<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______________ to _______________
Commission file number 0-23621
-------
MKS INSTRUMENTS, INC.
(Exact name of registrant as specified in its charter)
Massachusetts 04-2277512
--------------------------------------------------------------------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
Six Shattuck Road, Andover, Massachusetts 01810
--------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (978) 975-2350
--------------------
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No .
--- ---
Number of shares outstanding of the issuer's common stock as of October 31,
2000: 25,532,257
<PAGE> 2
MKS INSTRUMENTS, INC.
FORM 10-Q
INDEX
PART I FINANCIAL INFORMATION
------ ---------------------
ITEM 1. FINANCIAL STATEMENTS
Consolidated Balance Sheets -
September 30, 2000 and December 31, 1999
Consolidated Statements of Income -
Three and nine months ended September 30, 2000 and 1999
Consolidated Statements of Cash Flows -
Nine months ended September 30, 2000 and 1999
Notes to Consolidated Financial Statements
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
PART II OTHER INFORMATION
------- -----------------
ITEM 1. LEGAL PROCEEDINGS
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
ITEM 5. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MKS INSTRUMENTS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
<TABLE>
<CAPTION>
SEPTEMBER 30, 2000 DECEMBER 31, 1999
------------------ -----------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents ................................ $ 41,097 $ 35,714
Short-term investments ................................... 6,461 28,132
Trade accounts receivable, net ........................... 61,908 36,857
Inventories .............................................. 45,210 27,650
Deferred tax asset ....................................... 5,371 4,119
Other current assets ..................................... 4,769 3,378
--------- ---------
Total current assets ................................. 164,816 135,850
Property, plant and equipment, net ....................... 34,417 32,826
Goodwill and other intangible assets, net ................ 38,737 ---
Long-term investments .................................... 12,100 1,063
Other assets ............................................. 5,683 4,866
--------- ---------
Total assets ......................................... $ 255,753 $ 174,605
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings .................................... $ 17,352 $ 12,423
Current portion of long-term debt ........................ 6,825 7,346
Current portion of capital lease obligations ............. 845 1,059
Accounts payable ......................................... 16,398 7,683
Accrued compensation ..................................... 11,294 9,202
Other accrued expenses ................................... 10,816 6,314
Income taxes payable ..................................... 1,289 1,385
Distribution Payable ..................................... --- 3,350
--------- ---------
Total current liabilities ............................ 64,819 48,762
Long-term debt ............................................... 3,830 4,340
Long-term portion of capital lease obligations ............... 948 1,322
Deferred tax liability ....................................... 1,817 522
Other liabilities ............................................ 468 490
Commitments and contingencies (Note 10)
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;
25,532,257 and 24,632,849 issued and outstanding at
September 30, 2000 and December 31, 1999,
respectively.......................................... 113 113
Additional paid-in capital ............................... 115,098 84,713
Retained earnings ........................................ 68,152 33,166
Shareholder receivable ................................... (777) (856)
Accumulated other comprehensive income ................... 1,285 2,033
--------- ---------
Total stockholders' equity ........................... 183,871 119,169
--------- ---------
Total liabilities and stockholders' equity ........... $ 255,753 $ 174,605
========= =========
</TABLE>
The accompanying notes are an integral part of the
consolidated financial statements.
<PAGE> 4
MKS INSTRUMENTS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
--------------------- ----------------------
2000 1999 2000 1999
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net sales ............................................ $ 87,636 $ 50,621 $ 230,893 $ 132,740
Cost of sales ........................................ 47,050 28,876 124,262 76,983
--------- --------- --------- ---------
Gross profit ......................................... 40,586 21,745 106,631 55,757
Research and development ............................. 5,967 3,482 16,115 9,754
Selling, general and administrative .................. 13,446 10,264 36,284 28,556
Amortization of goodwill and other intangible assets . 1,443 --- 2,014 ---
Purchase of in-process technology .................... 310 --- 310 ---
--------- --------- --------- ---------
Income from operations ............................... 19,420 7,999 51,908 17,447
Interest expense ..................................... 289 341 1,139 1,025
Interest income ...................................... 847 672 2,538 1,346
Other income (expense), net .......................... --- 681 (209) 849
--------- --------- --------- ---------
Income before income taxes ........................... 19,978 9,011 53,098 18,617
Provision for income taxes ........................... 7,542 2,974 20,045 5,645
Non-recurring deferred tax credit (Note 9) ........... --- --- --- (3,770)
--------- --------- --------- ---------
Net income ........................................... $ 12,436 $ 6,037 $ 33,053 $ 16,742
========= ========= ========= =========
Historical net income per share:
Basic ............................................ $ 0.49 $ 0.25 $ 1.32 $ 0.75
========= ========= ========= =========
Diluted .......................................... $ 0.47 $ 0.24 $ 1.26 $ 0.72
========= ========= ========= =========
Historical weighted average common shares outstanding:
Basic ............................................ 25,310 24,458 25,048 22,193
========= ========= ========= =========
Diluted .......................................... 26,371 25,628 26,262 23,327
========= ========= ========= =========
Pro forma data:
Historical income before income taxes ............ $ 9,011 $ 18,617
Pro forma provision for income taxes assuming C
corporation tax .............................. 3,334 6,984
--------- ---------
Pro forma net income ............................. $ 5,677 $ 11,633
========= =========
Pro forma net income per share:
Basic ............................................ $ 0.23 $ 0.52
========= =========
Diluted .......................................... $ 0.22 $ 0.50
========= =========
Pro forma weighted average common shares outstanding:
Basic ............................................ 24,458 22,193
========= =========
Diluted .......................................... 25,558 23,133
========= =========
</TABLE>
The accompanying notes are an integral part of the
consolidated financial statements.
