UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTIONS 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) November 2, 2006 .
ENTEGRIS, INC.
(Exact name of registrant as Specified in its Charter)
Delaware
(State or Other Jurisdiction of Incorporation or Organization)
| 000-30789 | 41-1941551 | |
| (Commission File Number) | (I.R.S. Employer Identification No.) |
| 3500 Lyman Boulevard, Chaska, MN | 55318 | |
| (Address of principal executive offices) | (Zip Code) |
(952) 556-3131
(Registrant’s telephone number, including area code)
N/A
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02. Results of Operations and Financial Condition
On November 2, 2006, the registrant issued a press release to announce results for the third quarter of 2006, ended September 30, 2006. A copy of this press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
In accordance with General Instructions B.2 of Form 8-K, the information in this Item 2.02 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing. The information set forth herein will not be deemed an admission as to the materiality of any information required to be disclosed solely to satisfy the requirements of Regulation FD.
Item 9.01. Financial Statements and Exhibits.
| (d) | Exhibits |
| Exhibit 99.1 | Press Release, Dated November 2, 2006 |
Page 1
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| ENTEGRIS, INC. | ||||
| Dated: November 2, 2006 | By | /s/ John Villas | ||
| John Villas, | ||||
| Senior Vice President & Chief Financial Officer | ||||
Page 2
EXHIBIT 99.1
FOR RELEASE — Thursday, November 2, 2006 at 7:30 a.m. ET
Entegris Reports Results for Fiscal Third Quarter of 2006
CHASKA (Minneapolis), Minn., November 2, 2006 – Entegris, Inc. (Nasdaq: ENTG), a global leader in materials integrity management, today reported its financial results for the fiscal third quarter ended September 30, 2006. Sales from continuing operations were $171.3 million, versus sales of $121.3 million for the comparable three-month period a year ago and $180.7 million for the quarter ended July 1, 2006.
Third-quarter GAAP net income was $17.8 million, or $0.13 per diluted share. This result includes total pretax stock-based compensation of $3.4 million, or $0.02 per diluted share after tax, of which $1.1 million was for integration-related stock-based compensation.
On a non-GAAP basis, third-quarter net income from continuing operations was $21.9 million, or $0.16 per fully diluted share. The non-GAAP result is adjusted for merger-related and other restructuring charges. These pretax adjustments include restructuring charges of $0.3 million, integration expense of $0.9 million, merger-related amortization expense of $3.5 million, and integration-related stock-based compensation expense of $1.1 million. A reconciliation of GAAP to non-GAAP results is provided elsewhere in this release.
For the nine months ended September 30, 2006, sales from continuing operations were $509.6 million and GAAP net income was $47.4 million, or $0.34 per fully diluted share. On a non-GAAP basis, net income from continuing operations for the first nine months of the year was $64.9 million, or $0.46 per fully diluted share.
“Sales for the third quarter remained at healthy levels, despite signs of softening in the semiconductor industry. Unit-driven sales, which were 61 percent of total sales, were about even with the June quarter, reflecting continuing demand for our liquid filtration products used for advanced semiconductor applications, as well as for our wafer and disk shippers,” said Gideon Argov, president and chief executive officer of Entegris. “Capital-driven sales, which were 39 percent of total sales, declined as expected from a particularly strong second quarter, which had been boosted by higher-than-average sales levels of our liquid systems. Sales of our gas microcontamination control products, which are increasingly being used in leading-edge lithography applications, reached an all-time high for the sixth consecutive quarter.”
Argov added: “We achieved an operating margin on an adjusted basis of 16.7 percent, but our success in controlling our operating costs and the benefits from the full realization of merger-related cost synergies were partially offset by a lower-than-expected gross margin, caused primarily by isolated manufacturing inefficiencies at a North American facility as well as by lower production levels.
“Our strong balance sheet and cash flow allow us to pursue key growth initiatives in our core markets as well as to repurchase our shares,” Argov said. The Company ended the quarter with cash, cash equivalents, and short-term investments of $228.5 million, which reflects the execution in September 2006 of a $100 million accelerated stock buyback program that is part of the Company’s $150 million stock buyback authorization announced in August 2006.
Third-quarter EBITDA (earnings before interest, taxes, depreciation, and amortization) was $35.5 million, reflecting non-GAAP operating income of $28.5 million, depreciation of approximately $5.9 million, and non-merger-related amortization of approximately $1.1 million.
Outlook
For its fourth fiscal quarter ending December 31, 2006, the Company currently expects sales of approximately $155 million to $163 million. GAAP net income per diluted share is expected to range from $0.09 to $0.12. Non-GAAP net income is expected to range from approximately $15 million to $19 million, reflecting pretax adjustments for integration and restructuring charges of approximately $1.0 million, merger-related amortization expense of $3.5 million, and integration-related stock-based compensation expense of approximately $0.9 million. Non-GAAP net income per diluted share is expected to range from $0.11 to $0.14.
