INTEVAC INC (Form: 8-K, Received: 01/30/2004 10:01:28)

Santa Clara, Calif.—January 30, 2004 —Intevac, Inc. (Nasdaq: IVAC), today reported financial results for the three- and twelve-month periods ended December 31, 2003.

Revenues for the three-month period ended December 31, 2003, were $12.1 million compared to $12.0 million in 2002. The $12.1 million included $9.0 million of Equipment revenues, which included two MDP-250B disk sputtering systems; and $3.1 million of Imaging revenues (which consists of revenues from Commercial Imaging and from Photonics Technology). Net loss for the fourth quarter of 2003 was $588,000 or $0.04 per diluted share. The $588,000 net loss included $287,000 of other income related to deferred payments received by the company related to the sale of our rapid thermal processing equipment product line in 2002, a credit to inventory provisions of $199,000, and $204,000 of other expense related to the disposition of fixed assets. The $588,000 net loss compares to net income of $14.0 million, or $0.86 per diluted share in the comparable prior year period. The $14.0 million of net income included a $15.4 million gain on the sale of our rapid thermal processing product line, $638,000 of inventory provisions, a $324,000 gain from the disposition of fixed assets, and a $214,000 tax refund.

Revenues for the twelve-month period ended December 31, 2003, were $36.3 million, versus $33.8 million in 2002. The $36.3 million included $26.7 million of Equipment revenues, which included two MDP-250B disk sputtering systems; and $9.6 million of Imaging revenues. Net loss for the twelve-month period ended December 31, 2003, was $12.3 million, or $0.95 per diluted share, and included $843,000 of other expense related to the disposition of fixed assets, $743,000 of inventory provisions and $287,000 of other income related to the sale of our rapid thermal processing equipment product line in 2002. For the year-earlier period, we reported net income of $8.8 million, or $0.66 per diluted share, which included a $15.4 million gain on the sale of our rapid thermal processing product line, $6.6 million of tax refunds and $1.3 million of inventory provisions.

During the quarter, we converted $29.5 million of our 6 1/2% Convertible Notes due 2009 into 4.2 million shares of Intevac Common Stock. 16,953,464 shares of our common stock were outstanding as of December 31, 2003.

Backlog totaled $43.3 million at December 31, 2003, compared to $24.1 million at September 27, 2003, and $18.2 million at December 31, 2002. The increase in backlog was primarily the result of orders for eight Intevac® 200 Lean disk sputtering systems.

Kevin Fairbairn, Intevac’s President and CEO, commented. “I am very pleased with the progress we made during the quarter. In our Equipment business we delivered our first 200 Lean disk sputtering system on schedule, which was a major accomplishment by our engineering and operations people. We also received an order for eight more of these systems, which increased our 200 Lean backlog to a total of ten systems. All of this backlog is scheduled for delivery by the end of Q2. In our Imaging business, increased activity on our funded development programs and shipments of LIVAR cameras contributed to profitable operations in the Photonics Technology Division. Additionally, the conversion of our 2009 convertible note to equity eliminated all but $1 million of the debt on our balance sheet and significantly increased our net worth.”

The Company will discuss its financial results in a conference call January 30, 2004, at 8:00 a.m. PST (11:00 a.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 www.FullDisclosure.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 at 11 a.m. PST on January 30. You may access the playback by calling (800) 642-1687 or, for international callers (706) 645-9291, and providing Conference ID 4979682.

Intevac is the world’s leading supplier of thin-film disk sputtering equipment for the hard disk drive industry and a developer of leading technology for extreme low light imaging sensors, cameras and systems.

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, comments regarding expected delivery of our products. The forward-looking statements contained herein involve risks and uncertainties that could cause actual results to differ materially from the Company’s expectations, including the risk of our inability to accurately forecast the size of markets and timing of orders and deliveries and acceptances for our products and services and the possibility that orders in backlog may be cancelled, delayed or rescheduled. These risks and other factors are detailed the Company’s regular filings with the Securities and Exchange Commission.

CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)


					3 months ended						12 months ended

					Dec 31, 2003			Dec 31, 2002			Dec 31, 2003			Dec 31, 2002

					(Unaudited)			(Unaudited)
Net revenues
		Equipment Products			$	8,972		$	10,824		$	26,748		$	27,100
		Commercial Imaging				30			6			36			43
		Photonics Technology				3,074			1,162			9,510			6,641

				Total net revenues		12,076			11,992			36,294			33,784
Gross profit (loss)						4,671			3,001			9,830			7,309
Gross margin
		Equipment Products				40.2	%		28.5	%		27.5	%		24.4	%
		Commercial Imaging				36.7	%		100.0	%		47.2	%		90.7	%
		Photonics Technology				34.3	%		(7.9	%)		25.9	%		9.9	%

				Consolidated		38.7	%		25.0	%		27.1	%		21.6	%
Operating expenses
		Research and development				3,121			2,455			12,037			10,846
		Selling, general and administrative				2,161			2,230			8,448			7,752

				Total operating expenses		5,282			4,685			20,485			18,598
Operating income/(loss)
		Equipment Products				133			807			(3,993	)		(5,139	)
		Commercial Imaging				(509	)		(682	)		(3,041	)		(1,656	)
		Photonics Technology				287			(1,102	)		(1,114	)		(2,173	)
		Corporate				(522	)		(707	)		(2,507	)		(2,321	)

				Total operating loss		(611	)		(1,684	)		(10,655	)		(11,289	)
Other income (expense)
			Gain from sale of RTP product line			287			15,428			287			15,428
			Gain from repurchase of 6 1/2% Convertible Notes due 2004 ^a			—			23			—			23
			Other ^b			(226	)		(33	)		(1,863	)		(1,913	)

Profit/(Loss) before provision for income taxes						($550	)		13,734			($12,231	)		2,249
		Provision for (Benefit from) income taxes				38			(223	)		38			(6,592	)

Net Income/(Loss)						($588	)	$	13,957			($12,269	)	$	8,841

Income (loss) per share
	Basic					($0.04	)	$	1.15			($0.95	)	$	0.73
	Diluted ^c					($0.04	)	$	0.86			($0.95	)	$	0.66
Weighted average common shares outstanding
		Basic				15,174			12,114			12,948			12,077
		Diluted ^c				15,174			16,542			12,948			15,262

a		The Company adopted SFAS 145 in Q4 2002, which resulted in the reclassification of the $803 gain on repurchase of 6 1/2% Convertible Notes from extraordinary income to other income.

b		Other income and expense in the twelve month period ended December 31, 2002 includes $508 of offering expenses related to the exchange in July 2002 of $36,270 of the Company’s 6 1/2% Convertible Notes due 2004 for $29,543 of the Company’s Convertible Notes due 2009 and $6,727 of cash.

c		Diluted earnings per share exclude “as converted” treatment of the Company’s 6 1/2% Convertible Subordinated Notes Due 2004 and the Company’s 6 1/2% Convertible Subordinated Notes Due 2009 and the effect of outstanding stock options when these potentially dilutive securities are anti-dilutive to earnings per share


			Dec. 31, 2003			Dec. 31, 2002

ASSETS
Current assets
	Cash, cash equivalents and short term investments		$	19,507		$	28,457
	Accounts receivable, net			14,016			4,991
	Income taxes recoverable			—			214
	Inventories – production			7,533			5,957
	Inventories – pending acceptance at customer site			5,575			9,914
	Prepaid expenses and other current assets			1,113			961

		Total current assets		47,744			50,494
Property, plant and equipment, net				5,796			6,793
Investment in 601 California Avenue LLC				2,431			2,431
Debt issuance costs and other				4			580

		Total assets	$	55,975		$	60,298

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities Convertible notes			$	1,025			—
	Accounts payable			3,396		$	1,739
	Accrued payroll and related liabilities			1,610			1,379
	Other accrued liabilities			2,643			3,723
	Customer advances			16,432			12,344

		Total current liabilities		25,106			19,185
Convertible notes				—			30,568
Shareholders’ equity
	Common stock			51,982			19,389
	Retained earnings (deficit)			(21,113	)		(8,844	)

		Total shareholders’ equity		30,869			10,545

		Total liabilities and shareholders’ equity	$	55,975		$	60,298


	Item 12. Results of Operations and Financial Condition
	Item 7. Financial Statements and Exhibits
Exhibit Index
EXHIBIT 99.1


		INTEVAC, INC.

Date: January 30, 2004	By:	/s/ KEVIN H. SOULSBY

		Kevin H. Soulsby Corporate Controller



Charles Eddy		Dan Matsui/Eugene Heller
Chief Financial Officer		Silverman Heller Associates
(408) 986-9888		(310) 208-2550
		dmatsui@sha-ir.com

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State of California (State or other jurisdiction of incorporation or organization)		0-26946 (Commission File Number)		94-3125814 (IRS Employer Identification Number)