Veeco Instruments (VECO) 10-Q 3 Aug 17 2017 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2017	Jul. 26, 2017
Document and Entity Information
Entity Registrant Name	VEECO INSTRUMENTS INC
Entity Central Index Key	103,145
Document Type	10-Q
Document Period End Date	Jun. 30, 2017
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		48,420,617
Document Fiscal Year Focus	2,017
Document Fiscal Period Focus	Q2

Consolidated Balance Sheets

Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Current assets:
Cash and cash equivalents	$ 205,564	$ 277,444
Short-term investments	97,086	66,787
Accounts receivable, net	108,349	58,020
Inventories	119,935	77,063
Deferred cost of sales	4,439	6,160
Prepaid expenses and other current assets	24,909	16,034
Total current assets	560,282	501,508
Property, plant and equipment, net	82,546	60,646
Intangible assets, net	396,097	58,378
Goodwill	303,160	114,908
Deferred income taxes	2,528	2,045
Other assets	25,056	21,047
Total assets	1,369,669	758,532
Current liabilities:
Accounts payable	46,040	22,607
Accrued expenses and other current liabilities	44,305	33,201
Customer deposits and deferred revenue	76,985	85,022
Income taxes payable	4,316	2,311
Current portion of long-term debt	1,013	368
Total current liabilities	172,659	143,509
Deferred income taxes	46,291	13,199
Long-term debt	270,071	826
Other liabilities	11,163	6,403
Total liabilities	500,184	163,937
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; 48,382,213 and 40,714,790 shares issued at June 30, 2017 and December 31, 2016, respectively; 48,382,213 and 40,588,194 shares outstanding at June 30, 2017 and December 31, 2016, respectively	484	407
Additional paid-in capital	1,053,138	763,303
Accumulated deficit	(185,877)	(168,583)
Accumulated other comprehensive income	1,740	1,777
Treasury stock, at cost, 126,596 shares at December 31, 2016.		(2,309)
Total stockholders' equity	869,485	594,595
Total liabilities and stockholders' equity	$ 1,369,669	$ 758,532

Consolidated Balance Sheets (Pa

Consolidated Balance Sheets (Parenthetical) - $ / shares	Jun. 30, 2017	Dec. 31, 2016
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	48,382,213	40,714,790
Common stock, shares outstanding	48,382,213	40,588,194
Treasury stock, shares		126,596

Consolidated Statements of Oper

Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Consolidated Statements of Operations
Net sales	$ 115,066	$ 75,348	$ 209,452	$ 153,359
Cost of sales	76,346	43,909	136,533	89,964
Gross profit	38,720	31,439	72,919	63,395
Operating expenses, net:
Research and development	18,619	21,543	33,608	43,653
Selling, general, and administrative	22,698	19,995	41,801	39,834
Amortization of intangible assets	6,354	5,273	9,221	10,524
Restructuring	3,257	2,095	4,595	2,195
Acquisition costs	14,133		15,494
Asset impairment	675	13,627	1,138	13,627
Other, net	(10)	159	(87)	88
Total operating expenses, net	65,726	62,692	105,770	109,921
Operating income (loss)	(27,006)	(31,253)	(32,851)	(46,526)
Interest income	782	290	1,575	596
Interest expense	(5,061)	(105)	(9,196)	(143)
Income (loss) before income taxes	(31,285)	(31,068)	(40,472)	(46,073)
Income tax expense (benefit)	(12,897)	1,014	(23,179)	1,542
Net income (loss)	$ (18,388)	$ (32,082)	$ (17,293)	$ (47,615)
Income (loss) per common share:
Basic (in dollars per share)	$ (0.43)	$ (0.82)	$ (0.42)	$ (1.22)
Diluted (in dollars per share)	$ (0.43)	$ (0.82)	$ (0.42)	$ (1.22)
Weighted average number of shares:
Basic (in shares)	42,656	38,965	41,160	39,035
Diluted (in shares)	42,656	38,965	41,160	39,035

Consolidated Statements of Comp

Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Consolidated Statements of Comprehensive Income (Loss)
Net income (loss)	$ (18,388)	$ (32,082)	$ (17,293)	$ (47,615)
Other comprehensive income, net of tax
Unrealized gain (loss) on available-for-sale securities	53	(11)	(61)	39
Foreign currency translation	9	(12)	24	27
Total other comprehensive income, net of tax	62	(23)	(37)	66
Comprehensive income (loss)	$ (18,326)	$ (32,105)	$ (17,330)	$ (47,549)

Consolidated Statements of Cash

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Cash Flows from Operating Activities
Net income (loss)	$ (17,293)	$ (47,615)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	15,620	17,291
Non-cash interest expense	4,887
Deferred income taxes	(19,412)	1,821
Share-based compensation expense	13,806	8,390
Asset impairment	1,138	13,627
Provision for bad debts	92	160
Changes in operating assets and liabilities:
Accounts receivable	(4,956)	7,584
Inventories and deferred cost of sales	20,496	(14,577)
Prepaid expenses and other current assets	608	2,404
Accounts payable and accrued expenses	(7,103)	(9,156)
Customer deposits and deferred revenue	(12,872)	(10,378)
Long-term income tax liability	(4,877)
Other, net	277	(682)
Net cash provided by (used in) operating activities	(9,589)	(31,131)
Cash Flows from Investing Activities
Acquisitions of businesses, net of cash acquired	(399,478)
Capital expenditures	(10,057)	(9,179)
Proceeds from the sale of investments	235,586	78,145
Payments for purchases of investments	(219,141)	(35,533)
Other		(213)
Net cash provided by (used in) investing activities	(393,090)	33,220
Cash Flows from Financing Activities
Proceeds (tax withholdings) from stock option exercises and employee stock purchase plan	1,498	473
Restricted stock tax withholdings	(6,294)	(665)
Purchases of common stock		(13,349)
Proceeds from long-term debt borrowings	335,751
Principal payments on long-term debt	(180)	(166)
Net cash provided by (used in) financing activities	330,775	(13,707)
Effect of exchange rate changes on cash and cash equivalents	24	27
Net increase (decrease) in cash and cash equivalents	(71,880)	(11,591)
Cash and cash equivalents - beginning of period	277,444	269,232
Cash and cash equivalents - end of period	205,564	257,641
Supplemental Disclosure of Cash Flow Information
Interest paid	65	103
Income taxes paid	1,422	$ 1,284
Non-cash operating and financing activities
Net transfer of inventory to property, plant and equipment	$ 33

Basis of Presentation

Basis of Presentation	6 Months Ended
	Jun. 30, 2017
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, 2016 (“2016 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. Certain amounts previously reported have been reclassified in the financial statements to conform to the current presentation. 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 2017 interim quarters end on April 2, July 2, and October 1, and the 2016 interim quarters ended on April 3, July 3, and October 2. These interim quarters are reported as March 31, June 30, and September 30 in Veeco’s interim consolidated financial statements. Revenue recognition Veeco recognizes revenue when all of the following criteria have been met: persuasive evidence of an arrangement exists with a customer; delivery of the specified products has occurred or services have been rendered; prices are contractually fixed or determinable; and collectability is reasonably assured. Revenue is recorded including shipping and handling costs and excluding applicable taxes related to sales. Contracts with customers frequently contain multiple deliverables, such as systems, upgrades, components, spare parts, maintenance, and service plans. Judgment is required to properly identify the accounting units of the multiple-element arrangements and to determine how the revenue should be allocated among the accounting units. Veeco also evaluates whether multiple transactions with the same customer or related parties should be considered part of a single, multiple-element arrangement 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. Moreover, judgment is used in interpreting the commercial terms and determining when all criteria have been met in order to recognize revenue in the appropriate accounting period. When there are separate units of accounting, Veeco allocates revenue to each element based on the following selling price hierarchy: vendor-specific objective evidence (“VSOE”) if available; third party evidence (“TPE”) if VSOE is not available; or the best estimate of selling price (“BESP”) if neither VSOE nor TPE is available. Veeco uses BESP for the elements in its arrangements. The maximum revenue recognized on a delivered element is limited to the amount that is not contingent upon the delivery of additional items. Veeco considers many facts when evaluating each of its sales arrangements to determine the timing of revenue recognition including its contractual obligations, the customer’s creditworthiness, and the nature of the customer’s post-delivery acceptance provisions. Veeco’s system sales arrangements, including certain upgrades, generally include field acceptance provisions that may include functional or mechanical test procedures. For the majority of the arrangements, a customer source inspection of the system is performed in Veeco’s facility or test data is sent to the customer documenting that the system is functioning to the agreed upon specifications prior to delivery. 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 Veeco objectively demonstrates that the criteria specified in the contractual acceptance provisions are achieved prior to delivery, revenue is recognized upon system delivery since there is no substantive contingency remaining related to the acceptance provisions at that date, subject to the retention amount constraint described below for certain contracts. For new products, new applications of existing products, or for products with substantive customer acceptance provisions where Veeco 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 and fully recognized upon the receipt of final customer acceptance, assuming all other revenue recognition criteria have been met. The Company’s system sales arrangements, including certain upgrades, generally do not contain provisions for the right of return, forfeiture, refund, or other purchase price concession. In the rare instances where such provisions are included, all revenue is deferred until such rights expire. The sales arrangements generally include installation. The installation process is not deemed essential to the functionality of the equipment since it is not complex; it does not require significant changes to the features or capabilities of the equipment or involve constructing elaborate interfaces or connections subsequent to factory acceptance. Veeco has a demonstrated history of consistently completing installations in a timely manner and can reliably estimate the costs of such activities. Most customers engage Veeco to perform the installation services, although there are other third-party providers with sufficient knowledge who could complete these services. Based on these factors, installation is deemed to be inconsequential or perfunctory relative to the system sale as a whole, and as a result, installation service is not considered a separate element of the arrangement. As such, Veeco records the cost of the installation at the earlier of the time of revenue recognition for the system or when installation services are performed. In certain cases Veeco’s products are sold with a billing retention, typically 10% of the sales price, which is billed by Veeco and payable by the customer when field acceptance provisions are completed. The amount of revenue recognized upon delivery of a system or upgrade, if any, is limited to the lower of i) the amount billed that is not contingent upon acceptance provisions or ii) the value of the arrangement consideration allocated to the delivered elements, if such sale is part of a multiple-element arrangement. The Company recognizes revenue related to maintenance and service contracts ratably over the applicable contract term. Veeco recognizes revenue from the sales of components, spare parts, and specified service engagements at the time of delivery in accordance with the terms of the applicable sales arrangement. Incremental direct costs incurred related to the acquisition of a customer contract, such as sales commissions, are expensed as incurred, even if the related revenue is deferred in accordance with the above policy. Recent accounting pronouncements The FASB issued ASU 2014-09, as amended: Revenue from Contracts with Customers , which has been codified as Accounting Standards Codification 606 (“ASC 606”). ASC 606 requires the Company’s revenue recognition to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which it expects to be entitled in exchange for those goods or services. ASC 606 outlines a five-step model to make the revenue recognition determination and requires new financial statement disclosures. Publicly-traded companies are required to adopt ASC 606 for reporting periods beginning after December 15, 2017, but can adopt early for annual periods beginning after December 15, 2016. The Company is still completing its evaluation of the impact of adopting this standard; however, the Company currently expects the most significant financial statement impacts of adopting ASC 606 will be the elimination of the constraint on revenue associated with the billing retention related to the receipt of customer final acceptance as well as the identification of installation services as a performance obligation. The elimination of the constraint on revenue related to customer final acceptance, which is usually about 10 percent of a system sale, will generally be recognized at the time the Company transfers control of the system to the customer, which is earlier than under the Company’s current revenue recognition model for certain contracts that are subject to the billing retention constraint described above. The new performance obligation related to installation services under the new standard will generally be recognized as the installation services are performed, which is later than under the Company’s current revenue recognition model. Taken together, the Company currently believes there will be a net acceleration of a small percentage of its revenue under ASC 606 as compared to its current revenue recognition model. ASC 606 provides for different transition alternatives, and the Company is evaluating which method of adoption to select. In January 2016, the FASB issued ASU 2016-01: Financial Instruments — Overall , which requires certain equity investments to be measured at fair value, with changes in fair value recognized in net income. Publicly-traded companies are required to adopt the update for reporting periods beginning after December 15, 2017; early adoption is permitted. The Company does not expect this ASU will have a material impact on the consolidated financial statements. In February 2016, the FASB issued ASU 2016-02: Leases , which generally requires operating lessee rights and obligations to be recognized as assets and liabilities on the balance sheet. In addition, interest on lease liabilities is to be recognized separately from the amortization of right-of-use assets in the Statement of Operations. Further, payments of the principal portion of lease liabilities are to be classified as financing activities while payments of interest on lease liabilities and variable lease payments are to be classified as operating activities in the Statement of Cash Flows. When the standard is adopted, the Company will be required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, with early application permitted. The Company is evaluating the anticipated impact of adopting the ASU on the consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments , which provides guidance on eight specific cash flow issues, including debt prepayments or debt extinguishment costs. Publicly-traded companies are required to adopt the update for reporting periods beginning after December 15, 2017. This ASU will not have a material impact on the consolidated financial statements. In October 2016, the FASB issued ASU 2016-16, Income Taxes: Intra-Entity Transfers of Assets Other Than Inventory , which requires that entities recognize the income tax consequences of an intra-entity transfer of an asset, other than inventory, when the transfer occurs. Publicly-traded companies are required to adopt the update for reporting periods beginning after December 15, 2017. The Company is evaluating the anticipated effect the ASU will have on the consolidated financial statements. The Company is also evaluating other pronouncements recently issued but not yet adopted. The adoption of these pronouncements is not expected to have a material impact on our consolidated financial statements.

