EX-99.1 2 dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

LOGO

ASM International N.V.

ASM INTERNATIONAL REPORTS

SECOND QUARTER 2010 OPERATING RESULTS

ALMERE, THE NETHERLANDS, July 28, 2010—ASM International N.V. (NASDAQ: ASMI and Euronext Amsterdam: ASM) reports today its second quarter 2010 (unaudited) operating results in accordance with US GAAP.

 

  •  

Second quarter 2010 net sales of EUR 302.4 million a new record, up 38% quarter to quarter and up 153% year to year;

 

  •  

For our Front-end segment this quarter we achieved our operating cost (including manufacturing overhead) reduction target of 40% compared to the fourth quarter 2008 run rate;

 

  •  

Earnings from operations excluding impairment and restructuring charges increased from negative EUR 6.7 million in the second quarter of 2009 to EUR 83.5 million;

 

  •  

The Front-end segment increased from negative EUR 22.5 million to EUR 6.9 million;

  •  

The Back-end segment increased from EUR 15.8 million to EUR 76.6 million;

 

  •  

Net earnings of the second quarter of 2010 were EUR 47.5 million, or EUR 0.61 diluted net earnings per share, as compared to net earnings of EUR 4.2 million, or EUR 0.08 diluted net earnings per share for the first quarter of 2010 and a net loss of EUR 55.7 million or EUR 1.08 diluted net loss per share for the second quarter of 2009;

 

  •  

Bookings in the second quarter of 2010 were EUR 526.1 million, up 48% from the first quarter of 2010. Bookings from our Front-end segment were up 32% and bookings from our Back-end segment were up 52%. Quarter-end backlog was EUR 556.6 million, up 67% from the end of the previous quarter;

Commenting on the results, Chuck del Prado, President and Chief Executive Officer of ASM International, said, “ASMI’s second quarter performance reflects strong growth in both our wafer processing and assembly and packaging operations.

Our Front-end business returned to profitability, we reached the cost reduction targets as set out in our global restructuring program PERFORM!, and we experienced an acceleration of orders compared to prior quarters. In Back-end, revenues, orders, and profits once again set quarterly records for our assembly and packaging operations serving the semiconductor and LED markets”.

Contacts:

Erik Kamerbeek

+31 88100 8500

Mary Jo Dieckhaus

+1 212 986 2900

Media Contact:

Charles Huijskens

+31 20 6855 955

+31 653 105 072

 

1

The following table shows the operating performance for the second quarter of 2010 as compared to the first quarter of 2010 and the second quarter of 2009:

 

(EUR millions)        
      Q2 2009     Q1 2010     Q2 2010     % Change
Q1 2010
to
Q2 2010		     % Change
Q2 2009
to
Q2 2010		  

Net sales

    119.5      219.1      302.4      38 %    153 % 

Gross profit before impairment of inventories

    33.7      92.5      133.4      44 %    296 % 

Gross profit margin %

    28.2 %    42.2 %    44.1 %     

Impairment inventories

    (20.6 )    —        —         

Gross profit

    13.1      92.5      133.4      44 %    916 % 

Selling, general and administrative expenses

    (25.7 )    (26.6 )    (31.6 )    19 %    23 % 

Research and development expenses

    (14.6 )    (17.5 )    (18.2 )    4 %    25 % 

Amortization of other intangible assets

    (0.2 )    (0.1 )    (0.1 )     

Restructuring expenses

    (15.4 )    (3.6 )    (3.3 )             

Earnings (loss) from operations

    (42.7 )    44.7      80.2      80 %   

Net earnings (loss) allocated to the shareholders of the of the parent

    (55.7 )    4.2      47.5       

Net earnings (loss) per share, diluted

    (1.08 )    0.08      0.61       

New orders

    155.8      355.4      526.1      48 %    238 % 

Backlog at end of period

    122.4      333.0      556.6      67 %    355 % 

Net Sales. The following table shows net sales of our Front-end and Back-end segments for the second quarter of 2010 as compared to the first quarter of 2010 and the second quarter of 2009:

 

(EUR millions)    Q2 2009    Q1 2010    Q2 2010    % Change
Q1 2010
to
Q2 2010		     % Change
Q2 2009
to
Q2 2010		  

Front-end

    27.6    54.0    66.1    22 %    139 % 

Back-end

    91.9    165.1    236.4    43 %    157 % 

Total net sales

    119.5    219.1    302.4    38 %    153 % 

The increase in the second quarter of 2010 in our Front-end segment compared to the previous quarter was driven by increased equipment sales in particular for our ALD enabling technologies and higher spares and service sales as a result of increased activity levels at our customers. In our Back-end segment record quarterly sales again were realized in the second quarter of 2010 due to the continued strong demand for our traditional products and increasing demand for our LED related products.

The strengthening of the Yen, US dollar and US dollar related currencies against the euro in the second quarter of 2010 as compared to the first quarter of 2010 impacted total net sales positively by 7%. The strengthening of these currencies as compared to the second quarter of 2009 impacted total net sales positively by 4%.

