Form 6-K

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If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82- .

As used in this report, the terms “we,” “us,” “our,” “ASM,” “ASMI,” and “ASM International” mean ASM International N.V. and its subsidiaries, unless the context indicates another meaning, and the term “common shares” means our common shares, par value € 0.04 per share. Since we are a Netherlands company, the par value of our common shares is expressed in euros (“€”). The terms “United States,” “U.S.,” and “USA” refer to the United States of America.

ASM International N.V. (‘ASMI’ or ‘the Company’) is a corporation domiciled in the Netherlands with its principal operations in Europe, the United States, Southeast Asia and Japan.

The accompanying condensed financial information (which the Company refers to as the Interim Financial Information) has been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”), except for the disclosure of segment information in accordance with SFAS 131 “Disclosures about Segments of an Enterprise and Related Information.” The Company’s 53.84% owned subsidiary, ASM Pacific Technology Ltd. (“ASMPT”), which comprises the Company’s back-end operations, is listed on the Hong Kong Stock Exchange and publicly reports semi-annual financial information in accordance with the rules of the Hong Kong Stock Exchange. Accordingly, the Company provides segment information for its front-end and back-end operations only on a semi-annual basis.

The Interim Financial Information is unaudited but includes all adjustments (consisting of normal recurring adjustments) which the Company’s management considers necessary for a fair presentation of the financial position, operating results and cash flows for the dates and periods presented. Certain information and footnote disclosures normally included in financial information prepared in accordance with US GAAP have been condensed or omitted. The result of operations for the three months ended March 31, 2005 may not necessarily be indicative of the operating results for the entire fiscal year.

The Consolidated Balance Sheet as of December 31, 2004 was derived from audited financial statements but does not include all disclosures required by US GAAP. However, the Company believes that the disclosures are adequate to make the information presented not misleading. The Interim Financial Information should be read in conjunction with the Consolidated Balance Sheets of ASM International N.V. as of December 31, 2003 and 2004, and the related Consolidated Statements of Operations, Comprehensive Income, Cash Flows and changes in Shareholders’ Equity for each year in the three year period ended December 31, 2004. See the Company’s Annual Report on Form 20-F for the year ended December 31, 2004.

In December 2004, the FASB issued SFAS No. 123R “Share-Based Payment”, which addresses the accounting for employee stock options. This statement is a revision of SFAS No. 123 “Accounting for Stock-Based Compensation” and supersedes APB Opinion No. 25, “Accounting for Stock Issued to Employees.” SFAS No. 123R is effective at the beginning of the first annual period beginning after June 15, 2005. The approach to accounting for share-based payments in SFAS No. 123R is in general similar to the approach described in SFAS No. 123. However, SFAS No. 123R requires that the cost of all employee stock options, as well as other equity-based compensation arrangements, be reflected in the financial statements based on the estimated fair value of the

awards. Pro forma disclosure is no longer an alternative. The Company will adopt SFAS No. 123R at January 1, 2006, and will apply the provisions of SFAS No. 123R to all share-based payments, including employee stock options granted, modified or settled subsequent to the date of adoption. The cost relating to those payments will be measured at fair value on the grant date and will be recognized in the financial statements over the requisite service period. In addition, SFAS No. 123R requires that the cost of common shares issued under the Employee Share Incentive Scheme of ASMPT is accounted for in the year of vesting. In prior years, the Company applied APB Opinion No. 25 and accounted for this cost in the year in which service was rendered by the employee who was granted shares. The Company expects that the adoption of SFAS No. 123R in 2006 will not have a material impact on the Company’s financial position or result of operations.

At March 31, 2005, cash and cash equivalents and marketable securities of the Company’s 53.84% owned subsidiary ASMPT amounted to € 84,751 and are restricted to use in the operations of ASMPT.

ASM Microchemistry Oy – In July 1999, the Company acquired all the outstanding shares of Microchemistry Oy. The acquisition was accounted for using the purchase method. The total consideration paid amounted to € 3,868. After adding the assets deficiency, goodwill amounted to € 4,747.

NanoPhotonics AG – In December 1999, the Company acquired a 24.0% interest in NanoPhotonics AG, a German supplier of precision thin film metrology equipment, for € 407. The Company’s Chief Executive Officer also purchased a 44.5% interest in NanoPhotonics. In December 1999 the Company agreed with the Chief Executive Officer the right to purchase his 44.5% interest at the option of the Company, expiring December 31, 2004, at the same price the officer paid for his interest in the initial transaction. This option agreement expired in 2004 and has been extended until December 31, 2005 at the same terms as the initial option agreement. Due to the issuance of new shares by NanoPhotonics to third parties in 2003, the Company’s interest diluted to 23.61% and the Chief Executive Officer’s interest diluted to 43.77% as of December 31, 2004.

ASM NuTool, Inc. (“ASM NuTool”) – On June 2, 2004 the Company acquired the remaining 84.3% interest in NuTool and as from June 2, 2004 the Company owns 100% of the outstanding capital stock of NuTool. The total consideration for the 84.3% interest, including expenses, amounted to € 35,063, excluding the value of common shares that may be issued in the future based on certain financial performance targets. The other 15.7% interest in NuTool was acquired by the Company in two transactions in December 2001 and April 2003 for a total consideration of € 21,507 at the time of the purchase. The acquisition was accounted for using the purchase method and the excess of the purchase price over the fair value of the underlying net assets acquired in the amount of € 42,022 (or US$ 51.5 million at the time of purchase) has been recorded as goodwill.

ASM Genitech Ltd. (“ASM Genitech”) – On August 5, 2004, the Company acquired 100% of the common shares in Genitech. The total consideration at the date of the acquisition, including expenses, amounted to € 7,939, excluding variable cash payments that may be payable in the future based on certain financial performance targets. The acquisition was accounted for using the purchase method and the excess of the purchase price over the fair value of the underlying net assets acquired in the amount of € 6,917 (or KRW 9,881 million at the time of purchase) has been recorded as goodwill.

ASM Pacific Technology Ltd.– In 2000, the Company purchased in various transactions 5.0% of the outstanding common shares of ASMPT to maintain a majority interest in the shares of ASMPT of 54.88% after the 5.0% acquisition. The total purchase price of the acquired shares amounted to € 74,757 (or US$ 71.8 million at the time of purchase). The acquisition of these shares was accounted for using the purchase method and the excess of the purchase price over the fair value of the underlying net assets acquired in the amount of € 64,985 (or US$ 61.8 million at the time of purchase) has been recorded as goodwill. The fair value approximated the book value of such assets and liabilities of ASMPT at the date of purchase.

In the second quarter of 2004, the Company’s subsidiary ASMPT repurchased 0.40% of its outstanding common shares in the open market for € 4,465 (HK$ 42.5 million). The acquisition of these common shares was accounted for using the purchase method and the excess of the purchase price over the fair value of the underlying net assets acquired has been recorded as goodwill. This repurchase increased the interest of the Company in ASMPT from 53.87% to 54.09%. This interest was diluted by 0.25% to 53.84% in December 2004 as a result of the issuance of 1,798,500 common shares of ASMPT pursuant to the Employee Share Incentive Scheme of ASMPT.

The changes in the amount of purchased technology and other intangible assets are as follows:

Purchased technology and other intangible assets are amortized over useful lives of 3 to 7 years.

ASMI and its individual subsidiaries borrow under separate short-term lines of credit with banks in the countries where they are located. The lines contain general provisions concerning renewal and continuance at the option of the banks. The weighted average interest rate of the outstanding notes payable was 1.87% at March 31, 2005.

Total short-term lines of credit amounted to € 92,854 at March 31, 2005. The amount outstanding at March 31, 2005 was € 23,184 and the undrawn portion totaled € 69,670. The undrawn portion includes € 33,582 relating to ASMPT, in which the Company holds a 53.84% interest, and such amount is limited solely for use in the operations of ASMPT. ASM Japan had € 35,784 available for borrowings under its bank lines, which are restricted for use in the ASM Japan operations. Total short-term facilities of ASM Japan in the amount of € 58,032 are guaranteed by ASMI.

The Company does not provide guarantees for borrowings of ASMPT and there are no guarantees from ASMPT to secure indebtedness of the Company. Under the rules of the Stock Exchange of Hong Kong, ASMPT is precluded from providing loans and advances, other than trade receivables in the normal course of business, to ASMI or its affiliates.

Long-term debt outstanding in local currencies, including current portion, is as follows (in thousands):

Long-term facilities outstanding in Japan, Singapore and Korea are collateralized by real estate and other assets of the respective subsidiaries of ASMI in Japan, Singapore and Korea, with additional guarantees provided by ASMI.

In November and December 2001, ASMI issued US$ 115.0 million in principal amount of 5.0% convertible subordinated notes due November 15, 2005 in a private offering. Interest is payable on May 15 and November 15 of each year. The notes are subordinated in right of payment to the Company’s existing and future senior debt. The notes are convertible into common shares at any time before their maturity at a conversion rate of 53.0504 shares per each US$ 1,000 principal amount of notes, subject to adjustment in certain circumstances. This is equivalent to an initial conversion price of US$ 18.85 per share. The Company may redeem, under certain conditions, some or all of the notes at any time after November 30, 2003 at a redemption price of US$ 1,000 per US$ 1,000 principal amount of notes, plus accrued and unpaid interest, if any, to, but excluding, the redemption date, if the closing price of the Company’s common shares has exceeded 150% of the conversion price then in effect for at least 20 trading days within a period of 30 consecutive trading days ending on the trading day before the date of mailing of the redemption notice. With respect to any notes called for early redemption, ASMI is required to make an additional payment

in cash or, at ASMI’s option, in common shares, or in a combination of cash and common shares, in an amount equal to US$ 199.44 per US$ 1,000 principal amount of notes, less the amount of any interest actually paid on the notes before the date of redemption. In the event of a change in control, ASMI may be required to repurchase the notes. In December 2004, US$ 16.1 million of the US$ 115.0 million convertible subordinated notes has been repurchased and as a result US$ 98.9 million remains outstanding at December 31, 2004. In the first quarter of 2005, US$ 4.6 million of the US$ 115.0 million convertible subordinated notes has been repurchased and as a result US$ 94.3 million remains outstanding at March 31, 2005. The US$ 4.6 million has been repurchased for a market value of US$ 5.0 million. The loss for the early extinguishment of the notes of € 319, which includes the premium paid above par and the write-off of unamortized issuance costs, has been recorded as interest expense in the Consolidated Statement of Operations for the three months ended March 31, 2005.

