20-F

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 20-F

¨ Registration Statement pursuant to Section 12(b) or (g) of the Securities Exchange Act of 1934.

x Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

For the fiscal year ended December 31, 2010

¨ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

¨ Shell company report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

Date of event requiring this shell company report

For the transition period from              to            

Commission File Number: 0-13355

ASM INTERNATIONAL N.V.

(Exact name of Registrant as specified in its charter)

The Netherlands

(jurisdiction of incorporation or organization)

Versterkerstraat 8, 1322 AP, Almere, the Netherlands

(Address of principal executive offices)

Richard Bowers

Telephone: (602) 432-1713

Fax: (602) 470-2419

Email: dick.bowers@asm.com

Address: 3440 E. University Dr., Phoenix, AZ 85034, USA

(Name, Telephone, Email and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
Common Shares, par value € 0.04	The NASDAQ Stock Market LLC

Securities registered or to be registered pursuant to

Section 12(g) of the Act: None

Securities for which there is a reporting obligation pursuant to

Section 15(d) of the Act: None

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report: 52,931,881 common shares; 0 preferred shares.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  x    No  ¨

If this annual report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.    Yes  ¨    No  x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  þ    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer  x Accelerated filer  ¨ Non-accelerated filer  ¨

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP  x    International Financial Reporting Standards as issued by the International

Accounting Standards Board  ¨    Other  ¨

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow:

Item 17  ¨    Item 18  ¨

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):    Yes  ¨    No  x

TABLE OF CONTENTS

Part I
Item 1	Identity of Directors, Senior Management and Advisors	4
Item 2	Offer Statistics and Expected Timetable	4
Item 3	Key Information	4
	A. Selected Consolidated Financial Data	4
	B. Capitalization and Indebtedness	7
	C. Reasons for the Offer and Use of Proceeds	7
	D. Risk Factors	7
Item 4	Information on the Company	19
	A. History and Development of the Company	20
	B. Business Overview	20
	C. Organizational Structure	39
	D. Property, Plant and Equipment	40
Item 4A	Unresolved Staff Comments	40
Item 5	Operating and Financial Review and Prospects	40
	A. Operating Results
	B. Liquidity and Capital Resources
	C. Research and Development, Patents and Licenses, etc.
	D. Trend Information
	E. Off-Balance Sheet Arrangements
	F. Tabular Disclosure of Contractual Obligations
	G. Safe Harbor
Item 6	Directors, Senior Management and Employees	58
	A. Directors and Senior Management	58
	B. Compensation	59
	C. Board Practices	59
	D. Employees	60
	E. Share Ownership	61
Item 7	Major Shareholders and Related Party Transactions	61
	A. Major Shareholders	61
	B. Related Party Transactions	62
	C. Interests of Experts & Counsel	62
Item 8	Financial Information	62
	A. Consolidated Statements and Other Financial Information	62
	B. Significant Changes	63
Item 9	The Offer and Listing	63
	A. Offer and Listing Details	63
	B. Plan of Distribution	63
	C. Markets	63
	D. Selling Shareholders	64
	E. Dilution	64
	F. Expenses of the Issue	64
Item 10	Additional Information	64
	A. Share Capital	64
	B. Memorandum and Articles of Association	64
	C. Material Contracts	64
	D. Exchange Controls	64
	E. Taxation	64
	F. Dividends and Paying Agents	70
	G. Statement by Experts	70
	H. Documents on Display	70
	I. Subsidiary Information	71
Item 11	Quantitative and Qualitative Disclosures About Market Risk	71
Item 12	Description of Securities Other Than Equity Securities	73

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Part II
Item 13	Defaults, Dividend Arrearages and Delinquencies	74
Item 14	Material Modifications to the Rights of Security Holders and Use of Proceeds	74
Item 15	Controls and Procedures	74
Item 16		74
	A. Audit Committee Financial Expert	74
	B. Code of Ethics	75
	C. Principal Accountant Fees and Services	75
	D. Exemptions from the Listing Standards for Audit Committees	75
	E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers	75
	F. Change in Registrant’s Certifying Accountant	76
	G. Corporate Governance	76
Part III
Item 17	Financial Statements	78
Item 18	Financial Statements	78
Item 19	Exhibits	78
Signatures		S-1
Index to Consolidated Financial Statements		F-1

EX - 1.1
EX - 4.7
EX - 4.13
EX - 8.1
EX - 12.1
EX - 12.2
EX - 13.1
EX - 15.1
EX - 101	XBRL Financial Data

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PART I

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

Forward Looking Safe Harbor Statement

Some of the information in this report constitutes forward-looking statements within the meaning of the United States federal securities laws, including the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements include, among others, statements regarding future revenue, sales, income, expenditures, sufficiency of cash generated from operations, maintenance of majority interest in ASM Pacific Technology Ltd. (“ASM Pacific Technology”), business strategy, product development, product acceptance, market penetration, market demand, return on investment in new products, product shipment dates, corporate transactions, restructurings, liquidity and financing matters, currency fluctuations, litigation involving intellectual property, shareholder matters, and outlooks. These statements may be found under Item 4, “Information on the Company,” Item 5, “Operating and Financial Review and Prospects” and elsewhere in this report. Forward-looking statements are statements other than statements of historical fact and typically are identified by use of terms such as “may,” “could,” “should,” “project,” “believe,” “anticipate,” “expect,” “plan,” “estimate,” “forecast,” “potential,” “intend,” “continue” and similar words, although some forward-looking statements are expressed differently. You should be aware that these statements involve risks and uncertainties and our actual results could differ materially from those contained in the forward-looking statements due to a number of factors, including the matters discussed in Item 4, “Information on the Company” and the risks discussed in Item 3.D., “Risk factors.” The risks described are not the only ones facing ASMI. Some risks are not yet known and some that we do not currently believe to be material could later become material. Each of these risks could materially affect our business, revenues, income, assets, liquidity and capital resources. All statements are made as of the date of this report, and we assume no obligation and do not intend to update or revise any forward-looking statements to reflect future developments or circumstances.

Item 1. Identity of Directors, Senior Management and Advisers

Not applicable.

Item 2. Offer Statistics and Expected Timetable

Not applicable.

Item 3. Key Information

A. Selected consolidated financial data.

The following selected financial data has been derived from ASMI’s historical audited consolidated financial statements. The selected financial data should be read in conjunction with Item 5, “Operating and Financial Review and Prospects” and Item 18, “Financial Statements,” and the accompanying notes for the corresponding fiscal years:

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	Year ended December 31
	2006			2007			2008			2009			2010
	EUR			EUR			EUR			EUR			EUR
	(in thousands, except per share data)
Consolidated Statements of Operations data:
Net sales		877,491			955,239			747,362			590,739			1,222,900
Cost of sales		(538,674	)		(594,163	)		(477,100	)		(409,224	)		(673,322	)
Gross profit		338,817			361,076			270,262			181,515			549,578
Operating expenses:
Selling, general and administrative		(120,654	)		(129,676	)		(126,591	)		(107,777	)		(130,596	)
Research and development, net		(88,130	)		(83,468	)		(75,011	)		(62,806	)		(78,785	)
Amortization of other intangible assets		(553	)		(553	)		(475	)		(401	)		(357	)
Impairment of goodwill		—			—			(1,395	)		—			—
Restructuring expenses		—			—			(7,068	)		(35,687	)		(11,201	)
Total operating expenses		(209,337	)		(213,697	)		(210,540	)		(206,671	)		(220,939	)
Earnings (loss) from operations		129,480			147,379			59,722			(25,156	)		328,640
Interest income		5,902			6,113			4,047			1,018			1,221
Interest expense		(11,726	)		(9,866	)		(7,745	)		(8,556	)		(15,677	)
Gain (loss) resulting from early extinguishment of debt		—			(10,049	)		7,956			(1,759	)		(3,609	)
Accretion interest expense convertible notes		—			—			—			(4,286	)		(6,010	)
Revaluation conversion option		—			—			—			(24,364	)		(19,037	)
Foreign currency exchange gains (losses), net		(1,250	)		(1,020	)		785			(1,384	)		(65	)
Earnings (loss) from continuing operations before income taxes		122,406			132,557			64,765			(64,487	)		285,462
Income tax expense		(14,095	)		(19,245	)		(12,144	)		(3,786	)		(42,939	)
Earnings (loss) from continuing operations before dilution on investment in subsidiary		108,311			113,312			52,621			(68,273	)		242,523
Gain on dilution of investment in subsidiary (1)		1,255			3,010			4,088			—			—
Net earnings (loss) from continuing operations		109,566			116,322			56,709			(68,273	)		242,523
Loss from discontinued operations before income taxes (2 )		(20,350	)		—			—			—			—
Income tax expense		—			—			—			—			—
Net loss from discontinued operations		(20,350	)		—			—			—			—
Net earnings (loss)		89,216			116,322			56,709			(68,273	)		242,523
Net earnings (loss) for allocation between shareholders of the parent and non-controlling interest
Allocation of net earnings (loss)
Shareholders of the parent		34,334			60,977			18,411			(107,517	)		110,639
Non-controlling interest		54,882			55,345			38,298			39,244			131,884
Earnings per Share data:
Basic net earnings (loss) from continuing operations per share:	€	1.02		€	1.13		€	0.35		€	(2.08	)	€	2.11
Basic net loss from discontinued operations per share:	€	(0.38	)	€	—		€	—		€	—		€	—
Basic net earnings (loss) per share	€	0.64		€	1.13		€	0.35		€	(2.08	)	€	2.11
Diluted net earnings (loss) from continuing operations per share:	€	1.02		€	1.07		€	0.35		€	(2.08	)	€	2.09
Diluted net loss from discontinued operations per share:	€	(0.38	)	€	—		€	—		€	—		€	—
Diluted net earnings (loss) per share:	€	0.64		€	1.07		€	0.35		€	(2.08	)	€	2.09
Basic weighted average number of shares (thousands)		53,403			53,968			52,259			51,627			52,435
Diluted weighted average number of shares (thousands)		53,575			65,076			52,389			51,627			61,494
Other data:
Number of common shares outstanding at year end (in thousands)		53,829			54,005			54,275			51,745			52,932
Dividends declared on common shares		—		€	0.10			—			—			—
Number of preferred shares outstanding at year end		—			—			21,985			—			—

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	As of December 31
	2006		2007		2008		2009		2010
	EUR		EUR		EUR		EUR		EUR
	(in thousands)
Consolidated Balance Sheet data:
Cash and cash equivalents		193,872		167,923		157,277		293,902		340,294
Total assets		832,297		840,333		767,798		851,700		1,214,117
Net current assets (3)		381,204		392,213		372,029		419,535		509,867
Total debt		228,500		186,936		153,682		265,430		215,681
Capital stock		2,153		2,160		2,171		2,070		2,117
Total shareholders’ equity		276,458		318,878		317,902		241,229		411,460

(1) Following the adoption of ASC 810(-10 45-23) in 2009 results on dilution of investments in subsidiaries are accounted for directly in equity. The 2009 results and changes in equity have been adjusted accordingly.

(2) The restructuring of ASM NuTool in 2005 followed by the sale of substantially all of the ASM NuTool patent portfolio to a third party in December 2006 required ASM NuTool to be accounted for retroactively as discontinued operations under US GAAP in our Consolidated Financial Statements.

(3) Net current assets is calculated as the difference between total current assets, including cash and cash equivalents, and total current liabilities.

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Exchange Rate Information

The following table sets forth, for each period indicated, specified information regarding the U.S. dollar per euro exchange rates based on the noon buying rate in New York City for cable transfers payable in euros as certified for customs purposes by the Federal Reserve Bank of New York, which is often referred to as the “noon buying rate.” Effective January 1, 2009 the Federal Reserve Bank has discontinued publication of Foreign Exchange Rates. The information regarding the U.S. dollar per euro exchange rates will now be based on the rates of the European Central Bank, referred to as the “reference rate.” On March 2, 2011, the reference rate was 1.3809 U.S dollars per euro.

U.S. Dollar per Euro Exchange Rate

	September 2010		October 2010		November 2010		December 2010		January 2011		February 2011		March 2011 1
High		1.3648		1.3705		1.2998		1.3435		1.3716		1.3440		1.3825
Low		1.2697		1.4101		1.4244		1.3064		1.2903		1.3834		1.3809

	Years Ended December 31,
	2006		2007		2008		2009		2010
Average exchange rate 2		1.2661		1.3797		1.4695		1.3963		1.3207

(1) Through March 2, 2011.

(2) Average of the exchange rates on the last day of each month during the period presented.

B. Capitalization and indebtedness.

Not applicable.

C. Reasons for the offer and use of proceeds.

Not applicable.

D. Risk factors.

You should carefully consider each of the risks and uncertainties described below and all other information contained in this Annual Report on Form 20-F. In order to help assess the major risks in our business, we have identified many, but not all, of these risks, which may not be in order of likelihood or materiality. Due to the scope of our operations, a wide range of factors could materially affect future developments and performance.

If any of the following risks are realized, our business, financial condition, cash flow or results of operations could be materially and adversely affected, and as a result, the trading price of our common stock could be materially and adversely impacted. These risk factors should be read in conjunction with other information set forth in this Report, including without limitation Item 4 Information on the Company, Item 5 Operating and Financial Review and Prospects, and our Consolidated Financial Statements and related notes.

RISKS RELATED TO OUR INDUSTRY

The industry in which we operate is highly cyclical and continues to recover from an unprecedented downturn which negatively impacted our business.

We sell our products to the semiconductor manufacturing industry, which is subject to sudden, extreme, cyclical variations in product supply and demand. Starting late in 2008 and continuing in 2009, this industry experienced a dramatic and unprecedented decline in demand for semiconductor devices due to the worldwide economic downturn, which led to significant layoffs, plant closings, reduced capital expenditures and other cost reduction measures by semiconductor manufacturers. These conditions caused a substantial diminution in the demand for our products, which represent capital expenditures for our customers although a pick-up in demand was evident in the second half of 2009 and continued through 2010. However, future negative industry or general economic conditions may lead to business and financial deterioration and further consolidation in the semiconductor manufacturing industry. The timing, length and severity of such cycles cannot be predicted. The unprecedented nature of the recent and any future global financial crisis and economic downturn may result in changes in the semiconductor manufacturing industry and the manner in which we must conduct our business in ways that cannot now be predicted.

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Semiconductor manufacturers may contribute to the severity of downturn and upturn cycles by misinterpreting the conditions in the industry and over-investing or under-investing in semiconductor manufacturing capacity and equipment. In any event, the lag between changes in demand for semiconductor devices and changes in demand for our products by semiconductor manufacturers accentuates the intensity of these cycles in both expansion and contraction phases. We may not be able to respond timely and effectively to these industry cycles in the expansion and contraction phases.

Industry downturns historically have been characterized by reduced demand for semiconductor devices and equipment, production over-capacity and a decline in average selling prices. During periods of declining demand, we must quickly and effectively reduce expenses. However, our ability to reduce expenses is limited by our need for continued investment in engineering and research and development and extensive ongoing customer service and support requirements. In addition, in a downturn, our ability to reduce inventories quickly is limited by the long lead time for production and delivery of some of our products, reduced sales, order cancellations and delays, and delays associated with reducing deliveries from our supplier pipeline. During an extended downturn, a portion of our inventory may have to be written down as excess or obsolete if it is not sold in a timely manner.

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

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

Our future success depends upon commercial acceptance of products incorporating new technologies we are developing, such as new plasma enhanced and atomic layer deposition processes, new epitaxy processes and new materials and chemistries. The semiconductor industry and the semiconductor equipment industry are subject to rapid technological change and frequent introductions of enhancements to existing products which can result in significant write-downs and impairment charges and costs. Technological changes have had and will continue to have a significant impact on our business. Our operating results and our ability to remain competitive are affected by our ability to accurately anticipate customer and market requirements and develop technologies and products to meet these requirements. Our success in developing, introducing and selling new and enhanced products depends upon a variety of factors, including, without limitation:

• successful innovation of processes and equipment;

• accurate technology and product selection;

• timely and efficient completion of product design, development and qualification;

• timely and efficient implementation of manufacturing and assembly processes;

• successful product performance in the field;

• effective and timely product support and service; and

• effective product sales and marketing.

We may not be able to accurately forecast or respond to commercial and technical trends in the semiconductor industry or to the development of new technologies and products by our competitors. Our competitors may develop technologies and products that are more effective than ours or that may be more widely accepted. We may also experience delays and technical and manufacturing difficulties in future introductions or volume production of new systems or enhancements. Significant delays can occur between a product’s introduction and the commencement of volume production of that product. Any of these events could negatively impact our ability to generate the return we intend to achieve on our investments in new products.

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

We have limited resources to allocate to research and development, and must allocate our resources among a wide variety of projects in our Front-end and Back-end businesses. If we have insufficient cash flow from our businesses to support the necessary level of research and development, we will have to fund such expenditures by diminishing our cash balances, or utilizing our credit facilities or reducing our level of research and development expenses.

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Because of intense competition in our industry, the consequences of failing to invest in strategic developments are significant. In order to enhance the benefits obtained from our research and development expenditures, we have contractual and other relationships with independent research institutes. If we fail to adequately invest in research and development or lose our ability to collaborate with these independent research entities, we may be unable to compete effectively in the Front-end and Back-end markets in which we operate.

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

We face intense competition in both the Front-end and Back-end segments of the semiconductor equipment industry from other established companies. Our primary competitors in the Front-end business include amongst others Applied Materials, Novellus Systems, Tokyo Electron, Kokusai, and Jusung. Our primary competitors in the Back-end business include amongst others Kulicke & Soffa, ESEC, Shinkawa, Apic Yamada, BE Semiconductor Industries, Towa, Shinko and Mitsui. A number of our competitors have substantial financial, technological, engineering, manufacturing, marketing and distribution resources, which may enable them to:

• better withstand periodic downturns in the semiconductor industry, such as the recent downturn;

• compete more effectively on the basis of price, technology, service and support;

• more quickly develop enhancements to and new generations of products; and

• more effectively retain existing customers and attract new customers.

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

We believe that our ability to compete successfully depends on a number of factors, including, without limitation:

• our success in developing new products and enhancements;

• performance of our products;

• quality of our products;

• ease of use of our products;

• reliability of our products;

• cost of ownership of our products;

• our ability to ship products in a timely manner;

• quality of the technical service we provide;

• timeliness of the services we provide;

• responses to changing market and economic conditions; and

• price of our products and our competitors’ products.

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

Industry Alliances May Not Select our Equipment.

Our customers are entering into alliances or other forms of cooperation with one another to expedite the development of processes and other manufacturing technologies. One of the results of this cooperation may be the definition of a system or particular tool set for a certain function or a series of process steps that uses a specific set of manufacturing equipment. These decisions could work to our disadvantage if a competitor’s equipment becomes the standard equipment for such function or process. Even if our equipment was previously used by a customer, that equipment may be displaced in current and future applications by the equipment standardized through such cooperation. These forms of cooperation may have a material adverse effect on our business, financial condition and results of operations.

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RISKS RELATED TO OUR BUSINESS

Commencing in 2009 and continuing through 2010, we implemented a major restructuring plan, the execution of which involves risks to our business and financial results.

Our PERFORM! program, designed to streamline our Front-end global operations and reduce our cost base including a focused effort on lowering our working capital requirements, was started in 2009 and involved the material restructuring of our significant Front-end operating, manufacturing and administrative units. These efforts and other initiatives continued through 2010. While the majority of the initiatives have been finalized in 2010, we will continue to further implement and build upon these initiatives as we transition to a more global sales organization, a more centralized and cost efficient R&D function, a global Enterprise Reporting Process (ERP) system, and the sharing of platforms among products. Changes of this magnitude across a broad spectrum of our Front-end operations involve significant risks to our operations, including among others the following:

• adverse impact on our ability to provide customers with timely delivery and satisfactory service;

• loss of intellectual capital through redirecting of R&D and other functions; and

• underestimation of cost or overestimation of benefit.

We cannot assure you that we will be able to successfully manage these changes or that the changes will achieve all desired effects of streamlining our operations and reducing our cost base. If such restructuring and continued efforts are not successful for any reason, including because the attendant costs are higher or benefits are lower than estimated, it could have a material adverse impact on our competiveness, financial condition, results of operations and cash flows.

Our customers face challenges in economic downturns and if they cannot perform their obligations to us our financial results will suffer.

We face increased payment and performance risk in economic downturns from our customers. If any of our customers become insolvent or commence bankruptcy or similar proceedings, our receivables from such customers may become uncollectible. In order to promote sales, we may be required to provide extended payment terms, financing arrangements or other modified sale terms for some customers, which will increase our sales expenses and further increase our exposure to customer credit risk, all in an environment of downward pressure on average selling prices. Even though we may be a secured creditor in these arrangements with rights in the underlying equipment, the equipment may have only limited value upon a customer default, especially if activity in our markets remains at low levels, which may result in substantial write-downs upon any such default.

If we do not accurately evaluate our customers’ creditworthiness in connection with sales financing arrangements involving increased exposure to customer payment risk, our bad debt expense will increase. If we are too cautious in our sales practices because of this, we may lose sales. In either case, our results of operations and financial condition would be negatively affected.

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

Our largest customers account for a significant percentage of our revenues. Our largest customer accounted for 5.2% (which is 21.6% for our largest Front-end customer and 4.3% for our largest Back-end customer) and our ten largest customers accounted for 27.9% (which is 61.2% for our ten largest Front-end customers and 27.3% for our ten largest Back-end customers) of our net sales in 2010. Sales to and the relative importance of these large customers have varied significantly from year to year and will continue to fluctuate in the future. These sales also may fluctuate significantly from quarter to quarter. We may not be able to retain our key customers or they may cancel purchase orders or reschedule or decrease their level of purchases from us, which would reduce our revenues and negatively affect our financial results. In addition, any difficulty in collecting amounts due from one or more key customers could harm our financial results.

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

In the past, we have experienced capital constraints that adversely affected our operations and ability to compete, particularly in our Front-end business. We may require additional capital to finance our future growth and fund our ongoing research and development activities particularly with regard to our Front-end

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business. We have only limited ability to reallocate funds from our Back-end business to our Front-end business and some limitations on our ability to reallocate funds among our Front-end businesses.

If we raise additional funds through the issuance of equity securities, the percentage ownership of our existing shareholders would be diluted. If we finance our capital requirements with debt, we may incur significant interest costs. Additional financing may not be available to us when needed or, if available, may not be available on terms acceptable to us, particularly in light of the current global financial crisis that has dramatically affected the availability of bank and other sources of debt financing.

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

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

Our products are technologically complex. Prospective customers generally must commit significant resources to test and evaluate our products and to install and integrate them into larger systems. In addition, customers often require a significant number of product presentations and demonstrations, in some instances evaluating equipment on site, before reaching a sufficient level of confidence in the product’s performance and compatibility with the customer’s requirements to place an order. As a result, our sales process is often subject to delays associated with lengthy approval processes that typically accompany the design and testing of new products. Accordingly, the sales cycles of our products often last for many months or even years, thereby requiring us to invest significant resources in attempting to complete sales.

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

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

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

Intellectual property laws may not adequately support our proprietary rights or may change in an unfavorable manner. Patent rights may not be granted or construed as we expect, and key patents may expire resulting in technology becoming available that may hurt our competitive position.

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

In past years, there has been substantial litigation regarding patent and other intellectual property rights in our semiconductor and related technology industries. In the future, litigation may be necessary to enforce patents issued to us, to protect trade secrets or know-how owned by us or to defend us against claimed infringement of the rights of others and to determine the scope and validity of the proprietary rights of others.

Claims that our products infringe the proprietary rights of others would force us to defend ourselves and possibly our customers or suppliers against the alleged infringement. Such claims, if successful, could

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subject us to significant liability for damages and potentially invalidate our proprietary rights. Regardless of the outcome, patent infringement litigation is time-consuming and expensive to resolve and diverts management time and attention.

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

• forfeit our proprietary rights;

• stop manufacturing or selling our products that incorporate the challenged intellectual property;

• obtain from the owner of the infringed intellectual property right a license to sell, produce, use, have sold, have produced or have used the relevant technology, which license may not be available on reasonable terms or at all or may involve significant royalty payments;

• pay damages, including treble damages and attorney’s fees in some circumstances; or

• redesign those products that use the challenged intellectual property.

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

In October 1997, we entered into an agreement to settle mutual patent infringement litigation with Applied Materials, which was amended and restated in 1998, pursuant to which Applied Materials agreed to grant us a worldwide, non-exclusive and royalty-bearing license to use all of the litigated patents and certain additional patents that were not part of the litigation. In return we agreed to pay Applied Materials a settlement fee and to grant it a worldwide, non-exclusive and royalty-free license to use a number of our patents including but not limited to those patents which we were enforcing in the litigation. All licenses granted by Applied Materials to us expire at the end of the life of the underlying patents which expire at various times through approximately 2018. Our obligation to pay certain royalties to Applied Materials generally continues until the expiration of the corresponding underlying patent. In addition, the settlement agreement included covenants for limited periods during which the parties would not litigate the issue of whether certain of our products infringe any of Applied Materials’ patents that were not licensed to us under the settlement agreement. These covenants, which lasted for different periods of time for different products, have expired. Upon the occurrence of an event of default or other specified events, including, among other things, our failure to pay royalties, a change of control of ASM International, and improper use of the licenses, Applied Materials may terminate the settlement agreement, including the licenses included in the agreement.

Additional litigation with Applied Materials regarding the operation of the settlement agreement or other matters could occur. Litigation with Applied Materials, which has greater financial resources than we do, could negatively impact our earnings and financial position.

As of December 18, 2007, we ceased paying royalties under certain Applied Materials patent licenses in respect of patents that we no longer practice. If it is determined that we still practice these patents, we will owe royalty payments to Applied Materials on our sales of covered products since that time.

Under our settlement agreement with Applied Materials, we pay royalties based upon our sales of equipment that employs technology covered by the licensed patents. We believe that we no longer practice patents applicable to certain equipment and ceased paying royalties on the sale of such equipment as of December 18, 2007 and gave written notice to Applied Materials in December 2007. The agreement provides a process to address royalty issues in a prescribed manner: the first step is written notice of a royalty matter to a party; the second step is amicable resolution with the participation of an expert if desired by Applied Materials; and the final step if not resolved by the parties is through binding arbitration. Initiation of this process is not considered a default event and the remedy is the payment of any unpaid royalties for equipment shipped after the written notice that are ultimately agreed to by the parties or determined by arbitration. Applied Materials is verifying our position through the review by an independent expert. While we consider the matter closed, Applied Materials notified us in late 2009 that they are continuing to evaluate the matter and will contact us if they require additional information. Although we believe our position is correct, the outcome of any possible arbitration is uncertain and, if we are not successful, we could be required to pay up to approximately € 4.3 million for royalties as of December 31, 2010.

Our net earnings could be negatively impacted by currency fluctuations.

Our assets, liabilities and operating expenses and those of our subsidiaries are to a large extent denominated in the currency of the country where each entity is established. Our financial statements, including our Consolidated Financial Statements, are expressed in euros. The translation exposures that

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result from the inclusion of financial statements of our subsidiaries that are expressed in the currencies of the countries where the subsidiaries are located are not hedged. As a result, our assets, liabilities and operating expenses are exposed to fluctuations of various foreign currency exchange rates.

In addition, foreign currency fluctuations may affect the prices of our products. Prices for our products for sales to our customers throughout the world are currently denominated in various foreign currencies including, but not limited to, U.S. dollar, euro, Japanese yen and Chinese Yuan. If there is a significant devaluation of the currency in a specific country, the prices of our products will increase relative to that country’s currency, and could increase relative to prices of our competitors, and our products may be less competitive in that country. Also, we cannot be sure that our international customers will continue to be willing to place orders denominated in these currencies. If they do not, our revenue and earnings from operations could be subject to additional foreign exchange rate fluctuations.

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

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

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

We are subject to various legal proceedings and claims, the outcomes of which are uncertain. If we fail to accurately evaluate the probability of loss or the amount of possible losses, an adverse outcome may materially and adversely affect our financial condition and results of operations.

We are party to various legal proceedings and claims generally incidental to our business, as disclosed in Note 20 of Notes to Consolidated Financial Statements included elsewhere in this report. For each of these proceedings and claims, our management evaluates, based on the relevant facts and legal principles, the likelihood of an unfavorable outcome and whether the amount of the loss can be reasonably estimated, in connection with our determination of whether or not to record a charge to earnings. Significant subjective judgments are required in these evaluations, including judgments regarding the validity of asserted claims and the likely outcome of legal, arbitration and administrative proceedings. The outcome of these proceedings is subject to a number of factors beyond our control. In addition, estimates of the potential costs associated with legal, arbitration and administrative proceedings frequently cannot be subjected to any sensitivity analysis, as damage estimates or settlement offers by claimants may bear little or no relation to the eventual outcome. Finally, in any particular proceeding, even where we believe that we would ultimately prevail, we may agree to settle or to terminate a claim or proceeding where we believe that doing so, when taken together with other relevant commercial considerations, is more cost-effective than engaging in an expensive and protracted contest. If we do not accurately assess the probability of an unfavorable outcome or the range of possible loss, an unfavorable outcome could have a material adverse impact on our financial condition and results of operations.

The Dutch Enterprise Court is reviewing certain matters in relation to ASMI and Stichting Continuïteit ASM International, the timeline and outcome of which are uncertain.

During 2008 two ASMI shareholders requested the Dutch Enterprise Court to investigate certain matters in relation to the Company and Stichting Continuïteit ASM International. In August 2009 the Enterprise Court ordered an inquiry in respect of the affairs of the Company. In July 2010 the Dutch Supreme Court annulled the order of the Enterprise Court and remanded the decision to the Enterprise Court to consider certain observations of the Supreme Court. The Enterprise Court has not yet rendered a new decision on whether an inquiry into the affairs of ASMI is to be held.

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

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

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

We derive a significant portion of our net sales, earnings from operations and net earnings from the consolidation of the results of operations of ASM Pacific Technology in our results. ASM Pacific Technology is a Cayman Islands limited liability company that is based in Hong Kong and listed on the Hong Kong Stock Exchange. As of December 31, 2010, we owned 52.36% of ASM Pacific Technology through our wholly-owned subsidiary, ASM Pacific Holding B.V. and the remaining 47.64% was owned by the public. If we do not maintain our majority interest in ASM Pacific Technology, and if other circumstances are such that we do not control it through other means, we would no longer be able to consolidate its results of operations in ours. Any such determination of whether we could continue to consolidate would be based on whether we still have a “controlling financial interest” within the meaning of United States generally accepted accounting principles. If we were to become unable to consolidate the results of operations of ASM Pacific Technology with our results, the results of operations of ASM Pacific Technology would no longer be included in our earnings from operations. Instead, our proportionate share of ASM Pacific Technology’s earnings would be reflected as a separate line-item called “share of results from investments” in our Consolidated Statements of Operations. We would no longer be able to consolidate the assets and liabilities of ASM Pacific Technology and would have to reflect the net investment in ASM Pacific Technology in the line-item “investments” in our Consolidated Balance Sheet. This event would have a significant negative effect on our consolidated earnings from operations, although our net earnings would be reduced only to the extent of the reduction of our ownership interest in ASM Pacific Technology.

The ASM Pacific Technology shares we own are partly pledged as security for our revolving credit facility. If such shares were sold upon the exercise of remedies following an uncured default under this credit facility, we may no longer be able to consolidate the result of operations of ASM Pacific Technology.

ASM Pacific Technology has an employee share incentive program pursuant to which it can issue up to an aggregate of 7.5% of its total issued shares subject to certain limitations. When ASM Pacific Technology issues shares pursuant to this program, our ownership interest is diluted. Our interest could further be diluted if ASM Pacific Technology issues equity for other purposes. Any such decision by ASM Pacific Technology to issue additional shares requires the approval of shareholders in general meeting in accordance with the listing rules of the Hong Kong Stock Exchange, which in effect makes such decision subject to our approval. We may need to purchase shares of ASM Pacific Technology or take other measures to maintain our majority interest in the future. There is no assurance that we will have sufficient financial resources to do so at that time.

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

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

In addition, the directors of ASM Pacific Technology are under no obligation to declare a payment of dividends to shareholders. As a shareholder of ASM Pacific Technology, we cannot compel the payment or amount of dividends. With respect to the payment of dividends, the directors must consider the financial position of ASM Pacific Technology after the dividend. Cash dividends received from ASM Pacific Technology totaled € 49.1 million, € 21.4 million, and € 65.6 million in 2008, 2009 and 2010, respectively. In the past, we have used these dividends in our Front-end business. In November 2006, we announced our commitment that for at least the years 2007, 2008 and 2009 we would not use these cash dividends to support our Front-end business, but instead would use such dividends to retire outstanding convertible debt, repurchase our common shares, pay dividends on our common shares, or purchase shares of ASM Pacific Technology. At our 2010 Annual General Meeting, we announced that we would continue this commitment for at least another two years through 2011. See Item 5, “Operating and Financial Review and Prospects—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.”

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

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

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

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

• our ability to continue to broaden our senior management group;

• our ability to attract, hire and retain skilled employees; and

• the ability of our officers and key employees to continue to expand, train and manage our employee base.

We have in the past experienced intense competition for skilled personnel during market expansions and believe competition will be intense if the semiconductor market experiences a sustained expansion. Consequently, we generally attempt to minimize reductions in skilled personnel in reaction to industry downturns, which reduces our ability to lower costs by payroll reduction.

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

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

Our reliance on a limited number of suppliers and a single manufacturing facility in our Front-end could result in disruption of our operations.

We outsource a portion of the manufacturing of our Front-end business to a limited number of suppliers. If our suppliers were unable or unwilling to deliver products in a timely manner to us in the quantities we require for any reason, including without limitation, capital constraints, natural disaster, labor unrest, capacity constraints, supply chain management problems or contractual disputes, we may be unable to fill customer orders on a timely basis, which could negatively affect our customer relationships and financial performance. Many of our suppliers face economic challenges in a depressed or difficult global economy, which increases our risk of disruption from a supplier’s failure to perform its obligations to us in a timely manner.

We have shifted an increasing portion of our Front-end manufacturing to our Front-end Manufacturing Singapore (FEMS) facility, and expect to increase the concentration of Front-end manufacturing there in the

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future. If this facility experiences a manufacturing disruption for any reason, including without limitation, natural disaster, labor unrest, capacity constraints, supply chain management problems or contractual disputes, our ability to timely meet our customers’ needs may be impaired, which would negatively affect our customer relationships and financial performance.

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

We market and sell our products and services throughout the world. A substantial portion of our manufacturing employees and operations are in the People’s Republic of China and the success of our business depends substantially on those operations. In addition, we have operating facilities in the Netherlands, the United States, Japan, Hong Kong, Singapore, Malaysia and South Korea. Our operations are subject to risks inherent in doing business internationally, including, without limitation:

• unexpected changes in regulatory or legal requirements or changes in one country in which we do business which are inconsistent with regulations in another country in which we do business;

• potentially adverse tax consequences;

• fluctuations in foreign currency exchange rates and foreign currency controls;

• political conditions and instability;

• economic conditions and instability;

• terrorist activities;

• human health emergencies, such as the outbreak of infectious diseases or viruses;

• tariffs and other trade barriers, including current and future import and export restrictions, and freight rates;

• difficulty in staffing, coordinating and managing international operations;

• burden of complying with a wide variety of foreign laws and licensing requirements;

• differences in possibilities to protect intellectual property rights;

• differences to enforce agreements and other rights;

• differences in accounts receivable payment terms and practices; and

• business interruption and damage from natural disasters.

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

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

Our operations are subject to many environmental laws and regulations wherever we operate governing, among other things, air emissions, wastewater discharges, the use and handling of hazardous substances, waste disposal and the investigation and remediation of soil and groundwater contamination. As with other companies engaged in similar activities, we face inherent risks of environmental liability in our current and historical manufacturing R&D activities. Costs associated with future environmental compliance or remediation obligations could adversely affect our business.

For example, the European Commission published in 2003 a directive on waste electrical and electronic equipment (“WEEE”), which has been implemented in the Netherlands. In principle, the rules result in “take- back” obligations of manufacturers and/or the responsibility of manufacturers for the financing of the collection, recovery and disposal of electrical and electronic equipment by requiring that European Union Member States adopt appropriate measures to minimize WEEE disposal and achieve high levels of collection and separation of WEEE. Producers of WEEE must provide for the financing of the collection, treatment, recovery and environmentally sound disposal of WEEE. Another directive of the European Commission provides for a ban on the use of lead and some flame retardants in manufacturing electronic components. To the extent these and other similar regulations in other countries apply to our business throughout the world, these measures could adversely affect our manufacturing costs or product sales by forcing us or our suppliers to change production processes or use more costly materials.

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Any acquisitions or investments we may make could disrupt our business and harm our financial condition.

We may consider from time to time additional investments in complementary businesses, products or technologies, such as the current acquisition by ASM Pacific Technology of the SEAS Business. We may not be able to successfully integrate these businesses, products, technologies or personnel that we might acquire in the future, and accordingly we may not realize the anticipated benefits from such acquisitions. In particular, our operation of acquired businesses involves numerous risks, including without limitation:

• problems integrating the purchased operations, technologies or products;

• unanticipated costs and liabilities for which we are not able to obtain indemnification from the sellers;

• diversion of management’s attention from our core business;

• adverse effects on existing business relationships with customers;

• risks associated with entering markets in which we have no, or limited, prior experience;

• risks associated with installation, service and maintenance of equipment of which we have limited or no prior experience;

• limited technical documentation of the equipment developed in the acquired company; and

• potential loss of key employees, particularly those of the acquired organizations.

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

• issue shares that would dilute our current shareholders’ percentage ownership;

• incur debt;

• assume liabilities;

• incur impairment expenses related to goodwill and other intangible assets; or

• incur substantial accounting write-offs.

RISKS RELATED TO AN INVESTMENT IN OUR SHARES

Lehman Bros. liquidation administrators have notified us that our common shares purchased by Lehman and held by Lehman in custody accounts on our behalf may have a shortfall.

During 2008, we engaged Lehman to repurchase ordinary ASMI shares on the Euronext and Nasdaq markets. As of September 15, 2008, Lehman had purchased and held 2,552,071 shares for our account. Lehman went into bankruptcy administration on September 15, 2008, and we subsequently filed a submission giving notice of our proprietary interest in the shares believed to be held in custody by Lehman. At our May 2009 AGM, our shareholders resolved to cancel all of these treasury shares and we so notified Lehman of the cancellation. However we were notified in September 2010 by the Lehman administrators that there is a possible shortfall in the number of shares held by Lehman as reflected in the statements of our accounts with Lehman. To the extent the number of treasury shares held by Lehman as of the date of their cancellation is lower than 2,552,071 only such lower number of shares have been cancelled and the shortfall of shares may still be considered outstanding. The Lehman administrators report that some time prior to its bankruptcy, Lehman put into a segregated client omnibus account a cash sum on our behalf of $6,758,796, which the administrators apparently regard as money to which we have a proprietary right in lieu of some or all of the missing shares. We are uncertain at this time as to the accuracy of the shortfall of shares, the sufficiency of this cash sum to cover the value of any such discrepancy, and our entitlement to all or a portion of such sum when distributions are determined and made since there is likely to also be a shortfall in Lehman assets subject to proprietary rights. Given the magnitude of the overall Lehman administration, the timeline for clarity and resolution of this item is expected to be considerable, perhaps up to several years.

Our founder who is also Chairman of the Board of ASM Pacific Technology controls approximately 21.4% of our voting power which gives him significant influence over matters voted on by our shareholders, including the election of members of our Supervisory Board and Management Board and makes it substantially more difficult for a shareholder group to remove or elect such members without his support.

Our founder controlled approximately 21.4% of the voting power of our outstanding common shares as of December 31, 2010. Accordingly, he has significant influence on the outcome of matters submitted to a shareholder vote, such as the election of the members of our Supervisory Board and Management Board.

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Persons nominated by the Supervisory Board for appointment by the shareholders to the Supervisory Board or Management Board at a general meeting of shareholders will be elected if they receive a majority of the votes cast at the meeting. Nominees to the Supervisory Board or Management Board who are not proposed by the Supervisory Board are appointed if they receive the affirmative vote of a majority of the votes cast at the meeting, provided such affirmative votes represent at least one third of our issued capital. Members of the Supervisory and Management Boards may be removed only by the affirmative vote of a majority of the votes cast at a meeting, and, unless such removal is recommended by the Supervisory Board, the affirmative votes must represent at least one third of our issued capital. This makes it difficult for a group of shareholders to remove or elect members of our Supervisory Board or Management Board without the support of our founder.

Our anti-takeover provisions may prevent a beneficial change of control.

The Company has granted to Stichting Continuïteit ASM International (“Stichting”), a non-membership organization with a board composed of three members independent of ASMI, the right to acquire and vote our preferred shares. The objective of Stichting is to serve the interests of the Company. To that objective Stichting may, among other things, acquire, own and vote our preferred shares in order to maintain our independence and/or continuity and/or identity. This may prevent a change of control from occurring that shareholders may otherwise support. On May 14, 2008, Stichting exercised this right in response to a perceived threat to our continuity and acquired shares of our preferred stock representing 29.9% of the total voting power of our outstanding capital shares at that time. These shares were retired in 2009 and a new right was issued to Stichting to acquire and vote preferred shares in certain situations in the future. For additional information regarding Stichting, see Item 7, “Major Shareholders and Related Party Transactions.”

The voting power of Stichting may make it more difficult for a shareholder or a group of shareholders to cause us to enter into a change of control transaction not supported by Stichting, even if such transaction offers our shareholders an opportunity to sell their shares at a premium over the market price.

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

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

Our failure to maintain effective internal controls over financial reporting may prevent our auditor from attesting to our evaluation of our controls.

We are subject to United States securities laws, including the Sarbanes-Oxley Act of 2002 and the rules and regulations adopted by the U.S. Securities and Exchange Commission pursuant to the Act. Under Section 404 of the Sarbanes-Oxley Act and the related regulations, we are required to perform an annual evaluation of our internal controls over financial reporting and submit a management report on such controls. In addition, we are required to have our independent auditor publicly attest to our evaluation of internal controls over financial reporting.

If we fail to maintain effective internal controls over financial reporting, if we do not timely evaluate the effectiveness of internal controls over financial reporting, or if our independent auditor cannot timely attest to our evaluation, we could be subject to regulatory scrutiny and decreased public confidence in our internal controls, which may adversely affect the market price of our common shares.

Our stock price has fluctuated and may continue to fluctuate widely.

The market price of our common shares has fluctuated substantially in the past. Between January 1, 2010 and December 31, 2010, the sale price of our common shares, as reported on the NASDAQ Global Select Market, ranged from a low of US$ 19.10 to a high of US$ 35.09. The market price of our common shares will continue to be subject to significant fluctuations in the future in response to a variety of factors, including the risk factors discussed in this report and the following, without limitation:

• future announcements concerning our business or that of our competitors or customers;

• the introduction of new products or changes in product pricing policies by us or our competitors;

• litigation regarding proprietary rights or other matters;

• changes in analysts’ earnings estimates and recommendations;

• developments in the financial markets;

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• quarterly fluctuations in operating results;

• hedge fund and shareholder activist activities;

• general economic, political and market conditions, such as recessions or foreign currency fluctuations; and

• general conditions in the semiconductor and semiconductor equipment industries.

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

Our quarterly revenues and earnings from operations have varied significantly in the past and may vary in the future due to a number of factors, including, without limitation:

• cyclicality and other economic conditions in the semiconductor industry;

• production capacity constraints;

• the timing of customer orders, cancellations and shipments;

• the length and variability of the sales cycle for our products;

• the introduction of new products and enhancements by us and our competitors;

• the emergence of new industry standards;

• product obsolescence;

• disruptions in sources of supply;

• our ability to time our expenditures in anticipation of future orders;

• our ability to fund our capital requirements;

• changes in our pricing and pricing by our suppliers and competitors;

• our product and revenue mix;

• seasonal fluctuations in demand for our products;

• foreign currency exchange rate fluctuations; e.g. appreciation of the euro versus the Japanese yen and U.S. dollar, which would negatively affect the competitiveness of those manufacturing activities that are domiciled in countries whose currency is the euro; and

• economic conditions generally or in various geographic areas where we or our customers do business.

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

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

Item 4. Information on the Company

The information in this Item 4 should be read in conjunction with the risks discussed under Item 3.D., “Risk Factors.”

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A. History and development of the Company.

ASM International N.V. was incorporated on March 4, 1968 as a Netherlands naamloze vennootschap, or public limited liability company, and was previously known as Advanced Semiconductor Materials International N.V. Our principal executive offices are located at Versterkerstraat 8, 1322 AP, Almere, the Netherlands. Our telephone number at that location is +31 8810 08810. Our authorized agent in the United States is our subsidiary, ASM America Inc., a Delaware corporation, located at 3440 East University Drive, Phoenix, Arizona 85034.

B. Business overview.

Introduction

Our Business

We are a semiconductor capital equipment supplier. We design, manufacture and sell equipment and services to our customers for the production of semiconductor devices, or integrated circuits. The semiconductor capital equipment market is composed of three major market segments: wafer processing equipment, assembly and packaging equipment, and test equipment. ASMI is mainly active in the wafer processing and assembly and packaging market segments. The wafer processing segment is referred to as “Front-end.” Assembly and packaging is referred to as “Back-end.”

Front-end production systems perform processes on round slices of silicon, called wafers, which are typically 200mm or 300mm in diameter. During these processes, thin films, or layers, of various materials are grown or deposited onto the wafer, or modified in various ways such as through temperature treatment or etching. Some of these films are electrically conductive, some are electrically insulating. By depositing multiple layers of films, multi-level, integrated electrical circuits are created. Many individual integrated circuits are created at one time on each wafer, and these are referred to as “dies” or “chips.” After testing these individual circuits for correct performance, the dies on the processed wafer are separated, with each die of the same wafer containing the same circuitry. Back-end production systems then assemble and connect one or more known good dies in a single package, to form a complex semiconductor device that will perform calculations, store data and interface with its environment.

Our Front-end operations are conducted through wholly-owned subsidiaries, the most significant being ASM Front-End Manufacturing Singapore Pte Ltd. (“FEMS”), located in Singapore, ASM Europe B.V. (“ASM Europe”), located in the Netherlands, ASM America, Inc. (“ASM America”), located in the United States, ASM Japan K.K. (“ASM Japan”), located in Japan, and ASM Genitech Korea Ltd. (“ASM Genitech”) located in Korea.

Our Back-end operations are conducted through our majority-owned subsidiary, ASM Pacific Technology Ltd. (“ASM Pacific Technology”), with principal operations in Hong Kong, the People’s Republic of China, Singapore, and Malaysia. At December 31, 2010, we owned 52.36% of the outstanding equity of ASM Pacific Technology.

The location of our Front-end facilities allows us to interact closely with customers in the world’s major Front-end geographic market segments: Europe, North America, and Asia. The principal market we address in the Front-end is a portion of the “Deposition and Related Tools” market segment, as defined by VLSI Research¹. Our Front-end segment accounted for 27.1% of our net sales in 2009 and 24.0% of our net sales in 2010.

Our Back-end facilities are in close proximity to where most customer assembly and packaging operations are located. The principal markets we address in Back-end are portions of the “IC Bonding Equipment,” “Packaging Equipment” and “IC Integrated Assembly Systems” segments as defined by VLSI Research ², which segments include assembly and packaging equipment for LED’s. We also manufacture and sell lead-frames which are substrates connecting the various circuits on a chip to the devices in which the chips are installed. Our Back-end segment accounted for 72.9% of our net sales in 2009 and 76.0% of our net sales in 2010.

¹ www.vlsiresearch.com, VIC code 1460.00000, accessed February 21, 2011.

² www.vlsiresearch.com, VIC codes 1540.00000, 1550.00000 and 1560.00000, accessed February 22, 2011.

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Recent Developments—Front-end Business

Front-end Manufacturing—Singapore

In late 2004, we established FEMS in Singapore as a low-cost manufacturing hub for Front-end production. We established FEMS to manufacture generic subsystems and parts for our Front-end products that we previously outsourced, in order to improve cost-effectiveness and strengthen our gross profit margin in our Front-end segment.

In January 2009 we announced the transfer to Singapore of the complete manufacturing, i.e. including final assembly and test, of our Vertical Batch Furnaces. As a result, since the end of 2009, our Vertical Batch Furnaces are completely manufactured in FEMS. In 2010 we continued with the transfer of the manufacturing responsibility for our Single Wafer Products to FEMS. As part of this transfer, in 2010, we closed our production facilities in Phoenix, Arizona and in Nagaoka, Japan.

Almere Headquarters

In December 2008, we relocated our headquarters from Bilthoven to our existing facility in Almere, the Netherlands. We are marketing our Bilthoven facility for sale.

Product Portfolio Streamlining

We are in the process of moving the 300mm process technologies offered on the Polygon Platform to the Eagle XP platform. The Eagle XP common platform enables us to improve the coherency in our product portfolio.

Restructuring

In July 2009 we announced a major restructuring program called PERFORM! This plan calls for globalization of manufacturing, sales and service, and platform R&D functions, and streamlining of our Front-end organization in two business units: Thermal Products (including CVD/Diffusion and ALD/Epi Product Lines) and Plasma Products (including PECVD and PEALD Product Lines). We announced in 2010, as part of PERFORM!, the establishment of a third business unit: Global Service and Spares, to increase the focus on servicing, and to generate increased revenue and improved margin from our growing installed equipment base.

In 2010, we completed the restructuring of our ASM America (ASMA) operations by transferring the manufacturing in our Phoenix, Arizona, facility to our FEMS operation in Singapore, and closing the Phoenix manufacturing facility in August. In 2010, we also completed the restructuring of our ASM Japan operations by closing our manufacturing facility in Nagaoka, Japan, by the end of 2010.

We also completed in 2010 much of the consolidation of the regional finance and IT activities to our new Shared Service Center in Singapore.

Recent Developments—Back-end Business

The year 2010 was a stellar year for ASMPT. Capturing the opportunity that was brought about by the strong recovery of the economy in Asia, ASMPT managed to break all new records in bookings, billings and net profits and managed to achieve revenues of over US$1 billion, for the first time in ASMPT’s history. In the course of the year, ASMPT set up a new factory in Huizhou, China, and also started the construction of a new R&D building in Chengdu, China.

In 2010, ASMPT also made a strategic move to enter the SMT equipment industry by acquiring the SEAS business from Siemens AG as at January 1, 2011. The size of the SMT equipment market is at least the same as the semiconductor assembly and packaging equipment market, if not bigger. The acquisition of the SEAS business offers ASMPT another excellent growth engine. The SEAS business is renamed ASM Assembly Systems (ASM AS). Munich, Germany, will continue to be the Headquarters of ASM AS as well as the Center of Excellence for SMT equipment within the ASMPT Group. With ASM AS, ASMPT is in a unique position to capitalize on the industry trend of convergence of the semiconductor assembly process and the SMT process. The addition of the Munich R&D center will further strengthen the long term strategic position of ASMPT.

Industry Background and Major Business Trends

Semiconductor devices are the key enablers of the electronic age. Each semiconductor device can hold many individual components, most of which are transistors. For over 30 years now, the average number of

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components per integrated semiconductor device, at the optimum cost-per-component, has been increased by a factor of two every 18 to 24 months. This trend is generally referred to as Moore’s law, after Gordon Moore who co-founded Intel. Increases in complexity, along with simultaneous reductions in the cost-per-component, have mainly been achieved by reducing the size of individual transistors, so that a larger number of transistors fit within a given size die. Today, transistors less than 45nm (1 nm is equal to one billionth of a meter) long are manufactured in high volume, and several billion transistors can be manufactured on a single die with an area of a few square centimeters.

A second development that has decreased the cost per device is the increased size of the wafer (the silicon substrate upon which semiconductors are built), so that more devices can be produced within one production cycle. Today, almost all of the newly installed semiconductor device fabrication capacity employs 300mm wafers, with each wafer typically holding between a few dozen to several thousand individual circuits. In several industry consortia a transition to 450mm wafers is being discussed.

The semiconductor industry had a substantial up year in 2010, driven by an over US$ 1.6 trillion global electronics industry (VLSI Research Chip Insider February 14, 2011), that required approximately $248 billion (ibid.) in semiconductors. The semiconductor industry in turn, supported the approximately $47 billion (ibid.) semiconductor capital equipment industry, which supplies the needed production systems and services.

The yield, or the fraction of chips on a wafer that operate according to specifications (known good dies), is one of the key variables that influences the financial performance of the integrated device manufacturers. Large initial investments are needed to build an automated production line in an ultra-clean environment in order to achieve high yield. The capital equipment in this production line is increasingly becoming an important determinant for the yield of the factory.

Parallel to the above-mentioned trends of transistor scaling and larger wafer size, another trend is beginning to emerge on the die level: heterogeneous integration. While the components on a chip that perform calculation and storage can undergo scaling, other components, such as inductors, capacitors, sensors, micromechanical, photonic, or micro-fluidic devices, do not scale as easily as do transistors and some capacitors. Yet, in order to make devices with these components small and cost-effective enough, they will eventually also have to be integrated into the same semiconductor device. Although several functions can be integrated on a single die, as in a system on a chip (“SoC”), for economic reasons this is usually limited to the components that scale with Moore’s law (“more Moore”), and use the same base material (silicon). For components that do not scale, or components that use a different base material it is not always practical or economically feasible to place them on the same die. In that case, integration of several dies, sometimes coming from different supply lines, in a single package to form a system in a package (“SiP”) is the alternative solution that provides the desired functionality. This trend is sometimes referred to as “more than Moore.”

The trends outlined above are the drivers of the broad semiconductor roadmap which semiconductor equipment companies track in developing new production systems and process technologies. These new systems and technologies must be developed well ahead of volume demand for the semiconductor devices they make. As a result, there is a large lead time between the investment in a new technology, and its commercial success. With the combination of a long lead time and the short product life-cycles comes the inherent difficulty of matching supply and demand, which results in the high volatility associated with the semiconductor equipment industry. In this highly cyclical industry, the Front-end and Back-end market segments have historically reacted differently to market forces. We believe, therefore, that operating in both segments works in our favor to reduce the impact of business cycles on our operations.

Our Strategy

Our strategic objective is to realize profitable, sustainable growth by capitalizing on our technological innovations, manufacturing infrastructure and sales and support offices located close to our global customers. The key elements of our strategy include:

• Streamlining our Front-end manufacturing processes to follow the highly successful vertical manufacturing model of our Back-end segment, by systematically reducing manufacturing costs through global sourcing, product platform consolidation, and locating our manufacturing capability in more cost efficient countries.

• Maintaining our global reach through our global operating, sales and customer service organization and its facilities in key parts of the world in order to establish and maintain long-term customer relationships.

• Leveraging our combined strong Front-end and Back-end technology leadership and manufacturing capabilities through advancements in our products and processes early in the technology lifecycle.

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• Expanding the scope and depth of our research and development capabilities through strategic alliances with independent research institutes, universities, customers and suppliers, and expanding our patent portfolio by filing applications for key developments in equipment, processes, materials and software where this is deemed necessary and beneficial.

Background of Semiconductor Manufacturing Processes

Overview

The process of manufacturing an integrated semiconductor, from raw material to finished device, includes amongst others the segments in which we participate: Front-end and Back-end.

Front-end Manufacturing Process

The Front-end manufacturing process, or wafer processing, can be divided in three distinct parts: wafer manufacturing, transistor formation (known as Front-end of the line (“FEOL”) processing), and interconnect formation (known as Back-end of the line (“BEOL”) processing). We develop and sell technology, develop, manufacture and sell equipment, and provide services used by semiconductor device manufacturers in each of these sections of Front-end manufacturing.

In the wafer manufacturing process a large single crystal of very pure silicon is grown from molten silicon. The crystal is then sliced into a large number of thin slices, or wafers, of single crystalline silicon. These slices are polished to an atomic level flatness before the next steps are executed. For advanced applications, some layers are deposited on the wafer for later use, by either epitaxy or diffusion/oxidation (described below). Epitaxial wafers are even flatter and contain fewer defects at the surface than polished wafers. Some wafers are made with an embedded electrically insulating layer, such as silicon oxide, just below a very thin top layer of pure silicon. These special wafers are called Silicon-on-Insulator or SOI wafers and are used for some of the most advanced microprocessors. The finished wafers, still without pattern on them, are shipped to the integrated device manufacturers and foundries for further processing.

During FEOL and BEOL wafer processing, multiple thin films of either electrically insulating material, also called dielectrics, or conductive material are modified, grown, or deposited on a silicon wafer. First, several material processing cycles are used in the FEOL to build the basic transistor and other components such as capacitors and resistors. Second, several processing cycles are used in the BEOL to electrically connect the large amount of transistors and components, and to build additional passive components such as capacitors, inductors and resistors. Patterning of deposited layers with lithography and etching (described below) creates the transistors, passive components and connecting wires, which together make up the integrated circuit. Each integrated circuit is on a single “chip” or a “die” on the wafer. A finished wafer may contain a few dozen to several thousand individual dies. Front-end processes are performed either one wafer at a time in single wafer processing systems or many wafers at a time in batch processing systems. Multiple deposition, and patterning processes are performed on the same wafer.

The number and precise order of the process steps vary depending upon the complexity and design of the integrated circuit. The performance of the circuit is determined in part by the various electrical characteristics of the materials used in the layers of the circuit and the wafer. Simple circuits may have as few as ten layers, while complex circuits may have more than one hundred layers. The Front-end manufacturing process is capital intensive, requiring multiple units of several different production systems. Many different but complementary methods are used to modify, grow, or deposit materials on the wafers. We are predominantly active in developing and manufacturing the equipment used by semiconductor device manufacturers in the deposition processes, i.e., those steps that involve the creation of insulating, conducting and semi-conducting layers on the wafer surface.

The Front-end manufacturing process is complete when all of the layers have been deposited and patterned on the wafer. As a last step, the correct electrical functioning of the integrated circuits on each die is confirmed by probing. Non-functioning circuits are marked so they can be eliminated before the Back-end processing. The introduction of even trace levels of foreign particles or material can make a circuit, or even an entire wafer, unusable. To reduce the level of foreign particles or material, Front-end processing is performed in clean rooms with ultra-low particle and contamination levels. Once the Front-end processing is complete, the entire wafer with multiple, functioning, integrated circuits is shipped to the Back-end facility where it is separated into dies, which are then bonded to a suitable substrate or lead frame, packaged, and tested before final shipment of the semiconductor device to the end customer. Back-end processes do not require the same level of contaminant control. These processes are performed in facilities that differ from facilities in which Front-end processes are performed.

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The following is an alphabetical list of the principal Front-end process technologies used by semiconductor device manufacturers:

• Atomic Layer Deposition (“ALD”) is an advanced technology that deposits atomic layers one at a time at low temperatures on wafers. This process is used to create ultra-thin films of exceptional quality and flatness. Plasma is sometimes used to enhance the process further (Plasma Enhanced ALD, PEALD).

• Chemical Mechanical Polishing (“CMP”) is a technology that planarizes, or levels, layers deposited on wafers by polishing them with a chemical solution called slurry. Planarization reduces the vertical height differences of the various layers. This increases the number of layers that can be processed without introducing reliability problems. Electrochemical Mechanical Polishing (“ECMP”) is comparable to CMP aided with an electric current.

• Chemical Vapor Deposition (“CVD”) is a technique in which one or more gaseous reactants are used to form a solid insulating or conducting layer on the surface of a wafer. Low pressure (Low Pressure CVD, LPCVD) or plasma is sometimes used to enhance the process further (Plasma Enhanced CVD, PECVD).

• Clean removes undesirable contaminants from the wafer’s surface.

• Diffusion and Oxidation are high-temperature processes that change the electrical characteristics of layers. Diffusion is used to move dopants, or impurities, and make dopants introduced by ion implantation electrically active. Anneal is used as a synonym to diffusion. Oxidation forms a silicon oxide layer on the wafer’s surface, which acts as an insulating or protective layer over the wafers surface.

• Electroplating or Electrochemical Deposition (“ECD”) deposits a layer of metal from a complex liquid solution, containing metal salts, and certain additives, by passing an electrical current through that solution and towards the surface of the wafer. Electrochemical Mechanical Deposition (“ECMD”) is ECD with concurrent mechanical planarization.

• Epitaxy involves the deposition of silicon or silicon compounds on the wafer, continuing and perfecting the crystal structure of the bare wafer underneath. Epitaxy improves the electrical characteristics of the wafer surface, making it suitable for highly complex microprocessors and memory devices. Selective epitaxy is an epitaxy process that only deposits silicon or a silicon compound on certain predetermined areas of the wafer.

• Etch reproduces the pattern imprinted by lithography by removing excess material from the uppermost layer(s) of the wafer.

• Ion Implantation is a process in which wafers are bombarded with ions to introduce dopant atoms, or impurities, into the wafer to improve its electrical characteristics. Silicon conducts little or no electricity. In order to have electrical current within a layer, it is necessary to place small amounts of impurities into the layer.

• Lithography is used to print the various layer patterns of the semiconductor device on the uppermost layer of the wafer. These patterns determine the functions of the semiconductor device. The lithography process determines the smallest pitch with which components can be placed in the circuit.

• Metrology is used to measure the width of lines on semiconductor devices, the thickness of layers, the surface profiles of layers, and certain electrical properties of layers.

• Probing is a process in which electrical and functional tests are performed on each die and defective ones are marked on the wafer so that they can be discarded prior to the Back-end processing.

• Rapid Thermal Processing (“RTP”) is similar to diffusion/oxidation, except that it exposes a single wafer to heat over a short period of time. Rapid Thermal Anneal (“RTA”) is a subset of RTP that is restricted to heat treatments in a non-reactive ambient.

Back-end Manufacturing Process

When the wafer with confirmed working integrated circuits is received in the Back-end facility, wafers are first cut (“diced”) into individual dies or chips by a dicing saw or sometimes a laser. The dies are then separated and a single die is (or for an advanced device several different dies are) picked and attached to a lead frame or other substrate by a bonding process. The lead frame or substrate provides the interface between the electrical circuit on the die and the system in which the die is incorporated. Lead frames are produced by stamping or etching out a pattern on a strip of copper or iron-nickel alloy. For high precision (and fast turnaround purposes) lead frames are produced by an etching process to achieve a shorter time to market. Stamped frames are typically used for very high volumes on mature designs. In order to allow a wire to be easily attached to its surface, the lead frames are plated with a thin layer of silver or a stacked layer of nickel, palladium, and gold on appropriate places. The electrical connection of the electrical circuit to the lead frame is made by wire bonding. As few as one or as many a thousand or more separate wires are each connected between a terminal connection point called “pad” on the die and a lead on the lead frame, through which the device is able to communicate with the printed circuit board. Lead frames and wire bonding are by far the most common technology in use today.

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After this assembly and wire bonding interconnection process, the dies are encapsulated to protect them from environmental influences. The encapsulation process employs high-grade epoxy molding compounds (“EMC”), automated molding systems, and tooling to enclose the die and wires. The molding compound forms a hard casing around the die and wires after it is cured. For production efficiency during assembly most lead frames consist of many parts arranged in rows and columns. Each individual part is moved through the multiple assembly process steps connected to other identical parts. After the molding process is completed, the parts are separated from this array in a series of processes referred to as trim, form, and singulation. Here too, high precision tooling and automation are employed to precisely cut away portions of the substrate or lead frame so that the packaged unit is freed from the rest. These singulated units will then move through inspection, electrical test, marking and packing to prepare the tested and finished devices for shipment to the customer.

Another method used for chips with high pin count and speed is flip chip. The flip chip process eliminates the need for die and wire bonding. Instead, it involves populating the electrical interconnect points on a chip with small solder balls made of low melting point materials, a process called bumping. The substrate is designed such that it has an identical pattern to that of the device. The device is then flipped onto the substrate with precise alignment and the bonding process is completed by the application of heat, force, ultrasonic vibration, or a combination of the three. Wafer level packaging (“WLP”) is another emerging technique that places all the protective layers, interconnections and interconnection points directly on the surface of the wafer, such that completely packaged devices are made at wafer level. After probing and dicing, the die can be separated and may be directly attached to printed circuit boards.

The following is an alphabetical list of the principal Back-end processes used by semiconductor manufacturers:

• Binning assigns tested, packaged devices to defined performance categories.

• Die Bonding mounts the die onto carriers such as lead-frames using a die bonder.

• Die Separation separates the dies on the wafer into individual units using dicing saws.

• Die Sorting segregates tested dies into different performance levels.

• Encapsulation or Molding encases the die in a protective housing, often epoxy, using dispensing systems or transfer molds.

• Marking puts product identification information on the semiconductor package using stencil printing or laser inscription techniques.

• Product Testing tests the performance of the completed, encapsulated, and singulated semiconductor device.

• Singulation is the separation of the many individual devices attached to a lead frame.

• Trim and Form cuts away the excess portion of the lead frame and bends the leads into the desired shape, resulting in the completed semiconductor device.

• Wire Bonding attaches extremely thin gold, copper, or aluminum wires between the input/output terminals (“I/O terminals”) known as “pads” on the die and the lead frame leads creating electrical connections using a wire bonder. Wedge bonding employs only ultrasonic energy, while thermosonic wire bonding employs both heat and ultrasonic energy.

LED Manufacturing Process

Light Emitting Diodes (LEDs) are manufactured on sapphire or silicon carbide substrates of typically 2” to 4” in diameter. The LED is formed by sequentially depositing semiconducting N- and P- type thin films on the substrate surface by MOCVD (Metalorganic Chemical Vapor Deposition). Following MOCVD patterned electrical contacts are provided by a Mask Aligner. Individual dies are singulated by a laser scriber and a dicing machine. The individual LED dies are then tested on electrical and chromatic properties and binned in different performance categories. The substrates of LED packages can be Vertical Lead frames, pre-molded SMT Lead frames or Ceramic substrates. LED dies are attached to the package substrates with conductive or non-conductive glue. Eutectic die attach and flip chip die attach are also employed. The electrodes of the LED die are connected to the leads of the package substrate with fine Gold Wire by a Wire Bonder.

For white LED packages, a yellow phosphor is deposited onto the surface of Blue LED dies. LED dies with dome surface are coated in a Silicone Liquid Molding machine. The packages are singulated and then tested and sorted into different bins, and each bin is packed onto a Tape and Reel Form by the Taping Machine.

The SMT Placement Process (Electronics Assembly)

Modern electronic modules are produced by placing various components and connectors on printed circuit boards. To ensure the precision and efficiency required to handle ever smaller components at ever lower cost, the placement process takes place on highly automated surface-mount technology (SMT) lines.

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These SMT lines and the placement process in general can be divided into three main segments:

• The solder paste printer, which applies solder paste to the printed circuit board (PCB) in order to keep the components in place during the entire placement process

• The placement machine, which places various components on the printed circuit board in predefined positions

• The reflow oven, in which the solder paste is heated and hardened or adhesives are cured in order to create a permanent bond between the components and the printed circuit board’s conducting paths

The Printer

The soldering paste or adhesive is applied with special paste printers, mostly by using the screen printing method. A laser-perforated metallic stencil (the screen) is positioned over the printed circuit board in such a way that the stencil’s openings are centered over the contact areas (pads) for the components. The machine then presses the screen against the circuit board and uses a squeegee to press the solder paste through the openings onto the pads.

The Placement Machine

The components are supplied to the placement machine via various types of feeders such as tapes, trays, belts or tubes, depending on the type and size of the component.

A placement head, which can move along three axes and rotate around the Z-axis, uses suction to pick up a component from the tape or tray, checks the component’s position with the help of a camera system, computes its angle and offset from the nominal position, and places it onto the printed circuit board. When all components have been placed, a conveyor system moves the board to the next station and replaces it with a fresh, empty board.

To increase the throughput rate, modern placement machines have several “revolver-type” placement heads, each of which is able to pick up and place multiple components per cycle in order to minimize the travel time between pick-up and placement positions. And thanks to their modular design, the machines can be configured with different feeder modules, placement heads, camera systems, etc. in order to best meet the specific production requirements. For products with many components and high line throughput requirements, multiple SMT placement machines are usually positioned in a line.

The Reflow Oven

Once all components have been placed, the PCB is transported into the reflow oven, where the board is heated to the appropriate processing temperature. The solder balls in the solder paste melt and create a mechanical as well as an electrical connection between the components and the printed circuit board. If the SMD components were glued on, the reflow oven is used to cure the adhesive at a temperature that is lower than the heat required to melt the solder paste. Once the adhesive has hardened, the boards are flow-soldered – usually after additional special components have been installed.

Modern SMT lines contain additional systems and components such as quality control systems (e.g., automated optical inspection or AOI systems) or special process control systems (e.g., barcode readers).

Important Technology Trends for our Business

Technology Trends

The continuous demand for smaller, faster and cheaper semiconductor components drives the technology advances in the semiconductor manufacturing process. As the transistors in an integrated circuit become smaller, the cost-per-component decreases. Fortuitously, at the same time the operating speed of the transistor increases. Thus the minimum size of a single transistor in an integrated circuit is an extremely important parameter. This minimum size can be characterized by the so-called half-pitch, which is about equal to the smallest line width in the device. Today, our leading-edge high volume production systems support the manufacturing of semiconductor devices having a half-pitch as small as 65 to 32 nanometers (one nanometer is one billionth of a meter). At ASMI, and in close cooperation with our customers, we are qualifying and testing new critical process equipment for line widths at or below 32 to 22nm. Simultaneously, we are developing new 22 to 15nm technologies in our laboratories. Today, most of the newly installed semiconductor device fabrication capacity employs 300mm wafers. Accordingly, our system and process development and sales effort is concentrated in 300mm equipment.

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In developing faster and smaller devices, our Front-end customers’ major technology requirements are:

• new thin film materials and device designs that can reduce the amount of power consumed in the device, increase the speed and reliability of the circuit, and increase the amount of charge that can be stored;

• reliable manufacturing of taller three-dimensional structures in devices;

• lithography of ever smaller feature sizes, now much smaller than the wavelength of light; and

• new manufacturing processes that reduce device variability and increase yield.

Technological developments in the Front-end process have resulted in new requirements for the Back-end manufacturing process. The ability to place millions of transistors onto a thumbnail-size device with vastly increased functionality has created the first major trend: the need for more input/output terminals in the same or smaller space. The challenge for Back-end equipment suppliers is to connect this increasing number of terminals in a package that sometimes is barely larger than the chip. Wire bonding has been at the forefront of this transition, but for integrated circuits with very high terminal count, the industry has developed ball grid array (“BGA”) and flip chip packaging that use the entire surface of a die, and not just the perimeter.

A second major trend in the Back-end market segment is driven by the strong growth in demand for hand held devices. There is an ongoing need to build ever smaller and more complex packages at lower cost for this market. Individual dies must be packaged in areas that are just slightly larger than the individual dies they contain. These chip scale packages minimize the amount of space occupied by the end product on the circuit board.

A third major trend relates to the industry demand for a much higher level of integration, but still at lower cost and optimized yield. This has resulted in a requirement to place multiple dies into the same package. The assembly of a combination of “known good dies” in a package can lead to higher yield than the combination of the same functionality blocks on a single chip. Such a System-in-Package (“SiP”) is more than a simple collection of multiple dies: SiP products are fully functional systems or sub-systems. Moreover, devices from different supply chains, with sometimes entirely different feature sizes or technologies can be integrated this way. Dies can be placed next to and/or on top of each other, using stacked die bonding techniques and sometimes mixing flip chip and wire bonding techniques in the same package. It appears that in the near future an increasing fraction of the value of the device will be in the package, at the cost of the fraction that is for the die.

Technology Trends in Electronics Assembly

As a result of the above, new technological requirements for placement equipment arise from the component side as well as from downstream production processes and from the markets for end products.

The trend toward integrating ever more complex functions in the smallest amount of space continues unabated and will keep playing a significant role in the development of placement equipment and SMT production techniques. Examples of this trend include:

• More use of dies, which can be placed closer together because of their lack of packaging, and package-on-package (PoP) designs, which are placed one on top of the other

• More optical circuitry for faster transmission rates

• More component diversity

The market for LED placement equipment is a good example of some of these technological requirements: The setup processes and programs must be able to handle the different LED brightness categories and accommodate them with the addition of series resistors or by permitting only the placement of LEDs in the same brightness category. Since LED components are very fragile, they must be positioned with great care using special nozzle shapes. In addition, the placement machines and conveyor systems must be able to process extra-long boards, because the multiple clusters of backlight units are often very large.

These and other developments in the component and PCB field pose ever tougher demands on the precision and flexibility of the placement equipment – from drives and gantries to feeders and vision systems to placement heads and pick-up systems. And since producers are also subject to increasing pressure in terms of costs and efficiency, this level of precision must be delivered even for high placement speeds and over long periods of time. Another challenge is the feeding of components directly from the wafer, which is a way of eliminating time-consuming and expensive process steps such as the packaging of dies and flip-chips. Other challenges are posed by the growth in selected application fields such as LED placement.

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New requirements arise also at the customer end. Shorter product life cycles and the rising number of product variants along with optimized logistics chains reduce the average lot sizes and make for shorter lead times. At the same time, today’s lines run at much higher speeds. As a result, each shift must be able to handle more and more product changeovers, which means that the associated setup procedures reduce the productivity of traditional SMT lines.

In the process control area, customers want more features ranging from monitoring to full-fledged component traceability for sophisticated applications in medical technology, aerospace engineering and the automobile industry. But no matter which industry they serve, electronics manufacturers have to deal with huge competitive and cost pressures as well as a highly cyclical market environment.

As far as recent trends in LED packaging are concerned, the sapphire or silicon carbide substrate for LED chip fabrication is migrating from 2” to 4”, some are moving to 6” substrates in production. Larger substrates can produce more LED chips in a wafer. With reference to chip sizes, High Power LED increases the chip size to 40 mils or above to increase the total output power for a single chip. Furthermore, as the LED efficiency increases, more chips move to 6 mils to reduce the cost for small power application such as indicators. For package substrates, more High Power LED packages employ ceramic and silicon substrates for better heat dissipation.

