FEI COMPANY REPORTS Q-2, 1998 RESULTS HILLSBORO, Ore., July 29 /PRNewswire/AsiaNet -- FEI Company (Nasdaq: FEIC) today announced net sales for the fiscal quarter ended June 28, 1998 increased 2.0% to $44.9 million from $44.0 million for the fiscal quarter ended June 29, 1997. For the six months ended June 28, 1998, net sales increased 6.4% to $80.9 million from $76.0 million for the six months ended June 29, 1997. Backlog at July 17, 1998 was $56.2 million, compared to $51.0 million at December 31, 1997. Net income was $1.0 million or $0.06 per diluted share for the quarter, compared to net income of $2.2 million or $0.13 per diluted share for the prior year's second quarter. For the six months ended June 28, net income was $1.6 million, or $0.09 per diluted share, compared to a net loss of $42.0 million, or $(2.72) per diluted share, for the six months ended July 20, 1997. At the same time, the Company announced that it will take charges in its third fiscal quarter of 1998 of approximately $6.4 million for restructuring and approximately $8.0 million for valuation and reserve adjustments. The restructuring charge is being taken to consolidate operations and to provide for outsourcing of certain manufacturing activities. The Company anticipates that the restructuring will affect approximately 160 positions worldwide, or about 15% of its work force, beginning in August and extending through the first quarter of the 1999 fiscal year. Severance outplacement assistance and associated benefits will be provided to laid off employees. The charge for asset valuation and reserve adjustments is being taken to eliminate unproductive assets from the Company's balance sheet and to adjust inventory values and reserves. President and Chief Executive Officer Vahe' Sarkissian said, "These actions are necessary both to bring operating costs in line with market realities, and to streamline operations for better focus and higher efficiency." Except for the historical statements contained herein, the matters discussed in this news release, including anticipated charges for restructuring and valuation and reserve adjustments, involve risks and uncertainties. Factors that could cause actual results to differ materially include, but are not limited to: business conditions and growth in the electronics, life sciences and material sciences industries and the general economy, both domestic and international; lower than expected customer orders; competitive factors, including pricing pressures, technological developments and products offered by competitors; technological difficulties and resource constraints encountered in developing new products; and the timely flow of competitive new products and market acceptance of those products. In addition, backlog may not be a reliable measure of future sales or earnings for any succeeding period for a variety of reasons, including the timing of shipments, product mix, and customer cancellations. FEI Company Consolidated Balance Sheets (In thousands except share data) June 28, December 31, 1998 1997 Assets Cash & Cash Equivalents $8,600 $16,394 Receivables 52,261 56,168 Inventories 45,346 37,807 Deferred Income Taxes 2,902 2,484 Other 881 2,497 Total Current Assets 109,990 115,350 Equipment 21,823 19,246 Lease Receivables 777 946 Other Assets 45,482 47,480 Total Assets $178,072 $183,022 Liabilities & Stockholders' Equity Accounts Payable $13,259 $15,984 Current Accounts with Philips 7,629 9,074 Accrued Payroll Liabilities 1,938 3,248 Accrued Expenses and Deferred Income 19,740 18,206 Other Current Liabilities 7,046 5,742 Total Current Liabilities 49,612 52,254 Line of Credit 12,922 17,844 Long-Term Provisions 844 491 Deferred Income Taxes 8,133 7,544 Preferred Stock - 500,000 shares authorized; none issued and outstanding -- -- Common Stock - 30,000,000 shares authorized; 18,077,793 and 18,079,983 shares issued and outstanding at December 31, 1997 and June 28, 1998 respectively 149,159 149,149 Retained Earnings (34,983) (36,602) Cumulative Foreign Currency Translation Adjustment (7,615) (7,658) Total Stockholders' Equity 106,561 104,889 Total Liabilities & Stockholders' Equity $178,072 $183,022 FEI Company Consolidated Statements of Operations (In thousands except per share data) Thirteen Weeks Twenty-Six Weeks Ended Ended June 28, June 29, June 28, June 29, 1998 1997 1998 1997 Net Sales $44,922 $43,958 $80,876 $76,025 Cost of Sales 27,850 25,909 49,708 50,866 Gross Profit 17,072 18,049 31,168 25,159 Research and Development Costs 3,452 4,260 6,911 6,845 Selling, General and Administrative 10,912 9,300 19,771 18,383 Amortization of Intangibles 624 681 1,258 937 Purchased In-process Research and Development -- -- -- 38,046 Restructuring and Reorganization Costs -- -- -- 2,478 Total Operating Expenses 14,988 14,241 27,940 66,689 Income (Loss) from Operations 2,084 3,808 3,228 (41,530) Other Expense, net (521) (83) (737) (280) Income Before Tax 1,563 3,725 2,491 (41,810) Income Tax Expense 546 1,490 872 190 Net Income $1,017 $2,235 $1,619 $(42,000) Diluted Earnings Per Share $0.06 $0.13 $0.09 $(2.72) Weighted Average of Diluted Shares Outstanding 18,345 17,810 18,383 15,427SOURCE: FEI Company 07/29/98 CONTACT: William Langley, Chief Financial Officer of FEI Company, 503-640-7537 Web site: http://www.feic.com