Exhibit 99.1
[LOGO] MKS
Technology for Productivity
FOR IMMEDIATE RELEASE
INVESTOR RELATIONS CONTACT:
Ronald Weigner
Vice President & Chief Financial Officer
978.975.2350
MKS INSTRUMENTS REPORTS THIRD QUARTER 2003 FINANCIAL RESULTS
Andover, Mass.-- October 21, 2003 -- MKS Instruments, Inc. (NASDAQ: MKSI),
a leading provider of process control technologies for improving productivity in
semiconductor and other advanced manufacturing process environments, today
reported third quarter 2003 revenues of $81.6 million, a slight increase from
second quarter 2003 revenues of $81.2 million and 12 percent below third quarter
2002 revenues of $92.2 million.
The third quarter 2003 GAAP net loss was $5.6 million or $0.11 per share,
approximately the same as the second quarter 2003 GAAP net loss of $5.5 million
or $0.11 per share. The third quarter 2002 GAAP net loss was $3.8 million or
$0.07 per share.
The third quarter 2003 net loss would have been $1.7 million or $0.03 per
share, after excluding amortization of acquired intangible assets of $3.6
million and restructuring, asset impairment and other charges of $0.3 million.
By comparison, the third quarter 2002 net loss on revenues of $92.2 million
would have been $8,000 or breakeven on a per share basis, after excluding
amortization of acquired intangible assets of $3.8 million; restructuring, asset
impairment and other charges of $2.4 million; a $4.1 million charge to reserve a
note receivable and warrants related to a prior sale of non-
strategic assets; a $4.2 million gain from a litigation settlement; and a $2.3
million adjustment for income taxes related to these items.
John R. Bertucci, Chairman, Chief Executive Officer and President, said,
"Third quarter 2003 revenues were within our guidance and essentially flat,
after stronger than expected second quarter revenues that included pulled in
orders from the third quarter. Orders continued to trend higher through the
third quarter, and we now estimate fourth quarter revenues could increase by as
much as 9 percent and range from $85 to $89 million. Given the year-over-year
improvement in our cost structure, we expect to achieve breakeven at a lower
quarterly revenue threshold. We estimate fourth quarter 2003 earnings could
range from breakeven to $0.03 per share, excluding amortization of acquired
intangible assets of $3.6 million and restructuring charges of up to $2 million,
or a net loss of $0.08 to $0.11 per share on a GAAP basis."
Mr. Bertucci continued, "During the third quarter, we posted a double digit
increase in thin film revenues, as we continued to make inroads in flat panel
display, optical storage and architectural glass applications. We also
penetrated leading edge applications for semiconductor manufacturing in the
quarter. In addition, we expanded our technology portfolio by acquiring leading
edge MEMS-based technology for vacuum gauges. Consistent with an improving
outlook, we're participating in many customer evaluations of our products,
including those that integrate multiple technologies, and we are encouraged
about prospects for future success."
For the nine months ended September 30, 2003, MKS reported revenues of
$235.5 million and a GAAP net loss of $18.5 million or $0.36 per share compared
to
revenues of $237.2 million and a GAAP net loss of $20.3 million or $0.41 per
share for the same period of 2002.
The net loss for the nine months of 2003 would have been $6.9 million or
$0.13 per share, after excluding amortization of acquired intangible assets of
$11 million and restructuring, asset impairment and other charges of $0.6
million. By comparison, the net loss for the nine months of 2002 would have been
$4.1 million or $0.08 per share, after excluding amortization of acquired
intangible assets of $10.1 million; purchase of in-process technology of $8.4
million; restructuring, asset impairment and other charges of $2.4 million; a
$4.1 million charge to reserve a note receivable and warrants related to a prior
sale of non-strategic assets; a $4.2 million gain from a litigation settlement;
and a $4.6 million adjustment for income taxes related to these items.
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 uses these non-GAAP measures
internally to evaluate the company's performance and manage its operations, and
believes that these measures provide useful information for understanding
operating results and comparing prior periods.
