EX-99.1 2 dex991.htm PRESS RELEASE ASM INTERNATIONAL REPORTS 2006 THIRD QUARTER OPERATING RESULTS. Press release ASM International Reports 2006 Third Quarter Operating Results.

Exhibit 99.1

LOGO

ASM International N.V.

 

      Contact :   

Naud van der Ven,

   

+ 31 30 229 85 40

        

Mary Jo Dieckhaus,

   

+ 1 212 986 29 00

ASM INTERNATIONAL REPORTS

2006 THIRD QUARTER OPERATING RESULTS

 

  •   Net sales of € 213.4 million, down 9% from the second quarter of 2006 and up 22% from the third quarter of 2005.

 

  •   Net earnings of € 13.1 million or € 0.24 diluted net earnings per share, as compared to net earnings of € 17.4 million or € 0.30 diluted net earnings per share in the second quarter of 2006 and a net loss of € 6.3 million or € 0.12 diluted net loss per share for the third quarter of 2005.

 

  •   Third quarter bookings of € 184.5 million, down 28% from the second quarter of 2006.

 

  •   Quarter-end backlog of € 251.7 million, down 10% from the end of the second quarter of 2006.

 

  •   Front-end positive earnings from operations for second consecutive quarter.

BILTHOVEN, THE NETHERLANDS, October 30, 2006 - ASM International N.V. (NASDAQ: ASMI and Euronext Amsterdam: ASM) reports today its 2006 third quarter operating results. These operating results have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”).

“We are reporting satisfactory third quarter results for ASMI,” commented Arthur del Prado, president and chief executive officer of ASMI. “During the third quarter, ASMI continued to make progress toward our goal of consistent profitability in the Front-end semiconductor equipment operations. Despite lower sales volume, Front-end gross margins increased from the second quarter level and even more when compared to the first quarter of 2006, resulting from overall cost-cutting initiatives and an outstanding contribution from FEMS, our Front-end manufacturing move to Singapore. Our Back-end operations again reported solid results, although slightly below the record level achieved in the second quarter of this year.”

 

-1-

Three months ended September 30, 2006.

The following table shows the operating performance for the third quarter of 2006 as compared to the second quarter of 2006 and the third quarter of 2005:

 

(euro millions)       
     Q3 2005     Q2 2006     Q3 2006    

% Change
Q2 2006
to

Q3 2006

    

% Change
Q3 2005
to

Q3 2006

  

Net sales

    174.5     234.8     213.4     (9 )%   22  %

Gross profit

    62.1     93.3     83.0     (11 )%   34  %

Gross profit margin %

    35.6 %   39.7 %   38.9 %   (0.8 )% (1)   3.3 % (1)

Selling, general and administrative expenses

    (26.6 )   (30.6 )   (29.6 )   (3 )%   11
%		  
 

Research and development expenses

    (23.7 )   (21.9 )   (22.1 )   1 %   (7 )%

Amortization of other intangible assets

    (0.4 )   (0.8 )   (0.4 )   (51 )%   (9 )%
                              

Earnings from operations

    11.4     40.0     30.9     (23 )%   172  %
                              

Net earnings (loss)

    (6.3 )   17.4     13.1     (25 )%   na  

Diluted net earnings per share

    (0.12 )   0.30     0.24     (20 )%   na  

New orders

    201.5     256.9     184.5     (28 )%   (8 )%

Backlog at end of period

    223.5     280.6     251.7     (10 )%   13  %
                              

 

(1) Percentage point change

Net Sales in the third quarter of 2006 was 9% lower as compared to the second quarter of 2006. When compared to the third quarter of 2005, net sales increased by 22%.

The weakening of the US dollar and US dollar related currencies against the euro in the third quarter of 2006 as compared to the second quarter of 2006 and the third quarter of 2005 impacted sales negatively by 2% and 5% respectively.

