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ASM INTERNATIONAL N.V. REPORT
THIRD QUARTER 2012 OPERATING RESULTS
ALMERE, The Netherlands - October 24, 2012 - ASM International N.V. (NASDAQ: ASMI and Euronext Amsterdam: ASM) reports today its third quarter (unaudited) operating results in accordance with US GAAP.
Highlights
• | Net sales for the third quarter 2012 were EUR 409 million, an increase of 8% quarter-to-quarter and 9% year-on-year. Net sales of our Front-end segment increased 11% quarter-to-quarter while Back-end sales increased by 7%. |
• | Result from operations for Q3 2012 was EUR 32 million. Result from operations in Q2 2012 was EUR 39 million while the third quarter of 2011 showed a profit of EUR 51 million (excluding a gain on the bargain purchase of SEAS of EUR 98 million). |
• | The Front-end segment's operating loss was EUR 1.6 million compared to a loss of EUR 1.9 million quarter-to-quarter. Q3 2011 showed an operating profit of EUR 13.5 million; |
• | The Back-end segment operating profit was EUR 33.6 million compared to EUR 40.5 million quarter-to-quarter. Q3 2011 showed an operating profit of EUR 37.8 million (excluding a gain on the bargain purchase of SEAS of EUR 97.9 million). |
• | Third quarter 2012 net earnings were EUR 5 million compared to net earnings of EUR 18 million for the second quarter of 2012 and EUR 30 million for the third quarter of 2011 (excluding a net gain on the bargain purchase of EUR 51 million). |
• | Book to bill in the third quarter was 0.7, both for the Front-end and for the Back-end segment. The Backlog decreased from Euro 439 million at the end of the second quarter 2012 to EUR 295 million at the end of the third quarter 2012. |
Comment
Commenting on the results, Chuck del Prado, President and Chief Executive Officer of ASM International, said: “While sales, both in Front-end and Back-end showed, despite worsening market conditions, a healthy growth, our results were lagging behind. In our Back-end operations this was mainly caused by increased price pressure, product mix and lower volume in the assembly equipment segment. In our Front-end operations pressure on our gross margin was caused by customer mix and high under-absorption which is mainly due to worsening market conditions during the third quarter. We have started a cost reduction program in our
Front-end operations, which should lead to cost reductions in the course of 2013, especially in our manufacturing and overhead organization.”
Outlook
Based on the current order book we expect for the fourth quarter a double digit sales decrease for both Front- end and Back-end. For our Back-end operations we do only see a recovery earliest in the course of the first quarter of 2013. We expect our Font-end operations to show a strong order intake in Q4.
About ASM International
ASM International N.V., headquartered in Almere, the Netherlands, and its subsidiaries design and manufacture equipment and materials used to produce semiconductor devices. ASM International and its subsidiaries provide production solutions for wafer processing (Front-end segment) as well as assembly and packaging (Back-end segment) through facilities in the United States, Europe, Japan and Asia. ASM International's common stock trades on NASDAQ (symbol ASMI) and the Euronext Amsterdam Stock Exchange (symbol ASM). For more information, visit ASMI's website at www.asm.com.
Safe Harbor Statement under the U.S. Private Securities Litigation Reform Act of 1995: All matters discussed in this statement, except for any historical data, are forward-looking statements. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. These include, but are not limited to, economic conditions and trends in the semiconductor industry generally and the timing of the industry cycles specifically, currency fluctuations, corporate transactions, 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 to update or revise any forward-looking statements to reflect future developments or circumstances.
ASM International will host an investor conference call and web cast on Thursday, October 25, 2012 at 15:00 Continental European Time (9:00 a.m. - US Eastern Time, 9:00 p.m. Hong Kong Time).
The teleconference dial-in numbers are as follows:
• | United States: +1 646 254 3367 |
• | International: + 44 (0)20 7136 2056 |
• | Access Code: 6490180 |
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 November 24, 2012.
The replay dial-in numbers are:
• | United States: +1 347 366 9565 |
• | England: + 44 (0)20 3427 0598 |
• | The Netherlands: +31 (0)20 708 5013 |
• | Hong Kong: +852 3011 4669 |
• | Access Code: 6490180 |
Investor Relations:
Erik Kamerbeek
+31 88 100 8500
Erik.Kamerbeek@asm.com
Mary Jo Dieckhaus
+1 212 986 2900
MaryJo.Dieckhaus@asm.com
Media Contacts:
Ian Bickerton
+31 20 6855 955
+31 62501 8512
ANNEX 1
OPERATING AND FINANCIAL REVIEW
The following table shows the operating performance for the third quarter of 2012 as compared to the second quarter of 2012 and the third quarter of 2011:
(EUR millions, except earnings per share) | Q3 2011 | Q2 2012 | Q3 2012 | % Change Q2 2012 to Q3 2012 | % Change Q3 2011 to Q3 2012 | |||||
Net sales | 376.1 | 377.9 | 409.3 | 8 | % | 9 | % | |||
Gross profit | 130.7 | 130.6 | 125.4 | (4 | )% | (4 | )% | |||
Gross profit margin % | 34.7 | % | 34.6 | % | 30.6 | % | ||||
Selling, general and administrative expenses | (44.8 | ) | (53.8 | ) | (53.6 | ) | 0 | % | 19 | % |
Research and development expenses | (34.6 | ) | (38.2 | ) | (40.0 | ) | 5 | % | 16 | % |
Gain on bargain purchase SEAS | 97.9 | - | - | |||||||
Result from operations | 149.2 | 38.5 | 31.9 | (17 | )% | (79 | )% | |||
Net earnings 1) | 81.0 | 17.7 | 4.9 | (72 | )% | (94 | )% | |||
Net earnings per share, diluted in euro 1) | €1.32 | €0.32 | €0.09 | (72 | )% | (93 | )% |
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 third quarter of 2012 as compared to the second quarter of 2012 and the third quarter of 2011:
(EUR millions) | Q3 2011 | Q2 2012 | Q3 2012 | % Change Q2 2012 to Q3 2012 | % Change Q3 2011 to Q3 2012 | |||||
Front-end | 104.1 | 86.5 | 96.1 | 11 | % | (8 | )% | |||
Back-end | 272.1 | 291.4 | 313.2 | 7 | % | 15 | % | |||
ASMI consolidated | 376.1 | 377.9 | 409.3 | 8 | % | 9 | % |
The third quarter 2012 sales increase in our Front-end segment, compared to the previous quarter, resulted from a higher volume of tool sales. The increase of the Back-end sales came from lead frame and surface mount technology equipment activities.
