Exhibit 99.2
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ASM International N.V.
ASM INTERNATIONAL REPORTS
THIRD QUARTER 2009 OPERATING RESULTS
ALMERE, THE NETHERLANDS, October 29, 2009 - ASM International N.V. (NASDAQ: ASMI and Euronext Amsterdam: ASM) reports today its third quarter 2009 (unaudited) operating results in accordance with US GAAP.
• | Third quarter of 2009 net sales of EUR 180.2 million, up 51% from the second quarter of 2009 and down 5% from the third quarter of 2008. Front-end sales were up 37%, Back-end sales were up 55%; |
• | Restructuring expenses of EUR 9.2 million were incurred and an inventory impairment charge of EUR 5.9 million was recognized in the third quarter of 2009; |
• | Net loss (allocated to the shareholders of the parent) of the third quarter of 2009 was EUR 15.8 million, or EUR 0.31 diluted net loss per share, as compared to net loss of EUR 55.7 million, or EUR 1.08 diluted net loss per share for the second quarter of 2009 and net earnings of EUR 2.4 million or EUR 0.05 diluted net earnings per share for the third quarter of 2008; |
• | Bookings in the third quarter of 2009 were EUR 204.5 million, up 31% from the second quarter of 2009. Bookings from our Front-end segment were up 98% and bookings from our Back-end segment were up 20%. Quarter-end backlog was EUR 146.6 million, up 20% from the end of the previous quarter. |
Investor Contacts:
Erik Kamerbeek
Investor Relations
+31 88 100 8500
Mary Jo Dieckhaus
Investor Relations
+1 212-986-290
Media Contact:
Ian Bickerton
+31 625 018 512
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Commenting on the Company’s operating results, Chuck del Prado, President and Chief Executive Officer of ASM International, said “Commenting on the company’s operating results, Chuck del Prado, President and Chief Executive Officer of ASM International, said, “ASM’s overall results are improving as a result of the market upturn and the restructuring program that is being executed.”
“In Front-end we see improvement in terms of sales and bookings. Front-end bookings almost doubled compared to the albeit low Q2-levels. Also we are on schedule with our cost reduction as part of the PERFORM! program. At the same time we are making inroads with new technologies positioning our front-end products and processes for the 32nm production ramps of our customers.”
“Back-end’s strong performance reflects continued solid business momentum from both the semiconductor assembly and packaging segment, and adjacent markets such as LED. In addition to reporting substantial growth in quarterly sales, Back-end significantly expanded its operating leverage as margins grew, driven by strong equipment and leadframe demand and aggressive cost-cutting measures implemented earlier this year”.
All amounts in this press release are rounded to the nearest thousand or million euro; therefore amounts may not equal (sub) totals due to rounding.
The following table shows the operating performance for the third quarter of 2009 as compared to the second quarter of 2009 and the third quarter of 2008:
(EUR millions) | Q3 2008 | Q2 2009 | Q3 2009 | % Change Q2 2009 to Q3 2009 | % Change Q3 2008 to Q3 2009 | ||||||||||
Net sales | 190.0 | 119.5 | 180.2 | 51 | % | (5 | )% | ||||||||
Gross profit before impairment of inventories | 68.7 | 33.7 | 69.0 | 105 | % | 0 | % | ||||||||
Gross profit margin % | 36.2 | % | 28.2 | % | 38.3 | % | 10.1 | pt 1) | 2.1 | pt 1) | |||||
Impairment inventories | — | (20.6 | ) | (5.9 | ) | ||||||||||
Gross profit | 68.7 | 13.1 | 63.1 | 382 | % | (8 | )% | ||||||||
Selling, general and administrative expenses | (30.7 | ) | (25.7 | ) | (28.2 | ) | 10 | % | (8 | )% | |||||
Research and development expenses | (18.8 | ) | (14.6 | ) | (15.2 | ) | 4 | % | (19 | )% | |||||
Amortization of other intangible assets | (0.1 | ) | (0.2 | ) | (0.0 | ) | |||||||||
Impairment of goodwill | — | — | — | ||||||||||||
Restructuring expenses | — | (15.4 | ) | (9.2 | ) | ||||||||||
Earnings from operations | 19.1 | (42.7 | ) | 10.5 | |||||||||||
Net earnings (loss)2) | 2.4 | (55.7 | ) | (15.8 | ) | ||||||||||
Net earnings (loss)2) per share, diluted | 0.05 | (1.08 | ) | (0.31 | ) | ||||||||||
New orders | 176.2 | 155.8 | 204.5 | 31 | % | 16 | % | ||||||||
Backlog at end of period | 160.8 | 122.4 | 146.6 | 20 | % | (9 | )% |
1) | Percentage point change |
2) | allocated to the shareholders of the parent |
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Net Sales. The following table shows net sales of our Front-end and Back-end segments for the third quarter of 2009 as compared to the second quarter of 2009 and the third quarter of 2008:
(EUR millions) | Q3 2008 | Q2 2009 | Q3 2009 | % Change Q2 2009 to Q3 2009 | % Change Q3 2008 to Q3 2009 | |||||||
Front-end | 63.4 | 27.6 | 37.8 | 37 | % | (40 | )% | |||||
Back-end | 126.6 | 91.9 | 142.5 | 55 | % | 13 | % | |||||
Total net sales | 190.0 | 119.5 | 180.2 | 51 | % | (5 | )% | |||||
During the third quarter of 2009, net sales of wafer processing equipment (Front-end segment) represented 21% of total net sales and sales of assembly and packaging equipment and materials (Back-end segment) represented 79% of total net sales.
Due to increasing customers activity in the third quarter of 2009 additional sales in our Front-end segment were realized.
In our Back-end segment the early signs of strengthening order in-flows which started during the second quarter have gathered further momentum as we entered the second half of the year. During the past three months, our Back-end segment has seen a spectacular surge in orders and a substantial leap in quarter-on-quarter growth.
The strengthening of the Yen, US dollar and US dollar related currencies against the euro in the third quarter of 2009 as compared to the third quarter of 2008 impacted total net sales by 8%.
