Filed by Veeco Instruments Inc.
Filed pursuant to Rules 165 and 425 promulgated under
the Securities Act of 1933, as amended, and deemed filed
pursuant to Rule 14a-12 promulgated under the Securities
Exchange Act of 1934, as amended.
Subject Company: Veeco Instruments Inc.
Commission File No.: 0-16244
On July 15th, 2002, Veeco made available the following transcript.
VEECO
Moderator: Debra Wasser
07-12-02/9:00 am CT
Confirmation # 491789
Page 1
VEECO
MODERATOR: DEBRA WASSER
JULY 12, 2002
9:00 AM CT
Operator: Good day, everyone, and welcome to this Veeco and FEI merger
conference call. Today's conference is being recorded.
For opening remarks and introductions, I would like to turn the call
over to Ms. Debra Wasser. Please go ahead, Ms. Wasser.
Debra Wasser: Thank you, operator. And good morning, everyone. This is
Debra Wasser, Vice President of Investor Relations for Veeco
Instruments.
On behalf of the management teams of Veeco Instruments and FEI Company,
I'm excited to welcome you all to this morning's conference call to
announce the signing of our definitive merger agreement to form a new
company, Veeco FEI, Inc.
Joining me here in Woodbury New York are Vahe Sarkissian, Chairman, CEO,
and President of FEI Company, who will become Veeco FEI's Chairman of
the Board and Chief Strategy Officer, Ed Braun, Chairman, CEO...FEI's
CEO and President, and Jack Rein, Veeco's CFO, who will continue in this
role for Veeco FEI.
VEECO
Moderator: Debra Wasser
07-12-02/9:00 am CT
Confirmation # 491789
Page 2
I have few items to cover which may take a few moments - so bear with
me - before we start the presentation. Copies of this morning's press
release and the slide presentation related to this conference call are
available on both www.veeco.com and www.feico.com.
This call is being recorded by Veeco Instruments and is copyrighted
material. It cannot be recorded or rebroadcast without Veeco's expressed
permission. You participation implies consent to our taping.
This call is also being Webcast live at both companies' Web sites and
will be available for replay and archived for future reference. The
companies do not plan to update the information on this Webcast once it
has been archived.
In regard to SEC filings, we draw your attention to the fact that in
connection with the proposed merger Veeco and FEI will be jointly filing
a proxy statement registration statement on Form S4 containing
prospectus related to the shares to be issued to FEI stockholders with
the SEC as soon as practicable.
Investors and security holders are urged to read this document when it
becomes available, because it will contain important information about
the proposed merger.
Investors and security holders may obtain copies of this document when
it has been filed with the SEC as well as other SEC filings of Veeco and
FEI free of charge from the SEC's Web site at www.sec.gov as well as
from the applicable company by directing a request to investor relations
for Veeco at 516-677-0200, Extension 1403, and to investor relations for
FEI at 503-640-7500, Extension 7527.
VEECO
Moderator: Debra Wasser
07-12-02/9:00 am CT
Confirmation # 491789
Page 3
Veeco and FEI as well as their officers and directors may be deemed to
be participants in the solicitation of proxies from the Veeco and FEI
stockholders with respect to the Veeco FEI transaction.
Information regarding such individuals is included in Veeco's and FEI's
proxy statements dated April 9, 2002 and April 17, 2002, respectively,
available free of charge from the SEC and the applicable company as
indicated above.
Veeco and FEI will each be filing with the SEC within a few days current
reports on Form 8K containing the full text of their merger agreement.
These filings will be available free of charge from the SEC and the
applicable companies as identified above.
I will now read the Safe Harbor statement. Statements made on this
conference call that are not historical facts and that relate to future
plans or events are forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995.
These forward-looking statements include statements about prospects for
future growth, the success of the proposed merger, product revenues,
market acceptance of technology, and improved economic conditions. These
statements are subject to risks and uncertainties.
Factors that could materially affect the company's outlook include, but
are not limited to, the company's ability to successfully consummate the
merger and to achieve the anticipated benefits of the merger, downturns
in the semiconductor manufacturing market, lower than expected customer
orders, cancellation of customer orders, increased competition and new
product offerings from competitors, failure of the competitors to
introduce products as planned, failure of the company's products and
technology to find acceptance with customers, as well as business
conditions and growth in the electronics industry and general economy,
both domestic and foreign.
VEECO
Moderator: Debra Wasser
07-12-02/9:00 am CT
Confirmation # 491789
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Additional factors that could materially decrease revenues, prospects,
and market acceptance internationally include fluctuations in interest
and exchange rates, including changes in relevant foreign currency
exchange rates between time of sale and time of payment and changes in
trade policies and tariff regulations.
Moreover, there is no certainty that economic conditions will improve in
the near future. We caution you that actual results may differ
materially from those forward-looking statements due to a number of risk
and uncertainties.
We refer you to Veeco's and FEI's 10Q and 10K filings made with the SEC
for additional information on risk factors which could cause actual
results to differ materially from current expectations.
I have one brief last item to cover. In this morning's press release,
both Veeco and FEI stated each company expects to meet its prior
guidance which was provided for the quarter - the second quarter of
2002, excuse me. We do not intend to provide any further information on
our quarterly financial results until we each individually report the
second quarter on July 29.
Thank you for your patience during this lengthy introduction. I would
now like to, happily, turn the call over to Vahe.
Vahe Sarkissian: Thank you, Debra. We are excited about our $1 billion merger
with Veeco Instruments. Ed and I have known each other for more than ten
years. Both of us are committed to creating a new company, Veeco FEI,
that combines the strengths of both of our organizations and propels us
into the top tier ranks as the leading supplier of 3D metrology.
VEECO
Moderator: Debra Wasser
07-12-02/9:00 am CT
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With combined revenues 2001 of $825 million, 3D metrology is the fastest
growing market segment in the metrology space, which in turn is the
fastest growing part of the semiconductor and data storage equipment
markets.
This merger doubles our size and strengthens our respective leadership
positions in surface and subsurface three dimensional metrology, which
are key enablers for deep sub-micron device development and
manufacturing.
Veeco and FEI have rich technology portfolios and intellectual property.
We serve similar markets and have little to no overlapping products.
Both companies leverage their key 3D technologies across multiple
markets. This merger extends our market reach, improves our R&D
efficiency. It accelerates our (fab) penetration and creates new growth
opportunities for Veeco FEI.
