Intevac: Fiscal 4Q07 Financial Results

Intevac, Inc. reported financial results for the fourth quarter
and year ended December 31, 2007.

Net loss for the quarter was $2.4 million, or $0.11 per diluted
share, on 21.6 million weighted-average shares outstanding. The net
loss included $1.7 million of stock-based compensation expense,
equivalent to $0.05 per diluted share. Fourth quarter earnings include
a $1.5 million one-time gain on the sale of a real estate investment,
equivalent to $0.05 per diluted share. For the fourth quarter of 2006,
net income was $21.3 million, or $0.97 per diluted share, on 22.1
million weighted average shares outstanding, which included $1.3
million of stock-based compensation expense, equivalent to $0.05 per
diluted share.

Revenues for the quarter were $16.8 million, including $10.8
million of Equipment revenues and record Imaging revenues of $6.0
million. As no 200 Lean systems were shipped in the quarter,
equipment revenues consisted of disk lubrication systems, equipment
upgrades, spares, consumables and service. Imaging revenues consisted
of $4.1 million of research and development contracts and a record $1.9
million of product sales. In the fourth quarter of 2006, revenues were
$95.9 million, including $92.8 million of Equipment revenues and $3.1
million of Imaging revenues, which included $331,000 of product sales.

Equipment and Imaging gross margins for the fourth quarter of 2007
rose to 46.7% and 46.7%, respectively, from 40.9% and 37.9% for the
fourth quarter of 2006. Equipment margins improved because Equipment
revenues were driven primarily by technology upgrades and spares
business. Imaging margins improved as a result of securing
higher-margin development contracts and an increased percentage of
revenue derived from higher-margin product shipments. Consolidated
gross margins improved to 46.7%, from 40.8% in the fourth quarter of
2006.

Operating expenses for the quarter totaled $14.9 million, or 89% of
revenues, versus $16.9 million, or 17.6% of revenues, in the fourth
quarter of 2006 and $16.5 million, or 32.6% of revenues, in the third
quarter of 2007. For the third sequential quarter, operating expenses
have declined. Total operating expenses decreased versus the fourth
quarter of 2006 primarily because of reductions in R&D and general
and administrative expenses.

Net income for the full year 2007 was $27.3 million, or $1.23 per
diluted share, on 22.2 million weighted-average shares outstanding. Net
income included $6.2 million of stock-based compensation expense,
equivalent to $0.22 per diluted share, and a $1.5 million one-time gain
on the sale of an investment, equivalent to $0.05 per diluted share.
For the full year 2006, net income was $46.7 million, or $2.13 per
diluted share, on 21.9 million weighted average shares outstanding,
which included $3.4 million of stock-based compensation expense,
equivalent to $0.13 per diluted share.

Revenues for the full year were $215.8 million, including $196.7
million of Equipment revenues and $19.1 million of Imaging revenues.
Equipment revenues consisted of twenty-nine 200 Lean(R) systems as well
as disk lubrication systems, equipment upgrades, spares, consumables
and service. Imaging revenues consisted of $13.9 million of research
and development contracts and $5.2 million of product sales. For the
full year 2006, revenues were $259.9 million, including $248.5 million
of Equipment revenues and $11.4 million of Imaging revenues, which
included $1.7 million of product sales.

Equipment and Imaging gross margins for the year increased to 44.7%
and 42.6%, respectively, from 39.1% and 33.3% in 2006. Equipment
margins improved primarily due to record high sales of technology
upgrades and spares as well as reduced manufacturing costs. Imaging
margins increased primarily as the result of securing higher-margin
development contracts, higher factory utilization and an increased
percentage of revenue derived from higher-margin product shipments.
Consolidated gross margins improved to 44.5%, from 38.8% in 2006.

Operating expenses for the year totaled $68.6 million, or 31.8% of
revenues, versus $53.0 million, or 20.4% of revenues, in 2006.
Operating expenses grew primarily as the result of increased spending
on development of new Equipment products, increased business
development expense, legal expenses associated with patent litigation
and higher stock-based compensation expense.

Order backlog totaled $34.2 million on December 31, 2007, compared
to $31.2 million on September 29, 2007 and $125.0 million on December
31, 2006. Backlog at year end includes two 200 Lean(R) systems,
compared to one on September 29, 2007 and twenty-four on December 31,
2006.

"We delivered stronger-than-expected results for the fourth
quarter, as we responded to a challenging market environment by
reducing our cost structure without slowing down the development of our
future growth products," commented Kevin Fairbairn, president and chief
executive officer of Intevac. "Fourth quarter revenues declined 83%
from last year’s record-setting fourth quarter, yet we delivered higher
gross margins, lower operating expenses and another profitable quarter
for our Imaging business. We also completed the acquisition of Creative
Display Systems, which we expect to be accreditive to earnings by the end
of 2008, to expand our served markets and contribute to the
competitiveness of our future night vision products."

Intevac, Inc.