Veeco: Fiscal 4Q07 Financial Results

Veeco Instruments Inc. announced its financial
results for the fourth quarter and year ended December 31, 2007. Veeco
reports its results on a generally accepted accounting principles (“GAAP”)
basis, and also provides results excluding certain items. Investors
should refer to the attached table for further details of the
reconciliation of GAAP operating (loss) income to earnings excluding
certain items.

Fourth Quarter 2007 Highlights

• Revenue was $106.8 million, in line with Veeco’s
  guidance of $104-$112 million;
• Bookings were $114.9 million, at the high end of Veeco’s
  guidance of $105-$115 million;
• Net loss was ($9.4) million, or ($0.30) per share, compared to net
  income of $7.6 million, or $0.24 per share, last year. The current
  quarter net loss includes restructuring and other charges of $10.6
  million;
• Veeco’s earnings per share, excluding
  certain items, was $0.07 compared to earnings per share of $0.29 last
  year, ahead of Veeco’s guidance of
  $0.00-$0.06 per share.

John R. Peeler, Veeco’s Chief Executive
Officer commented, “Veeco’s
revenues of $106.8 million were in line with our guidance, representing
a decrease of 13% compared to the prior year fourth quarter but a
sequential increase of 9%. We are pleased that fourth quarter bookings,
at $114.9 million, were at the high end of our guidance. We received
orders of over $40 million from HB-LED/wireless and solar customers for
our metal organic chemical vapor deposition (MOCVD) systems and thermal
deposition sources. Veeco’s fourth quarter
data storage orders of $36 million were flat sequentially.”

“During the fourth quarter, Veeco made
significant progress on our profit improvement programs,”
continued Mr. Peeler. “We completed a 7.5%
reduction in force, representing an annualized savings of nearly $12
million. We are on track to consolidate corporate headquarters into our
Plainview, NY site, which we anticipate will save $1.8 million annually.
In addition, we have right-sized our data storage businesses, including
the discontinuation of two products and consolidation of our Fremont, CA
R&D center into Plainview, representing another $1.3 million of annual
savings. Veeco remains committed to our data storage customers and will
focus our R&D and engineering expenditures on specific products aligned
to their technology needs and transition to larger wafer sizes. While we
will continue to rigorously focus on cost-containment activities, we are
investing in our global field sales and service organization,
strengthening our management team, and aligning our R&D spending to
growth opportunities in LED, solar and nanotechnology.”

Fourth Quarter 2007 Summary

Veeco’s revenue for the fourth quarter of
2007 was $106.8 million, compared to $123.1 million in the fourth
quarter of 2006. Fourth quarter 2007 operating loss was ($8.6) million,
which includes the previously noted $10.6 million in restructuring and
other charges, compared with operating income of $10.2 million in the
fourth quarter of 2006. Veeco’s fourth
quarter 2007 earnings before interest, taxes and amortization excluding
certain charges (EBITA) was $4.1 million, compared to $14.3 million last
year. Fourth quarter net loss was ($9.4) million, or ($0.30) per share,
compared to net income of $7.6 million, or $0.24 per share, in the
fourth quarter of 2006. Excluding $10.6 million in charges for
severance, as well as asset impairment and inventory write-offs related
to discontinued product lines in 2007, and excluding amortization
expenses and using a 35% tax rate in both periods, fourth quarter 2007
earnings per share were $0.07 compared to $0.29 in 2006. Veeco’s
fourth quarter 2007 bookings were $114.9 million compared to $109.1
million last year. Veeco recorded $16.2 million in backlog cancellations
during the fourth quarter, primarily relating to certain discontinued
data storage products.

2007 Summary

Veeco’s 2007 revenue was $402.5 million,
compared to $441.0 million last year, and the Company’s
2007 operating loss was ($12.1) million compared with operating income
of $22.5 million in 2006. Veeco’s 2007 EBITA
was $10.8 million, compared to $39.7 million last year. 2007 net loss
was ($17.4) million, or ($0.56) per share, compared to net income of
$14.9 million, or $0.48 per share in 2006. Excluding certain charges and
gains as well as amortization expense, and using a 35% tax rate in both
periods, 2007 earnings were $0.17 per share, compared to $0.75 per share
in 2006. Veeco’s 2007 bookings were $451.6
million compared to $493.8 million last year.

Outlook

The Company forecasts first quarter 2008 revenues to be in the range of
$98-$105 million. Veeco’s loss per share is
currently forecasted to be between ($0.19) –
($0.09) on a GAAP basis, and earnings per share are currently forecasted
to be between $0.00 to $0.06 on a non-GAAP basis (excluding amortization
of $2.0 million and restructuring charges of $3.6 million, using a 35%
tax rate). As previously announced, the Company expects to
incur restructuring charges principally related to the
consolidation of its corporate headquarters in the first quarter. The
range for these charges is $3.5 million to $4.0 million. ($3.6
million is the current estimate of these charges). Veeco currently
expects that its first quarter 2008 bookings will be $105-$112 million.

Mr. Peeler commented, “As we have previously
stated, the first half of 2008 will start off slowly. We expect 2008 to
be a recovery year for Veeco in terms of growth and profitability. While
we always face unpredictability in our served markets, our 2008 goal is
for revenue growth at a minimum of 10% and for operating spending to
decline as a percentage of sales. While we are cautious about
macro-economic issues, we are currently experiencing positive growth
trends for Veeco’s MOCVD and MBE technologies
in the HB-LED/wireless market, as well as early penetration in solar
applications. In data storage, Veeco is well-aligned with our customers’
technology requirements, and focused on improving profitability in 2008.
We also anticipate strength in the scientific research/industrial market
to continue, driven by several new instrumentation products. While
softness in the semiconductor market continues, our newly launched
InSight 3DAFM offers Veeco opportunities for
growth.”

Veeco Instruments Inc.