EX-10.1 3 p67258exv10w1.txt EX-10.1 Exhibit 10.1 Additional Exhibits - Quarterly report for the quarter ended September 30, 2002 which was distributed to our U.S. shareholders in paper form. LETTER TO SHAREHOLDERS ASM International N.V. reports the operating results for the third quarter of 2002. The net loss for the third quarter of 2002 amounted to E 4.6 million or E 0.09 diluted net loss per share compared to a net loss of E 12.7 million or E 0.26 diluted net loss per share for the third quarter of 2001. By comparison the net loss for the second quarter of 2002 amounted to E 6.4 million or E 0.13 diluted net loss per share. For the nine months ended September 30, 2002 the net loss amounted to E 23.2 million or E 0.47 diluted net loss per share, compared to net earnings of E 15.1 million or E 0.30 diluted net earnings per share for the same period in 2001. NET SALES Net sales for the third quarter of 2002 amounted to E 140.0 million, almost at the same sales level of E 140.9 million in the second quarter of 2002 and an increase of 37.3% compared to net sales of E 102.0 million for the same period last year. Net sales for the nine months ended September 30, 2002, amounted to E 381.5 million, 16.3% lower than the E 455.8 million net sales for the same period in 2001. The semiconductor equipment market is still impacted by the severe downturn in the industry, which started late 2000. This resulted in a lower capital spending by semiconductor manufacturers, in particular for capacity driven purchases. Despite the lower capacity driven demand, ASMI has seen a continued interest and orders for new technology and 300mm equipment over the last quarters in particular for our Front-end operations. This increased order activity has already resulted in a significantly higher level of sales in the second and third quarter of 2002 as compared to the third and fourth quarter of 2001 and the first quarter of 2002. OPERATIONS The gross profit margin for the third quarter of 2002 amounted to 38.1% of net sales, 0.3 percentage points above the gross profit margin of 37.8% for the previous quarter. The gross profit margin for the nine months of 2002 amounted to 36.7%, a decrease of 3.8 percentage points compared to 40.5% gross profit margin in the same period in 2001. The lower sales volume and the mix of products sold in the nine months of 2002 compared to the same period in 2001 resulted in a decrease of gross profit margin. Selling, general and administrative costs were E 28.6 million in the third quarter of 2002, the same level of E 28.6 million as in the second quarter of 2002, and increased 6.7% compared to E 26.8 million in the third quarter of 2001. Selling, general and administrative expenses were 20.9% of net sales in the nine months of 2002, compared to 18.8% of net sales in the nine months of 2001. Research and development expenses were E 21.6 million or 15.4% of net sales in the third quarter of 2002, the same level as in the second quarter of 2002, an increase from E 19.9 million or 19.5% of net sales in the third quarter of 2001. For the nine months in 2002 research and development expenses increased by 8.9% compared to the same period last year, and as a percentage of net sales from 12.9% to 16.7%. ASMI continued to keep the research and development expenses at a high level despite the market circumstances and concentrated its investments in research and development on the equipment and product solutions for the next generations of semiconductor devices. Amortization of goodwill. As of January 1, 2002 ASMI adopted SFAS 142 "Goodwill and Other Intangible Assets". This new accounting standard requires that goodwill not be amortized, but rather tested at least annually for impairment. Consequently, ASMI stopped amortizing goodwill as of January 1, 2002. ASMI did not record an impairment loss upon adoption of SFAS 142. Amortization of goodwill in the third quarter of 2001 amounted to E 1.9 million and for the nine months in 2001 to E 5.7 million. Earnings (loss) from operations amounted to earnings of E 3.2 million in the third quarter of 2002 compared to a loss from operations of E 12.1 million in the same period of 2001. For the nine months of 2002, the loss from operations amounted to E 3.6 million, compared to earnings of E 34.2 million for the nine months of 2001. Before amortization of 1 2002 THIRD QUARTER REPORT ASM INTERNATIONAL N.V. goodwill, the adjusted loss from operations for the third quarter of 2001 were E 10.1 million compared to earnings of E 3.2 million in the third quarter of 2002. Net interest and other financial income (expenses) increased from a net expense of E 0.9 million in the third quarter of 2001 to a net expense of E 2.2 million in the third quarter of 2002. In the nine months of 2002 the net expense amounted to E 6.8 million compared to a net expense of E 0.3 million in the same period of 2001. The increase in net expense in the nine months of 2002 was the result of increased borrowings and the full impact of our US$ 115.0 million 5% convertible notes, issued in November 