The impact of currency changes was an increase of 4% quarter to quarter and an increase of 14% year-over-year.
Gross Profit (Margin). The following table shows our gross profit and gross profit margin for our Front-end and Back-end performance for the third quarter of 2012 as compared to the second quarter of 2012 and the third quarter of 2011:
(EUR millions) | Gross profit Q3 2011 | Gross profit Q2 2012 | Gross profit Q3 2012 | Gross profit margin Q3 2011 | Gross profit margin Q2 2012 | Gross profit margin Q3 2012 | Increase or (decrease) percentage points Q2 2012 to Q3 2012 | Increase or (decrease) percentage points Q3 2011 to Q3 2012 | ||||||||
Front-end | 40.6 | 28.5 | 30.1 | 39.0 | % | 33.0 | % | 31.4 | % | (1.5 | ) | (7.6 | ) | |||
Back-end | 90.1 | 102.0 | 95.3 | 33.1 | % | 35.0 | % | 30.4 | % | (4.6 | ) | (2.7 | ) | |||
ASMI consolidated | 130.7 | 130.6 | 125.4 | 34.7 | % | 34.6 | % | 30.6 | % | (3.9 | ) | (4.1 | ) |
The gross profit margin of our Front-end segment in the third quarter decreased 1.5% while efficiency improved strongly, margin was strongly effected by under-absorption (-4%). The Back-end gross profit margin decreased, mainly due to increased price pressure, a worsening of the mix and a lower volume of Assembly and Packaging equipment.
The impact of currency changes was an increase of 4% quarter to quarter and an increase of 15% year-over-year.
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 2012 as compared to the second quarter of 2012 and the third quarter of 2011:
(EUR millions) | Q3 2011 | Q2 2012 | Q3 2012 | % Change Q2 2012 to Q3 2012 | % Change Q3 2011 to Q3 2012 | |||||
Front-end | 14.8 | 15.4 | 16.3 | 6 | % | 10 | % | |||
Back-end | 30.0 | 38.4 | 37.2 | (3 | )% | 24 | % | |||
ASMI consolidated | 44.8 | 53.8 | 53.6 | 0 | % | 19 | % | |||
Total selling, general and administrative expenses as a percentage of net sales | 12 | % | 14 | % | 13 | % |
In the Front-end segment SG&A as a percentage of sales decreased for the third quarter of 2012 to 17%, compared to 18% of the previous quarter. In the Back-end segment SG&A as a percentage of sales decreased from 13% to 12% compared to the previous quarter.
The impact of currency changes was an increase of 3% quarter to quarter and an increase of 13% year-over-year.
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 2012 as compared to the second quarter of 2012 and the third quarter of 2011:
(EUR millions) | Q3 2011 | Q2 2012 | Q3 2012 | % Change Q2 2012 to Q3 2012 | % Change Q3 2011 to Q3 2012 | |||||
Front-end | 12.2 | 15.1 | 15.4 | 2 | % | 26 | % | |||
Back-end | 22.3 | 23.1 | 24.5 | 6 | % | 10 | % | |||
ASMI consolidated | 34.6 | 38.2 | 40.0 | 5 | % | 16 | % | |||
Total research and development expenses as a percentage of net sales | 9 | % | 10 | % | 10 | % |
R&D as a % of sales in the Front-end segment decreased from 17% in Q2, 2012 to 16% in Q3, 2012. In the Back-end segment R&D expenses of 8% were in line with the previous quarter.
The impact of currency changes was an increase of 4% quarter to quarter and an increase of 14% year-over-year.
Result from Operations. The following table shows results from operations for our Front-end and Back-end segments for the third quarter of 2012 as compared to the second quarter of 2012 and the third quarter of 2011:
(EUR millions) | Q3 2011 | Q2 2012 | Q3 2012 | Change Q2 2012 to Q3 2012 | Change Q3 2011 to Q3 2012 | |||||
Front-end | 13.5 | (1.9 | ) | (1.6 | ) | 0.3 | (15.1 | ) | ||
Back-end: | ||||||||||
-Excluding special items | 37.8 | 40.5 | 33.6 | (6.9 | ) | (4.2 | ) | |||
-Gain on bargain purchase SEAS | 97.9 | - | - | - | (97.9 | ) | ||||
-Including special items | 135.7 | 40.5 | 33.6 | (6.9 | ) | (102.1 | ) | |||
ASMI consolidated | 149.2 | 38.5 | 31.9 | (6.6 | ) | (117.3 | ) | |||
Total result from operations excluding gain on bargain purchase as a percentage of net sales | 14 | % | 10 | % | 8 | % |
The impact of currency changes was an increase of 5% quarter to quarter and an increase of 18% year-over-year.
