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Filed by: Applied Science and Technology, Inc.
Pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12 of the
Securities Exchange Act of 1934
Subject Company: Applied Science and Technology, Inc.
Exchange Act File No. 0-22646
MKS Instruments, Inc.
Around the Process...
Around the World...
Strategic Acquisition of ASTeX, October, 2000
Slide # 1
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Safe Harbor Passage
This presentation may contain forward-looking statements that are made
under the safe harbor provisions of the Securities Litigation Reform Act of
1995. Such statements are estimates which involve risks and uncertainties.
Actual results may vary significantly from those stated in forward-looking
statements. Further information regarding risk factors can be found in the
Companies filings with the Securities and Exchange Commission.
Slide # 2
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MKS Instruments, Inc.
Around the Process...
Around the World...
Strategic Acquisition of ASTeX, October, 2000
Slide # 3
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Transaction Summary
[ ] $300M acquisition of ASTeX
[ ] 100% Stock and assumption of debt/cash
[ ] Ownership
[ ] 70% MKS Instruments
[ ] 30% ASTeX
[ ] Exchange Ratio
[ ] 0.7669 MKSI shares per ASTeX common share
[ ] Pooling of interests
[ ] Expected Closing: December 2000
Slide # 4
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Complementary Technologies ... Integrated Solutions
[MKS logo omitted]
[ ] #1 supplier of gas process control instruments to semiconductor OEMs and
Fabs
[ ] Market Value ~$700M
[ ] 30 years of consecutive profitability, revenue CAGR 18% for 20 years
[ ] World-class global infrastructure
[ASTeX logo omitted]
[ ] #1 supplier of reactive gas solutions to semiconductor OEMs
[ ] Market Value ~$210M
[ ] 5-year revenue CAGR 48% (3x industry growth rate)
[ ] Broad, deep, technically experienced management team
Slide # 5
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Strong Strategic Fit
Around the process
[Diagram of process chamber including the following MKS products:
Mass-Flo(R)Gas Panel Instruments
Gas Box Instruments
Specialty Gases
Materials Delivery System
Control Valve
Shut-off Valve
Process Monitor
Baratron(R)Pressure Measurement
Adaptive Controller
HPS(R)Vacuum Components/Subsystems]
[Diagram of process chamber described above, adding on each of the following
ASTeX products:
Power Generators
ASTRON Reactive Gas Generators
Ozone Generator]
Slide # 6
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Strategic Rationale
[ ] One-stop Solution Leader
[ ] Most comprehensive product offering
[ ] Strengthens Competitive Positioning
[ ] Integrated solutions leader
[ ] Most comprehensive offering
[ ] Enhanced critical mass
[ ] Combines complementary core technologies
[ ] Builds on leading global infrastructure
[ ] Revenue Synergy Upside
[ ] 100% complementary product offerings
[ ] Cross-selling opportunities
Slide # 7
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Strategic Financial Position
[ ] Strong Financial Position
[ ] $388 million in revenues (combined Companies, LTM)
[ ] $157 million cash (combined Companies, June 30, 2000)
[ ] Positioned for additional acquisitions
[ ] Accretive to MKS' earnings (without synergies)
[ ] Cost Synergy Upside
[ ] Leverage global infrastructure
[ ] Leverage MKS' lean manufacturing
[ ] Leverage supply chain management
[ ] Leverage R&D investment
[ ] Enhanced Growth Platform
[ ] Depth of combined management team and technology
[ ] Complementary core competencies
[ ] Strong geographical and cultural fit
Slide # 8
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Established Global Infrastructure
[Diagram of world showing locations of MKS and ASTeX facilities.]
[ ] 12 Manufacturing Facilities
[ ] 22 Customer Support Centers
[ ] Provides SG&A Leverage
[ ] ASTeX Locations
Slide # 9
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Leaders in Growing Market
[Pie chart showing total available market, served market and MKS and
ASTeX shares of served market.]
Served Market ~ 750M (1999)
MKS ~ 25%
Served Market ~ $1450M (1999)
[Pie chart indicates MKS and ASTEX portions of market]
Total Market Around the Process
~$3.5bn (1999)
~$5.5bn (2000) est.
