Fei (FEIC) 8-K FEI Company Reports Second Quarter Financial Results

Exhibit 99.1

NEWS RELEASE

For more information contact:

FEI Company

Fletcher Chamberlin

Investor Relations

(503) 726-7710

fletcher.chamberlin@fei.com

FEI Company Reports Second Quarter Financial Results

Record Revenue and Second-quarter Bookings

HILLSBORO, Ore., July 29, 2008 — FEI Company (NASDAQ: FEIC) reported revenue at record levels for the fifth time in the last six quarters, as continued growth in the company’s Research & Industry and Life Sciences markets offset a cyclical decline in its Electronics market. Operating and net income were affected by the company’s previously-announced restructuring program.

Net sales for the quarter ended June 29, 2008 of $154.0 million were up 2% compared to the first quarter of 2008 and up 4% compared to the second quarter of 2007. Bookings in the quarter totaled $140.4 million, compared with $150.5 million in the first quarter of 2008 and $136.2 million for the second quarter of 2007. Bookings in the latest quarter were the highest for a second quarter in the company’s history. The backlog at the end of the quarter was $296.0 million, of which over 90% is expected to ship in the next four quarters.

Operating income for the second quarter of 2008 was $4.9 million, compared with $8.8 million in the first quarter of 2008 and $15.0 million in last year’s second quarter. Restructuring expenses in the latest quarter reduced operating income by $2.3 million or $0.05 per diluted share. Net income for the second quarter of 2008 was $4.9 million, compared with $8.2 million in the first quarter of 2008 and $14.0 million in last year’s second quarter. Diluted earnings per share in the latest quarter were $0.12, compared with $0.20 in the first quarter of 2008 and $0.33 in the second quarter of 2007. The gross profit margin was 38.1% in the second quarter of 2008, compared with 39.1% in the first quarter of 2008.

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“The strength of our market and geographic diversity was again demonstrated in the second quarter,” said Don Kania, president and CEO of FEI, “despite the negative impact of a weak dollar and a difficult semiconductor capital equipment market.

“We expect our second-half bookings to be above first-half levels,” continued Kania, “based on our flow of exciting new products, expanding global demand for nanotechnology tools, and technology spending from our semiconductor customers. In addition to continued growth in 2009, we expect the benefits of our restructuring program to grow as the year progresses, including a lower cost structure, better currency balance and more efficient factory utilization.”

Bookings and revenue comparisons for the company’s market segments and other data are included in the supplementary information attached to this release, along with detailed statements of operations and balance sheets.

Guidance for Q3 2008 and Outlook for Q4 2008

FEI currently expects net sales for the seasonally slow third quarter of 2008 to be in the range of $144 million to $150 million. Bookings are expected to be above $150 million, and GAAP earnings per share are expected to be in the range of $0.04 to $0.09, assuming a 30% tax rate and restructuring charges estimated at $0.04. Earnings are expected to be negatively impacted compared with the second quarter due to the strong euro relative to the U.S. dollar, lower interest income on invested cash balances, and a higher tax rate due to restructuring costs.

On June 16, 2008, the company used existing cash balances to repay $148.9 million of zero-coupon convertible bonds. The convertible debt repayment reduced the weighted average total of outstanding shares used to calculate diluted earnings per share to 41.5 million shares in the second quarter and will reduce the total further to approximately 37.2 million shares in the third quarter.

The preliminary outlook for the fourth quarter is for increased revenue, gross margins and net income compared with the third quarter guidance.

Investor Conference Call — 2:00 p.m. PDT Tuesday, July 29, 2008

Parties interested in listening to FEI’s quarterly conference call may do so by dialing 1-800-257-1836 (domestic, toll-free) or 1-303-262-2053 (international) and asking for the FEI Second Quarter Earnings call. The call can also be accessed via the web by going to FEI’s Investor Relations page atwww.fei.com, where the webcast will also be archived. A telephone replay of the call will also be accessible for one month by dialing 1-800-405-2236 (US) or 1-303-590-3000 (international) and entering the access code 11117189#.

