Financial Data and Key Metrics Changes - Revenue for the full year 2021 was $583 million, representing a 28% increase over 2020, driven by semiconductor and data storage performance [14][20] - Non-GAAP operating income for 2021 was $87 million, a 65% increase from $52 million in 2020, with diluted non-GAAP EPS increasing 66% to $1.43 [32][14] - Cash flow from operations was $68 million, a 58% increase over 2020 [15] - Q4 2021 revenue was $153 million, exceeding guidance, with diluted non-GAAP EPS at $0.43 [16][17] Business Line Data and Key Metrics Changes - Semiconductor revenue for 2021 was $247 million, a 49% increase year-over-year, accounting for 43% of total revenue [20] - Data Storage revenue was $169 million, a 37% increase over the prior year, making up 29% of total revenue [23] - Compound semiconductor revenue was $107 million, flat from 2020, but underlying growth was noted after normalizing for one-time sales [21] - In Q4, semiconductor market contributed 43% of revenue, compound semiconductor market contributed 23%, and data storage market contributed 24% [25] Market Data and Key Metrics Changes - The United States accounted for 38% of total revenue in 2021, driven by data storage customers, while Asia Pacific (excluding China) made up 35% [24] - In Q4, the United States represented 37% of total revenue, Asia Pacific (excluding China) contributed 26%, and China accounted for 25% [27] Company Strategy and Development Direction - The company views 2021 as an inflection point, completing its transformation and focusing on growth strategies, including R&D projects in laser annealing and MOCVD for power electronics [10][12] - The company aims to expand its served available market through the adoption of laser annealing technology and is engaged with leading customers for advanced applications [49][51] - The company is committed to improving governance and corporate responsibility while enhancing service capabilities to support customer needs [13][60] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for 2022, expecting significant growth in semiconductor and compound semiconductor markets, with a revenue outlook between $640 million and $680 million [45][41] - The company anticipates challenges from supply chain issues and inflation but expects to maintain gross margins around 42% to 44% [29][34] - Management noted that the data storage market is expected to decline in 2022 but anticipates recovery in 2023 as demand from cloud and data center applications increases [58][96] Other Important Information - The company ended 2021 with a backlog of $440 million, a 20% increase from 2020, with semiconductor backlog more than doubling [33] - The company has entered into a $150 million revolving credit facility to enhance financial flexibility [41] Q&A Session Summary Question: Can you expand on the repeat multi-systems orders? - Management indicated that laser annealing is expected to be the largest business in 2022, with nearly 50% growth anticipated [66] Question: What specific applications are driving MOCVD adoption? - Management noted traction in power electronics and multiple applications for the Lumina platform, including micro LED and edge-emitting lasers [70] Question: What is the outlook for gross margins? - Management expects gross margins to improve to 43% in 2022, despite ongoing supply chain challenges [76] Question: Are you seeing traction in advanced packaging processes? - Management confirmed opportunities in heterogeneous integration while also maintaining business in traditional packaging processes [80] Question: What is the expected revenue progression throughout 2022? - Management anticipates higher revenue in the second half of 2022 compared to the first half, with a year-on-year growth of 13% to 14% [91]

Financial Data and Key Metrics Changes - Revenue for Q3 2021 was $150 million, representing a 34% year-on-year increase and a 3% sequential increase [23] - Non-GAAP gross margin was 42.6%, up 1 percentage point from the previous quarter [26] - Non-GAAP operating income was $24.3 million, a 14% sequential increase and a 72% increase year-on-year [26] - Non-GAAP EPS was $0.40 on a diluted share count of 51.7 million shares [26] - Year-to-date revenue growth was 37%, driven by a 67% increase in semiconductor sales [9] Business Line Data and Key Metrics Changes - Semiconductor revenue reached a record $76 million, accounting for 51% of total revenue, with a 42% sequential increase and a 127% year-on-year increase [23] - Data storage revenue was $39 million, making up 26% of revenue, reflecting a 6% year-on-year increase but a 25% sequential decline [24] - Compound semiconductor revenue was relatively flat at $23 million, representing 15% of revenue [24] - Scientific and other revenue was $11 million, accounting for 8% of total revenue [24] Market Data and Key Metrics Changes - The Asia-Pacific region (excluding China) accounted for 40% of total sales, driven by ion beam and laser annealing systems [25] - The United States contributed 33% of revenue, primarily from ion beam systems shipped to data storage customers [25] - China represented 18% of revenue, mainly from semiconductor systems [25] - EMEA accounted for 9% of total revenue [25] Company Strategy and Development Direction - The company is focused on transforming to leverage global megatrends, with a commitment to sustainability and improving operational transparency [10] - The semiconductor market is expected to grow at a CAGR of approximately 23%, significantly outpacing long-term wafer fab equipment growth [11] - Investments in evaluation systems and service infrastructure are aimed at supporting growth in 2022 and beyond [20] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges from global supply chain disruptions but emphasized proactive measures to mitigate impacts [19] - The company expects to achieve over 25% revenue growth in 2021 and is on track to meet long-term financial targets [20] - For Q4, revenue is expected to be between $140 million and $160 million, with full-year revenue projected at approximately $580 million, a 28% year-on-year increase [30][32] Other Important Information - The company plans to adopt a new accounting standard for convertible debt in Q1 2022, which will affect non-GAAP EPS calculations [33] - The company is experiencing increased logistics costs, which had a 1 percentage point impact on gross margin in Q3 [85] Q&A Session Summary Question: Update on tools shipped and new wins - The company has shipped nine out of ten planned tools for the year, with positive feedback from customers on the tools deployed [38][41] Question: Semiconductor business performance - Record revenues were driven by all three segments: laser annealing, EUV tools, and advanced packaging [43][45] Question: Advanced packaging market applications - The market is broadening beyond mobile applications to include heterogeneous integration opportunities [50] Question: Supply chain management - The company has successfully mitigated supply chain challenges through close supplier collaboration and proactive inventory management [52][53] Question: Advanced packaging market size - The advanced packaging market is expected to grow over 20% in 2022, with the company anticipating an increase in market share [59] Question: Data storage market outlook - Revenue for data storage is expected to decline in 2022, but long-term prospects remain strong due to data proliferation [69]

MAKING A MATERIAL DIFFERENCE | --- | --- | --- | --- | |-------|-------------------|-------|-------| | | | | | | | | | | | | Q3 2021 | | | | | Financial Results | | | | | Conference Call | | | | Veeco | (Nasdaq: VECO) | | | | | November 2, 2021 | | | Safe Harbor This presentation contains "forward-looking statements", within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995, as amended, that are based on management's expectations, estimates, projections a ...