The Gross Profit Margin for the third quarter of 2006 of 38.9% of net sales was 0.8 percentage points below the 39.7% gross profit margin realized in the second quarter of 2006. When compared to the second quarter of 2006, the gross profit margin of the Company’s Front-end segment increased, while the gross profit margin of the Company’s Back-end segment decreased.

Selling, General and Administrative Expenses decreased 3% from € 30.6 million in the second quarter of 2006 to € 29.6 million in the third quarter of 2006 and increased 11% from € 26.6 million in the third quarter of 2005.

The increase from the third quarter of 2005 is the result of increased sales and marketing activity, demo activity, and increased expenditures in preparing to meet the requirements under section 404 of the Sarbanes-Oxley Act. In addition, the adoption of Statement of Financial Accounting Standards No. 123R “Share-Based Payment,” effective January 1, 2006, required us to recognize costs of employee stock options.

As a percentage of net sales, selling, general and administrative expenses were 14% in the third quarter of 2006, as compared to 13% in the second quarter of 2006 and 15% in the third quarter of 2005.

 

-2-

Research and Development Expenses of € 22.1 million in the third quarter of 2006 is stable as compared to € 21.9 million in the second quarter of 2006. These expenses decreased 7% from € 23.7 million in the third quarter of 2005 as a result of focus on research and development expenses and the restructuring of ASM NuTool.

As a percentage of net sales, research and development expenses were 10% in the third quarter of 2006, as compared to 9% in the second quarter of 2006 and 14% in the third quarter of 2005.

Earnings from Operations amounted to € 30.9 million in the third quarter of 2006 compared to € 40.0 million in the second quarter of 2006 and € 11.4 million in the third quarter of 2005. The decrease of 23% as compared to the second quarter of 2006 is primarily caused by decreased sales and gross profit.

Net Interest Expense was € 1.3 million in the third quarter of 2006, down € 0.3 million as compared to net interest expenses in the second quarter of 2006 and down € 1.1 million as compared to net interest expenses in the third quarter of 2005. When compared to the third quarter of 2005, interest expenses decreased due to decreased borrowings, mainly the result of the repayment of US$ 94.3 million in convertible subordinated notes which were due in November 2005. Interest income increased due to increased cash balances during the third quarter and increased interest rates.

Nine months ended September 30, 2006.

The following table shows the operating performance and the percentage change for the nine months ended September 30, 2006 compared to the same period in 2005:

 

(euro millions, except earnings per share)    Nine months ended
September 30,		  
     2005     2006     %
Change		  

Net sales

    492.5     654.6     33 %

Gross profit

    171.8     254.9     48 %

Gross profit margin %

    34.9 %   38.9 %   4.0  (1)

Selling, general and administrative expenses

    (74.5 )   (96.0 )   29 %

Research and development expenses

    (68.5 )   (65.8 )   (4 )%

Amortization of other intangible assets

    (1.2 )   (1.4 )   13 %
                  

Earnings from operations

    27.6     91.7     232 %

Net earnings (loss)

    (13.0 )   33.0     na  

Diluted net earnings (loss) per share

    (0.25 )   0.62     na  

New orders

    529.2     684.5     29 %

Backlog at the end of period

    223.5     251.7     13  %
                  

 

(1) Percentage points change.

Net Sales of € 654.6 million for the nine months ended September 30, 2006 increased 33% as compared to € 492.5 million in the same period in 2005. Both our Front-end segment and our Back-end segment contributed to the increase noticed.

 

-3-

The strengthening of the US dollar and US dollar related currencies against the euro in the nine months ended September 30, 2006 as compared to the nine months ended September 30, 2005 impacted sales positively by 1%.

Gross Profit Margin amounted to 38.9% of net sales in the nine months ended September 30, 2006, showing an increase of 4.0 percentage points as compared to the same period in 2005. The increase was caused primarily by increased margins in the Front-end segment. In addition, the increase in the proportion of net sales accounted for by the higher margin Back-end segment and increase margins in the Back-end segment contributed to the increase noticed.

