Current Report Filing (8-k)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_____________________________________________

FORM 8-K

_____________________________________________

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(D) OF THE

SECURITIES EXCHANGE ACT OF 1934

July 30, 2015

Date of Report (Date of earliest event reported)

_____________________________________________

FEI COMPANY

(Exact name of registrant as specified in its charter)

_____________________________________________




Oregon	000-22780	93-0621989
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

5350 NE Dawson Creek Drive, Hillsboro, Oregon 97124

(Address of principal executive offices, including zip code)

(503) 726-7500

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

_____________________________________________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:



¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)



¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)



¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))



¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition.

On July 30, 2015, FEI Company issued a press release announcing results for the quarter ended June 28, 2015. A copy of this press release is attached as Exhibit 99.1 to this current report on Form 8-K and is incorporated by reference herein.

The information in this Item 2.02 of this Current Report on Form 8-K and the exhibits attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filing.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.




Exhibit No.		Description

99.1		Press Release issued by FEI Company, dated July 30, 2015

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

FEI COMPANY

/s/ Bradley J. Thies

Bradley J. Thies

Senior Vice President, General Counsel and Secretary

Date: July 30, 2015

EXHIBIT INDEX




Exhibit No.		Description

99.1		Press Release issued by FEI Company, dated July 30, 2015

Exhibit 99.1

NEWS RELEASE

For more information contact:

FEI Company

Jason Willey

Investor Relations Director

jason.willey@fei.com

(503) 726-2533

FEI Reports Second Quarter 2015 Results

Revenue of $224 Million

Gross Margin of 50.0% and EPS of $0.89

HILLSBORO, Ore. July 30, 2015 - FEI Company (NASDAQ: FEIC) reported results for the second quarter of 2015. Second quarter revenue of $224 million was down 5.4% compared to $237 million for second quarter of 2014. Movements in foreign exchange rates negatively impacted revenue for the second quarter of 2015 by $13 million, as compared with second quarter of 2014 rates. Excluding the impact of foreign exchange rate changes, second quarter organic revenue was flat compared with the second quarter of 2014.

Diluted earnings per share were $0.89 for the second quarter of 2015, compared with $0.59 for the second quarter of 2014. Net income for the second quarter of 2015 was $37 million, compared with $25 million for the second quarter of 2014.

Gross margin for the second quarter was 50.0%, compared with 46.4% for the second quarter of 2014. Operating margin was 20.5% for the second quarter of 2015, compared with 13.0% for the second quarter of 2014.

The company’s backlog of orders at the end of the second quarter of 2015 was $541 million, compared with $517 million at the end of the second quarter of 2014 and $510 million at the end of the first quarter of 2015. Revaluation for changes in foreign exchange rates at the end of the quarter increased backlog by $4.1 million compared to the first quarter of 2015. Bookings for the second quarter of 2015 were $252 million, resulting in a book-to-bill of 1.12-to-1.

Net cash provided by operating activities for the second quarter of 2015 was $66 million, compared with $16 million in the second quarter of 2014. During the quarter, the company paid cash dividends of $10 million, spent $2.7 million on plant and equipment and repurchased 275,000 shares of its common stock at an average price of $77.97. Total cash, investments and restricted cash at the end of the quarter was $513 million.

“The FEI team executed on our 50% gross margin and 20% operating margin goals,” commented Don Kania, president and CEO. “This enabled us to generate record second quarter EPS and $66 million of cash from operating activities.

“Our first half order activity from semiconductor and life sciences customers highlights our strong technology and competitive positioning in these key growth markets. As we look to the second half of 2015, our current backlog shows a high level of product deliveries in the fourth quarter, particularly to our Science customers.”

Outlook

For the third quarter of 2015, the company currently expects reported revenue to be in the range of $215 million to $225 million. This range includes a negative impact related to the stronger U.S. dollar of approximately 5% as compared to the third quarter of 2014. Earnings per fully diluted share are expected to be in the range of $0.70 to $0.80. This range is based on an expected tax rate for the third quarter of approximately 20%.

For full year 2015, the company continues to expect organic revenue growth to be in the range of 4% to 7% compared with 2014 and earnings per fully diluted share in the range of $3.40 to $3.70. This EPS range is based on an expected tax rate for the full year of approximately 20%. Based on current exchange rates, the stronger U.S. dollar is expected to negatively impact full year 2015 reported revenue growth by approximately 5% as compared to the full year 2014.

