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): February 10, 2005 MKS Instruments, Inc. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Massachusetts 0-23621 04-2277512 - ------------------------------------------------------------------------------------------- (State or other jurisdiction of (Commission (IRS Employer incorporation) File Number) Identification No.) 90 Industrial Way, Wilmington, Massachusetts 01887 - ------------------------------------------------------------------------------------------- (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 February 10, 2005, MKS Instruments, Inc. announced its financial results for the quarter and year ended December 31, 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: February 10, 2005 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 February 10, 2005
EXHIBIT 99.1 FOR IMMEDIATE RELEASE Contact: Ron Weigner Vice President and Chief Financial Officer 978.284.4446 MKS INSTRUMENTS REPORTS FOURTH QUARTER AND YEAR 2004 RESULTS Wilmington, Mass. -- February 10, 2005 -- 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 fourth quarter and full year 2004 financial results. Fourth quarter net sales were $130.9 million, up 29 percent from $101.8 million in the fourth quarter of 2003 and down 6 percent from $139.7 million in the third quarter of 2004. Fourth quarter 2004 GAAP net earnings were $24.1 million, or $0.44 per diluted share, which included a non-cash adjustment of $16.7 million, or $0.31 per share, to reverse a previously established valuation allowance against net deferred tax assets. Excluding this adjustment, net earnings were $7.4 million, or $0.14 per diluted share, compared to GAAP net earnings of $2.1 million, or $0.04 per diluted share, for the fourth quarter of 2003 and $12.2 million, or $0.22 per diluted share, for the third quarter of 2004. Non-GAAP net earnings, which exclude amortization of acquired intangible assets and special items, were $11.1 million, or $0.20 per diluted share, for the fourth quarter of 2004, compared to $5.9 million, or $0.11 per diluted share, for the fourth quarter of 2003 and $15.8 million, or $0.29 per diluted share, for the third quarter of 2004. For the calendar year 2004, net sales increased by 65 percent to $555.1 million from $337.3 million for the calendar year 2003. GAAP net earnings were $69.8 million, or $1.28 per diluted share, on 54.7 million weighted average shares outstanding in 2004, compared to a net loss of $16.4 million, or $0.32 per basic share, on 51.6 million weighted average shares outstanding in 2003. Non-GAAP net earnings were $62.9 million, or $1.15 per diluted share, in 2004 compared to a loss of $1.0 million, or $0.02 per basic share, in 2003.
John Bertucci, Chairman and Chief Executive Officer, said, "A slowdown in semiconductor capital spending began in the second half of 2004. Our fourth quarter sales to semiconductor OEMs decreased by 9 percent sequentially, while sales to other, non-semiconductor markets increased by 11 percent. "Our visibility is limited because of our short lead times, making it difficult to estimate business levels beyond the current quarter. Based on current customer order patterns, we estimate that first quarter 2005 sales could range from $115 to $125 million, or a sequential decrease of 5 to 12 percent. GAAP net earnings could range from $0.02 to $0.08 per diluted share, and non-GAAP net earnings, which exclude amortization of acquired intangible assets of approximately $3.7 million, could range from $0.06 to $0.12 per diluted share. We will continue to look closely at order levels and manage the business to increase profitability at all sales levels. At the same time, we will continue to invest in R&D for products that enhance the performance and productivity of process tools. "It is clear that world-class device manufacturers are not delaying strategic projects that provide competitive advantage, as shown by recent announcements for higher capital spending at the leading edge in 2005. We believe that an increasing percent of the capital spending dollar will be invested in process control, as fabs strive to improve uptime, yield, and throughput. We are well positioned to address these requirements. While near-term challenges may continue in the semiconductor capital equipment market, we see good momentum in many of our process control products targeted at this growing opportunity." 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 fourth quarter financial results on a conference call today at 5:00 p.m. (Eastern Time). A live web cast and replay of the conference call will be
