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MKS Instruments Reports Third Quarter 2018 Financial Results

Oct 23, 2018

ANDOVER, Mass., Oct. 23, 2018 (GLOBE NEWSWIRE) -- MKS Instruments, Inc. (NASDAQ: MKSI), a global provider of technologies that enable advanced processes and improve productivity, today reported third quarter 2018 financial results.

Quarterly Financial Results
(in millions, except per share data)
  Q3 2018 Q2 2018
GAAP Results    
Net revenues $487 $573
Gross margin 47.6% 48.0%
Operating margin 24.0% 26.4%
Net income $93 $123
Diluted EPS $1.70 $2.22
Non-GAAP Results    
Gross margin 47.6% 48.0%
Operating margin 26.5% 28.3%
Net earnings $103 $129
Diluted EPS $1.88 $2.33

Third Quarter 2018 Financial Results
Revenue was $487 million, a decrease of 15% from a record of $573 million in the second quarter of 2018 and an increase of $1 million from $486 million in the third quarter of 2017.

Net income was $93 million, or $1.70 per diluted share, compared to net income of $123 million, or $2.22 per diluted share, in the second quarter of 2018, and $76 million, or $1.38 per diluted share, in the third quarter of 2017.

Non-GAAP net earnings, which exclude special charges and credits, were $103 million, or $1.88 per diluted share, compared to $129 million, or $2.33 per diluted share, in the second quarter of 2018, and $86 million, or $1.56 per diluted share, in the third quarter of 2017.

Sales in the Vacuum and Analysis Division were $286 million, a decrease of 7% from the third quarter a year ago, primarily due to moderation in semiconductor capital equipment spending.  Sales in the Light and Motion Division were $201 million, an increase of 13% from the prior year period.

Sales to semiconductor customers were $259 million, a decrease of 8% compared to the third quarter of 2017, and sales to Advanced Markets were $228 million, an increase of 11% compared to the third quarter of 2017.

“Despite the recent moderation in the semiconductor market, we are pleased with our strong financial results for the third quarter, reflecting our ability to manage through these cycles," said Gerald Colella, Chief Executive Officer.  "Although we foresee the semiconductor market will continue to face headwinds in the near term, exiting the third quarter we have seen that our semiconductor business has been more steady and consistent.  We are very optimistic on the long-term growth drivers within the semiconductor market.  Moreover, we have continued to diversify our markets, customers and product portfolio and are on target to grow our Advanced Markets more than two times faster than the overall market.”

“The acquisition of Newport Corporation, which was completed two years ago, coupled with strong organic growth has continued to expand our portion of revenue from Advanced Markets,” said Seth Bagshaw, Chief Financial Officer. “In the past five years, we have grown our Advanced Market revenue from approximately $211 million in 2013 to approaching over $900 million in 2018.  Advanced Markets represented approximately 47% of consolidated revenue in the third quarter and year to date revenue increased almost 20% from the same period a year ago.”

Additional Financial Information
The Company had $620 million in cash and short-term investments and $348 million of Term Loan Debt as of September 30, 2018.  During the third quarter of 2018, the Company repurchased 818 thousand shares for $75 million at an average price of $91.67 per share and paid a dividend of $10.9 million or $0.20 cents per diluted share.

Fourth Quarter 2018 Outlook
Based on current business levels, the Company expects that revenue in the fourth quarter of 2018 could range from $420 to $460 million.

At these volumes, GAAP net income could range from $1.19 to $1.45 per diluted share and Non-GAAP net earnings could range from $1.38 to $1.64 per diluted share.  This financial guidance incorporates assumptions made based upon the Company’s current interpretation of the 2017 Tax Cuts and Jobs Act and may change as additional clarification and implementation guidance is issued.

Conference Call Details
A conference call with management will be held on Wednesday, October 24, 2018 at 8:30 a.m. (Eastern Time). To participate in the conference call, please dial (877) 212-6076 for domestic callers and (707) 287-9331 for international callers, and an operator will connect you.  Participants will need to provide the operator with the Conference ID of 4268689, which has been reserved for this call.  A live and archived webcast of the call will be available on the Company’s website at www.mksinst.com, along with the Company's earnings press release and supplemental financial information.