Financial Performance - Net sales for the three months ended September 30, 2021, were $150.246 million, a 34% increase from $112.078 million in the same period of 2020[136]. - Gross profit for the three months ended September 30, 2021, was $63.169 million, a 29% increase from $49.142 million in the same period of 2020[136]. - Operating income for the three months ended September 30, 2021, was $16.416 million, a 135% increase from $6.985 million in the prior year[136]. - For the nine months ended September 30, 2021, net sales increased by 37% to $430.3 million compared to $315.2 million in the prior year period[152]. - Gross profit for the same period rose by 30% to $178.3 million, although gross margins decreased due to increased spending and product mix[155]. - Total operating expenses increased by 11% to $139.2 million, with a notable increase in research and development and selling expenses[152]. Market Segments - Semiconductor market sales reached $76.320 million, representing 51% of total sales and a 127% increase compared to $33.578 million in the prior year[138]. - Sales in the China region surged to $27.261 million, a 161% increase from $10.464 million in the same period of 2020[138]. - The Data Storage market generated $39.256 million in sales, a 6% increase from $36.897 million in the same period of 2020[138]. - The Compound Semiconductor market saw sales of $23.273 million, a 12% decrease from $26.584 million in the previous year[138]. - The Scientific & Other market reported sales of $11.397 million, a 24% decrease from $15.019 million in the prior year[138]. Research and Development - Research and development expenses increased to $21.999 million, a 15% rise from $19.129 million in the prior year, reflecting selective investments in new technology[136]. - Research and development expenses increased by 15% to $66.4 million, reflecting investments in new technology and applications[156]. - The company anticipates long-term revenue growth primarily from the Semiconductor market, supported by strategic investments in R&D and inventory[134]. Cash Flow and Capital Expenditures - Net cash provided by operating activities was $50.6 million for the nine months ended September 30, 2021, compared to $27.6 million in 2020, driven by a net income of $17.8 million and adjustments for non-cash items of $42.1 million[167]. - Capital expenditures for the nine months ended September 30, 2021, were $31.5 million, significantly higher than $3.3 million in 2020, primarily due to the build-out of a new facility in San Jose, California[168]. - Net cash used in investing activities was $57.1 million for the nine months ended September 30, 2021, compared to $39.9 million in 2020, reflecting increased capital expenditures and net changes in investments[168]. - The company expects increased capital expenditures and duplicate operating expenses during the transition to the new facility in San Jose, California[168]. Debt and Financing - Net interest expense for the nine months ended September 30, 2021, was $20.2 million, up from $16.7 million in the prior year, primarily due to new debt issuances[159]. - The company has $131.7 million of 2.70% convertible senior notes maturing on January 15, 2023, and $132.5 million of 3.50% convertible senior notes maturing on January 15, 2025[171]. - The company has sufficient capital resources and cash flows from operations to support scheduled interest payments on its debts[172]. - Net cash used in financing activities was $(1.6) million for the nine months ended September 30, 2021, compared to $30.6 million in 2020, primarily due to cash used to settle taxes related to employee equity programs[170]. Tax and Expenses - The company's tax expense for the nine months ended September 30, 2021, was $1.0 million, compared to $0.5 million in the prior year[163]. - Selling, general, and administrative expenses rose by 14% to $63.3 million, but as a percentage of revenue, these expenses decreased compared to the prior year[157]. Foreign Operations and Exchange Rates - Approximately 67% of net sales for the three months ended September 30, 2021, were from customers located outside the United States, up from 62% in the same period of 2020[180]. - A 10% change in foreign exchange rates would have an immaterial impact on the consolidated results of operations, as most sales outside the United States are denominated in U.S. dollars[181]. Investment Portfolio - The fair value of the investment portfolio was approximately $214.0 million at September 30, 2021, with a potential decrease of $2.1 million from a 100 basis point increase in interest rates[175].

MAKING A MATERIAL DIFFERENCE Q2 2021 Financial Results Conference Call Veeco (Nasdaq: VECO) August 3, 2021 Safe Harbor This presentation contains "forward-looking statements", within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995, as amended, that are based on management's expectations, estimates, projections and assumptions. Words such as "expects," "anticipates," "plans," "believes," "scheduled," "estimates" and variations of these words and similar ...

Financial Data and Key Metrics Changes - Revenue for Q2 2021 was $146 million, representing a 9% sequential increase and a 48% year-over-year increase [24] - Non-GAAP gross margin was 41.6%, flat compared to the previous quarter [27] - Non-GAAP operating income increased by 32% sequentially to $21.3 million, more than doubling from the same quarter last year [27] - Diluted non-GAAP EPS was $0.35, based on a diluted share count of 51.8 million shares [27] - Cash and short-term investments at the end of the quarter were $330 million, a sequential increase of $2 million [28] Business Line Data and Key Metrics Changes - Semiconductor revenue increased by 43% to $54 million, accounting for 37% of total revenue, driven by Laser Annealing and Lithography products [25] - Data Storage revenue increased by 84% to $52 million, making up 35% of total revenue, driven by capacity and technology additions [25] - Compound Semiconductor revenue increased by 37% to $24 million, representing 17% of total revenue, driven by wet processing systems for RF applications [25] Market Data and Key Metrics Changes - The U.S. region accounted for 46% of total revenue, driven by Ion Beam systems shipped to Data Storage customers [26] - The Asia-Pacific region (excluding China) made up 34% of revenue, while China accounted for 14% [26] - Wafer fab equipment spending is forecasted to be approximately $18 billion for 2021, with long-term forecasts predicting spending up to $100 billion annually [13] Company Strategy and Development Direction - The company is focused on four priorities: improving culture, enhancing profitability, achieving revenue growth, and investing in evaluation systems and service infrastructure [21][22] - The strategic rationale for the Ultratech acquisition is now serving as a cornerstone for the overall growth strategy [10] - The company is expanding its manufacturing footprint for Laser Annealing and Lithography products to meet increasing demand [16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the remainder of 2021, with near-term growth plans unfolding as expected [8] - The company anticipates a digestion period in Data Storage equipment in 2022 but expects to offset this with growth in Semiconductor and Compound Semiconductor markets [43] - Management highlighted strong momentum in the semiconductor market, particularly in Laser Annealing and Advanced Packaging [10][16] Other Important Information - The company plans to host a Virtual Analyst Day in September to share more details about its strategy, markets, and technologies [33] - The company expects Q3 revenue to be between $135 million and $155 million, with non-GAAP gross margin between 41% and 43% [30] Q&A Session Summary Question: Update on equipment wins and evaluation tools - The company has shipped eight out of ten planned evaluation tools, with strong performance in Laser Annealing and Compound Semiconductor applications [36][37] Question: Data Storage market outlook - The company has a significant backlog in Data Storage and expects continued growth despite a potential slowdown in the market [40][42] Question: Sources of second-half upside - The company is seeing strength in its Semiconductor business and higher service revenue, which may provide upside in the second half of the year [50] Question: Supply chain constraints - The company is experiencing supply chain constraints but has successfully mitigated risks through proactive measures [59][60] Question: Advanced Packaging business demand - The Advanced Packaging business is seeing broad-based demand, particularly in heterogeneous integration applications [74][76]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 0-16244 VEECO INSTRUMENTS INC. (Exact Name of Registrant as Specified in Its Charter) Delaware 11-2989601 (State or Other Jurisdiction of Incorporati ...