available at www.mksinstruments.com in the "Investors" section. To hear a telephone replay through February 17, 2005, dial 303-590-3000, pass code 11021310#. 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 CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS) Three Months Ended ------------------ December 31, December 31, September 30, 2004 2003 2004 --------- --------- --------- Net sales $ 130,859 $ 101,778 $ 139,651 Cost of sales 82,716 64,242 84,045 --------- --------- --------- Gross profit 48,143 37,536 55,606 Research and development 13,816 12,931 14,201 Selling, general and administrative 21,500 17,523 22,971 Amortization of acquired intangible assets 3,691 3,685 3,689 Restructuring, asset impairment and other charges -- 959 -- --------- --------- --------- Income from operations 9,136 2,438 14,745 Interest income, net 873 271 442 Other income (NOTE 1) -- 927 -- --------- --------- --------- Income before income taxes 10,009 3,636 15,187 Provision (benefit) for income taxes (NOTE 2) (14,106) 1,500 3,037 --------- --------- --------- Net income $ 24,115 $ 2,136 $ 12,150 ========= ========= ========= Net income per share: Basic $ 0.45 $ 0.04 $ 0.23 Diluted $ 0.44 $ 0.04 $ 0.22 Weighted average shares outstanding: Basic 53,680 51,899 53,602 Diluted 54,272 54,006 54,302 THE FOLLOWING SUPPLEMENTAL NON-GAAP EARNINGS INFORMATION IS PRESENTED TO AID IN UNDERSTANDING THE MKS OPERATING RESULTS: GAAP net Income $ 24,115 $ 2,136 $ 12,150 Adjustments: Benefit for income taxes (NOTE 2) (16,729) -- -- Amortization of acquired intangible assets 3,691 3,685 3,689 Restructuring, asset impairment and other charges -- 959 -- Gain from insurance repayment (NOTE 1) -- (927) -- --------- --------- --------- Non-GAAP net income (NOTE 3) $ 11,077 $ 5,853 $ 15,839 ========= ========= ========= Non-GAAP net income per share (NOTE 3) $ 0.20 $ 0.11 $ 0.29 ========= ========= ========= Weighted average shares outstanding - diluted 54,272 54,006 54,302 NOTE 1: For the three months ended December 31, 2003, the Company recorded a gain of $927 from the early repayment of premiums related to a split dollar life insurance policy covering the Chairman and CEO of the Company. NOTE 2: The three month period ended December 31, 2004 includes a benefit of $16,729 for the reversal of the previously established valuation allowance against net deferred tax assets. NOTE 3: The Non-GAAP net income and non-GAAP net income 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 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE DATA) Year ended December 31, ------------ 2004 2003 --------- --------- Net sales $ 555,080 $ 337,291 Cost of sales 335,709 219,182 --------- --------- Gross profit 219,371 118,109 Research and development 56,973 47,650 Selling, general and administrative 87,284 69,891 Amortization of acquired intangible assets 14,764 14,692 Restructuring, asset impairment and other charges 437 1,593 --------- --------- Income (loss) from operations 59,913 (15,717) Interest income, net 1,913 1,056 Other income (NOTE 1, 2) 5,402 927 --------- --------- Income (loss) before income taxes 67,228 (13,734) Provision (benefit) for income taxes (NOTE 3) (2,611) 2,651 --------- --------- Net income (loss) $ 69,839 $ (16,385) ========= ========= Net income (loss) per share: Basic $ 1.30 $ (0.32) Diluted $ 1.28 $ (0.32) Weighted average shares outstanding: Basic 53,519 51,581 Diluted 54,656 51,581 THE FOLLOWING SUPPLEMENTAL NON-GAAP EARNINGS INFORMATION IS PRESENTED TO AID IN UNDERSTANDING THE MKS OPERATING RESULTS: GAAP Net income (loss) $ 69,839 $ (16,385) Adjustments: Benefit for income taxes (NOTE 3) (16,729) -- Amortization of acquired intangible assets 14,764 14,692 Restructuring, asset impairment and other charges 437 1,593 Gain from insurance repayment (NOTE 1) -- (927) Other income (NOTE 2) (5,402) -- --------- --------- Non-GAAP net income (loss) (NOTE 4) $ 62,909 $ (1,027) ========= ========= Non-GAAP net income (loss) per share (NOTE 4, 5) $ 1.15 $ (0.02) ========= ========= Weighted average shares outstanding - diluted (NOTE 5) 54,656 51,581 NOTE 1: The Company recorded a gain of $927 during 2003 from the early repayment of premiums related to a split dollar life insurance policy covering the Chairman and CEO of the Company. NOTE 2: The GAAP amount for 2004 represents primarily the collection of a note receivable of $5.0 million which had been written off in 2002. NOTE 3: The year ended December 31, 2004 includes a benefit of $16,729 for the reversal of the previously established valuation allowance against net deferred tax assets. NOTE 4: 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. NOTE 5: Due to the net loss for the year ended December 31, 2003, net loss per share is based on the basic number of weighted average shares outstanding. For the year ended December 31, 2004, the Company reported net income and, therefore, used the diluted weighted average shares outstanding.
MKS INSTRUMENTS, INC. UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS) December 31, 2004 2003 -------- -------- ASSETS Cash and short-term investments $235,900 $129,178 Trade accounts receivable 83,942 65,454 Inventories 99,633 82,013 Other current assets 22,037 5,631 -------- -------- Total current assets 441,512 282,276 Property, plant and equipment, net 80,917 76,121 Long-term investments 4,775 13,625 Goodwill 255,740 259,924 Other acquired intangible assets 41,604 56,192 Other assets 3,572 4,724 -------- -------- Total assets $828,120 $692,862 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Short-term debt $ 24,509 $ 20,196 Accounts payable 23,338 25,302 Accrued expenses and other liabilities 45,965 26,310 -------- -------- Total current liabilities 93,812 71,808 Long-term debt 6,667 8,924 Other long-term liabilities 6,147 3,820 Stockholders' equity: Common stock 113 113 Additional paid-in capital 630,736 587,910 Retained earnings 82,077 12,238 Other stockholders' equity 8,568 8,049 -------- -------- Total stockholders' equity 721,494 608,310 -------- -------- Total liabilities and stockholders' equity $828,120 $692,862 ======== ========