- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q10-Q/A
AMENDMENT NO. 1 TO
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED SEPTEMBER 30, 1996MARCH 31,1997
Commission file number 0-16244
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VEECO INSTRUMENTS INC.
(Exact name of registrant as specified in its charter)
Delaware 11-2989601
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
Terminal Drive
Plainview, New York 11803
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (516) 349-8300
-----------------------------------
Indicate by check mark whether the Registrant: (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days:
YesYES X No
--- ---
5,826,534NO
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5,871,959 shares of Common Stock $.01 par value, were outstanding as of
October 25, 1996.
- --------------------------------------------------------------------------------April 28, 1997.
The Registrant, Veeco Instruments Inc., hereby amends and restates
its Quarterly Report on Form 10-Q (the "10-Q") for the quarterly period
ended March 31, 1997, filed with the Securities and Exchange Commission (the
"Commission") on May 7, 1997, to provide certain information included in its
definitive Schedule 14A dated July 2, 1997.
VEECO INSTRUMENTS INC.
INDEX
PAGE
----
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited):
Condensed Consolidated Statements of Income -
Three Months Ended September 30, 1996 and 1995 3
Condensed Consolidated Statements of Income -
Nine Months Ended September 30, 1996 and 1995 4
Condensed Consolidated Balance Sheets -
September 30, 1996 and December 31, 1995 5
Condensed Consolidated Statements of Cash Flows -
Nine Months Ended September 30, 1996 and 1995 6
Notes to Condensed Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 12
SIGNATURES 13
-2-
PAGE
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited):
Condensed Consolidated Statements of Income -Three Months Ended
March 31, 1997 and 1996....................................................... 3
Condensed Consolidated Balance Sheets -March 31, 1997
and December 31, 1996......................................................... 4
Condensed Consolidated Statements of Cash Flows -Three Months Ended
March 31, 1997 and 1996....................................................... 5
Notes to Condensed Consolidated Financial Statements.......................... 6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations......................................................... 8
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K............................................... 10
SIGNATURES.............................................................................. 11
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Veeco Instruments Inc.
and Subsidiaries
Condensed Consolidated Statements of Income
(Dollars in(In thousands, except per share data)
(Unaudited)
Three Months Ended
September 30,
---------------------------------
1996 1995
-------- --------
Net sales $ 24,071 $ 18,430
Cost of sales 13,602 10,061
---------- ----------
Gross profit 10,469 8,369
Costs and expenses:
Research and development expense 2,601 1,589
Selling, general and administrative expense 4,745 4,200
Amortization expense 63 51
Other - net 46 108
-------- --------
Operating income 3,014 2,421
Interest income, net 148 152
-------- --------
Income before income taxes 3,162 2,573
Income taxes 1,168 695
-------- --------
Net income $ 1,994 $ 1,878
-------- --------
-------- --------
Net income per common share $ 0.34 $ 0.33
-------- --------
-------- --------
Shares used in computation 5,860,000 5,750,000
-------- --------
-------- --------
SEE ACCOMPANYING NOTES.
-3-
Veeco Instruments Inc.
and Subsidiaries
Condensed Consolidated Statements of Income
(Dollars in thousands, except per share data)
(Unaudited)
Nine Months Ended
September 30,
-----------------------------------
1996 1995
---------- ----------
Net sales $ 69,810 $ 50,061
Cost of sales 39,011 27,430
---------- ----------
Gross profit 30,799 22,631
Costs and expenses:
Research and development expense 7,184 4,950
Selling, general and administrative
expense 14,334 11,628
Amortization expense 168 151
Other - net 163 84
---------- ----------
Operating income 8,950 5,818
Interest income, net 510 167
---------- ----------
Income before income taxes 9,460 5,985
Income taxes 3,550 1,529
---------- ----------
Net income $ 5,910 $ 4,456
THREE MONTHS ENDED
MARCH 31,
----------------------
1997 1996
---------- ----------
Net sales........................................................... $ 29,551 $ 20,644
Cost of sales....................................................... 16,642 11,437
---------- ----------
Gross profit........................................................ 12,909 9,207
Costs and expenses:
Research and development expense.................................... 2,952 2,004
Selling, general and administrative expense......................... 5,765 4,373
Amortization expense................................................ 69 53
Other--net.......................................................... (18) 92
---------- ----------
Operating income.................................................... 4,141 2,685
Interest income, net................................................ 105 200
---------- ----------
Income before income taxes.......................................... 4,246 2,885
Income taxes........................................................ 1,609 1,075
---------- ----------
Net income.......................................................... $ 2,637 $ 1,810
---------- ----------
---------- ----------
Net income per common share......................................... $ 0.43 $ 0.31
---------- ----------
---------- ----------
Shares used in computation.......................................... 6,150,000 5,893,000
---------- ----------
---------- ----------
Net income per common share $ 1.00 $ 0.84
---------- ----------
---------- ----------
Shares used in computation 5,889,000 5,317,000
---------- ----------
---------- ----------
SEE ACCOMPANYING NOTES.
