10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2021

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 0-16244

VEECO INSTRUMENTS INC.

(Exact Name of Registrant as Specified in Its Charter)

Delaware	11-2989601
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
Terminal Drive Plainview, New York	11803
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code:

(516) 677-0200

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	VECO	The NASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes ☒  No ◻

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).Yes ☒  No ◻

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒	Accelerated filer ☐
Non-accelerated filer ☐	Smaller reporting company ☐
	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ☐  No ☒

As of July 28, 2021, there were 50,348,804 shares of the registrant’s common stock outstanding.

VEECO INSTRUMENTS INC.

INDEX

Safe Harbor Statement	1
PART I—FINANCIAL INFORMATION	4
Item 1. Financial Statements	4
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
Item 3. Quantitative and Qualitative Disclosures about Market Risk	37
Item 4. Controls and Procedures	38
PART II—OTHER INFORMATION	38
Item 1. Legal Proceedings	38
Item 1A. Risk Factors	39
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	39
Item 3. Defaults Upon Senior Securities	39
Item 4. Mine Safety Disclosures	39
Item 5. Other Information	39
Item 6. Exhibits	40
SIGNATURES	41

Safe Harbor Statement

This quarterly report on Form 10-Q (the “Report”) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Discussions containing such forward-looking statements may be found in Part I - Items 1, 2, and 3 hereof, as well as within this Report generally. In addition, when used in this Report, the words “believes,” “anticipates,” “expects,” “estimates,” “targets,” “plans,” “intends,” “will,” and similar expressions related to the future are intended to identify forward-looking statements. All forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from projected results.

In addition, the preparation of financial statements in conformity with U.S. Generally Accepted Accounting Principles (“U.S. GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Although these estimates and assumptions are based on knowledge of current events, including the potential impact of the COVID-19 pandemic on our business, and planned actions to be undertaken in the future, they may ultimately differ from actual results. Operating results for the three and six months ended June 30, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021. All estimates and assumptions are subject to a number of risks and uncertainties that could cause actual results to differ materially from these estimates and assumptions.

The risks and uncertainties of Veeco Instruments Inc. (together with its consolidated subsidiaries, “Veeco,” the “Company,” “we,” “us,” and “our,” unless the context indicates otherwise) include, without limitation, those set forth under the heading “Risk Factors” Part 1, Item 1A in our 2020 Form 10-K, and the following:

Risks Related to Our Business, Finance and Operations

● The effects of the COVID-19 pandemic have strained and have threatened to negatively impact our businesses and operations, and the duration and extent to which COVID-19 may impact our future results of operations and overall financial performance remains uncertain;

● Unfavorable market conditions have adversely affected, and may continue to adversely affect, our operating results;

● The timing of our orders, shipments, and revenue recognition may cause our quarterly operating results to fluctuate significantly;

● Our sales cycle is long and unpredictable;

● Our backlog is subject to customer cancellation or modification which could result in decreased sales, increased inventory obsolescence, and liabilities to our suppliers for products no longer needed;

● We may be required to take impairment charges on assets;

● We are exposed to risks associated with business combinations, acquisitions, strategic investments and divestitures;

● We have adopted certain measures that may have anti-takeover effects which may make an acquisition of our Company by another company more difficult;

● We may not have the ability to raise the funds necessary to settle for cash conversions of our 2.70% Convertible Senior Notes due 2023 (the “2023 Notes”), our 3.50% Convertible Senior Notes due 2025 (the “2025 Notes”), or our 3.75% Convertible Senior Notes due 2027 (the “2027 Notes”) (the 2023 Notes, 2025 Notes, and 2027 Notes, together, the “Notes”) or to repurchase the Notes for cash upon a fundamental change, and any future debt may contain limitations on our ability to pay cash upon conversion or repurchase of the Notes;

1

● The conditional conversion features of the 2023 Notes, 2025 Notes, and 2027 Notes, if triggered, may materially and adversely affect our financial condition and operating results;

● The accounting method for convertible debt securities that may be settled in cash, such as the Notes, could have a material effect on our reported financial results;

● Issuance of our common stock, if any, upon conversion of the Notes, as well as the capped call transactions and the hedging activities of the option counterparties, may impair or reduce our ability to utilize our net operating loss carryforwards or our research and development credits carryforwards in the future;

● The capped call transactions may affect the value of the 2027 Notes and our common stock;

Risks Associated with Operating a Global Business

● We are exposed to risks of operating businesses outside the United States;

● Changes in U.S. trade policy and export controls and ongoing trade disputes between the U.S. and China have adversely affected, and may continue to adversely affect, our business, results of operations, and financial condition;

● We may be unable to obtain required export licenses for the sale of our products;

● We are exposed to various risks associated with global regulatory requirements;

● We may be exposed to liabilities under the Foreign Corrupt Practices Act and other similar laws;

● Our operating results may be adversely affected by tightening credit markets;

● We are subject to foreign currency exchange risks;

Risks Related to Intellectual Property and Cybersecurity

● Disruptions in our information technology systems or data security incidents could result in significant financial, legal, regulatory, business, and reputational harm to us;

● We may be unable to effectively enforce and protect our intellectual property rights;

● We may be subject to claims of intellectual property infringement by others;

Risks Associated with Our Industry

● We face significant competition;

● We operate in industries characterized by rapid technological change;

● Certain of our sales are dependent on the demand for consumer electronics, which can experience significant volatility due to seasonal and other factors;

● We have a concentrated customer base, located primarily in a limited number of regions, which operates in highly concentrated industries;

● The cyclicality of the industries we serve directly affects our business;

2

● Our failure to estimate customer demand accurately could result in inventory obsolescence, liabilities to our suppliers for products no longer needed, and manufacturing interruptions or delays which could affect our ability to meet customer demand;

● Our failure to successfully manage our outsourcing activities or failure of our outsourcing partners to perform as anticipated could adversely affect our results of operations;

● We rely on a limited number of suppliers, some of whom are our sole source for particular components;

General Risk Factors

● The price of our common shares is volatile and could decrease;

● We are subject to risks of non-compliance with environmental, health, and safety regulations;

● Our inability to attract, retain, and motivate employees could have a material adverse effect on our business;

● Changes in accounting pronouncements or taxation rules or practices may adversely affect our financial results; and

● Our income taxes may change.

Consequently, such forward looking statements and estimates should be regarded solely as the current plans and beliefs of Veeco. We do not undertake any obligation to update any forward looking statements to reflect future events or circumstances after the date of such statements.

3

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

Veeco Instruments Inc. and Subsidiaries

Consolidated Balance Sheets

(in thousands, except share amounts)

	June 30,		December 31,
	2021		2020
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	114,747	$	129,625
Restricted cash		640		658
Short-term investments		214,635		189,771
Accounts receivable, net		108,312		79,991
Contract assets		14,084		21,246
Inventories		164,041		145,906
Deferred cost of sales		595		433
Prepaid expenses and other current assets		21,570		19,301
Total current assets		638,624		586,931
Property, plant, and equipment, net		82,208		65,271
Operating lease right-of-use assets		27,768		10,275
Intangible assets, net		39,855		46,185
Goodwill		181,943		181,943
Deferred income taxes		1,440		1,440
Other assets		3,671		6,019
Total assets	$	975,509	$	898,064
Liabilities and stockholders' equity
Current liabilities:
Accounts payable	$	55,045	$	33,656
Accrued expenses and other current liabilities		52,436		44,876
Customer deposits and deferred revenue		70,569		67,235
Income taxes payable		1,363		914
Total current liabilities		179,413		146,681
Deferred income taxes		5,257		5,240
Long-term debt		328,215		321,115
Long-term operating lease liabilities		31,036		6,305
Other liabilities		7,853		10,349
Total liabilities		551,774		489,690
Stockholders' equity:
Preferred stock, $0.01 par value; 500,000 shares authorized; no shares issued and outstanding.		—		—
Common stock, $0.01 par value; 120,000,000 shares authorized; 50,348,804 shares issued and outstanding at June 30, 2021 and 49,723,751 shares issued and outstanding at December 31, 2020		503		497
Additional paid-in capital		1,119,908		1,113,352
Accumulated deficit		(698,479)		(707,321)
Accumulated other comprehensive income		1,803		1,846
Total stockholders' equity		423,735		408,374
Total liabilities and stockholders' equity	$	975,509	$	898,064

See accompanying Notes to the Consolidated Financial Statements.

4

Veeco Instruments Inc. and Subsidiaries

Consolidated Statements of Operations

(in thousands, except per share amounts)

(unaudited)

	Three months ended June 30,				Six months ended June 30,
	2021		2020		2021		2020
Net sales	$	146,344	$	98,637	$	280,059	$	203,139
Cost of sales		86,178		56,743		164,978		114,826
Gross profit		60,166		41,894		115,081		88,313
Operating expenses, net:
Research and development		22,553		19,254		44,398		38,449
Selling, general, and administrative		21,466		17,818		41,722		36,123
Amortization of intangible assets		2,976		3,834		6,330		7,671
Restructuring		—		472		—		1,097
Asset impairment		—		281		—		281
Other operating expense (income), net		(81)		(174)		(36)		(283)
Total operating expenses, net		46,914		41,485		92,414		83,338
Operating income (loss)		13,252		409		22,667		4,975
Interest income		235		427		370		1,227
Interest expense		(6,820)		(6,041)		(13,578)		(11,706)
Loss on extinguishment of debt		—		(3,046)		—		(3,046)
Income (loss) before income taxes		6,667		(8,251)		9,459		(8,550)
Income tax expense (benefit)		319		51		617		319
Net income (loss)	$	6,348	$	(8,302)	$	8,842	$	(8,869)
Income (loss) per common share:
Basic	$	0.13	$	(0.17)	$	0.18	$	(0.18)
Diluted	$	0.12	$	(0.17)	$	0.17	$	(0.18)
Weighted average number of shares:
Basic		48,743		48,109		48,758		48,147
Diluted		53,942		48,109		53,539		48,147

See accompanying Notes to the Consolidated Financial Statements.

5

Veeco Instruments Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income (Loss)

(in thousands)

(unaudited)

	Three months ended June 30,				Six months ended June 30,
	2021		2020		2021		2020
Net income (loss)	$	6,348	$	(8,302)	$	8,842	$	(8,869)
Other comprehensive income (loss), net of tax:
Unrealized gain (loss) on available-for-sale securities		(15)		(148)		(4)		53
Change in currency translation adjustments		(9)		18		(39)		(30)
Total other comprehensive income (loss), net of tax		(24)		(130)		(43)		23
Total comprehensive income (loss)	$	6,324	$	(8,432)	$	8,799	$	(8,846)

See accompanying Notes to the Consolidated Financial Statements.

6

Veeco Instruments Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

	Six months ended June 30,
	2021		2020
Cash Flows from Operating Activities
Net income (loss)	$	8,842	$	(8,869)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization		13,189		15,372
Non-cash interest expense		7,100		6,778
Deferred income taxes		17		191
Share-based compensation expense		7,605		6,620
Loss on extinguishment of debt		—		3,046
Asset impairment		—		281
Changes in operating assets and liabilities:
Accounts receivable and contract assets		(21,158)		(9,454)
Inventories and deferred cost of sales		(18,298)		(4,520)
Prepaid expenses and other current assets		4,489		(3,578)
Accounts payable and accrued expenses		14,046		5,820
Customer deposits and deferred revenue		3,334		3,470
Income taxes receivable and payable, net		449		93
Other, net		1,114		2,300
Net cash provided by (used in) operating activities		20,729		17,550
Cash Flows from Investing Activities
Capital expenditures		(9,082)		(1,957)
Proceeds from the sale of investments		130,398		103,630
Payments for purchases of investments		(156,020)		(100,265)
Proceeds from held for sale assets, net of costs to sell		—		9,503
Net cash provided by (used in) investing activities		(34,704)		10,911
Cash Flows from Financing Activities
Proceeds from issuance of 2025 Notes and 2027 Notes, net of issuance costs		—		121,946
Purchase of capped calls		—		(10,313)
Repurchase of 2023 Notes		—		(81,240)
Proceeds (net of tax withholdings) from option exercises and employee stock purchase plan		1,865		1,592
Restricted stock tax withholdings		(2,747)		(1,518)
Net cash provided by (used in) financing activities		(882)		30,467
Effect of exchange rate changes on cash and cash equivalents		(39)		(29)
Net increase (decrease) in cash, cash equivalents, and restricted cash		(14,896)		58,899
Cash, cash equivalents, and restricted cash - beginning of period		130,283		129,951
Cash, cash equivalents, and restricted cash - end of period	$	115,387	$	188,850
Supplemental Disclosure of Cash Flow Information
Interest paid	$	4,160	$	5,508
Net income taxes paid (refunds received)		(196)		66
Non-cash activities
Capital expenditures included in accounts payable and accrued expenses		15,400		515
Net transfer of property, plant and equipment to inventory		—		526
Right-of-use assets obtained in exchange for lease obligations		20,353		913

See accompanying Notes to the Consolidated Financial Statements.

7

Veeco Instruments Inc. and Subsidiaries

Notes to the Consolidated Financial Statements

(unaudited)

Note 1 — Basis of Presentation

The accompanying unaudited Consolidated Financial Statements of Veeco have been prepared in accordance with U.S. GAAP as defined in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification 270 for interim financial information and with the instructions to Rule 10-01 of Securities and Exchange Commission Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements as the interim information is an update of the information that was presented in Veeco’s most recent annual financial statements. For further information, refer to Veeco’s Consolidated Financial Statements and Notes thereto included in the Annual Report on Form 10-K for the year ended December 31, 2020 (“2020 Form 10-K”). In the opinion of management, all adjustments considered necessary for a fair presentation have been included. All such adjustments are of a normal, recurring nature.

Veeco reports interim quarters on a 13-week basis ending on the last Sunday of each quarter. The fourth quarter always ends on the last day of the calendar year, December 31. The 2021 interim quarters end on April 4, July 4, and October 3, and the 2020 interim quarters ended on March 29, June 28, and September 27. These interim quarters are reported as March 31, June 30, and September 30 in Veeco’s interim consolidated financial statements.

The preparation of financial statements in conformity with U.S GAAP requires the Company’s management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Although these estimates are based on management’s knowledge of current events and actions it may undertake in the future, actual results may differ from these estimates. In particular, the COVID-19 pandemic has adversely impacted and is likely to further adversely impact the Company’s business and markets, including the Company’s workforce and operations and the operations of the Company’s customers, suppliers, and business partners. The full extent to which the pandemic will directly or indirectly impact the Company's business, results of operations and financial condition, including sales, expenses, manufacturing, research and development costs, reserves and allowances, fair value measurements, and asset impairment charges, will depend on future developments that are highly uncertain and difficult to predict. These developments include, but are not limited to, the duration and spread of the outbreak, its severity, the actions to contain the virus or address its impact, governmental actions to contain the spread of the pandemic and respond to the reduction in global economic activity, and how quickly and to what extent normal economic and operating conditions can resume.

Revenue Recognition

Revenue is recognized upon the transfer of control of the promised product or service to the customer in an amount that reflects the consideration the Company expects to receive in exchange for such product or service. The Company’s contracts with customers generally do not contain variable consideration. In the rare instances where variable consideration is included, the Company estimates the amount of variable consideration and determines what portion of that, if any, has a high probability of significant subsequent revenue reversal, and if so, that amount is excluded from the transaction price. The Company’s contracts with customers frequently contain multiple deliverables, such as systems, upgrades, components, spare parts, installation, maintenance, and service plans. Judgment is required to properly identify the performance obligations within a contract and to determine how the revenue should be allocated among the performance obligations. The Company also evaluates whether multiple transactions with the same customer or related parties should be considered part of a single contract based on an assessment of whether the contracts or agreements are negotiated or executed within a short time frame of each other or if there are indicators that the contracts are negotiated in contemplation of one another.

When there are separate units of accounting, the Company allocates revenue to each performance obligation on a relative stand-alone selling price basis. The stand-alone selling prices are determined based on the prices at which the Company separately sells the systems, upgrades, components, spare parts, installation, maintenance, and service plans. For items

8

Veeco Instruments Inc. and Subsidiaries

Notes to the Consolidated Financial Statements - continued

(unaudited)

that are not sold separately, the Company estimates stand-alone selling prices generally using an expected cost plus margin approach.

Most of the Company’s revenue is recognized at a point in time when the performance obligation is satisfied. The Company considers many facts when evaluating each of its sales arrangements to determine the timing of revenue recognition, including its contractual obligations and the nature of the customer’s post-delivery acceptance provisions. The Company’s system sales arrangements, including certain upgrades, generally include field acceptance provisions that may include functional or mechanical test procedures. For many of these arrangements, a customer source inspection of the system is performed in the Company’s facility, test data is sent to the customer documenting that the system is functioning to the agreed upon specifications prior to delivery, or other quality assurance testing is performed internally to ensure system functionality prior to shipment. Historically, such source inspection or test data replicates the field acceptance provisions that are performed at the customer’s site prior to final acceptance of the system. When the Company objectively demonstrates that the criteria specified in the contractual acceptance provisions are achieved prior to delivery either through customer testing or the Company’s historical experience of its tools meeting specifications, transfer of control of the product to the customer is considered to have occurred and revenue is recognized upon system delivery since there is no substantive contingency remaining related to the acceptance provisions at that date. For new products, new applications of existing products, or for products with substantive customer acceptance provisions where the Company cannot objectively demonstrate that the criteria specified in the contractual acceptance provisions have been achieved prior to delivery, revenue and the associated costs are deferred. The Company recognizes such revenue and costs upon obtaining objective evidence that the acceptance provisions can be achieved, assuming all other revenue recognition criteria have been met.

In certain cases the Company’s contracts with customers contain a billing retention, which is billed by the Company and payable by the customer when field acceptance provisions are completed. Revenue recognized in advance of the amount that has been billed is recorded as a contract asset on the Consolidated Balance Sheets.

The Company recognizes revenue related to maintenance and service contracts over time based upon the respective contract term. Installation revenue is recognized over time as the installation services are performed. The Company recognizes revenue from the sales of components, spare parts, and specified service engagements at a point in time, which is typically consistent with the time of delivery in accordance with the terms of the applicable sales arrangement.

The Company may receive customer deposits on system transactions. The timing of the transfer of goods or services related to the deposits is either at the discretion of the customer or expected to be within one year from the deposit receipt. As such, the Company does not adjust transaction prices for the time value of money. Incremental direct costs incurred related to the acquisition of a customer contract, such as sales commissions, are expensed as incurred since the expected amortization period is one year or less.

The Company has elected to treat shipping and handling costs as a fulfillment activity, and the Company includes such costs in cost of sales when the Company recognizes revenue for the related goods. Taxes assessed by governmental authorities that are collected by the Company from a customer are excluded from revenue.

Inventories

Inventories are stated at the lower of cost or net realizable value, with cost determined on a first-in, first-out basis. Each quarter the Company assesses the valuation and recoverability of all inventories: materials (raw materials, spare parts, and service inventory); work-in-process; and finished goods. Obsolete inventory or inventory in excess of management’s estimated usage requirement is written down to its estimated net realizable value if less than cost. The Company evaluates usage requirements by analyzing historical usage, anticipated demand, alternative uses of materials, and other qualitative factors. Unanticipated changes in demand for the Company’s products may require a write down of

9

Veeco Instruments Inc. and Subsidiaries

Notes to the Consolidated Financial Statements - continued

(unaudited)

inventory, which would be reflected in cost of sales in the period the revision is made. Inventory acquired as part of a business combination is recorded at fair value on the date of acquisition.

Recently Adopted Accounting Standards

The Company adopted ASU 2019-12: Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes in the second quarter of 2020, effective as of the beginning of fiscal year 2020. This ASU simplifies the accounting for income taxes by eliminating certain exceptions to the general principles and simplifying several aspects of ASC 740, Income Taxes, including, but not limited to, requirements related to the following: a) exception to the incremental approach for intraperiod tax allocation; b) the tax basis step-up in goodwill obtained in a transaction that is not a business combination; c) ownership changes in investments - changes from a subsidiary to an equity method investment; d) separate financial statements of entities not subject to tax; e) interim-period accounting for enacted changes in tax law; and f) the year-to-date loss limitation in interim-period tax accounting. The adoption did not have a material impact on the Company’s consolidated financial statements as of the date of adoption.

Recent Accounting Standards Not Yet Adopted

In August 2020, the FASB issued ASU 2020-06: Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. This standard simplifies the accounting for convertible debt instruments by removing the separation models for convertible debt with a cash conversion feature, as well as convertible instruments with a beneficial conversion feature. As a result, entities will account for a convertible debt instrument wholly as debt, unless certain other conditions are met. The elimination of these models will reduce non-cash interest expense for entities that have issued a convertible instrument that was within the scope of those models before the adoption of ASU 2020-06. Additionally, ASU 2020-06 requires the application of the if-converted method for calculating diluted earnings per share, and precludes the use of the treasury stock method for certain debt instruments. The provisions of ASU 2020-06 are applicable for fiscal years beginning after December 15, 2021. The Company’s 2023 Notes, 2025 Notes, and 2027 Notes all are currently accounted for using the separation models for convertible debt with a cash conversion feature, and therefore upon adoption of ASU 2020-06 in the first quarter of 2022, the Company expects a decrease in non-cash interest expense. Additionally, the Company will be required to use the if-converted method when calculating diluted earnings (loss) per share, which will result in an increase in income available to common shareholders, as well as an increase in diluted shares outstanding. The Company is evaluating the permitted transition methods, which includes either a modified retrospective or full retrospective method.

i

10

Veeco Instruments Inc. and Subsidiaries

Notes to the Consolidated Financial Statements - continued

(unaudited)

Note 2 — Income (Loss) Per Common Share

Basic income (loss) per share is calculated by dividing net income (loss) by the weighted average number of shares outstanding during the period. Diluted income per share is calculated by dividing net income by the weighted average number of shares used to calculate basic income (loss) per share plus the weighted average number of common share equivalents outstanding during the period. The dilutive effect of outstanding options to purchase common stock and share-based awards is considered in diluted income per share by application of the treasury stock method. The dilutive effect of performance share units is included in diluted income per common share if the performance targets have been achieved, or would have been achieved if the reporting date was the end of the contingency period. The Company has determined that it has the ability and intent to settle the principal amount of its convertible senior notes in cash, and the excess of the principal portion in shares of its common stock. As such, the Company accounts for the conversion spread using the treasury stock method, and the shares issuable upon conversion of the Notes are not included in the calculation of diluted earnings per share except to the extent that the conversion value of the Notes exceeds their principal amount and if the effect would be dilutive. The computations of basic and diluted income (loss) per share for the three and six months ended June 30, 2021 and 2020 are as follows:

	Three months ended June 30,				Six months ended June 30,
	2021		2020		2021		2020
	(in thousands, except per share amounts)
Net income (loss)	$	6,348	$	(8,302)	$	8,842	$	(8,869)
Net income (loss) per common share:
Basic	$	0.13	$	(0.17)	$	0.18	$	(0.18)
Diluted	$	0.12	$	(0.17)	$	0.17	$	(0.18)
Basic weighted average shares outstanding		48,743		48,109		48,758		48,147
Dilutive effect of share-based awards		1,707		—		1,553
Dilutive effect of the 2027 Notes		3,492		—		3,228		—
Diluted weighted average shares outstanding		53,942		48,109		53,539		48,147
Common share equivalents excluded from the diluted weighted average shares outstanding since the Company incurred a net loss and their effect would be antidilutive		N/A		712		N/A		671
Potentially dilutive shares excluded from the diluted calculation as their effect would be antidilutive		449		1,194		452		1,132
Maximum potential shares to be issued for settlement of the 2023, 2025, and 2027 Notes excluded from the diluted calculation as their effect would be antidilutive due to a net loss or the fact that the conversion value of the Notes did not exceed their principal amount		8,811		15,354		8,811		15,354

Note 3 — Assets

Investments

Short-term investments are generally classified as available-for-sale and reported at fair value, with unrealized gains and losses, net of tax, presented as a separate component of stockholders’ equity under the caption “Accumulated other comprehensive income” in the Consolidated Balance Sheets. These securities may include U.S. treasuries, government agency securities, corporate debt, and commercial paper, all with maturities of greater than three months when purchased. All realized gains and losses and unrealized losses resulting from declines in fair value that are other than temporary are included in “Other operating expense (income), net” in the Consolidated Statements of Operations.

11

Veeco Instruments Inc. and Subsidiaries

Notes to the Consolidated Financial Statements - continued

(unaudited)

Fair value is the price that would be received for an asset or the amount paid to transfer a liability in an orderly transaction between market participants. Veeco classifies certain assets based on the following fair value hierarchy:

Level 1: Quoted prices in active markets that are unadjusted and accessible at the measurement date for identical, unrestricted assets or liabilities;

Level 2: Quoted prices for identical assets and liabilities in markets that are not active, quoted prices for similar assets and liabilities in active markets or financial instruments for which significant inputs are observable, either directly or indirectly; and

Level 3: Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.

