Ore., Feb. 2 /PRNewswire-FirstCall/ -- FEI Company
(NASDAQ:FEIC) reported record bookings and sales as
well as significantly increased operating margins
and income in its financial report for the fourth
quarter of 2004.
Net sales were $145.2 million for the fourth quarter
ended December 31, 2004, an increase of 36% compared
with net sales of $107.0 million for the third quarter
of 2004 and an increase of 49% compared with net sales
of $97.7 million for the fourth quarter of 2003.
Bookings in the fourth quarter totaled $143.8 million,
resulting in a book-to-bill ratio of 0.99 and a backlog
of $160.0 million at the end of the quarter. Bookings
increased 14% compared with the previous record-high
bookings reported for the third quarter of 2004 and
increased 42% compared with the fourth quarter of
GAAP net income for the fourth quarter of 2004 was
$8.4 million, an increase of over 150% compared with
net income of $3.3 million in both the third quarter
of 2004 and the fourth quarter of 2003.
Fully diluted earnings per share in the latest quarter
were $0.21 compared with $0.08 in both the third quarter
of 2004 and the fourth quarter of 2003. Pro-forma
earnings per share in the latest quarter were $0.25
per diluted share, compared to the published consensus
estimate by analysts of $0.19 per share. Investors
should refer to the attached table for a reconciliation
of GAAP earnings to pro-forma earnings.
Pro-forma earnings per share for the latest quarter
are calculated by excluding amortization of purchased
intangibles, excluding shares attributable to the
potential conversion of the company's contingent convertible
bonds (described below) and applying the tax rate
in effect through the first nine months of the year.
Pro-forma earnings in prior periods exclude amortization
of purchased intangibles; restructuring, reorganization
and relocation costs; bond buy-back costs; and the
shares attributable to contingent convertible bonds.
The number of shares used to calculate fully diluted
earnings per share in the latest quarter was 39.7
million and includes 5.5 million shares attributable
to the potential conversion of the company's contingent
convertible bonds, adding 16% dilution. During the
fourth quarter of 2004, the Emerging Issues Task Force
of the Financial Accounting Standards Board changed
the rules to require inclusion of these shares in
the fully diluted share count. Prior period share
counts and fully diluted earnings per share figures
have been restated to conform to the current presentation.
"The fourth quarter results were exceptionally
strong and exceeded our guidance by a wide margin,"
said Vahe A. Sarkissian, chairman, president and chief
executive officer of FEI. "We shattered our prior
revenue and bookings records and more than doubled
our earnings sequentially and from the prior year's
fourth quarter. Annual results were also strong, with
bookings growth of over 40% to over $500 million,
revenue growth of nearly 30% and earnings more than
double last year. Our performance was particularly
strong in the nanotechnology research market where
we have industry-leading new products and break-away
technology. We also improved our operating margin
and generated cash.
"While we expect a seasonal slowdown in our business
in the first quarter, especially after the very strong
fourth quarter, we enter the year with a good backlog
and anticipate further revenue and earnings growth
in 2005," concluded Sarkissian.
Net sales for the full year 2004 were $465.7 million,
an increase of 29% from the 2003 total of $361.0 million.
Bookings for 2004 were $504.1 million, up 41% from
$358.5 million in 2003. GAAP net income for 2004 was
$16.6 million, or $0.42 per diluted share, compared
with $7.2 million or $0.20 per diluted share in 2003.
By market, sales to industry and institute customers
in the fourth quarter were up 45% and bookings were
up 37% compared with the third quarter. For the full
year, industry and institute sales were up 20% and
bookings were up 21%. Sales to semiconductor customers
in the fourth quarter increased 40% compared to the
third quarter while bookings decreased by 7%. For
the full year, semiconductor customer sales increased
41% and bookings increased 72%. Data storage sales
in the fourth quarter were down 57% compared with
the third quarter, while bookings were up 11%. For
all of 2004, data storage sales increased 24% and
bookings increased 17%.
The operating margin in the fourth quarter was 9.3%,
compared with 6.2% in the third quarter of 2004 and
2.0% in the fourth quarter of 2003. The gross margin
for the fourth quarter was 40.3% compared to 42.3%
in the third quarter of 2004 and 38.9% in the fourth
quarter of 2003; the sequential change from the third
quarter was primarily due to a change in the mix of
products sold. Operating expenses increased by $6.4
million compared with the third quarter due to increased
sales commissions; employee profit sharing and bonuses;
the impact of the weaker dollar compared to the euro;
and increased regulatory expenses, primarily for Sarbanes-Oxley
compliance. Included in operating expenses in the
fourth quarter was amortization of intangibles of
$1.7 million, compared with $1.4 million in the third
quarter. The tax rate for the fourth quarter was 28.8%,
bringing the full-year 2004 tax rate down to 32.0%.
Cash generated by operations was $12.4 million for
the quarter. Capital spending for the quarter was
$4.3 million, and depreciation expense was $4.1 million.
Inventory turnover increased from 2.5 times in the
third quarter to 4.0 times in the fourth quarter as
inventory decreased by $10.9 million from the third
quarter level. Accounts receivable increased by $32.6
million from the prior quarter due to increased shipments,
while days sales outstanding decreased from 109 days
at the end of the third quarter to 101 days at the
end of the fourth quarter. The company continued to
maintain a strong balance sheet, with cash and investments
of $341.9 million, convertible debt of $295.0 million
(due in 2008) and shareholders' equity of $379.8 million
as of December 31, 2004.
First Quarter 2005 Guidance
The company normally experiences a seasonal decline
in bookings and revenue from the fourth quarter to
the first quarter in most years, and it expects that
decline to happen this year. Currently it expects
net sales for the first quarter of 2005 to be in the
range of $120 million to $130 million. GAAP earnings
per share are anticipated to be in the range of $0.09
to $0.13 per share. Pro-forma earnings per share,
excluding amortization of purchased intangibles and
the shares attributable to the conversion of the contingent
convertible bonds, are thus anticipated to be in the
range of $0.13 to $0.18. For reasons why the company's
actual results may differ from guidance, please see
the section titled "Safe Harbor Statement"
Investor Conference Call -- 2:00 p.m. PST Wednesday,
February 2, 2005
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 http://www.feicompany.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 11020807#.
FEI's Tools for Nanotech(TM), featuring focused ion-
and electron-beam technologies, deliver 3D characterization,
analysis and modification capabilities with resolution
down to the sub-Angstrom level. With R&D centers
in North America and Europe and sales and service
operations in more than 40 countries around the world,
FEI is bringing the nanoscale within the grasp of
leading researchers and manufacturers and helping
to turn some of the biggest ideas of this century
into reality. More information can be found on the
FEI website at: http://www.feicompany.com/ .