2001, E 1.1 million in amortization of debt issuance costs related to these convertible notes, and a small foreign exchange loss as compared to a small foreign exchange gain in the same period of 2001. BOOKINGS AND BACKLOG New orders booked in our Front-end operations increased by more than 10%, an increase for the third quarter in a row. The overall level of new orders booked in the third quarter of 2002 amounted to E 152.2 million. For the first nine months in 2002 the total of new orders amounted to E 429.5 million. The backlog at the end of September stood at E 180.6 million, an increase of 7.2% compared to the backlog of E 168.4 million at the end of June 2002. OUTLOOK The visibility of a strong recovery in the industry is still weak, due to uncertain market and economic conditions, resulting in current low and selective capital spending by semiconductor manufacturers. Despite the market weakness, ASMI has seen increased order activity for new technology equipment over the past two quarters, which already led to an increase in sales volumes in the second and third quarter of 2002. This in particular in our Front-end operations. ASMI believes it is well positioned in the Front-end segment of the semiconductor equipment market due to its strategies in 300mm, low-k, high-k, SiGe, Strained Silicon applications and copper, and in the Back-end segment due to its established position as a leading supplier of a full spectrum of innovative products and its recently introduced next generation wire bonders. ASMI also strongly believes that its firm commitment to research and development, its readiness in new technologies, design-in wins at top-tier customers as well as our strategic partnerships provide us with a broad basis for substantial long-term market share gains. Based on the current tendency of semiconductor manufacturers to delay further capital spending into the next year, ASMI does anticipate that sales and bottom line levels for the fourth quarter of 2002 will be lower compared to the third quarter of this year. Nevertheless, based on our current backlog and the selection of ASMI's new technologies by top-tier customers and in spite of the now weaker than originally anticipated 4th quarter, ASMI re-confirms its existing outlook for a continued growth of sales and improvement of the bottom line for the second half of 2002, compared to the first half of this year, and also into 2003. Arthur H. del Prado President and Chief Executive Officer Bilthoven October 21, 2002 2 2002 THIRD QUARTER REPORT ASM INTERNATIONAL N.V. Auditors: Deloitte & Touche, Accountants. Stock: Traded on the NASDAQ National Market System under the symbol 'ASMI' and on the Euronext Amsterdam Stock Exchange under the symbol 'ASM' Transfer Agents: Citibank, New York, NY, U.S.A. ABN AMRO Bank, Breda, the Netherlands Safe Harbor Statement under the US Private Securities Litigation Reform Act of 1995: All matters discussed in this statement, except for any historical data, are forward-looking statements. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. These include, but are not limited to, economic conditions and trends in the semiconductor industry, currency fluctuations, the timing of significant orders, market acceptance of new products, competitive factors, litigation involving intellectual property, shareholder and other issues, commercial and economic disruption due to terrorist activity, armed conflict or political instability and other risks indicated in the Company's filings from time to time with the US Securities and Exchange Commission, including, but not limited to, the Company's report on Form 20-F and Form 6-K as filed. 3 2002 THIRD QUARTER REPORT ASM INTERNATIONAL N.V. CONSOLIDATED STATEMENTS OF OPERATIONS
(thousands, except per share data) In Euro -------------------------------------------------------------------------------------------------------------------- Three months ended Nine months ended September 30, September 30, -------------------------- -------------------------- 2001 2002 2001 2002 ----------- ----------- ----------- ----------- (unaudited) (UNAUDITED) (unaudited) (UNAUDITED) Net sales 102,028 140,044 455,785 381,468 Cost of sales (65,438) (86,642) (271,385) (241,649) ----------- ----------- ----------- ----------- Gross profit 36,590 53,402 184,400 139,819 Operating expenses: Selling, general and administrative (26,812) (28,604) (85,845) (79,594) Research and development (19,923) (21,610) (58,670) (63,863) Amortization of goodwill (1,924) -- (5,682) -- ----------- ----------- ----------- ----------- Total operating expenses (48,659) (50,214) (150,197) (143,457) ----------- ----------- ----------- ----------- Earnings (loss) from operations (12,069) 3,188 34,203 (3,638) Net interest and other financial income (expenses) (856) (2,223) (288) (6,825) ----------- ----------- ----------- ----------- Earnings (loss) before income taxes and minority interest (12,925) 965 33,915 (10,463) Income taxes 484 (121) (6,487) 496 ----------- ----------- ----------- ----------- Earnings (loss) before