Balance Sheet Information | 9 Months Ended |
Sep. 30, 2013 |
Balance Sheet Information | ' |
Balance Sheet Information | ' |
Note 3—Balance Sheet Information |
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Cash and Cash Equivalents |
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Cash and cash equivalents include cash and certain highly liquid investments. Highly liquid investments with maturities of three months or less when purchased may be classified as cash equivalents. Such items may include liquid money market accounts, treasury bills, government agency securities and corporate debt. The investments that are classified as cash equivalents are carried at cost, which approximates fair value. |
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Short-Term Investments |
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Total available-for-sale securities and gains and losses in accumulated other comprehensive income consist of the following (in thousands): |
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| | September 30, 2013 | |
| | Amortized | | Gains in | | Losses in | | Estimated Fair | |
Cost | Accumulated | Accumulated | Value |
| Other | Other | |
| Comprehensive | Comprehensive | |
| Income | Income | |
United States treasuries | | $ | 180,101 | | $ | 63 | | $ | (3 | ) | $ | 180,161 | |
Corporate bonds | | 74,778 | | 29 | | (86 | ) | 74,721 | |
Government agency securities | | 55,657 | | 7 | | (1 | ) | 55,663 | |
Commercial paper | | 11,943 | | — | | — | | 11,943 | |
Total available-for-sale securities | | $ | 322,479 | | $ | 99 | | $ | (90 | ) | $ | 322,488 | |
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During the three and nine months ended September 30, 2013, available-for-sale securities were liquidated for total proceeds of $150.5 million and $422.9 million, respectively. There were minimal gross realized gains on these sales for the three months ended September 30, 2013 and $0.1 million of gross realized gains on these sales for the nine months ended September 30, 2013. |
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Total available-for-sale securities and gains and losses in accumulated other comprehensive income consist of the following (in thousands): |
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| | December 31, 2012 | |
| | Amortized | | Gains in | | Losses in | | Estimated Fair | |
Cost | Accumulated | Accumulated | Value |
| Other | Other | |
| Comprehensive | Comprehensive | |
| Income | Income | |
United States treasuries | | $ | 184,102 | | $ | 76 | | $ | — | | $ | 184,178 | |
Government agency securities | | 8,056 | | — | | — | | 8,056 | |
Total available-for-sale securities | | $ | 192,158 | | $ | 76 | | $ | — | | $ | 192,234 | |
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During the three and nine months ended September 30, 2012, available-for-sale securities were liquidated for total proceeds of $76.8 million and $176.3 million, respectively. The gross realized gains and losses on these sales were minimal for the three and nine months ended September 30, 2012. |
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The table below shows the fair value of short-term investments that have been in an unrealized loss position for less than 12 months (in thousands): |
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| | September 30, 2013 | |
| | Less than 12 months | | Total | |
| | Estimated | | Gross Unrealized | | Estimated Fair | | Gross Unrealized | |
Fair | Losses | Value | Losses |
Value | | | |
United States treasuries | | $ | 8,882 | | $ | (3 | ) | $ | 8,882 | | $ | (3 | ) |
Corporate bonds | | 49,447 | | (86 | ) | 49,447 | | (86 | ) |
Government agency securities | | 7,999 | | (1 | ) | 7,999 | | (1 | ) |
Total | | $ | 66,328 | | $ | (90 | ) | $ | 66,328 | | $ | (90 | ) |
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As of December 31, 2012 we did not hold any short-term investments that were in a loss position. We did not hold any short-term investments that have been in an unrealized loss position for 12 months or longer for the period noted in the table above. |
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The Company regularly reviews its investment portfolio to identify and evaluate investments that have indications of possible impairment. Factors considered in determining whether an unrealized loss was considered to be temporary or other-than-temporary and therefore impaired include: the length of time and extent to which fair value has been lower than the cost basis; the financial condition and near-term prospects of the investee; and whether it is more likely than not that the Company will be required to sell the security prior to recovery. The Company believes the gross unrealized losses on the Company’s short-term investments as of September 30, 2013 were temporary in nature and therefore did not recognize any impairment. |
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Contractual maturities of available-for-sale debt securities are as follows (in thousands): |
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| | September 30, 2013 | | | | | | | | | | |
| | Estimated Fair Value | | | | | | | | | | |
Due in one year or less | | $ | 230,968 | | | | | | | | | | |
Due in 1–2 years | | 53,295 | | | | | | | | | | |
Due in 2–3 years | | 38,225 | | | | | | | | | | |
Total available-for-sale securities | | $ | 322,488 | | | | | | | | | | |
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Actual maturities may differ from contractual maturities because some borrowers have the right to call or prepay obligations with or without call or prepayment penalties. |
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Restricted Cash |
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As of September 30, 2013 and December 31, 2012, restricted cash consisted of $2.9 million and $2.0 million, respectively, which serves as collateral for bank guarantees that provide financial assurance that the Company will fulfill certain customer obligations. This cash is held in custody by the issuing bank and is restricted as to withdrawal or use while the related bank guarantees are outstanding. |
