SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________ to ________
Commission File No. 0-22780
FEI COMPANY
(Exact name of registrant as specified in its charter)
Oregon 93-0621989
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
7451 NW Evergreen Parkway
Hillsboro, Oregon 97124-5830
(Address of principal executive offices) (Zip Code)
(503) 640-7500
(Registrant's telephone number, including area code)
Not applicable
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 17,689,549 shares of Common
Stock were outstanding at April 30, 1997.
<PAGE>
INDEX TO FORM 10-Q
Page
Part I - Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets - March 30, 1997 (unaudited) and
December 31, 1996............................................ 1
Consolidated Statements of Operations - Thirteen Weeks Ended
March 30, 1997 and March 31, 1996 (unaudited)................ 2
Consolidated Statements of Cash Flows - Thirteen Weeks Ended
March 30, 1997 (unaudited) and March 31, 1996 (unaudited).... 3
Notes to Consolidated Financial Statements (unaudited)....... 4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.......................... 8
Part II - Other Information
Item 2. Changes in Securities.................................... 12
Item 6. Exhibits and Reports on Form 8-K......................... 12
Signatures............................................................. 15
<PAGE>
PART I - Financial Information
Item 1. Financial Statements
FEI Company and Subsidiaries Consolidated Balance Sheets (Unaudited) December
31, 1996 and March 30, 1997 (In thousands, except share data)
<TABLE>
<CAPTION>
December 31, March 30,
1996 1997
----------- ---------
(PEO (Combined
Operations) Company)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ -- $ 9,985
Receivables 25,349 35,731
Inventories (Note 3) 30,213 48,116
Current accounts with Philips (Note 4) 1,639 3,627
Other receivables and prepaid expenses 1,426 1,484
Deferred income taxes -- 619
--------- ---------
Total current assets 58,627 99,562
EQUIPMENT 5,658 18,207
LEASES RECEIVABLE -- 1,854
OTHER ASSETS (Note 5) 7,539 46,026
--------- ---------
TOTAL $ 71,824 $ 165,649
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Line of credit and notes payable $ -- $ 10,427
Accounts payable 7,585 13,111
Accrued payroll liabilities 1,648 3,235
Prepayments received 2,145 2,552
Accrued expenses/deferred income 13,277 14,313
Other current liabilities 2,897 4,446
--------- ---------
Total current liabilities 27,552 48,084
LONG-TERM PROVISIONS 1,202 562
DEFERRED INCOME TAXES -- 7,207
SHAREHOLDERS' EQUITY:
Preferred stock - 500,000 shares authorized; none -- --
issued and outstanding
Common stock - 30,000,000 shares authorized; -- 151,135
17,686,549 shares issued and outstanding at March 30,
1997
Retained earnings -- (41,339)
Division equity (Note 8) 43,070 --
--------- ---------
SHAREHOLDERS' EQUITY 43,070 109,796
--------- ---------
TOTAL $ 71,824 $ 165,649
========= =========
</TABLE>
See notes to consolidated financial statements.