A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Veeco has evaluated the estimated fair value of financial instruments using available market information and valuations as provided by third-party sources. The use of different market assumptions or estimation methodologies could have a significant effect on the estimated fair value amounts.

The following table presents the portion of Veeco’s assets that were measured at fair value on a recurring basis at June 30, 2021 and December 31, 2020:

	Level 1		Level 2		Level 3		Total
	(in thousands)
June 30, 2021
Cash equivalents
Certificate of deposits and time deposits	$	60,479	$	—	$	—	$	60,479
Corporate debt		—		—		—		—
Commercial paper		—		—		—		—
Money market cash		320		—		—		320
Total	$	60,799	$	—	$	—	$	60,799
Short-term investments
U.S. treasuries	$	124,129	$	—	$	—	$	124,129
Government agency securities		—		7,255		—		7,255
Corporate debt		—		65,666		—		65,666
Commercial paper		—		17,585		—		17,585
Total	$	124,129	$	90,506	$	—	$	214,635
December 31, 2020
Cash equivalents
Certificate of deposits and time deposits	$	59,168	$	—	$	—	$	59,168
Commercial paper		—		2,000		—		2,000
U.S. treasuries		24,997		—		—		24,997
Total	$	84,165	$	2,000	$	—	$	86,165
Short-term investments
U.S. treasuries	$	149,219	$	—	$	—	$	149,219
Corporate debt		—		32,554		—		32,554
Commercial paper		—		7,998		—		7,998
Total	$	149,219	$	40,552	$	—	$	189,771

There were no transfers between fair value measurement levels during the three and six months ended June 30, 2021.

12

Veeco Instruments Inc. and Subsidiaries

Notes to the Consolidated Financial Statements - continued

(unaudited)

At June 30, 2021 and December 31, 2020, the amortized cost and fair value of available-for-sale securities consist of:

			Gross		Gross
	Amortized		Unrealized		Unrealized		Estimated
	Cost		Gains		Losses		Fair Value
	(in thousands)
June 30, 2021
U.S. treasuries	$	124,140	$	4	$	(15)	$	124,129
Government agency securities		7,258		—		(3)		7,255
Corporate debt		65,676		26		(36)		65,666
Commercial paper		17,585		—		—		17,585
Total	$	214,659	$	30	$	(54)	$	214,635
December 31, 2020
U.S. treasuries	$	149,206	$	14	$	(1)	$	149,219
Corporate debt		32,588		—		(34)		32,554
Commercial paper		7,997		1		—		7,998
Total	$	189,791	$	15	$	(35)	$	189,771

Available-for-sale securities in a loss position at June 30, 2021 and December 31, 2020 consist of:

	June 30, 2021				December 31, 2020
			Gross				Gross
	Estimated		Unrealized		Estimated		Unrealized
	Fair Value		Losses		Fair Value		Losses
		(in thousands)
U.S. treasuries	$	61,520	$	(15)	$	19,991	$	(1)
Government agency securities		7,255		(3)		—		—
Corporate debt		41,569		(36)		32,554		(34)
Total	$	110,344	$	(54)	$	52,545	$	(35)

At June 30, 2021 and December 31, 2020, there were no short-term investments that had been in a continuous loss position for more than 12 months.

The contractual maturities of securities classified as available-for-sale at June 30, 2021 were as follows:

	June 30, 2021
	Amortized		Estimated
	Cost		Fair Value
		(in thousands)
Due in one year or less	$	152,949	$	152,932
Due after one year through two years		55,693		55,679
Due after two years through three years		6,017		6,024
Total	$	214,659	$	214,635

Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. There were minimal realized gains or losses for the six months ended June 30, 2021 and no realized gains or losses for the six months ended June 30, 2020.

13

Veeco Instruments Inc. and Subsidiaries

Notes to the Consolidated Financial Statements - continued

(unaudited)

Accounts Receivable

Accounts receivable is presented net of an allowance for doubtful accounts of $0.7 million at June 30, 2021 and December 31, 2020. The Company considered its current expectations of future economic conditions, including the impact of COVID-19, when estimating its allowance for doubtful accounts.

Inventories

Inventories at June 30, 2021 and December 31, 2020 consist of the following:

	June 30,		December 31,
	2021		2020
	(in thousands)
Materials	$	91,389	$	82,679
Work-in-process		59,769		53,979
Finished goods		12,883		9,248
Total	$	164,041	$	145,906

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets primarily consist of supplier deposits, prepaid value-added tax, lease deposits, prepaid insurance, prepaid licenses, and other receivables. The balance as of June 30, 2021 includes a current receivable of $4.1 million related to landlord reimbursement for leasehold improvements associated with the Company’s new leased facility in San Jose, California. In addition, Veeco had deposits with its suppliers of $4.5 million and $7.2 million at June 30, 2021 and December 31, 2020, respectively.

Property, Plant, and Equipment

Property, plant, and equipment at June 30, 2021 and December 31, 2020 consist of the following:

	June 30,		December 31,
	2021		2020
	(in thousands)
Land	$	5,061	$	5,061
Building and improvements		63,117		62,865
Machinery and equipment (1)		144,585		140,493
Leasehold improvements		26,036		6,671
Gross property, plant, and equipment		238,799		215,090
Less: accumulated depreciation and amortization		156,591		149,819
Net property, plant, and equipment	$	82,208	$	65,271

(1) Machinery and equipment also includes software, furniture and fixtures

For the three and six months ended June 30, 2021, depreciation expense was $3.5 million and $6.9 million, respectively, and $3.8 million and $7.7 million, respectively, for the comparable 2020 periods.

Goodwill

Goodwill represents the future economic benefits arising from assets acquired in a business combination that are not individually identified and separately recognized. The Company continues to assess potential triggering events related to the value of its goodwill and concluded that there were no indicators of impairment during the six months ended June 30, 2021.

14

Veeco Instruments Inc. and Subsidiaries

Notes to the Consolidated Financial Statements - continued

(unaudited)

Intangible Assets

Intangible assets consist of purchased technology, customer relationships, patents, trademarks and tradenames, and backlog, and are initially recorded at fair value. Long-lived intangible assets are amortized over their estimated useful lives in a method reflecting the pattern in which the economic benefits are consumed or amortized on a straight-line basis if such pattern cannot be reliably determined. The Company continues to assess potential triggering events related to the value of its intangible assets and concluded that there were no indicators of impairment during the three and six months ended June 30, 2021.

The components of purchased intangible assets were as follows:

	June 30, 2021						December 31, 2020
			Accumulated						Accumulated
	Gross		Amortization				Gross		Amortization
	Carrying		and		Net		Carrying		and		Net
	Amount		Impairment		Amount		Amount		Impairment		Amount
	(in thousands)
Technology	$	327,908	$	306,624	$	21,284	$	327,908	$	302,358	$	25,550
Customer relationships		146,465		131,552		14,913		146,465		130,131		16,334
Trademarks and tradenames		30,910		27,254		3,656		30,910		26,614		4,296
Other		3,686		3,684		2		3,686		3,681		5
Total	$	508,969	$	469,114	$	39,855	$	508,969	$	462,784	$	46,185

Other intangible assets primarily consist of patents, licenses, and backlog.

Note 4 — Liabilities

Accrued Expenses and Other Current Liabilities

The components of accrued expenses and other current liabilities at June 30, 2021 and December 31, 2020 consist of:

	June 30,		December 31,
	2021		2020
	(in thousands)
Payroll and related benefits	$	24,412	$	26,630
Warranty		6,220		5,058
Operating lease liabilities		4,175		4,148
Interest		4,893		2,574
Professional fees		1,777		1,112
Sales, use, and other taxes		6,153		2,658
Other		4,806		2,696
Total	$	52,436	$	44,876

Warranty

Warranties are typically valid for one year from the date of system final acceptance. The Company estimates the costs that may be incurred under the warranty which are determined by analyzing specific product and historical configuration statistics and regional warranty support costs and are affected by product failure rates, material usage, and labor costs incurred in correcting product failures during the warranty period. Unforeseen component failures or exceptional

15

Veeco Instruments Inc. and Subsidiaries

Notes to the Consolidated Financial Statements - continued

(unaudited)

component performance can also result in changes to warranty costs. Changes in product warranty reserves for the six months ended June 30, 2021 include:

		(in thousands)
Balance - December 31, 2020	$	5,058
Warranties issued		3,221
Consumption of reserves		(2,912)
Changes in estimate		853
Balance - June 30, 2021	$	6,220

Customer Deposits and Deferred Revenue

Customer deposits totaled $53.3 million and $49.3 million at June 30, 2021 and December 31, 2020, respectively. Deferred revenue represents amounts billed, other than deposits, in excess of the revenue that can be recognized on a particular contract at the balance sheet date. Changes in deferred revenue were as follows:

	(in thousands)
Balance - December 31, 2020	$	17,985
Deferral of revenue		(7,436)
Recognition of unearned revenue		6,718
Balance - June 30, 2021	$	17,267

As of June 30, 2021, the Company has approximately $35.1 million of remaining performance obligations on contracts with an original estimated duration of one year or more, of which approximately 73% is expected to be recognized within one year, with the remaining amounts expected to be recognized between one to three years. The Company has elected to exclude disclosures regarding remaining performance obligations that have an original expected duration of one year or less.

Convertible Senior Notes

2023 Notes

On January 10, 2017, the Company issued $345.0 million of 2.70% convertible senior unsecured notes due 2023 (the “2023 Notes”). The Company received net proceeds, after deducting underwriting discounts and fees and expenses payable by the Company, of approximately $335.8 million. The 2023 Notes bear interest at a rate of 2.70% per year, payable semiannually in arrears on January 15 and July 15 of each year, commencing on July 15, 2017. The 2023 Notes mature on January 15, 2023, unless earlier purchased by the Company, redeemed, or converted.

On May 18, 2020, in connection with the completion of a private offering of $125.0 million aggregate principal amount of 3.75% convertible senior notes due 2027 described below, the Company repurchased and retired approximately $88.3 million in aggregate principal amount of its outstanding 2023 Notes, with a carrying amount of $78.1 million, for approximately $81.2 million of cash.

Additionally, on November 11, 2020, the Company entered into a privately negotiated exchange agreement with a holder of its outstanding 2023 Notes, under which the Company agreed to retire $125.0 million in aggregate original principal amount of the 2023 Notes, with a carrying amount of $113.1 million, in exchange for the issuance of $132.5 million in

16

Veeco Instruments Inc. and Subsidiaries

Notes to the Consolidated Financial Statements - continued

(unaudited)

aggregate principal amount of new 3.50% convertible senior notes due 2025 described below, which had a fair value that approximated the principal amount of notes issued.

2025 Notes

On November 17, 2020, as part of the privately negotiated exchange agreement described above, the Company issued $132.5 million of 3.50% convertible senior notes due 2025 (the “2025 Notes”). The 2025 Notes bear interest at a rate of 3.50% per year, payable semiannually in arrears on January 15 and July 15 of each year, commencing on July 15, 2021. The 2025 Notes mature on January 15, 2025, unless earlier purchased by the Company, redeemed, or converted.

2027 Notes

On May 18, 2020, the Company completed a private offering of $125.0 million of 3.75% convertible senior notes due 2027 (the “2027 Notes”). The Company received net proceeds of approximately $121.9 million, after deducting underwriting discounts and fees and expenses payable by the Company. Additionally, the Company used approximately $10.3 million of cash to purchase capped calls, discussed below. The 2027 Notes bear interest at a rate of 3.75% per year, payable semiannually in arrears on June 1 and December 1 of each year, commencing on December 1, 2020. The 2027 Notes mature on June 1, 2027, unless earlier purchased by the Company, redeemed, or converted.

The 2023 Notes, 2025 Notes, and 2027 Notes (collectively, the “Notes”) are unsecured obligations of Veeco and rank senior in right of payment to any of Veeco’s subordinated indebtedness; equal in right of payment to all of Veeco’s unsecured indebtedness that is not subordinated; effectively subordinated in right of payment to any of Veeco’s secured indebtedness to the extent of the value of the assets securing such indebtedness; and structurally subordinated to all indebtedness and other liabilities (including trade payables) of Veeco’s subsidiaries.

The Notes are convertible at the option of the holders upon the satisfaction of specified conditions and during certain periods as described below. The initial conversion rates are 24.9800, 41.6667, and 71.5372 shares of the Company’s common stock per $1,000 principal amount of the 2023 Notes, 2025 Notes, and 2027 Notes, respectively, representing initial effective conversion prices of $40.03, $24.00, and $13.98 per share of common stock, respectively. The conversion rates may be subject to adjustment upon the occurrence of certain specified events.

Holders may convert all or any portion of their notes, in multiples of one thousand dollar principal amount, at their option at any time prior to the close of business on the business day immediately preceding October 15, 2022 with respect to the 2023 Notes, October 15, 2024 with respect to the 2025 Notes, and October 1, 2026 with respect to the 2027 Notes, only under the following circumstances:

(i) During any calendar quarter (and only during such calendar quarter), if the last reported sale price of the common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day;

(ii) During the five consecutive business day period after any five consecutive trading day period (the “measurement period”) in which the trading price per one thousand dollar principal amount of Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of Veeco’s common stock and the conversion rate on each such trading day;

(iii) If the Company calls any or all of applicable series of the Notes for redemption at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date; or

(iv) Upon the occurrence of specified corporate events.

17

Veeco Instruments Inc. and Subsidiaries

Notes to the Consolidated Financial Statements - continued

(unaudited)

For the calendar quarter ended June 30, 2021, the last reported sales price of common stock during the 30 consecutive trading days, based on the criteria outlined in (i) above, was greater than 130% of the conversion price of the 2027 Notes, and as such the 2027 Notes are convertible by the holders until September 30, 2021.

Holders may convert their notes at any time, regardless of the foregoing circumstances, on or after October 15, 2022 with respect to the 2023 Notes, October 15, 2024 with respect to the 2025 Notes, and October 1, 2026 with respect to the 2027 Notes, until the close of business on the business day immediately preceding the respective maturity date.

Upon conversion by the holders, the Company may elect to settle such conversion in shares of its common stock, cash, or a combination thereof. As a result of its cash conversion options, the Company segregated the liability component of the instruments from the equity components. The liability components were measured by estimating the fair value of a non-convertible debt instrument that is similar in its terms to the Notes. The calculation of the fair value of the debt components required the use of Level 3 inputs, including utilization of convertible investors’ credit assumptions and high yield bond indices. Fair value was estimated through discounting future interest and principal payments, an income approach, due under the Notes at a discount rate equal to the estimated borrowing rate for similar non-convertible debt, or 7.0%, 8.0%, and 9.1% with respect to the 2023 Notes, 2025 Notes, and 2027 Notes, respectively. The excess of the aggregate face values of the Notes over the estimated fair values of the liability components of $72.5 million, $21.0 million, and $34.2 million with respect to the 2023 Notes, 2025 Notes, and 2027 Notes, respectively, were recognized as debt discounts and recorded as an increase to additional paid-in capital and will be amortized over the expected lives of the Notes using the effective interest rate method. Amortization of the debt discounts are recognized as non-cash interest expense.

The transaction costs of $9.2 million, $1.9 million, and $3.1 million incurred in connection with the issuance of the 2023 Notes, 2025 Notes, and 2027 Notes, respectively, were allocated to the liability and equity components based on their relative values. Transaction costs allocated to the liability component are being amortized using the effective interest rate method and recognized as non-cash interest expense over the expected terms of the Notes. Transaction costs allocated to the equity component of $1.9 million, $0.3 million, and $0.8 million with respect to the 2023 Notes, 2025 Notes, and 2027 Notes, respectively, reduced the value of the equity components recognized in stockholders' equity.

In connection with the offering of the 2027 Notes, on May 13, 2020, the Company entered into privately negotiated capped call transactions (the “Capped Call Transactions”), pursuant to capped call confirmations, covering the total principal amount of the 2027 Notes for an aggregate premium of $10.3 million. The Capped Call Transactions are expected generally to reduce the potential dilution to the Company’s common stock upon any conversion of the 2027 Notes and/or offset any cash payments the Company is required to make in excess of the aggregate principal amount of converted 2027 Notes, as the case may be, with such reduction and/or offset subject to a cap based on the capped price of the Capped Call Transactions. The Capped Call Transactions exercise price is equal to the initial conversion price of the 2027 Notes, and the capped price of the Capped Call Transactions is approximately $18.46 per share and is subject to certain adjustments under the terms of the capped call confirmations.

The Capped Call Transactions are separate transactions entered into by the Company with the capped call counterparties, are not part of the terms of the 2027 Notes and do not change the holders’ rights under the 2027 Notes. Holders of the 2027 Notes do not have any rights with respect to the Capped Call Transactions. The cost of the Capped Call Transactions is not expected to be tax-deductible as the Company did not elect to integrate the Capped Call Transactions into the 2027 Notes for tax purposes. The Company used a portion of the net proceeds from the offering of the 2027 Notes to pay for the Capped Call Transactions, and the cost of the Capped Call Transactions was recorded as a reduction of the Company’s additional paid-in capital in the accompanying consolidated financial statements.

18

Veeco Instruments Inc. and Subsidiaries

Notes to the Consolidated Financial Statements - continued

(unaudited)

The carrying value of the 2023 Notes, 2025 Notes and 2027 Notes are as follows:

		June 30, 2021						December 31, 2020
		Principal Amount		Unamortized debt discount/ transaction costs		Net carrying value		Principal Amount		Unamortized debt discount/ transaction costs		Net carrying value
		(in thousands)
2023 Notes	$	131,695	$	(9,171)	$	122,524	$	131,695	$	(11,925)	$	119,770
2025 Notes		132,500		(19,749)		112,751		132,500		(22,097)		110,403
2027 Notes		125,000		(32,060)		92,940		125,000		(34,058)		90,942
Net carrying value	$	389,195	$	(60,980)	$	328,215	$	389,195	$	(68,080)	$	321,115

Total interest expense related to the 2023 Notes, 2025 Notes and 2027 Notes is as follows:

	Three months ended June 30,				Six months ended June 30,
	2021		2020		2021		2020
	(in thousands)
Cash Interest Expense
Coupon interest expense - 2023 Notes	$	889	$	2,070	$	1,778	$	4,399
Coupon interest expense - 2025 Notes		1,159		—		2,319		—
Coupon interest expense - 2027 Notes		1,172		573		2,344		573
Non-cash Interest Expense
Amortization of debt discount/transaction costs- 2023 Notes		1,390		3,004		2,754		6,325
Amortization of debt discount/transaction costs- 2025 Notes		1,185		—		2,348		—
Amortization of debt discount/transaction costs- 2027 Notes		1,011		453		1,998		453
Total Interest Expense	$	6,806	$	6,100	$	13,541	$	11,750

The Company determined the 2023 Notes, 2025 notes, and 2027 Notes are Level 2 liabilities in the fair value hierarchy and had an estimated fair value at June 30, 2021 of $132.3 million, $158.8, and $220.2 million, respectively.

Other Liabilities

As part of the acquisition of Ultratech, the Company assumed an executive non-qualified deferred compensation plan that allowed qualifying executives to defer cash compensation. The plan was frozen at the time of acquisition and no further contributions have been made. At December 31, 2020, plan assets approximated $2.4 million, representing the cash surrender value of life insurance policies and is included within “Other assets” in the Consolidated Balance Sheets, while plan liabilities approximated $2.5 million at December 31, 2020 and was included within “Other liabilities” in the Consolidated Balance Sheets. The plan was terminated and fully liquidated during the first quarter of 2021. Other liabilities at June 30, 2021 and December 31, 2020 also included (i) medical and dental benefits for former executives of $1.8 million and $1.9 million, respectively; (ii) asset retirement obligations of $2.8 million and $2.7 million, respectively; and (iii) income tax payables of $1.4 million. Additionally, as a result of the Coronavirus, Aid, Relief, and Economic Security Act, the Company has accrued for and deferred the deposit and payment of its share of social security taxes, resulting in a liability of $3.5 million at both June 30, 2021 and December 31, 2020, of which $1.7 million is included within “Accrued expenses and other current liabilities”, and $1.8 million is included within “Other liabilities” in the Consolidated Balance Sheets for both periods.

19

Veeco Instruments Inc. and Subsidiaries

Notes to the Consolidated Financial Statements - continued

(unaudited)

Note 5 — Commitments and Contingencies

Leases

The Company’s operating leases primarily include real estate leases for properties used for manufacturing, R&D activities, sales and service, and administration, as well as certain equipment leases. Some leases may include options to renew for a period of up to 5 years, while others may include options to terminate the lease. The weighted average remaining lease term of the Company’s operating leases as of June 30, 2021 was 12 years, and the weighted average discount rate used in determining the present value of future lease payments was 5.7%.

The following table provides the maturities of lease liabilities at June 30, 2021:

	Operating
	Leases
	(in thousands)
Payments due by period:
2021	$	2,125
2022		4,667
2023		3,145
2024		2,897
2025		2,506
Thereafter		38,367
Total future minimum lease payments		53,707
Less: Imputed interest		(18,496)
Total	$	35,211
Reported as of June 30, 2021
Accrued expenses and other current liabilities	$	4,175
Long-term operating lease liabilities		31,036
Total	$	35,211

Operating lease cost for the three and six months ended June 30, 2021 were $1.8 million and $3.1 million, respectively, and $1.4 million and $2.7 million, respectively, for the comparable 2020 periods. Variable lease cost for the three and six months ended June 30, 2021 were $0.4 million and $0.9 million, respectively, and $0.4 million and $0.9 million, respectively, for the comparable 2020 periods. Additionally, the Company has an immaterial amount of short-term leases. Operating cash outflows from operating leases for the six months ended June 30, 2021 and 2020 were $3.3 million and $3.5 million, respectively.

Purchase Commitments

Veeco has purchase commitments of $144.4 million at June 30, 2021, substantially all of which become due within one year.

Bank Guarantees

Veeco has bank guarantees and letters of credit issued by a financial institution on its behalf as needed. At June 30, 2021, outstanding bank guarantees and standby letters of credit totaled $10.2 million, and unused bank guarantees and letters of credit of $12.1 million were available to be drawn upon.

20

Veeco Instruments Inc. and Subsidiaries

Notes to the Consolidated Financial Statements - continued

(unaudited)

Legal Proceedings

On June 8, 2018, an Ultratech shareholder who received Veeco stock as part of the consideration for the Ultratech acquisition filed a purported class action complaint in the Superior Court of the State of California, County of Santa Clara, captioned Wolther v. Maheshwari et al., Case No. 18CV329690, on behalf of himself and others who purchased or acquired shares of Veeco pursuant to the registration statement and prospectus which Veeco filed with the SEC in connection with the Ultratech acquisition (the “Wolther Action”). On August 2 and August 8, 2018, two purported class action complaints substantially similar to the Wolther Action were filed on behalf of different plaintiffs in the same court as the Wolther Action. These cases have been consolidated with the Wolther Action, and a consolidated complaint was filed on December 11, 2018. The consolidated complaint seeks to recover damages and fees under Sections 11, 12, and 15 of the Securities Act of 1933 for, among other things, alleged false/misleading statements in the registration statement and prospectus relating to the Ultratech acquisition, relating primarily to the alleged failure to disclose delays in the advanced packaging business, increased MOCVD competition in China, and an intellectual property dispute.

On December 21, 2018, a purported Veeco stockholder filed a derivative action in the Superior Court of the State of California, County of Santa Clara, captioned Vladimir Gusinsky Revocable Trust v. Peeler, et al., Case No. 18CV339925, on behalf of nominal defendant Veeco. The complaint seeks to assert claims for breach of fiduciary duty, waste of corporate assets, and unjust enrichment against current and former Veeco directors premised on purported misstatements and omissions in the registration statement relating to the Ultratech acquisition. Veeco is defending this matter vigorously.

The Company is involved in various other legal proceedings arising in the normal course of business. The Company does not believe that the ultimate resolution of these matters will have a material adverse effect on its consolidated financial position, results of operations, or cash flows.

Note 6 — Derivative Financial Instruments

The Company is exposed to financial market risks arising from changes in currency exchange rates. Changes in currency exchange rates could affect the Company’s foreign currency denominated monetary assets and liabilities and forecasted cash flows. The Company enters into monthly forward derivative contracts from time to time with the intent of mitigating a portion of this risk. The Company only uses derivative financial instruments in the context of hedging and not for speculative purposes and had not designated its foreign exchange derivatives as hedges. Accordingly, changes in fair value from these contracts are recorded as “Other operating expense (income), net” in the Company’s Consolidated Statements of Operations. The Company executes derivative transactions with highly rated financial institutions to mitigate counterparty risk.

The Company did not have any outstanding derivative contracts at June 30, 2021 or December 31, 2020. Additionally, the Company did not have any gains or losses from currency exchange derivatives during the six months ended June 30, 2021 and 2020.