<PAGE> 5
MKS INSTRUMENTS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
----------------------
2000 1999
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income ....................................................... $ 33,053 $ 16,742
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization ................................ 6,934 4,632
Loss (gain) on disposal of property, plant and equipment ..... 61 (184)
Non-recurring deferred tax credit ............................ --- (3,770)
Deferred taxes ............................................... (972) (282)
Purchase of in-process technology ............................ 310 ---
Other ........................................................ 129 357
Forward exchange contract gain realized ...................... --- (78)
Changes in operating assets and liabilities, net of effects of
businesses acquired:
Increase in trade accounts receivable ..................... (21,657) (12,038)
Increase in inventories ................................... (13,907) (1,093)
Increase in other current assets .......................... (1,135) (1,913)
Increase in accrued expenses and other current
liabilities............................................... 10,203 4,592
Increase in accounts payable .............................. 6,237 3,991
-------- --------
Net cash provided by operating activities ........................ 19,256 10,956
-------- --------
Cash flows from investing activities:
Proceeds from sales of (purchases of) investments ............ 9,663 (34,562)
Purchases of property, plant and equipment ................... (6,119) (3,891)
Proceeds from sales of property, plant & equipment ........... 15 262
Purchases of companies, net of cash acquired ................. (17,539) ---
Increase in other assets ..................................... (582) (707)
Cash used to settle forward exchange contracts ............... --- 78
-------- --------
Net cash used in investing activities ............................ (14,562) (38,820)
-------- --------
Cash flows from financing activities:
Proceeds from short-term borrowings .......................... 17,299 6,692
Payments on short-term borrowings ............................ (11,759) (6,179)
Principal payments on long-term debt ......................... (4,777) (1,534)
Proceeds from exercise of stock options ...................... 2,545 37
Proceeds from issuance of common stock, net of issuance
costs........................................................ --- 82,062
Cash distributions to stockholders ........................... (1,417) (40,000)
Principal payments under capital lease obligations ........... (839) (768)
-------- --------
Net cash provided by financing activities ........................ 1,052 40,310
-------- --------
Effect of exchange rate changes on cash and cash equivalents ..... (363) 150
-------- --------
Increase in cash and cash equivalents ............................ 5,383 12,596
Cash and cash equivalents at beginning of period ................. 35,714 11,188
-------- --------
Cash and cash equivalents at end of period ....................... $ 41,097 $ 23,784
======== ========
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest .................................................. $ 929 $ 896
======== ========
Income taxes .............................................. $ 16,124 $ 6,394
======== ========
Noncash transactions during the period:
Assets acquired under capital leases ...................... $ --- $ 237
======== ========
Stock issued in acquisition of Compact Instrument ......... $ 8,433 $ ---
======== ========
Debt issued in acquisition of Telvac Engineering, Ltd. .... $ 752 $ ---
======== ========
Stock issued in acquisition of Spectra International,
LLC .................................................... $ 6,452 $ ---
======== ========
Stock issued in acquisition of D.I.P., Inc. ............... $ 6,826 $ ---
======== ========
</TABLE>
The accompanying notes are an integral part of the
consolidated financial statements.
<PAGE> 6
MKS INSTRUMENTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tables in thousands, except per share data)
1) BASIS OF PRESENTATION
The interim financial data as of September 30, 2000 and for the three
and nine months ended September 30, 2000 and 1999 is unaudited;
however, in the opinion of MKS Instruments, Inc. ("MKS" or the
"Company"), the interim data includes all adjustments, consisting only
of normal recurring adjustments, necessary for a fair presentation of
the results for the interim periods. The unaudited financial statements
presented herein have been prepared in accordance with the instructions
to Form 10-Q and do not include all the information and note
disclosures required by generally accepted accounting principles. The
financial statements should be read in conjunction with the December
31, 1999 audited financial statements and notes thereto included in the
Company's Annual Report on Form 10-K filed with the Securities and
Exchange Commission on March 30, 2000.
2) USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
dates of the financial statements and the reported amounts of revenues
and expenses during the reporting periods. Actual results could differ
from those estimates.
