Good day, everyone, and welcome to the Veeco First Quarter 2013 Conference Call. Today's call is being recorded. For opening remarks and introductions, I'd like to turn the conference over to Senior Vice President of Corporate Communications and Investor Relations, Ms. Debra Wasser. Ms. Wasser, please go ahead.

Thanks, operator, and thanks to all of you for joining John Peeler, Dave Glass and me. Today's call will be a bit different from our normal quarterly calls. Given our ongoing accounting review, we are unable to provide detailed revenue, earnings or other financials. Dave will start the call with some top level first quarter highlights. He will also give a brief overview of where we are with the accounting review. Please keep in mind when we get to the Q&A session, that we are limited in scope to what we can say about the matter other than what Dave is reviewing. While the accounting review is a challenge for the company, we want to take this opportunity to give you some insight into what is going on at Veeco. So John's presentation will review technology opportunities we are excited about, how we see the latest trends in our end markets and most importantly, our vision for how we are going to get Veeco growing again. If you haven't done so already, please visit our website so that you could follow along with the slides. Let me just briefly remind you that this call is being recorded by Veeco Instruments and is copyrighted material. It cannot be recorded or rebroadcast without our expressed permission. Your participation implies consent to our taping. To the extent that this call discusses expectations about market conditions, market acceptance and future sales of the company's products, future disclosures or otherwise make statements about the future, such statements are forward-looking and are subject to a number of risks and uncertainties that could cause the actual results to differ materially from the statements made. These factors are discussed in our public filings and press releases. Veeco does not undertake any obligation to update any forward-looking statements including those made on this call to reflect future events or circumstances after the date of such statements. Given our accounting review and limited financial metrics, we are planning to hold only a very brief Q&A session. With that, here is Dave.

Thanks, Deb. My plan today is to share some of our key financial metrics but as Deb mentioned, I'm going to ask for everybody's understanding in recognizing that with the ongoing accounting review still underway, we have to limit all our comments and financial disclosures to those that are unrelated to revenue. Having said that, I think the information we can share today around bookings, cash and shipments may be helpful to at least give you some line of sight on how the business is doing. Q1 was another challenging quarter for Veeco. Bookings came in at just $70 million, remaining at trough levels for MOCVD and MBE. Data Storage was up versus Q4 but not enough to counter the very weak MOCVD trend. Bookings were at the lowest level we've seen since 2009. As John will explain in a moment, we do expect to see a recovery in bookings during Q2. There are positive signs such as some of our top MOCVD customers operating close to full utilization and in some case, they're even talking about fab expansions. In Data Storage, we see customers starting to make selective technology buy decisions. These are all positive signs. System shipments declined sharply in MOCVD and Data Storage, reflecting the weak overall environment we're still operating under. There are a few sizeable MOCVD deals that were not shippable in Q1. Shipments continue to be lumpy because of issues such as fab readiness in China. We didn't have to make any significant backlog adjustments this quarter. Cash continues to be a bright spot for us. We continue to maintain a very strong financial base from which to weather this storm. In Q1, our cash balance grew from -- grew to $588 million, that's up from $579 million at the end of December. We…

Thanks, Dave. No one wants to get through this accounting review any faster than me, but we really have to get it right. I'm going to focus my comments today on our growth opportunities and show you how we can get Veeco growing again. You can think of Veeco's growth story as a journey. We started out by developing or acquiring technology in our core markets, and then we built that technology into the global leadership positions in MOCVD for LED Lighting, MBE for compound semiconductor production and Ion Beam Etch and Deposition for hard disk drives. We're now in a new phase and we want to accomplish 3 things: First, to fortify and build our leadership position in our core markets, especially in LED Lighting, which has a huge market opportunity and which also allows us to grow our services business; second, we want to leverage our core technologies into adjacent markets like Power Electronics, OLED, MEMS and EUV; and third, we want to acquire other businesses that have synergy with our business. Today, I'm going to focus on the organic growth portions of the journey and provide an update on our core markets and where we're heading into adjacent markets. LEDs represent a new growth opportunity and a greener paradigm for the $70 billion lighting industry. And according to the U.S. Department of Energy, adoption of LED Lighting in the U.S. alone will reduce lighting electricity demands by 62%. LED Lighting will eliminate 258 million metric tons of carbon emissions, and LED Lighting will enable us to avoid building 133 new power plants. The New York Times recently ran a piece on LED lights. They said they last for decades, save electricity, don't shatter, don't burn you, don't contain anything harmful and they'll save you hundreds of dollars.…

[Operator Instructions] We'll go first to Krish Sankar with Bank of America Merrill Lynch.