In addition to the near term SG&A synergies, this merger will allow us
to bring critical mass to our merged sales and support channels with the
strength of more than 700 professionals, yielding higher efficiencies
and accelerating growth as we move increasingly into (fab) operations
with 24x7 coverage.
In summary, Veeco FEI will have a combined management team with a proven
track record for growth and profitability. The attributes of this
merger, which I've discussed...will clearly help our combined management
team achieve higher levels of growth, profitability, and capitalization
than possible separately. Without question, this merger makes one plus
one equal far greater than two.
I will now turn the meeting over to Ed to discuss the formation and
compelling strategic value of Veeco FEI.
VEECO
Moderator: Debra Wasser
07-12-02/9:00 am CT
Confirmation # 491789
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Ed Braun: Thank you Vahe. Good morning. I'm very pleased to welcome
Vahe and to have - and to join him in creating a strategically
compelling merger in which we are creating a new world leader in 3D
metrology and process equipment by announcing the signing of a
definitive merger agreement to create a new company, Veeco FEI, Inc.
The merger of Veeco and FEI is a combination of enabling technologies
that many of you have suggested in the past. It is a significant step,
as it redefines Veeco FEI's combined strength of products, of
technologies, and of market opportunities going forward. It impacts all
of the markets we serve.
Today I will highlight three significant benefits. It increases the
critical mass, the footprint of Veeco. It redefines our unique 3D
metrology position and creates the third-largest metrology company in
the United States.
In what is, as Vahe has commented, the fastest growing most profitable
segment of semiconductor equipment, it doubles our size and more than
doubles our profitability.
And thirdly, it sets the stage for increased levels of profitability as
we continue to grow the company. And it does this with entirely
complementary products and virtually no overlap. The merger is a very
significant growth opportunity for our shareholders, our customers, and
our employees.
Permit me to describe the deal structure. This transaction is valued at
nearly $1 billion, accounted for using purchase accounting in a
stock-for-stock tax-free transaction with an exchange ratio of 1.355
Veeco shares for each FEI share and with 73 million total shares
post-transaction.
VEECO
Moderator: Debra Wasser
07-12-02/9:00 am CT
Confirmation # 491789
Page 7
It will be accretive to Veeco's 2003 pro forma street consensus
estimates. The closing is expected during the fourth quarter of 2002,
pending both shareholder approval and government regulatory review.
Veeco FEI will have a board of directors having 13 members, 7 of whom
are current members of Veeco's board, 5 of whom are current members of
FEI's board, and 1 member designated by Philips Business Electronics
International, a significant FEI shareholder.
Post-transaction ownership of the company will be 45% FEI shareholders,
40% Veeco shareholders, and 15% Philips Business Electronics
International. With Vahe as a Chairman and Chief Strategy Officer, I
will continue as CEO and President. And Jack Rein will continue as CFO.
Corporate headquarters will remain in Woodbury New York with Veeco as
the surviving business entity. The new company will be named Veeco FEI,
Inc. and continue to trade on the NASDAQ market under the ticker symbol
VECO.
Let me next highlight the value of critical mass. In creating this very
exciting new company, Veeco FEI, we will have distinct leadership in 3D
metrology and process equipment, having larger critical mass with a
clear technology leadership position in complementary core products and
virtually no overlap.
We will have combined 2001 revenue of $825 million. Veeco FEI will the
third-largest US provider of semiconductor metrology equipment with a
very unique 3D product focus.
We will be the sixth-largest US company serving the semiconductor
equipment industry. We will have had combined 2001 EBITDA of $127
million with a strong balance sheet, including $476
VEECO
Moderator: Debra Wasser
07-12-02/9:00 am CT
Confirmation # 491789
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million in cash. Again, this transaction will be immediately accretive
to the current Veeco 2003 pro forma street estimate.
Both companies have strong historic revenue and profit growth track
records. Both in fact were profitable. Both had both increased sales and
profits in a very difficult 2001 market, all of this with stronger
worldwide presence, a larger combined customer base, and a very
experienced combined management team.
We will clearly be breaking away to a larger size. We will have created
a new larger-cap semiconductor equipment company, which will allow wider
investor interest, enhance shareholder value, and improve liquidity for
our shareholders.
Veeco FEI will be sixth in our peer group, behind Applied Materials,
KLA, Paradigm, (Lam), and (Novellis). But we will be Number 1 in 3D
metrology, as defined as a combination of atomic force microscopy,
focused ion beam, transmission electron microscopy, (sem), and gas
chemistries.
Point Number 2, the increased metrology content provided by the
combination of this company drives higher margins and higher growth
rates. The combined Veeco FEI will have a higher metrology product mix,
where we will be approximately 2/3 metrology and 1/3 process equipment,
compared to Veeco standing alone, where last year in a $450 million
revenue base we had $172 million in metrology and $277 million of
process equipment.
That is 38% metrology and 62% process equipment. And FEI standing alone
last year had $376 million, all metrology. So when one makes that
combination, we change the mix to 2/3 metrology and 1/3 process
equipment. So as our mix changes from Veeco's 1/3 metrology to Veeco
FEI's 2/3 metrology mix, our gross margin...improves by 2 or 3
percentage points.
VEECO
Moderator: Debra Wasser
07-12-02/9:00 am CT
Confirmation # 491789
Page 9
I think as you all know, the metrology - the gross margin content of
metrology is typically higher than process equipment. Last year, for
example, within Veeco's combined 45% margin, our margin in metrology was
52%, our margin on process equipment was 41%. FEI's margin in process
equipment was 49%. So in the combination, our total margin increases
from 45% to 47%.
Metrology spending increases with technology transitions. Metrology is
increasingly important as feature sizes shrink and as new materials such
as copper and low (kaydye) electronics are introduced.
Additional process layers and new materials cause new defect failure
modes, including both surface and subsurface embedded defects, driving
the demand for Veeco FEI tools.
Veeco's industry-leading atomic force microscopes, once used only in
labs, are now widely used in production, a transition path that FEI's
dual beam ((inaudible)) systems are clearly following.
Veeco FEI's combined semiconductor metrology revenue for 2001 was
approximately $240 million, a sizable amount of metrology sales to
semiconductor.
((inaudible)) reports that metrology sales content will increase from
15% of 1997 semi-equipment sales to 19% of the forecasted year 2004
semi-equipment sales.
So therefore, the metrology market size will go - will have gone from
$19.2 billion in 1997 to a forecasted doubling of nearly $42 billion
forecasted for the year 2004, making it the fastest growth area in
semiconductor equipment. And this will be key to the growth of Veeco
FEI.
