EX-99.1 2 q22012exhibit991.htm PRESS RELEASE Q2 2012 Exhibit 99.1


Exhibit 99.1
NEWS RELEASE
For more information contact:
FEI Company
Fletcher Chamberlin
Treasurer & Communications Director
(503) 726-7710
fletcher.chamberlin@fei.com

FEI Reports Record Revenue and and Earnings for the Second Quarter of 2012
Revenue of $221.5 Million and Diluted EPS of $0.74
Net Bookings of $210.1 Million are a Second Quarter Record
HILLSBORO, Ore., August 2, 2012 - FEI Company (NASDAQ: FEIC) reported record revenue and earnings for the second quarter ended July 1, 2012. Net bookings were the highest for any second quarter in the company's history.
Second quarter revenue of $221.5 million was up 5% compared to $211.1 million in the second quarter of 2011 and up 2% from $217.6 million in the first quarter of 2012.
The gross margin in the second quarter was 47.2%, compared with 45.3% in the second quarter of 2011 and 45.1% in the first quarter of 2012.
GAAP net income was $30.3 million, up 16% from $26.1 million in the second quarter of 2011 and up 18% from $25.7 million in the first quarter of 2012. Earnings per share in this quarter were $0.74 per diluted share, compared with $0.62 per diluted share in the second quarter of 2011 and $0.63 per diluted share in the first quarter of 2012.
For the second quarter of 2012, net bookings were $210.1 million, compared with $204.5 million in the second quarter of 2011 and $221.8 million in the first quarter of 2012. Gross bookings were $217.2 million and were reduced by a $7.1 million revaluation of the backlog due to movements in foreign exchange rates in the quarter. The book-to-bill ratio for the quarter was 0.95 to 1, and the backlog at the end of the quarter was $423.6 million.
Total cash, investments and restricted cash at the end of the quarter were $419.8 million, compared with $396.4 million at the end of the first quarter of 2012.
“We recorded another strong quarter, as our market and geographic diversity continued to serve us well,” commented Don Kania, president and CEO. “Revenue growth for this quarter was powered by our Electronics business, while bookings growth in the latest quarter was led by our Materials Science and Life Sciences businesses. We saw significant bookings growth this quarter from the U.S. and Japan, following the strength we saw in Asia in the first quarter.
“Our gross margin increased over 200 basis points from the first quarter, propelled by product mix, improved service margins and a favorable foreign exchange environment,” continued Kania, “and moves us solidly toward our long-run targets. We are projecting second-half revenue and earnings will be above the first-half levels, with a normal seasonal pattern in the third quarter.”
Guidance for Q3 2012
For the third quarter of 2012, revenue is expected to be in the range of $210 million to $220 million, and bookings are expected to be another record of at least $210 million. GAAP earnings per share are expected to be in the range of $0.63 to $0.70, assuming a 20% effective tax rate.
Investor Conference Call -- 2:00 p.m. Pacific time, Thursday, August 2, 2012
Parties interested in listening to FEI's quarterly conference call may do so by dialing 1-877-941-1465 (U.S., toll-free) or 1-480-629-9773 (international and toll), with the conference title: FEI Second Quarter Earnings Call, Conference ID 4552887. A telephone replay of the call will be available at 1-800-406-7325 (U.S., toll-free) or 1-303-590-3030 (international and toll) with the passcode: 4552887#. The call can also be accessed via the web by going to FEI's Investor Relations page at www.fei.com, where the webcast will also be archived.




