News Details

Veeco Reports Fourth Quarter and Fiscal Year 2016 Financial Results

February 16, 2017

PLAINVIEW, NY -- (Marketwired) -- 02/16/17 --

Veeco Instruments Inc. (NASDAQ: VECO)

Fourth Quarter 2016 Highlights

  • Revenues of $93.6 million
  • GAAP net loss per share of $0.13 and Non-GAAP earnings per share of $0.09
  • Non-GAAP adjusted EBITDA of $6.2 million

Full Year 2016 Highlights

  • Revenues of $332.5 million
  • GAAP net loss per share of $3.11 and Non-GAAP net loss per share of $0.29
  • Non-GAAP adjusted EBITDA of $4.2 million

Veeco Instruments Inc. (NASDAQ: VECO) announced financial results for its fourth quarter and fiscal year ended December 31, 2016. 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 '16     Q4 '15      2016       2015
----------------------------------------------------------------------------
Revenue                             $93.6     $106.5     $332.5     $477.0
----------------------------------------------------------------------------
Net income (loss)                  ($5.0)     ($9.8)    ($122.2)    ($32.0)
----------------------------------------------------------------------------
Diluted earnings (loss) per
 share                             ($0.13)    ($0.25)    ($3.11)    ($0.80)
----------------------------------------------------------------------------

                                       4th Quarter            Full Year
                                --------------------------------------------
Non-GAAP Results                   Q4 '16     Q4 '15      2016       2015
----------------------------------------------------------------------------
Net income (loss)                   $3.8       $0.6      ($11.3)     $22.1
----------------------------------------------------------------------------
Adjusted EBITDA                     $6.2       $4.4       $4.2       $41.7
----------------------------------------------------------------------------
Diluted earnings (loss) per
 share                              $0.09      $0.01     ($0.29)     $0.54
----------------------------------------------------------------------------

"Veeco's fourth quarter financial results marked a strong finish to a challenging year. Revenues increased by 9% and adjusted EBITDA more than doubled sequentially over the prior quarter. We improved gross margins for the third consecutive year, delivering on our objective to achieve gross margins of 40% or better. Our performance demonstrates solid operational execution and underscores our focus on improving through-cycle profitability," commented John R. Peeler, Chairman and Chief Executive Officer.

"Entering 2017, we are seeing healthy LED industry dynamics and positive business momentum. We closed an exclusive, multi-year agreement with OSRAM Opto Semiconductors GmbH to supply Metal Organic Chemical Vapor Deposition ("MOCVD") and Precision Surface Processing ("PSP") systems for their new high volume LED production facility in Kulim. We made significant progress in growing our Advanced Packaging business, increasing sales into the Advanced Packaging, MEMS & RF markets by ~10% year over year. In addition, our recently announced agreement to acquire Ultratech will establish Veeco as a leading equipment supplier to the Advanced Packaging industry. We are excited by this proposed combination, which is expected to increase our scale, diversify our revenue and provide a stable platform to drive long-term shareholder value. The transaction is subject to regulatory clearance and approval by Ultratech's stockholders and is expected to close in the second quarter," Mr. Peeler concluded.

Guidance and Outlook

The following guidance is provided for Veeco's first quarter 2017:

  • Revenue is expected to be in the range of $85 million to $100 million
  • Adjusted EBITDA is expected to be in the range of $5 million to $11 million
  • GAAP earnings (loss) per share are expected to be in the range of ($0.28) to ($0.12) and includes a pre-tax interest expense estimated to be ~$4 million associated with the 2023 Convertible Notes
  • Non-GAAP earnings per share are expected to be in the range of $0.00 to $0.16 and includes a pre-tax interest expense estimated to be ~$2 million associated with the 2023 Convertible Notes

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 16, 2017 starting at 5:00pm ET. To join the call, dial 877-741-4245 (toll free) or 719-325-4942 and use passcode 2499397. The call will also be webcast live on the Veeco website at ir.veeco.com. A replay of the webcast will be made available on the Veeco website beginning at 8:00pm ET this evening. We will post an accompanying slide presentation to our website prior to the beginning of the call.

About Veeco

Veeco's process equipment solutions enable the manufacture of LEDs, displays, power electronics, compound semiconductors, hard disk drives, semiconductors, MEMS and wireless chips. We are the leader in MOCVD, MBE, Ion Beam, Wet Etch single wafer processing and other advanced thin film process technologies. Our high performance systems drive innovation in energy efficiency, consumer electronics and network storage and allow our customers to maximize productivity and achieve lower cost of ownership. For information on our company, products and worldwide service and support, please visit www.veeco.com.

