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Electro Scientific Industries Inc · 10-K · For 5/31/95 · EX-13

Filed On 8/17/95   ·   Accession Number 912057-95-6670   ·   SEC File 0-12853

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  As Of                Filer                Filing    For/On/As Docs:Size              Issuer               Agent

 8/17/95  Electro Scientific Industries Inc 10-K        5/31/95    6:125K                                   Merrill Corp/FA

Annual Report   —   Form 10-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-K        Annual Report                                         45    212K 
 2: EX-11       Statement re: Computation of Earnings Per Share        1      7K 
 3: EX-13       Annual or Quarterly Report to Security Holders        17     46K 
 4: EX-22       Published Report Regarding Matters Submitted to a      1      7K 
                          Vote of Security Holders                               
 5: EX-23       Consent of Experts or Counsel                          1      5K 
 6: EX-27       Financial Data Schedule                                2      7K 


EX-13   —   Annual or Quarterly Report to Security Holders

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ELECTRO SCIENTIFIC INDUSTRIES, INC. 1995 ANNUAL REPORT ESI IN BRIEF Electro Scientific Industries, Inc. (ESI) designs and builds advanced production equipment used throughout the world in electronics manufacturing. The principal end markets for products made using ESI equipment include the computer, telecommunications and automotive industries. ESI's principal product lines include: - Precision, high speed production and test equipment for ceramic capacitor manufacturing - Industry leading laser processing systems for semiconductor memory yield improvement - Advanced laser trimming systems for the precise tuning of electronic circuits In addition, ESI is developing new products, based upon the company's strengths, to serve emerging markets such as advanced electronic packaging and machine vision.
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ESI backs its products with exceptional service and support, contributing to an international reputation for excellence. With world headquarters in Portland, Oregon, USA, ESI has production facilities in Oregon and California, and sixteen sales and service offices, five of which are in the United States, seven in Asia and four in Europe. Founded in 1953, ESI employs approximately 730 people. ESI became a public company in 1983 with shares traded on the NASDAQ National Market System under the symbol ESIO. SELECTED FINANCIAL DATA REVENUES $M 1992 $58.1 1993 $67.9 1994 $72.6 1995 $108.2 EARNINGS PER SHARE $ 1992 ($1.00) 1993 $0.37 1994 $1.23 1995 $1.53
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YEAR-END EQUITY $M 1992 $41.5 1993 $44.0 1994 $53.5 1995 $94.4 RETURN ON EQUITY % 1992 (13.8%) 1993 5.2% 1994 12.9% 1995 15.6% FISCAL YEARS ENDING MAY 31 (THOUSANDS OF DOLLARS EXCEPT PER SHARES [Enlarge/Download Table] 1995 1994 1993 1992 1991 ---- ---- ---- ---- ---- Net Sales $108,215 $72,550 $67,851 $58,170 $66,677 Sales From Core Businesses 108,215 68,508 59,871 49,863 57,832 Divested Product Lines (1) - - 4,042 7,980 8,307 8,845 Income (Loss) From Continuing Operations 11,517 7,874 2,244 (6,122) 863 Income (Loss) Per Share From Continuing Operations 1.53 1.23 0.37 (1.00) 0.14 Working Capital 76,089 36,247 28,883 23,739 33,110 Net Property And Equipment 15,616 14,592 16,696 19,128 19,186 Total Assets 110,598 62,366 61,161 58,536 68,692 Long-Term Debt - - - - 4,809 4,954 7,557 Shareholders' Equity 94,444 53,547 43,950 41,533 47,281
