Interim / Quarterly Report • Aug 5, 2010
Interim / Quarterly Report
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| in 1 million | Q2 / 10 | Q2 / 09 | Change | 6M / 10 | 6M / 09 | Change |
|---|---|---|---|---|---|---|
| Continuing operations | ||||||
| Order entry | 50.6 | 23.9 | 111.7% | 82.9 | 39.9 | 107.8% |
| Order backlog as of 06/30 | – | – | – | 89.9 | 57.7 | 55.8% |
| Total sales | 37.7 | 24.6 | 53.3% | 59.6 | 47.1 | 26.5% |
| Sales margin | 4.8% | 2.8% | 2.0%-points | 1.8% | -0.6% | 2.4%-points |
| Gross profit | 13.3 | 9.7 | 37.1% | 20.1 | 18.9 | 6.3% |
| Gross margin | 35.3% | 39.4% | -4.1%-points | 33.7% | 40.1% | -6.5%-points |
| Costs of sales | 24.4 | 14.9 | 63.8% | 39.5 | 28.2 | 40.1% |
| R&D costs | 1.8 | 1.1 | 63.6% | 3.3 | 2.3 | 43.5% |
| Continuing operations | ||||||
| EBITDA | 5.2 | 2.1 | 147.6% | 6.8 | 2.6 | 161.5% |
| EBITDA margin | 13.8% | 8.5% | 5.3%-points | 11.4% | 5.5% | 5.9%-points |
| EBIT | 3.5 | 1.0 | 250.0% | 3.5 | 0.2 | > 250% |
| EBIT margin | 9.3% | 4.1% | 5.2%-points | 5.9% | 0.4% | 5.5%-points |
| Earnings after tax | 1.8 | 0.7 | 157.1% | 1.1 | -0.3 | > 250% |
| Earnings per share | 0.10 | 0.04 | 150.0% | 0.06 | -0.02 | > 250% |
| Continuing and discontinued operations | ||||||
| Earnings after tax | 1.6 | -0.1 | > 250% | 0.5 | -1.1 | 145.5% |
| Earnings per share | 0.09 | 0.00 | – | 0.03 | -0.07 | 142.9% |
| Balance sheet and cash flow | ||||||
| Equity | – | – | – | 96.6 | 89.9 | 7.5 % |
| Equity ratio | – | – | – | 59.6 % | 62.8% | -3.2%-points |
| Return on equity | 1.7 % | -0.1 % | 1.8%-points | 0.5 % | -1.2% | 1.7%-points |
| Balance sheet total | – | – | – | 162.1 | 143.1 | 13.3 % |
| Net cash | – | – | – | 25.6 | 13.8 | 85.5 % |
| Free cash flow* | 7.3 | 2.1 | 247.6 % | 6.0 | 4.0 | 50.0 % |
| Further key figures | ||||||
| Investments** | 0.6 | 0.6 | 0.0 % | 1.2 | 2.5 | -52.0 % |
| Investment ratio | 1.6 % | 2.4 % | -0.8%-points | 2.0 % | 5.3% | 7.1%-points |
| Depreciation | 1.6 | 1.2 | 33.3 % | 3.3 | 2.5 | 32.0 % |
| Employees as of 06/30*** | – | – | – | 581 | 499 | 16.4 % |
| Employees as of 06/30**** | – | – | – | 581 | 623 | -6.7 % |
* before consideration of purchase or sale of availablefor-sale securities and before consideration of extraordinary items for purchase or sale of subsidiaries
** before consideration of the acquisition of HamaTech and purchase of land and facility in Sternenfels
*** continuing operations
**** continuing and discontinued operations
| Foreweword of the Management Board | 04 |
|---|---|
| Highlights Highlights 2010 |
08 |
| Investor Relations | |
| Investor Relations | 10 |
| The SUSS MicroTec Share | 11 |
| Ownership Information as of June 30, 2010 | 12 |
| Share Ownership by Officers and Related Parties | |
| as of June 30, 2010 | 12 |
| Overview of Business Development | 13 |
|---|---|
| Report on the Earnings, Assets, and Financial Position | |
| of the Group | 17 |
| Subsequent Events | 22 |
| Risk Report | 22 |
| Report on Material Transactions with Related Parties | 25 |
| Forecast Report | 25 |
| Statement on the Projected Development of the Group | 27 |
| Forward-looking Statements | 28 |
| Consolidated Statement of Income | 29 |
|---|---|
| Statement of Comprehensive Income | 31 |
| Consolidated Balance Sheet | 32 |
| Consolidated Statement of Cash Flows | 34 |
| Consolidated Statement of Shareholders' Equity | 36 |
| Segment Reporting | 38 |
| Selected Explanatory Notes | 40 |
| Legal Structure of the Group | 48 |
|---|---|
| Financial Calendar 2010 | 49 |
| Credits & Contacts | 50 |
After the first quarter of the current 2010 fiscal year was dominated by the successful conclusion of two strategic investment and divestment projects, it stood to reason that the second quarter would be shaped by several internal structural changes. And so, as early as mid-May – just three months after the acquisition of HamaTech APE – the production sites at Vaihingen and Sternenfels were amalgamated without complications. In addition, the subsidiary in Taiwan became our first foreign sales company to successfully implement the Group-wide SAP system. Furthermore, the relocation of the Substrate Bonder division from the USA to Germany, which was announced in June, is currently being implemented and will be completed by the end of this fiscal year. At the same time, the North American sales and applications center is being moved from Waterbury, Vermont, to Sunnyvale, California. Both steps will have a major impact on streamlining our corporate structure and represent the final phase of our strategic restructuring.
Along with these measures, in mid-May we successfully placed a total of 1,701,912 common bearer shares – with a calculated par value of 11.00 per share and profit-sharing rights beginning on January 1, 2010 – with German and international investors via an increase in capital stock from approved capital, excluding subscription rights. The gross inflow of funds of 16.8 million is being used in particular to refinance the HamaTech acquisition and fund additional corporate growth. At the end of May, a loan agreement for 14.5 million was concluded with a local bank in order to finance the newly acquired business property in Sternenfels.
The second quarter of 2010 went well for our Company from a financial point of view as well. The rising demand for SUSS MicroTec equipment, which was already evident in the first quarter of 2010, was even more robust in the second quarter. Order entry increased in the months from April to June 2010 by approximately 112% to 150.6 million after 123.9 million in the same period of the previous year. In particular, the regions of Taiwan, China, and Rest of Asia were drivers of the strong demand. Sales in the second quarter totaled 137.7 million, exceeding the previous year's quarterly figure by approximately 53% (Q2 2009: 124.6 million).
left: Michael Knopp CFO right: Frank Averdung CEO
A mid-year review paints an equally positive picture: in the first six months of 2010, order entry of 182.9 million surpassed the 139.9 million total for the same period of the previous year by approximately 108%. Compared with the first half of 2009, sales increased by approximately 27% from 147.1 million to 159.6 million. The order backlog as of June 30, 2010 thus amounted to 189.9 million (June 30, 2009: 157.7 million).
Including extraordinary effects of 1 1.5 million, earnings before interest and taxes (EBIT) improved to 13.5 million (H1 2009: 10.2 million). Extraordinary effects in the first half of the year primarily consisted of the following:
Excluding these extraordinary effects, EBIT came to 1 2.0 million. Earnings after taxes (EAT) amounted to 11.1 million, compared with 1-0.3 million in the corresponding period of the previous year. Basic earnings per share (EPS) therefore totaled 10.06 (H1 2009: 1-0.02).
Free cash flow before the inclusion of securities and extraordinary effects from M&A activities came to 16.0 million at the end of the first half-year after 14.0 million in the same period of the previous year. As of June 30, 2010, the SUSS MicroTec Group therefore had cash and interestbearing securities of 137.1 million (December 31, 2009: 131.1 million). The net cash position grew significantly in comparison to the end of the 2009 fiscal year from 118.4 million to 125.6 million (H1 2009: 113.8 million).
In view of the strong order entry in the second quarter of 2010, we have raised our annual forecast for the full year. For the current year we now expect sales of approximately 1140 million as well as positive earnings before interest and taxes (EBIT) despite one-off restructuring expenses of approximately 17.5 million. We will also be in a position to generate positive free cash flow in the 2010 fiscal year.
Garching, Germany, August 2010
Frank Averdung Michael Knopp Chief Executive Officer Chief Financial Officer
Based on SUSS MicroTec's proven Mask Aligner technology, the new fully automatic MA100e Gen2 Mask Aligner was introduced at the beginning of June. The next generation of the proven MA100e, which was specially developed for the production of high brightness LEDs, processes wafer sizes up to 4" at an industry-leading throughput of 145 wafers per hour and reduced cycle times. The new MA100e Gen2 saves valuable processing time during production as a result of its very powerful exposure optics, the ability to process wafers extremely rapidly, and very short changeover times between the individual substrate sizes. In addition, special noncontact handling protects the highly sensitive and expensive wafers, which are used for LED production, thus contributing significantly to increased output. As a result, the new system optimally fulfills the requirements of the LED industry for an inexpensive, technically sophisticated, and fully automated processing solution.
