- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED MARCH 31,1997SEPTEMBER 30, 1997
Commission file number 0-16244
--------------------------
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:
YES X/X/ NO - -
5,871,959/ /
8,873,176 shares of Common Stock $.01 par value, were outstanding as of
April 28,November 10, 1997.
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
VEECO INSTRUMENTS INC.
INDEX
PAGE
-----
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
PAGE
PART I. FINANCIAL INFORMATION -----
Item 1. Financial Statements (Unaudited):
Condensed Consolidated Statements of Income -
Three Months Ended September 30, 1997 and 1996............ 3
Condensed Consolidated Statements of Income -
Nine Months Ended September 30, 1997 and 1996............. 4
Condensed Consolidated Balance Sheets -
September 30, 1997 and December 31, 1996.................. 5
Condensed Consolidated Statements of Cash Flows -
Nine Months Ended September 30, 1997 and 1996............. 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 4. Submission of Matters to a Vote of Security Holders........ 12
Item 6. Exhibits and Reports on Form 8-K........................... 12
SIGNATURES......................................................... 13
2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Veeco Instruments Inc.
and Subsidiaries
Condensed Consolidated Statements of Income
(In thousands, except per share data)
(Unaudited)VEECO INSTRUMENTS INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
THREE MONTHS ENDED
MARCH 31,
----------------------SEPTEMBER 30,
--------------------------
1997 1996
---------- ---------------------- ------------
Net sales...........................................................sales............................................................................. $ 29,55142,836 $ 20,64428,505
Cost of sales....................................................... 16,642 11,437
---------- ----------sales......................................................................... 22,644 15,186
------------ ------------
Gross profit........................................................ 12,909 9,207profit.......................................................................... 20,192 13,319
Costs and expenses:
Research and development expense.................................... 2,952 2,004expense..................................................... 4,867 3,294
Selling, general and administrative expense......................... 5,765 4,373expense.......................................... 7,970 5,775
Amortization expense................................................expense................................................................. 69 53
Other--net.......................................................... (18) 92
---------- ----------63
Other--net........................................................................... (123) (59)
Merger expenses...................................................................... 2,250 --
------------ ------------
Operating income.................................................... 4,141 2,685income...................................................................... 5,159 4,246
Interest income, net................................................ 105 200
---------- ----------net.................................................................. 258 341
------------ ------------
Income before income taxes.......................................... 4,246 2,885taxes............................................................ 5,417 4,587
Income taxes........................................................ 1,609 1,075
---------- ----------taxes.......................................................................... 2,005 1,729
------------ ------------
Net income..........................................................income............................................................................ $ 2,6373,412 $ 1,810
---------- ----------
---------- ----------2,858
------------ ------------
------------ ------------
Net income per common share.........................................share........................................................... $ 0.430.36 $ 0.31
---------- ----------
---------- ----------0.32
------------ ------------
------------ ------------
Shares used in computation.......................................... 6,150,000 5,893,000
---------- ----------
---------- ----------computation............................................................ 9,465,000 8,860,000
------------ ------------
------------ ------------
See accompanying notes.
3
Veeco Instruments Inc.
