Note 4 - Liabilities

Accrued expenses and other current liabilities

The components of accrued expenses and other current liabilities at March 31, 2016 and December 31, 2015 consist of:

	March 31,		December 31,
	2016		2015
	(in thousands)
Payroll and related benefits	$	30,306	$	30,917
Warranty	7,104		8,159
Professional fees	2,378		2,224
Installation	1,373		1,110
Sales, use, and other taxes	1,264		1,132
Restructuring liability	437		824
Other	3,456		5,027

Total	$	46,318	$	49,393

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

Warranty

Warranties are typically valid for one year from the date of system final acceptance, and Veeco estimates the costs that may be incurred under the warranty. Estimated warranty costs 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 three months ended March 31, 2016 include:

	(in thousands)
Balance - December 31, 2015	$	8,159
Warranties issued	1,221
Consumption of reserves	(2,095		)
Changes in estimate	(181		)

Balance - March 31, 2016	$	7,104

Restructuring accruals

During the three months ended March 31, 2016, additional accruals were recognized and payments made related to previous years’ restructuring initiatives. Additional restructuring costs to be accrued for these activities are not expected to be significant.

	Personnel
	Severance and			Facility
	Related Costs			Closing Costs			Total
	(in thousands)
Balance - December 31, 2015	$	824		$	—		$	824
Provision	—			102			102
Changes in estimate	(2		)	—			(2		)
Payments	(385		)	(102		)	(487		)

Balance - March 31, 2016	$	437		$	—		$	437

Customer deposits

Customer deposits totaled $28.9 million and $28.2 million at March 31, 2016 and December 31, 2015, respectively.

Long-term debt

Debt consists of a mortgage note payable with a carrying value of $1.5 million at March 31, 2016 and December 31, 2015. The mortgage note payable is secured by certain land and buildings with a carrying value of $3.3 million at March 31, 2016 and December 31, 2015. One of the buildings is currently held for sale. The annual interest rate on the mortgage is 7.91%, and the final payment is due on January 1, 2020. Veeco estimated the mortgage fair value as $1.5 million and $1.6 million at March 31, 2016 and December 31, 2015, respectively, using a discounted cash flow model.