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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 third and fourth quarters of 2008; demand in our markets; the expected shipment of our backlog; expectations for future bookings; the impact of a weak dollar and our efforts to mitigate that impact; the timing, scope and impact of the planned restructuring, the impact of new products and the reduction in shares used to calculate diluted earnings per share. Factors that could affect these forward-looking statements include, but are not limited to, the strength of the Research and Industry, Electronics and Life Sciences segments; cyclical changes in the data storage and semiconductor industries, which are the major components of the Electronics market; fluctuations in foreign exchange, interest and tax rates; our continued ability to maintain deferral accounting of hedge transactions; valuation of the auction rate securities we hold and classification of them on the balance sheet; inability to produce a higher volume of products with existing personnel or facilities; reduced profitability due to failure to achieve or sustain margin improvement in service or product manufacturing; the relative mix of higher-margin and lower-margin products; failure to achieve expected benefits of restructuring plans; changes in restructuring plans; risks associated with shipping a high percentage of the company’s quarterly revenue in the last month of the quarter; difficulty in obtaining parts from suppliers; inability to achieve cost reductions in manufacturing or other areas; 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 additional 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 acquisitions and collaborations, including failure to achieve financial goals and integrate future acquisitions successfully. Please also refer to our Form 10-K, Forms 10-Q,

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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)

	June 29, 2008		March 30, 2008		December 31, 2007
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	84,467	$	215,343	$	280,593
Short-term investments in marketable securities		44,837		48,746		152,041
Short-term restricted cash		19,395		22,679		20,984
Receivables		172,998		184,109		157,120
Inventories		157,763		156,036		138,762
Deferred tax assets		3,524		5,242		4,788
Other current assets		41,171		38,842		36,273
Total current assets		524,155		670,997		790,561
Non-current investments in marketable securities		118,857		127,597		12,758
Long-term restricted cash		23,206		22,463		24,621
Non-current inventories		44,386		43,616		42,168
Property plant and equipment, net		76,173		74,945		74,700
Purchased technology, net		2,034		2,497		2,862
Goodwill		40,839		40,838		40,864
Deferred tax assets		3,359		3,314		2,641
Other assets, net		19,148		17,770		16,834
TOTAL	$	852,157	$	1,004,037	$	1,008,009
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	36,041	$	41,060	$	31,156
Accrued payroll liabilities		18,819		20,721		26,115
Accrued warranty reserves		7,159		6,888		6,585
Accrued agent commissions		9,344		10,207		9,119
Deferred revenue		53,567		61,558		60,681
Income taxes payable		6,945		4,973		3,106
Accrued restructuring, reorganization and relocation		2,149		517		580
Current portion of convertible debt		1,093		150,000		195,882
Other current liabilities		27,201		32,538		29,266
Total current liabilities		162,318		328,462		362,490
Convertible debt		115,000		115,000		115,000
Deferred tax liabilities		5,161		5,270		4,479
Other liabilities		48,216		43,255		38,646
SHAREHOLDERS’ EQUITY:
Preferred stock - 500 shares authorized; none issued and outstanding		—		—		—
Common stock - 70,000 shares authorized; 36,638, 36,464, and 36,405, shares issued and outstanding at June 29, 2008, March 30, 2008 and December 31, 2007		401,881		397,486		395,904
Retained earnings		39,403		34,552		26,398
Accumulated other comprehensive income		80,178		80,012		65,092
Total shareholders’ equity		521,462		512,050		487,394
TOTAL	$	852,157	$	1,004,037	$	1,008,009

FEI Company and Subsidiaries

Consolidated Statements of Operations

(In thousands, except per share amounts)

(Unaudited)

