ASMI Statutory annual report 2015 - ASM International

ASMI Statutory annual report 2015 - ASM International

STATUTORY ANNUAL REPORT 2015 BEYOND THE LAYERS ASMI STATUTORY ANNUAL REPORT 2015 ABOUT TABLE OF CONTENTS OUR STRATEGY Mission, strategy and foc...

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STATUTORY ANNUAL REPORT 2015

BEYOND THE LAYERS

ASMI STATUTORY ANNUAL REPORT 2015

ABOUT

TABLE OF CONTENTS

OUR STRATEGY Mission, strategy and focus areas Value creation

23 26

OUR INNOVATION AT WORK

Profile4 At a glance 6 Letter to shareholders 9 Beyond the layers 12

People29 Research & development 32 Breakthrough technologies 34 Chip making 36 Markets and products 39 Patents and trademarks 42 Operational excellence 43

THE WORLD IN WHICH WE OPERATE Global trends Corporate responsibility

18 20

SHAREHOLDERS

PERFORMANCE REVIEW

FINANCIAL & NON-FINANCIAL RESULTS Financial performance CR performance

46 63

FINANCIAL STATEMENTS

CORPORATE GOVERNANCE

RISK MANAGEMENT Risk management approach Risk categories and factors

93 96

CONSOLIDATED FINANCIAL STATEMENTS COMPANY FINANCIAL STATEMENTS

FINANCIAL STATEMENTS

Corporate governance principles 73 Management Board 74 Supervisory Board 78 Supervisory Board report 84 Shares and shareholders’ rights 87 External auditor 91 Declarations92

66 67 69 70 71

GOVERNANCE

GOVERNANCE

Share listing Shareholder returns Key dates Key figures Contact information

SHAREHOLDERS

SHAREHOLDER INFORMATION

PERFORMANCE REVIEW

OUR COMPANY

STRATEGY & BUSINESS

STRATEGY & BUSINESS

ABOUT

2

ASMI STATUTORY ANNUAL REPORT 2015

3

ABOUT

ABOUT

STRATEGY & BUSINESS

NET SALES

670

EMPLOYEES

EUR million

1,597

PERFORMANCE REVIEW

in front-end operations

BASED IN

3 14

CONTINENTS AND SHAREHOLDERS

COUNTRIES

Profile4 At a glance 6 Letter to shareholders 9 Beyond the layers 12

THE WORLD IN WHICH WE OPERATE Global trends Corporate responsibility

18 20

GOVERNANCE

OUR COMPANY

FINANCIAL STATEMENTS

ASMI STATUTORY ANNUAL REPORT 2015 | Profile |

SEMICONDUCTOR EQUIPMENT AND SERVICES

SMALLER FASTER CHEAPER CHIPS Semiconductor chips enable technological advances for an expanding number of applications. The cloud, smart vehicles, the desire to be fully connected at all times for email, phone and the internet. All these factors are driving the demand for smaller, faster, cheaper chips. The semiconductor industry is committed to reducing the size of transistors, so that the transistors will be faster, and that more of them fit in the same physical space. For over 50 years, following the trend called Moore’s Law, the average number of components per integrated semiconductor device, at the optimum cost-per-component, has increased by a factor of two every 18 to 24 months. Currently, the most advanced microprocessor chips include over 3 billion transistors.

SHAREHOLDERS

Our technology is an enabler of the deposition of the extremely thin material layers that create these advanced chips. As a driver of innovation, we have established a leading position in the fast-growing market of Atomic Layer Deposition (ALD), and also provide equipment for PECVD, epitaxy, and vertical furnace applications. Our portfolio of ALD products is an enabling technology for our customers, helping them to build faster, cheaper and more powerful semiconductors.

PERFORMANCE REVIEW

We design, manufacture and sell equipment and services to our customers for the production of semiconductor devices, or  integrated circuits (ICs). Semiconductor ICs, often called chips, are a key technology that enable the advanced electronic products used by consumers and businesses everywhere. Our innovative technologies are used by the most advanced semiconductor manufacturers, primarily for the deposition of thin films.

STRATEGY & BUSINESS

We are a global supplier of semiconductor wafer processing equipment and process solutions mainly for the semiconductor industry, with operations in 14 countries. Our customers include the world’s top semiconductor device manufacturers. Since 1968 we have helped the industry to create smaller, cheaper and more powerful microchips. Our focus is on continuing to help our customers develop their technology roadmap, by expanding our broad portfolio of innovative technologies and products.

ABOUT

PROFILE

4

COMPLEX PROCESSES

GOVERNANCE

The process of making semiconductor ICs is highly complex and very costly. Semiconductor fabrication plants, called fabs, house a large set of wafer processing equipment which performs a series of process steps on round silicon wafers, which are typically 300mm in diameter. The equipment is operated in cleanrooms that filter the air to avoid small particles that could negatively affect the circuitry on the chips. There are many chips on each wafer. Most of our systems are designed for deposition processes when thin films, or layers, of various materials are grown or deposited onto the wafer. After testing the individual circuits for correct performance, the chips on the wafer are separated and then packaged in a protective housing before ultimately becoming part of a set of IC chips on circuit boards within an electronic product.

FINANCIAL STATEMENTS

ASMI STATUTORY ANNUAL REPORT 2015 | Profile |

5

ABOUT

SUPPLYING THE WORLD’S TOP MANUFACTURERS

THE VALUE CHAIN IN OUR INDUSTRY UNIVERSITY RESEARCH/R&D INSTITUTES

INDUSTRY MATERIALS SUPPLIERS

FAB EQUIPMENT SUPPLIERS

CONSUMERS

STRATEGY & BUSINESS

Our innovative technologies and products are used by all of the world’s top semiconductor manufacturers, primarily for the deposition of thin films. We are a truly global company. Based in 14 countries, we benefit from the advantages of bringing together the best brains in the world to help our customers develop their technology roadmap.

SEMICONDUCTOR suPPLIERS

Enabling the industry to move to smaller line widths and better transistors that use new materials, our discoveries result in greater efficiencies for businesses and greater opportunities for everyone.

SHAREHOLDERS

We focus primarily on equipment and process solutions for the deposition of thin films. Our core strengths are in ALD, epitaxy, plasma enhanced chemical vapor deposition (PECVD), low-pressure chemical vapor deposition (LPCVD), and oxidation/diffusion. In order to meet our customers’ needs, we have developed – and are still developing – the deposition technology for many new materials. With this portfolio of established and newer technologies, we are addressing many of the key areas on the semiconductor industry roadmap, including: ››high-k metal gate; ››new applications for advanced FinFET transistors; ››dielectrics for spacer-defined double patterning; ››liners and spacers; ››low-k dielectrics for interconnect; and ››strained silicon.

PERFORMANCE REVIEW

WAFER PROCESSING

Thermal products business unit Research facilities Leuven, Belgium Helsinki, Finland

Singapore, Singapore Plasma products business unit Tokyo, Japan Cheonan, South Korea

FINANCIAL STATEMENTS

Manufacturing

GOVERNANCE

Almere, the Netherlands Phoenix, AZ, US

ASMI STATUTORY ANNUAL REPORT 2015 | At a glance |

ABOUT

AT A GLANCE

6

ORGANIZATION STRUCTURE ASMI organizes its activities in two operating segments, Front-end (wafer processing) and Back-end (assembly and packaging).

STRATEGY & BUSINESS

ASM International NV (ASMI) is a leading supplier of semiconductor wafer processing equipment and process solutions. Our customers include all of the top semiconductor device manufacturers in the world. We help them create faster, cheaper and more powerful semiconductors that bring greater opportunities for people to understand, create and share more.

ASM INTERNATIONAL

ASM

WaFEr proCEssing

ASM PACIFIC tECHNOLOGY ASSEMBLY & PACKAGING SURFACE MOUNT TECHNOLOGY 39.55% ownErship

HIGHLIGHTS** OPERATING RESULT

EUR million

(EBIT) EUR million

NET EARNINGS*

RESULT ON INVESTMENT*

EARNINGS PER SHARE*

EUR million

EUR million

(Diluted) EUR

OPERATIONAL CASH FLOW

CASH

STAFF

EUR million

EUR million

FTE

608 157 * Excluding effects sale ASMPT shares. ** Front-end segment.

44 447

111

2.93 1,597

FINANCIAL STATEMENTS

175

670

GOVERNANCE

NET SALES

EUR million

SHAREHOLDERS

BOOKINGS

PERFORMANCE REVIEW

HEADQUARTERS: ALMERE, THE NETHERLANDS

ASMI STATUTORY ANNUAL REPORT 2015 | At a glance |

7

ABOUT

NET SALES* EUR million

OPERATING RESULT* EUR million

750 750

670

600 600

546 456

452

80

370

73 45

40

150 150

20

2011

2012

2013

2014

2015

OPERATIONAL CASH FLOW* EUR million 175

0

12 2011

2012

2013

500

447 386 312

125

300

79

200

40

50

2015

CASH* EUR million

400

150

2014

100

145 66

1 2011

2012

2013

2014

2015

2011

2012

2013

2014

2015

PERFORMANCE REVIEW

200

100

93

60

300 300

0

111

100

STRATEGY & BUSINESS

450 450

120

* Front-end segment.

SHAREHOLDERS GOVERNANCE FINANCIAL STATEMENTS

ASMI STATUTORY ANNUAL REPORT 2015 | At a glance |

8

ABOUT

KEY FIGURES (EUR million, except per share data and full-time equivalents)

2011

2012

2013 3

2014

2015

Operations: 456

370

452

546

670

Back-end

1,178

1,048

160





Front-end

73

12

45

93

111

Back-end

304

87

(4)





Net earnings (loss) from continuing operations

316

40

(343)

138

157

Net earnings (loss) from discontinued operations





1,405

3



NET EARNINGS (LOSS) FROM OPERATIONS

316

40

1,062

141

157

430

477

109

108

114

1,582

1,500

1,608

1,889

2,076

215

230

312

386

447

Result from operations

Balance sheet: Net working capital 1 Total assets Net cash 2

Backlog: 92

115

176

128

226

198







Front-end

1,631

1,636

1,502

1,635

1,597

Back-end

14,563

15,768







Basic net earnings (loss)

3.52

0.28

16.81

2.23

2.53

Diluted net earnings (loss)

3.27

0.28

16.55

2.20

2.50

Basic

55,210

56,108

63,202

63,510

62,114

Diluted

64,682

56,767

64,196

64,209

62,928

Number of staff: Full-time equivalents:

Per share data: Net earnings (loss) on operations per share:

Weighted average number of shares used in computing per share amounts (in thousands):

Net working capital includes accounts receivable, inventories, other current assets, accounts payable, provision for warranty and accrued expenses and other. Since 2009 Evaluation tools at customers are no longer reported under inventories but under non-current assets. The historical figures have been adjusted for this reclassification. 2 Net cash includes cash and cash equivalents less long-term debt and notes payable to banks. 3 ASMPT (Back-end) was deconsolidated as from March 15, 2013. 1

GOVERNANCE

105

Back-end

SHAREHOLDERS

Front-end

PERFORMANCE REVIEW

Front-end

STRATEGY & BUSINESS

Net sales:

FINANCIAL STATEMENTS

ASMI STATUTORY ANNUAL REPORT 2015 | Letter to shareholders |

ABOUT

LETTER TO SHAREHOLDERS

9

STRATEGY & BUSINESS

Chairman of the Management Board, President and Chief Executive Officer

“AS A LEADER IN THE ALD MARKET OUR COMPANY IS WELL POSITIONED FOR FURTHER GROWTH.”

2015 has been another year of healthy growth for our company. Thanks to continued strong momentum in our ALD business we increased our revenue by solid double digits and again outperformed the broader wafer fab equipment market. We significantly increased investments in R&D during the year. Profits further improved and cash generation was again solid. We increased the dividend and started another share buyback program, while maintaing a strong balance sheet. With the need for ALD further increasing at the next technology node transitions ASMI is well positioned for a continued strong performance.

We stepped up our investments in research and development and raised our staff numbers in R&D by 15% during the year. The operating margin remained at a solid level of almost 17%, despite one-off charges included in R&D related to the write off of the remaining 450 millimeter assets. Net profits increased by 11% in 2015. Working capital remained well under control during the year. Combined with the strong level of profitability, free cash flow1 increased by 33% to EUR 104 million in 2015. Our financial position remains solid. 1

Free cash flow= Net cash flow from operating activities less the sum of capital expenditure, capitalized development expenditure and purchase of intangible assets.

FINANCIAL STATEMENTS

After the strong improvement in 2014 the gross margin further improved by 100 basis points to more than 44% in 2015. We continue to benefit from various efficiency programs that we started in 2013 including new outsourcing initiatives and the migration of a larger part of our supply base to Asia. Successful execution of these programs has contributed to an improved and competitive cost structure as well as structurally increased and more robust gross margins.

GOVERNANCE

Looking back at 2015, conditions in the semiconductor end-markets slowed down in the course of the year. The market for wafer fab equipment ended the year relatively flat, with the first half being stronger than the second half. For the year as a whole Memory was again the strongest segment within the wafer fab equipment market. Our company increased revenue by 14% on a constant currency basis in 2015, which was again driven by the ALD business. ALD now accounts for clearly more than half of our equipment revenue.

SHAREHOLDERS

ANOTHER YEAR OF HEALTHY GROWTH

PERFORMANCE REVIEW

CHARLES D. (CHUCK) DEL PRADO

ASMI STATUTORY ANNUAL REPORT 2015 | Letter to shareholders |

33%

>

ABOUT

“WITH A CONTINUED STRONG LEVEL OF PROFITABILITY, FREE CASH FLOW INCREASED.”

10

FREE CASH FLOW

ALD FIRMLY ESTABLISHED AS A KEY ENABLING TECHNOLOGY

In the more recent years, we have also broadened our customer base beyond the leading device manufacturers. In 2015, for the first time, all of the top 10 semiconductor companies, ranked by capital spending, have adopted our ALD technologies in high-volume manufacturing. In combination with an expanded client base, we have also achieved a more robust and balanced customer mix over the years. Apart from expanding our presence in the Logic-Foundry segment we have built a much stronger exposure and customer relationships in the Memory sector. Our ALD technology for multiple patterning is used by virtually all of the Memory customers and has been a strong growth driver.

We believe that growth prospects for the ALD market remain strong. Further miniaturization, introduction of 3D  device architectures such as next generation FinFET devices and new and complex material integration schemes increase the need for more precise film deposition. We expect that this will in turn continue to drive the demand for ALD at the most advanced technology nodes.

CORPORATE RESPONSIBILITY In 2015 we continued to strengthen Corporate Responsibility (CR) across ASMI and into our supply chain. We raised the bar with our performance objective to EICC (Electronics Industry Citizenship Coalition) Code of Conduct. We validated our progress with external audits, and are driving expanded accountability in our supply chain with our Supplier Code of Conduct and assessment process. We continue to make progress against key CR objectives. We are releasing our second Corporate responsibility report with the release of this Annual report.

FINANCIAL STATEMENTS

Our VF and EPI activities continue to show a healthy contribution to the bottom line. Moreover the increase in our installed base shows a gradually increase in our Spares- and Services business. In the past years, thanks to our leading ALD position, we have been able to build up a stronger relationship with all major Logic, Foundry and Memory players. On the back of this relationship we are now increasing R&D efforts in our other activities, which will create further growth opportunities for the future.

GOVERNANCE

Building on our leadership in ALD remains a key element in our strategy to further grow our company. As reflected by the increase in R&D investments during the year we continue to commit significant resources in  further enhancing our leading platforms and to grow the pipeline of new ALD applications that will help transitioning our industry to the future technology generations.

SHAREHOLDERS

Over the last five years we have positioned our company as a leader in the ALD market. As the number of customers and ALD applications continued to expand we have grown our total revenue by an average annual growth rate of 18% since 2010. The wafer fab equipment market grew by an average annual growth rate barely above 0% during the same period.

PERFORMANCE REVIEW

ALD is now firmly established as a key enabling technology. Today, ALD has become a critical technology for the manufacture of virtually all leading-edge semiconductor devices. The leading customers in our industry have already ramped several device generations based on our ALD equipment – for high-k metal gate applications in Logic and Foundry and for multiple patterning applications in the Memory sector.

STRATEGY & BUSINESS

With the publication of the third quarter results we announced a second consecutive share buyback program, again for an amount of €100 million and to be executed in the 2015-2016 timeframe. This is part of the company’s policy to use excess cash for the benefit of its shareholders. In addition, we remain committed to our policy to pay a sustainable dividend. We will propose to the Annual General Meeting of Shareholders 2016 an ordinary dividend of €0.70 per share, an increase of 17% compared to the dividend of €0.60 paid in 2015.

ASMI STATUTORY ANNUAL REPORT 2015 | Letter to shareholders |

11

ABOUT

ASMPT

OUTLOOK

2016 spending in the Logic and Foundry segment is expected to be driven by the transition to the 10 nanometer technology node. The first investments in 10 nanometer volume manufacturing have started in the early part of  2016, although the ultimate size and timing of this ramp are still uncertain. This node transition in Logic and Foundry is expected to result in a significant increase in the number of single wafer ALD applications.

In NAND Flash a larger part of spending is projected to shift from planar NAND to the new 3D NAND technology. This transition is initially expected to have a mixed impact on the ALD market opportunity. The requirements for patterning are less in 3D NAND. At the same time, our company is engaged with customers in new 3D NAND applications that are expected to start contributing to revenue in 2016 with a growing contribution in the coming years.

GOVERNANCE

As a leader in the ALD market we believe our company is well positioned for further healthy growth. The continued strong performance of ASMI in 2015 strengthens us in our belief that we have taken the right strategic steps over the last years. We would like to thank our employees for their continued dedication and hard work that contributed to the successful results in 2015. We are also grateful for the trust of our customers and the continued support of our shareholders. Our focus remains the creation of sustainable value for our all our stakeholders.

SHAREHOLDERS

The market research firms expect 2016 equipment spending in the DRAM segment to drop by a double digit  percentage compared to the strong level in 2015. At the next technology node, however, the number of  multiple patterning layers is expected to increase further. Our company is well-placed to support DRAM customers in their ever increasing technology and productivity requirements, as soon as equipment demand for the next 1x node starts to pick up.

PERFORMANCE REVIEW

Against the backdrop of an uncertain macro-economic outlook, market research firms have forecasted the wafer fab equipment market to be down by a low- to mid-single-digit percentage in 2016. At the same time, 2016 wafer fab equipment spending is expected to be supported by healthy investments in leading-edge manufacturing capacity. The transition to the most advanced technology nodes continues to enable our customers to produce new semiconductor devices that are smaller, faster and more power efficient. This in turn  will support their customers to bring new and innovative end-products to market such as solid-state drives (SSD) and smartphones with enhanced functionality. Our ALD solutions support our customers to stay on Moore’s law and to transition to the next-technology nodes.

STRATEGY & BUSINESS

ASMPT’s net profits decreased markedly in 2015 following a strong recovery in 2014. At a strategic level, ASMPT reported a number of important achievements. In SMT Solutions the company continued to increase its market share and overtook the number 1 position. In the Back-end Equipment activity, ASMPT strengthened its position in the Advanced Packaging segments. Despite the overall drop in revenue, ASMPT managed to increase gross margins last year due to a strong improvement in SMT and an effective strategy to reduce the volatility of the gross margin in Back-end Equipment.

April 13, 2016 FINANCIAL STATEMENTS

Charles D. (Chuck) del Prado President and Chief Executive Officer

ASMI STATUTORY ANNUAL REPORT 2015 | Beyond the layers |

12

ABOUT STRATEGY & BUSINESS

But let’s take a look beyond these layers. Let us show you how we create value now and how we’re powering the future.

FINANCIAL STATEMENTS

To meet their demands, the world’s top chip manufacturers rely on our state-of-the-art thin layer deposition technology. Our technology is used to make chips that are used to help people to make the most of their lives. From helping them to connect with each other instantly, anytime, anywhere on their portable smart devices, to the intelligence behind new smart vehicles.

GOVERNANCE

Today’s consumers want ever more processing power in smaller and smaller devices so they can benefit from smart technology in all areas of their lives. Helping them to be more productive at work and making their leisure time more rewarding.

SHAREHOLDERS

OUR TECHNOLOGY HELPS CREATE THE WORLD’S MOST ADVANCED SEMICONDUCTOR CHIPS. CHIPS THAT LIE BEHIND THE LATEST TECHNOLOGICAL DEVELOPMENTS THAT ARE CHANGING OUR WORLD.

PERFORMANCE REVIEW

BEYOND THE LAYERS

ASMI STATUTORY ANNUAL REPORT 2015 | Beyond the layers |

ABOUT

BEYOND THE LAYERS

13

STRATEGY & BUSINESS PERFORMANCE REVIEW

Today, we take them for granted but they’re only possible because of the power of the latest semiconductor chips and their potential to keep increasing in power. Technological potential is enabling human potential.

So can anyone say what will happen in the next twenty years? As semiconductor manufacturers produce microchips with ever-greater processing power, what new uses will human beings find for them? How will our lives change? Where will the journey take us? To see into the future, we need to imagine the unimaginable.

FINANCIAL STATEMENTS

But behind this ‘magic’ lies pure science. Our equipment and process technology is a vital link, translating the underlying physics and chemistry into the steps needed to deposit the complex layers in precise locations.

GOVERNANCE

WHO KNEW THAT WE WOULD ONE DAY HAVE SMART PHONES ENABLING US TO RECORD A HIGH QUALITY VIDEO AND INSTANTLY UPLOAD IT TO THE WORLD?

SHAREHOLDERS

THE (UN)IMAGINABLE POTENTIAL

ASMI STATUTORY ANNUAL REPORT 2015 | Beyond the layers |

ABOUT

BEYOND THE LAYERS

14

STRATEGY & BUSINESS PERFORMANCE REVIEW

And you wouldn’t be alone. These advances never cease to amaze us and we are the ones making them happen. Every few years we witness something extraordinary, as the incredible in our R&D labs becomes reality in the form of innovative new technologies.

