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8-K - LIVE FILING - MKS INSTRUMENTS INChtm_42367.htm

(MKS LOGO)

EXHIBIT 99.1

Contact: Seth H. Bagshaw
Vice President, Chief Financial Officer & Treasurer
Telephone: 978.645.5578

MKS Instruments Reports Q2 2011 Financial Results
Record Non-GAAP net earnings of $38.8 million; up 16% from Q2 of 2010

Andover, Mass., July 20, 2011 — MKS Instruments, Inc. (NASDAQ: MKSI), a global provider of technologies that enable advanced processes and improve productivity; today reports second quarter 2011 financial results.

Second Quarter Financial Results

Sales were $224.5 million, up 2% from $220.6 million in the second quarter of 2010 and down 3% from a record $231.9 million in the first quarter of 2011.

Second quarter net income was $38.6 million, or $0.73 per diluted share, compared to net income of $38.8 million, or $0.76 per diluted share, in the second quarter of 2010 and $38.0 million, or $0.73 per diluted share, in the first quarter of 2011.

Record Non-GAAP net earnings were $38.8 million, or $0.73 per diluted share, compared to $33.4 million, or $0.66 per diluted share, in the second quarter of 2010 and $38.2 million, or $0.73 per diluted share, in the first quarter of 2011.

Also in the second quarter, the board of directors authorized a quarterly cash dividend of $0.15 per share which was paid on June 17th. Cash and investments, net of short-term borrowings, were $500.9 million at the end of the quarter, while stockholders’ equity, net of intangible assets and goodwill, was $807.7 million at quarter end.

Leo Berlinghieri, Chief Executive Officer and President, said, “We are pleased to report another strong quarter for MKS, with continued strength in the semiconductor market being somewhat offset by a decline in solar business following our record shipments in Q1. Our operating leverage further improved with favorable product mix coupled with effective cost controls. After a robust first half of the year, we are seeing some softening in the semiconductor market as the record shipments of the last few quarters are assimilated and brought on line. We expect that the solar market will remain slightly depressed in the third quarter, but we anticipate that sales to our other markets should continue to remain strong. Based upon these patterns and general business outlook, we estimate that our third quarter sales may range from $180 to $210 million and at this volume, our non-GAAP net earnings could range from $0.40 to $0.60 per share.”

Conference Call Details

A conference call with management will be held on Thursday, July 21, 2011 at 8:30 a.m. (Eastern Time). To participate in the conference call, please dial (877) 666-7169 for domestic callers and (817) 382-5829 for international callers, and an operator will connect you. Participants will need to provide the operator with the Conference ID of 82212141, 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. Following the webcast, a telephone replay will be available for 7 days. To access the replay, please dial (800) 642-1687 or (706) 645-9291 which will require the conference ID noted above.

Use of Non-GAAP Financial Results

Non-GAAP net earnings and Non-GAAP net earnings per share amounts which exclude discontinued operations, amortization of acquired intangible assets, costs associated with acquisitions and disposition related charges, 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, which exclude discontinued operations, amortization of acquired intangible assets, costs associated with acquisitions and disposition related charges, 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, 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.

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MKS Instruments, Inc.
Unaudited Consolidated Statements of Operations
(In thousands, except per share data)

                         
    Three Months Ended (Note 1)
    June 30, 2011   June 30, 2010   March 31, 2011
Net revenues
  $ 224,487     $ 220,647     $ 231,851  
Cost of revenues
    119,499       123,328       125,490  
 
                       
Gross profit
    104,988       97,319       106,361  
Research and development
    15,582       16,154       16,896  
Selling, general and administrative
    31,851       30,902       32,707  
Amortization of intangible assets
    250       314       250  
 
                       
Income from operations
    57,305       49,949       56,508  
Interest income, net
    309       254       271  
 
                       
Income from continuing operations before income taxes
    57,614       50,203       56,779  
Provision for income taxes
    19,013       17,059       18,736  
 
                       
Income from continuing operations
    38,601       33,144       38,043  
Income from discontinued operations, net of taxes
          5,633        
 
                       
Net income
  $ 38,601     $ 38,777     $ 38,043  
 
                       
Basic income per share:
                       
Continuing operations
  $ 0.74     $ 0.66     $ 0.74  
Discontinued operations
          0.11        
 
                       
Net income
  $ 0.74     $ 0.77     $ 0.74  
Diluted income per share:
                       
Continuing operations
  $ 0.73     $ 0.65     $ 0.73  
Discontinued operations
          0.11        
 
