1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 2001
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______________ to _______________
Commission file number 0-23621
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MKS INSTRUMENTS, INC.
(Exact name of registrant as specified in its charter)
Massachusetts 04-2277512
- --------------------------------------------------------------------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
Six Shattuck Road, Andover, Massachusetts 01810
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (978) 975-2350
-------------------
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ].
Number of shares outstanding of the issuer's common stock as of April 30, 2001:
37,599,096
2
MKS INSTRUMENTS, INC.
FORM 10-Q
INDEX
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Consolidated Balance Sheets -
March 31, 2001 and December 31, 2000
Consolidated Statements of Income -
Three months ended March 31, 2001 and 2000
Consolidated Statements of Cash Flows -
Three months ended March 31, 2001 and 2000
Notes to Consolidated Financial Statements
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
ITEM 5. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MKS INSTRUMENTS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
March 31, December 31,
2001 2000
--------- ------------
(Unaudited) (Note 1)
ASSETS
Current assets:
Cash and cash equivalents ............................... $111,423 $123,082
Short-term investments .................................. 14,824 17,904
Trade accounts receivable, net .......................... 82,725 95,076
Inventories ............................................. 78,497 69,165
Deferred tax asset ...................................... 7,358 9,976
Other current assets .................................... 5,351 4,433
-------- --------
Total current assets ................................ 300,178 319,636
Property, plant and equipment, net ...................... 70,849 64,133
Goodwill and acquired intangible assets, net ............ 38,101 45,325
Long-term investments ................................... 17,230 17,100
Other assets ............................................ 14,033 8,209
-------- --------
Total assets ........................................ $440,391 $454,403
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings ................................... $ 16,558 $ 15,741
Current portion of long-term debt ....................... 1,373 2,783
Current portion of capital lease obligations ............ 638 610
Accounts payable ........................................ 19,218 23,653
Accrued compensation .................................... 8,175 17,003
Other accrued expenses .................................. 14,138 14,588
Income taxes payable .................................... 5,541 7,937
-------- --------
Total current liabilities ........................... 65,641 82,315
Long-term debt .............................................. 9,825 11,439
Long-term portion of capital lease obligations .............. 669 947
Deferred tax liability ...................................... 963 1,663
Other liabilities ........................................... 508 517
Commitments and contingencies
Stockholders' equity:
Preferred Stock, $0.01 par value, 2,000,000 shares
authorized; none issued and outstanding ............. -- --
Common Stock, no par value, 50,000,000 shares authorized;
36,895,686 and 36,645,665 issued and outstanding at
March 31, 2001 and December 31, 2000, respectively .. 113 113
Additional paid-in capital .............................. 271,252 263,723
Retained earnings ....................................... 91,130 93,235
Accumulated other comprehensive income .................. 290 451
-------- --------
Total stockholders' equity .......................... 362,785 357,522
-------- --------
Total liabilities and stockholders' equity .......... $440,391 $454,403
======== ========
The accompanying notes are an integral part of the consolidated financial
statements.
4
MKS INSTRUMENTS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
(Unaudited)
Three Months Ended
March 31,
-----------------------
2001 2000
--------- ---------
(Note 1)
Net sales ................................................ $ 110,888 $ 96,158
Cost of sales ............................................ 67,693 54,933
--------- ---------
Gross profit ............................................. 43,195 41,225
Research and development ................................. 11,151 7,123
Selling, general and administrative ...................... 19,057 15,220
Amortization of goodwill and acquired intangible assets .. 2,240 378
Goodwill impairment charge ............................... 3,720 --
Merger expenses .......................................... 7,708 --
--------- ---------
Income (loss) from operations ............................ (681) 18,504
Interest expense ......................................... 402 429
Interest income .......................................... 1,794 1,211
Other income (expense), net .............................. -- (9)
--------- ---------
Income before income taxes ............................... 711 19,277
Provision for income taxes ............................... 2,816 7,318
--------- ---------
Net income (loss) ........................................ $ (2,105) $ 11,959
========= =========
Historical net income (loss) per share:
Basic ................................................ $ (0.06) $ 0.36
========= =========
Diluted .............................................. $ (0.06) $ 0.34
========= =========
Historical weighted average common shares outstanding:
Basic ................................................ 36,820 33,618
========= =========
Diluted .............................................. 36,820 35,331
========= =========
The accompanying notes are an integral part of the consolidated financial
statements.
5
MKS INSTRUMENTS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
Three Months Ended
March 31,
-----------------------
2001 2000
--------- ---------
Cash flows from operating activities:
Net income (loss) .................................................. $ (2,105) $ 11,959
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
Depreciation and amortization .................................. 4,958 2,700
Goodwill impairment charge ..................................... 3,720 --
Other .......................................................... 27 (468)
Changes in operating assets and liabilities net of effects of
businesses acquired:
Trade accounts receivable ................................... 14,220 (7,352)
Inventories ................................................. (875) (8,099)
Other current assets ........................................ (1,232) (917)
Accrued expenses and other current liabilities .............. (13,155) 4,274
Accounts payable ............................................ (3,590) 3,377
--------- ---------
Net cash provided by operating activities .......................... 1,968 5,474
--------- ---------
Cash flows from investing activities:
Proceeds from (purchases of) investments ....................... (5,393) 7,429
Purchases of property, plant and equipment ..................... (4,898) (2,566)
(Increase) decrease in other assets ............................ (408) 322
Purchases of companies, net of cash acquired ................... -- (6,164)
--------- ---------
Net cash used in investing activities .............................. (10,699) (979)
--------- ---------
Cash flows from financing activities:
Proceeds from short-term borrowings ............................ 11,825 1,670
Payments on short-term borrowings .............................. (10,988) --
Principal payments on long-term debt ........................... (695) (514)
Proceeds from exercise of stock options ........................ 796 1,138
Proceeds from issuance of common stock, net of issuance costs .. -- 259
Principal payments under capital lease obligations ............. (250) (308)
--------- ---------
Net cash provided by financing activities .......................... 688 2,245
--------- ---------
Effect of exchange rate changes on cash and cash equivalents ....... (474) 95
--------- ---------
Increase (decrease) in cash and cash equivalents ................... (8,517) 6,835
Cash and cash equivalents at beginning of period ................... 123,082 67,489
Effect of excluded results of ASTeX (Note 1)........................ (3,142) --
--------- ---------
Cash and cash equivalents at end of period ......................... $ 111,423 $ 74,324
========= =========
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest .................................................... $ 365 $ 267
========= =========
Income taxes ................................................ $ 5,053 $ 2,555
========= =========
Acquisitions:
Fair value of assets acquired ............................... $ -- $ 15,803
Less: liabilities assumed .................................. -- 1,161
Stock and options issued ................................ -- 8,433
Cash acquired ........................................... -- 45
--------- ---------
Acquisitions, net of cash acquired ...................... $ -- $ 6,164
========= =========
The accompanying notes are an integral part of the consolidated financial
statements.