Gross Profit Margin.The following table shows gross profit and gross profit margin for the Front-end and Back-end segments for the third quarter of 2009 as compared to the second quarter of 2009 and the third quarter of 2008:
(EUR millions) | Gross profit Q3 2008 | Gross profit before impairment inventories Q2 2009 | Gross profit before impairment inventories Q3 2009 | Gross profit margin Q3 2008 | Gross profit margin Q2 2009 | Gross profit margin Q3 2009 | Increase or (decrease) percentage points Q2 2009 to Q3 2009 | Increase or (decrease) percentage points Q3 2008 to Q3 2009 | ||||||||||||
Front-end | 20.3 | 0.4 | 6.7 | 32.1 | % | 1.7 | % | 17.7 | % | 16.0 | (14.4 | ) | ||||||||
Back-end | 48.4 | 33.3 | 62.3 | 38.2 | % | 36.2 | % | 43.7 | % | 7.5 | 5.5 | |||||||||
Total gross profit | 68.7 | 33.7 | 69.0 | 36.2 | % | 28.2 | % | 38.3 | % | 10.1 | 2.1 | |||||||||
The decrease in the gross profit margin excluding the impairment of inventories of our Front-end segment in the third quarter of 2009 is the result of the relative low sales level, the mix of products sold and the absorption of our manufacturing overhead compared with the third quarter of 2008. As a result of the current prolonged contraction in the market and strategic focus on certain of our product configurations an additional impairment of inventories has been recorded of EUR 5.9 million in the third quarter of 2009, resulting in a gross profit margin of EUR 0.8 million or 2.1% of net sales.
Gross margins of our Back-end segment have further improved in the third quarter of 2009. With the overall improvement in the performance, gross margin during the quarter has exceeded the same quarter last year by a wide margin. Improvement in gross margin was a direct result of higher production volume, lower metal prices and our cost reduction effort.
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Selling, General and Administrative Expenses.The following table shows selling, general and administrative expenses for our Front-end and Back-end segments for the third quarter of 2009 as compared to the second quarter of 2009 and the third quarter of 2008:
(EUR millions) | Q3 2008 | Q2 2009 | Q3 2009 | % Change Q2 2009 to Q3 2009 | % Change Q3 2008 to Q3 2009 | |||||||
Front-end | 16.5 | 14.7 | 14.7 | — | (11 | )% | ||||||
Back-end | 14.2 | 11.0 | 13.5 | 23 | % | (5 | )% | |||||
Total selling, general and administrative expenses | 30.7 | 25.7 | 28.2 | 10 | % | (8 | )% | |||||
As a percentage of net sales, selling, general and administrative expenses were 16% in the third quarter of 2009 and 21% in the second quarter of 2009 and 16% in the third quarter of 2008.
Selling, general and administrative expenses of our Front-end segment were on the same level as the second quarter of 2009. The lower level of expenses compared to the third quarter of 2008 reflect our focus to reduce our expenses given the current market circumstances, including the further reduction of headcount of the Front-end segment.
The decrease in the Back-end segment compared with the third quarter of 2008 is the result of the implementation of major costs reduction programs, initiated after the market downturn in the second half of 2008. Compared with the second quarter of 2009 the selling, general administrative expenses increased as a result of increased activities.
Headcount of the Front-end segment was further reduced by 5% in the third quarter of 2009.
Research and Development Expenses. The following table shows research and development expenses for our Front-end and Back-end segments for the third quarter of 2009 as compared to the second quarter of 2009 and the third quarter of 2008:
(EUR millions) | Q3 2008 | Q2 2009 | Q3 2009 | % Change Q2 2009 to Q3 2009 | % Change Q3 2008 to Q3 2009 | |||||||
Front-end | 10.7 | 8.1 | 7.5 | (7 | )% | (30 | )% | |||||
Back-end | 8.1 | 6.5 | 7.7 | 18 | % | (5 | )% | |||||
Total research and development expenses | 18.8 | 14.6 | 15.2 | 4 | % | (19 | )% | |||||
As a percentage of net sales, research and development expenses were 8% in the third quarter of 2009, 12% in the second quarter of 2009 and 10% in the third quarter of 2008.
The decrease in the Front-end segment from the second quarter of 2009 and the third quarter of 2008 is the result of the prioritisation of research and development projects.
At the Back-end segment the research and development expenses in the third quarter of 2009 were at a higher level as compared to the second quarter of 2009 as a result of the increased activity.
Restructuring Expenses.In 2009 ASMI is implementing a major restructuring in our Front-end segment as announced on January 9, 2009 and on July 20, 2009. Related to these restructuring plans, an amount of EUR 9.2 million restructuring expenses was recorded in the third quarter of 2009. These charges include EUR 5.8 million in one-time employee termination benefit obligations, EUR 2.4 million in non cash fixed asset impairment charges and EUR 1.0 million in other transition charges.
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In the second quarter of 2009 an amount of EUR 15.4 million restructuring expenses was recorded. This charge consisted of EUR 7.8 million in one-time employee termination benefit, EUR 2.3 million in non cash fixed asset impairment charges and EUR 4.3 million related to the intended management buy-out of our RTP business and EUR 1.0 million in other transition expenses. In the first quarter of 2009 an amount of EUR 4.1 million restructuring charges was recognized, mainly related to one-time employee termination benefit obligations.
Earnings (Loss) from Operations.The following table shows earnings (loss) from operations for our Front-end and Back-end segments for the third quarter of 2009 as compared to the second quarter of 2009 and the third quarter of 2008:
(EUR millions) | Q3 2008 | Q2 2009 | Q3 2009 | Change Q2 2009 to Q3 2009 | Change Q3 2008 to Q3 2009 | |||||||||
Front-end: | ||||||||||||||
Excluding impairments and restructuring charges | (7.0 | ) | (22.5 | ) | (15.5 | ) | 7.0 | (8.5 | ) | |||||
Impairments and restructuring | — | (36.0 | ) | (15.1 | ) | 20.9 | (15.1 | ) | ||||||
Including impairments and restructuring | (7.0 | ) | (58.5 | ) | (30.6 | ) | 27.9 | (23.6 | ) | |||||
Back-end | 26.1 | 15.8 | 41.1 | 25.3 | 15.0 | |||||||||
Total earnings (loss) from operations | 19.1 | (42.7 | ) | 10.5 | 53.2 | (8.6 | ) | |||||||
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 third quarter of 2009 as compared to the second quarter of 2009 and the third quarter of 2008:
(EUR millions) | Q3 2008 | Q2 2009 | Q3 2009 | Change Q2 2009 to Q3 2009 | Change Q3 2008 to Q3 2009 | ||||||||||
Front-end: | |||||||||||||||
Excluding impairments, restructuring and fair value change Conversion option | (9.5 | ) | (23.9 | ) | (14.6 | ) | 9.3 | (5.1 | ) | ||||||
Impairments and restructuring | — | (34.9 | ) | (15.1 | ) | 19.8 | (15.1 | ) | |||||||
Fair value change Conversion option | — | (4.7 | ) | (5.4 | ) | (0.7 | ) | (5.4 | ) | ||||||
Including impairments, restructuring and fair value change Conversion option | (9.5 | ) | (63.5 | ) | (35.1 | ) | 28.4 | (25.6 | ) | ||||||
Back-end | 11.9 | 7.8 | 19.3 | 11.5 | 7.4 | ||||||||||
Total net earnings (loss)1) | 2.4 | (55.7 | ) | (15.8 | ) | 39.9 | (18.2 | ) | |||||||
1) | allocated to the shareholders of the parent |
Net earnings for the Back-end segment reflect our 52.87% ownership of ASM Pacific Technology.