	Thirteen Weeks Ended									Twenty-Six Weeks Ended
	June 29, 2008			March 30, 2008			July 1, 2007			June 29, 2008			July 1, 2007
NET SALES:
Products	$	119,758		$	117,214		$	117,156		$	236,972		$	233,585
Service and components		34,281			34,432			31,399			68,713			62,929
Total net sales		154,039			151,646			148,555			305,685			296,514
COST OF SALES:
Products		70,384			66,983			63,140			137,367			125,303
Service and components		25,035			25,438			23,658			50,473			45,711
Total cost of sales		95,419			92,421			86,798			187,840			171,014
Gross profit		58,620			59,225			61,757			117,845			125,500
OPERATING EXPENSES:
Research and development		18,496			17,807			15,978			36,303			31,469
Selling, general and administrative		32,460			32,159			30,172			64,619			59,746
Amortization of purchased technology		459			453			443			912			883
Restructuring, reorganization and relocation		2,271			—			168			2,271			(404	)
Total operating expenses		53,686			50,419			46,761			104,105			91,694
OPERATING INCOME		4,934			8,806			14,996			13,740			33,806
OTHER INCOME (EXPENSE):
Interest income		4,118			4,999			5,684			9,117			9,972
Interest expense		(2,250	)		(2,231	)		(2,097	)		(4,481	)		(4,073	)
Gain on investment disposals and impairment, net		—			—			497			—			656
Other expense, net		(373	)		(867	)		(954	)		(1,240	)		(2,228	)
Total other income (expense), net		1,495			1,901			3,130			3,396			4,327
INCOME FROM CONTINUING OPERATIONS BEFORE TAXES		6,429			10,707			18,126			17,136			38,133
INCOME TAX EXPENSE		1,578			2,553			4,095			4,131			9,172
INCOME FROM CONTINUING OPERATIONS		4,851			8,154			14,031			13,005			28,961
DISCONTINUED OPERATIONS:
Gain (loss) from discontinued operations		—			—			—			—			—
Gain on disposal, net of income taxes		—			—			—			—			127
INCOME FROM DISCONTINUED OPERATIONS		—			—			—			—			127
NET INCOME	$	4,851		$	8,154		$	14,031		$	13,005		$	29,088
BASIC NET INCOME PER SHARE DATA:
From continuing operations	$	0.13		$	0.22		$	0.39		$	0.36		$	0.82
From discontinued operations	$	0.00		$	0.00		$	0.00		$	0.00		$	0.01
DILUTED NET INCOME PER SHARE DATA:
From continuing operations	$	0.12		$	0.20		$	0.33		$	0.32		$	0.68
From discontinued operations	$	0.00		$	0.00		$	0.00		$	0.00		$	0.01
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic		36,499			36,435			35,742			36,467			35,149
Diluted		41,509			42,370			46,471			41,940			45,889

FEI Company and Subsidiaries

Consolidated Statements of Operations

(Unaudited)

	Thirteen Weeks Ended(1)						Twenty-Six Weeks Ended
	June 29, 2008		March 30, 2008		July 1, 2007		June 29, 2008		July 1, 2007
NET SALES:
Products	77.7	%	77.3	%	78.9	%	77.5	%	78.8	%
Service	22.3	%	22.7	%	21.1	%	22.5	%	21.2	%
Total net sales	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%
COST OF SALES:
Products	45.7	%	44.2	%	42.5	%	44.9	%	42.3	%
Service	16.3	%	16.8	%	15.9	%	16.5	%	15.4	%
Total cost of sales	61.9	%	60.9	%	41.6	%	61.4	%	57.7	%
Gross profit	38.1	%	39.1	%	41.6	%	38.6	%	42.3	%
OPERATING EXPENSES:
Research and development	12.0	%	11.7	%	10.8	%	11.9	%	10.6	%
Selling, general and administrative	21.1	%	21.2	%	20.3	%	21.1	%	20.1	%
Amortization of purchased technology	0.3	%	0.3	%	0.3	%	0.3	%	0.3	%
Restructuring, reorganization and relocation	1.5	%	0.0	%	0.1	%	0.7	%	-0.1	%
Total operating expenses	34.9	%	33.2	%	31.5	%	34.1	%	30.9	%
OPERATING INCOME	3.2	%	5.8	%	10.1	%	4.5	%	11.4	%
OTHER INCOME (EXPENSE):
Interest income	2.7	%	3.3	%	3.8	%	3.0	%	3.4	%
Interest expense	-1.5	%	-1.5	%	-1.4	%	-1.5	%	-1.4	%
Gain on investment disposals and impairment, net	0.0	%	0.0	%	0.3	%	0.0	%	0.2	%
Other expense, net	-0.2	%	-0.6	%	-0.6	%	-0.4	%	-0.8	%
Total other income (expense), net	1.0	%	1.3	%	2.1	%	1.1	%	1.5	%
INCOME FROM CONTINUING OPERATIONS BEFORE TAXES	4.2	%	7.1	%	12.2	%	5.6	%	12.9	%
INCOME TAX EXPENSE	1.0	%	1.7	%	2.8	%	1.4	%	3.1	%
INCOME FROM CONTINUING OPERATIONS	3.1	%	5.4	%	9.4	%	4.3	%	9.8	%
DISCONTINUED OPERATIONS:
Gain (loss) from discontinued operations	0.0	%	0.0	%	0.0	%	0.0	%	0.0	%
Gain on disposal, net of income taxes	0.0	%	0.0	%	0.0	%	0.0	%	0.0	%
INCOME FROM DISCONTINUED OPERATIONS	0.0	%	0.0	%	0.0	%	0.0	%	0.0	%
NET INCOME	3.1	%	5.4	%	9.4	%	4.3	%	9.8	%

