EX-99.1 2 exhibit991.htm EXHIBIT Exhibit 99.1 12.31.2013


Exhibit 99.1
NEWS RELEASE

For more information contact:
FEI Company                
Fletcher Chamberlin    
Investor Relations & Communications Director
(503) 726-7710
fletcher.chamberlin@fei.com

FEI Reports Record Bookings, Revenue and Earnings for the Fourth Quarter and Full Year 2013
Q4 Revenue of $265.3 million; Q4 Bookings of $256.8 million
Q4 GAAP EPS of $0.97
HILLSBORO, Ore., February 5, 2014 - FEI Company (NASDAQ: FEIC) reported record bookings, revenue, earnings and cash flow from operations for 2013 and for the fourth quarter. Fourth quarter revenue of $265.3 million was up 15% compared to $230.9 million in the fourth quarter of 2012 and up 21% from $218.5 million in the third quarter of 2013.
Net income for the fourth quarter was $41.3 million, up 38% from $29.8 million in the fourth quarter of 2012 and up 44% from $28.6 million in the third quarter of 2013. Diluted earnings per share for the fourth quarter were $0.97, compared with $0.72 in the fourth quarter of 2012 and $0.67 in the third quarter of 2013.
For the fourth quarter, net bookings were $256.8 million, an increase of 11% from net bookings of $230.5 million in the fourth quarter of 2012 and an increase of 2% from $251.0 million in the third quarter of 2013. The backlog at the end of the quarter was $473.5 million.
The gross margin in the fourth quarter was 47.0%, compared with 47.2% in the fourth quarter of 2012 and 47.9% the third quarter of 2013.
For the full year 2013, revenue was $927.5 million, an all-time record and compared with $891.7 million in 2012. Bookings were $976.2 million, also a record, compared with $885.7 million in 2012. Net income was $126.7 million or $3.01 per diluted share, compared with $114.9 million or $2.80 per diluted share for 2012. Gross margin for the year increased to 47.3% from 46.6% in 2012.
Total cash, investments and restricted cash at the end of the year was $591.2 million, an increase of $174.2 million from the end of 2012 and up $82.3 million from the end of the third quarter. Net cash provided by operating activities for the fourth quarter was $97.7 million, driven by increased earnings and significant improvement in days sales outstanding and inventory turnover.
“A solid fourth quarter completed another good year for FEI,” commented Don Kania, president and CEO. “For the year, bookings were up 10% over 2012, revenue grew by 4% and net income was up 10%. Cash flow from operations




was 2.8 times the 2012 total. Our continued investment in R&D yielded the largest flow of new products in the company’s history. We invested in the business with the purchase of our Eindhoven facility, equipment and fit-out of our new leased facility in the Czech Republic and expansion of our sales and service operations in China, Brazil, Australia and the Middle East. We continued to execute our strategy of expanding our served available market with the development of new workflow solutions.
“As we look to 2014,” Kania continued, “we forecast first-half revenue to be around $500 million and full-year revenue growth to be in the 10% to 14% range compared with 2013, including the impact of the acquisition of Lithicon and the licensing agreement with the Australian National University (ANU), which we announced today.”
Guidance for Q1-2014
For the first quarter of 2014, revenue is expected to be in the range of $228 million to $238 million, and bookings are expected to be above $250 million. GAAP earnings per share are expected to be in the range of $0.60 to $0.70, assuming a 19% effective tax rate. Included in the GAAP earnings per share guidance are costs of $0.03 per share in expected restructuring charges, as well as a $0.03 cost for the impact of the acquisition of Lithicon and the ANU agreement announced today.


Investor Conference Call -- 2:00 p.m. Pacific time, Wednesday, February 5, 2014
Parties interested in listening to FEI's quarterly conference call may do so by dialing 1-877-941-0843 (U.S., toll-free) or 1-480-629-9818 (international and toll), with the conference title: FEI Fourth Quarter Earnings Call, Conference ID 4663371. 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: 4663371#. 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 guidance for revenue, earnings per share and bookings for the first quarter of 2014, revenue expectations for the first half and full year 2014, the impact of certain items on our results for these periods and assumptions about tax rates. Forward-looking statements may also be identified by words and phrases that refer to future expectations, such as “guidance”, “guiding”, “forecast”, “toward”, “plan”, “expect”, “expects”, “are expected”, “is expected”, “will”, “projecting”, “look forward” 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 Science and Industry market segments; lower than expected customer orders for recently-introduced new products; potential disruption in manufacturing or unexpected additional costs due to the transition from older to newer products; potential reduced governmental spending due to budget constraints and uncertainty around U.S. or other countries’ sovereign debt; potential disruption in the company’s operations due to organization changes; risks associated with building and shipping a high percentage of the company’s quarterly revenue in the last month of the quarter; cyclical changes in the data storage and semiconductor industries, which are the major components of Industry market segment revenue; continued weakness in the mining industry, which is also a component of Industry market segment revenue; 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; the relative mix of higher-margin and lower-margin products; risks associated with a high percentage of the company’s revenue coming from “turns” business, when the order for a product is placed by the customer in the same quarter as the planned shipment;




