(MKS LOGO)
FOR IMMEDIATE RELEASE
Contact: Ron Weigner
Vice President and Chief Financial Officer
978.284.4446
MKS INSTRUMENTS REPORTS THIRD QUARTER 2004 RESULTS
Wilmington, Mass. -- October 19, 2004 -- 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 third quarter 2004 financial results. Net sales were
$139.7 million, up 71 percent from $81.6 million in the third quarter of 2003
and down 8 percent from $151.6 million in the second quarter of 2004.
GAAP net earnings were $12.2 million, or $0.22 per diluted share, compared to
a third quarter 2003 net loss of $5.6 million, or $0.11 per basic share, and
second quarter 2004 net earnings of $20.9 million, or $0.38 per diluted share.
Excluding amortization of acquired intangible assets and special items, non-GAAP
net earnings were $15.8 million, or $0.29 per diluted share, compared to a third
quarter 2003 net loss of $1.7 million, or $0.03 per basic share, and second
quarter 2004 net earnings of $20.3 million, or $0.37 per diluted share.
For the nine months ended September 30, MKS reported sales of $424.2 million
in 2004 compared to $235.5 million in 2003. GAAP net earnings were $45.7
million, or $0.83 per diluted share, in 2004 compared to a net loss of $18.5
million, or $0.36 per basic share, in 2003. For the same nine month period,
non-GAAP net earnings, which exclude amortization of acquired intangible assets
and special items, were $53.0 million, or $0.97 per diluted share, in 2004
compared to a net loss of $6.9 million, or $0.13 per basic share, in 2003.
John Bertucci, Chairman and Chief Executive Officer, said, "Our nine month
sales growth of 80 percent reflects strong demand for our process control
technologies and share gains in key markets. In semiconductor capital equipment
and thin-film markets, our nine month sales growth rate of 98 percent was well
above industry estimates of 61
percent growth for our served semiconductor front-end equipment market. To meet
increased demand over the period, OEM customers filled their work-in-process
pipelines as they raised their tool production rates.
"In the third quarter, we saw some softening in orders from semiconductor
OEMs, along with stretched out delivery requests and order push outs. We believe
these reduced orders for our products reflected a closer alignment of product
demand to our customers' production rates.
"Our semiconductor OEM orders have softened further in a more cautious market
environment. Although our short lead times limit our visibility, we currently
expect that fourth quarter sales could range from $115 to $125 million, or a
sequential decrease of 10 to 18 percent. GAAP net earnings could range from
$0.02 to $0.09 per diluted share, and non-GAAP net earnings, which exclude
amortization of acquired intangible assets of approximately $3.7 million, could
range from $0.09 to $0.16 per diluted share. With limited visibility, we are
focused on increasing our profitability at all sales levels.
"Looking longer term, we believe that device manufacturers will need to add
capacity and upgrade technology to stay competitive and support the growth of
new and emerging electronic applications. With each technology upgrade, more
process steps are required, and processes must be controlled more precisely. We
are well positioned with technologies for improving manufacturing productivity,
and we expect to continue to gain share as semiconductor process complexity
continues to increase."
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 has historically been acquisitive, and MKS' management
believes the presentation of non-GAAP financial measures, which exclude the
costs associated with acquisitions and other special items, is useful to
investors for comparing prior periods and analyzing ongoing business trends and
operating results.
Management will discuss third quarter financial results on a conference call
today at 5:00 p.m. (Eastern Time). A web cast of the conference call will be
available at www.mksinstruments.com in the "Investors" section. To hear a replay
through October 26, 2004, dial 303-590-3000, passcode 11009618#.
MKS Instruments, Inc. is a leading worldwide provider of process control
solutions for 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. 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 improving their
productivity 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 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 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, September 30, June 30,
2004 2003 2004
--------- --------- ---------
Net sales $ 139,651 $ 81,568 $ 151,585
Cost of sales 84,045 53,846 90,192
--------- --------- ---------
Gross profit 55,606 27,722 61,393
Research and development 14,201 12,034 14,620
Selling, general and administrative 22,971 17,090 22,661
Amortization of acquired intangible assets 3,689 3,612 3,691
Restructuring, asset impairment and other charges -- 330 --
--------- --------- ---------
Income (loss) from operations 14,745 (5,344) 20,421
Interest income, net 442 223 326
Other Income (NOTE 1) -- -- 5,402
--------- --------- ---------
Income (loss) before income taxes 15,187 (5,121) 26,149
Provision for income taxes 3,037 500 5,281
--------- --------- ---------
Net income (loss) $ 12,150 $ (5,621) $ 20,868
========= ========= =========
Net income (loss) per share:
Basic $ 0.23 $ (0.11) $ 0.39
Diluted $ 0.22 $ (0.11) $ 0.38
Weighted average shares outstanding:
Basic 53,602 51,625 53,540
Diluted 54,302 51,625 54,967
THE FOLLOWING SUPPLEMENTAL NON-GAAP EARNINGS INFORMATION IS
PRESENTED TO AID IN UNDERSTANDING THE MKS OPERATING RESULTS:
GAAP net Income (loss) $ 12,150 $ (5,621) $ 20,868
Adjustments:
Amortization of acquired intangible assets 3,689 3,612 3,691
Restructuring, asset impairment and other charges -- 330 --
Other income, net of tax (NOTE 1) -- -- (4,272)
--------- --------- ---------
Non-GAAP net income (loss) (NOTE 2) $ 15,839 $ (1,679) $ 20,287
========= ========= =========
Non-GAAP net income (loss) per share (NOTE 2) $ 0.29 $ (0.03) $ 0.37
========= ========= =========
Weighted average shares outstanding (NOTE 3) 54,302 51,625 54,967
NOTE 1: The GAAP amount for the three months ended June 30, 2004, represents
primarily the collection of a note receivable of $5.0 million which had been
written off in 2002. The Non-GAAP adjustment is net of applicable income taxes.