Source: AVEM, Semi, Company Estimates
Slide # 10
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ASTeX Growth Drivers
[ ] Increased customer reliance on suppliers for value-add
[ ] Higher level of integration
[ ] Increased outsourcing by semiconductor equipment OEMs
[ ] New etch and deposition systems increase available market
Slide # 11
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Competition
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------
Pressure Reactive Gas
Measurement & Materials Delivery and Analysis Vacuum Generators Power
Control Products Generators
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Flow Control Gas Analysis
-------------------------------------------------------------------------------------------------------------
[ ] MKS [ ] MKS [ ] MKS [ ] MKS [ ] ASTeX [ ] ASTeX
-------------------------------------------------------------------------------------------------------------
[ ] Millipore [ ] Aera [ ] Inficon [ ] Edwards [ ] AE [ ] AE
-------------------------------------------------------------------------------------------------------------
[ ] Millipore [ ] * Spectra [ ] Helix [ ] Ebara [ ] Analogic
-------------------------------------------------------------------------------------------------------------
[ ] STEC [ ] Inficon [ ] Sumitomo [ ] Daihen
-------------------------------------------------------------------------------------------------------------
[ ] Unit [ ] MDC [ ] ENI
Instruments
-------------------------------------------------------------------------------------------------------------
[ ] Nor-Cal
-------------------------------------------------------------------------------------------------------------
[ ] Varian
-------------------------------------------------------------------------------------------------------------
</TABLE>
* Acquired by MKS
Slide # 12
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Transaction Summary
[ ] $300M acquisition of ASTeX
[ ] 100% Stock and assumption of debt/cash
[ ] Ownership
[ ] 70% MKS Instruments
[ ] 30% ASTeX
[ ] Exchange Ratio
[ ] 0.7669 MKSI shares per ASTeX common share
[ ] Pooling of interests
[ ] Expected Closing: December 2000
Slide # 13
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Key Financial Statistics
(LTM, June 30, 2000/$M)
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------
MKS ASTeX Combined
-----------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenue $248.2 $139.9 $388.1
-----------------------------------------------------------------------------------
EBIT 50.7 19.4 70.0
-----------------------------------------------------------------------------------
Pro Forma Net Income 33.1 14.0 47.1
-----------------------------------------------------------------------------------
Shareholder's Equity 154.3 159.1 313.4
-----------------------------------------------------------------------------------
</TABLE>
[ ] Slightly accretive without synergies
Slide # 14
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Combined Capitalization
(June 30, 2000 /$M)
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------
MKS ASTeX Combined
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Debt $ 29.3 $ 9.6 $ 38.9
----------------------------------------------------------------------------------------------------------
Equity 154.3 159.1 313.4
----------------------------------------------------------------------------------------------------------
Cash 65.8 91.2 157.0
----------------------------------------------------------------------------------------------------------
Current Market Value 700 210 910
----------------------------------------------------------------------------------------------------------
</TABLE>
Source: Financials as of June 30, 2000, Market Value as of September 29, 2000
Slide # 15
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MKS Instruments, Inc.
Around the Process...
Around the World...
Questions & Answers
Slide # 16
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MKS INSTRUMENT/ASTEX
MERGER ANNOUNCEMENT
MONDAY, OCTOBER 2, 2000
BETH LEWIS, THE FINANCIAL RELATIONS BOARD
Thank you for joining MKS Instruments to discuss its merger with Applied Science
& Technology, commonly referred to as ASTeX, as announced in this morning's
press release. By now you should have received a copy of the release. If for
some reason you have not received the press release, please call Luiza Lopes at
my office at 617-369-9240.
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For today's conference call, from MKS Instruments we have John Bertucci,
Chairman and CEO; Ron Weigner, Vice President and Chief Financial Officer; and,
ASTeX Chairman and CEO Dr. Richard Post.
Before we begin, I need to remind you that during this conference call, our
remarks will include forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995 that are subject to risks and
uncertainties that could cause actual results to differ materially from those
anticipated or indicated, including statements concerning the merger of MKS
Instruments and ASTeX.
For a more detailed discussion of the risks and uncertainties of the companies'
business, please refer to companies' periodic reports and registration
statements filed with the Securities and Exchange Commission, including the
companies' annual reports on Form 10-K for the period ended December 31, 1999
for MKS and July 1, 2000 for ASTeX, and quarterly report on Form 10-Q for the
period ended June 30, 2000 for MKS. Please note also, following this call, we
will make avaiable on both the MKS and ASTeX websites, about 16 slides that help
illustrate the merger and why we think it's such a good strategic fit. And with
that, I will turn the call over to John Bertucci.
