FEI Company (Nasdaq:FEIC) reported record revenue and earnings for 2011 and for the fourth quarter. Revenue and earnings per share computed on the basis of accounting principles generally accepted in the United States (“GAAP”) were the highest of any quarter in the company’s history. Several items had an impact on the fourth quarter GAAP results, as detailed below and in the attached table.
Fourth quarter revenue of $213.0 million was up 14% compared to $186.1 million in the fourth quarter of 2010 and up 4% from $205.3 million in the third quarter of 2011.
The gross margin in the fourth quarter was 44.4%, compared with 45.0% in the fourth quarter of 2010 and equal to the third quarter of 2011.
GAAP net income was $29.1 million or $0.72 per diluted share, compared with $21.3 million or $0.52 per diluted share in the fourth quarter of 2010 and $26.2 million or $0.63 per diluted share in the third quarter of 2011. The fourth quarter of 2011 includes a net tax benefit of $7.8 million, which includes a cumulative benefit of $12.4 million due to the Netherlands Tax Authority’s approval of FEI’s use of the “Innovation Box” for a portion of its Dutch taxable income. The benefit of the Innovation Box extends into 2012 and later years and lowers the company’s estimated overall effective tax rate to approximately 22%. In addition, the company incurred charges to operating expenses of $5.3 million related to certain patent litigation matters, a $2.1 million charge for early termination of a contract, and $1.4 million for impairment of an intangible asset. Adjusting for the tax benefit and the previously mentioned charges and applying an appropriate tax rate results in non-GAAP net income of $25.4 million and non-GAAP diluted earnings per share of $0.63 for the quarter. A reconciliation of these charges and benefits along with their impact on net income and earnings per share is included in a table attached to this press release, along with detailed GAAP statements of operations, balance sheets and additional supplementary information. Management’s reasons for presenting non-GAAP information are outlined later in this release.
For the fourth quarter of 2011, gross bookings were $212.0 million. Net bookings were $203.6 million after reduction of the ending backlog due to currency movements. Net bookings were $218.4 million in the fourth quarter of 2010 and $186.4 million in the third quarter of 2011. The backlog at the end of the quarter was $430.7 million.
For the full year 2011, revenue was $826.4 million, an all-time record for the company and up 30% from $634.2 million in 2010. Net income was $103.6 million or $2.51 per diluted share, nearly double the $53.5 million or $1.34 per diluted share posted for 2010. Gross margin for the year increased to 44.5% from 42.5% in 2010.
Total cash, investments and restricted cash at the end of the quarter was $456.1 million, an increase of $20.4 million from the end of the third quarter. Total cash, investments and restricted cash increased $32.3 million during the year, after the repurchase of $50 million of the company’s common stock and $14.1 million for the acquisition of TILL Photonics.
“A strong fourth quarter completed a transformational year for FEI,” commented Don Kania, president and CEO. “Revenue grew by over 30%, margins improved, we increased R&D spending for future growth, earnings nearly doubled and cash flow from operating activities was over $100 million. We have also taken important steps in the execution of our growth strategy by acquiring companies strategic to our high-growth Life Sciences and Natural Resources businesses, and the announcement of two important collaborations for biology research with NIH and the Knight Cancer Center at Oregon Health Sciences University. Our market position and product lines are strong, and we expect 2012 to be another growth year for FEI.”