6
MKS INSTRUMENTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tables in thousands, except per share data)
1) BASIS OF PRESENTATION
The interim financial data as of March 31, 2001 and for the three months
ended March 31, 2001 and 2000 is unaudited; however, in the opinion of MKS
Instruments, Inc., the interim data includes all adjustments, consisting
only of normal recurring adjustments, necessary for a fair presentation of
the results for the interim periods. The unaudited financial statements
presented herein have been prepared in accordance with the instructions to
Form 10-Q and do not include all the information and note disclosures
required by generally accepted accounting principles. The financial
statements should be read in conjunction with the December 31, 2000 audited
financial statements and notes thereto included in the MKS Annual Report on
Form 10-K filed with the Securities and Exchange Commission on April 2,
2001 and the MKS Current Report on Form 8-K filed with the Securities and
Exchange Commission on April 20, 2001.
On January 26, 2001 MKS completed its acquisition of Applied Science and
Technology, Inc. ("ASTeX") in a transaction accounted for under the pooling
of interests method of accounting. Under the terms of the agreement, each
outstanding share of ASTeX common stock was exchanged for 0.7669 newly
issued shares of common stock of MKS Instruments, Inc., resulting in the
issuance of approximately 11.2 million shares of common stock of MKS
Instruments, Inc., representing approximately 30% of its then outstanding
shares. There were no material adjustments required to conform the
accounting policies of the two companies. The unaudited financial
statements for the three months ended March 31, 2000 combine the historical
financial statements of MKS Instruments, Inc. for the three months ended
March 31, 2000 with the historical financial statements of ASTeX for the
three months ended September 25, 1999. The following table presents details
of the results of operations for the separate companies.
MKS Instruments, Inc. ASTeX
Three Months Ended Three Months Ended
March 31, 2000 September 25, 1999 Combined
--------------------- ------------------ --------
Net sales..... $65,556 $30,602 $96,158
Net income.... $ 9,331 $ 2,628 $11,959
The December 31, 2000 Balance Sheet combines the balance sheet of MKS
Instruments, Inc. as of December 31, 2000 with the balance sheet of ASTeX
as of June 30, 2000.
The terms "MKS" and the "Company" refer to MKS Instruments, Inc., including
ASTeX.
As a result of conforming dissimilar fiscal year-ends, the ASTeX results of
operations for the six-month period ended December 31, 2000 are excluded
from the consolidated financial statements of MKS for the year ended
December 31, 2000. The following is information related to the ASTeX
financial results for the six-month period ended December 31, 2000:
Net sales..................................................... $89,193
Net income.................................................... 5,968
Net cash used by operating activities......................... (3,500)
Net cash provided by investing activities..................... 245
Net cash provided by financing activities..................... 43
Included in the March 31, 2001 stockholders' equity is a $5,968,000
adjustment resulting from conforming the two companies' dissimilar year
ends, which represents the ASTeX results of operations for the six-month
period ended December 31, 2000.
7
MKS INSTRUMENTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Tables in thousands, except per share data)
2) USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the dates of the
financial statements and the reported amounts of revenues and expenses
during the reporting periods. Actual results could differ from those
estimates.
3) CASH AND CASH EQUIVALENTS AND INVESTMENTS
Cash equivalents consist of the following:
March 31, December 31,
2001 2000
-------- ------------
Cash and Money Market Instruments ................. $ 44,893 $ 36,687
Commercial Paper .................................. 24,955 74,895
Federal Government and Government Agency
Obligations ..................................... -- 1,000
State and Municipal Government Obligations ........ 2,000 2,000
Corporate Obligations ............................. 39,575 8,500
-------- --------
$111,423 $123,082
======== ========
Short-term available-for-sale investments maturing within one year consist
of the following:
March 31, December 31,
2001 2000
-------- ------------
Federal Government and Government Agency
Obligations .................................... $ 5,602 $10,101
State and Municipal Government Obligations ....... 4,622 --
Corporate Obligations ............................ 4,600 1,000
Commercial Paper ................................. -- 6,803
------- -------
$14,824 $17,904
======= =======
Long-term available-for-sale investments maturing within two years consist
of the following:
March 31, December 31,
2001 2000
--------- ------------
Federal Government and Government Agency
Obligations ....................................... $ -- $ 4,000
State and Municipal Government Obligations .......... 17,230 13,100
------- -------
$17,230 $17,100
======= =======
4) NET INCOME PER SHARE
The following is a reconciliation of basic to diluted net income per share:
Three Months Ended
March 31,
-------------------
2001 2000
-------- --------
Net income (loss) .................................... $ (2,105) $ 11,959
Shares used in net income per common share - basic ... 36,820 33,618
Effect of dilutive securities:
Employee and director stock options ................ -- 1,713
-------- --------
Shares used in net income per common share - diluted.. 36,820 35,331
======== ========
Net income (loss) per common share - basic ........... $ (0.06) $ 0.36
======== ========
Net income (loss) per common share - diluted ......... $ (0.06) $ 0.34
======== ========
8
MKS INSTRUMENTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Tables in thousands, except per share data)
For purposes of computing diluted earnings per share, weighted average
common share equivalents do not include stock options with an exercise
price greater than the average market price of the common shares during the
period. Options to purchase 43,000 shares of common stock which were
outstanding during the three months ended March 31, 2000, were not included
in the calculation of diluted net income per common share because the
option price was greater than the average market price of the common shares
during the period. All options outstanding during the three months ended
March 31, 2001 are excluded from the calculation of diluted net income per
common share because their inclusion would be anti-dilutive. There were
options to purchase approximately 5,131,000 shares of the Company's common
stock outstanding as of March 31, 2001.
