EX-99.1 2 ex-99d1.htm EX-99.1

EXHIBIT 99.1

VEECO REPORTS FOURTH QUARTER AND FISCAL YEAR 2019 FINANCIAL RESULTS

Fourth Quarter 2019 Highlights:

| · |  | Revenues of $113.2 million, compared with $99.0 million in the same period last year

| · |  | GAAP net loss of $32.9 million, or $0.69 loss per diluted share

| · |  | Non-GAAP net income of $5.4 million, or $0.11 per diluted share

Plainview, N.Y., February 13, 2020 -- Veeco Instruments Inc. (Nasdaq: VECO) today announced financial results for its fourth quarter and fiscal year ended December 31, 2019. Results are reported in accordance with U.S. generally accepted accounting principles (“GAAP”) and are also reported adjusting for certain items (“Non-GAAP”). A reconciliation between GAAP and Non-GAAP operating results is provided at the end of this press release.

U.S. Dollars in millions, except per share data

|  | 4th Quarter |  | Full Year
GAAP Results |  | Q4 '19 |  | Q4 '18 |  | 2019 |  | 2018
Revenue |  | $ | 113.2 |  | $ | 99.0 |  | $ | 419.3 |  | $ | 542.1
Net income (loss) |  | $ | (32.9) |  | $ | (144.7) |  | $ | (78.7) |  | $ | (407.1)
Diluted earnings (loss) per share |  | $ | (0.69) |  | $ | (3.11) |  | $ | (1.66) |  | $ | (8.63)

|  | 4th Quarter |  | Full Year
Non-GAAP Results |  | Q4 '19 |  | Q4 '18 |  | 2019 |  | 2018
Net income (loss) |  | $ | 5.4 |  | $ | (7.5) |  | $ | (1.3) |  | $ | 14.2
Operating income (loss) |  | $ | 7.4 |  | $ | (6.9) |  | $ | 5.1 |  | $ | 23.2
Diluted earnings (loss) per share |  | $ | 0.11 |  | $ | (0.16) |  | $ | (0.03) |  | $ | 0.30

“We executed well on the first phase of our transformation in 2019 by improving gross margins and reducing expenses, leading to a return to profitability in the second half of the year. Our data storage business continued its solid performance. Furthermore, we are positioning the company for long-term growth in the front-end semiconductor, advanced packaging and compound semiconductor markets by executing on our product roadmaps,” commented William J. Miller, Ph.D., Chief Executive Officer.

“As we enter 2020, we are focused on optimizing our product portfolio, extending our core technologies into new markets, and further increasing our profitability,” concluded Dr. Miller.

1

Guidance and Outlook

The following guidance is provided for Veeco’s first quarter 2020:

| · |  | Revenue is expected to be in the range of $95 million to $120 million

| · |  | GAAP loss per share is expected to be in the range of ($0.24) to ($0.01)

| · |  | Non-GAAP earnings per share is expected to be in the range of $0.00 to $0.22

Please refer to the tables at the end of this press release for further details.

Conference Call Information

A conference call reviewing these results has been scheduled for today, February 13, 2020 starting at 4:30pm ET. To join the call, dial 1-888-394-8218 (toll free) or 1-646-828-8193 and use passcode 3039225. Participants may also access a live webcast of the call by visiting the investor relations section of Veeco's website at ir.veeco.com. A replay of the webcast will be made available on the Veeco website that evening. We will post an accompanying slide presentation to our website prior to the beginning of the call.

About Veeco

Veeco (NASDAQ: VECO) is an innovative manufacturer of semiconductor process equipment. Our proven ion beam, laser annealing, lithography, MOCVD, and single wafer etch & clean technologies play an integral role in the fabrication and packaging of advanced semiconductor devices. With equipment designed to optimize performance, yield and cost of ownership, Veeco holds leading technology positions in the markets we serve. To learn more about Veeco’s systems and service offerings, visit www.veeco.com.

Forward-looking Statements

To the extent that this news release discusses expectations or otherwise makes statements about the future, such statements are forward-looking and are subject to a number of risks and uncertainties that could cause actual results to differ materially from the statements made. These factors include the risks discussed in the Business Description and Management's Discussion and Analysis sections of Veeco's Annual Report on Form 10-K for the year ended December 31, 2018 and in our subsequent quarterly reports on Form 10-Q, current reports on Form 8-K and press releases. Veeco does not undertake any obligation to update any forward-looking statements to reflect future events or circumstances after the date of such statements.

