November 3, 2009

FEI Third Quarter EPS of $0.16 Up 60% Sequentially

Bookings of $149.7 Million and Revenue of $140.8 Million

HILLSBORO, Ore., Nov 3, 2009 (GlobeNewswire via COMTEX News Network) -- FEI Company (Nasdaq:FEIC) reported increased earnings on comparable revenue for the third quarter ended October 4, 2009. Earnings per share exceeded company guidance, revenue was near the high end of guidance and the book-to-bill ratio in the quarter was 1.06 to 1.

For the quarter, net bookings were $149.7 million, including a $6.3 million upward revaluation of the backlog of unfilled orders due to changes in foreign exchange rates. Total bookings were 5% below second-quarter bookings of $157.8 million and 15% below last year's record third quarter total of $175.3 million. Net sales of $140.8 million were up slightly compared to the second quarter of 2009 and down 1% from the third quarter of 2008. The backlog at the end of the quarter was a record $345.7 million, of which approximately 90% is expected to ship in the next 12 months.

Net income for the third quarter of 2009 was $6.1 million, up 66% compared with $3.7 million in the second quarter of 2009 and up 53% compared with $3.9 million in last year's third quarter. Diluted earnings per share in the latest quarter were $0.16, compared with $0.10 in the second quarter of 2009 and $0.11 in the third quarter of 2008. Operating income in the quarter was $7.9 million, compared with $6.6 million in the second quarter of 2009 and $6.2 million in last year's third quarter. Restructuring expenses in the latest quarter reduced operating income by $0.6 million or $0.01 per diluted share. The tax rate for the latest quarter was 14.5%, compared with 28.4% in the second quarter and 29.8% in last year's third quarter.

During the quarter the company continued to improve its balance sheet and liquidity. Total cash and investments increased by $19.9 million in the quarter to $403.9 million, and shareholders' equity increased by $20.5 million to $564.0 million. Net cash provided by operating activities was positive $20.0 million for the quarter.

"FEI performed well in a seasonally weak quarter," said Don Kania, president and CEO of FEI. "Bookings were solid, as strength in Research and Industry, including orders related to U.S. science-based stimulus funding for science investment, offset expected variability in Electronics and Life Sciences. We expect improved bookings, revenue and earnings in the fourth quarter. Despite the weakening dollar, we expect to enter 2010 with good momentum, based on a record backlog, ongoing stimulus funding and an array of recently introduced new products."

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.

Results for the first nine months of 2008 have been adjusted for the effect of the required adoption on January 1, 2009 of guidance within the FASB's Accounting Standards Codification, Section 470-20, "Debt-Debt with Conversion and Other Options" -- formerly 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 three quarters by $6.3 million and $0.15 per share. The restatement is related to the company's zero percent convertible notes. Because the notes were paid off in June 2008, there was no restatement of the Statement of Operations for the third quarter of 2008 or later periods.

Guidance for Q4 2009

Assuming a euro/dollar exchange rate of $1.45, FEI expects net sales in the fourth quarter of 2009 to be in the range of $145 million to $152 million. Bookings are expected to be at least $150 million. GAAP earnings per share are expected to be in the range of $0.16 to $0.21, including estimated restructuring charges of approximately $0.03 per share.

Investor Conference Call -- 2:00 p.m. Pacific time, Tuesday, November 3, 2009

Parties interested in listening to FEI's quarterly conference call may do so by dialing 1-877-941-1848 (domestic, toll-free) or 1-480-629-9722 (international) and asking for the FEI Third Quarter Earnings call, # 4175238. 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 1-800-406-7325 (U.S.) or 1-303-590-3030 (international) and entering the access code 4175238#.

About FEI

FEI (Nasdaq:FEIC) is a leading diversified scientific instruments company. It is a premier provider of electron and ion-beam microscopes and tools for nanoscale applications across many industries: industrial and academic materials research, life sciences, semiconductors, data storage, natural resources and more. With a 60-year history of technological innovation and leadership, FEI has set the performance standard in transmission electron microscopes (TEM), scanning electron microscopes (SEM) and DualBeams(TM), which combine a SEM with a focused ion beam (FIB). FEI's imaging systems provide 3D characterization, analysis and modification/prototyping with resolutions down to the sub-Angstrom (one-tenth of a nanometer) level. 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 approximately 1,800 employees and sales and service operations in more than 50 countries around the world. More information can be found at: www.fei.com.