21

Veeco Instruments Inc. and Subsidiaries

Notes to the Consolidated Financial Statements - continued

(unaudited)

Note 7 — Equity

Statement of Stockholders’ Equity

The following tables present the changes in Stockholders’ Equity:

								Accumulated
				Additional				Other
	Common Stock			Paid-in		Accumulated		Comprehensive
	Shares	Amount		Capital		Deficit		Income		Total
	(in thousands)
Balance at December 31, 2020	49,724	$	497	$	1,113,352	$	(707,321)	$	1,846	$	408,374
Net income (loss)	—		—		—		2,494		—		2,494
Other comprehensive income (loss), net of tax	—		—		—		—		(19)		(19)
Share-based compensation expense	—		—		3,237		—		—		3,237
Net issuance under employee stock plans	459		5		(1,630)		—		—		(1,625)
Balance at March 31, 2021	50,183	$	502	$	1,114,959	$	(704,827)	$	1,827	$	412,461
Net income (loss)	—		—		—		6,348		—		6,348
Other comprehensive income (loss), net of tax	—		—		—		—		(24)		(24)
Share-based compensation expense	—		—		4,367		—		—		4,367
Net issuance under employee stock plans	166		1		582		—		—		583
Balance at June 30, 2021	50,349	$	503	$	1,119,908	$	(698,479)	$	1,803	$	423,735

								Accumulated
				Additional				Other
	Common Stock			Paid-in		Accumulated		Comprehensive
	Shares	Amount		Capital		Deficit		Income		Total
	(in thousands)
Balance at December 31, 2019	48,994	$	490	$	1,071,058	$	(698,930)	$	1,894	$	374,512
Net income (loss)	—		—		—		(567)		—		(567)
Other comprehensive income (loss), net of tax	—		—		—		—		153		153
Share-based compensation expense	—		—		3,646		—		—		3,646
Net issuance under employee stock plans	434		4		(684)		—		—		(680)
Balance at March 31, 2020	49,428	$	494	$	1,074,020	$	(699,497)	$	2,047	$	377,064
Net income (loss)	—		—		—		(8,302)		—		(8,302)
Other comprehensive income (loss), net of tax	—		—		—		—		(130)		(130)
Share-based compensation expense	—		—		2,974		—		—		2,974
Net issuance under employee stock plans	191		3		752		—		—		755
Extinguishment of equity component of repurchased 2023 Notes	—		—		(80)		—		—		(80)
Equity component of 2027 Notes	—		—		33,363		—		—		33,363
Purchase of capped calls	—		—		(10,313)		—		—		(10,313)
Balance at June 30, 2020	49,619	$	497	$	1,100,716	$	(707,799)	$	1,917	$	395,331

22

Veeco Instruments Inc. and Subsidiaries

Notes to the Consolidated Financial Statements - continued

(unaudited)

Accumulated Other Comprehensive Income (“AOCI”)

The following table presents the changes in the balances of each component of AOCI, net of tax:

			Unrealized
			Gains (Losses)
	Foreign		on Available
	Currency		for Sale
	Translation		Securities		Total
	(in thousands)
Balance - December 31, 2020		1,866		(20)		1,846
Other comprehensive income (loss)		(39)		(4)		(43)
Balance - June 30, 2021	$	1,827	$	(24)	$	1,803

There were minimal reclassifications from AOCI into net income for the three and six months ended June 30, 2021 and 2020.

Note 8 — Share-based Compensation

Restricted share awards are issued to employees that are subject to specified restrictions and a risk of forfeiture. The restrictions typically lapse over one to five years and may entitle holders to dividends and voting rights. Other types of share-based compensation include performance share awards, performance share units, and restricted share units (collectively with restricted share awards, “restricted shares”), as well as options to purchase common stock.

Share-based compensation expense was recognized in the following line items in the Consolidated Statements of Operations for the three and six months ended June 30, 2021 and 2020:

	Three months ended June 30,				Six months ended June 30,
	2021		2020		2021		2020
	(in thousands)
Cost of sales	$	650	$	474	$	1,146	$	995
Research and development		1,132		613		1,949		1,486
Selling, general, and administrative		2,585		1,887		4,510		4,139
Total	$	4,367	$	2,974	$	7,605	$	6,620

For the six months ended June 30, 2021, equity activity related to stock options was as follows:

		Weighted
	Number of	Average
	Shares	Exercise Price
	(in thousands)
Balance - December 31, 2020	730		35.26
Expired or forfeited	(280)		40.27
Balance - June 30, 2021	450		32.14

23

Veeco Instruments Inc. and Subsidiaries

Notes to the Consolidated Financial Statements - continued

(unaudited)

For the six months ended June 30, 2021, equity activity related to non-vested restricted shares and performance shares was as follows:

		Weighted
		Average
	Number of	Grant Date
	Shares	Fair Value
	(in thousands)
Balance - December 31, 2020	2,040		12.73
Granted	864		23.89
Performance award adjustments	(36)		19.75
Vested	(410)		13.69
Forfeited	(60)		14.25
Balance - June 30, 2021	2,398		16.45

Note 9 — Income Taxes

Income taxes are estimated for each of the jurisdictions in which the Company operates. Deferred income taxes reflect the net tax effect of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, as well as the tax effect of carryforwards. Realization of net deferred tax assets is dependent on future taxable income. At June 30, 2021, the Company’s U.S. deferred tax assets are fully offset by a valuation allowance since the Company cannot conclude that it is more likely than not that these future benefits will be realized.

At the end of each interim reporting period, the effective tax rate is aligned with expectations for the full year. This estimate is used to determine the income tax provision on a year-to-date basis and may change in subsequent interim periods.

Income (loss) before income taxes and income tax expense (benefit) for the three and six months ended June 30, 2021 and 2020 were as follows:

	Three months ended June 30,				Six months ended June 30,
	2021		2020		2021		2020
	(in thousands)
Income (loss) before income taxes	$	6,667	$	(8,251)	$	9,459	$	(8,550)
Income tax expense (benefit)	$	319	$	51	$	617	$	319

The Company’s tax expense for the three months ended June 30, 2021 was $0.3 million, compared to $0.1 million for the comparable prior period. The 2021 tax expense included a $0.1 million expense related to the Company’s domestic operations and a $0.2 million expense related to the Company’s non-U.S. operations, compared to 2020 when the expense included a $0.1 million expense related to the Company’s domestic operations, offset by an immaterial benefit related to the Company’s non-U.S. operations.

The Company’s tax expense for the six months ended June 30, 2021 was $0.6 million, compared to $0.3 million for the comparable prior period. The 2021 tax expense included a $0.2 million expense related to the Company’s domestic operations and a $0.4 million expense related to the Company’s non-U.S. operations, compared to 2020 when the expense included a $0.2 million expense related to the Company’s domestic operations and a $0.1 million expense related to the Company’s non-U.S. operations. The current period domestic tax expense is primarily attributable to the tax amortization of indefinite-lived intangible assets that is not available to offset U.S. deferred tax assets. The current period foreign tax expense is primarily attributable to non-U.S operation profits and foreign withholding taxes on unremitted earnings as of June 30, 2021, offset by the amortization of intangible assets.

24

Veeco Instruments Inc. and Subsidiaries

Notes to the Consolidated Financial Statements - continued

(unaudited)

Note 10 — Segment Reporting and Geographic Information

Veeco operates and measures its results in one operating segment and therefore has one reportable segment: the development, manufacture, sales, and support of semiconductor and thin film process equipment primarily sold to make electronic devices.

Veeco categorizes its sales into the following four end-markets:

Semiconductor

The Semiconductor market refers to early process steps in logic and memory applications where silicon wafers are processed. There are many different process steps in forming patterned wafers, such as deposition, etching, masking, and doping, where the microchips are created but remain on the silicon wafer. This market includes mask blank production for extreme ultraviolet (“EUV”) lithography. This market also includes Advanced Packaging which refers to a portfolio of wafer-level assembly technologies that enable improved performance of electronic products, such as smartphones, high-end servers, and graphical processors.

Compound Semiconductor

The Compound Semiconductor market includes Photonics, Power Electronics, RF Filters and Amplifiers, and Solar applications. Photonics refers to light source technologies and laser-based solutions for 3D sensing, datacom and telecom applications. This includes micro-LED, laser diodes, edge emitting lasers and vertical cavity surface emitting lasers (“VCSELs”). Power Electronics refers to semiconductor devices such as rectifiers, inverters and converters for the control and conversion of electric power in applications such as fast or wireless charging of consumer electronics and automotive applications. RF power amplifiers and filters (including surface acoustic wave (“SAW”) and bulk acoustic wave (“BAW”) filters) are used in 5G communications infrastructure, smartphones, tablets, and mobile devices. They make use of radio waves for wireless broadcasting and/or communications. Solar refers to power obtained by harnessing the energy of the sun through the use of compound semiconductor devices such as photovoltaics.

Data Storage

Data Storage refers to the Hard Disk Drive (“HDD”) market, for which our systems enable customers to manufacture thin film magnetic heads for hard disk drives as part of large capacity storage applications.

Scientific & Other

Scientific & Other refers to advanced materials research and a range of manufacturing applications including optical coatings (laser mirrors, optical filters, and anti-reflective coatings).

25

Veeco Instruments Inc. and Subsidiaries

Notes to the Consolidated Financial Statements - continued

(unaudited)

Sales by end-market and geographic region for the three and six months ended June 30, 2021 and 2020 were as follows:

	Three months ended June 30,				Six months ended June 30,
	2021		2020		2021		2020
	(in thousands)
Sales by end-market
Semiconductor	$	53,689	$	37,460	$	105,321	$	74,884
Compound Semiconductor		24,231		17,740		48,982		36,169
Data Storage		52,025		28,305		93,005		67,188
Scientific & Other		16,399		15,132		32,751		24,898
Total	$	146,344	$	98,637	$	280,059	$	203,139
Sales by geographic region
United States	$	66,969	$	29,632	$	112,132	$	69,268
EMEA(1)		8,939		26,130		22,563		42,280
China		20,880		17,393		40,887		27,865
Rest of APAC		49,460		25,432		104,337		63,374
Rest of World		96		50		140		352
Total	$	146,344	$	98,637	$	280,059	$	203,139

(1) EMEA consists of Europe, the Middle East, and Africa

For geographic reporting, sales are attributed to the location in which the customer facility is located.

26

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Cautionary Statement Regarding Forward Looking Statements

Our discussion below constitutes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. When used in this Report, the words “believes,” “anticipates,” “expects,” “estimates,” “targets,” “plans,” “intends,” “will,” and similar expressions related to the future are intended to identify forward-looking statements. All forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from projected results. You should not place undue reliance on any forward-looking statements, which speak only as of the dates they are made.

Executive Summary

We are an innovative manufacturer of semiconductor process equipment. Our proven ion beam, laser annealing, lithography, MOCVD and single wafer etch & clean technologies play an integral role in the fabrication and packaging of advanced semiconductor devices. With equipment designed to optimize performance, yield and cost of ownership, Veeco holds leading technology positions in the markets we serve. To learn more about Veeco’s systems and service offerings, visit www.veeco.com.

COVID-19 Update

As a result of the COVID-19 pandemic, governmental authorities have implemented and are continuing to implement numerous and constantly evolving measures to try to contain the virus, such as travel bans and restrictions, limits on gatherings, quarantines, shelter-in-place orders, and business shutdowns. We have important manufacturing operations in the U.S. and sales and support operations in China, Germany, Japan, Malaysia, Philippines, Singapore, South Korea, Thailand, Taiwan and the United Kingdom, all of which have been affected by the COVID-19 pandemic.

Measures providing for business shutdowns generally exclude certain essential services, and those essential services include critical infrastructure and the businesses that support that critical infrastructure. Our operations are considered part of the critical and essential infrastructure defined by applicable government authorities, and, although governmental measures to contain the pandemic may be modified or extended, our manufacturing facilities remain open. We believe our diverse product offerings and the critical nature of certain of our products for infrastructure insulate us, to some extent, from the adverse effects of the pandemic; however, a prolonged economic downturn will adversely affect our customers, which could have a material adverse effect on our revenues, particularly if customers from whom we derive a significant amount of revenue reduce or delay purchases to mitigate the impacts of the pandemic or fail to make payments to us on time or at all.

We serve a global and highly interconnected customer base across the Asia-Pacific region, Europe, and North America. Our net sales to customers located outside of the United States represented approximately 68%, 70%, and 77% of our total net sales in 2020, 2019, and 2018, respectively, and we expect that net sales to customers outside the United States will continue to represent a significant percentage of our total net sales. As a result, our business will be adversely impacted by further deterioration in global economic conditions, particularly in markets in Asia and Europe.

To date, we have not yet experienced any significant interruptions to our supply chain as a result of the COVID-19 pandemic. Although many jurisdictions worldwide have authorized the use of vaccines as a method to limit and control infections, new variants of the virus continue to emerge. We remain cautious as many factors remain unpredictable. We continue to monitor our global supply chain and may experience disruptions in future periods, primarily as a result of financial challenges confronting companies in our supply chain and restrictions or disruptions of transportation, such as reduced availability of air transport, port closures and increased border controls or closures, any of which could cause a disruption in our ability to obtain raw materials or components required to manufacture our products.

Like many in our industry, we are managing through the effects of the COVID-19 pandemic. Although the full extent of the COVID-19 pandemic’s impact on our business, results of operations, supply chain, and growth can not be predicted or quantified, we proactively identified potential challenges to our business and have been executing business continuity

27

activities to manage disruptions in our business and continue to provide critical infrastructure to our customers. In response to the pandemic, we have taken, or intend to take, the following steps, among others, to keep our employees safe and minimize the spread of the virus, while continuing to serve our customers:

● implemented rigorous health and safety protocols at our manufacturing facilities, including extensively and frequently disinfecting our facilities, limiting access to our facilities, checking temperatures of individuals entering our facilities, staggering shifts to minimize employee overlap in gowning areas, and providing protective equipment;

● mandated remote working arrangements for employees that do not need to be physically present on the manufacturing floor or at customer facilities;

● implemented virtual meetings, customer demos, and factory acceptances to enable customers to review data and performance of their system in our factory remotely via live video;

● performing service and support activities remotely to resolve customer issues and enable our customers to maintain their operations;

● proactively identified gaps in our supply chain and re-sourced a number of components in order to maintain our customer shipment commitments and mitigate single points of failure;

● monitoring our IT systems and implementing contingency and disaster recovery plans to support our IT infrastructure to ensure that our systems remain continuously operative; and

● continuing to monitor and, if necessary, reduce our operating expenses and capital expenditures to maintain financial flexibility and profit margins.

While these steps have been effective so far, there could be additional challenges ahead that may impact either our operations or those of our customers, which could have a negative effect on our financial performance, including productivity and capacity impacts as a result of the ongoing pandemic. We expect to continue to implement these measures until we determine that the COVID-19 pandemic is adequately contained for purposes of our business, and we may take further actions as government authorities require or recommend or as we determine to be in the best interests of our employees, customers and suppliers. As a result, we may incur additional expenses in future periods in response to the pandemic, which could adversely affect our financial position, results of operations, or cash flows. In addition, we may revise our approach to these initiatives or take additional actions to meet the needs of our employees and customers, and mitigate the impact of the pandemic on our business.

Business Update

We categorize our revenue by the end-markets into which we sell. Our four end-markets are: Semiconductor; Compound Semiconductor; Data Storage; and Scientific & Other.

Sales in the Semiconductor market were driven by our laser annealing systems for leading and trailing node logic, as well as lithography systems for Advanced Packaging. We continue to build momentum for our laser annealing solutions with advanced node logic customers. We are currently production tool of record at multiple leading-edge customers for their most advanced nodes. We also have multiple systems currently being evaluated at both logic and memory customers for their next nodes. Our lithography systems for Advanced Packaging are aligned with longer-term growth of heterogenious integration, fan-out wafer-level packaging and other Advanced Packaging applications. We are seeing an increase in demand for our lithography systems and recently received a multi-system order from a large integrated device manufacturer. Additionally, the ongoing adoption of EUV Lithography for advanced node, semiconductor manufacturing continues to drive requirements for our mask blank deposition systems. Overall, we believe that our technology and market strategy is well aligned with trends such as artificial intelligence, mobile connectivity and high performance computing that drive the Semiconductor market. Finally, construction remains on track at our new San Jose facility, which we believe will allow us to better meet the demands of our semiconductor customers.

28

We address the Compound Semiconductor market with a broad portfolio of technologies including primarily Wet Processing and MOCVD, along with MBE and Ion Beam, all of which have been developed to support emerging applications such as 5G driven RF device/filter manufacturing, Gallium Nitride-based power electronics, and photonics applications including edge-emitting lasers and micro-LEDs. Sales in the Compound Semiconductor market were driven by equipment shipments for RF Devices, RF Filters and sales to the Photonics market.

Sales in the Data Storage market have been growing for several years, primarily driven by shipments of Ion Beam systems. Demand for our Ion Beam products for data storage is being driven by big data and cloud-based storage growth. In order to be successful, hard disk drive manufacturers are required to improve areal density of magnetic heads for hard disk drives and are manufacturing drives with an increasing number of thin film magnetic heads. These two factors taken together, along with new innovations by HDD manufacturers such as heat assisted magnetic recording and microwave assisted magnetic recording, are driving additional capacity requirements and equipment upgrades. We have good near-term visibility in this market, which we believe will remain healthy through 2021. However, after multiple years of customers accelerating their capacity additions, including in 2021, order rates have slowed, and we recognize that a period of equipment digestion is likely. With data proliferation showing no signs of slowing, we feel confident about the long-term prospects of our data storage business.

Sales in the Scientific & Other market are largely driven by sales to governments, universities, and research institutions. We are beginning to see signs of a recovery in this market with recent orders for optical coating systems.

Overall, our laser annealing, 5G RF, data storage, and advanced packaging lithography products are all performing well for us today, and we expect them to contribute to full year 2021 revenue growth. Long-term revenue growth for 2022 and beyond is expected to come from the Semiconductor and Compound Semiconductor markets. As such, we have been making strategic investments in R&D and inventory, including evaluation systems, in these markets, as well as improving our service capabilities to support these anticipated growth opportunities.

29

Results of Operations

For the three months ended June 30, 2021 and 2020

The following table presents revenue and expense line items reported in our Consolidated Statements of Operations for the indicated periods in 2021 and 2020 and the period-over-period dollar and percentage changes for those line items. Our results of operations are reported as one business segment, represented by our single operating segment.

	Three Months Ended June 30,						Change
	2021			2020			Period to Period
	(dollars in thousands)
Net sales	$	146,344	100%	$	98,637	100%	$	47,707	48%
Cost of sales		86,178	59%		56,743	58%		29,435	52%
Gross profit		60,166	41%		41,894	42%		18,272	44%
Operating expenses, net:
Research and development		22,553	15%		19,254	20%		3,299	17%
Selling, general, and administrative		21,466	15%		17,818	18%		3,648	20%
Amortization of intangible assets		2,976	2%		3,834	4%		(858)	(22)%
Restructuring		—	-		472	-		(472)	*
Asset impairment		—	-		281	-		(281)	*
Other operating expense (income), net		(81)	-		(174)	-		93	(53)%
Total operating expenses, net		46,914	32%		41,485	42%		5,429	13%
Operating income (loss)		13,252	9%		409	-		12,843	*
Interest income (expense), net		(6,585)	(4)%		(5,614)	(6)%		(971)	17%
Loss on extinguishment of debt		—	-		(3,046)	(3)%		3,046	(100)%
Income (loss) before income taxes		6,667	5%		(8,251)	(8)%		14,918	(181)%
Income tax expense (benefit)		319	-		51	-		268	*
Net income (loss)	$	6,348	4%	$	(8,302)	(8)%	$	14,650	(176)%

* Not meaningful

Net Sales

The following is an analysis of sales by market and by region:

	Three Months Ended June 30,						Change
	2021			2020			Period to Period
	(dollars in thousands)
Sales by end-market
Semiconductor	$	53,689	37%	$	37,460	38%	$	16,229	43%
Compound Semiconductor		24,231	17%		17,740	18%		6,491	37%
Data Storage		52,025	35%		28,305	29%		23,720	84%
Scientific & Other		16,399	11%		15,132	15%		1,267	8%
Total	$	146,344	100%	$	98,637	100%	$	47,707	48%
Sales by geographic region
United States	$	66,969	46%	$	29,632	30%	$	37,337	126%
EMEA		8,939	6%		26,130	26%		(17,191)	(66)%
China		20,880	14%		17,393	18%		3,487	20%
Rest of APAC		49,460	34%		25,432	26%		24,028	94%
Rest of World		96	-		50	-		46	92%
Total	$	146,344	100%	$	98,637	100%	$	47,707	48%

Sales increased for the three months ended June 30, 2021 against the comparable prior year period across all markets. By geography, sales increased in the United States, China, and Rest of APAC regions. The increase in sales in the United

30

States was primarily driven by shipments to data storage customers, while the increase in sales in the Rest of APAC region was primarily driven by shipments to semiconductor and data storage customers. Sales in the Rest of APAC region for the three months ended June 30, 2021 included sales in Taiwan and South Korea of $15.2 million and $14.7 million, respectively. Sales in the Rest of APAC region for the three months ended June 30, 2020 included sales in South Korea of $10.2 million. Pricing was not a significant driver of the change in total sales. We expect there will continue to be year-to-year variations in our future sales distribution across markets and geographies. In light of the global nature of our business, we are impacted by conditions in the various countries in which we and our customers operate. Several markets continue to remain challenged in light of ongoing restrictions on business and travel, and decreased business and consumer spending generally, resulting from the COVID-19 pandemic.

Gross Profit

For the three months ended June 30, 2021, gross profit increased against the comparable prior period primarily due to an increase in sales volume, partially offset by decreased gross margins. Gross margins decreased principally due to product and region mix of sales in the period and an increase in spending to support higher business activity. We expect our gross margins to fluctuate each period due to product mix and other factors.

Research and Development

The markets we serve are characterized by continuous technological development and product innovation, and we invest in various research and development initiatives to maintain our competitive advantage and achieve our growth objectives. Research and development expenses increased for the three months ended June 30, 2021 against the comparable prior period primarily due to personnel-related expenses as we selectively invest in new research and development and developing additional applications for our technology in order to be well positioned to capitalize on emerging global megatrends and support longer term growth in Semiconductor and Compound Semiconductor markets. However, expenses as a percentage of revenue have decreased when compared to the prior period.

Selling, General, and Administrative

Selling, general, and administrative expenses increased for the three months ended June 30, 2021 against the comparable prior period primarily due to higher variable expenses associated with the increase in revenue, profitability, and order in-take. However, expenses as a percentage of revenue have decreased when compared to the prior year period. Given the uncertainty regarding the impacts on our business resulting from the COVID-19 pandemic, we are focused on the proactive management of expenses. In future periods, we may incur additional selling, general and administrative expenses to support our responses to the COVID-19 pandemic. In addition, we expect a period of duplicate operating expenses until the transition from our existing facility in San Jose, California to our new leased facility is completed over the next several quarters.

Amortization Expense

Amortization expense decreased compared to the comparable prior year period primarily due to changes in amortization expense to reflect expected cash flows of certain intangible assets, as well as certain other intangible assets becoming fully amortized during the three months ended June 30, 2021.

Interest Income (Expense)

We recorded net interest expense of $6.6 million for the three months ended June 30, 2021, compared to $5.6 million for the comparable prior year period. The increase in interest expense was primarily related to the issuance of the 2027 Notes in May 2020 and the 2025 Notes in November 2020, partially offset by the partial repurchase and exchange of the 2023 Notes. Included in interest expense for the three months ended June 30, 2021 were non-cash charges of $3.6 million related to the amortization of debt discount and transaction costs of the 2023 Notes, 2025 Notes, and 2027 Notes, while the three months ended June 30, 2020 included non-cash charges of $3.5 million related to the amortization of debt discount and transaction costs of the 2023 Notes and 2027 Notes.

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Loss on Extinguishment of Debt

On May 18, 2020, in connection with the completion of a private offering of $125 million aggregate principal amount of 3.75% convertible senior notes, we repurchased and retired approximately $88.3 million in aggregate principal amount of our outstanding 2023 Notes, with a carrying amount of $78.1 million, for approximately $81.2 million of cash. We accounted for the repurchase of the $88.3 million of the 2023 Notes as an extinguishment, and as such, recorded a loss on extinguishment of approximately $3.0 million for the three months ended June 30, 2020.

Income Taxes

At the end of each interim reporting period, we estimate the effective income tax rate expected to be applicable for the full year. This estimate is used to determine the income tax provision or benefit on a year-to-date basis and may change in subsequent interim periods.

Our tax expense for the three months ended June 30, 2021 was $0.3 million, compared to $0.1 million for the comparable prior year period. The 2021 tax expense included an expense of $0.1 million related to our domestic operations and $0.2 million related to our non-U.S. operations, compared to the comparable period in 2020 when the expense included a $0.1 million expense related to our domestic operations offset by a minimal benefit related to our non-U.S. operations.

