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FEI Company Reports Record Bookings and Earnings for the Fourth Quarter of 2006
Net 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%.
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