FEI Company Sells Knights Technology Unit to Magma

FEI Company announced today that it has completed the sale of its Knights Technology subsidiary to Magma Design Automation Inc. (NASDAQ: LAVA). Knights provides Yield Management and Failure Analysis software solutions to the semiconductor industry.

"This transaction is a part of our strategy to focus on our core products as we grow in the NanoElectronics business," said Don Kania, president and chief executive officer of FEI. "As a leading provider of semiconductor design software, Magma will be able to more effectively utilize Knights' software. We are pleased that Magma intends to hire the Knights team, and we plan to continue to use Knights' software products in select FEI systems."

FEI will account for Knights Technology as a discontinued operation in future financial reports. The sale will result in a net pretax gain of approximately $2.8 million in the fourth quarter of 2006. This gain is incremental to the earnings per share guidance for the fourth quarter of 2006 that FEI provided with its November 1 earnings report. The Knights subsidiary accounted for less than 2% of FEI's consolidated revenues in the last 12 months. Specific terms of the sale transaction were not

disclosed.

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