Management will host a conference call on Tuesday, October 21, 2003 at 5:00
p.m. (Eastern Time) to discuss these financial results. To listen to this call,
dial 800-218-0530 (domestic) or 303-262-2130 (international), or access the live
call and a rebroadcast at www.mksinstruments.com. To hear a replay through
October 28, 2003, dial 303-590-3000, passcode 552461#.
MKS Instruments, Inc. is a leading worldwide provider of instruments,
components and subsystems that measure, control, power and monitor critical
parameters of semiconductor and other advanced manufacturing process
environments. MKS' products are used to manufacture semiconductors; thin film
coatings for diverse markets such as flat panel displays, optical storage
products, architectural glass, and electro-optical products; and medical imaging
equipment.
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 failure of MKS and acquired
companies to realize the anticipated benefits of their combined businesses, the
challenges and risks involved with integrating the operations of MKS and
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 Quarterly
Report on Form 10-Q, 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.
###
MKS INSTRUMENTS, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Three Months Ended
September 30,
------------------------
2003 2002
-------- --------
Net sales $ 81,568 $ 92,216
Cost of sales 53,846 60,391
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Gross profit 27,722 31,825
Research and development 12,034 12,650
Selling, general and administrative 17,090 20,455
Amortization of acquired intangible assets 3,612 3,778
Restructuring, asset impairment and other charges 330 2,408
-------- --------
Loss from operations (5,344) (7,466)
Interest income, net 223 433
Income from litigation settlement -- 4,200
Other expenses (See NOTE 3) -- 4,121
-------- --------
Loss before income taxes (5,121) (6,954)
Provision (benefit) for income taxes (See NOTE 1) 500 (3,129)
-------- --------
Net loss $ (5,621) $ (3,825)
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Net loss per share (See NOTE 2) $ (0.11) $ (0.07)
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Weighted average shares outstanding 51,625 51,262
The following supplemental Non-GAAP earnings information
is presented to aid in understanding the MKS operating results:
Supplemental Non-GAAP Earnings Information
GAAP net loss $ (5,621) $ (3,825)
Adjustments:
Amortization of acquired intangible assets 3,612 3,778
Restructuring, asset impairment and other charges 330 2,408
Charge to reserve note and warrants (See NOTE 3) -- 4,121
Income from litigation settlement -- (4,200)
Tax effect of adjustments (See NOTE 1) -- (2,290)
-------- --------
Non-GAAP net loss (See NOTE 4) $ (1,679) $ (8)
======== ========
Non-GAAP net loss per share (See NOTE 4) $ (0.03) $ (0.00)
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Weighted average shares outstanding 51,625 51,262
NOTE 1: MKS recorded a tax benefit of $3,129 for the three months ended
September 30, 2002. In the three months ended December 31, 2002, MKS recorded a
full valuation allowance against its net deferred tax assets. Accordingly, MKS
has not recorded a deferred tax benefit from the net operating loss incurred in
the quarter ended September 30, 2003. The provision for income taxes of $500
includes tax expense from foreign operations and state taxes.
NOTE 2: Due to the net loss for the quarter, net loss per share is based on the
basic number of weighted average shares outstanding.
NOTE 3: During 2001 MKS sold certain non-strategic assets for approximately
$9,000, including a note receivable of $3,928 and warrants valued at $193. In
the third quarter of 2002, MKS recorded a charge of $4,121 to establish a
reserve against the note and warrants.
NOTE 4: The Non-GAAP net loss and non-GAAP net loss per share amounts exclude
amortization of acquired intangible assets, acquisition and disposition related
charges and special items, net of income taxes.