John, would you like to begin?
JOHN BERTUCCI, CHAIRMAN, CEO, MKS INSTRUMENTS
Thank you very much, Beth. As Chairman and CEO of MKS Instruments, I'd like to
thank all of you for participating on today's call, and, of course, your
continuing interest and support for MKS Instruments.
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As you know, MKS announced this morning that it has entered into a definitive
merger agreement to acquire ASTeX. The purpose of the call this morning is to
provide some details of the transaction and to give you the opportunity to ask
any questions. I'm speaking with you today from our corporate office in Andover,
Massachusetts. Joining me is Ron Weigner, CFO of MKS, and Dr. Richard Post, who
is Chairman and CEO of ASTeX. At the close of the transaction, Dr. Post will
assume the role of Corporate Vice-President of Business Development at MKS, and
will be a valuable addition to our Executive Committee. ASTeX will become the
ASTeX Products group of MKS and will continue to be managed by John Ross, who
will report to Dr. Peter Younger, President and COO of MKS.
First allow me to summarize the transaction. Under the terms of the agreement,
each outstanding share of ASTeX common stock will be exchanged for 0.7669 newly
issued shares of MKS. This will result in the issuance of approximately 11
million shares of common stock of MKS, representing a purchase price of
approximately $300 million, based on the closing price of common stock of MKS on
Friday, September 29, 2000.
The transaction is expected to close in the fourth calendar quarter of 2000 and
is expected to be slightly accretive to EPS in 2001. The transaction is expected
to be accounted for as a pooling of interests, and is expected to qualify as a
tax-free reorganization. The merger is subject to the approval of both MKS and
ASTeX stockholders, regulatory approval and other customary closing conditions.
3
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I'd like to highlight some key points about the two companies:
- MKS is the #1 supplier of gas process control instruments to semiconductor
OEMs and Fabs. We have a market capitalization of roughly $700 million a
track record of 30 consecutive years of profitability; we have achieved a
revenue growth rate averaging roughly 18% per year and have assembled a
solid global operation with world class manufacturing, sales and marketing
infrastructure.
- ASTeX is the #1 supplier of reactive gas solutions to semiconductor OEMs.
It has a market capitalization of roughly $210 million. The company has
achieved an impressive 5 year revenue compound average growth rate of 48%,
which represents roughly a three times multiple of the industry's general
growth rate. The company is well recognized in the industry as a
technologically strong organization.
You've often heard me discuss our strategic objective to effectively surround
the process chamber with MKS control instruments and subsystems. ASTeX is an
ideal strategic fit for MKS. We serve virtually the same markets with zero
product duplication; our product lines are fully complementary. Together we'll
offer the most comprehensive line of process control solutions available. MKS
products will monitor, control, and analyze critical variables related to
advanced thin film processes - specifically pressure, gas flow, gas composition
and energy. This represents a key
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competitive advantage as our customers continue their trend of outsourcing
highly specialized, integrated sub-system solutions to a few key global
suppliers.
We believe the critical mass we will achieve with this combination enables us to
enhance our customer relationships and leverage our complementary technologies
and our worldwide sales, marketing and support infrastructure. This combined
entity offers our customers the broadest range of best in class products and
integrated solutions.
The combined entity maintains a strong financial position with a revenue base of
approximately $400 million for the four quarters ended June 30, 2000 and with
cash of approximately $150 million.
With the combined depth of technologies and complimentary core competencies, we
believe that the new entity will have a substantially enhanced growth platform.
Before we go over the financial details of the transaction, I'll turn the call
over to someone I have worked with for a number of years, and have a great deal
of professional respect for, Dr. Richard Post, Chairman and CEO of ASTeX.
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RICHARD POST, CHAIRMAN AND CEO OF ASTEX:
Thank you, John. You've outlined the strong strategic rationale for this merger.
I just want to go on record as saying that our management team is equally
enthusiastic about the future prospects of our combined company. Most
definitely, ASTeX is eager to fully leverage the worldwide sales, marketing and
support infrastructure of MKS. The new MKS will have significant operations in
France, Germany, Japan, Korea, The Netherlands, Singapore, Taiwan, the United
Kingdom and the United States.