3) NEW ACCOUNTING PRONOUNCEMENTS
In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101 ("SAB 101"), "Revenue Recognition". SAB 101
summarizes the staff's view in applying generally accepted accounting
principles to revenue recognition. The application of the guidance in
SAB 101 will be required in the Company's fourth quarter of the fiscal
year 2000. The effect of applying this guidance, if any, will be
reported as a cumulative effect adjustment resulting from a change in
accounting principle. The Company is currently in the process of
evaluating the impact that SAB 101 will have on its financial position
and results of operations.
4) CASH AND CASH EQUIVALENTS AND INVESTMENTS
Cash equivalents consist of the following:
<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
------------- ------------
<S> <C> <C>
Cash and Money Market Instruments $ 22,877 $ 22,156
Commercial Paper -- 5,558
Federal Government and Government
Agency Obligations 12,720 6,000
Corporate Obligations 5,500 2,000
-------- --------
$ 41,097 $ 35,714
======== ========
</TABLE>
<PAGE> 7
MKS INSTRUMENTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Tables in thousands, except per share data)
Short-term available-for-sale investments maturing within one year
consist of the following:
<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
------------- ------------
<S> <C> <C>
Federal Government and Government
Agency Obligations $ 4,687 $ 16,245
Corporate Obligations 1,000 5,501
Commercial Paper --- 4,641
Equity Securities 774 1,745
------- -------
$ 6,461 $28,132
======= =======
</TABLE>
Long-term available-for-sale investments maturing within two years
consist of the following:
<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
------------- ------------
<S> <C> <C>
Federal Government and Government
Agency Obligations $ 12,100 $ 1,063
======== =======
</TABLE>
5) HISTORICAL AND PRO FORMA NET INCOME PER SHARE
Historical net income per share is not meaningful in 1999 because of
the Company's conversion from an S corporation to a C corporation in
April, 1999 upon the closing of its initial public offering. For the
three and nine months ended September 30, 1999, historical net income
has been adjusted for the pro forma provision for income taxes
calculated assuming the Company was subject to income taxation as a C
corporation.
The following is a reconciliation of basic to diluted historical and
pro forma net income per share:
<TABLE>
<CAPTION>
Three Months Ended September 30,
2000 1999
---------- -------------------------
HISTORICAL PRO FORMA HISTORICAL
---------- --------- ----------
<S> <C> <C> <C>
Net income ............................. $12,436 $ 5,677 $ 6,037
Shares used in net income per common
share-basic ........................ 25,310 24,458 24,458
Effect of dilutive securities:
Employee and director stock options 1,061 1,100 1,170
------- ------- -------
Shares used in net income per common
share-diluted ...................... 26,371 25,558 25,628
======= ======= =======
Net income per common share-basic ...... $ 0.49 $ 0.23 $ 0.25
======= ======= =======
Net income per common share-diluted .... $ 0.47 $ 0.22 $ 0.24
======= ======= =======
</TABLE>
<PAGE> 8
MKS INSTRUMENTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Tables in thousands, except per share data)
<TABLE>
<CAPTION>
Nine Months Ended September 30,
----------------------------------------
2000 1999
---------- -------------------------
HISTORICAL PRO FORMA HISTORICAL
---------- --------- ----------
<S> <C> <C> <C>
Net income ............................ $33,053 $11,633 $16,742
Shares used in net income per common
share-basic ....................... 25,048 22,193 22,193
Effect of dilutive securities:
Employee and director stock options 1,214 940 1,134
------- ------- -------
Shares used in net income per common
share-diluted ..................... 26,262 23,133 23,327
======= ======= =======
Net income per common share-basic ..... $ 1.32 $ 0.52 $ 0.75
======= ======= =======
Net income per common share-diluted ... $ 1.26 $ 0.50 $ 0.72
======= ======= =======
</TABLE>
For purposes of computing diluted earnings per share, weighted average common
share equivalents do not include stock options with an exercise price greater
than the average market price of the common shares during the period. Options to
purchase 464,117, 173,571, 0 and 8,000 shares of common stock were outstanding
during the three and nine months ended September 30, 2000 and the three and nine
months ended September 30, 1999, respectively, but were not included in the
calculation of diluted net income per common share because the option price was
greater than the average market price of the common shares during the period.