Income (Loss) Per Common Share

Income (Loss) Per Common Share	6 Months Ended
	Jun. 30, 2017
Income (Loss) Per Common Share
Income (Loss) Per Common Share	Note 2 - Income (Loss) Per Common Share The Company considers unvested share-based awards that have non-forfeitable rights to dividends prior to vesting to be participating shares, which are treated as a separate class of security from the Company’s common shares for calculating per share data. Therefore, the Company applies the two-class method when calculating income (loss) per share. The two-class method is an earnings allocation formula that determines earnings per share for each class of common stock and participating security according to dividends declared and participation rights in undistributed earnings. However, since the holders of the participating shares are not obligated to fund losses, participating shares are excluded from the calculation of loss per share. The dilutive effect of the Convertible Senior Notes on income (loss) per share is calculated using the treasury stock method since the Company has both the current intent and ability to settle the principal amount of the Convertible Senior Notes in cash. See Note 5, “Liabilities,” for additional information on the Convertible Senior Notes. Basic income (loss) per share is calculated by dividing net income (loss) by the weighted average number of shares outstanding during the period under the two-class method. 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 non-participating 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 in the periods the performance targets have been achieved. The computations of basic and diluted income (loss) per share for the three and six months ended June 30, 2017 and 2016 are as follows: Three months ended June 30, Six months ended June 30, 2017 2016 2017 2016 (in thousands, except per share amounts) Net income (loss) $ ) $ ) $ ) $ ) Net income (loss) per common share: Basic $ ) $ ) $ ) $ ) Diluted $ ) $ ) $ ) $ ) Basic weighted average shares outstanding Effect of potentially dilutive share-based awards — — — — Diluted weighted average shares outstanding Unvested participating shares excluded from basic weighted average shares outstanding since the securityholders are not obligated to fund losses Common share equivalents excluded from the diluted weighted average shares outstanding since Veeco incurred a net loss and their effect would be antidilutive Potentially dilutive non-participating shares excluded from the diluted calculation as their effect would be antidilutive Maximum potential shares to be issued for settlement of Convertible Senior Notes excluded from the diluted calculation as their effect would be antidilutive — —

Business Combinations

Business Combinations	6 Months Ended
	Jun. 30, 2017
Business Combinations
Business Combinations	Note 3 — Business Combinations Ultratech On May 26, 2017, the Company completed its acquisition of Ultratech, Inc. (“Ultratech”). Ultratech designs, manufactures, and markets lithography, laser annealing, and inspection equipment for manufacturers of semiconductor devices, including advanced packaging, MEMS, and atomic layer deposition (“ALD”) applications. Ultratech’s customers are primarily located throughout the United States, EMEA, China, Japan, Taiwan, and Korea. With the addition of Ultratech, the Company establishes itself as a leading equipment supplier in the advanced packaging market, forming a strong technology portfolio to address critical advanced packaging applications. The results of Ultratech’s operations have been included in the consolidated financial statements since the date of acquisition. Ultratech shareholders received (i) $21.75 per share in cash and (ii) 0.2675 of a share of Veeco common stock for each Ultratech common share outstanding on the acquisition date. The Company plans to finalize the purchase accounting within the measurement period, which may include adjustments to the fair values of assets acquired and liabilities assumed. The preliminary acquisition date fair value of the consideration totaled $633.4 million, net of cash acquired, which consisted of the following: Acquisition Date (May 26, 2017) (in thousands) Amount paid, net of cash acquired $ Fair value of equity issuances (7.4 million shares issued) Replacement equity awards attributable to pre-acquisition service Acquisition date fair value $ The following table summarizes the preliminary estimated fair values of the assets acquired and liabilities assumed at the acquisition date: Acquisition Date (May 26, 2017) (in thousands) Short-term investments $ Accounts receivable Inventory and deferred cost of sales Prepaid expense and other current assets Property, plant, and equipment Intangible assets Other assets Total identifiable assets acquired Accounts payable and accrued expenses Customer deposits and deferred revenue Deferred income taxes Other liabilities Total liabilities assumed Net identifiable assets acquired Goodwill Net assets acquired $ The gross contractual value of the acquired accounts receivable was approximately $46.0 million. The fair value of the accounts receivables is the amount expected to be collected by the Company. Goodwill generated from the acquisition is primarily attributable to expected synergies from future growth and strategic advantages provided through the expansion of product offerings as well as assembled workforce and is not expected to be deductible for income tax purposes. The Company has not yet completed its analysis of the allocation of the above acquired goodwill to the reporting units. The preliminary classes of intangible assets acquired and the estimated useful life of each class is presented in the table below: Acquisition Date (May 26, 2017) Amount Useful life (in thousands) Technology $ 9 years Customer relationships 12 years Backlog 6 months In-process research and development * Trademark and tradenames 7 years Intangible assets acquired $ *In-process research and development will be amortized (or impaired) upon completion (or abandonment) of the development project The Company determined the estimated fair value of the identifiable intangible assets based on various factors including: cost, discounted cash flow, income method, loss-of-revenue/income method, and relief-from-royalty method in determining the purchase price allocation. In-process research and development (IPR&D) represents the estimated fair values of incomplete Ultratech research and development projects that had not reached the commercialization stage and meet the criteria for recognition as IPR&D as of the date of the acquisition. In the future, the fair value of each project at the acquisition date will be either amortized or impaired depending on whether the projects are completed or abandoned. The fair value of IPR&D was determined using an income approach, and costs to complete the project and expected commercialization timelines are considered key assumptions. This valuation approach reflects the present value of the projected cash flows that are expected to be generated by the IPR&D less charges representing the contribution of other assets to those cash flows. The value of the IPR&D was determined to be $43.3 million, approximately half of which is related to the Company’s lithography technologies and one-third of which is related to the Company’s laser annealing technologies. For the three and six months ended June 30, 2017, acquisition related costs were approximately $14.1 million and $15.5 million, respectively, including non-cash charges of $4.2 million for the three months ended June 30, 2017 related to accelerated share-based compensation for employee terminations. The amounts of revenue and income (loss) from continuing operations before income taxes of Ultratech included in the Company’s consolidated statement of operations from the acquisition date to the period ending June 30, 2017 are as follows: Total (in thousands) Revenue $ Loss from operations before income taxes $ ) Loss from operations before income taxes of Ultratech for the period ending June 30, 2017 of $21.4 million includes acquisition costs of $14.1 million, release of inventory fair value step-up related to purchase accounting of $7.4 million, amortization expense on intangible assets of $3.5 million, and restructuring charges of $1.2 million. The following table presents unaudited pro forma financial information as if the acquisition of Ultratech had occurred on January 1, 2016: Three months ended June 30, Six months ended June 30, 2017 2016 2017 2016 (in thousands, except per share amounts) Revenue $ $ $ $ Loss from operations ) ) ) ) Diluted earnings per share $ ) $ ) $ ) $ ) The pro-forma results were calculated by combining the results of the Company with the stand-alone results of Ultratech for the pre-acquisition period, and adjusting for the following: (i) Additional amortization expense related to identified intangibles valued as part of the purchase price allocation that would have been incurred starting on January 1, 2016. (ii) Additional depreciation expense for the property, plant, and equipment fair value adjustments that would have been incurred starting on January 1, 2016. (iii) All acquisition related costs incurred by the Company as well as by Ultratech pre-acquisition have been removed from their respective periods and included in the three months ended March 31, 2016, as such expenses would have been incurred in the first quarter following the acquisition. (iv) All amortization of inventory step-up has been removed from their respective periods and recorded in the first two quarters of 2016, as such costs would have been incurred as the corresponding inventory was sold. (v) Additional interest expense related to the Convertible Senior Notes (see Note 5, “Liabilities”) as if they had been issued on January 1, 2016. (vi) Income tax expense (benefit) was adjusted for the impact of the above adjustments for each period.

