Contact: Ronald C. Weigner Vice President and Chief Financial Officer Telephone: 978.645.5500
MKS Instruments Reports First Quarter 2008 Financial Results
Andover, Mass., April 24, 2008 — MKS Instruments, Inc. (NASDAQ: MKSI), a global provider of technologies that enable advanced processes and improve productivity, today reported first quarter 2008 financial results.
Sales were $193.4 million, up 5 percent from $184.1 million in the fourth quarter of 2007 and down 9 percent from $211.4 million in the first quarter of 2007.
Net income was $20.4 million, or $0.39 per diluted share, compared to $15.2 million, or $0.27 per diluted share, in the fourth quarter of 2007 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 $20.6 million, or $0.39 per diluted share, compared to $18.6 million, or $0.33 per diluted share, in the fourth quarter of 2007 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, “We started 2008 with another quarter of sequential growth after stronger-than-expected fourth quarter sales. Demand increased primarily in semiconductor, solar and flat panel display markets, where we continued to leverage our broad technology portfolio. We also delivered strong operating performance on the higher sales volume.
“Our first quarter results exceeded our guidance in an uncertain market environment. Industry analysts are forecasting further declines in semiconductor capital equipment spending in 2008, and we are seeing a more challenging environment. We are optimistic about our long-term growth opportunities in semiconductor and non-semiconductor markets. In the second quarter, while we expect growth in solar and flat panel display markets, we expect a decline in our semiconductor business. Second quarter sales could range from $170 to $180 million. Net income could range from $0.18 to $0.25 per diluted share on approximately 52 million shares outstanding, and non-GAAP net earnings could range from $0.20 to $0.27 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 1-800-240-2430 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 1, 2008, dial 303-590-3000, pass code 11111743#.
MKS Instruments, Inc. is a global provider of instruments, subsystems and process control solutions that measure, control, power, monitor and analyze critical parameters of advanced manufacturing processes to improve process performance and productivity. Our products are derived from our core competencies in pressure measurement and control, materials delivery, gas composition analysis, electrostatic charge management, control and information technology, power and reactive gas generation, and vacuum technology. Our primary served markets are manufacturers of capital equipment for semiconductor devices, and for other thin film applications including flat panel displays, solar cells, data storage media, and other advanced coatings. We also leverage our technology in other markets with advanced manufacturing applications including medical equipment, pharmaceutical manufacturing, and energy generation and environmental monitoring.
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, 2008
March 31, 2007
December 31, 2007
Net sales
$
193,448
$
211,432
$
184,063
Cost of sales
111,541
118,570
108,066
Gross profit
81,907
92,862
75,997
Research and development
19,249
18,299
18,361
Selling, general and administrative
31,709
34,576
32,251
Amortization of acquired intangible assets
3,105
4,107
4,091
Purchase of in-process technology
—
—
900
Income from operations
27,844
35,880
20,394
Impairment of investments
(1,161
)
—
(1,457
)
Interest income, net
2,176
3,305
3,592
Income before income taxes
28,859
39,185
22,529
Provision for income taxes
8,477
11,895
7,368
Net income
$
20,382
$
27,290
$
15,161
Net income per share:
Basic
$
0.39
$
0.48
$
0.27
Diluted
$
0.39
$
0.48
$
0.27
Weighted average shares outstanding:
Basic
51,733
56,354
55,415
Diluted
52,571
57,326
55,946
The following supplemental Non-GAAP earnings information is presented to aid in understanding MKS’ operating results:
GAAP net income
$
20,382
$
27,290
$
15,161
Adjustments (net of tax, if applicable):
Amortization of acquired intangible assets
3,105
4,107
4,091
Foreign exchange gain from legal entity restructuring (Note 1)
(2,669
)
—
—
Purchase of in-process technology
—
—
900
Tax effect of adjustments
(204
)
(1,514
)
(1,507
)
Non-GAAP net earnings (Note 2)
$
20,614
$
29,883
$
18,645
Non-GAAP net earnings per share (Note 2)
$
0.39
$
0.52
$
0.33
Weighted average shares outstanding — diluted
52,571
57,326
55,946
Note 1: Selling, general and administrative expenses for the three month period ended March 31, 2008 includes a foreign exchange gain of $2.7 million related to the Company’s legal entity restructuring of certain foreign operations.
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, 2008
December 31, 2007
ASSETS
Cash and short-term investments
$
276,618
$
323,765
Trade accounts receivable
121,574
107,504
Inventories
154,938
150,731
Other current assets
29,446
27,980
Total current assets
582,576
609,980
Property, plant and equipment, net
81,801
81,365
Goodwill
337,622
337,473
Other acquired intangible assets
33,035
36,141
Other assets
11,688
11,301
Total assets
$
1,046,722
$
1,076,260
LIABILITIES AND STOCKHOLDERS’ EQUITY
Short-term debt
$
18,636
$
20,203
Accounts payable
33,497
28,683
Accrued expenses and other liabilities
55,305
46,859
Total current liabilities
107,438
95,745
Long-term debt
5,694
5,871
Other long-term liabilities
21,662
20,635
Stockholders’ equity:
Common stock
113
113
Additional paid-in capital
645,332
685,465
Retained earnings
254,178
255,244
Other stockholders’ equity
12,305
13,187
Total stockholders’ equity
911,928
954,009
Total liabilities and stockholders’ equity
$
1,046,722
$
1,076,260
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