-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AsDLcJv7G6UYEe6fwBE8S8xDR+ahfDNXXIN+OsPdZjNfcoRf8tp8UzUjGIViD2ir UNISAqD/MlNKbO0UpkaJAg== 0000950135-04-000951.txt : 20040226 0000950135-04-000951.hdr.sgml : 20040226 20040226123233 ACCESSION NUMBER: 0000950135-04-000951 CONFORMED SUBMISSION TYPE: 20-F/A PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20021231 FILED AS OF DATE: 20040226 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BE SEMICONDUCTOR INDUSTRIES NV CENTRAL INDEX KEY: 0001003196 STANDARD INDUSTRIAL CLASSIFICATION: SEMICONDUCTORS & RELATED DEVICES [3674] IRS NUMBER: 000000000 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 20-F/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-27298 FILM NUMBER: 04629799 BUSINESS ADDRESS: STREET 1: MARCONILAAN 4 STREET 2: DRUNEN 5151 DR CITY: THE NETHERLANDS STATE: P7 ZIP: 31416-3844 BUSINESS PHONE: 6028316600 MAIL ADDRESS: STREET 1: MARCONILAAN 4 STREET 2: DRUNEN 5151 DR CITY: THE NETHERLANDS STATE: P7 ZIP: 31416-3844 20-F/A 1 b49673cpe20vfza.txt BE SEMICONDUCTOR INDUSTRIES N.V. FORM 20-F/A ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 - -------------------------------------------------------------------------------- AMENDMENT NO. 1 TO FORM 20-F [ ] REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934 OR [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002 OR [ ] 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: 0-27298 BE SEMICONDUCTOR INDUSTRIES N.V. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) THE NETHERLANDS (JURISDICTION OF INCORPORATION OR ORGANIZATION) MARCONILAAN 4 5151 DR DRUNEN THE NETHERLANDS (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) SECURITIES REGISTERED OR TO BE REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: None SECURITIES REGISTERED OR TO BE REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED ------------------- ----------------------------------------- Ordinary Shares Nasdaq National Market
SECURITIES FOR WHICH THERE IS A REPORTING OBLIGATION PURSUANT TO SECTION 15(d) OF THE ACT: None The number of outstanding shares of each of the issuer's classes of capital or common stock as of December 31, 2002: 30,898,228 Ordinary Shares, nominal value E0.91 per share (of which amount, 5,000,425 are traded on the Nasdaq National Market in the form of New York Shares and 25,897,803 are traded on the Amsterdam Stock Exchange in the form of Bearer Shares). 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 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 which financial statement item the Registrant has elected to follow. Item 17 [ ] Item 18 [X] ================================================================================ EXPLANATORY NOTE This Amendment No. 1 to Form 20-F is being filed for the purposes of filing the Independent Auditors' Report of BDO Accountants and accompanying financial statements for the year ended December 31, 2000 and for the period January 1, 2001 to November 15, 2001 of Possehl BESI Electronics N.V. ("PBE"), a joint venture in which BE Semiconductor Industries N.V. ("BESI") held a 30% equity interest. BESI sold its equity interest in PBE on November 15, 2001. In connection with this amendment, the registrant is including the certifications required by 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, as exhibits 13.3, and 13.4 and the certifications required by Rule 13a-14(a)/15(d) and 14(a) of the Securities Exchange Act of 1934, as amended, as exhibits 12.3 and 12.4. The Exhibit Index is included in this Amendment No. 1 to Form 20-F to reflect such certifications. PART III ITEM 18: FINANCIAL STATEMENTS The following financial statements, together with the report of our independent auditors are filed as part of the Amendment No. 1 to Form 20-F: POSSEHL ELECTRONICS N.V Independent Auditors' Report F-1 Consolidated Balance Sheets as of December 31, 2000 and 2001 F-2 Consolidated Statements of Operations for the years ended December 31, 1999, 2000 and 2001 F-3 Consolidated Statements of Cash Flows for the years ended December 31, 1999, 2000 and 201 F-4 Consolidated Statements of Shareholders' Equity for the years Ended December 31, 1999, 2000 and 2001 F-6 Notes to the Consolidated Financial Statements F-7
ITEM 19: EXHIBITS
EXHIBIT DESCRIPTION OF EXHIBIT NUMBER 8.1 List of Subsidiaries of BE Semiconductor Industries N.V. (previously filed as Exhibit 8.1 to the Annual Report on Form 20-F for the year ended December 31, 2002, and incorporated herein by reference) 12.1 Rule 13a-14(a)/15(d)-14(a) Certification of Chief Executive Officer (previously filed in the Annual Report on Form 20-F for the year ended December 31, 2002, and incorporated herein by reference) 12.2 Rule 13a-14(a)/15(d)-14(a) Certification of Chief Financial Officer (previously filed in the Annual Report on Form 20-F for the year ended December 31, 2002, and incorporated herein by reference) 12.3 Rule 13a-14(a)/15(d)-14(a) Certification of Chief Executive Officer 12.4 Rule 13a-14(a)/15(d)-14(a) Certification of Chief Financial Officer 13.1 Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (previously filed as Exhibit 10.1.1 to Annual Report on Form 20-F for the year ended December 31, 2002, and incorporated herein by reference) 13.2 Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (previously filed as Exhibit 10.a.2 to Annual Report on Form 20-F for the year ended December 31, 2002, and incorporated herein by reference) 13.3 Section 1350 Certification of Chief Executive Officer 13.4 Section 1350 Certification of Chief Financial Officer
SIGNATURES The registrant hereby certifies that it meets all of the requirements for filing a Form 20-F and that it has duly caused and authorized the undersigned to sign this Amendment No. 1 to annual report on Form 20-F on its behalf. BE SEMICONDUCTOR INDUSTRIES NV By: /s/ Richard W. Blickman -------------------------------------------- Name: Richard W. Blickman Title: President and Chief Executive Officer Date: February 24, 2004 ITEM 18: FINANCIAL STATEMENTS Independent Auditors' Report To the Shareholders and the Board of Management of Possehl Electronics N.V. We have audited the accompanying consolidated balance sheet of Possehl Electronics N.V. and subsidiaries as of December 31, 2000 and 2001 and the related consolidated statement of operations, cash flows, shareholders' equity and accumulated other comprehensive income, for each of the years in the three-year period ended December 31, 2001. These consolidated financial statements are the responsibility of the management of Possehl Electronics N.V. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America and The Netherlands. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, based on our audit, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Possehl Electronics N.V. and subsidiaries at December 31, 2000 and 2001 and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2001 in conformity with accounting principles generally accepted in the United States of America. As discussed in Note 1, the Company changed its method of accounting for depreciation on stamping tools in 2001. BDO Accountants `s-Hertogenbosch, The Netherlands February 6, 2002 F-1 Consolidated Balance Sheets (Amounts in thousands)