5) INVENTORIES
Inventories consist of the following:
March 31, December 31,
2001 2000
--------- ------------
Raw material ................................... $29,864 $23,765
Work in process ................................ 19,785 20,856
Finished goods ................................. 28,848 24,544
------- -------
$78,497 $ 69,165
======= ========
6) STOCKHOLDERS' EQUITY
Total comprehensive income was as follows:
Three Months Ended
March 31,
-------------------
2001 2000
-------- --------
Net income (loss) ........................................ $ (2,105) $ 11,959
Other comprehensive income, net of taxes:
Changes in value of financial instruments designated
as hedges of currency and interest rate exposures... 758 192
Foreign currency translation adjustment .............. (606) (101)
Unrealized gain (loss) on investments ................ (313) (102)
-------- --------
Other comprehensive income (loss), net of taxes .......... (161) (11)
-------- --------
Total comprehensive income (loss) ........................ $ (2,266) $ 11,948
======== ========
7) SEGMENT INFORMATION AND SIGNIFICANT CUSTOMER
Segment Information for the three months ended March 31, 2001 and 2000:
North America Far East Europe Total
------------- -------- ------ --------
Net sales to unaffiliated customers 2001 $81,132 $17,363 $12,393 $110,888
2000 74,327 13,977 7,854 96,158
Intersegment net sales 2001 $18,392 $ 330 $ 392 $ 19,114
2000 14,922 371 337 15,630
Income (loss) from operations 2001 $(5,012) $ 1,885 $ 2,446 $ (681)
2000 16,099 1,363 1,042 18,504
The Company had one customer comprising 23% and 29% of net sales for the
three months ended March 31, 2001 and 2000, respectively.
9
MKS INSTRUMENTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Tables in thousands, except per share data)
8) ACQUISITIONS
On August 4, 1999, the Company acquired substantially all of the assets of
the Shamrock product line from Sputtered Films, Inc., a designer,
manufacturer and seller of high performance sputtering equipment for the
semiconductor and magnetic storage industries. Cash consideration of
approximately $6,382,000 was paid for the assets. The costs of the
acquisition were allocated on the basis of the estimated fair market value
of the assets acquired and resulted in an allocation of $4,463,000 to
goodwill. The allocation of the purchase price is as follows:
Current assets ......................................... $ 646
Goodwill ............................................... 4,463
Property and equipment and other assets ................ 1,377
Liabilities assumed .................................... (104)
-------
$ 6,382
=======
On March 10, 2000 the Company acquired Compact Instrument Technology, LLC
("Compact Instrument"), a start-up company with proprietary technology in
process monitoring for semiconductor manufacturing and other manufacturing
processes. The acquisition has been accounted for by the purchase method of
accounting. The purchase price was $8,700,000 and consisted of $8,400,000
in stock and $300,000 in assumed net liabilities. The purchase price was
allocated to the assets acquired based upon their estimated fair values.
This allocation resulted in goodwill of $7,600,000 and acquired technology
of $1,600,000, which are being amortized on a straight-line basis over 5
years and 3 years, respectively.
9) GOODWILL IMPAIRMENT CHARGE
When the Company acquired the Shamrock product line, it was expected that
sales of the existing system design and development of new system designs
would generate future revenues. Since the acquisition, the Company has
provided potential customers with purchase quotations for Shamrock systems,
including a quotation to a potential customer in January 2001 for the sale
of several systems. The customer did not purchase the systems, and the
quotation expired in March 2001. The Company has been unsuccessful in
selling any systems of the product line since the acquisition and, with the
expiration of the significant quote in March 2001, believes that future
Shamrock system sales are not probable. Additionally, the Company has no
plans for future development of new system designs. Consequently, the
Company believed that the carrying amount of the Shamrock related goodwill
was impaired. To measure the impairment, the Company performed a cash flow
analysis for the product group and determined that the estimated future
cash flows of the group would be insignificant. As a result, the Company
has written off the carrying value of the related goodwill of approximately
$3,720,000.
10) MERGER COSTS
On January 26, 2001 MKS completed its acquisition of ASTeX in a transaction
accounted for under the pooling of interest method of accounting. Under the
pooling of interests method of accounting, fees and expenses related to the
merger are expensed in the period of the merger. During the three months
ended March 31, 2001, MKS expensed approximately $7.7 million of merger
related expenses, consisting of $6.9 million of investment banking, legal,
accounting, printing and other professional fees, $0.6 million of employee
related costs, and $0.2 million of regulatory and other fees. Approximately
$0.7 million of the merger costs were accrued and unpaid at March 31, 2001.
11) SUBSEQUENT EVENT
On April 27, 2001 MKS completed its acquisition of On-Line Technologies,
Inc. ("On-Line), a supplier of measurement and control products used for
gas analysis, wafer metrology and process control. The acquisition will be
accounted for under the purchase method of accounting. The purchase price
included approximately 660,000 shares of MKS common stock, assumption of
On-Line debt of approximately $9,200,000 and contingent payments of up to
$1,500,000.
10
ITEM 2.
MKS INSTRUMENTS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
This Quarterly Report on Form 10-Q contains a number of statements, including,
without limitation, statements relating to MKS's beliefs, expectations and plans
which are forward-looking statements, as are statements that certain actions,
conditions or circumstances will continue. Such statements are based upon
management's current expectations and are subject to a number of factors and
uncertainties. Information contained in these forward-looking statements is
inherently uncertain and actual performance and results may differ materially
due to many important factors. See "Factors That May Affect Future Results" for
some, but not all, factors that could cause actual results to differ materially
from any forward-looking statements made by MKS. The terms "MKS", the "Company",
"we", "us" and "our" refer to MKS Instruments, Inc., including ASTeX.
