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 enable customers to find meaningful answers to questions that accelerate breakthrough discoveries, increase productivity, and ultimately change the world. We design, manufacture, and support the broadest range of high-performance microscopy workflows that provide images and answers in the micro-, nano-, and picometer scales. Combining hardware and software expertise in electron, ion, and light microscopy with deep application knowledge in the materials science, life sciences, semiconductor, and oil & gas markets, we are dedicated to our customers’ pursuit of discovery and resolution to global challenges.

We report our revenue based on a group structure organization, which we categorize as the Industry Group and the Science Group.

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 approximately 50 other 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 the thirteen week period ended April 3, 2016 are 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 ended December 31, 2015, which was filed with the Securities and Exchange Commission (“SEC”) on February 22, 2016.

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;


•	valuations of excess and obsolete inventory;


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


•	the valuation of goodwill;


•	restructuring and reorganization costs;


•	tax valuation allowances and unrecognized tax benefits;


•	stock-based compensation; and


•	accounting for derivatives.

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

Reclassifications

Certain reclassifications to prior year consolidated financial statements have been made to conform to current period presentation. These reclassifications had no effect on our consolidated statements of operations.