In May 2003, ASMI issued US$ 90.0 million in principal amount of 5.25% convertible subordinated notes due in May 2010 in a private offering. Interest on the notes is payable on May 15 and November 15 of each year. The notes are subordinated in right of payment to all of the Company’s existing and future senior indebtedness. The notes are convertible, at the option of the holder, into shares of the Company’s common stock initially at a conversion rate of 52.0237 shares of common stock for each US$ 1,000 principal amount of notes, subject to adjustment in certain circumstances. This is equivalent to an initial conversion price of US$ 19.22 per share. On or after May 20, 2006, the Company may redeem any of the notes at a redemption price equal to 100% of the principal amount of the notes being redeemed, plus accrued and unpaid interest, if the closing price of the Company’s common shares has exceeded 150% of the conversion price for at least 20 trading days in any period of 30 consecutive trading days and if certain other conditions are satisfied. In the event of a change in control, the Company may be required to repurchase the notes. The US$ 115.0 million 5.0% convertible subordinated notes rank pari passu with the US$ 90.0 million convertible subordinated notes. At March 31, 2005, none of the US$ 90.0 million convertible subordinated notes have been converted or repurchased.

In December 2004, ASMI issued US$ 150.0 million in principal amount of 4.25% convertible subordinated notes due in December 2011 in a private offering. Interest on the notes is payable on June 6 and December 6 of each year. The notes are subordinated in right of payment to all of the Company’s existing and future senior indebtedness. The notes are convertible, at the option of the holder, into shares of the Company’s common stock initially at a conversion rate of 48.0307 shares of common stock for each US$ 1,000 principal amount of notes, subject to adjustment in certain circumstances. This is equivalent to an initial conversion price of US$ 20.82 per share. On or after December 6, 2007, the Company may redeem any of the notes at a redemption price equal to 100% of the principal amount of the notes being redeemed, plus accrued and unpaid interest, if the closing price of the Company’s common shares has exceeded 130% of the conversion price for at least 20 trading days in any period of 30 consecutive trading days. In the event of a change in control, the Company may be required to repurchase the notes. The US$ 150.0 million 4.25% convertible subordinated notes rank pari passu with the US$ 115.0 million convertible subordinated notes and the US$ 90.0 million convertible subordinated notes. At March 31, 2005, none of the US$ 150.0 million convertible subordinated notes have been converted or repurchased.

Other movements in the balance of the outstanding subordinated debt in the three months ended March 31, 2005 are related to the translation of the outstanding amounts in U.S. dollars to euros.

The fees incurred for the issuance of the convertible subordinated notes are included as debt issuance costs in the Consolidated Balance Sheet and amortized by the interest method as interest cost during the life of the debts.

The Company has adopted various stock option plans and has entered into stock option agreements with various key management personnel. Under these plans, key employees may purchase a specific number of shares of the Company’s common stock. Options are priced at market value in euros or U.S. dollars on the date of grant, generally vest in equal parts over a period of five years and generally expire after five or ten years. Under the 2001 Stock Option Plan the Company is authorized to issue options to purchase 4,000,000 common shares. At March 31, 2005, options to purchase 1,486,146 common shares had been issued under the 2001 Stock Option Plan. Under previous plans no more options to purchase common shares can be issued. At March 31, 2005, options to purchase an aggregate of 1,959,611 common shares were outstanding, expiring at various dates through 2014.

The Company applies the intrinsic value method allowed by APB 25 in accounting for its stock option plans. Under APB 25, compensation expense resulting from awards under fixed plans is measured as the difference between the market price and the exercise price at the grant date. All fixed plan options were granted at an exercise price equal to market value at the measurement date. Accordingly, no compensation expense for stock options granted to key management personnel has been recognized in the Consolidated Statements of Operations pursuant to APB 25.

The following table illustrates the effect on net earnings (loss) if the Company had applied the fair value recognition provisions of SFAS No. 123, as partially amended by SFAS No. 148:

The total estimated stock-based compensation expense, determined under the fair value based method, net of related tax effect, is amortized ratably over the option vesting periods and computed using the Black-Scholes option pricing model with the following weighted average assumptions:

The following represents a reconciliation of net earnings (loss) and weighted average number of shares outstanding (in thousands) for purposes of calculating basic and diluted net earnings (loss) per share:

Due to the loss reported in the three months ended March 31, 2005, 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 loss for that period.

At December 31, 2004 and at March 31, 2005 the Company had entered into purchase commitments with suppliers in the amount of € 77,196 and € 89,033, of which € 76,403 and € 88,850 for purchases within the next 12 months. Commitments for capital expenditures at December 31, 2004 and March 31, 2005 were € 4,809 and € 5,575 respectively.

The Company is party to various legal proceedings generally incidental to its business and is subject to a variety of environmental and pollution control laws and regulations. As is the case with other companies in similar industries, the Company faces exposure from actual or potential claims and legal proceedings. Although the ultimate disposition of legal proceedings cannot be predicted with certainty, it is the opinion of the Company’s management that the outcome of any claim which is pending or threatened, either individually or on a combined basis, will not have a materially adverse effect on the financial position of the Company, but could materially affect the Company’s results of operations in a given year.

In June 2001, the Company’s subsidiary, ASM America, Inc. (“ASM America”), filed a lawsuit against Genus, Inc. (“Genus”) in the U.S. District Court for the Northern District of California alleging infringement of three patents (U.S. Patents Nos. 5,916,365, 6,015,590 and 4,798,165). Genus counterclaimed alleging antitrust violations and infringement of U.S. Patent No. 5,294,568. After court rulings that Genus did not infringe the ‘365 or ‘590 patents, the parties entered into a binding memorandum in April 2003 settling the litigation and granting nonexclusive cross-licenses to the patents in suit and directly related patents, with the license for the ‘365 and ‘590 patents becoming effective only upon completion of an appeal. The parties also agreed to refrain for a five-year period from litigating patent and antitrust claims, although each party retains the right to recover damages incurred during such period if a suit is brought later. In January 2004, the Company and ASM America appealed to the U.S. Court of Appeals for the Federal Circuit, and on March 16, 2005, the appellate court affirmed the district court’s claim construction and summary judgment rulings on the ‘590 and ‘365 patents. The effect of the appellate court’s decision is that the license granted to Genus for the ‘365 and ‘590 patents in the settlement agreement between the Company, ASM America and Genus is effective and no payments are due by Genus to ASM America.

You should read this discussion together with the Interim Financial Information and other financial information included in this report. Our financial statements are prepared in accordance with US GAAP, except that we provide segment information for our front-end and back-end operations only on a semi-annual basis. This report contains forward-looking statements that involve risks and uncertainties described in more detail below under “Cautionary Factors.”

We design, manufacture and sell equipment and systems used to produce semiconductor devices, or integrated circuits. Our production equipment and systems are used by both the front-end and back-end segments of the semiconductor industry. Front-end equipment performs various fabrication processes in which multiple thin films of electrically insulating or conductive material are grown or deposited onto a round slice of silicon, called a wafer. Back-end equipment separates these processed wafers into numerous individual dies, each containing the circuitry of a single semiconductor device, and assembles packages and tests the dies in order to create semiconductor devices. We conduct our front-end business, which accounted for 47.1% of our net sales in 2004, through our principal facilities in the Netherlands, the United States, Japan and Singapore. We conduct our back-end business, which accounted for 52.9% of our net sales in 2004, through our principal facilities in Hong Kong, the People’s Republic of China, Singapore and Malaysia. Our back-end operations are conducted through our 53.84 % majority-owned subsidiary, ASM Pacific Technology Ltd. (“ASM Pacific Technology”).

We sell our products worldwide to the semiconductor industry, which is subject to sudden and extreme cyclical variations in product supply and demand. In the period 2001 - 2003, the semiconductor industry experienced a severe cyclical downturn characterized by overcapacity and reduced demand for products, lower average selling prices across certain product lines, reduced investments in semiconductor capital equipment and other factors, all of which led to lower sales and earnings for our business, in particular for capacity-driven purchases. The year 2004 was a year of recovery in our industry, resulting in a significant improvement in sales, operating results and net earnings in 2004. In the second half of 2004 we have seen a reduced order intake indicating a lower level of activity of our customers, who became more cautious in adding capacity. This industry trend has resulted in lower sales and operating results in the first quarter of 2005.

Net sales in the first quarter of 2005 were € 134.7 million, a decrease of 31.2% from net sales in the first quarter of 2004 and a decrease of 17.2% from net sales in the fourth quarter of 2004. In line with industry trends, net sales for the first quarter of 2005 were lower as compared to the fourth quarter of 2004 in both wafer processing equipment (front-end) and assembly and packaging equipment and materials (back-end).

The first quarter of 2005 showed a positive development in order intake. With € 150.0 million in new orders, the order intake increased € 23.0 million or 18.1% as compared to € 127.0 million in the fourth quarter of 2004, reflecting a surge in back-end orders. The backlog at March 31, 2005 amounted to € 202.1 million, an increase of 8.2% compared to the backlog of € 186.8 million at December 31, 2004. Approximately one-third of this amount is attributable to the ending backlog of ASM Pacific Technology.

The current transition in the industry to new processes and materials and to a larger, 300mm wafer size from the current 200mm wafer size requires equipment providers to develop entirely new sets of tools and continues to present us with an opportunity to displace existing suppliers to major semiconductor manufacturers. We believe that we are well positioned and that our firm commitment to research and development, our readiness in new technologies and design-in wins at top-tier customers provide us with a broad basis for substantial long-term market share gains.

Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). The preparation of these consolidated financial statements requires us to make certain estimates, judgments and assumptions that we believe are reasonable based upon the information available. These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the periods presented. The significant accounting policies which we believe are the most critical to aid in fully understanding and evaluating our reported financial results include the following:

Revenue Recognition. We follow very specific and detailed guidelines in recognizing revenue following principles of revenue recognition described in United States Securities and Exchange Commission (“SEC”) Staff Topic 13, which includes interpretive guidance issued in Staff Accounting Bulletin No. 101 “Revenue Recognition in Financial Statements,” issued by the staff of the SEC in December 1999, and Staff Accounting Bulletin No. 104 “Revenue Recognition,” issued by the staff of the SEC in December 2003, as well as guidance set forth in Emerging Issues Task Force Issue No. 00-21 “Revenue Arrangements with Multiple Deliverables.” However, certain judgments affect the application of our revenue policy. Our transactions frequently involve the sale of complex equipment, which may include customer-specific criteria, transactions to new customers or transactions with new technology, as well as payment terms, linked to achieving certain milestones. Management must make the determination whether such a transaction is recognized as revenue based on the merits of the contractual agreements with a customer, the experience with a particular customer, the technology and the number of similarly configured products previously delivered.

We recognize revenue from equipment sales upon shipment of our products when it is proven prior to shipment that the equipment has met all of the customer’s criteria and specifications. The installation process is not believed to be essential to the functionality of our products. However, since under most of our sales contracts the timing of payment of a portion of the sales price is coincident with installation, such installation is not considered to be inconsequential or perfunctory. Therefore, at the time of shipment, we defer that portion of the sales price related to the fair value of installation. We believe we have an enforceable claim for the portion of the sales price not related to the fair value of the installation should we not fulfill our installation obligation. If this belief were changed by industry developments in the future, this portion would be deferred in future periods until final acceptance by the customer or until contractual conditions lapse. At March 31, 2005 we have deferred revenues related to the fair value of installations and equipment deliveries in the amount of € 13.3 million. Revenue results are difficult to predict, and any shortfall in revenue or delay in recognizing revenue could cause our operating results to vary significantly from quarter to quarter and could result in future operating losses.

Valuation of Goodwill. We perform an annual impairment test as of December 31 of each year, and upon the occurrence of an indication that a potential impairment exists, in accordance with the requirements of Statement of Financial Accounting Standard (“SFAS”) No. 142, “Goodwill and Other Intangible Assets,” issued by the Financial Accounting Standards Board (“FASB”). Impairment is the condition that exists when the carrying amount of goodwill exceeds its implied fair value. Our impairment test and the determination of the implied fair value is based on a discounted future cash flow approach that uses our estimates of future revenues, driven by assumed market growth and estimated costs as well as appropriate discount rates. These estimates are consistent with the plans and estimated costs we use to manage the underlying business. As of December 31, 2004, we did not record an impairment loss as a result of our tests performed. The calculation of the implied fair value involves certain management judgments and was based on our best estimates and projections at the time of our review, and the value may be different if other assumptions are used. In future periods we may be required to record an impairment loss based on the impairment test performed, which may significantly affect our result of operations at that time. Our analysis as of December 31, 2004 indicated that a 10% decrease in the estimated discounted future cash flows would not have resulted in an impairment loss.

Valuation of Long-Lived Assets. In accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” we review our long-lived assets and certain recognized intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In performing the review for recoverability, we estimate the future undiscounted cash flows expected to result from the use of the asset and its eventual disposition. At December 31, 2004, we reviewed our long-lived assets, for facts or circumstances, both internal and external that may suggest impairment. Our cash flow estimates used include certain management judgments and were based on our best estimates and projections at the time of our review, and may be different if other assumptions are used. In future periods, however, we may be required to record an impairment loss, which may significantly affect our results of operations at that time.

Valuation of Inventory. Inventories are valued at the lower of cost or market. We regularly evaluate the value of our inventory of components and raw materials, work in progress and finished goods, based on a combination of factors including the following: forecasted sales, historical usage, product end of life cycle, estimated current and future market values, service inventory requirements and new product introductions, as well as other factors. Purchasing requirements and alternative uses for the inventory are explored within these processes to mitigate inventory exposure. We record write downs for inventory based on the above factors and take into account worldwide quantities and demand into our analysis. At March 31, 2005 our valuation allowance for inventory obsolescence and lower market value amounted to € 24.1 million, which is 12.1% of our total inventory. If circumstances related to our inventories change, our estimates of the value of inventory could materially change. At March 31, 2005, an increase of our overall estimate for obsolescence and lower market value by 10% of our total inventory balance would result in an additional charge to cost of sales of € 19.9 million.

Accounting for Income Taxes. We currently have significant deferred tax assets, which resulted primarily from operating losses incurred in prior years as well as other temporary differences. SFAS No. 109, “Accounting for Income Taxes,” requires us to establish a valuation allowance to reflect the likelihood of the realization of deferred tax assets. Based on available evidence, we regularly evaluate whether it is more likely than not that the deferred tax assets will be realized. This evaluation includes our judgment on the future profitability and our ability to generate taxable income, changes in market conditions and other factors. At December 31, 2004, we believed that there was insufficient evidence to substantiate recognition of substantially all net deferred tax assets with respect to net operating loss carry forwards, and we have established a valuation allowance in the amount of € 97.9 million. Future changes in facts and circumstances, if any, may result in a change of the valuation allowance and deferred tax asset balances which may significantly influence our results of operations at that time. If our evaluation of the realization of deferred tax assets would have indicated that an additional 10% of the net deferred tax assets as of December 31, 2004 was not realizable, this would have resulted in an additional valuation allowance and an income tax expense of € 0.8 million.

The following table compares the operating performance for the first quarter of 2005 with the fourth quarter of 2004 and the first quarter of 2004:

Net Sales. In line with industry trends, net sales for the first quarter of 2005 were lower as compared to the fourth quarter of 2004 in both wafer processing equipment (front-end) and assembly and packaging equipment and materials (back-end).

Consolidated sales levels expressed in euro were negatively impacted by the strengthened euro against the U.S. dollar and U.S. dollar related currencies. The decline in exchange rates in the first quarter of 2005 compared to the first quarter of 2004 impacted sales negatively by 4.7%.

Gross Profit Margin amounted to 34.1% of net sales in the first quarter of 2005, 7.3 percentage points below the gross profit margin of 41.4% of net sales in the first quarter of 2004. The decrease was caused by lower volumes and an increase in the proportion of net sales accounted for by the lower margin front-end segment. The gross profit margin in the first quarter of 2005 was 0.3 percentage points below the gross profit margin of 34.4% in the fourth quarter of 2004.

Selling, General and Administrative Expenses decreased 4.7% from € 24.9 million in the first quarter of 2004 to € 23.8 million in the first quarter of 2005 and decreased 4.6% from € 24.9 million in the fourth quarter of 2004. The decrease was the result of favourable currency exchange rates and our focus on fixed cost control.

As a percentage of net sales, selling, general and administrative expenses were 17.6% in the first quarter of 2005 compared to 12.7% in the first quarter of 2004, and 15.3% in the fourth quarter of 2004. The increase was the result of lower net sales.

Research and Development Expenses increased 19.9% from € 17.5 million in the first quarter of 2004 to € 20.9 million in the first quarter of 2005 and decreased 5.5% from € 22.2 million in the fourth quarter of 2004.

Research and development expenses increased in the first quarter of 2005 when compared to the first quarter of 2004 mainly as a result of the inclusion of the operations of our subsidiaries ASM NuTool and ASM Genitech, which were acquired in June 2004 and August 2004 respectively.

Amortization of Purchased Technology and Other Intangible Assets was € 0.4 million in the first quarter of 2005, unchanged from the fourth quarter of 2004. The amortization mainly relates to the amortization of purchased technology and other intangible assets from the acquisitions of ASM NuTool and ASM Genitech.

Earnings from Operations amounted € 0.8 million in the first quarter of 2005 compared to € 38.7 million in the first quarter of 2004 and € 8.4 million in the fourth quarter of 2004. Earnings from operations decreased in both our front-end and back-end segments.

Net Interest Expense increased from a net expense of € 2.4 million in the first quarter of 2004 to a net expense of € 2.8 million in the first quarter of 2005. The increase is mainly the result of increased interest expenses due to increased borrowings, including the issuance of US$ 150.0 million in convertible debt in December 2004. The increased interest expense is partly offset by favourable U.S. dollar exchange rates and increased interest income, which is due to increased cash and cash equivalents and increased interest rates for cash deposits. Net interest expense in the first quarter of 2005 also includes a € 0.3 million loss related to the early extinguishment of US$ 4.6 million of convertible subordinated notes due November 2005.

New orders received increased 18.1% from € 127.0 million in the fourth quarter of 2004 to € 150.0 million in the first quarter of 2005 reflecting a surge in back-end orders. For the first quarter of 2005, the level of new orders divided by the net sales for the quarter (book-to-bill ratio) was 1.11, compared to a book-to-bill ratio of 0.86 and 0.78 in the third and fourth quarter of 2004, respectively.

The backlog at March 31, 2005 amounted to € 202.1 million, an increase of 8.2% compared to the backlog of € 186.8 million at December 31, 2004. Approximately one-third of this amount refers to the ending backlog of ASM Pacific Technology.

Our backlog consists of orders of products by purchase orders or letters of intent for future periods, typically for up to one year. In some markets, such as Japan, it is common practice for letters of intent to be used instead of firm purchase orders. Under specific circumstances, customers can cancel or reschedule deliveries. In addition, purchase orders are subject to price negotiations and changes in quantities of products ordered as a result of changes in customers’ requirements. Depending on the complexity of an order, we generally ship our products within one to six months after receipt of an order. We include in the backlog only orders for which a delivery schedule has been specified and to which the customer has assigned an order number. Rescheduled deliveries are included in backlog if they have a firm delivery date.

In the first quarter of 2005 we have seen a positive development in order intake, but at lower levels than we anticipated earlier in the year. Although we have won important orders, our customers are more cautious in adding capacity and as a result customers are delaying orders further into 2005 or even into 2006. Based on the current market forecast we expect sales levels to be lower than anticipated earlier, in particular in our front-end wafer processing segment. This lower sales expectation also delays the achievement of operational profitability for the front-end operations. In contrast to earlier guidance, and despite continued strong focus on fixed costs, we do no longer expect positive earnings from operations for our front-end segment for the full year 2005.

