MKS Inc.
LSE : MKX

MKS Inc.

November 23, 2010 07:00 ET

MKS Announces Second Quarter Fiscal 2011 Results and Increases Quarterly Dividend

FOR:  MKS INC.

TSX SYMBOL:  MKX

November 23, 2010

MKS Announces Second Quarter Fiscal 2011 Results and Increases Quarterly Dividend

WATERLOO, ONTARIO--(Marketwire - Nov. 23, 2010) - MKS Inc. (MKS) (TSX:MKX) the global application lifecycle
management (ALM) technology leader, today announced its financial results for the second quarter of fiscal year
2011 and a 14% increase to its quarterly cash dividend. All amounts are reported in US dollars under United
States Generally Accepted Accounting Principles.

Financial & Operational Highlights:

Q2 2011 (compared with Q2 2010)



--  Total revenue of $17.4 million compared to $14.7 million, an increase of
    19%
--  License revenue of $5.6 million compared to $3.9 million, an increase of
    42%
--  Maintenance revenue of $8.0 million compared to $7.8 million, an
    increase of 3%
--  Service revenue of $3.8 million compared to $3.0 million, an increase of
    29%
--  Operating income of $3.2 million compared to $2.2 million, an increase
    of 45%
--  Net income of $2.4 million, or $0.23 per share, compared to $1.6
    million, or $0.16 per share, an increase of 49%
--  Key license transactions at Denso, ITT Electronics, Magna, Mitsubishi
    Electric, RIM, Robert Bosch, Rolls Royce, and Volkswagen



Closing cash balance at October 31, 2010 was $21.8 million, a $3.0 million decrease from the $24.8 million
balance at April 30, 2010, and up $0.9 million from the $20.9 million at July 31, 2010. During the quarter MKS
paid $1.8 million in dividends.

"We were pleased to report strong second quarter results driven by excellent license performance. The
outstanding quality of our global customers is testament to the strategic position that we are winning in the
embedded systems market." said Michael Harris, President and CEO. "We have steadily established MKS Integrity
as the market standard for global manufacturers who recognized that software has become their most critical
factor in product innovation."

"With continued new customer wins among the largest embedded systems customers globally, we are also proving
the robustness of our financial model." said Philip C. Deck, Executive Chairman. "Our strong financial
performance this quarter supported our continued confidence in our performance for the full fiscal year 2011."

MKS also announced today that its Board of Directors has declared a quarterly cash dividend of US$0.20 per
share on the Company's outstanding common shares, an increase of 14% from the previous quarter.

The cash dividend on MKS common shares will be payable on January 14, 2011 to shareholders of record at the
close of business on December 31, 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 second quarter of fiscal 2011 was $17.4 million, up 19 percent from $14.7 million for the
second quarter of fiscal 2010. Net income for the second quarter of fiscal 2011 increased 49 percent to $2.4
million, or $0.23 per share, compared to $1.6 million or $0.16 per share in the second quarter of fiscal 2010.

Six month revenue for fiscal 2011 increased 8 percent to $32.7 million compared with revenue of $30.4 million
for the same period in fiscal 2010. Six month net income was $3.4 million, or $0.33 per share, an increase of
12 percent from the net income of $3.0 million, or $0.30 per share, for the same period in fiscal 2010.

Conference Call Details

MKS will hold a conference call November 23, 2010 at 8:30 a.m. EST to discuss its quarterly 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 #21442612.

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
http://www.mks.com.

Copyright (C) 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.



                                                                     US GAAP

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

                                         October 31 2010      April 30 2010
----------------------------------------------------------------------------
Assets:

Current assets:
 Cash and cash equivalents              $         21,769   $         24,755
 Accounts receivable, net of allowances
  for doubtful accounts of $155 (April
  30, 2010 - $124)                                10,355             10,685
 Income taxes receivable                             556                556
 Deferred income taxes                             2,540              2,540
 Prepaid expenses and other assets                 1,660              1,643
----------------------------------------------------------------------------
Total current assets                              36,880             40,179
Fixed assets                                       3,843              3,632
Intangible assets                                     10                 15
Goodwill                                           2,424              2,424
Income taxes receivable                            2,459              3,019
Deferred income taxes                              4,219              4,522
----------------------------------------------------------------------------
Total assets                            $         49,835   $         53,791
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Liabilities and shareholders' equity:

Current liabilities:
 Accounts payable                       $          1,585   $          2,028
 Accrued liabilities                               3,421              4,163
 Deferred loss on forward contracts                  175                488
 Income taxes payable                                976                959
 Deferred revenue                                 15,048             17,221
----------------------------------------------------------------------------
Total current liabilities                         21,205             24,859
 Deferred income taxes                             1,071              1,007
----------------------------------------------------------------------------
Total long term liabilities                        1,071              1,007
Shareholders' equity:
 Share capital                                    58,565             57,926
 Accumulated other comprehensive loss               (883)              (113)
 Accumulated deficit                             (30,123)           (29,888)
----------------------------------------------------------------------------
Total shareholders' equity                        27,559             27,925
----------------------------------------------------------------------------
Total liabilities and shareholders'
 equity                                 $         49,835   $         53,791
----------------------------------------------------------------------------
----------------------------------------------------------------------------


