Exhibit 99.1
| | NEWS RELEASE |
For more information contact:
FEI Company
Fletcher Chamberlin
Investor Relations
(503) 726-7710
FEI Company Reports Record Sales and Earnings for the First Quarter of 2007
HILLSBORO, Ore., April 30, 2007 — FEI Company (NASDAQ: FEIC) reported increases in revenue, earnings and cash for the first quarter of 2007. Net sales and earnings were the highest for any quarter in the company’s history, and quarterly bookings were the second-highest and the largest first-quarter total ever.
Net sales for the quarter ended April 1, 2007 of $148.0 million were up 5% compared to the fourth quarter of 2006 and up 32% compared to the first quarter of 2006. Bookings in the quarter totaled $152.6 million, compared with $171.7 million in the fourth quarter of 2006 and $149.0 million in the first quarter of 2006. The book-to-bill ratio for the quarter was 1.03 to 1.00, and the backlog at the end of the quarter was $310.5 million, of which approximately 90% is expected to ship by the end of the first quarter of 2008.
Income from continuing operations for the first quarter of 2007 was $14.9 million, compared with income from continuing operations of $11.9 million in the fourth quarter of 2006 and a net loss of $5.2 million from continuing operations in last year’s first quarter. Diluted earnings per share from continuing operations in the latest quarter were $0.36, compared with diluted earnings per share of $0.30 from continuing operations in the fourth quarter of 2006 and a loss per share of $0.15 from continuing operations in the first quarter of 2006. The gross profit margin improved to 43.1% in the first quarter of 2007, compared with 42.0% in the fourth quarter and 40.8% in the prior year’s first quarter. The tax rate from continuing operations for the first quarter of 2007 was 25.4%, compared with 22.6% in the fourth quarter and 37.2% for the full year 2006.
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Including the impact of the discontinued operations, net income in the first quarter of 2007 was $15.1 million or $0.36 per diluted share. For the first quarter of 2007, the company reported an after-tax gain of $127,000 related to the sale of Knights Technology Inc., a small wholly-owned software subsidiary which was sold in the fourth quarter of 2006. The financial statements for all reporting periods have been recast to reflect the results of Knights Technology as a discontinued operation. In addition, in the first quarter of 2006, the company recorded severance, restructuring, asset impairment and merger costs that reduced pretax income by a total of $12.5 million.
“The year has started out on track,” said Don Kania, president and CEO of FEI, “as we continued to demonstrate progress in several strategic areas — ramping revenue, improving gross margins and building our presence in Asia. Bookings continued to be solid and within our expected range, and we increased shipments to bring the book-to-bill ratio closer to 1 to 1. Our gross margin improved to 43.1%, reflecting increased volume and improved revenue mix. Bookings from Asia including Japan increased 59% from last year’s first quarter and 45% from the fourth quarter. The company also increased its total cash and investment position during the quarter by $19.7 million, due to continued profitability and employee stock option exercise proceeds.”
Bookings and revenue comparisons for the company’s three market segments and other data are included in the supplementary information attached to this release, along with detailed statements of operations and balance sheets.
The company’s balance sheet remained strong. Total cash and investments at the end of the quarter were $425.7 million, and convertible debt at the end of the quarter remained unchanged at $310.9 million.
Second Quarter Guidance
FEI currently expects net sales for the second quarter of 2007 to be in the range of $145 million to $152 million. Bookings are expected to be in line with revenue and earnings per share are expected to be in the range of $0.32 to $0.37 per share.
Investor Conference Call — 2:00 p.m. PDT Monday, April 30, 2007
Parties interested in listening to FEI’s quarterly conference call may do so by dialing 1-800-219-6110 (domestic, toll-free) or 1-303-205-0033 (international) and asking for the FEI Q1 Earnings call. The call can also be accessed via the web by going to FEI’s Investor Relations page at http://www.fei.com, where the webcast will also be archived. A telephone replay of the call will
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also be accessible for one month by dialing 1-800-405-2236 (US) or 1-303-590-3000 (international) and entering the access code 11088415#.
