FEI Company Reports Third Quarter Results

HILLSBORO, Ore. (PROTEXT) - FEI Company (Nasdaq: FEIC) todayannounced third quarter net sales of $52.0 million, 23% higherthan the comparable quarter in 1998. Net income was $955,000, or$.04 per share, before a $12 million charge for purchased in-process research and development. The charge related to the mid-quarter merger with Micrion Corporation whose financial resultsare included for the period subsequent to August 13, 1999.Including the $12.0 million charge the third quarter result was anet loss of $11.0 million, or $.48 per share. For the nine-monthperiod ended October 3, 1999, net sales were $143.2 million, 16%higher than the year-ago nine-month period. Net income, beforethe in-process research and development charge of $12 million,was $2.6 million, or $.13 per share. Including the in-processresearch and development charge, the net loss for the nine monthperiod was $9.4 million, or $.47 per share as compared to a netloss of $11.9 million, or $.66 per share in the year-ago nine-month period. The year ago period included non-recurring chargesfor restructuring and other charges. Third quarter net sales attributable to the merger were $6.2million for the partial period reported. Excluding these sales,Microelectronic Products segment net sales increased 8% andElectron Optics Products increased 14% over the prior year'squarter. The Components segment, while 29% higher than theprevious calendar quarter, declined 27% from the year-ago thirdquarter. Segment net sales excluding the merger increased 30% forthe Microelectronics Product segment and 8% for the ElectronOptics segment as compared to the comparable 1998 nine-monthperiod. The Components segment, which accounts for approximately7% of total year-to-date 1999 sales, declined 38%. Theconsolidated book-to-bill ratio for the quarter ended October 4,1999 was 1.2. Quarter-ending backlog totaled $85 million,including service backlog of $10 million. Total gross margin was 38.5% for the current 1999-quarter and38.8% for the 1999 nine-month year-to-date period. Excluding theresults attributable to the merger and purchase accountingeffects, gross margin was 39.5 % as compared to 13.8% in thecomparable prior period quarter, and 30.0% for the 1998 nine-month period. The following table identifies some of thefinancial impact of the combination's effect in the thirdquarter. 13 Week Period Ending October 3, 1999 (Millions)

PURCHASE

ACCOUNTING

FEI

MICRION CONSOLIDATED EFFECT

TOTAL Net Sales

$45.8

$6.2

$52.0

-- $52.0 Gross Profit 18.1

1.9

20.0

0.3

20.3 Purchased In Process R&D

--

12.0

12.0 (12.0)

-- Total Operating Expenses

15.2

14.7

29.9 (12.4)

17.5 Operating Income (Loss)

$2.9 $(12.7) $(9.9) $(12.7)

$2.8 Operating expenses for the quarter, excluding the $12 millionpurchased in-process research and development charge were $17.9million or 35% of sales. For the prior year quarter operatingexpenses were $16.0 million or 38% of sales after excludingrestructuring charges. President and Chief Executive Officer Vahe' A. Sarkissiancommented, "We are pleased to report our first results whichinclude the combination with Micrion. Significant progress hasbeen made in the integration process. We took actions tostreamline our product offerings and account management teams andto communicate this to our customers. We are continuing ourintegration efforts focusing on manufacturing and informationsystems. We are enthusiastic about our prospects for the upcomingyear." About FEI FEI Company is a leading supplier of charged particle beamsystems, including FIB systems, scanning electron microscopes,transmission electron microscopes and components for submicron-level imaging, analysis, modification and fabrication. FEI hasapproximately 1,300 employees worldwide, with manufacturingoperations located in Hillsboro, Oregon; Peabody, Massachusetts;Eindhoven, The Netherlands; and Brno, Czech Republic. Except for the historical statements contained herein, thestatements in this news release concerning growth, new productdevelopment and margin improvement involve risks anduncertainties. Factors that could cause actual results to differmaterially include, but are not limited to business conditions inthe electronics, life sciences and material sciences industriesand the general economy, both domestic and international; lowerthan expected customer orders; competitive factors, includingpricing pressures, technological developments and productsoffered by competitors; technological difficulties and resourceconstraints encountered in developing new products, and thetimely flow of competitive new products and market acceptance ofthose products.

