UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 6)
ELECTRO SCIENTIFIC INDUSTRIES INC. (ESIO)
(Name of Issuer)
Common Stock
(Title of Class of Securities)
285229100
(CUSIP Number)
David Nierenberg
The D3 Family Funds
19605 NE 8th Street
Camas, WA 98607
(360) 604-8600
With a copy to:
Henry Lesser, Esq.
DLA Piper US LLP
2000 University Avenue
East Palo Alto, CA 94303
(650) 833-2000
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
January 22, 2007
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D and is filing this
schedule because of ss.ss. 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the
following box |_|.
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON
The D3 Family Fund, L.P.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) |X|
(b) |_|
--------------------------------------------------------------------------------
3 SEC USE ONLY
--------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
WC
--------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) |_|
--------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Washington
--------------------------------------------------------------------------------
7 SOLE VOTING POWER
585,202 Common shares (2.0%)
-----------------------------------------------------------------
NUMBER OF 8 SHARED VOTING POWER
SHARES
BENEFICIALLY 0
OWNED BY -----------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON 585,202
WITH -----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
--------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
For the reporting person listed on this page, 585,202; for all
reporting persons as a group, 3,374,484 shares (11.6%)
--------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* |_|
--------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
11.6%
--------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
--------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
2
--------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON
The DIII Offshore Fund, L.P.
--------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) |X|
(b) |_|
--------------------------------------------------------------------------------
3 SEC USE ONLY
--------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
WC
--------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) |_|
--------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Bahamas
--------------------------------------------------------------------------------
7 SOLE VOTING POWER
774,214 common shares (2.7%)
-----------------------------------------------------------------
NUMBER OF 8 SHARED VOTING POWER
SHARES
BENEFICIALLY 0
OWNED BY -----------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON 774,214
WITH -----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
--------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
For the reporting person listed on this page, 774,214; for all
reporting persons as a group, 3,374,484 shares (11.6%)
--------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* |_|
--------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
11.6%
--------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
--------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
3
--------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON
The D3 Family Bulldog Fund, L.P.
--------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) |X|
(b) |_|
--------------------------------------------------------------------------------
3 SEC USE ONLY
--------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
WC
--------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) |_|
--------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Washington
--------------------------------------------------------------------------------
7 SOLE VOTING POWER
2,015,068 common shares (6.9%)
-----------------------------------------------------------------
NUMBER OF 8 SHARED VOTING POWER
SHARES
BENEFICIALLY 0
OWNED BY -----------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON 2,015,068
WITH -----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
--------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
For the reporting person listed on this page, 2,015,068; for all
reporting persons as a group, 3,374,484 shares (11.6%)
--------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* |_|
--------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
11.6%
--------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
--------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
4
--------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON
Nierenberg Investment Management Company, Inc.
--------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) |X|
(b) |_|
--------------------------------------------------------------------------------
3 SEC USE ONLY
--------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
WC
--------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) |_|
--------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Washington
--------------------------------------------------------------------------------
7 SOLE VOTING POWER
0
-----------------------------------------------------------------
NUMBER OF 8 SHARED VOTING POWER
SHARES
BENEFICIALLY 3,374,484 shares (11.6%)
OWNED BY -----------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON 0
WITH -----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
3,374,484 shares
--------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
For the reporting person listed on this page, 3,374,484; for all
reporting persons as a group, 3,374,484 shares (11.6%)
--------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* |_|
--------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
11.6%
--------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
--------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
5
--------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON
Nierenberg Investment Management Offshore, Inc.
--------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) |X|
(b) |_|
--------------------------------------------------------------------------------
3 SEC USE ONLY
--------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
WC
--------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) |_|
--------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Bahamas
--------------------------------------------------------------------------------
7 SOLE VOTING POWER
0
-----------------------------------------------------------------
NUMBER OF 8 SHARED VOTING POWER
SHARES
BENEFICIALLY 774,214 common shares (2.7%)
OWNED BY -----------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON 0
WITH -----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
774,214
--------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
For the reporting person listed on this page, 774,214 for all
reporting persons as a group, 3,374,484 shares (11.6%)
--------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* |_|
--------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
11.6%
--------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
--------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
6
This Amendment No. 6 to Schedule 13D (this "Amendment") amends the
below-indicated items from the Schedule 13D previously filed by or on behalf of
the undersigned parties (the "Reporting Persons") (the "Schedule 13D"), by
supplementing such Items with the information below:
Item 4. Purpose of Transaction
Our proposal that ESIO put excess cash to work to maximize shareholder value
seems to be progressing. We cite three recent developments to illustrate our
point.
