萬機儀器 (MKSI) 2004 Q4 法說會逐字稿

Good afternoon, ladies and gentlemen, and welcome to the MKS Instruments fourth-quarter 2004 earnings conference call. At this time, all participants are in a listen-only mode. Following today's presentation, instructions will be given for the question-and-answer session. (OPERATOR INSTRUCTIONS). As a reminder, this conference is being recorded today, Thursday, February 10, 2005.

I would now like to turn the conference ever to Jonna Manes, Director of Investor Relations. Please go ahead, ma'am.

Thank you, and good afternoon, and welcome to our fourth-quarter earnings conference call. By now, you should have received a copy of our earnings release. If you did not, please go to our website at www.MKSinstruments.com, or you can call 978-284-4045 after this call.

As a reminder, various remarks that we may make about future expectations, plans and prospects for MKS constitute forward-looking statements for purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements, as a result of various important factors, including those discussed in this afternoon's press release and in the Company's annual report on Form 10-K for the fiscal year ended December 31st, 2003 and most recent quarterly report on Form 10-Q, each of which is on file with the SEC.

In addition, these forward-looking statements represent the company's expectations only as of today. While the Company may elect to update these forward-looking statements, it specifically disclaims any obligation to do so. Any forward-looking statements should not be relied upon as representing the Company's estimates or views as of any date subsequent to today.

And finally, I would like to remind everyone that during the Q&A period, each person will be limited to two questions. We'll circle back for further questions as time allows.

And now, I would like to introduce John Bertucci, Chairman and Chief Executive Officer of MKS.

Thanks, Jonna, and thanks, everyone, for joining us today. With me is Ron Weigner, our Chief Financial Officer. I will give an overview of the fourth quarter, and then Ron will give a detailed review of the results. I'll make some closing comments, and then we will answer your questions.

I am pleased to report that our fourth-quarter sales of 130.9 million exceeded the high end of our guidance, with sales down 6 percent sequentially. Sales to semiconductor OEMs decreased by 9 percent sequentially, while sales to other non-semiconductor markets increased by 11 percent.

GAAP earnings totaled 24.1 million or 44 cents per diluted share, and included a tax benefit from the reversal of a deferred tax asset that Ron will discuss later. Non-GAAP earnings, which exclude amortization of acquired intangible assets and special items, totaled 11.1 million or 20 cents per diluted share. Sales for the year totaled 555.1 million, which was a 65 percent increase year over year. I'm pleased to report that we increased our share of a larger shared market in 2004. Based on VLSI research and our estimates, our market share increased to 23 percent from 21 percent in a served market that grew by 50 percent to 2.4 billion in 2004, up from 1.6 billion in 2003.

Our strategy to gain share is to develop best-in-class products, acquired leading-edge technology and integrate those technologies into higher-value subsystems. We are developing application-specific integrated subsystems that improve process performance while reducing manufacturing complexity. This strategy differentiates MKS with our customers, because these subsystems combine technologies and process expertise that single-product suppliers cannot duplicate. Integrated subsystems sales reached 25 percent of total sales in 2004, bringing us closer to our goal of 30 percent of sales from these uniquely differentiated products.

Now, let's take a look at how our process control technology provided solutions to our customers in the fourth quarter. Semiconductor device fabrication processes are becoming so complex and wafers so valuable that standard process sensors are insufficient for advanced process control. By embedding digital connectivity into our sophisticated process sensors, we enable information to flow from sensors around the process chamber to the factory network. As fabs strive to get next-generation processes up and running faster, they need fast, actionable process information to improve yield management.

Our advanced TOOLweb product suite is being widely evaluated, and in the fourth quarter, 300mm fabs in Asia ordered multiple TOOLweb residual gas analyzers. By incorporating fault detection and classification software into TOOLweb, we enable in-depth process monitoring, data collection and real-time advanced process control. We see opportunity ahead for our information and control systems.

Our ozone technology continued to gain acceptance for use in atomic layer deposition in the fourth quarter. Our ozone gas generators and delivery systems provide ultra-high concentrations of high-purity ozone. Because these products improve the performance of the process tool, major semiconductor fabs in Asia are requesting our ozone products on tools they buy from various OEMs.

Interest in our RF and DC power products remained strong, and active evaluations are underway at major OEMs. In the fourth quarter, orders from OEMs increased for our integrated RF power systems for use in HDPCVD applications, and for our microwave power subsystems for use in resist strip applications.

