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FEI Company Reports Fourth-Quarter Financial Results
Record Quarterly and Annual Revenue and Income
HILLSBORO, Ore., Feb 04, 2008 (BUSINESS WIRE) --
FEI Company (NASDAQ:FEIC) reported 2007 annual revenue that was 24% higher and net income that was nearly three times greater than in 2006. Fourth quarter revenue grew both sequentially and year-over-year, as did quarterly net income, which was aided in the latest quarter by a tax benefit. Net sales for the quarter ended December 31, 2007 of $152.5 million were up 5% compared to the third quarter of 2007 and 9% compared to the fourth quarter of 2006. Bookings in the quarter totaled $156.3 million, up 2% compared with $153.3 million in the third quarter of 2007 and down 9% from the record level of $171.7 million for the fourth quarter of 2006. The book-to-bill ratio for the latest quarter was 1.02 to 1.00. The backlog at the end of the quarter was $309.4 million, of which over 90% is expected to ship by the end of the fourth quarter of 2008. Income from continuing operations
for the fourth quarter of 2007 was $17.2 million, compared with $13.4 million in the third quarter of 2007 and $11.9 million in last year's fourth quarter. Diluted earnings per share from continuing operations in the latest quarter were $0.40, compared with $0.31 in the third quarter of 2007 and $0.30 in the fourth quarter of 2006. The gross profit margin was 40.7 % in the fourth quarter of 2007, compared with 42.0% in both the third quarter of 2007 and the prior year's fourth quarter. The company recorded a tax benefit of $4.0 million in the fourth quarter of 2007, due mainly to the completion of various international tax audits. The tax benefit increased fourth quarter 2007 net income and net income per share from continuing operations by approximately $6.7 million and $0.15 per share, respectively. "The strength of our market and geographic diversity was evident in the
fourth quarter," said Don Kania, president and CEO of FEI. "Bookings were up sequentially and were the second highest quarterly total in our history. Revenue was the highest for a single quarter ever, and capped a year of 24% growth. Revenue has grown at a 12% compound growth rate in the last five years, and our target is to continue to grow at least that rapidly over the next five years. "We made three important announcements in early 2008 that reflect important parts of our strategy," continued Kania. "In January, we retired the $45.9 million balance of our 5.5% convertible notes, highlighting the company's solid cash-generating capabilities. Also in January we announced the opening of our latest NanoPort applications center in Shanghai, China, as part of our strategic investment to expand our business in Asia. Today we announced the introduction of the Titan Krios(TM), which
expands our industry-leading transmission electron microscope performance into life science applications. The Krios reflects both the strategic importance of extending our technology leadership as well as the opportunities we see to tap the growth in our NanoBiology market segment." 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. The company's balance sheet remained strong. Total cash and investments at the end of the quarter were $491.0 million, up $35.2 million from the beginning of the quarter and up $84.9 million for the full year. Convertible debt at the end of the quarter remained unchanged at $310.9 million; that total was reduced by $45.9 million in January, 2008. Shareholders' equity at the end of
the fourth quarter was $489.0 million, an increase of $32.3 million in the quarter and $139.1 million for the full year. First Quarter 2008 Guidance FEI currently expects net sales for the first quarter of 2008 to be in the range of $145 million to $152 million. Bookings are expected to be above $145 million, and earnings are expected to be in the range of $0.18 to $0.25 per share, assuming a 25% tax rate. Investor Conference Call -- 2:00 p.m. PST Monday, February 4, 2008 Parties interested in listening to FEI's quarterly conference call may do so by dialing 1-800-218-4007 (domestic, toll-free) or 1-303-262-2130 (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 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 11107863#. 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: www.fei.com. Safe Harbor Statement These
financial results are subject to completion of our