Third-Quarter Results Conference Call Details
Entegris will hold a conference call to discuss its third-quarter results on Thursday, November 2, 2006, at 10:00 a.m. Eastern Time. Participants should dial 1-800-811-0667 (domestic callers) or 1-913-981-4901 (for callers outside the U.S.); all callers should use passcode 5377248. A replay of the call can be accessed at 1-719-457-0820 using the same passcode. The call will also be webcast on the investor relations portion of the Entegris website at www.entegris.com.
EBITDA AND NON-GAAP DISCUSSION
The financial results discussed in this release include references to a non-GAAP measure called “EBITDA,” which is defined as earnings before interest, taxes, depreciation, and amortization. We believe this measure provides relevant and useful information to our investors since it provides a meaningful view of the Company’s ongoing operating results and as such is one of the measures used by management to assess the Company’s financial results and cash flow. We intend to continue to use this measure in the future, particularly since we expect the active exploration and selective pursuit of mergers and acquisitions to continue to be a key part of our growth and value-creation strategy. EBITDA should be considered in conjunction with, not as a substitute for, other measures of financial performance reported in accordance with accounting principles generally accepted in the U.S. EBITDA, as we have defined it, may not be comparable to similarly named measures reported by other companies.
In addition to disclosing results that are determined in accordance with generally accepted accounting principles in the U.S. (GAAP), the Company also discloses non-GAAP results of operations that exclude certain expenses and charges. These non-GAAP results are provided as a complement to results provided in accordance with GAAP in order to provide investors with relevant and useful information about the Company’s ongoing operations. As such, non-GAAP information primarily excludes expenses and charges resulting from purchase accounting and integration activities associated with the Company’s August 2005 merger with Mykrolis Corporation. Earnings guidance for the quarter ending December 31, 2006 is disclosed on both a GAAP and a non-GAAP basis. A reconciliation of GAAP to non-GAAP financial information discussed in this release is contained in the attached exhibits and on the Company’s website at www.entegris.com.
Forward-Looking Statements
Certain information contained in this press release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on current management expectations only as of the date of this press release, which involve substantial risks and uncertainties that could cause actual results to differ materially from the results expressed in, or implied by, these forward-looking statements. Statements which are modified by words such as “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “may,” “will,” “should” or the negative thereof and similar expressions as they relate to Entegris or our management are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions which are difficult to predict. These risks include, but are not limited to, fluctuations in the market price of Entegris’ stock, future operating results of Entegris, other acquisition and investment opportunities available to Entegris, general business and market conditions and other factors. Additional information concerning these and other risk factors may be found in previous financial press releases issued by Entegris and Entegris’ periodic public filings with the Securities and Exchange Commission, including the discussion described under the headings “Risks Relating to our Business and Industry,” and “Risks Related to Securities Markets and Ownership of Our Securities” in Item 7 of our Annual Report on Form 10–K for the fiscal year ended August 27, 2005. Except as required under the federal securities laws and the rules and regulations of the Securities and Exchange Commission, we undertake no obligation to update publicly any forward-looking statements contained herein.
ABOUT ENTEGRIS
Entegris is the global leader in materials integrity management, delivering a wide range of products for purifying, protecting and transporting critical materials used in processing and manufacturing in semiconductor and other high tech industries. Entegris is ISO 9001 certified and has manufacturing, customer service and/or research facilities in the United States, China, France, Germany, Japan, Malaysia, Singapore, South Korea and Taiwan. Additional information can be found at www.entegris.com.