Year ended December 31, 2000 2001 2001 EUR EUR USD --- --- --- ASSETS Cash and cash equivalents 3,736 3,276 2,916 Accounts receivable, net 44,626 29,216 26,005 Inventories 38,678 29,897 26,611 Other current assets 7,426 31,450 27,994 Deferred tax assets 3,170 4,906 4,367 ------- ------- ------- Total current assets 97,636 98,745 87,893 Property, plant and equipment 108,058 92,527 82,358 Other non-current assets 217 215 191 Deferred tax assets, net 1,672 2,355 2,096 ------- ------- ------- Total assets 207,583 193,842 172,538 ======= ======= ======= LIABILITIES AND SHAREHOLDERS' EQUITY Notes payable to banks 19,034 57,353 51,050 Current portion of long-term debt 10,001 5,063 4,507 Advances from shareholders 951 37 33 Accounts payable 18,517 13,190 11,740 Accrued liabilities 17,866 16,932 15,071 Deferred tax liabilities 1,092 1,260 1,121 ------- ------- ------- Total current liabilities 67,461 93,835 83,522 Long-term debt 25,021 1,034 920 Subordinated loan from shareholders 12,313 37,738 33,591 Other long-term liabilities 2,973 1,361 1,211 Deferred tax liabilities 3,448 1,154 1,027 ------- ------- ------- Total non-current liabilities 43,755 41,287 36,749 Minority interest 3,749 4,404 3,920 Ordinary shares 29,327 29,728 26,461 Capital in excess of par value 9,785 9,325 8,300 Retained earnings 49,586 8,084 7,196 Accumulated other comprehensive income (loss) 3,920 7,179 6,390 ------- ------- ------- Total shareholders' equity 92,618 54,316 48,347 ------- ------- ------- Total liabilities and shareholders' equity 207,583 193,842 172,538 ======= ======= =======
The accompanying notes are an integral part of these consolidated financial statements. F-2 Consolidated Statements of Operations (Amounts in thousands)
Year ended December 31, ----------------------------------------------------- 1999 2000 2001 2001 EUR EUR EUR USD --- --- --- --- Net sales 193,055 253,112 178,997 159,325 Cost of sales (1) 145,543 187,037 167,539 149,126 -------- -------- -------- -------- Gross profit 47,512 66,075 11,458 10,199 Selling, general and administrative expenses 26,995 35,991 30,609 27,245 Research and development expenses 2,032 2,007 1,597 1,421 Restructuring charges -- -- 15,493 13,791 Foreign currency (gains) losses (1,400) (1,273) (478) (425) -------- -------- -------- -------- Total operating expenses 27,627 36,725 47,221 42,032 Operating income 19,885 29,350 (35,763) (31,833) Interest expense, net 3,295 4,486 4,777 4,252 -------- -------- -------- -------- Income before taxes, investment income from affiliated companies, minority interest and cumulative effect of change of accounting principle 16,590 24,864 (40,540) (36,085) Income taxes 2,766 3,890 (3,593) (3,198) -------- -------- -------- -------- Income before investment income from affiliated companies, minority interest and cumulative effect of change of accounting principle 13,824 20,974 (36,947) (32,887) Investment income from affiliated companies 25 1,983 -- -- Minority interest (3,214) (1,857) (473) (421) Cumulative effect of change of accounting principle(1) -- -- (4,082) (3,633) -------- -------- -------- -------- Net income 10,635 21,100 (41,502) (36,941) ======== ======== ======== ========
(1) In December 2001 the Company changed its depreciation method for stamping tools, as described in the notes to property, plant and equipment. The cumulative effect on previous years depreciation included in 2001 is EUR 4,082. The 1999 and 2000 net income on a pro forma basis would have been EUR 7,928 and EUR 19,725, respectively. For this we calculated the actual accumulated depreciation for 1999 and 2000 on a pro-rata basis. The 2001 effect in depreciation is EUR 1,697. The accompanying notes are an integral part of these consolidated financial statements. F-3 Consolidated Statements of Cash Flows (Amounts in thousands)
Year ended December 31, ------------------------------------------------- 1999 2000 2001 2001 EUR EUR EUR USD --- --- --- --- CASH FLOWS FROM OPERATING ACTIVITIES: Net income 10,635 21,100 (41,502) (36,941) Adjustments to reconcile net income to net cash flows from operating activities: Minority interest 3,214 1,857 473 421 Gain on sale of affiliated companies -- (1,983) -- Revaluation of warrant -- (36) (313) (279) Interest expense on original issue discount 45 365 425 378 Depreciation of property, plant and equipment 20,663 25,534 36,481 32,472 Restructuring impairment -- -- 9,364 8,335 Deferred income taxes (benefit) 123 (62) (4,545) (4,046) (Gain) loss on disposal of equipment 257 499 (234) (208) Translation of debt in foreign currency (1,412) (1,141) (1,351) (1,203) Effects of changes in assets and liabilities: (Increase) decrease in accounts receivable (10,641) (5,010) 16,669 14,837 (Increase) decrease in inventories (4,667) (8,759) 10,020 8,919 (Increase) decrease in other current assets (808) (1,568) 494 440 Increase (decrease) in accrued liabilities 5,786 (81) (1,525) (1,357) Increase (decrease) in accounts payable 4,674 214 (5,855) (5,212) ------- ------- ------- ------- Net cash provided by operating activities 27,869 30,929 18,601 16,556 CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (25,878) (38,632) (27,299) (24,299) Proceeds from sale of equipment 413 346 1,442 1,284 Proceeds from sale of affiliated companies -- 9,090 -- -- Purchase of subsidiaries -- (3,952) -- -- Cash transferred as part of sale of affiliated Companies -- (245) -- -- ------- ------- ------- ------- Net cash used in investing activities (25,465) (33,393) (25,857) (23,015) ======= ======= ======= =======
The accompanying notes are an integral part of these consolidated financial statements. F-4 Consolidated Statements of Cash Flows (Amounts in thousands)
Continued Year ended December 31, ------------------------------------------------- 1999 2000 2001 2001 EUR EUR EUR USD --- --- --- --- CASH FLOWS FROM FINANCING ACTIVITIES: Repayments of advances from shareholders (8,698) (1,022) (659) (587) Proceeds from subordinated loan from shareholders 13,613 -- 25,000 22,253 Proceeds from long-term debt 409 23,506 5,927 5,276 Payments on deposit with shareholders (24,500) (21,807) Payments on long-term debt (12,746) (3,180) (6,003) (5,343) Payments on bank lines of credit (2,531) (28,021) (13,307) (11,845) Proceeds from bank lines of credit 9,720 13,313 20,066 17,861 Dividend payments to minority shareholders (3,038) (372) -- -- ------- ------- ------- ------- Net cash (used in) provided by financing activities (3,271) 4,224 6.524 5,808 Net increase (decrease) in cash and cash equivalents (867) 1,760 (732) (651) Effect of changes in exchange rates on cash and cash equivalents 342 87 272 242 Cash and cash equivalents at beginning of the year 2,414 1,889 3,736 3,325 ------- ------- ------- ------- Cash and cash equivalents at end of the year 1,889 3,736 3,276 2,916 ======= ======= ======= ======= SUPPLEMENTAL DISCLOSURE: Cash paid for interest 2,201 5,523 5,528 4,920 Cash paid for income taxes 1,376 4,072 2,902 2,583 ======= ======= ======= =======
The accompanying notes are an integral part of these consolidated financial statements. F-5 Consolidated Statements of Shareholders' Equity (Amounts in thousands except per share data)
Number of Share Capital Retained Accumulated Total Ordinary capital in excess earnings other share- Shares at par of par comprehensive holders' Outstanding value value income equity EUR EUR EUR EUR EUR ---------- ---------- ---------- ---------- ---------- ---------- Balance December 31, 1998 61,090,239 27,722 11,390 17,851 (9,807) 47,156 Net income -- -- -- 10,635 -- 10,635 Exchange rate changes for the year -- -- -- -- 9,529 9,529 Issuance of shares related to the contribution of Possehl Electronic HK Ltd. 3,536,872 1,605 (1,605) -- -- -- ---------- ---------- ---------- ---------- ---------- ---------- Balance December 31, 1999 64,627,111 29,327 9,785 28,486 (278) 67,320 Net income -- -- -- 21,100 -- 21,100 Exchange rate changes for the year -- -- -- -- 4,198 4,198 ---------- ---------- ---------- ---------- ---------- ---------- Balance December 31, 2000 64,627,111 29,327 9,785 49,586 3,920 92,618 Net loss -- -- -- (41,502) (41,502) Exchange rate changes for the year -- -- -- -- 3,259 3,259 Translation of share capital into EUR -- 401 (401) -- -- -- Other -- -- (59) -- -- (59) ---------- ---------- ---------- ---------- ---------- ---------- Balance December 31, 2001 64,627,111 29,728 9,325 8,084 7,179 54,316 ========== ========== ========== ========== ========== ==========