year-end audit. In addition, this news release contains forward-looking statements that include our guidance for the first quarter of 2008, the expected shipment of our backlog, plans for further geographic expansion, expectations for future bookings, market and revenue growth and the impact of new product introductions. 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 in service or product manufacturing; the relative mix
of higher-margin and lower-margin products; inability to produce a higher volume of products with existing personnel or facilities; 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; 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 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)
Dec. 31, Sept. 30, Dec. 31,
ASSETS 2007 2007 2006
---------- --------- ---------
CURRENT ASSETS:
Cash and cash equivalents $ 280,593 $222,419 $110,656
Short-term investments in marketable
securities 152,041 198,362 234,202
Short-term restricted cash 20,984 12,973 20,172
Receivables 159,457 176,468 144,955
Inventories 138,762 137,243 97,470
Deferred tax assets 4,788 4,996 4,386
Other current assets 36,273 40,941 33,474
---------- --------- ---------
Total current assets 792,898 793,402 645,315
Non-current investments in marketable
securities 12,758 12,708 34,900
Long-term restricted cash 24,621 9,298 6,131
Non-current service inventories 42,168 41,134 37,920
Property plant and equipment, net 74,700 68,083 60,394
Purchased technology, net 2,862 3,268 4,494
Goodwill 40,864 40,875 40,900
Deferred tax assets 2,641 9,479 542
Other assets, net 16,834 19,141 7,483
---------- --------- ---------
TOTAL $1,010,346 $997,388 $838,079
========== ========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 31,156 $ 50,083 $ 45,118
Accrued payroll liabilities 26,544 26,212 20,736
Accrued warranty reserves 6,585 6,902 5,716
Accrued agent commissions 9,119 6,871 6,175
Deferred revenue 72,551 61,564 48,992
Income taxes payable 3,403 6,987 9,203
Accrued restructuring, reorganization
and relocation 580 598 2,439
Current portion of convertible debt 195,882 45,882 -
Other current liabilities 29,266 31,241 29,276
---------- --------- ---------
Total current liabilities 375,086 236,340 167,655
Convertible debt 115,000 265,000 310,882
Deferred tax liabilities 4,479 4,204 4,062
Other liabilities 26,776 35,119 5,572
SHAREHOLDERS' EQUITY:
Preferred stock - 500 shares
authorized; none issued and
outstanding - - -
Common stock - 70,000 shares
authorized; 36,405, 36,252 and
34,052 shares issued and outstanding
at December 31, 2007, September 30,
2007 and December 31, 2006 395,904 390,168 348,479
Retained earnings (accumulated
deficit) 28,009 10,533 (36,041)
Accumulated other comprehensive
income 65,092 56,024 37,470
---------- --------- ---------
Total shareholders' equity 489,005 456,725 349,908
---------- --------- ---------
TOTAL $1,010,346 $997,388 $838,079
========== ========= =========
FEI Company and Subsidiaries
Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
Thirteen Weeks Ended Year Ended
----------------------------- -------------------
Dec. 31, Sept. 30, Dec. 31, Dec. 31, Dec. 31,
2007 2007 2006 2007 2006
--------- --------- --------- --------- ---------
NET SALES:
Products $119,275 $113,565 $107,822 $466,425 $360,643
Service and
components 33,270 32,223 32,462 128,422 118,848
--------- --------- --------- --------- ---------
Total net sales 152,545 145,788 140,284 594,847 479,491
--------- --------- --------- --------- ---------
COST OF SALES:
Products 65,995 61,249 58,499 252,546 197,742
Service and
components 24,525 23,307 22,880 93,544 85,303
--------- --------- --------- --------- ---------
Total cost of
sales 90,520 84,556 81,379 346,090 283,045
--------- --------- --------- --------- ---------
Gross profit 62,025 61,232 58,905 248,757 196,446
--------- --------- --------- --------- ---------
OPERATING EXPENSES:
Research and
development 18,222 16,414 16,112 66,105 57,528
Selling, general
and
administrative 33,865 30,915 28,508 124,526 100,279
Amortization of
purchased
technology 450 444 438 1,777 2,034
Merger costs - - - - 484
Restructuring,
reorganization
and relocation 132 - (27) (272) 12,609
Asset impairment - - - - 465
--------- --------- --------- --------- ---------
Total operating
expenses 52,669 47,773 45,031 192,136 173,399
--------- --------- --------- --------- ---------
OPERATING INCOME 9,356 13,459 13,874 56,621 23,047
--------- --------- --------- --------- ---------
OTHER INCOME
(EXPENSE):
Interest income 6,498 5,902 4,154 22,372 13,150
Interest expense (2,444) (2,218) (2,110) (8,735) (7,355)
Gain on investment
disposals and
impairment, net - 511 - 1,167 -
Other expense, net (230) (1,034) (538) (3,492) (723)
--------- --------- --------- --------- ---------
Total other
income, net 3,824 3,161 1,506 11,312 5,072
--------- --------- --------- --------- ---------