-financial tables attached-

Veeco Contacts:

Investors: Media:

Anthony Bencivenga (516) 252-1438 Kevin Long (516) 714-3978

abencivenga@veeco.com klong@veeco.com

2

Veeco Instruments Inc. and Subsidiaries
Condensed Consolidated Statements of Operations

(in thousands, except per share amounts)
(unaudited)

|  | Three months ended December 31, |  | Year ended December 31, |
|  | 2019 |  | 2018 |  | 2019 |  | 2018 |
Net sales |  | $ | 113,202 |  | $ | 98,972 |  | $ | 419,349 |  | $ | 542,082 |
Cost of sales |  |  | 68,232 |  |  | 63,713 |  |  | 261,155 |  |  | 348,363 |
Gross profit |  |  | 44,970 |  |  | 35,259 |  |  | 158,194 |  |  | 193,719 |
Operating expenses, net: |  |  |  |  |  |  |  |  |  |  |  |  |
Research and development |  |  | 21,655 |  |  | 24,962 |  |  | 90,557 |  |  | 97,755 |
Selling, general, and administrative |  |  | 19,128 |  |  | 21,218 |  |  | 79,749 |  |  | 92,060 |
Amortization of intangible assets |  |  | 4,312 |  |  | 4,249 |  |  | 17,085 |  |  | 32,351 |
Restructuring |  |  | 2,529 |  |  | 887 |  |  | 6,403 |  |  | 8,556 |
Acquisition costs |  |  | — |  |  | 53 |  |  | — |  |  | 2,959 |
Asset impairment |  |  | 4,020 |  |  | 122,829 |  |  | 4,020 |  |  | 375,172 |
Other operating expense (income), net |  |  | 190 |  |  | 42 |  |  | (42) |  |  | 368 |
Total operating expenses, net |  |  | 51,834 |  |  | 174,240 |  |  | 197,772 |  |  | 609,221 |
Operating income (loss) |  |  | (6,864) |  |  | (138,981) |  |  | (39,578) |  |  | (415,502) |
Interest expense, net |  |  | (4,663) |  |  | (4,485) |  |  | (17,405) |  |  | (18,332) |
Other income (expense), net |  |  | (20,973) |  |  | — |  |  | (20,973) |  |  | — |
Income (loss) before income taxes |  |  | (32,500) |  |  | (143,466) |  |  | (77,956) |  |  | (433,834) |
Income tax expense (benefit) |  |  | 371 |  |  | 1,208 |  |  | 777 |  |  | (26,746) |
Net income (loss) |  | $ | (32,871) |  | $ | (144,674) |  | $ | (78,733) |  | $ | (407,088) |
Income (loss) per common share: |  |  |  |  |  |  |  |  |  |  |  |  |
Basic |  | $ | (0.69) |  | $ | (3.11) |  | $ | (1.66) |  | $ | (8.63) |
Diluted |  | $ | (0.69) |  | $ | (3.11) |  | $ | (1.66) |  | $ | (8.63) |
Weighted average number of shares: |  |  |  |  |  |  |  |  |  |  |  |  |
Basic |  |  | 47,519 |  |  | 46,551 |  |  | 47,482 |  |  | 47,151 |
Diluted |  |  | 47,519 |  |  | 46,551 |  |  | 47,482 |  |  | 47,151 |

3

Veeco Instruments Inc. and Subsidiaries
Condensed Consolidated Balance Sheets

(in thousands)

