<PAGE> 1
FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
REPORT OF FOREIGN PRIVATE ISSUER
Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934
September 6, 2000
ASM INTERNATIONAL N.V.
(Translation of registrant's name into English)
JAN VAN EYCKLAAN 10
3723 BC BILTHOVEN
THE NETHERLANDS
(Address of principal executive offices)
[Indicate by check mark whether the registrant files or will file
annual reports under cover of Form 20-F or Form 40-F.]
Form 20-F X Form 40-F
[Indicate by check mark whether the registrant by furnishing the
information contained in this Form is also thereby furnishing the information to
the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934.]
Yes ______ No X
[If "Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b): 82-____________________.]
<PAGE> 2
<TABLE>
<CAPTION>
<S> <C>
Table of Contents: Page
Capitalization ......................................................................................... 3
Selected Consolidated Financial Data ................................................................... 4
Consolidated Balance Sheets as of December 31, 1999
and June 30, 2000 (unaudited) ................................................................. 5
Consolidated Statements of Operations for the Quarter and Six-Month Periods
ended June 30, 1999 and 2000 (unaudited) ...................................................... 6
Consolidated Statements of Comprehensive Income for the Quarter and Six-Month
Periods ended June 30, 1999 and 2000 (unaudited) .............................................. 7
Consolidated Statement of Shareholders' Equity for the Six-Month Period
ended June 30, 2000 (unaudited) ............................................................... 7
Consolidated Statement of Cash Flows for the Quarter and Six-Month Periods ended
June 30, 1999 and 2000 (Unaudited) ............................................................ 8
Notes to Financials .................................................................................... 9
Management's Discussion and Analysis of Financial Condition and
Results of Operations ......................................................................... 18
Market Risk Disclosure ................................................................................. 24
Cautionary Factors ..................................................................................... 25
Incorporation by Reference ............................................................................. 27
Exhibit List ........................................................................................... 28
Signatures
</TABLE>
As used in this report, the terms "we," "us," "our" and "ASM International" mean
ASM International N.V. and its subsidiaries, unless the context indicates
otherwise.
2
<PAGE> 3
CAPITALIZATION
The following table shows our cash and cash equivalents and our capitalization
as of June 30, 2000 on an actual basis and as adjusted to reflect the US$75
million loan we received of which US$69 million was taken down, after deducting
fees and expenses.
<TABLE>
<CAPTION>
JUNE 30, 2000
-----------------------------------------
ACTUAL AS ADJUSTED
---------- -----------
(EUROS IN THOUSANDS, EXCEPT
SHARE AND PER SHARE DATA)
<S> <C> <C>
Cash and cash equivalents (1) (euro) 77,085 (euro) 148,162
============= ==============
Total debt:
Notes payable to banks............................................ (euro) 12,304 (euro) 12,304
Current portion of long-term debt................................. 5,610 31,683
Current portion of subordinated debt.............................. 1,361 1,361
Long-term debt.................................................... 11,070 57,422
Subordinated debt................................................. - -
Total debt................................................. 30,345 102,770
Stockholders' equity:
Common shares: Nlg. 0.01 par value; 60,000,000 shares
authorized 48,758,946 issued and outstanding, actual and
outstanding, as adjusted (2)........................................ 221 221
Additional paid-in capital............................................ 253,506 253,506
Retained earnings................................................ 3,806 3,806
Cumulative other comprehensive (loss) income..................... (1,519) (1,519)
Total stockholders equity............................................. 256,014 256,014
-------------- --------------
Total capitalization....................................... (euro) 286,359 (euro) 358,784
============== ==============
</TABLE>
(1) Cash and cash equivalents of ASM Pacific Technology, are restricted to
use in the operations of ASM Pacific Technology only. At June 30, 2000,
such restricted cash and cash equivalents amounted to (euro) 47.8
million (actual) and (euro) 47.8 million (as adjusted)
(2) The actual share number is based on common shares outstanding as of
June 30, 2000 but excludes:
- 1,469,695 common shares issuable upon exercise of outstanding
options with a weighted average exercise price of $7.32 per common
share; and
- 200,000 common shares issuable upon exercise of outstanding
warrants, with an exercise price of $9.81375 per share.
(3) The net proceeds have been converted into Euros at the noon buying rate
in New York City on April 6, 2000 for cable transfers payable in Euros
as certified for customs purposes by the Federal Reserve Bank of New
York, which was 0.9580 United States dollars per Euro.
3
<PAGE> 4
SELECTED CONSOLIDATED FINANCIAL DATA
You should read the following selected financial data in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and our financial statements and the notes thereto included
elsewhere in this report. The following data, insofar as they relate to each of
the years 1995 through 1999, have been derived from audited consolidated
financial statements not included in this report.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
1995 1996 1997 1998
-------------- -------------- -------------- --------------
(Euros in thousands, except per share data) (1)
<S> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS
DATA:
Net sales......................................... (euro)304,419 (euro)298,695 (euro)321,582 (euro)288,111
Costs of sales ................................... (168,102) (164,833) (182,259) (179,326)
----------- ------------ ------------- ------------
Gross profit ..................................... 136,317 133,862 139,323 108,785
Operating expenses:
Selling, general and administrative ............ (59,645) (62,744) (74,675) (60,017)
Research and development, net .................. (20,357) (26,137) (39,000) (36,277)
Litigation settlement .......................... -- -- (79,669) --
----------- ------------ ------------- ------------
Total operating expenses .................... (80,002) (88,881) (193,344) (96,294)
----------- ------------ ------------- ------------
Earnings (loss) from operations .................. 56,315 44,981 (54,021) 12,491
----------- ------------ ------------- ------------
Net interest and other financial income
(expenses) ..................................... (6,242) (3,236) (3,239) (5,350)
Income taxes ..................................... (2,996) (2,032) (2,761) (648)
Minority interest in net earnings of
subsidiaries ................................... (13,689) (8,674) (10,455) (6,261)
----------- ------------ ------------- ------------
Net earnings (loss) .............................. (euro)33,388 (euro)31,039 (euro)(70,476) (euro)232
=========== ============ ============= ============
Basic net earnings (loss) per share .............. (euro)1.06 (euro)0.98 (euro)(2.12) (euro)0.01
=========== ============ ============= ============
Diluted net earnings (loss) per share ............ (euro)0.98 (euro)0.92 (euro)(2.12) (euro)0.01
=========== ============ ============= ============
Basic weighted average number of
shares ......................................... 31,428 31,566 33,232 33,794
Diluted weighted average number of
shares ......................................... 33,966 33,717 33,232 34,743
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
-------------------------
1999 1999 2000
-------------- -------------- ---------
(Euros in thousands, except per share data) (1)
<S> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS
DATA: unaudited unaudited
Net sales.............................................. (euro)414,495 (euro)149,287 (euro)420,919
Costs of sales ........................................ (244,485) (90,278) (237,700)
--------------- --------------- --------------
Gross profit .......................................... 170,010 59,009 183,219
Operating expenses:
Selling, general and administrative ................. (83,510) (34,453) (68,975)
Research and development, net ....................... (47,145) (19,837) (32,081)
Litigation settlement ............................... -- -- --
--------------- --------------- --------------
Total operating expenses ......................... (130,655) (54,290) (101,056)
--------------- --------------- --------------
Earnings (loss) from operations ....................... 39,355 4,719 82,163
--------------- --------------- --------------
Net interest and other financial income
(expenses) .......................................... (8,608) (5,475) (562)
Income taxes .......................................... (1,274) (290) (10,511)
Minority interest in net earnings of
subsidiaries ........................................ (18,374) (5,048) (31,830)
--------------- --------------- --------------
Net earnings (loss) ................................... (euro)11,099 (euro)(6,094) (euro)39,260
============== ============== ==============
Basic net earnings (loss) per share ................... (euro)0.30 (euro)(0.17) (euro)0.88
=============== =============== ==============
Diluted net earnings (loss) per share ................. (euro)0.29 (euro)(0.17) (euro)0.83
=============== =============== ==============
Basic weighted average number of
shares .............................................. 37,301 36,143 44,814
Diluted weighted average number of
shares .............................................. 40,664 36,143 47,500
</TABLE>
<TABLE>
<CAPTION>
DEC 31, JUNE 30, JUNE 30,
------- -------- --------
1995 1996 1997 1998 1999 1999 2000
------- ------- ------- ------- ------- ------- -------
(Euros in thousands)
--------------------
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA: unaudited unaudited
Cash and cash equivalents 26,683 26,028 27,446 11,724 14,153 7,190 77,085
Total assets ............ 233,911 277,704 328,589 282,950 425,035 324,556 624,735
Total debt .............. 77,569 80,145 167,417 148,756 119,893 144,137 30,345
Total shareholders equity 33,386 80,807 16,019 20,464 65,552 25,938 256,014
</TABLE>
(1) The noon buying rate in New York City for cable transfers payable in
Euros as certified for customs purposes by the Federal Reserve Bank of
New York was 1.0070 per United States dollar on December 31, 1999.
