News

News

Veeco Announces First Quarter 2008 Financial Results

April 28, 2008

PLAINVIEW, N.Y.--(BUSINESS WIRE)--April 28, 2008--Veeco Instruments Inc. (Nasdaq: VECO) today announced its financial results for the first quarter ended March 31, 2008. Veeco reports its results on a generally accepted accounting principles ("GAAP") basis, and also provides results excluding certain items. Investors should refer to the attached table for details of the reconciliation of GAAP operating income to earnings excluding certain items.

Veeco will host a conference call reviewing these results at 5:00 pm EDT today at 1-877-723-9511 (toll free) or 1-719-325-4791. The call will also be webcast live on the Veeco website at www.veeco.com. A replay of the call will be available beginning at 8:00pm EDT through midnight on May 13, 2008 at 888-203-1112 or 719-457-0820, using passcode 3406596, or on the Veeco website. Please also see the Veeco website for a slide presentation reviewing financial data.

    First Quarter 2008 Highlights

    --  Revenue was $102.3 million, in line with Veeco's guidance of
        $98-$105 million;

    --  Bookings were $109.3 million, in line with Veeco's guidance of
        $105-$112 million;

    --  Net loss was ($1.6) million, or ($0.05) per share, compared to
        net income of $0.3 million, or $0.01 per share, last year. The
        current quarter net loss includes a restructuring and asset
        impairment charge of $3.2 million principally related to the
        consolidation and relocation of Veeco's Corporate headquarters
        in the first quarter.

    --  Veeco's earnings per share, excluding certain items, was $0.09
        compared to earnings per share of $0.10 last year, ahead of
        Veeco's guidance of $0.00-$0.06 per share.

John R. Peeler, Veeco's Chief Executive Officer, commented, "We are pleased to report in-line revenues and better than expected earnings due to our restructuring and cost containment efforts and better than anticipated gross margins, up sequentially from 37.9% to 41.7%. We are on track to improve Veeco's performance on both the top and bottom line in 2008."

"Veeco's LED & Solar Process Equipment business reported revenues of $42.1 million and EBITA of $8.6 million, now representing our largest segment at 41% of revenues. These results were significantly improved both on a year-over-year and sequential basis. In Data Storage Process Equipment, while we reported a weak revenue quarter as expected, our bookings increased to over $40 million, driven by increased capital expenditures and technology spending by key hard drive customers. We also reported a sequential recovery in the profitability of our Metrology business. Bookings in Metrology were weak due to slow scientific research/industrial spending which impacted our instruments products, and continued semiconductor industry softness."

First Quarter 2008 Summary

Veeco's revenue for the first quarter of 2008 was $102.3 million, compared to $99.2 million in the first quarter of 2007. First quarter 2008 operating income was $0.1 million, which includes the previously noted $3.2 million in restructuring and asset impairment charges, compared with operating income of $1.7 million in the first quarter of 2007. Veeco's first quarter 2008 earnings before interest, taxes and amortization excluding certain charges (EBITA) was $5.3 million, compared to $5.6 million last year. First quarter 2008 net loss was ($1.6) million, or ($0.05) per share, compared to net income of $0.3 million, or $0.01 per share, in the first quarter of 2007. Excluding restructuring, asset impairment and amortization expenses and using a 35% tax rate in both periods, first quarter 2008 earnings per share were $0.09, compared to $0.10 in 2007.

Outlook

The Company forecasts second quarter 2008 revenues to be in the range of $102-$110 million. Veeco's earnings per share is currently forecasted to be between $(0.02) - $0.07 on a GAAP basis, and earnings per share are currently forecasted to be between $0.05 to $0.11 on a non-GAAP basis (excluding amortization of $2.0 million and using a 35% tax rate). Veeco currently expects that its second quarter 2008 bookings will be greater than the first quarter, with a range of $110-$118 million. The Company currently anticipates sequential bookings increases in the LED & Solar Process Equipment and Metrology segments. For the full year, Veeco reaffirms its guidance of revenue growth at a minimum of 10% to $440 million.