|  | December 31, |  | December 31,
|  | 2019 |  | 2018
Assets |  |  |  |  |  |
Current assets: |  |  |  |  |  |
Cash and cash equivalents |  | $ | 129,294 |  | $ | 212,273
Restricted cash |  |  | 657 |  |  | 809
Short-term investments |  |  | 115,252 |  |  | 48,189
Accounts receivable, net |  |  | 45,666 |  |  | 66,808
Contract assets |  |  | 25,351 |  |  | 10,397
Inventories |  |  | 133,067 |  |  | 156,311
Deferred cost of sales |  |  | 445 |  |  | 3,072
Prepaid expenses and other current assets |  |  | 14,966 |  |  | 22,221
Assets held for sale |  |  | 11,180 |  |  | —
Total current assets |  |  | 475,878 |  |  | 520,080
Property, plant and equipment, net |  |  | 75,711 |  |  | 80,284
Operating lease right-of-use assets |  |  | 14,453 |  |  | —
Intangible assets, net |  |  | 61,518 |  |  | 85,149
Goodwill |  |  | 181,943 |  |  | 184,302
Deferred income taxes |  |  | 1,549 |  |  | 1,869
Other assets |  |  | 7,036 |  |  | 29,132
Total assets |  | $ | 818,088 |  | $ | 900,816
Liabilities and stockholders’ equity |  |  |  |  |  |
Current liabilities: |  |  |  |  |  |
Accounts payable |  | $ | 21,281 |  | $ | 39,611
Accrued expenses and other current liabilities |  |  | 41,243 |  |  | 46,450
Customer deposits and deferred revenue |  |  | 54,870 |  |  | 72,736
Income taxes payable |  |  | 830 |  |  | 1,256
Total current liabilities |  |  | 118,224 |  |  | 160,053
Deferred income taxes |  |  | 5,648 |  |  | 5,690
Long-term debt |  |  | 300,068 |  |  | 287,392
Operating lease long-term liabilities |  |  | 10,300 |  |  | —
Other liabilities |  |  | 9,336 |  |  | 9,906
Total liabilities |  |  | 443,576 |  |  | 463,041
Total stockholders’ equity |  |  | 374,512 |  |  | 437,775
Total liabilities and stockholders’ equity |  | $ | 818,088 |  | $ | 900,816

4

Veeco Instruments Inc. and Subsidiaries
Reconciliation of GAAP to Non-GAAP Financial Data

(in thousands, except per share amounts)
(unaudited)

|  |  |  |  | Non-GAAP Adjustments |  |  |  |
|  |  |  |  | Share-Based |  |  |  |  |  |  |  |
Three months ended December 31, 2019 |  | GAAP |  | Compensation |  | Amortization |  | Other |  | Non-GAAP |
Net sales |  | $ | 113,202 |  |  |  |  |  |  |  | $ | 113,202 |
Gross profit |  |  | 44,970 |  | 455 |  |  |  | 29 |  |  | 45,454 |
Gross margin |  |  | 39.7 | % |  |  |  |  |  |  |  | 40.2 | %
Operating expenses |  |  | 51,834 |  | (3,287) |  | (4,312) |  | (6,213) |  |  | 38,022 |
Operating income (loss) |  |  | (6,864) |  | 3,742 |  | 4,312 |  | 6,242 | ^ |  | 7,432 |
Net income (loss) |  |  | (32,871) |  | 3,742 |  | 4,312 |  | 30,262 | ^ |  | 5,445 |
Income (loss) per common share: |  |  |  |  |  |  |  |  |  |  |  |  |
Basic |  | $ | (0.69) |  |  |  |  |  |  |  | $ | 0.11 |
Diluted |  |  | (0.69) |  |  |  |  |  |  |  |  | 0.11 |
Weighted average number of shares: |  |  |  |  |  |  |  |  |  |  |  |  |
Basic |  |  | 47,519 |  |  |  |  |  |  |  |  | 47,525 |
Diluted |  |  | 47,519 |  |  |  |  |  |  |  |  | 48,404 |

^- See table below for additional details.

Veeco Instruments Inc. and Subsidiaries

Other Non-GAAP Adjustments

(in thousands)
(unaudited)

Three months ended December 31, 2019 |  |
Restructuring |  | 2,132
Asset Impairment |  | 4,020
Depreciation of PP&E fair value step-up associated with the Ultratech purchase accounting |  | 90
Subtotal |  | 6,242
Non-cash interest expense |  | 3,257
Impairment of equity investments |  | 20,973
Non-GAAP tax adjustment * |  | (210)
Total Other |  | 30,262

*- The ‘with or without’ method is utilized to determine the income tax effect of all Non-GAAP adjustments.