Safe Harbor Statement
This news release contains forward-looking statements that include statements regarding our guidance for revenue, earnings per share and bookings for the third quarter of 2012 and our outlook for the second half of 2012. Forward-looking statements may also be identified by words and phrases that refer to future expectations, such as “guidance”, “guiding” , “expect”, “expects”, “are expected”, “will”, “projecting”, “estimate”, and other similar words and phrases. Factors that could affect these forward-looking statements include, but are not limited to, the global economic environment; lower than expected customer orders and potential weakness of the Materials Science, Electronics and Life Sciences market segments; potential reduced governmental spending due to budget constraints and current uncertainty around global sovereign debt; limitations in our manufacturing capacity for certain products; problems in obtaining necessary product components in sufficient volumes on a timely basis from our supply chain; bankruptcy or insolvency of customers or suppliers; cyclical changes in the data storage and semiconductor industries (which are the major components of Electronics market revenue); fluctuations in foreign exchange, interest and tax rates; changes in tax rate and laws, accounting rules regarding taxes or agreements with tax authorities; the ongoing determination of the effectiveness of foreign exchange hedge transactions; 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; risks associated with building and shipping a high percentage of the company's quarterly revenue in the last month of the quarter; customer requests to defer planned shipments; 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, including new products, to find acceptance with customers; inability to develop or deploy products as expected or delays in shipping products due to technical problems or barriers; potential shipment or supply chain disruptions due to natural disasters or terrorist attacks; changes to or 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; 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, 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.
About FEI
FEI Company (Nasdaq: FEIC) is a leading supplier of scientific instruments for nanoscale applications across many industries: materials science, life sciences, semiconductors, data storage, natural resources and more. With more than 60 years of technological innovation and leadership, FEI has set the performance standard in transmission electron microscopes (TEM), scanning electron microscopes (SEM) and DualBeams™, which combine a SEM with a focused ion beam (FIB). Headquartered in Hillsboro, Ore., USA, FEI has over 2,300 employees and sales and service operations in more than 50 countries around the world. More information can be found at: www.fei.com.




FEI Company and Subsidiaries
Consolidated Balance Sheets
(In thousands)
(Unaudited)
 
 
July 1,
2012
 
April 1,
2012
 
December 31,
2011
ASSETS
 
 
 
 
 
CURRENT ASSETS:
 
 
 
 
 
Cash and cash equivalents
$
324,245

 
$
252,277

 
$
320,361

Short-term investments in marketable securities
35,990

 
60,061

 
16,213

Short-term restricted cash
10,672

 
18,434

 
22,564

Receivables, net
212,261

 
216,704

 
185,955

Inventories, net
193,297

 
194,051

 
182,010

Deferred tax assets
19,965

 
17,344

 
18,899

Other current assets
39,797

 
31,578

 
27,964

Total current assets
836,227

 
790,449

 
773,966

Non-current investments in marketable securities
24,059

 
33,010

 
53,341

Long-term restricted cash
24,876

 
32,611

 
43,669

Non-current inventories
64,029

 
61,687

 
57,575

Property plant and equipment, net
97,367

 
96,711

 
85,082

Goodwill
79,743

 
80,503

 
58,053

Deferred tax assets
658

 
1,618

 
934

Other assets, net
25,389

 
25,849

 
17,289

TOTAL
$
1,152,348

 
$
1,122,438

 
$
1,089,909

LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 
 
 
 
CURRENT LIABILITIES:
 
 
 
 
 
Accounts payable
$
61,553

 
$
58,039

 
$
52,470

Accrued liabilities
53,969

 
50,489

 
67,386

Deferred revenue
73,042

 
75,359

 
72,730

Income taxes payable
17,756

 
10,802

 
11,260

Accrued restructuring, reorganization and relocation
—

 
2,265

 
2,213

Convertible debt
89,011

 
—

 
—

Other current liabilities
57,787

 
47,600

 
48,623

Total current liabilities
353,118

 
244,554

 
254,682

Convertible debt
—

 
89,011

 
89,011

Other liabilities
48,643

 
46,966

 
49,402

SHAREHOLDERS’ EQUITY:
 
 
 
 
 
Preferred stock - 500 shares authorized; none issued and outstanding
—

 
—

 
—

Common stock - 70,000 shares authorized; 38,075, 37,935 and 37,866 shares issued and outstanding at July 1, 2012, April 1, 2012 and December 31, 2011
503,799

 
496,644

 
493,698

Retained earnings
231,575

 
204,328

 
178,661

Accumulated other comprehensive income
15,213

 
40,935

 
24,455

Total shareholders’ equity
750,587

 
741,907

 
696,814

TOTAL
$
1,152,348

 
$
1,122,438

 
$
1,089,909





FEI Company and Subsidiaries
Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
 
 
Thirteen Weeks Ended
 
Twenty-Six Weeks Ended
 
July 1,
2012
 
April 1,
2012
 
July 3,
2011
 
July 1,
2012
 
July 3,
2011
NET SALES:
 
 
 
 
 
 
 
 
 
Products
$
172,644

 
$
169,344

 
$
168,896

 
$
341,988

 
$
324,928

Service and components
48,808

 
48,211

 
42,245

 
97,019

 
83,173

Total net sales
221,452

 
217,555

 
211,141

 
439,007

 
408,101

COST OF SALES:
 
 
 
 
 
 
 
 
 