 

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Gross Profit Margin. The following table shows our gross profit and gross profit margin for our Front-end and Back-end segments for the second quarter of 2010 as compared to the first quarter of 2010 and the second quarter of 2009:

 

(EUR millions)   

Gross
profit1)

Q2 2009

   

Gross
profit

Q1 2010

   

Gross
profit

Q2 2010

   

Gross
profit
margin

Q2 2009

    

Gross
profit
margin

Q1 2010

    

Gross
profit
margin

Q2 2010

    

Increase or
(decrease)

percentage
points

Q1 2010 to
Q2 2010

   

Increase or
(decrease)

percentage
points

Q2 2009 to

Q2 2010

Front-end

    0.4    18.0    26.0    1.7 %    33.4 %    39.4 %    6.0    37.7

Back-end

    33.3    74.5    107.3    36.2 %    45.1 %    45.4 %    0.3    9.2

Total gross profit

    33.7    92.5    133.4    28.2 %    42.2 %    44.1 %    1.9    15.9
1) before impairment inventories

The gross profit margin of both our Front-end segment and our Back-end segment continued to improve when compared to the first quarter of 2010 driven by higher activity levels. The increase of the gross margin in our Front-end segment, both compared to the same period last year and to the previous quarter is partly attributable to the lower cost levels and manufacturing overhead as a result of the transfer of our manufacturing activities to our plant in Singapore and a favorable product mix.

The impact of currency changes quarter to quarter was an increase of 7% and year to year an increase of 4%.

Selling, General and Administrative Expenses. The following table shows selling, general and administrative expenses for our Front-end and Back-end segments for the second quarter of 2010 as compared to the first quarter of 2010 and the second quarter of 2009:

 

(EUR millions)    Q2 2009    Q1 2010    Q2 2010    % Change
Q1 2010
to
Q2 2010		     % Change
Q2 2009
to
Q2 2010		  

Front-end

    14.7    11.0    11.2    2 %    (24 )% 

Back-end

    11.0    15.6    20.4    31 %    85 % 

Total selling, general and administrative expenses

    25.7    26.6    31.6    19 %    23 % 

As a percentage of net sales, selling, general and administrative (SG&A) expenses were 10% in the second quarter of 2010, 12% in the first quarter of 2010 and 21% in the second quarter of 2009.

In the Front-end segment SG&A as a percentage of sales was 17% in Q2 as compared to 20% in Q1 and 53% in Q2 2009, reflecting our focus to reduce the fixed cost base as part of our restructuring program Perform!.

In the Back-end segment SG&A, as a percentage of net sales, decreased due to the higher activity level.

The impact of currency changes quarter to quarter was an increase of 6% and year to year an increase of 4%.

 

3

Research and Development Expenses. The following table shows research and development expenses for our Front-end and Back-end segments for the second quarter of 2010 as compared to the first quarter of 2010 and the second quarter of 2009:

 

(EUR millions)    Q2 2009    Q1 2010    Q2 2010    % Change
Q1 2010
to
Q2 2010		     % Change
Q2 2009
to
Q2 2010		  

Front-end

    8.1    8.3    7.8    (6 )%    (4 )% 

Back-end

    6.5    9.2    10.3    12 %    58 % 

Total research and development expenses

    14.6    17.5    18.2    4 %    25 % 

As a percentage of net sales, research and development expenses were 6% in the second quarter of 2010, 8% in the first quarter of 2010 and 12% in the second quarter of 2009.

We continue to focus and prioritize our programs carefully in line with our strategic objectives.

The impact of currency changes quarter to quarter was an increase of 6% and year to year an increase of 5%.

Restructuring expenses. In 2009 ASMI started the implementation of a major restructuring in the Front-end segment. Related to these restructuring projects EUR 3.3 million of expenses were incurred during the second quarter of 2010. These related mainly to severance packages, retention costs, provisions for vacancy and other costs related to the transfer of activities to Singapore.

Earnings (Loss) from Operations. The following table shows earnings (loss) from operations for our Front-end and Back-end segments for the second quarter of 2010 as compared to the first quarter of 2010 and the second quarter of 2009:

 

(EUR millions)    Q2 2009     Q1 2010     Q2 2010     Change
Q1 2010
to
Q2 2010		    Change
Q2 2009
to
Q2 2010

Front-end:

            

Excluding impairments and restructuring

    (22.5 )    (1.4 )    6.9      8.3    29.4

Impairments and restructuring

    (36.0 )    (3.6 )    (3.3 )    0.3    32.7

Including impairments and restructuring

    (58.5 )    (5.0 )    3.6      8.6    62.1

Back-end

    15.8      49.7      76.6      26.9    60.8

Total earnings (loss) from operations

    (42.7 )    44.7      80.2      35.5    122.9

 

4

Net Earnings (Loss) allocated to the shareholders of the parent. The following table shows net earnings (loss) for our Front-end and Back-end segments for the second quarter of 2010 as compared to the first quarter of 2009 and the second quarter of 2009:

 

(EUR millions)    Q2 2009     Q1 2010     Q2 2010     Change
Q1 2010
to
Q2 2010		    Change
Q2 2009
to
Q2 2010

Front-end

            

Excluding impairments, restructuring expenses, result on early extinguishment of debt and fair value changes conversion option

   (23.9 )    (10.1 )    1.4      11.5    25.3

Impairments and restructuring

    (34.9 )    (3.6 )    (3.3 )    0.3    31.6

Result on early extinguishment of debt

    —        (2.3 )    —        2.3    —  

Fair value changes conversion options

    (4.7 )    (2.6 )    14.0      16.6    18.7

Special items

    (39.6 )    (8.5 )    10.7      19.2    50.3

Including impairments, restructuring expenses, result on early extinguishment of debt and fair value changes conversion option

   (63.5 )    (18.6 )    12.1      30.7    75.6

Back-end

    7.8      22.7      35.4      12.7    27.6

Total net earnings (loss) allocated to the shareholders of the parent

    (55.7 )    4.2      47.5      43.3    103.2

Net earnings for the Back-end segment reflect our 52.59% ownership of ASM Pacific Technology.

