10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 _____________________________________________

FORM 10-Q

 _____________________________________________

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 30, 2014

OR

o 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. 000-22780

 _____________________________________________

FEI COMPANY

(Exact name of registrant as specified in its charter)

 _____________________________________________

Oregon	93-0621989
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
5350 NE Dawson Creek Drive, Hillsboro, Oregon	97124-5793
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: 503-726-7500

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  o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	x		Accelerated filer	o
Non-accelerated filer	o	(Do not check if a smaller reporting company)	Smaller reporting company	o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  o No  x

The number of shares of common stock outstanding as of April 28, 2014 was 42,257,016.

FEI COMPANY

FORM 10-Q QUARTERLY REPORT

TABLE OF CONTENTS

		Page
PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Consolidated Balance Sheets as of March 30, 2014 and December 31, 2013	2
	Consolidated Statements of Operations for the thirteen weeks ended March 30, 2014 and March 31, 2013	3
	Consolidated Statements of Comprehensive Income for the thirteen weeks ended March 30, 2014 and March 31, 2013	4
	Consolidated Statements of Cash Flows for the thirteen weeks ended March 30, 2014 and March 31, 2013	5
	Condensed Notes to the Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26
Item 4.	Controls and Procedures	26
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	26
Item 1A.	Risk Factors	27
Item 6.	Exhibits	37
Signatures		39

1

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

FEI Company and Subsidiaries

Consolidated Balance Sheets

(In thousands)

(Unaudited)

	March 30, 2014		December 31, 2013
Assets
Current Assets:
Cash and cash equivalents	$	317,666	$	384,170
Short-term investments in marketable securities	120,832		108,191
Short-term restricted cash	14,926		18,798
Receivables, net of allowances for doubtful accounts of $3,070 and $2,969	206,906		194,418
Inventories	192,551		181,725
Deferred tax assets	9,884		15,114
Other current assets	30,089		28,324
Total current assets	892,854		930,740
Non-current investments in marketable securities	60,740		47,278
Long-term restricted cash	34,589		32,718
Property, plant and equipment, net of accumulated depreciation of $130,790 and $125,405	163,447		157,829
Intangible assets, net of accumulated amortization of $19,479 and $16,941	67,637		47,197
Goodwill	184,260		136,152
Deferred tax assets	4,261		1,751
Non-current inventories	59,295		62,104
Other assets, net	10,517		10,315
Total Assets	$	1,477,600	$	1,426,084
Liabilities and Shareholders’ Equity
Current Liabilities:
Accounts payable	$	94,311	$	73,247
Accrued payroll liabilities	34,538		45,146
Accrued warranty reserves	13,264		12,705
Short-term deferred revenue	93,098		91,563
Income taxes payable	3,135		4,579
Other current liabilities	52,105		46,374
Total current liabilities	290,451		273,614
Long-term deferred revenue	32,603		30,744
Deferred tax liabilities	11,465		8,931
Other liabilities	36,580		35,227
Commitments and contingencies
Shareholders’ Equity:
Preferred stock - 500 shares authorized; none issued and outstanding	—		—
Common stock - 70,000 shares authorized; 42,255 and 42,136 shares issued and outstanding, no par value	646,531		637,482
Retained earnings	412,938		392,958
Accumulated other comprehensive income	47,032		47,128
Total Shareholders’ Equity	1,106,501		1,077,568
Total Liabilities and Shareholders’ Equity	$	1,477,600	$	1,426,084

See accompanying Condensed Notes to the Consolidated Financial Statements.

2

FEI Company and Subsidiaries

Consolidated Statements of Operations

(In thousands, except per share amounts)

(Unaudited)

	Thirteen Weeks Ended
	March 30, 2014			March 31, 2013
Net sales:
Products	$	169,298		$	169,495
Service	56,966			51,694
Total net sales	226,264			221,189
Cost of sales:
Products	86,595			85,183
Service	33,345			33,455
Total cost of sales	119,940			118,638
Gross profit	106,324			102,551
Operating expenses:
Research and development	25,646			24,809
Selling, general and administrative	48,462			43,524
Restructuring, reorganization, relocation and severance	1,331			695
Total operating expenses	75,439			69,028
Operating income	30,885			33,523
Other expense:
Interest income	152			116
Interest expense	(98		)	(816		)
Other, net	(324		)	(805		)
Total other expense, net	(270		)	(1,505		)
Income before income taxes	30,615			32,018
Income tax expense	5,537			5,217
Net income	$	25,078		$	26,801
Basic net income per share	$	0.59		$	0.70
Diluted net income per share	$	0.59		$	0.65
Cash dividends declared per share	$	0.12		$	0.08
Shares used in per share calculations:
Basic	42,191			38,522
Diluted	42,772			42,136

See accompanying Condensed Notes to the Consolidated Financial Statements.

3

FEI Company and Subsidiaries

Consolidated Statements of Comprehensive Income

(In thousands)

(Unaudited)

	Thirteen Weeks Ended
	March 30, 2014			March 31, 2013
Net income	$	25,078		$	26,801
Other comprehensive income, net of taxes:
Change in cumulative translation adjustment	107			(15,714		)
Change in unrealized gain on available-for-sale securities	1			7
Change in minimum pension liability	16			(15		)
Changes due to cash flow hedging instruments:
Net loss on hedge instruments	(753		)	(1,925		)
Reclassification to net income of previously deferred losses related to hedge derivatives instruments	533			322
Comprehensive income	$	24,982		$	9,476

See accompanying Condensed Notes to the Consolidated Financial Statements.

4

FEI Company and Subsidiaries

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

	Thirteen Weeks Ended
	March 30, 2014			March 31, 2013
Cash flows from operating activities:
Net income	$	25,078		$	26,801
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	7,066			5,810
Amortization	3,197			2,557
Stock-based compensation	5,139			4,364
Income taxes (receivable) payable, net	(2,898		)	600
Deferred income taxes	1,455			976
(Increase) decrease, net of acquisitions, in:
Receivables	(10,760		)	(9,284		)
Inventories	(10,930		)	(1,606		)
Other assets	4,196			(512		)
Increase (decrease), net of acquisitions, in:
Accounts payable	12,542			3,212
Accrued payroll liabilities	(13,725		)	(9,645		)
Accrued warranty reserves	545			421
Deferred revenue	1,152			10,587
Accrued restructuring, reorganization, relocation and severance	773			188
Other liabilities	5,619			341
Net cash provided by operating activities	28,449			34,810
Cash flows from investing activities:
Decrease (increase) in restricted cash	1,907			(3,462		)
Acquisition of property, plant and equipment	(4,336		)	(5,043		)
Payments for acquisitions, net of cash acquired	(64,615		)	—
Purchase of investments in marketable securities	(75,100		)	(50,715		)
Redemption of investments in marketable securities	49,374			34,030
Other	(268		)	(293		)
Net cash used in investing activities	(93,038		)	(25,483		)
Cash flows from financing activities:
Dividends paid on common stock	(5,058		)	(3,078		)
Withholding taxes paid on issuance of vested restricted stock units	(955		)	(363		)
Proceeds from exercise of stock options and employee stock purchases	5,504			4,146
Excess tax benefit for share based payment arrangements	1,866			586
Net cash provided by financing activities	1,357			1,291
Effect of exchange rate changes	(3,272		)	(5,245		)
(Decrease) increase in cash and cash equivalents	(66,504		)	5,373
Cash and cash equivalents:
Beginning of period	384,170			266,302
End of period	$	317,666		$	271,675
Supplemental Cash Flow Information:
Cash paid for income taxes, net	$	3,711		$	2,656
Cash paid for interest	63			56
(Decrease) increase in fixed assets related to transfers with inventories	(240		)	1,664
Dividends declared but not paid	5,056			3,078
Accrued purchases of plant and equipment	8,345			398

See accompanying Condensed Notes to the Consolidated Financial Statements.

5

FEI COMPANY AND SUBSIDIARIES

CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1. ORGANIZATION AND BASIS OF PRESENTATION

Nature of Business

We are a leading supplier of scientific instruments and related services for nanoscale applications and solutions for industry and science. We report our revenue based on a group structure organization, which we categorize as the Industry Group and the Science Group.

Our products include transmission electron microscopes ("TEMs"); scanning electron microscopes ("SEMs"); DualBeam^TMsystems which combine a SEM and a focused ion beam system ("FIB") on a single platform; stand-alone FIBs; high-performance optical microscopes, three-dimensional modeling software, and service and components to support the products. TEMs provide the highest resolution images of samples and their internal structure, down to the atomic level. SEMs provide detailed images of the surface and shape of samples. Optical microscopes provide a wider field of view than SEMs and TEMs. DualBeams and FIBs image, manipulate, mill and deposit material for a variety of purposes, including preparation of samples for TEMs. Substantially all of these product categories are sold into all of our markets. Individual models of our products are increasingly designed to provide specific solutions and applications in each of our markets.

Our DualBeam systems include models that have wafer handling capability and are purchased by semiconductor equipment manufacturers (“wafer-level DualBeam systems”) and models that have small stages and are sold to customers in several markets (“small-stage DualBeam systems”).

Our significant research and development and manufacturing operations are located in Hillsboro, Oregon; Eindhoven, The Netherlands; and Brno, Czech Republic; and our software development is managed principally from Bordeaux, France. Our sales and service operations are conducted in the United States (U.S.) and approximately50other countries around the world. We also sell our products through independent agents, distributors and representatives in additional countries.

Basis of Presentation

The consolidated financial statements include the accounts of FEI Company and our wholly-owned subsidiaries (collectively, “FEI”). All significant intercompany balances and transactions have been eliminated in consolidation.

The accompanying consolidated financial statements and condensed footnotes have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, the financial statements do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments considered necessary for fair presentation have been included. The results of operations for thethirteen week period endedMarch 30, 2014are not necessarily indicative of the results to be expected for the full year. For further information, refer to the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year endedDecember 31, 2013, which was filed with the Securities and Exchange Commission (“SEC”) on February 21, 2014.

Use of Estimates in Financial Reporting

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period.

Significant accounting policies and estimates underlying the accompanying consolidated financial statements include:

• the timing of revenue recognition;

• the allowance for doubtful accounts;

• valuations of excess and obsolete inventory;

• the lives and recoverability of equipment and other long-lived assets such as goodwill;

• the valuations of intangible assets;

• restructuring, reorganization, relocation and severance costs;

• tax valuation allowances and unrecognized tax benefits;

6

• warranty liabilities;

• stock-based compensation; and

• accounting for derivatives.

It is reasonably possible that management's estimates may change in the future.

NOTE 2. EARNINGS PER SHARE

Following is a reconciliation of basic earnings per share (“EPS”) and diluted EPS (in thousands, except per share amounts):

	Thirteen Weeks Ended					Thirteen Weeks Ended
	March 30, 2014					March 31, 2013
	Net Income		Shares	Per Share Amount		Net Income		Shares	Per Share Amount
Basic EPS	$	25,078	42,191	$	0.59	$	26,801	38,522	$	0.70
Dilutive effect of 2.875% convertible debt	—		—	—		455		3,033	(0.04		)
Dilutive effect of stock options, restricted stock units, and shares issuable to Philips	—		581	—		—		581	(0.01		)
Diluted EPS	$	25,078	42,772	$	0.59	$	27,256	42,136	$	0.65

The following table sets forth the schedule of anti-dilutive securities excluded from the computation of diluted EPS (number of shares, in thousands):

	Thirteen Weeks Ended
	March 30, 2014	March 31, 2013
Stock options	138	222
Restricted stock units	1	2

NOTE 3. STOCK-BASED COMPENSATION

1995 Stock Incentive Plan

Our 1995 Stock Incentive Plan, as amended (the “1995 Plan”), allows for the issuance of a maximum of 11,000,000 shares of our common stock.

The following table sets forth certain information regarding the 1995 Plan:

	March 30, 2014
Shares available for grant	2,001,765
Shares of common stock reserved for issuance	3,364,680

The following table sets forth certain information regarding all options outstanding and exercisable:

	March 30, 2014
	Options Outstanding		Options Exercisable
Number	649,059		151,082
Weighted average exercise price	$	52.82	$	33.96
Aggregate intrinsic value	$ 32.5 million		$ 10.4 million
Weighted average remaining contractual term	5.1 years		3.8 years

7

The following table sets forth certain information regarding all RSUs nonvested and expected to vest:

	March 30, 2014
	RSUs Nonvested		RSUs Expected to Vest
Number	713,858		627,724
Weighted average grant date per share fair value	$	58.39	$	57.53
Aggregate intrinsic value	$ 73.4 million		$ 64.6 million
Weighted average remaining term to vest	1.5 years		1.5 years

As of March 30, 2014, unrecognized stock-based compensation related to outstanding, but unvested stock options and RSUs was $43.5 million, which will be recognized over the weighted average remaining vesting period of 1.9 years.

Stock-Based Compensation Expense

Our stock-based compensation expense was included in our Consolidated Statements of Operations as follows (in thousands):

	Thirteen Weeks Ended
	March 30, 2014		March 31, 2013
Cost of sales	$	726	$	595
Research and development	617		531
Selling, general and administrative	3,796		3,238
Total stock-based compensation	$	5,139	$	4,364

NOTE 4. CREDIT FACILITIES AND RESTRICTED CASH

Multibank Credit Agreement

We have a multibank credit agreement (the “Credit Agreement”), which provides for a $100.0 million secured revolving credit facility, including a $50.0 million subfacility for the issuance of letters of credit. The credit agreement expires in April 2016. We may, upon notice to JPMorgan Chase Bank, N.A., request to increase the revolving loan commitments by an aggregate amount of up to$50.0 millionwith new or additional commitments subject only to the consent of the lender(s) providing the new or additional commitments, for a total secured credit facility of up to$150.0 million. As of March 30, 2014, there were no revolving loans or letters of credit outstanding under the Credit Agreement, we were in compliance with all covenants and we were not in default under the Credit Agreement.

Restricted Cash

As part of our contracts with certain customers, we are required to provide letters of credit or bank guarantees which these customers can draw against in the event we do not perform in accordance with our contractual obligations.Restricted cash balances securing bank guarantees that expire within 12 months of the balance sheet date are recorded as a current asset on our consolidated balance sheets. Restricted cash balances securing bank guarantees that expire beyond 12 months from the balance sheet date are recorded as long-term restricted cash on our consolidated balance sheets.

The following table sets forth information related to guarantees and letters of credit (in thousands):

	March 30, 2014
Guarantees and letters of credit outstanding	$	49,588
Amount secured by restricted cash deposits:
Current	$	14,926
Long-term	34,589
Total secured by restricted cash	$	49,515

8

NOTE 5. INVENTORIES

Inventories are stated at the lower of cost or market, with cost determined by standard cost methods, which approximate the first-in, first-out method. Inventory costs include material, labor and manufacturing overhead. Service inventories that exceed the estimated requirements for the next 12 months based on recent usage levels are reported as a long-term asset. Management has established inventory reserves based on estimates of excess and/or obsolete current and non-current inventory.

Inventories consisted of the following (in thousands):

	March 30, 2014		December 31, 2013
Raw materials and assembled parts	$	62,191	$	61,235
Service inventories, estimated current requirements	14,516		15,197
Work-in-process	84,187		75,883
Finished goods	31,657		29,410
Total current inventories	$	192,551	$	181,725
Non-current inventories	$	59,295	$	62,104

NOTE 6. GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill

The roll-forward of activity related to our goodwill was as follows (in thousands):

	Thirteen Weeks Ended
	March 30, 2014		March 31, 2013
Balance, beginning of period	$	136,152	$	131,320
Goodwill additions	46,446		—
Goodwill adjustments	1,662		(3,148		)
Balance, end of period	$	184,260	$	128,172

Additions to goodwill represent goodwill from acquisitions made during the period. Adjustments to goodwill include translation adjustments resulting from a portion of our goodwill being recorded on the books of our foreign subsidiaries as well as an adjustment recorded in the first quarter of 2013 related to the finalization of the purchase price allocation of the acquisition of ASPEX Corporation in 2012.

Acquisition of Lithicon AS

On February 5, 2014 we acquired 100% of the outstanding shares of Lithicon AS of Trondheim, Norway. Lithicon AS owns 100% of the shares of Lithicon Norway of Trondheim, Norway and Lithicon Australia of Canberra, Australia (collectively "Lithicon.") Lithicon provides digital rock technology services and pore-scale micro computed tomography (microCT) equipment to oil and gas companies. In conjunction with the acquisition we have obtained the helical scan microCT product and associated software from the Australian National University through a licensing and development agreement.

The total purchase price of the acquisition was $68.0 million, plus an adjustment for the change in final closing accounts. The closing account adjustment is still in the process of final determination. We paid $0.4 million in transaction costs of which $0.3 million was paid in the current quarter. Those costs were expensed as incurred and are recorded in the Selling, general and administrative line on the Consolidated Statements of Operations. The total purchase price was allocated to the net tangible and intangible assets acquired based on their preliminary fair values as of February 5, 2014. The fair value of net tangible assets acquired was $7.7 million and the fair value of net intangible assets acquired was $22.0 million, which consisted of $18.6 million in developed technology, $2.2 million of customer relationships and $1.2 million of purchased backlog. Including an increase to net deferred tax liabilities of $8.1 million, the excess of the purchase price over the fair value of the net assets acquired was $46.4 million, which was recorded as goodwill in the Industry Group. For the thirteen week period ended March 30, 2014 the acquired business added $0.8 million of revenue and a net loss of $1.0 million to our consolidated financial results.

The goodwill arising from the acquisition of Lithicon is primarily related to expected future cash flows from expansion of our product offerings in the oil and gas market to include digital rock services, as well as synergies from the introduction of the microCT product to the existing FEI product suite.

9

The acquired developed technology, customer relationships and purchased backlog will be amortized over a period of 10 years, 5 years and 2 years, respectively.

No pro forma financial information has been provided for this acquisition as it is insignificant.

Other Intangible Assets

Patents, trademarks and other are amortized under the straight-line method over their estimated useful lives of2 to 10 years. Customer relationships are amortized under the straight-line method over their estimated useful lives of5 to 10 years. Developed technology is amortized under the straight-line method over the estimated useful life of the related technology, which ranges from5.5 to 10 years. Note issuance costs were amortized over the life of the related debt, which was7 years.

The gross amount of our other intangible assets and the related accumulated amortization were as follows (in thousands):

	March 30, 2014			December 31, 2013
Patents, trademarks and other	$	25,827		$	24,327
Accumulated amortization	(10,283		)	(9,296		)
Net patents, trademarks and other	15,544			15,031
Customer relationships	23,852			21,650
Accumulated amortization	(4,211		)	(3,547		)
Net customer relationships	19,641			18,103
Developed technology	37,437			18,161
Accumulated amortization	(4,985		)	(4,098		)
Net developed technology	32,452			14,063
Total intangible assets included in other long-term assets	$	67,637		$	47,197

Amortization expense was as follows (in thousands):

	Thirteen Weeks Ended
	March 30, 2014		March 31, 2013
Patents, trademarks and other	$	1,001	$	919
Customer relationships	666		505
Developed technology	887		524
Note issuance costs	—		87
Total amortization expense	$	2,554	$	2,035

Expected amortization, without consideration for foreign currency effects, is as follows over the next five years and thereafter (in thousands):

	Patents, Trademarks and Other		Customer Relationships		Developed Technology		Total
Remainder of 2014	$	2,885	$	2,153	$	3,164	$	8,202
2015	3,695		2,871		4,218		10,784
2016	2,839		2,871		4,218		9,928
2017	2,265		2,523		3,938		8,726
2018	1,649		2,437		3,774		7,860
Thereafter	2,211		6,786		13,140		22,137
Total future amortization expense	$	15,544	$	19,641	$	32,452	$	67,637

10

NOTE 7. WARRANTY RESERVES

Our products generally carry a one-year warranty. A reserve is established at the time of sale to cover estimated warranty costs and certain commitments for product upgrades as a component of cost of sales on our consolidated statements of operations. Our estimate of warranty cost is primarily based on our history of warranty repairs and maintenance, as applied to systems currently under warranty. For our new products without a history of known warranty costs, we estimate the expected costs based on our experience with similar product lines and technology. While most new products are extensions of existing technology, the estimate could change if new products require a significantly different level of repair and maintenance than similar products have required in the past. Our estimated warranty costs are reviewed and updated on a quarterly basis. Changes to the reserve occur as volume, product mix and warranty costs fluctuate.

The following is a summary of warranty reserve activity (in thousands):

	Thirteen Weeks Ended
	March 30, 2014			March 31, 2013
Balance, beginning of period	$	12,705		$	12,049
Reductions for warranty costs incurred	(2,779		)	(3,403		)
Warranties issued	3,333			3,788
Translation and changes in estimates	5			(154		)
Balance, end of period	$	13,264		$	12,280

NOTE 8. INCOME TAXES

Our effective income tax rates for the thirteen week periods ended March 30, 2014 and March 31, 2013 were 18.1% and 16.3%, respectively, and reflected taxes accrued in the U.S. and foreign jurisdictions. The tax rate is lower in the comparable period due to U.S. research and experimentation tax credits generated in 2012 and recognized in conjunction with the extension of legislation enacted in January 2013. This legislation expired at the end of 2013, and we have not recognized any benefit related to U.S. research and experimentation credits in the thirteen week period ended March 30, 2014.

We continue to record a valuation allowance against a portion of our U.S. and foreign deferred tax assets as we do not believe it is more likely than not that we will be able to utilize the deferred tax assets in future periods.

Deferred Income Taxes

Net deferred tax assetswere classified on the balance sheet as follows (in thousands):

	March 30, 2014			December 31, 2013
Deferred tax assets – current	$	9,884		$	15,114
Deferred tax assets – non-current	4,261			1,751
Other current liabilities	(53		)	(9		)
Deferred tax liabilities – non-current	(11,465		)	(8,931		)
Net deferred tax assets	$	2,627		$	7,925
Valuation allowance	$	4,514		$	2,723

Unrecognized Tax Benefits

During the thirteen week periods ended March 30, 2014 and March 31, 2013, unrecognized tax benefits increased $0.1 million and $0.4 million, respectively, primarily due to uncertainty surrounding permanent establishment and tax credits. The increase for the period ended March 30, 2014 was partially offset by effective settlement of $0.2 million of positions taken on returns in a foreign jurisdiction. There were no increases or decreases in prior unrecognized tax benefits resulting from lapses of statutes of limitations during the period. We recognize interest and penalties related to unrecognized tax benefits in tax expense.

11

For our major tax jurisdictions, the following years were open for examination by the tax authorities as ofMarch 30, 2014:

Jurisdiction	Open Tax Years
U.S.	2010 and forward
The Netherlands	2011 and forward
Czech Republic	2011 and forward

NOTE 9. RELATED-PARTY ACTIVITY

Related parties with which we had transactions during the thirteen week period endedMarch 30, 2014 were as follows:

• one of the members of our Board of Directors serves on the Board of Directors of Applied Materials, Inc. and Lattice Semiconductor Corporation;

• our Chief Financial Officer is on the Board of Directors of Cascade Microtech, Inc.;

• one of the members of our Board of Directors serves on the Supervisory Board of TMC BV; and

• our Chief Executive Officer is on the Board of Trustees for the Oregon Health and Science University Foundation.

Transactions with these related parties were as follows (in thousands):

	Thirteen Weeks Ended
Sales to Related Parties	March 30, 2014		March 31, 2013
Product sales:
Applied Materials, Inc.	$	959	$	3,492
Oregon Health & Science University	130		129
Total product sales to related parties	1,089		3,621
Service sales:
Applied Materials, Inc.	168		133
Lattice Semiconductor Corporation	3		3
Cascade Microtech, Inc.	8		8
Oregon Health & Science University	82		9
Total service sales to related parties	261		153
Total sales to related parties	$	1,350	$	3,774
Purchases from Related Parties
TMC BV	$	408	$	25
Oregon Health & Science University	39		—
Total purchases from related parties	$	447	$	25

Amounts due from (to) related parties were as follows (in thousands):

	March 30, 2014
Applied Materials, Inc.	$	990
Cascade Microtech, Inc.	8
Oregon Health & Science University	(28		)
TMC BV	(290		)
Due from related parties, net	$	680

12

NOTE 10. COMMITMENTS AND CONTINGENCIES

From time to time, we may be a party to litigation arising in the ordinary course of business. Currently, we are not a party to any litigation that we believe would have a material adverse effect on our financial position, results of operations or cash flows.

