UNITED STATES 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 19, 2004 MKS Instruments, Inc. (Exact name of registrant as specified in its charter) Massachusetts 0-23621 04-2277512 (State or other (Commission (IRS Employer jurisdiction of File Number) Identification No.) incorporation) 90 Industrial Way, Wilmington, 01887 Massachusetts (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (978) 284-4000 (Former name or former address, if changed since last report) Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e4(c))
ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION. On October 19, 2004, MKS Instruments, Inc. announced its financial results for the quarter ended September 30, 2004. The full text of the press release 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 19, 2004 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 19, 2004
(MKS LOGO) FOR IMMEDIATE RELEASE Contact: Ron Weigner Vice President and Chief Financial Officer 978.284.4446 MKS INSTRUMENTS REPORTS THIRD QUARTER 2004 RESULTS Wilmington, Mass. -- October 19, 2004 -- 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 third quarter 2004 financial results. Net sales were $139.7 million, up 71 percent from $81.6 million in the third quarter of 2003 and down 8 percent from $151.6 million in the second quarter of 2004. GAAP net earnings were $12.2 million, or $0.22 per diluted share, compared to a third quarter 2003 net loss of $5.6 million, or $0.11 per basic share, and second quarter 2004 net earnings of $20.9 million, or $0.38 per diluted share. Excluding amortization of acquired intangible assets and special items, non-GAAP net earnings were $15.8 million, or $0.29 per diluted share, compared to a third quarter 2003 net loss of $1.7 million, or $0.03 per basic share, and second quarter 2004 net earnings of $20.3 million, or $0.37 per diluted share. For the nine months ended September 30, MKS reported sales of $424.2 million in 2004 compared to $235.5 million in 2003. GAAP net earnings were $45.7 million, or $0.83 per diluted share, in 2004 compared to a net loss of $18.5 million, or $0.36 per basic share, in 2003. For the same nine month period, non-GAAP net earnings, which exclude amortization of acquired intangible assets and special items, were $53.0 million, or $0.97 per diluted share, in 2004 compared to a net loss of $6.9 million, or $0.13 per basic share, in 2003. John Bertucci, Chairman and Chief Executive Officer, said, "Our nine month sales growth of 80 percent reflects strong demand for our process control technologies and share gains in key markets. In semiconductor capital equipment and thin-film markets, our nine month sales growth rate of 98 percent was well above industry estimates of 61
percent growth for our served semiconductor front-end equipment market. To meet increased demand over the period, OEM customers filled their work-in-process pipelines as they raised their tool production rates. "In the third quarter, we saw some softening in orders from semiconductor OEMs, along with stretched out delivery requests and order push outs. We believe these reduced orders for our products reflected a closer alignment of product demand to our customers' production rates. "Our semiconductor OEM orders have softened further in a more cautious market environment. Although our short lead times limit our visibility, we currently expect that fourth quarter sales could range from $115 to $125 million, or a sequential decrease of 10 to 18 percent. GAAP net earnings could range from $0.02 to $0.09 per diluted share, and non-GAAP net earnings, which exclude amortization of acquired intangible assets of approximately $3.7 million, could range from $0.09 to $0.16 per diluted share. With limited visibility, we are focused on increasing our profitability at all sales levels. "Looking longer term, we believe that device manufacturers will need to add capacity and upgrade technology to stay competitive and support the growth of new and emerging electronic applications. With each technology upgrade, more process steps are required, and processes must be controlled more precisely. We are well positioned with technologies for improving manufacturing productivity, and we expect to continue to gain share as semiconductor process complexity continues to increase." 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 third quarter financial results on a conference call today at 5:00 p.m. (Eastern Time). A web cast of the conference call will be available at www.mksinstruments.com in the "Investors" section. To hear a replay through October 26, 2004, dial 303-590-3000, passcode 11009618#.
