Quarterly Report • Aug 12, 2008
Quarterly Report
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1 January – 30 June
| in 3 milllion | Q2/08 | Q2/07 | Change | 6M/08 | 6M/07 | Change |
|---|---|---|---|---|---|---|
| Sales and order position | ||||||
| Order entry | 42.6 | 37.5 | 13.6% | 86.5 | 64.2 | 34.7% |
| Order backlog as of 03/31 | – | – | – | 92.2 | 64.8 | 42.3% |
| Total sales | 34.4 | 37.0 | -7.0% | 69.7 | 76.4 | -8.8% |
| Sales margin | -1.9% | 8.9% | – | 0.5% | 7.2% | – |
| Gross profit | 12.5 | 17.4 | -28.2% | 27.0 | 34.0 | -20.6% |
| Gross margin | 36.2% | 47.0% | – | 38.8% | 44.5% | – |
| Cost of sales | 21.9 | 19.6 | 11.7% | 42.6 | 42.4 | 0.5% |
| EBITDA | 0.0 | 3.6 | -100.0% | 2.7 | 8.9 | -69.7% |
| EBITDA margin | 0.0% | 9.8% | – | 3.8% | 11.7% | – |
| EBIT | -1.1 | 2.2 | -150.0% | 0.5 | 6.1 | -91.8% |
| EBIT margin | -3.3% | 6.0% | – | 0.7% | 8.0% | – |
| Earnings after tax | -0.7 | 2.0 | -135.0% | 0.3 | 5.5 | -94.5% |
| Basic earnings per share | -0.04 | 0.11 | -136.4% | 0.02 | 0.32 | -93.8% |
| Balance sheet | ||||||
| Equity | – | – | – | 102.0 | 104.7 | -2.6% |
| Equity ratio | – | – | – | 63.8% | 70.2% | – |
| Return on equity | -0.7% | 1.9% | -136.8% | 0.3% | 5.3% | – |
| Balance sheet total | – | – | – | 159.9 | 149.3 | 7.1% |
| Net cash | – | – | – | 3.5 | 11.7 | -70.1% |
| Free cash flow | -6.5 | -4.6 | 41.3% | -3.9*) | -4.1 | -4.9% |
| Further key figures | ||||||
| Investments | 3.4 | 2.4 | 41.7% | 6.4 | 4.1 | 56.1% |
| Investment ratio | 10.0% | 6.4% | – | 9.2% | 5.4% | – |
| Depreciation | 1.1 | 1.4 | -21.4% | 2.2 | 2.8 | -21.4% |
| Employees as of 03/31 | – | – | – | 732 | 780 | -6.2% |
* ) without consideration of purchased/disposed available-for-sale securities
| 02 | Foreword Foreword by the Management Board |
|---|---|
| Highlights | |
| 04 | Highlights 2008 |
| Investor Relations |
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| 6 | Investor Relations |
| 8 | The SUSS MicroTec Share |
| 9 | Shareholder Structure as of July 31, 2008 |
| 9 | Directors' Dealings as of June 30, 2008 |
| Consolidated Interim Report |
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| 10 | Overview of the Course of Business |
| 15 | Earnings, Assets, and Financial Position |
| 21 | Report on risks and opportunities |
| 22 | Supplementary Report |
| 22 | Report on significant business with related parties |
| 23 | Prognosis Report |
| Interim Financial Statements (IFRS) |
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| 26 | Consolidated Statement of Income |
| 30 | Consolidated Balance Sheet |
| 32 | Consolidated Statement of Cash Flows |
| 34 | Consolidated Statement of Shareholders' Equity |
| 36 | Segment Reporting |
| 38 | Selected Explanatory Notes |
| 43 | Confirmation by the legal representatives |
| Service | |
| 44 | Legal Structure of the Group |
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In the second quarter of the current 2008 fiscal year, and thus for the third time in a row, SUSS MicroTec Group was once again able to achieve very good order entry at EUR 42.6 million (Q2 2007: EUR 37.5 million). This is all the more gratifying since industry associations had predicted an average decline of -10 percent for the semiconductor equipment market. However, the trend in Group sales, which at EUR 34.4 million remained approximately EUR 2.6 million below the first-quarter amount of the previous year, was not entirely satisfactory. In this context, the order backlog as of June 30, 2008 rose by 42.3 percent to EUR 92.2 million (June 30, 2007: EUR 64.8 million).
The picture for the first half of the year is similarly mixed: while our most important indicator for future developments, order entry of EUR 86.5 million, exceeded the corresponding amount of the previous year (H1 2007: EUR 64.2 million) by 34.7 percent, sales of EUR 69.7 million in the first six months of 2008 fell short of the amount generated in the comparable period of the previous year (H1 2007: EUR 76.4 million).
In half-year comparison, gross profit declined from EUR 34.0 million in 2007 to EUR 27.0 million in 2008, or by 20.6 percent. Reasons for this included lower sales, a less favorable product mix, and the weak US dollar, which together led to a decrease in margins. Against this backdrop, earnings before interest and taxes (EBIT) declined from EUR 6.1 million in the first half of 2007 to EUR 0.5 million in the same period of 2008. Earnings after taxes (EAT) declined year on year from EUR 5.5 million to EUR 0.3 million.
The second quarter of the current fiscal year was marked by two additional significant events: the first three German companies of the SUSS MicroTec Group converted to the new SAP system according to plan on July 1, 2008. In this initial step, a total of eight system modules from financial accounting to product life cycle management were adapted to SUSS MicroTec and successfully implemented within only six months. A major feat when one considers that during introduction, the system had to record and model all Company-specific processes. By consolidating the processes into just one system, programs and ad hoc solutions previously in use were simultaneously discarded.
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| Interim Financial Statements + | ||
| Service + |
Dr. Stefan Schneidewind Chief Executive Officer
Michael Knopp Chief Financial Officer
In addition, on June 19, 2008 the Ordinary Shareholders' Meeting of SUSS MicroTec AG took place in Munich. This represented a historical milestone for the Company as in the course of routine new elections to the Supervisory Board, Dr. Winfried Süss retired from his post as Chairman of the Supervisory Board after more than 50 years of service and commitment to SUSS MicroTec (formerly Karl Süss) as a result of old age, Dr. Franz Richter, Dr. Stefan Reineck, and Mr. Jan Teichert were newly elected.
We would like to take this opportunity to express our very heartfelt thanks to the former members of the Supervisory Board and particularly to Dr. Süss for their many years of consistently positive and constructive collaboration.
The second half of 2008 will most likely be marked by a lower order entry. However, as a result of the large order backlog we are optimistic that we will be able to achieve significant growth in sales in the third and fourth quarters, though particularly the latter. Therefore, we continue to maintain our previous prognosis for 2008. Excluding unforeseen events and extraordinary developments, we assume moderately positive growth contrary to the overall semiconductor trend with sales and a gross profit margin at the level of the previous year. Furthermore, we expect to generate sufficient cash flow from operations to be able to finance the organic growth of the underlying business.
