Earnings Out:
Thursday October 22, 5:12 pm Eastern Time
Company Press Release
Veeco Instruments Reports Third Quarter and First
Nine Month 1998 Results
PLAINVIEW, N.Y.--(BUSINESS WIRE)--Oct. 22, 1998--Veeco Instruments Inc. (NASDAQ:VECO - news), today
reported financial results for the third quarter and nine months ended September 30, 1998. Historical financial results have been
restated to reflect the merger of Veeco and Digital Instruments, which closed on May 29, 1998, using the pooling of interests
accounting method.
Third Quarter Results
Veeco's sales for the third quarter of 1998 were $50.5 million, compared with sales of $55.2 million for the corresponding
quarter of 1997. Veeco Metrology's quarterly sales increased 14% compared to the third quarter of 1997, driven by the
increased use of in-line metrology for the production of thin film magnetic heads (TFMHs) in the data storage industry. The
Company's Process Equipment business, which supplies etch and deposition tools to the data storage industry, reported a 35%
decrease in sales compared with the corresponding quarter of 1997, impacted by excess industry capacity of etch equipment.
Operating income for the third quarter of 1998 was $6.3 million compared to $10.9 million (excluding non-recurring charges) in
the 1997 third quarter. Net income for the third quarter of 1998 was $4.2 million compared to $6.9 million for the third quarter
of 1997 (including a previously announced non-recurring charge in 1997.)
Earnings per share for the third quarter of 1998 was $.26 per share (pro forma fully taxed) compared to $.46 per share in the
third quarter of 1997 (also pro forma fully taxed and excluding a previously announced non-recurring charge.)
Operating profit for the third quarter of 1998 was impacted by lower gross profit from Process Equipment sales resulting from
the reduced sales volume, as well as a shift in product mix to new deposition products with increased product field support
costs. Research and development spending increased by $.9 million to $7.1 million, or 14% of sales, in the third quarter of
1998 compared with the third quarter of 1997, as the Company continues to invest in research and development for both
Metrology and Process Equipment in order to ensure the flow of new products.
For the third quarter of 1998, orders were $43.5 million compared with orders of $59.5 million reported in the third quarter of
1997. The book/bill ratio was .86 for the third quarter of 1998.
Nine Month Results
Veeco's sales for the first nine months of 1998 were $155.3 million, compared to $159.0 million for the corresponding 1997
period. Metrology sales increased 23% during the first nine months of 1998, while Process Equipment sales declined 34% from
the first nine months of 1997.
Excluding previously announced non-recurring merger and reorganization related charges, operating income was $19.9 million
in the first nine months of 1998 versus $32.1 million in the first nine months of 1997. Net income for the period was $8.2 million
compared to $19.9 million during the 1997 nine month period, including the previously announced non-recurring charges in
each period. Earnings per share during the first nine months of 1998 was $.82 per share (pro forma fully taxed) or $1.34 per
share (pro forma fully taxed) and excluding the non-recurring charges in each period.
For the first nine months of 1998, orders were $159.4 million, compared with $167.6 million for the first nine months of 1997.
The book/bill ratio was 1.03 for the first nine months of 1998.
Edward H. Braun, Chairman, President and CEO of Veeco, commented, ''As we had anticipated entering the third quarter,
our revenues remained flat versus the second quarter at approximately $50 million. Veeco's third quarter book-to-bill was .86,
and our nine month book-to-bill was 1.03. Weak data storage and semiconductor market conditions, accompanied by
industry-wide over-capacity, continue to impact Veeco's performance.
''Our Metrology products, which accounted for 63% of sales for the first nine months, continue to grow based on acceptance
of 100% in-line inspection of critical dimensions on TFMHs at our key data storage customers. Despite growth in our
deposition products driven by the transition to higher density magnetoresistive (MR) and giant MR TFMHs, our overall
Process Equipment sales declined compared to the prior year. We continue to implement spending reductions in line with
current order rates.''
Braun added, ''We remain convinced that our strategy to broaden Veeco's product line through internal development and
acquisitions lessens our vulnerability to industry cyclicality. Veeco will emerge from this industry-wide downturn with the
strongest product portfolio in our Company's history.''