Purchase Obligations

We have commitments under non-cancelable purchase orders, primarily relating to inventory, totaling107.9 million at March 30, 2014. These commitments expire at various times through the second quarter of 2016.

NOTE 11. SEGMENT INFORMATION

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision making group, in deciding how to allocate resources and in assessing performance. Our chief operating decision maker is our Chief Executive Officer.

We currently report our segments based on a group structure organization. Our segments are the Industry Group and the Science Group.

The following tables summarize various financial amounts for each of our business segments (in thousands):

	Thirteen Weeks Ended
	March 30, 2014		March 31, 2013
Sales to External Customers:
Industry Group	$	106,437	$	99,064
Science Group	119,827		122,125
Total	$	226,264	$	221,189
Gross Profit:
Industry Group	$	56,132	$	50,514
Science Group	50,192		52,037
Total	$	106,324	$	102,551

	March 30, 2014		December 31, 2013
Goodwill:
Industry Group	$	99,688	$	51,532
Science Group	84,572		84,620
Total	$	184,260	$	136,152
Total Assets:
Industry Group	$	401,073	$	297,987
Science Group	361,215		365,571
Corporate and Eliminations	715,312		762,526
Total	$	1,477,600	$	1,426,084

Market segment disclosures are presented to the gross profit level as this is the primary performance measure for which the segment general managers are responsible. Selling, general and administrative, research and development and other operating expenses are managed and reported at the corporate level and, given allocation to the market segments would be arbitrary, have not been allocated to the market segments. See the Consolidated Statements of Operations for reconciliations from gross profit to income before income taxes. These reconciling items are not included in the measure of profit and loss for each reportable segment.

NOTE 12. RESTRUCTURING, REORGANIZATION, RELOCATION AND SEVERANCE

First Quarter 2014 Restructuring

During the first quarter of 2014 we engaged in a restructuring plan principally aimed at consolidating our sales force in Europe. The restructuring plan costs of $1.3 million primarily consisted of severance and related employee termination costs and was completed during the quarter. No future costs under this plan are expected. Savings from this plan is expected to be approximately $1.8 million on an annual basis.

13

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 was completed in the first quarter of 2013. The costs associated with the reorganization included primarily severance costs and resulted in the termination of certain positions throughout the company. In anticipation of this reorganization, we incurred$2.9 million of costs during the fourth quarter of 2012, and recorded $1.1 million of costs during the first half of 2013, for a total cost of $4.0 million. We expect to incur no additional charges related to the reorganization.

Restructuring, Reorganization, Relocation and Severance Accrual

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

Thirteen Weeks Ended March 30, 2014	First Quarter 2014 Restructuring			Group Structure Organization		Total
Beginning accrued liability	$	—		$	50	$	50
Charged to expense, net	1,331			—		1,331
Expenditures	(484		)	—		(484		)
Ending accrued liability	$	847		$	50	$	897

Thirteen Weeks Ended March 31, 2013	Group Structure Organization			Total
Beginning accrued liability	$	2,692		$	2,692
Charged to expense, net	695			695
Expenditures	(511		)	(511		)
Write-offs and adjustments	(80		)	(80		)
Ending accrued liability	$	2,796		$	2,796

NOTE 13. FAIR VALUE MEASUREMENTS OF ASSETS AND LIABILITIES

Factors used in determining the fair value of our financial assets and liabilities are summarized into three broad categories:

• Level 1 – quoted prices in active markets for identical securities as of the reporting date;

• Level 2 – other significant directly or indirectly observable inputs, including quoted prices for similar securities, interest rates, prepayment speeds and credit risk; and

• Level 3 – significant inputs that are generally less observable than objective sources, including our own assumptions in determining fair value.

The factors or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.

Following are the disclosures related to the fair value of our financial assets and (liabilities) (in thousands):

March 30, 2014	Level 1		Level 2			Level 3		Total
Available for sale marketable securities:
U.S. Government-backed securities	$	15,092	$	—		$	—	$	15,092
Agency bonds	—		52,967			—		52,967
Commercial paper	—		34,989			—		34,989
Certificates of deposit	—		8,578			—		8,578
Municipal bonds	—		51,601			—		51,601
Corporate bonds	—		12,091			—		12,091
Trading securities:
Equity securities – mutual funds	6,254		—			—		6,254
Derivative contracts, net	—		(2,936		)	—		(2,936		)
Total	$	21,346	$	157,290		$	—	$	178,636

14

December 31, 2013	Level 1		Level 2			Level 3		Total
Available for sale marketable securities:
U.S. treasury notes	$	10,128	$	—		$	—	$	10,128
Agency bonds	—		37,961			—		37,961
Commercial paper	—		39,987			—		39,987
Certificates of deposit	—		7,786			—		7,786
Municipal bonds	—		49,319			—		49,319
Corporate bonds	—		5,001			—		5,001
Trading securities:
Equity securities – mutual funds	5,287		—			—		5,287
Derivative contracts, net	—		(1,113		)	—		(1,113		)
Total	$	15,415	$	138,941		$	—	$	154,356

Agency bonds are securities backed by U.S. government-sponsored entities. U.S. Government-backed securities include Treasury Bills and Treasury Notes.

We use an income approach to value the assets and liabilities for outstanding derivative contracts using current market information as of the reporting date, such as spot rates, interest rate differentials and implied volatility.

There were no transfers between fair value categories or changes to our valuation techniques during thethirteen week period endedMarch 30, 2014.

We believe the carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and other current liabilities are a reasonable approximation of the fair value of those financial instruments because of the nature of the underlying transactions and the short-term maturities involved.

NOTE 14. DERIVATIVE INSTRUMENTS

In the normal course of business, we are exposed to foreign currency risk and we use derivatives to mitigate financial exposure from movements in foreign currency exchange rates.

The aggregate notional amount of outstanding derivative contracts were as follows (in thousands):

	March 30, 2014		December 31, 2013
Cash flow hedges	$	177,397	$	208,446
Balance sheet hedges	158,511		172,947
Total outstanding derivative contracts	$	335,908	$	381,393

The outstanding contracts at March 30, 2014 have varying maturities through the third quarter of 2015. We do not enter into derivative financial instruments for speculative purposes.

We attempt to mitigate derivative credit risk by transacting with highly rated counterparties. We have evaluated the credit and nonperformance risks associated with our derivative counterparties and believe them to be insignificant and not warranting a credit adjustment atMarch 30, 2014. In addition, there are no credit contingent features in our derivative instruments.

Balance Sheet Related

In countries outside of the U.S., we transact business in U.S. dollars and in various other currencies. We attempt to mitigate our currency exposures for recorded transactions by using forward exchange contracts to reduce the risk that our future cash flows will be adversely affected by changes in exchange rates. We enter into forward sale or purchase contracts for foreign currencies to economically hedge specific cash, receivables or payables positions denominated in foreign currencies.

Changes in fair value of derivatives entered into to mitigate the foreign exchange risks related to these balance sheet items are recorded in other income (expense) together with the transaction gain or loss from the respective balance sheet position as follows (in thousands):

	Thirteen Weeks Ended
	March 30, 2014			March 31, 2013
Foreign currency loss, inclusive of the impact of derivatives	$	(230	)	$	(599	)

15

Cash Flow Hedges

We use zero cost collar contracts and option contracts to hedge certain anticipated foreign currency exchange transactions. The foreign exchange hedging structure is set up, generally, on a twenty-four month time horizon. The hedging transactions we undertake primarily limit our exposure to changes in the U.S. dollar/euro and the U.S. dollar/Czech koruna exchange rate. The zero cost collar contract hedges are designed to protect us as the U.S. dollar weakens, but also provide us with some flexibility if the dollar strengthens.

These derivatives meet the criteria to be designated as hedges and, accordingly, we record the change in fair value of the effective portion of these hedge contracts relating to anticipated transactions in other comprehensive income rather than net income until the underlying hedged transaction affects net income.Gains and losses resulting from the ineffective portion of the hedge contracts, if any, are recognized as a component of net income. Gains and losses related to cash flow derivative contracts not designated as hedging instruments are recorded as a component of net income.

Summary

Our derivative instruments are subject to master netting arrangements and are presented net in our balance sheet. We do not have any financial collateral related to these netting arrangements. The effect of these netting arrangements on our balance sheet is as follows (in thousands):

	Offsetting of Derivative Assets							Offsetting of Derivative Liabilities
March 30, 2014	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Balance Sheet			Net Amounts Presented in Other Current Assets		Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Balance Sheet			Net Amounts Presented in Other Current Liabilities
Foreign exchange contracts designated as hedging instruments	$	—	$	—		$	—	$	3,876	$	(2,065	)	$	1,811
Foreign exchange contracts not designated as hedging instruments	720		(275		)	445		2,203		(633		)	1,570
Total	$	720	$	(275	)	$	445	$	6,079	$	(2,698	)	$	3,381

	Offsetting of Derivative Assets							Offsetting of Derivative Liabilities
December 31, 2013	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Balance Sheet			Net Amounts Presented in Other Current Assets		Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Balance Sheet			Net Amounts Presented in Other Current Liabilities
Foreign exchange contracts designated as hedging instruments	$	—	$	—		$	—	$	4,362	$	(3,042	)	$	1,320
Foreign exchange contracts not designated as hedging instruments	2,171		(698		)	1,473		2,916		(1,650		)	1,266
Total	$	2,171	$	(698	)	$	1,473	$	7,278	$	(4,692	)	$	2,586

The effect of derivative instruments was as follows (in thousands):

	Thirteen Weeks Ended
Foreign Exchange Contracts in Cash Flow Hedging Relationships	March 30, 2014			March 31, 2013
Amount of gain/(loss):
Recognized in OCI (effective portion)	$	(2,202	)	$	(1,799	)
Reclassified from accumulated OCI into revenue (effective portion)	37			—
Reclassified from accumulated OCI into cost of sales (effective portion)	(570		)	(297		)
Recognized in other, net (ineffective portion and amount excluded from effectiveness testing)	—			(25		)
Foreign Exchange Contracts Not in Cash Flow Hedging Relationships
Amount of gain/(loss):
Recognized in other, net	$	3,109		$	767

The unrealized losses at March 30, 2014are expected to be reclassified to net income during the next eighteen months as a result of the underlying hedged transactions also being recorded in net income.

16

NOTE 15. CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME BY COMPONENT

The following tables illustrate the disclosure of changes in the balances of each component of accumulated other comprehensive income ("AOCI"), as well as details the effect of reclassifications out of AOCI on the line items in the Consolidated Statements of Operations by component (net of tax, in thousands):

	Thirteen Weeks Ended March 30, 2014
	Foreign Currency Items		Unrealized Gains and Losses on Available-for-Sale Securities			Defined Benefit Pension Items			Gains and Losses on Cash Flow Hedges			Total
Beginning Balance	$	48,865	$	(11	)	$	(552	)	$	(1,174	)	$	47,128
Other comprehensive income before reclassifications	107		1			16			(753		)	(629		)
Amounts reclassified from AOCI to:
Revenue	—		—			—			(37		)	(37		)
Cost of goods sold	—		—			—			570			570
Other income (expense)	—		—			—			—			—
Total reclassifications out of AOCI	—		—			—			533			533
Net current period other comprehensive income	107		1			16			(220		)	(96		)
Ending balance	$	48,972	$	(10	)	$	(536	)	$	(1,394	)	$	47,032

	Thirteen Weeks Ended March 31, 2013
	Foreign Currency Items			Unrealized Gains and Losses on Available-for-Sale Securities		Defined Benefit Pension Items			Gains and Losses on Cash Flow Hedges			Total
Beginning Balance	$	38,890		$	4	$	(819	)	$	481		$	38,556
Other comprehensive income before reclassifications	(15,714		)	7		(15		)	(1,925		)	(17,647		)
Amounts reclassified from AOCI to:
Cost of goods sold	—			—		—			297			297
Other income (expense)	—			—		—			25			25
Total reclassifications out of AOCI	—			—		—			322			322
Net current period other comprehensive income	(15,714		)	7		(15		)	(1,603		)	(17,325		)
Ending balance	$	23,176		$	11	$	(834	)	$	(1,122	)	$	21,231

NOTE 16. NEW ACCOUNTING PRONOUNCEMENTS

Recent accounting pronouncements issued by the Financial Accounting Standards Board and the United States Exchange Commission did not have a material impact on the Company's financial statements.

17

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

This Quarterly Report on Form 10-Qcontains forward-looking statements that include guidance for revenue, earnings per share and bookings for thesecond quarter of 2014, revenue expectations for the remainder of 2014, the impact of certain items on our results for these periods and assumptions about tax rates. Forward-looking statements may also be identified by words and phrases that refer to future expectations, such as “guidance”, “guiding”, “forecast”, “toward”, “plan”, “expect”, “expects”, “are expected”, “is expected”, "anticipate", "believe", “will”, “projecting”, “look forward” and other similar words and phrases. Factors that could affect these forward-looking statements include, but are not limited to, the global economic environment; lower than expected customer orders and potential weakness of the Science Group and Industry Group; lower than expected customer orders for recently-introduced new products; potential disruption in manufacturing or unexpected additional costs due to the transition from older to newer products; potential reduced governmental spending due to budget constraints and uncertainty around U.S. or other countries’ sovereign debt; potential disruption in the company’s operations due to organization changes; risks associated with building and shipping a high percentage of the company’s quarterly revenue in the last month of the quarter; cyclical changes in the data storage and semiconductor industries, which are the major components of Industry Group revenue; continued weakness in the mining industry, which is also a component of Industry Group revenue; limitations in our manufacturing capacity for certain products; problems in obtaining necessary product components in sufficient volumes on a timely basis from our supply chain; the relative mix of higher-margin and lower-margin products; increases in cancellations; risks associated with a high percentage of the company’s revenue coming from “turns” business, when the order for a product is placed by the customer in the same quarter as the planned shipment; fluctuations in foreign exchange rates, which can affect margins or the competitive pricing of our products; additional costs related to future merger and acquisition activity; failure of the company to achieve anticipated benefits of acquisitions and collaborations, including failure to achieve financial goals and integrate acquisitions successfully; reduced profitability due to failure to achieve or sustain margin improvement in service or product manufacturing; potential customer requests to defer planned shipments; increased competition and new product offerings from competitors; lower average sales prices and reduced margins on some product sales due to increased competition; failure of the company's products and technology, including new products, to find acceptance with customers; inability to deploy products as expected or delays in shipping products due to technical problems or barriers, especially with regard to recently introduced TEM products; bankruptcy or insolvency of customers or suppliers; changes in tax rate and laws, accounting rules regarding taxes or agreements with tax authorities; the ongoing determination of the effectiveness of foreign exchange hedge transactions; potential shipment or supply chain disruptions due to natural disasters or terrorist attacks; changes to or potential additional restructurings and reorganizations; changes in trade policies and tariff regulations; changes in the regulatory environment in the nations where we do business; and additional selling, general and administrative or research and development expenses.

From time to time, we also may provide oral or written forward-looking statements in other materials we release to the public. The risks, uncertainties and assumptions referred to above include, but are not limited to, those discussed here and the risks discussed from time to time in our other public filings. All forward-looking statements included in thisQuarterly Report on Form 10-Qare based on information available to us as of the date of this report, and we assume no obligation to update these forward-looking statements. You are advised, however, to consult any further disclosures we make on related subjects in our Forms 10-K, 10-Q and 8-K filed with, or furnished to, the SEC. You also should read the section titled “Risk Factors” included inPart II, Item 1A. of this Quarterly Report on Form 10-Qfor factors that we believe could cause our actual results to differ materially from expected and historical results. Other factors could also adversely affect us.

Summary of Products and Segments

We are a leading supplier of scientific instruments and related services for nanoscale applications and solutions for industry and science. We report our revenue based on a group structure organization, which we categorize as the Industry Group and the Science Group.

Our products include transmission electron microscopes ("TEMs"); scanning electron microscopes ("SEMs"); DualBeam^TMsystems which combine a SEM and a focused ion beam system ("FIB") on a single platform; stand-alone FIBs; high-performance optical microscopes, three-dimensional modeling software, and service and components to support the products. TEMs provide the highest resolution images of samples and their internal structure, down to the atomic level. SEMs provide detailed images of the surface and shape of samples. Optical microscopes provide a wider field of view than SEMs and TEMs. DualBeams and FIBs image, manipulate, mill and deposit material for a variety of purposes, including preparation of samples for TEMs. Substantially all of these product categories are sold into all of our markets. Individual models of our products are increasingly designed to provide specific solutions and applications in each of our markets.

Our DualBeam systems include models that have wafer handling capability and are purchased by semiconductor equipment manufacturers (“wafer-level DualBeam systems”) and models that have small stages and are sold to customers in several markets (“small-stage DualBeam systems”).

18

Our significant research and development and manufacturing operations are located in Hillsboro, Oregon; Eindhoven, The Netherlands; and Brno, Czech Republic; and our software development is managed principally from Bordeaux, France. Our sales and service operations are conducted in the United States (U.S.) and approximately50other countries around the world. We also sell our products through independent agents, distributors and representatives in additional countries.

The Industry Groupconsists of customers in semiconductor integrated circuit manufacturing and related industries such as manufacturers of data storage equipment and other technologies, as well as customers in the natural resources industries including mining and oil and gas. The tools we develop for our Industry Group customers are generally aimed at improving their processes to increase overall yields, whether in a factory, at a mine or at an oil and gas rig. For the semiconductor market, our growth is driven by shrinking line widths and process nodes of 45 nanometers and smaller, increasing complexity in their materials such as high-k metal gates and low-k dielectrics and increasing device complexity such as 3D transistor architectures. Such products are used primarily in laboratories or near the fabrication line to speed new product development and increase yields by enabling 3D wafer metrology, defect analysis, root cause failure analysis and circuit edit for modifying device functionality. For the natural resource market, our products are used to increase yields in mining through automated mineralogy and in oil and gas exploration and laboratory analysis. We also provide support for products and customers within this group for the entire life cycle of a tool from installation through the warranty period, and after the warranty period through contract coverage or on a time and materials basis.

The Science Groupincludes universities, public and private research laboratories and customers in a wide range of industries, including metals, automobiles, aerospace, and forensics. The tools we develop for our customers in the Science Group are generally aimed at the exploration and discovery of new materials and chemistries or solving for causes and cures of diseases. The tools are used in a laboratory and are generally not used in industrial applications. The Science Group also includes customers at universities, government laboratories and research institutes engaged in biotech and life sciences applications, as well as pharmaceutical, biotech and medical device companies and hospitals. Growth in these markets is driven by global corporate and government funding for research and development and by development of new products and processes based on innovations at the nanoscale. Our solutions enable scientific discovery and advancement for researchers and help manufacturers develop, analyze and produce advanced products. Our products are also used in root cause failure analysis and quality control applications across a range of industries. Our products’ ultra-high resolution imaging allows structural biologists to create detailed 3D reconstructions of complex biological structures such as proteins and viruses. Cellular biologists use our tools to correlate wide-field, lower resolution optical images with higher resolution electron microscope imaging. Our products are also used by drug researchers and in particle analysis and a range of pathology and quality control applications. We also provide support for products and customers within this group for the entire life cycle of a tool from installation through the warranty period, and after the warranty period through contract coverage or on a time and materials basis.

Overview - Orders and Backlog

Orders received in a particular period that are not scheduled to be built and shipped to the customer in that period represent backlog.We only recognize backlog for purchase commitments for which the terms of the sale have been agreed upon, including price, configuration, options and payment terms. Purchase commitments may include letters of intent. Product backlog consists of all open orders meeting these criteria. Service backlog consists of open orders for service, unearned revenue on service contracts and open orders for spare parts. U.S. government backlog is limited to contracted amounts. In addition, some of the U.S. government backlog represents uncommitted funds. At March 30, 2014, our total backlog was $494.6 million, compared to $473.5 million in total backlog at December 31, 2013.

At March 30, 2014, our backlog consisted of $361.6 million of products and $133.0 million related to service, compared to product backlog of $349.3 million and service backlog of $124.2 million at December 31, 2013. Generally, at least 90% of our backlog is shippable within one year.

Customers may cancel or delay delivery on previously placed orders, although our standard terms and conditions include penalties for cancellations made close to the scheduled delivery date. As a result, the timing of the receipt of orders or the shipment of products could have a significant impact on our backlog at any date. Historically, cancellations have been low. There were no cancellations during the first thirteen weeks of 2014 and we experienced cancellations of $4.2 million during all of 2013. From time to time, we have experienced difficulty in shipping our product from backlog due to single-sourcing issues and problems in securing electronic components from a certain vendor. In addition, product shipments have been extended due to delays in completing certain application development, by our customers pushing out shipments because their facilities are not ready to install our systems and by our own manufacturing delays due to the technical complexity of our products and supply chain issues. A significant portion of our backlog is denominated in currencies other than the U.S. dollar and, therefore, our reported backlog fluctuates, to an extent, as a result of foreign currency exchange rate movements. For these reasons, the amount of backlog at any date is not necessarily indicative of revenue to be recognized in future periods.

19

Outlook

OUTLOOK FOR THE REMAINDER OF 2014

Based on our current backlog of unfilled orders, our pipeline of potential orders, conditions in each of our markets, the impact of new products that we have introduced in the last few years and our strategies and competitive positioning, we expect revenue to increase in the second quarter compared with the first quarter. For all of 2014, we expect somewhat higher growth in 2014 than the 4% experienced in 2013 compared with 2012.

Within the Industry segment, we expect growth in the semiconductor business. Our equipment has been used primarily in laboratories for new process development and yield improvement, and the increasing complexity and shrinking dimensions of the devices made by our customers have increased the demand for our workflow solutions. In addition, we have introduced products that are intended to move our tools closer to the production line, and initial customer response has been positive. We believe our volume will increase in part due to demand for those products.

Our Industry Group also includes, to a much lesser extent, sales to companies in the mining and oil and gas markets. Orders from mining company customers remain constrained due to market conditions affecting their business. We continue to reorient our oil and gas business toward reservoir characterization where we believe there is substantial opportunity. As part of that strategy, in the first quarter of 2014 we acquired Lithicon AS, a provider of digital rock technology services and pore-scale micro computed tomography (µCT, or microCT) equipment to oil and gas companies worldwide, and we have begun the integration of Lithicon with our existing operations for oil and gas customers. While we believe this strategy will allow us to introduce new products and address new markets, we do not expect it to materially impact our revenues until after 2014.

Within the Science segment, sales of our products to customers engaged in material research have historically driven the largest portion of revenues. Sales to these customers were relatively weak in the first quarter, as several large potential transactions were postponed. We expect orders to strengthen in the second quarter, resulting in improved revenue performance in the second half of 2014. In addition, we also expect increasing contribution in the second half from the important new products introduced in 2013.

Sales to customers engaged in structural and cell biology research were strong in the first quarter, continuing the growth that developed at the end of 2013. The primary driver of this growth has been increased penetration of electron microscopy into structural biology applications and adoption of our products in correlative microscopy for cell biology. While we may experience variation from quarter to quarter, we expect revenues from customers in the biological sciences to continue to grow.

Gross margin increased by 60 basis points from the first quarter of 2013 to the first quarter of 2014. We are seeking continued gross margin improvement in 2014. In addition to increasing our proportion of newer, higher-margin products and application-specific products, we expect lower costs from continued sourcing improvements and initial production from our new leased facility in the Czech Republic, which is scheduled to open in the second half of 2014. We expect to incur restructuring costs of approximately $3 million in the second half of 2014, related to relocation of this facility and related exit costs, and we are also looking at opportunities for improved efficiencies in the overall organization.