                       
Net income
  $ 0.73     $ 0.76     $ 0.73  
Cash dividends per common share
  $ 0.15     $     $ 0.15  
Weighted average shares outstanding:
                       
Basic
    52,346       50,067       51,407  
Diluted
    52,906       50,870       52,386  
The following supplemental Non-GAAP earnings information is presented to aid in understanding MKS’ operating results:
                       
Income from continuing operations
  $ 38,601     $ 33,144     $ 38,043  
Adjustments (net of tax, if applicable):
                       
Amortization of acquired intangible assets
    250       314       250  
Proforma tax adjustments
    (65 )     (90 )     (65 )
 
                       
Non-GAAP net earnings (Note 2)
  $ 38,786     $ 33,368     $ 38,228  
 
                       
Non-GAAP net earnings per share (Note 2)
  $ 0.73     $ 0.66     $ 0.73  
 
                       
Weighted average shares outstanding
    52,906       50,870       52,386  

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 all periods presented.

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, net of applicable income taxes.

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MKS Instruments, Inc.
Unaudited Consolidated Statements of Operations
(In thousands, except per share data)

                 
    Six Months Ended
    June 30, (Note 1)
    2011   2010
Net revenues
  $ 456,338     $ 412,813  
Cost of revenues
    244,989       229,999  
 
               
Gross profit
    211,349       182,814  
Research and development
    32,478       31,829  
Selling, general and administrative
    64,558       58,714  
Amortization of intangible assets
    500       783  
Gain on sale of asset
          (682 )
 
               
Income from operations
    113,813       92,170  
Interest income, net
    580       579  
 
               
Income from continuing operations before income taxes
    114,393       92,749  
Provision for income taxes
    37,749       30,607  
 
               
Income from continuing operations
    76,644       62,142  
Income from discontinued operations, net of taxes
          5,860  
 
               
Net income
  $ 76,644     $ 68,002  
 
               
Basic income per share:
               
Continuing operations
  $ 1.48     $ 1.24  
Discontinued operations
          0.12  
 
               
Net income
  $ 1.48     $ 1.36  
Diluted income per share:
               
Continuing operations
  $ 1.46     $ 1.22  
Discontinued operations
          0.12  
 
               
Net income
  $ 1.46     $ 1.34  
Cash dividends per common share
  $ 0.30     $  
Weighted average shares outstanding:
               
Basic
    51,877       49,834  
Diluted
    52,646       50,735  
The following supplemental Non-GAAP earnings information is presented to aid in understanding MKS’ operating results:
               
Income from continuing operations
  $ 76,644     $ 62,142  
Adjustments (net of tax, if applicable):
               
Amortization of acquired intangible assets
    500       783  
Gain on sale of asset (Note 2)
          (682 )
Proforma tax adjustments
    (130 )     18  
 
               
Non-GAAP net earnings (Note 3)
  $ 77,014     $ 62,261  
 
               
Non-GAAP net earnings per share (Note 3)
  $ 1.46     $ 1.23  
 
               
Weighted average shares outstanding
    52,646       50,735  

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 all periods presented.

Note 2: The six month period ended June 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, net of applicable income taxes.

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MKS Instruments, Inc.
Unaudited Consolidated Balance Sheet
(In thousands)

                 
    June 30, 2011   December 31, 2010
ASSETS
               
Cash and short-term investments
  $ 496,287     $ 431,933  
Trade accounts receivable, net
    150,980       138,181  
Inventories
    164,450       156,429  
Other current assets
    37,992       26,352  
 
               
Total current assets
    849,709       752,895  
Property, plant and equipment, net
    69,653       68,976  
Goodwill
    140,020       140,020  
Intangible assets, net
    1,243       1,743  
Long-term marketable securities
    5,277        
Other assets
    14,713       18,779  
 
               
Total assets
  $ 1,080,615     $ 982,413  
 
               
LIABILITIES AND STOCKHOLDERS’ EQUITY
               
Short-term borrowings
  $ 619     $  
Accounts payable
    33,754       36,427  
Accrued expenses and other liabilities
    67,610       73,259  
 
               
Total current liabilities
    101,983       109,686  
Other liabilities
    29,666       25,688  
Stockholders’ equity:
               
Common stock
    113       113  
Additional paid-in capital
    699,458       663,792  
Retained earnings
    232,372       171,356  
Other stockholders’ equity
    17,023       11,778  
 
               
Total stockholders’ equity
    948,966       847,039  
 
               
Total liabilities and stockholders’ equity
  $ 1,080,615     $ 982,413  
 
               

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