MKS Instruments Reports Q3 2011 Financial Results

ANDOVER, Mass., Oct. 19, 2011 (GLOBE NEWSWIRE) -- MKS Instruments, Inc. (Nasdaq:MKSI), a global provider of technologies that enable advanced processes and improve productivity, today reports third quarter 2011 financial results.

Third Quarter Financial Results

Sales were $194.5 million, down 12.1% from $221.3 million in the third quarter of 2010 and down 13.4% from $224.5 million in the second quarter of 2011.

Third quarter net income was $30.4 million, or $0.57 per diluted share, compared to net income of $38.6 million in the third quarter of 2010, or $0.76 per diluted share, and $38.6 million in the second quarter of 2011, or $0.73 per diluted share.

Non-GAAP net earnings were $30.6 million, or $0.58 per diluted share, compared to $36.8 million, or $0.72 per diluted share, in the third quarter of 2010 and a record $38.8 million, or $0.73 per diluted share, in the second quarter of 2011.

Cash and investments, net of short-term borrowings, were $533.8 million at the end of the quarter, while stockholders' equity, net of intangible assets and goodwill, was $831.2 million at quarter end.

Leo Berlinghieri, Chief Executive Officer and President, said, "Order levels began to decline in May and continued to decline until the middle of the third quarter. However, since then, orders have remained fairly stable. In conditions like these, our proven strategy is to remain nimble, aggressively identify and pursue new opportunities while simultaneously controlling costs.

"Based upon recent business levels and general business outlook, we estimate that our fourth quarter sales may range from $145 to $165 million and at this volume, our non-GAAP net earnings could range from $0.18 to $0.31 per diluted share."

Conference Call Details

A conference call with management will be held on Thursday, October 20, 2011 at 8:30 a.m. (Eastern Time). To participate in the conference call, please dial (877) 212-6076 for domestic callers and (707) 287-9331 for international callers, and an operator will connect you. Participants will need to provide the operator with the Conference ID of 11366013, which has been reserved for this call. A live and archived webcast of the call will also be available on the company's website at www.mksinst.com. 

Use of Non-GAAP Financial Results

Non-GAAP net earnings and Non-GAAP net earnings per share amounts exclude discontinued operations, amortization of acquired intangible assets, costs associated with acquisitions and disposition related charges, and certain adjustments to income tax rates. These non-GAAP measures are not in accordance with Accounting Principles Generally Accepted in the United States of America (GAAP). MKS' management believes the presentation of these non-GAAP financial measures is useful to investors for comparing prior periods and analyzing ongoing business trends and operating results.

About MKS Instruments

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, 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, light emitting diodes, data storage media, and other advanced coatings. We also leverage our technology in other markets with advanced manufacturing applications including medical equipment, pharmaceutical manufacturing, energy generation, and environmental monitoring.

Forward-Looking Statements

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, and other advanced manufacturing markets, 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 and Quarterly Reports 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 (Note 1)
  September 30,
2011		 September 30,
2010		 June 30,
2011
       
Net revenues  $ 194,508  $ 221,323  $ 224,487
Cost of revenues  106,830  122,820  119,499
Gross profit  87,678  98,503  104,988
       
Research and development  14,331  15,070  15,582
Selling, general and administrative  31,984  28,247  31,851
Amortization of intangible assets  251  250  250
Income from operations  41,112  54,936  57,305
       
Interest income, net  272  35  309
       
Income from continuing operations before income taxes  41,384  54,971  57,614
Provision for income taxes   11,011  18,370  19,013
Income from continuing operations  30,373  36,601  38,601
Income from discontinued operations, net of taxes  --   2,035  -- 
Net income  $ 30,373  $ 38,636  $ 38,601
       
Basic income per share:       
 Continuing operations  $ 0.58  $ 0.73  $ 0.74
 Discontinued operations  --   0.04  -- 
 Net income  $ 0.58  $ 0.77  $ 0.74
       
Diluted income per share:       
 Continuing operations  $ 0.57  $ 0.72  $ 0.73
 Discontinued operations  --   0.04  -- 
 Net income  $ 0.57  $ 0.76  $ 0.73
       
Cash dividends per common share  $ 0.15  $ --   $ 0.15
       
Weighted average shares outstanding:       
 Basic  52,456  50,226  52,346
 Diluted  52,992  50,994  52,906
       
The following supplemental Non-GAAP earnings information is presented to aid in understanding MKS' operating results:  
       