Net Earnings allocated to the shareholders of the parent. The following table shows net earnings for our Front-end and Back-end segments for the third quarter of 2012 as compared to the second quarter of 2012 and the third quarter of 2011:
(EUR millions, except earnings per share) | Q3 2011 | Q2 2012 | Q3 2012 | Change Q2 2012 to Q3 2012 | Change Q3 2011 to Q3 2012 | |||
Front-end | 12.6 | 1.3 | (8.4 | ) | (9.7 | ) | (21.0 | ) |
Back-end: | ||||||||
-Excluding special items | 17.1 | 16.5 | 13.3 | (3.1 | ) | (3.8 | ) | |
-Net gain on bargain purchase SEAS | 51.3 | - | - | - | (51.3 | ) | ||
-Including special items | 68.4 | 16.5 | 13.3 | (3.1 | ) | (55.0 | ) | |
Total net earnings allocated to the shareholders of the parent | 81.0 | 17.7 | 4.9 | (12.8 | ) | (76.1 | ) |
Net earnings for the Back-end segment reflect our 52.17% ownership of ASM Pacific Technology.
Nine months ended September 30, 2012
The following table shows the operating performance and the percentage change for the nine months ended September 30, 2012 compared to the same period in 2011:
(EUR millions, except earnings per share) | Nine months ended September 30, | |||||
2011 | 2012 | % Change | ||||
Net sales | 1,282.4 | 1,098.2 | (14 | )% | ||
Gross profit | 476.0 | 352.6 | (26 | )% | ||
Gross profit margin % | 37.1 | % | 32.1 | % | ||
Selling, general and administrative expenses | (132.9 | ) | (148.6 | ) | 12 | % |
Research and development expenses | (94.1 | ) | (111.7 | ) | 19 | % |
Gain on bargain purchase SEAS | 97.9 | - | n/a | |||
Earnings from operations | 347.0 | 92.3 | (73 | )% | ||
Net earnings 1) | 171.3 | 28.9 | (83 | )% | ||
Net earnings per share, diluted 1) | €2.85 | €0.52 | (82 | )% | ||
New orders | 1,096.3 | 1,057.3 | (4 | )% | ||
Backlog at end of period | 396.5 | 295.2 | (25.5 | )% |
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, 2012 compared to the same period in 2011:
(EUR millions) | Nine months ended September 30, | |||||
2011 | 2012 | % Change | ||||
Front-end | 341.9 | 277.3 | (19 | )% | ||
Back-end | 940.5 | 820.9 | (13 | )% | ||
ASMI consolidated | 1,282.4 | 1,098.2 | (14 | )% |
The decrease of net sales in the nine months ended September 30, 2012 in our Front-end segment compared to the same period last year was driven by decreased equipment sales as a result of decreased activity at our customers. In our Back-end segment sales decreased due to a lower activity level in equipment sales (as well IC/DE equipment as assembly equipment).
The impact of currency changes year-over-year was a increase of 10%.
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, 2012 compared to the same period in 2011:
(EUR millions) | Nine months ended September 30, | |||||||
Gross profit | Gross profit margin | |||||||
2011 | 2012 | 2011 | 2012 | Increase or (decrease) percentage points | ||||
Front-end | 133.6 | 90.0 | 39.1 | % | 32.4 | % | (6.6 | ) |
Back-end | 342.5 | 262.6 | 36.4 | % | 32.0 | % | (4.4 | ) |
ASMI consolidated | 476.0 | 352.6 | 37.1 | % | 32.1 | % | (5.0 | ) |
The decrease of the gross margin in our Front-end segment compared to the same period last year is mainly attributable to efficiency losses and inventory corrections lower loading of our factories and evaluation tools. The gross profit margin in the Back-end segment decreased mainly due to mix differences (higher lead frame activities), increased price pressure and the lower activity level.
The impact of currency changes year-over-year was a increase of 9%.
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, 2012 compared to the same period in 2011:
(EUR millions) | Nine months ended September 30, | |||||
2011 | 2012 | % Change | ||||
Front-end | 46.4 | 46.3 | 0 | % | ||
Back-end | 86.4 | 102.3 | 18 | % | ||
ASMI consolidated | 132.9 | 148.6 | 12 | % |
As a percentage of net sales, selling, general and administrative expenses were 14% in the nine months ended September 30, 2012 and 10% in the same period of 2011.
For the nine months ended September 30, 2012 selling, general and administrative expenses as a percentage of net sales of our Front-end segment, increased to 17% compared with 14% for the same period of 2011. For the Back-end segment selling, general and administrative expenses as a percentage of net sales increased from 9% in 2011 to 13% in 2012.
The impact of currency changes year-over-year was a increase of 9%.
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, 2012 compared to the same period in 2011:
(EUR millions) | Nine months ended September 30, | |||||
2011 | 2012 | % Change | ||||
Front-end | 34.1 | 44.4 | 30 | % | ||
Back-end | 60.0 | 67.3 | 12 | % | ||
ASMI consolidated | 94.1 | 111.7 | 19 | % |
As a percentage of net sales, research and development expenses were 10% in the nine months ended September 30, 2012 compared to 7% for the same period of 2011.