 

5

Six months ended June 30, 2010

The following table shows the operating performance and the percentage change for the six months ended June 30, 2010 compared to the same period in 2009:

 

(EUR millions, except earnings per share)    Six months ended June 30,         
      2009     2010     % Change  

Net sales

    208.6      521.5      150 % 

Gross profit before impairment of inventories

    55.0      225.9      311 % 

Gross profit margin %

    26.4 %    43.3 %   

Impairment inventories

    (20.6 )    —       

Gross profit

    34.4      225.9      556 % 

Selling, general and administrative expenses

    (50.9 )    (58,2 )    14 % 

Research and development expenses

    (31.1 )    (35.7 )    15 % 

Amortization of other intangible assets

    (0.3 )    (0.2 )   

Restructuring expenses

    (19.5 )    (7.0 )       

Earnings (loss) from operations

    (67.4 )    124.9     

Net earnings (loss)1)

    (79.0 )    51.7     

Net earnings (loss) per share, diluted1)

    (1.53 )    0.77     

New orders

    240.2      881.5      267 % 

Backlog at end of period

    122.4      556.6      167 % 
1)

allocated to the shareholders of the parent

Net Sales. The following table shows net sales of our Front-end and Back-end segments for the six months ended June 30, 2010 compared to the same period in 2009:

 

(EUR millions)    Six months ended June 30,        
      2009    2010    % Change  

Front-end

    73.4    120.0    63 % 

Back-end

    135.2    401.5    197 % 

Total net sales

    208.6    521.5    150 % 

The increase of net sales in the first six months of 2010 in our Front-end segment compared to the same period last year was driven by increased equipment and higher spares and service sales as a result of increased activity at our customers. In our Back-end segment record quarterly sales was realized both in the first quarter and in the second quarter of 2010 due to the high continued strong demand for our traditional products and increasing demand for our LED related products.

The strengthening of the Yen, US dollar and US dollar related currencies against the euro in the first six months of 2010 as compared to the first six months of 2009 impacted total net sales positively by 2%.

 

6

Gross Profit Margin. The following table shows gross profit and gross profit margin for the Front-end and Back-end segments for the six months ended June 30, 2010 compared to the same period in 2009:

 

(EUR millions)    Six months ended June 30,       
      Gross profit    Gross profit margin       
      20091)    2010    2009     2010     Increase or (decrease)
percentage points

Front-end

    12.6    44.0    17.2 %    36.7 %    19.5

Back-end

    42.4    181.8    31.4 %    45.3 %    13.9

Total gross profit

    55.0    225.9    26.4 %    43.3 %    16.9
1)

before impairment inventories

The gross profit margin of both our Front-end segment and our Back-end segment strongly improved when compared to the first six months of 2009 driven by significantly higher activity levels. The increase of the gross margin in our Front-end segment, both compared to the same period last year is partly attributable to the lower manufacturing overhead as a result of the transfer of our manufacturing activities to Singapore.

The impact of currency changes year to year was an increase of 2%.

Selling, General and Administrative Expenses. The following table shows selling, general and administrative expenses for our Front-end and Back-end segments for the six months ended June 30, 2010 compared to the same period in 2009:

 

(EUR millions)    Six months ended June 30,        
      2009    2010    % Change  

Front-end

    30.6    22.2    (27 )% 

Back-end

    20.3    36.0    77 % 

Total selling, general and administrative expenses

    50.9    58.2    14 % 

As a percentage of net sales, selling, general and administrative expenses were 11% in the first half year of 2010 and 24% in the same period of 2009.

For the first six months of 2010 selling, general and administrative expenses as a percentage of net sales of our Front-end segment, were reduced to 19% compared with 42% for the first 6 months of 2009, reflecting our focus to reduce the fixed cost base as part of our restructuring program Perform!. For the period under review the selling, general and administrative expenses in the Back-end segment as a percentage of net sales decreased from 15% in 2009 to 9% in 2010.

The impact of currency changes year to year was an increase of 1%.

Research and Development Expenses. The following table shows research and development expenses for our Front-end and Back-end segments for the six months ended June 30, 2010 compared to the same period in 2009:

 

(EUR millions)    Six months ended June 30,        
      2009    2010    % Change  

Front-end

    18.1    16.1    (11 )% 

Back-end

    13.0    19.5    50 % 

Total research and development expenses

    31.1    35.7    15 % 

 

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As a percentage of net sales, research and development expenses were 7% in the first six months of 2010 and 15% in the first six months of 2009.

The decrease in our Front-end segment is the result of a further prioritisation of research and development projects.

The impact of currency changes year to year was an increase of 2%.

Restructuring Expenses. In 2009 ASMI started the implementation of a major restructuring in the Front-end segment. Related to these restructuring projects, during the first six months of 2010 EUR 7.0 million of expenses were incurred. These related mainly to severance packages, retention costs, provisions for vacancy and other costs related to the transition of activities to Singapore.

