(MKS LOGO)

EXHIBIT 99.1

MKS Instruments Reports Fourth Quarter and
Full Year 2016 Financial Results

Achieved record fourth quarter and full year semi revenue

Increased expected synergies from Newport Corporation acquisition from $35 million to $40 million

Successful re-pricing of term loan in Q4 expected to save additional 20% in annual interest costs

Andover, Mass., February 2, 2017 — MKS Instruments, Inc. (NASDAQ: MKSI), a global provider of technologies that enable advanced processes and improve productivity, today reported fourth quarter and full year 2016 financial results.

GAAP Financial Results1

                                 
    Q4   Full Year
    2015   2016   2015   2016
Net revenues ($ millions)
  $ 172     $ 405     $ 814     $ 1,295  
Operating margin
    12.9 %     15.4 %     19.3 %     12.1 %
Net income ($ millions)
  $ 25.5     $ 45.5     $ 122.3     $ 104.8  
Diluted EPS
  $ 0.48     $ 0.83     $ 2.28     $ 1.94  

Non GAAP Financial Results1

                                 
    Q4   Full Year
    2015   2016   2015   2016
Net revenues ($ millions)
  $ 172     $ 405     $ 814     $ 1,295  
Operating margin
    14.4 %     20.6 %     20.1 %     18.7 %
Net income ($ millions)
  $ 18.4     $ 57.2     $ 119.1     $ 164.0  
Diluted EPS
  $ 0.34     $ 1.05     $ 2.22     $ 3.03  

1   The full year 2016 results include the results of Newport Corporation (now our Light & Motion segment) since the acquisition on April 29, 2016.

Fourth Quarter Financial Results

Sales were $405 million, an increase of 6% from $381 million in the third quarter of 2016, and an increase of 26% from $323 million in the fourth quarter of 2015 on a pro-forma basis.

Fourth quarter net income was $45.5 million, or $0.83 per diluted share, compared to net income of $32.5 million, or $0.60 per diluted share in the third quarter of 2016, and $25.5 million, or $0.48 per diluted share in the fourth quarter of 2015.

Non-GAAP net earnings, which exclude special charges and credits, were $57.2 million, or $1.05 per diluted share, compared to $47.9 million, or $0.88 per diluted share in the third quarter of 2016, and $18.4 million, or $0.34 per diluted share in the fourth quarter of 2015.

Additional Financial Information

The Company had $423 million in cash and short-term investments as of December 31, 2016 and $627 million outstanding under its term loan. During the fourth quarter, MKS paid a dividend of $9.1 million or $0.17 per diluted share.

Full Year Results

On a pro-forma basis, sales were $1.47 billion, an increase of 4% from $1.42 billion in 2015 driven by strong sales to our semiconductor customers. Sales to our semiconductor customers were $790 million, an increase of 14% compared to 2015, also on a pro-forma basis.

Sales in our Vacuum and Analysis segment, the historic MKS business, were $872 million, an increase of 7% from $814 million in 2015 driven by very strong sales to our semiconductor customers, which increased 15% from 2015.

“The fourth quarter was a strong finish to a transformational year for MKS. We are pleased with our sales of $405 million in the quarter, which rose 6% sequentially after a strong Q3,” said Gerald Colella, Chief Executive Officer and President. Mr. Colella added, “The integration with Newport is proceeding very well, and exiting 2016 we have realized almost $20 million of synergies on an annualized basis. We are tracking ahead of plan and are pleased to announce that we now expect to achieve total synergies of $40 million by the end of 2018, up from our previously announced goal of $35 million. The combination with Newport is allowing us to create new, high-value solutions to address a wide array of applications for a broad set of customers. As we look to 2017 and beyond, we are excited about our prospects to deliver growth, generate strong cash flow, and deliver attractive financial returns.”

“We also continue to execute on our strategy to delever our balance sheet and reduce our interest cost. During the quarter we completed another successful re-pricing of our term loan resulting in an additional 75 basis point reduction in our interest rate. We also made a $40 million voluntary pre-payment on our term loan facility, bringing our total pre-payments to date to $150 million. These actions are expected to result in significant savings over the life of the loan and align with our strategy to delever our balance sheet and reduce our cost of capital. Since origination on April 29th, we have reduced our non-GAAP interest expense by approximately $14 million or 36% on an annualized basis,” said Seth Bagshaw, Vice President and Chief Financial Officer.

