EX-99.1 2 dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

 

LOGO    

ASM International N.V.

   Contact:    Naud van der Ven

Mary Jo Dieckhaus

Erik Kamerbeek

    + 31 30 229 85 40

+ 1 212 986 29 00

+ 31 30 229 85 00

ASM INTERNATIONAL REPORTS

FIRST QUARTER 2008 OPERATING RESULTS

APPOINTMENT OF VP GLOBAL SALES AND SERVICE

BILTHOVEN, THE NETHERLANDS, May 5, 2008—ASM International N.V. (NASDAQ: ASMI and Euronext Amsterdam: ASM) reports today its first quarter 2008 operating results in accordance with US GAAP.

 

  •  

First quarter of 2008 net sales of EUR 197.1 million, down 17% from the fourth quarter of 2007 and down 6% from the first quarter of 2007;

 

  •  

Net earnings of the first quarter of 2008 were EUR 12.6 million, or EUR 0.22 diluted net earnings per share, down 35% as compared to net earnings of EUR 19.1 million, or EUR 0.33 diluted net earnings per share for the fourth quarter of 2007 and up 13% as compared to net earnings of EUR 11.2 million or EUR 0.20 diluted net earnings per share for the first quarter of 2007;

 

  •  

Bookings in the first quarter of 2008 were EUR 187.3 million, down 25% from the fourth quarter of 2007. Bookings from our Front-end segment were down 31% and bookings from our Back-end segment were down 21%. Quarter-end backlog was EUR 190.6 million, down 5% from the end of the previous quarter;

 

  •  

Lowering of Front-end net earnings break even level;

 

  •  

Announcement of appointment VP Global Sales and Service in line with Roadmap to Peer Group Profitability

Mr. Chuck del Prado, President and Chief Executive Officer of ASM International said:

“We have made continued progress with the Front-end business, driving the net earnings breakeven point down to approx. EUR 90 million from an average of approx. EUR 110 million per quarter in 2007, keeping gross margins firm and being EBIT positive. This progress came despite a very challenging industry environment that reduced the level of both front-end revenues and bookings.

While industry conditions will continue to be challenging, we remain confident that our Roadmap to 2009 Front-End Peer Group Profitability strategy will deliver a significant and structural shift towards peer profitability in 2009 and beyond. The plans that we have for the business are ambitious, but also realistic and deliverable. They will deliver value for the shareholders in the short term, but will not do so at the expense of the long-term health of the business.”

 

1

Effective May 12, 2008, Mr. Tom Wu will join ASMI as Vice President Global Sales and Service, a new position created as part of the Company’s Roadmap to Front-end Peer Group profitability. We have made clear that we are addressing our plans with urgency and the appointment today of Tom Wu is further evidence of this. Mr. Wu comes to ASMI from ESI (Electro Scientific Industries, Inc.) where he was Vice President of Worldwide Sales and Operations. With over 20 years industry experience at such leading companies as—Motorola, Novellus, KLA-Tencor and, most recently, ESI, he has extensive experience in building and training sales teams, working with key multinational clients in multiple geographies, and in effective account penetration of key customers. Mr. Wu accrued valuable Asian experience at both KLA-Tencor and Novellus, where he was responsible for China and South East Asia sales.

Mr. Chuck del Prado commented: “Tom Wu brings to ASMI the experience, drive and vision to implement our global sales program, and I am very pleased to welcome him to our Front end Management team. This is a key appointment for ASMI and important evidence that we are moving aggressively to deliver on our key financial commitments.

Mr. del Prado continued, “While our back-end operations have not been immune to the industry slowdown, revenues for Q1, their historically weakest quarter, were 38% higher when compared with the first quarter of 2007 and bookings were 21% higher, both as measured in local currency. The fact that back-end operations maintained their high margin levels and once again achieved solid overall results in a declining market is testimony to the winning combination of back-end’s industry-leading product and application base and a low-cost, vertically-integrated business model.”