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TO OUR SHAREHOLDERS Our focus on continuous improvement and our ability to grow by leveraging our strengths have resulted in a successful formula for ESI. In 1995, we achieved notable successes: We surpassed $100 million in annual sales; earned record profits; completed a stock offering; concluded the Chicago Laser Systems acquisition and improved our ability to meet our customers' needs. Sales for fiscal 1995 were $108.2 million, an increase of 49 percent over the $72.6 million recorded in fiscal 1994. Net income was $11.5 million, or $1.53 per share, compared to $7.9 million, or $1.23 per share, in fiscal 1994. Net income increased 84 percent over the prior year, excluding the effect of the after-tax gain of $1.6 million associated with the disposition of a non- strategic asset in fiscal 1994. The fourth quarter of fiscal 1995 represented ESI's twelfth consecutive quarter of improved income per share from operations. Backlog on May 31, 1995, was $26 million, up 225 percent from the $8 million reported on May 31, 1994. The financial information presented throughout this report depicts strong operating results for fiscal 1995 and a strengthening balance sheet. We improved in all six of the indices we use to measure ESI's progress in achieving our goal of continuous improvement. Our balance sheet and equity position benefited from the November, 1994 stock offering, during which we raised $23 million of new equity. The fiscal 1995 return on equity was a solid 16 percent. An additional outcome of the stock offering was the significantly increased awareness of our company in the investment community. ESI's position improved in each of its key markets during 1995. We began the year with good product offerings and worldwide customer support capabilities. The acquisition of Chicago Laser Systems, Inc. (CLS) in fiscal 1995 further improved these strengths. CLS, founded in 1976, was the second largest supplier of laser systems for
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the fine tuning of electrical circuits. We are now in the final phases of integrating the CLS and ESI business activities. Sales of our Palomar Systems, Inc. subsidiary led the company last year, at more than $39 million. Exploding demand for the miniature capacitors produced by Palomar systems fueled the growth. In addition, Palomar's commitment to customer-involved research and development, created a broad line of fast, high quality equipment that has made them the market leader. Just after the conclusion of fiscal 1995, we completed the acquisition of XRL, Inc., of Canton, Massachusetts. XRL, formed in 1984, is a major supplier of laser systems to improve the manufacturing yield of semiconductor Dynamic Random Access Memories (DRAMs) and Static Random Access Memories (SRAMs). While we have just begun the post-acquisition effort with XRL, we already are identifying opportunities to pool talents and resources to better serve our customers. ESI introduced several important new products in 1995. Some focused on improving our position in existing ESI markets and others on developing new market opportunities. Three important examples are: Model 9250 -- The latest generation Memory Yield Improvement System, with the capability to repair DRAMs to 64 megabit, and beyond. Model 5000 -- New Laser Via Drilling System, focused on the developing advanced electronic packaging industry. The Model 5000, introduced at the IPC Printed Circuits Expo in May, was the talk of the show. Model 2007 -- New high speed Ceramic Capacitor Termination System, focused on a part of the miniature capacitor market where our customers have typically developed their own equipment. The Model 2007 can process more than 400,000 capacitors per hour.
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During fiscal 1995, Keith Thomson, vice president and Oregon site manager for Intel Corp. and Vernon Ryles, a prominent Portland business leader, joined the ESI Board of Directors. Keith and Vern bring new perspectives and are superb additions to our Board. ESI accomplished much in 1995. These accomplishments are the result of the hard work and dedication of ESI employees, worldwide. We extend our thanks to all ESI'ers for a record year. You are our most valuable asset. Our goal is to build on the results achieved to date. We are optimistic about the broad demand for our equipment. However, we are mindful of the risks associated with adding fixed costs and are expanding capacity judiciously. We look forward to the challenges and opportunities associated with serving dynamic markets and sharing our progress with you. DAVID F. BOLENDER CHAIRMAN OF THE BOARD DONALD R. VANLUVANEE PRESIDENT & CHIEF EXECUTIVE OFFICER SERVING GROWING MARKETS