For the three months ended June 30, 2021 and 2020, the Company’s U.S. deferred tax assets are fully offset by a valuation allowance since the Company cannot conclude that it is more likely than not that these future benefits will be realized. The domestic tax expense for both periods is primarily attributable to the tax amortization of indefinite-lived intangible assets that is not available to offset U.S. deferred tax assets. The current period foreign tax expense is primarily attributable to non-U.S operations profits and foreign withholding taxes on unremitted earnings as of June 30, 2021, offset by the amortization of intangible assets.

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For the six months ended June 30, 2021 and 2020

The following table presents revenue and expense line items reported in our Consolidated Statements of Operations for 2021 and 2020 and the period-over-period dollar and percentage changes for those line items. Our results of operations are reported as one business segment, represented by our single operating segment.

	Six Months Ended June 30,						Change
	2021			2020			Period to Period
	(dollars in thousands)
Net sales	$	280,059	100%	$	203,139	100%	$	76,920	38%
Cost of sales		164,978	59%		114,826	57%		50,152	44%
Gross profit		115,081	41%		88,313	43%		26,768	30%
Operating expenses, net:
Research and development		44,398	16%		38,449	19%		5,949	15%
Selling, general, and administrative		41,722	15%		36,123	18%		5,599	15%
Amortization of intangible assets		6,330	2%		7,671	4%		(1,341)	(17)%
Restructuring		—	-		1,097	1%		(1,097)	*
Asset impairment		—	-		281	-		(281)	*
Other operating expense (income), net		(36)	-		(283)	-		247	(87)%
Total operating expenses, net		92,414	33%		83,338	41%		9,076	11%
Operating income (loss)		22,667	8%		4,975	2%		17,692	*
Interest income (expense), net		(13,208)	(5)%		(10,479)	(5)%		(2,729)	26%
Loss on extinguishment of debt		—	-		(3,046)	-		3,046	(100)%
Income (loss) before income taxes		9,459	3%		(8,550)	(4)%		18,009	(211)%
Income tax expense (benefit)		617	-		319	-		298	93%
Net income (loss)	$	8,842	3%	$	(8,869)	(4)%	$	17,711	(200)%

* Not meaningful

	Six Months Ended June 30,						Change
	2021			2020			Period to Period
	(dollars in thousands)
Sales by end-market
Semiconductor	$	105,321	38%	$	74,884	37%	$	30,437	41%
Compound Semiconductor		48,982	17%		36,169	18%		12,813	35%
Data Storage		93,005	33%		67,188	33%		25,817	38%
Scientific & Other		32,751	12%		24,898	12%		7,853	32%
Total	$	280,059	100%	$	203,139	100%	$	76,920	38%
Sales by geographic region
United States	$	112,132	40%	$	69,268	34%	$	42,864	62%
EMEA		22,563	8%		42,280	21%		(19,717)	(47)%
China		40,887	15%		27,865	14%		13,022	47%
Rest of APAC		104,337	37%		63,374	31%		40,963	65%
Rest of World		140	-		352	-		(212)	(60)%
Total	$	280,059	100%	$	203,139	100%	$	76,920	38%

Sales increased for the six months ended June 30, 2021 against the comparable prior year period across all markets. By geography, sales increased in the United States, China, and Rest of APAC regions. The increase in sales in the United States was primarily driven by shipments to data storage customers, while the increase in sales in the Rest of APAC region was primarily driven by shipments to semiconductor and data storage customers. Sales in the Rest of APAC region for the six months ended June 30, 2021 included sales in Taiwan, South Korea, and Thailand of $33.8 million, $25.6 million, and $13.2 million, respectively. Sales in the Rest of APAC region for the six months ended June 30, 2020 included sales in Taiwan and Singapore of $22.9 million and $16.0 million, respectively. Pricing was not a significant

33

driver of the change in total sales. We expect there will continue to be year-to-year variations in our future sales distribution across markets and geographies. In light of the global nature of our business, we are impacted by conditions in the various countries in which we and our customers operate. Several markets continue to remain challenged in light of ongoing restrictions on business and travel, and decreased business and consumer spending generally, resulting from the COVID-19 pandemic.

Gross Profit

For the six months ended June 30, 2021, gross profit increased against the comparable prior year period primarily due to an increase in sales volume, partially offset by decreased gross margins. Gross margins decreased principally due to an increase in spending to support higher business activity, as well as product and region mix of sales in the period. We expect our gross margins to fluctuate each period due to product mix and other factors.

Research and Development

The markets we serve are characterized by continuous technological development and product innovation, and we invest in various research and development initiatives to maintain our competitive advantage and achieve our growth objectives. Research and development expenses increased for the six months ended June 30, 2021 against the comparable prior year period primarily due to personnel-related expenses as we selectively invest in new research and development and developing additional applications for our technology in order to be well positioned to capitalize on emerging global megatrends and support longer term growth in Semiconductor and Compound Semiconductor markets. However, expenses as a percentage of revenue have decreased when compared to the comparable prior year period.

Selling, General, and Administrative

Selling, general, and administrative expenses increased for the six months ended June 30, 2021 against the comparable prior year period primarily due to higher variable expenses associated with the increase in revenue, profitability, and order in-take. However, expenses as a percentage of revenue have decreased when compared to the prior year period. Given the uncertainty regarding the impacts on our business resulting from the COVID-19 pandemic, we are focused on the proactive management of expenses. In future periods, we may incur additional selling, general and administrative expenses to support our responses to the COVID-19 pandemic. In addition, we expect a period of duplicate operating expenses until the transition from our existing facility in San Jose, California to our new leased facility is completed over the next several quarters.

Amortization Expense

Amortization expense decreased compared to the comparable prior year period primarily due to changes in amortization expense to reflect expected cash flows of certain intangible assets, as well as certain other intangible assets becoming fully amortized during the six months ended June 30, 2021.

Interest Income (Expense)

We recorded net interest expense of $13.2 million for the six months ended June 30, 2021, compared to $10.5 million for the comparable prior year period. The increase in interest expense was primarily related to the issuance of the 2027 Notes in May 2020 and the 2025 Notes in November 2020, partially offset by the partial repurchase and exchange of the 2023 Notes. Included in interest expense for the six months ended June 30, 2021 were non-cash charges of $7.1 million related to the amortization of debt discount and transaction costs of the 2023 Notes, 2025 Notes, and 2027 Notes, while the six months ended June 30, 2020 included non-cash charges of $6.8 million related to the amortization of debt discount and transaction costs of the 2023 Notes and 2027 Notes. Additionally, interest income decreased approximately $0.7 million for the six months ended June 30, 2021 compared to the prior year period, primarily as a result of lower interest rates, and we expect interest income to remain depressed as a result.

34

Loss on Extinguishment of Debt

On May 18, 2020, in connection with the completion of a private offering of $125 million aggregate principal amount of 3.75% convertible senior notes, we repurchased and retired approximately $88.3 million in aggregate principal amount of our outstanding 2023 Notes, with a carrying amount of $78.1 million, for approximately $81.2 million of cash. We accounted for the repurchase of the $88.3 million of the 2023 Notes as an extinguishment, and as such, recorded a loss on extinguishment of approximately $3.0 million for the six months ended June 30, 2020.

Income Taxes

At the end of each interim reporting period, we estimate the effective income tax rate expected to be applicable for the full year. This estimate is used to determine the income tax provision or benefit on a year-to-date basis and may change in subsequent interim periods.

Our tax expense for the six months ended June 30, 2021 was $0.6 million, compared to $0.3 million for the comparable prior year period. The 2021 tax expense included an expense of $0.2 million related to our domestic operations and $0.4 million related to our non-U.S. operations, compared to 2020 when the expense included a $0.2 million expense related to our domestic operations and a $0.1 million expense related to our non-U.S. operations.

For the six months ended June 30, 2021 and 2020, the Company’s U.S. deferred tax assets are fully offset by a valuation allowance since the Company cannot conclude that it is more likely than not that these future benefits will be realized. The domestic tax expense for the current period is primarily attributable to the tax amortization of indefinite-lived intangible assets that is not available to offset U.S. deferred tax assets. The current period foreign tax expense is primarily attributable to non-U.S operation profits and foreign withholding taxes on unremitted earnings as of June 30, 2021, offset by the amortization of intangible assets.

Liquidity and Capital Resources

Our cash and cash equivalents, restricted cash, and short-term investments are as follows:

	June 30,		December 31,
	2021		2020
	(in thousands)
Cash and cash equivalents	$	114,747	$	129,625
Restricted cash		640		658
Short-term investments		214,635		189,771
Total	$	330,022	$	320,054

At June 30, 2021 and December 31, 2020, cash and cash equivalents of $37.7 million and $40.2 million, respectively, were held outside the United States. As of June 30, 2021, we had $15.3 million of accumulated undistributed earnings generated by our non-U.S. subsidiaries for which the U.S. repatriation tax has been provided and did not require the use of cash due to the use of net operating loss carryforwards. Approximately $6.7 million of undistributed earnings will be subject to foreign withholding taxes if distributed back to the United States.

We believe that our projected cash flow from operations, combined with our cash and short-term investments, will be sufficient to meet our projected working capital requirements, contractual obligations, and other cash flow needs for the next twelve months, including scheduled interest payments on our convertible senior notes, purchase commitments, and payments in respect of operating leases. Although there is uncertainty related to the anticipated impact of the COVID-19 outbreak on our future results, we believe our business model, our current cash and short-term investments, and our proactive management of expenses, leave us well-positioned to manage our business through this crisis as it continues to unfold.

35

A summary of the cash flow activity for the three months ended June 30, 2021 and 2020 is as follows:

Cash Flows from Operating Activities

	Six Months Ended June 30,
	2021		2020
	(in thousands)
Net income (loss)	$	8,842	$	(8,869)
Non-cash items:
Depreciation and amortization		13,189		15,372
Non-cash interest expense		7,100		6,778
Deferred income taxes		17		191
Share-based compensation expense		7,605		6,620
Loss on extinguishment of debt		—		3,046
Asset impairment		—		281
Changes in operating assets and liabilities		(16,024)		(5,869)
Net cash provided by (used in) operating activities	$	20,729	$	17,550

Net cash provided by operating activities was $20.7 million for the six months ended June 30, 2021 and was due to net income of $8.8 million and adjustments for non-cash items of $27.9 million, partially offset by a decrease in cash flow from changes in operating assets and liabilities of $16.0 million. The changes in operating assets and liabilities were largely attributable to increases in accounts receivable and inventories, partially offset by increases in accounts payable, accrued expenses, and customer deposits.

Cash Flows from Investing Activities

	Six Months Ended June 30,
	2021		2020
	(in thousands)
Capital expenditures	$	(9,082)	$	(1,957)
Changes in investments, net		(25,622)		3,365
Proceeds from held for sale assets, net of costs to sell		—		9,503
Net cash provided by (used in) investing activities	$	(34,704)	$	10,911

The cash used by investing activities during the six months ended June 30, 2021 was primarily attributable to net changes of investments, as well as capital expenditures. We expect increased capital expenditures associated with the build-out of our newly leased facility in San Jose, California over the next several quarters. In addition, we expect a period of duplicate operating expenses until the transition from our existing facility to our new facility is completed. The cash provided by investing activities during the six months ended June 30, 2020 was primarily attributable to the net proceeds from sale of a non-core product line, partially offset by capital expenditures.

Cash Flows from Financing Activities

	Six Months Ended June 30,
	2021		2020
	(in thousands)
Proceeds from issuance of 2025 Notes and 2027 Notes, net of issuance costs	$	—	$	121,946
Purchase of capped calls		—		(10,313)
Repurchase of 2023 Notes		—		(81,240)
Settlement of equity awards, net of withholding taxes		(882)		74
Net cash provided by (used in) financing activities	$	(882)	$	30,467

The cash used in financing activities for the six months ended June 30, 2021 was related to cash used to settle taxes related to employee equity programs, partially offset by cash received under the Employee Stock Purchase Plan. The cash provided by financing activities for the six months ended June 30, 2020 was primarily related to the net cash

36

proceeds received from the issuance of the 2027 Notes, partially offset by the cash used to repurchase $88.3 million principal amount of our outstanding 2023 Notes as well as the purchase of the capped call transactions.

Convertible Senior Notes

We have $131.7 million outstanding principal balance of 2.70% convertible senior notes that bear interest at a rate of 2.70% per year, payable semiannually in arrears on January 15 and July 15 of each year, and mature on January 15, 2023, unless earlier purchased by the Company, redeemed, or converted. In addition, we have $132.5 million outstanding principal balance of 3.50% convertible senior notes that bear interest at a rate of 3.50% per year, payable semiannually in arrears on January 15 and July 15 of each year, and mature on January 15, 2025, unless earlier purchased by the Company, redeemed, or converted. Finally, we have $125.0 million outstanding principal balance of 3.75% convertible senior notes that bear interest at a rate of 3.75% per year, payable semiannually in arrears on June 1 and December 1 of each year, and mature on June 1, 2027, unless earlier purchased by the Company, redeemed, or converted. The 2027 Notes are currently convertible by shareholders until September 30, 2021.

We believe that we have sufficient capital resources and cash flows from operations to support scheduled interest payments on these debts, as well as the payment in cash of principal amounts of any notes that are converted.

Contractual Obligations and Commitments

We have commitments under certain contractual arrangements to make future payments for goods and services. These contractual arrangements secure the rights to various assets and services to be used in the future in the normal course of business. We expect to fund these contractual arrangements with cash generated from operations in the normal course of business.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on our financial condition, changes in financial condition, expenses, and results of operations, liquidity, capital expenditures or capital resources other than bank guarantees and purchase commitments disclosed in the preceding footnotes.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Interest Rate Risk

Our exposure to market rate risk for changes in interest rates primarily relates to our investment portfolio. We centrally manage our investment portfolios considering investment opportunities and risks, tax consequences, and overall financing strategies. Our investment portfolio includes fixed-income securities with a fair value of approximately $214.6 million at June 30, 2021. These securities are subject to interest rate risk and, based on our investment portfolio at June 30, 2021, a 100 basis point increase in interest rates would result in a decrease in the fair value of the portfolio of $1.5 million. While an increase in interest rates may reduce the fair value of the investment portfolio, we will not realize the losses in the Consolidated Statements of Operations unless the individual fixed-income securities are sold prior to recovery or the loss is determined to be other-than-temporary.

Currency Exchange Risk

We conduct business on a worldwide basis and, as such, a portion of our revenues, earnings, and net investments in foreign affiliates is exposed to changes in currency exchange rates. The economic impact of currency exchange rate movements is complex because such changes are often linked to variability in real growth, inflation, interest rates, governmental actions, and other factors. These changes, if material, could cause us to adjust our financing and operating strategies. Consequently, isolating the effect of changes in currency does not incorporate these other important economic factors.

37

Changes in currency exchange rates could affect our foreign currency denominated monetary assets and liabilities and forecasted cash flows. We may enter into monthly forward derivative contracts from time to time with the intent of mitigating a portion of this risk. We only use derivative financial instruments in the context of hedging and not for speculative purposes and have not historically designated our foreign exchange derivatives as hedges. Accordingly, changes in fair value from these contracts are recorded as “Other, net” in our Consolidated Statements of Operations. We execute derivative transactions with highly rated financial institutions to mitigate counterparty risk.

Our net sales to customers located outside of the United States represented approximately 54% and 60% of our total net sales for the three and six months ended June 30, 2021, respectively, and 70% and 66% for the comparable 2020 periods. We expect that net sales to customers outside the United States will continue to represent a large percentage of our total net sales. Our sales denominated in currencies other than the U.S. dollar represented 3% of total net sales in both the three and six months ended June 30, 2021, and 5% and 4% for the comparable 2020 periods.

A 10% change in foreign exchange rates would have an immaterial impact on the consolidated results of operations since most of our sales outside the United States are denominated in U.S. dollars.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our principal executive and financial officers have evaluated and concluded that our disclosure controls and procedures are effective as of June 30, 2021. The disclosure controls and procedures are designed to ensure that the information required to be disclosed in this report filed under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and is accumulated and communicated to our principal executive and financial officers as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

During the quarter ended June 30, 2021, there were no changes in internal control that have materially affected or are reasonably likely to materially affect internal control over financial reporting.

PART II—OTHER INFORMATION

Item 1. Legal Proceedings

On June 8, 2018, an Ultratech shareholder who received Veeco stock as part of the consideration for the Ultratech acquisition filed a purported class action complaint in the Superior Court of the State of California, County of Santa Clara, captioned Wolther v. Maheshwari et al., Case No. 18CV329690, on behalf of himself and others who purchased or acquired shares of Veeco pursuant to the registration statement and prospectus which Veeco filed with the SEC in connection with the Ultratech acquisition (the “Wolther Action”). On August 2 and August 8, 2018, two purported class action complaints substantially similar to the Wolther Action were filed on behalf of different plaintiffs in the same court as the Wolther Action. These cases have been consolidated with the Wolther Action, and a consolidated complaint was filed on December 11, 2018. The consolidated complaint seeks to recover damages and fees under Sections 11, 12, and 15 of the Securities Act of 1933 for, among other things, alleged false/misleading statements in the registration statement and prospectus relating to the Ultratech acquisition, relating primarily to the alleged failure to disclose delays in the advanced packaging business, increased MOCVD competition in China, and an intellectual property dispute.

On December 21, 2018, a purported Veeco stockholder filed a derivative action in the Superior Court of the State of California, County of Santa Clara, captioned Vladimir Gusinsky Revocable Trust v. Peeler, et al., Case No. 18CV339925, on behalf of nominal defendant Veeco. The complaint seeks to assert claims for breach of fiduciary duty, waste of corporate assets, and unjust enrichment against current and former Veeco directors premised on purported misstatements and omissions in the registration statement relating to the Ultratech acquisition. Veeco is defending this matter vigorously.

38

The Company is involved in various other legal proceedings arising in the normal course of business. The Company does not believe that the ultimate resolution of these matters will have a material adverse effect on its consolidated financial position, results of operations, or cash flows.

Item 1A. Risk Factors

Information regarding risk factors appears in the Safe Harbor Statement at the beginning of this quarterly report on Form 10-Q and in Part I — Item 1A of our 2020 Form 10-K. There have been no material changes from the risk factors previously disclosed.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not Applicable.

Item 5. Other Information

None.

39

Item 6. Exhibits

Unless otherwise indicated, each of the following exhibits has been filed with the Securities and Exchange Commission by Veeco under File No. 0-16244.

Exhibit		Incorporated by Reference			Filed or Furnished
Number	Exhibit Description	Form	Exhibit	Filing Date	Herewith
10.1	Second Amendment to Veeco Instruments Inc. 2016 Employee Stock Purchase Plan	S-8	10.1	5/11/2021
31.1	Certification of Chief Executive Officer pursuant to Rule 13a—14(a) or Rule 15d—14(a) of the Securities and Exchange Act of 1934.				*
31.2	Certification of Chief Financial Officer pursuant to Rule 13a—14(a) or Rule 15d—14(a) of the Securities and Exchange Act of 1934.				*
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes - Oxley Act of 2002.				*
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes - Oxley Act of 2002.				*
101.INS	XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.				*
101.XSD	XBRL Schema.				**
101.PRE	XBRL Presentation.				**
101.CAL	XBRL Calculation.				**
101.DEF	XBRL Definition.				**
101.LAB	XBRL Label.				**
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).				**

*     Filed herewith

**   Filed herewith electronically

40

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on August 3, 2021.

Veeco Instruments Inc.
By:	/S/ WILLIAM J. MILLER, Ph.D.
	William J. Miller, Ph.D.
	Chief Executive Officer
By:	/s/ JOHN P. KIERNAN
	John P. Kiernan
	Senior Vice President and Chief Financial Officer

41

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO

RULE 13a — 14(a) or RULE 15d — 14(a)

OF THE SECURITIES EXCHANGE ACT OF 1934

I, William J. Miller, Ph.D., certify that:

1. I have reviewed this quarterly report on Form 10-Q for the period ended June 30, 2021 of Veeco Instruments Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

By:	/s/ WILLIAM J. MILLER, Ph.D.
	William J. Miller, Ph.D.
	Chief Executive Officer
	Veeco Instruments Inc.
	August 3, 2021

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO

RULE 13a — 14(a) or RULE 15d — 14(a)

OF THE SECURITIES EXCHANGE ACT OF 1934

I,  John P. Kiernan, certify that:

1.    I have reviewed this quarterly report on Form 10-Q for the period ended June 30, 2021 of Veeco Instruments Inc.;

2.    Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.    Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.    The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)  designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)  designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)  evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)  disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.    The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)  all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)  any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

By:	/s/ JOHN P. KIERNAN
	John P. Kiernan
	Senior Vice President and Chief Financial Officer
	Veeco Instruments Inc.
	August 3, 2021

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of Veeco Instruments Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2021 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, William J. Miller, Ph.D., Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

By:	/s/ WILLIAM J. MILLER Ph.D.
	William J. Miller, Ph.D.
	Chief Executive Officer
	Veeco Instruments Inc.
	August 3, 2021

A signed original of this written statement required by Section 906 has been provided to Veeco Instruments Inc. and will be retained by Veeco Instruments Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of Veeco Instruments Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2021 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, John P. Kiernan, Senior Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

By:	/s/ JOHN P. KIERNAN
	John P. Kiernan
	Senior Vice President and Chief Financial Officer
	Veeco Instruments Inc.
	August 3, 2021

A signed original of this written statement required by Section 906 has been provided to Veeco Instruments Inc. and will be retained by Veeco Instruments Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2021	Jul. 28, 2021
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2021
Document Transition Report	false
Entity File Number	0-16244
Entity Registrant Name	VEECO INSTRUMENTS INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	11-2989601
Entity Address, Address Line One	Terminal Drive
Entity Address, City or Town	Plainview
Entity Address, State or Province	NY
Entity Address, Postal Zip Code	11803
City Area Code	516
Local Phone Number	677-0200
Title of 12(b) Security	Common Stock
Trading Symbol	VECO
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		50,348,804
Entity Central Index Key	0000103145
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q2
Amendment Flag	false

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Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Current assets:
Cash and cash equivalents	$ 114,747	$ 129,625
Restricted cash	640	658
Short-term investments	214,635	189,771
Accounts receivable, net	108,312	79,991
Contract assets	14,084	21,246
Inventories	164,041	145,906
Deferred cost of sales	595	433
Prepaid expenses and other current assets	21,570	19,301
Total current assets	638,624	586,931
Property, plant, and equipment, net	82,208	65,271
Operating lease right-of-use assets	27,768	10,275
Intangible assets, net	39,855	46,185
Goodwill	181,943	181,943
Deferred income taxes	1,440	1,440
Other assets	3,671	6,019
Total assets	975,509	898,064
Current liabilities:
Accounts payable	55,045	33,656
Accrued expenses and other current liabilities	52,436	44,876
Customer deposits and deferred revenue	70,569	67,235
Income taxes payable	1,363	914
Total current liabilities	179,413	146,681
Deferred income taxes	5,257	5,240
Long-term debt	328,215	321,115
Long-term operating lease liabilities	31,036	6,305
Other liabilities	7,853	10,349
Total liabilities	551,774	489,690
Stockholders' equity:
Preferred stock, $0.01 par value; 500,000 shares authorized; no shares issued and outstanding.
Common stock, $0.01 par value; 120,000,000 shares authorized; 50,348,804 shares issued and outstanding at June 30, 2021 and 49,723,751 shares issued and outstanding at December 31, 2020	503	497
Additional paid-in capital	1,119,908	1,113,352
Accumulated deficit	(698,479)	(707,321)
Accumulated other comprehensive income	1,803	1,846
Total stockholders' equity	423,735	408,374
Total liabilities and stockholders' equity	$ 975,509	$ 898,064

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Consolidated Balance Sheets (Parenthetical) - $ / shares	Jun. 30, 2021	Dec. 31, 2020
Consolidated Balance Sheets
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized	500,000	500,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, authorized shares	120,000,000	120,000,000
Common stock, shares issued	50,348,804	49,723,751
Common stock, shares outstanding	50,348,804	49,723,751

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Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Consolidated Statements of Operations
Net sales	$ 146,344	$ 98,637	$ 280,059	$ 203,139
Cost of sales	86,178	56,743	164,978	114,826
Gross profit	60,166	41,894	115,081	88,313
Operating expenses, net:
Research and development	22,553	19,254	44,398	38,449
Selling, general, and administrative	21,466	17,818	41,722	36,123
Amortization of intangible assets	2,976	3,834	6,330	7,671
Restructuring		472		1,097
Asset impairment		281		281
Other operating expense (income), net	(81)	(174)	(36)	(283)
Total operating expenses, net	46,914	41,485	92,414	83,338
Operating income (loss)	13,252	409	22,667	4,975
Interest income	235	427	370	1,227
Interest expense	(6,820)	(6,041)	(13,578)	(11,706)
Loss on extinguishment of debt		(3,046)		(3,046)
Income (loss) before income taxes	6,667	(8,251)	9,459	(8,550)
Income tax expense (benefit)	319	51	617	319
Net income (loss)	$ 6,348	$ (8,302)	$ 8,842	$ (8,869)
Income (loss) per common share:
Basic (in dollars per share)	$ 0.13	$ (0.17)	$ 0.18	$ (0.18)
Diluted (in dollars per share)	$ 0.12	$ (0.17)	$ 0.17	$ (0.18)
Weighted average number of shares:
Basic (in shares)	48,743	48,109	48,758	48,147
Diluted (in shares)	53,942	48,109	53,539	48,147

