MKS Announces Record First Quarter Revenue and Profits

Waterloo, ON - September 8, 2005: MKS Inc. (MKS) (TSX: MKX) today announced its financial results for the first quarter of fiscal 2006 which ended on July 31, 2005. All amounts are reported in US dollars under United States Generally Accepted Accounting Principles.

Total revenue for the first quarter of fiscal 2006 was $10.8 million, a 22 percent or $2.0 million increase from $8.8 million in the first quarter of fiscal 2005. Net income for the first quarter of fiscal 2006 was $0.5 million, or $0.01 per share, an improvement of 206 per cent or $0.3 million compared to net income of $0.2 million or $0.00 per share in the first quarter of fiscal 2005.

First quarter application lifecycle management (ALM) revenues were $8.8 million, representing 32 percent growth over ALM revenues of $6.7 million in the first quarter of fiscal 2005. The Company’s cash position increased from $7.8 million to $8.9 million during the quarter.

"We were pleased to show continued strong results in our first quarter, once again driven by excellent licensing and field services performance," said Philip C. Deck, CEO of MKS. "Our strong profitability and cash flow in the quarter was particularly gratifying given significant new hiring in both R&D and field operations as we build for future quarters."

"In addition to steady license progress, we have begun to see the results of our strategic initiative to build out services partnerships and channels," said Michael Harris, MKS COO. "We generated more than 50 percent growth in our service revenue due in part to contributions from MKS Solutions Partners in customer implementations."

MKS expects that the trend of revenue growth will continue throughout fiscal 2006 developing ALM licensing opportunities through expansion of existing customer relationships and through targeting of Global 1000 companies in its primary markets worldwide. MKS believes that the positive results in Q1 ’06 and the anticipated growth in ALM revenue in the balance of fiscal 2006 will lead to annual fiscal 2006 revenue in the range of $46 to $51 million and income from operations before tax in the range of $3 to $4 million. Factors to be considered in arriving at these ranges, identified in the April 30, 2005 MD&A, yet still relevant as of July 31, 2005, include: the expectation that MKS's Interoperability business will decline 5 to 10 percent over the course of the year; the intention of MKS to expand its sales and services staff, increased marketing expenditures and increased ALM research and development expenditures to ensure MKS maintains its technical leadership in the ALM market.

Highlights for the Quarter

Significant customer wins at Axalto N.V.; BearingPoint Inc.; Cincinnati Financial Corporation ; Continental Teves Inc; Deutsche Lufthansa AG; European Aeronautic Defense and Space Company EADS N.V.; Exel PLC; HSBC Holdings PLC; LexisNexis Group; NCR Corporation; Northrop Grumman Corporation; Tele Atlas N.V.; T-Mobil International; Verizon Wireless and Wincor Nixdorf International GmbH.

37 contracts worth greater than $50,000, vs. 41 in the same period last year.
63 percent growth in ALM service revenue delivery over the first quarter of fiscal 2005.

Partnership with Aspen Software Consultants extending MKS’s consulting and professional services reach with deep consulting, implementation and process expertise.

Delivery of the MKS Integrity Solution for ITIL with processes for change, configuration, incident and problem management and the announcement of certification of the solution and MKS software by Pink Elephant.
Release of MKS Toolkit 9.0 improving developer productivity on 32 and 64-bit Windows operating systems.

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