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Nine months ended September 30, 2009
The following table shows the operating performance and the percentage change for the nine months ended September 30, 2009 compared to the same period in 2008:
(EUR millions, except earnings per share) | Nine months ended September 30, | ||||||||
2008 | 2009 | % Change | |||||||
Net sales | 596.4 | 388.8 | (35 | )% | |||||
Gross profit before impairment of inventories | 226.3 | 124.0 | (45 | )% | |||||
Gross profit margin % | 38.0 | % | 31.9 | % | (6.1 | ) pt | |||
Impairment inventories | — | (26.5 | ) | — | |||||
Gross profit | 226.3 | 97.5 | (57 | )% | |||||
Selling, general and administrative expenses | (91.6 | ) | (79.1 | ) | 14 | % | |||
Research and development expenses | (56.1 | ) | (46.3 | ) | 17 | % | |||
Amortization of other intangible assets | (0.4 | ) | (0.3 | ) | nm | ||||
Impairment of goodwill | (1.4 | ) | — | — | |||||
Restructuring expenses | — | (28.8 | ) | — | |||||
Earnings from operations | 76.9 | (56.9 | ) | — | |||||
Net earnings (loss)1) | 24.7 | (94.8 | ) | — | |||||
Net earnings (loss) per share, diluted1) | 0.47 | (1.84 | ) | — | |||||
New orders | 556.8 | 444.7 | (20 | )% | |||||
Backlog at end of period | 160.8 | 146.6 | (9 | )% |
1) | allocated to the shareholders of the parent |
Net Sales. The following table shows net sales of our Front-end and Back-end segments for the nine months ended September 30, 2009 compared to the same period in 2008:
(EUR millions) | Nine months ended September 30, | ||||||
2008 | 2009 | % Change | |||||
Front-end | 224.4 | 111.1 | (50 | )% | |||
Back-end | 372.1 | 277.7 | (25 | )% | |||
Total net sales | 596.4 | 388.8 | (35 | )% | |||
During the nine months ended September 30, 2009 net sales of wafer processing equipment (Front-end segment) represented 29% of total net sales and sales of assembly and packaging equipment and materials (Back-end segment) represented 71% of total net sales.
The market conditions in the semiconductor industry impacted the sales levels in the first nine months ended September 30, 2009 compared to the same period in 2008. Lower sales levels of 50% in our Front-end segment and 25% in our Back-end segment were recorded. In our Front-end segment the decrease continued quarter over quarter and are noticed in all product lines. In the Back-end segment the nine months period ended September 30, 2009 started with weak sales levels and rebounded in the second and third quarter of 2009 as market conditions improved significantly in the assembly and packaging equipment industry due to the stimulus packages implemented by the Chinese government. The improvement in the third quarter is more broad-based on a geographical basis.
The strengthening of the Yen, US dollar and US dollar related currencies against the euro in the first nine months of 2009 as compared to the same period of 2008 impacted total net sales by 10%.
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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 nine months ended September 30, 2009 compared to the same period in 2008:
(EUR millions) | Nine months ended September 30, | ||||||||||||
Gross profit | Gross profit margin | ||||||||||||
2008 | 2009 excluding impairment charges inventories | 2008 | 2009 | Increase or (decrease) percentage points | |||||||||
Front-end | 73.5 | 19.3 | 32.8 | % | 17.4 | % | (15.4 | ) pt | |||||
Back-end | 152.9 | 104.8 | 41.1 | % | 37.7 | % | (3.4 | ) pt | |||||
Total gross profit | 226.3 | 124.0 | 38.0 | % | 31.9 | % | (6.1 | ) pt | |||||
The decrease in the gross profit margin excluding the impairment of inventories of our Front-end segment in the second and third quarter of 2009 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 has been recorded of EUR 26.5 million in the nine months ended September 30, 2009. In our Back-end segment gross margins have decreased during the nine months ended September 30, 2009 compared to the same period in 2008 due to the industry dynamics, however rebounded during the second and third quarter 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 the nine months ended September 30, 2009 compared to the same period in 2008:
(EUR millions) | Nine months ended September 30, | ||||||
2008 | 2009 | % Change | |||||
Front-end | 50.8 | 45.2 | (11 | )% | |||
Back-end | 40.7 | 33.9 | (17 | )% | |||
Total selling, general and administrative expenses | 91.6 | 79.1 | (14 | )% | |||
As a percentage of net sales, selling, general and administrative expenses were 20% in the first nine months of 2009 and 15% in the same period of 2008.
Selling, general and administrative expenses of our Front-end segment decreased as a result of our focus to reduce our expenses given the current market circumstances, including the reduction of headcount of the Front-end segment in the first nine months of 2009.
The decrease in the Back-end segment compared with the same period in 2008 is the result of the implementation of major costs reduction programs.
Headcount of the Front-end segment was reduced by 19% in the first nine months of 2009.
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Research and Development Expenses.The following table shows research and development expenses for our Front-end and Back-end segments for the nine months ended September 30, 2009 compared to the same period in 2008:
(EUR millions) | Nine months ended September 30, | ||||||
2008 | 2009 | % Change | |||||
Front-end | 33.4 | 25.6 | (23 | )% | |||
Back-end | 22.7 | 20.7 | (9 | )% | |||
Total research and development expenses | 56.1 | 46.3 | (17 | )% | |||
As a percentage of net sales, research and development expenses were 12% in the first nine months of 2009 and 9% in the first nine months of 2008.
The decrease in the Front-end segment is the result of the prioritisation of research and development projects. The reduction in the Back-end segment is result of cost reduction efforts.
Restructuring Expenses.In 2009 ASMI is implementing a major restructuring in our Front-end segment as announced on January 9, 2009 and on July 20, 2009. Related to these restructuring plans, an amount of EUR 28.8 million restructuring expenses was recorded in the nine months ended September 30, 2009. These charges include EUR 17.6 million in one-time employee termination benefit obligations, EUR 4.7 million in non cash fixed asset impairment charges, EUR 4.3 million related to the intended management buy-out of our RTP business and EUR 2.2 million in other transition expenses.