Fourth-quarter sales grew faster quarter over quarter in other non-semiconductor markets. For example, we expanded our penetration in high-energy physics markets in the quarter, as residual gas analyzers and vacuum gauging products were selected for multiple facilities worldwide.

Gas analysis products continued to be selected by gas suppliers and by industrial companies for a variety of applications. We also saw an increase in sales to the medical equipment market in the quarter, especially for our compact PICO leak detector, and we continued to penetrate the biopharmaceutical market.

Now, let me turn to the outlook. The slowdown in semiconductor capital spending began in the second half of 2004. Our visibility is limited because of our short leadtimes, making it difficult to estimate business levels beyond the current quarter. Based on current customer order patterns, we estimate that first-quarter 2005 sales could range from 115 to 125 million, or a sequential decrease of 5 to 12 percent. We will continue to look closely at order levels, and manage the business to increase profitability at all sales levels. At the same time, we will continue to invest in R&D for products that will enhance the performance and productivity of process tools. It is clear that world-class device manufacturers are not delaying strategic projects that provide competitive advantage, as shown by recent announcements for higher capital spending at the leading edge in 2005.

We believe that an increasing percent of the capital spending dollar will be invested in process control, as fabs strive to improve uptime, yield and throughput. Semiconductor devices with smaller dimensions are more challenging to manufacture. With each technology upgrade, more process steps per wafer are required, which increases the value of individual wafers. Device manufacturers require more data in order to track individual wafers, instead of batches of wafers. They require more digital connectivity to make better use of that data, and they require more precise process control in the chamber to anticipate process deviations and prevent wafer yield loss. We are well-positioned to address these requirements. While near-term challenges may continue in the semiconductor capital equipment market, we see good momentum in many of our process control products targeted at this growing opportunity.

And now, I will turn it over to Ron to discuss our financial results.

Thanks, John, and good afternoon, everyone. Fourth-quarter 2004 sales of 130.9 million were up 29 percent compared to 101.8 million in the fourth quarter of 2003, and down 6 percent from sales of 139.7 million in the third quarter of 2004.

Fourth-quarter GAAP net earnings were 24.1 million, or 44 cents per diluted share, which include a non-cash adjustment of 16.7 million or 31 cents per share reverse a previously established valuation allowance against net deferred tax assets. Excluding this adjustment, net earnings were 7.4 million or 14 cents per diluted share, compared to GAAP net earnings of 2.1 million or 4 cents per diluted share for the prior-year period and 12.2 million or 22 cents per diluted share for the third quarter of 2004.

On an operating basis, which excludes amortization of acquired intangible assets and special items, non-GAAP earnings totaled 11.1 million or 20 cents per diluted share for the fourth quarter of 2004, compared to 5 million or 11 cents per diluted share for the prior-year period and 15.8 million or 29 cents per diluted share in the third quarter of 2004.

For the full year, sales increased by 65 percent to 555.1 million from 337.3 million in 2003. Sales grew in each of our three reported market areas, with an 84 percent increase in semiconductor markets and a 23 percent increase in both thin-film and other non-semiconductor markets. GAAP net earnings for 2004 were 69.8 million or $1.28 per diluted share, on 54.7 million weighted average shares outstanding, compared to a net loss of 16.4 million or 32 cents per basic share on 51.6 million weighted average shares outstanding in 2003. On an operating basis, non-GAAP earnings were 62.9 million or $1.15 per diluted share in 2004, compared to a loss of 1 million or 2 cents per basic share in 2003.

Turning to the fourth-quarter overview, sales to semiconductor OEMs were down 9 percent sequentially, while sales to semiconductor OEM subcontractors were down 30 percent, which suggests that subcontractor inventories were being worked down in the quarter. Thin-film sales were down 15 percent sequentially, while sales to other markets increased by 11 percent, as we continued to expand our penetration in high-energy physics, industrial and medical equipment applications.

Looking at the detail, sales to semiconductor equipment markets represented 73 percent of fourth-quarter sales and decreased 9 percent sequentially, while the sales to OEMs down 9 percent and sales to end users down 15 percent. Thin-film sales, which include equipment for flat-panel display and data storage, totaled 7 percent of fourth-quarter sales. Sales to other markets represented 20 percent of fourth-quarter sales.

Our top 10 customers accounted for 49 percent of fourth-quarter sales, compared to 50 percent in the third quarter. Sales to Applied Materials, our largest customer, represented 18 percent of sales, compared to 19 percent in the third quarter. Sales to subcontractors that are supplying the semiconductor equipment industry totaled 8 percent of sales, compared to 11 percent in the third quarter.