Operating expenses are expected to increase in 2014 due to acquisitions, the increase of sales and service personnel, increased spending for research and development and higher stock-based compensation expense.

Growth in net income for the remainder of 2014 will be primarily dependent on expected increases in revenue and further improvements in gross margin.

Please see the risk factors listed in Part II, Item 1A. of this Quarterly Report on Form 10-Q for the risk factors that could cause our results to vary from this Outlook for the remainder of 2014.

Critical Accounting Policies and the Use of Estimates

Preparation of our financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. We believe the most complex and sensitive judgments, because of their significance to the Consolidated Financial Statements, result primarily from the need to make estimates about the effects of matters that are inherently uncertain.

Management’s Discussion and Analysis and Note 1 to the Consolidated Financial Statements in our2013Annual Report on Form 10-Kdescribe the significant accounting estimates and policies used in preparation of the Consolidated Financial Statements. Actual results in these areas could differ from management’s estimates. Duringthe first thirteen weeks of 2014, there were no significant changes in our critical accounting policies or estimates from those reported in our Annual Report on Form 10-K for the year endedDecember 31, 2013, which was filed with the Securities and Exchange Commission on February 21, 2014.

20

Results of Operations

The following table sets forth our statement of operations data, in absolute dollars and as a percentage⁽¹⁾of consolidated net sales (dollars in thousands):

	Thirteen Weeks Ended					Thirteen Weeks Ended
	March 30, 2014					March 31, 2013
Net sales	$	226,264		100.0	%	$	221,189		100.0	%
Cost of sales	119,940			53.0		118,638			53.6
Gross profit	106,324			47.0		102,551			46.4
Research and development	25,646			11.3		24,809			11.2
Selling, general and administrative	48,462			21.4		43,524			19.7
Restructuring, reorganization, relocation and severance	1,331			0.6		695			0.3
Operating income	30,885			13.6		33,523			15.2
Other expense, net	(270		)	(0.1	)	(1,505		)	(0.7	)
Income before income taxes	30,615			13.5		32,018			14.5
Income tax expense	5,537			2.4		5,217			2.4
Net income	$	25,078		11.1	%	$	26,801		12.1	%

___________________________

⁽¹⁾  Percentages may not add due to rounding.

Net Sales

Net sales increased$5.1 million, or 2.3%, to $226.3 million in the thirteen week period endedMarch 30, 2014 (the first quarter of 2014) compared to $221.2 million in the thirteen week period endedMarch 31, 2013 (the first quarter of 2013). Revenue from acquired businesses increased net sales by $2.5 million, or 1.1%, in the thirteen week period endedMarch 30, 2014 versus the comparable period of 2013.

Currency fluctuations decreased net sales by $0.4 million, or 0.2%, in the thirteen week period endedMarch 30, 2014 compared to the same period of 2013. Strengthening of the U.S. dollar against foreign currencies generally has the effect of decreasing net sales and backlog.

The factors affecting net sales are discussed in more detail in the Net Sales by Segment discussion below.

Net Sales by Segment

Net sales by market segment (in thousands) and as a percentage of net sales were as follows:

	Thirteen Weeks Ended
	March 30, 2014				March 31, 2013
Industry Group	$	106,437	47.0	%	$	99,064	44.8	%
Science Group	119,827		53.0		122,125		55.2
Consolidated net sales	$	226,264	100.0	%	$	221,189	100.0	%

Industry Group

The $7.4 million, or 7.4%, increase in Industry Group sales in the thirteen week period endedMarch 30, 2014 versus the comparable period of 2013 was primarily due to increased sales to semiconductor customers, mainly as a result of their capital purchasing cycles and the continued adoption of our near-line product solutions. This increase was partially offset by reduced demand for our products from oil and gas customers and continued weakness in the mining sector driven by lower commodity prices and a corresponding reduction in capital spending. Currency fluctuations decreased Industry Group revenue by $0.2 million, or 0.2%, and revenue from acquired businesses increased revenue by $1.0 million, or 1.0%, versus the comparable period of 2013.

Science Group

The $2.3 million, or 1.9%, decrease in Science Group sales in the thirteen week period endedMarch 30, 2014 versus the comparable period of 2013 was primarily driven by decreased revenue from high-end, high-resolution systems sold to research and science customers globally. The decrease was offset by increased demand for our structural and cell biology applications solutions, and

21

increased revenue from our installed base. Currency fluctuations decreasedScience Group revenue by $0.2 million, or 0.1%, and revenue from acquired businesses increased revenue by $1.5 million, or 1.2%, versus the comparable period of 2013.

Net Sales by Geographic Region

Most of our net sales are derived from customers outside of the U.S., which we expect to continue. The following table shows our net sales by geographic region (dollars in thousands):

	Thirteen Weeks Ended
	March 30, 2014				March 31, 2013
U.S. and Canada	$	72,266	31.9	%	$	68,709	31.1	%
Europe	67,042		29.6		65,673		29.7
Asia-Pacific Region and Rest of World	86,956		38.5		86,807		39.2
Consolidated net sales	$	226,264	100.0	%	$	221,189	100.0	%

U.S. and Canada

The $3.6 million, or 5.2%, increase in sales to the U.S. and Canada in the thirteen week period endedMarch 30, 2014 versus the comparable period of 2013 was primarily due to increased sales to customers engaged in materials research, structural and cell biology research, and semiconductor manufacturing. We also saw increased revenue from our installed base.

Europe

Our European region also includes Central America, South America, Africa (excluding South Africa), the Middle East and Russia.

The $1.4 million, or 2.1%, increase in sales to Europe in the thirteen week period endedMarch 30, 2014 versus the comparable period of 2013 was primarily due to increased revenue from our installed base. We saw increased sales to structural and cell biology customers, though these gains were offset by decreased purchases from research and semiconductor customers. Currency fluctuationsincreased revenue to Europe by $2.5 million, or 3.9%, in the thirteen week period endedMarch 30, 2014 versus the comparable period of 2013.

Asia-Pacific Region and Rest of World

The $0.1 million, or 0.2%, increase in sales to the Asia-Pacific Region and Rest of World in the thirteen week period endedMarch 30, 2014 versus the comparable period of 2013 was largely due to increased purchases by our semiconductor customers as the region continues to expand manufacturing capacity. The increase was offset by declines in sales to customers engaged in research activities in Japan. Currency fluctuations, specifically the weakening of the dollar against the yen, decreased revenue to this region by $2.9 million, or 3.3% in the thirteen week period endedMarch 30, 2014 versus the comparable period of 2013.

Cost of Sales and Gross Margin

Our gross margin (gross profit as a percentage of net sales) by segment was as follows:

	Thirteen Weeks Ended
	March 30, 2014		March 31, 2013
Industry Group	52.7	%	51.0	%
Science Group	41.9		42.6
Overall	47.0		46.4

Cost of sales includes manufacturing costs, such as materials, labor (both direct and indirect) and factory overhead, as well as all of the costs of our customer service function such as labor, materials, travel and overhead. The four primary drivers affecting gross margin include: product mix, operational efficiencies, competitive pricing pressure and currency movements.

Cost of sales increased$1.3 million, or 1.1%, to $119.9 million in the thirteen week period endedMarch 30, 2014 versus $118.6 million in the comparable period of 2013 due primarily to a change in product mix of systems sold. Currency fluctuations decreased cost of sales by $0.8 million and increased our gross margin by $0.4 million, or 0.3 percentage points, during the thirteen week period endedMarch 30, 2014 versus the comparable period of 2013

Industry Group

The increase in Industry Group gross margin during the thirteen week period endedMarch 30, 2014 versus the comparable period of 2013 was due primarily to change in product mix as we sold more comparatively higher resolution systems to semiconductor customers, which generally carry higher average margins, as well as an increase in margins on revenue earned from our installed

22

base. Currency fluctuations increased Industry Group gross margin by $0.1 million, or 0.2 percentage points, in the thirteen week period endedMarch 30, 2014 versus the comparable period of 2013.

Science Group

The decrease in Science Group gross margin in the thirteen week period endedMarch 30, 2014 versus the comparable period of 2013 was due primarily to changes in product mix as we sold more comparatively lower resolution systems, offset partially by increases in margins recognized from our installed base. Currency fluctuations increased Science Group gross margin by $0.3 million, or 0.4 percentage points, in the thirteen week period endedMarch 30, 2014 versus the comparable period 2013.

Research and Development Costs

Research and Development (“R&D”) costs include labor, materials, overhead and payments to third parties for research and development of new products and new software or enhancements to existing products and software and are expensed as incurred. We periodically receive funds from various organizations to subsidize our research and development. These funds are reported as an offset to research and development expense. During the thirteen week period ended March 30, 2014, and for the comparable period of 2013, we received subsidies from European governments for technological developments primarily for semiconductor and life sciences equipment.

R&D costs, net of subsidies, were as follows (in thousands):

	Thirteen Weeks Ended
	March 30, 2014			March 31, 2013
Gross spending	$	26,583		$	26,131
Less subsidies	(937		)	(1,322		)
Net expense	$	25,646		$	24,809

R&D costs increased $0.8 million, or 3.4%, in the thirteen week period endedMarch 30, 2014 versus the comparable period of 2013 primarily due to increased headcount and project spending focused on support of current growth opportunities, and reduced subsidies from European governments. Currency fluctuations increased R&D costs by $0.2 million, or 0.8%, in the thirteen week period endedMarch 30, 2014 versus the comparable period of 2013.

We anticipate that we will invest between 10% and 11% of revenue in R&D for the foreseeable future. Accordingly, as revenues increase, we expect R&D expenditures will also increase. Actual future spending, however, will depend on market conditions.

Selling, General and Administrative Costs

Selling, general and administrative (“SG&A”) costs include labor, travel, outside services and overhead incurred in our sales, marketing, management and administrative support functions. SG&A costs also include sales commissions paid to our employees as well as to our agents.

SG&A costs increased$4.9 million, or 11.3%, to $48.5 million in the thirteen week period endedMarch 30, 2014 compared to $43.5 million in the thirteen week period endedMarch 31, 2013 primarily due to increased headcount, higher stock-based compensation cost, additional depreciation, and the inclusion of SG&A costs of our acquired companies. Currency fluctuations increased SG&A costs by $0.4 million, or 0.8%, in thirteen week period endedMarch 30, 2014 versus the comparable period of 2013.

Restructuring, Reorganization, Relocation and Severance

First Quarter 2014 Restructuring

During the first quarter of 2014 we engaged in a restructuring plan principally aimed at consolidating our sales force in Europe. The restructuring plan costs of $1.3 million primarily consisted of severance and related employee termination costs and was completed during the quarter. No future costs under this plan are expected. Savings from this plan is expected to be approximately $1.8 million on an annual basis.

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 was completed in the first quarter of 2013. The costs associated with the reorganization included primarily severance costs and resulted in the termination of certain positions throughout the company. In anticipation of this reorganization, we incurred$2.9 million of costs during the fourth quarter of 2012, and recorded $1.1 million

23

of costs during the first half of 2013, for a total cost of $4.0 million. We expect to incur no additional charges related to the reorganization.

For information regarding the related accrued liability, see Note 12 of the Condensed Notes to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Other Expense, Net

Other expense, netincludes interest income, interest expense, foreign currency transaction gains and losses and other miscellaneous items.

Interest income represents interest earned on cash and cash equivalents and investments in marketable securities and totaled$0.2 million in the thirteen week period endedMarch 30, 2014 and $0.1 million in the comparable period of 2013. The increase in the thirteen week period endedMarch 30, 2014 versus the comparable period of 2013 was primarily due to higher cash and investment balances.

Interest expense was $0.1 million in the thirteen week period endedMarch 30, 2014 and $0.8 million in the comparable period of 2013. The decrease in interest expense related primarily to our 2.875% convertible notes, which converted to common stock on June 1, 2013.

Other, net primarily consists of foreign currency gains and losses on transactions and realized and unrealized gains and losses on the changes in fair value of derivative contracts entered into to hedge these transactions.

Income Tax Expense

Our effective income tax rates for the thirteen week periods endedMarch 30, 2014 and March 31, 2013 were 18.1% and 16.3%, respectively, and reflected taxes accrued in the U.S. and foreign jurisdictions. The tax rate in the thirteen week period ended March 30, 2014 is higher than the comparable period in 2013 due to U.S. research and experimentation tax credits, which were generated in 2012 and which were recognized in the first quarter of 2013 in conjunction with the extension of legislation enacted in January 2013. This legislation expired at the end of 2013, and we have not recognized any benefit related to U.S. research and experimentation credits in the thirteen week period ending March 30, 2014, and do not expect to recognize any such benefit in the remainder of 2014.

Our effective tax rate may differ from the U.S. federal statutory tax rate primarily as a result of the effects of state and foreign income taxes, research and development tax credits earned in the U.S. and foreign jurisdictions, adjustments to our unrecognized tax benefits and our ability or inability to utilize various carry forward tax items. In addition, our effective income tax rate may be affected by changes in statutory tax rates and laws in the U.S. and foreign jurisdictions and other factors.

As of March 30, 2014, total unrecognized tax benefits were $24.1 million and related primarily to uncertainty surrounding tax credits and permanent establishment. All unrecognized tax benefits would decrease the effective tax rate if recognized.

Our net deferred tax assets totaled $2.6 million and $7.9 million, respectively, at March 30, 2014 and December 31, 2013. Valuation allowances on deferred tax assets totaled $4.5 million and $2.7 million as of March 30, 2014 and December 31, 2013, respectively. The increase is due to additional valuation allowance against net deferred tax assets recorded as part of the Lithicon acquisition. We continue to record a valuation allowance against a portion of U.S. and foreign deferred tax assets, as we do not believe it is more likely than not that we will be able to utilize the deferred tax assets in future periods.

Liquidity and Capital Resources

Sources of Liquidity and Capital Resources

Our sources of liquidity and capital resources as of March 30, 2014 consisted of $453.4 millionof cash, cash equivalents, short-term restricted cash and short-term investments,$60.7 million in non-current investments, $34.6 million of long-term restricted cash, $100.0 millionavailable under revolving credit facilities, as well as potential future cash flows from operations. As of March 30, 2014, $236.8 million of our $548.8 millionin total cash, cash equivalents, restricted cash and investments, including long-term restricted cash was located outside of the United States. Although we do not intend to do so, repatriation of these funds would subject us to both U.S. income taxes (subject to an adjustment for foreign tax credits) and withholding taxes payable to the various foreign countries where funds are held. Restricted cash relates to deposits to secure bank guarantees for customer prepayments that expire through2019.

We believe that we have sufficient cash resources and available credit lines to meet our expected operational and capital needs for at least the next twelve months fromMarch 30, 2014.

In the thirteen week period endedMarch 30, 2014, cash and cash equivalents and short-term restricted cash decreased$70.3 million to $332.6 million from $403.0 million as of December 31, 2013 primarily as a result of $64.6 million used for acquisitions, $25.7

24

million for the net purchase of marketable securities, $5.1 million for dividends paid on common stock, and the $3.3 million unfavorable effect of exchange rate changes. These factors were partially offset by $28.4 million of cash provided by operating activities, and $5.5 million received from the exercise of employee stock options.

In the thirteen week period ended March 31, 2013, cash and cash equivalents and short-term restricted cash increased $5.1 million to $285.9 million as of March 31, 2013 from $280.8 million as of December 31, 2012 primarily as a result of $34.8 million provided by operations, and $4.1 million of proceeds from the exercise of employee stock options. These factors were partially offset by $16.7 million for the net purchase of marketable securities, $5.0 million used for the purchase of property, plant and equipment, the $5.2 million unfavorable effect of exchange rate changes and dividends paid on common stock of $3.1 million.

Accounts receivable increased$12.5 million to $206.9 million as of March 30, 2014, from $194.4 million as of December 31, 2013. This increase was primarily due to the timing of shipments. The March 30, 2014 balance also included a $0.5 millionincrease related to fluctuations in currency exchange rates. Our days sales outstanding, calculated on a quarterly basis, was 83 days at March 30, 2014 and 89 days at March 31, 2013.

Inventories increased$10.8 million to $192.6 million as of March 30, 2014 compared to $181.7 million as of December 31, 2013, mainly due to plans to increase sales volumes in the second quarter of 2014 and beyond. The March 30, 2014 balance included a $0.4 milliondecrease related to fluctuations in currency exchange rates. Our annualized inventory turnover rate, calculated on a quarterly basis, was 1.9 times for the quarters ended March 30, 2014 and March 31, 2013.

Deferred tax assets, current and long term, net of deferred tax liabilities decreased $5.3 million to $2.6 million as of March 30, 2014, compared to $7.9 million as of December 31, 2013, primarily from the inclusion of additional deferred tax liabilities from our newly acquired companies.

Expenditures for property, plant and equipment of$4.3 millionand transfers to fixed assets from inventories of$0.2 million in the thirteen week period endedMarch 30, 2014 primarily consisted of payments for equipment related to the build-out of our leased Brno facility and demonstration equipment.

Accounts payable increased $21.1 million to $94.3 million as of March 30, 2014 compared to $73.2 million as of December 31, 2013, primarily due to accrued purchases of equipment related to the build-out of the new leased facility in Brno and increased purchases of inventory in anticipation of increased sales volumes in the second quarter of 2014 and beyond.

Accrued payroll liabilities decreased$10.6 million to $34.5 million as of March 30, 2014 compared to $45.1 million as of December 31, 2013, primarily due to the payout of employee incentive compensation.

Other Credit Facilities and Letters of Credit

We have a $100.0 million secured revolving credit facility, including a $50.0 million subfacility for the issuance of letters of credit. The credit agreement expires in April 2016. We may, upon notice to JPMorgan Chase Bank, N.A., request to increase the revolving loan commitments by an aggregate amount of up to$50.0 millionwith new or additional commitments subject only to the consent of the lender(s) providing the new or additional commitments, for a total secured credit facility of up to$150.0 million. There were no amounts outstanding under this facility as of March 30, 2014.

We mitigate credit risk by transacting with highly rated counterparties. We have evaluated the credit and non-performance risks associated with our lenders and believe them to be insignificant.

As part of our contracts with certain customers, we are required to provide letters of credit or bank guarantees which these customers can draw against in the event we do not perform in accordance with our contractual obligations.Restricted cash balances securing bank guarantees that expire within 12 months of the balance sheet date are recorded as a current asset on our consolidated balance sheets. Restricted cash balances securing bank guarantees that expire beyond 12 months from the balance sheet date are recorded as long-term restricted cash on our consolidated balance sheets.

The following table sets forth information related to guarantees and letters of credit (in thousands):

	March 30, 2014
Guarantees and letters of credit outstanding	$	49,588
Amount secured by restricted cash deposits:
Current	$	14,926
Long-term	34,589
Total secured by restricted cash	$	49,515

25

Share Repurchase Plan

A plan to repurchase up to a total of4.0 millionshares of our common stock was approved by our Board of Directors in September 2010, re-authorized in December 2012, and does not have an expiration date. The amount and timing of specific repurchases are subject to market conditions, applicable legal requirements and other factors. The purchases are funded from existing cash resources and may be suspended or discontinued at any time at our discretion without prior notice.

During 2012 we repurchased 20,500 shares for a total of $0.9 million, or an average of $43.41 per share, and during 2011 we repurchased 1,654,000 shares for a total of $50.0 million, or an average of $30.19 per share. We did not repurchase any shares during 2013, or in the first thirteen week period of 2014. As of March 30, 2014, 2,119,800 shares remained available for purchase pursuant to this plan.

On May 1, 2014, the Company resumed purchasing shares in the open market under the terms of the plan.

Dividends to Shareholders

In June 2012 we announced our plan to initiate a quarterly dividend and our Board of Directors has declared dividends each quarter since the plan's inception. During the first quarter of 2014, our Board of Directors declared a dividend of $0.12per share of common stock. Dividend payments during the first thirteen week period of 2014 totaled $5.1 million. The declaration and payment of dividends to shareholders in the future is subject to the discretion of the Board of Directors.

New Accounting Pronouncements

See Note 16 of the Condensed Notes to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for a discussion of new accounting pronouncements.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a material current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes in our reported market risks and risk management policies since the filing of our2013Annual Report on Form 10-K, which was filed with the Securities and Exchange Commission onFebruary 21, 2014.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management evaluated, with the participation and under the supervision of our President and Chief Executive Officer and Chief Financial Officer, the effectiveness of our disclosure controls and procedures as of the end of the period covered by thisQuarterly Report on Form 10-Q. Based on this evaluation, our President and Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures are effective to ensure that information we are required to disclose in reports that we file or submit under the Securities Exchange Act of 1934 is accumulated and communicated to our management, including our President and Chief Executive Officer and our Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure and that such information is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.

Changes in Internal Control Over Financial Reporting

There was no change in our internal control over financial reporting that occurred during our most recent fiscal quarter that has materially affected or is reasonably likely to materially affect our internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

We are involved in various legal proceedings and receive claims from time to time, arising in the normal course of our business activities, including claims for alleged infringement or violation of intellectual property rights. We are not a party to any litigation that is expected to have a significant effect on our operations or business.

26

Item 1A. Risk Factors

A description of the risks and uncertainties associated with our business is set forth below. You should carefully consider such risks and uncertainties, together with the other information contained in this Quarterly Report on Form 10-Q and in our other public filings. If any of such risks and uncertainties actually occurs, our business, financial condition or operating results could differ materially from the plans, projections and other forward-looking statements included in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in Part I, Item 2 of this Quarterly Report on Form 10-Q and elsewhere in this Quarterly Report on Form 10-Q and in our other public filings and public disclosures. In addition, if any of the following risks and uncertainties, or if any other risks and uncertainties, actually occurs, our business, financial condition or operating results could be harmed substantially, which could cause the market price of our stock to decline, perhaps significantly.

We operate in highly competitive industries, and we cannot be certain that we will be able to compete successfully in such industries.

The industries in which we operate are intensely competitive. Established companies, both domestic and foreign, compete with us in each of our product lines. Some of our competitors have greater financial, engineering, manufacturing and marketing resources than we do and may price their products very aggressively. In addition, these competitors may be willing to operate at a less profitable level than at which we would expect to operate.Our significant competitors include, among others: JEOL Ltd., Carl Zeiss SMT A.G., Hitachi High Technologies Corporation and Tescan, a.s.In addition, some of our competitors have formed collaborative relationships and otherwise may cooperate with each other.

The identity and composition of our competitors may change as we increase our focus on application-specific workflows and new market opportunities, such as the oil and gas services sector. As we expand into new markets, we will face competition not only from our existing competitors, but also from other competitors, including companies with stronger technological, marketing and sales positions in those markets.

Our customers must make a substantial investment to install and integrate capital equipment into their laboratories and process applications. As a result, once a manufacturer has selected a particular vendor’s capital equipment, the manufacturer generally relies on that equipment for a specific production line or process control application and frequently will attempt to consolidate its other capital equipment requirements with the same vendor. Accordingly, if a particular customer selects a competitor’s capital equipment, we expect to experience difficulty selling to that customer for a significant period of time.

Our ability to compete successfully depends on a number of factors both within and outside of our control, including:

• price;

• product quality;

• breadth of product line;

• system performance;

• ease of use;

• type and breadth of product applications;

• cost of ownership;

• global technical service and support;

• success in developing or otherwise introducing new products; and

• foreign currency fluctuations.

We cannot be certain that we will be able to compete successfully on these or other factors, which could negatively impact our revenues, gross margins and net income in the future.

Because many of our shipments occur in the last month of a quarter, we are at risk of one or more transactions not being delivered according to forecast.

We have historically shipped approximately 65%-75% of our products in the last month of each quarter. In addition, we rely on a significant amount of turns business (revenue from tools booked and sold in the same quarter) in any given quarter. As any one sale may be significant to meeting our quarterly sales projection (as our average selling price for a tool is approximately $1 million), any slippage of shipments into a subsequent quarter may result in our not meeting our quarterly sales projection, which may adversely impact our results of operations for the quarter.