During SEMICON West – the world's largest semiconductor trade fair – in San Francisco, HamaTech APE, a wholly owned subsidiary of SUSS MicroTec AG, introduced its latest innovation for mask cleaning and integrity. The new MaskTrack Pro Bake/Develop (BD), which represents a refinement of the extremely successful MaskTrack Pro cleaning platform, was
developed especially for the demanding mask cleaning and integrity of 193i immersion technology and extreme ultraviolet (EUV) lithography. The new system thus now covers bake and develop processes, which are critical to success and are necessary for next generation lithography. With MaskTrack Pro BD, a unique compensation process is being introduced that ensures maximum temperature uniformity at the mask level during treatment and therefore enables the precise matching of individual process parameters. As a result of this special approach, MaskTrack Pro BD guarantees aboveaverage precision in transferring patterns from mask to substrate, thus providing significantly higher output for customers. The first Mask-Track Pro BD will be delivered to Asia as early as the end of 2010.
3
In mid-June, the Company announced its decision to move its Substrate Bonder division, based in Waterbury, Vermont (USA), to Germany. In the course of the planned restructuring, the research and development, production and product management functions of the Bonder product lines will be relocated to Sternenfels (Baden-Württemberg), Germany. At the same time, the North American service and sales activities as well as the applications center are moving from Waterbury to Sunnyvale, California. The decision to combine the Substrate Bonder, Coater/Developer, and Photomask Equipment product lines at the newly acquired Sternenfels site has been made in the interest of optimizing and simplifying the corporate structure and reducing the number of development and manufacturing sites from the existing four in January 2010 to two highly efficient sites in Germany for the future. Furthermore, by bundling the product lines at one site, the Company will be able to achieve technology and production synergies and react faster and more flexibly to market demands. In addition to the cost advantages for R&D, the production site in Sternenfels also provides the physical premises necessary to take advantage of the growth potential available in the area of 3D integration.
Approximately 80 shareholders, shareholder representatives, bank representatives, and guests accepted the invitation to this year's ordinary Shareholders' Meeting, which took place on June 23, 2010 in the Haus der Bayerischen Wirtschaft (House of the Bavarian Economy) in Munich. In total, 6.1 million voting shares (approximately 33% of the Company's equity capital) were represented.
In addition to discharging the Management Board and Supervisory Board from liability for the 2009 fiscal year and appointing auditors for the individual and consolidated financial statements, this year the amendment of the articles of incorporation pursuant to the German Act on Implementing the Shareholders' Rights Directive (ARUG) was on the agenda. All resolution proposals were approved by at least 99% of the voting rights represented at the Shareholders' Meeting. The originally scheduled agenda item 6, which dealt with the creation of new conditional capital as well as the authorization to issue convertible and/or optional bonds, had already been removed from the agenda prior to the Shareholders' Meeting and was thus not presented for resolution. In his statement of accounts, Chief Executive Officer Frank Averdung detailed the main developments and results of the past fiscal year and the first quarter of 2010. The report focused in particular on the investment and divestment projects started in fiscal year 2009 and completed in the current 2010 fiscal year, as well as on the relocation of the Substrate Bonder division from the USA to the Sternenfels site in Germany, which was announced in mid-June.
On May 11, 2010, SUSS MicroTec AG carried out an increase in capital stock without subscription rights from approved capital as part of an accelerated book-building procedure. As a result, a total of 1,701,912 common bearer shares were issued with a calculated par value of 11.00 per share and profit-sharing rights beginning on January 1, 2010. The increase in capital stock, which was carried out at short notice, was needed to refinance the HamaTech acquisition and provide further financing for corporate growth. The new shares were successfully placed with German and international investors at a price of 1 4.00 per share. The gross inflow of funds for the Company amounted to a total of approximately 16.8 million. The new shares were listed on May 25, 2010. They were made equivalent with the old shares on June 24, 2010 following the ordinary Shareholders' Meeting. As a result, the Company's subscribed capital increased from 1 17,019,126.00 to the new amount of 118,721,038.00.
The SUSS MicroTec share began the 2010 fiscal year at a price of 14.45. Despite positive corporate news (the sale of the loss-making Test Systems division), the share lost ground slightly in the first three months of the year and closed approximately 6% lower at 13.88 on March 31, 2010. At the beginning of the second quarter there was a temporary change in direction for the share performance. On April 14, the investor magazine "Der Aktionär" (The Shareholder) set off some real fireworks with the share price. After the magazine added the SUSS MicroTec 60 90
share to its model portfolio, the share surged by 12% to 14.84 with extraordinarily high daily trading volumes. Finally, on April 26, the share reached its high for the year so far of 14.95. In the subsequent months, concerns about the creditworthiness of the PIIGS countries (Portugal, Italy, Ireland, Greece, and Spain) depressed the overall stock market mood. Against this backdrop, the SUSS MicroTec share lost ground again and closed the quarter on June 30, 2010 at 1 4.00, representing a drop of approximately 10% from the closing price at the end of 2009.
The TecDAX German stock market index similarly ended the first half of 2010 with a drop of approximately 11%, while the Prime IG Semiconductor sector index managed to record an increase of approximately 12% in the first six months of the year compared with the closing price for 2009.
The average daily trading volume of SUSS MicroTec shares on all German stock exchanges increased in the second quarter of 2010 to 125,583 shares (Q2 2009: average daily trading volume of 46,972 shares). In the first half of 2010, the average daily trading volume for the share was 105,375 shares.
| Shares | Options | |
|---|---|---|
| Management Board | ||
| Frank Averdung | 27,500 | 67,500 |
| Michael Knopp | 22,500 | 97,500 |
| Dr. Stefan Reineck | 9,600 | 40,000 |
|---|---|---|
| Jan Teichert | 0 | 0 |
| Sebastian Reppegather | 0 | 0 |
The rising demand for SUSS MicroTec equipment, which was already evident in the first quarter of 2010, has remained encouragingly strong in this year's second quarter. Order entry increased in the months from April to June 2010 by approximately 112% to 150.6 million after 123.9 million in the same period of the previous year. Sales in the second quarter totaled 137.7 million, exceeding the previous year's quarterly figure by approximately 53% (Q2 2009: 124.6 million).
A mid-year review paints just as encouraging a picture: in the first six months of 2010, order entry of 182.9 million surpassed the 139.9 million total for the same period of the previous year by approximately 108%. Compared with the first half of 2009, sales increased by approximately 27% from 147.1 million to 159.6 million. The order backlog as of June 30, 2010 amounted to 189.9 million (June 30, 2009: 157.7 million).
Gross profit in the first half of 2010 improved by approximately 6% to 1 20.1 million compared with the previous year's period (H1 2009: 118.9 million). However, the gross profit margin fell from 40.1% to its current figure of 33.7%, reflecting relatively low-margin individual Bonder systems, which were delivered in the second quarter of 2010 as part of strategic R&D cooperative agreements. Including extraordinary effects of 1 1.5 million, earnings before interest and taxes (EBIT) improved significantly to 13.5 million (H1 2009: 10.2 million). Extraordinary effects in the first half of the year primarily consisted of the following:
Excluding these extraordinary effects, EBIT came to 1 2.0 million. Earnings after taxes (EAT) amounted to 11.1 million, compared with 1-0.3 million in the corresponding period of the previous year. Basic earnings per share (EPS) therefore totaled 10.06 (H1 2009: 1-0.02).
Free cash flow before inclusion of securities and extraordinary effects from M&A activities came to 16.0 million at the end of the first halfyear after 14.0 million in the same period of the previous year. As of June 30, 2010, the SUSS MicroTec Group therefore had cash and interest-bearing securities of 137.1 million (December 31, 2009: 131.1 million). The net cash position grew significantly in comparison to the end of the 2009 fiscal year from 118.4 million to 125.6 million (H1 2009: 113.8 million).
The strong orders position in the first half of 2010 was primarily driven by the Rest of Asia region, which essentially encompasses Taiwan, China, and Malaysia and which recorded an overall increase in orders of 139.5% compared to the corresponding period of the previous year. Although the regions of North America (+78.3%) and Europe (+68.8%) each recorded high double-digit growth rates in order entry, growth in the Japan region of +11.1% compared to the previous year's period was relatively modest.
The regional distribution of sales in the first six months offers a mixed picture. While the regions of Europe (-26.9%) and Japan (-27.4%) still recorded significant declines compared to the first half of 2009, the regions of North America and Rest of Asia reported sales increases of 9.3% and 135.3%, respectively.
The Lithography division includes the development, manufacture, and sale of the Mask Aligner, Developer, and Coater product lines. These product lines are developed and produced in Germany at the locations in Garching near Munich and more recently in Sternenfels. The relocation of Coater and Developer production from Vaihingen an der Enz to the newly acquired production building in neighboring Sternenfels was completed in mid-May 2010 without complications.
The Lithography division recorded encouraging growth rates both in order entry and sales in the first half of 2010. Order entry of 154.9 million was up 106.8% compared with the figure for H1 2009 of 126.4 million. Asian production customers in particular were drivers of the strong demand. Division sales in the first half of the year amounted to 1 38.5 million after 136.0 million in the corresponding quarter of the previous year. Division earnings improved from 14.5 million in the first six months of the previous year to 17.0 million.