We continue to invest in our front-end technological capabilities and our front-end manufacturing facility in Singapore. We also remain confident that our back-end segment will see improved momentum starting in the second quarter 2005. Based on the above, and in combination with our current backlog, we expect the net sales and net result in the second quarter of 2005 to improve when compared to the first quarter of 2005.

Our liquidity is affected by many factors, some of which are related to our ongoing operations and others of which are related to the semiconductor and semiconductor equipment industries and to the economies of the countries in which we operate. Although our cash requirements fluctuate based on the timing and extent of these factors, we believe that cash generated by operations, together with the liquidity provided by our existing cash resources and our financing arrangements, will be sufficient to fund working capital, capital expenditures and other ongoing business requirements for at least the next twelve months. The cyclicality of the industry could result in lower customer demand and continued fixed costs and as a result, cash generated by operations may be lower than forecasted. In such a situation we might need to further utilize our short-term credit facilities or investigate additional financing.

At March 31, 2005, our principal sources of liquidity consisted of € 232.9 million in cash and cash equivalents, of which € 148.2 million was available for our front-end operations and € 84.7 million was restricted for use in our back-end operations. In addition, we also had € 69.7 million in undrawn bank facilities, of which € 33.6 million was available for our back-end operations and € 36.1 million was available for our front-end operations in Japan.

Net cash provided by operations in the first quarter of 2005 was € 22.5 million as compared to € 34.1 million in the first quarter of 2004. The decrease was primarily caused by the net loss reported in the first quarter of 2005, partly compensated by increased collections on outstanding receivables.

Net cash used in investing activities in the first quarter of 2005 was € 11.9 million as compared to net cash used of € 9.0 million in the first quarter of 2004. The increase was primarily caused by increased capital expenditures, in particular machinery. We expect capital expenditures to be between € 40 million and € 50 million in 2005. Our capital expenditure commitments at December 31, 2004 were € 4.8 million and at March 31, 2005 were € 5.6 million.

Net cash used in financing activities was € 3.6 million in the three months ended March 31, 2005. During that period, we repaid € 3.7 million in net debt and received € 0.1 million from the issuance of common shares.

If our convertible subordinated notes due November 2005 are not converted into common shares prior to or at maturity in November 2005, we have to repay these notes in cash. The conversion price is US$ 18.85. At March 31, 2005, US$ 72.8 million of these notes were outstanding.

Net working capital, consisting of accounts receivable, inventories, other current assets, accounts payable, accrued expenses, advance payments from customers and deferred revenue, decreased from € 189.2 million at December 31, 2004 to € 174.9 million at March 31, 2005. The decrease is primarily the result of decreased sales levels, partly offset by increased inventory levels for shipments in the second quarter of 2005. The number of outstanding days of working capital, measured based on quarterly sales, increased from 107 days at December 31, 2004 to 117 days at March 31, 2005.

At December 31, 2004 and March 31, 2005, we had purchase commitments with suppliers in the amount of € 77.2 million and € 89.0 million, respectively.

We finance the operation of our front-end business from operating cash flows, from dividends received from ASMPT and from borrowings. We support certain borrowings of our front-end subsidiaries with guarantees.

We rely on dividends from ASMPT for a portion of our cash flow for use in our front-end operations. Cash dividends received from ASMPT during 2002, 2003 and 2004 were € 29.5 million, € 24.1 million and € 40.4 million, respectively. In April 2005, we received a final dividend for the year 2004 of € 21.0 million.

Our back-end segment, which is conducted through ASMPT, our 53.84%-owned subsidiary, is entirely self-financed by ASMPT. However, the earnings, cash resources and borrowing capacity of ASMPT are not available to our front-end segment due to restrictions imposed by the Hong Kong Stock Exchange, on which the ASMPT common shares are listed.

Although two of the six directors of ASMPT are affiliates of ASM International, ASMPT is under no obligation to declare dividends to shareholders or enter into transactions that are beneficial to us. As a majority shareholder, we can approve the payment of dividends, but cannot compel their payment or size.

The market value of our investment in ASMPT at March 31, 2005 was approximately € 691.3 million, which is higher than the market value at December 31, 2004, which was approximately € 547.3 million.

We are exposed to market risk from changes in interest rates and foreign currency exchange rates, most notably fluctuations of the United States dollar, the Hong Kong dollar and the Japanese yen against the euro. We report our operating results and financial position in euros, while foreign affiliates report their operating results and financial position in their respective functional currencies. To the extent that foreign currency fluctuations affect the value of our investments in our foreign affiliates, they are not hedged. The cumulative effect of these fluctuations is separately reported in Shareholders’ Equity. For the three months ended March 31, 2004, we recorded a favourable movement of € 6.6 million and for the three months ended March 31, 2005, we recorded a favourable movement of € 8.4 million.

Our operations are exposed to foreign exchange risk arising from cash flows and financial instruments that are denominated in currencies other than the functional currency of ASM International or the respective subsidiary conducting the business. The purpose of our foreign currency management is to manage the effect of exchange rate fluctuations on certain foreign currency denominated revenues, costs and eventual cash flows and on foreign currency denominated assets and liabilities.

The terms of currency instruments used for hedging purposes are consistent with the timing of the transactions being hedged. We do not use derivative financial instruments for trading or speculative purposes. We use derivative financial instruments, such as forward exchange contracts, to hedge certain forecasted foreign currency denominated transactions expected to occur within the next 12 months. As a policy we only hedge anticipated foreign currency sales and purchase transactions for which we have a firm commitment to a customer or supplier. All hedges related to anticipated transactions are designated and documented at the inception of the hedge as cash flow hedges, and are evaluated for effectiveness quarterly. The effective portion of the gain or loss on these hedges is reported as a component of other comprehensive income in Shareholders’ Equity, and is reclassified into earnings when the hedged transaction affects earnings. A cumulative effective loss of approximately € 0.5 million included in other comprehensive income at March 31, 2005 will be reclassified to earnings within 12 months upon completion of the underlying transaction. If the underlying transaction being hedged fails to occur, or if a portion of any derivative is ineffective, the gain or loss is immediately recognized in earnings under foreign currency transaction gains (losses) in the Consolidated Statement of Operations.

Furthermore, we continue to manage the currency exposure of certain receivables and payables using derivative instruments, such as forward exchange contracts and currency swaps, and nonderivative instruments, such as debt borrowings in foreign currencies. The gains or losses on these instruments provide an offset to the gains or losses recorded on the foreign currency receivables and payables. The derivative instruments are recorded at fair value and changes in fair value are recorded in earnings under net interest and other financial income (expenses) on the Statement of Operations. Foreign currency receivables and payables are recorded at the exchange rate on the balance sheet date and gains and losses as a result of changes in exchange rates are recorded in earnings under net interest and other financial income (expenses) on the Statement of Operations. The operations of our subsidiaries are generally financed with debt issued in the currency of the country in which each subsidiary is located in an effort to limit our foreign currency exposure.

As of March 31, 2005, we have entered into forward exchange contracts with terms less than twelve months to sell US$ 72.4 million and to receive € 55.7 million, to sell US$ 5.9 million and to receive Japanese yen 612.1 million, to buy US$ 7.1 million for payment of € 5.6 million and to buy US$ 2.6 million for payment of Japanese yen 282.0 million, to sell € 2.0 million for payment of Japanese yen 266.6 million and to buy € 1.6 million for payment of Japanese yen 218.2 million. At March 31, 2005, the aggregate fair market value of these forward exchange contracts was to receive € 62.3 million and to pay € 9.1 million. The fair market values of these contracts are based on external quotes from banks for similar contracts.

As our borrowings are primarily in other currencies than euros, a change in foreign currency exchange rates will have an impact on our net earnings. A hypothetical change of 10% in foreign currencies against the euro would result in an annual € 1.4 million change in interest expenses at March 31, 2005 borrowing levels.

Our long-term and convertible subordinated debt borrowings outstanding have fixed interest rates. At December 31, 2004 and March 31, 2005 we had € 23.4 million and € 23.2 million, respectively, in other borrowings with variable short-term interest rates outstanding. We are exposed to interest rate risk primarily through our borrowing activities. We do not enter into financial instrument transactions for trading or speculative purposes or to manage interest rate exposure. A hypothetical change in the average interest rate by 10% on the portion of our debt bearing interest at variable rates would not result in a material change in interest expense at March 31, 2005 borrowing levels.

Credit risk represents the accounting loss that would be recognized at the reporting date if counterparties failed completely to perform as contracted and from movements in interest rates and foreign exchange rates. We do not anticipate nonperformance by counterparties. We generally do not require collateral or other security to support financial instruments with credit risk. Concentrations of credit risk (whether on or off-balance sheet) that arise from financial instruments exist for groups of customers or counterparties when they have similar economic characteristics that would cause their ability to meet contractual obligations to be similarly affected by changes in economic or other conditions. Financial instruments on the balance sheet that potentially subject us to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. We maintain a policy providing for the diversification of cash and cash equivalent investments and placement of investments in high quality financial institutions to limit the amount of credit risk exposure. A significant percentage of our revenue is derived from a limited number of large customers. Our largest customer accounted for approximately 10.9% of our net sales in 2004 and our ten largest customers accounted for approximately 36.4% of our net sales in 2004. For the three months ended March 31, 2005, our largest customer accounted for approximately 24.8% of our net sales and our ten largest customers accounted for approximately 52.7% of net sales. Sales to these large customers also may fluctuate significantly from time to time depending on the timing

and level of purchases from us. Significant orders from such customers may expose us to a concentration of credit risk and difficulties in collecting amounts due, which might harm our financial results and financial condition. At March 31, 2005, one customer accounted for 12.6% of the outstanding balance in accounts receivable.

