Exhibit 99.1
![]() |
ASM International N.V.
Contact: | Naud van der Ven Mary Jo Dieckhaus Erik Kamerbeek | + 31 30 229 85 40 + 1 212 986 29 00 + 31 30 229 85 00 |
ASM INTERNATIONAL REPORTS
FIRST QUARTER 2008 OPERATING RESULTS
APPOINTMENT OF VP GLOBAL SALES AND SERVICE
BILTHOVEN, THE NETHERLANDS, May 5, 2008—ASM International N.V. (NASDAQ: ASMI and Euronext Amsterdam: ASM) reports today its first quarter 2008 operating results in accordance with US GAAP.
• | First quarter of 2008 net sales of EUR 197.1 million, down 17% from the fourth quarter of 2007 and down 6% from the first quarter of 2007; |
• | Net earnings of the first quarter of 2008 were EUR 12.6 million, or EUR 0.22 diluted net earnings per share, down 35% as compared to net earnings of EUR 19.1 million, or EUR 0.33 diluted net earnings per share for the fourth quarter of 2007 and up 13% as compared to net earnings of EUR 11.2 million or EUR 0.20 diluted net earnings per share for the first quarter of 2007; |
• | Bookings in the first quarter of 2008 were EUR 187.3 million, down 25% from the fourth quarter of 2007. Bookings from our Front-end segment were down 31% and bookings from our Back-end segment were down 21%. Quarter-end backlog was EUR 190.6 million, down 5% from the end of the previous quarter; |
• | Lowering of Front-end net earnings break even level; |
• | Announcement of appointment VP Global Sales and Service in line with Roadmap to Peer Group Profitability |
Mr. Chuck del Prado, President and Chief Executive Officer of ASM International said:
“We have made continued progress with the Front-end business, driving the net earnings breakeven point down to approx. EUR 90 million from an average of approx. EUR 110 million per quarter in 2007, keeping gross margins firm and being EBIT positive. This progress came despite a very challenging industry environment that reduced the level of both front-end revenues and bookings.
While industry conditions will continue to be challenging, we remain confident that our Roadmap to 2009 Front-End Peer Group Profitability strategy will deliver a significant and structural shift towards peer profitability in 2009 and beyond. The plans that we have for the business are ambitious, but also realistic and deliverable. They will deliver value for the shareholders in the short term, but will not do so at the expense of the long-term health of the business.”
1
Effective May 12, 2008, Mr. Tom Wu will join ASMI as Vice President Global Sales and Service, a new position created as part of the Company’s Roadmap to Front-end Peer Group profitability. We have made clear that we are addressing our plans with urgency and the appointment today of Tom Wu is further evidence of this. Mr. Wu comes to ASMI from ESI (Electro Scientific Industries, Inc.) where he was Vice President of Worldwide Sales and Operations. With over 20 years industry experience at such leading companies as—Motorola, Novellus, KLA-Tencor and, most recently, ESI, he has extensive experience in building and training sales teams, working with key multinational clients in multiple geographies, and in effective account penetration of key customers. Mr. Wu accrued valuable Asian experience at both KLA-Tencor and Novellus, where he was responsible for China and South East Asia sales.
Mr. Chuck del Prado commented: “Tom Wu brings to ASMI the experience, drive and vision to implement our global sales program, and I am very pleased to welcome him to our Front end Management team. This is a key appointment for ASMI and important evidence that we are moving aggressively to deliver on our key financial commitments.
Mr. del Prado continued, “While our back-end operations have not been immune to the industry slowdown, revenues for Q1, their historically weakest quarter, were 38% higher when compared with the first quarter of 2007 and bookings were 21% higher, both as measured in local currency. The fact that back-end operations maintained their high margin levels and once again achieved solid overall results in a declining market is testimony to the winning combination of back-end’s industry-leading product and application base and a low-cost, vertically-integrated business model.”