-4-
See accompanying notes.
3
Veeco Instruments Inc.
and Subsidiaries
Consolidated Balance Sheet
(Dollars in thousands)
September 30, December 31,
1996 1995
-----------------------------------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 18,109 $ 17,568
Accounts and trade notes receivable 17,878 18,983
Inventories 21,569 15,795
Prepaid expenses and other current assets 925 923
Deferred income taxes 1,261 1,221
---------- ----------
Total current assets 59,742 54,490
Property, plant and equipment at cost, net 8,932 7,381
Excess of cost over net assets acquired 4,481 4,579
Other assets - net 1,053 930
---------- ----------
Total assets $ 74,208 $ 67,380
---------- ----------
---------- ----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 10,880 $ 8,729
Accrued expenses 6,661 7,523
Income taxes payable 336 777
---------- ----------
Total current liabilities 17,877 17,029
Deferred income taxes 118 118
Other liabilities 463 482
Shareholders' equity:
Common stock 58 58
Additional paid-in capital 47,610 47,353
Retained earnings 7,481 1,571
Cumulative translation adjustment 601 769
---------- ----------
Total shareholders' equity 55,750 49,751
---------- ----------
Total liabilities and shareholders' equity $ 74,208 $ 67,380
---------- ----------
---------- ----------
SEE ACCOMPANYING NOTES.
-5-
MARCH 31, DECEMBER 31,
1997 1996
----------- ------------
(UNAUDITED)
Assets
Current assets:
Cash and cash equivalents........................................... $ 24,819 $ 21,209
Accounts and trade notes receivable................................. 20,276 19,826
Inventories......................................................... 23,619 21,263
Prepaid expenses and other current assets........................... 808 858
Deferred income taxes............................................... 1,987 1,937
----------- ------------
Total current assets................................................ 71,509 65,093
Property, plant and equipment at cost, net.......................... 10,792 9,761
Excess of cost over net assets acquired............................. 4,433 4,448
Other assets--net................................................... 1,319 1,025
----------- ------------
Total assets........................................................ $ 88,053 $ 80,327
----------- ------------
----------- ------------
Liabilities and shareholders' equity
Current liabilities:
Accounts payable.................................................... $ 13,901 $ 11,196
Accrued expenses.................................................... 11,015 9,964
Income taxes payable................................................ 2,002 479
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Total current liabilities........................................... 26,918 21,639
Deferred income taxes............................................... 257 257
Other liabilities................................................... 422 461
Shareholders' equity:
Common stock........................................................ 59 58
Additional paid-in capital.......................................... 47,993 47,638
Retained earnings................................................... 12,246 9,609
Cumulative translation adjustment................................... 158 665
----------- ------------
Total shareholders' equity.......................................... 60,456 57,970
----------- ------------
Total liabilities and shareholders' equity.......................... $ 88,053 $ 80,327
----------- ------------
----------- ------------
See accompanying notes.