and Subsidiaries
Consolidated Balance Sheet
(Dollars in thousands)VEECO INSTRUMENTS INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
MARCH 31, DECEMBER 31,
1997 1996
----------- ------------NINE MONTHS ENDED
SEPTEMBER 30,
--------------------------
(UNAUDITED)
Assets
Current assets:
Cash1997 1996
------------ ------------
Net sales............................................................................. $ 122,506 $ 82,782
Cost of sales......................................................................... 64,802 43,963
------------ ------------
Gross profit.......................................................................... 57,704 38,819
Costs and cash equivalents...........................................expenses:
Research and development expense.................................................... 13,096 9,099
Selling, general and administrative expense......................................... 23,486 17,414
Amortization expense................................................................ 206 168
Other--net.......................................................................... (400) (127)
Merger expenses..................................................................... 2,250 --
Purchased in process technology..................................................... 4,200 --
------------ ------------
Operating income...................................................................... 14,866 12,265
Interest income, net.................................................................. 416 636
------------ ------------
Income before income taxes............................................................ 15,282 12,901
Income taxes.......................................................................... 5,788 4,899
------------ ------------
Net income............................................................................ $ 24,8199,494 $ 21,209
Accounts and trade notes receivable................................. 20,276 19,826
Inventories......................................................... 23,619 21,263
Prepaid expenses and other current assets........................... 808 858
Deferred8,002
------------ ------------
------------ ------------
Net income taxes............................................... 1,987 1,937
-----------per common share........................................................... $ 1.02 $ 0.90
------------ 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
-----------Shares used in computation............................................................ 9,295,000 8,889,000
------------ 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)VEECO INSTRUMENTS INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
THREE MONTHS ENDED
MARCHSEPTEMBER 30, DECEMBER 31,
--------------------1997 1996
------------- ------------
(UNAUDITED)
ASSETS
Current assets:
Cash and cash equivalents......................................................... $ 22,011 $ 23,465
Accounts and trade notes receivable............................................... 35,988 24,114
Inventories....................................................................... 33,577 25,351
Prepaid expenses and other current assets......................................... 6,296 3,677
------------- ------------
Total current assets................................................................ 97,872 76,607
Property, plant and equipment at cost, net.......................................... 16,986 13,087
Excess of cost over net assets acquired............................................. 4,350 4,448
Other assets--net................................................................... 5,002 2,655
------------- ------------
Total assets........................................................................ $ 124,210 $ 96,797
------------- ------------
------------- ------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities................................................................. $ 42,396 $ 27,246
Other non-current liabilities....................................................... 668 718
Long-term debt...................................................................... 2,483 2,563
Shareholders' equity................................................................ 78,663 66,270
------------- ------------
Total liabilities and shareholders' equity.......................................... $ 124,210 $ 96,797
------------- ------------
------------- ------------
See accompanying notes.
5
VEECO INSTRUMENTS INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
NINE MONTHS ENDED
SEPTEMBER 30,
---------------------
1997 1996
---------- ---------
---------
Operating activities
OPERATING ACTIVITIES
Net income..............................................................income................................................................................. $ 2,6379,494 $ 1,8108,002
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization........................................... 295 334amortization............................................................ 1,083 1,062
Deferred income taxes................................................... (50) (12)taxes.................................................................... (1,919) (568)
Purchased in process technology.......................................................... 4,200 --
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)
---------receivable...................................................................... (12,243) 216
Inventories.............................................................................. (6,663) (6,979)
Current liabilities...................................................................... 11,076 3,195
Other--net............................................................................... 542 682
---------- ---------
Net cash provided by operating activities............................... 4,718 133
Investing activitiesactivities.................................................. 5,570 5,610
INVESTING ACTIVITIES
Capital expenditures.................................................... (1,266) (439)
---------expenditures....................................................................... (4,138) (2,293)
Net assets of business acquired............................................................ (4,375) --
---------- ---------
Net cash used in investing activities................................... (1,266) (439)
Financing activitiesactivities...................................................... (8,513) (2,293)
FINANCING ACTIVITIES
Proceeds from stock issuance............................................ 356 206
Other................................................................... (14) --
---------issuance............................................................... 1,751 257
Other...................................................................................... (83) (203)
---------- ---------
Net cash provided by financing activities............................... 342 206activities.................................................. 1,668 54
Effect of exchange rates on cash........................................ (184) 51
---------cash........................................................... (179) 121
---------- ---------
Net change in cash and cash equivalents................................. 3,610 (49)equivalents.................................................... (1,454) 3,492
Cash and cash equivalents at beginning of period........................ 21,209 17,568
---------period........................................... 23,465 18,525
---------- ---------
Cash and cash equivalents at end of period..............................period................................................. $ 24,81922,011 $ 17,51922,017
---------- ---------
---------
------------------- ---------
See accompanying notes.
