MKS Instruments Reports Record Sales and Record Earnings in Q2 2010

ANDOVER, Mass., July 21 — (PRNewswire) — MKS Instruments, Inc. (Nasdaq: MKSI), a global provider of technologies that enable advanced processes and improve productivity, today reports second quarter 2010 financial results.

Sales were $220.6 million, an increase of 15 percent from $192.2 million in the first quarter of 2010, and an increase of 192 percent from $75.6 million in the second quarter of 2009.    

Non-GAAP net earnings, which exclude special items, were $33.4 million, or $0.66 per diluted share, compared to $28.9 million, or $0.57 per diluted share in the first quarter of 2010, and a net loss of $4.2 million, or ($0.08) per basic share in the second quarter of 2009.

GAAP net income was $38.8 million, or $0.76 per diluted share, compared to net income of $29.2 million, or $0.58 per diluted share in the first quarter of 2010, and a net loss of $207.1 million, or ($4.20) per basic share in the second quarter of 2009.  Included in the GAAP results are the effect of our decision to divest two small product lines in the second quarter of 2010 which are shown as discontinued operations.

Leo Berlinghieri, Chief Executive Officer and President, said, "We achieved record revenue and Non-GAAP net earnings for the second quarter, with revenue increasing an additional 15% sequentially to $221 million and nearly 200% from a year ago.  

"We continue to gain share and achieve critical design wins in SEMI.  We are also continuing to successfully execute our strategy of diversification into other advanced and growing markets, which achieved a new quarterly sales record in this quarter.  As a result of our efforts in all of the markets we serve, coupled with our ability to ramp production levels quickly, our sales in the first half of 2010 have already surpassed sales volumes for all of 2009.

"Over the last four quarters, the semiconductor industry has experienced phenomenal growth and our sales to other advanced markets continued to exceed our expectations.  Based upon industry projections and current business levels, we estimate that our third quarter sales may range from $210 to $230 million, and at these volumes, our Non-GAAP net earnings could range from $0.58 to $0.71 per share."

Management will discuss second quarter financial results on a conference call today at 4:30 p.m. (eastern time). Dial-in numbers are (800) 762-8779 for domestic callers and (480) 629-9771 for international callers. The call will be broadcast live and available for replay at www.mksinst.com . To hear a telephone replay through July 28, 2010, dial (303) 590-3030, pass code 4317832#.

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.

MKS Instruments, Inc. is a leading, global provider of technologies to power, control, deliver, monitor, measure and analyze advanced processes in high growth applications. Our primary served markets are manufacturers of capital equipment for thin film applications including semiconductor devices, flat panel displays, light emitting diodes (LEDs), solar cells, data storage media and coatings, as well as medical equipment; energy generation and environmental monitoring processes; biopharm and other industrial manufacturing; and university, government and industrial research laboratories.

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


June 30,


June 30,


March 31,


2010


2009


2010







Net sales

$           220,647


$               75,623


$          192,166

Cost of sales

123,328


51,373


106,671

Gross profit

97,319


24,250


85,495







Research and development

16,154


11,514


15,675

Selling, general and administrative

30,902


24,620


27,812

Amortization of acquired intangible assets

314


690


469

Gain on sale of asset

-


-


(682)

Goodwill and asset impairment charges

-


142,958


-

Restructuring

-


15


-

Income (loss) from operations

49,949


(155,547)


42,221







Interest income, net

254


213


325







Income (loss) from continuing operations before income taxes

50,203


(155,334)


42,546

Provision (benefit) for income taxes

17,059


(8,986)


13,548

Income (loss) from continuing operations

33,144


(146,348)


28,998

Income (loss) from discontinued operations, net of taxes

5,633


(60,786)


227

Net income (loss)

$             38,777


$           (207,134)


$            29,225







Basic income (loss) per share:






 Continuing operations

$                 0.66


$                 (2.97)


$                0.58

 Discontinued operations

0.11


(1.23)


0.01

 Net income (loss)

$                 0.77


$                 (4.20)


$                0.59







Diluted income (loss) per share:






 Continuing operations

$                 0.65


$                 (2.97)


$                0.57

 Discontinued operations

0.11


(1.23)


0.01

 Net income (loss)

$                 0.76


$                 (4.20)


$                0.58







Weighted average shares outstanding:






 Basic

50,067


49,307


49,601

 Diluted

50,870


49,307


50,600







The following supplemental Non-GAAP earnings information is presented






to aid in understanding MKS' operating results:












Income (loss) from continuing operations

$             33,144


$           (146,348)


$            28,998







Adjustments (net of tax, if applicable):






 Amortization of acquired intangible assets

314


690


469

 Gain on sale of asset (Note 1)

-


-


(682)

 Goodwill and asset impairment charges (Note 2)

-


142,958


-

 Restructuring and related items (Note 3)

-


15


-

 Proforma tax adjustments

(90)


(1,562)


108







Non-GAAP net earnings (Note 4)

$             33,368


$               (4,247)


$            28,893







Non-GAAP net earnings per share (Note 4)

$                 0.66


$                 (0.08)


$                0.57

Weighted average shares outstanding

50,870


49,307


50,600













Note 1 : The three month period ended March 31, 2010 includes a $682 gain on the sale of a vacated facility.