About Veeco

Veeco Instruments Inc. manufactures enabling solutions for customers in the HB-LED, solar, data storage, semiconductor, scientific research and industrial markets. We have leading technology positions in our three businesses: LED & Solar Process Equipment, Data Storage Process Equipment, and Metrology Instruments. Veeco's manufacturing and engineering facilities are located in New York, New Jersey, California, Colorado, Arizona and Minnesota. Global sales and service offices are located throughout the U.S., Europe, Japan and APAC. http://www.veeco.com/

To the extent that this news release discusses expectations or otherwise makes statements about the future, such statements are forward-looking and are subject to a number of risks and uncertainties that could cause actual results to differ materially from the statements made. These factors include the risks discussed in the Business Description and Management's Discussion and Analysis sections of Veeco's Annual Report on Form 10-K for the year ended December 31, 2007 and in our subsequent quarterly reports on Form 10-Q, current reports on Form 8-K and press releases. Veeco does not undertake any obligation to update any forward-looking statements to reflect future events or circumstances after the date of such statements.

               Veeco Instruments Inc. and Subsidiaries
                Consolidated Statements of Operations
                (In thousands, except per share data)
                             (Unaudited)

                                                  Three months ended
                                                       March 31,
                                                 ---------------------
                                                    2008       2007
                                                 ---------- ----------

Net sales                                         $102,307    $99,166
Cost of sales                                       59,681     55,471
                                                 ---------- ----------
Gross profit                                        42,626     43,695

Operating expenses:
Selling, general and administrative expense         22,628     22,806
Research and development expense                    14,726     15,389
Amortization expense                                 1,956      3,909
Restructuring expense                                2,875          -
Asset impairment charge                                285          -
Other expense (income), net                              4       (147)
                                                 ---------- ----------

Operating income                                       152      1,738

Interest expense, net                                  892        819
Gain on extinguishment of debt                           -       (738)
                                                 ---------- ----------

(Loss) income before income taxes and
 noncontrolling interest                              (740)     1,657

Income tax provision                                   919      1,494
Noncontrolling interest                                (76)      (130)
                                                 ---------- ----------
Net (loss) income                                  ($1,583)      $293
                                                 ========== ==========

(Loss) income per common share:
Net (loss) income per common share                  ($0.05)     $0.01
Diluted net (loss) income per common share          ($0.05)     $0.01

Weighted average shares outstanding                 31,161     30,899
Diluted weighted average shares outstanding         31,161     31,281
               Veeco Instruments Inc. and Subsidiaries
                Condensed Consolidated Balance Sheets
                            (In thousands)

                                               March 31,  December 31,
                                                 2008         2007
                                              ----------- ------------
                                              (Unaudited)
ASSETS
Current assets:
   Cash and cash equivalents                    $ 114,429     $117,083
   Accounts receivable, net                        76,753       75,207
   Inventories, net                               105,169       98,594
   Prepaid expenses and other current assets        7,739        8,901
   Deferred income taxes                            2,929        2,649
                                              ----------- ------------
Total current assets                              307,019      302,434

Property, plant and equipment, net                 65,661       66,142
Goodwill                                          100,898      100,898
Other assets, net                                  58,382       59,860
                                              ----------- ------------
Total assets                                    $ 531,960     $529,334
                                              =========== ============

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
   Accounts payable                             $  38,101     $ 36,639
   Accrued expenses                                55,883       60,201
   Deferred profit                                  4,330        3,250
   Income taxes payable                             2,066        2,278
   Current portion of long-term debt               25,418       25,550
                                              ----------- ------------
Total current liabilities                         125,798      127,918

Deferred income taxes                               4,351        3,712
Long-term debt                                    120,987      121,035
Other non-current liabilities                       3,026        1,978

Noncontrolling interest                               938        1,014

Shareholders' equity                              276,860      273,677
                                              ----------- ------------
Total liabilities and shareholders' equity      $ 531,960     $529,334
                                              =========== ============
               Veeco Instruments Inc. and Subsidiaries
Reconciliation of operating income to earnings excluding certain items
                (In thousands, except per share data)
                             (Unaudited)

                                                Three months ended
                                                     March 31,
                                                -------------------
                                                   2008       2007
                                                --------   --------


Operating income                                $   152    $ 1,738

Adjustments:

Amortization expense                              1,956      3,909
Restructuring expense                             2,875 (1)      -
Asset impairment charge                             285 (2)      -
                                                --------   --------

Earnings before interest, income taxes and
 amortization excluding certain items ("EBITA")   5,268      5,647