VEECO
Moderator: Debra Wasser
07-12-02/9:00 am CT
Confirmation # 491789
Page 10
Again, Veeco FEI offers distinct 3D metrology products. As you look at
our ranking among metrology companies, we will be the third-largest in
total revenue in metrology-based - behind KLA-Tencor and Applied
Materials.
But our core metrology products, focused ion beam, atomic force
microscopy, dual beam transition electron microscopy, are not offered by
either KLA or Applied Materials.
And our revenue exceeds the combined revenue of Numbers 4, 5, and 6 in
the metrology listings -- (Thermowave), (Rudolph), and (ADE). So as you
can see, we will be a leader in high-growth high-margin 3D metrology.
Addressing our markets, we will provide complementary and -
complementary technology serving each of our core markets which we have
in common. Our combined products strengthen our leadership position in
semiconductors, in data storage, in telecom, and in the scientific
research sector.
Both companies have found that market and product diversification have
helped to offset industry cyclicality. Veeco's and FEI's technologies
are indeed complementary, combining Veeco's broad ion beam and FEI's
narrow focused ion beam process capabilities and combining surface and
subsurface 3D metrology vital for defects in buried layers with
virtually no product overlap.
Our corporate cultures are similar. We are both technology-focused,
profit-driven with a breadth of products serving research and production
applications, backed by quite strong customer support.
We bring a significant impact to our shared core markets, which are
semiconductors, data storage, scientific research, and telecom. Let me
spend a moment on each of those.
VEECO
Moderator: Debra Wasser
07-12-02/9:00 am CT
Confirmation # 491789
Page 11
In semiconductors Veeco provides leadership surface profiling atomic
force microscopy. FEI offers a broad line of 3D metrology tools, ranging
from failure analysis to in-line (fab) product process control.
Together, we provide a very broad and unique surface and subsurface 3D
metrology suite of products.
In data storage FEI's focused ion beam and electronic beam metrology
tools quite nicely complement Veeco's full line of ion beam process
equipment and deposition tools.
In scientific research, the combined companies provide state-of-the-art
high gross margin metrology tools based on ion, electron beam, and
atomic force microscopy, products seen as industry standards, measuring
and imaging equipment that are building blocks for next-generation
emerging markets.
Scientific research as a market now includes life sciences,
(nanotechnology), industrial and university research, a growth area over
the last few years and one that's very important to the future.
In telecom wireless, Veeco has expanded its product line to include ion
beam etch and deposition equipment, now molecular beam (epitaxy) for
wireless device deposition. And this is an emerging opportunity for both
FEI and Veeco's metrology products as wireless and telecom business
expands.
To further elaborate on some of the market positions, let me first speak
to data storage, where aerial density continues to grow 100% each year,
driving the need for new technology every five years as the head
technology hits a wall in aerial density.
VEECO
Moderator: Debra Wasser
07-12-02/9:00 am CT
Confirmation # 491789
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And unlike semiconductors, the technology road map for ((inaudible))
thin film head manufacturers is more closely held, giving the marketing
advantage to incumbents. And Veeco has the industry's largest process
equipment installed base of over 2000 tools.
Metrology is increasingly important in achieving high yields for new
advanced thin film heads. And FEI in fact is the leading supplier of
focused ion beam systems to data storage with over 50 systems in the
field.
Veeco FEI will offer a broad line of process and metrology tools with no
product overlap and with combined 2001 revenue of $200 million. The data
storage market is often contra-cyclical with semiconductor, providing
again some important diversification and cushioning.
In the scientific research market, where we think tomorrow's advanced
technologies emerge from laboratories, Veeco FEI's ion and electron beam
line, atomic force, and atomic force microscopy provide a broad line of
metrology products to address advanced and emerging markets in the
combination of life sciences, (nanotechnology), industrial and
university research.
This market is far less volatile than semiconductor, data storage, or
telecom. So while the growth rate is...the volatility is also less. And
we often provide state-of-the-art FEI and Veeco research products that
have high gross margins.
The combined Veeco FEI 2001 sales in this important sector were $272
million. And the high-growth (nanotech) market is expected to exceed $1
trillion as a total market by 2010.
So our combined products allow broader penetration of all of our core
growth markets. Our market segments will be - by this merger will be
more balanced between semiconductor, data storage, scientific research,
and telecom.
VEECO
Moderator: Debra Wasser
07-12-02/9:00 am CT
Confirmation # 491789
Page 13
As you can see on the Web page chart, scientific research would be 33%
of our combined sales in 2001, semiconductor 28%, data storage 23%,
telecom/wireless 16%, a clearly greater balance than we've had in the
past. So as you can see, Veeco FEI's combined complementary technologies
serve these core growth markets with no overlap, allowing greater market
penetration.
To highlight our important sales and service capability, I would comment
that together we provide a strong worldwide sales and service channel.
Half of our sales would be outside of North America.
With a greater international presence and process support in the
important growth markets of Asia/Pacific, Japan, and Europe, with
improved strategic positioning in key accounts, with increased market
share based on a broader and more competitive product offering, with
improved 7x24 service, and sales, and technical support coming from 32
worldwide offices, and with 775 sales and service professionals,
clearly, we will be able to leverage sales and service expenses over a
larger revenue base.
If you look at our top ten combined customers as a merged Veeco FEI,
five are semiconductor and five are data storage. And importantly, in
the top ten, Intel, (AMD), and Samsung, not in Veeco's top ten
previously, are added to the combined companies' top ten by FEI's
progress.
Semiconductor, data storage, and telecom customers desire deeper
strategic relationships with fewer suppliers having greater critical
mass, thus allowing deeper technology partnerships with key customers
where suppliers become an extension of our customers' R&D programs. And
customers benefit by getting shorter time to market ramp for their new
products. Veeco FEI will become more important to its key customers.
VEECO
Moderator: Debra Wasser
07-12-02/9:00 am CT
Confirmation # 491789
Page 14
Concerning our profit improvement going forward, we have formed an
integration plan in two phases. In the first six months, we will
integrate a combined worldwide field sales and service organization. We
will achieve $8 to $10 million of annual synergistic cost savings.
In addition, we will maximize our combined companies' $100 million R&D
program to make sure it's aligned to high-growth market opportunities.
And we will gain by consolidating material purchase activity, thereby
having better supplier management. And that will produce a number of
savings.
In Phase 2, we will define common Veeco FEI customer hardware and
software platforms. We will extend our product offerings. And we will
add core technologies for growth opportunities.