Helping to create devices that enable us to immerse ourselves in virtual worlds to experience the thrill of walking on the moon or the wonder of travelling to the bottom of the ocean. While providing the innovative technologies that support amazing advances in healthcare. If that’s not incredible, we don’t know what is.

FINANCIAL STATEMENTS

Today, we can deposit layers measured in atoms on advanced transistors measured in nanometers. To put that in perspective, a human hair is 100,000 nanometers in diameter.

GOVERNANCE

YOU WOULD BE AMAZED IF YOU SAW THE INNOVATIONS TAKING PLACE AT THE ATOMIC LEVEL HELPING TO MAKE SEMICONDUCTOR DEVICES EVER SMALLER.

SHAREHOLDERS

THE (IN)CREDIBLE DISCOVERIES

ASMI STATUTORY ANNUAL REPORT 2015 | Beyond the layers |

ABOUT

BEYOND THE LAYERS

15

STRATEGY & BUSINESS PERFORMANCE REVIEW

And that’s only if you counted 24 hours a day without sleep. It’s a mindboggling statistic and yet the numbers just keep getting bigger as chips become more powerful. But if you work in medical robotics or virtual reality gaming, you (or, perhaps, your computer) are familiar with working with huge numbers; in fact you rely on them.

More bits, more bytes. As semiconductor-makers continue to follow Moore’s Law, our technology has to become ever more precise to make computing huge numbers possible. Don’t worry, even if you can’t count the numbers, you can count on our technology to do the job.

FINANCIAL STATEMENTS

Our innovations are used to deposit extremely precise, thin film layers for double patterning technology, which makes it possible to produce cutting-edge chips.

GOVERNANCE

Q. HOW LONG WOULD IT TAKE YOU TO COUNT THE NUMBER OF BITS IN A 256 GIGABIT MEMORY CHIP? A. OVER EIGHT YEARS.

SHAREHOLDERS

THE (UN)COUNTABLE NUMBERS

ASMI STATUTORY ANNUAL REPORT 2015 | Beyond the layers |

ABOUT

BEYOND THE LAYERS

16

STRATEGY & BUSINESS PERFORMANCE REVIEW

Transistors are the basic building blocks of silicon chips that combine to make a system that has the power to perform computing tasks faster than we can comprehend.

The same transistors drive the high tech systems that enable smart power grids, providing us with an extraordinary opportunity to take energy production into a new age of productivity, accessibility, and sustainability benefitting both our economic and our environmental health. Transistors: the invisible power helping to make visions of a sustainable future a reality.

FINANCIAL STATEMENTS

Transistors can be as small as a few dozen atoms across and can control the flow of electricity itself. The most advanced microprocessors now being made use billions of transistors enabling our customers to further reduce the size of their chips.

GOVERNANCE

OUR TECHNOLOGY DEPOSITS THE ULTRA-THIN LAYERS OF MATERIAL NEEDED TO FORM THE BILLIONS OF TRANSISTORS CONTAINED ON THE MOST ADVANCED MICROPROCESSOR CHIPS.

SHAREHOLDERS

THE (IN)VISIBLE POWER

ASMI STATUTORY ANNUAL REPORT 2015 | Beyond the layers |

ABOUT

BEYOND THE LAYERS

17

STRATEGY & BUSINESS PERFORMANCE REVIEW

The smallest transistors currently capable of being manufactured are around the same diameter as six strands of DNA – the very essence of life itself. Smaller transistors help manufacturers fit more of them into the design of their chips increasing their processing power.

GOVERNANCE

TODAY’S MOST ADVANCED TRANSISTORS ARE SMALLER THAN MOST PEOPLE CAN EVEN IMAGINE – ONLY A FEW NANOMETERS ACROSS.

SHAREHOLDERS

THE (IN)TANGIBLE DIMENSIONS

Yet as transistors shrink in width, they are starting to head upwards. They are moving into the third dimension.

Today’s transistors might be too small to see and touch but they are helping to transform the very tangible physical world around us.

FINANCIAL STATEMENTS

As the industry shifts from 2D to 3D chips, our advances will be used in the new devices that will connect the cities of tomorrow. Growing smarter urban environments where people, their homes, devices, vehicles, and offices can connect, collect and exchange data.

ASMI STATUTORY ANNUAL REPORT 2015 | Global trends |

STRATEGY & BUSINESS

We live in a society that is increasingly connected. From the way we interact and travel, to the cities we inhabit, we rely on electronic devices to help us communicate, navigate, learn and play. The next phase in this journey is the move towards the Internet of Things, where devices connect online and share data. As objects become ‘smarter’ and provide us with more information about our world, we will see greater connectivity between individuals, societies and businesses, resulting in more freedom, economic growth and innovations in health, safety and energy.

ABOUT

GLOBAL TRENDS

18

3D TRANSISTORS

SEMICONDUCTOR ROADMAP The trends outlined above are the main drivers of the broad semiconductor roadmap which semiconductor equipment companies track in developing new production systems and process technologies. These new systems and technologies must be developed well ahead of volume demand for the semiconductor devices they make. As a result, there is a long lead-time between the investment in a new technology and its commercial success. With the combination of a long lead time and the short product life-cycles comes the inherent difficulty of matching supply and demand, which results in the high volatility associated with the semiconductor equipment industry.

Semiconductor chips are manufactured in wafer fabrication plants, where silicon wafers 300mm in diameter move through a series of process steps, including lithography, deposition and etching. Demand for the semiconductor equipment we manufacture is driven both by growth in the end market for semiconductor devices, and by new technology needed to realize the next generation of devices. The result of this advanced technology drive is greater complexity in transistors and memory devices, which means wafer processing equipment gets ever more complex, driving the trend of higher wafer fab capital costs.

By driving innovations at the atomic level, we play an integral part in enabling our customers to fulfil their ambitions. The chip-making process is in the age of the nanometer, and we are now creating transistors that are only a few nanometers across. But connecting billions of transistors on a single chip requires astonishing precision. As a leading supplier of ALD process solutions to the semiconductor industry, our ALD technology supports our customers with this.

FINANCIAL STATEMENTS

ALD TECHNOLOGY

GOVERNANCE

GREATER COMPLEXITY

SHAREHOLDERS

Another 3D trend in semiconductor manufacturing is the stacking of several chips in one package. These chips can come from different supply chains, each optimized for its own performance and cost, enabling the manufacture of heterogeneous devices with integration in the package or as chips stacked on a wafer. As a consequence, ‘more than Moore’ chips can be efficiently integrated with conventional Moore-scaled devices in one package.

PERFORMANCE REVIEW

These developments are only possible because of the industry’s relentless push to follow Moore’s Law, which results in the development of devices with greater performance at lower costs. One result of this advanced technology drive is higher complexity in transistors and memory devices. Historically, new technology nodes have been achieved by shrinking the transistor size, although certain physical limits have recently been reached. To solve this problem, the trend is to build 3D (three-dimensional) transistors, as more performance functionality can be stacked vertically than in two dimensions. The result is that FinFETs and several 3D memory architectures are now in volume production.

ASMI STATUTORY ANNUAL REPORT 2015 | Global trends |

19

ABOUT

ALD allows us to deposit thin films atom-by-atom on silicon wafers, meaning we can deliver atomic-scale thickness control, high quality deposition and large area uniformity. Such precision means we can use materials that could not be considered before and develop 3D structures, such as FinFETs, which are vital to the future of electronics. STRATEGY & BUSINESS

As the industry continues to shift from working in a single plane to 3D, our ALD deposition technology will enable customers to produce the chips of tomorrow.

PERFORMANCE REVIEW SHAREHOLDERS GOVERNANCE FINANCIAL STATEMENTS

ASMI STATUTORY ANNUAL REPORT 2015 | Corporate responsibility |

MATERIALITY AND STAKEHOLDER ANALYSIS

GOVERNANCE

The stakeholder engagement and materiality process, coupled with regular market research and benchmarking of technology and management practices, enables us to further align our CR objectives with our overall business strategies, and will aid us in preparing to integrate our financial and non-financial reporting. Our goal is  to continually improve how we identify stakeholder concerns and priorities, actively engage and partner with them for the design of our future strategies, while being transparent with our performance measurement.

SHAREHOLDERS

To help achieve our Corporate responsibility (CR) ambitions, we have integrated our CR strategy into our overall strategy. We set our own CR strategies and goals, but one aspect of our approach is to improve our stakeholder engagement and feedback to the process. In 2015, we formalized how we engage with our stakeholders and worked on improving our dialogue with them by conducting a stakeholder priority assessment. Using the Global Reporting Initiative’s G4 Sustainability Reporting Framework, we identified the environmental, social, and economic material aspects that have the greatest impact on our business, and generated the greatest level of interest among stakeholders within our value chain. The identified direct and indirect aspects represent opportunities and risks that we consider when developing our strategy, and improve how we identify and prioritize the aspects stakeholders perceive are relevant and important to our business, both financially and non-financially. The assessment identified five key areas that our stakeholders view as having the greatest potential impact on our business: ››ethics and code conformance; ››worker health and safety; ››attracting and retaining talent; ››R&D investment and innovation; ››company financial health.

PERFORMANCE REVIEW

ASMI is committed to the vision of ZERO HARM! This means we strive to prevent all injuries to our employees and customer employees, reduce our environmental impact, and make positive contributions to society. We believe that this ambition, and our focus on sustainability, not only creates value for our company, our stakeholders and society, but also strengthens our brand and creates stronger relationships with our customers, employees, and investors. These strengthened relationships further drive our ability for innovation and bolster our product portfolio. We know that doing the right thing is good for society and good for business.

STRATEGY & BUSINESS

We innovate at the atomic level, yet the solutions we provide contribute to solving global challenges. And as proud as we are to be a leading supplier of ALD semiconductor technology and process solutions, we always think bigger – striving to be a leader in responsible, sustainable business practices. By continuing to strengthen the way we manage our social and environmental performance and non-financial risk, we create value for our customers, our business partners, and our other stakeholders.

ABOUT

CORPORATE RESPONSIBILITY

20

CUSTOMER SATISFACTION FINANCIAL STATEMENTS

In 2015 we conducted a customer satisfaction survey covering many aspects of our interactions with our customers, including key aspects of corporate responsibility. The results validate actions taken by us in response to what we had learned from previous surveys, and suggest areas where we can further improve.

ASMI STATUTORY ANNUAL REPORT 2015 | Corporate responsibility |

21

ABOUT

EICC

ANNUAL SELF-ASSESSMENT

TAX PRINCIPLE We believe that tax should follow the business. Hence income is reported in the countries where value is created. We do not use artificial tax structures solely aimed at tax avoidance. Taxes are determined and paid in accordance with all relevant rules and regulations in the countries in which ASMI operates. ASMI aims to follow both the letter as well as the spirit of the law.

Our disclosures are made in accordance with the relevant local and or international regulations. ASMI seeks an open and constructive dialogue with the tax authorities in the countries where we operate. Our aim is to disclose all relevant facts and circumstances. We believe that this will enhance certainty on our respective tax position in view of the applicable tax rules and regulations.

SHAREHOLDERS

ASMI applies the at arm’s length principle to determine transfer prices in accordance with domestic and international rules and standards, such as the OECD (Organization for Economic Cooperation and Development) guidelines for Multinational Companies.

PERFORMANCE REVIEW

We conduct an annual self-assessment, which is a standard part of the overall EICC members’ risk assessment process of the electronics industry supply chain. Following strict guidelines for assessment, our  results demonstrate that our operations continue to be ‘low-risk’ per EICC and customer criteria. In  addition to our annual self-assessment, in 2015 we invited an independent third party to conduct EICC audits of our operations and facilities. The results fully support the self-assessments and our belief that we have strong programs in place to manage compliance with the EICC Code of Conduct.

STRATEGY & BUSINESS

As part of the semiconductor industry value chain, many of our customers are Electronic Industry Citizenship Coalition (EICC) members. Many of the material issues that impact our business, and which are priorities for our stakeholders, such as labor and human rights, worker health and safety, environmental standards, and ethics, are embedded in the EICC Code of Conduct. We have adopted the EICC Code of Conduct, and in 2015 our global EICC Committee met regularly to ensure we were driving the right programs, systems and culture of EICC code and corporate responsibility compliance.

LOOKING AHEAD GOVERNANCE

While we believe we made solid progress towards achieving our CR ambitions in 2015, we are convinced that  there is always more to do. In 2016 we will further improve in the areas of EICC code compliance, our environmental objectives, sustainability in the product life cycle, and workforce diversity. More information on these and other CR topics can be found in our Corporate responsibility report 2015.

FINANCIAL STATEMENTS

ASMI STATUTORY ANNUAL REPORT 2015 22

STRATEGY & BUSINESS

FUTURE INNOVATION

WAFER PROCESSING

Pulsar XP ALD EmerALD XP ALD Eagle XP8 PEALD Dragon XP8 PECVD A400/A412 batch vertical furnace Intrepid XP epitaxy Epsilon 2000/3200 epitaxy

Front-end deposition equipment for: ALD Epitaxy PECVD LPCVD Oxidation/diffusion

23 26

OUR INNOVATION AT WORK

FINANCIAL STATEMENTS

People29 32 Research & development 34 Breakthrough technologies Chip making 36 39 Markets and products 42 Patents and trademarks 43 Operational excellence

GOVERNANCE

OUR STRATEGY

SHAREHOLDERS

PRODUCTS

PERFORMANCE REVIEW

Nano technology 3D solutions New materials

Mission, strategy and focus areas Value creation

ABOUT

STRATEGY & BUSINESS

ASMI STATUTORY ANNUAL REPORT 2015  |  Mission, strategy and focus areas  |

MISSION

VISION We aim to delight our customers, employees and shareholders by driving innovation with new technologies and delivering excellence with dependable products. By doing this, we will create new possibilities for everyone to learn, create and share more of what they love.

PERFORMANCE REVIEW

Our mission is to provide our customers with the most advanced, cost-effective, and reliable products, service and global support network in the semiconductor industry and beyond. We advance the adoption of our technology platforms by developing new materials and process applications that support our customers’ long-term technology roadmaps. Our ALD technique provides us with a platform for a whole new generation of technologies and processes, and acts as a strategic enabler for our business.

STRATEGY & BUSINESS

Our track record as an experienced innovation leader is a result of focusing on key issues and challenges within the semiconductor technology roadmap, enabling us to make the greatest difference to our customers. While these issues may change over time, one thing will always remain the same: we will continue to transform the results of our breakthrough technologies into volume manufacturing, benefiting our customers.

ABOUT

MISSION, STRATEGY AND FOCUS AREAS

23

STRATEGY

The key elements of our strategy are:

SHAREHOLDERS

Our strategic objective is to realize profitable, sustainable growth by capitalizing on our innovative strength, operational excellence, our leadership in ALD, and our strong relationships with key customers. We have also integrated corporate responsibility (CR) into our strategic goals, and aim to continue to help improve the quality of people’s lives.

› INNOVATIVE STRENGTH

› LEADERSHIP IN ALD

FINANCIAL STATEMENTS

ALD technologies are established as mainstream technologies in high-volume manufacturing, supporting virtually all of the leading customers in the semiconductor industry. As a leader in this space, ALD has turned into a key growth driver for our business. We expect that the trends of continued scaling and evolution towards 3D device structures will further expand the number of applications for ALD. We aim to maintain our leading position in ALD by leveraging on our strong expertise and established customer relationships, and by developing new applications to support our customers with increasingly complex device node transitions.

GOVERNANCE

We have always been recognized for our technology leadership. Today, we provide leading technologies that support our customers in staying on the curve of Moore’s Law. Our innovative strength is what differentiates us in the marketplace and continues to be the cornerstone of our strategy. Apart from our internal R&D efforts, we are continuously expanding and deepening our strategic cooperation with key customers, suppliers, chemical manufacturers and research institutes such as imec. We also expand our patent portfolio.

ASMI STATUTORY ANNUAL REPORT 2015  |  Mission, strategy and focus areas  |

24

ABOUT

› OPERATIONAL EXCELLENCE

› RESPONSIBILITY

We believe that being a responsible company creates value for our company, our stakeholders and society, which is why we have integrated CR into our strategic goals. Our goal is to manage all aspects of our business responsibly to meet or exceed stakeholder expectations, while holding our suppliers to high standards. This will enable us to continue to help improve the quality of people’s lives.

THE IMPACT

Innovative strength

Investing in our own R&D, as well as continuously expanding and deepening our strategic cooperation with key customers, suppliers, chemicals manufacturers and research institutes.

Co-creation, competitive edge and responsible sourcing.

Leadership in ALD

Focus on leveraging on our strong expertise and established customer relationships, and by developing new applications to support our customers with increasingly complex device node transitions.

Continued scaling, 3D evolution, and ongoing efforts to exceed stakeholder expectations.

Operational excellence

Continue to optimize our manufacturing and global sourcing processes, including the migration to common product platforms.

Consistent leading edge products and services, and continuous improvement in environmental impact of R&D and manufacturing activities.

GOVERNANCE

Responsibility

Manage all aspects of our business responsibly to meet or exceed stakeholder expectations and to hold our suppliers to the same standard that we hold ourselves.

Deliver positive contributions to society.

FINANCIAL STATEMENTS

HOW WE WILL DO THIS

SHAREHOLDERS

KEY ELEMENTS

PERFORMANCE REVIEW

OUR STRATEGY

STRATEGY & BUSINESS

While technology leadership remains crucial, we continue to focus on further improving the effectiveness of our organization and the efficiency of processes. We aim to provide our customers with dependable leading-edge products and services at a consistent quality level, providing the best cost of ownership. To help achieve this, we continue to optimize our manufacturing and global sourcing processes, including the migration to common product platforms.

ASMI STATUTORY ANNUAL REPORT 2015  |  Mission, strategy and focus areas  |

25

ABOUT

FOCUS AREAS

PERFORMANCE REVIEW

Our breakthrough technologies enable the industry to move to smaller line widths and better transistors that use new materials. In addition to addressing the technology needs of our customers, in order to meet the requirements of the industry to reduce costs, we focus on further increasing equipment throughput and equipment reliability, further lowering the cost per wafer of our wafer processing systems. In addition, to enable further efficiencies in our manufacturing process, we exert significant effort on improving the level of standardization in our equipment portfolio by migrating to common platforms, sub-assemblies and components.

STRATEGY & BUSINESS

Within wafer processing, we focus primarily on equipment and process solutions for the deposition of thin films. Our core strengths are in ALD, Epitaxy, Plasma Enhanced Chemical Vapor Deposition (PECVD), Low Pressure Chemical Vapor Deposition (LPCVD) and Oxidation/Diffusion. With this broad portfolio of technologies, we are addressing many of the key areas on the semiconductor industry roadmap, including: ››high-k metal gate; ››new applications for advanced FinFET transistors; ››dielectrics for spacer-defined double patterning; ››liners and spacers; ››low-k dielectrics for interconnect; and ››strained silicon.

SHAREHOLDERS GOVERNANCE FINANCIAL STATEMENTS

ASMI STATUTORY ANNUAL REPORT 2015 | Value creation |

Delivering excellence through advanced technologies like ALD and dependable, cost-effective products enables us to realize the technology roadmaps we co-create with our customers, leading to the development of electronic devices that deliver ever greater performance while reducing their energy consumption. Higher performance translates into more processing power, while lower energy requirements mean the production of smaller, more efficient devices. This enables our customers to further integrate smart technology into their products, helping everyone to understand more, create more and share more of what they love. The result is value creation not only for our customers, but for all of our stakeholders.

PERFORMANCE REVIEW

GREATER PERFORMANCE, REDUCED ENERGY CONSUMPTION

STRATEGY & BUSINESS

Creating value is the core of our business. We began as pioneers at the birth of the semiconductor industry, and since then we have helped shape the industry through a series of breakthrough innovations. Our challenge today is to create new opportunities for a fast-changing global society, by driving innovations at the atomic level. The chip-making process is in the age of the nanometer and we are now creating transistors that are a small number of nanometers across. But connecting billions of nanoscopic transistors on a single chip requires astonishing precision. As a leading supplier of ALD process solutions to the semiconductor industry, our ALD technology makes this possible.

ABOUT

VALUE CREATION

26

10 NANOMETER DEVICES

DEVELOPING NEW MATERIALS

FINANCIAL STATEMENTS

In order to meet our customers’ needs, we have developed – and are still developing – many new materials. ALD is an advanced technology that deposits atomic layers one at a time on wafers. This process is used to create ultra-thin films of exceptional quality and flatness. For example, in the FEOL, ALD of high-k dielectrics and novel metal gate electrodes can improve the performance and reduce the power consumption of a device, thereby enhancing battery life. This same class of materials can also lead to larger charge storage in a smaller capacitor, critical for memories and RF circuits. In addition to the development of the high-k dielectric, there is also a great deal of focus on new technologies and materials for the metal gate electrode, the gate sidewall passivation and many other applications. Plasma Enhanced ALD (PEALD) is an important technology for isolating features in 3D devices. We expect that the creation of 3D vertical transistors will further increase the demand for processes with better coverage of 3D structures, such as ALD.

GOVERNANCE

In developing faster and smaller devices, our customers’ major technology requirements are: ››introduction of new thin film materials and device designs needed for continued scaling; ››reliable manufacturing of taller and narrower 3D structures in devices; ››lithography of ever smaller feature sizes, now much smaller than the wavelength of visible light; and ››new manufacturing processes that reduce device variability and increase yield.

SHAREHOLDERS

The continuous demand for smaller, faster and cheaper semiconductor components drives the technology advances in the semiconductor manufacturing process. As the transistors in an integrated circuit become smaller, the cost-per-component decreases. At the same time, the operating speed of the transistor increases. Thus, the minimum size of a single transistor in an integrated circuit is an extremely important parameter. Today,  our customers manufacture semiconductor devices as small as 10 nanometers (one nanometer (nm) is one billionth of a meter), sometimes in a vertical 3D transistor or FinFET architecture. Our customers are qualifying and testing new critical processes to generate devices with line widths at or below 7nm. Simultaneously, in our customers’ laboratories and several collaborative research environments, advanced 5nm  design rule devices and related materials are being developed.