The following table shows the operating performance for the first quarter of 2008 as compared to the fourth quarter of 2007 and the first quarter of 2007:
(EUR millions) | Q1 2007 | Q4 2007 | Q1 2008 | % Change Q4 2007 to Q1 2008 | % Change Q1 2007 to Q1 2008 | ||||||||||
Net sales | 210.1 | 236.9 | 197.1 | (17 | )% | (6 | )% | ||||||||
Gross profit | 72.8 | 94.2 | 76.4 | (19 | )% | 5 | % | ||||||||
Gross profit margin % | 34.6 | % | 39.8 | % | 38.8 | % | (1 | )%(1) | 4.2 | %(1) | |||||
Selling, general and administrative expenses | (29.9 | ) | (33.6 | ) | (29.1 | ) | (13 | )% | (3 | )% | |||||
Research and development expenses | (19.8 | ) | (21.0 | ) | (18.9 | ) | (10 | )% | (5 | )% | |||||
Amortization of other intangible assets | (0.1 | ) | (0.1 | ) | (0.1 | ) | (5 | )% | (13 | )% | |||||
Earnings from operations | 23.0 | 39.5 | 28.3 | (28 | )% | 23 | % | ||||||||
Net earnings | 11.2 | 19.1 | 12.6 | (34 | )% | 13 | % | ||||||||
Diluted net earnings per share | 0.20 | 0.33 | 0.22 | ||||||||||||
New orders | 246.2 | 250.5 | 187.3 | (25 | )% | (24 | )% | ||||||||
Backlog at end of period | 270.4 | 200.4 | 190.6 | (5 | )% | (30 | )% |
(1) | Percentage point change |
2
Net Sales. The following table shows net sales of our Front-end and Back-end segments for the first quarter of 2008 as compared to the fourth quarter of 2007 and the first quarter of 2007:
(EUR millions) | Q1 2007 | Q4 2007 | Q1 2008 | % Change Q4 2007 to Q1 2008 | % Change Q1 2007 to Q1 2008 | |||||||
Front-end | 116.3 | 106.3 | 83.9 | (21 | )% | (28 | )% | |||||
Back-end | 93.8 | 130.6 | 113.2 | (13 | )% | 21 | % | |||||
Total net sales | 210.1 | 236.9 | 197.1 | (17 | )% | (6 | )% | |||||
In the first quarter of 2008, net sales of wafer processing equipment (Front-end segment) represented 42.6% of total net sales. Net sales of assembly and packaging equipment and materials (Back-end segment) represented 57.4% of total net sales in the first quarter of 2008.
The decrease of net sales of our Front-end segment was noticed in all product lines except for Transistor Products.
The weakening of the Yen, US dollar and US dollar related currencies against the euro in the first quarter of 2008 as compared to the fourth quarter of 2007 and the first quarter of 2007 impacted total net sales negatively by 3% and 10% respectively.
Gross Profit Margin.The following table shows our gross profit and gross profit margin for our Front-end and Back-end segments for the first quarter of 2008 as compared to the fourth quarter of 2007 and the first quarter of 2007:
(EUR millions) | Gross profit Q1 2007 | Gross profit Q4 2007 | Gross profit Q1 2008 | Gross profit margin Q1 2007 | Gross profit margin Q4 2007 | Gross profit margin Q1 2008 | Increase or (decrease) percentage points Q4 2007 to Q1 2008 | Increase or (decrease) percentage points Q1 2007 to Q1 2008 | ||||||||||||
Front-end | 34.9 | 37.7 | 28.6 | 30.0 | % | 35.5 | % | 34.0 | % | (1.5 | ) | 4.0 | ||||||||
Back-end | 37.9 | 56.5 | 47.8 | 40.4 | % | 43.2 | % | 42.2 | % | (1.0 | ) | 1.8 | ||||||||
Total gross profit | 72.8 | 94.2 | 76.4 | 34.6 | % | 39.8 | % | 38.8 | % | (1.0 | ) | 4.2 | ||||||||
When comparing the gross profit margin of our Front-end segment for the first quarter of 2008 of 34.0% to the gross profit margin for the year 2007 of 32.2%, the increase is explained by changes in the product mix and the results from cost reductions programs which have been implemented since the third quarter of 2007. Headcount of the Front-end segment was reduced by 7% in the first quarter of 2008.