About FEI
FEI (Nasdaq: FEIC) is a global leader in providing innovative instruments for nanoscale imaging, analysis and prototyping. FEI focuses on delivering solutions that provide groundbreaking results and accelerate research, development and manufacturing cycles for its customers in Semiconductor and Data Storage, Academic and Industrial R&D, and Life Sciences markets. With R&D centers in North America and Europe, and sales and service operations in more than 50 countries around the world, FEI’s Tools for Nanotech™ are bringing the nanoscale within the grasp of leading researchers and manufacturers. More information can be found online at: www.fei.com.
Safe Harbor Statement
This news release contains forward-looking statements that include our guidance for the second quarter of 2007 and the expected timing of shipments from our backlog. Factors that could affect these forward-looking statements include, but are not limited to, the strength of the NanoResearch and Industry, NanoElectronics and NanoBiology segments; cyclical changes in the data storage and semiconductor industries, which are the major components of the NanoElectronics market; fluctuations in foreign exchange, interest and tax rates; our continued ability to maintain deferral accounting of hedge transactions; reduced profitability due to failure to achieve or sustain margin improvement, improved product mix, higher volume or cost reductions; lower than expected customer orders; cancellation of customer orders; customer requests to defer planned shipments; failure of customers to adopt new technologies; increased competition and new product offerings from competitors; lower average sales prices and reduced margins on some product sales due to increased competition; failure of the company’s products and technology to find acceptance with customers; delays in shipping products for technical performance, component supply or other reasons; unfavorable business conditions and lack of growth in the general economy, both domestic and foreign; potential restructurings and reorganizations not presently anticipated; reduced sales due to geopolitical risks; changes in trade policies and tariff regulations; changes in the regulatory environment in the nations where we do business; inability to overcome technological barriers; additional selling, general and administrative or research and development expenses; additional costs related to future merger and acquisition activity; and failure of the company to achieve anticipated benefits of current or future acquisitions, including failure to achieve financial goals and integrate the acquisitions successfully. Please also refer to our Form 10-K, Forms 10-Q, Forms 8-K and other filings with the U.S. Securities and Exchange Commission for additional information on these factors and other factors that could cause actual results to differ materially from the forward-looking statements. FEI assumes no duty to update forward-looking statements.
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FEI Company and Subsidiaries
Consolidated Balance Sheets
(In thousands)
(Unaudited)
| | April 1, | | December 31, | |
| | 2007 | | 2006 | |
ASSETS | | | | | |
| | | | | |
CURRENT ASSETS: | | | | | |
Cash and cash equivalents | | $ | 165,335 | | $ | 110,656 | |
Short-term investments in marketable securities | | 237,534 | | 234,202 | |
Short-term restricted cash | | 11,056 | | 20,172 | |
Receivables | | 163,325 | | 144,955 | |
Inventories | | 107,803 | | 97,470 | |
