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Balance Sheet Information | 3 Months Ended
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Mar. 31, 2014
Balance Sheet Information |
Balance Sheet Information | Note 4—Balance Sheet Information Cash and Cash Equivalents Cash and cash equivalents include cash and certain highly liquid investments. Highly liquid investments with maturities of three months or less when purchased may be classified as cash equivalents. Such items may include liquid money market accounts, U.S. treasuries, government agency securities and corporate debt. The investments that are classified as cash equivalents are carried at cost, which approximates fair value. Short-Term Investments Total available-for-sale securities and gains and losses in accumulated other comprehensive income (loss) consist of the following (in thousands):
|  | March 31, 2014 |
|  | Amortized Cost |  | Gains in Accumulated Other Comprehensive Income |  | Losses in Accumulated Other Comprehensive Income |  | Estimated Fair Value |
U.S. treasuries |  | $ | 130,889 |  | $ | 25 |  | $ | — |  | $ | 130,914 |
Corporate debt |  | 73,410 |  | 76 |  | (13 | ) | 73,473 |
Government agency securities |  | 59,004 |  | 11 |  | — |  | 59,015 |
Commercial paper |  | 4,000 |  | — |  | — |  | 4,000 |
Total available-for-sale securities |  | $ | 267,303 |  | $ | 112 |  | $ | (13 | ) | $ | 267,402 |
|  | December 31, 2013 |
|  | Amortized Cost |  | Gains in Accumulated Other Comprehensive Income |  | Losses in Accumulated Other Comprehensive Income |  | Estimated Fair Value |
U.S. treasuries |  | $ | 130,956 |  | $ | 22 |  | $ | (1 | ) | $ | 130,977 |
Corporate debt |  | 77,582 |  | 55 |  | (36 | ) | 77,601 |
Government agency securities |  | 61,004 |  | 9 |  | — |  | 61,013 |
Commercial paper |  | 11,947 |  | — |  | — |  | 11,947 |
Total available-for-sale securities |  | $ | 281,489 |  | $ | 86 |  | $ | (37 | ) | $ | 281,538 |
During the three months ended March 31, 2014 and 2013, available-for-sale securities were liquidated for total proceeds of $32.0 million and $101.2 million, respectively. For the three months ended March 31, 2014 there were no realized gains on these liquidations, which were all maturities of investments. For the three months ended March 31, 2013 the gross realized gains on these sales were $0.1 million. The cost of securities sold is based on specific identification. The table below shows the fair value of short-term investments that have been in an unrealized loss position for less than 12 months (in thousands):
|  | March 31, 2014 |
|  | Less than 12 months |  | Total |
|  | Estimated Fair Value |  | Gross Unrealized Losses |  | Estimated Fair Value |  | Gross Unrealized Losses |
Corporate debt |  | $ | 25,916 |  | $ | (13 | ) | $ | 25,916 |  | $ | (13 | )
Total |  | $ | 25,916 |  | $ | (13 | ) | $ | 25,916 |  | $ | (13 | )
|  | December 31, 2013 |
|  | Less than 12 months |  | Total |
|  | Estimated Fair Value |  | Gross Unrealized Losses |  | Estimated Fair Value |  | Gross Unrealized Losses |
Corporate debt |  | $ | 37,654 |  | $ | (36 | ) | $ | 37,654 |  | $ | (36 | )
U. S. treasuries |  | 29,068 |  | (1 | ) | 29,068 |  | (1 | )
Total |  | $ | 66,722 |  | $ | (37 | ) | $ | 66,722 |  | $ | (37 | )
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 March 31, 2014 and December 31, 2013 were temporary in nature and therefore did not recognize any impairment. Contractual maturities of available-for-sale debt securities are as follows (in thousands):
|  | March 31, 2014 |
|  | Estimated Fair Value |
Due in one year or less |  | $ | 207,913 |
Due in 1–2 years |  | 47,621 |
Due in 2–3 years |  | 11,868 |
Total available-for-sale securities |  | $ | 267,402 |
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 March 31, 2014 and December 31, 2013, restricted cash was $0.8 million and $2.7 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 presented net of allowance for doubtful accounts of $2.7 million and $2.4 million as of March 31, 2014 and December 31, 2013, respectively. We evaluate the collectability of accounts receivable based on a combination of factors. In cases where we become aware of circumstances that may impair a customer’s ability to meet its financial obligations subsequent to the original sale, we will record an allowance against amounts due, and thereby reduce the net recognized receivable to the amount the we reasonably believes will be collected. For all other customers, we recognize an allowance for doubtful accounts based on the length of time the receivables are past due and consideration of other factors such as industry conditions, the current business environment and its historical experience. Inventories Inventories are stated at the lower of cost (principally first-in, first-out) or market. Inventories consist of (in thousands):