The impact of currency changes year-over-year was a increase of 9%.
Earnings from Operations. The following table shows earnings from operations for our Front-end and Back-end segments for the nine months ended September 30, 2012 compared to the same period in 2011:
(EUR millions) | Nine months ended September 30, | |||||
2011 | 2012 | Change | ||||
Front-end | 53.1 | (0.7 | ) | (53.8 | ) | |
Back-end: | ||||||
-Comparable | 196.0 | 93.0 | (103.0 | ) | ||
-Gain on bargain purchase SEAS | 97.9 | - | (97.9 | ) | ||
-Total | 293.9 | 93.0 | (200.9 | ) | ||
ASMI consolidated | 347.0 | 92.3 | (254.7 | ) |
The impact of currency changes year-over-year was a increase of 10%.
Net Earnings allocated to the shareholders of the parent. The following table shows net earnings for our Front-end and Back-end segments for the nine months ended September 30, 2012 compared to the same period in 2011:
(EUR millions) | Nine months ended September 30, | |||||
2011 | 2012 | Change | ||||
Front-end: | ||||||
-Excluding special items | 41.1 | (9.7 | ) | (50.8 | ) | |
-Loss from early extinguishment of debt | (0.8 | ) | - | 0.8 | ||
-Fair value change conversion options | (4.4 | ) | - | 4.4 | ||
-Special items | (5.2 | ) | - | 5.2 | ||
-Including special items | 35.9 | (9.7 | ) | (45.6 | ) | |
Back-end: | ||||||
-Excluding special items | 84.1 | 38.5 | (45.6 | ) | ||
-Net gain on bargain purchase SEAS | 51.3 | - | (51.3 | ) | ||
-Including special items | 135.4 | 38.5 | (96.9 | ) | ||
ASMI consolidated, total earnings 1) | 171.3 | 28.9 | (142.4 | ) |
1) Allocated to the shareholders of the parent
Net earnings for the Back-end segment reflect our 52.17% 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 third quarter of 2012 and the backlog at the end of the third quarter of 2012 as compared to the second quarter of 2012 and the third quarter of 2011:
(EUR millions, except earnings per share) | Q3 2011 | Q2 2012 | Q3 2012 | % Change Q2 2012 to Q3 2012 | % Change Q3 2011 to Q3 2012 | |||||
Front-end | ||||||||||
Backlog at the beginning of the quarter | 121.7 | 89.1 | 92.2 | 3 | % | (24 | )% | |||
- New orders for the quarter | 93.2 | 85.8 | 64.3 | (25 | )% | (31 | )% | |||
- Net sales for the quarter | (104.1 | ) | (86.5 | ) | (96.1 | ) | 11 | % | (8 | )% |
- FX-effect for the quarter | 5.4 | 3.8 | (3.1 | ) | n/a | n/a | ||||
Backlog at the end of the quarter | 116.2 | 92.2 | 57.3 | (38 | )% | (51 | )% | |||
Book-to-bill ratio (new orders divided by net sales) | 0.9 | 1.0 | 0.7 | |||||||
Back-end | ||||||||||
Backlog at the beginning of the quarter | 314.6 | 283.9 | 346.9 | 22 | % | 10 | % | |||
- New orders for the quarter | 219.4 | 334.3 | 209.9 | (37 | )% | (4 | )% | |||
- Net sales for the quarter | (272.1 | ) | (291.4 | ) | (313.2 | ) | 7 | % | 15 | % |
- FX-effect for the quarter | 18.3 | 20.1 | (5.7 | ) | n/a | n/a | ||||
Backlog at the end of the quarter | 280.4 | 346.9 | 237.9 | (31 | )% | (15 | )% | |||
Book-to-bill ratio (new orders divided by net sales) | 0.8 | 1.1 | 0.7 | |||||||
ASMI consolidated | ||||||||||
Backlog at the beginning of the quarter | 436.3 | 373.0 | 439.1 | 18 | % | 1 | % | |||
- New orders for the quarter | 312.6 | 420.1 | 274.2 | (35 | )% | (12 | )% | |||
- Net sales for the quarter | (376.1 | ) | (377.9 | ) | (409.3 | ) | 8 | % | 9 | % |
- FX-effect for the quarter | 23.7 | 23.8 | (8.8 | ) | n/a | n/a | ||||
Backlog at the end of the quarter | 396.5 | 439.1 | 295.2 | (33 | )% | (26 | )% | |||
Book-to-bill ratio (new orders divided by net sales) | 0.8 | 1.1 | 0.7 |
Liquidity and capital resources
Net cash used by operations was EUR 20 million for the third quarter of 2012, as compared to EUR 27 million for the second quarter of 2012. For the third quarter of 2011 net cash provided by operations was EUR 64 million. For the nine months ended September 30, 2012, EUR 8 million net cash was used by operations compared to EUR 177 million cash provided for the same period previous year.
Net cash used in investing activities was EUR 15 million for the third quarter of 2012, as compared to EUR 18 million for the second quarter of 2012 and EUR 22 million for the third quarter of 2011. For the nine months ended September 30, 2012, EUR 51 million net cash was used for investing activities compared to EUR 70 million for the same period previous year.