Earnings (Loss) from Operations.The following table shows earnings (loss) from operations for our Front-end and Back-end segments for the nine months ended September 30, 2009 compared to the same period in 2008:
(EUR millions) | Nine months ended September 30, | ||||||||
2008 | 2009 | Change | |||||||
Front-end: | |||||||||
Excluding impairments and restructuring charges | (12.5 | ) | (52.0 | ) | (39.5 | ) | |||
Impairments and restructuring charges | — | (55.2 | ) | (55.2 | ) | ||||
Including impairments and restructuring charges | (12.5 | ) | (107.2 | ) | (94.7 | ) | |||
Back-end | 89.4 | 50.2 | (39.2 | ) | |||||
Total earnings (loss) from operations | 76.9 | (56.9 | ) | (133.8 | ) | ||||
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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 nine months ended September 30, 2009 compared to the same period in 2008:
(EUR millions) | Nine months ended September 30, | ||||||||
2008 | 2009 | Change | |||||||
Front-end: | |||||||||
Excluding impairments, restructuring charges and fair value change conversion option | (17.3 | ) | (53.0 | ) | (35.7 | ) | |||
Impairments and restructuring charges | — | (55.2 | ) | (55.2 | ) | ||||
Fair value change conversion options | — | (9.5 | ) | (9.5 | ) | ||||
Including impairments, restructuring charges and fair value change conversion options | (17.3 | ) | (117.7 | ) | (100.4 | ) | |||
Back-end | 42.0 | 22.9 | (19.1 | ) | |||||
Total earnings (loss)1) | 24.7 | (94.8 | ) | (119.5 | ) | ||||
1) | Allocated to the shareholders of the parent |
Net earnings for the Back-end segment reflect our 52.87% ownership of ASM Pacific Technology.
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Bookings and backlog
The following table shows, for our Front-end and Back-end segments, the level of new orders for the third quarter of 2009 and the backlog at the end of the third quarter of 2009 as compared to the second quarter of 2009 and the third quarter of 2008:
(EUR millions, except book-to-bill ratio) | ||||||||||||
Q3 2008 | Q2 2009 | Q3 2009 | % Change Q2 2009 to Q3 2009 | % Change Q3 2008 to Q3 2009 | ||||||||
Front-end: | ||||||||||||
New orders for the quarter | 63.0 | 22.1 | 43.7 | 98 | % | (31 | )% | |||||
Backlog at the end of the quarter | 74.8 | 36.2 | 42.1 | 16 | % | (44 | )% | |||||
Book-to-bill ratio (new orders divided by net sales) | 0.99 | 0.80 | 1.16 | |||||||||
Back-end: | ||||||||||||
New orders for the quarter | 113.2 | 133.7 | 160.8 | 20 | % | 42 | % | |||||
Backlog at the end of the quarter | 86.0 | 86.2 | 104.5 | 21 | % | 22 | % | |||||
Book-to-bill ratio (new orders divided by net sales) | 0.89 | 1.45 | 1.13 | |||||||||
Total | ||||||||||||
New orders for the quarter | 176.2 | 155.8 | 204.5 | 31 | % | 16 | % | |||||
Backlog at the end of the quarter | 160.8 | 122.4 | 146.6 | 20 | % | (9 | )% | |||||
Book-to-bill ratio (new orders divided by net sales) | 0.93 | 1.30 | 1.13 |
The following table shows the level of new orders during the nine months ended September 30, 2008 and 2009 and the backlog at September 30, 2008 and 2009 and the percentage change:
(EUR millions, except book-to-bill ratio) | Nine months ended September 30, | ||||||
2008 | 2009 | % Change | |||||
Front-end: | |||||||
New orders | 200.0 | 100.2 | (50 | )% | |||
Backlog at September 30 | 74.8 | 42.1 | (44 | )% | |||
Book-to-bill ratio (new orders divided by net sales) | 0.89 | 0.90 | |||||
Back-end: | |||||||
New orders | 356.8 | 344.5 | (3 | )% | |||
Backlog at September 30 | 86.0 | 104.5 | 22 | % | |||
Book-to-bill ratio (new orders divided by net sales) | 0.96 | 1.24 | |||||
Total | |||||||
New orders | 556.8 | 444.7 | (20 | ) | |||
Backlog at September 30 | 160.8 | 146.6 | (9 | )% | |||
Book-to-bill ratio (new orders divided by net sales) | 0.93 | 1.14 |
Liquidity and capital resources
Net cash provided by operations was EUR 32.0 million for the third quarter of 2009 as compared to EUR 47.7 million for the third quarter of 2008. For the nine months ended September 30, 2009 net cash provided by operations was EUR 31.5 million as compared to EUR 109.2 million for the comparable period in 2008. These decreases result mainly from the decreased earnings, partly offset by cash inflows from lower working capital.
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Net cash used in investing activities was EUR 2.0 million for the third quarter of 2009 as compared to EUR 8.3 million for the third quarter of 2008. For the nine months period ended September 30, 2009 net cash used in investing activities was EUR 7.3 million compared to EUR 23.7 million in the same period last year. The decrease results mainly from lower capital expenditures.
Net cash used in financing activities was EUR 12.1 million for the third quarter of 2009 as compared to net cash used in financing activities of EUR 26.8 million for the third quarter of 2008. For the nine months period ended September 30, 2009 net cash used in financing activities was EUR 29.7 million, in the same period of 2008 this was EUR 83.9 million. During the first nine months of 2008, EUR 36.5 million was spent on the repurchase of treasury shares and EUR 13.5 million was spent on the repayment of debt.
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 208.1 million at June 30, 2009 to EUR 194.3 million at September 30, 2009. The decrease includes the (non-cash) impairment of EUR 26.5 million in inventories in the second (EUR 20.6 million) and the third quarter (EUR 5.9 million) of 2009 and the balance of lower manufacturing and sales levels in the Front-end segment and the higher manufacturing and sales levels in the Back-end segment. The number of outstanding days of working capital, measured based on annual sales, decreased from 138 days at June 30, 2009 to 131 days at September 30, 2009. For the same period, our Front-end segment decreased from 163 days to 160 days. Our Back-end segment decreased from 123 days to 117 days.
At September 30, 2009, the Company’s principal sources of liquidity consisted of EUR 147.7 million in cash and cash equivalents and EUR 79.5 million in undrawn bank lines. Approximately EUR 86.9 million of the cash and cash equivalents and EUR 26.4 million of the undrawn bank lines are restricted to use in the Company’s Back-end operations and EUR 16.7 million of the cash and cash equivalents and EUR 8.1 million in undrawn bank lines are restricted to use in the Company’s Front-end operations in Japan.
Change in accounting policies
As per January 1, 2009, ASMI applies FAS 160 “Non-controlling Interests in Consolidated Financial Statements”. This Statement changes the way the consolidated income statement is presented. It requires consolidated net income to be reported at amounts that include the amounts attributable to both the parent and the non-controlling interest (“minority interest”). It also requires disclosure, on the face of the consolidated statement of income, of the amounts of consolidated net income attributable to the parent and to the minority interest. Previously, net income attributable to the minority interest generally was reported as an expense in arriving at consolidated net income.