FEI Company and Subsidiaries

Condensed Consolidated Balance Sheets

(In Thousands except share data)

December 31, October 3,

1998

1999

(Unaudited) ASSETS CURRENT ASSETS: Cash and cash equivalents

$15,198

11,422 Receivables

56,046

64,272 Current accounts with Philips

--

2,607 Inventories

43,518

58,991 Income tax receivable

--

5,887 Deferred income taxes

9,926

7,553 Other

1,872

1,137 Total current assets

126,560

151,889 EQUIPMENT

23,845

29,173 OTHER ASSETS

40,733

89,191 TOTAL

$191,138

$270,253 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable

$10,607

$20,437 Current accounts with Philips

5,043

-- Accrued payroll liabilities

3,908

5,518 Accrued warranty reserves

6,186

8,325 Deferred revenue

15,744

19,170 Income taxes payable

952

-- Accrued restructuring costs

3,055

1,550 Other current liabilities

10,715

20,015

Total current liabilities

56,210

75,015 LINE OF CREDIT BORROWINGS

7,250

912 LONG-TERM ACCOUNT WITH PHILIPS

19,099

29,552 DEFERRED INCOME TAXES

7,861

7,039 OTHER LIABILITIES

3,091

2,413 SHAREHOLDERS' EQUITY: Preferred stock - 500,000 shares authorized;

none issued and outstanding

--

-- Common stock - 45,000,000 shares authorized;

18,167,475 and 27,409,179 shares issued

and outstanding at December 31, 1998 and

October 3, 1999

149,635

217,371 Accumulated deficit

(45,510)

(54,875) Accumulated other comprehensive loss

(6,498)

(7,174)

Total shareholders' equity

97,627

155,322 TOTAL

$191,138

$270,253

FEI Company and Subsidiaries

Condensed Consolidated Statements of Operations

(In thousands except per share data)

(Unaudited)

Thirteen Weeks

Thirty-nine Weeks

Ended

Ended

Sept. 27

Oct. 3, Sept. 27

Oct. 3,

1998

1999

1998

1999 NET SALES

$42,440

$52,044 $123,316 $143,174 COST OF SALES

36,564

32,017

86,272

87,652 Gross Profit

5,875

20,027

37,044

55,522 OPERATING EXPENSES: Research and development

5,838

6,262

14,986

16,038 Selling, general and

administrative

9,579

10,628

29,350

32,318 Amortization of purchased

intangibles

629

1,029

1,887

2,287 Purchased in-process research

and development

--

12,000

--

12,000 Restructuring and

reorganization costs

4,957

--

4,957

131

Total operating expenses

21,003

29,919

51,180

62,774 OPERATING LOSS (15,127)

(9,892) (14,136)

(7,252) OTHER EXPENSE: Valuation adjustment

(3,267)

--

(3,267)

-- Other, net

(242)

(286)

(979)

(126)

Total other expense

(3,509

(286)

(4,246)

(126) LOSS BEFORE TAXES

(18,636)

(10,178) (18,382)

(7,378) TAX EXPENSE (BENEFIT)

(6,523)

867

(6,434)

1,987 NET LOSS

$(12,113)

$(11,045 $(11,948) $(9,365) PER SHARE DATA: Net loss per share-basic

and diluted:

$(0.67)

$(0.48) $ (0.66)

$(0.47) WEIGHTED AVERAGE SHARES OUTSTANDING:

Basic and diluted

18,345

23,017

18,087

19,818ots Original Text Service: FEI Company Internet:http://www.newsaktuell.de Contact: Vahe' A. Sarkissian,President and Chief Executive Officer, 503-726-2770 , or WilliamP. Mooney, Executive Vice President and Chief Financial Officer,503-640-7537, both of FEI Company Web site: http://www.feic.com

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