MKS Inc.

MKS Inc.

September 08, 2010 08:00 ET

MKS Announces First Quarter Fiscal 2011 Results

WATERLOO, ONTARIO--(Marketwire - Sept. 8, 2010) - MKS Inc. (MKS) (TSX:MKX) the global application lifecycle management (ALM) technology leader, today announced its financial results for the first quarter of fiscal year 2011. All amounts are reported in US dollars under United States Generally Accepted Accounting Principles.

Financial & Operational Highlights:

Q1 2011 (compared with Q1 2010)

  • Total revenue of $15.3 million compared to $15.7 million, a decrease of 3%
  • License revenue of $4.5 million compared to $5.6 million, a decrease of 20%
  • Maintenance revenue of $7.6 million compared to $7.4 million, an increase of 2%
  • Service revenue of $3.2 million compared to $2.7 million, an increase of 18%
  • Operating income of $1.2 million compared to $2.3 million, a decrease of 47%
  • Net income of $1.0 million, or $0.09 per share, compared to $1.4 million, or $0.14 per share, a decrease of 31%
  • Follow on license transactions at Agilent, Alcatel-Lucent, Autoliv, Chase Paymentech, Dassault, Magna, Volkswagen and Wincor Nixdorf
  • New accounts wins at Edwards Life Sciences and Rolls-Royce

Closing cash balance at April 30, 2010 was $20.9 million, a $3.9 million decrease from the $24.8 million balance at April 30, 2010. During the quarter MKS paid $1.8 million in dividends.

"While we saw modest licensing in the first quarter, we were pleased with the progress we made in some of our key MKS Integrity deployments, as well as landing new global engineering companies as MKS customers." said Michael Harris, President and CEO. "Our heightened focus on helping enterprise customers deal with embedded software development complexity has increased our expertise in this niche even further. Our growth in services revenue comes primarily from these larger projects which have the most potential for future license sales."

"This quarter we continued to make new investments and key executive hires to support our strategy for license revenue growth" said Philip C. Deck, Executive Chairman. "We remain excited about our prospects for revenue and profit growth for the full year driven by higher license sales."

MKS also announced today that its Board of Directors has declared a quarterly cash dividend of US$0.175 per share on the Company's outstanding common shares.

The cash dividend on MKS common shares will be payable on October 15, 2010 to shareholders of record at the close of business on September 30, 2010. The dividend is designated as an eligible dividend for the purposes of section 89 of the Income Tax Act (Canada).

Financial Review

Total revenue for the first quarter of fiscal 2011 was $15.3 million, down 3 percent from $15.7 million for the first quarter of fiscal 2010. Net income for the first quarter of fiscal 2011 decreased 31 percent to $1.0 million, or $0.09 per share, compared to $1.4 million or $0.14 per share in the first quarter of fiscal 2010.

Conference Call Details

MKS will hold a conference call September 8, 2010 at 4:00 p.m. EDT to discuss its first quarter performance. Interested parties may access the call by dialing 800-215-1640 or 1-416-620-2418. A digital recording of the call will be available for seven (7) days following the call and may be accessed by dialing 800-558-5253 or 416-626-4100 and by entering reservation #21442611.

About MKS

MKS Inc., the global application lifecycle management (ALM) technology leader, enables software engineering and IT organizations to seamlessly manage their worldwide software development activities. With its flagship product, MKS Integrity, MKS offers support for all software development activities through a single enterprise application, resulting in better global collaboration and higher productivity. MKS supports customers worldwide with offices across North America, Europe and Asia. For more information about MKS, visit our Web site at

Copyright © 2010 MKS Inc. MKS and MKS Integrity are trademarks of MKS Inc. All other trademarks mentioned in this release are the property of their respective owners.

This news release contains forward-looking statements that involve risks and uncertainties, which may cause actual results to differ materially from the statements made. When used in this document, the words "may", "would", "could", "will", "intend", "plan", "anticipate", "believe", "estimate", "expect" and similar expressions are intended to identify forward-looking statements. Such statements reflect MKS's current views with respect to future events and are subject to such risks and uncertainties. Although MKS believes the expectations represented by such forward looking statements are reasonable, there can be no assurance that those expectations will prove to be correct. Many factors could cause our actual results to differ materially from the statements made including those factors detailed from time to time in filings made by MKS with Canadian securities regulatory authorities. Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking statements prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated or expected. MKS does not intend and does not assume any obligation to update these forward-looking statements.