As per January 1, 2009, ASMI applies EITF 07-05 “Determining Whether an Instrument (or Embedded Feature) Is Indexed to an Entity’s Own Stock”.
The Company’s convertible subordinated notes 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”). EITF 07-05 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 Q3, 2009 EUR 0.8 million). The conversion option is measured at market value through the income statement (revaluation loss in Q3, 2009 EUR 5.4 million).
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Outlook
For the Company as a whole we expect the fourth quarter to be at least in line with the third quarter. Visibility beyond the fourth quarter remains limited and therefore we are not in a position to give guidance beyond that period at this stage.
The fourth quarter performance for Front-end is expected to modestly further improve in terms of sales, bookings and operating result. We continue to vigorously execute on our cost reduction program towards our target of at least 40% reduction by the first half of 2010 compared to the Q4 2008 run rate.
In Back-end, we expect business levels to remain strong in the fourth quarter driven by healthy product demand from both semiconductor and non-IC customers. We are confident that our diversified product and customer base, as well as capacity additions coming on stream by year-end, will continue to support Back-end’s leading industry position in 2010.
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ASM INTERNATIONAL CONFERENCE CALL
ASM International will host an investor conference call and web cast on
Tuesday, November 3, 2009 at 15:00 Continental European Time (9:00 a.m. US Eastern Time).
The teleconference dial-in numbers are as follows:
United States – +1 866.966.5335
International – + 44 (0)20 3023 4456
A simultaneous audio web cast will be accessible atwww.asm.com.
The teleconference will be available for replay, beginning one hour after completion of the live broadcast, through November 17, 2009.
The replay dial-in numbers are:
United States – +1 866.583.1035
International – + 44 (0)20 8196 1998
Access Code: 117327#
ASM International N.V., headquartered in Almere, the Netherlands, and its subsidiaries design and manufacture equipment and materials used to produce semiconductor devices. ASM International and its subsidiaries provide production solutions for wafer processing (Front-end segment) as well as assembly and packaging (Back-end segment) through facilities in the United States, Europe, Japan and Asia. ASM International's common stock trades on NASDAQ (symbol ASMI) and the Euronext Amsterdam Stock Exchange (symbol ASM). For more information, visit ASMI's website atwww.asm.com.
Safe Harbor Statement under the U.S. Private Securities Litigation Reform Act of 1995: All matters discussed in this statement, except for any historical data, are forward-looking statements. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. These include, but are not limited to, economic conditions and trends in the semiconductor industry generally and the timing of the industry cycles specifically, currency fluctuations, financing and liquidity matters, the success of restructurings, the timing of significant orders, market acceptance of new products, competitive factors, litigation involving intellectual property, shareholder and other issues, commercial and economic disruption due to natural disasters, terrorist activity, armed conflict or political instability, epidemics and other risks indicated in the Company's filings from time to time with the U.S. Securities and Exchange Commission, including, but not limited to, the Company's reports on Form 20-F and Form 6-K. The Company assumes no obligation nor intends to update or revise any forward-looking statements to reflect future developments or circumstances.
13
ASM INTERNATIONAL N.V.
CONSOLIDATED STATEMENTS OF OPERATIONS
(thousands, except earnings per share data) | In Euro | |||||||||||
Three months ended September 30, | Nine months ended September 30, | |||||||||||
2008 | 2009 | 2008 | 2009 | |||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||||||
Net sales | 189,953 | 180,209 | 596,432 | 388,815 | ||||||||
Cost of sales | (121,262 | ) | (117,083 | ) | (370,099 | ) | (291,269 | ) | ||||
Gross profit | 68,691 | 63,127 | 226,333 | 97,546 | ||||||||
Operating expenses: | ||||||||||||
Selling, general and administrative | (30,633 | ) | (28,212 | ) | (91,552 | ) | (79,084 | ) | ||||
Research and development | (18,822 | ) | (15,178 | ) | (56,105 | ) | (46,326 | ) | ||||
Amortization of other intangible assets | (115 | ) | (26 | ) | (358 | ) | (319 | ) | ||||
Impairment of goodwill | — | — | (1,395 | ) | — | |||||||
Restructuring expenses | — | (9,220 | ) | — | (28,762 | ) | ||||||
Total operating expenses | (49,570 | ) | (52,637 | ) | (149,410 | ) | (154,491 | ) | ||||
Earnings (loss) from operations | 19,121 | 10,490 | 76,924 | (56,946 | ) | |||||||
Net interest expense | (840 | ) | (1,514 | ) | (2,584 | ) | (4,487 | ) | ||||
Accretion of interest convertible | — | (828 | ) | — | (2,869 | ) | ||||||
Revaluation conversion option | — | (5,381 | ) | — | (9,463 | ) | ||||||
Foreign currency exchange gains (losses) | (437 | ) | (103 | ) | (34 | ) | (1,100 | ) | ||||
Earnings (loss) before income taxes | 17,844 | 2,664 | 74,305 | (74,865 | ) | |||||||
Income tax benefit (expense) | (4,929 | ) | (1,276 | ) | (12,788 | ) | 487 | |||||
Net earnings (loss) | 12,915 | 1,388 | 61,517 | (74,378 | ) | |||||||
Allocation of net earnings (loss) | ||||||||||||
Shareholders of the parent | 2,421 | (15,817 | ) | 24,656 | (94,820 | ) | ||||||
Minority interest | 10,494 | 17,205 | 36,861 | 20,442 | ||||||||
Net earnings (loss) per share, allocated to the shareholders of the parent: | ||||||||||||
Basic net earnings (loss) | 0.05 | (0.31 | ) | 0.47 | (1.84 | ) | ||||||
Diluted net earnings (loss) (1) | 0.05 | (0.31 | ) | 0.47 | (1.84 | ) | ||||||
Weighted average number of shares used in computing per share amounts (in thousands): | ||||||||||||
Basic | 51,793 | 51,610 | 52,477 | 51,609 | ||||||||
Diluted (1) | 51,993 | 51,610 | 52,658 | 51,609 | ||||||||
(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 and nine months ended September 30, 2009, the effect of a potential conversion of convertible debt into 7,221,492 common shares was anti-dilutive and no adjustments have been reflected in the diluted weighted average number of shares and net earnings per share for this period. The possible increase of common shares caused by employee stock options for the three months ended September 30, 2009 with 158,518 common shares and for the nine months ended September 30, 2009 with 112,975 common shares was anti-dilutive and no adjustments have been reflected in the diluted weighted average number of shares and net earnings per share for this period |
Amounts are rounded to the nearest thousand euro; therefore amounts may not equal (sub) totals due to rounding.