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The markets for ESI's products and services have grown steadily in the past year. What is creating this increased demand? It's the continuing digital electronics revolution: compact and convenient wireless communication devices; powerful, easy to use multi-media personal computers; advanced automotive electronics; and all the increasing number of electronic devices that surround us in everyday life. ESI has seized market opportunities and gained leadership in providing electronic products for manufacturing computers, telecommunications products and automobiles. According to several research firms, we may be entering a new era for electronics. The percentage of electronics content in most products and services we use continues to climb, often doubling projections. Companies are finding new ways to use personal computers for greater productivity and customer service. Why are we emphasizing personal computers? Because they are so interrelated to many of the markets ESI serves. According to VLSI Research, Inc., a leading international electronics forecasting firm, personal computers account for more than one third of worldwide semiconductor sales. How does ESI benefit from these trends? ESI has developed sophisticated techniques and equipment to produce essential electronic building blocks...most notably miniature ceramic capacitors, semiconductor memories, circuit assemblies and advanced electronic packages. ESI systems produce, test, fine tune and improve manufacturing yields of these building blocks at extremely high speed and reliability. ESI delivers value to customers by integrating a combination of capabilities, including: solid state lasers: high speed, sub-micron positioning systems; precision optics; high speed small parts handling; image processing and optical character recognition; real time precision measurement; software; and systems integration.
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1995 WORLDWIDE REVENUE DISTRIBUTION Asia/Pacific Rim 53% North America 29% Europe 18% AT ESI, WE ARE ON A JOURNEY OF CONTINUOUS IMPROVEMENT AND GROWTH, WORLDWIDE. MORE THAN TWO-THIRDS OF ESI'S BUSINESS IS OUTSIDE THE UNITED STATES, BUT HIGH QUALITY PRODUCTS AND RESPONSIVE SUPPORT CREATE AN INTERNATIONAL LANGUAGE ALL THEIR OWN. ESI WILL CONTINUE TO PUT PRODUCTS AND PEOPLE IN PLACE TO MEET OUR CUSTOMERS' NEEDS. (Photo Captions page 5) ABOVE: PALOMAR SYSTEMS MODEL 2007 TERMINATION SYSTEM ADDS METAL TO THE CONTACT POINTS OF MINIATURE CAPACITORS, AT MORE THAN 400,000 UNITS PER HOUR. BELOW: ESI'S MODEL 9250 MEMORY YIELD ENHANCEMENT SYSTEM IS THE LATEST GENERATION MEMORY REPAIR STATION AND CAN PROCESS 64 AND 256 MEGABIT DRAMS. MINIATURE CERAMIC CAPACITOR PRODUCTION EQUIPMENT At our Palomar Systems, Inc. subsidiary, continuous improvement and cooperative efforts with the world's leading miniature ceramic capacitor manufacturers have increased quality, customer satisfaction, and sales. Palomar manufactures and sells a broad line of automatic test, production and handling equipment for manufacturing multi-layer ceramic capacitors (MLCCs). MLCCs are used to filter and smooth electrical signals and are found in virtually all electronic applications and products. Palomar's advantage comes from combining small parts handling technology with microprocessor-based controllers to create highly automated systems.