At this point, I would like to have Jack Rein, our CFO, review financial
aspects of the merger, followed by some short summary remarks. And then
we would be glad to take your questions. Jack?
Jack Rein: Thank you, Ed. I'd just like to comment on a couple of the
key points of this from a financial perspective. Number 1, the improved
income statement through higher-margin metrology content is pretty key.
Two thousand one's historic combined sales were $825 million.
Gross profit on a combined basis was 46.7%, compared to 45.1% for Veeco
as a standalone. Operating profit before amortization would be $127
million on a 2001 combined basis with 15.4% of sales.
Head count for the combined companies is approximately 2900 people. We
do have a very key service component, approximately 22% of the combined
sales of the two companies.
VEECO
Moderator: Debra Wasser
07-12-02/9:00 am CT
Confirmation # 491789
Page 15
We have a quite strong balance sheet with cash at March 31 of $476
million on a combined basis, long term debt, principally convertible
notes, of $410 million, shareholders' equity in excess of $1.3 billion.
And we also expect, as Ed noted, synergy cost savings to accrue. There's
an opportunity of $8 to $10 million annually, which we'd expect to start
realizing in the first quarter of '03.
We believe that there are additional cost savings. But the initial ones
will - most of those savings will come from the SG&A cost reduction
area. We also expect to realize purchasing savings and efficiencies in
R&D such as software development. There will also be geographic
synergies that accrue as a result of this combination.
Our operating model ((inaudible)) Veeco as a standalone in 2001 had a
gross margin of 45%. On an historic combined 2001 basis, the combined
company would have had a 47% gross margin. Our long term target is a 50%
margin, which we think is achievable...by the improved mix of metrology
and the efficiencies that we talked about.
On an operating profit before amortization basis, Veeco as a standalone
in 2001 was 13%. On a 2001 combined basis, we were at 15%. And our
target long term is 20%. We expect to achieve that by keeping SG&A at a
17% level and investing in R&D at a 13% level -- so a very achievable
long term operating model target.
At this point we'll return to Ed for some additional comments.
Ed Braun: Thank you, Jack. Summing up, I would highlight that the new
Veeco FEI will create significant value for our shareholders as a new
leadership company. We will be a clear leader in the key product areas
we've described, including 3D metrology, atomic force microscopy,
focused ion beam, as well as our ion beam processing equipment.
VEECO
Moderator: Debra Wasser
07-12-02/9:00 am CT
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Page 16
We will have the margin benefit of increases metrology sales in the
fastest growing segment of semiconductor equipment, 3D metrology. We
will be accretive to year 2003 pro forma street consensus with a very
strong balance sheet to finance future growth.
Our products of the combined companies are indeed complementary and
serve all of our core growth markets. We will see improved profitability
through cost synergies and increased margin.
As Vahe and I have commented, we will double our individual company
sales and more than double our profitability. And our combined companies
have senior management strength and a record of revenue and profit
growth achievement. Vahe and I are very excited to have this opportunity
together to create a new significantly larger worldwide equipment
company, Veeco FEI.
Operator, we would be pleased to take questions.
Operator: Thank you. Our question and answer session will be
conducted electronically. Anyone wishing to ask a question may do so by
simply pressing the star key followed by the digit 1 on your touch-tone
telephone.
We'll take your questions in the order that you signal us. And we'll
take as many questions as time permits. Once again, if you would like to
ask a question, you may do so by pressing star 1 now.
And we'll go first Chip Lontai with Bear Stearns.
(Robert): Hello? Do you hear me?
VEECO
Moderator: Debra Wasser
07-12-02/9:00 am CT
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Ed Braun: Yes, we do.
Vahe Sarkissian: Yes, we do.
(Robert): Hi. It's (Robert). Sorry. Congratulations on a nice merger.
Could you give us a little more detail as to - I realize it's early. But
in terms of SG&A, I heard Jack's comments. But what sort of target
reduction are you looking for? And what - you know, give us some idea of
some of the synergies you're looking at doing and what would be moved
around.
Vahe Sarkissian: First, let me comment on - both of us I think will answer
this. (Robert), the synergies of $8 to $10 million that we spoke of come
largely from SG&A in Phase 1 of the integration. And there will be
additional savings from better material supplier management and later on
from examining the opportunity to consolidate sites.
(Robert): Okay. In terms of products going forward, have there been
any requests from customers on either the Veeco side or the FEI side to
get together or to work collaboratively on projects? And what sort of -
without getting into specifics, any sort of broad directions that you
can talk about that would work appropriately?
(Crosstalk)
Vahe Sarkissian: We both can answer that question. And the answer is both
implied and explicit - yes. In the data storage market, for instance,
we very much complement each other.
And the higher degree of coupling and collaboration in terms of
manufacturing equipment and the 3D metrology that we provide will close
the loop and give a significant time to data and efficiency improvements
in that market segment. And there's also new applications that drive the
processing metrology to become closer. There's a clear and unambiguous
benefit there.
VEECO
Moderator: Debra Wasser
07-12-02/9:00 am CT
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Page 18
In the semiconductor arena, as we stated, surface and subsurface
metrology combination is extremely important in making the metrology
space even stronger and quicker time to data. And the ability to provide
the optimal solution for the customers is going to be very important.
If we take a look at the laboratory market and research in industry, we
see significant coupling between the optical metrology that Veeco
provides coupled with our environmental (sem) technology, which is the
next generation as the dimension shrinks. So there's a lot of continuity
both in terms of current applications and road maps going forward in all
of the markets that we serve.
Ed Braun: (Robert), the complementary nature in metrology is very
powerful and very obvious.
But in further answer to your question, in the last couple of months for
the first time - we've never competed before. But in the last couple of
months, we've seen opportunities where both companies have received
(RRQs) in the process arena where people - and this is I think in no
one's model, including our own, but an opportunity in answer to your
question.
If you look at Veeco as a broad beam ion beam supplier for process and
you look at FEI as a narrow focused beam, it becomes apparent that
between those two end conditions there indeed could be a variable beam
product that is a piece of process equipment. And we have begun to see
very early indicators that that has interest in data storage and in
semiconductor. And that's not in any models.
(Robert): Okay. Okay, very good. Thank you.
Ed Braun: Thank you, (Robert).
VEECO
Moderator: Debra Wasser
07-12-02/9:00 am CT
Confirmation # 491789
Page 19
Operator: Our next question today comes from Brad Hodess - I'm sorry,
Brett Hodess, with Merrill Lynch.