Our Response to Technology Trends

We develop and manufacture wafer processing systems and new thin film materials that enable our customers to produce devices that consume less power, are faster, show less variability, are more reliable and are able to store more electrical charge. In order to meet our customers’ needs, we have developed, and are still developing many new materials. For example, in the FEOL, high-k dielectrics and novel metal electrodes can reduce the power consumption of a device, thereby enhancing battery life. This same class of materials can also lead to larger charge storage in a smaller capacitor, critical for memories and RF circuits. Whereas in the recent past much focus has been on the development of the high-k dielectric, today as much focus is on new technologies and materials for the metal electrode and the gate sidewall passivation. Another example of new materials in the FEOL is our silicon-germanium (“SiGe”) and silicon-carbon (“SiC”) epitaxial materials that can increase the switching speed of the transistors and the circuit in which they are embedded by so-called strain engineering. This can be done without negatively affecting the power these transistors consume.

In the BEOL or interconnect process, a continued demand to improve the speed at which signals travel through thin copper wires has led to the development of a full suite of low-k materials. These low-k materials can decrease the amount of delay in signal propagation, resulting in, for example, faster microprocessors. We have been one of the leaders in successfully introducing these low-k materials in the market.

We have also developed and sold new processes and wafer processing equipment to enable the creation of narrow lines having dimensions beyond the resolution of common lithography, and with low line width variability. For that purpose we have developed low temperature plasma enhanced ALD processes that are compatible with the photoresist processes that are common to lithography tools.

In addition to addressing the technology needs of our customers, the relentless drive of the industry to reduce cost corresponds to significant spending on development programs that further increase throughput and reliability, and lower the cost of the wafer processing systems.

For our Back-end customers, lead frame and wire bond technology continues to offer the most flexible method of connecting the die to the printed circuit board. Increasing pressure on the number of I/O terminals per unit area of silicon continues to drive down the distance between two adjacent interconnect points or pads, reducing the bond pad pitch and allowable wire diameter. The increasing I/O requirement has also resulted in the use of several rows of these pads on a single die. Production is now ongoing with a bond pad pitch of 30 microns. Wire bonding must not only address decreasing wire diameters and pitch, but also address the throughput to reduce the overall cost of the device. Future wire bonding platforms will be able to operate in an environment that requires the bond pad pitch to be at 25 microns. The increasing row count will require better control of the wire shapes and looping profiles to maintain signal integrity at high communication speeds. All of this must be achieved with the highest possible speed and reliability. In addition, semiconductor manufacturers are looking to automation and integration of Back-end equipment as ways to reduce costs and increase productivity.

Increasing pressure on the level of integration and reduction in size of handheld or mobile devices has given rise to several alternative assembly and bonding techniques and materials, such as flip chips and several chip-scale packaging methods. Stacked die packages, in which more than one die is stacked on top of another, to form a single device, play a major role in the handheld appliance market. We are responding

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to the need of stacked die packages by developing better wire bonding techniques, for example, by controlling the shape of the wire loop. We are currently developing methods of working with insulated wires, which will allow for more crossed connections in a device.

The newly developed ASM Die Bonder AD8312 offers a wide range of benefits with the sole target of producing highest speed and quality at lowest cost per die placement. Special handling and operating aspects of stacked and thin die are incorporated in the revolutionary machine concept. The extremely fast vision system and the ultra-light pick and place head with his innovative linear motor technology offer an incredible increase in performance, product quality and yield.

Response to Technology Trends in Electronics Assembly

Under the industry-famous product brand SIPLACE and in close coordination with customers and other partners, innovative SMT placement machines are developed and manufactured which are able to process a broad spectrum of components with high speed, precision and reliability. With the modular machine designs and in connection with our SIPLACE software and SIPLACE services our customers are offered complete solutions which allow them to flexibly adapt their SMT lines to shorter lead times, fluctuating workloads, frequent product changes and ever smaller lot sizes.

Thus far, over 25,000 placement solutions have been installed successfully at more than 2,500 customers worldwide. SIPLACE employees support electronics producers and EMS providers in the telecommunication, automotive, IT, consumer electronics and automation industries as well as in other segments. For example, approx. half of all mobile phones worldwide are produced with SIPLACE placement equipment. This success results from the combination of excellent technical expertise with innovative strength and close customer orientation.

The SIPLACE X-Series is one of the most powerful high-end SMT platforms anywhere and was one of the first solutions able to handle 01005 components with no slowdown in high-volume environments. With its high precision and speed, the SIPLACE X-Series is the ideal solution for large EMS companies, mobile phone production and the growing LED placement market.

With the SIPLACE CA we developed and brought to market the first placement platform that can supply components directly from the wafer as well as with classic SMT feeder technologies. For the electronics manufacturer, this capability means maximum flexibility and guaranteed investment protection.

In 2010 the SIPLACE SX placement platform was launched, whose special interchangeable gantries, intelligent feeders and innovative setup concepts make it the ideal solution for high-mix environments. The key feature of this highly innovative solution is the “Capacity-on-Demand” function. The newly developed SIPLACE MultiStar placement head switches automatically between Collect & Place mode, Pick & Place mode and a special mixed mode, which is why it can be used for the fast placement of standard components as well as for the end-of-line placement of large components. Thanks to these properties, even high-mix lines can operate well balanced at all times for improved total line productivity.

With the digital SIPLACE D-Series, which combines high-tech innovations with proven technologies, an excellent price-performance ratio and cost of ownership, SIPLACE offers a platform for highly cost-sensitive users in the standard and high-performance segment who require lots of flexibility.

For 2011, ASM Assembly Systems has scheduled the launch of the SIPLACE DX, whose features and price-performance ratio were optimized especially for high-volume production environments in Asia and other parts of the world.

With their digital vision systems, intelligent SIPLACE X-feeders, head models, conveyor systems and linear drives, all current SIPLACE platforms use a shared pool of basic hardware modules to simplify the production and maintenance of the entire portfolio.

To put the performance and flexibility of its machines to the best possible use, ASM Assembly Systems has developed the extensive SIPLACE software suite, which ranges from production scheduling to line and process control to monitoring, setup verification and traceability. In addition, the SIPLACE FACTS materials management system and the SIPLACE LES line execution system for setup-optimized production synchronization provide customers with exceptionally powerful software solutions.

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Products

Market Coverage

The table below indicates the major market segments of the semiconductor equipment industry. The principal market segments in which we participate are underlined.

		Major Market Segment 1
Market Segment 1	Test and related Systems	IC Fabrication Equipment or Front-end	IC Assembly Equipment or Back-end
	Automated Test Systems	MicroLithography and Mask Equipment	Assembly Inspection Equipment
	Material Handling Systems	CMP Equipment	Dicing Equipment
		Ion Implanters	Bonding Equipment
		Deposition and Related Tools 2	Packaging Equipment
		Etching and Cleaning Tools	Integrated Assembly Systems
		Process Diagnostic Equipment	Leadframes 3

(1) Based on VLSI Research Industry Segmentation (www.vlsiresearch.com, accessed February 1, 2011).

(2) This segment also includes diffusion and oxidation furnaces.

(3) While the materials segment is not included by VLSI Research in the Back-end segment, lead frames are a significant component of our revenues.

Front-end Segment Products

ASMI’s Front-end segment products come from a number of product platforms, with each platform designed to host and enable specified process technologies. The products in each product platform are linked through common technology elements of the platform, for example a common in-system software framework, common critical components, similar logistics (batch or single wafer processing), or a similar wafer processing environment (wet or dry). The following table lists our principal product platforms for the Front-end market, the main process technology that they enable, and the semiconductor device manufacturing solution for which the products from that platform are used.

Product Platform 1	ASMI Process Technology 1	Products 1
Advance 400 Series	ALD, CVD, diffusion/oxidation, LPCVD	A400, A412, A4ALD, Vertical Furnace Systems
Eagle	PECVD	Eagle 10, Eagle 12 (2) , Dragon 2300 (2) Single Wafer Plasma Processing Systems
Eagle XP (3)	PECVD,PEALD, ALD	Pulsar 3000 and EmerALD ALD Products, PECVD Products, PEALD Products
Epsilon	Epitaxy, LPCVD	Epsilon 2000 and Epsilon 3200 (4) Single Wafer Epitaxy Systems
Polygon	ALD, PEALD	Polygon 8200, Polygon 8300 (5) , Pulsar 3000 (5) Single Wafer Atomic Layer Deposition Systems

(1) Advance, Epsilon, Polygon, PEALD, Eagle, Dragon, Pulsar, EmerALD, A400 and A412, are used, registered or pending ASMI trademarks. For a detailed list of trademarks we own please refer to the Intellectual Property section.

(2) The functionality of the Dragon and the Eagle 12 has merged with the Eagle XP platform starting in 2010.

(3) The Eagle XP is our standard single wafer processing platform designed to accommodate multiple process application modules with common platform standards.

(4) It is our plan to merge the functionality of the Epsilon with the Eagle XP platform starting in 2011.

(5) The functionality of the Polygon, Pulsar and EmerALD has merged with the Eagle XP platform starting in 2009.

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Description of our Front-end Segment’s Product Platforms

Advance 400

The Advance 400 is our Vertical Furnace, batch processing platform. Products built on this product platform are used for diffusion, oxidation, (LP)CVD and ALD. The product platform is used in many manufacturing steps, from the production of silicon wafers to the final anneal in interconnect. The A400 is a system for 150 and 200mm wafers, while the A412 is for 300mm wafers. The A412 systems feature two reactors above a rotating carousel, a dual-boat concept for high productivity, and a wide range of process applications with variable load sizes from 25 wafers for shortest cycle time requirements, up to 150 wafers for lowest cost requirements in a single run. In this series, we also offer the A4ALD, for atomic layer deposition of dielectrics and metals, targeted mainly for high volume applications of our memory customers.

Eagle

The Eagle is our single-wafer processing product platform for PECVD applications. While the Eagle 10 is a system for 150 and 200mm wafers, the Eagle 12 and Dragon 2300 are systems for 300mm wafers. The Eagle 10 and the Dragon 2300 have two PECVD reactors, while the Eagle 12 has three PECVD reactors. Different wafers are processed in parallel in the reactors to enhance the throughput. The processes available on the Eagle product platform include insulators (such as silicon oxide, silicon nitride, silicon oxi-nitride), Aurora low-k dielectrics for interconnect applications, as well as hardmask and antireflection layers that aid in the lithography of very fine features.

Eagle XP

First, the Eagle XP is our high productivity extension to the Eagle product platform, for 300mm. The Eagle XP has four PECVD reactors. Substantially all processes on the Eagle 12 and Dragon are or will be available on the Eagle XP.

Second, the Eagle XP is transitioning from a dedicated platform for PECVD to a common high volume platform for all 300mm single wafer processing in our addressed markets. The Eagle XP will also enable integration of sequential process steps on one platform. The Eagle XP is now available with PECVD, PEALD, Pulsar and EmerALD ALD modules. It is our plan to also merge the functionality of the Epsilon with the Eagle XP platform starting in 2011.

The Eagle XP common platform will benefit our customers through reduced operating costs since multiple ASM products now will use many of the same parts and consumables and a common control architecture improves ease of use. The Eagle XP common platform enables us to improve the coherency in our product portfolio.

Epsilon

The Epsilon is our platform for single wafer epitaxy. The Epsilon product platform offers a wide range of epitaxy products and materials for many applications, ranging from high temperature silicon used in silicon starting material manufacturing, to low temperature, selective or non-selective silicon, silicon germanium (“SiGe”), silicon-carbon (“SiC”) used in CMOS devices and silicon germanium carbon (“SiGeC”) used in bipolar devices. The Epsilon 2000 is a single wafer, single reactor system for 150mm and 200mm wafers. The Epsilon 3200 is a single wafer, single reactor system for 300mm wafers.

Polygon

The Polygon is a single wafer atomic layer deposition platform. It features a six-sided central vacuum handler, capable of hosting up to four reactors. The Polygon 8200 is used for 150 and 200mm wafers, and for magnetic head substrates. The Polygon 8300 is used for 300mm wafers. One or more Pulsar modules with ALD technology can be integrated onto the platform. Products built on this product platform are currently being used in, among others, ALD high-k gate dielectrics for high performance logic, metal-insulator-metal capacitors for system on a chip applications, and magnetic head gap fill.

Description of our Front-end Segment’s Process Technology Platforms

Depending on application, a process technology can be used in more than one product platform. Process technologies that are intended for use across multiple product platforms are called a process technology platform. The technologies in a process technology platform share a common knowledge base and patent portfolio. ALCVD, for example, is enabled on both our single wafer and batch product platforms. This gives us the principal ability to provide a single wafer tool for a certain application early in the lifecycle,

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when short development cycle times are needed, and later in the lifecycle switch to a batch tool for efficiencies in high volume production, using the same chemistry and maintaining basic materials properties.

ALCVD: Atomic Layer Deposition and Plasma Enhanced Atomic Layer Deposition

ALCVD is one of the newest technologies to deposit ultra-thin films of exceptional flatness and uniformity. This technology was brought into ASMI in 1999 with the acquisition of ASM Microchemistry, who first developed the thermal ALD technology. PEALD is an extension of this original ALD technology that uses plasma, which was brought into ASMI in 2001 through a partnership with Genitech and a subsequent acquisition in 2004. The use of plasma enables us to deposit high quality films at very low temperatures. Collectively ASMI refers to these two technologies as its ALCVD process technology platform. ALCVD is a very versatile technology platform that can be used to deposit high-k insulating materials, conductors, silicon oxide and silicon nitride. Selected ALCVD processes are released on our Polygon, Eagle, Eagle XP, and Advance 400 product platforms. We have hundreds of issued patents that relate to this process technology platform. In addition, ALCVD, Atomic Layer CVD, and PEALD are our trademarks. We expect that the trends of continued scaling, and evolution towards three dimensional device structures plays into the strength of our ALCVD position.

LPCVD: novel chemistries

On our LPCVD process technology platform we have developed processes with new chemistries (under the trademark Silcore) that enable the deposition of silicon and silicon containing materials at low temperatures. Processes are released on our Epsilon product platform for selective and non-selective epitaxy, single wafer LPCVD, and on our Advance 400 product platform for thin, smooth polycrystalline Si . Our strategy for the LPCVD process technology platform as a whole is to continue to qualify new chemistries developed by, and with, our chemical suppliers for all of our product platforms, well in advance of the development of our customers’ needs. We have about 10 issued patents related to Silcore and other specialized LPCVD process chemistries.

Back-end Segment Products

The following table lists ASM Pacific Technologies (“ASMPT”) principal products for Back-end market and the main technologies that they enable.

Product Platform	ASMI Process Technology	Products 1
Die Attach Equipment	Die Bonding	AD898/8912 epoxy/ eutectic, AD830, MCM12 multi chip, SD890A and SD832D soft solder, IS898 glass attach Systems
Scanning and Sorting Equipment	Die Sorting	WP808A WLP sorting Systems, , AS899, MS100 die sorting Systems
Flip Chip Equipment	Flip Chip Bonding	AD900A, AD9012A, AD900TS, AD9012TS, AD9212 dual head flip chip bonding Systems, AD9012TC, Hummingbird stud bumping Systems
Wire Bonding Equipment	Thermosonic Gold Wire Bonding	TwinEagleXtreme, HarrierXtreme, EagleXtreme, iHawkXtreme EagleXtreme X2L
Wire Bonding Equipment	Ultrasonic Aluminum Wedge Bonding	Heavy Aluminum Wire Bonder, AB530, AB559A rotating bond head
Encapsulation Equipment	Molding, Dispensing and Jetting system	IDEALmold and Osprey transfer molding Systems, IDEALcompress/IDEALab Silicone Liquid Molding, DS500 dam-and-fill Systems, DS520 Jetting System
Post Encapsulation Equipment	Ball Placement, Testing and Marking, Trim and Form, Singulation, Binning	BP2000 ball placement, CS8000-AP jig saw and sorting, MP209, MP-TAB trim form system, FT2030S, FT1000, FT2030WF Test and Finishing handler, FV2030 Vision Inspection, SLS230 LED Testing & Sorting, SLT400 LED Taping, IP360 SMD LED Taping

(1) Eagle60, Harrier, Hummingbird, IDEALmold, Osprey, and TwinEagle are used, registered, or pending ASMPT trademarks. For a detailed list of trademarks ASMPT owns please refer to the Intellectual Property section.

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Die and Flip Chip Bonding, and Die Sorting Products

ASMPT manufactures several die bonding models as well as die sorting equipment to address various markets including semiconductors and light emitting diodes (LED). The latest epoxy die bonder platform for 300mm wafers continues the path undertaken by ASMPT to provide customers with the highest quality and best cost/performance systems on the market. With its capability of handling up to 300mm wafers, fully automatic operation, epoxy writer, pre and post bond inspection and wafer mapping, this platform is able to provide customers with exceptional operational results. Variations on this platform have been developed to address the requirements of the growing stacked die market. The ability to handle silicon devices down to 25 microns in thickness is a key feature for the future.

Packaged device performance is continually pushed to higher levels. In critical applications, devices are increasingly utilizing flip chip interconnect methods to provide higher levels of electrical performance. Our flip chip platform provides high speed flip chip die bonding for IC applications. Variations of this platform have evolved to provide for the use of ultrasonics, heat force or the combination of these to affect the process. There continues to be a very large market in which the die and wafer sizes are relatively small, under 30 mils square. A mil is 1/1000 of an inch. Many of these devices are attached directly to printed circuit boards (Chip on Board, “COB”) or very large arrays. Therefore, many different handling methods are required. We have several systems addressing the various form factors represented in the market.

The LED business requires both high speed and high precision manipulation of very small devices. Many of these devices are assembled in arrays with a die attach process. In these arrays brightness and color must match. We have developed several platforms for sorting these devices and segregating them according to the customers’ requirements. The high power LED market for general purpose illumination continues to grow. These devices have unique thermal and electrical requirements that must be met by the die attach process. We have a new platform that addresses the use of soft solder in a special atmosphere that facilitates this special process. Machines may be configured to operate stand-alone or connected to epoxy curing ovens and wire bonders.

Wire Bonding Products

The Eagle Xtreme gold/Cu wire bonder has successfully completed field trials begun in late 2007 and revenue shipments began during the second half of 2008. This is the successor to our award-winning Eagle60AP generation bonder. The Eagle Xtreme and iHawk Xtreme gold wire bonders continue to extend the productivity of the process as well as exceed the industry roadmaps for required bond pad pitch. Additional features on the Eagle Xtreme allow it to deal with the complex wire geometries and extreme height variations that are prevalent in the stacked die packages being built today at higher productivity rates. The productivity envelope was enlarged with the introduction of our latest dual head platform, the TwinEagle Xtreme and Harrier Xtreme. This tool provides all the capabilities of our standard Xtreme but with higher output per floor space required. We also extended our product portfolio in the wedge bonder area with newer, faster, more flexible systems to address the consumer products market that focuses on cost effective solutions. The expansion of the flip chip process has also provided us with opportunities to take advantage of our wire bonder technology to provide platforms capable of applying gold or copper stud bumps on wafers up to 300mm in diameter.

Encapsulation Products

Our auto molding product line continues to build on the success of our earlier automated multi-plunger molding systems. The IDEALmold serves the industry segment that requires very high throughput with production flexibility. The recent shift in lot sizes and package variability also required a new platform. We have met this requirement with our Osprey single strip molding system. With this platform, the emphasis is on quick material and package conversions for low volume, high mix situations. As with all ASMPT products, it can be configured for stand-alone or integrated in the IDEALine (see below) with many of our other Back-end products.

Post Encapsulation Products

Ball placement systems have seen strong growth as the ball grid array (“BGA”) package types continue to expand. These are the mainstream packages for microprocessors and other high performance chips found in computer systems today. Our early work in this area has allowed us to be the exclusive supplier of ball placement systems to the major provider of such components. As the number of package variants continues to increase along with the lead frame unit density, our post encapsulation products (“PEP”) have also evolved. The variation requires systems that are more flexible and faster to convert. The increased density has reduced the need for press speed but increased the emphasis on precision. The decrease in package thickness has dictated a change in the tooling methodology to provide more support throughout the

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trim, form, and singulation processes. Significant changes have been made in design to migrate to turret handling and offloading for small packages. These changes allow the incorporation of faster handling across more processes in a smaller footprint than the conventional linear approach. Significant inroads have been made in the incorporation of test heads into these lines so that units emerge ready to ship.

Automated Systems

The IDEALine integrates Back-end assembly, packaging, and test handling equipment. Such lines can be fully controlled by computers minimizing operator intervention and providing better quality through more stringent process recipe control. We believe we are the only manufacturer of Back-end equipment capable of offering such an extensive integrated line using our own equipment. These lines integrate serial process steps with mechanical and software linkages. Offered in a modular format, customers may integrate some or all of the following processes that we supply: die bonding and inspection, epoxy curing, wire bonding and inspection, encapsulation, post mold curing, package singulation, test handling, inspection, laser marking, packing, and finishing.

Electronics Assembly Products (Hardware)

Type of Production	Applications/Industries	Platforms
High-end/high-speed environments	Large EMS providers, telecommunication & IT products, LED placement	SIPLACE X SIPLACE CA
High-quality/high-mix environments	Small and medium-sized EMS providers, machine controls, automobile industry, aerospace	SIPLACE SX
Cost-sensitive high-volume environments	Medium-sized and large EMS providers	SIPLACE DX (as of Q3/2011) SIPLACE D

Within the platforms, machines with different gantry and head configurations are available (e.g., SIPLACE DX1, SIPLACE DX2, SIPLACE DX4, or SIPLACE SX1, SIPLACE SX2, SIPLACE SX 4 etc.)

Electronics Assembly Products (Software)

Applications	Products
Production planning, optimization and line control	SIPLACE Pro SICluster / SICluster Pro SIPLACE EDM
Production monitoring, process control	SIPLACE OIS SIPLACE Feeder Manager SIPLACE Explorer
Setup verification, traceability	SIPLACE Setup Center SIPLACE Traceability
Order & materials management	SIPLACE FACTS
Line execution & process synchronization	SIPLACE LES

Intellectual Property and Trademarks

Intellectual Property

Because of the rapid technological advances in the microelectronics field, we believe that our products will be subject to continuing change and enhancement. Accordingly, we believe that our success will depend upon the technical competence and creative ability of our personnel as well as the ownership of and the ability to enforce our intellectual property rights.

We own and license patents that cover some of the key technologies, features and operations of our major Front-end products and are registered in the principal countries where semiconductor devices or equipment are manufactured or sold. The following table shows the number of patents for which we made an initial filing during the indicated year and the number of patents in force by us at the end of the indicated year. As part of a program to reduce cost, the patent portfolio was critically reviewed against the current business strategy in 2009. This review resulted in a decision to drop coverage on certain granted patents that did not align with current strategy, and a decrease in the initial patent filing rate in 2009. Cost control measures and stricter patent filing prioritization in 2010 resulted in a lower initial patent filing rate in 2010 compared to 2009.

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Segment	For year:	2006 1		2007		2008		2009		2010
Front-end	Initial patent filings		94		93		79		47		33
	Patents in force at year end		722		793		872		830		931
Back-end	Initial patent filings		25		26		18		19		18
	Patents on force at year end		186		256		332		399		436

(1)

We have entered into worldwide, non-exclusive, non-transferable and non-assignable licenses with Applied Materials for patents related to epitaxy and certain chemicals used to deposit insulating layers for PECVD. We pay Applied Materials a royalty on sales of equipment that use the patented technology. A number of the licensed patents have already expired. The remaining royalty bearing patents that we use expire at various times through 2012. Upon expiration of the patents, the technology may be used royalty-free by the public, including us. For further information, see Item 3.D, “Risk factors—As of December 18, 2007, we ceased paying royalties under certain Applied Materials patent licenses in respect of patents that we no longer practice. If it is determined that we still practice these patents, we will owe royalty payments to Applied Materials on our sales of covered products since that time.”

We have licensed our intellectual property in our ALCVD process technology platform through non-exclusive, restricted field of use license agreements to a limited number of companies. In addition to generating revenue, licensing is expected to accelerate market acceptance of our ALCVD technology.

We have licensed our RTP portfolio of 58 issued patents and 20 pending patents to Levitech BV.

In the Back-end market, companies generally compete based on their cumulative expertise in applying well known technologies to improve productivity and cost-efficiency. As a result, we have historically filed fewer patents related to our Back-end operations. Due to increasing pressure on new technology development in the Back-end market, and the increasing fractional value of the package in the device, we expect the importance of patents in the Back-end market segment to increase over the following years. Wherever deemed necessary, ASM Pacific Technology will file for protection of its innovations.

Trademarks

ASM, the ASM International logo, Advance, Aurora, Dragon, Eagle, EmerALD, Epsilon, Polygon, Pulsar, Silcore and Stellar are our registered trademarks. A400, A412, A4ALD, ALCVD, Atomic Layer CVD, NCP, PEALD, Pore Builder, SmartBatch, and Superfill CVD are our trademarks. “The Process of Innovation” and “The Switch Is On” are our service marks.

AB500B, DreamPAK, DRYLUB, EQUIPMANAGER, EQUIPMGR, IDEALine, IDEALsystem, IDEALab, IDEALNet, PGS, SMARTWALK, SOFTEC, SmartSurf, and Ultravac are registered trademarks of ASM Pacific Technology Ltd. Cheetah, Eagle60, Harrier, Hummingbird, IDEALCompress, IDEALmold, Osprey, TwinEagle, FAB Farming and SolarCSI are trademarks of ASM Pacific Technology.

Litigation

There has been substantial litigation regarding patent and other intellectual property rights in semiconductor-related industries. Although we have been involved in significant litigation in the past, we are at present not involved in any litigation which we believe is likely to have a material adverse effect on our financial position. In the future, additional litigation may be necessary to enforce patents issued to us, to protect trade secrets or know-how owned by us or to defend ASMI against claimed infringement of the rights of others and to determine the scope and validity of the proprietary rights of others. Any such litigation could result in substantial cost and diversion of effort by us, which could have a material adverse effect on our business, financial condition, and earnings from operations. Adverse determinations in such litigation could result in our loss of proprietary rights, subject us to significant liabilities to third parties, require us to seek licenses from third parties or prevent us from manufacturing or selling our products, any of which could have a material adverse effect on our business, financial condition and earnings from operations.

Research and Development

We believe that our future success depends to a large extent upon our ability to develop new products and add improved features to existing products. Accordingly, our global product development policies and local activities are for the most part directed toward expanding and improving present product lines to incorporate technology advances and reduce product cost, while simultaneously developing new products that can penetrate new markets. These activities require the application of physics, chemistry, materials science, electrical engineering, precision mechanical engineering, software engineering, and system engineering.

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Our net research and development expenses were € 75.0 million, € 62.8 million and € 78.8 million in 2008, 2009 and 2010, respectively. We expect to continue investing significant resources in research and development in order to enhance our product offerings. Our research and development activities are chiefly conducted in the principal semiconductor markets of the world, which enables us to draw on innovative and technical capabilities on an international basis. Each geographic center provides expertise for specific products and/or technologies. This approach, combined with the interactions between the individual centers, permits efficient allocation of technical resources and customer interaction during development. In 2010, we formed a globally operating Platform Engineering group that addresses the needs for common platforms for the various products in our Front-end Segment. Selected resources in Belgium, Almere and Helsinki have been grouped under corporate R&D, addressing the common needs for advanced materials research and process integration work for the 15nm, 11nm and smaller nodes.

Segment	Location	Number of R&D employees as of December 31,  2010, exclusive of temporary workers
Front-end	Almere, the Netherlands		39
	Leuven, Belgium		18
	Helsinki, Finland		10
	Phoenix, Arizona, United States		77
	Cheonan, South Korea		30
	Singapore		3
	Tama, Japan		81
Back-end	Hong Kong, the People’s Republic of China		407
	Singapore		272
	Chengdu, the People’s Republic of China		82
Total			1,019

As part of our research and development activities, we are engaged in various formal and informal arrangements with customers and institutes. At December 31, 2010, our Front-end segment was engaged in several formal joint development programs with customers for 300mm applications of our products. As part of these efforts, we may sell new products to customers at a significantly reduced margin, and invest significant resources in the joint development and subsequent product qualification. We sometimes also cooperate with other semiconductor capital equipment suppliers in complementary fields, in order to gain knowledge on the performance of our own deposition processes, in cooperation with other processes, either in bilateral or in publicly funded projects. In addition to cooperating with customers and other capital equipment suppliers, we also enter into research projects with technical universities and institutes (TNO; CNT; Fraunhofer Munich).

We participate also in publicly funded programs, mainly in Europe, to develop the production technology for semiconductor devices with line widths of 32, 22 and 15nm and below and in More-than-Moore technologies. Among our current cooperative efforts are projects awarded under the Information Society Technologies (IST) seventh framework program. We are also a partner in several cluster development programs in the Eureka initiative by MEDEA+ (Micro Electronics Development for European Applications) and its successor CATRENE (Cluster for Application and Technology Research in Europe on Nano-Electronics). In one of the MEDEA+/CATRENE projects MaxCaps, we are the project leader. In addition, we are an active participant in the Catrene organization at several levels, member of AENEAS (Association for European Nano-Electronics Activities) and the Dutch Point-one (Pole of Innovation in Advanced Technologies) organization. In all three organizations ASM participates actively in roadmap and program discussions. We are partner in projects under ENIAC (European Nano-electronics Initiative Advisory Council), in one ENIAC project, which started in 2010, ASM is project coordinator. We also participate in Dutch national programs such as those funded by STW (Stichting Technologie en Wetenschap: Foundation for Technology and Science) and in the FES (Fonds Economische Structuurversterking – Fund Structural Enhancement of the Economy) program. Next to the mentioned European organizations in which we are actively participating, we are heading the Steering Committee of a European 450mm equipment and materials initiative, called EEMI450. As part of these projects we receive research and development grants or credits.

In October 2004, we commenced a strategic partnership with the Interuniversity MicroElectronics Center (IMEC) in Belgium for their 300mm FEOL technology development program. Our Epsilon, A412, and Polygon based products are involved in this partnership. In September 2005 we complemented this FEOL partnership with a partnership in BEOL for advanced on-chip interconnect which utilizes our Eagle based

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products. This gives us the opportunity to investigate, both jointly and independently, the integration of individual process steps in process modules and electrically active devices. Although these partnerships have ended in 2010, we expect continued partnering with IMEC on a variety of topics. We have been partnering with IMEC since 1990.

In December 2003, we commenced a five-year partnership with University of Helsinki that aims at further development of atomic layer deposition processes and chemistries. This partnership was extended for a second quinquennial in December 2008.

Manufacturing and Suppliers

Our manufacturing operations consist of the fabrication and assembly of various critical components, product assembly, quality control and testing.

In the second half of 2004, in order to reduce manufacturing costs in our Front-end operations we established FEMS, a manufacturing facility in Singapore, to manufacture certain generic subsystems and subassemblies for our Vertical Furnaces that we previously outsourced. At the end of 2008, generic subassemblies for Vertical Furnaces, Epitaxy and Eagle systems are manufactured in this facility. In 2009 we started the transition of manufacturing of ASM products to be final assembled in Singapore, i.e. including final assembly and test. We closed down our manufacturing operations in Almere at the end of 2009. In August 2010 we closed our manufacturing facility in Phoenix (US) , and in December 2010 we closed our manufacturing operations in Nagaoka (Japan). With this transition we have also implemented a global organization for our procurement activities. Further, we will move to a global quality system instead of the more regional oriented quality system we had in the past.

Our Back-end operations are vertically integrated. The manufacturing activities in Hong Kong and Singapore consist primarily of assembling and testing components and subassemblies manufactured at our main manufacturing facilities in the People’s Republic of China and Malaysia.

Marketing and Sales

We market and sell our products with the objective of developing and maintaining an ongoing, highly interactive service and support relationship with our customers. Our marketing strategy includes advertising and participating in various industry trade shows. We provide prospective customers with extensive process and product data, provide opportunities for tests on demonstration equipment and, if required, install evaluation equipment at the customer’s site. Once equipment has been installed, we support our customers with, among other things, extensive training, on-site service, spare parts and process support. All of this is further supported by in-house development to enhance the productive life of existing equipment. We make hardware improvements available in the form of retrofit kits as well as joint development of new applications with our customers.

Because of the significant investment required to purchase our systems and their highly technical nature, the sales process is complex, requiring interaction with several levels of a customer’s organization and extensive technical exchanges, product demonstrations and commercial negotiations. As a result, the full sales cycle can be as long as 12 to 18 months for sales of Front-end equipment and 2 to 4 months for sales of Back-end equipment. Purchase decisions are generally made at a high level within a customer’s organization, and the sales process involves broad participation across our organization, from senior executive management to the engineers who designed the product.

Our sales process usually starts with high-level introduction meetings. Early in the process we also meet with operational personnel to discuss the intended uses of our equipment, technical requirements, solutions, and the overall production process of the customer. Demonstrations and evaluation of test results take time. Once we agree upon the technology elements of the sale, the process continues with price and delivery negotiations and, when completed successfully, with the issuance by the customer of a letter of intent to secure a slot in the manufacturing and assembly planning schedule, followed by a purchase order.

To market our products, we operate demonstration and training centers where customers can examine our equipment in operation and can, if desired, process their wafers or individual dies for further in-house evaluation. Customers are also trained to properly use purchased equipment.

Each of our major product lines has a dedicated product manager, responsible for positioning the product in the market, its market share, developing it over time and evaluating its relative performance compared to the competition. Each product manager sets priorities in terms of technical development and sales support.

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To execute the sales and service functions, we have established a global sales force, in which all regional units report directly into the global sales organization. We have sales offices located in Europe (in France, Ireland, Germany and Italy), Israel, Taiwan, Korea, the People’s Republic of China, Singapore and Japan. At the end of 2010, 123 employees were employed in sales and marketing of Front-end products, representing 9% of total Front-end segment staff.

Sales of Back-end equipment and materials are provided by our principal offices in Hong Kong and Singapore, through direct sales offices in the People’s Republic of China, Taiwan, the Philippines, Malaysia, Thailand, Japan, Europe and North America, and through sales representatives in South Korea and some parts of the United States. At the end of 2010, 338 employees were employed in sales and marketing of Back-end products, representing 2% of total Back-end segment staff.

Customers

We sell our products predominantly to manufacturers of semiconductor devices and manufacturers of silicon wafers. Our customers include most of the leading semiconductor and wafer manufacturers. Our customers vary from independent semiconductor manufacturers that design, manufacture, and sell their products on the open market, to large electronic systems companies that design and manufacture semiconductor devices for their own use, to semiconductor manufacturers, known as foundries that manufacture devices on assignment of other companies, including “fabless” companies that design chips but do not have wafer processing factories.

Our largest customer accounted for approximately 13.8%, 9.1% and 5.2% of our net sales in 2008, 2009 and 2010, respectively. For our Front-end segment this was 31.7%, 30.6% and 21.6% of our net sales in 2008, 2009 and 2010, respectively. For our Back-end segment this was 4.4%, 6.0% and 4.3% of our net sales in 2008, 2009 and 2010, respectively. Our ten largest customers accounted for approximately 32.0%, 32.9% and 27.9% of our net sales in 2008, 2009 and 2010, respectively. For our Front-end segment this was 60.4%, 61.4% and 61.2% of our net sales in 2008, 2009 and 2010, respectively. For our Back-end segment this was 26.3%, 32.7% and 27.3% of our net sales in 2008, 2009 and 2010, respectively. Historically, a significant percentage of our net sales in each year has been attributable to a limited number of customers; however, the largest customers for our products may vary from year to year depending upon, among other things, a customer’s budget for capital expenditures, timing of new fabrication facilities and new product introductions.

The following table shows the distribution of net sales, by segment and geographic destination of the product:

	SEGMENT	PERCENTAGE OF NET SALES	GEOGRAPHIC DESTINATION	PERCENTAGE OF NET SALES
				Front-end			Back-end
2010	Front-end	24.0%	S.E. Asia		8.2	%		68.9	%
			Europe		5.6	%		0.7	%
	Back-end	76,0%	United States		7.5	%		1.7	%
			Japan		2.7	%		4.7	%
	SEGMENT	PERCENTAGE OF NET SALES	GEOGRAPHIC DESTINATION	PERCENTAGE OF NET SALES
				Front-end			Back-end
2009	Front-end	27.1%	S.E. Asia		6.5	%		68.8	%
			Europe		6.2	%		0.6	%
	Back-end	72.9%	United States		8.8	%		2.5	%
			Japan		5.6	%		1.0	%
	SEGMENT	PERCENTAGE OF NET SALES	GEOGRAPHIC DESTINATION	PERCENTAGE OF NET SALES
				Front-end			Back-end
2008	Front-end	39.7%	S.E. Asia		9.7	%		55.3	%
			Europe		9.8	%		0.9	%
	Back-end	60.3%	United States		13.0	%		1.8	%
			Japan		7.2	%		2.3	%

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Customer Service

We provide responsive customer technical assistance to support our marketing and sales. Technical assistance is becoming an increasingly important factor in our business as most of our equipment is used in critical phases of semiconductor manufacturing. Field engineers install the systems, perform preventive maintenance and repair services, and are available for assistance in solving customer problems. Our global presence permits us to provide these functions in proximity to our customers. We also maintain local spare part supply centers to facilitate quick support.

We provide maintenance during the product warranty period, usually one to two years, and thereafter perform maintenance pursuant to individual orders issued by the customer. In addition to providing ongoing service, our customer service operations are responsible for customer training programs, spare parts sales and technical publications. In appropriate circumstances, we will send technical personnel to customer locations to support the customer for extended periods of time in order to optimize the use of the equipment for the customer’s specific processes. For our Front-end operations, where the availability of field support is particularly important for a sale, 441 employees were employed in customer service at the end of 2010, representing 30% of total Front-end segment staff. For our Back-end operations 651 employees were employed in customer service at the end of 2010, representing 4% of total Back-end segment staff

Competition

The semiconductor equipment industry is intensely competitive, and is fragmented among companies of varying size, each with a limited number of products serving particular segments of the semiconductor process. Technical specifications of the individual products are an important competitive factor, especially concerning capabilities for manufacturing of new generations of semiconductor devices. As each product category encompasses a specific blend of different technologies, our competitive position from a technology standpoint may vary within each category. Customers are evaluating manufacturing equipment based on a mixture of technical performance and cost of ownership over the life of the product. Main competitive factors include overall product performance, yield, reliability, maintainability, service, support and price. We believe that we are competitive with respect to each of these factors, and that our products are cost effective.

As the variety and complexity of available machinery increases, some semiconductor manufacturers are attempting to limit their suppliers. In addition, semiconductor manufacturers are located throughout the world, and expect their equipment suppliers to have offices worldwide to meet their supply and service needs. Semiconductor equipment manufacturers with a more limited local presence are finding it increasingly difficult to compete in an increasingly global industry.

Our primary competitors in the Front-end market are from the United States, Japan and Korea. Our primary competitors in the Back-end market are from the United States, Europe and Japan. In each of our product lines, we compete primarily with two or three companies which vary from small to large firms in terms of the size of their net sales and range of products. Our primary competitors in the Front-end market include Applied Materials, Novellus Systems, Tokyo Electron, Kokusai, and Jusung. Our primary competitors in the Back-end market include Kulicke & Soffa, ESEC, Shinkawa, Apic Yamada, BE Semiconductor Industries, Towa, Shinko and Mitsui.

C. Organizational structure.

The following chart presents the jurisdiction of incorporation of our significant subsidiaries and our percentage of ownership interest in those subsidiaries as of March 2, 2011:

Subsidiary Name and Location	Country of Incorporation	Percentage Owned by ASM International N.V.
ASM Europe B.V. Almere, the Netherlands	The Netherlands	100%
ASM America, Inc. Phoenix, Arizona, United States	United States	100%
ASM Japan K.K. Tama, Japan	Japan	100%
ASM Front-End Manufacturing Singapore Pte. Ltd., Singapore	Singapore	100%
ASM Pacific Technology Ltd. Hong Kong, the People’s Republic of China	Cayman Islands	52.36%

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D. Property, plants and equipment.

To develop and manufacture products to local specifications and to market and service products more effectively in the worldwide semiconductor market, our Front-end facilities are located in the Netherlands, the United States, Japan and Singapore and our Back-end facilities are located in Hong Kong, the People’s Republic of China, Singapore and Malaysia. Our principal facilities are summarized below:

SEGMENT	LOCATION	PRIMARY USES	APPROXIMATE AGGREGATE SQUARE FOOTAGE
	Almere, the Netherlands	Executive offices of ASMI Marketing, research and offices		103,000
	Tama and Nagaoka, Japan	Wafer processing equipment marketing, research and offices		70,000
Front-end	Phoenix, Arizona, United States	Wafer processing equipment marketing, research and offices		130,000
	Singapore	Wafer processing equipment manufacturing and offices		169,000
	Cheonan, South Korea	Wafer processing equipment manufacturing, marketing, research and offices		33,000
	Helsinki, Finland	Wafer processing equipment research and offices		6,000
	Hong Kong, People’s Republic of China	Semiconductor assembly and encapsulation equipment manufacturing, marketing, research and offices		278,000
	Shenzhen, People’s Republic of China	Semiconductor assembly equipment parts and modules manufacturing, lead frame manufacturing and offices		1,695,000
Back-end	Chengdu, People’s Republic of China	Semiconductor assembly equipment research and offices		199,000
	Singapore	Semiconductor assembly equipment and etched lead frame manufacturing, marketing, research and offices		333,000
	Johor Bahru, Malaysia	Semiconductor assembly equipment parts and modules manufacturing, etched lead frame manufacturing and offices		326,000

Our principal facilities in the Netherlands, the United States, Korea, Finland, Hong Kong, the People’s Republic of China, Singapore and Malaysia are subject to leases expiring at various times from 2011 to 2024. Some facilities we own are subject to mortgages. We believe that our facilities are maintained in good operating condition and are adequate for our present level of operations.

Back-end’s new manufacturing plant in Huizhou, China is now fully-operational, and is progressing into its second phase of expansion. A new casting centre and a fabrication centre will be ready by the first half of 2012. It will allow Back-end to further enhance its production capacity to cater for the growth of both the assembly and packaging equipment and SMT equipment businesses, and to facilitate new investments in casting technology. We will further supplement our etched lead frame capacity by setting up new etching facilities in Fuyong, China to capture the growing China market. The funding of these production capacity expansion activities will be through internal sources.

Item 4A. Unresolved Staff Comments

None.

Item 5. Operating and Financial Review and Prospects

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

Overview

We design, manufacture and sell equipment and systems used to produce semiconductor devices, or integrated circuits. Our production equipment and systems are used by both the Front-end and Back-end segments of the semiconductor market. Front-end equipment performs various fabrication processes in which multiple thin films of electrically insulating or conductive material are grown or deposited onto a round slice of silicon, called a wafer. Back-end equipment separates these processed wafers into numerous

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individual dies, each containing the circuitry of a single semiconductor device, and assembles packages and tests the dies in order to create semiconductor devices. We conduct our Front-end business, which accounted for 24.0% of our net sales in 2010, through our principal facilities in the Netherlands, the United States, Japan and Singapore. We conduct our Back-end business, which accounted for 76.0% of our net sales in 2010, through our principal facilities in Hong Kong, the People’s Republic of China, Singapore and Malaysia. Our Back-end operations are conducted through our 52.36% majority-owned subsidiary, ASM Pacific Technology.

We sell our products to the semiconductor manufacturing industry, which is subject to sudden, extreme, cyclical variations in product supply and demand. After the dramatic and unprecedented decline in demand for semiconductor devices due to the worldwide economic downturn in late 2008 and first half of 2009, which has led to the announcement of significant layoffs, plant closings, reduced capital expenditures and other cost reduction measures by semiconductor manufacturers, the industry was experiencing a pick-up in demand in the second half of 2009. The year 2010 showed a further, and rather extraordinary, demand increase. This became visible in our sales and order book development. In 2009 we saw a sales decrease of 21% to a level of € 591 million, while in 2010 sales increased with 107% to a level of € 1,223 million. In the same period our order book, which were € 100 million at the end of 2008, increased at the end of 2009 to a level of € 200 million and were € 500 million at the end of 2010.

We implemented major restructuring plans in 2010. In particular, our PERFORM! program which was designed to streamline our Front-end global operations and reduce our cost base including a focused effort on lowering our working capital requirements demanded great efforts of the organization. This program involved the material restructuring of our significant Front-end operating, manufacturing and administrative units. By the end of 2010 we finalized our PERFORM! restructuring program in a shorter period and with substantially lower costs than earlier indicated. The total (cash) expenses were € 42 million against an earlier guidance of € 50-60 million, while total impairments (including inventories) were € 29 million against a guidance of € 30-35 million. Among others the program initiatives included the consolidation of our manufacturing operations in Singapore, the transition to a more global sales organization, a more centralized and cost efficient R&D function, the implementation of a global Enterprise Reporting Process (ERP) system, and the sharing of platforms among products. During 2009 we restructured our ASM Europe (ASME) operations by transferring all manufacturing in our Almere facility in the Netherlands to our FEMS operation in Singapore. This restructuring was completed and the Almere manufacturing facility was closed by the end of 2009. During 2010 we completed the transfer and closure of our production facilities in Nagaoka, Japan and Phoenix, Arizona. The goal of all those actions was to improve our cost-effectiveness and to strengthen our gross profit margin in our Front-end segment. The effect of those efforts are already becoming visible in our 2010 results.

For a discussion of our restructuring and the related impairment charges, see Note 23 of the Notes to our Consolidated Financial Statements included elsewhere in this report.

The year 2010 showed strong result improvements, in both Front-end and our Back-end operations. Sales in the Front-end segment increased with 83% as compared to 2009, to a level of € 293 million, while our Back-end segment showed a sales increase of 116% to a level of € 930 million. The gross margin for ASMI consolidated increased from 30.7% in 2009 to 44.9% in 2010. Adjusted for restructuring expenses and impairment charges these margins increased from 34.8% to 44.9%. Gross margin in our Front-end segment increased from 5.4% in 2009 to 39.1% in 2010, adjusted for restructuring expenses and impairment charges these margins increased from 20.5% in 2009 to 39.1% in 2010 while our Back-end segment showed an increase from 40.1% to 46.8% for the same period.

The result from operations as a percentage of sales increased from negative 4.3% in 2009 to 26.9% in 2010. Here we also saw impressive improvements in both our Front-end and our Back-end segments. While the Front-end segment for the year 2009 showed a negative operating margin of 75.0% (adjusted for restructuring expenses and impairment charges negative 35.9%), mainly due to higher activity levels and especially the effects of the restructuring, the operating margin improved to a positive 5.4% (adjusted for restructuring expenses and impairment charges 9.2%) for the year 2010. For the same period the operating margin of our Back-end segment improved from 22.1% to 33.6%.

Net earnings for 2010 were strongly affected by the revaluation of the conversion option included in the 4.25% Senior Subordinated Convertible notes. The valuation at fair value of this option resulted in a non-cash charge of € 19 million in 2010. In January 2011, we exercised our right to call these notes, resulting in conversion of all remaining notes. As a result the last effects of this revaluation will be included in our results for the first quarter of the year 2011.

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Sales

Our Front-end sales are concentrated in the United States, Europe, Japan and Southeast Asia and our Back-end sales are concentrated in Southeast Asia.

The following table shows the geographic distribution of our Front-end and Back-end sales for the years 2008, 2009 and 2010:

	Year ended December 31,
(amounts in millions)	2008				2009				2010
Front-end:
United States	€	96.7	32.6	%	€	51.9	32.4	%	€	91.7	31.3	%
Europe		73.4	24.7			36.8	22.9			67.9	23.2
Taiwan		54.4	18.3			17.3	10.8			35.1	12.0
Japan		54.0	18.2			33.1	20.7			33.0	11.2
South Korea		6.0	2.0			9.2	5.7			37.3	12.7
China		7.7	2.6			7.8	4.9			21.5	7.3
Other		4.6	1.6			4.3	2.6			6.9	2.3
	€	296.8	100	%	€	160.4	100	%	€	293.4	100	%
Back-end:
People’s Republic of China	€	159.4	35.4	%	€	144.6	33.6	%	€	350.0	37.6	%
Taiwan		76.2	16.9			86.2	20.0			148.8	16.0
Malaysia		60.6	13.4			42.4	9.8			112.1	12.1
South Korea		26.4	5.9			63.9	14.9			97.8	10.5
Hong Kong		30.5	6.8			16.1	3.7			39.9	4.3
Thailand		23.7	5.3			24.4	5.7			42.1	4.5
Japan		16.9	3.8			5.7	1.3			57.4	6.2
Singapore		12.4	2.8			5.1	1.2			13.8	1.5
Philippines		20.5	4.5			21.6	5.0			34.4	3.7
United States		13.6	3.0			15.0	3.5			21.1	2.3
Other		10.4	2.2			5.4	1.3			12.1	1.3
	€	450.6	100	%	€	430.4	100	%	€	929.5	100	%

The sales cycle from quotation to shipment for our Front-end equipment generally takes several months, depending on capacity utilization and the urgency of the order. The acceptance period after installation may be as short as four to five weeks. However, if customers are unfamiliar with our equipment or are receiving new product models, the acceptance period may take as long as several months. The sales cycle is longer for equipment which is installed at the customer’s site for evaluation prior to sale. The typical trial period ranges from six months to one year after installation.

The sales cycle for Back-end products is typically shorter than for Front-end products. Generally, the majority of our Back-end equipment is built in standard configurations. We build Back-end products that are approximately 85% complete in anticipation of customer orders. Upon receipt of a customer’s order and specifications, the remaining 15% of the manufacturing is completed. This allows us to complete the assembly of our equipment in a short period of time. We therefore require between two to six weeks for final manufacturing, testing, crating, and shipment of our Back-end equipment. Our Back-end customers’ acceptance periods generally are shorter than those for Front-end equipment. We provide installation, training and technical support to our customers with local staff in all of our major markets.

A substantial portion of our Front-end sales is for equipping new or upgraded fabrication plants where device manufacturers are installing complete fabrication equipment. As a result our Front-end sales tend to be uneven across customers and financial periods. Sales to our ten largest Front-end customers accounted for 60.4%, 61.4% and 61.2% of Front-end net sales in 2008, 2009 and 2010, respectively. The composition of our ten largest Front-end customers changes from year to year. The largest Front-end customer accounted for 31.7%, 30.6% and 21.6% of Front-end net sales in 2008, 2009 and 2010, respectively.

Back-end sales per customer tend to be more level over time than Front-end sales, because Back-end operations can be scaled up in smaller increments at existing facilities. Sales to our ten largest Back-end customers accounted for 26.3%, 32.7% and 27.3% of Back-end net sales in 2008, 2009 and 2010, respectively. Because our Back-end customers’ needs are more level over time, the composition of our ten largest customers is more stable from year to year than in the Front-end. Our largest Back-end customer accounted for 4.4%, 6.0% and 4.3% of Back-end net sales in 2008, 2009 and 2010, respectively.

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Research and Development

We continue to invest in research and development at a high level. As part of our research and development activities, we are engaged in various development programs with customers and research institutes that allow us to develop products that meet customer requirements and to obtain access to new technology and expertise. Research and development costs are expensed as incurred. The costs relating to prototypes and experimental models, which we may subsequently sell to customers are charged to the cost of sales.

For a further discussion of research and development expenses see Item 4.B., “Business Overview—Research and Development” and Item 5 “Results of Operations,” below.

Our research and development operations in the Netherlands and the United States receive research and development grants and credits from various sources.

Critical Accounting Policies

Use of estimates

Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). The preparation of our financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, net sales and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to revenue recognition, warranty, long-lived assets, inventories, convertible bonds and conversion option, provisions, share-based compensation expenses and income tax. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. While we regularly evaluate our estimates and assumptions, actual results may differ from these estimates if these assumptions prove incorrect. To the extent there are material differences between actual results and these estimates, our future results of operations could be materially and adversely affected. We believe that the accounting policies described below require us to make significant judgments and estimates in the preparation of our consolidated financial statements.

Revenue Recognition

We recognize revenue when all four revenue recognition criteria have been met: persuasive evidence of an arrangement exists; delivery has occurred or services have been rendered; seller’s price to buyer is fixed or determinable; and collectibility is reasonably assured. In general, we recognize revenue from sales of equipment upon shipment of equipment, only if testing at the factory has proven that the equipment has met substantially all of the customer’s criteria and specifications. The outcome of the test is signed-off by the customer (“factory acceptance”). Instead of signing-off, the customer may choose to provide a waiver, e.g. with respect to repeat orders.

Our revenue includes revenue from contractual arrangements consisting of multiple deliverables, such as equipment and installation. The revenue from the undelivered element of the arrangement is deferred at fair value until delivery of the element. We recognize revenue from installation of equipment upon completion of installation at the customer’s site. At the time of shipment, we defer that portion of the sales price related to the fair value of installation. The fair value of the installation process is measured based upon the per-hour amounts charged by third parties for similar installation services. Installation is completed when testing at the customer’s site has proven that the equipment has met all of the customer’s criteria and specifications. The completion of installation is signed-off by the customer (“final acceptance”). At December 31, 2009 and December 31, 2010 we have deferred revenues from fair value of installations in the amount of € 2.5 million and € 4.4 million respectively.

Our Front-end sales frequently involve sales of complex equipment, which may include customer-specific criteria, sales to new customers or sales of equipment with new technology. For each sale, the decision whether to recognize revenue is, in addition to shipment and factory acceptance, based on: the contractual agreement with a customer; the experience with a particular customer; the technology and the number of similarly configured equipment previously delivered. Based on these criteria we may decide to defer revenue until completion of installation at the customer’s site and obtaining final acceptance from the customer.

At December 31, 2009 we had € 0.7 million deferred revenue from sales of equipment. At December 31, 2010 we had no deferred revenue from sales of equipment. We provide training and technical support service to customers. Revenue related to such services is recognized when the service is rendered. Revenue from the sale of spare parts and materials is recognized when the goods are shipped.

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Warranty

We provide maintenance on our systems during the warranty period, usually one to two years. Costs of warranty include the cost of labor, material and related overhead necessary to repair a product during the warranty period. We accrue for the estimated cost of the warranty on products shipped in a provision for warranty, upon recognition of the sale of the product. The costs are estimated based on actual historical expenses incurred and on estimated future expenses related to current sales, and are updated periodically. Actual warranty costs are charged against the provision for warranty. The actual warranty costs may differ from estimated warranty costs, as a result of which we adjust our provision for warranty accordingly. Future warranty costs may exceed our estimates, which could result in an increase of our cost of sales.

Long-lived assets

Long-lived assets include goodwill, other intangible assets and property, plant and equipment.

Goodwill is tested for impairment annually on December 31 and whenever events or changes in circumstances indicate that the carrying amount of the goodwill may not be recoverable. Our Front-end impairment test and the determination of the fair value is based on a discounted future cash flow approach that uses our estimates of future revenues, driven by assumed market growth and estimated costs as well as appropriate discount rates. These estimates are consistent with the plans and estimated costs we use to manage the underlying business. Our Back-end impairment test is based on the market value of the listed shares of ASMPT. The material assumptions used by management for the annual impairment test performed per December 31, 2010 were:

• For Front-end external market segment data, historical data and strategic plans to estimate cash flow growth per product line have been used.

• Cash flow projections for the first four years; after these four years perpetuity growth rates are set based on market maturity of the products. For maturing product the perpetuity growth rates used are 1% or less and for enabling technology products the rate used is 3% or less.

• A discount rate of 20.5% ( last year 13.5%) representing the pre-tax weighted average cost of capital. This relative high rate is a consequence of the current situation whereby certain production lines are in the early phase of the product lifecycle, hence reflecting a higher risk.

• For Back-end the market value of the listed shares of ASMPT on the Hong Kong Stock exchange has been used in our analysis.

Management believes that the fair value calculated reflects the amount a market participant would be willing to pay.

Based on this analysis management believes that the fair value of the reporting units substantially exceeded its carrying value and that, therefore, goodwill was not impaired as of December 31, 2010. For the year ended December 31, 2008 we recorded impairment charges of € 1.4 million with respect to goodwill resulting from the acquisition of NanoPhotonics.

The calculation of fair value involves certain management judgments and was based on our best estimates and projections at the time of our review. The value may be different if other assumptions are used. In future periods we may be required to record an impairment loss based on the impairment test performed, which may significantly affect our results of operations at that time. At December 31, 2010, a decrease in estimated cash flows of 10% and an increase of 10% of the discount rate used in calculating the fair value would not result in an impairment of the carrying value of goodwill.

Other intangible assets and property, plant and equipment are reviewed by us for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In performing the review for recoverability, we estimate the future undiscounted cash flows expected to result from the use of the asset and its eventual disposition. In 2008 we recorded an impairment charge of € 7.1 million related to the restructuring of ASM Europe. In 2009 we recorded impairment charges mainly related to certain demo tools which were as a result of the strategic reorientation determined end of life. Our cash flow estimates used include certain management judgments and were based on our best estimates and projections at the time of our review, and may be different if other assumptions are used. In future periods, however, we may be required to record impairment losses, which may significantly affect our results of operations at that time. At December 31, 2010, a decrease in estimated cash flows of 10% would not result in an impairment of the carrying value of long-lived assets.

Inventories

Inventories are valued at the lower of cost (first-in, first out method) or market value. Costs include net prices paid for materials purchased, charges for freight and custom duties, production labor cost and factory overhead. Allowances are made for slow moving, obsolete or unsellable inventory and are reviewed on a quarterly basis.

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We regularly evaluate the value of our inventory of components and raw materials, work in progress and finished goods, based on a combination of factors including the following: forecasted sales, historical usage, product end of life cycle, estimated current and future market values, service inventory requirements and new product introductions, as well as other factors. Purchasing requirements and alternative uses for the inventory are explored within these processes to mitigate inventory exposure. We record write downs for inventory based on the above factors and take into account worldwide quantities and demand into our analysis. In the year ended December 31, 2009 we have charged € 27.2 million to cost of sales as a result of our analysis of the value of inventory. Of this charge € 24.2 million was recognized as a result of the current prolonged contraction in the market and strategic refocusing of certain of our product configurations. At December 31, 2010 our allowance for inventory obsolescence amounted to € 41.3 million, which is 14.0% of our total inventory. If circumstances related to our inventories change, our estimate of the values of inventories could materially change. At December 31, 2010, an increase of our overall estimate for obsolescence and lower market value by 10% of our total inventory balance would result in an additional charge to cost of sales of € 29.6 million.

Convertible bonds and conversion option

As per 1 January 2009, ASMI applies ASC 815 “Determining Whether an Instrument (or Embedded Feature) Is Indexed to an Entity’s Own Stock”. All our convertible bonds due 2010, 2011 and 2014, include a component that creates a financial liability to the Company and a component that grants an option to the holder of the convertible note to convert it into common shares of the Company (“conversion option”). ASC 815 requires separate recognition of these components.

For the conversion options of the convertible bonds due 2010 and 2011 the accounting is different from that for the conversion option of the convertible bonds due 2014. As the convertible bonds due 2010 and 2011 are denominated in USD and the ASM International common shares in which they can be converted to are denominated in Euro, these conversion options are recognized as a liability measured at fair value. The conversion option is measured at fair value through the income statement, and for 2010 this revaluation at fair value resulted in a loss of € 19.0 million (2009: loss € 24.4 million). For the conversion options of the convertible bonds due 2014 the fixed–for-fixed principle is met as both the debt instrument (the bond) and the entity’s equity shares into which they can be converted are denominated in the functional currency (Euro). Based on the before mentioned criteria the conversion option qualifies as permanent equity.

The fair value of the liability component is estimated using the prevailing market interest rate at the date of issue, for similar non-convertible debt. Subsequently, the liability is measured at amortized cost. The interest expense on the liability component is calculated by applying the market interest rate for similar non-convertible debt at the date of issue to the liability component of the instrument. The difference between this amount and the interest paid is added to the carrying amount of the convertible subordinated notes, thus creating a non-cash interest expense. For 2010 this accretion interest was € 6.0 million (2009: € 4.3 million).

Provisions

As a result of the implementation of our major restructuring plan PERFORM!, that started in 2009, significant restructuring expenses incurred. Distinction is made in one-time employee termination expenses, contract termination expenses and other associated expenses. For the accounting on the distinguished elements of restructuring expenses we apply to the policy as mentioned below. The expenses have been charged to “restructuring expenses”.

One-time termination expenses represent the payments provided to employees that have become redundant and are terminated under the terms and conditions of a restructuring plan.

A restructuring plan exists at the date the plan meets all of the following criteria and has been communicated to employees:

• Management commits to the plan.

• The plan identifies the number of employees that become redundant and the expected completion date.

• The plan sets out the terms and conditions of the arrangement in sufficient detail to enable employees to determine the type and amount of benefits they will receive.

• Actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.

• The timing of the recognition and measurement of a liability for one-time termination expenses depends on whether employees will be retained to render service beyond a minimum retention period.

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• Contract termination expenses are related to the termination of an operating lease or another contract. These expenses are distinguished in:

• Expenses related to the termination of the contract before the end of its term. These expenses are recognized when the contract is terminated .The liability is measured at its fair value in accordance with the contract terms.

• Expenses related to contracts that will last for its remaining term without economic benefit to the entity. This is the case when a lease contract for premises is not terminated while the premises are not (completely) in use anymore. The liability is accrued for at the cease-use date, the date the company determined that it would no longer occupy the premises, which is conveyed to it under the contractual operating lease. The liability is measured at its fair value in accordance with the contract terms.

Other costs related to restructuring include costs to consolidate or close facilities and relocate employees. A liability for other expenses related to a restructuring such as transition costs is recognized and measured in the period in which the liability is incurred. The costs incurred are directly related to the restructuring activity. The definition of exit costs excludes expected future operating losses.

Share-based compensation expenses

The cost relating to employee stock options is measured at fair value on the grant date. The fair value was determined using the Black-Scholes option valuation model with the following weighted average assumptions:

	December 31,
	2009			2010
Expected life (years)		5 – 10			5 – 10
Risk free interest rate		3.0	%		2,8	%
Dividend yield		—			—
Expected volatility		52.1	%		45.6	%

When establishing the expected life assumption the Company takes into account the contractual terms of the option.

Income Taxes

We currently have significant deferred tax assets, which resulted primarily from operating losses incurred in prior years as well as other temporary differences. We have established a valuation allowance to reflect the likelihood of the realization of deferred tax assets. Based on available evidence, we regularly evaluate whether it is more likely than not that the deferred tax assets will not be realized. This evaluation includes our judgment on the future profitability and our ability to generate taxable income, changes in market conditions and other factors. At December 31, 2010, we believe that there is insufficient evidence to substantiate recognition of substantially all net deferred tax assets with respect to net operating loss carry forwards, and we have established a valuation allowance in the amount of € 149.6 million. Future changes in facts and circumstances, if any, may result in a change of the valuation allowance to these deferred tax asset balances which may significantly influence our results of operations at that time. If our evaluation of the realization of deferred tax assets would indicate that an additional 10% of the net deferred tax assets as of December 31, 2010 is not realizable, this would result in an additional valuation allowance and an income tax expense of € 1.5 million.

A reconciliation of the beginning balance at January 1, 2010 and the ending balance at December 31, 2010 of the liability for unrecognized tax benefits is as follows:

(euro millions)
Balance January 1, 2010	15.7
Gross increases—tax positions in current year	3.2
Foreign currency translation effect	1.2
Balance December 31, 2010	20.1

Unrecognized tax benefits mainly relate to transfer pricing positions, operational activities in countries where we are not tax registered and tax deductible costs. We estimate that no interest and penalties are related to these unrecognized tax benefits. Unrecognized tax benefits of € 20.1 million would, if recognized, impact the Company’s effective tax rate. We estimate that the liability for unrecognized tax benefits will change with € 20.1 million within the next 12 months, following the expected outcome of investigations by local tax authorities.

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The calculation of our tax positions involves dealing with uncertainties in the application of complex tax laws. Our estimate for the potential outcome of any uncertain tax position is highly judgmental. Settlement of uncertain tax positions in a manner inconsistent with our estimates could have a material impact on the Company’s earnings, financial position and cash flows.

Results of Operations

The following table shows certain Consolidated Statement of Operations data as a percentage of net sales for our Front-end and Back-end segments for the years 2008, 2009 and 2010:

	Year ended December 31,
	Front-end									Back-end									Total
	2008			2009			2010			2008			2009			2010			2008			2009			2010
Net sales		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%
Cost of sales		(68.4	)		(94.6	)		(60.9	)		(60.9	)		(59.8	)		(53.2	)		(63.8	)		(69.3	)		(55.1	)
Gross profit		31.6			5.4			39.1			39.1			40.2			46.8			36.2			30.7			44.9
Selling, general and administrative expenses		(24.1	)		(36.5	)		(17.2	)		(12.2	)		(11.5	)		(8.6	)		(16.9	)		(18.2	)		(10.7	)
Research and development expenses		(14.8	)		(21.5	)		(12.5	)		(6.9	)		(6.6	)		(4.6	)		(10.0	)		(10.6	)		(6.4	)
Amortization of other intangible assets		(0.1	)		(0.2	)		(0.1	)		—			—			—			(0.1	)		(0.1	)		—
Impairment of goodwill		(0.5	)		—			—			—			—			—			(0.2	)		—			—
Restructuring expenses		(2.4	)		(22.3	)		(3.8	)		—			—			—			(1.0	)		(6.0	)		(0.9	)
Earnings (loss) from operations		(10.3	)		(75.0	)		5.4			20.0			22.1			33.6			8.0			(4.3	)		26.9
Net interest income (expense)		(1.6	)		(5.0	)		(5.1	)		0.2			0.1			0.1			(0.6	)		(1.3	)		(1.2	)
Accretion of interest convertible		—			(2.7	)		(2.1	)		—			—			—			—			(0.7	)		(0.5	)
Revaluation conversion option		—			(15.2	)		(6.5	)		—			—			—			—			(4.1	)		(1.6	)
Gain (expense) resulting from early extinguishment of debt		2.7			(1.1	)		(1.2	)		—			—			—			1.1			(0.3	)		(0.3	)
Foreign currency exchange gains (losses)		(0.2	)		(0.4	)		(0.6	)		0.3			(0.1	)		0.2			0.1			(0.2	)		—
Earnings (loss) before income taxes and dilution		(9.4	)		(99.4	)		(10.1	)		20.5			22.1			33.9			8.6			(10.9	)		23.3
Income tax income / (expense)		(0.5	)		4.9			(2.1	)		(2.3	)		(2.7	)		(4.0	)		(1.6	)		(0.6	)		(3.5	)
Earnings (loss) before dilution		(9.9	)		(94.5	)		(12.2	)		18.2			19.4			29.9			7.0			(11.6	)		19.8
Gain on dilution of investment in subsidiary		—			—			—			—			—			—			0.6			—			—
Net earnings (loss)		(9.9	)%		(94.5	)%		(12.2	)%		9.7	%		19.4	%		29.9	%		7.6	%		(11.6	)%		19.8	%
Allocation of net earnings (loss)
Shareholders of the parent																				2.5	%		(18.3	)%		9.0	%
Minority interest																				5.1	%		6.7	%		10.8	%

Year Ended December 31, 2010 Compared to Year Ended December 31, 2009

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

(EUR millions)	2009		2010		% Change
Front-end		160.4		293.4		83	%
Back-end		430.4		929.5		116	%
Total net sales		590.7		1,222.9		107	%

The increase of net sales for the full year of 2010 in our Front-end segment, compared to the same period last year, was driven by higher customer demand in all our equipment segments and in spares and service. In our Back-end segment record quarterly sales were realized in the first quarter, the second quarter and in the third 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, U.S. dollar and U.S. dollar related currencies against the Euro in 2010 as compared to the same period of 2009 impacted total net sales by 5%.

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Gross Profit Margin. The following table shows gross profit and gross profit margin for the Front-end and Back-end segments for the full year 2010 compared to the same period in 2009. In order to improve comparability impairment charges have been disclosed separately in the table below.:

(EUR millions)	Gross profit					Gross profit margin						Increase or (decrease) percentage points
	2009			2010		2009			2010
Gross profit before impairment of inventory charge		32.9			114.6		20.5	%		39.1	%		18.6pt
Impairment of inventory charge		(24.2	)		—		(15.1	)%		—			15.1pt
Gross profit Front-end		8.7			114.6		5.4	%		39.1	%		33.7pt
Gross profit Back-end		172.8			435.0		40.1	%		46.8	%		6.6pt
Total gross profit		181.5			549.6		34.8	%		44.9	%		10.1pt

The gross profit margin of both our Front-end segment and our Back-end segment strongly improved in 2010 compared to 2009, driven by significantly higher activity levels. The Front-end margin further improved due to the execution of our PERFORM! program which, among other things, resulted in a lower manufacturing overhead.

In 2009, as a result of the current prolonged contraction in the market and strategic focus of certain of our product configurations a write down of inventories was recorded of € 24.2 million.

The strengthening of the Yen, U.S. dollar and U.S. dollar related currencies against the Euro in 2010 as compared to the same period of 2009 negatively impacted gross profit by 6%.

Selling, General and Administrative Expenses. The following table shows selling, general and administrative expenses (including amortization of other intangible assets) for our Front-end and Back-end segments 2010 compared to 2009:

(EUR millions)	2009			2010			% Change
Front-end		58.9			51.0			(13	)%
Back-end		49.3			79.9			62	%
Total selling, general and administrative expenses		108.2			131.0			21	%
Total selling, general and administrative expenses as a percentage of net sales		18	%		11	%

For 2010, selling, general and administrative expenses as a percentage of net sales of our Front-end segment, were reduced to 17% compared with 37% for 2009, reflecting our focus to reduce our fixed cost base as part of our restructuring program PERFORM!.

The selling, general and administrative expenses in the Back-end segment as a percentage of net sales decreased from 12% in 2009 to 9% in 2010.

The strengthening of the Yen, U.S. dollar and U.S. dollar related currencies against the Euro in 2010 as compared to the same period of 2009 increased selling, general and administrative expenses by 5%.

Research and Development Expenses. The following table shows research and development expenses for our Front-end and Back-end segments for the full year 2010 compared to 2009:

(EUR millions)	2009			2010			% Change
Front-end		34.4			36.5			6	%
Back-end		28.4			42.3			49	%
Total research and development expenses		62.8			78.8			25	%
Total research and development expenses as a percentage of net sales		11	%		6	%

The decrease in research and development expense as a percentage of sales, in both our Front-end and Back-end segment, is the result of a further prioritisation of research and development projects in

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combination with a substantial sales increase. In the course of 2010 we saw an increase in the absolute amount of development costs driven by those higher activity levels and related customer specific development activities.

The strengthening of the Yen, U.S. dollar and U.S. dollar related currencies against the Euro in 2010 as compared to the same period of 2009 increased research and development expenses by 6%.

Restructuring Expenses. In 2009 ASMI started the implementation of a major restructuring in the Front-end segment (PERFORM!) as announced on January 9, 2009 and on July 20, 2009. The main components of the Company’s accelerated execution plans are:

• The consolidation of our global Front-end manufacturing operations from Europe, the United States and Japan, into our Front-end manufacturing operations in Singapore by the end of 2010. This will be achieved by completing the previously announced transfer from Almere, the Netherlands, which was finalized during 2009; the phasing out the manufacturing operation in Phoenix, Arizona, in the first half of 2010; and by transferring manufacturing from Nagaoka, Japan, no later than the fourth quarter of 2010.

• The reduction of selling, general and administration expenses by making fundamental changes in our global support infrastructure. This includes a significant simplification and streamlining of our warehousing operations and the further strengthening of the global sales & service organization which was created last year.

• The leveraging of research and development and our product portfolio by reprioritization of strategic programs in order to maximize their potential.

The following table summarizes the aggregated restructuring expenses by type:

	Year ended December 31,
	2008		2009		2010
Employee related expenses		—		19.437		4.534
Contract termination related expenses		—		2.799		779
Impairment charges		7.068		4.623		—
Transition expenses		—		4.366		3.806
Expenses buy out RTP		—		3.940		—
Other expenses		—		522		2.082
Total restructuring expenses		7.068		35.687		11.201

Related to these execution plans, an amount of € 11.2 million in restructuring expenses was recorded for of 2010. These expenses were mainly costs for severance packages, retention costs, provisions for vacancy and other costs related to the transition of activities to Singapore.

Related to these execution plans, an amount of € 35.7 million in restructuring expenses was recorded in 2009. These charges include:

• Employee related expenses of € 19.4 million. Included are unconditional one-time termination benefits of € 15.8 million, conditional one-time termination benefits subject to the final termination date of € 1.7 million and other employee related expenses of € 1.9 million.

• Contract termination related expenses of € 2.8 million. These expenses mainly relate to operational lease contracts and include both the valuating of the onerous contracts at fair value, the decommissioning expenses and impairments of leasehold improvements.

• Impairment charges of € 4.6 million mainly related to machinery and equipment. We impaired certain demo tools which were as a result of the strategic reorientation determined end of life. The impairment charges were determined based on the difference between the asset’s estimated fair value and their carrying amount.

• Expenses of € 4.4 million resulting from the transition of our global Front-end manufacturing operations from Europe, the United States and Japan, into our Front-end manufacturing operations in Singapore.

• Expenses of € 3.9 million related to the management buy-out of our RTP.

• Other expenses of € 0.6 million.