ASMI STATUTORY ANNUAL REPORT 2015 | Value creation |

27

ABOUT

LOW-K MATERIAL SUITE In the BEOL or interconnect process, a continued demand to improve the speed at which signals travel through thin copper wires has led to the development of a full suite of low-k materials. These low-k materials can decrease the amount of delay in signal propagation, resulting in, for example, faster microprocessors. Simultaneously, these low-k materials can reduce the amount of power loss in the interconnections. We have been one of the leaders in successfully introducing these low-k materials in the market. We are continuing to develop improvements to this low-k technology to enable faster interconnect circuits.

In addition to addressing the technology needs of our customers, the relentless drive of the industry to reduce cost corresponds to significant spending on development programs that further increase throughput, equipment reliability, and yield in our customer’s line, and further lower the cost per wafer of the wafer processing systems. In order to enable further efficiencies in our manufacturing process, we have improved, and will continue to improve, the level of standardization in our equipment portfolio by migrating to common platforms, sub-assemblies and components. This requires a significant engineering effort, although it can result in efficiencies in the long term.

OUR BUSINESS MODEL At ASMI we have developed a business model that enables us to create value for the company and all of our stakeholders. We achieve this by working with our customers to develop innovative solutions, while constantly looking at what is best for our investors, our people, society, and other stakeholders.

GOVERNANCE

ALD is one of the newest technologies to deposit ultra-thin films of exceptional flatness and uniformity. This technology was brought into ASMI in 1999 with the acquisition of ASM Microchemistry, who first developed the thermal ALD technology. Plasma Enhanced ALD, PEALD, is an extension of this original ALD technology that uses plasma, which was brought into ASMI in 2001 through a partnership with Genitech and a subsequent acquisition in 2004 and formation of ASM Genitech Korea. The use of plasma enables us to deposit high-quality films at very low temperatures. ALD is a very versatile technology that can be used to deposit high-k insulating materials, conductors, silicon oxide and silicon nitride. We expect that the trends of  continued scaling, and evolution towards 3D device structures play into the strength of our ALD position. We offer ALD/PEALD processes on several of our product platforms, including single wafer and batch systems, and for multiple wafer sizes.

SHAREHOLDERS

ALD AT ASMI

PERFORMANCE REVIEW

We have also developed and sold new ALD processes and wafer processing equipment to enable the creation of narrow lines that have dimensions beyond the resolution of common lithography, and with low line width variability, using a process called spacer-defined double patterning. For that purpose we have developed low temperature Plasma Enhanced ALD processes that are compatible with and assist the common lithography process.

STRATEGY & BUSINESS

Another example of new materials in the FEOL are our silicon-germanium (SiGe) and silicon-carbon-phosphorous (SiCP) epitaxial materials that can increase the switching speed of the transistors and the circuit in which they are embedded by so-called strain engineering. This can be done without negatively affecting the  power these transistors consume.

FINANCIAL STATEMENTS

ASMI STATUTORY ANNUAL REPORT 2015 | Value creation |

1,597

INTELLECTUAL R&D investment (EUR million)

93

FINANCIAL Market capital (EUR billion)

MANUFACTURING Spends for manufacturing and components with suppliers (EUR million)

NATURAL Electrical power usage (KwH)

SOCIAL Stakeholder groups engaged

HUMAN Employees

2.231 5

THE VALUE CHAIN

MATERIALS SUPPLIERS

FAB EQUIPMENT SUPPLIERS

SEMICONDUCTOR SUPPLIERS

ASMI

INDUSTRY

CONSUMERS

PRE-CURSOR EXPLORATION

PROCESS INTEGRATION TESTING

PROCESS FEASIBILITY

PROCESS DEVELOPMENT

BASIC MATERIALS R&D

PROCESS INTEGRATION

HELSINKI - FINLAND

LEUVEN - BELGIUM

PRODUCT DEVELOPMENT PRODUCT MARKETING PRODUCT MANUFACTURING PHOENIX - USA, TOKYO - JAPAN, CHEONAN - South KOREA, ALMERE - NETHERLANDS, SINGAPORE - SINGAPORE

HUMAN Revenue/employee increase

INTELLECTUAL Patents filed

FINANCIAL Net sales/revenue (EUR million)

MANUFACTURING New orders (EUR million)

NATURAL Greenhouse gas emissions (in mtCO2e-Scope 1/Scope 2 only)

SOCIAL Employees trained in ethics

16,300

All figures related to 2015 unless otherwise noted.

670

98%

FINANCIAL STATEMENTS

608

85

GOVERNANCE

OUTPUT

26%

SHAREHOLDERS

OUR BUSINESS

PERFORMANCE REVIEW

UNIVERSITY RESEARCH/R&D INSTITUTES

STRATEGY & BUSINESS

>300

30,303,776

ABOUT

INPUT

28

ASMI STATUTORY ANNUAL REPORT 2015 | People |

ABOUT

PEOPLE

29

STRATEGY & BUSINESS

Perhaps the greatest contribution we can make to society is to continue to innovate. But to achieve this we need the right people. Talented people who are able to provide our customers with innovative solutions. People who share our fascination for the future, but want answers today. From the sharpest graduates, to skillful engineers and inspirational leaders. ASMI’S WORKFORCE In 2015 we employed 1,597 people across the globe. In line with our increased investments in R&D and innovation, 26% of our staff were employed in R&D. This is an increase of 15% compared to the end of 2014.

EQUAL OPPORTUNITIES

WORKFORCE  

2013

2014

2015

1,503

1,635

1,597

30

28

26

29

Male

87%

87%

86%

86%

Female

13%

13%

14%

14%

Nationalities

ATTRACTING THE RIGHT TALENT Recruiting and developing a diverse workforce gives us a wide range of perspectives, and allows us to explore and adopt new ideas and innovations in technology. It also allows us to better understand and meet the needs of our diverse customers, suppliers and communities. Workforce diversity continues to be part of the strategic objectives that help us drive for innovation. We benefit from this diverse perspective and the advantages of  bringing talented men and women of all backgrounds together to create new breakthrough innovations, turning today’s challenges into tomorrow’s opportunities.

SHAREHOLDERS

2012

1,636

Employees

PERFORMANCE REVIEW

We are an equal opportunities employer. We understand that every individual is unique. We recognize and respect the differences between individuals and we understand that these differences can include ethnicity, religious beliefs, national origin, age, gender, sexual orientation, family status, physical ability, experience and  perspective. In 2015 we continued to maintain a diverse workforce throughout the company, employing 29 nationalities. The percentage of women remained stable at 14% of the workforce.

GOVERNANCE FINANCIAL STATEMENTS

ASMI STATUTORY ANNUAL REPORT 2015 | People |

30

ABOUT

ASMI NEW COLLEGE GRADUATE PROGRAM

ENABLING OUR PEOPLE We have invested in an integrated people technology platform and service delivery model, which enables us to leverage the different people processes in operation across the company. This means we can maximize value and collate data, enabling managers to further enhance our people development and their performance.

TALENT MANAGEMENT SOUNDING BOARD Next to this we launched a Talent Management Sounding Board, which brings together key people from all levels and backgrounds. The Sounding Board provides crucial feedback on business priorities for our talent management roadmap.

In 2016 we aim to embed our Onboarding Process in the HR Technology platform, building on existing practices. This will offer new hires a consistent Onboarding experience and a base to understand the company, how they can add value, and help them accelerate their performance and engagement.

GOVERNANCE

When developing people practices, we use a group of employees to benchmark our progress and deliverables against pre-set goals and clear key performance indicators (KPIs). We also initiated a Change & Communication approach, ensuring that we embed initiatives in a way that delivers the greatest value. And because every initiative is integrated in our technology platform, we are developing a set of clear, connected processes, tools and metrics.

SHAREHOLDERS

At the same time it is vital that we listen to our people. By being transparent and focusing on open, honest dialogue, we understand their needs more fully and create stronger connections, leading to better results and practices. To help achieve this, we have established HR Business Partners in each key business and support area. Their role is to help strengthen the connection between our people and our business and strategic aims, contributing to our long-term success.

PERFORMANCE REVIEW

In 2016 we aim to further develop the way we source graduate talent and will introduce a new enhanced recruitment process. The aim is to make the connection between our internal employees, external candidates and our global vacancies stronger and more transparent.

STRATEGY & BUSINESS

To help secure the right talent, we have established the ASM New College Graduate (NCG) program, which enables us to attract, develop and retain recent graduates with advanced degrees in physics, physical chemistry, chemistry, materials science and engineering. Working with a select list of universities that focus on the education and training that fits our technology needs, we participate in career events that give us the opportunity to showcase the company. After new graduates are hired, they are given the resources, opportunities and support to succeed in their careers. They are trained and begin working at the cutting edge of technology, alongside experienced innovators, to resolve some of our toughest scientific challenges. During the first few years of their career they are based at one of our innovation centers in Helsinki, Finland, or Leuven, Belgium, before being given the opportunity to apply their knowledge in different product areas and at our other global facilities.

FINANCIAL STATEMENTS

ASMI STATUTORY ANNUAL REPORT 2015 | People |

31

ABOUT

ENGAGE AND EXCEL

ASMI LEADERSHIP ACADEMY

SHAREHOLDERS

Additionally, to strengthen the connection of our people with our strategy, we deploy a performance management process and initiated a Succession and Talent review process. These processes are supported by a globally aligned competency set and a talent scorecard. Both processes support setting the right direction for our people development and maximizing the potential of our people to deliver our strategy.

PERFORMANCE REVIEW

Once we have attracted the right people, we work hard to ensure they engage with the company and its strategic goals, and provide an enabling environment that allows them to excel and turn today’s challenges into tomorrow’s opportunities. One example is the ASMI Leadership Academy, which offers our people different leadership programs. In 2015 we launched a (Senior) Directors Program as part of our Leadership Academy. Senior employees from around the world participate in an intense training week, including course curriculum, team dynamics, and a real-time ASMI business case. Our Leadership Academy helps managers and leaders from all levels of the organization to develop their employees and build high-performing teams. Using consistent content and bringing managers and leaders together in these programs has also led to increased understanding, and greater cross-culture and business collaboration. In the coming period our aim is to further enhance the Leadership Academy, creating more engagement and further improving its business relevance and value to the company.

STRATEGY & BUSINESS

Achieving bottom line business results starts with capable people being committed to ASMI and its customers. We employ a diverse range of experienced, talented people who have in-depth understanding and experience of our technology, products and customers. This, combined with the introduction of new talent at all levels of the company to add fresh perspectives and new insights and diversity to existing knowledge and experience, enables us to blend internal expertise and commitment with external perspective and accelerated change. And because we are a relatively small company, our people can make an immediate impact, leading to greater learning and engagement. This is one of the reasons we expect more and more people will want to be part of our growing, dynamic company – a company that provides its customers with solutions that count.

GOVERNANCE FINANCIAL STATEMENTS

ASMI STATUTORY ANNUAL REPORT 2015 | Research & development |

GLOBAL RESEARCH

PERFORMANCE REVIEW

As a global company we carry out R&D on different continents, giving us access to some of the smartest professionals working in the semiconductor sector today. We maintain the widest and most diverse ALD development organization in the industry. We are active at all stages in its life cycle, from developing the basic chemistry to implementing solutions on our equipment at our customers’ production sites. Our research centers in Finland, the United States, Japan, South Korea, the Netherlands, and Belgium are all active in ALD development. We also work with specialists across a wide range of disciplines to develop our research goals, including from research institutes, universities and suppliers. However, our most important collaboration is with our global customers, with whom we co-create and jointly develop our technology roadmaps to bring new technologies and processes to market, faster. Such diversity means that we get the benefit of wider viewpoints while being able to bring together the best minds in the world to create new breakthroughs.

STRATEGY & BUSINESS

We have been an innovation leader for nearly 50 years. We have not only contributed to the remarkable advance of the semiconductor industry, we have shaped the industry itself. But this success, and our future success, is largely dependent on our ability to develop new products and processes and to improve the features of existing products. Achieving this requires an unparalleled commitment to research and development (R&D). In 2014 and 2015, our net R&D investments were €64.7 million and €93.0 million respectively.

ABOUT

RESEARCH & DEVELOPMENT

32

REGIONAL EXPERTISE

Our global product development policies and local activities are for the most part directed towards expanding and improving present product lines to incorporate technology advances and reduce product cost, while simultaneously developing new products that can penetrate new markets. These activities require the application of physics, chemistry, materials science, chemical engineering, electrical engineering, precision mechanical engineering, software engineering, and systems engineering.

In 2010 we formed a global Platform Engineering group that addresses the needs for common platforms for the various products in our wafer processing product portfolio. Selected resources in Leuven, Almere and Helsinki have been grouped under Corporate R&D, addressing the common needs for advanced materials research and process integration work for the 10nm to 5nm nodes.

GOVERNANCE

GLOBAL PLATFORM ENGINEERING GROUP

SHAREHOLDERS

Going forward, we expect to continue to invest significantly in R&D to enhance our product offerings. With our R&D activities chiefly conducted in the principal semiconductor markets of the world, we are able to draw on innovative and technical capabilities internationally. Each geographic center provides expertise for  specific products or technologies. This approach, combined with the interactions between the individual centers, enables efficient allocation of technical resources and customer interaction during development.

FINANCIAL STATEMENTS

ASMI STATUTORY ANNUAL REPORT 2015 | Research & development |

33

ABOUT

LOCATION

NUMBER OF R&D EMPLOYEES  AS OF DECEMBER 31, 2015, EXCLUSIVE OF TEMPORARY WORKERS

36

Leuven, Belgium

27

Helsinki, Finland

20

Phoenix, Arizona, United States

168

Cheonan, South Korea

63

Singapore, Singapore

4

Tama, Japan

102

TOTAL

420

STRATEGY & BUSINESS

Almere, the Netherlands

ARRANGEMENTS WITH CUSTOMERS, INSTITUTES & UNIVERSITIES PERFORMANCE REVIEW

As part of our research and development activities, we are engaged in various formal and informal arrangements with customers, institutes and universities. As of December 31, 2015, we were engaged in several formal joint development programs with customers for 300mm applications of our products. As part of these efforts, we may sell new products to customers at a significantly reduced margin, and invest significant resources in the joint development and subsequent product qualification. Additionally, we also occasionally cooperate with other  semiconductor capital equipment suppliers in complementary fields, in order to gain knowledge on the  performance of our own deposition processes, in cooperation with other processes, either in bilateral or in publicly funded projects. In addition to cooperating with customers and other capital equipment suppliers, we also enter into research projects with technical universities and institutes (for example imec in Belgium).

PUBLICLY-FUNDED PROGRAMS

In December 2003, we commenced a five-year partnership with the University of Helsinki that aims to further develop atomic layer deposition processes and chemistries. This partnership was extended for a second and now a third five-year period, reaching into December 2018.

As of year-end 2015, 420 employees were employed in R&D, representing 26% of our total staff.

FINANCIAL STATEMENTS

We contribute to several process and equipment development projects at the major Dutch technical universities though the Dutch FOM and STW funding organizations for fundamental and applied research.

GOVERNANCE

In 2011 we renewed our strategic R&D partnership with the Interuniversity Micro-Electronics Center (imec) in Leuven, Belgium. Our Epsilon, A412, Pulsar, EmerALD, Dragon and Eagle based products are involved in this partnership. From 2012 through 2015 we significantly expanded our partnership with additional ALD and epitaxy capability. This gives us the opportunity to investigate, both jointly and independently, the integration of individual process steps in process modules and electrically active devices. We have partnered with imec since 1990, with significant on-site representation since 1994.

SHAREHOLDERS

Mainly in Europe, we participate in publicly funded programs to research and develop the production technology for semiconductor devices with line widths of 7nm and below, and in more-than-Moore technologies. We are also involved in several cluster development programs in the Eureka initiative, as an active member of the AENEAS association as mentor or reviewer, and we are involved in roadmapping activities for the chapters on Process Technology and Integration. In the Netherlands we participate in projects focused on efficiency improvements for photovoltaic cells within the TKI Solar Energy Program.

ASMI STATUTORY ANNUAL REPORT 2015 | Breakthrough technologies |

ABOUT

BREAKTHROUGH TECHNOLOGIES

34

STRATEGY & BUSINESS

We were one of the first companies to have the vision to realize the potential of ALD technology for the semiconductor industry. In 1999, we acquired Microchemistry in Finland, forming ASM Microchemistry. Originally developed for use in the flat panel display industry, ALD had been researched for various applications for over 20 years. We dedicated a further eight years of R&D to turning it into a process that could be used reliably and efficiently by advanced semiconductor chip manufacturers. ATOMIC LAYER DEPOSITION

By product

PURGE

2

1

Oxidant

By product

PURGE

3

INCREDIBLE PRECISION What benefits does ALD bring? ALD allows us to deposit thin films atom-by-atom on silicon wafers, meaning we can deliver atomic-scale thickness control, high-quality deposition film properties and large area uniformity.

SHAREHOLDERS

4

PERFORMANCE REVIEW

ALD CYCLE Precursor

Such precision means we can use materials that could not be considered before and develop 3D structures, which are vital to the future of electronics. 3D technology provides a number of real benefits. These include saving space, while delivering chips with higher performance that consume less power.

Using ALD, we are now able to deposit new materials several atoms thick on wafers at low temperatures, producing ultra-thin films of exceptional quality and uniformity. In PEALD, plasma is used to provide the reaction energy for the process, enabling lower temperatures for low thermal budget applications. Using ALD technology, we have been able to scale devices to smaller dimensions while reducing the power consumption of transistors, all of which helps the industry follow Moore’s Law and create smaller, more powerful semiconductors.

ALD IS NOW MAINSTREAM ALD is now a mainstream technology used in volume manufacturing in the semiconductor industry. Our ALD technology is now being used to build ICs for a wide range of leading-edge products, including highperformance computers and smartphones. The results of ALD are everywhere in the world around us.

FINANCIAL STATEMENTS

ALD is now our basic platform for the development of a wide range of new materials. Our research centers across the globe are working on ALD, and we are also conducting joint research projects with Europe’s largest independent research institute, imec. Taken together, this helps make ALD one of the principal drivers for future growth in microelectronics.

GOVERNANCE

ALD – A DRIVER OF FUTURE GROWTH

ASMI STATUTORY ANNUAL REPORT 2015 | Breakthrough technologies |

35

ABOUT

ENHANCING INNOVATION

SUSTAINABLE GROWTH FOR THE NEXT DECADE

PERFORMANCE REVIEW

Yet this is just the beginning of ALD. While the fundamental technology has been around for 30 years, in the semiconductor manufacturing industry it is still relatively new. We expect it to be one of the principal drivers of growth in microelectronics over the coming decade. Looking ahead, we will continue to develop the huge potential of ALD in support of the semiconductor industry, enabling the industry to support the future demands of consumers.

STRATEGY & BUSINESS

Plasma Enhanced ALD (PEALD) is another innovation in our long line of innovations. It widens the spectrum of materials that can be deposited. Its capability to deposit materials at temperatures as low as room temperature makes it possible to carry out processes on temperature-sensitive substrates like photoresist. This technology was introduced in DRAM and planar NAND flash manufacturing in the 3x nm node, for spacer-defined double patterning (SDDP), a technique that can reduce device dimensions, postponing the need for new lithography technologies. The technology continues to be used for DRAM and planar NAND flash manufacturing in the 2x nm node. This is just one example of how ALD continues to open up new possibilities for further process breakthroughs.

SHAREHOLDERS GOVERNANCE FINANCIAL STATEMENTS

ASMI STATUTORY ANNUAL REPORT 2015 | Chip making |

SEMICONDUCTOR DEVICE MANUFACTURING

WAFER PROCESSING In the wafer manufacturing process, a large single crystal of very pure silicon is grown from molten silicon. The crystal is then sliced into a large number of thin slices, or wafers, of single crystalline silicon. These slices are polished to an atomic-level flatness before the next steps are executed. For advanced applications, some layers are deposited on the wafer for later use, by either epitaxy or diffusion/oxidation (described below). Epitaxial wafers are even flatter and contain fewer defects at the surface than polished wafers.

PROCESS STEPS

FINANCIAL STATEMENTS

The number and precise order of the process steps varies depending upon the complexity and design of the integrated circuit. The performance of the circuit is determined in part by the various electrical characteristics of the materials used in the layers of the circuit and the wafer. Simple circuits may have as few as ten layers, while complex circuits may have more than one hundred layers. The device manufacturing process is capital-intensive, requiring multiple units of several different production systems. Many different but complementary methods are used to modify, grow, or deposit materials on the wafers. The device manufacturing process on  the wafer is complete when all of the layers have been deposited and patterned on the wafer.

GOVERNANCE

During FEOL and BEOL wafer processing, multiple thin films of either electrically insulating material, also called dielectrics, or conductive material are modified, grown, or deposited on a silicon wafer. First, several material processing cycles are used in the FEOL to build the basic transistor and other components such as capacitors and resistors. Second, several processing cycles are used in the BEOL to electrically connect the large number of transistors and components, and to build additional passive components such as capacitors, inductors and resistors. Patterning of deposited layers with lithography and etching (as decribed in the infographic below) creates the transistors, passive components and connecting wires, which together make up the integrated circuit. Each integrated circuit is a single ‘chip’ or a ‘die’ on the wafer. A finished wafer may contain several dozen to several thousand individual dies. Wafer processing is performed either one wafer at a time in single wafer processing systems or many wafers at a time in batch processing systems. Multiple deposition, and patterning processes are performed on the same wafer to complete a device.

SHAREHOLDERS

FROM WAFER TO DEVICES

PERFORMANCE REVIEW

To explain how this all works, let’s take a look at how a chip is made. The manufacturing process of semiconductor devices on a wafer can be divided into three distinct parts: wafer manufacturing, transistor formation (known as front-end of the line (FEOL) processing), and interconnect formation (known as back-end of the line (BEOL) processing). We develop, manufacture and sell equipment, and provide services used by semiconductor device manufacturers in each of these sections of semiconductor device manufacturing.

STRATEGY & BUSINESS

The world uses semiconductors like never before. From the way we communicate and travel, to the cities we inhabit, they enable modern life. From our dishwashers, microwaves and TVs, to our smartphones, PCs and tablets, the tiny chips we all take for granted drive the everyday devices we have come to rely on. Their use has revolutionized how we live, work and play. Enabling us to understand, create and share information faster and more easily. Today, we expect devices to become more powerful and smaller every year, without fully understanding how.