27

Because we have significant operations outside of the U.S., we are subject to political, economic and other international conditions that could result in increased operating expenses and regulation of our products and increased difficulty in maintaining operating and financial controls.

Because a significant portion of our operations occur outside of the U.S., our revenues and expenses are impacted by foreign economic and regulatory conditions. Approximately 68%, 69% and 68% of our sales came from outside the U.S. in the first thirteen weeks of 2014, 2013 and 2012, respectively. Our sales to China have grown considerably in recent years. We have manufacturing facilities in Brno, Czech Republic, Eindhoven, The Netherlands and Munich, Germany and sales offices in many other countries. Over 80% of our products are manufactured in Europe.

Moreover, we operate in over 50 countries, including in 25 where we have a direct presence, and we are seeking to establish a direct presence in additional countries. Some of our global operations are geographically isolated, are distant from corporate headquarters and/or have little infrastructure support. Therefore, maintaining and enforcing operating and financial controls can be difficult. Failure to maintain or enforce controls could have a material adverse effect on our control over service inventories, quality of service, customer relationships and financial reporting.

Our exposure to the business risks presented by foreign economies will increase to the extent we continue to expand our global operations. International operations will continue to subject us to a number of risks, including:

• longer sales cycles;

• multiple, conflicting and changing governmental laws and regulations;

• protectionist laws and business practices that favor local companies;

• price and currency exchange rates and controls;

• taxes and tariffs;

• export restrictions;

• business practices that we are prohibited from engaging in by the Foreign Corrupt Practices Act and other anti-corruption laws and regulations;

• difficulties in collecting accounts receivable;

• travel and transportation difficulties resulting from actual or perceived health risks (e.g., avian or swine influenza);

• changes in the regulatory environment in countries where we do business could lead to delays in the importation of products into those countries;

• the implementation and administration of the Control of Electronic Information Products (often referred to as China RoHS) regulations could lead to delays in the importation of products into China;

• European Union Regulation of Hazardous Substances (RoHS) which could create problems in manufacture and delivery of certain products in Europe;

• political and economic instability (e.g. unrest in Mexico, Egypt, Greece, the Middle East and Eastern Europe);

• risk of failure of internal controls and failure to detect unauthorized transactions; and

• potential labor unrest.

The industries in which we sell our products are cyclical, which may cause our results of operations to fluctuate.

Our business depends in large part on the capital expenditures of customers within ourIndustry Group and Science Group. See “Net Sales by Segment” included in Part I, Item 2 of this Quarterly Report on Form 10-Q for additional information.

The largest part of theIndustry Groupis the semiconductor industry. This industry is cyclical and has experienced significant economic downturns at various times in the last decade. Such downturns have been characterized by diminished product demand, accelerated erosion of average selling prices and production overcapacity. A downturn in this industry, or the businesses of one or more of our customers, could have a material adverse effect on our business, prospects, financial condition and results of operations. During downturns, our sales and gross profit margins generally decline.

The Science Groupis also affected by overall economic conditions, but is not as cyclical as theIndustry Group.

A significant portion of ourScience Grouprevenue is dependent on government investments in, and tax credits for, research and development of new technology. To the extent that governments, especially in Europe or the U.S., reduce their spending in response to budget deficits and debt limitations, demand for our products could be affected. To date, we have not seen an impact from such actions, although the U.S. government has indicated that it plans to reduce funding for research. The funding cycles for our

28

customers tend to extend over multiple quarters and several countries have reaffirmed their commitment to scientific research, but the longer-term impact of potential government fiscal austerity measures on our growth rate cannot be determined at this time.

As a capital equipment provider, our revenues depend in large part on the spending patterns of our customers, who could delay expenditures or cancel orders in reaction to variations in their businesses or general economic conditions. Because a high proportion of our costs are fixed, we have a limited ability to reduce expenses quickly in response to revenue shortfalls. In a prolonged economic downturn, we may not be able to reduce our significant fixed costs, such as manufacturing overhead, capital equipment or research and development costs, which may cause our gross margins to erode and our net loss to increase or earnings to decline.

Our acquisition and investment strategy subjects us to risks associated with evaluating and pursuing these opportunities and integrating these businesses.

In addition to our efforts to develop new technologies from internal sources, we may also seek to acquire new technologies or operations from external sources. On August 9, 2013 we acquired nanoTechnology Systems Pty. Ltd. of Melbourne, Australia, which previously operated as our exclusive distributor in Australia and New Zealand for approximately 10 years. On February 5, 2014 we acquired Lithicon AS of Trondheim, Norway, a provider of digital rock technology services and pore-scale micro computed tomography equipment to oil and gas companies worldwide. We continue to work to integrate these new entities.

Acquisitions can involve numerous risks, including management issues and costs in connection with the integration of the operations and personnel, technologies and products of the acquired companies, legal and intellectual property issues, failure to properly integrate acquisitions, the possible write-downs of impaired assets and the potential loss of key employees of the acquired companies. The inability to effectively manage any of these risks could seriously harm our business. Additionally, difficulties in integrating our acquisitions into our internal control structure could result in a failure of our internal control over financial reporting, which, in turn, could create a material weakness.

To the extent we make investments in entities that we control, or have significant influence in, our financial results will reflect our proportionate share of the financial results of the entity.

We may suffer manufacturing capacity limitations on occasion and are planning expansion.

Recently, demand for our product has accelerated and, as orders increase, we may not be able to ramp our manufacturing capacity and supply chain fast enough to keep pace with order intake for every product line offered. We recently experienced challenges regarding manufacturing capacity for our TEM products driven by rapid growth. As a consequence, our ability to realize revenue on orders may be delayed or, in some cases, reduced and we may suffer cancellations. In addition, the quality of the products we ship may suffer, damaging our reputation and future sales. Although we are planning expansion to address future capacity needs, our failure to plan adequately or execute on those plans could constrain capacity in the future.

A portion of our manufacturing operations will be moved to a new leased facility in the middle of 2014 which may involve significant costs and risks of operational interruption and product quality.

We are planning to move our operations in the Czech Republic to a new leased facility beginning in the middle of 2014. Our current facility accounts for over half of the total product shipments each quarter. Moving product manufacturing includes, among others, the following risks:

• unanticipated additional costs connected to such moves;

• higher than expected employee attrition;

• delay or failure in being able to build the transferred product at the new sites;

• unanticipated additional labor and materials costs related to such moves;

• logistical issues arising from the moves; and

• product quality falling short of the product standard when manufactured at the prior location.

Any of these factors could cause us to miss product orders, cause a decline in product quality and completeness, damage our reputation, increase costs of goods sold or decrease revenue and gross margins.

If our customers cancel or reschedule orders or if an anticipated order for even one of our systems is not received in time to permit shipping during a certain fiscal period, our operating results for that fiscal period may fluctuate and our business and financial results for such period could be materially and adversely affected. Cancellation risks rise in periods of economic uncertainty.

Our customers are able to cancel or reschedule orders, generally with limited or no penalties, depending on the product’s stage of completion. The amount of purchase orders at any particular date, therefore, is not necessarily indicative of sales to be made in any given period. Our build cycle, or the time it takes us to build a product to customer specifications, typically ranges from one to six months. During this period, the customer may cancel the order, although generally we will be entitled to receive a cancellation

29

fee based on the agreed-upon shipment schedule. In addition, we derive a substantial portion of our net sales in any fiscal period from the sale of a relatively small number of high-priced systems, with a large portion in the last month of the quarter.

Further, in some cases, our customers have to make changes to their facilities to accommodate the site requirements for our systems and may reschedule their orders because of the time required to complete these facility changes. This is particularly true of our high-performance TEMs. As a result, the timing of revenue recognition for a single transaction could have a material effect on our revenue and results of operations for a particular fiscal period. We experienced no cancellations during the first thirteen weeks of 2014 and $4.2 million in all of 2013.

Due to these and other factors, our net revenues and results of operations have fluctuated in the past and are likely to fluctuate significantly in the future on a quarterly and annual basis. It is possible that in some future quarter or quarters our results of operations will be below the expectations of public market analysts or investors. In such event, the market price of our common stock may decline significantly.

Due to our extensive international operations and sales, we are exposed to foreign currency exchange rate risks that could adversely affect our revenues, gross margins and results of operations.

A significant portion of our sales and expenses are denominated in currencies other than the U.S. dollar, principally the euro and Czech Koruna. For the first thirteen weeks of 2014, 2013 and 2012, approximately 30%, 30% and 29% of our revenue was denominated in euros, respectively, while more than half of our expenses were denominated in euros, Czech Koruna, yen or other foreign currencies. Particularly as a result of this imbalance, changes in the exchange rate between the U.S. dollar and foreign currencies, principally the euro, Czech Koruna and Japanese Yen, can impact our revenues, gross margins, results of operations and cash flows. We undertake hedging transactions primarily to limit our exposure to changes in the dollar/euro and dollar/Czech Koruna exchange rates. The hedges are designed to protect us as the dollar weakens but also provide us with some flexibility if the dollar strengthens.

Achieving hedge designation is based on evaluating the effectiveness of the derivative contracts’ ability to mitigate the foreign currency exposure of the linked transaction. We are required to monitor the effectiveness of all new and open derivative contracts designated as hedges on a quarterly basis. Failure to meet the hedge accounting requirements could result in the requirement to record deferred and current realized and unrealized gains and losses into net income in the current period. This failure could result in significant fluctuations in operating results. In addition, we will continue to recognize unrealized gains and losses related to the changes in fair value of derivative contracts not designated as hedges in the current period net income. Accordingly, the related impact to operating results may be recognized in a different period than the foreign currency impact of the hedged transaction.

We also enter into foreign forward exchange contracts that are designed to partially mitigate the impact of specific cash, receivables or payables positions denominated in foreign currencies. See Note 14 of the Condensed Notes to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information.

The volatility of dollar/euro and dollar/Czech Koruna exchange rates can make it more difficult for us to deploy our hedging program and create effective hedges.

Gross margins on our products vary between product lines and markets and, accordingly, changes in product mix will affect our results of operations.

If a higher portion of our net sales in any given period have lower gross margins, our overall gross margins and earnings would be negatively affected. Sales to our semiconductor customers, which ultimately depend on consumers who buy electronic devices, is volatile, but contributes, on average, a higher proportion of our gross margin. Any significant downturn in the market would have a negative impact on our overall performance.

Our business is complex, and changes to the business may not achieve their desired benefits.

Our business is based on a myriad of technologies, encompassed in multiple different product lines, addressing various customers in a range of markets in different regions of the world. A business of our breadth and complexity requires significant management time, attention and resources. In addition, significant changes to our business, such as changes in manufacturing, operations, product lines, market focus or organizational structure or focus, can be distracting, time-consuming and expensive. These changes can have short-term adverse effects on our financial results. Moreover, we operate through various foreign subsidiaries that are subject to local corporate, labor and other laws. Specifically, the requirements that certain actions of our subsidiaries are subject to approval by local workers councils and supervisory boards could impair the company's ability to take various actions and could result in unanticipated additional expense and delays. 

In addition, the complexity of product lines and diversity of our customer base creates manufacturing planning and control challenges that may lead to higher costs of materials and labor, increased service costs, delayed shipments and excessive inventory. Our products incorporate leading-edge technology, including both hardware and software components. Software typically contains bugs that can unexpectedly interfere with expected operations. There can be no assurance that our pre-shipment testing programs

30

will be adequate to detect all defects, which may interfere with customer satisfaction, reduce sales opportunities, or affect gross margins. Failure to effectively manage these manufacturing and product testing issues may materially impact our financial position, results of operations or cash flow.

We rely on a limited number of suppliers to provide parts and components. Failure of any of these suppliers to provide us with quality products in a timely manner could negatively affect our revenues and results of operations.

Failure of critical suppliers of parts, components and manufacturing equipment to deliver sufficient quantities to us in a timely and cost-effective manner could negatively affect our business, including our ability to convert backlog into revenue.Although we currently use numerous vendors to supply parts, components and subassemblies for the manufacture and support of our products, some key parts may only be obtained from a single supplier or a limited group of suppliers. In particular, we rely on: VDL Enabling Technologies Group, NTS Group, Frencken Mechatronics B.V., Keller Technology and AZD Praha SRO for our supply of mechanical parts and subassemblies; Gatan, Inc., Edax Inc. and Bruker Corp. for critical accessory products; and Neways Electronics, N.V. for some of our electronic subassemblies. A portion of the subcomponents that make up the components and sub-assemblies supplied to us are proprietary in nature and are provided to our suppliers only from single sources. We monitor those parts subject to single or a limited source supply to seek to minimize factory down time due to unavailability of such parts, which could impact our ability to meet manufacturing schedules. In addition, some of our suppliers rely on sole suppliers. As a result of this concentration of key suppliers, our results of operations may be materially and adversely affected if we do not timely and cost-effectively receive a sufficient quantity of quality parts to meet our production requirements or if we are required to find alternative suppliers for these supplies. We may not be able to expand our supplier group or to reduce our dependence on single suppliers. If our suppliers are not able to meet our supply requirements, constraints may affect our ability to deliver products to customers in a timely manner, which could have an adverse effect on our results of operations. In addition, restrictions regulating the use of certain hazardous substances in electrical and electronic equipment in various jurisdictions may impact parts and component availability or our electronics suppliers’ ability to source parts and components in a timely and cost-effective manner. Overall, because we only have a few equipment suppliers, we may be more exposed to future cost increases for this equipment.

Our maintenance and repair revenue depends on our ability to reliably supply replacement parts and consumables to our customers and failure to deliver high quality parts and consumables in a timely manner could cause our business to suffer.

Our installed base ofapproximately 9,260tools includes diverse products of varying ages, configurations, use cases, condition, and customer requirements and is dispersed in approximately50countries around the globe. Providing logistical support for delivery of spare parts and consumables to these tools, particularly the older tools, can be difficult. We have attempted to address the complexity of our maintenance and repair requirements, in part, through a remote diagnostics system that allows us to remotely access tools through a virtual private network. If we are unable to effectively manage and support the supply and delivery of spare parts and consumables to our customers we may damage our reputation and business.

Our business relies on various electronic data systems and their functioning is important to our business. Our business could be damaged if those systems fail or suffer a security breach or compromise.

We use a number of electronic data systems to help operate our business. If we are unable to maintain and safeguard our electronic data, our operating activities, financial reporting and intellectual property could be compromised, which may disrupt operations, harm our reputation and damage customer relationships. Further, we maintain personal information of our employees and a data breach that leads to the misuse or misappropriation of this information could cause the company to incur liability and damage our relationship with our employees and our reputation. Moreover, if we suffer an unauthorized intrusion into our own systems or the virtual private network providing for remote tool diagnostics at customer sites, we, or our customers, may suffer a loss of proprietary information that could create liability for us and undermine our business.

Further, if our systems are inaccessible for a period of time, it may compromise our ability to perform business functions in a timely manner. In addition, we are presently upgrading our main enterprise resource planning system, which if not completed on time and as planned, could result in cost overruns or limit our ability to manufacture and ship products as planned.

We depend on certain business processes for order entry and failure to adhere to those processes could impair our ability to properly book and fulfill orders.

We use business processes, including automated systems, to enter and track customer orders. Failure to adhere to these processes could result in errors in bookings, discounts on tool sales and failure to meet our global export compliance obligations. Further, inaccurate bookings information could lead to delays in shipping and having to rework orders. These problems could, in turn, cause us to suffer reduced margins, delayed revenue and governmental fines and penalties.

31

Our sales contracts often require delivery of multiple elements with complex terms and conditions that may cause our quarterly results to fluctuate.

Our system sales contracts include multiple elements such as delivery of more than one system, installation obligations (sometimes for multiple tools), accessories and/or service contracts, as well as provisions for customer acceptance. Typically, we recognize revenue as the various elements are delivered to the customer or the related services are provided. However, certain of these contracts have complex terms and conditions or technical specifications that require us to deliver most, or sometimes all, elements under the contract before revenue can be recognized. This could result in a significant delay between production and delivery of products and when revenue is recognized, which may cause volatility in, or adversely impact, our quarterly results of operations and cash flows.

The loss of one or more of our key customers would result in the loss of significant net revenues.

A relatively small number of customers account for a large percentage of our net revenues, and one customer accounted for more than10%of total annual net revenues during 2013. Our business will be seriously harmed if we do not generate as much revenue as we expect from these key customers, if we experience a loss of any of our key customers or if we suffer a substantial reduction in orders from these customers. Our ability to continue to generate revenues from our key customers will depend on our ability to introduce new products that are desirable to these customers.

We may not be able to enforce our intellectual property rights, especially in foreign countries, which could have a material adverse effect on our business.

Our success depends in large part on the protection of our proprietary rights. We generally rely on patents, copyrights, trademarks and trade secret laws to establish and maintain proprietary rights in our technology, products and services. We incur significant costs to obtain and maintain patents and other intellectual property rights and to defend our intellectual property. We also rely on the laws of the U.S. and other countries where we develop, manufacture or sell products and services to protect our proprietary rights. We may not be successful in protecting these proprietary rights, these rights may not provide the competitive advantages that we expect or other parties may challenge, invalidate or circumvent these rights. More specifically, we depend on trade secrets used in the development and manufacture of our products and delivery of our services. We endeavor to protect these trade secrets, but the measures taken to protect these trade secrets may be inadequate or ineffective. These risks may increase as we focus on application-specific workflows and new market opportunities, such as those in the oil and gas services sector, where key aspects of the technology may be publicly available to competitors and new market entrants.

Further, our efforts to protect our intellectual property may be less effective in some countries where intellectual property rights are not as well protected as they are in the U.S. Many U.S. companies have encountered substantial problems in protecting their proprietary rights against infringement in foreign countries. Approximately 68%, 69% and 68% of our sales occurred outside the U.S. in the first thirteen weeks of 2014, 2013 and 2012, respectively, and if we fail to adequately protect our intellectual property rights in these countries, our business may be materially adversely affected.

Infringement of our proprietary rights could result in weakened capacity to compete for sales and increased litigation costs, both of which could have a material adverse effect on our business, product gross margins, prospects, financial condition and results of operations.

If third parties assert that we violate their intellectual property rights, our business and results of operations may be materially adversely affected.

Several of our competitors hold patents or other intellectual property rights covering a variety of technologies that may be included in some of our products and services. In addition, some of our customers may use our products for applications that are similar to those covered by these patents or other intellectual property rights. From time to time, we, and our respective customers, have received correspondence from our competitors claiming that some of our products, as sold by us or used by our customers, may be infringing one or more of these patents or other intellectual property rights. Any claim of infringement from a third party, even one without merit, could cause us to incur substantial costs defending against the claim, and could distract our management from running the business.

In addition, our competitors or other entities, including non-practicing entities, may assert infringement claims against us or our customers in the future with respect to current or future products or uses, and these assertions may result in costly litigation or require us to obtain a license to use intellectual property rights of others. Additionally, if claims of infringement are asserted against our customers, those customers may seek indemnification from us for damages or expenses they incur.

If we become subject to additional infringement claims, we will evaluate our position and consider the available alternatives, which may include seeking licenses to use the technology in question, developing non-infringing technology or defending our position. These licenses, however, may not be available on satisfactory terms or at all. If we are not able to negotiate the necessary

32

licenses on commercially reasonable terms, develop non-infringing technology or successfully defend our position, these potential infringement claims could have a material adverse effect on our business, prospects, financial condition and results of operations.

Our exposure to risks associated with the use of intellectual property may be increased as a result of acquisitions due to our lower level of visibility into the development process with respect to such technology or the care taken to safeguard against infringement risk.

If we are unable to pay quarterly dividends or repurchase our stock at intended levels, our reputation and stock price may be harmed.

In September 2010, our Board of Directors approved a plan to repurchase up to a total of4.0 millionshares of our common stock. In June 2012, our Board of Directors approved the initiation of quarterly cash dividends to holders of our common stock. The declaration and payment of dividends to shareholders in the future is subject to the discretion of our Board of Directors and capital availability. Dividends have been paid under this program each quarter since its inception in June 2012. The dividend and stock repurchase program may require the use of a significant portion of our cash earnings. As a result, we may not retain a sufficient amount of cash to fund our operations or finance future growth opportunities, new product development initiatives and unanticipated capital expenditures. Further, our Board of Directors may, at its discretion, decrease the intended level of dividends or entirely discontinue the payment of dividends at any time. The stock repurchase program does not have an expiration date and may be limited at any time. Our ability to pay dividends and repurchase stock will depend on our ability to generate sufficient cash flows from operations in the future. This ability may be subject to certain economic, financial, competitive and other factors that are beyond our control. Any failure to pay dividends or repurchase stock after we have announced our intention to do so may negatively impact our reputation and investor confidence in us and may negatively impact our stock price.

Restructuring activities may be disruptive to our business and financial performance. Any delay or failure by us to execute planned cost reductions could also be disruptive and could result in total costs and expenses that are greater than expected.

From time to time, we have engaged in various restructuring and infrastructure improvement programs in order to increase operational efficiency, reduce costs and balance the effects of currency fluctuations on our financial results. These actions have previously included reductions of work-force as well as the costs to migrate portions of our supply chain to dollar-linked contracts.

Restructuring has the potential to adversely affect our business, financial condition and results of operations in other respects as well. This includes potential disruption of manufacturing operations, our supply chain and other aspects of our business. Employee morale and productivity could also suffer and result in unintended employee attrition. Loss of sales, service and engineering talent, in particular, could damage our business. Restructuring requires substantial management time and attention and has the potential to divert management from other important work. Moreover, we could encounter delays in executing our plans, which could cause further disruption and additional unanticipated expense. Some of our employees work in areas, such as Europe and Asia, where workforce reductions are highly regulated, and this could slow the implementation of planned workforce reductions. Restructuring plans may also fail to achieve the stated aims for reasons similar to those described in the prior paragraph.

During the course of executing a restructuring, we could incur material non-cash charges such as write-downs of inventories or other tangible assets. We test our goodwill and other intangible assets for impairment annually or when an event occurs indicating the potential for impairment. If we record an impairment charge as a result of this analysis, it could have a material impact on our results of operations.

Because we do not have long-term contracts with our customers, our customers may stop purchasing our products at any time, which makes it difficult to forecast our results of operations and to plan expenditures accordingly.

We do not have long-term contracts with our customers. Accordingly:

• customers can stop purchasing our products at any time without penalty;

• customers may cancel orders that they previously placed;

• customers may purchase products from our competitors;

• we are exposed to competitive pricing pressure on each order; and

• customers are not required to make minimum purchases.

If we do not succeed in obtaining new sales orders from new and existing customers, our results of operations will be negatively impacted.

33

Many of our projects are funded under various government contracts and if we are found to have violated the terms of the government contracts or applicable statutes and regulations, we are subject to the risk of suspension or debarment from government contracting activities, which could have a material adverse effect on our business and results of operations.

Many of our projects are funded under various government contracts worldwide. Government contracts are subject to specific procurement regulations, contract provisions and requirements relating to the formation, administration, performance and accounting of these contracts. Many of these contracts include express or implied certifications of compliance with applicable laws and contract provisions. As a result of our government contracting, claims for civil or criminal fraud may be brought by the government for violations of these regulations, requirements or statutes. Further, if we fail to comply with any of these regulations, requirements or statutes, our existing government contracts could be terminated, we could be suspended or debarred from government contracting or subcontracting, including federally funded projects at the state level. If one or more of our government contracts are terminated for any reason, or if we are suspended from government work, we could suffer the loss of the contracts, which could have a material adverse effect on our business and results of operations.

Changes and fluctuations in government spending priorities could adversely affect our revenue.

Because a significant part of our overall business is generated either directly or indirectly as a result of worldwide federal and local government regulatory and infrastructure priorities, shifts in these priorities due to changes in policy imperatives or economic conditions or government administration, which are often unpredictable, may affect our revenues.

Political instability in key regions around the world, the U.S. government’s commitment to military related expenditures and current uncertainty around global sovereign debt put at risk federal discretionary spending, including spending on nanotechnology research programs and projects that are of particular importance to our business. Also, changes in U.S. Congressional appropriations practices could result in decreased funding for some of our customers. At the state and local levels, the need to compensate for reductions in federal matching funds, as well as financing of federal unfunded mandates, creates strong pressures to cut back on research expenditures as well. A potential reduction of federal funding may adversely affect our business.