1
<PAGE>
FEI Company and Subsidiaries
Consolidated Statements of Operations (Unaudited)
Thirteen Weeks Ended March 31, 1996 and March 30, 1997
(In thousands except per share data)
<TABLE>
<CAPTION>
Thirteen Weeks Ended
March 31, 1996 March 30, 1997
-------------- --------------
(PEO (Combined
Operations) Company)
<S> <C> <C>
Sales $ 17,593 $ 32,241
Cost of sales 11,154 22,779
--------- ---------
Gross profit 6,439 9,462
Research and development costs 2,411 2,769
Selling, general and administrative costs 4,717 7,242
Amortization of intangibles (Note 6) - 307
Purchased in-process research and development (Note 6) - 38,046
Restructuring and reorganization costs (Note 7) - 2,478
--------- ---------
Loss from operations (689) (41,380)
Other income - 41
--------- ---------
Loss before income taxes (689) (41,339)
Income tax expense (benefit) (144) -
-------- ---------
Net loss $ (545) $(41,339)
======== ========
Pro forma weighted average common and common equivalent shares 9,729 13,037
outstanding ========= =========
Pro forma loss per share (Note 2) $ (0.06) $ (3.17)
======== ========
</TABLE>
See notes to consolidated financial statements
2
<PAGE>
FEI Company and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
Thirteen Weeks Ended March 31, 1996 and March 30, 1997
(In thousands)
<TABLE>
<CAPTION>
Thirteen Weeks Ended
March 31, 1996 March 30, 1997
-------------- --------------
(PEO (Combined
Operations) Company)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (545) $ (41,339)
Other items impacting operating cash flows 2,728 42,705
-------- ---------
Net cash provided by operating activities 2,183 1,366
-------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of equipment (2,399) (1,493)
Net change in leases receivable - (513)
Proceeds from sale of investments - 359
-------- ---------
Net cash used in investing activities (2,399) (1,647)
-------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings on line of credit - 1,217
Proceeds from issuance of common stock - 3
Net cash received from Philips 216 7,985
-------- ---------
Net cash provided by financing activities 216 9,205
-------- ---------
INCREASE IN CASH AND CASH EQUIVALENTS - 8,924
CASH, BEGINNING OF PERIOD - 1,061
-------- ---------
CASH, END OF PERIOD $ - $ 9,985
======== =========
</TABLE>
See notes to consolidated financial statements.
3
<PAGE>
FEI COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. NATURE OF BUSINESS
FEI Company and its wholly owned subsidiaries (the "Company") design,
manufacture and market focused ion beam ("FIB") workstations, transmission
electron microscopes ("TEMs"), scanning electron microscopes ("SEMs") and
components of these products. The Company has manufacturing operations in
Hillsboro, Oregon; Eindhoven, The Netherlands; and Brno, Czech Republic. Sales
and service operations are conducted in eight countries and the U.S.,
constituting a majority of the worldwide market for the Company's products. In
addition, the Company's products are sold through distribution agreements with
affiliates of Philips Electronics N.V. ("Philips") located in approximately 20
additional countries.
The Company's products are sold to manufacturers of integrated circuits ("ICs")
and life science and materials science customers. The Company's FIB workstations
are sold primarily to IC manufacturers. The Company's electron microscope
products are sold primarily to life science and materials science research
institutes, universities and industrial customers, as well as to a limited
number of IC manufacturers.
The Company is an indirect subsidiary of Philips which owns, through one of its
subsidiaries, 55% of the outstanding stock of the Company.
2. BASIS OF PRESENTATION
On February 21, 1997, FEI Company completed a combination transaction (the
"Combination") with the electron optics business ("PEO Operations") of Philips
Industrial Electronics International B.V. ("PIE"), a wholly owned subsidiary of
Philips. Pursuant to the Combination, FEI Company acquired shares of two
Philips' subsidiaries owning substantially all of the assets and liabilities of
PEO Operations' business, and issued to PIE a number of shares of FEI Common
Stock equal, after issuance, to 55% of the outstanding shares of Common Stock of
FEI Company. The transaction is being accounted for as a "reverse acquisition"
for accounting and financial reporting purposes, whereby PIE will be treated as
the accounting acquiror because PIE acquired control of the Company by acquiring
55% of the outstanding voting securities of the Company in the transaction. As a
result, the historical financial statements of the Company are the historical
financial statements of the PEO Operations for all periods prior to the date of
the Combination.
Pro forma earnings per share have been calculated assuming the shares of the
Company issued to PIE in the Combination were outstanding for the PEO Operations
and the combined company for all periods presented and assuming the shares of
the Company outstanding prior to the Combination were issued as of the closing
date of the Combination.
The accompanying unaudited consolidated financial statements have been prepared
in accordance with the instructions to Form 10-Q and Article 2 of Regulation
S-X. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments considered necessary
for fair presentation have been included. In addition to the adjustments for
normal recurring accruals, the Company recorded charges in the first quarter of
1997 of approximately $38.0 million associated with the purchase of in-process
research and development, as a result of the Company's combination with PEO
Operations. The Company also recorded a $2.5 million restructuring and
reorganization charge primarily associated with the relocation of the Company's
Wilmington, Massachusetts manufacturing operations.