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Result from Operations. The following table shows earnings (loss) from operations for our Front-end and Back-end segments for the full year 2010 compared to the same period in 2009. In order to improve comparability, impairment and restructuring charges have been disclosed separately in the table below:

(EUR millions)	2009			2010			Change
Front-end:
Before impairments and restructuring charges		(60.4	)		27.1			87.5
Impairments and restructuring charges		(59.9	)		(11.2	)		48.7
After impairments and restructuring charges		(120.3	)		15.9			136.1
Back-end		95.1			312.8			217.6
Total result from operations		(25.2	)		328.6			353.8

The strengthening of the Yen, U.S. dollar and U.S. dollar related currencies against the Euro in 2010 as compared to the same period of 2009 impacted operating result by 6%.

Net Interest Expense. Net interest expense amounted to € 14.5 million in 2010 compared to the net interest expense of € 7.5 million in 2009. This increase in net interest expenses mainly resulted from a higher average debt , higher interest rates and a strengthening of the USD in 2010 against the Euro.

Accretion interest expense convertible notes. Both our convertible bonds due 2010, 2011 and 2014, include a component that creates a financial liability to the Company and a component that grants an option to the holder of the convertible note to convert it into common shares of the Company (“conversion option”). ASC 815 requires separate recognition of these components.

The fair value of the liability component is estimated using the prevailing market interest rate at the date of issue, for similar non-convertible debt. Subsequently, the liability is measured at amortized cost. The interest expense on the liability component is calculated by applying the market interest rate for similar non-convertible debt at the date of issue to the liability component of the instrument. The difference between this amount and the interest paid is added to the carrying amount of the convertible subordinated notes, thus creating a non-cash interest expense. For 2010 this accretion interest was € 6.0 million (2009; € 4.3 million).

Revaluation conversion option. All convertible bonds include a component that creates a financial liability to the Company and a component that grants an option to the holder of the convertible note to convert it into common shares of the Company (“conversion option”). ASC 815 requires separate recognition of these components.

For the conversion options of the convertible bonds due 2010 and 2011 the accounting is different from that for the conversion option of the convertible bonds due 2014. As the convertible bonds due 2010 and 2011 are denominated in USD and the ASM International common shares in which they can be converted to are denominated in Euro, these conversion options are recognized as a liability measured at fair value. The conversion option is measured at fair value through the income statement, for 2010 this revaluation at fair value resulted in a loss of € 19.0 million (2009: 24.4 million).

For the conversion options of the convertible bonds due 2014 the fixed–for-fixed principle is met as both the debt instrument (the bond) and the entity’s equity shares in which they can be converted to are denominated in the functional currency (Euro). Based on the before mentioned criteria the conversion option qualifies as permanent equity.

Gain (expense) resulting from early extinguishment of debt. In 2010 US$ 56.5 million convertible subordinated notes have been repurchased for a market value of US$ 74.6 million. The loss from the early extinguishment of the notes of € 3,609, which includes the write-off of unamortized issuance costs and the amortization of unamortized interest expenses, has been recorded as a loss from early extinguishment of debt in the Consolidated Statement of Operations for the year 2010.

In 2009 US$ 4.0 million 5.25% convertible subordinated notes due 2010 and US$ 26.3 million 4.25% convertible subordinated notes due 2011 were repurchased for a market value of US$ 38.9 million. The loss from the early extinguishment of the notes of € 1.8 million, which includes the write-off of unamortized issuance costs, has been recorded as a loss from early extinguishment of debt in the Consolidated Statement of Operations for the year 2009.

Income Tax Expense. Income tax expense increased from € 3.8 million in 2009 to € 42.9 million in 2010, resulting from the increase of result before tax in 2010.

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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 full year 2010 compared to the same period in 2009. In order to improve comparability, impairment and restructuring charges, results on early extinguishment of debt and the fair value changes of the conversion option have been disclosed separately in the table below:

(EUR millions)	2009			2010			Change
Front-end:
Before impairments, restructuring charges, result on early extinguishment of debt and fair value change conversion option		(65.5	)		(1.8	)		63.7
Impairments and restructuring charges		(59.9	)		(11.2	)		48.7
Loss from early extinguishment of debt		(1.8	)		(3.6	)		(1.9	)
Fair value change conversion options		(24.4	)		(19.0	)		5.3
Incomparable items		(86.0	)		(33.8	)		52.2
After impairments, restructuring charges result on early extinguishment of debt and fair value change conversion options		(151.5	)		(35.7	)		115.8
Back-end		44.0			146.3			102.3
Total net earnings (loss) allocated to the shareholders of the parent		(107.5	)		110.6			218.1

Net earnings for the Back-end segment reflect our 52.36% ownership of ASM Pacific Technology (2009; 52.59%).

Year Ended December 31, 2009 Compared to Year Ended December 31, 2008

Net Sales. The following table shows net sales of our Front-end and Back-end segments and the percentage change for the full years 2009 and 2008:

(EUR millions)	2008		2009		% Change
Front-end		296.8		160.4		(46	)%
Back-end		450.6		430.4		(4	)%
Total net sales		747.4		590.7		(21	)%

In 2009 net sales of wafer processing equipment (Front-end segment) represented 27% of total net sales and sales of assembly and packaging equipment and materials (Back-end segment) represented 73% of total net sales.

The market conditions in the semiconductor industry impacted the sales levels for the full year 2009 compared to 2008. Lower sales levels of 46% in our Front-end segment and 4% in our Back-end segment were recorded.

In our Front-end segment the decrease continued in the first two quarters, but recovered from the third quarter onwards. This pattern is noticed in all product lines.

In the Back-end segment 2009 started with weak sales levels which rebounded after the first quarter of 2009 as market conditions improved significantly in the assembly and packaging equipment industry due to the stimulus packages implemented by especially the Chinese government and the right product mix. The improvement in the second half of the year is more broad-based from a geographical perspective.

The strengthening of the Yen, U.S. dollar and U.S. dollar related currencies against the Euro in 2009 as compared to the same period of 2008 increased total net sales by 5%.

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Gross Profit Margin. The following table shows the gross profit margin of our Front-end and Back-end segments for the full years 2009 and 2008. In order to improve comparability impairment charges have been disclosed separately in the table below.

(EUR millions)	Gross profit						Gross profit margin						Increase or (decrease) percentage points
	2008			2009			2008			2009
Gross profit before impairment of inventory charge		97.8			32.9			33.0	%		20.5	%		(12.5)pt
Impairment of inventory charge		(3.9	)		(24.2	)		(1.4	)%		(15.1	)%		(13.7)pt
Gross profit Front-end		93.9			8.7			31.6	%		5.4	%		(26.2)pt
Gross profit Back-end		176.4			172.8			39.1	%		40.1	%		1.0pt
Total gross profit		270.3			181.5			36.7	%		34.8	%		(1.9)pt

The decrease in the gross profit margin before the impairment of inventories of our Front-end segment is the result of the low sales level, the mix of products sold and the absorption of our manufacturing overhead. As a result of the current prolonged contraction in the market and strategic focus of certain of our product configurations a write down of inventories was recorded of € 24.2 million. In 2008 an impairment charge of € 3.9 million on RTP inventory was charged to the cost of sales. In our Back-end segment gross margins decreased in the first quarter, but due to the industry dynamics rebounded in the remaining three quarters of 2009.

Selling, General and Administrative Expenses. The following table shows selling, general and administrative expenses for our Front-end and Back-end segments for 2009 and 2008:

(EUR millions)	2008		2009		% Change
Front-end		71.6		58.5		(18	)%
Back-end		55.0		49.3		(10	)%
Total selling, general and administrative expenses		126.6		107.8		(15	)%

As a percentage of net sales, selling, general and administrative expenses were 18% for 2009 and 17% in 2008.

Selling, general and administrative expenses of our Front-end segment decreased for the full year 2009 as a result of our focus to reduce our expenses to address market circumstances, including the reduction of headcount of the Front-end segment.

The decrease in the Back-end segment compared with the same period in 2008 is the result of the implementation of cost reduction programs.

Headcount of the Front-end segment was reduced by 24% in 2009 while the headcount of the Back-end segment increased 7% in 2009.

Research and Development Expenses. The following table shows research and development expenses for our Front-end and Back-end segments for 2009 and 2008:

(EUR millions)	2008		2009		% Change
Front-end		43.8		34.4		(21	)%
Back-end		31.2		28.4		(9	)%
Total research and development expenses		75.0		62.8		(16	)%

As a percentage of net sales, research and development expenses were 11% in 2009 and 10% in 2008.

The decrease in the Front-end segment is the result of the prioritization of research and development projects. The reduction in the Back-end segment is result of cost reduction efforts.

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Restructuring Expenses. In 2009 ASMI started the implementation of a major restructuring in the Front-end segment as announced on January 9, 2009 and on July 20, 2009. The main components of the Company’s accelerated execution plans are:

• The consolidation of our global Front-end manufacturing operations from Europe, the United States and Japan, into our Front-end manufacturing operations in Singapore by the end of 2010. This was to be achieved by completing the previously announced transfer from Almere, the Netherlands, which was finalized during 2009; the phasing out the manufacturing operation in Phoenix, Arizona, in the first half of 2010; and by transferring manufacturing from Nagaoka, Japan, no later than the fourth quarter of 2010.

• The reduction of selling, general and administration expenses by making fundamental changes in our global support infrastructure. This includes a significant simplification and streamlining of our warehousing operations and the further strengthening of the global sales & service organization which was created last year.

• The leveraging of research and development and our product portfolio by reprioritization of strategic programs in order to maximize their potential.

Related to these execution plans, an amount of € 35.7 million restructuring expenses was recorded for the full year of 2009. These charges include:

• Employee related expenses of € 19.4 million. Included are unconditional one-time termination benefits of € 15.8 million, conditional one-time termination benefits subject to the final termination date of € 1.7 million and other employee related expenses of € 1.9 million.

• Contract termination related expenses of € 2.8 million. These expenses mainly relate to operational lease contracts and include both the valuation of the onerous contracts at fair value, the decommissioning expenses and impairments of leasehold improvements.

• Impairment charges of € 4.6 million mainly related to machinery and equipment. We recorded an impairment charge for certain demonstration tools which were determined to be at the end of life as a result of the strategic reorientation. The impairment charges were determined based on the difference between the asset’s estimated fair value and its carrying amount.

• Expenses of € 4.4 million resulting from the transition of our global Front-end manufacturing operations from Europe, the United States and Japan, into our Front-end manufacturing operations in Singapore.

• Expenses of € 3.9 million related to the management buy-out of our RTP.

• Other expenses of € 0.6 million.

Net Interest Expense. Net interest expense amounted to € 7.5 million in 2009 compared to the net interest expense of € 3.7 million in 2008. This increase in net interest expenses mainly results from decreased interest income.

Accretion interest expense convertible notes. As per 1 January 2009, ASMI applies ASC 815 “Determining Whether an Instrument (or Embedded Feature) Is Indexed to an Entity’s Own Stock”.

Our convertible bonds due 2010, 2011 and 2014, include a component that creates a financial liability to the Company and a component that grants an option to the holder of the convertible note to convert it into common shares of the Company (“conversion option”). ASC 815 requires separate recognition of these components.

The fair value of the liability component is estimated using the prevailing market interest rate at the date of issue, for similar, but non-convertible debt. Subsequently, the liability is measured at amortized cost. The interest expense on the liability component is calculated by applying the market interest rate for similar non-convertible debt at the date of issue to the liability component of the instrument. The difference between this amount and the interest paid is added to the carrying amount of the convertible subordinated notes, thus creating a non-cash interest expense. For 2009 this accretion interest was € 4.3 million.

Revaluation conversion option. As per 1 January 2009, ASMI applies ASC 815 “Determining Whether an Instrument (or Embedded Feature) Is Indexed to an Entity’s Own Stock”.

Our convertible bonds due 2010, 2011 and 2014, include a component that creates a financial liability to the Company and a component that grants an option to the holder of the convertible note to convert it into common shares of the Company (“conversion option”). ASC 815 requires separate recognition of these components.

For the conversion options of the convertible bonds due 2010 and 2011 the accounting is different from that for the conversion option of the convertible bonds due 2014. As the convertible bonds due 2010 and

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2011 are denominated in USD and the ASM International common shares in which they can be converted to are denominated in Euro, these conversion options are recognized as a liability measured at fair value. The conversion option is measured at fair value through the income statement. For 2009 this revaluation at fair value resulted in a loss of € 24.4 million. For the conversion options of the convertible bonds due 2014 the fixed–for-fixed principle is met as both the debt instrument (the bond) and the entity’s equity shares into which they can be converted are denominated in the functional currency (Euro). Based on the before mentioned criteria the conversion option qualifies as permanent equity.

Gain (expense) resulting from early extinguishment of debt. In 2009 US$ 4.0 million 5.25% convertible subordinated notes due 2010 and US$ 26.3 million 4.25% convertible subordinated notes due 2011 were repurchased for a market value of US$ 38.9 million. The loss from the early extinguishment of the notes of € 1.8 million, which includes the difference between the nominal value and the higher market value and the write-off of unamortized issuance costs, has been recorded as a loss from early extinguishment of debt in the Consolidated Statement of Operations for the year 2009.

In 2008, we repurchased US$ 48.3 million in convertible debt at a lower market value than the nominal value of the outstanding convertible debt. The difference between the market value and the nominal value and the write off of unamortized issuance costs amounted to a gain of € 8.0 million.

Income Tax Expense. Income tax expense declined from € 12.1 million in 2008 to € 3.8 million in 2009, principally due to the reduction in operating income in 2009.

Earnings (Loss) from Operations. The following table shows earnings (loss) from operations for our Front-end and Back-end segments for 2009 compared to 2008. In order to improve comparability, impairment and restructuring charges have been disclosed separately in the table below.

(EUR millions)	2008			2009			Change
Front-end:
Before impairments and restructuring charges		(19.5	)		(60.4	)		(40.9	)
Impairments and restructuring charges		(11.0	)		(59.9	)		(48.9	)
After impairments and restructuring charges		(30.5	)		(120.3	)		(89.8	)
Back-end		90.2			95.1			4.9
Total earnings (loss) from operations		59.7			(25.2	)		(84.9	)

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 2009 compared to 2008. In order to improve comparability, impairment and restructuring charges, results on early extinguishment of debt, accretion of interest on the convertible bonds and the fair value changes of the conversion option have been disclosed separately in the table below.

(EUR millions)	2008			2009			Change
Front-end:
Before impairments, restructuring, result early extinguishment, accretion interest and fair value change conversion option		(26.2	)		(61.1	)		(34.9	)
Impairments and restructuring		(11.0	)		(59.9	)		(48.9	)
Gain / (loss) on early extinguishment of debt		8.0			(1.8	)		(9.8	)
Non cash accretion interest convertible bonds		—			(4.3	)		(4.3	)
Fair value change conversion option		—			(24.4	)		(24.4	)
Incomparable items		(3.0	)		(90.4	)		(87.4	)
After impairments, restructuring and fair value change conversion option		(29.2	)		(151.5	)		(122.3	)
Back-end		43.5			44.0			(0.4	)
Gain on dilution of investment in ASMPT (Back-end)		4.1			—			(4.1	)
Total net earnings (loss)1)		18.4			(107.5	)		(126.9	)

1) allocated to the shareholders of the parent

Net earnings for the Back-end segment reflect our 52.59% ownership of ASM Pacific Technology (2008; 52.87%).

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Backlog

Our backlog includes orders for which purchase orders or letters of intent have been accepted, typically for up to one year. Historically, orders have been subject to cancellation or rescheduling by customers. In addition, orders have been subject to price negotiations and changes in specifications as a result of changes in customers’ requirements. Due to possible customer changes in delivery schedules and requirements and to cancellation of orders, our backlog at any particular date is not necessarily indicative of actual sales for any succeeding period.

The following table shows the level of new orders during 2009 and 2010, and the backlog and book-to-bill ratios at December 31, 2009 and 2010:

(EUR millions, except book-to-bill ratio)	Full year
	2009		2010		% Change
Front-end:
New orders		158.2		404.8		155	%
Backlog at December 31		50.3		162.9		224	%
Book-to-bill ratio (new orders divided by net sales)		1.0		1.4
Back-end:
New orders		543.9		1,113.3		105	%
Backlog at December 31		146.4		447.8		206	%
Book-to-bill ratio (new orders divided by net sales)		1.3		1.2
Total
New orders		702.1		1,518.1		116	%
Backlog at December 31		196.7		499.8		154	%
Book-to-bill ratio (new orders divided by net sales)		1.2		1.2

Liquidity and Capital Resources

Our liquidity is affected by many factors, some of which are related to our ongoing operations and others of which are related to the semiconductor and semiconductor equipment industries and to the economies of the countries in which we operate. Although our cash requirements fluctuate based on the timing and extent of these factors, we believe that cash generated by operations, together with the liquidity provided by our existing cash resources and our financing arrangements, will be sufficient to fund working capital, capital expenditures and other ongoing business requirements for at least the next twelve months.

Net cash provided by operations in 2010 was € 259.9 million as compared to € 62.7 million for 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 in 2010 was € 100.6 million compared to € 15.5 million for 2009. The increase results mainly from increased capital expenditures in our Back-end segment.

Net cash used in financing activities in 2010 was EUR 123.0 million compared to proceeds of EUR 90.9 million for the same period in 2009. The increase mainly results from the increased payment of dividend to minority shareholders and the repurchase of convertible bonds during the year 2010. In November 2009 we received the net proceeds of the issued convertible bonds (EUR 144.5 million) and we repurchased a part of the outstanding convertibles (EUR 26.8 million)

In January 2010, we increased the standby revolving credit facility from € 65 million to € 90 million. The interest rate for the facility is based on EURIBOR.

In May 2010 the remaining outstanding US$ 16.9 million of our 5.25% Convertible bonds due 2010 were converted into common shares.

In January, July and December 2010 respectively US$ 39.4 million, US$ 7.2 million and US$ 9.9 million of our 4.25% Convertible bonds due 2010 were repurchased.

On January 3, 2011 we announced the redemption for all of the outstanding principal balance of our 4.25% Convertible Subordinated Notes due 2011, which resulted in the conversion of all remaining notes prior to the redemption date scheduled for February 15, 2011.

At December 31, 2010, the Company’s principal sources of liquidity consisted of EUR 340 million in cash and cash equivalents and EUR 119 million in undrawn bank lines. Approximately EUR 198 million of the cash and cash equivalents and EUR 22 million of the undrawn bank lines are restricted to use in the

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Company’s Back-end operations. EUR 16 million of the cash and cash equivalents and EUR 6 million in undrawn bank lines are restricted to use in the Company’s Front-end operations in Japan. The use of EUR 22 million of cash and cash equivalents is restricted in use for buy-back of outstanding convertible bonds due 2011.

For the most part, our cash and cash equivalents are not guaranteed by any governmental agency. We place our cash and cash equivalents with high quality financial institutions to limit our credit risk exposure.

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 170 million December 31, 2009 to EUR 293 million at December 31, 2010. The number of outstanding days of working capital, measured based on quarterly sales, decreased from 77 days at December 31, 2009 to 76 days at December 31, 2010. For the same period, our Front-end segment increased from 79 days to 93 days and our Back-end segment decreased from 77 days to 70 days.

The net debt of ASMI, excluding Back-end, at December 31, 2010 was € 73.3 million (2009; € 83.8 million). This net debt is the balance of € 142.4 million cash and € 215.7 million debt. The debt of € 215.7 million consists of € 187.1 million convertible debt and € 28.6 million other debt. Furthermore, ASMI, excluding Back-end, has useable undrawn credit lines of € 97 million.

See notes 3, 12, 15, 16 and 21 to our consolidated financial statements for discussion of our funding, treasury policies and our long-term debt.

We are obligated to fund defined benefit pension plans for our employees in Japan. We expect that the amount of this funding in 2010 will be approximately € 651,000. Our employees in the Netherlands participate in a multi-employer plan. The plan monitors the risks of the entire investment portfolio, not by individual company or employee, and is subject to regulation by Dutch governmental authorities. By Dutch law, a multi-employer union plan must be monitored against specific criteria, including the coverage ratio of its assets to its obligations. This ratio includes a minimum coverage ratio of 105%. At December 31, 2010 the coverage ratio of the multi-employer plan was 96 % (December 31, 2009: 99%) This decrease is mainly the result of the implementation of up dated mortality tables. Consequently, the Board of the multi-employer plan decided that existing pension obligations will not be indexed for the year 2011. For a discussion of our pension obligations, see Note 18 of the Notes to our Consolidated Financial Statements included elsewhere in this report.

Our Back-end segment, which is conducted through ASM Pacific Technology, our 52.36%-owned subsidiary, is entirely self-financed and at December 31, 2010 had no long-term debt. The cash resources and borrowing capacity of ASM Pacific Technology are not available to our Front-end segment due to restrictions imposed by the Hong Kong Stock Exchange, on which the ASM Pacific Technology common shares are listed.

We historically relied on dividends from ASM Pacific Technology for a portion of our cash flow for use in our Front-end operations. Cash dividends received from ASM Pacific Technology during 2008, 2009 and 2010 were € 49.1 million, € 21.4 million and € 65.6 million, respectively. In November 2006, we announced our commitment that for at least the next three years we would not use these cash dividends to support our Front-end business, but instead would use such dividends to retire outstanding convertible debt, repurchase our common shares, pay dividends on our common shares or, in the event of dilution resulting from the exercise of employee stock options in ASM Pacific Technology, purchase shares of ASM Pacific Technology to maintain our percentage ownership at its current level.

At our Annual General Meeting of Shareholders in May 2010 we decided to extend this policy for at least the years 2010 and 2011.

The following table shows the dividends received from ASM Pacific Technology and the use of those dividends within the Front-end business:

(EUR millions)	Dividends received from ASM Pacific Technology		Repurchased common shares of ASM International			Repurchased Convertible bonds			Dividend paid to shareholders of ASM International			Balance of dividends received and the use of those dividends
2007		49.1		—			(32.9	)		(5.4	)		10.8
2008		49.1		(36.5	)		(27.1	)		—			(14.5	)
2009		21.4		—			(27.0	)		—			(5.6	)
2010		65.6		—			(55.8	)		—			9.8
Total		185.2		(36.5	)		(142.8	)		(5.4	)		0.5

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

The market value of our investment in ASM Pacific Technology at the end of 2010 was approximately € 1,962 million. At the end of 2009 this was approximately € 1,371 million.

Outlook

We have developed forecasts and projections of cash flows and liquidity needs for the upcoming year taking into account the current market conditions, reasonably possible changes in trading performance based on such conditions, and our ability to modify our cost structure as a result of changing economic conditions and sales levels. We have also considered in the forecasts the total cash balances amounting to € 340.3 million as of December 31, 2010, available borrowings, the ability to renew debt arrangements and to access additional indebtedness and whether or not we will maintain compliance with our financial covenants. Based on this, we believe that our cash on hand at the end of 2010 is adequate to fund our operations, our investments in capital expenditures and to fulfill our existing contractual obligations for the next twelve months.

Contractual Obligations, Contingent Liabilities and Commitments

We have contractual obligations, some of which are required to be recorded as liabilities in our consolidated financial statements, including long- and short-term debt. Other contractual arrangements, such as operating lease commitments and purchase obligations, are not generally required to be recognized as liabilities on our consolidated balance sheet, but are required to be disclosed.

The following table summarizes our contractual obligations as of December 31, 2010 aggregated by type of contractual obligation:

Contractual obligations	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
Notes payable to banks 1		8,532		8,532		—		—		—
Long-term debt 1, 2		20,684		16,292		4,392		—		—
Convertible subordinated debt 1		221,149		43,524		19,500		158,125		—
Operating leases		30,167		10,061		13,023		4,693		2,390
Purchase obligations:
Purchase commitments to suppliers		58,006		57,726		280		—		—
Capital expenditure commitments		22,359		22,359		—		—		—
Unrecognized tax benefits (FIN 48)		20,057		20,057		—		—		—
Total contractual obligations		380,954		178,551		37,195		162,818		2,390

(1) Including interest expense based on the percentages at the reporting date.

(2) Capital lease obligations of € 425 are included in long-term debt.

For a further discussion of our contractual obligations see Notes 12, 15, 16, 19, 21 and 24 to our Consolidated Financial Statements, which are incorporated herein by reference.

We outsource a substantial portion of the manufacturing of our Front-end operations to certain suppliers. As our products are technologically complex, the lead times for purchases from our suppliers can vary and can be as long as nine months. Generally contractual commitments are made for multiple modules or systems in order to reduce our purchase prices per module or system. For the majority of our purchase commitments, we have flexible delivery schedules depending on the market conditions, which allow us, to a certain extent, to delay delivery beyond originally planned delivery schedules.

New Accounting Pronouncements

For information regarding new accounting pronouncements, see Note 1 to our Consolidated Financial Statements, which is incorporated herein by reference.

Safe Harbor

Please refer to “Forward Looking and Safe Harbor Statement” on page 4 which is incorporated herein.

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Item 6. Directors, Senior Management and Employees

A. Directors and senior management.

The members of our Supervisory Board and Management Board and our other senior manager are as follows:

Name	Position	Year of Birth		Term Expires
Gert-Jan Kramer 2	Chairman of the Supervisory Board		1942		2013
Johan M.R. Danneels 2	Member of the Supervisory Board		1949		2012
Heinrich W. Kreutzer 1	Member of the Supervisory Board		1949		2014
Jan C. Lobbezoo 1	Member of the Supervisory Board		1946		2013
Martin C.J. van Pernis 2	Member of the Supervisory Board		1945		2014
Ulrich H.R. Schumacher 1	Member of the Supervisory Board		1958		2012
Charles D. (Chuck) del Prado	Chairman of the Management Board, President and Chief Executive Officer		1961		2014
Peter A.M. van Bommel	Member of the Management Board and Chief Financial Officer		1957		2014
W.K. Lee	Chief Executive Officer of ASM Pacific Technology Ltd.		1954		—

(1) Member of Audit Committee

(2) Member of Nomination, Selection and Remuneration Committee

Gert-Jan Kramer was elected to the Supervisory Board in May 2009 and is currently Chairman of the Supervisory Board. Mr. Kramer served as President and Chief Executive Officer of Fugro N.V. for more than 20 years until his retirement in 2005. Mr. Kramer currently serves on the supervisory boards of Scheuten Solar (Chairman), Damen Shipyards Group (Vice-Chairman), Trajectum B.V., (Mammoet), Fugro N.V., Bronwaterleiding Doorn and Energie Beheer Nederland B.V., and IRO (Chairman). He is also Chairman of the Supervisory Board of Delft Technical University. Furthermore, Mr. Kramer serves on advisory boards of many cultural organisations such as the Royal Concertgebouw, several museums (Nieuwe Kerk/Hermitage, Frans Hals Museum, Museum Beelden aan Zee) and the Pieterskerk in Leiden.

Johan M.R. Danneels was elected a member of the Supervisory Board in May 2000. Currently Mr. Danneels serves as Chief Executive Officer at Essensium. In January 2005 Mr. Danneels founded Essensium N.V., a spin-off from the research institute IMEC of which he was chairman since 2000. Mr. Danneels served recently as Groups Vice President of STMicroelectronics. Prior to that, he was Corporate Executive Vice President of Alcatel NV and Chief Executive Officer of Alcatel Microelectronics. He spent 25 years in Alcatel in different management functions of all major product lines. Mr. Danneels holds a Ph.D. degree in engineering from the KULeuven, Belgium and a MBA degree from Boston University.

Heinrich W. Kreutzer was elected a member of the Supervisory Board in November 2006. Mr. Kreutzer is currently chairman of the Board of Directors of Micronas Semiconductor AG in Zurich, Switzerland, chairman of the Supervisory Board of Micronas Semiconductor GmbH in Freiburg, Germany and chairman of the Supervisory Board of BKtel communications GmbH, Germany. He worked at several companies, including General Telephone & Electronics in Waltham, USA, and Alcatel in Stuttgart, Germany. From 2004 to April 2006, he was Managing Director of Kabel Deutschland GmbH in Munich, Germany. From 1999 to 2003, Mr. Kreutzer was a member of the Management Board, and was the Chief Operating Officer and Chief Technology Officer of Alcatel SEL AG. Mr. Kreutzer is ‘Diplom-Ingenieur’ and ‘Diplom-Ökonom’. He studied at the Technical University of Berlin and the University of Hagen.

Jan C. Lobbezoo was elected a member of the Supervisory Board in May 2009. Mr. Lobbezoo served as Executive Vice-President and Chief Financial Officer of Royal Philips Electronics semiconductor division from 1994 until 2005. He was a member of the board of Taiwan Semiconductor Manufacturing Company (TSMC) for 12 years until 2007, and remains its advisor, specifically in the areas of US corporate governance, international reporting and financial review. He is on the board of FEI, a US-based nano-technology equipment company and on the supervisory boards of TMC Group N.V. (Chairman), Smartrac N.V. (Chairman of the Audit Committee), Mapper Lithography (Chairman), Mutracx B.V. (Chairman), ALSI, and Point One Innovation Fund. Mr. Lobbezoo holds a master degree in Business economics from the Erasmus University Rotterdam, the Netherlands and the accountancy degree “Register Accountant”.

Martin C.J. van Pernis was elected a member of the Supervisory Board in May 2010. Mr van Pernis retired from the Siemens Group in the end of 2009. In his last position as chairman of the management board of Siemens Nederland N.V. Mr van Pernis had the responsibility of oversight of all Siemens’ activities in the Netherlands. Mr van Pernis joined Siemens in 1971 and his working experience has been mainly in

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senior management positions. Mr van Pernis is chairman of the Supervisory Board of Dutch Space B.V., a subsidiary of EADS. He is also member of the Supervisory Boards of Aalberts Industries N.V., Feyenoord Rotterdam N.V. and Batenburg Beheer N.V.

Ulrich H.R. Schumacher was elected a member of the Supervisory Board in May 2008. Dr. Schumacher was the CEO & President and member of the Board of Grace Semiconductor Manufacturing Corporation in Shanghai from September 2007 till September 2010. From 2004 until September 2007, Dr. Schumacher was a partner of Francisco Partners, a private equity investment company based in the U.S. From 1986 through 1999, Dr. Schumacher served in various engineering and management roles at Siemens AG and was CEO and President of Siemens Semiconductor Group from 1996 until it was spun off in 1999 by Siemens as Infineon Technologies AG. He served as President and CEO of Infineon Technologies AG until 2004. Mr. Schumacher studied Electrical Engineering and Business Administration at the University of Aachen, Germany, and was awarded a Doctorate of Engineering.

Charles D. (Chuck) del Prado became a member of the Management Board in May 2006 and the President and Chief Executive Officer on March 1, 2008. From January 1, 2008 until February 29, 2008, he was the Executive Vice President Front-end Operations. He was President and General Manager of ASM America from February 2003 until August 2007. In March 2001, he was appointed Director Marketing, Sales & Service of ASM Europe. From February 1996 to 2001, he held various management positions at ASML in manufacturing and sales in Taiwan and in the Netherlands. Mr. del Prado worked at IBM Nederland N.V. from 1989 to 1996 in several marketing and sales positions. Mr. del Prado received a Master of Science degree in Industrial Engineering and Technology Management from the University of Twente, the Netherlands.

Peter A.M. van Bommel became a member of the Management Board per July 1, 2010 and Chief Financial Officer on September 1, 2010. Mr. van Bommel has more than twenty years of experience in the electronics and semiconductor industry. He spent most of his career at Philips, which he joined in 1979. From the mid-1990s until 2005 Mr. van Bommel acted as CFO of several business units of the Philips group. Between 2006 and 2008 he was CFO at NXP (formerly Philips Semiconductors) and was CFO of Odersun AG, a manufacturer of thin-film solar cells and modules until August 31, 2010. Mr. van Bommel holds a Master’s degree in economics from the Erasmus University, Rotterdam, the Netherlands.

W.K. Lee became Chief Executive Officer of ASM Pacific Technology Ltd. effective January 1, 2007 and has been General Manager Southern Region of ASM Pacific Technology since 1990. He has been employed by ASM Pacific Technology for over 25 years. Prior to becoming in 1990 General Manager of ASM Pacific Technology’s activities in Singapore, Mr. W.K. Lee was involved in product development. Mr. W.K. Lee studied at the Chinese University of Hong Kong (Bachelor of Science and Master of Philosophy in Electronics) and has a Master Degree in Business Administration from the National University of Singapore. Mr. Lee also served as a member of the ASMI Management Board until the expiration of his term on January 1,2011.

B. Compensation.

For information regarding remuneration of members of our Management Board and Supervisory Board, see Note 28 to our Consolidated Financial Statements, which is incorporated herein by reference.

For further information regarding remuneration of members of our Management Board, see our Remuneration Policy and Remuneration Report 2009, which are posted on our website (www.asm.com). Our Remuneration Report 2010 is currently posted on our website as will future reports in accordance with applicable requirements under local law.

We have granted stock options to certain key employees. For information regarding such options see Note 18 to our Consolidated Financial Statements, which is incorporated herein by reference.

C. Board practices.

Under Netherlands law, Supervisory Board members have the duty to supervise and advise the Management Board members. Persons nominated by the Supervisory Board to be appointed by the shareholders to the Supervisory Board are elected if they receive a majority of the votes cast at a meeting of shareholders. Nominees to the Supervisory Board who are not proposed by the Supervisory Board are appointed if they receive the affirmative vote of a majority of the votes cast at a meeting, which affirmative votes represent at least one third of our issued capital. A resolution to remove a member of the Supervisory Board, other than in accordance with a proposal of the Supervisory Board, shall require the affirmative vote of a majority of the votes cast, which affirmative votes represent at least one third our issued capital. The Supervisory Board members serve a four year term and may be re-elected after each term. The Supervisory Board members may be re-elected twice.

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The Management Board is entrusted with our management under the supervision of the Supervisory Board and has the general authority to enter into binding agreements with third parties. Persons nominated by the Supervisory Board to be appointed by the shareholders to the Management Board are elected if they receive a majority of the votes cast at a meeting of shareholders. Nominees to the Management Board who are not proposed by the Supervisory Board are appointed if they receive the affirmative vote of a majority of the votes cast at a meeting, if such affirmative votes represent at least one third of our issued capital. A Management Board member may at any time be suspended by the Supervisory Board. A Management Board member may, in accordance with a proposal of the Supervisory Board, be dismissed by the General Meeting of Shareholders with a majority of the votes cast. A resolution to suspend or to dismiss a member of the Management Board, other than in accordance with a proposal of the Supervisory Board, shall require the affirmative vote of a majority of the votes cast at a meeting, which affirmative votes represent at least one third of our issued capital.

The Audit Committee of the Supervisory Board has a supervisory task with regard to monitoring the integrity of our financial reports and risk management. The Audit Committee consists of Mr. Lobbezoo (Chairman), Mr. Kreutzer and Mr. Schumacher. The Audit Committee supervises the activities of the Management Board with respect but not limited to:

• the operation of the internal risk management and control systems, including supervision of the enforcement of the relevant legislation and regulations, and supervising the operation of codes of conduct;

• our release of financial information;

• compliance with recommendations and observations of external auditors;

• our policy on tax planning;

• relations with the external auditor, including, in particular, its independence, remuneration and any non-audit services performed for us;

• our financing and financial position; and

• the applications of information and communication technology (ICT).

The Audit Committee meets periodically to nominate a firm to be appointed as independent auditors to audit the financial statements and to perform services related to the audit, review the scope and results of the audit with the independent auditors, review with management and the independent auditors our annual operating results and consider the adequacy of the internal accounting procedures and the effect of the procedures relating to the auditor’s independence.

The Nomination, Selection and Remuneration committee of the Supervisory Board advises the Supervisory Board on matters relating to the selection and nomination of the members of the Management Board and Supervisory Board. The committee further monitors and evaluates the remuneration policy for the Management Board. This committee consists of Mr. Kramer (Chairman), Mr. Danneels and Mr. van Pernis.

We have entered into indemnity agreements with each of our Supervisory Board and Management Board members in which we agree to hold each of them harmless, to the extent permitted by law, from damage resulting from a failure to perform or a breach of duties by our board members, and to indemnify each of them for serving in any capacity for the benefit of the Company, except in the case of willful misconduct or gross negligence in certain circumstances.

D. Employees.

As of December 31, 2010, we had 16,699 employees, including 1,019 employees primarily involved in research and development activities, 461 in marketing and sales, 1,092 in customer service, 746 in finance and administration, and 13,381 in manufacturing.

The following table lists the total number of our employees and the number of our employees in our Front-end and Back-end business at the dates indicated, exclusive of temporary workers:

Geographic Location	December 31, 2008						December 31, 2009						December 31, 2010
	Front-end		Back-end		Total		Front-end		Back-end		Total		Front-end		Back-end		Total
Europe
The Netherlands		341		8		349		193		8		201		148		10		158
EMEA		168		10		178		132		5		137		136		5		141
United States		455		14		469		353		11		364		361		10		371
Japan		289		23		312		206		22		228		180		21		201
Southeast Asia		414		9,992		10,406		410		10,727		11,137		625		15,203		15,828
Total		1,667		10,047		11,714		1,294		10,773		12,067		1,450		15,249		16,699

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Our Netherlands operations, which employed 148 persons as of March 2, 2011, is subject to standardized industry bargaining under Netherlands law, and is required to pay wages and meet conditions established as a result of negotiations between all Netherlands employers in their industry and unions representing employees of those employers. Additionally, management personnel in the Netherlands facilities meet as required by Netherlands law with a works council consisting of elected representatives of the employees to discuss working conditions and personnel policies as well as to explain major corporate decisions and to solicit their advice on major issues.

Many of our employees are highly skilled, and our continued success will depend in part upon our ability to continue to attract and retain these employees, who are in great demand. We believe that our employee relations are good.

E. Share ownership.

Information with respect to shares and options held by members of our Supervisory Board and Management Board is included in Item 7, “Major Shareholders and Related Party Transactions” and Notes 28 and 29 to our Consolidated Financial Statements, which are incorporated herein by reference. With the exception of Chuck del Prado, as of March 2, 2011, none of the members of our Supervisory Board or Management Board owned beneficially more than 1% of our outstanding common shares.

We maintain various stock option plans for the benefit of our employees. For information about our stock option plans, see Note 18 to our Consolidated Financial Statements, which is incorporated herein by reference.

Item 7. Major Shareholders and Related Party Transactions

A. Major shareholders.

The following table sets forth information with respect to the ownership of our common shares as of March 2, 2011 by each beneficial owner known to us of more than 5% of our common shares:

	Number of Shares		Percent 1
Arthur H. del Prado 2		11,342,878		20.66

(1) Calculated on the basis of 54,893,106 Common Shares outstanding as of March 2, 2011, and without regard to options.

(2) Includes 3,039 common shares owned by Stichting Administratiekantoor ASMI, a trust controlled by Arthur H. del Prado, and 713,000 common shares beneficially owned by Chuck D. del Prado, Arthur H. del Prado’s son.

A “beneficial owner” of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares (i) voting power which includes the power to vote, or to direct the voting of, such security and/or (ii) investment power which includes the power to dispose, or to direct the disposition, of such security. In addition, a person shall be deemed to be the beneficial owner of a security if that person has the right to acquire beneficial ownership of such security, as defined above, within 60 days, including but not limited to any right to acquire: (i) through the exercise of any option, warrant or right; (ii) through the conversion of a security; or (iii) pursuant to the power to revoke, or pursuant to the automatic termination of, a trust, discretionary account, or similar arrangement.

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On May 28, 1997, we entered into an agreement with Stichting Continuïteit ASM International (Stichting), pursuant to which Stichting was granted an option to acquire up to a number of our preferred shares corresponding with a total par value equal to 50% of the par value of our common shares issued and outstanding at the date of the exercise of the option. Stichting is a non-membership organization organized under Netherlands law. The objective of Stichting is to serve the interests of the Company. To that objective Stichting may, amongst others, acquire, own and vote our preferred shares in order to maintain our independence and/or continuity and/or identity. The members of the board of Stichting are:

Michael J.C. van Galen (chairman)	Retired Managing Director, Breevast N.V.
Rinze Veenenga Kingma	President Archeus Consulting B.V.
Jan Klaassen	Emeritus Professor, Vrije Universiteit Amsterdam

On May 14, 2008, Stichting exercised its right to acquire preferred shares in the Company and acquired 21,985 preferred shares representing 21,985,000 votes, which constituted 29.9% of the total voting power of our outstanding capital stock as of May 14, 2008. Stichting paid € 219,850, which constituted one-fourth of the nominal value of the preferred shares acquired, in accordance with the option agreement. This amount was paid by Stichting using an existing credit line. On May 14, 2009 the Annual Meeting of Shareholders resolved to cancel the outstanding preferred shares and to reissue an option to Stichting Continuïteit to acquire preferred shares.

The issuance of preferred shares to Stichting has since been the subject of litigation in the Enterprise Chamber of the Amsterdam court of appeal. This litigation was initiated by shareholders Hermes Focus Asset Management Ltd. and Fursa Alternative Investment Strategies LLC. In August 2009 the Enterprise Court ordered an inquiry in respect of the affairs of the Company. In July 2010 the Dutch Supreme Court annulled the order of the Enterprise Court and remanded the decision to the Enterprise Court to consider certain observations of the Supreme Court. The Enterprise Court has not yet rendered a new decision on whether an inquiry into the affairs of ASMI is to be held.

Except as described above regarding Stichting, we are unaware of any arrangement which we anticipate will result in a change in control of ASM International. All shares of our common stock (including shares held by major shareholders) entitle the holder to the same voting rights. Our preferred shares entitle the holder to 1,000 votes per share.

Of our 54,893,106 outstanding common shares at March 2, 2011, 2,142,039 are registered with us in the Netherlands, 42,883,621 are registered with our transfer agent in the Netherlands, ABN AMRO Bank N.V., and 9,867,446 are registered with our transfer agent in the United States, Citibank, N.A., New York. Our common shares registered with Citibank, N.A., New York are listed on the NASDAQ Global Select Market under the symbol “ASMI.” As of March 2, 2011 there were approximately 150 record holders of our common shares registered with Citibank. The common shares registered with ABN AMRO Bank N.V., are in bearer form and are traded on Euronext Amsterdam under the symbol “ASM.”

B. Related party transactions.

For information regarding related party transactions, see Note 29 to our Consolidated Financial Statements, which is incorporated herein by reference.

C. Interest of Experts & Counsel.

Not applicable.

Item 8. Financial Information

A. Consolidated statements and other financial information

Consolidated financial statements

See Item 18, “Financial Statements.”

Legal proceedings

See Item 4.B., “Business Overview” and Note 20 to our Consolidated Financial Statements, which is incorporated herein by reference. See also Item 3.D, “Risk Factors—We are subject to various legal proceedings and claims, the outcomes of which are uncertain. If we fail to accurately evaluate the probability of loss or the amount of possible losses, an adverse outcome may materially and adversely affect our financial condition and results of operations.”

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Dividend policy

ASMI aims, as part of its financing policy, to pay a sustainable annual dividend. Annually the Supervisory Board, upon proposal of the Management Board, will assess the amount of dividend that will be proposed to the Annual General Meeting of Shareholders. The decision that a dividend be proposed to the Annual General Meeting of Shareholders will be subject to the availability of distributable profits as well as retained earnings and may be affected by our potential future funding requirements. Accordingly, dividend payments may fluctuate and could decline or be omitted in a certain future year.

In 2007, we paid an interim dividend of € 0.10 per common share. We have not paid dividends in 2008, 2009, 2010 and in any year prior to 2007. In 2011 we will propose to the forthcoming Annual General Meeting of Shareholders to declare a dividend of Euro 0.40 per share.

B. Significant changes

No significant changes have occurred since the date of our Consolidated Financial Statements.

Item 9. The Offer and Listing

A. Offer and listing details.

The following table sets forth, for the periods indicated, the high and low closing prices of our common shares as reported on the NASDAQ Global Select Market and the high and low closing prices as reported on Euronext Amsterdam:

Price Range of Common Shares

	NASDAQ Closing Prices				Euronext Closing Prices
	High		Low		High		Low
Annual Information
2006	$	21,34	$	13,72	€	16,97	€	10.95
2007		30.32		20.94		21.08		15.08
2008		32.66		6.60		20.96		5.00
2009		25.75		6.30		17.80		4.92
2010		35.09		19.10		26.50		15.32
Quarterly Information
2009:
First Quarter	$	10.47	$	6.30	€	7.55	€	4.92
Second Quarter		16.64		8.52		11.93		6.45
Third Quarter		19.38		13.88		13.49		9.80
Fourth Quarter		25.75		17.29		17.80		11.80
2010:
First Quarter	$	26.90	$	20.98	€	20.30	€	15.33
Second Quarter		28.81		19.10		21.45		15.32
Third Quarter		26.31		19.37		19.98		15.48
Fourth Quarter		35.09		23.28		26.50		17.25
Monthly Information
September 2010	$	25.80	$	22.75	€	18.86	€	17.48
October 2010		25.92		24.46		18.75		17.70
November 2010		26.08		23.28		19.11		17.25
December 2010		35.09		26.10		26.50		19.77
January 2011		40.67		33.72		30.36		25.97
February 2011		41.38		37.71		30.66		27.38
March 2011 1		41.64		40.01		30.27		29.35

(1) Through March 2, 2011.

B. Plan of distribution.

Not applicable.

C. Markets.

Our common shares are listed on the NASDAQ Global Select Market under the symbol “ASMI” and listed on Euronext Amsterdam under the symbol “ASM.” See item 9.A. “Offer and listing Details”.

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D. Selling shareholders.

Not applicable.

E. Dilution.

Not applicable.

F. Expenses of the issue.

Not applicable.

Item 10. Additional Information

A. Share capital.

Not applicable.

B. Memorandum and articles of association.

The information required by Item 10.B. is incorporated by reference to Exhibit 1.1 in our Form 20-F filed with the United States Securities and Exchange Commission on March 16, 2007 and the Form 6-K filed on April 30, 2007. Our current Articles of Association are filed as Exhibit 1.1 hereto.

C. Material contracts.

We entered into a trust deed on November 6, 2009 with Citicorp Trustee Company Limited as trustee, under which we issued € 150 million aggregate principal amount of 6.5% senior unsecured convertible bonds due 6 November 2014. The terms of the bonds issued under the trust deed are summarized in Note 16 to our consolidated financial statements, which summary is incorporated herein by reference. A copy of the trust deed was filed as Exhibit 2.3 to our Form 20-F filed March 26, 2010.

As discussed in Item 4, ASMPT acquired the SEAS business from Siemens AG. In January 2011 nominal consideration was paid by ASMPT to Siemens for the business as well as certain loan and equity commitments were made by ASMPT to fund the ongoing acquired business. A copy of the acquisition agreement is filed as Exhibit 4.13 to this Form 20-F.

D. Exchange controls.

There are no foreign exchange controls or other governmental laws, decrees or regulations in the Netherlands restricting the import or export of capital or affecting the remittance of dividends, interest or other payments to non-resident shareholders. Neither the laws of the Netherlands nor the Articles of Association of ASM International restrict remittances to non-resident shareholders or the right to hold or vote such securities.

E. Taxation.

Summary of Dutch Tax Provisions Applicable to Nonresident Shareholders with a particular focus on U.S. Shareholders

The statements below briefly summarize the current Dutch tax laws, based on the laws as in force at January 1, 2009. The description is limited to the tax implications for shareholders who neither are nor are deemed to be a resident of the Netherlands for purposes of the relevant tax codes. The description does not address special rules that may apply to holders of special classes of shares and should not be interpreted as extending by implication to matters not specifically referred to in this document. As to individual tax consequences, shareholders are advised to consult their own tax advisors.

Withholding Tax

Dividends distributed by us generally are subject to a withholding tax imposed by the Netherlands at a rate of 15%. The expression “dividends distributed” includes, among other things:

• direct and indirect distributions in cash or in kind, deemed and constructive distributions and repayments of paid-in capital which is not recognized as such for Dutch dividend withholding tax purposes;

• liquidation proceeds, proceeds of redemption of ordinary shares or consideration for the repurchase of ordinary shares by us, or one of our subsidiaries, to the extent that such consideration exceeds the average paid-in capital which is recognized as such for Dutch dividend withholding tax purposes;

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• the par value of ordinary shares issued to a holder of ordinary shares or an increase in the par value of ordinary shares, as the case may be, to the extent that it does not appear that a contribution, which is recognized as such for Dutch dividend withholding tax purposes, has been made or will be made; and

• partial repayments of paid-in capital, which is recognized as such for Dutch dividend withholding tax purposes, if and insofar as there are net profits (zuivere winst) unless the general meeting of our shareholders has resolved in advance to make such repayment and provided that the par value of the ordinary shares concerned has been reduced by an equal amount by way of an amendment to the articles of association.

If a holder of ordinary shares resides in a country that signed a double taxation convention with the Netherlands and such convention is in effect, such holder of ordinary shares may, depending on the terms of that double taxation convention, be eligible for a full or partial exemption from, reduction or refund of Dutch dividend withholding tax. The Netherlands has concluded such a convention with the United States, among other countries.

Under the Convention between the United States of America and the Kingdom of the Netherlands for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income (the “US Tax Treaty”) currently in effect, dividends we pay to a corporate holder of our common shares who is not, or is not deemed to be, a resident of the Netherlands for Dutch tax purposes but who is a resident of the United States as defined in the U.S. Tax Treaty may be eligible for a reduction of the 15% Netherlands withholding tax. In the case of certain U.S. corporate shareholders owning at least 10% of ASM International voting power, the Netherlands withholding tax may be reduced to 5%, provided that such shareholder does not have an enterprise or an interest in an enterprise that is, in whole or in part, carried on through a permanent establishment or permanent representative in the Netherlands to which the dividends are attributable. A full exemption of Netherlands withholding tax is applicable for a U.S. corporate shareholder owning at least 80% of voting power in the Company for a period of at least twelve months prior to the distribution, provided that this shareholder meets specific tests of the limitation of benefits clause of the U.S. Tax Treaty. The U.S. Tax Treaty provides for complete exemption from tax on dividends received by exempt pension trusts and exempt organizations, as defined therein. Except in the case of exempt organizations, the reduced dividend withholding rate can be applied at the source upon payment of the dividends, provided that the proper forms have been filed prior to the payment. Exempt organizations remain subject to the statutory withholding rate of 15% and are required to file an application for a refund of such withholding.

A holder who is not, or is not deemed to be, a resident of the Netherlands may only claim the benefits of the U.S. Tax Treaty if:

• the holder is a resident of the United States as defined therein; and

• the holder’s entitlement to such benefits is not limited by the provisions of Article 26 (“limitation on benefits”) of the U.S. Tax Treaty.

Under current Dutch law, in situations where we distribute dividends which we received ourselves (flow through dividends) from subsidiaries established in countries with which the Netherlands has concluded a tax treaty, we may be permitted under limited circumstances to deduct and retain from the withholding a portion of the amount that otherwise would be required to be remitted to the Dutch Tax Authorities. That portion generally may not exceed 3% of the total dividend distributed by us during the calendar year and the two preceding calendar years. If we retain a portion of the amount withheld from the dividends paid, the portion (which is not remitted to the tax authorities) might not be creditable against your domestic income tax or corporate income tax liability. We will endeavor to provide you with information concerning the extent to which we have applied the reduction described above to dividends paid to you and advise you to check the consequences thereof with your local tax advisor.

A refund, reduction, exemption or credit of Dutch dividend withholding tax on the basis of Dutch tax law or on the basis of a tax treaty between the Netherlands and another state, will be granted only if the dividends are paid to the beneficial owner of the dividends. The Dutch Supreme Court has defined that a person is a beneficial owner if: (i) that person is the legal owner of the dividend coupons and (ii) is in the position to freely dispose of the dividends so received and (iii), not acting in the capacity of an agent or fiduciary for someone else. A receiver of a dividend is not considered to be the beneficial owner of a dividend in an event of “dividend stripping” in which he has paid a consideration related to the receipt of such dividend. In general terms, “dividend stripping” can be described as the situation in which a foreign or domestic person (usually, but not necessarily, the original shareholder) has transferred his shares or his entitlement to the dividend distributions to a party that has a more favorable right to a refund or reduction of Dutch dividend withholding tax than the foreign or domestic person. In these situations, the foreign or domestic person (usually the original shareholder), by transferring his shares or his entitlement to the dividend distributions, avoids Dutch dividend withholding tax while retaining his “beneficial” interest in the

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shares and the dividend distributions. This regime may also apply to the transfer of shares or the entitlement to dividend distributions as described above, if the avoidance of dividend withholding tax is not the main purpose of the transfer.

Income Tax and Corporate Income Tax on Dividends

A nonresident individual or corporate shareholder will not be subject to Dutch income tax with respect to dividends distributed by us or with respect to capital gains derived from the sale, disposal or deemed disposal of our common shares, provided that:

• such holder is neither resident nor deemed to be resident in the Netherlands nor has made an election for the application of the rules of the Dutch 2001 Income Tax Act as they apply to residents of the Netherlands; and

• such holder does not have, and is not deemed to have, an enterprise or an interest in an enterprise which is, in whole or in part, carried on through a permanent establishment, a deemed permanent establishment, or a permanent representative in the Netherlands and to which enterprise or part of an enterprise the shares are attributable, nor does such holder carry out any other activities in the Netherlands that exceed regular asset management;

• such holder does not have a profit share in, or any other entitlement to the assets or income of an enterprise, other than by way of securities, which enterprise is effectively managed in the Netherlands and to which enterprise the shares are attributable;

• such holder does not carry out and has not carried out employment activities with which the holding of the shares is connected directly or indirectly; and

• such holder, individuals relating to such holder and some of their relations by blood or marriage in the direct line (including foster children) do not have a substantial interest or deemed substantial interest in us, or, if such holder has a substantial interest or a deemed substantial interest in us, it forms part of the assets of an enterprise.

Generally, a nonresident holder will have a substantial interest if he, his partner, certain other relatives (including foster children) or certain persons sharing his household, alone or together, directly or indirectly:

• hold shares representing 5% or more of our total issued and outstanding capital (or the issued and outstanding capital of any class of our shares);

• hold or have rights to acquire shares (including the right to convert notes or stock options into shares), whether or not already issued, that at any time (and from time to time) represent 5% or more of our total issued and outstanding capital (or the issued and outstanding capital of any class of our shares); or

• hold or own certain profit-participating rights that relate to 5% or more of our annual profit and/or to 5% or more of our liquidation proceeds.

The same criteria apply to a nonresident entity, save for the extension to partners, certain other relatives, and certain persons sharing the holder’s household.

Gift and Inheritance Tax

In principle, liability for Dutch gift tax or inheritance tax arises in respect of any gifts of common shares by or inheritance of common shares from any person who resides in the Netherlands at the time of the gift or death.

A gift or inheritance of common shares from a nonresident shareholder will not be subject to Dutch gift and inheritance tax, provided that:

• the nonresident shareholder does not have an enterprise or an interest in an enterprise that is, in whole or in part, carried on through a permanent establishment or a permanent representative in the Netherlands to which or to whom the common shares are attributable;

• the nonresident shareholder is not entitled to a share in the profits of an enterprise that is effectively managed in the Netherlands other than by way of securities or through an employment contract, the common shares being attributable to that enterprise; and

• the nonresident shareholder makes a gift of shares and does not die within 180 days after the date of the gift, while being resident or deemed to be resident in the Netherlands at the time of his death.

For the purposes of Dutch gift and inheritance tax, a Dutch national is deemed to be a resident of the Netherlands if he resided in that country at any time during a period of ten years preceding the date of the gift or death, as the case may be. In addition, for the purposes of Dutch gift tax, a person not possessing Dutch nationality is also deemed to be a Dutch resident, irrespective of his nationality, if he was a Dutch

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resident at any time during a period of twelve months preceding the time at which the gift was made. The Netherlands has concluded a treaty with the United States, based on which double taxation on inheritances may be avoided if the inheritance is subject to Netherlands and/or U.S. inheritance tax and the deceased was a resident of either the Netherlands or the United States.

United States Federal Income Taxation

The following is a general description of select U.S. federal income tax consequences of the ownership and disposition of our common shares by a U.S. Holder (as defined below). This summary only applies to “U.S. Holders” (as defined below) that hold their shares as capital assets. This discussion does not purport to be a comprehensive description of all U.S. federal income taxation considerations that may be relevant to holders of shares in view of their particular circumstances, and does not deal with holders subject to special rules, such as, but not limited to, the alternative minimum tax provisions of the Internal Revenue Code of 1986 (“Internal Revenue Code”) or the Internal Revenue Code’s provisions applicable to dealers in securities or foreign currencies, traders in securities that elect to use a mark-to-market method of accounting, certain financial institutions, tax-exempt organizations, tax-qualified employer plans and other tax-qualified accounts, insurance companies, persons that actually or constructively own 10% or more of our voting stock, persons holding common shares as part of a straddle, hedging, conversion or constructive sale transaction or holders of common shares whose “functional currency” is not the U.S. dollar.

This discussion is based on the Internal Revenue Code, as amended to the date hereof, final, temporary and proposed U.S. Treasury Department regulations promulgated thereunder, and administrative and judicial interpretations thereof, any or all of which could be changed subsequent to the date of this summary, possibly with retroactive effect. Any such change could affect the tax consequences described in this summary. We will not update this summary to reflect any such changes after the date of this annual report. In addition, there can be no assurance that the Internal Revenue Service will not challenge any tax treatment that is based upon or consistent with any discussion of tax consequences described in this summary, and we have not obtained, nor do we intend to obtain, a ruling from the Internal Revenue Service or an opinion of counsel with respect to the U.S. federal income tax consequences of acquiring or holding common shares. Prospective holders of shares should consult their own tax advisors as to the application of the U.S. federal income tax laws to their particular situation, as well as to any tax consequences that may arise under the U.S. federal estate or gift tax laws or under any state, local or foreign tax laws with respect to the ownership and disposition of our common shares.

The following discussion is a summary of the tax rules applicable to U.S. Holders of common shares and does not consider any U.S. federal income tax consequences to non-U.S. Holders. As used in this summary, “U.S. Holder” means a beneficial owner of common shares that is (i) an individual citizen or resident alien of the United States (as defined for U.S. federal income tax purposes), (ii) a corporation (or any other entity taxable as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States or any State, (iii) an estate the income of which is subject to U.S. federal income taxation regardless of its source, or (iv) a trust if either (a) a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust, or (b) a valid election is in place to treat the trust as a U.S. person. A “non-U.S. Holder” is a beneficial owner of common shares that is not a U.S. Holder as so defined herein.

If a partnership (or other entity treated as a partnership for US federal income tax purposes) holds common shares, the tax treatment of a partner generally will depend upon the status and tax residency of the partner and the activities of the partnership. Partners in a partnership that holds common shares are urged to consult their own tax advisor regarding the specific tax consequences of the owning and disposing of such common shares by the partnership.

Taxation of Dispositions

A U.S. Holder will recognize gain or loss for U.S. federal income tax purposes upon a taxable sale or other disposition of common shares. The amount of such gain or loss will equal the difference between the amount realized by the U.S. Holder and the U.S. Holder’s adjusted tax basis in the common shares. For these purposes, a U.S. Holder’s adjusted tax basis in the common shares generally will equal the U.S. dollar cost of the common shares to the U.S. Holder. Subject to the passive foreign investment company rules described below, gain or loss realized by a U.S. Holder on a sale or other disposition of common shares generally will be treated as capital gain or loss, and will be long-term capital gain or loss if the common shares were held for more than one year as of the date of the sale or other disposition. Any such gain generally will be treated as U.S. source income for U.S. foreign tax credit purposes. Net long-term capital gain recognized by a U.S. Holder who is an individual generally is subject to reduced rates of taxation. The deduction of capital losses is subject to certain limitations. Prospective investors should consult their own tax advisors in this regard.

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If we repurchase our common shares, the repurchase generally will be treated as a sale or exchange of the common shares subject to the rules discussed above. However, under certain circumstances as provided in Section 302 of the Internal Revenue Code, the repurchase may be treated fully or partially as a dividend taxable as described below under “Taxation of Distributions.” U.S. Holders should consult their own tax advisors concerning the U.S. federal income tax consequences of our repurchase of their common shares.

Taxation of Distributions

Subject to the anti-deferral tax rules described below, the gross amount (before reduction for Netherlands withholding taxes) of any distribution actually or constructively paid with respect to common shares will be included in the gross income of the U.S. Holder as foreign source dividend income to the extent the distributions are paid out of our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. The amount of any distribution of property other than cash will be the fair market value of such property on the date of distribution. To the extent that the amount of any distribution exceeds our current and accumulated earnings and profits, the distribution will first be treated as a tax-free return of capital to the extent of the U.S. Holder’s adjusted tax basis in the common shares (thereby increasing the amount of gain or decreasing the amount of loss to be recognized on the subsequent disposition of the common shares), and to the extent that such distribution exceeds the U.S. Holder’s adjusted tax basis in the common shares such excess will be taxed as capital gain. We do not maintain calculations of our earnings and profits under U.S. federal income tax principles, and therefore it may not be possible to determine whether or to what extent a distribution should be treated as a dividend. Distributions treated as dividends generally will not be eligible for the dividends received deduction allowed to corporations under the Internal Revenue Code. The availability of this deduction is subject to several complex limitations which are beyond the scope of this summary.

If a U.S. Holder receives a dividend in euros, the amount of the dividend for U.S. federal income tax purposes should be the U.S. dollar value of the dividend, determined at the spot rate in effect on the date of such payment, regardless of whether the payment is later converted into U.S. dollars. In the case of such later conversion, the U.S. Holder may recognize U.S. source ordinary income or loss as a result of currency fluctuations between the date on which the dividend is paid and the date the dividend amount is converted to U.S. dollars.

Dividends received by a U.S. Holder generally will be taxed at ordinary income rates. However, certain dividends received by individuals through taxable years beginning on or before December 31, 2012, may qualify to be taxed at capital gain rates (15% or less), provided (i) the recipient has held the underlying stock for more than 60 days during the 121 day period beginning 60 days before the ex-dividend date and (ii) the dividends are received from a “qualified foreign corporation.” A non-U.S. corporation (other than a passive foreign investment company) generally will be considered to be a “qualified foreign corporation” if (i) the shares of the non-U.S. corporation are readily tradable on an established securities market in the United States or (ii) the non-U.S. corporation is eligible with respect to substantially all of its income for the benefits of a comprehensive income tax treaty with the United States which contains an exchange of information program. We believe that we are, and will continue to be, a “qualified foreign corporation.” Individual U.S. Holders should consult their tax advisors regarding the impact of distributions paid with respect to their common shares in light of their particular situations.

Foreign Tax Credit

Dividends distributed by us generally are subject to a withholding tax imposed by the Netherlands at a rate of 15% (see “Summary of Dutch Tax Provisions Applicable to Nonresident Shareholders with a particular focus on U.S. Shareholders – Withholding Tax”). Subject to certain conditions and limitations set forth in the Internal Revenue Code, foreign withholding tax paid with respect to dividends on common shares generally will be eligible for credit against a U.S. Holder’s U.S. federal income tax liability. Alternatively, a U.S. Holder may claim a deduction for the amount of foreign withholding taxes, but only for a year for which the U.S. Holder elects to do so with respect to all foreign income taxes. Under current Dutch law, we may be permitted, under limited circumstances, to retain a portion of Netherlands taxes we withhold from dividends paid to our shareholders, rather than pay that portion of the withheld taxes to the taxing authorities in the Netherlands (see “Summary of Dutch Tax Provisions Applicable to Nonresident Shareholders with a particular focus on U.S. Shareholders – Withholding Tax”). This amount generally may not exceed 3% of the total dividend distributed by us during the calendar year and the two preceding calendar years. If we retain a portion of the Netherlands withholding taxes, the retained amount in all likelihood will not qualify as a creditable tax for U.S. federal income tax purposes. We will endeavor to provide U.S. Holders with information concerning the extent to which we retain any Netherlands taxes on dividends paid to U.S. Holders.

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Effective for tax years beginning after December 31, 2006, there will be two specific classes (passive and general) of income for purposes of calculating foreign tax credit limitations. Dividends will generally constitute “passive category income” but could, in the case of certain U.S. Holders, constitute “general category income.” Gain from a sale, exchange or other disposition of our common shares will be treated as U.S. source income for foreign tax credit purposes unless the U.S. Holder makes an election pursuant to the U.S tax convention with the Netherlands to treat any such gain as foreign source. The rules relating to the determination of the U.S. foreign tax credit are complex. U.S. Holders should consult their own tax advisors with respect to the availability of a foreign tax credit or deduction for foreign, including Netherlands, taxes withheld.

Anti-Deferral Tax Rules

The Internal Revenue Code contains various provisions that impose current U.S. federal income tax on certain foreign corporations or their U.S. shareholders if such corporations derive certain types of passive income and fail to make adequate distribution of profits to their U.S. shareholders. These provisions include the passive foreign investment company and controlled foreign corporation rules. While we do not believe that any of these rules should apply to us, we are not certain that we can avoid these tax rules because we cannot predict with any degree of certainty the amount and character of our future income or the amount of our common shares any particular U.S. Holder will own. Accordingly, we will only briefly summarize those provisions and then only the rules that we believe may have the greatest likelihood of applying to us in the future.

Passive Foreign Investment Company. As a foreign corporation with U.S. Holders, we could potentially be treated as a “passive foreign investment company” (“PFIC”) as defined in the Internal Revenue Code.

The PFIC provisions of the Internal Revenue Code can have significant tax effects on U.S. Holders. In general, a foreign corporation will be a PFIC in a particular tax year and for all succeeding tax years if:

• 75% or more of its gross income (including the foreign corporation’s pro rata share of the gross income of any U.S. or foreign company in which the corporation owns or is considered to own 25% or more of the shares by value) in a taxable year is passive income (which generally includes interest, dividends and certain rents and royalties); or

• at least 50% of the average value of the corporation’s gross assets in a taxable year (average determined as of the end of each quarter of the corporation’s taxable year and ordinarily determined based on gross fair market value, including the proportionate share of the assets of any U.S. or foreign company in which the corporation owns or is considered to own 25% or more of the shares by value) produce, or are held for the production of, passive income.

If we were a PFIC for a taxable year during which a U.S. Holder owned our shares, then a U.S. Holder would likely incur increased tax liabilities (possibly including an interest charge) upon the sale or other disposition of our common shares or upon receipt of “excess distributions.” In other words, gain recognized by a U.S. Holder on a sale or other disposition of our common shares would be allocated ratably over the U.S. Holder’s holding period for the common shares. The amounts allocated to the taxable year of the sale or other disposition and to any year before we became a PFIC would be taxed as ordinary income. The amount allocated to each other taxable year would be subject to tax at the highest rate in effect for individuals or corporations, as appropriate, and an interest charge would be imposed on the amount allocated to that taxable year. Further, any distribution in excess of 125 percent of the average of the annual distributions on common shares received by the U.S. Holder during the preceding three years or the U.S. Holder’s holding period, whichever is shorter, would be subject to taxation as described above. Certain elections may be available (including a qualified electing fund election and a mark to market election) to U.S. Holders that may mitigate the adverse consequences resulting from PFIC status. In addition, if we were a PFIC in a taxable year in which we pay a dividend or the prior year, the 15% dividend rate discussed above with respect to dividends paid to certain U.S. Holders would not apply.

We believe that we are not a PFIC, and we do not expect to become a PFIC. However, we cannot assure that we will not qualify as a PFIC in the future. The PFIC rules are very complex and U.S. Holders should consult their own tax advisors on this issue. In the event we are determined to be a PFIC in the current or future taxable year we do not anticipate providing US Holders with the information necessary to support a qualified electing fund election.

Controlled Foreign Corporation Rules. If more than 50% of the voting power or total value of all classes of our common shares is owned, directly or indirectly, by U.S. Holders, each of which owns 10% or more of the total combined voting power of all classes of our common shares, we could be treated as a controlled foreign corporation (“CFC”) under Subpart F of the Internal Revenue Code. This classification would result in many complex consequences, including the required inclusion into income by such 10% or greater shareholders of their pro rata shares of our “Subpart F Income,” as defined in the Internal Revenue Code. In

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addition, under Section 1248 of the Internal Revenue Code, gain from the sale or exchange of common shares by any U.S. Holder who is or was a 10% or greater shareholder at any time during the five-year period ending with the sale or exchange will be dividend income to the extent of our earnings and profits attributable to the common shares sold or exchanged and accumulated during the periods that we were a CFC. Under certain circumstances, a U.S. Holder that directly owns 10% or more of our voting common shares and is a corporation may be entitled to an indirect foreign tax credit for amounts characterized as dividends under Section 1248 of the Internal Revenue Code. We believe that we are not a CFC and we will not become a CFC, however, we can not assure you that we will not become a CFC in the future.

United States Backup Withholding Tax and Information Reporting

Under certain circumstances, a U.S. Holder may be subject to information reporting and backup withholding with respect to certain payments made in respect of the common shares and the proceeds received on the disposition of the common shares paid within the U.S. (and in certain cases, outside the U.S.). Such amounts may be subject to a 28% U.S. backup withholding tax unless the U.S. Holder otherwise establishes an exemption. For example, backup withholding generally will not apply to a U.S. Holder who (1) is a corporation or comes within certain other exempt categories and, when required, demonstrates that fact, or (2) furnishes a correct taxpayer identification number and makes certain other required certifications as provided by the backup withholding rules.

Backup withholding is not an additional tax. The amount of any backup withholding from a payment to a U.S. Holder will be allowed as a credit against the U.S. Holder’s U.S. federal income tax liability and may entitle a U.S. Holder to a refund, provided that the required information is furnished to the Internal Revenue Service.

The discussion set forth above is included for general information only and may not be applicable depending upon a holder’s particular situation. Holders should consult their tax advisors with respect to the tax consequences of the purchase, ownership and disposition of common shares including the tax consequences under state, local and other laws and the possible effects of changes in United States federal and other tax laws.

F. Dividends and paying agents.

Not Applicable.

G. Statement by experts.

Not Applicable.

H. Documents on display.

We are subject to certain reporting requirements of the U.S. Securities Exchange Act of 1934 (the “Exchange Act”). As a “foreign private issuer,” we are exempt from the rules under the Exchange Act prescribing certain disclosure and procedural requirements for proxy solicitations, and our officers, directors and principal shareholders are exempt from the reporting and “short-swing” profit recovery provisions contained in Section 16 of the Exchange Act, with respect to their purchases and sales of shares. In addition, we are not required to file reports and financial statements with the Commission as frequently or as promptly as companies that are not foreign private issuers whose securities are registered under the Exchange Act. However, we are required to file with the Commission, within six months after the end of each fiscal year, an annual report on Form 20-F containing financial statements audited by an independent accounting firm and interactive data comprising financial statements in extensible business reporting language which, with respect to our annual report on Form 20-F for the year ended December 31, 2010, should be furnished within 30 days of filing our annual report on Form 20-F. We publish unaudited interim financial information after the end of each quarter. We furnish this quarterly financial information to the Commission under cover of a Form 6-K.

Documents we file with the Commission are publicly available at its public reference facilities at 450 Fifth Street, N.W., Washington, DC 20549, Woolworth Building, 233 Broadway, New York, New York 10048 and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of the documents are available at prescribed rates by writing to the Public Reference Section of the Commission at 450 Fifth Street, N.W., Washington DC 20549. The Commission also maintains a website that contains reports and other information regarding registrants that are required to file electronically with the Commission. The address of this website is http://www.sec.gov. Please call the Commission at 1-800-SEC-0330 for further information on the operation of the public reference facilities.

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I. Subsidiary information.

See Item 4.C. “Organizational Structure”.

Item 11. Quantitative and Qualitative Disclosures about Market Risk

We are exposed to market risks (including foreign exchange rate risk and interest rate risk), credit risk and liquidity risk. We use forward exchange contracts to hedge foreign exchange risk. We do not enter into financial instrument transactions for trading or speculative purposes.

Foreign exchange rate risk management

We conduct business in a number of foreign countries, with certain transactions denominated in currencies other than the functional currency of ASM International (euro) or one of our subsidiaries conducting the business. The purpose of the Company’s foreign currency management is to manage the effect of exchange rate fluctuations on revenues, costs and cash flows and assets and liabilities denominated in selected foreign currencies, in particular denominated in U.S. dollars.

Our Front-end segment uses forward exchange contracts to hedge its foreign exchange risk of anticipated sales or purchase transactions in the normal course of business, which occur within the next twelve months, for which it has a firm commitment from a customer or to a supplier. The terms of these contracts are consistent with the timing of the transactions being hedged. The hedges related to forecasted transactions are designated and documented at the inception of the hedge as cash flow hedges, and are evaluated for effectiveness quarterly. The effective portion of the gain or loss on these hedges is reported as a component of accumulated other comprehensive income in Shareholders’ Equity, and is reclassified into earnings when the hedged transaction affects earnings.

The majority of revenues and costs of our Back-end segment are denominated in Hong Kong dollars, Chinese Yuan and U.S. dollars. The functional currency of our Back-end segment (Hong Kong dollar) is linked to the U.S. dollar. Since foreign currency exposure is not significant, no forward exchange contracts are used. The effect of exchange rate fluctuations on revenues, costs and cash flows and assets and liabilities denominated in foreign currencies is periodically reviewed.

Changes in the fair value of derivatives that do not qualify for hedge treatment, as well as the ineffective portion of any hedges, are recognized in earnings. We record all derivatives, including forward exchange contracts, on the balance sheet at fair value in other current assets or accrued expenses.

We expect that substantially all of the € 13,000 unrealized gains included in accumulated other comprehensive income as of December 31, 2010 will be reclassified to net earnings within the next twelve months, upon completion of the underlying transactions. If the underlying transaction being hedged fails to occur, or if a portion of any derivative is ineffective, the gain or loss is immediately recognized in earnings under foreign currency exchange gains (losses) in the Consolidated Statement of Operations. Hedge ineffectiveness was insignificant for the years ended December 31, 2009 and December 31, 2010.

