EXHIBIT 99.1
FOR IMMEDIATE RELEASE
Contact: Ron Weigner
Vice President and Chief Financial Officer
978.284.4446
MKS INSTRUMENTS REPORTS FOURTH QUARTER AND YEAR 2004 RESULTS
Wilmington, Mass. -- February 10, 2005 -- 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 fourth quarter and full year 2004 financial results.
Fourth quarter net sales were $130.9 million, up 29 percent from $101.8 million
in the fourth quarter of 2003 and down 6 percent from $139.7 million in the
third quarter of 2004.
Fourth quarter 2004 GAAP net earnings were $24.1 million, or $0.44 per
diluted share, which included a non-cash adjustment of $16.7 million, or $0.31
per share, to reverse a previously established valuation allowance against net
deferred tax assets. Excluding this adjustment, net earnings were $7.4 million,
or $0.14 per diluted share, compared to GAAP net earnings of $2.1 million, or
$0.04 per diluted share, for the fourth quarter of 2003 and $12.2 million, or
$0.22 per diluted share, for the third quarter of 2004.
Non-GAAP net earnings, which exclude amortization of acquired intangible
assets and special items, were $11.1 million, or $0.20 per diluted share, for
the fourth quarter of 2004, compared to $5.9 million, or $0.11 per diluted
share, for the fourth quarter of 2003 and $15.8 million, or $0.29 per diluted
share, for the third quarter of 2004.
For the calendar year 2004, net sales increased by 65 percent to $555.1
million from $337.3 million for the calendar year 2003. GAAP net earnings were
$69.8 million, or $1.28 per diluted share, on 54.7 million weighted average
shares outstanding in 2004, compared to a net loss of $16.4 million, or $0.32
per basic share, on 51.6 million weighted average shares outstanding in 2003.
Non-GAAP net earnings were $62.9 million, or $1.15 per diluted share, in 2004
compared to a loss of $1.0 million, or $0.02 per basic share, in 2003.
John Bertucci, Chairman and Chief Executive Officer, said, "A slowdown in
semiconductor capital spending began in the second half of 2004. Our fourth
quarter sales to semiconductor OEMs decreased by 9 percent sequentially, while
sales to other, non-semiconductor markets increased by 11 percent.
"Our visibility is limited because of our short lead times, making it
difficult to estimate business levels beyond the current quarter. Based on
current customer order patterns, we estimate that first quarter 2005 sales could
range from $115 to $125 million, or a sequential decrease of 5 to 12 percent.
GAAP net earnings could range from $0.02 to $0.08 per diluted share, and
non-GAAP net earnings, which exclude amortization of acquired intangible assets
of approximately $3.7 million, could range from $0.06 to $0.12 per diluted
share. We will continue to look closely at order levels and manage the business
to increase profitability at all sales levels. At the same time, we will
continue to invest in R&D for products that enhance the performance and
productivity of process tools.
"It is clear that world-class device manufacturers are not delaying strategic
projects that provide competitive advantage, as shown by recent announcements
for higher capital spending at the leading edge in 2005. We believe that an
increasing percent of the capital spending dollar will be invested in process
control, as fabs strive to improve uptime, yield, and throughput. We are well
positioned to address these requirements. While near-term challenges may
continue in the semiconductor capital equipment market, we see good momentum in
many of our process control products targeted at this growing opportunity."
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 fourth quarter financial results on a conference call
today at 5:00 p.m. (Eastern Time). A live web cast and replay of the conference
call will be
available at www.mksinstruments.com in the "Investors" section. To
hear a telephone replay through February 17, 2005, dial 303-590-3000, pass code
11021310#.
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 CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
Three Months Ended
------------------
December 31, December 31, September 30,
2004 2003 2004
--------- --------- ---------
Net sales $ 130,859 $ 101,778 $ 139,651
Cost of sales 82,716 64,242 84,045
--------- --------- ---------
Gross profit 48,143 37,536 55,606
Research and development 13,816 12,931 14,201
Selling, general and administrative 21,500 17,523 22,971
Amortization of acquired intangible assets 3,691 3,685 3,689
Restructuring, asset impairment and other charges -- 959 --
--------- --------- ---------
Income from operations 9,136 2,438 14,745
Interest income, net 873 271 442
Other income (NOTE 1) -- 927 --
--------- --------- ---------
Income before income taxes 10,009 3,636 15,187
Provision (benefit) for income taxes (NOTE 2) (14,106) 1,500 3,037
--------- --------- ---------
Net income $ 24,115 $ 2,136 $ 12,150
========= ========= =========
Net income per share:
Basic $ 0.45 $ 0.04 $ 0.23
Diluted $ 0.44 $ 0.04 $ 0.22
Weighted average shares outstanding:
Basic 53,680 51,899 53,602
Diluted 54,272 54,006 54,302
THE FOLLOWING SUPPLEMENTAL NON-GAAP EARNINGS
INFORMATION IS PRESENTED TO AID IN
UNDERSTANDING THE MKS OPERATING RESULTS:
GAAP net Income $ 24,115 $ 2,136 $ 12,150
Adjustments:
Benefit for income taxes (NOTE 2) (16,729) -- --
Amortization of acquired intangible assets 3,691 3,685 3,689
Restructuring, asset impairment and other charges -- 959 --
Gain from insurance repayment (NOTE 1) -- (927) --
--------- --------- ---------
Non-GAAP net income (NOTE 3) $ 11,077 $ 5,853 $ 15,839
========= ========= =========
Non-GAAP net income per share (NOTE 3) $ 0.20 $ 0.11 $ 0.29
========= ========= =========
Weighted average shares outstanding - diluted 54,272 54,006 54,302
NOTE 1: For the three months ended December 31, 2003, the Company recorded a
gain of $927 from the early repayment of premiums related to a split dollar life
insurance policy covering the Chairman and CEO of the Company.