4
Veeco Instruments Inc.
and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Dollars in thousands)
(Unaudited)
Nine Months Ended
September 30,
---------------------------------
1996 1995
---------- ----------
OPERATING ACTIVITIES
Net income $ 5,910 $ 4,456
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 1,012 965
Deferred income taxes (40) 495
Changes in operating assets and
liabilities:
Accounts and trade notes receivable 867 (1,627)
Inventories (5,886) (3,159)
Accounts payable 2,169 (171)
Accrued expenses and other current
liabilities (1,263) 1,415
Other - net (11) 266
---------- ----------
Net cash provided by operating activities 2,758 2,640
INVESTING ACTIVITIES
Capital expenditures (2,403) (703)
---------- ----------
Net cash used in investing activities (2,403) (703)
FINANCING ACTIVITIES
Proceeds from stock issuance 257 14,538
Deferred financing costs (193) (85)
Other - (29)
---------- ----------
Net cash provided by financing activities 64 14,424
Effect of exchange rates on cash 122 (172)
---------- ----------
Net change in cash and cash equivalents 541 16,189
Cash and cash equivalents at beginning
of period 17,568 2,279
---------- ----------
Cash and cash equivalents at end
of period $18,109 $18,468
---------- ----------
---------- ----------
SEE ACCOMPANYING NOTES.
-6-
THREE MONTHS ENDED
MARCH 31,
--------------------
1997 1996
--------- ---------
Operating activities
Net income.............................................................. $ 2,637 $ 1,810
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization........................................... 295 334
Deferred income taxes................................................... (50) (12)
Changes in operating assets and liabilities:
Accounts receivable..................................................... (697) 868
Inventories............................................................. (2,557) (3,649)
Accounts payable........................................................ 2,727 1,902
Accrued expenses and other current liabilities.......................... 2,660 (1,076)
Other--net.............................................................. (297) (44)
--------- ---------
Net cash provided by operating activities............................... 4,718 133
Investing activities
Capital expenditures.................................................... (1,266) (439)
--------- ---------
Net cash used in investing activities................................... (1,266) (439)
Financing activities
Proceeds from stock issuance............................................ 356 206
Other................................................................... (14) --
--------- ---------
Net cash provided by financing activities............................... 342 206
Effect of exchange rates on cash........................................ (184) 51
--------- ---------
Net change in cash and cash equivalents................................. 3,610 (49)
Cash and cash equivalents at beginning of period........................ 21,209 17,568
--------- ---------
Cash and cash equivalents at end of period.............................. $ 24,819 $ 17,519
--------- ---------
--------- ---------
See accompanying notes.
5
VEECO INSTRUMENTS INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)
Note 1 - Basis of PresentationNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1--BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements of
Veeco Instruments Inc. ("Veeco") and its subsidiaries (collectively, the
"Company") have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they
do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the
opinion of management, all adjustments considered necessary for a fair
presentation (consisting of normal recurring accruals) have been included.
Operating results for the ninethree months ended September 30, 1996,March 31, 1997, are not
necessarily indicative of the results that may be expected for the year
ending December 31, 1996.1997. For further information, refer to the financial
statements and footnotes thereto included in the Company's Annual Report on
Form 10-K for the year ended December 31, 1995.1996.
Earnings per share is computed using the weighted average number of common
and common equivalent shares outstanding during the period.
Note 2 - InventoriesNOTE 2--INVENTORIES
Interim inventories have been determined by lower of cost (principally
first-in, first-out) or market. Inventories consist of:
September 30, December 31,
1996 1995
---- ----
(Dollars in thousands)
Raw materials $ 8,052 $ 4,349
Work-in process 6,142 4,222
Finished goods 7,375 7,224
-------- -------
$ 21,569 $15,795
-------- -------
-7-
MARCH 31, DECEMBER 31,
1997 1996
----------- ------------
(DOLLARS IN THOUSANDS)
Raw materials....................................................... $ 11,108 $ 9,546
Work-in process..................................................... 6,134 4,909
Finished goods...................................................... 6,377 6,808
----------- ------------
$ 23,619 $ 21,263
----------- ------------
----------- ------------
6
Note 3 - Balance Sheet Information
Selected balance sheet account disclosures follow:
September 30, December 31,
1996 1995
---- ----
(Dollars in thousands)
Allowance for doubtful accounts $ 654 $ 517
Accumulated depreciation and amortization
of property, plant and equipment $ 6,138 $ 5,318
Accumulated amortization of excess of cost
over net assets acquired $ 877 $ 779
Note 4 - Credit Facility
In place of its existing financing arrangements, in July 1996, the Company
entered into a new credit facility (the "New Credit Facility") with Fleet Bank,
N.A. and The Chase Manhattan Bank. The New Credit Facility, which is to be used
for working capital, acquisitions and general corporate purposes, provides the
Company with up to $30 million of availability. The New Credit Facility bears
interest at the prime rate of the lending banks, but is adjustable to a maximum
rate of 3/4% above the prime rate in the event the Company's debt to cash flow
exceeds a defined ratio. A LIBOR based interest rate option is also provided.
