Duiven, the Netherlands, July 28, 2011 - BE Semiconductor Industries N.V. ("the Company" or "Besi") (NYSE Euronext: BESI; OTCQX: BESIY), a leading manufacturer of assembly equipment for the semiconductor industry, today announced its results for the second quarter ended June 30, 2011.
Key Highlights
• Q2-11 revenue € 89.9 million in line with prior guidance (approximately € 91 million) and similar to Q2-10
• Orders of € 82.5 million down 6.6% sequentially vs. Q1-11 due to customer caution in adding new capacity partially offset by increased orders for advanced packaging applications
• Gross margin of 41.2% at high end of prior guidance (39-41%)
• Net income of € 8.8 million in Q2-11 within guidance
• Record H1 revenue and net income of € 180.9 million and € 18.4 million up 23.9% and 43.7% vs. H1-10
• Net cash increases to € 45.7 million vs. € 19.6 million in Q1-11 due to redemption of Convertible Notes
• Commencement of stock buy back program to reduce share dilution from Note conversion

(€ millions; except EPS)
Q2-2011 Q1-2011 Δ Q2-2010 Δ
Revenue 89.9 91.1 -1.3% 89.5 0.4%
Operating income (loss) 12.0 13.5 -11.1% 13.9 -13.7%
EBITDA 14.8 16.3 -9.2% 16.2 -8.6%
Net income (loss) 8.8 9.6 -8.3% 15.4-42.9%
EPS (diluted) 0.25 0.26 -3.8% 0.40 -37.5%
Orders 82.5 88.3 -6.6% 133.7 -38.3%
Backlog 66.3 73.7 -10.0% 136.0 -51.3%
Cash flow (deficit) from ops. 8.9 1.5 NM (0.4) NM
Cash 61.8 65.5 -5.6% 48.1 28.5%
Total Debt 16.1 45.9 -64.9% 49.4 -67.4%

Richard W. Blickman, President and Chief Executive Officer of Besi, commented: “We are pleased to report that our second quarter revenue and net income met our expectations. Our revenue was roughly equal to Q1-11 as we experienced sales growth of multi chip and flip chip die bonders for more advanced packaging applications which offset decreased shipments of certain single chip die bonders for more mainstream package types. Our net income benefitted from gross margins at the high end of guidance due to a more favorable percentage of advanced packaging systems in our sales mix and lower interest expense due to the redemption of our 5.5% Convertible Notes. Profit for Q2-11 came in slightly lower than Q1-11 due to a higher effective tax rate but on a combined basis resulted in record net income of € 18.4 million for the six month period, a 43.8% increase as compared to H1-10.
We executed a number of actions in Q2-11 to improve our liquidity and shareholder returns. Our net cash position increased to € 45.7 million from € 19.6 million at Q1-11 as a result of the Note redemption which positions us favorably to take advantage of future growth opportunities. We initiated a share repurchase program under which we have purchased approximately 1.1 million shares to date to reduce associated share dilution from the Note redemption which will improve our earnings per share in 2011. In total, we utilized € 8.9 million of our cash flow from operations in Q2-11 to pay cash dividends to shareholders, repurchase shares and reduce bank debt outstanding.
However, our business was not immune to the market downturn which began during the quarter and has been noted recently by many industry participants. Orders declined by 6.6% sequentially in Q2-11 reflecting customer caution in the face of slowing consumer expenditures for tablets, smart phones and other electronic devices and renewed concerns as to the global economy. In spite of such decline, we continued to experience bookings growth for die bonding and ultra thin molding systems for ever smaller, denser and more complex packaging applications which we expect to drive our revenue growth in future years. Based on our backlog and customer feedback, we expect that our revenue will decline by 15-20% in Q3-11 vs. Q2-11 as the industry slow down continues after a period of strong growth over the past two years."