56
VEECO INSTRUMENTS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1--BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements
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 three and nine months ended March 31,September 30, 1997, are not
necessarily indicative of the results that may be expected for the year
ending December 31, 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, 1996.
Earnings per share is computed using the weighted average number of common
and common equivalent shares outstanding during the period.
NOTE 2--INVENTORIES
Interim inventories2--ACQUISITIONS
On April 10, 1997, Veeco Instruments Inc. ("Veeco" or the Company")
acquired certain assets and personnel of the PVD ("Physical Vapor
Deposition") business pertaining to data storage of Materials Research
Corporation for cash plus the assumption of certain liabilities. The
acquisition was accounted for using the purchase method of accounting.
Accordingly, a portion of the purchase price was allocated to the net assets
acquired based on their estimated fair values as determined by an independent
appraisal, including $4.2 million allocated to in-process engineering and
development projects. These projects have not reached technological
feasibility and have no alternative future uses and thus have been determined by lowerexpensed
as of cost (principally
first-in, first-out) or market. Inventories consist of:
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:
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 three months ended March 31, 1997 and 1996 was
$15,000 and $83,000, respectively. The Company made income tax paymentsdate of $103,000 and $308,000 for the three months ended March 31, 1997 and 1996,
respectively.
NOTE 5--SUBSEQUENT EVENTSacquisition.
On April 28,July 25, 1997, the Company signed a definitive merger agreement withCompany's wholly-owned subsidiary Veeco Acquisition
Corp., merged into Wyko Corporation ("Wyko") of Tucson, Arizona, a leading
supplier of optical interferometric measurement systems for the data storage and
semiconductor industries providing for the merger of Veeco Acquisition Corporation, a
wholly owned subsidiary of the Company, into Wyko.industries. Under the merger, agreement, Wyko shareholders would receivereceived 2,863,810
shares of Veeco common stock and holders of options to acquire Wyko common stock
would receivereceived 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.transaction and,
accordingly, historical financial data has been restated to include Wyko data.
Merger expenses of approximately $2.3 million pertaining to investment banking,
legal fees and other one-time transaction costs were charged to operating
expenses during three month period ended September 30, 1997. The consummationfollowing
unaudited pro forma data summarizes the combined results of operations 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 advisorCompany and confirmation from Veeco's
independent accountants regarding its concurrence thatWyko as though the merger may be
accountedhad occurred at the beginning of fiscal
year 1994.
Unaudited pro forma
(In thousands, except per share data)
YEARS ENDED
DECEMBER 31,
1996 1995 1994
---------- ------------ ---------
Net sales................................................................... $ 115,042 $ 85,825 $ 60,031
Net income.................................................................. 10,835 9,237 441
Net income per common share................................................. 1.22 1.09 0.08
7
NOTE 3--INVENTORIES
Interim inventories have been determined by lower of cost (principally
first-in, first-out) or market. Inventories consist of:
SEPTEMBER 30, DECEMBER 31,
1997 1996
------------- ------------
(IN THOUSANDS)
Raw materials....................................................................... $ 14,061 $ 11,159
Work-in process..................................................................... 9,477 6,402
Finished goods...................................................................... 10,039 7,790
------------- ------------
$ 33,577 $ 25,351
------------- ------------
------------- ------------
NOTE 4 - BALANCE SHEET INFORMATION
Selected balance sheet account disclosures follow:
SEPTEMBER 30, DECEMBER 31,
1997 1996
--------------- ---------------
(IN THOUSANDS)
Allowance for doubtful accounts..................................................... $ 785 $ 553
Accumulated depreciation and amortization
of property, plant and equipment.................................................. 9,683 8,859
Accumulated amortization of excess of
cost over net assets acquired..................................................... 1,007 910
NOTE 5--OTHER INFORMATION
Total interest paid for as a poolingthe nine months ended September 30, 1997 and 1996
was $290,000 and $174,000 respectively. The Company made income tax payments of
interests.
