Contact: Ronald C. Weigner Vice President and Chief Financial Officer Telephone: 978.284.4000
MKS Instruments Reports First Quarter 2007 Financial Results
Record sales on strong demand for process-critical technologies
Wilmington, Mass., April 26, 2007 — 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 2007 financial results.
MKS reported record quarterly sales of $211.4 million, up 18 percent from $179.1 million in the first quarter of 2006, and up 6 percent from $199.9 million in the fourth quarter of 2006.
Net income increased by 77 percent to $27.3 million, or $0.48 per diluted share, from $15.4 million, or $0.28 per diluted share, in the first quarter of 2006, and by 3 percent from $26.5 million, or $0.47 per diluted share, in the fourth quarter of 2006.
Non-GAAP net earnings, which exclude amortization of acquired intangible assets and special items, increased by 53 percent to $29.9 million, or $0.52 per diluted share, from $19.6 million, or $0.35 per diluted share, in the first quarter of 2006, and by 15 percent from $25.9 million, or $0.46 per diluted share, in the fourth quarter of 2006.
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 costs associated with acquisitions and special items, is useful to investors for comparing prior periods and analyzing ongoing business trends and operating results.
Leo Berlinghieri, Chief Executive Officer and President, said, “After achieving an outstanding 2006, we generated record first quarter sales on strong demand for our process-critical technologies in the semiconductor market, as our customers’ process performance and productivity requirements continued to increase.
“We are focused on leveraging our broad technology portfolio to grow our business in key semiconductor process areas and in attractive, less cyclical non-semiconductor market sectors. Our outlook anticipates variations in customer order patterns across markets. Considering these fluctuations, and given our higher than expected 6 percent sequential growth in the first quarter and the semiconductor industry’s more cautious outlook, we anticipate that second quarter 2007 sales could range from $195 to $205 million. Net income could range from $0.36 to $0.42 per diluted share on approximately 58.0 million shares outstanding. Non-GAAP net earnings could range from $0.41 to $0.47 per diluted share.”
Management will discuss first quarter financial results on a conference call today at 8:30 a.m. (Eastern Time). Dial-in numbers are 1-800-218-4007 for domestic callers and 303-262-2130 for international callers. The call will be broadcast live and available for replay atwww.mksinstruments.com. To hear a telephone replay through May 3, 2007, dial 303-590-3000, pass code 11087365#.
MKS Instruments, Inc. is a leading worldwide provider of process control solutions for improving productivity in 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 and other markets. 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 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, Section 27 of the Securities Act, and Section 21E of the Securities Exchange Act 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, 2007
March 31, 2006
December 31, 2006
Net sales
$
211,432
$
179,061
$
199,895
Cost of sales
118,570
105,316
112,638
Gross profit
92,862
73,745
87,257
Research and development
18,299
16,057
18,018
Selling, general and administrative
34,576
29,765
34,621
Amortization of acquired intangible assets
4,107
5,254
4,020
Purchase of in-process technology
—
800
—
Income from operations
35,880
21,869
30,598
Interest income, net
3,305
1,430
2,797
Income before income taxes
39,185
23,299
33,395
Provision for income taxes
11,895
7,864
6,902
Net income
$
27,290
$
15,435
$
26,493
Net income per share:
Basic
$
0.48
$
0.28
$
0.47
Diluted
$
0.48
$
0.28
$
0.47
Weighted average shares outstanding:
Basic
56,354
54,660
55,914
Diluted
57,326
55,269
56,561
The following supplemental Non-GAAP earnings information is presented to aid in understanding MKS’ operating results:
GAAP net income
$
27,290
$
15,435
$
26,493
Adjustments (net of tax, if applicable):
Amortization of acquired intangible assets
4,107
5,254
4,020
Purchase of in-process technology
—
800
—
Benefit for income taxes (NOTE 1)
—
—
(3,129
)
Tax effect of adjustments
(1,514
)
(1,905
)
(1,481
)
Non-GAAP net earnings (NOTE 2)
$
29,883
$
19,584
$
25,903
Non-GAAP net earnings per share (NOTE 2)
$
0.52
$
0.35
$
0.46
Weighted average shares outstanding — diluted
57,326
55,269
56,561
NOTE 1: The three month period ended December 31, 2006 includes a net tax benefit of $3,129 attributable to the impact on prior 2006 quarters of the retroactive extension of the R&D tax credit from January 1, 2006 through December 31, 2006 and to a reduction of the valuation allowance on state tax credits.
NOTE 2: The Non-GAAP net earnings and Non-GAAP net earnings per share amounts exclude amortization of acquired intangible assets, acquisition and disposition related charges and special items, net of applicable income taxes.
2
MKS Instruments, Inc. Unaudited Consolidated Balance Sheet (In thousands)
March 31, 2007
December 31, 2006
ASSETS
Cash and short-term investments
$
313,257
$
289,957
Trade accounts receivable
131,817
123,658
Inventories
157,356
149,820
Other current assets
31,362
28,003
Total current assets
633,792
591,438
Property, plant and equipment, net
78,851
79,463
Long-term investments
2,463
2,816
Goodwill
323,715
323,973
Other acquired intangible assets
40,275
43,104
Other assets
2,608
2,926
Total assets
$
1,081,704
$
1,043,720
LIABILITIES AND STOCKHOLDERS’ EQUITY
Short-term debt
$
22,080
$
23,021
Accounts payable
43,533
38,541
Accrued expenses and other liabilities
57,564
58,424
Total current liabilities
123,177
119,986
Long-term debt
6,037
6,113
Other long-term liabilities
19,794
16,402
Stockholders’ equity:
Common stock
113
113
Additional paid-in capital
691,030
680,164
Retained earnings
231,413
210,877
Other stockholders’ equity
10,140
10,065
Total stockholders’ equity
932,696
901,219
Total liabilities and stockholders’ equity
$
1,081,704
$
1,043,720
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