The Substrate Bonder division comprises the development, production, and sale of the Substrate (Wafer) Bonder product line and is currently still located in Waterbury, Vermont (USA). The relocation of Bonder development and production to Sternenfels, which was announced in mid-June, is being implemented at present and should be completed by the end of this fiscal year. Both Bonder sales and the North American service and applications center will be relocated to California as part of this move.
Although order entry of 1 10.5 million in the Substrate Bonder division declined slightly compared to the first half of the previous year (H1 2009: 111.5 million), sales improved in the same period by approximately 39% to 112.1 million (H1 2009: 18.7 million). Despite this good sales performance, division earnings fell from 1-1.3 million to 1-4.1 million. The weaker earnings development was due in particular to the very low margins for several large production systems, which were delivered to strategic R&D partners in the second quarter of 2010, as well as extraordinary expenses of 10.9 million in connection with the relocation of the division to Germany.
The Photomask Equipment division includes the development, manufacture, and sale of the HMx, ASx, MaskTrack, and MaskTrack Pro product lines of HamaTech APE GmbH & Co. KG, which was acquired on February 15, 2010. The development and production of specialized systems for the cleaning and processing of photomasks for the semiconductor industry is conducted at the Sternenfels site near Stuttgart.
The Photomask Equipment division developed very favorably in the four-month period since initial consolidation. At the end of June 2010, order entry totaled 1 14.0 million. Division sales amounted to 16.1 million. For purposes of comparison: in the previous 2009 fiscal year, HamaTech APE generated annual sales of 111.0 million. In terms of earnings, the division made a small loss of 10.2 million in the period under review.
The Others division comprises the Mask business in Palo Alto, California (USA), which caters to the semiconductor industry, and the Microoptics activities at the Neuchâtel, Switzerland location as well as the C4NP business and the costs for central Group functions that generally cannot be attributed to the main divisions.
The Others division performed positively compared to the first half of 2009 in terms of both order entry and sales. Order entry improved from 12.0 million to 13.5 million. Division sales after the first six months of 2010 amounted to 13.0 million after 12.3 million in the corresponding period of the previous year. Compared to H1 2009, the Photomask business experienced a slight decline of 10.2 million in both order entry and sales to 11.2 million (H1 2009: 1 1.4 million). By contrast, order entry in the Micro-optics business grew by 1 1.4 million to 12.1 million (H1 2009: 10.7 million), while sales increased by 10.9 million to 1 1.6 million (H1 2009: 10.7 million). Badwill totaling 12.7 million related to the initial consolidation of HamaTech APE had a positive impact on division earnings, which amounted to 10.7 million in the first half of 2010 after 1-3.0 million in the corresponding period of 2009.
Sales generated by the SUSS MicroTec Group in the first half of 2010 demonstrated a significant upward trend. In the first six months of the current fiscal year, the SUSS MicroTec Group achieved sales of 159.6 million. This included sales of 16.1 million in the Photomask Equipment division, which has been part of the SUSS MicroTec Group since the acquisition of HamaTech APE GmbH & Co. KG on February 15, 2010. Excluding the Photomask sales, sales in the first half of 2010 totaled 153.5 million after approximately 147.1 million in the previous year's period, representing a rise of approximately 13.6%.
EBIT in the first half of 2010 amounted to 13.5 million (continuing activities). The initial consolidation of HamaTech APE GmbH & Co. KG on March 1, 2010, which led to gain of bargain purchase of 12.7 million, had a positive impact. However, restructuring expenses of 10.9 million, which were incurred in connection with the relocation of the Substrate Bonder division and the North American sales and service organization from Waterbury, Vermont (USA) to Sternenfels and California, respectively, had a negative effect on earnings. Furthermore, the amalgamation of the Vaihingen and Sternenfels sites resulted in additional expenses of 10.3 million.
Adjusted for these extraordinary effects, the EBIT in the first six months of the current fiscal year came to approximately 12.0 million (after 10.2 million in the same period of the previous year).
As in previous quarters, the largest sales driver was the Lithography division, which produced sales of 138.5 million and an EBIT of 17.0 million. In the first half of the previous fiscal year, the SUSS MicroTec Group's Lithography division generated sales of 136.0 million and an EBIT of 14.5 million.
Sales increases were also recorded in the Substrate Bonder division: in the first six months of the current fiscal year, sales totaled 112.1 million (after 18.7 million in the first half of 2009). Earnings in the Substrate Bonder division were reduced by high expenses for cooperative agreements with IMEC and ITRI and high development costs related to thin wafer handling. In addition, earnings reflected restructuring expenses of 10.9 million related to the relocation of the Substrate Bonder division. As a result of these high expenses, the EBIT deteriorated further and amounted to -14.1 million (after -11.3 million in the corresponding period of the previous year).
Sales developments in the new Photomask Equipment division were very encouraging. In the four months since the initial consolidation, the Photomask Equipment division contributed 16.1 million to consolidated sales. The Photomask Equipment division's EBIT amounted to -10.2 million in the first half of 2010.
Cost of sales included write-downs on capitalized development costs of EUR 1.4 million. As such, write-downs on capitalized development costs were approximately 11.3 million higher than new capitalizations, which totaled only 10.1 million in the first six months of the current fiscal year. In the first half of 2009, capitalized development costs came to 11.0 million and were thus approximately as high as the writedowns, which also amounted to 11.0 million.
The gross profit increased compared with the previous year's period by 11.2 million, amounting to 120.1 million in the first half of 2010. However, the gross profit margin shrank from 40.1% in the same period of the previous year to 33.7%. The main reason for the decline in the gross profit margin was the Substrate Bonder division, which processed strategically important orders with IMEC and ITRI involving high cost of sales.
It was possible to keep administrative and selling costs at a low level due to the systematic ongoing implementation of the cost-saving program. Overall, administrative and selling costs of 116.4 million were incurred, representing an expense ratio of 28% relative to sales generated. In the same period of the previous year, corresponding costs of 116.0 million were recorded, representing approximately 34% of sales generated.
Research and development costs totaled 13.3 million in the first half of 2010. As a result, they were approximately 11.0 million higher than in the same period of 2009.
Other operating income of 15.5 million included the recognition in profit or loss of gain of bargain purchase of 12.7 million, which resulted from the initial consolidation of HamaTech APE GmbH & Co. KG and the retroactive purchase price adjustment.
The financial result for the first half of 2010 came to -10.5 million (after 10.0 million in the previous year's period), primarily reflecting higher interest expenses, while interest income was lower than in the previous year.
In the first half of 2010, a tax expense of 1 1.9 million was recognized. This resulted in a consolidated tax rate that significantly exceeded the average consolidated tax rate of approximately 28%. This development is essentially due to the fact that it was not possible to recognize deferred tax assets for the losses incurred by foreign subsidiaries.
Financial Position
In the first half of the year, the SUSS MicroTec Group succeeded in significantly expanding its net cash position – the balance from cash and cash equivalents, interest-bearing securities, and financial liabilities – to 125.6 million. Compared with December 31, 2009, this meant an increase of 17.2 million.
These developments made it possible to achieve the goal of generating positive free cash flow once again in the first half of the year: Adjusted for extraordinary effects (acquisition of HamaTech, including the land and buildings at Sternenfels and the sale of the Test Systems business) and before inclusion of available-forsale securities, free cash flow totaled 16.0 million, compared with 14.0 million in the same period of the previous year.
The high level of free cash flow was again essentially due to a high cash inflow from operating activities of 16.5 million (previous year: 16.4 million). In particular the build-up of accounts payable (reduced cash outflow of 14.4 million) and the significant increase in customer down payments (from 112.6 million at the end of 2009 to 117.3 million) had a noticeable impact here. It was also possible to reduce accounts receivable further (adjusted for exchange rate effects) and generate a cash inflow of 11.8 million. A countervailing factor was the build-up of consolidated inventories, which resulted in a cash outflow of 17.6 million. Tools that had already been delivered to customers but for which final acceptance was still outstanding, accounted for the largest share of the increase in inventories. The inventory of these tools rose from 19.8 million at the end of 2009 to the current figure of 112.9 million.
Cash flow from investing activities amounted to -11.3 million (after -12.5 million in the first half of 2009), excluding the acquisition of HamaTech APE GmbH & Co. KG as well as the land and buildings in Sternenfels, the sale of the Test Systems business, and investments in securities. Investments were primarily made in tangible assets.
Cash flow from financing activities reflected a cash inflow from the increase in capital stock carried out in May 2010, which resulted in a net inflow of 16.6 million.
Besides cash and cash equivalents of 119.5 million (December 31, 2009: 1 20.6 million), the Group had credit and guarantee lines of approximately 19.7 million as of the half-year reporting date, which were predominantly secured in line with banking practice and were not bound to financial covenants. The utilization of these credit lines amounted to 12.7 million as of the half-year reporting date and primarily related to down payment guarantees for customer down payments. Thus, the Group has sufficient funds at its disposal to finance the operational business.