About MKS Instruments
MKS Instruments, Inc. is a global provider of instruments, subsystems and process control solutions that measure, monitor, deliver, analyze, power and control critical parameters of advanced manufacturing processes to improve process performance and productivity for our customers.  Our products are derived from our core competencies in pressure measurement and control, flow measurement and control, gas and vapor delivery, gas composition analysis, residual gas analysis, leak detection, control technology, ozone generation and delivery, power, reactive gas generation, vacuum technology, lasers, photonics, sub-micron positioning, vibration control and optics.  We also provide services relating to the maintenance and repair of our products, installation services and training.  Our primary served markets include semiconductor, industrial technologies, life and health sciences, research and defense. Additional information can be found at www.mksinst.com.

Use of Non-GAAP Financial Results
This release includes measures that are not in accordance with U.S. generally accepted accounting principles (“Non-GAAP measures”). Non-GAAP measures exclude amortization of acquired intangible assets, asset impairments, costs associated with completed and announced acquisitions, acquisition integration costs, restructuring charges, certain excess and obsolete inventory charges, fees and expenses related to the re-pricings of our term loan, amortization of debt issuance costs, environmental costs related to an acquisition, costs associated with the sale of a business, the one-time tax effects of the 2017 Tax Cuts and Jobs Act, windfall tax benefits from stock-based compensation, accrued taxes on subsidiary distributions, a tax adjustment related to the sale of a business and the related tax effects of adjustments impacting pre-tax income. These Non-GAAP measures should be viewed in addition to, and not as a substitute for, MKS’ reported results, and may be different from Non-GAAP measures used by other companies. In addition, these Non-GAAP measures are not based on any comprehensive set of accounting rules or principles. MKS management believes the presentation of these Non-GAAP measures is useful to investors for comparing prior periods and analyzing ongoing business trends and operating results.

SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS

This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 regarding the future financial performance, business prospects and growth of MKS. These statements are only predictions based on current assumptions and expectations. Actual events or results may differ materially from those in the forward-looking statements set forth herein. Among the important factors that could cause actual events to differ materially from those in the forward-looking statements are the conditions affecting the markets in which MKS operates, including the fluctuations in capital spending in the semiconductor industry and other advanced manufacturing markets, fluctuations in net sales to our major customers, the challenges, risks and costs involved with integrating the operations of the companies we have acquired, including our most recent acquisition of Newport Corporation, the Company’s ability to successfully grow our business, potential fluctuations in quarterly results, the terms of our term loan, dependence on new product development, rapid technological and market change, acquisition strategy, manufacturing and sourcing risks, volatility of stock price, international operations, financial risk management, and the other factors described in MKS’ most recent Annual Report on Form 10-K for the year ended December 31, 2017 filed with SEC. MKS is under no obligation to, and expressly disclaims any obligation to, update or alter these forward-looking statements, whether as a result of new information, future events or otherwise after the date of this press release.

Company Contact:  Seth H. Bagshaw
Senior Vice President, Chief Financial Officer and Treasurer
Telephone:  978.645.5578

Investor Relations Contacts:
Monica Gould
The Blueshirt Group
Telephone:  212.871.3927
Email:  monica@blueshirtgroup.com

Lindsay Grant Savarese
The Blueshirt Group
Telephone:  212.331.8417
Email:  lindsay@blueshirtgroup.com

               
MKS Instruments, Inc.   
Unaudited Consolidated Statements of Operations   
(In thousands, except per share data)   
               
               
               
    Three Months Ended   
    September 30,   September 30,   June 30,  
     2018   2017    2018  
        (Note 12)      
Net revenues:              
Products   $   426,255     $   428,891     $   509,999    
Services       60,897         57,376         63,141    
Total net revenues       487,152         486,267         573,140    
                           
Cost of revenues:              
Products       219,311         226,445         266,890    
Services       35,981         31,827         31,373    
Total cost of revenues       255,292         258,272         298,263    
               
