SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 29, 1998
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 [ ]
The number of shares of Common Stock outstanding as of May 11, 1998 was
18,079,683.
<PAGE>
INDEX TO FORM 10-Q/A
Page
Part I - Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheets - March 29, 1998
(restated) and December 31, 1997 ................................1
Condensed Consolidated Statements of Operations -
Thirteen Weeks Ended March 29, 1998 (restated) and
March 30, 1997 ..................................................2
Condensed Consolidated Statements of Cash Flows -
Thirteen Weeks Ended March 29, 1998 (restated) and
March 30, 1997 ..................................................3
Notes to Condensed 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 6. Exhibits and Reports on Form 8-K ...........................12
Signatures ...................................................................13
i
<PAGE>
<TABLE>
<CAPTION>
Item 1. Financial Statements
FEI Company and Subsidiaries
Consolidated Balance Sheets
(In thousands, except share data)
(Unaudited)
December 31, March 29,
1997 1998
------------- -------------
(As Restated,
see Note 7)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 16,394 $ 17,129
Receivables 56,168 52,467
Inventories (Note 3) 37,807 40,647
Deferred income taxes 2,484 3,374
Other 2,497 1,080
------------- -------------
Total current assets 115,350 114,697
EQUIPMENT 19,246 20,355
LEASE AND NOTE RECEIVABLES 946 825
OTHER ASSETS 47,480 45,662
------------- -------------
TOTAL $ 183,022 $ 181,539
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 15,984 $ 13,927
Current accounts with Philips (Note 4) 9,074 14,241
Accrued payroll liabilities 3,248 2,684
Accrued expenses & deferred income 18,206 19,016
Other current liabilities 5,742 5,484
------------- -------------
Total current liabilities 52,254 55,352
LINE OF CREDIT 17,844 12,801
LONG-TERM PROVISIONS 491 835
DEFERRED INCOME TAXES 7,544 7,957
SHAREHOLDERS' EQUITY:
Preferred stock - 500,000 shares authorized;
None issued and outstanding -- --
Common stock - 30,000,000 shares authorized; 149,151 149,149
18,077,793 and 18,078,337 shares issued
and outstanding at December 31, 1997 and
March 29, 1998, respectively
Accumulated deficit (36,602) (36,895)
Accumulated other comprehensive income (7,658) (7,662)
------------- -------------
Total shareholders' equity 104,889 104,594
------------- -------------
TOTAL $ 183,022 $ 181,539
============= =============
See notes to condensed consolidated financial statements.
</TABLE>
1
<PAGE>
<TABLE>
<CAPTION>
FEI Company and Subsidiaries
Condensed Consolidated Statements of Operations
(In thousands except per share data)
(Unaudited)
Thirteen Weeks Ended
March 30, March 29,
1997 1998
------------- -------------
(As Restated,
see Note 7)
<S> <C> <C>
NET SALES $ 32,067 $ 35,954
COST OF SALES 23,267 21,858
------------- -------------
Gross profit 8,800 14,096
OPERATING EXPENSES:
Research and development costs 4,383 4,838
Selling, general and administrative costs 10,398 8,859
Amortization of intangibles 256 634
Purchased in-process research and
development (Note 2) 38,046 --
Restructuring and reorganization costs
(Note 5) 2,478 --
------------- -------------
Total operating expenses 55,561 14,331
OPERATING LOSS (46,761) (235)
OTHER EXPENSE, NET (197) (216)
------------- -------------
LOSS BEFORE TAXES (46,958) (451)
TAX BENEFIT (1,827) (158)
------------- -------------
NET LOSS $ (45,131) $ (293)
============= =============
PER SHARE DATA:
Net loss per share, basic $ (3.46) $ (0.02)
============= =============
Net loss per share, diluted $ (3.46) $ (0.02)
============= =============
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic 13,037 18,078
============= =============
Diluted 13,037 18,078
============= =============
See notes to condensed consolidated financial statements.