INCOME FROM
CONTINUING
OPERATIONS BEFORE
TAXES 13,180 16,620 15,380 67,933 28,119
INCOME TAX EXPENSE
(BENEFIT) (4,034) 3,236 3,481 8,374 10,467
--------- --------- --------- --------- ---------
INCOME FROM
CONTINUING
OPERATIONS 17,214 13,384 11,899 59,559 17,652
DISCONTINUED
OPERATIONS:
Gain (loss) from
discontinued
operations - - (580) - (947)
Gain on disposal,
net of income
taxes 263 - 3,335 390 3,335
--------- --------- --------- --------- ---------
INCOME FROM
DISCONTINUED
OPERATIONS 263 - 2,755 390 2,388
--------- --------- --------- --------- ---------
NET INCOME $ 17,477 $ 13,384 $ 14,654 $ 59,949 $ 20,040
========= ========= ========= ========= =========
BASIC NET INCOME PER
SHARE DATA:
From continuing
operations $ 0.47 $ 0.37 $ 0.35 $ 1.67 $ 0.52
========= ========= ========= ========= =========
From discontinued
operations $ 0.01 $ 0.00 $ 0.08 $ 0.01 $ 0.07
========= ========= ========= ========= =========
DILUTED NET INCOME
PER SHARE DATA:
From continuing
operations $ 0.40 $ 0.31 $ 0.30 $ 1.39 $ 0.47
========= ========= ========= ========= =========
From discontinued
operations $ 0.01 $ 0.00 $ 0.06 $ 0.01 $ 0.06
========= ========= ========= ========= =========
WEIGHTED AVERAGE
SHARES OUTSTANDING:
Basic 36,323 36,216 33,886 35,709 33,818
========= ========= ========= ========= =========
Diluted 46,477 46,419 44,079 46,254 39,752
========= ========= ========= ========= =========
FEI Company and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
Thirteen Weeks Ended(1) Year Ended(1)
--------------------------- -----------------
Dec. 31, Sept. 30, Dec. 31, Dec. 31, Dec. 31,
2007 2007 2006 2007 2006
-------- --------- -------- -------- --------
NET SALES:
Products 78.2% 77.9% 76.9% 78.4% 75.2%
Service 21.8% 22.1% 23.1% 21.6% 24.8%
-------- --------- -------- -------- --------
Total net sales 100.0% 100.0% 100.0% 100.0% 100.0%
COST OF SALES:
Products 43.3% 42.0% 41.7% 42.5% 41.2%
Service 16.1% 16.0% 16.3% 15.7% 17.8%
-------- --------- -------- -------- --------
Total cost of sales 59.3% 58.0% 58.0% 58.2% 59.0%
-------- --------- -------- -------- --------
Gross profit 40.7% 42.0% 42.0% 41.8% 41.0%
-------- --------- -------- -------- --------
OPERATING EXPENSES:
Research and
development 11.9% 11.3% 11.5% 11.1% 12.0%
Selling, general and
administrative 22.2% 21.2% 20.3% 20.9% 20.9%
Amortization of
purchased technology 0.3% 0.3% 0.3% 0.3% 0.4%
Restructuring,
reorganization and
relocation 0.1% 0.0% 0.0% 0.0% 2.6%
Asset impairment 0.0% 0.0% 0.0% 0.0% 0.1%
Merger costs 0.0% 0.0% 0.0% 0.0% 0.0%
-------- --------- -------- -------- --------
Total operating
expenses 34.5% 32.8% 32.1% 32.3% 36.2%
-------- --------- -------- -------- --------
OPERATING INCOME 6.1% 9.2% 9.9% 9.5% 4.8%
-------- --------- -------- -------- --------
OTHER INCOME (EXPENSE):
Interest income 4.3% 4.0% 3.0% 3.8% 2.7%
Interest expense -1.6% -1.5% -1.5% -1.5% -1.5%
Gain on investment
disposals and
impairment, net 0.0% 0.4% 0.0% 0.2% 0.0%
Other expense, net -0.2% -0.7% -0.4% -0.6% -0.2%
-------- --------- -------- -------- --------
Total other
expense, net 2.5% 2.2% 1.1% 1.9% 1.1%
-------- --------- -------- -------- --------
INCOME FROM CONTINUING
OPERATIONS BEFORE TAXES 8.6% 11.4% 11.0% 11.4% 5.9%
-------- --------- -------- -------- --------
INCOME TAX EXPENSE
(BENEFIT) -2.6% 2.2% 2.5% 1.4% 2.2%
-------- --------- -------- -------- --------
INCOME FROM CONTINUING
OPERATIONS 11.3% 9.2% 8.5% 10.0% 3.7%
======== ========= ======== ======== ========
DISCONTINUED OPERATIONS:
Loss from discontinued
operations 0.0% 0.0% -0.4% 0.0% -0.2%
Gain on disposal, net
of income taxes 0.2% 0.0% 2.4% 0.1% 0.7%
-------- --------- -------- -------- --------
INCOME FROM DISCONTINUED
OPERATIONS 0.2% 0.0% 2.0% 0.1% 0.5%
-------- --------- -------- -------- --------
NET INCOME 11.5% 9.2% 10.4% 10.1% 4.2%
-------- --------- -------- -------- --------
(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
12/31/2007 9/30/2007 12/31/2006
----------------------------------------------------------------------
Income Statement Highlights
----------------------------------------------------------------------
Consolidated sales $ 152.6 $ 145.8 $ 140.3
----------------------------------------------------------------------
Gross margin 40.7% 42.0% 42.0%
----------------------------------------------------------------------
R&D spending $ 18.2 $ 16.4 $ 16.1
----------------------------------------------------------------------
R&D (% of sales) 11.9% 11.3% 11.5%
----------------------------------------------------------------------
SG&A $ 33.9 $ 30.9 $ 28.5
----------------------------------------------------------------------
