VEECO INSTRUMENTS VEECO INSTRUMENTS OVERVIEWOVERVIEW
APRIL 2005APRIL 2005
2APRIL 2005 ROADSHOW
VEECO PROVIDES ENABLING TECHNOLOGY VEECO PROVIDES ENABLING TECHNOLOGY FOR MULTIPLE GROWTH MARKETSFOR MULTIPLE GROWTH MARKETS
120 and 160 GB; 1” Drives for CE 90 and 65nm; 300mm HB-LEDs, WiFi, Nanotech & Life ScienceCamera Cell Phones, LCD TV
Data Storage Semiconductor LED/WirelesData Storage Semiconductor LED/Wireless s Scientific ResearchScientific Research
3APRIL 2005 ROADSHOW
ENABLING SOLUTIONS ADDRESS COMMON CHALLENGES ACROSS MULTIPLE END-MARKETS
Process Equipment
• Ion Beam Etch & Deposition
• Physical Vapor Deposition
• Molecular Beam Epitaxy
• Metal Organic CVD
• Diamond-Like Carbon
• Lapping, Dicing & Slicing
Metrology
• Automated Atomic Force Microscopes
• Research AFMs and SPMs
• Stylus Profilers/Optical Interferometers
Enabling SolutionsCore technologies, capable of R&D and manufacturing, key to multi-year technology road maps
Data Storage
Semiconductor LED/Wireless
Scientific Research
• Technology solutions for R&D and production challenges
• Smaller geometries• New/ difficult
materials• Higher performance• Lower costs
4APRIL 2005 ROADSHOW
VEECO LEVERAGES CORE TECHNOLOGIES IN GROWTH MARKETS
ADD MATERIAL (DEPOSITION)
REMOVE MATERIAL
IMAGE, MEASURE & MONITOR
MARKETS WE SERVE...
Multiple markets provide stable growth …Broader opportunities
than silicon semiconductor
2004 REVENUE ($390M;UP 40%)
WE PROVIDE “KEY TECHNOLOGIES” FOR DEVELOPMENT AND MANUFACTURING
% of Veeco Revenue
• Ion Beam Deposition (IBD)• Physical Vapor Deposition (PVD)• Molecular Beam Epitaxy (MBE)• Diamond-Like Coating (DLC)• Metal Organic CVD (MOCVD)
• Ion Beam Etch (IBE)• Reactive Ion Beam Etch (RIBE)• Precision Lapping/Slicing
• Atomic Force Microscopy (AFM)
• Scanning Probe Microscopy (SPM)
• Stylus Profilers
• Optical Profilers
• Interferometers
• Quasi-static Magnetic Measurements
Semiconductor
Data StorageWireless
25%25%
32%32%
14%14%
29%29%
Scientific Research
5APRIL 2005 ROADSHOW
VEECO INVESTMENT THEMES
• We are a leading supplier of enabling technology (used in R&D and production) for converging data storage, semiconductor/compound semi and HB-LED, color display growth opportunities
• In the post PC era…microdrives, HB-LEDs, color displays, and wireless technology will enable a wave of new high volume, digital consumer electronics for mass markets
• A diverse market and product mix allows Veeco a broader customerbase than most other semi equipment companies
• Nanotechnology, smaller form factors, higher density and new materials will drive extensions of:• Moore’s Law 20nm feature size• Areal Density 1 Tb/in²• Large high resolution, high brightness color displays• Breakthrough “new class” of pharma/drug delivery/molecular
measurement for life science applications
6APRIL 2005 ROADSHOW
SERVING INDUSTRY LEADERS IN MULTIPLE MARKETS
MARKETS PRODUCTS CUSTOMERS
Data Storage
#1 Equipment Supplier for TFMHs;
Etch, Deposition, Lapping, Slicing, Dicing and
Metrology
LED/WirelessOnly Broad line Equipment and
Metrology Supplier
MBE, MOCVD (Epitaxial Deposition) and Metrology
Semiconductor
#1 3D AFM Metrology
Automated Atomic Force Microscopy and Optical
Profilers
Scientific Research
#1 AFMs, SPMs and Optical Profilers
Breadth of research solutions
7APRIL 2005 ROADSHOW
VEECO MULTI-MARKET GROWTH OPPORTUNITY
