☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Massachusetts 04-2277512
incorporation or organization)
onfiles)filesLarge accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐ Securities registered pursuant to Section 12(b) of the Act:Title of each classTradingSymbol(s)Name of each exchangeon which registeredCommon Stock, no par valueMKSINasdaq Global Select MarketMay 1,October 54,357,26054,510,355 shares of common stock outstanding.
ITEM 1. | ||||||||||
3 | ||||||||||
4 | ||||||||||
5 | ||||||||||
7 | ||||||||||
8 | ||||||||||
ITEM 2. | 36 | |||||||||
ITEM 3. | 48 | |||||||||
ITEM 4. | 48 | |||||||||
ITEM 1. | 49 | |||||||||
ITEM 1A. | 49 | |||||||||
ITEM 6. | 50 | |||||||||
51 |
March 31, 2019 | December 31, 2018 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 418,016 | $ | 644,345 | ||||
Short-term investments | 44,326 | 73,826 | ||||||
Trade accounts receivable, net of allowance for doubtful accounts of $4,968 and $5,243 at March 31, 2019 and December 31, 2018, respectively | 335,990 | 295,454 | ||||||
Inventories | 475,633 | 384,689 | ||||||
Other current assets | 86,387 | 65,790 | ||||||
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Total current assets | 1,360,352 | 1,464,104 | ||||||
Property, plant and equipment, net | 251,424 | 194,367 | ||||||
Right-of-use asset | 65,628 | — | ||||||
Goodwill | 1,057,331 | 586,996 | ||||||
Intangible assets, net | 619,091 | 319,807 | ||||||
Long-term investments | 10,350 | 10,290 | ||||||
Other assets | 48,562 | 38,682 | ||||||
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Total assets | $ | 3,412,738 | $ | 2,614,246 | ||||
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LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Short-term debt | $ | 10,281 | $ | 3,986 | ||||
Accounts payable | 95,317 | 83,825 | ||||||
Accrued compensation | 61,523 | 82,350 | ||||||
Income taxes payable | 14,355 | 16,358 | ||||||
Lease liability | 19,459 | — | ||||||
Deferred revenue and customer advances | 21,056 | 14,246 | ||||||
Other current liabilities | 74,568 | 62,520 | ||||||
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Total current liabilities | 296,559 | 263,285 | ||||||
Long-term debt, net | 976,823 | 343,842 | ||||||
Non-current deferred taxes | 78,904 | 48,223 | ||||||
Non-current accrued compensation | 60,337 | 55,598 | ||||||
Non-current lease liability | 49,392 | — | ||||||
Other liabilities | 29,862 | 30,111 | ||||||
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Total liabilities | 1,491,877 | 741,059 | ||||||
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Commitments and contingencies (Note 19) | ||||||||
Stockholders’ equity: | ||||||||
Preferred Stock, $0.01 par value per share, 2,000,000 shares authorized; none issued and outstanding | — | — | ||||||
Common Stock, no par value, 200,000,000 shares authorized; 54,231,772 and 54,039,554 shares issued and outstanding at March 31, 2019 and December 31, 2018, respectively | 113 | 113 | ||||||
Additionalpaid-in capital | 844,261 | 793,932 | ||||||
Retained earnings | 1,086,409 | 1,084,797 | ||||||
Accumulated other comprehensive loss | (9,922 | ) | (5,655 | ) | ||||
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Total stockholders’ equity | 1,920,861 | 1,873,187 | ||||||
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Total liabilities and stockholders’ equity | $ | 3,412,738 | $ | 2,614,246 | ||||
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September 30, 2019 | December 31, 2018 | |||||||
ASSET S | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 386,281 | $ | 644,345 | ||||
Short-term investments | 88,847 | 73,826 | ||||||
Trade accounts receivable, net of allowance for doubtful accounts of $5,190 and $5,243 at September 30, 2019 and December 31, 2018, respectively | 327,983 | 295,454 | ||||||
Inventories | 463,263 | 384,689 | ||||||
Other current assets | 94,011 | 65,790 | ||||||
Total current assets | 1,360,385 | 1,464,104 | ||||||
Property, plant and equipment, net | 236,124 | 194,367 | ||||||
Right-of-use asset | 67,632 | — | ||||||
Goodwill | 1,054,091 | 586,996 | ||||||
Intangible assets, net | 580,880 | 319,807 | ||||||
Long-term investments | 10,146 | 10,290 | ||||||
Other assets | 45,286 | 38,682 | ||||||
Total assets | $ | 3,354,544 | $ | 2,614,246 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Short-term debt | $ | 12,623 | $ | 3,986 | ||||
Accounts payable | 88,078 | 83,825 | ||||||
Accrued compensation | 87,045 | 82,350 | ||||||
Income taxes payable | 11,048 | 16,358 | ||||||
Lease liability | 20,575 | — | ||||||
Deferred revenue and customer advances | 22,363 | 14,246 | ||||||
Other current liabilities | 68,925 | 62,520 | ||||||
Total current liabilities | 310,657 | 263,285 | ||||||
Long-term debt, net | 873,450 | 343,842 | ||||||
Non-current deferred taxes | 69,190 | 48,223 | ||||||
Non-current accrued compensation | 43,704 | 55,598 | ||||||
Non-current lease liability | 47,294 | — | ||||||
Other liabilities | 36,718 | 30,111 | ||||||
Total liabilities | 1,381,013 | 741,059 | ||||||
Commitments and contingencies (Note 19) | ||||||||
Stockholders’ equity: | ||||||||
Preferred Stock, $0.01 par value per share, 2,000,000 shares authorized; NaN issued and outstanding | — | — | ||||||
Common Stock, 0 par value, 200,000,000 shares authorized; 54,496,664 and 54,039,554 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively | 113 | 113 | ||||||
Additional paid-in capital | 856,437 | 793,932 | ||||||
Retained earnings | 1,149,457 | 1,084,797 | ||||||
Accumulated other comprehensive loss | (32,476 | ) | (5,655 | ) | ||||
Total stockholders’ equity | 1,973,531 | 1,873,187 | ||||||
Total liabilities and stockholders’ equity | $ | 3,354,544 | $ | 2,614,246 | ||||
Three Months Ended March 31, | ||||||||
2019 | 2018 | |||||||
Net revenues: | ||||||||
Products | $ | 397,363 | $ | 496,677 | ||||
Services | 66,198 | 57,598 | ||||||
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Total net revenues | 463,561 | 554,275 | ||||||
Cost of revenues: | ||||||||
Cost of products | 229,710 | 261,321 | ||||||
Cost of services | 35,733 | 30,099 | ||||||
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Total cost of revenues (exclusive of amortization shown separately below) | 265,443 | 291,420 | ||||||
Gross profit | 198,118 | 262,855 | ||||||
Research and development | 38,933 | 34,857 | ||||||
Selling, general and administrative | 82,455 | 82,949 | ||||||
Fees and expenses related to incremental term loan | 5,847 | — | ||||||
Acquisition and integration costs | 30,167 | — | ||||||
Restructuring | 223 | 1,220 | ||||||
Customer contract obligation | 1,700 | — | ||||||
Environmental costs | — | 1,000 | ||||||
Amortization of intangible assets | 15,727 | 11,190 | ||||||
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Income from operations | 23,066 | 131,639 | ||||||
Interest income | 1,714 | 1,105 | ||||||
Interest expense | 9,119 | 5,430 | ||||||
Other expense, net | 325 | 572 | ||||||
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Income before income taxes | 15,336 | 126,742 | ||||||
Provision for income taxes | 2,881 | 21,621 | ||||||
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Net income | $ | 12,455 | $ | 105,121 | ||||
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Other comprehensive income: | ||||||||
Changes in value of financial instruments designated as cash flow hedges, net of tax expense (benefit)(1) | $ | 52 | $ | 178 | ||||
Foreign currency translation adjustments, net of tax of $0 | (4,268 | ) | 10,771 | |||||
Unrecognized pension loss, net of tax benefit(2) | (1 | ) | (85 | ) | ||||
Unrealized loss on investments, net of tax benefit(3) | (50 | ) | (59 | ) | ||||
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Total comprehensive income | $ | 8,188 | $ | 115,926 | ||||
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Net income per share: | ||||||||
Basic | $ | 0.23 | $ | 1.93 | ||||
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Diluted | $ | 0.23 | $ | 1.90 | ||||
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Weighted average common shares outstanding: | ||||||||
Basic | 54,147 | 54,423 | ||||||
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Diluted | 54,848 | 55,286 | ||||||
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Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Net revenues: | ||||||||||||||||
Products | $ | 386,173 | $ | 426,255 | $ | 1,184,862 | $ | 1,432,931 | ||||||||
Services | 76,278 | 60,897 | 215,260 | 181,636 | ||||||||||||
Total net revenues | 462,451 | 487,152 | 1,400,122 | 1,614,567 | ||||||||||||
Cost of revenues: | ||||||||||||||||
Cost of products | 216,238 | 219,311 | 672,161 | 747,522 | ||||||||||||
Cost of services | 41,209 | 35,981 | 113,812 | 97,453 | ||||||||||||
Total cost of revenues (exclusive of amortization shown separately below) | 257,447 | 255,292 | 785,973 | 844,975 | ||||||||||||
Gross profit | 205,004 | 231,860 | 614,149 | 769,592 | ||||||||||||
Research and development | 41,566 | 31,898 | 122,354 | 103,259 | ||||||||||||
Selling, general and administrative | 82,101 | 70,822 | 247,792 | 229,952 | ||||||||||||
Fees and expenses related to term loan | 642 | — | 6,489 | 378 | ||||||||||||
Acquisition and integration costs | 2,103 | 36 | 35,510 | (1,132 | ) | |||||||||||
Restructuring and other | 1,525 | 1,364 | 4,690 | 4,374 | ||||||||||||
Amortization of intangible assets | 17,020 | 10,695 | 50,299 | 32,786 | ||||||||||||
Gain on sale of long-lived assets | (6,773 | ) | — | (6,773 | ) | — | ||||||||||
Income from operations | 66,820 | 117,045 | 153,788 | 399,975 | ||||||||||||
Interest income | 1,230 | 1,516 | 4,367 | 4,077 | ||||||||||||
Interest expense | 13,542 | 3,719 | 35,335 | 13,071 | ||||||||||||
Other ( expense, netincome ) | (914 | ) | 326 | 199 | 1,179 | |||||||||||
Income before income taxes | 55,422 | 114,516 | 122,621 | 389,802 | ||||||||||||
Provision for income taxes | 7,994 | 21,239 | 24,999 | 68,542 | ||||||||||||
Net income | $ | 47,428 | $ | 93,277 | $ | 97,622 | $ | 321,260 | ||||||||
Other comprehensive income: | ||||||||||||||||
Changes in value of financial instruments designated as cash flow hedges, net of tax (benefit) expense (1) | $ | (782 | ) | $ | 163 | $ | (8,554 | ) | $ | 8,053 | ||||||
Foreign currency translation adjustments, net of tax of $0 | (14,553 | ) | (3,576 | ) | (18,229 | ) | (11,314 | ) | ||||||||
Unrecognized pension gain (loss), net of tax expense (benefit) (2) | 91 | 24 | 92 | (13 | ) | |||||||||||
Unrealized gain (loss) on investments, net of tax expense (benefit) (3) | 16 | 230 | (130 | ) | (95 | ) | ||||||||||
Total comprehensive income | $ | 32,200 | $ | 90,118 | $ | 70,801 | $ | 317,891 | ||||||||
Net income per share: | ||||||||||||||||
Basic | $ | 0.86 | $ | 1.71 | $ | 1.79 | $ | 5.89 | ||||||||
Diluted | $ | 0.86 | $ | 1.70 | $ | 1.77 | $ | 5.82 | ||||||||
Weighted average common shares outstanding: | ||||||||||||||||
Basic | 54,945 | 54,476 | 54,636 | 54,539 | ||||||||||||
Diluted | 55,204 | 54,954 | 55,045 | 55,171 | ||||||||||||
(1) | Tax (benefit) expense September . |
(2) | Tax . |
(3) | Tax |
Common Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income/(Loss) | Total Stockholders’ Equity | ||||||||||||||||||||
Shares | Amount | |||||||||||||||||||||||
Balance at December 31, 2018 | 54,039,554 | $ | 113 | $ | 793,932 | $ | 1,084,797 | $ | (5,655 | ) | $ | 1,873,187 | ||||||||||||
Net issuance under stock-based plans | 192,218 | 22,491 | 22,491 | |||||||||||||||||||||
Stock-based compensation | 27,838 | 27,838 | ||||||||||||||||||||||
Cash dividend ($0.20 per common share) | (10,843 | ) | (10,843 | ) | ||||||||||||||||||||
Comprehensive income (net of tax): | ||||||||||||||||||||||||
Net income | 12,455 | 12,455 | ||||||||||||||||||||||
Other comprehensive loss | (4,267 | ) | (4,267 | ) | ||||||||||||||||||||
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Balance at March 31, 2019 | 54,231,772 | $ | 113 | $ | 844,261 | $ | 1,086,409 | $ | (9,922 | ) | $ | 1,920,861 | ||||||||||||
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Common Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income/(Loss) | Total Stockholders’ Equity | ||||||||||||||||||||
Shares | Amount | |||||||||||||||||||||||
Balance at December 31, 2017 | 54,355,535 | $ | 113 | $ | 789,644 | $ | 795,698 | $ | 3,452 | $ | 1,588,907 | |||||||||||||
Net issuance under stock-based plans | 136,568 | (8,920 | ) | (8,920 | ) | |||||||||||||||||||
Stock-based compensation | 10,426 | 10,426 | ||||||||||||||||||||||
Cash dividend ($0.18 per common share) | (9,808 | ) | (9,808 | ) | ||||||||||||||||||||
Accounting Standards Codification Topic 606 Adjustment | 1,809 | 1,809 | ||||||||||||||||||||||
Comprehensive income (net of tax): | ||||||||||||||||||||||||
Net income | 105,121 | 105,121 | ||||||||||||||||||||||
Other comprehensive gain | 10,805 | 10,805 | ||||||||||||||||||||||
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Balance at March 31, 2018 | 54,492,103 | $ | 113 | $ | 791,150 | $ | 892,820 | $ | 14,257 | $ | 1,698,340 | |||||||||||||