MKS INSTRUMENTS, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Nine Months Ended
September 30,
------------------------
2003 2002
--------- ---------
Net sales $ 235,513 $ 237,215
Cost of sales 154,940 156,455
--------- ---------
Gross profit 80,573 80,760
Research and development 34,719 33,835
Selling, general and administrative 52,368 58,234
Amortization of acquired intangible assets 11,007 10,120
Restructuring, asset impairment and other charges 634 2,408
Purchase of in-process technology -- 8,390
--------- ---------
Loss from operations (18,155) (32,227)
Interest income, net 785 1,215
Income from litigation settlement -- 4,200
Other expenses (See NOTE 3) -- 4,121
--------- ---------
Loss before income taxes (17,370) (30,933)
Provision (benefit) for income taxes (See NOTE 1) 1,151 (10,627)
--------- ---------
Net loss $ (18,521) $ (20,306)
========= =========
Net loss per share (See NOTE 2) $ (0.36) $ (0.41)
========= =========
Weighted average shares outstanding 51,475 49,567
The following supplemental Non-GAAP earnings information is
presented to aid in understanding the MKS operating results:
Supplemental Non-GAAP Earnings Information
GAAP Net loss $ (18,521) $ (20,306)
Adjustments:
Amortization of acquired intangible assets 11,007 10,120
Restructuring, asset impairment and other charges 634 2,408
Charge to reserve note and warrants (See NOTE 3) -- 4,121
Income from litigation settlement -- (4,200)
Purchase of in-process technology -- 8,390
Tax effect of adjustments (See NOTE 1) -- (4,613)
--------- ---------
Non-GAAP net loss (See NOTE 4) $ (6,880) $ (4,080)
========= =========
Non-GAAP net loss per share (See NOTE 4) $ (0.13) $ (0.08)
========= =========
Weighted average shares outstanding 51,475 49,567
NOTE 1: MKS recorded a tax benefit of $10,627 for the nine months ended
September 30, 2002. In the three months ended December 31, 2002, MKS recorded a
full valuation allowance against its net deferred tax assets. Accordingly, MKS
has not recorded a deferred tax benefit from the net operating loss incurred in
the nine months ended September 30, 2003. The provision for income taxes of
$1,151 includes tax expense from foreign operations and state taxes.
NOTE 2: Due to the net loss for the nine month periods, net loss per share is
based on the basic number of weighted average shares outstanding.
NOTE 3: During 2001 MKS sold certain non-strategic assets for approximately
$9,000, including a note receivable of $3,928 and warrants valued at $193. In
the third quarter of 2002, MKS recorded a charge of $4,121 to establish a
reserve against the note and warrants.
NOTE 4: The non-GAAP net loss and non-GAAP net loss per share amounts exclude
amortization of acquired intangible assets, acquisition and disposition related
charges and special items, net of income taxes.
MKS INSTRUMENTS, INC.
UNAUDITED CONSOLIDATED BALANCE SHEET
(IN THOUSANDS)
September 30, December 31,
2003 2002
------------- ------------
ASSETS
Cash and short-term investments $115,613 $128,714
Trade accounts receivable 53,963 45,505
Inventories 75,973 73,235
Other current assets 7,975 6,098
-------- --------
Total current assets 253,524 253,552
Property, plant and equipment, net 76,629 82,595
Long-term investments 18,243 15,980
Goodwill 260,091 259,781
Other acquired intangible assets 58,889 67,720
Other assets 5,809 5,995
-------- --------
Total assets $673,185 $685,623
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LIABILITIES AND STOCKHOLDERS' EQUITY
Short-term debt $ 16,780 $ 18,472
Accounts payable 19,143 15,301
Other accrued expenses 25,721 27,771
-------- --------
Total current liabilities 61,644 61,544
Long-term debt 9,298 11,726
Other long-term liabilities 2,439 1,663
Stockholders' equity:
Common stock 113 113
Additional paid-in capital 584,058 579,175
Retained earnings 10,102 28,623
Other stockholders' equity 5,531 2,779
-------- --------
Total stockholders' equity 599,804 610,690
-------- --------
Total liabilities and stockholders' equity $673,185 $685,623
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