Income from continuing operations  $ 30,373  $ 36,601  $ 38,601
       
Adjustments (net of tax, if applicable):      
 Amortization of acquired intangible assets  251  250  250
 Proforma tax adjustments  (67)  (66)  (65)
       
Non-GAAP net earnings (Note 2)  $ 30,557  $ 36,785  $ 38,786
       
Non-GAAP net earnings per share (Note 2)  $ 0.58  $ 0.72  $ 0.73
Weighted average shares outstanding  52,992  50,994  52,906
       
       
Note 1: During 2010, the Company sold two product lines that no longer met the Company's long-term strategic objectives. The results of operations of the two product lines have been classified as discontinued operations in the consolidated statements of operations for the prior year period provided.
 
Note 2: The Non-GAAP net earnings and Non-GAAP net earnings per share amounts exclude results of discontinued operations, 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)
     
  Nine Months Ended
September 30, (Note 1)
  2011 2010
     
Net revenues  $ 650,846  $ 634,136
Cost of revenues  351,819  352,819
Gross profit  299,027  281,317
     
Research and development  46,809  46,899
Selling, general and administrative  96,542  86,961
Amortization of intangible assets  751  1,033
Gain on sale of asset  --   (682)
Income from operations  154,925  147,106
     
Interest income, net  852  614
     
Income from continuing operations before income taxes  155,777  147,720
Provision for income taxes   48,760  48,977
Income from continuing operations  107,017  98,743
Income from discontinued operations, net of taxes  --   7,895
Net income  $ 107,017  $ 106,638
     
Basic income per share:     
 Continuing operations  $ 2.06  $ 1.98
 Discontinued operations  --   0.16
 Net income  $ 2.06  $ 2.13
     
Diluted income per share:     
 Continuing operations  $ 2.03  $ 1.94
 Discontinued operations  --   0.16
 Net income  $ 2.03  $ 2.10
     
Cash dividends per common share  $ 0.45  $ -- 
     
Weighted average shares outstanding:     
 Basic  52,070  49,965
 Diluted  52,761  50,821
     
The following supplemental Non-GAAP earnings information is presented to aid in understanding MKS' operating results:
     
Income from continuing operations  $ 107,017  $ 98,743
     
Adjustments (net of tax, if applicable):    
 Amortization of acquired intangible assets  751  1,033
 Gain on sale of asset (Note 2)  --   (682)
 Proforma tax adjustments  (197)  (48)
     
Non-GAAP net earnings (Note 3)  $ 107,571  $ 99,046
     
Non-GAAP net earnings per share (Note 3)  $ 2.04  $ 1.95
Weighted average shares outstanding  52,761  50,821
     
     
Note 1: During 2010, the Company sold two product lines that no longer met the Company's long-term strategic objectives. The results of operations of the two product lines have been classified as discontinued operations in the consolidated statements of operations for the prior year period provided.
     
Note 2: The nine month period ended September 30, 2010 includes a $682 gain on the sale of a vacated facility.
     
Note 3: The Non-GAAP net earnings and Non-GAAP net earnings per share amounts exclude results of discontinued operations, 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)
     
  September 30,
2011		 December 31,
2010
     
ASSETS    
     
Cash and short-term investments  $ 525,839  $ 431,933
Trade accounts receivable, net  125,517  138,181
Inventories  161,059  156,429
Other current assets  37,913  26,352
Total current assets  850,328  752,895
     
Property, plant and equipment, net  69,891  68,976
Goodwill  140,084  140,020
Intangible assets, net  1,307  1,743
Long-term marketable securities  9,260  -- 
Other assets  16,842  18,779
     
Total assets  $ 1,087,712  $ 982,413
     
     
LIABILITIES AND STOCKHOLDERS' EQUITY    
     
Short-term borrowings  $ 1,302  $ -- 
Accounts payable  22,572  36,427
Accrued expenses and other liabilities  59,057  73,259
Total current liabilities  82,931  109,686
     
Other liabilities  32,169  25,688
     
Stockholders' equity:    
Common stock  113  113
Additional paid-in capital  703,405  663,792
Retained earnings  254,701  171,356
Other stockholders' equity  14,393  11,778
Total stockholders' equity  972,612  847,039
     
Total liabilities and stockholders' equity  $ 1,087,712  $ 982,413 
CONTACT: Seth H. Bagshaw

         Vice President, Chief Financial Officer & Treasurer

         Telephone:  978.645.5578
Source: MKS Instruments, Inc.

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