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Common Stock | Additional | Accumulated Other | Total | |||||||||||||||||||||
Shares | Amount | Paid-In Capital | Retained Earnings | Comprehensive Loss | Stockholders’ Equity | |||||||||||||||||||
Balance at December 31, 2018 | 54,039,554 | $ | 113 | $ | 793,932 | $ | 1,084,797 | $ | (5,655 | ) | $ | 1,873,187 | ||||||||||||
Net issuance under stock-based plans | 192,218 | 22,491 | 22,491 | |||||||||||||||||||||
Stock-based compensation | 27,838 | 27,838 | ||||||||||||||||||||||
Cash dividend ($0.20 per common share) | (10,843 | ) | (10,843 | ) | ||||||||||||||||||||
Comprehensive income (net of tax): | ||||||||||||||||||||||||
Net income | 12,455 | 12,455 | ||||||||||||||||||||||
Other comprehensive loss | (4,267 | ) | (4,267 | ) | ||||||||||||||||||||
Balance at March 31, 2019 | 54,231,772 | 113 | 844,261 | 1,086,409 | (9,922 | ) | 1,920,861 | |||||||||||||||||
Net issuance under stock-based plans | 247,920 | (2,113 | ) | (2,113 | ) | |||||||||||||||||||
Stock-based compensation | 7,205 | 7,205 | ||||||||||||||||||||||
Cash dividend ($0.20 per common share) | (10,880 | ) | (10,880 | ) | ||||||||||||||||||||
Stock dividends accrued | 232 | (232 | ) | — | ||||||||||||||||||||
Comprehensive income (net of tax): | ||||||||||||||||||||||||
Net income | 37,739 | 37,739 | ||||||||||||||||||||||
Other comprehensive loss | (7,325 | ) | (7,325 | ) | ||||||||||||||||||||
Balance at June 30, 2019 | 54,479,692 | 113 | 849,585 | 1,113,036 | (17,247 | ) | 1,945,487 | |||||||||||||||||
Net issuance under stock-based plan s | 16,972 | (629 | ) | (629 | ) | |||||||||||||||||||
Stock-based compensation | 7,376 | 7,376 | ||||||||||||||||||||||
Cash dividend ($0.20 per common share) | (10,898 | ) | (10,898 | ) | ||||||||||||||||||||
Stock dividends accrued | 105 | (105 | ) | — | ||||||||||||||||||||
Other | (4 | ) | (4 | ) | ||||||||||||||||||||
Comprehensive income (net of tax): | ||||||||||||||||||||||||
Net income | 47,428 | 47,428 | ||||||||||||||||||||||
Other comprehensive loss | (15,229 | ) | (15,229 | ) | ||||||||||||||||||||
Balance at September 30, 2019 | 54,496,664 | $ | 113 | $ | 856,437 | $ | 1,149,457 | $ | (32,476 | ) | $ | 1,973,531 | ||||||||||||
STOCKHOLDERS’ EQUITY (continued)
thousands, except per share data)
Three Months Ended March 31, | ||||||||
2019 | 2018 | |||||||
Cash flows provided by operating activities: | ||||||||
Net income | $ | 12,455 | $ | 105,121 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 25,211 | 20,492 | ||||||
Amortization of inventorystep-up adjustment to fair value | 5,140 | — | ||||||
Amortization of debt issuance costs, original issue discount, and soft call premium | 1,202 | 2,019 | ||||||
Stock-based compensation | 27,838 | 10,426 | ||||||
Provision for excess and obsolete inventory | 5,063 | 5,333 | ||||||
(Recovery) provision for doubtful accounts | (440 | ) | 335 | |||||
Deferred income taxes | (2,445 | ) | (705 | ) | ||||
Other | 66 | 34 | ||||||
Changes in operating assets and liabilities, net of business acquired: | ||||||||
Trade accounts receivable | 4,028 | (37,336 | ) | |||||
Inventories | (10,327 | ) | (28,177 | ) | ||||
Income taxes | (3,653 | ) | 8,822 | |||||
Other current andnon-current assets | 4,804 | (942 | ) | |||||
Accrued compensation | (22,957 | ) | (32,531 | ) | ||||
Other current andnon-current liabilities | 359 | 10,544 | ||||||
Accounts payable | (17,294 | ) | 9,321 | |||||
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Net cash provided by operating activities | 29,050 | 72,756 | ||||||
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Cash flows used in investing activities: | ||||||||
Acquisition of business, net of cash acquired | (988,599 | ) | — | |||||
Purchases of investments | (44,212 | ) | (49,753 | ) | ||||
Maturities of investments | 18,684 | 49,596 | ||||||
Sales of investments | 154,489 | 8,930 | ||||||
Proceeds from sale of assets | 35 | — | ||||||
Purchases of property, plant and equipment | (14,529 | ) | (9,390 | ) | ||||
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Net cash used in investing activities | (874,132 | ) | (617 | ) | ||||
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Cash flows provided by (used in) financing activities: | ||||||||
Net proceeds from short and long-term borrowings | 638,638 | 11,907 | ||||||
Payments on short-term borrowings | (176 | ) | (10,274 | ) | ||||
Payments on long-term borrowings | — | (50,000 | ) | |||||
Net payments related to employee stock awards | (8,987 | ) | (8,921 | ) | ||||
Dividend payments to common stockholders | (10,843 | ) | (9,808 | ) | ||||
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Net cash provided by (used in) financing activities | 618,632 | (67,096 | ) | |||||
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Effect of exchange rate changes on cash and cash equivalents | 121 | 1,958 | ||||||
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(Decrease) Increase in cash and cash equivalents and restricted cash | (226,329 | ) | 7,001 | |||||
Cash and cash equivalents at beginning of period | 644,345 | 333,887 | ||||||
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Cash and cash equivalents at end of period | $ | 418,016 | $ | 340,888 | ||||
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Common Stock | Additional | Accumulated Other | Total | |||||||||||||||||||||
Shares | Amount | Paid-In Capital | Retained Earnings | Comprehensive Income/(Loss) | Stockholders’ Equity | |||||||||||||||||||
Balance at December 31, 2017 | 54,355,535 | $ | 113 | $ | 789,644 | $ | 795,698 | $ | 3,452 | $ | 1,588,907 | |||||||||||||
Net issuance under stock-based plans | 136,568 | (8,920 | ) | (8,920 | ) | |||||||||||||||||||
Stock-based compensation | 10,426 | 10,426 | ||||||||||||||||||||||
Cash dividend ($0.18 per common share) | (9,808 | ) | (9,808 | ) | ||||||||||||||||||||
Accounting Standards Codification Topic 606 adjustment | 1,809 | 1,809 | ||||||||||||||||||||||
Comprehensive income (net of tax): | ||||||||||||||||||||||||
Net income | 105,121 | 105,121 | ||||||||||||||||||||||
Other comprehensive gain | 10,805 | 10,805 | ||||||||||||||||||||||
Balance at March 31, 2018 | 54,492,103 | 113 | 791,150 | 892,820 | 14,257 | 1,698,340 | ||||||||||||||||||
Net issuance under stock-based plans | 295,050 | (4,132 | ) | (4,132 | ) | |||||||||||||||||||
Stock-based compensation | 6,366 | 6,366 | ||||||||||||||||||||||
Cash dividend ($0.20 per common share) | (10,942 | ) | (10,942 | ) | ||||||||||||||||||||
Accounting Standards Codification Topic 606 adjustment | (42 | ) | (42 | ) | ||||||||||||||||||||
Comprehensive income (net of tax): | ||||||||||||||||||||||||
Net income | 122,862 | 122,862 | ||||||||||||||||||||||
Other comprehensive loss | (11,014 | ) | (11,014 | ) | ||||||||||||||||||||
Balance at June 30, 2018 | 54,787,153 | 113 | 793,384 | 1,004,698 | 3,243 | 1,801,438 | ||||||||||||||||||
Net issuance under stock-based plans | 15,601 | (588 | ) | (588 | ) | |||||||||||||||||||
Stock-based compensation | 5,213 | 5,213 | ||||||||||||||||||||||
Cash dividend ($0.20 per common share) | (10,858 | ) | (10,858 | ) | ||||||||||||||||||||
Stock repurchase | (818,131 | ) | (11,871 | ) | (63,129 | ) | (75,000 | ) | ||||||||||||||||
Accounting Standards Codification Topic 606 adjustment | (29 | ) | (29 | ) | ||||||||||||||||||||
Comprehensive income (net of tax): | ||||||||||||||||||||||||
Net income | 93,277 | 93,277 | ||||||||||||||||||||||
Other comprehensive loss | (3,160 | ) | (3,160 | ) | ||||||||||||||||||||
Balance at September 30, 2018 | 53,984,623 | $ | 113 | $ | 786,138 | $ | 1,023,959 | $ | 83 | $ | 1,810,293 | |||||||||||||
Nine Months Ended September 30, | ||||||||
2019 | 2018 | |||||||
Cash flows provided by operating activities: | ||||||||
Net income | $ | 97,622 | $ | 321,260 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 79,863 | 59,906 | ||||||
Amortization of inventory step-up adjustment to fair value | 7,624 | — | ||||||
Amortization of debt issuance costs, original issue discount, and soft call premium | 6,554 | 3,784 | ||||||
Stock-based compensation | 42,140 | 22,005 | ||||||
Provision for excess and obsolete inventory | 18,599 | 15,575 | ||||||
Provision for doubtful accounts | 226 | 859 | ||||||
Deferred income taxes | (9,067 | ) | (3,525 | ) | ||||
Gain on sale of long-lived asset | (6,773 | ) | — | |||||
Other | 364 | 531 | ||||||
Changes in operating assets and liabilities, net of business acquired: | ||||||||
Trade accounts receivable | 9,284 | (23,125 | ) | |||||
Inventories | (25,795 | ) | (80,441 | ) | ||||
Income taxes | (760 | ) | (13,874 | ) | ||||
Other current and non-current assets | (18,194 | ) | (17,652 | ) | ||||
Accrued compensation | (13,449 | ) | (15,529 | ) | ||||
Other current and non-current liabilities | 3,016 | 8,934 | ||||||
Accounts payable | (23,992 | ) | (385 | ) | ||||
Net cash provided by operating activities | 167,262 | 278,323 | ||||||
Cash flows used in investing activities: | ||||||||
Acquisition of business, net of cash acquired | (988,599 | ) | — | |||||
Purchases of investments | (171,316 | ) | (213,774 | ) | ||||
Maturities of investments | 93,344 | 135,339 | ||||||
Sales of investments | 162,415 | 67,868 | ||||||
Proceeds from sale of assets | 41,214 | — | ||||||
Purchases of property, plant and equipment | (44,753 | ) | (36,885 | ) | ||||
Net cash used in investing activities | (907,695 | ) | (47,452 | ) | ||||
Cash flows provided by (used in) financing activities: | ||||||||
Repurchase of common stock | — | (75,000 | ) | |||||
Net proceeds from short and long-term borrowings | 642,180 | 60,624 | ||||||
Payments on short-term borrowings | (3,927 | ) | (57,865 | ) | ||||
Payments on long-term borrowings | (103,869 | ) | (50,002 | ) | ||||
Net payments related to employee stock awards | (11,728 | ) | (13,641 | ) | ||||
Dividend payments to common stockholders | (32,621 | ) | (31,608 | ) | ||||
Net cash provided by (used in) financing activities | 490,035 | (167,492 | ) | |||||
Effect of exchange rate changes on cash and cash equivalents | (7,666 | ) | 2,584 | |||||
(Decrease) increase in cash and cash equivalents | (258,064 | ) | 65,963 | |||||
Cash and cash equivalents at beginning of period | 644,345 | 333,887 | ||||||
Cash and cash equivalents at end of period | $ | 386,281 | $ | 399,850 | ||||
1) |
|
2) |
|
MKS INSTRUMENTS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share data)
preparation on adoption. Upon adoption, the Company recorded a cumulative effect of initially applying this new standard, resulting in the addition of $71,042 of
3) |
|
Three Months Ended March 31, 2019 | ||||
Lease Cost: | ||||
Operating lease cost | $ | 5,377 | ||
Other Information: | ||||
Operating cash flows used for operating leases | $ | 5,711 | ||
Weighted average discount rate | 3.81 | % | ||
Weighted average remaining lease term | 4.9 years |
Future
Three Months September 30, | Nine Months September 30, | |||||||
Lease Cost: | ||||||||
Operating lease cost | $ | 6,313 | $ | 17,694 |
Amount | ||||
Year Ending December 31, | ||||
2019 (remaining) | $ | 5,887 | ||
2020 | 21,569 | |||
2021 | 14,064 | |||
2022 | 8,497 | |||
2023 | 7,158 | |||
Thereafter | 17,453 | |||
Total lease payments | 74,628 | |||
Less:imputed interest | 6,759 | |||
Total operating lease liabilities | $ | 67,869 | ||
Year Ending December 31, | Operating Leases | |||
2019 | $ | 20,106 | ||
2020 | 17,142 | |||
2021 | 10,325 | |||
2022 | 5,573 | |||
2023 | 4,411 | |||
Thereafter | 8,739 | |||
|
| |||
Total minimum lease payments | $ | 66,296 | ||
|
|
Operating | ||||
Year Ending December 31, | ||||
2019 | $ | 20,106 | ||
2020 | 17,142 | |||
2021 | 10,325 | |||
2022 | 5,573 | |||
2023 | 4,411 | |||
Thereafter | 8,739 | |||
Total minimum lease payments | $ | 66,296 | ||
4) |
|
assets
Three Months Ended March 31, 2019 | ||||
Beginning balance, January 1(1) | $ | 17,474 | ||
Deferred revenue and customer advances assumed in ESI Merger | 3,314 | |||
Additions to deferred revenue and customer advances | 17,219 | |||
Amount of deferred revenue and customer advances recognized in income | (13,933 | ) | ||
|
| |||
Ending balance, March 31(2) | $ | 24,074 | ||
|
|
Nine Months September 30, | ||||
Beginning balance, January 1 (1) | $ | 17,474 | ||
Deferred revenue and customer advances assumed in ESI Merger | 4,629 | |||
Additions to deferred revenue and customer advances | 41,922 | |||
Amount of deferred revenue and customer advances recognized in | (38,787 | ) | ||
Ending balance, September 30 (2) | $ | 25,238 | ||
(1) | Beginning deferred revenue and customer advances as of January 1, 2019 included 8,134 of current deferred revenue, 3,228 of long-term deferred revenue and 6,112 of current customer advances. |
(2) | Ending deferred revenue as of 14,161 of current deferred revenue, 2,874 of long-term deferred revenue and 8,202 of current customer advances. |
Net revenues: Products Services Total net revenues Net revenues: Products Services Total net revenues Three Months Ended March 31, 2019 Vacuum &
