BE Semiconductor Industries Reports Second Quarter 1998 Results

Business Wire, August 6, 1998

DRUNEN, The Netherlands--(BUSINESS WIRE)--August 6, 1998--

Final 1998 Second Quarter Results Slightly Above Pre-Announced

Results

BE Semiconductor Industries N.V. (Nasdaq: BESIF; Amsterdam Stock Exchange: BESI; Frankfurt Stock Exchange: BSI), a leading manufacturer of assembly equipment for the semiconductor industry, today announced its financial results for the second quarter and six months ended June 30, 1998.

1997 financial data has also been prepared on a pro forma basis to reflect the contribution of the Company's Leadframe and Connector Plating Services ("the Leadframes Business") to Possehl BESI Electronics N.V. ("PBE"), a joint venture in which the company owns 30%.

Net sales for the second quarter of 1998 were NLG 86.8 million (US$ 42.7 million), a slight increase compared to net sales of NLG 84.4 million (US$ 41.5 million) in the first quarter of 1998. Pro forma net sales for the second quarter of 1997 were NLG 87.9 million (US$ 43.2 million). The Company's net loss for the second quarter of 1998 amounted to NLG 1.8 million (US$ 0.9 million), compared to 1998 first quarter net income of NLG 2.5 million (US$ 1.2 million) and net income of NLG 4.8 million (US$ 2.4 million) in the second quarter of 1997. The net loss per share was NLG 0.07 (US$ 0.03) for the second quarter of 1998, compared to earnings per share of NLG 0.10 (US$ 0.05) in the first quarter of 1998 and NLG 0.18 (US$ 0.09) in the year-ago quarter.

Commenting on these results, Richard Blickman, President and Chief Executive Officer, said, "As discussed in our preliminary earnings announcement on July 7, 1998, we are disappointed with the results for the second quarter. The net loss for the quarter amounted to NLG 1.8 million including a NLG 1.4 million foreign currency loss related to PBE. BE Semiconductor's packaging and plating systems business essentially broke even on an operating income basis during the quarter. Consistent with semiconductor industry trends, our second quarter results were negatively affected by adverse market conditions, particularly in Asia. These conditions reduced demand for packaging and plating systems and especially for leadframe products."

Net sales for the six months ended June 30, 1998 increased 4.1% to NLG 171.2 million (US$ 84.2 million), compared to pro forma net sales of NLG 164.5 million (US$ 80.9 million) in the prior year period. The Company's net income for the first six months of 1998 was NLG 0.7 million (US$ 0.4 million), compared to net income of NLG 8.9 million (US$ 4.4 million) for the first half of 1997. Earnings per share were NLG 0.03 (US$ 0.01) for the first six months of 1998, compared to earnings per share of NLG 0.34 (US$ 0.17) for the first six months of 1997.

The Company noted that the backlog at June 30, 1998 was NLG 149.2 million, a 5.4% decline in comparison to the backlog of NLG 157.7 million at March 31, 1998, but up 11.9% in comparison to NLG 133.3 million at December 31, 1997. "The book-to-bill ratio for the first half of 1998 was 1.09, compared to 1.25 for the first half of 1997. However, due to ongoing weakness in the global markets for semiconductors, related capital equipment and leadframe products, we continue to be cautious about forecasting any improvement in our operating results during the second half of 1998," Mr. Blickman stated.

Gross profit for the second quarter of 1998 was NLG 28.6 million (US$ 14.1 million), compared to NLG 31.0 million (US$ 15.2 million) in the same period of 1997. As a percentage of net sales, gross profit was 32.9% in the 1998 second quarter and equalled the 1998 first quarter. Gross margin was 35.2% in the 1997 second quarter. The gross margin decline in the 1998 second quarter as compared to the prior year period was principally due to price competition, product mix and production cost overruns on certain orders for new packaging equipment.

The Company's operating loss for the second quarter of 1998 was NLG 0.4 million (US$ 0.2 million) compared to a pro forma operating profit of NLG 2.5 million (US$ 1.2 million) in the 1997 period. As a percentage of net sales, the Company's operating loss was 0.4% in the second quarter of 1998 compared to an operating profit of 0.1% in the first quarter of 1998 and 2.9% in the 1997 period. The decrease in the 1998 period was mainly due to lower gross margins and higher operating expenses relative to net sales. Selling, general and administrative expenses increased as a percentage of net sales to 24.0% in the second quarter of 1998 as compared to 22.3% in the first quarter of 1998 and 21.7% in the 1997 period.

PBE contributed a loss of NLG 1.4 million (US$ 0.7 million) to the Company's net loss in the second quarter of 1998, including an after tax foreign currency loss of NLG 1.4 million, as compared to a contribution of net earnings of NLG 2.3 million (US$ 1.1 million) in the first quarter of 1998, including an after tax foreign currency gain of NLG 0.3 million.

At June 30, 1998, the Company's cash totalled NLG 52.7 million and exceeded total debt and capital lease obligations of NLG 37.6 million. At June 30, 1998, shareholders' equity was NLG 284.4 million.