EX-99.1 2 q32012exhibit991.htm PRESS RELEASE Q3 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 Bookings for the Third Quarter of 2012
Diluted EPS of $0.71 Increases 13% from a Year Ago
HILLSBORO, Ore., October 30, 2012 - FEI Company (NASDAQ: FEIC) reported record revenue and bookings for the third quarter ended September 30, 2012, and earnings were the highest for any third quarter in the company's history.
Third quarter revenue of $221.8 million was up 8% compared to $205.3 million in the third quarter of 2011 and up from $221.5 million in the second quarter of 2012.
The gross margin in the third quarter was 47.0%, compared with 44.4% in the third quarter of 2011 and 47.2% in the second quarter of 2012.
GAAP net income was $29.2 million, compared with $26.2 million in the third quarter of 2011 and $30.3 million in the second quarter of 2012. Earnings per share in this quarter were $0.71 per diluted share, compared with $0.63 per diluted share in the third quarter of 2011 and $0.74 per diluted share in the second quarter of 2012.
Net bookings were $223.3 million for the third quarter of 2012, up 20% from $186.4 million in the third quarter of 2011 and up 6% from $210.1 million in the second quarter of 2012. The book-to-bill ratio for the quarter was 1.01 to 1, and the backlog at the end of the quarter was $425.2 million.
Total cash, investments and restricted cash at the end of the quarter were $359.8 million, compared with $419.8 million at the end of the second quarter of 2012. During the third quarter, the company invested $63.2 million in two acquisitions, reached a patent cross-license agreement for $15.0 million and paid its first ever quarterly dividend of $3.0 million. Operating cash flow was positive $16.2 million for the quarter.
“We had another good quarter, with revenue growth in spite of a normally weak seasonal period and an uncertain economic environment,” commented Don Kania, president and CEO. “Margins were as expected and earnings were ahead of our guidance. Bookings growth compared with both last year's third quarter and this year's second quarter was driven by our electronics and natural resources businesses. Bookings growth was also strong in Europe compared with both prior periods. We are looking forward to a seasonally strong fourth quarter for bookings, revenue and earnings.”
Guidance for Q4 2012
For the fourth quarter of 2012, revenue is expected to be in the range of $223 million to $233 million, and bookings are expected to be another record of at least $225 million. GAAP earnings per share are expected to be in the range of $0.64 to $0.72, which includes restructuring costs estimated at $0.04, assuming a 20% effective tax rate.
Investor Conference Call -- 2:00 p.m. Pacific time, Tuesday, October 30, 2012
Parties interested in listening to FEI's quarterly conference call may do so by dialing 1-877-941-6010 (U.S., toll-free) or 1-480-629-9643 (international and toll), with the conference title: FEI Third Quarter Earnings Call, Conference ID 4570620. 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: 4570620#. 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 fourth quarter of 2012. Forward-looking statements may also be identified by words and phrases that refer to future expectations, such as “guidance”, “guiding” , “expect”, “expects”, “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, the potential “fiscal cliff” and 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 semiconductor industry (which is the major component 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 recent and 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)
 
 
September 30,
2012
 
July 1,
2012
 
December 31,
2011
ASSETS
 
 
 
 
 
CURRENT ASSETS:
 
 
 
 
 
Cash and cash equivalents
$
261,892

 
$
324,245

 
$
320,361

Short-term investments in marketable securities
37,914

 
35,990

 
16,213

Short-term restricted cash
5,993

 
10,672

 
22,564

Receivables, net
221,814

 
212,261

 
185,955

Inventories, net
196,504

 
193,297

 
182,010

Deferred tax assets
16,696

 
19,965

 
18,899

Other current assets
34,593

 
39,797

 
27,964

Total current assets
775,406

 
836,227

 
773,966

Non-current investments in marketable securities
31,840

 
24,059

 
53,341

Long-term restricted cash
22,165

 
24,876

 
43,669

Non-current inventories
66,366

 
64,029

 
57,575

Property plant and equipment, net
99,774

 
97,367

 
85,082

Intangible assets, net
52,416

 
15,347

 
6,938

Goodwill
129,667

 
79,743

 
58,053

Deferred tax assets
4,573

 
658

 
934

Other assets, net
9,185

 
10,042

 
10,351

TOTAL
$
1,191,392

 
$
1,152,348

 
$
1,089,909

LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 
 
 
 
CURRENT LIABILITIES:
 
 
 
 
 
Accounts payable
$
57,945

 
$
61,553

 
$
52,470

Accrued liabilities
58,855

 
53,969

 
67,386

Deferred revenue
69,722

 
73,042

 
72,730

Income taxes payable
8,355

 
17,756

 
11,260

Accrued restructuring, reorganization and relocation
—

 
—

 
2,213

Convertible debt
89,010

 
89,011

 
—

Other current liabilities
53,402

 
57,787

 
48,623

Total current liabilities
337,289

 
353,118

 
254,682

Convertible debt
—

 
—

 
89,011

Other liabilities
58,713

 
48,643

 
49,402

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

 
—

 
—

Common stock - 70,000 shares authorized; 38,107, 38,075 and 37,866 shares issued and outstanding at September 30, 2012, July 1, 2012 and December 31, 2011
507,912