Analysis Light &
Motion Equipment &
Solutions Total $ 192,648 $ 178,697 $ 26,018 $ 397,363 41,707 15,291 9,200 66,198 $ 234,355 $ 193,988 $ 35,218 $ 463,561 Three Months Ended March 31, 2018 Vacuum &
Analysis Light &
Motion Equipment &
Solutions Total $ 304,336 $ 192,341 $ — $ 496,677 44,008 13,590 — 57,598 $ 348,344 $ 205,931 $ — $ 554,275
Solutions $ $ $ $ $ $ $ $
Three Months Ended September 30, 201 8 | ||||||||||||||||
Vacuum & Analysis | Light & Motion | Equipment & Solutions | Total | |||||||||||||
Net revenues: | ||||||||||||||||
Products | $ | 239,924 | $ | 186,331 | $ | — | $ | 426,255 | ||||||||
Services | 46,114 | 14,783 | — | 60,897 | ||||||||||||
Total net revenues | $ | 286,038 | $ | 201,114 | $ | — | $ | 487,152 | ||||||||
Nine Months Ended September 30, 2019 | ||||||||||||||||
Vacuum & Analysis | Light & Motion | Equipment & Solutions | Total | |||||||||||||
Net revenues: | ||||||||||||||||
Products | $ | 581,611 | $ | 502,496 | $ | 100,755 | $ | 1,184,862 | ||||||||
Services | 129,080 | 46,531 | 39,649 | 215,260 | ||||||||||||
Total net revenues | $ | 710,691 | $ | 549,027 | $ | 140,404 | $ | 1,400,122 | ||||||||
Nine Months Ended September 30, 2018 | ||||||||||||||||
Vacuum & Analysis | Light & Motion | Equipment & Solutions | Total | |||||||||||||
Net revenues: | ||||||||||||||||
Products | $ | 865,714 | 567,217 | $ | — | $ | 1,432,931 | |||||||||
Services | 136,996 | 44,640 | — | 181,636 | ||||||||||||
Total net revenues | $ | 1,002,710 | $ | 611,857 | $ | — | $ | 1,614,567 | ||||||||
5) |
|
March 31, 2019 | December 31, 2018 | |||||||
Available-for-sale investments: | ||||||||
Time deposits and certificates of deposit | $ | 101 | $ | 102 | ||||
Bankers’ acceptance drafts | 1,722 | 989 | ||||||
Asset-backed securities | — | 9,113 | ||||||
Commercial paper | 33,509 | 19,359 | ||||||
Corporate obligations | 8,994 | 9,352 | ||||||
U.S. treasury obligations | — | 13,298 | ||||||
U.S. agency obligations | — | 21,613 | ||||||
|
|
|
| |||||
$ | 44,326 | $ | 73,826 | |||||
|
|
|
|
September 30, | December 31, | |||||||
Available-for-sale investments: | ||||||||
Time deposits and certificates of deposit | $ | 6,262 | $ | 102 | ||||
Bankers’ acceptance drafts | 4,540 | 989 | ||||||
Asset-backed securities | — | 9,113 | ||||||
Commercial paper | 44,981 | 19,359 | ||||||
Corporate obligations | — | 9,352 | ||||||
U.S. treasury obligations | 3,602 | 13,298 | ||||||
U.S. agency obligations | 29,462 | 21,613 | ||||||
$ | 88,847 | $ | 73,826 | |||||
March 31, 2019 | December 31, 2018 | |||||||
Available-for-sale investments: | ||||||||
Group insurance contracts | $ | 5,950 | $ | 5,890 | ||||
Cost method investments: | ||||||||
Minority interest in a private company | 4,400 | 4,400 | ||||||
|
|
|
| |||||
$ | 10,350 | $ | 10,290 | |||||
|
|
|
|
September 30, | December 31, | |||||||
Available-for-sale investments: | ||||||||
Group insurance contracts | $ | 5,746 | $ | 5,890 | ||||
Cost method investments: | ||||||||
Minority interest in a private company | 4,400 | 4,400 | ||||||
$ | 10,146 | $ | 10,290 | |||||
As of March 31, 2019: | Cost | Gross Unrealized Gains | Gross Unrealized (Losses) | Estimated Fair Value | ||||||||||||
Short-term investments: | ||||||||||||||||
Available-for-sale investments: | ||||||||||||||||
Time deposits and certificates of deposit | $ | 99 | $ | 2 | $ | — | $ | 101 | ||||||||
Bankers’ acceptance drafts | 1,722 | — | — | 1,722 | ||||||||||||
Commercial paper | 33,752 | 1 | (244 | ) | 33,509 | |||||||||||
Corporate obligations | 8,996 | 1 | (3 | ) | 8,994 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
$ | 44,569 | $ | 4 | $ | (247 | ) | $ | 44,326 | ||||||||
|
|
|
|
|
|
|
| |||||||||
As of March 31, 2019: | Cost | Gross Unrealized Gains | Gross Unrealized (Losses) | Estimated Fair Value | ||||||||||||
Long-term investments: | ||||||||||||||||
Available-for-sale investments: | ||||||||||||||||
Group insurance contracts | $ | 5,582 | $ | 368 | $ | — | $ | 5,950 | ||||||||
|
|
|
|
|
|
|
|
As of September 30 , 2019: | Cost | Gross Unrealized Gains | Gross Unrealized (Losses) | Estimated Fair Value | ||||||||||||
Short-term investments: | ||||||||||||||||
Available-for-sale investments: | ||||||||||||||||
Time deposits and certificates of deposit | $ | 6,261 | $ | 1 | $ | — | $ | 6,262 | ||||||||
Bankers’ acceptance drafts | 4,540 | — | — | 4,540 | ||||||||||||
Commercial paper | 45,342 | — | (361 | ) | 44,981 | |||||||||||
U.S. treasury obligations | 3,601 | 1 | — | 3,602 | ||||||||||||
U.S. agency obligations | 29,460 | 4 | (2 | ) | 29,462 | |||||||||||
$ | 89,204 | $ | 6 | $ | (363 | ) | $ | 88,847 | ||||||||
MKS INSTRUMENTS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share data)
As of December 31, 2018: | Cost | Gross Unrealized Gains | Gross Unrealized (Losses) | Estimated Fair Value | ||||||||||||
Short-term investments: | ||||||||||||||||
Available-for-sale investments: | ||||||||||||||||
Time deposits and certificates of deposit | $ | 102 | $ | — | $ | — | $ | 102 | ||||||||
Bankers’ acceptance drafts | 989 | — | — | 989 | ||||||||||||
Asset-backed securities | 9,121 | 1 | (9 | ) | 9,113 | |||||||||||
Commercial paper | 19,504 | — | (145 | ) | 19,359 | |||||||||||
Corporate obligations | 9,367 | — | (15 | ) | 9,352 | |||||||||||
U.S. treasury obligations | 13,294 | 4 | — | 13,298 | ||||||||||||
U.S. agency obligations | 21,617 | 2 | (6 | ) | 21,613 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
$ | 73,994 | $ | 7 | $ | (175 | ) | $ | 73,826 | ||||||||
|
|
|
|
|
|
|
|
As of December 31, 2018: | Cost | Gross Unrealized Gains | Gross Unrealized (Losses) | Estimated Fair Value | ||||||||||||
Long-term investments: | ||||||||||||||||
Available-for-sale investments: | ||||||||||||||||
Group insurance contracts | $ | 5,546 | $ | 344 | $ | — | $ | 5,890 | ||||||||
|
|
|
|
|
|
|
|
As of September 30 , 2019: | Cost | Gross Unrealized Gains | Gross Unrealized (Losses) | Estimated Fair Value | ||||||||||||
Long-term investments: | ||||||||||||||||
Available-for-sale investments: | ||||||||||||||||
Group insurance contracts | $ | 5,329 | $ | 417 | $ | — | $ | 5,746 | ||||||||
As of December 31 , 2018: | Cost | Gross Unrealized Gains | Gross Unrealized (Losses) | Estimated Fair Value | ||||||||||||
Short-term investments: | ||||||||||||||||
Available-for-sale investments: | ||||||||||||||||
Time deposits and certificates of deposit | $ | 102 | $ | — | $ | — | $ | 102 | ||||||||
Bankers’ acceptance drafts | 989 | — | — | 989 | ||||||||||||
Asset-backed securities | 9,121 | 1 | (9 | ) | 9,113 | |||||||||||
Commercial paper | 19,504 | — | (145 | ) | 19,359 | |||||||||||
Corporate obligations | 9,367 | — | (15 | ) | 9,352 | |||||||||||
U.S. treasury obligations | 13,294 | 4 | — | 13,298 | ||||||||||||
U.S. agency obligations | 21,617 | 2 | (6 | ) | 21,613 | |||||||||||
$ | 73,994 | $ | 7 | $ | (175 | ) | $ | 73,826 | ||||||||
As of December 31 , 2018: | Cost | Gross Unrealized Gains | Gross Unrealized (Losses) | Estimated Fair Value | ||||||||||||
Long-term investments: | ||||||||||||||||
Available-for-sale investments: | ||||||||||||||||
Group insurance contracts | $ | 5,546 | $ | 344 | $ | — | $ | 5,890 | ||||||||
6) |
|
model
Level 1 | Quoted prices in active markets for identical assets or liabilities assessed as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. | |||||||
Level 2 | Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 2 assets and liabilities include debt securities with quoted prices that are traded less frequently than exchange-traded instruments or securities or derivative contracts that are valued using a pricing model with inputs that are observable in the market or can be derived principally from or corroborated by observable market data. |
MKS INSTRUMENTS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share data)
Level 3 | Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation. |
Fair Value Measurements at Reporting Date Using | ||||||||||||||||
Description | March 31, 2019 | Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||
Assets: | ||||||||||||||||
Cash equivalents: | ||||||||||||||||
Money market funds | $ | 294 | $ | 294 | $ | — | $ | — | ||||||||
Time deposits and certificates of deposit | 3,852 | — | 3,852 | — | ||||||||||||
Commercial paper | 82,584 | — | 82,584 | — | ||||||||||||
Corporate obligations | 12,570 | — | 12,570 | — | ||||||||||||
U.S. agency obligations | 49,084 | — | 49,084 | — | ||||||||||||
Restricted cash – money market funds | 317 | 317 | — | — | ||||||||||||
Available-for-sale investments: | ||||||||||||||||
Time deposits and certificates of deposit | 101 | — | 101 | — | ||||||||||||
Bankers’ acceptance drafts | 1,722 | — | 1,722 | — | ||||||||||||
Commercial paper | 33,509 | — | 33,509 | — | ||||||||||||
Corporate obligations | 8,994 | — | 8,994 | — | ||||||||||||
Group insurance contracts | 5,950 | — | 5,950 | — | ||||||||||||
Derivatives – currency forward contracts | 3,492 | — | 3,492 | — | ||||||||||||
Funds in investments and other assets: | ||||||||||||||||
Israeli pension assets | 14,481 | — | 14,481 | — | ||||||||||||
Derivatives – interest rate hedge –non-current | 4,459 | — | 4,459 | — | ||||||||||||
Deferred compensation plan assets: | ||||||||||||||||
Mutual funds and exchange traded funds | 1,799 | — | 1,799 | — | ||||||||||||
Money market securities | 274 | — | 274 | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total assets | $ | 223,482 | $ | 611 | $ | 222,871 | $ | — | ||||||||
|
|
|
|
|
|
|
| |||||||||
Liabilities: | ||||||||||||||||
Derivatives – currency forward contracts | $ | 322 | $ | — | $ | 322 | $ | — | ||||||||
|
|
|
|
|
|
|
| |||||||||
Reported as follows: | ||||||||||||||||
Assets: | ||||||||||||||||
Cash and cash equivalents, including restricted cash(1) | $ | 148,701 | $ | 611 | $ | 148,090 | $ | — | ||||||||
Short-term investments | 44,326 | — | 44,326 | — | ||||||||||||
Other current assets | 3,492 | — | 3,492 | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total current assets | $ | 196,519 | $ | 611 | $ | 195,908 | $ | — | ||||||||
|
|
|
|
|
|
|
| |||||||||
Long-term investments(2) | $ | 5,950 | $ | — | $ | 5,950 | $ | — | ||||||||
Other assets | 21,013 | — | 21,013 | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total long-term assets | $ | 26,963 | $ | — | $ | 26,963 | $ | — | ||||||||
|
|
|
|
|
|
|
| |||||||||
Liabilities: | ||||||||||||||||
Other current liabilities | $ | 322 | $ | — | $ | 322 | $ | — | ||||||||
|
|
|
|
|
|
|
|
Fair Value Measurements at Reporting Date Using | ||||||||||||||||
Description | September 30, 2019 | Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||
Assets: | ||||||||||||||||
Cash equivalents: | ||||||||||||||||
Money market funds | $ | 4,732 | $ | 4,732 | $ | — | $ | — | ||||||||
Time deposits and certificates of deposit | 4,651 | — | 4,651 | — | ||||||||||||
Commercial paper | 40,966 | — | 40,966 | — | ||||||||||||
U.S. treasury obligations | 7,999 | — | 7,999 | — | ||||||||||||
U.S. agency obligations | 20,592 | — | 20,592 | — | ||||||||||||
Restricted cash – money market funds | 330 | 330 | — | — | ||||||||||||
Available-for-sale investments: | ||||||||||||||||
Time deposits and certificates of deposit | 6,262 | — | 6,262 | — | ||||||||||||
Bankers’ acceptance drafts | 4,540 | — | 4,540 | — | ||||||||||||
Commercial paper | 44,981 | — | 44,981 | — | ||||||||||||
U.S. treasury obligations | 3,602 | — | 3,602 | — | ||||||||||||
U.S. agency obligations | 29,462 | — | 29,462 | — | ||||||||||||
Group insurance contracts | 5,746 | — | 5,746 | — | ||||||||||||
Derivatives – currency forward contracts | 4,232 | — | 4,232 | — | ||||||||||||
Funds in investments and other assets: | ||||||||||||||||
Israeli pension assets | 16,135 | — | 16,135 | — | ||||||||||||
Deferred compensation plan assets: | ||||||||||||||||
Mutual funds and exchange traded funds | 1,832 | — | 1,832 | — | ||||||||||||
Money market securities | 483 | — | 483 | — | ||||||||||||
Total assets | $ | 196,545 | $ | 5,062 | $ | 191,483 | $ | — | ||||||||
Liabilities: | ||||||||||||||||
Derivatives – currency forward contracts | $ | 308 | $ | — | $ | 308 | $ | — | ||||||||
Derivatives – interest rate hedge – non-current | 6,908 | — | 6,908 | — | ||||||||||||
Total liabilities | $ | 7,216 | $ | — | $ | 7,216 | $ | — | ||||||||
Reported as follows: | ||||||||||||||||
Assets: | ||||||||||||||||
Cash and cash equivalents, including restricted cash (1) | $ | 79,270 | $ | 5,062 | $ | 74,208 | $ | — | ||||||||
Short-term investments | 88,847 | — | 88,847 | — | ||||||||||||
Other current assets | 4,232 | — | 4,232 | — | ||||||||||||
Total current assets | $ | 172,349 | $ | 5,062 | $ | 167,287 | $ | — | ||||||||
Long-term investments (2) | $ | 5,746 | $ | — | $ | 5,746 | $ | — | ||||||||
Other assets | 18,450 | — | 18,450 | — | ||||||||||||
Total long-term assets | $ | 24,196 | $ | — | $ | 24,196 | $ | — | ||||||||
Liabilities: | ||||||||||||||||
Other current liabilities | $ | 308 | $ | — | $ | 308 | $ | — | ||||||||