Selling, General and Administrative Expenses increased 29% from € 74.5 million in the nine months ended September 30, 2005 to € 96.0 million in the nine months ended September 30, 2006.

Selling, general and administrative expenses are impacted by impairment and restructuring charges of € 5.4 million recorded in the first quarter of 2006 in our Front-end segment. Next, the increase is also due to increased sales and marketing activity, demo activity, and increased expenditures in preparing to meet the requirements under section 404 of the Sarbanes-Oxley Act. In addition, the adoption of Statement of Financial Accounting Standards No. 123R “Share-Based Payment,” effective January 1, 2006, required us to recognize costs of employee stock options.

As a percentage of net sales, selling, general and administrative expenses were 15%, both in the nine months ended September 30, 2006 and the nine months ended September 30, 2005.

Research and Development Expenses decreased 4% from € 68.5 million in the nine months ended September 30, 2005 to € 65.8 million in the nine months ended September 30, 2006 as a result of focus on research and development expenses and the restructuring of ASM NuTool.

As a percentage of net sales, research and development expenses were 10% in the nine months ended September 30, 2006, compared to 14% in the same period in 2005.

Earnings from Operations amounted to € 91.7 million for the nine months ended September 30, 2006 as compared to € 27.6 million for the same period in 2005. Earnings from operations for the nine months ended September 30, 2006 include impairment and restructuring charges of € 5.4 million recorded in our Front-end segment.

Net Interest Expense amounted to € 4.7 million for the nine months ended September 30, 2006 as compared to € 8.0 million for the nine months ended September 30, 2005. Interest expenses decreased due to decreased borrowings, mainly the result of the repayment of US$ 94.3 million in convertible subordinated notes which were due in November 2005.

Net Earnings for the nine months ended September 30, 2006 amounted to € 33.0 million or € 0.62 diluted net earnings per share compared to a net loss of € 13.0 million or € 0.25 diluted net loss per share for the same period in 2005. Net earnings for the nine months ended September 30, 2006 include impairment and restructuring charges of € 5.4 million recorded in our Front-end segment.

 

-4-

Bookings and backlog

New orders received decreased 28% from € 256.9 million in the second quarter of 2006 to € 184.5 million in the third quarter of 2006. The decrease was noticed in both our Front-end segment and our Back-end segment.

For the nine months ended September 30, 2006 the total of new orders booked amounted to € 684.5 million compared to € 529.2 million in the same period of 2005, an increase of 29%.

For the third quarter of 2006, the level of new orders divided by the net sales for the quarter (book-to-bill ratio) was 0.86, compared to a book-to-bill ratio of 1.09 in the second quarter of 2006.

For the nine months ended September 30, 2006 the book-to-bill ratio was 1.05, compared to a book-to-bill ratio of 1.07 for the same period in 2005.

The backlog at September 30, 2006 amounted to € 251.7 million, showing a decrease of 10% compared to the backlog of € 280.6 million at June 30, 2006.

Liquidity and capital resources

Net cash provided by operations in the third quarter of 2006 was € 32.0 million as compared to net cash provided by operations of € 10.9 million in the third quarter of 2005. For the nine months ended September 30, 2006, net cash provided by operations was € 104.3 million compared to cash provided by operations of € 29.6 million for the same period in 2005.

Net cash used in investing activities in the third quarter of 2006 was € 8.2 million, compared to € 14.3 million in the third quarter of 2005. For the nine months ended September 30, 2006, net cash used in investing activities was € 25.9 million compared to € 33.1 million for the same period in 2005.

Net working capital, consisting of accounts receivable, inventories, other current assets, accounts payable, accrued expenses, advance payments from customers and deferred revenue, increased from € 229.9 million at June 30, 2006 to € 238.0 million at September 30, 2006. The number of outstanding days of working capital, measured based on the sales of the past 12 months, decreased from 99 days at June 30, 2006 to 98 days at September 30, 2006.