These tables include financial measures adjusted for the impact of certain items; these financial measures are therefore not calculated in accordance with U.S. generally accepted accounting principles (“GAAP”). These Non-GAAP financial measures exclude items such as: share-based compensation expense; charges relating to restructuring initiatives; non-cash asset impairments; certain other non-operating gains and losses; and acquisition-related items such as transaction costs, non-cash amortization of acquired intangible assets, and certain integration costs.

These Non-GAAP financial measures may be different from Non-GAAP financial measures used by other companies. Non-GAAP financial measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. By excluding these items, Non-GAAP financial measures are intended to facilitate meaningful comparisons to historical operating results, competitors’ operating results, and estimates made by securities analysts. Management is evaluated on key performance metrics including Non-GAAP Operating income (loss), which is used to determine management incentive compensation as well as to forecast future periods. These Non-GAAP financial measures may be useful to investors in allowing for greater transparency of supplemental information used by management in its financial and operational decision-making. In addition, similar Non-GAAP financial measures have historically been reported to investors; the inclusion of comparable numbers provides consistency in financial reporting. Investors are encouraged to review the reconciliation of the Non-GAAP financial measures used in this news release to their most directly comparable GAAP financial measures.

5

Veeco Instruments Inc. and Subsidiaries

Reconciliation of GAAP to Non-GAAP Financial Data

(in thousands, except per share amounts)
(unaudited)

|  |  |  |  | Non-GAAP Adjustments |  |  |  |
|  |  |  |  | Share-based |  |  |  |  |  |  |
Three months ended December 31, 2018 |  |  | GAAP |  | Compensation |  | Amortization |  | Other |  | Non-GAAP |
Net sales |  | $ | 98,972 |  |  |  |  |  |  |  | $ | 98,972 |
Gross profit |  |  | 35,259 |  | 282 |  |  |  | 134 |  |  | 35,675 |
Gross margin |  |  | 35.6 | % |  |  |  |  |  |  |  | 36.0 | %
Operating expenses |  |  | 174,240 |  | (3,071) |  | (4,249) |  | (124,327) |  |  | 42,593 |
Operating income (loss) |  |  | (138,981) |  | 3,353 |  | 4,249 |  | 124,461 | ^ |  | (6,918) |
Net income (loss) |  |  | (144,674) |  | 3,353 |  | 4,249 |  | 129,532 | ^ |  | (7,540) |
Income (loss) per common share: |  |  |  |  |  |  |  |  |  |  |  |  |
Basic |  | $ | (3.11) |  |  |  |  |  |  |  | $ | (0.16) |
Diluted |  |  | (3.11) |  |  |  |  |  |  |  |  | (0.16) |
Weighted average number of shares: |  |  |  |  |  |  |  |  |  |  |  |  |
Basic |  |  | 46,551 |  |  |  |  |  |  |  |  | 46,551 |
Diluted |  |  | 46,551 |  |  |  |  |  |  |  |  | 46,551 |

^- See table below for additional details.

Veeco Instruments Inc. and Subsidiaries

Other Non-GAAP Adjustments

(in thousands)
(unaudited)

Three months ended December 31, 2018 |  |
Restructuring |  | 722
Acquisition related |  | 53
Asset impairment |  | 122,829
Release of inventory fair value step-up associated with the Ultratech purchase accounting |  | 70
Depreciation of PP&E fair value step-up associated with the Ultratech purchase accounting |  | 190
Accelerated depreciation |  | 597
Subtotal |  | 124,461
Non-cash interest expense |  | 3,023
Non-GAAP tax adjustment * |  | 2,048
Total Other |  | 129,532

*- The ‘with or without’ method is utilized to determine the income tax effect of all Non-GAAP adjustments.

These tables include financial measures adjusted for the impact of certain items; these financial measures are therefore not calculated in accordance with U.S. generally accepted accounting principles (“GAAP”). These Non-GAAP financial measures exclude items such as: share-based compensation expense; charges relating to restructuring initiatives; non-cash asset impairments; certain other non-operating gains and losses; and acquisition-related items such as transaction costs, non-cash amortization of acquired intangible assets, and certain integration costs.

