MKS INSTRUMENTS INC, S-3, 2000-04-10

MKS INSTRUMENTS INC
S-3, 2000-04-10
INDUSTRIAL INSTRUMENTS FOR MEASUREMENT, DISPLAY, AND CONTROL

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 10, 2000

REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------

MKS INSTRUMENTS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

<TABLE>
<S> <C> <C>
MASSACHUSETTS 3823 04-2277512
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>

SIX SHATTUCK ROAD
ANDOVER, MA 01810
(978) 975-2350
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
JOHN R. BERTUCCI
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
MKS INSTRUMENTS, INC.
SIX SHATTUCK ROAD
ANDOVER, MA 01810
(978) 975-2350
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE
NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE)
------------------------
COPIES TO:

<TABLE>
<S> <C>
MARK G. BORDEN, ESQ. DAVID C. CHAPIN, ESQ.
HALE AND DORR LLP ROPES & GRAY
60 STATE STREET ONE INTERNATIONAL PLACE
BOSTON, MASSACHUSETTS 02109 BOSTON, MASSACHUSETTS 02110
(617) 526-6000 (617) 951-7000
</TABLE>

------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable after the effective date hereof.

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [ ]

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(a), MAY
DETERMINE.
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CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
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PROPOSED
AMOUNT PROPOSED MAXIMUM MAXIMUM
TO BE OFFERING PRICE AGGREGATE AMOUNT OF
TITLE OF SHARES TO BE REGISTERED REGISTERED(1) PER SHARE(2) OFFERING PRICE(1) REGISTRATION FEE
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, no par value per share......... 3,450,000 $49.38 $170,361,000.00 $44,976
- ----------------------------------------------------------------------------------------------------------------------
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</TABLE>

- ---------------
(1) Includes 450,000 shares of common stock issuable upon exercise of the
underwriters' over-allotment option.
(2) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457(c) under the Securities Act and based upon the average of the
high and low prices on the Nasdaq National Market on April 5, 2000.
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<PAGE> 2

THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED
WITHOUT NOTICE. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION
STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS
EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND
WE ARE NOT SOLICITING OFFERS TO BUY THESE SECURITIES IN ANY STATE WHERE
THE OFFER OR SALE IS NOT PERMITTED.

Prospectus (Not Complete)
Issued April 10, 2000
3,000,000 SHARES

[MKS LOGO]

COMMON STOCK
------------------------------

MKS Instruments, Inc. is offering 2,000,000 shares of common stock, and the
selling stockholders are offering an additional 1,000,000 shares of common
stock, in a firmly underwritten offering. We will not receive any of the
proceeds from the sale of shares by the selling stockholders.
------------------------------

Our common stock is traded on the Nasdaq National Market under the symbol
"MKSI." The last reported sale price of our common stock on the Nasdaq National
Market on April 6, 2000 was $51.13 per share.
------------------------------

INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" BEGINNING ON PAGE 7.
------------------------------

<TABLE>
<CAPTION>
PER SHARE TOTAL
--------- -----
<S> <C> <C>
Offering Price.............................................. $ $
Discounts and Commissions to Underwriters................... $ $
Offering Proceeds to MKS.................................... $ $
Offering Proceeds to the Selling Stockholders............... $ $
</TABLE>

Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.

MKS and the selling stockholders have granted the underwriters the right to
purchase up to an additional 450,000 shares of common stock to cover any
over-allotments. The underwriters can exercise this right at any time within
thirty days after the offering. Banc of America Securities LLC expects to
deliver the shares of common stock to investors on , 2000.

BANC OF AMERICA SECURITIES LLC
CIBC WORLD MARKETS
LEHMAN BROTHERS
ADAMS, HARKNESS & HILL, INC.
NEEDHAM & COMPANY, INC.
------------------------------

, 2000
<PAGE> 3

INSIDE FRONT COVER (PG. 2):

This page is produced in four-color process. Amidst a dark background, the
MKS logo appears at the top right of the page, and to the top left is the
phrase "A Wide Range of Products Made Using MKS Process Control Instruments."
Two paragraphs describing the role MKS plays in complex advanced materials
manufacturing processes also appear on this page, and are as follows:

"MKS Surrounds the Process. Technologically complex, gas related manufacturing
processes are used to create such products as semiconductor devices, optical
filters, fiber optic cables, flat panel displays, magnetic and optical storage
media, architectural glass, solar panels and gas lasers. These processes build
up very thin layers of materials, step by step, through the interaction of
specific gases and materials inside tightly controlled process chambers.
Maintaining control of these complex steps throughout the entire manufacturing
process is critical to maximizing uptime, yield and throughput. MKS's process
control instruments, components and integrated subsystems surround many gas
related processes - managing the flow rates of gases entering and exiting the
process chamber; controlling the gas composition and pressure inside the
chamber; analyzing and monitoring the composition of the gases; and isolating
the gases from the outside environment."

In the center of the page is a photo montage, displaying images of
semiconductor devices, flat panel displays, fiber optic cables, solar panels,
magnetic and optical storage media and gas lasers. Each of these images has a
text label adjacent to it.

(Headings for images)

"Semiconductor Devices

Flat Panel Displays

Optical Filters and Fibers

Solar Panels

Magnetic and Optical Storage Media

Gas Lasers"

"MKS, MKS Instruments, Baratron, Mass-Flo, HPS and ORION are trademarks of MKS.
This prospectus contains trademarks, service marks and trade names of companies
and organizations other than MKS."

INSIDE SPREAD (PGS. 3 AND 4):

These pages are produced in four-color process. The main focus of the spread is
the illustration of a typical process chamber, with numerous MKS products
surrounding the chamber. At the top of the illustration, centered across the
two pages, is the title "MKS Instruments...Surrounding the Process." Each
product is described in a brief paragraph, and the paragraphs appear on both
sides of the illustration--left and right columns. The paragraphs are as
follows:

DIRECT LIQUID INJECTION SUBSYSTEMS
For use in the delivery of a wide variety of new materials to the process
chamber that cannot be delivered using conventional thermal-based mass flow
controllers.

AUTOMATIC PRESSURE CONTROLLERS WITH INTEGRATED BARATRON(R) PRESSURE TRANSDUCERS
A compact, integrated measurement and control package for use in controlling
upstream or downstream process chamber pressure.

ULTRA-CLEAN MASS FLOW CONTROLLERS
For the precise measurement and control of mass flow rates of inert or
corrosive gases and vapors into the process chamber.

ULTRA-CLEAN MINI-BARATRON(R) PRESSURE TRANSDUCERS
For use in gas cabinets to feed ultra-pure gases to critical process systems.

PRESSURE CONTROL VALVES
To precisely control the flow of gases to a process chamber in wide range of
flow rates.

GAS BOX RATE OF RISE CALIBRATORS
For fast verification of mass flow controller accuracy and repeatability during
a process.

DIGITAL COLD CATHODE IONIZATION AND CONVECTION VACUUM GAUGES
A variety of indirect pressure gauges for measuring very low chamber pressures
and conveying information digitally to host computers.

ORION(R) PROCESS MONITORS AND RESIDUAL GAS ANALYZERS
For the analysis of the composition of background and process gases inside the
process chamber.

PRESSURE SWITCHES
Provide protection of vacuum equipment and processes by signaling when
atmospheric pressure has been achieved.

BARATRON(R) PRESSURE MEASURING INSTRUMENTS
For the accurate measurement and control of a wide range of process pressures.

IN-SITU DIAGNOSTICS ACCESS VALVE
Enables accurate calibration and diagnostics of vacuum gauges and pressure
transducers while directly mounted on the process chamber.

EXHAUST THROTTLE VALVES AND AUTOMATIC PRESSURE CONTROLLERS
For isolation and downstream control of process chamber pressures and pressure
control within the exhaust systems.

HIGH VACUUM VALVES
To isolate the process chamber from both the pumps and atmospheric gases.

HEATED PUMPING LINES
To reduce contaminants in the vacuum pump and pump exhaust stream.

VAPOR SUBLIMATION TRAP
to collect by-products and particulates that could otherwise contaminate
devices in the process chamber and damage vacuum pumps.

Prices of products shown above range from $200 to $80,000.

The above graphic depicts a generalized process chamber with a number of MKS's
manufactured products shown.

<PAGE> 4

YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. WE
HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION DIFFERENT FROM THAT
CONTAINED IN THIS PROSPECTUS. WE ARE OFFERING TO SELL, AND SEEKING OFFERS TO
BUY, SHARES OF COMMON STOCK ONLY IN JURISDICTIONS WHERE OFFERS AND SALES ARE
PERMITTED. THE INFORMATION CONTAINED IN THIS PROSPECTUS IS ACCURATE ONLY AS OF
THE DATE OF THIS PROSPECTUS, REGARDLESS OF THE TIME OF DELIVERY OF THIS
PROSPECTUS OR OF ANY SALE OF OUR COMMON STOCK. THE INFORMATION IN OUR INTERNET
WEBSITE IS NOT INCORPORATED BY REFERENCE INTO THIS PROSPECTUS. IN THIS
PROSPECTUS, "MKS," "WE," "US" AND "OUR" REFER TO MKS INSTRUMENTS, INC. (UNLESS
THE CONTEXT OTHERWISE REQUIRES).

TABLE OF CONTENTS

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PAGE
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<S> <C>
Prospectus Summary.......................................... 4
Risk Factors................................................ 7
Special Note Regarding Forward-Looking Information.......... 12
Use of Proceeds............................................. 13
Price Range of Our Common Stock............................. 14
Dividend Policy............................................. 14
Capitalization.............................................. 15
Selected Consolidated Financial Data........................ 16
Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 18
Business.................................................... 26
Management.................................................. 42
Principal and Selling Stockholders.......................... 44
Underwriting................................................ 46
Legal Matters............................................... 48
Experts..................................................... 48
Where You Can Find More Information......................... 48
Incorporation of Certain Documents by Reference............. 48
</TABLE>

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PROSPECTUS SUMMARY

This summary highlights information contained elsewhere in this prospectus.
This summary does not contain all of the information that is important to you.
You should read this entire prospectus carefully. Unless otherwise indicated,
all information contained in this prospectus assumes that the underwriters will
not exercise their over-allotment option. This prospectus contains
forward-looking statements, which involve risks and uncertainties. Our actual
results could differ materially from those anticipated in these forward-looking
statements as a result of certain factors, including those set forth under "Risk
Factors" and elsewhere in this prospectus.

MKS INSTRUMENTS, INC.

We are a leading worldwide developer, manufacturer and supplier of
instruments, components and integrated subsystems used to measure, control and
analyze gases in semiconductor manufacturing and similar industrial
manufacturing processes. We sold products to over 4,000 customers in 1999. In
addition to semiconductors, our products are used in processes to manufacture a
diverse range of products, such as optical filters, fiber optic cables, flat
panel displays, magnetic and optical storage media, architectural glass, solar
panels and gas lasers.

The ability of semiconductor device manufacturers to offer integrated
circuits with smaller geometries and greater functionality at higher speeds
requires continuous improvements in semiconductor process equipment and process
controls. Manufacturing a semiconductor, or a similar industrial product,
requires hundreds of process steps, many of which involve the precise
measurement and control of gases. These process steps take place within a
process chamber, where specific gas mixtures at precisely controlled pressures
are used to control the required process atmosphere and are used as a source of
material.

Given the complexity of the semiconductor manufacturing process, the value
of the products manufactured and the significant cost of semiconductor
manufacturing equipment and facilities, significant importance is placed upon:

- uptime, which is the amount of time that semiconductor manufacturing
equipment is available for processing;

- yield, which is the ratio of acceptable output to total output; and

- throughput, which is the aggregate output that can be processed per hour.

The design and performance of instruments that control the pressure or flow
of gases are becoming more critical to the semiconductor manufacturing process
since they directly affect uptime, yield and throughput. In addition, the
increasing sophistication of semiconductor devices requires an increase in the
number of components and subsystems used in the design of semiconductor
manufacturing process tools. To address manufacturing complexity, improve
quality and reliability, and ensure long-term service and support, semiconductor
device manufacturers and semiconductor capital equipment manufacturers are
increasingly seeking to reduce their supplier base and are, therefore, choosing
to work with suppliers that provide a broad range of integrated, technologically
advanced products backed by worldwide service and support.

We believe that we offer the widest range of pressure and vacuum
measurement and control products serving the semiconductor industry. Our
objective is to be the leading worldwide supplier of instruments, components and
integrated subsystems used to measure, control and analyze gases in
semiconductor and other advanced thin-film processing applications and to help
semiconductor device manufacturers achieve improvements in their return on
investment capital. Our strategy to accomplish this objective includes:

- extending our technology leadership;

- continuing to broaden our comprehensive product offerings;

- building upon our close working relationships with customers;

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<PAGE> 6

- expanding the application of our existing technologies to related
markets; and

- leveraging our global infrastructure and world class manufacturing
capabilities.

For over 25 years, we have focused on satisfying the needs of semiconductor
capital equipment manufacturers and semiconductor device manufacturers. As a
result, we have established long-term relationships with many of our customers.
We sell our products primarily to:

- semiconductor capital equipment manufacturers;

- semiconductor device manufacturers;

- industrial manufacturing companies; and

- university, government and industrial research laboratories.

Our customers include Applied Materials, Inc., Lam Research Corporation,
Novellus Systems, Inc., Tokyo Electron Limited, Inc., Air Products and
Chemicals, Inc., and Motorola, Inc. We sell our products primarily through our
direct sales force located in 22 offices worldwide.

MKS Instruments, Inc. is a Massachusetts corporation organized in June
1961. Our principal executive offices are located at Six Shattuck Road, Andover,
MA 01810, and our telephone number is (978) 975-2350.

THE OFFERING

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<S> <C>
Common stock offered by MKS............................. 2,000,000 shares
Common stock offered by the selling stockholders........ 1,000,000 shares
Common stock to be outstanding after this offering...... 26,970,762 shares
Use of proceeds......................................... For working capital, capital expenditures,
potential acquisitions and general corporate
purposes. See "Use of Proceeds." We will not
receive any of the proceeds from the sale of
common stock by the selling stockholders.
Nasdaq National Market symbol........................... MKSI
</TABLE>

Our common stock to be outstanding after this offering is based on shares
outstanding as of March 24, 2000 and excludes the following as of that date:

- 2,760,834 shares of common stock issuable upon the exercise of options
outstanding as of such date at a weighted average exercise price of
$11.51 per share;

- 937,583 shares of common stock reserved for future issuance under our
stock option plans; and

- 463,480 shares of common stock reserved for sale under our employee stock
purchase plans.

See "Capitalization" and Note 8 of Notes to our 1999 Consolidated Financial
Statements, which are incorporated by reference into this prospectus.

SUMMARY CONSOLIDATED FINANCIAL DATA

The following table presents our summary consolidated statement of income
data for 1995 through 1999 and our summary consolidated balance sheet data as of
December 31, 1999. Consolidated balance sheet data is presented on an actual
basis and as adjusted to reflect the sale of 2,000,000 shares of common stock at
an

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assumed public offering price of $ per share, after deducting the estimated
underwriting discount and offering expenses payable by us.

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------
1995 1996 1997 1998 1999
-------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Net sales........................... $157,164 $170,862 $188,080 $139,763 $187,083
Gross profit........................ 69,461 68,854 80,474 55,979 79,855
Income from operations.............. 24,106 16,068 23,963 9,135 27,611
Net income.......................... $ 21,658 $ 12,503 $ 20,290 $ 7,186 $ 24,037
HISTORICAL NET INCOME PER SHARE:
Basic............................. $ 1.20 $ 0.69 $ 1.12 $ 0.40 $ 1.05
======== ======== ======== ======== ========
Diluted........................... $ 1.20 $ 0.69 $ 1.10 $ 0.38 $ 1.00
======== ======== ======== ======== ========
PRO FORMA STATEMENT OF INCOME DATA
(UNAUDITED)(1):
Pro forma net income................ $ 13,821 $ 8,248 $ 13,806 $ 5,044 $ 18,412
Pro forma net income per share:
Basic............................. $ 0.77 $ 0.46 $ 0.76 $ 0.28 $ 0.81
======== ======== ======== ======== ========
Diluted........................... $ 0.77 $ 0.46 $ 0.76 $ 0.27 $ 0.77
======== ======== ======== ======== ========
</TABLE>

<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1999
-------------------------
ACTUAL AS ADJUSTED
-------- -----------
(IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................................... $ 35,714 $
Working capital............................................. 87,088
Total assets................................................ 174,605
Short-term obligations...................................... 20,828
Long-term obligations, less current portion................. 5,662
Stockholders' equity........................................ 119,169
</TABLE>

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(1) Data is computed on the same basis as Note 2 of Notes to our 1999
Consolidated Financial Statements, which are incorporated by reference into
this prospectus. The historical net income per share data does not include
provisions for federal income taxes because prior to our initial public
offering in 1999, we were treated as an S corporation for federal and
certain state income tax purposes. The Pro Forma Statement of Income Data
presents net income and net income per share data as if we had been subject
to income taxes as a C corporation during the periods presented.