Data Storage Microdrive growth to enable new wireless consumer products (iPod, MP3 players, camera/cell phones). Development of next generation 160/200 GB drives and advanced development of perpendicular heads for 2006/2007. Industry to add capacity to double HDD unit manufacturing in 3 years
Semiconductor Complete deployment of 90/65nm, 300mm (8-10 AFMs per fab)
Wireless New application opportunity for Blue/White LED’s for backlighting of color displays, handheld camera/ cell phone, large area color displays, PDA, Wi Max, automotive, and solid state lighting
Scientific Research Continued strength of research AFMs/SPMs, characterization of new materials. Nanoscience emerges (life sciences, material sciences, genomics)
The content of Veeco’s enabling technologies increases in new consumer and nanotech applications
8APRIL 2005 ROADSHOW
THE NEXT BIG GROWTH OPPORTUNITY…beyond the PC
A $150B DIGITAL CONSUMER
ELECTRONICS MARKET BY 2007
$150B
$ 60B
Consumer Electronics
Chip, LED, color display storage content (40%)
Capital Equipment required$10B
9APRIL 2005 ROADSHOW
DRAMATIC CONSUMER PRODUCT GROWTH (CG’02-’08)
Flat Panel Display Backlighting
HB-LED Headlights
Home Media Server
Enabled by the convergence of
semiconductor chips, wireless chips,
microdrives, high resolution color
displays, and high brightness LEDs
HDD for DVR/DVT
HDD for GPS; Auto Nav.
HDD for Digital Cameras, Audio/
Video Player
+35.9% CAGR
+61.4% CAGR
+33.6% CAGR
+145.7% CAGR
+159.2% CAGR
+71.2% CAGR
Sources: IDC, 2004; Strategies Unlimited 2004
Wireless Mobile Consumer Products
10APRIL 2005 ROADSHOW
VEECO INVESTMENT THEMES
• Double digit consumer product growth, with high chip, LED, display and embedded data storage content will drive “data storage equipment capex” growth in 2005 and Epitaxial capex growth in 2006/2007
• Mass market, high volume, easy to use, low cost consumer electronics will broaden Veeco’s current customer base
• Veeco well positioned to benefit from growth in “converged” datastorage, semiconductor, HB-LED display opportunities…based on Veeco’s core technologies
11APRIL 2005 ROADSHOW
INFORMATION TECHNOLOGY EVOLVES BEYOND THE “SCALING” OF SILICON
CMOS Scaling
70s 80s 90s 00s 10s
Perf
orm
ance Novel Materials
Novel ArchitecturesNew DevicesNanotech • 3D Wafer Stacking
• Optoelectronics • RF/Microwave• Spintronics• CS on Silicon
• Lithography
• Copper Interconnects• Silicon-on-Insulator• Low k dielectric• Silicon-Germanium (SiGe)• Strained Silicon• High k dielectric
Courtesy of Albany Nanotech, University of Albany
CMOS Scaling
70s 80s 90s 00s 10s
Perf
orm
ance Novel Materials
Novel ArchitecturesNew DevicesNanotech • 3D Wafer Stacking
• Optoelectronics • RF/Microwave• Spintronics• CS on Silicon
• Lithography
• Copper Interconnects• Silicon-on-Insulator• Low k dielectric• Silicon-Germanium (SiGe)• Strained Silicon• High k dielectric
Courtesy of Albany Nanotech, University of Albany
Veeco CompetenceEquipment & Metrology
AFM MetrologyAFM Metrology
EUV Masks
CS and Novel Material Processing
ION BEAM DEPOSITION
The Opportunity
12APRIL 2005 ROADSHOW
YOUR NEXT COMPUTER….Losing the wires is only the beginning
There are 1.5 billion mobile phones in the
world today. They browse the Web, take pictures,
send email, watch movies and play games. Soon
they could make your PC obsolete.