The following table shows the operating performance for the first quarter of 2008 as compared to the fourth quarter of 2007 and the first quarter of 2007:

 

(EUR millions)

    Q1
2007		     Q4
2007		     Q1
2008		     % Change
Q4 2007
to
Q1 2008		     % Change
Q1 2007
to
Q1 2008		  

Net sales

    210.1     236.9     197.1     (17 )%   (6 )%

Gross profit

    72.8     94.2     76.4     (19 )%   5 %

Gross profit margin %

    34.6 %   39.8 %   38.8 %   (1 )%(1)   4.2 %(1)

Selling, general and administrative expenses

    (29.9 )   (33.6 )   (29.1 )   (13 )%   (3 )%

Research and development expenses

    (19.8 )   (21.0 )   (18.9 )   (10 )%   (5 )%

Amortization of other intangible assets

    (0.1 )   (0.1 )   (0.1 )   (5 )%   (13 )%
                              

Earnings from operations

    23.0     39.5     28.3     (28 )%   23 %

Net earnings

    11.2     19.1     12.6     (34 )%   13 %

Diluted net earnings per share

    0.20     0.33     0.22      

New orders

    246.2     250.5     187.3     (25 )%   (24 )%

Backlog at end of period

    270.4     200.4     190.6     (5 )%   (30 )%

 

(1) Percentage point change

 

2

Net Sales. The following table shows net sales of our Front-end and Back-end segments for the first quarter of 2008 as compared to the fourth quarter of 2007 and the first quarter of 2007:

 

(EUR millions)

    Q1
2007		    Q4
2007		    Q1
2008		    % Change
Q4 2007
to
Q1 2008		     % Change
Q1 2007
to
Q1 2008		  

Front-end

    116.3    106.3    83.9    (21 )%   (28 )%

Back-end

    93.8    130.6    113.2    (13 )%   21 %
                           

Total net sales

    210.1    236.9    197.1    (17 )%   (6 )%
                           

In the first quarter of 2008, net sales of wafer processing equipment (Front-end segment) represented 42.6% of total net sales. Net sales of assembly and packaging equipment and materials (Back-end segment) represented 57.4% of total net sales in the first quarter of 2008.

The decrease of net sales of our Front-end segment was noticed in all product lines except for Transistor Products.

The weakening of the Yen, US dollar and US dollar related currencies against the euro in the first quarter of 2008 as compared to the fourth quarter of 2007 and the first quarter of 2007 impacted total net sales negatively by 3% and 10% respectively.

Gross Profit Margin. The following table shows our gross profit and gross profit margin for our Front-end and Back-end segments for the first quarter of 2008 as compared to the fourth quarter of 2007 and the first quarter of 2007:

 

(EUR millions)

    Gross
profit
Q1 2007		    Gross
profit
Q4 2007		    Gross
profit
Q1 2008		    Gross
profit
margin
Q1 2007		     Gross
profit
margin
Q4 2007		     Gross
profit
margin
Q1 2008		     Increase or
(decrease)
percentage
points
Q4 2007 to
Q1 2008		     Increase or
(decrease)
percentage
points
Q1 2007 to
Q1 2008

Front-end

    34.9    37.7    28.6    30.0 %   35.5 %   34.0 %   (1.5 )   4.0

Back-end

    37.9    56.5    47.8    40.4 %   43.2 %   42.2 %   (1.0 )   1.8
                                           

Total gross profit

    72.8    94.2    76.4    34.6 %   39.8 %   38.8 %   (1.0 )   4.2
                                           

When comparing the gross profit margin of our Front-end segment for the first quarter of 2008 of 34.0% to the gross profit margin for the year 2007 of 32.2%, the increase is explained by changes in the product mix and the results from cost reductions programs which have been implemented since the third quarter of 2007. Headcount of the Front-end segment was reduced by 7% in the first quarter of 2008.