Noncurrent assets totaled 145.3 million as of the half-year reporting date and were thus 15.3 million higher than on December 31, 2009. The increase resulted primarily from the purchase of the land and buildings in Sternenfels, which were obtained as part of the acquisition of HamaTech APE and recognized at a cost of 1 4.5 million. An additional 10.3 million was invested in the newly acquired buildings as part of the relocation of the Vaihingen production site to Sternenfels.
Intangible assets showed an increase of 10.5 million to 114.3 million. The main reasons for this were the technology obtained as part of the HamaTech purchase and the acquisition of an order backlog, which together with acquisition costs were valued at 11.0 million and will be written down on a pro rata basis until the end of their useful life. In addition, capitalized development costs denominated in US dollars rose by approximately 11.0 million as a result of exchange rate effects. Write-downs on capitalized development costs, which totaled 11.4 million in the first six months of the current fiscal year, were a countervailing factor.
Current assets rose by 1 20.3 million from 196.5 million (December 31, 2009) to 1116.8 million as of the half-year reporting date. This was largely due to an inventory increase of 1 15.9 million to 1 56.7 million. 1 5.6 million of this increase related to the inventories of HamaTech APE GmbH & Co. KG, which were added to consolidated assets as a result of the acquisition. An additional increase of 13.0 million resulted from the revaluation of inventories reported in foreign currencies due to changes in exchange rates. Furthermore, inventories of tools that had already been delivered to customers but for which final acceptance was still outstanding rose by approximately 13.1 million to 112.9 million.
Accounts receivable also showed an increase of 114.8 million (December 31, 2009) to 116.6 million. The increase resulted in part from receivables of 11.6 million, which were acquired as part of the HamaTech APE purchase. In addition, changes in exchange rates boosted foreign currency receivables by 11.6 million. However, adjusted for exchange rate and extraordinary effects, the level of receivables declined by 11.4 million.
The SUSS MicroTec Group's portfolio of securities increased in the first six months of the current fiscal year from 110.5 million to 120.3 million. First, SUSS MicroTec AG obtained 747,530 shares in Cascade Microtech Inc., Beaverton, Oregon (USA), which were valued at 12.7 million as of the half-year reporting date, following the sale of shares in SUSS MicroTec Test Systems GmbH. And second, securities amounting to approximately 18.0 million were acquired in the second quarter of 2010 using the free cash flow generated. The securities recognized consist of corporate and government bonds as well as commercial paper.
The shareholders' equity of the SUSS MicroTec Group has grown since December 31, 2009 by 110.6 million to 196.6 million. However, the equity ratio has fallen from 63.1% to 59.6% as a result of the increase in total assets.
The increase in capital stock carried out on May 10/11, 2010 resulted in 1,701,912 shares being issued at a price of 14.00 per share. The gross inflow of funds amounted to 16.8 million. As a result, common stock increased by 11.7 million to 118.7 million. 15.1 million was added to additional paid-in capital. The transaction costs for carrying out the increase in capital stock totaled approximately 10.2 million. They were deducted from additional paid-in capital.
Noncurrent liabilities rose by 11.0 million from 120.0 million to 121.0 million. The increase was primarily due to higher deferred tax liabilities of 10.7 million from the acquisition of HamaTech.
In the first half of 2010, current liabilities grew by 1 14.0 million to 1 44.4 million. The high level of accounts payable, which amounted to 111.1 million as of June 30, 2010 (after 14.5 million at the end of 2009), accounted for most of this growth. The revaluation due to exchange rate changes caused these liabilities to increase by 11.1 million.
Other liabilities went up by 1 6.4 million to 1 21.3 million in comparison to December 31, 2009. The primary reason for this was the high level of customer down payments, which amounted to approximately 117.6 million as of the half-year reporting date (after 112.6 million at the end of 2009). Furthermore, provisions for personnel expenses rose (due to the reporting date) by 10.9 million to 12.8 million.
Provisions have shown an increase of 12.8 million to 14.6 million since the beginning of the year. This amount includes the earn-out provision of 10.3 million recognized in connection with the HamaTech acquisition and the restructuring provision of 10.7 million for the relocation of the Substrate Bonder division. Provisions of 10.4 million were recognized for severance payments and other liabilities in connection with the sale of the Test Systems business. In addition, the warranty provision was increased by 10.3 million in response to the rise in sales.
The tax liabilities include tax provisions set up for individual Group companies on the basis of the positive half-year result in 2010.
As of June 30, 2010, the Group had 581 employees (June 30, 2009: 623 employees overall, 499 employees in continuing activities) within the individual Group companies. The increase is almost exclusively attributable to the acquisition of HamaTech APE GmbH & Co. KG.
On May 25/28, 2010, SUSS MicroTec AG concluded a loan agreement with a local bank in order to finance the newly acquired business property in Sternenfels. The loan, which totals 14.5 million, runs until June 30, 2020. It was made available and drawn down on July 6, 2010.
No additional material events requiring disclosure occurred after the end of the interim reporting period.
Global activities in the field of high technology lead to general and current risks for the Company. The Management Board has taken appropriate measures for the purpose of monitoring risks in order to identify developments that may threaten the continued existence of the SUSS MicroTec Group early on.
In risk monitoring, a fundamental distinction is made between general business and industry risks, operating risks, and financial market risks.
The Company identifies general business risks as underlying political and economic conditions, cyclical market fluctuations and developments, market positioning, and dependence on the expertise of individuals. These risks are described in the Company's most recent Annual Report in the corresponding Risk Report section.
There were no substantial changes to the risks and opportunities outlined in the most recent Annual Report during the first half of the current fiscal year.
SUSS MicroTec regards operating risks as those which have an impact on the Group's assets and earnings position as a result of potentially necessary write-downs in the consolidated statement of financial position due to the difficult economic environment. Pricing pressure and legal risks, in particular liability risks, represent additional operating risks. Each of these risk types was outlined in detail in the most recent Annual Report.
The following possible risks were identified in connection with the relocation of the Substrate Bonder division and the North American sales and service organization from Waterbury, Vermont (USA) to Sternenfels and California, respectively.
In order to successfully relocate and continue the Substrate Bonder division, SUSS MicroTec needs to preserve the expertise of its North American employees and transfer it to the employees who will in future be working in Sternenfels and California. To ensure that knowledge is transferred adequately, it is necessary that a large number of the employees who have worked in Waterbury up until now remain at SUSS MicroTec at least until the end of 2010 or the end of the first quarter of 2011. In addition, SUSS MicroTec plans to continue employing selected staff members from Waterbury temporarily in Sternenfels beyond the end of 2010 in order to retain as much expertise as possible. The SUSS MicroTec Group regards as a risk the possibility that this transfer of expertise may not occur to the extent needed. First, employees of SMT Inc. could leave the Company early and would therefore no longer be available to transfer knowledge. Second, selected employees of SMT Inc. in Waterbury may not be sufficiently willing to move temporarily to Sternenfels or California in order to provide active support in transferring expertise. In order to minimize this risk, a team from Germany currently consisting of 15 employees was assembled. This team is already working in Waterbury to support the transfer of expertise and acquire as much of the available knowledge and experience as possible by the end of the year. At the same time, selected employees in Waterbury were made attractive offers in order to incentivize them and increase their willingness to remain at SUSS MicroTec until the closure of the Waterbury site or (temporarily) move to Sternenfels and participate beyond 2010 in the reorganization and expansion of the Substrate Bonder division.
The SUSS MicroTec Group (via an ad hoc announcement on June 10, 2010) provided timely notification of the details and schedule of the relocation of the Substrate Bonder division and the North American sales and service organization. There is a potential risk that these plans will lead to uncertainty among customers, who could become reluctant to submit new orders. SUSS MicroTec is countering this risk by communicating openly and transparently with customers and providing information about all pending measures and their impact. Simultaneously, both the transfer team from Germany and the employees still working in Waterbury have been made aware of, and sensitized to, this risk. Furthermore, the planned investments and measures, which are quite substantial, indicate that SUSS MicroTec anticipates significant growth in the Substrate Bonder division in the months and years to come and is very keen to retain existing customers and acquire new ones. So far, neither cancellations nor delays in order entry have been reported in the Substrate Bonder division. Instead, some customers have even welcomed the relocation that is underway because they assume that the planned steps will lead to the strengthening of supplier relationships with SUSS MicroTec. Therefore, this risk is regarded as negligible.
Even after the relocation of the Substrate Bonder division from Waterbury to Sternenfels, SUSS MicroTec plans to maintain existing supplier relationships (primarily with US suppliers), given positive experience in the past. The risk exists that the supply chain could be disrupted in view of the geographical distance and transnational differences. Delays in order processing and production could result. SUSS MicroTec is countering this risk by keeping North American suppliers apprised of all steps in the move and actively involving them in the process of relocation. At the same time, SUSS MicroTec is offering suppliers support in processing export transactions and is helping them with transnational formalities.
Regarding other operating risks, there were no substantial changes to the risks and opportunities in the first half of 2010.
At the SUSS MicroTec Group, financial market risks encompass credit risks, liquidity risks, and market price risks. The 2009 Annual Report provided an extensive description of these risks.
No substantial changes to these risks and opportunities occurred in the first half of the year.
No risks that threaten the Company's existence were identified within the Group in the first half of the 2010 fiscal year. The continued existence of the Company was at no time endangered from a material assets and liquidity point of view.