See "Notes to the Unaudited Consolidated Interim Financial Statements."
4
<PAGE> 5
ASM INTERNATIONAL N.V.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
(thousands except share data) In Euro
-----------------------------------------------------------------------------------------------------------------------------------
December 31, June 30,
-----------------------------------------------------------------------------------------------------------------------------------
Assets 1999 2000
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
(note A) UNAUDITED
Cash and cash equivalents 14,153 77,085
Marketable securities 5,709 5,593
Accounts receivable, net 149,115 230,316
Inventories, net, (note B) 107,280 128,668
Other current assets 15,844 20,976
-----------------------------------------------------------------------------------------------------------------------------------
Total current assets 292,101 462,638
Property, plant and equipment, net (note C) 127,176 152,566
Intangible assets, net (note D) 5,758 9,531
-----------------------------------------------------------------------------------------------------------------------------------
Total Assets 425,035 624,735
===================================================================================================================================
Liabilities and Shareholders' Equity
-----------------------------------------------------------------------------------------------------------------------------------
Notes payable to banks (note E) 22,667 12,304
Accounts payable 108,922 152,751
Accrued expenses 48,566 59,861
Advance payments from customers 4,595 11,469
Income taxes 3,887 13,343
Current portion of long-term debt (note F) 36,944 5,610
Current portion of subordinated debt (note G) 52,285 1,361
-----------------------------------------------------------------------------------------------------------------------------------
Total current liabilities 277,866 256,699
Long-term debt (note F) 7,997 11,070
Deferred income taxes 3,490 3,637
-----------------------------------------------------------------------------------------------------------------------------------
Total Liabilities 289,353 271,406
Minority interest in subsidiary 70,130 97,315
Shareholders' Equity:
Common shares
Authorized 60,000,000 shares, par value Nlg .01,
issued and outstanding 40,107,784 and 48,758,946 shares 182 221
Financing preferred shares, issued none -- --
Preferred shares, issued none -- --
Capital in excess of par value 103,443 253,506
Retained (deficit) earnings (35,454) 3,806
Accumulated other comprehensive loss (2,619) (1,519)
-----------------------------------------------------------------------------------------------------------------------------------
Total Shareholders' Equity 65,552 256,014
-----------------------------------------------------------------------------------------------------------------------------------
Total Liabilities and Shareholders' Equity 425,035 624,735
===================================================================================================================================
</TABLE>
See "Notes to the Unaudited Consolidated Interim Financial Statements."
5
<PAGE> 6
ASM INTERNATIONAL N.V.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
(thousands, except per share data) In Euro
-----------------------------------------------------------------------------------------------------------------------------------
Three months ended Six months ended
June 30, June 30,
-----------------------------------------------------------------------------------------------------------------------------------
1999 2000 1999 2000
-----------------------------------------------------------------------------------------------------------------------------------
UNAUDITED UNAUDITED UNAUDITED UNAUDITED
<S> <C> <C> <C> <C>
Net sales 96,550 255,387 149,287 420,919
Cost of sales (56,458) (143,503) (90,278) (237,700)
-----------------------------------------------------------------------------------------------------------------------------------
Gross profit 40,092 111,884 59,009 183,219
Operating expenses:
Selling, general and administrative costs (15,156) (39,942) (34,453) (68,975)
Research and development (10,931) (18,215) (19,837) (32,081)
-----------------------------------------------------------------------------------------------------------------------------------
Total operating expenses (26,087) (58,157) (54,290) (101,056)
-----------------------------------------------------------------------------------------------------------------------------------
Earnings from operations 14,005 53,727 4,719 82,163
Net interest and other financial (expenses)
income (2,912) 471 (5,475) (562)
-----------------------------------------------------------------------------------------------------------------------------------
Earnings (loss) before income taxes and
minority interest in net earnings of
subsidiary 11,093 54,198 (756) 81,601
Income taxes (456) (6,549) (290) (10,511)
-----------------------------------------------------------------------------------------------------------------------------------
Earnings (loss) before minority interest in
net earnings of subsidiary 10,637 47,649 (1,046) 71,090
Minority interest in net earnings of
subsidiary (5,012) (20,661) (5,048) (31,830)
-----------------------------------------------------------------------------------------------------------------------------------
Net earnings (loss) 5,625 26,988 (6,094) 39,260
===================================================================================================================================
Net earnings (loss) per share:
Basic 0.15 0.56 (0.17) 0.88
Diluted (1) 0.14 0.54 (0.17) 0.83
-----------------------------------------------------------------------------------------------------------------------------------
Weighted average number of shares (note K)
Basic 36,208 48,238 36,143 44,814
Diluted (1) 41,790 49,763 36,143 47,500
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(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 (see note
K).
See "Notes to the Unaudited Consolidated Interim Financial Statements."
6
<PAGE> 7
ASM INTERNATIONAL N.V.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
(thousands, except per share data) In Euro
-------------------------------------------------------------------------------------------------------------------
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------------------------------------------------------------------------------------------------------------------
1999 2000 1999 2000
-------------------------------------------------------------------------------------------------------------------
UNAUDITED UNAUDITED UNAUDITED UNAUDITED
<S> <C> <C> <C> <C>
Net earnings (loss) 5,625 26,988 (6,094) 39,260
Other comprehensive income:
Exchange rate changes for the period 2,125 1,031 4,622 1,100
-------------------------------------------------------------------------------------------------------------------
Total other comprehensive income 2,125 1,031 4,622 1,100
-------------------------------------------------------------------------------------------------------------------
Comprehensive income (loss) 7,750 28,019 (1,472) 40,360
-------------------------------------------------------------------------------------------------------------------
</TABLE>
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
(thousands, except for number of common shares) In Euro
------------------------------------------------------------------------------------------------------------------------------------
Accumulated Total
Number of Capital in Retained other com- Share-
common Common excess of earnings prehensive holders'
shares shares par value (deficit) income (loss) Equity
------------------------------------------------------------------------------------------------------------------------------------
UNAUDITED UNAUDITED UNAUDITED UNAUDITED UNAUDITED UNAUDITED
<S> <C> <C> <C> <C> <C> <C>
Balance December 31, 1999 40,107,784 182 103,443 (35,454) (2,619) 65,552
Issuance of common shares:
For stock options 863,205 4 2,999 -- -- 2,999
Exercise of warrants 3,537,957 16 27,514 -- -- 27,530
Public offering 4,250,000 19 119,554 -- -- 119,573
Net earnings -- -- -- 39,260 -- 39,260
Exchange rate changes for the
period -- -- -- -- 1,100 1,100
-----------------------------------------------------------------------------------------------------------------------------------
Balance June 30, 2000 48,758,946 221 253,506 3,806 (1,519) 256,014
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See "Notes to the Unaudited Consolidated Interim Financial Statements."
