MKS Instruments, Inc. News

MKS Instruments Reports Second Quarter 2008 Financial Results

ANDOVER, Mass., July 24 PRNewswire-FirstCall — MKS Instruments, Inc. (Nasdaq: MKSI), a global provider of technologies that enable advanced processes and improve productivity, today reported second quarter 2008 financial results.

Sales were $171.0 million, down 12 percent from $193.4 million in the first quarter of 2008 and down 16 percent from $204.0 million in the second quarter of 2007.

Net income was $9.2 million, or $0.18 per diluted share, compared to $20.4 million, or $0.39 per diluted share, in the first quarter of 2008 and $22.5 million, or $0.39 per diluted share, in the second quarter of 2007.

Non-GAAP net earnings, which exclude amortization of acquired intangible assets and special items, totaled $10.5 million, or $0.21 per diluted share, compared to $20.6 million, or $0.39 per diluted share, in the first quarter of 2008 and $25.1 million, or $0.43 per diluted share, in the second quarter of 2007.

The financial results that exclude certain charges and special items are not in accordance with Accounting Principles Generally Accepted in the United States of America (GAAP). MKS' management believes the presentation of non-GAAP financial measures, which exclude costs associated with acquisitions and special items, is useful to investors for comparing prior periods and analyzing ongoing business trends and operating results.

Leo Berlinghieri, Chief Executive Officer and President, said, "After a strong first quarter with double-digit sequential growth in the semiconductor market, we saw sharply lower demand in the second quarter as this market weakened. However, our solar business continued to ramp, and sales to non-semiconductor markets grew by 17 percent to 45 percent of total sales. Even in this changing business environment, we continue to increase our investment in new product development that will contribute to future revenue growth.

"In the third quarter, we expect some incremental weakness in semiconductor capital equipment spending. Our sales could range from $155 to $165 million. Net income could range from $0.09 to $0.16 per diluted share on approximately 51 million shares outstanding, and non-GAAP net earnings could range from $0.12 to $0.19 per diluted share."

Management will discuss second quarter financial results on a conference call today at 8:30 a.m. (Eastern Time). Dial-in numbers are 1-800-240-2430 for domestic callers and 303-262-2130 for international callers. The call will be broadcast live and available for replay at http://www.mksinstruments.com. To hear a telephone replay through July 31, 2008, dial 303-590-3000, pass code 11116548#.

MKS Instruments, Inc. is a global provider of instruments, subsystems and process control solutions that measure, control, power, monitor and analyze critical parameters of advanced manufacturing processes to improve process performance and productivity. Our products are derived from our core competencies in pressure measurement and control, materials delivery, gas composition analysis, electrostatic charge management, control and information technology, power and reactive gas generation, and vacuum technology. Our primary served markets are manufacturers of capital equipment for semiconductor devices, and for other thin film applications including flat panel displays, solar cells, data storage media, and other advanced coatings. We also leverage our technology in other markets with advanced manufacturing applications including medical equipment, pharmaceutical manufacturing, and energy generation and environmental monitoring.

This release contains projections or other forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27 of the Securities Act, and Section 21E of the Securities Exchange Act regarding MKS' future growth and the future financial performance of MKS. These projections or statements are only predictions. Actual events or results may differ materially from those in the projections or other forward-looking statements set forth herein. Among the important factors that could cause actual events to differ materially from those in the projections or other forward-looking statements are the fluctuations in capital spending in the semiconductor industry, fluctuations in net sales to MKS' major customers, potential fluctuations in quarterly results, the challenges, risks and costs involved with integrating the operations of MKS and any acquired companies, dependence on new product development, rapid technological and market change, acquisition strategy, manufacturing and sourcing risks, volatility of stock price, international operations, financial risk management, and future growth subject to risks. Readers are referred to MKS' filings with the Securities and Exchange Commission, including its most recent Annual Report on Form 10-K, for a discussion of these and other important risk factors concerning MKS and its operations. MKS is under no obligation to, and expressly disclaims any obligation to, update or alter its forward-looking statements, whether as a result of new information, future events or otherwise.