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RISK FACTORS

You should consider carefully the risks described below before you decide
to buy our common stock. If any of the following risks actually occur, our
business, financial condition or results of operations would likely suffer. In
such case, the trading price of our common stock could fall, and you may lose
all or part of the money you paid to buy our common stock.

This prospectus contains forward-looking statements that involve risks and
uncertainties. These forward-looking statements are usually accompanied by words
such as "anticipates," "believes," "estimates," "expects," "intends," "may,"
"plans," "potential," "projects," "will," "would" and similar expressions. Our
actual results may differ materially from the results discussed in the
forward-looking statements because of factors such as the Risk Factors discussed
below.

OUR BUSINESS DEPENDS SUBSTANTIALLY ON CAPITAL SPENDING IN THE SEMICONDUCTOR
INDUSTRY WHICH IS CHARACTERIZED BY PERIODIC FLUCTUATIONS THAT MAY CAUSE A
REDUCTION IN DEMAND FOR OUR PRODUCTS.

We estimate that approximately 66% of our sales during 1999 were to
semiconductor capital equipment manufacturers and semiconductor device
manufacturers, and we expect that sales to such customers will continue to
account for a substantial majority of our sales. Our business depends upon the
capital expenditures of semiconductor device manufacturers, which in turn depend
upon the demand for semiconductors. Periodic reductions in demand for the
products manufactured by semiconductor capital equipment manufacturers and
semiconductor device manufacturers may adversely affect our business, financial
condition and results of operations. Historically, the semiconductor market has
been highly cyclical and has experienced periods of overcapacity, resulting in
significantly reduced demand for capital equipment. For example, in 1996 and
1998, the semiconductor capital equipment industry experienced significant
declines, which caused a number of our customers to reduce their orders. We
cannot be certain that semiconductor downturns will not recur. A decline in the
level of orders as a result of any future downturn or slowdown in the
semiconductor capital equipment industry could have a material adverse effect on
our business, financial condition and results of operations.

OUR QUARTERLY OPERATING RESULTS HAVE VARIED, AND ARE LIKELY TO CONTINUE TO VARY
SIGNIFICANTLY. THIS MAY RESULT IN VOLATILITY IN THE MARKET PRICE FOR OUR SHARES.

A substantial portion of our shipments occur shortly after an order is
received and therefore we operate with a low level of backlog. As a consequence
of the just-in-time nature of shipments and the low level of backlog, a decrease
in demand for our products from one or more customers could occur with limited
advance notice and could have a material adverse effect on our results of
operations in any particular period.

A significant percentage of our expenses are relatively fixed and based in
part on expectations of future net sales. The inability to adjust spending
quickly enough to compensate for any shortfall would magnify the adverse impact
of a shortfall in net sales on our results of operations. Factors that could
cause fluctuations in our net sales include:

- the timing of the receipt of orders from major customers;

- shipment delays;

- disruption in sources of supply;

- seasonal variations of capital spending by customers;

- production capacity constraints; and

- specific features requested by customers.

For example, we were in the process of increasing our production capacity
when the semiconductor capital equipment market began to experience a
significant downturn in 1996. This downturn had a material adverse effect on our
operating results in the second half of 1996 and the first half of 1997. After
an increase in business in the latter half of 1997, the market experienced
another downturn in 1998, which had a material
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<PAGE> 9

adverse effect on our 1998 and first quarter 1999 operating results. As a result
of the factors discussed above, it is likely that we will in the future
experience quarterly or annual fluctuations and that, in one or more future
quarters, our operating results will fall below the expectations of public
market analysts or investors. In any such event, the price of our common stock
could decline significantly.

THE LOSS OF NET SALES TO ANY ONE OF OUR MAJOR CUSTOMERS WOULD LIKELY HAVE A
MATERIAL ADVERSE EFFECT ON US.

Our five largest customers accounted for approximately 33% of our net sales
in 1999 and 24% of our net sales in 1998. The loss of a major customer or any
reduction in orders by these customers, including reductions due to market or
competitive conditions, would likely have a material adverse effect on our
business, financial condition and results of operations. During 1999, one
customer, Applied Materials, accounted for approximately 22% of our net sales.
While we have entered into a purchase contract with Applied Materials that
expires in 2000 unless it is extended by mutual agreement, none of our
significant customers, including Applied Materials, has entered into an
agreement requiring it to purchase any minimum quantity of our products. The
demand for our products from our semiconductor capital equipment customers
depends in part on orders received by them from their semiconductor device
manufacturer customers.

Attempts to lessen the adverse effect of any loss or reduction through the
rapid addition of new customers could be difficult because prospective customers
typically require lengthy qualification periods prior to placing volume orders
with a new supplier. Our future success will continue to depend upon:

- our ability to maintain relationships with existing key customers;

- our ability to attract new customers; and

- the success of our customers in creating demand for their capital
equipment products which incorporate our products.

AN INABILITY TO CONVINCE SEMICONDUCTOR DEVICE MANUFACTURERS TO SPECIFY THE USE
OF OUR PRODUCTS TO OUR CUSTOMERS, WHO ARE SEMICONDUCTOR CAPITAL EQUIPMENT
MANUFACTURERS, WOULD WEAKEN OUR COMPETITIVE POSITION.

The markets for our products are highly competitive. Our competitive
success often depends upon factors outside of our control. For example, in some
cases, particularly with respect to mass flow controllers, semiconductor device
manufacturers may direct semiconductor capital equipment manufacturers to use a
specified supplier's product in their equipment. Accordingly, for such products,
our success will depend in part on our ability to have semiconductor device
manufacturers specify that our products be used at their semiconductor
fabrication facilities. In addition, we may encounter difficulties in changing
established relationships of competitors that already have a large installed
base of products within such semiconductor fabrication facilities.

IF OUR PRODUCTS ARE NOT DESIGNED INTO SUCCESSIVE NEW GENERATIONS OF OUR
CUSTOMERS' PRODUCTS, WE WILL LOSE SIGNIFICANT NET SALES DURING THE LIFESPAN OF
THOSE PRODUCTS.

New products designed by semiconductor capital equipment manufacturers
typically have a lifespan of five to ten years. Our success depends on our
products being designed into new generations of equipment for the semiconductor
industry. We must develop products that are technologically current so that they
are positioned to be chosen for use in each successive new generation of
semiconductor capital equipment. If our products are not chosen by our
customers, our net sales may be reduced during the lifespan of our customers'
products.

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THE SEMICONDUCTOR INDUSTRY IS SUBJECT TO RAPID DEMAND SHIFTS WHICH ARE DIFFICULT
TO PREDICT. AS A RESULT, OUR INABILITY TO EXPAND OUR MANUFACTURING CAPACITY IN
RESPONSE TO THESE RAPID SHIFTS MAY CAUSE A REDUCTION IN OUR MARKET SHARE.

Our ability to increase sales of certain products depends in part upon our
ability to expand our manufacturing capacity for such products in a timely
manner. If we are unable to expand our manufacturing capacity on a timely basis
or to manage such expansion effectively, our customers could implement our
competitor's products and, as a result, our market share could be reduced.
Because the semiconductor industry is subject to rapid demand shifts which are
difficult to foresee, we may not be able to increase capacity quickly enough to
respond to a rapid increase in demand in the semiconductor industry.
Additionally, capacity expansion could increase our fixed operating expenses and
if sales levels do not increase to offset the additional expense levels
associated with any such expansion, our business, financial condition and
results of operations could be materially adversely affected.

SALES TO FOREIGN MARKETS CONSTITUTE APPROXIMATELY 31% OF OUR NET SALES.
THEREFORE, OUR NET SALES AND RESULTS OF OPERATIONS COULD BE ADVERSELY AFFECTED
BY DOWNTURNS IN ECONOMIC CONDITIONS IN COUNTRIES OUTSIDE OF THE UNITED STATES.

International sales, which include sales by our foreign subsidiaries, but
exclude direct export sales which were less than 10% of our total net sales,
accounted for approximately 31% of net sales in 1999 and 32% of net sales in
1998. We anticipate that international sales will continue to account for a
significant portion of our net sales. In addition, certain of our key domestic
customers derive a significant portion of their revenues from sales in
international markets. Therefore, our sales and results of operations could be
adversely affected by economic slowdowns and other risks associated with
international sales.

UNFAVORABLE EXCHANGE RATE FLUCTUATIONS MAY LEAD TO LOWER GROSS MARGINS, OR MAY
CAUSE US TO RAISE PRICES WHICH COULD RESULT IN REDUCED SALES.

Exchange rate fluctuations could have an adverse effect on our net sales
and results of operations and we could experience losses with respect to our
hedging activities. Unfavorable currency fluctuations could require us to
increase prices to foreign customers which could result in lower net sales by us
to such customers. Alternatively, if we do not adjust the prices for our
products in response to unfavorable currency fluctuations, our results of
operations could be adversely affected. In addition, sales made by our foreign
subsidiaries are denominated in the currency of the country in which these
products are sold and the currency we receive in payment for such sales could be
less valuable at the time of receipt as a result of exchange rate fluctuations.
We enter into forward exchange contracts and local currency purchased options to
reduce currency exposure arising from intercompany sales of inventory. However,
we cannot be certain that our efforts will be adequate to protect us against
significant currency fluctuations or that such efforts will not expose us to
additional exchange rate risks.

COMPETITION FOR PERSONNEL IN THE SEMICONDUCTOR AND INDUSTRIAL MANUFACTURING
INDUSTRIES IS INTENSE. WE DO NOT TYPICALLY HAVE EMPLOYMENT AGREEMENTS WITH OUR
EMPLOYEES AND THEREFORE WE CANNOT BE SURE THAT WE WILL BE ABLE TO RETAIN THEM.

Our success depends to a large extent upon the efforts and abilities of a
number of key employees and officers, particularly those with expertise in the
semiconductor manufacturing and similar industrial manufacturing industries. The
loss of key employees or officers could have a material adverse effect on our
business, financial condition and results of operations. We believe that our
future success will depend in part on our ability to attract and retain highly
skilled technical, financial, managerial and marketing personnel. Competition
for such personnel is intense, and we cannot be certain that we will be
successful in attracting and retaining such personnel.

9
<PAGE> 11

OUR PROPRIETARY TECHNOLOGY IS IMPORTANT TO THE CONTINUED SUCCESS OF OUR
BUSINESS. OUR FAILURE TO PROTECT THIS PROPRIETARY TECHNOLOGY MAY SIGNIFICANTLY
IMPAIR OUR COMPETITIVE POSITION.

Although we seek to protect our intellectual property rights through
patents, copyrights, trade secrets and other measures, we cannot be certain
that:

- we will be able to protect our technology adequately;

- competitors will not be able to develop similar technology independently;

- any of our pending patent applications will be issued;

- intellectual property laws will protect our intellectual property rights;
or

- third parties will not assert that our products infringe patent,
copyright or trade secrets of such parties.

PROTECTION OF OUR INTELLECTUAL PROPERTY RIGHTS MAY RESULT IN COSTLY LITIGATION.

Litigation may be necessary in order to enforce our patents, copyrights or
other intellectual property rights, to protect our trade secrets, to determine
the validity and scope of the proprietary rights of others or to defend against
claims of infringement. Such litigation could result in substantial costs and
diversion of resources and could have a material adverse effect on our business,
financial condition and results of operations.

THE MARKET PRICE OF OUR SHARES MAY EXPERIENCE EXTREME PRICE AND VOLUME
FLUCTUATIONS FOR REASONS OVER WHICH WE HAVE NO CONTROL.

The stock market has from time to time experienced, and is likely to
continue to experience, extreme price and volume fluctuations. Recently, prices
of securities of technology companies have been especially volatile and have
often fluctuated for reasons that are unrelated to the operating performance of
the companies. The market price of shares of our common stock has fluctuated
greatly since our initial public offering and could continue to fluctuate due to
a variety of factors. In the past, companies that have experienced volatility in
the market price of their stock have been the objects of securities class action
litigation. If we were the object of securities class action litigation, it
could result in substantial costs and a diversion of our management's attention
and resources.

AFTER THIS OFFERING ONE STOCKHOLDER, ALONG WITH MEMBERS OF HIS FAMILY, WILL
CONTINUE TO HAVE A CONTROLLING INTEREST IN MKS AND WILL BE ABLE TO EFFECT
IMPORTANT CORPORATE ACTIONS WITHOUT THE APPROVAL OF OTHER STOCKHOLDERS.

Upon consummation of this offering, John R. Bertucci, Chairman and Chief
Executive Officer of MKS, and members of his family will, in the aggregate,
beneficially own approximately 55.6% of our outstanding common stock. As a
result, these stockholders, acting together, will be able to take any of the
following actions without the approval of our public stockholders:

- amend our Articles of Organization in certain respects or approve a
merger, sale of assets or other major corporate transaction;

- defeat any non-negotiated takeover attempt that may be beneficial to our
public stockholders;

- determine the amount and timing of dividends paid to themselves and to
our public stockholders; and

- otherwise control our management and operations and the outcome of all
matters submitted for a stockholder vote, including the election of
directors.

CERTAIN PROVISIONS OF OUR ARTICLES OF ORGANIZATION, OUR BY-LAWS AND
MASSACHUSETTS LAW COULD DISCOURAGE POTENTIAL ACQUISITION PROPOSALS AND COULD
DELAY OR PREVENT A CHANGE IN CONTROL OF MKS.

Anti-takeover provisions could diminish the opportunities for stockholders
to participate in tender offers including tender offers at a price above the
then current market value of the common stock. Such provisions
10
<PAGE> 12

may also inhibit increases in the market price of the common stock that could
result from takeover attempts. For example, while we have no present plans to
issue any preferred stock, our board of directors, without further stockholder
approval, may issue preferred stock that could have the effect of delaying,
deterring or preventing a change in control of MKS. The issuance of preferred
stock could adversely affect the voting power of the holders of our common stock
including the loss of voting control to others. In addition, our By-Laws will
provide for a classified board of directors consisting of three classes. This
classified board could also have the effect of delaying, deterring or preventing
a change in control of MKS.

YOU WILL BE RELYING ON THE JUDGMENT OF OUR MANAGEMENT REGARDING OUR USE OF
PROCEEDS.

We have not designated any specific use for the net proceeds from the sale
of our common stock described in this prospectus. Rather, we expect to use the
net proceeds of this offering for working capital, capital expenditures, general
corporate purposes and potential acquisitions. Consequently, our management will
have significant flexibility in applying the net proceeds. You will be relying
on the judgment of our management regarding the application of the proceeds. Our
management will have the ability to change the application of the proceeds of
this offering without stockholder approval.

YOU WILL EXPERIENCE AN IMMEDIATE AND SUBSTANTIAL DILUTION IN THE BOOK VALUE OF
YOUR INVESTMENT.

The public offering price of the common stock in this offering is
$ higher than the tangible pro forma book value of our common stock on
a per share basis after the offering. As a result, investors purchasing common
stock in this offering will incur immediate and substantial dilution. In the
past, we issued options to acquire common stock at prices significantly below
the public offering price in this offering. To the extent these options are
exercised, there will be further dilution to investors.

11
<PAGE> 13

SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION

This prospectus includes and incorporates forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. All statements, other than statements of
historical facts, included or incorporated in this prospectus regarding our
strategy, future operations, financial position, future revenues, projected
costs, prospects, plans and objectives of management are forward-looking
statements. The words "anticipates," "believes," "estimates," "expects,"
"intends," "may," "plans," "potential," "projects," "will," "would" and similar
expressions are intended to identify forward-looking statements, although not
all forward-looking statements contain these identifying words. We cannot
guarantee that we actually will achieve the plans, intentions or expectations
disclosed in our forward-looking statements and you should not place undue
reliance on our forward-looking statements. Actual results or events could
differ materially from the plans, intentions and expectations disclosed in the
forward-looking statements we make. We have included important factors in the
cautionary statements included or incorporated in this prospectus, particularly
under the heading "Risk Factors", that we believe could cause actual results or
events to differ materially from the forward-looking statements that we make.
Our forward-looking statements do not reflect the potential impact of any future
acquisitions, mergers, dispositions, joint ventures or investments we may make.
We do not assume any obligation to update any forward-looking statements.