These Non-GAAP financial measures may be different from Non-GAAP financial measures used by other companies. Non-GAAP financial measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. By excluding these items, Non-GAAP financial measures are intended to facilitate meaningful comparisons to historical operating results, competitors’ operating results, and estimates made by securities analysts. Management is evaluated on key performance metrics including Non-GAAP Operating income (loss), which is used to determine management incentive compensation as well as to forecast future periods. These Non-GAAP financial measures may be useful to investors in allowing for greater transparency of supplemental information used by management in its financial and operational decision-making. In addition, similar Non-GAAP financial measures have historically been reported to investors; the inclusion of comparable numbers provides consistency in financial reporting. Investors are encouraged to review the reconciliation of the Non-GAAP financial measures used in this news release to their most directly comparable GAAP financial measures.

6

Veeco Instruments Inc. and Subsidiaries

Reconciliation of GAAP Net Income (loss) to Non-GAAP Operating Income (loss)

(in thousands)
(unaudited)

|  | Three months ended |  | Three months ended
|  | December 31, 2019 |  | December 31, 2018
GAAP Net income (loss) |  | $ | (32,871) |  | $ | (144,674)
Share-based compensation |  |  | 3,742 |  |  | 3,353
Amortization |  |  | 4,312 |  |  | 4,249
Restructuring |  |  | 2,132 |  |  | 722
Acquisition related |  |  | — |  |  | 53
Asset impairment |  |  | 4,020 |  |  | 122,829
Release of inventory fair value step-up associated with the Ultratech purchase accounting |  |  | — |  |  | 70
Depreciation of PP&E fair value step-up associated with the Ultratech purchase accounting |  |  | 90 |  |  | 190
Accelerated depreciation |  |  | — |  |  | 597
Interest (income) expense, net |  |  | 4,663 |  |  | 4,485
Impairment of equity investments |  |  | 20,973 |  |  | —
Income tax expense (benefit) |  |  | 371 |  |  | 1,208
Non-GAAP Operating income (loss) |  | $ | 7,432 |  | $ | (6,918)

This table includes financial measures adjusted for the impact of certain items; these financial measures are therefore not calculated in accordance with U.S. generally accepted accounting principles (“GAAP”). These Non-GAAP financial measures exclude items such as: share-based compensation expense; charges relating to restructuring initiatives; non-cash asset impairments; certain other non-operating gains and losses; and acquisition-related items such as transaction costs, non-cash amortization of acquired intangible assets, and certain integration costs.

These Non-GAAP financial measures may be different from Non-GAAP financial measures used by other companies. Non-GAAP financial measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. By excluding these items, Non-GAAP financial measures are intended to facilitate meaningful comparisons to historical operating results, competitors’ operating results, and estimates made by securities analysts. Management is evaluated on key performance metrics including Non-GAAP Operating income (loss), which is used to determine management incentive compensation as well as to forecast future periods. These Non-GAAP financial measures may be useful to investors in allowing for greater transparency of supplemental information used by management in its financial and operational decision-making. In addition, similar Non-GAAP financial measures have historically been reported to investors; the inclusion of comparable numbers provides consistency in financial reporting. Investors are encouraged to review the reconciliation of the Non-GAAP financial measures used in this news release to their most directly comparable GAAP financial measures.

7

Veeco Instruments Inc. and Subsidiaries

Reconciliation of GAAP to Non-GAAP Financial Data

(in thousands, except per share amounts)

(unaudited)

|  |  |  |  | Non-GAAP Adjustments |  |  |  |
|  |  |  |  | Share-based |  |  |  |  |  |  |
For the year ended December 31, 2019 |  |  | GAAP |  | Compensation |  | Amortization |  | Other |  | Non-GAAP |
Net sales |  | $ | 419,349 |  |  |  |  |  |  |  | $ | 419,349 |
Gross profit |  |  | 158,194 |  | 1,903 |  |  |  | 1,453 |  |  | 161,550 |
Gross margin |  |  | 37.7 | % |  |  |  |  |  |  |  | 38.5 | %
Operating expenses |  |  | 197,772 |  | (13,367) |  | (17,085) |  | (10,841) |  |  | 156,479 |
Operating income (loss) |  |  | (39,578) |  | 15,270 |  | 17,085 |  | 12,294 | ^ |  | 5,071 |
Net income (loss) |  |  | (78,733) |  | 15,270 |  | 17,085 |  | 45,102 | ^ |  | (1,276) |
Income (loss) per common share: |  |  |  |  |  |  |  |  |  |  |  |  |
Basic |  | $ | (1.66) |  |  |  |  |  |  |  | $ | (0.03) |
Diluted |  |  | (1.66) |  |  |  |  |  |  |  |  | (0.03) |
Weighted average number of shares: |  |  |  |  |  |  |  |  |  |  |  |  |
Basic |  |  | 47,482 |  |  |  |  |  |  |  |  | 47,482 |
Diluted |  |  | 47,482 |  |  |  |  |  |  |  |  | 47,482 |

^- See table below for additional details.