We have long sales cycles for our systems, which may cause our results of operations to fluctuate.

Our sales cycle can be 18 months or longer and is unpredictable. Variations in the length of our sales cycle could cause our net sales and, therefore, our business, financial condition, results of operations, operating margins and cash flows, to fluctuate widely from period to period. These variations could be based on factors partially or completely outside of our control.

The length of time it takes us to complete a sale depends on many factors, including:

• the efforts of our sales force and our independent sales representatives;

• changes in the composition of our sales force, including the departure of senior sales personnel;

• the history of previous sales to a customer;

• the complexity of the customer’s manufacturing processes;

• the introduction, or announced introduction, of new products by our competitors;

• the economic environment;

• the internal technical capabilities and sophistication of the customer; and

• the capital expenditure budget cycle of the customer.

Our sales cycle also extends in situations where the sale involves developing new applications for a system or technology. As a result of these and a number of other factors that could influence sales cycles with particular customers, the period between initial contact with a potential customer and the time when we recognize revenue from that customer, if we ever do, may vary widely.

The loss of key management or our inability to attract and retain managerial, engineering and other technical personnel could have a material adverse effect on our business, financial condition and results of operations.

Attracting qualified personnel is difficult, and our recruiting efforts may not be successful. Specifically, our product generation efforts depend on hiring and retaining qualified engineers. The market for qualified engineers is very competitive. In addition, experienced management and technical, sales, marketing and service personnel in the technology industry are in high demand, and competition for such talent is intense. The loss of key personnel, or our inability to attract key personnel, could have an adverse effect on our business, financial condition or results of operations.

34

Our customers experience rapid technological changes, with which we must keep pace. We may be unable to properly ascertain new market needs, or introduce new products responsive to those needs, on a timely and cost-effective basis.

Customers in each of our Groups experience rapid technological change that requires new product introductions and enhancements. Our ability to remain competitive depends in large part on our ability to understand these changes and develop, in a timely and cost-effective manner, new and enhanced systems at competitive prices that respond to, and accurately predict, new market requirements. We may fail to ascertain and respond to the needs of our customers or fail to develop and introduce new and enhanced products that meet their needs, which could adversely affect our financial position. In addition, new product introductions or enhancements by competitors could cause a decline in our sales or a loss of market acceptance of our existing products. Increased competitive pressure also could lead to intensified price competition, resulting in lower margins, which could materially adversely affect our business, prospects, financial condition and results of operations.

Our success in developing, introducing and selling new and enhanced systems depends on a variety of factors, including:

• selection and development of product offerings;

• timely and efficient completion of product design and development;

• timely and efficient implementation of manufacturing processes;

• effective sales, service and marketing functions; and

• product performance.

Because new product development commitments must be made well in advance of sales, new product decisions must anticipate both the future demand for products under development and the equipment required to produce such products. We cannot be certain that we will be successful in selecting, developing, manufacturing and marketing new products or in enhancing existing products. On occasion, certain product and application developments have taken longer than expected. These delays can have an adverse effect on product shipments and results of operations.

The process of developing new high technology capital equipment products and services is complex and uncertain, and failure to accurately anticipate customers’ changing needs and emerging technological trends, to complete engineering and development projects in a timely manner and to develop or obtain appropriate intellectual property could significantly harm our results of operations. We must make long-term investments and commit significant resources before knowing whether our predictions will result in products that the market will accept.

To the extent that a market does not develop for a new product, we may decide to discontinue or modify the product. These actions could involve significant costs and/or require us to take charges in future periods. If these products are accepted by the marketplace, sales of our new products may cannibalize sales of our existing products. Further, after a product is developed, we must be able to manufacture sufficient volume quickly and at low cost. To accomplish this objective, we must accurately forecast production volumes, mix of products and configurations that meet customer requirements. If we are not successful in making accurate forecasts, our business and results of operations could be significantly harmed.

We may have exposure to income tax rate fluctuations as well as to additional tax liabilities, which would impact our financial position.

As a corporation with operations both in the U.S. and abroad, we are subject to income taxes in both the U.S. and various foreign jurisdictions. Our effective tax rate is subject to significant fluctuation from one period to the next as the income tax rates for each year are a function of the following factors, among others:

• the effects of a mix of profits or losses earned by us and our subsidiaries in numerous foreign tax jurisdictions with a broad range of income tax rates;

• our ability to utilize recorded deferred tax assets;

• changes in uncertain tax positions, interest or penalties resulting from tax audits; and

• changes in tax rates and laws or the interpretation of such laws.

Changes in the mix of these items and other items may cause our effective tax rate to fluctuate between periods, which could have a material adverse effect on our financial results.

We are also subject to non-income taxes, such as payroll, sales, use, value-added, net worth, property and goods and services taxes, in both the U.S. and various foreign jurisdictions.

We are regularly under audit by tax authorities with respect to both income and non-income taxes and may have exposure to additional tax liabilities as a result of these audits.

35

Significant judgment is required in determining our provision for income taxes and other tax liabilities. Although we believe that our tax estimates are reasonable, we cannot assure you that the final determination of tax audits or tax disputes will not be different from what is reflected in our historical income tax provisions and accruals.

Many of our current and planned products are highly complex and may contain defects or errors that can only be detected after installation, which may harm our reputation and damage our business.

Our products are highly complex, and our extensive product development, manufacturing and testing processes may not be adequate to detect all defects, errors, failures and quality issues that could impact customer satisfaction or result in claims against us. As a result, we could have to replace certain components and/or provide remediation in response to the discovery of defects in products after they are shipped. The occurrence of any defects, errors, failures or quality issues could result in cancellation of orders, product returns, diversion of our resources, legal actions by our customers and other losses to us or to our customers. These occurrences could also result in the loss of, or delay in, market acceptance of our products and loss of sales, which would harm our business and adversely affect our revenues and profitability. Also, our ability to recognize revenue that has been deferred on sales of new products could be negatively impacted if all conditions for revenue recognition are not met.

Some of our systems use hazardous gases and high voltage power supplies as well as emit x-rays, which, if not properly contained, could result in property damage, bodily injury and death.

A product safety failure, such as a hazardous gas release, high voltage power supply problem, x-ray leak or extreme pressure release, could result in substantial liability and could also significantly damage customer relationships and our reputation and disrupt future sales. Moreover, remediation could require redesign of the tools involved, creating additional expense, increasing tool costs and damaging sales. In addition, a product safety failure could involve significant litigation that would divert management time and resources and cause unanticipated legal expense. Further, if such a failure involved violation of health and safety laws, we may suffer substantial fines and penalties in addition to the other damage suffered. Finally, failure to properly manage the regulatory requirements for shipment of dangerous products could cause delays in clearing customs and thereby cause delay or loss of revenue in any particular quarter.

Natural disasters, catastrophic events, terrorist acts and acts of war may seriously harm our business and revenues, costs and expenses and financial condition.

Our worldwide operations could be subject to earthquakes, volcanic eruptions, telecommunications failures, power interruptions, water shortages, closure of transport routes, tsunamis, floods, hurricanes, typhoons, fires, extreme weather conditions, medical epidemics or pandemics, terrorist acts, acts of war and other natural or manmade disasters or business interruptions. For many of these events we carry no insurance. The occurrence of any of these business disruptions could seriously harm our revenue and financial condition and increase our costs and expenses. The impact of such events could be disproportionately greater on us than on other companies as a result of our significant international presence. Our corporate headquarters, and a portion of our research and development activities, are located on the Pacific coast, and other critical business operations and some of our suppliers are located in Asia, near major earthquake faults. We rely on major logistics hubs, primarily in Europe, Asia and the U.S. to manufacture and distribute our products and to move products to customers in various regions. Our operations could be adversely affected if manufacturing, logistics or other operations in these locations are disrupted for any reason, including those described above. The ultimate impact on us, our significant suppliers and our general infrastructure of being consolidated in certain geographical areas is unknown, but our revenue, profitability and financial condition could suffer in the event of a catastrophic event.

Unforeseen health, safety and environmental costs could impact our future net earnings.

Some of our operations use substances that are regulated by various federal, state and international laws governing health, safety and the environment. We could be subject to liability if we do not handle these substances in compliance with safety standards for storage and transportation and applicable laws. We will record a liability for any costs related to health, safety or environmental remediation when we consider the costs to be probable and the amount of the costs can be reasonably estimated.

We may not be successful in obtaining the necessary export licenses to conduct operations abroad, and the U.S. Congress may prevent proposed sales to foreign customers.

We are subject to export control laws that limit which products we sell and where and to whom we sell our products. Moreover, export licenses are required from government agencies for some of our products and accessories in accordance with various statutory authorities, including U.S. statutes such as the Export Administration Act of 1979, the International Emergency Economic Powers Act of 1977, the Trading with the Enemy Act of 1917 and the Arms Export Control Act of 1976. Depending on the shipment, we are also subject to Dutch or Czech law regarding export controls and licensing requirements. We may not be successful in obtaining these necessary licenses in order to conduct business abroad. In addition, we may suffer from process failures that would cause us to violate export laws. Failure to comply with applicable export controls or the termination or significant limitation on

36

our ability to export certain of our products would have an adverse effect on our business, results of operations and financial condition.

Changes in accounting pronouncements or taxation rules or practices may affect how we conduct our business.

Changes in accounting pronouncements or taxation rules or practices can have a significant effect on our reported results. New accounting pronouncements or taxation rules and varying interpretations of accounting pronouncements or taxation practices have occurred and may occur in the future. New rules, changes to existing rules, or the questioning of current practices may adversely affect our reported financial results or change the way we conduct our business.

Provisions of our charter documents, our shareholder rights plan and Oregon law could make it more difficult for a third party to acquire us, even if the offer may be considered beneficial by our shareholders.

Our articles of incorporation and bylaws contain provisions that could make it harder for a third party to acquire us without the consent of our Board of Directors. Our Board of Directors has also adopted a shareholder rights plan, or “poison pill,” which would significantly dilute the ownership of a hostile acquirer. In addition, the Oregon Control Share Act and the Oregon Business Combination Act limit the ability of parties who acquire a significant amount of voting stock to exercise control over us. These provisions may have the effect of lengthening the time required for a person to acquire control of us through a proxy contest or the election of a majority of our Board of Directors, may deter efforts to obtain control of us and may make it more difficult for a third party to acquire us without negotiation. These provisions may apply even if the offer may be considered beneficial by our shareholders.

Item 6. Exhibits

The following exhibits are filed herewith or incorporated by reference hereto and this list is intended to constitute the exhibit index:

3.1	Third Amended and Restated Articles of Incorporation.(1)
3.2	Articles of Amendment to the Third Amended and Restated Articles of Incorporation.(2)
3.3	Amended and Restated Bylaws, as amended on November 14, 2012. (3)
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of The Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of The Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of The Sarbanes-Oxley Act of 2002.
32.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of The Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document.
101.SCH	XBRL Taxonomy Extension Schema Document.
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB	XBRL Taxonomy Extension Label Linkbase Document.
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.

_____________________________

(1) Incorporated by reference to our Quarterly Report on Form 10-Q for the quarter ended September 28, 2003.

(2) Incorporated by reference to our Current Report on Form 8-K filed with the Securities and Exchange Commission on July 27, 2005.

37

(3) Incorporated by reference to our Current Report on Form 8-K filed with the Securities and Exchange Commission on November 15, 2012.

38

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		FEI COMPANY
Dated:	May 2, 2014	/s/ DON R. KANIA
		Don R. Kania
		President and Chief Executive Officer
		(Principal Executive Officer)
		/s/ RAYMOND A. LINK
		Raymond A. Link
		Executive Vice President and
		Chief Financial Officer
		(Principal Financial Officer)

39

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO RULE 13a-14(a) OR RULE 15d-14(a)

OF THE SECURITIES EXCHANGE ACT OF 1934

I, Don R. Kania, certify that:

1. I have reviewed this quarterly report on Form 10-Q of FEI Company;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	May 2, 2014
By: /s/ DON R. KANIA
Don R. Kania
President and Chief Executive Officer
(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO RULE 13a-14(a) OR RULE 15d-14(a)

OF THE SECURITIES EXCHANGE ACT OF 1934

I, Raymond A. Link, certify that:

1. I have reviewed this quarterly report on Form 10-Q of FEI Company;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	May 2, 2014
By: /s/ RAYMOND A. LINK
Raymond A. Link
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO RULE 13a-14(b) OR RULE 15d-14(b)

OF THE SECURITIES EXCHANGE ACT OF 1934 AND 18 U.S.C. SECTION 1350

I, Don R. Kania, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the quarterly report of FEI Company on Form 10-Q for the quarterly period ended March 30, 2014 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such quarterly report on Form 10-Q fairly presents in all material respects the financial condition and results of operations of FEI Company.

By: /s/ DON R. KANIA

Don R. Kania

President and Chief Executive Officer

(Principal Executive Officer)

May 2, 2014

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO RULE 13a-14(b) OR RULE 15d-14(b)

OF THE SECURITIES EXCHANGE ACT OF 1934 AND 18 U.S.C. SECTION 1350

I, Raymond A. Link, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the quarterly report of FEI Company on Form 10-Q for the quarterly period ended March 30, 2014 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such quarterly report on Form 10-Q fairly presents in all material respects the financial condition and results of operations of FEI Company.

By: /s/ RAYMOND A. LINK

Raymond A. Link

Executive Vice President and

Chief Financial Officer

(Principal Financial Officer)

May 2, 2014

XML

Earnings Per Share - Antidilutive Securities (Details) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 30, 2014	Mar. 31, 2013
Stock options [Member]
Antidilutive Securities Excluded from Computation of Diluted Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of diluted EPS	138	222
Restricted Stock Units [Member]
Antidilutive Securities Excluded from Computation of Diluted Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of diluted EPS	1	2

XML

Related-Party Activity - Schedule of Amounts Due From (To) Related Parties (Details) (USD $) In Thousands, unless otherwise specified	Mar. 30, 2014
Related Party Transaction [Line Items]
Due from (to) related party	$ 680
Applied Materials [Member]
Related Party Transaction [Line Items]
Due from (to) related party	990
Cascade Microtech [Member]
Related Party Transaction [Line Items]
Due from (to) related party	8
Oregon Health and Science University [Member]
Related Party Transaction [Line Items]
Due from (to) related party	(28)
TMC BV [Member]
Related Party Transaction [Line Items]
Due from (to) related party	$ (290)

XML

Goodwill and Other Intangible Assets - Amortization of Intangibles (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 30, 2014	Mar. 31, 2013	Dec. 31, 2013
Finite-Lived Intangible Assets [Abstract]
Finite-lived intangible assets, amortization expense	$ 2,554	$ 2,035
Finite-Lived Intangible Assets, Future Amortization Expense [Abstract]
Expected amortization, remainder of 2014	8,202
Expected amortization, 2015	10,784
Expected amortization, 2016	9,928
Expected amortization, 2017	8,726
Expected amortization, 2018	7,860
Expected amortization thereafter	22,137
Total expected amortization expense	67,637		47,197
Patents trademarks and other [Member]
Finite-Lived Intangible Assets [Abstract]
Finite-lived intangible assets, amortization expense	1,001	919
Finite-Lived Intangible Assets, Future Amortization Expense [Abstract]
Expected amortization, remainder of 2014	2,885
Expected amortization, 2015	3,695
Expected amortization, 2016	2,839
Expected amortization, 2017	2,265
Expected amortization, 2018	1,649
Expected amortization thereafter	2,211
Total expected amortization expense	15,544		15,031
Customer relationships [Member]
Finite-Lived Intangible Assets [Abstract]
Finite-lived intangible assets, amortization expense	666	505
Finite-Lived Intangible Assets, Future Amortization Expense [Abstract]
Expected amortization, remainder of 2014	2,153
Expected amortization, 2015	2,871
Expected amortization, 2016	2,871
Expected amortization, 2017	2,523
Expected amortization, 2018	2,437
Expected amortization thereafter	6,786
Total expected amortization expense	19,641		18,103
Developed technology [Member]
Finite-Lived Intangible Assets [Abstract]
Finite-lived intangible assets, amortization expense	887	524
Finite-Lived Intangible Assets, Future Amortization Expense [Abstract]
Expected amortization, remainder of 2014	3,164
Expected amortization, 2015	4,218
Expected amortization, 2016	4,218
Expected amortization, 2017	3,938
Expected amortization, 2018	3,774
Expected amortization thereafter	13,140
Total expected amortization expense	32,452		14,063
Note issuance costs [Member]
Finite-Lived Intangible Assets [Abstract]
Finite-lived intangible assets, amortization expense	$ 0	$ 87
Minimum [Member] | Patents trademarks and other [Member]
Finite-Lived Intangible Assets [Abstract]
Finite-lived intangible assets, useful life	2 years
Minimum [Member] | Customer relationships [Member]
Finite-Lived Intangible Assets [Abstract]
Finite-lived intangible assets, useful life	5 years
Minimum [Member] | Developed technology [Member]
Finite-Lived Intangible Assets [Abstract]
Finite-lived intangible assets, useful life	5 years 6 months
Maximum [Member] | Patents trademarks and other [Member]
Finite-Lived Intangible Assets [Abstract]
Finite-lived intangible assets, useful life	10 years
Maximum [Member] | Customer relationships [Member]
Finite-Lived Intangible Assets [Abstract]
Finite-lived intangible assets, useful life	10 years
Maximum [Member] | Developed technology [Member]
Finite-Lived Intangible Assets [Abstract]
Finite-lived intangible assets, useful life	10 years

XML

Commitments and Contingencies (Details) (Inventories [Member], USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 30, 2014
Inventories [Member]
Unrecorded Unconditional Purchase Obligation [Line Items]
Non-cancelable purchase orders	$ 107.9
Purchase commitment, maximum expiration date	second quarter of 2016

XML

Goodwill and Other Intangible Assets - Goodwill (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 30, 2014	Mar. 31, 2013
Goodwill [Roll Forward]
Goodwill, beginning of period	$ 136,152	$ 131,320
Goodwill additions	46,446	0
Goodwill adjustments	1,662	(3,148)
Goodwill, end of period	$ 184,260	$ 128,172

XML

Restructuring, Reorganization, Relocation and Severance (Tables)

3 Months Ended

Mar. 30, 2014

Restructuring and Related Activities [Abstract]

Schedule of Restructuring Reserve by Type of Cost

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

Thirteen Weeks Ended March 30, 2014	First Quarter 2014 Restructuring			Group Structure Organization		Total
Beginning accrued liability	$	—		$	50	$	50
Charged to expense, net	1,331			—		1,331
Expenditures	(484		)	—		(484		)
Ending accrued liability	$	847		$	50	$	897

Thirteen Weeks Ended March 31, 2013	Group Structure Organization			Total
Beginning accrued liability	$	2,692		$	2,692
Charged to expense, net	695			695
Expenditures	(511		)	(511		)
Write-offs and adjustments	(80		)	(80		)
Ending accrued liability	$	2,796		$	2,796

XML

Segment Information - Goodwill and Total Assets (Details) (USD $) In Thousands, unless otherwise specified	Mar. 30, 2014	Dec. 31, 2013	Mar. 31, 2013	Dec. 31, 2012
Segment Reporting Information [Line Items]
Goodwill	$ 184,260	$ 136,152	$ 128,172	$ 131,320
Total Assets	1,477,600	1,426,084
Industry [Member]
Segment Reporting Information [Line Items]
Goodwill	99,688	51,532
Total Assets	401,073	297,987
Science [Member]
Segment Reporting Information [Line Items]
Goodwill	84,572	84,620
Total Assets	361,215	365,571
Intersegment Eliminations [Member]
Segment Reporting Information [Line Items]
Total Assets	$ 715,312	$ 762,526

XML

Stock-Based Compensation (Tables)

3 Months Ended

Mar. 30, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of Information Related to Stock-Based Compensation Plans

The following table sets forth certain information regarding the 1995 Plan:

	March 30, 2014
Shares available for grant	2,001,765
Shares of common stock reserved for issuance	3,364,680

Schedule of Options Outstanding and Exercisable

The following table sets forth certain information regarding all options outstanding and exercisable:

	March 30, 2014
	Options Outstanding		Options Exercisable
Number	649,059		151,082
Weighted average exercise price	$	52.82	$	33.96
Aggregate intrinsic value	$ 32.5 million		$ 10.4 million
Weighted average remaining contractual term	5.1 years		3.8 years

Schedule of Restricted Stock Units Nonvested and Expected to Vest

The following table sets forth certain information regarding all RSUs nonvested and expected to vest:

	March 30, 2014
	RSUs Nonvested		RSUs Expected to Vest
Number	713,858		627,724
Weighted average grant date per share fair value	$	58.39	$	57.53
Aggregate intrinsic value	$ 73.4 million		$ 64.6 million
Weighted average remaining term to vest	1.5 years		1.5 years

Schedule of Stock-Based Compensation Expense

Our stock-based compensation expense was included in our Consolidated Statements of Operations as follows (in thousands):

	Thirteen Weeks Ended
	March 30, 2014		March 31, 2013
Cost of sales	$	726	$	595
Research and development	617		531
Selling, general and administrative	3,796		3,238
Total stock-based compensation	$	5,139	$	4,364

XML

Warranty Reserves (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 30, 2014	Mar. 31, 2013
Product Warranty Reserve Activity [Roll Forward]
Balance, beginning of period	$ 12,705	$ 12,049
Reductions for warranty costs incurred	(2,779)	(3,403)
Warranties issued	3,333	3,788
Translation and changes in estimates	5	(154)
Balance, end of period	$ 13,264	$ 12,280

XML

Stock-Based Compensation - Allocation in Income Statement (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 30, 2014	Mar. 31, 2013
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expense	$ 5,139	$ 4,364
Cost of Sales [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expense	726	595
Research and Development Expense [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expense	617	531
Selling, General and Administrative [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expense	$ 3,796	$ 3,238

XML

Organization and Basis of Presentation (Details)	Mar. 30, 2014 country
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Number of Countries in which Entity Operates	50

XML

Income Taxes - Unrecognized Tax Benefits (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 30, 2014	Mar. 31, 2013
Income Tax Contingency [Line Items]
Unrecognized Tax Benefits, Period Increase (Decrease)	$ 0.1	$ 0.4
Unrecognized Tax Benefits, Decrease Resulting from Current Period Tax Positions	$ 0.2
United States [Member]
Income Tax Contingency [Line Items]
Tax years open for examination, by major tax jurisdiction	2010
The Netherlands [Member]
Income Tax Contingency [Line Items]
Tax years open for examination, by major tax jurisdiction	2011
Czech Republic [Member]
Income Tax Contingency [Line Items]
Tax years open for examination, by major tax jurisdiction	2011

XML

Derivative Instruments - Balance Sheet Location (Details) (Foreign Exchange Contract [Member], USD $) In Thousands, unless otherwise specified	Mar. 30, 2014	Dec. 31, 2013
Other Current Assets [Member]
Offsetting Derivative Assets [Abstract]
Gross Amounts of Recognized Assets	$ 720	$ 2,171
Gross Amounts Offset in the Balance Sheet	(275)	(698)
Net Amounts Presented in Other Current Assets	445	1,473
Other Current Liabilities [Member]
Offsetting Derivative Liabilities [Abstract]
Gross Amounts of Recognized Liabilities	6,079	7,278
Gross amounts offset in the balance sheet	(2,698)	(4,692)
Net Amounts Presented in Other Current Liabilities	3,381	2,586
Designated as Hedging Instrument [Member] | Other Current Assets [Member]
Offsetting Derivative Assets [Abstract]
Gross Amounts of Recognized Assets	0	0
Gross Amounts Offset in the Balance Sheet	0	0
Net Amounts Presented in Other Current Assets	0	0
Designated as Hedging Instrument [Member] | Other Current Liabilities [Member]
Offsetting Derivative Liabilities [Abstract]
Gross Amounts of Recognized Liabilities	3,876	4,362
Gross amounts offset in the balance sheet	(2,065)	(3,042)
Net Amounts Presented in Other Current Liabilities	1,811	1,320
Not Designated as Hedging Instrument [Member] | Other Current Assets [Member]
Offsetting Derivative Assets [Abstract]
Gross Amounts of Recognized Assets	720	2,171
Gross Amounts Offset in the Balance Sheet	(275)	(698)
Net Amounts Presented in Other Current Assets	445	1,473
Not Designated as Hedging Instrument [Member] | Other Current Liabilities [Member]
Offsetting Derivative Liabilities [Abstract]
Gross Amounts of Recognized Liabilities	2,203	2,916
Gross amounts offset in the balance sheet	(633)	(1,650)
Net Amounts Presented in Other Current Liabilities	$ 1,570	$ 1,266

XML

Goodwill and Other Intangible Assets - Intangible Assets (Details) (USD $) In Thousands, unless otherwise specified	Mar. 30, 2014	Dec. 31, 2013
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, accumulated amortization	$ (19,479)	$ (16,941)
Finite-lived intangible assets, net	67,637	47,197
Patents trademarks and other [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, gross	25,827	24,327
Finite-lived intangible assets, accumulated amortization	(10,283)	(9,296)
Finite-lived intangible assets, net	15,544	15,031
Customer relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, gross	23,852	21,650
Finite-lived intangible assets, accumulated amortization	(4,211)	(3,547)
Finite-lived intangible assets, net	19,641	18,103
Developed technology [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, gross	37,437	18,161
Finite-lived intangible assets, accumulated amortization	(4,985)	(4,098)
Finite-lived intangible assets, net	$ 32,452	$ 14,063

XML

Stock-Based Compensation

3 Months Ended

Mar. 30, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-Based Compensation

STOCK-BASED COMPENSATION

1995 Stock Incentive Plan

Our 1995 Stock Incentive Plan, as amended (the “1995 Plan”), allows for the issuance of a maximum of 11,000,000 shares of our common stock.

