MKS Instruments Reports Third Quarter 2008 Financial Results
ANDOVER, Mass., Oct. 22 /PRNewswire-FirstCall/ -- MKS Instruments, Inc. (Nasdaq: MKSI), a global provider of technologies that enable advanced processes and improve productivity, today reported third quarter 2008 financial results.
Sales were $157.4 million, down 8 percent from $171.0 million in the second quarter of 2008 and down 13 percent from $181.0 million in the third quarter of 2007.
Net income was $6.8 million, or $0.14 per diluted share, compared to $9.2 million, or $0.18 per diluted share, in the second quarter of 2008 and $21.4 million, or $0.37 per diluted share, in the third quarter of 2007.
Non-GAAP net earnings, which exclude amortization of acquired intangible assets and special items, totaled $8.9 million, or $0.18 per diluted share, compared to $10.5 million, or $0.21 per diluted share, in the second quarter of 2008 and $22.0 million, or $0.38 per diluted share, in the third 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, "Despite an increasingly difficult environment in the third quarter, we continued to penetrate the high-growth solar market with 27 percent sales growth quarter over quarter. This progress reduced the impact of lower spending for semiconductor capital equipment in a cyclical industry downturn. Our cash position remained strong.
"Given the current challenging macroeconomic environment, we expect fourth quarter sales could decline and range from $130 to $140 million, with income above breakeven. Net income could range from $0.01 to $0.09 per diluted share on approximately 50 million shares outstanding, and non-GAAP net earnings could range from $0.00 to $0.07 per diluted share."
Management will discuss third quarter financial results on a conference call today at 8:30 a.m. (Eastern Time). Dial-in numbers are 1-800-257-2182 for domestic callers and 303-262-2140 for international callers. The call will be broadcast live and available for replay at www.mksinstruments.com. To hear a telephone replay through October 29, 2008, dial 303-590-3000, pass code 11120704#.
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
September 30, September 30, June 30,
2008 2007 2008
Net sales $157,364 $181,014 $171,002
Cost of sales 94,425 104,416 100,514
Gross profit 62,939 76,598 70,488
Research and development 19,528 17,159 20,486
Selling, general and administrative 33,460 32,494 35,113
Amortization of acquired intangible
assets 1,963 3,877 1,984
Income from operations 7,988 23,068 12,905
Gain (Impairment) of investments 506 - (251)
Interest income, net 1,326 4,010 1,636
Income before income taxes 9,820 27,078 14,290
Provision for income taxes 3,029 5,696 5,056
Net income $6,791 $21,382 $9,234
Net income per share:
Basic $0.14 $0.38 $0.19
Diluted $0.14 $0.37 $0.18
Weighted average shares outstanding:
Basic 48,730 56,809 49,691
Diluted 49,898 57,482 50,866
The following supplemental Non-GAAP
earnings information is presented
to aid in understanding MKS' operating
results:
GAAP net income $6,791 $21,382 $9,234
Adjustments (net of tax, if applicable):
Amortization of acquired intangible
assets 1,963 3,877 1,984
Expense (Benefit) for income taxes
(Note 1) 819 (1,847) -
Tax effect of adjustments (709) (1,427) (717)
Non-GAAP net earnings (Note 2) $8,864 $21,985 $10,501
Non-GAAP net earnings per share (Note 2) $0.18 $0.38 $0.21
Weighted average shares outstanding -
diluted 49,898 57,482 50,866
Note 1: The three month period ended September 30, 2008 includes a net
tax expense for discrete items of $819 attributable to the booking of a
valuation allowance on state tax credits of $2,651 partially offset by a
benefit of $1,832 for discrete items related to the reversal of FIN 48
reserve items as a result of a statute of limitations expiration. The
three month period ended September 30, 2007 includes a benefit of $1,847
attributable to a discrete tax matter related to our research and
development tax credits.
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)
Nine Months Ended
September 30,
2008 2007
Net sales $521,814 $596,424
Cost of sales 306,480 340,934
Gross profit 215,334 255,490
Research and development 59,263 53,809
Selling, general and administrative 100,282 102,998
Amortization of acquired intangible
assets 7,052 12,092
Income from operations 48,737 86,591
Impairment of investments (906) -
Interest income, net 5,138 10,896
Income before income taxes 52,969 97,487
Provision for income taxes 16,562 26,288
Net income $36,407 $71,199
Net income per share:
Basic $0.73 $1.26
Diluted $0.71 $1.24
Weighted average shares outstanding:
Basic 50,051 56,661
Diluted 51,112 57,582
The following supplemental Non-GAAP
earnings information is presented
to aid in understanding MKS' operating
results:
GAAP net income $36,407 $71,199
Adjustments (net of tax, if
applicable):
Amortization of acquired intangible
assets 7,052 12,092
Expense (Benefit) for income taxes
(Note 1) 819 (1,847)
Foreign exchange gain from legal
entity restructuring (Note 2) (2,669) -
Tax effect of adjustments (1,630) (4,454)
Non-GAAP net earnings (Note 3) $39,979 $76,990
Non-GAAP net earnings per share (Note 3) $0.78 $1.34
Weighted average shares outstanding -
diluted 51,112 57,582
Note 1: The nine month period ended September 30, 2008 includes a net
tax expense for discrete items of $819 attributable to the booking of a
valuation allowance on state tax credits of $2,651 partially offset by a
benefit of $1,832 for discrete items related to the reversal of FIN 48
reserve items as a result of a statute of limitations expiration. The nine
month period ended September 30, 2007 includes a benefit of $1,847
attributable to a discrete tax matter related to our research and
development tax credits.
Note 2: Selling, general and administrative expenses for the nine month
period ended September 30, 2008 includes a foreign exchange gain of $2,669
related to the Company's legal entity restructuring of certain foreign
operations.
Note 3: 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)
September 30, December 31,
2008 2007
ASSETS
Cash and short-term investments $257,212 $323,765
Trade accounts receivable 104,558 107,504
Inventories 142,680 150,731
Other current assets 38,178 27,980
Total current assets 542,628 609,980
Property, plant and equipment, net 79,760 81,365
Goodwill 337,765 337,473
Other acquired intangible assets 29,089 36,141
Other assets 9,768 11,301
Total assets $999,010 $1,076,260
LIABILITIES AND STOCKHOLDERS' EQUITY
Short-term debt $18,310 $20,203
Accounts payable 25,405 28,683
Accrued expenses and other liabilities 42,733 46,859
Total current liabilities 86,448 95,745
Long-term debt 540 5,871
Other long-term liabilities 21,459 20,635
Stockholders' equity:
Common stock 113 113
Additional paid-in capital 632,428 685,465
Retained earnings 247,718 255,244
Other stockholders' equity 10,304 13,187
Total stockholders' equity 890,563 954,009
Total liabilities and stockholders'
equity $999,010 $1,076,260
SOURCE MKS Instruments, Inc.