14
ASM INTERNATIONAL N.V.
CONSOLIDATED BALANCE SHEETS
(thousands, except share data) | In Euro | |||||
December 31, 2008 | September 30, 2009 | |||||
(unaudited) | ||||||
Assets | ||||||
Cash and cash equivalents | 157,277 | 147,653 | ||||
Accounts receivable, net | 172,603 | 144,493 | ||||
Inventories, net | 197,700 | 151,263 | ||||
Income taxes receivable | 108 | 91 | ||||
Deferred tax assets | 4,685 | 6,062 | ||||
Other current assets | 27,323 | 28,437 | ||||
Total current assets | 559,696 | 477,999 | ||||
Debt issuance costs | 1,353 | 924 | ||||
Deferred tax assets | 2,285 | 8,077 | ||||
Other intangible assets | 7,918 | 9,652 | ||||
Goodwill, net | 47,989 | 46,704 | ||||
Property, plant and equipment, net | 148,557 | 117,437 | ||||
Total Assets | 767,798 | 660,793 | ||||
Liabilities and Shareholders’ Equity | ||||||
Notes payable to banks | 16,858 | 14,702 | ||||
Accounts payable | 69,718 | 65,789 | ||||
Accrued expenses | 56,657 | 63,285 | ||||
Advance payments from customers | 5,728 | 11,777 | ||||
Deferred revenue | 4,979 | 1,981 | ||||
Income taxes payable | 26,964 | 20,485 | ||||
Current portion of long-term debt | 6,763 | 20,043 | ||||
Total current liabilities | 187,667 | 198,062 | ||||
Pension liabilities | 6,490 | 5,944 | ||||
Deferred tax liabilities | 539 | 300 | ||||
Long-term debt | 23,268 | 17,499 | ||||
Convertible subordinated debt | 106,793 | 80,244 | ||||
Conversion option | — | 12,010 | ||||
Total Liabilities | 324,757 | 314,060 | ||||
Shareholders’ Equity: | ||||||
Common shares | ||||||
Authorized 110,000,000 shares, par value € 0.04, issued and outstanding 54,275,131 and 51,722,131 shares | 2,171 | 2,069 | ||||
Financing preferred shares, issued none | — | — | ||||
Preferred shares, issued and outstanding 21,985 shares and none | 220 | — | ||||
Capital in excess of par value | 324,707 | 287,480 | ||||
Treasury shares at cost | (37,215 | ) | (1,549 | ) | ||
Retained earnings | 92,111 | 5,180 | ||||
Accumulated other comprehensive loss | (64,092 | ) | (68,452 | ) | ||
Total Shareholders’ Equity | 317,902 | 224,728 | ||||
Minority interest | 125,139 | 122,005 | ||||
Total Equity | 443,041 | 346,733 | ||||
Total Liabilities and Equity | 767,798 | 660,793 | ||||
Amounts are rounded to the nearest thousand euro; therefore amounts may not equal (sub) totals due to rounding.
15
ASM INTERNATIONAL N.V.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(thousands) | In Euro | |||||||||||
Three months ended September 30, | Nine months ended September 30, | |||||||||||
2008 | 2009 | 2008 | 2009 | |||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||||||
Increase (decrease) in cash and cash equivalents: | ||||||||||||
Cash flows from operating activities: | ||||||||||||
Net earnings (loss) | 12,915 | 1,388 | 61,517 | (74,378 | ) | |||||||
Adjustments to reconcile net earnings to net cash from operating activities: | ||||||||||||
Depreciation of property, plant and equipment | 8,175 | 7,981 | 23,836 | 25,597 | ||||||||
Amortization of other intangible assets | 367 | 212 | 1,098 | 1,164 | ||||||||
Impairment of property, plant and equipment | — | 2,378 | — | 4,690 | ||||||||
Impairment of goodwill | — | — | 1,395 | — | ||||||||
Impairment of inventories | — | 5,856 | — | 26,485 | ||||||||
Addition provision restructuring expenses | — | 8,558 | — | 19,321 | ||||||||
Release provision restructuring expenses | — | — | — | — | ||||||||
Amortization of debt issuance costs | 144 | 124 | 577 | 390 | ||||||||
Amortization transition obligation SFAS 158 (Pensions) | — | 41 | — | 122 | ||||||||
Compensation expense employee stock option plan | 511 | 538 | 1,391 | 1,711 | ||||||||
Compensation expense employee share incentive scheme ASMPT | 2,291 | 1,169 | 5,386 | 2,806 | ||||||||
Revaluation conversion option | — | 5,381 | — | 9,463 | ||||||||
Additional non-cash interest convertible | — | 828 | — | 2,869 | ||||||||
Income taxes | 3,838 | 4,710 | 5,787 | (5,535 | ) | |||||||
Deferred income taxes | 591 | (3,752 | ) | (2 | ) | (7,626 | ) | |||||
Changes in other assets and liabilities: | ||||||||||||
Accounts receivable | 19,247 | (25,568 | ) | 40,945 | 22,051 | |||||||
Inventories | 5,779 | 5,253 | 454 | 12,823 | ||||||||
Other current assets | 3,912 | (1,040 | ) | (3,204 | ) | (2,041 | ) | |||||
Accounts payable and accrued expenses | (5,096 | ) | 20,245 | (24,460 | ) | (5,254 | ) | |||||
Advance payments from customers | (2,351 | ) | 4,930 | (188 | ) | 6,572 | ||||||
Deferred revenue | (2,660 | ) | (377 | ) | (5,543 | ) | (2,931 | ) | ||||
Pension liabilities | 72 | (498 | ) | 194 | (424 | ) | ||||||
Payments out of restructuring provision | — | (6,390 | ) | — | (6,390 | ) | ||||||
Net cash provided by operating activities | 47,734 | 31,967 | 109,182 | 31,484 | ||||||||
Cash flows from investing activities: | ||||||||||||
Capital expenditures | (7,775 | ) | (2,055 | ) | (24,392 | ) | (4,661 | ) | ||||
Purchase of intangible assets | (1,056 | ) | (77 | ) | (2,870 | ) | (2,864 | ) | ||||
Disposal of investment | 410 | — | 410 | — | ||||||||
Proceeds from sale of property, plant and equipment | 164 | 107 | 3,140 | 230 | ||||||||
Net cash used in investing activities | (8,258 | ) | (2,025 | ) | (23,711 | ) | (7,296 | ) | ||||
Cash flows from financing activities: | ||||||||||||
Notes payable to banks, net | 7,673 | — | 8,179 | (1,534 | ) | |||||||
Repayments of long-term debt and subordinated debt | (9,056 | ) | (1,737 | ) | (13,449 | ) | (5,450 | ) | ||||
Sale (Purchase) of treasury shares | (4,435 | ) | 35 | (36,453 | ) | 35 | ||||||
Dividend tax paid on withdrawal of treasury shares | — | (10 | ) | — | (3,409 | ) | ||||||
Proceeds from issuance (withdrawal) of preferred shares | — | (220 | ) | 220 | (220 | ) | ||||||
Proceeds from issuance of common shares | 87 | — | 1,039 | — | ||||||||
Dividend to minority shareholders | (21,057 | ) | (10,130 | ) | (43,398 | ) | (19,099 | ) | ||||
Net cash used in financing activities | (26,788 | ) | (12,062 | ) | (83,861 | ) | (29,677 | ) | ||||
Exchange rate effects | 4,733 | (2,999 | ) | 176 | (4,137 | ) | ||||||
Net increase (decrease) in cash and cash equivalents | 17,422 | 14,882 | 1,785 | (9,626 | ) | |||||||
Cash and cash equivalents at beginning of period | 152,286 | 132,771 | 167,922 | 157,279 | ||||||||
Cash and cash equivalents at end of period | 169,708 | 147,653 | 169,708 | 147,653 | ||||||||
Supplemental disclosures of cash flow information | ||||||||||||
Cash paid during the period for: | ||||||||||||
Interest, net | (877 | ) | 400 | 938 | 3,350 | |||||||
Income taxes, net | 500 | 317 | 7,004 | 12,674 | ||||||||
Non cash investing and financing activities: | ||||||||||||
Subordinated debt converted | 311 | — | 4,967 | — | ||||||||
Subordinated debt converted into number of common shares | 23,660 | — | 372,946 | — | ||||||||
Amounts are rounded to the nearest thousand euro; therefore amounts may not equal (sub) totals due to rounding.