Deferred tax assets | | 4,414 | | 4,386 | |
Other current assets | | 39,279 | | 33,474 | |
Total current assets | | 728,746 | | 645,315 | |
| | | | | |
Non-current investments in marketable securities | | 7,466 | | 34,900 | |
Long-term restricted cash | | 4,344 | | 6,131 | |
Non-current service inventories | | 38,448 | | 37,920 | |
Property plant and equipment, net | | 61,225 | | 60,394 | |
Purchased technology, net | | 4,068 | | 4,494 | |
Goodwill | | 40,897 | | 40,900 | |
Deferred tax assets | | 9,898 | | 542 | |
Other assets, net | | 8,065 | | 7,483 | |
TOTAL | | $ | 903,157 | | $ | 838,079 | |
| | | | | |
LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | |
| | | | | |
CURRENT LIABILITIES: | | | | | |
Accounts payable | | $ | 52,172 | | $ | 45,118 | |
Accrued payroll liabilities | | 18,309 | | 20,736 | |
Accrued warranty reserves | | 6,481 | | 5,716 | |
Accrued agent commissions | | 6,145 | | 6,175 | |
Deferred revenue | | 58,245 | | 48,992 | |
Income taxes payable | | 1,260 | | 9,203 | |
Accrued restructuring, reorganization and relocation | | 639 | | 2,439 | |
Other current liabilities | | 27,267 | | 29,276 | |
Total current liabilities | | 170,518 | | 167,655 | |
| | | | | |
Convertible debt | | 310,882 | | 310,882 | |
Deferred tax liabilities | | 4,312 | | 4,062 | |
Other liabilities | | 24,254 | | 5,572 | |
| | | | | |
SHAREHOLDERS’ EQUITY: | | | | | |
Preferred stock - 500 shares authorized; none issued and outstanding | | — | | — | |
Common stock - 70,000 shares authorized; 35,311 and 34,052 shares issued and outstanding at April 1, 2007 and December 31, 2006 | | 371,126 | | 348,479 | |
Accumulated deficit | | (16,882 | ) | (36,041 | ) |
Accumulated other comprehensive income | | 38,947 | | 37,470 | |
Total shareholders’ equity | | 393,191 | | 349,908 | |
| | | | | |
TOTAL | | $ | 903,157 | | $ | 838,079 | |
FEI Company and Subsidiaries
Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
| | Thirteen Weeks Ended | |
| | April 1, | | December 31, | | April 2, | |
| | 2007 | | 2006 | | 2006 | |
| | | | | | | |
NET SALES: | | | | | | | |
Products | | $ | 116,429 | | $ | 107,822 | | $ | 85,122 | |
Service and components | | 31,530 | | 32,462 | | 27,144 | |
Total net sales | | 147,959 | | 140,284 | | 112,266 | |
| | | | | | | |
COST OF SALES: | | | | | | | |
Products | | 62,163 | | 58,499 | | 45,666 | |
Service and components | | 22,053 | | 22,880 | | 20,850 | |
Total cost of sales | | 84,216 | | 81,379 | | 66,516 | |
| | | | | | | |
Gross profit | | 63,743 | | 58,905 | | 45,750 | |
| | | | | | | |
OPERATING EXPENSES: | | | | | | | |
Research and development | | 15,491 | | 16,112 | | 13,359 | |
Selling, general and administrative | | 29,574 | | 28,508 | | 23,352 | |
Amortization of purchased technology | | 440 | | 438 | | 541 | |
CEO severance | | — | | — | | 9,324 | |
Restructuring, reorganization and relocation | | (572 | ) | (27 | ) | 2,239 | |
Asset impairment | | — | | — | | 465 | |
Merger costs | | — | | — | | 452 | |
Total operating expenses | | 44,933 | | 45,031 | | 49,732 | |
| | | | | | | |
OPERATING INCOME (LOSS) | | 18,810 | | 13,874 | | (3,982 | ) |
| | | | | | | |
OTHER INCOME (EXPENSE): | | | | | | | |
Interest income | | 4,288 | | 4,154 | | 2,244 | |
Interest expense | | (1,976 | ) | (2,110 | ) | (1,658 | ) |
Gain (loss) on investment disposals and impairment, net | | 159 | | — | | — | |
Other expense, net | | (1,274 | ) | (538 | ) | (383 | ) |
Total other income (expense), net | | 1,197 | | 1,506 | | 203 | |
| | | | | | | |