6) INVENTORIES
Inventories consist of the following:
September 30, December 31,
2000 1999
------------- ------------
Raw material .................................. $ 9,797 $ 6,644
Work in process................................ 13,018 7,026
Finished goods................................. 22,395 13,980
------- -------
$45,210 $27,650
======= =======
7) STOCKHOLDERS' EQUITY
Total comprehensive income was as follows:
<TABLE>
<CAPTION>
Three Months Ended September 30,
2000 1999
------- -------
<S> <C> <C>
Net income..................................... $12,436 $ 6,037
Other comprehensive income, net of taxes:
Changes in value of financial instruments
designated as hedges of currency and
interest rate exposures.................. 95 (504)
Foreign currency translation adjustment.... (269) 574
Unrealized gain (loss) on investments...... (384) (59)
------- -------
Other comprehensive income, net of taxes....... (558) 11
------- -------
Total comprehensive income..................... $11,878 $ 6,048
======= =======
</TABLE>
<PAGE> 9
MKS INSTRUMENTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Tables in thousands, except per share data)
<TABLE>
<CAPTION>
Nine Months Ended September 30,
2000 1999
---------- -----------
<S> <C> <C>
Net income................................................ $ 33,053 $ 16,742
Other comprehensive income, net of taxes:
Non-recurring deferred tax charge to comprehensive
income (Note 9).................................... --- (660)
Impact of adopting SFAS No. 133....................... --- (16)
Changes in value of financial instruments designated
as hedges of currency and interest rate exposures... 408 (250)
Foreign currency translation adjustment............... (563) (165)
Unrealized gain (loss) on investments................. (594) 353
-------- -------
Other comprehensive income, net of taxes.................. (749) (738)
-------- -------
Total comprehensive income................................ $ 32,304 $ 16,004
======== ========
</TABLE>
8) SEGMENT INFORMATION AND SIGNIFICANT CUSTOMER
Segment Information for the three months ended September 30, 2000 and
1999:
<TABLE>
<CAPTION>
NORTH AMERICA FAR EAST EUROPE TOTAL
------------- -------- ------ -----
<S> <C> <C> <C> <C>
Net sales to unaffiliated customers 2000 $62,535 $17,719 $7,382 $87,636
1999 35,700 9,873 5,048 50,621
Intersegment net sales 2000 $17,508 $292 $353 $18,153
1999 8,693 200 197 9,090
Income from operations 2000 $16,895 $1,845 $680 $19,420
1999 6,828 768 403 7,999
</TABLE>
Segment Information for the nine months ended September 30, 2000 and
1999:
<TABLE>
<CAPTION>
NORTH AMERICA FAR EAST EUROPE TOTAL
------------- -------- ------ -----
<S> <C> <C> <C> <C>
Net sales to unaffiliated customers 2000 $162,812 $47,839 $20,242 $230,893
1999 92,694 25,620 14,426 132,740
Intersegment net sales 2000 $47,044 $941 $972 $48,957
1999 24,465 527 707 25,699
Income from operations 2000 $45,465 $4,215 $2,228 $51,908
1999 14,915 1,391 1,141 17,447
</TABLE>
The Company had one customer comprising 25% and 25% of net sales for the three
months ended September 30, 2000 and 1999, respectively, and 26% and 23% for the
nine months ended September 30, 2000 and 1999, respectively.
<PAGE> 10
MKS INSTRUMENTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Tables in thousands, except per share data)
9) INCOME TAXES
Prior to its initial public offering, the Company was treated as an S
corporation for federal income tax purposes. As an S corporation, the
Company was not subject to federal, and certain state income taxes. The
Company terminated its S corporation status upon the closing of the
initial public offering and became subject to taxes at C corporation
tax rates. This change in tax status and tax rates resulted in a
non-recurring, non-cash deferred tax credit to net income of $3,770,000
and a deferred tax charge to other comprehensive income of $660,000 in
the nine months ended September 30, 1999.
10) COMMITMENTS AND CONTINGENCIES
Prior to its initial public offering, the Company entered into a Tax
Indemnification and S Corporation Distribution Agreement with its then
existing stockholders (the "Pre-IPO stockholders"). The agreement
includes provisions for the payment, with interest, by the Pre-IPO
stockholders or MKS, as the case may be, for the difference between the
$40,000,000 distributed as an estimate of the amount of the accumulated
adjustments account as of April 4, 1999, which is the date the
Company's 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 was $41,416,619. Accordingly, the
Company made an additional distribution of $1,416,619, plus interest of
$177,524, to the Pre-IPO stockholders during the three months ended
September 30, 2000. The amount of the additional distribution payable
had been estimated to be $3,350,000. This estimated amount was charged
directly to retained earnings during 1999 and had no impact on net
income or earnings per share. The difference between the actual
additional distribution and the estimated additional distribution was
credited directly to retained earnings during the three months ended
September 30, 2000 and had no impact on net income or earnings per
share. The amount of the accumulated adjustments account can be
affected by future income tax audits of MKS. If any audit increases or
decreases the accumulated adjustments account, MKS or the Pre-IPO
stockholders, as the case may be, will also be required to make a
payment, with interest, of such difference to the other party. No
shareholders, other than the Pre-IPO stockholders, are parties to the
Tax Indemnification and S Corporation Distribution Agreement.