I had 2 of them. First, John, in your prepared comments, you spoke about the pricing pressure. Can you talk a little -- elaborate a little bit on it? Is it coming from your primary competitor Aixtron or are you seeing new guys come up in China? And then I have a follow-up.

Okay. Well, we've been gaining market share for the last 3 years, and I think what we've been seeing more and more recently is Aixtron using price as a strategy to try to win more deals in a tough environment. So it's really that the pressures are Veeco and Aixtron, we're not seeing Chinese competitors. We haven't seen any competition with Chinese competitors at this point. We've seen them trying to get people to take a look at their systems and things but they are not driving the pricing pressure.

Got it. That's really helpful. And then just a quick follow-up. The meaningfully higher bookings in Q2, I'm just wondering, is that -- are you talking about MOCVD bookings, that's strictly the total bookings and when you mean meaningfully higher, is it back to Q3, Q4 levels of last year or is it going to be higher than that?

Well, it is -- we are expecting higher bookings in both MOCVD and for Veeco as a whole. Q1 orders were very weak at $70 million, so we can get meaningfully higher without setting any new records or anything like that. But it is broad-based. And I can tell you that it's coming from more than 1 region. This is not a single customer, single region. At least, that's where we think things are going now.

We'll go next to Satya Kumar with Crédit Suisse. Satya Kumar - Crédit Suisse AG, Research Division: I was wondering if you could provide a little bit of color on the levels of profitability. If your shipments are hypothetically, in Q2, were in line with the anticipated high levels bookings that you are thinking about in Q2, would you still be able to sustain cash at current levels?

Yes, Satya, unfortunately, due to the accounting review, we really can't comment on anything on the income statement that starts with revenue. As we said in the past though, we're pretty proud of the job that we've done in managing cash but we just can't really comment on the details of the income statement. Satya Kumar - Crédit Suisse AG, Research Division: Okay. And the cash itself, could you give perhaps, like a breakdown of the cash that you have onshore versus offshore and is any portion of the cash in China?

No significant change from -- in the past, Satya.

So most of them are onshore.

Yes. Satya Kumar - Crédit Suisse AG, Research Division: Mostly onshore. Got it.

We'll go next to Vishal Shah with Deutsche Bank.

You guys had mentioned previously that you're trying to produce the breakeven level down to $85 million, $90 million. I was curious to see if you can provide some color on where the cash and overall revenue breakeven levels would be in this environment.

Yes, Vishal, again, I'll have to say anything related to breakeven would have a relationship to revenue and because the accounting review is revenue-related, we can't comment.

Okay. And then the rush orders that you mentioned, are they coming from China only or from other regions as well? And is it fair to say it's general lighting-related orders? And historically, we've seen this pick up in utilization rates due to seasonality. I mean, what do you think this is different this time around?

Well, it's been -- it's been a long time since we had customers calling up saying, hey, can you get me that system 2 months earlier than we planned and can you pull in my shipment? So that's why we thought it was meaningful for us. And in this case, it certainly was China. But we've just noticed a change in the tone of the customers over the last month or so, and a bigger sense of urgency. I do believe it's lighting. I mean, lighting is what's driving all the growth now. There are enough systems out there to handle backlighting and any kind of expansion is ultimately lighting-driven because the customers can move capacity between backlighting and lighting.

We'll take our next question from Jed Dorsheimer with Canaccord.

John, just a follow-up on that last one. I think you guys consider Taiwanese joint ventures in China if the tools going to China is a Chinese sale, I believe. So the activity that you're seeing in China, is that mostly around the joint ventures or is it Chinese-specific companies? And then I have a follow-up.