The following table sets forth certain information regarding the 1995 Plan:

	March 30, 2014
Shares available for grant	2,001,765
Shares of common stock reserved for issuance	3,364,680

The following table sets forth certain information regarding all options outstanding and exercisable:

	March 30, 2014
	Options Outstanding		Options Exercisable
Number	649,059		151,082
Weighted average exercise price	$	52.82	$	33.96
Aggregate intrinsic value	$ 32.5 million		$ 10.4 million
Weighted average remaining contractual term	5.1 years		3.8 years

The following table sets forth certain information regarding all RSUs nonvested and expected to vest:

	March 30, 2014
	RSUs Nonvested		RSUs Expected to Vest
Number	713,858		627,724
Weighted average grant date per share fair value	$	58.39	$	57.53
Aggregate intrinsic value	$ 73.4 million		$ 64.6 million
Weighted average remaining term to vest	1.5 years		1.5 years

As of March 30, 2014, unrecognized stock-based compensation related to outstanding, but unvested stock options and RSUs was $43.5 million, which will be recognized over the weighted average remaining vesting period of 1.9 years.

Stock-Based Compensation Expense

Our stock-based compensation expense was included in our Consolidated Statements of Operations as follows (in thousands):

	Thirteen Weeks Ended
	March 30, 2014		March 31, 2013
Cost of sales	$	726	$	595
Research and development	617		531
Selling, general and administrative	3,796		3,238
Total stock-based compensation	$	5,139	$	4,364

XML

Derivative Instruments - Effect on Income Statement (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 30, 2014	Mar. 31, 2013
Derivative Instruments, Gain (Loss) [Line Items]
Foreign currency (loss) gain, inclusive of the impact of derivatives	$ (230)	$ (599)
Foreign Exchange Contract [Member] | Other Comprehensive Income (Loss) [Member] | Cash Flow Hedging [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Recognized in OCI (effective portion)	(2,202)	(1,799)
Foreign Exchange Contract [Member] | Sales Revenue, Net [Member] | Cash Flow Hedging [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Reclassified from accumulated OCI into cost of sales (effective portion)	37	0
Foreign Exchange Contract [Member] | Cost of Sales [Member] | Cash Flow Hedging [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Reclassified from accumulated OCI into cost of sales (effective portion)	(570)	(297)
Foreign Exchange Contract [Member] | Other Income Expense Net [Member] | Not Designated as Hedging Instrument [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Recognized in other, net	3,109	767
Foreign Exchange Contract [Member] | Other Income Expense Net [Member] | Cash Flow Hedging [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Recognized in other, net (ineffective portion and amount excluded from effectiveness testing)	$ 0	$ (25)

XML

Credit Facilities and Restricted Cash - Credit Facilities (Details) (USD $)	3 Months Ended
	Mar. 30, 2014
Revolving Credit Facility [Member]
Line of Credit Facility [Line Items]
Line of credit facility, current borrowing capacity	$ 100,000,000
Line of credit facility, additional borrowing capacity	50,000,000
Line of credit facility, maximum borrowing capacity	150,000,000
Credit Facility, Subfacility [Member]
Line of Credit Facility [Line Items]
Line of credit facility, current borrowing capacity	50,000,000
Credit Agreement [Member]
Line of Credit Facility [Line Items]
Line of credit facility, expiration date	Apr. 01, 2016
Line of credit facility, amount outstanding	$ 0

XML

Warranty Reserves (Tables)

3 Months Ended

Mar. 30, 2014

Product Warranties Disclosures [Abstract]

Schedule of Warranty Reserve Activity

The following is a summary of warranty reserve activity (in thousands):

	Thirteen Weeks Ended
	March 30, 2014			March 31, 2013
Balance, beginning of period	$	12,705		$	12,049
Reductions for warranty costs incurred	(2,779		)	(3,403		)
Warranties issued	3,333			3,788
Translation and changes in estimates	5			(154		)
Balance, end of period	$	13,264		$	12,280

XML

Goodwill and Other Intangible Assets (Tables)

3 Months Ended

Mar. 30, 2014

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Goodwill Activity

The roll-forward of activity related to our goodwill was as follows (in thousands):

	Thirteen Weeks Ended
	March 30, 2014		March 31, 2013
Balance, beginning of period	$	136,152	$	131,320
Goodwill additions	46,446		—
Goodwill adjustments	1,662		(3,148		)
Balance, end of period	$	184,260	$	128,172

Schedule of Finite-Lived Intangible Assets by Major Class

The gross amount of our other intangible assets and the related accumulated amortization were as follows (in thousands):

	March 30, 2014			December 31, 2013
Patents, trademarks and other	$	25,827		$	24,327
Accumulated amortization	(10,283		)	(9,296		)
Net patents, trademarks and other	15,544			15,031
Customer relationships	23,852			21,650
Accumulated amortization	(4,211		)	(3,547		)
Net customer relationships	19,641			18,103
Developed technology	37,437			18,161
Accumulated amortization	(4,985		)	(4,098		)
Net developed technology	32,452			14,063
Total intangible assets included in other long-term assets	$	67,637		$	47,197

Schedule of Amortization Expense by Major Class

Amortization expense was as follows (in thousands):

	Thirteen Weeks Ended
	March 30, 2014		March 31, 2013
Patents, trademarks and other	$	1,001	$	919
Customer relationships	666		505
Developed technology	887		524
Note issuance costs	—		87
Total amortization expense	$	2,554	$	2,035

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense

Expected amortization, without consideration for foreign currency effects, is as follows over the next five years and thereafter (in thousands):

	Patents, Trademarks and Other		Customer Relationships		Developed Technology		Total
Remainder of 2014	$	2,885	$	2,153	$	3,164	$	8,202
2015	3,695		2,871		4,218		10,784
2016	2,839		2,871		4,218		9,928
2017	2,265		2,523		3,938		8,726
2018	1,649		2,437		3,774		7,860
Thereafter	2,211		6,786		13,140		22,137
Total future amortization expense	$	15,544	$	19,641	$	32,452	$	67,637

XML

Segment Information - Sales to External Customers and Gross Profit (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 30, 2014	Mar. 31, 2013
Segment Reporting Information [Line Items]
Sales to external customers	$ 226,264	$ 221,189
Gross profit	106,324	102,551
Industry [Member]
Segment Reporting Information [Line Items]
Sales to external customers	106,437	99,064
Gross profit	56,132	50,514
Science [Member]
Segment Reporting Information [Line Items]
Sales to external customers	119,827	122,125
Gross profit	$ 50,192	$ 52,037

XML

Credit Facilities and Restricted Cash - Letters of Credit and Restricted Cash (Details) (USD $) In Thousands, unless otherwise specified	Mar. 30, 2014	Dec. 31, 2013
CREDIT FACILITIES AND RESTRICTED CASH [Abstract]
Guarantees and letters of credit outstanding	$ 49,588
Short-term restricted cash	14,926	18,798
Long-term restricted cash	34,589	32,718
Total secured by restricted cash	$ 49,515

XML

Income Taxes (Tables)

3 Months Ended

Mar. 30, 2014

Income Tax Disclosure [Abstract]

Schedule of Deferred Tax Assets and Liabilities, Balance Sheet Classification

Net deferred tax assetswere classified on the balance sheet as follows (in thousands):

	March 30, 2014			December 31, 2013
Deferred tax assets – current	$	9,884		$	15,114
Deferred tax assets – non-current	4,261			1,751
Other current liabilities	(53		)	(9		)
Deferred tax liabilities – non-current	(11,465		)	(8,931		)
Net deferred tax assets	$	2,627		$	7,925
Valuation allowance	$	4,514		$	2,723

Open Tax Years By Major Tax Jurisdiction

For our major tax jurisdictions, the following years were open for examination by the tax authorities as ofMarch 30, 2014:

Jurisdiction	Open Tax Years
U.S.	2010 and forward
The Netherlands	2011 and forward
Czech Republic	2011 and forward

XML

Related-Party Activity (Tables)

3 Months Ended

Mar. 30, 2014

Related Party Transactions [Abstract]

Schedule of Transactions with Related Parties

Transactions with these related parties were as follows (in thousands):

	Thirteen Weeks Ended
Sales to Related Parties	March 30, 2014		March 31, 2013
Product sales:
Applied Materials, Inc.	$	959	$	3,492
Oregon Health & Science University	130		129
Total product sales to related parties	1,089		3,621
Service sales:
Applied Materials, Inc.	168		133
Lattice Semiconductor Corporation	3		3
Cascade Microtech, Inc.	8		8
Oregon Health & Science University	82		9
Total service sales to related parties	261		153
Total sales to related parties	$	1,350	$	3,774
Purchases from Related Parties
TMC BV	$	408	$	25
Oregon Health & Science University	39		—
Total purchases from related parties	$	447	$	25

Schedule of Amounts Due From (To) Related Parties

Amounts due from (to) related parties were as follows (in thousands):

	March 30, 2014
Applied Materials, Inc.	$	990
Cascade Microtech, Inc.	8
Oregon Health & Science University	(28		)
TMC BV	(290		)
Due from related parties, net	$	680

XML

Earnings Per Share

3 Months Ended

Mar. 30, 2014

Earnings Per Share [Abstract]

Earnings Per Share

EARNINGS PER SHARE

Following is a reconciliation of basic earnings per share (“EPS”) and diluted EPS (in thousands, except per share amounts):

	Thirteen Weeks Ended					Thirteen Weeks Ended
	March 30, 2014					March 31, 2013
	Net Income		Shares	Per Share Amount		Net Income		Shares	Per Share Amount
Basic EPS	$	25,078	42,191	$	0.59	$	26,801	38,522	$	0.70
Dilutive effect of 2.875% convertible debt	—		—	—		455		3,033	(0.04		)
Dilutive effect of stock options, restricted stock units, and shares issuable to Philips	—		581	—		—		581	(0.01		)
Diluted EPS	$	25,078	42,772	$	0.59	$	27,256	42,136	$	0.65

The following table sets forth the schedule of anti-dilutive securities excluded from the computation of diluted EPS (number of shares, in thousands):

	Thirteen Weeks Ended
	March 30, 2014	March 31, 2013
Stock options	138	222
Restricted stock units	1	2

XML

Segment Information (Tables)

3 Months Ended

Mar. 30, 2014

Segment Reporting [Abstract]

Schedule of Sales to External Customers and Gross Profit by Segment

The following tables summarize various financial amounts for each of our business segments (in thousands):

	Thirteen Weeks Ended
	March 30, 2014		March 31, 2013
Sales to External Customers:
Industry Group	$	106,437	$	99,064
Science Group	119,827		122,125
Total	$	226,264	$	221,189
Gross Profit:
Industry Group	$	56,132	$	50,514
Science Group	50,192		52,037
Total	$	106,324	$	102,551

Schedule of Goodwill and Total Assets by Segment

	March 30, 2014		December 31, 2013
Goodwill:
Industry Group	$	99,688	$	51,532
Science Group	84,572		84,620
Total	$	184,260	$	136,152
Total Assets:
Industry Group	$	401,073	$	297,987
Science Group	361,215		365,571
Corporate and Eliminations	715,312		762,526
Total	$	1,477,600	$	1,426,084

XML

Earnings Per Share - Additional Information (Details) (Convertible Debt [Member])	Mar. 31, 2013
Convertible Debt [Member]
Debt Instrument [Line Items]
Debt Instrument, Interest Rate, Stated Percentage	2.875%

XML

Related-Party Activity (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 30, 2014	Mar. 31, 2013
Related Party Transaction [Line Items]
Product sales to related parties	$ 1,089	$ 3,621
Service sales to related parties	261	153
Total sales to related parties	1,350	3,774
Purchases from related parties	447	25
Applied Materials [Member]
Related Party Transaction [Line Items]
Product sales to related parties	959	3,492
Service sales to related parties	168	133
Oregon Health and Science University [Member]
Related Party Transaction [Line Items]
Product sales to related parties	130	129
Service sales to related parties	82	9
Purchases from related parties	39	0
Lattice Semiconductor [Member]
Related Party Transaction [Line Items]
Service sales to related parties	3	3
Cascade Microtech [Member]
Related Party Transaction [Line Items]
Service sales to related parties	8	8
TMC BV [Member]
Related Party Transaction [Line Items]
Purchases from related parties	$ 408	$ 25

XML

Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Mar. 30, 2014	Dec. 31, 2013
Current Assets:
Cash and cash equivalents	$ 317,666	$ 384,170
Short-term investments in marketable securities	120,832	108,191
Short-term restricted cash	14,926	18,798
Receivables, net of allowances for doubtful accounts of $3,070 and $2,969	206,906	194,418
Inventories	192,551	181,725
Deferred tax assets	9,884	15,114
Other current assets	30,089	28,324
Total current assets	892,854	930,740
Non-current investments in marketable securities	60,740	47,278
Long-term restricted cash	34,589	32,718
Property, plant and equipment, net of accumulated depreciation of $130,790 and $125,405	163,447	157,829
Intangible assets, net of accumulated amortization of $19,479 and $16,941	67,637	47,197
Goodwill	184,260	136,152
Deferred tax assets	4,261	1,751
Non-current inventories	59,295	62,104
Other assets, net	10,517	10,315
Total Assets	1,477,600	1,426,084
Current Liabilities:
Accounts payable	94,311	73,247
Accrued payroll liabilities	34,538	45,146
Accrued warranty reserves	13,264	12,705
Short-term deferred revenue	93,098	91,563
Income taxes payable	3,135	4,579
Other current liabilities	52,105	46,374
Total current liabilities	290,451	273,614
Long-term deferred revenue	32,603	30,744
Deferred tax liabilities	11,465	8,931
Other liabilities	36,580	35,227
Commitments and contingencies
Shareholders’ Equity:
Preferred stock - 500 shares authorized; none issued and outstanding	0	0
Common stock - 70,000 shares authorized; 42,255 and 42,136 shares issued and outstanding, no par value	646,531	637,482
Retained earnings	412,938	392,958
Accumulated other comprehensive income	47,032	47,128
Total Shareholders’ Equity	1,106,501	1,077,568
Total Liabilities and Shareholders’ Equity	$ 1,477,600	$ 1,426,084

XML

Inventories (Details) (USD $) In Thousands, unless otherwise specified	Mar. 30, 2014	Dec. 31, 2013
Inventory Disclosure [Abstract]
Raw materials and assembled parts	$ 62,191	$ 61,235
Service inventories, estimated current requirements	14,516	15,197
Work-in-process	84,187	75,883
Finished goods	31,657	29,410
Total current inventories	192,551	181,725
Non-current inventories	$ 59,295	$ 62,104

XML

Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 30, 2014	Mar. 31, 2013
Cash flows from operating activities:
Net income	$ 25,078	$ 26,801
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	7,066	5,810
Amortization	3,197	2,557
Stock-based compensation	5,139	4,364
Income taxes (receivable) payable, net	(2,898)	600
Deferred income taxes	1,455	976
(Increase) decrease, net of acquisitions, in:
Receivables	(10,760)	(9,284)
Inventories	(10,930)	(1,606)
Other assets	4,196	(512)
Increase (decrease), net of acquisitions, in:
Accounts payable	12,542	3,212
Accrued payroll liabilities	(13,725)	(9,645)
Accrued warranty reserves	545	421
Deferred revenue	1,152	10,587
Accrued restructuring, reorganization, relocation and severance	773	188
Other liabilities	5,619	341
Net cash provided by operating activities	28,449	34,810
Cash flows from investing activities:
Decrease (increase) in restricted cash	1,907	(3,462)
Acquisition of property, plant and equipment	(4,336)	(5,043)
Payments for acquisitions, net of cash acquired	(64,615)	0
Purchase of investments in marketable securities	(75,100)	(50,715)
Redemption of investments in marketable securities	49,374	34,030
Other	(268)	(293)
Net cash used in investing activities	(93,038)	(25,483)
Cash flows from financing activities:
Dividends paid on common stock	(5,058)	(3,078)
Withholding taxes paid on issuance of vested restricted stock units	(955)	(363)
Proceeds from exercise of stock options and employee stock purchases	5,504	4,146
Excess tax benefit for share based payment arrangements	1,866	586
Net cash provided by financing activities	1,357	1,291
Effect of exchange rate changes	(3,272)	(5,245)
(Decrease) increase in cash and cash equivalents	(66,504)	5,373
Cash and cash equivalents:
Beginning of period	384,170	266,302
End of period	317,666	271,675
Supplemental Cash Flow Information:
Cash paid for income taxes, net	3,711	2,656
Cash paid for interest	63	56
(Decrease) increase in fixed assets related to transfers with inventories	(240)	1,664
Dividends declared but not paid	5,056	3,078
Accrued purchases of plant and equipment	$ 8,345	$ 398

XML

Fair Value of Assets and Liabilities - Securities (Details) (Fair Value, Measurements, Recurring [Member], USD $) In Thousands, unless otherwise specified	Mar. 30, 2014	Dec. 31, 2013
Estimate of Fair Value, Fair Value Disclosure [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities - mutual funds	$ 6,254	$ 5,287
Derivative contracts, net	(2,936)	(1,113)
Assets, fair value	178,636	154,356
Estimate of Fair Value, Fair Value Disclosure [Member] | U.S. Government-backed securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale marketable securities	15,092	10,128
Estimate of Fair Value, Fair Value Disclosure [Member] | Agency bonds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale marketable securities	52,967	37,961
Estimate of Fair Value, Fair Value Disclosure [Member] | Commercial paper [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale marketable securities	34,989	39,987
Estimate of Fair Value, Fair Value Disclosure [Member] | Certificates of deposit [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale marketable securities	8,578	7,786
Estimate of Fair Value, Fair Value Disclosure [Member] | Municipal Bonds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale marketable securities	51,601	49,319
Estimate of Fair Value, Fair Value Disclosure [Member] | Corporate Bond Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale marketable securities	12,091	5,001
Fair Value, Inputs, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities - mutual funds	6,254	5,287
Derivative contracts, net	0	0
Assets, fair value	21,346	15,415
Fair Value, Inputs, Level 1 [Member] | U.S. Government-backed securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale marketable securities	15,092	10,128
Fair Value, Inputs, Level 1 [Member] | Agency bonds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale marketable securities	0	0
Fair Value, Inputs, Level 1 [Member] | Commercial paper [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale marketable securities	0	0
Fair Value, Inputs, Level 1 [Member] | Certificates of deposit [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale marketable securities	0	0
Fair Value, Inputs, Level 1 [Member] | Municipal Bonds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale marketable securities	0	0
Fair Value, Inputs, Level 1 [Member] | Corporate Bond Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale marketable securities	0	0
Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities - mutual funds	0	0
Derivative contracts, net	(2,936)	(1,113)
Assets, fair value	157,290	138,941
Fair Value, Inputs, Level 2 [Member] | U.S. Government-backed securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale marketable securities	0	0
Fair Value, Inputs, Level 2 [Member] | Agency bonds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale marketable securities	52,967	37,961
Fair Value, Inputs, Level 2 [Member] | Commercial paper [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale marketable securities	34,989	39,987
Fair Value, Inputs, Level 2 [Member] | Certificates of deposit [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale marketable securities	8,578	7,786
Fair Value, Inputs, Level 2 [Member] | Municipal Bonds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale marketable securities	51,601	49,319
Fair Value, Inputs, Level 2 [Member] | Corporate Bond Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale marketable securities	12,091	5,001
Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities - mutual funds	0	0
Derivative contracts, net	0	0
Assets, fair value	0	0
Fair Value, Inputs, Level 3 [Member] | U.S. Government-backed securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale marketable securities	0	0
Fair Value, Inputs, Level 3 [Member] | Agency bonds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale marketable securities	0	0
Fair Value, Inputs, Level 3 [Member] | Commercial paper [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale marketable securities	0	0
Fair Value, Inputs, Level 3 [Member] | Certificates of deposit [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale marketable securities	0	0
Fair Value, Inputs, Level 3 [Member] | Municipal Bonds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale marketable securities	0	0
Fair Value, Inputs, Level 3 [Member] | Corporate Bond Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale marketable securities	$ 0	$ 0

XML

Derivative Instruments (Tables)

3 Months Ended

Mar. 30, 2014

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Notional Amounts of Outstanding Derivative Positions

The aggregate notional amount of outstanding derivative contracts were as follows (in thousands):

	March 30, 2014		December 31, 2013
Cash flow hedges	$	177,397	$	208,446
Balance sheet hedges	158,511		172,947
Total outstanding derivative contracts	$	335,908	$	381,393

Schedule of Gain (Loss) Attributable to Foreign Exchange Rate Fluctuations

Changes in fair value of derivatives entered into to mitigate the foreign exchange risks related to these balance sheet items are recorded in other income (expense) together with the transaction gain or loss from the respective balance sheet position as follows (in thousands):

	Thirteen Weeks Ended
	March 30, 2014			March 31, 2013
Foreign currency loss, inclusive of the impact of derivatives	$	(230	)	$	(599	)

Schedule of Derivatives Instruments, Offsetting in Balance Sheet

Our derivative instruments are subject to master netting arrangements and are presented net in our balance sheet. We do not have any financial collateral related to these netting arrangements. The effect of these netting arrangements on our balance sheet is as follows (in thousands):

	Offsetting of Derivative Assets							Offsetting of Derivative Liabilities
March 30, 2014	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Balance Sheet			Net Amounts Presented in Other Current Assets		Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Balance Sheet			Net Amounts Presented in Other Current Liabilities
Foreign exchange contracts designated as hedging instruments	$	—	$	—		$	—	$	3,876	$	(2,065	)	$	1,811
Foreign exchange contracts not designated as hedging instruments	720		(275		)	445		2,203		(633		)	1,570
Total	$	720	$	(275	)	$	445	$	6,079	$	(2,698	)	$	3,381

	Offsetting of Derivative Assets							Offsetting of Derivative Liabilities
December 31, 2013	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Balance Sheet			Net Amounts Presented in Other Current Assets		Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Balance Sheet			Net Amounts Presented in Other Current Liabilities
Foreign exchange contracts designated as hedging instruments	$	—	$	—		$	—	$	4,362	$	(3,042	)	$	1,320
Foreign exchange contracts not designated as hedging instruments	2,171		(698		)	1,473		2,916		(1,650		)	1,266
Total	$	2,171	$	(698	)	$	1,473	$	7,278	$	(4,692	)	$	2,586

Schedule of Derivative Instruments, Gain (Loss) in Statement of Operations

The effect of derivative instruments was as follows (in thousands):

	Thirteen Weeks Ended
Foreign Exchange Contracts in Cash Flow Hedging Relationships	March 30, 2014			March 31, 2013
Amount of gain/(loss):
Recognized in OCI (effective portion)	$	(2,202	)	$	(1,799	)
Reclassified from accumulated OCI into revenue (effective portion)	37			—
Reclassified from accumulated OCI into cost of sales (effective portion)	(570		)	(297		)
Recognized in other, net (ineffective portion and amount excluded from effectiveness testing)	—			(25		)
Foreign Exchange Contracts Not in Cash Flow Hedging Relationships
Amount of gain/(loss):
Recognized in other, net	$	3,109		$	767

XML

New Accounting Pronouncements

3 Months Ended

Mar. 30, 2014

New Accounting Pronouncements and Changes in Accounting Principles [Abstract]

New Accounting Pronouncements

NEW ACCOUNTING PRONOUNCEMENTS

Recent accounting pronouncements issued by the Financial Accounting Standards Board and the United States Exchange Commission did not have a material impact on the Company's financial statements.

