Nanotechnology Now - Press Release: FEI Reports Sequential Increase in Fourth Quarter Sales and Net Income: Earnings Per Share Grew from $0.11 in Q3 to $0.20 in Q4

Home > Press > FEI Reports Sequential Increase in Fourth Quarter Sales and Net Income: Earnings Per Share Grew from $0.11 in Q3 to $0.20 in Q4

Abstract:
FEI Company (NASDAQ:FEIC) reported growth in sales for the fourth quarter of 2008 from both the third quarter and the comparable quarter a year ago. Sales for the quarter were also the second highest in the company's history. Operating income was the highest in five quarters and net income was up 86% over the third-quarter levels. Revenue and net income were above guidance, as well as bookings (consistent with the company's previous announcement).

FEI Reports Sequential Increase in Fourth Quarter Sales and Net Income: Earnings Per Share Grew from $0.11 in Q3 to $0.20 in Q4

Hillsboro, OR | Posted on February 5th, 2009

Net sales for the quarter ended December 31, 2008 of $151.7 million were up 7% compared to the third quarter of 2008 and up 1% compared to the fourth quarter of 2007. Gross new bookings were $181.8 million before $20.4 million of currency revaluation of the backlog and $7.6 million of cancellations. Net bookings in the quarter totaled $153.8 million compared with a record $175.3 million in the third quarter of 2008 and $156.3 million for the fourth quarter of 2007. The backlog at the end of the quarter was $330.5 million, the highest in the company's history. Approximately 90% of the backlog is expected to ship in the next 12 months.

Operating income for the fourth quarter of 2008 was $11.2 million, compared with $6.2 million in the third quarter of 2008 and $7.4 million in last year's fourth quarter. Restructuring expenses in the latest quarter reduced operating income by $0.8 million or $0.02 per diluted share. Net income for the fourth quarter of 2008 was $7.3 million, compared with $3.9 million in the third quarter of 2008 and $15.9 million in last year's fourth quarter (which included a $4.3 million tax benefit, equal to $0.09 per share). Diluted earnings per share in the latest quarter was $0.20, compared with $0.11 in the third quarter of 2008 and $0.37 in the fourth quarter of 2007. Total cash and investments increased by $5.3 million in the quarter to $319.3 million, and operating cash flow was positive $25.1 million for the quarter.

For the full year 2008, bookings were $620.0 million, up 4% from 2007. Revenue was $599.2 million, up 1% from 2007. Both were records. Net income for 2008 was $24.3 million or $0.61 per share, compared with $58.3 million, or $1.36 per share in 2007. Operating cash flow for the year was $54.9 million, compared with $51.5 million in 2007.

"We had a good quarter," said Don Kania, president and CEO of FEI. "Our Research & Industry segment registered the highest bookings quarter in its history, as customers worldwide continued their investment in nanotechnology centers and our best-in-class tools. Our Life Sciences segment completed the year with 31% annual bookings growth, and we are investing for further growth in this area. Electronics bookings were down as expected due to market weakness.

"Despite the stronger dollar, which reduces our revenues, sales were the second-highest in our history," continued Kania. "Higher operating margins resulted from the beneficial impact of restructuring and the stronger dollar. For the first quarter, a seasonally weak quarter, revenue will be moderated if the U.S. dollar remains strong. We continue to target sequential margin improvement due to higher-margin new products, more favorable foreign exchange rates and the impact of our restructuring program. The Electronics market is likely to remain weak in the quarter, while the outlook for the Research & Industry and Life Sciences markets remains positive."

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.

Guidance for Q1 2009

Assuming an average euro/dollar exchange rate of $1.35, FEI expects net sales in the first quarter of 2009 to be in the range of $135 million to $142 million. Bookings are expected to be above $130 million. GAAP earnings per share are expected to be in the range of $0.10 to $0.15, assuming a 25% tax rate and restructuring charges estimated at $1 million.