Earnings (Loss) from Operations. The following table shows earnings (loss) from operations for our Front-end and Back-end segments for the six months ended June 30, 2010 compared to the same period in 2009:

 

(EUR millions)    Six months ended June 30,       
      2009     2010     Change

Front-end:

       

Excluding impairments and restructuring charges

    (36.4 )    5.6      42.0

Impairments and restructuring charges

    (40.1 )    (7.0 )    33.1

Including impairments and restructuring charges

    (76.5 )    (1.4 )    75.1

Back-end

    9.1      126.3      117.2

Total earnings (loss) from operations

    (67.4 )    124.9      192.3

Net Earnings (Loss) allocated to the shareholders of the parent. The following table shows net earnings (loss) for our Front-end and Back-end segments for the six months ended June 30, 2010 compared to the same period in 2009:

 

(EUR millions)    Six months ended June 30,         
      2009     2010     Change  

Front-end:

       

Excluding impairments, restructuring charges, result on early extinguishment of debt and fair value change conversion option

    (40.7 )    (8.6 )    32.1   

Loss from early extinguishment of debt

    —        (2.3 )    (2.3 ) 

Impairments and restructuring charges

    (37.8 )    (7.0 )    30.8   

Fair value change conversion options

    (4.1 )    11.4      15.5   

Including impairments, restructuring charges result on early extinguishment of debt and fair value change conversion options

    (82.6 )    (6.4 )    76.2   

Back-end

    3.6      58.1      54.5   

Total earnings (loss)1)

    (79.0 )    51.7      130.7   
1)

Allocated to the shareholders of the parent

Net earnings for the Back-end segment reflect our 52.59% ownership of ASM Pacific Technology.

 

8

Bookings and backlog

The following table shows, for our Front-end and Back-end segments, the level of new orders for the second quarter of 2010 and the backlog at the end of the second quarter of 2010 as compared to the first quarter of 2010 and the second quarter of 2009:

 

(EUR millions, except book-to-bill ratio)        
      Q2 2009    Q1 2010    Q2 2010    % Change
Q1 2010
to
Q2 2010		     % Change
Q2 2009
to
Q2 2010		  

Front-end:

              

New orders for the quarter

    22.1    65.4    86.5    32 %    291 % 

Backlog at the end of the quarter

    36.2    61.7    82.1    33 %    127 % 

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

    0.80    1.21    1.31     

Back-end:

              

New orders for the quarter

    133.7    290.0    439.6    52 %    229 % 

Backlog at the end of the quarter

    86.2    271.3    474.5    75 %    450 % 

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

    1.45    1.76    1.86     

Total

              

New orders for the quarter

    155.8    355.4    526.1    48 %    238 % 

Backlog at the end of the quarter

    122.4    333.0    556.6    67 %    355 % 

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

    1.30    1.62    1.74             

In our Front-end segment we have seen increased order bookings. Both 200mm and 300mm Epitaxy equipment led our second quarter Front-end order book. 200mm Epitaxy system bookings included Epitaxy orders for power management applications. In July, we received an order, valued in excess of US $25 million (approximately EUR 20 million), for multiple 300 mm Epitaxy tools, in addition to continued strong performance to date in our overall Front-end orderbook. Our Back-end segment bookings level in the second quarter was a new record. The demand for equipment to assemble both integrated circuits and LEDs was very strong.

Liquidity and capital resources

Net cash provided by operations was EUR 61.2 million for the second quarter of 2010 as compared to net cash used by operations of EUR 6.4 million for the second quarter of 2009. For the six months ended June 30, 2010 net cash provided from operations of EUR 87.0 million compared to net cash used in operations of EUR 0.5 million for the comparable period in 2009. This increase results mainly from the improved net earnings, partly offset by investments in working capital resulting from the increased level of activity.

Net cash used in investing activities was EUR 19.3 million for the second quarter of 2010 as compared to EUR 2.3 million for the second quarter of 2009. For the six months ended June 30, 2010 net cash used in investing activities of EUR 30.1 million compared to EUR 5.3 million for the comparable period in 2009. The increase results mainly from increased capital expenditures in our Back-end segment.

Net cash used in financing activities was EUR 30.5 million for the second quarter of 2010 as compared to net cash used in financing activities of EUR 15.3 million for the second quarter of 2009. For the six months ended June 30, 2010 net cash used in financing activities of EUR 70.6 million compared to EUR 17.6 million for the comparable period in 2009. The increase mainly

 

9

results from the increased payment of dividend to minority shareholders and the repurchase of convertible bonds during the first quarter of 2010.

Net working capital, consisting of accounts receivable, inventories, other current assets, accounts payable, accrued expenses, advance payments from customers and deferred revenue, increased from EUR 214.1 million at March 31, 2010 to EUR 262.6 million at June 30, 2010. This increase is primarily the result of increased activity levels and exchange rates. The number of outstanding days of working capital, measured based on quarterly sales, decreased from 90 days at March 31, 2010 to 80 days at June 30, 2010. For the same period, our Front-end segment increased from 84 days to 104 days and our Back-end segment decreased from 92 days to 73 days.