Other liabilities | $ | 6,908 | $ | — | $ | 6,908 | $ | — | ||||||||
(1) | The cash and cash equivalent amounts presented in the table above do not include cash of |
(2) | The long-term investments presented in the table above do not include the Company’s minority interest investment in a private company, which is accounted for under the cost method. |
Fair Value Measurements at Reporting Date Using | ||||||||||||||||
Description | December 31, 2018 | Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||
Assets: | ||||||||||||||||
Cash equivalents: | ||||||||||||||||
Money market funds | $ | 180,340 | $ | 180,340 | $ | — | $ | — | ||||||||
Time deposits and certificates of deposit | 850 | — | 850 | — | ||||||||||||
Commercial paper | 2,687 | — | 2,687 | — | ||||||||||||
U.S. agency obligations | 3,418 | — | 3,418 | — | ||||||||||||
Restricted cash – money market funds | 110 | 110 | — | — | ||||||||||||
Available-for-sale investments: | ||||||||||||||||
Time deposits and certificates of deposit | 102 | — | 102 | — | ||||||||||||
Bankers’ acceptance drafts | 989 | — | 989 | — | ||||||||||||
Asset-backed securities | 9,113 | — | 9,113 | — | ||||||||||||
Commercial paper | 19,359 | — | 19,359 | — | ||||||||||||
Corporate obligations | 9,352 | — | 9,352 | — | ||||||||||||
U.S. treasury obligations | 13,298 | — | 13,298 | — | ||||||||||||
U.S. agency obligations | 21,613 | — | 21,613 | — | ||||||||||||
Group insurance contracts | 5,890 | — | 5,890 | — | ||||||||||||
Derivatives – currency forward contracts | 2,485 | — | 2,485 | — | ||||||||||||
Funds in investments and other assets: | ||||||||||||||||
Israeli pension assets | 14,408 | — | 14,408 | — | ||||||||||||
Derivatives – interest rate hedge –non-current | 6,083 | — | 6,083 | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total assets | $ | 290,097 | $ | 180,450 | $ | 109,647 | $ | — | ||||||||
|
|
|
|
|
|
|
| |||||||||
Liabilities: | ||||||||||||||||
Derivatives – currency forward contracts | $ | 1,168 | $ | — | $ | 1,168 | $ | — | ||||||||
|
|
|
|
|
|
|
| |||||||||
Reported as follows: | ||||||||||||||||
Assets: | ||||||||||||||||
Cash and cash equivalents, including restricted cash(1) | $ | 187,405 | $ | 180,450 | $ | 6,955 | $ | — | ||||||||
Short-term investments | 73,826 | — | 73,826 | — | ||||||||||||
Other current assets | 2,485 | — | 2,485 | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total current assets | $ | 263,716 | $ | 180,450 | $ | 83,266 | $ | — | ||||||||
|
|
|
|
|
|
|
| |||||||||
Long-term investments(2) | $ | 5,890 | $ | — | $ | 5,890 | $ | — | ||||||||
Other assets | 20,491 | — | 20,491 | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total long-term assets | $ | 26,381 | $ | — | $ | 26,381 | $ | — | ||||||||
|
|
|
|
|
|
|
| |||||||||
Liabilities: | ||||||||||||||||
Other current liabilities | $ | 1,168 | $ | — | $ | 1,168 | $ | — | ||||||||
|
|
|
|
|
|
|
|
Fair Value Measurements at Reporting Date Using | ||||||||||||||||
Description | December 31, 2018 | Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||
Assets: | ||||||||||||||||
Cash equivalents: | ||||||||||||||||
Money market funds | $ | 180,340 | $ | 180,340 | $ | — | $ | — | ||||||||
Time deposits and certificates of deposit | 850 | — | 850 | — | ||||||||||||
Commercial paper | 2,687 | — | 2,687 | — | ||||||||||||
U.S. agency obligations | 3,418 | — | 3,418 | — | ||||||||||||
Restricted cash – money market funds | 110 | 110 | — | — | ||||||||||||
Available-for-sale investments: | ||||||||||||||||
Time deposits and certificates of deposit | 102 | — | 102 | — | ||||||||||||
Bankers’ acceptance drafts | 989 | — | 989 | — | ||||||||||||
Asset-backed securities | 9,113 | — | 9,113 | — | ||||||||||||
Commercial paper | 19,359 | — | 19,359 | — | ||||||||||||
Corporate obligations | 9,352 | — | 9,352 | — | ||||||||||||
U.S. treasury obligations | 13,298 | — | 13,298 | — | ||||||||||||
U.S. agency obligations | 21,613 | — | 21,613 | — | ||||||||||||
Group insurance contracts | 5,890 | — | 5,890 | — | ||||||||||||
Derivatives – currency forward contracts | 2,485 | — | 2,485 | — | ||||||||||||
Funds in investments and other assets: | ||||||||||||||||
Israeli pension assets | 14,408 | — | 14,408 | — | ||||||||||||
Derivatives – interest rate hedge – non-current | 6,083 | — | 6,083 | — | ||||||||||||
Total assets | $ | 290,097 | $ | 180,450 | $ | 109,647 | $ | — | ||||||||
Liabilities: | ||||||||||||||||
Derivatives – currency forward contracts | $ | 1,168 | $ | — | $ | 1,168 | $ | — | ||||||||
Reported as follows: | ||||||||||||||||
Assets: | ||||||||||||||||
Cash and cash equivalents, including restricted cash (1) | $ | 187,405 | $ | 180,450 | $ | 6,955 | $ | — | ||||||||
Short-term investments | 73,826 | — | 73,826 | — | ||||||||||||
Other current assets | 2,485 | — | 2,485 | — | ||||||||||||
Total current assets | $ | 263,716 | $ | 180,450 | $ | 83,266 | $ | — | ||||||||
Long-term investments (2) | $ | 5,890 | $ | — | $ | 5,890 | $ | — | ||||||||
Other assets | 20,491 | — | 20,491 | — | ||||||||||||
Total long-term assets | $ | 26,381 | $ | — | $ | 26,381 | $ | — | ||||||||
Liabilities: | ||||||||||||||||
Other current liabilities | $ | 1,168 | $ | — | $ | 1,168 | $ | — | ||||||||
(1) | The cash and cash equivalent amounts presented in the table above do not include cash of $456,940 as of December 31, 2018. |
(2) | The long-term investments presented in the table above do not include the Company’s minority interest investment in a private company, which is accounted for under the cost method. |
7) |
|
Agreements
MKS INSTRUMENTS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share data)
and Taiwanese currencies. To the extent these derivatives are effective inpurposes.
purposes
March 31, 2019 | ||||||||
Currency Hedged (Buy/Sell) | Gross Notional Value | Fair Value(1) | ||||||
U.S. Dollar/Japanese Yen | $ | 39,022 | $ | 302 | ||||
U.S. Dollar/South Korean Won | 54,077 | 1,424 | ||||||
U.S. Dollar/Euro | 20,146 | 916 | ||||||
U.S. Dollar/U.K. Pound Sterling | 10,921 | 125 | ||||||
U.S. Dollar/Taiwan Dollar | 19,836 | 403 | ||||||
|
|
|
| |||||
Total | $ | 144,002 | $ | 3,170 | ||||
|
|
|
|
September 30, 2019 | ||||||||
Currency Hedged (Buy/Sell) | Gross Value | Fair (1) | ||||||
U.S. Dollar/Japanese Yen | $ | 43,339 | $ | (83 | ) | |||
U.S. Dollar/South Korean Won | 42,082 | 2,191 | ||||||
U.S. Dollar/Euro | 31,689 | 1,326 | ||||||
U.S. Dollar/U.K. Pound Sterling | 7,320 | 382 | ||||||
U.S. Dollar/Taiwan Dollar | 18,359 | 108 | ||||||
Total | $ | 142,789 | $ | 3,924 | ||||
December 31, 2018 | ||||||||
Currency Hedged (Buy/Sell) | Gross Value | Fair (1) | ||||||
U.S. Dollar/Japanese Yen | $ | 43,770 | $ | (478 | ) | |||
U.S. Dollar/South Korean Won | 59,149 | 570 | ||||||
U.S. Dollar/Euro | 23,515 | 688 | ||||||
U.S. Dollar/U.K. Pound Sterling | 11,827 | 323 | ||||||
U.S. Dollar/Taiwan Dollar | 21,133 | 214 | ||||||
Total | $ | 159,394 | $ | 1,317 | ||||
(1) | Represents the receivable (payable) amount included in the consolidated balance . |
Derivatives Designated as Hedging Instruments | March 31, 2019 | December 31, 2018 | ||||||
Derivative assets: | ||||||||
Foreign exchange contracts(1) | $ | 3,492 | $ | 2,485 | ||||
Foreign currency interest rate hedge(2) | 4,459 | 6,083 | ||||||
Derivative liabilities: | ||||||||
Foreign exchange contracts(1) | (322 | ) | (1,168 | ) | ||||
|
|
|
| |||||
Total net derivative asset designated as hedging instruments | $ | 7,629 | $ | 7,400 | ||||
|
|
|
|
September 30, | December 31, | |||||||
Derivative assets: | ||||||||
Foreign exchange contracts (1) | $ | 4,232 | $ | 2,485 | ||||
Interest rate hedge (2) | — | 6,083 | ||||||
Derivative liabilities: | ||||||||
Foreign exchange contracts (1) | (308 | ) | (1,168 | ) | ||||
Interest rate hedge (2) | (6,908 | ) | — | |||||
Total net derivative (liability)asset designated as hedging | $ | (2,984 | ) | $ | 7,400 | |||
(1) | The derivative assets of |
(2) | The 6,908 as of 6,083 as of December 31, 2018 |
MKS INSTRUMENTS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share data)
Three Months Ended March 31, | ||||||||
Derivatives Designated as Cash Flow Hedging Instruments | 2019 | 2018 | ||||||
Forward exchange contracts: | ||||||||
Net gain recognized in OCI(1) | $ | 67 | $ | 66 | ||||
Net gain (loss) reclassified from accumulated OCI into income(2) | $ | 949 | $ | (2,539 | ) |
Three Months September 30, | Nine Months September 30, | |||||||||||||||
Derivatives Designated as Cash Flow Hedging Instruments | 2019 | 2018 | 2019 | 2018 | ||||||||||||
Forward exchange contracts: | ||||||||||||||||
Net gain (loss) recognized in OCI (1) | $ | (1,024 | ) | $ | 212 | $ | (11,189 | ) | $ | 10,357 | ||||||
Net gain (loss) reclassified from accumulated OCI into income (2) | $ | 2,000 | $ | 306 | $ | 4,077 | $ | (4,882 | ) |
(1) | Net change in the fair value of the effective portion classified in OCI. |
(2) | Effective portion classified in cost of products for the three |
Three Months Ended March 31, | ||||||||
Derivatives Not Designated as Hedging Instruments | 2019 | 2018 | ||||||
Forward exchange contracts: | ||||||||
Net gain (loss) recognized in income(1) | $ | 57 | $ | (1,253 | ) |
Three Months September 30, | Nine Months September 30, | |||||||||||||||
Derivatives Not Designated as Hedging Instruments | 2019 | 2018 | 2019 | 2018 | ||||||||||||
Forward exchange contracts: | ||||||||||||||||
Net gain (loss) recognized in income (1) | $ | 82 | $ | (111 | ) | $ | (166 | ) | $ | 12 |
(1) | The Company enters into foreign exchange contracts to hedge against changes in the balance sheet for certain subsidiaries to mitigate the risk associated with certain foreign currency transactions in the ordinary course of business. These derivatives are not designated as hedging instruments and gains or losses from these derivatives are recorded immediately in other (expense) income. |
|
March 31, 2019 | December 31, 2018 | |||||||
Raw materials | $ | 303,588 | $ | 235,593 | ||||
Work-in-process | 76,560 | 61,908 | ||||||
Finished goods | 95,485 | 87,188 | ||||||
|
|
|
| |||||
$ | 475,633 | $ | 384,689 | |||||
|
|
|
|
|
September 30, | December 31, | |||||||
Raw materials | $ | 291,613 | $ | 235,593 | ||||
Work-in-process | 84,814 | 61,908 | ||||||
Finished goods | 86,836 | 87,188 | ||||||
$ | 463,263 | $ | 384,689 | |||||
MKS INSTRUMENTS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share data)
Cash paid for outstanding shares(1) | $ | 1,032,671 | ||
Settlement of share-based compensation awards(2) | 30,630 | |||
Total purchase price | 1,063,301 | |||
Less: Cash and cash equivalents acquired | (44,072 | ) | ||
Total purchase price, net of cash and cash equivalents acquired | $ | 1,019,229 | ||
(1) | Represents cash paid of $30.00 per share for |
(2) | Represents the vested but not issued portion of ESI share-based compensation awards as of the acquisition date of February 1, 2019. |
Current assets (excluding inventory) | $ | 209,194 | ||
Inventory | 92,364 | |||
Intangible assets | 318,600 | |||
Goodwill | 471,403 | |||
Property, plant and equipment | 52,891 | |||
Long-term assets | 9,633 | |||
|
| |||
Total assets acquired | 1,154,085 | |||
Current liabilities | 51,479 | |||
Non-current deferred taxes | 32,146 | |||
Other long-term liabilities | 7,159 | |||
|
| |||
Total liabilities assumed | 90,784 | |||
Fair value of assets acquired and liabilities assumed | 1,063,301 | |||
Less: Cash and cash equivalents acquired | (44,072 | ) | ||
|
| |||
Total purchase price, net of cash and cash equivalents acquired | $ | 1,019,229 | ||
|
|
Current assets (excluding inventory) | $ | 208,009 | ||
Inventory | 83,036 | |||
Intangible assets | 316,200 | |||
Goodwill | 471,722 | |||
Property, plant and equipment | 65,489 | |||
Long-term assets | 9,633 | |||
Total assets acquired | 1,154,089 | |||
Current liabilities | 51,479 | |||
Non-current deferred taxes | 32,150 | |||
Other long-term liabilities | 7,159 | |||
Total liabilities assumed | 90,788 | |||
Fair value of assets acquired and liabilities assumed | 1,063,301 | |||
Less: Cash and cash equivalents acquired | (44,072 | ) | ||
Total purchase price, net of cash and cash equivalents acquired | $ | 1,019,229 | ||
MKS INSTRUMENTS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share data)
Completed technology - Laser | $ | 257,900 | 12 years | |||||
Completed technology -Non-Laser | 18,500 | 10 years | ||||||
Trademarks and trade names | 14,400 | 7 years | ||||||
Customer relationships | 25,400 | 10 years | ||||||
Backlog | 2,400 | 1 year | ||||||
|
| |||||||
$ | 318,600 | |||||||
|
|
Completed technology - Laser | $ | 255,700 | 12 years | ||||||
Completed technology - Non-Laser | 18,300 | 10 years | |||||||
Trademarks and trade names | 14,400 | 7 years | |||||||
Customer relationships | 25,400 | 10 years | |||||||
Backlog | 2,400 | 1 | |||||||
$ | 316,200 |
While the Company uses its best estimates and assumptions as part of the purchase price allocation process to value the assets acquired and liabilities assumed on the acquisition date, its estimates and assumptions are subject to refinement.