Looking at the geographic mix, the percent of sales to Asia remained steady, as a result of higher sales to OEMs, while sales in the US and Europe declined. Sales to Asia represented 26 percent of fourth-quarter sales. Sales to US customers were down 7 percent sequentially, and represented 66 percent of fourth-quarter sales. Sales to Europe were down 14 percent sequentially, and represented 8 percent of fourth-quarter sales.

Turning to the operating results, gross margin was 36.8 percent, compared to 39.8 percent in the third quarter. The change in rate reflects the net effect of several items -- underabsorption of manufacturing overhead that resulted from our 4.7 million reduction of inventory during the quarter; fixed overhead as a higher percent of lower sales volume; and other changes including product mix, material cost reduction and nonrecurring items. We expect that some of these items could have a lesser impact on gross margin in the first quarter.

R&D spending was 13.8 million or 10.6 percent of sales in the fourth quarter, compared to 14.2 million or 10.2 percent of sales in the third quarter, primarily as a result of lower spending for project material. SG&A expense was 21.5 million or 16.4 percent of fourth-quarter sales, compared to 23 million or 16.4 percent of sales in the third quarter, primarily as a result of lower professional fees.

We had a 14.1 million income tax benefit in the fourth quarter, as a result of the 16.7 million deferred tax adjustment an 2.6 million of expense to reflect our actual tax rate of 21 percent for 2004. Our worldwide workforce decreased to 2,319 from 2,425, as we continued to adjust to lower production levels in the fourth quarter.

Now, I'll turn to the balance sheet. Our cash and investments increased by approximately 24 million to 241 million, compared to 217 million in the third quarter. Cash, net of debt, increased to 210 million in the fourth quarter. Cash from operations of 23 million was comparable to third quarter and totaled approximately 66 (ph) million for the year.

Days sales outstanding increased to 58 days from 56 days in the third quarter. Inventory turns improved to 3.3 turns, compared to 3.2 turns in the third quarter, primarily as a result of our 4.7 million reduction in inventory. Capital expenditures of 4.3 million were primarily for continued investment in the new companywide ERP system, and for manufacturing and test equipment. Capital expenditures totaled 18.3 million in 2004, and could be approximately 10 million in 2005.

Depreciation in the fourth quarter was 3.7 million, and totaled 13.1 million for the year.

As a result of short leadtimes, our visibility is limited. Based on our current order patterns, we expect that first-quarter 2005 sales could range from 115 to 125 million, or a sequential quarterly decrease of 5 to 12 percent. At these revenue levels, gross margin could range from 36 to 37 percent, which primarily reflects the effect of lower anticipated sales volume. We estimate that operating expenses could increase in the first quarter, R&D spending could range from 13.9 to 14.3 million, as a result of increased project material costs. SG&A expenses could range from 22.2 to 22.8 million, resulting from benefit costs that are normally higher in the first quarter of the calendar year. Amortization of acquired intangible assets is estimated to remain at approximately 3.7 million. We expect our effective tax rate could be 33 percent for 2005.

Based on these assumptions, first-quarter GAAP net earnings could range from 1.1 million to 4.2 million, or 2 cents to 8 cents per diluted share on 55.5 million shares outstanding. On an operating basis, which excludes the amortization of intangible assets of 3.7 million, non-GAAP earnings could range from 3.4 million to 6.5 million, or 6 cents to 12 cents per diluted share.

This concludes our financial discussion, and I will now turn the call back to John.

I would just like to add that, as we look ahead to 2005, we will continue our cost reduction efforts, while maintaining our investment in technology leadership to provide solutions that our customers require. Ron and I will now take your questions.

(OPERATOR INSTRUCTIONS). Tom Dibley (ph), Merrill Lynch.

It's actually Brett Hodess with Merrill Lynch. John, I'm wondering if you could talk to us a little bit about the trend that you're seeing in the non-semi business, given some of the strength you saw this quarter. Does the 115 to 125 range assume that that business is continuing to grow, offset by some more weakness in the semi side, or how you see that mix?

Yes, that would characterize it. At this point, I would say that our mix will stay pretty much the same. We don't forecast the mix. It's much too difficult, with short leadtimes, to know what that mix is going to be. And the issue with non-semi is that we can get a large order that might come in that, because the total number is smaller, we can get a large order that comes in and skews the numbers, so we don't really make those forecasts. But to give you a trend, a feeling of trend, I don't see that that mix is going to change substantially in this first quarter. But that's more of an educated guess.