The New Credit Facility expires July 31, 1999, but under certain conditions is
convertible into a term loan, which would amortize quarterly through July 31,
2002. The New Credit Facility is secured by substantially all of the Company's
personal property, as well as the stock of its Sloan subsidiary.
Note 5 - Other Information
The principal reason for the variation in the relationship between the statutory
income tax rate and the effective tax rate for the three and nine months ended
September 30, 1995 is due to the recognition of previously unrecognized deferred
tax assets.NOTE 3--BALANCE SHEET INFORMATION
SELECTED BALANCE SHEET ACCOUNT DISCLOSURES FOLLOW:
MARCH 31, DECEMBER 31,
1997 1996
----------- -------------
(DOLLARS IN THOUSANDS)
Allowance for doubtful accounts..................................... $ 491 $ 482
Accumulated depreciation and amortization of property, plant and
equipment......................................................... $ 6,991 $ 6,503
Accumulated amortization of excess of cost over net assets
acquired.......................................................... $ 925 $ 910
NOTE 4--OTHER INFORMATION
Total interest paid for the ninethree months ended September 30, 1995March 31, 1997 and 1996 was
$106,000.$15,000 and $83,000, respectively. The Company made income tax payments of
$3,967,000$103,000 and $647,000$308,000 for the ninethree months ended September 30,March 31, 1997 and 1996,
respectively.
NOTE 5--SUBSEQUENT EVENTS
On April 28, 1997, Veeco signed a definitive merger agreement with Wyko
Corporation ("Wyko") of Tucson, Arizona, a leading supplier of optical
interferometric measurement systems for the data storage and 1995, respectively.
-8-semiconductor
industries providing for the merger of Veeco Acquisition Corporation, a
wholly owned subsidiary of Veeco, into Wyko. Under the merger agreement, Wyko
shareholders would receive 2,863,810 shares of Veeco common stock and holders
of options to acquire Wyko common stock would receive options to acquire an
aggregate of 136,190 shares of Veeco common stock. The merger is intended to
be accounted for as a pooling of interests transaction. The consummation of
the merger is subject to a number of conditions, including approval by the
shareholders of Veeco, receipt of a fairness opinion from Veeco's financial
advisor and confirmation from Veeco's independent accountants regarding its
concurrence that the merger may be accounted for as a pooling of interests.
On April 10, 1997, the Company acquired certain assets and personnel of the
Media and Magnetics Applications Division of Materials Research Corporation
for cash plus the assumption of certain liabilities. The acquisition is being
accounted for using the purchase method of accounting. Accordingly, a
portion of the purchase price will be allocated to the net assets acquired
based on their estimated fair values as determined by an outside appraisal,
including between $3,500,000 to $4,500,000 to be allocated to in-process
engineering and development projects. These projects have not reached
technological feasibility and have no alternative future uses and thus will
be expensed as of the date of acquisition.
NOTE 6--NEW ACCOUNTING PRONOUNCEMENT
In February 1997, the Financial Accounting Standards Board issues SFAS No.
128, "Earnings Per Share," which is effective for both interim and annual
financial statements for periods ending after December 15, 1997. At that
time, the Company will be required to change the method currently used to
compute earnings per share and to restate all prior periods. Under the new
requirements for calculating primary earnings per share, the dilutive effect
of stock options will be excluded. The impact of adopting SFAS No. 128 on
the calculation of primary and fully diluted earnings per share is not
expected to be material.
7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30,Results of Operations
Three Months Ended March 31, 1997 and 1996 COMPARED TO THE THREE MONTHS ENDED
SEPTEMBER 30, 1995
Net sales for three months ended September 30, 1996March 31, 1997 increased by approximately
$5.6 million$8,907,000 or 30.6%43% over the comparable 19951996 period. The increase principally
reflects continuing growth in Ion Beam Systemion beam system sales. .Sales in the U.S.
increased approximately 53%, while international sales included an
approximately 45% decrease in Japan, a 31% decrease in Europe, and a 400%
increase in Asia-Pacific. The Company believes that there will continue to
be quarter to quarter variations in the geographic concentration of sales.