In addition, the Company recorded $6,764 in acquisition and integration costs, which were primarily advisory services costs.
MKS INSTRUMENTS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share data)
Three Months Ended March 31, 2019 | ||||
Total net revenues | $ | 35,218 | ||
|
| |||
Net loss | $ | (31,716 | ) | |
|
| |||
Net loss per share: | ||||
|
| |||
Basic | $ | (0.59 | ) | |
|
| |||
Diluted | $ | (0.59 | ) | |
|
|
Three Months Ended September 30, 2019 | Nine Months Ended September 30, 2019 | |||||||
Total net revenues | $ | 49,308 | $ | 140,403 | ||||
Net loss | $ | (5,843 | ) | $ | (40,685 | ) | ||
Net loss per share: | ||||||||
Basic | $ | (0.11 | ) | $ | (0.74 | ) | ||
Diluted | $ | (0.11 | ) | $ | (0.74 | ) | ||
Three Months Ended March 31, | ||||||||
2019 | 2018 | |||||||
Total net revenues | $ | 478,069 | $ | 660,513 | ||||
|
|
|
| |||||
Net income | $ | 49,135 | $ | 101,633 | ||||
|
|
|
| |||||
Net income per share: | ||||||||
|
|
|
| |||||
Basic | $ | 0.91 | $ | 1.87 | ||||
|
|
|
| |||||
Diluted | $ | 0.90 | $ | 1.84 | ||||
|
|
|
|
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Total net revenues | $ | 462,451 | $ | 573,070 | $ | 1,414,660 | $ | 1,917,348 | ||||||||
Net income | $ | 47,669 | $ | 91,111 | $ | 127,676 | $ | 357,333 | ||||||||
Net income per share: | ||||||||||||||||
Basic | $ | 0.87 | $ | 1.67 | $ | 2.34 | $ | 6.55 | ||||||||
Diluted | $ | 0.86 | $ | 1.65 | $ | 2.32 | $ | 6.48 | ||||||||
(1) | Incremental amortization and depreciation expense related to the estimated fair value of identifiable intangible assets and property, plant and equipment, respectively, from the purchase price allocation. |
(2) | Revenue and cost of goods sold adjustments as a result of the reduction in deferred revenue and the cost related to their estimated fair value. |
(3) | Incremental interest expense related to the Company’s 2019 Incremental Term Loan Facility, as defined and discussed in Note 11. |
(4) | The exclusion of acquisition costs and inventory step-up amortization from the three and nine month periods ended |
(5) | The exclusion of debt issuance costs due to the modification of the 2019 Incremental Term Loan Facility from the three and nine month |
(6) | The estimated tax impact of the above adjustments. |
10) |
|
recoverable. The process of evaluating the potential impairment of goodwill and intangible assets requires significant judgment. The Company regularly monitors current business conditions and other factors including, but not limited to, adverse industry or economic trends, restructuring actions and lower projections of profitability that may impact future operating results. Beginning balance at January 1 Acquired goodwill(1) Foreign currency translation Ending balance at March 31, 2019 and December 31, 2018 During the MKS INSTRUMENTS, INC.NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except share and per share data)threenine months ended March 31,September 30, 2019 and year ended December 31, 2018 were as follows: Three Months Ended March 31, 2019 Twelve Months Ended December 31, 2018 Gross
Carrying
Amount Accumulated
Impairment
Loss Net Gross
Carrying
Amount Accumulated
Impairment
Loss Net $ 731,272 $ (144,276 ) $ 586,996 $ 735,323 $ (144,276 ) $ 591,047 471,403 — 471,403 — — — (1,068 ) — (1,068 ) (4,051 ) — (4,051 ) $ 1,201,607 $ (144,276 ) $ 1,057,331 $ 731,272 $ (144,276 ) $ 586,996 $ $ ) $ $ $ ) $ ) ) ) ) $ $ ) $ $ $ ) $ (1) threenine months ended March 31,September 30, 2019, the Company recorded $471,403 $
As of March 31, 2019: | Gross | Accumulated Impairment Charges | Accumulated Amortization | Foreign Currency Translation | Net | |||||||||||||||
Completed technology(1) | $ | 448,831 | $ | (105 | ) | $ | (146,614 | ) | $ | (162 | ) | $ | 301,950 | |||||||
Customer relationships(1) | 308,144 | (1,406 | ) | (68,738 | ) | (819 | ) | 237,181 | ||||||||||||
Patents, trademarks, trade names and other(1) | 120,895 | — | (40,976 | ) | 41 | 79,960 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
$ | 877,870 | $ | (1,511 | ) | $ | (256,328 | ) | $ | (940 | ) | $ | 619,091 | ||||||||
|
|
|
|
|
|
|
|
|
|
As of September 30, 2019 : | Gross | Accumulated Impairment Charges | Accumulated Amortization | Foreign Currency Translation | Net | |||||||||||||||
Completed technology (1) | $ | 446,431 | $ | (105 | ) | $ | (167,816 | ) | $ | (282 | ) | $ | 278,228 | |||||||
Customer relationships (1) | 308,144 | (1,406 | ) | (79,028 | ) | (2,066 | ) | 225,644 | ||||||||||||
Patents, trademarks, trade names and other (1) | 120,895 | — | (44,036 | ) | 149 | 77,008 | ||||||||||||||
$ | 875,470 | $ | (1,511 | ) | $ | (290,880 | ) | $ | (2,199 | ) | $ | 580,880 | ||||||||
(1) | During the |
MKS INSTRUMENTS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share data)
As of December 31, 2018: | Gross | Impairment Charges | Accumulated Amortization | Foreign Currency Translation | Net | |||||||||||||||
Completed technology | $ | 172,431 | $ | (105 | ) | $ | (137,283 | ) | $ | (73 | ) | $ | 34,970 | |||||||
Customer relationships | 282,744 | (1,406 | ) | (63,788 | ) | (269 | ) | 217,281 | ||||||||||||
Patents, trademarks, trade names and other | 110,523 | — | (42,954 | ) | (13 | ) | 67,556 | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
$ | 565,698 | $ | (1,511 | ) | $ | (244,025 | ) | $ | (355 | ) | $ | 319,807 | ||||||||
|
|
|
|
|
|
|
|
|
|
As of December 31, 2018 : | Gross | Accumulated Impairment Charges | Accumulated Amortization | Foreign Currency Translation | Net | |||||||||||||||
Completed technology | $ | 172,431 | $ | (105 | ) | $ | (137,283 | ) | $ | (73 | ) | $ | 34,970 | |||||||
Customer relationships | 282,744 | (1,406 | ) | (63,788 | ) | (269 | ) | 217,281 | ||||||||||||
Patents, trademarks, trade names and other | 110,523 | — | (42,954 | ) | (13 | ) | 67,556 | |||||||||||||
$ | 565,698 | $ | (1,511 | ) | $ | (244,025 | ) | $ | (355 | ) | $ | 319,807 | ||||||||
Year | Amount | |||
2019 (remaining) | $ | 51,638 | ||
2020 | 55,751 | |||
2021 | 47,958 | |||
2022 | 45,480 | |||
2023 | 45,121 | |||
2024 | 44,204 | |||
Thereafter | 273,039 |
Year | Amount | |||
2019 (remaining) | $ | 17,382 | ||
2020 | 55,392 | |||
2021 | 47,617 | |||
2022 | 45,182 | |||
2023 | 44,844 | |||
2024 | 43,927 | |||
Thereafter | 270,636 |
11) |
|
MKS INSTRUMENTS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share data)
As of March 31, 2019, after total principal prepayments of $425,000 and regularly scheduled principal payments of $6,536, the total outstanding principal balance of the 2016 Term Loan Facility was $348,464. As a result of making these prepayments, the Company is no longer required to make any regularly scheduled principal payments on the 2016 Term Loan Facility until the maturity date of the loan.
issued with original issue discount of 0.25% of the principal amount thereof.
Senior
In connection with the completion of the Newport Merger in April 2016, the Company entered into an asset-based credit agreement with Deutsche Bank AG New York Branch, as administrative agent and collateral agent, the other borrowers from time to time party thereto, and the lenders and letters of credit issuers from time to time party thereto, that provided senior secured financing of up to $50,000, which the Company never borrowed against.
MKS INSTRUMENTS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share data)
time to time party thereto (the “ABL Credit Agreement”), that provides senior secured revolving credit financing of up to $100,000, subject to a borrowing base limitation (the “ABL Facility”). On April 26, 2019, the Company entered into a First Amendment to the ABL Credit Agreement which amended the borrowing base calculation for eligible inventory prior to an initial field examination and appraisal requirements. The borrowing base for the ABL Facility at any time equals the sum of: (a) 85% of certain eligible accounts; plus (b) prior to certain notice and filedfield examination and appraisal requirements, the lesser of (i) 20% of net book value of eligible inventory in the United States and (ii) 30% of the borrowing base, and after the satisfaction of such requirements, the lesser of (i) the lesser of (A) 65% of the lower of cost or market value of certain eligible inventory and (B) 85% of the net orderly liquidation value of certain eligible inventory and (ii) 30% of the borrowing base; minus (c) reserves established by the administrative agent.agent, in each case, subject to additional limitations and examination requirements for eligible accounts and eligible inventory acquired in an acquisition after February 1, 2019. The ABL Facility includes borrowing capacity in the form of letters of credit up to $25,000.
The Company has not borrowed against this ABL Facility to date.
One of the Company’s Austrian subsidiaries has various outstanding loans from the Austrian government to fund research and development. These loans are unsecured and do not require principal repayment as long as certain conditions are met. Interest on these loans is payable semi-annually. The interest rates associated with these loans range from 0% to 0.75%.
MKS INSTRUMENTS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share data)
March 31, 2019 | December 31, 2018 | |||||||
Short-term debt: | ||||||||
Japanese lines of credit | $ | 2,175 | $ | 2,724 | ||||
Japanese receivables financing facility | 1,020 | 665 | ||||||
Austrian loans due through March 2020 | 586 | 597 | ||||||
Term Loan Facility | 6,500 | — | ||||||
|
|
|
| |||||
$ | 10,281 | $ | 3,986 | |||||
|
|
|
|
March 31, 2019 | December 31, 2018 | |||||||
Long-term debt: | ||||||||
Austrian loans due through March 2020 and other debt | $ | 83 | $ | 86 | ||||
Term Loan Facility, net(1) | 976,740 | 343,756 | ||||||
|
|
|
| |||||
$ | 976,823 | $ | 343,842 | |||||
|
|
|
|
September 30, | December 31, | |||||||
Short-term debt: | ||||||||
Japanese lines of credit | $ | 3,627 | $ | 2,724 | ||||
Japanese receivables financing facility | 28 | 665 | ||||||
Other debt | — | 597 | ||||||
Term Loan Facility | 8,968 | — | ||||||
$ | 12,623 | $ | 3,986 | |||||
September 30, | December 31, | |||||||
Long-term debt: | ||||||||
Other debt | $ | 79 | $ | 86 | ||||
Term Loan Facility, net (1) | 873,371 | 343,756 | ||||||
$ | 873,450 | $ | 343,842 | |||||
(1) | Net of deferred financing fees, original issuance discount and repricing fee of . |
Year | Amount | |||
2019 (remaining | $ | 8,656 | ||
2020 | 6,583 | |||
2021 | 6,500 | |||
2022 | 6,500 | |||
2023 | 354,964 | |||
2024 | 6,500 | |||
Thereafter | 612,625 |
Year | Amount | |||
2019 (remaining) | $ | 5,897 | ||
2020 | 9,037 | |||
2021 | 8,979 | |||
2022 | 8,968 | |||
2023 | 8,968 | |||
2024 | 8,968 | |||
Thereafter | 847,514 |
12) |
|
Three Months Ended March 31, | ||||||||
2019 | 2018 | |||||||
Beginning of period | $ | 10,399 | $ | 10,104 | ||||
Assumed product warranty liability from ESI Merger | 7,177 | — | ||||||
Provision for product warranties | 6,062 | 5,184 | ||||||
Direct and other charges to warranty liability | (6,705 | ) | (4,073 | ) | ||||
|
|
|
| |||||
End of period(1) | $ | 16,933 | $ | 11,215 | ||||
|
|
|
|
Nine Months Ended | ||||||||
2019 | 2018 | |||||||
Beginning of period | $ | 10,399 | | $ | 10,104 | |||
Assumed product warranty liability from ESI Merger | 7,177 | — | ||||||
Provision for product warranties | 18,700 | 11,448 | ||||||
Direct and other charges to warranty liability | (21,209 | ) | (11,072 | ) | ||||
End of period (1) | $ | 15,067 | $ | 10,480 | ||||
(1) | As of . |
MKS INSTRUMENTS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share data)
) |
|
Thein the amount of $5,023. This correction, which was recorded during the quarter ended June 30, 2019, but should have been recorded during the three months ended September 30, 2018, increased the Company’s effective tax rate for the three and six months ended March 31,June 30, 2019 and the nine months ended September 30, 2019 by 9.8%, 7.5% and
The Company accrues interest expense, and if applicable, penalties, for any uncertain tax positions. Interest and penalties are classified as a component of income tax expense. As of March 31,September 30, 2019 and December 31, 2018, the Company had accrued interest on unrecognized tax benefits of approximately $543$581 and $568, respectively.
The Company and its subsidiaries are subject to examination by U.S. federal, state and foreign tax authorities. The U.S. Internal Revenue Service commenced an examination of the Company’s U.S. federal income tax filings for tax years 2015 and 2016 during the quarter ended September 30, 2017. This audit was effectively settled during the quarter ended March 31, 2018, and the impact was not material. Also during the quarter ended March 31, 2018 the Company received notification from the U.S. Internal Revenue Service of their intent to audit its U.S. subsidiary, Newport, Corporation, for tax year 2015. This audit commenced during the quarter ended June 30, 2018 and there have beenwas effectively settled during the quarter ended June 30, 2019 with a no proposed adjustments through March 31, 2019.change result. The U.S. statute of limitations remains open for tax years 20152016 through present. The statute of limitations for the Company’s tax filings in other jurisdictions varies between fiscal years 2013 through present. The Company also has certain federal credit carry-forwards and state tax loss and credit carry-forwards that are open to examination for tax years 2000 through the present.
