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Home > Press > FEI Company Reports Record Bookings and Earnings for the Fourth Quarter of 2006

Abstract:
FEI Company (Nasdaq:FEIC) reported increases in bookings, revenue, earnings and cash for the
fourth quarter of 2006. Bookings and earnings were the highest in the company's history, and quarterly revenue was the second-highest ever.

FEI Company Reports Record Bookings and Earnings for the Fourth Quarter of 2006

Hillsboro, OR | Posted on February 6th, 2007

Net sales for the quarter ended December 31, 2006 of $140.3 million were up 21% compared to the third quarter of 2006 and 41% compared to the fourth quarter of 2005. Bookings in the latest quarter totaled $171.7 million, up 16% from the third quarter of 2006 and 50% from the fourth quarter of 2005. The book-to-bill ratio for the latest quarter was 1.22 to 1.00, and the backlog at the end of the quarter was $305.9 million, of which approximately 90% is expected to ship by the end of 2007. Income from continuing operations for the fourth quarter of 2006 was $11.9 million, compared with income from continuing operations of $6.9 million in the third quarter of 2006 and a net loss of $30.9 million from continuing operations in last year's fourth quarter. Diluted earnings per share from continuing operations in the latest quarter were $0.30, compared with diluted earnings per share of $0.18 from continuing operations in the third quarter of 2006 and a loss per share of $0.92 from continuing operations in the fourth quarter of 2005. The gross profit margin improved to 42.0% in the fourth quarter of 2006, compared with 40.6% in the third quarter and 28.4% in the prior year's fourth quarter. The tax rate from continuing operations for the fourth quarter of 2006 was 22.6%, compared with 32.2% in the third quarter. During the fourth quarter of 2006, the company sold its small wholly-owned software subsidiary, Knights Technology Inc. The financial statements for all reporting periods have been recast to reflect the results of Knights Technology as a discontinued operation. For the fourth quarter of 2006, the company reported an after-tax gain of $2.8 million, equal to $0.06 per diluted share, primarily from the sale of this discontinued operation. Including the impact of the discontinued operation, net income in the fourth quarter of 2006 was $14.7 million or $0.36 per diluted share. "We ended 2006 with a strong performance," said Don Kania, president and CEO of FEI. "Revenue and earnings exceeded our guidance and were above the prior quarter and the prior year. Bookings continued to be solid across all of our market divisions, with particular strength in our NanoResearch and Industry market, highlighted by a $11.5 million order from the Technical University of Denmark, the largest single order ever received by the company. Our gross margin improved to 42%, reflecting increased volume and improved product mix. We also increased our total cash and cash investment position during the quarter by $40.4 million, due to increased profitability, the sale of Knights and improved working capital utilization." For the full year 2006, bookings were $601.4 million, a 34% increase from 2005. Revenue for 2006 was $479.5 million, up 14% from 2005. Income from continuing operations for 2006 was $17.7 million or $0.47 per diluted share, compared with a loss from continuing operations of $78.5 million or $2.34 per share in 2005. Net income for 2006 was $20.0 million or $0.53 per diluted share compared with a net loss of $78.2 million or $2.33 per share in 2005. Bookings and revenue comparisons for the company's three market segments and other data are included in the supplementary information attached to this release, along with detailed statements of operations and balance sheets. The company's balance sheet remained strong. Total cash and investments at the end of the quarter were $406.1 million, and convertible debt at the end of the quarter remained unchanged from last quarter at $310.9 million. First Quarter Guidance FEI currently expects net sales for the first quarter of 2007 to be in the range of $137 million to $144 million. Bookings are expected to be approximately $150 million. Earnings per share are expected to be in the range of $0.27 to $0.32 per share. The company expects a tax rate for the first quarter of approximately 26%. Investor Conference Call -- 2:00 p.m. PST Tuesday, February 6, 2007 Parties interested in listening to FEI's quarterly conference call may do so by dialing 1-800-240-4186 (domestic, toll-free) or 1-303-262-2211 (international) and asking for the FEI Q4 Earnings call. The call can also be accessed via the web by going to FEI's Investor Relations page at http://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 11080858#.

