BILTHOVEN, Netherlands, Oct. 29, 2004 (PRIMEZONE) -- ASM International N.V. (Nasdaq:ASMI) (Euronext Amsterdam:ASM) reported today the operating results for the third quarter of 2004. Net earnings for the third quarter of 2004 amounted to EUR 3.7 million, or EUR 0.07 diluted net earnings per share compared to a net loss of EUR (9.7) million or EUR (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 EUR 22.6 million or EUR 0.44 diluted net earnings per share compared to a net loss of EUR (25.9) million or EUR (0.52) diluted net loss per share for the same period in 2003.
Sales levels for the third quarter of 2004 in the Company's Front-end segment were slightly better than in the second quarter of 2004, while in the Company's Back-end segment sales were at a lower level compared to sales levels in the second quarter of 2004.
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:
(euro millions)
% Change % Change
Q3 2004 Q3 2004
to to
Q3 2003 Q2 2004 Q3 2004 Q2 2004 Q3 2003
Net sales 147.4 211.9 183.8 (13.3)% 24.7%
Gross profit 48.7 73.7 71.0 (3.7)% 45.9%
Gross profit margin % 33.0% 34.8% 38.6% 3.8%(1) 5.6%(1)
Selling, general and
administrative
expenses (26.9) (29.1) (28.0) (3.7)% 4.2%
Research and development
expenses (18.8) (23.1) (22.1) (4.3)% 17.6%
Amortization of
intangibles -- (0.5) (0.5) (3.0)% --
Earnings (loss) from
operations 2.9 21.0 20.3 (3.2)% 592.9%
Net earnings (loss) (9.7) 4.4 3.7 (15.3)% na
New orders 130.8 232.1 157.1 (32.3)% 20.1%
Backlog at end of
period 117.1 248.9 222.3 (10.7)% 89.8%
(1) Percentage point change
Nine Months Performance
Net sales for the nine months ended September 30, 2004 amounted to EUR 591.6 million, an increase of 41.4% compared to EUR 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 EUR 22.6 million, or EUR 0.44 diluted net earnings per share compared to a net loss of EUR (25.0) million or EUR (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 EUR 614.9 million compared to EUR 392.5 million in the same period of 2003, an increase of 56.7%.
Operations
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 EUR 26.9 million in the third quarter of 2003 to EUR 28.0 million in the third quarter of 2004 and decreased 3.7% from the EUR 29.1 million in the second quarter of 2004. Selling, general and administrative expenses were EUR 82.1 million in the nine months ended September 30, 2004 compared to EUR 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 EUR 18.8 million or 12.8% of net sales in the third quarter of 2003 to EUR 22.1 million or 12.0% of net sales in the third quarter of 2004, and were 4.3% below the EUR 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 EUR 57.4 million in the nine months ended September 30, 2003 to EUR 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 EUR 0.5 million in the third quarter of 2004 and EUR 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 EUR 0.5 million for purchased In-Process Research and Development, which amount has been expensed in full.
Earnings from operations amounted to earnings of EUR 20.3 million for the third quarter of 2004 compared to EUR 2.9 million for the same period in 2003 and EUR 21.0 million in the second quarter of 2004. For the nine months ended September 30, 2004 earnings from operations were EUR 80.0 million compared to EUR 3.7 million in the same period of 2003.
Net earnings (loss) were EUR 3.7 million for the three months ended September 30, 2004 compared to a net loss of EUR (9.7) million for the three months ended September 30, 2003. The net earnings for the nine months ended September 30, 2004 amounted to EUR 22.6 million compared to a net loss of EUR (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 EUR 157.1 million, 32.3% lower than the strong order intake of EUR 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 EUR 222.3 million, a decrease of 10.7% compared to EUR 248.9 million at June 30, 2004.
Liquidity and capital resources
Net cash provided by operations and investing activities for the third quarter of 2004 was EUR 0.9 million as compared to EUR 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 EUR 32.9 million compared to EUR 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 EUR 154.4 million at December 31, 2003 to EUR 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 EUR 157.7 million in cash and cash equivalents, of which EUR 83.5 million was available for the Company's Front-end segment and EUR 74.2 million was restricted for use in the Company's Back-end segment. In addition the Company also had EUR 59.2 million in undrawn bank facilities, of which EUR 35.0 million was restricted for use in the Back-end segment and EUR 23.1 million was available for use in the Front-end operations in Japan.
Outlook
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.
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, currency fluctuations, the timing of significant orders, market acceptance of new products, competitive factors, litigation involving intellectual property, shareholder and other issues, commercial and economic disruption due to terrorist activity, armed conflict or political instability 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 report on Form 20-F for the year ended December 31, 2003.
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