7
<PAGE> 8
ASM INTERNATIONAL N.V.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
(thousands) In Euro In Euro
-----------------------------------------------------------------------------------------------------------------------------------
Three months ended Six months ended
June 30, June 30,
-----------------------------------------------------------------------------------------------------------------------------------
1999 2000 1999 2000
-----------------------------------------------------------------------------------------------------------------------------------
UNAUDITED UNAUDITED UNAUDITED UNAUDITED
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net (loss) earnings 5,625 26,988 (6,094) 39,260
Depreciation and amortization 6,763 9,598 12,252 16,831
Deferred income taxes 142 418 475 147
Minority interest in net earnings of
subsidiary 5,012 20,661 5,048 31,830
Changes in other assets and liabilities (15,498) (25,005) (13,248) (36,267)
-----------------------------------------------------------------------------------------------------------------------------------
Net cash (used in) provided by operating
activities 2,044 32,660 (1,567) 51,801
-----------------------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Net capital expenditures (3,247) (23,575) (4,897) (37,185)
Acquisitions -- (4,601) -- (4,601)
Proceeds from sale of marketable
securities 1,854 -- 1,854 --
-----------------------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (1,393) (28,176) (3,043) (41,786)
-----------------------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Proceeds from issuance of shares 14 119,869 14 126,547
Repayment of long-term debt and
subordinated debt (3,932) (59,925) (5,601) (62,754)
Other financing activities (5,961) (20,799) (1,306) (14,021)
-----------------------------------------------------------------------------------------------------------------------------------
Net cash (used in) provided by financing
activities (9,879) 39,145 (6,893) 49,772
Exchange rate effects 2,915 257 6,968 3,145
-----------------------------------------------------------------------------------------------------------------------------------
Net (decrease) increase in cash and cash
equivalents (6,313) 43,886 (4,535) 62,932
-----------------------------------------------------------------------------------------------------------------------------------
Supplemental disclosures of cash flow
information
Cash paid during the period for:
Interest 2,820 822 5,709 3,172
Income taxes (201) (1,027) (591) (908)
-----------------------------------------------------------------------------------------------------------------------------------
Non cash financing activities:
Exercise of warrants and subsequent
conversion of subordinated notes into
common shares -- -- 6,737 23,555
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See "Notes to the Unaudited Consolidated Interim Financial Statements."
8
<PAGE> 9
ASM INTERNATIONAL N.V.
NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(amounts in thousands of Euros, except per share and other data, unless
otherwise stated)
NOTE A: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ASM International N.V. ("ASMI"or "the Company") is a corporation
domiciled in the Netherlands with principal operations in Europe, the United
States, Southeast Asia and Japan.
The accompanying condensed financial statements (hereinafter referred to as
the "Interim Financial Statements") have been prepared in accordance with
accounting principles generally accepted in the United States of America ("U.S.
GAAP").
The Interim Financial Statements are unaudited but include all adjustments
(consisting of normal recurring adjustments) which the Company's management
considers necessary for a fair presentation of the financial position as of such
dates and the operating results and cash flows for those periods. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with U.S. GAAP have been condensed or omitted. The
results of operations for the three months ended June 30, 2000 and six months
ended June 30, 2000 may not necessarily be indicative of the operating results
that may be incurred for the entire fiscal year.
The December 31, 1999 balance sheet was derived from audited financial
statements but does not include all disclosures required by U.S. GAAP. However,
the Company believes that the disclosures are adequate to make the information
presented not misleading. These Interim Financial Statements should be read in
conjunction with the consolidated balance sheets of ASM International N.V. as of
December 31, 1999 and 1998, and the related consolidated statements of
operations, comprehensive income, cash flows and changes in shareholders' equity
for each of the three years in the period ended December 31, 1999.
New Accounting Pronouncements - In December 1999, the Securities and
Exchange Commission issued Staff Accounting Bulletin (SAB) No. 101, "Revenue
Recognition in Financial Statements," which provides guidance on the
recognition, presentation and disclosure of revenue in financial statements
filed with the SEC. In June 2000, the SEC issued SAB 101B, "Second Amendment:
Revenue Recognition in Financial Statements." SAB 101B delays the implementation
of SAB101 until no later than the fourth quarter of the fiscal years beginning
after December 15, 1999. The Company is currently assessing the impact of the
statements on its financial position, results of operations and cash flows.
9
<PAGE> 10
NOTE B: INVENTORIES
<TABLE>
<CAPTION>
Dec. 31, 1999 June 30, 2000
------------- -------------
<S> <C> <C>
Components and raw materials 41,052 54,975
Work in process 50,612 54,960
Finished goods 15,616 18,733
--------------------------------------------------------------------------------
Inventories 107,280 128,668
--------------------------------------------------------------------------------
</TABLE>
NOTE C: PROPERTY, PLANT & EQUIPMENT
<TABLE>
<CAPTION>
Total
-----
<S> <C>
At cost:
Balance January 1, 2000 276,119
Capital expenditure 39,061
Retirements and sales (7,352)
Translation effect 8,395
-------------------------------------------------------------------------------
Balance June 30, 2000 316,225
-------------------------------------------------------------------------------
Accumulated depreciation:
Balance January 1, 2000 148,943
Depreciation 15,143
Retirements and sales (5,255)
Translation effect 4,828
-------------------------------------------------------------------------------
Balance June 30, 2000 163,659
-------------------------------------------------------------------------------
Property, plant & equipment, net:
January 1, 2000 127,176
June 30, 2000 152,566
Useful lives in years:
Buildings and improvements 25 years
Machinery and equipment 2-10 years
Furniture and fixtures 2-10 years
</TABLE>
10
<PAGE> 11
NOTE D: INTANGIBLE ASSETS
<TABLE>
<CAPTION>
<S> <C>
Goodwill at cost January 1, 2000 6,202
Acquired 4,231
Translation effect (23)
--------------------------------------------------------------------------------
Balance June 30, 2000 10,410
--------------------------------------------------------------------------------
Accumulated amortization goodwill at January 1, 2000 444
Amortization 435
--------------------------------------------------------------------------------
Balance June 30, 2000 879
--------------------------------------------------------------------------------
Goodwill, net
January 1, 2000 5,758
June 30, 2000 9,531
</TABLE>
Following the issuance of common shares under the ASM Pacific Technology
Ltd. Employee Incentive Scheme in March 2000, the Company's shareholding in ASM
Pacific Technology Ltd. ("ASMPT") dropped slightly below 50%. In various
transactions in April and June, the Company acquired 0.3% of the outstanding
common shares of ASMPT, thereby restoring its total share holding in that
company to over 50%. Throughout this entire period, the Company maintained
control over ASMPT. The amortization period for the acquired goodwill is 10
years.
NOTE E: NOTES PAYABLE TO BANKS
<TABLE>
<CAPTION>
Dec. 31, 1999 June 30, 2000
------------- -------------
<S> <C> <C>
The Netherlands 12,223 --
Japan 10,274 12,218
Hong Kong 170 86
--------------------------------------------------------------------------------
22,667 12,304
--------------------------------------------------------------------------------
</TABLE>
11
<PAGE> 12
NOTE F: LONG-TERM DEBT
<TABLE>
<CAPTION>
Dec. 31, 1999 June 30, 2000
------------- -------------
<S> <C> <C>
Term Loans:
The Netherlands, 5.16-6.75%, due 2000 24,958 --
Japan, 3.3%, due 2005 - 2006 800 3,736
Hong Kong, 7.3-7.5%, due 2000 10,975 4,191
Finland, 1.0-3.0%, due 2004 - 2005 2,545 3,386
Mortgage loans:
The Netherlands, 5.35-6.75%, due 2007 - 2026 2,121 1,997
Japan, 2.625%, due 2005 - 2006 3,232 3,027
Lease commitments, 5.75-9.23%, due 2002 310 343
====================================================================================================================================
44,941 16,680
Current portion 36,944 5,610
====================================================================================================================================
7,997 11,070
---------------------------------------------------------------------------------------------
</TABLE>
The long-term facilities offered by the Japanese banks to ASM Japan are
collateralized by the real estate and other assets of ASM Japan, with guarantees
provided by the Company. In Hong Kong, ASMPT's term loan is collateralized by
the machinery it covers. ASMPT is precluded to provide loans and advances other
than trade receivables in the normal course of business, to other ASM units
under the rules of the Stock Exchange of Hong Kong. There are no guarantees from
ASMPT to secure indebtedness of the Company; nor does the Company provide
guarantees for the borrowings of ASMPT. In the U.S.A., the long-term obligations
relate to lease commitments on property, equipment and machines.