Okay. But like last quarter, if you got some large orders in on that, it could create some upside from the non-semi side?

Yes, that's possible.

And then, my second question is, I'm wondering if you could update us -- given the integrated product increases that you saw this year, up to 25 percent, as you do integrated products, there's more parts and pieces that you do in there. And I know you been trying to reduce some of your costs, outsourcing some materials and whatnot. I was wondering if you could give us an update on how that cost reduction program is going, and maybe how that might start to phase in over the course of the year.

Well, we are continuing. This is just a constant process of sourcing materials and finding lower-cost sources. And that applies to materials for integrated products, as well as materials for stand-alone systems or instruments. The benefits that we have seen over the past year have allowed us to maintain margins. As you know, it's been a lumpy process over the last year, with large revenue gain in the first two quarters and then declines in the last two quarters. So we have the effects of inventory changes affecting what our gross margin with overabsorption and underabsorption of costs.

So the net result of that has been we certainly had, we believe, positive results on our material costs over this past year, and are continuing to work on that, with sourcing to low-cost suppliers. And I'm not making any prediction of what that material cost reduction is going to be, but we're constantly working on reducing that.

And my last question was, in your opening remarks, you commented on some of the strong areas in process control and ozone and RF and DC. On these newer products, would you expect typically to be seeing higher margin that you have seen in the past, given that some of these products have, it sounds like, more value-added than typical?

That is certainly our objective. Our target on any of the new products is higher margins. Whether we ultimately achieve that or not remains to be seen; but certainly, our targets are that, and our cost targets are such that we should get better margins with new products as they come in. Again, predicting gross margin is very difficult, because of the changes that go on with inventory levels, with sales levels. But certainly, our objectives are better gross margins.

Jay Deahna, JPMorgan.

First question is on integrated subsystems being up around 25 percent of sales. Is there visibility to push that past 30 at some point? And as your business kind of comes back from semiconductors generically, maybe second half of this year or whatever, will that create a mix where you're kind of sailing against the wind there on that, to try to get that up as a percentage of sales?

I didn't quite understand the last part of that question, Jay. As what happens with semiconductor?

As your core semiconductor business comes back in the second half of the year, or whenever that happens, will that make it harder for you to increase integrated subsystems as a percentage of sales, or not?

Well, the integrated subsystems are skewed to 300mm, not 200mm. And assuming that as the semiconductor industry comes back, it's coming back as 300mm, we'll see more integrated subsystems, not less.

So that should help you increase your integrated subsystems as a percentage of sales faster, then?

That's right. New products, and they're typically designed for 300mm.

So, if that happens, is 30 percent going to start looking like a conservative target for integrated subsystems within the next year or two?

It could. I think there is a limit, however, because at some point -- and I think I've touched on this before -- at some point, you begin to move away from what are truly integrated subsystems, where they are systems that we have designed, to systems that have more content from other suppliers, and that gets it closer into more subcontract manufacturing, which is not what we do. And so, I think there is a practical limit. I don't know what that limit is; it may be as high as 40 percent, but I don't think it's an issue, or I don't think it's a situation where it could get to 60 percent, for example.

So, then, the other question I had is, one of your major competitors has had a little bit of a rough go, kind of operationally in the power area. Do you see opportunities there to -- in other words, are you getting more design wins in the power area? Where do you think your is going in power?

I think those numbers -- do we have those numbers?

If you looked at the increase in our power and reactive gas business, this year over last year, it was 77 percent increase year over year, compared to -- our total growth was 65 (ph) percent. So that certainly demonstrates that we're doing very well in that area.

And whether or not that is -- I think there will be VLSI numbers out; they are not out yet. But that's basically the change in our revenues in that area. And once we have VLSI numbers, we will have an idea of what the change of that segment might be. So I'd rather not comment on that, and on design wins, because the problem with counting design wins is you can get a design win on a system that doesn't win in the marketplace, at the OEM level. And so it may be a design win for an insignificant amount of revenue. So I think what counts is looking at those wins that are on meaningful systems. And so, I'd rather not get into the win counting business, I guess.

Jim Covello, Goldman Sachs.

This is Amanda Hindlian for Jim Covello. Going back to the expenses again, they were up a little bit in the first quarter. The question is, what would trigger you to take some more significant expenses out of the model? What would you see out there that would drive you to really take some significant cuts?