 FEI Company and Subsidiaries
                         Consolidated Balance Sheets
                                (In thousands)
                                 (Unaudited)

                                          December 31, October 1, December 31,
    ASSETS                                    2006        2006        2005

    CURRENT ASSETS:
      Cash and cash equivalents             $110,656     $92,198     $58,766
      Short-term investments in
       marketable securities                 234,202     210,936     156,049
      Short-term restricted cash              20,172      26,645      20,140
      Receivables                            144,955     134,297      96,230
      Inventories                             97,470      88,830      84,879
      Deferred tax assets                      4,386       3,911       5,157
      Other current assets                    33,474      31,605      32,284
      Assets of discontinued operations            -       4,863       6,342

               Total current assets          645,315     593,285     459,847

    Non-current investments in marketable
     securities                               34,900      31,236      44,602

    Long-term restricted cash                  6,131       4,607         519

    Property plant and equipment, net         60,394      58,805      58,807

    Purchased technology, net                  4,494       4,877       6,354

    Goodwill                                  40,900      40,859      40,902

    Deferred tax assets                          542       1,440       1,095

    Other assets, net                         45,403      45,133      43,905

    TOTAL                                   $838,079    $780,242    $656,031

    LIABILITIES AND SHAREHOLDERS' EQUITY

    CURRENT LIABILITIES:
      Accounts payable                       $45,118     $32,514     $26,186
      Current accounts with Philips                -       1,508       1,964
      Accrued payroll liabilities             20,736      18,173       9,177
      Accrued warranty reserves                5,716       5,087       5,193
      Accrued agent commissions                6,175       6,283       8,387
      Deferred revenue                        48,992      36,100      42,442
      Income taxes payable                     9,203      12,359       9,021
      Accrued restructuring,
       reorganization and relocation           2,439       3,019       5,274
      Other current liabilities               28,577      25,084      22,485
      Liabilities of discontinued
       operations                                699       1,529       1,929

               Total current liabilities     167,655     141,656     132,058

    Convertible debt                         310,882     310,882     225,000

    Deferred tax liabilities                   4,062       2,195       1,947

    Other liabilities                          5,572       5,664       4,583

    SHAREHOLDERS' EQUITY:
      Preferred stock - 500 shares
       authorized; none issued and
       outstanding                                 -           -           -
      Common stock - 70,000 shares
       authorized; 34,051, 33,792 and
       33,800
         shares issued and outstanding at
          December 31, 2006, October 1,
          2006 and
         December 31, 2005                   348,479     340,315     332,125
      Accumulated deficit                    (36,041)    (50,695)    (56,081)
      Accumulated other comprehensive
       income                                 37,470      30,225      16,399

               Total shareholders' equity    349,908     319,845     292,443

    TOTAL                                   $838,079    $780,242    $656,031


                         FEI Company and Subsidiaries
                    Consolidated Statements of Operations
                   (In thousands, except per share amounts)
                                 (Unaudited)

                              Thirteen Weeks Ended            Year Ended
                         Dec. 31,    Oct. 1,  Dec. 31,   Dec. 31,   Dec. 31,
                           2006       2006      2005       2006       2005

    NET SALES:
      Products           $107,822   $84,653    $73,279   $360,643   $311,351
      Service and
       components          32,462    30,949     26,489   $118,848   $108,746
               Total net
                sales     140,284   115,602     99,768    479,491    420,097

    COST OF SALES:
      Products             58,499    47,085     50,587    197,742    195,834
      Service and
       components          22,880    21,582     20,895     85,303     79,069
               Total
                cost of
                sales      81,379    68,667     71,482    283,045    274,903

               Gross
                profit     58,905    46,935     28,286    196,446    145,194

    OPERATING EXPENSES:
      Research and
       development         16,112    13,907     13,694     57,528     56,577
      Selling, general
       and
       administrative      28,508    24,434     23,645    100,279     97,460
      Amortization of
       purchased
       technology             438       510        540      2,034      3,819
      CEO severance             -         -          -      9,324         -
      Restructuring,
       reorganization
       and relocation         (27)      249      4,616      3,285      8,544
      Asset impairment          -         -      8,607        465     25,351
      Merger costs              -         -          -        484          -
               Total
                operating
                expenses   45,031    39,100     51,102    173,399    191,751

    OPERATING  INCOME
     (LOSS)                13,874     7,835    (22,816)    23,047    (46,557)

    OTHER INCOME
     (EXPENSE):
      Interest income       4,154     3,663      2,233     13,150      7,818
      Interest expense     (2,110)   (2,018)    (1,461)    (7,355)    (9,342)
      Gain (loss) on
       investment
       disposals and
       impairment, net          -     1,374     (5,638)     1,374     (6,408)
      Other expense, net     (538)     (650)    (1,063)    (2,097)    (1,900)
    Total other income
     (expense), net         1,506     2,369     (5,929)     5,072     (9,832)

    INCOME (LOSS) FROM
     CONTINUING
     OPERATIONS BEFORE
     TAXES                 15,380    10,204    (28,745)    28,119    (56,389)

    INCOME TAX EXPENSE      3,481     3,284      2,109     10,467     22,071

    INCOME (LOSS) FROM
     CONTINUING
     OPERATIONS            11,899     6,920    (30,854)    17,652    (78,460)