fluctuations in foreign exchange rates, which can affect margins or the competitive pricing of our products; additional costs related to future merger and acquisition activity; failure of the company to achieve anticipated benefits of acquisitions and collaborations, including failure to achieve financial goals and integrate acquisitions successfully; reduced profitability due to failure to achieve or sustain margin improvement in service or product manufacturing; potential 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 deploy products as expected or delays in shipping products due to technical problems or barriers, especially with regard to recently introduced TEM products; bankruptcy or insolvency of customers or suppliers; 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; potential shipment or supply chain disruptions due to natural disasters or terrorist attacks; changes to or potential additional restructurings and reorganizations not presently anticipated; changes in trade policies and tariff regulations; changes in the regulatory environment in the nations where we do business; and additional selling, general and administrative or research and development expenses. 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) designs, manufactures and supports a broad range of high-performance microscopy workflow solutions that provide images and answers at the micro-, nano- and picometer scales. Its innovation and leadership enable customers in industry and science to increase productivity and make breakthrough discoveries. Headquartered in Hillsboro, Ore., USA, FEI has over 2,600 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)
 
 
December 31,
2013
 
September 29,
2013
 
December 31,
2012
ASSETS
 
 
 
 
 
CURRENT ASSETS:
 
 
 
 
 
Cash and cash equivalents
$
384,170

 
$
335,502

 
$
266,302

Short-term investments in marketable securities
108,191

 
98,009

 
79,532

Short-term restricted cash
18,798

 
15,328

 
14,522

Receivables, net
194,418

 
211,980

 
211,160

Inventories, net
181,725

 
195,658

 
192,540

Deferred tax assets
15,114

 
13,120

 
12,245

Other current assets
28,324

 
28,534

 
29,332

Total current assets
930,740

 
898,131

 
805,633

Non-current investments in marketable securities
47,278

 
24,414

 
29,179

Long-term restricted cash
32,718

 
35,668

 
27,425

Non-current inventories
62,104

 
64,270

 
65,116

Property plant and equipment, net
157,829

 
151,580

 
109,872

Intangible assets, net
47,197

 
48,279

 
51,499

Goodwill
136,152

 
135,184

 
131,320

Deferred tax assets
1,751

 
1,084

 
5,092

Other assets, net
10,315

 
9,778

 
9,087

TOTAL
$
1,426,084

 
$
1,368,388

 
$
1,234,223

LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 
 
 
 
CURRENT LIABILITIES:
 
 
 
 
 
Accounts payable
$
73,247

 
$
75,944

 
$
54,847

Accrued liabilities
65,527

 
56,812

 
59,273

Deferred revenue
91,563

 
86,406

 
74,736

Income taxes payable
4,579

 
3,545

 
1,343

Accrued restructuring, reorganization and relocation
50

 
366

 
2,692

Convertible debt
—

 
—

 
89,010

Other current liabilities
38,648

 
42,088

 
36,902

Total current liabilities
273,614

 
265,161

 
318,803

Other liabilities
74,902

 
73,831

 
75,517

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

 
—

 
—

Common stock - 70,000 shares authorized; 42,136, 41,757 and 38,478 shares issued and outstanding at December 31, 2013, September 29, 2013 and December 31, 2012
637,482

 
626,541

 
516,907

Retained earnings
392,958

 
356,703

 
284,440

Accumulated other comprehensive income
47,128

 
46,152

 
38,556

Total shareholders’ equity
1,077,568

 
1,029,396

 
839,903

TOTAL
$
1,426,084

 
$
1,368,388

 
$
1,234,223





FEI Company and Subsidiaries
Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
 
 
Thirteen Weeks Ended
 
Fifty-Two Weeks Ended
 
December 31,
2013
 
September 29,
2013
 
December 31,
2012
 
December 31,
2013
 
December 31,
2012
NET SALES:
 