MKS Inc.
Consolidated Balance Sheets
(US dollars, thousands, unaudited)

  July 31 2010 April 30 2010
Current assets:    
  Cash and cash equivalents $ 20,873 $ 24,755
  Accounts receivable, net of allowances for doubtful accounts    
    of $160 (April 30, 2010 – $124) 10,587 10,685
  Income taxes receivable 556 556
  Deferred income taxes 2,540 2,540
  Prepaid expenses and other assets 1,981 1,643
Total current assets 36,537 40,179
Fixed assets 3,810 3,632
Intangible assets 12 15
Goodwill 2,424 2,424
Income taxes receivable 2,791 3,019
Deferred income taxes 4,431 4,522
Total assets $ 50,005 $ 53,791
Liabilities and shareholders' equity:    
Current liabilities:    
  Accounts payable $ 1,131 $ 2,028
  Accrued liabilities 3,349 4,163
  Deferred loss on forward contracts 591 488
  Income taxes payable 788 959
  Deferred revenue 16,398 17,221
Total current liabilities 22,257 24,859
Deferred income taxes 1,037 1,007
Total long term liabilities 1,037 1,007
Shareholders' equity:    
  Share capital 58,553 57,926
  Accumulated other comprehensive loss (1,130) (113)
  Accumulated deficit (30,712) (29,888)
Total shareholders' equity 26,711 27,925
Total liabilities and shareholders' equity $ 50,005 $ 53,791

MKS Inc.
Consolidated Statements of Operations
(US dollars, thousands, except per share data, unaudited)

Three months ended July 31 2010 July 31 2009
  License $ 4,532 $ 5,624
  Maintenance 7,565 7,415
  Service 3,186 2,701
  15,283 15,740
Operating expenses:    
  Cost of product and support 1,369 1,229
  Cost of service 2,107 1,731
  Sales and marketing 5,558 5,217
  Research and development 3,258 3,185
  General and administrative 1,809 1,924
  Foreign exchange gain (182) (41)
  Stock-based compensation 132 176
  14,051 13,421
Operating income 1,232 2,319
Interest income, net 2 4
Income before income taxes 1,234 2,323
Income tax provision (recovery):    
  Current 264 35
  Deferred (4) 881
Income tax provision 260 916
Net income $ 974 $ 1,407
Earnings per share:    
  Basic $ 0.09 $ 0.14
  Diluted $ 0.09 $ 0.14
  Weighted average number of shares outstanding 10,260 10,036
  Diluted weighted average number of shares outstanding 10,555 10,118

MKS Inc.
Consolidated Statements of Cash Flows
(US dollars, thousands, unaudited)

Three months ended July 31 2010 July 31 2009
Cash flows provided by (used for) operating activities:    
Net income $ 974 $ 1,407
Adjustments to reconcile net income to net cash provided by (used for) operating activities:    
Depreciation of fixed assets 375 337
Amortization of intangible assets 2 22
Stock-based compensation 132 176
Deferred income taxes (4) 881
Loss on disposal of fixed assets 65
Change in operating assets and liabilities:    
  Accounts receivable 98 1,023
  Prepaid expenses and other assets (338) (588)
  Accounts payable, net of deferred compensation (897) (318)
  Accrued liabilities (814) 346
  Income taxes payable/receivable 57 71
  Deferred revenue (823) 166
Net cash provided by (used for) operating activities (1,237) 3,588
Cash flows (used for) investing activities:    
  Purchase of fixed assets (547) (279)
Net cash (used for) investing activities (547) (279)
Cash flows provided by (used for) financing activities:    
  Proceeds on issuance of common shares 495 505
  Payment of dividends (1,798) (1,259)
Net cash (used for) financing activities (1,303) (754)
Effect of exchange rate changes on cash and cash equivalents (795) 76
Change in cash and cash equivalents balances (3,882) 2,631
Cash and cash equivalents, beginning of period 24,755 17,098
Cash and cash equivalents, end of period $ 20,873 $ 19,729

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