On January 26, 2001 MKS completed its acquisition of Applied Science and
Technology, Inc. ("ASTeX") in a transaction accounted for under the pooling of
interests method of accounting. Because the fiscal years for MKS and ASTeX
differ, the periods combined for the purposes of the consolidated financial
statements for the three months ended March 31, 2000 were as follows:
MKS ASTeX
--- -----
Three months ended March 31, 2000 Three months ended September 25, 1999
MKS develops, manufactures and supplies gas measurement, control and analysis
products, reactive gas generator and power delivery products used in
semiconductor manufacturing and other advanced thin-film manufacturing
processes. We estimate that during 2000 approximately 76% of our net sales were
to semiconductor capital equipment manufacturers and semiconductor device
manufacturers. The following table sets forth for the periods indicated the
percentage of total net sales of certain line items included in MKS's
consolidated statement of income data.
Three Months Ended
March 31,
------------------
2001 2000
----- -----
Net sales ............................................. 100.0% 100.0%
Cost of sales ......................................... 61.0 57.1
----- -----
Gross profit .......................................... 39.0 42.9
Research and development .............................. 10.1 7.4
Selling, general and administrative ................... 17.2 15.9
Amortization of goodwill and acquired intangible assets 2.0 0.4
Goodwill impairment charge ............................ 3.4 --
Merger expenses ....................................... 6.9 --
----- -----
Income (loss) from operations ......................... (0.6) 19.2
Interest income, net .................................. 1.2 0.8
Other income, net ..................................... -- --
----- -----
Income before income taxes ............................ 0.6 20.0
Provision for income taxes ............................ 2.5 7.6
----- -----
Net income (loss) ..................................... (1.9)% 12.4%
===== =====
11
Results of Operations
Net Sales. Net sales increased 15.3% to $110.9 million for the three months
ended March 31, 2001 from $96.2 million for the three months ended March 31,
2000. International net sales were approximately $29.8 million for the three
months ended March 31, 2001 or 26.8% of net sales and $21.8 million for the
three months ended March 31, 2000 or 22.7% of net sales. The increase in net
sales was due to increased worldwide sales volume of MKS' existing products,
which resulted primarily from increased sales to the Company's semiconductor
capital equipment manufacturer and semiconductor device manufacturer customers.
Gross Profit. Gross profit as a percentage of net sales decreased to 39.0%
for the three months ended March 31, 2001 from 42.9% for the three months ended
March 31, 2000. The change was primarily due to increased overhead costs
resulting from the Company increasing capacity throughout 2000, and a higher
proportion of lower margin products.
Research and Development. Research and development expense increased 56.5%
to $11.2 million or 10.1% of net sales for the three months ended March 31, 2001
from $7.1 million or 7.4% of net sales for the three months ended March 31,
2000. The increase was primarily due to increased spending of $2.0 million for
compensation, increased expenses of $0.7 million for development materials
related to projects in process, and $0.5 million of other research and
development costs associated with the Shamrock business acquired in the first
quarter of 2000.
Selling, General and Administrative. Selling, general and administrative
expenses increased 25.2% to $19.1 million or 17.2% of net sales for the three
months ended March 31, 2001 from $15.2 million or 15.9% of net sales for the
three months ended March 31, 2000. The increase was due primarily to increased
compensation expense of $1.2 million, increased professional fees of $0.7
million, earnout expense of $0.3 million, and other expenses associated with
companies acquired in 2000.
Amortization of Goodwill and Acquired Intangible Assets. Amortization of
goodwill and acquired intangible assets increased $1.9 million to $2.2 million
for the three months ended March 31, 2001 from $0.4 million for the same period
of 2000. The increase is due to the amortization of goodwill and other
intangibles resulting from the acquisitions completed by the Company during
2000.
Goodwill Impairment Charge. In August 1999, ASTeX purchased the Shamrock
product group for approximately $6.4 million in cash. The costs of the
acquisition were allocated on the basis of the estimated fair market value of
the assets acquired at that time, and resulted in an allocation of $4,463,000 to
goodwill.
When the Company acquired the Shamrock product line, it was expected that
sales of the existing system design and development of new system designs would
generate future revenues. Since the acquisition, the Company has provided
potential customers with purchase quotations for Shamrock systems, including a
quotation to a potential customer in January 2001 for the sale of several
systems. The customer did not purchase the systems, and the quotation expired in
March 2001. The Company has been unsuccessful in selling any systems of the
product line since the acquisition and, with the expiration of the significant
quote in March 2001, believes that future Shamrock system sales are not
probable. Additionally, the Company has no plans for future development of new
system designs. Consequently, the Company believed that the carrying amount of
the Shamrock related goodwill was impaired. To measure the impairment, the
Company performed a cash flow analysis for the product group and determined that
the estimated future cash flows of the group would be insignificant. As a
result, the Company has written off the carrying value of the related goodwill
of approximately $3,720,000.
Merger Costs. On January 26, 2001 MKS completed its acquisition of ASTeX in
a transaction accounted for under the pooling of interest method of accounting.
Under the pooling of interests method of accounting, fees and expenses related
to the merger are expensed in the period of the merger. During the three months
ended March 31, 2001, MKS expensed approximately $7.7 million of merger related
expenses, consisting of $6.9 million of investment banking, legal, accounting,
printing and other professional fees, $0.6 million of employee related costs,
and $0.2 million of regulatory and other fees. Approximately $0.7 million of the
merger costs were accrued and unpaid at March 31, 2001.
Interest Income (Expense), Net. During the three months ended March 31,
2001 and 2000, the Company generated net interest income of $1.4 million and
$0.8 million, respectively, primarily from the invested net proceeds of its
common stock offerings, offset by interest expense on outstanding debt.