On April 10,$4,114,000 and $4,245,000 for the nine months ended September 30, 1997 and 1996,
respectively.
NOTE 6--NEW ACCOUNTING PROUNCEMENT
In February 1997, the Financial Accounting Standards Board issued 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 acquired certain assetswill be required to change the method currently used to compute
earnings per share and personnelto 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 Mediacalculation of
primary and Magnetics Applications Division of Materials Research Corporation,
for a purchase price including cash plus assumption of certain liabilities.
7fully diluted earnings per share is not expected to be material.
8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations
Three Months Ended March 31,RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1997 Compared to the Three Months Ended
March 31,AND 1996
Net sales for the three months ended March 31,September 30, 1997 increased by
approximately $8.9$14.3 million or 43%50.3% over the comparable 1996 period. The
increase principally reflects continuing growth in Ion Beam Systemsales of ion beam systems
and sales of process metrology products. Sales in the U.S. increased
approximately 84.0% while international sales included an approximately
59.5% increase in AsiaPacific, a 24.9% increase in Europe, and a 20.8%
decrease in Japan. The Company believes that there will continue to be
quarter to quarter variations in the geographic concentration of sales.
Process equipment sales of approximately $24.0 million for the three
months ended September 30, 1997 increased by approximately $10.8 million or
81.8% over the comparable period in 1996, as a result of increased demand
from the data storage industry for equipment used in the production of MR
("magnetorestive") and GMR ("giant magnetorestive") heads for high-density
hard drives. Of this increase, approximately 62.7% was due to growth in
volume, with the balance of the increase due to an approximately 41.4% higher
average selling price of a system resulting from a shift in customer demand
to multi-process modules with increased automation. Sales of Ion Beam Systemsprocess
metrology products for the firstthree months ended September 30, 1997 of
approximately $14.2 million increased by approximately $3.7 million or 34.9%
over the comparable 1996 period principally due to an increase in volume.
Sales of industrial measurement products for the three months ended September
30, 1997 of approximately $4.6 million was equivalent to the comparable
period in 1996.
Veeco booked approximately $43.6 million of orders for the three months
ended September 30, 1997 compared to approximately $24.5 million of orders in
the comparable 1996 period, reflecting the continued industry transition to the
next generation MR thin film magnetic heads and the semiconductor industry
investment in advanced products.
Gross profit for the third quarter of 1997 of approximately $17.9$20.2 million
represents an increase of approximately $6.9 million over the comparable 1996
period. Gross profit as a percentage of net sales increased to 47.1% for 1997
from 46.7% for 1996 principally due to volume increases discussed above.
Research and development expense in the third quarter of 1997 increased by
approximately $8.3$1.6 million or 86%47.8% over the comparable period of 1996 as the
Company increased its R&D investment in its process equipment and process
metrology product lines.
Selling, general and administrative expenses increased by approximately $2.2
million for the three months ended September 30, 1997 compared to the comparable
1996 period. The increase was primarily due to approximately $1.9 million of
additional selling expense comprised of sales commissions related to the higher
sales volume, as well as increased compensation and travel expense.
In connection with the merger with Wyko Corporation, the Company incurred
approximately $2.3 million of merger related fees in the three months ended
September 30, 1997 consisting of investment banking, legal and other transaction
costs.
Operating income, including the effects of the one-time merger expenses of
approximately $2.3 million, increased to approximately $5.2 million or 12.0% of
net sales for the third quarter of 1997 compared to approximately $4.2 million
or 14.9% of net sales for the third quarter of 1996, due to the above noted
factors.
Income taxes for 1997 amounted to approximately $2.0 million or 37.0% of
income before income taxes in 1997 as compared to $1.7 million or 37.7 % of
income before taxes for the same period in 1996.