Brett Hodess: Good morning. Two questions, the first is, on the outlook
for, you know, accretion or dilution, the press release it says that it
would be dilutive if you included - excluded the (SAB) 101 deferred
revenue recognition.
And since, you know, the pro forma numbers - I think generally analysts,
including myself, try to include the effects of (SAB) 101 in the pro
forma numbers. Can you clarify that a little bit, if it would still be
accretive if we had - you know, if we included the effects of (SAB) 101
in the pro forma numbers?
Ed Braun: I think, Brett, what we were referring to is that there's
a - under purchase accounting - we will certainly be including (SAB)
101. But under purchase accounting, a portion of the deferred revenue
will not be realized - will never be realized by the company.
That's just part of the purchase accounting rules. We have not sized
that amount at this point. But we do expect that particular component to
be very material.
Brett Hodess: Okay.
Ed Braun: Brett, if you remember, in purchase accounting there's a
one-time charge associated with (SAB) revenue and profit recognition.
But on an ongoing basis, including (SAB), we will be accretive.
Brett Hodess: Okay, great.
Ed Braun: Yes.
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Brett Hodess: And the second question, back a little bit on the answer you
were just giving on - between the product lines, given that, you know,
Veeco is a lot more of a broad beam solution with the atomic force
microscope and FEI is more of a narrow beam, are there - and that the
products are different -- and that's quite clear that you do not overlap
on the products -- are there applications that you already overlap on
where there might be some application cannibalization? Or is it still
pretty separated at this point?
Ed Braun: No, there's no cannibalization. I mean, we really sell often
- in semiconductor our tools are sold side by side in failure analysis
and in (fabs). And that's really a matter of looking - our tools, the
Veeco tools, are sold for surface analysis. The FEI tools are frequently
sold for buried defects, buried layers...
Vahe Sarkissian: Cross sectioning.
Ed Braun: ...cross sectioning. In data storage our tools are sold for
a broad ion beam etching. And the dual beam (fib) is used for metrology.
We do see an opportunity where people might want to combine some of our
tools in the future in a cluster-like relationship. But again, that
wouldn't be cannibalizing. That would be additive.
Brett Hodess: That is great. Congratulations.
Ed Braun: Thank you, Brett.
Vahe Sarkissian: Thank you, Brett.
Operator: We'll go next to Ed Kressler with Angelo Gordon.
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Ed Kressler: Hi. Just some questions in terms of the merger agreement,
are there any sort of walk-away provisions if Veeco should fall to a
certain price that FEI shareholders can walk away?
Ed Braun: No, there's no collar on this transaction.
Ed Kressler: I mean, not - outside of a collar, there's no walk-away
price at which FEI shareholders could walk away if Veeco should fall
below a certain price?
Ed Braun: No.
Ed Kressler: Okay. Thank you very much.
Operator: And Mark Miller with Hoefer & Arnett has our next question.
Mark Miller: I'm just wondering if you can give us any detail. You've
got a lot of convertible notes. And some of this, I think, was put out
by FEI looking for an acquisition. Do you see - what do you see
happening with those?
Ed Braun: Well both companies have convertibles that are outstanding.
Mark Miller: Right.
Ed Braun: And by virtue of this merger -- it's a stock-to-stock
transaction -- both convertible notes will remain outstanding and will
be assumed by Veeco FEI.
Mark Miller: Is there an impetus to convert or do anything with those
notes in the future?
Ed Braun: Well it's - we have three years before that's a possibility.
So we'll address that in the future.
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Mark Miller: Do you see any other moves strategically in terms of
splitting out the divisions? You're becoming, it looks like, a metrology
company because of the better future outlook there. Do you see any...
Ed Braun: No. I would say that both companies have a history of being
accretive.
Vahe and I have had long conversations about future pieces of technology
we would like to add to both our process equipment and our metrology
lines. And as you stated, the convertibles, in part, were to give us
somewhat of an ability to do that for some technology purchases. And
Vahe and I are very interested not in selling things, but in buying
things.
Operator: And next we'll turn to Steve Albert with Tanaka.
(Brian Sinnaka): Hi. Can you hear me? It's (Brian Sinnaka), Ed. How are
you?
Ed Braun: Yes, I'm great. How are you?
(Brian Sinnaka): Congratulations. Just a couple of things, in terms - are
there any accounting differences -- we all have to ask that question
nowadays -- that have to be resolved or reconciled?
And in terms of write-offs, I didn't catch the amount, if there is one.
Jack Rein: (Brian), this is Jack Rein. There are no accounting issues.
We actually have gotten a ruling from the SEC or a review by the SEC
that Veeco will be the continuing accounting entity.
And therefore, Veeco's historic financials will be the financials of the
combined company. And upon closing the merger, FEI's financials will be
- FEI's results will be included.
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(Brian Sinnaka): Great. And in terms - would there be R&D write-offs or
anything like that?
Jack Rein: We expect that the combined - there will be write-offs. We
have not at this point sized them. These amounts are, you know, very
fact-sensitive and require time-consuming detailed appraisals, which
we'll be undertaken over the next several months.
(Brian Sinnaka): Okay. The other thing is that it sounds like you have
additional -- which is great -- Phase 2 or further cost savings. How
much might they total up to relative to the $8 to $10 million for the
first date?
Jack Rein: Well we're putting together an implementation group. And we
need to address that both in terms of material cost savings and further
synergies that we can achieve.
(Brian Sinnaka): Okay. The other thing is, I don't know if you've had a
chance to get any...from customers. What do you think their reaction is
going to be? And...
Ed Braun: Well we share our customer list - I think it'll actually be
quite positive.
And as I've commented, there are, you know, customers who - our larger
customers typically are multi-billion or multi-tens-of-billion dollar
size and are frequently nervous about dealing with $100, $200, and $300
million revenue suppliers who have narrow product lines and smaller
resources.
So - and we share - probably six or seven of our top ten customers are
common to both companies. So I think this will allow us to have deeper
strategic relationships with those customers, offering them more product
technology, and being able to offer them more technology solutions that
are (clusterable) going forward, and to serve them better.
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(Brian Sinnaka): That's...
Ed Braun: I think this will be very well received by our customers.
(Brian Sinnaka): Well that's terrific. That's great. A last question -- I'm
sorry -- the competitive situation out there, I'm not sure in the FEI
space what that looks like and what your combined market shares might
be. It sounds like there's no overlap at all.
Vahe Sarkissian: Well let me comment on that and amplify how we expect the
customers to react also.
Our dual beam technology has been very surely solo in the marketplace in
terms of its effectiveness, in terms of its leadership, in terms of its
newness. And it's created a dimension of its own. And we are the clear
leader in that market.