Products
85,993

 
87,338

 
86,256

 
173,331

 
169,851

Service and components
31,030

 
32,106

 
29,190

 
63,136

 
56,651

Total cost of sales
117,023

 
119,444

 
115,446

 
236,467

 
226,502

Gross margin
104,429

 
98,111

 
95,695

 
202,540

 
181,599

OPERATING EXPENSES:
 
 
 
 
 
 
 
 
 
Research and development
23,306

 
22,722

 
19,619

 
46,028

 
37,559

Selling, general and administrative
42,045

 
41,323

 
38,774

 
83,368

 
74,556

Restructuring, reorganization and relocation
—

 
—

 
783

 
—

 
1,068

Total operating expenses
65,351

 
64,045

 
59,176

 
129,396

 
113,183

OPERATING INCOME
39,078

 
34,066

 
36,519

 
73,144

 
68,416

OTHER INCOME (EXPENSE), NET
(1,255
)
 
(2,063
)
 
(893
)
 
(3,318
)
 
(1,115
)
INCOME BEFORE TAXES
37,823

 
32,003

 
35,626

 
69,826

 
67,301

INCOME TAX EXPENSE (BENEFIT)
7,530

 
6,336

 
9,566

 
13,866

 
18,929

NET INCOME
$
30,293

 
$
25,667

 
$
26,060

 
$
55,960

 
$
48,372

BASIC NET INCOME PER SHARE DATA
$
0.80

 
$
0.68

 
$
0.67

 
$
1.48

 
$
1.25

DILUTED NET INCOME PER SHARE DATA
0.74

 
0.63

 
0.62

 
1.37

 
1.16

WEIGHTED AVERAGE SHARES OUTSTANDING:
 
 
 
 
 
 
 
 
 
Basic
37,993

 
37,886

 
38,883

 
37,939

 
38,686

Diluted
41,614

 
41,518

 
42,566

 
41,579

 
42,359





FEI Company and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
 
 
Thirteen Weeks Ended (1)
 
Twenty-Six Weeks Ended (1)
 
July 1,
2012
 
April 1,
2012
 
July 3,
2011
 
July 1,
2012
 
July 3,
2011
NET SALES:
 
 
 
 
 
 
 
 
 
Products
78.0
 %
 
77.8
 %
 
80.0
 %
 
77.9
 %
 
79.6
 %
Service and components
22.0

 
22.2

 
20.0

 
22.1

 
20.4

Total net sales
100.0
 %
 
100.0
 %
 
100.0
 %
 
100.0
 %
 
100.0
 %
COST OF SALES:
 
 
 
 
 
 
 
 
 
Products
38.8
 %
 
40.1
 %
 
40.9
 %
 
39.5
 %
 
41.6
 %
Service and components
14.0

 
14.8

 
13.8

 
14.4

 
13.9

Total cost of sales
52.8
 %
 
54.9
 %
 
54.7
 %
 
53.9
 %
 
55.5
 %
GROSS MARGIN:
 
 
 
 
 
 
 
 
 
Products
50.2
 %
 
48.4
 %
 
48.9
 %
 
49.3
 %
 
47.7
 %
Service and components
36.4

 
33.4

 
30.9

 
34.9

 
31.9

Gross margin
47.2

 
45.1

 
45.3

 
46.1

 
44.5

OPERATING EXPENSES:
 
 
 
 
 
 
 
 
 
Research and development
10.5
 %
 
10.4
 %
 
9.3
 %
 
10.5
 %
 
9.2
 %
Selling, general and administrative
19.0

 
19.0

 
18.4

 
19.0

 
18.3

Restructuring, reorganization and relocation
—

 
—

 
0.4

 
—

 
0.3

Total operating expenses
29.5
 %
 
29.4
 %
 
28.0
 %
 
29.5
 %
 
27.7
 %
OPERATING INCOME
17.6
 %
 
15.7
 %
 
17.3
 %
 
16.7
 %
 
16.8
 %
OTHER INCOME (EXPENSE), NET
(0.6
)%
 
(0.9
)%
 
(0.4
)%
 
(0.8
)%
 
(0.3
)%
INCOME BEFORE TAXES
17.1
 %
 
14.7
 %
 
16.9
 %
 
15.9
 %
 
16.5
 %
INCOME TAX EXPENSE (BENEFIT)
3.4
 %
 
2.9
 %
 
4.5
 %
 
3.2
 %
 
4.6
 %
NET INCOME
13.7
 %
 
11.8
 %
 
12.3
 %
 
12.7
 %
 
11.9
 %
 
(1) 
Percentages may not add due to rounding.