Gross profit       231,860         227,995         274,877    
Research and development       31,898         32,548         36,504    
Selling, general and administrative       70,822         71,347         76,181    
Acquisition and integration costs       36         2,466         (1,168 )  
Restructuring       1,364         10         790    
Fees and expenses related to repricing of term loan       —         492         378    
Amortization of intangible assets       10,695         10,977         10,901    
Income from operations       117,045         110,155         151,291    
Interest income       1,516         873         1,456    
Interest expense       3,719         7,172         3,922    
Other expense, net       326         2,485         281    
Income from operations before income taxes       114,516         101,371         148,544    
Provision for income taxes        21,239         25,377         25,682    
Net income   $   93,277     $   75,994     $   122,862    
Net income per share:              
Basic   $   1.71     $   1.40     $   2.25    
Diluted   $   1.70     $   1.38     $   2.22    
Cash dividends per common share   $   0.20     $   0.18     $   0.20    
Weighted average shares outstanding:               
Basic       54,476         54,282         54,719    
Diluted       54,954         55,101         55,274    
               
The following supplemental Non-GAAP earnings information is presented to aid in understanding MKS' operating results:  
   
Net income   $   93,277     $   75,994     $   122,862    
Adjustments:              
Acquisition and integration costs (Note 1)       36         2,466         (1,168 )  
Fees and expenses related to repricing of term loan (Note 2)        —         492         378    
Amortization of debt issuance costs (Note 3)       682         2,314         660    
Restructuring (Note 4)       1,364         10         790    
Amortization of intangible assets       10,695         10,977         10,901    
Windfall tax benefit on stock-based compensation (Note 5)       (287 )       (594 )       (4,752 )  
Accrued tax on subsidiary distribution (Note 6)       (2,756 )       —         —    
Transition tax on accumulated foreign earnings (Note 7)       863         —         (659 )  
Pro-forma tax adjustments       (659 )       (5,789 )       (200 )  
Non-GAAP net earnings (Note 8)    $   103,215     $   85,870     $   128,812    
Non-GAAP net earnings per share (Note 8)   $   1.88     $   1.56     $   2.33    
Weighted average shares outstanding       54,954         55,101         55,274    
Income from operations   $   117,045     $   110,155     $   151,291    
Adjustments:              
Acquisition and integration costs (Note 1)       36         2,466         (1,168 )  
Fees and expenses related to repricing of term loan (Note 2)        —         492         378    
Restructuring (Note 4)       1,364         10         790    
Amortization of intangible assets       10,695         10,977         10,901    
Non-GAAP income from operations (Note 9)   $   129,140     $   124,100     $   162,192    
Non-GAAP operating margin percentage (Note 9)     26.5 %     25.5 %     28.3 %  
Interest expense   $   3,719     $   7,172     $   3,922    
Amortization of debt issuance costs (Note 3)       682         2,314         660    
Non-GAAP interest expense   $   3,037     $   4,858     $   3,262    
Net income   $   93,277     $   75,994     $   122,862    
Interest expense, net       2,203         6,299         2,466    
Provision for income taxes       21,239         25,377         25,682    
Depreciation       8,834         9,153         8,984    
Amortization       10,695         10,977         10,901    
EBITDA (Note 10)   $   136,248     $   127,800     $   170,895    
Stock-based compensation       5,213         4,846         6,366    
Acquisition and integration costs (Note 1)       36         2,466         (1,168 )  
Fees and expenses related to repricing of term loan (Note 2)        —         492         378    
Restructuring (Note 4)       1,364         10         790    
Other adjustments       —         836         —    
Adjusted EBITDA (Note 11)   $   142,861     $   136,450     $   177,261    
               
Note 1: We recorded acquisition and integration costs related to the Newport Corporation acquisition, which closed during the second quarter of 2016, during the three months ended September 30, 2018 and 2017. During the second quarter of 2018, we reversed a portion of these costs related to severance agreement provisions that were not met.  
               
Note 2: We recorded fees and expenses during the three months ended June 30, 2018 and September 30, 2017 related to repricings of our Term Loan Credit Agreement.  
               
Note 3: We recorded additional interest expense related to the amortization of debt issuance costs affiliated with our Term Loan Credit Agreement and ABL Facility.  
               
Note 4: We recorded restructuring charges during the three months ended September 30, 2018, which consisted primarily of severance costs related to an organization-wide reduction in workforce. We recorded restructuring costs during the three months ended June 30, 2018 which were primarily comprised of severance costs related to transferring a portion of our shared accounting functions to a third party as well as the consolidation of certain shared accounting functions in Asia. We recorded restructuring costs during the three months ended September 30, 2017, primarily related to the consolidation of two manufacturing plants.  
               