    DISCONTINUED
     OPERATIONS
      (Loss) income from
       discontinued
       operations, net
       of income taxes       (580)     (412)       161       (947)       302
      Gain (loss) on
       disposal, net of
       income taxes         3,335         -          -      3,335          -
    INCOME (LOSS) FROM
     DISCONTINUED
     OPERATIONS             2,755      (412)       161      2,388        302

    NET INCOME (LOSS)     $14,654    $6,508   $(30,693)   $20,040   $(78,158)

    BASIC NET INCOME
     (LOSS) PER SHARE
     DATA:
      From continuing
       operations           $0.35     $0.20     $(0.92)     $0.52     $(2.34)
      From discontinued
       operations           $0.08    $(0.01)     $0.00      $0.07      $0.01

    DILUTED NET INCOME
     (LOSS) PER SHARE
     DATA:
      From continuing
       operations           $0.30     $0.18     $(0.92)     $0.47     $(2.34)
      From discontinued
       operations           $0.06    $(0.01)     $0.00      $0.06      $0.01

    WEIGHTED AVERAGE
     SHARES OUTSTANDING:
      Basic                33,886    33,752     33,718     33,818     33,595
      Diluted              44,058    39,572     33,718     39,746     33,595


                         FEI Company and Subsidiaries
                    Consolidated Statements of Operations
                                 (Unaudited)

                                      Thirteen Weeks Ended(1)  Year Ended (1)
                                    Dec. 31, Oct.1, Dec. 31, Dec. 31, Dec. 31,
                                      2006     2006    2005    2006    2005

    NET SALES:
      Products                          76.9%   73.2%   73.4%   75.2%   74.1%
      Service                           23.1%   26.8%   26.6%   24.8%   25.9%
               Total net sales         100.0%  100.0%  100.0%  100.0%  100.0%

    COST OF SALES:
      Products                          41.7%   40.7%   50.7%   41.2%   46.6%
      Service                           16.3%   18.7%   20.9%   17.8%   18.8%
               Total cost of sales      58.0%   59.4%   71.6%   59.0%   65.4%

               Gross profit             42.0%   40.6%   28.4%   41.0%   34.6%

    OPERATING EXPENSES:
      Research and development          11.5%   12.0%   13.7%   12.0%   13.5%
      Selling, general and
       administrative                   20.3%   21.1%   23.7%   20.9%   23.2%
      Amortization of purchased
       technology                        0.3%    0.4%    0.5%    0.4%    0.9%
      CEO severance                      0.0%    0.0%    0.0%    1.9%    0.0%
      Restructuring, reorganization
       and relocation                    0.0%    0.3%    4.6%    0.7%    2.0%
      Asset impairment                   0.0%    0.0%    8.6%    0.1%    6.0%
      Merger costs                       0.0%    0.0%    0.0%    0.1%    0.0%
               Total operating
                expenses                32.1%   33.8%   51.2%   36.2%   45.6%

    OPERATING INCOME (LOSS)              9.9%    6.8%  -22.9%    4.8%  -11.1%

    OTHER INCOME (EXPENSE):
      Interest income                    3.0%    3.2%    2.2%    2.7%    1.9%
      Interest expense                  -1.5%   -1.7%   -1.5%   -1.5%   -2.2%
      Gain (loss) on investment
       disposals and impairment, net     0.0%    1.2%   -5.7%    0.3%   -1.5%
      Other expense, net                -0.4%   -0.6%   -1.1%   -0.4%   -0.5%
    Total other expense, net             1.1%    2.0%   -5.9%    1.1%   -2.3%

    INCOME (LOSS) FROM CONTINUING
     OPERATIONS BEFORE TAXES            11.0%    8.8%  -28.8%    5.9%  -13.4%

    INCOME TAX EXPENSE                   2.5%    2.8%    2.1%    2.2%    5.3%

    INCOME (LOSS) FROM CONTINUING
     OPERATIONS                          8.5%    6.0%  -30.9%    3.7%  -18.7%

    DISCONTINUED OPERATIONS
      Income (loss) from discontinued
       operations, net of income taxes  -0.4%   -0.4%    0.2%   -0.2%    0.1%
      Gain (loss) on disposal, net of
       income taxes                      2.4%    0.0%    0.0%    0.7%    0.0%
    INCOME (LOSS) FROM DISCONTINUED
     OPERATIONS                          2.0%   -0.4%    0.2%    0.5%    0.1%

    NET INCOME (LOSS)                   10.4%    5.6%  -30.8%    4.2%  -18.6%

    (1) Percentages may not add due to rounding.