First Quarter 2017 Outlook

Based on current business levels, the Company expects that sales in the first quarter of 2017 may range from $385 to $425 million, and at these volumes, GAAP net income could range from $0.72 to $0.96 per diluted share and non-GAAP net earnings could range from $0.93 to $1.17 per diluted share.

Conference Call Details

A conference call with management will be held today at 8:30 a.m. (Eastern Time). To participate in the conference call, please dial (877) 212-6076 for domestic callers and (707) 287-9331 for international callers, and an operator will connect you. Participants will need to provide the operator with the Conference ID of 47777201, which has been reserved for this call. A live and archived webcast of the call will be available on the Company’s website at www.mksinst.com.

About MKS Instruments

MKS Instruments, Inc. is a global provider of instruments, subsystems and process control solutions that measure, control, power, monitor, and analyze critical parameters of advanced manufacturing processes to improve process performance and productivity. Our products are derived from our core competencies in pressure measurement and control, flow measurement and control, gas and vapor delivery, gas composition analysis, residual gas analysis, leak detection, control and information technology, ozone generation and delivery, RF & DC power, reactive gas generation, vacuum technology, lasers, photonics, sub-micron positioning, vibration isolation, and optics. Our primary served markets include semiconductor capital equipment, general industrial, life sciences, and research. Additional information can be found at www.mksinst.com.

Use of Non-GAAP Financial Results

Non-GAAP amounts exclude amortization of acquired intangible assets, an asset impairment, costs associated with completed and announced acquisitions, acquisition integration costs, sale of previously written down inventory, an inventory step-up adjustment related to an acquisition, restructuring charges, certain excess and obsolete inventory charges, fees and expenses related to re-pricing of term loan, amortization of debt issuance costs, net proceeds from an insurance policy, the tax effect of a legal entity restructuring, other discrete tax benefits and charges, and the related tax effect of these adjustments. These non-GAAP measures are not in accordance with Accounting Principles Generally Accepted in the United States of America (GAAP). MKS’ management believes the presentation of these non-GAAP financial measures is useful to investors for comparing prior periods and analyzing ongoing business trends and operating results. Pro forma revenue amounts assume the acquisition of Newport had occurred as of the beginning of 2015.

SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS

This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 regarding the future financial performance of MKS, our future business prospects, our future growth, and our expected synergies and cost savings from our recent acquisition of Newport Corporation. These statements are only predictions based on current assumptions and expectations. Actual events or results may differ materially from those in the forward-looking statements set forth herein. Among the important factors that could cause actual events to differ materially from those in the forward-looking statements are the conditions affecting the markets in which we operate, including the fluctuations in capital spending in the semiconductor industry, and other advanced manufacturing markets, fluctuations in net sales to our major customers, our ability to successfully integrate Newport’s operations and employees, unexpected costs, charges or expenses resulting from the Newport acquisition, the terms of the term loan financing, MKS’ ability to realize anticipated synergies and cost savings from the Newport acquisition, our ability to successfully grow our business, potential adverse reactions or changes to business relationships resulting from the Newport acquisition, potential fluctuations in quarterly results, the challenges, risks and costs involved with integrating the operations of any other acquired companies, dependence on new product development, rapid technological and market change, acquisition strategy, manufacturing and sourcing risks, volatility of stock price, international operations, financial risk management, and the other factors described in MKS’ Quarterly Report for the quarter ended June 30, 2016 on Form 10-Q filed with the SEC. MKS is under no obligation to, and expressly disclaims any obligation to, update or alter our forward-looking statements, whether as a result of new information, future events or otherwise after the date of this press release.