Garching, August 2008
Dr. Stefan Schneidewind Michael Knopp
Chief Executive Office (CEO) Chief Financial Officer (CFO)
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In this year's 10 BEST Customer Satisfaction Awards sponsored by VLSI Research Inc., an American market research institute, SUSS MicroTec once again performed well. Customers rated SUSS MicroTec first in the Material Handling Suppliers category for the tenth year in a row – clear proof of the Company's leading position in the area of customer satisfaction. Customers
selected SUSS MicroTec as best in Cost of Ownership, Uptime, Build Quality, Usable Throughput, Quality of Result, Product Performance, and Commitment, thus making the Munich-based Company first in seven of the 13 categories. In the Small Suppliers of Wafer Processing category, the high-tech manufacturer based in Garching near Munich ranked fifth, and among the Focused Suppliers of Chip Making Equipment it ranked eighth. The survey's respondents represent approximately 95% of the world's semiconductor market.
SUSS MicroTec has entered a license agreement with Philips Research (Eindhoven, The Netherlands) for a new technology for large-area nanostructure imprinting. Nanoimprint equipment developed within the framework of the Substrate Conformal Imprint Lithography (SCIL) joint project with Philips Research will be adapted to an already existing SUSS MicroTec equipment platform and distributed exclusively by SUSS MicroTec. SCIL represents a new technology for the creation of structures in the sub-50nm range which offers new possibilities for the processing of large-area imprinting applications with outstanding resolution and repeatability. Essentially all Laboratory Mask Aligner from SUSS MicroTec can be modified to process 150mm and 200mm wafers with SCIL technology. The market launch of the SUSS MicroTec lab aligners with integrated SCIL functionality is scheduled for later this year.
Foreword + Highlights + Investor Relations + Interim Management Report + Interim Financial Statements +
Service +
PDMS Stemp used for SCIL mounted on glass backplate
World's first 300mm WLR Test System The newest 200mm Bond Cluster
made by SUSS.
On April 8, 2008, SUSS MicroTec installed the world's first 300mm wafer-level reliability (WLR) test system at a leading Japanese manufacturer of semiconductor devices. As the technology and design of semiconductor devices advance, the need to test their reliability and gauge their lifetime becomes more acute. With the PM300WLR test system, which was specially developed for reliability tests, the test procedure can be moved to the wafer level and therefore take place before the component's design phase. Thus, the new SUSS MicroTec test system, which is the most intelligent manual probe system now available, substantially contributes to shorter throughput and cost savings as a result of fewer defects at the component level.
u-ITC, a world-class supplier specializing in the production of MEMS sensors, will equip its facility in Korea with ABC200, the newest Bond Cluster from SUSS MicroTec. Due to its flexibility, the automatic 200mm Bond Cluster enables the rapid reconfiguration of process parameters from small runs to full production. The state-of-the-art Bonder System from SUSS MicroTec is particularly attractive to suppliers who must respond quickly to their customers' requirements and simultaneously deal with diverse process conditions.
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On June 19, 2008, the Management Board and Supervisory Board of SUSS MicroTec AG were able to welcome approximately 100 shareholders, bank representatives, and guests to this year's Ordinary Shareholders' Meeting in the offices of the Haus der bayerischen Wirtschaft (House of the Bavarian Economy) in Munich, Germany. In his statement of accounts, Chief Executive Officer Dr. Stefan Schneidewind elaborated on the 2007 fiscal year and discussed the events during the year that impacted business activity. Particular emphasis was placed on the rationale for the adjusted sales and earnings prognosis in October 2007 for the full year as well as the successful market launch of new products.
The questions from shareholder representatives and shareholders in the discussions that followed focused above all on trends of the past fiscal year as well as the strategic direction and outlook of the Group against the backdrop of the new Supervisory Board elections. The Management Board as well as departing and proposed members of the Supervisory Board provided detailed answers to the questions posed.
For the first time in the corporate history of SUSS MicroTec as a listed company, shareholders introduced motions during the 2008 Shareholders' Meeting that sought to table agenda items 8 and 9 as well as to postpone a by-election for the Supervisory Board. All of these motions were defeated in early special votes of the Shareholders' Meeting.
In subsequent voting on the agenda items, a large majority of the shareholders expressed their confidence in the Management Board and the Supervisory Board and discharged both boards. The key resolutions of the Shareholders' Meeting included the reduction in the size of the Supervisory Board from previously six members to three members, as well as new elections for the members of the Supervisory Board. Regarding both points, the Shareholders' Meeting ratified the proposals of the management and elected with a clear majority the recommended candidates Dr. Franz Richter (Chairman), Dr. Stefan Reineck, and Jan Teichert to the Supervisory Board.
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In doing so, the Munich-based Company came to another historical milestone: in the course of the new elections, Dr. Winfried Süss retired from his post as Chairman of the Supervisory Board after more than 50 years of service and commitment to SUSS MicroTec (formerly Karl Süss) as a result of old age. The Management Board expressed its recognition of his many years of service and his extraordinarily strong commitment to the Company and its gratitude for the support that he consistently provided in difficult times to the formerly family-owned Company, even after it went public.
Additional agenda items which required the approval of the Shareholders' Meeting, included – in addition to the profit and loss transfer agreement with SUSS MicroTec Reman GmbH and a resolution on the suspension and creation of new approved capital – the ratification of a new stock option plan (2008). The only agenda items that failed to obtain the required threequarters majority were agenda items 8 and 9, which involved the creation of new contingent capital for the issuance of convertible and/or warrant-linked bonds along with other financial instruments.
Regarding pending routine elections to the Supervisory Board, two individuals who are very familiar with SUSS MicroTec were nominated as candidates: Dr. Franz Richter and Dr. Stefan Reineck. Dr. Franz Richter (Chairman of the Supervisory Board), who has worked for SUSS MicroTec since 1990, served first as R&D Manager before assuming the position of Chairman of the Management Board from 1998 until the end of 2004. Following a rather long break, he will now assist the Company with his technical expertise and many years of industry experience as an advisor.
Dr. Stefan Reineck (Deputy Chairman of the Supervisory Board) was a member of the Management Board of SUSS MicroTec AG from April 1, 2007 until September 30, 2007. Until Mr. Michael Knopp joined the firm as Chief Financial Officer, the holder of a doctorate in physics was interim responsible for finance, accounting, IT, legal, tax, insurance, and personnel departments and later, strategic planning. Dr. Reineck has belonged to the Supervisory Board of SUSS MicroTecAG since October 2007.