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Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Consolidated Statements of Comprehensive Income (Loss)
Net income (loss)	$ 6,348	$ (8,302)	$ 8,842	$ (8,869)
Other comprehensive income (loss), net of tax:
Unrealized gain (loss) on available-for-sale securities	(15)	(148)	(4)	53
Change in currency translation adjustments	(9)	18	(39)	(30)
Total other comprehensive income (loss), net of tax	(24)	(130)	(43)	23
Total comprehensive income (loss)	$ 6,324	$ (8,432)	$ 8,799	$ (8,846)

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Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020
Cash Flows from Operating Activities
Net income (loss)	$ 8,842	$ (8,869)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	13,189	15,372
Non-cash interest expense	7,100	6,778
Deferred income taxes	17	191
Share-based compensation expense	7,605	6,620
Loss on extinguishment of debt		3,046
Asset impairment		281
Changes in operating assets and liabilities:
Accounts receivable and contract assets	(21,158)	(9,454)
Inventories and deferred cost of sales	(18,298)	(4,520)
Prepaid expenses and other current assets	4,489	(3,578)
Accounts payable and accrued expenses	14,046	5,820
Customer deposits and deferred revenue	3,334	3,470
Income taxes receivable and payable, net	449	93
Other, net	1,114	2,300
Net cash provided by (used in) operating activities	20,729	17,550
Cash Flows from Investing Activities
Capital expenditures	(9,082)	(1,957)
Proceeds from the sale of investments	130,398	103,630
Payments for purchases of investments	(156,020)	(100,265)
Proceeds from held for sale assets, net of costs to sell		9,503
Net cash provided by (used in) investing activities	(34,704)	10,911
Cash Flows from Financing Activities
Proceeds from issuance of 2025 Notes and 2027 Notes, net of issuance costs		121,946
Purchase of capped calls		(10,313)
Repurchase of 2023 Notes		(81,240)
Proceeds (net of tax withholdings) from option exercises and employee stock purchase plan	1,865	1,592
Restricted stock tax withholdings	(2,747)	(1,518)
Net cash provided by (used in) financing activities	(882)	30,467
Effect of exchange rate changes on cash and cash equivalents	(39)	(29)
Net increase (decrease) in cash, cash equivalents, and restricted cash	(14,896)	58,899
Cash, cash equivalents, and restricted cash - beginning of period	130,283	129,951
Cash, cash equivalents, and restricted cash - end of period	115,387	188,850
Supplemental Disclosure of Cash Flow Information
Interest paid	4,160	5,508
Net income taxes paid (refunds received)	(196)	66
Non-cash operating and financing activities
Capital expenditures included in accounts payable and accrued expenses	15,400	515
Net transfer of property, plant and equipment to inventory		526
Right-of-use assets obtained in exchange for lease obligations	$ 20,353	$ 913

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Basis of Presentation

6 Months Ended

Jun. 30, 2021

Basis of Presentation

Basis of Presentation

Note 1 — Basis of Presentation

The accompanying unaudited Consolidated Financial Statements of Veeco have been prepared in accordance with U.S. GAAP as defined in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification 270 for interim financial information and with the instructions to Rule 10-01 of Securities and Exchange Commission Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements as the interim information is an update of the information that was presented in Veeco’s most recent annual financial statements. For further information, refer to Veeco’s Consolidated Financial Statements and Notes thereto included in the Annual Report on Form 10-K for the year ended December 31, 2020 (“2020 Form 10-K”). In the opinion of management, all adjustments considered necessary for a fair presentation have been included. All such adjustments are of a normal, recurring nature.

Veeco reports interim quarters on a 13-week basis ending on the last Sunday of each quarter. The fourth quarter always ends on the last day of the calendar year, December 31. The 2021 interim quarters end on April 4, July 4, and October 3, and the 2020 interim quarters ended on March 29, June 28, and September 27. These interim quarters are reported as March 31, June 30, and September 30 in Veeco’s interim consolidated financial statements.

The preparation of financial statements in conformity with U.S GAAP requires the Company’s management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Although these estimates are based on management’s knowledge of current events and actions it may undertake in the future, actual results may differ from these estimates. In particular, the COVID-19 pandemic has adversely impacted and is likely to further adversely impact the Company’s business and markets, including the Company’s workforce and operations and the operations of the Company’s customers, suppliers, and business partners. The full extent to which the pandemic will directly or indirectly impact the Company's business, results of operations and financial condition, including sales, expenses, manufacturing, research and development costs, reserves and allowances, fair value measurements, and asset impairment charges, will depend on future developments that are highly uncertain and difficult to predict. These developments include, but are not limited to, the duration and spread of the outbreak, its severity, the actions to contain the virus or address its impact, governmental actions to contain the spread of the pandemic and respond to the reduction in global economic activity, and how quickly and to what extent normal economic and operating conditions can resume.

Revenue Recognition

Revenue is recognized upon the transfer of control of the promised product or service to the customer in an amount that reflects the consideration the Company expects to receive in exchange for such product or service. The Company’s contracts with customers generally do not contain variable consideration. In the rare instances where variable consideration is included, the Company estimates the amount of variable consideration and determines what portion of that, if any, has a high probability of significant subsequent revenue reversal, and if so, that amount is excluded from the transaction price. The Company’s contracts with customers frequently contain multiple deliverables, such as systems, upgrades, components, spare parts, installation, maintenance, and service plans. Judgment is required to properly identify the performance obligations within a contract and to determine how the revenue should be allocated among the performance obligations. The Company also evaluates whether multiple transactions with the same customer or related parties should be considered part of a single contract based on an assessment of whether the contracts or agreements are negotiated or executed within a short time frame of each other or if there are indicators that the contracts are negotiated in contemplation of one another.

When there are separate units of accounting, the Company allocates revenue to each performance obligation on a relative stand-alone selling price basis. The stand-alone selling prices are determined based on the prices at which the Company separately sells the systems, upgrades, components, spare parts, installation, maintenance, and service plans. For items

that are not sold separately, the Company estimates stand-alone selling prices generally using an expected cost plus margin approach.

Most of the Company’s revenue is recognized at a point in time when the performance obligation is satisfied. The Company considers many facts when evaluating each of its sales arrangements to determine the timing of revenue recognition, including its contractual obligations and the nature of the customer’s post-delivery acceptance provisions. The Company’s system sales arrangements, including certain upgrades, generally include field acceptance provisions that may include functional or mechanical test procedures. For many of these arrangements, a customer source inspection of the system is performed in the Company’s facility, test data is sent to the customer documenting that the system is functioning to the agreed upon specifications prior to delivery, or other quality assurance testing is performed internally to ensure system functionality prior to shipment. Historically, such source inspection or test data replicates the field acceptance provisions that are performed at the customer’s site prior to final acceptance of the system. When the Company objectively demonstrates that the criteria specified in the contractual acceptance provisions are achieved prior to delivery either through customer testing or the Company’s historical experience of its tools meeting specifications, transfer of control of the product to the customer is considered to have occurred and revenue is recognized upon system delivery since there is no substantive contingency remaining related to the acceptance provisions at that date. For new products, new applications of existing products, or for products with substantive customer acceptance provisions where the Company cannot objectively demonstrate that the criteria specified in the contractual acceptance provisions have been achieved prior to delivery, revenue and the associated costs are deferred. The Company recognizes such revenue and costs upon obtaining objective evidence that the acceptance provisions can be achieved, assuming all other revenue recognition criteria have been met.

In certain cases the Company’s contracts with customers contain a billing retention, which is billed by the Company and payable by the customer when field acceptance provisions are completed. Revenue recognized in advance of the amount that has been billed is recorded as a contract asset on the Consolidated Balance Sheets.

The Company recognizes revenue related to maintenance and service contracts over time based upon the respective contract term. Installation revenue is recognized over time as the installation services are performed. The Company recognizes revenue from the sales of components, spare parts, and specified service engagements at a point in time, which is typically consistent with the time of delivery in accordance with the terms of the applicable sales arrangement.

The Company may receive customer deposits on system transactions. The timing of the transfer of goods or services related to the deposits is either at the discretion of the customer or expected to be within one year from the deposit receipt. As such, the Company does not adjust transaction prices for the time value of money. Incremental direct costs incurred related to the acquisition of a customer contract, such as sales commissions, are expensed as incurred since the expected amortization period is one year or less.

The Company has elected to treat shipping and handling costs as a fulfillment activity, and the Company includes such costs in cost of sales when the Company recognizes revenue for the related goods. Taxes assessed by governmental authorities that are collected by the Company from a customer are excluded from revenue.

Inventories

Inventories are stated at the lower of cost or net realizable value, with cost determined on a first-in, first-out basis. Each quarter the Company assesses the valuation and recoverability of all inventories: materials (raw materials, spare parts, and service inventory); work-in-process; and finished goods. Obsolete inventory or inventory in excess of management’s estimated usage requirement is written down to its estimated net realizable value if less than cost. The Company evaluates usage requirements by analyzing historical usage, anticipated demand, alternative uses of materials, and other qualitative factors. Unanticipated changes in demand for the Company’s products may require a write down of

inventory, which would be reflected in cost of sales in the period the revision is made. Inventory acquired as part of a business combination is recorded at fair value on the date of acquisition.

Recently Adopted Accounting Standards

The Company adopted ASU 2019-12: Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes in the second quarter of 2020, effective as of the beginning of fiscal year 2020. This ASU simplifies the accounting for income taxes by eliminating certain exceptions to the general principles and simplifying several aspects of ASC 740, Income Taxes, including, but not limited to, requirements related to the following: a) exception to the incremental approach for intraperiod tax allocation; b) the tax basis step-up in goodwill obtained in a transaction that is not a business combination; c) ownership changes in investments - changes from a subsidiary to an equity method investment; d) separate financial statements of entities not subject to tax; e) interim-period accounting for enacted changes in tax law; and f) the year-to-date loss limitation in interim-period tax accounting. The adoption did not have a material impact on the Company’s consolidated financial statements as of the date of adoption.

Recent Accounting Standards Not Yet Adopted

In August 2020, the FASB issued ASU 2020-06: Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. This standard simplifies the accounting for convertible debt instruments by removing the separation models for convertible debt with a cash conversion feature, as well as convertible instruments with a beneficial conversion feature. As a result, entities will account for a convertible debt instrument wholly as debt, unless certain other conditions are met. The elimination of these models will reduce non-cash interest expense for entities that have issued a convertible instrument that was within the scope of those models before the adoption of ASU 2020-06. Additionally, ASU 2020-06 requires the application of the if-converted method for calculating diluted earnings per share, and precludes the use of the treasury stock method for certain debt instruments. The provisions of ASU 2020-06 are applicable for fiscal years beginning after December 15, 2021. The Company’s 2023 Notes, 2025 Notes, and 2027 Notes all are currently accounted for using the separation models for convertible debt with a cash conversion feature, and therefore upon adoption of ASU 2020-06 in the first quarter of 2022, the Company expects a decrease in non-cash interest expense. Additionally, the Company will be required to use the if-converted method when calculating diluted earnings (loss) per share, which will result in an increase in income available to common shareholders, as well as an increase in diluted shares outstanding. The Company is evaluating the permitted transition methods, which includes either a modified retrospective or full retrospective method.

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Income (Loss) Per Common Share

6 Months Ended

Jun. 30, 2021

Income (Loss) Per Common Share

Income (Loss) Per Common Share

Note 2 — Income (Loss) Per Common Share

Basic income (loss) per share is calculated by dividing net income (loss) by the weighted average number of shares outstanding during the period. Diluted income per share is calculated by dividing net income by the weighted average number of shares used to calculate basic income (loss) per share plus the weighted average number of common share equivalents outstanding during the period. The dilutive effect of outstanding options to purchase common stock and share-based awards is considered in diluted income per share by application of the treasury stock method. The dilutive effect of performance share units is included in diluted income per common share if the performance targets have been achieved, or would have been achieved if the reporting date was the end of the contingency period. The Company has determined that it has the ability and intent to settle the principal amount of its convertible senior notes in cash, and the excess of the principal portion in shares of its common stock. As such, the Company accounts for the conversion spread using the treasury stock method, and the shares issuable upon conversion of the Notes are not included in the calculation of diluted earnings per share except to the extent that the conversion value of the Notes exceeds their principal amount and if the effect would be dilutive. The computations of basic and diluted income (loss) per share for the three and six months ended June 30, 2021 and 2020 are as follows:

	Three months ended June 30,				Six months ended June 30,
	2021		2020		2021		2020
	(in thousands, except per share amounts)
Net income (loss)	$	6,348	$	(8,302)	$	8,842	$	(8,869)
Net income (loss) per common share:
Basic	$	0.13	$	(0.17)	$	0.18	$	(0.18)
Diluted	$	0.12	$	(0.17)	$	0.17	$	(0.18)
Basic weighted average shares outstanding		48,743		48,109		48,758		48,147
Dilutive effect of share-based awards		1,707		—		1,553
Dilutive effect of the 2027 Notes		3,492		—		3,228		—
Diluted weighted average shares outstanding		53,942		48,109		53,539		48,147
Common share equivalents excluded from the diluted weighted average shares outstanding since the Company incurred a net loss and their effect would be antidilutive		N/A		712		N/A		671
Potentially dilutive shares excluded from the diluted calculation as their effect would be antidilutive		449		1,194		452		1,132
Maximum potential shares to be issued for settlement of the 2023, 2025, and 2027 Notes excluded from the diluted calculation as their effect would be antidilutive due to a net loss or the fact that the conversion value of the Notes did not exceed their principal amount		8,811		15,354		8,811		15,354

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Assets

6 Months Ended

Jun. 30, 2021

Assets

Assets

Note 3 — Assets

Investments

Short-term investments are generally classified as available-for-sale and reported at fair value, with unrealized gains and losses, net of tax, presented as a separate component of stockholders’ equity under the caption “Accumulated other comprehensive income” in the Consolidated Balance Sheets. These securities may include U.S. treasuries, government agency securities, corporate debt, and commercial paper, all with maturities of greater than three months when purchased. All realized gains and losses and unrealized losses resulting from declines in fair value that are other than temporary are included in “Other operating expense (income), net” in the Consolidated Statements of Operations.

Fair value is the price that would be received for an asset or the amount paid to transfer a liability in an orderly transaction between market participants. Veeco classifies certain assets based on the following fair value hierarchy:

Level 1: Quoted prices in active markets that are unadjusted and accessible at the measurement date for identical, unrestricted assets or liabilities;

Level 2: Quoted prices for identical assets and liabilities in markets that are not active, quoted prices for similar assets and liabilities in active markets or financial instruments for which significant inputs are observable, either directly or indirectly; and

Level 3: Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.

A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Veeco has evaluated the estimated fair value of financial instruments using available market information and valuations as provided by third-party sources. The use of different market assumptions or estimation methodologies could have a significant effect on the estimated fair value amounts.

The following table presents the portion of Veeco’s assets that were measured at fair value on a recurring basis at June 30, 2021 and December 31, 2020:

	Level 1		Level 2		Level 3		Total
	(in thousands)
June 30, 2021
Cash equivalents
Certificate of deposits and time deposits	$	60,479	$	—	$	—	$	60,479
Corporate debt		—		—		—		—
Commercial paper		—		—		—		—
Money market cash		320		—		—		320
Total	$	60,799	$	—	$	—	$	60,799
Short-term investments
U.S. treasuries	$	124,129	$	—	$	—	$	124,129
Government agency securities		—		7,255		—		7,255
Corporate debt		—		65,666		—		65,666
Commercial paper		—		17,585		—		17,585
Total	$	124,129	$	90,506	$	—	$	214,635
December 31, 2020
Cash equivalents
Certificate of deposits and time deposits	$	59,168	$	—	$	—	$	59,168
Commercial paper		—		2,000		—		2,000
U.S. treasuries		24,997		—		—		24,997
Total	$	84,165	$	2,000	$	—	$	86,165
Short-term investments
U.S. treasuries	$	149,219	$	—	$	—	$	149,219
Corporate debt		—		32,554		—		32,554
Commercial paper		—		7,998		—		7,998
Total	$	149,219	$	40,552	$	—	$	189,771

There were no transfers between fair value measurement levels during the three and six months ended June 30, 2021.

At June 30, 2021 and December 31, 2020, the amortized cost and fair value of available-for-sale securities consist of:

			Gross		Gross
	Amortized		Unrealized		Unrealized		Estimated
	Cost		Gains		Losses		Fair Value
	(in thousands)
June 30, 2021
U.S. treasuries	$	124,140	$	4	$	(15)	$	124,129
Government agency securities		7,258		—		(3)		7,255
Corporate debt		65,676		26		(36)		65,666
Commercial paper		17,585		—		—		17,585
Total	$	214,659	$	30	$	(54)	$	214,635
December 31, 2020
U.S. treasuries	$	149,206	$	14	$	(1)	$	149,219
Corporate debt		32,588		—		(34)		32,554
Commercial paper		7,997		1		—		7,998
Total	$	189,791	$	15	$	(35)	$	189,771

Available-for-sale securities in a loss position at June 30, 2021 and December 31, 2020 consist of:

	June 30, 2021				December 31, 2020
			Gross				Gross
	Estimated		Unrealized		Estimated		Unrealized
	Fair Value		Losses		Fair Value		Losses
		(in thousands)
U.S. treasuries	$	61,520	$	(15)	$	19,991	$	(1)
Government agency securities		7,255		(3)		—		—
Corporate debt		41,569		(36)		32,554		(34)
Total	$	110,344	$	(54)	$	52,545	$	(35)

At June 30, 2021 and December 31, 2020, there were no short-term investments that had been in a continuous loss position for more than 12 months.

The contractual maturities of securities classified as available-for-sale at June 30, 2021 were as follows:

	June 30, 2021
	Amortized		Estimated
	Cost		Fair Value
		(in thousands)
Due in one year or less	$	152,949	$	152,932
Due after one year through two years		55,693		55,679
Due after two years through three years		6,017		6,024
Total	$	214,659	$	214,635

Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. There were minimal realized gains or losses for the six months ended June 30, 2021 and no realized gains or losses for the six months ended June 30, 2020.

Accounts Receivable

Accounts receivable is presented net of an allowance for doubtful accounts of $0.7 million at June 30, 2021 and December 31, 2020. The Company considered its current expectations of future economic conditions, including the impact of COVID-19, when estimating its allowance for doubtful accounts.

Inventories

Inventories at June 30, 2021 and December 31, 2020 consist of the following:

	June 30,		December 31,
	2021		2020
	(in thousands)
Materials	$	91,389	$	82,679
Work-in-process		59,769		53,979
Finished goods		12,883		9,248
Total	$	164,041	$	145,906

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets primarily consist of supplier deposits, prepaid value-added tax, lease deposits, prepaid insurance, prepaid licenses, and other receivables. The balance as of June 30, 2021 includes a current receivable of $4.1 million related to landlord reimbursement for leasehold improvements associated with the Company’s new leased facility in San Jose, California. In addition, Veeco had deposits with its suppliers of $4.5 million and $7.2 million at June 30, 2021 and December 31, 2020, respectively.

Property, Plant, and Equipment

Property, plant, and equipment at June 30, 2021 and December 31, 2020 consist of the following:

	June 30,		December 31,
	2021		2020
	(in thousands)
Land	$	5,061	$	5,061
Building and improvements		63,117		62,865
Machinery and equipment (1)		144,585		140,493
Leasehold improvements		26,036		6,671
Gross property, plant, and equipment		238,799		215,090
Less: accumulated depreciation and amortization		156,591		149,819
Net property, plant, and equipment	$	82,208	$	65,271

(1) Machinery and equipment also includes software, furniture and fixtures

For the three and six months ended June 30, 2021, depreciation expense was $3.5 million and $6.9 million, respectively, and $3.8 million and $7.7 million, respectively, for the comparable 2020 periods.

Goodwill

Goodwill represents the future economic benefits arising from assets acquired in a business combination that are not individually identified and separately recognized. The Company continues to assess potential triggering events related to the value of its goodwill and concluded that there were no indicators of impairment during the six months ended June 30, 2021.

Intangible Assets

Intangible assets consist of purchased technology, customer relationships, patents, trademarks and tradenames, and backlog, and are initially recorded at fair value. Long-lived intangible assets are amortized over their estimated useful lives in a method reflecting the pattern in which the economic benefits are consumed or amortized on a straight-line basis if such pattern cannot be reliably determined. The Company continues to assess potential triggering events related to the value of its intangible assets and concluded that there were no indicators of impairment during the three and six months ended June 30, 2021.

The components of purchased intangible assets were as follows:

	June 30, 2021						December 31, 2020
			Accumulated						Accumulated
	Gross		Amortization				Gross		Amortization
	Carrying		and		Net		Carrying		and		Net
	Amount		Impairment		Amount		Amount		Impairment		Amount
	(in thousands)
Technology	$	327,908	$	306,624	$	21,284	$	327,908	$	302,358	$	25,550
Customer relationships		146,465		131,552		14,913		146,465		130,131		16,334
Trademarks and tradenames		30,910		27,254		3,656		30,910		26,614		4,296
Other		3,686		3,684		2		3,686		3,681		5
Total	$	508,969	$	469,114	$	39,855	$	508,969	$	462,784	$	46,185

Other intangible assets primarily consist of patents, licenses, and backlog.

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Liabilities

6 Months Ended

Jun. 30, 2021

Liabilities

Liabilities

Note 4 — Liabilities

Accrued Expenses and Other Current Liabilities

The components of accrued expenses and other current liabilities at June 30, 2021 and December 31, 2020 consist of:

	June 30,		December 31,
	2021		2020
	(in thousands)
Payroll and related benefits	$	24,412	$	26,630
Warranty		6,220		5,058
Operating lease liabilities		4,175		4,148
Interest		4,893		2,574
Professional fees		1,777		1,112
Sales, use, and other taxes		6,153		2,658
Other		4,806		2,696
Total	$	52,436	$	44,876

Warranty

Warranties are typically valid for one year from the date of system final acceptance. The Company estimates the costs that may be incurred under the warranty which are determined by analyzing specific product and historical configuration statistics and regional warranty support costs and are 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 also result in changes to warranty costs. Changes in product warranty reserves for the six months ended June 30, 2021 include:

		(in thousands)
Balance - December 31, 2020	$	5,058
Warranties issued		3,221
Consumption of reserves		(2,912)
Changes in estimate		853
Balance - June 30, 2021	$	6,220

Customer Deposits and Deferred Revenue

Customer deposits totaled $53.3 million and $49.3 million at June 30, 2021 and December 31, 2020, respectively. Deferred revenue represents amounts billed, other than deposits, in excess of the revenue that can be recognized on a particular contract at the balance sheet date. Changes in deferred revenue were as follows:

	(in thousands)
Balance - December 31, 2020	$	17,985
Deferral of revenue		(7,436)
Recognition of unearned revenue		6,718
Balance - June 30, 2021	$	17,267

As of June 30, 2021, the Company has approximately $35.1 million of remaining performance obligations on contracts with an original estimated duration of one year or more, of which approximately 73% is expected to be recognized within one year, with the remaining amounts expected to be recognized between one to three years. The Company has elected to exclude disclosures regarding remaining performance obligations that have an original expected duration of one year or less.

Convertible Senior Notes

2023 Notes

On January 10, 2017, the Company issued $345.0 million of 2.70% convertible senior unsecured notes due 2023 (the “2023 Notes”). The Company received net proceeds, after deducting underwriting discounts and fees and expenses payable by the Company, of approximately $335.8 million. The 2023 Notes bear interest at a rate of 2.70% per year, payable semiannually in arrears on January 15 and July 15 of each year, commencing on July 15, 2017. The 2023 Notes mature on January 15, 2023, unless earlier purchased by the Company, redeemed, or converted.

On May 18, 2020, in connection with the completion of a private offering of $125.0 million aggregate principal amount of 3.75% convertible senior notes due 2027 described below, the Company repurchased and retired approximately $88.3 million in aggregate principal amount of its outstanding 2023 Notes, with a carrying amount of $78.1 million, for approximately $81.2 million of cash.

Additionally, on November 11, 2020, the Company entered into a privately negotiated exchange agreement with a holder of its outstanding 2023 Notes, under which the Company agreed to retire $125.0 million in aggregate original principal amount of the 2023 Notes, with a carrying amount of $113.1 million, in exchange for the issuance of $132.5 million in

aggregate principal amount of new 3.50% convertible senior notes due 2025 described below, which had a fair value that approximated the principal amount of notes issued.