12
<PAGE> 14

USE OF PROCEEDS

The net proceeds we will receive from the sale of the 2,000,000 shares of
common stock offered by us at an assumed public offering price of $ per
share are estimated to be $ ($ if the underwriters'
over-allotment option is exercised in full), after deducting the estimated
underwriting discount and offering expenses payable by us. We will not receive
any of the proceeds from the sale of shares by the selling stockholders.

We expect to use the net proceeds for general corporate purposes, including
working capital, product development and capital expenditures. A portion of the
net proceeds may also be used for the acquisition of businesses, products and
technologies that are complementary to ours. There are currently no commitments
or agreements with respect to any such material acquisition. Pending such uses,
we intend to invest the net proceeds from this offering in investment-grade,
interest-bearing securities.

13
<PAGE> 15

PRICE RANGE OF OUR COMMON STOCK

Our common stock is traded on the Nasdaq National Market under the symbol
"MKSI." On April 6, 2000, the closing price of our common stock, as reported on
the Nasdaq National Market, was $51.13 per share. The following table sets forth
for the periods indicated the high and low sales prices per share of our common
stock as reported by the Nasdaq National Market.

<TABLE>
<CAPTION>
1999 HIGH LOW
- ---- ---- ---
<S> <C> <C>
First Quarter (beginning March 30).......................... 14 1/2 13 3/8
Second Quarter.............................................. 19 3/4 11 7/8
Third Quarter............................................... 22 1/2 17 3/4
Fourth Quarter.............................................. 36 1/2 19 1/4
2000
First Quarter............................................... 62 1/4 30 1/2
</TABLE>

On March 24, 2000, there were 24,970,762 shares of our common stock
outstanding, held by approximately 40 holders of record.

DIVIDEND POLICY

We currently intend, subject to our contractual obligations under the Tax
Indemnification and S Corporation Distribution Agreement, to retain earnings for
the continued development of our business. Restrictions or limitations on the
payment of dividends may be imposed in the future under the terms of credit
agreements or under other contractual provisions. In the absence of such
restrictions or limitations, the payment of any dividends will be at the
discretion of our board of directors.

14
<PAGE> 16

CAPITALIZATION

The following table sets forth our capitalization as of December 31, 1999:

- on an actual basis; and

- on an as adjusted basis to reflect the sale of 2,000,000 shares of our
common stock by us at an assumed public offering price of $ per
share after deducting the estimated underwriting discount and offering
expenses payable by us.

<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1999
-----------------------
ACTUAL AS ADJUSTED
-------- -----------
(IN THOUSANDS, EXCEPT
SHARE DATA)
<S> <C> <C>
Long-term obligations, less current portion................. $ 5,662 $
Stockholders' equity:
Preferred Stock, $0.01 par value; 2,000,000 shares
authorized, none issued and outstanding................ --
Common stock, no par value; 50,000,000 shares authorized,
24,632,849 shares issued and outstanding (actual);
26,632,849 shares issued and outstanding (as
adjusted).............................................. 113
Additional paid-in capital................................ 84,713
Retained earnings......................................... 33,166
Shareholder receivable.................................... (856)
Accumulated other comprehensive income.................... 2,033
-------- --------
Total stockholders' equity............................. 119,169
-------- --------
Total capitalization................................. $124,831 $
======== ========
</TABLE>

Our common stock outstanding after this offering is based on shares
outstanding as of December 31, 1999 and excludes the following as of that date:

- 2,652,591 shares of common stock issuable upon the exercise of options
outstanding at a weighted average exercise price of $8.31 per share; and

- 1,263,613 shares reserved for issuance under our stock option plan and
413,480 shares reserved for sale under our employee stock purchase plan.

See Note 8 of Notes to our 1999 Consolidated Financial Statements, which
are incorporated by reference into this prospectus.

15
<PAGE> 17

SELECTED CONSOLIDATED FINANCIAL DATA

The following selected financial data as of December 31, 1998 and 1999 and
for the years ended December 31, 1997, 1998 and 1999 have been derived from our
consolidated financial statements, which are incorporated by reference into this
prospectus, which have been audited by PricewaterhouseCoopers LLP, independent
accountants, as indicated in their report. The selected financial data as of
December 31, 1995, 1996 and 1997 and for the years ended December 31, 1995 and
1996 are derived from our consolidated financial statements, which were also
audited by PricewaterhouseCoopers LLP, not included herein. The data should be
read in conjunction with the Consolidated Financial Statements, including the
Notes thereto, which are incorporated by reference into this prospectus, and
with "Management's Discussion and Analysis of Financial Condition and Results of
Operations" included elsewhere in this prospectus.

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------------------
1995 1996 1997 1998 1999
-------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Net sales................................... $157,164 $170,862 $188,080 $139,763 $187,083
Gross profit................................ 69,461 68,854 80,474 55,979 79,855
Income from operations...................... 24,106 16,068 23,963 9,135 27,611
Net income.................................. $ 21,658 $ 12,503 $ 20,290 $ 7,186 $ 24,037
Historical net income per share:
Basic..................................... $ 1.20 $ 0.69 $ 1.12 $ 0.40 $ 1.05
======== ======== ======== ======== ========
Diluted................................... $ 1.20 $ 0.69 $ 1.10 $ 0.38 $ 1.00
======== ======== ======== ======== ========
Historical weighted average common shares
outstanding:
Basic..................................... 18,053 18,053 18,053 18,053 22,784
Diluted................................... 18,053 18,053 18,388 18,720 23,954
PRO FORMA STATEMENT OF INCOME DATA
(UNAUDITED)(1):
Historical income before taxes.............. $ 22,658 $ 13,303 $ 22,268 $ 8,135 $ 29,268
Pro forma provision for income taxes
assuming C corporation tax................ 8,837 5,055 8,462 3,091 10,856
-------- -------- -------- -------- --------
Pro forma net income........................ $ 13,821 $ 8,248 $ 13,806 $ 5,044 $ 18,412
Pro forma net income per common share:
Basic..................................... $ 0.77 $ 0.46 $ 0.76 $ 0.28 $ 0.81
======== ======== ======== ======== ========
Diluted................................... $ 0.77 $ 0.46 $ 0.76 $ 0.27 $ 0.77
======== ======== ======== ======== ========
Pro forma weighted average common shares
outstanding:
Basic..................................... 18,053 18,053 18,053 18,053 22,784
Diluted................................... 18,053 18,053 18,262 18,538 23,786
</TABLE>

16
<PAGE> 18

<TABLE>
<CAPTION>
AS OF DECEMBER 31,
------------------------------------------------------
1995 1996 1997 1998 1999
-------- ------- -------- ------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents............. $ 3,650 $ 3,815 $ 2,511 $11,188 $ 35,714
Working capital....................... 32,202 22,404 30,321 31,493 87,088
Total assets.......................... 104,511 95,000 106,536 96,232 174,605
Short-term obligations................ 15,192 16,124 13,852 12,819 20,828
Long-term obligations, less current
portion............................. 20,462 18,899 15,624 13,786 5,662
Stockholders' equity.................. 48,392 45,498 52,848 54,826 119,169
</TABLE>

17
<PAGE> 19

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion contains forward-looking statements that involve
risks and uncertainties. Our actual results could differ materially from those
discussed in the forward-looking statements as a result of certain factors
including those set forth under "Risk Factors" and elsewhere in this prospectus.
The following discussion and analysis should be read in conjunction with
"Selected Consolidated Financial Data" appearing elsewhere in this prospectus
and with our 1999 Consolidated Financial Statements and Notes thereto, which are
incorporated by reference into this prospectus.

OVERVIEW

MKS was founded in 1961. We develop, manufacture and supply instruments,
components and integrated subsystems used to measure, control and analyze gases
in semiconductor manufacturing and similar industrial manufacturing processes.
During 1999, we estimate that approximately 66% of our net sales were to
semiconductor capital equipment manufacturers and semiconductor device
manufacturers. We expect that sales to such customers will continue to account
for a substantial majority of our sales. Our customers include semiconductor
capital equipment manufacturers, semiconductor device manufacturers, industrial
manufacturing companies and university, government and industrial research
laboratories. Our top five customers accounted for approximately 33% of our net
sales in 1999, 24% in 1998 and 32% in 1997. During 1999, Applied Materials
accounted for approximately 22% of our net sales. We typically enter into
contracts with our semiconductor equipment manufacturer customers that provide
for quantity discounts. We recognize revenue, and accrue for anticipated returns
and warranty costs, upon completion of our delivery obligations.

A significant portion of our sales are to operations in international
markets. International sales by our foreign operations, located in Japan, Korea,
Europe, Singapore and Taiwan, were 31.3% of net sales in 1999 and 32.4% of net
sales in 1998. Sales by our Japanese subsidiary comprised 16.4% of net sales in
1999 and 15.1% in 1998. We do not classify export sales made directly by us as
international sales. Such export sales have generally been less than 10% of our
net sales. We currently use, and plan to continue to use, forward exchange
contracts and local currency purchased options to reduce currency exposure
arising from foreign currency denominated intercompany sales of inventory. Gains
and losses on derivative financial instruments that qualify for hedge accounting
are classified in cost of sales. Gains and losses on derivative financial
instruments that do not qualify for hedge accounting are marked to market and
recognized immediately in other income. See Note 3 of Notes to our 1999
Consolidated Financial Statements, which are incorporated by reference into this
prospectus.

We were treated as an S corporation for federal income tax purposes prior
to our initial public offering in 1999. Our S corporation status terminated upon
the closing of the offering, at which time we became subject to federal, and
certain state, income taxation as a C corporation. The pro forma net income
reflects a pro forma effective tax rate of 38.0% in 1997 and 1998, and 37.1% in
1999 to reflect federal and state income taxes which would have been payable had
we been taxed as a C corporation for each period.

On April 5, 1999, we closed the initial public offering of our common
stock. In connection with that offering and the exercise of an over-allotment
option by the underwriters, we sold 6,375,000 shares of common stock. Our net
proceeds were approximately $82 million. Also on that date, we distributed $40
million, which was the estimated amount of our undistributed S corporation
earnings as of the day prior to the closing of our initial public offering.

18
<PAGE> 20

RESULTS OF OPERATIONS

The following table sets forth for the periods indicated the percentage of
total net sales of certain line items included in our consolidated statement of
income data:

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------
1997 1998 1999
------ ------ ------
<S> <C> <C> <C>
Net sales................................................... 100.0% 100.0% 100.0%
Cost of sales............................................... 57.2 59.9 57.3
----- ----- -----
Gross profit................................................ 42.8 40.1 42.7
Research and development.................................... 7.8 8.7 7.1
Selling, general and administrative......................... 22.3 24.9 20.8
----- ----- -----
Income from operations...................................... 12.7 6.5 14.8
Interest income (expense), net.............................. (1.0) (0.8) 0.4
Other income, net........................................... 0.1 0.1 0.4
----- ----- -----
Income before income taxes.................................. 11.8 5.8 15.6
Provision for income taxes.................................. 1.0 0.7 2.8
----- ----- -----
Net income.................................................. 10.8% 5.1% 12.8%
===== ===== =====
Pro forma data:
Historical income before income taxes..................... 11.8% 5.8% 15.6%
Pro forma provision for income taxes...................... 4.5 2.2 5.8
----- ----- -----
Pro forma net income...................................... 7.3% 3.6% 9.8%
===== ===== =====
</TABLE>

Year Ended 1999 Compared to 1998

Net sales. Net sales increased 33.9% to $187.1 million for 1999 from
$139.8 million for 1998. International net sales were $58.5 million in 1999 or
31.3% of net sales and $45.3 million in 1998 or 32.4% of net sales. The increase
in net sales was primarily due to increased sales volume of our existing
products in the United States and in Asia which resulted primarily from
increased sales to our semiconductor capital equipment manufacturing and
semiconductor device manufacturer customers.

Gross profit. Gross profit as a percentage of net sales increased to 42.7%
for 1999 from 40.1% in 1998. The increase was primarily due to fuller
utilization of existing manufacturing capacity as a result of increased net
sales.

Research and development. Research and development expenses increased 9.0%
to $13.2 million or 7.1% of net sales for 1999 from $12.1 million or 8.7% of net
sales for 1998. The increase was due to increased spending for development
materials.

Selling, general and administrative. Selling, general and administrative
expenses increased 12.4% to $39.0 million or 20.8% of net sales from $34.7
million or 24.9% of net sales for 1998. The increase was due primarily to
increased incentive compensation expense of $3.3 million, professional fees, and
other selling expenses.

Interest income (expense), net. During 1999, we generated net interest
income of $0.8 million primarily from the invested net proceeds of the initial
public offering, offset by interest expense on outstanding debt. Net interest
expense of $1.2 million for 1998 represents interest on outstanding loans,
offset by interest income earned on cash and cash equivalents and short-term
investments.

Other income, net. Other income of $0.8 million for 1999 includes a
distribution of $0.7 million from one of our mutual insurance carriers upon the
initial public offering of the insurance carrier, and also includes gains
recorded from foreign exchange contracts which did not qualify for hedge
accounting. Other income of

19
<PAGE> 21

$0.2 million in 1998 primarily represents foreign exchange translation gains on
intercompany payables of $1.0 million offset by $0.7 million for costs
associated with our planned initial public offering in early 1998.

Effective April 1, 1999 we adopted Statement of Financial Accounting
Standards (SFAS) No. 133, "Accounting for Derivative Instruments and Hedging
Activities." SFAS No. 133 requires that all derivative instruments be recorded
on the balance sheet at their fair value. Changes in the fair value of
derivatives are recorded each period in current earnings or other comprehensive
income, depending on whether a derivative is designated as part of a hedge
transaction and, if it is, the type of hedge transaction. The adoption of SFAS
No. 133 did not have a material impact on our financial position or results of
operations. The derivative instruments currently held by us which have been
designated as hedges, including forward exchange contracts, local currency
purchased options, and an interest rate swap, qualify for hedge accounting under
SFAS No. 133, and changes in their fair value will be recorded as a component of
other comprehensive income until the hedged transaction occurs.

Pro forma provision for income taxes. Prior to the closing of our initial
public offering in April 1999 we were treated as an S corporation for tax
purposes. As an S corporation, we were not subject to federal, and certain state
income taxes. Upon the closing of our initial public offering on April 5, 1999,
our status as an S corporation was terminated and we became subject to taxes as
a C corporation. The pro forma provision for income taxes reflects the estimated
tax expense we would have incurred had we been subject to federal and state
income taxes as a C corporation. The pro forma provision differs from the
federal statutory rate due primarily to the effects of state and foreign taxes
and certain tax credits. The pro forma provision for 1999 reflects a pro forma
tax rate of 37.1%. This rate differs from the pro forma tax rate of 38% for 1998
due to increased tax credits and lower nondeductable expenses in 1999.

Year Ended 1998 Compared to 1997

Net sales. Net sales decreased 25.7% to $139.8 million for 1998 from
$188.1 million for 1997. International net sales were approximately $45.3
million in 1998 or 32.4% of net sales and $51.4 million in 1997 or 27.3% of net
sales. The decrease in net sales was primarily due to decreased sales volume of
our existing products in the United States and in Asia caused by the 1998
downturn in the semiconductor capital equipment market.

Gross profit. Gross profit as a percentage of net sales decreased to 40.1%
for 1998 from 42.8% in 1997. The change was primarily due to manufacturing
overhead costs being a higher percentage of net sales due to lower sales volume
in 1998.

Research and development. Research and development expenses decreased
17.3% to $12.1 million or 8.7% of net sales for 1998 from $14.7 million or 7.8%
of net sales for 1997. The decrease was due to reduced spending for development
materials primarily related to certain projects that were completed during 1998.

Selling, general and administrative. Selling, general and administrative
expenses decreased 17.0% to $34.7 million or 24.9% of net sales for 1998 from
$41.8 million or 22.3% of net sales for 1997. The decrease was due primarily to
a decrease of approximately $4.2 million in compensation expense resulting from
the reduction in personnel during 1998 and reduced incentive compensation.
Additionally, expenses were reduced as a result of lower spending on
advertising, travel, and other selling and administrative costs.

Interest expense, net. Net interest expense decreased to $1.2 million for
1998 from $1.9 million for 1997 primarily due to lower debt outstanding during
1998.

Other income, net. Other income of $0.2 million in 1998 primarily
represents foreign exchange translation gains on intercompany payables of $1.0
million offset by $0.7 million for costs associated with our planned initial
public offering in early 1998 which was postponed. Other income of $0.2 million
in 1997 represents gains of $1.2 million from foreign exchange contracts that
did not qualify for hedge accounting, offset by a foreign exchange translation
loss on an intercompany payable.