###

Company Contact: Seth H. Bagshaw
Vice President, Chief Financial Officer and Treasurer
Telephone: 978.645.5578

Investor Relations Contact: Monica Gould
The Blueshirt Group
Telephone: 212.871.3927
Email: monica@blueshirtgroup.com

1

MKS Instruments, Inc.
Unaudited Consolidated Statements of Operations
(In thousands, except per share data)

                         
    Three Months Ended
    December 31, 2016   December 31, 2015   September 30, 2016
Net revenues:
                       
Products
  $ 359,765     $ 143,286     $ 335,156  
Services
    45,375       29,101       45,504  
 
                       
Total net revenues
    405,140       172,387       380,660  
Cost of revenues:
                       
Products
    194,716       79,553       183,789  
Services
    27,016       20,035       28,486  
 
                       
Total cost of revenues
    221,732       99,588       212,275  
Gross profit
    183,408       72,799       168,385  
Research and development
    32,870       16,841       32,268  
Selling, general and administrative
    67,626       31,555       68,016  
Acquisition and integration costs
    2,089             2,641  
Restructuring
    618       505        
Asset impairment
    5,000              
Amortization of intangible assets
    12,691       1,693       12,452  
 
                       
Income from operations
    62,514       22,205       53,008  
Interest income
    702       852       404  
Interest expense
    10,085       11       12,008  
Other (expense) income, net
    (3,575 )           844  
 
                       
Income from operations before income taxes
    49,556       23,046       42,248  
Provision (benefit) for income taxes
    4,069       (2,476 )     9,699  
 
                       
Net income
  $ 45,487     $ 25,522     $ 32,549  
 
                       
Net income per share:
                       
Basic
  $ 0.85     $ 0.48     $ 0.61  
Diluted
  $ 0.83     $ 0.48     $ 0.60  
Cash dividends per common share
  $ 0.17     $ 0.17     $ 0.17  
Weighted average shares outstanding:
                       
Basic
    53,617       53,217       53,574  
Diluted
    54,518       53,554       54,315  
The following supplemental Non-GAAP earnings information is presented to aid in understanding MKS’ operating results:
                       
Net income
  $ 45,487     $ 25,522     $ 32,549  
Adjustments:
                       
Acquisition and integration costs (Note 1)
    2,089             2,641  
Acquisition inventory step-up (Note 2)
                4,971  
Fees and expenses relating to re-pricing of term loan (Note 3)
    526              
Amortization of debt issuance costs (Note 4)
    2,430             2,838  
Restructuring (Note 5)
    618       505        
Net proceeds from an insurance policy (Note 6)
                (1,323 )
Tax (benefit) expense from legal entity restructuring (Note 7)
    (6,570 )           1,532  
Release of tax reserves (Note 8)
          (7,692 )      
Tax benefit and tax credits (Note 9)
          (1,378 )      
Excess and obsolete charge (Note 10)
          488        
Asset impairment (Note 11)
    5,000              
Withholding tax on dividends (Note 12)
    1,362              
Amortization of intangible assets
    12,691       1,693       12,452  
Pro forma tax adjustments
    (6,437 )     (761 )     (7,790 )
 
                       
Non-GAAP net earnings (Note 13)
  $ 57,196     $ 18,377     $ 47,870  
 
                       
Non-GAAP net earnings per share (Note 13)
  $ 1.05     $ 0.34     $ 0.88  
 
                       
Weighted average shares outstanding
    54,518       53,554       54,315  
Income from operations
  $ 62,514     $ 22,205     $ 53,008  
Adjustments:
                       
Acquisition and integration costs (Note 1)
    2,089             2,641  
Acquisition inventory step-up (Note 2)
                4,971  
Fees and expenses relating to re-pricing of term loan (Note 3)
    526              
Restructuring (Note 5)
    618       505        
Excess and obsolete charge (Note 10)
          488        
Asset impairment (Note 11)
    5,000              
Amortization of intangible assets
    12,691       1,693       12,452  
 
                       
Non-GAAP income from operations (Note 14)
  $ 83,438     $ 24,891     $ 73,072  
 
                       
Non-GAAP operating margin percentage (Note 14)
    20.6 %     14.4 %     19.2 %
 
                       
Gross profit
  $ 183,408     $ 72,799     $ 168,385  
Acquisition inventory step-up (Note 2)
                4,971  
Excess and obsolete charge (Note 10)
          488        
 
                       
Non-GAAP gross profit (Note 15)
  $ 183,408     $ 73,287     $ 173,356  
 
                       
Non-GAAP gross profit percentage (Note 15)
    45.3 %     42.5 %     45.5 %
 
                       
Interest expense
  $ 10,085     $ 11     $ 12,008  
Amortization of debt issuance costs (Note 4)
    2,430             2,838  
 
                       
Non-GAAP interest expense
  $ 7,655     $ 11     $ 9,170  
 
                       

Note 1: We recorded $2.1 million and $2.6 million of acquisition and integration costs during the three months ended December 31, 2016 and September 30, 2016, respectively, related to the Newport Corporation acquisition.