Well, the most obvious thing would be lower revenue expectations.

And so, at this point, where is the quarterly breakeven level?

Amanda, we're about 100 million right now in the quarter.

And is there a specific level you'd see your sales go where you would say, okay, we need to take that a lot lower?

Well, we do have minimum target objectives for profitability, and so, as we get lower than 115, I suppose we would be looking at taking more action then we are taking.

Next question -- can you just touch a little bit on the pricing environment?

Yes, this question comes up frequently, and we don't see any different pricing environment than we've seen. There's obviously -- it is obviously competitive in most areas, but not more so than it has been. And we don't see the situation that we saw several years ago, where on individual systems, an OEM might be looking for a concession, because they are giving a concession to their customer. We haven't seen that kind of situation. So I would characterize the pricing environment at this point as quiet.

Avinash Kant, Adams Harkness.

If you could touch upon the margin impact on the integrated subsystems, would you think that the integrated subsystems margin is, at this point, better than the corporate margin, or is it below, or at what level would it become better than the corporate margin? If you could talk about that?

The integrated subsystems are typically better than the corporate margin, by several points. And so, a change going from 25 to 30 percent, for example, might imply 0.5 percent or so --

Yes, on the margin.

-- delta on the overall margin.

And quickly, of course, for the overall year '05, I think the industry is still expected to be down. Assuming your revenues were down 10 to 15 percent, where do you see the overall margins, gross margins for the company, if it turns out to be the case?

Well, we don't make projections for the year. It's difficult enough to do it quarter to quarter. So let's say, if the sales were in the 160 million a quarter range, we would expect to be close to our target model. And if they are in the 115 million range, we would be in the numbers kind of guidance that we have given. And that's a big range on revenues. But I think, at trough, we probably get down to 32 --

32 percent was our trough, yes.

Ali Irani, CIBC World Markets.

Two for you, one on the ERP status. Ron, could you give us an update on where it has been installed, and what remains yet to be done, and perhaps shed some light on some of the benefits you are seeing? I'm wondering in particular if some of the inventory reduction is related to the ERP status.

And secondly, on the R&D programs in your guidance for higher spend next quarter, how long do you see the duration of the spending, and where is the level where you see R&D normalize on a quarterly basis?

First of all, on the ERP implementation, we are in the early stages of that, Ali. We're in the process of going through implementing it at one of our sites here in Massachusetts, and over the next year or so, we'll have that in all our sites.

The real major benefit, though, is -- because you know we have done 11 acquisitions over the last several years -- is to really get everyone on the same platform. The systems that people are using right now are good systems, but the real benefit is to get everyone on the same platform, get a little more commonality in what everyone is doing. It gives us better management information, and so forth. So that would happen gradually over time, and then, also, it may allow us to reduce some of our operating expense, as a result of doing that, going forward.

Will the ERP system be tied into some of the subcons that supply your OEMs, and what would give you an ability to track inventory into the next leg-up (ph) better, perhaps, from the past?

Well, we use lean manufacturing. And so, we used combine systems, which is 180 degrees from having tracking inventory all over the place, because you have thousands of transactions when you do that, and that's the beauty of combine systems. So we have suppliers, for example, who come in and replenish inventory bins.

So, as Ron was saying, the reason for ERP is not for inventory control. That has never been an issue. The issue is getting financial information quickly, and having everyone on the same platform.

So more of a cost focus?

But our operations are world-class operations for lean manufacturing, and that has been demonstrated over and over.

And the R&D programs?

The R&D programs -- there are several types of programs. Some are long-term platform design, some are shorter-term opportunities. Some represent opportunities for developing common technologies that can be used across a number of product areas. And what typically fluctuates our R&D is where there may be opportunities, but it requires some additional development. And the other areas of R&D are basically -- are more predictable, but the opportunistic part of it is what fluctuates. And that is what we're looking at as an increase this quarter. We have target model of having our R&D in the 8 to 10 percent range, and that would be more at higher revenue levels. We are not interested, and we will not be cutting R&D, I don't anticipate, at any level much below the levels that we got to in the (multiple speakers), which was about 11 million.

Right, and running about 14 million.

We are running at 14.

Stuart Muter, RBC Capital Markets.

First question, for Ron -- you mentioned there are a number of items that impacted gross margins in Q4. I thought you mentioned some nonrecurring expenses. Could you elaborate on what those expenses were?