At September 30, 2006, the Company’s principal sources of liquidity consisted of € 161.8 million in cash and cash equivalents, of which € 91.6 million was available for the Company’s Front-end operations and € 70.2 million was restricted for use in the Company’s Back-end operations. In addition, the Company also had € 106.7 million in undrawn bank facilities, of which € 30.6 million was available for its Back-end operations and € 25.8 million was available for the Front-end operations in Japan.

 

-5-

Outlook

We are pleased with the progress being made through 2006 in reaching our financial targets for Front-end, and with the continued outstanding performance delivered by our Back-end operations. The Front-end results demonstrate that we are on course to reach profitability for 2007.

Based on nine-months´ results and visibility for the remainder of the year, we confirm earlier statements that 2006 second half Front-end sales are expected to be comparable to first half sales. For the full year 2006, the EBITDA of Front-end - net of restructuring charges - is expected to be double digit. For Back-end, we expect another quarter with a solid performance.

 

-6-

ASM INTERNATIONAL CONFERENCE CALL

ASM International will host an investor conference call and web cast on

MONDAY, OCTOBER 30, 2006 at

9:00 a.m. US Eastern time

3:00 p.m Continental European time.

The teleconference dial-in numbers are as follows:

United States:                     +1    866.825.1709

International:                      +1    617.213.8060

Participation pass code is 579 53 264

A simultaneous audio web cast will be accessible at www.asm.com.

The teleconference will be available for replay, beginning one hour after completion of the live broadcast, through November 13, 2006. The replay dial-in numbers are:

United States:                     +1     888.286.8010

International                       +1     617.801.6888

Participation pass code is 833 19 534

About ASM International

ASM International N.V., headquartered in Bilthoven, the Netherlands, and its subsidiaries design and manufacture equipment and materials used to produce semiconductor devices. ASM International and its subsidiaries provide production solutions for wafer processing (Front-end segment) as well as assembly and packaging (Back-end segment) through facilities in the United States, Europe, Japan and Asia. ASM International's common stock trades on NASDAQ (symbol ASMI) and the Euronext Amsterdam Stock Exchange (symbol ASM). For more information, visit ASMI’s website at http://www.asm.com.

Safe Harbor Statement under the U.S. Private Securities Litigation Reform Act of 1995: All matters discussed in this statement, except for any historical data, are forward-looking statements. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. These include, but are not limited to, economic conditions and trends in the semiconductor industry generally and the timing of the industry cycles specifically, currency fluctuations, the timing of significant orders, market acceptance of new products, competitive factors, litigation involving intellectual property, shareholder and other issues, commercial and economic disruption due to natural disasters, terrorist activity, armed conflict or political instability, epidemics and other risks indicated in the Company’s filings from time to time with the U.S. Securities and Exchange Commission, including, but not limited to, the Company’s reports on Form 20-F and Form 6-K. The Company assumes no obligation nor intends to update or revise any forward-looking statements to reflect future developments or circumstances.

 

-7-

ASM INTERNATIONAL N.V.

CONSOLIDATED STATEMENTS OF OPERATIONS

 

     Three months ended
September 30,		     Nine months ended
September 30,		  

(euro thousands except per share data)

    2005     2006     2005     2006  
     (unaudited)     (unaudited)     (unaudited)     (unaudited)  

Net sales

    174,476     213,367     492,459     654,614  

Cost of sales

    (112,387 )   (130,373 )   (320,703 )   (399,738 )
                        

Gross profit

    62,089     82,994     171,756     254,876  

Operating expenses:

         

Selling, general and administrative

    (26,654 )   (29,627 )   (74,478 )   (96,026 )

Research and development

    (23,657 )   (22,111 )   (68,463 )   (65,835 )