Furthermore, we manage the currency exposure of certain receivables and payables using derivative instruments, such as forward exchange contracts (fair value hedges) and currency swaps, and non-derivative instruments, such as debt borrowings in foreign currencies. The gains or losses on these instruments provide an offset to the gains or losses recorded on receivables and payables denominated in foreign currencies. The derivative instruments are recorded at fair value and changes in fair value are recorded in earnings under foreign currency exchange gains (losses) in the Consolidated Statement of Operations. Receivables and payables denominated in foreign currencies are recorded at the exchange rate at the balance sheet date and gains and losses as a result of changes in exchange rates are recorded in earnings under foreign currency exchange gains (losses) in the Consolidated Statement of Operations.

We do not use forward exchange contracts for trading or speculative purposes.

To the extent that foreign currency fluctuations affect the value of our investments in our foreign affiliates, they are not hedged. The cumulative effect of these fluctuations is separately reported in Consolidated Shareholders’ Equity. For the year ended December 31, 2009, we recorded an un favorable movement of € 1.9 million. For the year ended December 31, 2010, we recorded a favorable movement of € 30.6 million. See Note 17 to our Consolidated Financial Statements, which is incorporated herein by reference.

The following table summarizes our financial instruments as of December 31, 2010 and analyzes the sensitivity of the fair value of our financial instruments to an immediate change in foreign currency rates. Fair

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values represent the present value of forecasted future cash flows at market foreign currency exchange rates. The sensitivity analysis assumes an immediate 10% favorable or unfavorable change in all foreign currency exchange rates against the euro from their levels as of December 31 with all other variables kept constant. A favorable 10% change indicates a strengthening of the currency in which our financial instruments are denominated, primarily the U.S. dollar, against the euro and an unfavorable change indicates a weakening of the currency in which our financial instruments are denominated, primarily the U.S. dollar, against the euro. The selection of 10% favorable or unfavorable change in foreign currency exchange rates should not be construed as a prediction by us of future market events, but rather, to illustrate the potential impact of such an event. The modeling technique used to calculate the exposure does not take into account correlation among foreign currency exchange rates, or correlation among various markets (i.e., the foreign exchange, equity and fixed-income markets). Even though we believe it to be possible that all of the foreign currency exchange rates to which we are exposed would simultaneously change by more than 10%, we find it meaningful to “stress test” our exposure under this 10% fluctuation scenario and other hypothetical adverse market scenarios. Our actual experience may differ from the results in the table below due to the correlation assumptions utilized, or if events occur that were not included in the methodology, such as significant liquidity or market events.

	Currency and notional amount			Carrying amount		Fair value		Sensitivity analysis
								Favorable FX change of 10%		Unfavorable FX change of 10%
		(in millions)
As of December 31, 2010:
Notes payable to banks, due within twelve months	yen		775.0		7.1		7.1		6.4		7,8
	SG$		2.0		1.2		1.2		1.1		1.3
Long-term debt with maturities:
due from 2011—2012	yen		2,166.2		19.9		19.9		17.9		21.9
due from 2011	SG$		0.6		0.3		0.3		0.3		0.4
Convertible subordinated debt:
due December 6, 2011	US$		44.9		33.6		57.9		30.2		37.0
due November 6, 2014	euro		150.0		150.0		255.4		150.0		150.0
Foreign exchange contracts:
sale of currency contracts to be settled within twelve months:	US$		2.3		1.7		1.7		1.6		1.9

For long-term debt, the estimated fair values of our long-term debt are based on current interest rates available to us for debt instruments with similar terms and remaining maturities. The fair values of our convertible subordinated debt borrowings are based on our estimates. For forward exchange contracts, market values based on external quotes from banks have been used to determine the fair value.

The following tables analyze our sensitivity to a hypothetical 10% strengthening and 10% weakening of the U.S. dollar, Hong Kong dollar or Japanese yen against the euro as of December 31, 2010. This analysis includes foreign currency denominated monetary items and adjusts their translation at year end for a 10% increase and 10% decrease of the U.S. dollar, Hong Kong dollar or Japanese yen against the euro.

A positive amount indicates an increase in equity. Recognized in equity is the revaluation effect of subsidiaries denominated in U.S. dollars, Hong Kong dollars and Japanese yen.

	2009			2010
	Impact on equity			Impact on equity
10% increase of U.S. dollar versus euro		(79	)		1,061
10% decrease of U.S. dollar versus euro		79			(1,061	)
10% increase of Singapore dollar versus euro		NM			1,431
10% decrease of Singapore dollar versus euro		NM			(1,431	)
10% increase of Hong Kong dollar versus euro		19,736			53,458
10% decrease of Hong Kong dollar versus euro		(19,736	)		(53,458	)
10% increase of Japanese yen versus euro		3,585			5,016
10% decrease of Japanese yen versus euro		(3,585	)		(5,016	)

A positive amount indicates a gain in net earnings.

A hypothetical 10% strengthening or 10% weakening of any currency other than the U.S. dollar, Hong Kong dollar or Japanese yen against the euro as of December 31, 2009 and December 31, 2010 would not result in a material impact on equity.

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The following table analyzes our sensitivity to a hypothetical 10% strengthening and 10% weakening of the U.S. dollar and Hong Kong dollar against the euro at average exchange rates for the years 2009 and 2010. A positive amount indicates an increase in net earnings.

	2009			2010
	Impact on net earnings			Impact on Net earnings
10% increase of Japanese yen versus euro		(1,212	)		617
10% decrease of Japanese yen versus euro		1,212			(617	)
10% increase of U.S. dollar versus euro		(7,456	)		(549	)
10% decrease of U.S. dollar versus euro		7,456			549
10% increase of Hong Kong dollar versus euro		4,570			14,632
10% decrease of Hong Kong dollar versus euro		(4,570	)		(14,632	)

A hypothetical 10% strengthening or 10% weakening of any currency other than the U.S. dollar and the Hong Kong dollar against the euro at average exchange rates for the years 2009 and 2010 would not result in a material impact on net earnings.

Interest risk

We are exposed to interest rate risk primarily through our borrowing activities. The Company does not enter into financial instrument transactions for trading or speculative purposes or to manage interest rate exposure. At December 31, 2010 the Company had convertible subordinated debt borrowings outstanding of € 33,609 (US$ 44,909) at a fixed interest rate, maturing in December 2011 (on January 3, 2011 we announced the redemption for all of the outstanding principal balance of our 4.25% Convertible Subordinated Notes due 2011, which resulted in the conversion of all remaining notes prior to the redemption date scheduled for February 15, 1011) and € 150,000 at a fixed rate, maturing in November 2014, € 20,266 in long-term debt at fixed interest rates and € 8,297 in other borrowings with variable short-term interest rates. A hypothetical change in the average interest rate by 10% on the portion of the Company’s debt bearing interest at variable rates would not result in a material change in interest expense at December 31, 2009 and December 31, 2010 borrowing levels.

Credit risk

Financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash and cash equivalents, accounts receivable and derivative instruments. These instruments contain a risk of counterparties failing to discharge their obligations. We monitor credit risk and manage credit risk exposure by type of financial instrument by assessing the creditworthiness of counterparties. We do not anticipate nonperformance by counterparties given their high creditworthiness.

Our customers are semiconductor device manufacturers located throughout the world. We generally do not require collateral or other security to support financial instruments with credit risk.

Concentrations of credit risk (whether on or off-balance sheet) that arise from financial instruments exist for groups of customers or counterparties when they have similar economic characteristics that would cause their ability to meet contractual obligations to be similarly affected by changes in economic or other conditions.

A significant percentage of our revenue is derived from a small number of large customers. Our largest customer accounted for approximately 5.2% of net sales in 2010 (2009: 9.1%; 2008: 13.8%) and the ten largest customers accounted for approximately 27.9% of net sales in 2010 (2009: 32.9%; 2008: 32.0%). Sales to these large customers also may fluctuate significantly from time to time depending on the timing and level of purchases by these customers. Significant orders from such customers may expose us to a concentration of credit risk and difficulties in collecting amounts due, which could harm our financial results. At December 31, 2010 one customer accounted for 6.0% of the outstanding balance in accounts receivable (2009: 7.8%; 2008: 12.3%).

We place our cash and cash equivalent and derivative instruments with high quality financial institutions to limit the amount of credit risk exposure.

The maximum credit exposure is equal to the carrying values of cash and cash equivalent and accounts receivable.

Item 12. Description of Securities Other Than Equity Securities

Not applicable.

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PART II

Item 13. Defaults, Dividend Arrearages and Delinquencies

None.

Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds

On May 14, 2008, Stichting Continuïteit ASM International (“Stichting”) exercised an option under a 1997 agreement with us and acquired 21,985 preferred shares representing 21,985,000 votes on matters to be acted on by our shareholders. All such preferred shares were cancelled in 2009 and an option was reissued to Stichting to acquire preferred shares. See the discussion of Stichting under Item 7.A., “Major Shareholders and Related Party Transactions—Major shareholders,” above.

Item 15. Controls and Procedures

(a) Disclosure Controls and Procedures: Our CEO and CFO, after evaluating the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)) as of the end of the period covered by this Form 20-F, have concluded that as of December 31, 2010 our disclosure controls and procedures were effective.

(b) Management’s Annual Report on Internal Control Over Financial Reporting: Our management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. Internal control over financial reporting is a process to provide reasonable assurance regarding the reliability of our financial reporting for external purposes in accordance with applicable generally accepted accounting principles. Internal control over financial reporting includes policies and procedures for maintaining records that in reasonable detail accurately and fairly reflect our transactions; providing reasonable assurance that transactions are recorded as necessary for preparation of our financial statements; providing reasonable assurance that receipts and expenditures of Company assets are made in accordance with management authorization; and providing reasonable assurance that unauthorized acquisition, use or disposition of Company assets that could have a material effect on our financial statements would be prevented or detected on a timely basis. Management, including our CEO and CFO, conducted an evaluation of the effectiveness of our internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f)) based on the framework in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on this evaluation, management concluded that the Company’s internal control over financial reporting was effective as of December 31, 2010. Deloitte Accountants B.V., an independent registered public accounting firm, has audited the Consolidated Financial Statements included in this annual report on Form 20-F and, as part of the audit, has issued an attestation report, included herein, on ASMI’s internal control over financial reporting.

(c) Attestation Report of the Registered Public Accounting Firm: The attestation report of Deloitte Accountants B.V. is included in this annual report on Form 20-F and is incorporated by reference herein.

(d) Changes in Internal Control Over Financial Reporting: There were no changes to our internal control over financial reporting that occurred during the period covered by this Form 20-F that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls

All internal control systems no matter how well designed and implemented have inherent limitations. Even systems determined to be effective may not prevent or detect misstatements or fraud and can only provide reasonable assurance with respect to disclosure and financial statement presentation and reporting. Additionally, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changed conditions and the degree of compliance with the policies or procedures may deteriorate.

Item 16

Item 16A. Audit Committee Financial Expert

The Supervisory Board has determined that Mr. Lobbezoo, an independent member of the Supervisory Board, qualifies as the Audit Committee Financial Expert. For Mr. Lobbezoo’s experience see Item 6 “Directors, Senior Management and Employees”.

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Item 16B. Code of Ethics

Our code of ethics applies to all of our employees worldwide, as well as our Supervisory Board and Management Board. The code of ethics is designed to promote honest and ethical conduct and timely and accurate disclosure in our periodic financial reports.

For further information, see the Code of Ethics and other related policies including our Rules Concerning Insider Trading, which are posted on our website (www.asm.com).

Item 16C. Principal Accountant Fees and Services

Audit fees.

Deloitte Accountants B.V. (“Deloitte”), has served as our independent registered public accounting firm for each of the three financial years up to December 31, 2010. The following table sets out the aggregate fees for professional audit services and other services rendered by Deloitte Accountants B.V. and its members firms and/or affiliates in 2009 and 2010:

	EUR thousands				As a % of total fees
	2009		2010		2009			2010
Audit fees		2,074		1,798		82	%		68	%
Audit-related fees		5		—		—			—
Tax fees		426		665		17			25
Other fees		36		197		1			7
Total		2,541		2,660		100	%		100	%

Audit Committee pre-approval policies.

The Audit Committee has determined that the provision of services by Deloitte described in the preceding paragraphs is compatible with maintaining Deloitte’s independence. All audit and permitted non-audit services provided by Deloitte during 2010 were pre-approved by the Audit Committee.

The Audit Committee has adopted the following policies and procedures for pre-approval of all audit and permitted non-audit services provided by our independent registered public accounting firm:

Audit Services. Management submits to the Audit Committee for pre-approval the scope and estimated fees for specific services directly related to performing the independent audit of our Consolidated Financial Statements for the current year.

Audit-Related Services. The Audit Committee may pre-approve expenditures up to a specified amount for services included in identified service categories that are related extensions of audit services and are logically performed by the auditors. Additional services exceeding the specified pre-approved limits require specific Audit Committee approval.

Tax Services. The Audit Committee may pre-approve expenditures up to a specified amount per engagement and in total for identified services related to tax matters. Additional services exceeding the specified pre-approved limits, or involving service types not included in the pre-approved list, require specific Audit Committee approval.

Other Services. In the case of specified services for which utilizing our independent registered public accounting firm creates efficiencies, minimizes disruption, or preserves confidentiality, or for which management has determined that our independent registered public accounting firm possesses unique or superior qualifications to provide such services, the Audit Committee may pre-approve expenditures up to a specified amount per engagement and in total. Additional services exceeding the specified pre-approved limits, or involving service types not included in the pre-approved list, require specific Audit Committee approval.

Item 16D. Exemptions from the Listing Standards for Audit Committees

Not applicable.

Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers

On May 20, 2010, the General Meeting of Shareholders authorized, for an 18-month period, to be calculated from the date of the General Meeting to cause the Company to repurchase its own shares up to the statutory maximum, at a price at least equal to the shares’ nominal value and at most a price equal to 110% of the share’s average closing price according to the listing on the Euronext Amsterdam stock exchange during the five trading days preceding the acquisition date.

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No shares were repurchased during 2010 under the authorization of May 20, 2010.

The maximum number of shares that may yet be purchased under the authorization takes into account any treasury shares held by the Company (at December 31, 2010 there are currently no treasury shares held by the Company) and the maximum number of common shares which the Company can hold is 10% of the number of common shares issued.

Of our treasury shares, 2,552,071 shares were held for our account by Lehman Brothers International (Europe) (“Lehman”), which was placed into administration on September 15, 2008. These shares were cancelled in 2009 by resolution of the 2009 Annual General Meeting of Shareholders.

During 2008, we engaged Lehman to repurchase ordinary ASMI shares on the Euronext and Nasdaq markets. As of September 15, 2008, Lehman had purchased and held 2,552,071 shares for our account. Lehman went into bankruptcy administration on September 15, 2008, and we subsequently filed a submission giving notice of our proprietary interest in the shares believed to be held in custody by Lehman. At our May 2009 AGM, our shareholders resolved to cancel all of these treasury shares and we so notified Lehman of the cancellation. However we were notified in September 2010 by the Lehman administrators that there is a possible shortfall in the number of shares held by Lehman as reflected in the statements of our accounts with Lehman. To the extent the number of treasury shares held by Lehman as of the date of their cancellation is lower than 2,552,071 only such lower number of shares have been cancelled and the shortfall of shares may still be considered outstanding. The Lehman administrators report that some time prior to its bankruptcy, Lehman put into a segregated client omnibus account a cash sum on our behalf of $6,758,796, which the administrators apparently regard as money to which we have a proprietary right in lieu of some or all of the missing shares. We are uncertain at this time as to the accuracy of the shortfall of shares, the sufficiency of this cash sum to cover the value of any such discrepancy, and our entitlement to all or a portion of such sum when distributions are determined and made since there is likely to also be a shortfall in Lehman assets subject to proprietary rights. Given the magnitude of the overall Lehman administration, the timeline for clarity and resolution of this item is expected to be considerable, perhaps up to several years.

Item 16F. Change in Registrant’s Certifying Accountant.

Not applicable.

Item 16G. Corporate Governance

Because we are a Netherlands public limited liability company, with principal executive offices outside of the U.S., some of our corporate practices vary from those required by the NASDAQ Listing Rules, as follows:

(i) Listing Rule 5620(c): Quorum

Pursuant to Dutch corporate law (section 2:120 sub 2 Dutch Civil Code) the validity of a resolution by the general meeting of shareholders does not depend on the proportion of the capital or shareholders represented at the meeting (i.e. quorum), unless the law or articles of association of a company otherwise provide. It is the generally accepted business practice for Dutch companies not to provide for a quorum requirement in their articles, and there is no contrary requirement in the Dutch securities laws or under the rules of Euronext Amsterdam. Accordingly, our Articles of Association provide that a resolution of the general or any extraordinary meeting of shareholders will be adopted upon the favorable vote of a majority of the votes cast at the meeting. With the exception as outlined below, our Articles of Association do not provide for a quorum other than for resolutions in relation to the limitation of pre-emptive rights of existing shareholders and the cancellation of outstanding shares, which quorum requirements correspond with mandatory Dutch law. Furthermore, our Articles of Association provide that in the case of a shareholder appointment of persons to, or dismissal of persons from, our Supervisory Board and Management Board not proposed by our Supervisory Board, such resolution requires the affirmative vote of a majority of the votes cast at an annual or extraordinary shareholders meeting, which affirmative votes represent at least one third of our issued capital. To this extent, our practice varies from the requirement of Listing Rule 5620(c), which requires an issuer to provide in its bylaws for a quorum, and that such quorum may not be less than one-third of the outstanding voting stock.

(ii) Listing Rule 5620(b): Proxies

The solicitation of proxies and the distribution of proxy statements for meetings of shareholders are not required under Dutch law or by the rules of Euronext Amsterdam. It is still business practice for Dutch companies not to solicit proxies or distribute proxy statements in respect of European shareholders. In part

76

this is because a substantial portion of shares held by these shareholders are held in bearer form. This is the case for our common shares traded on Euronext Amsterdam and, accordingly, it is impractical to solicit proxies as to these shares. As a result, our practice in respect of the holders of shares other than our common shares listed on the NASDAQ Global Select Market varies from that required by Listing Rule 5620(b), which provides that issuers shall solicit proxies and provide proxy statements for all meetings of shareholders.

As to our common shares listed on the NASDAQ Global Select Market, which we refer to as New York registry shares, we prepare a proxy statement and solicit proxies from the holders of such shares since there are procedures in place under the Securities Exchange Act of 1934, as amended, for soliciting proxies from beneficial owners. Our practice in this regard, however, differs from the typical practice of U.S. corporate issuers in that the advance record date for determining the holders of record entitled to attend and vote at our shareholder meetings may not be more than 30 days prior to the meeting under applicable Dutch corporate law (section 2:119 sub 2 of Dutch Civil Code). As an administrative necessity, we establish a mailing record date in advance of each meeting of shareholders for purposes of determining the shareholders to which the proxy statement and form of proxy, or the notice of Internet availability, will be sent. However, only shareholders of record on the specified record date are entitled to attend and vote, directly or by proxy, at the meeting.

77

PART III

Item 17. Financial Statements

Not Applicable.

Item 18. Financial Statements

See pages F-1 through F-52, which are incorporated herein by reference.

Item 19. Exhibits (*)

Exhibit Number		Description	Incorporated by Reference to:	Included Herein:
	1.1	English Informal Translation of ASM International N.V.’s Articles of Association, as amended			X
	2.1	Trust Deed dated November 6, 2009 for the 6.5 % Senior Unsecured Convertible Bonds	Exhibit 2.3 to the Registrant’s Form 20-F filed on March 26, 2010
	4.1	2001 Stock Option Plan	Exhibit 99.1 to the Registrant’s Form S-8 filed on April 30, 2002
	4.2	1994 Stock Option Plan	Exhibit 99.1 to the Registrant’s S-8 filed October 25, 1999
	4.3	Trust Deed and Rules of The ASM Pacific Technology Employee Share Incentive Scheme, dated March 23, 1990	Exhibit 4.14 to the Registrant’s Form 20-F filed on April 17, 2003
	4.4	Deed of Adherence Relating to Participation in the Employee Share Incentive Scheme of ASM Pacific Technology Limited, dated April 12, 1999	Exhibit 4.15 to the Registrant’s Form 20-F filed on April 17, 2003
	4.5	Supplemental Deed Relating to the Employee Share Incentive Scheme of ASM Pacific Technology Limited	Exhibit 4.16 to the Registrant’s Form 20-F filed on April 17, 2003
	4.6	Overview of Remuneration of Members of the Management Board, dated May 18, 2006	Exhibit 4.23 to the Registrant’s Form 20-F filed on March 16, 2007
	4.7	Overview of Remuneration of Mr. Peter van Bommel			X
	4.8	Form of Supervisory Board Member Indemnification Agreement	Exhibit 10.1 to the Registrant’s Form 20-F filed on March 16, 2007
	4.9	Form of Management Board Member Indemnification Agreement	Exhibit 10.2 to the Registrant’s Form 20-F filed on March 16, 2007
	4.10	Amended and Restated Settlement Agreement dated as of December 16, 1998 by and among ASM International N.V., ASM America, Inc. and Applied Materials, Inc. **	Exhibit 10.3 to the Registrant’s Form 20-F filed on March 16, 2007
	4.11	Summary of the material elements of employment contract with Mr. C.D. del Prado (effective as of March 1, 2008)	Exhibit 99.9 to the Registrant’s Form 6-K filed on May 20, 2008
	4.12	Overview of remuneration of Mr. W.K. Lee	Exhibit 4.24 to the Registrant’s Form 20-F filed on March 16, 2007
	4.13	Master Sale and Purchase Agreement re SEAS acquisition dated July 28, 2010			X
	8.1	Subsidiaries			X
	12.1	Certification of CEO pursuant to Rule 13a-14(a)			X

78

Exhibit Number		Description	Incorporated by Reference to:	Included Herein:
	12.2	Certification of CFO pursuant to Rule 13a-14(a)			X
	13.1	Certification of CEO and CFO pursuant to Rule 13a-14(b) and 18 U.S.C. 1350			X
	15.1	Consent of Independent Registered Public Accounting Firm			X
	101.INS	XBRL Instance Document
	101.SCH	XBRL Taxonomy Extension Schema Document
	101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
	101.LAB	XBRL Taxonomy Extension Definition Linkbase Document
	101.PRE	XBRL Taxonomy Extension Label Linkbase Document
	101.DEF	XBRL Taxonomy Extension Presentation Linkbase Document

* Pursuant to Instruction 2(b)(ii), the Registrant has omitted certain agreements with respect to long-term debt not exceeding 10% of consolidated total assets. The Registrant agrees to furnish a copy of any such agreements to the Securities Exchange Commission upon request.

** Redacted version, originally filed as an exhibit to Registrant’s Form 6-K filed February 11, 1999. Portions of the Agreement have been omitted pursuant to a request for confidential treatment.

79

SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

	ASM INTERNATIONAL N.V.
Date: March 25, 2011	/S/ CHARLES D. DEL PRADO
	Charles D. del Prado
	Chief Executive Officer

S-1

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm	F-2, F3
Consolidated Balance Sheets as of December 31, 2009 and 2010	F-4
Consolidated Statements of Operations for the years ended December 31, 2008, 2009 and 2010	F-5
Consolidated Statements of Comprehensive Income for the years ended December 31, 2008, 2009 and 2010	F-6
Consolidated Statements of Total Equity for the years ended December 31, 2008, 2009 and 2010	F-7
Consolidated Statements of Cash Flows for the years ended December 31, 2008, 2009 and 2010	F-8
Notes to the Consolidated Financial Statements	F-9

F-1

Report of Independent Registered Public Accounting Firm

To the Supervisory Board and Shareholders of

ASM International N.V.

Almere, the Netherlands

We have audited the accompanying consolidated balance sheets of ASM International NV and subsidiaries (the “Company”) as of December 31, 2010 and 2009, and the related consolidated statements of operations, total equity, comprehensive income and cash flows for each of the three years in the period ended December 31, 2010. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of ASM International NV and subsidiaries at December 31, 2010 and 2009, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2010, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of December 31, 2010, based on the criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 25, 2011 expressed an unqualified opinion on the Company’s internal control over financial reporting.

/s/ Deloitte Accountants BV

Amsterdam, the Netherlands,

March 25, 2011

F-2

Report of Independent Registered Public Accounting Firm

To the Supervisory Board and Shareholders of

ASM International N.V.

Almere, the Netherlands

We have audited the internal control over financial reporting of ASM International NV and subsidiaries (the “Company”) as of December 31, 2010, based on the criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2010, based on the criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements as of and for the year ended December 31, 2010 of the Company and our report dated March 25, 2011 expressed an unqualified opinion on those financial statements.

/s/ Deloitte Accountants BV

Amsterdam, the Netherlands

March 25, 2011

F-3

Consolidated Balance Sheets

			December 31,
(EUR thousands except per share data)	Notes		2009			2010
Assets
Cash and cash equivalents		3		293,902			340,294
Accounts receivable (less allowance for doubtful accounts of € 8,968 and € 9,304)		4		165,754			271,271
Inventories, net		5		150,645			254,557
Income taxes receivable				43			57
Deferred tax assets		24		6,893			8,567
Other current assets				31,129			59,405
Total current assets				648,367			934,149
Debt issuance costs		16		6,978			5,564
Deferred tax assets		24		8,545			5,807
Other intangible assets, net		6		8,936			6,804
Goodwill, net		7		47,223			50,815
Evaluation tools at customers		10		11,282			6,644
Investments		11		50			50
Property, plant and equipment, net		8		114,811			197,937
Assets held for sale		9		5,508			6,347
Total assets				851,700			1,214,117
Liabilities and shareholders’ equity
Notes payable to banks		12		17,008			8,297
Accounts payable				93,117			170,553
Provision for warranty		13		5,650			8,273
Accrued expenses and other		14		78,061			117,401
Income taxes payable				17,658			47,493
Current portion convertible subordinated debt		16		11,542			32,439
Current portion conversion option		16		—			23,875
Current portion of long-term debt		15		5,795			15,950
Total current liabilities				228,832			424,282
Pension liabilities		18		5,556			7,167
Deferred tax liabilities		24		314			321
Long-term debt		15		16,554			4,316
Convertible subordinated debt		16		192,350			130,804
Conversion option		16		22,181			—
Total liabilities				465,787			566,890
Commitments and contingencies		19,20
Common shares:
Authorized 110,000,000 shares, par value € 0.04, issued and outstanding 51,745,140 and 52,931,881 shares				2,070			2,117
Financing preferred shares:
Authorized 8,000 shares, par value € 40, none issued				—			—
Preferred shares:
Authorized 118,000 shares, par value € 40, none issued				—			—
Capital in excess of par value				287,768			311,841
Treasury shares at cost				—			—
Retained earnings				16,145			131,741
Accumulated other comprehensive loss				(64,754	)		(34,239	)
Total shareholders’ equity		17		241,229			411,460
Non-controlling interest				144,684			235,767
Total equity				385,913			647,227
Total liabilities and shareholders’ equity				851,700			1,214,117

See Notes to Consolidated Financial Statements.

F-4

Consolidated Statements of Operations

		Year ended December 31,
(EUR thousands, except per share data)	Notes	2008			2009			2010
Net sales	25		747,362			590,739			1,222,900
Cost of sales			(477,100	)		(409,224	)		(673,322	)
Gross profit	25		270,262			181,515			549,578
Operating expenses:
Selling, general and administrative			(126,591	)		(107,777	)		(130,596	)
Research and development, net	22		(75,011	)		(62,806	)		(78,785	)
Amortization of other intangible assets	6		(475	)		(401	)		(357	)
Impairment of goodwill	7		(1,395	)		—			—
Restructuring expenses	23		(7,068	)		(35,687	)		(11,201	)
Total operating expenses			(210,540	)		(206,671	)		(220,939	)
Result from operations	25		59,722			(25,156	)		328,640
Interest income			4,047			1,018			1,221
Interest expense			(7,745	)		(8,556	)		(15,677	)
Gain (loss) resulting from early extinguishment of debt	16		7,956			(1,759	)		(3,609	)
Accretion interest expense convertible notes	16		—			(4,286	)		(6,010	)
Revaluation conversion option	16		—			(24,364	)		(19,037	)
Foreign currency exchange gains (losses), net			785			(1,384	)		(65	)
Earnings (loss) before income taxes			64,765			(64,487	)		285,462
Income tax expense	24		(12,144	)		(3,786	)		(42,939	)
Earnings (loss) before dilution on investment in subsidiary			52,621			(68,273	)		242,523
Gain on dilution of investment in subsidiary	18		4,088			—			—
Net earnings (loss)			56,709			(68,273	)		242,523
Net earnings (loss) for allocation between shareholders of the parent and non-controlling interest
Allocation of net earnings (loss)
Shareholders of the parent			18,411			(107,517	)		110,639
Non-controlling interest			38,298			39,244			131,884
Net earnings (loss) per share:	27
Basic net earnings (loss) from continuing operations			0.35			(2.08	)		2.11
Diluted net earnings (loss) from continuing operations			0.35			(2.08	)		2.09
Weighted average number of shares used in computing per share amounts (in thousands):
Basic			52,259			51,627			52,435
Diluted			52,389			51,627			61,494

See Notes to Consolidated Financial Statements.

F-5

Consolidated Statements of Comprehensive Income

		Year ended December 31,
(EUR thousands)	Notes	2008			2009			2010
Net earnings (loss)			56,709			(68,273	)		242,523
Other comprehensive income (loss):
Foreign currency translation effect			14,681			(4,939	)		41,309
Unrealized gains (losses) on derivative instruments, net of tax			(99	)		(170	)		136
Reclassification transition obligation into retained earnings			—			877			—
Amortization unrecognized actuarial results			—			26			—
Result on curtailment and settlement unrecognized pension obligations			—			852			—
Actuarial loss			(936	)		(370	)		(87	)
Amortization of transition obligation related to pensions (ASC 715)			67			—			—
Total other comprehensive income (loss)	17		13,713			(3,724	)		41,358
Comprehensive income (loss)			70,422			(71,997	)		283,881
Allocation of comprehensive income (loss):
Common shareholders			27,228			(108,184	)		141,154
Preferred shareholders			10			5			—
Non-controlling interest	17		43,184			36,182			142,727

See Notes to Consolidated Financial Statements.

F-6

Consolidated Statements of Total Equity

									EUR
(thousands, except for share data)	Notes		Number of common shares			Number of preferred shares			Common shares			Preferred shares			Capital in excess of par value			Treasury shares at cost			Retained earnings			Accumulated other comprehens- ive income (loss)			Total share- holders’ equity			Non- controlling interest			Total equity
Balance January 1, 2008				54,005,214			—			2,160			—			319,657			(3,985	)		73,965			(72,919	)		318,878			120,624			439,502
Compensation expense stock options		18		—			—			—			—			2,024			—			—			—			2,024			—			2,024
Purchase of common shares		17		—			—			—			—			—			(36,453	)		—			—			(36,453	)		—			(36,453	)
Issuance of preferred shares		17		—			21,985			—			220			—			—			—			—			220			—			220
Conversion of debt into common shares		16		269,917			—			11			—			3,582			—						—			3,593			—			3,593
Conversion of debt into common shares out of treasury shares		16, 17		—			—			—			—			—			1,373			—			—			1,373			—			1,373
Exercise of stock options out of treasury shares		16, 17		—			—			—			—			(556	)		1,850			(255	)		—			1,039			—			1,039
Net earnings to common shareholders				—			—			—			—			—			—			18,401			—			18,401			38,298			56,699
Other comprehensive income		17		—			—			—			—			—			—			—			8,827			8,827			4,886			13,713
Other movements in non-controlling interest:
Dividend paid				—			—			—			—			—			—			—			—			—			(43,398	)		(43,398	)
Dilution				—			—			—			—			—			—			—			—			—			4,729			4,729
Balance December 31, 2008				54,275,131			21,985			2,171			220			324,707			(37,215	)		92,111			(64,092	)		317,902			125,139			443,041
Compensation expense stock options				—			—			—			—			2,127			—			—			—			2,127			—			2,127
Withdrawal of common shares		17		(2,553,000	)		—			(102	)		—			(35,529	)		35,631			—			—			—			—			—
Dividend tax paid on withdrawal of common shares				—			—			—			—			(3,399	)		—			—			—			(3,399	)		—			(3,399	)
Withdrawal of preferred shares		17		—			(21,985	)		—			(220	)		—			—			—			—			(220	)		—			(220	)
Exercise of stock options out of treasury shares				—			—			—			—			(323	)		1,584			(25	)		—			1,236			—			1,236
Exercise stock options by issue of common shares		17		23,009			—			1			—			185			—			—			—			186			—			186
Reclassification transition obligation related to pensions (ASC 715)				—			—			—			—			—			—			(877	)		—			(877	)		—			(877	)
Impact of initial adoption of ASC 815 regarding the accounting for the convertible notes		16		—			—			—			—			—			—			7,902			—			7,902			—			7,902
Recognition conversion option subsequent to issuance of convertible notes		16		—			—			—			—			—			—			23,601			—			23,601			—			23,601
Net earnings to common shareholders				—			—			—			—			—			—			(107,522	)		—			(107,522	)		39,244			(68,278	)
Other comprehensive income		17		—			—			—			—			—			—			—			(662	)		(662	)		(3,062	)		(3,724	)
Other movements in non-controlling interest:
Dividend paid				—			—			—			—			—			—			—			—			—			(19,099	)		(19,099	)
Dilution				—			—			—			—			—			—			956			—			956			2,462			3,418
Balance December 31, 2009				51,745,140			—			2,070			—			287,768			—			16,145			(64,754	)		241,229			144,684			385,913
Compensation expense stock options				—			—			—			—			2,526			—			—			—			2,526			—			2,526
Conversion of debt into common shares		16		878,491			—			35			—			17,614			—			—			—			17,649			—			17,649
Exercise stock options by issue of common shares		17		308,250			—			12			—			3,932			—			—			—			3,944			—			3,944
Net earnings to common shareholders				—			—			—			—			—			—			110,639			—			110,639			131,884			242,523
Other comprehensive income		17		—			—			—			—			—			—			—			30,515			30,515			10,843			41,358
Other movements in non-controlling interest:
Dividend paid				—			—			—			—			—			—			—			—			—			(58,162	)		(58,162	)
Dilution				—			—			—			—			—			—			4,957			—			4,957			6,518			11,475
Balance December 31, 2010				52,931,881			—			2,117			—			311,841			—			131,741			(34,239	)		411,460			235,767			647,227

See Notes to Consolidated Financial Statements.

F-7

Consolidated Statements of Cash Flows

	Note		Year ended December 31,
(EURO thousands)			2008			2009			2010
Cash flows from operating activities:
Net earnings (loss)				56,709			(68,273	)		242,523
Adjustments to reconcile net earnings to net cash from operating activities:
Depreciation		8		33,176			32,054			30,630
Depreciation evaluation tools at customers				—			2,032			2,477
Amortization of other intangible assets		6		1,484			2,335			2,735
Impairment of property, plant and equipment		8		7,068			4,628			—
Impairment of goodwill		7		1,395			—			—
Amortization of debt issuance costs		16		742			902			1,952
Accruals for restructuring expenses and onerous contracts				—			26,657			1,863
Compensation expense employee share incentive scheme ASMPT		18		7,524			3,685			11,375
Compensation expense employee stock option plan		18		2,024			2,127			2,526
Accretion interest convertible bonds		16		—			4,286			6,010
Change in fair value conversion option		16		—			24,364			19,037
Deferred income taxes				(514	)		(9,081	)		4,092
(Gain) loss resulting from early extinguishment of debt		16		(7,956	)		1,759			3,609
Gain on dilution of investment in subsidiary		18		(4,088	)		—			—
Increase (decrease) in allowance for doubtful receivables		4		1,927			1,667			(187	)
Changes in assets and liabilities:
Accounts receivable				73,159			1,338			(95,073	)
Inventories				23,980			30,044			(77,236	)
Other current assets				1,699			(5,449	)		(31,478	)
Accounts payable and accrued expenses				(54,471	)		23,171			104,095
Advance payments from customers				(4,339	)		11,052			9,646
Deferred revenue				(7,680	)		(1,674	)		1,100
Payments from provision restructuring expenses				—			(16,105	)		(9,297	)
Pension liabilities				743			(280	)		390
Income taxes				4,820			(8,586	)		29,096
Net cash provided by operating activities				137,402			62,652			259,884
Cash flows from investing activities:
Capital expenditures		8		(31,450	)		(12,718	)		(102,974	)
Purchase of intangible assets		6		(5,362	)		(3,294	)		(624	)
Acquisition of business		7		(176	)		(50	)		—
Proceeds from sale of business		7		410			—			—
Proceeds from sale of property, plant and equipment		8		3,569			570			3,032
Net cash used in investing activities				(33,009	)		(15,493	)		(100,566	)
Cash flows from financing activities:
Notes payable to banks, net				(5,172	)		966			(10,817	)
Debt issuance costs for stand-by facility paid				—			(1,075	)		—
Net-proceeds from long-term debt and subordinated debt				7,980			144,516			—
Repayments of long-term debt and subordinated debt				(45,754	)		(32,246	)		(57,994	)
Purchase of treasury shares		17		(36,453	)		—			—
Proceeds from issuance of common shares and exercise of stock options				1,039			1,447			3,944
Dividend tax paid on withdrawal of common shares				—			(3,399	)		—
Proceeds from issuance of preferred shares		17		220			(220	)		—
Dividends to minority shareholders ASMPT				(43,398	)		(19,099	)		(58,162	)
Net cash provided by / (used in) financing activities				(121,538	)		90,890			(123,027	)
Foreign currency translation effect				6,499			(1,427	)		10,096
Net (decrease) increase in cash and cash equivalents				(10,646	)		136,623			46,387
Cash and cash equivalents at beginning of year		3		167,923			157,277			293,902
Cash and cash equivalents at end of year		3		157,277			293,902			340,294
Supplemental disclosures of cash flow information
Cash paid during the year for:
Interest				3,843			5,918			14,786
Income taxes				8,438			21,144			9,751
Supplemental on cash investing and financing activities:
Subordinated debt converted		16		4,966			—			13,473
Subordinated debt converted into number of shares		16		372,946			—			878,491

See Notes to Consolidated Financial Statements.

F-8

Notes to Consolidated Financial Statements

1- General information / Summary of Significant Accounting Policies

General information

ASM International N.V. (“ASMI” or “the Company”) is a Netherlands public liability company domiciled in the Netherlands with its principal operations in Europe, the United States, Southeast Asia and Japan. The Company dedicates its resources to the research, development, manufacturing, marketing and servicing of equipment and materials used to produce semiconductor devices. The Company provides production solutions for the main areas of semiconductor production: wafer processing (Front-end), assembly and packaging (Back-end).

The Company’s shares are listed for trading on the NASDAQ (symbol ASMI) and the Euronext Amsterdam Stock Exchange (symbol ASM).

The accompanying consolidated financial statements include the financial statements of ASM International N.V. headquartered in Almere, the Netherlands, and its consolidated subsidiaries (together referred to as “ASMI” or the “Company”).

Basis of preparation

The Company follows accounting principles generally accepted in the United States of America (“U.S. GAAP”) and applies the going concern basis in preparing its consolidated financial statements. Historical cost is used as the measurement basis unless otherwise indicated.

The accompanying consolidated financial statements are stated in thousands of Euros (“EUR”) unless indicated otherwise. Amounts in these financial statements are rounded to the nearest thousand Euro; therefore amounts may not equal (sub) totals due to rounding.

Use of estimates

The preparation of the Company’s consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities on the balance sheet dates and the reported amounts of revenue and expenses during the reported periods. While we regularly evaluate our estimates and assumptions, actual results may differ from these estimates if these assumptions prove incorrect.

Consolidation

The consolidated financial statements include the accounts of ASMI N.V. and all of its subsidiaries where ASMI holds a controlling interest. The non-controlling interest is disclosed separately in the consolidated financial statements. All intercompany profits, transactions and balances have been eliminated in consolidation.

Subsidiaries are all entities over which ASMI has the power to govern the financial and operating policies.

As further described in the Notes to Consolidated Financial Statements herein, from time to time, the consolidated subsidiary ASM Pacific Technology Ltd. (“ASMPT”) will issue common shares pursuant to their Employee Share Incentive Scheme. The effect of these issuances is a dilution of the ownership in ASMPT. Following the adoption of ASC 810(-10 45-23) as per 2009 results on dilution of investments in subsidiaries are accounted for directly in equity.

Subsidiaries are fully consolidated from the date on which control is transferred to ASMI and are deconsolidated from the date on which ASMI’s control ceases.

Segment reporting

The Company organizes its activities in two operating segments, Front-end and Back-end. Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Executive Officer (“CEO”), which is the chief operating decision maker (according to ASC 280).

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

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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 of 52.36% interest, whilst the remaining shares are listed on the Stock Exchange of Hong Kong.

Foreign Currency Translation

Items included in the financial statements of each ASMI’s entities are measured using the currency of the primary economic environment in which the entity operates (the functional currency). The consolidated financial information is presented in euro (EUR), which is the functional currency of the Company and the group’s presentation currency.

In the preparation of ASMI’s consolidated financial statements assets and liabilities of foreign subsidiaries, of which the functional currency is not the euro, are translated into euros at the exchange rate in effect on the respective balance sheet dates. Income and expenses are translated into euros based on the weighted average exchange rates for the corresponding period. Resulting translation adjustments are directly recorded in shareholders’ equity. Currency differences on intercompany loans that have the nature of a long-term investment are also accounted for directly in shareholders’ equity.

Reclassifications

Following the adoption of ASC 810(-10 45-23) as per 2009 results on dilution of investments in subsidiaries are accounted for directly in equity. The 2009 results and changes in equity have been adjusted accordingly.

Derivative Financial Instruments

ASMI and its subsidiaries conduct business in a number of foreign countries, with certain transactions denominated in currencies other than the functional currency of the Company (euro) or one of its subsidiaries conducting the business. The purpose of the Company’s foreign currency management is to manage the effect of exchange rate fluctuations on income, expenses, cash flows and assets and liabilities denominated in selected foreign currencies, in particular denominated in U.S. dollar.

The Company’s Front-end segment uses forward exchange contracts to hedge its foreign exchange risk of anticipated sales or purchase transactions in the normal course of business, which occur within the next twelve months, for which the Company has a firm commitment from a customer or to a supplier. The terms of these contracts are consistent with the timing of the transactions being hedged. The hedges related to forecasted transactions are designated and documented at the inception of the hedge as cash flow hedges, and are evaluated for effectiveness quarterly. The effective portion of the gain or loss on these hedges is reported as a component of accumulated other comprehensive income (loss) net of taxes in shareholders’ equity, and is reclassified into earnings when the hedged transaction affects earnings.

Changes in the fair value of derivatives that do not qualify for hedge treatment, as well as the ineffective portion of any hedges, are recognized in earnings. The Company records all derivatives, including forward exchange contracts, on the balance sheet at fair value in other current assets or accrued expenses and other.

Substantially all amounts, which are net of taxes, included in accumulated other comprehensive loss at December 31, 2010 will be reclassified to net earnings within the next twelve months, upon completion of the underlying transactions. If the underlying transaction being hedged fails to occur, or if a portion of any derivative is ineffective, the gain or loss is immediately recognized in earnings under foreign currency exchange gains (losses) in the consolidated statement of operations.

Furthermore, the Company manages the currency exposure of certain receivables and payables using derivative instruments, such as forward exchange contracts (fair value hedges) and currency swaps, and non-derivative instruments, such as debt borrowings in foreign currencies. The gains or losses on these instruments provide an offset to the gains or losses recorded on receivables and payables denominated in foreign currencies. The derivative instruments are recorded at fair value and changes in fair value are recorded in earnings under foreign currency exchange gains (losses) in the consolidated statement of operations. Receivables and payables denominated in foreign currencies are recorded at the exchange rate at the balance sheet date and gains and losses as a result of changes in exchange rates are recorded in earnings under foreign currency exchange gains (losses) in the consolidated statement of operations.

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The Company does not use forward exchange contracts for trading or speculative purposes.

Cash and Cash Equivalents

Cash and cash equivalents comprise cash on hand, deposits held at call with banks, and other short-term highly liquid investments with original maturity of three months or less. Bank overdrafts are included within notes payable to banks in current liabilities on the consolidated balance sheet.

Cash and cash equivalents of the Company’s subsidiaries ASMPT and ASM Japan are restricted to be used only in the operations of ASMPT and ASM Japan respectively. The use of the equivalent of 67% of the outstanding 2011 4.25% convertible bonds due is restricted in use under the credit facility agreement.

Accounts Receivable

Accounts receivable are stated at nominal value less an allowance for doubtful accounts.

A significant percentage of our accounts receivable is derived from sales to a limited number of large multinational semiconductor device manufacturers located throughout the world. In order to monitor potential credit losses, we perform ongoing credit evaluations of our customers’ financial condition. An allowance for doubtful accounts is maintained for potential credit losses based upon management’s assessment of the expected collectability of all accounts receivable. The allowance for doubtful accounts is reviewed periodically to assess the adequacy of the allowance. In making this assessment, management takes into consideration any circumstances of which we are aware regarding a customer’s inability to meet its financial obligations; and our judgments as to potential prevailing economic conditions in the industry and their potential impact on the Company’s customers.

Inventories

Inventories are valued at the lower of cost (first-in, first-out method) or market value. Costs include net prices paid for materials purchased, charges for freight and custom duties, production labor cost and factory overhead. Allowances are made for slow moving, obsolete or unsellable inventory.

Allowances for inventory are determined based on the expected demand as well as the expected market value of the inventory. We regularly evaluate the value of our inventory of components and raw materials, work in progress and finished goods, based on a combination of factors including the following: forecasted sales, historical usage, product end of life cycle, estimated current and future market values, service inventory requirements and new product introductions, as well as other factors. Purchasing requirements and alternative uses for the inventory are explored within these processes to mitigate inventory exposure. We record write downs for inventory based on the above factors and take into account worldwide quantities and demand into our analysis.

Evaluation tools at customers

Evaluation tools at customers (“evaluation tools”) are systems generally delivered to customers under evaluation or a conditional purchase order and include substantial customization by ASM engineers and ASM-R&D staff in the field. Evaluation tools are recorded at cost and depreciated over their useful life (5 years). The depreciation period may be shorter, depending on circumstances. The depreciation expenses are reported as Cost of sales.

On final acceptance of the system the purchase consideration is recognized as revenue. The carrying value of the evaluation system at that point in time is recognized as cost of sales. When the system is returned, at the end of the evaluation period, a detailed impairment review takes place, and future sales opportunities and additional costs are identified. Only when the fair value is below the carrying value of the evaluation tool an additional depreciation is recognized. The remaining carrying value is recognized as finished goods (inventory).

Long-lived assets

Long-lived assets include goodwill, other intangible assets and property, plant and equipment. Property, plant and equipment are carried at cost, less accumulated depreciation and any impairment losses. Capital leased assets are recorded at the present value of future lease obligations. Depreciation is calculated using the straight-line method over the estimated useful lives. Leasehold improvements are depreciated over the lesser of the estimated useful life of the leasehold improvement or the term of the underlying lease.

F-11

Business combinations are accounted for under the purchase acquisition method. The Company tests its recorded goodwill and other intangible assets with indefinite lives for impairment each year on December 31 and whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

Goodwill is allocated to reporting units for purposes of impairment testing and tested for impairment on a two step approach. The implied fair value of goodwill is determined. First the recoverability is tested by comparing the carrying amount of the goodwill with the fair value being the sum of the discounted future cash flows. If the carrying amount of the goodwill at reporting unit level is higher than the fair value of the goodwill, the second step should be performed. The goodwill impairment is measured as the excess of the carrying amount of the goodwill over its fair value.

Other intangible assets with finite lives are amortized over the estimated useful lives using the straight-line method.

Recoverability of Long-Lived Asset

Long-lived assets (except those not being amortized) to be held and used by the Company are reviewed by the Company for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In performing the review for recoverability, the Company estimates the future undiscounted cash flows expected to result from the use of the asset. If the undiscounted future cash flow is less than the carrying amount of the asset, the asset is deemed impaired. The amount of the impairment is measured as the difference between the carrying value and the fair value of the asset. Long-lived assets and other intangibles (except those not being amortized) to be disposed of are reported at the lower of carrying amount or fair value less cost to sell.

Revenue Recognition

The Company recognizes revenue when all four revenue recognition criteria have been met: persuasive evidence of an arrangement exists; delivery has occurred or services have been rendered; seller’s price to buyer is fixed or determinable; and collectability is reasonably assured. The Company’s revenue includes revenue from contractual arrangements consisting of multiple deliverables, such as equipment and installation. The revenue from the undelivered element of the arrangement is deferred at fair value until delivery of the element.

A major portion of our revenue is derived from contractual arrangements with customers that have multiple deliverables, such as installation. The revenue relating to the undelivered elements of the arrangements, the installation, is deferred at fair value until delivery of these elements. The fair value is determined by vendor specific objective evidence (“VSOE”). VSOE is determined based upon the prices that the Company charges for installation on a stand-alone basis, which are subject to normal price negotiations.

In general, the Company recognizes revenue from sales of equipment upon shipment of equipment, only if testing at the factory has proven that the equipment has met substantially all of the customer’s criteria and specifications. The outcome of the test is signed-off by the customer (“factory acceptance”). Instead of signing-off, the customer may choose to provide a waiver, e.g. with respect to repeat orders.

The Company recognizes revenue from installation of equipment upon completion of installation at the customer’s site. At the time of shipment, the Company defers that portion of the sales price related to the fair value of installation. The fair value of the installation process is measured based upon the per-hour amounts charged by third parties for similar installation services. Installation is completed when testing at the customer’s site has proven that the equipment has met all of the customer’s criteria and specifications. The completion of installation is signed-off by the customer (“final acceptance”).

We provide training and technical support service to customers. Revenue related to such services is recognized when the service is rendered. Revenue from the sale of spare parts and materials is recognized when the goods are shipped.

The Company’s sales frequently involve complex equipment, which may include customer-specific criteria, sales to new customers or equipment with new technology. For each sale, the decision whether to recognize revenue is, in addition to shipment and factory acceptance, based on the contractual agreement with a customer, the experience with a particular customer, the technology and the number of similarly configured equipment previously delivered. Instead of recognizing revenue, the Company could decide to defer revenue recognition until completion of installation at the customer’s site and obtaining final acceptance from the customer.

F-12

Freight charges billed to customers are recognized as revenue, the related costs are recognized as cost of sales.

Revenues are recognized excluding the taxes levied on revenues.

Cost of Sales

Cost of sales comprise direct costs such as labor, materials, cost of warranty, depreciation, shipping and handling costs and related overhead costs. Cost of sales also includes third party commission, depreciation expenses of evaluation tools at customers, royalty payments and costs relating to prototype and experimental products, which the Company may subsequently sell to customers. Costs of warranty include the cost of labor, material and related overhead necessary to repair a product during the warranty period.

Warranty

We provide maintenance on our systems during the warranty period, usually one to two years. Costs of warranty include the cost of labor, material and related overhead necessary to repair a product during the warranty period. We accrue for the estimated cost of the warranty on products shipped in a provision for warranty, upon recognition of the sale of the product. The costs are estimated based on actual historical expenses incurred and on estimated future expenses related to current sales, and are updated periodically.

Research and Development Costs

Research and development costs are expensed as incurred. Costs, which relate to prototype and experimental models and are sold to customers, are charged to cost of sales. Subsidies and other governmental credits to cover research and development costs relating to approved projects are recorded as research and development credits in the period when such project costs occur. The research and development expenses are presented net of the development credits. Technical development credits received from the government of the Netherlands, to offset the costs of certain research and development projects, are contingently repayable to the extent sales of products developed in such projects occur within the agreed upon period. Such repayments are calculated as a percentage of sales and are charged to cost of sales. No such repayments are required if such sales do not occur within the agreed upon period. Reference is made to Note 22.

Share-based compensation expenses

On January 1, 2006 ASMI adopted ASC 715 “Share-Based Payment” (“ASC 715”), using the modified prospective transition method. ASC 715 requires that the cost of all employee stock options, as well as other equity-based compensation arrangements, be reflected in the financial statements based on the estimated fair value of the awards.

The cost relating to employee stock options (compensation expense) are recognized based upon the grant date fair value of stock options. The fair value at grant date is estimated using a Black-Scholes option valuation model. This model requires the use of assumptions including expected stock price volatility, the estimated life of each award and the estimated dividend yield.

The grant date fair value of the stock options is expensed on a straight-line basis over the vesting period, based on the Company’s estimate of stock options that will eventually vest. The impact of the true up of the estimates is recognized in the consolidated statement of operations in the period in which the revision is determined.

For further information on ASMI’s employee stock option plans reference is made to Note 18.

Restructuring costs

Restructuring expenses are recognized for exit or disposal activities when the liability arising from restructuring plans is incurred. In 2008, 2009 and 2010 restructuring expenses incurred, reference is made to Note 23. Distinction is made in one-time employee termination expenses, contract termination expenses and other associated expenses. For the accounting on the distinguished elements of restructuring expenses we apply to the policy as mentioned below. The expenses have been charged to “restructuring expenses”.

F-13

One-time termination expenses represent the payments provided to employees that have become redundant and are terminated under the terms and conditions of a restructuring plan. A restructuring plan exists at the date the plan meets all of the following criteria and has been communicated to employees:

• Management commits to the plan.

• The plan identifies the number of employees that become redundant and the expected completion date.

• The plan sets out the terms and conditions of the arrangement in sufficient detail to enable employees to determine the type and amount of benefits they will receive.

• Actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.

The timing of the recognition and measurement of a liability for one-time termination expenses depends on whether employees will be retained to render service beyond a minimum retention period.

Contract termination expenses are related to the termination of an operating lease or another contract. These expenses are distinguished in:

• Expenses related to the termination of the contract before the end of its term. These expenses are recognized when the contract is terminated .The liability is measured at its fair value in accordance with the contract terms.

• Expenses related to contracts that will last for its remaining term without economic benefit to the entity. This is the case when a lease contract for premises is not terminated while the premises are not (completely) in use anymore. The liability is accrued for at the cease-use date, the date the company determined that it would no longer occupy the premises, which is conveyed to it under the contractual operating lease. The liability is measured at its fair value in accordance with the contract terms.

Other costs related to restructuring include costs to consolidate or close facilities and relocate employees. A liability for other expenses related to a restructuring such as transition costs is recognized and measured in the period in which the liability is incurred. The costs incurred are directly related to the restructuring activity. The definition of exit costs excludes expected future operating losses.

Income Taxes

The Company recognizes deferred tax assets and liabilities for the estimated future tax consequences of events attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using currently enacted tax rates. The effect on deferred tax assets and liabilities of changes in tax rates is recognized in the Consolidated Statement of Operations in the period in which the enacted rate changes. Deferred tax assets are reduced through a valuation allowance at such time as, based on available evidence, it is more likely than not that the deferred tax assets will not be realized.

On January 1, 2007 the Company adopted Interpretation 48, “Accounting for Uncertainty in Income Taxes” (“ASC 740”). ASC 740 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with Statement of Financial Accounting Standard ASC 740, “Accounting for Income Taxes”. ASC 740 prescribes a two-step approach for recognizing and measuring tax positions taken or expected to be taken in a tax return. Prior to recognizing the benefit of a tax position in the financial statements, the tax position must be more-likely-than-not of being sustained based solely on its technical merits. Once this recognition threshold has been met, tax positions are recognized at the largest amount that is more-likely-than-not to be sustained. ASC 740 also provides guidance on derecognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition.

Pensions

The Company has retirement plans covering substantially all employees. The principal plans are defined contribution plans, except for the plans of the Company’s operations in the Netherlands and Japan. The Company’s employees in the Netherlands participate in a multi-employer plan. Payment to defined contribution plans and the multi-employer plan are recognized as an expense in the Consolidated Statement of Operations as they fall due.

The Company’s employees in Japan participate in a defined benefit plan. Pension costs in respect of this defined benefit plan are determined using the projected unit credit method. These costs primarily

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represent the increase in the actuarial present value of the obligation for pension benefits based on employee service during the year and the interest on this obligation in respect of employee service in previous years, net of the expected return on plan assets.

Actuarial gains and losses are recognized in income, spread over the average remaining service lives of employees, using the corridor approach. In accordance with ASC 715, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans the Company recognizes in its Consolidated Balance Sheet an asset or a liability for the plan’s overfunded status or underfunded status respectively. Reference is made to Note 18.

Commitments and Contingencies

The Company has various contractual obligations, some of which are required to be recorded as liabilities in the Company’s consolidated financial statements, including long- and short-term debt. Others, namely operating lease commitments, purchase commitments and commitments for capital expenditure, are generally not required to be recognized as liabilities on the Company’s balance sheet but are required to be disclosed. Reference is made to Note 19.

Comprehensive Income

Comprehensive income consists of net earnings (loss) and other comprehensive income. Other comprehensive income includes gains and losses that are not included in net earnings, but are recorded directly in Shareholders’ Equity.

New Accounting Pronouncements

In April 2009, the FASB issued ASC 820-10-65-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly”. This ASC provides guidance for making fair value measurements more consistent with the principles presented in ASC 820, “Fair Value Measurements”. This ASC relates to determining fair values when there is no active market or where the price inputs being used represent distressed sales. It reaffirms the objective of fair value measurement—to reflect how much an asset would be sold for in an orderly transaction at the date of the financial statements under current market conditions. Specifically, it reaffirms the need to use judgment to ascertain if a formerly active market has become inactive and in determining fair values when markets have become inactive. The ASC is effective for financial statements issued for fiscal years and interim periods beginning after June 15, 2009 and should be applied prospectively. The implementation of this standard did not have any impact on the consolidated financial statements of the Company.

In June 2009, the FASB issued ASC 810 (Statement 167, “Amendments to FASB Interpretation No. 46(R)”). This ASC changes the way in which a company determines whether or not an entity that is insufficiently capitalized or is not controlled through voting (or similar rights) should be consolidated. The determination of whether a company is required to consolidate an entity is based on, among other things, an entity’s purpose and design and its ability to direct the activities of the entity that most significantly impact the entity’s economic performance. This ASC is effective for fiscal years and interim periods beginning after November 15, 2009. The implementation of this standard did not have any impact on the consolidated financial statements of the Company.

In September 2009, the EITF reached final consensus on ASU 2009-13, “Revenue Arrangements with Multiple Deliverables”. ASU 2009-13 amends the current guidance on arrangements with multiple deliverables (ASC 605-25) to (1) eliminate the separation criterion that requires entities to establish objective and reliable evidence of fair value for undelivered elements, (2) establish a selling price hierarchy to help entities allocate arrangement consideration to the separate units of account (i.e. separate elements of the sales agreement), (3) require the relative selling price allocation method for all arrangements (i.e., eliminate the residual method), and (4) significantly expand required disclosures. The final consensus is effective for financial years beginning after June 15, 2010. We anticipate that the adoption of ASU 2009-13 will not have a material impact on the Company’s consolidated financial statements.

In September 2009, the EITF reached final consensus on ASU 2009-14, Certain Revenue Arrangements that include Software elements. ASU 2009-14 amends the scoping guidance for software arrangements (ASC 985-605) to exclude tangible products that contain software elements and non-software elements that function together to interdependently deliver the product’s essential functionality. ASU 2009-14 also provides considerations and examples for entities applying this guidance. This issue will be

F-15

effective prospectively for new or materially modified agreements entered into in financial years beginning on or after June 15, 2010. We are currently assessing the impact that ASU 2009-14 may have on our consolidated financial statements.

In January 2010, the EITF reached final consensus on ASU 2010-06, “Improving Disclosures about Fair Value Measurements”. This ASU amends ASC 820 to add new requirements for disclosures about transfers into and out of Levels 1 and 2 and separate disclosures about purchases, sales issuances and settlements relating to Level 3 measurements. The ASU also clarifies existing fair value disclosures about the level of disaggregation and about inputs and valuation techniques used to measure fair value. The ASU is effective for annual reporting periods beginning after December 15, 2009. Level 3 related amendments are effective for annual periods beginning after December 15, 2010. The adoption of the ASU did not have any impact on the Company’s consolidated financial statements but resulted in some additional disclosures, see Note 2. We are currently assessing the impact of the Level 3 related amendments.

In 2010, the Company adopted ASU 2010-20, “Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses”. This ASU is intended to provide additional information to assist financial statement users in assessing an entity’s credit risk exposures and evaluating the adequacy of its allowance for credit losses. The objective of the amendments is for an entity to provide disclosures that facilitate financial statement users’ evaluation of the following: the nature of credit risk inherent in the entity’s portfolio of financing receivables, how that risk is analyzed and assessed in arriving at the allowance for credit losses and the changes and reasons for those changes in the allowance for credit losses. The adoption of the ASU did not have any impact on the Company’s consolidated financial statements.

In 2010, the Company adopted ASU 2010-09, “Amendments to Certain Recognition and Disclosure Requirements”. This ASU amends ASC 855 to address certain implementation issues related to an entity’s requirement to perform and disclose subsequent event procedures. The adoption of this ASU did not have any impact on the Company’s consolidated financial statements.

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2- List of Significant Subsidiaries

Name	Location	% Ownership December 31,
		2009			2010
ASM Europe B.V. 1	Almere, the Netherlands		100.00	%		100.00	%
ASM United Kingdom Sales B.V. 1	Almere, the Netherlands		100.00	%		100.00	%
ASM Germany Sales B.V. 1	Almere, the Netherlands		100.00	%		100.00	%
ASM Pacific Holding B.V. 3	Almere, the Netherlands		100.00	%		100.00	%
Advanced Semiconductor Materials (Netherlands Antilles) N.V.	Willemstad, Curacao, Netherlands Antilles		100.00	%		100.00	%
ASM France S.A.R.L.	Montpellier, France		100.00	%		100.00	%
ASM Belgium N.V.	Leuven, Belgium		100.00	%		100.00	%
ASM Italia S.r.l.	Agrate, Italy		100.00	%		100.00	%
ASM Microchemistry Oy	Helsinki, Finland		100.00	%		100.00	%
ASM Services and Support Ireland Ltd.	Dublin, Ireland		100.00	%		100.00	%
ASM Services and Support Israel Ltd	Tel Aviv, Israel		100.00	%		100.00	%
ASM America, Inc.	Phoenix, Arizona, United States		100.00	%		100.00	%
ASM Japan K.K.	Tokyo, Japan		100.00	%		100.00	%
ASM Wafer Process Equipment Ltd.	Quarry Bay, Hong Kong, People’s Republic of China		100.00	%		100.00	%
ASM China Trading Ltd.	Shanghai, People’s Republic of China		100.00	%		100.00	%
ASM Wafer Process Equipment Singapore Pte Ltd.	Singapore		100.00	%		100.00	%
ASM Far East Marketing Ltd.	Hsin-Chu, Taiwan		100.00	%		100.00	%
ASM Front-End Sales & Services Taiwan Co., Ltd.	Hsin-Chu, Taiwan		100.00	%		100.00	%
ASM Front-End Manufacturing Singapore Pte Ltd.	Singapore		100.00	%		100.00	%
ASM NuTool, Inc.	Phoenix, Arizona, United States		100.00	%		100.00	%
ASM Genitech Korea Ltd.	Cheonan, South Korea		100.00	%		100.00	%
ASM Pacific Technology Ltd.	Kwai Chung, Hong Kong, People’s Republic of China		52.59	%		52.36	%
ASM Assembly Automation Ltd. 2	Kwai Chung, Hong Kong, People’s Republic of China		52.59	%		52.36	%
ASM Assembly Materials Ltd. 2	Kwai Chung, Hong Kong, People’s Republic of China		52.59	%		52.36	%
ASM Technology Singapore Pte Ltd. 2	Singapore		52.59	%		52.36	%
ASM Technology (M) Sdn. Bhd. 2	Johor Bahru, Malaysia		52.59	%		52.36	%
ASM Semiconductor Materials (Shenzhen) Co. Ltd. 2	Shenzhen, People’s Republic of China		52.59	%		52.36	%
Edgeward Development Ltd. 2	Guernsey, Channel Islands		52.59	%		52.36	%
Shenzhen ASM Micro Electronic Technology Co. Ltd. 2	Shenzhen, People’s Republic of China		52.59	%		52.36	%

(1) For these subsidiaries ASM International N.V. has filed statements at the Dutch Chamber of Commerce assuming joint and several liability in accordance with Article 403 of Book 2, Part 9 of the Netherlands Civil Code.

(2) 100% subsidiaries of ASM Pacific Technology Ltd.

(3) Established in 2008, ASM Pacific Holding B.V. is holding 52.36% of the shares in ASM Pacific Technology Ltd.

The accounts of the above mentioned entities and of certain insignificant subsidiaries not mentioned above have been consolidated in the Consolidated Financial Statements.

3- Cash and Cash Equivalents

At December 31, 2010, cash and cash equivalents of the Company’s subsidiaries ASMPT and ASM Japan amounted to € 197,865 and € 15,647 respectively, which are restricted to be used only in the operations of ASMPT and ASM Japan respectively. The use of € 22,406 (USD 29,939) of cash and cash equivalents is restricted in use under the credit facility agreement for the repurchase of outstanding convertible bonds due 2011. No further restrictions on usage of cash and cash equivalents exist. The carrying amount approximates their fair value.

F-17

4- Accounts receivable

The carrying amount of accounts receivable is as follows:

	Current		Overdue < 30 days		Overdue 31 – 60 days		Overdue 61 – 120 days		Overdue > 120 days		Total
December 31, 2009		127,409		19,712		11,195		4,627		2,811		165,754
December 31, 2010		213,059		28,684		15,814		10,368		3,346		271,271

The changes in the allowance for doubtful accounts receivable are as follows:

Balance January 1, 2008	(5,075	)
Charged to selling, general and administrative expenses	(2,859	)
Utilization	932
Foreign currency translation effect	(298	)
Balance December 31, 2008	(7,300	)
Charged to selling, general and administrative expenses	(2,812	)
Utilization	1,145
Foreign currency translation effect	(1	)
Balance December 31, 2009	(8,968	)
Charged to selling, general and administrative expenses	(461	)
Utilization	648
Foreign currency translation effect	(522	)
Balance December 31, 2010	(9,304	)

The carrying amount of the accounts receivable approximates their fair value.

5- Inventories

Inventories consist of the following:

	December 31,
	2009			2010
Components and raw materials		92,352			138,965
Work in process		64,516			128,728
Finished goods		40,716			28,165
Total inventories, gross		197,584			295,857
Allowance for obsolescence		(46,939	)		(41,301	)
Total inventories, net		150,645			254,557

The changes in the allowance for obsolescence are as follows:

Balance January 1, 2008	(27,493	)
Charged to cost of sales	(11,711	)
Utilization	8,299
Foreign currency translation effect	(1,710	)
Balance December 31, 2008	(32,615	)
Charged to cost of sales	(27,236	)
Utilization	11,818
Foreign currency translation effect	1,094
Balance December 31, 2009	(46,939	)
Charged to cost of sales	(3,248	)
Utilization	14,628
Foreign currency translation effect	(5,742	)
Balance December 31, 2010	(41,301	)

F-18

6- Other Intangible Assets

Other intangible assets include purchased technology from third parties and software developed or purchased (including licences) for internal use. The changes in the amount of other intangible assets are as follows:

	Software			Purchased technology and other intangible assets		Total
At cost:
Balance January 1, 2009		10,111			2,754		12,865
Additions		3,294			—		3,294
Foreign currency translation effect		(81	)		166		85
Balance December 31, 2009		13,324			2,920		16,244
Additions		624			—		624
Reclassification		131			—		131
Foreign currency translation effect		354			272		626
Balance December 31, 2010		14,433			3,192		17,625
Accumulated amortization:
Balance January 1, 2009		3,042			1,905		4,947
Amortization for the year		1,934			401		2,335
Foreign currency translation effect		(89	)		114		25
Balance December 31, 2009		4,887			2,420		7,307
Amortization for the year		2,376			358		2,735
Reclassification		240			—		240
Foreign currency translation effect		305			233		538
Balance December 31, 2010		7,809			3,011		10,820
Other intangible assets, net:
December 31, 2009		8,437			500		8,936
December 31, 2010		6,624			181		6,804

Other intangible assets are amortized over useful lives of 3 to 7 years. Estimated amortization expenses relating to other intangible assets are as follows:

2011	2,433
2012	2,050
2013	1,640
2014	679
2015	3
	6,804

7- Goodwill

The changes in the carrying amount of goodwill are as follows:

	Front-end		Back-end			Total
Balance January 1, 2009		9,845		38,144			47,989
Foreign currency translation effect		550		(1,316	)		(766	)
Balance December 31, 2009		10,395		36,828			47,223
Foreign currency translation effect		798		2,794			3,592
Balance December 31, 2010		11,193		39,622			50,815

F-19

The allocation of the carrying amount of goodwill is as follows:

	December 31,
	2009		2010
Front-end segment:
ASM Microchemistry Oy		3,560		3,560
ASM Genitech Korea Ltd		6,835		7,633
Back-end segment:
ASM Pacific Technology Ltd		36,828		39,622
Total		47,223		50,815

NanoPhotonics AG—In September 2008, the Company sold its entire 72.86% interest in NanoPhotonics AG. The Company recorded an impairment charge of € 1,395 related to goodwill of its investment in NanoPhotonics AG in June 2008.

The proceeds from the sale of NanoPhotonics AG and the impairment charge can be summarized as follows:

Carrying value of assets and liabilities:
Intangible assets:	8
Goodwill	1,729
Property, plant & equipment	346
Other assets and liabilities	(278	)
	1,805
Cash proceeds from sale of NanoPhotonics AG	(410	)
Impairment charge	1,395

ASM Genitech Korea Ltd.—In 2004, the Company acquired 100% of the common shares in Genitech in exchange for 247,638 common shares of the Company, € 4,640 in cash and possible future variable cash payments of up to US$ 9.2 million if certain financial performance targets are satisfied at various times from the acquisition date in 2004 through the year ended December 31, 2008. The total consideration at the date of the acquisition in 2004, including expenses, amounted to € 7,939, excluding variable cash payments that may be payable in the future based on certain financial performance targets.

The excess of the purchase price over the fair value of the identifiable net assets has been recorded as goodwill in the amount of € 6,917 in 2004. In 2006, 2007 and 2008 the Company recorded € 862, € 281 and € 176 respectively as additional purchase consideration as certain financial performance targets were satisfied.

We perform an annual impairment test at December 31 of each year or if events or changes in circumstances indicate that the carrying amount of goodwill exceeds its fair value. Our Front-end impairment test and the determination of the fair value is based on a discounted future cash flow approach that uses our estimates of future revenues, driven by assumed market growth and estimated costs as well as appropriate discount rates. Our Back-end impairment test is based on the market value of the listed shares of ASMPT.

The material assumptions used for the fair value calculation of the reporting unit are:

• A discount rate of 20.5% ( last year 13.0%) representing the pre-tax weighted average cost of capital. This relative high rate is a consequence of the current situation whereby certain production lines are in the early phase of the product lifecycle, hence reflecting a higher risk.

• For Front- end external market segment data, historical data and strategic plans to estimate cash flow growth per product line have been used.

• Cash flow calculations are limited to five years of cash flow; after these five years perpetuity growth rates are set based on market maturity of the products. For maturing product the perpetuity growth rates used are 1% or less and for enabling technology products the rate used is 3% or less.

• For Back-end the market value of the listed shares of ASMPT on the Hong Kong Stock exchange has been used in our analysis.

These estimates are consistent with the plans and estimated costs we use to manage the underlying business. Based on this analysis management believes that as per December 31, 2010 the fair value of the reporting units exceeded the carrying value.

F-20

8- Property, Plant and Equipment

The changes in the amount of property, plant and equipment are as follows:

	Land, buildings and leasehold improvements			Machinery, equipment, furniture and fixtures			Total
At cost:
Balance January 1, 2009		104,860			327,783			432,643
Capital expenditures		1,849			10,869			12,718
Reclassification as held for sale		(6,634	)		—			(6,634	)
Impairment charges		(132	)		(4,496	)		(4,628	)
Retirements and sales		(217	)		(6,240	)		(6,457	)
Foreign currency translation effect		(3,251	)		(10,981	)		(14,232	)
Balance December 31, 2009		96,475			316,935			413,410
Capital expenditures		24,716			78,258			102,974
Retirements and sales		(1,612	)		(18,787	)		(20,399	)
Reclassification		74			(206	)		(132	)
Foreign currency translation effect		11,778			33,690			45,468
Balance December 31, 2010		131,431			409,889			541,320
Accumulated depreciation:
Balance January 1, 2009		59,156			224,930			284,086
Depreciation for the year		6,778			25,276			32,054
Reclassification as held for sale		(1,126	)		—			(1,126	)
Retirements and sales		(213	)		(5,427	)		(5,640	)
Foreign currency translation effect		(2,012	)		(8,764	)		(10,776	)
Balance December 31, 2009		62,583			236,016			298,599
Depreciation for the year		7,092			23,538			30,630
Retirements and sales		(1,607	)		(15,757	)		(17,364	)
Reclassification		—			(240	)		(240	)
Foreign currency translation effect		6,147			25,609			31,756
Balance December 31, 2010		74,216			269,167			343,383
Property, plant and equipment, net:
December 31, 2009		33,893			80,919			114,811
December 31, 2010		57,215			140,722			197,937

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

ASM Japan and ASM Front-End Manufacturing Singapore have pledged real estate with a carrying value of € 28,586 to secure loan facilities outstanding in Japan and Singapore.

In 2009 the Company recorded impairment charges of € 4,628 mainly related to machinery and equipment. The Company impaired certain demo tools which were as a result of the strategic reorientation determined end of life. Valuations of these assets are classified as Level 3 in the fair value hierarchy since their fair values were determined based on unobservable inputs. The impairment charges were determined based on the difference between the asset’s estimated fair value and their carrying amount.

In 2009 the decision was made to dispose certain items of property, plant and equipment. These assets are reported as held for sale.

