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Home > Press > FEI Company Reports Record Sales and Earnings for the First Quarter of 2007

Abstract:
FEI Company (Nasdaq: FEIC) reported increases in revenue, earnings and cash for the first quarter of 2007. Net sales and earnings were the highest for any quarter in the company's history, and quarterly bookings were the second-highest and the largest first-quarter total ever.

FEI Company Reports Record Sales and Earnings for the First Quarter of 2007

HILLSBORO, OR | Posted on April 30th, 2007

Net sales for the quarter ended April 1, 2007 of $148.0 million were up
5% compared to the fourth quarter of 2006 and up 32% compared to the first
quarter of 2006. Bookings in the quarter totaled $152.6 million, compared
with $171.7 million in the fourth quarter of 2006 and $149.0 million in the
first quarter of 2006. The book-to-bill ratio for the quarter was 1.03 to
1.00, and the backlog at the end of the quarter was $310.5 million, of
which approximately 90% is expected to ship by the end of the first quarter
of 2008.

Income from continuing operations for the first quarter of 2007 was
$14.9 million, compared with income from continuing operations of $11.9
million in the fourth quarter of 2006 and a net loss of $5.2 million from
continuing operations in last year's first quarter. Diluted earnings per
share from continuing operations in the latest quarter were $0.36, compared
with diluted earnings per share of $0.30 from continuing operations in the
fourth quarter of 2006 and a loss per share of $0.15 from continuing
operations in the first quarter of 2006. The gross profit margin improved
to 43.1% in the first quarter of 2007, compared with 42.0% in the fourth
quarter and 40.8% in the prior year's first quarter. The tax rate from
continuing operations for the first quarter of 2007 was 25.4%, compared
with 22.6% in the fourth quarter and 37.2% for the full year 2006.

Including the impact of the discontinued operations, net income in the
first quarter of 2007 was $15.1 million or $0.36 per diluted share. For the
first quarter of 2007, the company reported an after-tax gain of $127,000
related to the sale of Knights Technology Inc., a small wholly-owned
software subsidiary which was sold in the fourth quarter of 2006. The
financial statements for all reporting periods have been recast to reflect
the results of Knights Technology as a discontinued operation. In addition,
in the first quarter of 2006, the company recorded severance,
restructuring, asset impairment and merger costs that reduced pretax income
by a total of $12.5 million.

"The year has started out on track," said Don Kania, president and CEO
of FEI, "as we continued to demonstrate progress in several strategic areas
-- ramping revenue, improving gross margins and building our presence in
Asia. Bookings continued to be solid and within our expected range, and we
increased shipments to bring the book-to-bill ratio closer to 1 to 1. Our
gross margin improved to 43.1%, reflecting increased volume and improved
revenue mix. Bookings from Asia including Japan increased 59% from last
year's first quarter and 45% from the fourth quarter. The company also
increased its total cash and investment position during the quarter by
$19.7 million, due to continued profitability and employee stock option
exercise proceeds."

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 $425.7 million, and convertible debt at the
end of the quarter remained unchanged at $310.9 million.

Second Quarter Guidance

FEI currently expects net sales for the second quarter of 2007 to be in
the range of $145 million to $152 million. Bookings are expected to be in
line with revenue and earnings per share are expected to be in the range of
$0.32 to $0.37 per share.

Investor Conference Call -- 2:00 p.m. PDT Monday, April 30, 2007

Parties interested in listening to FEI's quarterly conference call may
do so by dialing 1-800-219-6110 (domestic, toll-free) or 1-303-205-0033
(international) and asking for the FEI Q1 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 11088415#.

####

About FEI Company
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 second quarter of 2007 and the expected timing of shipments from our backlog. 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, improved product mix, higher volume or cost reductions; 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; 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; 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 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.

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

                                                    April 1,      December 31,
    ASSETS                                            2007           2006

    CURRENT ASSETS:
     Cash and cash equivalents                      $165,335       $110,656
     Short-term investments in
      marketable securities                          237,534        234,202
     Short-term restricted cash                       11,056         20,172
     Receivables                                     163,325        144,955
     Inventories                                     107,803         97,470
     Deferred tax assets                               4,414          4,386
     Other current assets                             39,279         33,474

       Total current assets                          728,746        645,315

    Non-current investments in marketable securities   7,466         34,900

    Long-term restricted cash                          4,344          6,131

    Non-current service inventories                   38,448         37,920

    Property plant and equipment, net                 61,225         60,394

    Purchased technology, net                          4,068          4,494

    Goodwill                                          40,897         40,900

    Deferred tax assets                                9,898            542

    Other assets, net                                  8,065          7,483

    TOTAL                                           $903,157       $838,079

    LIABILITIES AND SHAREHOLDERS' EQUITY

    CURRENT LIABILITIES:
     Accounts payable                                $52,172        $45,118
     Accrued payroll liabilities                      18,309         20,736
     Accrued warranty reserves                         6,481          5,716
     Accrued agent commissions                         6,145          6,175
     Deferred revenue                                 58,245         48,992
     Income taxes payable                              1,260          9,203
     Accrued restructuring, reorganization
      and relocation                                     639          2,439
     Other current liabilities                        27,267         29,276