Amortization of other intangible assets

    (422 )   (385 )   (1,206 )   (1,357 )
                        

Total operating expenses

    (50,733 )   (52,123 )   (144,147 )   (163,218 )
                        

Earnings from operations

    11,356     30,871     27,609     91,658  

Net interest expense

    (2,445 )   (1,310 )   (8,008 )   (4,703 )

Foreign currency transaction gains (losses)

    331     (312 )   (78 )   (1,191 )
                        

Earnings before income taxes and minority interest

    9,242     29,249     19,523     85,764  

Income tax expense

    (3,057 )   (2,777 )   (5,107 )   (8,820 )
                        

Earnings before minority interest

    6,185     26,472     14,416     76,944  

Minority interest

    (12,481 )   (13,417 )   (27,442 )   (43,919 )
                        

Net earnings (loss)

    (6,296 )   13,055     (13,026 )   33,025  
                        

Net earnings (loss) per share:

         

Basic

    (0.12 )   0.24     (0.25 )   0.62  

Diluted (1)

    (0.12 )   0.24     (0.25 )   0.62  
                        

Weighted average number of shares used in computing per share amounts (in thousands):

         

Basic

    52,640     53,474     52,632     53,332  

Diluted (1)

    52,640     65,426     52,632     60,618  
                        

 

(1) The calculation of diluted net earnings (loss) per share reflects the potential dilution that could occur if securities or other contracts to issue common shares were exercised or converted into common shares or resulted in the issuance of common shares that would then share in earnings. Only instruments that have a dilutive effect on net earnings (loss) are included in the calculation. The assumed conversion results in adjustment in the weighted average number of common shares and net earnings (loss) due to the related impact on interest expense. The calculation is done for each reporting period individually.

Due to the loss reported in the three months and nine months ended September 30, 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. For the nine months ended September 30, 2006 the effect of a potential conversion of convertible debt into 4,682,133 common shares were anti-dilutive.

ASM INTERNATIONAL N.V.

CONSOLIDATED BALANCE SHEETS

 

(euro thousands except share data)

    December 31,
2005		     September 30,
2006		  
           (unaudited)  

Assets

     

Cash and cash equivalents

    135,000     161,774  

Accounts receivable, net

    209,314     215,073  

Inventories, net

    189,404     198,915  

Income taxes receivable

    22     68  

Deferred tax assets

    2,841     3,563  

Other current assets

    24,232     26,406  
            

Total current assets

    560,813     605,799  

Debt issuance costs

    5,430     4,337  

Deferred tax assets

    536     213  

Other intangible assets

    9,177     9,621  

Goodwill, net

    73,009     69,650  

Property, plant and equipment, net

    163,343     149,349  
            

Total Assets

    812,308     838,969  
            

Liabilities and Shareholders’ Equity

     

Notes payable to banks

    21,061     22,302  

Accounts payable

    93,669     101,413  

Accrued expenses

    76,899     75,454  

Advance payments from customers

    7,943     13,416  

Deferred revenue

    9,862     12,154  

Income taxes payable

    7,965     13,181  

Current portion of long-term debt

    7,150     6,365  
            

Total current liabilities

    224,549     244,285  

Deferred tax liabilities

    311     1,339  

Long-term debt

    25,741     22,656  

Convertible subordinated debt

    203,448     189,576  
            

Total Liabilities

    454,049     457,856  

Minority interest in subsidiaries

    119,665     106,793  

Shareholders’ Equity:

     

Common shares

     

Authorized 110,000,000 shares, par value € 0.04, issued and outstanding 52,678,952 and 53,489,824 shares

    2,107     2,140  

Financing preferred shares, issued none

    —       —    

Preferred shares, issued none

    —       —    

Capital in excess of par value

    300,479     310,454  

Accumulated (deficit) gains

    (15,586 )   17,439  

Accumulated other comprehensive loss

    (48,406 )   (55,713 )
            

Total Shareholders’ Equity

    238,594     274,320  
            

Total Liabilities and Shareholders' Equity

    812,308     838,969  
            

ASM INTERNATIONAL N.V.