11) ACQUISITIONS
On March 10, 2000 the Company acquired Compact Instrument Technology,
LLC ("Compact Instrument"), a start-up company with proprietary
technology in process monitoring for semiconductor manufacturing and
other manufacturing processes. The acquisition has been accounted for
by the purchase method of accounting. The purchase price was $8,700,000
and consisted of $8,400,000 in MKS common stock and $300,000 in assumed
net liabilities. The purchase price was allocated to the assets
acquired based upon their estimated fair values. This allocation
resulted in goodwill of $7,600,000 and acquired technology of
$1,600,000, which are being amortized on a straight-line basis over 5
years and 3 years, respectively.
On May 5, 2000 the Company acquired Telvac Engineering, Ltd., a
UK-based, privately held manufacturer of vacuum subsystems. The
acquisition has been accounted for by the purchase method of
accounting. The purchase price was $1,600,000, and consisted of
$750,000 in cash, $750,000 in debt and $100,000 in other acquisition
expenses. The purchase price was allocated to the assets acquired based
on their estimated fair values. This allocation resulted in goodwill of
$800,000, which is being amortized on a straight-line basis over 5
years.
<PAGE> 11
MKS INSTRUMENTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Tables in thousands, except per share data)
On July 21, 2000 the Company acquired Spectra International, LLC, a
privately held company with products and technology in process
monitoring. The purchase price consisted of $9,700,000 cash; 183,293
shares of MKS common stock valued at $6,500,000; fully vested options
to purchase 83,675 shares of MKS common stock valued at $2,400,000,
calculated at an exchange ratio of 0.4768 shares of MKS common stock
per share of Spectra common stock; and $400,000 in acquisition costs.
The transaction also includes contingent earnout payments of up to an
aggregate of $12,000,000 over 5 years, which will be treated as
compensation expense as it is earned. The purchase price was allocated
to the assets acquired based on their estimated fair values. Goodwill,
acquired technology and other intangible assets are being amortized on
a straight-line basis over 5 to 7 years. The allocation of the purchase
price is as follows:
<TABLE>
<S> <C>
Current assets............................... $ 5,400
Acquired intangibles......................... 7,900
Acquired technology.......................... 3,700
Goodwill..................................... 6,100
Other assets................................. 400
Liabilities and debt assumed................. (4,500)
-------
$19,000
=======
</TABLE>
The intangible assets include approximately $0.3 million for acquired
in-process technology for projects that did not have future alternative
uses. This allocation represents the estimated fair value based on
risk-adjusted cash flows related to the in-process technology projects.
At the date of the acquisition, the development of these projects had
not yet reached technological feasibility, and the technology in
progress had no alternative future uses. Accordingly, these costs were
expensed in the three months ended September 30, 2000.
On September 6, 2000 the Company acquired D.I.P., Inc., a privately
held company with products and technology in digital process control.
The purchase price was $6,900,000 cash; 231,392 shares of MKS common
stock valued at $6,800,000; and $300,000 in acquisition costs. The
purchase price was allocated to the assets acquired based on their
estimated fair values. Goodwill, acquired technology and other
intangibles are being amortized on a straight-line basis over 3 to 5
years. The allocation of the purchase is as follows:
<TABLE>
<S> <C>
Current assets............................... $ 3,000
Acquired intangibles......................... 1,700
Acquired technology.......................... 7,200
Goodwill..................................... 4,300
Other assets................................. 200
Liabilities assumed.......................... (2,400)
-------
$14,000
=======
</TABLE>
<PAGE> 12
MKS INSTRUMENTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Tables in thousands, except per share data)
The following unaudited pro forma information presents a summary of the
historical results of operations of the Company as if the acquisitions
had occurred at the beginning of each period.
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales.................... $89,814 $55,470 $243,412 $146,670
Net income................... $11,741 $ 4,654 $ 30,810 $ 12,971
======= ======= ======== ========
Net income per share:
Basic.................... $ 0.46 $ 0.19 $ 1.21 $ 0.57
======= ======= ======== ========
Diluted.................. $ 0.44 $ 0.18 $ 1.16 $ 0.54
======= ======= ======== ========
</TABLE>
These unaudited pro forma results have been prepared for comparative
purposes only and do not purport to be indicative of the results of
operations which actually would have resulted had the acquisitions
occurred at the beginning of the period, or which may result in the
future.
12) SUBSEQUENT EVENT
On October 2, 2000 the Company entered into a definitive merger
agreement to acquire Applied Science and Technology, Inc. (ASTeX), a
Wilmington, Massachusetts based company that designs, develops, and
manufactures precision reactive gas solutions.
Under the terms of the agreement, each outstanding share of ASTeX
common stock will be exchanged for 0.7669 newly issued shares of common
stock of MKS. This would result in the issuance of approximately 11.2
million shares of common stock of MKS, representing 30% of MKS's then
outstanding shares. The merger is subject to the approval of both MKS
and ASTeX stockholders, regulatory approval and other customary closing
conditions.
<PAGE> 13
ITEM 2.