We have also combined our dual beam product, expanded it in terms of
small, medium, and large to cover both laboratory and (fab)
environments. In terms of the competitive space there, we are a clear
leader.
In terms of some of the other laboratory equipment, we do have
competition. And we have stated that we do compete with primarily
Japanese competitors in the (sem) and (tem) arena.
But the strength of that combination there is very strong. And I would
like to state that even the Japanese have given our transmission
electron microscope a product award of the year, the first time ever, in
Japan.
So we believe that the customers are looking for solutions. And
therefore the broader the solution that you can offer them, the better
off they are in terms of being able to share their road maps with you
and being able to work with you to get that solution.
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(Brian Sinnaka): Thank you very much. Congratulations.
Vahe Sarkissian: Thank you.
Ed Braun: Thank you.
Operator: And once again, if you would like to ask a question, you may
do so by pressing star 1.
We'll go next to John Pitzer with Credit Suisse First Boston.
Man: ((inaudible)).
Operator: Mr. Pitzer, your line is open. You may ask your question.
Man: Mr. Pitzer?
Operator: Hearing no response, we'll move on to Fred Wolf with Adams
Harkness & Hill.
Fred Wolf: Yes, Vahe, can you give us a feeling for your progress and
give us some benchmarks in terms of getting the focused ion beam into
in-line production on the factory floor versus, you know, an R&D tool?
Vahe Sarkissian: Well, you know, last conference call we stated that we are
on course with that. And all I would like to say at this conference call
is that we're again on course with our progress there.
And we're getting more and more excited about that opportunity. We'll
cover that...in our conference call subsequently. But the answer is we
continue to getting increases in that area.
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07-12-02/9:00 am CT
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Ed Braun: Fred, we feel very good about the fact that this evolution
that you're describing - that you and Vahe are describing, I think, is
quite similar to the path that we've navigated within Veeco in having
taken our atomic force microscope from research applications to
production in-line.
We're - you know, today, I think as you're aware, of our $130 million
atomic force microscopy business, 1/2 of it literally has become in-line
production tools. And it took a number of years to do that. And I think
FEI's dual beam (fib) is well on that path. And Veeco can be very
helpful in helping the combined Veeco FEI manage that transition.
Fred Wolf: Can you give us a feeling for how many for how many
state-of-the-art (fab) launch - production (fab) how many tools will be
- could be sold?
Ed Braun: I think that, you know, as you Vahe commented, in future
conference calls we'll have more detailed information in that regard.
But I really, you know, like (AFM) as the stage that (fib) is at. These
are very rich failure analysis tools as well as very high potential
in-line (fab) tools. And so you'll see growth in both areas. But I think
we'll be more - Vahe and I will be more explicit in the next couple
months in more - in our other conference calls.
Fred Wolf: Okay. Thank you.
Vahe Sarkissian: The bottom line is that our models that we have talked
about in the future continue to stand. And they're enhanced by this
combination.
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Ed Braun: Yes. This is a case also where the synergy is very
important, because both companies in semiconductor sites have existing
process support teams that are somewhat expensive given our installed
base of either standalone (fib) or standalone (AFM).
There's a tremendous benefit if we could use our current process support
teams at TI, at IBM, and (Infinian) to leverage them over (fib) and
(AFM). It's a very big win, because the customer gets a broader product
line, and we get to do it at less expense.
Operator: Our next question comes from Byron Walker with UBS Warburg.
Byron Walker: Good morning. Ed, can you give us a rough idea of what your
- as you define the 3D metrology, what your market share position is
with the new combined entity?
Ed Braun: In all three of our leadership areas, in (fib), in atomic
force microscopy, and in ion beam -- I'll mention ion beam in
((inaudible)) deposition -- we are a clear Number 1 supplier with market
shares that range anywhere from 60% to 80%.
We are not without competition. There's Seiko, Hitachi. You know, there
are people we compete with. But we have enormous - very significant
market share. So in the area of 3D metrology, surface and subsurface,
you know, we probably have a 60% to 80% market share.
But the growth will not come from going to 100% market share. The growth
will come from the fact that that's the fastest growing element of
semiconductor equipment.
And as line sizes shrink and defects become more important, the number
-- and KLA has done a nice job of showing that it has ((inaudible))
research. But the amount of metrology content required as you go from .2
to .15 to .13 increases triple-digits.
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And it's a very high growth...to have to have the amount of defect
inspection, profiling, trench measurement, CMP measurement as your line
sizes shrink and as you introduce new materials.
Byron Walker: Do you have a rough idea of what you think the growth rate will
be in the next say three years or so...
Ed Braun: Well it's...
Byron Walker: ...for the 3D segment?
Ed Braun: It's clearly over 25% a year.
Byron Walker: All right. And the other question I had - I guess you said
that there's no issues with the converts. How about on the bank line
side? Do you have to (re-cash) given some changes?
Ed Braun: Well we certainly need to get our banks' approval. We've
had preliminary discussions with the banks. And I see no problem in that
regard, Byron.
Byron Walker: Great. Thanks.
Ed Braun: Thank you, Byron.
Operator: Tony Reiner with Clinton Group has our next question.
Tony Reiner: Oh hi. It sounds like a great deal. Congratulations.
Ed Braun: Thank you.
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Tony Reiner: Just a question, why now? I mean, is there - ((inaudible))
industry, I mean, is there - was there a need to combine these two,
possibly another company wanting to, you know, buy in, get involved in
this strong segment - this growing segment? Or, you know, what's the
impetus for doing it at this point in time...
Ed Braun: Well...
Tony Reiner: ...((inaudible))?
Ed Braun: ...two or three answers. I think as all of you know, the
consolidation within the semiconductor equipment industry is a very
positive thing. It builds stronger companies. It gives our customers
suppliers who have greater critical mass.
We've been looking at focused ion beam, I must say, for seven or eight
years. Vahe and I have had conversations on and off certainly for the
last five years. I have a board member who always likes to say, you
know, the time to make a deal is when the other guy wants to make a
deal. And we both see tremendous growth going forward.
And, you know, the planets are aligned. And I think one shouldn't be
hampered by today's stock price. One should look at the profitability
gain of these two companies being combined.
Vahe, do you...
Vahe Sarkissian: Well both companies are very strong and are capable of
going it alone. The exact timing of any deal is, you know, when it's
right and when it gets done.
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And the principal reason for the combination is the comparative
strategic value, not for today, not for this quarter, not for next
quarter. But it is comparing value over the long haul. We believe that
that drove us to this conclusion.