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Mr. Jan Teichert ideally complements the Supervisory Board of SUSS MicroTec AG thanks to his extensive financial and capital markets expertise. The business graduate (Diplom-Kaufmann) began his career at a prestigious auditing firm in Munich before moving to the operational side in an international listed company in 1999. Since 2003, Mr. Teichert has been responsible for financial management at Hans Einhell AG, Landau, Germany. 1200
The SUSS MicroTec share began the 2008 fiscal year at a price of EUR 4.29 and performed well in a persistently difficult market environment. In the first six months of the year, the share outperformed TecDAX, an index of selected German technology stocks, as well as the Prime IG Semiconductor industry index. 600 800
Price of the SUSS MicroTec share on January 1, 2008: 3 4.29 Price of the TecDAX on January 1, 2008: 3 974.19 Price of the Prime IG Semiconductor on January 1, 2008: 3 124.17
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| Management Board | Shares | Options |
|---|---|---|
| Dr. Stefan Schneidewind | 18,278 | 150,000 |
| Michael Knopp | 5,000 | 30,000 |
| Supervisory Board | Shares | Options |
|---|---|---|
| Dr. Winfried Süss* | 1,131,000 | 0 |
| Gerhard Rauter* | 0 | 0 |
| Peter Heinz, MBA* | 1,338 | 0 |
| Prof. Dr. Anton Heuberger* | 0 | 0 |
| Heinz-Peter Verspay* | 2,000 | 0 |
| Dr. Stefan Reineck/ * |
1,600 | 40,000 |
| Dr. Franz Richter** | 101,040 | 0 |
| Jan Teichert** | 0 | 0 |
* Supervisory Board member until June 19, 2008
** Supervisory Board since June 19, 2008
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Decidedly good growth in order entry continued in the second quarter of fiscal year 2008. As in the fourth quarter of 2007 and the first quarter of this year, SUSS MicroTec Group once again was able to achieve very good order entry of 3 42.6 million (Q2 2007: 3 37,5 million; + 13.6%). However, the trend in Group sales, which at 3 34.4 million remained under the result for the corresponding period of last year (3 37.0 million), was not entirely satisfactory. In this context, the order backlog as of June 30, 2008 rose by 42.3 percent to 3 92.2 million (H1 2007: 3 64.8 million).
The outlook for the first half-year shows a similarly mixed picture: while sales of 3 69.7 million in the first six months of 2008 fell short of the amount generated in the same period of the previous year (H1 2007: 3 76.4 million), our most important forward-looking indicator – order entry of 3 86.5 million – exceeded the previous year's result (H1 2007: 3 64.2 million) by 34.7%. Once again, the Lithography division accounted for a substantial share of order growth in the first half of the year as a result of intensified demand for the Lithography division's Mask Aligner and Coater product lines, in particular for advanced packaging and, in the second quarter, MEMS applications.
Gross profit in the first half of the year declined from 3 34.0 million in 2007 to 3 27.0 million in 2008, or by 20.6%. Reasons for this included lower sales, a less favorable product mix, and the weak US dollar, which together led to lower margins. Against this backdrop, earnings before interest and taxes (EBIT) declined from 3 6.1 million in the first half of 2007 to 3 0.5 million in the same period of 2008. Earnings after taxes (EAT) declined in six-month comparison from 3 5.5 million to 3 0.3 million.
Cash flow from operating activities rose in the first half of the year from 3 0.0 million in 2007 to 3 1.0 million in 2008. However, the cash flow from operating activities was not sufficient to cover investments in the first half of 2008. Investments in tangible and intangible assets totaled 3 1.3 million (H1 2007: 3 0.9 million) and 3 5.1 million (H1 2007: 3 3.2 million), respectively. The latter included not only expenditures in the previous year for the Group's development projects, but also additional investments in the new SAP ERP System. In addition to securities available for sale of 3 7.5 million, SUSS MicroTec Group carries cash and cash equivalents of 3 9,9 million (H1 2007: 3 15,9 million).
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The distribution of sales by region in the first half of 2008 shows overall stable growth in the regions of Europe with 3 25.6 million (H1 2007: 3 24.7 million), Japan with 3 7.7 million (H1 2007: 3 7.5 million), and Rest of Asia with 3 19.8 million (H1 2007: 3 19.9 million), while North America with 3 16.5 million registered a rather significant decrease in sales of approximately 32%. Within the Rest of Asia region, sales declines in China (from 3 3.0 million to 3 1.5 million) and the other Asia (from 3 7.5 million to 3 4.3 million) were nearly offset by sales growth in Taiwan (+49.0%).
The distribution of order entry by region indicates significant growth in the regions of Europe (+27.7%) and Rest of Asia (+140.0%). However, Japan (-5.4%) and North America (-12.3%) showed a downturn in orders compared with the previous year. 35
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Lithography, the core business of SUSS MicroTec, generated sales of 3 42.8 million in the first six months of the fiscal year, slightly below the previous year's amount of 3 43.2 million.
Order entry in the first half of the year totaled 3 63.1 million, exceeding the result of the previous year (H1 2007: 3 30.0 million) by approximately 210%. Compared to the first quarter of 2008, in the months from April to June there was intensified demand for Mask Aligner and Coater for MEMS applications along with advanced packaging solutions.
The division result fell in this period by approximately 3 1.3 million to 3 7.0 million (H1 2007: 3 8.3 million). As in the first quarter of 2008, the result was impaired by the higher share of the product mix attributable to the Coater product group, which tends to have lower margins. In the second half of the current fiscal year, the share of the mix comprised of Mask Aligner will increase again sharply, which will have a positive impact on margins. 40 50 60 70
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The sales of the Substrate Bonder Division reached 3 8.7 million in the first half of 2008, approximately 10% below the previous year's level (H1 2007: 3 9.9 million). Order entry fell compared with the previous half-year by 3 3.7 million to 3 8.3 million. The division of the SUSS MicroTec Group received significant orders among others from the Korean subcontractor u-ITC and a German microsystems technology manufacturer from the pharmaceutical industry. 15
In the first six months of the 2008 fiscal year, the Test Systems division generated sales of 3 12.7 million, slightly above the comparable amount for the same period of the previous year (H1 2007: 3 12.4 million). However, order entry declined in half-year comparison by 3 1.1 million to 3 11.9 million (H1 2007: 3 13.0 million). The division result of 3 -1.1 million was significantly worse than in the corresponding period of the previous year (H1 2007: 3 0.0 million). The reasons for this were the weaker gross profit margin as a result of sustained margin pressure and the still weak US dollar. In addition, write-downs relating to raw materials, supplies, and consumables in the amount of 3 0.2 million put a strain on the division result. 5 10 15 20 0 3 6 9
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Along with the Photo Mask and Micro-optics business, the Others division encompasses the holding functions and the C4NP product line. Sales and order entry in this division declined in half-year comparison. Order entry sank by 3 3.0 million to 3 3.2 million (H1 2007: 3 6.2 million). Sales in the first six months fell from 3 7.4 million in 2007 to 3 3.3 million in the current fiscal year. The Photo Mask business registered a decline in half-year comparison in both order entry and sales of 3 3.9 million to 3 2.0 million each. The picture was similar for the Micro-optics business: order entry declined to 3 1.0 million (H1 2007: 3 2.3 million) and sales of 3 1.0 million were approximately 55% below the corresponding amount of the previous year (H1 2007: 3 2.2 million). 20
After the sale of the Device Bonder division in July 2007, sales from the further processing of the remaining order backlog as of the closing date (July 16, 2007) amounted to 3 2.2 million in the first half of 2008 (H1 2007: 3 3.5 million). The division result includes write-downs relating to raw materials, supplies, and consumables of 3 0.2 million. 5 10
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In the first half of the year the Group generated sales of 3 69.7 million after 3 76.4 million in the corresponding period of the previous year. Of this decline in sales, 3 4.2 million is attributable to the Mask and Micro-optics business, both of which belong to the Others division. The cause of this sales downturn is a sharply reduced order entry from the respective largest customers of these lines. However, sales in the core divisions of the Company have experienced robust growth, contrary to the current market trend. The Test Systems division was even able to achieve a slight sales increase of 3 0.3 million to 3 12.7 million. 60
Gross profit, which declined by 3 7.0 million over last year for the same period, totaled 3 27.0 million in the first half of the year. The gross profit margin was 38.8% (H1 2007: 44.5%) in the first half of the year. Along with overall margin pressure as a result of below-average industry activity, the further weakening of the US dollar and the Japanese yen as well as the product mix were the primary factors contributing to the decline in the gross profit margin. Furthermore, an additional cost adjustment was necessary for the C4NP production equipment to be supplied to IBM. 10 20 30 40
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Inventory rose from December 31, 2007 by 3 4.4 million to 3 58.2 million as of the first halfyear. The buildup in inventory encompasses all divisions of the Group, although the bulk of the buildup occurred for Substrate Bonder. With the successful introduction of the SAP ERP System in the first Group companies, a thorough Group-wide management of inventories will be possible. This will lead to a reduction in inventory over the medium term. The introduction of SAP will be completed in the 2009 fiscal year.