NOTE 2: The Non-GAAP net income (loss) and non-GAAP net income (loss) per share
amounts exclude amortization of acquired intangible assets, acquisition and
disposition related charges and special items, net of applicable income taxes.
NOTE 3: Due to the net loss for the quarter ended September 30, 2003, net loss
per share is based on the basic number of weighted average shares outstanding.
For the quarters ended September 30, 2004 and June 30, 2004, respectively, the
Company reported net income and therefore, used the diluted weighted average
shares outstanding.
MKS INSTRUMENTS, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Nine Months Ended
September 30,
--------------------------
2004 2003
--------- ---------
Net sales $ 424,221 $ 235,513
Cost of sales 252,993 154,940
--------- ---------
Gross profit 171,228 80,573
Research and development 43,157 34,719
Selling, general and administrative 65,784 52,368
Amortization of acquired intangible assets 11,073 11,007
Restructuring, asset impairment and other charges 437 634
--------- ---------
Income (loss) from operations 50,777 (18,155)
Interest income, net 1,040 785
Other income (NOTE 1) 5,402 --
--------- ---------
Income (loss) before income taxes 57,219 (17,370)
Provision for income taxes 11,495 1,151
--------- ---------
Net income (loss) $ 45,724 $ (18,521)
========= =========
Net income (loss) per share:
Basic $ 0.86 $ (0.36)
Diluted $ 0.83 $ (0.36)
Weighted average shares outstanding:
Basic 53,466 51,475
Diluted 54,785 51,475
THE FOLLOWING SUPPLEMENTAL NON-GAAP EARNINGS INFORMATION IS
PRESENTED TO AID IN UNDERSTANDING THE MKS OPERATING RESULTS:
GAAP Net income (loss) $ 45,724 $ (18,521)
Adjustments:
Amortization of acquired intangible assets 11,073 11,007
Restructuring, asset impairment and other charges 437 634
Other income, net of tax (NOTE 1) (4,272) --
--------- ---------
Non-GAAP net income (loss) (NOTE 2) $ 52,962 $ (6,880)
========= =========
Non-GAAP net income (loss) per share (NOTE 2) $ 0.97 $ (0.13)
========= =========
Weighted average shares outstanding (NOTE 3) 54,785 51,475
NOTE 1: The GAAP amount represents primarily the collection of a note receivable
of $5.0 million which had been written off in 2002. The Non-GAAP adjustment is
net of applicable income taxes.
NOTE 2: The Non-GAAP net income (loss) and non-GAAP net income (loss) per share
amounts exclude amortization of acquired intangible assets, acquisition and
disposition related charges and special items, net of applicable income taxes.
NOTE 3: Due to the net loss for the nine months ended September 30, 2003, net
loss per share is based on the basic number of weighted average shares
outstanding. For the nine months ended September 30, 2004, the Company reported
net income and therefore, used the diluted weighted average shares outstanding.
MKS INSTRUMENTS, INC.
UNAUDITED CONSOLIDATED BALANCE SHEET
(IN THOUSANDS)
September 30, December 31,
2004 2003
-------- --------
ASSETS
Cash and short-term investments $206,583 $129,178
Trade accounts receivable 85,333 65,454
Inventories 104,337 82,013
Other current assets 11,106 5,631
-------- --------
Total current assets 407,359 282,276
Property, plant and equipment, net 79,903 76,121
Long-term investments 10,469 13,625
Goodwill 259,784 259,924
Other acquired intangible assets 45,085 56,192
Other assets 3,751 4,724
-------- --------
Total assets $806,351 $692,862
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Short-term debt $ 23,004 $ 20,196
Accounts payable 25,673 25,302
Other accrued expenses 54,133 26,310
-------- --------
Total current liabilities 102,810 71,808
Long-term debt 7,111 8,924
Other long-term liabilities 4,458 3,820
Stockholders' equity:
Common stock 113 113
Additional paid-in capital 624,411 587,910
Retained earnings 57,962 12,238
Other stockholders' equity 9,486 8,049
-------- --------
Total stockholders' equity 691,972 608,310
-------- --------
Total liabilities and stockholders' equity $806,351 $692,862
======== ========