20
<PAGE> 22

Pro forma provision for income taxes. The pro forma provision for income
taxes for 1998 reflects the estimated tax expense we would have incurred had we
been subject to federal and state income taxes as a C corporation under the
Internal Revenue Code. The pro forma provision reflects a pro forma tax rate of
38.0%, which differs from the federal statutory rate due primarily to the
effects of state and foreign taxes and certain tax credits.

Quarterly Operating Results

The following tables present unaudited consolidated financial information
for the eight quarters ended December 31, 1999. In the opinion of management,
this information has been presented on the same basis as the audited 1999
Consolidated Financial Statements, which are incorporated by reference into this
prospectus. All adjustments which management considers necessary for a fair
presentation of the results of such periods have been included to present fairly
the unaudited quarterly results when read in conjunction with our 1999
Consolidated Financial Statements and Notes thereto. The results for any quarter
are not necessarily indicative of future quarterly results of operations.

<TABLE>
<CAPTION>
QUARTERS ENDED
-----------------------------------------------------------------------------------------
MARCH 31, JUNE 30, SEPT. 30, DEC. 31, MARCH 31, JUNE 30, SEPT. 30, DEC. 31,
1998 1998 1998 1998 1999 1999 1999 1999
--------- -------- --------- -------- --------- -------- --------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Net sales........................ $46,163 $34,026 $28,834 $30,740 $37,910 $44,209 $50,621 $54,343
Cost of sales.................... 26,757 20,265 18,140 18,622 22,557 25,550 28,876 30,245
------- ------- ------- ------- ------- ------- ------- -------
Gross profit..................... 19,406 13,761 10,694 12,118 15,353 18,659 21,745 24,098
Research and development......... 3,794 3,107 2,568 2,668 2,955 3,317 3,482 3,476
Selling, general and
administrative................. 10,112 9,045 7,808 7,742 8,857 9,435 10,264 10,458
------- ------- ------- ------- ------- ------- ------- -------
Income from operations........... 5,500 1,609 318 1,708 3,541 5,907 7,999 10,164
Interest income (expense), net... (375) (337) (234) (241) (242) 232 331 487
Other income (expense), net...... (281) 123 77 268 168 -- 681 --
------- ------- ------- ------- ------- ------- ------- -------
Income before income taxes....... 4,844 1,395 161 1,735 3,467 6,139 9,011 10,651
Provision for income taxes....... 565 163 19 202 338 (1,437) 2,974 3,356
------- ------- ------- ------- ------- ------- ------- -------
Net income....................... $ 4,279 $ 1,232 $ 142 $ 1,533 $ 3,129 $ 7,576 $ 6,037 $ 7,295
======= ======= ======= ======= ======= ======= ======= =======
Historical net income per share:
Basic.......................... $ 0.24 $ 0.07 $ 0.01 $ 0.08 $ 0.17 $ 0.31 $ 0.25 $ 0.30
======= ======= ======= ======= ======= ======= ======= =======
Diluted........................ $ 0.23 $ 0.07 $ 0.01 $ 0.08 $ 0.16 $ 0.30 $ 0.24 $ 0.28
======= ======= ======= ======= ======= ======= ======= =======
Historical weighted average
common shares outstanding:
Basic.......................... 18,053 18,053 18,053 18,053 18,054 24,065 24,458 24,558
Diluted........................ 18,751 18,737 18,553 18,841 19,402 24,951 25,628 25,834
Pro forma statement of income
data:
Historical income before income
taxes........................ $ 4,844 $ 1,395 $ 161 $ 1,735 $ 3,467 $ 6,139 $ 9,011 $10,651
Pro forma provision for income
taxes assuming C corporation
tax.......................... 1,841 530 61 659 1,317 2,333 3,334 3,872
------- ------- ------- ------- ------- ------- ------- -------
Pro forma net income........... $ 3,003 $ 865 $ 100 $ 1,076 $ 2,150 $ 3,806 $ 5,677 $ 6,779
======= ======= ======= ======= ======= ======= ======= =======
Pro forma net income per common
share:
Basic.......................... $ 0.17 $ 0.05 $ 0.01 $ 0.06 $ 0.12 $ 0.16 $ 0.23 $ 0.28
======= ======= ======= ======= ======= ======= ======= =======
Diluted........................ $ 0.16 $ 0.05 $ 0.01 $ 0.06 $ 0.11 $ 0.15 $ 0.22 $ 0.26
======= ======= ======= ======= ======= ======= ======= =======
Pro forma weighted average common
shares outstanding:
Basic.......................... 18,053 18,053 18,053 18,053 18,054 24,065 24,458 24,558
Diluted........................ 18,557 18,548 18,434 18,612 18,890 24,951 25,558 25,745
</TABLE>

21
<PAGE> 23

Our quarterly operating results have varied significantly and are likely to
continue to vary significantly due to a number of factors including:

- specific economic conditions in the industries in which our customers
operate, particularly the semiconductor industry;

- the timing of the receipt of orders from major customers;

- customer cancellations or shipment delays;

- price competition;

- disruption in sources of supply;

- seasonal variations of capital spending by customers;

- production capacity constraints;

- specific features requested by customers;

- exchange rate fluctuations;

- the introduction or announcement of new products by us or our
competitors; and

- other factors, many of which are beyond our control.

Our net sales have fluctuated over the past eight quarters primarily due to
the cyclicality in the semiconductor capital equipment industry. In each quarter
of 1998, the decline in the markets adversely affected sales of our products.
Gross profit as a percentage of net sales decreased in each of the first three
quarters of 1998 as a result of manufacturing overhead costs becoming a higher
percentage of net sales due to lower sales volume. In each of the quarters of
1999, the upturn in the semiconductor capital equipment industry beneficially
affected our sales. Gross profit as a percentage of net sales increased in each
of the quarters of 1999 as a result of fuller utilization of existing
manufacturing capacity as a result of the increased net sales.

The decrease in research and development expenses for the first, second,
and third quarters of 1998 was due to reduced spending for development materials
for projects that were completed during 1998. These expenses began to increase
in the fourth quarter of 1998 and in each of the first three quarters of 1999
due to increased spending for development materials.

22
<PAGE> 24

The decrease in selling, general and administrative expenses in each of the
quarters of 1998 was primarily due to a decrease in compensation expense along
with other selling related expenses. The increase in these expenses in each of
the quarters of 1999 was primarily due to increased incentive compensation
expense, professional fees and other selling expenses.

Other expenses in the first quarter of 1998 include $0.7 million for costs
associated with our planned initial public offering in early 1998 which was
postponed. Beginning in the second quarter of 1999, we generated net interest
income resulting from the invested net proceeds from our initial public
offering. Other income in the first quarter of 1999 includes gains from foreign
exchange contracts which did not qualify for hedge accounting. Other income in
the third quarter of 1999 resulted from a distribution from one of our mutual
insurance carriers upon its initial public offering.

LIQUIDITY AND CAPITAL RESOURCES

We have financed our operations and capital requirements through a
combination of cash provided by operations, long-term real estate financing,
capital lease financing and short-term lines of credit. On April 5, 1999, we
completed the initial public offering of our common stock. In connection with
that offering and the exercise of an over-allotment option by the underwriters,
we sold 6,375,000 shares of common stock. Our net proceeds were approximately
$82 million and were received in the second quarter of 1999. Underwriting
discounts and commissions were approximately $6 million, and other offering
costs were approximately $1 million. On April 5, 1999, we distributed $40
million to our stockholders, which was the estimated amount of our undistributed
S corporation earnings as of the day prior to the closing of the offering.

Operations provided cash of $17.1 million for 1999 primarily from
generating net income. This cash flow was impacted by depreciation and changes
in the levels of accounts payable, accrued expenses, accounts receivable and a
non-cash deferred tax credit. Investing activities utilized cash of $33.4
million for 1999 primarily from purchasing short-term investments with the net
proceeds from the initial public offering and for the purchase of property and
equipment. Financing activities provided cash of $41.2 million, with net
proceeds from the initial public offering of $82.1 million offset by the
distribution to stockholders of $40.0 million.

Working capital was $87.1 million as of December 31, 1999, an increase of
$55.6 million from December 31, 1998. We have a combined $30.0 million line of
credit with two banks, expiring December 31, 2000, all of which is available.

Prior to our initial public offering, we entered into a Tax Indemnification
and S Corporation Distribution Agreement with our then existing stockholders.
The agreement includes provisions for the payment, with interest, by those
stockholders or MKS, as the case may be, for the difference between the $40
million distributed as an estimate of the amount of the accumulated adjustments
account as of April 4, 1999, which is the date our S corporation status was
terminated, and the actual amount of the accumulated adjustments account on that
day. The actual amount of the accumulated adjustments account cannot be
determined until we calculate the amount of our taxable income for the year
ending December 31, 1999. Based on our estimate of the taxable income for the
year ending December 31, 1999, we believe that an additional distribution to the
then existing stockholders will be required under this agreement. The amount of
the additional distribution, prior to interest, is currently estimated to be
$3.4 million. The amount of the additional distribution payable has been charged
directly to retained earnings and had no impact on net income or earnings per
share. The amount of the accumulated adjustments account can be affected by
income tax audits of MKS. If any audit increases or decreases the accumulated
adjustments account, MKS or the then existing stockholders, as the case may be,
will also be required to make a payment with interest, of such difference to the
other party. No stockholders, other than the then existing stockholders, are
parties to the Tax Indemnification and S Corporation Distribution Agreement.

We believe that the net proceeds from this offering, together with our
working capital and the cash anticipated to be generated from operations and
funds available from existing credit facilities, will be sufficient to satisfy
our estimated working capital and planned capital expenditure requirements
through at least the next 24 months.
23
<PAGE> 25

EFFECT OF CURRENCY EXCHANGE RATES AND EXCHANGE RATE RISK MANAGEMENT

A significant portion of our business is conducted outside of the United
States through our foreign subsidiaries, which maintain their accounting records
in their local currencies. Consequently, period to period comparability of
results of operations is affected by fluctuations in exchange rates. We derive a
significant portion of our revenue from foreign locations. To the extent the
dollar value of foreign denominated revenue is diminished as a result of a
strengthening U.S. dollar, our results of operations could be adversely
affected.

The primary currencies to which we have exposure are the Japanese yen and
the German mark. The nature of this exposure is from MKS selling inventory to
our overseas subsidiaries for resale in local currency. To reduce the risks
associated with foreign currency rate fluctuations, we have entered into forward
exchange contracts and local currency purchased options on a continuing basis in
amounts and timing consistent with the underlying currency exposures on the
probable intercompany sales of inventory.

The Company also entered into local currency purchased options to hedge
intercompany payables. Since these derivatives hedge existing amounts that are
denominated in foreign currencies, the options do not qualify for hedge
accounting under SFAS No. 133.

Gains on forward exchange contracts and local currency purchased options,
qualifying for hedge accounting, amounted to $1.2 million for the year ended
December 31, 1997, $0.3 million for the year ended December 31, 1998 and losses
of $0.1 million for the year ended December 31, 1999 and are classified in cost
of sales. Gains of $1.2 million in 1997, losses of $0.2 million in 1998 and
gains of $0.4 million in 1999 on forward exchange contracts that did not qualify
for hedge accounting were recognized in earnings and are classified in other
income (expense), net. Also, included in other income (expense), net are an
exchange translation loss of $1.0 million in 1997 and a gain of $1.0 million in
1998 on intercompany payables from our subsidiaries. We plan to continue to use
forward exchange contracts and local currency purchased options to seek to
mitigate the impact of exchange rate fluctuations. See Notes 2 and 3 of Notes to
our 1999 Consolidated Financial Statements, which are incorporated by reference
into this prospectus.

MARKET RISK AND SENSITIVITY ANALYSIS

Foreign Exchange Rate Risk

We enter into forward exchange contracts and local currency purchased
options to reduce currency exposure arising from probable intercompany sales of
inventory. The potential fair value loss for a hypothetical 10% adverse change
in forward currency exchange rates on our forward exchange contracts at December
31, 1999 would be $502,000. The potential loss was estimated by calculating the
fair value of the forward exchange contracts at December 31, 1999 and comparing
that with those calculated using the hypothetical forward currency exchange
rates.

The value of the local currency purchased options at December 31, 1999 was
immaterial.

At December 31, 1999, we had $12,423,000 related to short-term borrowings
denominated in Japanese yen. The carrying value of these short-term borrowings
approximates fair value due to their short period to maturity. Assuming a
hypothetical 10% adverse change in the Japanese yen to U.S. dollar year end
exchange rate, the fair value of these short-term borrowings would increase by
$1,381,000. The potential increase in fair value was estimated by calculating
the fair value of the short-term borrowings at December 31, 1999 and comparing
that with the fair value using the hypothetical year end exchange rate.

24
<PAGE> 26

Interest Rate Risk

We are exposed to fluctuations in interest rates in connection with our
variable rate term loans. In order to minimize the effect of changes in interest
rates on earnings, we entered into an interest rate swap that fixed the interest
rate on our variable rate term loans. Under the swap agreement, we pay a fixed
rate of 5.85% on the notional amount and receive LIBOR. At December 31, 1999,
the notional amount of the interest rate swap was equal to the principal amount
of the variable rate term loans. The potential increase in the fair value of
term loans when adjusting for the interest rate swap paying at a fixed rate
resulting from a hypothetical 10% decrease in interest rates was not material.

Due to its short-term duration, the fair value of our cash and investment
portfolio at December 31, 1999 approximated its carrying value. Interest rate
risk was estimated as the potential decrease in fair value resulting from a
hypothetical 10% increase in interest rates for securities contained in the
investment portfolio. The resulting hypothetical fair value was not materially
different from the year-end carrying value.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

See Note 2 of Notes to our 1999 Consolidated Financial Statements, which
are incorporated by reference into this prospectus, for a discussion of the
impact of recently issued accounting pronouncements.

YEAR 2000 COMPLIANCE

The Year 2000 problem stems from the fact that many currently installed
computer systems include software and hardware products that are unable to
distinguish 21st century dates from those in the 20th century. As a result,
computer software and/or hardware used by many companies and governmental
agencies may need to be upgraded to comply with Year 2000 requirements or risk
system failure or miscalculations causing disruptions to normal business
activities. To date, we have experienced no material year 2000 problems with our
internal computer software and hardware, products, facilities and manufacturing
equipment or third party goods, services and interfaces.

25
<PAGE> 27

BUSINESS

- semiconductors

- optical filters and fiber optic cables for data and telecommunications

- flat panel displays

- magnetic and optical storage devices and media, including:

-- compact disks

-- hard disk storage devices

-- magnetic devices for reading disk data

-- digital video disks

-- optical storage disks or laser readable disks

- solar panels

- gas lasers

- eyeglasses

- architectural glass

- cutting tools

- freeze-dried pharmaceuticals

We supply products in three principal product areas. We also provide
value-added integrated subsystems combining these products. Our products
include:

- Pressure Measurement and Control Products;

- Material Delivery and Analysis Products; and

- Vacuum Products.

For over 25 years, we have focused on satisfying the needs of semiconductor
capital equipment manufacturers and semiconductor device manufacturers and have
established long-term relationships with many of our customers. Over 4,000
customers worldwide purchased products from us during 1999, including:

- semiconductor capital equipment manufacturers;

- semiconductor device manufacturers;

- industrial manufacturing companies; and

- university, government and industrial research laboratories.

Our customers include Applied Materials, Inc., Lam Research Corporation,
Novellus Systems, Inc., Tokyo Electron Limited, Inc., Air Products and
Chemicals, Inc. and Motorola, Inc. We sell our products primarily through our
direct sales force, which consists of 126 employees, as of December 31, 1999, in
22 offices in France, Germany, Japan, Korea, The Netherlands, Singapore, Taiwan,
the United Kingdom and the United States.

INDUSTRY BACKGROUND

In the past 40 years, significant advances in materials science and
processing technologies have made possible the manufacture of products ranging
from highly complex microprocessor chips to simple but effective airtight
coatings for food packagings. In many materials processing applications,
specific gas mixtures at precisely controlled pressures are used:

- to create and maintain the required process atmosphere;

- to provide a source of materials to be deposited on a surface, such as a
silicon wafer; and

- to remove or etch materials from a surface to form a circuit pattern.

26
<PAGE> 28

Currently, the largest commercial application employing materials science
and processing technologies is the manufacture of semiconductors. Worldwide
semiconductor sales have increased as the use of semiconductors has expanded
beyond personal computers and computer systems to a wide array of additional
applications such as data and telecommunications systems, automotive products,
consumer goods, medical products and household appliances. In large part, this
growth has been facilitated by the ability of semiconductor device manufacturers
to produce increasingly fast, more complex, higher performance semiconductors
while steadily reducing cost per function, power consumption requirements and
size of these products to meet end-user and system designer requirements.
Advancements in semiconductor processing technologies have allowed semiconductor
device designers to reduce circuit pattern sizes and subsequently increase the
number of individual semiconductor circuits on a silicon wafer. These trends
have driven the need for increasingly complex and sophisticated semiconductor
device manufacturing processes, process equipment and process controls.