XML

Changes in Accumulated Other Comprehensive Income by Component (Tables)

3 Months Ended

Mar. 30, 2014

Changes in Accumulated Other Comprehensive Income [Abstract]

Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block]

The following tables illustrate the disclosure of changes in the balances of each component of accumulated other comprehensive income ("AOCI"), as well as details the effect of reclassifications out of AOCI on the line items in the Consolidated Statements of Operations by component (net of tax, in thousands):

	Thirteen Weeks Ended March 30, 2014
	Foreign Currency Items		Unrealized Gains and Losses on Available-for-Sale Securities			Defined Benefit Pension Items			Gains and Losses on Cash Flow Hedges			Total
Beginning Balance	$	48,865	$	(11	)	$	(552	)	$	(1,174	)	$	47,128
Other comprehensive income before reclassifications	107		1			16			(753		)	(629		)
Amounts reclassified from AOCI to:
Revenue	—		—			—			(37		)	(37		)
Cost of goods sold	—		—			—			570			570
Other income (expense)	—		—			—			—			—
Total reclassifications out of AOCI	—		—			—			533			533
Net current period other comprehensive income	107		1			16			(220		)	(96		)
Ending balance	$	48,972	$	(10	)	$	(536	)	$	(1,394	)	$	47,032

	Thirteen Weeks Ended March 31, 2013
	Foreign Currency Items			Unrealized Gains and Losses on Available-for-Sale Securities		Defined Benefit Pension Items			Gains and Losses on Cash Flow Hedges			Total
Beginning Balance	$	38,890		$	4	$	(819	)	$	481		$	38,556
Other comprehensive income before reclassifications	(15,714		)	7		(15		)	(1,925		)	(17,647		)
Amounts reclassified from AOCI to:
Cost of goods sold	—			—		—			297			297
Other income (expense)	—			—		—			25			25
Total reclassifications out of AOCI	—			—		—			322			322
Net current period other comprehensive income	(15,714		)	7		(15		)	(1,603		)	(17,325		)
Ending balance	$	23,176		$	11	$	(834	)	$	(1,122	)	$	21,231

XML

Earnings Per Share (Tables)

3 Months Ended

Mar. 30, 2014

Earnings Per Share [Abstract]

Earnings Per Share Reconciliation

Following is a reconciliation of basic earnings per share (“EPS”) and diluted EPS (in thousands, except per share amounts):

	Thirteen Weeks Ended					Thirteen Weeks Ended
	March 30, 2014					March 31, 2013
	Net Income		Shares	Per Share Amount		Net Income		Shares	Per Share Amount
Basic EPS	$	25,078	42,191	$	0.59	$	26,801	38,522	$	0.70
Dilutive effect of 2.875% convertible debt	—		—	—		455		3,033	(0.04		)
Dilutive effect of stock options, restricted stock units, and shares issuable to Philips	—		581	—		—		581	(0.01		)
Diluted EPS	$	25,078	42,772	$	0.59	$	27,256	42,136	$	0.65

Schedule of Antidilutive Securities Excluded from Computation of Diluted Earnings Per Share

The following table sets forth the schedule of anti-dilutive securities excluded from the computation of diluted EPS (number of shares, in thousands):

	Thirteen Weeks Ended
	March 30, 2014	March 31, 2013
Stock options	138	222
Restricted stock units	1	2

XML

Organization and Basis of Presentation

3 Months Ended

Mar. 30, 2014

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization and Basis of Presentation

ORGANIZATION AND BASIS OF PRESENTATION

Nature of Business

We are a leading supplier of scientific instruments and related services for nanoscale applications and solutions for industry and science. We report our revenue based on a group structure organization, which we categorize as the Industry Group and the Science Group.

Our products include transmission electron microscopes ("TEMs"); scanning electron microscopes ("SEMs"); DualBeam^TMsystems which combine a SEM and a focused ion beam system ("FIB") on a single platform; stand-alone FIBs; high-performance optical microscopes, three-dimensional modeling software, and service and components to support the products. TEMs provide the highest resolution images of samples and their internal structure, down to the atomic level. SEMs provide detailed images of the surface and shape of samples. Optical microscopes provide a wider field of view than SEMs and TEMs. DualBeams and FIBs image, manipulate, mill and deposit material for a variety of purposes, including preparation of samples for TEMs. Substantially all of these product categories are sold into all of our markets. Individual models of our products are increasingly designed to provide specific solutions and applications in each of our markets.

Our DualBeam systems include models that have wafer handling capability and are purchased by semiconductor equipment manufacturers (“wafer-level DualBeam systems”) and models that have small stages and are sold to customers in several markets (“small-stage DualBeam systems”).

Our significant research and development and manufacturing operations are located in Hillsboro, Oregon; Eindhoven, The Netherlands; and Brno, Czech Republic; and our software development is managed principally from Bordeaux, France. Our sales and service operations are conducted in the United States (U.S.) and approximately50other countries around the world. We also sell our products through independent agents, distributors and representatives in additional countries.

Basis of Presentation

The consolidated financial statements include the accounts of FEI Company and our wholly-owned subsidiaries (collectively, “FEI”). All significant intercompany balances and transactions have been eliminated in consolidation.

The accompanying consolidated financial statements and condensed footnotes have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, the financial statements do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments considered necessary for fair presentation have been included. The results of operations for thethirteen week period endedMarch 30, 2014are not necessarily indicative of the results to be expected for the full year. For further information, refer to the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year endedDecember 31, 2013, which was filed with the Securities and Exchange Commission (“SEC”) on February 21, 2014.

Use of Estimates in Financial Reporting

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period.

Significant accounting policies and estimates underlying the accompanying consolidated financial statements include:

• the timing of revenue recognition;

• the allowance for doubtful accounts;

• valuations of excess and obsolete inventory;

• the lives and recoverability of equipment and other long-lived assets such as goodwill;

• the valuations of intangible assets;

• restructuring, reorganization, relocation and severance costs;

• tax valuation allowances and unrecognized tax benefits;

• warranty liabilities;

• stock-based compensation; and

• accounting for derivatives.

It is reasonably possible that management's estimates may change in the future.

XML

Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Per Share data, unless otherwise specified	Mar. 30, 2014	Dec. 31, 2013
Assets
Allowance for doubtful accounts	$ 3,070	$ 2,969
Accumulated depreciation	130,790	125,405
Accumulated amortization	$ 19,479	$ 16,941
Shareholders’ Equity:
Preferred stock, shares authorized	500	500
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, shares authorized	70,000	70,000
Common stock, shares issued	42,255	42,136
Common stock, shares outstanding	42,255	42,136
Common stock, no par value	$ 0	$ 0

XML

Segment Information

3 Months Ended

Mar. 30, 2014

Segment Reporting [Abstract]

Segment Information

SEGMENT INFORMATION

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision making group, in deciding how to allocate resources and in assessing performance. Our chief operating decision maker is our Chief Executive Officer.

We currently report our segments based on a group structure organization. Our segments are the Industry Group and the Science Group.

The following tables summarize various financial amounts for each of our business segments (in thousands):

	Thirteen Weeks Ended
	March 30, 2014		March 31, 2013
Sales to External Customers:
Industry Group	$	106,437	$	99,064
Science Group	119,827		122,125
Total	$	226,264	$	221,189
Gross Profit:
Industry Group	$	56,132	$	50,514
Science Group	50,192		52,037
Total	$	106,324	$	102,551

	March 30, 2014		December 31, 2013
Goodwill:
Industry Group	$	99,688	$	51,532
Science Group	84,572		84,620
Total	$	184,260	$	136,152
Total Assets:
Industry Group	$	401,073	$	297,987
Science Group	361,215		365,571
Corporate and Eliminations	715,312		762,526
Total	$	1,477,600	$	1,426,084

Market segment disclosures are presented to the gross profit level as this is the primary performance measure for which the segment general managers are responsible. Selling, general and administrative, research and development and other operating expenses are managed and reported at the corporate level and, given allocation to the market segments would be arbitrary, have not been allocated to the market segments. See the Consolidated Statements of Operations for reconciliations from gross profit to income before income taxes. These reconciling items are not included in the measure of profit and loss for each reportable segment.

XML

Document and Entity Information	3 Months Ended
	Mar. 30, 2014	Apr. 28, 2014
Document and Entity Information [Abstract]
Entity Registrant Name	FEI CO
Entity Central Index Key	0000914329
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Document Type	10-Q
Document Period End Date	Mar. 30, 2014
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q1
Amendment Flag	false
Entity Common Stock, Shares Outstanding		42,257,016

XML

Restructuring, Reorganization, Relocation and Severance

3 Months Ended

Mar. 30, 2014

Restructuring and Related Activities [Abstract]

Restructuring, Reorganization, Relocation and Severance

RESTRUCTURING, REORGANIZATION, RELOCATION AND SEVERANCE

First Quarter 2014 Restructuring

During the first quarter of 2014 we engaged in a restructuring plan principally aimed at consolidating our sales force in Europe. The restructuring plan costs of $1.3 million primarily consisted of severance and related employee termination costs and was completed during the quarter. No future costs under this plan are expected. Savings from this plan is expected to be approximately $1.8 million on an annual basis.

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 was completed in the first quarter of 2013. The costs associated with the reorganization included primarily severance costs and resulted in the termination of certain positions throughout the company. In anticipation of this reorganization, we incurred$2.9 million of costs during the fourth quarter of 2012, and recorded $1.1 million of costs during the first half of 2013, for a total cost of $4.0 million. We expect to incur no additional charges related to the reorganization.

Restructuring, Reorganization, Relocation and Severance Accrual

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

Thirteen Weeks Ended March 30, 2014	First Quarter 2014 Restructuring			Group Structure Organization		Total
Beginning accrued liability	$	—		$	50	$	50
Charged to expense, net	1,331			—		1,331
Expenditures	(484		)	—		(484		)
Ending accrued liability	$	847		$	50	$	897

Thirteen Weeks Ended March 31, 2013	Group Structure Organization			Total
Beginning accrued liability	$	2,692		$	2,692
Charged to expense, net	695			695
Expenditures	(511		)	(511		)
Write-offs and adjustments	(80		)	(80		)
Ending accrued liability	$	2,796		$	2,796

XML

Consolidated Statements of Operations (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 30, 2014	Mar. 31, 2013
Net sales:
Products	$ 169,298	$ 169,495
Service	56,966	51,694
Total net sales	226,264	221,189
Cost of sales:
Products	86,595	85,183
Service	33,345	33,455
Total cost of sales	119,940	118,638
Gross profit	106,324	102,551
Operating expenses:
Research and development	25,646	24,809
Selling, general and administrative	48,462	43,524
Restructuring, reorganization, relocation and severance	1,331	695
Total operating expenses	75,439	69,028
Operating income	30,885	33,523
Other expense:
Interest income	152	116
Interest expense	(98)	(816)
Other, net	(324)	(805)
Total other expense, net	(270)	(1,505)
Income before income taxes	30,615	32,018
Income tax expense	5,537	5,217
Net income	$ 25,078	$ 26,801
Basic net income per share	$ 0.59	$ 0.70
Diluted net income per share	$ 0.59	$ 0.65
Cash dividends declared per share	$ 0.12	$ 0.08
Shares used in per share calculations:
Basic	42,191	38,522
Diluted	42,772	42,136

XML

Goodwill and Other Intangible Assets

3 Months Ended

Mar. 30, 2014

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Other Intangible Assets

GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill

The roll-forward of activity related to our goodwill was as follows (in thousands):

	Thirteen Weeks Ended
	March 30, 2014		March 31, 2013
Balance, beginning of period	$	136,152	$	131,320
Goodwill additions	46,446		—
Goodwill adjustments	1,662		(3,148		)
Balance, end of period	$	184,260	$	128,172

Additions to goodwill represent goodwill from acquisitions made during the period. Adjustments to goodwill include translation adjustments resulting from a portion of our goodwill being recorded on the books of our foreign subsidiaries as well as an adjustment recorded in the first quarter of 2013 related to the finalization of the purchase price allocation of the acquisition of ASPEX Corporation in 2012.

Acquisition of Lithicon AS

On February 5, 2014 we acquired 100% of the outstanding shares of Lithicon AS of Trondheim, Norway. Lithicon AS owns 100% of the shares of Lithicon Norway of Trondheim, Norway and Lithicon Australia of Canberra, Australia (collectively "Lithicon.") Lithicon provides digital rock technology services and pore-scale micro computed tomography (microCT) equipment to oil and gas companies. In conjunction with the acquisition we have obtained the helical scan microCT product and associated software from the Australian National University through a licensing and development agreement.

The total purchase price of the acquisition was $68.0 million, plus an adjustment for the change in final closing accounts. The closing account adjustment is still in the process of final determination. We paid $0.4 million in transaction costs of which $0.3 million was paid in the current quarter. Those costs were expensed as incurred and are recorded in the Selling, general and administrative line on the Consolidated Statements of Operations. The total purchase price was allocated to the net tangible and intangible assets acquired based on their preliminary fair values as of February 5, 2014. The fair value of net tangible assets acquired was $7.7 million and the fair value of net intangible assets acquired was $22.0 million, which consisted of $18.6 million in developed technology, $2.2 million of customer relationships and $1.2 million of purchased backlog. Including an increase to net deferred tax liabilities of $8.1 million, the excess of the purchase price over the fair value of the net assets acquired was $46.4 million, which was recorded as goodwill in the Industry Group. For the thirteen week period ended March 30, 2014 the acquired business added $0.8 million of revenue and a net loss of $1.0 million to our consolidated financial results.

The goodwill arising from the acquisition of Lithicon is primarily related to expected future cash flows from expansion of our product offerings in the oil and gas market to include digital rock services, as well as synergies from the introduction of the microCT product to the existing FEI product suite.

The acquired developed technology, customer relationships and purchased backlog will be amortized over a period of 10 years, 5 years and 2 years, respectively.

No pro forma financial information has been provided for this acquisition as it is insignificant.

Other Intangible Assets

Patents, trademarks and other are amortized under the straight-line method over their estimated useful lives of2 to 10 years. Customer relationships are amortized under the straight-line method over their estimated useful lives of5 to 10 years. Developed technology is amortized under the straight-line method over the estimated useful life of the related technology, which ranges from5.5 to 10 years. Note issuance costs were amortized over the life of the related debt, which was7 years.

The gross amount of our other intangible assets and the related accumulated amortization were as follows (in thousands):

	March 30, 2014			December 31, 2013
Patents, trademarks and other	$	25,827		$	24,327
Accumulated amortization	(10,283		)	(9,296		)
Net patents, trademarks and other	15,544			15,031
Customer relationships	23,852			21,650
Accumulated amortization	(4,211		)	(3,547		)
Net customer relationships	19,641			18,103
Developed technology	37,437			18,161
Accumulated amortization	(4,985		)	(4,098		)
Net developed technology	32,452			14,063
Total intangible assets included in other long-term assets	$	67,637		$	47,197

Amortization expense was as follows (in thousands):

	Thirteen Weeks Ended
	March 30, 2014		March 31, 2013
Patents, trademarks and other	$	1,001	$	919
Customer relationships	666		505
Developed technology	887		524
Note issuance costs	—		87
Total amortization expense	$	2,554	$	2,035

Expected amortization, without consideration for foreign currency effects, is as follows over the next five years and thereafter (in thousands):

	Patents, Trademarks and Other		Customer Relationships		Developed Technology		Total
Remainder of 2014	$	2,885	$	2,153	$	3,164	$	8,202
2015	3,695		2,871		4,218		10,784
2016	2,839		2,871		4,218		9,928
2017	2,265		2,523		3,938		8,726
2018	1,649		2,437		3,774		7,860
Thereafter	2,211		6,786		13,140		22,137
Total future amortization expense	$	15,544	$	19,641	$	32,452	$	67,637

XML

Inventories

3 Months Ended

Mar. 30, 2014

Inventory Disclosure [Abstract]

Inventories

INVENTORIES

Inventories are stated at the lower of cost or market, with cost determined by standard cost methods, which approximate the first-in, first-out method. Inventory costs include material, labor and manufacturing overhead. Service inventories that exceed the estimated requirements for the next 12 months based on recent usage levels are reported as a long-term asset. Management has established inventory reserves based on estimates of excess and/or obsolete current and non-current inventory.

Inventories consisted of the following (in thousands):

	March 30, 2014		December 31, 2013
Raw materials and assembled parts	$	62,191	$	61,235
Service inventories, estimated current requirements	14,516		15,197
Work-in-process	84,187		75,883
Finished goods	31,657		29,410
Total current inventories	$	192,551	$	181,725
Non-current inventories	$	59,295	$	62,104

XML

Organization and Basis of Presentation (Policies)

3 Months Ended

Mar. 30, 2014

Accounting Policies [Abstract]

Consolidation Policy

The consolidated financial statements include the accounts of FEI Company and our wholly-owned subsidiaries (collectively, “FEI”). All significant intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates Policy

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period.

Restricted Cash Policy

As part of our contracts with certain customers, we are required to provide letters of credit or bank guarantees which these customers can draw against in the event we do not perform in accordance with our contractual obligations.Restricted cash balances securing bank guarantees that expire within 12 months of the balance sheet date are recorded as a current asset on our consolidated balance sheets. Restricted cash balances securing bank guarantees that expire beyond 12 months from the balance sheet date are recorded as long-term restricted cash on our consolidated balance sheets.

Inventories Policy

Inventories are stated at the lower of cost or market, with cost determined by standard cost methods, which approximate the first-in, first-out method. Inventory costs include material, labor and manufacturing overhead. Service inventories that exceed the estimated requirements for the next 12 months based on recent usage levels are reported as a long-term asset. Management has established inventory reserves based on estimates of excess and/or obsolete current and non-current inventory.

Intangible Assets Policy

Patents, trademarks and other are amortized under the straight-line method over their estimated useful lives of2 to 10 years. Customer relationships are amortized under the straight-line method over their estimated useful lives of5 to 10 years. Developed technology is amortized under the straight-line method over the estimated useful life of the related technology, which ranges from5.5 to 10 years. Note issuance costs were amortized over the life of the related debt, which was7 years.

Warranty Liabilities Policy

Our products generally carry a one-year warranty. A reserve is established at the time of sale to cover estimated warranty costs and certain commitments for product upgrades as a component of cost of sales on our consolidated statements of operations. Our estimate of warranty cost is primarily based on our history of warranty repairs and maintenance, as applied to systems currently under warranty. For our new products without a history of known warranty costs, we estimate the expected costs based on our experience with similar product lines and technology. While most new products are extensions of existing technology, the estimate could change if new products require a significantly different level of repair and maintenance than similar products have required in the past. Our estimated warranty costs are reviewed and updated on a quarterly basis. Changes to the reserve occur as volume, product mix and warranty costs fluctuate.

XML

Fair Value Measurements of Assets and Liabilities

3 Months Ended

Mar. 30, 2014

Fair Value Disclosures [Abstract]

Fair Value Measurements of Assets and Liabilities

FAIR VALUE MEASUREMENTS OF ASSETS AND LIABILITIES

Factors used in determining the fair value of our financial assets and liabilities are summarized into three broad categories:

• Level 1 – quoted prices in active markets for identical securities as of the reporting date;

• Level 2 – other significant directly or indirectly observable inputs, including quoted prices for similar securities, interest rates, prepayment speeds and credit risk; and

• Level 3 – significant inputs that are generally less observable than objective sources, including our own assumptions in determining fair value.

The factors or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.

Following are the disclosures related to the fair value of our financial assets and (liabilities) (in thousands):

March 30, 2014	Level 1		Level 2			Level 3		Total
Available for sale marketable securities:
U.S. Government-backed securities	$	15,092	$	—		$	—	$	15,092
Agency bonds	—		52,967			—		52,967
Commercial paper	—		34,989			—		34,989
Certificates of deposit	—		8,578			—		8,578
Municipal bonds	—		51,601			—		51,601
Corporate bonds	—		12,091			—		12,091
Trading securities:
Equity securities – mutual funds	6,254		—			—		6,254
Derivative contracts, net	—		(2,936		)	—		(2,936		)
Total	$	21,346	$	157,290		$	—	$	178,636

December 31, 2013	Level 1		Level 2			Level 3		Total
Available for sale marketable securities:
U.S. treasury notes	$	10,128	$	—		$	—	$	10,128
Agency bonds	—		37,961			—		37,961
Commercial paper	—		39,987			—		39,987
Certificates of deposit	—		7,786			—		7,786
Municipal bonds	—		49,319			—		49,319
Corporate bonds	—		5,001			—		5,001
Trading securities:
Equity securities – mutual funds	5,287		—			—		5,287
Derivative contracts, net	—		(1,113		)	—		(1,113		)
Total	$	15,415	$	138,941		$	—	$	154,356

Agency bonds are securities backed by U.S. government-sponsored entities. U.S. Government-backed securities include Treasury Bills and Treasury Notes.

We use an income approach to value the assets and liabilities for outstanding derivative contracts using current market information as of the reporting date, such as spot rates, interest rate differentials and implied volatility.

There were no transfers between fair value categories or changes to our valuation techniques during thethirteen week period endedMarch 30, 2014.

We believe the carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and other current liabilities are a reasonable approximation of the fair value of those financial instruments because of the nature of the underlying transactions and the short-term maturities involved.

XML

Related-Party Activity

3 Months Ended

Mar. 30, 2014

Related Party Transactions [Abstract]

Related-Party Activity

RELATED-PARTY ACTIVITY

Related parties with which we had transactions during the thirteen week period endedMarch 30, 2014 were as follows:

• one of the members of our Board of Directors serves on the Board of Directors of Applied Materials, Inc. and Lattice Semiconductor Corporation;

• our Chief Financial Officer is on the Board of Directors of Cascade Microtech, Inc.;

• one of the members of our Board of Directors serves on the Supervisory Board of TMC BV; and

• our Chief Executive Officer is on the Board of Trustees for the Oregon Health and Science University Foundation.