Additional Information and Where to Find It
In connection with the proposed acquisition of Ultratech ("Ultratech") by Veeco ("Veeco") pursuant to the terms of an Agreement and Plan of Merger by and among Ultratech, Veeco and Merger Sub, Veeco will file with the Securities and Exchange Commission (the "SEC") a Registration Statement on Form S-4 (the "Form S-4") that will contain a proxy statement of Ultratech and a prospectus of Veeco, which proxy statement/prospectus will be mailed or otherwise disseminated to Ultratech's stockholders when it becomes available. Investors are urged to read the proxy statement/prospectus (including all amendments and supplements) because they will contain important information. Investors may obtain free copies of the proxy statement/prospectus when it becomes available, as well as other filings containing information about Veeco and Ultratech, without charge, at the SEC's Internet site (http://www.sec.gov). Copies of these documents may also be obtained for free from the companies' web sites at www.Veeco.com or www.Ultratech.com.

Participants in Solicitation
Veeco, Ultratech and their respective officers and directors may be deemed to be participants in the solicitation of proxies from the stockholders of Ultratech in connection with the proposed transaction. Information about Veeco's executive officers and directors is set forth in its Annual Report on Form 10-K, which was filed with the SEC on February 25, 2016 and its proxy statement for its 2016 annual meeting of stockholders, which was filed with the SEC on March 22, 2016. Information about Ultratech's executive officers and directors is set forth in its Annual Report on Form 10-K, which was filed with the SEC on February 26, 2016, Amendment No. 1 to its Annual Report on Form 10-K, which was filed with the SEC on April 22, 2016, and the proxy statements for its 2016 annual meeting of stockholders, which were filed with the SEC on June 10, 2016 and June 13, 2016. Investors may obtain more detailed information regarding the direct and indirect interests of the Veeco, Ultratech and their respective executive officers and directors in the acquisition by reading the preliminary and definitive proxy statement/prospectus regarding the transaction, which will be filed with the SEC.

Forward-Looking Statements
This written communication also contains forward-looking statements that involve risks and uncertainties concerning Veeco's proposed acquisition of Ultratech, Ultratech's and Veeco's expected financial performance, as well as Ultratech's and Veeco's strategic and operational plans. Actual events or results may differ materially from those described in this written communication due to a number of risks and uncertainties. The potential risks and uncertainties include, among others, the possibility that Ultratech may be unable to obtain required stockholder approval or that other conditions to closing the transaction may not be satisfied, such that the transaction will not close or that the closing may be delayed; the reaction of customers to the transaction; general economic conditions; the transaction may involve unexpected costs, liabilities or delays; risks that the transaction disrupts current plans and operations of the parties to the transaction; the ability to recognize the benefits of the transaction; the amount of the costs, fees, expenses and charges related to the transaction and the actual terms of any financings that will be obtained for the transaction; the outcome of any legal proceedings related to the transaction; the occurrence of any event, change or other circumstances that could give rise to the termination of the transaction agreement. In addition, please refer to the documents that Veeco and Ultratech file with the SEC on Forms 10-K, 10-Q and 8-K. The filings by Veeco and Ultratech identify and address other important factors that could cause its financial and operational results to differ materially from those contained in the forward-looking statements set forth in this written communication.

All forward-looking statements speak only as of the date of this written communication nor, in the case of any document incorporated by reference, the date of that document. Neither Veeco nor Ultratech is under any duty to update any of the forward-looking statements after the date of this written communication to conform to actual results.

-financial tables attached-

                  Veeco Instruments Inc. and Subsidiaries
              Condensed Consolidated Statements of Operations
                  (in thousands, except per share amounts)

