ASM International N.V. Reports 1997 Fourth Quarter and Full Year Operating Results

ASM International N.V. reports sales of Netherlands guilders (Nlg) 221.9 million (U.S. $109.8 million) in the 1997 fourth quarter, up 19 percent compared to the preceding quarter. Fourth quarter net earnings were Nlg 10.8 million (U.S. $5.4 million), or Nlg 0.33 (U.S. $0.16) per share, compared to third quarter earnings before one-time charges of Nlg 7.3 million (U.S. $3.6 million), or Nlg 0.21 (U.S. $0.11) per share, a 48 percent increase.

For the year, sales reached Nlg 708.7 million (U.S. $350.8 million), an increase of 8 percent over 1996. Earnings from operations before one-time charges stood at Nlg 23.8 million (U.S. $11.8 million) or Nlg 0.72 (U.S. $0.36) per share. After one-time charges, the company reported a loss of Nlg 155.3 million (U.S. $76.9 million).

Backlog stood at Nlg 244 million (U.S. $120.8 million) on Dec. 31, 1997, an increase of 6 percent from the backlog at the end of the third quarter. New orders received during the quarter amounted to Nlg 235 million (U.S. $116.3 million) resulting in a book-to-bill of 1.06. The ratio was above one for both front and back end equipment segments. For the year as a whole, the book-to-bill was 1.1.

Fourth quarter earnings from operations amounted to Nlg 22.9 million (U.S. $11.3 million) or 10.3 percent of net sales. The strong operating margin of the third quarter could not be maintained, the company said, due to some pressure on gross margins during these last three months. The 1997 fourth quarter gross margin was 43 percent versus 46 percent in the third quarter. Increased depreciation charges and investments in research and development also restrained the operating margin. A small restructuring was carried out in early 1998, reducing head count at U.S. operations. The costs of this restructuring were already taken in 1997.

1997 cash flow (earnings before minority interest and one time charges plus depreciation) amounted to Nlg 90.2 million (U.S. $44.6 million) and net capital expenditure to Nlg 59.0 million (U.S. $29.2 million). The cash flow before one-time charges per share was Nlg 2.71 (U.S. $1.34). For the previous year the cash flow was Nlg 118.3 million or Nlg 3.51 per share.

According to ASM, the increase in sales in the fourth quarter reflected strong growth for both leadframes and assembly equipment shipments, supported by new product introductions such as the aluminum wedge wire bonder and the AB339 gold wire ball bonder. In the front-end product line, the A400 vertical furnace enjoyed a strong fourth quarter, increasing its installed base with two new customers (31 customers at year-end). Additionally, two 300 mm alpha (pre-production version) A412 furnace systems were sold to a large wafer manufacturer and a beta version will be evaluated at SELETE, the Japanese consortium for 300 mm development. The epitaxy product family had a reasonable quarter as far as shipments were concerned and a strong quarter in terms of bookings. The Eagle-10 single wafer plasma reactor made good progress outside Japan, notably in Taiwan. The installed base of the A600 UHV, used to enhance storage capacitors in memory chips, increased during the quarter.

Due to the appreciation of the U.S. dollar, the Hong Kong dollar, and the Japanese yen against the Dutch guilder, current assets and property, plant and equipment increased by Nlg 37 million (U.S. $18.3 million) and Nlg 13 million (U.S. $6.4 million) respectively. Liabilities, including minority interest, increased by approximately Nlg 38 million (U.S. $18.8 million). The net movement of Nlg 12 million (U.S. $5.9 million) is included in Shareholders' equity as a translation adjustment.

ASM International said it began the new year in a substantially better position than a year ago despite a mixed market outlook. Capital spending plans have been reduced during the past few months due to both the Asian liquidity crisis and defensive positioning by large semiconductor producers. At the same time, however, even if the transition to 300 mm wafer size will be slower than previously envisioned, the transition to 0.25 micron technology requires continuation of technology-driven equipment purchases.

The company limited its forecasts to the next six months due to poor market visibility. ASM continues to believe, however, that its net earnings for the first and second quarters of 1998 will comfortably exceed those achieved during the same period in 1997 before one-time charges.

For the convenience of U.S. investors, the Netherlands guilder amounts are converted into U.S. dollars at the closing rate of Dec. 31, 1997 of Nlg 2.0203, an increase of 1 percent over the rate used in the conversion of the previous quarter results (Nlg 1.9913) and of 16 percent over the rate used at year end 1996 (Nlg 1.7458).