RESTRUCTURING, REORGANIZATION, RELOCATION AND SEVERANCE

Group Structure Reorganization

In January 2013, we announced our intention to reorganize the company into a group structure in order to enable us to efficiently execute our growth strategy. The reorganization will be effective beginning in the first quarter of 2013 and is expected to be implemented over the next six months. The costs associated with the reorganization will include primarily severance costs and we anticipate that it will result in the termination of certain positions throughout the company. In anticipation of this reorganization, we incurred $2.9 million of severance costs during the fourth quarter of 2012 and as the reorganization continues, we expect to incur approximately $1.9 million in additional restructuring charges. All of the costs related to this plan are expected to result in cash expenditures and we currently expect the total cost of the reorganization to be approximately $4.8 million.

Manufacturing Transfer

In 2008 we entered into an arrangement to outsource aspects of our manufacturing processes. In 2011, we notified our largest contract manufacturer, accounting for approximately 10% of our revenue, that we were terminating the arrangement and that we would transfer the manufacturing process back to FEI. The termination contract was signed during the fourth quarter of 2011 and the manufacturing process was transitioned back to FEI as of April 2, 2012. The costs associated with the termination of the outsourcing arrangement were accrued in the fourth quarter of 2011. No additional costs were incurred in 2012 and we do not expect to incur any significant additional costs associated with the termination of this arrangement.

April 2010 Restructuring

On April 12, 2010, we announced a restructuring program to consolidate the manufacturing of our small DualBeam product line by relocating manufacturing activities currently performed at our facility in Eindhoven, The Netherlands to our facility in Brno, Czech Republic. The balance of our small DualBeam product line is already based in Brno. The move, which has been substantially completed, resulted in severance costs, costs to transfer the product line, costs to train Brno employees and costs to build-out the existing Brno facility to add capacity for the additional small DualBeam production. In addition to the product line move, the April 2010 restructuring plan involved organizational changes designed to improve the efficiency of our finance, research and development and other corporate programs and improve our market focus. Costs incurred in connection with this plan were related to the consolidation of the manufacturing of our small DualBeam product line in Brno.

Information for costs related to the April 2010 restructuring plan is as follows (in thousands):



	Year Ended December 31,
Costs Incurred	2012		2011		2010		Life of Plan
Severance costs related to work force reduction and reorganization	$	—	$	184	$	6,433	$	6,617
Product line transfer, training of Brno employees and facility build-out in Brno	—		963		872		1,835
Total costs incurred	$	—	$	1,147	$	7,305	$	8,452

All of the costs incurred resulted in cash expenditures. We do not expect to incur significant additional costs associated with this plan.

April 2008 Restructuring

Our April 2008 restructuring plan was related to improving the efficiency of our operations and improving the currency balance in our supply chain so that more of our costs are denominated in dollar or dollar-linked currencies. Also included in these costs were amounts related to IT system upgrades, which were expected to increase the efficiency of our manufacturing operations. These activities reduced operating expenses, improved our factory utilization and helped to offset the effect of currency fluctuations on our cost of goods sold. The main activities and related costs are described in the table below.

The April 2008 restructuring plan was completed in 2010. Total costs incurred related to this plan were $11.6 million. In 2010 we incurred $3.8 million under the April 2008 restructuring plan and incurred no additional costs related to this plan in 2011 or 2012. All of the costs resulted in cash expenditures and we do not expect to incur any additional costs under this plan.

A summary of the expenses related to our April 2008 restructuring plan is as follows (in millions):



Costs Incurred	Life of Plan
Severance costs related to work force reduction	$	3.3
Transfer of manufacturing and other activities	0.3
Shift of supply chain	5.9
IT system upgrades	2.1

Restructuring, Reorganization, Relocation and Severance Accrual

The following tables summarize the charges, expenditures, write-offs and adjustments related to our restructuring, reorganization, relocation and severance accrual (in thousands):



Year Ended December 31, 2012	Severance, outplacement and related benefits for terminated employees			Manufacturing transfer			Group Structure Reorganization			Total
Beginning accrued liability	$	113		$	2,100		$	—		$	2,213
Charged to expense, net	—			—			2,859			2,859
Expenditures	—			(2,100		)	(254		)	(2,354		)
Write-offs and adjustments	(113		)	—			87			(26		)
Ending accrued liability	$	—		$	—		$	2,692		$	2,692



Year Ended December 31, 2011	Product line transfer and training of Brno employees			Severance, outplacement and related benefits for terminated employees			IT system upgrades			Abandoned leases, leasehold improvements and facilities			Manufacturing Transfer		Total
Beginning accrued liability	$	—		$	4,832		$	20		$	32		$	—	$	4,884
Charged to expense, net	963			184			—			(32		)	2,100		3,215
Expenditures	(963		)	(5,083		)	—			—			—		(6,046		)
Write-offs and adjustments	—			180			(20		)	—			—		160
Ending accrued liability	$	—		$	113		$	—		$	—		$	2,100	$	2,213



Year Ended December 31, 2010	Product line transfer and training of Brno employees			Severance, outplacement and related benefits for terminated employees			Transfer of manufacturing and related activities and shift of supply chain			IT system upgrades			Abandoned leases, leasehold improvements and facilities		Total
Beginning accrued liability	$	—		$	—		$	—		$	—		$	32	$	32
Charged to expense, net	872			6,777			1,312			2,106			—		11,067
Expenditures	(872		)	(2,342		)	(1,312		)	(2,086		)	—		(6,612		)
Write-offs and adjustments	—			397			—			—			—		397
Ending accrued liability	$	—		$	4,832		$	—		$	20		$	32	$	4,884