                            Three months ended        For the year ended
                               December 31,              December 31,
                         ------------------------  ------------------------
                             2016         2015         2016         2015
                         -----------  -----------  -----------  -----------
Net sales                $    93,609  $   106,543  $   332,451  $   477,038
Cost of sales                 57,601       67,757      199,593      299,797
                         -----------  -----------  -----------  -----------
Gross profit                  36,008       38,786      132,858      177,241
                         -----------  -----------  -----------  -----------
Operating expenses, net:
  Research and
   development                17,471       20,639       81,016       78,543
  Selling, general, and
   administrative             19,412       21,036       77,642       90,188
  Amortization of
   intangible assets           3,434        5,802       19,219       27,634
  Restructuring                1,646        1,170        5,640        4,679
  Asset impairment              (142)           -       69,520          126
  Other, net                    (660)          98          223         (697)
Total operating
 expenses, net                41,161       48,745      253,260      200,473
Operating income (loss)       (5,153)      (9,959)    (120,402)     (23,232)
  Interest income, net           245          145          958          586
Income (loss) before
 income taxes                 (4,908)      (9,814)    (119,444)     (22,646)
  Income tax expense              90          (26)       2,766        9,332
Net income (loss)        $    (4,998) $    (9,788) $  (122,210) $   (31,978)
                         -----------  -----------  -----------  -----------

Income (loss) per common
 share:
  Basic                  $     (0.13) $     (0.25) $     (3.11) $     (0.80)
  Diluted                $     (0.13) $     (0.25) $     (3.11) $     (0.80)

Weighted average number
 of shares:
  Basic                       39,267       39,794       39,340       39,742
  Diluted                     39,267       39,794       39,340       39,742

                   Veeco Instruments Inc. and Subsidiaries
                    Condensed Consolidated Balance Sheets
                               (in thousands)

                                                  December 31,  December 31,
                                                      2016          2015
                                                 ------------- -------------
Assets
Current assets:
  Cash and cash equivalents                      $     277,444 $     269,232
  Short-term investments                                66,787       116,050
  Accounts receivable, net                              58,020        49,524
  Inventories                                           77,063        77,469
  Deferred cost of sales                                 6,160         2,100
  Prepaid expenses and other current assets             16,034        22,760
  Assets held for sale                                       -         5,000
    Total current assets                               501,508       542,135
Property, plant and equipment, net                      60,646        79,590
Intangible assets, net                                  58,378       131,674
Goodwill                                               114,908       114,908
Deferred income taxes                                    2,045         1,384
Other assets                                            21,047        21,098
                                                 ------------- -------------
    Total assets                                 $     758,532 $     890,789
                                                 ============= =============

Liabilities and stockholders' equity
Current liabilities:
  Accounts payable                               $      22,607 $      30,074
  Accrued expenses and other current liabilities        33,201        49,393
  Customer deposits and deferred revenue                85,022        76,216
  Income taxes payable                                   2,311         6,208
  Current portion of long-term debt                        368           340
                                                 ------------- -------------
    Total current liabilities                          143,509       162,231
Deferred income taxes                                   13,199        11,211
Long-term debt                                             826         1,193
Other liabilities                                        6,403         1,539
                                                 ------------- -------------
    Total liabilities                                  163,937       176,174

    Total stockholders' equity                         594,595       714,615
                                                 ------------- -------------

      Total liabilities and stockholders' equity $     758,532 $     890,789
                                                 ------------- -------------

                  Veeco Instruments Inc. and Subsidiaries
             Reconciliation of GAAP to Non-GAAP Financial Data
                  (in thousands, except per share amounts)
                                (unaudited)

                                     Non-GAAP Adjustments
                              -----------------------------------
Three months ended             Share-based
December 31, 2016     GAAP    Compensation  Amortization  Other    Non-GAAP
------------------ ---------- ------------- ------------ -------- ----------
Net sales          $  93,609                                      $  93,609
Gross profit          36,008           316                   362     36,686
Gross margin            38.5%                                          39.2%
Research and
 development          17,471          (292)                          17,179
Selling, general,
 and
 administrative
 and Other            18,752        (2,971)                  (44)    15,737
Net income (loss)     (4,998)        3,579         3,434   1,740      3,755

Income (loss) per
 common share:
  Basic            $   (0.13)                                     $    0.09
  Diluted              (0.13)                                          0.09
Weighted average
 number of shares:
  Basic               39,267                                         39,579
  Diluted             39,267                                         39,990

                  Veeco Instruments Inc. and Subsidiaries
                         Other Non-GAAP Adjustments
                               (in thousands)
                                (unaudited)

Three months ended
December 31, 2016
------------------
  Asset impairment                                                     (142)
  Restructuring                                                       1,646
  Acquisition
   related                                                               44
  Accelerated
   depreciation                                                         362
  ALD liquidation                                                      (429)
  Non-GAAP tax
   adjustment *                                                         259
                                                                  ----------
  Total Other                                                         1,740
* - 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 incremental transaction-related compensation.