Note 5: We recorded windfall tax benefits on the vesting of stock-based compensation.  
               
Note 6: We recorded an adjustment to a tax accrual related to a planned distribution of an MKS subsidiary.  
               
Note 7*: We adjusted the provisional transition tax on accumulated foreign earnings related to the 2017 Tax Cut and Jobs Act during the three months ended September 30, 2018 and June 30, 2018.  
               
Note 8: The Non-GAAP net earnings and Non-GAAP net earnings per share amounts exclude acquisition and integration costs, fees and expenses related to the repricing of our Term Loan Credit Agreement, amortization of debt issuance costs, restructuring costs, amortization of intangible assets, a windfall tax benefit related to stock compensation expense, a deferred tax adjustment, transition tax on accumulated foreign earnings and the related tax effect of these adjustments to reflect the expected full year effective tax rate in the related period.  
               
Note 9: The Non-GAAP income from operations and Non-GAAP operating margin percentages exclude acquisition and integration costs, fees and expenses related to the repricing of the Term Loan Credit Agreement, restructuring costs and amortization of intangible assets.  
               
Note 10: EBITDA excludes net interest, income taxes, depreciation and amortization of intangible assets.  
               
Note 11: Adjusted EBITDA excludes stock-based compensation, acquisition and integration costs, fees and expenses related to the repricing of the Term Loan Credit Agreement, restructuring costs and other adjustments as defined in our Term Loan Credit Agreement.  
               
Note 12: We historically recorded the revenue and related cost of revenue for our spare parts within Products in our Statement of Operations for the Vacuum and Analysis Division. We have now determined that these items are better reflected within Services in our Statement of Operations and have revised the presentation of our previously issued financial statements as shown below:  
               
    Three Months Ended September 30, 2017  
    As previously
reported
  Adjustment   As revised  
Net revenues:              
Products   $   434,710     $   (5,819 )   $   428,891    
Services       51,557         5,819         57,376    
Total net revenues        486,267         —         486,267    
Cost of revenues:              
Cost of products       225,174         1,271         226,445    
Cost of services       33,098         (1,271 )       31,827    
Total cost of revenues    $   258,272     $   —     $   258,272    
               
*The computation of the one-time tax on our offshore earnings pursuant to the 2017 Tax Cut and Jobs Act (the "Tax Act") as well as our net deferred tax liability is based on our current understanding and assumptions regarding the impact of the Tax Act, and may change as additional clarification and implementation guidance is issued and as the interpretation of the Tax Act evolves over time.  
               


               
MKS Instruments, Inc.  
Unaudited Consolidated Statements of Operations  
(In thousands, except per share data)  
               
               
               
        Nine Months Ended   
        September 30,  
          2018     2017 (Note 20)  
Net revenues:              
Products       $   1,432,931     $   1,243,146    
Services           181,636         161,031    
Total net revenues           1,614,567         1,404,177    
Cost of revenues:              
Products           747,522         662,985    
Services           97,453         88,067    
Total cost of revenues           844,975         751,052    
Gross profit           769,592         653,125    
Research and development           103,259         99,510    
Selling, general and administrative           229,952         217,546    
Acquisition and integration costs           (1,132 )       4,698    
Restructuring           3,374         2,596    
Environmental costs           1,000         —    
Asset impairment            —         6,719    
Fees and expenses related to repricing of term loan           378         492    
Amortization of intangible assets           32,786         34,946    
Income from operations           399,975         286,618    
Interest income           4,077         1,896    
Interest expense           13,071         23,001    
Gain on sale of business           —         74,856    
Other expense, net           1,179         3,741    
Income from operations before income taxes           389,802         336,628    
Provision for income taxes            68,542         75,134    
Net income       $   321,260     $   261,494    
Net income per share:              
Basic       $   5.89     $   4.84    
Diluted       $   5.82     $   4.75    
Cash dividends per common share       $   0.58     $   0.53    
Weighted average shares outstanding:               
Basic           54,539         54,076    
Diluted           55,171         55,020    
               
