Assets

9 Months Ended

Sep. 30, 2023

Assets

Assets

Note 4 — 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, 2023 and December 31, 2022:

	Level 1		Level 2		Level 3		Total
	(in thousands)
September 30, 2023
Cash equivalents
Certificate of deposits and time deposits	$	74,807	$	—	$	—	$	74,807
Corporate debt		—		724		—		724
Commercial paper		—		3,994		—		3,994
Money market cash		24,699		—		—		24,699
Total	$	99,506	$	4,718	$	—	$	104,224
Short-term investments
U.S. treasuries	$	23,886	$	—	$	—	$	23,886
Government agency securities		—		69,201		—		69,201
Corporate debt		—		20,231		—		20,231
Commercial paper		—		16,799		—		16,799
Total	$	23,886	$	106,231	$	—	$	130,117
December 31, 2022
Cash equivalents
Certificate of deposits and time deposits	$	61,135	$	—	$	—	$	61,135
Money market cash		405		—		—		405
Total	$	61,540	$	—	$	—	$	61,540
Short-term investments
U.S. treasuries	$	62,849	$	—	$	—	$	62,849
Government agency securities		—		27,366		—		27,366
Corporate debt		—		41,591		—		41,591
Commercial paper		—		15,682		—		15,682
Total	$	62,849	$	84,639	$	—	$	147,488

There were no transfers between fair value measurement levels during the three and nine months ended September 30, 2023.

At September 30, 2023 and December 31, 2022, 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, 2023
U.S. treasuries	$	23,900	$	—	$	(14)	$	23,886
Government agency securities		69,345		—		(144)		69,201
Corporate debt		20,281		5		(55)		20,231
Commercial paper		16,799		—		—		16,799
Total	$	130,325	$	5	$	(213)	$	130,117
December 31, 2022
U.S. treasuries	$	63,331	$	—	$	(482)	$	62,849
Government agency securities		27,464		—		(98)		27,366
Corporate debt		42,006		—		(415)		41,591
Commercial paper		15,682		—		—		15,682
Total	$	148,483	$	—	$	(995)	$	147,488

Available-for-sale securities in a loss position at September 30, 2023 and December 31, 2022 consist of:

	Continuous Loss Position				Continuous Loss Position
	for Less than 12 Months				for 12 Months or More
			Gross				Gross
	Estimated		Unrealized		Estimated		Unrealized
	Fair Value		Losses		Fair Value		Losses
		(in thousands)
September 30, 2023
U.S. treasuries	$	20,892	$	(8)	$	2,994	$	(6)
Government agency securities		69,201		(144)		—		—
Corporate debt		17,163		(18)		2,587		(37)
Total	$	107,256	$	(170)	$	5,581	$	(43)
December 31, 2022
U.S. treasuries	$	39,791	$	(84)	$	23,057	$	(398)
Government agency securities		22,528		(86)		4,838		(12)
Corporate debt		19,693		(138)		21,898		(277)
Total	$	82,012	$	(308)	$	49,793	$	(687)

The contractual maturities of securities classified as available-for-sale at September 30, 2023 were as follows:

	September 30, 2023
	Amortized		Estimated
	Cost		Fair Value
		(in thousands)
Due in one year or less	$	116,504	$	116,351
Due after one year through two years		13,821		13,766
Total	$	130,325	$	130,117

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, 2023 and 2022.

Accounts Receivable

Accounts receivable is presented net of an allowance for doubtful accounts of $1.0 million and $0.7 million at September 30, 2023 and December 31, 2022 respectively. The Company considered its current expectations of future economic conditions when estimating its allowance for doubtful accounts.

Inventories

Inventories at September 30, 2023 and December 31, 2022 consist of the following:

	September 30,		December 31,
	2023		2022
	(in thousands)
Materials	$	156,485	$	134,940
Work-in-process		86,349		68,765
Finished goods		9,286		3,203
Total	$	252,120	$	206,908

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 Company had deposits with its suppliers of $16.7 million and $9.4 million at September 30, 2023 and December 31, 2022, respectively.

Property, Plant, and Equipment

Property, plant, and equipment at September 30, 2023 and December 31, 2022 consist of the following:

	September 30,		December 31,
	2023		2022
	(in thousands)
Land	$	5,061	$	5,061
Building and improvements		61,064		64,198
Machinery and equipment (1)		177,519		155,533
Leasehold improvements		55,008		54,764
Gross property, plant, and equipment		298,652		279,556
Less: accumulated depreciation and amortization		180,439		172,275
Net property, plant, and equipment	$	118,213	$	107,281

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

For the three and nine months ended September 30, 2023, depreciation expense was $4.1 million and $12.3 million, respectively, and $3.8 million and $11.6 million, respectively, for the comparable 2022 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 following table presents the changes in goodwill balances for the nine months ended September 30, 2023:

	Gross carrying		Accumulated
	amount		impairment		Net amount
	(in thousands)
Balance at December 31, 2022	$	430,331	$	248,388	$	181,943
Acquisition		33,021		—		33,021
Balance at September 30, 2023	$	463,352	$	248,388	$	214,964

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, 2023.

The components of purchased intangible assets were as follows:

	September 30, 2023						December 31, 2022
			Accumulated						Accumulated
	Gross		Amortization				Gross		Amortization
	Carrying		and		Net		Carrying		and		Net
	Amount		Impairment		Amount		Amount		Impairment		Amount
	(in thousands)
Technology	$	355,928	$	320,671	$	35,257	$	327,908	$	316,918	$	10,990
Customer relationships		146,925		137,088		9,837		146,465		135,415		11,050
Trademarks and tradenames		30,910		29,968		942		30,910		29,063		1,847
Other		3,746		3,713		33		3,686		3,686		—
Total	$	537,509	$	491,440	$	46,069	$	508,969	$	485,082	$	23,887

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