Selling, General and Administrative Expenses.The following table shows selling, general and administrative expenses for our Front-end and Back-end segments for the first quarter of 2008 as compared to the fourth quarter of 2007 and the first quarter of 2007:
(EUR millions) | Q1 2007 | Q4 2007 | Q1 2008 | % Change Q4 2007 to Q1 2008 | % Change Q1 2007 to Q1 2008 | |||||||
Front-end | 18.2 | 19.9 | 16.5 | (17 | )% | (9 | )% | |||||
Back-end | 11.7 | 13.7 | 12.6 | (8 | )% | 8 | % | |||||
Total selling, general and administrative expenses | 29.9 | 33.6 | 29.1 | (13 | )% | (3 | )% | |||||
3
As a percentage of net sales, selling, general and administrative expenses were 15% in the first quarter of 2008 and 14% in both the fourth quarter of 2007 and the first quarter of 2007.
Selling, general and administrative expenses of our Front-end segment decreased as a result of increased effort to control selling, general and administrative expenses, including the reduction of headcount of the Front-end segment in the first quarter of 2008. In addition, selling, general and administrative expenses of our Front-end segment in the fourth quarter of 2007 included, amongst others, external auditor’s expenditures, a reduction in force, accruals for bonuses and pensions, and a provision for lease obligations. Also included in selling, general and administrative expense of our Front-end segment for the fourth quarter of 2007 was a positive revaluation of fixed assets held for sale of EUR 0.8 million.
Research and Development Expenses. The following table shows research and development expenses for our Front-end and Back-end segments for the first quarter of 2008 as compared to the fourth quarter of 2007 and the first quarter of 2007:
(EUR millions) | Q1 2007 | Q4 2007 | Q1 2008 | % Change Q4 2007 to Q1 2008 | % Change Q1 2007 to Q1 2008 | |||||||
Front-end | 13.2 | 13.4 | 11.7 | (13 | )% | (11 | )% | |||||
Back-end | 6.6 | 7.6 | 7.2 | (5 | )% | 8 | % | |||||
Total research and development expenses | 19.8 | 21.0 | 18.9 | (10 | )% | (5 | )% | |||||
The decrease in the Front-end segment was the result of increased focus in the research and development portfolio.
As a percentage of net sales, research and development expenses were 10% in the first quarter of 2008 and 9% in both the fourth quarter of 2007 and the first quarter of 2007.
Earnings from Operations.The following table shows earnings from operations for our Front-end and Back-end segments for the first quarter of 2008 as compared to the fourth quarter of 2007 and the first quarter of 2007:
(EUR millions) | Q1 2007 | Q4 2007 | Q1 2008 | % Change Q4 2007 to Q1 2008 | % Change Q1 2007 to Q1 2008 | |||||||
Front-end | 3.4 | 4.3 | 0.2 | (95 | )% | (94 | )% | |||||
Back-end | 19.5 | 35.1 | 28.1 | (20 | )% | 44 | % | |||||
Total earnings from operations | 23.0 | 39.5 | 28.3 | (28 | )% | 23 | % | |||||
4
Net Earnings.The following table shows net earnings for our Front-end and Back-end segments for the first quarter of 2008 as compared to the fourth quarter of 2007 and the first quarter of 2007:
(EUR millions) | Q1 2007 | Q4 2007 | Q1 2008 | % Change Q4 2007 to Q1 2008 | % Change Q1 2007 to Q1 2008 | ||||||||
Front-end | 1.2 | 3.4 | (1.1 | ) | na | na | |||||||
Back-end | 10.0 | 15.7 | 13.7 | (13 | )% | 38 | % | ||||||
Total net earnings | 11.2 | 19.1 | 12.6 | (34 | )% | 13 | % | ||||||
Net earnings for the Front-end segment for the fourth quarter of 2007 include a gain on dilution of our investment in ASM Pacific Technology of EUR 3.0 million.
Net earnings for the Back-end segment reflect our 53.1% ownership of ASM Pacific Technology.
