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MKS Announces Fourth Quarter and Fiscal 2007 Financial Results

Waterloo, ON – June 6, 2007: MKS Inc. (MKS) (TSX: MKX) today announced its financial results for the fourth quarter and fiscal year ended April 30, 2007. All amounts are reported in US dollars under United States Generally Accepted Accounting Principles.

Waterloo, ON – June 6, 2007: MKS Inc. (MKS) (TSX: MKX) today announced its financial results for the fourth quarter and fiscal year ended April 30, 2007. All amounts are reported in US dollars under United States Generally Accepted Accounting Principles.

Financial & Operational Highlights:

    Fiscal 2007 (compared with fiscal 2006)
    • Total revenue remained unchanged at $48.3 million
    • Net loss of ($2.8) million or ($0.06) per share compared to net income of $9.1 million, or $0.20 per share ($3.9 million or $0.09 per share, before income tax recovery)
    • Application lifecycle management (ALM) revenue increased slightly to $40.2 from $40.0 million
    • ALM operating loss of ($5.7) million compared to operating income of $1.3 million.
    • Average headcount increased by 14 percent to 316 from 278
    • ALM maintenance revenue increased 22 percent to $18.9 million from $15.5 million.
    • ALM Service revenue increased 24 percent to $6.0 million from $4.8 million in fiscal 2006

    Q4 2007 (compared with Q4 2006)

    • Total revenue remained unchanged at $12.6 million
    • Net loss of ($0.5) million or ($0.01) per share compared to net income of $6.0 million or $0.12 per share ($0.8 million, or $0.02 per share, before income tax recovery)
    • Application lifecycle management (ALM) revenue increased to $10.3 million from $10.0 million
    • Announced new contract wins at Continuing Care of Ontario, CQG, Genesis Microchip, IKON Office Solutions, Verizon Communications, Phoenix Interactive, Seavus Group, and Tyco Fire & Safety and follow-on wins at Avon Products, Continental Teves, HSBC Technology Services, Lockheed Martin Information Technology, Mitsui Knowledge Industry, NCR, St. Paul Travelers, TRX, The TJX Companies and Vertex Pharmaceuticals.

    Closing cash balance at April 30, 2007 was $15.3 million.

“This quarter we made good progress towards rebuilding our license revenue momentum,” said Philip Deck, CEO of MKS. “In addition we saw record services bookings and made excellent progress in the development of our services partnership network.”

“While we experienced sluggish license orders from our largest accounts this year, we did realize increased services revenue with the same, laying the groundwork for increasingly ambitious implementations of MKS software,” said Michael Harris, MKS President and COO, “We are confident that the pace of licensing will rebound and increase as these customers roll out additional capabilities of MKS’ unified lifecycle management platform.”

Financial Review
Revenue for fiscal 2007 was $48.3 million, unchanged over the prior year. Net loss for fiscal 2007 was ($2.8) million, or ($0.06) per share, compared to net income of $9.1 million, or $0.20 per share, reported in fiscal 2006 ($3.9 million, or $0.09 per share, before income tax recovery).

Total revenue for the fourth quarter of fiscal 2007 was $12.6 million, unchanged over the fourth quarter of fiscal 2006. Net loss for the fourth quarter of fiscal 2007 declined to ($0.5) million, or ($0.01) per share, compared to net income of $6.0 million or $0.12 per share in the fourth quarter of fiscal 2006 ($0.8 million or $0.02 per share before income tax recovery).

Fourth quarter fiscal 2007 application lifecycle management (ALM) revenues were $10.3 million, compared to revenues of $10.0 million reported in the fourth quarter of fiscal 2006.

Outlook & Guidance
MKS expects that ALM license revenue will improve in 2008 from the levels of 2007, which combined with continued increases in maintenance and services revenue will result in higher total revenue for the fiscal year compared to FY07, more than offsetting expected modest declines expected in Interoperability revenue.

MKS is committed to an early return to quarterly profitability and is managing its cost base with a view to sustaining current capacity and making further investments in sales resources only when acceptable levels of profitability are re-established. MKS expects full year profitability, based on increasing revenue and carefully managed costs.

MKS expects to maintain more than sufficient cash balances through fiscal 2008. The combination of expected improvements in net income, reduced capital expenditures over fiscal 2007, a continuation of lower overall receivables days, and expected stock option exercises, due to expiry schedules, are expected to more than offset the cash needed to fund higher license sales and the maintenance of the company’s dividend policy. MKS expects that seasonal factors will continue to cause modest outflows of cash in the first half of the fiscal year and inflows in the second half.

Income tax expense is recorded in the MKS’ financial statements going forward at the prevailing tax rate in the jurisdiction, where the income was generated to the extent, a deferred tax asset has been recorded in that jurisdiction. Such rate may be higher than the average rate that MKS expects to pay in the future across all jurisdictions. MKS expects the long term tax rate to be approximately 35% to 36%. This will be subject to an ongoing quarterly assessment of the valuation allowance by jurisdiction, which may give rise to further increases or decreases to the existing tax asset.

Conference Call Details
The Company will hold a conference call at 5:00 p.m. EST on June 6, 2007 to discuss its fourth quarter performance. Interested parties may access the call by dialing 877-871-9526 or 416-620-2400. A digital recording of the call will be available for one (1) week from June 6, 2007 to June 13, 2007 and may be accessed by dialing 800-558-5253 or 416-626-4100 and by entering reservation #21337073.

For summarized financial information, please click here.

About MKS
MKS is the premier provider of application lifecycle management solutions for the global 1000. MKS’s flagship ALM solution, MKS Integrity, is the most highly integrated ALM platform in the industry today, spanning all aspects of the software development lifecycle and supporting critical business transformations including SOA, application rationalization and outsourcing. MKS Integrity’s single architecture drives high levels of user productivity, facilitates rapid deployment and process standardization while delivering a complete view of application development activity through real time metrics, trends and reporting. MKS Integrity also provides essential support for IT operations through software deployment and issue management. Founded in 1984, MKS serves more than 10,000 customers in countries across the world. Whether through deployment of MKS’s solution strategically on an enterprise scale, or by leveraging individual components to solve project-level challenges, our customers can use MKS’s software to enable higher levels of process maturity, better manage global development activity and safeguard their most critical business applications and software assets. Under its widely known MKS Toolkit brand, MKS also provides UNIX-Windows co-existence and system administration that significantly cut development and administrative costs and reduce time to market, while enabling enhanced performance. More information about MKS can be found at http://www.mks.com or by calling 1-800-265-2797 (US & Canada), +49-711-351775-0 (Germany), +44-1483-733900 (United Kingdom) and 1-519-884-2251 (Rest of World).

Copyright © 2007 MKS Inc. MKS and MKS Toolkit are trademarks or registered trademarks of MKS Inc. All other trademarks mentioned in this release are the property of their respective owners.

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

US and Canada Media Contact:

Douglas Sawatzky, Chief Financial Officer
MKS Inc.
Phone: 519-883-3252
Email: dsawatzky@mks.com

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