NOTE G: SUBORDINATED DEBT
<TABLE>
<CAPTION>
Dec. 31, 1999 June 30, 2000
------------- -------------
<S> <C> <C>
Current:
Subordinated loans:
De Nationale Investeringsbank N.V ("NIB") 2,042 1,361
Related party 1,361 --
Applied Materials Inc. 33,744 --
6% zero-coupon debentures 15,138 --
==============================================================================================
52,285 1,361
-----------------------------------------------------------------------------------------
</TABLE>
The subordinated loan from NIB carries interest at 8.25%. Repayments on the
outstanding balance of NLG 3.0 million ((euro) 1.4 million) will be in equal
bi-annual installments of NLG 1.5 million ending December 31, 2000.
12
<PAGE> 13
On October 1, 1999, the Company issued US$20 million, five-year, zero-coupon
debentures. The debentures were discounted at 6% annual interest; the Company
received net proceeds of US$14.9 million. As part of the debenture agreement,
the investors received 2,037,957 non-detachable warrants and 200,000
supplemental warrants on common shares of the Company with an exercise price of
US$9.81 per share, a premium to market at the date of issuance of 20%. In
February 2000, the Company called the exercise of the 2,037,957 warrants and
cancelled the debentures in partial payment of the exercise price of the
warrants. The remaining portion of the exercise price of the warrants was
fulfilled by the investors contributing US$4.8 million in cash.
In March 2000, Applied Materials exercised 1,500,000 warrants to purchase
commons shares in ASM. The proceeds of the warrants were used to reduce the
outstanding balance of the subordinated loan. The remaining balance was repaid
on April 12, 2000 (see note J).
NOTE H: RESTRUCTURING
During the first quarter of 1999, the Company decided to close its
manufacturing activities for wafer processing equipment in the United States and
in combination therewith to outsource to third parties the manufacturing of
substantially all parts previously manufactured in-house. Concurrently, the
United States assembly and test activities were combined with those in Europe.
This resulted in a reduction in the Company's number of employees in the United
States by approximately 75 and in the vacation of certain facilities.
Approximately 50 new positions were created in Europe. The Company incurred a
one-time restructuring charge, covering employee terminations, write-offs and
occupancy costs of (euro) 3.9 million associated with these decisions.
In the first half of 2000, the global demand for wafer processing equipment
and, as a consequence, the assembly and final testing of such equipment,
increased sharply when compared to the same period in 1999. The Company's
European facilities and the Company's third party subcontractors had difficulty
in coping with the much higher volumes. Consequently, the Company decided to
partially reverse its earlier decision and reopened facilities that were vacated
under the 1999 restructuring program. The Company is in the process of hiring
staff in the United States to do final assembly and testing.
As a consequence, part ((euro) 1.6 million) of the restructuring provision
balance as of June 30, 2000 ((euro) 2.4 million) was taken into the Consolidated
Statement of Operations for the three months and the six months ended June 30,
2000. The remaining balance of (euro) 0.8 million relates primarily to asset
write-offs.
NOTE I: DISCLOSURES 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.
13
<PAGE> 14
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 as of July 6, 2000 a majority of 54.9% interest. The remaining
shares are listed on the Stock Exchange of Hong Kong. The segment's main
operations are located in Hong Kong, Singapore and the People's Republic of
China.
<TABLE>
<CAPTION>
Front-End Back-End Total
Six months ended June 30, 1999
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales to unaffiliated customers 65,612 83,675 149,287
(Loss) earnings from operations (6,648) 11,367 4,719
Net interest and other financial expense (4,496) (979) (5,475)
Income tax (48) (242) (290)
Minority interest 0 (5,048) (5,048)
Net (loss) earnings (11,192) 5,098 (6,094)
Capital expenditures 1,827 3,095 4,922
Total assets 124,291 200,265 324,556
Current portion of long term debt and subordinated
debt 11,816 12,031 23,847
Long-term debt and subordinated debt 82,976 -- 82,976
</TABLE>
<TABLE>
<CAPTION>
Six months ended June 30, 2000
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales to unaffiliated customers 157,022 263,897 420,919
Earnings from operations 13,457 68,706 82,163
Net interest and other financial (expense) income (2,888) 2,326 (562)
Income tax (4,513) (5,998) (10,511)
Minority interest 0 (31,830) (31,830)
Net earnings 6,056 33,204 39,260
Capital expenditures 9,437 29,624 39,061
Total assets 275,236 349,499 624,735
Current portion of long-term debt and subordinated
debt 2,780 4,191 6,971
Long-term debt 11,070 -- 11,070
</TABLE>
NOTE J: MATERIAL CONTINGENCIES
Effective October 31, 1997, the Company, Advanced Semiconductor
Materials America, Inc. and Epsilon Technology, Inc. (collectively 'ASM') and
Applied Materials, Inc. ('Applied Materials') signed an agreement that resolved
all outstanding legal disputes with Applied Materials and dismissed with
prejudice all pending litigation between the companies.
The settlement required the Company to pay Applied Materials US$80 million
in the form of a convertible note due November 2, 1998 against which the Company
paid US$15 million in November 1997.
Effective December 16, 1998, following the restructuring of the convertible
note, ASM and
14
<PAGE> 15
Applied Materials entered into an amended settlement agreement, the terms of
which are not materially different from the agreement dated October 31, 1997.
The changes included the conversion of ASM's covenants not to sue into licenses
and an increase in certain TEOS related royalties.
The settlement agreement provides a cross license between the parties of the
patents in suit and certain other CVD and TEOS patents and requires ASM to pay
an ongoing royalty on certain semiconductor equipment for epitaxial and plasma
TEOS technologies. The settlement also provides covenants not to sue for patent
infringement for periods up to five years from the date of the settlement for
certain semiconductor systems and applications that are essentially unchanged
from those commercially available on July 1, 1997. If at the end of a covenant
period the product or application is no longer infringing, Applied Materials
cannot recover more than a reasonable royalty from the Company retroactive to
October 31, 1997. Applied Materials may not recover damages for such products
that were sold prior to October 31, 1997.
ASM and Applied Materials also represented and warranted that as of October
31, 1997, neither party was aware of any infringement of its patents by the
other party except for the patents that were asserted in the lawsuits that were
resolved by the settlement. The original settlement agreement was filed with the
United States Securities Exchange Commission on a 6-K/A on November 18, 1997.
The amended settlement agreement was filed on a 6-K/A on February 11, 1999.
In March, 2000, Applied Materials exercised its warrants to purchase
1,500,000 common shares in ASM. The proceeds of the warrants were used to reduce
the outstanding balance of the subordinated note the Company received from
Applied Materials, as part of the settlement agreement. On April 12, 2000, the
Company paid the outstanding balance of the note.
15
<PAGE> 16
NOTE K: EARNINGS PER SHARE
The following represents a reconciliation of net earnings and weighted
average number of shares outstanding (in thousands) for purposes of calculating
basic and diluted net earnings per share:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Three months ended Six months ended
June 30, June 30,
------------------------------------------------------------------------------------------------------------------------------------
1999 2000 1999(1) 2000
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net earnings used for purpose of
computing basic earnings per share 5,625 26,988 (6,094) 39,260
After-tax equivalent of interest expense
on convertible notes and exercisable
warrants 376 30 - 372
------------------------------------------------------------------------------------------------------------------------------------
Net earnings used for purposes of
computing diluted net earnings per
share 6,001 27,018 (6,094) 39,632
------------------------------------------------------------------------------------------------------------------------------------
Basic weighted average number of shares
outstanding at the end of period used
for purpose of computing basic earnings
per share 36,208 48,238 36,143 44,814
Dilutive effect of stock options 750 1,325 - 1,321
Dilutive effect of convertible notes and
exercisable warrants 4,832 200 - 1,365
------------------------------------------------------------------------------------------------------------------------------------
Dilutive weighted average number of
shares outstanding 41,790 49,763 36,143 47,500
------------------------------------------------------------------------------------------------------------------------------------
Net earnings per share:
Basic 0.15 0.56 (0.17) 0.88
Diluted 0.14 0.54 (0.17) 0.83
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) 707 stock options and 4,832 stock-equivalents in convertible notes and
exercisable warrants were not included in the computation of diluted earnings
per share for the six months ended June 30, 1999 as the effect would be
anti-dilutive.