Net cash used in financing activities was EUR 5 million for the third quarter of 2012, as compared EUR 27 million provided for the second quarter of 2012. For the third quarter of 2011 net cash used in financing activities of EUR 53 million was reported. For the nine months ended September 30, 2012, EUR 38 million net cash was used for financing activities compared to EUR 68 million for the same period previous year.
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 458 million at June 30, 2012 to EUR 507 million at September 30, 2012.
The number of outstanding days of working capital, measured against quarterly sales, decreased from 112 days at June 30, 2012 to 111 days at September 30, 2012. For the same period both our Front-end segment and our Back-end segment remained on the same level of respectively 113 days and 111 days.
Sources of liquidity. At September 30, 2012, the Company’s principal sources of liquidity consisted of EUR 297 million in cash and cash equivalents and EUR 270 million in undrawn bank lines. Approximately EUR 112 million of the cash and cash equivalents and EUR 107 million of the undrawn bank lines are restricted to use in the Company’s Back-end operations. EUR 5 million of the cash and cash equivalents and EUR 13 million in undrawn bank lines are restricted to use in the Company’s Front-end operations in Japan.
ASM INTERNATIONAL N.V.
CONSOLIDATED STATEMENTS OF OPERATIONS
(EUR thousands, except earnings per share date) | Three months ended September 30, | Nine months ended September 30, | ||||||
2011 | 2012 | 2011 | 2012 | |||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||
Net sales | 376,136 | 409,284 | 1,282,384 | 1,098,165 | ||||
Cost of sales | (245,439 | ) | (283,857 | ) | (806,368 | ) | (745,564 | ) |
Gross profit | 130,697 | 125,428 | 476,015 | 352,600 | ||||
Operating expenses: | ||||||||
Selling, general and administrative | (44,825 | ) | (53,556 | ) | (132,876 | ) | (148,592 | ) |
Research and development | (34,574 | ) | (39,951 | ) | (94,050 | ) | (111,684 | ) |
Net gain on bargain purchase | 97,894 | — | 97,895 | — | ||||
Restructuring expenses | — | — | — | — | ||||
Total operating expenses | 18,495 | (93,506 | ) | (129,032 | ) | (260,275 | ) | |
Earnings from operations | 149,193 | 31,922 | 346,983 | 92,326 | ||||
Net interest expense | (2,744 | ) | (3,112 | ) | (8,321 | ) | (8,314 | ) |
Loss from early extinguishment of debt | (824 | ) | — | (824 | ) | — | ||
Accretion of interest | (1,140 | ) | (1,221 | ) | (3,290 | ) | (3,724 | ) |
Revaluation conversion option | — | — | (4,378 | ) | — | |||
Foreign currency exchange gains (losses) | 6,416 | (5,835 | ) | 1,813 | (2,518 | ) | ||
Earnings before income taxes | 150,901 | 21,754 | 331,983 | 77,769 | ||||
Income tax expense | (7,739 | ) | (4,631 | ) | (37,482 | ) | (13,542 | ) |
Net earnings | 143,161 | 17,123 | 294,501 | 64,227 | ||||
Allocation of net earnings | ||||||||
Shareholders of the parent | 80,971 | 4,908 | 171,325 | 28,882 | ||||
Minority interest | 62,190 | 12,215 | 123,176 | 35,345 | ||||
Net earnings per share, allocated to the shareholders of the parent: | ||||||||
Basic net earnings | 1.46 | 0.09 | 3.11 | 0.52 | ||||
Diluted net earnings (1) | 1.32 | 0.09 | 2.85 | 0.52 | ||||
Weighted average number of shares used in | ||||||||
computing per share amounts (in thousands): | ||||||||
Basic | 55,328 | 54,989 | 55,154 | 55,175 | ||||
Diluted (1) | 64,891 | 55,433 | 64,875 | 55,545 | ||||
(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. Both for the three months ended September 30, 2012 and for the nine months ended September 30 2012, the effect of a potential conversion of convertible debt into 9,074,410 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 these periods. The possible increase of common shares caused by employee stock options for the three months ended September 30, 2012 with 443,813 common shares and for the nine month ended September 30, 2012 with 369,397 common shares, adjustments have been reflected in the diluted weighted average number of shares and net earnings per share for this period. | ||||||||
Amounts are rounded to the nearest thousand euro; therefore amounts may not equal (sub) totals due to rounding. |
ASM INTERNATIONAL N.V.