Note 2 : The three month period ended June 30, 2009 includes a $142,958 charge related to the impairment of goodwill and
other long-lived assets.


Note 3: The three month period ended June 30, 2009 includes $15 of restructuring charges primarily for severance related
costs.


Note 4 : The Non-GAAP net earnings (loss) and Non-GAAP net earnings (loss) 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)










Six Months Ended


June 30,






2010


2009





Net sales

$ 412,813


$  147,888

Cost of sales

229,999


115,120

Gross profit

182,814


32,768





Research and development

31,829


25,963

Selling, general and administrative

58,714


51,273

Amortization of acquired intangible assets

783


1,381

Gain on sale of asset

(682)


-

Goodwill and asset impairment charges

-


142,958

Restructuring

-


5,393

Income (loss) from operations

92,170


(194,200)





Interest income, net

579


1,222





Income (loss) from continuing operations before income taxes

92,749


(192,978)

Provision (benefit) for income taxes

30,607


(31,657)

Income (loss) from continuing operations

62,142


(161,321)

Income (loss) from discontinued operations, net of taxes

5,860


(62,312)

Net income (loss)

$   68,002


$ (223,633)





Basic income (loss) per share:




 Continuing operations

$       1.24


$       (3.28)

 Discontinued operations

0.12


(1.27)

 Net income (loss)

$       1.36


$       (4.55)





Diluted income (loss) per share:




 Continuing operations

$       1.22


$       (3.28)

 Discontinued operations

0.12


(1.27)

 Net income (loss)

$       1.34


$       (4.55)





Weighted average shares outstanding:




 Basic

49,834


49,151

 Diluted

50,735


49,151





The following supplemental Non-GAAP earnings information is presented




to aid in understanding MKS' operating results:








Income (loss) from continuing operations

$   62,142


$ (161,321)





Adjustments (net of tax, if applicable):




 Amortization of acquired intangible assets

783


1,381

 Excess & obsolete inventory adjustment (Note 1)

-


12,900

 Gain on sale of asset (Note 2)

(682)


-

 Goodwill and asset impairment charges (Note 3)

-


142,958

 Restructuring and related items (Note 4)

-


4,144

 (Benefit) for income taxes (Note 5)

-


(6,370)

 Proforma tax adjustments

18


(8,175)





Non-GAAP net earnings (Note 6)

$   62,261


$   (14,483)





Non-GAAP net earnings per share (Note 6)

$       1.23


$       (0.29)

Weighted average shares outstanding

50,735


49,151









Note 1: Cost of sales for the six month period ended June 30, 2009 includes $12,900 of special charges for
excess, obsolete and committed inventory purchases.



Note 2 : The six month period ended June 30, 2010 includes a $682 gain on the sale of a vacated facility.


Note 3 : The six month period ended June 30, 2009 includes a $142,958 charge related to the impairment of
goodwill and other long-lived assets.



Note 4: The six month period ended June 30, 2009 includes $5,393 of restructuring charges primarily for
severance related costs offset by a credit of $1,249 for the reversal of previously expensed equity
compensation charges of terminated employees.



Note 5: The six month period ended June 30, 2009 includes a benefit of $6,370 attributable to the reversal of
FIN 48 reserve items as a result of a Federal audit close.



Note 6 : The Non-GAAP net earnings (loss) and Non-GAAP net earnings (loss) 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)























June 30,


December 31,



2010


2009






ASSETS










Cash and short-term investments

$ 323,414


$      271,795

Trade accounts receivable

149,863


94,215

Inventories


137,305


118,004

Other current assets

55,081


48,867


Total current assets

665,663


532,881






Property, plant and equipment, net

65,568


67,196

Goodwill


138,850


144,511

Other acquired intangible assets

2,243


4,963

Other assets

10,735


24,518






Total assets


$ 883,059


$      774,069











LIABILITIES AND STOCKHOLDERS' EQUITY









Short-term debt

$   12,986


$        12,885

Accounts payable

38,902


26,292

Accrued expenses and other liabilities

56,257


32,123


Total current liabilities

108,145


71,300






Other long-term liabilities

21,071


17,836






Stockholders' equity:




Common stock

113


113

Additional paid-in capital

652,004


645,411

Retained earnings

96,771


28,769

Other stockholders' equity

4,955


10,640


Total stockholders' equity

753,843


684,933






Total liabilities and stockholders' equity

$ 883,059


$      774,069




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