MYKROLIS CORP - 10-Q Quarterly Report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended July 3, 2004

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

COMMISSION FILE NUMBER 001-16611

Mykrolis Corporation

(Exact Name of Registrant as Specified in its Charter)

Delaware

(State or Other Jurisdiction of Incorporation or Organization)

04-3536767

(I.R.S. Employer Identification No.)

129 Concord Road

Billerica, Massachusetts 01821

(Address of principal executive offices)

(978) 436-6500

Registrant’s Telephone Number, Including Area Code

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities and Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes x No ¨

The registrant had 41,687,995 shares of common stock outstanding as of July 15, 2004.

Mykrolis Corporation

INDEX TO FORM 10-Q


			Page No.
Part I.	Financial Information		3

Item 1.	Condensed Financial Statements		3

	Consolidated Statements of Operations - Three and Six Months Ended July 3, 2004 and June 28, 2003		3

	Consolidated Balance Sheets - July 3, 2004 and December 31, 2003		4

	Consolidated Statements of Shareholders’ Equity and Comprehensive Income (Loss) - Six Months Ended July 3, 2004 and year ended December 31, 2003		5

	Consolidated Statements of Cash Flows - Six Months Ended July 3, 2004 and June 28, 2003		6

	Notes to Consolidated Financial Statements		7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		14

Item 3.	Quantitative and Qualitative Disclosures about Market Risks		22

Item 4.	Controls and Procedures		22

Part II.	Other Information		23

Item 1.	Legal Proceedings		23

Item 4.	Submission of Matters to a Vote of Security Holders		23

Item 6.	Exhibits and Reports on Form 8-K		23

	Signatures		24

	Exhibits

	Exhibit 10.1	Letter Agreement, dated May 20, 2004, with Peter Kirlin, Vice President of Business Development

	Exhibit 31.1	Certification of C. William Zadel, Chief Executive Officer, Pursuant to Rule 13a-14(a)

	Exhibit 31.2	Certification of Bertrand Loy, Chief Financial Officer, Pursuant to Rule 13a-14(a)

	Exhibit 32.1	Certifications Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes– Oxley Act of 2002

PART I - FINANCIAL INFORMATION

Item 1. Condensed Financial Statements

Mykrolis Corporation

Consolidated Statements of Operations

(In thousands except per share data)

(Unaudited)


	Three Months Ended						Six Months Ended
	July 3, 2004			June 28, 2003			July 3, 2004			June 28, 2003
Net sales	$	73,335		$	42,678		$	143,850		$	83,186
Cost of sales		37,440			24,072			73,886			48,048

Gross profit		35,895			18,606			69,964			35,138
Research and development expenses		6,556			4,673			12,853			9,157
Selling, general and administrative expenses		19,056			16,187			38,725			32,539
Restructuring and other charges (income)		(88	)		1,757			(88	)		1,757

Operating income (loss)		10,371			(4,011	)		18,474			(8,315	)
Other income, net		405			1,174			879			1,834

Income (loss) before income taxes		10,776			(2,837	)		19,353			(6,481	)
Income tax expense		3,055			2,698			4,645			4,411

Net income (loss)	$	7,721		$	(5,535	)	$	14,708		$	(10,892	)

Basic income (loss) per share	$	0.19		$	(0.14	)	$	0.36		$	(0.27	)
Shares used in computing basic income (loss) per share:		41,420			39,795			41,207			39,761

Diluted income (loss) per share	$	0.18		$	(0.14	)	$	0.34		$	(0.27	)
Shares used in computing diluted income (loss) per share:		43,599			39,795			43,509			39,761

The accompanying notes are an integral part of the consolidated financial statements.

Mykrolis Corporation

Consolidated Balance Sheets

(In thousands except share data)


	July 3, 2004			December 31, 2003
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	82,748		$	70,503
Marketable securities		14,425			—
Accounts receivable (less allowance for doubtful accounts of $376 and $559, respectively)		58,706			46,698
Inventories		43,614			38,771
Deferred income taxes		664			664
Other current assets		7,367			5,726

Total current assets		207,524			162,362

Marketable securities		4,964			14,266
Restricted cash		1,608			1,782
Property, plant and equipment, net		67,223			71,033
Deferred income taxes		3,411			3,411
Goodwill		17,297			17,317
Other intangible assets (less accumulated amortization of $23,371 and $22,490, respectively)		6,741			7,622
Other assets		6,102			5,962

Total assets	$	314,870		$	283,755

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current portion of capital lease obligation	$	78		$	78
Accounts payable		17,086			12,613
Accrued income taxes		14,805			11,227
Accrued expenses		23,088			24,781

Total current liabilities		55,057			48,699

Long-term portion of capital lease obligation		16			55
Other liabilities		13,047			11,912
Minority interest		81			61

Commitments and contingencies (note 13)

Shareholders’ equity:
Preferred stock, par value $.01 per share, 5,000,000 shares authorized; no shares issued and outstanding		—			—
Common stock, par value $.01 per share, 250,000,000 shares authorized; 41,684,145 and 40,648,773 shares issued and outstanding, respectively		417			406
Additional paid-in capital		340,230			330,515
Accumulated deficit		(86,747	)		(101,455	)
Accumulated other comprehensive loss		(7,231	)		(6,438	)

Total shareholders’ equity		246,669			223,028

Total liabilities and shareholders’ equity	$	314,870		$	283,755

The accompanying notes are an integral part of the consolidated financial statements.

Mykrolis Corporation

Consolidated Statements of Shareholders’ Equity

and Comprehensive Income (Loss)

(In thousands)


	Common Shares			Additional Paid-In Capital		Accumulated Deficit			Accumulated Other Comprehensive Income (Loss)			Total Shareholders’ Equity			Comprehensive Income (Loss)
	Shares	Amount		Additional Paid-In Capital		Accumulated Deficit						Total Shareholders’ Equity			Comprehensive Income (Loss)
Balance December 31, 2002	39,724	$	397	$	320,061	$	(93,351	)	$	(14,463	)	$	212,644
Issuance of common stock-employee stock purchase plan and exercise of stock options	592		6		5,534		—			—			5,540
Issuance of common stock for acquisition	333		3		4,903		—			—			4,906
Stock based compensation			—		17		—			—			17
Comprehensive income (loss) :
Net loss			—		—		(8,104	)		—			(8,104	)		(8,104	)
Foreign currency translations			—		—		—			8,333			8,333			8,333
Additional minimum pension liability			—		—		—			(221	)		(221	)		(221	)
Unrealized loss on marketable securities	—		—		—		—			(87	)		(87	)		(87	)

Comprehensive loss															$	(79	)

Balance December 31, 2003	40,649	$	406	$	330,515	$	(101,455	)	$	(6,438	)	$	223,028

Issuance of common stock-employee stock purchase plan and exercise of stock options *	1,035		11		8,413		—			—			8,424
Stock based compensation*					47								47
Proceeds under tax sharing agreement with Millipore*					1,255								1,255
Comprehensive income (loss) :
Net income *			—		—		14,708			—			14,708			14,708
Foreign currency translations *			—		—		—			(783	)		(783	)		(783	)
Unrealized loss on marketable securities*	—		—		—

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