Bookings and backlog
The following table shows, for our Front-end and Back-end segments, the level of new orders for the first quarter of 2008 and the backlog at the end of the first quarter of 2008 as compared to the fourth quarter of 2007 and the first quarter of 2007:
(EUR millions, except book-to-bill ratio) | Q1 2007 | Q4 2007 | Q1 2008 | % Change Q4 2007 to Q1 2008 | % Change Q1 2007 to Q1 2008 | |||||||
Front-end: | ||||||||||||
New orders for the quarter | 133.6 | 110.8 | 76.2 | (31 | )% | (43 | )% | |||||
Backlog at the end of the quarter | 172.8 | 99.2 | 91.5 | (8 | )% | (47 | )% | |||||
Book-to-bill ratio (new orders divided by net sales) | 1.15 | 1.04 | 0.91 | |||||||||
Back-end: | ||||||||||||
New orders for the quarter | 112.6 | 139.7 | 111.1 | (21 | )% | (1 | )% | |||||
Backlog at the end of the quarter | 97.6 | 101.2 | 99.1 | (2 | )% | 2 | % | |||||
Book-to-bill ratio (new orders divided by net sales) | 1.20 | 1.07 | 0.98 | |||||||||
Total | ||||||||||||
New orders for the quarter | 246.2 | 250.5 | 187.3 | (25 | )% | (24 | )% | |||||
Backlog at the end of the quarter | 270.4 | 200.4 | 190.6 | (5 | )% | (30 | )% | |||||
Book-to-bill ratio (new orders divided by net sales) | 1.17 | 1.06 | 0.95 |
In line with the market, order intake decreased in the first quarter of 2008.
The decrease of order intake of our Front-end segment was noticed in all product lines except for Transistor Products.
The book-to-bill ratio of our Back-end segment is 1.04 when measured in local currency.
5
Liquidity and capital resources
Net cash provided by operations was EUR 31.9 million for the first quarter of 2008 as compared to net cash provided by operations of EUR 11.9 million for the first quarter of 2007. The increase results mainly from decreased working capital.
Net cash used in investing activities was EUR 7.4 million for the first quarter of 2008 as compared to EUR 6.4 million for the first quarter of 2007. The increase results from higher capital expenditures, partly offset by proceeds from the sale of property.
Net cash used in financing activities was EUR 2.5 million for the first quarter of 2008 as compared to net cash used in financing activities of EUR 0.9 million for the first quarter of 2007. In anticipation of dividend of ASMPT, we purchased treasury shares of EUR 1.1 million in the first quarter of 2008.
In 2008 and 2009, ASMI will continue to utilize the dividend from ASMPT on a combination of buy back of shares, buy back of convertibles, payment of cash dividends and/or buying some additional shares in ASMPT to retain the November 2006 level of ownership.
Net working capital, consisting of accounts receivable, inventories, other current assets, accounts payable, accrued expenses, advance payments from customers and deferred revenue, decreased from EUR 271.9 million at December 31, 2007 to EUR 262.3 million at March 31, 2008. The decrease is primarily the result of lower manufacturing and sales levels. The number of outstanding days of working capital, measured based on annual sales, decreased from 104 days at December 31, 2007 to 102 days at March 31, 2008. For the same period, our Front-end segment decreased from 125 days to 120 days and our Back-end segment increased from 85 days to 87 days.
At March 31, 2008, the Company’s principal sources of liquidity consisted of EUR 186.5 million in cash and cash equivalents and EUR 102.8 million in undrawn bank lines. Approximately EUR 75.1 million of the cash and cash equivalents and EUR 24.5 million of the undrawn bank lines are restricted to use in the Company’s Back-end operations and EUR 11.2 million of the cash and cash equivalents and EUR 27.1 million in undrawn bank lines are restricted to use in the Company’s Front-end operations in Japan.
Release of 2007 Statutory Annual Report
On April 29, 2008 ASMI released its 2007 Statutory Annual Report, which includes its Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (“IFRS”). Under IFRS, final net earnings allocated to shareholders of the parent amount to EUR 65.7 million. This amount differs from preliminary net earnings of EUR 62.6 million as reported in the Company’s 2007 operating results press release on February 27, 2008 and reported in Annex A to the Proxy Statement for its 2007 Annual General Meeting of Shareholders. The adjustment results from a revision of the allocation of the premium paid in repurchasing the Company’s convertible subordinated notes. The preliminary IFRS net earnings did not fully reflect the requirement under IFRS that a portion of the repurchase premium be allocated to equity instead of the statement of operations. As a result of this adjustment, IFRS net earnings increased, with no impact on total shareholders’ equity.
6
Outlook
Based on recent projections by industry analysts, front-end capital equipment spending for the year will deteriorate to between negative 15% and negative 20%—or possibly more. Visibility beyond the second quarter remains extremely low, and the timing of any upturn remains hazy.
Based on the protracted industry downturn ASMI anticipates increased weakness in front-end revenue for Q2. However, our leaner front-end operating model will help to mitigate part of the negative effects of the current industry contraction on our operating results.