I believe the most immediate benefit to ASTeX will be in the Asian markets. We
believe that the substantial growth in the Pacific Rim is a major opportunity
for ASTeX products. Currently approximately 10% of our business is derived from
Asia including Japan. We have already established ASTeX at many accounts. In
combination with MKS' established presence, we will be able to provide high
level support and can accelerate the adoption of ASTeX products in production.
POST:
Most importantly, I believe the critical mass we achieve with this combination
will enable us to strengthen our customer relationships. According to industry
analysts and company estimates MKS' served market in 1999 was about $750
million. For ASTeX our served market was about $700 million. Since there is zero
overlap in our product offerings, our potential market has effectively doubled.
Furthermore, this market is expected to grow perhaps 60% this year, according to
industry analysts. We believe the strength of the combined entity will enable us
to gain a larger share of this growing market.
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As John said, we have effectively surrounded the process chamber with our
combined reactive gas technologies, and I think our customers will appreciate
the depth and sophistication of our combined broad product line and integration
capabilities.
POST:
As John alluded, the drivers affecting growth at ASTeX include the increased
outsourcing by semiconductor equipment OEMs, who are looking to suppliers like
ASTeX and MKS for value-added components.
That trend has guided our research efforts to develop a higher level of
integration into our product line, which is illustrated by our top-selling
ASTRON product, which integrates a reactive gas source, a power source and
controls into a compact subsystem.
Also contributing to our growth are new etch and deposition system that increase
our available market.
POST:
The combined entity will possess a uniquely broad competitive offering. MKS will
be the only provider of products and solutions in all five product areas
surrounding the process chamber: pressure measurement and control, materials
delivery and analysis, vacuum components, reactive gas generators, and power
delivery subsystems. This breadth, plus the unique ability to integrate
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innovative products across these product lines, offers greater value to our
OEM and end user customers and a significant competitive advantage to our
company.
And now, Ron Weigner, CFO of MKS, will walk us through the financial
details of the merger. Ron.
RON WEIGNER, CFO, MKS
Thank you Dick. 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 will result in the issuance of approximately 11 million
shares of common stock of MKS, representing a purchase price of approximately
$300 million, based on the closing price of common stock of MKS on Friday,
September 29, 2000.
The transaction is expected to close in the fourth calendar quarter of 2000 and
is expected to be slightly accretive to EPS in 2001. The transaction is expected
to be accounted for as a pooling of interests, and is expected to qualify as a
tax-free reorganization. The merger is subject to the approval of both MKS and
ASTeX stockholders, regulatory approval and other customary closing conditions.
Finally, we've prepared a number of key financial statistics illustrating the
impact on our financials.
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Combined revenue for the four quarters ended June 30, 2000 was $388 million,
EBIT was $70 million combined pro forma net income was $47 million, and combined
shareholders equity as of June 30, 2000 was $313 million.
WEIGNER
As to our combined capitalization, the sum of the unaffected market values, as
of September 29, 2000 represented approximately $910 million; combined debt as
of the most recent financial statements was $39 million; equity was $313
million; and cash $157 million.
And now, I believe John has a few closing comments. John.
BERTUCCI
Thank you, Ron. Over the past years, MKS and ASTeX have leveraged the know-how
of highly skilled engineering teams to design and manufacture sophisticated
products that have consistently produced superior value to both our customers
and our shareholders. I want our shareholders to know that this merger was
carefully considered with an eye to achieving a complementary business model,
cultural and technological fit, and finally, a deal of financial merit.
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I firmly believe the merger of MKS and ASTeX provides breadth of product
offering, a company of substantial scale and high-end technological capacity
that will accelerate the growth of our combined company worldwide. With that,
I'll open up to any questions you might have.
CLOSING COMMENT
BERTUCCI:
Let me close by telling you that the transaction we entered into today enhances
our position as a premier supplier of gas and vacuum based control subsystems
worldwide. We believe that this transaction enhances our ability to deliver
innovative product solutions to our customers on a global basis.
Thank you for participating in today's call.