Selling, General and Administrative Expenses. The following table shows selling, general and administrative expenses for our Front-end and Back-end segments for the first quarter of 2008 as compared to the fourth quarter of 2007 and the first quarter of 2007:

 

(EUR millions)

    Q1
2007		    Q4
2007		    Q1
2008		    % Change
Q4 2007
to
Q1 2008		     % Change
Q1 2007
to
Q1 2008		  

Front-end

    18.2    19.9    16.5    (17 )%   (9 )%

Back-end

    11.7    13.7    12.6    (8 )%   8 %
                           

Total selling, general and administrative expenses

    29.9    33.6    29.1    (13 )%   (3 )%
                           

 

3

As a percentage of net sales, selling, general and administrative expenses were 15% in the first quarter of 2008 and 14% in both the fourth quarter of 2007 and the first quarter of 2007.

Selling, general and administrative expenses of our Front-end segment decreased as a result of increased effort to control selling, general and administrative expenses, including the reduction of headcount of the Front-end segment in the first quarter of 2008. In addition, selling, general and administrative expenses of our Front-end segment in the fourth quarter of 2007 included, amongst others, external auditor’s expenditures, a reduction in force, accruals for bonuses and pensions, and a provision for lease obligations. Also included in selling, general and administrative expense of our Front-end segment for the fourth quarter of 2007 was a positive revaluation of fixed assets held for sale of EUR 0.8 million.

Research and Development Expenses. The following table shows research and development expenses for our Front-end and Back-end segments for the first quarter of 2008 as compared to the fourth quarter of 2007 and the first quarter of 2007:

 

(EUR millions)

    Q1
2007		    Q4
2007		    Q1
2008		    % Change
Q4 2007
to
Q1 2008		     % Change
Q1 2007
to
Q1 2008		  

Front-end

    13.2    13.4    11.7    (13 )%   (11 )%

Back-end

    6.6    7.6    7.2    (5 )%   8 %
                           

Total research and development expenses

    19.8    21.0    18.9    (10 )%   (5 )%
                           

The decrease in the Front-end segment was the result of increased focus in the research and development portfolio.

As a percentage of net sales, research and development expenses were 10% in the first quarter of 2008 and 9% in both the fourth quarter of 2007 and the first quarter of 2007.

Earnings from Operations. The following table shows earnings from operations for our Front-end and Back-end segments for the first quarter of 2008 as compared to the fourth quarter of 2007 and the first quarter of 2007:

 

(EUR millions)

    Q1
2007		    Q4
2007		    Q1
2008		    % Change
Q4 2007
to
Q1 2008		     % Change
Q1 2007
to
Q1 2008		  

Front-end

    3.4    4.3    0.2    (95 )%   (94 )%

Back-end

    19.5    35.1    28.1    (20 )%   44 %
                           

Total earnings from operations

    23.0    39.5    28.3    (28 )%   23 %
                           

 

4

Net Earnings. The following table shows net earnings for our Front-end and Back-end segments for the first quarter of 2008 as compared to the fourth quarter of 2007 and the first quarter of 2007:

 

(EUR millions)

    Q1
2007		    Q4
2007		    Q1
2008		     % Change
Q4 2007
to
Q1 2008		     % Change
Q1 2007
to
Q1 2008		  

Front-end

    1.2    3.4    (1.1 )   na     na  

Back-end

    10.0    15.7    13.7     (13 )%   38 %
                            

Total net earnings

    11.2    19.1    12.6     (34 )%   13 %
                            

Net earnings for the Front-end segment for the fourth quarter of 2007 include a gain on dilution of our investment in ASM Pacific Technology of EUR 3.0 million.

Net earnings for the Back-end segment reflect our 53.1% ownership of ASM Pacific Technology.

Bookings and backlog

The following table shows, for our Front-end and Back-end segments, the level of new orders for the first quarter of 2008 and the backlog at the end of the first quarter of 2008 as compared to the fourth quarter of 2007 and the first quarter of 2007:

 

(EUR millions, except book-to-bill ratio)

    Q1
2007		    Q4
2007		    Q1
2008		    % Change
Q4 2007
to
Q1 2008		     % Change
Q1 2007
to
Q1 2008		  
                             

Front-end:

              

New orders for the quarter

    133.6    110.8    76.2    (31 )%   (43 )%

Backlog at the end of the quarter

    172.8    99.2    91.5    (8 )%   (47 )%

Book-to-bill ratio (new orders divided by net sales)

    1.15    1.04    0.91     

Back-end:

              

New orders for the quarter

    112.6    139.7    111.1    (21 )%   (1 )%

Backlog at the end of the quarter

    97.6    101.2    99.1    (2 )%   2 %

Book-to-bill ratio (new orders divided by net sales)

    1.20    1.07    0.98     

Total

              

New orders for the quarter

    246.2    250.5    187.3    (25 )%   (24 )%

Backlog at the end of the quarter

    270.4    200.4    190.6    (5 )%   (30 )%

Book-to-bill ratio (new orders divided by net sales)

    1.17    1.06    0.95     

In line with the market, order intake decreased in the first quarter of 2008.

The decrease of order intake of our Front-end segment was noticed in all product lines except for Transistor Products.

The book-to-bill ratio of our Back-end segment is 1.04 when measured in local currency.

 

5

Liquidity and capital resources

Net cash provided by operations was EUR 31.9 million for the first quarter of 2008 as compared to net cash provided by operations of EUR 11.9 million for the first quarter of 2007. The increase results mainly from decreased working capital.

Net cash used in investing activities was EUR 7.4 million for the first quarter of 2008 as compared to EUR 6.4 million for the first quarter of 2007. The increase results from higher capital expenditures, partly offset by proceeds from the sale of property.

Net cash used in financing activities was EUR 2.5 million for the first quarter of 2008 as compared to net cash used in financing activities of EUR 0.9 million for the first quarter of 2007. In anticipation of dividend of ASMPT, we purchased treasury shares of EUR 1.1 million in the first quarter of 2008.

In 2008 and 2009, ASMI will continue to utilize the dividend from ASMPT on a combination of buy back of shares, buy back of convertibles, payment of cash dividends and/or buying some additional shares in ASMPT to retain the November 2006 level of ownership.

Net working capital, consisting of accounts receivable, inventories, other current assets, accounts payable, accrued expenses, advance payments from customers and deferred revenue, decreased from EUR 271.9 million at December 31, 2007 to EUR 262.3 million at March 31, 2008. The decrease is primarily the result of lower manufacturing and sales levels. The number of outstanding days of working capital, measured based on annual sales, decreased from 104 days at December 31, 2007 to 102 days at March 31, 2008. For the same period, our Front-end segment decreased from 125 days to 120 days and our Back-end segment increased from 85 days to 87 days.

At March 31, 2008, the Company’s principal sources of liquidity consisted of EUR 186.5 million in cash and cash equivalents and EUR 102.8 million in undrawn bank lines. Approximately EUR 75.1 million of the cash and cash equivalents and EUR 24.5 million of the undrawn bank lines are restricted to use in the Company’s Back-end operations and EUR 11.2 million of the cash and cash equivalents and EUR 27.1 million in undrawn bank lines are restricted to use in the Company’s Front-end operations in Japan.

Release of 2007 Statutory Annual Report

On April 29, 2008 ASMI released its 2007 Statutory Annual Report, which includes its Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (“IFRS”). Under IFRS, final net earnings allocated to shareholders of the parent amount to EUR 65.7 million. This amount differs from preliminary net earnings of EUR 62.6 million as reported in the Company’s 2007 operating results press release on February 27, 2008 and reported in Annex A to the Proxy Statement for its 2007 Annual General Meeting of Shareholders. The adjustment results from a revision of the allocation of the premium paid in repurchasing the Company’s convertible subordinated notes. The preliminary IFRS net earnings did not fully reflect the requirement under IFRS that a portion of the repurchase premium be allocated to equity instead of the statement of operations. As a result of this adjustment, IFRS net earnings increased, with no impact on total shareholders’ equity.

 

6

Outlook

Based on recent projections by industry analysts, front-end capital equipment spending for the year will deteriorate to between negative 15% and negative 20%—or possibly more. Visibility beyond the second quarter remains extremely low, and the timing of any upturn remains hazy.

Based on the protracted industry downturn ASMI anticipates increased weakness in front-end revenue for Q2. However, our leaner front-end operating model will help to mitigate part of the negative effects of the current industry contraction on our operating results.

