SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------------------ FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): October 21, 2003 MKS Instruments, Inc. - ------------------------------------------------------------------------------- (Exact name of registrant as specified in charter) Massachusetts 0-23621 04-2277512 - -------------------------------------------------------------------------------- (State or other jurisdiction of (Commission (IRS Employer incorporation) File Number) Identification No.) Six Shattuck Road, Andover, Massachusetts 01810 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (978) 975-2350 - -------------------------------------------------------------------------------- (Former name or former address, if changed since last report)
ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION On October 21, 2003, MKS Instruments, Inc. announced its financial results for the quarter ended September 30, 2003. The full text of the press release issued in connection with the announcement is attached as Exhibit 99.1 to this Current Report on Form 8-K. The information in this Form 8-K and the Exhibit attached hereto shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act") or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such a filing.
SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Date: October 21, 2003 MKS Instruments, Inc. By: /s/ Ronald C. Weigner ------------------------------------ Ronald C. Weigner, Vice President & Chief Financial Officer
EXHIBIT INDEX Exhibit No. Description - ----------- ----------- 99.1 Press release dated October 21, 2003
Exhibit 99.1 [LOGO] MKS Technology for Productivity FOR IMMEDIATE RELEASE INVESTOR RELATIONS CONTACT: Ronald Weigner Vice President & Chief Financial Officer 978.975.2350 MKS INSTRUMENTS REPORTS THIRD QUARTER 2003 FINANCIAL RESULTS Andover, Mass.-- October 21, 2003 -- MKS Instruments, Inc. (NASDAQ: MKSI), a leading provider of process control technologies for improving productivity in semiconductor and other advanced manufacturing process environments, today reported third quarter 2003 revenues of $81.6 million, a slight increase from second quarter 2003 revenues of $81.2 million and 12 percent below third quarter 2002 revenues of $92.2 million. The third quarter 2003 GAAP net loss was $5.6 million or $0.11 per share, approximately the same as the second quarter 2003 GAAP net loss of $5.5 million or $0.11 per share. The third quarter 2002 GAAP net loss was $3.8 million or $0.07 per share. The third quarter 2003 net loss would have been $1.7 million or $0.03 per share, after excluding amortization of acquired intangible assets of $3.6 million and restructuring, asset impairment and other charges of $0.3 million. By comparison, the third quarter 2002 net loss on revenues of $92.2 million would have been $8,000 or breakeven on a per share basis, after excluding amortization of acquired intangible assets of $3.8 million; restructuring, asset impairment and other charges of $2.4 million; a $4.1 million charge to reserve a note receivable and warrants related to a prior sale of non-
strategic assets; a $4.2 million gain from a litigation settlement; and a $2.3 million adjustment for income taxes related to these items. John R. Bertucci, Chairman, Chief Executive Officer and President, said, "Third quarter 2003 revenues were within our guidance and essentially flat, after stronger than expected second quarter revenues that included pulled in orders from the third quarter. Orders continued to trend higher through the third quarter, and we now estimate fourth quarter revenues could increase by as much as 9 percent and range from $85 to $89 million. Given the year-over-year improvement in our cost structure, we expect to achieve breakeven at a lower quarterly revenue threshold. We estimate fourth quarter 2003 earnings could range from breakeven to $0.03 per share, excluding amortization of acquired intangible assets of $3.6 million and restructuring charges of up to $2 million, or a net loss of $0.08 to $0.11 per share on a GAAP basis." Mr. Bertucci continued, "During the third quarter, we posted a double digit increase in thin film revenues, as we continued to make inroads in flat panel display, optical storage and architectural glass applications. We also penetrated leading edge applications for semiconductor manufacturing in the quarter. In addition, we expanded our technology portfolio by acquiring leading edge MEMS-based technology for vacuum gauges. Consistent with an improving outlook, we're participating in many customer evaluations of our products, including those that integrate multiple technologies, and we are encouraged about prospects for future success." For the nine months ended September 30, 2003, MKS reported revenues of $235.5 million and a GAAP net loss of $18.5 million or $0.36 per share compared to
revenues of $237.2 million and a GAAP net loss of $20.3 million or $0.41 per share for the same period of 2002. The net loss for the nine months of 2003 would have been $6.9 million or $0.13 per share, after excluding amortization of acquired intangible assets of $11 million and restructuring, asset impairment and other charges of $0.6 million. By comparison, the net loss for the nine months of 2002 would have been $4.1 million or $0.08 per share, after excluding amortization of acquired intangible assets of $10.1 million; purchase of in-process technology of $8.4 million; restructuring, asset impairment and other charges of $2.4 million; a $4.1 million charge to reserve a note receivable and warrants related to a prior sale of non-strategic assets; a $4.2 million gain from a litigation settlement; and a $4.6 million adjustment for income taxes related to these items. 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 uses these non-GAAP measures internally to evaluate the company's performance and manage its operations, and believes that these measures provide useful information for understanding operating results and comparing prior periods. Management will host a conference call on Tuesday, October 21, 2003 at 5:00 p.m. (Eastern Time) to discuss these financial results. To listen to this call, dial 800-218-0530 (domestic) or 303-262-2130 (international), or access the live call and a rebroadcast at www.mksinstruments.com. To hear a replay through October 28, 2003, dial 303-590-3000, passcode 552461#.