9- Assets held for sale

The changes in the carrying value of assets held for sale are as follows:

	Japan		The Netherlands		Total
Balance January 1, 2009		—		—		—
Assets reclassified as held for sale		5,231		277		5,508
Balance December 31, 2009		5,231		277		5,508
Foreign currency translation effect		839		—		839
Balance December 31, 2010		6,070		277		6,347

F-21

In 2009 the decision was made to dispose certain items of property, plant and equipment. These assets represent a carrying value as per December 31, 2010 of € 6,347. The assets held for sale are located in Japan and The Netherlands. In Japan (Tama) a building that was used for research and development activities was ceased to be used in December 2009. The carrying value of € 5.3 million is lower than the fair value less cost to sell. Also in Japan a piece of land that was purchased to build a research and development center has now been regarded as held for sale. The carrying value of € 0.8 million is below the expected selling price. In the Netherlands the former ASMI head office located in Bilthoven has been regarded as held for sale. The carrying value of € 0.3 million is lower than the fair value less cost to sell. The expected selling prices were determined, based on various inputs and considerations, including an appraisal from an outside firm performed during 2009. During 2010 both the Japanese and the Dutch properties were under the interest of the market, though the assets have not been sold yet, the outside firms maintain the expected selling prices.

10- Evaluation tools at customers

The changes in the amount of evaluation tools are as follows:

Balance as at January 1, 2009	6,693
Evaluation tools shipped	8,588
Depreciation	(2,032	)
Evaluation tools sold	(1,776	)
Foreign currency translation effect	(191	)
Balance December 31, 2009	11,282
Evaluation tools shipped	5,381
Depreciation	(2,477	)
Evaluation tools sold	(8,526	)
Foreign currency translation effect	984
Balance December 31, 2010	6,644
Useful lives in years:	5

Evaluation tools are systems delivered to customers under evaluation agreements. Evaluation tools are recorded at cost and depreciated over their useful life (5 years). The depreciation period may be shorter, depending on circumstances. The depreciation expenses are reported as Cost of sales.

11- Investments

The investment of € 50 as per December 31, 2010 reflects the cost of the interest in Levitech B.V. Resulting from the management buy-out of the RTP business, ASM International N.V. obtained a 20% interest in Levitech B.V.

12- Notes Payable to Banks

Information on notes payable to banks is as follows:

	December 31,
	2009		2010
Short-term debt outstanding in:
Japan		13,518		7,130
Singapore		990		1,167
Overdraft in:
The Netherlands		2,500		—
Total		17,008		8,297

Short-term debt outstanding in local currencies is as follows (in thousands):

	December 31,
	2009		2010
Japanese yen		1,800,000		775,000
Singapore dollar		2,000		2,000

Short-term debt outstanding in Japan in the amount of € 7,130 is collateralized by real estate with a carrying value of € 8,780 of ASM Japan.

F-22

ASMI and its individual subsidiaries borrow under separate short-term lines of credit with banks in the countries where they are located. The lines contain general provisions concerning renewal and continuance at the option of the banks. The weighted average interest rate of the outstanding notes payable was 2.8% at December 31, 2010.

Total short-term lines of credit amounted to € 126,833 at December 31, 2010. The amount outstanding at December 31, 2010 was € 8,297 and the undrawn portion totaled € 118,536. The undrawn portion includes the Company’s standby revolving credit facility of € 90,000 with a consortium of banks. The facility, available through November 6, 2012, is secured by a portion of the Company’s shareholding in ASMPT. The undrawn portion further includes € 22,464 for ASMPT, which amount is restricted to be used only in the operations of ASMPT. The undrawn portion further includes € 6,072 for ASM Japan, which amount is restricted to be used only in the operations of ASM Japan.

The credit facility of € 90,000 bank includes two financial covenants: a minimum long-term committed capital and a total net debt/equity ratio. These financial covenants are measured twice each year, at June 30 and December 31. The Company is in compliance with these financial covenants as of June 30, 2010 and as of December 31, 2010.

Short-term line of credits of ASM Japan of € 1,610 include financial covenants, of which the most important covenants, measured at December 31 of each year are, no two loss making years in a row and no annual loss in excess of a certain percentage of the equity of ASM Japan. ASM Japan is in compliance with these financial covenants as of December 31, 2010.

ASMI is guarantor with respect to all short-term debt outstanding of ASM Front-End Manufacturing Singapore. ASMI is guarantor with respect to a credit line of € 13,202, with € 7,130 outstanding, of ASM Japan. ASMI does not provide guarantees for borrowings of ASMPT and there are no guarantees from ASMPT to secure indebtedness of ASMI. Under the rules of the Stock Exchange of Hong Kong, ASMPT is precluded from providing loans and advances other than trade receivables in the normal course of business, to ASMI or its non ASMPT subsidiaries.

13- Provision for Warranty

The changes in the amount of provision for warranty are as follows:

Balance January 1, 2009	9,913
Charged to cost of sales	2,082
Deductions	(6,153	)
Foreign currency translation effect	(192	)
Balance December 31, 2009	5,650
Charged to cost of sales	7,066
Deductions	(4,824	)
Foreign currency translation effect	381
Balance December 31, 2010	8,273

14- Accrued Expenses and Other

Accrued expenses and other consist of the following:

	December 31,
	2009		2010
Advance payments from customers		16,371		28,272
Accrual for employee contract termination benefits		9,236		2,065
Accrual for onerous contracts		1,396		1,449
Deferred revenue		3,254		4,367
Personnel related items		22,115		47,060
Interest payable		2,424		2,102
Other		23,265		32,086
		78,061		117,401

In 2009 ASMI started the implementation of a major restructuring in the Front-end segment as announced on January 9, 2009 and on July 20, 2009. The restructuring costs consisted among others of employee contract termination benefits and lease contract termination costs (onerous contracts).

F-23

The accrual for employee termination benefits relates to the benefits payable to employees that have become redundant and are terminated under the terms and conditions of a restructuring plan.

The accrual for onerous contracts relates to operating lease contracts for buildings for which no economic benefits are expected. The accrual for onerous contracts is expected to be utilized by 2013.

15- Long-term Debt

Long-term debt consists of the following:

	December 31,
	2009			2010
Term loans:
Japan, 1.3-2.4%, due 2011 – 2012		16,898			16,606
Finland, 1.0%, due 2011		214			—
Singapore, 4.5%, due 2011		855			337
Mortgage loans:
Japan, 2.1-2.2%, due 2012		3,417			2,898
Capital lease commitments:
Japan, 1.8%, due 2011 – 2012		965			425
		22,349			20,266
Current portion		(5,795	)		(15,950	)
		16,554			4,316

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

	December 31,
	2009		2010
Euro		214		—
Japanese yen		2,833,514		2,166,175
Singapore dollars		1,727		578

Aggregate annual principal repayments for years subsequent to December 31, 2010 are:

2011	15,950
2012	4,316
	20,266

Long-term debt outstanding in Japan in the amount of € 13,938 is collateralized by real estate with a carrying value of € 5,612 of ASM Japan.

Long-term debt outstanding in Singapore in the amount of € 337 is collateralized by real estate with a carrying value of € 14,269 and other assets with a carrying value of € 65,227 of ASM Front-End Manufacturing Singapore.

Long-term debt of ASM Japan of € 11,040 include financial covenants, of which the most important covenants, measured at December 31 of each year are as follows:

• no two loss making years in a row;

• no annual loss in excess of a certain percentage of the equity of ASM Japan.

ASM Japan is in compliance with these financial covenants as of December 31, 2010.

ASMI is guarantor with respect to all long-term debt outstanding of ASM Front-End Manufacturing Singapore and is guarantor with respect to € 5,152 long-term debt outstanding of ASM Japan.

Capital lease commitments relate to commitments for equipment and machinery.

16- Convertible Subordinated Debt

As per 1 January 2009, ASMI applies ASC 815 “Determining Whether an Instrument (or Embedded Feature) Is Indexed to an Entity’s Own Stock”.

F-24

All our convertible bonds due 2010, 2011 and 2014, include a component that creates a financial liability to the Company and a component that grants an option to the holder of the convertible note to convert it into common shares of the Company (“conversion option”). ASC 815 requires separate recognition of these components.

For the conversion options of the convertible bonds due 2010 and 2011 the accounting is different from that for the conversion option of the convertible bonds due 2014. As the convertible bonds due 2010 and 2011 are denominated in USD and the ASM International common shares in which they can be converted to are denominated in Euro, these conversion options are recognized as a liability measured at fair value. The conversion option is measured at fair value through the income statement, for 2010 this revaluation at fair value resulted in a loss of € 19.0 million (2009 € 24.4 million). For the conversion options of the convertible bonds due 2014 the fixed–for-fixed principle is met as both the debt instrument (the bond) and the Company’s equity shares, in which they can be converted to, are denominated in the same currency (Euro). Based on this criterion the conversion option qualifies as permanent equity.

The fair value of the liability component is estimated using the prevailing market interest rate at the date of issue, for similar non-convertible debt. Subsequently, the liability is measured at amortized cost. The interest expense on the liability component is calculated by applying the market interest rate for similar non-convertible debt at the date of issue to the liability component of the instrument. The difference between this amount and the interest paid is added to the carrying amount of the convertible subordinated notes, thus creating a non-cash interest expense. For the financial year 2010 this accretion interest expense was € 6,010 (2009; € 4,286).

The changes in the outstanding amounts of convertible subordinated debt are as follows:

	5.25% convertible subordinated notes, due 2010			4.25% convertible subordinated notes, due 2011			6.50% convertible unsecured notes, due 2014
Liability at redemption value at date of issuance		79,267			111,682			150,000
Conversion component at date of issuance		(13,653	)		(18,329	)		(23,601	)
Liability component at date of issuance		65,614			93,353			126,399
Balance January 1, 2009		15,037			91,756			—
Separation conversion option subsequent to the adoption of ASC 815		(825	)		(9,684	)		—
Issue of notes		—			—			126,399
Accrual of interest		595			3,135			556
Repurchasing of notes		(2,647	)		(16,208	)		—
Foreign currency translation effect		(619	)		(3,605	)		—
Balance December 31, 2009		11,542			65,394			126,955
Conversion of notes		(12,677	)		(5	)		—
Accrual of interest		181			1,560			3,849
Repurchasing of notes		—			(38,276	)		—
Foreign currency translation effect		954			3,765			—
Balance December 31, 2010		—			32,439			130,804
Reported as non-current liabilities		—			—			130,804
Reported as current liabilities		—			32,439			—

	5.25% convertible subordinated notes, due 2010		4.25% convertible subordinated notes, due 2011		6.50% convertible subordinated notes, due 2014
Nominal value in US$:
December 31, 2009		16,880		101,387		—
December 31, 2010		—		44,909		—
Nominal value in €:
December 31, 2009		11,718		70,383		150,000
December 31, 2010		—		33,609		150,000

F-25

5.25% convertible subordinated notes, due 2010

In May 2003, ASMI issued US$ 90.0 million in principal amount of 5.25% convertible subordinated notes due in May 2010 in a private offering. Interest on the notes was payable on May 15 and November 15 of each year. The notes were subordinated in right of payment to all of the Company’s existing and future senior indebtedness. The notes were convertible, at the option of the holder, into shares of the Company’s common stock initially at a conversion rate of 52.0237 shares of common stock for each US$ 1,000 principal amount of notes, subject to adjustment in certain circumstances. This was equivalent to an initial conversion price of US$ 19.22 per share. On or after May 20, 2006, the Company could redeem any of the notes at a redemption price equal to 100% of the principal amount of the notes being redeemed, plus accrued and unpaid interest, if the closing price of the Company’s common shares exceeded 150% of the conversion price for at least 20 trading days in any period of 30 consecutive trading days and if certain other conditions were satisfied. In the event of a change in control, the Company could be required to repurchase the notes.

In 2007, US$ 20.8 million of the US$ 90.0 million convertible subordinated notes were repurchased. The US$ 20.8 million were repurchased for a market value of US$ 29.0 million. The loss for the early extinguishment of the notes of € 6,309, which includes the premium paid above par and the write-off of unamortized issuance costs, was recorded as expense from early extinguishment of debt in the Consolidated Statement of Operations for the year 2007.

In 2008, US$ 48.3 million convertible subordinated notes was repurchased. The US$ 48.3 million was repurchased for a market value of US$ 37.7 million. The gain from the early extinguishment of the notes of € 7,957, which includes the premium paid under par and the write-off of unamortized issuance costs, was recorded as a gain from early extinguishment of debt in the Consolidated Statement of Operations for the year 2008.

In 2008 US$ 0.01 million in convertible subordinated notes were converted into 520 common shares out of the treasury shares, previously purchased by the Company.

In 2009 US$ 4.0 million convertible subordinated notes was repurchased for a market value of US$ 5.2 million. The loss from the early extinguishment of the notes of € 211, which includes the premium paid above par and the write-off of unamortized issuance costs, was recorded as a loss from early extinguishment of debt in the Consolidated Statement of Operations for the year 2009.

In 2010 the remaining US$ 16.9 million in convertible subordinated notes were converted into 878,154 common shares, newly issued by the Company.

4.25% convertible subordinated notes, due 2011

In December 2004, ASMI issued US$ 150.0 million in principal amount of 4.25% convertible subordinated notes due in December 2011 in a private offering. Interest on the notes was payable on June 6 and December 6 of each year. The notes were subordinated in right of payment to all of the Company’s existing and future senior indebtedness. The notes were convertible, at the option of the holder, into shares of the Company’s common stock initially at a conversion rate of 48.0307 shares of common stock for each US$ 1,000 principal amount of notes, subject to adjustment in certain circumstances. This was equivalent to an initial conversion price of US$ 20.82 per share. Effective December 6, 2007, the conversion price was adjusted for the cash dividend paid in September 2007 to US$ 20.71 per share. On or after December 6, 2007, the Company could redeem any of the notes at a redemption price equal to 100% of the principal amount of the notes being redeemed, plus accrued and unpaid interest, if the closing price of the Company’s common shares exceeded 130% of the conversion price for at least 20 trading days in any period of 30 consecutive trading days. In the event of a change in control, the Company could be required to repurchase the notes.

In 2007, US$ 14.6 million of the US$ 150.0 million convertible subordinated notes were repurchased. The US$ 14.6 million were repurchased for a market value of US$ 19.4 million. The loss for the early extinguishment of the notes of € 3,740, which includes the premium paid above par and the write-off of unamortized issuance costs, was recorded as expense from early extinguishment of debt in the Consolidated Statement of Operations for the year 2007.

In 2008 US$ 7.7 million in convertible subordinated notes were converted into 372,426 common shares of which 102,509 consisted of the treasury shares previously purchased by the Company and 269,917 newly issued common shares.

In 2009 US$ 26.3 million convertible subordinated notes were repurchased for a market value of US$ 33.7 million. The loss from the early extinguishment of the notes of € 1,548, which includes the write-off of unamortized issuance costs and the amortization of unamortized interest expenses, was recorded as a loss from early extinguishment of debt in the Consolidated Statement of Operations for the year 2009.

F-26

In 2010 US$ 56.5 million convertible subordinated notes was repurchased for a market value of US$ 74.6 million. The loss from the early extinguishment of the notes of € 3,609, which includes the write-off of unamortized issuance costs and the amortization of unamortized interest expenses, was recorded as a loss from early extinguishment of debt in the Consolidated Statement of Operations for the year 2010.

In 2010 US$ 7 thousand in convertible subordinated notes were converted into 337 common shares, newly issued by the Company.

On January 3, 2011 we announced that we initiated a full redemption for all of the outstanding principal balance of the 4.25% Convertible Subordinated Notes due 2011. The Notes which were not converted into common shares were redeemed on February 16, 2011, at a redemption price of 100.00% of the principal amount thereof, plus accrued and unpaid interest to February 15, 2011. The Notice of Redemption for the Notes was sent to all registered holders on January 3, 2011.

The 4.25% convertible subordinated notes ranked pari passu with the 5.25% convertible subordinated notes.

6.50% convertible subordinated notes, due 2014

In November 2009, ASMI issued € 150.0 million in principal amount of 6.50% convertible unsecured notes due in November 2014 in a private offering. Interest on the notes is payable on February 6, May 6, August 6 and November 6 of each year. The notes are subordinated in right of payment to all of the Company’s existing and future senior indebtedness. The notes are convertible into shares of the Company’s common stock only, initially at a conversion rate of 58.5851 shares of common stock for each € 1,000 principal amount of notes, subject to adjustment in certain circumstances. This is equivalent to an initial conversion price of € 17.09 per share. On or after November 27, 2012, the Company may redeem any of the notes at a redemption price equal to 100% of the principal amount of the notes being redeemed, plus accrued and unpaid interest, if the closing price of the Company’s common shares has exceeded 130% of the conversion price for at least 20 trading days in any period of 30 consecutive trading days. In the event of a change in control, the Company may be required to repurchase the notes.

The 6.50% convertible subordinated notes rank pari passu amongst themselves and equally with all other unsecured and unsubordinated obligations of the Company.

Conversion option

The conversion component of the subordinated notes qualifying as a liability is measured at fair value. The fair values for these options were determined using the Black-Scholes option valuation model with the following market data:

Valuation in US$ per note of nominal US$ 1,000	5.25% Convertible subordinated notes, due May 2010			4.25% Convertible subordinated notes, due December 2011
Valuation per 31 December 2008:
Implied volatility		17.4	%		10.0	%
USD interest average		1.86	%		1.86	%
Stock price	€	6.16		€	6.16
Conversion price	US$	19.22		US$	20.71
Value of the option	US$	13.32		US$	29.99
Valuation per 31 December 2009:
Implied volatility		32.0	%		32.0	%
USD interest average		0.37	%		1.27	%
Stock price	€	17.76		€	17.76
Conversion price	US$	19.22		US$	20.71
Value of the option	US$	312.97		US$	263.04
Valuation per 31 December 2010:
Implied volatility		n/a			31.0	%
USD interest average		n/a			0.78	%
Stock price		n/a		€	26.50
Conversion price		n/a		US$	20.71
Value of the option		n/a		US$	710.35

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Debt issuance costs

The fees incurred for the issuance of the convertible subordinated notes are included as debt issuance costs in the Consolidated Balance Sheet and amortized by the effective interest method as interest expense during the economic life of the debts. Debt issuance costs of € 1,234 are expected to be amortized in 2011.

17- Shareholders’ Equity

Common shares, preferred and financing preferred shares

The authorized capital of the Company amounts to 110,000,000 shares of € 0.04 par value common shares, 118,000 shares of € 40 par value preferred shares and 8,000 shares of € 40 par value financing preferred shares, of which 52,931,881 common shares, no preferred and no financing preferred shares were outstanding as at December 31, 2010. All shares have one vote per € 0.04 par value. Treasury shares held by the Company cannot be voted on.

Financing preferred shares are designed to allow ASMI to finance equity with an instrument paying a preferred dividend, linked to EURIBOR loans and government loans, without the dilutive effects of issuing additional common shares.

Preferred and financing preferred shares are issued in registered form only and are subject to transfer restrictions. Essentially, a preferred or financing preferred shareholder must obtain the approval of the Company’s Supervisory Board to transfer shares. If the approval is denied, the Supervisory Board will provide a list of acceptable prospective buyers who are willing to purchase the shares at a cash price to be fixed by consent of the Supervisory Board and seller within two months after the approval is denied. If the transfer is approved, the shareholder must complete the transfer within three months, at which time the approval expires.

Preferred shares are entitled to a cumulative preferred dividend based on the amount paid-up on such shares. Financing preferred shares are entitled to a cumulative dividend based on the par value and share premium paid on such shares. The preferred dividend on the amount paid-up was € 5 for the year 2009.

In the event preferred shares are issued, the Management Board must, within two years after such preferred shares were issued, submit to the general meeting a proposal to annul the preferred shares. On May 14, 2008, 21,985 preferred shares were issued to Stichting Continuïteit ASM International (“Stichting”). The amount paid-up by Stichting was € 220, which is the equivalent of one/fourth of the nominal value of the preferred shares. On May 14, 2009 the Annual Meeting of Shareholders resolved to cancel the outstanding preferred shares and to reissue an option to Stichting Continuïteit to acquire preferred shares.

During 2008, ASM engaged Lehman Bros (“Lehman”). to repurchase ordinary ASMI shares on the Euronext and Nasdaq markets on behalf of ASMI. As of September 15, 2008, at the time it went into bankruptcy administration, Lehman reported that it had purchased and held on our behalf 2,552,071 shares, which were accounted for as treasury shares accordingly. ASM filed a submission with the Lehman administrators giving notice of the shares held in custody by Lehman. At ASMI’s May 2009 Annual General Meeting, our shareholders resolved to cancel all of these treasury shares which, accordingly, was accounted for in our 2009 Annual Report as a reduction of the number of outstanding shares. Lehman was notified of the cancellation of shares at the time.

In September 2010, Lehman’s administrators notified us that there is a possible shortfall in the number of shares held by Lehman of 479,279 shares (out of the 2,552,071 shares), which cannot currently be accounted for by Lehman. The Lehman administrators also reported a segregated collateral cash account of US$ 6,759, that ASMI may be entitled to in the absence of the shares. We have not been able to obtain additional information to confirm and understand the potential shortfall of shares or our ability to recover the US$ 6,759 from the Lehman bankruptcy proceedings in lieu of the shares. Accordingly, we are uncertain at this time as to the accuracy of the shortfall of shares, our ability to claim the collateral cash sum to cover the value of any such discrepancy, and our entitlement to all or a portion of such sum when distributions are determined and made by the administrator since there is likely to also be a shortfall in Lehman assets subject to proprietary rights. Given the magnitude of the overall Lehman administration, we believe it may take several years to obtain clarity or resolution about the potential shortfall or claim to cash. ASMI is in the process of filing a claim with the Lehman administrators to safeguard our interests.

Considering the factual and legal uncertainties, it is premature to conclude that the 479,279 shares should still be considered as outstanding or that ASMI has a US$ 6,759 receivable from Lehman. ASMI has, therefore, neither reversed the cancellation of these shares that we recorded in 2009, nor recorded a receivable from Lehman. If the shares would be considered as outstanding, the impact on our basic and diluted earnings per share as at December 31, 2010 would have been € (0.02) and € (0.01) respectively per share.

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Treasury shares at cost

The changes in the number and amount of treasury shares at cost is as follows:

	Number of treasury shares			Amount			Amount per share
Balance January 1, 2009		2,666,491			37,215			13.96
Withdrawal of common shares		(2,553,000	)		(35,631	)		13.96
Issuance of treasury shares upon exercise of options		(113,491	)		(1,584	)		13.96
Balance December 31, 2009		—			—			—
Balance December 31, 2010		—			—			—

Retained earnings

Distributions to common shareholders are limited to the extent the total amount of shareholders’ equity exceeds the amounts of nominal paid-in share capital (exclusive any share premium) and any reserves to be formed pursuant to law or the Company’s articles of association. The amounts are derived from the Statutory Financial Statements of ASM International N.V.

Following the adoption of ASC 810(-10 45-23) as per 2009 results on dilution of investments in subsidiaries are accounted for directly in equity. The 2009 results and changes in equity have been adjusted accordingly. For 2010 and 2009 these dilution gains were € 4,957 and € 956 respectively.

Accumulated other comprehensive loss

The changes in the amount of accumulated other comprehensive loss are as follows:

	Foreign currency translation effects			Unrealized gains (losses) on derivative instruments, net of tax			Unrecognized pension obligations, net of tax			Total
Balance January 1, 2009		(62,301	)		47			(1,838	)		(64,092	)
Foreign currency translation effect on translation of foreign operations		(1,939	)		—			62			(1,877	)
Increase in fair value of derivative instruments, net of tax		—			81			—			81
Transfer to Consolidated Statement of Operations of derivative instruments, net of tax		—			(251	)		—			(251	)
Reclassification transition obligation into retained earnings		—			—			877			877
Result on curtailment and settlement unrecognized pension obligations		—			—			852			852
Actuarial loss		—			—			(370	)		(370	)
Amortization of unrecognized actuarial results		—			—			26			26
Total change in accumulated other comprehensive loss		(1,939	)		(170	)		1,447			(662	)
Balance December 31, 2009		(64,240	)		(123	)		(391	)		(64,754	)
Foreign currency translation effect on translation of foreign operations		30,553			—			(87	)		30,466
Increase in fair value of derivative instruments, net of tax		—			136			—			136
Actuarial loss		—			—			(87	)		(87	)
Total change in accumulated other comprehensive loss		30,553			136			(174	)		30,515
Balance December 31, 2010		(33,687	)		13			(565	)		(34,239	)

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

On May 22, 2007, the General Meeting of Shareholders authorized the Company, for an 18-month period, to be calculated from the date of the General Meeting, to repurchase its own shares up to the

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statutory maximum, at a price at least equal to the shares’ nominal value and at most a price equal to 110% of the share’s average closing price according to the listing on the Euronext Amsterdam stock exchange during the five trading days preceding the purchase date.

The number of shares bought back under the authorization of May 22, 2007 was 2,655,100. Of this number, 249,071 were sold upon the exercise of options by employees of ASMI, under the Employee Stock Option Plan, 103,029 were issued upon conversion of convertible subordinated debt and 2,553,000 were withdrawn in July 2009.

Reference is made to the paragraph “Common shares, preferred and financing preferred shares” of this note to the consolidated financial statements for the uncertainty about the shares held in custody by Lehman.

The following table summarizes shares repurchased under the authorization of May 22, 2007:

Period	Total Number of Shares Purchased		Total Number of Shares Purchased as Part of Publicly Announced  Plans or Programs		Average Price Paid per Share		Maximum Number of Shares that May Yet be Purchased under the Programs
August 2007		250,000		250,000	€	18.67		—
March and April 2008		2,405,100		2,405,100	€	13.31		—

On May 21, 2008, the General Meeting of Shareholders authorized the Company, for an 18-month period, to be calculated from the date of the General Meeting, to repurchase its own shares up to the statutory maximum, at a price at least equal to the shares’ nominal value and at most a price equal to 110% of the share’s average closing price according to the listing on the Euronext Amsterdam stock exchange during the five trading days preceding the purchase date.

The number of shares bought back under the authorization of May 21, 2008 was 250,000.

The following table summarizes shares repurchased under the authorization of May 21, 2008:

Period	Total Number of Shares Purchased		Total Number of Shares Purchased as Part of Publicly Announced  Plans or Programs		Average Price Paid per Share		Maximum Number of Shares that May Yet be Purchased under the Programs
September 2008		250,000		250,000	€	17.74		2,758,656

The maximum of shares that may yet be purchased under the program takes into account the treasury shares held by the Company (at December 31, 2010 there were no treasury shares held) and the maximum number of common shares which the Company can hold according to its Articles of Association. This maximum is 10% of the number of common shares issued.

18- Employee Benefits

Pension plans

The Company has retirement plans covering substantially all employees. The principal plans are defined contribution plans, except for the plans of the Company’s operations in the Netherlands and Japan.

The Company’s employees in the Netherlands participate in a multi-employer plan (“Bedrijfstakpensioenfonds Metalektro”). The plan monitors the risks of the entire investment portfolio, not by individual company or employee, and is subject to regulation by Dutch governmental authorities. By Dutch law, a multi-employer union plan must be monitored against specific criteria, including the coverage ratio of its assets to its obligations. This ratio includes a minimum coverage ratio of 105%. Each company participating in the plan contributes a percentage of its total pensionable salaries and each company contributes the same percentage. The pension rights of individual employees are based on the employee’s average salary during employment. The Company’s net periodic pension cost for the multi-employer plan for a fiscal period is equal to the required contribution for that period. At December 31, 2010 the coverage ratio of the multi-employer plan was 96 (December 31, 2009: 99%). This decrease mainly resulted from the use of the latest mortality tables. The Board of the multi-employer plan decided that existing pension obligations will not be indexed for the years 2010 and 2011.

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The Company’s employees in Japan participate in a defined benefit plan. The funded status of the plan and the amounts not yet recognized in the Consolidated Statement of Operations and the amounts recognized in the Consolidated Balance Sheet are as follows:

	December 31,
	2009			2010
Defined benefit obligations		(6,560	)		(8,805	)
Fair value of plan assets		2,119			3,189
Funded status deficit		(4,441	)		(5,617	)
Unrecognized actuarial loss		662			954
Net liabilities		(3,779	)		(4,663	)

The changes in defined benefit obligations and fair value of plan assets are as follows:

	December 31,
	2009			2010
Defined benefit obligations
Balance January 1		10,046			6,560
Current service cost		675			629
Interest on obligation		154			139
Actuarial losses (gains)		605			795
Benefits paid		(365	)		(819	)
Curtailment and settlement		(4,095	)		—
Foreign currency translation effect		(461	)		1,502
Balance December 31		6,560			8,805
Fair value of plan assets
Balance January 1		4,973			2,119
Expected return on plan assets		98			77
Actuarial losses		(20	)		658
Company contribution		629			647
Benefits paid		(365	)		(819	)
Settlement		(2,996	)		—
Foreign currency translation effect		(201	)		507
Balance December 31		2,119			3,189

The net periodic benefit cost consists of the following:

	December 31,
	2008			2009			2010
Current service cost		739			675			629
Interest on obligation		160			154			139
Expected return on plan assets		(193	)		(98	)		(77	)
Amortization deferred actuarial loss		—			44			1
Amortization of transition amount		113			—			—
Net periodic pension benefit cost		819			775			692

The actual return on plan assets was € (1,293), € 78 and € 734 for the years ended December 31, 2008, 2009 and 2010 respectively.

The assumptions in calculating the actuarial present value of benefit obligations and net periodic benefit cost are as follows:

	December 31,
	2008			2009			2010
Discount rate for obligations		2.00	%		1.70	%		1.25	%
Expected return on plan assets		3.00	%		3.00	%		3.00	%
Future salary increases		2.94	%		2.93	%		2.93	%

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The allocation of plan assets is as follows:

	December 31,
	2009				2010
Shares		868	41.0	%		798	25.0	%
Bonds		1,010	47.6	%		1,965	61.6	%
Loans		126	5.9	%		235	7.4	%
Real estate		25	1.2	%		51	1.6	%
Other		91	4.3	%		140	4.4	%
		2,119	100.0	%		3,189	100.0	%

The plan assets do not include any of the Company’s shares.

The Company expects to contribute € 651 to the defined benefit plan in 2011. The Company expects to pay benefits for years subsequent to December 31, 2010 as follows:

2011	251
2012	257
2013	262
2014	286
2015	286
Aggregate for the years 2016-2020	1,897
Total	3,239

Retirement plan costs consist of the following:

	December 31,
	2008		2009		2010
Defined contribution plans		7,863		6,875		10,423
Multi-employer plans		2,792		2,089		1,207
Defined benefit plans		819		775		673
Total retirement plan costs		11,474		9,739		12,303

The Company does not provide for any significant post-retirement benefits other than pensions.

Employee Stock Option Plan

The Company has adopted various stock option plans and has entered into stock option agreements with various employees. Under these plans, employees may purchase a specific number of shares of the Company’s common stock. Options are priced at market value in euros or U.S. dollars on the date of grant, are generally vesting in equal parts over a period of five years and generally expire after five or ten years. Under the 2001 Stock Option Plan the Company is authorized to issue 4,000,000 shares. At December 31, 2010, options to purchase 3,838,320 shares have been issued under the 2001 Stock Option Plan. Under previous plans no more options to purchase shares can be issued. Under the various stock option plans a total of 1,445,523 options to purchase common stock were outstanding at December 31, 2010, expiring at various dates through 2019. The number of options outstanding at December 31, 2008 and 2009 were 1,460,730 and 1,750,158 respectively. In 2011, a new stock option plan will be adopted. In the new plan to limit potential dilution, the Supervisory Board will require that at any time the amount of outstanding (vested and non-vested) options granted to the Management Board and to other employees will not exceed 7.5% of the issued ordinary share capital of ASMI.

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The following is a summary of changes in options outstanding:

	Number of options			Weighted average exercise price in US$		Number of options			Weighted average exercise price in €
Balance January 1, 2008		442,797			16.43		747,000			15.10
Options granted		276,000			20.49		148,000			12.36
Options forfeited		(36,500	)		16.43		(17,200	)		17.55
Options exercised		(79,357	)		15.07		(20,010	)		13.85
Balance December 31, 2008		602,940			18.47		857,790			14.61
Options granted		358,400			17.83		381,600			14.76
Options forfeited		(68,740	)		14.27		(245,332	)		14.43
Options exercised		(69,700	)		12.99		(66,800	)		12.20
Balance December 31, 2009		822,900			19.00		927,258			14.89
Options granted		42,000			35.01		64,500			22.53
Options forfeited		(35,700	)		19.73		(67,185	)		16.97
Options exercised		(143,140	)		16.83		(165,110	)		13.12
Balance December 31, 2010		686,060			20.40		759,463			15.74

The weighted average fair values of employee stock options granted in U.S. dollars were US$ 11.01 in 2008, US$ 9.31 in 2009 and US$ 17.02 in 2010. The weighted average fair values of employee stock option granted in Euro were € 5.55 in 2008, € 7.26 in 2009 and € 13.94 in 2010.

The weighted average remaining contractual life of the outstanding options granted in 2010 is 6.36 years at December 31, 2010.

The total intrinsic value of options exercised was € 818, € 684 and € 2,322 for the years ended December 31, 2008, 2009 and 2010 respectively. No new shares have been issued for the exercise of options in 2008. In 2009 and 2010 new shares have been issued for the exercise of 23,009 and 308,250 options respectively.

At December 31, 2010 options outstanding and options exercisable classified by range of exercise prices are:

	Options outstanding						Options exercisable
Range of exercise prices	Number outstanding		Weighted average remaining contractual life		Weighted average exercise price		Number exercisable		Weighted average exercise price
In US$			In years		In US$				In US$
1.00-10.00		68,000		8.14		7.47		4,000		6.30
10.00-15.00		139,060		4.11		12.88		62,020		13.35
15.00-20.00		71,700		6.43		18.27		26,800		17.48
20.00-30.00		365,300		5.97		24.41		103,900		25.22
30.00-40.00		42,000		6.01		35.01		—		—
US$1.00-40.00		686,060		5.85		20.40		196,720		20.04
In €				In years		In €				In €
1.00-10.00		14,800		2.92		7.95		400		7.79
10.00-15.00		145,380		4.11		12.33		11,800		12.11
15.00-20.00		559,783		4.47		16.07		210,623		17.38
20.00-30.00		39,500		6.01		26.50		—		—
€1.00-30.00		759,463		4.45		15.74		222,823		17.08
Total		1,445,523		5.12		17.95		419,543		18.47

At December 31, 2010, the aggregate intrinsic value of all options outstanding and all options exercisable is € 15,672 and € 4,302 respectively.

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The cost relating to employee stock options is measured at fair value on the grant date. The fair value was determined using the Black-Scholes option valuation model with the following weighted average assumptions:

	December 31,
	2009			2010
Expected life (years)		5 – 10			5 – 10
Risk free interest rate		3.0	%		2.8	%
Dividend yield		—			—
Expected volatility		52.1	%		45.6	%

The grant date fair value of the stock options is expensed on a straight-line basis over the vesting period, based on the Company’s estimate of stock options that will eventually vest. The impact of the true up of the estimates is recognized in the consolidated statement of operations in the period in which the revision is determined. We recorded compensation expenses of € 2,127 and € 2,526 for 2009 and 2010 respectively.

Employee Share Incentive Scheme ASMPT

In 1989, the shareholders of ASMPT approved a plan to issue up to 5.0 percent of the total issued shares of ASMPT to directors and employees. This plan was extended in 1999 for a term up to March 23, 2010. At the annual general meeting of the ASMPT held on 24 April 2009, the shareholders approved to extend the period of the Scheme for a term of a further 10 years up to 23 March 2020 and allow up to 7.5% of the issued share capital of ASMPT from time to time (excluding any shares subscribed for or purchased pursuant to the Scheme since 23 March 1990) to be subscribed for or purchased pursuant to the Scheme during such extended period and that no more than 3.5% of the issued share capital of ASMPT from time to time (excluding any shares subscribed for or purchased pursuant to the Scheme since 23 March 1990) to be subscribed for or purchased pursuant to the Scheme for the period from 24 March 2010 to 23 March 2015.

The directors annually may approve an amount of supplemental compensation to the designated directors and officers, which will be used to issue or purchase ASMPT’s common shares for the designees at current market value. In December 2010, 1,726,900 common shares of ASMPT were issued, for cash at par value of HK$ 0.10 per share, pursuant to the Employee Share Incentive Scheme of ASMPT. In 2009 and 2008, respectively 2,035,400 and 1,728,700 ASMPT shares were issued to certain directors and employees under the plan. The effect of this transaction on ASMI was a dilution of its ownership interest in ASMPT of 0.23% in 2010, 0.28% in 2009 and 0.23% in 2008. The shares issued under the plan in 2010 have diluted ASMI’s ownership in ASMPT to 52.36% as of December 31, 2010. Total compensation expenses related to the Employee Share Incentive Scheme of respectively € 7,524 in 2008, € 3,685 in 2009, and € 11,375 in 2010 were charged to the Consolidated Statement of Operations.

Dilution investment ASMPT

The dilution in ownership has resulted in a gain on the investment in ASMPT of € 4,088 in 2008, which gain has been separately included in the Consolidated Statement of Operations. Due to the participation exemption in the Netherlands no deferred income taxes have been provided for these gains. Following the adoption of ASC 810(-10 45-23) as per 2009 results on dilution of investments in subsidiaries are accounted for directly in equity. The 2009 results and changes in equity have been adjusted accordingly. For 2010 and 2009 these dilution gains were € 4,957 and € 956 respectively.

19- Commitments and Contingencies

Capital leases included in property, plant and equipment are as follows:

	December 31,
	2009			2010
Machinery and equipment		4,305			3,644
Furniture and fixtures		739			359
		5,044			4,003
Less accumulated depreciation		(3,939	)		(3,211	)
		1,105			792

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At December 31, 2010 minimum rental commitments under capital leases and operating leases having initial or remaining non-cancelable terms in excess of one year are as follows:

	Capital leases			Operating leases
2011		299			10,061
2012		131			7,871
2013		—			5,152
2014		—			2,854
2015		—			1,839
Years thereafter		—			2,390
Total		430			30,167
Less amount representing interest		(5	)
Present value of net minimum lease payments		425

Aggregate rental expense for operating leases was € 9,748 in 2008, € 10,719 in 2009 and € 10,173 in 2010. At December 31, 2010 the Company had entered into purchase commitments with suppliers in the amount of € 58,006 for purchases, of which € 57,726 for purchases within the next 12 months. Commitments for capital expenditures at December 31, 2010 were € 22,359.

Change of Control Transaction

If the Company desires to effect a change of control transaction with a competitor of Applied Materials, Inc., (“Applied Materials”) the Company must, pursuant to a litigation settlement agreement in 1997, as amended and restated in 1998, first offer the change of control transaction to Applied Materials on the same terms as the Company would be willing to accept from that competitor pursuant to a bona fide arm’s-length offer by that competitor.

20- Litigation and Environmental Matters

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

Under our license agreement with Applied Materials, we pay royalties based upon our sales of equipment that employs technology covered by the licensed patents. We believe that we no longer practice patents applicable to certain equipment and ceased paying royalties on the sale of such equipment as of December 18, 2007 and gave written notice to Applied Materials in December 2007. The agreement provides a process to address royalty issues in a prescribed manner: the first step is written notice of a royalty matter to a party; the second step is amicable resolution with the participation of an expert if desired by Applied Materials; and the final step if not resolved by the parties is through binding arbitration. Initiation of this process is not considered a default event and the remedy is the payment of any unpaid royalties for equipment shipped after the written notice that are ultimately agreed to by the parties or determined by arbitration. Applied Materials is verifying our position through the review by an independent expert. While we consider the matter closed, Applied Materials notified us in late 2009 that they are continuing to evaluate the matter and will contact us if they require additional information. Although we believe our position is correct, the outcome of any possible arbitration is uncertain and, if we are not successful, we could be required to pay up to approximately US$ 5.8 million (€ 4.3 million) for royalties as of December 31, 2010.

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21- Financial Instruments and Risk Management

Categories of Financial Instruments

Financial instruments include:

Financial assets:

	December 31,
	2009		2010
Cash and cash equivalents		293,902		340,294
Accounts receivable		165,754		271,271
Derivative instruments designated in cash flow hedges		—		14
Derivative instruments designated in fair value hedges		94		—

Financial liabilities:

	December 31,
	2009		2010
Notes payable to banks		17,008		8,297
Accounts payable		93,117		170,553
Current portion of long-term debt		5,795		15,950
Current portion of convertible subordinated debt		11,542		32,439
Long-term debt		16,554		4,316
Convertible subordinated debt		192,350		130,804
Conversion option		22,181		23,875
Derivative instruments designated in cash flow hedges		167		—
Derivative instruments designated in fair value hedges		28		31

Gains or losses related to financial instruments are as follows:

	Year ended December 31,
	2009			2010
Interest income		1,018			1,221
Interest expense		(8,556	)		(15,677	)
Accretion interest expense convertible notes at amortized value		(4,286	)		(6,010	)
Loss resulting from early extinguishment of debt		(1,759	)		(3,609	)
Revaluation conversion option		(24,364	)		(19,037	)
Losses Foreign currency exchange, net		(1,384	)		(65	)
Addition to allowance for doubtful accounts receivable		(2,812	)		(461	)

We adopted ASC 820, Fair Value Measurements, on January 1, 2008, for financial assets and liabilities and for nonfinancial assets and liabilities that are remeasured at least annually. ASC 820 defines fair value as the price that would be received for an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. ASC 820 establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three broad levels.

Level 1.	Quoted prices in active markets that are accessible at the measurement date for identical assets and liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.
Level 2.	Observable inputs other than quoted prices in active markets.
Level 3.	Unobservable inputs for which there is little or no market data available. The fair value hierarchy gives the lowest priority to Level 3 inputs.

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The following table presents the Company’s financial assets and financial liabilities that are measured at fair value on a recurring basis.

	At carrying value		At fair value Level 1		Level 2		Level 3		Total
December 31, 2009
Assets:
Derivative financial instruments		94		—		14,500		—		14,500
Total		94		—		14,500		—		14,500
Liabilities:
Conversion options		22,181		—		22,181		—		22,181
Derivative financial instruments		195		—		421		—		421
Total		22,376		—		22,602		—		22,602
December 31, 2010
Assets:
Derivative financial instruments		14		—		1,743		—		1,743
Total		14		—		1,743		—		1,743
Liabilities:
Conversion options		23,875		—		23,875		—		23,875
Total		23,875		—		23,875		—		23,875

Financial Risk Factors

ASMI is exposed to a number of risk factors: market risks (including foreign exchange risk and interest rate risk), credit risk and liquidity risk. The Company uses forward exchange contracts to hedge its foreign exchange risk. The Company does not enter into financial instrument transactions for trading or speculative purposes.

Foreign Exchange Risk

ASMI and its subsidiaries conduct business in a number of foreign countries, with certain transactions denominated in currencies other than the functional currency of the Company (euro) or one of its subsidiaries conducting the business. The purpose of the Company’s foreign currency management is to manage the effect of exchange rate fluctuations on revenues, costs and cash flows and assets and liabilities denominated in selected foreign currencies, in particular denominated in U.S. dollar.

The Company’s Front-end segment uses forward exchange contracts to hedge its foreign exchange risk of anticipated sales or purchase transactions in the normal course of business, which occur within the next twelve months, for which the Company has a firm commitment from a customer or to a supplier. The terms of these contracts are consistent with the timing of the transactions being hedged. The hedges related to forecasted transactions are designated and documented at the inception of the hedge as cash flow hedges, and are evaluated for effectiveness quarterly. The effective portion of the gain or loss on these hedges is reported as a component of accumulated other comprehensive loss in Shareholders’ Equity, and is reclassified into earnings when the hedged transaction affects earnings.

The majority of revenues and costs of the Company’s Back-end segment are denominated in Hong Kong dollars, Chinese Yuan and U.S. dollars. Since foreign currency exposure is not significant, no forward exchange contracts are used. The effect of exchange rate fluctuations on revenues, costs and cash flows and assets and liabilities denominated in foreign currencies is periodically reviewed.

Changes in the fair value of derivatives that do not qualify for hedge treatment, as well as the ineffective portion of any hedges, are recognized in earnings. The Company records all derivatives, including forward exchange contracts, on the balance sheet at fair value in other current assets or accrued expenses.

The Company expects that substantially all of the € 13 unrealized gains included in accumulated other comprehensive loss as of December 31, 2010 will be reclassified to net earnings within the next twelve months, upon completion of the underlying transactions. If the underlying transaction being hedged fails to occur, or if a portion of any derivative is ineffective, the gain or loss is immediately recognized in earnings under foreign currency exchange gains (losses) in the Consolidated Statement of Operations. Unrealized

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losses included in accumulated other comprehensive loss as of December 31, 2009 of € 123 were reclassified to earnings in 2010. Hedge ineffectiveness was insignificant for the years ended December 31, 2009 and December 31, 2010.

Furthermore, the Company manages the currency exposure of certain receivables and payables using derivative instruments, such as forward exchange contracts (fair value hedges) and currency swaps, and non-derivative instruments, such as debt borrowings in foreign currencies. The gains or losses on these instruments provide an offset to the gains or losses recorded on receivables and payables denominated in foreign currencies. The derivative instruments are recorded at fair value and changes in fair value are recorded in earnings under foreign currency exchange gains (losses) in the Consolidated Statement of Operations. Receivables and payables denominated in foreign currencies are recorded at the exchange rate at the balance sheet date and gains and losses as a result of changes in exchange rates are recorded in earnings under foreign currency exchange gains (losses) in the Consolidated Statement of Operations.

To the extent that exchange rate fluctuations impact the value of the Company’s investments in its foreign subsidiaries, they are not hedged. The cumulative effect of these fluctuations is separately reported in Consolidated Shareholders’ Equity. Reference is made to Note 17.

The outstanding forward exchange contracts are as follows:

	Currency		Notional amount			Forward contract value			Fair value			Difference between forward value and fair value			Included in accumulated other comprehensive income (loss)
						Euro			Euro			Euro			Euro
December 31, 2009:
Assets:
Cash flow hedge contracts:
Short position		US$		(10,767	)		(7,293	)		(7,460	)		(167	)		(123	)
Fair value hedge contracts:
Short position		US$		(10,135	)		(7,134	)		(7,040	)		94			—
Liabilities:
Cash flow hedge contracts
Long position		—		—			—			—			—			—
Fair value hedge contracts:
Long position		US$		607			449			421			(28	)		—
December 31, 2010:
Assets:
Cash flow hedge contracts:
Short position		US$		(452	)		(350	)		(336	)		14			13
Fair value hedge contracts:
Short position		US$		(1,881	)		(1,376	)		(1,407	)		(31	)		—
Liabilities:
Cash flow hedge contracts
Long position		—		—			—			—			—			—
Fair value hedge contracts:
Long position		US$		—			—			—			—			—

For forward exchange contracts, market values based on external quotes from banks have been used to determine the fair value.

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The following table analyzes the Company’s sensitivity to a hypothetical 10% strengthening and 10% weakening of the U.S. dollar, Hong Kong dollar and Japanese yen against the euro as of December 31, 2009 and December 31, 2010. This analysis includes foreign currency denominated monetary items and adjusts their translation at year end for a 10% increase and 10% decrease of the U.S. dollar, Hong Kong dollar or Japanese yen against the euro. A positive amount indicates an increase in equity. Recognized in equity is the revaluation effect of subsidiaries denominated in U.S. dollar, Hong Kong dollar and Japanese yen.

	Impact on equity
	2009			2010
10% increase of U.S. dollar versus euro		(79	)		1,061
10% decrease of U.S. dollar versus euro		79			(1,061	)
10% increase of Singapore dollar versus euro		NM			1,431
10% decrease of Singapore dollar versus euro		NM			(1,431	)
10% increase of Hong Kong dollar versus euro		19,736			53,458
10% decrease of Hong Kong dollar versus euro		(19,736	)		(53,458	)
10% increase of Japanese yen versus euro		3,585			5,016
10% decrease of Japanese yen versus euro		(3,585	)		(5,016	)

A hypothetical 10% strengthening or 10% weakening of any currency other than the U.S. dollar, Hong Kong dollar and Japanese yen against the euro as of December 31, 2009 and December 31, 2010 would not result in a material impact on equity.

The following table analyzes the Company’s sensitivity to a hypothetical 10% strengthening and 10% weakening of the U.S. dollar and Hong Kong dollar against the euro at average exchange rates for the years 2009 and 2010. A positive amount indicates an increase in net earnings.

	Impact on net earnings
	2009			2010
10% increase of Japanese yen versus euro		(1,212	)		617
10% decrease of Japanese yen versus euro		1,212			(617	)
10% increase of U.S. dollar versus euro		(7,456	)		(549	)
10% decrease of U.S. dollar versus euro		7,456			549
10% increase of Hong Kong dollar versus euro		4,570			14,632
10% decrease of Hong Kong dollar versus euro		(4,570	)		(14,632	)

A hypothetical 10% strengthening or 10% weakening of any currency other than the U.S. dollar, Hong Kong dollar and the Japanese yen against the euro at average exchange rates for the years 2009 and 2010 would not result in a material impact on net earnings.

Interest Risk

We are exposed to interest rate risk primarily through our borrowing activities. The Company does not enter into financial instrument transactions for trading or speculative purposes or to manage interest rate exposure. At December 31, 2010 the Company had convertible subordinated debt borrowings outstanding of € 33,609 (US$ 44,909) at a fixed interest rate, maturing in December 2011 (on January 3, 2011 we announced the redemption for all of the outstanding principal balance of our 4.25% Convertible Subordinated Notes due 2011, which resulted in the conversion of all remaining notes prior to the redemption date scheduled for February 15, 1011) and € 150,000 at a fixed rate, maturing in November 2014, € 20,266 in long-term debt at fixed interest rates and € 8,297 in other borrowings with variable short-term interest rates. A hypothetical change in the average interest rate by 10% on the portion of the Company’s debt bearing interest at variable rates would not result in a material change in interest expense at December 31, 2009 and December 31, 2010 borrowing levels.

Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents, accounts receivable and derivative instruments. These instruments contain a risk of counterparties failing to discharge their obligations. The Company monitors credit risk and manages credit risk exposure by type of financial instrument by assessing the creditworthiness of counterparties. The Company does not anticipate nonperformance by counterparties given their high creditworthiness.

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The Company’s customers are semiconductor device manufacturers located throughout the world. The Company generally does not require collateral or other security to support financial instruments with credit risk.

Concentrations of credit risk (whether on or off-balance sheet) that arise from financial instruments exist for groups of customers or counterparties when they have similar economic characteristics that would cause their ability to meet contractual obligations to be similarly affected by changes in economic or other conditions.

The Company derives a significant percentage of its revenue from a small number of large customers. The Company’s largest customer accounted for approximately 5.2% of net sales in 2010 (2009: 9.1%; 2008: 13.8%) and the ten largest customers accounted for approximately 27.9% of net sales in 2010 (2009: 32.9%; 2008: 32.0%). Sales to these large customers also may fluctuate significantly from time to time depending on the timing and level of purchases by these customers. Significant orders from such customers may expose the Company to a concentration of credit risk and difficulties in collecting amounts due, which could harm the Company’s financial results. At December 31, 2010 one customer accounted for 6.0% of the outstanding balance in accounts receivable (2009: 7.8%; 2008: 12.3%).

The Company places its cash and cash equivalent and derivative instruments with high quality financial institutions to limit the amount of credit risk exposure.

The maximum credit exposure is equal to the carrying values of cash and cash equivalent and accounts receivable.

Liquidity Risk

The following table summarizes the Company’s contractual obligations as at December 31, 2010 aggregated by type of contractual obligation:

Contractual obligations	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
Notes payable to banks 1		8,532		8,532		—		—		—
Long-term debt 1, 2		20,684		16,292		4,392		—		—
Convertible subordinated debt 1		221,149		43,524		19,500		158,125		—
Operating leases		30,167		10,061		13,023		4,693		2,390
Purchase obligations:
Purchase commitments to suppliers		58,006		57,726		280		—		—
Capital expenditure commitments		22,359		22,359		—		—		—
Unrecognized tax benefits (ASC 740)		20,057		20,057		—		—		—
Total contractual obligations		380,954		178,551		37,195		162,818		2,390

(1) Including interest expense based on the percentages at the reporting date.

(2) Capital lease obligations of € 425 are included in long-term debt.

Total short-term lines of credit amounted to € 126,833 at December 31, 2010. The amount outstanding at December 31, 2010 was € 8,297 and the undrawn portion totaled € 118,536. The undrawn portion includes the standby revolving credit facility of € 90,000 with a consortium of banks. The facility, available through November 6, 2012, is secured by a portion of the Company’s shareholding in ASMPT. The undrawn portion includes € 22,464 for ASMPT, which amount is restricted to be used only in the operations of ASMPT. The undrawn portion includes € 6,072 for ASM Japan, which amount is restricted to be used only in the operations of ASM Japan.

The Company uses notes payable to banks to manage short term liquidity and uses long-term debt and convertible subordinated debt to manage long term liquidity.

For the majority of purchase commitments, the Company has flexible delivery schedules depending on the market conditions, which allows the Company, to a certain extent, to delay delivery beyond originally planned delivery schedules.

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22- Research and Development

Research and Development consists of the following:

	Year ended December 31,
	2008			2009			2010
Research and development expenses from continuing operations		75,650			63,934			79,331
Research and development grants and credits		(639	)		(1,128	)		(546	)
Total research and development		75,011			62,806			78,785

The Company’s operations in the Netherlands, Germany and the United States receive research and development grants and credits from various sources. The research and development grants and credits received from governmental sources in the Netherlands include a credit which is contingently repayable to the extent the Company recognizes sales of products to which the credit is related within an agreed upon period. The Company does not recognize a liability on the Consolidated Balance Sheet in respect of this credit until it recognizes sales of products to which the credit is related, within the agreed upon period and is then charged to cost of sales when such sales are recorded. The repayment amounts to 4.0% of the realized sales of these products. In 2008 the Company accounted for repayments with respect to such credits of € 86. Interest on the contingent repayments is accrued at an interest rate of 6.05% per annum. The contingent repayment, including accrued interest, was € 3,162 at December 31, 2008. This amount has not been recognized as a liability in the Consolidated Balance Sheet since the Company has not recognized sales of products to which the credit is related. With the disposal of our RTP business the liability has been transferred to Levitech B.V., the vehicle in which the management buy-out has been constructed. ASM International N.V. participates for 20% in Levitech B.V. With the disposal of our RTP business in 2009 we have licensed our RTP portfolio of 50 issued patents and 23 pending patents to Levitech BV.

23- Restructuring expenses

In 2009 ASMI started the implementation of a major restructuring in the Front-end segment (PERFORM!) as announced on January 9, 2009 and on July 20, 2009. The main components of the Company’s accelerated execution plans are:

• The consolidation of our global Front-end manufacturing operations from Europe, the United States and Japan, into our Front-end manufacturing operations in Singapore by the end of 2010. This will be achieved by completing the previously announced transfer from Almere, the Netherlands, which was finalized during 2009; the phasing out the manufacturing operation in Phoenix, Arizona, in the first half of 2010; and by transferring manufacturing from Nagaoka, Japan, no later than the fourth quarter of 2010.

• The reduction of selling, general and administration expenses by making fundamental changes in our global support infrastructure. This includes a significant simplification and streamlining of our warehousing operations and the further strengthening of the global sales & service organization which was created last year.

• The leveraging of research and development and our product portfolio by reprioritization of strategic programs in order to maximize their potential.

The following table summarizes the aggregated restructuring expenses by type:

	Year ended December 31,
	2008		2009		2010
Employee related expenses		—		19,437		4,534
Contract termination related expenses		—		2,799		779
Impairment charges		7,068		4,623		—
Transition expenses		—		4,366		3,806
Expenses buy out RTP		—		3,940		—
Other expenses		—		522		2,082
Total restructuring expenses		7,068		35,687		11,201

Related to these execution plans, an amount of € 11.2 million in restructuring expenses was recorded in 2010. These expenses were mainly costs for severance packages, retention costs, provisions for vacancy and other costs related to the transition of activities to Singapore.

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Related to these execution plans, an amount of € 35.7 million in restructuring expenses was recorded for of 2009. These charges include:

• Employee related expenses of € 19.4 million. Included are unconditional one-time termination benefits of € 15.8 million, conditional one-time termination benefits subject to the final termination date of € 1.7 million and other employee related expenses of € 1.9 million.

• Contract termination related expenses of € 2.8 million. These expenses mainly relate to operational lease contracts and include both the valuating of the onerous contracts at fair value, the decommissioning expenses and impairments of leasehold improvements.

• Impairment charges of € 4.6 million mainly related to machinery and equipment. We impaired certain demo tools which were as a result of the strategic reorientation determined end of life. The impairment charges were determined based on the difference between the asset’s estimated fair value and their carrying amount.

• Expenses of € 4.4 million resulting from the transition of our global Front-end manufacturing operations from Europe, the United States and Japan, into our Front-end manufacturing operations in Singapore.

• Expenses of € 3.9 million related to the management buy-out of our RTP.

• Other expenses of € 0.6 million

In 2008 the Company recorded an impairment charge related to the manufacturing plant at ASM Europe in the Netherlands of € 7,1 million. The impairment was the consequence of the announcement in January 2009 of the restructuring of the ASM Europe operations including the transfer of the manufacturing operations to the Company’s subsidiary ASM Front-end Manufacturing Singapore. ASM Europe will cease using the manufacturing plant upon completion of the transfer. The impairment charges are included in the Consolidated Statements of Operations as restructuring expenses.

24- Income Taxes

The components of earnings (loss) before income taxes and Non-controlling interest consist of:

	Year ended December 31,
	2008			2009			2010
The Netherlands		(32,287	)		(92,945	)		(48,177	)
Other countries		97,052			28,458			333,639
Earnings (Loss) before income taxes and Non-controlling interest		64,765			(64,487	)		285,462

The income tax expense consists of:

	Year ended December 31,
	2008			2009			2010
Current:
The Netherlands		(64	)		(297	)		(505	)
Other countries		(12,594	)		(12,570	)		(38,342	)
		(12,658	)		(12,867	)		(38,847	)
Deferred:
The Netherlands		—			—			—
Other countries		514			9,081			(4,093	)
Income tax expense		(12,144	)		(3,786	)		(42,939	)

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The provisions for income taxes as shown in the Consolidated Statements of Operations differ from the amounts computed by applying the Netherlands statutory income tax rates to earnings before taxes. A reconciliation of the provisions for income taxes and the amounts that would be computed using the Netherlands statutory income tax rates is set forth as follows:

	Year ended December 31,
	2008			2009			2010
Earnings (Loss) before income taxes and Non-controlling interest		64,765			(64,487	)		285,462
Netherlands statutory income tax rate		25.5	%		25.5	%		25.5	%
Income tax provision at statutory rate		(16,515	)		16,444			(72,793	)
Non-deductible expenses		(653	)		(8,376	)		(8,250	)
Foreign taxes at a rate other than the Netherlands statutory rate		11,017			16,100			24,198
Valuation allowance		(10,604	)		(32,087	)		(3,698	)
Non-taxable income		4,608			4,870			18,536
Other		3			(737	)		(932	)
Income tax expense		(12,144	)		(3,786	)		(42,939	)

Included in non-taxable income for 2010 is € 13,793 regarding the Company’s manufacturing operations in Singapore and other countries where income covering certain products is non-taxable under tax incentive schemes granted by the local tax authority (further describe). The majority of these tax exemption schemes have terms ending in 2010.

On 29 May 2006 and 8 June 2009 the Singapore Economic Development Board (“EDB”) granted Pioneer Certificates to ASM Front End Manufacturing Singapore Pte Ltd (“FEMS”, a principal subsidiary of the Group,) to the effect that profits arising from certain manufacturing activities by FEMS of Front End equipment will in principle be exempted from tax for a period of 10 years effective from dates ranging between 1 April 2005 and 1 July 2008, subject to fulfillment of certain criteria during the period.

On 12 July 2010, the EDB granted a Pioneer Certificate to ASM Technology Singapore Pte Limited (“ATS”), a principal subsidiary of the Group, to the effect that profits arising from certain products will be exempted from tax for a period of 10 years effective from dates ranging between 1 June 2010 and 1 January 2012 across specified products, subject to fulfillment of certain criteria during the period. EDB had also granted a 5 year Development and Expansion Incentive (DEI) to ATS to the effect that the profits arising from certain existing products shall be subject a concessionary tax rate of 10% for a period of 5 years from 1 January 2011, subject to the fulfillment of certain criteria during the period.

On the same date, the EDB also granted ATS an International Headquarters (“IHQ”) Award to the effect that certain income arising from qualifying activities conducted by ATS, excluding income from business transactions with companies or end customers in Singapore, shall be subject to concessionary tax rate of 5% for a period of 10 years from 1 January 2011, subject to fulfillment of certain criteria during the period.

Manufacturing Headquarters (“MH”) status granted to ATS previously :

• The Group’s profit arising from the manufacturing of semiconductor equipment and materials by ATS in Singapore is non-taxable under a tax incentive covering certain new products under the Manufacturing Headquarters (“MH”) status granted by the Singapore Government. The tax exemption applies to profits arising for a period of 10 years from 1 January 2001, subject to the fulfillment of certain criteria during the period.”

• Income arising from activities not covered under the abovementioned incentives is taxed at the prevailing Singapore corporate tax rate.

The Netherlands statutory tax rate amounted to 25.5% in 2008, 2009 and 2010. Taxations for other jurisdictions is calculated at the rates prevailing in the relevant jurisdictions. The Company’s deferred tax assets and liabilities have been determined in accordance with these statutory income tax rates.

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Deferred income taxes consist of the following:

	December 31,
	2009			2010
Deferred tax assets:
Reserves and allowances		5,673			7,020
Net operating losses		147,551			153,407
Depreciation		1,801			2,331
Other		924			895
Gross deferred tax assets		155,949			163,653
Less: valuation allowance		(140,825	)		(149,600	)
Net deferred tax assets		15,124			14,053
Deferred tax liabilities		—			—
Net deferred income taxes		15,124			14,053

Deferred tax assets and liabilities are classified in the balance sheet as follows:

	December 31,
	2009			2010
Deferred tax assets—current		6,893			8,567
Deferred tax assets—non-current		8,545			5,807
Deferred tax liabilities—non-current		(314	)		(321	)
		15,124			14,053

Based on tax filings, ASMI and its individual subsidiaries have net operating losses available at December 31, 2010 of € 550,469 for tax return purposes to reduce future income taxes, mainly in Europe and the United States. The Company believes that realization of its net deferred tax assets is dependent on the ability of the Company to generate taxable income in the future. Given the volatile nature of the semiconductor equipment industry, past experience, and the tax jurisdictions where the Company has net operating losses, the Company believes that there is currently insufficient evidence to substantiate recognition of substantially all net deferred tax assets with respect to net operating losses. Accordingly, a valuation allowance of € 140,825 in 2009 and € 149,600 in 2010 has been recorded.

The amounts and expiration dates of net operating losses for tax purposes are as follows:

Expiration year
2011	142,176
2012	52,715
2013	22,290
2014	40,800
2015	0
2016	917
2017	96,691
2018	61,758
2019	27,814
2020	0
2021	1,560
2022	10,156
2023	3,907
2024	423
2025	4,745
2026	1,483
2027	2,846
2028	0
2029	25,798
Unlimited	54,389
Net operating losses	550,469

The Company has not provided for deferred foreign withholding taxes, if any, on undistributed earnings of its foreign subsidiaries. At December 31, 2010 undistributed earnings of subsidiaries, subject to withholding taxes, were approximately € 19,928. These earnings could become subject to foreign

F-44

withholding taxes if they were remitted as dividends or if the Company should sell its interest in the subsidiaries. However, the Company believes that Netherlands tax credits would largely eliminate any foreign withholding tax that might otherwise be due.

On January 1, 2007 the Company adopted ASC 740 “Accounting for Uncertainty in Income Taxes”. The Company’s net operating losses for tax purposes decreased by € 5,369 as a result of the adoption of ASC 740. Since a valuation allowance was recorded against the net deferred tax assets with respect to these net operating losses, the adoption of ASC 740 did not impact the Company’s financial position and net earnings.

A reconciliation of the beginning and ending balance of the liability for unrecognized tax benefits is as follows:

Balance January 1, 2008	12,908
Gross increases—tax positions in current year	1,044
Foreign currency translation effect	889
Balance December 31, 2008	14,841
Gross increases—tax positions in current year	1,381
Foreign currency translation effect	(560	)
Balance December 31, 2009	15,663
Gross increases—tax positions in current year	3,230
Foreign currency translation effect	1,164
Balance December 31, 2010	20,057

Unrecognized tax benefits mainly relate to transfer pricing positions, operational activities in countries where the Company is not tax registered and tax deductible costs.

The Company estimates that no interest and penalties are related to these unrecognized tax benefits.

In the year ended December 31, 2010, no settlement with tax authorities and no reduction as a result of a lapse of statute of limitations occurred.

Unrecognized tax benefits of € 20,057 would, if recognized, impact the Company’s effective tax rate. The Company estimates that the liability for unrecognized tax benefits will change with € 20,057 within the next 12 months, following the expected outcome of investigations by local tax authorities.

A summary of open tax years by major jurisdiction is as follows:

Jurisdiction
Japan	2009—2010
Hong Kong	2000—2010
The Netherlands	2007—2010
Singapore	2006—2010
United States	1997—2010

The calculation of the Company’s tax liabilities involves dealing with uncertainties in the application of complex tax laws. The Company’s estimate for the potential outcome of any unrecognized tax benefits is highly judgmental. Settlement of unrecognized tax benefits in a manner inconsistent with the Company’s expectations could have a material impact on the Company’s financial position, net earnings and cash flows.

25- Disclosures about Segments and Related Information

The Company organizes its activities in two operating segments, Front-end and Back-end. Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Executive Officer (“CEO”), which is the chief operating decision maker (according to ASC 280).

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 of 52.36% interest, whilst the remaining shares are listed on the Stock Exchange of Hong Kong. The segment’s main operations are located in Hong Kong, the People’s Republic of China, Singapore and Malaysia.

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(euro thousands, except for headcount)	Front-end			Back-end			Total
Year ended December 31, 2008
Net sales to unaffiliated customers		296,737			450,625			747,362
Gross profit		93,898			176,364			270,262
Result from operations		(30,445	)		90,167			59,722
Interest income		3,002			1,045			4,047
Interest expense		(7,745	)		—			(7,745	)
Gain resulting from early extinguishment of debt		7,956			—			7,956
Foreign currency exchange gains (losses), net		(566	)		1,351			785
Income tax expense		(1,486	)		(10,658	)		(12,144	)
Net earnings (loss) before gain on dilution of investment in subsidiary		(29,284	)		81,905			52,621
Gain on dilution of investment in subsidiary								4,088
Allocation of net earnings:
Shareholders of the parent								18,411
Non-controlling interest								38,298
Capital expenditures		11,173			20,277			31,450
Purchase of other intangibles		4,994			368			5,362
Depreciation		14,440			18,736			33,176
Amortization of other intangible assets		985			499			1,484
Impairment of goodwill		1,395			—			1,395
Impairment of property, plant and equipment		7,068			—			7,068
Cash and cash equivalents		78,897			78,380			157,277
Capitalized goodwill		9,844			38,145			47,989
Other intangible assets		7,335			583			7,918
Other identifiable assets		282,340			272,274			554,614
Total assets		378,416			389,382			767,798
Total debt		153,682			—			153,682
Headcount in full-time equivalents 1		1,667			10,047			11,714

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

(euro thousands, except for headcount)	Front-end			Back-end			Total
Year ended December 31, 2009
Net sales to unaffiliated customers		160,378			430,361			590,739
Gross profit		8,726			172,789			181,515
Result from operations		(120,269	)		95,113			(25,156	)
Interest income		541			477			1,018
Interest expense		(8,556	)		—			(8,556	)
Loss resulting from early extinguishment of debt		(1,759	)		—			(1,759	)
Accretion interest expense convertible notes		(4,286	)		—			(4,286	)
Revaluation conversion option		(24,364	)		—			(24,364	)
Foreign currency exchange gains (losses), net		(733	)		(651	)		(1,384	)
Income tax expense		7,890			(11,676	)		(3,786	)
Net earnings (loss)		(151,535	)		83,262			(68,273	)
Allocation of net earnings (loss):
Shareholders of the parent								(107,517	)
Non-controlling interest								39,244
Capital expenditures		3,269			9,450			12,718
Purchase of other intangibles		2,934			360			3,294
Depreciation		11,436			20,619			32,054
Amortization of other intangible assets		1,884			451			2,335
Impairment of property, plant and equipment		4,628			—			4,628
Cash and cash equivalents		181,681			112,222			293,902
Capitalized goodwill		10,395			36,828			47,223
Other intangible assets		8,440			497			8,936
Other identifiable assets		187,194			314,445			501,638
Total assets		387,709			463,991			851,700
Total debt		265,430			—			265,430
Headcount in full-time equivalents 1		1,294			10,773			12,067

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

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(euro thousands, except for headcount)	Front-end			Back-end			Total
Year ended December 31, 2010
Net sales to unaffiliated customers		293,356			929,544			1,222,900
Gross profit		114,624			434,954			549,578
Result from operations		15,954			312,686			328,640
Interest income		615			605			1,221
Interest expense		(15,677	)		—			(15,677	)
Loss resulting from early extinguishment of debt		(3,609	)		—			(3,609	)
Accretion interest expense convertible notes		(6,010	)		—			(6,010	)
Revaluation conversion option		(19,037	)		—			(19,037	)
Foreign currency exchange gains (losses), net		(1,809	)		1,744			(65	)
Income tax expense		(6,106	)		(36,833	)		(42,939	)
Net earnings (loss)		(35,679	)		278,202			242,523
Allocation of net earnings:
Shareholders of the parent								110,639
Non-controlling interest								131,884
Capital expenditures		17,653			85,320			102,974
Purchase of other intangibles		43			582			625
Depreciation property, plant & equipment		8,930			21,700			30,630
Depreciation evaluation tools at customers		2,477			—			2,477
Amortization of other intangible assets		2,338			397			2,735
Cash and cash equivalents		142,420			197,874			340,294
Capitalized goodwill		11,193			39,622			50,815
Other intangible assets		6,089			715			6,804
Other identifiable assets		281,076			535,129			816,204
Total assets		440,777			773,340			1,214,117
Total debt		215,681			—			215,681
Headcount in full-time equivalents 1		1,450			15,249			16,699

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

There are no inter-segment transactions, other than charges for management services, which are based on actual cost. The accounting policies used to measure the net earnings and total assets in each segment are identical to those used in the Consolidated Financial Statements. The measurement methods used to determine reported segment earnings are consistently applied for all periods presented. There were no asymmetrical allocations to segments.

Geographical information is summarized as follows:

	Europe		United States of America		Japan		Southeast Asia		Corporate		Consolidated
Year ended December 31, 2008
Net sales to unaffiliated customers		80,237		110,264		70,948		485,913		—		747,362
Long-lived assets		5,809		9,679		26,050		106,763		256		148,557
Total assets		73,877		83,876		115,103		436,325		58,617		767,798
Capital expenditures		5,655		1,909		2,383		21,400		103		31,450
Purchase of intangible assets		—		142		—		386		4,834		5,362
Year ended December 31, 2009
Net sales to unaffiliated customers		40,236		66,955		38,834		444,714		—		590,739
Long-lived assets		2,246		4,119		15,417		92,762		267		114,811
Total assets		36,073		49,350		95,350		518,344		152,583		851,700
Capital expenditures		49		401		953		11,309		6		12,718
Purchase of intangible assets		—		1		—		383		2,910		3,294
Year ended December 31, 2010
Net sales to unaffiliated customers		76,235		112,863		90,394		943,408		—		1,222,900
Long-lived assets		1,978		9,395		19,409		167,020		135		197,937
Total assets		40,470		85,065		92,547		839,720		156,315		1,214,117
Capital expenditures		186		7,059		5,388		90,279		62		102,974
Purchase of intangible assets		—		—		—		607		17		624

F-47

Long-lived assets for the years ended December 31, 2008, 2009 and 2010 consist of the Company’s property, plant and equipment.

26- Selected Operating Expenses and Additional Information

Personnel expenses for employees were as follows:

	December 31,
	2008		2009		2010
Wages and salaries		184,371		157,789		236,746
Social security		18,050		14,314		17,402
Pension expenses		11,474		9,849		12,303
		213,895		181,952		266,451

The average number of employees, exclusive of temporary workers, by geographic area during the year was as follows:

	December 31,
	2008		2009		2010
The Netherlands		352		288		170
Other European countries		197		154		139
United States of America		494		418		358
Southeast Asia		10,687		10,136		13,389
Japan		292		246		197
		12,022		11,242		14,253

27- Earnings per Share

Basic net earnings (loss) per common share is computed by dividing net earnings (loss) by the weighted average ordinary shares outstanding for that period. Diluted net earnings (loss) per ordinary share reflects the potential dilution that could occur if stock options under the ASMI Option Plan were exercised and if convertible notes were converted, unless potential dilution would have an anti-dilutive effect,

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

	December 31,
	2008		2009			2010
Net earnings used for purpose of computing basic earnings per common share		18,401		(107,522	)		110,639
After-tax equivalent of interest expense on convertible subordinated notes		—		—			17,670
Net earnings used for purposes of computing diluted net earnings per common share		18,401		(107,522	)		128,309
Basic weighted average number of shares outstanding during the year used for purpose of computing basic earnings per share (thousands)		52,259		51,627			52,435
Dilutive effect of stock options		130		—			282
Dilutive effect of convertible subordinated notes		—		—			8,777
Dilutive weighted average number of shares outstanding		52,389		51,627			61,494
Net earnings per share:
Basic net earnings from continuing operations		0.35		(2.08	)		2.11
Diluted net earnings from continuing operations		0.35		(2.08	)		2.09

For the year ended December 31, 2010, the effect of 2,630,113 conversion rights was anti-dilutive.

