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Balance Sheet Information | 9 Months Ended
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Sep. 30, 2012
Balance Sheet Information |
Balance Sheet Information | Note 4—Balance Sheet Information Short-Term Investments Available-for-sale securities consist of the following (in thousands):
|  | September 30, 2012 |
|  | Amortized Cost |  | Gains in Accumulated Other Comprehensive Income |  | Losses in Accumulated Other Comprehensive Income |  | Estimated Fair Value |
Treasury bills |  | $ | 117,872 |  | $ | 54 |  | $ | — |  | $ | 117,926 |
Government Agency Securities |  | 39,559 |  | 4 |  | (1 | ) | 39,562 |
FDIC guaranteed corporate debt |  | 28,198 |  | 6 |  | — |  | 28,204 |
Total available-for-sale securities |  | $ | 185,629 |  | $ | 64 |  | $ | (1 | ) | $ | 185,692 |
|  | December 31, 2011 |
|  | Amortized Cost |  | Gains in Accumulated Other Comprehensive Income |  | Losses in Accumulated Other Comprehensive Income |  | Estimated Fair Value |
Treasury bills |  | $ | 70,147 |  | $ | 46 |  | $ | (1 | ) | $ | 70,192 |
Government agency securities |  | 88,585 |  | 62 |  | (6 | ) | 88,641 |
FDIC guaranteed corporate debt |  | 114,640 |  | 125 |  | (7 | ) | 114,758 |
Total available-for-sale securities |  | $ | 273,372 |  | $ | 233 |  | $ | (14 | ) | $ | 273,591 |
During the three and nine months ended September 30, 2012, available-for-sale securities were sold for total proceeds of $76.8 million and $176.3 million, respectively. The gross realized gains and losses on these sales were minimal for the three and nine months ended September 30, 2012. During the three months ended September 30, 2012, minimal net unrealized holding gains on available-for-sale securities have been included in accumulated other comprehensive income. During the nine months ended September 30, 2012, net unrealized holding losses on available-for-sale securities of $0.2 million have been included in accumulated other comprehensive income. During the three and nine months ended September 30, 2011, available-for-sale securities were sold for total proceeds of $292.9 million and $667.2 million, respectively. The gross realized gains on these sales were $0.2 million and $0.4 million for the three and nine months ended September 30, 2011, respectively. Net unrealized holding (losses) gains on available-for-sale securities amounting to $(0.1) million and $0.1 million for the three and nine months ended September 30, 2011, respectively, have been included in accumulated other comprehensive income. For purpose of determining gross realized gains and losses for the current and prior year periods, the cost of securities sold is based on specific identification. The tables below show the fair value of short-term investments that have been in an unrealized loss position for less than 12 months (in thousands):
|  | September 30, 2012 |
|  | Less than 12 months |  | Total |
|  | Fair value |  | Gross Unrealized Losses |  | Fair value |  | Gross Unrealized Losses |
Government agency securities |  | $ | 18,519 |  | $ | (1 | ) | $ | 18,519 |  | $ | (1 | )
Total |  | $ | 18,519 |  | $ | (1 | ) | $ | 18,519 |  | $ | (1 | )
|  | December 31, 2011 |
|  | Less than 12 months |  | Total |
|  | Fair value |  | Gross Unrealized Losses |  | Fair value |  | Gross Unrealized Losses |
Government agency securities |  | $ | 20,497 |  | $ | (6 | ) | $ | 20,497 |  | $ | (6 | )
FDIC guaranteed corporate debt |  | 8,033 |  | (7 | ) | 8,033 |  | (7 | )
Treasury bills |  | 5,024 |  | (1 | ) | 5,024 |  | (1 | )
Total |  | $ | 33,554 |  | $ | (14 | ) | $ | 33,554 |  | $ | (14 | )
We did not hold any short-term investments that have been in an unrealized loss position for 12 months or longer for the periods noted in the tables above. The Company regularly reviews its investment portfolio to identify and evaluate investments that have indications of possible impairment. Factors considered in determining whether an unrealized loss was considered to be temporary or other-than-temporary and therefore impaired include: the length of time and extent to which fair value has been lower than the cost basis; the financial condition and near-term prospects of the investee; and whether it is more likely than not that the Company will be required to sell the security prior to recovery. The Company believes the gross unrealized losses on the Company’s short-term investments as of September 30, 2012 and December 31, 2011 were temporary in nature and therefore did not recognize any impairment. For investments that were in an unrealized loss position, we held the securities through maturity. Contractual maturities of available-for-sale debt securities at September 30, 2012, are as follows (in thousands):