Entegris, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
| Three months ended | Nine months ended | |||||||||||||||
| Sept. 30, 2006 |
Oct. 1, 2005 |
Sept. 30, 2006 |
Oct. 1, 2005 |
|||||||||||||
| Net sales |
$ | 171,262 | $ | 121,264 | $ | 509,625 | $ | 295,690 | ||||||||
| Cost of sales(a) |
95,000 | 83,903 | 273,296 | 186,398 | ||||||||||||
| Gross profit |
76,262 | 37,361 | 236,329 | 109,292 | ||||||||||||
| Selling, general and administrative expenses(b) |
43,672 | 50,652 | 147,717 | 98,288 | ||||||||||||
| Engineering, research and development expenses |
9,840 | 8,045 | 29,235 | 16,476 | ||||||||||||
| Operating income (loss) |
22,750 | (21,336 | ) | 59,377 | (5,472 | ) | ||||||||||
| Interest income, net |
2,846 | 1,244 | 6,765 | 2,490 | ||||||||||||
| Other income (loss), net |
702 | (926 | ) | 2,296 | 1,984 | |||||||||||
| Income (loss) before income taxes |
26,298 | (21,018 | ) | 68,438 | (998 | ) | ||||||||||
| Income tax expense (benefit) |
8,468 | (9,122 | ) | 22,585 | (3,501 | ) | ||||||||||
| Equity in net (earnings) loss of affiliates |
(93 | ) | 49 | (288 | ) | 219 | ||||||||||
| Income (loss) from continuing operations |
17,923 | (11,945 | ) | 46,141 | 2,284 | |||||||||||
| (Loss) income from discontinued operations, net of taxes |
(102 | ) | (6,100 | ) | 1,226 | (7,591 | ) | |||||||||
| Net income (loss) |
$ | 17,821 | $ | (18,045 | ) | $ | 47,367 | $ | (5,307 | ) | ||||||
| Basic income (loss) per common share: |
||||||||||||||||
| Continuing operations: |
$ | 0.13 | $ | (0.11 | ) | $ | 0.34 | $ | 0.03 | |||||||
| Discontinued operations |
— | (0.05 | ) | 0.01 | (0.09 | ) | ||||||||||
| Net income (loss) per common share |
$ | 0.13 | $ | (0.16 | ) | $ | 0.35 | $ | (0.06 | ) | ||||||
| Diluted income (loss) per common share: |
||||||||||||||||
| Continuing operations: |
$ | 0.13 | $ | (0.11 | ) | $ | 0.33 | $ | 0.03 | |||||||
| Discontinued operations |
— | (0.05 | ) | 0.01 | (0.09 | ) | ||||||||||
| Net income (loss) per common share |
$ | 0.13 | $ | (0.16 | ) | $ | 0.34 | $ | (0.06 | ) | ||||||
| Weighted average shares outstanding: |
||||||||||||||||
| Basic |
135,538 | 111,542 | 136,624 | 86,170 | ||||||||||||
| Diluted |
138,921 | 111,542 | 139,981 | 86,170 | ||||||||||||
| a) | Cost of sales for the three months ended September 30, 2006 include $0.1 million of merger-related and other restructuring charges, integration expenses, and integration-related stock-based compensation expense. Cost of sales for the nine months ended September 30, 2006 include $2.9 million for merger-related and other restructuring charges, integration expenses, and integration-related stock-based compensation expense and a $0.7 million gain on the sale of a facility. |
| b) | Selling, general and administrative expenses for the three months and nine months ended September 30, 2006 include $5.7 million and $25.8 million, respectively, of merger-related and other restructuring charges, integration expense, integration-related stock-based compensation expense, and merger-related amortization of intangibles. |
Entegris, Inc.
GAAP to Non-GAAP Reconciliation of Statement of Operations
For the Three Months Ended September 30, 2006
(In thousands, except per share data)
(Unaudited)
| U.S. GAAP | Adjustments | Non-GAAP | ||||||||||
| Net sales |
$ | 171,262 | $ | — | $ | 171,262 | ||||||
| Cost of sales(a) |
95,000 | (51 | ) | 94,949 | ||||||||
| Gross profit |
76,262 | 51 | 76,313 | |||||||||
| Selling, general and administrative expenses(b) |
43,672 | (5,720 | ) | 37,952 | ||||||||
| Engineering, research and development expenses |
9,840 | — | 9,840 | |||||||||
| Operating income |
22,750 | 5,771 | 28,521 | |||||||||
| Interest income, net |
2,846 | — | 2,846 | |||||||||
| Other income, net |
702 | — | 702 | |||||||||
| Income before income taxes |
26,298 | 5,771 | 32,069 | |||||||||
| Income tax expense |
8,468 | 1,794 | 10,262 | |||||||||
| Equity in net earnings of affiliates |
(93 | ) | — | (93 | ) | |||||||
| Income from continuing operations |
17,923 | 3,977 | 21,900 | |||||||||
| Loss from discontinued operations, net of taxes |
(102 | ) | — | (102 | ) | |||||||
| Net income |
$ | 17,821 | $ | 3,977 | $ | 21,798 | ||||||
| Basic income per common share: |
||||||||||||
| Continuing operations: |
$ | 0.13 | $ | 0.03 | $ | 0.16 | ||||||
| Discontinued operations |
— | — | — | |||||||||
| Net income per common share |
$ | 0.13 | $ | 0.03 | $ | 0.16 | ||||||
| Diluted income per common share: |
||||||||||||
| Continuing operations: |
$ | 0.13 | $ | 0.03 | $ | 0.16 | ||||||
| Discontinued operations |
— | — | — | |||||||||
| Net income per common share |
$ | 0.13 | $ | 0.03 | $ | 0.16 | ||||||
| Weighted average shares outstanding: |
||||||||||||
| Basic |
135,538 | 135,538 | ||||||||||
| Diluted |
138,921 | 138,921 | ||||||||||
| a) | Non-GAAP cost of sales for the three months ended September 30, 2006 is adjusted for $0.1 million of merger-related and other restructuring charges, integration expenses, and integration-related stock-based compensation expense. |
| b) | Non-GAAP selling, general and administrative expenses for the three months ended September 30, 2006 are adjusted for $0.4 million of merger-related and other restructuring charges, $0.8 million of integration expense, $1.0 million of integration-related stock-based compensation expense, and $3.5 million of merger-related amortization of intangibles. |
Entegris, Inc.