MKS INSTRUMENTS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
This Quarterly Report on Form 10-Q contains a number of statements, including,
without limitation, statements relating to MKS's beliefs, expectations and plans
which are forward-looking statements, as are statements that certain actions,
conditions or circumstances will continue. Such statements are based upon
management's current expectations and are subject to a number of factors and
uncertainties. Information contained in these forward-looking statements is
inherently uncertain and actual performance and results may differ materially
due to many important factors. See "Factors That May Affect Future Operating
Results" for factors that could cause actual results to differ materially from
any forward-looking statements made by MKS. The terms "MKS", "we", "us" and
"our" refer to MKS Instruments, Inc.
MKS develops, manufactures and supplies 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. We estimate that approximately 66% of our net
sales during 1999 and 76% of our net sales in the first nine months of 2000 were
to semiconductor capital equipment manufacturers and semiconductor device
manufacturers. The following table sets forth for the periods indicated the
percentage of total net sales of certain line items included in MKS's
consolidated statement of income data.
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
2000 1999 2000 1999
------ ------ ------ ------
<S> <C> <C> <C> <C>
Net sales .......................................... 100.0% 100.0% 100.0% 100.0%
Cost of sales ...................................... 53.7 57.0 53.8 58.0
----- ----- ----- -----
Gross profit ....................................... 46.3 43.0 46.2 42.0
Research and development ........................... 6.8 6.9 7.0 7.4
Selling, general and administrative ................ 15.3 20.3 15.7 21.5
Amortization of goodwill and other intangible
assets............................................. 1.6 --- 0.9 ---
Purchase of in-process technology .................. 0.4 --- 0.1 ---
----- ----- ----- -----
Income from operations ............................. 22.2 15.8 22.5 13.1
Interest income, net ............................... 0.6 0.7 0.6 0.3
Other income (expense), net ........................ --- 1.3 (0.1) 0.6
----- ----- ----- -----
Income before income taxes ......................... 22.8 17.8 23.0 14.0
Provision for income taxes ......................... 8.6 5.9 8.7 4.3
Non-recurring deferred tax credit .................. --- --- --- (2.9)
----- ----- ----- -----
Net income ......................................... 14.2% 11.9% 14.3% 12.6%
===== ===== ===== =====
Pro forma data for 1999:
Historical income before income taxes .......... 17.8% 14.0%
Pro forma provision for income taxes ........... 6.6 5.2
----- -----
Pro forma net income ........................... 11.2% 8.8%
===== =====
</TABLE>
Results of Operations
Net Sales. Net sales increased 73.1% to $87.6 million for the three
months ended September 30, 2000 from $50.6 million for the three months ended
September 30, 1999. International net sales were approximately $25.1 million for
the three months ended September 30, 2000 or 28.6% of net sales and $14.9
million for the three months ended September 30, 1999 or 29.5% of net sales. Net
sales increased 73.9% to $230.9 million for the nine months ended September 30,
2000 from $132.7 million in the same period of 1999. International net sales
were approximately $68.1 million for the nine months ended September 30, 2000 or
29.5% of net sales
<PAGE> 14
and $40.0 million for the nine months ended September 30, 1999 or 30.2% of net
sales. The increase in net sales were due to increased worldwide sales volume of
MKS's existing products which resulted primarily from increased sales to the
Company's semiconductor capital equipment manufacturer and semiconductor device
manufacturer customers.
Gross Profit. Gross profit as a percentage of net sales increased to
46.3% for the three months ended September 30, 2000 from 43.0% for the three
months ended September 30, 1999. Gross profit as a percentage of net sales
increased to 46.2% for the nine months ended September 30, 2000 from 42.0% for
the same period of 1999. The increases were primarily due to fuller utilization
of existing manufacturing capacity as a result of increased net sales and other
manufacturing efficiencies.
Research and Development. Research and development expense increased
71.4% to $6.0 million or 6.8% of net sales for the three months ended September
30, 2000 from $3.5 million or 6.9% of net sales for the three months ended
September 30, 1999 due primarily to increased spending of $1.1 million for
compensation and increased spending of $0.9 million for development materials
related to projects in process. Research and development expense increased 65.2%
to $16.1 million for the nine months ended September 30, 2000 from $9.8 million
for the same period of 1999 due to increased compensation and increased spending
for development materials related to projects in process.
Selling, General and Administrative. Selling, general and
administrative expenses increased 31.0% to $13.4 million or 15.3% of net sales
for the three months ended September 30, 2000 from $10.3 million or 20.3% of net
sales for the three months ended September 30, 1999. The increase was due
primarily to increased compensation expense of $1.2 million, earnout payments of
$0.5 million related to the acquisition of Spectra International, LLC, increased
professional fees of $0.4 million, and other general and administrative
expenses. Selling, general and administrative expenses increased 27.1% to $36.3
million for the nine months ended September 30, 2000 from $28.6 million for the
same period of 1999 due primarily to increased compensation expense of $3.5
million, earnout payments of $0.5 million related to the acquisition of Spectra
International, LLC, increased professional fees of $1.0 million and other
general and administrative expenses.