2025 Notes

On November 17, 2020, as part of the privately negotiated exchange agreement described above, the Company issued $132.5 million of 3.50% convertible senior notes due 2025 (the “2025 Notes”). The 2025 Notes bear interest at a rate of 3.50% per year, payable semiannually in arrears on January 15 and July 15 of each year, commencing on July 15, 2021. The 2025 Notes mature on January 15, 2025, unless earlier purchased by the Company, redeemed, or converted.

2027 Notes

On May 18, 2020, the Company completed a private offering of $125.0 million of 3.75% convertible senior notes due 2027 (the “2027 Notes”). The Company received net proceeds of approximately $121.9 million, after deducting underwriting discounts and fees and expenses payable by the Company. Additionally, the Company used approximately $10.3 million of cash to purchase capped calls, discussed below. The 2027 Notes bear interest at a rate of 3.75% per year, payable semiannually in arrears on June 1 and December 1 of each year, commencing on December 1, 2020. The 2027 Notes mature on June 1, 2027, unless earlier purchased by the Company, redeemed, or converted.

The 2023 Notes, 2025 Notes, and 2027 Notes (collectively, the “Notes”) are unsecured obligations of Veeco and rank senior in right of payment to any of Veeco’s subordinated indebtedness; equal in right of payment to all of Veeco’s unsecured indebtedness that is not subordinated; effectively subordinated in right of payment to any of Veeco’s secured indebtedness to the extent of the value of the assets securing such indebtedness; and structurally subordinated to all indebtedness and other liabilities (including trade payables) of Veeco’s subsidiaries.

The Notes are convertible at the option of the holders upon the satisfaction of specified conditions and during certain periods as described below. The initial conversion rates are 24.9800, 41.6667, and 71.5372 shares of the Company’s common stock per $1,000 principal amount of the 2023 Notes, 2025 Notes, and 2027 Notes, respectively, representing initial effective conversion prices of $40.03, $24.00, and $13.98 per share of common stock, respectively. The conversion rates may be subject to adjustment upon the occurrence of certain specified events.

Holders may convert all or any portion of their notes, in multiples of one thousand dollar principal amount, at their option at any time prior to the close of business on the business day immediately preceding October 15, 2022 with respect to the 2023 Notes, October 15, 2024 with respect to the 2025 Notes, and October 1, 2026 with respect to the 2027 Notes, only under the following circumstances:

(i) During any calendar quarter (and only during such calendar quarter), if the last reported sale price of the common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day;

(ii) During the five consecutive business day period after any five consecutive trading day period (the “measurement period”) in which the trading price per one thousand dollar principal amount of Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of Veeco’s common stock and the conversion rate on each such trading day;

(iii) If the Company calls any or all of applicable series of the Notes for redemption at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date; or

(iv) Upon the occurrence of specified corporate events.

For the calendar quarter ended June 30, 2021, the last reported sales price of common stock during the 30 consecutive trading days, based on the criteria outlined in (i) above, was greater than 130% of the conversion price of the 2027 Notes, and as such the 2027 Notes are convertible by the holders until September 30, 2021.

Holders may convert their notes at any time, regardless of the foregoing circumstances, on or after October 15, 2022 with respect to the 2023 Notes, October 15, 2024 with respect to the 2025 Notes, and October 1, 2026 with respect to the 2027 Notes, until the close of business on the business day immediately preceding the respective maturity date.

Upon conversion by the holders, the Company may elect to settle such conversion in shares of its common stock, cash, or a combination thereof. As a result of its cash conversion options, the Company segregated the liability component of the instruments from the equity components. The liability components were measured by estimating the fair value of a non-convertible debt instrument that is similar in its terms to the Notes. The calculation of the fair value of the debt components required the use of Level 3 inputs, including utilization of convertible investors’ credit assumptions and high yield bond indices. Fair value was estimated through discounting future interest and principal payments, an income approach, due under the Notes at a discount rate equal to the estimated borrowing rate for similar non-convertible debt, or 7.0%, 8.0%, and 9.1% with respect to the 2023 Notes, 2025 Notes, and 2027 Notes, respectively. The excess of the aggregate face values of the Notes over the estimated fair values of the liability components of $72.5 million, $21.0 million, and $34.2 million with respect to the 2023 Notes, 2025 Notes, and 2027 Notes, respectively, were recognized as debt discounts and recorded as an increase to additional paid-in capital and will be amortized over the expected lives of the Notes using the effective interest rate method. Amortization of the debt discounts are recognized as non-cash interest expense.

The transaction costs of $9.2 million, $1.9 million, and $3.1 million incurred in connection with the issuance of the 2023 Notes, 2025 Notes, and 2027 Notes, respectively, were allocated to the liability and equity components based on their relative values. Transaction costs allocated to the liability component are being amortized using the effective interest rate method and recognized as non-cash interest expense over the expected terms of the Notes. Transaction costs allocated to the equity component of $1.9 million, $0.3 million, and $0.8 million with respect to the 2023 Notes, 2025 Notes, and 2027 Notes, respectively, reduced the value of the equity components recognized in stockholders' equity.

In connection with the offering of the 2027 Notes, on May 13, 2020, the Company entered into privately negotiated capped call transactions (the “Capped Call Transactions”), pursuant to capped call confirmations, covering the total principal amount of the 2027 Notes for an aggregate premium of $10.3 million. The Capped Call Transactions are expected generally to reduce the potential dilution to the Company’s common stock upon any conversion of the 2027 Notes and/or offset any cash payments the Company is required to make in excess of the aggregate principal amount of converted 2027 Notes, as the case may be, with such reduction and/or offset subject to a cap based on the capped price of the Capped Call Transactions. The Capped Call Transactions exercise price is equal to the initial conversion price of the 2027 Notes, and the capped price of the Capped Call Transactions is approximately $18.46 per share and is subject to certain adjustments under the terms of the capped call confirmations.

The Capped Call Transactions are separate transactions entered into by the Company with the capped call counterparties, are not part of the terms of the 2027 Notes and do not change the holders’ rights under the 2027 Notes. Holders of the 2027 Notes do not have any rights with respect to the Capped Call Transactions. The cost of the Capped Call Transactions is not expected to be tax-deductible as the Company did not elect to integrate the Capped Call Transactions into the 2027 Notes for tax purposes. The Company used a portion of the net proceeds from the offering of the 2027 Notes to pay for the Capped Call Transactions, and the cost of the Capped Call Transactions was recorded as a reduction of the Company’s additional paid-in capital in the accompanying consolidated financial statements.

The carrying value of the 2023 Notes, 2025 Notes and 2027 Notes are as follows:

		June 30, 2021						December 31, 2020
		Principal Amount		Unamortized debt discount/ transaction costs		Net carrying value		Principal Amount		Unamortized debt discount/ transaction costs		Net carrying value
		(in thousands)
2023 Notes	$	131,695	$	(9,171)	$	122,524	$	131,695	$	(11,925)	$	119,770
2025 Notes		132,500		(19,749)		112,751		132,500		(22,097)		110,403
2027 Notes		125,000		(32,060)		92,940		125,000		(34,058)		90,942
Net carrying value	$	389,195	$	(60,980)	$	328,215	$	389,195	$	(68,080)	$	321,115

Total interest expense related to the 2023 Notes, 2025 Notes and 2027 Notes is as follows:

	Three months ended June 30,				Six months ended June 30,
	2021		2020		2021		2020
	(in thousands)
Cash Interest Expense
Coupon interest expense - 2023 Notes	$	889	$	2,070	$	1,778	$	4,399
Coupon interest expense - 2025 Notes		1,159		—		2,319		—
Coupon interest expense - 2027 Notes		1,172		573		2,344		573
Non-cash Interest Expense
Amortization of debt discount/transaction costs- 2023 Notes		1,390		3,004		2,754		6,325
Amortization of debt discount/transaction costs- 2025 Notes		1,185		—		2,348		—
Amortization of debt discount/transaction costs- 2027 Notes		1,011		453		1,998		453
Total Interest Expense	$	6,806	$	6,100	$	13,541	$	11,750

The Company determined the 2023 Notes, 2025 notes, and 2027 Notes are Level 2 liabilities in the fair value hierarchy and had an estimated fair value at June 30, 2021 of $132.3 million, $158.8, and $220.2 million, respectively.

Other Liabilities

As part of the acquisition of Ultratech, the Company assumed an executive non-qualified deferred compensation plan that allowed qualifying executives to defer cash compensation. The plan was frozen at the time of acquisition and no further contributions have been made. At December 31, 2020, plan assets approximated $2.4 million, representing the cash surrender value of life insurance policies and is included within “Other assets” in the Consolidated Balance Sheets, while plan liabilities approximated $2.5 million at December 31, 2020 and was included within “Other liabilities” in the Consolidated Balance Sheets. The plan was terminated and fully liquidated during the first quarter of 2021. Other liabilities at June 30, 2021 and December 31, 2020 also included (i) medical and dental benefits for former executives of $1.8 million and $1.9 million, respectively; (ii) asset retirement obligations of $2.8 million and $2.7 million, respectively; and (iii) income tax payables of $1.4 million. Additionally, as a result of the Coronavirus, Aid, Relief, and Economic Security Act, the Company has accrued for and deferred the deposit and payment of its share of social security taxes, resulting in a liability of $3.5 million at both June 30, 2021 and December 31, 2020, of which $1.7 million is included within “Accrued expenses and other current liabilities”, and $1.8 million is included within “Other liabilities” in the Consolidated Balance Sheets for both periods.

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2021

Commitments and Contingencies

Commitments and Contingencies

Note 5 — Commitments and Contingencies

Leases

The Company’s operating leases primarily include real estate leases for properties used for manufacturing, R&D activities, sales and service, and administration, as well as certain equipment leases. Some leases may include options to renew for a period of up to 5 years, while others may include options to terminate the lease. The weighted average remaining lease term of the Company’s operating leases as of June 30, 2021 was 12 years, and the weighted average discount rate used in determining the present value of future lease payments was 5.7%.

The following table provides the maturities of lease liabilities at June 30, 2021:

	Operating
	Leases
	(in thousands)
Payments due by period:
2021	$	2,125
2022		4,667
2023		3,145
2024		2,897
2025		2,506
Thereafter		38,367
Total future minimum lease payments		53,707
Less: Imputed interest		(18,496)
Total	$	35,211
Reported as of June 30, 2021
Accrued expenses and other current liabilities	$	4,175
Long-term operating lease liabilities		31,036
Total	$	35,211

Operating lease cost for the three and six months ended June 30, 2021 were $1.8 million and $3.1 million, respectively, and $1.4 million and $2.7 million, respectively, for the comparable 2020 periods. Variable lease cost for the three and six months ended June 30, 2021 were $0.4 million and $0.9 million, respectively, and $0.4 million and $0.9 million, respectively, for the comparable 2020 periods. Additionally, the Company has an immaterial amount of short-term leases. Operating cash outflows from operating leases for the six months ended June 30, 2021 and 2020 were $3.3 million and $3.5 million, respectively.

Purchase Commitments

Veeco has purchase commitments of $144.4 million at June 30, 2021, substantially all of which become due within one year.

Bank Guarantees

Veeco has bank guarantees and letters of credit issued by a financial institution on its behalf as needed. At June 30, 2021, outstanding bank guarantees and standby letters of credit totaled $10.2 million, and unused bank guarantees and letters of credit of $12.1 million were available to be drawn upon.

Legal Proceedings

On June 8, 2018, an Ultratech shareholder who received Veeco stock as part of the consideration for the Ultratech acquisition filed a purported class action complaint in the Superior Court of the State of California, County of Santa Clara, captioned Wolther v. Maheshwari et al., Case No. 18CV329690, on behalf of himself and others who purchased or acquired shares of Veeco pursuant to the registration statement and prospectus which Veeco filed with the SEC in connection with the Ultratech acquisition (the “Wolther Action”). On August 2 and August 8, 2018, two purported class action complaints substantially similar to the Wolther Action were filed on behalf of different plaintiffs in the same court as the Wolther Action. These cases have been consolidated with the Wolther Action, and a consolidated complaint was filed on December 11, 2018. The consolidated complaint seeks to recover damages and fees under Sections 11, 12, and 15 of the Securities Act of 1933 for, among other things, alleged false/misleading statements in the registration statement and prospectus relating to the Ultratech acquisition, relating primarily to the alleged failure to disclose delays in the advanced packaging business, increased MOCVD competition in China, and an intellectual property dispute.

On December 21, 2018, a purported Veeco stockholder filed a derivative action in the Superior Court of the State of California, County of Santa Clara, captioned Vladimir Gusinsky Revocable Trust v. Peeler, et al., Case No. 18CV339925, on behalf of nominal defendant Veeco. The complaint seeks to assert claims for breach of fiduciary duty, waste of corporate assets, and unjust enrichment against current and former Veeco directors premised on purported misstatements and omissions in the registration statement relating to the Ultratech acquisition. Veeco is defending this matter vigorously.

The Company is involved in various other legal proceedings arising in the normal course of business. The Company does not believe that the ultimate resolution of these matters will have a material adverse effect on its consolidated financial position, results of operations, or cash flows.

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Derivative Financial Instruments

6 Months Ended

Jun. 30, 2021

Derivative Financial Instruments

Derivative Financial Instruments

Note 6 — Derivative Financial Instruments

The Company is exposed to financial market risks arising from changes in currency exchange rates. Changes in currency exchange rates could affect the Company’s foreign currency denominated monetary assets and liabilities and forecasted cash flows. The Company enters into monthly forward derivative contracts from time to time with the intent of mitigating a portion of this risk. The Company only uses derivative financial instruments in the context of hedging and not for speculative purposes and had not designated its foreign exchange derivatives as hedges. Accordingly, changes in fair value from these contracts are recorded as “Other operating expense (income), net” in the Company’s Consolidated Statements of Operations. The Company executes derivative transactions with highly rated financial institutions to mitigate counterparty risk.

The Company did not have any outstanding derivative contracts at June 30, 2021 or December 31, 2020. Additionally, the Company did not have any gains or losses from currency exchange derivatives during the six months ended June 30, 2021 and 2020.

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Equity

6 Months Ended

Jun. 30, 2021

Stockholders' Equity

Equity

Note 7 — Equity

Statement of Stockholders’ Equity

The following tables present the changes in Stockholders’ Equity:

								Accumulated
				Additional				Other
	Common Stock			Paid-in		Accumulated		Comprehensive
	Shares	Amount		Capital		Deficit		Income		Total
	(in thousands)
Balance at December 31, 2020	49,724	$	497	$	1,113,352	$	(707,321)	$	1,846	$	408,374
Net income (loss)	—		—		—		2,494		—		2,494
Other comprehensive income (loss), net of tax	—		—		—		—		(19)		(19)
Share-based compensation expense	—		—		3,237		—		—		3,237
Net issuance under employee stock plans	459		5		(1,630)		—		—		(1,625)
Balance at March 31, 2021	50,183	$	502	$	1,114,959	$	(704,827)	$	1,827	$	412,461
Net income (loss)	—		—		—		6,348		—		6,348
Other comprehensive income (loss), net of tax	—		—		—		—		(24)		(24)
Share-based compensation expense	—		—		4,367		—		—		4,367
Net issuance under employee stock plans	166		1		582		—		—		583
Balance at June 30, 2021	50,349	$	503	$	1,119,908	$	(698,479)	$	1,803	$	423,735

								Accumulated
				Additional				Other
	Common Stock			Paid-in		Accumulated		Comprehensive
	Shares	Amount		Capital		Deficit		Income		Total
	(in thousands)
Balance at December 31, 2019	48,994	$	490	$	1,071,058	$	(698,930)	$	1,894	$	374,512
Net income (loss)	—		—		—		(567)		—		(567)
Other comprehensive income (loss), net of tax	—		—		—		—		153		153
Share-based compensation expense	—		—		3,646		—		—		3,646
Net issuance under employee stock plans	434		4		(684)		—		—		(680)
Balance at March 31, 2020	49,428	$	494	$	1,074,020	$	(699,497)	$	2,047	$	377,064
Net income (loss)	—		—		—		(8,302)		—		(8,302)
Other comprehensive income (loss), net of tax	—		—		—		—		(130)		(130)
Share-based compensation expense	—		—		2,974		—		—		2,974
Net issuance under employee stock plans	191		3		752		—		—		755
Extinguishment of equity component of repurchased 2023 Notes	—		—		(80)		—		—		(80)
Equity component of 2027 Notes	—		—		33,363		—		—		33,363
Purchase of capped calls	—		—		(10,313)		—		—		(10,313)
Balance at June 30, 2020	49,619	$	497	$	1,100,716	$	(707,799)	$	1,917	$	395,331

Accumulated Other Comprehensive Income (“AOCI”)

The following table presents the changes in the balances of each component of AOCI, net of tax:

			Unrealized
			Gains (Losses)
	Foreign		on Available
	Currency		for Sale
	Translation		Securities		Total
	(in thousands)
Balance - December 31, 2020		1,866		(20)		1,846
Other comprehensive income (loss)		(39)		(4)		(43)
Balance - June 30, 2021	$	1,827	$	(24)	$	1,803

There were minimal reclassifications from AOCI into net income for the three and six months ended June 30, 2021 and 2020.

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Share-based Compensation

6 Months Ended

Jun. 30, 2021

Share-based Compensation

Stock Plans

Note 8 — Share-based Compensation

Restricted share awards are issued to employees that are subject to specified restrictions and a risk of forfeiture. The restrictions typically lapse over one to five years and may entitle holders to dividends and voting rights. Other types of share-based compensation include performance share awards, performance share units, and restricted share units (collectively with restricted share awards, “restricted shares”), as well as options to purchase common stock.

Share-based compensation expense was recognized in the following line items in the Consolidated Statements of Operations for the three and six months ended June 30, 2021 and 2020:

	Three months ended June 30,				Six months ended June 30,
	2021		2020		2021		2020
	(in thousands)
Cost of sales	$	650	$	474	$	1,146	$	995
Research and development		1,132		613		1,949		1,486
Selling, general, and administrative		2,585		1,887		4,510		4,139
Total	$	4,367	$	2,974	$	7,605	$	6,620

For the six months ended June 30, 2021, equity activity related to stock options was as follows:

		Weighted
	Number of	Average
	Shares	Exercise Price
	(in thousands)
Balance - December 31, 2020	730		35.26
Expired or forfeited	(280)		40.27
Balance - June 30, 2021	450		32.14

For the six months ended June 30, 2021, equity activity related to non-vested restricted shares and performance shares was as follows:

		Weighted
		Average
	Number of	Grant Date
	Shares	Fair Value
	(in thousands)
Balance - December 31, 2020	2,040		12.73
Granted	864		23.89
Performance award adjustments	(36)		19.75
Vested	(410)		13.69
Forfeited	(60)		14.25
Balance - June 30, 2021	2,398		16.45

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Income Taxes

6 Months Ended

Jun. 30, 2021

Income Taxes

Income Taxes

Note 9 — Income Taxes

Income taxes are estimated for each of the jurisdictions in which the Company operates. Deferred income taxes reflect the net tax effect of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, as well as the tax effect of carryforwards. Realization of net deferred tax assets is dependent on future taxable income. At June 30, 2021, the Company’s U.S. deferred tax assets are fully offset by a valuation allowance since the Company cannot conclude that it is more likely than not that these future benefits will be realized.

At the end of each interim reporting period, the effective tax rate is aligned with expectations for the full year. This estimate is used to determine the income tax provision on a year-to-date basis and may change in subsequent interim periods.

Income (loss) before income taxes and income tax expense (benefit) for the three and six months ended June 30, 2021 and 2020 were as follows:

	Three months ended June 30,				Six months ended June 30,
	2021		2020		2021		2020
	(in thousands)
Income (loss) before income taxes	$	6,667	$	(8,251)	$	9,459	$	(8,550)
Income tax expense (benefit)	$	319	$	51	$	617	$	319

The Company’s tax expense for the three months ended June 30, 2021 was $0.3 million, compared to $0.1 million for the comparable prior period. The 2021 tax expense included a $0.1 million expense related to the Company’s domestic operations and a $0.2 million expense related to the Company’s non-U.S. operations, compared to 2020 when the expense included a $0.1 million expense related to the Company’s domestic operations, offset by an immaterial benefit related to the Company’s non-U.S. operations.

The Company’s tax expense for the six months ended June 30, 2021 was $0.6 million, compared to $0.3 million for the comparable prior period. The 2021 tax expense included a $0.2 million expense related to the Company’s domestic operations and a $0.4 million expense related to the Company’s non-U.S. operations, compared to 2020 when the expense included a $0.2 million expense related to the Company’s domestic operations and a $0.1 million expense related to the Company’s non-U.S. operations. The current period domestic tax expense is primarily attributable to the tax amortization of indefinite-lived intangible assets that is not available to offset U.S. deferred tax assets. The current period foreign tax expense is primarily attributable to non-U.S operation profits and foreign withholding taxes on unremitted earnings as of June 30, 2021, offset by the amortization of intangible assets.

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Segment Reporting and Geographic Information

6 Months Ended

Jun. 30, 2021

Segment Reporting and Geographic Information

Segment Reporting and Geographic Information

Note 10 — Segment Reporting and Geographic Information

Veeco operates and measures its results in one operating segment and therefore has one reportable segment: the development, manufacture, sales, and support of semiconductor and thin film process equipment primarily sold to make electronic devices.

Veeco categorizes its sales into the following four end-markets:

Semiconductor

The Semiconductor market refers to early process steps in logic and memory applications where silicon wafers are processed. There are many different process steps in forming patterned wafers, such as deposition, etching, masking, and doping, where the microchips are created but remain on the silicon wafer. This market includes mask blank production for extreme ultraviolet (“EUV”) lithography. This market also includes Advanced Packaging which refers to a portfolio of wafer-level assembly technologies that enable improved performance of electronic products, such as smartphones, high-end servers, and graphical processors.

Compound Semiconductor

The Compound Semiconductor market includes Photonics, Power Electronics, RF Filters and Amplifiers, and Solar applications. Photonics refers to light source technologies and laser-based solutions for 3D sensing, datacom and telecom applications. This includes micro-LED, laser diodes, edge emitting lasers and vertical cavity surface emitting lasers (“VCSELs”). Power Electronics refers to semiconductor devices such as rectifiers, inverters and converters for the control and conversion of electric power in applications such as fast or wireless charging of consumer electronics and automotive applications. RF power amplifiers and filters (including surface acoustic wave (“SAW”) and bulk acoustic wave (“BAW”) filters) are used in 5G communications infrastructure, smartphones, tablets, and mobile devices. They make use of radio waves for wireless broadcasting and/or communications. Solar refers to power obtained by harnessing the energy of the sun through the use of compound semiconductor devices such as photovoltaics.

Data Storage

Data Storage refers to the Hard Disk Drive (“HDD”) market, for which our systems enable customers to manufacture thin film magnetic heads for hard disk drives as part of large capacity storage applications.

Scientific & Other

Scientific & Other refers to advanced materials research and a range of manufacturing applications including optical coatings (laser mirrors, optical filters, and anti-reflective coatings).

Sales by end-market and geographic region for the three and six months ended June 30, 2021 and 2020 were as follows:

	Three months ended June 30,				Six months ended June 30,
	2021		2020		2021		2020
	(in thousands)
Sales by end-market
Semiconductor	$	53,689	$	37,460	$	105,321	$	74,884
Compound Semiconductor		24,231		17,740		48,982		36,169
Data Storage		52,025		28,305		93,005		67,188
Scientific & Other		16,399		15,132		32,751		24,898
Total	$	146,344	$	98,637	$	280,059	$	203,139
Sales by geographic region
United States	$	66,969	$	29,632	$	112,132	$	69,268
EMEA(1)		8,939		26,130		22,563		42,280
China		20,880		17,393		40,887		27,865
Rest of APAC		49,460		25,432		104,337		63,374
Rest of World		96		50		140		352
Total	$	146,344	$	98,637	$	280,059	$	203,139

(1) EMEA consists of Europe, the Middle East, and Africa

For geographic reporting, sales are attributed to the location in which the customer facility is located.

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Basis of Presentation (Policies)

6 Months Ended

Jun. 30, 2021

Basis of Presentation

Basis of Presentation

The accompanying unaudited Consolidated Financial Statements of Veeco have been prepared in accordance with U.S. GAAP as defined in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification 270 for interim financial information and with the instructions to Rule 10-01 of Securities and Exchange Commission Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements as the interim information is an update of the information that was presented in Veeco’s most recent annual financial statements. For further information, refer to Veeco’s Consolidated Financial Statements and Notes thereto included in the Annual Report on Form 10-K for the year ended December 31, 2020 (“2020 Form 10-K”). In the opinion of management, all adjustments considered necessary for a fair presentation have been included. All such adjustments are of a normal, recurring nature.

Fiscal Period

Veeco reports interim quarters on a 13-week basis ending on the last Sunday of each quarter. The fourth quarter always ends on the last day of the calendar year, December 31. The 2021 interim quarters end on April 4, July 4, and October 3, and the 2020 interim quarters ended on March 29, June 28, and September 27. These interim quarters are reported as March 31, June 30, and September 30 in Veeco’s interim consolidated financial statements.