ABOUT

CHIP MAKING

36

ASMI STATUTORY ANNUAL REPORT 2015 | Chip making |

37

ABOUT

CLEAN ROOMS

FRONT-END AND BACK-END PROCESSING

CHIP MAKING PROCESS 3

4

5

6

7

8

9

It all starts with one simple, common substance – sand. The silicon found in sand is in the form of silicon dioxide. To make chips, manufacturers need pure silicon, which means the first step in the process is to separate the silicon from the oxygen molecules. The pure silicon needed to make silicon chips can have only one foreign atom for every billion silicon atoms. It must also be in monocrystalline form. The way atoms are organized in this form of silicon is essential to some of the later processes.

FINANCIAL STATEMENTS

1. FROM SAND TO PURE SILICON

GOVERNANCE

2

SHAREHOLDERS

1

PERFORMANCE REVIEW

There are two basic segments of chip manufacturing to complete a final packaged chip product. We refer to them as wafer processing and assembly and packaging. We are an equipment supplier for the front-end part: wafer processing. During wafer processing – the start of the manufacturing line – manufacturers process wafers made of silicon, on which the electrical components are formed. During assembly and packaging – the back end of the manufacturing line – the wafers are divided up into individual chips and tested before being assembled and packaged.

STRATEGY & BUSINESS

The introduction of even trace levels of foreign particles or material can make a circuit, or even an entire wafer, unusable. To reduce the level of foreign particles or material, wafer processing is performed in cleanrooms with ultra-low particle and contamination levels. The correct electrical functioning of the integrated circuits on each die is confirmed by probing. Non-functioning circuits are marked so they can later be discarded before money is spent on packaging the chip. The yield, or the percentage of known good die for a mature process, is usually well above 95%. For a process in development the yield can be substantially lower, and it is important to improve this as quickly as possible as it determines, to a large extent, the profitability of our customers.

ASMI STATUTORY ANNUAL REPORT 2015 | Chip making |

38

ABOUT

2. WAFER BLANKS The silicon is then extracted, or pulled, from liquid silicon in the form of long cylindrical ingots at around 1,400 degrees centigrade.

Wafers are then cut from the ingots before being polished to produce a smooth surface. They are then sent to chip manufacturers for processing. The following steps in wafer processing are then repeated many times to create the finished wafer containing chips.

4. COATING A WAFER The wafer is put into a high-temperature furnace and exposed to oxygen, forming a layer of silicon dioxide on the surface. Then chemical vapor deposition (CVD) is used to add a layer or film of nitride.

Once the circuit layout of the chips has been designed, glass plates or masks are created to help copy the design onto the surface of the wafer. Several masks are used in sequence to add more and more complexity to the chips.

6. ADDING A PATTERN Now comes the time to begin creating the design on the surface of the wafer using the masks as a guide. Photolithography, a type of optical printing, is used. The wafer is first coated with photoresist, which changes when exposed to ultraviolet (UV) light. The mask is placed above the wafer and precisely aligned with it. UV light shining above the mask reacts with the exposed parts of the photoresist, creating a pattern. The wafer is covered with a developing solution to develop these patterns, which are then etched, leaving the parts not exposed to UV light intact. The surface now contains ‘trenches’ that run across the surface.

A dielectric or insulating film is deposited in the trenches by one of a number of deposition technologies such as CVD or ALD. Gates are formed between the trenches, creating parts of the many millions of transistors that may be created on a single chip. Gates can be switched to allow charge carriers, such as electrons, to flow or to prevent them from flowing. Contacts are formed by each gate to create a source and drain. Ion implantation is used to implant special elements into the wafer for the source and drain. The charge carrier enters a gate channel at the source contact and exits at the drain contact.

SHAREHOLDERS

Deposition

PERFORMANCE REVIEW

5. CREATING MASKS

STRATEGY & BUSINESS

3. WAFERS ARE CUT

Connect

7. WAFERS SEPARATED INTO INDIVIDUAL CHIPS

GOVERNANCE

Once the basic chip components have been created, they need to be connected. The same processes of lithography, etching and deposition, are used to form trenches filled with metal connections. These connections between components are created not just on one level, but on many. The finished wafer will contain up to several thousand individual chips in a space of 200mm to 300mm, and some chips can hold billions of transistors.

Once wafer processing has been completed, the finished wafers are transported to another plant for cutting, assembly and packaging. The individual wafers are cut into separate chips.

The chips are then placed in a lead frame forming a protective housing.

9. TESTING PACKING Each chip is then tested before being packaged to be sent for placement on circuit boards.

SUMMARY The equipment and processes used to create chips are very complex and draw on leading-edge research. But the objective is simple – to keep enabling us to understand, create and share more of what people love.

FINANCIAL STATEMENTS

8. LEAD FRAMES

ASMI STATUTORY ANNUAL REPORT 2015 | Markets and products |

MARKETS

ANALOG DEVICES We also supply equipment to leading manufacturers of analog semiconductor devices, which are important for enabling the increasing semiconductor content used in most products worldwide.

PERFORMANCE REVIEW

The semiconductor industry was driven in 2015 by a US$2.0 trillion global electronics industry (VLSI Research Chip Insider, March 1, 2016) that required approximately US$284 billion in semiconductors. The semiconductor industry in turn supported the approximately US$49.3 billion semiconductor capital equipment industry, which supplies the needed production systems and services. Within the capital equipment segment, we serve the wafer processing equipment segment, which is worth approximately US$32.2 billion annually. Demand for semiconductor capital equipment is driven both by growth in the market for semiconductor devices and also by new technology needed to realize the next generation of devices. The semiconductor industry declined by about -1.3% in 2015, driving the equipment business down less than 1%. The equipment segment in 2015 was driven mostly by capacity expansion in Memory fabs and new technology generation investments in Logic and Foundry fabs.

STRATEGY & BUSINESS

ASMI is a leading player in the market for semiconductor manufacturing equipment. The semiconductor capital equipment market is composed of three major market segments: wafer processing equipment, assembly and packaging equipment, and test equipment. We operate in the semiconductor wafer processing equipment market.

ABOUT

MARKETS AND PRODUCTS

39

LOGIC, FOUNDRY & MEMORY MARKETS

MARKET COVERAGE The semiconductor capital equipment market is composed of three major market segments: wafer processing equipment, assembly and packaging equipment, and test equipment. We are active in the wafer processing segment. Within wafer processing equipment, the major segments are Lithography, CMP, Ion Implant, Deposition, Etch & Clean, and Process Diagnostics. The principal market segment in which we participate is Deposition and Related Tools. According to VLSI, the Deposition segment was worth approximately US$8.3 billion in 2015.

Our products come from a number of product platforms, with each platform designed to host and enable specified process technologies. The products in each product platform are linked through common technology elements of the platform – for example, a common in-system software framework, common critical components, similar logistics (batch or single wafer processing), or a similar wafer processing environment (wet or dry). The  following table lists our principal product platforms, the main process technology that they enable, and the semiconductor device manufacturing solution for which the products from that platform are used.

FINANCIAL STATEMENTS

ASMI PRODUCTS

GOVERNANCE

PRODUCTS

SHAREHOLDERS

Our semiconductor wafer processing business supplies equipment to the leading semiconductor manufacturers in the Logic, Foundry and Memory markets, primarily for the deposition of thin films. ››The Logic market is made up of manufacturers who create chips that are used to process data. Known as the central processing unit (CPU), this microprocessor is the ‘brains’ of a computer system, and can be found in smartphones, laptops and computers. ››The Foundry market consists of businesses that operate semiconductor fabrication plants to manufacture the designs of other semiconductor companies. ››The Memory market covers manufacturers who make chips that store information either temporarily or permanently, such as Random Access Memory (RAM) and NAND.

ASMI STATUTORY ANNUAL REPORT 2015 | Markets and products |

40

ABOUT

TECHNOLOGY – PRODUCT MATRIX ASMI PRODUCTS

ALD

XP1

Pulsar XP ALD system EmerALD XP ALD system

Polygon2

Pulsar2 single wafer ALD system EmerALD2 single wafer ALD system

PEALD

XP81

Eagle XP8 PEALD system

PECVD

XP81

Dragon XP8 PECVD system

Diffusion Oxidation LPCVD ALD

Advance Series

A400 batch vertical furnace system A412 batch vertical furnace system

Epitaxy

XP1

Intrepid XP epitaxy

Epsilon

Epsilon 2000 single wafer epitaxy system Epsilon 3200 single wafer epitaxy system

The XP is our standard single wafer processing platform designed to accommodate multiple process application modules with common platform standards. In 2012 ASMI launched the XP8 high productivity platform for PECVD and PEALD, based on our common XP platform standard with an expanded configuration that enables integration of up to eight chambers on one wafer handling platform. The functionality of the Polygon, Pulsar and EmerALD has merged with the XP platform starting in 2009.

The Advance is our vertical furnace batch-processing platform. Products built on this product platform are used for diffusion, oxidation, LPCVD and ALD. The product platform is used in many manufacturing steps, from the production of silicon wafers to the final anneal in interconnect.

A400 batch vertical furnace The A400 system is for 150mm and 200mm wafers. It is available with two batch tube reactors and supports applications similar to the A412 tool.

GOVERNANCE

A412 batch vertical furnace The A412 is a 300mm vertical furnace system featuring two reactors above a rotating carousel, with a dual-boat configuration for high productivity. The tool supports a wide range of process applications with variable load sizes from 25 wafers for shortest cycle time requirements, up to 150 wafers for lowest cost requirements in a single run.

SHAREHOLDERS

PRODUCT DESCRIPTIONS Advance platform

PERFORMANCE REVIEW

2

ASMI PRODUCT PLATFORM

STRATEGY & BUSINESS

1

DEPOSITION APPLICATION

XP platform

The XP common platform benefits our customers through reduced operating costs since multiple ASMI products use many of the same parts and consumables, and a common control architecture improves ease of use.

FINANCIAL STATEMENTS

The XP is our high-productivity common 300mm single wafer platform that can be configured with up to four process modules. The XP platform enables high-volume multi-chamber parallel processing or integration of sequential process steps on one platform.

ASMI STATUTORY ANNUAL REPORT 2015 | Markets and products |

41

ABOUT

EmerALD XP ALD system EmerALD XP is a 300mm ALD tool designed for depositing metal gate layers for advanced high-k metal gate transistors and other applications. Intrepid XP epitaxy system Intrepid XP is a 300mm epitaxy tool designed for critical transistor strain and channel layers. Processes include silicon (Si), silicon-germanium (SiGe), and other silicon-based compounds.

The XP8 platform follows the basic architectural standards of the XP, but provides even higher productivity with up to eight chambers integrated on a single wafer platform with a small footprint. Eagle XP8 PEALD system Eagle XP8 is a high-productivity 300mm tool for PEALD applications. The system can be configured with up to four Dual Chamber Modules (DCM), enabling eight chambers in high volume production within a very compact footprint. The system is capable of a broad range of dielectric PEALD processes including low temperature spacers for multiple patterning applications.

Epsilon

Polygon

FINANCIAL STATEMENTS

The Polygon is a single wafer atomic layer deposition platform. It features a six-sided central vacuum handler, capable of hosting up to four reactors. The Polygon 8200 is used for 150mm and 200mm wafers, and for magnetic head substrates. The Polygon 8300 is used for 300mm wafers. One or more Pulsar modules with ALD technology can be integrated onto the platform. Products built on this product platform are currently being used in, among others, ALD high-k gate dielectrics for high-performance Logic, metal-insulator-metal capacitors for so-called ‘system on a chip’ applications, and magnetic head gap fill.

GOVERNANCE

The Epsilon is our platform for single wafer epitaxy. The Epsilon product platform offers a wide range of epitaxy products and materials for many applications, ranging from high-temperature silicon used in silicon starting material manufacturing, to low temperature, selective or non-selective silicon, silicon-germanium (SiGe), siliconcarbon (SiC) used in CMOS devices and silicon germanium carbon (SiGeC) used in bipolar devices. The Epsilon 2000 is a single wafer, single reactor system for 150mm and 200mm wafers. The Epsilon 3200 is a single wafer, single reactor system for 300mm wafers.

SHAREHOLDERS

Dragon XP8 PECVD system Dragon XP8 is a high-productivity 300mm tool for PECVD applications. The system can be configured with up to four Dual Chamber Modules (DCM), enabling eight chambers in high-volume production within a very compact footprint. Processes include a broad range of dielectric PECVD films for applications such as interconnect dielectrics layers, passivation layers and etch stop layers.

PERFORMANCE REVIEW

XP8 platform

STRATEGY & BUSINESS

Pulsar XP ALD system Pulsar XP is a 300mm ALD tool designed for depositing extremely thin high-k dielectric materials required for  advanced transistor gates and other applications. Pulsar is the benchmark ALD high-k gates tool for the industry.

ASMI STATUTORY ANNUAL REPORT 2015 | Patents and trademarks |

CULTURE OF INNOVATION We are an innovative company and have created a culture of innovation at every level of the organization. We attract and retain creative people from all over the world, who help us create a steady stream of innovations that we bring into volume manufacturing through close cooperation with our customers.

Intellectual Property (IP) managers work at all of our major global R&D sites, where they capture all patentable material resulting from our R&D activities. Each year we file between 50 and 100 initial patent applications, and now have over 1,300 patents in force worldwide. Many hundreds of those relate specifically to the ALD process technology platform, and we expect new deposition technologies and chemistries to be a major driver for new IP in the future. Patents protect our discoveries and enable us to speak more openly about our inventions and share ideas in the marketplace that benefit our customers. Our patents are usually registered in the principal countries where semiconductor devices or equipment are manufactured and/or sold.

INITIAL PATENT FILINGS

PATENTS IN FORCE

100

2,000

80

63 60

61

1,600

66

1,200

51 34

935

1,050

1,081

2011

2012

1,166

1,266

1,395

800

20

400

2010

2011

2012

2013

2014

2015

2010

2013

2014

SHAREHOLDERS

85

40

PERFORMANCE REVIEW

CAPTURING IDEAS EFFICIENTLY

STRATEGY & BUSINESS

We have been an innovation leader for nearly 50 years. We have not only contributed to the remarkable advance of the semiconductor industry, we have shaped the industry itself through a series of breakthrough innovations in technologies such as plasma deposition and epitaxy and, since 2000, through ALD.

ABOUT

PATENTS AND TRADEMARKS

42

2015

We have registered a number of trademarks covering our product portfolio in the principal countries. ASM, the ASM International logo, Advance, Aurora, Dragon, Eagle, EmerALD, Epsilon, Intrepid, Polygon, Pulsar and Silcore are registered trademarks of ASM International NV. A400, A412, ALCVD, Atomic Layer CVD, Horizon, Loadstar, Medallion, NCP, PEALD and Previum are our trademarks. ‘The Switch Is On’ and ‘Drive Innovation. Deliver Excellence.’ are our service marks.

GOVERNANCE

TRADEMARK LIST AS OF JANUARY 1, 2016

FINANCIAL STATEMENTS

ASMI STATUTORY ANNUAL REPORT 2015 | Operational excellence |

ABOUT

OPERATIONAL EXCELLENCE

43

In 2012 we began making further significant steps to improve the structural maturity and operational performance of ASMI. For example, strategic focus areas were identified in relation to our longer-term ambitions.

These strategic focus areas, each sponsored by a member of the Senior Management Team, are:

CUSTOMERS Nurture the relationships we have with them and deliver the performance critical to our continued success.

PRODUCTS

STRATEGY & BUSINESS

STRATEGIC FOCUS AREAS

Drive Innovation to ensure that our future product portfolio will sustain our technology leadership positions.

Build and sustain a high-performance organization.

PRODUCT LIFE CYCLE Maximize the effectiveness of our product development process to Deliver Excellence.

GLOBAL OPERATIONS Optimize our manufacturing capabilities and performance.

PERFORMANCE REVIEW

TALENT

SYSTEMS

KEY OPERATIONAL IMPROVEMENTS In parallel and consistent with the above strategic focus areas, we carried out a rigorous self-assessment in 2013 against a comprehensive, industry-specific, business process, systems, and performance framework. From this self-assessment, we selected key operational improvement opportunities across a range of business process areas, based on their potential to both improve our performance and deliver excellence to our customers.

OPERATIONS AND MANUFACTURING Our broad portfolio of innovative technologies and products are used by the most advanced semiconductor fabrication plants around the world, helping them to progress along their technology roadmaps. Manufacturing these products involves the fabrication and assembly of various critical components, product assembly, quality control and testing.

FINANCIAL STATEMENTS

We recognize that our focus on operational excellence is a never-ending journey. Concentrating on the above areas collectively represents a considerable investment in our future, and is yielding significant improvements in  capabilities and results. We review our progress in these strategic focus areas quarterly, regularly refresh how  we search for further improvement opportunities, and continually raise the bar in our relentless drive to deliver excellence.

GOVERNANCE

The collective set of improvement projects was established as a company objective, with the imperative to globally harmonize our business practices. These projects were largely completed within 2014, which validated our program management methodology, and established a foundation of continuous improvement. In 2015, the critical prerequisites established in the preceding years enabled us to initiate an even more challenging and impactful set of projects, with commensurate progress. The cumulative progress in structural maturity, results, and ambition is recognized by our customers. For 2016 we will continue to drive further development in both the strategic focus areas and the operational continuous improvement program.

SHAREHOLDERS

Achieve leading edge information systems and infrastructure performance.

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44

ABOUT

ESTABLISHMENT OF FEMS

In 2015 we invested in a Supply Chain Excellence team to focus on critical technologies and key suppliers, which will drive supplier capability in alignment with our technology roadmap.

CUSTOMER RECOGNITION In March 2016, we were awarded Intel’s prestigious Preferred Quality Supplier (PQS) award for performance in 2015. This is our first such award. The PQS Award is part of Intel’s Supplier Continuous Quality Improvement (SCQI) program that encourages suppliers to strive for excellence and continuous improvement. This achievement reflects our long partnership with Intel, the value of our leading-edge materials deposition technology – essential to Intel’s success – and the significant progress we have made in our relentless drive toward operational excellence and safety leadership.

The press release detailing this award can be found on our corporate website. Further details are available at Intel’s website: https://newsroom.intel.com/.

GOVERNANCE

The PQS achievement requires outstanding performance in quality, cost, availability, technology, customer service, labor and ethics systems, environmental sustainability, as well as social responsibility and governance goals. This achievement is the culmination of many years’ focus on operational excellence across all key areas of our business.

SHAREHOLDERS

As we enter 2016, we are continuing to focus on increased order flexibility through lead time and cycle time reduction programs, such as a Merge-In-Transit (MIT) delivery model and the introduction of lean/Six Sigma production processes to optimize our manufacturing capability.

PERFORMANCE REVIEW

In 2004, we established FEMS, a manufacturing Center of Excellence in Singapore, to manufacture generic subsystems for our Vertical Furnaces product offering. This enabled us to reduce manufacturing costs in our wafer processing equipment operations. In 2009 we began the transition to full product manufacturing, including final assembly, testing and shipping systems to our customers from our Singapore location. In 2012 we strengthened the company with the addition of a global supply chain function, which includes responsibility for procurement, supply chain quality and inventories. In 2013 we made fundamental changes in the global manufacturing model, transforming from a vertically integrated model to an outsourced model, which reduced complexity, increased supply chain leverage, and drove improvements into our core internal manufacturing capabilities. Over the last few years we have continued to move non-core activities to value-added contract manufacturing, which has resulted in lower total costs and increased capability and flexibility. By 2014 we had expanded our outsourced manufacturing model to manage all production into FEMS.

STRATEGY & BUSINESS

In addition to technology leadership, we also continue to focus on further improving the effectiveness of our organization and the efficiency of our processes. This involves providing our customers with dependable, leading-edge products and services of consistent quality that offer the best cost of ownership, increasing our flexibility to meet customer expected lead times. To achieve this, we continually optimize our manufacturing and global sourcing processes, including the migration to common product platforms.

FINANCIAL STATEMENTS

ASMI STATUTORY ANNUAL REPORT 2015 45

ABOUT

PERFORMANCE REVIEW

Europe

STRATEGY & BUSINESS

14.8%

SALES PER REGION

OPERATING CASH FLOW

18.5%

175

North America

EUR million

PERFORMANCE REVIEW

66.7% Asia

OPERATING RESULT (EBIT)

SHAREHOLDERS

111

EUR million

Financial performance CR performance

46 63

GOVERNANCE

FINANCIAL & NON-FINANCIAL RESULTS

FINANCIAL STATEMENTS

ASMI STATUTORY ANNUAL REPORT 2015 | Financial performance |

ABOUT

FINANCIAL PERFORMANCE

46

MANAGEMENT BOARD REPORT INTRODUCTION

The principal markets that we address in wafer processing are selected segments of the deposition equipment market. The total deposition equipment market was estimated to be US$8.3 billion in 2015 (VLSI Research, January 2016). Within this market we focus on the following segments: vertical furnaces, epitaxy, PECVD and Atomic Layer Deposition (ALD). ALD is an advanced technology that deposits atomic layers one at a time on wafers. This process is used to create ultra-thin films of exceptional quality and flatness. Plasma is sometimes used to enhance the process further (Plasma Enhanced ALD, or PEALD) and may enable the deposition at reduced process temperature.

A key driver in the semiconductor industry is the continuous demand for smaller, faster and cheaper semiconductor components. Through technology advances in the manufacturing process, semiconductor manufacturers are continuously scaling chips to smaller dimensions. This enables more transistors to fit in the same physical space, thereby reducing the costs and increasing the speed and the performance of a device. Another trend is  towards vertical or 3D transistors. This trend also helps to keep the industry on track with Moore’s Law (processor speeds, or overall processing power for computers, will double every two years).

GOVERNANCE

MOORE’S LAW

SHAREHOLDERS

Our wafer processing business supplies equipment to the leading semiconductor manufacturers in the Logic, Foundry and Memory markets, primarily for the deposition of thin films. The Logic market is made up of manufacturers who create chips that are used to process data; the Foundry market consists of businesses that operate semiconductor fabrication plants to manufacture the designs of other semiconductor companies; and the Memory market covers manufacturers who make chips that store information either temporarily or permanently, such as Random Access Memory (RAM). We also supply equipment to leading manufacturers of analog semiconductor devices.