The following supplemental Non-GAAP earnings information is presented to aid in understanding MKS' operating results:  
   
Net income       $   321,260     $   261,494    
Adjustments:              
Acquisition and integration costs (Note 1)           (1,132 )       4,698    
Expenses related to sale of a business (Note 2)           —         859    
Excess and obsolete inventory charge (Note 3)           —         1,160    
Fees and expenses related to repricing of term loan (Note 4)            378         492    
Amortization of debt issuance costs (Note 5)           3,173         5,422    
Restructuring (Note 6)           3,374         2,596    
Environmental costs (Note 7)           1,000         —    
Asset impairment (Note 8)           —         6,719    
Gain on sale of business (Note 9)           —         (74,856 )  
Amortization of intangible assets           32,786         34,946    
Windfall tax benefit on stock-based compensation (Note 10)           (8,075 )       (10,413 )  
Accrued tax on subsidiary distribution (Note 11)           (2,756 )       —    
Tax adjustment related to the sale of a business (Note 12)           —         15,007    
Deferred tax adjustment (Note 13)           878         —    
Transition tax on accumulated foreign earnings (Note 14)           (1,464 )       —    
Pro-forma tax adjustments           (3,106 )       (15,499 )  
Non-GAAP net earnings (Note 15)        $   346,316     $   232,625    
Non-GAAP net earnings per share (Note 15)       $   6.28     $   4.23    
Weighted average shares outstanding           55,171         55,020    
Income from operations       $   399,975     $   286,618    
Adjustments:              
Acquisition and integration costs (Note 1)           (1,132 )       4,698    
Expenses related to sale of a business (Note 2)           —         859    
Excess and obsolete inventory charge (Note 3)           —         1,160    
Fees and expenses related to repricing of term loan (Note 4)            378         492    
Restructuring (Note 6)           3,374         2,596    
Environmental costs (Note 7)           1,000         —    
Asset impairment (Note 8)           —         6,719    
Amortization of intangible assets           32,786         34,946    
Non-GAAP income from operations (Note 16)       $   436,381     $   338,088    
Non-GAAP operating margin percentage (Note 16)         27.0 %     24.1 %  
Gross profit       $   769,592     $   653,125    
Excess and obsolete inventory charge (Note 3)           —         1,160    
Non-GAAP gross profit (Note 17)       $   769,592     $   654,285    
Non-GAAP gross profit percentage (Note 17)         47.7 %     46.6 %  
Interest expense       $   13,071     $   23,001    
Amortization of debt issuance costs (Note 5)           3,173         5,422    
Non-GAAP interest expense       $   9,898     $   17,579    
Net Income       $   321,260     $   261,494    
Interest expense, net           8,994         21,105    
Provision for income taxes           68,542         75,134    
Depreciation           27,120         27,605    
Amortization           32,786         34,946    
EBITDA (Note 18)       $   458,702     $   420,284    
Stock-based compensation           22,005         19,835    
Acquisition and integration costs (Note 1)           (1,132 )       4,698    
Expenses related to sale of a business (Note 2)           —         859    
Excess and obsolete inventory charge (Note 3)           —         1,160    
Fees and expenses related to repricing of term loan (Note 4)            378         492    
Restructuring (Note 6)           3,374         2,596    
Environmental costs (Note 7)           1,000         —    
Asset impairment (Note 8)           —         6,719    
Gain on sale of business (Note 9)           —         (74,856 )  
Other adjustments           772         2,405    
Adjusted EBITDA (Note 19)       $   485,099     $   384,192    
               
Note 1: We recorded acquisition and integration costs related to the Newport Corporation acquisition, which closed during the second quarter of 2016, during the nine months ended September 30, 2018 and 2017. During the second quarter of 2018, we reversed a portion of these costs related to severance agreement provisions that were not met.  
               
Note 2: We recorded legal and consulting expenses during the nine months ended September 30, 2017 related to the sale of a business, which was completed in April 2017.  
               
Note 3: We recorded excess and obsolete inventory charges in cost of sales during the nine months ended September 30, 2017, related to the discontinuation of a product line in connection with the consolidation of two manufacturing sites.  
               
Note 4: We recorded fees and expenses during the nine months ended September 30, 2018 and 2017 related to repricings of our Term Loan Credit Agreement.  
               