For back-end operations, we again expect solid results for Q2. The first quarter book-to-bill ratio of 1.04, as measured in the local currency, indicates a fairly stable order pattern for our back-end operations, despite the current soft market environment. We feel confident that back-end’s proven business strategies—multiple products serving diversified application markets, a customer focus, vertical integration and low-cost manufacturing locations and a superior customer support organization, will continue to contribute positive results throughout this period of weak demand and low visibility.
7
ASM INTERNATIONAL CONFERENCE CALL
ASM International will host an investor conference call and web cast on
TUESDAY, MAY 6, 2008 at
09:00 a.m. US Eastern time
15:00 p.m Continental European time.
The teleconference dial-in numbers are as follows:
United States: International: | +1 866.966.5335 +44 (0)20.3023.4456 |
A simultaneous audio web cast will be accessible at www.asm.com.
The teleconference will be available for replay, beginning one hour after completion of the live broadcast, through May 19, 2008. The replay dial-in numbers are:
United States: International: Access Code: | +1 866.583.1035 +44 (0)20.8196.1998 117327# |
About ASM International
ASM International N.V., headquartered in Bilthoven, the Netherlands, and its subsidiaries design and manufacture equipment and materials used to produce semiconductor devices. ASM International and its subsidiaries provide production solutions for wafer processing (Front-end segment) as well as assembly and packaging (Back-end segment) through facilities in the United States, Europe, Japan and Asia. ASM International’s common stock trades on NASDAQ (symbol ASMI) and the Euronext Amsterdam Stock Exchange (symbol ASM). For more information, visit ASMI’s website at www.asm.com.
Safe Harbor Statement under the U.S. Private Securities Litigation Reform Act of 1995: All matters discussed in this statement, except for any historical data, are forward-looking statements. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. These include, but are not limited to, economic conditions and trends in the semiconductor industry generally and the timing of the industry cycles specifically, currency fluctuations, the timing of significant orders, market acceptance of new products, competitive factors, litigation involving intellectual property, shareholder and other issues, commercial and economic disruption due to natural disasters, terrorist activity, armed conflict or political instability, epidemics and other risks indicated in the Company’s filings from time to time with the U.S. Securities and Exchange Commission, including, but not limited to, the Company’s reports on Form 20-F and Form 6-K. The Company assumes no obligation nor intends to update or revise any forward-looking statements to reflect future developments or circumstances.
8
ASM INTERNATIONAL N.V.
CONSOLIDATED STATEMENTS OF OPERATIONS
(thousands except per share data) | in Euro | |||||
Three months ended March 31, | ||||||
2007 | 2008 | |||||
(unaudited) | (unaudited) | |||||
Net sales | 210,091 | 197,079 | ||||
Cost of sales | (137,332 | ) | (120,657 | ) | ||
Gross profit | 72,759 | 76,422 | ||||
Operating expenses: | ||||||
Selling, general and administrative | (29,877 | ) | (29,126 | ) | ||
Research and development | (19,788 | ) | (18,863 | ) | ||
Amortization of other intangible assets | (144 | ) | (126 | ) | ||
Total operating expenses | (49,809 | ) | (48,115 | ) | ||
Earnings from operations | 22,950 | 28,307 | ||||
Net interest expense | (1,026 | ) | (799 | ) | ||
Foreign currency exchange gains | 59 | 927 | ||||
Earnings from continuing operations before income taxes and minority interest | 21,983 | 28,435 | ||||
Income tax expense | (2,130 | ) | (3,977 | ) | ||
Earnings from continuing operations before minority interest | 19,853 | 24,458 | ||||
Minority interest | (8,696 | ) | (11,819 | ) | ||
Net earnings | 11,157 | 12,639 | ||||
Net earnings per share: | ||||||
Basic net earnings | 0.21 | 0.23 | ||||
Diluted net earnings (1) | 0.20 | 0.22 | ||||
Weighted average number of shares used in computing per share amounts (in thousands): | ||||||
Basic | 53,874 | 54,005 | ||||
Diluted (1) | 61,403 | 64,109 | ||||
(1) | The calculation of diluted net earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in earnings of the Company. Only instruments that have a dilutive effect on net earnings are included in the calculation. The assumed conversion results in adjustment in the weighted average number of common shares and net earnings due to the related impact on interest expense. The calculation is done for each reporting period individually. For the three months ended March 31, 2007, the effect of a potential conversion of convertible debt into 4,682,133 common shares was anti-dilutive and no adjustments have been reflected in the diluted weighted average number of shares and net earnings per share for this period. |
9
ASM INTERNATIONAL N.V.