                                 FEI COMPANY
                          Supplemental Data Table 1
                  ($ in millions, except per share amounts)
                                 (Unaudited)

                                             Q4 Ended    Q3 Ended    Q4 Ended
                                            12/31/2006  10/1/2006   12/31/2005
    Income Statement Highlights
    Consolidated sales                        $140.3      $115.6       $99.8
    Gross margin                               42.0%       40.6%       28.4%
    R&D spending                               $16.1       $13.9       $13.7
    R&D (% of sales)                           11.5%       12.0%       13.7%
    SG&A                                       $28.5       $24.4       $23.6
    SG&A (% of sales)                          20.3%       21.1%       23.7%
    Stock compensation expense - COGS           $0.2        $0.2        $0.0
    Stock compensation expense - R&D            $0.2        $0.2        $0.0
    Stock compensation expense - SG&A           $1.4        $1.1        $0.0
    Net income (loss) from continuing
     operations                                $11.9        $6.9      ($30.9)
    Net income (loss) from discontinued
     operations                                 $2.8       ($0.4)       $0.2
    Net income (loss)                          $14.7        $6.5      ($30.7)
    Diluted earnings (loss) per share
     from continuing operations                $0.30       $0.18      ($0.92)
    Diluted earnings (loss) per share
     from discontinued operations              $0.06      ($0.01)      $0.00
    Sales by Market Segment
       NanoElectronics                         $42.4       $33.7       $24.6
       NanoResearch & Industry                 $55.3       $37.6       $40.8
       NanoBiology                             $10.1       $13.3        $7.9
       Service and Components                  $32.5       $31.0       $26.5
    Sales by Geography
    North America                              $49.9       $43.8       $31.9
    Europe                                     $52.2       $49.3       $31.5
    Asia Pacific                               $38.2       $22.5       $36.4
    Bookings
       Total                                  $171.7      $148.3      $114.4
       Book to bill ratio                       1.22        1.28        1.15
       Backlog - total                        $305.9      $274.5      $184.0
       Backlog - Service and Components        $46.8       $46.2       $38.5
    Bookings by Market Segment
       NanoElectronics                         $49.7       $51.5       $35.2
       NanoResearch & Industry                 $65.1       $43.2       $43.8
       NanoBiology                             $23.9       $23.4       $11.1
       Service and Components                  $33.0       $30.2       $24.3
    Balance Sheet Highlights
    Cash, equivalents, investments,
     restricted cash                          $406.1      $365.6      $280.1
    Operating cash generated (used)            $26.5       ($5.3)       $5.8
    Accounts receivable                       $145.0      $134.3       $96.2
    Days sales outstanding (DSO)                  94         106          88
    Inventory turnover                           3.5         3.1         2.9
    Inventories                                $97.5       $88.8       $84.9
    Property, plant and equipment              $60.4       $58.8       $58.8
    Fixed asset investment (during
     quarter)                                   $2.1        $2.0        $3.3
    Depreciation expense                        $3.3        $3.3        $3.3
    Current liabilities                       $167.7      $141.7      $132.1
    Working capital                           $477.7      $451.6      $327.8
    Shareholders' equity                      $349.9      $319.8      $292.4
    Headcount (permanent and temporary)        1,683       1,705       1,674


####

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(TM) are bringing the nanoscale within the grasp of
leading researchers and manufacturers. More information can be found online
at: http://www.fei.com .

Safe Harbor Statement

This news release contains forward-looking statements that include our
guidance for the first quarter of 2007. Factors that could affect these
forward-looking statements include, but are not limited to, the strength of
the NanoResearch and Industry, NanoElectronics and NanoBiology segments;
cyclical changes in the data storage and semiconductor industries, which
are the major components of the NanoElectronics market; fluctuations in
foreign exchange, interest and tax rates; our continued ability to maintain
deferral accounting of hedge transactions; reduced profitability due to
failure to achieve or sustain margin improvement or cost reductions; lower
than expected customer orders; cancellation of customer orders; 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; changes in the mix of products sold in a quarter;
unfavorable business conditions and lack of growth in the general economy,
both domestic and foreign; potential 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 research and
development expenses; inability to overcome technological barriers;
additional selling, general and administrative expenses; additional costs
related to future merger and acquisition activity; and failure of the
company to achieve anticipated benefits of current or future acquisitions,
including failure to achieve financial goals and integrate the 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.

For more information, please click here

Contacts:
Fletcher Chamberlin
Treasurer
Investor Relations Director
FEI Company
5350 NE Dawson Creek Drive
Hillsboro, OR 97124-5793
Phone: (503) 726-7710

Copyright © PR Newswire Association LLC.

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