• Third quarter net sales in the Front-end segment slightly higher than in the second quarter; Book-to-bill ratio exceeded 1.
• Third quarter net sales and bookings in the Back-end segment lower than in the second quarter due to the earlier announced slow-down in the Assembly & Packaging industry.
• Third quarter consolidated net sales of € 183.8 million, up 24.7% from the third quarter of 2003 and down 13.3% from net sales of the previous quarter;
• Third quarter net earnings of € 3.7 million or € 0.07 diluted net earnings per share compared to a net loss of € (9.7) million or € (0.20) diluted net loss per share for the third quarter of 2003 and net earnings of € 4.4 million or € 0.08 diluted net earnings per share for the second quarter of 2004;
• Third quarter bookings of € 157.1 million, an increase of 20.1% compared to € 130.8 million in the third quarter of 2003 and a decrease of 32.3% compared to € 232.1 million in the second quarter of 2004; Third quarter book-to-bill ratio of 0.86.
• Nine months bookings of € 614.9 million, an increase of 56.7% compared to € 392.5 million for the nine months in 2003;
• Quarter-end backlog of € 222.3 million, down 10.7% from the previous quarter.

 

 

BILTHOVEN, THE NETHERLANDS, October 29, 2004 --- ASM International N.V. (NASDAQ: ASMI and Euronext Amsterdam: ASM) reported today the operating results for the third quarter of 2004. Net earnings for the third quarter of 2004 amounted to € 3.7 million, or € 0.07 diluted net earnings per share compared to a net loss of € (9.7) million or € (0.20) diluted net loss per share for the third quarter of 2003.

For the nine months ended September 30, 2004 net earnings amounted to € 22.6 million or € 0.44 diluted net earnings per share compared to a net loss of € (25.9) million or € (0.52) diluted net loss per share for the same period in 2003.

 

 

The order intake slowed down in the third quarter of 2004, in particular in the Back-end segment. The order intake in the Front-end segment continued to be strong with more new orders than net sales recorded in this quarter.

 

The consolidated financial statements include the operations of our 100% subsidiary ASM NuTool, Inc. (NuTool) as from June 2, 2004 and our 100% subsidiary Genitech Ltd. (Genitech) as from August 5, 2004.

 

The following table shows the operating performance for the third quarter of 2004 as compared to the second quarter of 2004 and the third quarter of 2003 and the percentage change for the third quarter of 2004 compared to the second quarter of 2004 and the third quarter of 2003:

 

 

 

Net sales for the nine months ended September 30, 2004 amounted to € 591.6 million, an increase of 41.4% compared to € 418.3 million in the same period in 2003.

 

Our consolidated net sales expressed in euro were negatively impacted by the strong euro against the Japanese yen, the US dollar and US dollar related currencies. The decline in exchange rates for the first nine months of 2004 compared to the same period in 2003 impacted our sales negatively by 7.3%.

 

For the nine months, net earnings amounted to € 22.6 million, or € 0.44 diluted net earnings per share compared to a net loss of € (25.0) million or € (0.52) diluted net loss per share for the same period in 2003.

 

For the nine months ended September 30, 2004 the total of new orders booked amounted to € 614.9 million compared to € 392.5 million in the same period of 2003, an increase of 56.7%.

 

 

Gross profit in the third quarter of 2004 amounted to 38.6% of net sales, 3.8 percentage points above the gross profit margin of 34.8% of net sales in the second quarter of 2004, and 5.6 percentage points above the gross margin of 33.0% for the third quarter of 2003. The gross profit margin percentage in the third quarter of 2004 compared to the second quarter of 2004 improved in both the Front-end and the Back-end segment. In the second quarter of 2004 the gross profit margin percentage was negatively impacted by one-time charges in the Back-end segment.

 

The gross profit margin for the first nine months of 2004 amounted to 38.2%, an increase of 5.6 percentage points compared to the 32.6% gross profit margin for the same period in 2003. The increase is mainly the result of the overall growth in sales volumes and the related increased utilization of the Company's manufacturing capacity and, to a lesser extent, changes in product mix. The one-time charges in the second quarter of 2004 in the Back-end segment contributed negatively.

Selling, general and administrative expenses increased 4.2% from € 26.9 million in the third quarter of 2003 to € 28.0 million in the third quarter of 2004 and decreased 3.7% from the € 29.1 million in the second quarter of 2004. Selling, general and administrative expenses were € 82.1 million in the nine months ended September 30, 2004 compared to € 75.2 million in the same period of 2003. The increase is mainly the result of growing activities and the need to further invest in the service organization of our Front-end segment.

 

As a percentage of net sales, selling, general and administrative expenses were 13.9% in the nine months ended September 30, 2004 compared to 18.0% in the same period of 2003.

 

Research and development expenses increased from € 18.8 million or 12.8% of net sales in the third quarter of 2003 to € 22.1 million or 12.0% of net sales in the third quarter of 2004, and were 4.3% below the € 23.1 million in research and development expenses in the second quarter of 2004. For the nine months ended September 30, 2004 research and development expenses increased 9.2% from € 57.4 million in the nine months ended September 30, 2003 to € 62.7 million in the first three quarters of 2004, and decreased as a percentage of net sales from 13.7% to 10.6%.