Financial Data and Key Metrics Changes - Revenue for Q1 2021 was $134 million, driven by semiconductor and data storage sales, with a gross margin above 41% and non-GAAP operating income of $16 million, leading to diluted non-GAAP EPS of $0.25 [9][28] - Cash flow from operations was $10 million, and cash and short-term investments increased by $8 million to $328 million [10][32] - The company increased its full-year revenue guidance to a range of $540 million to $560 million, reflecting a 21% year-on-year growth, up from a previous guidance of 17% [37] Business Line Data and Key Metrics Changes - Semiconductor revenue was $52 million, representing 39% of total revenue, driven by laser annealing and lithography products [29] - Compound semiconductor revenue was $25 million, making up 18% of total revenue, driven by wet processing systems for RF applications [29] - Data storage revenue was $41 million, accounting for 31% of total revenue, with expectations for continued growth [29] Market Data and Key Metrics Changes - The Asia Pacific region (excluding China) contributed 41% of total revenue, the United States accounted for 34%, China made up 15%, and EMEA contributed 10% [30] - Analysts forecasted a growth of more than 20% in wafer fab equipment for 2021 and another 10% in 2022, indicating a healthy macro environment in the semiconductor equipment space [11] Company Strategy and Development Direction - The company is focusing on maintaining resiliency across operations, profitability, and near-term growth with laser annealing, 5G RF, and data storage solutions [25][26] - Investments are being made in evaluation systems and service infrastructure to support growth and win additional application steps [26] - The company is engaging with customers and shipping evaluation systems to position itself for long-term growth [13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's performance and the positive macro trends in the semiconductor space, noting increased demand for laser annealing and advanced packaging [41][44] - The company is cautiously optimistic about returning to normal operations as vaccination rates increase, while prioritizing employee health and safety [7][8] Other Important Information - The company reported a backlog of $366 million at the beginning of the year, with data storage being the largest contributor [102] - The company is experiencing strong demand in the compound semiconductor market, particularly for RF filters and power amplifiers driven by 5G adoption [22][78] Q&A Session Summary Question: Demand pull-ins in semiconductor supply chain - Management noted an uptick in demand aligned with macro trends, particularly in laser annealing opportunities, and increased engagement in the semiconductor space [41] Question: Number of evaluation tools delivered - Six evaluation systems are currently in the field, with plans to ship four more by the end of the year, focusing on laser annealing and advanced packaging [45] Question: Advanced packaging market demand - Demand is broadening to include foundries and IDMs, not just OSATs, indicating a positive trend in the advanced packaging market [50] Question: Supply chain tightness - The supply chain is currently stable, with no significant constraints reported, and the company is actively managing supply chain issues [59] Question: Data storage business visibility - Management indicated that Q1 revenue was within expectations, and they anticipate a strong data storage year based on backlog [67][68] Question: Transition to HAMR and EMR heads - The transition to more complex heads is expected to increase the number of passes through Veeco's equipment, positively impacting demand [91] Question: Backlog size and growth - The backlog was reported at $366 million, with a positive trend in backlog execution, particularly in data storage and semiconductor segments [102]

MAKING A MATERIAL DIFFERENCE Q1 2021 Financial Results Conference Call Veeco (Nasdaq: VECO) May 4, 2021 Safe Harbor This presentation contains "forward-looking statements", within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995, as amended, that are based on management's expectations, estimates, projections and assumptions. Words such as "expects," "anticipates," "plans," "believes," "scheduled," "estimates" and variations of these words and similar exp ...

[FORM 10-Q Filing Information](index=1&type=section&id=FORM%2010-Q%20Filing%20Information) This section details Veeco Instruments Inc.'s Form 10-Q filing information, including the reporting period, stock exchange, and outstanding common stock - The document is a Quarterly Report on Form 10-Q for Veeco Instruments Inc. for the period ended **March 31, 2021**[3](index=3&type=chunk) - Veeco Instruments Inc. (VECO) common stock is registered on The NASDAQ Global Select Market[4](index=4&type=chunk) - The registrant is classified as a **large accelerated filer**[5](index=5&type=chunk) - As of April 28, 2021, there were **50,182,609 shares of common stock outstanding**[5](index=5&type=chunk) [Safe Harbor Statement and Risk Factors](index=4&type=section&id=Safe%20Harbor%20Statement) This section outlines the company's forward-looking statements and details various risks related to its business, global operations, intellectual property, industry, and general factors [Forward-Looking Statements](index=4&type=section&id=Forward-Looking%20Statements) This section outlines the forward-looking nature of statements within the report, emphasizing that they are subject to risks and uncertainties that could cause actual results to differ materially from projections - The report contains forward-looking statements, identified by words like 'believes,' 'anticipates,' 'expects,' 'estimates,' 'targets,' 'plans,' 'intends,' and 'will,' which are subject to risks and uncertainties[9](index=9&type=chunk) - Preparation of financial statements requires management to make estimates and assumptions that may ultimately differ from actual results, including the potential impact of the COVID-19 pandemic[10](index=10&type=chunk) [Risks Related to Business, Finance and Operations](index=4&type=section&id=Risks%20Related%20to%20Our%20Business%2C%20Finance%20and%20Operations) This section details specific risks impacting the company's business, financial health, and operations, including the effects of the COVID-19 pandemic, market conditions, sales cycle volatility, and financial instrument risks - The COVID-19 pandemic has strained and may continue to negatively impact business and operations, with uncertain duration and extent of impact on future results[11](index=11&type=chunk) - Unfavorable market conditions have adversely affected, and may continue to affect, operating results[11](index=11&type=chunk) - The timing of orders, shipments, and revenue recognition can cause significant quarterly operating result fluctuations[11](index=11&type=chunk) - The company may not have the ability to raise funds necessary to settle cash conversions or repurchase its 2023, 2025, and 2027 Convertible Senior Notes[11](index=11&type=chunk) [Risks Associated with Global Business](index=6&type=section&id=Risks%20Associated%20with%20Operating%20a%20Global%20Business) This section highlights risks inherent in operating internationally, such as exposure to foreign currency fluctuations, trade policy changes, export controls, and global regulatory requirements - The company is exposed to risks of