Per December 31, 2001 the authorized capital is translated from NLG into EUR. The 200,000,000 ordinary shares of NLG 1.00 each are translated into EUR at a rate of EUR0.46 per share. A number of 64,627,111 shares are issued and outstanding. Consolidated Statements of Comprehensive Income (Amounts in thousands)
Year ended December 31, ----------------------------------------------- 1999 2000 2001 2001 EUR EUR EUR USD --- --- --- --- Net income 10,635 21,100 (41,502) (36,941) Other comprehensive income (loss): Foreign currency translation adjustment 9,529 4,198 3,259 2,901 ------- ------- ------- ------- Comprehensive income 20,164 25,298 (38,243) (34,040) ======= ======= ======= =======
The accompanying notes are an integral part of these consolidated financial statements. F-6 Notes to the Consolidated Financial Statements 1 SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES GENERAL On May 30, 1997, L. Possehl & Co. mbH ("Possehl"), BE Semiconductor Industries N.V. ("BESI") and Mr Ho Hung Tak ("Mr Ho") contributed all of their ownership interests relating to the production and plating of leadframes and connectors to Possehl BESI Electronics N.V. ("PBE N.V.") and its consolidated subsidiaries, (collectively, the "Company"). The ownership of the Company by Possehl, BESI and Mr Ho was 50.1%, 30.0% and 19.9%, respectively. The Board of Directors of the Company consisted of executive officers of each of the founding members of the Company, of which each one was entitled to cast one vote. On November 15, 2001, BESI sold its 30% equity interest in PBE N.V. to Possehl. As a consequence, Possehl increased its interest in PBE N.V. from 50.1% to 80.1%. Mr. R.W. Blickman resigned from the Board of Directors as per November 15, 2001. Consequently, the Board of Directors of the Company consists of executive officers of each of the two shareholders of the Company, of which each one is entitled to cast one vote. Subsequent to the sale of the 30% interest in PBE, BESI no longer had any representation on the Board of Directors of PBE nor any other rights or responsibilities regarding PBE. At December 19, 2001 the name of the Company was changed to Possehl Electronics N.V. ("PE N.V. or the Company"). Furthermore it was agreed as per November 15, 2001 to adjust the names of the individual subsidiaries within six months after the transaction date. As per December 31, 2001 no formal name changes for subsidiaries occurred. The management of the Company shall adopt resolutions by an absolute majority of the total number of votes to be cast, except for certain significant resolutions which must be adopted by unanimity. Furthermore, these significant resolutions require prior approval of the General Meeting of Shareholders. As set forth in the Articles of Association and Shareholders Agreement of the Company, every share of the Company entitles the holder thereof to cast one vote in the General Meeting of Shareholders. Resolutions voted on at the General Meeting of Shareholders require a 75% majority of the votes cast for approval. Significant resolutions which require prior approval of the shareholders at the General Meeting of Shareholders include: - - Appointment of Management Board Members of the Company; - - Appointment of persons with power to represent the Company; - - Entering into credit agreements in excess of EUR 0.5 million; - - Approval of annual operating and capital expenditure budgets; - - Proposing a legal merger; - - Entering into or terminating a direct or indirect continuing cooperation with another company or legal person. On June 30, 1999, Possehl, BESI and Mr. Ho contributed their ownership interest in Possehl Electronic Hong Kong Ltd. ("PEH") to the Company in return for a total of 3,536,872 newly issued shares in the Company. The ownership interest of PEH were substantially the same as the ownership interests of the Company. F-7 PRESENTATION The accompanying consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America. The accompanying consolidated financial statements are stated in euro ("EUR"). The accompanying consolidated financial statements are, solely for the convenience of the reader, translated into US dollars ("USD") using the Noon Buying Rate in effect on December 31, 2001 (EUR 1 = USD 0.8901). Such translations should not be construed as representations that the EUR amounts could be converted into US dollars at that or any other date. All EUR and US dollar amounts are expressed in thousands. PRINCIPLES OF CONSOLIDATION The consolidated financial statements of the Company include the accounts of its subsidiaries, including those of PEH. Prior to the contribution of PEH on June 30, 1999, PEH was fully controlled by the Company. From May 30, 1997 through June 30, 1999 the management of PEH was identical to that of the Company and the management of the Company exerted control over PEH. From the date of incorporation of the Company on May 30, 1997, the financial statements of PEH have been consolidated with PBE as if it were a wholly owned subsidiary; therefore, the contribution of PEH had no effect on the principles of consolidation. March 31, 2000 the Company and Sumitomo Metal Mining Asia Pacific Pte. Ltd., Singapore (SMMAP) dissolved their common participations in the following companies: - - Possehl Sumiko Electronics Singapore Pte. Ltd. (PBE share 62.5%) - - Possehl Electronics Taiwan Ltd. (PBE share 75%) - - Sumiko Electronics Taiwan Ltd. (PBE share 14.8%) - - WSP Electro Materials Corporation (PBE share 6%) PBE acquired the remaining shares in Possehl Sumiko Electronics Singapore Pte. Ltd. and sold its shares in Possehl Electronics Taiwan Ltd., Sumiko Electronics Taiwan Ltd. and WSP Electro Materials Corporation. After the dissolution it was decided to rename the fully acquired company into Possehl BESI Singapore Pte. Ltd. As of December 31, 2001 the following subsidiaries and affiliated companies are included in the accompanying consolidated financial statements:
NAME COUNTRY PERCENTAGE OF OWNERSHIP - ---- ------- ------------ Possehl Electronic Nederland BV The Netherlands 100% Possehl BESI Electronics Hong Kong Ltd. Hong Kong 100% Possehl Hong Kong Precision Machinery Ltd. Hong Kong 100% Possehl BESI Laminates Ltd. Hong Kong 100% Meco Metal Finishing Engineers (Mal) Sdn. Bhd Malaysia 100% Possehl BESI Electronics (Malaysia) Sdn. Bhd Malaysia 100% Meco USA, Inc. United States of America 100% Meco Metal Finishing USA, Inc. United States of America 100% Meco Metal Finishing Illinois, LLC United States of America 100% Possehl Electronic GmbH Germany 100% Nastrojarna Possehl Electronic s.r.o Czech Republic 86% Possehl Electronic Maroc S.A.R.L Morocco 100% Possehl Electronic France S.A France 100% Possehl BESI Electronics Singapore Pte. Ltd. Singapore 100% Possehl Precision Toolings (Shenzhen) Co., Ltd. China P.R.C. 80% Shenzhen PBE SEG Electronics Co. Ltd. China P.R.C. 80%