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
FEI Company and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Thirteen Weeks Ended
March 30, March 29,
1997 1998
------------- -------------
(As Restated,
see Note 7)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (45,131) $ (293)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 920 1,736
Purchased in-process research and
development 38,046 --
Other 8,538 9,835
------------- -------------
Net cash provided by operating activities 2,373 11,278
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of equipment (1,072) (2,547)
Investment in software development (416) (361)
Net change in leases receivable 102 120
------------- -------------
Net cash used in financing activities (1,386) (2,788)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings on line of credit 1,542 (5,043)
Proceeds from exercise of stock options 3 2
Net cash received from Philips 8,000 --
Repayment of note to Philips -- (2,718)
------------- -------------
Net cash provided by (used in)
financing activities 9,545 (7,759)
FOREIGN CURRENCY TRANSLATION ADJUSTMENT 46 4
------------- -------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 10,578 735
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD -- 16,394
------------- -------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 10,578 $ 17,129
============= =============
See notes to condensed consolidated financial statements.
</TABLE>
3
<PAGE>
FEI COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except share data)
(Unaudited)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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 the United States and
eight other countries, 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 FIB workstations are sold primarily to semiconductor manufacturers
and are used in the design, manufacture and testing of integrated circuits. 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 semiconductor manufacturers.
Basis of Presentation - On February 21, 1997, FEI Company ("Pre-Combination
FEI") acquired substantially all of the assets and liabilities of the electron
optics business (the "PEO Operations") of Philips Industrial Electronics
International B.V. ("PIE"), a wholly owned subsidiary of Philips (the
"Combination"). The financial statements for periods prior to the Combination
are presented as if the PEO Operations had existed as an entity separate from
Philips during the periods presented and include the historical assets,
liabilities, sales and expenses that are directly related to the PEO Operations.
Because the PEO Operations transferred were historically part of the Philips
group, certain allocations of liabilities and expenses have been included in the
financial statements. These liabilities and expenses were allocated using
various methods depending upon the nature of the liability or expense. In the
opinion of management, the methods used to allocate these liabilities and
expenses to the PEO Operations are reasonable. The financial statements for the
periods prior to the Combination are not necessarily indicative of the financial
position and results of operations that would have occurred had the PEO
Operations been a separate entity.
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
4
<PAGE>
adjustments for normal recurring accruals, the Company recorded charges in the
first quarter of 1997 of $38,046 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 $2,478 restructuring and reorganization
charge primarily associated with the relocation of the Company's Wilmington,
Massachusetts manufacturing operations.
2. THE COMBINATION
On February 21, 1997, 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
outstanding voting securities of the Company, 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 1997 results of operations reflect the results of the PEO Operations
through February 21, 1997, and the combined results of the Company from February
22, 1997 and thereafter.
Management estimated the fair market value of the assets acquired in order to
allocate the total purchase price of $122,872 to the various assets. To
determine the value of each of Pre-Combination FEI's product lines, management
projected product revenues, gross margins (projected at 37% to 44%, depending on
the product and the stage in its life cycle), operating expenses, income taxes
and returns on requisite assets. The resulting operating income projections for
each product line were discounted to a net present value using discount rates
ranging from 18 percent to 21 percent. This approach was applied to existing
technology as well as to research and development projects which had not been
proven technologically feasible and which had not generated revenue as of the
date of the Combination. As a result of this valuation, the fair values of
in-process research and development, existing technology and goodwill of
Pre-Combination FEI were determined to be $38,046, $16,490 and $17,122,
respectively.
In determining the value of acquired in-process research and development,
management identified four specific research and development projects--a thin
film head FIB for the data storage industry, in-line systems for semiconductor
manufacturers, a laser-aligned stage and the Company's next generation platform.
The thin film head FIB and in-line systems have both been shipped to customers.