Investor Conference Call -- 2:00 p.m. PST Thursday, February 5, 2009

Parties interested in listening to FEI's quarterly conference call may do so by dialing 1-800-218-0713 (domestic, toll-free) or 1-303-228-2960 (international) and asking for the FEI Fourth 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 11125543#.

####

About FEI Company
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. Our 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 and contribute to better living through new product commercialization. FEI’s NanoPorts in North America, Europe and Asia provide centers of technical excellence where our world-class community of customers and specialists collaborate on the ongoing development of new ideas and innovative solutions. FEI has sales and service operations in more than 50 countries around the world.

Safe Harbor Statement

This news release contains forward-looking statements that include our guidance for the first quarter of 2009; expected demand in our markets; the expected shipment of our backlog; expectations for future bookings and backlog; the impact of foreign exchange rates on our results; expectations about foreign currency rates; government commitments to continued spending for science and technology; expected tax rates; the impact of our restructuring program; expected margin improvement; global macro-economic trends; and the impact of new products. Factors that could affect these forward-looking statements include, but are not limited to, global economic crisis, the strength and potential weakness of the Research and Industry, Electronics and Life Sciences segments; the potential impact on government funding of technology investments due to global financial system rescue programs; 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; our continued ability to maintain deferral accounting of hedge transactions; valuation of the auction rate securities we hold and classification of them on the balance sheet; inability to produce a higher volume of products with existing personnel or facilities; 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.

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

	December 31,		September 28,		December 31,
ASSETS	2008		2008		2007
CURRENT ASSETS:
Cash and cash equivalents	$	146,521	$	131,956	$	280,593
Short-term investments in marketable securities		32,901		41,455		152,041
Short-term restricted cash		10,994		17,947		20,984
Receivables		139,733		152,272		157,120
Inventories		141,609		149,899		138,762
Deferred tax assets		2,884		3,499		4,788
Other current assets		32,926		34,331		36,273

Total current assets		507,568		531,359		790,561

Non-current investments in marketable securities		94,098		101,287		12,758

Long-term restricted cash		34,833		21,383		24,621

Non-current inventories		41,072		42,274		42,168

Property plant and equipment, net		76,991		76,690		74,700

Purchased technology, net		1,295		1,502		2,862

Goodwill		40,964		40,866		40,864

Deferred tax assets		2,188		2,460		2,641

Other assets, net		33,163		16,857		16,834

TOTAL	$	832,172	$	834,678	$	1,008,009

LIABILITIES AND SHAREHOLDERS’ EQUITY

CURRENT LIABILITIES:
Accounts payable	$	34,964	$	38,420	$	31,156
Accrued payroll liabilities		19,219		20,769		26,833
Accrued warranty reserves		6,439		6,485		6,585
Accrued agent commissions		9,882		9,414		8,401
Deferred revenue		44,135		44,048		60,681
Income taxes payable		3,040		3,843		3,106
Accrued restructuring, reorganization and relocation		240		641		580
Current portion of convertible debt		0		0		195,882
Other current liabilities		33,732		34,748		29,266

Total current liabilities	$	151,651		158,368		362,490

Convertible debt		115,000		115,000		115,000

Deferred tax liabilities		4,164		4,526		4,479

Other liabilities		42,268		47,310		38,646

SHAREHOLDERS’ EQUITY:
Preferred stock - 500 shares authorized; none issued and outstanding		-		-		-
Common stock - 70,000 shares authorized; 37,286, 37,126, and 36,405, shares issued and outstanding at December 31, 2008, September 28, 2008, and December 31, 2007		418,025		412,800		395,904
Retained earnings		50,700		43,351		26,398
Accumulated other comprehensive income		50,364		53,323		65,092

Total shareholders’ equity		519,089		509,474		487,394

TOTAL	$	832,172	$	834,678	$	1,008,009

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

	Thirteen Weeks Ended									Year Ended
	December 31,			September 28,			December 31,			December 31,			December 31,
	2008			2008			2007			2008			2007
NET SALES:
Products	$	117,903		$	106,631		$	117,938		$	461,506		$	465,088
Service and components		33,823			35,137			32,270			137,673			127,422
Total net sales		151,726			141,768			150,208			599,179			592,510