And therefore the timing is secondary, as opposed to being...primary
reason for the deal. So we haven't done the deal because the time is
right. We've done the deal because it is the right deal. And I think it
just happens to have been concluded at this time. And that's kind of the
best answer we can give you on that.
Ed Braun: I think it's very important that we're doing this at a time
where the growth of 3D metrology is so strong. And so that's going to
help the new company, Veeco FEI, be launched with a very big driver
coming from the need for advanced 3D metrology.
Tony Reiner: Okay. Thank you very much.
Operator: Next we'll go to Glen Yeung with Salomon Smith Barney.
Glen Yeung: Thanks. I have just a couple of - well I wanted you just to
expand. You talked about potential cluster opportunities using both
technologies. And if you could, just sort of look in your crystal ball
and give us a sense, not so much just - well I guess how it will look as
a product, but also, you know, the kind of applications that it might
target.
Ed Braun: Well, you know, there are lots of applications where people
- you know, in semiconductor, people want to have tools that find the
defects and then drive a metrology tool to that defect to examine - to
uncover what the defect is, to cross-section it, to examine it, to
measure what the materials are, what's the cause of the defect.
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So, you know, there's a lot of (clusterability) being considered within
semiconductor to not only know you have a problem, but to determine what
is that problem.
Vahe Sarkissian: Well there is one - there are three ways that things could
be brought together, one, coupling of information, one is coupling the
tools, and the third, embedding the tools.
And as you know, in integrated metrology versus clustered metrology
versus clustered information coupled metrology, all of that has an
underlying element to it which has knowledge of the process, knowledge
of the critical measurement, and knowledge of when and how most
optimally to make that measurement.
The proliferation of the technology and the tools that we have enable us
to work with the customers in a way that picks the optimal point and the
optimal place to make the measurement for best cost benefit.
And this is where we think that we can bring a lot more to the party and
the frequency and the number of measurements that we can provide, which
will translate data to information for the customers. And that is the
critical value that I think the combined company can bring.
I'll give you a couple of examples. I think that data storage is way
ahead in terms of geometry and in terms of criticality of ((inaudible))
layer deposition. And the tight coupling of what you're depositing and
what you're measuring very quickly is very important.
For a long time, the Veeco tools have been doing the deposition and
etching. And we've been really tracking whether the deposition
((inaudible)) profiles are the right way. And I think tighter coupling
there is really going to bring a lot of value there.
And in...
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Ed Braun: And in that regard - just let me add this - there's a very
important and a good point. In deposition - it's clearer to see the
coupling in metrology.
But in process equipment, you know, frequently the thickness of the
deposited material influences the electrical or magnetic properties of
that film - of that device.
And you have now a way to both deposit and measure - deposit and control
the thickness with a broad or a narrow beam and to measure the
electrical and magnetic properties all at once. So you have a lot of
potential in process equipment as well as potential in metrology.
Vahe Sarkissian: The same thing applies in semiconductor in a bigger way...
Ed Braun: Yes.
Vahe Sarkissian: ...what is called integrated metrology inside the - coupled
with the tool, calibration metrology.
We're going to play, I think, as a combined company a major role in
calibrating and making sure that the metrology that is integrated is
really working, because what we bring is much more detailed measurements
about the structure itself, which is becoming the limiting factor in
most of these processes, not just the broad thickness or across a large
area, but the actual structure.
Ed Braun: Well and control the thickness, Glen, because now you would
have - you could use either a broad beam, or a focused ion beam, or a
variable beam in between to actually fine-tune the thickness while
you're in-situ measuring electrical or magnetic characteristics. There's
actually a very big brand-new area that, again, is not represented in
today's product lines.
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Glen Yeung: That's exactly what I wanted to hear.
And one other follow-up thought, which is, it would bring to mind some
opportunities. Well certainly some more could be done on the software
side. But ultimately as you are able to integrate these kind of
applications, it might open up some opportunities on the software side
as well. I wonder if you've progressed in your thinking on that at all
at this stage.
Vahe Sarkissian: Well we're way ahead of the game on that one. And we've
been talking about that. Software is generally the soul of the machine
and the soul of the information that you get, and we have - because of
the structures that we've measured and used for the most complex
measurements that's there.
And we've created some new software structures to be able to do that
which we can leverage across all of our products. And we will be
introducing and talking about some of this at (Semicon).
Glen Yeung: Great. Thank you.
Ed Braun: Thank you, Glen. Operator, we'll take one or two more
questions.
Operator: Okay. And we'll take our next question from Steven Connell
with Capital Group.
Steven Connell: Hi, yes. Just on the last point, could you re-explain
that...how fine-tuning - measuring the thickness and then measuring the
electromagnetism? I didn't understand that point.
But my question is, does FEI add anything to (nanotechnology)?
Ed Braun: Well let me ask - quickly explain your first question.
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If you think of an oscillator - there's many examples. But if you think
of just an (RF) oscillator, where the oscillation is determined by the
thickness of the metal that is on it, a piece of electric crystal with
metal on it will have a varying frequency, depending upon how much metal
you put on it.
And if you want that filter to have a certain designed frequency, it
would be really nice to watch its frequency while you're depositing
metal and to thin the metal when you get beyond a certain point.
Vahe Sarkissian: Selectively.
Ed Braun: Right. So there's, you know, a very straightforward example
about putting down metal when I don't want to exceed a certain thickness
to get frequency. I have a method of measuring.
I could deposit in the same chamber. I could measure the frequency in
that chamber. And now if I had a way of better controlling and thinning
the deposition, I would have an automated filter deposition system.
Steven Connell:And you would provide all of those tools...
Ed Braun: All of those, yes.
Steven Connell: ...including the deposition?
Ed Braun: Yes.
Vahe Sarkissian: Yes, that's correct.
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Steven Connell: That would be the (ND)?
Ed Braun: No, that would be ion beam deposition of a metal onto a
piece of electric...
Steven Connell: Okay.
Vahe Sarkissian: And also we, with the combination, will have the ability to
fine-tune the deposition, to adjust, fine-tune. And that's one of things
that is going to be very important.
To answer your question, what is - we are at FEI a (nanotechnology)
company. Every product that we manufacture is really
(nanotechnology)-related. One of the most important things in
(nanotechnology) is to be able to see and measure things at atomic
scale. And one of the major driving factors on that is most of the tools
run out of ability to see and measure.