The laser-aligned stage and the Company's next generation platform are currently
under development. The laser-aligned stage is expected to be shipped to
customers in 1998. The Company entered into a development agreement with Philips
Machinefabrieken Nederland B.V. ("Philips Machine Shop"), a related party, to
develop the stage assembly for its next generation platform. As of March 29,
1998, the Company has recognized $1,379 in research and development costs in
connection with such agreement. The Company expects to spend approximately $9
million to complete the development of its next
5
<PAGE>
generation platform. The Company expects to begin shipping its next generation
platform in 1999. However, there remains the risk that a technological hurdle
may be encountered that may delay or prevent the successful development of the
Company's next generation platform. Although the Company believes any hurdles
could eventually be overcome, the Company's competitive position could be harmed
if its competitors are successful first in developing a competing technology.
The amortization periods for existing technology and goodwill have been
established at 12 years and 15 years, respectively. 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 Company's policy to expense research and development
costs as incurred, a one-time charge of $38,046 for the write-off of acquired
in-process research and development was recorded immediately subsequent to the
closing of the Combination.
3. INVENTORIES
Inventories consisted of the following:
<TABLE>
<CAPTION>
December 31, March 29,
1997 1998
--------------- ---------------
<S> <C> <C>
Raw materials and assembled parts $ 24,987 $ 23,471
Work in process 12,123 14,363
Finished goods 5,998 8,329
--------------- ---------------
Total inventories 43,108 46,163
Reserve for obsolete inventory (5,301) (5,516)
--------------- ---------------
Net inventories $ 37,807 $ 40,647
=============== ===============
</TABLE>
4. CURRENT ACCOUNTS WITH PHILIPS
Current accounts with Philips represent accounts receivable and accounts payable
between the Company and other Philips units. Most of the current account
transactions relate to deliveries of goods.
Current accounts with Philips consisted of the following:
<TABLE>
<CAPTION>
December 31, March 29,
1997 1998
--------------- ---------------
<S> <C> <C>
Current accounts receivable $ 7,678 $ 1,430
Current accounts payable (16,752) (15,671)
--------------- ---------------
Net $ (9,074) $ (14,241)
=============== ===============
</TABLE>
6
<PAGE>
5. RESTRUCTURING AND REORGANIZATION
In March 1997, the Company implemented a restructuring and reorganization plan
for its ElectroScan operation in Massachusetts. The plan involved the transfer
of the ElectroScan manufacturing activities to the Company's manufacturing
facility in Acht, The Netherlands and termination of 11 employees. The Company
informed all affected employees of the planned terminations and the related
severance benefits that they would receive. The Company also discontinued the
principal product produced by ElectroScan. Consequently, $1,699 of intangible
assets attributable to the acquisition of the assets of ElectroScan was written
off and charged to expense in the first quarter of 1997, based on projections of
future losses and cash flows. In addition, the estimated severance costs for 11
ElectroScan manufacturing and development employees, and other related costs of
the plan were charged to expense.
The components of this charge were as follows:
Thirteen Weeks
Ended March 30,
1997
--------------
Severance, outplacement, transition bonuses and
related benefits for terminated employees $ 621
Remaining rent on vacated facilities 158
Valuation adjustment on intangible assets related
to abandoned technology 1,699
--------------
$ 2,478
==============
6. COMPREHENSIVE INCOME
The Company adopted SFAS No. 130, Reporting Comprehensive Income, in the current
quarter. The primary component of comprehensive loss not included in net loss
for the Company is the effect of foreign currency translation for the Company's
foreign subsidiaries. Comprehensive loss consisted of the following:
<TABLE>
<CAPTION>
Thirteen Weeks Ended
----------------------------------
March 30, March 29,
1997 1998
--------------- ---------------
<S> <C> <C>
Net loss as reported $ (45,131) $ (293)
Effect of foreign currency translation (3,627) (4)
--------------- ---------------
Comprehensive loss $ (48,758) $ (297)
=============== ===============
</TABLE>
7. RESTATEMENT
Subsequent to the issuance of the Company's Quarterly Report on Form 10-Q for
the thirteen weeks ended March 29, 1998, management determined that research and
development expense should have been recognized by the Company in connection
with a research and development agreement with Philips Machine Shop, in the
periods that Philips Machine Shop incurred the related expenses. The Company had
accounted for its research and development arrangement
7
<PAGE>
with Philips Machine Shop in accordance with the terms of the agreement, whereby
the Company would only pay for successful research and development efforts.