COST OF SALES:
Products		67,791			60,385			65,995			265,543			252,546
Service and components		23,941			24,681			24,525			99,095			93,544
Total cost of sales		91,732			85,066			90,520			364,638			346,090

Gross profit		59,994			56,702			59,688			234,541			246,420

OPERATING EXPENSES:
Research and development		16,907			17,168			18,159			70,378			66,042
Selling, general and administrative		30,656			31,685			33,499			126,960			124,160
Amortization of purchased technology		441			455			450			1,808			1,777
Restructuring, reorganization and relocation		820			1,176			132			4,267			(272	)
Total operating expenses		48,824			50,484			52,240			203,413			191,707

OPERATING INCOME		11,170			6,218			7,448			31,128			54,713

OTHER INCOME (EXPENSE):
Interest income		2,535			2,710			6,498			14,362			22,372
Interest expense		(1,736	)		(1,689	)		(2,444	)		(7,906	)		(8,735	)
Gain on investment disposals and impairment, net		-			-			-			-			1,167
Other expense, net		(1,818	)		(1,612	)		(230	)		(4,670	)		(3,492	)
Total other income (expense), net		(1,019	)		(591	)		3,824			1,786			11,312

INCOME FROM CONTINUING OPERATIONS BEFORE TAXES		10,151			5,627			11,272			32,914			66,025

INCOME TAX EXPENSE		2,802			1,679			(4,331	)		8,612			8,077

INCOME FROM CONTINUING OPERATIONS		7,349			3,948			15,603			24,302			57,948

DISCONTINUED OPERATIONS:
Gain (loss) from discontinued operations		-			-			-			-			-
Gain on disposal, net of income taxes		-			-			263			-			390
INCOME FROM DISCONTINUED OPERATIONS		-			-			263			-			390

NET INCOME	$	7,349		$	3,948		$	15,866		$	24,302		$	58,338

BASIC NET INCOME PER SHARE DATA:
From continuing operations	$	0.20		$	0.11		$	0.43		$	0.66		$	1.62
From discontinued operations	$	0.00		$	0.00		$	0.01		$	0.00		$	0.01

DILUTED NET INCOME PER SHARE DATA:
From continuing operations	$	0.20		$	0.11		$	0.36		$	0.61		$	1.35
From discontinued operations	$	0.00		$	0.00		$	0.01		$	0.00		$	0.01

WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic		37,183			36,780			36,323			36,766			35,709
Diluted		37,446			37,306			46,477			40,546			46,254

FEI Company and Subsidiaries
Consolidated Statements of Operations
(Unaudited)

	Thirteen Weeks Ended ⁽¹⁾						Year Ended⁽¹⁾
	December 31,		September, 28		December 31,		December 31,		December 31,
	2008		2008		2007		2008		2007
NET SALES:
Products	77.7	%	75.2	%	78.5	%	77.0	%	78.5	%
Service and components	22.3	%	24.8	%	21.5	%	23.0	%	21.5	%
Total net sales	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%

COST OF SALES:
Products	44.7	%	42.6	%	43.9	%	44.3	%	42.6	%
Service and components	15.8	%	17.4	%	16.3	%	16.5	%	15.8	%
Total cost of sales	60.5	%	60.0	%	60.3	%	60.9	%	58.4	%

Gross profit	39.5	%	40.0	%	39.7	%	39.1	%	41.6	%

OPERATING EXPENSES:
Research and development	11.1	%	12.1	%	12.1	%	11.7	%	11.1	%
Selling, general and administrative	20.2	%	22.3	%	22.3	%	21.2	%	21.0	%
Amortization of purchased technology	0.3	%	0.3	%	0.3	%	0.3	%	0.3	%
Restructuring, reorganization and relocation	0.5	%	0.8	%	0.1	%	0.7	%	0.0	%
Total operating expenses	32.2	%	35.6	%	34.8	%	33.9	%	32.4	%

