Contact: Ronald C. Weigner Vice President and Chief Financial Officer Telephone: 978.284.4000
MKS Instruments Reports Second Quarter 2007 Financial Results
Wilmington, Mass., July 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 second quarter 2007 financial results.
Second quarter sales totaled $204.0 million, up 3 percent from $198.4 million in the second quarter of 2006 and down 4 percent from $211.4 million in the first quarter of 2007.
Net income totaled $22.5 million, or $0.39 per diluted share, compared to $24.4 million, or $0.44 per diluted share, in the second quarter of 2006, and $27.3 million, or $0.48 per diluted share, in the first quarter of 2007.
Non-GAAP net earnings, which exclude amortization of acquired intangible assets and special items, totaled $25.1 million, or $0.43 per diluted share, compared to $27.0 million, or $0.48 per diluted share, in the second quarter of 2006, and $29.9 million, or $0.52 per diluted share, in the first quarter of 2007.
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, “MKS continues to demonstrate that our technology leadership supports multi-market growth. In the second quarter, we achieved double-digit sales growth in non-semiconductor markets as we continue to leverage our process technologies in thin film and other growth markets that are less cyclical. After record first quarter sales on strong semiconductor market demand, we saw some softening in the second quarter, which is consistent with industry trends.
“Looking ahead to the third quarter, based on semiconductor market projections and current order patterns, we expect sales could range from $180 to $188 million. Net income could range from $0.25 to $0.31 per diluted share on 58.5 million shares outstanding, and non-GAAP net earnings could range from $0.29 to $0.35 per diluted share. Although visibility is limited, we remain optimistic about longer-term prospects for growth. As fabs implement more high performance 300mm equipment, we are well positioned with process control and analysis technologies that improve fab productivity and reduce cost. And we are seeing more opportunities for our broad technology portfolio in other markets with favorable growth dynamics.”
Management will discuss second quarter financial results on a conference call today at 8:30 a.m. (Eastern Time). Dial-in numbers are 1-800-240-8621 for domestic callers and 303-262-2137 for international callers. The call will be broadcast live and available for replay atwww.mksinstruments.com. To hear a telephone replay through August 2, 2007, dial 303-590-3000, pass code 11093388#.
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
June 30, 2007
June 30, 2006
March 31, 2007
Net sales
$
203,978
$
198,351
$
211,432
Cost of sales
117,948
111,850
118,570
Gross profit
86,030
86,501
92,862
Research and development
18,351
17,663
18,299
Selling, general and administrative
35,928
30,300
34,576
Amortization of acquired intangible assets
4,108
4,086
4,107
Income from operations
27,643
34,452
35,880
Interest income, net
3,581
1,934
3,305
Income before income taxes
31,224
36,386
39,185
Provision for income taxes
8,697
12,012
11,895
Net income
$
22,527
$
24,374
$
27,290
Net income per share:
Basic
$
0.40
$
0.44
$
0.48
Diluted
$
0.39
$
0.44
$
0.48
Weighted average shares outstanding:
Basic
56,820
55,338
56,354
Diluted
57,939
55,907
57,326
The following supplemental Non-GAAP earnings information is presented to aid in understanding MKS’ operating results:
GAAP net income
$
22,527
$
24,374
$
27,290
Adjustments (net of tax, if applicable):
Amortization of acquired intangible assets
4,108
4,086
4,107
Tax effect of adjustments
(1,513
)
(1,506
)
(1,514
)
Non-GAAP net earnings (NOTE 1)
$
25,122
$
26,954
$
29,883
Non-GAAP net earnings per share (NOTE 1)
$
0.43
$
0.48
$
0.52
Weighted average shares outstanding — diluted
57,939
55,907
57,326
NOTE 1: 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 Statements of Operations (In thousands, except per share data)
Six Months Ended
June 30,
2007
2006
Net sales
$
415,410
$
377,412
Cost of sales
236,518
217,166
Gross profit
178,892
160,246
Research and development
36,650
33,720
Selling, general and administrative
70,504
60,065
Amortization of acquired intangible assets
8,215
9,340
Purchase of in-process technology
—
800
Income from operations
63,523
56,321
Interest income, net
6,886
3,364
Income before income taxes
70,409
59,685
Provision for income taxes
20,592
19,876
Net income
$
49,817
$
39,809
Net income per share:
Basic
$
0.88
$
0.72
Diluted
$
0.86
$
0.72
Weighted average shares outstanding:
Basic
56,587
54,999
Diluted
57,633
55,588
The following supplemental Non-GAAP earnings information is presented to aid in understanding MKS’ operating results:
GAAP net income
$
49,817
$
39,809
Adjustments (net of tax, if applicable):
Amortization of acquired intangible assets
8,215
9,340
Purchase of in-process technology
—
800
Tax effect of adjustments
(3,027
)
(3,410
)
Non-GAAP net earnings (Note 1)
$
55,005
$
46,539
Non-GAAP net earnings per share (Note 1)
$
0.95
$
0.84
Weighted average shares outstanding — diluted
57,633
55,588
NOTE 1: 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.
3
MKS Instruments, Inc. Unaudited Consolidated Balance Sheet (In thousands)
June 30, 2007
December 31, 2006
ASSETS
Cash and short-term investments
$
336,076
$
289,957
Trade accounts receivable
125,910
123,658
Inventories
163,713
149,820
Other current assets
29,831
28,003
Total current assets
655,530
591,438
Property, plant and equipment, net
80,130
79,463
Long-term investments
6,729
2,816
Goodwill
322,712
323,973
Other acquired intangible assets
35,998
43,104
Other assets
2,376
2,926
Total assets
$
1,103,475
$
1,043,720
LIABILITIES AND STOCKHOLDERS’ EQUITY
Short-term debt
$
25,421
$
23,021
Accounts payable
37,938
38,541
Accrued expenses and other liabilities
45,979
58,424
Total current liabilities
109,338
119,986
Long-term debt
6,135
6,113
Other long-term liabilities
20,139
16,402
Stockholders’ equity:
Common stock
113
113
Additional paid-in capital
714,034
680,164
Retained earnings
243,479
210,877
Other stockholders’ equity
10,237
10,065
Total stockholders’ equity
967,863
901,219
Total liabilities and stockholders’ equity
$
1,103,475
$
1,043,720
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