        Total current liabilities                    170,518        167,655

    Convertible debt                                 310,882        310,882

    Deferred tax liabilities                           4,312          4,062

    Other liabilities                                 24,254          5,572

    SHAREHOLDERS' EQUITY:
     Preferred stock - 500 shares authorized;
      none issued and outstanding                         --             --
     Common stock - 70,000 shares authorized;
      35,311 and 34,052 shares issued and
      outstanding at April 1, 2007 and
      December 31, 2006                              371,126        348,479
     Accumulated deficit                             (16,882)       (36,041)
     Accumulated other comprehensive income           38,947         37,470

        Total shareholders' equity                   393,191        349,908

    TOTAL                                           $903,157       $838,079


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

                                              Thirteen Weeks Ended
                                    April 1,      December 31,    April 2,
                                      2007            2006          2006

    NET SALES:
     Products                      $116,429        $107,822       $85,122
     Service and components          31,530          32,462        27,144
        Total net sales             147,959         140,284       112,266

    COST OF SALES:
     Products                        62,163          58,499        45,666
     Service and components          22,053          22,880        20,850
        Total cost of sales          84,216          81,379        66,516

        Gross profit                 63,743          58,905        45,750

    OPERATING EXPENSES:
     Research and development        15,491          16,112        13,359
     Selling, general and
      administrative                 29,574          28,508        23,352
     Amortization of purchased
      technology                        440             438           541
     CEO severance                       --              --         9,324
     Restructuring, reorganization
      and relocation                   (572)            (27)        2,239
     Asset impairment                    --              --           465
     Merger costs                        --              --           452
        Total operating expenses     44,933          45,031        49,732

    OPERATING INCOME (LOSS)          18,810          13,874        (3,982)

    OTHER INCOME (EXPENSE):
     Interest income                  4,288           4,154         2,244
     Interest expense                (1,976)         (2,110)       (1,658)
     Gain (loss) on investment
      disposals and impairment, net     159              --            --
     Other expense, net              (1,274)           (538)         (383)
        Total other income
         (expense), net               1,197           1,506           203

    INCOME (LOSS) FROM CONTINUING
     OPERATIONS BEFORE TAXES         20,007          15,380        (3,779)

    INCOME TAX EXPENSE                5,077           3,481         1,397

    INCOME (LOSS) FROM
     CONTINUING OPERATIONS           14,930          11,899        (5,176)

    DISCONTINUED OPERATIONS:
     (Loss) income from discontinued
      operations, net of income taxes    --            (580)          (45)

     Gain (loss) on disposal,
      net of income taxes               127           3,335            --
    INCOME (LOSS) FROM
     DISCONTINUED OPERATIONS            127           2,755           (45)

    NET INCOME (LOSS)               $15,057         $14,654       $(5,221)

    BASIC NET INCOME (LOSS)
     PER SHARE DATA:
     From continuing operations       $0.43           $0.35        $(0.15)
     From discontinued operations     $0.01           $0.08        $(0.00)

    DILUTED NET INCOME (LOSS)
     PER SHARE DATA:
     From continuing operations       $0.36           $0.30        $(0.15)
     From discontinued operations     $0.00           $0.06        $(0.00)

    WEIGHTED AVERAGE SHARES
     OUTSTANDING:
     Basic                           34,556          33,886        33,867
     Diluted                         45,307          44,079        33,867


                           FEI Company and Subsidiaries
                      Consolidated Statements of Operations
                                   (Unaudited)

                                            Thirteen Weeks Ended (1)
                                    April 1,      December 31,     April 2,
                                      2007            2006          2006

    NET SALES:
     Products                         78.7%           76.9%         75.8%
     Service                          21.3%           23.1%         24.2%
        Total net sales              100.0%          100.0%        100.0%

    COST OF SALES:
     Products                         42.0%           41.7%         40.7%
     Service                          14.9%           16.3%         18.6%
        Total cost of sales           56.9%           58.0%         59.2%

        Gross profit                  43.1%           42.0%         40.8%

    OPERATING EXPENSES:
     Research and development         10.5%           11.5%         11.9%
     Selling, general and
      administrative                  20.0%           20.3%         20.8%
     Amortization of purchased
      technology                       0.3%            0.3%          0.5%
     CEO severance                     0.0%            0.0%          8.3%
     Restructuring, reorganization
      and relocation                  -0.4%           -0.0%          2.0%
     Asset impairment                  0.0%            0.0%          0.4%
     Merger costs                      0.0%            0.0%          0.4%
        Total operating expenses      30.4%           32.1%         44.3%

