MKS Instruments Reports Fourth Quarter and Full Year 2009 Financial Results
Q4 Sales up 41% Sequentially
ANDOVER, Mass., Feb. 3 /PRNewswire-FirstCall/ -- MKS Instruments, Inc. (Nasdaq: MKSI), a global provider of technologies that enable advanced processes and improve productivity, reports fourth quarter and full year 2009 financial results.
Fourth Quarter Financial Results
Sales were $149.3 million, up 41 percent from $106.3 million in the third quarter of 2009 and up 19 percent from $125.2 million in the fourth quarter of 2008.
Fourth quarter net income was $14.9 million, or $0.30 per diluted share, compared to net losses of $4.0 million, or ($0.08) per basic share, in the third quarter of 2009 and $6.3 million, or ($0.13) per basic share, in the fourth quarter of 2008.
Non-GAAP net earnings, which exclude special charges, were $15.5 million, or $0.31 per diluted share, compared to $1.6 million, or $0.03 per diluted share, in the third quarter of 2009 and $0.1 million, or breakeven in the fourth quarter of 2008.
Full Year Results
Net sales were $411.4 million, down 36 percent compared to $647.0 million in 2008. The net loss was $212.7 million, or ($4.31) per basic share, compared to net income of $30.1 million, or $0.59 per diluted share, in 2008. Non-GAAP net loss was $2.6 million, or ($0.05) per basic share, compared to net earnings of $41.4 million, or $0.82 per diluted share in 2008.
Leo Berlinghieri, Chief Executive Officer and President, said, "In the fourth quarter we saw further acceleration in our core semiconductor business and we are seeing signs of improvement in the general market as well. Forecasters are predicting that the global economy is recovering and they are optimistic about a strong 2010.
"After enjoying a very positive uptick in sales in the past two quarters, we expect to see continued growth in the semiconductor market in 2010. We also expect that the improvement in the global economy, combined with our market diversification, will result in increased sales to our non semiconductor markets, fueling additional growth in 2010. Based on these factors and current customer activity, we anticipate that business in the first quarter of 2010 will continue to improve. We estimate that our first quarter sales may range from $170 to $190 million and at these volumes, our non-GAAP net earnings could range from $0.36 to $0.49 per share, and our GAAP net income could range from $0.35 to $0.48 per share."
Management will discuss fourth quarter and full year financial results on a conference call tomorrow at 8:30 a.m. (Eastern Time). Dial-in numbers are 1-877-941-9205 for domestic callers and 1-480-629-9835 for international callers. The call will be broadcast live and available for replay at www.mksinstruments.com. To hear a telephone replay through February 11, 2010, dial 1-303-590-3030, access code 4203019#.
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 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, electrostatic charge management, 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, 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.
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
------------------
December 31, December 31, September 30,
2009 2008 2009
---- ---- ----
Net sales $149,270 $125,180 $106,262
Cost of sales 86,536 80,571 66,783
------ ------ ------
Gross profit 62,734 44,609 39,479
Research and development 13,681 19,277 12,114
Selling, general and
administrative 27,814 30,518 24,385
Amortization of acquired
intangible assets 872 1,949 871
Impairment of intangible assets - 6,069 -
Restructuring (44) - 168
--- --- ---
Income (loss) from operations 20,411 (13,204) 1,941
Interest income, net 156 1,287 263
--- ----- ---
Income (loss) before income
taxes 20,567 (11,917) 2,204
Provision (benefit) for income
taxes 5,620 (5,627) 6,177
----- ------ -----
Net income (loss) $14,947 $(6,290) $(3,973)
======= ======= =======
Net income (loss) per share:
Basic $0.30 $(0.13) $(0.08)
Diluted $0.30 $(0.13) $(0.08)
Weighted average shares
outstanding:
Basic 49,509 48,712 49,461
Diluted 50,459 48,712 49,461
The following supplemental Non-GAAP
earnings information is presented
to aid in understanding MKS'
operating results:
GAAP net income (loss) $14,947 $(6,290) $(3,973)
Adjustments (net of tax, if
applicable):
Amortization of acquired
intangible assets 872 1,949 871
Excess & obsolete inventory
adjustment (Note 1) - 5,000 -
Restructuring and related
items (Note 2) (44) - 168
Impairment of intangible
assets (Note 3) - 6,069 -
Expense for income taxes (Note 4) - (1,823) -
Proforma tax adjustments (279) (4,855) 4,497
---- ------ -----
Non-GAAP net earnings (Note 5) $15,496 $50 $1,563
======= === ======
Non-GAAP net earnings per share
(Note 5) $0.31 $0.00 $0.03
===== ===== =====
Weighted average shares
outstanding - diluted 50,459 49,680 50,298
Note 1: Cost of Sales for the three month period ended December 31, 2008
includes $5,000 of excessive E&O inventory charges.