Assets

Assets	6 Months Ended
	Jun. 30, 2017
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 acquired. All realized gains and losses and unrealized losses resulting from declines in fair value that are other than temporary are included in “Other, 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 and/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, 2017 and December 31, 2016: Level 1 Level 2 Level 3 Total (in thousands) June 30, 2017 Short-term investments U.S. treasuries $ $ — $ — $ Government agency securities — — Total $ $ $ — $ December 31, 2016 Cash equivalents Corporate debt $ — $ $ — $ Total $ — $ $ — $ Short-term investments U.S. treasuries $ $ — $ — $ Government agency securities — — Corporate debt — — Commercial paper — — Total $ $ $ — $ There were no transfers between fair value measurement levels during the three and six months ended June 30, 2017. At June 30, 2017 and December 31, 2016, 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, 2017 U.S. treasuries $ $ — $ ) $ Government agency securities — ) Total $ $ — $ ) $ December 31, 2016 U.S. treasuries $ $ — $ ) $ Government agency securities — ) Corporate debt — ) Commercial paper — — Total $ $ — $ ) $ Available-for-sale securities in a loss position at June 30, 2017 and December 31, 2016 consist of: June 30, 2017 December 31, 2016 Gross Gross Estimated Unrealized Estimated Unrealized Fair Value Losses Fair Value Losses (in thousands) U.S. treasuries $ $ ) $ $ ) Government agency securities ) ) Corporate debt — — ) Total $ $ ) $ $ ) At June 30, 2017 and December 31, 2016, 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, 2017 were as follows: June 30, 2017 Amortized Estimated cost fair value (in thousands) Due in one year or less $ $ Due after one year through two years Total $ $ Actual maturities may differ from contractual maturities. Veeco may sell these securities prior to maturity based on the needs of the business. In addition, borrowers may have the right to call or prepay obligations prior to scheduled maturities. There were minimal realized gains for the three and six months ended June 30, 2017 and no realized gains for the three and six months ended June 30, 2016. The cost of securities liquidated is based on specific identification. Accounts receivable Accounts receivable is presented net of an allowance for doubtful accounts of $0.3 million at both June 30, 2017 and December 31, 2016. Inventories Inventories are stated at the lower of cost or net realizable value, with cost determined on a first-in, first-out basis. Inventories at June 30, 2017 and December 31, 2016 consist of the following: June 30, December 31, 2017 2016 (in thousands) Materials $ $ Work-in-process Finished goods Total $ $ 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, and prepaid licenses. Veeco had deposits with its suppliers of $7.9 million and $7.8 million at June 30, 2017 and December 31, 2016, respectively. Also included within prepaid expenses and other current assets at June 30, 2017 were assets held for sale with a carrying value of $2.3 million related to one of the Company’s properties in St. Paul, Minnesota. The Company determined that the carrying value of this property exceeded the fair value, less cost to sell, and recorded an impairment charge of approximately $0.7 million for the three and six months ended June 30, 2017. Property, plant, and equipment Property, plant, and equipment at June 30, 2017 and December 31, 2016 consist of the following: June 30, December 31, 2017 2016 (in thousands) Land $ $ Building and improvements Machinery and equipment(1) Leasehold improvements Gross property, plant and equipment Less: accumulated depreciation and amortization Net property, plant, and equipment $ $ (1) Machinery and equipment also includes software, furniture and fixtures For the three and six months ended June 30, 2017, depreciation expense was $3.5 million and $6.4 million, respectively, and $3.4 million and $6.8 million for the comparable 2016 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 six months ended June 30, 2017: Gross carrying Accumulated amount impairment Net amount (in thousands) Balance at December 31, 2016 $ $ $ Acquisition — Balance at June 30, 2017 $ $ $ Intangible assets Intangible assets consist of purchased technology, customer-related intangible assets, in-process research and development, trademarks (both long-lived and indefinite-lived), patents, backlog, and licenses and are initially recorded at fair value. Long-lived intangibles 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 components of purchased intangible assets were as follows: June 30, 2017 December 31, 2016 Accumulated Accumulated Gross Amortization Gross Amortization Carrying and Net Carrying and Net Amount Impairment Amount Amount Impairment Amount (in thousands) Technology $ $ $ $ $ $ Customer relationships In-process R&D — — — — Trademarks and tradenames Indefinite-lived trademark — — Other Total $ $ $ $ $ $ Other intangible assets primarily consist of patents, backlog, and licenses. Other assets Veeco has an ownership interest of less than 20% in a non-marketable investment, Kateeva, Inc. (“Kateeva”). Veeco does not exert significant influence over Kateeva and therefore the investment is carried at cost. There was no change to the $21.0 million carrying value of the investment during the six months ended June 30, 2017. The investment is included in “Other assets” on the Consolidated Balance Sheet. The investment is subject to a periodic impairment review; as there are no open-market valuations, the impairment analysis requires judgment. The analysis includes assessments of Kateeva’s financial condition, the business outlook for its products and technology, its projected results and cash flow, business valuation indications from recent rounds of financing, the likelihood of obtaining subsequent rounds of financing, and the impact of equity preferences held by Veeco relative to other investors. Fair value of the investment is not estimated unless there are identified events or changes in circumstances that could have a significant adverse effect on the fair value of the investment. No such events or circumstances are present. Also included within Other assets at June 30, 2017 are deferred compensation plan assets of approximately $3.1 million representing the cash surrender value of life insurance policies held by the Company related to an executive non-qualified deferred compensation plan that was assumed from Ultratech that allows qualifying executives to defer cash compensation. The related plan liability of approximately $4.4 million is included in “Other liabilities” on the Consolidated Balance Sheet.

Liabilities

Liabilities	6 Months Ended
	Jun. 30, 2017
Liabilities
Liabilities	Note 5 - Liabilities Accrued expenses and other current liabilities The components of accrued expenses and other current liabilities at June 30, 2017 and December 31, 2016 consist of: June 30, December 31, 2017 2016 (in thousands) Payroll and related benefits $ $ Warranty Professional fees Installation Sales, use, and other taxes Restructuring liability Interest — Other Total $ $ 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 six months ended June 30, 2017 include: (in thousands) Balance - December 31, 2016 $ Warranties issued Addition from Ultratech acquisition Consumption of reserves ) Changes in estimate Balance - June 30, 2017 $ Restructuring accruals During the six months ended June 30, 2017, additional accruals were recognized and payments made related to previous years’ restructuring initiatives. During the second and third quarters of 2016, the Company undertook restructuring activities as part of its initiative to streamline operations, enhance efficiency, and reduce costs. As a result of these actions, the Company notified approximately 50 employees of their termination from the Company. In addition, during the third quarter of 2016, the Company decided to significantly reduce future investments in its ALD technology development, which impacted approximately 25 additional employees. Over the next few quarters, the Company expects to incur additional restructuring costs of $1 million to $3 million as it finalizes all of these activities. Personnel Severance and Facility Related Costs Closing Costs Total (in thousands) Balance - December 31, 2016 $ $ — $ Provision Payments ) ) ) Balance - June 30, 2017 $ $ $ Included within restructuring expense in the Consolidated Statements of Operations for the six months ended June 30, 2017 is approximately $0.8 million of non-cash charges related to accelerated share-based compensation for employee terminations. Customer deposits Customer deposits totaled $25.0 million and $22.2 million at June 30, 2017 and December 31, 2016, respectively. Mortgage Payable The Company has a mortgage note payable associated with its property in St. Paul, Minnesota, which, during the second quarter of 2017 was designated an asset held for sale. The carrying value of the property exceeds the carrying value of the mortgage note, which was $1.0 million and $1.2 million at June 30, 2017 and December 31, 2016, respectively. The annual interest rate on the note is 7.91%, and the final payment is due on January 1, 2020. The Company determined the mortgage is a Level 3 liability in the fair-value hierarchy and, using a discounted cash flow model, estimated its fair value as $1.0 million and $1.2 million at June 30, 2017 and December 31, 2016, respectively. At June 30, 2017, the remaining principle balance on the mortgage note is included in “Current portion of long-term debt” on the Consolidated Balance Sheet as the associated asset is expected to be sold within the next twelve months. Convertible Senior Notes On January 10, 2017, the Company issued $345.0 million of 2.70% convertible senior unsecured notes due (the “Convertible Senior Notes”). The Company received net proceeds, after deducting underwriting discounts and fees and expenses payable by the Company, of approximately $335.8 million. The Convertible Senior 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 Convertible Senior Notes mature on January 15, 2023, unless earlier purchased by the Company, redeemed, or converted. The Convertible Senior 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 Convertible Senior Notes are convertible into cash, shares of the Company’s common stock, or a combination thereof, at the Company’s election, upon the satisfaction of specified conditions and during certain periods as described below. The initial conversion rate is 24.9800 shares of the Company’s common stock per $1,000 principal amount of Convertible Senior Notes, representing an initial effective conversion price of $40.03 per share of common stock. The conversion rate may be subject to adjustment upon the occurrence of certain specified events as provided in the indenture governing the Convertible Senior Notes, dated January 18, 2017 between the Company and U.S. Bank National Association, as trustee (the “Indenture”), but will not be adjusted for accrued but unpaid interest. 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 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 Convertible Senior 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 the Convertible Senior 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. On or after October 15, 2022, until the close of business on the business day immediately preceding the Maturity Date, holders may convert their notes at any time, regardless of the foregoing circumstances. 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 option, the Company segregated the liability component of the instrument from the equity component. The liability component was measured by estimating the fair value of a non-convertible debt instrument that is similar in its terms to the Convertible Senior Notes. The calculation of the fair value of the debt component 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 Convertible Senior Notes at a discount rate of 7.00%, an interest rate equal to the estimated borrowing rate for similar non-convertible debt. The excess of the aggregate face value of the Convertible Senior Notes over the estimated fair value of the liability component of $72.5 million was recognized as a debt discount and recorded as an increase to additional paid-in capital, and will be amortized over the expected life of the Convertible Senior Notes using the effective interest rate method. Amortization of the debt discount is recognized as non-cash interest expense. The transaction costs of $9.2 million incurred in connection with the issuance of the Convertible Senior Notes 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 term of the Convertible Senior Notes. Transaction costs allocated to the equity component of $1.9 million reduced the value of the equity component recognized in stockholders’ equity. The carrying value of the Convertible Senior Notes is as follows: June 30, 2017 (in thousands) Principal amount $ Unamortized debt discount ) Unamortized transaction costs ) Net carrying value $ Total interest expense related to the Convertible Senior Notes is as follows: Three months Six months ended 2017 2017 (in thousands) Cash Interest Expense Coupon interest expense $ $ Non-Cash Interest Expense Amortization of debt discount Amortization of transaction costs Total Interest Expense $ $ The Company determined the Convertible Senior Notes is a Level 2 liability in the fair value hierarchy and estimated its fair value as $354.0 million at June 30, 2017. Other Liabilities Other liabilities at June 30, 2017 included deferred compensation of $4.4 million, asset retirement obligations of $3.3 million, medical and dental benefits of $2.5 million, and acquisition related accruals of $1.0 million. At December 31, 2016, other liabilities primarily consisted of a non-current income tax payable of $4.9 million.

