Note 4 - Liabilities

Accrued expenses and other current liabilities

The components of accrued expenses and other current liabilities consist of:

	September 30, 2015		December 31, 2014
	(in thousands)
Payroll and related benefits	$	24,886	$	28,938
Warranty	6,546		5,411
Installation	2,112		2,861
Sales, use, and other taxes	1,633		1,776
Professional fees	2,480		2,752
Restructuring liability	718		1,428
Other	3,353		5,252

Total accrued liabilities	$	41,728	$	48,418

Other liabilities include accruals for costs related to customer training, royalties, and travel.

Warranty reserves

Warranties are typically valid for one year from the date of system final acceptance. Estimated warranty costs are determined by analyzing specific product and historical configuration statistics and regional warranty support costs. The estimate is affected by product failure rates, material usage, and labor costs incurred in correcting product failures during the warranty period. Unforeseen component failures or exceptional component performance can impact warranty costs. Changes in product warranty reserves include:

	(in thousands)
Warranty reserves - December 31, 2014	$	5,411
Warranties issued	5,316
Settlements made	(2,550		)
Changes in estimate	(1,631		)

Warranty reserves - September 30, 2015	$	6,546

Restructuring accruals

During the nine months ended September 30, 2015, additional accruals were recognized and payments made related to the 2014 closing of Veeco’s Ft. Collins, Colorado and Camarillo, California facilities. Business activities formerly conducted at these sites have been transferred to the Plainview, New York facility. In addition, Veeco is closing the Hyeongok-ri, South Korea facility. Veeco has accrued and paid for restructuring activities during the nine months ended September 30, 2015. Additional restructuring costs to be accrued for these activities are not expected to be significant.

	Personnel
	Severance and			Facility
	Related Costs			Closing Costs			Total
	(in thousands)
Restructuring accrual - December 31, 2014	$	1,428		$	—		$	1,428
Provision	2,421			1,088			3,509
Payments	(3,377		)	(842		)	(4,219		)

Restructuring accrual - September 30, 2015	$	472		$	246		$	718

Customer deposits and deferred revenue

Customer deposits totaled $32.4 million and $73.0 million at September 30, 2015 and December 31, 2014, respectively. The remainder of the balance relates to deferred revenue consisting of billings associated with customer contracts for which all revenue recognition criteria have not yet been met.

Long-term debt

Debt consists of a mortgage note payable with a carrying value of $1.6 million at September 30, 2015 and $1.8 million at December 31, 2014. The annual interest rate on the mortgage is 7.91%, and the final payment is due on January 1, 2020. The mortgage note payable is secured by the property currently held for sale. A discounted cash flow model was used to calculate a level 3 fair value estimate of $1.7 million at September 30, 2015 and $2.0 million at December 31, 2014.