9
RESULTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
Net sales for the nine months ended September 30, 1997 increased by
approximately $39.7 million or 48.0% over the comparable 1996 period. The
increase principally reflects continuing growth in ion beam system sales and
sales of process metrology products. Sales in the U.S. increased approximately
68.3% while international sales included an approximately 54.2 % increase in
Asia Pacific, a 22.8% increase in Europe, and a 5.0% decrease in Japan. The
Company believes that there will continue to be period to period variations in
the geographic concentration of sales.
Process equipment sales of approximately $64.7 million for the nine
months ended September 30, 1997 increased by approximately $27.5 million or
74.1% over the comparable period in 1996, driven principally by increased
demand from the data storage industry for high densityequipment used in the production of
MR and GMR heads for high-density hard drives. Of this increase,
approximately 54.8% was due to growth in volume, with the balance of the
increase due to an approximately 43.5% higher average selling price of a
system resulting from a shift in customer demand to multi-process modules
with increased automation. Sales of Surface
Metrologyprocess metrology products for the first quarter ofnine
months ended September 30, 1997 of approximately $6.6$43.0 million increased by
approximately $.9$12.7 million or 16%41.9% over the comparable 1996 period
reflecting increased SXM product sales as a result of the
semiconductor industry's investmentprincipally due to an increase in next generation sub-0.35 micron and
smaller-featured device production.volume. Sales of Industrial Measurementindustrial measurement
products for the first quarter ofnine months ended September 30, 1997 of approximately $5.0$14.8
million decreased by approximately $.3 million or 6% comparedwas equivalent to the comparable period in 1996, as the result of a decrease in leak detection equipment sales.
The Company1996.
Veeco booked approximately $31.4$127.4 million of orders for the nine months
ended September 30, 1997 compared to approximately $86.6 million of orders in
the quarter
compared to approximately $25.4 million of orders in the first quarter ofcomparable 1996 period, reflecting both the increased demand for high
density hard drives and the continued industry transition to the next
generation MR thin film magnetic heads and increasing orders for SXMthe semiconductor industry
investment in advanced products.
Gross profit for the first quarter ofnine months ended September 30, 1997 of approximately
$12.9$57.7 million represents an increase of approximately $3.748.7% or approximately
$18.9 million or 40% over the comparable 1996 period. Gross profit as a percentage of
net sales decreased
to 43.7%of 47.1% in 1997 remained relatively unchanged from 44.6%46.9% in 1996. This decline was principally due to
changes in product mix.
Research and development expense in the first quarternine months of 1997 increased
by approximately $.9$4.0 million or by 47% compared to44.0% over the first quartercomparable period of 1996 principally driven byas the
Company increased its R&D investment principally in Ion Beam Systems.its process equipment and
process metrology product lines.
Selling, general and administrative expenses for the nine months ended
September 30, 1997 increased by approximately $1.4$6.1 million or by 32% compared to the first
quarternine months of 1996. The increase was primarily due to approximately $1.1$4.7
million 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.expense as
a result of the hiring of additional sales and service personnel to support the
Company's continuing growth.
In connection with acquisition of certain assets of the PVD business
pertaining to the data storage of Materials Research Corporation in April 1997,
the Company expensed approximately $4.2 million during the nine months ended
September 30, 1997 representing the estimated fair values of in-process
engineering and development projects that had not reached technological
feasibility and had no future alternative uses. As previously noted above in
connection with the merger with Wyko Corporation, the Company incurred
approximately $2.3 million of merger related expenses during the nine months
ended September 30, 1997.
Operating income, including the effects of the one-time charges of
approximately $6.5 million described above increased to approximately $4.1$14.9
million or 14% of net sales for the first quarter ofnine months ended September 30, 1997 compared to approximately
$2.7$12.3 million or 13%
of net sales for the first quarter ofcomparable 1996 period, due to the above noted factors.