Before the Combination, the PEO Operations were operated as a business unit of
PIE. Management of Philips allocated certain costs in preparation of the
historical financial statements of the PEO Operations. No assurance is given
that these cost allocations reflect the actual costs that would have been
incurred by the PEO Operations if it had been operated as a stand-alone
business. Moreover, the preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amount of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amount of revenues and expenses during the reported
period. Actual results could differ from estimates.
4
<PAGE>
The accompanying consolidated financial statements should be read in conjunction
with the consolidated financial statements and footnotes thereto included in the
Company's annual report on Form 10-K for the year ended December 31, 1996 as
well as the financial statements and footnotes of PEO Operations for the year
ended December 31, 1996 included in the Company's report on Form 8-K/A dated May
7, 1997.
3. INVENTORIES
Inventories consist of the following (in thousands):
December 31, March 30,
1996 1997
------------ ---------
Raw materials and assembled parts $ 13,018 $ 21,500
Work in process 9,610 18,214
Finished goods 9,909 12,448
----------- ---------
32,537 52,162
Inventory reserves (2,324) (4,046)
Total inventories, net $ 30,213 $ 48,116
=========== =========
4. CURRENT ACCOUNTS WITH PHILIPS
Current accounts with Philips represent net accounts receivable and accounts
payable between the Company and other subsidiaries of Philips. Most of the
current account transactions relate to deliveries of goods.
Current accounts with Philips consist of the following (in thousands):
December 31, March 30,
1996 1997
------------ ---------
Current accounts receivable $ 2,471 $ 6,789
Current accounts payable (832) (3,162)
----------- ---------
Total current accounts with Philips $ 1,639 3,627
5. OTHER ASSETS
Other assets consist of the following (in thousands)
December 31, March 30,
1996 1997
------------ ---------
Goodwill, net (Note 6) $ 1,525 $ 17,003
Existing technology, net (Note 6) - 16,353
Noncurrent service inventories, net of
valuation reserves of $2,661 and $5,381,
respectively 6,014 8,634
Investment in Norsam Technologies, Inc.,
at cost - 3,267
Deposits and other - 769
------------ ---------
$ 7,539 $ 46,026
============ =========
6. THE COMBINATION
On February 21, 1997, FEI Company ("Pre-Combination FEI") acquired substantially
all of the assets and liabilities of the PEO Operations. The PEO Operations were
acquired in exchange for 9,728,807 newly issued shares of the Company's Common
Stock, which constituted, when issued to PIE, 55% of the shares of Common Stock
then outstanding. Because PIE acquired control of the Company by acquiring 55%
of the
5
<PAGE>
outstanding voting securities of the Pre-Combination FEI, the Combination was
treated as a "reverse acquisition" for accounting and financial reporting
purposes whereby purchase accounting was applied to the financial statements of
Pre-Combination FEI. The results of operations of Pre-Combination FEI are
included subsequent to February 21, 1997.
The Company obtained an appraisal of the fair market value of the intangible
assets acquired to serve as a basis for allocation of the purchase price to the
various classes of assets. The Company allocated the total purchase price of
$122.9 million to the assets acquired as follows (in thousands):
Current assets $ 43,893
Equipment 8,321
Leases receivable 1,341
Other assets 4,744
Existing technology intangible 16,490
In-process research and product development 38,046
Goodwill and other intangibles 17,122
Deferred income taxes (7,085)
---------
$ 122,872
=========
To determine the value of each of Pre-Combination FEI's product lines, projected
revenue net of provision for operating expenses, income taxes and returns on
requisite assets were discounted to a present value. This approach was applied
to existing technology as well as to research and development projects which
have not been proven technologically feasible and which had not generated
revenue at the date of the Combination. As a result of this valuation, the fair
value of existing technology and in-process technology were determined to be
$16,490,000 and $38,046,000, respectively.
The amortization periods for existing technology and goodwill have been
established at 12 years and 15 years, respectively. The existing focused ion
beam technology, which is now in its third year of commercialization, is
estimated to have a 15-year life. Management will evaluate these amortization
periods from time to time. It is possible that estimates of anticipated future
gross revenues, the remaining estimated economic life of products or
technologies, or both may be reduced due to competitive pressures or other
factors.