The risk management system described in the 2009 Annual Report continued to be used in the first half of 2010.
Regarding material transactions with related parties, we refer to the corresponding text in the selected explanatory notes of the SUSS MicroTec AG Interim Report as of June 30, 2010 (Note 11).
The business environment in which SUSS MicroTec AG operates is influenced by regional and global economic conditions as well as industry developments. The following forecast report provides a short explanation of changes since the beginning of the year in terms of internal and external factors that both the Company and leading market and industry observers regard as essential for the development of the Company.
The global economy recovered in the first half of 2010 more rapidly than had been anticipated even at the beginning of the year. Although the International Monetary Fund (IMF) had forecast global economic growth of 3.9% for 2010 at the beginning of the year, it raised its estimate at the beginning of July 2010 by 0.6 percentage points to 4.5%. The Kiel Institute for the World Economy (ifw) also significantly raised its forecast for global economic development in 2010 at mid-year from 3.7% to 4.4%. For the eurozone, both institutions are expecting an increase in gross domestic product compared with 2009 of between 1.0% (IMF) and 1.3% (ifw). Market researchers cited the continuing expansionary fiscal policies of most countries and the change in inventory management as reasons for the rapid, positive development. However, according to the ifw both factors will lose their stimulative effect or in the case of fiscal policy even have a restraining effect. Therefore, the trend will weaken slightly in 2011, according to economic experts.
The German Institute for Economic Research (DIW) has somewhat dampened expectations for the performance of the German economy in the next two years. As the reason for the adjustment, the DIW cited the continuing weakness in domestic demand (due to the high level of government debt) that has so far not kept pace with the anticipated strong level of foreign demand. Instead of the growth rate of 2.1% forecast at the beginning of the year, the Institute now expects an increase in economic output of 1.9% for 2010. For 2011, the DIW anticipates additional growth of 1.7% instead of the 1.8% forecast at the beginning of 2010.
At the beginning of 2010, the two market research institutes Gartner and iSuppli anticipated global sales in the semiconductor market to grow by 19.9% and 21.5%, respectively, to between US\$ 276 billion and US\$ 280 billion (as of February/March 2010). At the beginning of June, Gartner significantly raised its annual forecast and now expects sales to grow by 27.1% to US\$ 290 billion in the current year. As reasons for this optimism, Gartner cited the rising demand for PCs, cellular telephones, and consumer electronics as well as rising average prices for memory chips (DRAMs). For 2011, Gartner expects the global semiconductor market to continue to perform well and reach a sales level of US\$ 307 billion.
At the beginning of 2010, market researchers predicted an increase in worldwide expenditures for semiconductor equipment, ranging from 45.3% (Gartner, December 2009) to 46.8% (iSuppli, January 2010). In mid-June 2010, Gartner raised its forecast significantly for the current year and now expects the global market for semiconductor equipment to grow by 113.2% to US\$ 35.4 billion. In parallel, market researchers reduced their growth projections for 2011 to an increase of only 6.6%, following their assumptions in December 2009 that the market would grow by 30.2% to a total market volume of US\$ 47.8 billion. However, when evaluating the figures, it should be noted that they reflect markets critical for major frontend-based manufacturers such as Applied Materials and ASML.
SUSS MicroTec, on the other hand, is not particularly active in the classic front-end of chip manufacturers. Instead, the Company primarily operates as an innovative, specialized equipment manufacturer in back-end semiconductor manufacturing and particularly in the niche markets of MEMS, advanced packaging, compound semiconductors, and 3D integration.
As an innovative, specialized equipment manufacturer, SUSS MicroTec is primarily focused on the niche markets of advanced packaging, 3D integration, microelectromechanical systems (MEMS), and LED.
The projected development of these niche markets is detailed on pages 69-71 of the 2009 Annual Report. As of mid-2010, there have been no substantial changes to the assessments made there on the expected development of the niche markets. Therefore, we refer to the information in the Forecast Report section of the 2009 Annual Report.
At present, there is only a small number of market studies and forecasts for the three-dimensional system integration (3D integration) market, which is still in its infancy and is largely in development. In May 2010, the French market research institute Yole Développement published a study for the first time on the significance of wafer bonding processes in 3D integration. According to the study, both temporary and permanent wafer bonding represent manufacturing processes that will gain enormously in significance within the context of 3D integration in the future. The current study states that the market for temporary and permanent bonding will grow in the next two years from US\$ 166.5 million in 2010 to US\$ 533.3 million in 2013. This corresponds to an average annual growth rate of 79.0%.
SUSS MicroTec is focusing on the market for temporary and permanent bonding solutions with a broad portfolio of bonding equipment. According to its own estimates, SUSS MicroTec's current worldwide share of the bonder equipment market is approximately 30%.
Aside from the condition of the markets, the innovation potential of our product range is also a critical factor for our success. In the 2009 fiscal year, the Company concluded a total of four strategically important development cooperative agreements with well-known partners from industry and research in the area of 3D integration. Already in 2010, these innovations attracted the interest of research and development facilities as well as chip manufacturers. Therefore, we continue to assume that our customers will gradually integrate these new processes into their production in the coming years.
The global economy recovered in the first half of 2010 more rapidly than leading market research institutes had anticipated at the beginning of the year.
During 2010, the Gartner market research institute significantly boosted its growth forecasts both for the global semiconductor market and the semiconductor equipment market. Although market researchers assumed sales growth of 45.3% in the semiconductor equipment market in December 2009, experts now expect the market volume to increase by 113.2% to US\$ 35.4 billion in 2010. Even though these forecasts refer to markets that are crucial to large front-end-based manufacturers and are, therefore, less informative for the SUSS Micro-Tec Group, we have adjusted our forecast for the whole of 2010, taking into account the strong orders position in the first two quarters of the year. We now expect annual sales from continuing activities of almost 1 140 million as well as positive earnings before interest and taxes (EBIT) despite one-off restructuring expenses of approximately 17.5 million.
Furthermore, we assume that we will be able to generate positive free cash flow (before including the effects of M&A activities already carried out) in 2010 as well.
This Interim Report contains information and forecasts that refer to the future developments of the SUSS MicroTec Group and its companies. The forecasts are assessments that the Company has made based on all of the information available to it at the present time. Should the assumptions on which these forecasts are based not occur or the risks – as addressed in the risk report – arise, the actual results may deviate from those currently expected.
Garching, Germany, August 4, 2010
The Management Board
