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MKS Announces Record Third Quarter Results

Waterloo, ON – March 1, 2006: MKS Inc. (MKS) (TSX: MKX) today announced its financial results for the third quarter of fiscal 2006 which ended on January 31, 2006. All amounts are reported in US dollars under United States Generally Accepted Accounting Principles.

Waterloo, ON – March 1, 2006: MKS Inc. (MKS) (TSX: MKX) today announced its financial results for the third quarter of fiscal 2006 which ended on January 31, 2006. All amounts are reported in US dollars under United States Generally Accepted Accounting Principles.

Financial highlights for the quarter included:

    Comparing Q3 fiscal 2006 to Q3 fiscal 2005:
  • 27 percent increase in total revenue, from $10.6 million to $13.4 million
  • Increased net income from $0.8 million or $0.02 per share to $1.6 million or $0.04 per share
  • 41 percent growth in application lifecycle management (ALM) revenues from $8.3 million to $11.6 million
  • $1.0 million improvement in ALM profit from $0.2 million to $1.2 million.

“We are obviously delighted to report another quarter of record financial results. We are even more pleased to see that our focus and investments in our enterprise customers is yielding significant results,” said Philip Deck, CEO of MKS. “As we expand on our product capabilities with our upcoming spring release we will create even greater opportunity for further deployments.”

Operational highlights for the quarter included:

  • A $2.2 million license agreement with a longstanding customer, expanding deployment of MKS products within the customer and substantially increasing the install base.
  • New wins at Arrow Electronics Inc., Bosch Security Systems Inc., Federal Aviation Administration, Federal Home Loan Bank of Dallas, HSBC Holdings plc, The Neiman Marcus Group Inc., Parker Hannifin Corporation, Teva Pharmaceutical Industries Limited, The Toronto-Dominion Bank, The TJX Companies Inc.
  • 19 contracts worth greater than $100,000, unchanged from the same period last year.

“We continue to build out our enterprise sales and services organization to make new customer wins, demonstrate the business benefits of our technology and achieve further deployments,” said Michael Harris, MKS President and COO, “Our strategy to focus on large multinational accounts and work toward large scale deployments is beginning to pay dividends.”

Financial Review
Total revenue for the third quarter of fiscal 2006 was $13.4 million, a 27 percent or $2.8 million increase from $10.6 million in the third quarter of fiscal 2005. Net income for the third quarter of fiscal 2006 was $1.6 million, or $0.04 per share, an improvement of 100 per cent or $0.8 million compared to net income of $0.8 million or $0.02 per share in the third quarter of fiscal 2005.

Nine month revenue for fiscal 2006 was $35.8 million, a 24 percent or $7.0 million increase from $28.8 million for the same period in fiscal 2005. Nine month net income was $3.1 million, up $1.9 million, or $0.07 per share, from the net income of $1.2 million, or $0.03 per share, reported in the same period of fiscal 2005.

Third quarter fiscal 2006 application lifecycle management (ALM) revenues were $11.6 million, representing 41 percent growth over ALM revenues of $8.3 million in the third quarter of fiscal 2005. The Company’s cash position increased to $13.2 million from $10.5 million during the quarter.

The Company also reported that all of its outstanding Class 1 and Class 2 Purchase Warrants were exercised by holders before their expiry on January 22, 2006 for proceeds during the quarter of $3.1 million. Shares outstanding at the end of the quarter were 49.6 million

MKS expects that the trend of revenue growth will continue throughout fiscal 2006 driven primarily by ALM licensing opportunities with existing customers and by completing transactions with Global 1000 prospects. MKS believes that the positive results in Q3 06 and the anticipated growth in ALM revenue for the balance of fiscal 2006 will lead to annual fiscal 2006 revenue in the range of $47 to $51 million and income from operations before tax in the range of $3 to $4 million (unchanged from its expectation last quarter). The material factors and assumptions applied by MKS in arriving at these ranges are: the intention of MKS to expand its sales and services staff, increased marketing expenditures, increased ALM research and development expenditures to ensure MKS maintains its technical leadership in the ALM market and the expectation that MKS's Interoperability business will decline 5 to 10 percent over the course of the year.

Conference Call Details
Interested parties may access the call by dialing 1-877-871-9526 or 1-416-620-2400. A digital recording of the call will be available for one (1) week from March 01, 2006 to March 08, 2006 and may be accessed by dialing 1-800-558-5253 or 1-416-626-4100 and by entering reservation #21268924.

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 solution spans from requirements management to deployment providing customers with enhanced development productivity, visibility over processes, and improved IT controls for regulatory compliance. MKS’s software is distinguished by its single architecture and deep integration of features delivering collaboration throughout the development lifecycle, rapid implementation and low total cost of ownership. Founded in 1984, MKS serves more than 10,000 customers in countries across the world. Whether through deployment of MKS’s 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 © 2006 MKS Inc. MKS, MKS Integrity, 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


Investor Contact:
David Mason
Equicom Group Inc.
Phone 416.815.0700 x237
E-mail dmason@equicomgroup.com

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