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 CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE DATA) Three Months Ended --------------------------------------------- September 30, September 30, June 30, 2004 2003 2004 --------- --------- --------- Net sales $ 139,651 $ 81,568 $ 151,585 Cost of sales 84,045 53,846 90,192 --------- --------- --------- Gross profit 55,606 27,722 61,393 Research and development 14,201 12,034 14,620 Selling, general and administrative 22,971 17,090 22,661 Amortization of acquired intangible assets 3,689 3,612 3,691 Restructuring, asset impairment and other charges -- 330 -- --------- --------- --------- Income (loss) from operations 14,745 (5,344) 20,421 Interest income, net 442 223 326 Other Income (NOTE 1) -- -- 5,402 --------- --------- --------- Income (loss) before income taxes 15,187 (5,121) 26,149 Provision for income taxes 3,037 500 5,281 --------- --------- --------- Net income (loss) $ 12,150 $ (5,621) $ 20,868 ========= ========= ========= Net income (loss) per share: Basic $ 0.23 $ (0.11) $ 0.39 Diluted $ 0.22 $ (0.11) $ 0.38 Weighted average shares outstanding: Basic 53,602 51,625 53,540 Diluted 54,302 51,625 54,967 THE FOLLOWING SUPPLEMENTAL NON-GAAP EARNINGS INFORMATION IS PRESENTED TO AID IN UNDERSTANDING THE MKS OPERATING RESULTS: GAAP net Income (loss) $ 12,150 $ (5,621) $ 20,868 Adjustments: Amortization of acquired intangible assets 3,689 3,612 3,691 Restructuring, asset impairment and other charges -- 330 -- Other income, net of tax (NOTE 1) -- -- (4,272) --------- --------- --------- Non-GAAP net income (loss) (NOTE 2) $ 15,839 $ (1,679) $ 20,287 ========= ========= ========= Non-GAAP net income (loss) per share (NOTE 2) $ 0.29 $ (0.03) $ 0.37 ========= ========= ========= Weighted average shares outstanding (NOTE 3) 54,302 51,625 54,967 NOTE 1: The GAAP amount for the three months ended June 30, 2004, represents primarily the collection of a note receivable of $5.0 million which had been written off in 2002. The Non-GAAP adjustment is net of applicable income taxes. NOTE 2: 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, net of applicable income taxes. NOTE 3: Due to the net loss for the quarter ended September 30, 2003, net loss per share is based on the basic number of weighted average shares outstanding. For the quarters ended September 30, 2004 and June 30, 2004, respectively, the Company reported net income and therefore, used the diluted weighted average shares outstanding.
MKS INSTRUMENTS, INC. UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE DATA) Nine Months Ended September 30, -------------------------- 2004 2003 --------- --------- Net sales $ 424,221 $ 235,513 Cost of sales 252,993 154,940 --------- --------- Gross profit 171,228 80,573 Research and development 43,157 34,719 Selling, general and administrative 65,784 52,368 Amortization of acquired intangible assets 11,073 11,007 Restructuring, asset impairment and other charges 437 634 --------- --------- Income (loss) from operations 50,777 (18,155) Interest income, net 1,040 785 Other income (NOTE 1) 5,402 -- --------- --------- Income (loss) before income taxes 57,219 (17,370) Provision for income taxes 11,495 1,151 --------- --------- Net income (loss) $ 45,724 $ (18,521) ========= ========= Net income (loss) per share: Basic $ 0.86 $ (0.36) Diluted $ 0.83 $ (0.36) Weighted average shares outstanding: Basic 53,466 51,475 Diluted 54,785 51,475 THE FOLLOWING SUPPLEMENTAL NON-GAAP EARNINGS INFORMATION IS PRESENTED TO AID IN UNDERSTANDING THE MKS OPERATING RESULTS: GAAP Net income (loss) $ 45,724 $ (18,521) Adjustments: Amortization of acquired intangible assets 11,073 11,007 Restructuring, asset impairment and other charges 437 634 Other income, net of tax (NOTE 1) (4,272) -- --------- --------- Non-GAAP net income (loss) (NOTE 2) $ 52,962 $ (6,880) ========= ========= Non-GAAP net income (loss) per share (NOTE 2) $ 0.97 $ (0.13) ========= ========= Weighted average shares outstanding (NOTE 3) 54,785 51,475 NOTE 1: The GAAP amount represents primarily the collection of a note receivable of $5.0 million which had been written off in 2002. The Non-GAAP adjustment is net of applicable income taxes. NOTE 2: 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, net of applicable income taxes. NOTE 3: Due to the net loss for the nine months ended September 30, 2003, net loss per share is based on the basic number of weighted average shares outstanding. For the nine months ended September 30, 2004, the Company reported net income and therefore, used the diluted weighted average shares outstanding.
MKS INSTRUMENTS, INC. UNAUDITED CONSOLIDATED BALANCE SHEET (IN THOUSANDS) September 30, December 31, 2004 2003 -------- -------- ASSETS Cash and short-term investments $206,583 $129,178 Trade accounts receivable 85,333 65,454 Inventories 104,337 82,013 Other current assets 11,106 5,631 -------- -------- Total current assets 407,359 282,276 Property, plant and equipment, net 79,903 76,121 Long-term investments 10,469 13,625 Goodwill 259,784 259,924 Other acquired intangible assets 45,085 56,192 Other assets 3,751 4,724 -------- -------- Total assets $806,351 $692,862 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Short-term debt $ 23,004 $ 20,196 Accounts payable 25,673 25,302 Other accrued expenses 54,133 26,310 -------- -------- Total current liabilities 102,810 71,808 Long-term debt 7,111 8,924 Other long-term liabilities 4,458 3,820 Stockholders' equity: Common stock 113 113 Additional paid-in capital 624,411 587,910 Retained earnings 57,962 12,238 Other stockholders' equity 9,486 8,049 -------- -------- Total stockholders' equity 691,972 608,310 -------- -------- Total liabilities and stockholders' equity $806,351 $692,862 ======== ========