CONSOLIDATED BALANCE SHEETS
(EUR thousands, except share data) | December 31, | September 30, | ||
Assets | 2011 | 2012 | ||
(unaudited) | ||||
Cash and cash equivalents | 390,250 | 297,317 | ||
Accounts receivable, net | 330,891 | 358,901 | ||
Inventories, net | 376,667 | 433,518 | ||
Income taxes receivable | 907 | 1,735 | ||
Deferred tax assets | 14,350 | 15,390 | ||
Other current assets | 76,020 | 90,913 | ||
Total current assets | 1,189,084 | 1,197,774 | ||
Pledged cash | 20,000 | 20,000 | ||
Debt issuance costs | 4,389 | 3,236 | ||
Deferred tax assets | 13,072 | 21,093 | ||
Other intangible assets | 14,776 | 13,698 | ||
Goodwill, net | 52,131 | 52,462 | ||
Investments | 1,044 | 1,044 | ||
Other non current assets | 6,695 | 6,850 | ||
Assets held for sale | 6,862 | 6,753 | ||
Evaluation tools at customers | 13,987 | 16,798 | ||
Property, plant and equipment, net | 260,180 | 274,841 | ||
Total Assets | 1,582,221 | 1,614,548 | ||
Liabilities and Shareholders' Equity | ||||
Notes payable to banks | 40,680 | 85,061 | ||
Accounts payable | 157,549 | 176,337 | ||
Accrued expenses | 159,613 | 143,665 | ||
Advance payments from customers | 29,621 | 37,436 | ||
Deferred revenue | 6,340 | 1,029 | ||
Income taxes payable | 54,878 | 34,073 | ||
Deferred tax liability - current | 3,513 | 86 | ||
Current portion of long-term debt | 4,332 | 723 | ||
Total current liabilities | 456,527 | 478,410 | ||
Pension liabilities | 9,887 | 7,928 | ||
Deferred tax liabilities | 868 | 1,214 | ||
Provision for warranty | 6,828 | 5,382 | ||
Long-term debt | 15,319 | 4,980 | ||
Convertible subordinated debt | 135,078 | 138,590 | ||
Conversion option | — | — | ||
Total Liabilities | 624,507 | 636,503 | ||
Shareholders' Equity: | ||||
Common shares |
Authorized 110,000,000 shares, par value € 0.04, | ||||
issued and outstanding 55,377,020 and 54,992,040 shares | 2,215 | 2,220 | ||
Financing preferred shares, issued none | — | — | ||
Preferred shares, issued and outstanding none | — | — | ||
Capital in excess of par value | 376,217 | 380,432 | ||
Treasury shares at cost | — | (13,361 | ) | |
Retained earnings | 301,515 | 302,927 | ||
Accumulated other comprehensive loss | (20,151 | ) | (4,745 | ) |
Total Shareholders' Equity | 659,796 | 667,472 | ||
Non-controlling interest | 297,918 | 310,572 | ||
Total Equity | 957,714 | 978,045 | ||
Total Liabilities and Equity | 1,582,221 | 1,614,548 | ||
Amounts are rounded to the nearest thousand euro; therefore amounts may not equal (sub) totals due to rounding. |
ASM INTERNATIONAL N.V.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(EUR thousands) | Three months ended September 30, | Nine months ended September 30, | ||||||
2011 | 2012 | 2011 | 2012 | |||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||
Increase (decrease) in cash and cash equivalents: | ||||||||
Cash flows from operating activities: | ||||||||
Net earnings | 143,161 | 17,159 | 294,501 | 64,276 | ||||
Adjustments to reconcile net earnings to net cash from | ||||||||
operating activities: | ||||||||
Depreciation and amortization | 11,158 | 15,099 | 34,145 | 41,900 | ||||
Impairment charges | — | — | — | 96 | ||||
Amortization of debt issuance costs | 1,254 | 380 | 2,103 | 1,153 | ||||
Compensation expense employee stock option plan | 5,184 | 7,862 | 11,922 | 16,919 | ||||
Revaluation conversion option | — | — | 4,378 | — | ||||
Additional non-cash interest convertible | 1,140 | 1,221 | 3,290 | 3,724 | ||||
Net gain on bargain purchase | (97,895 | ) | — | (97,895 | ) | — | ||
Income taxes | 5,814 | 724 | 10,960 | (20,914 | ) | |||
Deferred income taxes | (952 | ) | (2,514 | ) | (5,575 | ) | (12,159 | ) |
Changes in other assets and liabilities: | ||||||||
Inventories | 20,499 | 10,780 | (44,887 | ) | (53,104 | ) | ||
Accounts receivable | 43,938 | (20,880 | ) | 30,235 | (29,032 | ) | ||
Accounts payable | (65,092 | ) | (33,497 | ) | (37,419 | ) | 17,443 | |
Other current assets | (4,127 | ) | (16,144 | ) | (29,128 | ) | (37,907 | ) |
Net cash provided (used) by operating activities | 64,082 | (19,810 | ) | 176,630 | (7,605 | ) | ||
Cash flows from investing activities: | ||||||||
Capital expenditures | (21,951 | ) | (14,100 | ) | (69,652 | ) | (48,506 | ) |
Purchase of intangible assets | (429 | ) | (700 | ) | (742 | ) | (2,982 | ) |
Acquisition of business | — | — | (994 | ) | — | |||
Proceeds from sale of property, plant and equipment | 694 | 252 | 1,268 | 629 | ||||
Net cash used in investing activities | (21,686 | ) | (14,548 | ) | (70,119 | ) | (50,859 | ) |
Cash flows from financing activities: | ||||||||
Notes payable to banks, net | (5,284 | ) | 18,567 | 3,020 | 45,441 | |||
Cash from business combination | (17,580 | ) | — | 33,150 | — | |||
Net proceeds from long-term debt and subordinated debt | (1,458 | ) | — | (1,458 | ) | — | ||
Repayments of long-term debt and subordinated debt | (1,399 | ) | (11,956 | ) | (4,661 | ) | (14,130 | ) |
Purchase of treasury shares | — | — | — | (13,361 | ) | |||
Change in minority interest | — | — | — | (3,552 | ) | |||
Proceeds from issuance of common shares | 46 | 422 | 4,001 | 1,760 | ||||
Dividend to minority shareholders ASMPT | (27,166 | ) | (12,182 | ) | (79,474 | ) | (27,024 | ) |
Dividend to shareholders ASMI | — | (97 | ) | (22,114 | ) | (27,519 | ) | |
Net cash provided (used) in financing activities | (52,841 | ) | (5,246 | ) | (67,536 | ) | (38,385 | ) |
Exchange rate effects | 2,607 | 3,192 | (8,642 | ) | 3,918 | |||
Net increase (decrease) in cash and cash equivalents | (7,838 | ) | (36,412 | ) | 30,332 | (92,931 | ) | |
Cash and cash equivalents at beginning of period | 378,462 | 333,732 | 340,294 | 390,250 | ||||
Cash and cash equivalents at end of period | 370,627 | 297,317 | 370,627 | 297,317 |
Amounts are rounded to the nearest thousand euro; therefore amounts may not equal (sub) totals due to rounding.