minority interest (12,441) 844 27,428 (9,967) Minority interest (295) (5,454) (12,294) (13,201) ----------- ----------- ----------- ----------- Net earnings (loss) (12,736) (4,610) 15,134 (23,168) =========== =========== =========== =========== Basic net earnings (loss) per share (0.26) (0.09) 0.31 (0.47) Diluted net earnings (loss) per share (1) (0.26) (0.09) 0.30 (0.47) =========== =========== =========== =========== Weighted average number of shares used in computing per share amounts (in thousands): Basic 48,978 49,161 48,904 49,137 Diluted (1) 48,978 49,161 50,064 49,137 =========== =========== =========== =========== Adjusted amounts - Adoption of SFAS No. 142 (2): Reported net earnings (loss) (12,736) (4,610) 15,134 (23,168) Add back: amortization of goodwill 1,924 -- 5,682 -- ----------- ----------- ----------- ----------- Adjusted net earnings (loss) (10,812) (4,610) 20,816 (23,168) Reported basic net earnings (loss) per share (0.26) (0.09) 0.31 (0.47) Amortization of goodwill per share 0.04 -- 0.12 -- ----------- ----------- ----------- ----------- Adjusted basic net earnings (loss) per share (0.22) (0.09) 0.43 (0.47) Reported diluted net earnings (loss) per share (0.26) (0.09) 0.30 (0.47) Amortization of goodwill per share 0.04 -- 0.11 -- ----------- ----------- ----------- ----------- Adjusted diluted net earnings (loss) per share (0.22) (0.09) 0.41 (0.47) =========== =========== =========== ===========
(1) The calculation of diluted net earnings (loss) per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in earnings of the Company. Only instruments that have a dilutive effect on net earnings (loss) are included in the calculation. The assumed conversion results in adjustment in the weighted average number of common shares and net earnings (loss) due to the related impact on interest expense. The calculation is done for each reporting period individually. Due to the loss reported in the three months ended September 30, 2001 and 2002 and the nine months ended September 30, 2002, the effect of securities and other contracts to issue common stock were anti-dilutive and no adjustments have been reflected in the diluted weighted average number of shares and net earnings (loss) for that period. (2) The adjusted amounts reflect the adoption of SFAS No. 142, "Goodwill and Other Intangible Assets" for all periods presented. The Company adopted SFAS No. 142 as of January 1, 2002. SFAS No. 142 requires that goodwill not be amortized, but, rather be tested at least annually for impairment. Consequently the Company stopped amortizing goodwill as of January 1, 2002. The Company did not record an impairment loss upon adoption of this standard. At September 30,2002: 1 Euro = 0.9860 US$ 4 2002 THIRD QUARTER REPORT ASM INTERNATIONAL N.V. CONSOLIDATED BALANCE SHEETS
(thousands, except per share data) In Euro ---------------------------------------------------------------------------------------- December 31, September 30, ------------ ------------- Assets 2001 2002 ------------ ------------- (UNAUDITED) Cash and cash equivalents 107,577 67,826 Marketable securities 5 11 Accounts receivable, net 136,615 143,826 Inventories, net 206,027 198,744 Income taxes receivable 4,103 3,806 Other current assets 21,110 25,036 ------------ ------------- Total current assets 475,437 439,249 Property, plant and equipment, net 191,081 167,711 Goodwill, net 64,306 57,747 Other assets 26,241 24,568 ------------ ------------- Total Assets 757,065 689,275 ============ ============= Liabilities and Shareholders' Equity Notes payable to banks 16,231 17,162 Accounts payable 61,737 84,273 Accrued expenses 85,794 54,908 Advance payments from customers 6,309 9,755 Deferred revenue 11,562 9,618 Income taxes payable 4,227 5,637 Current portion of long-term debt 2,179 1,547 ------------ ------------- Total current liabilities 188,039 182,900 Deferred income taxes 1,977 1,604 Long-term debt 11,720 10,093 Convertible subordinated debt 130,728 116,634 ------------ ------------- Total Liabilities 332,464 311,231 Minority interest in subsidiary 103,691 97,822 Shareholders' Equity: Common shares Authorized 110,000,000 shares, par value E 0.04, issued and outstanding 49,070,296 and 49,163,608 shares 1,963 1,967 Financing preferred shares, issued none -- -- Preferred shares, issued none -- -- Capital in excess of par value 252,892 253,660 Retained earnings 64,916 41,748 Accumulated other comprehensive income (loss) 1,139 (17,153) ------------ ------------- Total Shareholders' Equity 320,910 280,222 ------------ ------------- Total Liabilities and Shareholders' Equity 757,065 689,275 ============ =============