Under generally accepted accounting principles, such accounting is appropriate
in related party transactions when the presumption that payments also will be
made for unsuccessful development efforts is overcome. In September 1998, the
Company terminated the research and development agreement before its completion
and agreed to settle obligations to Philips Machine Shop, primarily for
reimbursement of expenses, resulting in a $3,581 charge to research and
development expense. As a result, the Company has determined that the
presumption that payments also will be made for unsuccessful research and
development efforts was not overcome in the first, second and third quarters of
1998. Accordingly, the Company has restated its results for the thirteen weeks
ended March 29, 1998 to recognize the research and development expense in the
period such expenses were incurred by Philips Machine Shop. The following is a
summary of the significant effects of the restatement:
<TABLE>
<CAPTION>
As Previously
Reported As Restated
-------------- ---------------
<S> <C> <C>
As of March 29, 1998:
Deferred income taxes $ 2,890 $ 3,374
Current account with Philips (12,862) (14,241)
Accumulated deficit (36,000) (36,895)
For the thirteen weeks ended March 29, 1998:
Research and development costs $ 3,459 $ 4,838
Income (loss) before income taxes 928 (451)
Net income (loss) 602 (293)
Net income (loss) per share - basic 0.03 (0.02)
Net income (loss) per share - assuming dilution 0.03 (0.02)
</TABLE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
RESULTS OF OPERATIONS
As discussed in Note 7 to the condensed consolidated financial statements, the
Company restated its March 29, 1998 financial statements to recognize costs
incurred in connection with a research and development agreement with Philips
Machine Shop in the period Philips Machine Shop incurred the related expenses.
The accompanying discussion and analysis of financial condition and results of
operations are on a restated basis. The following table sets forth certain
unaudited financial data for the periods indicated as a percentage of net sales.
<TABLE>
<CAPTION>
Thirteen Weeks Ended
----------------------------------
March 30, March 29,
1997 1998
--------------- ---------------
<S> <C> <C>
Net sales 100.0% 100.0%
Cost of sales 72.6% 60.8%
--------------- ---------------
Gross profit 27.4% 39.2%
Research and development costs 13.7% 13.5%
Selling, general and administrative costs 32.4% 24.6%
Amortization of intangibles 0.8% 1.8%
Purchased in-process research and development
(Note 2) 118.6% --
8
<PAGE>
Restructuring and reorganization costs (Note 5) 7.7% --
--------------- ---------------
Operating loss (145.8%) (0.7%)
Other expense, net 0.6% (0.6%)
--------------- ---------------
Loss before taxes (146.4%) (1.3%)
Tax benefit (5.7%) (0.5%)
--------------- ---------------
Net loss (140.7%) (0.8%)
=============== ===============
</TABLE>
Net sales. Net sales for the thirteen weeks ended March 29, 1998 increased $3.9
million (12.1%) compared to the corresponding period in 1997. The increase in
sales was primarily attributable to the fact that the 1998 period includes net
sales of the combined company, while the 1997 period includes the sales of the
PEO Operations only through February 21, 1997 and the net sales of the combined
company thereafter.
Sales outside the United States accounted for 50% and 68% of sales for the 1998
period and the 1997 period, respectively. The Company expects that sales outside
the United States will continue to represent a significant percentage of its net
sales.