Note 5: We recorded additional interest expense related to the amortization of debt issuance costs affiliated with our Term Loan Credit Agreement and ABL Facility.  
               
Note 6: We recorded restructuring costs during the nine months ended September 30, 2018, which were primarily comprised of severance costs related to a worldwide reduction in workforce in the third quarter, transferring a portion of our shared accounting functions to a third party as well as the consolidation of certain shared accounting functions in Asia. We recorded restructuring costs during the nine months ended September 30, 2017, primarily related to the restructuring of one of our international facilities and the consolidation of sales offices.  
               
Note 7: We recorded additional environmental costs during the nine months ended September 30, 2018, related to an EPA-designated Superfund site, which was acquired as part of our Newport acquisition.  
               
Note 8: We recorded an asset impairment charge, primarily related to the write-off of goodwill and intangible assets, during the nine months ended September 30, 2017, in connection with the consolidation of two manufacturing plants.  
               
Note 9: We recorded a gain during the nine months ended September 30, 2017, related to the sale of our Data Analytics Solutions business.  
               
Note 10: We recorded windfall tax benefits on the vesting of stock-based compensation.  
               
Note 11: We recorded an adjustment to a tax accrual related to a planned distribution of an MKS subsidiary.  
               
Note 12: We recorded taxes related to the sale of our Data Analytics Solutions business during the nine months ended September 30, 2017.  
               
Note 13*: We recorded a provisional deferred tax adjustment, which also includes the reversal of a tax accrual on a French dividend, related to U.S. tax reform legislation during the fourth quarter of 2017.  
               
Note 14*: We adjusted the provisional transition tax on accumulated foreign earnings related to the 2017 Tax Cut and Jobs Act during  the nine months ended September 30, 2018.  
               
Note 15: The Non-GAAP net earnings and Non-GAAP net earnings per share amounts exclude acquisition and integration costs, expenses related to the sale of a business, an excess and obsolete inventory charge, fees and expenses related to the repricing of the Term Loan Credit Agreement, amortization of debt issuance costs, restructuring costs, environmental costs, an asset impairment charge, a gain on the sale of a business, amortization of intangible assets, a windfall tax benefit related to stock compensation expense, taxes related to the sale of a business, a deferred tax adjustment, transition tax on accumulated foreign earnings and the related tax effect of these adjustments to reflect the expected full year effective tax rate in the related period.  
               
Note 16: The Non-GAAP income from operations and Non-GAAP operating margin percentages exclude acquisition and integration costs, expenses related to the sale of a business, an excess and obsolete inventory charge, fees and expenses related to the repricing of the Term Loan Credit Agreement, restructuring costs, environmental costs, an asset impairment charge and amortization of intangible assets.  
               
Note 17: The Non-GAAP gross profit amounts and Non-GAAP gross profit percentages exclude an excess and obsolete inventory charge related to the discontinuation of a product line.  
               
Note 18: EBITDA excludes net interest, income taxes, depreciation and amortization of intangible assets.  
               
Note 19: Adjusted EBITDA excludes stock-based compensation, acquisition and integration costs, expenses related to the sale of a business, an excess and obsolete inventory charge, fees and expenses related to the repricing of the Term Loan Credit Agreement, restructuring costs, environmental costs, an asset impairment charge, a gain on the sale of a business and other adjustments as defined in our Term Loan Credit Agreement.  
               
Note 20: We historically recorded the revenue and related cost of revenue for our spare parts within Products in our Statement of Operations for the Vacuum and Analysis Division. We have now determined that these items are better reflected within Services in our Statement of Operations and have revised the presentation of our previously issued financial statements as shown below:  
               
   
               
    Nine Months Ended September 30, 2017  
    As previously reported   Adjustment   As revised  
Net revenues:              
Products    $   1,259,582   $   (16,436 )   $   1,243,146    
Services        144,595       16,436         161,031    
Total net revenues        1,404,177       —         1,404,177    
Cost of revenues:              
Cost of products        659,538       3,447         662,985    
Cost of services        91,514       (3,447 )       88,067    
Total cost of revenues    $   751,052   $   —     $   751,052    
               
*The computation of the one-time tax on our offshore earnings pursuant to the 2017 Tax Cut and Jobs Act (the "Tax Act") as well as our net deferred tax liability is based on our current understanding and assumptions regarding the impact of the Tax Act, and may change as additional clarification and implementation guidance is issued and as the interpretation of the Tax Act evolves over time.  