Selling costs of 3 13.1 million remain stable compared to the same period of the previous year, while administration costs declined by 3 1.4 million. Beside discontinuation of administration costs due to the sell of Device Bonder business the main factors in the reduction were the capitalization of own work performed by the enterprise in connection with the introduction of SAP in the first Group companies and cost savings.
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The balance of other operating income and expenses remained almost unchanged over the previous year and primarily contained recognized losses from operating activities and unrecognized losses from the valuation of open foreign exchange positions as of the closing date.
Tax expense rose over that of the previous year's period on a relative basis as no revaluations are expected during the current fiscal year on previously adjusted deferred tax assets, which have had a favorable effect on the income tax rate in prior years.
Despite the difficult market environment in the semiconductor equipment industry, in the end the Group was able to conclude the first half of the 2008 fiscal year with positive earnings after taxes of 3 0.3 million, although this result fell substantially short of the 3 5.5 million for the comparison period of the previous year. 10
Development of Significant Performance Figures in 3 million 0
H1 2008 H1 2007
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In the first half of the fiscal year, the net cash position – the balance of cash and cash equivalents, securities, and financial liabilities – totaled 3 3.5 million. Compared to December 31, 2007 this means a decrease of 3 4.1 million. While financial liabilities rose only slightly in comparison, the sum of cash and cash equivalents and securities declined from 3 20.1 million as of December 31, 2007 to 3 17.4 million.
In the first half of the current fiscal year, the Group was not able to cover its investments through cash flows from operating activities. Investments of 3 6.4 million, excluding net payments for the acquisition of securities of 3 7.5 million (H1 2007: 3 0.0 million), were offset by cash flows from operating activities of only 3 1.0 million (H1 2007: 3 0.0 million).
The majority of the investments totaling 3 5.1 million (H1 2007: 3 3.2 million) concerned intangible assets. Along with investments in Group development projects in the Substrate Bonder of 3 1.1 million (H1 2007: 3 1.5 million) and C4NP segments of 3 0.7 million (H1 2007: 3 0.0 million), additional investments of 3 1.7 million (H1 2007: 3 0.0 million) were made in the new SAP ERP software in the first half of the year.
In addition to the sum of cash and cash equivalents and securities, as of the half-year balance sheet date the Group has credit lines of approximately 3 17.6 million at its disposal, the majority of which are secured in line with common banking practice and subject to financial covenants. As of the balance sheet date, the credit line has been utilized in the amount of 3 3.8 million by the subsidiary in Japan to take advantage of arbitrage gains. Thus, the Group has sufficient financial resources to finance operating activities.
Besides goodwill, non-current assets consist primarily of capitalized development activities. The C4NP project, for which total development activities of 3 8.5 million (December 31, 2007: 3 7.8 million) were capitalized as of the balance sheet date, represents the largest individual item. With the delivery of the first high-volume tool from the C4NP line to development partner IBM in the second quarter of the fiscal year, the development phase for the C4NP project has thus ended. Accordingly, no further development costs will be capitalized. Instead, the capitalized development activities will be amortized on a straight line basis over their expected useful life beginning in the third quarter.
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The greatest changes in the area of current assets occurred within working capital: while accounts receivable of 3 25.6 million as of December 31, 2007 declined to 3 20.2 million as of the half-year, inventory reserves of 3 53.8 million rose to 3 58.2 million. The majority of this increase related to raw materials, supplies, and commodities. The reduction in other financial assets from 3 3.0 million to 3 1.4 million resulted primarily from the influx of other purchase price proceeds from the sale of the Device Bonder division in the previous year.
In the area of current liabilities, the greatest change since December 31, 2007 involved accounts payable, which decreased from 3 8.8 million to 3 5.7 million. This decline was closely linked to the introduction of SAP at the first Group companies. Beforehand, as many outstanding vendor bills as possible were settled in order to reduce potential risks associated with a delayed introduction and to simplify balance transfers. 25 200
As a result of balance sheet shortening and only slightly lower equity as of the balance sheet date, the equity ratio rose from 62.9% as of December 31, 2007 to 63.8% as of the half-year balance sheet date. 10 15 100
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Reflecting the structure of the Company, investments in tangible assets are insignificant. Accordingly, investments in tangible assets in the first half of the year came to only 3 1.3 million (H1 2007: 3 0.9 million). However, investments in intangible assets climbed sharply compared to the same period of the previous year. Along with expenditures – also made in the previous year – for the Group's development projects in the Substrate Bonder and C4NP segments, investments were also made in the new SAP ERP System. In addition, in the first half of the year SUSS MicroTec AG used excess liquidity as of December 31, 2007 to purchase corporate bonds worth 3 10.5 million (H1 2007: 3 0.0 million), of which 3 3.0 million had already been sold by the balance sheet date.
In the first half of the 2008 fiscal year, the Group's individual companies had an average of 732 employees (H1 2007: 770 employees). This decline resulted from the sale of the Device Bonder division in July 2007. As of the half-year balance sheet date, the employees were distributed among various divisions as follows: 600 700
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Worldwide high-tech business activity gives rise to general and current risks for the Company. The Management Board has put appropriate measures into place to monitor risks in order to identify in good time trends that constitute a threat to the SUSS MicroTec Group's continued existence.
A distinction is made in risk monitoring between general economic risks and industry and operating risks.
The Company has identified as general economic risks underlying political conditions, prices of energy and raw materials, cyclical market fluctuations and market development, market positioning and dependence on individual know-how holders. These risks were outlined in the risk report in the Company's Annual Report for 2007.
No fundamental changes in the risks and opportunities described in the latest Annual Report occurred in the first half of the current fiscal year.
The SUSS MicroTec Group sees operating risks as the repercussions on the assets and earnings position of any write-downs in the consolidated balance sheet made necessary by new technological developments by the competition. Other operating risks are price pressure and exchange rate developments, access to capital borrowing and interest-rate risks along with legal risks, especially liability. The last Annual Report included detailed statements on all of these points.
