ASM INTERNATIONAL REPORTS 2005 FIRST QUARTER OPERATING RESULTS

Net sales of € 134.7 million, down 31.2% from net sales of the first quarter of 2004 and down 17.2% from net sales of the fourth quarter of 2004.

 

Net loss of € 7.2 million or € 0.14 diluted net loss per share, as compared to net earnings of € 14.6 million or € 0.28 diluted net earnings per share for the first quarter of 2004 and net earnings of € 1.4 million or € 0.03 diluted net earnings per share in the fourth quarter of 2004.

 

First quarter bookings of € 150.0 million, up 18.1% from the fourth quarter of 2004.

 

Quarter-end backlog of € 202.1 million, up 8.2% from the end of the previous quarter.

 

 

BILTHOVEN, THE NETHERLANDS, April 25, 2005 - ASM International N.V. (NASDAQ: ASMI and Euronext Amsterdam: ASM) reports today its 2005 first quarter operating results. These operating results have been prepared in accordance with accounting principles generally accepted in the United States of America ("US GAAP").

 

The net loss for the first quarter of 2005 amounted to € 7.2 million, or € 0.14 diluted net loss per share, compared to net earnings of € 14.6 million or € 0.28 diluted net earnings per share for the same period in 2004.

 

The first quarter of 2005 showed a positive development in order intake. With € 150.0 million in new orders, the order intake increased € 23.0 million or 18.1% as compared to € 127.0 million in the fourth quarter of 2004. Both the Company's Front-end and Back-end segments reported decreased levels of sales and operating results.

 

The consolidated financial statements for the first quarter of 2005 include the operations of the Company's 100% subsidiaries ASM NuTool, Inc. and ASM Genitech, Inc., which were acquired in June 2004 and August 2004, respectively.

 

 

 

 

In line with industry trends, net sales for the first quarter of 2005 were lower as compared to the fourth quarter of 2004 in both wafer processing equipment (Front-end) and assembly and packaging equipment and materials (Back-end).

 

Consolidated sales levels expressed in euro were negatively impacted by the strengthened euro against the US dollar and US dollar related currencies. The decline in exchange rates in the first quarter of 2005 compared to the first quarter of 2004 impacted sales negatively by 4.7%.

 

 

Gross Profit Margin amounted to 34.1% of net sales in the first quarter of 2005, 7.3 percentage points below the gross profit margin of 41.4% of net sales in the first quarter of 2004. The decrease was caused by lower volumes and an increase in the proportion of net sales accounted for by the lower margin Front-end segment. The gross profit margin in the first quarter of 2005 was 0.3 percentage points below the gross profit margin of 34.4% in the fourth quarter of 2004.

 

Selling, General and Administrative Expenses decreased 4.7% from € 24.9 million in the first quarter of 2004 to € 23.8 million in the first quarter of 2005 and decreased 4.6% from € 24.9 million in the fourth quarter of 2004., The decrease was the result of favourable currency exchange rates and the Company's focus on fixed cost control.

 

As a percentage of net sales, selling, general and administrative expenses were 17.6% in the first quarter of 2005 compared to 12.7% in the first quarter of 2004, and 15.3% in the fourth quarter of 2004. The increase was the result of lower net sales.

 

Research and Development Expenses increased 19.9% from € 17.5 million in the first quarter of 2004 to € 20.9 million in the first quarter of 2005 and decreased 5.5% from € 22.2 million in the fourth quarter of 2004.

 

Research and development expenses increased in the first quarter of 2005 when compared to the first quarter of 2004 mainly as a result of the inclusion of the operations of the Company's subsidiaries ASM NuTool and ASM Genitech, which were acquired in June 2004 and August 2004 respectively.

 

Amortization of Purchased Technology and Other Intangible Assets was € 0.4 million in the first quarter of 2005, unchanged from the fourth quarter of 2004. The amortization mainly relates to the amortization of purchased technology and other intangible assets from the acquisitions of ASM NuTool and ASM Genitech.

 

Earnings from Operations amounted € 0.8 million in the first quarter of 2005 compared to € 38.7 million in the first quarter of 2004 and € 8.4 million in the fourth quarter of 2004. Earnings from operations decreased in both the Company's Front-end and Back-end segments.