F-8 The balance sheets of the Company's foreign subsidiaries are translated at the year-end exchange rate and the income statements of the foreign subsidiaries are translated at the average rate of exchange prevailing during the period. Translation differences arising from the consolidation of the financial statements of foreign subsidiaries are recorded directly to shareholders' equity. All significant intercompany profits, transactions and balances have been eliminated in consolidation. DERIVATIVE FINANCIAL INSTRUMENTS Effective January 1, 2001, the Company adopted Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activity," which establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activities. All derivatives, whether or not designated in hedging relationships, are required to be recorded on the balance sheets at fair value. If the derivative is designated as a fair value hedge, the changes in the fair value of the derivative and of the hedged item attributable to the hedged risk are recognized in earnings. If the derivative is designated as a cash flow hedge, the effective portions of changes in the fair value of the derivative are recorded in other comprehensive income and are recognized in the statements of income when the hedged item affects earnings. Ineffective portions of changes in the fair value of cash flow hedges are recognized in earnings. The impact of adopting SFAS 133 was not material. The Company uses forward exchange contracts to hedge certain firm commitments denominated in foreign currencies. The terms of the currency instruments used are generally consistent with the timing of the committed transactions being hedged. The purpose of the Company's foreign currency management activity is to protect the Company from the risk that eventual cash flows from foreign currency denominated transactions may be adversely affected by changes in exchange rates. The Company does not use derivative financial instruments for trading or speculative purposes. FOREIGN CURRENCY Foreign currency transactions are recorded at the exchange rate of the date of origin, or at a forward contract rate if hedged through a related forward exchange contract. Realized and unrealized exchange rate gains and losses are recorded in the statement of operations. Assets and liabilities denominated in foreign currencies are translated at year-end exchange rates unless a related or matching forward exchange contract or currency swap has been entered into, in which event the rate specified in the contract is used. Exchange rate differences on assets and liabilities denominated in a foreign currency that are not covered by hedging arrangements are recorded in the statement of operations. CASH AND CASH EQUIVALENTS Cash and cash equivalents consist of highly liquid investments with a maturity date at acquisition of three months or less. INVENTORIES Inventories are stated at the lower of cost (first-in, first-out method) or market. Cost includes net prices paid for materials purchased, charges for freight and custom duties, production labor costs and factory overhead. Precious metals are valued at the market price at the balance sheet date. Variances in market price from balance sheet date to balance sheet date are recorded in gross profit as gains or losses. F-9 PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment are stated at cost less accumulated depreciation. Depreciation is calculated using the straight-line method, based on the following estimated useful lives.
CATEGORY ASSIGNED USEFUL LIFE - -------- -------------------- Land and buildings 20 - 60 years Leasehold improvements (1) 5 - 10 years Machinery and equipment 2 - 5 years Office furniture and equipment 3 - 5 years
(1) Leasehold improvements are amortized over the shorter of the lease term or economic life of the asset. In 2001 the Company revised its depreciation method for stamping tools to focus appropriate risk management. The new method implies depreciation on units sold with the condition that it should not be less than the straight-line method of depreciation of 4 years. LEASES Assets acquired under capital leases are included in the balance sheet at the present value of the minimum future lease payments and are depreciated over the shorter of the lease term and their useful lives. A corresponding liability is recorded at the inception of the capital lease and the interest element of capital leases is charged to interest expense. INVESTMENT IN AFFILIATED COMPANIES Investments in unconsolidated affiliated companies, in which the Company does not have significant influence, are valued at cost or market value, if less. An estimated realizable value is used in case there is no readily identifiable market value. INCOME TAXES The Company applies Statement of Financial Accounting Standard ("SFAS") No. 109 "Accounting for Income Taxes", which requires the asset and liability method of accounting for taxes. Under the asset and liability method of SFAS 109, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years which these temporary differences are expected to be recovered or settled. Deferred tax assets are reduced by a valuation allowance to the amount that is more likely than not to be realized. RECOGNITION OF REVENUES The Company's practice is to recognize revenues from sales based on invoiced value of goods supplied to customers, less discounts and sales returns. RESEARCH AND DEVELOPMENT Costs relating to research and development are charged to operating income as incurred. PENSION COMMITMENTS Pension plans are funded with insurance companies based on defined contribution plans, except for the pension plan of the Company's German subsidiary. The payments of annual premiums are charged against earnings. This subsidiary has a defined pension benefit plan for a limited number of employees. The pension commitments have been calculated according to the actuarial method. F-10 CONCENTRATION OF CREDIT RISK A relatively small number of customers account for a significant percentage of the Company's net sales. The loss of a major customer or any reduction in orders by such customers, including reductions due to market or competitive conditions, would have an adverse effect on the Company's business, financial condition and results of operations. The Company's future success will depend in part upon its ability to obtain orders from new customers, as well as the financial condition and success of its customers and the general economy. The Company's customers consist of semiconductor manufacturers located throughout the world. The Company performs ongoing credit evaluations of its customers' financial condition and generally requires no collateral to secure accounts receivable. The Company maintains an allowance for doubtful accounts based on an assessment of the collectibility of such accounts. USE OF ESTIMATES The preparation of the Company's consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the balance sheet dates and the reported amounts of revenue and expense during the reported periods. Actual results could differ from those estimates. IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS In July 2001, the FASB issued Statement No. 141, "Business combinations", and Statement No. 142, "Goodwill and other intangible assets". SFAS No. 141 requires that the purchase method of accounting be used for all business combinations initiated after June 30, 2001 as well as all purchase method business combinations completed after June 30, 2001. Statement No. 141 also specifies criteria intangible assets acquired in a purchase method business combination must meet to be recognized and reported apart from goodwill, noting that any purchase