operating businesses outside the United States, including foreign currency exchange risks[16](index=16&type=chunk) - Changes in U.S. trade policy, export controls, and ongoing trade disputes (e.g., U.S. and China) have adversely affected, and may continue to affect, business[16](index=16&type=chunk) - The company is exposed to various risks associated with global regulatory requirements and may be subject to liabilities under the Foreign Corrupt Practices Act[16](index=16&type=chunk) [Risks Related to Intellectual Property and Cybersecurity](index=6&type=section&id=Risks%20Related%20to%20Intellectual%20Property%20and%20Cybersecurity) This section addresses risks concerning the company's intellectual property rights and the potential for cybersecurity breaches, which could lead to significant harm - Disruptions in information technology systems or data security incidents could result in significant financial, legal, regulatory, business, and reputational harm[16](index=16&type=chunk) - The company may be unable to effectively enforce and protect its intellectual property rights and may be subject to claims of intellectual property infringement by others[16](index=16&type=chunk) [Risks Associated with Industry](index=6&type=section&id=Risks%20Associated%20with%20Our%20Industry) This section outlines industry-specific challenges, including intense competition, rapid technological change, and the cyclical nature of the markets served, particularly the demand for consumer electronics - The company faces significant competition and operates in industries characterized by rapid technological change[16](index=16&type=chunk) - Certain sales are dependent on the demand for consumer electronics, which can experience significant volatility[16](index=16&type=chunk) - The company has a concentrated customer base in highly concentrated industries, and the cyclicality of these industries directly affects its business[16](index=16&type=chunk) [General Risk Factors](index=8&type=section&id=General%20Risk%20Factors) This section covers broader operational and financial risks, such as inventory management, reliance on suppliers, stock price volatility, regulatory compliance, and the ability to attract and retain employees - Failure to estimate customer demand accurately could result in inventory obsolescence, liabilities to suppliers, and manufacturing interruptions[20](index=20&type=chunk) - Reliance on a limited number of suppliers, some of whom are sole sources, poses a risk[20](index=20&type=chunk) - The price of common shares is volatile and could decrease[20](index=20&type=chunk) - Inability to attract, retain, and motivate employees could have a material adverse effect on the business[20](index=20&type=chunk) [PART I—FINANCIAL INFORMATION](index=9&type=section&id=PART%20I%E2%80%94FINANCIAL%20INFORMATION) This part presents the company's unaudited consolidated financial statements and management's discussion and analysis of financial condition and results of operations [Item 1. Financial Statements](index=9&type=section&id=Item%201.%20Financial%20Statements) This section provides the unaudited consolidated financial statements, including the balance sheets, statements of operations, comprehensive income (loss), and cash flows, along with detailed notes explaining the basis of presentation, significant accounting policies, and specific financial line items [Consolidated Balance Sheets](index=9&type=section&id=Consolidated%20Balance%20Sheets) This section presents the company's consolidated balance sheets, detailing assets, liabilities, and stockholders' equity at specific reporting dates Consolidated Balance Sheet Highlights (in thousands) | Metric | March 31, 2021 | December 31, 2020 | | :------------------------- | :------------- | :---------------- | | Total Assets | $945,242 | $898,064 | | Total Liabilities | $532,781 | $489,690 | | Total Stockholders' Equity | $412,461 | $408,374 | [Consolidated Statements of Operations](index=11&type=section&id=Consolidated%20Statements%20of%20Operations) This section presents the company's consolidated statements of operations, detailing net sales, expenses, and net income (loss) for the periods presented Consolidated Statements of Operations Highlights (in thousands, except per share amounts) | Metric | Three months ended March 31, 2021 | Three months ended March 31, 2020 | Change (YoY) | | :--------------------------------- | :-------------------------------- | :-------------------------------- | :----------- | | Net sales | $133,714 | $104,502 | +28.0% | | Cost of sales | $78,800 | $58,083 | +35.7% | | Gross profit | $54,914 | $46,419 | +18.3% | | Operating income (loss) | $9,415 | $4,567 | +106.1% | | Income (loss) before income taxes | $2,792 | $(299) | N/A | | Net income (loss) | $2,494 | $(567) | N/A | | Basic EPS | $0.05 | $(0.01) | N/A | | Diluted EPS | $0.05 | $(0.01) | N/A | [Consolidated Statements of Comprehensive Income (Loss)](index=12&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20%28Loss%29) This section presents the company's consolidated statements of comprehensive income (loss), including net income and other comprehensive income (loss) Consolidated Statements of Comprehensive Income (Loss) (in thousands) | Metric | Three months ended March 31, 2021 | Three months ended March 31, 2020 | | :--------------------------------- | :-------------------------------- | :-------------------------------- | | Net income (loss) | $2,494 | $(567) | | Total other comprehensive income (loss), net of tax | $(19) | $153 | | Total comprehensive income (loss) | $2,475 | $(414) | [Consolidated Statements of Cash Flows](index=13&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This section presents the company's consolidated statements of cash flows, detailing cash movements from operating, investing, and financing activities Consolidated Statements of Cash Flows Highlights (in thousands) | Metric | Three months ended March 31, 2021 | Three months ended March 31, 2020 | | :--------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash provided by (used in) operating activities | $10,485 | $(2,396) | | Net cash provided by (used in) investing activities | $1,395 | $35,194 | | Net cash provided by (used in) financing activities | $(747) | $276 | | Net increase (decrease) in cash, cash equivalents, and restricted cash | $11,103 | $33,026 | | Cash, cash equivalents, and restricted cash - end of period | $141,386 | $162,977 | [Notes to the Consolidated Financial Statements](index=14&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the consolidated financial statements, including accounting policies and specific line item breakdowns [Note 1 — Basis of Presentation](index=14&type=section&id=Note%201%20%E2%80%94%20Basis%20of%20Presentation) This note describes the basis of preparing the unaudited interim financial statements, including accounting policies and the impact of estimates - The unaudited Consolidated Financial Statements are prepared in accordance with U.S. GAAP for interim financial information and SEC Regulation S-X[32](index=32&type=chunk) - Management's estimates and assumptions are significantly affected by current events, including the COVID-19 pandemic, which may impact sales, expenses, and asset valuations[34](index=34&type=chunk) - Revenue is recognized upon the transfer of control of products or services to the customer, with judgment required for identifying performance obligations