 
503,799

 
493,698

Retained earnings
257,684

 
231,575

 
178,661

Accumulated other comprehensive income
29,794

 
15,213

 
24,455

Total shareholders’ equity
795,390

 
750,587

 
696,814

TOTAL
$
1,191,392

 
$
1,152,348

 
$
1,089,909





FEI Company and Subsidiaries
Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
 
 
Thirteen Weeks Ended
 
Thirty-Nine Weeks Ended
 
September 30,
2012
 
July 1,
2012
 
October 2,
2011
 
September 30,
2012
 
October 2,
2011
NET SALES:
 
 
 
 
 
 
 
 
 
Products
$
172,359

 
$
172,644

 
$
161,255

 
$
514,347

 
$
486,183

Service and components
49,426

 
48,808

 
44,080

 
146,445

 
127,253

Total net sales
221,785

 
221,452

 
205,335

 
660,792

 
613,436

COST OF SALES:
 
 
 
 
 
 
 
 
 
Products
86,333

 
85,993

 
85,228

 
259,664

 
255,079

Service and components
31,296

 
31,030

 
28,882

 
94,432

 
85,533

Total cost of sales
117,629

 
117,023

 
114,110

 
354,096

 
340,612

Gross margin
104,156

 
104,429

 
91,225

 
306,696

 
272,824

OPERATING EXPENSES:
 
 
 
 
 
 
 
 
 
Research and development
23,908

 
23,306

 
19,212

 
69,936

 
56,771

Selling, general and administrative
41,931

 
42,045

 
37,051

 
125,299

 
111,607

Restructuring, reorganization and relocation
—

 
—

 
47

 
—

 
1,115

Total operating expenses
65,839

 
65,351

 
56,310

 
195,235

 
169,493

OPERATING INCOME
38,317

 
39,078

 
34,915

 
111,461

 
103,331

OTHER INCOME (EXPENSE), NET
(1,712
)
 
(1,255
)
 
(601
)
 
(5,030
)
 
(1,716
)
INCOME BEFORE TAXES
36,605

 
37,823

 
34,314

 
106,431

 
101,615

INCOME TAX EXPENSE (BENEFIT)
7,447

 
7,530

 
8,137

 
21,313

 
27,066

NET INCOME
$
29,158

 
$
30,293

 
$
26,177

 
$
85,118

 
$
74,549

BASIC NET INCOME PER SHARE DATA
$
0.76

 
$
0.80

 
$
0.68

 
$
2.24

 
$
1.93

DILUTED NET INCOME PER SHARE DATA
0.71

 
0.74

 
0.63

 
2.08

 
1.80

WEIGHTED AVERAGE SHARES OUTSTANDING:
 
 
 
 
 
 
 
 
 
Basic
38,082

 
37,993

 
38,421

 
37,987

 
38,628

Diluted
41,771

 
41,614

 
42,030

 
41,644

 
42,284





FEI Company and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
 
 
Thirteen Weeks Ended (1)
 
Twenty-Six Weeks Ended (1)
 
September 30,
2012
 
July 1,
2012
 
October 2,
2011
 
September 30,
2012
 
October 2,
2011
NET SALES:
 
 
 
 
 
 
 
 
 
Products
77.7
 %
 
78.0
 %
 
78.5
 %
 
77.8
 %
 
79.3
 %
Service and components
22.3

 
22.0

 
21.5

 
22.2

 
20.7

Total net sales
100.0
 %
 
100.0
 %
 
100.0
 %
 
100.0
 %
 
100.0
 %
COST OF SALES:
 
 
 
 
 
 
 
 
 
Products
38.9
 %
 
38.8
 %
 
41.5
 %
 
39.3
 %
 
41.6
 %
Service and components
14.1

 
14.0

 
14.1

 
14.3

 
13.9

Total cost of sales
53.0
 %
 
52.8
 %
 
55.6
 %
 
53.6
 %
 
55.5
 %
GROSS MARGIN:
 
 
 
 
 
 
 
 
 
Products
49.9
 %
 
50.2
 %
 
47.1
 %
 
49.5
 %
 
47.5
 %
Service and components
36.7

 
36.4

 
34.5

 
35.5

 
32.8

Gross margin
47.0

 
47.2

 
44.4

 
46.4

 
44.5

OPERATING EXPENSES:
 
 
 
 
 
 
 
 
 