|  | March 31, |  | December 31, |
|  | 2014 |  | 2013 |
Materials |  | $ | 27,486 |  | $ | 34,301 |
Work in process |  | 16,827 |  | 12,900 |
Finished goods |  | 7,760 |  | 12,525 |
|  | $ | 52,073 |  | $ | 59,726 |
Property, Plant and Equipment, Net As of March 31, 2014, we are holding $5.8 million of tools, that were previously used in our laboratories, for sale. These tools are carried in machinery and equipment, as a component of property, plant and equipment, net in our Condensed Consolidated Balance Sheets. These tools are the same type of tools we sell to our customers in the ordinary course of our business. During the three months ended March 31, 2014, we converted and sold $1.4 million of tools that we had previously used in our laboratories as Veeco Certified Equipment at an aggregate selling price of $2.3 million which is included in revenue in our Condensed Consolidated Statements of Operations. Cost Method Investment On September 28, 2010, we completed a $3.0 million investment in a rapidly developing organic light emitting diode (also known as OLED) equipment company (the “Investment”). We invested an additional $10.3 million and $1.2 million in the Investment during 2012 and 2011, respectively. In 2013, we invested an additional $2.4 million in the Investment in the form of bridge notes bearing 4% interest. The bridge notes are payable in equity at the time of a liquidity event or a qualifying equity investment round, otherwise they are payable in cash one year from the date of issuance. During the three months ended March 31, 2014, we invested an additional $0.2 million in the Investment in the form of additional bridge notes. Subsequent to quarter end, we invested an additional $0.6 million in the bridge notes. As of March 31, 2014 and December 31, 2013, we have a 15.4% ownership of the preferred shares, and effectively hold a 11.0% ownership interest of the total company. Since we do not exert significant influence on the Investment, this investment is treated under the cost method in accordance with applicable accounting guidance. This investment is recorded in other assets in our Condensed Consolidated Balance Sheets as of March 31, 2014 and December 31, 2013. Customer Deposits and Deferred Revenue As of March 31, 2014 and December 31, 2013, we had customer deposits of $31.3 million and $27.5 million, respectively recorded as a component of customer deposits and deferred revenue. 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 expenses 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):
|  | March 31, |
|  | 2014 |  | 2013 |
Balance as of the beginning of period |  | $ | 5,662 |  | $ | 4,942 |
Warranties issued during the period |  | 643 |  | 478 |
Settlements made during the period |  | (1,195 | ) | (1,341 | )
Changes in estimate during the period |  | — |  | — |
Balance as of the end of period |  | $ | 5,110 |  | $ | 4,079 |
Mortgage Payable We have a mortgage payable with approximately $2.1 million outstanding as of March 31, 2014 and December 31, 2013. The mortgage accrues interest at an annual rate of 7.91%, and the final payment is due on January 1, 2020. We estimate the fair value of the mortgage as of March 31, 2014 and December 31, 2013 was approximately $2.2 million and $2.3 million, respectively. Accumulated Other Comprehensive Income The components of accumulated other comprehensive income are (in thousands):
As of March 31, 2014 |  | Gross |  | Taxes |  | Net |
Translation adjustments |  | $ | 5,851 |  | $ | (392 | ) | $ | 5,459 |
Minimum pension liability |  | (1,160 | ) | 424 |  | (736 | )
Unrealized gain on available-for-sale securities |  | 99 |  | (18 | ) | 81 |
Accumulated other comprehensive income |  | $ | 4,790 |  | $ | 14 |  | $ | 4,804 |
As of December 31, 2013 |  | Gross |  | Taxes |  | Net |
Translation adjustments |  | $ | 5,718 |  | $ | (392 | ) | $ | 5,326 |
Minimum pension liability |  | (1,160 | ) | 424 |  | (736 | )
Unrealized gain on available-for-sale securities |  | 49 |  | (18 | ) | 31 |
Accumulated other comprehensive income |  | $ | 4,607 |  | $ | 14 |  | $ | 4,621 |
Common Stock During the three months ended March 31, 2014, 355,930 shares of common stock were issued as a result of stock option exercises and 12,532 restricted stock awards vested, for which, 4,841 shares were withheld to cover taxes and cancelled.

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