Investor Conference Call - 2:00 p.m. Pacific Time, Thursday, July 30, 2015

Parties interested in listening to FEI's quarterly conference call may do so by dialing 1-877-407-8293 (U.S., toll-free) or +1-201-689-8349 (international and toll), with the conference title: FEI Second Quarter Earnings Conference Call. The call can also be accessed via the web by going to FEI's Investor Relations page at http://investor.fei.com/events.cfm, where the webcast will also be archived.

Safe Harbor Statement

This news release contains forward-looking statements that include guidance for revenue and earnings per share for the third quarter of 2015 and full year 2015, the impact of certain items on our results for the quarter, statements about foreign currency exchange rates and the potential impact of a stronger U.S. dollar, assumptions about tax rates, and statements about potential healthy revenue growth and the timing product of deliveries in certain markets. Forward-looking statements may also be identified by words and phrases that refer to future expectations, such as “guidance”, “guiding”, “forecast”, “toward”, “plan”, “expect”, “expects”, “are expected”, “is expected”, “will”, “projecting”, “looking forward”, “continue to see”, “outlook” and other similar words and phrases. Factors that could affect these forward-looking statements include, but are not limited to: the global economic environment, particularly continued slower growth in China and emerging markets; lower than expected customer orders, including for recently-introduced products; potential weakness of the Science and Industry market segments, including continued weakness in the oil and gas sector of the Industry segment resulting from declining oil prices; fluctuations in foreign exchange rates, which, among other things, can affect revenues, margins, bookings, backlog and the competitive pricing of our products; cyclical and other changes and increased volatility in the semiconductor industry, which is a major component of Industry market segment revenue; changes in backlog and the timing of shipments from backlog, which may create forecasting challenges; potential delayed or reduced governmental spending to support expected orders; potential disruption in the company's operations due to organizational changes; the relative mix of higher-margin and lower-margin products; potential for increased volatility and challenges in forecasting resulting from larger sales transactions, cancellations and rescheduling of orders by customers; risks associated with a high percentage of the company's revenue coming from “turns” business, when the order for a product is placed by the customer in the same quarter as the planned shipment, and risks associated with building and shipping a high percentage of the company’s quarterly revenue in the last month of the quarter; delays in meeting all accounting requirements for revenue recognition; additional costs related to future merger and acquisition activity; failure of the company to achieve anticipated benefits of acquisitions and collaborations, including failure to achieve financial goals and integrate acquisitions successfully; reduced profitability due to failure to achieve or sustain margin improvement in service or product manufacturing; potential disruption in manufacturing or unexpected additional costs due to the transition from older to newer products; failure to achieve improved operational efficiency and other benefits from infrastructure investments and restructuring activities; potential additional restructurings, realignments and reorganizations; inability to deploy products as expected or delays in shipping products due to technical problems or barriers, especially with regard to recently introduced TEM products; and changes in tax rates and laws, accounting rules regarding taxes or agreements with tax authorities. 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.

About FEI

FEI Company (Nasdaq: FEIC) designs, manufactures and supports a broad range of high-performance microscopy workflow solutions that provide images and answers at the micro-, nano- and picometer scales. Its innovation and leadership enable customers in industry and science to increase productivity and make breakthrough discoveries. Headquartered in Hillsboro, Ore., USA, FEI has over 2,800 employees and sales and service operations in more than 50 countries around the world. More information can be found at: www.fei.com.

FEI Company and Subsidiaries

Consolidated Balance Sheets

(In thousands)

(Unaudited)



	June 28, 2015			December 31, 2014
Assets
Current Assets:
Cash and cash equivalents	$	333,194		$	300,507
Short-term investments in marketable securities	42,476			61,688
Short-term restricted cash	15,514			15,698
Receivables, net	211,745			227,354
Inventories, net	181,659			176,440
Deferred tax assets	9,587			8,225
Other current assets	32,486			35,503
Total current assets	826,661			825,415
Long-term investments in marketable securities	91,139			85,865
Long-term restricted cash	30,344			38,369
Property plant and equipment, net	156,203			163,794
Intangible assets, net	49,834			54,111
Goodwill	167,936			170,773
Deferred tax assets	8,927			6,605
Long-term inventories	48,703			50,731
Other assets, net	20,656			22,155
Total Assets	$	1,400,403		$	1,417,818
Liabilities and Shareholders' Equity
Current Liabilities:
Accounts payable	$	74,406		$	78,308
Accrued payroll liabilities	37,464			38,599
Accrued warranty reserves	13,311			13,005
Short-term deferred revenue	95,669			96,924
Income taxes payable	12,574			5,299
Accrued restructuring, reorganization, relocation and severance	1,692			9,161
Other current liabilities	53,894			56,146
Total current liabilities	289,010			297,442
Long-term deferred revenue	37,071			34,021
Deferred tax liabilities	7,666			9,576
Other liabilities	35,687			35,454
Shareholders' Equity:
Preferred stock - 500 shares authorized; none issued and outstanding	—			—
Common stock - 70,000 shares authorized; 41,589 and 41,797 shares issued and outstanding at June 28, 2015 and December 31, 2014	592,665			607,250
Retained earnings	503,961			461,586
Accumulated other comprehensive loss	(65,657		)	(27,511		)
Total shareholders’ equity	1,030,969			1,041,325
Total Liabilities and Shareholders' Equity	$	1,400,403		$	1,417,818