The FEI Company logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=6379

Safe Harbor Statement

This news release contains forward-looking statements that include our guidance for the fourth quarter of 2009 and future periods; the expected shipment of our backlog; expectations about operating expenses and restructuring expense; expectations for future revenue, earnings, bookings and backlog; expectations about foreign currency rates and the impact on our results; government economic stimulus spending; and product sales and performance, and performance of certain market segments. Factors that could affect these forward-looking statements include, but are not limited to, the global economic environment; the timing, size, execution and ultimate success of government stimulus programs; lower than expected customer orders and the potential weakness of the Research & Industry, Electronics and Life Sciences market segments; bankruptcy or insolvency of customers or suppliers; cyclical changes in the data storage and semiconductor industries, which are the major components of Electronics market revenue; 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 cost reductions and other improvements from restructuring plans; risks associated with shipping a high percentage of the company's quarterly revenue in the last month of the quarter; 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 new product introduction and the inability to manufacture products in required volumes; inability to deploy products as expected or delays in shipping products due to technical problems or barriers; shipment delays due to supply chain problems; changes to or 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; 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)

                                                              As
                                                           Adjusted(1)
                                  October 4,    July 5,   December 31,
                                     2009        2009         2008
                                  ----------  ----------  ------------
 ASSETS

 CURRENT ASSETS:
  Cash and cash equivalents       $  147,202  $  178,879  $   146,521
  Short-term investments in
   marketable securities             207,360     145,739       32,901
  Short-term restricted cash           9,984      10,783       10,994
  Receivables                        163,045     162,771      139,733
  Inventories                        152,565     147,798      141,609
  Deferred tax assets                  2,718       2,651        2,884
  Other current assets                46,970      52,921       32,926
                                  ----------  ----------  ------------

   Total current assets              729,844     701,542      507,568

 Non-current investments in
  marketable securities               12,882       6,300       94,098

 Long-term restricted cash            26,475      42,344       34,833

 Non-current inventories              42,362      41,468       41,072

 Property plant and equipment,
  net                                 81,018      76,860       76,991

 Goodwill                             44,626      44,600       40,964

 Deferred tax assets                   1,545       1,618        2,188

 Other assets, net                    15,879      18,667       34,458
                                  ----------  ----------  ------------

 TOTAL                             $ 954,631  $  933,399  $   832,172
                                  ==========  ==========  ============

 LIABILITIES AND SHAREHOLDERS'
  EQUITY

 CURRENT LIABILITIES:
  Accounts payable                $   38,310  $   36,108  $    34,964
  Accrued liabilities                 37,147      37,138       35,540
  Deferred revenue                    63,697      69,341       44,135
  Income taxes payable                 2,591       3,318        3,040
  Accrued restructuring,
   reorganization and relocation          34          86          240
  Short-term line of credit           70,800      70,800           --
  Other current liabilities           42,926      40,600       33,732
                                  ----------  ----------  ------------
   Total current liabilities         255,505     257,391      151,651

 Convertible debt                    100,000     100,000      115,000

 Other liabilities                    35,163      32,546       46,432

 SHAREHOLDERS' EQUITY:
  Preferred stock - 500 shares
   authorized; none issued and
   outstanding                            --          --           --
  Common stock - 70,000 shares
   authorized; 37,674, 37,553,
   and 37,286 shares issued and
   outstanding at October 4, 2009,
   July 5, 2009, and
   December 31, 2008                 479,670     478,075      469,893
  Retained earnings (deficit)         14,890       8,830       (1,168)
  Accumulated other comprehensive
   income                             69,403      56,557       50,364
                                  ----------  ----------  ------------

   Total shareholders' equity        563,963     543,462      519,089
                                  ----------  ----------  ------------

 TOTAL                            $  954,631  $  933,399  $   832,172
                                  ==========  ==========  ============

 (1) As adjusted for the effects of Accounting Standards Codification
     470-20 "Debt - Debt with Conversion and Other Options."


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

                                                     Thirty-Nine Weeks
                          Thirteen Weeks Ended             Ended
                      ----------------------------- -------------------
                                                                 As
                                                              Adjusted
                                                                 (1)
                       Oct.4,    July 5,  Sept. 28,  Oct. 4,  Sept. 28,
                        2009      2009      2008      2009      2008
                      --------- --------- --------- --------- ---------

 NET SALES:
  Products            $105,562  $107,162  $106,631  $321,286  $343,603
  Service and
   components           35,237    33,101    35,137   101,609   103,850
                      --------- --------- --------- --------- ---------
   Total net sales     140,799   140,263   141,768   422,895   447,453
                      --------- --------- --------- --------- ---------

 COST OF SALES:
  Products              61,658    61,127    60,385   182,672   197,752
  Service and
   components           23,760    22,975    24,681    69,989    75,154
                      --------- --------- --------- --------- ---------
   Total cost of
    sales               85,418    84,102    85,066   252,661   272,906
                      --------- --------- --------- --------- ---------