However, there appears to be a trend of increasing sales demand in
Asia-Pacific attributable to the expansion of hard drive and semiconductor
industries in that region.
Sales of Ion Beam Systemsion beam systems for the thirdfirst quarter of 19961997 of approximately
$17,898,000 increased toby approximately $13.2 million$8,278,000 or 62.8%86% over the comparable
period in 1995,1996, driven primarilyprincipally by increased demand from the mass memorydata storage
market.industry for high-density hard drives. Of this increase, approximately 73.8%
was due to growth in volume, with the balance of the increase due to an
approximately 30.7% higher average selling price of a system resulting from a
shift in customer demand to multi-process modules with increased automation.
Sales of Surface Metrologysurface metrology products for the thirdfirst quarter of 19961997 of
approximately $6.1
million remained flat compared to$6,610,000 increased by approximately $933,000 or 16% over the
third quarter of 1995,comparable 1996 period, reflecting increased SXM product sales as a result of
a
general slow downthe semiconductor industry's investment in semiconductor applications.next generation sub-0.35 micron
and smaller-featured device production. Of this increase, approximately 39.1%
was due to growth in volume, with the balance of the increase due to an
approximately 17.2% higher average selling price of surface metrology
products. Sales of Industrial
Measurementindustrial measurement products for the thirdfirst quarter of
1996 increased1997 of approximately $5,043,000 decreased by approximately $304,000 or 6%
compared to approximately
$4.8 million or 13.4% over the comparable period in 1995,1996, as the result of increased sales of newa decrease in
leak detection products.
The Companyequipment sales.
Veeco booked $18.3 millionapproximately $31,399,000 of orders in the first quarter of 1997
compared to $21.2
millionapproximately $25,449,000 of orders in the thirdfirst quarter of
1995, as1996, reflecting both the general over capacity inincreased demand for high density hard drives and
the semiconductor devicecontinued industry has impacted customers short term purchasing
patterns.transition to the next generation MR thin film
magnetic heads and increasing orders for SXM products.
Gross profit for the thirdfirst quarter of 19961997 of approximately $10.5 million$12,909,000
represents an increase of approximately $2.1 million$3,702,000 or 40% over the comparable
19951996 period. Gross profit as a percentage of net sales decreased to 43.7% for
the first quarter of 1997 from 45.4% in 1995
to 43.5% in44.6% for the first quarter of 1996. This
decline was principally due to product and geographic
mix changes in Surface Metrology products in the 1996 third quarter.product mix.
Research and development expense in the thirdfirst quarter of 1997 increased by
approximately $948,000 or by 47% compared to the first quarter of 1996,
increasedprincipally driven by approximately $1.0 million or 63.7% compared to the third quarter of 1995 as the
Company increased its R&D investment in each product line with particular
emphasis on ion beam deposition products.systems.
Selling, general and administrative expenses increased by approximately
$545,000$1,392,000 or by 32% compared to the thirdfirst quarter of 1995.1996. The increase was
primarily due to approximately $401,000$1,065,000 of additional selling expense
comprised of sales commissions related to the higher sales volume, as well as
increased sales and sales support compensation and travel expense.
Operating income increased to approximately $3.0 million$4,141,000 or 12.5%14% of net sales
for the thirdfirst quarter of 19961997 compared to approximately $2.4 million$2,685,000 or 13.1%13% of
net sales for the thirdfirst quarter of 1995,1996, due to the above noted factors.
Income taxes for the thirdfirst quarter of 19961997 amounted to approximately
$1.2
million$1,609,000 or 36.9%38% of income before income taxes in 19961997 as compared to
$695,000approximately $1,075,000 million or 27.0%37% of income before taxes for the same
period in 1995. The lower
effective tax rate in 1995 as compared to the statutory tax rate is a result of
the Company recognizing in 1995 previously unrecognized deferred tax assets.
-9-
NINE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED TO THE NINE MONTHS ENDED
SEPTEMBER 30, 1995
Net sales for nine months ended September 30, 1996 increased by approximately
$19.7 million or 39.5% over the comparable 1995 period. The increase reflects
growth in all three product lines: Ion Beam Systems, Surface Metrology and
Industrial Measurement.