5 2002 THIRD QUARTER REPORT ASM INTERNATIONAL N.V. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(thousands, except per share data) In Euro ----------------------------------------------------------------------------------------------------- Three months ended Nine months ended September 30, September 30, ------------------------ ------------------------ 2001 2002 2001 2002 ----------- ----------- ----------- ----------- (unaudited) (UNAUDITED) (unaudited) (UNAUDITED) Net earnings (loss) (12,736) (4,610) 15,134 (23,168) Other comprehensive income: Exchange rate changes for the period (17,838) 1,046 996 (19,265) Unrealized gains (losses) on derivative instruments 1,750 (1,088) 853 973 ----------- ----------- ----------- ----------- Total other comprehensive income (16,088) (42) 1,849 (18,292) ----------- ----------- ----------- ----------- Comprehensive income (loss) (28,824) (4,652) 16,983 (41,460) =========== =========== =========== ===========
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(thousands, except for number of common shares) In Euro ---------------------------------------------------------------------------------------------------------------------------------- Accumulated Number of Capital in other Total common Common excess of Retained comprehensive Shareholders' shares shares par value earnings income (loss) Equity ---------- ------ --------- -------- -------------- ----------- Balance December 31, 2000 48,797,346 221 252,784 58,818 (3,501) 308,322 Issuance of common shares: For stock options 222,218 1 1,377 -- -- 1,378 Net earnings -- -- -- 15,134 -- 15,134 Other comprehensive income -- -- -- -- 1,849 1,849 ---------- ------ --------- -------- -------------- ----------- Balance September 30, 2001 (unaudited) 49,019,564 222 254,161 73,952 (1,652) 326,683 ========== ====== ========= ======== ============== =========== Balance December 31, 2001 49,070,296 1,963 252,892 64,916 1,139 320,910 ISSUANCE OF COMMON SHARES: FOR STOCK OPTIONS 93,312 4 768 -- -- 772 NET EARNINGS (LOSS) -- -- -- (23,168) -- (23,168) OTHER COMPREHENSIVE INCOME (LOSS) -- -- -- -- (18,292) (18,292) ---------- ------ --------- -------- -------------- ----------- BALANCE SEPTEMBER 30, 2002 (UNAUDITED) 49,163,608 1,967 253,660 41,748 (17,153) 280,222 ========== ====== ========= ======== ============== ===========
6 2002 THIRD QUARTER REPORT ASM INTERNATIONAL N.V. CONSOLIDATED STATEMENTS OF CASH FLOWS
(thousands) In Euro ------------------------------------------------------------------------------------------------------------------ Three months ended Nine months ended September 30, September 30, ------------------------- -------------------------- 2001 2002 2001 2002 ----------- ----------- ----------- ----------- (unaudited) (UNAUDITED) (unaudited) (UNAUDITED) Cash flows from operating activities: Net earnings (loss) (12,736) (4,610) 15,134 (23,168) Depreciation and amortization 10,802 9,550 31,022 29,851 Amortization of debt issuance costs -- 343 -- 1,106 Deferred income taxes (266) 159 (649) (160) Minority interest 295 5,454 12,294 13,201 Changes in other assets and liabilities 2,318 6,396 (25,790) (25,751) ----------- ----------- ----------- ----------- Net cash provided by (used in) operating activities 413 17,292 32,011 (4,921) Cash flows from investing activities: Net capital expenditures (13,186) (9,886) (53,836) (20,740) Purchase of marketable securities -- (6) -- (6) ----------- ----------- ----------- ----------- Net cash (used in) investing activities (13,186) (9,892) (53,836) (20,746) Cash flows from financing activities: Notes payable to banks, net 59,731 1,408 67,144 1,346 Proceeds from issuance of shares 925 77 1,378 772 Proceeds from long-term debt 543 93 2,076 595 Repayments of long-term debt (41,872) (525) (54,928) (2,645) Dividend to minority shareholders -- -- (9,407) (8,056) ----------- ----------- ----------- ----------- Net cash provided by (used in) financing activities 19,327 1,053 6,263 (7,988) Exchange rate effects (8,839) (732) 4,775 (6,096) ----------- ----------- ----------- ----------- Net increase (decrease) in cash and cash equivalents (2,285) 7,721 (10,787) (39,751) =========== =========== =========== ===========
ACCOUNTING PRINCIPLES The Company follows accounting principles generally accepted in the United States of America (`US GAAP'). Accounting principles applied are unchanged compared to the year 2001, except for the accounting of goodwill. As of January 1, 2002 the Company adopted SFAS No. 142 "Goodwill and Other Intangible Assets", which requires that goodwill not be amortized, but, rather, be tested at least annually for impairment. The Company did not record an impairment loss upon adoption of SFAS No. 142 as of January 1, 2002. Under accounting principles generally accepted in the Netherlands (`Dutch GAAP') the statement of operations, the balance sheet and statement of cash flows would not differ significantly from those presented in this interim report, except for the amortization of goodwill. Under the new adopted US GAAP standard SFAS No. 142, the Company stopped amortizing goodwill as of January 1, 2002, which is not allowed under Dutch GAAP. Had the Company continued to amortize goodwill the net loss for the nine months ended September 30, 2002 would have been E 5.5 million higher at a net loss of E 28.7 million or E 0.58 diluted net loss per share, and retained earnings would have been E 5.5 million lower at E 36.2 million. 7 2002 THIRD QUARTER REPORT ASM INTERNATIONAL N.V.