For the year ended December 31, 2009, the effect of 14,550,780 conversion rights and 80,777 option rights to acquire common stock was anti-dilutive.

During 2008, ASM engaged Lehman Bros (“Lehman”). to repurchase ordinary ASMI shares on the Euronext and Nasdaq markets on behalf of ASMI. As of September 15, 2008, at the time it went into

F-48

bankruptcy administration, Lehman reported that it had purchased and held on our behalf 2,552,071 shares, which were accounted for as treasury shares accordingly. ASM filed a submission with the Lehman administrators giving notice of the shares held in custody by Lehman. At ASMI’s May 2009 Annual General Meeting, our shareholders resolved to cancel all of these treasury shares which, accordingly, was accounted for in our 2009 Annual Report as a reduction of the number of outstanding shares. Lehman was notified of the cancellation of shares at the time.

In September 2010, Lehman’s administrators notified us that there is a possible shortfall in the number of shares held by Lehman of 479,279 shares (out of the 2,552,071 shares), which cannot currently be accounted for by Lehman. The Lehman administrators also reported a segregated collateral cash account of US$ 6,759, that ASMI may be entitled to in the absence of the shares. We have not been able to obtain additional information to confirm and understand the potential shortfall of shares or our ability to recover the US$ 6,759 from the Lehman bankruptcy proceedings in lieu of the shares. Accordingly, we are uncertain at this time as to the accuracy of the shortfall of shares, our ability to claim the collateral cash sum to cover the value of any such discrepancy, and our entitlement to all or a portion of such sum when distributions are determined and made by the administrator since there is likely to also be a shortfall in Lehman assets subject to proprietary rights. Given the magnitude of the overall Lehman administration, we believe it may take several years to obtain clarity or resolution about the potential shortfall or claim to cash. ASMI is in the process of filing a claim with the Lehman administrators to safeguard our interests.

Considering the factual and legal uncertainties, it is premature to conclude that the 479,279 shares should still be considered as outstanding or that ASMI has a US$ 6,759 receivable from Lehman. ASMI has, therefore, neither reversed the cancellation of these shares that we recorded in 2009, nor recorded a receivable from Lehman. If the shares would be considered as outstanding, the impact on our basic and diluted earnings per share as at December 31, 2010 would have been € (0.02) and € (0.01) respectively per share.

28- Board Remuneration

The following table sets forth as to all current and former members of the Management Board of the Company, information concerning all remuneration from the Company (including its subsidiaries) for services in all capacities:

	Base compensation		Bonuses 6		Pensions		Year ended December 31,
							2010		2009
							Total		Total
Management Board:
C.D. del Prado		529		—		84		613		497
P.A.M. van Bommel 1		142		—		26		168		—
W.K. Lee 2		365		223		21		609		513
R.A. Ruijter 3		323		—		—		323		314
J.F.M. Westendorp 4		148		—		7		155		333
A.J.M. van der Ven 5		—		—		—		—		306
		1,507		223		138		1,868		1,963

(1) For the period July 1, 2010 through August 31, 2010 at 40% and for the period September 1, 2010 through December 31, 2010 full time.

(2) All remuneration relates to the compensation Mr. W.K. Lee received in his capacity as member of the Board of ASMPT.

(3) For the period May 15, 2009 through December 31, 2009 and for the period January 1, 2010 through August 31, 2010.

(4) For the period January 1, 2010 through May 20, 2010.

(5) For the period January 1, 2009 through December 31, 2009. Mr van der Ven resigned from the Management Board as per May 14, 2009. Per December 31, 2009 Mr van der Ven resigned from the Company and subsequently received a termination benefit of € 141.

(6) Bonuses paid in 2010 were calculated and paid in respect of performance in 2009.

The remuneration of members of the Management Board has been determined by the Supervisory Board, with the exception of Mr. W.K. Lee. His compensation has been determined by the Board of ASM Pacific Technology. The remuneration of members of the Supervisory Board has been determined by the General Meeting of Shareholders.

F-49

The following table sets forth as to all current and former members of the Supervisory Board of the Company information concerning all remuneration (base compensation, no bonuses or pensions were paid) from the Company (including its subsidiaries) for services in all capacities:

	Year ended December 31,
	2010		2009
	Total		Total
Supervisory Board:
G.J. Kramer 1		54		31
J.M.R. Danneels		29		29
H.W. Kreutzer		30		31
J.C. Lobbezoo 1		33		21
M.C.J. van Pernis 2		18		—
U.H.R. Schumacher		28		25
E.A. van Amerongen 3		15		35
P.C. van den Hoek 4		—		23
L.P.E.M. van den Boom 5		—		5
		206		200

(1) For the period May 15, 2009 through December 31, 2009.

(2) For the period May 20, 2010 through December 31, 2010.

(3) For the period January 1, 2010 through May 20, 2010.

(4) For the period January 1, 2009 through May 15, 2009.

(5) For the period January 1, 2009 through March 9, 2009.

No stock options have been issued to members of the Supervisory Board.

The following table shows the outstanding options to purchase ASM International N.V. common shares held by current and former members of the Management Board, and changes in such holdings during 2010:

	Year of grant		Outstanding January 1, 2010		Granted in 2010		Adjustment from vesting condition 2010 7			Exercised in 2010			Forfeited in 2010			Outstanding December 31, 2010		Exercise price		Remaining term, in years
Current members:
C.D. del Prado 2		2003		20,000		—		—			—			—			20,000	US$	11.35		3
C.D. del Prado 1		2007		22,451		—		(2,806	)		—			—			19,645	€	19.47		5
C.D. del Prado 1		2008		100,000		—		—			—			—			100,000	€	12.71		6
C.D. del Prado 1		2009		50,000		—		—			—			—			50,000	€	15.09		7
P.A.M. van Bommel 6		2010		—		25,000		—			—			—			25,000	€	16,27		8
Former members:
A.J.M. van der Ven 3,5		2005		30,000		—		—			(20,000	)		(10,000	)		—	€	11.18		—
A.J.M. van der Ven 1,5		2006		17,500		—					(17,500	)		—			—	€	14.13		—
A.J.M. van der Ven 1,5		2007		21,917		—		—			—			(21,917	)		—	€	19.47		—
A.H. del Prado 1		2007		60,441		—		(7,555	)		—			—			52,886	€	19.47		1
J.F.M. Westendorp 4		2006		56,000		—		—			—			—			56,000	€	15.40		1
J.F.M. Westendorp 1		2007		25,659		—		(3,207	)		—			—			22,452	€	19.47		5
J.F.M. Westendorp 4		2009		40,000		—		—			—			—			40,000	€	15.09		7
				443,968		25,000		(13,568	)		(37,500	)		(31,917	)		385,983

The fair value per option of options granted to current and former members of the Management Board was € 8.98 in 2009 and € 16.92 in 2010. The compensation expense recorded in the Consolidated Statements of Operations related to options held by current and former members of the Management Board was € 737 in 2009and € 572 in 2010.

In 2010, 37,500 options to purchase ASM International N.V. common shares were exercised and new shares were issued for the exercise of these options.

F-50

The stock option grants to members of the Management Board have been determined by the Supervisory Board.

(1) These options are conditional. A percentage—not exceeding 150%—of the options which have been granted conditionally will become unconditional after three years, based on the total return of the Company’s shares for the three years after the options are granted compared to the average total return of the shares of a relevant number of companies which are similar to the Company during the same three-year period. The options are granted for a term of eight years. Upon the retirement of Mr. A.H. del Prado in 2008, the remaining term of his options has been shortened.

(2) These options are granted for a term of ten years, and became exercisable in equal parts over a five year period.

(3) These options were granted for a term of eight years, and became exercisable in equal parts over a three year period, starting 2008.

(4) These options are granted for a term of five years, and become exercisable in equal parts over a five year period.

(5) As a result of his resignation the options granted to Mr. A.J.M. van der Ven expired per the end of March, 2010.

(6) These options are granted for a term of eight years and become exercisable after a 3 year vesting period.

(7) As a result of the final ranking of ASM International in a predefined peer group the options granted in May 2007 to all members of the Management Board have vested at 87.5%.

In March 2010, Mr. W.K. Lee in his capacity of member of the Board of Directors of ASMPT was granted 110,000 shares in the share capital of ASMPT under the Employee Share Incentive Scheme of ASMPT. The shares were issued in December 2010. The fair value of the shares granted amounted to € 705. In March 2009, Mr. W.K. Lee in his capacity of member of the Board of Directors of ASMPT was granted 110,000 shares in the share capital of ASMPT under the Employee Share Incentive Scheme of ASMPT. The shares were issued in December 2009. The fair value of the shares granted amounted to € 199.

29- Share Ownership and Related Party Transactions

The ownership or controlling interest of outstanding common shares of ASM International N.V. by members of the Management Board and Supervisory Board or members of their immediate family are as follows:

	December 31, 2009					December 31, 2010
	Shares owned		Percentage of Common shares outstanding			Shares owned		Percentage of Common shares outstanding
A.H. del Prado		9,275,839		17.93	%		9,200,839		17.38	%
C.D. del Prado (member of the Management Board)		132,945		0.26	%		132,945		0.26	%
J.F.M. Westendorp		6,000		0.01	%		6,000		0.01	%
Stichting Administratiekantoor ASMI		2,142,039		4.14	%		2,142,039		4.05	%

Stichting Administratiekantoor ASMI is a trust controlled by Mr. A.H. del Prado. The number of shares owned by Stichting Administratiekantoor ASMI includes 713,000 common shares which are beneficially owned by Mr. C.D. del Prado.

NanoPhotonics AG—In 1999, the Company acquired a 24.0% interest in NanoPhotonics, a German supplier of precision thin film metrology equipment, for € 407. In 1999, the Company’s then Chief Executive Officer also purchased a 44.5% interest in NanoPhotonics. Due to the issuance of new shares by NanoPhotonics to third parties in 2003, the Company’s interest diluted to 23.61% and the then Chief Executive Officer’s interest diluted to 43.77%. In 2004 the then Chief Executive Officer purchased an additional 1.72% interest in NanoPhotonics from another shareholder. For all the shares purchased by the then Chief Executive Officer, the Company and the then Chief Executive Officer agreed that the Company could purchase such shares at the same price the officer paid to acquire the shares. The Company exercised this option in December 2005, for a total consideration of € 1,101. In 2006 the Company acquired an additional 2% interest in NanoPhotonics for a consideration of € 300. In September 2008, the Company

F-51

finalized the sale of its interest for a total consideration of € 410. Related to this sale, the Company recorded an impairment charge of € 1,395. At December 31, 2007 the Company has provided NanoPhotonics with intercompany loans of € 300. In 2007 and 2008 the Company purchased no equipment from NanoPhotonics.

30- Subsequent events

On 28 July 2010, the ASM PT entered into an acquisition agreement (the “Acquisition Agreement”) with Siemens Aktiengesellschaft (the “Seller”) pursuant to which the Company has conditionally agreed to acquire the entire interest of 13 direct and indirect subsidiaries of the Seller operating the Siemens Electronics Assembly Systems Business (the “SEAS Business”) in 11 countries, including Germany, the PRC, the United Kingdom, France, Austria, the United States of America, Mexico, Singapore, Sweden, Italy and Brazil.

An extraordinary general meeting of the ASM PT was held on 6 January 2011 (“EGM”) for the purpose of considering and approval of the acquisition of the SEAS Business. The acquisition was approved by the shareholders of the ASM PT at the EGM. The acquisition of SEAS Business was completed on 7 January 2011.

Pursuant to the Acquisition Agreement, the ASM PT paid to Siemens Electronics Assembly Systems GmbH & Co. KG (“SEAS KG”), one of the 13 entities comprising the SEAS Business and an indirect wholly-owned subsidiary of the Company upon completion of the Acquisition Agreement, an amount of EUR 20 million (equivalent to approximately HK $208 million) on 7 January 2011 by increasing SEAS KG’s registered limited partnership interest and granted SEAS KG a revolving loan facility of up to € 20 million (equivalent to approximately HK $208 million) for a period of at least three years from 7 January 2011 subject to the terms and conditions as set out in the Acquisition Agreement. The Company also provided a letter of support to SEAS KG amounting to € 120 million (equivalent to approximately HK $1,246 million), valid as for a duration of six years following completion. The Company also provided the Seller with a bank guarantee in an amount of € 20 million (equivalent to approximately HK $208 million) which shall secure certain obligations of the Group as set out in the Acquisition Agreement.

F-52

EX-1.1

Exhibit 1.1

ARTICLES OF ASSOCIATION OF	SBR/6007424/10177875.dle
ASM INTERNATIONAL N.V.
(informal translation)

having its seat at Almere, as they read after the deed of amendment to the articles of association executed on 21 May 2010 before M.A.J. Cremers, civil-law notary in Amsterdam, in respect of which amendment the Minister of Justice advised on 21 May 2010 under number N.V. 97183 that no objections have become apparent.

Name and seat

Article 1.

1.1. The company will bear the name:

ASM International N.V.

1.2. The company has its seat at Almere.

Object

Article 2.

The object of the company will be:

• to participate in, to finance, to co-operate with and to conduct the management of legal persons and other enterprises, among which in particular included enterprises which have the object to produce and to trade in equipment, materials and components for the micro-electronic industry;

• to grant security for debts of group companies;

• to perform everything connected with the afore-stated or which might be conducive thereto,

everything in the broadest sense of the word.

Capital and shares

Article 3.

The authorised capital of the company amounts to nine million four hundred forty thousand euro (EUR 9,440,000.-).

It is divided into one hundred ten million (110,000,000) ordinary shares, each having a par value of four cent (EUR 0.04), eight thousand (8,000) finance preferred shares, each having a par value of forty euro (EUR 40.-) and one hundred eighteen thousand (118,000) preferred shares, each having a par value of forty euro (EUR 40.-).

- 1 -

Article 4.

Where in these articles reference is made to shares and shareholders, this shall include the ordinary shares, the financing preferred shares, the preferred shares and the holders of ordinary shares, the holders of financing preferred shares and the holders of preferred shares respectively, unless the contrary is explicitly stated.

Issue of shares

Article 5.

5.1. The general shareholders meeting - hereinafter also referred to as the general meeting - or the managing board, if so previously designated by the general meeting, will resolve to issue shares - as far as the managing board is concerned with the approval of the supervisory board; if the managing board has been so designated, the general meeting may not decide to issue such number of shares as to which the designation relates as long as the designation is in force.

5.2. With the approval of the supervisory board, the corporate body authorised to issue will determine the price and the further terms and conditions of issue, such with due observance of the other provisions with respect thereto in these articles.

5.3. If the managing board is designated as being authorised to resolve to issue shares, such designation shall also determine how many and what class of shares may be issued.

Such a designation shall also fix the duration of the designation, which may not exceed five years.

The designation may not be extended by more than five years on each occasion.

Unless it has been stipulated otherwise at the designation, it may not be revoked.

5.4. A previous or simultaneous approving resolution of each group of holders of shares of the same class whose rights the issue negatively affects will be required for the validity of a resolution of the general meeting to issue shares or to designate the managing board as corporate body authorised to issue shares.

5.5. Within eight days after a resolution of the general meeting to issue or to designate the managing board as being authorised to issue, a full text thereof will be deposited at the office of the Trade Register where the company has its seat according to these articles of association.

Within eight days after the end of each quarter of the year the managing board will notify the office of the Trade Register of each issue of shares in that quarter of the year, stating the number and class.

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5.6. The provisions of paragraphs 1 up to and including 5 of this article will correspondingly apply to the granting of rights to subscribe for shares, but will not apply to the issue of shares to someone who is exercising a previously acquired right to subscribe for shares.

5.7. Shares will never be issued below par, such without prejudice to the provisions of section 80, paragraph 2, Volume 2 of the Dutch Civil Code.

5.8. Ordinary shares and financing preferred shares will only be issued against payment in full; preferred shares may be issued against partial payment, provided that the nominal amount mandatorily to be paid - irrespective when it has been issued - should be the same for every preferred share, and that when subscribing for the share at least one fourth of the nominal amount should be paid.

5.9. Payment should be made in cash to the extent that no other contribution has been agreed upon.

5.10. With the approval of the supervisory board the managing board may at any moment resolve on what day and up to what amount further payment on non-fully paid up preferred shares should have been made.

The managing board will immediately inform the holders of preferred shares about such a resolution; between that announcement and the day on which the payment should have been made should be at least thirty days.

5.11. The managing board will be authorised to perform legal acts as specified in section 94, paragraph 1, Volume 2 of the Dutch Civil Code, provided with the prior approval of the supervisory board but without the approval of the general meeting.

Issuance of preferred shares

Article 6.

If preferred shares have been issued pursuant to a resolution to issue, or a resolution to grant a right to subscribe for shares passed by the managing board without the prior approval of the general meeting, the managing board will be obliged to convene a general meeting within two years after that placement to consider a proposal to repurchase or withdraw (as the case may be) such preferred shares.

If at that meeting no resolution is passed to repurchase or withdraw (as the case may be) the preferred shares, then the managing board will be obliged, within two years thereafter, to convene again a general meeting at which continuing proposal will again be made.

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The obligation as referred to in the previous sentence will cease to exist if said shares are no longer issued or (as the case may be) are no longer held by another than the company.

Preferential right

Article 7.

7.1. Without prejudice to the provisions of the third sentence of section 96a, paragraph 1, Volume 2 of the Dutch Civil Code, each holder of ordinary shares will have upon issue of ordinary shares a pre-emptive right in proportion to the total par value of his ordinary shares.

Holders of preferred shares and financing preferred shares do not have a pre-emptive right to shares to be issued.

Holders of ordinary shares do not have a pre-emptive right to preferred shares and financing preferred shares.

7.2. In the event of a share issue there will be no pre-emptive right on shares that are issued against contribution other than cash.

7.3. The general meeting or (as the case may be) the managing board if so designated - as far as the managing board is concerned with the approval of the supervisory board - will determine, with due observance of this article, when taking a resolution to issue in what manner and within which period the pre-emptive right can be exercised.

The foregoing period shall be at least two weeks after the announcement referred to in the next paragraph.

7.4. The company will announce the issue with pre-emptive right and the period in which that right can be exercised in the National Gazette (Staatscourant) and in a national distributed daily newspaper.

7.5. The pre-emptive right on ordinary shares and financing preferred shares may be limited or debarred by a resolution of the general meeting.

In the proposal for this purpose the reasons for the proposal and the choice of the intended price of issue should be explained in writing.

The pre-emptive right may also be limited or debarred, provided with the approval of the supervisory board, by the managing board if the managing board by resolution of the general meeting has been designated for a certain period of not more than five years as being authorised to limit or debar the pre-emptive right;

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such a designation may only be made if the managing board has been or is simultaneously designated as being authorised to issue, as referred to in article 5, paragraph 1.

The designation may each time be extended for not more than five years; it will in any case cease to apply if the designation of the managing board as being authorised to issue, as referred to in article 5, paragraph 1, is no longer in force. Unless it has been determined otherwise at the designation, it may not be revoked - without prejudice to the provisions of the previous sentence.

7.6. With respect to a resolution of the general meeting to limit or debar the pre-emptive right on ordinary shares and financing preferred shares or to designate, as referred to in the previous paragraph, a majority of at least two thirds of the votes cast will be required, if less than half the issued capital is represented at the meeting.

Within eight days after that resolution the managing board will deposit a full text thereof at the office of the Trade Register referred to in article 5, paragraph 5.

7.7. At granting rights to subscribe for ordinary shares and financing preferred shares the holders of ordinary shares and the holders of financing preferred shares will have a pre-emptive right; the provisions made afore in this article will apply correspondingly.

Shareholders do not have a pre-emptive right on shares that are issued to someone who is exercising a previously acquired right to subscribe for shares.

Purchase of own shares, right of pledge on own shares

Article 8.

8.1. With authorisation of the general meeting and without prejudice to the other provisions of section 98 and the provisions of section 98d, Volume 2 of the Dutch Civil Code, the managing board may have the company acquire fully paid-up shares in its own capital under onerous title.

Such an acquisition will, however, only be permitted, if:

a. the shareholders’ equity of the company, less the acquisition price of the shares, is not less than the paid-up and, insofar as it concerns preferred shares, the called part of the capital, plus the reserves that pursuant to the law should be kept; and

b. the total par value of the shares to be acquired and of the shares in its capital that the company holds itself or has in pledge or that are held by a subsidiary do not amount to more than half of the issued share capital.

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The requirement referred to under sub a will be determined by the amount of the shareholders’ equity according to the last adopted balance sheet, less the acquisition price for shares in the capital of the company, distributions from profits or reserves that it and its subsidiaries became due after the date of the balance sheet and the amount of loans granted in accordance with section 98c, paragraph 2, Volume 2 of the Dutch Civil Code.

If a financial year has expired for more than six months without the annual accounts having been adopted, acquisition according to the provisions of this paragraph will not be permitted.

At the authorisation, which shall apply for not more than eighteen months, the general meeting shall determine how many and what class of shares may be acquired, how they may be acquired and the price range for such acquisition.

8.2. With the approval of the supervisory board, the managing board will decide to alienate the shares acquired by the company in its own capital.

8.3. If depositary receipts for shares in the company have been issued, such depositary receipts will be put on a par with shares for the application of the provisions of the previous paragraphs.

8.4. The company may not derive any right to distribution from shares in its own capital; it will neither derive any right to such a distribution on shares for which it holds the depositary receipts.

When calculating the distribution of profit, the shares referred to in the previous sentence do not count unless on such shares or on the depositary receipts thereof a usufruct or a pledge is vested in favour of another than the company.

8.5. In a general meeting no vote may be cast for a share that is held by the company or by a subsidiary; neither for a share of which one of them holds the depositary receipts.

Usufructuaries of shares that belong to the company or a subsidiary are, however, not excluded from their voting-right if the usufruct was created before the share belonged to the company or a subsidiary.

The company or a subsidiary may not cast a vote for a share on which it has a right of usufruct.

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8.6. When determining to what extent shareholders vote, are present or represented, or to what extent the share capital is provided or represented, shares of which the law provides that it is not possible to cast a vote for them will not be taken into account.

8.7. The company may only accept shares which it holds in its own capital or depositary receipts thereof in pledge subject to the provisions of section 89a, Volume 2 of the Dutch Civil Code.

Capital reduction

Article 9.

9.1. With due observance of the provisions of section 99, Volume 2 of the Dutch Civil Code the general meeting may decide to reduce the issued share capital by withdrawing shares or by reducing the amount of the shares by way of an amendment of the articles.

The shares to which the resolution relates will be designated and the implementation of the resolution should be settled.

Withdrawal with repayment on shares or partial repayment on shares or exemption of the obligation to pay up as referred to in section 99, Volume 2 of the Dutch Civil Code may also be effected with respect to ordinary shares or solely with respect to financing preferred shares, or solely with respect to preferred shares.

A partial repayment or exemption should be effected in proportion to all shares concerned of the class.

It will be permitted to deviate from the requirement of proportion with the consent of all shareholders involved.

Provided with the approval of the managing board and the supervisory board, the general meeting may resolve to withdraw with repayment all preferred shares, or all financing preferred shares irrespective by whom these are held.

9.2. If less than half the issued share capital is represented the general meeting may only pass a resolution with respect to capital reduction with a majority of at least two-thirds of the votes cast.

9.3. A resolution to reduce the issued share capital requires moreover the approval, prior thereto or simultaneously, of every group of holders of shares of the same class whose rights will be impaired; the provision contained in the previous sentence will apply correspondingly to the decision-taking of a group.

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9.4. The notice convening a meeting at which a resolution as referred to in this article will be taken, will state the object of the capital reduction and the manner of implementation; the second, third and fourth paragraph of section 123, Volume 2 of the Dutch Civil Code will apply correspondingly.

Shares

Article 10.

10.1. The ordinary shares will be either registered or bearer shares, at the choice of the shareholder.

The preferred shares and the financing preferred shares will be registered shares.

The preferred shares will be numbered from P1 onwards, the financing preferred shares from F1 onwards.

10.2. Share certificates will be issued for the ordinary bearer shares.

Share certificates may be issued for ordinary registered shares but only then if those shares are traded on a stock exchange and the prescriptions of that stock exchange imply that in connection with the trade share certificates should have been issued.

A stock exchange shall mean a stock exchange as referred to in section 86c, Volume 2 of the Dutch Civil Code.

The share certificates will be numbered in the manner as to be determined by the managing board.

10.3. Quantity receipts will be issued upon request of a shareholder for such numbers of shares as the managing board will determine.

Upon request of the holder a quantity receipt will be changed into single receipts up to a similar nominal amount.

10.4. The share certificates will be provided with the signature of a member of the supervisory board and a member of the managing board.

One or both signatures may be effected by facsimile.

One or both signatures may also be replaced by a control stamp characteristic for the company and affixed by or under its supervision.

If not at least one signature has been placed by own hand by pen a control stamp as referred to above should be affixed.

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10.5. Under terms and conditions to be established by the managing board ordinary registered shares may be made out to bearer and vice versa upon request of the holder.

Transfer of registered shares and exchange of registered shares to bearer shares may not take place during the period commencing on the day after that on which shareholders have been convened for a general meeting and ending on the day after that of the meeting.

10.6. The company will not charge any costs for the issue and exchange of share certificates.

10.7. The share certificates of registered shares will be provided with a coupon sheet, consisting of dividend coupons and a talon.

Every share certificate relating to one or more ordinary bearer shares will be provided with a simplified coupon sheet, without any dividend coupons and talon. Such share certificates will be referred to hereinafter as CF-certificates.

10.8. A simplified coupon sheet (hereinafter to be referred to as a CF-coupon sheet) may only be issued by the company to a custodian to be appointed by the shareholder.

This appointment may only be effected from a group of custodians as such admitted by the company who have the custody of the CF-coupon sheets administered by an institution accepted thereto by the company but independent from it.

These custodians should have undertaken not to issue the CF-coupon sheets given into their custody to others than custodians admitted by the company or to the company.

10.9. With respect to dividends and other distributions on a share for which a CF-certificate has been issued the company will be discharged vis-à-vis the persons entitled by making those dividends or distributions available to or pursuant to the instructions of the independent institution as referred to in paragraph 8.

10.10. The company will be authorised to establish further rules with respect to the issue of CF-certificates.

10.11. The managing board may issue duplicates in case share certificates or coupon sheets relating to ordinary shares are lost, alienated or destroyed.

The managing board may make this issue subject to conditions, among which included, to give security and to have the applicant reimburse the costs.

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By issuing a duplicate the original document will become invalid vis-à-vis the company.

The new document should show that it is a duplicate.

Shareholders’ register

Article 11.

11.1. With respect to the registered shares the managing board will keep for each class separately a register in which the names and addresses of the shareholders have been included stating the amount paid up on every share and the share premium paid upon every financing preferred share at the issue.

In the register will also be included the names and addresses of those who have a right of usufruct or a right of pledge on the shares, stating as far as usufructuaries are concerned whether they are entitled to the rights attached to the shares pursuant to paragraphs 2, 3 and 4 of section 88, Volume 2 of the Dutch Civil Code and if so, which, and as far as the pledgees are concerned, that they are not entitled to the voting-right attached to the shares nor to the rights that the law assigns to depositary receipts for shares issued with the co-operation of the company.

The registers will state with respect to each shareholder, pledgee or usufructuary the date on which they obtained on the shares, the right of pledge or usufruct respectively, as well as the date of acknowledgement or serving.

If a shareholder, usufructuary or pledgee gives knowledge to the company of an electronic address together with the other data mentioned in paragraph 1 of this article to record this address in the register, this address will then be considered to be recorded for the purpose of receiving all notifications, announcements and statements as well as convocations for general meetings for shareholders and usufructuaries with meeting rights by electronic means.

A notice sent by electronic means shall be readable and reproducible.

11.2. The registers will be regularly kept up to date; every discharge of liability granted for payments not yet made will also be recorded in the registers.

Every entry in the register will be signed by a member of the managing board and a member of the supervisory board.

For the application of the previous sentence the facsimile of a signature will be deemed as set by own hand.

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11.3. Upon request the managing board will supply a shareholder, a usufructuary and a pledgee without charge with an extract from the register with respect to his right on a share.

If on a share a right of usufruct or a right of pledge is vested, the extract will state, as far as the usufructuaries are concerned, to which of the rights referred to in paragraphs 2, 3 and 4 of section 88, Volume 2 of the Dutch Civil Code they are entitled and as far as the pledgees are concerned, that they are not entitled to the voting-right attached to these shares nor to the rights that the law assigns to depositary receipt for shares issued with the co-operation of the company.

11.4. The register of ordinary registered shares may consist of various volumes, which may be kept at different places.

Each of these volumes may be kept in more than one copy and at more than one place.

11.5. The managing board will deposit the registers at the office of the company for inspection by the holders of registered shares who should have been entered in the register concerned, as well as by the usufructuaries of such shares who are entitled to the rights referred to in paragraph 4 of section 88, Volume 2 of the Dutch Civil Code.

The provisions made afore do not apply to the part of the register of holders of ordinary registered shares that is kept outside the Netherlands to comply with the legislation applicable there or pursuant to stock exchange requirements.

11.6. The information in the register with respect to non-paid-up preferred shares will be open for inspection by everyone; a copy or extract of this information will be provided at not more than cost price.

11.7. Every holder of registered shares as well as everyone who has a right of usufruct or a right of pledge on the shares will be obliged to inform the managing board about his address.

Holders of depositary receipts, pledgees

Article 12.

12.1. Where hereinafter in these articles reference is made to holders of depositary receipts, these will be understood to mean holders of depositary receipts issued with the co-operation of the company and persons who pursuant to section 88, Volume 2 of the Dutch Civil Code have the rights that the law assigns to holders of depositary receipts of shares issued with the co-operation of the company.

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12.2. It will not be possible to assign to pledgees of shares the voting-right attached to those shares.

They will not be entitled to the rights referred to in section 89, paragraph 4, Volume 2 of the Dutch Civil Code.

Convocation and notices

Article 13.

Without prejudice to the provisions of article 7, paragraph 5 every convocation of or notice to shareholders or holders of depositary receipts will be made in accordance with applicable law and regulations.

Manner of transfer of shares

Article 14.

14.1. Unless otherwise stipulated by law the transfer of registered shares or the transfer of a limited right thereon requires a deed for that purpose as well as, except in case the company itself is a party in that legal act, a written acknowledgement by the company of the transfer.

The acknowledgement will be effected in the deed or by a dated statement containing the acknowledgement on the deed or on a notarial copy or extract thereof or one certified by the transferor.

Serving of that deed or that copy or that extract to the company will be put on a par with the acknowledgement.

If it concerns the transfer of non-fully paid-up shares the acknowledgement may only be effected if the deed has a fixed date.

If for a registered share a share certificate has been issued, lodgement of the share certificate with the company will moreover be required for the transfer.

If the share certificate is lodged to the company, the company may acknowledge the transfer by placing on that share certificate an endorsement from which the acknowledgement appears or by replacing the issued share certificate by a new share certificate in the name of the transferee.

14.2. The provisions of paragraph 1 will correspondingly apply to the creation and relinquishing of a limited right on the shares.

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A right of pledge may also be created without acknowledgement or serving to the company; section 239, Volume 3 of the Dutch Civil Code will then apply correspondingly, which acknowledgement by or serving to the company will be substituted for the announcement as referred to in paragraph 3 of that section.

Transfer restrictions preferred and financing preferred shares

Article 15.

15.1. Approval of the supervisory board will be required for each transfer of preferred and financing preferred shares.

The approval will be requested in writing, at which the name and the address of the intended transferee as well as the price or other consideration that the intended transferee is prepared to pay or to give should be announced.

15.2. If the approval is refused, the supervisory board will be obliged to appoint simultaneously one or more prospective buyers who are prepared and able to purchase all the shares to which the request relates against payment in cash at a price to be fixed in mutual consultation by the transferor and the supervisory board within two months after that appointment.

15.3. If not within three months after the company has received request for approval of the intended transfer the transferor has received from the company a written notice with respect thereto or if a timely written refusal of approval has not simultaneously been accompanied by the appointment of one or more prospective buyers as referred to in paragraph 2, the approval for transfer will be deemed to have been granted after expiry of said period or after receipt of the notice of refusal respectively.

15.4. If not within two months after the refusal of the approval any agreement has been reached between the transferor and the supervisory board with respect to the price referred to in paragraph 2, this price will be fixed by an expert to be appointed by the transferor and the supervisory board in mutual consultation or, in the absence of any agreement about this within three months after the refusal of the approval, by the chairman of the Chamber of Commerce and Industry of the place where the company has its seat according to these articles, at request of the most willing party.

15.5. The transferor will have the right to refrain from the transfer, provided that he notifies the supervisory board of this in writing within one month after both the name of the appointed prospective buyer(s) and the fixed price have been brought to his knowledge.

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15.6. In case of approval to transfer in the way of paragraph 1 or paragraph 3 the transferor will be authorised for a period of three months after this approval to transfer all shares to which his request related to the transferee mentioned in the request at the price mentioned by him or the consideration referred to in paragraph 1 of this article.

15.7. The costs for the company attached to the transfer may charged to the new transferee.

Usufruct and voting-right

Article 16.

The shareholder will have the voting-right on the shares on which a usufruct has been created.

Contrary to the previous sentence the usufructuary will be entitled to the voting-right if this has been stipulated at the creation of the usufruct and the usufructuary is a person to whom the shares may be freely transferred.

If the usufructuary is a person to whom the shares, pursuant to the provisions of article 15, may not be freely transferred, he will only be entitled to the voting-right if this has been stipulated at the creation of the usufruct and both this provision and - in case of transfer of the usufruct - the transition of the voting-right has been approved by the supervisory board.

Managing board

Article 17.

17.1. The company will be managed by a managing board consisting of one or more members, the number to be decided by the supervisory board.

17.2. The supervisory board will appoint from the members of the managing board the chairman of the managing board.

17.3. The managing board will meet as often as a member of the managing board so desires.

At the meetings of the managing board every member of the managing board will cast one vote.

In case of a tie vote, the decision will be taken by the Chief Executive Officer (CEO).

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17.4. Subject to the approval of the supervisory board will be decisions of the managing board with respect to:

a. the issue of shares which includes the granting of a right to subscribe for shares and to obtain shares in debenture bonds chargeable to the company or of debenture bonds chargeable to a limited partnership or a partnership firm of which the company is fully liable partner;

b. cooperation to the issue of depositary receipts for shares;

c. application or the withdrawal for quotation of the securities mentioned under sub a and b in the price list of any stock exchange;

d. conclusion or cancellation of permanent cooperation of the company or a dependent company with another legal person or company or as fully liable partner in a limited partnership or a partnership firm, if this cooperation or cancellation is of major significance to the company;

e. a participation involving a value equal to at least one-fourth of the amount of the issued share capital plus the reserves according to the balance sheet with explanatory notes of the company, by itself or by a dependent company in the capital of another company as well as to drastically increase or reduce such a participation;

f. any investment that requires an expenditure equal to at least one-fourth part of the issued share capital plus the reserves of the company according to its balance sheet with explanatory notes;

g. a proposal to amend the articles;

h. a proposal to dissolve the company;

i. registration of bankruptcy and application for suspension of payments of debts;

j. a proposal to reduce the issued share capital.

17.5. Without prejudice to any other provisions in these articles of association, decisions of the managing board involving a major change in the company’s identity or character are subject to the general meeting’s approval, including at any rate:

a. the transfer of the enterprise or practically the whole enterprise to third parties;

b. to enter into or to terminate longstanding joint ventures of the company or a subsidiary with another legal entity or company or as fully liable partner in a limited partnership or a general partnership if this joint venture or termination of such a joint venture is of a major significance for the company;

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c. to acquire or dispose of a participation in the capital of a company worth at least one third of the amount of the assets according to the balance sheet with explanatory notes thereto, or if the company prepares a consolidated balance sheet according to such consolidated balance sheet with explanatory notes according to the last adopted annual accounts of the company, by the company or a subsidiary.

17.6. The absence of an approval defined in paragraphs 4 and 5 of this article shall not affect the managing board’s or the members of the managing board’s authority to represent the company.

Appointment, suspension and dismissal of members of the managing board

Article 18.

18.1. The members of the managing board will be appointed by the general meeting for a term of at most four years.

Re-appointment may occur for no more than four years per term.

The general meeting appoints a member of the managing board from a binding nomination to be drawn up by the supervisory board in accordance with section 133, Volume 2 of the Dutch Civil Code.

18.2. The general meeting may cancel the binding nature of a nomination at a meeting by an absolute majority of the votes cast, representing at least one third of the issued share capital.

In that event the supervisory board may draw up a new binding nomination to be submitted to a subsequent general meeting.

Should such a second nomination also be deprived of its binding character in the manner provided for in this paragraph, the general meeting shall be free to appoint, provided that a resolution of the general meeting to appoint shall require an absolute majority of the votes cast representing at least one third of the company’s issued capital.

18.3. If, however, in the meeting or the subsequent meeting referred to in paragraph 2 the required proportion of the capital is not represented, but an absolute majority of the votes cast is in favour of a resolution to cancel the binding nature of the nomination (as the case may be) a resolution for appointment, a new meeting shall be convened at which the resolution may be passed by an absolute majority of the votes cast, regardless of the proportion of the capital present at the meeting.

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18.4. At a general meeting, votes in respect of the appointment of a member of the managing board can only be cast for candidates named in the agenda of the meeting or explanatory notes thereto.

18.5. Members of the managing board may at any time be suspended or dismissed by the general meeting.

A resolution to suspend or to dismiss a member of the managing board, other than in accordance with a proposal of the supervisory board, shall require an absolute majority of the votes cast representing at least one third of the company’s issued capital.

If, however, the required proportion of the capital is not represented, but an absolute majority of the votes cast is in favour of a resolution to suspend or dismiss a member of the managing board, a new meeting shall be convened at which the resolution may be passed by an absolute majority of the votes cast, regardless of the proportion of the capital present at the meeting.

18.6. A member of the managing board may at any time be suspended by the supervisory board.

18.7. Even after having been extended once or several times a suspension may not last in total any longer than three months, unless it has been decided to dismiss in which case that period may run until the end of the employment.

A suspension may be cancelled by the general meeting at any time.

18.8. A suspended member of the managing board will be given the opportunity to defend himself at the general meeting and to be represented thereby by a counsellor.

18.9. In case of absence or inability to act of one or more members of the managing board the remaining members or the remaining member will be temporarily entrusted with the entire management.

In case of absence or inability to act of all members of the managing board or the sole member of that board the supervisory board will be temporarily entrusted with the management; the supervisory board will then be authorised to appoint one or more temporary managers.

In case of absence or inability to act the supervisory board will take as soon as possible the necessary measures in order to make a definitive arrangement.

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Article 19.

19.1. The company has a policy governing the remuneration of the managing board. The policy will be determined by the general meeting.

In this policy at least the items listed in section 383c through e, Volume 2 of the Dutch Civil Code will be taken into consideration to the extent they apply to the managing board.

19.2. The remuneration of the members of the managing board will be determined by the supervisory board with due observance of the policy defined in paragraph 1 and section 135 paragraph 4, Volume 2 Dutch Civil Code.

Proxy holders

Article 20.

The managing board may grant one or more persons, whether or not employed by the company, a power of attorney or an otherwise continuous power to represent the company and may assign to one or more persons such a title as it will choose.

Representation

Article 21.

21.1. The managing board and each member of the managing board individually will be authorised to represent the company.

The company may also be represented by a proxy holder, with due observance, however, of the limitations set to his power.

21.2. In all events of a conflict of interest in the meaning of section 146, Volume 2 Dutch Civil Code, the company will, subject to the approval of the supervisory board, be represented in the manner as provided in the first sentence of the previous paragraph, without prejudice to the last sentence of section 146, Volume 2 Dutch Civil Code.

Supervisory board

Article 22.

22.1. The supervision on the policy of the managing board and the general course of affairs of the company and the business affiliated with it will be conducted by a supervisory board consisting of at least two natural persons the number to be determined by the supervisory board.

22.2. The supervisory board will assist the managing board with advice.

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In exercising their duties the supervisory directors will act according to the interest of the company and the business affiliated with it.

The managing board will provide the supervisory board in good time with the information required to exercise its duties.

The managing board shall inform the supervisory board at least once each year in writing of the general lines of the strategy, the general and financial risks and the management control system of the company.

Without prejudice to the provisions of the previous sentence, the managing board shall submit to the supervisory board for its approval:

a. the operational and financial objectives of the company;

b. the strategy designed to achieve the objectives;

c. the parameters applied in relation to the strategy, for instance in respect of the financial ratio’s.

With due observance of these articles the supervisory board may draw up by-laws in which matters concerning it internally will be regulated.

The supervisory directors may furthermore divide their activities mutually, whether or not by means of by-laws.

22.3. The supervisory directors will be appointed by the general meeting.

The general meeting appoints a supervisory director from a binding nomination to be drawn up by the supervisory board in accordance with section 133, Volume 2 of the Dutch Civil Code.

22.4. The general meeting may cancel the binding nature of a nomination at a meeting by an absolute majority of the votes cast, representing at least one third of the issued share capital.

In that event the supervisory board may draw up a new binding nomination to be submitted to a subsequent general meeting.

Should such a second nomination also be deprived of its binding character in the manner provided for in this paragraph, the general meeting shall be free to appoint, provided that a resolution of the general meeting to appoint shall require an absolute majority of the votes cast representing at least one third of the company’s issued capital.

22.5. If, however, in the meeting or the subsequent meeting referred to in paragraph 4 the required proportion of the capital is not represented, but an absolute majority of the

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votes cast is in favour of a resolution to cancel the binding nature of the nomination (as the case may be) a resolution for appointment, a new meeting shall be convened at which the resolution may be passed by an absolute majority of the votes cast, regardless of the proportion of the capital present at the meeting.

22.6. At a general meeting, votes in respect of the appointment of a supervisory director can only be cast for candidates named in the agenda of the meeting or explanatory notes thereto.

22.7. A supervisory director may at any time be suspended or dismissed by the general meeting.

A resolution to suspend or to dismiss a supervisory director, other than in accordance with a proposal of the supervisory board, shall require an absolute majority of the votes cast representing at least one third of the company’s issued capital.

If, however, the required proportion of the capital is not represented, but an absolute majority of the votes cast is in favour of a resolution to suspend or dismiss a supervisory director, a new meeting shall be convened at which the resolution may be passed by an absolute majority of the votes cast, regardless of the proportion of the capital present at the meeting.

22.8. The supervisory directors will resign periodically according to the rotation scheme drawn up by the supervisory board.

If necessary, the supervisory board may fix, by manner of a transitional measure, for one or more of its members a shorter period of session.

Except if a supervisory director has resigned at an earlier date, his term in office shall lapse as per the time of closing of the annual general meeting as referred to in article 24 paragraph 1 to be held after the lapse of four years after his appointment.

A periodically resigning supervisory director will be immediately eligible for re-appointment.

A supervisory director may serve on the supervisory board for a maximum of three four year periods.

22.9. Upon a nomination to appoint a supervisory director the age, the profession of every candidate, the number of the shares held by him in the capital of the company and the positions that he occupies or has occupied insofar as of interest in connection with fulfilling the duty of supervisory director will be announced.

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It will also be stated to which legal entities he is already engaged as supervisory director, at which, if there are any legal entities among these that belong to the same group, the designation of that group will suffice.

The nomination to appoint or to reappoint a supervisory director shall be motivated.

In case of a reappointment the nominee’s track record will be taken into consideration.

22.10. The general meeting will grant a remuneration to the supervisory directors.

Their expenses will be reimbursed.

Organisation supervisory board

Article 23.

23.1. The supervisory board will appoint one of its members chairman; he will have the title of president of the supervisory board.

The supervisory board may furthermore appoint from their numbers one or more delegated supervisory directors who will be charged with maintaining a more frequent contact with the managing board; they will report about their findings to the supervisory board.

The offices of president of the supervisory board and delegated supervisory director can be combined.

The supervisory board will appoint a secretary - whether or not from their numbers.

23.2. The supervisory board may appoint from among its members one or more committees in order to fulfil a specific task or assignment, to be determined upon the installation of such committee.

The supervisory board shall at least install an audit committee, a remuneration committee and a selection and appointment committee.

The remuneration committee and the selection and appointment committee may be combined in one committee.

23.3. The supervisory board will meet as often as one of its members requests so.

It will decide by an absolute majority of the votes.

In case of a tie vote the proposal will be rejected.

23.4. Subject to the provisions of paragraph 5 the supervisory board may not pass any resolutions unless a majority of the members is present.

Supervisory directors may participate in meetings of the supervisory board by teleconference or similar means of telecommunication provided that all participating supervisory directors can hear each other.

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23.5. The supervisory board may also pass resolutions without convening a meeting, provided this takes place in writing, by telefax, or by electronic mail and all supervisory directors have declared to be in favour of the proposal concerned.

23.6. If invited to do so the members of the managing board will be obliged to attend the meetings of the supervisory board and to give at such a meeting all information required by that board.

23.7. At the expense of the company the supervisory board may seek advice from experts in such areas as the supervisory board deems desirable in order to correctly perform its task.

23.8. The supervisory board may determine that one or more of its members will have access to all industrial premises of the company and will be authorised to inspect all books, correspondence and other documents and to take cognisance of all activities that have taken place, or will be able to exercise part of these powers.

23.9. If there are temporarily one or more vacancies within the supervisory board, the acting supervisory director(s) will have all rights and obligations assigned and imposed on the supervisory board by law and by these articles.

General meetings

Article 24.

24.1. The annual general meeting will be held within six months after the end of the financial year.

24.2. Extraordinary meetings will be held as often as the managing board or the supervisory board deem this desirable.

24.3. Within three months after the managing board has assumed that the shareholders’ equity of the company has dropped to an amount equal to or lower than half the paid-up and called part of the capital, a general meeting will be held to discuss the measures to be taken, if any.

Article 25.

25.1. General meetings shall be held in Zeist, in Soest, in Utrecht, in Amsterdam, in Haarlemmermeer (Schiphol), in Rotterdam, in Naarden, in Bussum or in Almere.

25.2. General meetings will be convened by the managing board, by a member of the managing board, by the supervisory board or by a supervisory director.

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The convocation will be made in accordance with applicable law and regulations.

25.3. The convocation shall at least state (i) the subjects to be discussed (ii) the venue and time of the general meeting and (iii) the procedure to participate in the general meeting and to exercise voting rights, whether or not represented by a holder of a written proxy.

It will not be possible to pass valid resolutions which are not included in the notice and which have not been announced with due observance of the period stated for the convocation.

An item proposed by one or more shareholders or holders of depositary receipts, defined in article 12, which meets the requirements set out in section 114a, Volume 2 of the Dutch Civil Code, will be included in the convocation or announced in the same manner, provided the company receives such substantiated request or a proposal for a resolution no later than the sixtieth day before the day of the meeting.

25.4. Every holder of depositary receipts as referred to in article 12 will be authorised to attend the general meeting and to speak there but not to vote, provided that the latter does not apply to usufructuaries of shares who are entitled to the voting-right on the shares encumbered with usufruct.

25.5. Shareholders and holders of depositary receipts may have themselves represented at the meeting by a person holding a written power of attorney.

25.6. Before being admitted to a meeting a shareholder, a holder of depositary receipts or their attorney should sign an attendance list stating his name and insofar as applicable the number of votes to which he is entitled.

If it concerns an attorney of a shareholder or a holder of depositary receipts, also the name(s) will be stated of the person(s) on behalf of whom the attorney is acting.

25.7. A holder of registered shares, a usufructuary of registered shares who is entitled to the voting-right or their attorney will only have access to the general meeting if he or the persons on behalf of whom is acting (as the case may be) has been entered as such into the register meant in article 11 and provided that the company has received in writing notice of his intention to attend the meeting at the place and not later than on the day, as described in paragraphs 9 and 10 respectively of this article.

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25.8. The powers of attorney of holders of registered shares and of usufructuaries of registered shares should be deposited.

The provisions of paragraphs 9 and 10 respectively will apply to the place and time of depositing and to the entry thereof in the convening notice.

25.9. If the managing board so determines and/or the law so prescribes for the application of the provision in paragraph 7, persons with voting rights and/or meeting rights are considered to be those persons who on the in section 119 paragraph 2 Volume 2 of the Dutch Civil Code prescribed day of registration (the ‘record date’) are registered in (a) register(s) (or one or more parts thereof) designated by the managing board (the ‘register’), provided that that person with voting rights and/or meeting rights gave written notice to the company of his intention to attend the general meeting, irrespective of who at the time of the general meeting is a person with voting rights and/or meeting rights.

With respect to shares included in a collective deposit, the notice referred to in the previous sentence shall be sent by the associated institution concerned at the request of the person with voting rights and/or meeting rights.

The notice must state the name and the number of shares for which the person is entitled to vote and/or to attend the general meeting.

The record date and the notice, referred to in this paragraph, may not be determined earlier than on the earliest possible day before the general meeting permitted by law.

The record date and that moment shall be mentioned in the notice of the meeting. The provisions regarding the notice apply mutatis mutandis to the attorney authorised in writing of a person with voting rights and/or meeting rights.

25.10. In case neither the law nor the managing board prescribes a record date as referred to in paragraph 9, holders of ordinary bearer shares or their attorneys will only have access to the general meeting if the share certificates have been deposited at the office of the company before the meeting.

Submission at the office of the company of a written statement of a bank institution that it holds the share certificates described in that statement in custody until after the meeting or that the number of shares mentioned in that statement belongs to a community consisting of a collective deposit or giro deposit in the sense of the Securities Giro Act and of which community the person mentioned in the statement is a partner for the amount of shares or depositary receipts of shares mentioned and will remain such until after the meeting, will be put on a par with deposit.

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The convening notice will state the day on which this deposit may be effected at the latest.

This day may be set on a day allowed by law.

If a power of attorney relates to the share certificates, the power of attorney should be deposited simultaneously with the share certificates to which the power of attorney relates in accordance with the provisions made afore in this paragraph.

25.11. Convocation of the general meeting will be effected in the manner as described in article 13.

25.12. The managing board may decide that every shareholder or holder of depositary receipts is entitled to participate in, to address and to vote in the general meeting by way of an electronic means of communication, in person or by proxy, provided the shareholder may by the electronic means of communication be identified, directly take notice of the discussion in the meeting and participate in the deliberations.

The managing board may adopt a resolution containing conditions for the use of electronic means of communication in writing.

If the managing board has made such regulation, such conditions will be disclosed with the notice convening the meeting.

Article 26.

26.1. The general meeting will be chaired by the president of the supervisory board.

If the president of the supervisory board wants somebody else to chair the meeting or if he is not present at the meeting, the supervisory directors present at the meeting will appoint one of them chairman.

In the absence of all supervisory directors the meeting will appoint itself a chairman.

The chairman will appoint the secretary.

26.2. Unless a notarial report is made of the discussions at the meeting minutes will be taken.

Minutes will be adopted and as evidence thereof signed by the chairman and the secretary of the meeting concerned or, if this has not been effected, be adopted by a next meeting; in the latter case they will be signed by the chairman and the secretary of that next meeting as evidence of adoption.

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26.3. The chairman of the meeting and furthermore every member of the managing board and every supervisory director may at any time give order to draw up a notarial report, at the expense of the company.

26.4. The chairman will decide with respect to all disputes concerning voting, admission of persons and in general the order at the meeting, insofar this has not been provided for by law or by these articles.

Article 27.

27.1. In the general meeting, each ordinary share gives the right to cast one vote, each preferential finance share to cast one thousand votes and each preferred share to cast one thousand votes, without prejudice to the provisions in article 8, paragraph 5.

27.2. Blank votes and invalid votes will be deemed not to have been cast.

Article 28.

28.1. Resolutions will be passed by an absolute majority of votes, unless these articles or the law prescribe a larger majority.

28.2. With due observance of the provision in the following sentence, the chairman will determine the manner of voting, including the option of voting in electronic form.

Voting by acclamation is possible if none of those individuals with voting rights oppose the same.

28.3. In case the votes are equal on persons who have been nominated pursuant to the provisions of article 18, paragraph 1, last sentence or article 22 paragraph 3, last sentence, the first person nominated will apply as being appointed.

Meetings of holders of shares of a certain class

Article 29.

29.1. A meeting of holders of preferred shares or of financing preferred shares will be convened as often and insofar as a decision of the meeting of holders of preferred shares or of financing preferred shares desires this, and furthermore as often as the managing board and/or the supervisory board decide(s) so.

29.2. Holders of preferred shares and of financing preferred shares respectively will have the right to attend the meeting of holders of preferred shares and of financing preferred shares respectively.

One of the members of the managing board and one of the supervisory directors will attend the meeting.

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The convocation of a meeting of holders of preferred shares and of financing preferred shares respectively will be made by letter directed to the persons meant in the previous sentences or to the extent a holder of preferred shares and/or financing preferred shares consents thereto he/she may be notified by a legible message sent electronically to the address he/she has given to the company for this purpose.

The convening notice will state the subjects to be discussed.

29.3. Article 25, paragraphs 1, 2 and 5, article 26, article 27 and article 28, paragraph 2 will apply correspondingly to meetings of holders of preferred shares and of financing preferred shares respectively.

At the meeting resolutions will be passed with an absolute majority of the votes. In case of a tie vote there will not be effected any resolution.

29.4. At a meeting of holders of preferred shares and financing preferred shares respectively, at which the entire issued share capital in the form of those shares is represented, valid resolutions may be passed, provided unanimously, also if the requirements with respect to the place of the meeting, the manner of convocation, the period of convocation and stating at the convocation the subjects to be discussed have not been observed.

29.5. Holders of preferred shares and financing preferred shares respectively may also pass all resolutions that they may pass at a meeting, without convening a meeting.

A resolution may only be passed without convening a meeting if all holders of preferred shares and financing preferred shares respectively have declared in writing to be in favour of the proposal and provided the managing board and the supervisory board have been given the opportunity to give advice about the proposal.

Financial year, annual account

Article 30.

30.1. The financial year will coincide with the calendar year.

30.2. Annually within four months after the end of every financial year the managing board will prepare annual accounts.

The annual accounts will be accompanied by the accountant’s statement described in article 31, by the annual report and by the other information referred to in section 392, paragraph 1, Volume 2 of the Dutch Civil Code, however, as far as the other information is concerned insofar as these provisions apply to the company.

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The annual accounts will be signed by all members of the managing board and all supervisory directors; if the signature of one or more of them is absent this will be reported stating the reason therefore.

30.3. The company will see to it that the prepared annual accounts, the annual report and the other information meant in paragraph 2 will be ready at the office of the company and in Amsterdam at the place stated in the convening notice as from the day of convocation of the general meeting intended for discussion thereof.

The shareholders and holders of depositary receipts may inspect the documents there and obtain without charge a copy thereof.

Third parties may obtain at afore-meant places a copy at cost price.

30.4. After the proposal to adopt the annual accounts by the general meeting has been addressed, the general meeting shall be presented with the proposal to grant the members of the managing board discharge for actions in respect of their management during the relevant financial year and the supervisory directors in respect of their supervision thereon, insofar as that management is reflected in the annual accounts.

The annual accounts shall not be adopted, if the general meeting has not been able to take cognizance of the auditor’s opinion referred to in article 31.

Failing the opinion referred to, the annual accounts can still be adopted subject to a statement that the opinion is missing and the reason therefor.

Accountant

Article 31.

31.1. The general meeting will commission a chartered accountant or another expert as referred to in section 393, first paragraph, third sentence, Volume 2 of the Dutch Civil Code - both to be referred to hereinafter as: accountant - to audit the annual accounts prepared by the managing board, pursuant to the provisions of section 393, paragraph 3, Volume 2 of the Dutch Civil Code.

The accountant will report about his audit to the supervisory board and to the managing board and will render the audit in a statement.

31.2. Both the managing board and the supervisory board may grant commissions to the accountant meant in paragraph 1 or to another accountant at the expense of the company.

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Profit and loss

Article 32.

32.1. From profits, realised in the last completed financial year, distributions shall in the first place, if possible, be made on the preferred shares amounting to the percentage of the obligatory amount paid-up on those shares mentioned below.

The percentage referred to hereinbefore is equal to the EURIBOR-rate for six months’ loans - weighted to the number of days to which this was applicable -during the financial year over which the distribution is made, increased by one and a half.

If and insofar as the profit is insufficient to cover the distribution referred to hereinbefore in this paragraph in full, the deficit shall be chargeable to the reserves, the share premium reserve (agio reserve) created at the subscription for preferential finance shares excluded.

32.2. In case of withdrawal with repayment of preferred shares, on the day of repayment a distribution will be made on the withdrawn preferred shares, which distribution will be calculated to the extent possible in accordance with the provisions of paragraph 1 and paragraph 3 and this according to time to be calculated on the period as from the day on which for the last time a distribution as meant in paragraph 1 and paragraph 3 was made - or if the preferred shares have been issued after such a day: as from the day of issue - until the day of repayment.

32.3. If in any financial year the profit or the distributable reserves (as the case may be) are not sufficient to make the distributions meant afore in this article, the provisions made afore in paragraph 1, first two sentences, and the provisions of paragraph 4 up to and including paragraph 7 will only apply in the next financial years after the deficit has been cleared.

32.4. After application of the previous paragraphs, a dividend shall, if possible, be distributed on each preferential finance share that is equal to a percentage calculated over the par amount, increased by the share premium amount paid upon subscription for the share, and which percentage is related to the average effective yield on government loans with a weighted average remaining term of no more than ten years, subject to the then prevailing market conditions, as the managing board, subject to approval of the supervisory board, resolves to that effect, calculated and determined in the manner indicated below.

The calculation of the percentage of the dividend for the preferential finance shares

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shall be done by taking the arithmetic average of the average effective yield on the loans referred to hereinbefore, as made by the Dutch Central Bureau of Statistics (Centraal Bureau voor de Statistiek) and published in the Official List (Officiële Prijscourant) of Euronext Amsterdam N.V. on the last ten days of trading, preceding the day on which the preferential finance share was issued or on which the dividend percentage is adjusted in accordance with the provisions of paragraph 5 respectively, if necessary increased or decreased by no more than three percentage points, subject to the then prevailing market conditions, as the managing board, subject to approval of the supervisory board, resolves to that effect.

If and insofar as the profit is insufficient to cover the distributions mentioned in paragraph 4 hereinbefore in full, the deficit shall be chargeable to the reserves, the share premium reserve (agio reserve) created at the subscription for preferential finance shares excluded.

32.5. For the first time as per January first of the calendar year following on the day after eight years have lapsed since the day on which the financing preferred share was issued and each time eight years thereafter, the dividend percentage of all financing preferred shares will be adjusted to the average effective return of the government loans then applicable, calculated and fixed in the manner as stated in paragraph 4.

If and insofar as the profit is not sufficient to fully make the distribution meant afore in paragraph 4, the deficit will be distributed to the charge of the reserves with the exception of the reserve that has been formed as share premium at subscribing for financing preferred shares.

32.6. If in any financial year the profit or the distributable reserves, as the case may be, are not sufficient to make the distributions meant afore in paragraphs 4 and 5, the provisions of paragraphs 4 and 5 and the provisions of the following paragraphs will only apply in the next financial years after the deficit has been caught up with and after the provisions made afore in paragraphs 1 through 3 have been applied.

If the issue of a financing preferred share is effected in the course of a financial year, the dividend on that share will be decreased on that financial year pro rata the first day of issue.

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32.7. With the approval of the supervisory board the managing board will determine which part of the profit remaining after adoption of the provisions of the previous paragraphs will be reserved.

The profit after reserving will be at the disposal of the general meeting.

32.8. If the general meeting decides to proceed to entire or partial distribution as meant in the previous paragraph, this will be made to the holders of ordinary shares in proportion to amount of ordinary shares they own.

32.9. The company may only make distributions to the shareholders and other persons entitled to profit eligible for distribution insofar as its equity exceeds the amount of the paid-up and called amount of the share capital increased with the reserves that must be kept by virtue of the law.

The provisions of section 105, paragraph 4, volume 2, Civil Code shall be applicable to interim distributions.

32.10. Resolutions of the general meeting to cancel reserves entirely or partially require the approval of the managing board and the supervisory board, without prejudice to the provisions of this article with respect to distribution for which the reserves will be charged.

Article 33.

33.1. Distributions will be due and payable as from a day to be determined by the managing board, which may differ for distributions on ordinary shares and for distributions on preferred shares and/or financing preferred shares, but which day may not be later than the fourteenth day after declaration of the dividend.

33.2. Distribution of a dividend or interim dividend in cash on shares for which share certificates have been issued and which may be traded with the co-operation of the company on a stock exchange in another country than the Netherlands, will be paid in the currency of the country concerned, insofar as the dividend meant is made payable in the country concerned, unless the company is not able to do so because of government measures or other circumstances beyond its control.

If pursuant to the provisions of the previous sentence the distribution of a dividend or an interim dividend is paid in a foreign currency, conversion of the distribution will take place at the exchange rate applicable at the stock exchange in Amsterdam on a day to be determined and to be announced by the managing board.

This day may not be set any earlier than the day on which it has been decided to distribute and not later than the day on which the distribution pursuant to the provisions of paragraph 1 of this article has been made payable.

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33.3. The claims of the shareholders to distribution of dividends will be time-barred by five years.

33.4. With the approval of the supervisory board the managing board may distribute an interim dividend, however only insofar there is profit in the company.

33.5. With the approval of the supervisory board and of the general meeting the managing board will be authorised to determine that a distribution on ordinary shares will not be made in cash but in the form of ordinary shares or to determine that holders of ordinary shares will be given the choice to receive a distribution either in cash or in the form of ordinary shares, all this insofar as the managing board has been designated pursuant to the provisions of article 5 as the corporate body authorised to resolve to issue such shares, or insofar as the general meeting resolves thereto.

With the approval of the supervisory board the managing board will establish the terms and conditions under which such a choice may be made.

33.6. In case of withdrawal with repayment of financing preferred shares, a distribution will be made on the day of repayment on the withdrawn financing preferred shares, which distribution will be calculated as much as possible in accordance with those shares being entitled to dividend in accordance with the provisions of paragraph 4 and paragraph 5 of article 32 and this on the period that starts (a) as per the beginning of the running financial year, if on the day of repayment the profit over the past financial year eligible for distribution has already been determined, or (b) as per the beginning of the past financial year if on the day of repayment the profit over the past financial year eligible for distribution has not (yet) been determined, or (c) starts on the day of placement if it concerns financing preferred shares, since the placement of which not (yet) any determination of profit eligible for distribution has been made over the financial year in which they have been placed and which period will end on the day of repayment.

In case of withdrawal with repayment of financing preferred shares, on the day of repayment a distribution will be made of the share premium paid at the issue on the share concerned in addition to the repayment of the par value.

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Amendment of the articles, dissolution

Article 34.

34.1. A resolution to amend the articles of the company or to dissolve the company may only be passed by the general meeting on proposal of the managing board and the supervisory board.

34.2. A copy of the proposal in which the intended amendment of the articles is literally included will be deposited for inspection by every shareholder and holder of depositary receipts at the places as referred to in article 25, paragraph 3 by those who convene the general meeting simultaneously with that convocation until the end of the general meeting at which the resolution about the proposal will be passed.

The copies will be available without charge at afore-meant places to shareholders and holders of depositary receipts.

Liquidation

Article 35.

35.1. In case the company is dissolved, the liquidation will be effected with due observance of the statutory provisions.

During the liquidation the articles will remain in force to the extent possible.

35.2. After payment of all debts and the costs of the liquidation the balance of the capital of the company will be divided as follows:

a. first to the holders of preferred shares will be paid to the extent possible the amount nominally paid on their preferred shares, increased with an amount equal to the percentage referred to in paragraph 1 of article 32 of the amount mandatorily paid up on the preferred shares calculated on each year or part of a year in the period starting on the day following the period on which the last dividend on the preferred shares has been paid and ending on the day of the distribution on preferred shares meant in this article;

b. then to the extent possible to the holders of financing preferred shares will be paid the amount nominally paid on their financing preferred shares, increased with the share premium paid-up on their shares at the issue thereof, increased with an amount equal to the percentage fixed in accordance with paragraph 4 and paragraph 5 of article 32 on the nominal amount after that amount has been increased with the share premium paid on the share at the issue thereof;

c. the then remaining part will be distributed to the holders of ordinary shares in proportion to the number of ordinary shares that each of them owns.

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35.3. For seven years after the liquidation the books and documents of the company will remain in the custody of the person appointed thereto by the liquidators.

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EX-4.7

Exhibit 4.7

Material elements employment contract Mr. P. van Bommel

(effective as from 1 July 2010)

Subject to approval of the Annual General Meeting of Shareholders on 20 May 2010 (the “2010 AGM”), Mr. van Bommel will be appointed as member of the management board with effect as of 1 July 2010 and he will be CFO as per 1 September 2010. Mr. van Bommel’s employment contract is a fixed term contract for 4 years until 1 July 2014 and he will be entitled to an annual base salary of Euro 360,000 gross. Notice periods of 3 months for Mr. van Bommel and 6 months for ASM International apply.

Mr. van Bommel will participate in the defined contribution plan offered to members of the Management Board under the same financial conditions applicable to all employees residing in the Netherlands. Reference is made to the ASM Remuneration Policy, posted on the ASM website: www.asm.com.

The annual short term incentive currently varies between 0% and a maximum of 50% of the base salary and is based on the achievement of performance criteria. Reference is made to the ASM Remuneration Policy. As for the applicable long term incentive scheme, reference is made to the long term incentive (stock options) plan for the Management Board (the “LTIP”), approved by the Annual General Meeting of Shareholders held on May 18, 2006. Under this LTIP, Mr. van Bommel would be granted 30,000 stock options between 1 July and 31 December 2010.

In case of termination of employment by ASM International or if Mr. van Bommel is not reappointed after 1 July 2014, Mr. van Bommel will be entitled to an all-inclusive severance payment equal to two year’s base salary, unless dismissal is given for an urgent cause (as defined in section 7: 678 Dutch Civil Code)or after 2 years of illness. If the employment agreement is renewed after 1 July 2014 a maximum of one year’s base salary is payable as a severance payment in a new employment agreement.

Please note that at the 2010 AGM, a new remuneration policy may be adopted. In that case, the pension plan offered to Mr. van Bommel may be improved (with effect as from 1 July 2010) and the maximum percentage of his annual incentive may be raised. Also, the LTIP may be amended and the number of options to be granted to Mr. van Bommel may be based on the achievement of predetermined targets linked to the long term development of ASM International; stock options will then vest after a minimum of three years and can be exercised for a period of three years after vesting.

EX-4.13

Exhibit 4.13

[Notarization Required]

MASTER SALE AND PURCHASE AGREEMENT

by and between

Siemens Aktiengesellschaft

with its business address at

Wittelsbacherplatz 2, 80333 Munich, Germany

– herein “Seller” –

and

ASM Pacific Technology Ltd.

with its business address at

12/F, Watson Centre

16 Kung Yip Street

Kwai Chung,

Hong Kong

- herein “Purchaser” -

- each of Seller and Purchaser herein also referred to

individually as a “Party” and collectively as “Parties” -

regarding the sale and purchase of the

Electronics Assembly Systems Business

of the Siemens Group

Table of Contents

RECITALS	12
Section 1 – Companies and Shares	12
Section 2 – Carve-out	17
Section 3 – Agreement to Sell and Purchase	17
Section 4 – Purchase Price, Effective Date Accounts, Payment Terms	19
Section 5 – Termination of Intercompany Financing Arrangements	24
Section 6 – Equity Commitment; Seller Fund	26
Section 7 – Closing Conditions	26
Section 8 – Closing	31
Section 9 – Seller’s Guarantees	33
Section 10 – Seller’s Covenants	39
Section 11 – Remedies	42
Section 12 – Tax Indemnity	46
Section 13 – Expiration and Limitations of Claims	57
Section 14 – Purchaser’s Covenants	59
Section 15 – Separation Matters	65
Section 16 – Bank Guarantee and Letter of Support	71
Section 17 – Restrictions of Announcement, Confidentiality	71
Section 18 – Notices	73
Section 19 – Costs, Expenses Fees and Charges	74
Section 20 – Governing Law	75
Section 21 – Dispute Resolution, Service of Process	75
Section 22 – Miscellaneous	76

Page 2 of 77

Exhibits

Exhibit 2.1	List of Carve-out Agreements
Exhibit 2.2	List of employees to be taken over
Exhibit 3.2.1	German SPA
Exhibit 3.2.2	Template for other Local SPAs
Exhibit 4.2-1	Line items for calculation of Cash and Financial Debt
Exhibit 4.2-2	Line items for calculation of Net Working Capital
Exhibit 4.9	Market value of Shares
Exhibit 6.1	Form of loan facility (Loan Commitment)
Exhibit 7.1	Irrevocable shareholder undertaking
Exhibit 8.2.4	List of members of supervisory, advisory or other boards to resign
Exhibit 8.2.9	Form of Trademark License Agreement
Exhibit 8.2.11	Written shareholder consent
Exhibit 9.1.6	Collective Labor Agreements
Exhibit 9.1.7	Key Employees
Exhibit 9.1.9	Audit Opinion
Exhibit 9.1.11	Registered Intellectual Property
Exhibit 9.1.11 (ii)	Intellectual Property – Court proceedings, oppositions and similar proceedings
Exhibit 9.1.11 (iii)	Intellectual Property – Third party challenges and similar claims
Exhibit 9.1.16	Disclosure relating to EDB grants
Exhibit 9.3-1	Individuals relevant for Best Knowledge

Page 3 of 77

Exhibit 9.3-2	Individuals relevant for Best Knowledge
Exhibit 10.2	Exceptions to Seller’s Covenants
Exhibit 10.3	Stand-alone presentation
Exhibit 11.1.1	Methodology for calculation of EBITDA
Exhibit 11.4.5 (ii)	Joint Instruction Letter (Notary) Template
Exhibit 14.9.2 (ii)	Collective Labor Agreements
Exhibit 15.1.1 (i)	List of issued Seller’s Security
Exhibit 15.1.2 (i)	List of issued Financial Security
Exhibit 15.2.1	Surviving Intra-Group Arrangements
Exhibit 15.2.3	Relocation Concept
Exhibit 15.5	Pension Schedule
Exhibit 15.6.1	Equity Based Instruments
Exhibit 15.9	List of Patents
Exhibit 15.10	Special Retention Bonuses
Exhibit 16.1	Form of Bank Guarantee
Exhibit 16.2	Form of Letter of Support

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Definitions

Accounting Firm	as defined in Section 4.5.1
Acquisition Notice	as defined in Section 3.6
Actual Rate of Return	as defined in Exhibit 15.5
Actuarial Reports	as defined in Exhibit 15.5
Adjusted Delayed Local Pension Plan DBO Amount	as defined in Exhibit 15.5
Advance Tax Indemnification Payment	as defined in Section 12.3.2
Affiliate	shall mean “verbundenes Unternehmen” as defined in Section 15 German Stock Corporation Act (AktG)
Agreement	shall mean this Master Sale and Purchase Agreement
Antitrust Clearance	as defined in Section 7.1.1
Archiving Process	as defined in Section 14.2
AWG	as defined in Section 7.3
AWV	as defined in Section 7.3
Bank Guarantee	as defined in Section 16.1
Base Price	as defined in Section 4.1
Basket	as defined in Section 13.3
Best Knowledge	as defined in Section 9.3
Breach	as defined in Section 11.1
Business	as defined in Recital (A)
Business Days	shall be the banking days (Bankarbeitstage) in Frankfurt am Main (Saturdays excluded).