FEI Company and Subsidiaries

Consolidated Statements of Operations

(In thousands, except per share amounts)

(Unaudited)



	Thirteen Weeks Ended						Twenty-Six Weeks Ended
	June 28, 2015			June 29, 2014			June 28, 2015			June 29, 2014
Net Sales:
Products	$	163,585		$	179,030		$	327,644		$	348,328
Service	60,604			57,925			117,361			114,892
Total net sales	224,189			236,955			445,005			463,220
Cost of Sales:
Products	78,825			92,077			160,326			178,673
Service	33,259			35,027			67,303			68,371
Total cost of sales	112,084			127,104			227,629			247,044
Gross profit	112,105			109,851			217,376			216,176
Operating Expenses:
Research and development	23,128			26,221			46,450			51,866
Selling, general and administrative	43,093			50,587			88,915			99,050
Restructuring, reorganization, relocation and severance	(21		)	2,228			(142		)	3,559
Total operating expenses	66,200			79,036			135,223			154,475
Operating Income	45,905			30,815			82,153			61,701
Other Expense, Net	(590		)	(806		)	(1,557		)	(1,076		)
Income Before Income Taxes	45,315			30,009			80,596			60,625
Income Tax Expense	7,983			5,061			15,252			10,599
Net Income	$	37,332		$	24,948		$	65,344		$	50,026
Basic Net Income Per Share	$	0.90		$	0.59		$	1.57		$	1.19
Diluted Net Income Per Share	$	0.89		$	0.59		$	1.55		$	1.17
Weighted Average Shares Outstanding:
Basic	41,629			42,080			41,711			42,135
Diluted	42,044			42,627			42,142			42,701

FEI Company and Subsidiaries

Consolidated Statements of Operations

(Unaudited)



	Thirteen Weeks Ended ⁽¹⁾				Twenty-Six Weeks Ended ⁽¹⁾
	June 28, 2015		June 29, 2014		June 28, 2015		June 29, 2014
Net Sales:
Products	73.0	%	75.6	%	73.6	%	75.2	%
Service	27.0		24.4		26.4		24.8
Total net sales	100.0	%	100.0	%	100.0	%	100.0	%
Cost of Sales:
Products	35.2	%	38.9	%	36.0	%	38.6	%
Service	14.8		14.8		15.1		14.8
Total cost of sales	50.0	%	53.6	%	51.2	%	53.3	%
Gross Margin:
Products	51.8	%	48.6	%	51.1	%	48.7	%
Service	45.1		39.5		42.7		40.5
Gross margin	50.0		46.4		48.8		46.7
Operating Expenses:
Research and development	10.3	%	11.1	%	10.4	%	11.2	%
Selling, general and administrative	19.2		21.3		20.0		21.4
Restructuring, reorganization, relocation and severance	—		0.9		—		0.8
Total operating expenses	29.5	%	33.4	%	30.4	%	33.3	%
Operating Income	20.5	%	13.0	%	18.5	%	13.3	%
Other Expense, Net	(0.3	)%	(0.3	)%	(0.3	)%	(0.2	)%
Income Before Income Taxes	20.2	%	12.7	%	18.1	%	13.1	%
Income Tax Expense	3.6	%	2.1	%	3.4	%	2.3	%
Net Income	16.7	%	10.5	%	14.7	%	10.8	%


⁽¹⁾	Percentages may not add due to rounding.