MKS INSTRUMENTS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share data)
14) |
|
Three Months Ended March 31, | ||||||||
2019 | 2018 | |||||||
Numerator: | ||||||||
Net income | $ | 12,455 | $ | 105,121 | ||||
|
|
|
| |||||
Denominator: | ||||||||
Shares used in net income per common share – basic | 54,147,000 | 54,423,000 | ||||||
Effect of dilutive securities: | ||||||||
Restricted stock units, stock appreciation rights and shares issued under employee stock purchase plan | 701,000 | 863,000 | ||||||
|
|
|
| |||||
Shares used in net income per common share – diluted | 54,848,000 | 55,286,000 | ||||||
|
|
|
| |||||
Net income per common share: | ||||||||
Basic | $ | 0.23 | $ | 1.93 | ||||
Diluted | $ | 0.23 | $ | 1.90 |
Three Months Ended | Nine Months Ended | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Numerator: | ||||||||||||||||
Net income | $ | 47,428 | $ | 93,277 | $ | 97,622 | $ | 321,260 | ||||||||
Denominator: | ||||||||||||||||
Shares used in net income per common share – basic | 54,945,000 | 54,476,000 | 54,636,000 | 54,539,000 | ||||||||||||
Effect of dilutive securities: | ||||||||||||||||
Restricted stock units, stock appreciation rights and shares issued under employee stock purchase plan | 259,000 | 478,000 | 409,000 | 632,000 | ||||||||||||
Shares used in net income per common share – diluted | 55,204,000 | 54,954,000 | 55,045,000 | 55,171,000 | ||||||||||||
Net income per common share: | ||||||||||||||||
Basic | $ | 0.86 | $ | 1.71 | $ | 1.79 | $ | 5.89 | ||||||||
Diluted | $ | 0.86 | $ | 1.70 | $ | 1.77 | $ | 5.82 |
15) |
|
MKS INSTRUMENTS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share data)
The 748,920 shares of the Company’s common stock that are issuable pursuant to the Assumed RSUs and the Assumed SARs under the Company’s 2014 Plan were registered under the Securities Act of 1933 on the Registration Statement on Form
Three Months Ended March 31, | ||||||||
2019 | 2018 | |||||||
Cost of revenues | $ | 422 | $ | 1,005 | ||||
Research and development expense | 810 | 722 | ||||||
Selling, general and administrative expense | 8,038 | 8,699 | ||||||
Acquisition and integration related expense | 18,568 | — | ||||||
|
|
|
| |||||
Totalpre-tax stock-based compensation expense | $ | 27,838 | $ | 10,426 | ||||
|
|
|
|
Three Months Ended | Nine Months Ended | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Cost of revenues | $ | 818 | $ | 170 | $ | 1,876 | $ | 2,664 | ||||||||
Research and development expense | 971 | 708 | 2,842 | 2,249 | ||||||||||||
Selling, general and administrative expense | 4,009 | 4,335 | 16,253 | 17,092 | ||||||||||||
Acquisition and integration related expense | 1,202 | — | 20,796 | — | ||||||||||||
Restructuring related expense | 373 | — | 373 | — | ||||||||||||
Total pre-tax stock-based compensation expense | $ | 7,373 | $ | 5,213 | $ | 42,140 | $ | 22,005 | ||||||||
Three Months Ended March 31, 2019 | ||||||||
Outstanding RSUs | Weighted Average Grant Date Fair Value | |||||||
RSUs – beginning of period | 647,394 | $ | 74.04 | |||||
Assumed shares from ESI Merger | 736,133 | $ | 84.10 | |||||
Accrued dividend shares | 1,558 | $ | 78.45 | |||||
Granted | 182,212 | $ | 82.58 | |||||
Vested | (274,898 | ) | $ | 67.57 | ||||
Forfeited | (76,096 | ) | $ | 91.14 | ||||
|
| |||||||
RSUs – end of period | 1,216,303 | $ | 81.81 | |||||
|
|
Nine Months Ended September 30, 2019 | ||||||||
Outstanding RSUs | Weighted Average Grant Date Fair Value | |||||||
RSUs – beginning of period | 647,394 | $ | 74.04 | |||||
Assumed shares from ESI Merger | 736,133 | $ | 84.10 | |||||
Accrued dividend shares | 4,307 | $ | 79.20 | |||||
Granted | 417,335 | $ | 86.18 | |||||
Vested | (533,007 | ) | $ | 69.11 | ||||
Forfeited | (134,833 | ) | $ | 89.58 | ||||
RSUs – end of period | 1,137,329 | $ | 85.50 | |||||
Three Months Ended March 31, 2019 | ||||||||
Outstanding SARs | Weighted Average Grant Date Fair Value | |||||||
SARs – beginning of period | 177,538 | $ | 28.52 | |||||
Assumed SARs from ESI Merger | 12,787 | $ | 17.38 | |||||
Exercised | (23,569 | ) | $ | 27.34 | ||||
Forfeited or expired | (184 | ) | $ | 27.89 | ||||
|
| |||||||
SARs Outstanding – end of period | 166,572 | $ | 27.86 | |||||
|
|
Nine Months Ended September 30, 2019 | ||||||||
Outstanding SARs | Weighted Average Grant Date Fair Value | |||||||
SARs – beginning of period | 177,538 | $ | 28.52 | |||||
Assumed SARs from ESI Merger | 12,787 | $ | 17.38 | |||||
Exercised | (46,414 | ) | $ | 27.07 | ||||
Forfeited or expired | (3,998 | ) | $ | 23.00 | ||||
SARs o utstanding – end of period | 139,913 | $ | 28.18 | |||||
MKS INSTRUMENTS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share data)
16) |
|
March 31,September 30, 2019, and 2018, there were no0 repurchases of common stock.
$31,608 or $0.58 per share.
17) |
|
MKS INSTRUMENTS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share data)
purposes
Three Months Ended March 31, | ||||||||
2019 | 2018 | |||||||
Vacuum & Analysis | $ | 234,355 | $ | 348,344 | ||||
Light & Motion | 193,988 | 205,931 | ||||||
Equipment & Solutions | 35,218 | — | ||||||
|
|
|
| |||||
$ | 463,561 | $ | 554,275 | |||||
|
|
|
|
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2019 | 2018 | 2019 | 201 8 | |||||||||||||
Vacuum & Analysis | $ | 240,681 | $ | 286,038 | $ | 710,691 | $ | 1,002,710 | ||||||||
Light & Motion | 172,460 | 201,114 | 549,027 | 611,857 | ||||||||||||
Equipment & Solutions | 49,310 | — | 140,404 | — | ||||||||||||
$ | 462,451 | $ | 487,152 | $ | 1,400,122 | $ | 1,614,567 | |||||||||
Three Months Ended March 31, | ||||||||
2019 | 2018 | |||||||
Gross profit by reportable segment: | ||||||||
Vacuum & Analysis | $ | 98,139 | $ | 158,500 | ||||
Light & Motion | 92,741 | 104,355 | ||||||
Equipment & Solutions | 7,238 | — | ||||||
|
|
|
| |||||
Total gross profit by reportable segment | 198,118 | 262,855 | ||||||
Operating expenses: | ||||||||
Research and development | 38,933 | 34,857 | ||||||
Selling, general and administrative | 82,455 | 82,949 | ||||||
Fees and expenses related to incremental term loan | 5,847 | — | ||||||
Acquisition and integration costs | 30,167 | — | ||||||
Restructuring | 223 | 1,220 | ||||||
Customer contract obligation | 1,700 | — | ||||||
Environmental costs | — | 1,000 | ||||||
Amortization of intangible assets | 15,727 | 11,190 | ||||||
|
|
|
| |||||
Income from operations | 23,066 | 131,639 | ||||||
Interest and other expense, net | 7,730 | 4,897 | ||||||
|
|
|
| |||||
Income before income taxes | 15,336 | 126,742 | ||||||
Provision for income taxes | 2,881 | 21,621 | ||||||
|
|
|
| |||||
Net income | $ | 12,455 | $ | 105,121 | ||||
|
|
|
|
income
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Gross profit by reportable segment: | ||||||||||||||||
Vacuum & Analysis | $ | 102,826 | $ | 132,835 | $ | 303,060 | $ | 462,418 | ||||||||
Light & Motion | 79,873 | 99,025 | 257,562 | 307,174 | ||||||||||||
Equipment & Solutions | 22,305 | — | 53,527 | — | ||||||||||||
Total gross profit by reportable segment | 205,004 | 231,860 | 614,149 | 769,592 | ||||||||||||
Operating expenses: | ||||||||||||||||
Research and development | 41,566 | 31,898 | 122,354 | 103,259 | ||||||||||||
Selling, general and administrative | 82,101 | 70,822 | 247,792 | 229,952 | ||||||||||||
Fees and expenses related to term loan | 642 | — | 6,489 | 378 | ||||||||||||
Acquisition and integration costs | 2,103 | 36 | 35,510 | (1,132 | ) | |||||||||||
Restructuring and other | 1,525 | 1,364 | 4,690 | 4,374 | ||||||||||||
Amortization of intangible assets | 17,020 | 10,695 | 50,299 | 32,786 | ||||||||||||
Gain on sale of long-lived assets | (6,773 | ) | — | (6,773 | ) | — | ||||||||||
Income from operations | 66,820 | 117,045 | 153,788 | 399,975 | ||||||||||||
Interest and other expense, net | 11,398 | 2,529 | 31,167 | 10,173 | ||||||||||||
Income before income taxes | 55,422 | 114,516 | 122,621 | 389,802 | ||||||||||||
Provision for income taxes | 7,994 | 21,239 | 24,999 | 68,542 | ||||||||||||
Net income | $ | 47,428 | $ | 93,277 | $ | 97,622 | $ | 321,260 | ||||||||
Vacuum & Analysis | Light & Motion | Equipment & Solutions | Total | |||||||||||||
Three Months Ended March 31, 2019: | ||||||||||||||||
Capital expenditures | $ | 7,488 | $ | 5,154 | $ | 1,887 | $ | 14,529 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Three Months Ended March 31, 2018: | ||||||||||||||||
Capital expenditures | $ | 6,197 | $ | 3,193 | $ | — | $ | 9,390 | ||||||||
|
|
|
|
|
|
|
|
Vacuum & Analysis | Light & Motion | Equipment & Solutions | Total | |||||||||||||
Three Months Ended September 30, 2019: | ||||||||||||||||
Capital expenditures | $ | 7,461 | $ | 6,767 | $ | 2,271 | $ | 16,499 | ||||||||
Nine Months Ended September 30, 2019: | ||||||||||||||||
Capital expenditures | $ | 21,649 | $ | 16,859 | $ | 6,245 | $ | 44,753 | ||||||||
Three Months Ended September 30, 2018: | ||||||||||||||||
Capital expenditures | $ | 9,532 | $ | 5,535 | $ | — | $ | 15,067 | ||||||||
Nine Months Ended September 30, 2018: | ||||||||||||||||
Capital expenditures | $ | 22,701 | $ | 14,184 | $ | — | $ | 36,885 | ||||||||
MKS INSTRUMENTS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share data)
Vacuum & Analysis | Light & Motion | Equipment & Solutions | Total | |||||||||||||
Three Months Ended March 31, 2019: | ||||||||||||||||
Depreciation and amortization | $ | 4,045 | $ | 14,140 | $ | 7,026 | $ | 25,211 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Three Months Ended March 31, 2018 | ||||||||||||||||
Depreciation and amortization | $ | 5,129 | $ | 15,363 | $ | — | $ | 20,492 | ||||||||
|
|
|
|
|
|
|
|
Vacuum & Analysis | Light & Motion | Equipment & Solutions | Total | |||||||||||||
Three Months Ended September 30, 2019: | ||||||||||||||||
Depreciation and amortization | $ | 4,222 | $ | 12,992 | $ | 9,994 | $ | 27,208 | ||||||||
Nine Months Ended September 30, 2019 | ||||||||||||||||
Depreciation and amortization | $ | 12,208 | $ | 40,424 | $ | 27,231 | $ | 79,863 | ||||||||
Three Months Ended September 30, 2018: | ||||||||||||||||
Depreciation and amortization | $ | 5,083 | $ | 14,446 | $ | — | $ | 19,529 | ||||||||
Nine Months Ended September 30, 2018: | ||||||||||||||||
Depreciation and amortization | $ | 15,180 | $ | 44,726 | $ | — | $ | 59,906 | ||||||||
March 31, 2019: | Vacuum & Analysis | Light & Motion | Equipment & Solutions | Corporate, Eliminations & Other | Total | |||||||||||||||
Segment assets: | ||||||||||||||||||||
Accounts receivable | $ | 160,040 | $ | 139,592 | $ | 51,088 | $ | (14,730 | ) | $ | 335,990 | |||||||||
Inventory, net | 225,431 | 164,603 | 85,690 | (91 | ) | 475,633 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total segment assets | $ | 385,471 | $ | 304,195 | $ | 136,778 | $ | (14,821 | ) | $ | 811,623 | |||||||||
|
|
|
|
|
|
|
|
|
|
December 31, 2018: | Vacuum & Analysis | Light & Motion | Equipment & Solutions | Corporate, Eliminations & Other | Total | |||||||||||||||
Segment assets: | ||||||||||||||||||||
Accounts receivable | $ | 171,604 | $ | 140,658 | $ | — | $ | (16,808 | ) | $ | 295,454 | |||||||||
Inventory, net | 222,965 | 161,658 | — | 66 | 384,689 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total segment assets | $ | 394,569 | $ | 302,316 | $ | — | $ | (16,742 | ) | $ | 680,143 | |||||||||
|
|
|
|
|
|
|
|
|
|
September 30, 2019: | Vacuum & Analysis | Light & Motion | Equipment & Solutions | Corporate, Eliminations & Other | Total | |||||||||||||||
Segment assets: | ||||||||||||||||||||
Trade accounts receivable | $ | 156,066 | $ | 159,061 | $ | 40,289 | $ | (27,433 | ) | $ | 327,983 | |||||||||
Inventories | 221,182 | 168,597 | 73,449 | 35 | 463,263 | |||||||||||||||
Total segment assets | $ | 377,248 | $ | 327,658 | $ | 113,738 | $ | (27,398 | ) | $ | 791,246 | |||||||||
December 31, 2018: | Vacuum & Analysis | Light & Motion | Equipment & Solutions | Corporate, Eliminations & Other | Total | |||||||||||||||
Segment assets: | ||||||||||||||||||||
Trade accounts receivable | $ | 171,604 | $ | 140,658 | $ | — | $ | (16,808 | ) | $ | 295,454 | |||||||||
Inventories | 222,965 | 161,658 | — | 66 | 384,689 | |||||||||||||||
Total segment assets | $ | 394,569 | $ | 302,316 | $ | — | $ | (16,742 | ) | $ | 680,143 | |||||||||
March 31, 2019 | December 31, 2018 | |||||||
Total segment assets | $ | 811,623 | $ | 680,143 | ||||
Cash and cash equivalents and investments | 472,692 | 728,461 | ||||||
