EX-99.1 2 dex991.htm PRESS RELEASE ISSUED BY FEI COMPANY, DATED MAY 5, 2009 Press Release issued by FEI Company, dated May 5, 2009

Exhibit 99.1

LOGO

NEWS RELEASE

For more information contact:

FEI Company

Fletcher Chamberlin

Treasurer & Communications Director

(503) 726-7710

fletcher.chamberlin@fei.com

FEI Reports First Quarter Sales of $141.8 Million and E.P.S. of $0.17

Gross Margins Increase Sequentially and Year-over-Year

HILLSBORO, Ore., May 5, 2009 — FEI Company (NASDAQ: FEIC) reported improved gross margins on modestly lower revenue for the first quarter of 2009, compared with both the fourth quarter of 2008 and the comparable quarter a year ago. Earnings per share of $0.17 were above last year’s first-quarter level and above the guidance provided in February. Revenue was near the high end of the guidance range, and bookings exceeded the company’s forecast.

For the quarter ended April 5, 2009, net sales of $141.8 million were down 7% compared to the fourth quarter of 2008 and down 6% compared to the first quarter of 2008. Gross bookings were $139.1 million before $8.5 million of currency revaluation of the backlog, resulting in net bookings of $130.6 million, compared with $153.8 million in the fourth quarter of 2008 and $150.5 million for the first quarter of 2008. The backlog at the end of the quarter was $319.3 million, approximately 90% of which is expected to ship in the next 12 months.

Gross margin in the latest quarter was 41.4%, the highest level in the last six quarters. Operating income was $8.1 million, compared with $11.2 million in the fourth quarter of 2008 and $8.8 million in last year’s first quarter. Restructuring expenses in the latest quarter reduced operating income by $1.0 million or $0.02 per diluted share. Net income for the first quarter of 2009 was $6.3 million, compared with $7.3 million in the fourth quarter of 2008 and $5.0 million in last year’s first quarter. Diluted earnings per share in the latest quarter were $0.17, compared with $0.20 in the fourth quarter of 2008 and $0.14 in the first quarter of 2008.

 

1

Results for the first quarter of 2008 have been restated for the effect of the required adoption of FSP No. APB 14-1, “Accounting for Convertible Debt Instruments That May Be Settled in Cash Upon Conversion (Including Partial Cash Conversion).” The restatement reduced reported net income and diluted earnings per share for last year’s first quarter by $3.1 million and $0.06 per share. The restatement is related to the company’s zero percent convertible notes that were paid off in June 2008.

During the quarter the company substantially improved its balance sheet and liquidity. Total cash and investments increased by $53.6 million in the quarter to $372.9 million, and net cash decreased by $2.2 million. The company borrowed $70.8 million against its portfolio of auction rate securities and redeemed $15 million of its 2.875% convertible notes. Net cash provided by operating activities was positive $1.2 million for the quarter.

“We had a solid quarter in a difficult environment, with a good flow of orders and strong operational performance,” said Don Kania, president and CEO of FEI. “Gross margins improved significantly despite modestly lower revenues, driven by an improved product mix, a stronger dollar and our operating improvements. Operating expenses remained under tight control while we continued our investment in new products. Life Sciences, Electronics and Service bookings increased compared to the fourth quarter. Research & Industry bookings declined from the record levels of the fourth quarter, but they were up compared to the first quarter a year ago.

“For the second quarter, we are expecting similar overall levels of demand and operating results,” continued Kania, “In the second half, we see the potential for stronger Research and Life Sciences bookings, driven by economic stimulus programs around the world, in addition to continued penetration into the Life Sciences equipment market.”

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. Additional supplementary information realigning the geographic breakdown of revenue for the previous eight quarters is also included.

Guidance for Q2 2009

Assuming a euro/dollar exchange rate of $1.35, FEI expects net sales in the second quarter of 2009 to be in the range of $136 million to $142 million. Bookings are expected to be at least $135 million. GAAP earnings per share are expected to be in the range of $0.10 to $0.14, including estimated restructuring charges of $800,000. In comparison to the first quarter results, second quarter earnings are expected to be affected by a higher tax rate and higher non-operating expense, due in part to lower interest income.

 

2

Investor Conference Call — 2:00 p.m. PDT Tuesday, May 5, 2009

Parties interested in listening to FEI’s quarterly conference call may do so by dialing 1-800-366-7640 (domestic, toll-free) or

1-303-262-2005 (international) and asking for the FEI First Quarter Earnings call. 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. 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 11130592#.