Veeco Instruments Inc. and Subsidiaries

Other Non-GAAP Adjustments

(in thousands)

(unaudited)

For the year ended December 31, 2019 |  |
Restructuring |  | 6,006
Asset impairment |  | 4,020
Release of inventory fair value step-up associated with the Ultratech purchase accounting |  | 1,270
Depreciation of PP&E fair value step-up associated with the Ultratech purchase accounting |  | 557
Accelerated depreciation |  | 397
Other |  | 44
Subtotal |  | 12,294
Non-cash interest expense |  | 12,676
Impairment of equity investments |  | 20,973
Non-GAAP tax adjustment * |  | (841)
Total Other |  | 45,102

* - The 'with or without' method is utilized to determine the income tax effect of all non-GAAP adjustments.

These tables include financial measures adjusted for the impact of certain items; these financial measures are therefore not calculated in accordance with U.S. generally accepted accounting principles (“GAAP”). These Non-GAAP financial measures exclude items such as: share-based compensation expense; charges relating to restructuring initiatives; non-cash asset impairments; certain other non-operating gains and losses; and acquisition-related items such as transaction costs, non-cash amortization of acquired intangible assets, and certain integration costs.

These Non-GAAP financial measures may be different from Non-GAAP financial measures used by other companies. Non-GAAP financial measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. By excluding these items, Non-GAAP financial measures are intended to facilitate meaningful comparisons to historical operating results, competitors' operating results, and estimates made by securities analysts. Management is evaluated on key performance metrics including Non-GAAP Operating Income (loss), which is used to determine management incentive compensation as well as to forecast future periods. These Non-GAAP financial measures may be useful to investors in allowing for greater transparency of supplemental information used by management in its financial and operational decision-making. In addition, similar Non-GAAP financial measures have historically been reported to investors; the inclusion of comparable numbers provides consistency in financial reporting. Investors are encouraged to review the reconciliation of the Non-GAAP financial measures used in this news release to their most directly comparable GAAP financial measures.

8

Veeco Instruments Inc. and Subsidiaries

Reconciliation of GAAP to Non-GAAP Financial Data

(in thousands, except per share amounts)

(unaudited)

|  |  |  |  | Non-GAAP Adjustments |  |  |  |
|  |  |  |  | Share-based |  |  |  |  |  |  |
For the year ended December 31, 2018 |  |  | GAAP |  | Compensation |  | Amortization |  | Other |  | Non-GAAP |
Net sales |  | $ | 542,082 |  |  |  |  |  |  |  | $ | 542,082 |
Gross profit |  |  | 193,719 |  | 1,885 |  |  |  | 2,849 |  |  | 198,453 |
Gross margin |  |  | 35.7 | % |  |  |  |  |  |  |  | 36.6 | %
Operating expenses |  |  | 609,221 |  | (14,189) |  | (32,351) |  | (387,388) |  |  | 175,293 |
Operating income (loss) |  |  | (415,502) |  | 16,074 |  | 32,351 |  | 390,237 | ^ |  | 23,160 |
Net income (loss) |  |  | (407,088) |  | 16,074 |  | 32,351 |  | 372,862 | ^ |  | 14,199 |
Income (loss) per common share: |  |  |  |  |  |  |  |  |  |  |  |  |
Basic |  | $ | (8.63) |  |  |  |  |  |  |  | $ | 0.30 |
Diluted |  |  | (8.63) |  |  |  |  |  |  |  |  | 0.30 |
Weighted average number of shares: |  |  |  |  |  |  |  |  |  |  |  |  |
Basic |  |  | 47,151 |  |  |  |  |  |  |  |  | 47,171 |
Diluted |  |  | 47,151 |  |  |  |  |  |  |  |  | 47,199 |