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

     Three months ended
September 30,		     Nine months ended
September 30,		  

(euro thousands)

    2005     2006     2005     2006  
     (unaudited)     (unaudited)     (unaudited)     (unaudited)  

Cash flows from operating activities:

         

Net earnings (loss)

    (6,296 )   13,055     (13,026 )   33,025  

Adjustments to reconcile net earnings to net cash from operating activities:

         

Depreciation property, plant and equipment

    9,049     8,942     25,775     27,342  

Amortization of other intangible assets

    422     522     1,207     1,494  

Impairment of property, plant and equipment

    —       —       —       285  

Amortization of debt issuance costs

    481     160     1,410     659  

Deferred income taxes

    584     (191 )   329     513  

Compensation expense employee stock option plan

    —       394     —       1,018  

Compensation expense employee share incentive scheme ASMPT

    —       2,244     —       5,542  

Non cash settlement charges

    —       —       —       3,048  

Minority interest

    12,481     13,417     27,442     43,919  

Changes in other assets and liabilities:

         

Accounts receivable

    2,167     (4,172 )   6,049     (12,790 )

Inventories

    (7,359 )   (11,951 )   (25,954 )   (21,377 )

Other current assets

    487     (1,195 )   (124 )   (3,389 )

Accounts payable and accrued expenses

    2,676     10,677     11,565     15,346  

Advance payments from customers

    (4,047 )   (3,501 )   (870 )   1,345  

Deferred revenue

    (1,693 )   1,225     (3,403 )   2,591  

Income taxes

    1,986     2,409     (806 )   5,714  
                        

Net cash provided by operating activities

    10,938     32,035     29,594     104,285  
                        

Cash flows from investing activities:

         

Capital expenditures

    (14,000 )   (8,280 )   (32,860 )   (24,181 )

Purchase of other intangible assets

    (277 )   (357 )   (277 )   (2,442 )

Acquisition of business

    —       (150 )   —       (806 )

Proceeds from sale of property, plant and equipment

    19     579     48     1,552  
                        

Net cash used in investing activities

    (14,258 )   (8,208 )   (33,089 )   (25,877 )
                        

Cash flows from financing activities:

         

Notes payable to banks, net

    (8,039 )   1,772     (4,429 )   2,781  

Proceeds from long-term debt and subordinated debt

    12,559     2,048     13,148     2,048  

Repayments of long-term debt and subordinated debt

    (3,003 )   (908 )   (9,131 )   (4,204 )

Proceeds from issuance of common shares

    2     222     239     6,960  

Dividend to minority shareholders

    (13,245 )   (26,255 )   (31,713 )   (51,125 )
                        

Net cash used in financing activities

    (11,726 )   (23,121 )   (31,886 )   (43,540 )

Exchange rate effects

    (809 )   (408 )   18,763     (8,094 )
                        

Net increase (decrease) in cash and cash equivalents

    (15,855 )   298     (16,618 )   26,774  

Cash and cash equivalents at beginning of period

    217,856     161,476     218,619     135,000  
                        

Cash and cash equivalents at end of period

    202,001     161,774     202,001     161,774  
                        

Supplemental disclosures of cash flow information

         

Cash paid (received) during the period for:

         

Interest, net

    (768 )   (1,034 )   4,123     2,546  

Income taxes, net

    487     559     5,584     2,593  
                        

ASM INTERNATIONAL N.V.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Basis of Presentation

ASM International N.V, (“ASMI”) follows accounting principles in the United States of America ("US GAAP"). Accounting principles applied are unchanged compared to the year 2005, except for the adoption of Statement of Financial Accounting Standard No. 123R “Share-based Payment” (“SFAS 123R”) effective January 1, 2006.