price allocable to an assembled workforce may not be accounted for separately. Statement No. 142 will require that goodwill and intangible assets with indefinite useful lives no longer be amortized, but instead tested for impairment at least annually in accordance with the provisions of Statement No. 142. SFAS No. 142 will also require that intangible assets with definite useful lives be amortized over their respective estimated useful lives to their estimated residual values, and reviewed for impairment in accordance with SFAS No. 121, "Accounting for the impairment of long-lived assets and for long-lived assets to be disposed of". The Company adopted the provisions of Statement No. 141 as at July 1, 2001 and Statement No. 142 as at January 1, 2002. Any goodwill and any intangible asset determined to have an indefinite useful life that are acquired in a purchase business combination completed after June 30, 2001 will not be amortized, but will continue to be evaluated for impairment in accordance with SFAS No. 142 requirements. Goodwill and intangible assets acquired in business combinations completed before July 1, 2001 continued to be amortized prior to January 1, 2002. Statement No. 141 requires, that a company evaluates its existing intangible assets and goodwill that were acquired in a prior purchase business combination, and makes any necessary reclassifications in order to conform with the new criteria in Statement No. 141 for recognition apart from goodwill. The Company will reassess the useful lives and residual values of all intangible assets acquired in purchase business combinations, and make any necessary amortization period adjustments by the end of the first interim period after adoption. In addition, to the extent an intangible asset is identified as having an indefinite useful life, it is required to test the intangible asset for impairment in accordance with the provisions of Statement No. 142 within the first interim period. Any impairment loss will be measured as of the date of adoption and recognized as the cumulative effect of a change in accounting principle in the first interim period. F-11 In connection with the transitional goodwill impairment evaluation, Statement No. 142 will require to perform an assessment of whether there is an indication that goodwill, and equity-method goodwill, is impaired as of the date of adoption. To accomplish this a company must identify its reporting units and determine the carrying value of each reporting unit by assigning the assets and liabilities, including the existing goodwill and intangible assets, to those reporting units as of the date of adoption. The company then has up to six months from the date of adoption to determine the fair value of each reporting unit and compare it to the reporting unit's carrying amount. To the extent a reporting unit's carrying amount exceeds its fair value, an indication exists that the reporting unit's goodwill may be impaired and the second step of the transitional impairment test must be performed. In the second step, the implied fair value of the reporting unit's goodwill, determined by allocating the reporting unit's fair value to all of its assets (recognized and unrecognized) and liabilities in a manner similar to a purchase price allocation in accordance with Statement No. 141, must be compared to its carrying amount, both of which would be measured as of the date of adoption. This second step is required to be completed as soon as possible, but no later than the end of the year of adoption. Any transitional impairment loss will be recognized as the cumulative effect of a change in accounting principle in the financial statements. Finally, any unamortized negative goodwill and negative equity-method goodwill existing at the date Statement No. 142 is adopted, must be written off as the cumulative effect of a change in accounting principle. As of December 31, 2001, the Company has unamortized goodwill in the amount of nil, unamortized indentifiable intangible assets in the amount of nil, and no unamortized negative goodwill, all of which will be subject to the transition provisions of Statements No. 141 and No. 142. Amortization expense related to goodwill was nil for the year ended December 31, 1999, 2000 and 2001, respectively. In June 2001, the FASB issued SFAS No. 143, "Accounting for asset retirement obligations". SFAS No. 143 addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated retirement costs. It requires that the fair value of a liability for an asset retirement obligation is realized in the period in which it is incurred if a reasonable estimate of fair value can be made. The Company is currently assessing SFAS No. 143 and the impact that adoption, in 2003, will have on the consolidated financial statements. In August 2001, the FASB issued Statement of Financial Accounting Standards No. 144, "Accounting for Impairment or Disposal of Long-Lived Assets to be Disposed of", and APB Opinion No. 30 "Reporting the Results of Operations - Reporting the Effects of a Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions. SFAS No. 144 establishes a single accounting model for the impairment of long-lived assets and broadens the presentation of discontinued operations to include more disposal transactions. SFAS No. 144 is effective for 2002 and adoption will not have a material impact on our consolidated financial statements. F-12 2 ACCOUNTS RECEIVABLE Accounts receivable consist of the following:
December 31, ------------------------- 2000 2001 EUR EUR --- --- Accounts receivable 45,701 32,214 Allowance for doubtful accounts (1,075) (2,998) ------- ------- Total accounts receivable, net 44,626 29,216 ======= =======
3 INVENTORIES Inventories consist of the following:
December 31, ------------------------ 2000 2001 EUR EUR --- --- Precious metals 2,710 2,547 Raw materials 10,330 17,520 Work in progress 17,721 6,377 Finished goods and goods for resale 10,469 11,031 Allowance for obsolescence (2,552) (7,578) ------- ------- Total inventories 38,678 29,897 ======= =======
4 OTHER CURRENT ASSETS Other current assets consist of the following:
December 31, ------------------------- 2000 2001 EUR EUR --- --- VAT receivables 1,152 722 Income taxes 644 1,092 Tool loan receivables 1,985 1,949 Shipments to be billed 469 255 Shareholder deposit -- 24,500 Other deposits 675 420 Prepaid expenses 1,016 1,378 Other 1,485 1,134 ------ ------ Total other receivables 7,426 31,450 ====== ======
EUR 24,5 million of the income from the second subordinated Possehl loan of EUR 25 million has been put on short-term deposit with the shareholder, as it has been agreed with the banks not to reduce the notes payables. The deposit can be re-claimed at any time and bears the same interest rate as the subordinated loan. F-13 5 DEFERRED INCOME TAXES The items giving rise to deferred tax assets were as follows:
December 31, -------------------- 2000 2001 EUR EUR ------ ------- Deferred tax assets - - Operating loss carry forwards 3,793 13,032 - - Tangible fixed assets 563 1,233 - - Inventories 765 500 - - Provisions 99 46 - - Restructuring -- 250 - - Other items 381 799 - - Valuation allowance (759) (8,599) ------ ------- Total deferred tax assets, net 4,842 7,261 ====== ======= Deferred tax assets - - current 3,170 4,906 - - non-current 1,672 2,355 ------ ------- Total 4,842 7,261 ====== =======