   Gross profit         55,381    56,161    56,702   170,234   174,547
                      --------- --------- --------- --------- ---------

 OPERATING EXPENSES:
  Research and
   development          16,705    16,657    17,168    50,142    53,471
  Selling, general
   and administrative   30,176    31,825    32,140    94,827    97,671
  Restructuring,
   reorganization and
   relocation              601     1,067     1,176     2,630     3,447
                      --------- --------- --------- --------- ---------
   Total operating
    expenses            47,482    49,549    50,484   147,599   154,589
                      --------- --------- --------- --------- ---------

 OPERATING INCOME        7,899     6,612     6,218    22,635    19,958
                      --------- --------- --------- --------- ---------

 OTHER INCOME
  (EXPENSE):
  Interest income          498       668     2,710     2,299    11,827
  Interest expense      (1,191)   (1,195)   (1,689)   (4,298)  (12,484)
  Other, net              (116)     (974)   (1,612)     (631)   (2,852)
                      --------- --------- --------- --------- ---------
   Total other income
    (expense), net        (809)   (1,501)     (591)   (2,630)   (3,509)
                      --------- --------- --------- --------- ---------

 INCOME BEFORE TAXES     7,090     5,111     5,627    20,005    16,449

 INCOME TAX EXPENSE      1,030     1,451     1,679     3,947     5,810
                      --------- --------- --------- --------- ---------

 NET INCOME           $  6,060  $  3,660  $  3,948  $ 16,058  $ 10,639
                      ========= ========= ========= ========= =========

 BASIC NET INCOME PER
  SHARE DATA:         $   0.16  $   0.10  $   0.11  $   0.43  $   0.29
                      ========  ========  ========  ========  ========

 DILUTED NET INCOME
  PER SHARE DATA:     $   0.16  $   0.10  $   0.11  $   0.43  $   0.29
                      ========  ========  ========  ========  ========

 WEIGHTED AVERAGE
  SHARES OUTSTANDING:
  Basic                 37,610    37,450    36,780    37,461    36,571
                      ========  ========  ========  ========  ========
  Diluted               38,067    37,745    37,286    37,810    37,027
                      ========  ========  ========  ========  ========

 (1) As adjusted for the effects of Accounting Standards Codification
     470-20 "Debt - Debt with Conversion and Other Options."


                     FEI Company and Subsidiaries
                 Consolidated Statements of Operations
                              (Unaudited)

                                                    Thirty-Nine Weeks
                        Thirteen Weeks Ended(1)          Ended(1)
                     ----------------------------- -------------------
                                                                As
                                                             Adjusted
                                                                (2)
                      Oct. 4,   July 5,  Sept. 28,  Oct. 4,  Sept. 28,
                       2009      2009      2008      2009      2008
                     --------- --------- --------- --------- ---------
 NET SALES:
  Products               75.0%     76.4%     75.2%     76.0%     76.8%
  Service and
   components            25.0%     23.6%     24.8%     24.0%     23.2%
                     --------- --------- --------- --------- ---------
   Total net sales      100.0%    100.0%    100.0%    100.0%    100.0%
                     --------- --------- --------- --------- ---------

 COST OF SALES:
  Products               43.8%     43.6%     42.6%     43.2%     44.2%
  Service and
   components            16.9%     16.4%     17.4%     16.5%     16.8%
                     --------- --------- --------- --------- ---------
   Total cost of
    sales                60.7%     60.0%     60.0%     59.7%     61.0%
                     --------- --------- --------- --------- ---------

   Gross profit          39.3%     40.0%     40.0%     40.3%     39.0%
                     --------- --------- --------- --------- ---------

 OPERATING EXPENSES:
  Research and
   development           11.9%     11.9%     12.1%     11.9%     12.0%
  Selling, general
   and administrative    21.4%     22.7%     22.7%     22.4%     21.8%
  Restructuring,
   reorganization and
   relocation             0.4%      0.8%      0.8%      0.6%      0.8%
                     --------- --------- --------- --------- ---------
   Total operating
    expenses             33.7%     35.3%     35.6%     34.9%     34.5%
                     --------- --------- --------- --------- ---------

 OPERATING INCOME         5.6%      4.7%      4.4%      5.4%      4.5%
                     --------- --------- --------- --------- ---------

 OTHER INCOME
  (EXPENSE):
  Interest income         0.4%      0.5%      1.9%      0.5%      2.6%
  Interest expense       -0.9%     -0.9%     -1.2%     -1.0%     -2.8%
  Other, net             -0.1%     -0.7%     -1.1%     -0.1%     -0.6%
                     --------- --------- --------- --------- ---------
   Total other income
    (expense), net       -0.6%     -1.1%     -0.4%     -0.6%     -0.8%
                     --------- --------- --------- --------- ---------