Principles of Consolidation

The Consolidated Financial Statements include the accounts of ASMI and its subsidiaries, where ASMI holds a controlling interest. The minority interest in subsidiaries is disclosed separately in the Consolidated Financial Statements. All intercompany profits, transactions and balances have been eliminated in consolidation. Intercompany profits included in inventory are recognized in the Consolidated Statements of Operations upon the sale of the respective inventory to a third party.

Option plans

ASMI adopted SFAS 123R effective January 1, 2006 and applies the provisions of SFAS 123R to all share-based payments, including employee stock options, granted, vested, modified or settled subsequent to January 1, 2006. SFAS 123R requires that the cost of all share-based compensation arrangements, be reflected in the financial statements based on the fair value of the awards. The cost is measured at fair value on the grant date and is recognized over the requisite service period.

Prior to January 1, 2006, ASMI applied the intrinsic-value method prescribed in APB No. 25, “Accounting for Stock Issued to Employees.” All stock options granted to employees had an exercise price equal to the market value of the underlying common shares on the date of grant and accordingly for these plans no stock-based compensation expense was reflected in financial statements.

ASM INTERNATIONAL N.V.

RECONCILIATION US GAAP - IFRS

Accounting principles under IFRS

ASMI’s primary consolidated financial statements are and will continue to be prepared in accordance with US GAAP. However, ASMI is required under Dutch law to report its consolidated financial statements in accordance with International Financial Reporting Standards (“IFRS”).

The first consolidated financial statements prepared by ASMI in accordance with IFRS have been included in its Dutch Statutory Annual Report for 2005, including the consolidated financial statements of 2004 for comparison purposes. These consolidated financial statements replaced the consolidated financial statements ASMI prepared through 2004 in accordance with accounting principles generally accepted in the Netherlands (“Dutch GAAP”), included in its Dutch Statutory Annual Reports through 2004. As a result of the differences between IFRS and US GAAP that are applicable to ASMI, the Consolidated Statement of Operations and Consolidated Balance Sheet reported in accordance with IFRS differs from those reported in accordance with US GAAP. The major differences relate to accounting for goodwill, accounting for minority interest, accounting for convertible subordinated notes, accounting for development expenses and accounting for option plans.

The reconciliation between IFRS and US GAAP is as follows:

 

     Net earnings (loss)     Net earnings (loss)  
     Three months ended
September 30,		     Nine months ended
September 30,		  

(euro thousands except per share data)

    2005     2006     2005     2006  
     (unaudited)     (unaudited)     (unaudited)     (unaudited)  

US GAAP

   (6,296 )   13,055     (13,026 )   33,025  

Adjustments for IFRS:

         

Classification of minority interest

    12,481     13,417     27,442     43,919  

Convertible subordinated notes

    (3,333 )   (1,421 )   (4,699 )   (7,181 )

Development expenses

    2,207     2,339     6,782     7,318  

Option plans

    (371 )   (66 )   (967 )   92  
                        

Total adjustments

   10,984     14,269     28,558     44,148  

IFRS

    4,688     27,324     15,532     77,173  
                        

IFRS allocation of net earnings:

         

Shareholders

    (7,793 )   13,907     (11,910 )   33,254  

Minority interest

    12,481     13,417     27,442     43,919  

Net earnings (loss) per share:

         

Basic

    (0.15 )   0.26     (0.23 )   0.62  

Diluted

    (0.15 )   0.26     (0.23 )   0.62  
                        

(euro thousands)

                Equity     Equity  
               December 31,
2005		     September 30,
2006		  
                       (unaudited)  

US GAAP

        238,594     274,320  

Adjustments for IFRS:

         

Goodwill

        (11,686 )   (10,960 )

Classification of minority interest

        119,665     106,793  

Convertible subordinated notes

        38,229     31,048  

Development expenses

        9,366     15,811  
                

Total adjustments

        155,574     142,692  

IFRS

        394,168     417,012