NOTE L: SUBSEQUENT EVENTS
On July 6, 2000, the Company completed the purchase of approximately 4.7% of
the outstanding common shares in ASMPT, its subsidiary that operates the
Company's Back-End activities and in which it already owned a 50.2% majority
interest. As of July 6, 2000, the shareholding in ASMPT amounts to 54.9% of the
outstanding common shares.
On the same date, the Company entered into two financing arrangements.
Pursuant to the first such financing arrangement, the Company received a
two-year credit facility of US$75 million, carrying a variable interest rate
linked to Interbank Offered Rates and secured by a portion of the Company's
shareholding in ASMPT; $69 million of this facility was drawn down and the funds
16
<PAGE> 17
were used to purchase the additional shares in ASMPT referred to in the previous
paragraph. The facility has a quarterly repayment schedule.
Pursuant to the second facility, the Company entered into a Structured
Equity Line (the "Line") with an investor, who is an affiliate of the bank
providing the credit facility. Under the Line, the Company can issue, with
intervals of at least five business days between two issuances, common shares to
the investor in amounts not exceeding US$10 million and for a total not
exceeding US$140 million. The investor has committed to purchase these shares at
market price, which is defined as the volume weighted average price of five
trading days preceding the date of issuance, minus a discount of 4.5%. The
investor is not obligated to purchase shares if the purchase would cause the
aggregate number of common shares in the Company owned by the investor,
including those purchased during the previous 60 days, to exceed 9.9% of all of
the issued and outstanding common shares of the Company. The investor is also
under no obligation to purchase newly issued shares under the Line in the event
that the effectiveness of the Company's registration statement is withdrawn,
certain conditions precedent to the Line are not satisfied or certain covenants
are not complied with.
Under the Line, the investor has certain call rights in the event of a
collateral value shortfall under the credit facility. In such case, the investor
may require the Company to issue new common shares and apply the proceeds to
payment of the outstanding loan under the credit facility, such that the
proceeds are sufficient to cure the collateral value shortfall.
17
<PAGE> 18
Management's Discussion and Analysis of Financial Condition and Results
of Operations
You should read this discussion together with the financial statements and other
financial information included in this Form 6-K. This Form 6-K contains
forward-looking statements that involve risks and uncertainties.
Overview
We are a leader in the design, manufacture and sale of equipment and solutions
used to produce semiconductor devices. Our production equipment and solutions
are used by both the front-end and back-end segments of the semiconductor
market. We were incorporated under the laws of the Netherlands in 1968.
Throughout our history, we have conducted business through subsidiaries located
worldwide. We established our operations in Hong Kong in 1975, in the United
States in 1976, in Japan in 1982, and in Finland in 1999 through the acquisition
of Microchemistry Ltd. We completed our initial public offering in the United
States in 1981 and secondary public offerings in the United States in 1983 and
in the United States and the Netherlands in 2000. Our common shares are listed
on the AEX-Stock Exchange in Amsterdam and the Nasdaq National Market in the
United States.
We conduct our back-end operations through ASM Pacific Technology, which was our
wholly owned subsidiary until 1988 when we completed an initial public offering
of 25% of its shares on the Stock Exchange of Hong Kong. We have since sold and
purchased shares of ASM Pacific Technology on the open market, and as of July 6,
2000, we owned 54.875% of its outstanding shares. ASM Pacific Technology
expanded operations with significant new production facilities in Shenzhen,
China in 1989 and Singapore in 1990, and is in the process of completing new
plants in China and Malaysia, which we expect will become operational during
2000.
The sales cycle from quotation to shipment for our front-end equipment generally
ranges from five to nine months, depending on capacity utilization and the
urgency of the order. The acceptance period after installation may be as short
as four to five weeks. If customers are unfamiliar with our equipment or are
receiving new product models, the acceptance period may take as long as ten
weeks. The sales cycle is longer for equipment which is installed at the
customer's site for evaluation prior to sale. The typical trial period ranges
from six months to one year after installation.
The sales cycle for back-end products typically is shorter than for front-end.
Generally, the majority of our back-end equipment is built in standard
configurations. We build back-end products that are approximately 85% complete
in anticipation of customer orders. Upon receipt of a customer's order and
specifications, the remaining 15% of the manufacturing is completed. This allows
us to complete the assembly of our equipment in a short period of time. We
therefore require between two to six weeks for final manufacturing, testing,
crating, and shipment of our back-end equipment. Our back-end customers'
acceptance periods generally are shorter than those for front-end equipment are.
We provide installation, training and technical support to our customers with
local staff in all of our major markets.
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<PAGE> 19
We generally recognize revenue from the sale of products at the time of shipment
following an acceptance process at our own facilities. We rarely experience
equipment returns. We accrue costs for installation and warranty when we
recognize corresponding sales. We recognize revenue for services when we perform
the services.
Our front-end sales are primarily concentrated in the United States, Europe,
Japan and Southeast Asia. During 1999, equipment shipped to destinations in
these regions accounted for sales of (euro)52.1 million, (euro)40.5 million,
(euro)42.0 million, and (euro)47.1 million, respectively. Our back-end sales,
which approximated (euro)232.8 million, are concentrated in Asia. Our ten
largest customers in 1999 accounted for approximately 43% of total sales.
We invested approximately (euro)32.1 million in research and development during
the first six months of 2000, compared to (euro)47.1 million for the whole of
1999. As part of our research and development activities, we are engaged in
various development programs with customers and institutes that allow us to
develop products that meet customer requirements and to obtain access to new
technology and expertise. We expense rather than capitalize our research and
development expenses. The costs related to prototype and experimental models,
which we subsequently sell to customers, are charged to costs of sales.
Our reported research and development expenses are stated after research and
development credits, which approximated (euro)1.2 million in the first six
months of 2000 and (euro)3.3 million in 1999. Our Netherlands and Singapore
operations receive research and development grants and credits from various
governmental sources. The research and development grants we received in the
Netherlands are contingent and repayable only to the extent we recognize sales
of products to which the credit was related. These repayments vary and range
from 1.0% to 4.0% of the realized sales, depending on the products sold, up to
the amount of the grants plus interest. Our actual and contingent repayments
accrue interest at rates ranging from 5.0% to 8.0% per annum. Our contingent
liability related to these possible repayments approximated (euro)10.8 million
as of June 30, 2000 and (euro)11.9 million as of December 31, 1999.
Effective July 6, 2000, we purchased approximately 4.7% of the outstanding
shares of ASM Pacific Technology Ltd., bringing our total shareholding in this
company to 54.875%. The purchase price amounted, together with some smaller
purchases made in April and June of this year, to approximately (euro)75
million. The purchase was financed from cash resources and from the proceeds of
a $69 million two-year collateralized loan. At the same time, we entered into a
$140 million structured equity line. See "Subsequent Developments" below.
During the first quarter of 1999, the Company decided to close its manufacturing
activities for wafer processing equipment of ASM America in the United States
and in combination therewith to outsource to third parties the manufacturing of
substantially all parts, previously manufactured in-house. Concurrently, the
United States assembly and test activities were combined with those in Europe.
This resulted in a reduction of ASM America's number of employees by
approximately 75 and in the vacation of certain facilities. The Company incurred
a one-time restructuring charge, covering employee terminations, write-offs and
occupancy costs of (euro)3.9 million associated with these decisions.