NOTE 2: The three month period ended December 31, 2004 includes a benefit of
$16,729 for the reversal of the previously established valuation allowance
against net deferred tax assets.
NOTE 3: The Non-GAAP net income and non-GAAP net income per share amounts
exclude amortization of acquired intangible assets, acquisition and disposition
related charges and special items, net of applicable income taxes.
MKS INSTRUMENTS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Year ended
December 31,
------------
2004 2003
--------- ---------
Net sales $ 555,080 $ 337,291
Cost of sales 335,709 219,182
--------- ---------
Gross profit 219,371 118,109
Research and development 56,973 47,650
Selling, general and administrative 87,284 69,891
Amortization of acquired intangible assets 14,764 14,692
Restructuring, asset impairment and other charges 437 1,593
--------- ---------
Income (loss) from operations 59,913 (15,717)
Interest income, net 1,913 1,056
Other income (NOTE 1, 2) 5,402 927
--------- ---------
Income (loss) before income taxes 67,228 (13,734)
Provision (benefit) for income taxes (NOTE 3) (2,611) 2,651
--------- ---------
Net income (loss) $ 69,839 $ (16,385)
========= =========
Net income (loss) per share:
Basic $ 1.30 $ (0.32)
Diluted $ 1.28 $ (0.32)
Weighted average shares outstanding:
Basic 53,519 51,581
Diluted 54,656 51,581
THE FOLLOWING SUPPLEMENTAL NON-GAAP EARNINGS
INFORMATION IS PRESENTED TO AID IN
UNDERSTANDING THE MKS OPERATING RESULTS:
GAAP Net income (loss) $ 69,839 $ (16,385)
Adjustments:
Benefit for income taxes (NOTE 3) (16,729) --
Amortization of acquired intangible assets 14,764 14,692
Restructuring, asset impairment and other charges 437 1,593
Gain from insurance repayment (NOTE 1) -- (927)
Other income (NOTE 2) (5,402) --
--------- ---------
Non-GAAP net income (loss) (NOTE 4) $ 62,909 $ (1,027)
========= =========
Non-GAAP net income (loss) per share (NOTE 4, 5) $ 1.15 $ (0.02)
========= =========
Weighted average shares outstanding - diluted (NOTE 5) 54,656 51,581
NOTE 1: The Company recorded a gain of $927 during 2003 from the early repayment
of premiums related to a split dollar life insurance policy covering the
Chairman and CEO of the Company.
NOTE 2: The GAAP amount for 2004 represents primarily the collection of a note
receivable of $5.0 million which had been written off in 2002.
NOTE 3: The year ended December 31, 2004 includes a benefit of $16,729 for the
reversal of the previously established valuation allowance against net deferred
tax assets.
NOTE 4: 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.
NOTE 5: Due to the net loss for the year ended December 31, 2003, net loss per
share is based on the basic number of weighted average shares outstanding. For
the year ended December 31, 2004, the Company reported net income and,
therefore, used the diluted weighted average shares outstanding.
MKS INSTRUMENTS, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
December 31,
2004 2003
-------- --------
ASSETS
Cash and short-term investments $235,900 $129,178
Trade accounts receivable 83,942 65,454
Inventories 99,633 82,013
Other current assets 22,037 5,631
-------- --------
Total current assets 441,512 282,276
Property, plant and equipment, net 80,917 76,121
Long-term investments 4,775 13,625
Goodwill 255,740 259,924
Other acquired intangible assets 41,604 56,192
Other assets 3,572 4,724
-------- --------
Total assets $828,120 $692,862
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Short-term debt $ 24,509 $ 20,196
Accounts payable 23,338 25,302
Accrued expenses and other liabilities 45,965 26,310
-------- --------
Total current liabilities 93,812 71,808
Long-term debt 6,667 8,924
Other long-term liabilities 6,147 3,820
Stockholders' equity:
Common stock 113 113
Additional paid-in capital 630,736 587,910
Retained earnings 82,077 12,238
Other stockholders' equity 8,568 8,049
-------- --------
Total stockholders' equity 721,494 608,310
-------- --------
Total liabilities and stockholders' equity $828,120 $692,862
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