In accordance with the applicable accounting pronouncements, a one-time charge
of $38,046,000 associated with the writeoff of acquired in-process research and
product development was recorded immediately subsequent to the closing of the
Combination. Generally, it is the Company's policy to expense research and
development costs.
Unaudited pro forma combined statement of operations data, presented as if the
Combination had occurred on January 1, 1996, are as follows:
13 Weeks Ended
March 31, March 30,
1996 1997
--------- ---------
Net sales $ 26,829 $ 35,013
========= =========
Net income (loss) $ 96 $ (5,100)
========= =========
Pro forma earnings (loss) per share $ 0.01 $ (0.29)
========= =========
7. RESTRUCTURING AND REORGANIZATION
In March 1997, the Company approved a plan to restructure its ElectroScan
operations by relocating the majority of its ElectroScan manufacturing
activities from Wilmington, Massachusetts to the Company's Netherlands
manufacturing facility. In conjunction with this plan, the Company announced its
intent to layoff 11 ElectroScan employees in manufacturing, sales and
administration and cease the majority of its manufacturing operations at the
Wilmington, Massachusetts facility. The total cost of the restructuring is
estimated to be approximately $2.1 million, recorded in the period ended March
30, 1997, including the
6
<PAGE>
remaining goodwill of $1.7 million attributable to the acquisition of the assets
of ElectroScan Corporation and approximately $400,000 of severance and other
costs.
In addition, the Company recorded a charge of approximately $400,000 associated
with costs relating to integrating the businesses of FEI and the PEO Operations.
8. SHAREHOLDERS' EQUITY
Effective as of the closing of the Combination, division equity of the PEO
Operations was reclassified to paid-in capital of the Company.
9. NEW ACCOUNTING PRINCIPLE
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128 ("SFAS No. 128"), "Earnings per Share,"
which requires companies to present two new measures of earnings per share,
basic and diluted. If SFAS No. 128 had been adopted for all periods presented,
basic and diluted earnings per share would not have materially differed from
reported earnings per share.
7
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations
The following table sets forth consolidated statement of operations data as a
percentage of sales for the PEO Operations for the thirteen weeks ended March
31, 1996 and for the Company for the thirteen weeks ended March 30, 1997.
Operating results for the thirteen weeks ended March 30, 1997 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 1997. The following table should be read in conjunction with the
Combined Financial Statements of the PEO Operations and the footnotes thereto
included in the Company's Form 8-K/A dated May 7, 1997 and the financial
statement and footnotes of Pre-Combination FEI included in the Company's annual
report on Form 10-K for the year ended December 31, 1996.
Thirteen Weeks Ended
March 31, March 30,
1996 1997
----------- ----------
(PEO (Combined
Operations) Company)
Sales 100.0% 100.0%
Cost of sales 63.4% 70.7%
------- --------
Gross profit 36.6% 29.3%
Research and development costs 13.7% 8.6%
Selling, general and administrative costs 26.8% 22.5%
Amortization of intangibles -- 1.0%
Purchased in-process research and development -- 118.0%
Restructuring and reorganization -- 7.7%
------- --------
Income from operations (3.9)% (128.3)%
Other income -- 0.1%
------- --------
Loss before income taxes (3.9)% (128.2)%
Income tax expense (benefit) (0.8)% --
------- --------
Net loss (3.1)% (128.2)%
======= ========
Thirteen Weeks Ended March 30, 1997 and March 31, 1996
Sales. Sales increased $14.6 million (83%) to $32.2 million in the 1997 period
from $17.6 million in the 1996 period. The increase in net sales in 1997
compared to 1996 was primarily the result of the acquisition of Pre-Combination
FEI, which contributed approximately $8.1 million dollars in revenue for the
period from the Closing of the Combination on February 21, 1997 ("Closing")
through March 30, 1997. In addition, sales of scanning electron microscopes
increased $6.5 million in the 1997 period compared to the 1996 period.
8
<PAGE>
International sales accounted for 68% and 76% of sales for the 1997 period and
the 1996 period, respectively. International sales are defined as sales outside
the U.S. The Company expects international sales to continue to represent a
significant percentage of its net sales.