and allocating revenue for multiple deliverables[35](index=35&type=chunk)[36](index=36&type=chunk) - The adoption of ASU 2020-06 in Q1 2022 is expected to decrease non-cash interest expense and increase diluted earnings per share due to changes in accounting for convertible debt instruments[47](index=47&type=chunk) [Note 2 — Income (Loss) Per Common Share](index=19&type=section&id=Note%202%20%E2%80%94%20Income%20%28Loss%29%20Per%20Common%20Share) This note details the calculation of basic and diluted income (loss) per common share, including the treatment of convertible senior notes Income (Loss) Per Common Share (in thousands, except per share amounts) | Metric | Three months ended March 31, 2021 | Three months ended March 31, 2020 | | :--------------------------------- | :-------------------------------- | :-------------------------------- | | Net income (loss) | $2,494 | $(567) | | Basic weighted average shares outstanding | 48,624 | 47,811 | | Diluted weighted average shares outstanding | 53,050 | 47,811 | - The company accounts for the conversion spread of its convertible senior notes using the treasury stock method, as it intends to settle the principal in cash[49](index=49&type=chunk) [Note 3 — Assets](index=19&type=section&id=Note%203%20%E2%80%94%20Assets) This note provides detailed information on the company's assets, including fair value of investments, inventories, and intangible assets - Short-term investments are generally classified as available-for-sale and reported at fair value, with unrealized gains and losses presented in accumulated other comprehensive income[50](index=50&type=chunk) Fair Value of Cash Equivalents and Short-term Investments (March 31, 2021, in thousands) | Category | Level 1 | Level 2 | Total | | :----------------------- | :------ | :------ | :------ | | Cash equivalents | $81,047 | $2,952 | $83,999 | | Short-term investments | $120,096 | $66,046 | $186,142 | Inventories (in thousands) | Category | March 31, 2021 | December 31, 2020 | | :--------------- | :------------- | :---------------- | | Materials | $90,115 | $82,679 | | Work-in-process | $55,995 | $53,979 | | Finished goods | $10,106 | $9,248 | | **Total** | **$156,216** | **$145,906** | Net Intangible Assets (in thousands) | Category | March 31, 2021 | December 31, 2020 | | :---------------------- | :------------- | :---------------- | | Technology | $23,247 | $25,550 | | Customer relationships | $15,623 | $16,334 | | Trademarks and tradenames | $3,957 | $4,296 | | Other | $4 | $5 | | **Total** | **$42,831** | **$46,185** | [Note 4 — Liabilities](index=26&type=section&id=Note%204%20%E2%80%94%20Liabilities) This note details the company's liabilities, including accrued expenses, warranty reserves, customer deposits, and convertible senior notes Accrued Expenses and Other Current Liabilities (in thousands) | Category | March 31, 2021 | December 31, 2020 | | :-------------------------- | :------------- | :---------------- | | Payroll and related benefits | $29,238 | $26,630 | | Warranty | $5,363 | $5,058 | | Operating lease liabilities | $4,375 | $4,148 | | Interest | $4,017 | $2,574 | | Professional fees | $1,335 | $1,112 | | Sales, use, and other taxes | $3,221 | $2,658 | | Other | $3,515 | $2,696 | | **Total** | **$51,064** | **$44,876** | Changes in Product Warranty Reserves (in thousands) | Metric | Amount | | :-------------------------- | :----- | | Balance - December 31, 2020 | $5,058 | | Warranties issued | $1,561 | | Consumption of reserves | $(1,310) | | Changes in estimate | $54 | | Balance - March 31, 2021 | $5,363 | - Customer deposits totaled **$52.2 million** at March 31, 2021, and deferred revenue was **$16.7 million**[66](index=66&type=chunk) - The company has outstanding **2.70% Convertible Senior Notes due 2023 ($131.7M principal)**, **3.50% Convertible Senior Notes due 2025 ($132.5M principal)**, and **3.75% Convertible Senior Notes due 2027 ($125.0M principal)**[142](index=142&type=chunk)[143](index=143&type=chunk) Total Interest Expense Related to Convertible Senior Notes (in thousands) | Category | Three months ended March 31, 2021 | Three months ended March 31, 2020 | | :----------------------------------------- | :-------------------------------- | :-------------------------------- | | Cash Interest Expense | $3,220 | $2,329 | | Non-cash Interest Expense | $3,514 | $3,320 | | **Total Interest Expense** | **$6,734** | **$5,649** | [Note 5 — Commitments and Contingencies](index=33&type=section&id=Note%205%20%E2%80%94%20Commitments%20and%20Contingencies) This note outlines the company's operating lease liabilities, purchase commitments, bank guarantees, and ongoing legal proceedings - The weighted average remaining lease term for operating leases was **12 years** as of March 31, 2021, with a weighted average discount rate of **5.7%**[85](index=85&type=chunk) Maturities of Operating Lease Liabilities (March 31, 2021, in thousands) | Period | Payments Due | | :-------------------------- | :------------- | | 2021 | $3,559 | | 2022 | $4,335 | | 2023 | $3,170 | | 2024 | $2,896 | | 2025 | $2,506 | | Thereafter | $38,367 | | **Total future minimum lease payments** | **$54,833** | - Purchase commitments totaled **$158.8 million** at March 31, 2021, with substantially all due within one year[87](index=87&type=chunk) - Outstanding bank guarantees and standby letters of credit totaled **$7.2 million** at March 31, 2021[88](index=88&type=chunk) - The company is vigorously defending two purported class action lawsuits and a derivative action related to the Ultratech acquisition, but does not believe their ultimate resolution will have a material adverse effect[89](index=89&type=chunk)[90](index=90&type=chunk)[91](index=91&type=chunk) [Note 6 — Derivative Financial Instruments](index=34&type=section&id=Note%206%20%E2%80%94%20Derivative%20Financial%20Instruments) This note describes the company's use of derivative financial instruments to manage foreign currency exchange risk and their accounting treatment - The company uses monthly forward derivative contracts to mitigate foreign currency exchange rate risks, but these are not designated as hedges[92](index=92&type=chunk) - There were no outstanding derivative contracts at March 31, 2021, or December 31, 2020, and no gains or losses from currency exchange derivatives during the three months ended March 31, 2021 and 2020[93](index=93&type=chunk) [Note 7 — Equity](index=35&type=section&id=Note%207%20%E2%80%94%20Equity) This note details changes in stockholders' equity, including common stock, additional paid-in capital, and accumulated deficit Changes in Stockholders' Equity (in thousands) | Metric | Balance at Dec 31, 2020 | Net Income (Loss) | Other Comprehensive Income (Loss) | Share-based Compensation | Net Issuance under Employee Stock Plans | Balance at Mar 31, 2021 | | :-------------------------- | :---------------------- | :---------------- | :-------------------------------- | :----------------------- | :-------------------------------------- | :---------------------- | | Common Stock (Amount) | $497 | — | — | — | $5 | $502 | | Additional Paid-in Capital | $1,113,352 | — | — | $3,237 | $(1,630) | $1,114,959 | | Accumulated Deficit | $(707,321) | $2,494 | — | — | — | $(704,827) | | Accumulated Other Comprehensive Income | $1,846 | — | $(19) | — | — | $1,827 | | **Total Stockholders' Equity** | **$408,374** | **$2,494** | **$(19)** | **$3,237** | **$(1,625)** | **$412,461** | [Note 