PERFORMANCE REVIEW

ASMI sells its products to the semiconductor manufacturing industry and, through its 39.55% stake in ASMPT, to the assembly industry, which is subject to sudden, extreme, cyclical variations in product supply and demand. We conduct our front-end business through wholly-owned subsidiaries, the most significant being ASM front-End Manufacturing Singapore Pte Ltd (FEMS), located in Singapore, ASM Europe BV (ASM Europe), located in the Netherlands, ASM America, Inc (ASM America), located in the United States, ASM Japan KK (ASM Japan), located in Japan, and ASM Genitech Korea Ltd (ASM Genitech), located in South Korea. The location of our facilities allows us to interact closely with customers in the world’s major geographical market segments: Europe, North America, and Asia.

STRATEGY & BUSINESS

We are an equipment supplier mainly to the semiconductor manufacturing industry. We design, manufacture and sell equipment and services to our customers for the production of semiconductor devices, or integrated circuits. The semiconductor capital equipment market is composed of three major market segments: wafer processing equipment, assembly and packaging equipment, and test equipment. Through our front-end business, we are active in the wafer-processing segment. In addition, as per December 31, 2015, we have a 39.55% stake in ASM Pacific Technology (ASMPT), which is a leading supplier of assembly and packaging equipment to the semiconductor, LED and electronics markets.

FINANCIAL STATEMENTS

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Advanced deposition techniques

BACK-END OPERATIONS

STRATEGY Our strategic objective is to realize profitable, sustainable growth by capitalizing on our innovative strength, operational excellence and our leadership in ALD and other business segments we are active in. The key elements of our strategy include:

Innovative strength

Leadership in ALD

Operational excellence While technology leadership remains crucial, we continue to focus on further improving the effectiveness of our organization and the efficiency of processes. We aim to provide our customers with dependable leading-edge products and services at a consistent quality level, providing the best cost of ownership. To help achieve this, we continue to optimize our manufacturing and global sourcing processes, including the migration to common product platforms.

We believe that being a responsible company creates value for our company, our stakeholders and society, which is why we have integrated corporate responsibility (CR) into our strategic goals. Our goal is to manage all aspects of our business responsibly to meet or exceed stakeholder expectations, while holding our suppliers to the same high standards that we set for ourselves. This will enable us to continue to help improve the quality of people’s lives.

FINANCIAL STATEMENTS

Responsibility

GOVERNANCE

ALD technologies have been established as mainstream technologies in high-volume manufacturing supporting virtually all of the leading customers in the semiconductor industry. As the leader in this space, ALD has turned into a key growth driver for our business. We expect that the trends of continued scaling and evolution towards 3D device structures will further expand the number of applications for ALD. We aim to maintain our leading position in ALD by leveraging on our strong expertise and established customer relationships, and by developing new applications to support our customers with increasingly complex device node transitions.

SHAREHOLDERS

We have always been recognized for our technology leadership. Today, we provide leading technologies that support our customers in staying on the curve of Moore’s Law. Our innovative strength is what differentiates us in the marketplace and continues to be the cornerstone of our strategy. Apart from our internal R&D efforts, we are continuously expanding and deepening our strategic cooperation with key customers, suppliers, chemicals manufacturers and research institutes such as imec. We also expand our patent portfolio.

PERFORMANCE REVIEW

Our investment in ASM Pacific Technology represents the back-end business. The back-end operations are conducted through facilities in Hong Kong, the People’s Republic of China, Singapore, Malaysia and Germany. On March 15, 2013, we reduced our shareholding in ASMPT from 52% to around 40%. The sale of the 12% stake in ASMPT caused and required the deconsolidation of ASMPT. Since that date our share of the net result of ASMPT is reported on the line share in income of investments in associates.

STRATEGY & BUSINESS

The manufacture of ever smaller and more complex devices requires more advanced and precise deposit techniques. ALD offers the precision needed to deposit ultra-thin and highly conformal films, even on challenging 3D surfaces. Our portfolio of ALD products is an enabling technology for our customers, helping them to manufacture semiconductor devices at smaller line widths with new materials and 3D architectures. Our technologies support our customers in their roadmap towards chips with a higher performance and reduced energy consumption, which in turn enables the introduction of new and more advanced products ranging from high-end servers to smartphones, wearable devices and automotive electronics.

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OPERATIONS

Record revenue

The revenue growth in 2015 was again led by increased tool sales in our ALD business. Momentum in the ALD market during the year remained strong. ALD is required for an increasing number of process steps and applications as customers transition to the most advanced technology nodes. ALD is now firmly established as a key enabling technology. In Logic, Foundry and Memory, the leading customers have already ramped several technology generations based on our ALD equipment. Our ALD equipment is an enabling technology for spacerdefined multiple patterning and used by virtually all of the Memory customers. In the Logic and Foundry sector, ALD has become a mainstream technology for high-k metal gate applications.

In recent years, we have further broadened our customer base. In 2015 our total revenue growth was to a large  extent driven by an increased contribution from the top four to 10 customers. In combination with the expanded client base, we have also achieved a more balanced customer mix over the years, including a substantially stronger presence in the Memory sector. This allowed our company to benefit again in 2015 from  healthy levels of equipment spending by Memory customers. Following several years of steady growth in customer deployment and the development of new applications, ALD has turned into a key growth driver for our company. Our ALD product lines accounted for clearly more than half of total equipment revenue in 2015.

Gross margin

FINANCIAL STATEMENTS

The gross margin increased by 100 basis points in 2015 to 44.1%. Throughout the year, the margin was relatively stable at around the 44% level, with most of the quarter-by-quarter fluctuations explained by changes in the sales mix. Apart from positive mix effects during the year, we also benefited from ongoing efficiency improvements. The improvement in gross margin in 2015 followed on strong increases already achieved in 2013 and 2014. Starting in 2013, we began executing a number of programs to further increase the efficiency and flexibility of our manufacturing operations and supply chain. Measures included new outsourcing initiatives, a stronger focus on the sourcing of complete sub-assemblies and the migration of a larger part of our supply base to Asia.

GOVERNANCE

For the year in total, our new bookings increased by 1% in 2015 to €608 million. The book-to-bill as measured by orders divided by sales decreased from 1.1 in 2014 to 0.9 in 2015. Equipment bookings in 2015 for ASMI as a whole were led by the Memory segment, followed by Foundry and Logic. Unlike 2014, bookings in 2015 were first-half loaded. We finished the year with an order backlog of €128 million, a 27% decrease compared to the end of 2014.

SHAREHOLDERS

Broadening the customer base

PERFORMANCE REVIEW

Following a strong order intake in the latter part of 2014 and the first part of 2015, revenue increased to new record heights in the first half of 2015 at €162 million in the first quarter and €201 million in the second quarter. While still higher year-over-year revenue decreased sequentially in the second half, due to lower spending levels in the Logic/Foundry and DRAM customer segment. For the full year, net sales increased by 23% to a new record high for the wafer processing equipment business. On a constant currency basis our sales increased by 14% year-on-year. For the third consecutive year we have grown our sales by solid double digits and for the fourth time in five years we have outperformed the broader equipment market.

STRATEGY & BUSINESS

Following a strong increase in 2014, the semiconductor equipment market was relatively stable in 2015. Gartner estimated that the Wafer Fab Equipment market decreased marginally by 0.5% in 2015. While spending in the Foundry and Logic segments moderated in the course of the year, the Memory segment was again the key driver behind industry equipment spending. Leading-edge equipment continued to represent the largest part of global equipment spending in 2015.

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Expenses

Operating profit Operating profit increased from €93.4 million in 2014 to €111.1 million in 2015. Excluding the aforementioned impairment charges, the operating margin increased from 17.3% to 19.0%.

STRATEGY & BUSINESS

Selling, general and administrative expenses as a percentage of sales dropped from 15% in 2014 to 14% in 2015. Research and development (R&D) expenses excluding impairment charges on capitalized development costs remained stable at 11% of sales. The impairment charges were related to the write-off of the remaining 450mm assets for an amount of €13 million and for an amount of €3 million for other development projects. The total investment in R&D – including capitalized R&D – increased substantially during 2015 and was in response to an increase in customer requests for new applications.

Results from investments PERFORMANCE REVIEW SHAREHOLDERS

Results from investments, which primarily reflects our shareholding of 39.55% in ASMPT, dropped from €61.9 million to €44.2 million. These exclude the amortization of intangible assets related to ASMPT. Following a strong improvement in 2014, the contribution by ASMPT fell in 2015 as the company was impacted by the slowdown of the assembly and packaging equipment market during the year. ASMPT’s revenue dropped by 9% in 2015 in Hong Kong dollar. After a strong start of the year, momentum slowed in the second quarter. In the third quarter, the assembly and packaging equipment market weakened substantially, followed by some recovery in demand conditions in the fourth quarter. Despite the revenue decrease, ASMPT slightly increased gross margins during the year, driven by strong improvements in SMT  Solutions and reduced volatility in the assembly and packaging equipment margin. In assembly and packaging equipment, revenue dropped by 15% in 2015, even though ASMPT achieved positive growth in a number of products such as flip-chip bonders and CMOS Image Sensor equipment. In SMT Solutions (Surface Mount Technology) revenue decreased slightly by 2% and ASMPT overtook the position as the global top supplier in this market.

GOVERNANCE FINANCIAL STATEMENTS

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OPERATIONS UPDATE RESULTS OF OPERATIONS 2015 COMPARED TO 2014

The following table shows the operating performance for 2015, versus 2014: 2014

2015

New orders

602.1

608.4

1%

Backlog

176.1

127.8

(27%)

1.1

0.9

Net sales

545.6

669.6

23%

Gross profit

235.3

295.5

26%

43.1%

44.1%

Book-to-bill

Gross profit margin %

CHANGE

(80.6)

(94.7)

18%

(60.4)

(73.6)

22%

(0.9)

(16.2)

n/a

93.4

111.1

19%

17.1%

16.6%

Financing income /(expense)

24.8

24.8



Income tax

(19.4)

5.4

24.8

Net earnings before share in income of investments in associates

98.8

141.3

42.5

Share in income of investments in associates

39.4

16.1

(23.3)

Impairment charges property, plant and equipment and other intangible assets Operating result Operating margin %

Result from discontinued operations

3.2



(3.2)

NET EARNINGS

141.4

157.3

16.0

Net earnings per share, diluted

€2.20

€2.50

€0.30

Net earnings per share excluding effects from the sale of ASMPT shares

€2.49

€2.93

€0.44

GOVERNANCE

As a result of the sale on March 15, 2013 of a 12% share in ASMPT, ASMI lost control over ASMPT. Following the cease of control, ASMPT was presented as a discontinued operation. Consequently, the historic net results of ASMPT as well as the gain on the sale of the ASMPT share and the remeasurement gain are presented in the consolidated statement of income on the line results from discontinued operations. From the date ASMI lost control, the investment in ASMPT has been accounted for under the equity method and the related results are presented under results from investments and associates.

SHAREHOLDERS

Selling, general and administrative expenses Research and development expenses

PERFORMANCE REVIEW

(EUR million)

STRATEGY & BUSINESS

Results

FINANCIAL STATEMENTS

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The following table shows certain consolidated statement of profit or loss data as a percentage of net sales for our continued operations for 2014 and 2015:  in % Cost of sales

(56.9%)

(55.9%)

GROSS PROFIT

43.1%

44.1%

Selling, general and administrative expenses

(14.8%)

(14.1%)

Research and development expenses

(11.1%)

(11.0%)

(0.2%)

(2.4%)

17.1%

16.6%

Net interest income (expense)

(0.3%)

(0.1%)

Foreign currency exchange gains (losses)

4.8%

3.8%

Impairment charges EARNINGS (LOSS) FROM OPERATIONS

Share in income of investments in associates EARNINGS (LOSS) BEFORE INCOME TAXES Income tax income/(expense)

7.2%

2.4%

28.9%

22.7%

(3.6%)

0.8%

25.3%

23.5%

Net earnings from discontinued operations

0.6%



NET EARNINGS FROM OPERATIONS

25.9%

23.5%

NET EARNINGS (LOSS) FROM CONTINUING OPERATIONS

PERFORMANCE REVIEW

2015

100.0%

STRATEGY & BUSINESS

2014

100.0%

Net sales

Net sales SHAREHOLDERS

The sales cycle from quotation to shipment for our front-end equipment generally takes several months, depending on capacity utilization and the urgency of the order. Usually, acceptance is within one to three months after shipment. The sales cycle is longer for equipment that is installed at the customer’s site for evaluation prior to sale. The typical trial period ranges from six months to one year after installation. Our sales are concentrated in the United States, Europe and Asia. The following table shows the geographic distribution of our sales from continuing operations for 2014 and 2015:   (EUR million)

2015

€177.0

32.4%

€123.9

18.5%

Europe

94.5

17.3%

99.3

14.8%

Taiwan

81.1

14.9%

106.8

15.9%

Japan

62.5

11.5%

179.6

26.8%

South Korea

93.6

17.2%

109.9

16.4%

China

24.6

4.5%

38.3

5.7%

Other

12.3

2.3%

11.8

1.8%

€545.6

100.0%

€669.6

100.0%

FINANCIAL STATEMENTS

A substantial portion of our sales is for equipping new or upgraded fabrication plants where device manufacturers are installing complete fabrication equipment. As a result, our sales in this segment tend to be uneven across customers and financial periods. Sales to our ten largest customers accounted for 84% and 81% of net sales in 2014 and 2015, respectively. The composition of our ten largest front-end customers changes from year to year. The three largest customers from these ten accounted each for more than 10% of front-end net sales in 2014 and 2015, respectively.

GOVERNANCE

United States

YEAR ENDED DECEMBER 31, 2014

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Increase in net sales

STRATEGY & BUSINESS

For the full year, net sales increased by 23% in 2015 to a new record high for the front-end business. On a constant currency basis, our sales increased by 14%. For the third consecutive year we have grown our sales by solid double digits and for the fourth time in five years we have outperformed the broader equipment market. The revenue growth in 2015 was again led by increased tool sales in our ALD business. Momentum in the ALD market during the year remained strong. ALD is required for an increasing number of process steps and applications as customers transition to the most advanced technology nodes. ALD is now firmly established as a key enabling technology. In Logic, Foundry and Memory, the leading customers have already ramped several technology generations based on our ALD equipment. Our ALD equipment is an enabling technology for spacerdefined multiple patterning and used by virtually all of the Memory customers. In the Logic and Foundry sector, ALD has become a mainstream technology for high-k metal gate applications.

FULL YEAR (EUR million)

2014

2015

% CHANGE

BACKLOG AT THE BEGINNING OF THE YEAR

114.8

176.1

53%

New orders

602.1

608.4

1%

Net sales

(545.6)

(669.6)

23%

FX-effect

4.8

12.9

176.1

127.8

1.1

0.9

BACKLOG AS PER REPORTING DATE BOOK-TO-BILL RATIO (NEW ORDERS DIVIDED BY NET SALES)

GOVERNANCE

For the year in total, our new bookings increased by 1% in 2015 to €608 million. The book-to-bill as measured by orders divided by sales decreased from 1.1 in 2014 to 0.9 in 2015. Equipment bookings in 2015 for ASMI as a whole were led by the Memory segment, followed by Foundry, and Logic. Unlike the previous year, bookings in 2015 were first-half loaded. We finished the year with an order backlog of €128 million, a 27% decrease compared to the end of 2014.

SHAREHOLDERS

The backlog includes orders for which purchase orders or letters of intent have been accepted, typically for up to one year. Historically, orders have been subject to cancellation or rescheduling by  customers. In addition, orders have been subject to price negotiations and changes in specifications as a result of changes in customers’ requirements. Due to possible customer changes in delivery schedules and requirements and to cancellation of orders, our backlog at any particular date is not necessarily indicative of actual sales for any subsequent period.

(27%)

PERFORMANCE REVIEW

The following table shows the level of new orders for full year 2015 and the backlog for the same period over 2014:

FINANCIAL STATEMENTS

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Gross profit Total gross profit developed as follows: FULL YEAR GROSS PROFIT MARGIN

(EUR million)

2014

2015

2014

2015

INCREASE (DECREASE) PERCENTAGE POINTS

Front-end

235.3

295.5

43.1%

44.1%

100

PERFORMANCE REVIEW

Gross margin increased by 100 basis points in 2015 to 44.1%. Throughout the year the margin was relatively stable at around the 44% level, with most of the quarter-by-quarter fluctuations explained by changes in the sales mix. Apart from positive mix effects during the year, we also benefited from ongoing efficiency improvements. The improvement in gross margin in 2015 followed on strong increases already achieved in 2013 and 2014. Starting in 2013, we have executed a number of programs to further increase the efficiency and flexibility of our manufacturing operations and supply chain. Measures included new outsourcing initiatives, a stronger focus on the sourcing of complete sub-assemblies and the migration of a larger part of our supply base to Asia.

STRATEGY & BUSINESS

GROSS PROFIT

Currency changes led to an 8% increase in gross profit compared to 2014.

Selling, general and administrative expenses Total selling, general and administrative expenses developed as follows: FULL YEAR 2014

2015

% CHANGE

Front-end

80.6

94.7

17%

Selling, general and administrative (SG&A) expenses increased by 17% in 2015 compared to the previous year. As a percentage of sales, SG&A expenses were 14% in 2015 and 15% in 2014. SG&A included restructuring expenses of €1.7 million in 2015.

SHAREHOLDERS

(EUR million)

The impact of currency changes on SG&A expenses resulted in an increase of 7% year-over-year.

Research and development expenses GOVERNANCE

Total research and development (R&D) expenses, excluding impairment charges, increased by 22% in 2015 compared to the previous year, driven by additional investments to fulfill customer requirements. As a percentage of sales, R&D expenses remained stable at 11% compared to 2014. Currency changes resulted in an 11% increase in R&D expenses year-over-year.

FINANCIAL STATEMENTS

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Total research and development expenses developed as follows: FULL YEAR (EUR million)

2015

% CHANGE

Research and development expenses Research and development grants and credits

50.4

62.8

25%

(0.9)

(1.0)

11%

Amortization of capitalized development expenses

10.9

11.8

8%

60.4

73.6

22%

Impairment research and development related assets

0.9

16.2

n/a

TOTAL

61.3

89.7

46%

STRATEGY & BUSINESS

2014

Front-end:

PERFORMANCE REVIEW

Impairment of capitalized development expenses related primarily to the development of new hardware that is now no longer as in-demand from customers, and purchased technology which became obsolete. Of the impairment charges for 2015, €13.4 million relate to the impairment of capitalized development expenditures and other assets related to the 450mm technology. Of the impairment charges for 2015, €2.8 million relate to the impairment of capitalized development expenses for other projects.

Research and development investment

SHAREHOLDERS

We continue to invest strongly in R&D. As part of our R&D activities, we are engaged in various development programs with customers and research institutes. These allow us to develop products that meet customer requirements and obtain access to new technology and expertise. The costs relating to prototypes and experimental models, which we may subsequently sell to customers, are charged to the cost of sales. Our R&D operations in the Netherlands and the United States receive research and development grants and credits from various sources.

Operating result The operating result developed as follows: FULL YEAR (EUR million)

2015

CHANGE

94.4

129.0

37%

Impairment charges

(0.9)

(16.2)

Restructuring expenses

(0.1)

(1.7)

93.4

111.1

Front-end: BEFORE SPECIAL ITEMS

INCLUDING SPECIAL ITEMS

Financing costs Financing costs mainly reflect translation results. A substantial part of our cash position is denominated in US dollars.

FINANCIAL STATEMENTS

Operating profit increased to €111.1 million from €93.4 million in 2014. Excluding the previously mentioned impairment charges, the operating margin increased to 19.3% from 17.3%.

19%

GOVERNANCE

2014

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Results from investments in associates

STRATEGY & BUSINESS

Results from investments, which primarily reflects our 39.55% shareholding in ASMPT, dropped to €44.2 million from €61.9 million in 2014. These exclude the amortization of intangible assets related to ASMPT. Following a strong improvement in 2014, the contribution by ASMPT fell in 2015 as the company was impacted by the slowdown of the assembly and packaging equipment market during the year. ASMPT’s revenue dropped by 9% in 2015 in Hong Kong dollars. After a strong start of the year, momentum slowed in the second quarter. In the third quarter, the assembly and packaging equipment market weakened substantially, followed by some recovery in demand conditions in the fourth quarter. Despite the revenue decrease, ASMPT slightly increased gross margins during the year, driven by strong improvement in SMT Solutions and reduced volatility in the assembly and packaging equipment margin. In assembly and packaging equipment, revenue dropped by 15% in 2015, even though ASMPT achieved positive growth in a number of products such as flip-chip bonders and CMOS Image Sensor equipment. In SMT Solutions (Surface Mount Technology) revenue decreased slightly by 2% and ASMPT became the global top supplier in this market.

PERFORMANCE REVIEW

The amortization of the recognized intangible assets and the depreciation of the fair value adjustment for property, plant & equipment had a €27.2 million impact on net earnings in 2015 (2014: €22.5 million). For further information on the divestment of ASMPT, see Note 6 to the Consolidated financial statements.

Income tax The income tax benefit of €5.4 million (2014: €19.4 million expense) reflects an effective tax rate of 3.5% negative (2014: 12.3%). The tax benefit includes €9 million in a one-off cash benefit due to tax refunds in South Korea from previous years related to higher tax exemptions than originally assumed and a €5 million one-off benefit resulting from the recognition of deferred tax assets on tax losses, incurred in the past, in the Netherlands. For further information on tax, see Note 20 to the Consolidated financial statements.