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Accounts Receivable, Net |
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Accounts receivable are shown net of the allowance for doubtful accounts of $0.5 million as of September 30, 2013 and December 31, 2012. |
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Inventories |
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Inventories are stated at the lower of cost (principally first-in, first-out) or market. Inventories consist of (in thousands): |
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| | September 30, | | December 31, | | | | | | | |
| | 2013 | | 2012 | | | | | | | |
Materials | | $ | 35,377 | | $ | 36,523 | | | | | | | |
Work in process | | 19,590 | | 13,363 | | | | | | | |
Finished goods | | 2,618 | | 9,921 | | | | | | | |
| | $ | 57,585 | | $ | 59,807 | | | | | | | |
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Cost Method Investment |
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During the three and nine months ended September 30, 2013, we invested an additional $0.8 million and $1.6 million, respectively, into a rapidly developing organic light emitting diode (“OLED”) equipment company (the “Investment”). While Veeco is not obligated to increase amounts invested in the Investment, we may choose to do so if the opportunity arises in the future. As of September 30, 2013 and December 31, 2012 we have recorded a total investment of $16.1 million and $14.5 million, respectively, in the Investment. Our ownership in the Investment is approximately 15.3% of the preferred shares and a 12.0% interest in the total of the company. Since we do not exert significant influence on the Investment, this investment is accounted for under the cost method in accordance with applicable accounting guidance. The fair value of this investment is not estimated because there are no identified events or changes in circumstances that may indicate an other-than-temporary decline in the fair value of the investment, and we are exempt from estimating interim fair values because the investment does not meet the definition of a publicly traded company. This investment is recorded in other assets in our Condensed Consolidated Balance Sheets. |
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Customer Deposits |
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As of September 30, 2013 and December 31, 2012, we had customer deposits of $24.2 million and $32.7 million, respectively, which are recorded as a component of accrued expenses and other current liabilities. |
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Accrued Warranty |
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We estimate the costs that may be incurred under the warranties we provide and record a liability in the amount of such costs at the time the related revenue is recognized. Factors that affect our warranty liability include product failure rates, material usage and labor costs incurred in correcting product failures during the warranty period. This accrual is recorded in accrued expenses and other current liabilities in our Condensed Consolidated Balance Sheets. We periodically assess the adequacy of our recognized warranty liability and adjust the amount as necessary. Changes in our warranty liability during the period are as follows (in thousands): |
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| | September 30, | | | | | | | |
| | 2013 | | 2012 | | | | | | | |
Balance as of the beginning of period | | $ | 4,942 | | $ | 8,731 | | | | | | | |
Warranties issued during the period | | 2,778 | | 2,486 | | | | | | | |
Settlements made during the period | | (3,315 | ) | (6,389 | ) | | | | | | |
Changes in estimate during the period | | — | | 1,418 | | | | | | | |
Balance as of the end of period | | $ | 4,405 | | $ | 6,246 | | | | | | | |
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In the current year’s presentation we no longer include installation in the accrued warranty balance; therefore, in order to conform the balance to current year presentation, we have reclassified $1.047 million from the beginning balance of 2012 accrued warranty to accrued installation which, along with accrued warranty, is also a component of accrued expenses and other current liabilities. |
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Mortgage Payable |
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We have a mortgage payable with approximately $2.2 million outstanding as of September 30, 2013 and $2.4 million outstanding as of December 31, 2012. The mortgage accrues interest at an annual rate of 7.91%, and the final payment is due on January 1, 2020. We estimate the fair value of the mortgage as of September 30, 2013 was approximately $2.4 million and $2.6 million as of December 31, 2012. |
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Accumulated Other Comprehensive Income |
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The components of accumulated other comprehensive income are (in thousands): |
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| | Gross | | Taxes | | Net | | | | |
As of September 30, 2013 | | | | | | | | | | |
Translation adjustments | | $ | 5,694 | | $ | (352 | ) | $ | 5,342 | | | | |
Minimum pension liability | | (1,285 | ) | 510 | | (775 | ) | | | |
Unrealized gain on available-for-sale securities | | 9 | | (4 | ) | 5 | | | | |
Accumulated other comprehensive income | | $ | 4,418 | | $ | 154 | | $ | 4,572 | | | | |
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| | Gross | | Taxes | | Net | | | | |
As of December 31, 2012 | | | | | | | | | | |
Translation adjustments | | $ | 7,040 | | $ | (339 | ) | $ | 6,701 | | | | |
Minimum pension liability | | (1,285 | ) | 510 | | (775 | ) | | | |
Unrealized gain on available-for-sale securities | | 76 | | (29 | ) | 47 | | | | |
Accumulated other comprehensive income | | $ | 5,831 | | $ | 142 | | $ | 5,973 | | | | |
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