Commitments and Contingencies

Commitments and Contingencies	6 Months Ended
	Jun. 30, 2017
Commitments and Contingencies
Commitments and Contingencies	Note 6 - Commitments and Contingencies Minimum lease commitments At June 30, 2017, Veeco’s total future minimum lease payments under non-cancelable operating leases (exclusive of renewal options) are payable as follows: Operating (in thousands) Payments due by period: 2017 $ 2018 2019 2020 2021 Thereafter Total $ Purchase commitments Veeco has purchase commitments of $144.5 million at June 30, 2017, 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, 2017, outstanding bank guarantees and letters of credit totaled $4.1 million, and unused bank guarantees and letters of credit of $67.2 million were available to be drawn upon. Legal proceedings On March 17, 2017, an Ultratech shareholder filed a purported class action complaint in the U.S. District Court for the Northern District of California (the “District Court”), captioned The Vladimir Gusinsky Rev. Trust v. Ultratech, Inc., et al. , Case No. 4:17-cv-01468-PJH, on behalf of itself and all other Ultratech shareholders against Ultratech, its directors at the time the acquisition was announced, Veeco, and Merger Sub. The complaint alleges, among other things, that in connection with Veeco’s proposed acquisition of Ultratech, the defendants purportedly agreed to a supposedly inadequate price for the Ultratech shares, agreed to unreasonable deal-protection measures, and potentially engaged in supposed self-dealing. On March 22, 2017, two other Ultratech shareholders filed a purported class action complaint in the District Court, captioned De Letter et al. v. Ultratech, Inc., et al. , Case No. 3:17-cv-01542-WHA, on behalf of themselves and all other Ultratech shareholders against Ultratech and its directors at the time the acquisition was announced. The complaint alleges, among other things, that in connection with Veeco’s proposed acquisition of Ultratech, the defendants purportedly agreed to a supposedly inadequate price for the Ultratech shares and potentially engaged in supposed self-dealing. On May 28, 2017, the District Court dismissed both cases. Veeco is involved in various other legal proceedings arising in the normal course of business. Veeco 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.

Equity

Equity	6 Months Ended
	Jun. 30, 2017
Equity
Equity	Note 7 - Equity Accumulated Other Comprehensive Income (“AOCI”) The following table presents the changes in the balances of each component of AOCI, net of tax: Unrealized Foreign Currency Gains (Losses) on Translation Securities Total (in thousands) Balance - December 31, 2016 $ $ ) $ Other comprehensive income (loss) ) ) Balance - June 30, 2017 $ $ ) $ There were minimal reclassifications from AOCI into net income for the six months ended June 30, 2017. For the six months ended June 30, 2017, Additional Paid-in Capital increased approximately $233.8 million related to 7.4 million shares issued for the Ultratech merger consideration, $49.3 million related to the issuance of the Convertible Senior Notes including deferred tax impact, and $6.7 million related to on-going share-based compensation activities.

Share-based compensation

Share-based compensation	6 Months Ended
	Jun. 30, 2017
Share-based compensation
Share-based compensation	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, 2017 and 2016: Three months ended June 30, Six months ended June 30, 2017 2016 2017 2016 (in thousands) Cost of sales $ $ $ $ Research and development Selling, general, and administrative Restructuring — — Acquisition costs — — Total $ $ $ $ For the six months ended June 30, 2017, equity activity related to stock options was as follows: Number of Weighted Shares Exercise Price (in thousands) Balance - December 31, 2016 $ Granted — — Exercised ) Expired or forfeited ) Balance - June 30, 2017 For the six months ended June 30, 2017, equity activity related to non-vested restricted shares and performance shares was as follows: Weighted Number of Grant Date Shares Fair Value (in thousands) Balance - December 31, 2016 $ Granted Assumed from Ultratech Vested ) Forfeited ) Balance - June 30, 2017

Income Taxes

Income Taxes	6 Months Ended
	Jun. 30, 2017
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, 2017, the Company’s U.S. deferred tax assets are fully offset by a valuation allowance since the Company cannot conclude that that it is more likely than not that these future benefits will be realized before they expire. At the end of each interim reporting period, the effective tax rate is aligned to 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. The year-to-date tax benefit for interim period losses is limited to the amount that could be recognizable at the end of the fiscal year. Income (loss) before income taxes and income tax expense (benefit) for the three and six months ended June 30, 2017 and 2016 were as follows: Three months ended June 30, Six months ended June 30, 2017 2016 2017 2016 (in thousands) Loss before income taxes $ ) $ ) $ ) $ ) Income tax expense (benefit) $ ) $ $ ) $ The net income tax benefit for the three months ended June 30, 2017 was comprised of a net benefit of $15.4 million related to the Company’s U.S. operations, and a net tax expense of $2.5 million related to the Company’s non-U.S. operations. The net income tax benefit for the six months ended June 30, 2017 was comprised of a net benefit of $19.5 million and $3.7 million related to the Company’s U.S. and non-U.S. operations, respectively. The net income tax benefit from the Company’s U.S. operations was primarily attributable to a tax benefit of $16.4 million and $21.3 million for losses incurred during the three and six months ended June 30, 2017, respectively. Under the intraperiod tax allocation rules, the deferred tax liability created upon the issuance of the Convertible Senior Notes and recorded through Additional Paid-in Capital is treated as a source of income, which enables the Company to recognize a benefit for the U.S. loss before income taxes through continuing operations during fiscal 2017. The tax benefit related to the issuance of the Convertible Senior Notes will not recur in future years. When calculating the income tax benefit for the six months ended June 30, 2017, the Company was subject to a loss limitation rule as the year-to-date ordinary loss exceeded the full-year expected ordinary loss. The tax benefit for the year-to-date ordinary loss was limited to the amount that we expect to be able to recognize for the full year. This benefit was partially offset by a deferred provision of approximately $1.0 million and $1.9 million related to tax amortization on indefinite-lived intangible assets for the three and six months ended June 30, 2017, respectively. The net income tax benefit of $3.7 million for the six months ended June 30, 2017, from the Company’s non-U.S. operations was primarily attributable to the Company’s determination in the first quarter of 2017 that it was more likely than not that it will meet the requirements of an existing foreign tax incentive agreement. As a result, the Company remeasured this uncertain tax position and recognized a $6.3 million benefit during the first quarter, which is comprised of a reversal of a $4.9 million tax liability established in previous periods and the recognition of a deferred tax benefit of $1.4 million related to certain foreign net operating losses generated in prior years that are now determined to be realizable. This benefit was partially offset by a current year tax expense of approximately $2.7 million attributed to the profitable non-U.S. operations, of which approximately $2.5 million was recorded during the three months ended June 30, 2017. For the three and six months ended June 30, 2016, the Company did not provide a current tax benefit on U.S. pre-tax losses since the Company could not conclude that it is more likely than not that the benefits would be realized. The tax expense is primarily related to indefinite-lived intangible assets that are amortized for tax purposes but not for financial reporting purposes, as well as taxes attributed to the profitable non-U.S. operations. The deferred tax liability created by the tax deductible expense cannot be used to offset existing deferred tax assets.

Segment Reporting and Geographi

Segment Reporting and Geographic Information	6 Months Ended
	Jun. 30, 2017
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 continues to do so with the integration of Ultratech’s business activities. As a result, the Company has one reportable segment: the design, development, manufacture, and support of semiconductor process equipment primarily sold to make electronic devices. Veeco categorizes its revenue by the key markets into which it sells. As a result of the acquisition of Ultratech, the Company’s four key markets are now: Lighting, Display & Power Electronics; Advanced Packaging, MEMS & RF; Scientific & Industrial, which now includes Data Storage, which was formerly a separate category; and Front-End Semiconductor, which was formerly included in the Scientific & Industrial market category. Lighting, Display & Power Electronics Lighting refers to Light Emitting Diode (“LED”) and semiconductor illumination sources used in various applications including, but not limited to, displays such as backlights, general lighting, automotive running lights, and head lamps. Display refers to LEDs used for displays and Organic Light Emitting Diode (“OLED”) displays found in outdoor display/signage applications, smartphones, wearable devices, and tablets. Power Electronics refers to semiconductor devices such as rectifiers, inverters, and converters for the control and conversion of electric power. Advanced Packaging, MEMS & RF (Mobility) Advanced Packaging includes a portfolio of wafer-level assembly technologies that enable the miniaturization and performance improvement of electronic products, such as smartphones, smartwatches, tablets, and laptops. Micro-Electro Mechanical Systems (“MEMS”) includes tiny mechanical devices such as sensors, switches, mirrors, and actuators embedded in semiconductor chips used in vehicles, smartphones, tablets, and games. Radio Frequency (“RF”) includes semiconductor devices that make use of radio waves (RF fields) for wireless broadcasting and/or communications. Scientific & Industrial Scientific refers to advanced materials research at university research institutions, industry research institutions, industry consortiums, and government research agencies. Industrial refers to large-scale product manufacturing applications including high powered lasers, data storage, and optical coatings: thin layers of material deposited on a lens or mirror that alters how light reflects and transmits. Front-End Semiconductor Front-End Semiconductor refers to the early steps in the process of integrated circuit fabrication where the microchips are created but still remain on the silicon wafer. This includes the photomask market, which is an opaque plate that allows light to shine through in a defined pattern for use in lithography. Sales by end-market and geographic region for the three and six months ended June 30, 2017 and 2016 were as follows: Three months ended June 30, Six months ended June 30, 2017 2016 2017 2016 (in thousands) Sales by end-market Lighting, Display & Power Electronics $ $ $ $ Advanced Packaging, MEMS & RF Scientific & Industrial Front-End Semiconductor Total $ $ $ $ Sales by geographic region United States $ $ $ $ China EMEA(1) Rest of World Total $ $ $ $ (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.