Transmission electron microscopy is the only viable tool to see atoms
and how they're stacked up. And when we talk about molecular-level
deposition and every layer going to the molecular level, transmission
electron microscopy becomes the key to see, and measure, and analyze
atomic-level structures.
Ed Braun: So if you look at it in dollars - you know, both companies
have been selling packages of (nanotechnology) tools, as Vahe has said,
to manage technology centers.
And we've had this conversation within Veeco recently where today we at
Veeco present people with about $500,000 to $1 million combination of
imaging tools for a (nanotechnology) center. And mostly they're (AFM)
(nanomanipulator)-based.
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And Vahe has done the exact same thing in (tem), and (sem), and dual
beam. So together, we now go to a (nanotechnology) center with a package
of equipment that's probably $2 million that serves life sciences,
biomedical, and material science applications.
So we are - we clearly - we instantly become more important to a
(nanotechnology) center in doubling the amount of technology we can give
him and doubling the amount of the sale.
Steven Connell: Right.
Vahe Sarkissian: And one final thought, just very important, and that's to
prepare the sample to be able to see it at that atomic scale requires
dual beam systems. So the dual beam systems prepare the sample for the
transmission electron microscopy.
So you need the set to be able to go there and do it. And that is really
what's propelled us. That's why FEI, you know, has been extremely
successful and highly profitable in this most severe downturn in the
industry.
Steven Connell: So what percent of this $800-something million per year in
revenues is...
Ed Braun: Well research was about $250 million of the $825 million.
Steven Connell: When you say research - I was going to ask what
percentage...
Ed Braun: We combine in our, what we're calling scientific research,
in that number is the combination of (nanoscience), life science, and
industry and university spending.
Steven Connell: I was wondering what the (nano) portion of that was.
VEECO
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Ed Braun: The (nano) portion is probably 1/3 of the total - 1/3 of the
$250 million. But it's the one that's growing at the highest rate.
Vahe Sarkissian: That's the pure (nano). But, you know, when you talk to
semiconductor people, everybody says they already are leading in
(nanotechnology)...
Ed Braun: The other sectors would be offended if we didn't - if we
excluded them, because they may ((inaudible)) also.
But for, you know, the venture capitalist who's tracking
(nanotechnology), I would say that's about 1/3 of the total Veeco
scientific research business. But that 1/3 is growing by like 50% a
year.
Steven Connell: Right. And just a final confirmation, when you said 33%,
28%, and 23%, the 33% was scientific?
Man: ((inaudible)).
Ed Braun: Yes, yes.
Steven Connell: Thank you very much.
Ed Braun: Last question, operator.
Operator: And our last question will come from Christina Osmena with
Needham & Company.
Christina Osmena: Hi. I apologize - I was disconnected, so I apologize if
this was already asked. I have a couple of questions here.
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Could you review what the facilities will be of the combined entity and
which kinds of combinations are - you know, what kind of consolidations
are likely, you know, among the facilities now?
Ed Braun: By facilities, Christina, do you mean sites?
Christina Osmena: Yes, yes.
Ed Braun: No, we didn't go through - what we spoke of was core
synergies in the first six months that on an annual basis would be $8 to
$10 million a year. That would mostly come from SG&A.
You know, we have a combined company with 32 offices and 775 worldwide
sales and service professionals. We have a - we share a lot of common
accounts, so there are Veeco teams in many common accounts.
And there are sales offices throughout Asia, Japan, Europe, and North
America, so there's an opportunity for us to look at some SG&A
consolidation that we've eyeballed at $8 to $10 million a year.
That excludes - and we also commented that a lot of our bills of
materials are common. We buy pumps, chambers, valves...ion gauges. And
so there's a supplier management capability. We could be - and we will
go back to all of those suppliers and get deeper discounts for combined
buying. And that will be some number of millions of dollars per year.
And the third leg that comes from site consolidations is probably
something that doesn't happen in the first 6 to 12 months, but is
identified by the integration team for activity in the second year.
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Christina Osmena: Okay. And if there were any sites that would be closed down,
could we assume that it would be something like in the Netherlands or
Boston?
Ed Braun: No, no, no, no, no.
Vahe Sarkissian: Because the Netherlands is a...
Ed Braun: It's a vital...
Vahe Sarkissian: ...very vital piece of the combination. And that
particular sector of the business is where we do a lot of
(nanotechnology) and other core technologies that we do.
Just to kind of give you the big picture on this so you're not all
confused, we have SG&A synergies that we've identified right away. There
are independent improvements that we have been undertaking independently
in each company which we have articulated on an ongoing basis. And those
will continue.
And the third area is, we will look for ability to create efficiencies
with the combination. And those are three distinct separate things that
we are addressing as an integration team. And we believe there are
benefits in each one of those areas. But the first thing that we've
articulated and highlighted is very near term impact of the SG&A
consolidation.
Ed Braun: No sites have been identified. Let me repeat that. No
sites have been identified to be closed.
Christina Osmena: What about - are there any R&D programs that you were
conducting separately that look like they might be duplicative?
VEECO
Moderator: Debra Wasser
07-12-02/9:00 am CT
Confirmation # 491789
Page 40
Ed Braun: Well the combined company has a rather rich R&D spending
program of probably something around $100 million.
And clearly that gives us an opportunity to refocus our $100 million by
identifying the high-growth opportunities, by looking at the minimal -
the marginal activities that we could possibly eliminate and go more
heavily after those that have tremendous leverage.
So there is an R&D, you know, resorting that - although I won't promise
we'll spend fewer R&D dollars, I will promise we'll get a bigger bang
from them.
Christina Osmena: Okay. And also who is the - could you go over who might be
in charge of the whole - you know, the integration of the two companies
and who's going to be in charge of the operations?
Ed Braun: Vahe and I will work together to form an integration team.
And the integration team will consist of combined senior management from
both FEI and Veeco.
Christina Osmena: Okay.
Ed Braun: Thank you. Operator, I think that concludes this morning's
discussion. I want to thank everyone.
I thank Vahe. And we're very, very excited by this combination. And Vahe
and I look forward to speaking with you further in the next couple of
months and certainly seeing you at (Semiwest) and speaking to you there.
And both companies will, as Debora said, be reporting their second
quarter earnings in two weeks.
Operator, thank you.
VEECO
Moderator: Debra Wasser
07-12-02/9:00 am CT
Confirmation # 491789
Page 41
Vahe Sarkissian: Thank you very much.
Operator: Thank you. That concludes today's conference. We thank you
all for joining us. Have a great day.
Ed Braun: Thank you.
END