Intangibles Amortization. Amortization of goodwill and other intangible
assets of $1.4 million and $2.0 million for the three and nine months ended
September 30, 2000, respectively, represents the amortization of goodwill and
other intangibles resulting from the acquisitions completed by MKS during the
year.
Purchase of In-process Technology. In July, 2000 the Company acquired
Spectra International, LLC in a transaction accounted for as a purchase. The
purchase price was allocated to the assets acquired, including intangible
assets, based on their estimated fair values. The intangible assets include
approximately $0.3 million for acquired in-process technology for projects that
did not have future alternative uses. This allocation represents the estimated
fair value based on risk-adjusted cash flows related to the in-process
technology projects. At the date of the acquisition, the development of these
projects had not yet reached technological feasibility, and the technology in
progress had no alternative future uses. Accordingly, these costs were expensed
in the three months ended September 30, 2000.
Interest Income (Expense), Net. During the three and nine months ended
September 30, 2000 and the three and nine months ended September 30, 1999, the
Company generated net interest income of $0.6 million, $1.4 million, $0.3
million and $0.3 million, respectively, primarily from the invested net proceeds
of our initial public offering, offset by interest expense on outstanding debt.
Other Income (Expense), Net. Other expense of $0.2 million in the nine
months ended September 30, 2000 represents expenses related to the preparation
of the registration statement for the Company's follow-on public stock offering.
The Company decided not to proceed with the follow-on offering, and has
converted the registration statement to a shelf registration statement. Other
income of $0.7 million in the three months ended September 30, 1999 represents a
distribution from one of MKS's mutual insurance carriers upon the initial
<PAGE> 15
public offering of the insurance carrier. Other income of $0.8 million in the
nine months ended September 30, 1999 also includes this distribution and gains
recorded from foreign exchange contracts which did not qualify for hedge
accounting. Effective April 1, 1999 MKS 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.
Provision for Income Taxes. Prior to the closing of its initial public
offering in April, 1999 MKS was treated as an S corporation for tax purposes. As
an S corporation, MKS was 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 in 1999 reflects the
estimated tax expense MKS would have incurred had it been subject to federal and
state income taxes as a C corporation.
LIQUIDITY AND CAPITAL RESOURCES
MKS has financed its 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.
Operations provided cash of $19.3 million for the nine months ended September
30, 2000 primarily impacted by net income, depreciation and changes in the
levels of accounts payable, accrued expenses, inventories and accounts
receivable. Investing activities utilized cash of $14.6 million for the nine
months ended September 30, 2000 primarily from the purchases of Telvac
Engineering, Ltd., Spectra International, LLC and D.I.P., Inc. and the purchases
of property and equipment, offset by proceeds from selling short-term
investments. Financing activities provided cash of $1.1 million primarily from
net short-term borrowings and proceeds from employees exercising stock options
offset by payments on long-term debt.
Working capital was $100.0 million as of September 30, 2000, an increase of
$12.9 million from December 31, 1999. MKS has 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 was $41,416,619.
Accordingly, the Company made an additional distribution of $1,416,619, plus
interest of $177,524, to those stockholders during the three months ended
September 30, 2000. The amount of the additional distribution payable had been
estimated to be $3,350,000. This estimated amount was charged directly to
retained earnings during 1999 and had no impact on net income or earnings per
share. The difference between the actual additional distribution and the
estimated additional distribution was credited directly to retained earnings
during the three months ended September 30, 2000 and had no impact on net income
or earnings per share. The amount of the accumulated adjustments account can be
affected by future income tax audits of MKS. If any audit increases or
<PAGE> 16
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.
MKS believes that the net proceeds from its initial public offering,
together with the cash anticipated to be generated from operations and funds
available from existing credit facilities, will be sufficient to satisfy its
estimated working capital and planned capital expenditure requirements through
at least the next 24 months.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
See Note 3 of Notes to Consolidated Financial Statements for a discussion of the
impact of recently issued accounting pronouncements.
<PAGE> 17
FACTORS THAT MAY AFFECT FUTURE OPERATING RESULTS
Cyclicality of the Semiconductor Industry
We estimate that approximately 66% of our sales during 1999 and 76% of
our sales in the first nine months of 2000 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.
Fluctuations in Operating Results
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 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.
<PAGE> 18
Customer Concentration
Our five largest customers accounted for approximately 43% of our net
sales for the first nine months of 2000, 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 the first nine months of
2000 and during 1999, one customer, Applied Materials, accounted for
approximately 26% and 22%, respectively, of our net sales. While we have entered
into a purchase contract with Applied Materials that expires in December 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.
Competition
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.
Technological Changes
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.
Expansion of Manufacturing Capacity
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
<PAGE> 19
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.
International Operations and Sales
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 29% of net sales for the first nine months
of 2000, 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.
