XNAS:VECO Veeco Instruments Inc Quarterly Report 10-Q Filing - 6/30/2012

Effective Date 6/30/2012

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 


 

FORM 10-Q

 

(Mark One)

 

x

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended June 30, 2012

 

OR

 

o

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from              to              .

 

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
Incorporation or Organization)

 

(I.R.S. Employer

Identification Number)

 

Terminal Drive
Plainview, New York

 

11803

(Address of Principal Executive Offices)

 

(Zip Code)

 

Registrant’s telephone number, including area code: (516) 677-0200

 

Website: www.veeco.com

 


 

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 No o

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

 

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer x

 

Accelerated filer o

 

 

 

Non-accelerated filer o
(Do not check if a Smaller reporting company)

 

Smaller reporting company o

 

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

 

39,156,634 shares of common stock, $0.01 par value per share, were outstanding as of the close of business on July 23, 2012.

 

 

 



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SAFE HARBOR STATEMENT

 

This Quarterly Report on Form 10-Q (the “Report”) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Discussions containing such forward-looking statements may be found in Part I. Items 2 and 3 hereof, as well as within this Report generally. In addition, when used in this Report, the words “believes,” “anticipates,” “expects,” “estimates,” “plans,” “intends” and similar expressions are intended to identify forward-looking statements. All forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from projected results. These risks and uncertainties include, without limitation, the following:

 

·                  Our operating results have been, and may continue to be, adversely affected by unfavorable market conditions;

 

·                  Market adoption of LED technology for general lighting could be slower than anticipated;

 

·                  Our failure to successfully manage our outsourcing activities or failure of our outsourcing partners to perform as anticipated could adversely affect our results of operations and our ability to adapt to fluctuating order volumes;

 

·                  The further reduction or elimination of foreign government subsidies and economic incentives may adversely affect the future order rate for our MOCVD equipment;

 

·                  Our operating results have been, and may continue to be, adversely affected by tightening credit markets;

 

·                  Our backlog is subject to customer cancellation or modification and such cancellation could result in decreased sales and increased provisions for excess and obsolete inventory and/or liabilities to our suppliers for products no longer needed;

 

·                  The failure to estimate customer demand accurately could result in excess or obsolete inventory and\or liabilities to our suppliers for products no longer needed, while manufacturing interruptions or delays could affect our ability to meet customer demand;

 

·                  The cyclicality of the industries we serve directly affects our business;

 

·                  We rely on a limited number of suppliers, some of whom are our sole source for particular components;

 

·                  Our sales to HB LED and data storage manufacturers are highly dependent on these manufacturers’ sales for consumer electronics applications, which can experience significant volatility due to seasonal and other factors, which could materially adversely impact our future results of operations;

 

·                  We are exposed to the risks of operating a global business, including the need to obtain export licenses for certain of our shipments and political risks in the countries we operate;

 

·                  The timing of our orders, shipments, and revenue recognition may cause our quarterly operating results to fluctuate significantly;

 

·                  We operate in industries characterized by rapid technological change;

 

·                  We face significant competition;

 

·                  We depend on a limited number of customers, located primarily in a limited number of regions, that operate in highly concentrated industries;

 

·                  Our sales cycle is long and unpredictable;

 

·                  Our inability to attract, retain, and motivate key employees could have a material adverse effect on our business;

 

·                  The price of our common shares may be volatile and could decline significantly;

 

·                  We are subject to foreign currency exchange risks;

 

·                  The enforcement and protection of our intellectual property rights may be expensive and could divert our limited resources;

 

·                  We may be subject to claims of intellectual property infringement by others;

 

·                  Our acquisition strategy subjects us to risks associated with evaluating and pursuing these opportunities and

 

2



Table of Contents

 

integrating these businesses;

 

·                  We may be required to take additional impairment charges for goodwill and indefinite-lived intangible assets or definite-lived intangible and long-lived assets;

 

·                  Changes in accounting pronouncements or taxation rules or practices may adversely affect our financial results.

 

·                  We are subject to internal control evaluations and attestation requirements of Section 404 of the Sarbanes-Oxley Act;

 

·                  We are subject to risks of non-compliance with environmental, health and safety regulations.

 

·                  We have significant operations in locations which could be materially and adversely impacted in the event of a natural disaster or other significant disruption;

 

·                  We have adopted certain measures that may have anti-takeover effects which may make an acquisition of our Company by another company more difficult; and

 

·                  The matters set forth in this Report generally, including the risk factors set forth in “Part 2. Item 1A. Risk Factors.”

 

Consequently, such forward-looking statements should be regarded solely as the Company’s current plans, estimates, and beliefs. The Company does not undertake any obligation to update any forward-looking statements to reflect future events or circumstances after the date of such statements.

 

Available Information

 

We file annual, quarterly and current reports, information statements and other information with the Securities and Exchange Commission (the “SEC”). The public may obtain information by calling the SEC at 1-800-SEC-0330. The SEC also maintains a website that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The address of that site is www.sec.gov.