Gross profit. Gross profit for the thirteen weeks ended March 29, 1998 increased
$5.3 million (60.2%) compared to the corresponding period in 1997. Gross profit
as a percentage of sales for the thirteen weeks ended March 29, 1998 increased
to 39.2% from 27.4% for the corresponding period in 1997 primarily due to
favorable shifts in product mix. In addition, the 1997 gross margin was lower
due to the write-up of Pre-Combination FEI's inventory from cost to fair market
value and the resulting increase in cost of goods sold. This write-up of
Pre-Combination FEI's assets was a result of the reverse acquisition accounting
applied to the Combination.
Research and development costs. Research and development costs increased
$455,000 (10.4%) for the thirteen weeks ended March 29, 1998 compared to the
corresponding period in 1997. As a percentage of sales, research and development
costs were 13.5% for the thirteen weeks ended March 29, 1998 compared to 13.7%
for the corresponding period in 1997. The 1997 expense includes the write-off of
$1.6 million of previously capitalized software development costs. Excluding the
effect of the 1997 capitalized software write-off, research and development
costs increased from 8.6% of sales in 1997 to 13.5% of sales in 1998. Such
increase is primarily due to $1.4 million of research and development costs
incurred in connection with the termination of an agreement with Philips Machine
Shop to develop the Company's next generation platform.
Capitalized software development costs were $361,000 and $416,000 for the
thirteen weeks ended March 29, 1998 and March 30, 1997, respectively. The
Company is continuing to invest in internal development of software incorporated
in electron microscopes and focused ion and electron beam products.
Selling, general and administrative costs. Selling, general and administrative
costs for the thirteen weeks ended March 29, 1998 decreased $1.5 million (14.8%)
compared to the
9
<PAGE>
corresponding period in 1997. Selling, general and administrative costs as a
percentage of sales were 24.6% and 32.4% for the thirteen weeks ended March 29,
1998 and March 30, 1997, respectively. This decrease was attributable to $1.1
million in bad debts expenses recognized in the first quarter of 1997 and to the
favorable effect of foreign currency exchange rate fluctuations from 1997 to
1998 which resulted in lower expense levels in the first quarter of 1998 after
translation into U.S. dollars. These decreases were partially offset by the fact
that the 1998 period includes expenses of the combined company, while the 1997
period includes the expenses of the PEO Operations only through February 21,
1997 and of the combined company thereafter.
Amortization of intangibles. Amortization of intangibles for the thirteen weeks
ended March 29, 1998 increased $378,000 (147.7%) compared to the corresponding
period in 1997. This increase reflects amortization of the intangibles resulting
from the Combination for thirteen weeks in 1998 as compared to amortization for
only five weeks in 1997.
Income tax expense. The effective income tax rate was 35% for the thirteen weeks
ended March 29, 1998. The 1998 rate differs from the U.S. federal statutory tax
rate of 34% primarily as a result of state and foreign taxes, the amortization
of intangible assets not deductible for income tax purposes, and the favorable
tax effect of the Company's use of a foreign sales corporation for exports from
the U.S. The tax benefit recognized in the thirteen weeks ended March 30, 1997
is attributable to pretax operating losses in certain tax jurisdictions, offset
by the nondeductible write-off of purchased in process research and development.
LIQUIDITY AND CAPITAL RESOURCES
At March 29, 1998, the Company had total cash and cash equivalents of $17.1
million compared to $16.4 million at December 31, 1997. Cash provided by
operating activities for the thirteen weeks ended March 29, 1998 was $11.3
million compared to $6.0 million for the thirteen weeks ended March 30, 1997.
The primary reasons for the increase in cash from operating activities during
the 1998 thirteen week period compared to the 1997 period were improved
operating results.
Investing activities used $2.8 million during the thirteen weeks ended March 29,
1998 and $1.4 million during the thirteen weeks ended March 30, 1997, primarily
due to acquisitions of equipment and investment in software development. The
Company expects to continue to invest in plant and equipment and technology
needed for future business requirements, as well as to invest in internally
developed software for its products.