Semiconductor Manufacturing Process

The manufacturing of semiconductors requires hundreds of process steps.
Many steps involve the controlled application or removal of layers of materials
to or from a surface referred to as a substrate. These process steps take place
within a process chamber, which provides a controlled environment for the
fabrication of semiconductor devices. Most of the key processes used in the
production of semiconductors require precise automatic control of gas pressure,
flow and composition in the process chamber. A typical process step uses from
three to five different gases.

To ensure the integrity and performance of the manufacturing process,
semiconductor device manufacturers require sophisticated instruments that can
provide precise automated control of all major process variables within the
process chamber. The process steps required to produce circuit patterns involve
the control of multiple gases flowing into the process chamber at specified
intervals, and at controlled pressure and vacuum levels. In a typical process
step, the process chamber is evacuated to a base pressure established by a
vacuum pumping system and measured with vacuum gauges. Automatic shut-off valves
are sequenced to protect pumps and process instruments from exposure to
atmospheric pressure. Chamber leak integrity may be checked by gas analyzers
scanning for the presence of undesirable atmospheric gases or water vapor. Mass
flow controllers automatically control the flow rates of multiple gases into the
process chamber. Simultaneously, the automatic pressure control system for the
process chamber measures the pressure in the chamber and controls it at the
desired level by electronically adjusting the position of a control valve
located between the process chamber and the vacuum pump. Downstream of the
process chamber, heated lines, particle traps, and vacuum valves and switches
are used to prevent contamination of the process chamber as a result of the
backstream of particles and exhaust gases back into the process chamber. This
improves circuit quality, reduces maintenance and prolongs equipment life.

27
<PAGE> 29

The pressures used in semiconductor manufacturing processes range from as
low as one trillionth of atmospheric pressure to as high as two hundred times
atmospheric pressure. The following table shows the wide range of pressures
required for typical semiconductor manufacturing processes:

PRESSURE RANGES OF TYPICAL SEMICONDUCTOR MANUFACTURING PROCESSES

[PRESSURE RANGES OF TYPICAL SEMICONDUCTOR MANUFACTURING PROCESSES CHART]
(This table graphically depicts, using graybars, the gas pressure ranges, from
one trillionth of atmospheric pressure to two hundred times atmospheric pressure
used in various typical semiconductor manufacturing process steps (introduction
of gases into process chamber, deposition of materials and thin films on to
substrates, introduction of gases to etch circuit patterns, deposition of
conductive metal layers onto substrates and implantation of positively charged
atoms into substrates).

Uptime, yield and throughput are critical semiconductor manufacturing
concepts. Uptime is the amount of time that the semiconductor processing tool is
available for processing. Yield is the ratio of acceptable circuits to total
circuits processed. Throughput is the number of wafers that can be processed per
hour. Uptime, yield and throughput depend in large part upon:

- precise repeatable measurement and control of the specific gas pressure,
flow rates and composition;

- the maintenance of the vacuum integrity of the process chamber; and

- the prevention of wafer contamination from particles entering the
chamber.

Pressure variations of as little as one one-hundred-thousandth of
atmospheric pressure can change process yields significantly and errors in gas
flow rates and composition may impair circuit performance. Atmospheric
contamination and particle contamination can produce defects that significantly
reduce wafer yields and the time required to remove contaminates reduces uptime
and throughput. The speed of response and precision of the automatic control
systems directly affects uptime, throughput of wafers and process yields.

Other Similar Industrial Manufacturing Processes

Many of the same processes used to manufacture semiconductors are also used
to manufacture optical filters, fiber optic cables, flat panel displays,
magnetic and optical storage media, architectural glass, solar panels and gas
lasers.

Trends in Semiconductor Manufacturing

The ability of semiconductor device manufacturers to offer integrated
circuits with smaller geometries and greater functionality at higher speeds
requires continuous improvements in semiconductor process equipment and process
controls. The transition to smaller circuit patterns, such as 0.18 micron and
smaller line-widths, requires more process steps. It is also leading to the
introduction of new materials such as copper

28
<PAGE> 30

and low-k dielectrics. These in turn require new technologies for delivery of
gases and vapors to the process chamber. In addition, the introduction of
advanced processes such as high density plasma is leading to a need for lower
pressures, which are more difficult to measure and control than higher
pressures. These trends, along with increased wafer sizes, which result in
higher circuit value per wafer, are leading to the need for increased
sophistication of semiconductor processing equipment, a heightened emphasis on
uptime, yield and throughput and the need for more precise process controls. As
a result, the design and performance of instruments that control pressure or the
flow of gases, or analyze the composition of gases, are becoming even more
critical to the semiconductor manufacturing process.

To address the increasing complexity of semiconductor devices,
semiconductor device manufacturers typically develop processes to create
particular device features using specific manufacturing equipment. The process
for each feature is then documented and may be subsequently replicated for use
in multiple fabrication facilities around the world. The precision,
repeatability and reliability of the measurement and control instrumentation
used for each process is critical to providing uptime, high yield and throughput
on manufacturing equipment at all facilities employing such processes.
Semiconductor device manufacturers are placing increasing importance on uptime,
yield, throughput and process consistency throughout their facilities to
maximize capital equipment productivity and to reduce ongoing operating costs.

The increasing sophistication of semiconductor devices requires an increase
in the number of components and integrated subsystems used in the design of
semiconductor manufacturing process tools. To reduce manufacturing complexity,
improve quality and reliability and ensure long-term service and support,
semiconductor capital equipment manufacturers and semiconductor device
manufacturers are increasingly seeking to establish relationships with a smaller
group of broad-based suppliers that meet their needs on a worldwide basis and
provide:

- advanced technological capabilities to address the increasing
complexities of the semiconductor manufacturing process;

- instrument and component designs that ensure repeatable processes around
the world;

- value-added, integrated instruments and components; and

- a worldwide sales, service and support infrastructure.

MKS SOLUTION AND STRATEGY

Our objective is to be the leading worldwide supplier of instruments,
components and integrated subsystems used to measure, control and analyze gases
in semiconductor and other advanced thin-film materials processing applications
and to help semiconductor device manufacturers achieve improvements in their
return on invested capital. The principal elements of our solution and strategy
to achieve this objective are:

Technology Leadership. Our products incorporate leading-edge technologies
to control and monitor increasingly complex gas-related semiconductor
manufacturing processes, thereby enhancing uptime, yield and throughput which
can improve the investment return on capital equipment and facilities. Our
instruments, components and integrated subsystems provide:

- high precision operation over the extreme and variable pressure ranges
required for semiconductor processes;

- precise, consistent and repeatable measurement and control performance
that allows processes to be replicated in manufacturing facilities around
the world;

- advanced control technologies which enhance uptime, yield and throughput;

- multiple, diverse and alternative technologies for controlling the flow
rate and composition of gases and vapors needed for new classes of
advanced materials for next generation semiconductor devices; and

29
<PAGE> 31

- innovative vacuum technologies that reduce atmospheric and particle
contamination, thereby enhancing uptime, yield and throughput.

Our products have continuously advanced as our customers' needs have
evolved. We seek to extend our technological leadership by applying our
expertise in vacuum, pressure, flow and gas composition measurement control and
analysis technologies to develop advanced products that meet the critical
gas-related process requirements of semiconductor and advanced thin-film
materials manufacturers.

We have introduced technological innovations including:

- corrosion-resistant pressure and vacuum sensors;

- automatic pressure and vacuum control systems; and

- compact single unit gas composition analyzers to replace bulky
multi-component systems.

We have developed, and continue to develop, new products to address
emerging industry trends such as the transition from the use of 200mm wafers to
300mm wafers and the shrinking of integrated circuit line-widths from 0.25
micron to 0.18 micron and smaller. We have supplied pre-production equipment to
be incorporated into semiconductor capital equipment manufacturers' 300mm
pre-production semiconductor wafer process equipment, which is expected to be
included in pilot production lines of device manufacturers.

We have also developed equipment that is being used by research
laboratories for semiconductor devices using less than 0.18 micron line-widths.
In addition, we have developed, and continue to develop, materials delivery
systems for new classes of materials, such as copper for conductors, titanium
nitride for barriers and a class of organic and inorganic dielectric materials
that are beginning to be used in small geometry manufacturing.

We have been a leader in making our products compatible with emerging
digital network standards, such as DeviceNet. DeviceNet enables components used
in semiconductor manufacturing processes to transmit self-diagnostic and other
information on a digital host network. This reduces system complexity and space
requirements.

To ensure that we maintain our leading-edge position, we align our research
and development program to the International Technology Roadmap for
Semiconductors, or ITRS. The ITRS identifies technological developments, as well
as obstacles, required to produce future generations of semiconductor devices.
We also maintain associations with leading universities to anticipate future
semiconductor production needs three to seven years in advance.

Comprehensive Product Offering. We currently offer, and intend to continue
to offer, the widest range of pressure and vacuum measurement and control
products serving the semiconductor manufacturing and similar industrial
manufacturing industries. We offer a full line of products including a wide
range of gas pressure, flow and composition analysis measurement and control
instruments and vacuum gauges, valves and components.

Since the development of our original Baratron laboratory-based pressure
measurement instrument in 1961, we have continuously enhanced and expanded our
product offerings in response to the evolving needs of our customers. For
example, we recently introduced the ORION CVD-process monitor, which addresses
the growing copper process market. We plan to introduce new products throughout
2000, including integrated vapor delivery subsystems, application specific
Baratron pressure measurement instruments and additional integrated vacuum
subsystems for process improvement.

Our products are designed to meet the increasingly complex needs of our
customers. With the increasing sophistication of semiconductor capital equipment
leading to an increasing number of components and subsystems in semiconductor
manufacturing process tools, we deliver products that reduce equipment size and
improve process performance. Our subsystem products combine several components
into single integrated solutions. Our integrated solutions deliver higher
performance at a lower cost than similar subsystems built from discrete
components. Additionally, our integrated solutions are easier to install and
configure, further reducing the overall cost to the customer.
30
<PAGE> 32

We plan to continue to expand our product lines through both internal
development and acquisitions of complementary businesses, products and
technologies. In March 2000, we entered into a definitive agreement to acquire
Compact Instrument Technology, LLC. This strategic acquisition complements our
core capabilities in gas composition analysis and provides additional
capabilities to reduce the size and costs of monitors for advanced processes.

Close Working Relationships with Customers. We have focused on satisfying
the needs of semiconductor device manufacturers and semiconductor capital
equipment manufacturers for over 25 years and have established long-term
relationships with many of our customers. We work with our customers at the pre-
design and design stage to identify and respond to their requests for current
and future generations of products. These close working relationships allow us
to understand and address the cost and performance expectations of our
customers. Our comprehensive product offering enables us to meet a broad range
of customer needs and provide a single source of solutions for semiconductor
device and semiconductor capital equipment manufacturers as they seek to
consolidate their supplier relationships to a smaller select group. We plan to
enhance our relationships with our major customers and identify opportunities to
develop similar relationships with additional semiconductor capital equipment
manufacturers and semiconductor device manufacturers.

Applications in Related Markets. We are leveraging our accumulated
expertise in the semiconductor industry by developing products for applications
that employ production processes similar to semiconductor fabrication processes
in their reliance upon gases and vacuum-based production technologies.
Applications served by us outside the semiconductor industry include optical
filters, fiber optic cables, flat panel displays, magnetic and optical storage
media, solar panels and gas lasers. We plan to continue to identify and develop
products that address advanced materials processing applications where gas
management plays a critical role.

Global Infrastructure and World Class Manufacturing Capabilities. As
semiconductor device manufacturers have become increasingly global, they have
required that suppliers offer comprehensive local repair service and close
customer support. Manufacturers require close support to enable them to
calibrate, repair, modify, upgrade and retrofit their equipment to improve
process consistency, uptime, yield and throughput. To meet these market
requirements, we maintain a global sales and support organization with 22
offices worldwide. We currently manufacture our products at nine facilities in
the United States and abroad. We continue to devote significant resources to
expand and maintain our worldwide production and service capabilities to meet
the global demand for gas measurement, control and analysis instruments and
vacuum technology components.

We believe that the ability to manufacture reliable instruments and
components in a cost-effective manner is critical to meet the demanding
just-in-time delivery requirements of semiconductor capital equipment
manufacturers and semiconductor device manufacturers. Our worldwide production
and manufacturing facilities provide us with the ability to manufacture reliable
gas measurement, control and analysis instruments and components in a timely and
cost-effective manner. With a total of approximately 250,000 square feet of
manufacturing capacity in five locations in the United States and four others in
Germany, Japan, the United Kingdom and Korea, we have implemented world class
practices in quality and delivery techniques. Our manufacturing facilities in
the United States, the United Kingdom and Germany are ISO 9001 certified.

PRODUCTS

We offer a full line of instruments, components and integrated subsystems
that are used to measure, control and analyze gases in semiconductor
manufacturing and other advanced thin-film manufacturing processes. We supply
products in three principal product areas. We also provide value-added
integrated subsystems combining these products. Our products include:

- Pressure Measurement and Control Products;

- Materials Delivery and Analysis Products; and

- Vacuum Products.
31
<PAGE> 33

The following schematic shows where our products are used in a typical
semiconductor or other thin-film manufacturing process.

[CHART]
[Schematic showing where MKS products are used in a typical semiconductor
manufacturing process.]

PRESSURE MEASUREMENT AND CONTROL PRODUCTS. We design and manufacture a
wide range of gas pressure measurement and control instrumentation. Each product
line consists of products which are designed for a variety of pressure ranges
and accuracies.

Baratron Pressure Measurement Products. Our Baratron pressure measurement
products are high precision pressure measurement instruments. We have five
Baratron product families that range from high accuracy digital output
instruments to simple electronic switches. These products are typically used to
measure the pressure of the gases being distributed upstream of the process
chambers, to measure process chamber pressures and to measure pressures between
process chambers, vacuum pumps and exhaust lines. Baratron instruments measure
pressures at ranges from two hundred times atmospheric pressure to one billionth
of atmospheric pressure. We believe that we offer the widest range of gas
pressure measurement instruments in the semiconductor and advanced thin-film
materials processing industries.

A key feature of Baratron instruments is the ability to measure pressure
independent of gas composition, which is critical for precise pressure control
of semiconductor processes that involve gas mixtures. In these processes, there
is a need to control both pressure and gas mixture, but the pressure measurement
instrument must measure only the pressure of the sum of the gases in the
chamber, independent of gas composition. The Baratron instruments enable users
to achieve a highly precise, accurate and repeatable measurement of gas
pressure. Pressure measurement, independent of gas composition, is also useful
during process steps used to remove atmospheric gases as well as those used to
introduce specific amounts of various types of gases. Such processes are used to
manufacture fluorescent bulbs and to fabricate gas lasers.

32
<PAGE> 34

The following table shows our principal Baratron pressure measurement
product lines:

BARATRON PRESSURE MEASUREMENT PRODUCTS

<TABLE>
<CAPTION>
PRODUCT LINES DESCRIPTION RANGES OF LIST PRICES
- ------------- ----------- ---------------------
<S> <C> <C>
High precision, high accuracy Instruments with built-in temperature $2,700 - $6,900
pressure and vacuum measurement stabilization features, for high
instruments precision, high accuracy and high
temperature operation
General purpose pressure and vacuum Rugged instruments with and without $ 500 - $4,250
measurement instruments built- in temperature stabilization
features, for reliable, precise and
accurate process measurement
Ultra-clean high pressure and vacuum Instruments with ultra-clean surfaces $ 650 - $1,150
measurement instruments exposed to gas, for precise, high
purity applications
General purpose "MINI" pressure and Small footprint instruments for $ 650 - $1,500
vacuum measurement instruments precise, accurate, general purpose
process measurement
Electronic pressure and vacuum Economical, stable instrument $ 400 - $ 800
switches providing "go/no-go" output for
precise pressure trip-points and
alarms
</TABLE>

Our list prices for our Baratron measurement products vary depending upon
precision, accuracy, pressure range, operating temperature range, stability and
gas purity specifications.

Automatic Pressure and Vacuum Control Products. Our automatic pressure
control products consist of analog and digital automatic pressure and vacuum
control electronic instruments and valves. These products enable precise control
of process pressure by electronically actuating valves which control the flow of
gases in and out of the process chamber to minimize the difference between
desired and actual pressure in the chamber. The electronic controllers vary from
simple analog units with precise manual tuning capability to state-of-the-art
self-tuning, digital signal processing controllers. The valve products vary from
small gas inlet valves to large exhaust valves.