Note 2: We recorded $5.0 million of amortization expense during the three months ended September 30, 2016, related to the step-up of inventory to fair value as a result of the Newport Corporation acquisition.

Note 3: We recorded $0.5 million of fees and expenses during the three months ended December 31, 2016 related to the second re-pricing of our Term Loan Credit Agreement.

Note 4: We recorded $2.4 million and $2.8 million of additional interest expense during the three months ended December 31, 2016 and September 30, 2016, respectively, related to the amortization of debt issuance costs affiliated with our Term Loan Credit Agreement and ABL Facility.

Note 5: We recorded $0.6 million of restructuring costs during the three months ended December 31, 2016, related to the restructuring of one of our international facilities. We recorded $0.5 million of restructuring costs during the three months ended December 31, 2015 related to the consolidation of an international manufacturing operation.

Note 6: We recorded net proceeds of $1.3 million from a Company owned life insurance policy during the three months ended September 30, 2016.

Note 7: We recorded a tax benefit of $6.6 million during the three months ended December 31, 2016 and a tax expense of $1.5 million during the three months ended September 30, 2016, related to a legal entity restructuring.

Note 8: We recorded credits of $7.7 million for reserve releases related to the settlement of audits and expiration of the statute of limitations during the three months ended December 31, 2015.

Note 9: We recorded a tax benefit of $1.8 million during the three months ended December 31, 2015 from the reinstatement of the U.S. research tax credit, representing a full year benefit. We excluded the benefit applicable to the first three quarters of 2015, which is $1.4 million, from Non-GAAP net earnings.

Note 10: We recorded $0.5 million of excess and obsolete inventory charges, related to the discontinuation of a product line during the three months ended December 31, 2015.

Note 11: We recorded a $5.0 million impairment charge related to a minority interest investment in a privately held company during the three months ended December 31, 2016.

Note 12: We recorded $1.4 million for withholding tax on intercompany dividends during the three months ended December, 31, 2016.

Note 13: The Non-GAAP net earnings and Non-GAAP net earnings per share amounts exclude acquisition and integration costs, an inventory step-up adjustment related to an acquisition, fees and expenses related to the re-pricing of a term loan credit agreement, amortization of debt issuance costs, restructuring costs, net proceeds from an insurance policy, the tax effect of a legal entity restructuring, reserve releases related to the settlement of audits and expiration of the statute of limitations, tax benefit and tax credits, an excess and obsolete inventory charge, an asset impairment charge, a withholding tax on dividends, amortization of intangible assets and the related tax effect of these adjustments to reflect the expected full year effective tax rate in the related period.

Note 14: The Non-GAAP income from operations and Non-GAAP operating margin percentages exclude acquisition and integration costs, an inventory step-up adjustment related to an acquisition, fees and expenses related to the re-pricing of a term loan credit agreement, restructuring costs, an excess and obsolete inventory charge, an asset impairment charge and amortization of intangible assets.

Note 15: The Non-GAAP gross profit amounts and Non-GAAP gross profit percentages exclude an inventory step-up adjustment related to an acquisition and excess and obsolete inventory charges.