For back-end operations, we again expect solid results for Q2. The first quarter book-to-bill ratio of 1.04, as measured in the local currency, indicates a fairly stable order pattern for our back-end operations, despite the current soft market environment. We feel confident that back-end’s proven business strategies—multiple products serving diversified application markets, a customer focus, vertical integration and low-cost manufacturing locations and a superior customer support organization, will continue to contribute positive results throughout this period of weak demand and low visibility.

 

7

ASM INTERNATIONAL CONFERENCE CALL

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

TUESDAY, MAY 6, 2008 at

09:00 a.m. US Eastern time

15:00 p.m Continental European time.

The teleconference dial-in numbers are as follows:

 

United States:

International:

    +1 866.966.5335

+44 (0)20.3023.4456

   

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 May 19, 2008. The replay dial-in numbers are:

 

United States:

International:

Access Code:

    +1 866.583.1035

+44 (0)20.8196.1998

117327#

   

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 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.

 

8

ASM INTERNATIONAL N.V.

CONSOLIDATED STATEMENTS OF OPERATIONS

 

(thousands except per share data)

    in Euro  
     Three months ended March 31,  
     2007     2008  
     (unaudited)     (unaudited)  

Net sales

    210,091     197,079  

Cost of sales

    (137,332 )   (120,657 )
            

Gross profit

    72,759     76,422  

Operating expenses:

     

Selling, general and administrative

    (29,877 )   (29,126 )

Research and development

    (19,788 )   (18,863 )

Amortization of other intangible assets

    (144 )   (126 )
            

Total operating expenses

    (49,809 )   (48,115 )
            

Earnings from operations

    22,950     28,307  

Net interest expense

    (1,026 )   (799 )

Foreign currency exchange gains

    59     927  
            

Earnings from continuing operations before income taxes and minority interest

    21,983     28,435  

Income tax expense

    (2,130 )   (3,977 )
            

Earnings from continuing operations before minority interest

    19,853     24,458  

Minority interest

    (8,696 )   (11,819 )
            

Net earnings

    11,157     12,639  
            

Net earnings per share:

     

Basic net earnings

    0.21     0.23  

Diluted net earnings (1)

    0.20     0.22  
            

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

     

Basic

    53,874     54,005  

Diluted (1)

    61,403     64,109  
            

 

(1) The calculation of diluted net earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in earnings of the Company. Only instruments that have a dilutive effect on net earnings are included in the calculation. The assumed conversion results in adjustment in the weighted average number of common shares and net earnings due to the related impact on interest expense. The calculation is done for each reporting period individually. For the three months ended March 31, 2007, the effect of a potential conversion of convertible debt into 4,682,133 common shares was anti-dilutive and no adjustments have been reflected in the diluted weighted average number of shares and net earnings per share for this period.

 

9

ASM INTERNATIONAL N.V.

CONSOLIDATED BALANCE SHEETS

 

(thousands except share data)

    In Euro  
     December 31,
2007		     March 31,
2008		  
           (unaudited)  

Assets

     

Cash and cash equivalents

    167,923     186,523  

Accounts receivable, net

    229,160     199,137  

Inventories, net

    205,504     208,562  

Income taxes receivable

    117     55  

Deferred tax assets

    4,062     4,403  

Other current assets

    26,786     31,875  
            

Total current assets

    633,552     630,555  

Debt issuance costs

    2,316     1,993  

Deferred tax assets

    951     1,032  

Other intangible assets

    4,251     3,841  

Goodwill, net

    49,621     46,112  

Property, plant and equipment, net

    149,642     143,122  
            

Total Assets

    840,333     826,655  
            

Liabilities and Shareholders' Equity

     

Notes payable to banks

    16,677     17,650  

Accounts payable

    99,046     88,006  

Accrued expenses

    68,076     63,468  

Advance payments from customers

    10,039     13,245  

Deferred revenue

    12,377     12,597  

Income taxes payable

    19,686     17,142  

Current portion of long-term debt

    15,438     15,865  
            

Total current liabilities

    241,339     227,973  

Pension liabilities

    3,872     3,910  

Deferred tax liabilities

    799     757  

Long-term debt

    15,828     14,952  

Convertible subordinated debt

    138,993     129,397  
            

Total Liabilities

    400,831     376,989  

Minority interest

    120,624     124,323  

Shareholders' Equity:

     

Common shares

     

Authorized 110,000,000 shares, par value €0.04,
issued and outstanding 54,005,214 and 54,005,214 shares

    2,160     2,160  

Financing preferred shares, issued none

    —       —    

Preferred shares, issued none

    —       —    

Capital in excess of par value

    319,657     320,051  

Treasury shares at cost

    (3,985 )   (4,992 )

Retained earnings

    73,965     86,571  

Accumulated other comprehensive loss

    (72,919 )   (78,447 )
            

Total Shareholders' Equity

    318,878     325,343  
            

Total Liabilities and Shareholders' Equity

    840,333     826,655  
            

 

10

ASM INTERNATIONAL N.V.

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

(thousands)

    in Euro  
     Three months ended
March 31,		  
     2007     2008  
     (unaudited)     (unaudited)  

Increase (decrease) in cash and cash equivalents:

     

Cash flows from operating activities:

     

Net earnings

    11,157     12,639  

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

     

Depreciation of property, plant and equipment

    8,382     7,922  

Amortization of other intangible assets

    353     371  

Amortization of debt issuance costs

    232     173  

Compensation expense employee stock option plan

    358     425  

Compensation expense employee share incentive scheme ASMPT

    682     861  

Deferred income taxes

    (434 )   (290 )

Minority interest

    8,696     11,819  

Changes in other assets and liabilities:

     

Accounts receivable

    (3,563 )   23,158  

Inventories

    (16,010 )   (11,448 )

Other current assets

    (4,608 )   (6,426 )

Accounts payable and accrued expenses

    (762 )   (10,294 )

Advance payments from customers

    3,784     4,061  

Deferred revenue

    3,060     284  

Pension liabilities

    125     81  

Income taxes

    407     (1,430 )
            

Net cash provided by operating activities

    11,859     31,906  
            

Cash flows from investing activities:

     

Capital expenditures

    (6,146 )   (9,765 )

Purchase of intangible assets

    (336 )   (176 )

Proceeds from sale of property, plant and equipment

    97     2,536  
            

Net cash used in investing activities

    (6,385 )   (7,405 )
            

Cash flows from financing activities:

     

Notes payable to banks, net

    (825 )   250  

Repayments of long-term debt and subordinated debt

    (1,343 )   (1,729 )

Purchase of treasury shares

    —       (1,104 )

Proceeds from issuance of common shares

    1,301     34  
            

Net cash used in financing activities

    (867 )   (2,549 )

Exchange rate effects

    (939 )   (3,352 )
            

Net increase in cash and cash equivalents

    3,668     18,600  

Cash and cash equivalents at beginning of period

    193,872     167,923  
            

Cash and cash equivalents at end of period

    197,540     186,523  
            

Supplemental disclosures of cash flow information

     

Cash paid during the period for:

     

Interest, net

    (986 )   (661 )

Income taxes, net

    2,158     5,697  
            

 

11

ASM INTERNATIONAL N.V.

DISCLOSURE ABOUT SEGMENTS AND RELATED INFORMATION

The Company organizes its activities in two operating segments, Front-end and Back-end.

The Front-end segment manufactures and sells equipment used in wafer processing, encompassing the fabrication steps in which silicon wafers are layered with semiconductor devices. The segment is a product driven organizational unit comprised of manufacturing, service, and sales operations in Europe, the United States, Japan and Southeast Asia.

The Back-end segment manufactures and sells equipment and materials used in assembly and packaging, encompassing the processes in which silicon wafers are separated into individual circuits and subsequently assembled, packaged and tested. The segment is organized in ASM Pacific Technology Ltd., in which the Company holds a majority interest of 53.10% at March 31, 2008, whilst the remaining shares are listed on the Stock Exchange of Hong Kong. The segment's main operations are located in Hong Kong, Singapore, the People's Republic of China and Malaysia.