Some of the information in this report constitutes forward-looking statements within the meaning of the United States federal securities laws, including the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements include, among others, statements regarding future expenditures, sufficiency of cash generated from operations, maintenance of majority interest in ASM Pacific Technology Ltd. (“ASM Pacific Technology”), business strategy, product development, product acceptance, market penetration, market demand, return on investment in new products and product shipment dates. These statements may be found under “Management’s Discussion and Analyses of Financial Condition and Results of Operations,” and elsewhere in this report. Forward-looking statements typically are identified by use of terms such as “believe,” “anticipate,” “estimate,” “expect,” “intend,” “plan,” “will,” “may” and similar words, although some forward-looking statements are expressed differently. You should be aware that these statements involve risks and uncertainties and our actual results could differ materially from those contained in the forward-looking statements due to a number of factors, including the following discussion of cautionary factors.

Our business could be adversely affected by the cyclical nature of the semiconductor industry.

We sell our products to the semiconductor industry, which is subject to sudden, extreme, cyclical variations in product supply and demand. The timing, length and severity of these cycles are difficult to predict. In the period 2001 - 2003, the semiconductor industry experienced a cyclical downturn characterized by reduced demand for products, lower average selling prices, reduced investment in semiconductor capital equipment and other factors all of which resulted in lower sales and earnings for our business. This downturn lasted longer than past cycles and, although conditions in the semiconductor equipment market recovered in the fourth quarter of 2003 and the first half of 2004, the market weakened in the second half of 2004 and remains volatile and hard to predict. Semiconductor manufacturers may contribute to the severity of these cycles by misinterpreting the conditions in the industry and over-investing or under-investing in semiconductor manufacturing capacity and equipment. In any event, the lag between changes in demand for semiconductor devices and changes in demand for our products by semiconductor manufacturers accentuates the intensity of these cycles in both expansion and contraction phases. We may not be able to respond effectively to these industry cycles.

Downturns in the semiconductor industry often occur in connection with, or anticipation of, maturing product cycles and declines in general economic conditions. Industry downturns have been characterized by reduced demand for semiconductor devices and equipment, production over-capacity and a decline in average selling prices. During a period of declining demand, we must be able to quickly and effectively reduce expenses and motivate and retain key employees. Our ability to reduce expenses in response to any downturn in the semiconductor industry is limited by our need for continued investment in engineering and research and development and extensive ongoing customer service and support requirements. In addition, the long lead time for production and delivery of some of our products creates a risk that we may incur expenditures or purchase inventories for products that we cannot sell. During periods of extended downturn, a portion of our inventory may have to be written down if it is not sold in a timely manner.

Industry upturns have been characterized by fairly abrupt increases in demand for semiconductor devices and equipment and insufficient production capacity. During a period of increasing demand and rapid growth, we must be able to quickly increase manufacturing capacity to meet customer demand and hire and assimilate a sufficient number of additional qualified personnel. Our inability to quickly respond in times of increased demand could harm our reputation and cause some of our existing or potential customers to place orders with our competitors rather than us.

Our industry is subject to rapid technological change and we may not be able to forecast or respond to commercial and technological trends in time to avoid competitive harm.

Our growth strategy and future success depend upon commercial acceptance of products incorporating technologies we are developing, such as atomic layer chemical vapor deposition, rapid thermal processing, low-k dielectrics, copper deposition and silicon or silicon-germanium epitaxy. The semiconductor industry and the semiconductor equipment industry are subject to rapid technological change and frequent introductions of enhancements to existing products. Technological changes have had and will continue to have a significant impact on our business. Our operating results and our ability to remain competitive are affected by our ability to accurately anticipate customer and market requirements and develop technologies and products to meet these requirements. Our success in developing, introducing and selling new and enhanced products depends upon a variety of factors, including:

We may not be able to accurately forecast or respond to commercial and technical trends in the semiconductor industry or to the development of new technologies and products by our competitors. Our competitors may develop technologies and products that are more effective than ours or that may be more widely accepted. In addition, we may incur substantial unanticipated costs to ensure the functionality and reliability of our current and future products. If our products are unreliable or do not meet our customers’ expectations, then we may experience reduced orders, higher manufacturing costs, delays in collecting accounts receivable, and/or additional service and warranty expense. We have experienced delays from time to time in the introduction of, and some technical and manufacturing difficulties with, some of our systems and enhancements. We may also experience delays and technical and manufacturing difficulties in future introductions or volume

production of new systems or enhancements. Significant delays can occur between a product’s introduction and the commencement of volume production of that product. Any of these events could negatively impact our ability to generate the return we intend to achieve on our investments in new products.

If we fail to adequately invest in research and development, we may be unable to compete effectively.

We have limited resources to allocate to research and development, and must allocate our resources among a wide variety of projects in our front-end and back-end businesses. In the three months ended March 31, 2005, we invested € 20.9 million in research and development, or 15.6 % of our net sales. Because of intense competition in our industry, the cost of failing to invest in strategic developments is high. In order to enhance the benefits obtained from our research and development expenditures, we have contractual and other relationships with independent research institutes. If we fail to adequately invest in research and development or lose our ability to collaborate with these independent research entities, we may be unable to compete effectively in the front-end and back-end markets in which we operate.

We face intense competition from companies which have greater resources than we do, and potential competition from new companies entering the market in which we compete. If we are unable to compete effectively with these companies, our market share may decline and our business could be harmed.

We face intense competition in both the front-end and back-end segments of the semiconductor equipment industry from other established companies. Our primary competitors in the front-end business include Applied Materials, Novellus, Tokyo Electron, and Kokusai. Our primary competitors in the back-end business include Kulicke & Soffa, ESEC, Shinkawa, Apic Yamada, BE Semiconductor, Towa, Shinko and Mitsui. A number of our competitors have significantly greater financial, technological, engineering, manufacturing, marketing and distribution resources than we do. Their greater capabilities in these areas may enable them to:

In addition, new companies may enter the markets in which we compete, further increasing competition in the semiconductor equipment industry.

We believe that our ability to compete successfully depends on a number of factors, including:

Some of these factors are outside our control. We may not be able to compete successfully in the future, and increased competition may result in price reductions, reduced profit margins, loss of market share, and inability to generate cash flows that are sufficient to maintain or expand our development of new products.

Our quarterly revenues and operating results fluctuate due to a variety of factors, which may result in volatility or a decrease in the price of our common shares.

Our quarterly revenues and operating results have varied significantly in the past and may vary in the future due to a number of factors, including:

In addition, we derive a substantial portion of our net sales from products that have a high average selling price and significant lead times between the initial order and delivery of the product. The timing and recognition of net sales from customer orders can cause significant fluctuations in our operating results from quarter to quarter. Gross margins realized on product sales vary depending upon a variety of factors, including the mix of products sold during a particular period, negotiated selling prices, the timing of new product introductions and enhancements and manufacturing costs. A delay in a shipment near the end of a fiscal quarter or year, due, for example, to rescheduling or cancellations by customers or to unexpected manufacturing difficulties experienced by us, may cause sales in a particular period to fall significantly below our expectations and may materially adversely affect our operating results for that period. Further, our need to continue expenditures for research and development and engineering make it difficult for us to reduce expenses in a particular quarter even if our sales goals for that quarter are not met. Our inability to adjust spending quickly enough to compensate for any sales shortfall would magnify the adverse impact of a sales shortfall on our operating results. In addition, announcements by us or our competitors of new products and technologies could cause customers to defer purchases of our existing systems, which could negatively impact our earnings and our financial position.

As a result of these factors, our operating results may vary significantly from quarter to quarter. Any shortfall in revenues or net income from levels expected by securities analysts and investors could cause a decrease in the trading price of our common shares.

Our products generally have long sales cycles and implementation periods, which increase our costs in obtaining orders and reduce the predictability of our earnings.

Our products are technologically complex. Prospective customers generally must commit significant resources to test and evaluate our products and to install and integrate them into larger systems. In addition, customers often require a significant number of product presentations and demonstrations, in some instances evaluating equipment on site, before reaching a sufficient level of confidence in the product’s performance and compatibility with the customer’s requirements to place an order. As a result, our sales process is often subject to delays associated with lengthy

approval processes that typically accompany the design and testing of new products. The sales cycles of our products often last for many months or even years. Longer sales cycles require us to invest significant resources in attempting to make sales and delay the generation of revenue.

Long sales cycles also subject us to other risks, including customer’s budgetary constraints, internal acceptance reviews and cancellations. In addition, orders expected in one quarter could shift to another because of the timing of customer’s purchase decisions. The time required for our customers to incorporate our products into their systems can vary significantly with the needs of our customers and generally exceeds several months, which further complicates our planning processes and reduces the predictability of our operating results.

Our recent acquisitions and any acquisitions or investments we may make in the future could disrupt our business and harm our financial condition.

In June 2004 we acquired the remaining 84.3% interest in NuTool that we did not already own and in August 2004 we acquired Genitech. In addition, we intend to consider additional investments in complementary businesses, products or technologies. We may not be able to successfully integrate these businesses and any businesses, products, technologies or personnel that we might acquire in the future, and we may not realize the anticipated benefits from such acquisitions. In particular, our operation of acquired businesses involves numerous risks, including:

In addition, in the event of any future acquisitions of such businesses, products or technologies, we could:

Substantially all of our equipment orders are subject to operating, performance, safety or economic specifications. We occasionally experience unforeseen difficulties in compliance with these criteria, which can result in increased design, installation and other costs and expenses.

Substantially all of our equipment sales are conditioned on our demonstration, and our customer’s acceptance, that the equipment meets specified operating and performance criteria, either before shipment or after installation in a customer’s facility. We occasionally experience unforeseen difficulties in demonstrating compliance with these criteria, which can lead to unanticipated expenses for the redesign, modification and testing of the equipment and related software. To the extent this occurs in the future, our cost of goods sold and operating income will be adversely affected. If we are not able to demonstrate compliance with the performance and operating specifications in respect of specific equipment, we may have to pay penalties to the customer, issue credit notes to the customer and/or take other remedial action, including payment of damages, any one of which could negatively affect our operating income.

We derive a significant percentage of our revenue from sales to a small number of large customers, and if we are not able to retain these customers, or they reschedule, reduce or cancel orders, our revenues would be reduced and our financial results would suffer.