Frank Averdung Michael Knopp Chief Executive Officer Chief Financial Officer
| in 1 thousand | 04/01/2010 – 06/30/2010 |
04/01/2009 – 06/30/2009 |
|---|---|---|
| Sales | 37,739 | 24,636 |
| Cost of sales | -24,443 | -14,913 |
| Gross profit | 13,296 | 9,723 |
| Selling costs | -4,288 | -4,328 |
| Research and development costs | -1,843 | -1,073 |
| Administration costs | -5,036 | -3,518 |
| Other operating income | 2,983 | 846 |
| Other operating expenses | -1,610 | -683 |
| Analysis of net income from operations (EBIT): | ||
| EBITDA (Earnings before Interest and Taxes, Depreciation and Amortization) |
5,151 | 2,089 |
| Depreciation and amortization of tangible assets, intangible assets and investments in subsidiaries |
-1,649 | -1,122 |
| Net income from operations (EBIT) | 3,502 | 967 |
| Financial income/expense | -223 | 56 |
| Proft or loss from continuing operations before taxes | 3,279 | 1,023 |
| Income taxes | -1,464 | -300 |
| Proft or loss from continuing operations | 1,815 | 723 |
| Net profit or loss from discontinued operations (after taxes) | -206 | -794 |
| Net profit or loss | 1,609 | -71 |
| Thereof equity holders of SUSS MicroTec | 1,596 | -46 |
| Thereof minority interests | 13 | -25 |
| Earnings per share (undiluted) | ||
| Basic earnings per share from continuing operations in 1 | 0.10 | 0.04 |
| Basic earnings per share from discontinued operations in 1 | -0.01 | -0.05 |
| Earnings per share (diluted) | ||
| Basic earnings per share from continuing operations in 1 | 0.10 | 0.04 |
| Basic earnings per share from discontinued operations in 1 | -0.01 | -0.05 |
| 01/01/2010 – | 01/01/2009 – | |
|---|---|---|
| in 1 thousand | 06/30/2010 | 06/30/2009 |
| Sales | 59,632 | 47,087 |
| Cost of sales | -39,522 | -28,177 |
| Gross profit | 20,110 | 18,910 |
| Selling costs | -7,654 | -8,955 |
| Research and development costs | -3,342 | -2,341 |
| Administration costs | -8,715 | -7,008 |
| Other operating income | 5,467 | 2,018 |
| Other operating expenses | -2,415 | -2,459 |
| Analysis of net income from operations (EBIT): | ||
| EBITDA (Earnings before Interest and Taxes, | ||
| Depreciation and Amortization) | 6,768 | 2,555 |
| Depreciation and amortization of tangible assets, intangible assets and investments in subsidiaries |
-3,317 | -2,390 |
| Net income from operations (EBIT) | 3,451 | 165 |
| Financial income/expense | -495 | 7 |
| Proft or loss from continuing operations before taxes | 2,956 | 172 |
| Income taxes | -1,851 | -502 |
| Proft or loss from continuing operations | 1,105 | -330 |
| Net profit or loss from discontinued operations (after taxes) | -570 | -814 |
| Net profit or loss | 535 | -1,144 |
| Thereof equity holders of SUSS MicroTec | 512 | -1,104 |
| Thereof minority interests | 23 | -40 |
| Earnings per share (undiluted) | ||
| Basic earnings per share from continuing operations in 1 | 0.06 | -0.02 |
| Basic earnings per share from discontinued operations in 1 | -0.03 | -0.05 |
| Earnings per share (diluted) | ||
| Basic earnings per share from continuing operations in 1 | 0.06 | -0.02 |
| Basic earnings per share from discontinued operations in 1 | -0.03 | -0.05 |
| in 1 thousand | 01/01/2010 – 06/30/2010 |
01/01/2009 – 06/30/2009 |
|---|---|---|
| Net profit or loss | 535 | -1,144 |
| Fair value fluctuations of available for sale securities | 390 | 224 |
| Foreign currency adjustment | 3,548 | 366 |
| Cash flow hedges | 0 | -289 |
| Deferred taxes | -639 | 19 |
| Total income and expenses recognized in equity | 3,298 | 320 |
| Total income and expenses reported in the reporting period | 3,833 | -824 |
| Thereof equity holders of SUSS MicroTec | 3,779 | -777 |
| Thereof minority interests | 54 | -47 |
| in 1 thousand Assets |
06/30/2010 | 12/31/2009 |
|---|---|---|
| Non-current assets | 45,331 | 39,954 |
| Intangible assets | 14,340 | 13,837 |
| Goodwill | 13,599 | 13,599 |
| Tangible assets | 8,845 | 4,081 |
| Current tax assets | 121 | 121 |
| Other assets | 541 | 554 |
| Deferred tax assets | 7,885 | 7,762 |
| Current assets | 116,807 | 96,480 |
| Inventories | 56,711 | 40,790 |
| Accounts receivable | 16,630 | 14,842 |
| Other financial assets | 1,070 | 355 |
| Securities | 20,301 | 10,489 |
| Current tax assets | 87 | 265 |
| Cash and cash equivalents | 19,496 | 20,621 |
| Other assets | 2,512 | 1,595 |
| Assets classified as held for disposal | 0 | 7,523 |
| Total assets | 162,138 | 136,434 |
|---|---|---|
| y in 1 thousand Liabilities & share holders ' equit |
06/30/2010 | 12/31/2009 |
|---|---|---|
| Equity | 96,646 | 86,060 |
| Total equity attributable to shareholders of SUSS MicroTec AG | 96,391 | 85,859 |
| Subscribed capital | 18,721 | 17,019 |
| Reserves | 75,146 | 69,583 |
| Accumulated other comprehensive income | 2,524 | -743 |
| Minority interests | 255 | 201 |
| Non-current liabilities | 21,048 | 19,988 |
| Pension plans and similar commitments | 3,145 | 3,003 |
| Provisions | 639 | 711 |
| Financial debt | 10,510 | 10,962 |
| Other financial liabilities | 74 | 67 |
| Deferred tax liabilities | 6,680 | 5,245 |
| Current liabilities | 44,444 | 30,386 |
| Provisions | 4,554 | 1,772 |
| Tax liabilities | 1,944 | 595 |
| Financial debt | 988 | 1,747 |
| Other financial liabilities | 4,527 | 4,536 |
| Accounts payable | 11,136 | 4,458 |
| Other liabilities | 21,295 | 14,906 |
| Liabilities associated with assets classified as held for disposal | 0 | 2,372 |
| Total liabilities and shareholders' equity | 162,138 | 136,434 |
| in 1 thousand | 01/01/2010 – 06/30/2010 |
01/01/2009 – 06/30/2009 |
|---|---|---|
| Net profit or loss (after taxes) | 535 | -1,144 |
| Amortization of intangible assets | 2,080 | 1,792 |
| Depreciation of tangible assets | 1,251 | 743 |
| Profit or loss on disposal of intangible and tangible assets | 10 | 20 |
| Change of reserves on inventories | -80 | 1,335 |
| Change of reserves for bad debts | 45 | -410 |
| Non-cash stock based compensation | 93 | 103 |
| Non-cash income from the reversal of provisions | -196 | -242 |
| Other non-cash effective income and expenses | -1,826 | 10 |
| Bargain purchase arising from acquisition Hamatech | -2,678 | 0 |
| Gain from deconsolidation of SMTTS | -781 | 0 |
| Change in inventories | -7,642 | 315 |
| Change in accounts receivable | 1,812 | 11,528 |
| Change in other assets | -877 | -608 |
| Change in pension provisions | 257 | -43 |
| Change in accounts payable | 4,425 | 104 |
| Change in other liabilities and other provisions | 8,527 | -7,453 |
| Change of deferred taxes | 1,501 | 379 |
| Cash flow from operating activities – | ||
| continuing and discontinued operations | 6,456 | 6,429 |
| Cash flow from operating activities – | ||
| continuing operations | 6,456 | 6,513 |
in 1 thousand 01/01/2010 – 06/30/2010 01/01/2009 – 06/30/2009 Disbursements for tangible assets -1,016 -181 Disbursements for intangible assets -206 -2,269 Purchases of current available-for-sale securities -8,092 -4,051 Proceeds from redemption of available-for-sale securities 1,014 0 Payments for purchase of Hamatech -8,771 0 Proceeds from disposal of Test business 2,708 0 Cash flow from investing activities – continuing and discontinued operations -14,363 -6,501 Cash flow from investing activities – continuing operations -14,363 -6,490 Repayment of bank loans 0 -42 Change in current bank liabilities -759 -2,341 Change in other financial debt -452 -60 Proceeds from share capital contribution 6,808 0 Payments for expenses related to capital contribution -205 0 Cash flow from financing activities – continuing and discontinued operations: 5,392 -2,443 Cash flow from financing activities – continuing operations: 5,392 -2,443 Adjustments to funds caused by exchange-rate fluctuations 1,212 223 Change in cash and cash equivalents -1,303 -2,292 Funds at beginning of the year* 20,799 20,603 Funds at end of the period 19,496 18,311 Cash flow from operating activities includes: Interest paid during the period 52 70 Interest received during period 253 335 Tax paid during the period 218 512 Tax refunds during the period 64 132
* Cash and Cash equivalents as of January 1, 2010 also includes cash assets attributable to available-for-sale assets and discontinued activities (1178 million).