Research and development
10.8
 %
 
10.5
 %
 
9.4
 %
 
10.6
 %
 
9.3
 %
Selling, general and administrative
18.9

 
19.0

 
18.0

 
19.0

 
18.2

Restructuring, reorganization and relocation
—

 
—

 
—

 
—

 
0.2

Total operating expenses
29.7
 %
 
29.5
 %
 
27.4
 %
 
29.5
 %
 
27.6
 %
OPERATING INCOME
17.3
 %
 
17.6
 %
 
17.0
 %
 
16.9
 %
 
16.8
 %
OTHER INCOME (EXPENSE), NET
(0.8
)%
 
(0.6
)%
 
(0.3
)%
 
(0.8
)%
 
(0.3
)%
INCOME BEFORE TAXES
16.5
 %
 
17.1
 %
 
16.7
 %
 
16.1
 %
 
16.6
 %
INCOME TAX EXPENSE (BENEFIT)
3.4
 %
 
3.4
 %
 
4.0
 %
 
3.2
 %
 
4.4
 %
NET INCOME
13.1
 %
 
13.7
 %
 
12.7
 %
 
12.9
 %
 
12.2
 %
 
(1) 
Percentages may not add due to rounding.





FEI Company and Subsidiaries
Supplemental Data Table
(Dollars in millions, except per share amounts)
(Unaudited)
 
Q3 Ended September 30, 2012
Q2 Ended July 1, 2012
Q3 Ended October 2, 2011
 
39 Weeks Ended September 30, 2012
39 Weeks Ended October 2, 2011
Income Statement Highlights
 
 
 
 
 
 
Consolidated sales
$
221.8

$
221.5

$
205.3

 
$
660.8

$
613.4

Gross margin
47.0
%
47.2
%
44.4
%
 
46.4
%
44.5
%
Stock compensation expense
$
3.4

$
3.1

$
2.2

 
$
10.1

$
7.8

Net income
$
29.2

$
30.3

$
26.2

 
$
85.1

$
74.5

Diluted net income per share
$
0.71

$
0.74

$
0.63

 
$
2.08

$
1.80

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

$
0.5

$
0.5

 
$
1.4

$
1.4

Sales Highlights
 
 
 
 
 
 
Sales by Market Segment
 
 
 
 
 
 
Electronics
$
76.9

$
81.5

$
56.6

 
$
236.3

$
204.9

Materials Science
72.3

68.5

74.4

 
214.0

200.2

Life Sciences
23.2

22.7

30.2

 
64.1

81.0

Service and Components
49.4

48.8

44.1

 
146.4

127.3

Sales by Geography
 
 
 
 
 
 
USA & Canada
$
75.6

$
75.4

$
60.4

 
$
220.1

$
198.2

Europe
64.4

47.0

74.5

 
174.4

191.8

Asia-Pacific and Rest of World
81.8

99.1

70.4

 
266.3

223.4

Gross Margin by Market Segment
 
 
 
 
 
 
Electronics
55.3
%
54.6
%
54.3
%
 
54.5
%
52.5
%
Materials Science
47.2

46.5

40.9

 
46.4

42.9

Life Sciences
40.4

45.7

49.1

 
41.6

46.3

Service and Components
36.7

36.4

34.5

 
35.5

32.8

Bookings and Backlog
 
 
 
 
 
 
Bookings - Total
$
223.3

$
210.1

$
186.4

 
$
655.2

$
581.7

Book-to-bill Ratio
1.01

0.95

0.91

 
0.99

0.95

Backlog - Total
$
425.2

$
423.6

$
440.1

 
$
425.2

$
440.1

Backlog - Service and Components
94.7

95.8

91.9

 
94.7

91.9

Bookings by Market Segment
 
 
 
 
 
 
Electronics
$
70.3

$
51.5

$
40.3

 
$
208.8

$
180.9

Materials Science
89.2

78.0

75.8

 
232.3

195.4

Life Sciences
15.5

29.9

25.7

 
60.5

67.5

Service and Components
48.3

50.7

44.6

 
153.6

137.9

Bookings by Geography
 
 
 
 
 
 
USA & Canada
$
63.1

$
76.5

$
73.0

 
$
202.8

$
168.2

Europe
82.1

48.3

46.5

 
185.1

188.0

Asia-Pacific and Rest of World
78.1

85.3

66.9

 
267.3

225.5

Balance Sheet Highlights
 
 
 
 
 
 
Cash, equivalents, investments, restricted cash
$
359.8

$
419.8

$
435.7

 
$
359.8

$
435.7

Operating cash generated (used)
$
16.2

$
41.3

$
33.9

 
$
25.3

$
52.8

Accounts receivable
$
221.8

$
212.3

$
200.7

 
$
221.8

$
200.7

Days sales outstanding (DSO)
91

87

89

 
91

89

Inventory turnover
1.8

1.8

1.8

 
1.8

1.8

Fixed asset investment
$
3.1

$
5.4

$
3.3

 
$
14.7

$
9.1

Depreciation expense
$
5.8

$
5.3

$
4.8

 
$
16.3

$
14.0

Working capital
$
438.1

$
483.1

$
536.1

 
$
438.1

$
536.1

Headcount (permanent and temporary)
2,399

2,312

2,016

 
2,399

2,016

Euro average rate
1.250

1.289

1.416

 
1.285

1.407

Euro ending rate
1.293

1.264

1.343

 
1.293

1.343