Well, you're right. We do consider the end shipment destination of the equipment. So if it's a Taiwanese joint venture in China, it's a China deal. We are seeing pick up and increased quoting activity really, in all regions. So it's not just a China thing.

Okay. And then just with respect to the MaxBright, the -- I forgot the number of tools but have those all gone through final acceptance? And then just on your quoting activity, can you give any breakdown between the level of activity for MaxBrights versus single chamber reactors?

Okay. Well, if we look at acceptances, pretty much everything that shipped before the first half of our -- before the second half of 2012 has been accepted. There's probably a couple of exceptions but not much in the way of tools. And I think as far as the second half of 2012 and to now, acceptances are running fairly normally. Q1 acceptances were about in line with where we expected them to be. So no major changes there. And then we don't really report the mix of MaxBrights versus single chambers but what we have done over the last year or -- I mean, last couple of years, is we've been very careful to keep the single wafer reactors moving forward technically just like the cluster tool reactors. So we offer the same type of upgrades and capabilities on both products. And what we find is some customers prefer a cluster tool and it may be because they have tightness on fabs or fab space or other reasons, and some customers prefer single wafer reactors. So both products are doing very well, both are -- there's not one that's falling by the wayside, they're both doing well.

We'll take our next question from Edwin Mok with Needham & Company. Edwin Mok - Needham & Company, LLC, Research Division: So I remember back in the days when business was doing really well, you guys had quite a lot of large orders from customers but as things slowed down, the order sizes also come down quite a bit. These recent rush order, have you started to see card order size start to increase at all?

No, I don't think so. I mean, in Q1, well, there weren't a lot of orders period and there were a limited number of larger orders plus smaller orders. So we haven't noticed any real change in that. Of course, in 2010, there were some pretty huge orders that we haven't seen after 2010 or 2011. So I don't think I have anything to report there on a big uptick in that or anything. Edwin Mok - Needham & Company, LLC, Research Division: Maybe I'll ask you differently, is the customer interest in getting quotes for more number of tools or is this still ordering tools 2 -- 2, 3 tools here and there?

It's mixed. It depends on the customer size and where they are. Some larger customers are quoting relatively large numbers of tools versus what we've been seeing in recent quarters. And others are mixed all the way down to single tools. Edwin Mok - Needham & Company, LLC, Research Division: Okay. Got you. That's helpful. And then John, just on your comments regarding new opportunities, right, to various end markets or various new opportunity you talked about, right? Which one should we kind of look out for as the one market that you feel is the most immediate and most likely to be a near-term revenue driver and which ones do you think is going to be the greatest opportunity for you longer term?

I'm not sure I've got a good answer for you on that but what I can tell you is for each of these markets, we have products now and technology now and have already on revenue. I think longer-term, MOCVD services is going to become a much bigger component of our overall revenue, and it will get up to ratios that are more in line with our other businesses than where it is now. So I think that's a big opportunity and then I think each of these others has some good opportunities for us. And it's really going to depend on how much energy we put in there and what products we deliver and our success rate. But they're not -- these aren't visions. They are not fuzzy concepts where we don't have anything. They're all areas where we've got products and revenue already.

We'll take our next question from Stephen Chin with UBS.

John, can you give us your updated thoughts on how many tools will be needed by the industry for lighting? And then in that same light, can you also give us some color on your visibility for 2013 relative to 2012 in terms of bookings or shipments?

Okay. Let me take that in kind of reverse order. If we go back and look at 2012, there are probably 200 to 250 reactors shipped between Veeco and Aixtron. 2013 is pretty hard to call at this point. It could be less because we came into the year with a lower backlog. But then again, it could pick up fast and be different. So I'm not really prepared to call a 2013 number of reactors, but I would say that it could be bigger or smaller than last year. It's not definitely on either side. For the longer-term, we're looking at another 3,000 or so reactors to really satisfy this lighting wave, that's a guess, it's an estimate and it's probably not real different than the midpoint of the estimates in the market. Could be significantly higher and it could be lower. It depends on the rate that lighting takes off as well as how much we're able to drive and improve yield and improve performance and how much our customers are able to do certain things. But you're looking at 3,000 or so additional reactors.