Sales of Ion Beam Systems for the nine months ended September 30, 1996 increased
to approximately $37.2 million or 67.8% over the comparable 1995 period, driven
by increased demand from the mass memory storage market. Sales of Surface
Metrology products for the nine months ended September 30, 1996 increased to
approximately $17.3 million or 19.4% over the comparable 1995 period, primarily
as a result of increased activity in SXM Atomic Force Microscopy for
semiconductor applications. Sales of Industrial Measurement products for the
nine months ended September 30, 1996 increased to approximately $15.3 million or
14.4% over the comparable 1995 period, as a result of new leak detection
products.
Gross profit for the first nine months of 1996 of approximately $30.8 million
represents an increase of 36.1% or approximately $8.2 million over the
comparable 1995 period. Gross profit as a percentage of net sales decreased
from 45.2% in 1995 for the first nine months to 44.1% in 1996 for the same
period. This decline was principally due to product mix changes in Surface
Metrology and Industrial Measurement.
Research and development expense increased by approximately $2.2 million or
45.1% in the first nine months of 1996 compared to the comparable period of 1995
as the Company increased its R&D investment in all product lines, with $1.5
million of the increase directed at Ion Beam Systems.
Selling, general and administrative expenses for the first nine months of 1996
increased by approximately $2.7 million compared to the first nine months of
1995. The increase was primarily due to approximately $2.1 million of
additional selling expense comprised of sales commissions related to the higher
sales volume, as well as increased compensation and travel expense as a result
of the hiring of additional sales and service personnel to support the Company's
continuing growth. The Company booked $68.8 million of orders in the first nine
months of 1996 compared to $60.5 million of orders in the first nine months of
1995.
Operating income increased to approximately $9.0 million or 12.8% of net sales
for the nine months ended September 30, 1996 compared to approximately $5.8
million or 11.6% of net sales for the nine months ended September 30, 1995, due
to the above noted factors.
Income taxes for the nine months ended September 30, 1996 amounted to $3.6
million or 37.5% of income before income taxes as compared to approximately $1.5
million or 25.5% of income before income taxes for the same period in 1995. The
lower effective tax rate in 1995 as compared to the statutory tax rate is a
result of the Company recognizing in 1995 previously unrecognized deferred tax
assets.
-10-1996.
8
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operations totaled $2.8 millionapproximately $4,718,000 for the
first three months of 1997 compared to approximately $133,000 for the
comparable 1996 period. This increase reflects of an increase in net income
for the first quarter of 1997 of approximately $827,000 over the comparable
1996 period coupled with favorable changes in operating assets and
liabilities.
Veeco made capital expenditures of approximately $1,266,000 for the three
months ended March 31, 1997, as compared to approximately $439,000 in the
comparable 1996 period. Capital expenditures in the first quarter of 1997
principally reflect investments in building improvements, laboratory tools
and business information systems.
Relative to the acquisition in April 1997 of the Media and Magnetics
Applications business of Materials Research Corporation, Veeco believes that
it will expend approximately $10,000,000 of cash during the last nine months
of 1996 compared to $2.6 million1997 for the comparable 1995 period. Inventories
increased $5.9 millionpurchase of this business as a result of purchases requiredwell as for the increased sales
level.
The Company hadfuture capital
expenditures and working capital requirements. The expected time-frame for
developing the acquired technology into commercially viable products is
approximately 12 months from the acquisition date and it is anticipated that
during this time-frame between $2,000,000 and $3,000,000 of $2.4 million for the nine months ended
September 30, 1996, principally for laboratory tools and test equipment. In
addition, the Company began an upgrade of its computer systems in the 1996 third
quarter and anticipates spending $1.5 million on this program in the next six to
nine months.
In July, 1996 the Company entered into a new credit facility with two banks that
provides borrowing capability of $30 million. (See note 4 to the financial
statements). The new credit facilityexpense will be
used for working capital,
acquisitionsincurred in connection with the technical and other general corporate purposes.research and development
efforts necessary to develop these products.
The Company believes that existing cash balances together with cash generated
from operations and amounts available under the Company's bank credit
facility will be sufficient to meet the Company's projected working capital
and other cash flow requirements for the foreseeable future.