About FEI

FEI (Nasdaq: FEIC) is the world leader in pioneering technologies and applications that deliver imaging solutions for 3D characterization, analysis and modification/prototyping, with resolutions down to the sub-Ångström level. With a 60-year history of technological innovation and leadership, FEI has set the performance standard across TEM, SEM and DualBeam categories with its Titan™, Magellan™ and Helios™ product families. FEI’s customers, working in advanced research and manufacturing, are supported by field-experienced applications specialists. They have open access to FEI’s prestigious global user network so they can succeed in accelerating nanoscale discovery. FEI’s NanoPorts in North America, Europe and Asia provide centers of technical excellence where its world-class community of customers and specialists collaborate. FEI has sales and service operations in more than 50 countries around the world. More information can be found at: www.fei.com.

Safe Harbor Statement

This news release contains forward-looking statements that include our guidance for the second quarter of 2009 and the outlook for the second half of 2009; the expected shipment of our backlog; expectations about operating expenses; expectations for future bookings and backlog; the impact of foreign exchange rates on our results; expectations about foreign currency rates; government spending (including economic stimulus spending) and market demand for life sciences and nanotechnology generally; expected tax rates and interest income; and global macro-economic trends. Factors that could affect these forward-looking statements include, but are not limited to, the ongoing global and financial market economic crisis; the timing, size, execution and ultimate success of government stimulus programs; the strength and potential weakness of the Research & Industry, Electronics and Life Sciences market 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; changes in tax rate and laws and accounting rules regarding taxes; the ongoing determination of the effectiveness of foreign exchange hedge transactions; valuation of the auction rate securities we hold and classification of them on the balance sheet; 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; 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; bankruptcy or insolvency of customers or suppliers; 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, 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.

 

3

FEI Company and Subsidiaries

Consolidated Balance Sheets

(In thousands)

(Unaudited)

 

          As Adjusted (1)  
      April 5,
2009		    December 31,
2008		     March 30,
2008		  

ASSETS

        

CURRENT ASSETS:

        

Cash and cash equivalents

    $ 209,172    $ 146,521     $ 215,343  

Short-term investments in marketable securities

      16,988      32,901       48,746  

Short-term restricted cash

      9,626      10,994       22,679  

Receivables

      153,855      139,733       184,109  

Inventories

      141,394      141,609       156,036  

Deferred tax assets

      3,148      2,884       5,242  

Other current assets

      35,346      32,926       38,842  
                       

Total current assets

    $ 569,529      507,568       670,997  

Non-current investments in marketable securities

      97,880      94,098       127,597  

Long-term restricted cash

      39,271      34,833       22,463  

Non-current inventories

      40,893      41,072       43,616  

Property plant and equipment, net

      74,975      76,991       74,945  

Goodwill

      40,943      40,964       40,838  

Deferred tax assets

      1,998      2,188       3,314  

Other assets, net

      29,254      34,458       20,181  
                       

TOTAL

    $ 894,743    $ 832,172     $ 1,003,951  
                       

LIABILITIES AND SHAREHOLDERS’ EQUITY

        

CURRENT LIABILITIES:

        

Accounts payable

    $ 38,669    $ 34,964     $ 41,060  

Accrued liabilities

      34,408      35,540       37,816  

Deferred revenue

      55,327      44,135       61,558  

Income taxes payable

      4,376      3,040       4,973  

Accrued restructuring, reorganization and relocation

      111      240       517  

Short-term line of credit

      70,800      —         —    

Current portion of convertible debt

      —        —         146,721  

Other current liabilities

      39,374      33,732       32,538  
                       

Total current liabilities

    $ 243,065    $ 151,651       325,183  

Convertible debt

      100,000      115,000       115,000  

Other liabilities

      30,779      46,432       48,525  

SHAREHOLDERS’ EQUITY:

        

Preferred stock - 500 shares authorized; none issued and outstanding

      —        —         —    

Common stock - 70,000 shares authorized; 37,349, 37,286, and 36,464, shares issued and outstanding at April 5, 2009, December 31, 2008, and March 30, 2008

      472,762      469,893       449,354  

Retained earnings (defecit)

      5,171      (1,168 )     (14,123 )

Accumulated other comprehensive income

      42,966      50,364       80,012  
                       

Total shareholders’ equity

      520,899      519,089       515,243  
                       

TOTAL

    $ 894,743    $ 832,172     $ 1,003,951  
                       

 

(1) Restated for the effects of the adoption of FSP No. APB 14-1, “Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement).”