Note 2: The three month periods ended December 31, 2009 and September 30,
2009 includes $(44) and $168, respectively, of restructuring charges
(adjustments) primarily for severance related costs.
Note 3: The three month period ended December 31, 2008 includes a $6,069
write-down for the impairment of intangible assets resulting from a lower
forecast for a product for the semiconductor industry.
Note 4: The three month period ended December 31, 2008 includes a benefit
of $1,823 attributable to a discrete tax matter related to the
reinstatement of the U.S. research and development tax credits and other
adjustments.
Note 5: 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)
Twelve Months Ended
December 31,
------------
2009 2008
---- ----
Net sales $411,406 $646,994
Cost of sales 273,316 387,051
------- -------
Gross profit 138,090 259,943
Research and development 53,543 78,540
Selling, general and administrative 106,330 130,800
Amortization of acquired intangible assets 4,407 9,001
Goodwill and asset impairment charges 208,497 6,069
Restructuring 5,812 -
----- ------
Income (loss) from operations (240,499) 35,533
Impairment of investments - (906)
Interest income, net 1,641 6,425
----- -----
Income (loss) before income taxes (238,858) 41,052
Provision (benefit) for income taxes (26,199) 10,935
------- ------
Net income (loss) $(212,659) $30,117
========= =======
Net income (loss) per share:
Basic $(4.31) $0.61
Diluted $(4.31) $0.59
Weighted average shares outstanding:
Basic 49,318 49,717
Diluted 49,318 50,754
The following supplemental Non-GAAP earnings
information is presented to aid in
understanding MKS' operating results:
GAAP net income (loss) $(212,659) $30,117
Adjustments (net of tax, if applicable):
Amortization of acquired intangible assets 4,407 9,001
Excess & obsolete inventory adjustment (Note 1) 12,900 5,000
Restructuring and related items (Note 2) 4,514 -
Goodwill and asset impairment charges (Note 3) 208,497 6,069
Foreign exchange gain from legal entity
restructuring (Note 4) - (2,669)
Expense (benefit) for income taxes (Note 5) (6,370) 400
Proforma tax adjustments (13,897) (6,485)
------- ------
Non-GAAP net earnings (loss) (Note 6) $(2,608) $41,433
======= =======
Non-GAAP net earnings (loss) per share (Note 6) $(0.05) $0.82
Weighted average shares outstanding - diluted 49,318 50,754
Note 1: Cost of Sales for the twelve month periods ended December 31,
2009 and December 31, 2008 includes $12,900 and $5,000, respectively, of
special charges for excess, obsolete and committed inventory purchases.
Note 2: The twelve month period ended December 31, 2009 includes $5,812 of
restructuring charges primarily for severance related costs offset by a
credit of $1,298 for the reversal of previously expensed equity
compensation charges of terminated employees.
Note 3: The twelve month periods ended December 31, 2009 and December 31,
2008 includes $208,497 and $6,069, respectively, of charges related to
the impairment of goodwill, intangible assets and other long-lived assets.
Note 4: Selling, general and administrative expenses for the twelve month
period ended December 31, 2008 includes a foreign exchange gain of $2,669
related to the Company's legal entity restructuring of certain foreign
operations.
Note 5: The twelve month period ended December 31, 2009 includes a benefit
of $6,370 attributable to the reversal of FIN 48 reserve items as a result
of a Federal audit close. The twelve month period ended December 31, 2008
includes a net tax expense for discrete items of $400 attributable to the
booking of a valuation allowance on tax attributes of $3,467 partially
offset by a benefit of $3,067 for discrete items mainly related to the
reversal of FIN 48 reserve items as a result of a statute of limitations
expiration.
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)
December 31, December 31,
2009 2008
---- ----
ASSETS
Cash and short-term investments $271,795 $278,869
Trade accounts receivable 94,215 85,350
Inventories 118,004 131,519
Other current assets 48,867 32,990
------ ------
Total current assets 532,881 528,728
Property, plant and equipment, net 67,196 82,017
Goodwill 144,511 337,765
Other acquired intangible assets 4,963 21,069
Other assets 24,518 15,360
------ ------
Total assets $774,069 $984,939
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Short-term debt $12,991 $18,678
Accounts payable 26,292 19,320
Accrued expenses and other
liabilities 32,017 37,937
------ ------
Total current liabilities 71,300 75,935
Long-term debt 18 396
Other long-term liabilities 17,818 21,910
Stockholders' equity:
Common stock 113 113
Additional paid-in capital 645,411 637,938
Retained earnings 28,769 241,428
Other stockholders' equity 10,640 7,219
------ -----
Total stockholders' equity 684,933 886,698
------- -------
Total liabilities and
stockholders' equity $774,069 $984,939
======== ========
SOURCE MKS Instruments, Inc.
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