 

(thousands, except headcount)

    In Euro  
     Front-end     Back-end     Total  
     (unaudited)     (unaudited)     (unaudited)  

Three months ended March 31, 2007

       

Net sales to unaffiliated customers

    116,277     93,814     210,091  

Gross profit

    34,897     37,862     72,759  

Earnings from operations

    3,439     19,511     22,950  

Net interest income (expense)

    (1,931 )   905     (1,026 )

Foreign currency exchange gains (losses)

    (540 )   599     59  

Income tax benefit (expense)

    246     (2,376 )   (2,130 )

Minority interest

    —       (8,696 )   (8,696 )

Net earnings

    1,214     9,943     11,157  

Capital expenditures and purchase of intangible assets

    1,276     5,206     6,482  

Depreciation and amortization

    4,279     4,456     8,735  

Cash and cash equivalents

    102,639     94,901     197,540  

Capitalized goodwill

    14,034     39,877     53,911  

Other intangible assets

    4,394     478     4,872  

Other identifiable assets

    340,480     255,484     595,964  

Total assets

    461,547     390,740     852,287  

Total debt

    223,743     546     224,289  

Headcount in full-time equivalents (1)

    1,907     8,977     10,884  
                  
     (unaudited)     (unaudited)     (unaudited)  

Three months ended March 31, 2008

       

Net sales to unaffiliated customers

    83,878     113,201     197,079  

Gross profit

    28,552     47,870     76,422  

Earnings from operations

    213     28,094     28,307  

Net interest income (expense)

    (1,218 )   419     (799 )

Foreign currency exchange gains (losses)

    (112 )   1,039     927  

Income tax benefit (expense)

    54     (4,031 )   (3,977 )

Minority interest

    —       (11,819 )   (11,819 )

Net earnings

    (1,063 )   13,702     12,639  

Capital expenditures and purchase of intangible assets

    5,904     4,037     9,941  

Depreciation and amortization

    3,668     4,625     8,293  

Cash and cash equivalents

    111,410     75,113     186,523  

Capitalized goodwill

    12,528     33,584     46,112  

Other intangible assets

    3,171     670     3,841  

Other identifiable assets

    306,179     284,000     590,179  

Total assets

    433,288     393,367     826,655  

Total debt

    177,864     —       177,864  

Headcount in full-time equivalents (1)

    1,800     10,163     11,963  
                  

 

(1) Headcount includes those employees with a fixed contract, and is exclusive of temporary workers.

 

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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 2007.

Principles of Consolidation

The Consolidated Financial Statements include the accounts of ASMI and its subsidiaries, where ASMI holds a controlling interest. The minority interest of third parties is disclosed separately in the Consolidated Financial Statements. All intercompany profits, transactions and balances have been eliminated in consolidation.

 

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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”). 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 differ 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, accounting for option plans and accounting for pension plans.

The reconciliation between IFRS and US GAAP is as follows:

 

      Net earnings  
     Three months ended
March 31,		  
(euro thousands except per share data)    2007     2008  
     (unaudited)     (unaudited)  

US GAAP

    11,157     12,639  

Adjustments for IFRS:

     

Classification of minority interest

    8,696     11,819  

Convertible subordinated notes

    (1,792 )   (2,295 )

Development expenses

    3,537     3,341  

Option plans

    4     —    
            

Total adjustments

    10,445     12,865  

IFRS

    21,602     25,504  
            

IFRS allocation of net earnings:

     

Shareholders

    12,906     13,685  

Minority interest

    8,696     11,819  

Net earnings per share:

     

Basic

    0.24     0.25  

Diluted

    0.24     0.25  
            
     Equity     Equity  
(euro thousands)    December 31,
2007		         March 31,    
2008		  
           (unaudited)  

US GAAP

    318,878     325,343  

Adjustments for IFRS:

     

Goodwill

    (9,569 )   (8,979 )

Classification of minority interest

    120,624     124,323  

Convertible subordinated notes

    17,151     14,856  

Development expenses

    29,717     32,668  

Pension plans

    747     783  
            

Total adjustments

    158,670     163,651  

IFRS

    477,548     488,994  
            

 

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