12
Provision for Income Taxes. During the three months ended March 31, 2001,
the Company's effective tax rate was 396%. The effective tax rate differed from
the federal statutory tax rate due primarily to the effect of non-deductible
merger costs. Exclusive of the effect of the non-deductible merger costs, the
Company's effective tax rate was 37.5% as compared to the effective tax rate of
38.0% for the three months ended March 31, 2000. The change in the effective
rate, exclusive of the non-deductible merger costs, was primarily due to tax
credits increasing as a percent of taxable income.
LIQUIDITY AND CAPITAL RESOURCES
The Company has financed its operations and capital requirements through a
combination of cash provided by operations, long-term real estate financing,
capital lease financing and short-term lines of credit. On April 5, 1999, MKS
completed the initial public offering of its Common Stock. In connection with
this offering and the exercise of an over-allotment option by the underwriters,
MKS sold 6,375,000 shares of Common Stock at a price of $14.00 per share. The
net proceeds to MKS were approximately $82,000,000 and were received in the
second quarter of 1999. Underwriting discounts and commissions were
approximately $6,200,000, and other offering costs were approximately
$1,000,000. On April 5, 1999, MKS distributed $40,000,000, which was the
estimated amount of its undistributed S Corporation earnings as of the day prior
to the closing of the offering.
On March 30, 2000, ASTeX completed the registration and sale of 1,917,250 shares
of common stock at $40.42 per share. The net proceeds from the offering were
approximately $73.2 million.
On March 5, 1999, ASTeX completed the registration and sale of 1,533,800 shares
of common stock at $14.34 per share. On April 6, 1999, the underwriters
exercised their over-allotment option to purchase an additional 230,070 shares
of common stock. The net proceeds from the offering were approximately $23.8
million.
In 1998, ASTeX announced that it had met the requirements for the redemption of
redeemable warrants issued in connection with the ASTeX initial public offering
and called the warrants for redemption. 2,082,451 redeemable warrants and
133,088 underwriter warrants were converted into 1,297,147 shares of common
stock. The net proceeds were $15,234,000.
Operations provided cash of $2.0 million for the three months ended March 31,
2001. This cash flow was impacted by depreciation and amortization, the goodwill
impairment charge and changes in the levels of accounts payable and accrued
expenses, and accounts receivable. Investing activities utilized cash of $10.7
million for the three months ended March 31, 2001 primarily from purchasing
investments and property, plant, and equipment. Financing activities provided
cash of $0.7 million, primarily from short-term borrowings and employees
exercising stock options.
Working capital was $234.5 million as of March 31, 2001, a decrease of $2.8
million from December 31, 2000. The Company has a combined $40.0 million line of
credit with two banks, expiring July 31, 2001. At March 31, 2001, the Company
had no borrowings under the line of credit.
The Company believes that its working capital, together with the cash
anticipated to be generated from operations and funds available from existing
credit facilities, will be sufficient to satisfy its estimated working capital
and planned capital expenditure requirements through at least the next 24
months.
13
FACTORS THAT MAY AFFECT FUTURE RESULTS
MKS believes that this document contains "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. These
statements are subject to risks and uncertainties and are based on the beliefs
and assumptions of management of MKS, based on information currently available
to MKS's management. Use of words such as "believes," "expects," "anticipates,"
"intends," "plans," "estimates," "should," "likely" or similar expressions,
indicate a forward-looking statement. Forward-looking statements involve risks,
uncertainties and assumptions. Certain of the information contained in this
Quarterly Report on Form 10-Q consists of forward-looking statements. Important
factors that could cause actual results to differ materially from the
forward-looking statements include the following:
MKS' BUSINESS DEPENDS SUBSTANTIALLY ON CAPITAL SPENDING IN THE SEMICONDUCTOR
INDUSTRY WHICH IS CHARACTERIZED BY PERIODIC FLUCTUATIONS THAT MAY CAUSE A
REDUCTION IN DEMAND FOR MKS' PRODUCTS.
MKS estimates that approximately 76% of its sales in 2000 were to semiconductor
capital equipment manufacturers and semiconductor device manufacturers, and it
expects that sales to such customers will continue to account for a substantial
majority of its sales. MKS' business depends upon the capital expenditures of
semiconductor device manufacturers, which in turn depend upon the demand for
semiconductors. Periodic reductions in demand for the products manufactured by
semiconductor capital equipment manufacturers and semiconductor device
manufacturers may adversely affect MKS' business, financial condition and
results of operations. Historically, the semiconductor market has been highly
cyclical and has experienced periods of overcapacity, resulting in significantly
reduced demand for capital equipment. For example, in 1996 and 1998, the
semiconductor capital equipment industry experienced significant declines, which
caused a number of MKS customers to reduce their orders. More recently, in the
first quarter of 2001, MKS experienced a reduction in demand from OEM customers,
and lower gross margins due to reduced absorption of manufacturing overhead at
the lower revenue levels. In addition, many semiconductor manufacturers have
operations and customers in Asia, a region which in recent years has experienced
serious economic problems including currency devaluations, debt defaults, lack
of liquidity and recessions. MKS cannot be certain that semiconductor downturns
will not recur. A decline in the level of orders as a result of any future
downturn or slowdown in the semiconductor capital equipment industry could have
a material adverse effect on MKS' business, financial condition and results of
operations.
MKS' QUARTERLY OPERATING RESULTS HAVE VARIED, AND ARE LIKELY TO CONTINUE TO VARY
SIGNIFICANTLY. THIS MAY RESULT IN VOLATILITY IN THE MARKET PRICE FOR MKS'
SHARES.
A substantial portion of MKS' shipments occur shortly after an order is received
and therefore MKS operates with a low level of backlog. As a result, a decrease
in demand for MKS' products from one or more customers could occur with limited
advance notice and could have a material adverse effect on MKS' results of
operations in any particular period. A significant percentage of MKS' expenses
are relatively fixed and based in part on expectations of future net sales. The
inability to adjust spending quickly enough to compensate for any shortfall
would magnify the adverse impact of a shortfall in net sales on MKS' results of
operations. Factors that could cause fluctuations in MKS' net sales include:
- - the timing of the receipt of orders from major customers;
- - shipment delays;
- - disruption in sources of supply;
- - seasonal variations of capital spending by customers;
- - production capacity constraints; and
- - specific features requested by customers.
