MKS Inc.

MKS Inc.

September 08, 2005 16:05 ET

MKS Announces Record First Quarter Revenue and Profits

WATERLOO, ONTARIO--(CCNMatthews - Sept. 8, 2005) - MKS Inc. (MKS) (TSX:MKX) today announced its financial results for the first quarter of fiscal 2006 which ended on July 31, 2005. All amounts are reported in US dollars under United States Generally Accepted Accounting Principles.

Total revenue for the first quarter of fiscal 2006 was $10.8 million, a 22 percent or $2.0 million increase from $8.8 million in the first quarter of fiscal 2005. Net income for the first quarter of fiscal 2006 was $0.5 million, or $0.01 per share, an improvement of 206 per cent or $0.3 million compared to net income of $0.2 million or $0.00 per share in the first quarter of fiscal 2005.

First quarter application lifecycle management (ALM) revenues were $8.8 million, representing 32 percent growth over ALM revenues of $6.7 million in the first quarter of fiscal 2005. The Company's cash position increased from $7.8 million to $8.9 million during the quarter.

"We were pleased to show continued strong results in our first quarter, once again driven by excellent licensing and field services performance," said Philip C. Deck, CEO of MKS. "Our strong profitability and cash flow in the quarter was particularly gratifying given significant new hiring in both R&D and field operations as we build for future quarters."

"In addition to steady license progress, we have begun to see the results of our strategic initiative to build out services partnerships and channels," said Michael Harris, MKS COO. "We generated more than 50 percent growth in our service revenue due in part to contributions from MKS Solutions Partners in customer implementations."

MKS expects that the trend of revenue growth will continue throughout fiscal 2006 developing ALM licensing opportunities through expansion of existing customer relationships and through targeting of Global 1000 companies in its primary markets worldwide. MKS believes that the positive results in Q1 '06 and the anticipated growth in ALM revenue in the balance of fiscal 2006 will lead to annual fiscal 2006 revenue in the range of $46 to $51 million and income from operations before tax in the range of $3 to $4 million. Factors to be considered in arriving at these ranges, identified in the April 30, 2005 MD&A, yet still relevant as of July 31, 2005, include: the expectation that MKS's Interoperability business will decline 5 to 10 percent over the course of the year; the intention of MKS to expand its sales and services staff, increased marketing expenditures and increased ALM research and development expenditures to ensure MKS maintains its technical leadership in the ALM market.

Highlights for the Quarter

- Significant customer wins at Axalto N.V.; BearingPoint Inc.; Cincinnati Financial Corporation ; Continental Teves Inc; Deutsche Lufthansa AG; European Aeronautic Defense and Space Company EADS N.V.; Exel PLC; HSBC Holdings PLC; LexisNexis Group; NCR Corporation; Northrop Grumman Corporation; Tele Atlas N.V.; T-Mobil International; Verizon Wireless and Wincor Nixdorf International GmbH.

- 37 contracts worth greater than $50,000, vs. 41 in the same period last year.

- 63 percent growth in ALM service revenue delivery over the first quarter of fiscal 2005.

- Partnership with Aspen Software Consultants extending MKS's consulting and professional services reach with deep consulting, implementation and process expertise.

- Delivery of the MKS Integrity Solution for ITIL with processes for change, configuration, incident and problem management and the announcement of certification of the solution and MKS software by Pink Elephant.

- Release of MKS Toolkit 9.0 improving developer productivity on 32 and 64-bit Windows operating systems.

Conference Call Details

The Company will hold a conference call today, September 8, 2005 at 5:00 p.m. EDT to discuss its first quarter performance. Interested parties may access the call by dialing 1-877-871-9526 or 1-416-620-2400. A digital recording of the call will be available for one (1) week from September 8, 2005 to September 15, 2005 and may be accessed by dialing 1-800-558-5253 reservation #21256395 or 1-416-626-4100 reservation #21256395.

