MKS Instruments (MKSI) 8-K MKS Instruments Reports Second Quarter 2005 Results

Exhibit 99.1

For Immediate Release

Contact: Ron Weigner
Vice President and Chief Financial Officer
978.284.4446

MKS Instruments Reports Second Quarter 2005 Results

     Wilmington, Mass. — July 26, 2005 — MKS Instruments, Inc. (NASDAQ: MKSI), a leading worldwide provider of process control technologies for improving productivity in semiconductor and other advanced manufacturing processes, today reported second quarter 2005 financial results. Net sales were $130.2 million, up 2 percent from $127.4 million in the first quarter of 2005 and down 14 percent from $151.6 million in the second quarter of 2004.

     GAAP net earnings totaled $9.8 million, or $0.18 per diluted share on 54.5 million shares, compared to $5.5 million, or $0.10 per diluted share, in the first quarter of 2005 and $20.9 million, or $0.38 per diluted share, in the second quarter of 2004. Non-GAAP earnings, which exclude amortization of acquired intangible assets and special items, were $10.2 million, or $0.19 per share, compared to $8.0 million, or $0.15 per share, in the first quarter of 2005 and $19.2 million, or $0.35 per share, in the second quarter of 2004.

     “In the second quarter, we exceeded the high end of our sales and earnings guidance. Sales increased over the first quarter along with gross margin improvement and lower operating expense,” said John Bertucci, Executive Chairman of the Board. “As the leading edge shifts to smaller geometries that require new processes, demand continues for process control and information management to enhance tool performance and productivity. With our broad technology portfolio, we are providing higher value solutions that enable precise control and optimization of advanced manufacturing processes.”

     “Going forward, we will continue to work closely with our customers as their technology needs evolve and their lead times shorten,” said Chief Executive Officer and President Leo Berlinghieri. “In the near term, based on cautious customer order patterns,

we currently estimate that our third quarter sales could decrease by 3% to 8% and range from $120 to $126 million. At these levels, GAAP net earnings could range from $0.07 to $0.11 per diluted share, and non-GAAP earnings could range from $0.11 to $0.15 per share.”

     The financial results that exclude certain charges and special items are not in accordance with Accounting Principles Generally Accepted in the United States of America (GAAP). MKS has historically been acquisitive, and MKS’ management believes the presentation of non-GAAP financial measures, which exclude the costs associated with acquisitions and other special items, is useful to investors for comparing prior periods and analyzing ongoing business trends and operating results.

     Management will discuss second quarter financial results on a conference call today at 5:00 p.m. (Eastern Daylight Time). A live web cast and replay of the conference call will be available atwww.mksinstruments.com in the “Investors” section. To hear a telephone replay through August 2, 2005, dial 303-590-3000, pass code 11034204#.

     MKS Instruments, Inc. is a leading worldwide provider of process control solutions for advanced manufacturing processes such as semiconductor device manufacturing; thin-film manufacturing for flat panel displays, data storage media, architectural glass and electro-optical products; and technology for medical imaging equipment. Our instruments, components and subsystems incorporate sophisticated technologies to power, measure, control, and monitor increasingly complex gas-related semiconductor manufacturing processes, thereby enhancing our customers’ uptime, yield and throughput, and improving their productivity and return on invested capital.

     This release contains projections or other forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 regarding MKS’ future growth and the future financial performance of MKS. These projections or statements are only predictions. Actual events or results may differ materially from those in the projections or other forward-looking statements set forth herein. Among the important factors that could cause actual events to differ materially from those in the projections or other forward-looking statements are the fluctuations in capital spending in the semiconductor industry, fluctuations in net sales to MKS’ major customers, potential fluctuations in quarterly results, the challenges, risks and costs involved with integrating

the operations of MKS and any acquired companies, dependence on new product development, rapid technological and market change, acquisition strategy, manufacturing and sourcing risks, volatility of stock price, international operations, financial risk management, and future growth subject to risks. Readers are referred to MKS’ filings with the Securities and Exchange Commission, including its most recent Quarterly Report on Form 10-Q, for a discussion of these and other important risk factors concerning MKS and its operations. MKS is under no obligation to, and expressly disclaims any obligation to, update or alter its forward-looking statements, whether as a result of new information, future events or otherwise.

###

MKS Instruments, Inc.

Unaudited Consolidated Statements of Operations
(In thousands, except per share data)

	Three Months Ended
	June 30,			June 30,			March 31,
	2005			2004			2005
Net sales	$	130,193		$	151,585		$	127,407
Cost of sales		78,407			90,192			78,045
Gross profit		51,786			61,393			49,362
Research and development		14,689			14,620			14,549
Selling, general and administrative		23,040			22,661			23,849
Amortization of acquired intangible assets		3,693			3,691			3,690
Restructuring charges		—			—			454
Income from operations		10,364			20,421			6,820
Interest income, net		1,348			326			1,098
Other income (NOTE 1)		—			5,402			—
Income before income taxes		11,712			26,149			7,918
Provision for income taxes		1,934			5,281			2,460
Net income	$	9,778		$	20,868		$	5,458
Net income per share:
Basic	$	0.18		$	0.39		$	0.10
Diluted	$	0.18		$	0.38		$	0.10
Weighted average shares outstanding:
Basic		53,975			53,540			53,878
Diluted		54,451			54,967			54,393
The following supplemental Non-GAAP earnings information is presented to aid in understanding MKS’s operating results:
GAAP net income	$	9,778		$	20,868		$	5,458
Adjustments (net of tax, if applicable):
Amortization of acquired intangible assets		2,308			3,691			2,306
Restructuring charges		—			—			272
Other income (NOTE 1, NOTE 2)		—			(5,402	)		—
Benefit for income taxes (NOTE 3)		(1,901	)		—			—
Non-GAAP net income (NOTE 4)	$	10,185		$	19,157		$	8,036
Non-GAAP net income per share (NOTE 4)	$	0.19		$	0.35		$	0.15
Weighted average shares outstanding — diluted		54,451			54,967			54,393

