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, 2007Net 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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