Duiven, the Netherlands, February 6, 2007,
BE Semiconductor Industries N.V. ("the Company" or "Besi") (Euronext: BESI), a leading manufacturer of assembly equipment for the semiconductor industry, today announced its financial results for the fourth quarter and year ended December 31, 2006.
NASDAQ Delisting/SEC Deregistration Effective January 2007, Besi voluntarily delisted its Ordinary Shares (the “Shares”) from the NASDAQ National Market and suspended its registration of the Shares with the U.S. Securities and Exchange Commission (“SEC”). Our Euronext Amsterdam listing remains unchanged. As such, Besi will no longer be required to present its consolidated financial statements according to US GAAP. For the year ended December 31, 2006, Besi has provided its financial results in both US GAAP and IFRS as endorsed by the EU ("IFRS") for the convenience of readers. Our financial discussion and analysis in this press release will utilize results according to US GAAP for purposes of consistency with prior 2006 quarterly disclosure. Our statutory consolidated statements in IFRS differ in certain significant respects from our presentation of our consolidated financial statements in US GAAP. For this reason, attached to this press release we have provided a reconciliation of our net income (loss) and total equity for the years ended as of December 31, 2005 and 2006 between IFRS and US GAAP. Commencing with the first quarter of 2007, Besi will present its consolidated financial statements and quarterly guidance related thereto only according to IFRS accounting standards. Results of Operations 2006/2005 Net sales for the year ended December 31, 2006 amounted to € 191.2 million, an increase of 16.4% as compared to net sales of € 164.3 million in 2005. Besi’s net income in 2006 was € 10.0 million, or € 0.31 and € 0.29 per basic and diluted share, respectively, as compared to a net loss of € 5.2 million or € 0.16 per basic and diluted share in 2005. Besi’s increase in net sales in 2006 as compared to 2005 was principally due to improved industry conditions as customers added assembly production capabilities in light of increased industry demand for wireless applications and personal computing devices and higher capacity utilization rates at customer production facilities. Specifically, the year over year increase was due to a 15.3% increase in equipment sales for array connect applications, principally die bonding and singulation equipment as well as an 18.6% increase in shipments of assembly equipment for leadframe applications, primarily trim and form equipment. Orders in 2006 amounted to € 188.4 million, an increase of € 18.5 million, or 10.9%, as compared to 2005. Order growth in 2006 resulted primarily from increased demand for packaging and plating equipment by IDMs for leadframe applications. Orders for more advanced array connect applications were up only slightly versus 2005 as customers remained cautious in placing orders for new assembly process technologies. On a customer basis, orders by IDMs and subcontractors increased by 17.9% and 2.2%, respectively.
Backlog at December 31, 2006 was € 54.0 million as compared to € 56.8 million at December 31, 2005 and € 65.9 million at September 30, 2006. Approximately 72% and 28% of backlog at December 31, 2006 was represented by array connect and leadframe assembly applications, respectively. The book-to-bill ratio was 0.98 for 2006 as compared to 1.04 for 2005. Besi’s gross margin for 2006 was 40.5% as compared to 34.9% in 2005. The gross margin improvement was due primarily to (i) the benefits of increased sales volume, (ii) a significant increase in both leadframe and array connect gross margins due to the benefits of our 2005 restructuring and ongoing cost reduction efforts and (iii) the absence of charges in the 2006 period related to the Datacon acquisition. For the full year 2006, Besi’s total operating expenses increased by € 0.6 million, or 1.0% as compared to 2005 due to ongoing cost reduction efforts which limited expense growth in spite of higher sales and the absence of restructuring charges amounting to € 2.2 million in 2005. During the year, total headcount, including temporary personnel, increased by 110 people, or 9.5%, primarily in Asian locations with significantly lower costs per employee. Results of Operations Fourth Quarter 2006 Net sales for the fourth quarter of 2006 were € 49.5 million, representing an increase of 4.0% as compared to net sales of € 47.6 million in the fourth quarter of 2005 and an increase of 4.7% as compared to net sales of € 47.3 million in the third quarter of 2006. Besi’s net income for the fourth quarter of 2006 was € 1.8 million or € 0.05 per basic and diluted share, compared to net income of € 2.6 million, or € 0.08 per basic and € 0.07 per diluted share in the comparable 2005 period. In the fourth quarter of 2005, Besi recorded a tax benefit of € 0.2 million or € 0.01 per basic and diluted share versus income tax expense of € 0.8 million in the fourth quarter of 2006, or € 0.02 per basic and diluted share. Net income for the third quarter of 2006 was € 2.3 million or € 0.07 per basic and diluted share. The net sales increase in the fourth quarter of 2006 as compared to the fourth quarter of 2005 was due to an increase in equipment sales for array connect applications, principally packaging systems. Compared to the third quarter of 2006, Besi’s net sales in the fourth quarter of 2006 were at the high end of guidance due primarily to higher than anticipated shipments of die bonding and packaging equipment. Orders for the fourth quarter of 2006 were € 37.7 million, a decrease of 23.1% as compared to the fourth quarter of 2005 primarily due to a decrease in die bonding equipment orders from an unusually high level in the fourth quarter of 2005. Bookings decreased by € 6.8 million, or 15.3%, in the fourth quarter of 2006 as compared to the third quarter of 2006 due primarily to the delay in receipt of a € 4 million packaging equipment order that was received in the first quarter of 2007. On a customer basis, bookings in the fourth quarter of 2006 as compared to the third quarter of 2006 reflected a 18.4% decrease in orders by subcontractors and a 12.9% decrease in orders by IDMs. The Company’s book-to-bill ratio was 0.76 in the fourth quarter of 2006 as compared to 1.03 in the fourth quarter of 2005 and 0.94 in the third quarter of 2006. Besi’s gross margin for the fourth quarter of 2006 was 40.5% as compared to 39.1% in the fourth quarter of 2005 due primarily to higher gross margins realized for plating equipment in leadframe applications and for molding equipment in array connect applications. While this represents a slight decline in comparison to the 40.8% gross margin achieved in the third quarter of 2006, gross margin was at the high end of guidance for the fourth quarter of 2006.