Basis of Presentation (Policies

Basis of Presentation (Policies)	6 Months Ended
	Jun. 30, 2017
Basis of Presentation
Revenue recognition	Revenue recognition Veeco recognizes revenue when all of the following criteria have been met: persuasive evidence of an arrangement exists with a customer; delivery of the specified products has occurred or services have been rendered; prices are contractually fixed or determinable; and collectability is reasonably assured. Revenue is recorded including shipping and handling costs and excluding applicable taxes related to sales. Contracts with customers frequently contain multiple deliverables, such as systems, upgrades, components, spare parts, maintenance, and service plans. Judgment is required to properly identify the accounting units of the multiple-element arrangements and to determine how the revenue should be allocated among the accounting units. Veeco also evaluates whether multiple transactions with the same customer or related parties should be considered part of a single, multiple-element arrangement 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. Moreover, judgment is used in interpreting the commercial terms and determining when all criteria have been met in order to recognize revenue in the appropriate accounting period. When there are separate units of accounting, Veeco allocates revenue to each element based on the following selling price hierarchy: vendor-specific objective evidence (“VSOE”) if available; third party evidence (“TPE”) if VSOE is not available; or the best estimate of selling price (“BESP”) if neither VSOE nor TPE is available. Veeco uses BESP for the elements in its arrangements. The maximum revenue recognized on a delivered element is limited to the amount that is not contingent upon the delivery of additional items. Veeco considers many facts when evaluating each of its sales arrangements to determine the timing of revenue recognition including its contractual obligations, the customer’s creditworthiness, and the nature of the customer’s post-delivery acceptance provisions. Veeco’s system sales arrangements, including certain upgrades, generally include field acceptance provisions that may include functional or mechanical test procedures. For the majority of the arrangements, a customer source inspection of the system is performed in Veeco’s facility or test data is sent to the customer documenting that the system is functioning to the agreed upon specifications prior to delivery. 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 Veeco objectively demonstrates that the criteria specified in the contractual acceptance provisions are achieved prior to delivery, revenue is recognized upon system delivery since there is no substantive contingency remaining related to the acceptance provisions at that date, subject to the retention amount constraint described below for certain contracts. For new products, new applications of existing products, or for products with substantive customer acceptance provisions where Veeco 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 and fully recognized upon the receipt of final customer acceptance, assuming all other revenue recognition criteria have been met. The Company’s system sales arrangements, including certain upgrades, generally do not contain provisions for the right of return, forfeiture, refund, or other purchase price concession. In the rare instances where such provisions are included, all revenue is deferred until such rights expire. The sales arrangements generally include installation. The installation process is not deemed essential to the functionality of the equipment since it is not complex; it does not require significant changes to the features or capabilities of the equipment or involve constructing elaborate interfaces or connections subsequent to factory acceptance. Veeco has a demonstrated history of consistently completing installations in a timely manner and can reliably estimate the costs of such activities. Most customers engage Veeco to perform the installation services, although there are other third-party providers with sufficient knowledge who could complete these services. Based on these factors, installation is deemed to be inconsequential or perfunctory relative to the system sale as a whole, and as a result, installation service is not considered a separate element of the arrangement. As such, Veeco records the cost of the installation at the earlier of the time of revenue recognition for the system or when installation services are performed. In certain cases Veeco’s products are sold with a billing retention, typically 10% of the sales price, which is billed by Veeco and payable by the customer when field acceptance provisions are completed. The amount of revenue recognized upon delivery of a system or upgrade, if any, is limited to the lower of i) the amount billed that is not contingent upon acceptance provisions or ii) the value of the arrangement consideration allocated to the delivered elements, if such sale is part of a multiple-element arrangement. The Company recognizes revenue related to maintenance and service contracts ratably over the applicable contract term. Veeco recognizes revenue from the sales of components, spare parts, and specified service engagements at the time of delivery in accordance with the terms of the applicable sales arrangement. Incremental direct costs incurred related to the acquisition of a customer contract, such as sales commissions, are expensed as incurred, even if the related revenue is deferred in accordance with the above policy.
Recent accounting pronouncements	Recent accounting pronouncements The FASB issued ASU 2014-09, as amended: Revenue from Contracts with Customers , which has been codified as Accounting Standards Codification 606 (“ASC 606”). ASC 606 requires the Company’s revenue recognition to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which it expects to be entitled in exchange for those goods or services. ASC 606 outlines a five-step model to make the revenue recognition determination and requires new financial statement disclosures. Publicly-traded companies are required to adopt ASC 606 for reporting periods beginning after December 15, 2017, but can adopt early for annual periods beginning after December 15, 2016. The Company is still completing its evaluation of the impact of adopting this standard; however, the Company currently expects the most significant financial statement impacts of adopting ASC 606 will be the elimination of the constraint on revenue associated with the billing retention related to the receipt of customer final acceptance as well as the identification of installation services as a performance obligation. The elimination of the constraint on revenue related to customer final acceptance, which is usually about 10 percent of a system sale, will generally be recognized at the time the Company transfers control of the system to the customer, which is earlier than under the Company’s current revenue recognition model for certain contracts that are subject to the billing retention constraint described above. The new performance obligation related to installation services under the new standard will generally be recognized as the installation services are performed, which is later than under the Company’s current revenue recognition model. Taken together, the Company currently believes there will be a net acceleration of a small percentage of its revenue under ASC 606 as compared to its current revenue recognition model. ASC 606 provides for different transition alternatives, and the Company is evaluating which method of adoption to select. In January 2016, the FASB issued ASU 2016-01: Financial Instruments — Overall , which requires certain equity investments to be measured at fair value, with changes in fair value recognized in net income. Publicly-traded companies are required to adopt the update for reporting periods beginning after December 15, 2017; early adoption is permitted. The Company does not expect this ASU will have a material impact on the consolidated financial statements. In February 2016, the FASB issued ASU 2016-02: Leases , which generally requires operating lessee rights and obligations to be recognized as assets and liabilities on the balance sheet. In addition, interest on lease liabilities is to be recognized separately from the amortization of right-of-use assets in the Statement of Operations. Further, payments of the principal portion of lease liabilities are to be classified as financing activities while payments of interest on lease liabilities and variable lease payments are to be classified as operating activities in the Statement of Cash Flows. When the standard is adopted, the Company will be required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, with early application permitted. The Company is evaluating the anticipated impact of adopting the ASU on the consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments , which provides guidance on eight specific cash flow issues, including debt prepayments or debt extinguishment costs. Publicly-traded companies are required to adopt the update for reporting periods beginning after December 15, 2017. This ASU will not have a material impact on the consolidated financial statements. In October 2016, the FASB issued ASU 2016-16, Income Taxes: Intra-Entity Transfers of Assets Other Than Inventory , which requires that entities recognize the income tax consequences of an intra-entity transfer of an asset, other than inventory, when the transfer occurs. Publicly-traded companies are required to adopt the update for reporting periods beginning after December 15, 2017. The Company is evaluating the anticipated effect the ASU will have on the consolidated financial statements. The Company is also evaluating other pronouncements recently issued but not yet adopted. The adoption of these pronouncements is not expected to have a material impact on our consolidated financial statements.

Income (Loss) Per Common Share

Income (Loss) Per Common Share (Tables)	6 Months Ended
	Jun. 30, 2017
Income (Loss) Per Common Share
Schedule of basic and diluted net income (loss) per share and weighted average shares	Three months ended June 30, Six months ended June 30, 2017 2016 2017 2016 (in thousands, except per share amounts) Net income (loss) $ ) $ ) $ ) $ ) Net income (loss) per common share: Basic $ ) $ ) $ ) $ ) Diluted $ ) $ ) $ ) $ ) Basic weighted average shares outstanding Effect of potentially dilutive share-based awards — — — — Diluted weighted average shares outstanding Unvested participating shares excluded from basic weighted average shares outstanding since the securityholders are not obligated to fund losses Common share equivalents excluded from the diluted weighted average shares outstanding since Veeco incurred a net loss and their effect would be antidilutive Potentially dilutive non-participating shares excluded from the diluted calculation as their effect would be antidilutive Maximum potential shares to be issued for settlement of Convertible Senior Notes excluded from the diluted calculation as their effect would be antidilutive — —

Business Combinations (Tables)