Veeco Instruments Inc. and Subsidiaries

Other Non-GAAP Adjustments

(in thousands)

(unaudited)

For the year ended December 31, 2018 |  |
Restructuring |  | 7,395
Acquisition related |  | 2,959
Asset impairment |  | 375,172
Release of inventory fair value step-up associated with the Ultratech purchase accounting |  | 2,516
Depreciation of PP&E fair value step-up associated with the Ultratech purchase accounting |  | 1,011
Accelerated depreciation |  | 1,184
Subtotal |  | 390,237
Non-cash interest expense |  | 11,762
Non-GAAP tax adjustment * |  | (29,137)
Total Other |  | 372,862

* - The 'with or without' method is utilized to determine the income tax effect of all Non-GAAP adjustments.

These tables include financial measures adjusted for the impact of certain items; these financial measures are therefore not calculated in accordance with U.S. generally accepted accounting principles (“GAAP”). These Non-GAAP financial measures exclude items such as: share-based compensation expense; charges relating to restructuring initiatives; non-cash asset impairments; certain other non-operating gains and losses; and acquisition-related items such as transaction costs, non-cash amortization of acquired intangible assets, and certain integration costs.

These Non-GAAP financial measures may be different from Non-GAAP financial measures used by other companies. Non-GAAP financial measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. By excluding these items, Non-GAAP financial measures are intended to facilitate meaningful comparisons to historical operating results, competitors' operating results, and estimates made by securities analysts. Management is evaluated on key performance metrics including Non-GAAP Operating Income (loss), which is used to determine management incentive compensation as well as to forecast future periods. These Non-GAAP financial measures may be useful to investors in allowing for greater transparency of supplemental information used by management in its financial and operational decision-making. In addition, similar Non-GAAP financial measures have historically been reported to investors; the inclusion of comparable numbers provides consistency in financial reporting. Investors are encouraged to review the reconciliation of the Non-GAAP financial measures used in this news release to their most directly comparable GAAP financial measures.

9

Veeco Instruments Inc. and Subsidiaries

Reconciliation of GAAP Net Income (loss) to Non-GAAP Operating Income (loss)

(in thousands)
(unaudited)

|  | Year ended |  | Year ended
|  | December 31, 2019 |  | December 31, 2018
GAAP Net income (loss) |  | $ | (78,733) |  | $ | (407,088)
Share-based compensation |  |  | 15,270 |  |  | 16,074
Amortization |  |  | 17,085 |  |  | 32,351
Restructuring |  |  | 6,006 |  |  | 7,395
Acquisition related |  |  | — |  |  | 2,959
Asset impairment |  |  | 4,020 |  |  | 375,172
Release of inventory fair value step-up associated with the Ultratech purchase accounting |  |  | 1,270 |  |  | 2,516
Depreciation of PP&E fair value step-up associated with the Ultratech purchase accounting |  |  | 557 |  |  | 1,011
Accelerated depreciation |  |  | 397 |  |  | 1,184
Other |  |  | 44 |  |  | —
Interest (income) expense |  |  | 17,405 |  |  | 18,332
Impairment of equity investments |  |  | 20,973 |  |  | —
Income tax expense (benefit) |  |  | 777 |  |  | (26,746)
Non-GAAP Operating income (loss) |  | $ | 5,071 |  | $ | 23,160

This table includes financial measures adjusted for the impact of certain items; these financial measures are therefore not calculated in accordance with U.S. generally accepted accounting principles (“GAAP”). These Non-GAAP financial measures exclude items such as: share-based compensation expense; charges relating to restructuring initiatives; non-cash asset impairments; certain other non-operating gains and losses; and acquisition-related items such as transaction costs, non-cash amortization of acquired intangible assets, and certain integration costs.

These Non-GAAP financial measures may be different from Non-GAAP financial measures used by other companies. Non-GAAP financial measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. By excluding these items, Non-GAAP financial measures are intended to facilitate meaningful comparisons to historical operating results, competitors’ operating results, and estimates made by securities analysts. Management is evaluated on key performance metrics including Non-GAAP Operating income (loss), which is used to determine management incentive compensation as well as to forecast future periods. These Non-GAAP financial measures may be useful to investors in allowing for greater transparency of supplemental information used by management in its financial and operational decision-making. In addition, similar Non-GAAP financial measures have historically been reported to investors; the inclusion of comparable numbers provides consistency in financial reporting. Investors are encouraged to review the reconciliation of the Non-GAAP financial measures used in this news release to their most directly comparable GAAP financial measures.

