Liquidity Improves Despite Losses Tied to Industry Downturn
Duiven, the Netherlands, February 19, 2009, 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, 2008.
Financial Highlights Fourth Quarter 2008
• Revenues of € 30.6 million, down by 13.1% versus Q3-2008. Orders down 24.8% vs. Q3-2008
• Net loss of € 3.9 million before restructuring charges, goodwill impairment and asset write-downs versus net loss of € 0.4 million in Q3-2008 prior to restructuring charges and gain on retirement of debt
• Non-cash goodwill impairment and write down of deferred tax assets of € 27.2 million in Q4-2008 due to current adverse industry and market conditions
Financial Highlights Full Year 2008
• Revenues down 10.3% to € 149.4 million and net loss of € 4.1 million in 2008 vs. € 1.8 million in 2007 before restructuring charges, asset write-downs, goodwill impairment and gain on retirement of debt
• Net loss of € 33.5 million in 2008 including all charges versus € 5.5 million in 2007
Summary
• Financial/economic crisis accelerated semi/equipment downturn. Caused customer delays and cancellations and resulted in 49.5% order decline in H2 2008 vs. H1 2008
• Net loss for 2008 focused in Q4 after roughly break even profitability for first 9 months
• Q4 asset write down and impairment of goodwill amounting to € 27.2 million reflect current market conditions
• Despite losses, cash flow from operations increased to € 23.4 million in 2008 from € 0.6 million in 2007
• Balance sheet improvement:
o Total debt and lease obligations decreased € 9.9 million to € 61.6 million at year end 2008 vs. 2007
o Net cash and cash equivalents increased from € 3.3 million at year end 2007 to € 12.4 million at year end 2008
• Solid liquidity position. € 46.9 million of cash in excess of bank borrowings and lease obligations at year end 2008 to help cushion industry downturn
Update Strategic Plan
• Dragon II restructuring announced in December to reduce costs by € 15 million in 2010
• Invested € 5 million to complete new Malaysian production facility and equip Chinese tooling facility to accelerate system/tooling transfer to Asia
• Agreement to acquire Esec to expand die bonding market share in one of most rapidly growing assembly market segments
Pro Forma Key Data-Fourth Quarter and Full Year 2008*
(million) Q4-2008 Q3-2008 Change 2008 2007 Change
Revenue € 30.6 € 35.2 (13.1%) € 149.4 € 166.5 (10.3%)
Gross margin pro forma 28.1% 36.4% (8.3) 33.6% 36.0% (2.4)
Operating loss pro forma (€ 4.3) (€ 0.1) NM (€ 3.7) (€ 1.1) 236%
Net loss pro forma (€ 3.9) (€ 0.4) NM (€ 4.1) (€ 1.8) 128%
EPS (basic, diluted) pro forma (€ 0.13) (€ 0.01) NM (€ 0.13) (€ 0.05) 160%
Orders € 18.2 € 24.2 (24.8%) € 126.3 € 160.7 (21.4%)
Backlog (end of period) € 25.4 € 37.8 (32.8%) € 25.4 € 48.3 (47.4%)
Book to bill ratio 0.60 0.69 (14.0%) 0.85 0.97 (12.4%)
Cash Flow from Operations € 12.1 € 3.4 256% € 23.4 € 0.6 NM
Cash € 74.0 € 66.7 10.9% € 74.0 € 74.8 (1.1%)
Total Debt € 61.6 € 59.1 4.2% € 61.6 € 71.5 (13.8%)
* Prior to restructuring charges, goodwill impairment and asset write-downs and gain on retirement of debt. See accompanying tables for an analysis of Besi’s 2007 and 2008 income statement and as adjusted for all such charges.
Comments
Richard W. Blickman, President and Chief Executive Officer of the Company, commented: “Unprecedented turmoil and uncertainty in financial markets has dramatically weakened the global economy and has directly affected Besi’s business. Commencing in the second half of 2008, demand for our assembly equipment declined significantly from both IDMs and subcontractors as many customers have responded to the global economic crisis by delaying, foregoing or cancelling bookings until a clearer picture of the economy develops. As such, our orders declined by 49.5% as compared to the first half of the year and led to a net loss of € 3.9 million in the fourth quarter of 2008 prior to any restructuring charges and asset write-downs. Prior to the fourth quarter, we had managed to operate at roughly break even net income levels for 2008. As a result of deteriorating industry conditions during the latter part of the fourth quarter of 2008, we wrote down the value of goodwill and deferred tax assets by € 27.2 million at year end. Such write downs will not affect Besi’s liquidity, cash flow from operations or debt covenants. Further, these write-downs relate to current market realities and in no way alter our constructive view of the future of the semiconductor equipment industry.
On a positive note, our liquidity position strengthened significantly during the year. We generated € 23.4 million of cash flow from operations in 2008 versus € 0.6 million in 2007 which we utilized primarily to reduce indebtedness by approximately € 10 million and to fund the completion and equipment of our Malaysian and Chinese production facilities. We also ended the year with approximately € 46.9 million of cash in excess of our bank debt and capital leases. This liquidity cushion should help us absorb near term anticipated losses until the market can recover from current depressed levels.
Finally, we are pleased to report an agreement signed on January 25, 2009 to acquire the Esec business unit from OC Oerlikon Corporation AG. In combination with Besi’s Datacon product portfolio, the addition of Esec significantly will expand our share of the die bonding system market, one of the most rapidly growing segments of the assembly equipment business. It will also expand Besi’s market penetration of many key European, American and Asian global accounts as well as its global installed base of equipment from which to increase non system revenue growth. We anticipate closing the transaction in April and are actively at work on transition and integration plans to maximize potential synergies for the benefit of Besi shareholders.”

Outlook
Current analyst forecasts for the assembly equipment industry in 2009 vary significantly but generally forecast a substantial contraction in demand for semiconductors and related equipment in comparison to 2008.
Based on its December 31, 2008 backlog and feedback from customers, Besi forecasts for Q1-2009 that:
• Revenue will decrease by approximately 30-40% as compared to the € 30.6 million achieved in the fourth quarter of 2008
• Gross margins (excluding restructuring charges) will range between 24-26% as compared to the 28.1% realized in the fourth quarter of 2008
• Operating expenses (excluding restructuring and impairment charges) will decrease by approximately 5% as compared to the € 12.9 million reported in the fourth quarter of 2008
• Capital expenditures will be approximately € 0.8 million
As a result, the Company anticipates reporting a loss for the first quarter of 2009 in excess of that reported in the fourth quarter of 2008 (excluding impairment and restructuring charges). Based on its solid liquidity position, Besi is able to absorb near term losses until the market recovers and will continue to align its cost structure to current market realities by means of its Dragon restructuring plan.
More info on Besi's website: www.besi.com