At June 30, 2010, the Company’s principal sources of liquidity consisted of EUR 308.2 million in cash and cash equivalents and EUR 127.6 million in undrawn bank lines. Approximately EUR 148.7 million of the cash and cash equivalents and EUR 31.6 million of the undrawn bank lines are restricted to use in the Company’s Back-end operations. EUR 27.4 million of the cash and cash equivalents and EUR 6.1 million in undrawn bank lines are restricted to use in the Company’s Front-end operations in Japan. The use of EUR 33.7 of cash and cash equivalents is restricted in use for buy-back of outstanding convertible bonds due 2011.

Outlook

For the 2010 third quarter, we expect to generate positive revenue growth in both our Front-end and Back-end business segments.

We expect Front-end orders to strengthen further. Based on current order visibility, we believe this trend will continue through the rest of the year, as the semiconductor industry transitions to the more advanced technology nodes. We anticipate third quarter Back-end orders will continue to reflect the robust demand of both the semiconductor and LED markets.

Overall, we look forward to further improving our Front-end operating performance, complete PERFORM!, and to realizing another strong results’ quarter for our Back-end operations.

Proposed Acquisition by ASM Pacific Technology Limited

After pursuing our very successful Back-end strategy of internal organic growth for the past thirty years, we believe that it is time for us to adopt a new strategy of pursuing multiple growth engines. One of the challenges of changing a core strategic vision is to change it while one’s business is still performing strongly.

The Group’s proposed acquisition of the entire interest of the Electronics Assembly Systems business from Siemens AG represents an exciting and excellent opportunity for the Company. It offers ASM a significant growth opportunity and a chance to replicate our success in the assembly and packaging equipment business to the surface mount technology (“SMT”) equipment business.

The SMT placement equipment business that has been built up by Siemens AG has excellent market-leading technologies, good market reputation and a commendable market position. Currently, it enjoys strong market shares for products in the high-end market segments, particularly in Europe and the USA, which it is well-placed to maintain its leadership position. In terms of synergy, it shares many of the key enabling technologies and manufacturing processes of the assembly and packaging equipment offered by ASM. By contributing ASM’s experience and expertise in cost-efficient manufacturing and marketing networks in Asia, we aim to lower the costs of SMT equipment hitherto offered to the market. Hence, we are confident of expanding the market share of the acquired business in Asia, particularly in China. We also aim to repeat our

 

10

successful total solution strategy by horizontally expanding the product portfolio of this new SMT equipment business to cater to the needs of diverse customers.

We strongly believe that the proposed acquisition represents an excellent combination of advanced technologies with vast experience in cost-efficient manufacturing and marketing networks in Asia. The synergistic effects of combining the strengths of the two organizations will serve to push this new SMT business unit and the whole ASM Group to new heights.

Details of the proposed acquisition are set out in the announcement on “Major Transaction – Acquisition of the SEAS Business” of ASM Pacific Technology dated 28 July 2010.

Interim Financial Report

On August 31, 2010 ASM International will publish its Interim Financial report for the six months ended June 30, 2010. This report is in accordance with the requirements of the EU Transparency Directive as implemented in the Netherlands and includes consolidated condensed interim financial statements prepared in accordance with IAS 34, “Interim Financial Reporting”, an interim management board report and a management board responsibility statement. The interim financial report for the six months ended June 30, 2010 will be available online at www.asm.com as from August 31, 2010.

Historical development sales and net earnings in EUR millions

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ASM International will host an investor conference call and web cast on Thursday, July 29, 2010 at 15:00 Continental European Time (9:00 a.m. - US Eastern Time).

The teleconference dial-in numbers are as follows:

United States - +1 718 247 0888

International - + 44 (0)20 7806 1967

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 August 11, 2010.

The replay dial-in numbers are:

United States - +1 347 366 9565

International - + 44 (0)20 7111 1244

Access Code: 9715249#

About ASM International

ASM International N.V., headquartered in Almere, 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, financing and liquidity matters, the success of restructurings, 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.

 

12

ASM INTERNATIONAL N.V.

CONSOLIDATED STATEMENTS OF OPERATIONS

 

(thousands, except earnings per share data)                         In Euro  
      Three months ended June 30,     Six months ended June 30,  
      2009     2010     2009     2010  
     (unaudited)     (unaudited)     (unaudited)     (unaudited)  

Net sales

    119,519      302,416      208,606      521,468   

Cost of sales

    (106,395 )    (169,032 )    (174,187 )    (295,614 ) 

Gross profit

    13,124      133,384      34,419      225,854   

Operating expenses:

         

Selling, general and administrative

    (25,668 )    (31,630 )    (50,873 )    (58,187 ) 

Research and development

    (14,578 )    (18,160 )    (31,147 )    (35,671 ) 

Amortization of other intangible assets

    (180 )    (92 )    (293 )    (178 ) 

Restructuring expenses

    (15,406 )    (3,308 )    (19,542 )    (6,958 ) 

Total operating expenses

    (55,832 )    (53,191 )    (101,855 )    (100,994 ) 

Earnings (loss) from operations

    (42,708 )    80,193      (67,436 )    124,860   

Net interest expense

    (1,566 )    (3,248 )    (2,973 )    (7,798 ) 

Loss from early extinguishment of debt

    —        —        —        (2,281 ) 

Accretion of interest convertible

    (957 )    (1,399 )    (2,041 )    (3,229 ) 

Revaluation conversion option

    (4,684 )    13,960      (4,082 )    11,383   

Foreign currency exchange gains (losses)