 

Net Interest Expense increased from a net expense of € 2.4 million in the first quarter of 2004 to a net expense of € 2.8 million in the first quarter of 2005. The increase is mainly the result of increased interest expenses due to increased borrowings, including the issuance of US$ 150.0 million in convertible debt in December 2004. The increased interest expense is partly offset by favourable US dollar exchange rates and increased interest income, which is due to increased cash and cash equivalents and increased interest rates for cash deposits. Net interest expense in the first quarter of 2005 also includes a € 0.3 million loss related to the early extinguishment of US$ 4.6 million of convertible subordinated notes due November 2005.

 

 

New orders received increased 18.1% from € 127.0 million in the fourth quarter of 2004 to € 150.0 million in the first quarter of 2005 reflecting a surge in Back-end orders. For the first quarter of 2005, the level of new orders divided by the net sales for the quarter (book-to-bill ratio) was 1.11, compared to a book-to-bill ratio of 0.86 and 0.78 in the third and fourth quarter of 2004, respectively.

 

The backlog at March 31, 2005 amounted to € 202.1 million, an increase of 8.2% compared to the backlog of € 186.8 million at December 31, 2004. Of this amount approximately one-third refers to the ending backlog of ASM Pacific Technology.

 

 

Net cash provided by operations in the first quarter of 2005 was € 22.5 million as compared to € 34.1 million in the first quarter of 2004. The decrease was primarily caused by the net loss reported in the first quarter of 2005, partly compensated by increased collections on outstanding receivables. Net cash used in investing activities in the first quarter of 2005 was € 11.9 million as compared to net cash used of € 9.0 million in the first quarter of 2004. The increase was primarily caused by increased capital expenditures, in particular machinery.

Net working capital, consisting of accounts receivable, inventories, other current assets, accounts payable, accrued expenses, advance payments from customers and deferred revenue, decreased from € 189.2 million at December 31, 2004 to € 174.9 million at March 31, 2005. The decrease is primarily the result of decreased sales levels, partly offset by increased inventory levels for shipments in the second quarter of 2005. The number of outstanding days of working capital, measured based on quarterly sales, increased from 107 days at December 31, 2004 to 117 days at March 31, 2005.

At March 31, 2005, the Company's principal sources of liquidity consisted of € 232.9 million in cash and cash equivalents, of which € 148.2 million was available for the Company's Front-end operations and € 84.7 million was restricted for use in the Company's Back-end operations. In addition, the Company also had € 69.7 million in undrawn bank facilities, of which € 33.6 million was available for its Back-end operations and € 36.1 million was available for its Front-end operations in Japan.

 

If the Company's convertible subordinated notes due November 2005 are not converted into common shares prior to or at maturity in November 2005, the Company has to repay these notes in cash. The conversion price is $18.85. At March 31, 2005, € 72.8 million of these notes were outstanding.

 

 

In the first quarter of 2005 we have seen a positive development in order intake, but at lower levels than we anticipated earlier in the year. Although we have won important orders, our customers are more cautious in adding capacity and as a result customers are delaying orders further into 2005 or even into 2006. Based on the current market forecast we expect sales levels to be lower than anticipated earlier, in particular in our Front-end wafer processing segment. This lower sales expectation also delays the achievement of operational profitability for the Front-end operations. In contrast to earlier guidance, and despite continued strong focus on fixed costs, we do no longer expect positive earnings from operations for our Front-end segment for the full year 2005.

 

We continue to invest in our Front-end technological capabilities and our Front-end manufacturing facility in Singapore. We also remain confident that our Back-end segment will see improved momentum starting in the second quarter 2005. Based on the above, and in combination with our current backlog, we expect the net sales and net result in the second quarter of 2005 to improve when compared to the first quarter of 2005.

 

ASM INTERNATIONAL CONFERENCE CALL

 

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

                                  

TUESDAY, APRIL 26, 2005 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    800.510.9661

International:                      +1    617.614.3452

Participation pass code is 263 23 962

 

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

 

The teleconference will be available for replay, beginning one hour after completion of the live broadcast, through May 3, 2005. The replay dial-in numbers are:

 

United States:                   +1     888.286.8010

International                      +1     617.801.6888

Participation pass code is 805 18 954

 

 

ASM International N.V., based 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.