13APRIL 2005 ROADSHOW
HIGH GROWTH OF EASY TO USE, LOW PRICED CONSUMER ELECTRONICS
Apple iPod
Palm One sold 300,000 camera equipped Smart
Phones in 3 months
Nokia WiFi-equipped Communicator Cell Phone targets traveling executives
Apple sold 10 million units(sold 5M at Christmas)
iPod, MP3, smart cell phones, will converge
Palm One Camera-Equipped Smart Phone
Nokia WifiCommunicator
Source: Electronic Business
MARKET TRENDS
DATA STORAGE
16APRIL 2005 ROADSHOW
DATA STORAGE…growth continues, orders up 26% in Q1 following a 91% increase in Q4 orders
• Record orders of $45M included Veeco Ion Beam, Slider, Optical Metrology and Auto AFM buys…Multi-million $ orders from all 5 leading hard drive manufacturers
• First Data Storage production X3D Auto AFM ordered in Q1
• Drive manufacturers are reporting 90% utilization rates in wafer manufacturing and nearly 100% utilization rates in slider back end factories…many have announced planned capex spending increases for 2005
• Digital consumer electronics will drive growth in the HDD industry over the next several years… CE forecasted to grow 39%/year through 2008… Sub 1.8” drives to penetrate
– set top boxes (DVR/DTV) – digital cameras/cell phones– information appliances – “pocket” drives– automotive GPS
17APRIL 2005 ROADSHOW
DATA STORAGE…growth continues, orders up 26% in Q1 following a 91% increase in Q4 orders
• Current buys reflect increased capacity and investment in technology for development of perpendicular heads for next generation areal density requirements
• Overall industry drive revenue forecasted to grow 20% in 2005.
• Heads per drive are increasing with 2005 forecasted growth (up 20%) to 900 million heads from 740 million in 2004
• Increased industry capacity will impact Veeco’s Q2 order rate…expect continued order strength…backlog extends to Q3
18APRIL 2005 ROADSHOW
CONSUMER APPLICATIONS ENABLE EXPONENTIAL GROWTH
0200400600800
1000120014001600
1956
1966
1976
1986
1996
2006
PC era
3.5” 2.5”
3rd era 20
16
Mainframe era
24”, 14”
1st era Minicomputer era
8”, 5.25”
2nd era
2004
Consumer era
2.5” 1.8” 1”3.5”
DVD/HDD recorder since 2002
MP3 HDD since 2001
4th era
Source : Hitachi GST Estimate
M U
nits
–A
nnua
l HD
D S
hipm
ents
19APRIL 2005 ROADSHOW
DATA STORAGE HOME OF THE (NEAR) FUTURE
TiVo/DVR
Entertainment Centers/PCs
Laptop
Game (Xbox, PlayStation, etc)
Automobile GPS Navigation
MP4 Video
Mobile Phone
By 2010 each household will include 10 HDDs*
MP3 Music (i.e., iPod)
Home Applications
Mobile Applications
New Microdrive(.85 dia.)
Home Media Server
* Source: Hitachi Global Storage Technologies
20APRIL 2005 ROADSHOW
DATA STORAGE …Hard Disk Drive Unit Growth
Xbox800
700
600
500
400
300
200
100
0
Consumer Electronics
Laptop PC
Desktop PC
Enterprise
Servers
Desktop
Laptop
TiVo
iPodGPS
MobilePhones
Approx30%
ofHDDsby
2006
Uni
t Driv
e Sh
ipm
ents
(mill
ions
)
1980 1985 1990 1995 2000 2005 2010 2015
21APRIL 2005 ROADSHOW
DATA STORAGE HARD DRIVE GROWTHCONSUMER ELECTRONICS ADOPTION
0
100
200
300
400
500
600
CY04 CY05 CY06 CY07 CY08
HD
D U
nits
(Mill
ions
)
CE 1 out of 7
CE 1 out of 3
Growth in CE and traditional computer markets
ConsumerElectronics
Traditional (PC,Laptop, Enterprise)
CAGR(2004-2008)
39%
9%
15%Total
Source: IDC Mar2005
22APRIL 2005 ROADSHOW
UNPRECEDENTED TECHNOLOGY AND FORM FACTOR CHANGES OCCURRING SIMULTANEOUSLY
1000
100
10
1
100
10
1
100
10
1
100
10
100
10
100
10
100
10
100
10
100
10
1
100
10
1
100
10
1
100
10
100
10
100
10
100
10
100
10
00 01 02 03 04 05 06 07
Are
alD
ensi
ty (G
bit/i
n2 )2 )
Perpendicular
Recording
Longitudinal Recording
CPP
GMR
TMR
Reader & Writer Development
Pico Slider
Femto Slider
Mini Micro Namo Pico Femto(100%) (70%) (50%) (30%) (20%)
1975
19871990
1995 2004?
Mini Micro Namo Pico Femto(100%) (70%) (50%) (30%) (20%)
1975
19871990
1995 2004?