14
For example, MKS was in the process of increasing its production capacity when
the semiconductor capital equipment market began to experience a significant
downturn in 1996. This downturn had a material adverse effect on MKS' operating
results in the second half of 1996 and the first half of 1997. After an increase
in business in the latter half of 1997, the market experienced another downturn
in 1998, which had a material adverse effect on MKS' 1998 and first quarter 1999
operating results. More recently, the semiconductor capital equipment market has
experienced a significant downturn at the beginning of 2001. As a result, MKS
experienced a reduction in demand from OEM customers in the first quarter of
2001, which had a material adverse effect on MKS' operating results. As a result
of the factors discussed above, it is likely that MKS will in the future
experience quarterly or annual fluctuations and that, in one or more future
quarters, its operating results will fall below the expectations of public
market analysts or investors. In any such event, the price of MKS' common stock
could decline significantly.
THE LOSS OF NET SALES TO ANY ONE OF MKS' MAJOR CUSTOMERS WOULD LIKELY HAVE A
MATERIAL ADVERSE EFFECT ON MKS.
MKS' five largest customers accounted for approximately 45% of its net sales in
2000, 39% of its net sales in 1999 and 34% of its net sales in 1998. The loss of
a major customer or any reduction in orders by these customers, including
reductions due to market or competitive conditions, would likely have a material
adverse effect on MKS' business, financial condition and results of operations.
During 2000 and 1999, one customer, Applied Materials, accounted for
approximately 30% and 29%, respectively, of MKS' net sales. MKS' purchase
contract with Applied Materials expires in May 2001. While MKS and Applied
Materials are currently negotiating a new agreement, there can be no assurance
that negotiations will be successful. None of MKS' significant customers,
including Applied Materials, has entered into an agreement requiring it to
purchase any minimum quantity of MKS' products. The demand for MKS' products
from its semiconductor capital equipment customers depends in part on orders
received by them from their semiconductor device manufacturer customers.
Attempts to lessen the adverse effect of any loss or reduction through the rapid
addition of new customers could be difficult because prospective customers
typically require lengthy qualification periods prior to placing volume orders
with a new supplier. MKS' future success will continue to depend upon:
- - its ability to maintain relationships with existing key customers;
- - its ability to attract new customers; and
- - the success of its customers in creating demand for their capital equipment
products which incorporate MKS's products.
AS PART OF MKS' BUSINESS STRATEGY, MKS HAS ENTERED INTO AND MAY ENTER INTO OR
SEEK TO ENTER INTO BUSINESS COMBINATIONS AND ACQUISITIONS THAT MAY BE DIFFICULT
TO INTEGRATE, DISRUPT ITS BUSINESS, DILUTE STOCKHOLDER VALUE OR DIVERT
MANAGEMENT ATTENTION.
MKS acquired Compact Instrument Technology ("Compact Instrument") in March 2000,
Telvac Engineering, Ltd. ("Telvac") in May 2000, Spectra Instruments, Inc.
("Spectra") in July 2000, D.I.P., Inc. ("D.I.P.") in September 2000, ASTeX in
January 2001 and On-Line in April 2001. As a part of its business strategy, MKS
may enter into additional business combinations and acquisitions. Acquisitions
are typically accompanied by a number of risks, including the difficulty of
integrating the operations and personnel of the acquired companies, the
potential disruption of MKS' ongoing business and distraction of management,
expenses related to the acquisition and potential unknown liabilities associated
with acquired businesses.
If MKS is not successful in completing acquisitions that it may pursue in the
future, it may be required to reevaluate its growth strategy and MKS may have
incurred substantial expenses and devoted significant management time and
resources in seeking to complete proposed acquisitions that will not generate
benefits for it.
In addition, with future acquisitions, MKS could use substantial portions of its
available cash as all or a portion of the purchase price. MKS could also issue
additional securities as consideration for these acquisitions, which could cause
significant stockholder dilution. MKS' acquisitions of Compact Instrument,
Telvac, Spectra, D.I.P., ASTeX and On-Line and any future acquisitions may not
ultimately help MKS achieve its strategic goals and may pose other risks to MKS.
15
AN INABILITY TO CONVINCE SEMICONDUCTOR DEVICE MANUFACTURERS TO SPECIFY THE USE
OF MKS' PRODUCTS TO MKS' CUSTOMERS, WHO ARE SEMICONDUCTOR CAPITAL EQUIPMENT
MANUFACTURERS, WOULD WEAKEN MKS' COMPETITIVE POSITION.
The markets for MKS' products are highly competitive. Its competitive success
often depends upon factors outside of its control. For example, in some cases,
particularly with respect to mass flow controllers, semiconductor device
manufacturers may direct semiconductor capital equipment manufacturers to use a
specified supplier's product in their equipment. Accordingly, for such products,
MKS' success will depend in part on its ability to have semiconductor device
manufacturers specify that MKS' products be used at their semiconductor
fabrication facilities. In addition, MKS may encounter difficulties in changing
established relationships of competitors that already have a large installed
base of products within such semiconductor fabrication facilities.
IF MKS' PRODUCTS ARE NOT DESIGNED INTO SUCCESSIVE NEW GENERATIONS OF ITS
CUSTOMERS' PRODUCTS, MKS WILL LOSE SIGNIFICANT NET SALES DURING THE LIFESPAN OF
THOSE PRODUCTS.
New products designed by semiconductor capital equipment manufacturers typically
have a lifespan of five to ten years. MKS' success depends on its products being
designed into new generations of equipment for the semiconductor industry. MKS
must develop products that are technologically current so that they are
positioned to be chosen for use in each successive new generation of
semiconductor capital equipment. If MKS products are not chosen by its
customers, MKS' net sales may be reduced during the lifespan of its customers'
products. In addition, MKS must make a significant capital investment to develop
products for its customers well before its products are introduced and before it
can be sure that it will recover its capital investment through sales to the
customers in significant volume. MKS is thus also at risk during the development
phase that its product may fail to meet its customers' technical or cost
requirements and may be replaced by a competitive product or alternative
technology solution. If that happens, MKS may be unable to recover MKS'
development costs.