It was a combination of thanks. It includes product mix, which can change, obviously, from quarter to quarter. There were some benefits in there for material cost reduction, and there are other, sometimes just specific items that occurred during the quarter that would not occur in the next quarter. So, I think some of those items will have a lesser impact on gross margin in the first quarter, and that is why I gave the guidance that we did on the gross margin.

And a question for John. You mentioned residual gas analyzers in your prepared comments. Are you seeing a greater use of RGAs on process chambers? And if so, could you tell us which applications you're seeing?

Well, for competitive reasons, I won't talk about the applications. And we have two areas of gas analyzers -- one, our quadrupole mass spectrometers, and the other, our FTIR instruments -- and we have seen growth in that combination. But I won't get into the specific applications for that.

Okay, maybe I'll try another approach. Do you see one, either quadrupole or FTIR, growing faster than the other?

Probably FTIR growing faster than RGA -- then quadrupole, simply because you can handle higher pressures and dirtier gases with FTIR. So there is some advantage there. Both of them, though, follow the thesis that we have had and talked about, and that is that as the value of the wafers increase, the value of this kind of monitoring and control devices increases. And as you know, this kind of process equipment is expensive, compared to the typical kind of instrumentation that we supply, and typical kind of instrumentation that might be put on a process chamber. And it requires a real drive of return on investment to be able to justify this kind of equipment, and as the value of the wafers goes up, that return on investment is easier to justify.

Ted Berg, Lehman Brothers.

Ron, I wanted to follow up with you on a gross margin topic. The revenues were about 9 percent higher than the midpoint of your guidance, but the gross margin came in in the midpoint of your guidance, which had assumed lower revenue, and I heard the explanations that you gave. I was wondering if there was -- were there any issues with the warranty reserves, or other types of reserves that you had to increase in the quarter that would adversely impacted gross margin, and that is not going to happen again in the March quarter?

No, it really wasn't that. As I said, really, the major thing was we did reduce inventory 4.7 million. So there was a lot of underabsorbed overhead, and it was just really the lower volume. As I said to Stuart, there were a few things that are just specific to a certain material of item, but nothing that would be a trend or anything of that nature, just a one-time thing.

And in terms of the reversal of the $17 million deferred tax allowance reserve, what prompted that? I guess, obviously, you have a better -- or your accountants now have better confidence on your outlook for earnings going forward. Is that what prompted you to reduce the reserve, or is there any specifics you can give around the decision-making for that?

Well, one of the things the accounting rules do require you to look at what your estimates are for the future, and if you expect to be profitable, then you can re-establish that reserve on the balance sheet -- and also, looking at what we did historically, as well.

And one last question. The operating cash flow number, what was that?

It was 23 million for the quarter and 66 million for the year.

(OPERATOR INSTRUCTIONS). Tim Summers, Stanford Financial Group.

The fourth-quarter revenue was above the guidance that you guys provided on your last conference call, and I was curious to know -- did that strength come from the semi business or the non-semi business? And in that same vein, did you guys see pull-ins or accelerations of business from the first quarter into the fourth quarter of '04?

We don't forecast the mix. That was a question we had earlier. And so it's difficult for us to say that -- as you know, we have short leadtimes, whether it's for the semi industry or for our other business, that we are on short leadtimes. And so we don't sit at the beginning of a quarter and say we're going to get X from semi and Y from non-semi, so I can't really answer that based on the guidance. We're looking at overall projections from our field. And I'm not aware of any significant pull-in or push-out at all during the quarter. It was a relatively normal kind of quarter this last quarter.

And if I can ask one quick follow-up, to the degree you guys see this, do you have an idea of what percent of your revenue or your component sales in the quarter to the semiconductor space went to tools that are for 65nm and below production?

No. That's difficult to determine, because there are so many of the instruments that are used commonly across the range of products. I would suppose that anything that might be used for ALD would be 65nm or lower. But I can't give you a percent, no.

At this time, we have no further questions. I would like to turn the conference back to management for any concluding comments. Please go ahead.

Fine. Thank you very much. I'd just like to thank you all for joining us today, and for your continued interest in MKS. And we look forward to speaking to you at the next conference call. Thank you.

Ladies and gentlemen, that does conclude the MKS Instruments fourth-quarter 2004 earnings conference call. If you would like to listen to a replay of today's conference, you may dial 303-590-3000 using pass code 11021310#. Thank you again for your participation in today's conference, and you may now disconnect.