Currency Exchange Rate Fluctuations
Currency 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.
Need to Retain and Attract Key Employees
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.
Intellectual Property Matters
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
<PAGE> 20
- third parties will not assert that our products infringe
patent, copyright or trade secrets of such parties.
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.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Information concerning market risk is contained in the annual Management's
Discussion and Analysis of Financial Condition and Results of Operations in
MKS's Annual Report on Form 10-K for the year ended December 31, 1999, which was
filed with the Securities and Exchange Commission on March 30, 2000. There were
no material changes in MKS's exposure to market risk from December 31, 1999.
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On October 3, 2000, a purported class action lawsuit, Landau v. Applied Science
& Technology, Inc. et al (number 18384NC), was filed by an ASTeX stockholder
against ASTeX, each ASTeX director and MKS. The lawsuit alleges that the
defendants breached their fiduciary duties to ASTeX's stockholders in connection
with the merger, including a claim that the price offered by MKS for the ASTeX
common stock in the merger is inadequate. The lawsuit was filed in the Chancery
Court of the State of Delaware in and for New Castle County and seeks injunctive
relief and unspecified monetary damages. ASTeX and MKS believe that the suit is
without merit and intend to vigorously defend against the claims; however,
MKS can give no assurances as to the ultimate outcome of the suit.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
(c) Recent sales of Unregistered Securities
On March 10, 2000 MKS issued 137,130 shares of its common stock to the
former stockholders of Compact Instrument in connection with its acquisition of
Compact Instrument. The shares of common stock were exempt from registration
under Section 4(2) of the Securities Act of 1933, as amended, because there was
no public offering of the common stock issued. No underwriters were involved in
the sale of these securities.
On July 21, 2000 MKS issued 183,293 shares of its common stock to the
former stockholders of Spectra International in connection with its acquisition
of Spectra International. The shares of common stock were exempt from
registration under Section 4(2) of the Securities Act of 1933, as amended,
because there was no public offering of the common stock issued. No underwriters
were involved in the sale of these securities.
On September 6, 2000 MKS issued 231,392 shares of its common stock to the
former stockholders of D.I.P. in connection with its acquisition of D.I.P. The
shares of common stock were exempt from registration under Section 4(2) of the
Securities Act of 1933, as amended, because there was no public offering of the
common stock issued. No underwriters were involved in the sale of these
securities.
<PAGE> 21
(d) Use of Proceeds from Sales of Registered Securities. The Company
has previously provided information on Form 10-Q for the period ended
March 31, 1999 relating to the securities sold by the Company pursuant
to the Registration Statement on Form S-1 (Reg. No. 333-71363) that was
declared effective by the Securities and Exchange Commission on March
29, 1999. During the three months ended September 30, 2000, the Company
used approximately $8,800,000 of the net proceeds from the securities
sold to acquire other businesses. There has been no other change to the
information previously provided.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
<TABLE>
<CAPTION>
Ex. No. Description
<S> <C>
3.1(1) Restated Articles of Organization
3.2(2) Amended and Restated By-Laws
4.1(2) Specimen certificate representing the common stock
4.2(1) Stockholder Agreement, dated as of October 2, 2000 among the Registrant, Richard Post and John
M. Tarrh
10.28(1) Employment Agreement dated as of March 10, 2000 between the Registrant and Donald Smith
10.29(1) Employment Agreement dated October 18, 2000 between the Registrant and F. Thomas McNabb
10.30(1) Lease dated as of August 9, 2000 between Aspen Industrial Partnership, LLP and the Registrant
10.31(1) Letter Agreement dated as of October 13, 2000 by and between the Registrant and Applied
Materials, Inc. amending Comprehensive Supplier Agreement #982812 dated October 23, 1998
10.32(1) First Amendment dated as of September 1, 2000 to First Amended and Restated Loan Agreement
dated as of January 1, 2000 among BankBoston, N.A., The Chase Manhattan Bank and the
Registrant
10.35(1) Sixth Amendment dated as of September 1, 2000 to Loan Agreement dated as of October 31, 1995
between The First National Bank of Boston and the Registrant
10.36(1) Eleventh Amendment dated as of September 1, 2000 to Loan Agreement dated as of November 1,
1993 between The First National Bank of Boston and the Registrant
27 Financial Data Schedule
</TABLE>
----------------
(1) Incorporated by reference to the Registration Statement on Form S-4
originally filed with the Securities and Exchange Commission on November
13, 2000.
(2) 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, as amended.
<PAGE> 22
(b) Reports on Form 8-K
1. The Company filed a report on Form 8-K with the Securities and
Exchange Commission on October 11, 2000.
<PAGE> 23
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MKS INSTRUMENTS, INC.
November 10, 2000 By: /s/ Ronald C. Weigner
----------------------------------
Ronald C. Weigner
Vice President and Chief Financial
Officer (Principal Financial
Officer)