2

MKS Instruments, Inc.
Unaudited Consolidated Statements of Operations
(In thousands, except per share data)

                 
    Twelve Months Ended December 31,
    2016   2015
Net revenues:
               
Products
  $ 1,134,013     $ 697,104  
Services
    161,329       116,420  
 
               
Total net revenues
    1,295,342       813,524  
Cost of revenues:
               
Products
    627,850       373,764  
Services
    101,873       76,888  
 
               
Total cost of revenues
    729,723       450,652  
Gross profit
    565,619       362,872  
Research and development
    110,579       68,305  
Selling, general and administrative
    229,171       129,087  
Acquisition and integration costs
    27,279       30  
Restructuring
    642       2,074  
Asset impairment
    5,000        
Amortization of intangible assets
    35,681       6,764  
 
               
Income from operations
    157,267       156,612  
Interest income
    2,560       2,999  
Interest expense
    30,611       143  
Other (expense), net
    (1,239 )      
 
               
Income from operations before income taxes
    127,977       159,468  
Provision for income taxes
    23,168       37,171  
 
               
Net income
  $ 104,809     $ 122,297  
 
               
Net income per share:
               
Basic
  $ 1.96     $ 2.30  
Diluted
  $ 1.94     $ 2.28  
Cash dividends per common share
  $ 0.68     $ 0.675  
Weighted average shares outstanding:
               
Basic
    53,472       53,282  
Diluted
    54,051       53,560  
The following supplemental Non-GAAP earnings information is presented to aid in understanding MKS’ operating results:
               
Net income
  $ 104,809     $ 122,297  
Adjustments:
               
Acquisition and integration costs (Note 1)
    27,279       30  
Acquisition inventory step-up (Note 2)
    15,090        
Fees and expenses relating to re-pricing of term loan (Note 3)
    1,239        
Amortization of debt issuance costs (Note 4)
    6,897        
Restructuring (Note 5)
    642       2,074  
Sale of previously written down inventory (Note 6)
          (2,098 )
Net proceeds from an insurance policy (Note 7)
    (1,323 )      
Tax benefit from legal entity restructuring (Note 8)
    (5,038 )      
Release of tax reserves (Note 9)
          (7,692 )
Excess and obsolete charge (Note 10)
          488  
Asset impairment (Note 11)
    5,000        
Withholding tax on dividends (Note 12)
    1,362        
Amortization of intangible assets
    35,681       6,764  
Pro forma tax adjustments
    (27,617 )     (2,790 )
 
               
Non-GAAP net earnings (Note 13)
  $ 164,021     $ 119,073  
 
               
Non-GAAP net earnings per share (Note 13)
  $ 3.03     $ 2.22  
 
               
Weighted average shares outstanding
    54,051       53,560  
Income from operations
  $ 157,267     $ 156,612  
Adjustments:
               
Acquisition and integration costs (Note 1)
    27,279       30  
Acquisition inventory step-up (Note 2)
    15,090        
Fees and expenses relating to re-pricing of term loan (Note 3)
    1,239        
Restructuring (Note 5)
    642       2,074  
Sale of previously written down inventory (Note 6)
          (2,098 )
Excess and obsolete charge (Note 10)
          488  
Asset impairment (Note 11)
    5,000        
Amortization of intangible assets
    35,681       6,764  
 
               
Non-GAAP income from operations (Note 14)
  $ 242,198     $ 163,870  
 
               
Non-GAAP operating margin percentage (Note 14)
    18.7 %     20.1 %
 
               
Gross profit
  $ 565,619     $ 362,872  
Acquisition inventory step-up (Note 2)
    15,090        
Sale of previously written down inventory (Note 6)
          (2,098 )
Excess and obsolete charge (Note 10)
          488  
 
               
Non-GAAP gross profit (Note 15)
  $ 580,709     $ 361,262  
 
               
Non-GAAP gross profit percentage (Note 15)
    44.8 %     44.4 %
 
               
Interest expense
  $ 30,611     $ 143  
Amortization of debt issuance costs (Note 4)
    6,897        
 
               
Non-GAAP interest expense
  $ 23,714     $ 143  
 
               

Note 1: We recorded $27.3 million of acquisition and integration costs during the twelve months ended December 31, 2016 related to the Newport Corporation acquisition, which closed during the second quarter of 2016. We recorded $0.03 million of acquisition costs during the twelve months ended December 31, 2015 related to the Precisive LLC acquisition, which closed during the first quarter of 2015.

Note 2: We recorded $15.1 million of amortization expense during the twelve months ended December 31, 2016 related to the step-up of inventory to fair value as a result of the Newport Corporation acquisition.