10
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PRESS RELEASE
FOR FURTHER INFORMATION:
AT THE COMPANY THE FINANCIAL RELATIONS BOARD
-------------- -----------------------------
Ronald C. Weigner Michael Lawson Beth Lewis David Closs
Vice President and Chief (general info) (analyst info) (media info)
Financial Officer (617) 369-9240 (617) 369-9240 (212) 455-0947
(978) 975-2350
AT ASTEX
--------
John M. Tarrh
Vice President and Treasurer
(978) 284-4135
MKS INSTRUMENTS AND ASTEX ANNOUNCE DEFINITIVE MERGER AGREEMENT
ANDOVER, MASS. - OCTOBER 2, 2000 - MKS Instruments, Inc. (Nasdaq: MKSI), a
leading supplier of gas measurement, control and analysis products used in
semiconductor and other advanced thin-film manufacturing processes, announced
today that it has entered into a definitive merger agreement to acquire Applied
Science and Technology, Inc. ("ASTeX") (Nasdaq:ASTX), a Wilmington, MA-based
company that designs, develops, and manufactures precision reactive gas
solutions. MKS will be the surviving corporation. For the four quarters ended
June 30, 2000 MKS and ASTeX revenues were $248 million and $140 million,
respectively.
The announced transaction combines MKS, as the number one supplier of gas
process control instruments, with ASTeX, the number one supplier of reactive gas
solutions. The merger furthers MKS' strategy of offering a one-stop, broad based
product range for its OEM and end-user customers. ASTeX's broad product line is
based on its core technologies, which include reactive gas generation, power
sources, and subsystem integration. The ASTeX merger will add manufacturing
capabilities in Massachusetts, Colorado, Germany, and Korea.
John Bertucci, Chairman and CEO of MKS Instruments, stated that the ASTeX
product offering will further enhance MKS' strategic objective of surrounding
advanced process chambers with MKS control instruments and subsystems. MKS'
products used to control vacuum and gas based processes will be complemented
with ASTeX's reactive gas generators, RF and microwave power sources, thereby
doubling the potential market served by MKS products.
<PAGE> 28
"When this transaction is completed, we believe MKS will offer the most
comprehensive line of process control solutions available," said John Bertucci.
"Our combined products will monitor and control critical variables - pressure,
gas flow, gas composition and energy - related to advanced thin film processes."
The transaction is consistent with MKS' stated objective of expanding its core
product offering, both through strategic acquisitions and new product
development. MKS acquisitions this year have included Compact Instruments, with
technology for advanced vacuum instrumentation, Telvac, with vacuum subsystem
manufacturing capability for the European market, Spectra International, with a
line of in-process monitoring products, and D.I.P. Inc., with products and
technology for digital process control networks.
"ASTeX is an ideal strategic fit for MKS," said Mr. Bertucci. "We serve
virtually the same markets with zero product duplication; our product lines are
fully complementary, and we have a high degree of geographical and cultural fit.
We are very impressed by the high level of subsystem integration that ASTeX has
achieved with its products. By offering additional fully integrated process
control solutions we intend to increase MKS' value to our customers. The
combined technological capabilities of the two companies will enable us to add
further value through new innovative product solutions."
Dr. Richard Post, Chairman and CEO of ASTeX, stated "We're very enthusiastic
about the combination of our two companies. Together, we will have a greater
technological advantage, a larger installed customer base, and a broader ability
to serve our customers. We believe that ASTeX's growth objectives can be
achieved most rapidly by leveraging the global infrastructure of MKS. We are
particularly enthusiastic about MKS' strong position in Japan and the rest of
Asia."
Dr. Post will report to John Bertucci as Corporate Vice-President of Business
Development and will serve on the Executive Committee of MKS. He and Dr. Peter
Younger, President of MKS, will co-chair the MKS/ASTeX integration team. John
Ross will continue to manage the new ASTeX Products group of MKS as Corporate
Vice-President and General Manager, reporting to Peter Younger. At the closing,
the MKS Board of Directors will be expanded from 5 to 7 members and two ASTeX
designees will join.
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 million shares of common stock
of MKS, representing 30% of MKS' then outstanding shares. The transaction is
valued at approximately $300 million, based on the closing price of MKS common
stock on Friday, September 29, 2000.
The transaction is expected to close in the fourth calendar quarter of 2000, and
is expected to be slightly accretive to EPS in 2001. The transaction is expected
to be accounted for as a pooling of interests, and is expected to qualify as a
tax-free reorganization. The merger is subject to the approval of both MKS and
ASTeX stockholders, regulatory approval and other customary closing conditions.
Conference Call Management will host a teleconference, Monday, October 2, 2000,
at 8:45 a.m. ET to discuss the transaction.