-11-9
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits:
10.25 Credit2 Agreement and Plan of Merger Among Veeco Instruments Inc., Veeco
Acquisition Corp. and Wyko Corporation and its Security Holders
dated July 31, 1996 among the Registrant, Fleet
Bank N.A. and The Chase Manhattan Bank. (1)
10.26 Security Agreement dated July 31, 1996 among the Registrant,
Fleet Bank N.A. and The Chase Manhattan Bank. (1)
10.27 Guarantee Agreement dated July 31, 1996 among the Registrant,
Fleet Bank N.A. and The Chase Manhattan Bank. (1)
10.28 Guarantor's Security Agreement dated July 31, 1996 among Sloan
Technology Corporation, Fleet Bank N.A. and The Chase Manhattan
Bank.(1)
10.29 The Pledge Agreement dated July 31, 1996 among the Registrant,
Fleet Bank N.A. and The Chase Manhattan Bank. (1)
10.30 The Patent and Trademark Security Agreement dated July 31, 1996
among the Registrant, Fleet Bank N.A. and The Chase Manhattan
Bank.(1)
27.April 28, 1997.
27 Financial Data Schedule of Veeco Instruments Inc. for the quarterly periodquarter
ended September 30, 1996.March 31, 1997.
b) Reports on Form 8-K:
The Registrant filed a Form 8-K dated July 26, 1996March 13, 1997 reporting that: (I)
the Registrant entered into a letter of intent with Wyko Corporation
pursuant to which it is contemplated that the Registrant will acquire
all the issued and outstanding shares of Wyko in exchange for the
issuance of 3,000,000 shares of common stock par value $.01 per share, of the Registrant may no longer
be offered for resale or resoldand on
March 10, 1997, the Registrant issued a press release announcing the
execution of such letter of intent and, (ii) the Registrant issued a
press release on March 10, 1997 announcing it had entered into a
Memorandum of Understanding with MRC Corporation pursuant to any ofwhich it is
contemplated that the following
prospectuses: (i) the Company's Prospectus dated December 15, 1994 filed
as part of the Company's Registration Statement on Form S-8, file no.
33-87394; (ii) the Company's Prospectus dated August 3, 1995 filed as part
of the Company's Registration Statement on Form S-8, file no. 33-95424;Registrant will acquire certain assets and (iii) the Company's Prospectus dated August 3, 1995 filed as part of the
Company's Registration Statement on Form S-8, file no. 33-95422.
(1) Incorporated by reference from the Registrant's Quarterly Report on Form
10-Qassume
certain liabilities relating to MRC's Media and Magnetics Applications
division in exchange for the quarterly period ended June 30, 1996 filed with the Securities
and Exchange Commission on August 8, 1996.
-12-cash.
10
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: October 29, 1996July 2, 1997
Veeco Instruments Inc.
By: /s/ Edward H. Braun
-------------------
Edward H. Braun
Chairman, CEO and President
By: /s/ John F. Rein, Jr.
John F. Rein, Jr.
Vice President, Finance
and Chief Financial Officer
-13-
EXHIBIT INDEX
Exhibits:
10.25 Credit Agreement dated July 31, 1996 among the Registrant, Fleet
Bank N.A. and The Chase Manhattan Bank. (1)
10.26 Security Agreement dated July 31, 1996 among the Registrant,
Fleet Bank N.A. and The Chase Manhattan Bank. (1)
10.27 Guarantee Agreement dated July 31, 1996 among the Registrant,
Fleet Bank N.A. and The Chase Manhattan Bank. (1)
10.28 Guarantor's Security Agreement dated July 31, 1996 among Sloan
Technology Corporation, Fleet Bank N.A. and The Chase Manhattan
Bank.(1)
10.29 The Pledge Agreement dated July 31, 1996 among the Registrant,
Fleet Bank N.A. and The Chase Manhattan Bank. (1)
10.30 The Patent and Trademark Security Agreement dated July 31, 1996
among the Registrant, Fleet Bank N.A. and The Chase Manhattan
Bank. (1)
27. Financial Data Schedule of Veeco Instruments Inc. for the
quarterly period ended September 30, 1996.
(1) Incorporated by reference from the Registrant's Quarterly Report on
Form 10-Q for the quarterly period ended June 30, 1996 filed with the
Securities and Exchange Commission on August 8, 1996.11