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Carve-out	as defined in Section 2.1
Carve-out Agreements	as defined in Section 2.1
Cash	as defined in Section 4.2
Closing	as defined in Section 8.1
Closing Conditions	as defined in Section 7.1
Closing Date	as defined in Section 8.1
Closing Events	as defined in Section 8.2
Closing Protocol	as defined in Section 8.2.13
Combined Financial Statements	shall mean the historical information of the Business prepared by aggregating the financial information for each Company
Company/Companies	as defined in Section 1.14
Company Account	as defined in Section 4.15
Confidential Information	as defined in Section 17.2
Contest	as defined in Section 12.11.3
Data Preservation Termination Date	as defined in Section 14.3
Defined Benefit Obligations	as defined in Exhibit 15.5
Delayed Local Pension Plan DBO Amount	as defined in Exhibit 15.5
De Minimis Claims	as defined in Section 13.3
Designated Transferee(s)	as defined in Section 3.6
Disclosure Schedules	as defined in Section 9.2
ECB	as defined in Section 22.2
Effective Date	as defined in Section 4.2
Effective Date Accounts	as defined in Section 4.4
Equity Based Instruments	as defined in Section 15.6.1
Equity Commitment	as defined in Section 6.1

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EURIBOR	as defined in Section 4.12
Exchange Rates	as defined in Section 22.2
Exempted Claims	as defined in Section 13.1
Financial Debt	as defined in Section 4.2
Financial Security	as defined in Section 15.1.2
Fuji	as defined in Section 15.9
German SPA	as defined in Section 3.2.1
Group Agreement	as defined in Section 15.6.1
Grupo Siemens	as defined in Section 1.9
Hedges	as defined in Section 5.2
Individual Tax Indemnification Claim	as defined in Section 12.2.5
Insurance Claim Settlements	as defined in Section 15.3.3
Intellectual Property	as defined in Section 9.1.11
Intercompany Financing Arrangements	as defined in Section 5.1
IRC	as defined in Exhibit 15.5
Letter of Support	as defined in Section 16.2
Liability Cap for Seller’s Guarantees	as defined in Section 13.4
Loan Commitment	as defined in Section 6.1
Local Pension Plan Adjustment Amount	as defined in Exhibit 15.5
Local Pension Plan Asset Value	as defined in Exhibit 15.5
Local Pension Plan DBO Amount	as defined in Exhibit 15.5
Local SPAs	as defined in Section 3.2
Losses	as defined in Section 11.1
Material Information	as defined in Section 9.1.14
Negative Adjustment Amount	as defined in Section 4.7

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Net Working Capital	as defined in Section 4.2
Non-Surviving Intra-Group Arrangements	as defined in Section 15.2.1
Notice of Disagreement	as defined in Section 4.5
Party/Parties	as defined in the head of the Agreement
Pension Adjustment Amount	as defined in Exhibit 15.5
Plan Assets	as defined in Exhibit 15.5
Positive Adjustment Amount	as defined in Section 4.7
Purchase Price	as defined in Section 4.1
Purchaser	as defined in the head of the Agreement
Purchaser Claim	as defined in Section 11.1
Purchaser’s Bank Account	as defined in Section 4.14
Relevant Beneficiary	as defined in Exhibit 15.5
Relocation Concept	as defined in Section 15.2.3
Retention Materials	as defined in Section 14.3
Retirement Benefit Arrangements	as defined in Exhibit 15.5
Retirement Benefit Liabilities	as defined in Exhibit 15.5
Retirement Benefits	as defined in Exhibit 15.5
Retirement Defined Benefit Arrangements	as defined in Exhibit 15.5
SEAS Austria GmbH	as defined in Section 1.6
SEAS Austria GmbH Share	as defined in Section 1.6
SEAS Austria KG	as defined in Section 1.7
SEAS Austria KG Limited Partnership Interest	as defined in Section 1.7.2
SEAS Austria Shares	as defined in Section 1.7.2
SEAS Brazil	as defined in Section 1.13
SEAS Brazil Shares	as defined in Section 1.13

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SEAS China	as defined in Section 1.3
SEAS China Share	as defined in Section 1.3
SEAS France	as defined in Section 1.5
SEAS France Shares	as defined in Section 1.5
SEAS Germany Shares	as defined in Section 1.2.2
SEAS GmbH	as defined in Section 1.1
SEAS GmbH Share	as defined in Section 1.1
SEAS Italy	as defined in Section 1.12
SEAS Italy Share	as defined in Section 1.12
SEAS KG	as defined in Section 1.2
SEAS KG Limited Partnership Interest	as defined in Section 1.2.2
SEAS Mexico	as defined in Section 1.9
SEAS Mexico Shares	as defined in Section 1.9
SEAS Seller(s)	as defined in Section 1.15
SEAS Singapore	as defined in Section 1.10
SEAS Singapore Shares	as defined in Section 1.10
SEAS Sweden	as defined in Section 1.11
SEAS Sweden Share	as defined in Section 1.11
SEAS UK	as defined in Section 1.4
SEAS UK Shares	as defined in Section 1.4
SEAS USA	as defined in Section 1.8
SEAS USA Interest	as defined in Section 1.8
Security	as defined in Section 15.1.2
Security Deeds	as defined in Section 15.1.3
Seller	as defined in the head of the Agreement

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Seller’s Affiliates	as defined in Section 2.1
Seller’s Bank Account	as defined in Section 4.13
Seller’s Covenants	as defined in Section 10.6
Seller Fund	as defined in Section 6.2
Seller Group	shall mean Seller and its Affiliates
Seller Group Plan	as defined in Exhibit 15.5
Seller’s Guarantees	as defined in Section 9.1
Seller Period	as defined in Section 12.2
Seller Period Tax Returns	as defined in Section 12.9.1
Seller’s Security	as defined in Section 15.1.1
Share(s)	as defined in Section 1.16
Shared Premises	as defined in Section 15.2.3
Shareholder Loan Consideration	as defined in Section 5.1.3
Shareholder Loans	as defined in Section 5.1.2
Siemens Austria	as defined in Section 1.6
Siemens Brazil	as defined in Section 1.12
Siemens China	as defined in Section 1.3
Siemens Designation	as defined in Section 15.1
Siemens France	as defined in Section 1.5
Siemens Innovaciones	as defined in Section 1.9
Siemens Italy	as defined in Section 1.12
Siemens Manaus	as defined in Section 1.13
Siemens Mexico	as defined in Section 1.9
Siemens Sao Paulo	as defined in Section 1.13
Siemens Singapore	as defined in Section 1.10

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Siemens Sweden	as defined in Section 1.11
Siemens UK	as defined in Section 1.4
Siemens USA	as defined in Section 1.8
Signing Date	shall mean the date of execution of this Agreement
Successor Plan	as defined in Exhibit 15.5
Surviving Intra-Group Arrangements	as defined in Section 15.2.1
Sustained Business	as defined in Section 14.7
Target Net Working Capital	as defined in Section 4.2
Tax/Taxes	as defined in Section 12.1
Tax Benefits	as defined in Section 12.2.2
Tax Indemnification Claim	as defined in Section 12.2
Tax Refunds	as defined in Section 12.4
Third Party Claim	as defined in Section 11.7
Time Limitations	as defined in Section 13.1
Transaction	as defined in Recital (B)
Transfer Date	as defined in Exhibit 15.5
Transfer Plan	as defined in Exhibit 15.5
Ultimate Local Transfer Value	as defined in Exhibit 15.5

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RECITALS

(A) WHEREAS, Seller is, amongst other activities, through its direct and indirect subsidiaries, engaged in the development, manufacturing, distribution and servicing of electronics assembly systems and related products. This business is mainly held and run by the Companies (as defined in Section 1.14 below), but also comprises service forces operating in further countries referred to in Exhibit 2.2 below (the activities carried out by the Companies and such service forces, the “Business”).

(B) WHEREAS, Seller wishes to sell and transfer the Business to Purchaser by selling and transferring the shares in the Companies and Purchaser wishes to purchase and acquire the Business by acquiring these shares from Seller, each subject to the terms and conditions set forth in this Agreement (herein “Transaction”).

(C) WHEREAS, the Purchaser is aware that the Business is in distressed condition and subject to ongoing restructuring efforts. Purchaser is aware that Seller has invested considerable efforts and expenses in order to initiate the Companies’ economic turnaround. In order to support and continue this attempt and to reinforce and maintain the financial capability of the Business, Purchaser will grant a respective Letter of Support (as defined in Section 16.2 below).

NOW, THEREFORE, the Parties agree as follows:

Section 1 – Companies and Shares

1.1 Siemens Electronics Assembly Systems Management GmbH is a limited liability company (Gesellschaft mit beschränkter Haftung) organized under the laws of Germany, registered in the commercial register maintained at the lower court (Amtsgericht) of Munich under registration number HRB 174601 and having its corporate domicile (Sitz) in Munich, Germany (herein “SEAS GmbH”). As of the Signing Date, Seller holds one (1) share (Geschäftsanteil) with a nominal value of EUR 25,000.00 (in words: Euro twenty-five thousand) (herein “SEAS GmbH Share”) representing 100 per cent of the stated capital (Stammkapital) of SEAS GmbH.

1.2 Siemens Electronics Assembly Systems GmbH & Co. KG is a limited liability partnership (Kommanditgesellschaft) organized under the laws of Germany, registered with the commercial register maintained at the lower court (Amtsgericht) of Munich under registration number HRA 92704 and having its corporate domicile in Munich, Germany (herein “SEAS KG”). As of the Signing Date,

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1.2.1 SEAS GmbH is the sole general partner (Komplementär) of SEAS KG without a capital interest and without a participation in the profits of SEAS KG, and

1.2.2 Seller is the sole limited partner (Kommanditist) of SEAS KG with a registered limited partnership interest (Haftsumme) equaling the liable share (Pflichteinlage) in the amount of EUR 200,000.00 (in words: Euro two hundred thousand) (herein “SEAS KG Limited Partnership Interest”, and together with the SEAS GmbH Share, the “SEAS Germany Shares”).

1.3 Siemens Electronics Assembly Systems Ltd. is a limited liability company (wholly foreign-owned company) organized under the laws of China, registered in the Waigaoqiao Free Zone, Shanghai, China under registration number 310115400102413 (Pudong) with its registration address in 1F, Bao Steel Pu Dong International Building, No. 88 He Dan Road, Waigaoqiao Free Trade Zone, Shanghai, Zip Code 200131, China (herein “SEAS China”). As of the Signing Date, Siemens Ltd., China, registered in 7, Wangjing Zhonghuan Nanlu, Chaoyang District, Beijing, Zip Code 100102, China (herein “Siemens China”), holds 100 per cent of the registered capital of SEAS China (herein “SEAS China Share”).

1.4 Siemens Electronics Assembly Systems Ltd. is a private limited company organized under the laws of England registered with the Companies House under company number 6731817 and having its registered office at Faraday House, Sir William Siemens Square, Frimley, Camberley, Surrey, GU16 8QD, England (herein “SEAS UK”). As of the Signing Date, Siemens plc, Faraday House, Sir William Siemens Square, Frimley, Camberley, GU16 8QD (herein “Siemens UK”), holds three (3) ordinary shares with a nominal value of GBP 1.00 (in words: Great Britain Pounds one) each (herein “SEAS UK Shares”) representing 100 per cent of the stated capital of GBP 3.00 (in words: Great Britain Pounds three) of SEAS UK.

1.5 Siemens Electronics Assembly Systems SAS is a simplified corporation (Société par actions simplifiée) organized under the laws of France, registered with the Tribunal de Commerce de Meaux under registration number 484 145 545 RCS Meaux and having its corporate domicile in 6 avenue Gutenberg, Parc Gustave Eiffel, 77600 Bussy Saint Georges, France (herein “SEAS France”). As of the Signing Date, Siemens France Holding S.A.S., 9 boulevard Finot, 93200 Saint-Denis, France, (herein “Siemens France”) holds 2,500 shares with a nominal value of EUR 416.00 (in words: Euro four hundred sixteen) each (herein “SEAS France Shares”) representing 100 per cent of the stated capital of EUR 1,040,000.00 (in words: Euro one million forty thousand) of SEAS France.

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1.6 Siemens Electronics Assembly Systems GmbH is a limited liability company (Gesellschaft mit beschränkter Haftung) organized under the laws of Austria, registered in the companies register (Firmenbuch) maintained at the commercial court (Handelsgericht) of Vienna, Austria, under registration number FN 313494 x, having its corporate domicile (Sitz) in Vienna, Austria, and its business address at Kürschnergasse 6, 1210 Vienna, Austria (herein “SEAS Austria GmbH”). As of the Signing Date, Siemens Aktiengesellschaft Österreich, Siemensstraße 92, 1210 Vienna, Austria (herein “Siemens Austria”), holds one (1) share (Geschäftsanteil) with a nominal value of EUR 35,000.00 (in words: Euro thirty-five thousand) (herein “SEAS Austria GmbH Share”) representing 100 per cent of the stated capital (Stammkapital) of EUR 35,000.00 (in words: Euro thirty-five thousand) of SEAS Austria GmbH.

1.7 Siemens Electronics Assembly Systems GmbH & Co KG is a limited liability partnership (Kommanditgesellschaft) organized under the laws of Austria, registered in the companies register (Firmenbuch) maintained at the commercial court (Handelsgericht) of Vienna, Austria, under registration number FN 3141541, having its corporate domicile (Sitz) in Vienna, Austria, and its business address in Kürschnergasse 6, 1210 Vienna, Austria (herein “SEAS Austria KG”). As of the Signing Date,

1.7.1 SEAS Austria GmbH is the sole general partner (Komplementär) of SEAS Austria KG holding a partnership interest in SEAS Austria KG without capital interest and without participation in the profits (persönlich haftender Gesellschafter ohne Kapital- und Ergebnisanteil); and

1.7.2 Siemens Austria is the sole limited partner (Kommanditist) of SEAS Austria KG holding a limited partnership interest (bedungene Einlage und Haftsumme) with a nominal amount of EUR 36,000.00 (in words: Euro thirty-six thousand) (herein “SEAS Austria KG Limited Partnership Interest”; together with the SEAS Austria GmbH Share the “SEAS Austria Shares”).

1.8 Siemens Electronics Assembly Systems, LLC is a limited liability company organized under the laws of Delaware and having its registered office in the State of Delaware, Corporation Trust Center, 1209 Orange Street, City of Wilmington, County of New Castle, United States of America (herein “SEAS USA”). As of the Signing Date, Siemens Industry, Inc., having its business address at 1000 Deerfield Parkway, Buffalo Grove, Illinois 60089-4513, United States of America (herein “Siemens USA”), holds 100 per cent of the limited liability company interest in SEAS USA (herein “SEAS USA Interest”).

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1.9 Siemens Electronics Assembly Systems S. de R.L. de C.V. is a limited liability company (Sociedad de responsabilidad limitada de capital variable) organized under the laws of Mexico, as evidenced by public deed number 131,478, granted before Mr. Cecilio Gonzalez Marquez, Notary Public number 151 in Mexico City, Mexico, under public deed number 131,478, and having its registered office in Guadalajara, Jalisco, Mexico (herein “SEAS Mexico”). As of the Signing Date, Siemens Innovaciones, S.A. de C.V., Mexico (herein “Siemens Innovaciones”), holds one (1) partnership interest in the fixed capital of SEAS Mexico with a nominal value of MXN 1.00 (in words: Mexican Pesos one) and Grupo Siemens, S.A. de C.V., Mexico (herein “Grupo Siemens”), holds one (1) partnership interest in the fixed capital of SEAS Mexico with a nominal value of MXN 2,999.00 (in words: Mexican Pesos two thousand nine hundred and ninety-nine), together representing 100 per cent of the fixed capital of MXN 3,000.00 (in words: Mexican Pesos three thousand) of SEAS Mexico. Grupo Siemens further holds a quota in the variable capital of SEAS Mexico of MXN 854,270.00 (in words: Mexican Pesos eight hundred fifty-four thousand two hundred seventy). Grupo Siemens and Siemens Innovaciones, therefore together hold 100 per cent of the stated capital of MXN 857,270.00 (in words: Mexican Pesos eight hundred fifty-seven thousand two hundred seventy) (herein together “SEAS Mexico Shares”). Siemens Innovaciones and Grupo Siemens are jointly referred to herein as “Siemens Mexico”.

1.10 Siemens Electronics Assembly Systems Pte. Ltd. (Company Registration No: 200813066R) is a private limited company organized under the laws of Singapore and having its registered office at 2, Corporation Road, #01-03, Corporation Place, Singapore 618494, Singapore (herein “SEAS Singapore”). As of the Signing Date, Siemens Pte. Ltd. (Company Registration No: 199605166D), with its registered office at 60, Macpherson Road, Singapore 348615, Singapore (herein “Siemens Singapore”), holds 33,000,001 shares (of nominal value SGD 1.00 each), with an aggregate nominal value of SGD 33,000,001.00 (in words: Singapore Dollars thirty three million and one) (herein “SEAS Singapore Shares”) representing 100 per cent of the total issued and paid up capital of SGD 33,000,001.00 (in words: Singapore Dollars thirty-three million and one) of SEAS Singapore.

1.11 Siemens Electronics Assembly Systems AB is a private limited company (Aktiebolag) organized under the laws of Sweden and having its registered office in Johannelundsvägen 12-14, 19487 Upplands Väsby, Sweden (herein “SEAS Sweden”).

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As of the Signing Date, Siemens AB, having its registered office in Johannelundsvägen 12-14, 19487 Upplands Väsby, Sweden (herein “Siemens Sweden”), holds 100,000 shares (of nominal value SEK 1.00 each) with an aggregate nominal value of SEK 100,000.00 (in words: Swedish Krona one hundred thousand) (herein “SEAS Sweden Share”) representing 100 per cent of the stated capital of SEK 100,000.00 (in words: Swedish Krona one hundred thousand) of SEAS Sweden.

1.12 Siemens Electronics Assembly Systems S.r.l. is a limited liability company (Società a responsabilità limitata) organized under the laws of Italy, registered with the Register of Companies of Milan, under registration number and fiscal code 05308680965, and having its registered office in Milan, Viale Piero e Alberto Pirelli, 10, cap 20126, Italy (herein “SEAS Italy”). As of the Signing Date, Siemens S.p.A., registered with the Register of Companies of Milan, under registration number and fiscal code 00751160151, and having its registered office in Milan, Viale Piero e Alberto Pirelli, 10, cap 20126 Italy (herein “Siemens Italy”), holds one (1) share with a nominal value of EUR 30,000.00 (in words: Euro thirty thousand) (herein “SEAS Italy Share”) representing 100 per cent of the stated capital of EUR 30,000.00 (in words: Euro thirty thousand) of SEAS Italy.

1.13 Siemens Sistemas para Montagem de Componentes Eletrônicos Ltda. is a limited liability company (sociedade empresária limitada) organized under the laws of Brazil, registered before the Trade Board of State of São Paulo under registration number 35 2 2263456 1 (NIRE), duly enrolled with the National Register for Legal Entities of the Ministry of Finance (CNPJ/MF) under n° 10.406.538/0001-54 and having its registered office in the State of São Paulo, City of São Paulo, at Rua Dronsfield, 401/403, Lapa, CEP: 05074-000, Brazil (herein “SEAS Brazil”). As of the Signing Date, Siemens Ltda., São Paulo, Brazil, (herein “Siemens Sao Paulo”), duly enrolled with the National Register for Legal Entities of the Ministry of Finance (CNPJ/MF) under n° 44.013.159/0001-16, holds 2,057,743 (two million fifty-seven thousand seven hundred forty-three) shares with a nominal value of BRL 1.00 (in words: Brazilian Real one) each, and Siemens Eletroeletrônica Ltda., Manaus, Brazil, duly enrolled with the National Register for Legal Entities of the Ministry of Finance (CNPJ/MF) under n° 34.558.841/0001-30, (herein “Siemens Manaus”; together with Siemens Sao Paulo, “Siemens Brazil”) holds 1,501,028 (one million five hundred one thousand twenty-eight) shares with a nominal value of BRL 1.00 (in words: Brazilian Real one) (herein together “SEAS Brazil Shares”) representing together 100 per cent of the stated capital of BRL 3,558,771.00 (in words: Brazilian Real three million five hundred fifty-eight thousand seven hundred seventy-one) of SEAS Brazil.

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1.14 “Companies” and each individually a “Company” shall mean (i) SEAS GmbH, (ii) SEAS KG, (iii) SEAS China, (iv) SEAS UK, (v) SEAS France, (vi) SEAS Austria GmbH, (vii) SEAS Austria KG, (viii) SEAS USA, (ix) SEAS Mexico, (x) SEAS Singapore, (xi) SEAS Sweden, (xii) SEAS Italy and (xiii) SEAS Brazil.

1.15 “SEAS Sellers” and each individually a “SEAS Seller” shall mean (i) Siemens China, (ii) Siemens UK, (iii) Siemens France, (iv) Siemens Austria, (v) Siemens USA, (vi) Siemens Mexico, (vii) Siemens Singapore, (viii) Siemens Sweden, (ix) Siemens Italy, and (x) Siemens Brazil.

1.16 “Shares” and each individually a “Share” shall mean the (i) SEAS GmbH Share, (ii) SEAS KG Limited Partnership Interest, (iii) SEAS China Share, (iv) SEAS UK Shares, (v) SEAS France Shares, (vi) SEAS Austria GmbH Share, (vii) SEAS Austria KG Limited Partnership Interest, (viii) SEAS USA Interest, (ix) SEAS Mexico Shares, (x) SEAS Singapore Shares, (xi) SEAS Sweden Share, (xii) SEAS Italy Share, and (xiii) SEAS Brazil Shares.

Section 2 – Carve-out

2.1 The Business as formerly conducted directly or indirectly by Seller or Affiliates of Seller. (other than the Companies) (such Affiliates of Seller herein “Seller’s Affiliates”) has been transferred to the Companies and reorganized (all activities in connection therewith, and relating thereto, including the sale of certain parts of the Business to third parties, collectively herein “Carve-out”), by means of the transfer agreements listed in Exhibit 2.1 (herein “Carve-out Agreements”).

2.2 According to the respective Carve-out Agreements, several Companies are, inter alia, obliged to take over a number of employees as per the Closing Date. A list of the respective employees (on an anonymous basis) to be taken over under the relevant Carve-out Agreements is attached as Exhibit 2.2.

Section 3 – Agreement to Sell and Purchase

3.1 Seller herewith agrees to sell (verkaufen) and to cause the SEAS Sellers to sell and, subject to Section 3.3 below, agrees to assign and transfer (abtreten), and to cause the SEAS Sellers to assign and transfer, to the Designated Transferees (as defined in Section 3.6 below), and Purchaser agrees to procure (sicherstellen) that its Designated Transferees purchase and acquire from Seller or the SEAS Sellers, the Shares and the respective Shareholder Loans (as defined in Section 5.1.2 below) at Closing.

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3.2 The sale and transfer of the Shares and the Shareholder Loans shall be implemented by virtue of share purchase and transfer agreements to be executed between the Seller or the respective SEAS Seller and the respective Designated Transferee (the “Local SPAs”) at Closing. The Parties are in agreement that:

3.2.1 for the SEAS Germany Shares and the respective Shareholder Loan the Local SPA shall be substantially in the form as attached as Exhibit 3.2.1 (the “German SPA”);

3.2.2 for the other Shares and the respective other Shareholder Loans, the Local SPAs shall be substantially in the form as attached as Exhibit 3.2.2, subject to adjustments to reflect the particularities of local law.

3.3 The Parties agree that the execution of the Local SPAs (and thus the transfer and assignment of the Shares) shall be subject to the condition precedent (aufschiebende Bedingung) that all Closing Conditions (as defined in Section 7.1 below) have been duly fulfilled or, as the case may be, waived.

3.4 The Shares shall be sold with economic effect (mit wirtschaftlicher Wirkung) as of the Effective Date, including the dividend rights (Gewinn- und Gewinnbezugsrechte) to all profits not yet distributed to Seller or the relevant Seller’s Affiliate, as the case may be, on the Effective Date.

3.5 In the event of a conflict between this Agreement and a Local SPA (in the form actually executed), the provisions of this Agreement shall prevail. Purchaser shall not exercise, and shall procure (sicherstellen) that no Designated Transferee exercises, any rights, or makes any claim, under any of the Local SPAs other than the claim for the transfer of title to the relevant Shares or Shareholder Loan or its registration.

3.6 Purchaser shall determine in writing one or more of its Affiliates which shall purchase and acquire any or all of the Shares in accordance with the terms of the relevant Local SPA (herein “Designated Transferees” and each a “Designated Transferee”), by providing Seller with a written notification specifying the Designated Transferee(s) and Shares such Designated Transferee(s) shall purchase and acquire (the “Acquisition Notice”), provided such Acquisition Notice is received by Seller not less than ten (10) Business Days prior to the Closing Date. Purchaser shall procure (sicherstellen) that the Designated Transferee(s) acquire the relevant Shares on the Closing Date by execution of the relevant Local SPA.

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For the avoidance of doubt it is clarified that Purchaser (i) shall remain liable for all its obligations arising under this Agreement, (ii) hereby irrevocably guarantees by means of an independent guarantee (selbständiges Garantieversprechen) pursuant to Section 311 (1) of the German Civil Code the fulfilment of any liabilities and obligations of the Designated Transferee(s) arising out of or in connection with the respective Local SPA, and (iii) shall be responsible for exercising all rights and remedies, if any, on behalf of any Designated Transferee.

Section 4 – Purchase Price, Effective Date Accounts, Payment Terms

4.1 The purchase price payable by Purchaser as consideration for the sale and transfer of the Shares shall be an amount of EUR 1.00 (in words: Euro one) (the “Base Price”)

4.1.1 plus the Cash (as defined in Section 4.2 below)

4.1.2 minus the Financial Debt (as defined in Section 4.2 below)

4.1.3 plus the amount by which the Net Working Capital (as defined in Section 4.2 below) exceeds the Target Net Working Capital (as defined in Section 4.2 below); or

4.1.4 minus the amount by which the Net Working Capital falls short of the Target Net Working Capital,

4.1.5 plus or minus, as the case may be, the Pension Adjustment Amount as determined in accordance with Exhibit 15.5

(such amount as determined in accordance with this Section 4, the “Purchase Price”).

4.2 “Cash” and “Financial Debt” shall mean the balance of the line items set out in Exhibit 4.2-1, in each case existing at the Effective Date (on a Combined Financial Statements basis). “Net Working Capital” shall mean the balance of the line items set out in Exhibit 4.2-2 existing at the Effective Date. “Target Net Working Capital” shall be the amount of the balance of the line items set out in Exhibit 4.2-2 existing at 30 September 2010, determined based on the audited Combined Financial Statements of the Companies as of, and for the financial year ending on, 30 September 2010 as well as the underlying accounts. “Effective Date” shall mean 1 January 2011, 0:00 am, unless (i) Seller has delivered to Purchaser the Combined Financial Statements referred to in Section 7.1.2 after 10 January 2011, or has failed to comply with its obligations under Sections 7.2

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and 7.3 in all material respects, and (ii) Purchaser notifies Seller in writing or by fax not later than on 24 January 2011 that the Effective Date shall be postponed to 1 April 2011, in which case 1 April 2011, 0:00 am, shall be the Effective Date. Cash, Financial Debt, Net Working Capital and the Pension Adjustment Amount shall be determined in accordance with Sections 4.4 et seq. below.

4.3 On the Closing Date the Base Price shall be paid by Purchaser to Seller.

4.4 Within ninety (90) Business Days after the Effective Date, Seller shall prepare and deliver to Purchaser the Combined Financial Statements of the Companies as of the Effective Date (the “Effective Date Accounts”) together with the Actuarial Reports (as defined in Exhibit 15.5 and for which the principles of Exhibit 15.5 shall apply). The Effective Date Accounts shall be prepared in accordance with the same accounting principles (based on IFRS) as applied to the group financial statements of the Seller Group as of, and for the fiscal year ending on, 30 September 2010 (or as amended for the current fiscal period ending immediately prior to the Effective Date) and set forth in reasonable detail Seller’s calculation of the Cash, the Financial Debt, the Net Working Capital and the Pension Adjustment Amount, using the following specific methodology and principles:

4.4.1 The Effective Date Accounts shall be prepared on a going-concern basis consistent with past practice for the preparation of Combined Financial Statements in accordance with the accounting principles (based on IFRS) referred to in the second sentence of Section 4.4, disregarding (i) the Transaction or any effects resulting therefrom, (ii) any costs related to the integration of the Business into Purchaser’s group and (iii) any actions or intentions of Purchaser; no write-down shall be made based on the agreement on the market values of the Shares pursuant to Section 4.9.

4.4.2 Subsequent events (wertaufhellende Tatsachen) shall only be taken into account if they provide evidence of conditions that existed at the Effective Date.

4.4.3 To convert figures in local currency to Euro, the Exchange Rates (as defined in Section 22.2 below) for the Effective Date shall be used.

4.5 The Effective Date Accounts shall be audited by an internationally recognized firm of public accountants. Seller shall deliver to Purchaser the respective audit report together with the Effective Date Accounts and the Actuarial Reports. If and to the extent Purchaser disagrees with the Effective Date Accounts and/or an Actuarial Report, Purchaser may, within twenty-five (25) Business Days after delivery

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of the documents referred to in Section 4.4 and the audit report, deliver a notice to Seller disagreeing with the Effective Date Accounts and/or an Actuarial Report, as the case may be (“Notice of Disagreement”). Any such Notice of Disagreement shall specify, in reasonable detail, those items or amounts as to which Purchaser disagrees and the reasons for such disagreement together with the underlying evidence and documentation, and Purchaser shall be deemed to have agreed to all other items or amounts contained in the Effective Date Accounts and/or the Actuarial Reports delivered by Seller pursuant to Section 4.4. If and to the extent Purchaser has delivered a proper Notice of Disagreement, the following shall apply:

4.5.1 The Parties shall, during the twenty-five (25) Business Day period following such delivery (or any other period of time mutually agreed upon between the Parties), use all reasonable efforts to reach an agreement on the disputed items or amounts. If and to the extent that, during such period, the Parties are unable to reach such agreement, either Party may refer the remaining differences to an internationally recognized firm of independent public accountants (the “Accounting Firm”). If the Parties cannot mutually agree upon the Accounting Firm within two (2) weeks after either Party has requested its appointment, the Accounting Firm shall be appointed, upon request of either Party, by the Institute of Chartered Accountants (Institut der Wirtschaftsprüfer) in Düsseldorf, Germany.

4.5.2 The Accounting Firm, acting as an expert (Schiedsgutachter) and not as an arbitrator, shall, based on the principles as set forth in Section 4.4, decide whether and to what extent the Effective Date Accounts or an Actuarial Report require adjustment. The Accounting Firm, in making its determination, shall only take into account any remaining differences submitted to it and shall limit its determination to the scope of the dispute between the Parties, taking into account any compensating effects.

4.5.3 Seller and Purchaser shall, and shall cause their respective accountants and the Companies to, co-operate with and assist the Accounting Firm in the conduct of its review. Such co-operation and assistance shall include, without limitation, the making available to the Accounting Firm of all relevant books and records of the Business and any other information relating to the Business. If and to the extent that the Accounting Firm cannot resolve the dispute on any item or amount or the merits because it has not been provided with the relevant documents or information, the Accounting Firm shall decide against the Party who has failed to provide such documents or information, provided that there shall be a rebuttable presumption that any such documents or information relating to the Business (i) in the period as from (but excluding) the Carve-out, and (ii) not to the process of the Carve-out are accessible solely by Purchaser.

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4.5.4 The Parties shall instruct the Accounting Firm to deliver its written opinion (including reasons for the Accounting Firm’s decision to each disputed item) to them no later than two (2) months (or within any other period of time mutually agreed by the Parties) after the remaining differences have been referred to it. The decision of the Accounting Firm shall be conclusive and binding on the Parties (within the limit set forth in Section 319 of the German Civil Code) and shall not be subject to any appeal. The fees and disbursements of the Accounting Firm shall be allocated by the Accounting Firm between Seller and Purchaser in proportion to the respective success and defeat; Sections 91 et seq. of the German Code of Civil Procedure shall apply accordingly.

4.6 For the purpose of the calculation of the Purchase Price, the Cash, the Financial Debt, the Net Working Capital and the Pension Adjustment Amount shall be

4.6.1 the relevant amounts as shown in the Effective Date Accounts and the Actuarial Reports delivered by Seller pursuant to Section 4.4, if and to the extent no Notice of Disagreement with respect thereto is delivered pursuant to Section 4.5; or

4.6.2 if and to the extent such a Notice of Disagreement is delivered, the relevant amounts as (i) agreed by Purchaser and Seller or, (ii) in the absence of such agreement, shown in the Accounting Firm’s calculation delivered pursuant to Section 4.5.

4.7 If the calculation of the Purchase Price in accordance with this Section 4 results in an amount exceeding the Base Price (herein “Positive Adjustment Amount”), Purchaser shall pay to Seller such excess amount (to the extent not deducted from the Seller Fund pursuant to Section 6.2). If it results in an amount falling short of the Base Price/Seller shall pay to SEAS KG such shortfall (“Negative Adjustment Amount”). The Negative Adjustment Amount paid to SEAS KG shall, to the extent legally permissible, be construed and deemed as a contribution (Einlage) made by the respective Designated Transferee into SEAS KG. The Negative and Positive Adjustment Amount shall bear interest from the Closing Date until they fall due according to Section 4.8 below at a rate of the EURIBOR on the Closing Date plus 300 base points. For the avoidance of doubt,

(i) Purchaser’s payment of the Positive Adjustment Amount and/or the deduction of the Positive Adjustment Amount from the Seller Fund pursuant to Section 6.2 shall discharge the Designated Transferees from their obligations to pay an (adjusted) purchase price for the SEAS Shares under the Local SPAs, and

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(ii) Seller’s payment of the Negative Adjustment Amount shall discharge the SEAS Sellers from their obligations to pay an (adjusted) negative purchase price for the SEAS Shares under the Local SPAs.

4.8 Payment pursuant to Section 4.7 above of the Positive Adjustment Amount by Purchaser or the Negative Adjustment Amount by Seller, as the case may be, shall become due and payable

4.8.1 where no Notice of Disagreement has been served in accordance with Section 4.5, within ten (10) Business Days of expiry of the twenty-five (25) Business Day-period from delivery of the documents referred to in Section 4.4; or

4.8.2 where a Notice of Disagreement has been served in accordance with Section 4.5, within ten (10) Business Days of agreement between the Parties as to the disputed items or amounts pursuant to Section 4.5.1 or, where no such agreement has been reached, delivery of a written opinion from the Accounting Firm pursuant to Section 4.5.4.

4.9 In consideration of the obligations under Sections 4, 5 and 6, the Parties agree on the market values of the Shares as set forth in Exhibit 4.9.

4.10 Except as explicitly provided otherwise in this Agreement, any other payment obligation under this Agreement shall be immediately due and payable.

4.11 Except as explicitly provided otherwise in this Agreement, each of the Parties shall pay interest on any amounts becoming due and payable to the other Party under this Agreement as from (but not including) the respective due date until (and including) the respective day of payment at a rate of the EURIBOR on the due date plus 600 base points.

4.12 Interest payable under any provision of this Agreement shall be calculated on the basis of actual days elapsed divided by 360. The EURIBOR (Euro Interbank Offered Rate) is understood to mean the rate at which Euro interbank three (3) months term deposits are offered and shown on the Reuters Euribor Screen at eleven o’clock in the morning (11 a.m.) Central European Time (CET), as of the respective (due) date (the “EURIBOR”).

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4.13 All payments by Purchaser to Seller under this Agreement shall be made by Purchaser free and clear of costs and charges by way of wire transfer to be credited on the same day (mit gleichtägiger Gutschrift) to the bank account of Seller to be named not later than twenty (20) Business Days prior to the Closing Date (herein “Seller’s Bank Account”).

4.14 All payments by Seller to Purchaser under this Agreement shall be made by Seller free and clear of costs and charges by way of wire transfer to be credited on the same day (mit gleichtägiger Gutschrift) to the bank account of Purchaser to be named not later than twenty (20) Business Days prior to the Closing Date (herein “Purchaser’s Bank Account”).

4.15 All payments by any Party to any Company under this Agreement shall be made free and clear of costs and charges by way of wire transfer to be credited on the same day (mit gleichtägiger Gutschrift) to the bank account of the respective Company to be named not later than twenty (20) Business Days prior to the Closing Date (herein each a “Company Account”).

Section 5 – Termination of Intercompany Financing Arrangements

5.1 The Parties acknowledge that the Companies have entered into cash management agreements, other intercompany financing arrangements and intercompany trade clearing arrangements with Seller or Seller’s Affiliates that are relating to the clearing of intra-group trades (herein collectively “Intercompany Financing Arrangements”). Prior to the Closing Date, Seller shall terminate the Intercompany Financing Arrangements, so that the Companies shall cease to be financed thereunder.

5.1.1 Seller undertakes to settle any payables (being part of the Intercompany Financing Arrangements) of Seller or Seller’s Affiliates outstanding after the termination of the Intercompany Financing Arrangements within ten (10) Business Days after the Closing Date to the Company Accounts, so that neither Seller nor any of Seller’s Affiliates shall have any liability to any of the Companies with respect to the Intercompany Financing Arrangements.

5.1.2 Furthermore, Seller undertakes to make reasonable efforts to settle any receivables (being part of the Intercompany Financing Arrangements) of Seller or Seller’s Affiliates outstanding after the termination of the Intercompany Financing Arrangements latest as of the Closing Date. However, if and to the extent a settlement of such receivables cannot be

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effected as of the Closing Date despite Seller’s reasonable efforts, such outstanding receivables shall be continued with the respective Companies as loans (herein “Shareholder Loans”). Under the Local SPAs, Seller and the SEAS Sellers shall sell and transfer, or agree to procure the sale and transfer by Seller’s other Affiliates, as the case may be, of any Shareholder Loans existing as of the Closing Date to the Designated Transferees against payment of the Shareholder Loan Consideration pursuant to Section 5.1.3. For the avoidance of doubt, the restrictions set forth in Section 14.7 below shall not apply to the repayment of any Shareholder Loan that has become due.

5.1.3 The “Shareholder Loan Consideration” shall equal

(i) the nominal amount of the Shareholder Loans as of the Effective Date, which shall be determined on the basis of the audited Effective Date Accounts and the provisions of Sections 4.4 et seq., less

(ii) the nominal amount of any repayments of Shareholder Loans received by Seller or Seller’s Affiliate after the Effective Date.

Seller undertakes not to accept, and to procure that Seller’s Affiliates shall not accept, any repayments of Shareholder Loans after the Effective Date without Purchaser’s prior written consent.

5.1.4 The Shareholder Loan Consideration shall (i) become due on the due date of the Negative or Positive Adjustment Amount according to Section 4.8 and (ii) bear interest from the Closing Date until it falls due at a rate of the EURIBOR on the Closing Date plus 300 base points. Purchaser shall pay the Shareholder Loan Consideration on the due date into Seller’s Bank Account.

5.2 Purchaser acknowledges that Seller procured that all foreign exchange forward contracts existing between the Companies and Seller or Seller’s Affiliates (herein “Hedges”) were terminated prior to the Closing Date on an arm’s length basis. The resulting market values per Company will be debited or credited, as the case may be, to the respective Company Accounts on the Closing Date.

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Section 6 – Equity Commitment; Seller Fund

6.1 Purchaser herewith undertakes (i) to pay to SEAS KG an equity amount of EUR 20,000,000.00 (in words: Euro twenty million), by increasing SEAS KG’s registered limited partnership interest (Haftsumme) (herein “Equity Commitment”), and (ii) to grant SEAS KG a revolving loan facility of another EUR 20,000,000.00 (in words: Euro twenty million) for a period of at least three (3) years as from the Closing Date to terms and conditions as set out in Exhibit 6.1 (herein “Loan Commitment”). In the event the Positive Adjustment Amount pursuant to Section 4.7, to the extent it is attributable to SEAS KG (which shall be shown in reasonable detail by Seller to Purchaser based on the Effective Date Accounts), exceeds the amount of the Seller Fund pursuant to Section 6.2, the difference amount payable by Purchaser to Seller pursuant to Section 4.7 shall reduce the amount of the undrawn Loan Commitment on a Euro-for-Euro basis.

6.2 Seller herewith undertakes to make a non-recourse and non-refundable cash payment to SEAS KG on the due date of the Negative or Positive Adjustment Amount according to Section 4.8 in the amount of EUR 29,000,000.00 (in words: Euro twenty-nine million) (herein “Seller Fund”), however, reduced as the case may be, by the Positive Adjustment Amount to the extent it is attributable to SEAS KG.

Section 7 – Closing Conditions

7.1 This Agreement shall only be closed (erfüllt) pursuant to Section 8 below if all of the following conditions precedent (aufschiebende Bedingungen) have been duly fulfilled or waived in accordance with Section 7.5:

7.1.1 The required merger control clearance under the applicable merger control rules of Germany shall have been obtained from the competent authority or shall be deemed to have been obtained, e.g., because of the lapse of the applicable waiting periods or because jurisdiction has been declined (herein “Antitrust Clearance”);

7.1.2 Seller shall have delivered to Purchaser the Combined Financial Statements of the Companies, for the financial years as required by the Hong Kong Stock Exchange for the circular to be provided to Purchaser’s shareholders under the applicable listing rules of the Hong Kong Stock Exchange, in each case prepared in accordance with IFRS;

7.1.3 In the event of a Material Adverse Change, neither Party shall have requested in writing or by fax received by the other Party within a period of ten (10) Business Days after the delivery of the Combined Financial Statements of the Companies pursuant to Section 7.1.2 not to close this Agreement because of such Material Adverse Change. “Material

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Adverse Change” shall mean the occurrence of all of the following circumstances shown in the management accounts (BU reporting) for a period of the last six months available at the time of the written request pursuant to the first sentence of this Section 7.1.3:

(i) The combined order intake of the Companies shall amount to less than EUR 75,000,000.00 (in words: Euro seventy-five million);

(ii) The combined sales volume of the Companies shall amount to less than EUR 80,000,000.00 (in words: Euro eighty million); and

(iii) the Companies’ combined net cash flow from operations (excluding, for the avoidance of doubt, any cash flow attributable to a change of the balance of the line items set forth in Exhibit 4.2-2) shall amount to less than a negative value of EUR 50,000,000 (in words: Euro fifty million);

7.1.4 subsequent to the satisfaction of the Closing Condition in Section 7.1.2, a period of six (6) weeks, or, in the event the Hong Kong Stock Exchange does not clear the required circular on the Transaction within two (2) weeks after its formal submission, a period of eight (8) weeks shall have expired, unless,

(i) pursuant to the applicable listing rules of the Hong Kong Stock Exchange, a consummation of the Transaction does not require (a) Purchaser to publish a circular on the Transaction, or (b) Purchaser’s shareholder meeting to approve the Transaction, in which case the respective waiver shall fulfill the Closing Condition in this Section 7.1.4; or

(ii) Purchaser’s shareholder meeting to approve the Transaction has been held prior to the expiry of such period, in which case the holding of Purchaser’s shareholder meeting shall fulfill the Closing Condition in this Section 7.1.4

(collectively herein “Closing Conditions”). Exhibit 7.1 contains a copy of an irrevocable undertaking to approve the consummation of the Transaction, which was executed by Purchaser’s majority shareholder prior to the Signing Date.

7.2 Purchaser shall be responsible for taking all actions necessary to prepare and to make the filings for the Antitrust Clearance and for other merger control filings that the Parties determine to be required within due course after the Signing Date

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and to furnish all information required in connection therewith. In Brazil (where the applicable merger control rules provide for no stand-still obligation), Purchaser shall file a merger notification with the Brazilian antitrust commission (CADE) within 15 (fifteen) days after the Signing Date. Seller undertakes to cooperate, and to use its reasonable best efforts that the Companies cooperate, with Purchaser in providing all reasonably required information concerning the Business and to assist in such filings. Further, the Parties agree on the following:

7.2.1 Purchaser shall give Seller reasonable advance notice of any notification, submission or other communication which it proposes to make or submit to any antitrust authority and provide Seller with copies in English of such draft notification, submission or correspondence and any supporting documentation or information reasonably requested by Seller at such a time to allow Seller a reasonable opportunity to provide comments on such submissions and communications before they are submitted or sent. Purchaser undertakes to take any comments of Seller in relation to any such notification, submission or communication in due consideration. Any (i) substantial notifications and submissions to the antitrust authorities and (ii) all formal filings with any competent antitrust authority shall require the prior consent of Seller in writing or by e-mail, such consent not to be unreasonably withheld. Purchaser further agrees to keep Seller fully informed as to the progress of any notification made with any competent antitrust authority. Furthermore, Purchaser shall provide Seller with copies of any filings made with and/or any information supplied to any competent antitrust authority by Purchaser and/or its Affiliates in connection with this Agreement and the Transaction. In addition, Purchaser shall provide Seller with copies of all written correspondence between Purchaser and/or its Affiliates with any competent antitrust authority in connection with this Agreement and the Transaction. All copies of any filings, information and written correspondence shall be accompanied by a translation in English if English is not the language used in the aforementioned copies.

Seller and its advisers shall be given the opportunity to attend the meetings with any antitrust authority or other persons or bodies (unless prohibited by the authority or such other person) and make oral submissions at such meetings to the extent necessary. Purchaser shall not be obliged to disclose and is entitled to reasonably protect any business secrets vis-à-vis Seller under these and other provisions of this Agreement.

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7.2.2 Purchaser shall undertake (or cause any Designated Transferee to undertake) any and all steps necessary to avoid or eliminate each and every impediment to close the Transaction as contemplated under this Agreement under any antitrust, competition or trade regulation law that may be asserted by any antitrust or other governmental party including proposing to the relevant authorities committing to and effecting as promptly as practicable, the sale, divestiture or disposition of such assets, properties or businesses of Purchaser and/or its Affiliates and/or the Companies, and the conclusion of such other arrangements, as are necessary or advisable to obtain the Antitrust Clearance and to avoid the effect of materially delaying or preventing the consummation of the Transaction, provided that Purchaser shall not be obliged to conduct any measures that a reasonable third party would regard as commercially unreasonable and qualified to have a significant negative impact on Purchaser’s business.

7.2.3 Purchaser shall neither take any action nor undertake nor commit to anything that would be likely to have the effect of delaying, impairing or impeding the receipt of the Antitrust Clearance. In particular, Purchaser undertakes not to enter into any transaction, or any agreement to effect any transaction (including any merger or acquisition) that might reasonably be expected to make it more difficult, or to materially increase the time required, to obtain the Antitrust Clearance, or to delay or prevent the consummation of the Transaction.

7.3 Purchaser shall make reasonable best efforts to obtain clearance of the circular to be provided to Purchaser’s shareholders under the applicable listing rules of the Hong Kong Stock Exchange as soon as possible (including, for the avoidance of doubt, the continuation of the waiver application process). Seller shall make reasonable best efforts to deliver to Purchaser the audited Combined Financial Statements referred to in Section 7.1.2 not later than on 8 December 2010. In case Seller delivers to Purchaser such audited Combined Financial Statements after 10 January 2011, Purchaser shall have the option pursuant to Section 4.2 to opt for 1 April 2011, 0:00am, as the Effective Date. For the avoidance of doubt, Purchaser shall have no remedy against Seller (other than the option to postpone the Effective Date to 1 April 2011 pursuant to Section 4.2) in the event Seller fails to provide the audited Combined Financial Statements by 8 December 2010 and 10 January 2011. Seller undertakes furthermore to cooperate, and to use its reasonable best efforts that the Companies cooperate, with Purchaser in providing all reasonably required information concerning the preparation of the circular referred to in Section 7.1.4.

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7.4 The Parties share the view that there is no requirement for a filing of the Transaction under Section 7 (1) and (2) no. 6 of the German Foreign Trade Act (“AWG”) in conjunction with Section 53 (2) sentence 4 of the German Foreign Trade Ordinance (“AWV”), and the Parties are, furthermore, not aware of any circumstance which may entitle the German Federal Ministry of Economics and Technology to prohibit the Transaction or to issue orders (Anordnungen) in connection therewith. However, if the German Federal Ministry of Economics and Technology decides to enter into proceedings or any investigation set forth in the AWV, Purchaser (i) shall offer to and comply with any order, condition or obligation imposed by the German Federal Ministry of Economics and Technology and eliminate each and every impediment required to avoid a prohibition of the Transaction under the AWG or AWV and (ii) shall not be entitled to request any adjustment of the Purchase Price as a result of any such condition, obligation, commitment or agreement.

7.5 Purchaser and Seller shall have the right to unanimously waive any Closing Condition provided for in Sections 7.1.2, 7.1.3 and 7.1.4 in writing. The Parties shall notify each other in writing without undue delay (unverzüglich) of (i) the Closing Condition set forth in Section 7.1.1 having been fulfilled and/or (ii) the definitive (endgültige) failure of any of the Closing Conditions to be fulfilled.

7.6 Seller shall, until Closing has occurred, be entitled to withdraw from (zurücktreten) this Agreement with effect for all Parties by written notice to Purchaser, if not all of the Closing Conditions set forth in Sections 7.1.1, 7.1.2 and 7.1.4 have been fulfilled until the later of (i) the expiration of four (4) months after submission of the Combined Financial Statements pursuant to Section 7.1.2, or (ii) 31 May 2011, provided, however, that Seller shall have complied with its obligations in Section 7.2 and 7.3 in all material respects. In the event of a definitive (endgültige) failure of the Closing Condition in Section 7.1.3 to be fulfilled, either Party shall be entitled to withdraw from this Agreement with effect for all Parties by written notice to the other Party. In the event of a withdrawal, none of the Parties shall have any obligation or incur any liability towards the other Party except that (i) any liability of any Party for willful (vorsätzliches) behavior and (ii) Section 17 through 22 below shall in each case survive and remain in full force and effect.

7.7 If all Closing Conditions have been fulfilled but the transfer of the Shares cannot be consummated on the Closing Date in specific countries because of pending merger control proceedings (other than the proceeding to obtain the Antitrust Clearance), outstanding consents or permits by any governmental authority or other regulatory or legal reasons, the transfer of the Shares shall be performed on the Closing Date to the maximum extent legally permissible. In such case, the Parties shall agree on all appropriate measures, including, to the extent necessary, “hold separate” arrangements, so that the affected jurisdictions can be

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exempted from the consummation of the Transaction. Until the respective requirements are met, the Parties will put each other into the position as if the respective transfers had taken place as of the Closing Date. Purchaser shall cooperate with Seller and any of Seller’s Affiliates with a view to minimizing any risks, obligations and liabilities resulting out of, or in connection with, the continued operation of the relevant part of the Business in such affected countries. If the respective requirements are not met within three (3) months from Closing, Seller or Purchaser may request a sale and transfer of the relevant Companies and/or assets concerned to a third party, which sale and transfer shall be effected to the extent legally permissible subject to approval reasonably given by Purchaser and for the account of Purchaser; provided that any proceeds received by Seller in such sale and transfer (other than the proceeds received from Purchaser under this Agreement) shall be paid to Purchaser net of any taxes or reasonable fees, costs and expenses accruing for, or incurred by, Seller. The foregoing shall not delay Closing.

7.8 Purchaser may not request an amendment of this Agreement as a result of (i) any action pursuant to Sections 7.2, 7.4 or 7.7 above, including obligations or conditions (Auflagen und Bedingungen) or other agreements required by the respective competent merger control authority with respect to the Transaction, (ii) any legal consequences caused by the non-compliance with any filing requirements in countries other than Germany, (iii) any decision by a competent authority after the Closing Date prohibiting any transaction contemplated hereby, or (iv) title to the SEAS KG Limited Partnership Interest and the SEAS Austria KG Limited Partnership Interest being transferred with in rem effect only upon the respective Designated Transferee(s) having been registered as limited partner(s) of SEAS KG and SEAS Austria KG in the respective competent commercial register.

Section 8 – Closing

8.1 Subject to the satisfaction or waiver of all Closing Conditions, the consummation of the Transaction (herein “Closing”) shall occur:

8.1.1 On the later of (i) 3 January 2011, and (ii) the fifth (5^th) Business Day after all Closing Conditions set forth in Section 7.1 have been satisfied or waived, provided that the Effective Date is not postponed to 1 April 2011 pursuant to Section 4.2;

8.1.2 On 1 April 2011 if the Effective Date is postponed to 1 April 2011 pursuant to Section 4.2; or

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8.1.3 On such other date as the Parties may agree upon in writing

(herein “Closing Date”).

8.2 On the Closing Date, the Parties or their respective duly authorized representatives shall convene at Cleary Gottlieb Steen & Hamilton LLP, Main Tower / Neue Mainzer Str. 52, 60311 Frankfurt, or at such place as agreed between the Parties, and the following events (herein “Closing Events”) shall take place simultaneously (Zug-um-Zug), unless a Closing Event has been waived by the Party for the sole benefit of which such Closing Event is to take place:

8.2.1 Payment by Purchaser of the Base Price into Seller’s Bank Account;

8.2.2 Payment by Purchaser of the Equity Commitment into SEAS KG’s Company Account, execution of the application for filing the increase of the registered limited partnership interest (Haftsumme) in SEAS KG as described in Section 6.1 with the competent commercial register, and execution of the Loan Commitment as attached as Exhibit 6,1;

8.2.3 Execution by Seller and the relevant SEAS Sellers and the relevant Designated Transferee(s) of the respective Local SPAs;

8.2.4 Delivery by Seller of resignation letters signed by the representatives of Seller and SEAS Sellers incumbent on supervisory, advisory or other boards of the Companies as identified in Exhibit 8.2.4, such resignations becoming effective as of the earliest legally possible withdrawal date;

8.2.5 Execution by Seller, SEAS GmbH, Siemens Austria, Siemens Austria GmbH and the respective Designated Transferee(s) of (i) applications to the commercial registers of SEAS KG and SEAS Austria KG, respectively, to have the respective Designated Transferee(s) registered as limited partner(s) (Kommanditist) of SEAS KG and SEAS Austria KG and (ii) irrevocable instructions to the acting notary by Seller, SEAS GmbH, Siemens Austria, Siemens Austria GmbH and such Designated Transferee(s) to file such applications with the commercial registers of SEAS KG and SEAS Austria KG, respectively;

8.2.6 Delivery by Purchaser of the Bank Guarantee (according to Section 16.1 below) to Seller;

8.2.7 Delivery by Purchaser of the Security Deeds (according to Section 15.1.3 below) to Seller;

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8.2.8 Delivery by Purchaser of the executed Letter of Support according to Section 16.2 below;

8.2.9 Execution of the Trademark License Agreement essentially in the form attached as Exhibit 8.2.9;

8.2.10 Execution of binding and irrevocable documents to rename the Companies, the scope and contents of which shall be negotiated in good faith and agreed by the Parties prior to Closing;

8.2.11 In the event that, prior to Closing, the Hong Kong Stock Exchange has issued a ruling pursuant to which the Transaction may be consummated on the basis of a written approval of Purchaser’s majority shareholder, delivery of the duly executed written shareholder approval in the form attached as Exhibit 8.2.11;

8.2.12 Adoption of a shareholders’ resolution by Seller and SEAS GmbH in their capacity as the shareholders of SEAS KG on the Seller Fund payable by Seller in accordance with Section 6.2 (as the case may be, reduced by the Positive Adjustment Amount to the extent attributable to SEAS KG) to be made as a contribution into SEAS KG;

8.2.13 Execution of a closing protocol by Seller and Purchaser confirming the due fulfillment or waiver, as the case may be, of all Closing Conditions and the due performance or waiver, as the case may be, of all Closing Events (herein “Closing Protocol”).

8.3 The Closing Events shall be deemed to take place simultaneously and no Closing Event, delivery or execution shall be deemed to have been completed until all Closing Events have been completed (or waived, as the case may be) and the Closing Protocol has been signed. For the avoidance of doubt, the registration of the respective Designated Transferee(s) as limited partner(s) of SEAS KG and SEAS Austria KG with the commercial register of SEAS KG and SEAS Austria KG shall not be considered a Closing Event and shall not affect Closing.

Section 9 – Seller’s Guarantees

9.1 Seller hereby guarantees, subject to the limitations contained in this Agreement, in particular the remedies set out in Section 11 below, the Time Limitations (as defined in Section 13.1 below), the exclusion of De Minimis Claims (as defined in Section 13.3 below), the Basket (as defined in Section 13.3 below) and the Liability Cap for Seller’s Guarantees (as defined in Section 13.4 below), by way of an

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independent guarantee (selbständiges Garantieversprechen) pursuant to Section 311 (1) German Civil Code that the statements set forth in Section 9.1 (herein collectively “Seller’s Guarantees”) are true and correct as of the Signing Date or as of any other date explicitly referred to below. Seller and Purchaser agree and explicitly confirm that the Seller’s Guarantees shall neither be qualified and construed as quality guarantees concerning the object of the purchase (Garantien für die Beschaffenheit der Sache) within the meaning of Sections 443, 444 German Civil Code nor as agreements regarding the quality of the object of the purchase (Beschaffenheitsvereinbarungen) within the meaning of Section 434 (1) sentence 1 German Civil Code.

9.1.1 Enforceability, Authority and Existence of the Companies. This Agreement constitutes the legal, valid and binding obligation of Seller, enforceable against Seller in accordance with its terms. Seller has the absolute and unrestricted right, power, authority, and capacity to execute this Agreement and to perform its obligations under this Agreement, which actions have been duly authorized and approved by all necessary corporate action of Seller. As of the Signing Date and the Closing Date, each of the Companies is duly incorporated and validly existing under the laws of its jurisdiction and has all requisite corporate power and authority to own its respective assets. As of the Closing Date, the Local SPAs constitute the legal, valid and binding obligations of the respective SEAS Sellers, enforceable against such SEAS Sellers in accordance with their terms.

9.1.2 Ownership of the Shares. As per the Closing Date, (i) the Shares are owned by Seller and/or SEAS Sellers, and (ii) Seller or the relevant SEAS Seller is the sole and unrestricted (except for restrictions contained in the corporate documents of the respective Company or applicable law) owner of the Shares sold by it. As of the Closing Date, the Shares (i) have been duly authorized and validly issued, and (ii) have not been pledged, assigned, charged or used as a security to or by a third party and are free and clear of any other third party rights, and there are no pre-emptive rights, voting arrangements or other rights of third parties to acquire any of the Shares. As of the Closing Date, there are no pending applications for registration and/or resolutions of any corporate body requiring such registration which have been passed but not yet registered, other than those to facilitate the Transaction.

9.1.3 Majority Participations, Equity Interests. As per the Closing Date the Companies have no majority participations and do not hold any equity interest in another legal entity other than a Company.

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9.1.4 Bankruptcy or Judicial Composition Proceedings. As per the Closing Date no bankruptcy or judicial composition proceedings concerning any Company are pending or have been applied for nor, to the Best Knowledge of Seller, do any reasons exist that would require such proceedings. For the avoidance of doubt, the termination and settlement of any agreements between Seller and/or Seller’s Affiliates in connection with the transfer of the Shares from Seller and the SEAS Sellers to any Designated Transferees shall not be deemed to constitute a reason that would require such proceedings.

9.1.5 Enterprise Agreements. As per the Closing Date the Companies are not party to any enterprise agreements with any entity within the meaning of Sections 291 and 292 German Stock Corporation Act or comparable profit sharing or transfer agreements or any such arrangements under the laws of other jurisdictions.

9.1.6 Collective Labor Agreements. Exhibit 9.1.6 contains a true and complete list of all material collective labor agreements (i.e., Betriebsvereinbarungen, Tarifverträge or agreements of a similar nature under foreign jurisdictions) which are entered into between, or otherwise binding on, (i) SEAS KG and a group of employees or a representative body of employees of SEAS KG or (ii), to the Best Knowledge of Seller, any other Company and a group of employees or a representative body of employees of such Company, which exclude or restrict the right of SEAS KG or such other Company to terminate employment agreements for operational reasons (betriebsbedingte Kündigungen), or require SEAS KG or such other Company to pay a severance or similar financial compensation upon a termination of employment.

9.1.7 Key Employees. To the Best Knowledge of Seller, the employment agreements with the individuals listed in Exhibit 9.1.7 are in full force and effect and have not been terminated.

9.1.8 Governmental Approvals and Compliance with Laws. To the Best Knowledge of Seller, the Companies hold all governmental approvals which are necessary to operate the Business in substantially the same fashion or manner as currently conducted. To the Best Knowledge of Seller, (i) each Company has complied in all material respects with the compliance program of Seller, and (ii) no compliance proceedings or investigations by any governmental authority exist, the outcome of which would have a material impact on the operation of the Business in substantially the same fashion or manner as currently conducted.

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9.1.9 Financial Statements. The audited combined financial statements of the Companies as of, and for the financial year ending on, 30 September 2009, comprising a combined balance sheet, a combined statement of income, a combined statement of income and expense recognized in equity, a combined statement of cash flow and combined changes in equity and notes, (i) were prepared in accordance with IFRS, (ii) were certified by an audit opinion by Ernst & Young GmbH Wirtschaftsprufüngsgesellschaft, Stuttgart, dated 15 June 2010, such audit opinion being attached for documentation purposes as Exhibit 9.1.9 and (iii) present, based on the facts known (a) at the aforementioned balance sheet date (Bilanzstichtag) and (b) at the time of their preparation a true and fair view (ein den tatsächlichen Verhältnissen entsprechendes Bild) of the assets, liabilities and earnings situation of the Companies.

9.1.10 Assets/Unrelated Liabilities. To the Best Knowledge of Seller, the Companies have good and valid title to, or a valid leasehold interest in, or a license or right to use, all material tangible property and tangible assets necessary to operate the Business substantially in the same fashion or manner as currently conducted. To the Best Knowledge of Seller, the Companies are not exposed to any liabilities commercially unrelated to the Business that were (i) transferred by Seller or Seller’s Affiliates to any of the Companies, or (ii) otherwise incurred or assumed by any of the Companies in connection with the Carve-out Agreements.

9.1.11 Intellectual Property. “Intellectual Property” shall mean (i) all patents and utility models, (ii) all material trademarks, trade names, service marks and copyrights, (iii) all internet uniform resource locator and domain name registrations, (iv) all applications (whether or not already published) for any of the foregoing, and (v) all trade secrets, proprietary information, databases data, technology and know-how (including all inventions that have not yet been the subject of any patent application or utility model application), in each case relating to the Business and owned and/or used by, or licensed to, any Company in any jurisdiction. Exhibit 9.1.11 sets forth an accurate and complete list of all registered Intellectual Property owned by any of the Companies including, as applicable, the jurisdiction, application, issuance and/or registration number(s) and associated date(s), title and status, thereof.

(i) To the Best Knowledge of Seller, each Company has paid all annuities and renewal fees due in order to maintain the registered Intellectual Property owned by such Company except in all cases where a lapse date was included in Exhibit 9.1.11. To the Best Knowledge of Seller, Exhibit 9.1.11 sets forth an accurate and complete list of annuities and renewal fee due dates for registered Intellectual Property owned by the Companies.

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(ii) Except as disclosed on Exhibit 9.1.11 (ii), no registered Intellectual Property owned by any Company is subject to any court decision restricting or impairing, nor is there any court proceeding or opposition or nullity action pending, that could restrict and/or impair the use, licensing, exercise, practice and/or other exploitation thereof by any of the Companies.

(iii) To the Best Knowledge of Seller, none of the Companies has, except as disclosed on Exhibit 9.1.11 (iii), received after 31 December 2008 and prior to the Signing Date any written notice or claim (a) challenging the ownership of such Company in, or the validity or enforceability of, any of the Intellectual Property owned by Seller, any SEAS Seller or any Company, (b) alleging or asserting that any of the registered Intellectual Property owned by any Company is owned by a third party or is invalid or unenforceable, or (c) alleging or asserting that the conduct of the Business by any Company or the use by any Company of the registered Intellectual Property has infringed any third party intellectual property rights.

(iv) All Intellectual Property that is material to the operation of the Business and had at the completion date of the respective Carve-out Agreement been owned by Seller and/or such of its Affiliates being the asset sellers under the Carve-out Agreements has been transferred or licensed to SEAS KG and/or other Companies. All Intellectual Property, to the extent it was to be transferred under the Carve-out Agreements has been transferred by Seller or Seller’s Affiliates to a Company pursuant to and in accordance with the Carve-out Agreements. All Intellectual Property licenses granted by Seller or Seller’s Affiliates to any Company under the Carve-out Agreements are valid and in full force and effect

9.1.12 No Real Property. No Company owns, co-owns or holds any right in rem in respect of any real property (including land and buildings).

9.1.13 No Litigation. To the Best Knowledge of Seller and with the exception of any Intellectual Property related matter, no Company is as a defending party involved in any court proceedings (including arbitration proceedings) with an amount in dispute (Streitwert) exceeding EUR 750,000.00 (in words: Euro seven hundred fifty thousand) and, to the Best Knowledge of Seller, no such proceedings have been threatened in writing.

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9.1.14 Disclosure. To the Best Knowledge of Seller, Seller has disclosed to Purchaser all relevant information relating to the Companies that would have a material impact on the operation of the Business substantially in the same fashion and manner as currently conducted (“Material Information”). For the avoidance of doubt, Seller does not guarantee whether any assumptions, projections or expectations implied or expressly stated for future periods in any document, meeting or other in formation, in particular in any financial information, are realistic or achievable. The term Material Information shall not include information on Tax or Intellectual Property.

9.1.15 Environmental Issues. The Companies are not involved in any administrative proceeding of any governmental authority that is based on pollutants, contaminants or hazardous substances in or on the soil, in buildings, in the air, in the surface or in the groundwater either at the sites operated by any of the Companies or arising from operations conducted at those sites, pursuant to any applicable law, statute, or regulation. To the Best Knowledge of Seller, no such proceedings have been threatened in writing by any governmental authority.

9.1.16 EDB Grant. To the Best Knowledge of Seller, SEAS Singapore has complied with the terms and conditions specified in the grant approval letters dated 29 December 2003 and attached as Exhibit 9.1.16 by the Economic Development Board (EDB) to SEAS Singapore.

9.2 All Exhibits referred to in Section 9.1 above are collectively referred to as the “Disclosure Schedules”. The Parties agree that

9.2.1 any disclosure in any Disclosure Schedule shall be deemed to be disclosed for each Seller’s Guarantee contained in Section 9.1 above;

9.2.2 the transactions, contracts or agreements specifically provided for, or referred to, in this Agreement shall be deemed disclosed for all purposes hereunder and shall in no event be deemed to cause the incorrectness of any Seller’s Guarantee; and

9.2.3 if any disclosure of events or documents made in the Disclosure Schedules is below any materiality threshold provided for such disclosure requirement, or contains additional information, such disclosure shall not be used to construe the extent of the required disclosure (including any standard of materiality) pursuant to the relevant Seller’s Guarantee.

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9.3 “Best Knowledge” of Seller shall mean the knowledge (positive Kenntnis) of the persons set forth in Exhibit 9.3-1 in relation to the Seller’s Guarantees after having made one reasonable enquiry with the persons set forth in Exhibit 9.3-2 no earlier than five (5) Business Days prior to the Signing Date, or such knowledge the persons set forth in Exhibit 9.3-1 would have had, if such enquiry had been made.

Section 10 – Seller’s Covenants

10.1 Seller shall procure (sicherstellen) that between the Signing Date and the Closing Date none of the following events occur or are agreed without the prior written consent of Purchaser except for those actions specifically provided for in other Sections of this Agreement which shall not constitute a breach of the following covenants:

10.1.1 any payment or declaration of dividend or any other distribution unrelated to services, rental, supply or similar exchange-oriented agreements by any of the Companies to Seller or any Seller’s Affiliate;

10.1.2 the change or the amendment of articles of association of any of the Companies;

10.1.3 the injection or contribution of cash or any other payment to any of the Companies that is unrelated to services, rental or supply or similar exchange-oriented agreements, the increase or decrease of registered capital of any of the Companies, including the creation of authorized capital (genehmigtes Kapital) and contingent capital (bedingtes Kapital);

10.1.4 the issuance of, or authorization to issue, new shares (whether common or preferred shares) or other securities in any of the Companies including without limitation the issuance or creation of convertible bonds, dividend bonds or participation rights, options, warrants, conversion rights, purchase rights, pre-emption rights, stock appreciation rights or phantom stock with regard to equity interests in any Company;

10.1.5 the re-purchase (Erwerb eigener Anteile) or redemption (Einziehung) of shares in any of the Companies;

10.1.6 the adoption of domination, profit and loss transfer or any other corporate agreements in the meaning of Sections 291 and 292 German Stock Corporation Act or similar foreign statutes;

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10.1.7 the merger, split-off, conversion or any other restructuring of any of the Companies under the German Conversion Act or similar foreign statutes;

10.1.8 the dissolution of any of the Companies;

10.1.9 the termination of any Surviving Intra-Group Arrangement, as defined in Section 15.2.1; and

10.1.10 the purchase or acquisition of any real property (including land and buildings) by any of the Companies.

10.2 Furthermore, for the period between the Signing Date and the Closing Date, Seller shall, to the extent legally permissible, use reasonable efforts that the Companies continue to operate the Business substantially consistent with past practice. Except as set forth in other Sections of this Agreement or Exhibit 10.2, for the period between the Signing Date and the Closing Date, Seller shall, to the extent legally permissible, use reasonable efforts that each of the Companies shall not, except with the prior consent of Purchaser (which shall not be unreasonably withheld and shall be deemed to be granted if delayed for more than two (2) Business Days):

10.2.1 make any material capital expenditure (i.e., exceeding an amount of EUR 750,000.00 (in words: Euro seven hundred fifty thousand) or commitment therefor except for measures described in the business plan or due to legally binding obligations entered into in the ordinary course of business that are in existence on the Signing Date;

10.2.2 incur any incremental (zusätzliche) liability for borrowed money in excess of EUR 750,000.00 (in words: Euro seven hundred fifty thousand) in the individual case or to issue any guarantee for obligations or liabilities of any third party (other than a Company), in each case excluding (i) liabilities for borrowed money or guarantees towards any other Company, (ii) liabilities for borrowed money or guarantees described in the business plan or (iii) liabilities being part of the stand-alone treasury concept;

10.2.3 grant any increase in wages, salaries, bonus or other remuneration of any directors or employees other than increases (i) which are provided by collective bargaining agreements (Tarifverträge) or references to such bargaining agreements in the individual employment contracts or (ii) to the extent collective bargaining agreements do not apply (ÜTKreis/Senior Management), which are granted in the ordinary course of business consistent with past practice;

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10.2.4 cancel or waive any claims or rights with an individual market value in excess of EUR 750,000.00 (in words: Euro seven hundred fifty thousand) or settle (vergleichen) any pending court or administrative proceedings, including arbitration proceedings, with a litigation value (Streitwert) in excess of EUR 750,000.00 (in words: Euro seven hundred fifty thousand). The parties agree that the prior consent of Purchaser shall not be required for a settlement of claims of BSW Gesellschaft für Produktion und Vertrieb mbH in Insolvent, provided that such settlement does not exceed the accounting provisions in place for such case; or

10.2.5 agree, on a legal obligation (rechtliche Verpflichtung eingehen), to do any of the foregoing.

10.3 Purchaser hereby acknowledges and agrees that nothing in this Section 10 shall limit or restrict Seller, any of Seller’s Affiliates or any of the Companies to take any and all actions contemplated in other Sections of this Agreement or reasonably necessary and appropriate in connection with, or relating to, the measures required to separate the Companies from the Seller’s group as described in Exhibit 10.3 and inter alia set forth in Section 15.

10.4 Seller shall notify Purchaser of any circumstance that renders any representation of Seller’s Guarantees inaccurate (or would render any such representation inaccurate, if such representation had also been given as of the Closing Date). The notification shall be given as soon as possible but no later than ten (10) Business Days after the persons set forth in Exhibit 9.3-1 have become aware of such information. Seller shall, and shall procure (sicherstellen) that Seller’s Affiliates shall, make reasonable efforts to prevent that circumstances as described in the first sentence of this Section 10.4 occur. For the avoidance of doubt, Purchaser’s claims for a Breach of Seller’s Guarantees shall not be excluded due to Purchaser becoming aware of any event or development notified by Seller pursuant to this Section 10.4.

10.5 In light of Section 16(1) German Limited Liability Company Act, Seller undertakes to reasonably cooperate with the respective Designated Transferee during the period as from Closing until the inclusion of the restated shareholders’ list of SEAS GmbH in the electronic file of the competent commercial register to enable the respective Designated Transferee to exercise its shareholder rights in SEAS GmbH as from the Closing.

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10.6 During the time until and including the Closing Date, Seller shall procure that SEAS Singapore complies with the terms and conditions specified in any grant approval letters by the Economic Development Board (EDB) Singapore to SEAS Singapore. In particular, SEAS Singapore shall not shift the production of the D-series machines from Singapore to another country.

10.7 The covenants of Seller contained in this Section 10 shall herein be referred to as “Seller’s Covenants”.

Section 11 – Remedies

11.1 In the event of any breach or non-fulfillment by Seller of any of Seller’s Guarantees or Seller’s Covenants (“Breach”) contained in this Agreement (herein “Purchaser Claim”), Seller shall have the right to cure such Breach within a reasonable time period. In case Seller is not willing or able to cure such Breach within the foregoing period, Seller shall be liable for putting Purchaser, or, at the election of Purchaser, the respective Company into the same position that it would have been in if the Seller’s Guarantees or Seller’s Covenants had been correct or had not been breached (Naturalrestitution). For purposes of determining the liability of Seller, the rules of Sections 249 et seq. German Civil Code shall apply subject to the following:

11.1.1 Seller shall only be liable for any lost profits (entgangener Gewinn) (a) to the extent such lost profits are not realized through a sale of shares in any of the Companies, and (b) limited to the amount by which the combined or consolidated EBITDA (as determined in accordance with the methodology set forth in Exhibit 11.1.1) of the group of Companies for the financial year during which the damage materializes falls short of EUR 0.00 (in words: Euro zero); and

11.1.2 Seller shall not be liable for (i) any potential or actual reduction (Minderung) in value of the Companies beyond the actual damage incurred and any loss of goodwill or reputational damage, (ii) any consequential damages (Folgeschäden) to the extent not attributable to Seller under the German Civil Code, (iii) any frustrated expenses (vergebliche Aufwendungen) to the extent not collectable as damages under the German Civil Code, and (iv) any internal costs and expenses (i.e., administrative costs for the calculation of damages and the assertion of a Purchaser’s Claim) incurred by the Companies.

All relevant damages or losses shall be calculated on a Euro-for-Euro basis without any double-counting (herein “Losses”).

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11.2 If and to the extent compensation for damages will be paid to any of the Companies, such payments shall, to the extent legally permissible, be construed and deemed as contributions (Einlagen) made by the respective Designated Transferee into the respective Company and shall be treated as a reduction of the Purchase Price as between the Parties.

11.3 In the event that after the Closing Date, Purchaser, any of the Companies or any of the Designated Transferees becomes aware of any circumstances that may give rise to a Purchaser Claim, Purchaser will within a period of six (6) weeks give Seller written notice of such circumstances and the alleged breach or non-fulfillment of the respective Seller’s Guarantee or Seller’s Covenants with such notice stating the nature thereof and the amount involved to the extent that such amount has been determined at the time when such notice is given. Without prejudice to the validity of the alleged Purchaser Claim or alleged claim in question, to the extent legally permissible Purchaser shall allow, and shall cause the Companies to allow, Seller and its professional advisors to investigate the matter and whether and to what extent any amount is payable in respect of such Purchaser Claim and, for such purpose, Purchaser shall and shall procure (sicherstellen) that the Designated Transferees shall give and shall cause the Companies to give such information and assistance, including access (to the extent reasonable for such purpose and within normal business hours) to the Companies’ premises, personnel and advisors and including the right to examine and copy or photograph any assets, accounts, documents and records. Seller or its advisers shall not be entitled to access any information which is unrelated to the Purchaser Claim. In case any business secrets are involved, Seller herewith undertakes to treat the respective information confidential as set forth in Section 17.2.