CONSOLIDATED BALANCE SHEETS
(thousands except share data) | In Euro | |||||
December 31, 2007 | March 31, 2008 | |||||
(unaudited) | ||||||
Assets | ||||||
Cash and cash equivalents | 167,923 | 186,523 | ||||
Accounts receivable, net | 229,160 | 199,137 | ||||
Inventories, net | 205,504 | 208,562 | ||||
Income taxes receivable | 117 | 55 | ||||
Deferred tax assets | 4,062 | 4,403 | ||||
Other current assets | 26,786 | 31,875 | ||||
Total current assets | 633,552 | 630,555 | ||||
Debt issuance costs | 2,316 | 1,993 | ||||
Deferred tax assets | 951 | 1,032 | ||||
Other intangible assets | 4,251 | 3,841 | ||||
Goodwill, net | 49,621 | 46,112 | ||||
Property, plant and equipment, net | 149,642 | 143,122 | ||||
Total Assets | 840,333 | 826,655 | ||||
Liabilities and Shareholders' Equity | ||||||
Notes payable to banks | 16,677 | 17,650 | ||||
Accounts payable | 99,046 | 88,006 | ||||
Accrued expenses | 68,076 | 63,468 | ||||
Advance payments from customers | 10,039 | 13,245 | ||||
Deferred revenue | 12,377 | 12,597 | ||||
Income taxes payable | 19,686 | 17,142 | ||||
Current portion of long-term debt | 15,438 | 15,865 | ||||
Total current liabilities | 241,339 | 227,973 | ||||
Pension liabilities | 3,872 | 3,910 | ||||
Deferred tax liabilities | 799 | 757 | ||||
Long-term debt | 15,828 | 14,952 | ||||
Convertible subordinated debt | 138,993 | 129,397 | ||||
Total Liabilities | 400,831 | 376,989 | ||||
Minority interest | 120,624 | 124,323 | ||||
Shareholders' Equity: | ||||||
Common shares | ||||||
Authorized 110,000,000 shares, par value €0.04, | 2,160 | 2,160 | ||||
Financing preferred shares, issued none | — | — | ||||
Preferred shares, issued none | — | — | ||||
Capital in excess of par value | 319,657 | 320,051 | ||||
Treasury shares at cost | (3,985 | ) | (4,992 | ) | ||
Retained earnings | 73,965 | 86,571 | ||||
Accumulated other comprehensive loss | (72,919 | ) | (78,447 | ) | ||
Total Shareholders' Equity | 318,878 | 325,343 | ||||
Total Liabilities and Shareholders' Equity | 840,333 | 826,655 | ||||
10
ASM INTERNATIONAL N.V.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(thousands) | in Euro | |||||
Three months ended March 31, | ||||||
2007 | 2008 | |||||
(unaudited) | (unaudited) | |||||
Increase (decrease) in cash and cash equivalents: | ||||||
Cash flows from operating activities: | ||||||
Net earnings | 11,157 | 12,639 | ||||
Adjustments to reconcile net earnings to net cash from operating activities: | ||||||
Depreciation of property, plant and equipment | 8,382 | 7,922 | ||||
Amortization of other intangible assets | 353 | 371 | ||||
Amortization of debt issuance costs | 232 | 173 | ||||
Compensation expense employee stock option plan | 358 | 425 | ||||
Compensation expense employee share incentive scheme ASMPT | 682 | 861 | ||||
Deferred income taxes | (434 | ) | (290 | ) | ||
Minority interest | 8,696 | 11,819 | ||||
Changes in other assets and liabilities: | ||||||
Accounts receivable | (3,563 | ) | 23,158 | |||
Inventories | (16,010 | ) | (11,448 | ) | ||
Other current assets | (4,608 | ) | (6,426 | ) | ||
Accounts payable and accrued expenses | (762 | ) | (10,294 | ) | ||
Advance payments from customers | 3,784 | 4,061 | ||||
Deferred revenue | 3,060 | 284 | ||||
Pension liabilities | 125 | 81 | ||||
Income taxes | 407 | (1,430 | ) | |||
Net cash provided by operating activities | 11,859 | 31,906 | ||||
Cash flows from investing activities: | ||||||
Capital expenditures | (6,146 | ) | (9,765 | ) | ||
Purchase of intangible assets | (336 | ) | (176 | ) | ||
Proceeds from sale of property, plant and equipment | 97 | 2,536 | ||||