Veeco Instruments Inc., headquartered in Plainview, New York, is a worldwide leader in Metrology tools for the data storage
and semiconductor industries, and etch and deposition Process Equipment tools for the data storage industry. Manufacturing
and engineering facilities are located in New York, California and Arizona. Global sales and service offices are located
throughout the United States, Europe, Japan and Asia Pacific.
To the extent that this news release discusses expectations about market conditions or about market acceptance and future
sales of the Company'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 industries, 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 the Company's Report on Form 10-K and Annual Report to Shareholders.
- Financial Tables Follow -
-0-
Veeco Instruments Inc.
Consolidated Balance Sheets
(In thousands)
(Unaudited)
September 30, December 31,
1998 1997
--------- -----------
ASSETS
Current assets:
Cash and cash equivalents $14,251 $20,444
Accounts and notes receivable 46,795 44,927
Inventories 51,621 44,825
Other current assets 7,404 6,297
--------- -----------
Total current assets 120,071 116,493
Property, plant & equipment at cost, net 36,262 33,344
Excess of cost over net assets acquired 4,220 4,318
Other assets 5,338 5,476
--------- -----------
Total Assets $165,891 $159,631
========= ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities $42,227 $47,715
Long term liabilities 17,990 18,158
Shareholders' equity 105,674 93,758
--------- -----------
Total Liabilities & shareholders'
equity $165,891 $159,631
========= ===========
Veeco Instruments Inc.
Consolidated Results of Operations
(In thousands, except per share data)
----------------------------------------
Three Months Ended
September 30,
1998 1997
(unaudited)
-----------------------------
Net sales $50,539 $55,195
Gross Profit 23,222 26,961
Research and development
expense 7,052 6,154
Selling, general and
admin. expense 10,172 9,825
Amortization expense 97 69
Other, net (439) (20)
Merger and reorganization
expenses 0 2,250
Purchased in process
technology 0 0
-----------------------------
Operating income 6,340 8,683
Interest expense (income), net 283 (209)
-----------------------------
Income before income taxes 6,057 8,892
Income taxes 1,817 2,007
-----------------------------
Net income $4,240 $6,885 (1)
=============================
Diluted net income per
common share $0.29 $0.46 (1)
Pro forma diluted net income
per share excluding
one time charges $0.26 (4) $0.46 (4)
Diluted weighted average
shares outstanding 14,860 15,049
=============================
Nine Months Ended
September 30,
1998 1997
(unaudited)
-------------------------------
Net sales $155,345 $158,952
Gross Profit 71,462 78,123
Research and development
expense 20,549 17,261
Selling, general and
admin. expense 31,403 28,842
Amortization expense 292 206
Other, net (695) (335)
Merger and reorganization
expenses 7,500 2,250
Purchased in process
technology 0 4,200
------------------------------
Operating income 12,413 25,699
Interest expense (income), net 748 (79)
------------------------------
Income before income taxes 11,665 25,778
Income taxes 3,499 5,927
------------------------------
Net income $8,166 (2) $19,851 (3)
============== =============
Diluted net income per
common share $0.55 (2) $1.33 (3)
Pro forma diluted net income
per share excluding
one time charges $0.82 (4) $1.34 (4)
Diluted weighted average
shares outstanding 14,813 14,879
==============================
(1) Net income for the three months ended September 30, 1997 includes
non-recurring merger expenses of approximately $2.25 million
relating to the merger with Wyko Corporation ($0.10 per share).
(2) Net income for the nine months ended September 30, 1998 includes
non-recurring merger and reorganization expenses of approximately
$7.5 million principally relating to the merger with Digital
Instruments ($0.32 per share).
(3) Net income for the nine months ended September 30, 1997 includes non-recurring merger expenses of
approximately $2.25 million ($0.10 per share) relating to the merger with Wyko Corporation and a non-recurring
in-process R&D charge of approximately $4.2 million ($0.18 per share) relating to the acquisition of certain assets from
Materials Research Corporation.
(4) Pro forma diluted net income per share excluding non-recurring charges is computed using a fully taxed statutory rate
and excludes the effects of the applicable non-recurring charges for both 1997 and 1998. |
