Contact: Ronald C. Weigner Vice President & Chief Financial Officer Telephone: 978.284.4446
MKS Instruments Reports First Quarter 2006 Results
Wilmington, Mass., April 27, 2006 — 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 first quarter 2006 financial results. Net sales increased to $179.1 million, up 40.5 percent from $127.4 million in the first quarter of 2005 and up 38.6 percent from $129.2 million in the fourth quarter of 2005.
First quarter 2006 GAAP net earnings increased to $15.4 million, or $0.28 per diluted share, compared to first quarter 2005 GAAP net earnings of $5.5 million, or $0.10 per diluted share, and fourth quarter 2005 GAAP net earnings of $12.1 million, or $0.22 per diluted share. Due to the adoption of FAS 123( R), first quarter 2006 GAAP net earnings included stock-based compensation expense of $1.7 million, or $0.03 per share, net of tax.
First quarter 2006 non-GAAP earnings, which exclude amortization of acquired intangible assets, special items and stock-based compensation, increased to $21.3 million, or $0.39 per share, compared to first quarter 2005 non-GAAP earnings of $8.0 million, or $0.15 per share, and fourth quarter 2005 non-GAAP earnings of $12.1 million, or $0.22 per share.
Leo Berlinghieri, Chief Executive Officer and President, said, “Our sales grew by 39 percent sequentially, and excluding a full quarter of sales from two technology acquisitions, Ion Systems and Umetrics, our organic sales growth rate was 31 percent. We achieved significant sales growth on strong order momentum from semiconductor capital equipment manufacturers. Sales to semiconductor device manufacturers, and thin film and other markets also increased. Our close customer relationships and innovative solutions for improving process performance and productivity contributed to our success.”
Mr. Berlinghieri continued, “Looking ahead to the second quarter, based on current trends and industry bookings, we see signs for moderate growth in semiconductor capital equipment spending. After a very strong first quarter, we estimate that our second quarter sales could increase by 3 to 6 percent and range from $185 to $190 million. GAAP net earnings could range from $0.33 to $0.36 per diluted share on approximately 56 million shares outstanding, which includes $0.04 per share of stock-based compensation expense. Non-GAAP earnings, which exclude amortization of acquired intangible assets, special items and stock-based compensation, could range from $0.41 to $0.44 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’ management believes the presentation of non-GAAP financial measures, which exclude the costs associated with acquisitions, special items and stock-based compensation, is useful to investors for comparing prior periods and analyzing ongoing business trends and operating results.
Management will discuss first quarter financial results on a conference call today at 8:30 a.m. (Eastern Time). Dial-in numbers are 1-800-366-7417 for domestic callers and 303-262-2143 for international callers. The call will be broadcast live and available for replay atwww.mksinstruments.com. To hear a telephone replay through May 4, 2006, dial 303-590-3000, pass code 11058544#.
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 Annual Report on Form 10-K, 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.
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1
MKS Instruments, Inc. Unaudited Consolidated Statements of Operations (In thousands, except per share data)
Three Months Ended
March 31, 2006
March 31, 2005
December 31, 2005
Net sales
$
179,061
$
127,407
$
129,174
Cost of sales
105,316
78,045
77,545
Gross profit
73,745
49,362
51,629
Research and development
16,057
14,549
12,994
Selling, general and administrative
29,765
23,849
23,791
Amortization of acquired intangible assets
5,254
3,690
3,099
Income from litigation settlement
—
—
(3,000
)
Purchase of in-process technology
800
—
—
Restructuring
—
454
(91
)
Income from operations
21,869
6,820
14,836
Interest income, net
1,430
1,098
2,202
Income before income taxes
23,299
7,918
17,038
Provision for income taxes
7,864
2,460
4,933
Net income
$
15,435
$
5,458
$
12,105
Net income per share:
Basic
$
0.28
$
0.10
$
0.22
Diluted
$
0.28
$
0.10
$
0.22
Weighted average shares outstanding:
Basic
54,660
53,878
54,269
Diluted
55,269
54,393
54,945
The following supplemental Non-GAAP earnings information is presented to aid in understanding MKS’ operating results:
GAAP net income
$
15,435
$
5,458
$
12,105
Adjustments:
Amortization of acquired intangible assets
5,254
3,690
3,099
Stock compensation charges
2,666
—
—
Restructuring
—
454
(91
)
Income from litigation settlement
—
—
(3,000
)
Purchase of in-process technology
800
—
—
Tax effect of adjustments
(2,840
)
(1,566
)
(3
)
Non-GAAP net income (NOTE 1)
$
21,315
$
8,036
$
12,110
Non-GAAP net income per share (NOTE 1)
$
0.39
$
0.15
$
0.22
Weighted average shares outstanding — diluted
55,269
54,393
54,945
NOTE 1: The Non-GAAP net income and Non-GAAP net income per share amounts exclude amortization of acquired intangible assets, acquisition and disposition related charges, stock compensation charges and special items, net of applicable income taxes.
2
MKS Instruments, Inc. Unaudited Consolidated Balance Sheet (In thousands)
March 31, 2006
December 31, 2005
ASSETS
Cash and short-term investments
$
213,860
$
292,619
Trade accounts receivable
106,672
82,610
Inventories
111,967
98,242
Other current assets
28,870
25,676
Total current assets
461,369
499,147
Property, plant and equipment, net
80,083
78,726
Long-term investments
696
857
Goodwill
322,761
255,243
Other acquired intangible assets
54,923
27,422
Other assets
2,583
2,345
Total assets
$
922,415
$
863,740
LIABILITIES AND STOCKHOLDERS’ EQUITY
Short-term debt
$
19,340
$
18,886
Accounts payable
38,756
27,955
Accrued expenses and other liabilities
51,693
42,246
Total current liabilities
109,789
89,087
Long-term debt
5,935
6,152
Other long-term liabilities
15,314
5,658
Stockholders’ equity:
Common stock
113
113
Additional paid-in capital
651,779
639,152
Retained earnings
132,077
116,642
Other stockholders’ equity
7,408
6,936
Total stockholders’ equity
791,377
762,843
Total liabilities and stockholders’ equity
$
922,415
$
863,740
3
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