MKS Instruments, Inc. Unaudited Consolidated Statements of Operations (In thousands, except per share data) Three Months Ended June 30, June 30, March 31, 2008 2007 2008 Net sales $171,002 $203,978 $193,448 Cost of sales 100,514 117,948 111,541 Gross profit 70,488 86,030 81,907 Research and development 20,486 18,351 19,249 Selling, general and administrative 35,113 35,928 31,709 Amortization of acquired intangible assets 1,984 4,108 3,105 Income from operations 12,905 27,643 27,844 Impairment of investments (251) - (1,161) Interest income, net 1,636 3,581 2,176 Income before income taxes 14,290 31,224 28,859 Provision for income taxes 5,056 8,697 8,477 Net income $9,234 $22,527 $20,382 Net income per share: Basic $0.19 $0.40 $0.39 Diluted $0.18 $0.39 $0.39 Weighted average shares outstanding: Basic 49,691 56,820 51,733 Diluted 50,866 57,939 52,571 The following supplemental Non-GAAP earnings information is presented to aid in understanding MKS' operating results: GAAP net income $9,234 $22,527 $20,382 Adjustments (net of tax, if applicable): Amortization of acquired intangible assets 1,984 4,108 3,105 Foreign exchange gain from legal entity restructuring (Note 1) - - (2,669) Tax effect of adjustments (717) (1,513) (204) Non-GAAP net earnings (Note 2) $10,501 $25,122 $20,614 Non-GAAP net earnings per share (Note 2) $0.21 $0.43 $0.39 Weighted average shares outstanding - diluted 50,866 57,939 52,571 Note 1: Selling, general and administrative expenses for the three month period ended March 31, 2008 includes a foreign exchange gain of $2.7 million related to the Company's legal entity restructuring of certain foreign operations. Note 2: The Non-GAAP net earnings and Non-GAAP net earnings per share amounts exclude amortization of acquired intangible assets, acquisition and disposition related charges and special items, net of applicable income taxes. MKS Instruments, Inc. Unaudited Consolidated Statements of Operations (In thousands, except per share data) Six Months Ended June 30, 2008 2007 Net sales $364,450 $415,410 Cost of sales 212,055 236,518 Gross profit 152,395 178,892 Research and development 39,735 36,650 Selling, general and administrative 66,822 70,504 Amortization of acquired intangible assets 5,089 8,215 Income from operations 40,749 63,523 Impairment of investments (1,412) - Interest income, net 3,812 6,886 Income before income taxes 43,149 70,409 Provision for income taxes 13,533 20,592 Net income $29,616 $49,817 Net income per share: Basic $0.58 $0.88 Diluted $0.57 $0.86 Weighted average shares outstanding: Basic 50,712 56,587 Diluted 51,718 57,633 The following supplemental Non-GAAP earnings information is presented to aid in understanding MKS' operating results: GAAP net income $29,616 $49,817 Adjustments (net of tax, if applicable): Amortization of acquired intangible assets 5,089 8,215 Foreign exchange gain from legal entity restructuring (Note 1) (2,669) - Tax effect of adjustments (921) (3,027) Non-GAAP net earnings (Note 2) $31,115 $55,005 Non-GAAP net earnings per share (Note 2) $0.60 $0.95 Weighted average shares outstanding - diluted 51,718 57,633 Note 1: Selling, general and administrative expenses for the six month period ended June 30, 2008 includes a foreign exchange gain of $2.7 million related to the Company's legal entity restructuring of certain foreign operations. Note 2: The Non-GAAP net earnings and Non-GAAP net earnings per share amounts exclude amortization of acquired intangible assets, acquisition and disposition related charges and special items, net of applicable income taxes. MKS Instruments, Inc. Unaudited Consolidated Balance Sheet (In thousands) June 30, December 31, 2008 2007 ASSETS Cash and short-term investments $259,943 $323,765 Trade accounts receivable 109,512 107,504 Inventories 152,468 150,731 Other current assets 31,298 27,980 Total current assets 553,221 609,980 Property, plant and equipment, net 80,138 81,365 Goodwill 337,765 337,473 Other acquired intangible assets 31,052 36,141 Other assets 12,010 11,301 Total assets $1,014,186 $1,076,260 LIABILITIES AND STOCKHOLDERS' EQUITY Short-term debt $18,374 $20,203 Accounts payable 24,416 28,683 Accrued expenses and other liabilities 47,191 46,859 Total current liabilities 89,981 95,745 Long-term debt 5,563 5,871 Other long-term liabilities 22,624 20,635 Stockholders' equity: Common stock 113 113 Additional paid-in capital 637,104 685,465 Retained earnings 245,559 255,244 Other stockholders' equity 13,242 13,187 Total stockholders' equity 896,018 954,009 Total liabilities and stockholders' equity $1,014,186 $1,076,260

SOURCE MKS Instruments, Inc.

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