FEI Company and Subsidiaries

Consolidated Summary of Cash Flows

(In thousands)

(Unaudited)



	Thirteen Weeks Ended						Twenty-Six Weeks Ended
	June 28, 2015			June 29, 2014			June 28, 2015			June 29, 2014
Net Income	$	37,332		$	24,948		$	65,344		$	50,026
Depreciation	6,082			7,574			12,063			14,640
Amortization	2,825			3,667			5,715			6,864
Stock-based compensation	4,545			5,823			10,494			10,961
Other changes in working capital	15,076			(26,036		)	(4,632		)	(38,067		)
Net cash provided by operating activities	65,860			15,976			88,984			44,424
Acquisition of property, plant and equipment	(2,677		)	(18,986		)	(7,869		)	(23,322		)
Payments for acquisitions, net of cash acquired	—			(434		)	(5,377		)	(65,049		)
Other investing activities	22,376			(7,512		)	17,059			(31,599		)
Net cash provided by (used in) investing activities	19,699			(26,932		)	3,813			(119,970		)
Dividends paid on common stock	(10,427		)	(5,071		)	(20,877		)	(10,129		)
Repurchases of common stock	(21,928		)	(30,479		)	(30,224		)	(30,479		)
Other financing activities	3,303			2,145			6,325			8,560
Net cash used in financing activities	(29,052		)	(33,405		)	(44,776		)	(32,048		)
Effect of exchange rate changes	8,431			(933		)	(15,334		)	(4,204		)
Decrease in cash and cash equivalents	64,938			(45,294		)	$	32,687		$	(111,798	)
Cash and Cash Equivalents:
Beginning of period	268,256			317,666			300,507			384,170
End of period	$	333,194		$	272,372		$	333,194		$	272,372
Supplemental Cash Flow Information:
Cash paid for income taxes, net	$	4,655		$	6,172		$	10,597		$	9,883
Accrued purchases of plant and equipment	443			4,619			443			4,619
Dividends declared but not paid	12,479			10,564			12,479			10,564
Accrued repurchases of common stock	1,271			—			1,271			—

FEI Company and Subsidiaries

Supplemental Data Table

($ in millions, except per share amounts)

(Unaudited)



	Thirteen Weeks Ended						Twenty-Six Weeks Ended
	June 28, 2015			June 29, 2014			June 28, 2015			June 29, 2014
Income Statement Highlights:
Consolidated sales	$	224.2		$	237.0		$	445.0		$	463.2
Gross margin	50.0		%	46.4		%	48.8		%	46.7		%
Net income	$	37.3		$	24.9		$	65.3		$	50.0
Diluted net income per share	$	0.89		$	0.59		$	1.55		$	1.17
Sales and Bookings Highlights:
Sales by Segment
Industry Group	$	119.6		$	127.2		$	231.5		$	233.7
Science Group	104.6			109.8			213.5			229.5
Sales by Geography
USA & Canada	$	76.4		$	80.5		$	141.4		$	152.7
Europe	56.8			63.6			111.3			130.6
Asia-Pacific and Rest of World	91.0			92.9			192.3			179.9
Gross Margin by Segment
Industry Group	54.1		%	50.4		%	52.4		%	51.5		%
Science Group	45.3			41.7			45.0			41.8
Bookings and Backlog
Bookings - Total	$	251.6		$	260.5		$	467.5		$	508.0
Book-to-bill Ratio	1.12			1.10			1.05			1.10
Backlog - Total	$	541.2		$	516.7		$	541.2		$	516.7
Backlog - Service	165.0			143.5			165.0			143.5
Bookings by Segment
Industry Group	$	112.7		$	110.2		$	249.8		$	233.3
Science Group	138.9			150.3			217.7			274.7
Bookings by Geography
USA & Canada	$	91.3		$	86.4		$	143.7		$	144.5
Europe	73.0			74.5			111.3			167.7
Asia-Pacific and Rest of World	87.3			99.6			212.5			195.8
Balance Sheet and Other Highlights:
Cash, equivalents, investments, restricted cash	$	512.7		$	510.2		$	512.7		$	510.2
Days sales outstanding (DSO)	86			87			86			87
Days in inventory	180			181			180			181
Days in payables (DPO)	61			63			61			63
Cash Cycle (DSO + Days in Inventory - DPO)	205			205			205			205
Working capital	$	537.7		$	589.8		$	537.7		$	589.8
Headcount (permanent and temporary)	2,826			2,689			2,826			2,689
Euro average rate	1.10			1.37			1.12			1.37
Euro ending rate	1.12			1.36			1.12			1.36
Yen average rate	121.01			102.18			119.97			102.46
Yen ending rate	123.71			101.37			123.71			101.37