 
 
 
 
 
 
 
 
Products
$
207,154

 
$
162,452

 
$
177,149

 
$
709,438

 
$
691,496

Service
58,137

 
56,044

 
53,797

 
218,016

 
200,242

Total net sales
265,291

 
218,496

 
230,946

 
927,454

 
891,738

COST OF SALES:
 
 
 
 
 
 
 
 
 
Products
104,873

 
79,894

 
87,560

 
352,630

 
347,224

Service
35,826

 
33,857

 
34,452

 
136,039

 
128,884

Total cost of sales
140,699

 
113,751

 
122,012

 
488,669

 
476,108

Gross margin
124,592

 
104,745

 
108,934

 
438,785

 
415,630

OPERATING EXPENSES:
 
 
 
 
 
 
 
 
 
Research and development
26,328

 
25,397

 
25,029

 
101,947

 
94,965

Selling, general and administrative
48,051

 
45,346

 
44,420

 
179,560

 
169,719

Restructuring, reorganization and relocation
—

 
—

 
2,859

 
1,090

 
2,859

Total operating expenses
74,379

 
70,743

 
72,308

 
282,597

 
267,543

OPERATING INCOME
50,213

 
34,002

 
36,626

 
156,188

 
148,087

OTHER INCOME (EXPENSE), NET
(968
)
 
(661
)
 
(2,509
)
 
(4,586
)
 
(7,539
)
INCOME BEFORE TAXES
49,245

 
33,341

 
34,117

 
151,602

 
140,548

INCOME TAX EXPENSE (BENEFIT)
7,972

 
4,735

 
4,315

 
24,929

 
25,628

NET INCOME
$
41,273

 
$
28,606

 
$
29,802

 
$
126,673

 
$
114,920

BASIC NET INCOME PER SHARE DATA
$
0.98

 
$
0.69

 
$
0.78

 
$
3.13

 
$
3.02

DILUTED NET INCOME PER SHARE DATA
0.97

 
0.67

 
0.72

 
3.01

 
2.80

WEIGHTED AVERAGE SHARES OUTSTANDING:
 
 
 
 
 
 
 
 
 
Basic
41,963

 
41,750

 
38,295

 
40,446

 
38,065

Diluted
42,591

 
42,455

 
41,897

 
42,395

 
41,728





FEI Company and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
 
 
Thirteen Weeks Ended (1)
 
Fifty-Two Weeks Ended (1)
 
December 31,
2013
 
September 29,
2013
 
December 31,
2012
 
December 31,
2013
 
December 31,
2012
NET SALES:
 
 
 
 
 
 
 
 
 
Products
78.1
 %
 
74.4
 %
 
76.7
 %
 
76.5
 %
 
77.5
 %
Service
21.9

 
25.6

 
23.3

 
23.5

 
22.5

Total net sales
100.0
 %
 
100.0
 %
 
100.0
 %
 
100.0
 %
 
100.0
 %
COST OF SALES:
 
 
 
 
 
 
 
 
 
Products
39.5
 %
 
36.6
 %
 
37.9
 %
 
38.0
 %
 
38.9
 %
Service
13.5

 
15.5

 
14.9

 
14.7

 
14.5

Total cost of sales
53.0
 %
 
52.1
 %
 
52.8
 %
 
52.7
 %
 
53.4
 %
GROSS MARGIN:
 
 
 
 
 
 
 
 
 
Products
49.4
 %
 
50.8
 %
 
50.6
 %
 
50.3
 %
 
49.8
 %
Service
38.4

 
39.6

 
36.0

 
37.6

 
35.6

Gross margin
47.0

 
47.9

 
47.2

 
47.3

 
46.6

OPERATING EXPENSES:
 
 
 
 
 
 
 
 
 
Research and development
9.9
 %
 
11.6
 %
 
10.8
 %
 
11.0
 %
 
10.6
 %
Selling, general and administrative
18.1

 
20.8

 
19.2

 
19.4

 
19.0

Restructuring, reorganization and relocation
—

 
—

 
1.2

 
0.1

 
0.3

Total operating expenses
28.0
 %
 
32.4
 %
 
31.3
 %
 
30.5
 %
 
30.0
 %
OPERATING INCOME
18.9
 %
 
15.6
 %
 
15.9
 %
 
16.8
 %
 
16.6
 %
OTHER INCOME (EXPENSE), NET
(0.4
)%
 
(0.3
)%
 
(1.1
)%
 
(0.5
)%
 
(0.8
)%
INCOME BEFORE TAXES
18.6
 %
 
15.3
 %
 
14.8
 %
 
16.3
 %
 
15.8
 %
INCOME TAX EXPENSE (BENEFIT)
3.0
 %
 
2.2
 %
 
1.9
 %
 
2.7
 %
 
2.9
 %
NET INCOME
15.6
 %
 
13.1
 %
 
12.9
 %
 
13.7
 %
 
12.9
 %
 
(1) 
Percentages may not add due to rounding.





