FEI Company Revises Impairment Charge for Second Quarter of 2005

    HILLSBORO, Ore., Aug. 8 /PRNewswire-FirstCall/ -- FEI Company
 (Nasdaq:   FEIC) revised its results for the second quarter of 2005 to exclude
 an impairment charge.
     On August 3, 2005, the company issued a press release announcing results
 for the second quarter of 2005, which ended on July 3, 2005. In the release,
 FEI described an impairment of goodwill related to parts of our semiconductor
 business. This impairment of goodwill amounted to $21.6 million, or $0.65 per
 basic and diluted share for the quarter. On August 8, 2005, following further
 review, the company concluded that it would not include an impairment of the
 goodwill in the financial statements for the quarter. Accordingly, this charge
 will not be included in the statement of operations reported in the Form 10-Q
 which will be filed with the Securities and Exchange Commission later this
 week.
     The revised condensed financial statements for the quarter and year to
 date period ended July 3, 2005 are attached to this release.
 
     Analyst Conference and Web cast Call -- 8:00 a.m. PDT Tuesday, August 9,
 2005
     FEI will be hosting its annual analyst conference on Tuesday, August 9,
 2005 which will be web cast to all interested parties.  Interested parties may
 access the presentation via the web by going to FEI's Investor Relations page
 at http://www.feicompany.com . During this conference we plan to discuss this
 issue as well as business trends and other factors that impact FEI. The
 conference is scheduled to begin at 8:00 a.m. PDT and is expected to last
 approximately 2 hours.
 
     About FEI
     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 .
 
 
                          FEI Company and Subsidiaries
                     Condensed Consolidated Balance Sheets
                                 (In thousands)
                                  (Unaudited)
 
                                            July 3,    April 3,  December 31,
     ASSETS                                  2005        2005        2004
 
     CURRENT ASSETS:
       Cash and cash equivalents             $88,280   $158,257    $130,682
       Short-term investments in
        marketable securities                126,166    160,889     173,681
       Receivables                           116,877    135,406     160,276
       Inventories                            91,976     92,604      87,783
       Deferred tax assets                     2,032      7,394       8,365
       Other current assets                   30,344     22,936      29,804
 
                Total current assets         455,675    577,486     590,591
 
     NON-CURRENT INVESTMENTS IN MARKETABLE
      SECURITIES                              57,264     36,614      33,850
 
     LONG-TERM RESTRICTED CASH                 4,359      3,963       4,177
 
     PROPERTY PLANT AND EQUIPMENT, NET        65,312     71,270      71,550
 
     PURCHASED TECHNOLOGY, NET                 9,603     20,613      22,080
 
     GOODWILL                                 41,461     41,476      41,486
 
     DEFERRED TAX ASSETS                       6,690     24,409      18,555
 
     OTHER ASSETS, NET                        49,076     55,912      59,505
 
     TOTAL                                  $689,440   $831,743    $841,794
 
     LIABILITIES AND SHAREHOLDERS' EQUITY
 
     CURRENT LIABILITIES:
       Accounts payable                      $34,244    $41,266     $36,618
       Current accounts with Philips           2,757      4,766       4,240
       Accrued payroll liabilities            10,898     13,762      15,070
       Accrued warranty reserves               8,479      9,784      10,052
       Deferred revenue                       42,278     44,809      43,349
       Income taxes payable                    9,074      5,390       7,962
       Accrued restructuring,
        reorganization and relocation            693        706       1,020
       Other current liabilities              31,257     30,875      37,128
 
                Total current liabilities    139,680    151,358     155,439
 
     CONVERTIBLE DEBT                        225,000    295,000     295,000
 
     DEFERRED TAX LIABILITIES                  5,076      5,638       6,412
 
     OTHER LIABILITIES                         4,831      5,195       5,373
 
     SHAREHOLDERS' EQUITY:
       Preferred stock - 500 shares
        authorized; none issued and
        outstanding                               --         --          --
       Common stock - 70,000 shares
        authorized; 33,653; 33,493 and
        33,413 shares issued and
        outstanding at July 3, 2005;
        April 3, 2005; and
        December 31, 2004                    318,769    317,777     315,632
       Accumulated earnings (deficit)        (20,285)    25,500      22,077
       Accumulated other comprehensive
        income                                16,369     31,275      41,861
 
                Total shareholders' equity   314,853    374,552     379,570
 
     TOTAL                                  $689,440   $831,743    $841,794
 
 
                          FEI Company and Subsidiaries
                Condensed Consolidated Statements of Operations
                    (In thousands, except per share amounts)
                                  (Unaudited)
 
                               Thirteen Weeks Ended      Twenty Six Weeks Ended
                            July 3,   April 3,  July 4,    July 3,    July 4,
                             2005       2005      2004      2005       2004
 
     NET SALES:
       Products             $82,312   $95,753   $86,551   $178,065   $170,825
       Service               25,181    25,240    21,917     50,421     42,737
                Total net
                 sales      107,493   120,993   108,468    228,486    213,562
 
     COST OF SALES:
       Products              52,840    53,475    49,569    106,315     98,969
       Service               17,992    18,581    15,138     36,573     28,801
                Total cost
                 of sales    70,832    72,056    64,707    142,888    127,770
 
                Gross
                 profit      36,661    48,937    43,761     85,598     85,792
 
     OPERATING EXPENSES:
       Research and
        development          15,867    16,187    13,131     32,054     26,698
       Selling, general
        and administrative   25,174    25,313    22,764     50,487     42,878
       Amortization of
        purchased
        technology            1,517     1,342     1,413      2,859      2,826
       Asset impairment      15,944        --        --     15,944         --
       Restructuring,
        reorganization and
        relocation            1,124        --       488      1,124        707
             Total operating
              expenses       59,626    42,842    37,796    102,468     73,109
 
     OPERATING INCOME
      (LOSS)                (22,965)    6,095     5,965    (16,870)    12,683
 
     OTHER INCOME
      (EXPENSE):
       Interest income        1,905     1,814     1,288      3,719      2,351
       Interest expense      (3,982)   (2,507)   (2,611)    (6,489)    (5,079)
       Other expense, net      (993)     (216)       57     (1,209)    (2,355)
     Total other expense,
      net                    (3,070)     (909)   (1,266)    (3,979)    (5,083)
 
     INCOME (LOSS) BEFORE
      TAXES                 (26,035)    5,186     4,699    (20,849)     7,600
 
     INCOME TAX EXPENSE      19,750     1,763     1,645     21,513      2,660
 
     NET INCOME (LOSS)     $(45,785)   $3,423    $3,054   $(42,362)    $4,940
 
     PER SHARE DATA:
       Basic earnings
        (loss) per share     $(1.36)    $0.10     $0.09     $(1.26)     $0.15
       Diluted earnings
        (loss) per share     $(1.36)    $0.09     $0.08     $(1.26)     $0.12
 
     WEIGHTED AVERAGE
      SHARES OUTSTANDING:
       Basic                 33,544    33,456    33,241     33,500     33,213
       Diluted               33,544    39,878    39,734     33,500     39,724
 
 

SOURCE FEI Company

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