Slider Shrinks
Microdrives
MicrodrivesTFMH Technology Changes Drive Capital Equipment Growth
Areal density roadmap increases (50%) per year toward CPP (perpendicular recording) capable of 1 Terabit/in² (2006)…will
require new manufacturing technology
23APRIL 2005 ROADSHOW
VEECO: IN EVERY STEP OF YOUR TFMH PROCESS
WAFER PROCESSES ROWBAR/SLIDER PROCESSES HGS, FINAL ASSY AND TEST
NEW MTI
Slicing
NEW MTI
Dicing
SEMICONDUCTOR
25APRIL 2005 ROADSHOW
SEMICONDUCTOR SECTOR …Q1 orders of $14.4M included multiple Auto AFM orders and record Auto AFM revenue
• Despite our expectations of an industry-wide Semi Capexsoftening…we see continued world wide acceptance of our Auto AFMin Wafer Fabs for 90nm and 70nm applications (where utilization rates remain high)
• Q1 Auto AFM orders included multiple system buys
• In general, our AFM sales will be paced by leading edge 90/70 nmdeployment in 2005
• KLA, a key competitor, has withdrawn their AFM product and beta site units have been returned
26APRIL 2005 ROADSHOW
VEECO’S SEMICONDUCTOR OPPORTUNITY:SHRINKING DIMENSIONS REQUIRE 3D METROLOGY• Veeco has the broadest line of 3D
AFM non-destructive Metrology solutions
• Our goal is to be a step ahead of industry roadmap…90…65…45nm
• Top 10 semi device manufacturers have at least one AFM in line wafer fab – 300 systems installed…TAM 10 per fab
• We have launched new systems for specific applications in Etch, CMP, CD control, Photolithography
26nm lines in R&D sample
Veeco Dimension X3D and 65nm scan
27APRIL 2005 ROADSHOW
LEADING ATOMIC FORCE MICROSCOPE TIP TECHNOLOGYLEADING ATOMIC FORCE MICROSCOPE TIP TECHNOLOGY
Veeco tip development roadmap addresses leading edge 45nm and
25nm applications
LED/WIRELESS
29APRIL 2005 ROADSHOW
LED/WIRELESS...Q1 orders $14.0M reflects and industry downturn
• We expect a revenue decline in 2005 as mobile cell phone growth slows and Taiwan/China have excess capacity
• Industry LED device growth was 37% in ’04 to $3.5B; ’05 to be marked by ASP declines and vendor consolidation (APAC)
• Next LED growth wave…large area flat panel LCD TVs and automotive lighting expected in 2006..
• The LED market is forecasted to double from $3.5B to $7.0B in the next 5 years driven by Blue/Green/White LED penetration evolving from keypad and color display backlighting
• To large area LCD TV (Sony/Samsung/Philips announcing 20”/40” TV’s)• To automotive tail light/turn signals/interior light, eventually headlights • To specialty lighting for buildings/bridges/museums/airports high resolution signs
and eventually to general illumination in homes and offices penetrating the $12B/year world-wide lighting business (2008 to 2010 timeframe)
• Veeco to use 2005 to improve gross margin, product reliability, reduce warranty cost, introduce GaNzilla II plus, be profitable in Q4…prepare for 2006 growth
30APRIL 2005 ROADSHOW
LEDS IN MOBILE PHONES…over 45 LED chips per phone~670M phones sold in 2004
Color LCD DisplayCamera Phone—Flash LED (camera phones will show rapid growth ‘04-’07)Mid-end using 11 LED, High-End using 24 LED