OPERATING INCOME	7.4	%	4.4	%	5.0	%	5.2	%	9.2	%

OTHER INCOME (EXPENSE):
Interest income	1.7	%	1.9	%	4.3	%	2.4	%	3.8	%
Interest expense	-1.1	%	-1.2	%	-1.6	%	-1.3	%	-1.5	%
Gain on investment disposals and impairment, net	0.0	%	0.0	%	0.0	%	0.0	%	0.2	%
Other expense, net	-1.2	%	-1.1	%	-0.2	%	-0.8	%	-0.6	%
Total other income (expense), net	-0.7	%	-0.4	%	2.5	%	0.3	%	1.9	%

INCOME FROM CONTINUING OPERATIONS BEFORE TAXES	6.7	%	4.0	%	7.5	%	5.5	%	11.1	%

INCOME TAX EXPENSE	1.8	%	1.2	%	-2.9	%	1.4	%	1.4	%

INCOME FROM CONTINUING OPERATIONS	4.8	%	2.8	%	10.4	%	4.1	%	9.8	%

DISCONTINUED OPERATIONS:
Gain (loss) from discontinued operations	0.0	%	0.0	%	0.0	%	0.0	%	0.0	%
Gain on disposal, net of income taxes	0.0	%	0.0	%	0.2	%	0.0	%	0.1	%
INCOME FROM DISCONTINUED OPERATIONS	0.0	%	0.0	%	0.2	%	0.0	%	0.1	%

NET INCOME	4.8	%	2.8	%	10.6	%	4.1	%	9.8	%

(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

12/31/2008

9/28/2008

12/31/2007

Income Statement Highlights

Consolidated sales

151.7

141.8

150.2

Gross margin

39.5

40.0

39.7

R&D spending

16.9

17.2

18.2

R&D (% of sales)

11.1

12.1

SG&A

30.7

31.7

33.5

SG&A (% of sales)

20.2

22.3

Stock compensation expense - COGS

0.3

0.2

0.4

Stock compensation expense - R&D

0.3

Stock compensation expense - SG&A

1.8

1.4

1.5

Net income from continuing operations

7.3

3.9

15.6

Net income from discontinued operations

0.0

0.3

Net income

7.3

3.9

15.9

Diluted earnings per share from continuing operations

0.20

0.11

0.36

Diluted earnings per share from discontinued operations

0.00

0.01

Interest income add back included in the calculation of diluted EPS

0.0

1.2

Sales by Market Segment

Electronics

32.4

35.4

33.0

Research & Industry

67.3

47.9

67.8

Life Sciences

18.2

23.4

17.1

Service and Components

33.8

35.1

32.3

Sales by Geography

North America

54.8

51.4

63.2

Europe

70.8

57.4

63.8

Asia-Pacific

26.1

33.0

23.2

Bookings

Total

153.8

175.3

156.3

Book-to-bill ratio

1.01

1.24

1.04

Backlog - total

330.5

329.5

310.8

Backlog - Service and Components

57.0

59.8

54.7

Bookings by Market Segment

Electronics

22.2

51.2

39.6

Research & Industry

82.2

68.0

63.2

Life Sciences

17.3

25.9

24.0

Service and Components

32.1

30.2

29.5

Balance Sheet Highlights

Cash, equivalents, investments, restricted cash

319.3

314.0

491.0

Operating cash generated (used)

25.1

32.2

34.8

Accounts receivable

139.7

152.3

157.1

Days sales outstanding (DSO)

Inventory turnover

2.5

2.2

2.6

Inventories

141.6

149.9

138.8

Property, plant and equipment

77.0

76.7

74.7

Fixed asset investment (during quarter)

3.5

2.5

7.3

Depreciation expense

3.9

4.2

3.8

Current liabilities

151.7

158.4

362.5

Working capital

355.9

373.0

428.1

Shareholders’ equity

519.1

509.5

487.4

Headcount (permanent and temporary)

1,803

1,787

1,866

For more information, please click here

Contacts:
FEI Company
Treasurer & Communications Director
Fletcher Chamberlin
503-726-7710

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