 

Internet Address

 

We maintain a website where additional information concerning our business and various upcoming events can be found. The address of our website is www.veeco.com. We provide a link on our website, under Investors — Financial Information — SEC Filings, through which investors can access our filings with the SEC, including our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and all amendments to such reports. These filings are posted to our website, as soon as reasonably practicable after we electronically file such material with the SEC.

 

3



Table of Contents

 

VEECO INSTRUMENTS INC.

 

INDEX

 

 

Page

PART I. FINANCIAL INFORMATION

 

 

 

Item 1.

Financial Statements:

 

 

 

 

 

Condensed Consolidated Statements of Income and Comprehensive Income for the Three and Six Months Ended June 30, 2012 and 2011 (Unaudited)

5

 

 

 

 

Condensed Consolidated Balance Sheets as of June 30, 2012 (Unaudited) and December 31, 2011

6

 

 

 

 

Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2012 and 2011 (Unaudited)

7

 

 

 

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

8

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

17

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

29

 

 

 

Item 4.

Controls and Procedures

29

 

 

 

PART II. OTHER INFORMATION

 

 

 

 

Item 1.

Legal Proceedings

31

 

 

 

Item 1A.

Risk Factors

31

 

 

 

Item 6.

Exhibits

32

 

 

 

SIGNATURES

33

 

4



Table of Contents

 

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)

 

 

 

Three months ended

 

Six months ended

 

 

 

June 30,

 

June 30,

 

 

 

2012

 

2011

 

2012

 

2011

 

Net sales

 

$

136,547

 

$

264,815

 

$

276,456

 

$

519,491

 

Cost of sales

 

75,293

 

129,466

 

149,934

 

253,179

 

Gross profit

 

61,254

 

135,349

 

126,522

 

266,312

 

Operating expenses (income):

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

20,893

 

27,461

 

40,666

 

50,397

 

Research and development

 

23,910

 

23,652

 

47,216

 

43,523

 

Amortization

 

1,185

 

1,334

 

2,400

 

2,242

 

Restructuring

 

 

 

63

 

 

Other, net

 

146

 

(68

)

111

 

(28

)

Total operating expenses

 

46,134

 

52,379

 

90,456

 

96,134

 

Operating income

 

15,120

 

82,970

 

36,066

 

170,178

 

Interest (income) expense, net

 

(329

)

86

 

(532

)

1,385

 

Loss on extinguishment of debt

 

 

3,045

 

 

3,349

 

Income from continuing operations before income taxes

 

15,449

 

79,839

 

36,598

 

165,444

 

Income tax provision

 

4,438

 

23,521

 

9,125

 

51,147

 

Income from continuing operations

 

11,011

 

56,318

 

27,473

 

114,297

 

 

 

 

 

 

 

 

 

 

 

Discontinued operations:

 

 

 

 

 

 

 

 

 

Income (loss) from discontinued operations before income taxes

 

1,219

 

(59,698

)

1,138

 

(67,735

)

Income tax provision (benefit)

 

412

 

(22,586

)

381

 

(25,286

)

Income (loss) from discontinued operations

 

807

 

(37,112

)

757

 

(42,449

)

 

 

 

 

 

 

 

 

 

 

Net income

 

$

11,818

 

$

19,206

 

$

28,230

 

$

71,848

 

 

 

 

 

 

 

 

 

 

 

Income (loss) per common share:

 

 

 

 

 

 

 

 

 

Basic:

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

0.29

 

$

1.37

 

$

0.72

 

$

2.83

 

Discontinued operations

 

0.02

 

(0.90

)

0.02

 

(1.05

)

Income

 

$

0.31

 

$

0.47

 

$

0.74

 

$

1.78

 

Diluted :

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

0.28

 

$

1.31

 

$

0.71

 

$

2.67

 

Discontinued operations

 

0.02

 

(0.86

)

0.02

 

(0.99

)

Income

 

$

0.30

 

$

0.45

 

$

0.73

 

$

1.68

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

38,370

 

40,998

 

38,315

 

40,433

 

Diluted

 

38,988

 

43,002

 

38,925

 

42,780

 

 

Veeco Instruments Inc. and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income

(In thousands)

(Unaudited)

 

 

 

Three months ended

 

Six months ended

 

 

 

June 30,

 

June 30,

 

 

 

2012

 

2011

 

2012

 

2011

 

Net income

 

$

11,818

 

$

19,206

 

$

28,230

 

$

71,848

 

Other comprehensive (loss) income, net of tax

 

 

 

 

 

 

 

 

 

Unrealized (loss) gain on available-for-sale securities

 

(66

)

286

 

(184

)

349

 

Less: Reclassification adjustments for losses (gains) included in net income

 

1

 

(92

)

(9

)

(129

)

Net unrealized (loss) gain on available-for-sale securities

 

(65

)

194

 

(193

)

220

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation

 

244

 

686

 

(245

)

1,157

 

Comprehensive income

 

$

11,997

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