    323      963      (997 )    (374 ) 

Earnings (loss) before income taxes

    (49,592 )    90,469      (77,529 )    122,561   

Income tax benefit (expense)

    859      (11,033 )    1,763      (18,470 ) 

Net earnings (loss)

    (48,733 )    79,436      (75,766 )    104,092   

Allocation of net earnings (loss)

         

Shareholders of the parent

    (55,727 )    47,526      (79,003 )    51,698   

Minority interest

    6,994      31,910      3,237      52,394   

Net earnings (loss) per share, allocated to the shareholders of the parent:

         

Basic net earnings (loss)

    (1.08 )    0.91      (1.53 )    0.99   

Diluted net earnings (loss) (1)

    (1.08 )    0.61      (1.53 )    0.76   

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

         

Basic

    51,609      52,321      51,609      52,047   

Diluted (1)

    51,609      64,075      51,609      55,024   

 

(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 six month ended June 2010, the effect of a potential conversion of convertible debt into 8,777,063 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. The possible increase of common shares caused by employee stock options for the three months ended June 30, 2010 with 254,183 common shares and for the six month ended June 30, 2010 with 312,829 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.

Amounts are rounded to the nearest thousand euro; therefore amounts may not equal (sub) totals due to rounding.

ASM INTERNATIONAL N.V.

CONSOLIDATED BALANCE SHEETS

 

(thousands, except share data)           In Euro  
      December 31,     June 30,  
Assets    2009     2010  
           (unaudited)  

Cash and cash equivalents

    293,902      308,220   

Accounts receivable, net

    165,754      249,283   

Inventories, net

    150,645      201,470   

Income taxes receivable

    43      50   

Deferred tax assets

    6,893      8,331   

Other current assets

    31,129      55,803   

Total current assets

    648,367      823,158   

Debt issuance costs

    6,978      6,261   

Deferred tax assets

    8,545      9,576   

Other intangible assets

    8,936      7,859   

Goodwill, net

    47,223      54,259   

Investments

    50      50   

Assets held for sale

    5,508      6,349   

Evaluation tools at customers

    11,282      9,956   

Property, plant and equipment, net

    114,811      152,879   

Total Assets

    851,700      1,070,347   

Liabilities and Shareholders’ Equity

             

Notes payable to banks

    17,008      14,019   

Accounts payable

    93,117      130,413   

Accrued expenses

    64,086      77,997   

Advance payments from customers

    16,371      40,205   

Deferred revenue

    3,254      1,266   

Income taxes payable

    17,658      32,921   

Current portion of long-term debt

    17,337      6,046   

Total current liabilities

    228,832      302,868   

Pension liabilities

    5,556      6,835   

Deferred tax liabilities

    314      299   

Long-term debt

    16,554      17,119   

Convertible subordinated debt

    192,350      176,657   

Conversion option

    22,181      4,971   

Total Liabilities

    465,787      508,749   

Shareholders’ Equity:

     

Common shares

     

Authorized 110,000,000 shares, par value €0.04,

issued and outstanding 51,745,140 and 52,756,452 shares

    2,070      2,110   

Financing preferred shares, issued none

    —        —     

Preferred shares, issued and outstanding none

    —        —     

Capital in excess of par value

    287,768      303,516   

Retained earnings

    16,145      67,843   

Accumulated other comprehensive loss

    (64,754 )    (9,961 ) 

Total Shareholders’ Equity

    241,229      363,508   

Non-controlling interest

    144,684      198,090   

Total Equity

    385,913      561,598   

Total Liabilities and Equity

    851,700      1,070,347   

Amounts are rounded to the nearest thousand euro; therefore amounts may not equal (sub) totals due to rounding.

ASM INTERNATIONAL N.V.

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

(thousands)                         In Euro  
      Three months ended June 30,     Six months ended June 30,  
      2009     2010     2009     2010  
     (unaudited)     (unaudited)     (unaudited)     (unaudited)  

Increase (decrease) in cash and cash equivalents:

         

Cash flows from operating activities:

         

Net earnings (loss)

    (48,733 )    79,436      (75,766 )    104,092   

Adjustments to reconcile net earnings to net cash from

operating activities:

         

Depreciation of property, plant and equipment

    8,688      7,495      17,616      14,535   

Depreciation evaluation tools

    -          669      -          1,182   

Amortization of other intangible assets

    406      679      951      1,360   

Impairment of property, plant and equipment

    2,312      -          2,312      -       

Impairment of inventories

    20,629      -          20,629      -       

Addition provision restructuring expenses

    10,763      1,102      10,763      1,991   

Amortization of debt issuance costs

    131      554      266      1,264   

Loss resulting from early extinguishment of debt

    0      -          0      2,281   

Compensation expense employee stock option plan

    531      686      1,173      1,339   

Compensation expense employee share incentive scheme ASMPT

    1,210      3,658      1,637      4,816   

Revaluation conversion option

    4,684      (13,960 )    4,082      (11,383 ) 

Additional non-cash interest convertible

    957      1,399      2,041      3,229   

Income taxes

    786      8,549      (10,246 )    11,622   

Deferred income taxes

    (2,619 )    398      (3,874 )    687   

Changes in other assets and liabilities:

         

Accounts receivable

    235      (44,782 )    47,619      (54,069 ) 

Inventories

    (768 )    (3,566 )    7,570      (17,438 ) 

