Intevac, Inc. (NasdaqGS:IVAC) announced that the company has retained investment banking firm Houlihan Lokey Capital, Inc. (“Houlihan Lokey”) to advise management and the board of directors on strategic alternatives. Additionally, the board has formed a strategic committee comprised of independent directors David Dury and Kevin Barber to work with management and Houlihan Lokey in evaluating options to increase stockholder value. “The ongoing challenges within the hard disk drive (HDD) industry resulted in the unprecedented cancellation of $54 million in 200 Lean® system orders late last month,” commented Nigel Hunton, President and Chief Executive Officer.

“In our nearly 20 years of supplying these industry-leading media processing tools, this is the very first time one of our customers has elected to cancel an order. Our purchase order terms with this customer include very specific contractual protections related to our working capital exposure, and these include not only advanced deposits to fund the receipt of long-lead-time materials, but all inventory related to these systems. As we discussed on our first quarter earnings call, we previously made commitments to our suppliers that are resulting in continued material receipts for HDD systems year-to-date. These material receipts will continue through the second quarter, which will further increase our HDD inventory levels from the first quarter levels, and therefore will have a temporarily negative impact on cash at the end of the second quarter, yet it is critical to communicate that any material receipts not already funded by advanced deposits will be funded by our customer, and not by Intevac.” Regarding the appointment of Houlihan Lokey and a strategic committee of the board of directors, there can be no assurance that the exploration process will result in any transaction or other strategic alternative, and Intevac has not set a definitive timetable for completion of this process.

The Company does not expect to disclose further developments relating to this strategic evaluation process, unless and until the board of directors approves a specific transaction or otherwise concludes this review of strategic alternatives.