- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM 10-Q/A
AMENDMENT NO. 1 TO10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED JUNE 30, 1996MARCH 31,1997
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:
YesYES X No
--- ---
5,821,354NO
- -
5,871,959 shares of Common Stock $.01 par value, were outstanding as of
August
5, 1996.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------April 28, 1997.
The Registrant,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
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Veeco Instruments Inc.
(the "Company"), hereby amends its
Quarterlyand Subsidiaries
Condensed Consolidated Statements of Income
(In thousands, except per share data)
(Unaudited)
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
---------- ----------
---------- ----------
See accompanying notes.
3
Veeco Instruments Inc.
and Subsidiaries
Consolidated Balance Sheet
(Dollars in thousands)
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
----------- ------------
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)
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 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 months ended March 31, 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-Q (the "10-Q")10-K for the quarterly periodyear ended
June 30, 1996, filed withDecember 31, 1996.
Earnings per share is computed using the Securitiesweighted average number of common
and Exchange Commission on August 7,
1996, to file as Exhibit 27 thereto, a Financial Data Schedulecommon equivalent shares outstanding during the period.
NOTE 2--INVENTORIES
Interim inventories have been determined by lower 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 abovethree months ended March 31, 1997 and 1996 was
$15,000 and $83,000, respectively. The Company made income tax payments of
$103,000 and $308,000 for the three months ended March 31, 1997 and 1996,
respectively.
NOTE 5--SUBSEQUENT EVENTS
On April 28, 1997, the Company 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 semiconductor
industries providing for the merger of Veeco Acquisition Corporation, a
wholly owned subsidiary of the Company, 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 a purchase price including cash plus assumption of certain liabilities.
7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations
Three Months Ended March 31, 1997 Compared to the Three Months Ended
March 31, 1996
Net sales for three months ended March 31, 1997 increased by approximately
$8.9 million or 43% over the comparable 1996 period. The increase principally
reflects continuing growth in Ion Beam System sales.
Sales of Ion Beam Systems for the first quarter of 1997 of approximately
$17.9 million increased by approximately $8.3 million or 86% over the
comparable period in accordance with Item 601(c)1996, driven principally by increased demand from the
data storage industry for high density hard drives. Sales of Regulation S - K and Rule 401Surface
Metrology products for the first quarter of Regulation S - T.
In addition,1997 of approximately $6.6
million increased by approximately $.9 million or 16% over the electronic versioncomparable
1996 period, reflecting increased SXM product sales as a result of the
10-Q containedsemiconductor industry's investment in next generation sub-0.35 micron and
smaller-featured device production. Sales of Industrial Measurement
products for the first quarter of 1997 of approximately $5.0 million
decreased by approximately $.3 million or 6% compared to the comparable
period in 1996, as the result of a typographical errordecrease in leak detection equipment sales.
The Company booked approximately $31.4 million of orders in the Consolidated Balance Sheet set forth therein;quarter
compared to approximately $25.4 million of orders in the captions setting forthfirst quarter of
1996, reflecting both the datesincreased demand for high density hard drives and
the continued industry transition to the next generation MR thin film
magnetic heads and increasing orders for SXM products.
Gross profit for the first quarter of 1997 of approximately $12.9 million
represents an increase of approximately $3.7 million or 40% over the
comparable 1996 period. Gross profit as a percentage of net sales decreased
to 43.7% in 1997 from 44.6% in 1996. This decline was principally due to
changes in product mix.
Research and development expense in the first quarter of 1997 increased by
approximately $.9 million or by 47% compared to the first quarter of 1996,
principally driven by the increased R&D investment in Ion Beam Systems.
Selling, general and administrative expenses increased by approximately $1.4
million or by 32% compared to the first quarter of 1996. The increase was
primarily due to approximately $1.1 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.
Operating income increased to approximately $4.1 million or 14% of net sales
for the first quarter of 1997 compared to approximately $2.7 million or 13%
of net sales for the first quarter of 1996, due to the above noted factors.
Income taxes for the first quarter of 1997 amounted to approximately $1.6
million or 38% of income before income taxes in 1997 as compared to
approximately $1.1 million or 37% of income before taxes for the same period
in 1996.
8
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operations totaled approximately $4.7 million for the
first three 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 Company made capital expenditures of approximately $1.3 million for the
three months ended March 31, 1997, as compared to approximately $.4 million
in the comparable 1996 period. Capital expenditures in 1997 principally
reflect investments in building improvements, laboratory tools and business
information systems.
Relative to the acquisition in April 1997 of the Balance Sheet information mistakenly
read "June 30, 1995"Media and "December 31, 1996" insteadMagnetics
Applications business of "June 30, 1996" and
"December 31, 1995". Accordingly,Materials Research Corporation, the Company hereby amendsbelieves
that it will expend approximately $10 million of cash during the electronic
versionlast nine
months of 1997 for the 10-Qpurchase of this business, as well as for future
capital expenditures and working capital requirements.
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 correct such captions to read "June 30, 1996"meet the Company's projected working capital
and "December 31, 1995".
[Intentionally left blank]
-2-other cash flow requirements for the foreseeable future.
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)April 28, 1997.
27 Financial Data Schedule of Veeco Instruments Inc. for the quarterly periodquarter
ended June 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)
(1) Item previously filed with Veeco Instruments Inc. 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.
(*) Item filed with this Amendment No. 1.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 21, 1996May 7, 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
INDEX TO EXHIBITS
Exhibit No. Document
- ----------- --------
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 June 30, 1996. (*)
(1) Item previously filed with Veeco Instruments Inc. Quarterly
Report on Form 10-Q for the quarterly period ended
June 30, 1996.
(*) Item filed with this Amendment No. 1.11