 INCOME BEFORE TAXES      5.0%      3.6%      4.0%      4.7%      3.7%
                     --------- --------- --------- --------- ---------

 INCOME TAX EXPENSE       0.7%      1.0%      1.2%      0.9%      1.3%
                     --------- --------- --------- --------- ---------

 NET INCOME               4.3%      2.6%      2.8%      3.8%      2.4%
                     --------- --------- --------- --------- ---------


 (1) Percentages may not add due to rounding.
 (2) As adjusted for the effects of Accounting Standards Codification
     470-20 "Debt - Debt with Conversion and Other Options."


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

 ---------------------------------------------------------------------
                                  Q3 Ended     Q2 Ended     Q3 Ended
                                  4-Oct-09     5-Jul-09    28-Sep-2008
 ---------------------------------------------------------------------
 Income Statement Highlights
 ---------------------------------------------------------------------
  Consolidated sales                $140.8       $140.3       $141.8
 ---------------------------------------------------------------------
  Gross margin                        39.3%        40.0%        40.0%
 ---------------------------------------------------------------------
  Stock compensation expense -
   TOTAL                              $2.4         $2.7         $1.9
 ---------------------------------------------------------------------
  Net income                          $6.1         $3.7         $3.9
 ---------------------------------------------------------------------
  Diluted net income per share       $0.16        $0.10        $0.11
 ---------------------------------------------------------------------
  Interest income add back
   included in the calculation
   of diluted EPS                     $0.0         $0.0         $0.0
 ---------------------------------------------------------------------
 Sales by Market Segment
 ---------------------------------------------------------------------
  Electronics                        $31.7        $32.3        $35.4
 ---------------------------------------------------------------------
  Research & Industry                $61.6        $55.3        $47.9
 ---------------------------------------------------------------------
  Life Sciences                      $12.3        $19.6        $23.4
 ---------------------------------------------------------------------
  Service and Components             $35.2        $33.1        $35.1
 ---------------------------------------------------------------------
 Sales by Geography
 ---------------------------------------------------------------------
  USA & Canada                       $46.4        $40.4        $52.6
 ---------------------------------------------------------------------
  Europe                             $48.3        $40.7        $48.5
 ---------------------------------------------------------------------
  Asia-Pacific and Rest of World     $46.1        $59.2        $40.7
 ---------------------------------------------------------------------
 Bookings
 ---------------------------------------------------------------------
  Total                             $149.7       $157.8       $175.3
 ---------------------------------------------------------------------
  Book-to-bill ratio                  1.06         1.13         1.24
 ---------------------------------------------------------------------
  Backlog - total                   $345.7       $336.9       $329.5
 ---------------------------------------------------------------------
  Backlog - Service and
   Components                        $64.3        $64.1        $59.8
 ---------------------------------------------------------------------
 Bookings by Market Segment
 ---------------------------------------------------------------------
  Electronics                        $22.5        $35.1        $51.2
 ---------------------------------------------------------------------
  Research & Industry                $80.4        $57.4        $68.0
 ---------------------------------------------------------------------
  Life Sciences                      $11.4        $30.6        $25.9
 ---------------------------------------------------------------------
  Service and Components             $35.4        $34.7        $30.2
 ---------------------------------------------------------------------
 Balance Sheet Highlights
 ---------------------------------------------------------------------
  Cash, equivalents, investments,
   restricted cash                  $403.9       $384.0       $314.0
 ---------------------------------------------------------------------
  Operating cash generated (used)    $20.0        $11.4        $32.2
 ---------------------------------------------------------------------
  Accounts receivable               $163.0       $162.8       $152.3
 ---------------------------------------------------------------------
  Days sales outstanding (DSO)         106          106           98
 ---------------------------------------------------------------------
  Inventory turnover                   2.3          2.3          2.2
 ---------------------------------------------------------------------
  Fixed asset investment (during
   quarter)                           $3.8         $2.4         $2.5
 ---------------------------------------------------------------------
 Depreciation expense                 $4.4         $4.2         $4.2
 ---------------------------------------------------------------------
 Working capital                    $474.3       $444.2       $373.0
 ---------------------------------------------------------------------
 Headcount (permanent and
  temporary)                         1,779        1,770        1,787
 ---------------------------------------------------------------------

This news release was distributed by GlobeNewswire, www.globenewswire.com

SOURCE: FEI Company

CONTACT:  FEI Company
Fletcher Chamberlin, Treasurer & Communications Director
(503) 726-7710
fletcher.chamberlin@fei.com

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