NOTE 1: The GAAP amount for June 30, 2004 represents primarily the collection of a note receivable of $5.0 million which had been written off in 2002.

NOTE 2: The Non-GAAP adjustment for Other income for the three months ended June 30, 2004 was originally reported net of tax at $4,272. The amount currently reported as the Non-GAAP adjustment for Other income had been revised in the fourth quarter of 2004 to exclude tax in conjunction with the reversal of the previously established valuation allowance against net deferred tax assets and was reflected in our reported non-GAAP net earnings of $1.15 per share for 2004.

NOTE 3: The three month period ended June 30, 2005 includes a benefit of $1,901 in connection with closing an IRS audit.

NOTE 4: The Non-GAAP net income and non-GAAP net income per share amounts exclude amortization of acquired intangible assets, acquisition and disposition related charges and special items, net of applicable income taxes.

MKS Instruments, Inc.
Unaudited Consolidated Statements of Operations
(In thousands, except per share data)

	Six Months Ended
	June 30,
	2005			2004
Net sales	$	257,600		$	284,570
Cost of sales		156,452			168,948
Gross profit		101,148			115,622
Research and development		29,238			28,956
Selling, general and administrative		46,889			42,813
Amortization of acquired intangible assets		7,383			7,384
Restructuring charges		454			437
Income from operations		17,184			36,032
Interest income, net		2,446			598
Other income (NOTE 1)		—			5,402
Income before income taxes		19,630			42,032
Provision for income taxes		4,394			8,458
Net income	$	15,236		$	33,574
Net income per share:
Basic	$	0.28		$	0.63
Diluted	$	0.28		$	0.61
Weighted average shares outstanding:
Basic		53,926			53,398
Diluted		54,422			55,026
The following supplemental Non-GAAP earnings information is presented to aid in understanding the MKS operating results:
GAAP Net income	$	15,236		$	33,574
Adjustments (net of tax, if applicable):
Amortization of acquired intangible assets		4,614			7,384
Restructuring charges		272			437
Other income (NOTE 1, NOTE 2)		—			(5,402	)
Benefit for income taxes (NOTE 3)		(1,901	)		—
Non-GAAP net income (NOTE 4)	$	18,221		$	35,993
Non-GAAP net income per share (NOTE 4)	$	0.33		$	0.65
Weighted average shares outstanding		54,422			55,026

NOTE 1: The GAAP amount for June 30, 2004 represents primarily the collection of a note receivable of $5.0 million which had been written off in 2002.

NOTE 2: The Non-GAAP adjustment for Other income for the six months ended June 30, 2004 was originally reported net of tax at $4,272. The amount currently reported as the Non-GAAP adjustment for Other income had been revised in the fourth quarter of 2004 to exclude tax in conjunction with the reversal of the previously established valuation allowance against net deferred tax assets and was reflected in our reported non-GAAP net earnings of $1.15 per share for 2004.

NOTE 3: The six month period ended June 30, 2005 includes a benefit of $1,901 in connection with closing an IRS audit.

NOTE 4: The Non-GAAP net income and non-GAAP net income per share amounts exclude amortization of acquired intangible assets, acquisition and disposition related charges and special items, net of applicable income taxes.

MKS Instruments, Inc.
Unaudited Consolidated Balance Sheet
(In thousands)

	June 30,		December 31,
	2005		2004
ASSETS
Cash and short-term investments	$	264,303	$	235,900
Trade accounts receivable		78,452		82,315
Inventories		95,469		99,633
Other current assets		22,918		22,037
Total current assets		461,142		439,885
Property, plant and equipment, net		80,062		80,917
Long-term investments		1,627		4,775
Goodwill		255,385		255,740
Other acquired intangible assets		33,952		41,604
Other assets		5,442		5,756
Total assets	$	837,610	$	828,677
LIABILITIES AND STOCKHOLDERS’ EQUITY
Short-term debt	$	23,882	$	24,509
Accounts payable		23,280		23,338
Accrued expenses and other liabilities		38,959		44,338
Total current liabilities		86,121		92,185
Long-term debt		6,830		6,667
Other long-term liabilities		3,735		3,191
Stockholders’ equity:
Common stock		113		113
Additional paid-in capital		634,569		631,760
Retained earnings		97,313		82,077
Other stockholders’ equity		8,929		12,684
Total stockholders’ equity		740,924		726,634
Total liabilities and stockholders’ equity	$	837,610	$	828,677