Our largest customers account for a significant percentage of our revenues. Our largest customer accounted for 10.9% and our ten largest customers accounted for 36.5% of our net sales in 2004. For the three months ended March 31, 2005, our largest customer accounted for approximately 24.8% of our net sales and our ten largest customers accounted for approximately 52.7% of net sales. Sales to and the relative importance of these large customers have varied significantly from year to year and will continue to fluctuate in the future. These sales also may fluctuate significantly from quarter to quarter. We may not be able to retain our key customers or they may cancel purchase orders or reschedule or decrease their level of purchases from us, which would reduce our revenues and negatively affect our financial results. In addition, any difficulty in collecting amounts due from one or more key customers could harm our financial results.

We may need additional funds to finance our future growth, and ongoing research and development activities. If we are unable to obtain such funds, we may not be able to expand our business as planned.

In the past, we have experienced severe capital constraints that adversely affected our operations and ability to compete. We may require additional capital to finance our future growth and fund our ongoing research and development activities beyond 2005. Our capital requirements depend on many factors, including acceptance of and demand for our products, and the extent to which we invest in new technology and research and development projects.

If we raise additional funds through the issuance of equity securities, the percentage ownership of our existing shareholders would be diluted. If we finance our capital requirements we may incur significant interest costs. Additional financing may not be available to us when needed or, if available, may not be available on terms acceptable to us.

If we are unable to raise needed additional funds, we may have to reduce the amount we spend on research and development, slow down our introduction of new products, reduce capital expenditures necessary to support future growth and/or take other measures to reduce expenses which could limit our growth and ability to compete.

The success of our operations depends in significant part upon the experience of our management team. We do not have employment agreements with some members of our management team and we do not maintain “key man” life insurance policies. The loss of services from our key executives could harm our business, prospects, financial condition and results of operations.

We may not be able to recruit or retain qualified personnel or integrate qualified personnel into our organization. Consequently, we could experience reduced sales, delayed product development and diversion of management resources.

Our business and future operating results depend in part upon our ability to attract and retain qualified management, technical, sales and support personnel for our operations on a worldwide basis. Competition for qualified personnel is intense, and we cannot guarantee that we will be able to continue to attract and retain qualified personnel particularly during sustained economic upturns in the industry. Availability of qualified technical personnel varies from country to country, and may affect the operations of our subsidiaries in some parts of the world. Our operations could be negatively affected if we lose key executives or employees or are unable to attract and retain skilled executives and employees as needed. In particular, if our growth strategies are successful, we may not have sufficient personnel to manage that growth and may not be able to attract the personnel needed. Although we have agreements with some, but not all, employees, restricting their ability to compete with us after their employment terminates, we do not maintain insurance to protect against the loss of key executives or employees. Our future growth and operating results will depend on:

We are not currently focused on attracting new key personnel. We have in the past experienced intense competition for skilled personnel during market expansions and believe competition will again be intense if the semiconductor market experiences a sustained expansion. Consequently, we generally attempt to minimize reductions in skilled personnel in reaction to industry downturns, which reduces our ability to lower costs by payroll reduction.

Although we currently are a majority shareholder of ASM Pacific Technology, we may not be able to maintain our majority interest, which, if other circumstances are such that we do not control ASM Pacific Technology, would prevent us from consolidating its results of operations with ours. This event would have a significant negative effect on our consolidated net earnings from operations.

We derive a significant portion of our net sales, earnings from operations and net earnings from the consolidation of the results of operations of ASM Pacific Technology with our results. If we do not maintain our majority interest in ASM Pacific Technology, and if other circumstances are such that we do not control it through other means, we would no longer be able to consolidate its results of operations with ours. Any such determination of whether we could continue to consolidate would be based on whether we still have a “controlling financial interest” within the meaning of United States generally accepted accounting principles. If we were to become unable to consolidate the results of operations of ASM Pacific Technology with our results, the results of operations of ASM Pacific Technology would no longer be included in our earnings from operations. Instead, our proportionate share of ASM Pacific Technology’s earnings would be reflected as a separate line-item called “share of results from investments” in our consolidated statements of operations. We would no longer be able to consolidate the assets and liabilities of ASM Pacific Technology and would have to reflect the net investment in ASM Pacific Technology in the line-item “investments” in our consolidated balance sheet. This event would have a significant negative effect on our consolidated earnings from operations, although our net earnings would be reduced only to the extent of the reduction of our ownership interest in ASM Pacific Technology.

We maintain our majority interest in ASM Pacific Technology by purchasing shares from time to time as necessary. ASM Pacific Technology has an employee share incentive program pursuant to which it can issue up to an aggregate of 5.0% of its total issued shares, excluding shares subscribed for or purchased under the program, to directors and employees. When ASM Pacific Technology issues shares pursuant to this program, our ownership interest is diluted. If the current maximum amount of shares is issued under this program, our ownership interest would continue to be above 50.0%. However, our interest could further be diluted if ASM Pacific Technology issues additional equity. Any such decision by ASM Pacific Technology to issue additional shares requires the approval of a majority of shareholders, which means that, at present, our approval would be required. Although we intend to continue to purchase shares of ASM Pacific Technology if necessary to maintain our majority interest, we may be unable to do so if we do not have sufficient financial resources at that time.

Although we are a majority shareholder, ASM Pacific Technology is not obligated to pay dividends to us and may take actions or enter into transactions that are detrimental to us.

ASM Pacific Technology is a Cayman Islands limited liability company that is based in Hong Kong and listed on the Hong Kong Stock Exchange. As of March 31, 2005, we owned 53.84% of ASM Pacific Technology through our wholly-owned subsidiary, Advanced Semiconductor Materials (Netherlands Antilles) N.V., a Netherlands Antilles company, and the remaining 46.16% was owned by the public.

Although two of the six directors of ASM Pacific Technology are affiliates of ASM International, they are under no obligation to take any actions that are beneficial to us. Issues and conflicts of interest therefore may arise which might not be resolved in our best interests.

In addition, the directors of ASM Pacific Technology are under no obligation to declare a payment of dividends to shareholders. As a shareholder of ASM Pacific Technology, we cannot compel the payment or amount of dividends. With respect to the payment of dividends, the directors must consider the financial position of ASM Pacific Technology after the dividend. Since a portion of our cash flows available for our front-end segment is derived from the dividends we receive from ASM Pacific Technology, its failure to declare dividends in any year would negatively impact the cash position of our front-end segment for that year and reduce cash available to service our indebtedness. Cash dividends received from ASM Pacific Technology totaled € 29.5 million, € 24.1 million, and € 40.4 million in 2002, 2003 and 2004, respectively. In April 2005, we received a final dividend for the year 2004 of € 21.0 million.

The directors of ASM Pacific Technology owe their fiduciary duties to ASM Pacific Technology, and may approve transactions to which we are a party only if the transactions are commercially beneficial to ASM Pacific Technology. Further, under the listing rules of the Hong Kong Stock Exchange, directors who are on the boards of both ASM Pacific Technology and ASM International are not permitted to vote on a transaction involving both entities. This would disqualify both of the two affiliates of ASM International who currently serve on the board of ASM Pacific Technology from voting on any such transaction.

As a shareholder of ASM Pacific Technology, we can vote our shares in accordance with our own interests. However, we may not be entitled to vote on transactions involving both us and ASM Pacific Technology under the listing rules of the Hong Kong Stock Exchange and the Hong Kong Takeover Code. In particular, under the Hong Kong Takeover Code we would be excluded from voting if we were directly involved in a takeover of ASM Pacific Technology in a transaction requiring a shareholder vote.

Our reliance on a limited number of suppliers could result in disruption of our operations.

We outsource a substantial majority of the manufacturing of our front-end business to a limited number of suppliers. We are in the process of developing additional internal and external sources of supply for these manufacturing processes in the future, including an additional front-end supply source in Singapore. If our suppliers were unable or unwilling to deliver products to us in the quantities we require for any reason, including natural disaster, labor unrest, capacity constraints, supply chain management problems or contractual disputes, we may be unable to fill customer orders on a timely basis, which could negatively affect our financial performance and customer relationships.

Because the costs to semiconductor manufacturers of switching from one semiconductor equipment supplier to another can be high, it may be more difficult to sell our products to customers having a competing installed base, which could limit our growth in sales and market share.

We believe that once a semiconductor manufacturer has selected a supplier’s equipment for a particular product line, that manufacturer generally continues to rely on that supplier for future equipment requirements, including new generations of similar products. Changing from one equipment supplier to another is expensive and requires a substantial investment of resources by the customer. Accordingly, it is difficult to achieve significant sales to a customer using another supplier’s equipment. Our inability to sell our products to potential customers who use another supplier’s equipment could adversely affect our ability to increase revenue and market share.

Our ability to compete could be jeopardized if we are unable to protect our intellectual property rights from challenges by third parties; claims or litigation regarding intellectual property rights could require us to incur significant costs.

Our success and ability to compete depend in large part upon protecting our proprietary technology. We rely on a combination of patent, trade secret, copyright and trademark laws, nondisclosure and other contractual agreements and technical measures to protect our proprietary rights. These agreements and measures may not be sufficient to protect our technology from third party infringements, or to protect us from the claims of others. In addition, patents issued to us may be challenged, invalidated or circumvented, rights granted to us under patents may not provide competitive advantages to us, and third parties may assert that our products infringe their patents, copyrights or trade secrets. Third parties could also independently develop similar products or duplicate our products.

In addition, monitoring unauthorized use of our products is difficult and we cannot be certain that the steps we have taken will prevent unauthorized use of our technology. The laws of some countries in which our products are or may be developed, manufactured or sold, including various countries in Asia, may not protect our products or intellectual property rights to the same extent as do the laws of the Netherlands and the United States and thus make the possibility of piracy of our technology and products more likely in these countries. If competitors are able to use our technology as their own, our ability to compete effectively could be harmed.