| in 1 thousand | Subscribed capital |
Additional paid-in capital |
|---|---|---|
| As of January 01, 2009 | 17,019 | 92,842 |
| Issuance of subscription rights | 103 | |
| Net profit loss or loss | ||
| Total income and expenses recognized in equity | ||
| As of June 30, 2009 | 17,019 | 92,945 |
| As of January 01, 2010 | 17,019 | 93,094 |
| Capital increase | 1,702 | 4,959 |
| Issuance of subscription rights | 93 | |
| Net profit loss or loss | ||
| Total income and expenses recognized in equity | ||
| As of June 30, 2010 | 18,721 | 98,146 |
| Accumulated Total equity other attributable to Subscribed Additional Comprehensive shareholders of Minority capital paid-in capital Earnings reserve Retained Earnings Income Suss MicroTec AG interests |
Equity |
|---|---|
| 17,019 92,842 433 -19,133 -791 90,370 |
247 90,617 |
| 103 103 |
103 |
| -1,104 -1,104 |
-40 -1,144 |
| 327 327 |
-7 320 |
| 17,019 92,945 433 -20,237 -464 89,696 |
200 89,896 |
| 93,094 433 -23,945 -743 85,858 |
201 86,059 |
| 1,702 4,959 |
6,661 |
| 93 93 |
93 |
| 512 512 |
23 535 |
| 3,267 3,267 |
31 3,298 |
| 98,146 433 -23,433 2,524 96,391 |
255 96,646 |
| Lithography | Substrate Bonder | Photomask Equipment |
|||||
|---|---|---|---|---|---|---|---|
| in 1 thousand | 6M/2010 | 6M/2009 | 6M/2010 | 6M/2009 | 6M/2010 | 6M/2009 | |
| External Sales | 38,498 | 36,017 | 12,060 | 8,746 | 6,053 | 0 | |
| Internal Sales | 0 | 0 | 0 | 0 | 0 | 0 | |
| Total Sales | 38,498 | 36,017 | 12,060 | 8,746 | 6,053 | 0 | |
| Result per segment (EBIT) | 7,012 | 4,504 | -4,084 | -1,349 | -172 | 0 | |
| Income before taxes | 7,005 | 4,437 | -4,087 | -1,352 | -172 | 0 | |
| Significant non-cash items | -444 | -1,243 | -1,005 | -213 | 58 | 0 | |
| Segment assets | 55,691 | 52,955 | 34,460 | 27,140 | 8,622 | 0 | |
| – thereof Goodwill | 13,599 | 13,599 | 0 | 0 | 0 | 0 | |
| Unallocated assets | |||||||
| Total assets | |||||||
| Segment liabilities | -20,740 | -15,281 | -10,463 | -6,627 | -3,753 | 0 | |
| Unallocated liabilities | |||||||
| Total liabilities | |||||||
| Depreciation and amortisation | 876 | 1,014 | 1,385 | 729 | 326 | 0 | |
| – thereof scheduled | 801 | 1,014 | 1,252 | 729 | 326 | 0 | |
| – thereof impairment loss | 75 | 0 | 133 | 0 | 0 | 0 | |
| Capital expenditure | 281 | 562 | 373 | 632 | 1,973 | 0 | |
| Employees as of June 30 | 319 | 324 | 125 | 113 | 84 | 0 |
| Sales | Capital expenditure | Assets | |||||
|---|---|---|---|---|---|---|---|
| in 1 thousand | 6M/2010 | 6M/2009 | 6M/2010 | 6M/2009 | 6M/2010 | 6M/2009 | |
| Europe | 13,767 | 22,570 | 6,700 1,791 |
72,028 | 67,790 | ||
| North-America | 9,730 | 9,831 | 559 | 644 | 32,379 | 32,282 | |
| Japan | 5,454 | 7,141 | 21 | 11 | 2,249 | 3,704 | |
| Rest of Asia | 31,991 | 14,694 | 74 | 4 | 1,578 | 1,083 | |
| Rest of world | 114 | 28 | 53 | 0 | 0 | 0 | |
| Consolidation effects | 0 | 0 | 0 | 0 | 1,890 | -1,880 | |
| Total | 61,056 | 54,264 | 7,407 | 2,450 | 110,124 | 102,979 |
| Other | Continuing operations |
Discontinued Operations (Test business) |
Consolidation effects |
Total | |||||
|---|---|---|---|---|---|---|---|---|---|
| 6M/2010 | 6M/2009 | 6M/2010 | 6M/2009 | 6M/2010 | 6M/2009 | 6M/2010 | 6M/2009 | 6M/2010 | 6M/2009 |
| 3,021 | 2,324 | 59,632 | 47,087 | 1,424 | 7,177 | - | - | 61,056 | 54,264 |
| 2,829 | 2,501 | 2,829 | 2,501 | 0 | 0 | -2,829 | -2,501 | 0 | 0 |
| 5,850 | 4,825 | 62,461 | 49,588 | 1,424 | 7,177 | -2,829 | -2,501 | 61,056 | 54,264 |
| 695 | -2,990 | 3,451 | 165 | -571 | -819 | - | - | 2,880 | -654 |
| 210 | -2,914 | 2,956 | 171 | -572 | -821 | - | - | 2,384 | -650 |
| -81 | 131 | -1,472 | -1,325 | 37 | -248 | - | - | -1,435 | -1,573 |
| 11,351 | 10,965 | 110,124 | 91,060 | 0 | 11,919 | - | - | 110,124 | 102,979 |
| 0 | 0 | 13,599 | 13,599 | 0 | 4,168 | - | - | 13,599 | 17,767 |
| 52,014 | 40,168 | ||||||||
| 162,138 | 143,147 | ||||||||
| -2,208 | -3,977 | -37,164 | -25,885 | 0 | -3,553 | - | - | -37,164 | -29,438 |
| -28,328 | -23,813 | ||||||||
| -65,492 | -53,251 | ||||||||
| 730 | 647 | 3,317 | 2,390 | 14 | 145 | - | - | 3,331 | 2,535 |
| 730 | 647 | 3,109 | 2,390 | 14 | 145 | - | - | 3,123 | 2,535 |
| 0 | 0 | 208 | 0 | 0 | 0 | - | - | 208 | 0 |
| 4,780 | 1,239 | 7,407 | 2,433 | 0 | 17 | - | - | 7,407 | 2,450 |
| 53 | 62 | 581 | 499 | 0 | 124 | - | - | 581 | 623 |
The consolidated financial statements of SUSS MicroTec AG as of December 31, 2009 have been prepared in accordance with the International Financial Reporting Standards (IFRSs) applied by the International Accounting Standards Board (IASB) as of the closing date. In the consolidated interim financial statements as of June 30, 2010, which were prepared on the basis of International Accounting Standards (IAS) 34 "Interim Financial Reporting," the same accounting methods were applied as in the consolidated financial statements for the 2009 fiscal year.
All of the interpretations of the International Financial Reporting Interpretations Committee (IFRIC) in effect as of June 30, 2010 have been applied.
For additional information about specific accounting and measurement methods, please see the consolidated financial statements of SUSS MicroTec AG as of December 31, 2009.
The Group auditor, KPMG AG Wirtschaftsprüfungsgesellschaft, has neither audited nor reviewed the interim financial statements.
The consolidated financial statements include the financial statements of SUSS MicroTec AG and of all material companies over which, independent of the level of its participatory investment, the proprietary company can exercise control (i.e. the control principle).
Compared with the consolidated financial statements as of December 31, 2009, the following changes were made to the scope of consolidation:
+ SUSS MicroTec AG sold the Test Systems division in accordance with the purchase agreement of January 27, 2010. The main component of the transaction was the complete sale of 100% of the shares in SUSS MicroTec Test Systems GmbH, located in Sacka near Dresden, Germany. SUSS MicroTec Test Systems GmbH was deconsolidated as of January 27, 2010.
+ With effect from February 15, 2010, SUSS MicroTec AG acquired 100% of the shares in HamaTech APE GmbH & Co. KG, based in Sternenfels, Germany, from Singulus Technologies AG. HamaTech APE GmbH & Co. KG was included in the consolidated financial statements for the first time in accordance with IAS 27 (rev. 2008) and IFRS 3 (rev. 2008) as of March 31, 2010.
There were no additional changes in the scope of consolidation.
On January 28, 2010, SUSS MicroTec AG announced the sale of the Test Systems division to Cascade Microtech Inc., which is based in Beaverton, Oregon (USA). The Test Systems division is located in Sacka, near Dresden. The site handles development, production, and distribution in Europe. In Asia and North America, sales are conducted via SUSS MicroTec subsidiaries or external representatives.
The main component of the transaction was the sale of all shares in SUSS MicroTec Test Systems GmbH. In addition, individual assets of foreign subsidiaries, also assigned to the Test Systems division, were sold.
The purchase price for the Test Systems division consisted of a fixed amount and an amount placed in escrow. The fixed component amounts to 14.5 million, of which 12.0 million was paid in cash and 12.5 million was paid in the common shares of the purchaser. An additional amount of 12.5 million has been placed in escrow and will be released to the seller upon meeting certain post-sale conditions. This could lead to a corresponding purchase price adjustment. As of June 30, 2010, 10.2 million had been released from the escrow account to SUSS MicroTec AG. In addition, SUSS MicroTec AG received 10.8 million in purchase price adjustments. The total amount of 11.0 million had already been taken into account in the previous year in the measurement of available-for-sale assets and liabilities.
On January 27, 2010, SUSS MicroTec Test Systems GmbH was deconsolidated. The gain from the deconsolidation amounted to 10.8 million. Overall, the EBIT of the Test Systems division (discontinued activities) in the first half of 2010 was 1-0.6 million.
Effective February 15, 2010, SUSS MicroTec AG acquired 100% of the shares in HamaTech APE GmbH & Co. KG, based in Sternenfels, Germany, from Singulus Technologies AG. In addition, SUSS MicroTec AG acquired the land and company buildings at the Sternenfels site as well as a company loan of approximately 110.1 million.
The purchase price for the land and company buildings totaled 14.5 million. The purchase price for the shares in HamaTech APE GmbH & Co. KG and the company loan is comprised of a fixed component of approximately 13.5 million and an earn-out component of 11 million. In addition, SUSS MicroTec AG eliminated additional inter-company receivables of Singulus Technologies AG of approximately 11.0 million, which had resulted from the ongoing operations of HamaTech APE GmbH & Co. KG since January 1, 2010. Already in the first quarter of 2010, SUSS MicroTec AG had paid the entire (fixed) purchase price of approximately 19.0 million.
The acquisition of the shares and assets or liabilities is recorded in the consolidated financial statements of SUSS MicroTec AG in accordance with the International Financial Reporting Standards as a business combination, as stipulated in IAS 27 (rev. 2008) and IFRS 3 (rev. 2008). In this context, the acquired assets, liabilities, and contingent liabilities (with a few exceptions) are to be recognized at fair value at the time of acquisition (IFRS 3.18). In accordance with the guidelines of IFRS 3 in connection with IAS 38, not only assets appearing in the statement of financial position are to be taken into account, but also not yet recognized intangible assets.
