Veeco Reports Fourth Quarter and Year-End 1999 Results 1999 Sales up 15%
Bookings up 12%
Operating Profit up 37% Record Sales and Bookings for 1999
PLAINVIEW, N.Y.--(BUSINESS WIRE)--Feb. 10, 2000--Veeco Instruments Inc. (NASDAQ: VECO - news) today reported financial results for the fourth quarter and year ended December 31, 1999. Historical financial results have been restated to reflect Veeco's merger with Ion Tech, Inc., which was completed in November 1999, using the pooling of interests accounting method.
Fourth Quarter Results
Veeco's sales for the fourth quarter of 1999 were a record $63.8 million, a 19% increase over sales of $53.4 million reported for the corresponding quarter of 1998. Process Equipment sales in the fourth quarter were a record $35.9 million, 78% higher than the $20.2 million reported in 1998. Quarterly equipment sales increased in both data storage and optical telecommunications applications. Fourth quarter Metrology sales were $24.6 million, a 14% decrease from the $28.7 million reported in 1998.
In the fourth quarter of 1999, Veeco recorded non-recurring charges totaling approximately $7.3 million related to: expenses related to the merger with Ion Tech, Inc. ($2.6 million); the disposal of its leak detection business ($2.5 million); in-process technology related to its purchase of OptiMag, Inc. ($1.3 million); and other net charges of approximately $900,000, principally facility relocation. In the fourth quarter of 1999, Veeco sold its non-critical leak detection business to Vacuum Instrument Corp., a privately-held leak detection company. Terms of the transaction were not disclosed.
Operating income excluding non-recurring charges for the fourth quarter of 1999 was $8.8 million, a 31% increase over the $6.7 million reported in the 1998 fourth quarter. Net income excluding non-recurring charges was $6.9 million, a 51% increase over the $4.6 million reported in the fourth quarter of 1998. 1999 diluted earnings per share excluding non-recurring charges were $0.39, a 63% increase over the $0.24, fully taxed, reported in the fourth quarter of 1998. Including non-recurring charges, Veeco reported fourth quarter 1999 operating income of $1.6 million, net income of $1.1 million and diluted earnings per share of $0.06, compared with 1998 operating income of $6.7 million, net income of $4.6 million and diluted earnings per share of $0.28.
Veeco's fourth quarter 1999 bookings were $66.3 million, compared to 1998 fourth quarter bookings of $65.1 million. Veeco's Metrology group and its new Ion Tech subsidiary reported record fourth quarter bookings of $34.4 million and $13.0 million, respectively. Data storage equipment bookings declined in the fourth quarter. The company's book-to-bill ratio for the fourth quarter was 1.04.
Year-End 1999 Results
Veeco's 1999 sales were a record $246.6 million, compared with sales of $215.0 million in 1998, an increase of 15%. Veeco's Process Equipment sales in 1999 were a record $117.4 million, a 70% increase over 1998 sales of $69.1 million. 1999 Metrology group sales were $112.2 million, an 11% decrease from the $126.2 million reported in 1998. Growth in Process Equipment reflects both increased sales of equipment to data storage customers ramping production of giant magnetoresistive (GMR) thin film magnetic heads, and ion beam deposition equipment associated with Dense Wavelength Division Multiplexing (DWDM) optical thin film filters for increased telecommunications bandwidth. Veeco's new Ion Tech division's sales more than doubled to $20.4 million in 1999 from $8.1 million in 1998. The decline in sales of Veeco's Metrology products in 1999 reflected delayed purchases of yield improving measurement equipment for data storage applications.
Operating income excluding non-recurring charges for 1999 was $37.9 million, a 37% increase from the $27.6 million (excluding non-recurring charges) reported in 1998. 1999 net income excluding non-recurring charges was $26.2 million, a 58% increase over the $16.6 million (excluding non-recurring charges) reported in 1998. Veeco's 1999 earnings per share excluding non-recurring charges was $1.48 compared with $1.01 reported in 1998 (excluding non-recurring charges, fully taxed). Including the non-recurring charges, Veeco reported 1999 operating income of $30.6 million, net income of $20.4 million, and diluted earnings per share of $1.15, compared with 1998 operating income of $20.1 million, net income of $13.4 million and diluted earnings per share of $0.82.
Veeco's 1999 bookings were a record $257.2 million, a 12% increase over the $230.3 million reported in 1998. As compared to 1998, Process Equipment bookings increased 62% during 1999 to a record $131.0 million, while Metrology group bookings declined 15% to $111.9 million. Veeco's 1999 book-to-bill ratio was 1.04.
Management Highlights of 1999
Edward H. Braun, Veeco's Chairman, CEO and President, commented, ''1999 was a positive year for Veeco, including record sales and bookings and strong operating profit growth. This performance is a direct result of our long-term strategy to focus on opportunities in three high-growth information age markets - data storage, optical telecommunications and semiconductor, while broadening our equipment and metrology product lines through internal growth and acquisitions. Veeco's 1999 equity offering raised approximately $49 million, strengthening our balance sheet and providing additional capital for future growth.''
Mr. Braun continued, ''Veeco's sales to the data storage industry grew 20% in 1999, despite an industry-wide downturn caused by industry overcapacity and pricing pressures. We attribute Veeco's growth to our broad equipment and metrology product lines for advanced GMR applications, our penetration of international customers, and our strategic relationships with key accounts.''