Gross Profit. Gross profit increased $3.0 million (47%) to $9.4 million in the
1997 period from $6.4 million in the 1996 period. The increase in gross profit
in 1997 from 1996 in dollar amount was primarily due to the addition of the
operations of Pre-Combination FEI subsequent to Closing, which contributed
approximately $2.0 million of gross profit. Gross profit as a percentage of net
sales was 29% and 37% for the 1997 and 1996 periods, respectively. Gross profit
declined as a percent of sales due to lower margins on Pre-Combination FEI's
operations subsequent to Closing, primarily as a result of increasing the
carrying value of its inventory (and, therefore, its cost of sales) in
conjunction with the purchase price allocation. In addition, the Company
increased its valuation allowance for a certain type of high-tension tank
inventory by $645,000 as a result of a decision to accelerate the phase out of
this tank.
Research and Development. Research and development expense increased $358,000
(15%) to $2.8 million in the 1997 period from $2.4 million in the 1996 period.
This increase was primarily the result of the addition of research and
development costs incurred by Pre-Combination FEI subsequent to Closing. As a
percentage of sales, research and development expense was 9% and 14% of sales in
the 1997 and 1996 periods, respectively, with the decrease in 1997 resulting
from increased sales and from a relatively lower level of research and
development spending at Pre-Combination FEI.
Selling, General and Administrative. Selling, general and administrative costs
increased $2.5 million (53%) to $7.2 million in the 1997 period from $4.7
million in the 1996 period, primarily as a result of the addition of $1.2
million of selling, general and administrative costs incurred by Pre-Combination
FEI subsequent to Closing. These costs incurred by Pre-Combination FEI were
attributable in part to the Company's continued efforts to increase its FIB
workstation market share in the United States and Asia. As a percentage of net
sales, selling, general and administrative expense was 23% and 27% in the 1997
and 1996 periods, respectively. The decrease in these costs as a percentage of
sales was attributable to additional sales volume.
Income Tax Expense (Benefit). The Company's effective income tax rates for the
1997 and 1996 periods were 0% and 21%, respectively. The Company recorded no tax
benefit in the 1997 period primarily because the majority of the expenses
recorded during the thirteen weeks ended March 30, 1997 were nondeductible. In
the 1996 period, the Company's tax benefit of $144,000 was below the federal
statutory rate due primarily to the impact of foreign taxes. The Company's
effective income tax rate will continue to vary from the Company's federal
statutory tax rate of 34% primarily due to the impact of foreign taxes and the
amortization of goodwill for book purposes.
Risks of International Operations. Certain risks are inherent in international
operations, including changes in demand resulting from fluctuations in interest
and exchange rates, the
9
<PAGE>
risk of government financed competition, changes in trade policies, tariff
regulations and difficulties in obtaining export licenses. Changes in relevant
foreign currency exchange rates between time of sale and time of payment may
also have an adverse impact on profit levels.
Liquidity and Capital Resources
At March 30, 1997, the Company had total cash and cash equivalents of $10.0
million compared to zero at December 31, 1996 for the PEO Operations.
Historically, net cash of the PEO Operations was included in Current Accounts
with Philips and, as such, recorded as Division Equity. Cash provided by
operating activities for the thirteen weeks ended March 30, 1997 was $1.4
million compared to $2.2 million for the thirteen weeks ended March 31, 1996.
This decrease was primarily due to increases in accounts receivable and
inventory, partially offset by an increase in accounts payable.
Investing activities during the thirteen weeks ended March 31, 1997 used net
cash of $1.6 million, primarily due to continued capital expenditures to provide
the basis for growth. During the thirteen weeks ended March 31, 1996, the
Company used net cash of $2.4 million, primarily to purchase additional
operating equipment.
Net cash provided by financing activities for the thirteen weeks ended March 30,
1997 was $9.2 million compared to $216,000 for the 1996 period. The increase
consisted of $8.0 million of cash received from Philips as part of the
Combination and additional borrowings on the Company's line of credit. During
the period ended March 31, 1996, the PEO Operations received $216,000 from
Philips to fund operations.