Transactions with these related parties were as follows (in thousands):

	Thirteen Weeks Ended
Sales to Related Parties	March 30, 2014		March 31, 2013
Product sales:
Applied Materials, Inc.	$	959	$	3,492
Oregon Health & Science University	130		129
Total product sales to related parties	1,089		3,621
Service sales:
Applied Materials, Inc.	168		133
Lattice Semiconductor Corporation	3		3
Cascade Microtech, Inc.	8		8
Oregon Health & Science University	82		9
Total service sales to related parties	261		153
Total sales to related parties	$	1,350	$	3,774
Purchases from Related Parties
TMC BV	$	408	$	25
Oregon Health & Science University	39		—
Total purchases from related parties	$	447	$	25

Amounts due from (to) related parties were as follows (in thousands):

	March 30, 2014
Applied Materials, Inc.	$	990
Cascade Microtech, Inc.	8
Oregon Health & Science University	(28		)
TMC BV	(290		)
Due from related parties, net	$	680

XML

Derivative Instruments (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 30, 2014	Dec. 31, 2013
Derivative [Line Items]
Total outstanding derivative contracts	$ 335,908	$ 381,393
Outstanding derivative contracts maturity, maximum	2 years
Cash Flow Hedging [Member]
Derivative [Line Items]
Total outstanding derivative contracts	177,397	208,446
Balance Sheet Hedges [Member]
Derivative [Line Items]
Total outstanding derivative contracts	$ 158,511	$ 172,947

XML

Warranty Reserves

3 Months Ended

Mar. 30, 2014

Product Warranties Disclosures [Abstract]

Warranty Reserves

WARRANTY RESERVES

Our products generally carry a one-year warranty. A reserve is established at the time of sale to cover estimated warranty costs and certain commitments for product upgrades as a component of cost of sales on our consolidated statements of operations. Our estimate of warranty cost is primarily based on our history of warranty repairs and maintenance, as applied to systems currently under warranty. For our new products without a history of known warranty costs, we estimate the expected costs based on our experience with similar product lines and technology. While most new products are extensions of existing technology, the estimate could change if new products require a significantly different level of repair and maintenance than similar products have required in the past. Our estimated warranty costs are reviewed and updated on a quarterly basis. Changes to the reserve occur as volume, product mix and warranty costs fluctuate.

The following is a summary of warranty reserve activity (in thousands):

	Thirteen Weeks Ended
	March 30, 2014			March 31, 2013
Balance, beginning of period	$	12,705		$	12,049
Reductions for warranty costs incurred	(2,779		)	(3,403		)
Warranties issued	3,333			3,788
Translation and changes in estimates	5			(154		)
Balance, end of period	$	13,264		$	12,280

XML

Income Taxes

3 Months Ended

Mar. 30, 2014

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

Our effective income tax rates for the thirteen week periods ended March 30, 2014 and March 31, 2013 were 18.1% and 16.3%, respectively, and reflected taxes accrued in the U.S. and foreign jurisdictions. The tax rate is lower in the comparable period due to U.S. research and experimentation tax credits generated in 2012 and recognized in conjunction with the extension of legislation enacted in January 2013. This legislation expired at the end of 2013, and we have not recognized any benefit related to U.S. research and experimentation credits in the thirteen week period ended March 30, 2014.

We continue to record a valuation allowance against a portion of our U.S. and foreign deferred tax assets as we do not believe it is more likely than not that we will be able to utilize the deferred tax assets in future periods.

Deferred Income Taxes

Net deferred tax assetswere classified on the balance sheet as follows (in thousands):

	March 30, 2014			December 31, 2013
Deferred tax assets – current	$	9,884		$	15,114
Deferred tax assets – non-current	4,261			1,751
Other current liabilities	(53		)	(9		)
Deferred tax liabilities – non-current	(11,465		)	(8,931		)
Net deferred tax assets	$	2,627		$	7,925
Valuation allowance	$	4,514		$	2,723

Unrecognized Tax Benefits

During the thirteen week periods ended March 30, 2014 and March 31, 2013, unrecognized tax benefits increased $0.1 million and $0.4 million, respectively, primarily due to uncertainty surrounding permanent establishment and tax credits. The increase for the period ended March 30, 2014 was partially offset by effective settlement of $0.2 million of positions taken on returns in a foreign jurisdiction. There were no increases or decreases in prior unrecognized tax benefits resulting from lapses of statutes of limitations during the period. We recognize interest and penalties related to unrecognized tax benefits in tax expense.

For our major tax jurisdictions, the following years were open for examination by the tax authorities as ofMarch 30, 2014:

Jurisdiction	Open Tax Years
U.S.	2010 and forward
The Netherlands	2011 and forward
Czech Republic	2011 and forward

XML

Commitments and Contingencies

3 Months Ended

Mar. 30, 2014

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

COMMITMENTS AND CONTINGENCIES

From time to time, we may be a party to litigation arising in the ordinary course of business. Currently, we are not a party to any litigation that we believe would have a material adverse effect on our financial position, results of operations or cash flows.

Purchase Obligations

We have commitments under non-cancelable purchase orders, primarily relating to inventory, totaling107.9 million at March 30, 2014. These commitments expire at various times through the second quarter of 2016.

XML

Changes in Accumulated Other Comprehensive Income by Component (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 30, 2014	Mar. 31, 2013
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Beginning balance	$ 47,128	$ 38,556
Other comprehensive income before reclassifications	(629)	(17,647)
Cost of goods sold	(119,940)	(118,638)
Other income (expense)	(270)	(1,505)
Net current period other comprehensive income	(96)	(17,325)
Ending balance	47,032	21,231
Reclassification out of Accumulated Other Comprehensive Income [Member]
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Revenues	(37)
Cost of goods sold	570	297
Other income (expense)	0	25
Total reclassification out of AOCI	533	322
Accumulated Translation Adjustment [Member]
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Beginning balance	48,865	38,890
Other comprehensive income before reclassifications	107	(15,714)
Net current period other comprehensive income	107	(15,714)
Ending balance	48,972	23,176
Accumulated Translation Adjustment [Member] | Reclassification out of Accumulated Other Comprehensive Income [Member]
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Cost of goods sold	0	0
Other income (expense)	0	0
Total reclassification out of AOCI	0	0
Accumulated Net Unrealized Investment Gain (Loss) [Member]
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Beginning balance	(11)	4
Other comprehensive income before reclassifications	1	7
Net current period other comprehensive income	1	7
Ending balance	(10)	11
Accumulated Net Unrealized Investment Gain (Loss) [Member] | Reclassification out of Accumulated Other Comprehensive Income [Member]
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Cost of goods sold	0	0
Other income (expense)	0	0
Total reclassification out of AOCI	0	0
Accumulated Defined Benefit Plans Adjustment [Member]
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Beginning balance	(552)	(819)
Other comprehensive income before reclassifications	16	(15)
Net current period other comprehensive income	16	(15)
Ending balance	(536)	(834)
Accumulated Defined Benefit Plans Adjustment [Member] | Reclassification out of Accumulated Other Comprehensive Income [Member]
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Cost of goods sold	0	0
Other income (expense)	0	0
Total reclassification out of AOCI	0	0
Accumulated Net Gain (Loss) from Designated or Qualifying Cash Flow Hedges [Member]
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Beginning balance	(1,174)	481
Other comprehensive income before reclassifications	(753)	(1,925)
Net current period other comprehensive income	(220)	(1,603)
Ending balance	(1,394)	(1,122)
Accumulated Net Gain (Loss) from Designated or Qualifying Cash Flow Hedges [Member] | Reclassification out of Accumulated Other Comprehensive Income [Member]
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Revenues	(37)
Cost of goods sold	570	297
Other income (expense)	0	25
Total reclassification out of AOCI	$ 533	$ 322

XML

Fair Value Measurements of Assets and Liabilities (Tables)

3 Months Ended

Mar. 30, 2014

Fair Value Disclosures [Abstract]

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis

Following are the disclosures related to the fair value of our financial assets and (liabilities) (in thousands):

March 30, 2014	Level 1		Level 2			Level 3		Total
Available for sale marketable securities:
U.S. Government-backed securities	$	15,092	$	—		$	—	$	15,092
Agency bonds	—		52,967			—		52,967
Commercial paper	—		34,989			—		34,989
Certificates of deposit	—		8,578			—		8,578
Municipal bonds	—		51,601			—		51,601
Corporate bonds	—		12,091			—		12,091
Trading securities:
Equity securities – mutual funds	6,254		—			—		6,254
Derivative contracts, net	—		(2,936		)	—		(2,936		)
Total	$	21,346	$	157,290		$	—	$	178,636

December 31, 2013	Level 1		Level 2			Level 3		Total
Available for sale marketable securities:
U.S. treasury notes	$	10,128	$	—		$	—	$	10,128
Agency bonds	—		37,961			—		37,961
Commercial paper	—		39,987			—		39,987
Certificates of deposit	—		7,786			—		7,786
Municipal bonds	—		49,319			—		49,319
Corporate bonds	—		5,001			—		5,001
Trading securities:
Equity securities – mutual funds	5,287		—			—		5,287
Derivative contracts, net	—		(1,113		)	—		(1,113		)
Total	$	15,415	$	138,941		$	—	$	154,356

XML

Income Taxes - Net Deferred Tax Assets (Details) (USD $) In Thousands, unless otherwise specified	Mar. 30, 2014	Dec. 31, 2013
Deferred Income Taxes [Abstract]
Deferred tax assets - current	$ 9,884	$ 15,114
Deferred tax assets - noncurrent	4,261	1,751
Deferred tax liabilities - current	(53)	(9)
Deferred tax liabilities - noncurrent	(11,465)	(8,931)
Net deferred tax assets (liabilities)	2,627	7,925
Valuation allowance	$ 4,514	$ 2,723

XML

Changes in Accumulated Other Comprehensive Income by Component (Notes)

3 Months Ended

Mar. 30, 2014

Changes in Accumulated Other Comprehensive Income [Abstract]

Comprehensive Income Note [Text Block]

CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME BY COMPONENT

The following tables illustrate the disclosure of changes in the balances of each component of accumulated other comprehensive income ("AOCI"), as well as details the effect of reclassifications out of AOCI on the line items in the Consolidated Statements of Operations by component (net of tax, in thousands):

	Thirteen Weeks Ended March 30, 2014
	Foreign Currency Items		Unrealized Gains and Losses on Available-for-Sale Securities			Defined Benefit Pension Items			Gains and Losses on Cash Flow Hedges			Total
Beginning Balance	$	48,865	$	(11	)	$	(552	)	$	(1,174	)	$	47,128
Other comprehensive income before reclassifications	107		1			16			(753		)	(629		)
Amounts reclassified from AOCI to:
Revenue	—		—			—			(37		)	(37		)
Cost of goods sold	—		—			—			570			570
Other income (expense)	—		—			—			—			—
Total reclassifications out of AOCI	—		—			—			533			533
Net current period other comprehensive income	107		1			16			(220		)	(96		)
Ending balance	$	48,972	$	(10	)	$	(536	)	$	(1,394	)	$	47,032

	Thirteen Weeks Ended March 31, 2013
	Foreign Currency Items			Unrealized Gains and Losses on Available-for-Sale Securities		Defined Benefit Pension Items			Gains and Losses on Cash Flow Hedges			Total
Beginning Balance	$	38,890		$	4	$	(819	)	$	481		$	38,556
Other comprehensive income before reclassifications	(15,714		)	7		(15		)	(1,925		)	(17,647		)
Amounts reclassified from AOCI to:
Cost of goods sold	—			—		—			297			297
Other income (expense)	—			—		—			25			25
Total reclassifications out of AOCI	—			—		—			322			322
Net current period other comprehensive income	(15,714		)	7		(15		)	(1,603		)	(17,325		)
Ending balance	$	23,176		$	11	$	(834	)	$	(1,122	)	$	21,231

XML

Credit Facilities and Restricted Cash (Tables)

3 Months Ended

Mar. 30, 2014

Credit Facilities And Restricted Cash

Schedule of Letters of Credit and Restricted Cash

The following table sets forth information related to guarantees and letters of credit (in thousands):

	March 30, 2014
Guarantees and letters of credit outstanding	$	49,588
Amount secured by restricted cash deposits:
Current	$	14,926
Long-term	34,589
Total secured by restricted cash	$	49,515

XML

Goodwill and Other Intangible Assets Acquisition Information (Details) (Lithicon AS [Member], USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 30, 2014	Feb. 05, 2014
Business Acquisition [Line Items]
Business Acquisition, Percentage of Voting Interests Acquired		100.00%
Acquisition Purchase Price		$ 68.0
Business Acquisition, Transaction Costs - Cumulative	0.4
Business Acquisition, Transaction Costs	0.3
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Net		7.7
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles		22.0
Deferred Tax Assets, Goodwill and Intangible Assets		8.1
Acquisition related goodwill		46.4
Business Combination, Pro Forma Information, Revenue of Acquiree since Acquisition Date, Actual	0.8
Business Combination, Pro Forma Information, Earnings or Loss of Acquiree since Acquisition Date, Actual	1.0
Developed technology [Member]
Business Acquisition [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles		18.6
Customer relationships [Member]
Business Acquisition [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles		2.2
Order or Production Backlog [Member]
Business Acquisition [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles		$ 1.2

XML

Stock-Based Compensation (Details) (USD $) In Millions, except Share data, unless otherwise specified	3 Months Ended
	Mar. 30, 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares available for grant	2,001,765
Shares of common stock reserved for issuance	3,364,680
Total compensation cost not yet recognized	$ 43.5
Total compensation cost not yet recognized - period for recognition	1 year 10 months 24 days
Stock Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares authorized	11,000,000
Stock Options [Member]
Options Outstanding and Exercisable:
Options outstanding, number	649,059
Options exercisable, number	151,082
Options outstanding, weighted average exercise price	$ 52.82
Options exercisable, weighted average exercise price	$ 33.96
Options outstanding, aggregate intrinsic value	32.5
Options exercisable, aggregate intrinsic value	10.4
Options outstanding, weighted average remaining contractual term (in years)	5 years 1 month 6 days
Options exercisable, weighted average remaining contractual term (in years)	3 years 9 months 18 days
Restricted Stock Units [Member]
Restricted Stock Units Nonvested and Expected to Vest
Restricted stock units nonvested, number	713,858
Restricted stock units expected to vest, number	627,724
Restricted stock units nonvested, weighted average grant date per share fair value	$ 58.39
Restricted stock units expected to vest, weighted average grant date per share fair value	$ 57.53
Restricted stock units nonvested, aggregate intrinsic value	73.4
Restricted stock units expected to vest, aggregate intrinsic value	$ 64.6
Restricted stock units nonvested, weighted average remaining term to vest (in years)	1 year 6 months 1 day
Restricted stock units expected to vest, weighted average remaining term to vest (in years)	1 year 6 months 1 day

XML

Consolidated Statements of Comprehensive Income (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 30, 2014	Mar. 31, 2013
Net income	$ 25,078	$ 26,801
Other comprehensive income, net of taxes:
Change in cumulative translation adjustment	107	(15,714)
Change in unrealized gain on available-for-sale securities	1	7
Change in minimum pension liability	16	(15)
Changes due to cash flow hedging instruments:
Net loss on hedge instruments	(753)	(1,925)
Reclassification to net income of previously deferred losses related to hedge derivatives instruments	533	322
Comprehensive income	$ 24,982	$ 9,476

XML

Credit Facilities and Restricted Cash

3 Months Ended

Mar. 30, 2014

Credit Facilities And Restricted Cash

Credit Facilities and Restricted Cash

CREDIT FACILITIES AND RESTRICTED CASH

Multibank Credit Agreement

We have a multibank credit agreement (the “Credit Agreement”), which provides for a $100.0 million secured revolving credit facility, including a $50.0 million subfacility for the issuance of letters of credit. The credit agreement expires in April 2016. We may, upon notice to JPMorgan Chase Bank, N.A., request to increase the revolving loan commitments by an aggregate amount of up to$50.0 millionwith new or additional commitments subject only to the consent of the lender(s) providing the new or additional commitments, for a total secured credit facility of up to$150.0 million. As of March 30, 2014, there were no revolving loans or letters of credit outstanding under the Credit Agreement, we were in compliance with all covenants and we were not in default under the Credit Agreement.

Restricted Cash

As part of our contracts with certain customers, we are required to provide letters of credit or bank guarantees which these customers can draw against in the event we do not perform in accordance with our contractual obligations.Restricted cash balances securing bank guarantees that expire within 12 months of the balance sheet date are recorded as a current asset on our consolidated balance sheets. Restricted cash balances securing bank guarantees that expire beyond 12 months from the balance sheet date are recorded as long-term restricted cash on our consolidated balance sheets.

The following table sets forth information related to guarantees and letters of credit (in thousands):

	March 30, 2014
Guarantees and letters of credit outstanding	$	49,588
Amount secured by restricted cash deposits:
Current	$	14,926
Long-term	34,589
Total secured by restricted cash	$	49,515

XML

Restructuring, Reorganization, Relocation and Severance (Details) (USD $)	3 Months Ended				6 Months Ended		3 Months Ended
	Mar. 30, 2014	Mar. 31, 2013	Mar. 30, 2014 Group Structure Reorganization [Member]	Dec. 31, 2012 Group Structure Reorganization [Member]	Jun. 30, 2013 Group Structure Reorganization [Member]	Mar. 30, 2014 First Quarter 2014 Restructuring Plan [Member]	Mar. 30, 2014 First Quarter 2014 Restructuring Plan [Member]	Mar. 30, 2014 Group Structure Reorganization [Member]	Mar. 31, 2013 Group Structure Reorganization [Member]
Restructuring Cost and Reserve [Line Items]
Actual savings anticipated by restructuring activity						$ 1,800,000
Restructuring, reorganization, relocation and severance	1,331,000	695,000		2,900,000	1,100,000		1,331,000	0	695,000
Restructuring Reserve [Roll Forward]
Beginning accrued liability	50,000	2,692,000					0	50,000	2,692,000
Charged to expense, net	1,331,000	695,000		2,900,000	1,100,000		1,331,000	0	695,000
Expenditures	(484,000)	(511,000)					(484,000)	0	(511,000)
Write-offs and adjustments		(80,000)							(80,000)
Ending accrued liability	897,000	2,796,000					847,000	50,000	2,796,000
Expected additional cost of restructuring plan			0
Expected total cost of restructuring plan					$ 4,000,000

XML

Inventories (Tables)

3 Months Ended

Mar. 30, 2014

Inventory Disclosure [Abstract]

Schedule of Inventories

Inventories consisted of the following (in thousands):

	March 30, 2014		December 31, 2013
Raw materials and assembled parts	$	62,191	$	61,235
Service inventories, estimated current requirements	14,516		15,197
Work-in-process	84,187		75,883
Finished goods	31,657		29,410
Total current inventories	$	192,551	$	181,725
Non-current inventories	$	59,295	$	62,104

XML

Earnings Per Share (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 30, 2014	Mar. 31, 2013
Earnings Per Share Reconciliation
Basic EPS	$ 25,078	$ 26,801
Basic EPS - shares	42,191	38,522
Basic EPS - per share amount	$ 0.59	$ 0.70
Dilutive effect of 2.875% convertible debt - net income	0	455
Dilutive effect of 2.875% convertible debt - shares	0	3,033
Dilutive effect of 2.875% convertible debt - per share amount	$ 0.00	$ (0.04)
Dilutive effect of stock options, restricted stock units, and shares issuable to Philips - net income	0	0
Dilutive effect of stock options, restricted stock units, and shares issuable to Philips - shares	581	581
Dilutive effect of stock options, restricted stock units, and shares issuable to Philips - per share amount	$ 0.00	$ (0.01)
Diluted EPS - net income	$ 25,078	$ 27,256
Diluted EPS - shares	42,772	42,136
Diluted EPS - per share amount	$ 0.59	$ 0.65

XML

Derivative Instruments

3 Months Ended

Mar. 30, 2014

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments

DERIVATIVE INSTRUMENTS

In the normal course of business, we are exposed to foreign currency risk and we use derivatives to mitigate financial exposure from movements in foreign currency exchange rates.

The aggregate notional amount of outstanding derivative contracts were as follows (in thousands):

	March 30, 2014		December 31, 2013
Cash flow hedges	$	177,397	$	208,446
Balance sheet hedges	158,511		172,947
Total outstanding derivative contracts	$	335,908	$	381,393

The outstanding contracts at March 30, 2014 have varying maturities through the third quarter of 2015. We do not enter into derivative financial instruments for speculative purposes.

We attempt to mitigate derivative credit risk by transacting with highly rated counterparties. We have evaluated the credit and nonperformance risks associated with our derivative counterparties and believe them to be insignificant and not warranting a credit adjustment atMarch 30, 2014. In addition, there are no credit contingent features in our derivative instruments.

Balance Sheet Related

In countries outside of the U.S., we transact business in U.S. dollars and in various other currencies. We attempt to mitigate our currency exposures for recorded transactions by using forward exchange contracts to reduce the risk that our future cash flows will be adversely affected by changes in exchange rates. We enter into forward sale or purchase contracts for foreign currencies to economically hedge specific cash, receivables or payables positions denominated in foreign currencies.

Changes in fair value of derivatives entered into to mitigate the foreign exchange risks related to these balance sheet items are recorded in other income (expense) together with the transaction gain or loss from the respective balance sheet position as follows (in thousands):

	Thirteen Weeks Ended
	March 30, 2014			March 31, 2013
Foreign currency loss, inclusive of the impact of derivatives	$	(230	)	$	(599	)

Cash Flow Hedges

We use zero cost collar contracts and option contracts to hedge certain anticipated foreign currency exchange transactions. The foreign exchange hedging structure is set up, generally, on a twenty-four month time horizon. The hedging transactions we undertake primarily limit our exposure to changes in the U.S. dollar/euro and the U.S. dollar/Czech koruna exchange rate. The zero cost collar contract hedges are designed to protect us as the U.S. dollar weakens, but also provide us with some flexibility if the dollar strengthens.

These derivatives meet the criteria to be designated as hedges and, accordingly, we record the change in fair value of the effective portion of these hedge contracts relating to anticipated transactions in other comprehensive income rather than net income until the underlying hedged transaction affects net income.Gains and losses resulting from the ineffective portion of the hedge contracts, if any, are recognized as a component of net income. Gains and losses related to cash flow derivative contracts not designated as hedging instruments are recorded as a component of net income.

Summary

Our derivative instruments are subject to master netting arrangements and are presented net in our balance sheet. We do not have any financial collateral related to these netting arrangements. The effect of these netting arrangements on our balance sheet is as follows (in thousands):

	Offsetting of Derivative Assets							Offsetting of Derivative Liabilities
March 30, 2014	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Balance Sheet			Net Amounts Presented in Other Current Assets		Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Balance Sheet			Net Amounts Presented in Other Current Liabilities
Foreign exchange contracts designated as hedging instruments	$	—	$	—		$	—	$	3,876	$	(2,065	)	$	1,811
Foreign exchange contracts not designated as hedging instruments	720		(275		)	445		2,203		(633		)	1,570
Total	$	720	$	(275	)	$	445	$	6,079	$	(2,698	)	$	3,381

	Offsetting of Derivative Assets							Offsetting of Derivative Liabilities
December 31, 2013	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Balance Sheet			Net Amounts Presented in Other Current Assets		Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Balance Sheet			Net Amounts Presented in Other Current Liabilities
Foreign exchange contracts designated as hedging instruments	$	—	$	—		$	—	$	4,362	$	(3,042	)	$	1,320
Foreign exchange contracts not designated as hedging instruments	2,171		(698		)	1,473		2,916		(1,650		)	1,266
Total	$	2,171	$	(698	)	$	1,473	$	7,278	$	(4,692	)	$	2,586

The effect of derivative instruments was as follows (in thousands):

	Thirteen Weeks Ended
Foreign Exchange Contracts in Cash Flow Hedging Relationships	March 30, 2014			March 31, 2013
Amount of gain/(loss):
Recognized in OCI (effective portion)	$	(2,202	)	$	(1,799	)
Reclassified from accumulated OCI into revenue (effective portion)	37			—
Reclassified from accumulated OCI into cost of sales (effective portion)	(570		)	(297		)
Recognized in other, net (ineffective portion and amount excluded from effectiveness testing)	—			(25		)
Foreign Exchange Contracts Not in Cash Flow Hedging Relationships
Amount of gain/(loss):
Recognized in other, net	$	3,109		$	767

The unrealized losses at March 30, 2014are expected to be reclassified to net income during the next eighteen months as a result of the underlying hedged transactions also being recorded in net income.