16
ASM INTERNATIONAL N.V.
DISCLOSURE ABOUT SEGMENTS AND RELATED INFORMATION
The Company organizes its activities in two operating segments, Front-end and Back-end.
The Front-end segment manufactures and sells equipment used in wafer processing, encompassing the fabrication steps in which silicon wafers are layered with semiconductor devices. The segment is a product driven organizational unit comprised of manufacturing, service, and sales operations in Europe, the United States, Japan and Southeast Asia.
The Back-end segment manufactures and sells equipment and materials used in assembly and packaging, encompassing the processes in which silicon wafers are separated into individual circuits and subsequently assembled, packaged and tested. The segment is organized in ASM Pacific Technology Ltd., in which the Company holds a majority interest of 52.87% at September 30, 2009, whilst the remaining shares are listed on the Stock Exchange of Hong Kong. The segment's main operations are located in Hong Kong, Singapore, the People's Republic of China and Malaysia.
(thousands) | In Euro | ||||||||
Three months ended September 30, 2008 | Front-end (unaudited) | Back-end (unaudited) | Total (unaudited) | ||||||
Net sales to unaffiliated customers | 63,332 | 126,620 | 189,953 | ||||||
Gross profit | 20,336 | 48,354 | 68,691 | ||||||
Earnings (loss) from operations | (6,959 | ) | 26,079 | 19,121 | |||||
Net interest income (expense) | (1,038 | ) | 198 | (840 | ) | ||||
Foreign currency exchange losses | (67 | ) | (369 | ) | (437 | ) | |||
Income tax benefit (expense) | (1,397 | ) | (3,533 | ) | (4,929 | ) | |||
Net earnings (loss) | (9,461 | ) | 22,375 | 12,915 | |||||
Net earnings (loss) allocated to: | |||||||||
Shareholders of the parent | (9,461 | ) | 11,881 | 2,421 | |||||
Minority interest | — | 10,494 | 10,494 | ||||||
Capital expenditures and purchase of intangible assets | 2,582 | 6,249 | 8,831 | ||||||
Depreciation and amortization | 4,000 | 4,541 | 8,542 | ||||||
Three months ended September 30, 2009 | (unaudited) | (unaudited) | (unaudited) | ||||||
Net sales to unaffiliated customers | 37,750 | 142,460 | 180,209 | ||||||
Gross profit | 796 | 62,331 | 63,127 | ||||||
Earnings (loss) from operations | (30,618 | ) | 41,108 | 10,490 | |||||
Net interest income (expense) | (1,651 | ) | 138 | (1,514 | ) | ||||
Accretion of interest convertible | (828 | ) | — | (828 | ) | ||||
Revaluation conversion option | (5,381 | ) | — | (5,381 | ) | ||||
Foreign currency exchange gains (losses) | (75 | ) | (28 | ) | (103 | ) | |||
Income tax benefit (expense) | 3,438 | (4,714 | ) | (1,276 | ) | ||||
Net earnings (loss) | (35,115 | ) | 36,503 | 1,388 | |||||
Net earnings (loss) allocated to: | |||||||||
Shareholders of the parent | (35,115 | ) | 19,298 | (15,817 | ) | ||||
Minority interest | — | 17,205 | 17,205 | ||||||
Capital expenditures and purchase of intangible assets | 1,015 | 1,117 | 2,132 | ||||||
Depreciation and amortization | 3,076 | 5,117 | 8,193 | ||||||
Impairment of fixed assets | 2,378 | — | 2,378 |
Amounts are rounded to the nearest thousand euro; therefore amounts may not equal (sub) totals due to rounding.
17
ASM INTERNATIONAL N.V.