Sideview Whitefor color displays 1.0/0.8/0.6t600mcd ~1cdWhite Multi LEDs
for Camera flash3 White or RGB whitemore than 2cd
Multi chip indicators
Slim SMD Blue or Whitefor keypads0.35t
4 or 1 chip
3 chips
Main : 3 chip(sub-display :2)
8 ~ 12 chips
Source: Samsung SEMCO, Blue 2004
31APRIL 2005 ROADSHOW
HB-LEDS…A MULTIPLE MARKET GROWTH OPPORTUNITY
Electronic Equipment
IlluminationEfficiency(lm/W)
200
120
80
40
20
Future
Sign
* Outdoor
~ 2000~ 2000 2004 ~ 20062004 ~ 20062001 ~ 20032001 ~ 2003 2007~2007~
Automotive
* Interior
* Head Lamp
Signal
Mobile
* Keypad* Backlight
* Flash
* Power Amps
* Stop lamp* LCD Monitor
* LCD TV
* Indoor
* Radar
* Wi-MAX/Mobil WirelessCommunications
* HD-DVD
Present
Source: Samsung BLUE 2004
32APRIL 2005 ROADSHOW
SOLID STATE LIGHTING GROWTH OPPORTUNITYRed, Green, Blue HB-LEDs >20% CAGR
EnterpriseRed Indicator Lights
Red HB-LEDs
Blue & Green
HB-LED (GaN)
White
Backlighting
Gener
alIllu
min
atio
n
Red LED
Blue & Green HB-LEDRed HB-LEDTail Light
HB-LED Headlights
Small LCD Backlighting
Cell Phone PDA
Large LCD Backlighting
Rel
ativ
e LE
D U
nit S
hipm
ents
$12BHB-LEDMarket
Size
1960 1970 1980 1990 2000 2010 2020
33APRIL 2005 ROADSHOW
COMPOUND SEMICONDUCTOR: HIGH BRIGHTNESS LIGHT EMITTING DIODES (HB-LEDS)
2002 2003 2004 2005 2006 2007
$5B
$4B
$3B
$2B
$1B
$5B
$4B
$3B
$2B
$1B
30% CAGR2002-2007
2002 2003 2004 2005 2006 2007
$5B
$4B
$3B
$2B
$1B
$5B
$4B
$3B
$2B
$1B
30% CAGR2002-2007
GaN-based HB-LEDs
Primary Growth Demand
Timeframe Application
2015-2020 General Illumination
2010-2015 Automobile Headlights
2005-2010 Large LCD Backlights
2000-2005 Mobile Phone Backlights
34APRIL 2005 ROADSHOW
LED FORECAST…GaN HB LED market continues to grow (22% CAGR ’05 to ’09)
Source: Strategies Unlimited
35APRIL 2005 ROADSHOW
SOLID STATE LIGHTING TO PENETRATE $12B GENERAL ILLUMINATION MARKET
•20% of Global Electricity Demand is for Lighting•Solid State Lighting (HB-LED) will Cut Consumption in Half
Satellite Composite Photo at Night
2015
Solid State Lighting
2005
Incandescent
SCIENTIFIC RESEARCH
37APRIL 2005 ROADSHOW
IN SCIENTIFIC RESEARCH…orders declined 6% in Q1
• We see continued strength of our profitable optical and AFM Metrology products in Material Science/Life Science and Nanotechmaterial applications
• We will introduce new metrology products for extended applications in the second half of 2005 to grow this profitable Veeco segment
38APRIL 2005 ROADSHOW
NANOTECHNOLOGY “All The World’s Industry Is In Its Path”
AFMs Image, Measure and Manipulate Nanoscale Structures
Life Science Information TechnologyNano Ruler
Magnetic Bits (HDD)160nmx40nm (100Gb/in2).
MEMS10um – 1mm
Transistor0.5um – 90nm
Quantum Dots20nm wide ea.
Silicon Atom0.2nm dia
Human Hair70um wide
Red Blood Cells3um dia
DNA Strand2nm wide
1,000,000nm
100,000nm
10,000nm
1,000nm
100nm
10nm
1nm
0.1nm
Magnetic Bits (HDD)160nmx40nm (100Gb/in2).
MEMS10um – 1mm
MEMS10um – 1mm
Transistor0.5um – 90nm
Quantum Dots20nm wide ea.
