VEECO INSTRUMENTS INC Fair Value Disclosure
Note 3 — Fair Value Measurements
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. The Company is required to classify certain assets and liabilities 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. The Company has evaluated the estimated fair value of financial instruments using available market information and valuations as provided by third-party sources. The use of different market assumptions or estimation methodologies could have a significant effect on the estimated fair value amounts.
The following table presents the Company’s assets that were measured at fair value on a recurring basis at December 31, 2025 and 2024:
| Level 1 | | Level 2 | | Level 3 | | Total | |||||
(in thousands) | ||||||||||||
December 31, 2025 | ||||||||||||
Cash equivalents | ||||||||||||
Certificate of deposits and time deposits | $ | 63,893 | $ | — | $ | — | $ | 63,893 | ||||
Money market cash | 15,327 | — | — | 15,327 | ||||||||
Total | $ | 79,220 | $ | — | $ | — | $ | 79,220 | ||||
Short-term investments | ||||||||||||
U.S. treasuries | $ | 77,110 | $ | — | $ | — | $ | 77,110 | ||||
Government agency securities | — | 53,488 | — | 53,488 | ||||||||
Corporate debt | — | 96,165 | — | 96,165 | ||||||||
Total | $ | 77,110 | $ | 149,653 | $ | — | $ | 226,763 | ||||
December 31, 2024 | ||||||||||||
Cash equivalents | ||||||||||||
Certificate of deposits and time deposits | $ | 66,023 | $ | — | $ | — | $ | 66,023 | ||||
Money market cash | 15,003 | — | — | 15,003 | ||||||||
Total | $ | 81,026 | $ | — | $ | — | $ | 81,026 | ||||
Short-term investments | ||||||||||||
U.S. treasuries | $ | 84,032 | $ | — | $ | — | $ | 84,032 | ||||
Government agency securities | — | 30,167 | — | 30,167 | ||||||||
Corporate debt | — | 83,051 | — | 83,051 | ||||||||
Commercial paper | — | 1,469 | — | 1,469 | ||||||||
Total | $ | 84,032 | $ | 114,687 | $ | — | $ | 198,719 | ||||
The Company’s investments classified as Level 1 are based on quoted prices that are available in active markets, as well as certificates of deposits and time deposits that are classified as Level 1 due to their short-term nature. The Company’s investments classified as Level 2 are valued using observable inputs to quoted market prices, benchmark yields, reported trades, broker/dealer quotes, or alternative pricing sources with reasonable levels of price transparency.
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.