(1) Percentages may not add due to rounding.

FEI COMPANY

Supplemental Data Table 1

($ in millions, except per share amounts)

(Unaudited)

	Q2 Ended 6/29/2008			Q1 Ended 3/30/2008			Q2 Ended 7/1/2007
Income Statement Highlights
Consolidated sales	$	154.0		$	151.6		$	148.6
Gross margin		38.1	%		39.1	%		41.6	%
R&D spending	$	18.5		$	17.8		$	16.0
R&D (% of sales)		12.0	%		11.7	%		10.8	%
SG&A	$	32.5		$	32.2		$	30.2
SG&A (% of sales)		21.1	%		21.2	%		20.3	%
Stock compensation expense - COGS	$	0.2		$	0.3		$	0.2
Stock compensation expense - R&D	$	0.2		$	0.2		$	0.2
Stock compensation expense - SG&A	$	1.4		$	1.5		$	1.7
Net income from continuing operations	$	4.9		$	8.2		$	14.0
Net income from discontinued operations	$	0.0		$	0.0		$	0.0
Net income	$	4.9		$	8.2		$	14.0
Diluted earnings per share from continuing operations	$	0.12		$	0.20		$	0.33
Diluted earnings per share from discontinued operations	$	0.00		$	0.00		$	0.00
Interest income add back included in the calculation of diluted EPS	$	0.2		$	0.2		$	1.2
Sales by Market Segment
Electronics	$	37.7		$	46.5		$	61.1
Research & Industry	$	62.5		$	61.1		$	45.9
Life Sciences	$	19.5		$	9.6		$	10.2
Service and Components	$	34.3		$	34.4		$	31.4
Sales by Geography
North America	$	54.2		$	44.1		$	59.1
Europe	$	62.3		$	60.8		$	52.7
Asia-Pacific	$	37.5		$	46.7		$	36.8
Bookings
Total	$	140.4		$	150.5		$	136.2
Book-to-bill ratio		0.91			0.99			0.92
Backlog - total	$	296.0		$	309.6		$	298.2
Backlog - Service and Components	$	64.8		$	65.1		$	57.5
Bookings by Market Segment
Electronics	$	27.6		$	50.0		$	45.1
Research & Industry	$	57.1		$	39.2		$	40.8
Life Sciences	$	21.7		$	16.5		$	18.0
Service and Components	$	34.0		$	44.8		$	32.3
Balance Sheet Highlights
Cash, equivalents, investments, restricted cash	$	290.8		$	436.8		$	445.5
Operating cash generated (used)		($0.3	)		($2.2	)	$	4.1
Accounts receivable	$	173.0		$	184.1		$	169.5
Days sales outstanding (DSO)		102			111			104
Inventory turnover		2.4			2.5			3.0
Inventories	$	157.8		$	156.0		$	123.8
Property, plant and equipment	$	76.2		$	74.9		$	62.5
Fixed asset investment (during quarter)	$	2.3		$	5.3		$	3.1
Depreciation expense	$	4.3		$	4.1		$	3.3
Current liabilities	$	162.3		$	328.5		$	179.6
Working capital	$	361.8		$	342.5		$	581.2
Shareholders’ equity	$	521.5		$	512.1		$	427.3
Headcount (permanent and temporary)		1,804			1,857			1,773