11.4 Seller shall not be liable for, and Purchaser shall not be entitled to bring, any Purchaser Claim if and to the extent that:

11.4.1 the matter to which the Purchaser Claim relates has been taken into account in (i) the Combined Financial Statements of the Companies as of, and for the fiscal year ending on, 30 September 2009, by way of a provision (Rückstellung) reasonably associated with the matter in question, liability (Verbindlichkeit), exceptional depreciation (außerplanmäßige Abschreibung) or depreciation to reflect lower market values (Abschreibung auf den niedrigeren beizulegenden Wert) or (ii) the determination of the Purchase Price in accordance with Section 4.1;

11.4.2 the amount of the Purchaser Claim is recovered from a third party or constitutes a valid recovery claim under an insurance policy in force on the Closing Date;

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11.4.3 the payment or settlement of any item giving rise to a Purchaser Claim results in a tax saving to the Companies or the Purchaser (after taking into account the tax effect of the Purchaser Claim);

11.4.4 Purchaser, a Designated Transferee or any of the Companies has participated in causing (mitverursacht) such Purchaser Claim within the meaning of Section 254 (1) German Civil Code or has failed to comply with its duty to mitigate damages pursuant to Section 254 (2) German Civil Code;

11.4.5 the matter to which the Purchaser Claim relates was known by Purchaser, a Designated Transferee or their representatives and professional advisors as of the Signing Date; without limiting the generality of the foregoing, Purchaser and any and all Designated Transferees shall be deemed to have knowledge of all matters disclosed in:

(i) any information received by Purchaser or Designated Transferees in text form (Textform) within the meaning of Section 126b German Civil Code in connection with the Transaction, in particular (i) any presentation materials delivered to the representatives of Purchaser, a Designated Transferee or their representatives and professional advisors at any management presentation or expert meeting and (ii) any answers given by Seller or its representatives and professional advisors to any questions raised by Purchaser, the Designated Transferees, representatives, officers, employees or professional advisors;

(ii) the documents and information contained in the data room, provided that the disclosure of information relevant for a Breach is reasonably apparent (erkennbar) and fairly disclosed in the data room (e.g., consistent with the systematic approach of the data room); three electronic copies of the data room will be set aside and one will be preserved by the acting notary for a period of five (5) years after the Closing Date in accordance with a joint instruction letter attached hereto as Exhibit 11.4.5 (ii); or

(iii) the Disclosure Schedules or elsewhere in this Agreement;

11.4.6 the Purchaser Claim results from, or is increased by, the passing of, or any change in, after the Closing Date, any law, statute, ordinance, rule, regulation, common law rule or administrative practice of any government, governmental department, agency or regulatory body; or

11.4.7 the procedures set forth in Section 11.3 Sentence 1 above or Section 11.7 below were not observed by Purchaser, a Designated Transferee or any of the Companies, unless Purchaser can show that such non-compliance with the provisions of Section 11.7 did not cause or aggravate the damage to which the Purchaser Claim relates.

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11.5 When calculating the amount of the liability of Seller under this Agreement, any advantages in connection with the relevant matter shall be taken into account in accordance with the rules of the German civil law (Vorteilsausgleich) and Seller shall not be liable under this Agreement for any losses suffered by Purchaser, a Designated Transferee or a Company to the extent of any corresponding savings by, or net benefit to, the Purchaser arising therefrom to the extent the German civil law allows for a reduction of a damage claim by such savings or benefits.

11.6 To the extent that Seller compensates Purchaser under any Purchaser Claim, all underlying claims Purchaser or any Company may have against any third party in connection with the event underlying such Purchaser Claim shall be assigned to Seller. In the event that an assignment of such claims is not possible or permissible for whatever reason, Purchaser shall, upon Seller’s request, put Seller economically in a position as if such an assignment had been effected.

11.7 If (i) an order of any governmental authority (Behörde) is issued or threatened to be issued against Purchaser a Designated Transferee or any of the Companies or (ii) any of the Companies or Purchaser or any of the Designated Transferees is sued or threatened to be sued by a third party, including without limitation any governmental authority (herein “Third Party Claim”), in each case in a manner which may give rise to a Purchaser Claim, Purchaser shall give Seller notice of such Third Party Claim without undue delay and the following principles shall apply:

11.7.1 Purchaser shall, to the extent legally permissible, procure (sicherstellen) that Seller shall without undue delay be provided with the materials and information required to assess the Third Party Claim and shall be given reasonable opportunity to comment or discuss with Purchaser any measures proposed to be taken or to be omitted in connection with such Third Party Claim. In particular, Seller shall be given an opportunity to comment on, participate in, and review any reports and all relevant audits or other measures and shall receive copies of all relevant orders (Bescheide) of any authority without undue delay (unverzüglich), but, if possible, at least ten (10) days prior to the expiry of any relevant objection period (Einspruchs- oder Widerspruchsfrist).

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11.7.2 No admission of liability shall be made by or on behalf of Purchaser or the Companies and the Third Party Claim shall not be compromised, disposed of or settled without the prior written consent of Seller.

11.7.3 Seller agrees that all information obtained under this Section 11.7 shall be treated as Confidential Information (as defined in Section 17.2 below) pursuant to Section 17.2 below.

11.7.4 To the extent that Seller is in breach of a Seller’s Guarantee or a Seller’s Covenant, all costs and expenses incurred by Seller in defending such Third Party Claim shall be borne by Seller; if and to the extent it turns out that Seller was not in breach, any costs and expenses reasonably incurred by Seller in connection with the defense shall be borne by Purchaser.

Section 12.11 below operates as lex specialis.

11.8 Purchaser hereby acknowledges that Purchaser and its respective representatives and professional advisors were (i) permitted to conduct a due diligence and (ii) granted access to the information reasonably requested by Purchaser or its respective representatives and professional advisors. Based on such due diligence Purchaser confirms that Purchaser is on the Signing Date not aware of any facts or circumstances that could give rise to a Purchaser Claim.

Section 12 – Tax Indemnity

12.1 “Tax” or “Taxes” shall mean:

12.1.1 with respect to Germany, any taxes within the meaning of Section 3 German Tax Code (Abgabenordnung – AO) (Steuern und steuerliche Nebenleistungen) as well as social security contributions and similar duties;

12.1.2 with respect to other jurisdictions, any federal, state, local income, gross receipts, license, payroll, employment, excise, severance, stamp, environmental (includes taxes under IRC section 59A), customs duties, capital stock, franchise, profits, withholding, social security (or similar), real property, personal property, sales, use, transfer, registration, value added, alternative, or add-on minimum, or other tax of any kind whatsoever and such other charges, fees, duties, or assessments that are imposed by a governmental authority (this means the government of any country or state, province or political subdivision thereof, any city or any entity, body or authority, including social security agencies), including without limitations, contributions to social security agencies;

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12.1.3 any penalties, fines, interests on any of the items under Sections 12.1.1 and 12.1.2 above; and

12.1.4 any of the aforementioned listed payments imposed on Purchaser or a Company as a secondary liability (Haftungsschuld),

but excluding, in any case, for the avoidance of doubt, deferred taxes and/or notional tax losses (such as reductions of loss carry forwards or future depreciation).

12.2 From and after the Closing Date, Seller hereby undertakes to pay to Purchaser, or at the election of Purchaser to the respective Companies or respective Designated Transferees, such amount as is necessary to indemnify the Companies from and against

(i) any and all Taxes imposed on the Companies relating to (x) any taxable period (Veranlagungszeitraum) ending on or before the Closing Date, (y) with respect to taxable periods beginning before and ending after the Closing Date, that portion of such taxable period ending on the Closing Date (such periods under (x) and (y) above together herein “Seller Period”),

(ii) any German trade tax (Gewerbesteuer) imposed on SEAS KG as a result of the sale and transfer of the SEAS KG Limited Partnership Interest to Purchaser or a Designated Transferee, as the case may be, under this Agreement,

(iii) any Taxes that are imposed on SEAS KG, SEAS Austria KG, SEAS USA, Purchaser or on a Designated Transferee, as the case may be, for taxable periods ending after the Closing Date due to any legally required reduction of the value at which the pension accruals (Pensionsrückstellungen) are recorded immediately after the sale and transfer of SEAS KG Limited Partnership Interest, the SEAS Austria KG Limited Partnership Interest and/or the SEAS USA Interest to the value pursuant to Section 6a of the German Income Tax Act (Einkommensteuergesetz, EStG) or the relevant tax value under the laws of Austria or the United States,

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(iv) any Step Down Taxes (as defined hereinafter), “Step Down Taxes” shall mean the difference between (x) any Taxes imposed on SEAS KG, SEAS Austria KG, SEAS USA, Purchaser or a Designated Transferee (or any legal successor thereof) relating to the taxable periods up to seven (7) years from Closing and (y) the Taxes which would have been imposed on any of these subjects within this same period if Purchaser or a Designated Transferee had paid for the SEAS KG Limited Partnership Interest, the SEAS Austria KG Limited Partnership Interest and/or the SEAS USA Interest a purchase price in an amount not triggering a step down of the tax book values (steuerliche Buchwerte) of SEAS KG’s, SEAS Austria KG’s or SEAS USA’s assets as at Closing and a step up or recognition of liabilities or accruals as at Closing had not occurred and the payment of the CTA Pension Amount (as defined in Section 4.2 of Exhibit 15.5 to this Agreement) or the Seller Fund (if applicable, after reduction as defined in Section 6.2 of this Agreement) by Seller to SEAS KG had been treated for tax purposes as a contribution (Einlage) by Seller prior to or at Closing,

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(collectively herein “Tax Indemnification Claim”). If a payment under this Section 12.2 relates to Taxes imposed on SEAS KG, Seller shall make the payment to SEAS KG on behalf and on account of Purchaser. Purchaser shall not be entitled to bring any Tax Indemnification Claim if and to the extent

12.2.1 Taxes imposed were paid by the Companies prior to the Closing Date;

12.2.2 Purchaser, any of the Companies or any of the Designated Transferees has received or may be expected to receive any benefits in respect of Taxes relating to taxable periods commencing after the Closing Date, including (without limitation) benefits resulting from the lengthening of any amortization or depreciation periods, higher depreciation allowances, a step-up in the Tax basis of current or depreciable fixed assets, the non-recognition of liabilities or provisions (Phasenverschiebung) (herein collectively “Tax Benefits”) as the result of an adjustment or payment giving rise to a Tax Indemnification Claim. The amount of such Tax Benefit shall be determined on the basis of (a) the Tax rate applicable in the year in which the Tax Benefit arises in the relevant jurisdiction, (b) an equal distribution of the amount of the increase of the Tax basis that has not yet been reversed until the Closing Date over twenty-four (24) years in the case of pension provisions, five (5) years in the case of fixed assets and two (2) years in the case of current assets and other liabilities, (c) the likelihood that such Tax Benefit will actually result in a decrease of Taxes (it being agreed that the criteria for recognizing a deferred tax asset for any increase of loss carryforwards pursuant to the International Accounting Standard IAS 12 shall be relevant to determine whether the Tax Benefits may be taken into account) (d) an applied discount rate of five (5) percent per annum. For the avoidance of doubt, the Parties stipulate that (i) Tax Benefits shall not reduce a Tax Indemnification Claim that relates to any Step Down Taxes and (ii) Tax Benefits do not arise to the extent the Transaction constitutes a sale of assets (as opposed to shares) under the applicable tax law;

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12.2.3 the amount of the Taxes is recovered or could have been recovered from a third party after the Closing Date;

12.2.4 the amount of the Taxes results from (i) any voluntary change in the accounting and taxation principles or practices of Purchaser, any of the Companies or any of Designated Transferees (including methods of submitting Tax returns) introduced after the Closing Date (but with retroactive effect to periods ending on or before the Closing Date), or (ii) any voluntary action (including the change in the exercise of any Tax election right, the termination of any Tax consolidation scheme, the approval or implementation of any reorganization measure or the sale of any asset) taken by Purchaser, any of the Companies or any of Designated Transferees after the Closing Date but with retroactive effect to periods ending on or before the Closing Date;

12.2.5 each Individual Tax Indemnification Claim, (as defined hereinafter) does not exceed EUR 10,000.00 (in words: Euro ten thousand), it being understood that Purchaser is entitled to bring the Individual Tax Indemnification Claim in the full amount if it exceeds this threshold. “Individual Tax Indemnification Claim” shall mean a claim for a specific kind of Tax (Steuerart) for a specific taxable period (Veranlagungszeitraum), it being understood that a surcharge on Taxes shall not constitute a specific kind of Tax and a specific kind of Tax does not give rise to several Individual Tax Indemnification Claims merely because it is imposed by several public bodies as a result of an apportionment (Zerlegung);

12.2.6 the aggregate Tax Indemnification Claim (composed of Individual Tax Indemnification Claims which exceed the threshold in Section 12.2.5 above, but excluding claims based on Sections 12.2 (iii) and (iv)) does not exceed EUR 100,000.00 (in words: Euro one hundred thousand), it being understood that Purchaser is entitled to bring the aggregate Tax Indemnification Claim in the full amount if it exceeds this threshold;

12.2.7 Purchaser violates any of the obligations set forth under Sections 12.9 through 12.11 and such violation has a material adverse effect on the ability of Seller to defend against such Taxes; Purchaser bears the burden of proof that such violation did not have such material adverse effect, if Purchaser or any of the Companies, as the case may be, upon written request of Seller, fail to respond on time after having been set reasonable response times by Seller with the information and, as the case may be, documentation requested by Seller or with a reasonable explanation why the request could not timely be addressed;

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12.2.8 the Tax Indemnification Claim relates to Taxes which are to be borne by Purchaser pursuant to this Agreement;

12.2.9 the Tax Indemnification Claim is based

(i) on Section 12.2 (iii) on Pensionsrückstellungen, or

(ii) on Section 12.2 (iv) on Step Down Taxes,

and the aggregate amount of Tax Indemnification Claims under (i) and (ii) exceeds an amount of EUR 22,000,000.00 (in words: Euro twenty-two million); or

12.2.10 the Tax Indemnification Claim relates to Taxes that were included in the Net Working Capital and have reduced the Purchase Price paid by the Purchaser pursuant to Section 4 (it being agreed that vice versa claims for refunds of Taxes included in the Net Working Capital that have increased the Purchase Price payable by the Purchaser shall lead to a Tax Indemnification Claim against Seller when such claims cannot be realized).

12.3 Any Tax Indemnification Claim shall become due and payable on the later of (i) twenty (20) Business Days following written notice by Purchaser (which notice shall include a copy of the relevant Tax assessment; in case of Section 12.2 (iv), the notice shall include all documentation and calculations necessary to understand the Seller’s calculation of the Step Down Taxes, separated into all relevant Taxes and tax years, it being understood that Tax Indemnification Claims under Section 12.2 (iv) can be brought separately for each year of the seven year period) that payment to the competent Tax authority of an amount of Taxes which result in a Tax Indemnification Claim is payable, and (ii) two (2) Business Days before such Taxes are due to the competent Tax authority. In case the assessment by a competent Tax authority of any Taxes which would allow Purchaser to bring a Tax Indemnification Claim is contested and

12.3.1 if and to the extent the competent Tax Authority has granted relief from paying the assessed Taxes, payment of such Taxes to the competent Tax authority shall be considered due no earlier than the date a final and non-appealable determination to such effect is rendered by the competent Tax authority or a court of competent jurisdiction; or

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12.3.2 if and to the extent the competent Tax Authority has not granted relief (or revokes previously granted relief) from paying the assessed Taxes, Seller shall make an advance indemnification payment to Purchaser in accordance with Section 12.3 above (herein “Advance Tax Indemnification Payment”) and, upon a final and non-appealable determination with respect to such Taxes being rendered by the competent Tax authority or a court of competent jurisdiction,

(i) if the final amount of the Tax Indemnification Claim is lower than the amount of the Advance Tax Indemnification Payment, the balance of the amount of the Advance Tax Indemnification Payment, including all interest received thereon, and the final amount of the Tax Indemnification Claim shall be reimbursed by Purchaser within five (5) Business Days of such reimbursement; or

(ii) if the final amount of the Tax Indemnification Claim is higher than the amount of the Advance Tax Indemnification Payment, the balance of the final amount of the Tax Indemnification Claim and the amount of the Advance Tax Indemnification Payment shall be paid by Seller in accordance with Section 12.3 above.

12.4 Purchaser shall pay to Seller any refunds of Taxes relating to the Business and received by Purchaser, any of the Companies or any of Designated Transferees by receipt of cash payment, set-off, deduction or otherwise, which relate to any Seller Periods (herein “Tax Refunds”), except where the respective claims for Tax Refunds (i) are shown in the Effective Date Accounts or (ii) have been taken into account when calculating the Purchase Price. Purchaser shall notify Seller in writing and without undue delay of any relevant decision by the Tax authority resulting in a Tax Refund or about any Tax Refund actually received by Purchaser or a Company. Any amount payable to Seller pursuant to this Section 12.4 shall be due and payable within five (5) Business Days after receipt of the Tax Refund.

12.4.1 Seller shall not be entitled to claim any Tax Refunds if and to the extent Purchaser, any of the Companies or any of the Designated Transferees suffer any disadvantage in respect of Taxes relating to taxable periods commencing after the Closing Date, including (without limitation) disadvantages resulting from the shortening of any amortization or depreciation periods, lower depreciation allowances, a step-down in the Tax basis of current or depreciable fixed assets or due to the non-recognition of business expenses (herein collectively “Tax Disadvantages”) as the result of an adjustment or payment giving rise to claim for a Tax Refund. The amount of such Tax Disadvantage shall be determined in accordance with the principles set out in Section 12.2.2 sentence 2;

12.4.2 Sections 12.2.5 and 12.2.6 shall apply mutatis mutandi to the claim under this Section 12.4.

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12.5 If and to the extent the Tax basis of the Companies for periods ending on or before the Closing Date is increased after the Closing Date by the Tax authorities and such increase of the Tax basis does not result in an actual Tax payment of the Companies due to the fact (i) that Taxes on the Tax basis of the relevant Company are assessed directly against Seller or a Seller’s Affiliate due to the existence of a fiscal unity (Organschaft) or similar tax consolidation scheme or (ii) the increase of the Tax basis of the Company results in a reduction of a loss carry forward of Seller or a Seller’s Affiliate or a reduction of a loss carry forward attributed to Seller or a Seller’s Affiliate due to the existence of a fiscal unity or similar tax consolidation scheme, Purchaser shall compensate and indemnify Seller by way of payment of an amount calculated in accordance with the principles set out in Section 12.2.1 above for any Tax Benefits of Purchaser, Designated Transferees or the Companies in periods beginning after the Closing Date. Sections 12.2.5 and 12.2.6 shall apply mutatis mutandis.

12.6 If and to the extent the Tax basis of the Companies for periods ending on or before the Closing Date is decreased after the Closing Date by the Tax authorities and such decrease of the Tax basis does not result in an actual refund of Taxes to the Companies due to the fact (i) that Taxes on the Tax basis of the relevant Company are assessed directly against Seller or a Seller’s Affiliate due to the existence of a fiscal unity (Organschaft) or similar tax consolidation scheme or (ii) the decrease of the Tax basis of the Company results in an increase of a loss carry forward of Seller or a Seller’s Affiliate or an increase of a loss carry forward attributed to Seller or a Seller’s Affiliate due the existence of a fiscal unity or similar tax consolidation scheme, Seller shall compensate and indemnify Purchaser by way of payment of an amount calculated in accordance with the principles set out in Section 12.4.1 above for any Tax Disadvantages of Purchaser, Designated Transferees or the Companies in periods beginning after the Closing Date. Sections 12.2.5 and 12.2.6 shall apply mutatis mutandi.

12.7 Purchaser acknowledges that it shall be responsible for, and hereby undertakes to indemnify Seller and Seller’s Affiliates from and against any Taxes-owed by the Companies for which Purchaser is not being indemnified pursuant to Section 12.2 above. Without limiting the generality of the foregoing, Purchaser shall indemnify and hold harmless Seller and Seller’s Affiliates from and against any Taxes.

12.7.1 relating to periods after the Closing Date which are payable by Seller or any of Seller’s Affiliates for the account of the Companies or the Business, the calculation of such Taxes to be made in accordance with the applicable provisions of this Agreement, in particular Section 12.8 below;

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12.7.2 which are payable by Seller or any of Seller’s Affiliates and result from (i) any voluntary change in the accounting and taxation principles or practices of the Companies (including methods of submitting Tax returns) introduced after the Closing Date but with retroactive effect to periods ending on or before the Closing Date, or (ii) any voluntary action taken by Purchaser, any Company or any Designated Transferee after the Closing Date but with retroactive effect to periods ending on or before the Closing Date, including (x) the change in the exercise of any Tax election right, (y) the termination of any Tax consolidation scheme, or (z) the voluntary approval or implementation of any reorganization measure. For the avoidance of doubt, the Parties stipulate that Purchaser, any Company of any Designated Transferee shall not (i) be bound by the methodology applied by Seller for the step down of assets in the Carve-out to allocate the purchase price for this Transaction or (ii) be prevented from applying the legally compliant transfer pricing policy of Purchaser after the Closing Date.

12.8 With respect to Taxes that are payable for a taxable period beginning before and ending after the Closing Date,

12.8.1 in the case of any Tax based upon, or measured by, income, sales, transfers, gross receipts, wages, capital expenditures, expenses or any similar Tax base (e.g., corporate income tax (Körperschaftsteuer) or trade tax), Seller’s liability for Taxes shall be limited to the amount that would be payable if the taxable period ended on the Closing Date; and

12.8.2 in the case of any other Tax, Seller’s liability for Taxes shall be limited to the amount of Taxes for the entire taxable period multiplied by a fraction the numerator of which is the number of days of the portion of the taxable period ending on the Closing Date and the denominator of which is the number of days of the entire taxable period.

Any amounts attributable to business or accounting transactions (Geschäftsvorfälle) on or prior to the Closing Date shall be allocated to the portion of the taxable period ending on the Closing Date, and any amounts attributable to business or accounting transactions after the Closing Date shall be allocated to the portion of the taxable period beginning after the Closing Date. Any credit or refund resulting from an overpayment of Taxes shall be allocated pro rata based on the method described in this Section 12.8.

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12.9 With respect to the filing of Tax returns, the following shall apply:

12.9.1 After the Closing Date, Purchaser shall file, and shall procure that the Companies file, all Tax returns relating to any Seller Period in due time as set forth in the applicable Tax laws and subject to the provisions in this Section 12. As far as legally permissible, Purchaser shall procure that no Tax returns of any of the Companies relating to any Seller Period (collectively herein “Seller Period Tax Returns”), will be filed, amended or changed by Purchaser or any of the Companies without the prior written consultation of Seller, it being understood that the terms of the Carve-out Agreements relating to Tax matters shall remain unaffected (and it being further understood that Purchaser shall use best efforts to allow sufficient time for the consultation process). Upon request of Seller, Seller shall be entitled to prepare, or have prepared by professional advisors of its choice and at its sole expense, any Seller Period Tax Returns with the consent of Purchaser, which shall not be unreasonably withheld. In respect of the circumstances referred to in Section 12.2 (iii), Purchaser shall procure that SEAS KG will not revalue the transferred pension accruals to the value pursuant to Section 6a German Income Tax Act without prior written consent of Seller, whereby such consent shall not unreasonably be withheld (it being understood that SEAS KG shall not be obligated to value the pension accruals for tax purposes at a higher value than the value pursuant to Section 6a German Income Tax Act in the first place).

12.9.2 In respect of such Companies which are subject to corporate income tax in the United States of America, Tax returns and any other declarations to be prepared for fiscal years (Geschäftsjahre) or Tax periods or portions thereof ending on or before the Closing Date shall be prepared by Seller or the relevant Seller’s Affiliate in accordance with past practice and shall be submitted to the Purchaser for review 20 days in advance of their due date. Seller shall finalize such returns reflecting Purchaser’s reasonable comments (provided such comments are provided at least 10 days in advance of the due date).

12.10 Without prejudice to Section 12.9 above, the Parties agree to fully cooperate with each other in connection with any Tax matter relating to any Seller Period. Seller shall procure, that any transfer pricing documentation legally required for any Company in respect of the Seller Period will be produced timely at Seller’s expense; Purchaser shall procure, that any relevant Company will cooperate with Seller in order to finalize such legally required transfer pricing documentation. Purchaser or the relevant Company shall notify Seller in writing, supported by relevant copies, as the case may be, without undue delay of any material points communicated by any Tax authority and shall ensure that no declarations (whether by giving official or written comments, statements or otherwise) be made to the Tax authorities or courts for purposes of Tax matters of the Companies

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without the prior written consultation of Seller (it being understood that Purchaser shall use best efforts to allow sufficient time for the consultation process). Such cooperation shall include providing or making available of all relevant books, records and documentation relating to any Seller Period and the reasonable assistance of officers and employees. The Parties agree to retain, until the expiration of any applicable statute of limitation, all books, records and documentation relating to the Companies or the Business that may be relevant in connection with any audit or investigation for which Seller may be responsible hereunder and to provide access to electronic data as required by applicable laws.

12.11 Purchaser shall procure that Seller is informed of all Tax assessments and announcements of Tax audits, which may give rise to a Tax Indemnification Claim or Tax Refunds. The Parties agree on the following:

12.11.1 Purchaser shall, and shall procure that the Companies will, forward to Seller without undue delay copies of any correspondence of and with the Tax authorities relating to a potential or alleged Tax Indemnification Claim. Each notification shall be in writing and copies of any documents related thereto and not yet known to Seller shall be attached to such correspondence. Purchaser shall (i) grant, and shall ensure that the relevant Company grants, Seller and Seller’s advisors the right to participate in meetings, discussions and correspondence with the Tax authorities, including in the case of Tax audits the right to attend any formal meetings with the Tax auditor (the final meeting pursuant to Section 201 German Fiscal Code or comparable foreign provisions), (ii) request, and shall ensure that each relevant Company requests, that the relevant Tax auditor provides questions in writing and that such questions be forwarded without undue delay to Seller for Seller’s evaluation and comments, and (iii) duly incorporate, and shall ensure that each relevant Company incorporates in its statements to the Tax authorities any comments Seller may have.

12.11.2 Purchaser shall not, and shall ensure that Companies will not, (i) settle, concede or give their consent to the findings of any and all Tax audits relating to any Seller Period and (ii) make an admission of liability, compromise or settlement of a Third Party Claim by Tax or other governmental authorities without the prior written consent of Seller, unless Purchaser waives its claims under this Section 12 with respect to the findings or Third Party Claims in question.

12.11.3 Purchaser shall procure that, upon the request of Seller and at Seller’s expense, objections are filed and legal proceedings are instituted and conducted against any Tax assessment notices, orders, audits, decrees or judgments in accordance with Seller’s directions. Seller may retain

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counsel of its own choice and at its own expense. Purchaser shall procure that Seller may direct (if Purchaser elects to empower counsel selected by Seller to represent the relevant Company, through such counsel) any reasonable actions including legal remedies to be taken with respect to any Tax assessment notices, audit, claim for refund and administrative or judicial proceeding involving any asserted liability with respect to any Seller Period, or any refunds, credits or other benefits to which Seller or any of Seller’s Affiliates may be entitled pursuant to this Section 12 (herein collectively “Contest”).

12.11.4 If Seller elects to direct a Contest, then (i) Seller shall within fifteen (15) Business Days after having been notified by Purchaser of a Tax Indemnification Claim notify Purchaser of its intent to do so, and (ii) Purchaser shall cooperate and follow Seller’s instructions and shall cause the Companies or their respective successors to cooperate and follow Seller’s instructions in each phase of such Contest, insofar as the Contest involves an asserted Tax liability relating to any Seller Period, or any refunds, credits or other benefits to which Seller or any of Seller’s Affiliates may be entitled pursuant to this Section 12.

12.12 Section 11.2 above shall apply mutatis mutandis.

Section 13 – Expiration and Limitations of Claims

13.1 All claims of Purchaser arising under this Agreement shall be time-barred eighteen (18) months after the Closing Date, but in any event not earlier than on 1 June 2012, except for

13.1.1 all claims of Purchaser arising (i) from a breach of the Seller’s Guarantees contained in Section 9.1.2 (Ownership of the Shares) in respect of defects of title to the Shares, or (ii) in relation to specific performance claims (Erfüllungsansprüche), which shall be time-barred on the fifth (5^th) anniversary of the Closing Date;

13.1.2 all Tax Indemnification Claims which shall be time-barred for each claim four (4) months after the date of the final, non-appealable assessment concerning the respective Tax, but not earlier than eighteen (18) months after the Closing Date; and

13.1.3 all claims of Purchaser arising as a result of willful or intentional breaches of Seller’s obligations under this Agreement which shall be time-barred in accordance with the statutory rules in Sections 195, 199 German Civil Code,

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(herein collectively “Time Limitations”). “Exempted Claims” shall mean any (i) claims referred to in Section 13.1.1 above, (ii) Tax Indemnification Claims, and (iii) claims referred to in Section 13.1.3 above.

13.2 Section 203 German Civil Code shall not apply, unless the Parties agree in writing that the expiry period shall be tolled (gehemmt) on the basis of pending settlement negotiations.

13.3 In the event of a breach relating to Seller’s Guarantees, no liability shall attach to Seller under, or in connection with, this Agreement if and to the extent the individual claim is less than EUR 50,000.00 (in words: Euro fifty thousand) (herein “De Minimis Claims”) and until the aggregate amount of claims (excluding any De Minimis Claims) exceeds an amount of EUR 500,000.00 (in words: Euro five hundred thousand) (Freigrenze) (herein “Basket”). If the aggregate amount of claims under this Agreement (excluding any De Minimis Claims and Exempted Claims) exceeds the Basket, Purchaser may claim such aggregate amount subject to the other provisions of this Section 13. This Section 13.3 shall not apply to any Exempted Claims.

13.4 The aggregate liability of Seller under this Agreement for a breach of Seller’s Guarantees shall not exceed EUR 10,000,000.00 (in words: Euro ten million) (herein “Liability Cap for Seller’s Guarantees”). The aggregate liability of Seller under this Agreement for a breach of Seller’s Covenants shall not exceed EUR 20,000,000.00 (in words: Euro twenty million). This Section 13.4 shall not apply to any Exempted Claims and any Purchaser’s claim based on a breach of Seller’s Guarantee contained in Section 9.1.4 (Bankruptcy or Judicial Composition Proceedings), provided, however, that Seller’s overall liability under this Agreement, except for claims of Purchaser arising as a result of willful or intentional breaches of Seller’s obligations under this Agreement, shall in no event exceed the amount of EUR 40,000,000.00 (in words: Euro forty million) plus the amount received by SEAS KG from Purchaser under the Letter of Support (as defined in Section 16.2) and not repaid by SEAS KG to Purchaser in order to reincrease Purchaser’s commitment under the Letter of Support.

13.5 The Parties are in agreement that (i) the remedies that Purchaser may have against Seller for a Breach are solely governed by this Agreement, (ii) the remedies in case of a Breach provided for by this Agreement shall be the exclusive remedies available to Purchaser, and (iii) apart from such remedies in case of a

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Breach, (w) any right of Purchaser to withdraw (zurücktreten) from this Agreement or to require the winding up of the Transaction (e.g., by way of großer Schadenersatz or Schadenersatz statt der Leistung), (x) any claims for breach of pre-contractual obligations (culpa in contrahendo), including claims arising under Sections 241 (2), 311 (2) and (3) German Civil Code, or ancillary obligations (Nebenpflichten), including claims arising under Section 280 German Civil Code, (y) any claims based on frustration of contract pursuant to Section 313 German Civil Code (Störung der Geschäftsgrundlage), (z) all remedies of Purchaser for defects of the purchase object under Sections 437 through 441 German Civil Code are hereby expressly excluded and waived (verzichtet) by Purchaser. Claims based on willful deceit (arglistige Täuschung) or other intentional behavior (Vor-satz) of Seller shall remain unaffected by this Section 13.5. The provisions in this Section 13.5 shall be for the benefit of Seller and each of Seller’s Affiliates (echter Vertrag zugunsten Dritter). No remedies under or in connection with this Agreement or the Transaction shall be available to the Companies or the Designated Transferees.

Section 14 – Purchaser’s Covenants

14.1 Other than as permitted by (i) the existing Trademark License Agreement dated 18 December 2008, as amended, and (ii) the Trademark License Agreement to be entered into by and between Seller and SEAS KG on the Closing Date, Purchaser shall, and shall procure (sicherstellen) that its Affiliates and all of the Companies will, refrain from using, and, if used prior to Closing, cease to use and remove, the designation “Siemens”, “SIPLACE”, “SISCAN”, “Si”, any other abbreviation of the designation “Siemens” and/or any similar reference to the designation “Siemens” (collectively herein “Siemens Designation”) and/or any designation which in the reasonable opinion of Seller is confusingly similar to any such Siemens Designation, in particular as (i) commercial designation (Geschäftliche Bezeichnung) within the meaning of Section 5 German Trademark Act including company name or corporate mark, (ii) name affix, (iii) trademark, (iv) domain or (v) otherwise in any communication, including websites, e-mails, on any materials relating to the Business, including stationary, in connection with services, and on, or in connection with, products (including software). Purchaser shall procure (sicherstellen) that the terms of any trademark license agreement between Seller and SEAS KG, in particular any use up provisions and periods as set forth in such agreements, are complied with by Purchaser itself, the Designated Transferees, the Companies and any of its Affiliates.

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14.2 Purchaser undertakes that during a period of five (5) years as from the Closing Date, Seller’s and any of Seller’s Affiliates’ employees and professional advisors shall be granted, upon Seller’s request, reasonable access to sites and books, records, documents and information (including the right to receive hard copies and/or electronic copies thereof) and to the personnel and advisors of the Companies, to the extent necessary for Seller or any of Seller’s Affiliates in order to comply with requests by governmental authorities or as necessary for Seller or any of Seller’s Affiliates in connection with any investigation that is initiated to prepare a reasonable response or defense towards governmental authorities relating to the Companies, the Business, Seller or any of Seller’s Affiliates. It is understood that no access granted hereunder shall unreasonably interfere with the business operations of Purchaser, the Designated Transferees or the Companies. The Parties are aware that the Seller is currently conducting a process of archiving documents and electronic data of the Business which are required by Seller or any Seller Group Entity for Tax and other purposes (herein “Archiving Process”). The Parties shall reasonably cooperate to complete the Archiving Process as soon as practicable after the Closing Date. Seller shall procure that these documents will not be used in a way that could lead to negative effects on the Business.

14.3 Purchaser acknowledges and undertakes that, consistent with Seller’s cooperation with certain internal and government procedures relating to Seller and Seller’s Affiliates, all documents in the custody and control of the Companies which belong to the Companies or the Business and relate to the period prior to the Closing Date (herein “Retention Materials”) shall be preserved and retained for the period beginning on the Closing Date and ending eight (8) years later (herein “Data Preservation Termination Date”). Prior to the Data Preservation Termination Date, Purchaser agrees to procure (sicherstellen) that the Companies shall consult with Seller before destroying any Retention Materials and permit Seller to review and reproduce such materials prior to any destruction.

14.4 Without limiting the generality of Sections 14.2 and 14.3 above, Purchaser shall, and shall procure (sicherstellen) that each of the Companies shall, at Seller’s expense deliver to Seller all accounting data necessary or appropriate for (i) the preparation of Seller’s financial statements for the current fiscal year, including the Effective Date Accounts, and, if necessary, for any (consolidated) quarterly accounts for the quarter during which the Closing Date occurs, in a way that will not delay or endanger the completion of such statements or accounts pursuant to Seller’s accounting schedule, and (ii) purposes of the deconsolidation of the Companies by Seller.

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14.5 Seller agrees that all information obtained under Sections 14.1 through 14.4 above shall be treated as Confidential Information pursuant to 17.2 below.

14.6 Purchaser shall procure (sicherstellen) that the Companies duly fulfill their obligations under the Carve-out Agreements, provided that Seller shall not enforce any claims against SEAS KG pursuant to Section 10.3 of the Carve-out Agreement for Germany and that Seller shall, at the request of Purchaser, irrevocably waive any rights in this respect.

14.7 Purchaser shall not, and shall procure (sicherstellen) that no Purchaser’s Affiliate shall, for a period of three (3) years following the Closing Date, directly or indirectly, (i) make, resolve, initiate, enable or accept any withdrawals (including the granting of loans other than Shareholder Loans or capital decreases) from SEAS KG or any of its partial or entire successors conducting the Business or parts thereof (herein “Sustained Business”), (ii) make, resolve on, initiate, enable or accept dividend payments or loan repayments (other than any repayments of Shareholder Loans) by the Sustained Business, (iii) encumber, induce or impose the encumbrance of any assets of SEAS KG or any of its successors other than in the ordinary course for the regular operative business of SEAS KG, (iv) accept other non-arm’s length advantages from the Sustained Business, or (v) change, alter, rescind, rewind or in any other way contradict the Equity Commitment and the Loan Commitment. Purchaser shall not, and shall procure (sicherstellen) that no Purchaser’s Affiliate shall, for a period of six (6) years following the Closing Date change, alter, rescind, rewind or in any other way contradict the Letter of Support. Purchaser shall not, and shall procure (sicherstellen) that no Purchaser’s Affiliate shall, directly or indirectly, for a period of three (3) years following the Closing Date (a) impose transaction or management fees on the Companies, (b) enter into any consultancy agreement or any similar agreement the purpose of which is the advice, management, training or similar service of the respective contractual partner, with any Company or Companies’ Affiliate imposing payment obligations on the Companies in excess of EUR 100,000.00 (in words: Euro one hundred thousand) in the aggregate per annum, (c) enter into any agreement or transaction (however implemented) which may directly or indirectly result (aa) in a partial or entire change of the shareholding in the Companies or (bb) in the transfer of any asset relevant for the Business from the Companies or Companies Affiliates. Furthermore, Purchaser undertakes to procure that SEAS KG will not for a period of three (3) years following the Closing Date reduce or decrease the registered limited partnership interest (Haftsumme) of SEAS KG, but to maintain at least a registered limited partnership interest in the amount equaling the Equity Commitment.

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14.7a SEAS KG shall be entitled to grant loans to other Companies if and to the extent that

(i) Purchaser or the respective Designated Transferee has granted a loan (including any loans under the Loan Commitment) to SEAS KG in an amount not less than the amount of the loan(s) to be granted by SEAS KG to the other Companies, and

(ii) SEAS KG does not wish to utilize the loan(s) pursuant to subsection (i) for its own operations,

provided, however, that the aggregate amount of such loans to other Companies shall not exceed the lesser of:

(a) EUR 20,000,000.00 (in words: Euro twenty million), and

(b) an amount equal to the balance of the line items designated as “Cash” in Exhibit 4.2-1 existing as of the Effective Date, to the extent such positions relate to Companies other than SEAS KG (which shall be shown in reasonable detail by Seller to Purchaser based on the Effective Date Accounts).

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14.8 Purchaser shall keep Seller informed about any adjustment or amendment of the purchase price, including any determination of any variable purchase price, as agreed between the parties under an asset deal agreement dated 11 September 2009 relating to the sale and transfer of the business unit “Optische 3D Inline Inspection” by SEAS KG to NanoFocus AG, Lindnerstraße 98, 46149 Oberhausen and to forward or provide a copy of any correspondence or document relating to such adjustment or amendment, including but not limited to any correspondence under section 8.3 of the aforementioned agreement. For the avoidance of doubt, any such adjustment or amendment of the purchase price under said agreement shall not lead to an adjustment of the Purchase Price beyond the provisions set forth in Section 4.

14.9 Employment Protection

14.9.1 Maintenance of Sites. For a period of three (3) years after the Closing Date, Purchaser shall procure (sicherstellen) that SEAS KG (or any successor of SEAS KG)

(i) maintains its existing site (Standort) in Rupert-Mayer-Straße, Munich, unless the management of SEAS KG decides to move to a different location in Munich, and

(ii) maintains Munich as the headquarter of the worldwide Business.

14.9.2 Compliance with Collective Labor Agreements.

(i) Purchaser shall procure (sicherstellen) that SEAS KG (or any successor of SEAS KG) remains a member of the employers’ association (Arbeitgeberverband der Metall- und Elektroindustrie) and complies with the terms and conditions of the collective bargaining agreements (Tarifvertrage), shop agreements (Betriebsvereinbarungen) and, to the extent that obligations thereunder can be performed locally, group shop agreements (Konzernbetriebsvereinbarungen).

(ii) In particular, Purchaser shall procure that SEAS KG (or any successor of SEAS KG) complies with the terms and conditions of the agreements set forth in Exhibit 14.9.2 (ii) and any shop agreement entered into according to the last sentence of Section 14.9.5.

(iii) Vis-à-vis Seller, the obligations of Purchaser in this Section 14.9.2 shall be limited to a period of three (3) years after the Closing Date or the term of the relevant collective labor agreement in case that such agreement expires before the end of this three-year period.

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14.9.3 Lay-offs. Purchaser shall procure (sicherstellen) that for a period of three (3) years after the Closing Date, SEAS KG (or any successor of SEAS KG) does not lay off any of its employees for operational reasons (betriebsbedingte Kündigung). For the avoidance of doubt, this Section 14.9.3 shall not prevent SEAS KG from entering into amicable separation agreements (Auflösungsvereinbarungen) with any of its employees during this three-year period.

14.9.4 Reimbursement to Seller. In case of any breach of Sections 14.9.1, 14.9.2 (ii) or 14.9.3 above, Seller shall be entitled to compensate in good faith any employee laid off by SEAS KG (or any successor of SEAS KG) for operational reasons (betriebsbedingte Kündigung), who asserts claims against Seller, for any economic disadvantage caused by such lay-off. Purchaser shall reimburse to Seller the cost incurred by Seller for the compensation of any such employee laid off for operational reasons up to the amount that is usually paid by Siemens in comparable cases (i.e. in the most recent social plan and reconciliation of interests at that time), provided, however, that any financial compensation already granted by Purchaser or the respective Company shall be taken into account in this respect.

14.9.5 New Shop Agreement. Purchaser agrees that SEAS KG (or any successor of SEAS KG) may negotiate and agree with the competent works council on shop agreements reflecting matters other than the maintenance of Munich as the headquarter of the worldwide Business. If any shop agreements are negotiated until (and including) the Closing Date, Seller shall, and shall procure that SEAS KG shall, consult with Purchaser on the provisions of such shop agreements. Seller shall procure that until (and including) the Closing Date SEAS KG shall not agree to any shop agreements without the prior written consent of Purchaser, which consent may not be unreasonably withheld. For the avoidance of doubt, Purchaser may not withhold its consent to the extent the respective shop agreements reflect Purchaser’s undertakings as set forth in Sections 14.9.1 (i) or 14.9.3 on shop level.

14.10 Liquidated Damages. If Purchaser does not comply with any provision contained in Sections 14.7, 14.9.1, 14.9.2 (ii) or 14.9.3 above, Purchaser shall have the right and obligation to cure such non-compliance within a reasonable period of time. In case Purchaser is not able to cure or procure that the Companies cure such non-compliance within the foregoing period, Purchaser shall pay to Seller liquidated damages (pauschalierter Schadensersatz) in the amount of EUR 20,000,000.00 (in words: Euro twenty million). If Purchaser furnishes proof that the actual damage of the Companies and Seller, or Seller’s expenses

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pursuant to Section 14.9.4, are lower than EUR 20,000,000.00 (in words: Euro twenty million), the amount payable to Seller shall be reduced accordingly. The aggregate liability of Purchaser for damages vis-à-vis Seller for a breach of Sections 14.9.1, 14.9.2 (ii) or 14.9.3 shall be limited to EUR 20,000,000.00 (in words: Euro twenty million). These limitations shall not apply to any and all claims of Seller arising as a result of wilful or intentional breaches of Purchaser’s obligations under Sections 14.7, 14.9.1, 14.9.2 (ii) or 14.9.3. Any payment received by Seller due to a non-compliance with Sections 14.9.1, 14.9.2 (ii) or 14.9.3 shall be deducted from Seller’s claims under Section 14.9.4. For the avoidance of doubt, Seller’s claims for specific performance of the covenants in Sections 14.7, 14.9.1, 14.9.2 (ii) or 14.9.3 shall not be subject to the limitations of this Section 14.10.

14.11 If Purchaser or a Designated Transferee no longer solely owns the Shares or further shares in the Companies, or if the Companies no longer solely own the Business, Purchaser shall procure (sicherstellen) that the new (co)owner of the Shares, further shares in the Companies or the respective part of the Business shall enter into an agreement conferring upon Seller and Seller’s Affiliates (excluding the Companies) the same rights and imposing on the new (co)owner the same obligations as set out in this Section 14 (including this Section 14.11).

Section 15 – Separation Matters

15.1 Security

15.1.1 With effect as of the Closing Date, Purchaser hereby assumes under full release (befreiende Schuldübernahme) of Seller and Seller’s Affiliates all guarantees, comfort letters and other security of any kind which Seller or any of Seller’s Affiliates

(i) have provided with respect to the Business to banks, other financial institutions, suppliers, customers or other third parties on or prior to the Signing Date, including those listed in Exhibit 15.1.1(i) hereto; and

(ii) may provide with respect to the Business to banks, other financial institutions, suppliers, customers or other third parties after the Signing Date, but prior to the Closing Date (provided that Seller shall notify Purchaser thereof at least five (5) Business Days prior to the Closing. Date in the form of an update of Exhibit 15.1.1(i)),

(collectively herein “Seller’s Security”), in each case together with all obligations and liabilities of Seller or any of Seller’s Affiliates arising under such Seller’s Security.

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15.1.2 With effect as of the Closing Date, Purchaser hereby assumes under full release (befreiende Schuldübernahme) of Seller and Seller’s Affiliates all present and future obligations of Seller and Seller’s Affiliates to any banks or other financial institutions (including obligations to pay interest or fees and to provide back-to-back security) under, or in connection with, guarantees, comfort letters and other security of any kind which such banks or other financial institutions

(i) have provided with respect to the Business to banks, other financial institutions, suppliers, customers or other third parties on or prior to the Signing Date, including those listed in Exhibit 15.1.2(i) hereto; and

(ii) may provide with respect to the Business to banks, other financial institutions, suppliers, customers or other third parties after the Signing Date, but prior to the Closing Date (provided that Seller shall notify Purchaser thereof at least five (5) Business Days prior to the Closing Date in the form of an update of Exhibit 15.1.2(i)),

(collectively herein “Financial Security” and, together with the Seller’s Security, collectively herein “Security”), in each case together with all obligations and liabilities of Seller and Seller’s Affiliates arising under such Security.

15.1.3 On the Closing Date, Purchaser shall replace the Security and shall return any deeds or instruments evidencing the Security (herein “Security Deeds”) to Seller, so that Seller and Seller’s Affiliates are fully released by the beneficiaries from any such Seller Security and by the banks or other financial institutions with respect to any Financial Security.

15.1.4 If and to the extent, contrary to the obligation under Section 15.1.3, Seller and Sellers’ Affiliates are not effectively released from the Security on the Closing Date, for the period from (but not including) the Closing Date until (and including) the date on which Seller or the respective Seller’s Affiliate is released (i) by the relevant beneficiary from the Seller’s Security or (ii) by the relevant bank or financial institution from the Financial Security, Purchaser shall pay to Seller or the relevant Seller’s Affiliate, as the case may be,

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a. the amount of any commissions, fees, costs and expenses incurred by Seller or the relevant Seller’s Affiliate in connection with the respective Security, and

b. an additional amount per calendar month equaling a percentage rate per annum of the amount guaranteed by the Security that remains outstanding as of the last day of such calendar month, which percentage rate per annum shall initially be one (1) per cent and be increased each three (3) months by one (1) percentage point for the subsequent three (3) months,

payable quarterly in arrears on the first Business Day of the following calendar quarter.

15.2 Intra-Group Arrangements

15.2.1 Seller and Purchaser agree that, except for the agreements listed in Exhibit 15.2.1 (collectively “Surviving Intra-Group Arrangements”), all other agreements between any of the Companies on the one hand and Seller or any of Seller’s Affiliates on the other hand and all other services provided by Seller or any of Seller’s Affiliates to any of the Companies (collectively herein “Non-Surviving Intra-Group Arrangements”) shall be terminated and settled with effect as of the Closing Date without any prepayment penalty or other cost arising from such termination for any of the Companies, Seller or any of Seller’s Affiliates.

15.2.2 In the event any Non-Surviving Intra-Group Arrangement cannot be terminated as provided for in Section 15.2.1 above, such Non-Surviving Intra-Group Arrangement shall be terminated as soon as reasonably possible thereafter. Purchaser shall cooperate, and shall procure (sicherstellen) that the Companies and Purchaser’s Affiliates cooperate, with Seller and Seller’s Affiliates to effect the termination of the Non-Surviving Intra-Group Arrangements.

15.2.3 Purchaser acknowledges that certain of the Companies as of the Signing Date use, or have used in the past, premises together with Seller or Seller’s Affiliates (herein “Shared Premises”). The Companies will no longer be permitted to use the Shared Premises set forth in Exhibit 15.2.3 (herein “Relocation Concept”) as of the Closing Date. Purchaser shall procure (sicherstellen) that the relevant Company vacates the relevant Shared Premises without undue delay, but in any event no later than three (3) months after the Closing Date, without interfering with the other operations of Seller or Seller’s Affiliates on the respective Shared Premise.

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15.2.4 This Section 15.2 shall not apply to (i) Intercompany Financing arrangements which shall be dealt with exclusively in accordance with Section 5.1 above, (ii) agreements underlying, relating to, or in connection with, any Security which shall be dealt with exclusively in accordance with Section 15.1 above, (iii) the Carve-out Agreements, and (iv) contracts for the provision of goods and services which are (x) part of the relevant Party’s product or service portfolio offered also to third parties, and (y) not only provided for an interim period to ensure the transition of the Business (Verkehrsgeschäfte).

15.3 Insurance Coverage.

15.3.1 Purchaser acknowledges that the insurance coverage provided to the Business under group insurance policies of Seller or Seller’s Affiliates ceases with effect as of the Closing Date without any refund of any premium (or a portion thereof) already paid by any of the Companies.

15.3.2 Purchaser undertakes to procure (sicherstellen) insurance coverage for the Business effective from the Closing Date. Such coverage shall be commensurate to the insurance coverage existing for the Business until the Closing Date. The new insurance coverage shall also include any risks relating to the period prior to the Closing Date to the extent the existing insurance coverage is on “claims made” basis.

15.3.3 Purchaser acknowledges and agrees that all claim settlements under the existing insurance coverage of the Companies under the group insurance policies of Seller or Seller’s Affiliates that have been notified to the insurer prior to the Closing Date irrespective of whether the settlement is taking place before or after the Closing, will be made on the agreed terms and conditions of such insurance coverage and, in particular, the applicable deductibles existing under such insurance coverage which shall be borne by the relevant Company (collectively herein “Insurance Claim Settlements”). Notwithstanding the foregoing, Purchaser shall inform Seller without undue delay about any circumstance which may be relevant for such an insurance claim under the group insurance policies of Seller or Seller’s Affiliates and shall cooperate with Seller with regard to instructions for any Insurance Claim Settlement. Any claims under such group insurance policies shall be processed by Seller in consultation with Purchaser, and Purchaser shall, and shall procure (sicherstellen) that the relevant Company shall, provide reasonable administrative support to progress such claim if so required by Seller.

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15.4 Information Technology

15.4.1 Purchaser acknowledges that the third-party software licenses provided to the Companies under the group software license agreements of Seller or Seller’s Affiliates cease with effect as of the Closing Date and will have to be replaced by the Companies at their own cost.

15.4.2 Internet Protocol Addresses. Other than as permitted by the existing Trademark License Agreement dated 18 December 2008 as amended and the Trademark License Agreement to be entered into by and between Seller and SEAS KG on the Closing Date without undue delay (unverzüglich) but in any event within ninety (90) Business Days after the Closing Date, Purchaser shall refrain, and shall procure (sicherstellen) that the Companies and any Designated Transferee will refrain, from using any and all internet protocol addresses which were used by the Business on or prior to the Closing Date.

15.5 Pensions, Deferred Compensation. Pensions commitments made to active, passive or former employees of the Companies shall be dealt with as set forth in the Pension Schedule attached as Exhibit 15.5.

15.6 Equity Based Instruments

15.6.1 Seller has implemented various group-wide equity based compensation schemes, inter alia, Seller Share Matching Plan, Seller Stock Options, Seller Stock Awards and Seller Phantom Stocks (collectively herein “Equity Based Instruments”). Seller and some of its Affiliates, including certain of the Companies, have granted Equity Based Instruments to selected members of management and selected employees of the Companies in separate tranches each year since the year 2005, which continue to exist unexpired as at the Closing Date as set forth in Exhibit 15.6.1. Seller has entered into agreements with certain relevant Companies (or the relevant unit of the Business) regarding their participation in, and/or obligations in relation to, the Equity Based Instruments (each such agreements herein “Group Agreement”). It is intended that claims under the Equity Based Instruments shall be redeemed with effect as of Closing. To this effect, Seller and Purchaser shall procure (sicherstellen) that the Companies redeem any claims under Equity Based Instruments in accordance with the relevant Group Agreement and the respective plan rules after, but with effect as of, the Closing Date. The Parties agree that, subject to Section 15.6.2 below, the Group Agreements shall remain unaffected by the Transaction and Purchaser shall procure (sicherstellen) that the Companies duly fulfill their obligations under the relevant Group Agreement.

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15.6.2 The Parties agree that the Group Agreements shall terminate retroactively with effect as of the Closing Date upon completion of the redemption of the Equity Based Instruments as provided in Section 15.6.1.

15.6.3 Purchaser shall procure (sicherstellen) that the Companies, together with Purchaser and the relevant Designated Transferees, as required, will provide all administrative support reasonably required by Seller or any of Seller’s Affiliates to arrange for the redemption of the Equity Based Instruments in accordance with the provisions of this Section 15.6.

15.7 Old Age Part Time. Purchaser shall procure that SEAS KG shall, for the period following the Closing Date, provide a sufficient and adequate insolvency risk insurance to the extent and as required under the German Old Age Part Time Act (Altersteilzeitgesetz) for old-age part time funds (Altersteilzeitguthaben) of the relevant employees of SEAS KG. Purchaser is aware that such insolvency risk insurance is in existence as of the Signing Date as set out in the data room.

15.8 Licenses. Purchaser hereby acknowledges, and procures (stellt sicher) that the relevant Company acknowledges, that Seller and/or its Affiliates have granted licenses under the Intellectual Property and that such Intellectual Property is subject to those third party licenses granted as of the Closing Date.

15.9 Potential IP claim against Fuji. Purchaser herewith undertakes to pay to Seller an amount equaling twenty-five per cent (25%) of any indemnification, compensation for damages, any other compensation or consideration which Purchaser or any Purchaser Affiliate will receive from Fuji Machine Manufacturing Co. Ltd, Chirju, Aichi, Japan (herein “Fuji”) or any of its Affiliates pursuant to any decision of a court or arbitration tribunal, or any agreement entered into by and between Fuji or any of its Affiliates on the one hand and SEAS KG or any of its Affiliates on the other hand which relates to a use and/or infringement of the patents listed in Exhibit 15.9 hereto by Fuji or any of its Affiliates. Purchaser shall keep Seller informed about any negotiation, proceeding, or any agreement with Fuji or any Affiliate of Fuji touching the patents listed in Exhibit 15.9 and shall forward without undue delay any document and correspondence received in this regard to Seller.

15.10 Special Retention Bonuses. Purchaser hereby acknowledges that certain of the Companies have promised to pay special retention bonuses to selected members of management and selected employees in connection with the Transaction. Exhibit 15.10 sets forth, on an anonymous basis, a complete and accurate list of the eligible beneficiaries together with the bonus payments that will be due on the relevant payment dates.

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Section 16 – Bank Guarantee and Letter of Support

16.1 On the Closing Date, Purchaser shall provide Seller with a bank guarantee or bank guarantees of international banks of good standing acceptable to Seller payable after a settlement pursuant to Section 21.1 or a settlement or other decision of the arbitration tribunal pursuant to Section 21.3, substantially in the form attached hereto as Exhibit 16.1, which shall secure the obligations of Purchaser under Sections 14.7, 14.9 and 14.10 of this Agreement in an amount of not less than EUR 20,000,000.00 (in words: Euro twenty million) (herein “Bank Guarantee”).

16.2 Purchaser shall grant SEAS KG an irrevocable letter of support up to an amount of EUR 120,000,000.00 (in words: Euro one hundred twenty million) valid as from the Closing Date for a duration of six (6) years in the form attached as Exhibit 16.2 (the “Letter of Support”).

Section 17 – Restrictions of Announcement, Confidentiality

17.1 Each of the Parties undertakes that, prior to the Closing Date, it will not make, and that it will cause all of its Affiliates not to make, any announcement or disclose any information in connection with this Agreement, unless (i) required by applicable mandatory laws or stock exchange regulations, or (ii) the other Party has given its prior consent to such announcement, including the form of such announcement, which consent may not be unreasonably withheld and may be subject to conditions. If and to the extent any announcement or disclosure of information regarding the subject matter of this Agreement is to be made under applicable mandatory laws or any applicable stock exchange rules, the Party concerned shall, to the extent permissible under applicable laws or stock exchange regulations, not disclose any such information without first informing the other Party thereof. Any consent granted under this section and any information exchanged under this section may be exchanged in e-mail form between the Parties using the following names

and e-mail addresses:

If to Seller: Dr. Marc Langendorf (marc.langendorf@siemens.com) with a copy to Jochen Köpf (jochen.koepf@siemens.com)

If to Purchaser: Jupiter Kong (Jupiter.kong@asmpt.com) with a copy to Leonard Lee (leonard.lee@asmpt.com).

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17.2 The Parties expressly acknowledge and agree that (i) this Agreement and its terms, (ii) the Transaction, and (iii) all information, whether written or oral, furnished by either Party to the other Party or any Affiliate of such other Party, or by or to their representatives or professional advisors, in connection with the preparation, negotiation, execution or consummation of, or in the pursuit of disputes under, this Agreement or the Transaction, including the due diligence review conducted by Purchaser in connection therewith (herein “Confidential Information”) shall be deemed to be confidential and shall be maintained by each Party and their respective Affiliates in strict confidence, it being understood that this shall also apply to any Confidential Information disclosed under Sections 11.3 and 11.7 above or any comparable provisions.

17.3 The receiving Party shall use the same degree of care as it uses with regard to its own confidential information to prevent disclosure, use or publication of the confidential information. Confidential Information of the originating Party shall be held in strict confidence by the receiving Party, unless the receiving Party is able to prove that the Confidential Information is or has been

17.3.1 obtained legally and freely from a third party without any restrictions;

17.3.2 independently developed by the receiving Party at a prior time or in a separate and distinct manner without benefit of any of the Confidential Information of the disclosing Party, and documented to be as such;

17.3.3 made available by the disclosing Party for general release independent of the receiving Party;

17.3.4 made public as required by applicable laws, regulations, court proceedings or stock exchange regulations; or

17.3.5 within the public domain or later becomes part of the public domain as a result of acts by someone other than the receiving Party and through no fault or wrongful act of the receiving Party.

17.4 A receiving Party may disclose Confidential Information of a disclosing Party to (i) directors, officers, and employees of the receiving Party or (ii) agents of the receiving Party including their respective professional advisors, brokers, lenders or insurance carriers, who are either obliged to confidentiality by law or who have specifically agreed in writing to non-disclosure of the terms and conditions hereof and who have a need to know such information in connection with the Transaction. Any disclosure hereof required by legal process pursuant to Section 19.1 shall only be made after providing the disclosing Party with notice thereof in order to permit the disclosing Party to seek an appropriate protective order or

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exemption. Violation by a Party or its agents of the foregoing provisions shall entitle the disclosing Party, at its option, to obtain injunctive relief without a showing of irreparable harm or injury and without bond. The provisions of this Section 19 shall survive and remain effective for a period of three (3) years after the Closing Date.

Section 18 – Notices

All notices and other communications hereunder shall be made in writing and shall be delivered or sent by registered mail, courier or telefax to the addresses below or to such other addresses which may be specified by any Party to the other Party in the future in writing:

If to Seller:

Siemens Aktiengesellschaft

CF M&A – Corporate Finance Mergers & Acquisitions

Wittelsbacherplatz 2

80333 Munich

Germany

Fax: +49 (89) 636-32870

Attn.: Jochen Köpf

with a copy to:

Siemens Aktiengesellschaft

CF MAP – Post Closing Management

Wittelsbacherplatz 2

80333 Munich

Germany

Fax: Roland Meinzer

Attn.: +49 (89) 636-32108

with a copy to:

Siemens Aktiengesellschaft

Legal Corporate & Finance

CL C&F MAC M&A Erl

Werner-von-Siemens Str. 50

91052 Erlangen

Germany

Fax: +49 (9131) 7-28340

Attn.: Christoph Scholz

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If to Purchaser:

ASM Pacific Technology Ltd.

12/F., Watson Centre

16 Kung Yip Street

Kwai Chung, N.T.

Hong Kong

Fax: +852-2481 3367

Attn.: Chief Executive Officer

with a copy to:

ASM Technology Singapore Pte. Ltd.

2 Yishun Avenue 7

Singapore 768924

Fax: +65-6750 3183

Attn.: General Counsel

and a copy to:

Cleary Gottlieb Steen & Hamilton LLP

Main Tower / Neue Mainzer Str. 52

60311 Frankfurt, Germany

Fax: +49 69 97 103 199

Attn.: Dr. Klaus Riehmer

Section 19 – Costs, Expenses, Fees and Charges

All costs, expenses, fees and charges in connection with this Agreement and the Transaction, including legal services, shall be borne by the Party commissioning the respective costs, expenses, fees and charges. Purchaser shall bear (i) all fees in connection with the notarization of this Agreement and all documents to be notarized at Closing, (ii) all fees charged by the antitrust authorities in connection with the merger control clearances, including the Antitrust Clearance and (iii) any sales, transfer or stamp taxes, or other similar charges (which, for the avoidance of doubt, do not include VAT or capital gains taxes), payable by reason of the Transaction.

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Section 20 – Governing Law

This Agreement shall be governed by, and be construed in accordance with, the laws of the Federal Republic of Germany, without regard to principles of conflicts of laws and without regard to the UN Convention on Contracts for the International Sale of Goods (CISG).

Section 21 – Dispute Resolution, Service of Process

21.1 If any dispute arises in connection with this Agreement, the responsible representatives of the Parties shall attempt, in fair dealing and in good faith, to settle such dispute. If a Party provides written notification to the other Party that such attempt has failed, then each Party shall promptly appoint in writing a senior representative duly authorized to resolve such dispute. Each Party shall give notice of the appointment of such senior representative to the other Party and such senior representatives shall attempt to reach an amicable settlement. If such senior representatives have not been appointed and/or are not able to reach an amicable settlement within a time period of twenty (20) Business Days after the appointment of the first senior representative or such other time period as the Parties may agree in writing, then either Party may, by written notification to the other Party, require that the dispute be submitted for resolution pursuant to Section 21.3. Nothing in this Section 21 shall limit the right of the Parties to seek relief intended to preserve the status quo or interim measures, such as preliminary injunctions, from any court of competent jurisdiction and/or the arbitral tribunal.

21.2 If a claim in dispute may become time barred due to an applicable Time Limitation, the Parties shall agree upon a tolling (Hemmung) of such Time Limitation during the settlement process set forth in this Section 21. If the Parties are unable to reach an agreement on such tolling sufficiently in advance of the claim in dispute becoming time-barred, the Party whose claim may become time-barred may initiate arbitration proceedings as described below irrespective of the pre requisites of this Section 21.

21.3 All disputes in connection with this Agreement, which are not settled pursuant to Section 21.1, including any question regarding the existence, validity or termination or any subsequent amendment of this Agreement, and all claims in connection with it in respect of which no dispute exists but which require enforcement, shall be finally settled in accordance with the Arbitration Rules of the German Institution of Arbitration e.V. (Deutsche Institution für Schiedsgerichtsbarkeit – DIS) as applicable from time to time

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without recourse to the ordinary courts of law. The arbitral tribunal shall consist of three arbitrators. The seat of arbitration shall be Munich, Germany. The language to be used in the arbitration proceedings shall be English provided that any document in the German language shall not be required to be translated into the English language.

21.4 Purchaser hereby appoints Cleary Gottlieb Steen & Hamilton LLP (attn.: Dr. Klaus Riehmer) as its agent for service of process (Zustellungsbevollmächtigter) for all legal or arbitral proceedings involving Purchaser arising out of or in connection with this Agreement. Purchaser agrees that any document relating to such proceedings may be effectively served on it by service on its agent for service of process. The afore-described agency shall only terminate upon appointment of another individual as agent for service of process domiciled in Germany and reasonably acceptable to Seller. The appointment of the new agent for service of process and the termination of the current agent for service of process shall only become effective if and when notified to Seller in writing by Purchaser.

Section 22 – Miscellaneous

22.1 This Agreement comprises the entire agreement between the Parties concerning the subject matter hereof and supersedes and replaces all oral and written declarations of intention made by the Parties in connection with the contractual negotiations. Changes or amendments to this Agreement (including this Section 22.1) must be made by the, Parties in writing or in any other legally required form, if so required.

22.2 Any currency conversions under or in connection with this Agreement shall be determined using the following exchange rates: (i) the European Central Bank (herein “ECB”) reference rates which are published both by electronic market information providers (e.g., Reuters page ECB37) and on the ECB’s website www.ecb.int shortly after 2.15 p.m. CET on the relevant date, or (ii) in the event that such rates are not published on the relevant date, the rates published on the latest day before the relevant date for which such rates are published, or (iii) if the ECB generally does not publish exchange rates for a certain currency, the rates published by the electronic market information provider Reuters for the relevant date shortly after 2.15 p.m. CET or the latest day before the relevant date for which such rates are published, whatever the case may be ((i) through (iii) herein “Exchange Rates”). In case cross-rates have to be used where one leg of the currency pair is not the Euro, these cross-rates will be calculated by taking the corresponding two (2) fixing rates against the Euro.

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22.3 All Exhibits to this Agreement constitute an integral part of this Agreement. Any references to this Agreement shall include a reference to the Exhibits to this Agreement. Statements in one provision or Exhibit shall be deemed to have been made also for the purposes of all other provisions and Exhibits.

22.4 In this Agreement, the headings are inserted for convenience only and shall not affect the interpretation of this Agreement. Where a term in a language other than the English language has been inserted in quotation marks and/or italics, it alone (and not the English term to which it relates) shall be authoritative for the purpose of the interpretation of the relevant English term in this Agreement. The terms “including”, “include” and “in particular” shall always mean “including, without limitation”, “include, without limitation” and “in particular, without limitation”, respectively.

22.5 This Agreement shall not grant any rights to, and is not intended to operate for, the benefit of third parties unless otherwise explicitly provided for herein, as the case may be. Wherever under this Agreement any party other than Purchaser is to be indemnified by Seller, such other party, in particular the Companies, shall not be entitled to bring any claims for indemnification against Seller (kein echter Vertrag zugunsten Dritter). The Parties shall be permitted to terminate (only to the extent explicitly provided for in this Agreement), alter or amend this Agreement without the consent of any third party beneficiary, if any.

22.6 No Party shall be entitled to assign any rights or claims under this Agreement without the prior written consent of the other Party.

22.7 No Party, except as provided otherwise herein, shall be entitled (i) to set-off (aufrechnen) any rights and claims it may have against any rights or claims the other Party may have under this Agreement or (ii) to refuse to perform any obligation it may have under this Agreement on the grounds that it has a right of retention (Zurückbehaltungsrecht), unless the rights or claims of the relevant Party claiming a right of set-off (Aufrechnung) or retention (Zurückbehaltung) have been acknowledged (anerkannt) in writing by the other Party or have been confirmed by final decision of a competent court (Gerichf) or arbitration court (Schiedsgericht).

22.8 In the event that one or more provisions of this Agreement are, shall become, or are deemed to be, or shall become deemed to be, invalid or unenforceable, the validity and enforceability of the other provisions of this Agreement shall not be affected thereby. In such case, the Parties hereto agree to recognize and give effect to such valid and enforceable provision or provisions, which correspond as closely as possible with the commercial intent of the Parties. The same shall apply in the event that this Agreement contains any unintended gaps (unbeabsich-tigte Vertragslücken).

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EX-8.1

Exhibit 8.1

SUBSIDIARIES

Advanced Semiconductor Materials (Netherlands Antilles) N.V.

ASM Pacific Holding B.V.

ASM Pacific Technology Limited (subsidiary of ASM Pacific Holding B.V.)

ASM Assembly Automation Limited (subsidiary of ASM Pacific Technology Limited)

ASM Assembly Materials Limited (subsidiary of ASM Pacific Technology Limited)

ASM Assembly Products B.V. (subsidiary of ASM Pacific Technology Limited)

ASM Assembly Technology Co. Limited (subsidiary of ASM Pacific Technology Limited)

ASM Pacific Assembly Products Inc. (subsidiary of ASM Pacific Technology Limited)

ASM Microelectronic Technical Services (Shanghai) Co. Limited (subsidiary of ASM Pacific Technology Limited)

ASM Pacific Technology Asia Limited (subsidiary of ASM Pacific Technology Limited)

ASM Pacific (Hong Kong) Limited (subsidiary of ASM Pacific Technology Limited)

ASM Assembly Equipment Bangkok Limited (subsidiary of ASM Pacific Technology Limited)

ASM Semiconductor Materials (Shenzhen) Co. Limited (subsidiary of ASM Pacific Technology Limited)

ASM Technology Singapore Pte. Limited (subsidiary of ASM Pacific Technology Limited)

ASM Technology (M) Sdn. Bhd. (subsidiary of ASM Pacific Technology Limited)

ASM Technology China Limited (subsidiary of ASM Pacific Technology Limited)

ASM Technology (Huizhou) Co. Limited (subsidiary of ASM Pacific Technology Limited)

Shenzhen ASM Micro Electronic Technology Co. Limited (subsidiary of ASM Pacific Technology Limited)

ASM Assembly Equipment (M) Sdn. Bhd. (subsidiary of ASM Pacific Technology Limited)

ASM Pacific (Bermuda) Limited (subsidiary of ASM Pacific Technology Limited)

ASM Asia Limited (subsidiary of ASM Pacific Technology Limited)

Edgeward Development Limited (subsidiary of ASM Pacific Technology Limited)

Edgeward Trading (Shenzhen) Limited (subsidiary of ASM Pacific Technology Limited)

ASM America, Inc.

ASM Front-End Manufacturing Singapore Pte Limited

ASM Japan K.K.

ASM Microchemistry Oy

ASM NuTool, Inc.

ASM Genitech Korea Ltd

ASM Europe B.V.

ASM France S.A.R.L. (subsidiary of ASM Europe B.V.)

ASM Belgium N.V. (subsidiary of ASM Europe B.V.)

ASM United Kingdom Sales B.V. (subsidiary of ASM Europe B.V.)

ASM Germany Sales B.V. (subsidiary of ASM Europe B.V.)

ASM Italia S.r.l. (subsidiary of ASM Europe B.V.)

ASM Services and Support Ireland Ltd. (subsidiary of ASM Europe B.V.)

ASM Services and Support Israel Ltd. (subsidiary of ASM Europe B.V.)

ASM China Trading Limited

ASM Wafer Process Equipment Limited

ASM Wafer Process Equipment Singapore Pte Limited

ASM Front-End Sales & Services Taiwan Co., Ltd.

ASM IP Holding B.V.

EX-12.1

Exhibit 12.1

I, Charles D. del Prado, certify that:

1. I have reviewed this annual report on Form 20-F of ASM International N.V.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;

4. The Company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America;

(c) Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and

5. The Company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the audit committee of the Company’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.

Date: March 25, 2011.

/S/    CHARLES D. DEL PRADO        

Charles D. del Prado

Chief Executive Officer

EX-12.2

Exhibit 12.2

I, Peter A.M. van Bommel, certify that:

1. I have reviewed this annual report on Form 20-F of ASM International N.V.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;

4. The Company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America;

(c) Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and

5. The Company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the audit committee of the Company’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.

Date: March 25, 2011.

/S/    PETER VAN BOMMEL        

Peter A.M. van Bommel

Chief Financial Officer

EX-13.1

Exhibit 13.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the annual report on Form 20-F of ASM International N.V. (the “Company”) for the period ended December 31, 2010 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), we, Charles D. del Prado, Chief Executive Officer of the Company, and Peter A.M. van Bommel, Chief Financial Officer of the Company, each certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that to the best of our knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

By:	/S/    CHARLES D. DEL PRADO
	Charles D. del Prado
	Chief Executive Officer
	March 25, 2011
By:	/S/    PETER VAN BOMMEL
	Peter A.M. van Bommel
	Chief Financial Officer
	March 25, 2011

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-15.1

EXHIBIT 15.1

To the Supervisory Board and Shareholders of

ASM International N.V.

Versterkerstraat 8

1322 AP

Almere, the Netherlands

We consent to the incorporation by reference in the following Registration Statements on Form S-8 (Nos. 033-07111, 033-07109, 333-87262, 333-11060, 033-06184, 033-06185, 033-06186, 033-78628 and 033-93026) of our reports dated March 25, 2011, relating to the financial statements of ASM International N.V. and the effectiveness of ASM International N.V.’s internal control over financial reporting, appearing in this Annual Report on Form 20-F of ASM International N.V. for the year ended December 31, 2010.

/s/    Deloitte Accountants B.V.

Amsterdam, the Netherlands

March 25, 2011