Use of Estimates

The preparation of financial statements in conformity with U.S GAAP requires the Company’s management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Although these estimates are based on management’s knowledge of current events and actions it may undertake in the future, actual results may differ from these estimates. In particular, the COVID-19 pandemic has adversely impacted and is likely to further adversely impact the Company’s business and markets, including the Company’s workforce and operations and the operations of the Company’s customers, suppliers, and business partners. The full extent to which the pandemic will directly or indirectly impact the Company's business, results of operations and financial condition, including sales, expenses, manufacturing, research and development costs, reserves and allowances, fair value measurements, and asset impairment charges, will depend on future developments that are highly uncertain and difficult to predict. These developments include, but are not limited to, the duration and spread of the outbreak, its severity, the actions to contain the virus or address its impact, governmental actions to contain the spread of the pandemic and respond to the reduction in global economic activity, and how quickly and to what extent normal economic and operating conditions can resume.

Revenue Recognition

Revenue Recognition

Revenue is recognized upon the transfer of control of the promised product or service to the customer in an amount that reflects the consideration the Company expects to receive in exchange for such product or service. The Company’s contracts with customers generally do not contain variable consideration. In the rare instances where variable consideration is included, the Company estimates the amount of variable consideration and determines what portion of that, if any, has a high probability of significant subsequent revenue reversal, and if so, that amount is excluded from the transaction price. The Company’s contracts with customers frequently contain multiple deliverables, such as systems, upgrades, components, spare parts, installation, maintenance, and service plans. Judgment is required to properly identify the performance obligations within a contract and to determine how the revenue should be allocated among the performance obligations. The Company also evaluates whether multiple transactions with the same customer or related parties should be considered part of a single contract based on an assessment of whether the contracts or agreements are negotiated or executed within a short time frame of each other or if there are indicators that the contracts are negotiated in contemplation of one another.

When there are separate units of accounting, the Company allocates revenue to each performance obligation on a relative stand-alone selling price basis. The stand-alone selling prices are determined based on the prices at which the Company separately sells the systems, upgrades, components, spare parts, installation, maintenance, and service plans. For items

that are not sold separately, the Company estimates stand-alone selling prices generally using an expected cost plus margin approach.

Most of the Company’s revenue is recognized at a point in time when the performance obligation is satisfied. The Company considers many facts when evaluating each of its sales arrangements to determine the timing of revenue recognition, including its contractual obligations and the nature of the customer’s post-delivery acceptance provisions. The Company’s system sales arrangements, including certain upgrades, generally include field acceptance provisions that may include functional or mechanical test procedures. For many of these arrangements, a customer source inspection of the system is performed in the Company’s facility, test data is sent to the customer documenting that the system is functioning to the agreed upon specifications prior to delivery, or other quality assurance testing is performed internally to ensure system functionality prior to shipment. Historically, such source inspection or test data replicates the field acceptance provisions that are performed at the customer’s site prior to final acceptance of the system. When the Company objectively demonstrates that the criteria specified in the contractual acceptance provisions are achieved prior to delivery either through customer testing or the Company’s historical experience of its tools meeting specifications, transfer of control of the product to the customer is considered to have occurred and revenue is recognized upon system delivery since there is no substantive contingency remaining related to the acceptance provisions at that date. For new products, new applications of existing products, or for products with substantive customer acceptance provisions where the Company cannot objectively demonstrate that the criteria specified in the contractual acceptance provisions have been achieved prior to delivery, revenue and the associated costs are deferred. The Company recognizes such revenue and costs upon obtaining objective evidence that the acceptance provisions can be achieved, assuming all other revenue recognition criteria have been met.

In certain cases the Company’s contracts with customers contain a billing retention, which is billed by the Company and payable by the customer when field acceptance provisions are completed. Revenue recognized in advance of the amount that has been billed is recorded as a contract asset on the Consolidated Balance Sheets.

The Company recognizes revenue related to maintenance and service contracts over time based upon the respective contract term. Installation revenue is recognized over time as the installation services are performed. The Company recognizes revenue from the sales of components, spare parts, and specified service engagements at a point in time, which is typically consistent with the time of delivery in accordance with the terms of the applicable sales arrangement.

The Company may receive customer deposits on system transactions. The timing of the transfer of goods or services related to the deposits is either at the discretion of the customer or expected to be within one year from the deposit receipt. As such, the Company does not adjust transaction prices for the time value of money. Incremental direct costs incurred related to the acquisition of a customer contract, such as sales commissions, are expensed as incurred since the expected amortization period is one year or less.

The Company has elected to treat shipping and handling costs as a fulfillment activity, and the Company includes such costs in cost of sales when the Company recognizes revenue for the related goods. Taxes assessed by governmental authorities that are collected by the Company from a customer are excluded from revenue.

Inventories

Inventories

Inventories are stated at the lower of cost or net realizable value, with cost determined on a first-in, first-out basis. Each quarter the Company assesses the valuation and recoverability of all inventories: materials (raw materials, spare parts, and service inventory); work-in-process; and finished goods. Obsolete inventory or inventory in excess of management’s estimated usage requirement is written down to its estimated net realizable value if less than cost. The Company evaluates usage requirements by analyzing historical usage, anticipated demand, alternative uses of materials, and other qualitative factors. Unanticipated changes in demand for the Company’s products may require a write down of

inventory, which would be reflected in cost of sales in the period the revision is made. Inventory acquired as part of a business combination is recorded at fair value on the date of acquisition.

Recently Adopted Accounting Standards

Recently Adopted Accounting Standards

The Company adopted ASU 2019-12: Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes in the second quarter of 2020, effective as of the beginning of fiscal year 2020. This ASU simplifies the accounting for income taxes by eliminating certain exceptions to the general principles and simplifying several aspects of ASC 740, Income Taxes, including, but not limited to, requirements related to the following: a) exception to the incremental approach for intraperiod tax allocation; b) the tax basis step-up in goodwill obtained in a transaction that is not a business combination; c) ownership changes in investments - changes from a subsidiary to an equity method investment; d) separate financial statements of entities not subject to tax; e) interim-period accounting for enacted changes in tax law; and f) the year-to-date loss limitation in interim-period tax accounting. The adoption did not have a material impact on the Company’s consolidated financial statements as of the date of adoption.

Recent Accounting Standards Not Yet Adopted

In August 2020, the FASB issued ASU 2020-06: Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. This standard simplifies the accounting for convertible debt instruments by removing the separation models for convertible debt with a cash conversion feature, as well as convertible instruments with a beneficial conversion feature. As a result, entities will account for a convertible debt instrument wholly as debt, unless certain other conditions are met. The elimination of these models will reduce non-cash interest expense for entities that have issued a convertible instrument that was within the scope of those models before the adoption of ASU 2020-06. Additionally, ASU 2020-06 requires the application of the if-converted method for calculating diluted earnings per share, and precludes the use of the treasury stock method for certain debt instruments. The provisions of ASU 2020-06 are applicable for fiscal years beginning after December 15, 2021. The Company’s 2023 Notes, 2025 Notes, and 2027 Notes all are currently accounted for using the separation models for convertible debt with a cash conversion feature, and therefore upon adoption of ASU 2020-06 in the first quarter of 2022, the Company expects a decrease in non-cash interest expense. Additionally, the Company will be required to use the if-converted method when calculating diluted earnings (loss) per share, which will result in an increase in income available to common shareholders, as well as an increase in diluted shares outstanding. The Company is evaluating the permitted transition methods, which includes either a modified retrospective or full retrospective method.

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Income (Loss) Per Common Share (Tables)

6 Months Ended

Jun. 30, 2021

Income (Loss) Per Common Share

Schedule of basic and diluted income (loss) per share and weighted average shares

	Three months ended June 30,				Six months ended June 30,
	2021		2020		2021		2020
	(in thousands, except per share amounts)
Net income (loss)	$	6,348	$	(8,302)	$	8,842	$	(8,869)
Net income (loss) per common share:
Basic	$	0.13	$	(0.17)	$	0.18	$	(0.18)
Diluted	$	0.12	$	(0.17)	$	0.17	$	(0.18)
Basic weighted average shares outstanding		48,743		48,109		48,758		48,147
Dilutive effect of share-based awards		1,707		—		1,553
Dilutive effect of the 2027 Notes		3,492		—		3,228		—
Diluted weighted average shares outstanding		53,942		48,109		53,539		48,147
Common share equivalents excluded from the diluted weighted average shares outstanding since the Company incurred a net loss and their effect would be antidilutive		N/A		712		N/A		671
Potentially dilutive shares excluded from the diluted calculation as their effect would be antidilutive		449		1,194		452		1,132
Maximum potential shares to be issued for settlement of the 2023, 2025, and 2027 Notes excluded from the diluted calculation as their effect would be antidilutive due to a net loss or the fact that the conversion value of the Notes did not exceed their principal amount		8,811		15,354		8,811		15,354

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Assets (Tables)

6 Months Ended

Jun. 30, 2021

Assets

Schedule of portion of Veeco's assets (excluding cash balances) that are measured at fair value on a recurring basis

	Level 1		Level 2		Level 3		Total
	(in thousands)
June 30, 2021
Cash equivalents
Certificate of deposits and time deposits	$	60,479	$	—	$	—	$	60,479
Corporate debt		—		—		—		—
Commercial paper		—		—		—		—
Money market cash		320		—		—		320
Total	$	60,799	$	—	$	—	$	60,799
Short-term investments
U.S. treasuries	$	124,129	$	—	$	—	$	124,129
Government agency securities		—		7,255		—		7,255
Corporate debt		—		65,666		—		65,666
Commercial paper		—		17,585		—		17,585
Total	$	124,129	$	90,506	$	—	$	214,635
December 31, 2020
Cash equivalents
Certificate of deposits and time deposits	$	59,168	$	—	$	—	$	59,168
Commercial paper		—		2,000		—		2,000
U.S. treasuries		24,997		—		—		24,997
Total	$	84,165	$	2,000	$	—	$	86,165
Short-term investments
U.S. treasuries	$	149,219	$	—	$	—	$	149,219
Corporate debt		—		32,554		—		32,554
Commercial paper		—		7,998		—		7,998
Total	$	149,219	$	40,552	$	—	$	189,771

Schedule of amortized cost and fair value of available-for-sale securities

			Gross		Gross
	Amortized		Unrealized		Unrealized		Estimated
	Cost		Gains		Losses		Fair Value
	(in thousands)
June 30, 2021
U.S. treasuries	$	124,140	$	4	$	(15)	$	124,129
Government agency securities		7,258		—		(3)		7,255
Corporate debt		65,676		26		(36)		65,666
Commercial paper		17,585		—		—		17,585
Total	$	214,659	$	30	$	(54)	$	214,635
December 31, 2020
U.S. treasuries	$	149,206	$	14	$	(1)	$	149,219
Corporate debt		32,588		—		(34)		32,554
Commercial paper		7,997		1		—		7,998
Total	$	189,791	$	15	$	(35)	$	189,771

Schedule of fair value and unrealized losses of available-for-sale securities in a loss position

	June 30, 2021				December 31, 2020
			Gross				Gross
	Estimated		Unrealized		Estimated		Unrealized
	Fair Value		Losses		Fair Value		Losses
		(in thousands)
U.S. treasuries	$	61,520	$	(15)	$	19,991	$	(1)
Government agency securities		7,255		(3)		—		—
Corporate debt		41,569		(36)		32,554		(34)
Total	$	110,344	$	(54)	$	52,545	$	(35)

Schedule of contractual maturities of securities classified as available-for-sale

	June 30, 2021
	Amortized		Estimated
	Cost		Fair Value
		(in thousands)
Due in one year or less	$	152,949	$	152,932
Due after one year through two years		55,693		55,679
Due after two years through three years		6,017		6,024
Total	$	214,659	$	214,635

Schedule of inventories

	June 30,		December 31,
	2021		2020
	(in thousands)
Materials	$	91,389	$	82,679
Work-in-process		59,769		53,979
Finished goods		12,883		9,248
Total	$	164,041	$	145,906

Schedule of property, plant, and equipment

	June 30,		December 31,
	2021		2020
	(in thousands)
Land	$	5,061	$	5,061
Building and improvements		63,117		62,865
Machinery and equipment (1)		144,585		140,493
Leasehold improvements		26,036		6,671
Gross property, plant, and equipment		238,799		215,090
Less: accumulated depreciation and amortization		156,591		149,819
Net property, plant, and equipment	$	82,208	$	65,271

(1) Machinery and equipment also includes software, furniture and fixtures

Schedule of intangible assets excluding goodwill

	June 30, 2021						December 31, 2020
			Accumulated						Accumulated
	Gross		Amortization				Gross		Amortization
	Carrying		and		Net		Carrying		and		Net
	Amount		Impairment		Amount		Amount		Impairment		Amount
	(in thousands)
Technology	$	327,908	$	306,624	$	21,284	$	327,908	$	302,358	$	25,550
Customer relationships		146,465		131,552		14,913		146,465		130,131		16,334
Trademarks and tradenames		30,910		27,254		3,656		30,910		26,614		4,296
Other		3,686		3,684		2		3,686		3,681		5
Total	$	508,969	$	469,114	$	39,855	$	508,969	$	462,784	$	46,185

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Liabilities (Tables)

6 Months Ended

Jun. 30, 2021

Liabilities

Schedule of accrued expenses and other current liabilities

	June 30,		December 31,
	2021		2020
	(in thousands)
Payroll and related benefits	$	24,412	$	26,630
Warranty		6,220		5,058
Operating lease liabilities		4,175		4,148
Interest		4,893		2,574
Professional fees		1,777		1,112
Sales, use, and other taxes		6,153		2,658
Other		4,806		2,696
Total	$	52,436	$	44,876

Schedule of changes in product warranty reserves

		(in thousands)
Balance - December 31, 2020	$	5,058
Warranties issued		3,221
Consumption of reserves		(2,912)
Changes in estimate		853
Balance - June 30, 2021	$	6,220

Schedule of changes in deferred revenue

	(in thousands)
Balance - December 31, 2020	$	17,985
Deferral of revenue		(7,436)
Recognition of unearned revenue		6,718
Balance - June 30, 2021	$	17,267

Schedule of carrying value of Convertible Senior Notes

		June 30, 2021						December 31, 2020
		Principal Amount		Unamortized debt discount/ transaction costs		Net carrying value		Principal Amount		Unamortized debt discount/ transaction costs		Net carrying value
		(in thousands)
2023 Notes	$	131,695	$	(9,171)	$	122,524	$	131,695	$	(11,925)	$	119,770
2025 Notes		132,500		(19,749)		112,751		132,500		(22,097)		110,403
2027 Notes		125,000		(32,060)		92,940		125,000		(34,058)		90,942
Net carrying value	$	389,195	$	(60,980)	$	328,215	$	389,195	$	(68,080)	$	321,115

Schedule of interest expense related to Convertible Senior Notes

	Three months ended June 30,				Six months ended June 30,
	2021		2020		2021		2020
	(in thousands)
Cash Interest Expense
Coupon interest expense - 2023 Notes	$	889	$	2,070	$	1,778	$	4,399
Coupon interest expense - 2025 Notes		1,159		—		2,319		—
Coupon interest expense - 2027 Notes		1,172		573		2,344		573
Non-cash Interest Expense
Amortization of debt discount/transaction costs- 2023 Notes		1,390		3,004		2,754		6,325
Amortization of debt discount/transaction costs- 2025 Notes		1,185		—		2,348		—
Amortization of debt discount/transaction costs- 2027 Notes		1,011		453		1,998		453
Total Interest Expense	$	6,806	$	6,100	$	13,541	$	11,750

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Commitments and Contingencies (Tables)

6 Months Ended

Jun. 30, 2021

Commitments and Contingencies

Schedule of maturities of lease liabilities 2020

The following table provides the maturities of lease liabilities at June 30, 2021:

	Operating
	Leases
	(in thousands)
Payments due by period:
2021	$	2,125
2022		4,667
2023		3,145
2024		2,897
2025		2,506
Thereafter		38,367
Total future minimum lease payments		53,707
Less: Imputed interest		(18,496)
Total	$	35,211
Reported as of June 30, 2021
Accrued expenses and other current liabilities	$	4,175
Long-term operating lease liabilities		31,036
Total	$	35,211

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Equity (Tables)

6 Months Ended

Jun. 30, 2021

Stockholders' Equity

Schedule of Stockholders' Equity

								Accumulated
				Additional				Other
	Common Stock			Paid-in		Accumulated		Comprehensive
	Shares	Amount		Capital		Deficit		Income		Total
	(in thousands)
Balance at December 31, 2020	49,724	$	497	$	1,113,352	$	(707,321)	$	1,846	$	408,374
Net income (loss)	—		—		—		2,494		—		2,494
Other comprehensive income (loss), net of tax	—		—		—		—		(19)		(19)
Share-based compensation expense	—		—		3,237		—		—		3,237
Net issuance under employee stock plans	459		5		(1,630)		—		—		(1,625)
Balance at March 31, 2021	50,183	$	502	$	1,114,959	$	(704,827)	$	1,827	$	412,461
Net income (loss)	—		—		—		6,348		—		6,348
Other comprehensive income (loss), net of tax	—		—		—		—		(24)		(24)
Share-based compensation expense	—		—		4,367		—		—		4,367
Net issuance under employee stock plans	166		1		582		—		—		583
Balance at June 30, 2021	50,349	$	503	$	1,119,908	$	(698,479)	$	1,803	$	423,735

								Accumulated
				Additional				Other
	Common Stock			Paid-in		Accumulated		Comprehensive
	Shares	Amount		Capital		Deficit		Income		Total
	(in thousands)
Balance at December 31, 2019	48,994	$	490	$	1,071,058	$	(698,930)	$	1,894	$	374,512
Net income (loss)	—		—		—		(567)		—		(567)
Other comprehensive income (loss), net of tax	—		—		—		—		153		153
Share-based compensation expense	—		—		3,646		—		—		3,646
Net issuance under employee stock plans	434		4		(684)		—		—		(680)
Balance at March 31, 2020	49,428	$	494	$	1,074,020	$	(699,497)	$	2,047	$	377,064
Net income (loss)	—		—		—		(8,302)		—		(8,302)
Other comprehensive income (loss), net of tax	—		—		—		—		(130)		(130)
Share-based compensation expense	—		—		2,974		—		—		2,974
Net issuance under employee stock plans	191		3		752		—		—		755
Extinguishment of equity component of repurchased 2023 Notes	—		—		(80)		—		—		(80)
Equity component of 2027 Notes	—		—		33,363		—		—		33,363
Purchase of capped calls	—		—		(10,313)		—		—		(10,313)
Balance at June 30, 2020	49,619	$	497	$	1,100,716	$	(707,799)	$	1,917	$	395,331

Schedule of the changes in the balances of each component of AOCI, net of tax

			Unrealized
			Gains (Losses)
	Foreign		on Available
	Currency		for Sale
	Translation		Securities		Total
	(in thousands)
Balance - December 31, 2020		1,866		(20)		1,846
Other comprehensive income (loss)		(39)		(4)		(43)
Balance - June 30, 2021	$	1,827	$	(24)	$	1,803

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Share-based Compensation (Tables)

6 Months Ended

Jun. 30, 2021

Share-based Compensation

Schedule of share-based compensation expense

	Three months ended June 30,				Six months ended June 30,
	2021		2020		2021		2020
	(in thousands)
Cost of sales	$	650	$	474	$	1,146	$	995
Research and development		1,132		613		1,949		1,486
Selling, general, and administrative		2,585		1,887		4,510		4,139
Total	$	4,367	$	2,974	$	7,605	$	6,620

Summary of stock option activity

		Weighted
	Number of	Average
	Shares	Exercise Price
	(in thousands)
Balance - December 31, 2020	730		35.26
Expired or forfeited	(280)		40.27
Balance - June 30, 2021	450		32.14

Summary of non-vested restricted and performance shares activity

		Weighted
		Average
	Number of	Grant Date
	Shares	Fair Value
	(in thousands)
Balance - December 31, 2020	2,040		12.73
Granted	864		23.89
Performance award adjustments	(36)		19.75
Vested	(410)		13.69
Forfeited	(60)		14.25
Balance - June 30, 2021	2,398		16.45

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Income Taxes (Tables)

6 Months Ended

Jun. 30, 2021

Income Taxes

Schedule of loss before income taxes and income tax benefit

	Three months ended June 30,				Six months ended June 30,
	2021		2020		2021		2020
	(in thousands)
Income (loss) before income taxes	$	6,667	$	(8,251)	$	9,459	$	(8,550)
Income tax expense (benefit)	$	319	$	51	$	617	$	319

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Segment Reporting and Geographic Information (Tables)

6 Months Ended

Jun. 30, 2021

Segment Reporting and Geographic Information

Schedule of sales by end-market

	Three months ended June 30,				Six months ended June 30,
	2021		2020		2021		2020
	(in thousands)
Sales by end-market
Semiconductor	$	53,689	$	37,460	$	105,321	$	74,884
Compound Semiconductor		24,231		17,740		48,982		36,169
Data Storage		52,025		28,305		93,005		67,188
Scientific & Other		16,399		15,132		32,751		24,898
Total	$	146,344	$	98,637	$	280,059	$	203,139
Sales by geographic region
United States	$	66,969	$	29,632	$	112,132	$	69,268
EMEA(1)		8,939		26,130		22,563		42,280
China		20,880		17,393		40,887		27,865
Rest of APAC		49,460		25,432		104,337		63,374
Rest of World		96		50		140		352
Total	$	146,344	$	98,637	$	280,059	$	203,139

(1) EMEA consists of Europe, the Middle East, and Africa

Schedule of sales by geographic region

	Three months ended June 30,				Six months ended June 30,
	2021		2020		2021		2020
	(in thousands)
Sales by end-market
Semiconductor	$	53,689	$	37,460	$	105,321	$	74,884
Compound Semiconductor		24,231		17,740		48,982		36,169
Data Storage		52,025		28,305		93,005		67,188
Scientific & Other		16,399		15,132		32,751		24,898
Total	$	146,344	$	98,637	$	280,059	$	203,139
Sales by geographic region
United States	$	66,969	$	29,632	$	112,132	$	69,268
EMEA(1)		8,939		26,130		22,563		42,280
China		20,880		17,393		40,887		27,865
Rest of APAC		49,460		25,432		104,337		63,374
Rest of World		96		50		140		352
Total	$	146,344	$	98,637	$	280,059	$	203,139

(1) EMEA consists of Europe, the Middle East, and Africa

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Basis of Presentation - Fiscal Period (Details)	6 Months Ended
	Jun. 30, 2021
Basis of Presentation
Fiscal period duration (in days)	91 days

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Basis of Presentation - Revenue Recognition (Details)	6 Months Ended
	Jun. 30, 2021
Basis of Presentation
Revenue, practical expedient, incremental cost of obtaining contract	true

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Basis of Presentation - Recently Adopted Accounting Standards (Details)	Jan. 01, 2020
ASU 2019-12, Simplifying the Accounting for Income Taxes
Accounting Changes
Change in Accounting Principle, Accounting Standards Update, Adopted	true

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Income (Loss) Per Common Share - Basic and Diluted (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Income (Loss) Per Common Share
Net income (loss), Basic	$ 6,348	$ (8,302)	$ 8,842	$ (8,869)
Net income (loss), Diluted	$ 6,348	$ (8,302)	$ 8,842	$ (8,869)
Net income (loss) per common share:
Basic (in dollars per share)	$ 0.13	$ (0.17)	$ 0.18	$ (0.18)
Diluted (in dollars per share)	$ 0.12	$ (0.17)	$ 0.17	$ (0.18)
Weighted average shares reconciliation
Basic weighted average shares outstanding	48,743	48,109	48,758	48,147
Dilutive effect of share-based awards	1,707		1,553
Dilutive effect of the 2027 Notes	3,492		3,228
Diluted weighted average shares outstanding	53,942	48,109	53,539	48,147

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Income (Loss) Per Common Share - Shares Excluded from EPS (Details) - shares shares in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Common share equivalents
Diluted income (loss) per share
Securities excluded from the diluted calculation as their effect would be antidilutive		712		671
Potentially dilutive shares
Diluted income (loss) per share
Securities excluded from the diluted calculation as their effect would be antidilutive	449	1,194	452	1,132
Convertible Notes - 2023, 2025 and 2027
Diluted income (loss) per share
Securities excluded from the diluted calculation as their effect would be antidilutive	8,811	15,354	8,811	15,354