SG&A (% of sales) 22.2% 21.2% 20.3%
----------------------------------------------------------------------
Stock compensation expense -
COGS $ 0.4 $ 0.2 $ 0.2
----------------------------------------------------------------------
Stock compensation expense -
R&D $ 0.3 $ 0.3 $ 0.2
----------------------------------------------------------------------
Stock compensation expense -
SG&A $ 1.5 $ 0.7 $ 1.4
----------------------------------------------------------------------
Net income from continuing
operations $ 17.2 $ 13.4 $ 11.9
----------------------------------------------------------------------
Net income from discontinued
operations $ 0.3 $ 0.0 $ 2.8
----------------------------------------------------------------------
Net income $ 17.5 $ 13.4 $ 14.7
----------------------------------------------------------------------
Diluted earnings per share
from continuing operations $ 0.40 $ 0.31 $ 0.30
----------------------------------------------------------------------
Diluted earnings per share
from discontinued operations $ 0.01 $ 0.00 $ 0.06
----------------------------------------------------------------------
Interest income add back
included in the calculation
of diluted EPS $ 1.2 $ 1.2 $ 1.2
----------------------------------------------------------------------
Sales by Market Segment
----------------------------------------------------------------------
NanoElectronics $ 33.0 $ 48.1 $ 42.4
----------------------------------------------------------------------
NanoResearch & Industry $ 67.8 $ 51.6 $ 55.3
----------------------------------------------------------------------
NanoBiology $ 18.5 $ 13.9 $ 10.1
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Service and Components $ 33.3 $ 32.2 $ 32.5
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Sales by Geography
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North America $ 63.7 $ 46.5 $ 49.9
----------------------------------------------------------------------
Europe $ 65.7 $ 61.5 $ 52.2
----------------------------------------------------------------------
Asia Pacific $ 23.2 $ 37.8 $ 38.2
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Bookings
----------------------------------------------------------------------
Total $ 156.3 $ 153.3 $ 171.7
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Book-to-bill ratio 1.02 1.05 1.22
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Backlog - total $ 309.4 $ 305.7 $ 305.9
----------------------------------------------------------------------
Backlog - Service and
Components $ 54.7 $ 58.5 $ 46.8
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Bookings by Market Segment
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NanoElectronics $ 39.6 $ 28.8 $ 49.7
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NanoResearch & Industry $ 63.2 $ 80.2 $ 65.1
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NanoBiology $ 24.0 $ 11.2 $ 23.9
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Service and Components $ 29.5 $ 33.1 $ 33.0
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Balance Sheet Highlights
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Cash, equivalents,
investments, restricted cash $ 491.0 $ 455.8 $ 406.1
----------------------------------------------------------------------
Operating cash generated
(used) $ 34.8 $ 11.4 $ 24.4
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Accounts receivable $ 159.5 $ 176.5 $ 145.0
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Days sales outstanding (DSO) 95 110 94
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Inventory turnover 2.6 2.6 3.5
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Inventories $ 138.8 $ 137.2 $ 97.5
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Property, plant and equipment $ 74.7 $ 68.1 $ 60.4
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Fixed asset investment (during
quarter) $ 7.3 $ 5.1 $ 2.1
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Depreciation expense $ 3.8 $ 3.4 $ 3.3
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Current liabilities $ 375.1 $ 236.3 $ 167.7
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Working capital $ 417.8 $ 557.1 $ 477.7
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Shareholders' equity $ 489.0 $ 456.7 $ 349.9
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Headcount (permanent and
temporary) 1,866 1,851 1,683
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SOURCE: FEI Company FEI Company
Investor Relations
Fletcher Chamberlin, 503-726-7710
fletcher.chamberlin@fei.com
Copyright Business Wire 2008
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