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Veeco Instruments Inc. and Subsidiaries

Reconciliation of GAAP to Non-GAAP Financial Data

(in millions, except per share amounts)

(unaudited)

|  |  |  |  |  |  |  |  |  | Non-GAAP Adjustments |  |  |  |  |  |  |  |  |
Guidance for the three months ending |  |  |  |  |  |  |  |  |  | Share-based |  |  |  |  |  |  |  |  |  |  |  |  |
March 31, 2020 |  | GAAP |  | Compensation |  | Amortization |  | Other |  | Non-GAAP |
Net sales |  | $ | 95 |  | - |  | $ | 120 |  |  |  |  |  |  |  | $ | 95 |  | - |  | $ | 120 |
Gross profit |  |  | 37 |  | - |  |  | 48 |  | 1 |  | — |  | — |  |  | 38 |  | - |  |  | 49 |
Gross margin |  |  | 39% |  | - |  |  | 41% |  |  |  |  |  |  |  |  | 39% |  | - |  |  | 41% |
Operating expenses |  |  |  | ~$44 |  |  |  | 2 |  | 4 |  | 1 |  |  |  | ~$37 |  |  |
Operating income (loss) |  |  | (7) |  | - |  |  | 4 |  | 3 |  | 4 |  | 1 |  |  | 1 |  | - |  |  | 12 |
Net income (loss) |  | $ | (12) |  | - |  | $ | (1) |  | 3 |  | 4 |  | 5 |  | $ | — |  | - |  | $ | 11 |
Income (loss) per diluted common share |  | $ | (0.24) |  | - |  | $ | (0.01) |  |  |  |  |  |  |  | $ | 0.00 |  | - |  | $ | 0.22 |
Weighted average number of shares |  |  | 48 |  |  |  |  | 48 |  |  |  |  |  |  |  |  | 48 |  |  |  |  | 48 |

Veeco Instruments Inc. and Subsidiaries

Reconciliation of GAAP Net Income (loss) to Non-GAAP Operating Income (Loss)

(in millions)
(unaudited)

Guidance for the three months ending March 31, 2020 |  |  |  |  |  |  |  |
GAAP Net income (loss) |  | $ | (12) |  | - |  | $ | (1)
Share-based compensation |  |  | 3 |  | - |  |  | 3
Amortization |  |  | 4 |  | - |  |  | 4
Restructuring |  |  | 1 |  | - |  |  | 1
Interest expense, net |  |  | 4 |  | - |  |  | 4
Other |  |  | 1 |  | - |  |  | 1
Non-GAAP Operating income (loss) |  | $ | 1 |  | - |  | $ | 12

Note: Amounts may not calculate precisely due to rounding.

These tables include financial measures adjusted for the impact of certain items; these financial measures are therefore not calculated in accordance with U.S. generally accepted accounting principles (“GAAP”). These Non-GAAP financial measures exclude items such as: share-based compensation expense; charges relating to restructuring initiatives; non-cash asset impairments; certain other non-operating gains and losses; and acquisition-related items such as transaction costs, non-cash amortization of acquired intangible assets, and certain integration costs.

These Non-GAAP financial measures may be different from Non-GAAP financial measures used by other companies. Non-GAAP financial measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. By excluding these items, Non-GAAP financial measures are intended to facilitate meaningful comparisons to historical operating results, competitors’ operating results, and estimates made by securities analysts. Management is evaluated on key performance metrics including Non-GAAP Operating income (loss), which is used to determine management incentive compensation as well as to forecast future periods. These Non-GAAP financial measures may be useful to investors in allowing for greater transparency of supplemental information used by management in its financial and operational decision-making. In addition, similar Non-GAAP financial measures have historically been reported to investors; the inclusion of comparable numbers provides consistency in financial reporting. Investors are encouraged to review the reconciliation of the Non-GAAP financial measures used in this news release to their most directly comparable GAAP financial measures.

11