Net earnings developed as follows: FULL YEAR (EUR million)

2015

CHANGE

99.5

156.8

57.4

Impairment charges

(0.9)

(14.8)

(13.9)

Restructuring expenses

(0.1)

(1.7)

(1.6)

98.5

140.3

41.8

Front-end: BEFORE SPECIAL ITEMS

TOTAL Back-end:

62.2

44.2

(18.0)

Amortization other intangible assets from purchase price allocation

(22.5)

(27.2)

(4.7)

TOTAL

39.7

17.0

(22.7)

138.2

157.3

19.1

Unrealized remeasurement gain on the remaining approximately 40% of ASMPT shares

3.2



(3.2)

NET RESULT FROM DISCONTINUED OPERATIONS

3.2



(3.2)

141.4

157.3

15.9

NET RESULT FROM CONTINUING OPERATIONS

NET RESULT FROM OPERATIONS

FINANCIAL STATEMENTS

Investment in ASMPT (approximately 40%)

GOVERNANCE

2014

SHAREHOLDERS

Net earnings

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Cash flow The following table shows the cash flow statement: 2014

2015

138.2

157.3

Depreciation, amortization and impairments

33.0

54.3

Income tax

19.4

(5.4)

Share in income of investments in associates

(39.4)

(16.1)

7.5

8.2

(22.3)

(17.1)

6.8

(2.8)

Inventories

(20.0)

13.4

Accounts payable and accrued expenses

21.0

(3.0)

NET EARNINGS FROM CONTINUING OPERATIONS Adjustments to cash from operating activities:

Share-based compensation Non cash financing costs

STRATEGY & BUSINESS

(EUR million)

Changes in other assets and liabilities:

Other assets and liabilities

(4.9) (9.2)

124.7

174.8

Capital expenditures

(30.6)

(33.6)

Capitalized development expenditure

(14.3)

(30.2)

(1.5)

(7.2)

20.0

42.9

0.4

(0.5)

NET CASH PROVIDED (USED) IN INVESTING ACTIVITIES FROM CONTINUING OPERATIONS

(26.2)

(28.6)

Purchase treasury shares

(29.3)

(79.1)

Debt issuance fees paid

(1.4)



NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES

Purchase of intangible assets Dividend received from investments Other

Proceeds from shares issued

4.8

11.3

Dividend paid and capital repaid to shareholders ASMI

(31.8)

(37.2)

NET CASH PROVIDED (USED) IN FINANCING ACTIVITIES FROM CONTINUING OPERATIONS

(57.8)

(104.9)

40.8

41.3

TOTAL NET CASH PROVIDED

GOVERNANCE

Statement of financial position Working capital at December 31, 2015 was €114 million (2014: €112 million). Working capital consists of: inventories, accounts receivable, other current assets, accounts payable, provision for warranty and accrued expenses and other payables. The number of outstanding days of working capital, measured against quarterly sales, decreased from 78 days at December 31, 2014 to 69 days on December 31, 2015.

SHAREHOLDERS

(7.5) (11.8)

Income tax paid

PERFORMANCE REVIEW

Accounts receivable

FINANCIAL STATEMENTS

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Employees The following tables list the total number of employees and the number of employees in our front-end business, at the dates indicated, exclusive of temporary workers:

2014

2015

- the Netherlands

140

146

- EMEA

171

168

United States

600

516

Japan

186

209

South Korea

123

148

Singapore

325

318

Europe:

TOTAL

90

92

1,635

1,597

We had 1,597 employees as per December 31, 2015. The following table lists the number of employees per function: DECEMBER 31,

FUNCTION

2015

Research and development

365

420

Manufacturing

286

283

Marketing and sales

303

253

Customer service

517

476

Finance and administration

TOTAL

164

165

1,635

1,597

The assembly and packaging segment, ASMPT, had 14,348 employees as per December 31, 2015 (December 31, 2014: 15,946).

Subsequent events were evaluated up to April 13, 2016, which is the issuance date of this Statutory annual report 2015. There are no subsequent events to report.

FINANCIAL STATEMENTS

Subsequent events

GOVERNANCE

Our Dutch operations, which employed 146 as per December 31, 2015, is subject to standardized industry bargaining under Dutch law, and is required to pay wages and meet conditions established as a result of negotiations between all Dutch employers in their industry and unions representing employees of those employers. As required by Dutch law, management in our Dutch facilities meet with a works council consisting of elected employee representatives to discuss working conditions and personnel policies, as well as to explain major corporate decisions and to solicit their advice on major issues.

SHAREHOLDERS

2014

PERFORMANCE REVIEW

Asia, other

STRATEGY & BUSINESS

DECEMBER 31,

GEOGRAPHIC LOCATION

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LIQUIDITY AND CAPITAL RESOURCES LIQUIDITY

On December 31, 2015, our principal sources of liquidity consisted of €447 million in cash and cash equivalents and €150 million in undrawn bank lines.

CASH FLOW We generated cash from operating activities of €174.8 million in 2015 (2014: €124.7 million). We invested €28.6 million (2014: €26.2 million), and used €104.9 million (2014: €57.8 million) to finance operations.

DEBT We were debt-free as of December 31, 2015.

The credit facility of €150 million includes two financial covenants: ››minimum consolidated tangible net worth; and ››consolidated total net debt/total equity ratio.

SHAREHOLDERS

In December 2013, we finalized the extension of our current standby revolving credit facility. The maturity date of the credit commitment of €150 million was extended to December 31, 2018. As per December 31, 2015, this facility was undrawn. Once the facility is used, this usage is secured by a portion of our shareholding in ASMPT or accounts receivable.

PERFORMANCE REVIEW

For the most part, our cash and cash equivalents are not guaranteed by any governmental agency. We place our cash and cash equivalents with high-quality financial institutions to limit our credit risk exposure.

STRATEGY & BUSINESS

Our liquidity is affected by many factors, some of which are related to our ongoing operations while others are related to the semiconductor and semiconductor equipment industries, and to the economies of the countries in which we operate. Although our cash requirements fluctuate based on the timing and extent of these factors, we believe that cash generated by operations, together with the liquidity provided by our existing cash resources and our financing arrangements, will be sufficient to fund working capital, capital expenditures and other ongoing business requirements for at least the next twelve months.

These financial covenants are measured twice each year, on June 30 and December 31. We were in compliance with these financial covenants as per June 30, 2015 and December 31, 2015.

ASMPT The assembly and packaging segment of our business is organized in ASM Pacific Technology Ltd. Net cash of our 39.55%-owned associate was €239 million on December 31, 2015. The cash resources and borrowing capacity of ASMPT are not available to our wafer processing equipment segment.

The market value of our 39.55% investment ASMPT was approximately €1,155 million as per December 31, 2015.

FINANCIAL STATEMENTS

Although certain directors of ASMPT are directors of ASMI, ASMPT is under no obligation to declare dividends to shareholders or enter into transactions that are beneficial to us. As a substantial shareholder, we can participate in the shareholders approval of the payment of dividends, but cannot compel their payment or size. Cash dividends received from ASMPT during 2014 and 2015 were €20.0 million and €42.9 million, respectively.

GOVERNANCE

See notes 10, 15 and 16 to our Consolidated financial statements for more on our funding, treasury policies and our long-term debt.

ASMI STATUTORY ANNUAL REPORT 2015 | Financial performance |

59

ABOUT

OUTLOOK

STRATEGY & BUSINESS

We have developed forecasts and projections of cash flows and liquidity needs for the upcoming year. These take into account the current market conditions, reasonable possible changes in trading performance based on such conditions, and our ability to modify our cost structure as a result of changing economic conditions and sales levels. In the forecasts we have also taken into account: the total cash balances amounting to €447 million on December 31, 2015; the ability to renew debt arrangements and to access additional indebtedness; and whether or not we will comply with our financial covenants. Based on this, we believe that our cash on hand at the end of 2015 is adequate to fund our operations, our investments in capital expenditures and to fulfill our existing contractual obligations for the next twelve months.

CONTRACTUAL OBLIGATIONS, CONTINGENT LIABILITIES AND COMMITMENTS

The following table summarizes our contractual and other obligations as per December 31, 2015, aggregated by type of contractual obligation: LESS THAN 1 YEAR

1-3 YEARS

3-5 YEARS

MORE THAN 5 YEARS

54,441

54,441







6,841

6,841







Accrued expenses and other payables

44,791

44,791







Operating leases

21,577

6,052

8,917

5,300

1,308

Pension liabilities

6,207

378

1,323

1,171

3,335

Accounts payable Income tax payable

Purchase obligations: Purchase commitments to suppliers

53,985

53,985







Capital expenditure and other commitments

1,068

1,068







TOTAL CONTRACTUAL OBLIGATIONS

188,910

167,556

10,240

6,471

4,643

MARKET RISK

FOREIGN EXCHANGE RATE RISK We conduct business in a number of foreign countries, with certain transactions denominated in currencies other than the functional currency of ASMI (euro) or one of our subsidiaries conducting the business. The purpose of our foreign currency management is to manage the effect of exchange rate fluctuations on revenues, costs and cash flows, and assets and liabilities denominated in selected foreign currencies, in particular in US dollars.

FINANCIAL STATEMENTS

We are exposed to market risks (including foreign exchange rate risk), credit risk, liquidity risk and equity price risk. We may use forward exchange contracts to hedge foreign exchange risk. We do not enter into financial instrument transactions for trading or speculative purposes.

GOVERNANCE

We outsource a substantial portion of the manufacturing of our front-end operations to certain suppliers. As our products are technologically complex, the lead times for purchases from our suppliers can vary and can be as long as nine months. Generally, contractual commitments are made for multiple modules or systems in order to reduce our purchase prices per module or system. For the majority of our purchase commitments, we have flexible delivery schedules depending on the market conditions, which allow us, to a certain extent, to  delay delivery beyond originally planned delivery schedules.

SHAREHOLDERS

TOTAL

PERFORMANCE REVIEW

We have contractual obligations, some of which are required to be recorded as liabilities in our Consolidated financial statements, including long- and short-term debt. Other contractual arrangements, such as operating lease commitments and purchase obligations, are not generally required to be recognized as liabilities on our consolidated statement of financial position, but are required to be disclosed.

ASMI STATUTORY ANNUAL REPORT 2015 | Financial performance |

60

ABOUT

Forward contracts

The majority of revenues and costs of our assembly and packaging segment are denominated in Hong Kong dollars, Chinese yuan and US dollars. The functional currency of our assembly and packaging segment (Hong Kong dollar) is linked to the US dollar. As we did not use forward exchange contracts, no unrealized gains were included in accumulated other comprehensive income as per December 31, 2015.

PERFORMANCE REVIEW

We may use forward exchange contracts to hedge foreign exchange risk of anticipated sales or purchase transactions in the normal course of business, which occur within the next twelve months, for which we have a firm commitment from a customer or to a supplier. The terms of these contracts are consistent with the timing of the transactions being hedged. The hedges related to forecasted transactions are designated and documented at the inception of the hedge as cash flow hedges, and are evaluated for effectiveness quarterly. The effective portion of the gain or loss on these hedges is reported as a component of accumulated other comprehensive income in Shareholders’ Equity, and is reclassified into earnings when the hedged transaction affects earnings. As per December 31, 2015 we had no foreign exchange contracts in place.

STRATEGY & BUSINESS

The majority of revenues and costs of our wafer processing equipment segment are denominated in US dollars, Singapore dollars, Korean won and Japanese yen. Since foreign currency exposure on our trading positions is not significant, no forward exchange contracts are used. The effect of exchange rate fluctuations on revenues, costs and cash flows and assets and liabilities denominated in foreign currencies is reviewed periodically.

Derivative instruments

A positive amount indicates an increase in equity. Recognized in equity is the revaluation effect of subsidiaries denominated in US dollars, Singapore dollars, Hong Kong dollars, Korean won and Japanese yen.

FINANCIAL STATEMENTS

The following tables analyze our sensitivity to a hypothetical 10% strengthening and 10% weakening of the  US  dollar, Singapore dollar, Hong Kong dollar, Korean won or Japanese yen against the euro as per December 31, 2014 and December 31, 2015. This analysis includes foreign currency-denominated monetary items and adjusts their translation at year end for a 10% increase and 10% decrease of the US dollar, Singapore dollar, Hong Kong dollar, Korean won or Japanese yen against the euro.

GOVERNANCE

To the extent that foreign currency fluctuations affect the value of our investments in our foreign affiliates, they are not hedged. The cumulative effect of these fluctuations is separately reported in Consolidated Shareholders’ Equity. For the year ended December  31, 2015, we recorded a favorable movement of €137 million (year-ended December 31, 2014: €146 million). See Note 11 to our Consolidated financial statements.

SHAREHOLDERS

Furthermore, we may manage the currency exposure of certain receivables and payables using derivative instruments, such as forward exchange contracts (fair value hedges) and currency swaps, and non-derivative instruments, such as debt borrowings in foreign currencies. The gains or losses on these instruments provide an offset to the gains or losses recorded on receivables and payables denominated in foreign currencies. The derivative instruments are recorded at fair value and changes in fair value are recorded in earnings under foreign currency exchange gains (losses) in the consolidated statement of profit or loss. Receivables and payables denominated in foreign currencies are recorded at the exchange rate at the balance sheet date and gains and losses as a result of changes in exchange rates are recorded in earnings under foreign currency exchange gains (losses) in the consolidated Statement of profit or loss.

ASMI STATUTORY ANNUAL REPORT 2015 | Financial performance |

61

ABOUT

CURRENCY IMPACT ON EQUITY (EUR thousand)

2015

10% increase of US dollar versus euro

9,381

11,109

10% decrease of US dollar versus euro

(9,381)

(11,109)

10% increase of Singapore dollar versus euro

7,967

9,925

10% decrease of Singapore dollar versus euro

(7,967)

(9,925)

10% increase of Hong Kong dollar versus euro

109,211

118,085

10% decrease of Hong Kong dollar versus euro

(109,211)

(118,085)

10% increase of Korean won versus euro

8,163

12,123

10% decrease of Korean won versus euro

(8,163)

(12,123)

10% increase of Japanese yen versus euro

6,925

8,211

10% decrease of Japanese yen versus euro

(6,925)

(8,211)

STRATEGY & BUSINESS

2014

PERFORMANCE REVIEW

A hypothetical 10% strengthening or 10% weakening of any other currency against the euro as per December 31, 2014 and December 31, 2015 would not result in a material impact on equity. The following table analyzes our sensitivity to a hypothetical 10% strengthening and 10% weakening of the US dollar, Hong Kong dollar, Korean won and Japanese yen against the euro at average exchange rates for 2014 and 2015. A positive amount indicates an increase in net earnings. CURRENCY IMPACT ON NET EARNINGS (EUR thousand)

10% decrease of US dollar versus euro

2014

2015

520

640

(520)

(640)

10% increase of Singapore dollar versus euro

1,233

1,580

10% decrease of Singapore dollar versus euro

(1,233)

(1,580)

10% increase of Hong Kong dollar versus euro

3,969

1,700

10% decrease of Hong Kong dollar versus euro

(3,969)

(1,700)

10% increase of Korean won versus euro

1,552

3,509

10% decrease of Korean won versus euro

(1,552)

(3,509)

10% increase of Japanese yen versus euro

1,125

344

10% decrease of Japanese yen versus euro

(1,125)

(344)

GOVERNANCE

A hypothetical 10% strengthening or 10% weakening of any other currency against the euro at average exchange rates for 2014 and 2015 would not result in a material impact on net earnings.

SHAREHOLDERS

10% increase of US dollar versus euro

INTEREST RISK

CREDIT RISK Financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash and cash equivalents, accounts receivable and derivative instruments. These instruments contain a risk of counterparties

FINANCIAL STATEMENTS

We are not exposed to interest rate risk through our borrowing activities. We do not enter into financial instrument transactions for trading or speculative purposes or to manage interest rate exposure. As per December 31, 2015 the company is debt-free.

ASMI STATUTORY ANNUAL REPORT 2015 | Financial performance |

62

ABOUT

failing to discharge their obligations. We monitor credit risk and manage credit risk exposure by type of financial instrument by assessing the creditworthiness of counterparties. We do not anticipate nonperformance by counterparties given their high creditworthiness.

Concentrations of credit risk (whether on- or off-balance sheet) that arise from financial instruments exist for groups of customers or counterparties when they have similar economic characteristics that would cause their ability to meet contractual obligations to be similarly affected by changes in economic or other conditions.

We derive a significant percentage of our revenue from a small number of large customers. Our three largest customers accounted each for more than 10% of net sales in 2015 and 2014. The ten largest customers accounted for approximately 81.0% of net sales in 2015 (2014: 84.1%). Sales to these large customers also may fluctuate significantly from time to time depending on the timing and level of purchases by  these customers. Significant orders from such customers may expose us to a concentration of credit risk and difficulties in collecting amounts due, which could harm our financial results. At December 31, 2015, one customer accounted for 20.5% of total accounts receivable.

The maximum credit exposure is equal to the carrying values of cash and cash equivalent, and accounts receivable.

EQUITY PRICE RISK The ASMPT investment is accounted for under the equity method on a go forward basis. Equity method investments are tested for prolonged decline in value. The determination of whether an investment is impaired is made at the individual security level in each reporting period.

GOVERNANCE

If the fair value of an investment is less than its carrying value at the balance sheet date, we determine whether the impairment is temporary or prolonged. The amount per share recognized on December 31, 2015 under equity accounting amounts to HK$62.27, whereas the level 1 fair value per share (being the market price of a share on the Hong Kong Stock Exchange) was HK$60.90 on December 31, 2015. Management concluded that based on quantitative analysis, no impairment of our share in ASMPT existed as of December 31, 2015.

SHAREHOLDERS

We invest our cash and cash equivalents in short-term deposits and derivative instruments with high-rated financial institutions. We only enter into transactions with a limited number of major financial institutions that have high credit ratings and we closely monitor the creditworthiness of our counterparties. Concentration risk is mitigated by limiting the exposure to a single counter party.

PERFORMANCE REVIEW

Small number of large clients

STRATEGY & BUSINESS

Our customers are semiconductor device manufacturers located throughout the world. We perform ongoing credit evaluations of our customers’ financial condition. We take additional measures to mitigate credit risk when considered appropriate by means of down payments or letters of credit. We generally do not require collateral or other security to support financial instruments with credit risk.

FINANCIAL STATEMENTS

ASMI STATUTORY ANNUAL REPORT 2015 | CR performance |

ABOUT

CR PERFORMANCE

63

Our mission is to provide our customers with the most advanced, cost-effective, and reliable products, service and global support network in the semiconductor industry, and beyond.

As a truly global citizen, we have a vision of ZERO HARM! This means that we strive to prevent all injuries to our employees and customer employees, reduce our impact to the environment, and make positive contributions to society. Achieving this ambition involves setting goals and working towards them at all levels of the company.

At the same time, we make a positive contribution to society through innovation, which leads to faster computing, greater productivity, and in many cases improves the energy efficiency of electronics. For 2015, our top strategic priorities included recruiting, developing and retaining research and development (R&D) talent, while maintaining our technology leadership through our patents filing.

PROGRESS IN 2015

PERFORMANCE REVIEW

In 2015, our performance target regarding injuries was to reduce the total injury rate to 0.80 injuries per 100 employees. To reduce our impact on the planet, we responsibly manage our energy and water consumption, our product footprint, and our enabling technologies. Our three-year goal over the 2013-2015 period was to implement Greenhouse Gas reduction measures of 800 mtCO2e per year and reduce water consumption by 10,000 m3 from the 2012 baseline.

STRATEGY & BUSINESS

ZERO HARM!

We made good progress towards our main CR goals in 2015. This included:

We continued to significantly reduce the injury rate at our facilities. Our 2015 injury rate was 0.62 injuries per 100 employees, which exceeded our target of 0.80 by over 20%. This was a 35% reduction compared to 2014.

WATER CONSUMPTION We surpassed our water consumption target with a 24,766 m³ reduction, and implemented projects totaling 751 mtCO2e of greenhouse gas reductions per year.

SHAREHOLDERS

INJURY RATE

INVESTMENTS IN R&D

R&D TALENT We increased our R&D talent to 26% of all employees, up from 22% in 2014.

GOVERNANCE

Our investments in R&D totaled €93.0 million, a 43% increase over 2014. The outcomes of our R&D efforts are technological innovations, which can be measured by the number of new patent filings we make. In 2015, we increased our intellectual property holdings by 85 initial patent filings, a 29% increase over 2014.

FINANCIAL STATEMENTS

ASMI STATUTORY ANNUAL REPORT 2015 | CR performance |

64

ABOUT

Global Injury and RECORDABLE RatEs 1.5

INITIAL PATENT FILINGS

PATENTS IN FORC

100

2,000

85 80 60

1,600

66

1,200

51 34

40

0.5

61

800

20

2012

2013

Recordable Injury Rate

2015

2014

400

2010

2012

2013

2014

2015

751

Actual project completions 2013-2015

EMPLOYEES IN R&D

420

INVESTED IN R&D

Target reductions 2015 per 2012 baseline

EUR million

10.0

24.8 Actual reductions 2015 per 2012 baseline

93

1,

2011

2

SHAREHOLDERS

WATER USAGE REDUCTION (1,000 meters3)

2010

1,050

PERFORMANCE REVIEW

Target project completions 2013-2015

2011

Injury Rate

GHG REDUCTION PROJECTS (mtCO2e/year)

800

935

STRATEGY & BUSINESS

63

1.0

GOVERNANCE FINANCIAL STATEMENTS

ASMI STATUTORY ANNUAL REPORT 2015 65

ABOUT

SHAREHOLDERS

STRATEGY & BUSINESS

2.93

PERFORMANCE REVIEW

DIVIDEND INCREASE (PROPOSED)

EARNINGS PER SHARE

+17%

diluted in EUR

CASH RETURNED TO SHAREHOLDERS

SHAREHOLDERS

116

EUR million

Share listing Shareholder returns Key dates Key figures Contact information

66 67 69 70 71

GOVERNANCE

SHAREHOLDER INFORMATION

FINANCIAL STATEMENTS

ASMI STATUTORY ANNUAL REPORT 2015 | Share listing |

ABOUT

SHARE LISTING

66

ASMI’s shares are listed on the NYSE Euronext Stock Exchange in Amsterdam (symbol: ASM) where ASMI is included in the Midcap index.