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SEMICONDUCTOR MEMORY YIELD ENHANCEMENT SYSTEMS The changes occurring in personal computers and software from one generation to the next have created unprecedented demand for semiconductor memory. Despite rising factory costs, memory producers have realized great gains by having the most advanced factories to produce dynamic random access memories (DRAMs) and static random access memories (SRAMs). ESI systems are the leader in a critical step in the memory manufacturing process. ESI laser systems perform micro- surgery on defective elements to improve yields quickly and profitably. Each ESI machine performs the sub-micron task of repairing hundreds of thousands of memory chips per day. Our machines work 24-hour days in factories located in the USA, Europe, Asia, and Japan. ESI's worldwide network of service and support engineers provides valuable assistance to memory producers, wherever their factories might be. BUILDING FOR THE FUTURE LASER FINE TUNING SYSTEMS The demand upon telecommunications and automotive electronics products manufacturers to supply increasing quantities of devices has been accompanied by increased complexity, tighter specifications, and reduced size. To get the performance, ESI provides turnkey, microprocessor-controlled systems that allow our customers to fine tune their products to precise electrical values using lasers. For example, portable pagers are permanently laser tuned to precise frequency specifications, avoiding interference due to frequency drift. The combination of ESI's laser trim group with Chicago Laser Systems, acquired in August, 1994, has created a powerful team. The resulting product offerings allow the company to provide fine tuning solutions for the widest range of applications in the industry -- from high speed, high volume passive component trimming to the most precise fine tuning of complex electronic assemblies.
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MACHINE VISION Over the past several years, electronics production equipment manufacturers have increased their efforts in process integration and automation. Machine vision systems continue to play an increasing part in those efforts. ESI's Vision Product Division originally focused on the requirements of our laser processing systems. Today, we are making the technology available to other original equipment manufacturers in the semiconductor and electronics industry who need machine vision to improve the productivity and performance of their machines. LASER MICROMACHINING AND VIA DRILLING SYSTEMS ESI's latest technological development uses lasers to make very small holes (vias) in printed circuit boards and other substrates. This technology addresses several problems involved in achieving high density advanced electronic packaging. One editor has even characterized the ESI Model 5000 Laser Via Drilling System as enabling technology. Potential users include advanced printed circuit board manufacturers, leading single and multi-chip module fabricators and other manufacturers of high density electronic products. The Model 5000 is a flexible tool that can accept computer aided design (CAD) data directly, for more rapid production starts. (Photo Captions -- Page 6) ABOVE: THE MODEL CLS960 LASER TRIMMING SYSTEM OPERATES IN A CONVENIENT MICROSOFT WINDOWS -REGISTERED TRADEMARK- ENVIRONMENT. BELOW: ESI'S ROBUST OPTICAL CHARACTER RECOGNITION SYSTEM FOR SEMICONDUCTOR WAFER READING, USED ON THE MODEL 9250 MEMORY YIELD IMPROVEMENT SYSTEM, IS NOW AVAILABLE TO OTHER MANUFACTURERS. (Photo Caption -- Page 7)
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ESI'S NEW MODEL 5000 LASER VIA DRILLING SYSTEM, SHOWN WITH AN OPTIONAL WEB FEED MATERIAL HANDLING SUB-SYSTEM, BUILT SPECIFICALLY FOR SHELDAHL, INC.'S UNIQUE, FINE LINE PROCESS. 1995 REVENUE DISTRIBUTION BY BUSINESS SEGMENT Capacitor Manufacturing Equipment 36% Semiconductor Memory Yield Improvement 30% Laser Fine Tuning 28% Other 6% ESI HAS BECOME THE LEADING EQUIPMENT SUPPLIER IN THE CAPACITOR MANUFACTURING EQUIPMENT, SEMICONDUCTOR YIELD IMPROVEMENT AND LASER FINE TUNING MARKET SEGMENTS. KEY FINANCIAL INDICES FOR ESI Sound financial management and discipline are critical to the sustained success of any company. It is the foundation for future growth and prosperity. The following graphs present several of the important ratios which management utilizes to regularly measure ESI's performance and progress. SALES PER EMPLOYEE 1992 $105.8 1993 $130.5 1994 $134.4 1995 $161.6 SALES/OPERATING EXPENSES RATIO 1992 1.86 1993 2.41