Business Combinations (Tables) - Ultratech	6 Months Ended
	Jun. 30, 2017
Schedule of acquisition date fair value of the consideration transferred net of cash acquired	Acquisition Date (May 26, 2017) (in thousands) Amount paid, net of cash acquired $ Fair value of equity issuances (7.4 million shares issued) Replacement equity awards attributable to pre-acquisition service Acquisition date fair value $
Summary of the estimated fair values of the assets acquired, net of cash acquired, and liabilities assumed	Acquisition Date (May 26, 2017) (in thousands) Short-term investments $ Accounts receivable Inventory and deferred cost of sales Prepaid expense and other current assets Property, plant, and equipment Intangible assets Other assets Total identifiable assets acquired Accounts payable and accrued expenses Customer deposits and deferred revenue Deferred income taxes Other liabilities Total liabilities assumed Net identifiable assets acquired Goodwill Net assets acquired $
Schedule of classes of intangible assets acquired and the estimated weighted-average useful life of each class	Acquisition Date (May 26, 2017) Amount Useful life (in thousands) Technology $ 9 years Customer relationships 12 years Backlog 6 months In-process research and development * Trademark and tradenames 7 years Intangible assets acquired $ *In-process research and development will be amortized (or impaired) upon completion (or abandonment) of the development project
Schedule of amounts of revenue and income (loss) from continuing operations before income taxes	The amounts of revenue and income (loss) from continuing operations before income taxes of Ultratech included in the Company’s consolidated statement of operations from the acquisition date to the period ending June 30, 2017 are as follows: Total (in thousands) Revenue $ Loss from operations before income taxes $ )
Schedule of pro forma financial information	Three months ended June 30, Six months ended June 30, 2017 2016 2017 2016 (in thousands, except per share amounts) Revenue $ $ $ $ Loss from operations ) ) ) ) Diluted earnings per share $ ) $ ) $ ) $ )

Assets (Tables)

Assets (Tables)	6 Months Ended
	Jun. 30, 2017
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, 2017 Short-term investments U.S. treasuries $ $ — $ — $ Government agency securities — — Total $ $ $ — $ December 31, 2016 Cash equivalents Corporate debt $ — $ $ — $ Total $ — $ $ — $ Short-term investments U.S. treasuries $ $ — $ — $ Government agency securities — — Corporate debt — — Commercial paper — — Total $ $ $ — $
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, 2017 U.S. treasuries $ $ — $ ) $ Government agency securities — ) Total $ $ — $ ) $ December 31, 2016 U.S. treasuries $ $ — $ ) $ Government agency securities — ) Corporate debt — ) Commercial paper — — Total $ $ — $ ) $
Summary of fair value and unrealized losses of available-for-sale securities in a loss position	June 30, 2017 December 31, 2016 Gross Gross Estimated Unrealized Estimated Unrealized Fair Value Losses Fair Value Losses (in thousands) U.S. treasuries $ $ ) $ $ ) Government agency securities ) ) Corporate debt — — ) Total $ $ ) $ $ )
Schedule of contractual maturities of available-for-sale securities	June 30, 2017 Amortized Estimated cost fair value (in thousands) Due in one year or less $ $ Due after one year through two years Total $ $
Schedule of inventories	June 30, December 31, 2017 2016 (in thousands) Materials $ $ Work-in-process Finished goods Total $ $
Schedule of property, plant, and equipment	June 30, December 31, 2017 2016 (in thousands) Land $ $ Building and improvements Machinery and equipment(1) Leasehold improvements Gross property, plant and equipment Less: accumulated depreciation and amortization Net property, plant, and equipment $ $ (1) Machinery and equipment also includes software, furniture and fixtures
Schedule of changes in goodwill	Gross carrying Accumulated amount impairment Net amount (in thousands) Balance at December 31, 2016 $ $ $ Acquisition — Balance at June 30, 2017 $ $ $
Schedule of intangible assets excluding goodwill	June 30, 2017 December 31, 2016 Accumulated Accumulated Gross Amortization Gross Amortization Carrying and Net Carrying and Net Amount Impairment Amount Amount Impairment Amount (in thousands) Technology $ $ $ $ $ $ Customer relationships In-process R&D — — — — Trademarks and tradenames Indefinite-lived trademark — — Other Total $ $ $ $ $ $

Liabilities (Tables)

Liabilities (Tables)	6 Months Ended
	Jun. 30, 2017
Liabilities
Schedule of accrued expenses and other current liabilities	June 30, December 31, 2017 2016 (in thousands) Payroll and related benefits $ $ Warranty Professional fees Installation Sales, use, and other taxes Restructuring liability Interest — Other Total $ $
Schedule of changes in product warranty reserves	(in thousands) Balance - December 31, 2016 $ Warranties issued Addition from Ultratech acquisition Consumption of reserves ) Changes in estimate Balance - June 30, 2017 $
Schedule of restructuring accrual activities	Personnel Severance and Facility Related Costs Closing Costs Total (in thousands) Balance - December 31, 2016 $ $ — $ Provision Payments ) ) ) Balance - June 30, 2017 $ $ $
Schedule of carrying value of Convertible Senior Notes	June 30, 2017 (in thousands) Principal amount $ Unamortized debt discount ) Unamortized transaction costs ) Net carrying value $
Summary of interest expense related to Convertible Senior Notes	Three months Six months ended 2017 2017 (in thousands) Cash Interest Expense Coupon interest expense $ $ Non-Cash Interest Expense Amortization of debt discount Amortization of transaction costs Total Interest Expense $ $

Commitments and Contingencies (

Commitments and Contingencies (Tables)	6 Months Ended
	Jun. 30, 2017
Commitments and Contingencies
Schedule of future minimum lease payments under non-cancelable operating leases (exclusive of renewal options)	At June 30, 2017, Veeco’s total future minimum lease payments under non-cancelable operating leases (exclusive of renewal options) are payable as follows: Operating (in thousands) Payments due by period: 2017 $ 2018 2019 2020 2021 Thereafter Total $

Equity (Tables)

Equity (Tables)	6 Months Ended
	Jun. 30, 2017
Equity
Schedule of the changes in the balances of each component of AOCI, net of tax	Unrealized Foreign Currency Gains (Losses) on Translation Securities Total (in thousands) Balance - December 31, 2016 $ $ ) $ Other comprehensive income (loss) ) ) Balance - June 30, 2017 $ $ ) $

Share-based compensation (Table

Share-based compensation (Tables)	6 Months Ended
	Jun. 30, 2017
Share-based compensation
Schedule of share-based compensation expense	Three months ended June 30, Six months ended June 30, 2017 2016 2017 2016 (in thousands) Cost of sales $ $ $ $ Research and development Selling, general, and administrative Restructuring — — Acquisition costs — — Total $ $ $ $
Summary of stock option activity	Number of Weighted Shares Exercise Price (in thousands) Balance - December 31, 2016 $ Granted — — Exercised ) Expired or forfeited ) Balance - June 30, 2017
Summary of restricted and performance shares activity	Weighted Number of Grant Date Shares Fair Value (in thousands) Balance - December 31, 2016 $ Granted Assumed from Ultratech Vested ) Forfeited ) Balance - June 30, 2017

Income Taxes (Tables)

Income Taxes (Tables)	6 Months Ended
	Jun. 30, 2017
Income Taxes
Schedule of income (loss) before income taxes and income tax expense (benefit)	Three months ended June 30, Six months ended June 30, 2017 2016 2017 2016 (in thousands) Loss before income taxes $ ) $ ) $ ) $ ) Income tax expense (benefit) $ ) $ $ ) $

Segment Reporting and Geograp26

Segment Reporting and Geographic Information (Tables)	6 Months Ended
	Jun. 30, 2017
Segment Reporting and Geographic Information
Schedule of sales by end-market	Three months ended June 30, Six months ended June 30, 2017 2016 2017 2016 (in thousands) Sales by end-market Lighting, Display & Power Electronics $ $ $ $ Advanced Packaging, MEMS & RF Scientific & Industrial Front-End Semiconductor Total $ $ $ $
Schedule of sales by geographic region	Three months ended June 30, Six months ended June 30, 2017 2016 2017 2016 (in thousands) Sales by geographic region United States $ $ $ $ China EMEA(1) Rest of World Total $ $ $ $ (1) EMEA consists of Europe, the Middle East, and Africa

Basis of Presentation (Details)

Basis of Presentation (Details)	6 Months Ended
	Jun. 30, 2017
Basis of Presentation
Duration of each fiscal quarter for 52-week fiscal year (in days)	91 days
Revenue recognition
Revenue retention percentage	10.00%

Income (Loss) Per Common Shar28

Income (Loss) Per Common Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Income (Loss) Per Common Share
Net income (loss)	$ (18,388)	$ (32,082)	$ (17,293)	$ (47,615)
Net income (loss) per common share:
Basic (in dollars per share)	$ (0.43)	$ (0.82)	$ (0.42)	$ (1.22)
Diluted (in dollars per share)	$ (0.43)	$ (0.82)	$ (0.42)	$ (1.22)
Weighted average shares reconciliation
Basic weighted average shares outstanding	42,656	38,965	41,160	39,035
Diluted weighted average shares outstanding	42,656	38,965	41,160	39,035

Income (Loss) Per Common Shar29

Income (Loss) Per Common Share - Shares Excluded from EPS (Details) - shares shares in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Diluted income (loss) per share
Common share equivalents excluded from the diluted weighted average shares outstanding since Veeco incurred a net loss and their effect would be antidilutive	330	34	294	50
Unvested participating shares
Basic income (loss) per share
Unvested participating shares excluded from basic weighted average shares outstanding since the securityholders are not obligated to fund losses	228	659	228	691
Non-participating shares
Diluted income (loss) per share
Shares excluded from the diluted calculation as their effect would be antidilutive	1,265	2,425	1,462	2,350
Convertible Senior Notes
Diluted income (loss) per share
Shares excluded from the diluted calculation as their effect would be antidilutive	8,618		8,618

Business Combinations (Details)