 

Amortization of purchased technology and other intangible assets was € 0.5 million in the third quarter of 2004 and € 1.0 million in the first nine months of 2004. The amortization relates to the amortization of purchased technology and intangible assets from the acquisition of NuTool on June 2, 2004 and Genitech on August 5, 2004. The amortization expense for the nine months ended September 30, 2004 includes € 0.5 million for purchased In-Process Research and Development, which amount has been expensed in full.

 

Earnings from operations amounted to earnings of € 20.3 million for the third quarter of 2004 compared to € 2.9 million for the same period in 2003 and € 21.0 million in the second quarter of 2004. For the nine months ended September 30, 2004 earnings from operations were € 80.0 million compared to € 3.7 million in the same period of 2003.

 

Net earnings (loss) were € 3.7 million for the three months ended September 30, 2004 compared to a net loss of € (9.7) million for the three months ended September 30, 2003. The net earnings for the nine months ended September 30, 2004 amounted to € 22.6 million compared to a net loss of € (25.9) million in the same period of 2003. The improved net earnings reflect the improved sales and operating performance levels, in both our Front-end and Back-end segments.

 

Bookings and backlog

 

New orders received in the third quarter of 2004 were € 157.1 million, 32.3% lower than the strong order intake of € 232.1 million in the second quarter of 2004. For the third quarter of 2004 the level of new orders divided by the net sales for the quarter (book-to-bill ratio) was 0.86. The order intake in the Front-end segment continued to be strong with more new orders than net sales recorded in the third quarter of 2004, while the order intake in the Back-end segment weakened.

 

The backlog at the end of September 2004 amounted to € 222.3 million, a decrease of 10.7% compared to € 248.9 million at June 30, 2004.

 

 

Net cash provided by operations and investing activities for the third quarter of 2004 was € 0.9 million as compared to € 14.6 million in cash provided by operating and investing activities for the third quarter of 2003. For the nine months ended September 30, 2004 net cash provided by operating and investing activities was € 32.9 million compared to € 6.7 million in the same period of 2003.

 

Net working capital, consisting of accounts receivable, inventories, other current assets, accounts payable, accrued expenses, advance payments from customers and deferred revenue, increased from € 154.4 million at December 31, 2003 to € 178.0 million at September 30, 2004. The increase is primarily the result of increased sales levels and manufacturing activity. The number of outstanding days of working capital, measured based on quarterly sales, increased from 85 days at December 31, 2003 to 87 days at September 30, 2004.

 

At September 30, 2004, the Company's principal sources of liquidity consisted of € 157.7 million in cash and cash equivalents, of which € 83.5 million was available for the Company's Front-end segment and € 74.2 million was restricted for use in the Company's Back-end segment. In addition the Company also had € 59.2 million in undrawn bank facilities, of which € 35.0 million was restricted for use in the Back-end segment and € 23.1 million was available for use in the Front-end operations in Japan.

 

 

The Company expects net sales in the Front-end segment to increase during the fourth quarter of 2004. In the Back-end segment, where the order intake has already weakened, net sales are expected to be lower. On the consolidated level, net sales and net results in the fourth quarter of 2004 are expected to be at a lower level when compared to the third quarter of 2004. In case the semiconductor market weakens, this may lead to push-outs of deliveries, currently scheduled for the fourth quarter of 2004, which would impact our sales and net results.

 

The current backlog, the Company's leading technology position and the appreciation by our customers of the solutions offered by the Company today make us optimistic for the level of sales in the upcoming year 2005, in particular in the Front-end segment even in today's uncertain market conditions. In 2005 we will also see the first contribution of the Company's Front-end manufacturing facility in Singapore that will bring us cost-effectiveness and strengthen our gross profit margins. Based on the above, and barring unforeseen circumstances, we reconfirm our earlier statement that we expect the Front-end segment to achieve positive earnings from operations in 2005.

ASM INTERNATIONAL CONFERENCE CALL

 

ASM International will host an investor conference call and web cast on

                                   

Monday, November 1, 2004 at

 

  9:00 a.m. US Eastern time

15:00 p.m. Continental European time.

 

The teleconference dial-in numbers are as follows:

 

United States:                   +1 800.299.7098

International:                     +1 617.801.9715

The participation pass code is 396 47 084

 

A simultaneous audio web cast will be accessible at www.asm.com and www.fulldisclosure.com.

The teleconference will be available for replay beginning one hour after completion of the live broadcast through November 8, 2004. The replay dial-in numbers are:
 

United States:                   +1 888.286.8010

International:                     +1 617.801.6888

The participation pass code is 780 14 361

 

About ASM

 

ASM International N.V., headquartered in Bilthoven, the Netherlands, is a global company servicing one of the most important and demanding industries in the world. The Company possesses a strong technology base, state-of-the-art manufacturing facilities, a competent and qualified workforce and a highly trained, strategically distributed support network. ASM International 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 http://www.asm.com.