FEI Company and Subsidiaries

Consolidated Statements of Operations

(In thousands, except per share amounts)

(Unaudited)

 

     Thirteen Weeks Ended  
     April 5,
2009		     December 31,
2008		     As Adjusted (1)
March 30,
2008		  

NET SALES:

       

Products

    $ 108,562     $ 117,903     $ 117,214  

Service and components

      33,271       33,823       34,432  
                        

Total net sales

      141,833       151,726       151,646  
                        

COST OF SALES:

       

Products

      59,887       67,791       66,983  

Service and components

      23,254       23,941       25,438  
                        

Total cost of sales

      83,141       91,732       92,421  
                        

Gross profit

      58,692       59,994       59,225  
                        

OPERATING EXPENSES:

       

Research and development

      16,780       16,907       17,807  

Selling, general and administrative

      32,826       31,097       32,612  

Restructuring, reorganization and relocation

      962       820       —    
                        

Total operating expenses

      50,568       48,824       50,419  
                        

OPERATING INCOME

      8,124       11,170       8,806  
                        

OTHER INCOME (EXPENSE):

       

Interest income

      1,133       2,535       4,999  

Interest expense

      (1,912 )     (1,736 )     (5,352 )

Other, net

      459       (1,818 )     (867 )
                        

Total other income (expense), net

      (320 )     (1,019 )     (1,220 )
                        

INCOME BEFORE TAXES

      7,804       10,151       7,586  

INCOME TAX EXPENSE

      1,466       2,802       2,553  
                        

NET INCOME

    $ 6,338     $ 7,349     $ 5,033  
                        

BASIC NET INCOME PER SHARE DATA:

    $ 0.17     $ 0.20     $ 0.14  
                        

DILUTED NET INCOME PER SHARE DATA:

    $ 0.17     $ 0.20     $ 0.14  
                        

WEIGHTED AVERAGE SHARES OUTSTANDING:

       

Basic

      37,322       37,183       36,435  
                        

Diluted

      37,616       37,446       36,841  
                        

 

(1) Restated for the effects of the adoption of FSP No. APB 14-1, “Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement).”

FEI Company and Subsidiaries

Consolidated Statements of Operations

(Unaudited)

 

     Thirteen Weeks Ended (1)  
     April 5,
2009		     December 31,
2008		     As Adjusted (2)
March 30,
2008		  

NET SALES:

       

Products

    76.5 %   77.7 %   77.3 %

Service and components

    23.5 %   22.3 %   22.7 %
                  

Total net sales

    100.0 %   100.0 %   100.0 %
                  

COST OF SALES:

       

Products

    42.2 %   44.7 %   44.2 %

Service and components

    16.4 %   15.8 %   16.8 %
                  

Total cost of sales

    58.6 %   60.5 %   60.9 %
                  

Gross profit

    41.4 %   39.5 %   39.1 %
                  

OPERATING EXPENSES:

       

Research and development

    11.8 %   11.1 %   11.7 %

Selling, general and administrative

    23.1 %   20.5 %   21.5 %

Restructuring, reorganization and relocation

    0.7 %   0.5 %   0.0 %
                  

Total operating expenses

    35.7 %   32.2 %   33.2 %
                  

OPERATING INCOME

    5.7 %   7.4 %   5.8 %
                  

OTHER INCOME (EXPENSE):

       

Interest income

    0.8 %   1.7 %   3.3 %

Interest expense

    -1.3 %   -1.1 %   -3.5 %

Other, net

    0.3 %   -1.2 %   -0.6 %
                  

Total other income (expense), net

    -0.2 %   -0.7 %   -0.8 %
                  

INCOME BEFORE TAXES

    5.5 %   6.7 %   5.0 %
                  

INCOME TAX EXPENSE

    1.0 %   1.8 %   1.7 %
                  

NET INCOME

    4.5 %   4.8 %   3.3 %
                  

 

(1) Percentages may not add due to rounding.

 

(2) Restated for the effects of the adoption of FSP No. APB 14-1, “Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement).”