First, and foremost, we thank ESIO's management and Board of Directors for their
constructive and timely announcement yesterday reiterating their commitment to
enhancing shareholder value. We know that ESIO is working to prepare its
substantive response to our suggestions. As current and former public company
board members ourselves, we appreciate that doing this the right way takes time.
We are prepared to be patient while good people do the right thing.
Second, we note the Schedule 13D filed earlier today by ESIO's largest
shareholder, Third Avenue Management LLC. We particularly note the thoughtful
letter from Third Avenue's Co-Chief Investment Officer, Curtis R. Jensen, to
ESIO's CEO, Nick Konidaris, advocating a combined share repurchase and dividend
program to improve ESIO's return on equity (ROE) and tangibly demonstrate the
company's commitment to maximizing shareholder value. Though Third Avenue's
suggestions differ from those in our last 13D, we think they have improved our
original ideas.
Third, we note with enthusiasm today's announcement that United Microelectronics
Corp. (UMC), which is Taiwan's second largest contract chip manufacturer, will
use its excess cash to retire fully 30% of its outstanding shares and pay
shareholders a one time cash dividend. Taiwanese technology companies are
showing American technology companies how to use cash to build shareholder
value.
* * * * *
In conclusion, we would like to update the Schedule 13D to disclose that in two
separate recent conversations we have told ESIO's CEO and Board Chairman that we
do not require the company to use a one time cash dividend as the only or
principal way to return excess cash to the shareholders. As Mr. Jensen's letter
points out so powerfully, there are other perfectly acceptable ways to use
excess cash to build shareholder value. If, for example, ESIO's Board and
advisors were to conclude that the best way to improve ROE were to repurchase
shares, we could support that decision with just two conditions. First, we would
want the size of the repurchase program to be large enough that it would
meaningfully boost both ROE and earnings per share, like we believe UMC's
program will. And, second, we would like ESIO to make a continuing commitment to
use excess cash flow to repurchase a significant percentage of shares on an
ongoing basis. To illustrate the size of programs which could be acceptable to
us, we could support a one time repurchase of six million shares, which is over
20% of the outstanding
7
share count, succeeded by a continuing program to repurchase at least one
million more shares annually.
We appreciate the company's consideration of our views and look forward to the
response.
The previous statements by the Reporting Persons to their views regarding their
investment in ESIO represent solely their own analyses and judgments, based on
publicly-available information and their own internal evaluation thereof. Those
statements are not intended, and should not be relied on, as investment advice
to any other investor or prospective investor. To the extent those statements
reflect assessments of possible future developments, those assessments are
inherently subject to the uncertainties associated with all assessments of
future events; actual developments may materially differ as a result of
circumstances affecting ESIO and/or extrinsic factors such as developments in
the company's industry and the economic environment. The Reporting Persons
reserve the right to change their internal evaluation of this investment in the
future , as well as to increase or decrease their investment depending on their
evaluation, without further amending their Schedule 13D except as required by
applicable rules.
Item 5. Interest in Securities of the Issuer
(a, b) The Reporting Persons, in the aggregate, beneficially own 3,374,484
common shares, constituting approximately 11.6% of the outstanding shares.
(c) Since Amendment No. 5 to Schedule 13D, the following purchases of
Shares were made by D3 Family Funds in open market transactions:
Fund Trade Date Quantity Price
---- ---------- -------- -----
D3 Family Fund, LP 1/18/2007 14,370 19.61
D3 Family Bulldog Fund, LP 1/18/2007 45,570 19.61
DIII Offshore Fund, LP 1/18/2007 15,060 19.61
D3 Family Fund, LP 1/19/2007 5,900 19.64
D3 Family Bulldog Fund, LP 1/19/2007 20,300 19.64
DIII Offshore Fund, LP 1/19/2007 7,800 19.64
D3 Family Fund, LP 1/22/2007 17,900 19.44
D3 Family Bulldog Fund, LP 1/22/2007 64,020 19.44
DIII Offshore Fund, LP 1/22/2007 24,080 19.44
8
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, each of the
undersigned certifies that the information set forth in the Statement is true,
complete and correct.
D3 Family Fund, L.P., and D3 Bulldog
Fund, L.P.
By: Nierenberg Investment Management
Company, Inc.
Its: General Partner
January 24, 2007 By: /s/ David Nierenberg
-------------------------------
David Nierenberg, President
DIII Offshore Fund, L.P.
By: Nierenberg Investment Management
Offshore, Inc.
Its: General Partner
January 24, 2007 By: /s/ David Nierenberg
-------------------------------
David Nierenberg, President
Nierenberg Investment Management
Company, Inc.
January 24, 2007 By: /s/ David Nierenberg
-------------------------------
David Nierenberg, President
Nierenberg Investment Management
Offshore, Inc.
January 24, 2007 By: /s/ David Nierenberg
-------------------------------
David Nierenberg, President
9