ASM INTERNATIONAL N.V.
DISCLOSURE ABOUT SEGMENTS AND RELATED INFORMATION
The Company organizes its activities in two operating segments, Front-end and Back-end. | ||||||
The Front-end segment manufactures and sells equipment used in wafer processing, encompassing the fabrication steps in which silicon wafers are layered with semiconductor devices. The segment is a product driven organizational unit comprised of manufacturing, service, and sales operations in Europe, the United States, Japan and Southeast Asia. | ||||||
The Back-end segment manufactures and sells equipment and materials used in assembly and packaging, encompassing the processes in which silicon wafers are separated into individual circuits and subsequently assembled, packaged and tested. The segment is organized in ASM Pacific Technology Ltd., in which the Company holds a majority interest of 52.17% at September 30, 2012, 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. | ||||||
(EUR thousands) | Three months ended September 30, 2011 | |||||
Front-end | Back-end | Total | ||||
(unaudited) | (unaudited) | (unaudited) | ||||
Net sales to unaffiliated customers | 104,075 | 272,062 | 376,136 | |||
Gross profit | 40,570 | 90,127 | 130,697 | |||
Earnings from operations | 13,489 | 135,704 | 149,193 | |||
Net interest income (expense) | (2,955 | ) | 212 | (2,744 | ) | |
Loss resulting from early extinguishment of debt | (824 | ) | — | (824 | ) | |
Accretion of interest | (1,140 | ) | — | (1,140 | ) | |
Foreign currency exchange gains (losses) | 5,019 | 1,397 | 6,416 | |||
Income tax income (expense) | (983 | ) | (6,756 | ) | (7,739 | ) |
Net earnings | 12,605 | 130,556 | 143,161 | |||
Net earnings allocated to: | ||||||
Shareholders of the parent | 80,971 | |||||
Minority interest | 62,190 | |||||
Capital expenditures and purchase of intangible assets | 2,669 | 19,712 | 22,380 | |||
Depreciation and amortization | 3,420 | 7,738 | 11,158 | |||
Three month ended September 30, 2012 | ||||||
(unaudited) | (unaudited) | (unaudited) | ||||
Net sales to unaffiliated customers | 96,072 | 313,212 | 409,284 | |||
Gross profit | 30,135 | 95,292 | 125,428 | |||
Earnings (loss) from operations | (1,648 | ) | 33,569 | 31,922 | ||
Net interest income (expense) | (3,163 | ) | 52 | (3,112 | ) | |
Accretion of interest | (1,201 | ) | (20 | ) | (1,221 | ) |
Foreign currency exchange gains (losses) | (4,279 | ) | (1,556 | ) | (5,835 | ) |
Income tax income (expense) | 1,877 | (6,508 | ) | (4,631 | ) | |
Net earnings | (8,414 | ) | 25,537 | 17,123 | ||
Net earnings allocated to: | ||||||
Shareholders of the parent | 4,908 | |||||
Minority interest | 12,215 | |||||
Capital expenditures and purchase of intangible assets | 2,296 | 12,504 | 14,801 | |||
Depreciation and amortization | 4,597 | 10,501 | 15,099 | |||
Amounts are rounded to the nearest thousand euro; therefore amounts may not equal (sub) totals due to rounding. |
ASM INTERNATIONAL N.V.