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Assets - Fair Value (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Short-term investments
Transfer of assets from Level 1 to Level 2	$ 0
Transfer of assets from Level 2 to Level 1	0
Transfer of Liabilities from Level 1 to Level 2	0
Transfer of Liabilities from Level 2 to Level 1	0
Measured at fair value on a recurring basis
Cash equivalents
Total Cash equivalents	60,799	$ 86,165
Short-term investments
Total Short-term investments	214,635	189,771
Measured at fair value on a recurring basis | U.S. treasuries
Short-term investments
Total Short-term investments	124,129	149,219
Measured at fair value on a recurring basis | Government agency securities
Short-term investments
Total Short-term investments	7,255
Measured at fair value on a recurring basis | Corporate debt
Short-term investments
Total Short-term investments	65,666	32,554
Measured at fair value on a recurring basis | Commercial paper
Short-term investments
Total Short-term investments	17,585	7,998
Measured at fair value on a recurring basis | Certificate of deposits and time deposits
Cash equivalents
Total Cash equivalents	60,479	59,168
Measured at fair value on a recurring basis | Commercial paper
Cash equivalents
Total Cash equivalents		2,000
Measured at fair value on a recurring basis | Money market cash
Cash equivalents
Total Cash equivalents	320
Measured at fair value on a recurring basis | U.S. treasuries
Cash equivalents
Total Cash equivalents		24,997
Measured at fair value on a recurring basis | Level 1
Cash equivalents
Total Cash equivalents	60,799	84,165
Short-term investments
Total Short-term investments	124,129	149,219
Measured at fair value on a recurring basis | Level 1 | U.S. treasuries
Short-term investments
Total Short-term investments	124,129	149,219
Measured at fair value on a recurring basis | Level 1 | Certificate of deposits and time deposits
Cash equivalents
Total Cash equivalents	60,479	59,168
Measured at fair value on a recurring basis | Level 1 | Money market cash
Cash equivalents
Total Cash equivalents	320
Measured at fair value on a recurring basis | Level 1 | U.S. treasuries
Cash equivalents
Total Cash equivalents		24,997
Measured at fair value on a recurring basis | Level 2
Cash equivalents
Total Cash equivalents		2,000
Short-term investments
Total Short-term investments	90,506	40,552
Measured at fair value on a recurring basis | Level 2 | Government agency securities
Short-term investments
Total Short-term investments	7,255
Measured at fair value on a recurring basis | Level 2 | Corporate debt
Short-term investments
Total Short-term investments	65,666	32,554
Measured at fair value on a recurring basis | Level 2 | Commercial paper
Short-term investments
Total Short-term investments	$ 17,585	7,998
Measured at fair value on a recurring basis | Level 2 | Commercial paper
Cash equivalents
Total Cash equivalents		$ 2,000

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Assets - Available-For-Sale Securities (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2021	Dec. 31, 2020
Total available-for-sale securities
Amortized Cost		$ 214,659	$ 189,791
Gross Unrealized Gains		30	15
Gross Unrealized Losses		(54)	(35)
Estimated Fair Value		214,635	189,771
Available-for-sale securities in a loss position
Estimated Fair Value		110,344	52,545
Gross Unrealized Losses		(54)	(35)
Investments that had been in a continuous loss position for more than 12 months		0	0
Contractual maturities - Amortized Cost
Amortized Cost, Due in one year or less		152,949
Amortized Cost, Due after one year through two years		55,693
Amortized Cost, Due after two years through three years		6,017
Amortized Cost		214,659	189,791
Contractual maturities - Estimated Fair Value
Estimated Fair Value, Due in one year or less		152,932
Estimated Fair Value, Due after one year through two years		55,679
Estimated Fair Value, Due after two years through three years		6,024
Available-for-sale Securities, Debt Securities, Total		214,635	189,771
Realized gains or losses
Realized gains	$ 0
Realized losses	$ 0
U.S. treasuries
Total available-for-sale securities
Amortized Cost		124,140	149,206
Gross Unrealized Gains		4	14
Gross Unrealized Losses		(15)	(1)
Estimated Fair Value		124,129	149,219
Available-for-sale securities in a loss position
Estimated Fair Value		61,520	19,991
Gross Unrealized Losses		(15)	(1)
Contractual maturities - Amortized Cost
Amortized Cost		124,140	149,206
Contractual maturities - Estimated Fair Value
Available-for-sale Securities, Debt Securities, Total		124,129	149,219
Government agency securities
Total available-for-sale securities
Amortized Cost		7,258
Gross Unrealized Losses		(3)
Estimated Fair Value		7,255
Available-for-sale securities in a loss position
Estimated Fair Value		7,255
Gross Unrealized Losses		(3)
Contractual maturities - Amortized Cost
Amortized Cost		7,258
Contractual maturities - Estimated Fair Value
Available-for-sale Securities, Debt Securities, Total		7,255
Corporate debt
Total available-for-sale securities
Amortized Cost		65,676	32,588
Gross Unrealized Gains		26
Gross Unrealized Losses		(36)	(34)
Estimated Fair Value		65,666	32,554
Available-for-sale securities in a loss position
Estimated Fair Value		41,569	32,554
Gross Unrealized Losses		(36)	(34)
Contractual maturities - Amortized Cost
Amortized Cost		65,676	32,588
Contractual maturities - Estimated Fair Value
Available-for-sale Securities, Debt Securities, Total		65,666	32,554
Commercial paper
Total available-for-sale securities
Amortized Cost		17,585	7,997
Gross Unrealized Gains			1
Estimated Fair Value		17,585	7,998
Contractual maturities - Amortized Cost
Amortized Cost		17,585	7,997
Contractual maturities - Estimated Fair Value
Available-for-sale Securities, Debt Securities, Total		$ 17,585	$ 7,998

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Assets - Accounts Receivable (Details) - USD ($) $ in Millions	Jun. 30, 2021	Dec. 31, 2020
Assets
Allowance for doubtful accounts receivable	$ 0.7	$ 0.7

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Assets - Inventories (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Inventories
Materials	$ 91,389	$ 82,679
Work-in-process	59,769	53,979
Finished goods	12,883	9,248
Total	$ 164,041	$ 145,906

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Assets - Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Millions	Jun. 30, 2021	Dec. 31, 2020
Prepaid expenses and other current assets
Amount of landlord reimbursement receivable	$ 4.1
Deposits with suppliers	$ 4.5	$ 7.2

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Assets - Property, Plant, and Equipment (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020	Dec. 31, 2020
Property, plant, and equipment
Gross property, plant and equipment	$ 238,799		$ 238,799		$ 215,090
Less: accumulated depreciation and amortization	156,591		156,591		149,819
Net property, plant, and equipment	82,208		82,208		65,271
Depreciation expense	3,500	$ 3,800	6,900	$ 7,700
Land
Property, plant, and equipment
Gross property, plant and equipment	5,061		5,061		5,061
Building and improvements
Property, plant, and equipment
Gross property, plant and equipment	63,117		63,117		62,865
Machinery and equipment
Property, plant, and equipment
Gross property, plant and equipment	144,585		144,585		140,493
Leaseholds improvements
Property, plant, and equipment
Gross property, plant and equipment	$ 26,036		$ 26,036		$ 6,671

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Assets - Intangible Assets (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Intangible assets
Total Gross Intangible Assets	$ 508,969	$ 508,969
Accumulated Amortization and Impairment	469,114	462,784
Total Net Intangible Assets	39,855	46,185
Technology
Intangible assets
Gross Carrying Amount, Definite-lived intangible assets	327,908	327,908
Accumulated Amortization and Impairment, Definite-lived intangible assets	306,624	302,358
Total definite-lived intangible assets	21,284	25,550
Customer relationships
Intangible assets
Gross Carrying Amount, Definite-lived intangible assets	146,465	146,465
Accumulated Amortization and Impairment, Definite-lived intangible assets	131,552	130,131
Total definite-lived intangible assets	14,913	16,334
Trademarks and tradenames
Intangible assets
Gross Carrying Amount, Definite-lived intangible assets	30,910	30,910
Accumulated Amortization and Impairment, Definite-lived intangible assets	27,254	26,614
Total definite-lived intangible assets	3,656	4,296
Other
Intangible assets
Gross Carrying Amount, Definite-lived intangible assets	3,686	3,686
Accumulated Amortization and Impairment, Definite-lived intangible assets	3,684	3,681
Total definite-lived intangible assets	$ 2	$ 5

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Liabilities - Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Accrued expenses and other current liabilities
Payroll and related benefits	$ 24,412	$ 26,630
Warranty	6,220	5,058
Operating lease liabilities	4,175	4,148
Interest	4,893	2,574
Professional fees	1,777	1,112
Sales, use, and other taxes	6,153	2,658
Other	4,806	2,696
Total	$ 52,436	$ 44,876

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Liabilities - Warranty (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2021 USD ($)
Warranty
Warranty period	1 year
Balance, beginning of the period	$ 5,058
Warranties issued	3,221
Consumption of reserves	(2,912)
Changes in estimate	853
Balance, end of the period	$ 6,220

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Liabilities - Customer Deposits and Deferred Revenue (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2021	Dec. 31, 2020
Liabilities
Customer deposits and deferred revenue	$ 53,300	$ 49,300
Changes in deferred revenue
Beginning balance	17,985
Deferral of revenue	(7,436)
Recognition of unearned revenue	6,718
Ending balance	$ 17,267

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Liabilities - Performance Obligations Amount (Details) $ in Millions	6 Months Ended
	Jun. 30, 2021 USD ($)
Performance obligations
Remaining performance obligations	$ 35.1
Minimum
Performance obligations
Performance obligation at time of contract origination	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-07-01
Performance obligations
Percentage of remaining performance obligation expected to be recognized	73.00%

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Liabilities - Performance Obligations Timing (Details)	6 Months Ended
	Jun. 30, 2021
Liabilities
Revenue, Practical Expedient, Remaining Performance Obligation	true
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-07-01
Performance obligations
Remaining performance obligations, expected timing of satisfaction	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-07-01
Performance obligations
Remaining performance obligations, expected timing of satisfaction	2 years

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Liabilities - 2023, 2025 and 2027 Convertible Senior Notes (Details) - USD ($) $ in Thousands				6 Months Ended
	Nov. 11, 2020	May 18, 2020	Jan. 10, 2017	Jun. 30, 2020	Jun. 30, 2021	Dec. 31, 2020	Nov. 17, 2020
Debt
Principal amount					$ 389,195	$ 389,195
Proceeds, net of issuance costs				$ 121,946
Cash paid for repurchase of notes				81,240
Purchase of capped calls				$ 10,313
2023 Notes
Debt
Principal amount			$ 345,000		131,695	131,695
Interest rate (as a percent)			2.70%
Proceeds, net of issuance costs			$ 335,800
Repurchased and retired amount	$ 125,000	$ 88,300
Carrying amount of debt extinguished	$ 113,100	78,100
Cash paid for repurchase of notes		81,200
2025 Notes
Debt
Principal amount							$ 132,500
Interest rate (as a percent)							3.50%
2027 Notes
Debt
Principal amount		$ 125,000			$ 125,000	$ 125,000
Interest rate (as a percent)		3.75%
Proceeds, net of issuance costs		$ 121,900
Purchase of capped calls		$ 10,300

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Liabilities - Convertible Senior Notes (Details)					3 Months Ended	6 Months Ended
	Nov. 17, 2020 USD ($) $ / shares	May 18, 2020 USD ($) $ / shares	May 13, 2020 USD ($) $ / shares	Jan. 10, 2017 USD ($) $ / shares	Jun. 30, 2021 D	Jun. 30, 2021 USD ($) D
Capped Call Transactions
Debt
Aggregate price of capped call transaction			$ 10,300,000
Cap price of the capped call transactions (in dollars per share) | $ / shares			$ 18.46
Convertible Notes - 2023, 2025 and 2027
Debt
Multiples of principal holders may convert						1,000
Minimum threshold period | D						20
Consecutive trading days | D					30	30
Stock price trigger (as a percent)					130.00%	130.00%
Trading days | D						5
Number of consecutive business days						5 days
Maximum percentage of common stock conversion						98.00%
2023 Notes
Debt
Conversion rate				0.0249800
Conversion price (in dollars per share) | $ / shares				$ 40.03
Measurement input				0.070
Long-term Debt, Measurement Input				us-gaap:MeasurementInputDiscountRateMember
Debt discount				$ 72,500,000
Transaction costs				9,200,000
Transaction costs allocated to the equity component				$ 1,900,000
2025 Notes
Debt
Conversion rate	0.0416667
Conversion price (in dollars per share) | $ / shares	$ 24.00
Measurement input	0.080
Long-term Debt, Measurement Input	us-gaap:MeasurementInputDiscountRateMember
Debt discount	$ 21,000,000.0
Transaction costs	1,900,000
Transaction costs allocated to the equity component	$ 300,000
2027 Notes
Debt
Conversion rate		0.0715372
Conversion price (in dollars per share) | $ / shares		$ 13.98
Measurement input		0.091
Long-term Debt, Measurement Input		us-gaap:MeasurementInputDiscountRateMember
Debt discount		$ 34,200,000
Transaction costs		3,100,000
Transaction costs allocated to the equity component		$ 800,000

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Liabilities - Convertible Senior Notes Carrying Value (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020	May 18, 2020	Jan. 10, 2017
Debt
Principal amount	$ 389,195	$ 389,195
Unamortized debt discount/transaction costs	(60,980)	(68,080)
Net carrying value	328,215	321,115
2023 Notes
Debt
Principal amount	131,695	131,695		$ 345,000
Unamortized debt discount/transaction costs	(9,171)	(11,925)
Net carrying value	122,524	119,770
2025 Notes
Debt
Principal amount	132,500	132,500
Unamortized debt discount/transaction costs	(19,749)	(22,097)
Net carrying value	112,751	110,403
2027 Notes
Debt
Principal amount	125,000	125,000	$ 125,000
Unamortized debt discount/transaction costs	(32,060)	(34,058)
Net carrying value	$ 92,940	$ 90,942

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Liabilities - Convertible Senior Notes - Interest Expense (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Non-Cash Interest Expense
Amortization of debt discount/transaction costs			$ 7,100	$ 6,778
Total Interest Expense	$ 6,806	$ 6,100	13,541	11,750
2023 Notes
Cash Interest Expense
Coupon interest expense	889	2,070	1,778	4,399
Non-Cash Interest Expense
Amortization of debt discount/transaction costs	$ 1,390	3,004	$ 2,754	6,325
Convertible Debt, Fair Value by Fair Value Hierarchy Level	Level 2		Level 2
Estimated fair value	$ 132,300		$ 132,300
2025 Notes
Cash Interest Expense
Coupon interest expense	1,159		2,319
Non-Cash Interest Expense
Amortization of debt discount/transaction costs	$ 1,185		$ 2,348
Convertible Debt, Fair Value by Fair Value Hierarchy Level	Level 2		Level 2
Estimated fair value	$ 158,800		$ 158,800
2027 Notes
Cash Interest Expense
Coupon interest expense	1,172	573	2,344	573
Non-Cash Interest Expense
Amortization of debt discount/transaction costs	$ 1,011	$ 453	$ 1,998	$ 453
Convertible Debt, Fair Value by Fair Value Hierarchy Level	Level 2		Level 2
Estimated fair value	$ 220,200		$ 220,200

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Liabilities - Other Liabilities (Details) - USD ($) $ in Millions	51 Months Ended
	Jun. 30, 2021	Dec. 31, 2020
Other liabilities
Contributions to deferred compensation plan	$ 0.0
Accrued and deferred deposit payments	3.5	$ 3.5
Other Assets
Other liabilities
Deferred compensation plan assets		2.4
Accrued expenses and other current liabilities
Other liabilities
Accrued and deferred deposit payments	1.7	1.7
Other Liabilities
Other liabilities
Deferred compensation plan liabilities		2.5
Medical and dental benefits	1.8	1.9
Asset retirement obligations	2.8	2.7
Income taxes payable		1.4
Accrued and deferred deposit payments	$ 1.8	$ 1.8

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Commitments and Contingencies - Lease terms (Details)	Jun. 30, 2021
Leases
Lease renewal term	5 years
Remaining lease term	12 years
Weighted average discount rate (as a percent)	5.70%

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Commitments and Contingencies - Minimum lease commitments (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Minimum lease commitments, Payments due by period:
2021	$ 2,125
2022	4,667
2023	3,145
2024	2,897
2025	2,506
Thereafter	38,367
Total future minimum lease payments	53,707
Less: Imputed interest	(18,496)
Total operating lease liabilities	35,211
Operating lease liability, current	$ 4,175	$ 4,148
Operating Lease, Liability, Current, Statement of Financial Position	Accrued expenses and other current liabilities
Long-term operating lease liabilities	$ 31,036	$ 6,305
Total operating lease liabilities	$ 35,211

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Commitments and Contingencies - Lease costs (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Lease cost
Operating lease cost	$ 1.8	$ 1.4	$ 3.1	$ 2.7
Variable lease cost	$ 0.4	$ 0.4	0.9	0.9
Operating cash flows from operating leases			$ 3.3	$ 3.5

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Commitments and Contingencies - Purchase Commitments and Bank Guarantees (Details) $ in Millions	Jun. 30, 2021 USD ($)
Purchase commitments
Purchase commitments due within one year	$ 144.4
Bank guarantees
Bank guarantees and letters of credit outstanding	10.2
Unused bank guarantees and letters of credit	$ 12.1

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Commitments and Contingencies - Legal Proceedings (Details)	Aug. 08, 2018 case
Ultratech acquisition litigation
Legal Proceedings
Number of purported class action complaints filed	2

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Equity - Statement of Stockholders' Equity (Details) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended				6 Months Ended
	Jun. 30, 2021	Mar. 31, 2021	Jun. 30, 2020	Mar. 31, 2020	Jun. 30, 2021	Jun. 30, 2020
Increase (Decrease) in Stockholders' Equity
Balance at the beginning of the period	$ 412,461	$ 408,374	$ 377,064	$ 374,512	$ 408,374	$ 374,512
Net income (loss)	6,348	2,494	(8,302)	(567)	8,842	(8,869)
Other comprehensive income (loss), net of tax	(24)	(19)	(130)	153
Share-based compensation expense	4,367	3,237	2,974	3,646
Net issuance under employee stock plans	583	(1,625)	755	(680)
Extinguishment of equity component of repurchased/exchanged 2023 Notes			(80)
Equity component of Notes			33,363
Purchase of capped calls			(10,313)
Balance at the end of the period	423,735	412,461	395,331	377,064	423,735	395,331
Common Stock
Increase (Decrease) in Stockholders' Equity
Balance at the beginning of the period	$ 502	$ 497	$ 494	$ 490	$ 497	$ 490
Balance (in shares)	50,183	49,724	49,428	48,994	49,724	48,994
Net issuance under employee stock plans	$ 1	$ 5	$ 3	$ 4
Net issuance under employee stock plans (in shares)	166	459	191	434
Balance at the end of the period	$ 503	$ 502	$ 497	$ 494	$ 503	$ 497
Balance (in shares)	50,349	50,183	49,619	49,428	50,349	49,619
Additional Paid-in Capital
Increase (Decrease) in Stockholders' Equity
Balance at the beginning of the period	$ 1,114,959	$ 1,113,352	$ 1,074,020	$ 1,071,058	$ 1,113,352	$ 1,071,058
Share-based compensation expense	4,367	3,237	2,974	3,646
Net issuance under employee stock plans	582	(1,630)	752	(684)
Extinguishment of equity component of repurchased/exchanged 2023 Notes			(80)
Equity component of Notes			33,363
Purchase of capped calls			(10,313)
Balance at the end of the period	1,119,908	1,114,959	1,100,716	1,074,020	1,119,908	1,100,716
Accumulated Deficit
Increase (Decrease) in Stockholders' Equity
Balance at the beginning of the period	(704,827)	(707,321)	(699,497)	(698,930)	(707,321)	(698,930)
Net income (loss)	6,348	2,494	(8,302)	(567)
Balance at the end of the period	(698,479)	(704,827)	(707,799)	(699,497)	(698,479)	(707,799)
Accumulated Other Comprehensive Income
Increase (Decrease) in Stockholders' Equity
Balance at the beginning of the period	1,827	1,846	2,047	1,894	1,846	1,894
Other comprehensive income (loss), net of tax	(24)	(19)	(130)	153
Balance at the end of the period	$ 1,803	$ 1,827	$ 1,917	$ 2,047	$ 1,803	$ 1,917

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Equity - AOCI Rollforward (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Changes in the balances of each component of AOCI
Balance at the beginning of the period	$ 412,461	$ 377,064	$ 408,374	$ 374,512
Other comprehensive income (loss)	(24)	(130)	(43)	23
Balance at the end of the period	423,735	395,331	423,735	395,331
Accumulated Other Comprehensive Income
Changes in the balances of each component of AOCI
Balance at the beginning of the period	1,827	2,047	1,846	1,894
Other comprehensive income (loss)			(43)
Balance at the end of the period	1,803	$ 1,917	1,803	$ 1,917
Foreign Currency Translation
Changes in the balances of each component of AOCI
Balance at the beginning of the period			1,866
Other comprehensive income (loss)			(39)
Balance at the end of the period	1,827		1,827
Unrealized Gains (Losses) on Available for Sale Securities
Changes in the balances of each component of AOCI
Balance at the beginning of the period			(20)
Other comprehensive income (loss)			(4)
Balance at the end of the period	$ (24)		$ (24)

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Share-based Compensations - Recognized Share-based Compensation (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Recognized share-based compensation
Total share-based compensation expense	$ 4,367	$ 2,974	$ 7,605	$ 6,620
Cost of sales
Recognized share-based compensation
Total share-based compensation expense	650	474	1,146	995
Research and development
Recognized share-based compensation
Total share-based compensation expense	1,132	613	1,949	1,486
Selling, general and administrative
Recognized share-based compensation
Total share-based compensation expense	$ 2,585	$ 1,887	$ 4,510	$ 4,139
Restricted stock awards | Minimum
Share-based compensation
Expiration term			1 year
Restricted stock awards | Maximum
Share-based compensation
Expiration term			5 years

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Share-based Compensation - Stock Option Activity (Details) - Stock options shares in Thousands	6 Months Ended
	Jun. 30, 2021 $ / shares shares
Number of Shares
Outstanding at the beginning of the period (in shares) | shares	730
Expired or forfeited (in shares) | shares	(280)
Outstanding at the end of the period (in shares) | shares	450
Weighted Average Exercise Price
Outstanding at the beginning of the period (in dollars per share) | $ / shares	$ 35.26
Expired or forfeited (in dollars per share) | $ / shares	40.27
Outstanding at the end of the period (in dollars per share) | $ / shares	$ 32.14

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Share-based Compensation - Restricted shares and performance shares (Details) - Non-vested restricted shares and performance shares shares in Thousands	6 Months Ended
	Jun. 30, 2021 $ / shares shares
Number of Shares
Outstanding at the beginning of the period (in shares) | shares	2,040
Granted (in shares) | shares	864
Performance award adjustments (in shares) | shares	(36)
Vested (in shares) | shares	(410)
Forfeited (in shares) | shares	(60)
Outstanding at the end of the period (in shares) | shares	2,398
Weighted Average Grant Date Fair Value
Outstanding at the beginning of the period (in dollars per share) | $ / shares	$ 12.73
Granted (in dollars per share) | $ / shares	23.89
Performance award adjustments (in dollars per share) | $ / shares	19.75
Vested (in dollars per share) | $ / shares	13.69
Forfeited (in dollars per share) | $ / shares	14.25
Outstanding at the end of the period (in dollars per share) | $ / shares	$ 16.45

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Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Tax reconciliation disclosures
Income (loss) before income taxes	$ 6,667	$ (8,251)	$ 9,459	$ (8,550)
Income tax expense (benefit)	319	51	617	319
Domestic
Tax reconciliation disclosures
Income tax expense (benefit)	100	$ 100	200	200
Foreign tax
Tax reconciliation disclosures
Income tax expense (benefit)	$ 200		$ 400	$ 100

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Segment Reporting and Geographic Information (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021 USD ($)	Jun. 30, 2020 USD ($)	Jun. 30, 2021 USD ($) segment item	Jun. 30, 2020 USD ($)
Revenue reporting by end-market and geographic region
Number of operating segments | segment			1
Number of reportable segments | segment			1
Number of key markets | item			4
Sales	$ 146,344	$ 98,637	$ 280,059	$ 203,139
United States
Revenue reporting by end-market and geographic region
Sales	66,969	29,632	112,132	69,268
EMEA
Revenue reporting by end-market and geographic region
Sales	8,939	26,130	22,563	42,280
China
Revenue reporting by end-market and geographic region
Sales	20,880	17,393	40,887	27,865
Rest of APAC
Revenue reporting by end-market and geographic region
Sales	49,460	25,432	104,337	63,374
Rest Of World
Revenue reporting by end-market and geographic region
Sales	96	50	140	352
Semiconductor
Revenue reporting by end-market and geographic region
Sales	53,689	37,460	105,321	74,884
Compound Semiconductor
Revenue reporting by end-market and geographic region
Sales	24,231	17,740	48,982	36,169
Data Storage
Revenue reporting by end-market and geographic region
Sales	52,025	28,305	93,005	67,188
Scientific & Other
Revenue reporting by end-market and geographic region
Sales	$ 16,399	$ 15,132	$ 32,751	$ 24,898