The deferred tax asset for operating loss carry forwards is related to the French, Dutch, German, Hong Kong and Malaysian operations. PBE N.V. consolidated its Dutch subsidiary for tax purposes effective January 1, 1998. Under applicable Dutch tax law, the Company's Dutch related net operating losses can be carried back for three years and carried forward without limitation in duration. The Company has determined that it is more likely than not that tax losses will not be realized through future fiscal earnings. A 100% valuation allowance has therefore been recorded. Under applicable German tax law, the Company's German related net operating losses can be carried-forward without limitation in duration. The Company has determined that it is more likely than not that tax losses will not be realized through future fiscal earnings. A 100% valuation allowance has therefore been recorded. Effective 1998, the Hong Kong Inland Revenue Ordinance has effected a new tax legislation. This legislation allows an immediate 100% tax deduction for capital expenditures made to acquire manufacturing plant, machinery or computers. As a result, the Hong Kong operation recorded a fiscal loss in 1998, which can be carried forward without limitation in duration. On the deferred tax portion, however, the tax benefit from the tax losses is partly offset by the deferred tax liabilities arising from the 100% write-off for tax purpose compared to company depreciation rates. As far as a deferred tax asset remains after netting, the Company has determined that it is more likely than not that tax losses will not be realized through future fiscal earnings. A 100% valuation allowance has therefore been recorded for net deferred tax assets. The net change in valuation allowance was a (decrease) increase of EUR 772, (EUR 531) and EUR 4,507 for the years ended December 31, 1999, 2000 and 2001, respectively. F-14 The items giving rise to deferred tax liabilities were as follows:
December 31, ---------------- 2000 2001 EUR EUR ----- ----- Deferred tax liabilities relating to temporary differences on: Tangible fixed assets 4,540 2,414 ----- ----- Total deferred tax liabilities 4,540 2,414 ===== ===== Deferred tax liabilities - - current 1,092 1,260 - - non-current 3,448 1,154 ----- ----- Total 4,540 2,414 ===== =====
6 PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment consist of the following:
December 31, ----------------------- 2000 2001 EUR EUR -------- -------- Land, buildings and leasehold improvements 28,145 36,119 Machinery and equipment 175,966 209,947 Office furniture and equipment 18,161 19,870 Fixed assets under construction 21,544 1,090 -------- -------- Property, plant and equipment 243,816 267,026 Accumulated depreciation (135,758) (174,499) -------- -------- Total property, plant and equipment, net 108,058 92,527 ======== ========
Leasehold land in Hong Kong, China and Singapore, included in property, plant and equipment, is being depreciated over a period of 50 years in Hong Kong and China and 60 years in Singapore due to the fact that land use right will expire in these countries in 2047 and 2051, respectively. The Company has obligations under various capital and operating leases, primarily for equipment. Assets under capital leases included in property, plant and equipment are as follows:
December 31, --------------- 2000 2001 EUR EUR ---- ---- Machinery, equipment and office furniture 409 980 Accumulated depreciation (251) (341) ---- ---- Total 158 639 ==== ====
F-15 7 ADVANCES FROM SHAREHOLDERS Advances from shareholders consist of the following:
December 31, ------------ 2000 2001 EUR EUR --- --- Loan Meco Equipment Engineers, Inc., interest rate fixed at 6.0% 389 -- Other, non interest bearing 562 37 --- -- Total current account shareholders 951 37 === ==
8 SHORT-TERM DEBT Short-term debt consists of the following:
December 31, ------------------ 2000 2001 EUR EUR ------ ------ Notes payable to banks 19,034 57,353 Current portion of long-term debt 10,001 5,063 ------ ------ Total short-term debt 29,035 62,416 ====== ======
At December 31, 2001, the credit facilities of PE N.V. amounted to EUR 52,183 consisting of: - - EUR 9,076 from F. van Lanschot Bankiers N.V.; - - EUR 6,806 from ING Bank N.V.; - - EUR 6,806 from HSBC Trinkaus & Burkhardt KGaA; - - EUR 6,806 from Dresdner Bank AG; - - EUR 22,689 from Deutsche BanK AG. These credit facilities are all multi-currency and are for overdraft, guarantee and revolving credit purposes. The credit facility agreements include covenants requiring the Company to maintain a certain solvency ratio and interest coverage ratio. The Company was in compliance with all applicable covenants at December 31, 2000. However, the Company is not meeting the interest coverage ratio as per December 31, 2001, for which a waiver is received until at least March 15, 2002. The credit facilities of Dresdner Bank and Deutsche Bank are frozen and the Company committed to the other banks to abandon further withdrawals under the facilities. The Company's subsidiaries have local credit facilities aggregating EUR 17,480, for which the following security interests are applicable: Malaysia First mortgage on the leasehold land and building of Possehl BESI Electronics (M) Sdn. Bhd. to secure MYR 30,000 (EUR 8,876). The first mortgage is granted through a priority security sharing agreement with the Bank of Commerce (Malaysia) Berhad and HSBC Bank (Malaysia) Berhad, amounting to MYR 18,000 (EUR 5,326) and MYR 12,000 (EUR 3,550), respectively. F-16 Singapore First mortgage on the Singapore subsidiary's leasehold building to secure S$ 3,000 (EUR 1,827). China First mortgage on the leasehold land and building of Shenzhen PBE SEG Electronics Co., Ltd., to secure CNY 25,000 (EUR 3,396). 9 LONG-TERM DEBT
December 31, --------------------- 2000 2001 EUR EUR -------- ------- A. Commerzbank, Pobocka Praha, interest rates fixed at 6.5% and 5.2%. 1,407 1,263 B. Credit du Maroc, interest rate fixed at 7.5% 683 693 C. Bank of Communication, interest rates fixed at 5.94% and 6.534% 3,249 3.396 D. Bank of Commerce, Berhad 4,727 -- E. HSBC, Labuan 2,151 -- F. HSBC Bank (Malaysia) Berhard 2,548 -- G. F. van Lanschot Bankiers N.V. 6,806 -- H. ING Bank N.V. 6,409 -- I. HSBC Trinkaus & Burkhardt 6,800 -- J. Dresdner Bank AG -- -- Other 242 745 -------- ------- 35,022 6,097 Less: current portion of long term debt (10,001) (5,063) -------- ------- Long term debt 25,021 1,034 ======== =======
A. The loans of the Commerzbank to Nastrojarna Possehl Electronic S.R.O. is secured by ways of a Letter of Comfort from the parent company. Repayment will take place partly by half year installments with a final maturity at June 28, 2002 and partly at once at July 29, 2002. B. The loan of Credit du Maroc to Possehl Electronic Maroc S.A.R.L. is secured by a pledge of four stamping presses and a Letter of Comfort from the parent company. Monthly installments amount to EUR 25 with a final maturity at November, 2003. C. The loans of the Bank of Communication to Shenzhen PBE SEG Electronics Co. Ltd. is secured by a mortgage on the first phase building and land use rights. Repayment will take place in 2002. D/E/F. These loans matured in 2001. G/H/I/J. Medium term loans drawn under the bank facility of EUR 6,806 per bank, in total EUR 27,224, have been restated to notes payable to banks due to not meeting the interest coverage ratio, for which a waiver is received until at least March 15, 2002. F-17 Aggregate required principal payments due on long-term debt are as follows:
Total EUR ----- 2002 5,063 2003 711 2004 and thereafter 323 ----- Total 6,097 =====
10 ACCRUED LIABILITIES Accrued liabilities consist of the following:
December 31, ------------------ 2000 2001 EUR EUR ------ ------ Accrual for sales returns 1,114 675 Income taxes 2,699 352 Salaries and payroll related items 7,059 3,789 Accrued capital expenditures 247 738 Tool loan clearance 308 507 Accrued interest 793 209 Goods received 1,171 609 Audit and legal fees 378 217 Accrued commission 91 57 Accrued pension benefit obligation -- 1,346 Restructuring severance and other -- 4.148 Other 4,006 4.285 ------ ------ Total accrued liabilities 17,866 16,932 ====== ======
The Company and most of its subsidiaries have defined contribution pension plans, which provide retirement benefits covering substantially all employees. The Company has no continuing obligations other than the annual contributions. Aggregate pension plan contributions were EUR 1,870 in 2000 and EUR 2,278 in 2001. The Company's Malaysian and Singaporean subsidiaries have retirement plans that are integrated with and supplement the governmental benefits provided in the laws of Malaysia and Singapore, respectively. The Company's German subsidiary has a defined benefit pension plan covering a limited group of its employees. This pension plan provides benefits to all employees who joined the German subsidiary before December 31, 1984 and who were between 30 and 55 years old. The benefits under this plan are based on years of service and final average compensation levels. The plan is not funded. Expenses under this plan were EUR 75, EUR 104 and EUR 99, consisting of service costs of EUR 23, EUR 47 and EUR 37, interest costs of EUR 52, EUR 57 and EUR 62 for the years ended December 31, 1999, 2000 and 2001, respectively. The aggregate F-18 accumulated benefit obligation, projected benefit obligation and fair value of plan assets at December 31, 2001 amounted to EUR 1,346, EUR 1,502 and EUR 0, respectively. The accrued pension obligation was calculated using the following assumptions: Discount rate 4.0% Expected long-term return on assets -- Average residual active life 14 years
The movement in the aggregated accumulated benefit obligation is as follows:
EUR ------ Balance January 1, 2000 1,231 Service cost 47 Interest cost 57 Payments to employees (36) ------ Balance December 31, 2000 1,299 Service cost 37 Interest cost 62 Payments to employees (52) ------ Balance December 31, 2001 1,346 ======
11 SUBORDINATED LOAN FROM SHAREHOLDER
December 31, ------------------ 2000 2001 EUR EUR ------ ------ Possehl 12,313 37,738
The first subordinated loan from Possehl was granted to the Company on July 20, 1999 and is subordinated to all senior liabilities of the Company. Possehl postponed full repayment of the first subordinated loan to the maturity date of the loan, being July 2004. The interest rate is based on EURIBOR plus 2.00%. The effective interest rate at December 31, 2001 was 5.324%. The Company has granted Possehl warrants exercisable in the event of: - - a sale of more than 25% of the outstanding share capital; - - a sale of more than 35% of the Company's business or assets; or - - on any public offering. Under the terms of the warrants, the Company will issue new shares to be acquired by the holder of the warrants, which will give the holder of the warrants a (combined) share of 5.0% of the ordinary share capital of the Company, for which a total purchase price of EUR 9.1 million will be paid, thus valuing the equity of the Company at EUR 181.5 million. F-19 The holder of the warrants will have the right to sell all shares acquired through exercise of the warrants, along with any sale of shares by the shareholders of the Company and/or any public offering. The warrants will have a life of 10 years. Upon repayment of the loan in full the Company may cancel the warrants in return for a cash payment of EUR 2.3 million. A public offering or sale of a substantial part of the Company's business within a year after such early cancellation of the warrants will prompt an additional payment to the holder of the warrant. This payment will be equal to 5% of the positive difference between the implied equity valuation upon a public offering of equity and the original EUR 181.5 million equity value minus EUR 2.3 million. After five years the holder of the warrants will have the right to sell the warrants to the Company for a price of EUR 1.4 million. The subordinated debt includes covenants requiring the Company to maintain certain financial ratios. The Company was not in compliance with all applicable covenants at December 31, 2001, however Possehl granted the Company a waiver until January 2003 for any contractual default of financial covenants. On December 10, 2001 Possehl granted a second subordinated loan of EUR 25 million to the Company. This loan is subordinated in claim on assets to the other debts, and repayable only after other debts such as to Deutsche Bank AG, Dresdner Bank AG, HSBC Trinkaus & Burkhardt KGaA, ING Bank N.V. or F. van Lanschot Bankiers N.V. with a higher ranking claim have been repaid. Repayment will take place in one amount on December 31, 2004 latest. The loan is subject to an interest charge of 2.5% in addition to 3-months EURIBOR. The effective interest rate at December 31, 2001 was 5.839%. The movement in the balance sheet value of the first subordinated loan is as follows:
EUR ------- Original draw down at November 9, 1999 13,613 Original issue discount ("OID") of the warrants (1,710) Interest expense 835 ------- Balance December 31, 2001 12,738 =======
OID was calculated using the minimum value method with quarterly amortization. The interest rate of the subordinated loan at December 31, 2000 and 2001 was 7.254% and 5.324%, respectively. The effective interest rate used in the OID calculation was 9.41%. The interest expense in 1999, 2000 and 2001 was EUR 45, EUR 365 and EUR 425, respectively. F-20 12 OTHER LONG-TERM LIABILITIES The other long-term liabilities consist of the following:
December 31, ---------------- 2000 2001 EUR EUR ----- ----- Warrants 1,674 1,361 Accrued pension benefit obligation 1,299 -- ----- ----- Total other long-term liabilities 2,973 1,361 ===== =====
Warrants The OID of the warrants at November 9, 1999 calculated using the minimum value method amounts to EUR 1,710 and is classified in other long-term liabilities. The Company periodically revalues the warrants to fair market. Pension plans The accrued pension obligation has been restated to current liabilities, and more in specific to accrued liabilities. The German subsidiary will cease its operations in 2002. Therefore the benefit obligation has become a short-term obligation. 13 RESTRUCTURING In the second quarter of 2001 the Board of Directors decided to restructure the Company in order to adjust the organization to changed market conditions. It was decided to stop the production of leadframes in Europe and Hong Kong, whereby 4 production facilities were planned to be sold or shut down by the end of 2001. The necessary provisions for receivables, obsolete stock, impairment of fixed assets, termination benefits and estimated relocation costs were recorded per June 30, 2001 based on judgement of management. After BESI sold its 30% equity interest in the Company to Possehl, the new Board of Directors revised its decision concerning the production facilities in France and The Netherlands. It has been decided not to close these production facilities. F-21 The movement in the restructuring provision was:
Inventory Deferred Severance Impairment write-off tax Other Total --------- ---------- --------- -------- ----- ----- Balance January 1, 2001 -- -- -- -- -- -- Provision 7,242 3,776 1,496 (621) 1,857 13,750 Additions to provision 1,556 6,502 -- -- 769 8,827 Used from provision (1,955) (9,364) (1,496) -- (276) (13,091) Release of provision (3,456) (914) -- 371 (1,589) (5,588) ------- ------- ------- ------- ------- ------- Balance December 31, 2001 3,387 -- -- (250) 761 3,898 ======= ======= ======= ======= ======= ======= Restructuring charges 5,342 9,364 -- (250) 1,037 15,493 ======= ======= ======= ======= ======= ======= Cost of sales -- -- 1,496 -- -- 1,496 ======= ======= ======= ======= ======= =======
Severance The provision for the reduction in workforce recorded by the Company as per June 30, 2001, includes severance and other benefits for 353 employees, of which 108 are related to the production facilities in France and The Netherlands. Additionally, in the second half of 2001 the Company recorded a provision for a further reduction of 63 employees at the German subsidiary. The number of employees actually terminated as part of the restructuring is 308, of which 252 will leave the Company early 2002 due to formal procedures. 14 FINANCIAL INSTRUMENTS Due to the international scope of the Company's operations, the Company is exposed to the risk of adverse movements in foreign currency exchange rates. The Company is primarily exposed to fluctuations in the value of the Singapore dollar, Hong Kong dollar, Malaysian ringgit and EUR against the US dollar, since approximately 60% of the Company's sales are denominated in US dollar. The Company's policy has been to hedge only foreign currency exposures resulting from material contracts. PE has not hedged its currency exposure related to intercompany payables and external financing of subsidiaries. The Company has exposure to credit risk to the extent that the counterparty to the transaction fails to perform according to the terms of the contract. The amount of such credit risk, measured as the fair value of the forward foreign currency exchange contract that is in a positive fair value position, was EUR 74 and EUR 21 at December 31, 2000 and 2001 respectively. The Company believes that the risk of significant loss from credit risk is remote because it deals with creditworthy financial institutions. The Company does not typically demand collateral from the counterparties. The cumulative fair value of the contract is not considered material to these financial statements. F-22 The following is a summary of the Company's forward foreign currency exchange contracts:
December 31, ---------------- 2000 2001 EUR EUR ----- ----- To sell US dollar for Euro -- 1,373 To sell US dollars for Japanese yen 663 -- To sell US dollars for France francs 968 -- To sell US dollars for Dutch guilders 183 --
15 COMMITMENTS AND CONTINGENCIES The Company rents buildings, land and leases certain equipment under operating leases. As of December 31, 2001, the required minimum lease commitments were as follows:
EUR ----- 2002 1,092 2003 to 2006 504 2007 and thereafter 8,262 ----- Total 9,858
An amount of EUR 8,577 for land rental related to the Singapore subsidiary is included. Rental expense was EUR 2.0 million, EUR 2.8 million and EUR 3.1 million in 1999, 2000 and 2001, respectively. As of December 31, 2001, the minimum commitments in respect of contracts placed for capital expenditures amounted to EUR 0.1 million. 16 RELATED PARTY TRANSACTIONS Related party transactions are as follows:
1999 2000 2001 EUR EUR EUR ---- ---- ---- Sales to related companies 32,268 1,368 -- Purchases from related companies 1,506 4,509 2.502
F-23 17 INCOME TAXES The components of income before income taxes and investment income from affiliated companies (including the cumulative effect of change of accounting principle recorded in 2001) are as follows:
Year ended December 31, ----------------------- 1999 2000 2001 EUR EUR EUR ------- ------- ------- Domestic (997) (5,215) (2,446) Foreign 17,587 30,079 (42,176) ------- ------- ------- Total 16,590 24,864 (44,622) ======= ======= =======
The Netherlands domestic statutory tax rate is 35%. The reconciliation between the actual income taxes shown in the consolidated statements of operations and the expense that would be expected based on the application of the domestic tax rate to income before taxes, investment income from affiliated and minority interest is as follows:
Year ended December 31, ----------------------- 1999 2000 2001 EUR EUR EUR ------ ------ ------ "Expected" income taxes based on domestic rate 5,807 8,702 (15,618) Non deductible expenses 256 485 172 Foreign tax rate differential (1,262) (2,137) 3,229 Tax exempt income (2,517) (2,810) 3,069 Increase in valuation allowance 649 176 7,841 Other (167) (526) (2,286) ------ ------ ------ Income taxes shown in statements of operations 2,766 3,890 (3,593) ===== ===== ======
The Company's provision for income taxes consists of the following:
Year ended December 31, ----------------------- 1999 2000 2001 EUR EUR EUR ----- ----- ------ Current: - - domestic (228) (533) 70 - - foreign 2,871 4,485 883 Deferred: - - domestic (2) (468) 450 - - foreign 125 406 (4,996) ----- ----- ------ 2,766 3,890 (3,593) ===== ===== ======
F-24 EX-12.3 3 b49673cpexv12w3.txt CEO CERTIFICATION PURSUANT TO RULE 13A-14 & 15D-14 ITEM 19: EXHIBITS Exhibit 12.3 CERTIFICATIONS I, Richard W. Blickman, certify that: 1. I have reviewed this annual report on Form 20-F of BE Semiconductor Industries N.V.; 2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report; 3. Based on my knowledge, the financial statements, and other financial information included in this annual report; fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this annual report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Dated: February 24, 2004 /s/ Richard W. Blickman ------------------------------ Richard W. Blickman Chief Executive Officer EX-12.4 4 b49673cpexv12w4.txt CFO CERTIFICATION PURSUANT TO RULE 13A-14 & 15D-14 Exhibit 12.4 I, Cor te Hennepe, certify that: 1. I have reviewed this annual report on Form 20-F of BE Semiconductor Industries N.V.; 2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report; 3. Based on my knowledge, the financial statements, and other financial information included in this annual report; fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this annual report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Dated: February 24, 2004 /s/ Cor te Hennepe ------------------------------ Cor te. Hennepe Director of Finance EX-13.3 5 b49673cpexv13w3.txt CEO CERTIFICATION PURSUANT TO SECTION 906 Exhibit 13.3 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the annual report on Form 20-F of BE Semiconductor Industries N.V. (the "Company") for the period ended December 31, 2002, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned, Richard W. Blickman, Chief Executive Officer of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, that: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Dated: February 24, 2004 /s/ Richard W. Blickman ----------------------- Richard W. Blickman Chief Executive Officer EX-13.4 6 b49673cpexv13w4.txt CFO CERTIFICATION PURSUANT TO SECTION 906 Exhibit 13.4 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the annual report on Form 20-F of BE Semiconductor Industries N.V. (the "Company") for the period ended December 31, 2002, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned, Cor te Hennepe, Co-Director of Finance of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, that: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Dated: February 24, 2004 /s/ Cor te Hennepe ------------------ Cor te Hennepe Director of Finance -----END PRIVACY-ENHANCED MESSAGE-----