In most cases, our Baratron pressure measurement instruments provide the
pressure input to the automatic pressure control device. Together, these
components create an integrated automatic pressure control system. Our pressure
control products can also accept inputs from other measurement instruments,
enabling the automatic control of gas input or exhaust based on parameters other
than pressure.

AUTOMATIC PRESSURE AND VACUUM CONTROL PRODUCTS

<TABLE>
<CAPTION>
PRODUCT LINES DESCRIPTION RANGES OF LIST PRICES
- ------------- ----------- ---------------------
<S> <C> <C>
Automatic throttle control valve Analog controllers, self-tuning $ 950 - $2,700
controllers digital controllers and displayless
self-tuning controllers
Throttle control valves Non-sealing and sealing valves; high $1,500 - $8,800
speed sealing throttle control
valves; and automatic,
microprocessor-based smart throttle
control valves
Automatic solenoid control valve Stand-alone control electronics $1,400 - $3,000
controllers packages or integrated sensor, valve
and control electronics packages
Solenoid control valves Elastomer and all-metal-sealed $ 500 - $1,550
solenoid control valves
</TABLE>

33
<PAGE> 35

We have recently introduced a line of integrated pressure controllers that
combine the functions of our Baratron pressure measurement instrument, flow
measurement instrument, control electronics and valve into a four-inch long
instrument which can be placed directly on a gas line to control pressure
downstream of the instrument while indicating the gas flow rate. This addresses
the need for smaller components, saving valuable clean room space.

MATERIALS DELIVERY AND ANALYSIS PRODUCTS. We design and manufacture a wide
range of flow and composition analysis measurement and control instrumentation.
Each product line consists of products which are designed for a variety of flow
and composition ranges and accuracies.

Flow Measurement and Control Products. Our flow measurement products
include gas, vapor and liquid flow measurement products based upon thermal
conductivity, pressure and direct liquid injection technologies. The flow
control products combine the flow measuring device with valve control elements
based upon solenoid, piezo-electric and piston pump technologies. The products
measure and automatically control the mass flow rate of gases and vapors into
the process chamber. Our broad product lines include products that allow the
precise, automatic flow control of inert or corrosive gases, the automatic
control of low vapor pressure gases and heated liquid source materials, and the
automatic control of delicate, advanced technology liquid sources and vaporized
solid sources for next generation devices.

Our line of thermal-based mass flow controllers, which control gas flow
based on the molecular weight of gases, includes all-metal-sealed designs and
ultra-clean designs for semiconductor applications, and general purpose
controllers for applications where all-metal-sealed construction is not
required. We have also developed pressure-based mass flow controllers, based on
Baratron pressure instrument measurement and control technology, which use flow
restrictors in the gas line to transform pressure control into mass flow
control.

FLOW MEASUREMENT AND CONTROL PRODUCTS

<TABLE>
<CAPTION>
PRODUCT LINES DESCRIPTION RANGES OF LIST PRICES
- ------------- ----------- ---------------------
<S> <C> <C>
Direct liquid injection subsystem Pumps and vaporizes into process $8,500 - $25,450
chamber liquid precursors for metals
and dielectrics
Gas box rate of rise calibrator Measures pressure increase with time $8,100 - $11,800
in a known volume
Pressure-based vapor delivery systems Measures and controls flow of low $4,900 - $12,400
pressure vapors into chamber
Pressure-based mass flow controllers Gas flow controller consisting of $2,700 - $ 2,800
Baratron sensor, control valve,
orifice and electronics
Ultra-clean, all-metal-sealed thermal Gas flow controller consisting of $1,450 - $ 9,500
mass flow controllers sensor, control valve and electronics
General purpose elastomer-sealed mass Gas flow controller consisting of $ 950 - $ 2,450
flow controllers sensor, control valve and electronics
</TABLE>

Certain new materials required for the next generation of semiconductor
devices are difficult to control using traditional thermal mass flow technology.
To control these new materials, we have designed a direct liquid injection
subsystem which pumps a precise volume of liquid into a vaporizer, which in turn
supplies a controlled flow of vapor into the process chamber. The direct liquid
injection subsystem pump and vaporizer are presently used principally for
research and development applications for next generation semiconductor device
conductors, diffusion barriers and insulators, such as copper, titanium nitride
and dielectric materials.

Our flow measurement products also include a calibration system which
independently measures mass flow and compares this measurement to that of the
process chamber mass flow controller. The demand for our calibration system is
driven by the increasingly stringent process control needs of the semiconductor
industry and the need to reduce costly downtime resulting from stopping
operations to address mass flow controller problems.

34
<PAGE> 36

Gas Composition Analysis Instruments. Our gas analysis instruments are
sold primarily to the semiconductor industry. The residual gas analysis product
lines include a quadrapole mass spectrometer sensor, which is a device that
separates gases based on molecular weight. Our quadrapole mass spectrometer
sensors include built-in electronics to analyze the composition of background
and process gases in the process chamber. Our ORION process monitoring system is
a sophisticated quadrapole mass spectrometer process analyzer for statistical
process monitoring of manufacturing processes operating from very low pressures
to atmospheric pressure. These instruments are provided both as portable
laboratory systems and as process gas monitoring systems used in the diagnosis
of semiconductor manufacturing process systems and are sold at prices up to
$120,000. The gas monitoring systems can indicate out-of-bounds conditions, such
as the presence of undesirable atmospheric gases, water vapor or
out-of-tolerance amounts of specific gases in the process chamber, enabling
operators to diagnose and repair faulty equipment. Our gas sampling systems
provide a turn-key solution for withdrawing gases from chambers at relatively
high pressures for introduction into the low pressure gas analyzers. Next
generation semiconductor manufacturing processes, with smaller circuit patterns
and larger wafer sizes, are expected to require sophisticated gas analysis
instruments and/or monitoring equipment to ensure tighter process control and
earlier diagnosis of equipment malfunction. Our recent definitive agreement to
acquire Compact Instrument Technology enhances our core capabilities in gas
composition analysis and process monitoring.

VACUUM PRODUCTS. We design and manufacture a wide variety of vacuum
technology products, including vacuum gauges, valves and components.

Vacuum Gauging Products. We offer a wide range of vacuum instruments
consisting of vacuum measurement sensors and associated power supply and readout
units. These vacuum gauges measure phenomena that are related to the level of
pressure in the process chamber and downstream of the process chamber between
the chamber and the pump. Unlike Baratron pressure measurement instruments,
vacuum gauges do not measure pressure directly. These gauges are used to measure
vacuum at pressures lower than those measurable with a Baratron pressure
measurement instrument or to measure vacuum in the Baratron pressure measurement
instrument range where less accuracy is required. Our indirect pressure gauges
use thermal conductivity and ionization gauge technologies to measure pressure
from atmospheric pressure to one trillionth of atmospheric pressure. Our
Baratron pressure measurement instruments, together with our vacuum gauges, are
capable of measuring the full range of pressures used in semiconductor and other
thin-film manufacturing processes from two hundred times atmospheric pressure to
one trillionth of atmospheric pressure.

We also manufacture a wide range of vacuum gauge instruments in which the
associated electronics are packaged with the vacuum sensor, reducing panel space
and installation cost. We offer both analog and digital versions of these vacuum
gauge transducers.

Vacuum Valves and Components. Our vacuum valves are used on the gas lines
between the process chamber and the pump downstream of the process chamber. Our
vacuum components consist of flanges, fittings, traps and heated lines that are
used downstream from the process chamber to provide leak free connections and to
prevent condensable materials from depositing particles near or back into the
chamber. The manufacture of small circuit patterns cannot tolerate contamination
from atmospheric leaks or particles. Our vacuum components are designed to
minimize such contamination and thus increase yields and uptimes.

VACUUM PRODUCTS

<TABLE>
<CAPTION>
PRODUCT LINES DESCRIPTION RANGES OF LIST PRICES
- ------------- ----------- ---------------------
<S> <C> <C>
Cold cathode and hot filament vacuum Electronic gauges to measure pressure $ 600 - $7,150
gauges down to one trillionth of atmospheric
pressure
Convection gauges Electronic gauges to measure from one $ 250 - $ 700
atmosphere down to one millionth of
atmospheric pressure
</TABLE>

35
<PAGE> 37

<TABLE>
<CAPTION>
PRODUCT LINES DESCRIPTION RANGES OF LIST PRICES
- ------------- ----------- ---------------------
<S> <C> <C>
Right-angle and in-line shut-off High vacuum rapid action poppet $ 300 - $5,550
valves valves
Vapor sublimation traps Contaminant particle trap $1,800 - $4,550
Other vacuum components Flanges, fittings, valves and heated $ 50 - $3,150
lines
</TABLE>

MARKETS AND APPLICATIONS

We estimate that approximately two-thirds of our sales in 1999 were made to
the semiconductor industry. Our products are also used in other markets and
applications including the manufacture of, among other things:

- optical filters and fiber optic cables for data and telecommunications;

- flat panel displays;

- magnetic and optical storage media;

- solar panels;

- gas lasers;

- eyeglasses;

- architectural glass;

- cutting tools; and

- freeze-dried pharmaceuticals.

Semiconductor Manufacturing

Our products are sold to semiconductor capital equipment manufacturers and
semiconductor device manufacturers. Our products are used in the major
semiconductor processing steps such as:

- depositing materials onto substrates;

- etching circuit patterns; and

- implanting positively charged atoms into a substrate to alter electrical
characteristics.

Our products are also used for process facility applications such as gas
distribution, pressure control and vacuum distribution in clean rooms where
semiconductor manufacturing takes place. We anticipate that the semiconductor
manufacturing market will continue to account for a substantial portion of our
sales. While the semiconductor device manufacturing market is global, the major
semiconductor capital equipment manufacturers are concentrated in the United
States, Japan and Europe.

Optical Filters, Optical Fibers and Other Optical Coating

Our products are used in optical filter, optical fiber and other optical
thin-film coating processes. Our products are sold both to coating equipment
manufacturers and to manufacturers of products made using optical thin-film
coating processes. Optical filters and fibers used for data transmission are
manufactured using processes to deposit chemical vapors which are similar to
those used in semiconductor manufacturing. The requirement for greater data
transmission is driving the need for tighter control of optical filter and fiber
coating processes. Optical thin films for eyeglasses, solar panels and
architectural glass are deposited using processes to deposit chemical vapors and
gaseous metals similar to those used in semiconductor

36
<PAGE> 38

manufacturing. Optical filter, optical fiber and other optical thin-film
processing are concentrated in the United States, Japan and Europe.

Flat Panel Displays

Our products are used in the manufacture of flat panel displays, which
require the same or similar fabrication processes as semiconductor
manufacturing. We sell our products both to flat panel original equipment
manufacturers and to end-users in the flat panel display market. The transition
to larger panel size and higher definition is driving the need for defect
reduction which requires tighter process controls. The major manufacturers for
flat panel displays and flat panel display equipment are concentrated in Japan.

Magnetic and Optical Storage Media

Our products are used in the manufacture of:

- magnetic storage media which store and read data magnetically;

- optical storage media which store and read data using laser technology;

- compact disks;

- hard disks;

- data storage devices; and

- digital video or versatile disks.

The transition to higher density storage capacity requires manufacturing
processes incorporating tighter process controls. While storage media
manufacturing is global, the major manufacturers are concentrated in Japan and
the Asia-Pacific region and storage media capital equipment manufacturers are
concentrated in the United States, Japan and Europe.

Other Coating Markets

Our products are also used in processes for the application of thin films
to harden tool bit and cutting product surfaces, for the application of diamond
thin films to enhance surface hardness and durability and for coatings used for
food container packaging, jewelry and ornaments. The major equipment and process
providers are concentrated in the United States, Japan and Europe.

We estimate that the flat panel display, magnetic and optical storage
media, optical filter and fiber, optical coating markets and other coating
markets combined, accounted for approximately 14% of net sales for 1998 and 11%
of net sales for 1999.

Other Markets

Our products are used in plasma processes used to sterilize medical
instruments, in vacuum freeze drying of pharmaceuticals, foods and beverages,
and in vacuum processes involved in light bulb and gas laser manufacturing. Our
products are also sold to government, university and industrial laboratories for
vacuum applications involving research and development in materials science,
physical chemistry and electronics materials. The major equipment and process
providers and research laboratories are concentrated in the United States, Japan
and Europe.

CUSTOMERS

Our largest customers are leading semiconductor capital equipment
manufacturers such as Applied Materials, Lam Research, Novellus and Tokyo
Electron, semiconductor device manufacturers such as Motorola, and specialty gas
providers such as Air Products and Chemicals. Sales to our top ten customers
accounted for approximately 37% of our net sales in 1997, 29% in 1998 and 39% in
1999. International sales represented approximately 27% of our net sales in
1997, 32% in 1998 and 31% in 1999. During 1999,

37
<PAGE> 39

Applied Materials accounted for approximately 22% of our net sales. Applied
Materials purchases products from us under the terms of an agreement, with no
minimum purchase requirements, that expires in 2000.

SALES, MARKETING AND SUPPORT

Our worldwide sales, marketing and support organization is critical to our
strategy of maintaining close relationships with semiconductor capital equipment
manufacturers and semiconductor device manufacturers. We sell our products
primarily through our direct sales force. On December 31, 1999, we had 126 sales
employees in 22 offices in France, Germany, Japan, Korea, The Netherlands,
Singapore, Taiwan, the United Kingdom and the United States. This direct sales
force is supplemented by sales representatives and agents in Canada, China,
India, Israel, and Italy and in select U.S. cities. We maintain a marketing
staff to identify customer requirements, assist in product planning and
specifications and to focus on future trends in the semiconductor and other
markets.

As semiconductor device manufacturers have become increasingly sensitive to
the significant costs of system downtime, they have required that suppliers
offer comprehensive local repair service and close customer support.
Manufacturers require close support to enable them to repair, modify, upgrade
and retrofit their equipment to improve yields and adapt new materials or
processes. To meet these market requirements, we maintain a worldwide sales and
support organization with offices in 22 locations. Technical support is provided
by applications engineers located at offices in Arizona, California, Colorado,
Massachusetts, Oregon and Texas, as well as Canada, France, Germany, India,
Israel, Italy, Japan, Korea, The Netherlands, Singapore, Taiwan and the United
Kingdom. Repair and calibration services are provided at 14 service depots
located worldwide. We provide warranties from one to three years, depending upon
the type of product. In addition, we offer training programs for our customers
in a wide range of vacuum and gas processing technologies.

MANUFACTURING

We believe that the ability to manufacture reliable gas management
instruments and components in a cost-effective manner is critical to meeting the
demanding requirements of semiconductor capital equipment manufacturers and
semiconductor device manufacturers. We monitor and analyze product lead times,
warranty data, process yields, supplier performance, field data on mean time
between failures, inventory turns, repair response time and other indicators so
that we may continuously improve our manufacturing processes. We have adopted a
total quality management process. Our manufacturing facilities in the United
States, the United Kingdom and Germany are ISO 9001 certified.

We are devoting significant financial and management resources to maintain
and expand our worldwide production and service capabilities to meet the global
demand for gas management instruments and components. We believe that the
ability to manufacture reliable instruments and components in a cost-effective
manner is critical to meet the demanding just-in-time delivery requirements of
semiconductor capital equipment manufacturers and semiconductor device
manufacturers. Due to the short time between the receipt of orders and
shipments, we normally operate with a level of backlog that is not significant.
We currently manufacture our products at nine facilities in the United States
and abroad.

Our principal manufacturing activities consist of precision assembly, test
and calibration. We subcontract a portion of our assembly, machining and printed
circuit board assembly and testing. Critical assembly activities are performed
in cleanroom environments at our facilities.

RESEARCH AND DEVELOPMENT

Our research and development efforts are directed toward developing and
improving our gas management instruments and components for semiconductor and
advanced thin-film processing applications and identifying and developing
products for new applications for which gas management plays a critical role. We
have undertaken an initiative to involve our marketing, engineering,
manufacturing and sales personnel in the concurrent development of new products
in order to reduce the time to market for new products. Our employees also work
closely with our customers' development personnel. These relationships help us
identify
38
<PAGE> 40

and define future technical needs on which to focus our research and development
efforts. In addition, we participate in the Semiconductor Industry Suppliers
Association, a consortium of semiconductor equipment suppliers, to assist in
product development and standardization of product technology, and we support
research at academic institutions targeted at advances in materials science and
semiconductor process development.