FEI COMPANY

Supplemental Data Table 1

($ in millions, except per share amounts)

(Unaudited)

 

     Q1 Ended
5-Apr-2009		     Q4 Ended
31-Dec-2008		     Q1 Ended
30-Mar-2008		  

Income Statement Highlights

       

Consolidated sales

    $ 141.8     $ 151.7     $ 151.6  

Gross margin

      41.4 %     39.5 %     39.1 %

R&D spending

    $ 16.8     $ 16.9     $ 17.8  

R&D (% of sales)

      11.8 %     11.1 %     11.7 %

SG&A

    $ 32.8     $ 31.1     $ 32.6  

SG&A (% of sales)

      23.1 %     20.5 %     21.5 %

Stock compensation expense - COGS

    $ 0.4     $ 0.3     $ 0.3  

Stock compensation expense - R&D

    $ 0.3     $ 0.3     $ 0.2  

Stock compensation expense - SG&A

    $ 2.2     $ 1.8     $ 1.5  

Net income

    $ 6.3     $ 7.3     $ 5.0  

Diluted earnings per share

    $ 0.17     $ 0.20     $ 0.14  

Interest income add back included in the calculation of diluted EPS

    $ 0.0     $ 0.0     $ 0.0  

Sales by Market Segment

       

Electronics

    $ 29.3     $ 32.4     $ 46.5  

Research & Industry

    $ 58.3     $ 67.3     $ 61.1  

Life Sciences

    $ 20.9     $ 18.2     $ 9.6  

Service and Components

    $ 33.3     $ 33.8     $ 34.4  

Sales by Geography

       

USA & Canada

    $ 55.5     $ 54.8     $ 54.2  

Europe

    $ 48.9     $ 56.9     $ 39.8  

Asia-Pacific and Rest of World

    $ 37.4     $ 40.0     $ 57.6  

Bookings

       

Total

    $ 130.6     $ 153.8     $ 150.5  

Book-to-bill ratio

      0.92       1.01       0.99  

Backlog - total

    $ 319.3     $ 330.5     $ 309.6  

Backlog - Service and Components

    $ 62.5     $ 57.0     $ 65.1  

Bookings by Market Segment

       

Electronics

    $ 33.2     $ 22.2     $ 50.0  

Research & Industry

    $ 39.4     $ 82.2     $ 39.2  

Life Sciences

    $ 19.2     $ 17.3     $ 16.5  

Service and Components

    $ 38.8     $ 32.1     $ 44.8  

Balance Sheet Highlights

       

Cash, equivalents, investments, restricted cash

    $ 372.9     $ 319.3     $ 436.8  

Operating cash generated (used)

    $ 1.2     $ 25.1       ($2.1 )

Accounts receivable

    $ 153.9     $ 139.7     $ 184.1  

Days sales outstanding (DSO)

      99       84       111  

Inventory turnover

      2.4       2.5       2.5  

Inventories

    $ 141.4     $ 141.6     $ 156.0  

Property, plant and equipment

    $ 75.0     $ 77.0     $ 74.9  

Fixed asset investment (during quarter)

    $ 3.0     $ 3.5     $ 5.3  

Depreciation expense

    $ 4.0     $ 3.9     $ 4.1  

Current liabilities

    $ 243.1     $ 151.7     $ 325.2  

Working capital

    $ 326.5     $ 355.9     $ 345.8  

Shareholders’ equity

    $ 520.9     $ 519.1     $ 515.2  

Headcount (permanent and temporary)

      1,788       1,803       1,857  

FEI COMPANY

Supplemental Data Table 2

($ in millions, except per share amounts)

(Unaudited)

 

    Q1 Ended
5-Apr-2009		   Q4 Ended
31-Dec-2008		   Q3 Ended
28-Sep-2008		   Q2 Ended
29-Jun-2008		   Q1 Ended
30-Mar-2008		   Q4 Ended
31-Dec-2007		   Q3 Ended
30-Sep-2007		   Q2 Ended
1-Jul-2007		   Q1 Ended
1-Apr-2007

Revised Geographic Revenue Distribution

                  

USA & Canada

   $ 55.5   $ 54.8   $ 52.3   $ 54.3   $ 54.2   $ 63.0   $ 46.5   $ 59.1   $ 63.1

Europe

   $ 48.9   $ 56.9   $ 48.8   $ 56.1   $ 39.8   $ 54.1   $ 54.4   $ 37.3   $ 32.8

Asia-Pacific and Rest of World

   $ 37.4   $ 40.0   $ 40.7   $ 43.6   $ 57.6   $ 33.1   $ 44.9   $ 52.2   $ 52.1