Veeco accounts investigation reveals no fraud
Veeco Instruments has completed its internal investigation of improper accounting transactions at its TurboDisc business unit.
Recalculated revenue for the first three quarters of 2004 is $2.2 million lower than previously reported, and pre-tax loss widened by $10.2 million.
Jefferson Wells, a forensic accounting firm brought in by the audit committee of Veeco's board of directors, concluded that improper entries were made by a single individual at TurboDisc whose employment had been terminated before the investigation began. No motive was uncovered and no evidence found of either embezzlement or division of corporate assets.
The company restated its revenue for the first three quarters of 2004 as follows: Q1: $90.9 million (down $3.6 million); Q2: $99.2 million (down $3.6 million); and Q3: $97.4 million (up $5.0 million).
"While revenue adjustments impacted individual quarters, these adjustments in the aggregate do not reduce TurboDisc revenue recognized for the 2004 year," explained Veeco CEO Edward Braun. Despite this impact on the top line, Veeco's earnings for the equivalent period were badly hit, with adjusted pre-tax loss $10.2 million worse than previously reported.
The turmoil at Veeco led to the dismissal of the controller of its TurboDisc division. And the company has also brought in Richard Wissenbach as general manager of the compound semiconductor/epitaxial process equipment group that includes both the TurboDisc operation in Somerset, NJ, and the MBE unit at St. Paul, MN.
Veeco also reported its fourth quarter figures, which Braun labeled "a disappointment".
Revenue for the fourth quarter, ending 31 December 2004, was $103 million, up $5.6 million sequentially, and a 34% increase year-on-year. Operating loss was $6.7 million, well up on the $3.5 million recorded for the previous quarter.
However, Veeco's order backlog improved during the fourth quarter, rising 24% sequentially to $99 million, driven primarily by increased customer spending from data storage and silicon-based customers.
Excess capacity of epitaxial equipment is still a problem for the company, particularly in the Asia-Pacific region, and Veeco expects revenue from this product line to fall between 20% and 24% in 2005. But the sector is expected to pick-up again in 2006, as markets for high-brightness LEDs expand from cell phone applications to incorporate backlighting TV screens, automotive and general lighting.