MKS Instruments, Inc. is a leading worldwide provider of instruments, components and subsystems that measure, control, power and monitor critical parameters of semiconductor and other advanced manufacturing process environments. MKS' products are used to manufacture semiconductors; thin film coatings for diverse markets such as flat panel displays, optical storage products, architectural glass, and electro-optical products; and medical imaging equipment. 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 failure of MKS and acquired companies to realize the anticipated benefits of their combined businesses, the challenges and risks involved with integrating the operations of MKS and 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, ------------------------ 2003 2002 -------- -------- Net sales $ 81,568 $ 92,216 Cost of sales 53,846 60,391 -------- -------- Gross profit 27,722 31,825 Research and development 12,034 12,650 Selling, general and administrative 17,090 20,455 Amortization of acquired intangible assets 3,612 3,778 Restructuring, asset impairment and other charges 330 2,408 -------- -------- Loss from operations (5,344) (7,466) Interest income, net 223 433 Income from litigation settlement -- 4,200 Other expenses (See NOTE 3) -- 4,121 -------- -------- Loss before income taxes (5,121) (6,954) Provision (benefit) for income taxes (See NOTE 1) 500 (3,129) -------- -------- Net loss $ (5,621) $ (3,825) ======== ======== Net loss per share (See NOTE 2) $ (0.11) $ (0.07) ======== ======== Weighted average shares outstanding 51,625 51,262 The following supplemental Non-GAAP earnings information is presented to aid in understanding the MKS operating results: Supplemental Non-GAAP Earnings Information GAAP net loss $ (5,621) $ (3,825) Adjustments: Amortization of acquired intangible assets 3,612 3,778 Restructuring, asset impairment and other charges 330 2,408 Charge to reserve note and warrants (See NOTE 3) -- 4,121 Income from litigation settlement -- (4,200) Tax effect of adjustments (See NOTE 1) -- (2,290) -------- -------- Non-GAAP net loss (See NOTE 4) $ (1,679) $ (8) ======== ======== Non-GAAP net loss per share (See NOTE 4) $ (0.03) $ (0.00) ======== ======== Weighted average shares outstanding 51,625 51,262 NOTE 1: MKS recorded a tax benefit of $3,129 for the three months ended September 30, 2002. In the three months ended December 31, 2002, MKS recorded a full valuation allowance against its net deferred tax assets. Accordingly, MKS has not recorded a deferred tax benefit from the net operating loss incurred in the quarter ended September 30, 2003. The provision for income taxes of $500 includes tax expense from foreign operations and state taxes. NOTE 2: Due to the net loss for the quarter, net loss per share is based on the basic number of weighted average shares outstanding. NOTE 3: During 2001 MKS sold certain non-strategic assets for approximately $9,000, including a note receivable of $3,928 and warrants valued at $193. In the third quarter of 2002, MKS recorded a charge of $4,121 to establish a reserve against the note and warrants. NOTE 4: The Non-GAAP net loss and non-GAAP net loss per share amounts exclude amortization of acquired intangible assets, acquisition and disposition related charges and special items, net of income taxes.