Note 3: We recorded $1.2 million of fees and expenses during the twelve months ended December 31, 2016, related to the two re-pricings of our Term Loan Credit Agreement.

Note 4: We recorded $6.9 million of amortization expense during the twelve months ended December 31, 2016 related to the amortization of debt issuance costs affiliated with our Term Loan Credit Agreement and ABL Facility.

Note 5: We recorded $0.6 million of restructuring costs during the twelve months ended December 31, 2016, related to the restructuring of one of our international facilities. We recorded $2.1 million of restructuring costs during the twelve months ended December 31, 2015 related to the outsourcing of an international manufacturing operation and the consolidation of certain other foreign manufacturing locations.

Note 6: Cost of sales for 2015 includes a $2.1 million reversal of an excess and obsolete inventory charge for inventory that was subsequently sold.

Note 7: We recorded net proceeds of $1.3 million from a Company owned life insurance policy during the twelve months ended December 31, 2016.

Note 8: We recorded a tax benefit of $5.0 million related to a legal entity restructuring during the twelve months ended December 31, 2016.

Note 9: We recorded credits of $7.7 million for reserve releases related to the settlement of audits and expiration of the statute of limitations during the twelve months ended December 31, 2015.

Note 10: We recorded $0.5 million of excess and obsolete inventory charges, related to the discontinuation of a product line during the twelve months ended December 31, 2015.

Note 11: We recorded a $5.0 million impairment charge related to a minority interest investment in a privately held company during the twelve months ended December 31, 2016.

Note 12: We recorded $1.4 million for withholding tax on intercompany dividends during the twelve months ended December 31, 2016.

Note 13: The Non-GAAP net earnings and Non-GAAP net earnings per share amounts exclude acquisition and integration costs, an inventory step-up adjustment related to an acquisition, fees and expenses related to re-pricings of a term loan credit agreement, amortization of debt issuance costs, restructuring costs, the reversal of an excess and obsolete inventory charge for inventory that was subsequently sold, net proceeds from an insurance policy, the tax effect of a legal entity restructuring, excess and obsolete inventory charges, an asset impairment charge, a withholding tax on dividends, reserve releases related to the settlement of audits and expiration of the statute of limitations, amortization of intangible assets and the related tax effect of these adjustments to reflect the expected full year effective tax rate in the related period.

Note 14: The Non-GAAP income from operations and Non-GAAP operating margin percentages exclude acquisition and integration costs, an inventory step-up adjustment related to an acquisition, fees and expenses related to re-pricings of a term loan credit agreement, restructuring costs, the reversal of an excess and obsolete inventory charge for inventory that was subsequently sold, excess and obsolete inventory charges, an asset impairment charge and amortization of intangible assets.

Note 15: The Non-GAAP gross profit amounts and Non-GAAP gross profit percentages exclude an inventory step-up adjustment related to an acquisition, the reversal of an excess and obsolete inventory charge for inventory that was subsequently sold and excess and obsolete inventory charges.

3

MKS Instruments, Inc.
Reconciliation of GAAP Income Tax Rate to Non-GAAP Income Tax Rate
(In thousands)

                                                 
    Three Months Ended December 31, 2016   Three Months Ended September 30, 2016
         Provision            Provision    
    Income Before   (benefit) for   Effective   Income Before   (benefit) for   Effective
     Income Taxes     Income Taxes     Tax Rate     Income Taxes     Income Taxes     Tax Rate 
GAAP                
  $          49,556     $         4,069          8.2%        $         42,248     $         9,699          23.0%     
Adjustments:
                                               
Acquisition and integration costs
    2,089                     2,641                
(Note 1)
                                               
Acquisition inventory step-up (Note 2)
                        4,971                
Fees and expenses relating to
    526                                    
re-pricing of term loan (Note 3)
                                               
Amortization of debt issuance costs
    2,430                     2,838                
(Note 4)
                                               
Restructuring (Note 5)
    618                                    
Net proceeds from an insurance policy
                        (1,323 )              
(Note 6)
                                               
Tax (benefit) expense from legal
          6,570                     (1,532 )        
entity restructuring (Note 7)
                                               