Net cash used in investing activities | (6,385 | ) | (7,405 | ) | ||
Cash flows from financing activities: | ||||||
Notes payable to banks, net | (825 | ) | 250 | |||
Repayments of long-term debt and subordinated debt | (1,343 | ) | (1,729 | ) | ||
Purchase of treasury shares | — | (1,104 | ) | |||
Proceeds from issuance of common shares | 1,301 | 34 | ||||
Net cash used in financing activities | (867 | ) | (2,549 | ) | ||
Exchange rate effects | (939 | ) | (3,352 | ) | ||
Net increase in cash and cash equivalents | 3,668 | 18,600 | ||||
Cash and cash equivalents at beginning of period | 193,872 | 167,923 | ||||
Cash and cash equivalents at end of period | 197,540 | 186,523 | ||||
Supplemental disclosures of cash flow information | ||||||
Cash paid during the period for: | ||||||
Interest, net | (986 | ) | (661 | ) | ||
Income taxes, net | 2,158 | 5,697 | ||||
11
ASM INTERNATIONAL N.V.
DISCLOSURE ABOUT SEGMENTS AND RELATED INFORMATION
The Company organizes its activities in two operating segments, Front-end and Back-end.
The Front-end segment manufactures and sells equipment used in wafer processing, encompassing the fabrication steps in which silicon wafers are layered with semiconductor devices. The segment is a product driven organizational unit comprised of manufacturing, service, and sales operations in Europe, the United States, Japan and Southeast Asia.
The Back-end segment manufactures and sells equipment and materials used in assembly and packaging, encompassing the processes in which silicon wafers are separated into individual circuits and subsequently assembled, packaged and tested. The segment is organized in ASM Pacific Technology Ltd., in which the Company holds a majority interest of 53.10% at March 31, 2008, whilst the remaining shares are listed on the Stock Exchange of Hong Kong. The segment's main operations are located in Hong Kong, Singapore, the People's Republic of China and Malaysia.
(thousands, except headcount) | In Euro | ||||||||
Front-end | Back-end | Total | |||||||
(unaudited) | (unaudited) | (unaudited) | |||||||
Three months ended March 31, 2007 | |||||||||
Net sales to unaffiliated customers | 116,277 | 93,814 | 210,091 | ||||||
Gross profit | 34,897 | 37,862 | 72,759 | ||||||
Earnings from operations | 3,439 | 19,511 | 22,950 | ||||||
Net interest income (expense) | (1,931 | ) | 905 | (1,026 | ) | ||||
Foreign currency exchange gains (losses) | (540 | ) | 599 | 59 | |||||
Income tax benefit (expense) | 246 | (2,376 | ) | (2,130 | ) | ||||
Minority interest | — | (8,696 | ) | (8,696 | ) | ||||
Net earnings | 1,214 | 9,943 | 11,157 | ||||||
Capital expenditures and purchase of intangible assets | 1,276 | 5,206 | 6,482 | ||||||
Depreciation and amortization | 4,279 | 4,456 | 8,735 | ||||||
Cash and cash equivalents | 102,639 | 94,901 | 197,540 | ||||||
Capitalized goodwill | 14,034 | 39,877 | 53,911 | ||||||
Other intangible assets | 4,394 | 478 | 4,872 | ||||||
Other identifiable assets | 340,480 | 255,484 | 595,964 | ||||||
Total assets | 461,547 | 390,740 | 852,287 | ||||||
Total debt | 223,743 | 546 | 224,289 | ||||||
Headcount in full-time equivalents (1) | 1,907 | 8,977 | 10,884 | ||||||
(unaudited) | (unaudited) | (unaudited) | |||||||
Three months ended March 31, 2008 | |||||||||
Net sales to unaffiliated customers | 83,878 | 113,201 | 197,079 | ||||||
Gross profit | 28,552 | 47,870 | 76,422 | ||||||
Earnings from operations | 213 | 28,094 | 28,307 | ||||||
Net interest income (expense) | (1,218 | ) | 419 | (799 | ) | ||||
Foreign currency exchange gains (losses) | (112 | ) | 1,039 | 927 | |||||