19
<PAGE> 20
In the first half of 2000, the global demand for wafer processing equipment and,
as a consequence, the assembly and final testing of such equipment, increased
sharply when compared to the same period in 1999. The Company's European
facilities and the Company's third party subcontractors had difficulty in coping
with the much higher volumes. Consequently, the Company decided to partially
reverse its earlier decision to reduce operations in ASM America and reopened
facilities that were vacated under the 1999 restructuring program. The Company
is in the process of hiring staff in the United States to do final assembly and
testing.
As a consequence, part ((euro)1.6 million) of the restructuring provision
balance as of June 30, 2000 ((euro)2.4 million) was taken into the Consolidated
Statement of Operations for the three months and the six months ended June 30,
2000. The remaining balance of (euro)0.8 million relates primarily to asset
write-offs.
In July 1999 we purchased all of the outstanding shares of ASM Microchemistry
(formerly known as Microchemistry), a company located in Finland, for
approximately (euro)3.9 million payable in the form of a promissory note
convertible at $10.00 per share into our common shares. Prior to our purchase,
ASM Microchemistry developed the process to grow or deposit films one layer at a
time by means of atomic layer chemical vapor deposition ("ALCVD"), and marketed
ALCVD processes to manufacturers of flat panel displays and tape magnetic head
products. Following our acquisition, ASM Microchemistry is shifting its focus to
manufacturers of semiconductor devices.
In December 1999, we purchased a 24% interest in NanoPhotonics AG, a German
supplier of precision thin film metrology equipment. The technology supplied by
NanoPhotonics allows for the integration of high-resolution, ellipsometric thin
film metrology directly in a wafer-processing tool. We believe that this
investment will enable us to equip our batch and single wafer equipment with
integrated thin film metrology.
As of December 31, 1999, we had net operating loss tax carry-forwards of
(euro)275 million which we can apply against earnings reported in the United
States and the Netherlands.
Results of Operations
Six Months Ended June 30, 2000 Compared To Six Months Ended June 30, 1999
Net sales. Continuing a trend established in mid 1999, the net sales increased
in both the front-end and the back-end segment of the market in both quarters in
2000. Consolidated net sales increased by 182% in the first half of 2000 when
compared to the same period in 1999. Front-end sales increased 141% from
(euro)65.6 million in the first half of 1999 to (euro)157.8 million in the first
half of 2000. This growth was primarily driven by our Eagle-10 and our epitaxy
product lines. Our back-end sales increased by 214% from (euro)83.7 million in
the 6 months ending June 30, 1999 to (euro)263.1 million in the six months
ending June 30, 2000 and was mainly achieved due to increased sales of bonder
equipment.
Gross profit. The trend in rising gross profit margins also continued in 2000.
Our consolidated gross profit was 43.5% of net sales in the first six months of
2000, compared to 39.5% of net sales in the same period of 1999. The improvement
was achieved primarily by the back-end
20
<PAGE> 21
segment, where the gross profit margin improved from 40.2% of net sales in the
six months ending June 30, 1999 to 45.9% of net sales in the six months ending
June 30, 2000. The gross profit margin for the front-end segment improved from
38.6% in the first six months of 1999 to 39.6% in the first six months of 2000.
The improvement was achieved partially through manufacturing efficiency related
to increased volumes and partly through better pricing conditions for our
products.
Selling, General and Administrative. We invested in the expansion of our support
and our overhead departments in order to handle the increased product and order
volumes. Staff levels increased from 2,400 as of December 31, 1999 to
approximately 2,900 at the end of June 2000. The consolidated selling, general
and administrative expenses increased from (euro)30.6 million in the first half
of 1999 (excluding restructuring charges of (euro)3.9 million) to (euro)69.0
million in the first half of 2000, but declined as a percentage of net sales
from 20.5% in 1999 to 16.4% in 2000. Front-end and back-end segment selling,
general and administrative expenses increased from (euro)16.2 million and
(euro)14.4 million in 1999 to (euro)28.1 million and (euro)40.4 million in 2000.
Research and Development. In front-end, our investments in research and
development concentrated on high-k dielectrics, low-k dielectrics, ALCVD and
300mm process applications while in back-end, our concentration was on
performance improvements and 10 new or upgraded products have been released or
are scheduled to be released in 2000. The consolidated research and development
expenses amounted to (euro)32.1 million or 7.6% of net sales in 2000 compared to
(euro)19.8 million or 13.3% of net sales in 1999. Although the absolute
investments in research and development increased by 62%, they declined as a
percentage of net sales due to the 182% increase in the net sales. Research and
development comprised front-end segment costs of (euro)12.0 million in 1999 and
(euro)20.9 million in 2000 and back-end segment costs of (euro)7.8 million in
1999 and (euro)11.2 million in 2000.
Net Interest and Other Financial Income (Expenses). Net interest and other
financial income (expenses) decreased from an expense of (euro)5.5 million in
the first six months of 1999 to a net expense of (euro)0.6 million in the same
period in 2000, due to the repayment of short-term loans with the proceeds of a
public offering of common shares we completed in April of 2000 and with the cash
flow generated from operations.
Taxes. We paid (euro)10.5 million in taxes during the first half of 2000,
compared to (euro)0.3 million in the first half of 1999. As of December 31,
1999, we have (euro)275 million in net operating loss carryforward, which we can
apply against future earnings reported in the United States and the Netherlands.
Net Earnings. Our net earnings in the first six months of 2000 were
approximately (euro)39.3 million compared to a loss of (euro) 6.1 million in the
same period of 1999. Our front-end operation reported net earnings of (euro)6.1
million in 2000 compared to a net loss of (euro)11.2 million in 1999, including
the (euro)3.9 million restructuring charge incurred in the 1999 period in
connection with moving manufacturing operations from ASM America to ASM Europe.
Our portion of our back-end operation's net earnings approximated (euro)33.2
million compared to (euro)5.1 million in the first six months of 1999.
21
<PAGE> 22
Backlog. Our backlog of orders booked increased from approximately (euro)183.7
million as of December 31, 1999 to approximately (euro)336.4 million as of June
30, 2000, of which a substantial majority is for deliveries in the third and
fourth quarters of 2000. Our backlog consists of orders of products by purchase
orders or letters of intent for future periods, typically for up to the next
year. In markets such as Japan, it is common practice for letters of intent to
be used in place of firm purchase orders. We sometimes allow customers to cancel
or reschedule deliveries. In addition, purchase orders are subject to price
negotiations and changes in quantities of products ordered as a result of
changes in customers' requirements. Depending on the complexity of an order, we
generally ship our products from one to six months after receipt of an order. We
include in the backlog only orders for which a delivery schedule has been
specified and to which the customer has assigned an order number.
Liquidity and Capital Resources
Our liquidity is affected by many factors, some of which are related to our
ongoing operations and others of which are related to the semiconductor and
semiconductor equipment industries and to the economies of the countries in
which we operate. Although our cash requirements will fluctuate based on the
timing and extent of these factors, we believe that cash generated by
operations, together with the liquidity provided by our existing cash resources
and the arrangements governing our current indebtedness, will be sufficient to
fund working capital, capital expenditures and other ongoing business
requirements.
At June 30, 2000, our principal sources of liquidity consisted of (euro)77.1
million in cash and cash equivalents and (euro)80.9 million in undrawn bank
lines. Approximately (euro)42.3 million of the cash and cash equivalents and
(euro)63.2 million of the undrawn bank lines are restricted to use in our
back-end operations.
During the first six months of 2000, the net cash in flow from operating
activities amounted to (euro)51.8 million, compared to a net outflow of
(euro)1.6 million in the same period in 1999. The improvement was primarily
driven by higher earnings. During the first half of 2000, we invested
approximately (euro)37.2 million in capital equipment and facilities to increase
our manufacturing and assembly capacity. In April 2000, we completed a public
offering of common shares, which gave us net proceeds of approximately
(euro)126.5 million. We used (euro)76.8 million of these proceeds for repayment
of loans. Following the repayment, the assets securing these loans have been
released from their liens. We expect to make investments in 2000 to complete new
plants in Malaysia and China and to maintain front-end infrastructure.