The Company expects to continue to use cash to fund operations. In the future,
the Company will not have access to financing through Philips' intercompany
accounts, and Philips and its affiliates are not obligated to provide additional
funds, pursuant to the terms of the Combination Agreement or otherwise. Philips
has also advised the Company that it has no present intention to provide any
funds to the Company. The Company will be required to seek credit arrangements
with commercial banks and other institutional lenders, other than the existing
line of credit now maintained, or from other sources of equity or debt
financing. There is no assurance that any such additional financing will be
available on terms that are favorable to the Company. The Company believes its
cash and cash equivalents and borrowings available under its line of credit will
be sufficient to fund operations during the near term.
Backlog
The Company's backlog consists of purchase orders it has received for products
it expects to ship within the next nine months. The Company's backlog at March
30, 1997, was $56 million. A substantial portion of the Company's backlog
relates to orders for a relatively small number of products. As a result, the
timing of the receipt of an order from a single customer could have a
significant impact on the Company's backlog at any
10
<PAGE>
date. For this and other reasons, the amount of backlog at any date is not
necessarily determinative of revenue in future periods.
11
<PAGE>
Part II - Other Information
Item 2. Changes in Securities
On February 21, 1997, in connection with the Company's combination with the
electron optics business (the "PEO Operations") of Philips Electronics N.V., the
Company issued 9,728,807 shares of its Common Stock (the "Shares") to Philips
Industrial Electronics International B.V., a Netherlands corporation ("PIE").
The shares issued were not registered under the Securities Act of 1933, and the
issuance was made in reliance on Section 4(2) of the Securities Act as a
transaction not involving a public offering. The consideration received by the
Company for the Shares was all of the outstanding shares of Philips Electron
Optics International B.V., a Netherlands corporation ("PEO Holdings"), and
Philips Electron Optics, Inc., a Delaware corporation ("PEO-US"), both wholly
owned subsidiaries of PIE immediately prior to the closing of the combination.
All of the assets and liabilities of the PEO Operations were owned by PEO
Holdings and PEO-US at the time of closing of the combination.
Item 4. Submission of Matters to a Vote of Security Holders
A special meeting of shareholders was held on February 20, 1997. The
meeting involved, among other matters, the election of directors as part of the
Combination. The names of the persons elected as directors of the Registrant at
the meeting are:
Alfred B. Bok
William D. Curran
Theo J. H. J. Sonnemans
Karel D. van der Mast
William A. Whitward.
The names of persons continuing as directors after the meeting are:
William Langley
Lynwood W. Swanson
Lloyd R. Swenson
Donald R. VanLuvanee.
The matters voted on at the meeting were the following:
Proposal #1 - A proposal to approve and adopt a
Combination Agreement dated as of November 15, 1996, as
amended, (the "Combination Agreement") between the
Registrant and Philips Industrial Electronics International
B.V., a Netherlands corporation ("PIE") and wholly owned
subsidiary of Philips Electronics N.V., a Netherlands
corporation ("Philips"), and the transaction contemplated
therein, including the issuance of shares
12
<PAGE>
of the Registrant's Common Stock to PIE pursuant to the
terms and conditions of the Combination Agreement (the
"Combination").
The votes cast on Proposal #1 were as follows:
For 5,488,465
Against 8,128
Abstain 33,716
Broker non-votes 71,333
The shareholder vote approving the Combination
Agreement constituted a vote in favor of the election of
Messrs. Bok, Curran, Sonnemans, van der Mast and Whitward to
the Board of Directors of the Registrant. The votes cast
"for," "against," "abstain" and broker non-votes for each
nominee for director were identical to the votes cast for
Proposal #1.
Proposal #2 - Approval of an amendment to the Second
Amended and Restated Articles of Incorporation of the
Company to increase the number of authorized shares of
Common Stock from 15 million to 30 million shares.
The votes cast on Proposal #2 were as follows:
For 5,505,978
Against 58,048
Abstain 37,616
Broker non-votes 0
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
2.1(1) Combination Agreement, dated as of November 15, 1996, between
FEI Company and Philips Industrial Electronics International
B.V.
2.2(2) Letter Agreement, dated November 22, 1996, between FEI
Company and Philips Industrial Electronics International B.V.
- --------
1 Incorporated by reference to Exhibit 2.1 to Registrant's Current Report
on Form 8-K dated November 22, 1996.