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 adjusted EBITDA, 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.

                  Veeco Instruments Inc. and Subsidiaries
             Reconciliation of GAAP to Non-GAAP Financial Data
                  (in thousands, except per share amounts)
                                (unaudited)

                                     Non-GAAP Adjustments
                              -----------------------------------
Three months ended             Share-based
December 31, 2015     GAAP    Compensation  Amortization  Other    Non-GAAP
------------------ ---------- ------------- ------------ -------- ----------
Net sales          $ 106,543                                      $ 106,543
Gross profit          38,786           393                           39,179
Gross margin            36.4%                                          36.8%
Research and
 development          20,639        (1,292)                          19,347
Selling, general,
 and
 administrative
 and Other            21,134        (2,277)                 (188)    18,669
Net income (loss)     (9,788)        3,962         5,802     598        574

Income (loss) per
 common share:
  Basic            $   (0.25)                                     $    0.01
  Diluted              (0.25)                                          0.01
Weighted average
 number of shares:
  Basic               39,794                                         40,644
  Diluted             39,794                                         40,731

                  Veeco Instruments Inc. and Subsidiaries
                         Other Non-GAAP Adjustments
                               (in thousands)
                                (unaudited)
Three months ended
December 31, 2015
------------------
  Restructuring                                                       1,170
  Acquisition
   related                                                              188
  Non-GAAP tax
   adjustment *                                                        (760)
                                                                  ----------
    Total Other                                                         598
* - 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 incremental transaction-related compensation.

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 adjusted EBITDA, 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.

                  Veeco Instruments Inc. and Subsidiaries
        Reconciliation of GAAP Net Income (loss) to Adjusted EBITDA
                               (in thousands)
                                (unaudited)

                                                      Three months ended
                                                         December 31,
                                                   -------------------------
                                                       2016         2015
                                                   ------------ ------------
GAAP Net income (loss)                             $    (4,998) $    (9,788)
Share-based compensation                                 3,579        3,962
Amortization                                             3,434        5,802
Asset impairment                                          (142)           -
Restructuring                                            1,646        1,170
Acquisition related                                         44          188
Accelerated depreciation                                   362            -
ALD liquidation                                           (429)           -
Interest income                                           (245)        (145)
Depreciation                                             2,845        3,282
Income tax expense (benefit)                                90          (26)
                                                   -------------------------
Adjusted EBITDA                                    $     6,186  $     4,445
                                                   =========================
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 incremental transaction-related compensation.

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 adjusted EBITDA, 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.

                  Veeco Instruments Inc. and Subsidiaries
             Reconciliation of GAAP to Non-GAAP Financial Data
                  (in thousands, except per share amounts)
                                (unaudited)

                                     Non-GAAP Adjustments
                              -----------------------------------
For the year ended             Share-based
December 31, 2016     GAAP    Compensation  Amortization  Other    Non-GAAP
------------------ ---------- ------------- ------------ -------- ----------
Net sales          $ 332,451                                      $ 332,451
Gross profit         132,858         1,956                   716    135,530
Gross margin            40.0%                                          40.8%
Research and
 development          81,016        (3,324)                          77,692
Selling, general,
 and
 administrative
 and Other            77,866       (10,433)               (1,537)    65,896
Net income (loss)   (122,210)       15,713        19,219  75,954    (11,324)

Income (loss) per
 common share:
  Basic            $   (3.11)                                     $   (0.29)
  Diluted              (3.11)                                         (0.29)
Weighted average
 number of shares:
  Basic               39,340                                         39,340
  Diluted             39,340                                         39,340

                  Veeco Instruments Inc. and Subsidiaries
                         Other Non-GAAP Adjustments
                               (in thousands)
                                (unaudited)
For the year ended
December 31, 2016
------------------
  Asset impairment                                                   69,520
  Restructuring                                                       5,640
  Acquisition
   related                                                              232
  Accelerated
   depreciation                                                         716
  Pension
   termination                                                        1,305
  ALD liquidation                                                      (429)
  Non-GAAP tax
   adjustment *                                                      (1,030)
                                                                  ----------
    Total Other                                                      75,954
* - 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 incremental transaction-related compensation.

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 adjusted EBITDA, 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.