MARKET CAPITALIZATION At year-end, ASMI had a total of 61,706,387 shares outstanding. The market capitalization of ASMI was €2,231 million on December 31, 2015, based on that day’s closing share price of €36.16 at Euronext Amsterdam. An overview of the largest reported shareholders can be found in the Corporate governance chapter on page 89.

VOLUNTARY DELISTING FROM NASDAQ

SHARE PERFORMANCE On December 31, 2015, the closing price of ASMI’s share on Euronext Amsterdam was €36.16. The highest closing price during the year was €45.91 on June 6, 2015 and the lowest was €27.57 on September 24, 2015. The average daily trading volume of ASMI shares on Euronext Amsterdam was 236,152 in 2015. This compares to an average daily volume of 208,872 in 2014. %

125 100 75

GOVERNANCE

SHARE PRICE PERFORMANCE AND TOTAL SHARE RETURN

SHAREHOLDERS

On July 29, 2015, we announced that we would apply for the voluntary delisting from the Nasdaq market. The reason was the low and declining trading volume of the NY Registry Shares on Nasdaq, which at that time accounted for less than 1% of the worldwide trading volume of our shares. On August 21, 2015, we announced that the delisting from Nasdaq had become effective. Since that date, our NY Registry Shares have been eligible  for  trading on the over-the-counter (OTC) market in the United States under the symbol ASMIY (www.otcmarkets.com).

PERFORMANCE REVIEW

On March 18, 2016, we had 61,236,072 outstanding common shares, with 2,142,039 registered with us in  the  Netherlands; 58,628,604 registered with our transfer agent in the Netherlands, ABN AMRO Bank NV; and 465,429 registered with our transfer agent in the United States, Citibank, NA, New York.

STRATEGY & BUSINESS

Our strategy aims to create sustainable value for all our stakeholders. As part of this strategy, we are committed to the creation of long-term shareholder value. This chapter provides information that is particularly relevant for shareholders and investors, including information related to the share listing and share price performance, dividends and share buybacks.

50

Share price performance ASMI (Euronext Amsterdam) Total share return ASMI (Euronext Amsterdam)

2012

2013

2014

2015

2016

Information on the trading and share price of our shares on the OTC market in the United States can be found on www.otcmarkets.com.

FINANCIAL STATEMENTS

25

ASMI STATUTORY ANNUAL REPORT 2015 | Shareholder returns |

ABOUT

SHAREHOLDER RETURNS

67

We are committed to paying a sustainable dividend. Additionally, in recent years we have returned excess cash to the financial markets in the form of share buyback programs and an extraordinary return of capital.

ASMI aims to pay a sustainable annual dividend. The proposed dividend for 2016 will mark the sixth consecutive year that we pay a dividend. In 2012, 2013 and 2014, we paid a dividend of €0.50 per common share, and in 2015 we paid a dividend of €0.60 per common share. ASMI will propose to the forthcoming 2016 Annual General Meeting of Shareholders, which will be held on 25 May 2016, to declare a dividend of €0.70 per common share.

DIVIDEND PAID

EUR

1.00 0.80

0.70

0.60 0.40

0.40

0.50

0.50

2012

2013

2014

0.20

2011

2015

2016*

* Proposed.

In July 2013, ASMI distributed €4.25 per ordinary share to its shareholders. This followed on the sale of 12% of  the total shares in ASMPT in March 2013. The extraordinary return of capital in 2013 was in addition to the dividend paid that year.

By December 31, 2015, 251,979 shares had been repurchased under the 2015-2016 program at an average price of €38.55, totaling €9.1 million. We update the markets on the progress of the buyback program on a weekly basis. This information can be found on our website (www.asm.com). The program announced in October 2015 followed on from the 2014-2015 share buyback program, announced in October 2014. This previous program started on November 24, 2014, and was completed on May 20, 2015.

FINANCIAL STATEMENTS

On October 28, 2015, ASMI announced a new €100 million share buyback. The program started on November 26, 2015, and is to be executed within the 2015-2016 time frame. This share buyback program is part of ASMI’s commitment to use excess cash for the benefit of its shareholders. As part of this program, we will purchase shares that we intend to cancel upon repurchase, as well as shares to cover employee stock and stock option plans. The buyback will be realized through a program executed by intermediaries, and will end as soon as the aggregate purchase price of the common shares acquired has reached €100 million, but ultimately by November 20, 2016. The buyback program will be executed in accordance with the conditions of the mandate given by the General Meeting of Shareholders.

GOVERNANCE

SHARE BUYBACK

SHAREHOLDERS

0.50

0.60

PERFORMANCE REVIEW

Ex-dividend date: May 27, 2016. Record date shares Euronext: May 30, 2016. Record date shares OTC US: May 31, 2016. Payment date: June 7, 2016.

STRATEGY & BUSINESS

DIVIDENDS AND CAPITAL REPAYMENT

ASMI STATUTORY ANNUAL REPORT 2015 | Shareholder returns |

68

ABOUT

Under the 2014-2015 share buyback program, 2,594,420 shares were repurchased at  an  average price of €38.55, totaling €100 million. EUR

750 600 450 300

Buyback shares Dividends

150

Return of capital

2010

2011

2012

2013

2014

2015

STRATEGY & BUSINESS

CUMULATIVE CASH RETURNED TO MARKET

Buyback convertibles

PERFORMANCE REVIEW

During 2015 we returned €116 million in total to shareholders in the form of dividends and share buybacks. This was up from €61 million in 2014. Over the 2010-2015 period, we returned €625 million to the financial markets through dividends, share repurchases, return of capital and buyback of convertible bonds.

SHAREHOLDERS GOVERNANCE FINANCIAL STATEMENTS

ASMI STATUTORY ANNUAL REPORT 2015 | Key dates |

ABOUT

KEY DATES

69

Below you can find the date of the AGM 2016 as well as a the quarterly results announcement. An up-to-date investor calendar is available on our website.

The Annual General Meeting of Shareholders will be held on May 25, 2016.

APRIL 21, 2016 Announcement of first quarter results 2016.

JULY 28, 2016 Announcement of second quarter results 2016.

STRATEGY & BUSINESS

ANNUAL GENERAL MEETING OF SHAREHOLDERS

OCTOBER 26, 2016 PERFORMANCE REVIEW

Announcement of third quarter results 2016.

SHAREHOLDERS GOVERNANCE FINANCIAL STATEMENTS

ASMI STATUTORY ANNUAL REPORT 2015 | Key figures |

ABOUT

KEY FIGURES

70

KEY FIGURES PER SHARE The table below shows the key figures per share and other relevant share data for the last three years. (EUR, except number of shares)

2014

2015

2.20

2.50

Normalized net earnings per share, diluted

0.71

2.49

2.93

Dividend per share

0.50

0.60

0.70 1)

Capital distribution per share





27.66

31.58

Outstanding shares (thousand)

63,468

62,968

61,706

Average shares basic (thousand)

63,202

63,510

62,114

Average shares diluted (thousand)

64,196

64,209

62,928

Year end

23.95

35.10

36.16

High

31.30

35.10

45.91

Low

22.64

23.54

27.57

Market capitalization year-end (EUR million)

1,520

2,210

2,231

Closing share price Euronext Amsterdam

1

Proposed.

PERFORMANCE REVIEW

4.25 23.94

Shareholders’ equity

STRATEGY & BUSINESS

2013

16.55

Net earnings per share, diluted

SHAREHOLDERS GOVERNANCE FINANCIAL STATEMENTS

ASMI STATUTORY ANNUAL REPORT 2015 | Contact information |

ABOUT

CONTACT INFORMATION

71

OPEN DIALOGUE AND TIMELY INFORMATION

VICTOR BAREÑO Almere, the Netherlands T: +31 88 100 8500 E: [email protected]

STRATEGY & BUSINESS

We maintain an open dialogue with our shareholders and investors. We provide the financial markets with accurate and timely information through, amongst others, press releases, our Annual reports, quarterly earnings calls and webcasts and investor meetings. Investors can find up-to-date and comprehensive information about ASMI and the ASMI shares on our website.

PERFORMANCE REVIEW SHAREHOLDERS GOVERNANCE FINANCIAL STATEMENTS

ASMI STATUTORY ANNUAL REPORT 2015 72

ABOUT

GOVERNANCE

STRATEGY & BUSINESS PERFORMANCE REVIEW SHAREHOLDERS

Risk management approach Risk categories and factors

93 96

FINANCIAL STATEMENTS

Corporate governance principles 73 Management Board 74 Supervisory Board 78 Supervisory Board report 84 Shares and shareholders’ rights 87 External auditor 91 Declarations92

RISK MANAGEMENT

GOVERNANCE

CORPORATE GOVERNANCE

ASMI STATUTORY ANNUAL REPORT 2015 | Corporate governance principles |

ABOUT

CORPORATE GOVERNANCE PRINCIPLES

HIGH STANDARDS OF CORPORATE GOVERNANCE

COMPANY STRUCTURE

ASMI’s common stock trades on the Euronext Amsterdam Stock Exchange (symbol ASM)) and is  required to comply with the Dutch Corporate Governance Code adopted in 2003 as amended in 2008 (the Code).

CORPORATE GOVERNANCE FRAMEWORK

TRANSPARENCY AND ACCOUNTABILITY

VIS I O N

VALUES AND ETHICS

>

RISK AND PERFORMANCE MANAGEMENT

STR

AT E GY

MONITORING AND INTERNAL CONTROL

POLICIES & REGULATORY FRAMEWORKS

FINANCIAL STATEMENTS

>

>

OB J

CORPORATE GOVERNANCE

M IS S I O N

E C T IVE

S

>

GOVERNANCE

MANAGEMENT BOARD, SUPERVISORY BOARD AND COMMITTEES

SHAREHOLDERS

ASMI is a public company established under Dutch law. The company’s management and supervision structure is organized in a two-tier system, comprising a Management Board, composed of executive directors, and a Supervisory Board, composed of non-executive directors. The Company’s Management Board has ultimate responsibility for the overall management of ASMI. The Management Board is supervised and advised by an  independent Supervisory Board. The Management Board and the Supervisory Board are accountable to ASMI’s shareholders.

PERFORMANCE REVIEW

ASMI aspires to high standards of corporate governance and ethics practices. Sound corporate governance is a key component of ASMI’s culture, behavior and management and is consistent with our core values. Our corporate governance is supported by a strong focus on integrity, transparency and clear and timely communication. We endeavor to ensure that our policies and procedures comply with both applicable Dutch corporate governance requirements, to the extent possible and desirable, and the relevant laws. Furthermore our corporate governance structure supports our business and meets the needs of our stakeholders.

STRATEGY & BUSINESS

Good corporate governance is about following sound business practices. At ASM International we do business in an ethical and transparent manner. We achieve this with transparent processes and following internal policies and procedures that enable us to operate in the best interests of all our stakeholders, which comply with applicable Dutch corporate governance requirements, as far as is possible and desirable, and the law.

Corporate governance-related documents are available on our website, these include: ›› Supervisory Board Profile; ›› Supervisory Board Rules; ›› Management Board Rules; ›› Audit Committee Charter; ›› Nomination, Selection and Remuneration Committee Charter; ›› Remuneration Policy; ›› Code of Ethics; ›› Whistleblower Policy; ›› Anti-Fraud Policy; and ›› Rules concerning Insider Trading.

73

ASMI STATUTORY ANNUAL REPORT 2015 | Management Board |

Member of the Management Board and Chief Financial Officer

COMPOSITION OF THE MANAGEMENT BOARD CHARLES D. (CHUCK) DEL PRADO – CEO

PETER A.M. VAN BOMMEL – CFO

FINANCIAL STATEMENTS

Mr van Bommel was appointed as a member of the Management Board on July 1, 2010 and became Chief Financial Officer on September 1, 2010. Mr van Bommel was reappointed on May 21, 2014 for a period of four years. Mr van Bommel has more than twenty years of experience in the electronics and semiconductor industry. He spent most of his career at Philips, which he joined in 1979. From the mid-1990s until 2005 he acted as CFO of several business units of the Philips group. Between 2006 and 2008 he was CFO at NXP, formerly Philips Semiconductors. He was CFO of Odersun AG, a manufacturer of thin-film solar cells and modules until August 31, 2010. He holds a  Master’s  degree in Economics from the Erasmus University Rotterdam, the Netherlands. Mr van Bommel is a Dutch national.

GOVERNANCE

Mr del Prado was appointed as a member of the Management Board in May 2006 and President and Chief Executive Officer on March 1, 2008. Mr del Prado was reappointed on May 21, 2014 for a period of four years. Between 1989 and 1996 Mr del Prado held several marketing and sales positions at IBM  Nederland  NV. From 1996 to 2001 he worked in various management positions at ASML, in manufacturing and sales in Taiwan and the Netherlands. He was appointed as Director Marketing, Sales & Service of ASM Europe in March 2001. From 2003 to 2007 he was President and General Manager of ASM America. From January 1, 2008 to February 29, 2008, he acted as Executive Vice President Front-end Operations at ASM America. He holds a Master’s of Science degree in Industrial Engineering and  Technology Management from the University of Twente, the Netherlands. Mr del Prado is a Dutch national.

SHAREHOLDERS

The Management Board, supervised and advised by the Supervisory Board, manages ASMI’s strategic, commercial, financial and organizational matters, and appoints senior managers. The Supervisory Board supervises and advises the Board of Management in the execution of its tasks and responsiblities and establishes their individual remuneration within the boundaries of the remuneration policies approved by the General Meeting of Shareholders and the recommendations by the Nomination, Selection and Remuneration Committee.

PERFORMANCE REVIEW

PETER A.M. VAN BOMMEL

Chairman of the Management Board, President and Chief Executive Officer

STRATEGY & BUSINESS

CHARLES D. (CHUCK) DEL PRADO

ABOUT

MANAGEMENT BOARD

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ABOUT

On April 12, 2012 Mr van Bommel was appointed as a member of the Supervisory Board and Audit Committee of Royal KPN NV. On April 16, 2015 Mr van Bommel was appointed as a member of the Supervisory Board of Neways Electronics International NV.​​​

We recognize the advantages of  diversity. Diversity in our view consists of gender, but also relate to specific knowledge, background, (technical) experience, and skills. For the selection of future members of the Management Board the criteria will therefore also include a wider range of diversity aspects, and gender will be one of them.

RESPONSIBILITIES

The Management Board is guided by the interests of the Company taking the interests of all stakeholders into consideration.

RISK MANAGEMENT AND CONTROL FRAMEWORK The Management Board ensures that the Company has an adequately functioning Internal Risk Management and Control Framework. A comprehensive Risk Management and Control Framework, based on the ‘three lines of defense model’, has been established that allows the Audit Committee and the Management Board a  clear overview of the effectiveness of internal controls and risk management. This is explained in more detail in the Risk Management chapter.

FINANCIAL STATEMENTS

The Management Board provides the General Meeting of Shareholders with all information reasonably required for the fulfillment of its obligations and the exercise of its powers in a timely fashion. The Management Board is responsible for the quality and completeness of financial and other reports that are publicly disclosed by or on behalf of the Company, including all reports and documents the Company is required to file with regulatory agencies.

GOVERNANCE

The Management Board periodically discusses the internal risk management and control systems with the  Supervisory Board and the Audit Committee. The Management Board provides the Supervisory Board with all information required for the fulfillment of their obligations and the exercise of their powers.

SHAREHOLDERS

The members of the Management Board are collectively responsible for managing the Company. They are collectively and individually accountable to the Supervisory Board and the General Meeting of Shareholders for executing the Management Board’s responsibilities. The Management Board has the general authority to enter into binding agreements with third parties.

PERFORMANCE REVIEW

In addition to the duties of the Management Board stipulated by law and our Articles of Association, the Management Board has the following responsibilities: ››achieving the aims, strategy, policy and results of the Company; ››managing the risks associated with the activities of the Company; ››ensuring proper financing of the Company; ››establishing and maintaining disclosure controls and procedures that ensure that all major financial information is known to the Management Board in order to ensure that the external financial reporting is achieved in a timely, complete and accurate manner; and ››determining relevant aspects and achieving aims relating to corporate social responsibility and sustainability.

STRATEGY & BUSINESS

THE IMPORTANCE OF DIVERSITY

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CONFLICTS OF INTEREST

APPOINTMENT, SUSPENSION AND DISMISSAL

A Management Board member may be suspended at any time by the Supervisory Board. A Management Board member may, in accordance with a proposal by the Supervisory Board, be dismissed by the General Meeting of Shareholders through a majority vote. A resolution to suspend or to dismiss a member of the Management Board, other than in accordance with a proposal of the Supervisory Board, shall require the affirmative vote of  a  majority of the votes cast at a meeting. The affirmative votes must represent at least one  third of the issued capital.

PERFORMANCE REVIEW

The General Meeting of Shareholders appoints a Management Board member based on a binding nomination drawn up by the Supervisory Board. The General Meeting of Shareholders may set aside a binding nomination by a resolution taken with an absolute majority of the votes cast, representing at least one third of the share capital. If such a binding nomination is set aside, a new binding nomination will be drawn up by the Supervisory Board and submitted to a newly called General Meeting of Shareholders. If this binding nomination is set aside, the General Meeting of Shareholders is free to appoint a Management Board member, but only with an absolute majority of the votes cast representing at least one third of our issued capital.

STRATEGY & BUSINESS

Each Management Board member shall immediately report any potential conflict of interest to the Chairman of the Supervisory Board and to the other Management Board members. In such cases a Management Board member shall provide the Chairman of the Supervisory Board and the other Management Board members with all information relevant to the conflict and follow the procedures as set out in the Management Board Rules.

REMUNERATION SHAREHOLDERS

The remuneration of individual members of the Management Board is decided upon by the Supervisory Board, based on the recommendations by the Nomination, Selection and Remuneration (NSR) Committee of the Supervisory Board and on the Company’s Remuneration Policy. Our Remuneration Policy was last adopted by the General Meeting of Shareholders in 2014. The remuneration structure includes five components: a fixed (base) salary component, a variable component (annual bonus or short-term incentive), a long-term component (performance shares and stock options), pension provisions and fringe benefits. The remuneration structure reflects short-term and long-term elements of the responsibilities of members of the Management Board.

REVISIONS OF THE REMUNERATION POLICY

GOVERNANCE FINANCIAL STATEMENTS

The principal revisions of the Remuneration Policy are the following: ››the annual bonus for the CEO is set at up to 100% of the annual fixed salary for on-target performance and up to a maximum of 150% in the case of out-performance; ››the annual bonus for other members of the Management Board is set at up to 75% of the annual fixed salary for on-target performance and up to a maximum of 125% in the case of outperformance; ››performance shares are introduced as part of the long-term component for the Management Board; ››the total value of stock options and performance shares for the CEO will be 133% of the annual base salary for on-target performance and up to a maximum of 200% of annual fixed salary in the case of outperformance; ››the total value of stock options and performance shares for other members of the Management Board will be 100% of the annual base salary for on-target performance and up to a maximum of 150% of annual fixed salary in the case of outperformance; ››performance shares will become unconditional after three years depending on the achievement of pre-determined financial targets for those three years; and ››members of the Management Board are required to hold the vested performance shares for an additional two years after vesting.

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The relevant targets will be set annually by the Supervisory Board upon the recommendation of the NSR Committee. These targets will be pre-determined, assessable, influenceable and supportive of the Company’s long-term strategy in accordance with the best practices of the Dutch Corporate Governance Code.

LIMITING SHARE DILUTION

PERFORMANCE REVIEW

In order to limit potential dilution of the long-term incentive to be awarded to the Management Board and the restricted shares to be awarded to other employees, the Supervisory Board reduced the maximum previously applicable dilution percentage of 7.5% of the issued ordinary share capital of ASMI to 5% of the issued ordinary share capital of ASMI. This previous applied dilution limit of 7.5% was applicable to the number of outstanding (vested and non-vested) stock options granted to the Management Board and other employees up to and including 2014. In order to facilitate the transition to the new share- and option-based program and to attain this dilution limit of 5%, the Supervisory Board will apply a transition period of maximum four years, during which the potential dilution may exceed 5% but will not exceed 7.5%. In addition, ASMI may repurchase outstanding shares in order to mitigate possible dilution.

STRATEGY & BUSINESS

For further information regarding the remuneration of the Management Board, please see the Remuneration Policy and the Remuneration report 2015 which are posted on our website, and the report of the Supervisory Board 2015, which is included in our Statutory annual report 2015.

SHAREHOLDERS GOVERNANCE FINANCIAL STATEMENTS

ASMI STATUTORY ANNUAL REPORT 2015 | Supervisory Board |

ABOUT

SUPERVISORY BOARD

STRATEGY & BUSINESS

Top left to right Jan C. Lobbezoo - Chairman Johan M.R. Danneels Heinrich W. Kreutzer

PERFORMANCE REVIEW

Bottom left to right Martin C.J. van Pernis Ulrich H.R. Schumacher

The Supervisory Board oversees strategic and commercial policymaking by the Management Board and the way in which it manages and directs ASMI’s operations and affiliated/associated companies. Members of the Supervisory Board are appointed by the Annual General Meeting of Shareholders upon binding nomination by the Supervisory Board.

NATIONALITY

YEAR OF BIRTH

INITIAL APPOINTMENT

TERM EXPIRES

Dutch

1946

2009

2017

Member of the Supervisory Board

Belgian

1949

2000

2016

Member of the Supervisory Board

German

1949

2006

2018

Member of the Supervisory Board

Dutch

1945

2010

2018

Member of the Supervisory Board

German

1958

2008

2016

POSITION

Jan C. Lobbezoo 1, 2

Chairman of the Supervisory Board

Johan M.R. Danneels

2

Heinrich W. Kreutzer 1 Martin C.J. van Pernis

2

Ulrich H.R. Schumacher 1 2

Member of Audit Committee. Member of Nomination, Selection and Remuneration Committee.