10
Income taxes for the first quarter ofnine months ended September 30, 1997 amounted to
approximately $1.6$5.8 million or 38%37.9 % of income before income taxes in 1997 as compared
to approximately $1.1$4.9 million or 37%38.0% of income before income taxes for the
same period in 1996.
8
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operations totaled approximately $4.7$5.6 million for both
the first threenine months of 1997 compared to approximately $.1 million for the
comparable 1997 period. This increase is reflective of an increase in net
income in 1997 of approximately $.8 million over the comparable 1996 period
coupled with favorable changes in operating assets and liabilities.
The Company1996. Veeco made capital expenditures of
approximately $1.3$4.1 million for the threenine months ended March 31,September 30, 1997, as compared to
approximately $.4$2.3 million in the comparable 1996 period. Capital expenditures in the first
nine months of 1997 principally reflect investments in building improvements,
laboratory tools and business information systems.
RelativeVeeco used approximately $4.4 million in cash during the nine months ended
September 30, 1997 to acquire the acquisition in April 1997net assets of the Media and Magnetics
Applications business of Materials Research Corporation, the Company believes
thatPVD business.
Veeco anticipates it will expend approximately $10$7 to $8 million of cash duringover the
last ninenext six months of 1997 for the purchase of thisto upgrade its existing manufacturing facilities and business
as well as for future
capital expendituresinformation systems and working capital requirements.to acquire a new manufacturing facility.
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.
911
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
A special meeting of stockholders of the Company was held on July 25,
1997. Matters voted upon at the meeting were as follows: (a) the proposed
merger of Veeco Acquisition Corp., a newly formed, wholly owned subsidiary of
Veeco, with and into Wyko Corporation pursuant to the Agreement and Plan of
Merger dated April 28, 1997; (b) an amendment to Veeco's Amended and Restated
Certificate of Incorporation, as amended; and (c) an amendment to the Veeco
Instruments Inc. Amended and Restated 1992 Employees' Stock Option Plan, as
amended. The votes of the Company's stockholders on these matters were as
follows:
MATTERS IN FAVOR OPPOSED ABSTAINED NON-VOTE
- ------ ---------- ---------- ----------- ----------
(a) 3,565,620 2,192 9,897 2,414,242
(b) 3,313,444 1,165,171 10,097 1,483,445
(c) 4,320,224 110,406 58,082 1,483,445
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits:
2 Agreement and Plan of Merger Among Veeco Instruments Inc., Veeco
Acquisition Corp. and Wyko Corporation and its Security Holders
dated April 28, 1997.Exhibits.
27 Financial Data Schedule of Veeco Instruments Inc. for the quarter
ended March 31, 1997.Schedule. Filed herein.
b) Reports on Form 8-K:8-K.
The Registrant filed a Current Report on Form 8-K dated March 13,on July 2, 1997 making
reference to Attachment 2 to the OEM Agreement for Acquisition of IBM Prducts
between International Business Machines Corporation and Veeco for the
development, marketing and sales of the SXM 200 M (manual), filed as an exhibit
thereto.
The Registrant filed a Current Report on Form 8-K on August 11, 1997
reporting that : (I)
the Registrant entered into a letter of intent with Wyko Corporation
pursuant to whichon July 25, 1997 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 of the Registrant and 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 announcinganouncing that it had
entered intocompleted a Memorandummerger with Wyko. Under the merger Wyko shareholders received
2,863,810 shares of Understanding with MRC Corporation pursuantVeeco common stock, and holders of options to which it is
contemplated that the Registrant will acquire certain assets and assume
certain liabilities relatingWyko
common stock received options to MRC's Media and Magnetics Applications
division in exchange for cash.
10acquire an aggregate of 136,190 shares of Veeco
common stock.
12
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: May 7,November 13, 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
1113
Exhibit Index
Exhibits:
27. Financial Data Schedule of Veeco Instruments Inc. for the quarterly
period ended September 30, 1997. Filed herein.