- 17 February 2006 -

Strong Q4 and year-end results for Veeco

Veeco Instruments Inc has announced its financial results for the fourth quarter and year-ended December 31, 2005.

Amongst the Q4 highlights were revenues of $112.8 m, up 10% from the prior year fourth quarter and up 13% from the third quarter of 2005. Fourth quarter operating income was $6.7 m, compared with an operating loss of ($6.7) m in the fourth quarter of 2004. In addition, bookings were $102.7 m, up 4% from the prior year fourth quarter, up 22% from the third quarter of 2005 and above Veeco's guidance of $90-100 m; net income was $2.7 m.

For the full year, 2005, Veeco reported revenues of $410.2 m compared to 2004 revenues of $390.4 m. 2005 operating income was $11.1 m, compared with an operating loss of ($11.6) m in 2004.

Edward H. Braun, Veeco's Chairman and CEO, commented, "We are pleased to report strong fourth quarter results, with revenue, orders and EBITA all above prior year, prior quarter and guidance. Fourth quarter orders increased 22% from the third quarter of 2005, indicative of improved market conditions entering 2006.

"Our continued focus on operational improvements and cost control resulted in a doubling of EBITA on a 5% increase in revenue for 2005, while gross margins increased to 42.4% from 39.4% in the prior year. Our focus on operational excellence has led to the generation of $44.9 m in cash from operations and a $21.7 m reduction in inventory during 2005. We will continue our initiatives to improve margins, balance sheet and cash performance, and overall increased shareholder value."

Regarding Veeco's outlook for 2006, Mr. Braun added, "We enter 2006 with improved market conditions in our core markets (data storage, HB-LED, semiconductor and scientific research) and with significant new product introductions expected from both our Process Equipment and Metrology business units. Based upon this positive environment, we currently forecast that Veeco's revenues will increase 8-10% in 2006, providing significant growth in earnings. We currently expect revenues and earnings to be greater in the second half of 2006 than the first half of the year due to the significant number of new product introductions, specifically those developed for the data storage, HB-LED and scientific research/ nano-bio markets.

"Veeco will also continue to focus on increasing shareholder value through operational excellence and cash generation. We are pleased with our 2005 improvement in gross margins and our goal is to increase gross margins again by 2-3% in the second half of 2006, with improvements in both Process Equipment and Metrology. This progress will continue to come from activities such as better supply chain management, including outsourcing of new higher gross margin products, and development of common hardware and software platforms."

Web: http://www.veeco.com