THE SEMICONDUCTOR INDUSTRY IS SUBJECT TO RAPID DEMAND SHIFTS WHICH ARE DIFFICULT
TO PREDICT. AS A RESULT, MKS' INABILITY TO EXPAND ITS MANUFACTURING CAPACITY IN
RESPONSE TO THESE RAPID SHIFTS MAY CAUSE A REDUCTION IN ITS MARKET SHARE.
MKS' ability to increase sales of certain products depends in part upon its
ability to expand its manufacturing capacity for such products in a timely
manner. If MKS is unable to expand its manufacturing capacity on a timely basis
or to manage such expansion effectively, its customers could implement its
competitors' products and, as a result, its market share could be reduced.
Because the semiconductor industry is subject to rapid demand shifts which are
difficult to foresee, MKS may not be able to increase capacity quickly enough to
respond to a rapid increase in demand in the semiconductor industry.
Additionally, capacity expansion could increase MKS' fixed operating expenses
and if sales levels do not increase to offset the additional expense levels
associated with any such expansion, its business, financial condition and
results of operations could be materially adversely affected.
SALES TO FOREIGN MARKETS CONSTITUTE A SUBSTANTIAL PORTION OF MKS' NET SALES;
THEREFORE, MKS NET SALES AND RESULTS OF OPERATIONS COULD BE ADVERSELY AFFECTED
BY DOWNTURNS IN ECONOMIC CONDITIONS IN COUNTRIES OUTSIDE OF THE UNITED STATES.
International sales, which include sales by MKS' foreign subsidiaries, but
exclude direct export sales (which were less than 10% of MKS' total net sales),
accounted for approximately 23% of net sales in 2000, 25% of net sales in 1999
and 21% of net sales in 1998.
MKS anticipates that international sales will continue to account for a
significant portion of MKS' net sales. In addition, certain of MKS' key domestic
customers derive a significant portion of their revenues from sales in
international markets. Therefore, MKS' sales and results of operations could be
adversely affected by economic slowdowns and other risks associated with
international sales.
16
UNFAVORABLE CURRENCY EXCHANGE RATE FLUCTUATIONS MAY LEAD TO LOWER GROSS MARGINS,
OR MAY CAUSE MKS TO RAISE PRICES WHICH COULD RESULT IN REDUCED SALES.
Currency exchange rate fluctuations could have an adverse effect on MKS' net
sales and results of operations and MKS could experience losses with respect to
its hedging activities. Unfavorable currency fluctuations could require MKS to
increase prices to foreign customers which could result in lower net sales by
MKS to such customers. Alternatively, if MKS does not adjust the prices for its
products in response to unfavorable currency fluctuations, its results of
operations could be adversely affected. In addition, sales made by MKS' foreign
subsidiaries are denominated in the currency of the country in which these
products are sold and the currency it receives in payment for such sales could
be less valuable at the time of receipt as a result of exchange rate
fluctuations. MKS enters into forward exchange contracts and local currency
purchased options to reduce currency exposure arising from intercompany sales of
inventory. However, MKS cannot be certain that its efforts will be adequate to
protect it against significant currency fluctuations or that such efforts will
not expose it to additional exchange rate risks.
COMPETITION FOR PERSONNEL IN THE SEMICONDUCTOR AND INDUSTRIAL MANUFACTURING
INDUSTRIES IS INTENSE.
MKS' success depends to a large extent upon the efforts and abilities of a
number of key employees and officers, particularly those with expertise in the
semiconductor manufacturing and similar industrial manufacturing industries. The
loss of key employees or officers could have a material adverse effect on MKS'
business, financial condition and results of operations. MKS believes that its
future success will depend in part on its ability to attract and retain highly
skilled technical, financial, managerial and marketing personnel. Competition
for such personnel is intense, and MKS cannot be certain that it will be
successful in attracting and retaining such personnel.
MKS' PROPRIETARY TECHNOLOGY IS IMPORTANT TO THE CONTINUED SUCCESS OF ITS
BUSINESS. MKS' FAILURE TO PROTECT THIS PROPRIETARY TECHNOLOGY MAY SIGNIFICANTLY
IMPAIR MKS' COMPETITIVE POSITION.
As of March 31, 2001, MKS owned 97 U.S. patents and 60 foreign patents and had
50 pending U.S. patent applications and 120 pending foreign patent applications.
Although MKS seeks to protect its intellectual property rights through patents,
copyrights, trade secrets and other measures, it cannot be certain that:
- - MKS will be able to protect its technology adequately;
- - competitors will not be able to develop similar technology independently;
- - any of MKS' pending patent applications will be issued;
- - intellectual property laws will protect MKS' intellectual property rights;
or
- - third parties will not assert that MKS' products infringe patent, copyright
or trade secrets of such parties.
PROTECTION OF MKS' INTELLECTUAL PROPERTY RIGHTS MAY RESULT IN COSTLY LITIGATION.
Litigation may be necessary in order to enforce MKS' patents, copyrights or
other intellectual property rights, to protect its trade secrets, to determine
the validity and scope of the proprietary rights of others or to defend against
claims of infringement. For example, on November 30, 2000, ASTeX brought suit in
federal district court in Delaware against Advanced Energy Industries, Inc. for
infringement of ASTeX's patent related to its Astron product. Such litigation
could result in substantial costs and diversion of resources and could have a
material adverse effect on MKS' business, financial condition and results of
operations.
THE MARKET PRICE OF MKS' COMMON STOCK HAS FLUCTUATED AND MAY CONTINUE TO
FLUCTUATE FOR REASONS OVER WHICH MKS HAS NO CONTROL.
