Add
ESIO to Portfolio
Set Alert
Email to a
Friend
| |||
|
|
Quotes & Info
|
| ESIO > SEC Filings for ESIO > Form 10-Q on 10-Apr-2007 | All Recent SEC Filings |
10-Apr-2007
Quarterly Report
Forward Looking Statements
The statements contained in this report that are not statements of historical fact, including without limitation statements containing the words "believes," "expects" and similar words, constitute forward-looking statements that are subject to a number of risks and uncertainties. From time to time we may also make other forward-looking statements. Investors are cautioned that such forward-looking statements are subject to an inherent risk that actual results may materially differ as a result of many factors, including the risks described below under the heading "Factors That May Affect Future Results."
Overview
Electro Scientific Industries, Inc. and its subsidiaries (ESI) provide high-technology manufacturing equipment to the global electronics market, including advanced laser systems that are used to microengineer electronic device features in high-volume production environments. Our customers are primarily manufacturers of semiconductors, passive components and electronic interconnect devices. Our equipment enables these manufacturers to achieve the yield and productivity gains in their manufacturing processes that can be critical to their profitability. The components and devices manufactured by our customers are used in a wide variety of end products in the computer, consumer electronics and communications industries.
We supply advanced laser microengineering systems that allow electronics manufacturers to physically alter select device features during high-volume production in order to heighten performance and boost production yields of semiconductor devices, passive components and circuitry, high-density interconnect (HDI) circuit boards and advanced semiconductor packaging. Laser microengineering comprises a set of precise fine-tuning processes (laser trimming, link processing and via drilling) that require application-specific laser systems able to meet semiconductor and microelectronics manufacturers' exacting performance and productivity requirements.
Additionally, we produce high-speed test, inspection and termination equipment used in the high-volume production of multi-layer ceramic capacitors and other passive components, as well as original equipment manufacturer machine vision products.
The third quarter of fiscal 2007 reflected continued industry strength. Orders increased to $73.0 million in the third quarter of fiscal 2007, compared to orders in the first and second quarters of fiscal 2007 of $67.6 million and $62.4 million, respectively.
The sequential increase in orders is primarily due to a 58% rise in our semiconductor group (SG) orders, with customers continuing to ramp capacity to meet end-market demand for DRAM driven by innovations in personal computer technology, mobile communications and next generation game consoles. Demand remains strong for our infrared (IR)-based link-processing systems. Additionally, the customer base for our ultraviolet (UV)-based DRAM link-processing tool is growing. As is inherent in the businesses we serve, the timing of orders placed by customers can cause our order levels to fluctuate from period to period.
Passive component group (PCG) orders decreased 31% in the third quarter of fiscal 2007 compared to the second quarter. The decrease is primarily due to the timing of large orders placed in the first half of fiscal 2007 as suppliers sought to increase capacity, as well as the historical slowdown in this segment following the holiday season. Despite the sequential decrease in order volume in the current quarter, we believe the demand for our products will remain strong. Passive component manufacturers are expected to continue to increase capacity to meet end-market demand driven by the production of flat panel displays, 3G mobile phone technology, dual core microprocessors and automotive electronics.
Electronic interconnect group (EIG) orders reflected a 15% decline in the third quarter of fiscal 2007 compared to the second quarter of fiscal 2007 due to the seasonal timing of orders. Demand in this market continues to be driven primarily by single-head UV drill systems for flex-circuit manufacturers.
Shipments of $59.7 million in the third quarter of fiscal 2007 were stable compared to shipments of $60.5 million in the second quarter of fiscal 2007, as decreased EIG shipments were substantially offset by an increase in SG shipments. Backlog increased to $55.1 million at the close of the current quarter, compared to $41.9 million at the end of the prior quarter.
Gross margins were 42.0% on net sales of $59.4 million in the third quarter of fiscal 2007, compared to 40.9% on net sales of $59.3 million in the second quarter of fiscal 2007. Operating expenses increased $0.4 million to $21.0 million in the third quarter of fiscal 2007, compared to $20.6 million in the second quarter. Exclusive of the effect of the $1.0 million insurance recovery recorded in the second quarter of fiscal 2007, operating expenses decreased $0.6 million in the third quarter of fiscal 2007.
Operating income increased to $4.0 million in the current quarter, compared to operating income of $3.6 million in the second quarter of fiscal 2007. Non-operating income increased to $2.7 million in the third quarter compared to $2.3 million in the second quarter of fiscal 2007. Our effective income tax rate decreased to 15% for the third quarter compared to a net income tax rate of 36% for the second quarter of fiscal 2007. Net income was $5.6 million in the third quarter of fiscal 2007, compared to $3.8 million in the second quarter of fiscal 2007.
Shipments and net sales in the fourth quarter of fiscal 2007 are currently estimated to be in the range of $60 million to $70 million. The gross margin percentage in the fourth quarter is expected to be in the mid-40s range. We anticipate operating expenses for the fourth quarter of fiscal 2007 will be up slightly compared to the $21.0 million recorded in the third quarter of fiscal 2007. We expect the tax rate in the fourth quarter to be approximately 31%.
Revision of Results of Operations for the First Quarter of Fiscal 2007
During the third quarter of fiscal 2007, we identified adjustments which impacted the results of operations in the first quarter of fiscal 2007. We have determined that those adjustments were not material to the results of the first quarter of fiscal 2007, but the impact of recording those adjustments would be material to the results of operations for the third quarter of fiscal 2007. As such, we are revising the results of operations for the first quarter of fiscal 2007 for these immaterial corrections. These adjustments are included in the results of operations for the nine months ended March 3, 2007. The results of operations for the first quarter of fiscal 2007 have been revised as shown below.
|
|