As of December 31, 1999, we employed a research and development staff of
110 employees. Our research and development expenditures were approximately
$14.7 million in 1997, $12.1 million in 1998 and $13.2 million in 1999,
representing approximately 7.8% of net sales in 1997, 8.7% in 1998 and 7.1% in
1999.

COMPETITION

The market for our products is highly competitive. Principal competitive
factors include:

- historical customer relationships;

- product quality, performance and price;

- breadth of product line;

- manufacturing capabilities; and

- customer service and support.

While we believe that we compete favorably with respect to these factors,
there can be no assurance that we will continue to do so.

We encounter substantial competition in each of our product lines from a
number of competitors, although no one competitor competes with us across all
product lines. Certain of our competitors have greater financial and other
resources than we have. In some cases, the competitors are smaller than us, but
well-established in specific product niches. Millipore Corporation offers
products that compete with our pressure and flow products. Aera Corporation,
STEC and Unit Instruments each offer products that compete with our mass flow
control products. Nor-Cal Products, Inc. and MDC Vacuum Products, Inc. each
offer products that compete with our vacuum components. Leybold-Inficon, Inc.
offers products that compete with our vacuum measuring and gas analysis
products. Helix Technology Corporation offers products that compete with our
vacuum gauging products. Spectra International LLC offers products that compete
with our gas analysis products.

In some cases, particularly with respect to mass flow controllers,
semiconductor device manufacturers may direct semiconductor capital equipment
manufacturers to use a specified supplier's product in their equipment.
Accordingly, our success depends in part on our ability to have semiconductor
device manufacturers specify that our products be used at their fabrication
facilities and we may encounter difficulties in changing established
relationships of competitors with a large installed base of products at such
customers' fabrication facilities. In addition, our competitors can be expected
to continue to improve the design and performance of their products. There can
be no assurance that competitors will not develop products that offer price or
performance features superior to those of our products.

PATENTS AND OTHER INTELLECTUAL PROPERTY RIGHTS

We rely on a combination of patent, copyright, trademark and trade secret
laws and license agreements to establish and protect our proprietary rights. As
of December 31, 1999, we had 55 U.S. patents and 13 pending U.S. patent
applications. Foreign counterparts of certain of these applications have been
filed or may be filed at the appropriate time. While we believe that certain
patents may be important for certain aspects of our business, we believe that
our success depends more upon close customer contact, innovation, technological
expertise, responsiveness and worldwide distribution.

39
<PAGE> 41

We require each of our employees, including our executive officers, to
enter into standard agreements pursuant to which the employee agrees to keep
confidential all our proprietary information and to assign to us all inventions
made while they are employed by us.

We are not engaged in any material disputes with other parties with respect
to the ownership or use of our proprietary technology. However, there can be no
assurance that other parties will not assert technology infringement claims or
other claims against us in the future. The litigation of such a claim may
involve significant expense and management time. In addition, if any such claim
were successful, we could be required to pay monetary damages and may also be
required to either refrain from distributing the infringing product or obtain a
license from the party asserting the claim (which license may not be available
on commercially reasonable terms).

EMPLOYEES

As of December 31, 1999, we employed 1,006 persons. Management believes
that our ongoing success depends upon our continued ability to attract and
retain highly skilled employees. None of our employees is represented by a labor
union or party to a collective bargaining agreement. We believe that our
employee relations are good.

FACILITIES

We sell our products primarily through our direct sales force in 22 offices
in France, Germany, Japan, Korea, The Netherlands, Singapore, Taiwan, the United
Kingdom and the United States. The direct sales force is supplemented by sales
representatives and agents in Canada, China, India, Israel, and Italy and in
select U.S. cities. Our corporate headquarters are located in Andover,
Massachusetts. Manufacturing and other operations are conducted in a number of
locations worldwide. We believe that the current facilities will be adequate and
suitable to meet our needs for the foreseeable future. The following table
provides information as of March 24, 2000 concerning our principal and certain
other owned and leased facilities:

<TABLE>
<CAPTION>
LEASE
LOCATION SQ. FT. ACTIVITY PRODUCTS MANUFACTURED EXPIRES
- -------- ------- -------- --------------------- -------
<S> <C> <C> <C> <C>
Andover, Massachusetts.... 82,000 Headquarters, Pressure Measurement and (1)
Manufacturing, Customer Control Products
Support and Research &
Development
Austin, Texas............. 8,000 Sales, Customer Support Not applicable 1/30/03
and Service
Boulder, Colorado......... 86,000 Manufacturing, Customer Vacuum Products (2)
Support, Service and
Research & Development
Cheshire, U.K............. 2,000 Manufacturing, Sales, Materials Delivery and 10/5/09
Customer Support and Analysis Products
Service
Lawrence, Massachusetts... 40,000 Manufacturing Pressure Measurement and (1)
Control Products
Le Bourget, France........ 14,000 Sales, Customer Support Not applicable (1)
and Service
Methuen, Massachusetts.... 85,000 Manufacturing, Customer Pressure Measurement and (1)
Support, Service and Control Products;
Research & Development Materials Delivery and
Analysis Products
Munich, Germany........... 14,000 Manufacturing, Sales, Pressure Measurement and (1)
Customer Support, Service Control Products;
and Research & Materials Delivery and
Development Analysis Products
</TABLE>

40
<PAGE> 42

<TABLE>
<CAPTION>
LEASE
LOCATION SQ. FT. ACTIVITY PRODUCTS MANUFACTURED EXPIRES
- -------- ------- -------- --------------------- -------
<S> <C> <C> <C> <C>
Richardson, Texas......... 15,000 Manufacturing, Sales, Pressure Measurement and 8/31/01
Customer Support and Control Products;
Service Materials Delivery and
Analysis Products
Santa Clara, California... 13,000 Sales, Customer Support Not applicable (3)
and Service
Seoul, Korea.............. 5,000 Manufacturing, Sales, Materials Delivery and 5/30/00*
Customer Support and Analysis Products
Service
Singapore................. 2,000 Sales, Customer Support Not applicable 3/25/01
and Service
Taiwan.................... 2,000 Sales, Customer Support Not applicable 12/31/01
and Service
Tokyo, Japan.............. 21,000 Manufacturing, Sales, Materials Delivery and (4)
Customer Support, Service Analysis Products
and Research &
Development
Woburn, Massachusetts..... 3,000 Research and Development Not applicable 8/10/03
</TABLE>

- ---------------
* We have an option to extend this lease for a period of two years.

(1) This facility is owned by us.

(2) We lease one facility which has 39,000 square feet and a lease term which
expires 10/31/01 and own a second facility with 28,000 square feet and third
facility with 19,000 square feet.

(3) We lease one facility with 4,000 square feet on a month-to-month basis, a
second facility of 4,000 square feet with a lease term which expires on
1/30/03. We own a third facility of 5,000 square feet.

(4) We lease a facility which has 14,000 square feet and a lease term which
expires 4/30/01 and own another facility with 6,700 square feet.

In addition to manufacturing and other operations conducted at the
foregoing leased or owned facilities, we provide worldwide sales, customer
support and services from various other leased facilities throughout the world
not listed in the table above. See "Business -- Sales, Marketing and Support."

LEGAL PROCEEDINGS

We are not a party to any material legal proceedings.

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<PAGE> 43

MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

Our executive officers and directors as of March 24, 2000 are as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
John R. Bertucci..................... 59 Chairman and Chief Executive Officer
Peter R. Younger..................... 55 President and Chief Operating Officer
Ronald C. Weigner.................... 54 Vice President and Chief Financial Officer
John J. Sullivan..................... 64 Executive Vice President of Technology
Donald K. Smith...................... 47 Chief Technical Officer
William D. Stewart................... 55 Corporate Vice President and General Manager, Vacuum
Products
Joseph A. Maher, Jr. ................ 52 Corporate Vice President and General Manager, Pressure
Measurement and Control Products
Robert D. Klimm...................... 49 Corporate Vice President and General Manager, Materials
Delivery and Analysis Products
Leo Berlinghieri..................... 46 Corporate Vice President, Customer Support Operations
Richard S. Chute..................... 61 Director
Owen W. Robbins...................... 70 Director
Robert J. Therrien................... 65 Director
Louis P. Valente..................... 69 Director
</TABLE>

Mr. Bertucci has served as a director since 1974 and has been Chairman of
the board of directors and Chief Executive Officer since November 1995. From
1974 to 1999, he was President, and from 1970 to 1974 he was Vice President and
General Manager. Mr. Bertucci has an M.S. in Industrial Administration and a
B.S. in Metallurgical Engineering from Carnegie-Mellon University. Mr. Bertucci
is also a director of Applied Science and Technology, Inc. and Intellisense
Corporation.

Mr. Younger has served as our President and Chief Operating Officer since
May 1999. From 1982 to 1999, he served in various management positions at
Eaton's Semiconductor Equipment Operations, most recently as Vice President and
General Manager. He is currently a board member of Semiconductor Equipment and
Materials Information (SEMI), a global association of approximately 2,200 member
companies in the semiconductor equipment and materials industry, and was the
organization's chairman from 1997 to 1998. In addition, he served on the board
of directors for the North Shore Chamber of Commerce from 1993 to 1997. Mr.
Younger holds an A.B. in Physics from Cornell University, and an M.A. and Ph.D.
in Physics from Boston University.

Mr. Weigner has served as our Vice President and Chief Financial Officer
since November 1995. From September 1993 until November 1995, he was Vice
President and Corporate Controller, and from 1980 to 1993, he was Corporate
Controller. Mr. Weigner is a certified public accountant and has a B.S. in
Business Administration from Boston University.

Mr. Sullivan has served as our Executive Vice President of Technology since
March 1995. From 1982 to March 1995, he was Vice President of Marketing, and
from 1975 to 1982, he was Vice President of Sales and Marketing. Mr. Sullivan
has an M.S. and a B.S. in Physics from Northeastern University.

Mr. Smith has served as Chief Technical Officer since March 10, 2000. He
was President of Compact Instrument Technology, LLC from April 1999 until it was
acquired by us in March 2000. From 1987 until 1999, he was Senior Vice
President, Advanced Technology and a director of Applied Science and Technology.
He joined the Massachusetts Institute of Technology as a research scientist in
1981. Mr. Smith holds an M.S. and a Ph.D. in engineering from the University of
Wisconsin and a B.S. from Davidson College.

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<PAGE> 44

Mr. Stewart has served as our Corporate Vice President and General Manager
of Vacuum Products since November 1997. From October 1986 to November 1997, he
was President of HPS Vacuum Products group, which we acquired in October 1986.
Mr. Stewart co-founded HPS in 1976. Mr. Stewart has an M.B.A. from Northwestern
University and a B.S. in Business Administration from the University of
Colorado. Mr. Stewart also serves on the board of directors of the Janus Fund.

Mr. Maher has served as our Corporate Vice President and General Manager of
Pressure Measurement and Control Products since December 1999. From November
1997 to December 1999 he was Corporate Vice President and General Manager of
Measurement and Control Products and from March 1997 through November 1997, he
was Vice President of the Process Control Instrumentation Group. Mr. Maher was a
Vice President of Lam Research Corporation from 1993 through 1996, and from 1980
through 1993, he was Executive Vice President of Drytek Corporation, which was
purchased by Lam Research Corporation in 1993. Mr. Maher has a B.S. in
Electrical Engineering from Northeastern University.

Mr. Klimm has served as Corporate Vice President and General Manager of the
Materials Delivery and Analysis Products group since December 1999. From 1997 to
1999, he was Vice President and General Manager of the Factory Automation
Division of PRI Automation. From 1990 to 1997, he held various positions at
Eaton's Semiconductor Equipment Operations, culminating as General Manager of
the Implant Systems Division, Mr. Klimm has an M.B.A. from the Sloan School at
the Massachusetts Institute of Technology, an M.A. in Electrical Engineering
from Northeastern University and a B.S. in Electrical Engineering from Lehigh
University.

Mr. Berlinghieri has served as our Corporate Vice President, Customer
Support Operations since November 1995. From 1980 to November 1995, he served in
various management positions at MKS, including Manufacturing Manager, Production
& Inventory Control Manager, and Director of Customer Support Operations. Mr.
Berlinghieri is also Treasurer of the TQM-BASE Council, Inc., a non-profit
quality management consortium comprised of semiconductor capital equipment
manufacturers located in and around Boston, Massachusetts.

Mr. Chute has served as a member of our board of directors since 1974. He
has been a member of the law firm of Hill & Barlow, a professional corporation,
since November 1971.

Mr. Robbins has served as a member of our board of directors since February
1996. He was Executive Vice President of Teradyne, Inc., a manufacturer of
electronic test systems and backplane connection systems used in the electronics
and telecommunications industries from March 1992 to May 1997, and its Chief
Financial Officer from February 1980 to May 1997. Mr. Robbins has served on the
board of directors of Teradyne, Inc. since March 1992 and was its Vice Chairman
from January 1996 to May 1997.

Mr. Therrien has served as a member of our board of directors since
February 1996. He has been President and Chief Executive Officer of Brooks
Automation, Inc., a manufacturer of semiconductor processing equipment, since
1989.

Mr. Valente has served as a member of our board of directors since February
1996. He has been Chairman and Chief Executive Officer of Palomar Medical
Technologies, Inc., a company which designs, manufactures and markets cosmetic
lasers, since September 1997. He has been a director of Palomar Medical
Technologies, Inc. since February 1997 and was its President and Chief Executive
Officer from May 1997 to September 1997. Mr. Valente was a Senior Vice President
of Acquisitions, Mergers and Investments of EG&G, Inc. from 1991 until July
1995.

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<PAGE> 45

PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth certain information regarding beneficial
ownership of our common stock as of March 24, 2000, and as adjusted to reflect
the sale of shares offered hereby, by (1) each of our directors, (2) each of our
executive officers, (3) each person known to us to own beneficially more than 5%
of our common stock and (4) all directors and executive officers as a group.

Unless otherwise indicated, each person named in the table has sole voting
power and investment power or shares such power with his or her spouse with
respect to all shares of capital stock listed as owned by such person.
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and includes voting or investment power with
respect to the securities. The number of shares of common stock outstanding used
in calculating the percentage for each listed person includes any shares the
individual has the right to acquire within 60 days of March 24, 2000.

<TABLE>
<CAPTION>
SHARES SHARES
BENEFICIALLY OWNED NUMBER BENEFICIALLY OWNED
PRIOR TO OFFERING OF AFTER OFFERING
--------------------- SHARES ---------------------
NAME OF BENEFICIAL OWNER NUMBER PERCENT OFFERED NUMBER PERCENT
------------------------ ---------- ------- --------- ---------- -------
<S> <C> <C> <C> <C> <C>
EXECUTIVE OFFICERS AND DIRECTORS
John R. Bertucci..................... 15,997,777(1) 64.1% 1,000,000 14,997,777 55.6%
Peter R. Younger..................... 30,700(2) * -- 30,700 *
Ronald C. Weigner.................... 128,609(3) * -- 128,609 *
John J. Sullivan..................... 297,510 1.2 -- 297,510 1.1%
Donald K. Smith...................... 40,813 * -- 40,813 *
William D. Stewart................... 128,609(3) * -- 128,609 *
Joseph A. Maher, Jr.................. 102,676(4) * -- 102,676 *
Robert D. Klimm...................... -- * -- -- *
Leo Berlinghieri..................... 92,009(3) * -- 92,009 *
Richard S. Chute..................... 2,317,798(5) 9.3 200,000 2,117,798 7.8%
Owen W. Robbins...................... 25,092(3) * -- 25,092 *
Robert J. Therrien................... 25,092(3) * -- 25,092 *
Louis P. Valente..................... 25,092(3) * -- 25,092 *
5% STOCKHOLDER
Thomas H. Belknap.................... 2,021,506(6) 8.1 200,000 1,821,506 6.8%
All executive officers and directors
as a group (13 persons)............ 16,919,071(7) 66.2% 1,000,000 15,919,071 57.8%
</TABLE>

- ---------------
* Less than 1% of outstanding common stock.

(1) Includes 5,764,716 shares held directly by Mr. Bertucci, 5,919,199 shares
held directly by Mr. Bertucci's wife, and 4,313,862 shares held by Bertucci
family trusts for which either Mr. or Mrs. Bertucci serves as a co-trustee.

(2) Includes 30,000 shares subject to options exercisable within 60 days of
March 24, 2000.

(3) Consists of options exercisable within 60 days of March 24, 2000.

(4) Includes 96,960 shares subject to options exercisable within 60 days of
March 24, 2000.

(5) Includes 2,292,706 shares held by certain of the Bertucci family trusts for
which Mr. Chute serves as a co-trustee and 25,092 shares subject to options
held by Mr. Chute exercisable within 60 days of March 24, 2000.