Business Combinations (Details) - USD ($) $ / shares in Units, $ in Thousands	May 26, 2017	Jun. 30, 2017	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016	Dec. 31, 2016
Summary of estimated fair values of the assets acquired and liabilities assumed
Goodwill		$ 303,160	$ 303,160		$ 303,160		$ 114,908
Intangible assets acquired and the estimated weighted-average useful life
Acquisition related costs			14,133		15,494
Non-cash charges related to share based compensation					13,806	$ 8,390
Revenue and income (loss) from continuing operations before income taxes
Amortization expense on intangible assets			6,354	$ 5,273	9,221	10,524
Restructuring charges			3,257	2,095	4,595	2,195
Ultratech
Business Combinations
Cash received by acquiree (in dollars per share)	$ 21.75
Number of shares received by acquiree	0.2675
Fair value of the consideration transferred
Amount paid, net of cash acquired	$ 399,478
Fair value of equity issuances (7.4 million shares issued)	$ 233,655
Number of shares in fair value of equity issuances (in shares)	7,400,000
Replacement equity awards attributable to pre-acquisition service	$ 228
Acquisition date fair value	633,361
Summary of estimated fair values of the assets acquired and liabilities assumed
Short-term investments	47,161
Account receivable	45,465
Inventory and deferred cost of sales	61,680
Prepaid expense and other current assets	7,217
Property, plant, and equipment	19,555
Intangible assets	346,940
Other assets	6,442
Total identifiable assets acquired	534,460
Accounts payable and accrued expenses	40,087
Customer deposits and deferred revenue	4,834
Deferred income taxes	32,478
Other liabilities	11,952
Total liabilities assumed	89,351
Net identifiable assets acquired	445,109
Goodwill	188,252
Net assets acquired	633,361
Gross contractual value of accounts receivable	46,000
Intangible assets acquired and the estimated weighted-average useful life
Intangible assets acquired, amount	346,940
Acquisition related costs			14,100		15,500
Non-cash charges related to share based compensation			4,200
Revenue and income (loss) from continuing operations before income taxes
Revenue		24,050
Loss from operations before income taxes		$ (21,445)
Inventory fair value step-up related to purchase accounting					7,400
Amortization expense on intangible assets					3,500
Restructuring charges					1,200
Pro forma consolidated statement of operations
Revenue			128,399	124,272	280,194	247,493
Loss from operations before income taxes			$ (28,898)	$ (54,380)	$ (32,852)	$ (128,860)
Diluted earnings per share (in dollars per share)			$ (0.61)	$ (1.17)	$ (0.70)	$ (2.78)
Ultratech | Technology
Intangible assets acquired and the estimated weighted-average useful life
Intangible assets acquired, amount	$ 158,390
Useful life	9 years
Ultratech | Customer relationships
Intangible assets acquired and the estimated weighted-average useful life
Intangible assets acquired, amount	$ 116,710
Useful life	12 years
Ultratech | Backlog
Intangible assets acquired and the estimated weighted-average useful life
Intangible assets acquired, amount	$ 3,080
Useful life	6 months
Ultratech | In-process research and development
Intangible assets acquired and the estimated weighted-average useful life
Intangible assets acquired, amount	$ 43,340
Ultratech | Trademark and tradenames
Intangible assets acquired and the estimated weighted-average useful life
Intangible assets acquired, amount	$ 25,420
Useful life	7 years

Assets - Fair Value (Details)

Assets - Fair Value (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2017	Dec. 31, 2016	Jun. 30, 2016	Dec. 31, 2015
Cash equivalents
Total	$ 205,564	$ 205,564	$ 277,444	$ 257,641	$ 269,232
Short-term investments
Total	97,086	97,086	66,787
Transfer of assets between levels	0	0
Assets measured on a recurring basis
Cash equivalents
Total			1,501
Short-term investments
Total	97,086	97,086	66,787
Assets measured on a recurring basis | U.S. treasuries
Short-term investments
Total	34,951	34,951	40,008
Assets measured on a recurring basis | Government agency securities
Short-term investments
Total	62,135	62,135	10,012
Assets measured on a recurring basis | Corporate debt
Cash equivalents
Total			1,501
Short-term investments
Total			13,773
Assets measured on a recurring basis | Commercial paper
Short-term investments
Total			2,994
Assets measured on a recurring basis | Level 1
Short-term investments
Total	34,951	34,951	40,008
Assets measured on a recurring basis | Level 1 | U.S. treasuries
Short-term investments
Total	34,951	34,951	40,008
Assets measured on a recurring basis | Level 2
Cash equivalents
Total			1,501
Short-term investments
Total	62,135	62,135	26,779
Assets measured on a recurring basis | Level 2 | Government agency securities
Short-term investments
Total	$ 62,135	$ 62,135	10,012
Assets measured on a recurring basis | Level 2 | Corporate debt
Cash equivalents
Total			1,501
Short-term investments
Total			13,773
Assets measured on a recurring basis | Level 2 | Commercial paper
Short-term investments
Total			$ 2,994

Assets - Available-For-Sale Sec

Assets - Available-For-Sale Securities (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2016	Jun. 30, 2017	Dec. 31, 2016
Total available-for-sale securities
Amortized Cost			$ 97,167	$ 66,807
Gross Unrealized Losses			(81)	(20)
Estimated Fair Value			97,086	66,787
Available-for-sale securities in a loss position
Estimated Fair Value			97,086	43,788
Gross Unrealized Losses			(81)	(20)
Investments that had been in a continuous loss position for more than 12 months			0	0
Realized gains	$ 0	$ 0
Amortized costs of contractual maturities of available-for-sale securities
Due in one year or less			72,278
Due after one year through two years			24,889
Amortized Cost			97,167	66,807
Estimated fair value of contractual maturities of available-for-sale securities
Due in one year or less			72,220
Due after one year through two years			24,866
Estimated Fair Value			97,086	66,787
U.S. treasuries
Total available-for-sale securities
Amortized Cost			34,986	40,013
Gross Unrealized Losses			(35)	(5)
Estimated Fair Value			34,951	40,008
Available-for-sale securities in a loss position
Estimated Fair Value			34,951	20,002
Gross Unrealized Losses			(35)	(5)
Amortized costs of contractual maturities of available-for-sale securities
Amortized Cost			34,986	40,013
Estimated fair value of contractual maturities of available-for-sale securities
Estimated Fair Value			34,951	40,008
Government agency securities
Total available-for-sale securities
Amortized Cost			62,181	10,020
Gross Unrealized Losses			(46)	(8)
Estimated Fair Value			62,135	10,012
Available-for-sale securities in a loss position
Estimated Fair Value			62,135	10,012
Gross Unrealized Losses			(46)	(8)
Amortized costs of contractual maturities of available-for-sale securities
Amortized Cost			62,181	10,020
Estimated fair value of contractual maturities of available-for-sale securities
Estimated Fair Value			$ 62,135	10,012
Corporate debt
Total available-for-sale securities
Amortized Cost				13,780
Gross Unrealized Losses				(7)
Estimated Fair Value				13,773
Available-for-sale securities in a loss position
Estimated Fair Value				13,774
Gross Unrealized Losses				(7)
Amortized costs of contractual maturities of available-for-sale securities
Amortized Cost				13,780
Estimated fair value of contractual maturities of available-for-sale securities
Estimated Fair Value				13,773
Commercial paper
Total available-for-sale securities
Amortized Cost				2,994
Estimated Fair Value				2,994
Amortized costs of contractual maturities of available-for-sale securities
Amortized Cost				2,994
Estimated fair value of contractual maturities of available-for-sale securities
Estimated Fair Value				$ 2,994

Assets - Current Assets (Detail

Assets - Current Assets (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016	Dec. 31, 2016
Assets
Allowance for doubtful accounts receivable	$ 300		$ 300		$ 300
Inventories
Materials	58,372		58,372		46,457
Work-in-process	46,498		46,498		25,250
Finished goods	15,065		15,065		5,356
Total	119,935		119,935		77,063
Prepaid expenses and other current assets
Supplier deposits against purchase commitments	7,900		7,900		$ 7,800
Asset held for sale, carrying value	2,300		2,300
Asset impairment charges	$ 675	$ 13,627	$ 1,138	$ 13,627

Assets - Property, Plant, and E

Assets - Property, Plant, and Equipment (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016	Dec. 31, 2016
Property, plant, and equipment
Gross property, plant and equipment	$ 187,118		$ 187,118		$ 159,505
Less: accumulated depreciation and amortization	104,572		104,572		98,859
Net property, plant and equipment	82,546		82,546		60,646
Depreciation	3,500	$ 3,400	6,400	$ 6,800
Land
Property, plant, and equipment
Gross property, plant and equipment	5,669		5,669		5,669
Building and improvements
Property, plant, and equipment
Gross property, plant and equipment	49,832		49,832		50,814
Machinery and equipment
Property, plant, and equipment
Gross property, plant and equipment	122,131		122,131		99,370
Leaseholds improvements
Property, plant, and equipment
Gross property, plant and equipment	$ 9,486		$ 9,486		$ 3,652

Assets - Goodwill and Intangibl

Assets - Goodwill and Intangible Assets (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2017	Dec. 31, 2016
Goodwill
Gross carrying Amount, beginning balance	$ 238,108
Accumulated Impairment, beginning balance	123,200
Net Amount, beginning balance	114,908
Acquisition	188,252
Gross carrying Amount, ending balance	426,360
Accumulated Impairment, ending balance	123,200
Net Amount, ending balance	303,160
Intangible assets
Accumulated Amortization and Impairment	154,164	$ 146,221
Total Gross Intangible Assets	550,261	204,599
Total Net Intangible Assets	396,097	58,378
Indefinite-lived trademark
Intangible assets
Indefinite-lived intangible assets	2,900	2,900
Technology
Intangible assets
Gross Carrying Amount	307,588	149,198
Accumulated Amortization and Impairment	118,863	113,904
Net Amount	188,725	35,294
Customer relationships
Intangible assets
Gross Carrying Amount	164,595	47,885
Accumulated Amortization and Impairment	31,971	28,659
Net Amount	132,624	19,226
In-process research and development
Intangible assets
Gross Carrying Amount	43,340
Net Amount	43,340
Trademark and tradenames
Intangible assets
Gross Carrying Amount	28,010	2,590
Accumulated Amortization and Impairment	2,326	1,948
Net Amount	25,684	642
Other
Intangible assets
Gross Carrying Amount	3,828	2,026
Accumulated Amortization and Impairment	1,004	1,710
Net Amount	$ 2,824	$ 316

Assets - Other Assets (Details)

Assets - Other Assets (Details) $ in Millions	6 Months Ended
	Jun. 30, 2017USD ($)
Cost Method Investment
Change in additional investment	$ 0
Carrying value of the investment	21
Deferred compensation plan assets	3.1
Deferred compensation plan liability	$ 4.4
Maximum
Cost Method Investment
Percentage ownership of cost method investee	20.00%

Liabilities - Accrued Expenses

Liabilities - Accrued Expenses and Warranty (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2017	Dec. 31, 2016
Accrued expenses and other current liabilities
Payroll and related benefits	$ 23,016	$ 18,780
Warranty	6,741	4,217
Professional fees	2,943	1,827
Installation	1,386	1,382
Sales, use, and other taxes	1,806	1,282
Restructuring liability	1,373	1,796
Interest	4,244
Other	2,796	3,917
Total	$ 44,305	$ 33,201
Accrued Warranty
Warranty period	1 year
Balance, beginning of the year	$ 4,217
Warranties issued	2,809
Addition from Ultratech acquisition	1,889
Consumption of reserves	(2,673)
Changes in estimate	499
Balance, end of the year	$ 6,741