Asset impairment (Note 8)
    5,000                                    
Withholding tax on dividends (Note 12)
          (1,362 )                            
Amortization of intangible assets
    12,691                     12,452                
Tax effect of pro forma adjustments
          6,437                     7,790          
 
                                               
Non-GAAP
  $          72,910     $       15,714          21.6%        $        63,827     $         15,957          25.0%     
 
                                               
                         
    Three Months Ended December 31, 2015
         Provision    
    Income Before    (benefit) for   Effective
     Income Taxes     Income Taxes     Tax Rate 
GAAP
  $       23,046     $       (2,476 )       -10.7%    
Adjustments:
                       
Restructuring (Note 5)
    505                
Excess and obsolete inventory charge (Note 9)
    488                
Amortization of intangible assets
    1,693                
Release of tax reserves (Note 11)
          7,692          
Tax benefit and tax credits (Note 13)
          1,378          
Tax effect of pro forma adjustments
          761          
 
                       
Non-GAAP
  $       25,732     $       7,355       28.6%    
 
                       
                                                 
    Twelve Months Ended December 31, 2016   Twelve Months Ended December 31, 2015
         Provision            Provision    
    Income Before   (benefit) for   Effective   Income Before   (benefit) for   Effective
     Income Taxes     Income Taxes     Tax Rate     Income Taxes     Income Taxes     Tax Rate 
GAAP                
  $         127,977     $         23,168          18.1%        $        159,468     $         37,171          23.3%     
Adjustments:
                                               
Acquisition and integration costs
    27,279                     30                
(Note 1)
                                               
Acquisition inventory step-up (Note 2)
    15,090                                    
Fees and expenses relating to
    1,239                                    
re-pricing of term loan (Note 3)
                                               
Amortization of debt issuance costs
    6,897                                    
(Note 4)
                                               
Restructuring (Note 5)
    642                     2,074                
Sale of previously written down
                        (2,098 )              
inventory (Note 10)
                                               
Net proceeds from an insurance policy
    (1,323 )                                  
(Note 6)
                                               
Tax expense from legal entity
          5,038                              
restructuring (Note 7)
                                               
Release of tax reserves (Note 11)
                              7,692          
Excess and obsolete inventory charge
                        488                
(Note 9)
                                               
Asset impairment (Note 8)
    5,000                                    
Withholding tax on dividends (Note 12)
          (1,362 )                            
Amortization of intangible assets
    35,681                     6,764                
Tax effect of pro forma adjustments
          27,617                     2,790          
 
                                               
Non-GAAP
  $         218,482     $       54,461       24.9%        $       166,726     $         47,653          28.6%     
 
                                               

Note 1: We recorded $2.1 million and $27.3 million of acquisition and integration costs during the three and twelve months ended December 31, 2016, respectively, related to the Newport Corporation acquisition, which closed during the second quarter of 2016. We recorded $0.03 million of acquisition costs during the twelve months ended December 31, 2015 related to the Precisive LLC acquisition, which closed during the first quarter of 2015.

Note 2: We recorded $5.0 million and $15.1 million of amortization expense during the three months ended September 30, 2016 and twelve months ended December 31, 2016, respectively, related to the step-up of inventory to fair value as a result of the Newport Corporation acquisition.

Note 3: We recorded $0.5 million and $1.2 million of fees and expenses during the three and twelve months ended December 31, 2016, respectively, related to the re-pricing of our Term Loan Credit Agreement.

Note 4: We recorded $2.4 million and $6.9 million of additional interest expense during the three and twelve months ended December 31, 2016, respectively, related to the amortization of debt issuance costs affiliated with our Term Loan Credit Agreement and ABL Facility.

Note 5: We recorded $0.6 million of restructuring costs during the three and twelve months ended December 31, 2016, related to the restructuring of one of our international facilities. We recorded $0.5 million and $2.1 million of restructuring costs during the three and twelve months ended December 31, 2015, respectively, related to the outsourcing of an international manufacturing operation.

Note 6: We recorded net proceeds of $1.3 million during 2016 from a company owned life insurance policy.