About MKS

MKS is the preeminent provider of enterprise technology management solutions for the global 1000. MKS's solution spans the application lifecycle from requirements management, through application development, to server deployment providing customers with greater visibility over software development activities, enhanced development productivity and improved IT controls for regulatory compliance. MKS solutions are distinguished by their ease of implementation and low total cost of ownership. Founded in 1984, MKS serves more than 10,000 customers in countries across the world. Whether through deployment of MKS's enterprise solutions strategically on an enterprise scale, or by leveraging individual components to solve project-level challenges, our customers can use MKS's technology to better enable higher levels of process maturity, better manage global development activity and safeguard their most critical business applications and software assets. Under its widely known MKS Toolkit brand, MKS also provides UNIX-Windows co-existence and system administration that significantly cut development and administrative costs and reduce time to market, while enabling enhanced performance. More information about MKS can be found at, or by calling 1-800-265-2797 (US & Canada), +49-711-351775-0 (Germany), +44-1483-733900 (United Kingdom) and 1-519-884-2251 (Rest of World).

Copyright (C) 2005 MKS Inc. MKS, and MKS Toolkit are registered 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 the Company's current views with respect to future events and are subject to such risks and uncertainties. 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 the Company 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. The Company does not intend and does not assume any obligation to update these forward-looking statements.

MKS Inc.
Consolidated Balance Sheets
(Dollar Amounts in US, In Thousands, Unaudited)

July 31 April 30
2005 2005


Current assets:
Cash and cash equivalents $ 8,913 $ 7,799
Accounts receivable, net of allowances for
doubtful accounts of $ 159
(April 30, 2005 - $ 148) 6,559 8,126
Other 2,310 2,039
Total current assets 17,782 17,964

Fixed assets 3,170 3,250
Intangibles and goodwill 2,425 2,426
Other 226 395
Total assets $ 23,603 $ 24,035

Liabilities and shareholders' equity:

Current liabilities:
Accounts payable $ 1,471 $ 1,753
Accrued liabilities 2,665 3,455
Income taxes payable 389 320
Deferred revenue 8,932 9,704
Total current liabilities 13,457 15,232

Long-term liabilities:
Deferred revenue 248 149
Total liabilities 13,705 15,381

Shareholders' equity:
Share capital 48,464 47,933
Accumulated other comprehensive loss (1,155) (1,332)
Accumulated deficit (37,411) (37,947)
Total shareholders' equity 9,898 8,654
Total liabilities and shareholders' equity $ 23,603 $ 24,035

MKS Inc.
Consolidated Statements of Operations
(Dollar Amounts in US, In Thousands, Except Per Share Data,

Three Months Ended
July 31
2005 2004

License $ 5,245 $ 4,456
Maintenance 4,355 3,613
Service 1,205 771
Total revenue 10,805 8,840

Operating expenses:
Cost of product and support 850 783
Cost of service 1,024 563
Sales and marketing 4,648 3,948
Research and development 2,210 2,053
General and administrative 1,557 1,316
Total operating expenses 10,289 8,663
Income from operations 516 177

Interest income (expense), net 20 (2)
Net income $ 536 $ 175

Earnings per share:
Basic and diluted $ 0.01 $ 0.00
Weighted average number of shares outstanding 42,373 41,413

MKS Inc.
Consolidated Statements of Cash Flows
(Dollar Amounts in US, In Thousands, Unaudited)

Three Months Ended
July 31
2005 2004

Cash flows from operating activities:
Net income $ 536 $ 175
Adjustments to reconcile net income to net
cash used for operating activities:
Depreciation and amortization 187 199
Interest on deferred compensation 2 5
Loss on disposal of fixed assets 10 -

Change in operating assets and liabilities:
Accounts receivable 1,567 (767)
Other assets (102) (308)
Accounts payable, net of deferred
compensation (92) (358)
Accrued liabilities (790) (78)
Income taxes payable 69 (1)
Deferred revenue (673) (193)
Net cash provided by (used for) operating
activities 714 (1,326)

Cash flows from investing activities:
Purchase of fixed assets (153) (283)
Net cash (used for) investing activities (153) (283)

Cash flows from financing activities:
Proceeds on issuance of common shares 531 4
Payments of deferred compensation (190) (197)
Net cash provided by (used for) financing
activities 341 (193)

Effect of exchange rates on cash and cash
equivalents 212 (55)
Change in cash and cash equivalents 1,114 (1,857)
Cash and cash equivalents, beginning of
period 7,799 6,367
Cash and cash equivalents, end of period $ 8,913 $ 4,510

Supplemental schedules:
Cash paid for:
Interest $ 2 $ 16
Income taxes $ 22 $ 1

Contact Information

  • MKS Inc.
    Investor Contact: Robert Dietrich
    (519) 883-3210
    MKS Inc.
    Media Contact: Ellyn Winters-Robinson
    VP Marketing
    (519) 883-4346