Liabilities - Restructuring acc

Liabilities - Restructuring accruals general information (Details) $ in Thousands	3 Months Ended	6 Months Ended
	Sep. 30, 2016employee	Jun. 30, 2017USD ($)	Sep. 30, 2016employee	Jun. 30, 2016USD ($)
Restructuring accruals rollforward
Balance at the beginning of the period		$ 1,796
Provision		3,754
Payments		(4,177)
Balance at the end of the period		1,373
Non-cash charges related to share based compensation		13,806		$ 8,390
Restructuring
Restructuring accruals rollforward
Non-cash charges related to share based compensation		800
Minimum
Restructuring accruals
Additional restructuring costs expected over the next few quarters		1,000
Maximum
Restructuring accruals
Additional restructuring costs expected over the next few quarters		3,000
Atomic layer deposition restructuring plan
Restructuring accruals
Number of employees terminated | employee	25
Personnel Severance and Related Costs
Restructuring accruals rollforward
Balance at the beginning of the period		1,796
Provision		1,405
Payments		(2,079)
Balance at the end of the period		1,122
Personnel Severance and Related Costs | Streamline operations, enhance efficiency and reduce costs
Restructuring accruals
Number of employees terminated | employee			50
Facility Closing Costs
Restructuring accruals rollforward
Provision		2,349
Payments		(2,098)
Balance at the end of the period		$ 251

Liabilities - Customer Deposits

Liabilities - Customer Deposits (Details) - USD ($) $ in Millions	Jun. 30, 2017	Dec. 31, 2016
Customer deposits
Customer deposits	$ 25	$ 22.2

Liabilities - Mortgage Payable

Liabilities - Mortgage Payable (Details) - Mortgage Payable - USD ($) $ in Millions	Jun. 30, 2017	Dec. 31, 2016
Long-term debt
Mortgage payable outstanding	$ 1	$ 1.2
Interest rate (as a percent)	7.91%
Level 3
Long-term debt
Fair value of debt instrument	$ 1	$ 1.2

Liabilities - Convertible Senio

Liabilities - Convertible Senior Notes (Details)	Jan. 10, 2017USD ($)$ / shares	Jun. 30, 2017USD ($)	Jun. 30, 2017USD ($)
Long-term debt
Proceeds received, net of transaction fees			$ 335,751,000
Convertible Senior Notes
Long-term debt
Principal amount	$ 345,000,000	$ 345,000,000	345,000,000
Interest rate (as a percent)	2.70%
Proceeds received, net of transaction fees	$ 335,800,000
Conversion rate of the Notes to common stock, per $1,000 principal amount of Notes	24.9800
Common stock per principal amount	$ 1,000
Initial conversion price per share of common stock | $ / shares	$ 40.03
Threshold trading days for convertible debt	20 days
Threshold consecutive trading days for convertible debt	30 days
Percentage of minimum stock price trigger for conversion	130.00%
Number of consecutive business days after the measurement period	5 days
Number of consecutive trading days making up the measurement period	5 days
Maximum calculated percentage to which trading price of notes is compared in order to trigger conversion feature of notes	98.00%
Fair value inputs discount rate (as a percent)	7.00%
Unamortized debt discount	$ (72,500,000)	(68,072,000)	(68,072,000)
Transaction costs	9,200,000
Transaction costs allocated to the equity component	$ 1,900,000
Unamortized transaction costs		(6,857,000)	(6,857,000)
Net carrying value		270,071,000	270,071,000
Cash Interest Expense
Coupon interest expense		2,329,000	4,244,000
Non-Cash Interest Expense
Amortization of debt discount		2,455,000	4,440,000
Amortization of transaction costs		247,000	447,000
Total Interest Expense		5,031,000	9,131,000
Convertible Senior Notes | Level 2
Non-Cash Interest Expense
Estimated fair value of Convertible Senior Notes		$ 354,000,000	$ 354,000,000

Liabilities - Other Liabilities

Liabilities - Other Liabilities (Details) $ in Millions	6 Months Ended
	Jun. 30, 2017USD ($)
Other Liabilities
Deferred compensation	$ 4.4
Asset retirement obligations	3.3
Medical and dental benefits	2.5
Acquisition related accruals	1
Income taxes payable	$ 4.9

Commitments and Contingencies -

Commitments and Contingencies - Minimum Lease Requirements (Details) $ in Thousands	Jun. 30, 2017USD ($)
Commitments and Contingencies
2,017	$ 3,528
2,018	5,433
2,019	4,994
2,020	4,756
2,021	1,799
Thereafter	4,493
Total	$ 25,003

Commitments and Contingencies44

Commitments and Contingencies (Details) $ in Millions	Jun. 30, 2017USD ($)
Purchase commitments
Purchase commitments due within one year	$ 144.5
Bank guarantees
Bank guarantees outstanding	4.1
Unused bank guarantees and letters of credit	$ 67.2

Equity - AOCI Rollforward (Deta

Equity - AOCI Rollforward (Details) - USD ($) $ in Thousands, shares in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Changes in the balances of each component of AOCI
Balance at the beginning of the period			$ 594,595
Other comprehensive income (loss)	$ 62	$ (23)	(37)	$ 66
Balance at the end of the period	869,485		$ 869,485
Ultratech
Changes in the balances of each component of AOCI
Issuance of shares for merger consideration (in shares)			7.4
Accumulated Other Comprehensive Income
Changes in the balances of each component of AOCI
Balance at the beginning of the period			$ 1,777
Other comprehensive income (loss)			(37)
Balance at the end of the period	1,740		1,740
Foreign Currency Translation
Changes in the balances of each component of AOCI
Balance at the beginning of the period			1,797
Other comprehensive income (loss)			24
Balance at the end of the period	1,821		1,821
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)			(61)
Balance at the end of the period	$ (81)		(81)
Additional Paid-in Capital
Changes in the balances of each component of AOCI
Issuance of shares for merger consideration			233,800
Convertible senior notes including deferred tax impact			49,300
Convertible senior notes related to on-going share-based compensation			$ 6,700

Share-based compensation (Detai

Share-based compensation (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Share-based compensation
Total	$ 9,620	$ 4,002	$ 13,806	$ 8,390
Cost of sales
Share-based compensation
Total	500	486	1,157	1,032
Research and development
Share-based compensation
Total	708	940	1,137	2,039
Selling, general, and administrative
Share-based compensation
Total	3,368	$ 2,576	6,468	$ 5,319
Restructuring
Share-based compensation
Total	841		841
Acquisition costs
Share-based compensation
Total	$ 4,203		$ 4,203
Restricted Stock Awards | Minimum
Share-based compensation
Expiration term			1 year
Restricted Stock Awards | Maximum
Share-based compensation
Expiration term			5 years
Stock option Awards
Number of Shares
Outstanding at the beginning of the period (in shares)			1,576
Exercised (in shares)			(18)
Expired or forfeited (in shares)			(120)
Outstanding at the end of the period (in shares)	1,438		1,438
Weighted Average Exercise Price
Outstanding at the beginning of the period (in dollars per share)			$ 35.18
Exercised (in dollars per share)			30.03
Expired or forfeited (in dollars per share)			37.14
Outstanding at the end of the period (in dollars per share)	$ 35.08		$ 35.08
Restricted shares and performance shares
Number of Shares
Outstanding at the beginning of the period (in shares)			1,949
Granted (in shares)			649
Assumed from Ultratech (in shares)			338
Vested (in shares)			(549)
Forfeited (in shares)			(130)
Outstanding at the end of the period (in shares)	2,257		2,257
Weighted Average Grant Date Fair Value
Outstanding at the beginning of the period (in dollars per share)			$ 23.85
Granted (in dollars per share)			29.67
Assumed from Ultratech (in dollars per share)			31.75
Vested (in dollars per share)			25.98
Forfeited (in dollars per share)			25.95
Outstanding at the end of the period (in dollars per share)	$ 25.94		$ 25.94

Income Taxes (Details)

Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Income taxes disclosures
Loss before income taxes	$ (31,285)	$ (31,068)	$ (40,472)	$ (46,073)
Income tax expense (benefit)	(12,897)	$ 1,014	(23,179)	$ 1,542
Federal
Income taxes disclosures
Income tax expense (benefit)	(15,400)		(19,500)
Tax reconciliation disclosures
Current income tax expense (benefit) for net income (losses)	(16,400)		(21,300)
Deferred income tax expense related to amortization on indefinite-lived intangible assets	1,000		1,900
Foreign
Income taxes disclosures
Income tax expense (benefit)	2,500		(3,700)
Tax reconciliation disclosures
Current foreign income tax expense (benefit) for net income (losses)	2,500		$ 2,700
Increase (decrease) in unrecognized tax benefits	(6,300)
Reversal of tax liability related to uncertain tax position	(4,900)
Deferred tax benefit related to foreign net operating losses	$ (1,400)

Segment Reporting and Geograp48

Segment Reporting and Geographic Information (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017USD ($)	Jun. 30, 2016USD ($)	Jun. 30, 2017USD ($)itemsegment	Jun. 30, 2016USD ($)
Revenue reporting by end-market and geographic region
Number of operating segments | segment			1
Number of reportable segments | segment			1
Number of end-markets | item			4
Net sales	$ 115,066	$ 75,348	$ 209,452	$ 153,359
United States
Revenue reporting by end-market and geographic region
Net sales	21,245	20,734	38,533	47,446
China
Revenue reporting by end-market and geographic region
Net sales	26,287	24,582	66,613	33,383
EMEA
Revenue reporting by end-market and geographic region
Net sales	18,002	14,834	40,069	42,296
Rest of World
Revenue reporting by end-market and geographic region
Net sales	49,532	15,198	64,237	30,234
Lighting, Display & Power Electronics
Revenue reporting by end-market and geographic region
Net sales	56,199	24,762	110,393	47,705
Advanced Packaging, MEMS & RF
Revenue reporting by end-market and geographic region
Net sales	21,426	17,045	32,983	40,308
Scientific & Industrial
Revenue reporting by end-market and geographic region
Net sales	27,033	31,779	54,209	62,582
Front-End Semiconductor
Revenue reporting by end-market and geographic region
Net sales	$ 10,408	$ 1,762	$ 11,867	$ 2,764