FEI Company and Subsidiaries
Supplemental Data Table
(Dollars in millions, except per share amounts)
(Unaudited)
 
Q4 Ended December 31, 2013
Q3 Ended September 29, 2013
Q4 Ended December 31, 2012
 
Year Ended December 31, 2013
Year Ended December 31, 2012
Income Statement Highlights
 
 
 
 
 
 
 Consolidated sales
$
265.3

$
218.5

$
230.9

 
$
927.5

$
891.7

 Gross margin
47.0
%
47.9
%
47.2
%
 
47.3
%
46.6
%
 Stock compensation expense
$
5.0

$
4.6

$
4.1

 
$
18.3

$
14.2

 Net income
$
41.3

$
28.6

$
29.8

 
$
126.7

$
114.9

 Diluted net income per share
$
0.97

$
0.67

$
0.72

 
$
3.01

$
2.80

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

$
—

$
0.5

 
$
0.8

$
1.8

Sales Highlights
 
 
 
 
 
 
Sales by Market Segment
 
 
 
 
 
 
Industry
$
121.3

$
103.6

$
91.6

 
$
427.7

$
433.4

Science
144.0

114.9

139.3

 
499.8

458.3

Sales by Geography
 
 
 
 
 
 
USA & Canada
$
65.5

$
65.2

$
71.7

 
$
260.6

$
291.7

Europe
71.6

63.1

70.3

 
270.7

244.7

Asia-Pacific and Rest of World
128.2

90.2

88.9

 
396.2

355.3

Gross Margin by Market Segment
 
 
 
 
 
 
Industry
51.2
%
54.2
%
49.1
%
 
52.1
%
50.8
%
Science
43.4

42.2

45.9

 
43.2

42.6

Bookings and Backlog
 
 
 
 
 
 
 Bookings - Total
$
256.8

$
251.0

$
230.5

 
$
976.2

$
885.7

 Book-to-bill Ratio
0.97

1.15

1.00

 
1.05

0.99

 Backlog - Total
$
473.5

$
482.0

$
424.8

 
$
473.5

$
424.8

 Backlog - Service
124.2

126.2

96.9

 
124.2

96.9

Bookings by Market Segment
 
 
 
 
 
 
Industry
$
114.7

$
98.8

$
93.0

 
$
424.9

$
412.6

Science
142.1

152.2

137.5

 
551.3

473.1

Bookings by Geography
 
 
 
 
 
 
USA & Canada
$
78.5

$
63.7

$
78.4

 
$
276.7

$
281.2

Europe
76.8

81.0

83.7

 
280.7

268.8

Asia-Pacific and Rest of World
101.5

106.3

68.4

 
418.8

335.7

Balance Sheet Highlights
 
 
 
 
 
 
Cash, equivalents, investments, restricted cash
$
591.2

$
508.9

$
417.0

 
$
591.2

$
417.0

Operating cash generated (used)
$
97.7

$
48.7

$
59.6

 
$
237.9

$
85.0

Accounts receivable
$
194.4

$
212.0

$
211.2

 
$
194.4

$
211.2

Days sales outstanding (DSO)
67

89

83

 
67

83

Inventory turnover
2.2

1.8

1.9

 
2.2

1.9

Fixed asset investment
$
9.8

$
11.0

$
7.4

 
$
63.4

$
23.7

Depreciation expense
$
6.3

$
6.0

$
6.5

 
$
23.7

$
22.8

Working capital
$
657.1

$
633.0

$
486.8

 
$
657.1

$
486.8

Headcount (permanent and temporary)
2,611

2,609

2,518

 
2,611

2,518

Euro average rate
1.361

1.325

1.295

 
1.327

1.287

Euro ending rate
1.376

1.350

1.321

 
1.376

1.321

Yen average rate
99.990

98.831

80.896

 
97.339

79.616

Yen ending rate
105.155

98.625

86.025

 
105.155

86.025