Note 7: We recorded a tax benefit of $6.6 million and $5.0 million for the three and twelve months ended December 31, 2016, respectively, and a tax expense of $1.5 million for the three months ended September 30, 2016, related to a legal entity restructuring.

Note 8: We recorded a $5.0 million impairment charge during the three and twelve months ended December 31, 2016, related to a minority interest investment in a privately held company.

Note 9: We recorded $0.5 million of excess and obsolete inventory charges, related to the discontinuation of a product line during the three and twelve months ended December 31, 2015.

Note 10: Cost of sales for 2015 includes a $2.1 million reversal of an excess and obsolete inventory charge for inventory that was subsequently sold.

Note 11: We recorded credits for reserve releases related to the settlement of audits and expiration of the statute of limitations in 2015.

Note 12: We recorded $1.4 million during the three and twelve months ended December 31, 2016 for withholding tax on intercompany dividends.

Note 13: We recorded a tax benefit of $1.8 million from the reinstatement of the U.S. research tax credit, representing a full year benefit during the three months ended December 31, 2015. We excluded the benefit applicable to the first three quarters of 2015, which is $1.4 million, from Non-GAAP net earnings.

MKS Instruments, Inc.
Reconciliation of Q1-17 Guidance — GAAP Net Income to Non-GAAP Net Earnings
(In thousands, except per share data)

                                 
    Three Months Ended March 31, 2017
    Low Guidance   High Guidance
    $ Amount   $ Per Share   $ Amount   $ Per Share
GAAP net income
  $ 39,200     $ 0.72     $ 52,500     $ 0.96  
Amortization
    12,300       0.22       12,300       0.22  
Debt issuance costs
    1,000       0.02       1,000       0.02  
Acquisition costs
    300       0.01       300       0.01  
Integration costs
    2,600       0.05       2,600       0.05  
Tax effect of adjustments (Note 1)
    (4,700 )     (0.09 )     (4,900 )     (0.09 )
 
                               
Non-GAAP net earnings
  $ 50,700     $ 0.93     $ 63,800     $ 1.17  
 
                               
Q1 - 17 forecasted shares
            54,700               54,700  

Note 1: The Non-GAAP adjustments are tax effected at the applicable statutory rates and the difference between the GAAP and Non-GAAP tax rates.

4

MKS Instruments, Inc.
Unaudited Consolidated Balance Sheet
(In thousands)

                 
    December 31, 2016   December 31, 2015
ASSETS
               
Cash and cash equivalents
  $ 228,623     $ 227,574  
Restricted cash
    5,287        
Short-term investments
    189,463       430,663  
Trade accounts receivable, net
    248,757       101,883  
Inventories
    275,869       152,631  
Other current assets
    50,770       26,760  
 
               
Total current assets
    998,769       939,511  
Property, plant and equipment, net
    174,559       68,856  
Goodwill
    588,585       199,703  
Intangible assets, net
    408,004       44,027  
Long-term investments
    9,858        
Other assets
    32,467       21,250  
 
               
Total assets
  $ 2,212,242     $ 1,273,347  
 
               
LIABILITIES AND STOCKHOLDERS’ EQUITY
               
Short-term debt
  $ 10,993     $  
Accounts payable
    69,337       23,177  
Accrued compensation
    67,728       28,424  
Income taxes payable
    22,794       4,024  
Other current liabilities
    66,448       35,359  
 
               
Total current liabilities
    237,300       90,984  
Long-term debt, net
    601,229        
Non-current deferred taxes
    69,068       2,655  
Non-current accrued compensation
    44,714       13,395  
Other liabilities
    18,139       5,432  
 
               
Total liabilities
    970,450       112,466  
 
               
Stockholders’ equity:
               
Common stock
    113       113  
Additional paid-in capital
    777,482       744,725  
Retained earnings
    494,744       427,214  
Accumulated other comprehensive loss
    (30,547 )     (11,171 )
 
               
Total stockholders’ equity
    1,241,792       1,160,881  
 
               
Total liabilities and stockholders’ equity
  $ 2,212,242     $ 1,273,347  
 
               

5


The following information was filed by Mks Instruments Inc (MKSI) on Thursday, February 2, 2017 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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