Assets

9 Months Ended

Sep. 30, 2022

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 September 30, 2022 and December 31, 2021:

	Level 1		Level 2		Level 3		Total
	(in thousands)
September 30, 2022
Cash equivalents
Certificate of deposits and time deposits	$	63,527	$	—	$	—	$	63,527
Commercial paper		—		4,959		—		4,959
Money market cash		15,066		—		—		15,066
Total	$	78,593	$	4,959	$	—	$	83,552
Short-term investments
U.S. treasuries	$	46,353	$	—	$	—	$	46,353
Government agency securities		—		12,879		—		12,879
Corporate debt		—		36,745		—		36,745
Commercial paper		—		5,885		—		5,885
Total	$	46,353	$	55,509	$	—	$	101,862
December 31, 2021
Cash equivalents
Certificate of deposits and time deposits	$	41,544	$	—	$	—	$	41,544
Money market cash		121		—		—		121
Total	$	41,665	$	—	$	—	$	41,665
Short-term investments
U.S. treasuries	$	51,095	$	—	$	—	$	51,095
Government agency securities		—		12,052		—		12,052
Corporate debt		—		40,035		—		40,035
Commercial paper		—		999		—		999
Total	$	51,095	$	53,086	$	—	$	104,181

There were no transfers between fair value measurement levels during the three months and nine months ended September 30, 2022.

At September 30, 2022 and December 31, 2021, 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)
September 30, 2022
U.S. treasuries	$	47,084	$	—	$	(732)	$	46,352
Government agency securities		12,991		—		(112)		12,879
Corporate debt		37,389		—		(643)		36,746
Commercial paper		5,885		—		—		5,885
Total	$	103,349	$	—	$	(1,487)	$	101,862
December 31, 2021
U.S. treasuries	$	51,269	$	—	$	(174)	$	51,095
Government agency securities		12,075		—		(23)		12,052
Corporate debt		40,169		—		(134)		40,035
Commercial paper		999		—		—		999
Total	$	104,512	$	—	$	(331)	$	104,181

Available-for-sale securities in a loss position at September 30, 2022 and December 31, 2021 consist of:

	September 30, 2022								December 31, 2021
	Continuous Loss Position				Continuous Loss Position				Continuous Loss Position
	for Less than 12 Months				for 12 Months or More				for Less than 12 Months
			Gross				Gross				Gross
	Estimated		Unrealized		Estimated		Unrealized		Estimated		Unrealized
	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
		(in thousands)
U.S. treasuries	$	16,973	$	(122)	$	29,379	$	(610)	$	51,095	$	(174)
Government agency securities		8,082		(59)		4,797		(53)		12,052		(23)
Corporate debt		25,980		(423)		10,766		(220)		40,035		(134)
Total	$	51,035	$	(604)	$	44,942	$	(883)	$	103,182	$	(331)

At December 31, 2021, 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 September 30, 2022 were as follows:

	September 30, 2022
	Amortized		Estimated
	Cost		Fair Value
		(in thousands)
Due in one year or less	$	97,762	$	96,468
Due after one year through two years		5,587		5,394
Total	$	103,349	$	101,862

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 no realized gains or losses, or unrealized losses from declines in fair value that are other than temporary, for the nine months ended September 30, 2022 and 2021.

Accounts Receivable

Accounts receivable is presented net of an allowance for doubtful accounts of $0.7 million at September 30, 2022 and December 31, 2021. 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 September 30, 2022 and December 31, 2021 consist of the following:

	September 30,		December 31,
	2022		2021
	(in thousands)
Materials	$	120,021	$	96,027
Work-in-process		61,052		54,128
Finished goods		6,664		20,703
Total	$	187,737	$	170,858

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. In addition, Veeco had deposits with its suppliers of $7.1 million and $3.9 million at September 30, 2022 and December 31, 2021, respectively.

Property, Plant, and Equipment

Property, plant, and equipment at September 30, 2022 and December 31, 2021 consist of the following:

	September 30,		December 31,
	2022		2021
	(in thousands)
Land	$	5,061	$	5,061
Building and improvements		64,198		63,946
Machinery and equipment (1)		160,365		145,656
Leasehold improvements		50,404		45,979
Gross property, plant, and equipment		280,028		260,642
Less: accumulated depreciation and amortization		171,612		160,899
Net property, plant, and equipment	$	108,416	$	99,743

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

For the three and nine months ended September 30, 2022, depreciation expense was $3.8 million and $11.6 million, respectively, and $3.5 million and $10.3 million, respectively, for the comparable 2021 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 nine months ended September 30, 2022.

Intangible Assets

Intangible assets consist of purchased technology, customer relationships, patents, trademarks and tradenames, licenses, 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 nine months ended September 30, 2022.

The components of purchased intangible assets were as follows:

	September 30, 2022						December 31, 2021
			Accumulated						Accumulated
	Gross		Amortization				Gross		Amortization
	Carrying		and		Net		Carrying		and		Net
	Amount		Impairment		Amount		Amount		Impairment		Amount
	(in thousands)
Technology	$	327,908	$	315,327	$	12,581	$	327,908	$	310,551	$	17,357
Customer relationships		146,465		134,803		11,662		146,465		132,970		13,495
Trademarks and tradenames		30,910		28,762		2,148		30,910		27,857		3,053
Other		3,686		3,686		—		3,686		3,686		—
Total	$	508,969	$	482,578	$	26,391	$	508,969	$	475,064	$	33,905

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