Silicon Atom0.2nm dia
Human Hair70um wide
Red Blood Cells3um dia
DNA Strand2nm wide
Silicon Atom0.2nm dia
Human Hair70um wide
Red Blood Cells3um dia
DNA Strand2nm wide
1,000,000nm
100,000nm
10,000nm
1,000nm
100nm
10nm
1nm
0.1nm
39APRIL 2005 ROADSHOW
AFM APPLICATIONS ‘LAB-TO-FAB’
CMP Etch Litho Resist Litho Masks
DNA
Nano-manipulation& PicoForce
Topography Magnetics Life Science
Non-destructive(SARS virus)
Polarization Meas.(BiFeO3 spheres)
Atomic Scale Meas.(Copper seed layer)
RESEARCH & SCIENTIFIC (installed base >7000 systems)Nano ‘Pull / Position”
PRODUCTION FAB (installed base >300 systems)
40APRIL 2005 ROADSHOW
VEECO’S SCIENTIFIC RESEARCH BUSINESS INCLUDES:
• Nano Metrology
• Nano Manipulation
• Nano Material
Carbon Nanotube TransistorNanotechnology
Materials Research
Life Sciences
• Semiconductor• Future Data Storage• Polymers
• Living Cells• DNA• Proteomics
Polymers Cu Films Magnetic Storage Media
DNA Lipids Protein Crystal Detection
$116
$961
$-
$200
$400
$600
$800
1997 2004
NANOTECHNOLOGY ($M)
Government Nanotech Funding Source: NNI
$116
$961
$-
$200
$400
$600
$800
1997 2004
NANOTECHNOLOGY ($M)
Government Nanotech Funding Source: NNI
41APRIL 2005 ROADSHOW
NANOMATERIALS
• Nanomaterials: $35B market by 2020 ($200M in 2002)
• Industry lacks nanoscale metrology standards: a key bottleneck in development and manufacturing of commercial nanomaterials
Veeco and Dow receive a $6M NIST/ ATP to Develop New Nanotechnology tools
42APRIL 2005 ROADSHOW
PICOFORCE AND NANOMAN FOR SINGLE MOLECULE MEASUREMENTAND NANOMANIPULATION
MANIPULATION OF DNA USING VEECO’S NANOMAN SCANNING PROBE
Pulls or stretches molecules and produces force spectroscopy
readings at Pico-Newton levels
100+ Units Sold Since Introduction
THE 2005 MODEL
44APRIL 2005 ROADSHOW
THE 2005 REVENUE MODEL by Business Segment
PROJECTED REVENUE/PRODUCT MIX CHANGE FOR 2005
2004 2005 CHANGE 2005 RANGE
+15% TO +18% $154M TO $158M
$68M TO $71M
$168M TO $171M
$390M TO $400M
-24% TO -27%
+3% TO +5%
$134M
$93M
$163M
$390M
Ion Beam and Mechanical Equipment(IBE/IBD/Slider)
Epitaxial Equipment(MOCVD/MBE)
Metrology(Auto AFM/Research AFM
and Optical)
Total
Data Storage Growth
LED Decline
Scientific Research/Industrial Metrology Growth
Flat to modest growth
Revenue mix change favors higher Vecco gross margin
45APRIL 2005 ROADSHOW
THE GROSS MARGIN MODEL 2005
IMPROVED GROSS MARGINS IN EACH BUSINESS SEGMENT
’04 YEAR’05 QUARTERLY
INCREASE ‘05 YEAR
2006TARGET GROSS MARGIN
35%
24%
46%
44%
55%52%
39.5% 50%
Ion Beam and Mechanical Equipment(IBE/IBD/Slider)
36% 44% 42%
Epitaxial Equipment(MOCVD/MBE) 22% 33% 30%
Metrology(Auto AFM/Research
AFM and Optical)52% 55% 53%
Total 40% 46% 43%-44%
46APRIL 2005 ROADSHOW
“THE 2005 INCOME MODEL”
IMPROVE GROSS MARGINS 2% PER QUARTER
Q1 Q2 Q3 Q4 2005 YR Q106 Q206
100% 100%
50%
34%
16%
48%
35%
13%
100%
44%
36%
8%
100%
40%
37%
Sales 100% 100%
3%
100%
46%
36%
EBITA 5% 8% 10%
Gross Margin 42% 44%
Operating Expenses 37% 36%
APPROXIMATE TIME FRAME
47APRIL 2005 ROADSHOW
2005 PROFIT GROWTH PLAN ON FLAT REVENUE
Favorable product mix change (higher Data Storage, less Epitaxial revenue, stable Scientific Research/Metrology)… improves Veeco profitability
54
60
98
114109
117
90
124 15540
40
73
$0
$50
$100
$150
$200
$250
$300
$350
$400
$450
2003 2004A 2005E
+4%
+35%
+37%
+151%$279M
$390M +40% $405M +4%
-26%
+11%
+25%
+2%
CS
Semi
DS
SciRes
▲ ▲
EBITA $13.0M $13.8M $~30M*
* Based on projected cost reductions, material savings, new products, warranty cost reductions and mix change
Q2 2005 GUIDANCE
49APRIL 2005 ROADSHOW
Q2 2005 GUIDANCE (as of 4/26/05)