The stock market has from time to time experienced, and is likely to continue to
experience, extreme price and volume fluctuations. Recently, prices of
securities of technology companies have been especially volatile and have often
fluctuated for reasons that are unrelated to the operating performance of the
companies. The market price of shares of MKS' common stock has fluctuated
greatly since its initial public offering and could continue to fluctuate due to
a variety of factors. In the past, companies that have experienced volatility in
the market price of their stock have been the objects of securities class action
litigation. If MKS were the object of securities class action litigation, it
could result in substantial costs and a diversion of MKS' management's attention
and resources.
17
MKS'S DEPENDENCE ON SOLE AND LIMITED SOURCE SUPPLIERS COULD AFFECT ITS ABILITY
TO MANUFACTURE PRODUCTS AND SYSTEMS.
MKS relies on sole and limited source suppliers for a few of its components and
subassemblies that are critical to the manufacturing of MKS's products. This
reliance involves several risks, including the following:
- - the potential inability to obtain an adequate supply of required
components;
- - reduced control over pricing and timing of delivery of components; and
- - the potential inability of its suppliers to develop technologically
advanced products to support MKS's growth and development of new systems.
MKS believes that in time MKS could obtain and qualify alternative sources for
most sole and limited source parts. Seeking alternative sources of the parts
could require MKS to redesign its systems, resulting in increased costs and
likely shipping delays. MKS may be unable to redesign its systems, which could
result in further costs and shipping delays. These increased costs would
decrease MKS' profit margins if it could not pass the costs to its customers.
Further, shipping delays could damage MKS' relationships with current and
potential customers and have a material adverse effect on MKS' business and
results of operations.
MKS IS SUBJECT TO GOVERNMENTAL REGULATIONS.
MKS is subject to federal, state, local and foreign regulations, including
environmental regulations and regulations relating to the design and operation
of MKS' power supply products. MKS must ensure that these systems meet certain
safety standards, many of which vary across the countries in which MKS' systems
are used.
For example, the European Union has published directives specifically relating
to power supplies. MKS must comply with these directives in order to ship MKS'
systems into countries that are members of the European Union. MKS believes it
is in compliance with current applicable regulations, directives and standards
and has obtained all necessary permits, approvals, and authorizations to conduct
MKS' business. However, compliance with future regulations, directives and
standards could require it to modify or redesign certain systems, make capital
expenditures or incur substantial costs. If MKS does not comply with current or
future regulations, directives and standards:
- - MKS could be subject to fines;
- - MKS' production could be suspended; or
- - MKS could be prohibited from offering particular systems in specified
markets.
ONE STOCKHOLDER, ALONG WITH MEMBERS OF HIS FAMILY, CONTINUES TO HAVE A
SUBSTANTIAL INTEREST IN MKS.
As of January 31, 2001, John R. Bertucci, chairman and chief executive officer
of MKS, and members of his family, in the aggregate, beneficially owned
approximately 41.4% of MKS' outstanding common stock. As a result, these
stockholders, acting together, are able to exert substantial influence over
actions of MKS.
SOME PROVISIONS OF MKS' RESTATED ARTICLES OF ORGANIZATION, MKS' BY-LAWS AND
MASSACHUSETTS LAW COULD DISCOURAGE POTENTIAL ACQUISITION PROPOSALS AND COULD
DELAY OR PREVENT A CHANGE IN CONTROL OF MKS.
Anti-takeover provisions could diminish the opportunities for stockholders to
participate in tender offers, including tender offers at a price above the then
current market value of the common stock. Such provisions may also inhibit
increases in the market price of the common stock that could result from
takeover attempts. For example, while MKS has no present plans to issue any
preferred stock, MKS' board of directors, without further stockholder approval,
may issue preferred stock that could have the effect of delaying, deterring or
preventing a change in control of MKS. The issuance of preferred stock could
adversely affect the voting power of the holders of MKS' common stock, including
the loss of voting control to others. In addition, MKS' By-Laws provide for a
classified board of directors consisting of three classes. The classified board
could also have the effect of delaying, deterring or preventing a change in
control of MKS.
18
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Information concerning market risk is contained in the annual Management's
Discussion and Analysis of Financial Condition and Results of Operations
reflecting the merger of MKS Instruments, Inc. and Applied Science and
Technology, Inc. for the year ended December 31, 2000, which was filed with the
Securities and Exchange Commission in MKS's Current Report on Form 8-K on April
20, 2001. MKS enters into forward exchange contracts and local currency
purchased options to reduce currency exposure arising from intercompany sales
of inventory. The potential fair value loss for a hypothetical 10% adverse
change in currency exchange rates on MKS's local currency purchased options at
March 31, 2001 would be approximately $1,900,000. The potential loss was
estimated by calculating the fair value of the local currency purchased options
at March 31, 2001 and comparing that with those calculated using the
hypothetical currency exchange rates. There were no material changes in MKS's
exposure to market risk from December 31, 2000.
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
MKS is not aware of any material legal proceedings to which it or any of its
subsidiaries is a party.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
(d) Use of Proceeds from Sales of Registered Securities. There has been no
change to the information previously provided by the Company on Form 10-Q
for the period ended September 30, 2000 relating to the securities sold by
the Company pursuant to the Registration Statement on Form S-1 (Reg. No.
333-71363) that was declared effective by the Securities and Exchange
Commission on March 29, 1999.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
A special meeting of the stockholders of MKS was held on January 26, 2001 to
vote on a proposal to approve the issuance of approximately 11,200,000 shares
of MKS common stock to the stockholders of Applied Science and Technology, Inc.
("ASTeX") in a merger with ASTeX. The proposal was approved with 21,715,636
shares voting for the proposal, 11,984 shares voting against, and 18,390
abstaining.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
None.
(b) Reports on Form 8-K
The Company filed a Current Report on Form 8-K with the Securities and
Exchange Commission on February 1, 2001 relating to the completion of its
acquisition of ASTeX.
19
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MKS INSTRUMENTS, INC.
May 14, 2001 By: /s/ Ronald C. Weigner
-----------------------------------
Ronald C. Weigner
Vice President and Chief Financial Officer
(Principal Financial Officer)