The front-end business finances its operations from the cash flows derived from
its business activities and from collateralization of fixed and current assets.
Back-end operations are entirely self-financed by ASM Pacific Technology. The
cash resources and borrowing capacity of ASM Pacific Technology are not
available to our front-end operations.
We support borrowings of our front-end subsidiaries with guarantees. We have
also mortgaged our land and buildings to secure our front-end borrowings. We
have also pledged substantially
22
<PAGE> 23
all of our shareholding in ASM Pacific Technology. The market value of our
investment in ASM Pacific Technology at the end of June 2000 was approximately
(euro)744.5 million, which is substantially higher than the market value at the
end of 1999, which was approximately (euro)333.9 million.
Subsequent Developments
Following our sale of new common shares in April 2000, we not only paid down
term loans but also our credit lines with our main Dutch bankers. In early July
2000, we acquired 4.7% of the outstanding shares of ASM Pacific Technology Ltd.,
our back-end subsidiary, for cash. The financing of this acquisition came from
our own cash resources and from a $75 million loan facility we received from
Canadian Imperial Bank of Commerce ("CIBC") of which we used $69 million. The
loan is collateralized with substantially all of our shareholding in ASM Pacific
Technology. In order to make these shares available, we canceled the bank
facilities with our Dutch bankers, as these facilities were secured by our
shareholding in ASM Pacific Technology.
In connection with this $75 million loan facility, we entered into an equity
line of credit with Canadian Imperial Holdings, Inc. ("CIHI"), an affiliate of
the lender, pursuant to which we have the right to sell up to an aggregate of
$140 million of newly issued shares to CIHI from time to time over a two year
period. We are entitled, subject to certain restrictions and limitations, to
sell up to $10 million in common shares to CIHI as often as every five business
days, at a price based on the previous five trading days market value less a
4.5% discount. CIHI, however, is under no obligation to purchase if such a
purchase would cause the aggregate number of our common shares owned by CIHI.
including those purchased during the previous 60 days, to exceed 9.9% of all of
our issued and outstanding common shares. We are not obligated to sell any
shares unless there is an uncured collateral value shortfall under the $75
million loan facility. In that case, the lender may require that we issue shares
under the equity line and apply the proceeds to repay the loan facility in an
amount sufficient to cure the collateral value shortfall. Except in connection
with a call on the shares due to such a collateral value shortfall, the use of
proceeds of any sale of shares pursuant to the equity line is not restricted, so
long as the availability under the line is not less than the outstanding balance
under the loan facility.
Pursuant to the equity line, we are required to register with the U.S.
Securities and Exchange Commission $140 million of our common shares for offer
and sale pursuant to the equity line. The registration statement must remain in
effect for the duration of the equity line. CIHI is under no obligation to
purchase our newly issued common shares under the equity line if effectiveness
of our registration statement is withdrawn, certain conditions precedent to the
equity line are not satisfied or certain covenants are not complied with. We
must pay to CIHI a monthly fee of 3/4% of the outstanding loan amount if the
registration statement is not effective by October 20, 2000, which fee increases
to 1% per month if effectiveness is not achieved by December 4, 2000.
We are currently preparing the registration statement for filing. However, we
can give no assurance that the registration statement will be declared effective
by October 20, 2000. Failure to obtain registration of the newly issued shares
may have an adverse affect on our cash flows because of the fees we will be
obligated to pay to our lender.
23
<PAGE> 24
The sale of many newly issued shares of common stock in a short time period
could have an adverse effect on the market price of our common stock.
Market Risk Disclosure
We are exposed to currency fluctuations, most notably fluctuations of the United
States dollar, the Hong Kong dollar and the Japanese yen against the Euro. To
the extent that these fluctuations affect the value of our investments in our
affiliates, they are not hedged. The cumulative effect of these fluctuations is
separately reported in shareholders' equity and in the first half of 2000 showed
a positive movement of (euro)1.1 million.
Currency. Currency fluctuations that affect operating cash flows are hedged as a
policy. We view exposures on a consolidated basis and sell off or cover excess
or short positions, using spot or forward contracts, which are entered into with
commercial banks of good standing.
The operations of our subsidiaries are generally financed with debt issued in
our subsidiaries' respective functional currencies. Thus, we believe we do not
have significant currency exposure related to our borrowings.
Interest Rates. A considerable percentage of our outstanding debt bears
interest, which is typically variable in nature. We are exposed to interest rate
risk primarily through our borrowing activities. We do not enter into financial
instrument transactions for trading or speculative purposes or to manage
interest rate exposure. Therefore, an adverse change in the average interest
rate from 7% to 8% on the portion of our debt bearing interest at variable rates
would result in an annual increase in interest expense of approximately
(euro)0.1 million at June 30, 2000 borrowing levels.
The Netherlands, our country of domicile, is one of the countries that
participates in the use of the Euro, the new currency unit that has been
available since January 1, 1999. Until January 1, 2002, the participating
countries will allow both the Euro and local currencies as legal tender.
However, we expect that most businesses will convert sooner rather than later,
stimulated by the development of a Euro denominated capital market for both
public and private funding. Our European operations will therefore use the Euro
as their functional currency as soon as possible after its introduction. The
actual introduction is not critical for our business but will depend on
availability of reliable software for accounting, payroll and other internal
functions and will be achieved over a period of time, but before January 1,
2002. The introduction of the Euro will not significantly affect our currency
profile or risk as the Euro has a fixed exchange rate against the Netherlands
Guilder.
Effective for fiscal year 1999, we changed our reporting currency from
Netherlands Guilders to Euros. Prior year balances have been restated based on
the fixed exchange rate of (euro)1.00 to Nlg.2.20371. The comparative balances
reported in Euros depict the same trends as would have been presented if we had
continued to present balances in Netherlands Guilders. Balances for periods
prior to January 1, 1999 are not comparable to the balances of other companies
that
24
<PAGE> 25
report in Euros but restated amounts from a different currency than Netherlands
Guilders due to the fixing of the exchange rate between the Euro and the
currencies of participating countries.
Cautionary Factors
Some of the information in this report contains forward-looking statements
within the meaning of the United States federal securities laws. These
statements include, among others, statements regarding future expenditures,
sufficiency of cash generated from operations, maintenance of majority interest
in ASM Pacific Technology, business strategy, product development, product
acceptance, market penetration, market demand, return on investment in new
products, facility completion dates and product shipment dates. These statements
may be found "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Market Risk Disclosure." Forward-looking statements
typically are identified by use of terms such as "believe," "anticipate,"
"estimate," "expect," "intend," "plan," "will," "may" and similar words,
although some forward-looking statements are expressed differently. You should
be aware that our actual results could differ materially from those contained in
the forward-looking statements due to a number of factors, including the matters
discussed below.
OUR REVENUES AND OPERATING RESULTS FLUCTUATE DUE TO A VARIETY OF FACTORS, WHICH
MAY RESULT IN VOLATILITY OR A DECREASE IN THE PRICE OF OUR COMMON SHARES. Our
quarterly revenues and operating results have varied significantly due to a
number of factors, including:
- Cyclicality. The semiconductor industry is subject to sudden, extreme,
cyclical variations in product supply and demand. In some cases, these
cycles have lasted more than a year.
- Production Capacity Constraints. We have experienced capacity
constraints and expect to continue experiencing capacity constraints at
our assembly and manufacturing facilities for the foreseeable future.
Although we are in the process of completing a new plant in Malaysia and
expanding a plant in China and are considering other alternatives to
alleviate this issue, including increasing the percentage of outsourced
activities to third parties, our capacity will likely remain constrained
over the next few quarters until we can bring new capacity on-line.
- The Length and Variability of the Sales Cycle and Implementation Periods
for Our Products. Our products are technologically complex. Customers
often require a significant number of product presentations and
demonstrations, in some instances evaluating equipment on site, before
reaching a sufficient level of confidence in the product's performance
and compatibility with the customer's requirements to place an order. As
a result, our sales process is often subject to delays associated with
lengthy approval processes that typically accompany the design and
testing of new products. The sales cycles of our products often last for
many months or even years. The long sales cycle also subjects us to the
risk of making expenditures for anticipated orders long into the future.