Great. And then just a quick follow-up for Dave. Dave, last time when you gave us your thoughts on 4Q, you've given us some color on the OpEx. I'm wondering if you could give us some color on the OpEx for 1Q '13 and can you maybe quantify the OpEx related to the accounting review?

Yes, let me start with the first part. Again, we can't comment on OpEx because it's income statement related. What I will say is that the cost drives, given the environment that we're in, we are continuing to manage costs very, very closely and doing a good job of keeping costs in check. Can't give a specific number though. And in terms of what the accounting review is costing, that's not really our focus. Our focus is put the resources on it necessary to get it done, get it done right and get it done in the most timely way we can.

We'll go next to Andrew Huang with Sterne Agee. Andrew Huang - Sterne Agee & Leach Inc., Research Division: On the pricing pressure you alluded to, are you seeing it more in multichamber tools or on the standalone tools?

I don't -- we don't really think about it as different, just split between the 2, so I would say we see just more pricing pressure everywhere, which is pretty common in a small market without a lot of deals that we're fighting over less food, so prices tend to go down. So they're down really, on both. Andrew Huang - Sterne Agee & Leach Inc., Research Division: Okay. And can you comment on the tools that are idle or sitting in crates? Will they be usable if they get a tuneup from your services group or how do you think about those tools that are doing nothing right now?

Well, we do know a couple of customers that have some tools in crates that aren't fully installed. And I know in one case, they are installing them at a pretty rapid rate. So they are certainly usable and can be made to work. So I don't think there's any issue there. But most of what we've shipped has been installed, it's been accepted, it's been paid for and the customers are using them or if there may be a second or a third tier China supplier where they've got excess capacity, they're working hard to get improvements in their LED yield and their LED quality so they can use everything they've got. The larger suppliers in China are running it at high utilization rates and they're using what they have. So it's just a matter of time before that capacity gets used up. Andrew Huang - Sterne Agee & Leach Inc., Research Division: Is it okay if I squeeze in one follow-up?

Sure. Andrew Huang - Sterne Agee & Leach Inc., Research Division: Can you say how much working capital management on the balance sheet contributed to the sequential cash increase?

No, we can't comment on that. But as we have through the past quarters during the downturn, we're keeping a very, very close and active management of working capital.

Well, I'll [indiscernible] on that. We're pretty darn proud of the way we've managed our inventory, and we've been able to manage our inventory in our supply chain to not tie up an excessive amount of cash and working capital and to not have big write-offs and to not have a lot of inventory of older tools. Because one of the things in this business is you're always improving your tool and you're always changing it. And when you buy too much, you really get put at a disadvantage because you've got too much of last year's model. So anyway, I at least have to put in my pitch there.

We'll take our next question from Brian Lee with Goldman Sachs.

I was wondering, are you seeing any impact on market share on the limited amount of MOCVD deals that are out there, given the aggressive pricing actions from your main competitor? And then I guess as a follow-up to that, are the rush orders that you're alluding to in Q2, are they seeing the same amount of pricing pressure that seem to be percolating throughout the market?

We've done really well in market share from over 50% to -- in 2011 to over -- to 62% in 2012. And one of the other changes that we've seen is IMS now has us reported to have over 50% market share in every region. So in regions where maybe a couple of years ago, we were a little bit behind in share, we've pulled those up and we do believe we are the leader in every region of the world. So I think we've done well in market share and we expect to continue to do well. The overall pricing pressure is kind of all around. It's been there and we're all competing for that. So it is in Q2 and pretty much of what we booked.

We'll take our next question from Paul Coster with JPMorgan. Paul Coster - JP Morgan Chase & Co, Research Division: You talked of this pricing pressure, is it the kind of pricing pressure that's reversible when the market recovers? Do you think that margins can also recover?