In recent years, there has been substantial litigation regarding patent and other intellectual property rights in semiconductor-related industries. Unrelated to our 1997 settlement with Applied Materials, discussed below, we entered into a settlement agreement with Applied Materials in August 2004 dismissing all claims and counter-claims over certain patent infringement proceedings in the United States without prejudice and without payment of any kind by any party and without licensing any patents. In addition, in April 2003, we and our subsidiary, ASM America entered into a binding memorandum of understanding regarding the settlement of mutual patent infringement claims between ASM America and Genus. In the future, additional litigation may be necessary to enforce patents issued to us, to protect trade secrets or know-how owned by us or to defend us against claimed infringement of the rights of others and to determine the scope and validity of the proprietary rights of others. For additional information regarding this matter, see Note 12 to our unaudited consolidated Interim Financial Information.

Claims that our products infringe the proprietary rights of others would force us to defend ourselves and possibly our customers or suppliers against the alleged infringement. Such claims, if successful, could subject us to significant liability for damages and invalidate our proprietary rights. Regardless of the outcome, patent infringement litigation is time-consuming and expensive to resolve and diverts management time and attention.

Intellectual property litigation could force us to do one or more of the following, any one of which could severely harm our business:

We license the use of some patents from a competitor pursuant to a settlement agreement; if the agreement is terminated, our business could be adversely affected.

In October 1997, we entered into an agreement to settle mutual patent infringement litigation with Applied Materials, which was amended and restated in 1998, pursuant to which Applied Materials agreed to grant us a worldwide, non-exclusive and royalty-bearing license to use all of the litigated patents and certain additional patents that were not part of the litigation. In return we agreed to pay Applied Materials a settlement fee and to grant it a worldwide, non-exclusive and royalty-free license to use a number of our patents including but not limited to those patents which we were enforcing in the litigation. All licenses expire at the end of the life of the underlying patents. Our obligation to pay certain royalties to Applied Materials continues until the expiration of the corresponding underlying patent. In addition, the settlement agreement included covenants for limited periods during which the parties would not litigate the issue of whether certain of our products infringe any of Applied Materials’ patents that were not licensed to us under the settlement agreement. The covenants, which lasted for different periods of time for different products, have expired. Upon the occurrence of an event of default or other specified events, including, among other things, our failure to pay royalties, a change of control of ASM International, and improper use of the licenses, Applied Materials may terminate the settlement agreement, including the licenses included in the agreement.

Additional litigation with Applied Materials regarding other matters or the operation of the settlement agreement itself could occur. Litigation with Applied Materials, which has greater financial resources than we do, could negatively impact our earnings and financial position. For additional information regarding our recent litigation with Applied Materials see Note 12 to our unaudited consolidated Interim Financial Information.

We operate worldwide; economic, political, military or other events in a country where we make significant sales or have significant operations could interfere with our success or operations there and harm our business.

We market and sell our products and services throughout the world. A substantial portion of our manufacturing employees and operations are in the People’s Republic of China and the success of our business depends on our operations there. In addition, we have manufacturing facilities in Singapore and Malaysia and assembly facilities in the Netherlands, the United States, Japan, Hong Kong and Singapore. Our operations are subject to risks inherent in doing business internationally, including:

To the extent that such disruptions slow the global economy or, more particularly, result in delays or cancellations of purchase orders, our business and results of operations could be materially and adversely affected.

Our operational results could be negatively impacted by currency fluctuations.

Our assets, liabilities and operating expenses and those of our subsidiaries are to a large extent denominated in the currency of the country where each entity is established. Our financial statements, including our consolidated financial statements, are expressed in euros. The translation exposures that result from the inclusion of financial statements of our subsidiaries that are expressed in the currencies of the countries where the subsidiaries are located are not hedged. As a result, our operational results are exposed to fluctuations of various exchange rates. These net translation exposures are taken into account in determining shareholder’s equity.

In addition, foreign currency fluctuations may affect the prices of our products. Prices for our products are currently denominated in United States dollars, euros and Japanese yen for sales to our customers throughout the world. If there is a significant devaluation of the currency in a specific country, the prices of our products will increase relative to that country’s currency and our products may be less competitive in that country. Also, we cannot be sure that our international customers will continue to be willing to place orders denominated in these currencies. If they do not, our revenue and operating results will be subject to additional foreign exchange rate fluctuations.

Although we monitor our exposure to currency fluctuations, these fluctuations could negatively impact our earnings, cash flow and financial position.

If our products are found to be defective, we may be required to recall and/or replace them, which could be costly and result in a material adverse effect on our business, financial condition and results of operations.

One or more of our products may be found to be defective after we have already shipped the products in volume, requiring a product replacement or recall. We may also be subject to product returns and product liability claims that could impose substantial costs and have a material and adverse effect on our business, financial condition and results of operations.

Environmental laws and regulations may expose us to liability and increase our costs.

Our operations are subject to many environmental laws and regulations wherever we operate governing, among other things, air emissions, wastewater discharges, the use and handling of hazardous substances, waste disposal and the investigation and remediation of soil and groundwater contamination. In February 2003, the European Commission published a directive on waste electrical and electronic equipment (“WEEE”) (Directive 2002/96/EC, which was amended in December 2003 by Directive 2003/108/EC), and which has been implemented in the Netherlands. In principle, the rules result in “take-back” obligations of manufacturers and/or the responsibility of manufacturers for the financing of the collection, recovery and disposal of electrical and electronic equipment by requiring that European Union Member States adopt appropriate measures to minimize WEEE disposal and achieve high levels of collection and separation of WEEE. Producers of WEEE will have to provide for the financing of the collection, treatment, recovery and environmentally sound disposal of WEEE by August 13, 2005. Another directive of the European Commission (Directive 2002/95/EC) provides for a ban on the use of lead and some flame retardants in manufacturing electronic components. These measures could adversely affect our manufacturing costs or product sales by forcing us or our suppliers to change production processes or use more costly materials.

As with other companies engaged in similar activities, we face inherent risks of environmental liability in our current and historical manufacturing activities. Costs associated with future environmental compliance or remediation obligations could adversely affect our business.

Our directors and officers control approximately 23.3% of our voting power which gives them significant influence over matters voted on by our shareholders, including the election of members of our Supervisory Board and Management Board and makes it substantially more difficult for a shareholder group to remove or elect such members without the support of management.

Our Chairman and Chief Executive Officer controlled approximately 21.8% of the voting power of our outstanding common shares as of March 31, 2005, and the members of our Supervisory Board and Management Board and all our executive officers as a group controlled approximately 23.3% of the voting power of our outstanding common shares as of that date. Accordingly, these persons have significant influence on the outcome of matters submitted to a shareholder vote, such as the election of the members of our Supervisory Board and Management Board. Persons nominated in a non-binding nomination by the Supervisory Board for appointment by the shareholders to the Supervisory Board or Management Board at the annual general meeting of shareholders will be elected if the number of affirmative votes exceeds the number of negative votes cast by holders of the outstanding shares present or represented at the meeting and entitled to vote. Persons nominated in a binding nomination by the Supervisory Board for appointment by shareholders to the Supervisory Board and Management Board at the annual general meeting of shareholders are so appointed unless shareholders reject such nomination by a vote of at least two-thirds of the votes cast, provided that the votes to reject represent at least 50% of all issued and outstanding shares eligible to vote. This makes it difficult for a group of shareholders to remove or elect members of our Supervisory Board or Management Board without the support of management.

Our shareholders have granted to Stichting Continuïteit ASM International, or Stichting, a non-membership organization with a board composed of our President and Chief Executive Officer, the Chairman of our Supervisory Board and three independent members, the right to acquire and vote our preferred shares to maintain the continuity of our company. Toward that objective, Stichting will evaluate, when called for, whether a takeover offer is in our best interest, and may, if it determines that such action is appropriate, acquire preferred shares with voting power equal to 50.0% of the voting power of the outstanding common shares. This is likely to be sufficient to enable it to prevent a change of control from occurring. For additional information regarding Stichting, see Item 7 - Major Shareholders and Related Party Transactions in our Annual Report on Form 20-F for the year ended December 31, 2004.

These provisions may prevent us from entering into a change of control transaction that may otherwise offer our shareholders an opportunity to sell shares at a premium over the market price.

We must offer a possible change of control transaction to Applied Materials first.

Pursuant to our 1997 settlement agreement with Applied Materials, one of our competitors, as amended and restated in 1998, if we desire to effect a change of control transaction, as defined in the settlement agreement, with a competitor of Applied Materials, we must first offer the change of control transaction to Applied Materials on the same terms as we would be willing to accept from that competitor pursuant to a bona fide arm’s-length offer made by that competitor.

The market price of our common shares has fluctuated substantially in the past. Between January 1, 2004 and March 31, 2005, the sales price of our common shares, as reported on the Nasdaq National Market, ranged from a low of US$ 12.80 to a high of US$ 27.61. The market price of our common shares will continue to be subject to significant fluctuations in the future in response to a variety of factors, including the risk factors discussed in this report and the following:

In addition, public stock markets frequently experience substantial price and trading volume volatility, particularly in the high technology sectors of the market. This volatility has significantly affected the market prices of securities of many technology companies for reasons frequently unrelated to or disproportionately impacted by the operating performance of these companies. These broad market fluctuations may adversely affect the market price of our common shares.

We are subject to United States securities laws, including the Sarbanes-Oxley Act of 2002 and the rules and regulations adopted by the U.S. Securities and Exchange Commission pursuant to the Act. Under section 404 of the Sarbanes-Oxley Act and the related regulations we are required to perform an evaluation of our internal controls over financial reporting and have our independent auditor publicly attest to this evaluation beginning with the year ended December 31, 2006. We

have commenced the evaluation and expect to complete it in the course of 2005. We expect internal control evaluations and attestation requirements to be time-consuming and expensive. If we would fail to complete the evaluation of our internal controls over financial reporting in time, if we would identify material weaknesses in these internal controls, or if our independent accountant could not timely attest to our evaluation, we could be subject to regulatory scrutiny and decreased public confidence in our internal controls, which may adversely affect the market price of our common shares.

Our Financial Condition and Results of Operations Reported in Accordance with International Financial Reporting Standards May Differ from our Financial Position and Results of Operations Reported in Accordance with US GAAP.

Since we are listed on the NASDAQ Stock Market and required to file an Annual Report on Form 20-F with the Securities and Exchange Commission, we publish our primary consolidated financial statements in accordance with Generally Accepted Accounting Principles in the U.S. (“US GAAP”).