Other current assets | 86,387 | 65,790 | ||||||
Property, plant and equipment, net | 251,424 | 194,367 | ||||||
Right-of-use asset | 65,628 | — | ||||||
Goodwill and intangible assets, net | 1,676,422 | 906,803 | ||||||
Other assets | 48,562 | 38,682 | ||||||
|
|
|
| |||||
Consolidated total assets | $ | 3,412,738 | $ | 2,614,246 | ||||
|
|
|
|
September 30, 2019 | December 31, 2018 | |||||||
Total segment assets | $ | 791,246 | $ | 680,143 | ||||
Cash and cash equivalents and investments | 485,274 | 728,461 | ||||||
Other current assets | 94,011 | 65,790 | ||||||
Property, plant and equipment, net | 236,124 | 194,367 | ||||||
Right-of-use asset | 67,632 | — | ||||||
Goodwill and intangible assets, net | 1,634,971 | 906,803 | ||||||
Other assets | 45,286 | 38,682 | ||||||
Consolidated total assets | $ | 3,354,544 | $ | 2,614,246 | ||||
Three Months Ended March 31, | ||||||||
2019 | 2018 | |||||||
Net revenues: | ||||||||
United States | $ | 224,347 | $ | 276,720 | ||||
Korea | 35,802 | 54,011 | ||||||
Japan | 42,102 | 58,274 | ||||||
Asia (excluding Korea and Japan) | 101,327 | 101,384 | ||||||
Europe | 59,983 | 63,886 | ||||||
|
|
|
| |||||
$ | 463,561 | $ | 554,275 | |||||
|
|
|
|
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Net revenues: | ||||||||||||||||
United States | $ | 211,116 | $ | 243,273 | $ | 653,012 | $ | 801,811 | ||||||||
China | 46,679 | 35,554 | 140,469 | 98,631 | ||||||||||||
Korea | 41,313 | 43,468 | 116,011 | 164,462 | ||||||||||||
Japan | 32,388 | 38,964 | 105,485 | 151,325 | ||||||||||||
Other Asia | 77,360 | 69,782 | 213,325 | 215,282 | ||||||||||||
Europe | 53,595 | 56,111 | 171,820 | 183,056 | ||||||||||||
$ | 462,451 | $ | 487,152 | $ | 1,400,122 | $ | 1,614,567 | |||||||||
MKS INSTRUMENTS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share data)
March 31, 2019 | December 31, 2018 | |||||||
Long-lived assets:(1) | ||||||||
United States | $ | 198,747 | $ | 146,687 | ||||
Europe | 29,983 | 26,794 | ||||||
Asia | 57,523 | 50,572 | ||||||
|
|
|
| |||||
$ | 286,253 | $ | 224,053 | |||||
|
|
|
|
Long-lived assets: (1) | September 30, 2019 | December 31, 2018 | ||||||
United States | $ | 171,324 | $ | 146,687 | ||||
Europe | 30,514 | 26,794 | ||||||
Asia | 60,072 | 50,572 | ||||||
$ | 261,910 | $ | 224,053 | |||||
(1) | Long-lived assets include property, plant and equipment, net and certain other long-term assets, excluding long-term tax related accounts. |
March 31, 2019 | December 31, 2018 | |||||||
Reportable segment: | ||||||||
Vacuum & Analysis | $ | 196,937 | $ | 197,126 | ||||
Light & Motion | 388,896 | 389,870 | ||||||
Equipment & Solutions | 471,498 | — | ||||||
|
|
|
| |||||
Total goodwill | $ | 1,057,331 | $ | 586,996 | ||||
|
|
|
|
follows:
September 30, 2019 | December 31, 2018 | |||||||
Reportable segment: | ||||||||
Vacuum & Analysis | $ | 195,431 | $ | 197,126 | ||||
Light & Motion | 386,848 | 389,870 | ||||||
Equipment & Solutions | 471,812 | — | ||||||
Total goodwill | $ | 1,054,091 | $ | 586,996 | ||||
Three Months Ended March 31, | ||||||||
2019 | 2018 | |||||||
Advanced Manufacturing Components | $ | 371,345 | $ | 496,677 | ||||
Global Service | 66,198 | 57,598 | ||||||
Advanced Manufacturing Systems | 26,018 | — | ||||||
|
|
|
| |||||
$ | 463,561 | $ | 554,275 | |||||
|
|
|
|
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Advanced Manufacturing Components | $ | 353,639 | $ | 426,255 | $ | 1,084,107 | $ | 1,432,931 | ||||||||
Global Service | 76,278 | 60,897 | 215,260 | 181,636 | ||||||||||||
Advanced Manufacturing Systems | 32,534 | — | 100,755 | — | ||||||||||||
$ | 462,451 | $ | 487,152 | $ | 1,400,122 | $ | 1,614,567 | |||||||||
18) |
|
Three Months Ended March 31, | ||||||||
2019 | 2018 | |||||||
Beginning of period | $ | 2,632 | $ | 3,244 | ||||
Charged to expense | 223 | 1,220 | ||||||
Payments and adjustments | (252 | ) | (1,806 | ) | ||||
|
|
|
| |||||
End of period | $ | 2,603 | $ | 2,658 | ||||
|
|
|
|
Nine Months Ended | ||||||||
2019 | 2018 | |||||||
Beginning of period restructuring accrual | $ | 2,632 | $ | 3,244 | ||||
Charged to expense | 2,990 | 3,374 | ||||||
Payments and adjustments | (3,074 | ) | (3,963 | ) | ||||
End of period restructuring accrual | $ | 2,548 | $ | 2,655 | ||||
19) |
|
On March 2016, two putative class actions lawsuit captioned Dixon Chung v. Newport Corp., et al., Case No.complaints sought injunctive relief, including to enjoin or rescind the Newport Merger Agreement, and an award of attorneys’ and other fees and costs, among other relief. On April 14, 2016, the Court consolidated the actions.On October 19, 2016,actions, and plaintiffs in the consolidated actionlater filed an amended complaint captioned In re Newport Corporation Shareholder Litigation, Case No.contained substantially similar allegations related toalleged Newport’s former board of directors’ alleged breaches ofdirectors breached their fiduciary duties to Newport’s stockholders. The amended complaintstockholders and that the Company, Newport and Merger Sub had aided and abetted those breaches. It sought monetary damages, includingOnIn June 22, 2017, the Court granted Defendants’defendants’ motion to dismiss and dismissed the amended complaint against all defendants but granted plaintiffs leave to amend.Discovery is ongoing in this action.ESI LitigationNovember 29, 2018,May 1, 2019, the Court granted the defendants’ motion to strike plaintiffs’ jury demand and determined that the case will be tried by the Court, and not a complaint captioned Brian Morris et. al. v. Electro Scientific Industries, Inc. et al. was filedjury.U.S. District Courtaction is complete. On August 9, 2019, plaintiffs filed a motion for the District of Oregon by alleged former stockholders of ESI in connection with the ESI Merger. Theleave to file a third amended complaint, named the Company’s subsidiary, ESI, and the former members of ESI’s board of directors as defendants. Five additional complaints were subsequentlytwo in the U.S. District Courta motion for the District of Oregon and three in the Multnomah County Circuit Court in the State of Oregon. The cases filed in the U.S. District Court were dated December 6, 2018 and December 12, 2018 and captioned Melvyn Klein et. al. v. Electro Scientific Industries, Inc. et al. and Donald Mager et. al. v. Electro Scientific Industries, Inc. et al., respectively. The complaints filed in Multnomah County Circuit Court were dated December 5, 2018, December 5, 2018 and December 13, 2018 and captioned Michael Kent et. al v. Electro Scientific Industries, Inc. et al., Christopher Stanley et. al v. Electro Scientific Industries, Inc. et al. and Eduardo Colmenares et. al. v. Electro Scientific Industries, Inc., MKS Instruments, Inc., et al., respectively (collectively with Brian Morris et. al. v. Electro Scientific Industries, Inc. et. al., the “Lawsuits”).The Lawsuits are purported class actions brought on behalf of former ESI stockholders, asserting various claims against the former members of the ESI board of directors, ESI, the Company and the Company’s merger subsidiary, including breach of fiduciary duty and aiding and abetting the breach of fiduciary duty. The Lawsuits allege that the consideration paid to the ESI shareholders did not appropriately value ESI, and that merger related disclosures failed to disclose certain material information regarding the merger. The Lawsuits purported to seek unspecified damages.On February 26, 2019, the parties entered into a settlement agreement, pursuant to which plaintiffs dismissed their individual claims with prejudice and class claims without prejudice in returnsummary judgment. ESI’s previous supplemental merger related disclosures in connection with the transaction. ESI provided supplemental merger related disclosures to eliminate the burden and expense of litigation and to avoid any possible disruption to the merger that could result from further litigation.MKS INSTRUMENTS, INC.NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except share and per share data)flows.flows
20) | Sale-Leaseback of Long-Lived Assets |
ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. |
nine months ended September 30, 2019, compared to the same period in the prior year. This decrease was comprised of a volume decrease in net semiconductor revenues of $255 million and $14 million in the Vacuum & Analysis and Light & Motion segments, respectively, offset by an increase of $17 million from our Equipment & Solutions segment as a result of the ESI Merger.
Three Months Ended March 31, | ||||||||
2019 | 2018 | |||||||
Net revenues: | ||||||||
Product | 85.7 | % | 89.6 | % | ||||
Services | 14.3 | 10.4 | ||||||
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Total net revenues | 100.0 | 100.0 | ||||||
Cost of revenues: | ||||||||
Cost of product revenues | 49.6 | 47.2 | ||||||
Cost of service revenues | 7.7 | 5.4 | ||||||
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Total cost of revenues (exclusive of amortization shown separately below) | 57.3 | 52.6 | ||||||
Gross profit | 42.7 | 47.4 | ||||||
Research and development | 8.4 | 6.3 | ||||||
Selling, general and administrative | 17.8 | 15.0 | ||||||
Fees and expenses related to incremental term loan | 1.2 | — | ||||||
Acquisition and integration costs | 6.5 | — | ||||||
Restructuring | — | 0.2 | ||||||
Customer contract obligation | 0.4 | — | ||||||
Environmental costs | — | 0.2 | ||||||
Amortization of intangible assets | 3.4 | 2.0 | ||||||
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Income from operations | 5.0 | 23.7 | ||||||
Interest income | 0.4 | 0.2 | ||||||
Interest expense | 2.0 | 1.0 | ||||||
Other expense, net | 0.1 | — | ||||||
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Income from operations before income taxes | 3.3 | 22.9 | ||||||
Provision for income taxes | 0.6 | 3.9 | ||||||
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Net income | 2.7 | % | 19.0 | % | ||||
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Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Net revenues: | ||||||||||||||||
Product | 83.5 | % | 87.5 | % | 84.6 | % | 88.7 | % | ||||||||
Services | 16.5 | 12.5 | 15.4 | 11.3 | ||||||||||||
Total net revenues | 100.0 | 100.0 | 100.0 | 100.0 | ||||||||||||
Cost of revenues: | ||||||||||||||||
Cost of product revenues | 46.8 | 45.0 | 48.0 | 46.3 | ||||||||||||
Cost of service revenues | 8.9 | 7.4 | 8.1 | 6.0 | ||||||||||||
Total cost of revenues (exclusive of amortization shown separately below) | 55.7 | 52.4 | 56.1 | 52.3 | ||||||||||||
Gross profit | 44.3 | 47.6 | 43.9 | 47.7 | ||||||||||||
Research and development | 9.0 | 6.5 | 8.8 | 6.4 | ||||||||||||
Selling, general and administrative | 17.8 | 14.5 | 17.7 | 14.2 | ||||||||||||
Fees and expenses related to term loan | 0.1 | — | 0.5 | — | ||||||||||||
Acquisition and integration costs | 0.5 | — | 2.5 | (0.1 | ) | |||||||||||
Restructuring and other | 0.3 | 0.3 | 0.3 | 0.3 | ||||||||||||
Amortization of intangible assets | 3.7 | 2.2 | 3.6 | 2.0 | ||||||||||||
Gain on sale of long-lived assets | (1.5 | ) | — | (0.5 | ) | — | ||||||||||
Income from operations | 14.4 | 24.1 | 11.0 | 24.9 | ||||||||||||
Interest income | 0.3 | 0.3 | 0.3 | 0.2 | ||||||||||||
Interest expense | 2.9 | 0.8 | 2.5 | 0.8 | ||||||||||||
Other (income) expense, net | (0.2 | ) | 0.1 | — | 0.1 | |||||||||||
Income from operations before income taxes | 12.0 | 23.5 | 8.8 | 24.2 | ||||||||||||
Provision for income taxes | 1.7 | 4.4 | 1.8 | 4.3 | ||||||||||||
Net income | 10.3 | % | 19.1 | % | 7.0 | % | 19.9 | % | ||||||||
Three Months Ended March 31, | ||||||||
(dollars in millions) | 2019 | 2018 | ||||||
Product | $ | 397.4 | $ | 496.7 | ||||
Service | 66.2 | 57.6 | ||||||
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Total net revenues | $ | 463.6 | $ | 554.3 | ||||
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Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
(dollars in millions) | 2019 | 2018 | 2019 | 2018 | ||||||||||||
Product | $ | 386.2 | $ | 426.3 | $ | 1,184.9 | $ | 1,432.9 | ||||||||
Service | 76.3 | 60.9 | 215.2 | 181.7 | ||||||||||||
Total net revenues | $ | 462.5 | $ | 487.2 | $ | 1,400.1 | $ | 1,614.6 | ||||||||
South Korea and Japan, primarily due to decreases in semiconductor revenues for our Vacuum & Analysis segment, partially offset by an increase in net revenues from China, as a result of the ESI Merger.