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE TAXES | | 20,007 | | 15,380 | | (3,779 | ) |
| | | | | | | |
INCOME TAX EXPENSE | | 5,077 | | 3,481 | | 1,397 | |
| | | | | | | |
INCOME (LOSS) FROM CONTINUING OPERATIONS | | 14,930 | | 11,899 | | (5,176 | ) |
| | | | | | | |
DISCONTINUED OPERATIONS | | | | | | | |
(Loss) income from discontinued operations, net of income taxes | | — | | (580 | ) | (45 | ) |
Gain (loss) on disposal, net of income taxes | | 127 | | 3,335 | | — | |
INCOME (LOSS) FROM DISCONTINUED OPERATIONS | | 127 | | 2,755 | | (45 | ) |
| | | | | | | |
NET INCOME (LOSS) | | $ | 15,057 | | $ | 14,654 | | $ | (5,221 | ) |
| | | | | | | |
BASIC NET INCOME (LOSS) PER SHARE DATA: | | | | | | | |
From continuing operations | | $ | 0.43 | | $ | 0.35 | | $ | (0.15 | ) |
From discontinued operations | | $ | 0.01 | | $ | 0.08 | | $ | (0.00 | ) |
| | | | | | | |
DILUTED NET INCOME (LOSS) PER SHARE DATA: | | | | | | | |
From continuing operations | | $ | 0.36 | | $ | 0.30 | | $ | (0.15 | ) |
From discontinued operations | | $ | 0.00 | | $ | 0.06 | | $ | (0.00 | ) |
| | | | | | | |
WEIGHTED AVERAGE SHARES OUTSTANDING: | | | | | | | |
Basic | | 34,556 | | 33,886 | | 33,867 | |
Diluted | | 45,307 | | 44,079 | | 33,867 | |
FEI Company and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
| | Thirteen Weeks Ended (1) | |
| | April 1, | | December 31, | | April 2, | |
| | 2007 | | 2006 | | 2006 | |
NET SALES: | | | | | | | |
Products | | 78.7 | % | 76.9 | % | 75.8 | % |
Service | | 21.3 | % | 23.1 | % | 24.2 | % |
Total net sales | | 100.0 | % | 100.0 | % | 100.0 | % |
| | | | | | | |
COST OF SALES: | | | | | | | |
Products | | 42.0 | % | 41.7 | % | 40.7 | % |
Service | | 14.9 | % | 16.3 | % | 18.6 | % |
Total cost of sales | | 56.9 | % | 58.0 | % | 59.2 | % |
| | | | | | | |
Gross profit | | 43.1 | % | 42.0 | % | 40.8 | % |
| | | | | | | |
OPERATING EXPENSES: | | | | | | | |
Research and development | | 10.5 | % | 11.5 | % | 11.9 | % |
Selling, general and administrative | | 20.0 | % | 20.3 | % | 20.8 | % |
Amortization of purchased technology | | 0.3 | % | 0.3 | % | 0.5 | % |
CEO severance | | 0.0 | % | 0.0 | % | 8.3 | % |
Restructuring, reorganization and relocation | | -0.4 | % | 0.0 | % | 2.0 | % |
Asset impairment | | 0.0 | % | 0.0 | % | 0.4 | % |
Merger costs | | 0.0 | % | 0.0 | % | 0.4 | % |
Total operating expenses | | 30.4 | % | 32.1 | % | 44.3 | % |
| | | | | | | |
OPERATING INCOME (LOSS) | | 12.7 | % | 9.9 | % | -3.5 | % |
| | | | | | | |
OTHER INCOME (EXPENSE): | | | | | | | |
Interest income | | 2.9 | % | 3.0 | % | 2.0 | % |
Interest expense | | -1.3 | % | -1.5 | % | -1.5 | % |
Gain (loss) on investment disposals and impairment, net | | 0.1 | % | 0.0 | % | 0.0 | % |
Other expense, net | | -0.9 | % | -0.4 | % | -0.3 | % |
Total other expense, net | | 0.8 | % | 1.1 | % | 0.2 | % |
| | | | | | | |
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE TAXES | | 13.5 | % | 11.0 | % | -3.4 | % |
| | | | | | | |
INCOME TAX EXPENSE | | 3.4 | % | 2.5 | % | 1.2 | % |
| | | | | | | |
INCOME (LOSS) FROM CONTINUING OPERATIONS | | 10.1 | % | 8.5 | % | -4.6 | % |
| | | | | | | |
DISCONTINUED OPERATIONS | | | | | | | |
Income (loss) from discontinued operations, net of income taxes | | 0.0 | % | -0.4 | % | 0.0 | % |
Gain (loss) on disposal, net of income taxes | | 0.1 | % | 2.4 | % | 0.0 | % |
INCOME (LOSS) FROM DISCONTINUED OPERATIONS | | 0.1 | % | 2.0 | % | 0.0 | % |
| | | | | | | |
NET INCOME (LOSS) | | 10.2 | % | 10.4 | % | -4.7 | % |
(1) Percentages may not add due to rounding.
