

 

INTEVAC, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, in thousands, except per share amounts)

  Three months ended Year ended

December 31,
2010

 

December 31,
2009

   

December 31,
2010

 

December 31,
2009

Net revenues    
Equipment $ 26,799 $ 26,912 $ 168,252 $ 51,389
Intevac Photonics   9,360       7,288     34,274       26,592  
Total net revenues 36,159 34,200 202,526 77,981
 
Gross profit 14,576 15,264 87,672 32,720
Gross margin
Equipment 47.7 % 48.8 % 47.2 % 45.3 %
Intevac Photonics   19.1 %     29.2 %   23.9 %     35.6 %
Consolidated 40.3 % 44.6 % 43.3 % 42.0 %
 
Operating expenses
Research and development 7,300 5,808 27,918 28,064
Selling, general and administrative   7,243       5,351     28,516       22,003  
Total operating expenses 14,543 11,159 56,434 50,067
 
Operating income (loss)
Equipment 2,752 5,480 40,286 (8,826 )
Intevac Photonics (1,400 ) (886 ) (4,901 ) (4,133 )
Corporate   (1,319 )     (489 )   (4,147 )     (4,388 )
Total operating income (loss) 33 4,105 31,238 (17,347 )
 
Interest and other income (expense)   394       475     773       1,254  
Profit (loss) before income taxes 427 4,580 32,011 (16,093 )
Provision (benefit) for income taxes   (676 )     2,605     3,962       (6,016 )
Net income (loss) $ 1,103     $ 1,975   $ 28,049     $ (10,077 )
 
Income (loss) per share
Basic $ 0.05 $ 0.09 $ 1.26 $ (0.46 )
Diluted $ 0.05 $ 0.09 $ 1.22 $ (0.46 )
Weighted average common shares outstanding
Basic 22,497 22,073 22,340 21,975
Diluted 23,116 22,668 22,977 21,975
         
 
INTEVAC, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except par value)

 

December 31,
2010

 

December 31,
2009

(Unaudited) (see Note)
ASSETS
 
Current assets
Cash, cash equivalents and short-term investments $ 114,514 $ 23,592
Accounts receivable, net 25,911 44,756
Inventories 20,671 19,100
Deferred income tax assets 3,124 1,515
Prepaid expenses and other current assets   6,630   6,687  
Total current assets 170,850 95,650
 
Long-term investments 22,866 66,249
Property, plant and equipment, net 13,918 12,351
Deferred income tax assets 14,594 16,541
Goodwill 18,389 7,905
Other intangible assets, net 6,984 3,537
Other long-term assets   4,170   1,145  
Total assets $ 251,771 $ 203,378  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
Current liabilities
Accounts payable $ 5,562 $ 4,701
Accrued payroll and related liabilities 11,365 2,784
Other accrued liabilities 11,104 11,104
Customer advances   4,867   13,180  
Total current liabilities 32,898 31,769
 
Other long-term liabilities 11,630 252
Stockholders' equity
Common stock ($0.001 par value) 23 22
Additional paid in capital 139,824 134,071
Accumulated other comprehensive income (loss) 255 (1,828 )
Retained earnings   67,141   39,092  
Total stockholders' equity   207,243   171,357  
Total liabilities and stockholders' equity $ 251,771 $ 203,378  
 

Note: Amounts as of December 31, 2009 are derived from the December 31, 2009 audited consolidated financial statements.

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

Source: Intevac, Inc.

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