2 Incorporated by reference to Exhibit 2.2 to Registrant's Current Report
on Form 8-K dated November 22, 1996.
13
<PAGE>
2.3(3) Letter Agreement, dated February 21, 1997, between FEI
Company and Philips Industrial Electronics International B.V.
2.4(4) List of omitted schedules to Combination Agreement
3.1(5) Second Amended and Restated Articles of Incorporation, as amended
3.2(6) Amended Bylaws
10.16(7) Amendment, dated January 9, 1997, to Loan Agreement between the
Registrant and Key Bank of Oregon
27.1 Financial Data Schedule
(b) Reports on Form 8-K
A report on Form 8-K was filed by the Company on March 5, 1997
reporting Items 1, 2 and 5. Financial statements and pro forma
financial information pursuant to Item 7 were
filed on May 7, 1997.
- --------
3 Incorporated by reference to Exhibit 2.3 to Registrant's Current Report
on Form 8-K dated March 5, 1997.
4 Incorporated by reference to Exhibit 2.3 to Registrant's Current Report
on Form 8-K dated November 22, 1996.
5 Incorporated by reference to Exhibit 3.1 to Registrant's Annual Report
on Form 10-K dated March 28, 1997.
6 Incorporated by reference to Exhibit 3.2 to Registrant's Annual Report
on Form 10-K dated March 28, 1997.
7 Incorporated by reference to Exhibit 10.16 to Registrant's Annual Report
on Form 10-K dated March 28, 1997.
14
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934,
the registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
FEI COMPANY
(Registrant)
WILLIAM G. LANGLEY
Dated: May 14, 1997 ----------------------------------
William G. Langley
Chief Financial Officer
and Authorized Officer
15
<PAGE>
Exhibit Index
Exhibit Sequential Page
No. Description No.
- ------- ----------- ---------------
2.1(8) Combination Agreement, dated as of November 15, 1996, between FEI
Company and Philips Industrial Electronics International B.V.
2.2(9) Letter Agreement, dated November 22, 1996, between FEI Company and
Philips Industrial Electronics International B.V.
2.3(10) Letter Agreement, dated February 21, 1997, between FEI Company and
Philips Industrial Electronics International B.V.
2.4(11) List of omitted schedules to Combination Agreement
3.1(12) Second Amended and Restated Articles of Incorporation, as amended
3.2(13) Amended Bylaws
10.16(14) Amendment, dated January 9, 1997, to Loan Agreement between the
Registrant and Key Bank of Oregon
27.1 Financial Data Schedule
- --------
8 Incorporated by reference to Exhibit 2.1 to Registrant's Current Report
on Form 8-K dated November 22, 1996.
9 Incorporated by reference to Exhibit 2.2 to Registrant's Current Report
on Form 8-K dated November 22, 1996.
10 Incorporated by reference to Exhibit 2.3 to Registrant's Current Report
on Form 8-K dated March 5, 1997.
11 Incorporated by reference to Exhibit 2.3 to Registrant's Current Report
on Form 8-K dated November 22, 1996.
12 Incorporated by reference to Exhibit 3.1 to Registrant's Annual Report
on Form 10-K dated March 28, 1997.
13 Incorporated by reference to Exhibit 3.2 to Registrant's Annual Report
on Form 10-K dated March 28, 1997.
14 Incorporated by reference to Exhibit 10.16 to Registrant's Annual
Report on Form 10-K dated March 28, 1997.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMPANY'S
CONSOLIDATED FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-30-1997
<CASH> 9,985
<SECURITIES> 0
<RECEIVABLES> 35,731
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<INVENTORY> 48,116
<CURRENT-ASSETS> 99,562
<PP&E> 18,207
<DEPRECIATION> 0
<TOTAL-ASSETS> 165,649
<CURRENT-LIABILITIES> 48,084
<BONDS> 0
151,135
0
<COMMON> 0
<OTHER-SE> (41,339)
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<SALES> 32,241
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<CGS> 22,779
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<OTHER-EXPENSES> 50,842
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<INCOME-PRETAX> (41,339)
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<EPS-PRIMARY> (3.17)
<EPS-DILUTED> (3.17)
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