Interest expense, net                               892        819
Gain on extinguishment of debt                        -       (738)(3)
Adjustment to exclude gain on extinguishment of
 debt                                                 -        738
                                                --------   --------

Earnings excluding certain items before income
 taxes                                            4,376      4,828

Income tax provision at 35%                       1,532      1,690
Noncontrolling interest, net of income tax
 provision at 35%                                   (49)       (85)

                                                --------   --------
Earnings excluding certain items                $ 2,893    $ 3,223
                                                ========   ========

Earnings excluding certain items per diluted
 share                                          $  0.09    $  0.10

Diluted weighted average shares outstanding      31,301     31,281
(1) During the first quarter of 2008, the Company recorded a
 restructuring charge of $2.9 million, consisting of $2.6 million of
 costs associated with the consolidation and relocation of the lease
 for our Corporate headquarters, and $0.3 million of personnel
 severance costs.

(2) During the first quarter of 2008, the Company recorded a $0.3
 million asset impairment charge related to fixed asset write-offs
 associated with the consolidation and relocation of our Corporate
 headquarters.

(3) During the first quarter of 2007, the Company repurchased $56.0
 million aggregate principal amount of its 4.125% convertible
 subordinated notes. As a result of these repurchases, the Company
 recorded a gain from the early extinguishment of debt in the amount
 of $0.7 million.

NOTE - The above reconciliation is intended to present Veeco's
 operating results, excluding certain items and providing income taxes
 at a 35% statutory rate. This reconciliation is not in accordance
 with, or an alternative method for, generally accepted accounting
 principles in the United States, and may be different from similar
 measures presented by other companies. Management of the Company
 evaluates performance of its business units based on EBITA, which is
 the primary indicator used to plan and forecast future periods. The
 presentation of this financial measure facilitates meaningful
 comparison with prior periods, as management of the Company believes
 EBITA reports baseline performance and thus provides useful
 information.
               Veeco Instruments Inc. and Subsidiaries
            Segment Revenues, Bookings, and Reconciliation
                 of Operating Income (Loss) to EBITA
                            (In millions)
                             (Unaudited)

----------------------------------------------------------------------
                                           Three months ended
                                      March 31,         March 31,
                                  ------------------------------------
                                        2008               2007
----------------------------------------------------------------------
LED & Solar Process Equipment
   Bookings                         $         38.7    $          36.4
   Revenues                                   42.1               22.4

   Operating income (loss)                     8.1               (0.5)
   Amortization expense                        0.5                2.3
                                  ------------------------------------
   EBITA                                       8.6                1.8

----------------------------------------------------------------------
Data Storage Process Equipment
   Bookings                                   40.6               32.3
   Revenues                                   24.1               35.7

   Operating (loss) income                    (2.6)               1.4
   Amortization expense                        1.0                1.0
   Restructuring expense                       0.1                  -
                                  ------------------------------------
   EBITA                                      (1.5)               2.4

----------------------------------------------------------------------
Metrology
   Bookings                                   30.0               37.2
   Revenues                                   36.1               41.1

   Operating income                            1.2                3.6
   Amortization expense                        0.4                0.4
   Restructuring expense                       0.2                  -
                                  ------------------------------------
   EBITA                                       1.8                4.0

----------------------------------------------------------------------
Unallocated Corporate
   Operating loss                             (6.6)              (2.8)
   Amortization expense                        0.1                0.2
   Restructuring expense                       2.6                  -
   Asset impairment charge                     0.3                  -
                                  ------------------------------------
   EBITA                                      (3.6)              (2.6)

----------------------------------------------------------------------
Total
   Bookings                                  109.3              105.9
   Revenues                                  102.3               99.2

   Operating income                            0.1                1.7
   Amortization expense                        2.0                3.9
   Restructuring expense                       2.9                  -
   Asset impairment charge                     0.3                  -
                                  ------------------------------------
   EBITA                            $          5.3    $           5.6

----------------------------------------------------------------------
** Refer to footnotes on Reconciliation of operating income to
 earnings excluding certain items
    CONTACT: Veeco Instruments Inc.
             Financial:
             Debra Wasser, 516-677-0200 x1472
             SVP Investor Relations & Corporate Communications
             or
             Media:
             Fran Brennen, 516-677-0200 x1222
             Senior Director Marcom

    SOURCE: Veeco Instruments Inc.