''In November, we entered the rapidly growing optical telecommunications market with our Ion Tech merger,'' continued Mr. Braun. ''We are now the leading provider of ion beam deposition equipment to the high growth DWDM optical thin film filter marketplace. Ion Tech's bookings increased from $9.0 million in 1998 to $37.1 million in 1999, with a current order rate running at $50 million forecasted for 2000.''
''Our recent acquisitions of OptiMag and Monarch Labs, Inc. represent significant extensions of our in-line yield enhancing metrology product offerings for data storage customers. This January, we also signed an important strategic agreement with Seagate Technology Inc. Veeco will purchase Seagate's laser crown adjust technology, which micro-machines thin film magnetic heads while providing real-time process feedback using in-situ metrology. We view this agreement as a model for strategic alliances which can result in technology additions to Veeco and improved ''time-to-market'' of new products to our customers.''
Looking Ahead
Mr. Braun reviewed Veeco's outlook for 2000, ''We begin this year with the broadest product line in the history of our Company, and a renewed focus on providing leading edge equipment and metrology solutions to key customers in three high-growth information age markets - data storage, optical telecommunications and semiconductor.''
''We expect growth in 2000 to come from continued strength in optical telecommunications, as well as our yield improving optical and atomic force microscope metrology products, and newer technologies from OptiMag, Monarch and Seagate. However, sluggish capital spending by data storage customers could lead to a decline in sales of etch and deposition products to the data storage industry in the near term.'' Mr. Braun concluded, ''While we anticipate that 2000 will be a growth year for Veeco, with revenues in the range of $290 million to $300 million in line with current strong order rates, we are cautious about sales in the current quarter due to the continued weakness in data storage and the shipment ramp associated with our newer businesses.''
Veeco Instruments Inc., headquartered in Plainview, New York, is a worldwide leader in metrology tools for the data storage, semiconductor and research markets, and process equipment etch and deposition tools for the data storage and optical telecommunications industry. Manufacturing and engineering facilities are located in New York, California, Colorado and Arizona. Global sales and service offices are located throughout the United States, Europe, Japan and Asia Pacific. Additional information on Veeco can be found at veeco.com.
In addition to 1999/1998 balance sheet and income statement, Veeco has provided selected restated quarterly historical financial data reflecting the merger with Ion Tech. Veeco's merger with Monarch Labs, Inc. which was completed in January, 2000 and which will be accounted for as a pooling of interests, and the pending strategic alliance with Seagate Technologies, Inc., are not included in these results.
To the extent that this news release discusses expectations about market conditions or about market acceptance and future sales of Veeco's products, 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 cyclical nature of the data storage and semiconductor industry, risks associated with the acceptance of new products by individual customers and by the marketplace, and other factors discussed in the Business Description and Management's Discussion and Analysis sections of Veeco's Report on Form 10-K and Annual Report to Shareholders.
Veeco Instruments Inc.
Condensed Consolidated Statements of Income
(In thousands, except per share data)
Unaudited
Three Months Ended Years Ended
December 31, December 31,
1999 1998 1999 1998
Net sales $63,797 $53,439 $246,606 $214,985
Gross Profit 31,775 24,613 120,956 99,544
Research and
development expense 8,683 6,975 31,545 27,976
Selling, general and
admin. expense 14,001 11,295 51,434 44,756
Other expense (income),
net 1,126 (399) 965 (804)
Merger and
reorganization
expenses 2,600 0 2,600 7,500
Loss on sale of
leak detection business 2,500 0 2,500 0
Write-off of purchased
in-process technology 1,300 0 1,300 0
Operating income 1,565 6,742 30,612 20,116
Interest (income)
expense, net (876) 166 (1,784) 1,007
Income before income
taxes 2,441 6,576 32,396 19,109
Income tax expense 1,354 1,975 11,986 5,736
Net income $1,087 $4,601 $20,410 $13,373
Diluted net income
per common share $0.06 $0.28 $1.15 $0.82
Pro forma diluted
net income per share,
excluding charges $0.39 (1) $0.24 (2) $1.48 (1) $1.01 (2)
Diluted weighted
average shares
outstanding 17,983 16,634 17,768 16,396
(1) Pro forma diluted net income per share excludes the following
non-recurring charges: (i) $2.6 million of merger expenses relating to
the merger with Ion Tech, Inc., which was merged into the Company in
November 1999 in a transaction accounted for as a pooling of
interests, (ii) $2.5 million related to the loss on disposal of the
leak detection business, (iii) $1.3 million for the write-off of
purchased in-process technology related to the acquisition of OptiMag,
Inc. in October 1999 and (iv) approximately $900,000 (included in
other, net) of other net charges (principally facility relocation).
(2) Pro forma diluted net income per share excludes non-recurring
merger and reorganization expenses of $7.5 million principally related
to the merger with Digital Instruments, Inc. ("Digital"), recorded
during 1998, and presents income taxes as if Digital, which was merged
with the Company in May 1998 in a transaction accounted for as a
pooling of interests, had been a "C" corporation and, therefore,
subject to federal income taxes at the corporation level. Prior to the
merger, Digital held "S" corporation status for income tax purposes
and, therefore, was not subject to federal income taxes.
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