| Q2 GAAP Reconciliation 2007 2006 2007 2006 Operating (loss) income ($1,010) $5,607 $728 $7,246 Adjustments: Amortization expense 2,368 3,989 6,277 8,004 Restructuring expense 1,445 (1) - 1,445 (1) - Earnings before interest, income taxes and amortization excluding certain items ("EBITA") 2,803 9,596 8,450 15,250 Interest expense, net 772 1,149 1,591 2,527 Gain on extinguishment of debt - - (738) (2) (330) (3) Adjustment to exclude gain on extinguishment of debt - - 738 330 Earnings excluding certain items before income taxes 2,031 8,447 6,859 12,723 Income tax provision at 35% 711 2,956 2,401 4,453 Noncontrolling interest, net of income tax provision at 35% (149) - (233) - Earnings excluding certain items $1,469 $5,491 $4,691 $8,270 Earnings excluding certain items per diluted share $0.05 $0.18 $0.15 $0.27 Diluted weighted average shares outstanding 31,263 31,254 31,278 30,946 (1) During the second quarter of 2007, the Company incurred $1.4 million in expenses for personnel severance costs associated with its restructuring plan. (2) During the first quarter of 2007, the Company repurchased $56.0 million aggregate principal amount of its 4.125% convertible subordinated notes. As a result of these repurchases, the amount of convertible subordinated notes outstanding was reduced to $144.0 million, and the Company recorded a gain from the extinguishment of debt in the amount of $0.7 million. (3) During the first quarter of 2006, the Company repurchased $20.0 million aggregate principal amount of its 4.125% convertible subordinated notes. As a result of this repurchase, the amount of convertible subordinated notes outstanding was reduced to $200.0 million, and the Company recorded a gain from the extinguishment of debt in the amount of $0.3 million. NOTE - The above reconciliation is intended to present Veeco's operating results, excluding certain items and providing income taxes at a 35% statutory rate. This reconciliation is not in accordance with, or an alternative method for, generally accepted accounting principles in the United States, and may be different from similar measures presented by other companies. Management of the Company evaluates performance of its business units based on EBITA, which is the primary indicator used to plan and forecast future periods. The presentation of this financial measure facilitates meaningful comparison with prior periods, as management of the Company believes EBITA reports baseline performance and thus provides useful information. Veeco Instruments Inc. and Subsidiaries Reconciliation of operating (loss) income to earnings excluding certain items (In thousands, except per share data) (Unaudited) Three months ended Six months ended June 30, June 30, |