With one exception no fundamental changes to risks and opportunities in connection with operating risks occurred in the first half of 2008. As stated in the last Annual Report, new technological developments by the competition could make parts of the product portfolio and with them part of the Group's future earnings potential obsolete if new technologies were to offer faster, more efficient or less expensive solutions to the same problem. This risk could, especially in the valuation of capitalized development work, make unscheduled value adjustments necessary in
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|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
the course of future impairment tests. In the first half of 2008 the net book value of capitalized development costs increased by 3 1.9 million (previous year: 3 1.4 million). Thereof a portion of 3 0.7 million is represented by the C4NP project.
In the first half of fiscal year 2008 no risks were identified in the Group that posed a threat to its continued existence as a going concern. It was at no time under threat in respect of either substance or liquidity.
The risk management system outlined in the Annual Report for 2007 was used unchanged in the first half of 2008.
There were no significant events subject to reporting requirements after the close of the interim reporting period.
For material business with related parties please see the relevant section in the Selected Explanatory Notes to SUSS MicroTec AG's Interim Report as of June 30, 2008 (Note 12).
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Both exogenous and endogenous factors will influence SUSS MicroTec's performance in the second half of 2008 and beyond. In this prognosis report, we will briefly explain the factors that we as well as leading industry observers see as vital to the success of our Company.
At the beginning of 2008, the growth forecasts of five leading market research institutes for the chip industry averaged 8%. At the end of July 2008, the British market research company Future Horizon Ltd. confirmed average annual growth in 2008 of between 7 and 10%. While in 2007, strong growth in the supply of memory chip components was accompanied by a sharp decline in price, Future Horizon und IC Insights are already pointing to indications of a resumption of rising chip prices. The basis for this assumption is the sustained high capacity utilization rate at fabrication plants of more than 90% in the first half of 2008.
In the opinion of the leading market research institutes, however, the fundamentally positive mood of the chip industry in 2008 will not affect the readiness to invest in equipment. On the occasion of the SEMICON West trade fair in San Francisco, USA, the SEMI industry association confirmed its estimate that the semiconductor equipment market would shrink by approximately 20% in 2008.
While a decline of approximately 20% is anticipated in wafer processing, the packaging and assembling segment relevant to us is expected to experience an approximately 14% decline in comparison with last year. Based on constantly rising wafer fab utilization since 2007, however, industry experts expect much higher investment readiness for equipment in 2009 and 2010 with average annual growth of 13 and 6%, respectively.
| + SUSS MicroTec AG Interim Report 2008 | |||||||||||||
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As an innovative, specialized equipment manufacturer, SUSS MicroTec has focused primarily on the major markets of microsystems technology (MEMS), advanced packaging, and compound semiconductors.
Expected developments and forecasts in the major markets are discussed in detail on pages 66 to 68 of the 2007 Annual Report. As of mid-2008, no significant changes have been made to estimates regarding the expected development of the major markets. We therefore refer the reader to the discussions in the prognosis report contained in the 2007 Annual Report.
Along with the condition of the markets, the innovative potential of our product lines is critical to our success. In the first half of 2008, our new developments for 3D integration, wafer level redistribution, nanoimprinting, and other applications have already attracted the interest of chip manufacturers. We are therefore very confident that these new processes will be gradually integrated into manufacturing.
Although industry associations and research institutes in the semiconductor industry are making negative forecasts for 2008 and do not foresee a market revival until 2009, SUSS MicroTec has been able to generate very good order entry for three quarters in a row. Therefore, we are maintaining our prognosis for 2008. Excluding unforeseen events and extraordinary developments, we assume moderately positive growth contrary to the overall semiconductor trend with sales and a gross profit margin at the level of the previous year. Furthermore, we expect to generate sufficient cash flow from operations to be able to finance the organic growth of the underlying business.
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This interim report contains information and prognoses that refer to the future development of the SUSS MicroTec Group and its companies. The prognoses represent estimations that we have made based on all of the information available to us at the present time. If the assumptions underlying these prognoses do not occur or if risks – as addressed in the risk report – do arise, the actual results may deviate from the results expected at present.
Garching, Germany, August 11, 2008
The Management Board
Dr. Stefan Schneidewind Michael Knopp Chief Executive Officer (CEO) Chief Financial Officer (CFO)
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| 04/01 – 06/30/2008 | ||
|---|---|---|
| Discontinued | ||
| in T3 | Continuing operations | operations |
| Sales | 32,977 | 1,402 |
| Cost of sales | -20,516 | -1,412 |
| Gross profit | 12,461 | -10 |
| Selling costs | -6,891 | 5 |
| Research and development costs | -1,659 | 1 |
| Administration costs | -4,589 | -41 |
| Other operating income | 855 | 0 |
| Other operating expenses | -1,254 | -7 |
| Analysis of net income from operations (EBIT): | ||
| EBITDA (Earnings before Interest and Taxes, | ||
| Depreciation and Amortization) | 66 | -52 |
| Depreciation and amortization of tangible assets, | ||
| intangible assets and investments in subsidiaries | -1,143 | 0 |
| Net income from operations (EBIT) | -1,077 | -52 |