Income tax benefit (expense) | 54 | (4,031 | ) | (3,977 | ) | ||||
Minority interest | — | (11,819 | ) | (11,819 | ) | ||||
Net earnings | (1,063 | ) | 13,702 | 12,639 | |||||
Capital expenditures and purchase of intangible assets | 5,904 | 4,037 | 9,941 | ||||||
Depreciation and amortization | 3,668 | 4,625 | 8,293 | ||||||
Cash and cash equivalents | 111,410 | 75,113 | 186,523 | ||||||
Capitalized goodwill | 12,528 | 33,584 | 46,112 | ||||||
Other intangible assets | 3,171 | 670 | 3,841 | ||||||
Other identifiable assets | 306,179 | 284,000 | 590,179 | ||||||
Total assets | 433,288 | 393,367 | 826,655 | ||||||
Total debt | 177,864 | — | 177,864 | ||||||
Headcount in full-time equivalents (1) | 1,800 | 10,163 | 11,963 | ||||||
(1) | Headcount includes those employees with a fixed contract, and is exclusive of temporary workers. |
12
ASM INTERNATIONAL N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Basis of Presentation
ASM International N.V, ("ASMI") follows accounting principles in the United States of America ("US GAAP"). Accounting principles applied are unchanged compared to the year 2007.
Principles of Consolidation
The Consolidated Financial Statements include the accounts of ASMI and its subsidiaries, where ASMI holds a controlling interest. The minority interest of third parties is disclosed separately in the Consolidated Financial Statements. All intercompany profits, transactions and balances have been eliminated in consolidation.
13
ASM INTERNATIONAL N.V.
RECONCILIATION US GAAP - IFRS
Accounting principles under IFRS
ASMI’s primary consolidated financial statements are and will continue to be prepared in accordance with US GAAP. However, ASMI is required under Dutch law to report its Consolidated Financial Statements in accordance with International Financial Reporting Standards (“IFRS”). As a result of the differences between IFRS and US GAAP that are applicable to ASMI, the Consolidated Statement of Operations and Consolidated Balance Sheet reported in accordance with IFRS differ from those reported in accordance with US GAAP. The major differences relate to accounting for goodwill, accounting for minority interest, accounting for convertible subordinated notes, accounting for development expenses, accounting for option plans and accounting for pension plans.
The reconciliation between IFRS and US GAAP is as follows:
Net earnings | ||||||
Three months ended March 31, | ||||||
(euro thousands except per share data) | 2007 | 2008 | ||||
(unaudited) | (unaudited) | |||||
US GAAP | 11,157 | 12,639 | ||||
Adjustments for IFRS: | ||||||
Classification of minority interest | 8,696 | 11,819 | ||||
Convertible subordinated notes | (1,792 | ) | (2,295 | ) | ||
Development expenses | 3,537 | 3,341 | ||||
Option plans | 4 | — | ||||
Total adjustments | 10,445 | 12,865 | ||||
IFRS | 21,602 | 25,504 | ||||
IFRS allocation of net earnings: | ||||||
Shareholders | 12,906 | 13,685 | ||||
Minority interest | 8,696 | 11,819 | ||||
Net earnings per share: | ||||||
Basic | 0.24 | 0.25 | ||||
Diluted | 0.24 | 0.25 | ||||
Equity | Equity | |||||
(euro thousands) | December 31, 2007 | March 31, 2008 | ||||
(unaudited) | ||||||
US GAAP | 318,878 | 325,343 | ||||
Adjustments for IFRS: | ||||||
Goodwill | (9,569 | ) | (8,979 | ) | ||
Classification of minority interest | 120,624 | 124,323 | ||||
Convertible subordinated notes | 17,151 | 14,856 | ||||
Development expenses | 29,717 | 32,668 | ||||
Pension plans | 747 | 783 | ||||
Total adjustments | 158,670 | 163,651 | ||||
IFRS | 477,548 | 488,994 | ||||
14