8 — Share-based Compensation](index=35&type=section&id=Note%208%20%E2%80%94%20Share-based%20Compensation) This note provides details on share-based compensation expense and the balance of non-vested restricted and performance shares Share-based Compensation Expense (in thousands) | Line Item | Three months ended March 31, 2021 | Three months ended March 31, 2020 | | :--------------------------------- | :-------------------------------- | :-------------------------------- | | Cost of sales | $495 | $521 | | Research and development | $817 | $874 | | Selling, general, and administrative | $1,925 | $2,251 | | **Total** | **$3,237** | **$3,646** | - The balance of non-vested restricted shares and performance shares increased from **2,040 thousand shares** at December 31, 2020, to **2,610 thousand shares** at March 31, 2021, with **813 thousand shares granted** during the period[97](index=97&type=chunk) [Note 9 — Income Taxes](index=36&type=section&id=Note%209%20%E2%80%94%20Income%20Taxes) This note details income tax expense (benefit), including domestic and foreign components, and the valuation allowance against U.S. deferred tax assets Income (Loss) Before Income Taxes and Income Tax Expense (Benefit) (in thousands) | Metric | Three months ended March 31, 2021 | Three months ended March 31, 2020 | | :--------------------------------- | :-------------------------------- | :-------------------------------- | | Income (loss) before income taxes | $2,792 | $(299) | | Income tax expense (benefit) | $298 | $268 | - The company's U.S. deferred tax assets are fully offset by a valuation allowance, as realization of future benefits is not more likely than not[98](index=98&type=chunk)[100](index=100&type=chunk) - Domestic tax expense is primarily attributable to the tax amortization of indefinite-lived intangible assets, while foreign tax expense is due to non-U.S. operations profits and foreign withholding taxes[100](index=100&type=chunk) [Note 10 — Segment Reporting and Geographic Information](index=37&type=section&id=Note%2010%20%E2%80%94%20Segment%20Reporting%20and%20Geographic%20Information) This note provides information on the company's single operating segment and disaggregated sales data by end-market and geographic region - Veeco operates and measures its results in one operating segment: the development, manufacture, sales, and support of semiconductor and thin film process equipment[101](index=101&type=chunk) Sales by End-Market (in thousands) | End-Market | Three months ended March 31, 2021 | Three months ended March 31, 2020 | Change (YoY) | | :----------------------- | :-------------------------------- | :-------------------------------- | :----------- | | Semiconductor | $51,631 | $37,423 | +38% | | Compound Semiconductor | $24,751 | $18,430 | +34% | | Data Storage | $40,980 | $38,883 | +5% | | Scientific & Other | $16,352 | $9,766 | +67% | | **Total** | **$133,714** | **$104,502** | **+28%** | Sales by Geographic Region (in thousands) | Geographic Region | Three months ended March 31, 2021 | Three months ended March 31, 2020 | Change (YoY) | | :------------------------ | :-------------------------------- | :-------------------------------- | :----------- | | United States | $45,162 | $39,635 | +14% | | EMEA | $13,625 | $16,150 | -16% | | China | $20,007 | $10,472 | +91% | | Rest of APAC | $54,877 | $37,943 | +45% | | Rest of World | $43 | $302 | -86% | | **Total** | **$133,714** | **$104,502** | **+28%** | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=39&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial performance and condition, discussing key factors influencing results, including the impact of COVID-19, business segment updates, and detailed analysis of revenue and expense line items [Cautionary Statement Regarding Forward Looking Statements](index=39&type=section&id=Cautionary%20Statement%20Regarding%20Forward%20Looking%20Statements) This section reiterates the cautionary statement regarding forward-looking statements, emphasizing potential material differences from actual results - The discussion contains forward-looking statements, and readers should not place undue reliance on them as actual results may differ materially due to risks and uncertainties[106](index=106&type=chunk) [Executive Summary](index=39&type=section&id=Executive%20Summary) This section provides an overview of Veeco's business as an innovative manufacturer of semiconductor process equipment and its core technologies - Veeco is an innovative manufacturer of semiconductor process equipment, utilizing ion beam, laser annealing, lithography, MOCVD, and single wafer etch & clean technologies[107](index=107&type=chunk) [COVID-19 Update](index=39&type=section&id=COVID-19%20Update) This section details the impact of the COVID-19 pandemic on Veeco's operations, supply chain, and global sales, along with mitigation efforts - Veeco's operations are considered part of critical and essential infrastructure, allowing manufacturing facilities to remain open despite governmental measures to contain the COVID-19 pandemic[109](index=109&type=chunk) - Net sales to customers outside the United States represented approximately **68% of total net sales in 2020**, indicating significant global exposure to economic conditions[110](index=110&type=chunk) - The company has not experienced significant supply chain interruptions to date but continues to monitor risks and has implemented business continuity activities, including health and safety protocols, remote work, and supply chain re-sourcing[111](index=111&type=chunk)[112](index=112&type=chunk)[114](index=114&type=chunk) [Business Update](index=41&type=section&id=Business%20Update) This section provides updates on sales drivers and growth expectations across the Semiconductor, Compound Semiconductor, and Data Storage markets - Sales in the Semiconductor market are driven by laser annealing and lithography systems for Advanced Packaging, with momentum in advanced node logic and memory applications[116](index=116&type=chunk) - The Compound Semiconductor market is supported by a broad portfolio of technologies for emerging applications like 5G RF device manufacturing, photonics (micro-LEDs), and GaN-based power electronics[117](index=117&type=chunk) - Data Storage market sales are growing due to demand for Ion Beam systems, driven by big data, cloud-based storage, and innovations in hard disk drive manufacturing[118](index=118&type=chunk) - Near-term revenue growth through 2021 is expected from laser annealing, 5G RF, and data storage products, with long-term growth (2022 and beyond) anticipated from Semiconductor and Compound Semiconductor markets[120](index=120&type=chunk) [Results of Operations](index=44&type=section&id=Results%20of%20Operations) This section analyzes the company's financial performance, including detailed discussions of net sales, gross profit, and operating expenses [Net Sales](index=44&type=section&id=Net%20Sales) This section analyzes net sales performance by end-market and geographic region, highlighting key drivers of change Net Sales by End-Market (in thousands) | End-Market | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | Change (YoY) | | :----------------------- | :-------------------------------- | :-------------------------------- | :----------- | | Semiconductor | $51,631 | $37,423 | +38% | | Compound Semiconductor | $24,751 | $18,430 | +34% | | Data Storage | $40,980 | $38,883 | +5% | | Scientific & Other | $16,352 | $9,766 | +67% | | **Total** | **$133,714** | **$104,502** | **+28%** | Net Sales by Geographic Region (in thousands) | Geographic Region | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | Change (YoY) | | :------------------------ | :-------------------------------- | :-------------------------------- | :----------- | | United States | $45,162 | $39,635 | +14% | | EMEA | $13,625 | $16,150 | -16% | | China | $20,007 | $10,472 | +91% | | Rest of APAC | $54,877 | $37,943 | +45% | | Rest of World | $43 | $302 | -86% | | **Total** | **$133,714** | **$104,502** | **+28%** | - The increase in sales in the Rest of APAC region was primarily driven by shipments to data storage customers[125](index=125&type=chunk) [Gross Profit](index=46&type=section&id=Gross%20Profit) This section analyzes gross profit and gross margin trends, explaining factors influencing changes in profitability Gross Profit (in thousands) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | Change (YoY) | | :----------- | :-------------------------------- | :-------------------------------- | :----------- | | Gross profit | $54,914 | $46,419 | +18% | | Gross margin | 41% | 44% | -3 percentage points | - Gross margins decreased primarily due to product and region mix of sales and an increase in spending to support higher business activity[127](index=127&type=chunk) [Research and Development](index=46&type=section&id=Research%20and%20Development) This section discusses research and development expenses, detailing investments in new technologies and applications Research and Development Expenses (in thousands) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | Change (YoY) | | :-------------------------- | :-------------------------------- | :-------------------------------- | :----------- | | R&D expenses | $21,844 | $19,195 | +14% | | R&D as % of revenue | 16% | 18% | -2 percentage points | - The increase in R&D expenses was primarily due to personnel-related expenses as the company invests in new research and applications for Semiconductor and Compound Semiconductor markets[128](index=128&type=chunk) [Selling, General, and Administrative](index=46&type=section&id=Selling%2C%20General%2C%20and%20Administrative) This section analyzes selling, general, and administrative expenses, including factors contributing to changes and future expectations Selling, General, and Administrative Expenses (in thousands) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | Change (YoY) | | :-------------------------- | :-------------------------------- | :-------------------------------- | :----------- | | SG&A expenses | $20,255 | $18,304 | +11% | | SG&A as % of revenue | 15% | 18% | -3 percentage points | - The increase in SG&A expenses was primarily due to higher variable expenses associated with increased revenue and order intake[129](index=129&type=chunk) - The company expects a period of duplicate operating expenses during the one-to-two-year transition to its new leased facility in San Jose, California[129](index=129&type=chunk) [Amortization Expense](index=46&type=section&id=Amortization%20Expense) This section details amortization expense for intangible assets and the reasons for its change over the periods presented Amortization of Intangible Assets (in thousands) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | Change (YoY) | | :--------------------------------- | :-------------------------------- | :-------------------------------- | :----------- | | Amortization expense | $3,354 | $3,837 | -13% | - Amortization expense decreased primarily due to changes in amortization schedules reflecting expected cash flows of certain intangible assets[130](index=130&type=chunk) [Interest Income (Expense)](index=46&type=section&id=Interest%20Income%20%28Expense%29) This section analyzes net interest income (expense), including cash and non-cash components, and the impact of convertible notes Net Interest Income (Expense) (in thousands) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | Change (YoY) | | :--------------------------------- | :-------------------------------- | :-------------------------------- | :----------- | | Net interest expense | $(6,623) | $(4,866) | +36% | | Non-cash charges (amortization of debt discount/transaction costs) | $3,514 | $3,320 | +6% | | Interest income decrease | ~$0.7 million | N/A | N/A | - The increase in net interest expense was primarily related to the issuance of the 2027 Notes (May 2020) and 2025 Notes (November 2020), partially offset by the partial repurchase and exchange of the 2023 Notes[131](index=131&type=chunk) [Income Taxes](index=48&type=section&id=Income%20Taxes) This section discusses income tax expense (benefit), including domestic and foreign components, and the treatment of deferred tax assets Income Tax Expense (Benefit) (in thousands) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--------------------------------- | :-------------------------------- | :-------------------------------- | | Income tax expense (benefit) | $298 | $268 | | Domestic tax expense | $100 | $100 | | Non-U.S. operations tax expense | $200 | $200 | - The company's U.S. deferred tax assets are fully offset by a valuation allowance, as it cannot conclude that these future benefits will be realized[135](index=135&type=chunk) [Liquidity and Capital Resources](index=48&type=section&id=Liquidity%20and%20Capital%20Resources) This section assesses the company's liquidity position, capital resources, cash flow activities, and management of convertible senior notes [Cash Flow Activity](index=49&type=section&id=Cash%20Flow%20Activity) This section details cash flow from operating, investing, and financing activities, and the overall change in cash and equivalents Cash, Cash Equivalents, and Short-term Investments (in thousands) | Metric | March 31, 2021 | December 31, 2020 | | :-------------------------- | :------------- | :---------------- | | Cash and cash equivalents | $140,733 | $129,625 | | Restricted cash | $653 | $658 | | Short-term investments | $186,142 | $189,771 | | **Total** | **$327,528** | **$320,054** | Net Cash Flow by Activity (in thousands) | Activity | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--------------------------------- | :-------------------------------- | :-------------------------------- | | Operating Activities | $10,485 | $(2,396) | | Investing Activities | $1,395 | $35,194 | | Financing Activities | $(747) | $276 | - Net cash provided by operating activities improved to **$10.5 million** in Q1 2021, driven by net income and non-cash adjustments, partially offset by increases in accounts receivable and inventories[139](index=139&type=chunk) - Capital expenditures are expected to total **$30 million to $40 million** over the next one-to-two years for the new San Jose facility, leading to duplicate operating expenses during the transition[140](index=140&type=chunk) [Convertible Senior Notes](index=49&type=section&id=Convertible%20Senior%20Notes%20%28Liquidity%29) This section provides details on the company's outstanding convertible senior notes, their terms, and management's liquidity assessment - The company has **$131.7 million principal of 2.70% convertible senior notes due 2023**, **$132.5 million principal of 3.50% convertible senior notes due 2025**, and **$125.0 million principal of 3.75% convertible senior notes due 