Besi’s operating expenses were € 16.7 million, or 33.7% of net sales, in the fourth quarter of 2006, as compared to € 15.5 million, or 32.6% of net sales in the fourth quarter of 2005 primarily due to higher development, warranty and SEC regulatory reporting costs. Operating expenses increased by € 1.7 million, or 11.3%, in the fourth quarter of 2006 as compared to the third quarter of 2006 primarily due to higher sales commissions, development spending and SEC regulatory reporting costs. Financial Condition At December 31, 2006, cash and cash equivalents increased to € 81.1 million as compared to € 74.4 million at September 30, 2006. Total debt and capital leases declined from € 85.7 million at September 30, 2006 to € 66.8 million at December 31, 2006 as a result of cash flow generated from operations as well as the derecognition of a capital lease on one of our Dutch facilities. Comments Richard W. Blickman, President and Chief Executive Officer of the Company, commented: “We are pleased to report that Besi made major progress in realizing many of the financial and business goals that we set at the beginning of this year. Our results underscored efforts to increase shareholder value through product diversification, continued organizational improvements and cost reduction efforts. From a revenue perspective, our growth this year was broad based. In particular, we experienced strong growth of our packaging equipment systems and die bonding equipment as a result of new product introductions like the AMS-W and the APM-Evo. We also generated € 6 million in orders this year for die bonding and plating equipment for RFID applications, an area in which we see great promise. The pattern of our quarterly orders in 2006 fluctuated as is characteristic of our cyclical industry. This year orders peaked in the spring due to an extremely large build-up of leadframe capacity by customers in the first quarter. Orders gradually declined in the second half of the year as customers began to absorb additional production capacity and became more cautious in managing inventory levels and capital budgets in the face of an uncertain 2007 semiconductor environment. From a profitability perspective, our significant improvement this year was the direct result of restructuring efforts during the past three years and the successful integration of, and positive contribution by, our Datacon acquisition. More specifically, profitability in 2006 was aided by the further consolidation of our European packaging equipment and die bonding operations, implementation of our production strategy for the manufacturing of certain legacy and new assembly equipment at our Asian locations and our focus on reducing subsidiary overhead.” Outlook Based on our current backlog and feedback from customers, we expect that net sales in the first quarter of 2007 will decrease approximately 8-12% from the € 49.5 million achieved in the fourth quarter of 2006. Orders for the first quarter of 2007 are expected to increase by 10-15% in comparison to the € 37.7 million reached in the fourth quarter of 2006. On an IFRS basis, Besi expects that its gross margins will range between 36-38% in the first quarter of 2007 as compared to 39.0% in the fourth quarter of 2006. In addition, operating expenses for the first quarter of 2007 are expected to decline by 8-12% from the € 16.9 million reported according to IFRS in the fourth quarter of 2006. Capital expenditures are forecast to be approximately € 0.5 million in the first quarter of 2007.
At present, analyst forecasts for 2007 suggest that the semiconductor assembly equipment market will decline by approximately 5-7% as compared to 2006. It is difficult for us to assess these forecasts beyond the duration of our backlog which typically extends no more than 3-6 months. In general, our semiconductor customers remain cautious in approaching their 2007 capital equipment requirements due to current capacity utilization rates and forecasts for muted growth in consumer, business and industrial electronics applications. All things being considered, we expect net sales for 2007 to be roughly comparable to levels achieved in 2006.