Other current assets

    (5,926 )    (13,222 )    (1,001 )    (20,651 ) 

Accounts payable and accrued expenses

    563      27,810      (25,499 )    32,507   

Advance payments from customers

    1,253      9,349      1,642      18,766   

Deferred revenue

    (1,689 )    (378 )    (2,554 )    (2,153 ) 

Pension liabilities

    145      43      154      148   

Payments out of restructuring provision

    -          (4,690 )    -          (7,116 ) 

Net cash provided by (used in) operating activities

    (6,442 )    61,230      (483 )    87,011   

Cash flows from investing activities:

         

Capital expenditures

    (870 )    (19,175 )    (2,606 )    (30,349 ) 

Purchase of intangible assets

    (1,505 )    (176 )    (2,788 )    (252 ) 

Proceeds from sale of property, plant and equipment

    124      15      123      530   

Net cash used in investing activities

    (2,251 )    (19,336 )    (5,271 )    (30,071 ) 

Cash flows from financing activities:

         

Notes payable to banks, net

    (1,534 )    (649 )    (1,534 )    (5,086 ) 

Debt issuance costs paid

    -          (180 )    -          (452 ) 

Repayments of long-term debt and subordinated debt

    (1,446 )    (1,607 )    (3,713 )    (38,243 ) 

Dividend tax paid on withdrawal of treasury shares

    (3,399 )    -          (3,399 )    -       

Proceeds from issuance of common shares

    -          584      -          1,730   

Dividend to minority shareholders

    (8,969 )    (28,598 )    (8,969 )    (28,598 ) 

Net cash used in financing activities

    (15,348 )    (30,450 )    (17,615 )    (70,648 ) 

Exchange rate effects

    (4,673 )    17,772      (1,136 )    28,025   

Net increase (decrease) in cash and cash equivalents

    (28,714 )    29,216      (24,506 )    14,317   

Cash and cash equivalents at beginning of period

    161,485      279,003      157,277      293,902   

Cash and cash equivalents at end of period

    132,771      308,220      132,771      308,220   

Supplemental disclosures of cash flow information

         

Cash paid during the period for:

         

Interest, net

    2,787      4,446      2,950      8,227   

Income taxes, net

    974      2,086      12,356      6,160   

Non cash investing and financing activities:

         

Subordinated debt converted into 878,202 common shares

    -          13,468      -          13,468   

Amounts are rounded to the nearest thousand euro; therefore amounts may not equal (sub) totals due to rounding.

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 52.59% at June 30, 2010, 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)                  In Euro  
      Front-end     Back-end     Total  
Three months ended June 30, 2009    (unaudited)     (unaudited)     (unaudited)  

Net sales to unaffiliated customers

    27,626      91,893      119,519   

Gross profit

    (20,148 )    33,272      13,124   

Earnings (loss) from operations

    (58,498 )    15,790      (42,708 ) 

Net interest income (expense)

    (1,671 )    105      (1,566 ) 

Accretion of interest convertible

    (957 )    -          (957 ) 

Revaluation conversion option

    (4,684 )    -          (4,684 ) 

Foreign currency exchange gains (losses)

    (96 )    419      323   

Income tax benefit (expense)

    2,336      (1,477 )    859   

Net earnings (loss)

    (63,570 )    14,837      (48,733 ) 

Net earnings (loss) allocated to:

       

Shareholders of the parent

        (55,727 ) 

Non-controlling interest

        6,994   

Capital expenditures and purchase of intangible assets

    1,691      684      2,375   

Depreciation and amortization

    3,616      5,478      9,094   

Impairment of fixed assets

 

    2,312

 

   

 

   -    

 

   

 

   2,312

 

   

 

 

Three months ended June 30, 2010    (unaudited)     (unaudited)     (unaudited)  

Net sales to unaffiliated customers

    66,056      236,360      302,416   

Gross profit

    26,039      107,346      133,384   

Earnings from operations

    3,624      76,569      80,193   

Net interest income (expense)

    (3,357 )    108      (3,248 ) 

Accretion of interest convertible

    (1,399 )    -          (1,399 ) 

Revaluation conversion option

    13,960      -          13,960   

Foreign currency exchange gains (losses)

    (148 )    1,111      963   

Income tax expense

    (558 )    (10,475 )    (11,033 ) 

Net earnings

    12,123      67,313      79,436   

Net earnings allocated to:

       

Shareholders of the parent

        47,526   

Non-controlling interest

        31,910   

Capital expenditures and purchase of intangible assets

    2,512      16,839      19,351   

Depreciation and amortization

 

    3,413

 

   

 

   5,430

 

   

 

   8,843

 

   

 

Amounts are rounded to the nearest thousand euro; therefore amounts may not equal (sub) totals due to rounding.

ASM INTERNATIONAL N.V.

