Intevac, Inc. Reports First-Quarter Financial Results.

Achieves Record Gross Margin of 42.9%

SANTA CLARA, Calif. -- Intevac, Inc. (Nasdaq:IVAC) reported financial results for the quarter ended March 31, 2007.

Net income for the first quarter was $9.8 million, or $0.44 per diluted share, on 22.2 million weighted-average shares outstanding. Net income included $1.4 million of stock-based compensation expense, equivalent to $0.04 per diluted share; $1.4 million of flat panel license fees, equivalent to $0.04 per diluted share; and $101,000 of intangible amortization expense, related to the Company's acquisition of certain assets of Delta Nu, LLC on January 31, 2007. For first-quarter 2006, net income was $7.0 million, or $0.32 per diluted share, on 21.8 million weighted average shares outstanding, which included $428,000 of stock-based compensation expense, equivalent to $0.02 per diluted share.

Revenues for the quarter were $76.4 million, including $72.5 million of Equipment revenues and record Imaging revenues of $3.9 million. Equipment revenues consisted of thirteen magnetic media manufacturing systems, equipment upgrades, spares, consumables, and service. Imaging revenues consisted of $2.8 million of research and development contracts and $1.1 million of product sales. In first-quarter 2006, net revenues were $49.6 million, including $47.6 million of Equipment revenues and $2.0 million of Imaging revenues, which included $501,000 of product sales.

Equipment gross margins for the quarter rose to a record 43.3% from 35.2% in first quarter 2006, and Imaging gross margins increased to 36.6% from 26.2% in first-quarter 2006. Equipment margins improved primarily due to lower manufacturing costs, and higher sales of spares and upgrades. Imaging margins improved primarily as the result of higher margins on development contracts and favorable adjustments related to contract closeouts. Consolidated gross margins improved to 42.9% from 34.9% in first-quarter 2006.

Operating expenses for the quarter totaled $19.7 million, or 25.8% of revenues, versus $10.7 million, or 21.5% of revenues, in first-quarter 2006. Operating expenses grew primarily as the result of increased spending on development of new Equipment products, increased business development expense and higher stock based compensation expense.

Order backlog totaled $92.8 million on March 31, 2007, compared to $125.0 million on December 31, 2006, and $124.8 million on April 1, 2006. Backlog as of March 31, 2007 includes fourteen 200 Lean systems.

Intevac Chief Executive Kevin Fairbairn commented: "We are pleased to report another solid quarter of financial results with earnings per share exceeding expectations. We delivered all 200 Lean([R]) systems on time and continued to generate cash. The integration of our new DeltaNu subsidiary went smoothly and DeltaNu is executing ahead of plan. We continue to make good progress developing new Imaging and semiconductor products for the future growth of the business. The expansion of our Asian operations continues to track according to plan."

Conference Call Information

The Company will discuss its financial results 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 [phone] prior to the start time. For international callers, the dial-in number is [phone]. 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 3:30 p.m. PDT. You may access the playback by calling [phone] or, for international callers [phone], and providing conference ID 5955930.

About Intevac

Intevac is the world's leading supplier of disk sputtering equipment to manufacturers of magnetic media used in hard disk drives and a developer and provider of leading edge extreme low light imaging sensors, cameras and systems. For more information please visit our website at www.intevac.com.

200 Lean([R] )is a registered trademark of Intevac, Inc.

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