I think margins will improve as the market recovers. One of the things that there's a pretty fast pace of technology development in this market and we're certainly working on next-generation systems that have real advantages for our customers and I suspect Aixtron is doing the same. So I think there will be some improved pricing in the future. One of the things that we've also been very focused on is driving our cost down. And we really started that quite a few years ago, to drive out manufacturing cost, to improve our designs, to improve the way we manufacture the product and basically, continue to drive the cost down. So that helps also. Paul Coster - JP Morgan Chase & Co, Research Division: You've talked of going after some new market opportunities whether it's in power segment, R&D, OLED, et cetera. Can you talk a little bit about the go to market strategy, whether you need additional resource, what impact that might have on SG&A?

Well, in most of these segments, we're already selling to that segment. So the move-in -- and I'll pick a couple of examples. The move into MEMS, we started well over a year ago, 1.5 years ago and we've been basically getting to know the customers, understanding the technologies and refining our strategies. So we've already done that there. Another example would be either Power Electronics or MBE R&D. We're selling into both of those segments already. So we're already there. It's more hitting the market at the right time with the right products and some will -- could happen very quickly and some may just take a while for market adoption.

We'll take our next question from Colin Rusch with Northland Capital Markets.

Can you talk in reference to your 3,000 tool estimate on the impact of geometry changes? As we go forward, as you see some of your customers move to smaller geometries, is that included in your 3,000 tool estimate? And can you talk about whether you're seeing that in the marketplace just yet?

Yes. Our estimate includes a lot of different factors. It includes changes in customer yield on the front end, it includes changes in wafer size because there are ongoing sizes -- changes in wafer size, it includes changes in size of the actual dye, whether it's somebody trying to switch from -- to overdrive LEDs, changes between vertical and lateral LEDs. We try to take every last piece of this and project where it's going to go. It also makes some assumptions on what happens with GaN-on-Silicon and who wins there and what happens there. So we try to bake all of that in and -- to the best we can. So that's where we are with that. I think we'll take one more question, operator.

I'm sorry. Can I just get my follow-up in real quick?

Okay.

Are you seeing any orders out of Japan just yet?

We do have orders from Japan, yes.

And the magnitude of those? Are they sizable or are they still of [indiscernible] orders?

We've had sizable orders from Japan in the past and I think we're -- we consider that we're doing well in certain areas in Japan. We could always do better but we have penetrated some key customers.

We'll take our final question from Patrick Ho with Stifel. Patrick J. Ho - Stifel, Nicolaus & Co., Inc., Research Division: John, in terms of the -- you talked about picking up in the month of March, can you just give a little bit of a big picture view whether it's coming I guess, on single factors or from the [indiscernible] cluster tools because that could imply that you're seeing some capacity add-on or some next-generation fab buildout? Can you just give a little color on that?

Yes. I wouldn't read too much into whether it's single or cluster because frankly, we have some really important customers that just prefer single tools, and that's pretty much what they're going to buy no matter what they're doing. And then we have customers that prefer the clusters. So don't really have to see a big shift change or anything there. But it's driven by utilization rates. We've got customers that are basically close to 100% and they need more capacity if they want to get the business that they either are winning or can win and that, plus some customers with funding and customers basically trying to pull in their program. So it's a mix and it is more than one region. So it's not a single region thing. Patrick J. Ho - Stifel, Nicolaus & Co., Inc., Research Division: Great. And my final question, a follow-up to that is, on the supply chain, given that you're starting to see some quote orders, how ready is your supply-chain given that they've been pretty quiet for same type period you've been, how quickly can they, I guess, ramp-up and I guess, make up to your needs?

Our supply chain is in really good shape. We work with it carefully, we have multiple vendors supplying us. There are some sole sources but for the most part and for the final assembly side, we have multi-sites, multiple suppliers and multiple groups of our own people. So we're really prepared to ramp and I wouldn't anticipate anything where we would be manufacturing-limited for any significant period of time. And I think we've proven that in the past as we ramped before, that we're able to do that both from a manufacturing basis and from an install and services basis and we're actually more prepared now than ever for that. All right. Well, this will conclude our call. Thank you for joining us and we'll talk to you later.

That does conclude today's conference. We thank you for your participation.