DISCLOSURE ABOUT SEGMENTS AND RELATED INFORMATION (2/2)

 

(thousands, except headcount)                  In Euro  
      Front-end     Back-end     Total  
Six months ended June 30, 2009    (unaudited)     (unaudited)     (unaudited)  

Net sales to unaffiliated customers

    73,380      135,226      208,606   

Gross profit

    (8,025 )    42,444      34,419   

Earnings (loss) from operations

    (76,569 )    9,133      (67,436 ) 

Net interest income (expense)

    (3,188 )    215      (2,973 ) 

Accretion of interest convertible

    (2,041 )    -          (2,041 ) 

Revaluation conversion option

    (4,082 )    -          (4,082 ) 

Foreign currency exchange losses

    (230 )    (767 )    (997 ) 

Income tax benefit (expense)

    3,477      (1,714 )    1,763   

Net earnings (loss)

    (82,633 )    6,867      (75,766 ) 

Net earnings (loss) allocated to:

       

Shareholders of the parent

        (79,003 ) 

Non-controlling interest

        3,237   

Capital expenditures and purchase of intangible assets

    3,304      2,090      5,394   

Depreciation and amortization

    7,367      11,200      18,567   

Impairment of fixed assets

    2,312      -          2,312   

Cash and cash equivalents

    64,039      68,732      132,771   

Capitalized goodwill

    10,096      37,569      47,665   

Other intangible assets

    9,283      365      9,648   

Other identifiable assets

    196,437      259,198      455,635   

Total assets

    279,855      365,864      645,719   

Total debt

    142,625      -          142,625   

Headcount in full-time equivalents (1)

 

    1,485      9,085

 

   

 

   10,570

 

   

 

Six months ended June 30, 2010    (unaudited)     (unaudited)     (unaudited)  

Net sales to unaffiliated customers

    120,012      401,456      521,468   

Gross profit

    44,041      181,813      225,854   

Earnings (loss) from operations

    (1,394 )    126,254      124,860   

Net interest income (expense)

    (8,009 )    212      (7,798 ) 

Loss resulting of early extinguishment of debt

    (2,281 )    -          (2,281 ) 

Accretion of interest convertible

    (3,229 )    -          (3,229 ) 

Revaluation conversion option

    11,383      -          11,383   

Foreign currency exchange losses

    (1,861 )    1,487      (374 ) 

Income tax expense

    (1,040 )    (17,429 )    (18,470 ) 

Net earnings (loss)

    (6,431 )    110,523      104,092   

Net earnings allocated to:

       

Shareholders of the parent

        51,698   

Non-controlling interest

        52,394   

Capital expenditures and purchase of intangible assets

    5,567      25,033      30,600   

Depreciation and amortization

    6,622      10,456      17,077   

Cash and cash equivalents

    159,509      148,711      308,220   

Capitalized goodwill

    11,193      43,066      54,259   

Other intangible assets

    7,222      637      7,859   

Other identifiable assets

    230,776      469,233      700,009   

Total assets

    408,700      661,646      1,070,347   

Total debt

    218,812      -          218,812   

Headcount in full-time equivalents (1)

 

    1,301

 

   

 

   12,546

 

   

 

   13,847

 

   

 

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

Amounts are rounded to the nearest thousand euro; therefore amounts may not equal (sub) totals due to rounding.

ASM INTERNATIONAL N.V.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Basis of Presentation

ASM International N.V, (“ASMI”) follows accounting principles generally accepted in the United States of America (“US GAAP”). Amounts are rounded to the nearest thousand euro; therefore amounts may not equal (sub) totals due to rounding.

Principles of Consolidation

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

Change in accounting policies

No significant changes in accounting policies incurred during the second quarter of 2010.

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 most significant differences that affect ASMI concern to the capitalization of certain product development costs, goodwill, the accounting of reversal of inventory write downs, option plans, pension plans and preferred shares.

The reconciliation between IFRS and US GAAP is as follows:

 

      Net earnings     Net earnings       
      Three months ended June 30,     Six months ended June 30,       
(EUR thousands, except per share data)    2009     2010     2009     2010       
     (unaudited)     (unaudited)     (unaudited)     (unaudited)      

US GAAP

    (48,733 )    79,436      (75,766 )    104,092     

Adjustments for IFRS:

           

Reversal inventory write downs

    -          2,706      -          2,706     

Development expenses

    (3,276 )1    1,884      (855 )    1,222     

Debt issuance fees

    -          (300 )    -          (300 )   

Dividend preferred shares

    (1 )    -          (4 )    -           

Total adjustments

    (3,277 )    4,290      (859 )    3,628     

IFRS

    (52,010 )    83,726      (76,625 )    107,720       

IFRS allocation of net earnings (loss):

           

Shareholders

    (59,004 )    51,816      (79,862 )    55,326     

Minority interest

    6,994      31,910      3,237      52,394     

Net earnings (loss) per share, allocated to the shareholders of the parent;

           

Basic

    (1.14 )    0.99      (1.55 )    1.06     

Diluted

    (1.14 )    0.66      (1.55 )    0.83       
            

 

Total Equity

    

 

Total Equity

       
(euro thousands)                  June 30, 2009     June 30, 2010       
                 (unaudited)     (unaudited)      

US GAAP

        360,944      561,598     

Adjustments for IFRS:

           

Goodwill

        (9,848 )    (11,150 )   

Debt issuance fees

        -          (1,583 )   

Reversal inventory write downs

        -          2,728     

Development expenses

        36,446      30,979     

Pension plans

        803      391     

Preferred shares

                (220 )    -           

Total adjustments

        27,181      21,365     

IFRS

                388,125      582,963       

 

1) An impairment charge of EUR 7,530 as result of strategic choices was recognized in the second quarter of 2009

Amounts are rounded to the nearest thousand euro; therefore amounts may not equal (sub) totals due to rounding.