Intevac
Oct 31, 2011

Intevac Announces Third Quarter 2011 Financial Results

SANTA CLARA, Calif.--(BUSINESS WIRE)-- Intevac, Inc. (Nasdaq: IVAC) today reported financial results for the quarter and nine months ended October 1, 2011.

"We continue to manage through the current uncertainties stemming from the pending drive industry consolidations and, more recently, the further complication of the supply chain constraints resulting from the flooding in Thailand," commented Kevin Fairbairn, president and chief executive officer of Intevac. "Whereas a significant portion of the world's hard drives are assembled in Thailand, the vast majority of disk media capacity is located in other regions and has not been directly affected by the floods. While uncertainty in the hard drive industry is expected to continue over the next few quarters, the third quarter ended on a positive note, with hard drive shipments reaching a new record high.

"We have made progress in diversifying our equipment business for future growth. We completed the installation of our second LEAN SOLAR deposition system and expect to ship our first LEAN SOLAR etch system to a leading solar manufacturer before year-end. In our Photonics business, we received a sizeable follow-on production order for our LIVAR cameras, and received a significant award for the continued development of our next generation EBAPS sensor technology," concluded Mr. Fairbairn.

Third Quarter 2011 Summary

The net loss was $6.1 million, or $0.27 per diluted share, compared to net income of $13.2 million, or $0.58 per diluted share, in the third quarter of 2010.

Revenues were $19.3 million, including $12.4 million of Equipment revenues and Intevac Photonics revenues of $6.9 million. Equipment revenues consisted of upgrades, spares and service. Intevac Photonics revenues consisted of $1.5 million of research and development contracts and $5.4 million of product sales or 78% of Photonics revenues. In the third quarter of 2010, revenues were $64.6 million, including $55.9 million of Equipment revenues and Intevac Photonics revenues of $8.8 million, which included $3.5 million of product sales.

Equipment gross margin was 44.9%, compared to 48.8% in the third quarter of 2010, primarily as a result of decreased revenues and lower factory utilization. Intevac Photonics gross margin of 28.3% improved compared to 26.4% in the third quarter of 2010. The increase was primarily a result of improved manufacturing and warranty costs related to our night vision camera module for our NATO customer. Consolidated gross margin was 38.9%, compared to 45.8% in the third quarter of 2010. Operating expenses were $15.6 million, compared to $14.2 million in the third quarter of 2010, and increased primarily as a result of additional R&D investments in new equipment products.

Order backlog totaled $26.2 million on October 1, 2011, compared to $36.9 million on July 2, 2011 and $64.9 million on October 2, 2010. Backlog as of October 1, 2011 included one Solar system and no 200 Lean systems. Backlog as of October 2, 2010 included six 200 Lean systems.

First Nine Months 2011 Summary

The net loss was $15.8 million, or $0.69 per diluted share, compared to net income of $26.9 million, or $1.18 per diluted share, for the first nine months of 2010.

Revenues were $64.3 million, including $42.3 million of Equipment revenues and Intevac Photonics revenues of $22.0 million, compared to revenues of $166.4 million, including $141.5 million of Equipment revenues and Intevac Photonics revenues of $24.9 million, for the first nine months of 2010.

Equipment gross margin was 41.9%, compared to 47.1% in the first nine months of 2010, primarily as a result of lower revenues and lower factory utilization. Intevac Photonics gross margin of 28.6% improved compared to 25.7% in the first nine months of 2010, reflecting lower manufacturing and warranty costs related to our night vision camera module for our NATO customer. Consolidated gross margin was 37.4%, compared to 43.9% in the first nine months of 2010. Operating expenses were $46.3 million, compared to $41.9 million in the first nine months of 2010, and increased primarily as a result of additional R&D investments in new equipment products.

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 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. EDT. You may access the replay by calling 855-859-2056 or, for international callers, 404-537-3406, and providing Replay Passcode 15671522.

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®, EBAPS®, and LIVAR® are registered trademarks, and LEAN SOLARTM is a 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: expected recovery of the hard drive supply chain constraints, the demand for hard drives, the timing of shipments for our new products, and the future growth of our product portfolio for the solar cell manufacturing market. 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: a slowdown in demand for hard drives, and the failure to deliver new products for the solar market and photonics market, 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 Nine months ended

October 1,
2011

 

October 2,
2010

 

October 1,
2011

 

October 2,
2010

Net revenues    
Equipment $ 12,384 $ 55,868 $ 42,379 $ 141,453
Intevac Photonics   6,937       8,759     21,950       24,914  
Total net revenues 19,321 64,627 64,329 166,367
 
Gross profit 7,518 29,584 24,035 73,096
Gross margin
Equipment 44.9 % 48.8 % 41.9 % 47.1 %
Intevac Photonics   28.3 %     26.4 %   28.6 %     25.7 %
Consolidated 38.9 % 45.8 % 37.4 % 43.9 %
 
Operating expenses
Research and development 8,612 7,063 25,914 20,618
Selling, general and administrative   6,979       7,148     20,372       21,273  
Total operating expenses 15,591 14,211 46,286 41,891
 
Operating income (loss)
Equipment (5,358 ) 16,878 (14,423 ) 37,534
Intevac Photonics (948 ) (876 ) (3,023 ) (3,501 )
Corporate   (1,767 )   (629 )   (4,805 )     (2,828 )
Total operating income (loss) (8,073 ) 15,373 (22,251 ) 31,205
 
Interest and other income (expense)   140       (84 )   438       379  
Profit (loss) before income taxes (7,933 ) 15,289 (21,813 ) 31,584

Provision (benefit) for income taxes

  (1,817 )     2,110     (6,047 )     4,638  
Net income (loss) $ (6,116 )   $ 13,179   $ (15,766 )   $ 26,946  
 
Income (loss) per share
Basic $ (0.27 ) $ 0.59 $ (0.69 ) $ 1.21
Diluted $ (0.27 ) $ 0.58 $ (0.69 ) $ 1.18
Weighted average common shares outstanding
Basic 22,951 22,383 22,843 22,288
Diluted 22,951 22,887 22,843 22,931
INTEVAC, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except par value)

 

October 1,
2011

December 31,
2010

(Unaudited) (see Note)
ASSETS
 
Current assets
Cash, cash equivalents and short-term investments $ 73,370 $ 114,514
Accounts receivable, net 16,289 25,911
Inventories 19,754 20,671
Deferred income tax assets 3,572 3,124
Prepaid expenses and other current assets   6,957   6,630
Total current assets 119,942 170,850
 
Long-term investments 48,686 22,866
Property, plant and equipment, net 14,829 13,918
Deferred income tax assets 20,279 14,594
Goodwill 18,389 18,389
Other intangible assets, net 6,577 6,984
Other long-term assets   4,395   4,170
Total assets $ 233,097 $ 251,771
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
Current liabilities
Accounts payable $ 5,454 $ 5,562
Accrued payroll and related liabilities 5,367 11,365
Other accrued liabilities 9,411 11,104
Customer advances   4,746   4,867
Total current liabilities 24,978 32,898
 
Other long-term liabilities 10,780 11,630
Stockholders' equity
Common stock ($0.001 par value) 23 23
Additional paid in capital 145,510 139,824
Accumulated other comprehensive income 431 255
Retained earnings   51,375   67,141
Total stockholders' equity   197,339   207,243
Total liabilities and stockholders' equity $ 233,097 $ 251,771

Note: Amounts as of December 31, 2010 are derived from the December 31, 2010 audited consolidated financial statements.

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

Source: Intevac, Inc.

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