Three Months Ended March 31, | ||||||||
(dollars in millions) | 2019 | 2018 | ||||||
Net revenues: | ||||||||
Vacuum & Analysis | $ | 234.4 | $ | 348.4 | ||||
Light & Motion | 194.0 | 205.9 | ||||||
Equipment & Solutions | 35.2 | — | ||||||
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Total net revenues | $ | 463.6 | $ | 554.3 | ||||
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Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
(dollars in millions) | 2019 | 2018 | 2019 | 2018 | ||||||||||||
Net revenues: | ||||||||||||||||
Vacuum & Analysis | $ | 240.7 | $ | 286.1 | $ | 710.7 | $ | 1,002.7 | ||||||||
Light & Motion | 172.5 | 201.1 | 549.0 | 611.9 | ||||||||||||
Equipment & Solutions | 49.3 | — | 140.4 | — | ||||||||||||
Total net revenues | $ | 462.5 | $ | 487.2 | $ | 1,400.1 | $ | 1,614.6 | ||||||||
$7.4 million and $13.8 million for the three and nine months ended September 30, 2019, respectively.
Three Months Ended March 31, | ||||||||||||
2019 | 2018 | % Points Change | ||||||||||
Gross profit as a percentage of net revenues: | ||||||||||||
Product | 42.2 | % | 47.4 | % | (5.2 | )% | ||||||
Service | 46.0 | 47.7 | (1.7 | ) | ||||||||
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Total gross profit | 42.7 | % | 47.4 | % | (4.7 | )% | ||||||
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Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||
2019 | 2018 | % Points Change | 2019 | 2018 | % Points Change | |||||||||||||||||||
Gross profit as a percentage of net revenues: | ||||||||||||||||||||||||
Product | 44.0 | % | 48.5 | % | (4.5 | )% | 43.3 | % | 47.8 | % | (4.5 | )% | ||||||||||||
Service | 46.0 | 40.9 | 5.1 | 47.1 | 46.3 | 0.8 | ||||||||||||||||||
Total gross profit | 44.3 | % | 47.6 | % | (3.3 | )% | 43.9 | % | 47.7 | % | (3.8 | )% | ||||||||||||
partially offset by favorable product mix.
higher material costs.
Three Months Ended March 31, | ||||||||||||
2019 | 2018 | % Points Change | ||||||||||
Gross profit as a percentage of net revenues: | ||||||||||||
Vacuum & Analysis | 41.7 | % | 45.5 | % | (3.8 | )% | ||||||
Light & Motion | 47.8 | 50.7 | (2.9 | ) | ||||||||
Equipment & Solutions | 20.6 | — | 100.0 | |||||||||
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Total gross profit | 42.7 | % | 47.4 | % | (4.7 | )% | ||||||
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Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||
2019 | 2018 | % Points Change | 2019 | 2018 | % Points Change | |||||||||||||||||||
Gross profit as a percentage of net revenues: | ||||||||||||||||||||||||
Vacuum & Analysis | 42.7 | % | 46.4 | % | (3.7 | )% | 42.6 | % | 46.1 | % | (3.5 | )% | ||||||||||||
Light & Motion | 46.3 | 49.2 | (2.9 | ) | 46.9 | 50.2 | (3.3 | ) | ||||||||||||||||
Equipment & Solutions | 45.2 | — | 100.0 | 38.1 | — | 100.0 | ||||||||||||||||||
Total gross profit | 44.3 | % | 47.6 | % | (3.3 | )% | 43.9 | % | 47.7 | % | (3.8 | )% | ||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
(dollars in millions) | 2019 | 2018 | 2019 | 2018 | ||||||||||||
Research and development expenses | $ | 41.6 | $ | 31.9 | $ | 122.4 | $ | 103.3 |
Gross profit for our Light & Motion segment decreased by 2.9 percentage points$7.2 million from the ESI Merger, which primarily included $4.5 million of compensation-related expenses, $1.1 million of project materials and $0.8 million of depreciation expense, and an increase of $2.3 million of project materials related to the legacy MKS business.
Gross profit for our Equipment & Solutions segment of 20.6% for the three months ended March 31, 2019, is lower than normal partly due to the amortization of the inventorystep-up adjustment to fair value$18.7 million from purchase accounting of $5.1 million. Excluding this adjustment, the gross margin would have been 35.1%.
Research and Development
Three Months Ended March 31, | ||||||||
(dollars in millions) | 2019 | 2018 | ||||||
Research and development expenses | $ | 38.9 | $ | 34.9 |
Research and development expenses increased $4.0 million for the three months ended March 31, 2019, compared to the same period in the prior year, primarily due to the ESI Merger, which primarily included $2.4$12.2 million of compensation relatedcompensation-related expenses, $0.7$2.4 million of project materials, $0.5$2.2 million of depreciation expense and $0.4$1.0 million of occupancy costs.
costs, and an increase of $1.8 million of project materials related to the legacy MKS business.
Three Months Ended March 31, | ||||||||
(dollars in millions) | 2019 | 2018 | ||||||
Selling, general and administrative expenses | $ | 82.5 | $ | 82.9 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
(dollars in millions) | 2019 | 2018 | 2019 | 2018 | ||||||||||||
Selling, general and administrative expenses | $ | 82.1 | $ | 70.8 | $ | 247.8 | $ | 230.0 |
Fees and expenses related to incremental term loan Three Months Ended
March 31, (dollars in millions) 2019 2018 $ 5.8 $ —
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
(dollars in millions) | 2019 | 2018 | 2019 | 2018 | ||||||||||||
Fees and expenses related to term loan | $ | 0.6 | $ | — | $ | 6.5 | $ | 0.4 |
fourth repricing of our 2016 Term Loan Facility.
Three Months Ended March 31, | ||||||||
(dollars in millions) | 2019 | 2018 | ||||||
Acquisition and integration costs | $ | 30.2 | $ | — |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
(dollars in millions) | 2019 | 2018 | 2019 | 2018 | ||||||||||||
Acquisition and integration costs | $ | 2.1 | $ | — | $ | 35.5 | $ | (1.1 | ) |
Three Months Ended March 31, | ||||||||
(dollars in millions) | 2019 | 2018 | ||||||
Restructuring | $ | 0.2 | $ | 1.2 |
and Other
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
(dollars in millions) | 2019 | 2018 | 2019 | 2018 | ||||||||||||
Restructuring and other | $ | 1.5 | $ | 1.4 | $ | 4.7 | $ | 4.4 |
Customer Contract Obligation
Three Months Ended March 31, | ||||||||
(dollars in millions) | 2019 | 2018 | ||||||
Customer contract obligation | $ | 1.7 | $ | — |
We recorded a charge during the three months ended March 31, 2019 related to a contractual obligation we acquired as part of our acquisition of Newport Corporation (the “Newport Merger”).
Environmental Costs
Three Months Ended March 31, | ||||||||
(dollars in millions) | 2019 | 2018 | ||||||
Environmental costs | $ | — | $ | 1.0 |
We recorded $1.0 million of environmental costs during the first quarter ofnine months ended September 30, 2018, related to a U.S.an Environmental Protection Agency-designated Superfund site, which was acquired as part of the Newport Merger.
Three Months Ended March 31, | ||||||||
(dollars in millions) | 2019 | 2018 | ||||||
Amortization of intangible assets | $ | 15.7 | $ | 11.2 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
(dollars in millions) | 2019 | 2018 | 2019 | 2018 | ||||||||||||
Amortization of intangible assets | $ | 17.0 | $ | 10.7 | $ | 50.3 | $ | 32.8 |
Interest expense, net Three Months Ended
March 31, (dollars in millions) 2019 2018 $ 7.4 $ 4.3
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
(dollars in millions) | 2019 | 2018 | 2019 | 2018 | ||||||||||||
Interest expense, net | $ | 12.3 | $ | 2.2 | $ | 31.0 | $ | 9.0 |
Three Months Ended March 31, | ||||||||
(dollars in millions) | 2019 | 2018 | ||||||
Other expense, net | $ | 0.3 | $ | 0.6 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
(dollars in millions) | 2019 | 2018 | 2019 | 2018 | ||||||||||||
Other (income) expense, net | $ | (0.9 | ) | $ | 0.3 | $ | 0.2 | $ | 1.2 |
Three Months Ended March 31, | ||||||||
(dollars in millions) | 2019 | 2018 | ||||||
Provision for income taxes | $ | 2.9 | $ | 21.6 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
(dollars in millions) | 2019 | 2018 | 2019 | 2018 | ||||||||||||
Provision for income taxes | $ | 8.0 | $ | 21.2 | $ | 25.0 | $ | 68.5 |
Ourthree months ended September 30, 2018, increased our effective tax rate for the three and six months ended March 31,June 30, 2019 and the nine months ended September 30, 2019 by 9.8%, 7.5% and 3.8%, respectively. The error and subsequent adjustment were not material to prior or current interim and annual financial statements.
Net cash used in investing activities was $47.4 million for the nine months ended September 30, 2018, due to the purchases of production-related equipment of $36.9 million and net purchases of short-term investments of $10.5 million.
During the three and nine months ended September 30, 2018, we repurchased approximately 818,000 shares of our common stock for $75.0 million, for an average of $91.67 per share.
In
As of March 31, 2019, after total principal prepayments of $425.0 million and regularly scheduled principal payments of $6.5 million, the total outstanding principal balance of the 2016 Term Loan Facility was $348.5$1.2 million. As a result of making these prepayments, we are no longer required to make any regularly scheduled principal payments on the 2016 Term Loan Facility until the maturity date of the loan.
At September 30, 2019, the notional amount of this transaction was $300.0 million and it had a fair value liability of $8.1 million.
September 30, 2019.
In connection with the completion of the Newport Merger in April 2016, we entered into an asset-based credit agreement with Deutsche Bank AG New York Branch, as administrative agent and collateral agent, the other borrowers from time to time party thereto, and the lenders and letters of credit issuers from time to time party thereto, that provided senior secured financing of up to $50.0 million, which we never borrowed against.
In October 2018, the FASB issued ASU2018-16, “Derivatives and Hedging (Topic 815).” This standard permits the use of the Overnight Index Swap Rate (“OIS”) based on the Secured Overnight Financing Rate as a U.S. benchmark interest rate for hedge accounting purposes under Topic 815 in addition to the interest rates on direct treasury obligations of the U.S. government, the LIBOR swap rate, the OIS rate based on the Federal Funds Effective Rate and the Securities Industry and Financial Markets Association Municipal Swap Rate. This standard is effective for annual periods beginning after December 15, 2018, including interim periods within those fiscal years. We adopted this ASU during the first quarter of 2019 and the adoption of this ASU did not have a material impact on our consolidated financial statements.
In FebruaryJune 2016, the FASB issued ASU2016-02, Leases.
ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. |
ITEM 4. | CONTROLS AND PROCEDURES. |
|
ITEM 1. | LEGAL PROCEEDINGS. |
March 2016, two putative class actions lawsuit captioned Dixon Chung v. Newport Corp., et al., Case No.complaints sought injunctive relief, including to enjoin or rescind the Newport Merger Agreement, and an award of attorneys’ and other fees and costs, among other relief. On April 14, 2016, the Court consolidated the actions.On October 19, 2016,actions, and plaintiffs in the consolidated actionlater filed an amended complaint captioned In re Newport Corporation Shareholder Litigation, Case No.contained substantially similar allegations related toalleged Newport’s former board of directors’ alleged breaches ofdirectors breached their fiduciary duties to Newport’s stockholders. The amended complaintstockholders and that the Company, Newport and Merger Sub had aided and abetted these breaches. It sought monetary damages, includingOnIn June 22, 2017, the Court granted Defendants’defendants’ motion to dismiss and dismissed the amended complaint against all defendants but granted plaintiffs leave to amend.Discovery is ongoing in this action.
ESI Litigation
On November 29, 2018,May 1, 2019, the Court granted the defendants’ motion to strike plaintiffs’ jury demand and determined that the case will be tried by the Court, and not a complaint captioned Brian Morris et. al. v. Electro Scientific Industries, Inc. et al. was filedjury. Discovery in the U.S. District Courtaction is complete. On August 9, 2019, plaintiffs filed a motion for the District of Oregon by alleged former stockholders of Electro Scientific Industries, Inc. (“ESI”) in connection with the acquisition of ESI by the Company. Theleave to file a third amended complaint, named the Company’s subsidiary, ESI, and the former members of ESI’s board of directors as defendants. Five additional complaints were subsequentlywhich was denied on October 10, 2019. On August 23, 2019, defendants filed two in the U.S. District Courta motion for the District of Oregon and three in the Multnomah County Circuit Court in the State of Oregon. The cases filed in the U.S. District Court were dated December 6, 2018 and December 12, 2018 and captioned Melvyn Klein et. al. v. Electro Scientific Industries, Inc. et al. and Donald Mager et. al. v. Electro Scientific Industries, Inc. et al., respectively. The complaints filed in Multnomah County Circuit Court were dated December 5, 2018, December 5, 2018 and December 13, 2018 and captioned Michael Kent et. al v. Electro Scientific Industries, Inc. et al., Christopher Stanley et. al v. Electro Scientific Industries, Inc. et al. and Eduardo Colmenares et. al. v. Electro Scientific Industries, Inc., MKS Instruments, Inc., et al., respectively (collectively with Brian Morris et. al. v. Electro Scientific Industries, Inc. et. al., the “Lawsuits”).
The Lawsuits are purported class actions brought on behalf of former ESI stockholders, asserting various claims against the former members of the ESI board of directors, ESI, the Company and the Company’s merger subsidiary, including breach of fiduciary duty and aiding and abetting the breach of fiduciary duty. The Lawsuits allege that the consideration paid to the ESI shareholders did not appropriately value ESI, and that ESI’s merger related disclosures failed to disclose certain material information regarding the merger. The Lawsuits purport to seek unspecified damages.
On February 26, 2019, the parties entered into a settlement agreement, pursuant to which plaintiffs dismissed their individual claims with prejudice and class claims without prejudice in returnsummary judgment. A bench trial is scheduled for ESI’s previous supplemental merger related disclosures in connection with the transaction. ESI provided supplemental merger related disclosures to eliminate the burden and expense of litigation and to avoid any possible disruption to the merger that could result from further litigation.
January 2020.
ITEM 1A. | RISK FACTORS. |
ITEM 6. | EXHIBITS. |
+ | Previously filed |
|
(1) | Incorporated by reference to the Registration Statement on Form |
(2) | Incorporated by reference to the Registrant’s Quarterly Report on Form |
(3) | Incorporated by reference to the Registrant’s Quarterly Report on Form |
(4) | Incorporated by reference to the Registrant’s Current Report on Form |
(5) | Incorporated by reference to the Registrant’s Current Report on Form |
|
MKS INSTRUMENTS, INC. | ||||||
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Date: November 6, 2019 | By: | /s/ Seth H. Bagshaw | ||||
Seth H. Bagshaw | ||||||
Senior Vice President, Chief Financial Officer and Treasurer | ||||||
(Principal Financial Officer) |
50