2027**[142](index=142&type=chunk)[143](index=143&type=chunk) - The 2027 Notes are currently convertible by shareholders until **June 30, 2021**[143](index=143&type=chunk) - Management believes it has sufficient capital resources and cash flows from operations to support scheduled interest payments and cash payment of principal amounts for any converted notes[144](index=144&type=chunk) [Contractual Obligations and Commitments](index=51&type=section&id=Contractual%20Obligations%20and%20Commitments) This section outlines the company's significant contractual obligations and purchase commitments, and their expected funding sources - The company has purchase commitments of **$158.8 million** at March 31, 2021, with substantially all due within one year, expected to be funded by cash generated from operations[87](index=87&type=chunk)[145](index=145&type=chunk) [Off-Balance Sheet Arrangements](index=51&type=section&id=Off-Balance%20Sheet%20Arrangements) This section confirms the absence of material off-balance sheet arrangements beyond disclosed guarantees and commitments - The company does not have any material off-balance sheet arrangements other than disclosed bank guarantees and purchase commitments[146](index=146&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=51&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section details the company's exposure to market risks, specifically interest rate risk related to its investment portfolio and currency exchange risk from global operations, and the strategies employed to mitigate these risks [Interest Rate Risk](index=51&type=section&id=Interest%20Rate%20Risk) This section quantifies the company's exposure to interest rate risk on its investment portfolio and the potential impact of rate changes - The company's investment portfolio includes fixed-income securities with a fair value of approximately **$186.1 million** at March 31, 2021[147](index=147&type=chunk) - A **100 basis point increase** in interest rates would result in a **$0.9 million decrease** in the fair value of the investment portfolio[147](index=147&type=chunk) [Currency Exchange Risk](index=51&type=section&id=Currency%20Exchange%20Risk) This section details the company's exposure to foreign currency exchange risk from global operations and its mitigation strategies - Net sales to customers outside the United States represented approximately **66% of total net sales** for the three months ended March 31, 2021[150](index=150&type=chunk) - Most of the company's sales outside the United States are denominated in U.S. dollars, leading to an immaterial impact on consolidated results from a **10% change in foreign exchange rates**[152](index=152&type=chunk) - The company uses monthly forward derivative contracts to mitigate foreign currency exchange rate risk, but these are not designated as hedges[149](index=149&type=chunk) [Item 4. Controls and Procedures](index=53&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of the company's disclosure controls and procedures as of March 31, 2021, and states that there were no material changes in internal control over financial reporting during the quarter [Evaluation of Disclosure Controls and Procedures](index=53&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This section confirms the effectiveness of the company's disclosure controls and procedures as evaluated by executive officers - The principal executive and financial officers evaluated and concluded that the company's disclosure controls and procedures were **effective** as of March 31, 2021[153](index=153&type=chunk) [Changes in Internal Control Over Financial Reporting](index=53&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) This section reports on any material changes in internal control over financial reporting during the quarter - There were no changes in internal control over financial reporting during the quarter ended March 31, 2021, that have materially affected or are reasonably likely to materially affect it[154](index=154&type=chunk) [PART II—OTHER INFORMATION](index=53&type=section&id=PART%20II%E2%80%94OTHER%20INFORMATION) This part includes disclosures on legal proceedings, risk factors, equity sales, defaults, mine safety, other information, and exhibits [Item 1. Legal Proceedings](index=53&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in two purported class action lawsuits related to the Ultratech acquisition, alleging false/misleading statements, and a derivative action alleging breach of fiduciary duty. Veeco is vigorously defending these matters and does not believe their ultimate resolution will materially affect its financial position - Two purported class action complaints (Wolther v. Maheshwari et al.) were filed alleging false/misleading statements in the registration statement for the Ultratech acquisition[156](index=156&type=chunk) - A derivative action (Vladimir Gusinsky Revocable Trust v. Peeler, et al.) was filed alleging breach of fiduciary duty and waste of corporate assets related to the Ultratech acquisition[157](index=157&type=chunk) - The company does not believe that the ultimate resolution of these legal proceedings will have a material adverse effect on its consolidated financial position, results of operations, or cash flows[158](index=158&type=chunk) [Item 1A. Risk Factors](index=54&type=section&id=Item%201A.%20Risk%20Factors) This item refers to the risk factors previously disclosed in the Safe Harbor Statement of this 10-Q and the 2020 Form 10-K, stating that there have been no material changes - There have been no material changes from the risk factors previously disclosed in the Safe Harbor Statement at the beginning of this report and in Part I — Item 1A of the 2020 Form 10-K[159](index=159&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=54&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities or use of proceeds during the period - No unregistered sales of equity securities and use of proceeds were reported[160](index=160&type=chunk) [Item 3. Defaults Upon Senior Securities](index=54&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities during the period - No defaults upon senior securities were reported[161](index=161&type=chunk) [Item 4. Mine Safety Disclosures](index=54&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Mine Safety Disclosures are not applicable to the company[161](index=161&type=chunk) [Item 5. Other Information](index=54&type=section&id=Item%205.%20Other%20Information) The company reported no other information required to be disclosed under this item - No other information was reported under this item[162](index=162&type=chunk) [Item 6. Exhibits](index=55&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the SEC, including forms of stock awards, certifications of officers, and XBRL documents - Exhibits include forms of Notice of Performance Restricted Stock Unit Award and Restricted Stock Award, certifications of the Chief Executive Officer and Chief Financial Officer, and XBRL documents[165](index=165&type=chunk) [SIGNATURES](index=56&type=section&id=SIGNATURES) This section contains the official signatures of the Chief Executive Officer and Chief Financial Officer, certifying the report on behalf of Veeco Instruments Inc - The report was signed on **May 4, 2021**, by William J. Miller, Ph.D., Chief Executive Officer, and John P. Kiernan, Senior Vice President and Chief Financial Officer[167](index=167&type=chunk)[168](index=168&type=chunk)