|  | Estimated Fair Value |
Due in one year or less |  | $ | 107,269 |
Due in 1–2 years |  | 78,423 |
Total investments in debt securities |  | $ | 185,692 |
Actual maturities may differ from contractual maturities because some borrowers have the right to call or prepay obligations with or without call or prepayment penalties. Restricted Cash As of September 30, 2012 and December 31, 2011, restricted cash consisted of $0.9 million and $0.6 million, respectively, which serves as collateral for bank guarantees that provide financial assurance that the Company will fulfill certain customer obligations. This cash is held in custody by the issuing bank and is restricted as to withdrawal or use while the related bank guarantees are outstanding. Accounts Receivable, Net Accounts receivable are shown net of the allowance for doubtful accounts of $0.5 million as of September 30, 2012 and December 31, 2011. Inventories Inventories are stated at the lower of cost (principally first-in, first-out) or market. Inventories consist of (in thousands):
|  | September 30, |  | December 31, |
|  | 2012 |  | 2011 |
Materials |  | $ | 44,475 |  | $ | 57,169 |
Work in process |  | 23,780 |  | 20,118 |
Finished goods |  | 6,105 |  | 36,147 |
|  | $ | 74,360 |  | $ | 113,434 |
Cost Method Investment During the three months ended September 30, 2012, we completed an additional investment in a rapidly developing organic light emitting diode (“OLED”) equipment company (the “Investment”). Veeco has invested in this company’s Round D funding extension totaling $10.3 million, resulting in an 15.3% ownership of the preferred shares, and 12.0% ownership of the company. Since we do not exercise significant influence on the Investment, this investment is treated under the cost method in accordance with applicable accounting guidance. The fair value of this investment is not estimated because there are no identified events or changes in circumstances that may indicate an other-than-temporary decline in the fair value of the investment, and we are exempt from estimating interim fair values because the investment does not meet the definition of a publicly traded company. This investment is recorded in other assets in our Condensed Consolidated Balance Sheets as of September 30, 2012 and December 31, 2011. The total recorded investment as of September 30, 2012 and December 31, 2011 is $14.5 million and $4.2 million, respectively. In 2013, we invested an additional $1.6 million in the Investment. Accrued Warranty We estimate the costs that may be incurred under the warranties we provide and record a liability in the amount of such costs at the time the related revenue is recognized. Factors that affect our warranty liability include product failure rates, material usage and labor costs incurred in correcting product failures during the warranty period. This accrual is recorded in accrued expense and other current liabilities in our Condensed Consolidated Balance Sheets. We periodically assess the adequacy of our recognized warranty liability and adjust the amount as necessary. Changes in our warranty liability during the period are as follows (in thousands):
|  | September 30, |
|  | 2012 |  | 2011 |
Balance as of the beginning of period |  | $ | 8,731 |  | $ | 8,266 |
Warranties issued during the period |  | 2,486 |  | 5,988 |
Settlements made during the period |  | (6,389 | ) | (6,523 | )
Changes in estimate during the period |  | 1,418 |  | 1,259 |
Balance as of the end of period |  | $ | 6,246 |  | $ | 8,990 |
In the current year’s presentation we no longer include certain accrued installation costs in the accrued warranty balance; therefore, in order to conform the balance to current year presentation, we have reclassified $1.047 million and $0.972 million in 2012 and 2011, respectively, of the beginning balance of accrued warranty to accrued installation which, along with accrued warranty, is also a component of accrued expenses and other current liabilities.

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