FEI Company and Subsidiaries
Supplemental Data Table
(Dollars in millions, except per share amounts)
(Unaudited)
 
Q2 Ended July 1, 2012
Q1 Ended April 1, 2012
Q2 Ended July 3, 2011
 
26 Weeks Ended July 1, 2012
26 Weeks Ended July 3, 2011
Income Statement Highlights
 
 
 
 
 
 
Consolidated sales
$
221.5

$
217.6

$
211.1

 
$
439.0

$
408.1

Gross margin
47.2
%
45.1
%
45.3
%
 
46.1
%
44.5
%
Stock compensation expense
$
3.1

$
3.6

$
2.8

 
$
6.7

$
5.6

Net income
$
30.3

$
25.7

$
26.1

 
$
56.0

$
48.4

Diluted net income per share
$
0.74

$
0.63

$
0.62

 
$
1.37

$
1.16

Interest income add back included in the calculation of diluted EPS
$
0.5

$
0.5

$
0.5

 
$
0.9

$
0.9

Sales Highlights
 
 
 
 
 
 
Sales by Market Segment
 
 
 
 
 
 
Electronics
$
81.5

$
77.9

$
87.0

 
$
159.4

$
148.3

Materials Science
68.5

73.2

55.1

 
141.7

125.8

Life Sciences
22.7

18.3

26.8

 
40.9

50.8

Service and Components
48.8

48.2

42.2

 
97.0

83.2

Sales by Geography
 
 
 
 
 
 
USA & Canada
$
75.4

$
69.1

$
74.2

 
$
144.5

$
137.8

Europe
47.0

63.0

59.2

 
110.0

117.3

Asia-Pacific and Rest of World
99.1

85.5

77.7

 
184.5

153.0

Gross Margin by Market Segment
 
 
 
 
 
 
Electronics
54.6
%
53.6
%
51.9
%
 
54.1
%
51.8
%
Materials Science
46.5

45.5

44.9

 
46.0

44.1

Life Sciences
45.7

38.1

47.7

 
42.3

44.6

Service and Components
36.4

33.4

30.9

 
34.9

31.9

Bookings and Backlog
 
 
 
 
 
 
Bookings - Total
$
210.1

$
221.8

$
204.5

 
$
431.9

$
395.3

Book-to-bill Ratio
0.95

1.02

0.97

 
0.98

0.97

Backlog - Total
$
423.6

$
434.9

$
459.1

 
$
423.6

$
459.1

Backlog - Service and Components
95.8

93.9

91.4

 
95.8

91.4

Bookings by Market Segment
 
 
 
 
 
 
Electronics
$
51.5

$
87.0

$
76.1

 
$
138.5

$
140.6

Materials Science
78.0

65.1

64.5

 
143.1

119.6

Life Sciences
29.9

15.1

18.7

 
45.0

41.8

Service and Components
50.7

54.6

45.2

 
105.3

93.3

Bookings by Geography
 
 
 
 
 
 
USA & Canada
$
76.5

$
63.2

$
46.7

 
$
139.7

$
95.2

Europe
48.3

54.7

76.0

 
103.0

141.5

Asia-Pacific and Rest of World
85.3

103.9

81.8

 
189.2

158.6

Balance Sheet Highlights
 
 
 
 
 
 
Cash, equivalents, investments, restricted cash
$
419.8

$
396.4

$
471.3

 
$
419.8

$
471.3

Operating cash generated (used)
$
41.3

$
(32.2
)
$
9.2

 
$
9.1

$
18.9

Accounts receivable
$
212.3

$
216.7

$
207.1

 
$
212.3

$
207.1

Days sales outstanding (DSO)
87

91

89

 
87

89

Inventory turnover
1.8

1.9

1.9

 
1.8

1.9

Fixed asset investment
$
5.4

$
6.2

$
3.9

 
$
11.6

$
5.8

Depreciation expense
$
5.3

$
5.2

$
4.7

 
$
10.5

$
9.2

Working capital
$
483.1

$
545.9

$
557.4

 
$
483.1

$
557.4

Headcount (permanent and temporary)
2,312

2,221

1,957

 
2,312

1,957

Euro average rate
1.289

1.315

1.439

 
1.302

1.417

Euro ending rate
1.264

1.335

1.449

 
1.264

1.449