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1994 2.57 1995 2.66 INVENTORY TURNOVER RATIO 1992 2.01 1993 2.15 1994 1.93 1995 2.28 SALES/NET PROPERTY & EQUIPMENT RATIO 1992 3.04 1993 3.79 1994 4.64 1995 7.16 GROSS MARGIN 1992 42.7% 1993 46.7% 1994 50.6% 1995 52.5%
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DEBT AS % OF CAPITALIZATION 1992 19.3% 1993 14.7% 1994 1.4% 1995 0.0% SHAREHOLDER INFORMATION ANNUAL MEETING OF SHAREHOLDERS The annual meeting of shareholders is Friday, September 22, 1995 at 1 PM at ESI's offices, 13900 NW Science Park Drive, Portland, Oregon. ANNUAL REPORT/10K REPORT Publications and information of interest to current and potential investors are available on request. Please contact the Investor Relations Department, ESI, 13900 NW Science Park Drive, Portland, Oregon 97229-5497. TRANSFER AGENT AND REGISTRAR First Chicago Trust Company of New York INDEPENDENT PUBLIC ACCOUNTANTS Arthur Andersen LLP Portland, Oregon CORPORATE OFFICERS Donald R. VanLuvanee President and Chief Executive Officer Barry L Harmon Senior Vice President and Chief Financial Officer Edward J. Swenson
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Senior Vice President Mark W. Klug Vice President/President Palomar Systems, Inc. David B. Moser Vice President Joseph Z. Rivlin Vice President Vernon R. Swearingen Vice President Richard M. Walker Vice President Larry T. Rapp Corporate Secretary BOARD OF DIRECTORS David F. Bolender Chairman of the Board President (Retired) Electric Operations Group, PacifiCorp Portland, Oregon Douglas C. Strain Vice Chairman of the Board Founder of ESI Donald R. VanLuvanee President and Chief Executive Officer Larry L. Hanson Executive Vice President (Retired) Tylan General, Inc. San Diego, California Dr. W Arthur Porter President Houston Area Research Center The Woodlands, Texas
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Vernon B. Ryles, Jr. Chief Executive Officer Poppers Supply Portland, Oregon Keith L. Thomson Vice President and Oregon Site Mgr. Intel Corporation Beaverton, Oregon WORLD HEADQUARTERS Electro Scientific Industries, Inc. 13900 NW Science Park Drive Portland, Oregon 97229-5497 503/641-4141 Fax: 503/643-4873 htip://www.elcsci.com SUBSIDIARIES Palomar Systems, Inc. 231 0 Aldergrove Avenue Escondido, California 92029-1935 XRL Corporation 150 Dan Road Canton, Massachusetts 02021-2849 Electro Scientific Industries GmbH/CLS GmbH Riesstrasse 17 D-80992 Munchen 50 Germany Electro Scientific Industries Ltd/CLS Ltd Duke House, The Pavilions Downmill Road Bracknell, Berkshire England RG121QS Electro Scientific Industries SARL Cite Descartes 1, Allee Lorentz 77420 Champs-sur-Morne France
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Electro Scientific Industries KK Japan Co, Ltd. Donpa Bldg 1-11-15 Higashi Gotando Shinagawa-Ku, Tokyo 141 Japan Electro Scientific Industries BV Elisabethhof 21, PO Box 77 2350 AB Leiderdorp The Netherlands Electro Scientific Industries Korea So-Mang Bldg, 2nd Floor 99-16 Itaewon-Dong Yongsan-Gu, Seoul Korea 1995 Electro Scientific Industries, Inc. ESI is an equal opportunity and affirmative action employer.
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Appendix A Description of Graphic and Image Information Page Description 1. Four Bar Charts: See tables; Revenues, Earnings Per Share, Year End Equity, and Return on Equity. 3. Photo of David F. Bolender, Chairman of the Board and Donald R. VanLuvanee, President and CEO. 4. Pie Chart: See table 1995 Worldwide Revenue Distribution. 5. Photos: See photo captions page 5. 6. Photos: See photo captions page 6. 7. Photo: See photo caption page 7. Pie Chart: see table 1995 Revenue Distribution by Business Segment. 8. Six Bar Charts: See tables; Sales Per Employee, Sales/Operating Expenses Ratio, Inventory Turnover Ratio, Sales/Net Property & Equipment Ratio, Gross Margin and Debt As % Of Capitalization.

Dates Referenced Herein   and   Documents Incorporated By Reference

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5/31/944
For The Period Ended5/31/954
Filed On / Filed As Of8/17/95DEF 14A
9/22/9513DEF 14A
 
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