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- The Timing of Customer Orders, Cancellations and Shipments. The
industry's long sales cycles and the complexity of our products subject
us to risks involving customers' budgetary constraints, internal
acceptance reviews and cancellations. Consequently, orders expected in
one quarter could shift to another because of the timing of customers'
purchase decisions.
- Technological Changes. The semiconductor industry and the semiconductor
equipment industry are subject to rapid technological change and
frequent introductions of enhancements to existing products.
Technological trends have had and will continue to have a significant
impact on our business. Our results of operations and ability to remain
competitive are largely based upon our ability to accurately anticipate
customer and market requirements. Some competitors may be further along
or better funded in their research and development of new technology.
- Disruptions in Sources of Supply. We are currently outsourcing a
substantial majority of the manufacturing of our front-end furnace and
epitaxial reactors to a single supplier. If our contractor becomes
unable to deliver products, we could have a disruption of our
operations.
- Competition. We face competition or potential competition from
companies with greater resources than ours, and if we are unable to
compete effectively with these companies, our ability to fund capital
requirements and our market share may decline.
- Exchange Rate Fluctuations. Our assets, liabilities and operating
expenses and those of our subsidiaries are to a large extent
denominated in the currency of the country where each entity is
established. Our financial statements are expressed in Euros. The
translation exposures that result from the inclusion of financial
statements of our subsidiaries that are expressed in the currencies of
those subsidiaries are not hedged. As a result, our operational results
are exposed to fluctuations of various exchange rates versus the Euro.
WE DERIVE A SIGNIFICANT PERCENTAGE OF OUR REVENUE FROM SALES TO A SMALL NUMBER
OF LARGE CUSTOMERS, AND IF WE ARE NOT ABLE TO RETAIN THESE CUSTOMERS, OR THEY
RESCHEDULE, REDUCE OR CANCEL ORDERS, OUR REVENUES WOULD BE REDUCED AND OUR
FINANCIAL RESULTS WOULD SUFFER.
WE DEPEND ON KEY PERSONNEL, ESPECIALLY MANAGEMENT AND TECHNICAL PERSONNEL, WHO
MAY BE DIFFICULT TO ATTRACT AND RETAIN IN THE CURRENT MARKET WHERE COMPETITION
FOR PERSONNEL IS INTENSE. OUR OPERATIONS COULD BE NEGATIVELY AFFECTED IF WE LOSE
KEY EMPLOYEES OR ARE UNABLE TO ATTRACT AND RETAIN SKILLED EMPLOYEES.
WE ARE DEPENDENT UPON OUR WORLDWIDE SALES AND OPERATIONS; ECONOMIC, POLITICAL,
MILITARY, REGULATORY, NATURAL DISASTER OR OTHER EVENTS IN A COUNTRY WHERE WE
MAKE SIGNIFICANT SALES OR HAVE SIGNIFICANT OPERATIONS COULD INTERFERE WITH OUR
SUCCESS OR OPERATIONS THERE AND HARM OUR BUSINESS.
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OUR ABILITY TO COMPETE COULD BE JEOPARDIZED IF WE ARE UNABLE TO PROTECT OUR
INTELLECTUAL PROPERTY RIGHTS FROM CHALLENGES BY THIRD PARTIES, PARTICULARLY IF
OUR INTELLECTUAL PROPERTY RIGHTS ARE CHALLENGED UNDER THE LAW OF FOREIGN
JURISDICTIONS WHICH DO NOT HAVE STRONG INTELLECTUAL PROPERTY RIGHTS LAWS. THESE
TYPE OF CLAIMS COULD SERIOUSLY HARM OUR BUSINESS OR REQUIRE US TO INCUR
SIGNIFICANT COSTS.
OUR OPERATIONS ARE SUBJECT TO ENVIRONMENTAL LAWS THAT MAY EXPOSE US TO
LIABILITIES FOR NONCOMPLIANCE. WE ARE SUBJECT TO A VARIETY OF GOVERNMENTAL
REGULATIONS RELATING TO THE USE, STORAGE, DISCHARGE, HANDLING, MANUFACTURE AND
DISPOSAL OF THE TOXIC OR OTHER HAZARDOUS CHEMICAL BY-PRODUCTS OF, AND WATER USED
IN, OUR MANUFACTURING PROCESSES.
OUR FUTURE NET INCOME AND CASH FLOW WILL BE AFFECTED BY OUR ABILITY TO APPLY OUR
NET OPERATING LOSSES, WHICH TOTALED APPROXIMATELY (EURO)275.0 MILLION FOR TAX
REPORTING PURPOSES AS OF DECEMBER 31, 1999, AGAINST TAXABLE Income IN FUTURE
PERIODS. CHANGES IN TAX LAWS IN THE JURISDICTIONS IN WHICH WE OPERATE MAY LIMIT
OUR ABILITY TO UTILIZE OUR NET OPERATING LOSSES
ASM PACIFIC TECHNOLOGY IS A CONSOLIDATED SUBSIDIARY WHICH GENERATES A
SIGNIFICANT PORTION OF OUR NET SALES, EARNINGS FROM OPERATIONS AND NET EARNINGS;
ALTHOUGH WE CURRENTLY ARE A MAJORITY SHAREHOLDER, WE MAY NOT BE ABLE TO MAINTAIN
OUR MAJORITY INTEREST, IN WHICH CASE THERE IS A SIGNIFICANT RISK THAT WE WOULD
NO LONGER BE ABLE TO CONSOLIDATE ITS RESULTS OF OPERATIONS WITH OURS, WHICH
WOULD HAVE A SIGNIFICANT NEGATIVE EFFECT ON OUR CONSOLIDATED EARNINGS FROM
OPERATIONS. ALTHOUGH WE ARE A MAJORITY SHAREHOLDER, ASM PACIFIC TECHNOLOGY IS
NOT OBLIGATED TO PAY DIVIDENDS TO US AND MAY TAKE ACTIONS OR ENTER INTO
TRANSACTIONS THAT ARE DETRIMENTAL TO US.
OUR AFFAIRS ARE GOVERNED BY OUR ARTICLES OF ASSOCIATION AND BY THE LAWS
GOVERNING LIMITED LIABILITY COMPANIES FORMED IN THE NETHERLANDS. AS A RESULT, IT
MAY BE DIFFICULT FOR INVESTORS TO SERVE PROCESS WITHIN THE UNITED STATES UPON US
OR ENFORCE UNITED STATES COURT JUDGMENTS AGAINST US.
Incorporation by Reference
This Form 6-K is hereby incorporated by reference into the Company's Forms F-3
no. 333-11234 and 333-11502 filed with the U.S. Securities and Exchange
Commission.
Exhibit List
<TABLE>
<CAPTION>
Exhibit No. Description Incorporated by Filed Herewith
----------- ----------- --------------- --------------
Reference to:
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
23.1 Equity Financing Agreement X
-----------------------------------------------------------------------------------------------------------------
23.2 Credit Agreement X
-----------------------------------------------------------------------------------------------------------------
23.3 Registration Rights Agreement X
-----------------------------------------------------------------------------------------------------------------
23.4 Security Agreement X
-----------------------------------------------------------------------------------------------------------------
</TABLE>
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ASM INTERNATIONAL N.V.
Date: September 6, 2000 By: /s/ Arthur H. del Prado
-----------------------------
Arthur H. del Prado
President and CEO
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Exhibit Index
<TABLE>
<CAPTION>
Exhibit No. Description Incorporated by Filed Herewith
----------- ----------- --------------- --------------
Reference to:
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
23.1 Equity Financing Agreement X
-----------------------------------------------------------------------------------------------------------------
23.2 Credit Agreement X
-----------------------------------------------------------------------------------------------------------------
23.3 Registration Rights Agreement X
-----------------------------------------------------------------------------------------------------------------
23.4 Security Agreement X
-----------------------------------------------------------------------------------------------------------------
</TABLE>
29