DISCLOSURE ABOUT SEGMENTS AND RELATED INFORMATION (2/2)
(EUR thousands) | Nine months ended September 30, 2011 | |||||
Front-end | Back-end | Total | ||||
(unaudited) | (unaudited) | (unaudited) | ||||
Net sales to unaffiliated customers | 341,905 | 940,479 | 1,282,384 | |||
Gross profit | 133,562 | 342,454 | 476,015 | |||
Earnings from operations | 53,059 | 293,924 | 346,983 | |||
Net interest income (expense) | (9,408 | ) | 1,087 | (8,321 | ) | |
Loss resulting from early extinguishment of debt | (824 | ) | — | (824 | ) | |
Accretion of interest | (3,290 | ) | — | (3,290 | ) | |
Revaluation conversion option | (4,378 | ) | — | (4,378 | ) | |
Foreign currency exchange losses | 1,792 | 20 | 1,813 | |||
Income tax expense | (1,033 | ) | (36,448 | ) | (37,482 | ) |
Net earnings | 35,918 | 258,583 | 294,501 | |||
Net earnings allocated to: | ||||||
Shareholders of the parent | 171,325 | |||||
Minority interest | 123,176 | |||||
Capital expenditures and purchase of intangible assets | 11,295 | 59,099 | 70,394 | |||
Depreciation and amortization | 10,333 | 23,812 | 34,145 | |||
Cash and cash equivalents | 218,966 | 151,661 | 370,627 | |||
Capitalized goodwill | 10,737 | 39,112 | 49,849 | |||
Other intangible assets | 4,738 | 5,496 | 10,234 | |||
Other identifiable assets | 319,788 | 795,661 | 1,115,448 | |||
Total assets | 554,228 | 991,929 | 1,546,157 | |||
Total debt | 157,877 | 11,446 | 169,323 | |||
Headcount in full-time equivalents (1) | 1,611 | 16,180 | 17,791 | |||
Nine months ended September 30, 2012 | ||||||
(unaudited) | (unaudited) | (unaudited) | ||||
Net sales to unaffiliated customers | 277,305 | 820,859 | 1,098,165 | |||
Gross profit | 89,980 | 262,620 | 352,600 | |||
Earnings from operations | (702 | ) | 93,028 | 92,326 | ||
Net interest income (expense) | (8,778 | ) | 463 | (8,314 | ) | |
Accretion of interest | (3,511 | ) | (213 | ) | (3,724 | ) |
Revaluation conversion option | — | — | — | |||
Foreign currency exchange gains (losses) | (947 | ) | (1,570 | ) | (2,518 | ) |
Income tax income (expense) | 4,276 | (17,818 | ) | (13,542 | ) | |
Net earnings (loss) | (9,663 | ) | 73,890 | 64,227 | ||
Net earnings allocated to: | ||||||
Shareholders of the parent | 28,882 | |||||
Minority interest | 35,345 | |||||
Capital expenditures and purchase of intangible assets | 13,795 | 37,694 | 51,489 |
Depreciation and amortization | 12,714 | 29,186 | 41,900 | |||
Cash and cash equivalents | 184,902 | 112,416 | 297,317 | |||
Pledged cash | — | 20,000 | 20,000 | |||
Capitalized goodwill | 11,421 | 41,042 | 52,462 | |||
Other intangible assets | 9,483 | 4,215 | 13,698 | |||
Other identifiable assets | 346,823 | 884,247 | 1,231,070 | |||
Total assets | 552,628 | 1,061,920 | 1,614,548 | |||
Total debt | 144,293 | 85,060 | 229,353 | |||
Headcount in full-time equivalents (1) | 1,702 | 16,681 | 18,383 | |||
(1) Headcount includes those employees with a fixed contract, and is exclusive of temporary workers. | ||||||
Amounts are rounded to the nearest thousand euro; therefore amounts may not equal (sub) totals due to rounding. |
ASM INTERNATIONAL N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Basis of Presentation
ASM International N.V, (“ASMI”) follows accounting principles generally accepted in the United States of America (“US GAAP”).
Amounts are rounded to the nearest thousand euro; therefore amounts may not equal (sub) totals due to rounding.
Principles of Consolidation
The Consolidated Financial Statements include the accounts of ASMI and its subsidiaries, where ASMI holds a controlling interest. The non-controlling interest of third parties is disclosed separately in the Consolidated Financial Statements. All intercompany profits, transactions and balances have been eliminated in consolidation.
Change in accounting policies
No significant changes in accounting policies incurred during the third quarter of 2012.
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 development costs, goodwill, inventory obsolescence reserve, pension plans and preferred shares. | |||||||||
The reconciliation between IFRS and US GAAP is as follows: | |||||||||
(EUR thousands, except per share date) | Three months ended September 30, | Nine months ended September 30, | |||||||
Net earnings | |||||||||
2011 | 2012 | 2011 | 2012 | ||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | ||||||
US GAAP | 143,161 | 17,123 | 294,501 | 64,227 | |||||
Adjustments for IFRS: | |||||||||
Reversal inventory write downs | (229 | ) | 23 | (1,486 | ) | 101 | |||
Tax rate difference on eliminated intercompany profit | — | (2 | ) | — | (1,155 | ) | |||
Development expenses | 2,899 | 2,201 | 6,708 | 8,442 | |||||
Debt issuance fees | (461 | ) | 115 | (160 | ) | 338 | |||
Total adjustments | 2,209 | 2,337 | 5,062 | 7,726 | |||||
IFRS | 145,370 | 19,460 | 299,563 | 71,953 | |||||
IFRS allocation of net earnings: | |||||||||
Shareholders | 83,180 | 7,246 | 176,387 | 37,160 | |||||
Minority interest | 62,190 | 12,214 | 123,176 | 34,793 | |||||
Net earnings per share, allocated to the shareholders of the parent: | |||||||||
Basic | 1.50 | 0.13 | 3.20 | 0.67 | |||||
Diluted | 1.35 | 0.13 | 2.92 | 0.67 | |||||
(EUR thousands) | Total Equity | ||||||||
September 30, | |||||||||
2011 | 2012 | ||||||||
(unaudited) | (unaudited) | ||||||||
US GAAP | 904,050 | 978,045 | |||||||
Adjustments for IFRS: | |||||||||
Goodwill | (10,220 | ) | (10,671 | ) | |||||
Debt issuance fees | (1,286 | ) | (843 | ) | |||||
Reversal inventory write downs | 1,794 | 1,673 | |||||||
Development expenses | 41,400 | 53,624 | |||||||
Tax rate difference on eliminated intercompany profit | — | (388 | ) |
Pension plans | 565 | (179 | ) | ||||||
Total adjustments | 32,253 | 43,216 | |||||||
IFRS | 936,303 | 1,021,261 | |||||||
Amounts are rounded to the nearest thousand euro; therefore amounts may not equal (sub) totals due to rounding. |