                                                                     US GAAP

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


                         Three months ended           Six months ended
----------------------------------------------------------------------------
                       October 31    October 31    October 31    October 31
                             2010          2009          2010          2009
----------------------------------------------------------------------------
Revenue:
 License              $     5,567   $     3,921   $    10,099   $     9,545
 Maintenance                8,032         7,797        15,597        15,212
 Service                    3,821         2,959         7,007         5,660
----------------------------------------------------------------------------
                           17,420        14,677        32,703        30,417

Operating expenses:
 Cost of product and
  support                   1,462         1,141         2,831         2,370
 Cost of service            2,416         1,831         4,523         3,562
 Sales and marketing        5,053         4,770        10,611         9,987
 Research and
  development               3,447         2,749         6,705         5,934
 General and
  administrative            2,002         1,982         3,811         3,906
 Foreign exchange
  (gain) loss                (302)         (184)         (484)         (225)
 Stock-based
  compensation                137           175           269           351
----------------------------------------------------------------------------
                           14,215        12,464        28,266        25,885
----------------------------------------------------------------------------
Operating income            3,205         2,213         4,437         4,532
Interest income, net            4             3             6             7
----------------------------------------------------------------------------
Income before income
 taxes                      3,209         2,216         4,443         4,539
Income tax provision:
 Current                      532           105           796           140
 Deferred                     276           500           272         1,381
----------------------------------------------------------------------------
Income tax provision          808           605         1,068         1,521
----------------------------------------------------------------------------
Net income            $     2,401   $     1,611   $     3,375   $     3,018
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Earnings per share:
 Basic                $      0.23   $      0.16   $      0.33   $      0.30
 Diluted              $      0.23   $      0.16   $      0.32   $      0.30

 Weighted average
  number of shares
  outstanding              10,321        10,085        10,291        10,060
 Diluted weighted
  average number of
  shares outstanding       10,645        10,210        10,600        10,164


                                                                     US GAAP

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

                         Three months ended           Six months ended
----------------------------------------------------------------------------
                       October 31    October 31    October 31    October 31
                             2010          2009          2010          2009
----------------------------------------------------------------------------
Cash flows provided
 by (used for)
 operating
 activities:
Net income            $     2,401   $     1,611   $     3,375   $     3,018
Adjustments to
 reconcile net income
 to net cash provided
 by (used for)
 operating
 activities:
Depreciation of fixed
 assets                       319           346           694           683
Amortization of
 intangible assets              2            21             5            43
Stock-based
 compensation                 137           175           269           351
Deferred income taxes         276           500           272         1,381
Loss on disposal of
 fixed assets                  32             9            32            74
Change in operating
 assets and
 liabilities:
 Accounts receivable          232        (1,206)          330          (183)
 Prepaid expenses and
  other assets                321           432           (17)         (156)
 Accounts payable             454           215          (443)         (103)
 Accrued liabilities           72            (7)         (742)          339
 Income taxes
  payable/receivable          520          (608)          577          (537)
 Deferred revenue          (1,350)       (1,810)       (2,173)       (1,644)
----------------------------------------------------------------------------
Net cash provided by
 (used for) operating
 activities                 3,416          (322)        2,179         3,266
Cash flows (used for)
 investing
 activities:
 Purchase of fixed
  assets                     (351)         (173)         (898)         (452)
----------------------------------------------------------------------------
Net cash (used for)
 investing activities        (351)         (173)         (898)         (452)

Cash flows provided
 by (used for)
 financing
 activities:
 Proceeds on issuance
  of common shares            609           136         1,104           641
 Common shares
  purchased for
  restricted share
  units granted              (734)            -          (734)            -
 Payment of dividends      (1,812)       (1,262)       (3,610)       (2,521)
----------------------------------------------------------------------------
Net cash (used for)
 financing activities      (1,937)       (1,126)       (3,240)       (1,880)
Effect of exchange
 rate changes on cash
 and cash equivalents        (232)          901        (1,027)          977
----------------------------------------------------------------------------
Change in cash and
 cash equivalents
 balances                     896          (720)       (2,986)        1,911
Cash and cash
 equivalents,
 beginning of period       20,873        19,729        24,755        17,098
----------------------------------------------------------------------------
Cash and cash
 equivalents, end of
 period               $    21,769   $    19,009   $    21,769   $    19,009
----------------------------------------------------------------------------
----------------------------------------------------------------------------


FOR FURTHER INFORMATION PLEASE CONTACT:

MKS Inc.
Douglas Sawatzky
Chief Financial Officer
519-883-3252
dsawatzky@mks.com
www.mks.com

Contact Information

  • MKS Inc.