DISCLOSURE ABOUT SEGMENTS AND RELATED INFORMATION (2/2)
(thousands, except headcount) | In Euro | ||||||||
Nine months ended September 30, 2008 | Front-end (unaudited) | Back-end (unaudited) | Total (unaudited) | ||||||
Net sales to unaffiliated customers | 224,381 | 372,051 | 596,432 | ||||||
Gross profit | 73,481 | 152,853 | 226,333 | ||||||
Earnings (loss) from operations | (12,500 | ) | 89,423 | 76,924 | |||||
Net interest income (expense) | (3,406 | ) | 822 | (2,584 | ) | ||||
Foreign currency exchange gains (losses) | (198 | ) | 164 | (34 | ) | ||||
Income tax benefit (expense) | (1,222 | ) | (11,566 | ) | (12,788 | ) | |||
Net earnings (loss) | (17,326 | ) | 78,843 | 61,517 | |||||
Net earnings (loss) allocated to: | |||||||||
Shareholders of the parent | (17,326 | ) | 41,982 | 24,656 | |||||
Minority interest | — | 36,861 | 36,861 | ||||||
Capital expenditures and purchase of intangible assets | 11,978 | 15,284 | 27,262 | ||||||
Depreciation and amortization | 11,295 | 13,640 | 24,934 | ||||||
Impairment of goodwill | 1,395 | — | 1,395 | ||||||
Cash and cash equivalents | 123,894 | 45,814 | 169,708 | ||||||
Capitalized goodwill | 10,120 | 37,131 | 47,251 | ||||||
Other intangible assets | 4,979 | 617 | 5,596 | ||||||
Other identifiable assets | 279,315 | 316,014 | 595,329 | ||||||
Total assets | 418,308 | 399,576 | 817,884 | ||||||
Total debt | 184,179 | — | 184,179 | ||||||
Headcount in full-time equivalents (1) | 1,690 | 10,564 | 12,254 |
Nine months ended September 30, 2009 | (unaudited) | (unaudited) | (unaudited) | ||||||
Net sales to unaffiliated customers | 111,130 | 277,685 | 388,815 | ||||||
Gross profit | (7,229 | ) | 104,774 | 97,546 | |||||
Earnings (loss) from operations | (107,187 | ) | 50,241 | (56,946 | ) | ||||
Net interest income (expense) | (4,840 | ) | 352 | (4,487 | ) | ||||
Accretion of interest convertible | (2,869 | ) | — | (2,869 | ) | ||||
Revaluation conversion option | (9,463 | ) | — | (9,463 | ) | ||||
Foreign currency exchange losses | (305 | ) | (795 | ) | (1,100 | ) | |||
Income tax benefit (expense) | 6,915 | (6,428 | ) | 487 | |||||
Net earnings (loss) | (117,748 | ) | 43,370 | (74,378 | ) | ||||
Net earnings (loss) allocated to: | |||||||||
Shareholders of the parent | (117,748 | ) | 22,928 | (94,820 | ) | ||||
Minority interest | — | 20,442 | 20,442 | ||||||
Capital expenditures and purchase of intangible assets | 4,318 | 3,207 | 7,526 | ||||||
Depreciation and amortization | 10,443 | 16,317 | 26,760 | ||||||
Impairment of fixed assets | 4,690 | — | 4,690 | ||||||
Cash and cash equivalents | 60,706 | 86,946 | 147,653 | ||||||
Capitalized goodwill | 10,453 | 36,252 | 46,704 | ||||||
Other intangible assets | 9,349 | 303 | 9,652 | ||||||
Other identifiable assets | 180,216 | 276,568 | 456,784 | ||||||
Total assets | 260,724 | 400,069 | 660,793 | ||||||
Total debt | 144,499 | — | 144,499 | ||||||
Headcount in full-time equivalents (1) | 1,413 | 9,928 | 11,341 |
(1) | Headcount includes those employees with a fixed contract, and is exclusive of temporary workers. |
Amounts are rounded to the nearest thousand euro; therefore amounts may not equal (sub) totals due to rounding.
18
ASM INTERNATIONAL N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Basis of Presentation
ASM International N.V, ("ASMI") follows accounting principles generally accepted in the United States of America ("US GAAP").
Amounts are rounded to the nearest thousand euro; therefore amounts may not equal (sub) totals due to rounding.
Principles of Consolidation
The Consolidated Financial Statements include the accounts of ASMI and its subsidiaries, where ASMI holds a controlling interest. The minority interest of third parties is disclosed separately in the Consolidated Financial Statements. All intercompany profits, transactions and balances have been eliminated in consolidation.
Change in accounting policies
As per 1 January 2009, ASMI applies FAS 160 “Non-controlling Interests in Consolidated Financial Statements”. This Statement changes the way the consolidated income statement is presented. It requires consolidated net income to be reported at amounts that include the amounts attributable to both the parent and the non-controlling interest (“minority interest”). It also requires disclosure, on the face of the consolidated statement of income, of the amounts of consolidated net income attributable to the parent and to the minority interest. Previously, net income attributable to the minority interest generally was reported as an expense in arriving at consolidated net income.
As per 1 January 2009, ASMI applies EITF 07-05 “Determining Whether an Instrument (or Embedded Feature) Is Indexed to an Entity’s Own Stock”.
The Company’s convertible subordinated notes 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”). EITF 07-05 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. The conversion option is measured at market value through the income statement.
19
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 goodwill, convertible subordinated notes until 31 December 2008, development expenses, option plans, pension plans and preferred shares.
The reconciliation between IFRS and US GAAP is as follows:
Net earnings | Net earnings | |||||||||||
Three months ended September 30, | Nine months ended September 30, | |||||||||||
(EUR thousands, except per share data) | 2008 | 2009 | 2008 | 2009 | ||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||||||
US GAAP | 12,915 | 1,388 | 61,517 | (74,378 | ) | |||||||
Adjustments for IFRS: | ||||||||||||
Goodwill | 81 | — | 81 | — | ||||||||
Convertible subordinated notes (1) | 59,479 | — | 9,307 | — | ||||||||
Development expenses (2) | 2,584 | 1,641 | 8,455 | 786 | ||||||||
Pensions | 20 | 57 | ||||||||||
Dividend preferred shares | (4 | ) | (1 | ) | (6 | ) | (5 | ) | ||||
Total adjustments | 62,140 | 1,660 | 17,837 | 838 | ||||||||
IFRS | 75,055 | 3,048 | 79,354 | (73,540 | ) | |||||||
IFRS allocation of net earnings (loss): | ||||||||||||
Shareholders | 64,561 | (14,157 | ) | 42,493 | (93,982 | ) | ||||||
Minority interest | 10,494 | 17,205 | 36,861 | 20,442 | ||||||||
Net earnings (loss) per share, allocated to the shareholders of the parent; | ||||||||||||
Basic | 1.23 | (0.27 | ) | 0.81 | (1.82 | ) | ||||||
Diluted | 0.11 | (0.27 | ) | 0.81 | (1.82 | ) | ||||||
Total Equity | Total Equity | |||||
(euro thousands) | September 30, 2008 | September 30, 2009 | ||||
(unaudited) | (unaudited) | |||||
US GAAP | 438,270 | 346,733 | ||||
Adjustments for IFRS: | ||||||
Goodwill | (9,739 | ) | (10,130 | ) | ||
Convertible subordinated notes (1) | 836 | — | ||||
Development expenses | 40,578 | 37,710 | ||||
Pension plans | 820 | 772 | ||||
Preferred shares | (220 | ) | — | |||
Total adjustments | 32,275 | 28,352 | ||||
IFRS | 470,545 | 375,085 | ||||
(1) | As a result of the application of EITF 07-05 as from 1 January 2009, the accounting treatment of the subordinated convertible notes under US GAAP is equal to the treatment under IFRS |
(2) | An impairment charge of EUR 7,530 as result of strategic choices was recognized in the second quarter of 2009 |
Amounts are rounded to the nearest thousand euro; therefore amounts may not equal (sub) totals due to rounding.
20