MKS Inc.
TSX : MKX

MKS Inc.

November 23, 2010 07:01 ET

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 © 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 2010   October 31 2009   October 31 2010   October 31 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 2010   October 31 2009   October 31 2010   October 31 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  

Contact Information