Second Quarter Results of Operations
Besi’s Q2-11 revenue of € 89.9 million decreased by € 1.2 million (1.3%) as compared to Q1-11 as lower shipments of single chip die bonders was partially offset by increased sales of multi chip and flip chip die bonders for advanced packaging applications. Q2-11 revenue increased by € 0.4 million (0.4%) as compared to Q2-10 as higher die attach revenue, in particular, increased sales of multi chip and flip chip die bonding systems, was partially offset by lower wire bonding revenue due to its business rationalization in Q2-10.
Orders for Q2-11 were € 82.5 million, a decrease of € 5.8 million, or 6.6%, as compared to Q1-11. The quarterly sequential order decrease was primarily focused on reduced demand by customers, particularly IDMs, as they became more cautious in adding new capacity. Q2-11 orders declined by € 51.2 million, or 38.3%, from a cyclical peak reached in Q2-10 primarily due to decreased demand for die attach systems as a result of the current industry slow down. On a customer basis, the sequential order decrease in Q2-11 reflected a € 0.6 million (1.3%) decrease by subcontractors and a € 5.2 million (12.5%) decrease by IDMs. Backlog at June 30, 2011, was € 66.3 million, a decrease of € 7.4 million, or 10.0%, as compared to March 31, 2011.
Besi’s gross margin increased to 41.2% in Q2-11 as compared to 40.0% in Q1-11 due to increased molding and multi chip die bonding margins. Q2-11 gross margins were above prior guidance (39.0%-41.0%). The Q2-11 gross margin increased by 2.5 points as compared to 38.7% in Q2-10 due primarily to higher die attach gross margins, particularly for advanced packaging applications, and higher wire bonding gross margins due to cost reductions implemented at this business unit.
Besi’s operating expenses were € 25.0 million in Q2-2011 as compared to € 22.9 million in Q1-2011 and € 20.7 million in the Q2-10 and were above prior guidance (€ 22.9-24.0 million). Higher sequential quarterly operating expenses were primarily due to increased development personnel and materials in support of Besi’s next generation common die bonding platform and the upward movement of the Swiss franc versus the euro as well as certain one-time stock based compensation and bonus accruals. In Q2-11, Besi capitalized € 2.3 million of development expenses as compared to € 1.5 million in Q1-11. As a % of revenue, total operating expenses were 27.9% in Q2-11 as compared to 25.1% in Q1-11 and 23.2% in Q2-10.
Financial expense (income), net improved from expense of € 1.3 million in Q1-11 to income of € 0.2 million in Q2-11 as a result of the redemption of Besi’s Convertible Notes in June 2011 and a sequential decrease in losses on foreign currency contracts. Financial expense (income), net was € 0.9 million in Q2-10.
Q2-11 net income of € 8.8 million decreased by € 0.8 million from € 9.6 million in Q1-11 primarily due to an increase in the effective tax rate from 21.5% in Q1-11 to 27.5% in Q2-11 due to a change in Besi’s earnings mix from its European operations during the quarter. Q2-11 net income declined by € 6.6 million as compared to € 15.4 million in Q2-10 primarily due to the absence of a € 4.8 million tax benefit recognized in Q2-10 and an increase in the effective tax from 19.0% in Q2-10.
Half Year Results of Operations 2011/2010
For H1-11, Besi’s revenue increased by € 34.9 million or 23.9% to € 180.9 million as compared to H1-10 primarily due to a significant increase in die attach shipments, particularly for advanced packaging applications, partially offset by a decrease in wire bonding shipments. Orders for H1-11 were € 170.8 million, down by € 60.2 million, or 26.1%, as compared to a cyclical peak in orders which was reached in H1-10.
For H1-11, Besi recorded net income of € 18.4 million (€ 0.54 per share) a 43.8% increase versus € 12.8 million (or € 0.35 per share, diluted) for H1-10 while net margins increased to 10.2% versus 8.8% in H1-10. The net income improvement in the first half of 2011 was due primarily to significantly higher die attach revenue and gross margins from advanced packaging systems (both die bonding and packaging) and efficiencies resulting from Besi’s ongoing Asian production transfer.
Redemption of Convertible Notes/Share Repurchase Program
On June 17, 2011, Besi announced that all remaining holders of its 5.5% Convertible Notes due 2012 (the “Notes”) elected to exercise their conversion rights to receive Besi ordinary shares in exchange for Notes outstanding. The Notes were originally issued in a principal amount of € 46 million of which € 27.9 million principal amount was outstanding as of March 31, 2011. The Note redemption resulted in the issuance of approximately 5.6 million new Besi ordinary shares.

On May 20, 2011, Besi announced a share repurchase program according to which the Company may buy back up to a maximum of approximately 3.4 million ordinary shares from time to time until October 2012. The repurchase program is being implemented in accordance with industry best practices and in compliance with applicable buyback rules and regulations and was initiated to help reduce share dilution resulting from the conversion of Notes. Since June 6, 2011, Besi has purchased under this program a total of 1,114,470 of its ordinary shares at a weighted average price of € 5.64 for a total purchase amount of € 6.3 million.
Besi’s shares outstanding, net of treasury shares, increased from 33.9 million at March 31, 2011 to 39.4 million at June 30, 2011 as a result of the issuance of shares in connection with the Note redemption and the issuance of 307,875 shares in connection with the dividend payment in May 2011, partially offset by the buy-back of shares pursuant to the share repurchase program.
Financial Condition
Besi’s net cash position increased by € 26.1 million between March 31, 2011 and June 30, 2011 to € 45.7 million primarily due to a € 29.8 million sequential decrease in debt outstanding. During the period, cash and cash equivalents decreased by € 3.7 million to € 61.8 million as operating income, depreciation, non cash items and exchange rate benefits of € 16.7 million generated were more than offset by (i) € 5.1 million of cash dividends paid to shareholders, (ii) € 2.3 million of bank and other debt retired, (iii) an investment in working capital of € 6.7 million, (iv) capitalized development spending of € 2.3 million, (v) net capital expenditures of € 2.3 million and (vi) the repurchase of shares with a value of € 1.5 million.
Outlook
Based on our June 30, 2011 backlog and feedback from customers, we forecast for Q3-11 that:
• Revenue will decline by approximately 15-20% as compared to the € 89.9 million reported in Q2-11.
• Gross margins will range between 37-39% as compared to the 41.2% realized in Q2-11.
• Operating expenses will decrease by approximately 5% versus the € 25.0 million reported in Q2-11.
• Capital expenditures will be approximately € 2.0 million versus the € 2.3 million incurred in Q2-11.