FEI COMPANY
Supplemental Data Table 1
($ in millions, except per share amounts)
(Unaudited)
| | Q1 Ended | | Q4 Ended | | Q1 Ended | |
| | 4/1/2007 | | 12/31/2006 | | 4/2/2006 | |
Income Statement Highlights | | | | | | | |
Consolidated sales | | $ | 148.0 | | $ | 140.3 | | $ | 112.3 | |
Gross margin | | 43.1 | % | 42.0 | % | 40.8 | % |
R&D spending | | $ | 15.5 | | $ | 16.1 | | $ | 13.4 | |
R&D (% of sales) | | 10.5 | % | 11.5 | % | 11.9 | % |
SG&A | | $ | 29.6 | | $ | 28.5 | | $ | 23.4 | |
SG&A (% of sales) | | 20.0 | % | 20.3 | % | 20.8 | % |
Stock compensation expense - COGS | | $ | 0.1 | | $ | 0.2 | | $ | 0.1 | |
Stock compensation expense - R&D | | $ | 0.2 | | $ | 0.2 | | $ | 0.2 | |
Stock compensation expense - SG&A | | $ | 1.6 | | $ | 1.4 | | $ | 1.0 | |
Stock compensation expense - Restructuring (CEO Severance) | | $ | 0.0 | | $ | 0.0 | | $ | 7.0 | |
Net income (loss) from continuing operations | | $ | 14.9 | | $ | 11.9 | | $ | (5.2 | ) |
Net income (loss) from discontinued operations | | $ | 0.1 | | $ | 2.8 | | $ | (0.0 | ) |
Net income (loss) | | $ | 15.1 | | $ | 14.7 | | $ | (5.2 | ) |
Diluted earnings (loss) per share from continuing operations | | $ | 0.36 | | $ | 0.30 | | $ | (0.15 | ) |
Diluted earnings (loss) per share from discontinued operations | | $ | 0.00 | | $ | 0.06 | | $ | (0.00 | ) |
Sales by Market Segment | | | | | | | |
NanoElectronics | | $ | 56.5 | | $ | 42.4 | | $ | 39.7 | |
NanoResearch & Industry | | $ | 49.2 | | $ | 55.3 | | $ | 35.3 | |
NanoBiology | | $ | 10.7 | | $ | 10.1 | | $ | 10.1 | |
Service and Components | | $ | 31.6 | | $ | 32.5 | | $ | 27.2 | |
Sales by Geography | | | | | | | |
North America | | $ | 61.7 | | $ | 49.9 | | $ | 42.8 | |
Europe | | $ | 40.0 | | $ | 52.2 | | $ | 38.7 | |
Asia Pacific | | $ | 46.3 | | $ | 38.2 | | $ | 30.8 | |
Bookings | | | | | | | |
Total | | $ | 152.6 | | $ | 171.7 | | $ | 149.0 | |
Book to bill ratio | | 1.03 | | 1.22 | | 1.33 | |
Backlog - total | | $ | 310.5 | | $ | 305.9 | | $ | 220.7 | |
Backlog - Service and Components | | $ | 56.6 | | $ | 46.8 | | $ | 44.4 | |
Bookings by Market Segment | | | | | | | |
NanoElectronics | | $ | 56.0 | | $ | 49.7 | | $ | 40.0 | |
NanoResearch & Industry | | $ | 46.1 | | $ | 65.1 | | $ | 56.2 | |
NanoBiology | | $ | 9.1 | | $ | 23.9 | | $ | 19.7 | |
Service and Components | | $ | 41.4 | | $ | 33.0 | | $ | 33.1 | |
Balance Sheet Highlights | | | | | | | |
Cash, equivalents, investments, restricted cash | | $ | 425.7 | | $ | 406.1 | | $ | 254.7 | |
Operating cash generated (used) | | $ | 1.2 | | $ | 24.4 | | $ | (2.7 | ) |
Accounts receivable | | $ | 163.3 | | $ | 145.0 | | $ | 110.7 | |
Days sales outstanding (DSO) | | 101 | | 94 | | 90 | |
Inventory turnover | | 3.3 | | 3.5 | | 3.2 | |
Inventories | | $ | 107.8 | | $ | 97.5 | | $ | 81.5 | |
Property, plant and equipment | | $ | 61.2 | | $ | 60.4 | | $ | 58.5 | |
Fixed asset investment (during quarter) | | $ | 3.0 | | $ | 2.1 | | $ | 1.2 | |
Depreciation expense | | $ | 3.3 | | $ | 3.3 | | $ | 3.4 | |
Current liabilities | | $ | 170.5 | | $ | 167.7 | | $ | 130.2 | |
Working capital | | $ | 558.2 | | $ | 477.7 | | $ | 319.2 | |
Shareholders’ equity | | $ | 393.2 | | $ | 349.9 | | $ | 302.5 | |
Headcount (permanent and temporary) | | 1,729 | | 1,683 | | 1,646 | |