             
MKS Instruments, Inc.    
Unaudited Consolidated Balance Sheet    
(In thousands)    
             
             
             
             
    September 30,   December 31,    
     2018    2017    
ASSETS            
Cash and cash equivalents, including restricted cash   $   399,850   $   333,887    
Short-term investments       219,776       209,434    
Trade accounts receivable, net       318,470       300,308    
Inventories       399,077       339,081    
Other current assets       75,298       53,543    
Total current assets       1,412,471       1,236,253    
Property, plant and equipment, net       180,182       171,782    
Goodwill       587,861       591,047    
Intangible assets, net       331,288       366,398    
Long-term investments       10,404       10,655    
Other assets       42,390       37,883    
Total assets   $   2,564,596   $   2,414,018    
LIABILITIES AND STOCKHOLDERS' EQUITY            
Short-term debt   $   6,130   $   2,972    
Accounts payable       81,486       82,518    
Accrued compensation       74,472       96,147    
Income taxes payable       12,942       21,398    
Deferred revenue       9,136       12,842    
Other current liabilities       78,327       73,945    
Total current liabilities       262,493       289,822    
Long-term debt, net       342,970       389,993    
Non-current deferred taxes       61,540       61,571    
Non-current accrued compensation       56,888       51,700    
Other liabilities       30,412       32,025    
Total liabilities       754,303       825,111    
Stockholders' equity:            
Common stock       113       113    
Additional paid-in capital       786,138       789,644    
Retained earnings       1,023,959       795,698    
Accumulated other comprehensive income       83       3,452    
Total stockholders' equity       1,810,293       1,588,907    
Total liabilities and stockholders' equity   $   2,564,596   $   2,414,018    
             


               
MKS Instruments, Inc.  
Unaudited Consolidated Statements of Cash Flows  
(In thousands, except per share data)  
               
    Three Months Ended   
    September 30,   September 30,   June 30,  
     2018    2017    2018  
Cash flows from operating activities:              
Net income   $   93,277     $   75,994     $   122,862    
Adjustments to reconcile net income to net cash provided by operating activities:  
Depreciation and amortization       19,529         20,129         19,885    
Amortization of debt issuance costs and original issue discount       897         2,643         868    
Stock-based compensation       5,213         4,845         6,366    
Provision for excess and obsolete inventory       5,283         4,347         4,959    
Provision for doubtful accounts       263         139         261    
Deferred income taxes       (4,695 )       (1,157 )       1,875    
Other       71         36         426    
Changes in operating assets and liabilities       (23,882 )       (8,013 )       (47,891 )  
Net cash provided by operating activities       95,956         98,963         109,611    
Cash flows from investing activities:              
Purchases of investments       (64,958 )       (129,430 )       (99,063 )  
Sales of investments       4,505         18,252         54,433    
Maturities of investments       44,605         31,545         41,138    
Purchases of property, plant and equipment       (15,067 )       (8,118 )       (12,428 )  
Net cash used in investing activities       (30,915 )       (87,751 )       (15,920 )  
Cash flows from financing activities:              
Payments of short-term borrowings       (29,803 )       (4,016 )       (17,788 )  
Proceeds from short and long-term borrowings       23,635         4,521         25,082    
Payments of long-term borrowings       (2 )       (125,000 )       —    
Repurchase of common stock       (75,000 )       —         —    
Dividend payments       (10,858 )       (9,500 )       (10,942 )  
Net payments related to employee stock awards       (589 )       (1,306 )       (4,131 )  
Net cash used in financing activities       (92,617 )       (135,301 )       (7,779 )  
Effect of exchange rate changes on cash and cash equivalents       (5 )       2,071         631    
Increase in cash and cash equivalents and restricted cash       (27,581 )       (122,018 )       86,543    
Cash and cash equivalents, including restricted cash at beginning of period       427,431         428,112         340,888    
Cash and cash equivalents, including restricted cash at end of period   $   399,850     $   306,094     $   427,431