| Financial income/expense | 197 | 0 |
| Income before taxes | -880 | -52 |
| Income taxes | 265 | 0 |
| Net profit or loss | -615 | -52 |
| Thereof minority interests | 11 | 0 |
| Thereof equity holders of SUSS MicroTec | -626 | -52 |
| Earnings per share | ||
| Basic earnings per share in 3 | ||
| -0.04 | 0.00 | |
| Diluted earnings per share in 3 | -0.04 | 0.00 |
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|---|---|---|---|---|
| Group | operations | Continuing operations | Group | |
| 36,952 | 1,978 | 34,974 | 34,379 | |
| -19,569 | -902 | -18,667 | -21,928 | |
| 17,383 | 1,076 | 16,307 | 12,451 | |
| -7,334 | -583 | -6,751 | -6,886 | |
| -1,682 | -103 | -1,579 | -1,658 | |
| -5,784 | -164 | -5,620 | -4,630 | |
| 370 | 0 | 370 | 855 | |
| -738 | 0 | -738 | -1,261 | |
| 3,622 | 267 | 3,355 | 14 | |
| -1,407 | -41 | -1,366 | -1,143 | |
| 2,215 | 226 | 1,989 | -1,129 | |
| -18 | 49 | 197 | ||
| 2,246 | 208 | 2,038 | -932 | |
| -231 | -69 | -162 | 265 | |
| 2,015 | 139 | 1,876 | -667 | |
| 139 | 0 | 139 | 11 | |
| 1,876 | 139 | 1,737 | -678 | |
| 0.11 | 0.01 | 0.10 | -0.04 | |
| 0.11 | 0.01 | 0.10 | -0.04 | |
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| 01/01 – 06/30/2008 | ||
|---|---|---|
| Discontinued | ||
| in T3 | Continuing operations | operations |
| Sales | 67,471 | 2,197 |
| Cost of sales | -40,479 | -2,141 |
| Gross profit | 26,992 | 56 |
| Selling costs | -13,121 | -7 |
| Research and development costs | -3,592 | 0 |
| Administration costs | -9,418 | -81 |
| Other operating income | 1,627 | 0 |
| Other operating expenses | -1,951 | 2 |
| Analysis of net income from operations (EBIT): | ||
| EBITDA (Earnings before Interest and Taxes, | ||
| Depreciation and Amortization) | 2,711 | -30 |
| Depreciation and amortization of tangible assets, | ||
| intangible assets and investments in subsidiaries | -2,174 | 0 |
| Net income from operations (EBIT) | 537 | -30 |
| Financial income/expense | -58 | 0 |
| Income before taxes | 479 | -30 |
| Income taxes | -116 | 0 |
| Net profit or loss | 363 | -30 |
| Thereof minority interests | -7 | 0 |
| Thereof equity holders of SUSS MicroTec | 370 | -30 |
| Earnings per share | ||
| Basic earnings per share in 3 | 0.02 | 0.00 |
| Diluted earnings per share in 3 | 0.02 | 0.00 |
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| Group | operations | Continuing operations | Group | |
| 76,364 | 3,486 | 72,878 | 69,668 | |
| -42,378 | -1,812 | -40,566 | -42,620 | |
| 33,986 | 1,674 | 32,312 | 27,048 | |
| -13,112 | -1,000 | -12,112 | -13,128 | |
| -3,575 | -141 | -3,434 | -3,592 | |
| -10,855 | -318 | -10,537 | -9,499 | |
| 675 | 0 | 675 | 1,627 | |
| -1,000 | -9 | -991 | -1,949 | |
| 8,927 | 288 | 8,639 | 2,681 | |
| -2,808 | -82 | -2,726 | -2,174 | |
| 6,119 | 206 | 5,913 | 507 | |
| 23 | -84 | 107 | -58 | |
| 6,142 | 122 | 6,020 | 449 | |
| -632 | -40 | -592 | -116 | |
| 5,510 | 82 | 5,428 | 333 | |
| 148 | 0 | 148 | -7 | |
| 5,362 | 82 | 5,280 | 340 | |
| 0.00 | 0.32 | 0.02 | ||
| 0.32 | ||||
| 0.31 | 0.00 | 0.31 | 0.02 |
| + SUSS MicroTec AG Interim Report 2008 | ||||||||||||
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| ASSETS | ||
|---|---|---|
| in T3 | 06/30/2008 | 12/31/2007 |
| Non-current assets | 60,451 | 58,130 |
| Intangible assets | 22,765 | 19,483 |
| Goodwill | 21,515 | 21,961 |
| Tangible assets | 5,472 | 5,049 |
| Other investments | 5 | 5 |
| Current tax assets | 619 | 619 |
| Other assets | 585 | 519 |
| Deferred tax assets | 9,490 | 10,494 |
| Current assets | 99,467 | 105,000 |
| Inventories | 58,174 | 53,750 |
| Accounts receivable | 20,189 | 25,582 |
| Other financial assets | 1,363 | 3,023 |
| Securities | 7,529 | 2 |
| Current tax assets | 1,069 | 847 |
| Cash and cash equivalents | 9,918 | 20,092 |
| Other assets | 1,225 | 1,704 |
| Total assets | 159,918 | 163,130 |
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| Liabilities & shareholde rs' equity in T3 |
06/30/2008 | 12/31/2007 |
|---|---|---|
| Equity | 102,021 | 102,568 |
| Total equity attributable to shareholders | ||
| of SUSS MicroTec AG | 101,751 | 102,291 |
| Subscribed capital | 17,019 | 17,019 |
| Reserves | 88,013 | 87,383 |
| Accumulated other comprehensive income | -3,281 | -2,111 |
| Minority interests | 270 | 277 |
| Non-current liabilities | 18,181 | 19,309 |
| Pension plans and similar commitments | 2,722 | 2,738 |
| Provisions | 729 | 737 |
| Financial debt | 9,600 | 9,255 |
| Other financial liabilities | 49 | 51 |
| Deferred tax liabilities | 5,081 | 6,528 |
| Current liabilities | 39,716 | 41,253 |
| Provisions | 2,229 | 2,922 |
| Tax liabilities | 2,124 | 2,213 |
| Financial debt | 4,306 | 3,184 |
| Other financial liabilities | 4,219 | 4,089 |
| Accounts payable | 5,714 | 8,828 |
| Other liabilities | 21,124 | 20,017 |
| Total liabilities & shareholders' equity | 159,918 | 163,130 |
| + SUSS MicroTec AG Interim Report 2008 | |||||||||||||
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| in T3 | 01/01 – 06/30/2008 |
01/01 – 06/30/2007 |
|---|---|---|
| Net profit or loss (after taxes) | 333 | 5,510 |
| Amortization of intangible assets | 1,410 | 1,753 |
| Depreciation of tangible assets | 764 | 1,055 |
| Profit or loss on disposal of intangible and tangible assets | 15 | 101 |
| Change of reserves on inventories | -140 | 826 |
| Change of reserves for bad debts | -24 | 15 |
| Non-cash stock based compensation | 290 | 247 |
| Non-cash income from the reversal of provisions | -6 | -63 |
| Non-cash interest expenses from increase of convertible debt | 8 | 10 |
| Other non-cash effective income and expenses | 1,010 | -495 |
| Change in inventories | -5,773 | 2,062 |
| Change in accounts receivable | 4,978 | 3,472 |
| Change in other assets | 353 | -823 |
| Change in pension provisions | -16 | 22 |
| Change in accounts payable | -2,900 | -1,902 |
| Change in other liabilities and other provisions | 1,099 | -11,405 |
| Change of deferred taxes | -443 | -354 |
| Cash flow from operating activities – | ||
| continuing and discontinued operations | 958 | 31 |
| Cash flow from operating activities – continuing operations | 702 | 661 |
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| in T3 | 01/01 – 06/30/2008 |
01/01 – 06/30/2007 |
|---|---|---|
| Disbursements for tangible assets | -1,307 | -896 |
| Disbursements for intangible assets | -5,080 | -3,224 |
| Purchases of current available-for-sale securities | -10,524 | 0 |
| Proceeds from sale of current available-for-sale securities | 2,997 | 0 |