Against this background, a purchase price allocation was conducted for the acquired assets and liabilities. The acquired assets and liabilities were recognized at the time of initial consolidation as follows:
| in 1 million | Book value according to IFRS |
At time of acquisition |
|---|---|---|
| Intangible assets | 3.1 | 1.3 |
| Tangible assets | 0.3 | 0.4 |
| Current assets | 7.6 | 7.6 |
| Total assets | 11.0 | 9.3 |
| Noncurrent liabilities | 0.0 | 0.0 |
| Current liabilities | 2.6 | 2.6 |
| Total liabilities | 2.6 | 2.6 |
| Net assets | 8.4 | 6.7 |
| Acquisition costs | 4.5 | |
| Provision for earn-out | 0.8 | |
| Bargain purchase | 1.4 |
Capitalized development costs of 12.7 million, which previously had been recognized under intangible assets, were measured at the time of acquisition at 10. Instead, previously unrecognized intangible assets of 10.9 million, which primarily related to the acquired technology, were capitalized. The measurement of the technology is based on planning for the years 2010 to 2013 and the resulting cash flows. In addition, hidden reserves within tangible assets of 10.1 million were disclosed.
As part of the purchase of HamaTech APE GmbH & Co. KG, the seller, Singulus Technologies AG, issued a shareholders' equity guarantee to the effect that the shareholders' equity of HamaTech APE GmbH & Co. KG calculated in accordance with the German Commercial Code (HGB) should not fall below a certain amount at the time of closing. From SUSS MicroTec's perspective, the shareholders' equity guarantee was violated. As part of a settlement agreement, the buyer and seller agreed on a settlement in the form of a retroactive purchase price adjustment. First, Singulus Technologies AG will refund 10.7 million of the purchase price already received to SUSS MicroTec AG. And second, the earn-out component will be reduced from the previous amount of 11 million to 10.3 million. The settlement agreement has resulted in a positive impact on earnings of 11.2 million for the second quarter of 2010.
As a result of the settlement agreement with Singulus Technologies AG, the provision for the earn-out component has been reduced to 10.3 million. Gain of bargain purchase has increased to 12.7 million. Gain of bargain purchase is recognized with effect on net income under other operating income in accordance with IFRS 3.34.
HamaTech APE GmbH & Co. KG's income and expenses in the months from March to June 2010 are recorded in the consolidated statement of income. In this period, HamaTech APE contributed sales of 15.7 million and earnings of 10.1 million to consolidated earnings after taxes. If SUSS MicroTec AG had already acquired HamaTech at the beginning of the reporting period, consolidated sales would have totaled 159.9 million and consolidated earnings after taxes 10.0 million.
In May 2010, SUSS MicroTec AG approved an increase in capital stock without subscription rights from approved capital, which was completed on May 11, 2010. 1,701,912 shares with profit-sharing rights were placed, beginning on January 1, 2010 at a price of 14.00 per share. The gross inflow of funds amounted to 16.8 million.
The Company's equity capital was increased from 117,019,126.00 (divided into 17,019,126 common bearer shares with a calculated par value of 11.00 per share) by an amount of 11,701,912.00 to 118,721,038.00. Additional paid-in capital increased (gross) by 15.1 million.
The transaction costs for carrying out the increase in capital stock totaled approximately 10.2 million. They were deducted from additional paid-in capital.
On June 10, 2010, SUSS MicroTec AG announced its decision to relocate its Substrate Bonder division, which is currently based in Waterbury, Vermont (USA), to Germany this year. In the course of the planned restructuring, the research and development, production and product management functions of the Bonder product lines will be moved to the production site in Sternenfels, Germany. At the same time, the North American service and sales activities as well as the applications center will be moved from Waterbury, VT, to Silicon Valley in California.
The expected restructuring costs will reach approximately 17.5 million and will impact primarily on 2010. In the first half of 2010, approximately 10.8 million in restructuring expenses were recorded. As of June 30, 2010, provisions for restructuring came to 10.7 million.
On March 31, 2010, the previous bank consortium led by Fortis Bank was replaced by a new consortium led by Bayern LB. In March 2010, SUSS MicroTec AG signed credit agreements with the new bank consortium for a credit line of 16 million. The credit line initially runs until February 28, 2011 and was issued without covenants. Its primary purpose is to serve as backing for down payment guarantees.
In May 2010, HamaTech APE GmbH & Co. KG concluded a general credit agreement with BW Bank Mannheim for a credt line of 11 million. The credit line runs for an indefinite term and was issued without covenants. SUSS MicroTec AG issued a binding letter of comfort for HamaTech APE GmbH & Co. KG in order to secure the credit line.
The securities recognized in the statement of financial position include corporate and government bonds as well as commercial paper. The corporate and government bonds have been measured at market prices. Any fluctuations in the market price are recognized in accumulated other comprehensive income and therefore do not affect profit and loss.
Also disclosed under this item in the statement of financial position are the 747,530 Cascade shares – with a fair value of 12.7 million as of June 30, 2010 – obtained through the sale of the Test Systems division. Fluctuations in the market price are recognized in accumulated other comprehensive income and therefore do not affect profit and loss.
Other issues influencing assets, liabilities, shareholders' equity, the result for the period, or cash flows and unusual in terms of their nature, magnitude, or frequency, did not arise during the interim reporting period.
The presentation of the consolidated financial statements as of June 30, 2010 is analogous to the presentation as of December 31, 2009. There were no changes in presentation.
To the extent that estimates were made in the interim reports, the methodology underlying the estimates remained fundamentally the same during the fiscal year and in comparison to the previous fiscal year.
In a departure from the approach used at the end of the fiscal year, income tax expense in each interim reporting period is recorded on the basis of the best estimate of the weighted average annual income tax rate which is expected for the entire fiscal year.
SUSS MicroTec AG currently assumes that the annual income tax rate will deviate from the expected tax rate of approximately 28%. The primary reason for this is that the losses accrued by foreign subsidiaries cannot be capitalized.
Otherwise there are no changes requiring disclosure which would have a material impact on the current interim reporting period.
An increase in capital stock from approved capital was undertaken during the reporting period. No additional issuances, repurchases, or repayments occurred involving either bonds or equity securities.
During the reporting report, no dividend was distributed nor was such a distribution proposed.
On May 25/28, 2010, SUSS MicroTec AG concluded a loan agreement with a local bank in order to finance the newly acquired business property in Sternenfels. The loan, which totals 14.5 million, has a term until June 30, 2020. It was made available and drawn down on July 6, 2010.
No additional material events occurred after the end of the interim reporting period.
There are no contingent receivables. There were no substantial changes in contingent liabilities since the reporting date of December 31, 2009.
Basic earnings per share are calculated by dividing the net profit or loss for the period (net of minority interests) by the average number of shares.
For the first half of 2010, the average weighted number of shares – taking into account the increase in capital stock during the year – was 17,414,045 shares.
In order to calculate diluted earnings per share, the profit or loss for the period attributable to shareholders (net of minority interests) and the weighted average of outstanding shares are adjusted for the impact of all potential dilutive shares.
The existing stock option plans were not taken into account in calculating diluted earnings per share because either the market price of the SUSS MicroTec share was less than the exercise price of the options (the options were not "in the money") or the options could be exercised only given certain conditions, which were not met in full as of the reporting date.
In the previous year the Group was affected by the disclosure requirements of IAS 24 "Related Party Disclosures" with respect to business relationships with the since resigned Chairman of the Supervisory Board of SUSS MicroTec AG. The former Chairman of the Supervisory Board, Dr. Richter, was simultaneously a Management Board member of Thin Materials AG in Eichenau, Germany. In the first quarter of 2009, SUSS MicroTec AG concluded a cooperation agreement with this company. The agreement governs cooperation between the two companies in the area of thin wafer processing. As part of the agreement, SUSS MicroTec AG acquired intellectual property (IP) and expertise in the area of thin wafer handling for 10.9 million. The capitalized IP will be amortized over five years. At last year's SUSS MicroTec AG's Shareholders' Meeting on June 24, 2009, Dr. Richter resigned from his position as Chairman of the Supervisory Board of the Company.
"To the best of our knowledge, and in accordance with the applicable reporting principles, the consolidated interim financial statements give a true and fair view of the assets, liabilities, financial position, and profit or loss of the Group, and the Group Interim Management Report includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal opportunities and risks associated with the expected development of the Group over the remainder of the fiscal year."
Garching, August 4, 2010
Frank Averdung Michael Knopp CEO CFO
| Interim Report 2010 | August 5 |
|---|---|
| 6th UBS Best of Germany Conference, New York, USA | September 15 – 16 |
| 8th Scherrer Conference, Zurich, Switzerland | September 30 |
| Nine-month Report 2010 | November 04 |
| Analysts' Conference at the German Equity Forum Fall 2010 | November 22 – 24 |
| UBJ Investor Conference, Hamburg | Dezember 02 |
Published by: SUSS MicroTec AG
Edited by: Investor Relations, Finance Concept and design: IR-One AG & Co., Hamburg Printer: BluePrint Group, Munich
Investor Relations Phone: +49 (0)89-32007-161 E-mail: [email protected]
Forward-looking statements: These reports contain forward-looking statements. Statements that are not historical facts, including statements about our beliefs and expectations, are forward-looking statements. These statements are based oncurrent plans, estimates, and projections,and should be understood as such. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update any of them in light of new information or future events. Forward-looking statements involve inherent risks and uncertainties. We caution readers that a number of important factors could cause actual results or outcomes to differ materially from those expressed in any forward-looking statement.
SÜSS MicroTec AG Schleißheimer Straße 90 85748 Garching. Deutschland Fon: +49 (0)89-32007-0 E-Mail: info@suss,com
www,suss,com
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