6. Balance Sheet Information

Short-Term Investments

Available-for-sale securities consist of the following (in thousands):

	December 31, 2012

	Amortized Cost		Gains in Accumulated Other Comprehensive Income		Losses in Accumulated Other Comprehensive Income		Estimated Fair Value
Treasury bills	$	184,102	$	76	$	—	$	184,178
Government agency securities		8,056		—		—		8,056

Total available-for-sale securities	$	192,158	$	76	$	—	$	192,234

During the year ended December 31, 2012, available-for-sale securities were sold for total proceeds of $244.9 million. The gross realized gains on these sales were minimal for the year ended December 31, 2012. For purpose of determining gross realized gains, the cost of securities sold is based on specific identification. The change in the net unrealized holding loss on available-for-sale securities amounted to $0.1 million for the year ended December 31, 2012, and has been included in accumulated other comprehensive income. The tax impact on the unrealized gains, which is excluded from the table above, was less than $0.1 million.

	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		114,641		124		(7	)		114,758

Total available-for-sale securities	$	273,373	$	232	$	(14	)	$	273,591

During the year ended December 31, 2011, available-for-sale securities were sold for total proceeds of $707.6 million. The gross realized gains on these sales were $0.4 million for the year ended December 31, 2011. For purpose of determining gross realized gains, the cost of securities sold is based on specific identification. The change in the net unrealized holding gain on available-for-sale securities amounted to $0.2 million for the year ended December 31, 2011, and has been included in accumulated other comprehensive income. The tax impact on the unrealized gains, which was excluded from the table above, was $0.1 million.

As of December 31, 2012 we did not hold any short-term investments that were in a loss position. As of December 31, 2011 we had $33.5 million in short-term investments that had an aggregate unrealized fair value loss of less than $0.2 million none of which had been in an unrealized loss position for 12 months or longer. For investments that were in an unrealized loss position, we held the securities through maturity.

Contractual maturities of available-for-sale debt securities as of December 31, 2012 are as follows (in thousands):

	Estimated Fair Value

Due in one year or less	$	120,621
Due in 1 - 2 years		71,613

Total investments in debt securities	$	192,234

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 December 31, 2012 and 2011, restricted cash consisted of $2.0 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 December 31, 2012 and 2011.

Inventories (in thousands):

	December 31,

	2012		2011
Materials	$	36,523	$	57,169
Work in process		13,363		20,118
Finished goods		9,921		36,147

	$	59,807	$	113,434

Property, Plant and Equipment (in thousands):

	December 31,

	December 31,				Estimated Useful Lives
	2012		2011		Estimated Useful Lives
Land	$	12,535	$	12,535
Building and improvements		49,498		34,589	10 - 40 years
Machinery and equipment		110,150		102,241	3 - 10 years
Leasehold improvements		5,677		6,025	3 - 7 years

Gross property, plant and equipment at cost		177,860		155,390
Less: accumulated depreciation and amortization		79,558		69,323

Net property, plant and equipment	$	98,302	$	86,067

For the years ended December 31, 2012, 2011 and 2010, depreciation expense was $11.3 million, $8.2 million and $7.1 million, respectively.

Goodwill and Indefinite-Lived Intangible Assets

In accordance with the relevant accounting guidance related to goodwill and other intangible assets, we conducted our annual impairment test of goodwill and indefinite-lived intangible assets during the fourth quarters of 2012 and 2011, using October 1^st as our measurement date, and utilizing a discounted future cash flow approach as described in Note 1. This was consistent with the approach used in previous years. Based upon the results of such assessments, we determined that no goodwill and indefinite-lived intangible asset impairment existed as of October 1, 2012 and 2011, respectively.

Changes in our goodwill are as follows (in thousands):

	December 31,

	2012		2011
Beginning Balance	$	55,828	$	52,003
Write-off (see Note 3. Discontinued Operations)		—		(10,836	)
Acquisition (see Note 5. Business Combinations)		—		14,661

Ending Balance	$	55,828	$	55,828

As of December 31, 2012 and 2011, we had $2.9 million of indefinite-lived intangible assets consisting of trademarks and tradenames, which are included in the accompanying Consolidated Balance Sheets in the caption intangible assets, net.