| Proceeds from disposal of intangible and tangible assets | 10 | 0 |
| Proceeds from non-current assets held for sale | 1,498 | 0 |
| Cash flow from investing activities – continuing and discontinued operations |
-12,406 | -4,120 |
| Cash flow from financing activities – continuing and discontinued operations |
-13,904 | -4,095 |
| Increase of bank loans | 0 | 0 |
| Repayment of bank loans | -549 | -912 |
| Repayment of convertible bond | 0 | 0 |
| Change in current bank liabilities | 2,040 | 681 |
| Change in other financial debt | -24 | -49 |
| Proceeds from issuance of common stocks | 0 | 13 |
| Cash flow from financing activities – continuing and discontinued operations |
1,467 | -267 |
| Cash flow from financing activities – continuing operations | 1,467 | -316 |
| Adjustments to funds caused by exchange-rate fluctuations | -193 | -209 |
| Change in cash and cash equivalents | -10,174 | -4,565 |
| Funds at beginning of the year | 20,092 | 20,459 |
| Funds at end of the period | 9,918 | 15,894 |
| Cash flow from operating activities includes: | ||
| Interest paid during the period | 315 | 247 |
| Interest received during period | 320 | 280 |
| Tax paid during the period | 312 | 611 |
| Tax refunds during the period | 468 | 347 |
| + SUSS MicroTec AG Interim Report 2008 | ||||||||||||
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| in T3 | Subscribed capital |
Additional paid-in capital |
|
|---|---|---|---|
| As of 01 January 2007 | 17,007 | 91,573 | |
| Issuance of shares: Exercise of stock options | 5 | 8 | |
| Issuance of subscription rights | 247 | ||
| Net profit loss or loss | |||
| Unrealized loss from securities net of tax | |||
| Foreign currency adjustment | |||
| As of 30 June 2007 | 17,012 | 91,828 | |
| As of 01 January 2008 | 17,019 | 92,212 | |
| Issuance of subscription rights | 290 | ||
| Net profit loss or loss | |||
| Foreign currency adjustment | |||
| As of 30 June 2008 | 17,019 | 92,502 |
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| Minority interests |
Total equity attributable to shareholders of Suss MicroTec AG |
Accumulated other comprehensive income |
Retained earnings |
Earnings reserve |
|---|---|---|---|---|
| 163 | 98,992 | -354 | -9,667 | 433 |
| 13 | ||||
| 247 | ||||
| 148 | 5,362 | 5,362 | ||
| -2 | -2 | |||
| -189 | -189 | |||
| 311 104,734 |
104,423 | -545 | -4,305 | 433 |
| 277 102,568 |
102,291 | -2,111 | -5,262 | 433 |
| 290 | ||||
| -7 | 340 | 340 | ||
| -1,170 | -1,170 | |||
| 270 | 101,751 | -3,281 | -4,922 | 433 |
| + SUSS MicroTec AG Interim Report 2008 | |||||||||||||
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Segment information by business segment
| Lithography | Substrate Bonder | Test Systems | ||||
|---|---|---|---|---|---|---|
| in T3 | 6M/2008 | 6M/2007 | 6M/2008 | 6M/2007 | 6M/2008 | 6M/2007 |
| External sales | 42,819 | 43,210 | 8,709 | 9,903 | 12,735 | 12,371 |
| Internal sales | 0 | 0 | 0 | 0 | 0 | 0 |
| Total sales | 42,819 | 43,210 | 8,709 | 9,903 | 12,735 | 12,371 |
| Result per segment | 6,964 | 8,279 | -1,084 | -541 | -1,117 | -4 |
| Significant non-cash items | -891 | -663 | -175 | -173 | -546 | -109 |
| Segment assets | 64,304 | 58,148 | 25,191 | 18,392 | 16,705 | 17,030 |
| – thereof goodwill | 13,599 | 13,599 | 0 | 0 | 3,911 | 4,259 |
| Unallocated assets | ||||||
| Total assets | ||||||
| Segment liabilities | -20,052 | -12,970 | -3,960 | -3,076 | -4,294 | -3,618 |
| Unallocated liabilities | ||||||
| Total liabilities | ||||||
| Depreciation and amortisation | 1,149 | 1,415 | 572 | 621 | 187 | 139 |
| – thereof scheduled | 1,149 | 1,415 | 572 | 621 | 187 | 139 |
| – thereof impairment loss | 0 | 0 | 0 | 0 | 0 | 0 |
| Capital expenditure | 1,432 | 866 | 1,849 | 1,566 | 261 | 198 |
| Average workforce during the year | 359 | 361 | 118 | 107 | 158 | 156 |
| Sales | Capital expenditure | Assets | ||||
|---|---|---|---|---|---|---|
| in T3 | 6M/2008 | 6M/2007 | 6M/2008 | 6M/2007 | 6M/2008 | 6M/2007 |
| Europe | 25,624 | 24,664 | 4,230 | 1,934 | 85,551 | 75,949 |
| North America | 16,526 | 24,319 | 2,008 | 1,909 | 38,935 | 37,572 |
| Japan | 7,672 | 7,468 | 66 | 60 | 2,831 | 5,508 |
| Rest of Asia | 19,846 | 19,906 | 15 | 39 | 710 | 586 |
| Rest of world | 0 | 7 | 68 | 178 | 2,619 | 3,094 |
| Consolidation effects | 0 | 0 | 0 | 0 | -2,531 | -3,636 |
| Total | 69,668 | 76,364 | 6,387 | 4,120 | 128,115 | 119,073 |
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| Continuing | Discontinued | Consolidation | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Others | operations | operations | effects | Total | ||||||
| 6M/2008 | 6M/2007 | 6M/2008 | 6M/2007 | 6M/2008 | 6M/2007 | 6M/2008 | 6M/2007 | 6M/2008 | 6M/2007 | |
| 3,208 | 7,394 | 67,471 | 72,878 | 2,197 | 3,486 | – | – | 69,668 | 76,364 | |
| 2,660 | 3,080 | 2,660 | 3,080 | 0 | 0 | -2,660 | -3,080 | 0 | 0 | |
| 5,868 | 10,474 | 70,131 | 75,958 | 2,197 | 3,486 | -2,660 | -3,080 | 69,668 | 76,364 | |
| -4,226 | -1,773 | 537 | 5,961 | -30 | 158 | – | – | 507 | 6,119 | |
| -247 | 209 | -1,859 | -736 | -162 | 206 | – | – | -2,021 | -530 | |
| 21,389 | 19,179 | 127,589 | 112,749 | 526 | 6,324 | – | – | 128,115 | 119,073 | |
| 4,005 | 4,762 | 21,515 | 22,620 | 0 | 0 | – | – | 21,515 | 22,620 | |
| 31,803 | 30,180 | |||||||||
| 159,918 | 149,253 | |||||||||
| -3,723 | -3,416 | -32,029 | -23,080 | -616 | -3,149 | – | – | -32,645 | -26,229 | |
| -25,252 | -18,290 | |||||||||
| -57,897 | -44,519 | |||||||||
| 266 | 551 | 2,174 | 2,726 | 0 | 82 | – | – | 2,174 | 2,808 | |
| 266 | 551 | 2,174 | 2,726 | 0 | 82 | – | – | 2,174 | 2,808 | |
| 0 | 0 | 0 | 0 | 0 | 0 | – | – | 0 | ||
| 2,845 | 1,465 | 6,387 | 4,095 | 0 | 25 | – | – | 6,387 | 4,120 | |
| 97 | 94 | 732 | 718 | 0 | 52 | – | – | 732 | 770 | |
| + SUSS MicroTec AG Interim Report 2008 | |||||||||||||
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to the Interim Report of SUSS MicroTec AG as of June 30, 2008
The consolidated financial statements of SUSS MicroTec AG as of December 31, 2007 were prepared in accordance with International Financial Reporting Standards (IFRSs) issued by the International Accounting Standards Board (IASB) and valid as of the balance sheet date. The interim Group financial statements as of June 30, 2008, which have been prepared in accordance with International Accounting Standard (IAS) 34 "Interim Financial Reporting", have been drawn up using the same accounting methods as in the 2007 Group financial statements.