44
<PAGE> 46

(6) Includes 2,021,156 shares held by certain of the Bertucci family trusts for
which Mr. Belknap serves as a co-trustee and 350 shares held directly by Mr.
Belknap.

(7) Includes 576,555 shares subject to options exercisable within 60 days of
March 24, 2000.

45
<PAGE> 47

UNDERWRITING

We and the selling stockholders are offering the shares of common stock
described in this prospectus through a number of underwriters. Banc of America
Securities LLC, CIBC World Markets Corp., Lehman Brothers Inc., Adams, Harkness
& Hill, Inc. and Needham & Company, Inc. are the representatives of the
underwriters. MKS and the selling stockholders have entered into a firm
commitment underwriting agreement with the representatives. Under the terms and
subject to the conditions contained in the underwriting agreement dated
, 2000, we and the selling stockholders have agreed to sell to the
underwriters, and each of the underwriters has agreed to purchase, the number of
shares of common stock listed next to its name in the following table:

<TABLE>
<CAPTION>
UNDERWRITER NUMBER OF SHARES
- ----------- ----------------
<S> <C>
Banc of America Securities LLC..............................
CIBC World Markets Corp.....................................
Lehman Brothers Inc. .......................................
Adams, Harkness & Hill, Inc. ...............................
Needham & Company, Inc. ....................................
--------
Total..................................................
========
</TABLE>

The underwriting agreement is subject to a number of terms and conditions
and provides that the underwriters must buy all of the shares if they buy any of
them. The underwriters will sell the shares to the public when and if the
underwriters buy the shares from us and the selling stockholders.

The underwriters initially will offer shares to the public at the price
specified on the cover page of this prospectus. The underwriters may allow to
some dealers a concession of not more than $ per share. The underwriters
also may allow, and any other dealers may reallow, a concession of not more than
$ per share to some other dealers. If all the shares are not sold at the
public offering price, the underwriters may change the public offering price and
the other selling terms. The common stock is offered subject to a number of
conditions, including:

- receipt and acceptance of our common stock by the underwriters; and

- the right on the part of the underwriters to reject orders in whole or in
part.

We and the selling stockholders have granted an option to the underwriters
to buy up to 450,000 additional shares of common stock. These additional shares
would cover sales of shares by the underwriters that exceed the number of shares
specified in the table above. The underwriters have 30 days to exercise this
option. If the underwriters exercise this option, they will each purchase
additional shares approximately in proportion to the amounts specified in the
table above. If purchased, such additional shares will be sold by the
underwriters on the same terms as those on which the shares of common stock
offered hereby are being sold.

The following table sets forth the per share and total underwriting
discounts and commissions to be paid to the underwriters assuming both no
exercise and full exercise of the underwriters' option to purchase additional
shares.

<TABLE>
<CAPTION>
NO EXERCISE FULL EXERCISE
----------- -------------
<S> <C> <C>
Per share................................................... $ $
Total to be paid by us...................................... $ $
Total to be paid by the selling stockholders................ $ $
</TABLE>

We estimate that expenses payable by us and the selling stockholders in
connection with this offering, other than the underwriting discounts and
commissions referred to above, will be approximately $ .

We, our executive officers and directors, certain of our stockholders and
each of the selling stockholders have entered into lock-up agreements with the
underwriters. Under those agreements, we, our executive

46
<PAGE> 48

officers and directors and the selling stockholders may not dispose of or hedge
any shares of common stock or securities convertible into or exchangeable for
shares of common stock. These restrictions will be in effect for a period of 90
days from the date of this prospectus. At any time and without notice, Banc of
America Securities LLC may, in its sole discretion, release all or some of the
securities from these lock-up agreements.

We and the selling stockholders will indemnify the underwriters against
some liabilities, including some liabilities under the Securities Act. If we or
the selling stockholders are unable to provide this indemnification, we and the
selling stockholders will contribute to payments the underwriters may be
required to make in respect of those liabilities.

The shares of common stock are quoted on the Nasdaq National Market under
the symbol "MKSI."

In connection with this offering, the underwriters may purchase and sell
shares of common stock in the open market. These transactions may include:

- short sales;

- stabilizing transactions; and

- purchases to cover positions created by short sales.

Short sales involve the sale by the underwriters of a greater number of
shares than they are required to purchase in this offering. Stabilizing
transactions consist of bids or purchases made for the purpose of preventing or
retarding a decline in the market price of the common stock while this offering
is in progress.

The underwriters may also impose a penalty bid. This means that if the
representatives purchase shares in the open market in stabilizing transactions
or to cover short sales, the representatives can require the underwriters that
sold those shares as part of this offering to repay the underwriting discount
received by them.

The underwriters may engage in activities that stabilize, maintain or
otherwise affect the price of the common stock, including:

- over-allotment;

- stabilization;

- syndicate covering transactions; and

- imposition of penalty bids.

As a result of these activities, the price of the common stock may be
higher than the price that otherwise might exist in the open market. If the
underwriters commence these activities, they may discontinue them at any time.
The underwriters may carry out these transactions on the Nasdaq National Market,
in the over-the-counter market or otherwise.

In connection with this offering, some underwriters and any selling group
members who are qualified market makers on the Nasdaq National Market may engage
in passive market making transactions in the common stock on the Nasdaq National
Market in accordance with Rule 103 of Regulation M. Rule 103 permits passive
market making during the period when Regulation M would otherwise prohibit
market making activity by the participants in this offering. Passive market
making may occur during the business day before the pricing of the offering,
before the commencement of offers or sales of the common stock. Passive market
makers must comply with applicable volume and price limitations and must be
identified as a passive market maker. In general, a passive market maker must
display its bid at a price not in excess of the highest independent bid for the
security. If all independent bids are lowered below the passive market maker's
bid, however, the bid must then be lowered when purchase limits are exceeded.
Net purchases by a passive market maker on each day are limited to a specified
percentage of the passive market maker's average daily trading volume in the
common stock during a specified period and must be discontinued when such limit
is reached.

47
<PAGE> 49

Underwriters and dealers are not required to engage in passive market making and
may end passive market making activities at any time.

LEGAL MATTERS

The validity of the common stock offered hereby will be passed upon for MKS
by Hale and Dorr LLP, Boston, Massachusetts. Certain legal matters in connection
with this offering will be passed upon for the underwriters by Ropes & Gray,
Boston, Massachusetts.

EXPERTS

The financial statements incorporated in this prospectus by reference to
the Annual Report on Form 10-K for the year ended December 31, 1999 have been so
incorporated in reliance on the report of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.

WHERE YOU CAN FIND MORE INFORMATION

We file reports, proxy statements and other documents with the Securities
and Exchange Commission. You may read and copy any document we file at the SEC's
public reference room at Judiciary Plaza Building, 450 Fifth Street, N.W., Room
1024, Washington, D.C. 20549. You should call 1-800-SEC-0330 for more
information on the public reference room. Our SEC filings are also available to
you on the SEC's Internet site at http://www.sec.gov.

This prospectus is part of a registration statement that we filed with the
SEC. The registration statement contains more information than this prospectus
regarding us and our common stock, including certain exhibits and schedules. You
can obtain a copy of the registration statement from the SEC at the address
listed above or from the SEC's Internet site.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The SEC allows us to "incorporate" into this prospectus information that we
file with the SEC in other documents. This means that we can disclose important
information to you by referring to other documents that contain that
information. The information incorporated by reference is considered to be part
of this prospectus. Information contained in this prospectus and information
that we file with the SEC in the future and incorporate by reference in this
prospectus automatically updates and supersedes previously filed information. We
incorporate by reference the documents listed below and any future filings we
make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934, prior to the sale of all the shares covered by this
prospectus.

1. Our Annual Report on Form 10-K for the year ended December 31, 1999;

2. All of our filings pursuant to the Exchange Act after the date of filing
the initial registration statement and prior to effectiveness of the
registration statement; and

3. The description of our common stock contained in our Registration
Statement on Form 8-A dated March 2, 1999.

You may request a copy of these documents, which will be provided to you at
no cost, by contacting:
MKS Instruments, Inc.
Six Shattuck Road
Andover, MA 01810
Attention: Chief Financial Officer
Telephone: (978) 975-2350

48
<PAGE> 50

The inside back cover graphically depicts MKS's message of being a worldwide
provider of process control solutions. It is produced in four-color process. In
the center of the page is a photo of the Earth, with the tag line "Providing
Solutions Around the Process, Around the World" wrapping around the photo. The
word "Solutions" is highlighted with slightly larger type size. The background
of the page is dark, with the MKS logo appearing at the top right, knocking out
to white. Photos of MKS's products surround the photo of the Earth and include
MKS Baratron Capacitance Manometers, a Throttling Poppet Valve, a Pressure
Controller, Mass Flow Controllers, an In-Situ Flow Verifier, a Direct Liquid
Injection Subsystem and an ORION Process Monitor.

<PAGE> 51

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

3,000,000 SHARES

[MKS LOGO]

MKS INSTRUMENTS, INC.

------------------------------
PROSPECTUS
, 2000
------------------------------

BANC OF AMERICA SECURITIES LLC

CIBC WORLD MARKETS

LEHMAN BROTHERS

ADAMS, HARKNESS & HILL, INC.

NEEDHAM & COMPANY, INC.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 52

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

Estimated expenses payable in connection with the sale of the common stock
offered hereby are as follows:

<TABLE>
<S> <C>
SEC Registration Fee........................................ $ 44,973
NASD Filing Fee............................................. $ 17,536
Printing, Engraving and Mailing Expenses.................... $100,000
Legal Fees and Expenses..................................... $100,000
Accounting Fees and Expenses................................ $ 40,000
Blue Sky Fees and Expenses.................................. $ 10,000
Transfer Agent and Registrar Fees........................... $ 10,000
Miscellaneous............................................... $ 27,491
--------
Total.................................................. $350,000
========
</TABLE>

- ---------------
The Company will bear all expenses shown above.

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Section 67 of Chapter 156B of the Massachusetts General Laws provides that
a corporation may indemnify its directors and officers to the extent specified
in or authorized by (1) the articles of organization; (2) a by-law adopted by
the stockholders; or (3) a vote adopted by the holders of a majority of the
shares of stock entitled to vote on the election of directors. In all instances,
the extent to which a corporation provides indemnification to its directors and
officers under Section 67 is optional. In its Amended and Restated Articles of
Organization (the "Articles of Organization"), the Registrant has elected to
commit to provide indemnification to its directors and officers in specified
circumstances. Generally, Article 6 of the Registrant's Articles of Organization
provides that the Registrant shall indemnify directors and officers of the
Registrant against liabilities and expenses arising out of legal proceedings
brought against them by reason of their status as directors or officers or by
reason of their agreeing to serve, at the request of the Registrant, as a
director or officer with another organization. Under this provision, a director
or officer of the Registrant shall be indemnified by the Registrant for all
costs and expenses (including attorneys' fees), judgments, liabilities and
amounts paid in settlement of such proceedings, even if he is not successful on
the merits, if he acted in good faith in the reasonable belief that his action
was in the best interests of the Registrant. The Board of Directors may
authorize advancing litigation expenses to a director or officer at his request
upon receipt of an undertaking by any such director of officer to repay such
expenses if it is ultimately determined that he is not entitled to
indemnification for such expenses.

Article 6 of the Registrant's Articles of Organization eliminates the
personal liability of the Registrant's directors to the Registrant or its
stockholders for monetary damages for breach of a director's fiduciary duty,
except to the extent Chapter 156B of the Massachusetts General Laws prohibits
the elimination or limitation of such liability.

The Underwriting Agreement, a form of which is filed at Exhibit 1.1 to this
Registration Statement on Form S-3 (the "Underwriting Agreement"), provides that
the underwriters are obligated under certain circumstances to indemnify
directors, officers and controlling persons of the Registrant against certain
liabilities, including liabilities under the Securities Act of 1933, as amended
(the "Securities Act"). Reference is made to the form of Underwriting Agreement.

The Company has obtained directors and officers liability insurance for the
benefit of its directors and certain of its officers.

II-1
<PAGE> 53

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) Exhibits:

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S>
1.1* Form of Underwriting Agreement
3.1** Amended and Restated Articles of Organization
3.2** Amended and Restated By-laws
4.1** Specimen certificate representing the common stock
5.1* Opinion of Hale and Dorr LLP
23.1* Consent of Hale and Dorr LLP (contained in Exhibit 5.1)
23.2 Consent of PricewaterhouseCoopers LLP
24 Power of Attorney (included on Page II-3)
</TABLE>

- ---------------
* To be filed by amendment.

** Incorporated by reference to the Registration Statement on Form S-1 (File No.
333-71363), originally filed with the Securities and Exchange Commission on
January 28, 1999.

(b) Financial Statements Schedules

See Item 14(a)(2) to our Annual Report on Form 10-K for the year ended
December 31, 1999, which is incorporated by reference into this registration
statement.

ITEM 17. UNDERTAKINGS.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer and controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the questions whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

The undersigned registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of a registration statement in reliance upon Rule 430A and contained in the
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offer therein, and this offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.

The undersigned registrant hereby further undertakes to provide to the
underwriters at the closing specified in the underwriting agreements,
certificates in such denominations and registered in such names as required by
the underwriters to permit prompt delivery to each purchaser.

II-2
<PAGE> 54

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the town of Andover, Commonwealth of Massachusetts, on this 3rd
day of April, 2000.

MKS INSTRUMENTS, INC.

By: /s/ JOHN R. BERTUCCI
------------------------------------
John R. Bertucci
Chairman of the Board
and Chief Executive Officer

II-3
<PAGE> 55

SIGNATURES AND POWER OF ATTORNEY

We, the undersigned officers and directors of MKS Instruments, Inc., hereby
severally constitute and appoint John R. Bertucci, Ronald C. Weigner and Mark G.
Borden, and each of them singly, our true and lawful attorneys with full power
to any of them, and to each of them singly, to sign for us and in our names in
the capacities indicated below the Registration Statement on Form S-3 filed
herewith and any and all pre-effective and post-effective amendments to said
Registration Statement and generally to do all such things in our name and
behalf in our capacities as officers and directors to enable MKS Instruments,
Inc. to comply with the provisions of the Securities Act of 1933, as amended,
and all requirements of the Securities and Exchange Commission, hereby ratifying
and confirming our signatures as they may be signed by our said attorneys, or
any of them, to said Registration Statement and any and all amendments thereto.

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
---------- ----- ----
<C> <S> <C>

/s/ JOHN R. BERTUCCI Chairman of the Board and Chief April 3, 2000
- --------------------------------------------------- Executive Officer (Principal
John R. Bertucci Executive Officer)

/s/ RONALD C. WEIGNER Vice President and Chief April 3, 2000
- --------------------------------------------------- Financial Officer (Principal
Ronald C. Weigner Financial and Accounting
Officer)

/s/ RICHARD S. CHUTE Director April 3, 2000
- ---------------------------------------------------
Richard S. Chute

/s/ OWEN W. ROBBINS Director April 3, 2000
- ---------------------------------------------------
Owen W. Robbins

/s/ ROBERT J. THERRIEN Director April 3, 2000
- ---------------------------------------------------
Robert J. Therrien

/s/ LOUIS P. VALENTE Director April 4, 2000
- ---------------------------------------------------
Louis P. Valente
</TABLE>

II-4
<PAGE> 56

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S> <C>
1.1* Form of Underwriting Agreement
3.1** Amended and Restated Articles of Organization
3.2** Amended and Restated By-Laws
4.1** Specimen certificate representing the common stock
5.1* Opinion of Hale and Dorr LLP
23.1* Consent of Hale and Dorr LLP (contained in Exhibit 5.1)
23.2 Consent of PricewaterhouseCoopers LLP
24 Power of Attorney (included on Page II-3)
</TABLE>

- ---------------
* To be filed by amendment.

** Incorporated by reference to the Registration Statement on Form S-1 (File No.
333-71363) originally filed with the Securities and Exchange Commission on
January 28, 1999.

<PAGE> 1

EXHIBIT 23.2

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 (File No. 333- ) of our report dated January 28, 2000
relating to the financial statements, which appears in the 1999 Annual Report to
Shareholders, which is incorporated by reference in MKS Instruments, Inc.'s
Annual Report on Form 10-K for the year ended December 31, 1999. We also consent
to the incorporation by reference of our report dated January 28, 2000 relating
to the financial statement schedule, which appears in such Annual Report on Form
10-K. We also consent to the references to us under the headings "Experts" and
"Selected Financial Data" in such Registration Statement.

/s/ PRICEWATERHOUSECOOPERS LLP

PRICEWATERHOUSECOOPERS LLP

Boston, Massachusetts
April 7, 2000