                  Veeco Instruments Inc. and Subsidiaries
             Reconciliation of GAAP to Non-GAAP Financial Data
                  (in thousands, except per share amounts)
                                (unaudited)

                                     Non-GAAP Adjustments
                              -----------------------------------
For the year ended             Share-based
December 31, 2015     GAAP    Compensation  Amortization  Other    Non-GAAP
------------------ ---------- ------------- ------------ -------- ----------
Net sales          $ 477,038                                      $ 477,038
Gross profit         177,241         2,495                 1,311    181,047
Gross margin            37.2%                                          38.0%
Research and
 development          78,543        (4,031)                          74,512
Selling, general,
 and
 administrative
 and Other            89,491       (11,474)                 (958)    77,059
Net income (loss)    (31,978)       18,000        27,634   8,408     22,064

Income (loss) per
 common share:
  Basic            $   (0.80)                                     $    0.54
  Diluted              (0.80)                                          0.54
Weighted average
 number of shares:
  Basic               39,742                                         40,759
  Diluted             39,742                                         40,905

                  Veeco Instruments Inc. and Subsidiaries
                         Other Non-GAAP Adjustments
                               (in thousands)
                                (unaudited)
For the year ended
December 31, 2015
------------------
  Restructuring                                                       4,679
  Acquisition
   related - PSP
   inventory fair
   value step-up                                                      1,311
  Acquisition
   related                                                              563
  Asset Impairment                                                      126
  One-time legal
   settlement                                                           395
  Non-GAAP tax
   adjustment *                                                       1,334
                                                                  ----------
    Total Other                                                       8,408
* - 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 incremental transaction-related compensation.

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 adjusted EBITDA, 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.


                  Veeco Instruments Inc. and Subsidiaries
        Reconciliation of GAAP Net Income (loss) to Adjusted EBITDA
                               (in thousands)
                                (unaudited)

                                                      For the year ended
                                                         December 31,
                                                   -------------------------
                                                       2016         2015
                                                   ------------ ------------
GAAP Net income (loss)                             $  (122,210) $   (31,978)
Share-based compensation                                15,713       18,000
Amortization                                            19,219       27,634
Asset impairment                                        69,520          126
Restructuring                                            5,640        4,679
Acquisition related - PSP inventory fair value
 step-up                                                     -        1,311
Acquisition related                                        232          563
One-time legal settlement                                    -          395
Accelerated depreciation                                   716            -
ALD liquidation                                           (429)           -
Pension termination                                      1,305            -
Interest income                                           (958)        (586)
Depreciation                                            12,714       12,216
Income tax expense (benefit)                             2,766        9,332
                                                   -------------------------
Adjusted EBITDA                                    $     4,228  $    41,692
                                                   =========================
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 incremental transaction-related compensation.

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 adjusted EBITDA, 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.


                  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                     Share-
 three months                        based
 ended March 31,                   Compensa- Amortiza-
 2017                  GAAP          tion      tion    Other    Non-GAAP
---------------- ----------------- --------- --------- ----- ---------------
Net sales        $   85  - $  100                            $  85  - $ 100

Gross profit         32  -     39          1         -     0    33  -    40
  Gross margin       37% -     39%                              38% -    40%

Net income
 (loss)          $  (11) - $   (5)         4         3     4 $   0  - $   6

Income (loss)
 per diluted
 common share    $(0.28) - $(0.12)                           $0.00  - $0.16
  Weighted
   average
   number of
   shares            39        39                               40       40

                  Veeco Instruments Inc. and Subsidiaries
        Reconciliation of GAAP Net Income (loss) to Adjusted EBITDA
                               (in millions)
                                (unaudited)

Guidance for the
 three months
 ended March 31,
 2017
----------------
GAAP Net income
 (loss)                                                      $ (11) - $  (5)
Share-based
 compensation                                                    4  -     4
Amortization                                                     3  -     3
Restructuring                                                    2  -     2
Acquisition
 related expense                                                 2  -     2
Interest
 (income)
 expense                                                         4  -     4
Depreciation                                                     3  -     3
Income tax
 expense
 (benefit) *                                                    (2) -    (2)
                                                             ---------------
Adjusted EBITDA                                              $   5  - $  11
                                                             ===============

Note: Amounts may not calculate precisely due to rounding.
* - 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 incremental transaction-related compensation.

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 adjusted EBITDA, 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.


   Veeco Contacts:Investors: Shanye Hudson 516-677-0200 x1272 [email protected]:Jeffrey Pina 516-677-0200 x1222 [email protected]

Source: Veeco Instruments Inc.