All interpretations of the International Financial Reporting Interpretations Committee (IFRIC), which are mandatory as of June 30, 2008 have also been applied.
For additional information on the individual accounting methods applied, please refer to the consolidated financial statements of SUSS MicroTec AG as of December 31, 2007.
The interim financial statements were neither audited by the group's auditors, KPMG Deutsche Treuhand-Gesellschaft, Aktiengesellschaft, Wirtschaftsprüfungsgesellschaft, nor did they undergo an auditing review.
All amounts are indicated in thousands of euros (T3) unless otherwise noted.
The financial statements of SUSS MicroTec AG and all of the major companies for which there is a group control option according to the control principle, irrespective of the level of participating interest, are included in the consolidated financial statements. With respect to the consolidated financial statements as of December 31, 2007, there were no changes within the consolidated group.
By purchase contract dated 16 July 2007, SUSS MicroTec AG sold its business with Device Bonders. Under an asset deal, all material assets and liabilities of the Device Bonder business of Suss MicroTec S.A.S. were sold. Parties to the purchase contract agreed, that Suss MicroTec S.A.S. is entitled to realize the backlog of Device Bonders as existing at Closing. Out of this realisation the Group generated revenues of 0.8 Mio. 3 in the first quarter, that is shown under "Discontinued operations" in the Consolidated Income Statement.
SUSS MicroTec AG expects the complete realisation of the existing Device Bonder backlog latest until the end of the third quarter of 2008.
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In the first quarter, SUSS MicroTec AG purchased available for sale securities for about 3 7.5 million using its liquidity surplus as at 31 December 2007. The securities concerned are corporate bonds bearing variable interest linked to EURIBOR. The securities purchased are all from corporations with an investment grade rating. The securities have been measured at fair value. Any fluctuations in the market price are recorded under equity in accumulated other comprehensive income and therefore do not affect profit and loss.
As in the last quarter of the prior year, SUSS MicroTec AG converted further portions of its intragroup foreign currency loans to Suss MicroTec Inc. into loans with an indefinite term. In accordance with IAS 21, instead of presenting the effects from the measurement as at the balance sheet date in the income statement, the company now presents them in accumulated other comprehensive income. Furthermore, SUSS MicroTec AG has converted a portion of the existing indeterminate loan to Suss MicroTec Inc. into equity. The debt-/equity-ratio is such as to optimise the tax deductibility of the interest expense at this company.
By contract dated 8 May 2008, SUSS MicroTec AG contributed its 100% interest in Image Technology Inc. to SUSS MicroTec Inc., whose sole shareholder is also SUSS MicroTec AG. The background to this transaction is the further optimisation of Group's tax structure. The direct participation of SUSS MicroTec Inc. in Image Technology Inc. created the precondition for a tax-consolidated Group in the USA. As a result, the taxable income of Image Technology Inc. for purposes of Federal Tax, that represents the major part of the tax payable, is attributed to SUSS MicroTec Inc.
There were in the interim reporting period no other events or matters affecting assets, debts, equity, period result or cash flow that were unusual in terms of their nature, extent or frequency.
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Differently to the treatment in the consolidated financial statements as at 31 December 2007, SUSS MicroTec AG has adjusted the presentation of the employee numbers in the segment reporting. In the present interim reporting period the employees in the Group's administrative areas have been allocated for the first time to the segment for which they are mostly active. Previously these employees had been allocated to the segment "Other". The presentation in the corresponding prior year period has been adjusted.
As a further change in the segment reporting, an adjustment has been made in the determination of the segment result, which now also contains income and expenses from the translation of foreign currency and from disposals of assets. Both effects on results have been allocated to the segment, that determined these effects. In total, the results of the segments now correspond to the operating result, i.e. EBIT, of the Group. Here, too, the presentation of the corresponding prior year period has been adjusted.
If estimates were made within the scope of the interim reporting, they shall remain essentially unchanged in methodology within the fiscal year and in the fiscal year comparison.
In contrast to the method of approach at year-end, the 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 expected for the entire fiscal year.
SUSS MicroTec AG currently assumes that the annual income tax rate it will pay will be in the order of magnitude of the expected income tax rate of about 28%. The revaluation effects on previously adjusted deferred tax assets that had a favourable effect on the income tax rate in prior years are not expected to recur in the reporting year.
Furthermore, there were no changes subject to reporting requirements that have a significant impact on the current interim reporting period.
Foreword + Highlights + Investor Relations + Interim Management Report + Interim Financial Statements + Service +
No issues, buybacks or repayments were effected during the reporting period, either for debenture bonds or for other equity securities.
No dividends were paid out or proposed for disbursement during the reporting period.
There were no significant events subject to reporting requirements after the close of the interim reporting period.
There are no contingent claims. There were no significant changes in contingent liabilities with respect to the reporting time frame of December 31, 2007.
The undiluted earnings per share are determined by dividing the net income for the period accruing to the shares (after minority interests) by the average number of shares.
To determine the diluted earnings per share, the profit for the period to be attributed to the shareholders (after minority interests), as well as the weighted average of the shares in circulation, must be adjusted for the effects of all potentially diluting shares.
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In the first half of the financial year 2007, the Group was affected by the disclosure obligations under IAS 24 "Related party disclosures" with respect to business relationships entertained with members of the supervisory board of SUSS MicroTec AG and members of their immediate families.
Various group companies (Suss MicroTec Lithography GmbH, Suss MicroTec Test Systems GmbH, Suss MicroTec Inc.) rent their premises from Süss Grundstücksverwaltungs GbR or Grundstücksgesellschaft Hungar Mountains, USA. In the first half of the year, total rental payments of T3 889 (6M 2007: T3 898) were made.
In the first half of 2008, payments totalling T3 237 (6M: T3 221) were made to the Süss family in the form of salaries and pensions.
Mr Peter Heinz, who was a member of the supervisory board until 19 Juni 2008, has since 2007 been a member of the board of Image Technology Inc., a 100% subsidiary of Süss MicroTec AG. Mr Heinz receives an annual remuneration of T3 7 for his activity.
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To the best of our knowledge, and in accordance with the applicable reporting principles for interim financial reporting, the interim consolidated financial statements give a true and fair view of assets, liabilities, financial position and profit or loss of the Group, and the interim management report of the Group 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 for the remaining months of the financial year.
Garching, Germany, 11 August 2008
Dr. Stefan Schneidewind Michael Knopp
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44
Foreword +
| August, 12 | 2008 Interim Report |
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| September, 10 | 8th Munich Small and Mid-cap Conference, Munich |
| November, 5 | 2008 Nine-month Report |
| November, 10 – 12 | German Equity Forum, Frankfurt am Main |
| Published by: | SUSS MicroTec AG |
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| Edited by: | Investor Relations, Finance |
| Concept and design: | IR-One AG & Co., Hamburg |
| Printer: | Hartung Druck + Medien GmbH, Hamburg |
| Translation: | EnglishBusiness GbR, Hamburg |
Investor Relations Fon: +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 on current 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 forwardlooking statement.
SUSS MicroTec AG Schleißheimer Strasse 90 85748 Garching, Germany Fon: +49 (0)89-32007-0 e-mail: [email protected]
www.suss.com
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