    OPERATING INCOME (LOSS)           12.7%            9.9%         -3.5%

    OTHER INCOME (EXPENSE):
     Interest income                   2.9%            3.0%          2.0%
     Interest expense                 -1.3%           -1.5%         -1.5%
     Gain (loss) on investment
      disposals and impairment, net    0.1%            0.0%          0.0%
     Other expense, net               -0.9%           -0.4%         -0.3%
        Total other expense, net       0.8%            1.1%          0.2%

    INCOME (LOSS) FROM CONTINUING
     OPERATIONS BEFORE TAXES          13.5%           11.0%         -3.4%

    INCOME TAX EXPENSE                 3.4%            2.5%          1.2%

    INCOME (LOSS) FROM
     CONTINUING OPERATIONS            10.1%            8.5%         -4.6%

    DISCONTINUED OPERATIONS:
     Income (loss) from discontinued
      operations, net of income taxes  0.0%           -0.4%         -0.0%
     Gain (loss) on disposal,
      net of income taxes              0.1%            2.4%          0.0%

    INCOME (LOSS) FROM
     DISCONTINUED OPERATIONS           0.1%            2.0%         -0.0%

    NET INCOME (LOSS)                 10.2%           10.4%         -4.7%

    (1)  Percentages may not add due to rounding.


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

                                    Q1 Ended       Q4 Ended       Q1 Ended
                                    4/1/2007      12/31/2006      4/2/2006
    Income Statement Highlights
     Consolidated sales              $148.0          $140.3        $112.3
     Gross margin                      43.1%           42.0%         40.8%
     R&D spending                     $15.5           $16.1         $13.4
     R&D (% of sales)                  10.5%           11.5%         11.9%
     SG&A                             $29.6           $28.5         $23.4
     SG&A (% of sales)                 20.0%           20.3%         20.8%
     Stock compensation
      expense - COGS                   $0.1            $0.2          $0.1
     Stock compensation
      expense - R&D                    $0.2            $0.2          $0.2
     Stock compensation
      expense - SG&A                   $1.6            $1.4          $1.0
     Stock compensation
      expense - Restructuring
      (CEO Severance)                  $0.0            $0.0          $7.0
     Net income (loss) from
      continuing operations           $14.9           $11.9         ($5.2)
     Net income (loss) from
      discontinued operations          $0.1            $2.8         ($0.0)
     Net income (loss)                $15.1           $14.7         ($5.2)
     Diluted earnings (loss) per
      share from continuing
      operations                      $0.36           $0.30        ($0.15)
     Diluted earnings (loss) per
      share from discontinued
      operations                      $0.00           $0.06        ($0.00)
    Sales by Market Segment
     NanoElectronics                  $56.5           $42.4         $39.7
     NanoResearch & Industry          $49.2           $55.3         $35.3
     NanoBiology                      $10.7           $10.1         $10.1
     Service and Components           $31.6           $32.5         $27.2
    Sales by Geography
     North America                    $61.7           $49.9         $42.8
     Europe                           $40.0           $52.2         $38.7
     Asia Pacific                     $46.3           $38.2         $30.8
    Bookings
     Total                           $152.6          $171.7        $149.0
     Book to bill ratio                1.03            1.22          1.33
     Backlog - total                 $310.5          $305.9        $220.7
     Backlog - Service and Components $56.6           $46.8         $44.4
    Bookings by Market Segment
     NanoElectronics                  $56.0           $49.7         $40.0
     NanoResearch & Industry          $46.1           $65.1         $56.2
     NanoBiology                       $9.1           $23.9         $19.7
     Service and Components           $41.4           $33.0         $33.1
    Balance Sheet Highlights
     Cash, equivalents, investments,
      restricted cash                $425.7          $406.1        $254.7
     Operating cash generated (used)   $1.2           $24.4         ($2.7)
     Accounts receivable             $163.3          $145.0        $110.7
     Days sales outstanding (DSO)       101              94            90
     Inventory turnover                 3.3             3.5           3.2
     Inventories                     $107.8           $97.5         $81.5
     Property, plant and equipment    $61.2           $60.4         $58.5
     Fixed asset investment
      (during quarter)                 $3.0            $2.1          $1.2
     Depreciation expense              $3.3            $3.3          $3.4
     Current liabilities             $170.5          $167.7        $130.2
     Working capital                 $558.2          $477.7        $319.2
     Shareholders' equity            $393.2          $349.9        $302.5
     Headcount (permanent
      and temporary)                  1,729           1,683         1,646

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

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