Financing activities used $7.8 million for the thirteen weeks ended March 29,
1998. These cash uses were primarily for net repayments under the Company's bank
line of credit in the amount of $5.0 million as well as repayment of $2.7
million to Philips under an obligation incurred in conjunction with the
Combination. During the comparable 1997 period, financing
10
<PAGE>
activities produced $9.5 million primarily resulting from net borrowings under
the line of credit and cash advanced from Philips as part of the Combination.
The Company expects to continue to use cash to fund the growth of its
operations. While the Company believes its cash and cash equivalents and
borrowings available under its $25 million line of credit will be sufficient to
fund operations during the near term, the Company intends to seek an increase in
its borrowing capacity available under its line of credit agreement.
BACKLOG
The Company's backlog consists of purchase orders it has received for products
it expects to ship within the next 12 months. The Company's backlog at March 29,
1998 was approximately $53 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 orders could have a significant impact on
the Company's backlog at any date. For this and other reasons, the amount of
backlog at any date is not necessarily determinative of revenue in future
periods.
YEAR 2000 COMPUTER SYSTEM IMPACT
The Company has analyzed the impact of the Year 2000 issue on its information
systems and believes its enterprise management information system addresses the
Year 2000 issues on all core Company business systems. Accordingly, the Company
expects the Year 2000 issue will not have a material financial impact on the
Company. The Company has other ancillary systems, however, that may require
modification to address the Year 2000 issue, and the Company continues to
evaluate its information systems in connection with the Year 2000 issue. The
Company has not thoroughly analyzed the impact of other parties, computer system
failures, but the Company believes costs incurred in responding to other
parties' Year 2000 computer system failures, together with the cost of any
required modifications to the Company's ancillary systems, will not have a
material impact on the Company's results of operations or financial condition.
FORWARD-LOOKING STATEMENTS
From time to time the Company may issue forward-looking statements that are
subject to a number of risks and uncertainties. The statements in this report
concerning increased investment in plant and equipment and software development,
the portions of the Company's sales consisting of international sales, and
expected capital requirements constitute forward-looking statements that are
subject to risks and uncertainties. Factors that could materially decrease the
Company's investment in plant and equipment and software development include,
but are not limited to, downturns in the IC manufacturing market, lower than
expected customer orders and changes in product sales mix. Factors that could
materially reduce the portion of the Company's sales consisting of international
sales include, but are not limited to, competitive factors, including increased
international competition, new product offerings by
11
<PAGE>
competitors and price pressures, fluctuations in interest and exchange rates
(including changes in relevant foreign currency exchange rates between time of
sale and time of payment), changes in trade policies, tariff regulations and
business conditions and growth in the electronics industry and general
economies, both domestic and foreign. Factors that could materially increase the
Company's capital requirements include, but are not limited to, receipt of a
significant portion of customer orders and product shipments near the end of a
quarter and the other factors listed above.
Part II - Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27.1 Financial Data Schedule
(b) Reports on Form 8-K
None.
12
<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
Dated: April 29, 1999 WILLIAM P. MOONEY
-----------------------------------------
William P. Mooney
Executive Vice President and Chief
Financial Officer (Principal Financial
Officer)
MARK V. ALLRED
-----------------------------------------
Mark V. Allred
Controller and Assistant Treasurer
(Principal Accounting Officer)
13
<PAGE>
Exhibit Index
Exhibit
No. Description
------- -----------
27.1 Financial Data Schedule
<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> OTHER
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-29-1998
<CASH> 17,129
<SECURITIES> 0
<RECEIVABLES> 54,382
<ALLOWANCES> (1,915)
<INVENTORY> 40,647
<CURRENT-ASSETS> 114,697
<PP&E> 32,794
<DEPRECIATION> (12,439)
<TOTAL-ASSETS> 181,539
<CURRENT-LIABILITIES> 55,352
<BONDS> 0
149,151
0
<COMMON> 0
<OTHER-SE> (44,557)
<TOTAL-LIABILITY-AND-EQUITY> 181,539
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