Since we are a legal entity incorporated in the Netherlands and listed on the Euronext Amsterdam Stock Exchange (“Euronext Amsterdam”) we are required by European regulations to publish our statutory consolidated financial statements in accordance with International Financial Reporting Standards (“IFRS”) from 2005 onwards. Our first consolidated financial statements in accordance with IFRS will be the Annual Report for 2005, including the consolidated financial statements of 2004 for comparison purposes.

Our financial position and results of operations reported in accordance with IFRS will differ from our financial position and results of operations reported in accordance with US GAAP, which may adversely affect the market price of our common shares.

For additional information regarding IFRS, see Item 5. “Operation and Financial Review and Prospects—Management’s Discussion and Analysis of Financial Condition and Results of Operations—International Financial Reporting Standards” in our Annual Report on Form 20-F for the year ended December 31, 2004.

This report on Form 6-K is hereby incorporated by reference into Forms F-3 nos. 333-11234, 333-08080, 333-11502 and 333-107339 and Forms S-8 nos. 333-87262, 33-07111, 33-07109, 33-6184, 33-6185, 33-6186, 33-78628, 33-93026 and 333-11060 filed with the U.S. Securities and Exchange Commission.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


ASM INTERNATIONAL N.V.

Date: May 11, 2005

By:		/s/ Arthur H. del Prado
		Arthur H. del Prado
		President and CEO


		Page
Consolidated Balance Sheets as of December 31, 2004 and March 31, 2005 (unaudited)		3

Unaudited Consolidated Statements of Operations for the three months ended March 31, 2004 and March 31, 2005		4

Unaudited Consolidated Statements of Comprehensive Income for the three months ended March 31, 2004 and March 31, 2005		5

Unaudited Consolidated Statements of Shareholders’ Equity for the three months ended March 31, 2004 and March 31, 2005		5

Unaudited Consolidated Statements of Cash Flows for the three months ended March 31, 2004 and March 31, 2005		6

Notes to Unaudited Consolidated Interim Financial Information		7

Management’s Discussion and Analysis of Financial Condition and Results of Operations		18

Market Risk Disclosure		26

Cautionary Factors		29

Incorporation by Reference		46

Exhibits		46

Signatures		46


		In Euro
(thousands, except per share data)	Note	December 31, 2004		March 31, 2005
				(unaudited)
Assets
Cash and cash equivalents	2	218,614		232,864
Marketable securities	2	5		5
Accounts receivable, net		171,996		152,316
Inventories, net	3	156,959		175,068
Income taxes receivable		26		38
Deferred tax assets		3,624		3,649
Other current assets		24,646		22,458

Total current assets		575,870		586,398
Property, plant and equipment, net	4	142,696		151,828
Goodwill	5	89,309		93,880
Purchased technology and other intangible assets	6	8,833		8,955
Deferred tax assets		780		828
Debt issuance costs	9	6,346		6,182

Total Assets		823,834		848,071

Liabilities and Shareholders’ Equity
Notes payable to banks	7	23,379		23,184
Accounts payable		76,026		79,384
Accrued expenses		67,756		70,902
Advance payments from customers		7,189		11,356
Deferred revenue		13,397		13,299
Income taxes payable		13,636		10,182
Current portion of long-term debt	8	7,883		8,061
Current portion of convertible subordinated debt	9	72,646		72,779

Total current liabilities		281,912		289,147

Deferred tax liabilities		914		1,049
Long-term debt	8	17,137		17,176
Convertible subordinated debt	9	176,208		185,136

Total liabilities		476,171		492,508
Commitments and contingencies	13
Minority interest in subsidiary		90,947		100,029
Shareholders’ Equity:
Common shares
Authorized 110,000,000 shares, par value € 0.04, issued and outstanding 52,617,952 and 52,628,354 shares		2,105		2,105
Financing preferred shares, issued none		—		—
Preferred shares, issued none		—		—
Capital in excess of par value		299,761		299,871
Retained earnings		24,631		17,383
Accumulated other comprehensive loss		(69,781	)	(63,825	)

Total Shareholders’ Equity		256,716		255,534

Total Liabilities and Shareholders’ Equity		823,834		848,071


(thousands, except per share data)	In Euro
	Three months ended March 31,
	2004		2005
	(unaudited)		(unaudited)
Net sales	195,871		134,727
Cost of sales	(114,773	)	(88,803	)

Gross profit	81,098		45,924

Operating expenses:
Selling, general and administrative	(24,956	)	(23,772	)
Research and development	(17,484	)	(20,960	)
Amortization of purchased technology and other intangible assets	—		(381	)

Total operating expenses	(42,440	)	(45,113	)

Earnings from operations	38,658		811
Loss on equity investments	(287	)	—
Net interest expense	(2,351	)	(2,783	)
Foreign currency transaction gains (losses)	128		(176	)

Earnings (loss) before income taxes and minority interest	36,148		(2,148	)
Income tax expense	(4,832	)	(565	)

Earnings (loss) before minority interest	31,316		(2,713	)
Minority interest	(16,723	)	(4,535	)

Net earnings (loss)	14,593		(7,248	)

Net earnings (loss) per share:
Basic	0.29		(0.14	)
Diluted (1)	0.28		(0.14	)

Weighted average number of shares used in computing per share amounts (in thousands):
Basic	50,156		52,622
Diluted (1)	61,491		52,622


	In Euro
	Three months ended March 31,
(thousands)	2004		2005
	(unaudited)		(unaudited)
Net earnings (loss)	14,593		(7,248	)

Other comprehensive income:
Foreign currency translation effect for the period	6,622		8,360
Unrealized losses on derivative instruments	(991	)	(2,404	)

Total other comprehensive income	5,631		5,956

Comprehensive income (loss)	20,224		(1,292	)


	In Euro
(thousands, except for number of common shares)	Number of common shares	Common shares	Capital in excess of par value	Retained earnings		Accumulated other com- prehensive income (loss)		Total Share- holders’ Equity
Balance December 31, 2003	50,061,647	2,002	259,122	592		(57,107	)	204,609
Issuance of common shares:
For stock options	48,466	2	399	—		—		401
Exercise of warrants	166,210	7	1,317	—		—		1,324
Net earnings	—	—	—	14,593		—		14,593
Other comprehensive income	—	—	—	—		5,631		5,631

Balance March 31, 2004 (unaudited)	50,276,323	2,011	260,838	15,185		(51,476	)	226,558

Balance December 31, 2004	52,617,952	2,105	299,761	24,631		(69,781	)	256,716
Issuance of common shares:
For stock options	10,402	—	110	—		—		110
Net loss	—	—	—	(7,248	)	—		(7,248	)
Other comprehensive loss	—	—	—	—		5,956		5,956

Balance March 31, 2005 (unaudited)	52,628,354	2,105	299,871	17,383		(63,825	)	255,534


	Total
At cost:
Balance January 1, 2005	339,876
Capital expenditures	11,923
Retirements and sales	(855	)
Foreign currency translation effect	12,242

Balance March 31, 2005 (unaudited)	363,186

Accumulated depreciation:
Balance January 1, 2005	197,180
Depreciation	8,108
Retirements and sales	(845	)
Foreign currency translation effect	6,915

Balance March 31, 2005 (unaudited)	211,358

Property, plant and equipment, net:
January 1, 2005	142,696
March 31, 2005 (unaudited)	151,828

Useful lives in years:
Buildings and improvements	10-25
Machinery and equipment	2-10
Furniture and fixtures	2-10


	Cost	Accumulated amortization		Carrying amount
Balance January 1, 2005	97,770	(8,461	)	89,309
Foreign currency translation effect	4,935	(364	)	4,571

Balance March 31, 2005 (unaudited)	102,705	(8,825	)	93,880


	Three months ended March 31,
	2004		2005
	(unaudited)		(unaudited)
Net earnings (loss):
As reported	14,593		(7,248	)
Total stock-based compensation expense determined under fair value based method, net of related tax effect	(589	)	(564	)

Pro forma	14,004		(7,812	)
Basic earnings (loss) per share
As reported	0.29		(0.14	)
Pro forma	0.28		(0.15	)
Diluted earnings (loss) per share:
As reported	0.28		(0.14	)
Pro forma	0.27		(0.15	)


*(euro millions)*	*Q1 2004*		*Q4 2004*		*Q1 2005*		% Change Q4 2004 to *Q1 2005*		% Change Q1 2004 to *Q1 2005*
Net sales	195.9		162.6		134.7		(17.2	)%	(31.2	)%
Gross profit	81.1		55.9		45.9		(17.9	)%	(43.4	)%
Gross profit margin	41.4	%	34.4	%	34.1	%	(0.3	)(1)	(7.3	)(1)
Selling, general and administrative expenses	(24.9	)	(24.9	)	(23.8	)	(4.6	)%	(4.7	)%
Research and development expenses	(17.5	)	(22.2	)	(20.9	)	(5.5	)%	19.9	%
Amortization of purchased technology and other intangible assets	—		(0.4	)	(0.4	)	—		—

Earnings from operations	38.7		8.4		0.8		(90.4	)%	(97.9	)%
Net earnings (loss)	14.6		1.4		(7.2	)	na		na

New orders	225.7		127.0		150.0		18.1	%	(33.5	)%
Backlog at end of period	228.8		186.8		202.1		8.2	%	(11.7	)%


	December 31, 2004		March 31, 2005
			(unaudited)
Term loans:
Japan, 1.7-3.3%, due 2005 – 2008	13,205		13,098
Finland, 1.0-3.0%, due 2005 – 2010	2,580		2,300
Singapore, 3.6-3.8%, due 2008 – 2011	4,094		4,865
South Korea, 2.8-6.6%, due 2005 – 2008	1,881		1,906
Germany, 5.0-7.5%, due 2007 – 2010	1,748		1,748
Mortgage loans:
Japan, 2.6%, due 2005 – 2006	467		371
Capital lease commitments:
United States, 7.2-8.0%, due 2005 – 2007	888		844
Japan, 0.3%, due 2005	157		105

	25,020		25,237
Current portion	(7,883	)	(8,061	)

	17,137		17,176