GAAP to Non-GAAP Reconciliation of Statement of Operations
For the Nine Months Ended September 30, 2006
(In thousands, except per share data)
(Unaudited)
| U.S. GAAP | Adjustments | Non-GAAP | ||||||||||
| Net sales |
$ | 509,625 | $ | — | $ | 509,625 | ||||||
| Cost of sales(a) |
273,296 | (2,163 | ) | 271,133 | ||||||||
| Gross profit |
236,329 | 2,163 | 238,492 | |||||||||
| Selling, general and administrative expenses(b) |
147,717 | (25,825 | ) | 121,892 | ||||||||
| Engineering, research and development expenses |
29,235 | — | 29,235 | |||||||||
| Operating income |
59,377 | 27,988 | 87,365 | |||||||||
| Interest income, net |
6,765 | — | 6,765 | |||||||||
| Other income, net |
2,296 | — | 2,296 | |||||||||
| Income before income taxes |
68,438 | 27,988 | 96,426 | |||||||||
| Income tax expense |
22,585 | 9,237 | 31,822 | |||||||||
| Equity in net earnings of affiliates |
(288 | ) | — | (288 | ) | |||||||
| Income from continuing operations |
46,141 | 18,751 | 64,892 | |||||||||
| Income from discontinued operations, net of taxes |
1,226 | — | 1,226 | |||||||||
| Net income |
$ | 47,367 | $ | 18,751 | $ | 66,118 | ||||||
| Basic income per common share: |
||||||||||||
| Continuing operations: |
$ | 0.34 | $ | 0.14 | $ | 0.47 | ||||||
| Discontinued operations |
0.01 | — | 0.01 | |||||||||
| Net income per common share |
$ | 0.35 | $ | 0.14 | $ | 0.48 | ||||||
| Diluted income per common share: |
||||||||||||
| Continuing operations: |
$ | 0.33 | $ | 0.13 | $ | 0.46 | ||||||
| Discontinued operations |
0.01 | — | 0.01 | |||||||||
| Net income per common share |
$ | 0.34 | $ | 0.13 | $ | 0.47 | ||||||
| Weighted average shares outstanding: |
||||||||||||
| Basic |
136,624 | 136,624 | ||||||||||
| Diluted |
139,981 | 139,981 | ||||||||||
| a) | Non-GAAP cost of sales for the nine months ended September 30, 2006 is adjusted for $2.9 million of merger-related and other restructuring charges, integration expenses, and integration-related stock-based compensation expense offset by a $0.7 million gain on the sale of a facility. |
| b) | Non-GAAP selling, general and administrative expenses for the nine months ended September 30, 2006 are adjusted for $3.8 million of merger-related and other restructuring charges, $7.2 million of integration expense, $4.3 million of integration-related stock-based compensation expense, and $10.5 million of merger-related amortization of intangibles. |
Entegris, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
| September 30, 2006 | December 31, 2005 | |||||
| ASSETS |
||||||
| Cash, cash equivalents and short-term investments |
$ | 228,517 | $ | 274,403 | ||
| Accounts receivable |
130,443 | 111,058 | ||||
| Inventories |
104,816 | 69,535 | ||||
| Deferred tax assets |
26,657 | 26,078 | ||||
| Other current assets and assets held for sale |
9,313 | 25,290 | ||||
| Total current assets |
499,746 | 506,364 | ||||
| Property, plant and equipment, net |
118,906 | 120,323 | ||||
| Intangible assets |
477,962 | 493,544 | ||||
| Deferred tax asset – non-current |
9,982 | 10,614 | ||||
| Other assets |
12,117 | 12,301 | ||||
| Total assets |
$ | 1,118,713 | $ | 1,143,146 | ||
| LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||
| Current maturities of long-term debt |
$ | 540 | $ | 797 | ||
| Short-term debt |
— | 2,290 | ||||
| Accounts payable |
23,931 | 33,585 | ||||
| Accrued liabilities |
54,170 | 59,482 | ||||
| Income tax payable |
32,509 | 15,775 | ||||
| Total current liabilities |
111,150 | 111,929 | ||||
| Long-term debt, less current maturities |
3,094 | 3,383 | ||||
| Other liabilities |
16,566 | 15,015 | ||||
| Shareholders’ equity |
987,903 | 1,012,819 | ||||
| Total liabilities and shareholders’ equity |
$ | 1,118,713 | $ | 1,143,146 | ||
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