Intangible Assets

	December 31, 2012									December 31, 2011

(in thousands)	Purchased technology			Other intangible assets			Total intangible assets			Purchased technology			Other intangible assets			Total intangible assets
Gross intangible assets	$	109,248		$	19,635		$	128,883		$	109,248		$	19,635		$	128,883
Less accumulated amortization		(93,436	)		(14,473	)		(107,909	)		(89,620	)		(13,381	)		(103,001	)

Intangible assets, net	$	15,812		$	5,162		$	20,974		$	19,628		$	6,254		$	25,882

The estimated aggregate amortization expense for intangible assets with definite useful lives for each of the next five fiscal years is as follows (in thousands):


2013	$	3,556
2014		2,919
2015		2,752
2016		2,530
2017		1,544

In accordance with the relevant accounting guidance related to the impairment or disposal of long-lived assets, we performed an analysis as of December 31, 2012 and 2011 of our definite-lived intangible and long-lived assets.

As a result of the delay in filing this report and because our last annual impairment test was performed as of October 1, 2012, we were required to evaluate the impact of events and circumstances occurring through the date of the filing of this report. We considered several factors including our current year financial projections, changes in industry or market conditions, political factors, legal factors, regulatory factors, whether triggering events exist, and performed other analyses to assess whether our goodwill and/or long-lived assets are impaired. Based on our evaluation of the foregoing considerations, we concluded that no impairment exists through the date of this filing.

Cost Method Investment

On September 28, 2010, Veeco completed a $3 million investment in a rapidly developing organic light emitting diode (also known as OLED) equipment company (the "Investment"). Veeco invested an additional $10.3 million and $1.2 million in the Investment during 2012 and 2011, respectively. As of December 31, 2012, we have a 15.3% ownership of the preferred shares, and effectively hold a 12.0% 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. The fair value of this investment is not estimated because there are no identified events or changes in circumstances that may have a significant adverse effect on the fair value of the investment and the investment does not meet the definition of a publicly traded company. This investment is recorded in other assets in our Consolidated Balance Sheets as of December 31, 2012 and 2011. In 2013, Veeco invested an additional $1.6 million in the Investment.

Accrued Expenses and Other Current Liabilities

	December 31,

(in thousands)	2012		2011
Payroll and related benefits	$	14,581	$	19,017
Sales, use and other taxes		6,480		6,315
Customer deposits		32,719		57,075
Warranty		4,942		8,731
Restructuring liability		1,875		956
Other		13,663		14,532

	$	74,260	$	106,626

Accrued Warranty

Typically, we provide our customers a one year manufacturer's warranty from the date of final acceptance on the products they purchase from us. We estimate the costs that may be incurred under the warranty we provide for our products and recognize 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. Changes in our warranty liability during the year are as follows (in thousands):

	December 31,

	2012			2011
Balance as of the beginning of year	$	8,731		$	8,266
Warranties issued during the year		3,563			7,366
Settlements made during the year		(7,060	)		(8,462	)
Changes in estimate during the period		(292	)		1,561

Balance as of the end of year	$	4,942		$	8,731

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.

Accumulated Other Comprehensive Income

The components of accumulated other comprehensive income are (in thousands):

December 31, 2012	Gross			Taxes			Net

Translation adjustments	$	7,040		$	(339	)	$	6,701
Defined benefit pension plan		(1,285	)		510			(775	)
Unrealized gain (loss) on available for sale securities		76			(29	)		47

Accumulated other comprehensive income	$	5,831		$	142		$	5,973

December 31, 2011	Gross			Taxes			Net

Translation adjustments	$	8,111		$	(1,022	)	$	7,089
Defined benefit pension plan		(1,069	)		431			(638	)
Unrealized gain (loss) on available for sale securities		218			(79	)		139

Accumulated other comprehensive income	$	7,260		$	(670	)	$	6,590