• Q2 revenues and orders in the range of $90-95 million
• Q2 2005 GAAP loss in the range of $(0.11) to $(0.06) per share
• Q2 2005 non-GAAP (excluding amortization) earnings per diluted share are expected to be between $0.04 and $0.07 using a 35% taxrate
FINANCIALS
51APRIL 2005 ROADSHOW
MANAGEMENT HIGHLIGHTS (Q1 2005 Revenue)
• Revenue $93.9M, up 3% Y/Y, down 9% sequentially
• Sequentially Data Storage down 14% $25.6M Semiconductor up 14% 17.4Wireless down 14% 22.3Scientific Research down 10% 28.6
down 9% $93.9M• Above $85M to $90M guidance
• Record quarterly Auto AFM revenue ($14M)Continued strong AFM Semi acceptance at90/65nm line widths Semiconductor
Data Storage
Wireless
24%24%
27%27%
19%19%
30%30%
Scientific Research
Benefit of Market Diversity
52APRIL 2005 ROADSHOW
MANAGEMENT HIGHLIGHTS (Q1 2005 Orders)
• Orders $98.9M, down 15% Y/Y, flat sequential ordersB/B
• Sequentially Data Storage up 26% $45.3M 1.77Wireless down 23% 14.0 0.63 Semiconductor down 21% 14.4 0.83Scientific Research down 6% 25.2 0.88
flat $98.9M 1.05• Above guidance range $85-$90M
• Book/Bill 1.05 to 1; Backlog increased to $144M
• Strong Data Storage investmentexpected to continue in Q2
• Q1 Data Storage orders $45M atrecord level…multi million dollar orders
from all (5) leading TFMH manufacturers
Semiconductor
Data Storage
Wireless14%14%
46%46%
15%15%
25%25%
Scientific Research
Market Diversity
53APRIL 2005 ROADSHOW
MANAGEMENT HIGHLIGHTS
• EBITA $2.6M in line with guidance, below Q4 and prior year
• Gross Margin• 40% in line with guidance, above 37.5% in Q4, in line with quarterly improvement
plan… 2% increase per quarter• Includes 30% for Process Equipment (36% for Ion Beam; 22% Epitaxial)• Includes 52% for Metrology
• Operating Expense $35M or 37%
• RIF of 30 people in quarter (MOCVD/MBE)
• Inventory $106.2M, down $4.4M
• Accounts Receivable… stayed at 65 days
• Cash positive operations generated $15.5M, paid acquisition earnouts $15M
• Balance Sheet remains strong with $100.7M Cash
54APRIL 2005 ROADSHOW
STRONG VEECO BALANCE SHEET
($ IN MILLIONS)March 31
2005Dec. 31,
2004
Cash and Investments $ 100.7 $100.3
Working Capital 216.9 216.8
Fixed Assets 70.6 73.5
Total Assets 551.7 577.0
Long-Term Debt 229.5 229.6
Shareholders’ Equity $ 246.2 $ 252.4
55APRIL 2005 ROADSHOW
ATTRACTIVE UPSIDE FROM NEW OPPORTUNITIES WITHIN OUR REACH
New wireless consumer Electronics with 1.0 “
embedded hard drive;
perpendicular heads
develop
White LED backlighting
LCD TV, automotive and general illumination
Use of In-Line 3D AFM
Metrology for 90, 65 and
45 nm
Extending Nanoscience
Applications to Life Sciences
and NanoMaterials
$390MRevenue
~$600MRevenue*
Technology Convergence
Enabling Consumer Electronics
2004 2007
56APRIL 2005 ROADSHOW
SAFE HARBOR STATEMENT
• To the extent that this presentation discusses expectations about market condition, market acceptance and future sales of Veeco’s products, Veeco’s future financial performance, 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 challenges of continuing weakness in end market conditions and the cyclical nature of the telecommunications/wireless, data storage, semiconductor andresearch markets, risks associated with integrating acquired businesses and the acceptance of new products by individual customers and by the marketplace and other factors discussed in the Business Description and Management’s Discussion and Analysis sections of Veeco’s Annual Report on Form 10-K, subsequent Quarterly Reports on Form 10-Q and current reports on Form 8-K .
VEECO INSTRUMENTS VEECO INSTRUMENTS OVERVIEWOVERVIEW
APRIL 2005APRIL 2005