MKS INSTRUMENTS, INC. UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE DATA) Nine Months Ended September 30, ------------------------ 2003 2002 --------- --------- Net sales $ 235,513 $ 237,215 Cost of sales 154,940 156,455 --------- --------- Gross profit 80,573 80,760 Research and development 34,719 33,835 Selling, general and administrative 52,368 58,234 Amortization of acquired intangible assets 11,007 10,120 Restructuring, asset impairment and other charges 634 2,408 Purchase of in-process technology -- 8,390 --------- --------- Loss from operations (18,155) (32,227) Interest income, net 785 1,215 Income from litigation settlement -- 4,200 Other expenses (See NOTE 3) -- 4,121 --------- --------- Loss before income taxes (17,370) (30,933) Provision (benefit) for income taxes (See NOTE 1) 1,151 (10,627) --------- --------- Net loss $ (18,521) $ (20,306) ========= ========= Net loss per share (See NOTE 2) $ (0.36) $ (0.41) ========= ========= Weighted average shares outstanding 51,475 49,567 The following supplemental Non-GAAP earnings information is presented to aid in understanding the MKS operating results: Supplemental Non-GAAP Earnings Information GAAP Net loss $ (18,521) $ (20,306) Adjustments: Amortization of acquired intangible assets 11,007 10,120 Restructuring, asset impairment and other charges 634 2,408 Charge to reserve note and warrants (See NOTE 3) -- 4,121 Income from litigation settlement -- (4,200) Purchase of in-process technology -- 8,390 Tax effect of adjustments (See NOTE 1) -- (4,613) --------- --------- Non-GAAP net loss (See NOTE 4) $ (6,880) $ (4,080) ========= ========= Non-GAAP net loss per share (See NOTE 4) $ (0.13) $ (0.08) ========= ========= Weighted average shares outstanding 51,475 49,567 NOTE 1: MKS recorded a tax benefit of $10,627 for the nine months ended September 30, 2002. In the three months ended December 31, 2002, MKS recorded a full valuation allowance against its net deferred tax assets. Accordingly, MKS has not recorded a deferred tax benefit from the net operating loss incurred in the nine months ended September 30, 2003. The provision for income taxes of $1,151 includes tax expense from foreign operations and state taxes. NOTE 2: Due to the net loss for the nine month periods, net loss per share is based on the basic number of weighted average shares outstanding. NOTE 3: During 2001 MKS sold certain non-strategic assets for approximately $9,000, including a note receivable of $3,928 and warrants valued at $193. In the third quarter of 2002, MKS recorded a charge of $4,121 to establish a reserve against the note and warrants. NOTE 4: The non-GAAP net loss and non-GAAP net loss per share amounts exclude amortization of acquired intangible assets, acquisition and disposition related charges and special items, net of income taxes.
MKS INSTRUMENTS, INC. UNAUDITED CONSOLIDATED BALANCE SHEET (IN THOUSANDS) September 30, December 31, 2003 2002 ------------- ------------ ASSETS Cash and short-term investments $115,613 $128,714 Trade accounts receivable 53,963 45,505 Inventories 75,973 73,235 Other current assets 7,975 6,098 -------- -------- Total current assets 253,524 253,552 Property, plant and equipment, net 76,629 82,595 Long-term investments 18,243 15,980 Goodwill 260,091 259,781 Other acquired intangible assets 58,889 67,720 Other assets 5,809 5,995 -------- -------- Total assets $673,185 $685,623 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Short-term debt $ 16,780 $ 18,472 Accounts payable 19,143 15,301 Other accrued expenses 25,721 27,771 -------- -------- Total current liabilities 61,644 61,544 Long-term debt 9,298 11,726 Other long-term liabilities 2,439 1,663 Stockholders' equity: Common stock 113 113 Additional paid-in capital 584,058 579,175 Retained earnings 10,102 28,623 Other stockholders' equity 5,531 2,779 -------- -------- Total stockholders' equity 599,804 610,690 -------- -------- Total liabilities and stockholders' equity $673,185 $685,623 ======== ========