JAN C. LOBBEZOO

FINANCIAL STATEMENTS

Mr Lobbezoo was initially elected as a member of the Supervisory Board in May 2009 and was reappointed on May 16, 2013 for a period of four years, and on July 2013 Chairman of the Supervisory Board. Mr Lobbezoo was Executive Vice President and Chief Financial Officer of the semiconductor division of Royal Philips Electronics from 1994 to 2005. He was a member of the Board of Taiwan Semiconductor Manufacturing Company (TSMC) for 12 years until 2007 and remains its adviser, specifically in the areas of US corporate governance, international reporting and financial review. He is on the Board of FEI, a US-based nanotechnology equipment company, and on the one-tier Board of TMC Group NV (Non-Executive Member). He is also Chairman of the Supervisory Board of Point One Innovation Investment Fund. He holds a Master’s degree in Business Economics from Erasmus University Rotterdam, the Netherlands and is a Dutch Registered Accountant. Mr Lobbezoo is a Dutch national.

GOVERNANCE

1

SHAREHOLDERS

COMPOSITION NAME

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ABOUT

JOHAN M.R. DANNEELS

After four terms Mr Danneels will not be nominated for re-election. At the Annual General Meeting of Shareholders taking place on May 25, 2016, Mr Danneels’appointment as a Supervisory Board member will cease.

Mr Kreutzer was initially elected as a member of the Supervisory Board in November 2006 and was reappointed on May 21, 2014 for a period of four years. Between 1999 and 2003, Mr Kreutzer was a member of the Management Board as Chief Operating Officer and Chief Technology Officer of Alcatel Germany. From 2004 to 2006, he was Managing Director of Kabel Deutschland GmbH in Munich, Germany. Prior to that he worked at several companies including General Telephone & Electronics in Waltham, US and Alcatel in Stuttgart, Germany. Mr Kreutzer is currently on the Board of Directors of Micronas Semiconductor AG (Chairman) in Zurich, Switzerland, Micronas Semiconductor GmbH (Chairman) in Freiburg, Germany and BKtel Communications GmbH (Chairman), Germany. He holds a Master’s degree in Engineering and a Master’s degree in Economics, and studied at the Technical University of Berlin and the University of Hagen, Germany. Mr Kreutzer is a German national.

Mr Van Pernis was initially elected as a member of the Supervisory Board in May 2010 and was reappointed on May 21, 2014 for a period of four years. Mr Van Pernis joined Siemens in 1971 and retired from the Siemens Group at the end of 2009 as Chairman of the Management Board of Siemens Nederland NV. He is on the Supervisory Board of Batenburg Techniek NV (Chairman), Aalberts Industries NV (Vice Chairman), Rotterdam Philharmonisch Orkest – RPhO (Chairman), President of The Royal Institute of Engineers – KIVI, and Member of the Advisory Board of G4S. Mr Van Pernis is a Dutch national.

SHAREHOLDERS

MARTIN C.J. VAN PERNIS

PERFORMANCE REVIEW

HEINRICH W. KREUTZER

STRATEGY & BUSINESS

Mr Danneels was initially elected as a member of the Supervisory Board in May 2000 and was reappointed on May 15, 2012 for a period of four years. Prior to his retirement mid 2014, Mr Danneels was Chief Executive Officer at Essensium, the company he founded in 2005 as a spin-off from the imec (Interuniversity Microelectronics Centre) research institute. He was Chairman of imec from 2000 to 2005. Prior to that he spent 25 years at Alcatel. He held several management positions for all major product lines, was Corporate Executive Vice President of Alcatel NV, Chief Executive Officer of Alcatel Microelectronics and, most recently, Group Vice President of STMicroelectronics. He holds a PhD in Engineering from the Catholic University of Leuven, Belgium and  an  MBA from Boston University. Mr Danneels is a Belgian national.

ULRICH H.R. SCHUMACHER GOVERNANCE FINANCIAL STATEMENTS

Mr Schumacher was initially elected as a member of the Supervisory Board in May 2008 and was reappointed on May 15, 2012 for a period of four years. Currently Mr Schumacher is Chairman of the Executive Board and CEO of Zumtobel Group AG. From 1986 to 1999 he held various engineering and management positions at Siemens AG. Between 1996 and 1999 he was CEO and President of Siemens Semiconductor Group, and became President and CEO of Infineon Technologies AG after the spin-off from Siemens Semiconductor Group in 1999. From 2004 to 2007 he was a Partner at Francisco Partners, a private equity investment company based in the US. Between 2007 and 2010 he was the CEO and President of Grace Semiconductor Manufacturing Corporation. Most recently he was Managing Director of CGS DS. Until recently he was on the Supervisory Board of PACT XPP Technologies AG (Chairman). He holds a PhD in Electrical Engineering from the University of Aachen, Germany and has completed further education in Business Administration. Mr Schumacher is a German national.

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ABOUT

RESPONSIBILITIES

The Supervisory Board is responsible for monitoring and assessing its own performance.

CONFLICTS OF INTEREST A Supervisory Board member facing a conflict of interest shall, in accordance with Article 13 of our Supervisory Board Rules, inform the Chairman of the Supervisory Board immediately. The Chairman shall, if possible in consultation with the other members of the Supervisory Board, determine the course of action to be taken.

PERFORMANCE REVIEW

The Supervisory Board supervises and advises the Management Board in executing its responsibilities, particularly regarding: ››achievement of the Company’s objectives; ››corporate strategy and the risks inherent in the business activities; ››structure and operation of the internal risk management and control systems; ››financial reporting process; ››compliance with legislation and regulations; ››relation of the Company to its shareholders; and ››relevant aspects of corporate social responsibility.

STRATEGY & BUSINESS

The supervision over the policies of our Management Board and the general course of our business, and the related management actions, is entrusted to the Supervisory Board. In our two-tier structure under applicable Dutch law, the Supervisory Board is a separate body independent from the Management Board.

APPOINTMENT

The Supervisory Board is currently composed of five members. Supervisory Board members serve a four-year term and may be re-elected twice. Pursuant to section III.3.5 of the Code, a Supervisory Board member can serve for a maximum period of three four-year terms. However, the Code includes best practices only and deviations are possible on the basis of the ‘comply or explain’ principle.

SHAREHOLDERS

In accordance with Dutch law and the Code, the Supervisory Board has drawn up a profile for its own composition. This Supervisory Board Profile is available on our website. The Supervisory Board shall consist of at least three members. The members should operate independently of each other and within a good relationship of mutual trust. They should be experienced in the management of an international, publicly listed company, and have sufficient time available to fulfill the function of a Supervisory Board member. The Supervisory Board members appoint a Chairman from among themselves.

GOVERNANCE FINANCIAL STATEMENTS

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THE IMPORTANCE OF DIVERSITY

STRATEGY & BUSINESS

We recognize the advantages of diversity. Diversity in our view consists of gender, but also relate to specific knowledge, background, (technical) experience, and skills. For the selection of future members of the Supervisory Board the criteria will therefore also include a wider range of diversity aspects, and gender will be one of them. Any appointment or reappointment to the Supervisory Board shall be based on the candidate’s match with the Supervisory Board Profile. For reappointment, the candidate’s performance during the previous period shall be taken into account. A Supervisory Board member who is available for reappointment must be interviewed by the Chairman of the Nomination, Selection and Remuneration Committee. The Chairman of the Nomination, Selection and Remuneration Committee must be interviewed by the Chairman of the Supervisory Board. All  members of the Supervisory Board follow an introduction program after their first appointment, in which financial and legal aspects as well as financial reporting and specific features of ASMI are discussed.

PERFORMANCE REVIEW

REMUNERATION The remuneration of the members of the Supervisory Board is not dependent on our financial results. No member of the Supervisory Board personally maintains a business relationship with ASMI other than as a member of the  Supervisory Board. The Nomination, Selection and Remuneration Committee is responsible for  reviewing and, if appropriate, recommending changes to the remuneration of the Supervisory Board. Any recommended changes to the remuneration of the members of the Supervisory Board must be submitted to the General Meeting of Shareholders for approval. The remuneration of the Supervisory Board was approved by the shareholders in the 2011 Annual General Meeting of Shareholders. The Supervisory Board’s annual remuneration has been fixed as follows: (Amount in euros)

- Member of the Supervisory Board (other than the Chairman)

45,000

- Chairman of the Supervisory Board

60,000

Additional remuneration: - Member of the Audit Committee (other than the Chairman)

5,000

- Chairman of the Audit Committee

7,500

- Member of the Nomination, Selection and Remuneration Committee (other than the Chairman)

5,000

- Chairman of the Nomination, Selection and Remuneration Committee

7,500

The Supervisory Board is of the opinion that its current members are all independent as defined by the Code. Neither the Chairman nor any other member of the Supervisory Board is a former member of ASMI’s Management Board, or has another relationship with ASMI which can be judged ‘not independent’ of ASMI.

GOVERNANCE

INDEPENDENCE

SHAREHOLDERS

Base remuneration:

FINANCIAL STATEMENTS

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COMMITTEES In order to more efficiently fulfill its role and in compliance with the Code, the Supervisory Board has created two committees: the Audit Committee and the Nomination, Selection and Remuneration Committee.

The Audit Committee assists the Supervisory Board in its responsibility to oversee ASMI’s financing, financial statements, financial reporting process and system of internal business controls and risk management. The Audit Committee consists of: ››Heinrich Kreutzer (Chairman); ››Jan Lobbezoo; and ››Ulrich Schumacher.

Mr Lobbezoo, Chairman of the Supervisory Board and member of the Audit Committee, is the Supervisory Board’s financial expert, taking into consideration his extensive financial background and experience.

GOVERNANCE

The Chief Executive Officer, Chief Financial Officer, Director Internal Audit, Director External Reporting & Treasury and representatives of the external auditor are invited to, and also attend, the Audit Committee meetings.

SHAREHOLDERS

The Audit Committee meets periodically to: ››consider the adequacy of the internal control procedures; ››review the operating results with management and the independent auditors; ››review the scope and results of the audit with the independent auditors; ››review the scope and results of internal audits with Internal Audit; ››nominate a firm to be appointed as independent auditors; ››review performance evaluations relating to the auditor’s independence; and ››review performance and services of the external auditor.

PERFORMANCE REVIEW

The Audit Committee supervises the activities of the Management Board with respect to: ››the structure and operation of the internal risk management and control systems, including supervision of the enforcement of the relevant legislation and regulations; ››role and functioning of Internal Audit; ››policy on tax planning; ››the applications of information and communication technology; ››financing of the Company; ››compliance with recommendations and observations of internal and external auditors; ››release of financial information; and ››relations with the external auditor including, in particular, its independence, remuneration and any non-audit services performed for the Company.

STRATEGY & BUSINESS

AUDIT COMMITTEE

NOMINATION, SELECTION AND REMUNERATION COMMITTEE FINANCIAL STATEMENTS

The Nomination, Selection and Remuneration Committee (NSR Committee) advises the Supervisory Board on matters relating to the selection and nomination of the members of the Management Board and Supervisory Board. The Committee further monitors and evaluates the Remuneration Policy for the Management Board.

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The objective of the Remuneration Policy is two-fold: ››to create a remuneration structure that will allow ASMI to attract, reward and retain qualified executives who will lead ASMI in achieving its strategic objectives; and ››to provide and motivate these executives with a balanced and competitive remuneration.

This remuneration structure reflects short-term and long-term elements of the responsibilities of members of the Management Board. The NSR Committee ensures that a competitive remuneration structure is provided by benchmarking with other multinational companies of comparable size and complexity operating in comparable geographical and industrial markets. The NSR Committee evaluates the achievement of performance criteria specified per Management Board member. After the evaluation, it recommends the level of remuneration to the Supervisory Board.

The Chief Executive Officer and the Vice President Global Human Resource are invited to, and also attend, the Nomination, Selection and Remuneration Committee meetings.

SHAREHOLDERS

On an annual basis, the NSR Committee reports to the Supervisory Board on the application of the Remuneration Policy in the previous year and recommends the Remuneration Policy for the following years.

PERFORMANCE REVIEW

The remuneration structure includes five elements: ››base salary; ››annual incentive (bonus); ››long-term share-based incentive; ››pension; and ››other arrangements.

STRATEGY & BUSINESS

The NSR Committee consists of: ››Martin van Pernis (Chairman); ››Johan Danneels; and ››Jan Lobbezoo.

GOVERNANCE FINANCIAL STATEMENTS

ASMI STATUTORY ANNUAL REPORT 2015 | Supervisory Board report |

FINANCIAL STATEMENTS We present the ASMI 2015 Statutory annual report in accordance with IFRS, as prepared by the Management Board and reviewed by the Supervisory Board. Our independent auditors, KPMG Accountants NV, have audited these Financial statements and issued an unqualified opinion. Their report appears on pages 164 to 170 of the Financial statements.

SUPERVISION Supervision of the Management Board, its policy decisions and actions are entrusted to the Supervisory Board. In accordance with Dutch law, the Supervisory Board is a separate body, independent of the Management Board. The Supervisory Board supervises and advises the Management Board in executing its responsibilities. The profile of the Supervisory Board describes the range of expertises that should be represented within the Board. The procedures of the Supervisory Board and the division of its duties are laid down in the Supervisory Board Rules. Both documents are available on our website www.asm.com.

PERFORMANCE REVIEW

All of the members of the Supervisory Board have signed the Financial statements in respect of the financial year 2015.

STRATEGY & BUSINESS

During the year under review, the Supervisory Board performed its duties in accordance with applicable legislation and the Articles of Association of ASM International NV and supervised and advised the Management Board on an ongoing basis.

ABOUT

SUPERVISORY BOARD REPORT

84

MEETINGS OF THE SUPERVISORY BOARD

CORPORATE GOVERNANCE Included in the responsibilities of the Supervisory Board is to oversee the Company’s compliance with corporate governance standards and best practices. The Supervisory Board is of the opinion that the Company complies with the Code, except for those discussed in this Corporate Governance section.

Also in 2015, the Company announced a share buyback program of €100 million with the announcement of the third quarter results, in line with the earlier communicated message that the Company uses excess cash for the benefit of its shareholders.

FINANCIAL STATEMENTS

SHAREHOLDERS

GOVERNANCE

In addition, the Supervisory Board discussed the functioning of the Supervisory Board and its individual members, the relationship between the Supervisory Board and the Management Board, the composition of the Management Board, its performance, and the performance of its individual members without the members of the Management Board attending.

SHAREHOLDERS

During 2015, the Supervisory Board met with the Management Board on six occasions. Jan Lobbezoo, Heinrich Kreutzer, Johan Danneels and Martin van Pernis attended all Supervisory Board meetings with the Management Board, while Ulrich Schumacher attended all meetings except one. In these meetings, the Boards discussed strategy progress, operations, business risks, product and market developments, the Company’s organization, management and financial structure and performance, including further profitability improvements. One of those meetings was specifically earmarked to discuss with Management the long-term strategy of the company, the planned implementation of it and the risks attached to its realization.

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SUPERVISORY BOARD COMPOSITION The Supervisory Board is composed of five members. During 2015 no changes have taken place in the composition of the Supervisory Board. All five members are independent in line with the Corporate Governance Code.

The Management Board remains composed of two members. During 2015 no changes have taken place in its composition.

DIVERSITY We recognize the advantages of diversity. Diversity in our view consists of gender, but also relate to specific knowledge, background, (technical) experience, and skills. For the selection of future members of the Boards the criteria will therefore also include a wider range of diversity aspects, and gender will be one of them.

The role of the Audit Committee is described in its charter, which is available on the Company’s website (www.asm.com). The Audit Committee consists of Messrs Heinrich Kreutzer (Chairman), Jan Lobbezoo and Ulrich Schumacher. During the year, the Audit Committee met with the Management Board and KPMG Accountants, the Company’s independent auditors, on four occasions, and in one conference call. Audit ommittee discussions included: the Company’s financial reporting including the application of accounting principles; the Company’s financial position and financing programs; the Company’s internal risk management systems; effectiveness of internal controls; the audit performed, and its findings, the annual report and financial statements; and the budget and the quarterly progress reports prepared by the Management Board. The internal auditor participated in all four Audit Committee meetings presenting her own actions and findings.

Nomination, Selection and Remuneration Committee

In 2015, the Nomination, Selection and Remuneration Committee held one meeting and one conference call. The topics discussed included the remuneration of the individual members of the Management Board. During the meetings of the Committee, the Chief Executive Officer was present, except on the occasion when  his own remuneration was discussed.

FINANCIAL STATEMENTS

The remuneration of the members of the Management Board is disclosed in Note 24 on the Financial statements of the Statutory annual report. The remuneration of the members of the Management Board during 2015 is fully in accordance with the Remuneration Policy.

GOVERNANCE

The role of the Nomination, Selection and Remuneration Committee is described in its charter, which is available on the Company’s website, www.asm.com. In general, the Committee advises the Supervisory Board on matters relating to the selection and nomination of new Management Board members, as well as the remuneration of the members of the Management Board. This Committee consists of Messrs Martin van Pernis (Chairman), Jan Lobbezoo and Johan Danneels.

SHAREHOLDERS

On several occasions, the Audit Committee met with KPMG Accountants, without the members of the Management Board present, to discuss the risk of fraud. Furthermore, the Audit Committee discussed the auditor’s performance with the Management Board without KPMG Accountants present.

PERFORMANCE REVIEW

SUPERVISORY BOARD COMMITTEES Audit Committee

STRATEGY & BUSINESS

MANAGEMENT BOARD COMPOSITION

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WORD OF THANKS

SUPERVISORY BOARD J.C. Lobbezoo, Chairman J.M.R. Danneels H.W. Kreutzer M.C.J. van Pernis U.H.R. Schumacher

April 13, 2016

PERFORMANCE REVIEW

Almere, the Netherlands

STRATEGY & BUSINESS

We extend gratitude and appreciation to ASMI employees worldwide for their many contributions and enduring commitment to the Company. It is their commitment and determination that enabled us to make substantial progress in 2015. We recognize that the cumulative efforts of our workforce are truly creating real value for all of our stakeholders.

SHAREHOLDERS GOVERNANCE FINANCIAL STATEMENTS

ASMI STATUTORY ANNUAL REPORT 2015  |  Shares and shareholders’ rights  |

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SHARES AND SHAREHOLDERS’ RIGHTS

87

GENERAL MEETING OF SHAREHOLDERS

The convocation date is legally set at 42 days prior to the date of the Annual General Meeting of Shareholders. The record date is legally set at 28 days prior to the date of the General Meeting of Shareholders. Those who are registered as shareholders at the record date are entitled to attend the meeting and to exercise other shareholder rights. Shareholders may be represented by written proxy.

The Annual report, the Financial statements and other regulated information such as defined in the Dutch Act on Financial Supervision (Wet op het Financieel Toezicht), will solely be published in English on the Company’s website (www.asm.com). The draft minutes of the General Meeting of Shareholders are available on the Company’s website no later than three months after the meeting. Shareholders may provide their comments in the subsequent three months. Thereafter, the minutes are adopted.

PERFORMANCE REVIEW

PUBLICATION IN ENGLISH

STRATEGY & BUSINESS

ASMI shareholders exercise their rights through Annual and Extraordinary General Meetings of Shareholders. ASMI is required to convene an Annual General Meeting of Shareholders in the Netherlands each year, no later than six months after the end of the Company’s financial year. Additional extraordinary General Meetings of Shareholders may be convened at any time by the Supervisory Board or the Management Board.

2015 AGM OF ASMI

The main resolutions were as follows: ››the Financial statements for the year 2014 were adopted and the shareholders granted discharge to the members of the Management Board and the Supervisory Board from liability in relation to the exercise of their duties in the financial year 2014; and ››the shareholders voted in favor of the dividend payment of €0.60 per ordinary share.

In the General Meeting of Shareholders, each ordinary share with a nominal value of €0.04 entitles the holder to  cast one vote, each financing preferred share with a nominal value of €40.00 entitles the holder to cast one  thousand votes and each preferred share with a nominal value of €40.00 entitles the holder to cast one thousand votes. Presently there are no preferred shares and financing preferred shares outstanding. Treasury shares held by the Company cannot be voted on.

Of our 61,236,072 outstanding common shares at March  18, 2016, excluding treasury shares, 2,142,039 are registered with us in the Netherlands, 58,628,604 are registered with our transfer agent in the Netherlands, and 465,429 are registered with our transfer agent in the United States.

FINANCIAL STATEMENTS

The authorized capital of the Company amounts to 110,000,000 shares of €0.04 par value common shares, 118,000 shares of €40 par value preferred shares and 8,000 shares of €40 par value financing preferred shares, of which 61,706,387 common shares, no preferred and no financing preferred shares were outstanding as at December 31, 2015. All per December 31, 2015 outstanding common shares were fully paid.

GOVERNANCE

VOTING RIGHTS

SHAREHOLDERS

On May 21, 2015, ASMI held its Annual General Meeting of Shareholders in Almere, the  Netherlands. The attendance rate was 68.3% of the total issued share capital of ASMI as per the registration date. In line with the ASMI Boards’ recommendations, the shareholders approved all resolutions as proposed to  the  Annual General Meeting of Shareholders.

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ABOUT

Financing preferred shares are designed to allow ASMI to finance equity with an instrument paying a preferred dividend, linked to EURIBOR loans and government loans, without the dilutive effects of issuing additional common shares.

Preferred and financing preferred shares are issued in registered form only and are subject to transfer restrictions. Essentially, a preferred or financing preferred shareholder must obtain the approval of the Company’s Supervisory Board to transfer shares. If the approval is denied, the Supervisory Board will provide a list of acceptable prospective buyers who are willing to purchase the shares at a cash price to be fixed by consent of the Supervisory Board and seller within two months after the approval is denied. If the transfer is approved, the shareholder must complete the transfer within three months, at which time the approval expires.

STICHTING AGREEMENT On May 28, 1997, we entered into an agreement with Stichting Continuïteit ASM International (Stichting), pursuant to which Stichting was granted an option to acquire up to a number of our preferred shares corresponding with a total par value equal to 50% of the par value of our common shares issued and outstanding at the date of the exercise of the option. Stichting is a non-membership organization organized under Dutch law. The objective of Stichting is to serve the interests of the Company. For that objective, Stichting may, amongst others, acquire, own and vote on our preferred shares in order to maintain our independence and/or continuity and/or identity.

SHAREHOLDERS

The members of the board of Stichting are: ››Dick Bouma, Retired Chairman Board Pels Rijcken & Droogleever Fortuijn; ››Rob Ruijter, Chairman Supervisory Board Delta Loyd; and ››Rinze Veenenga Kingma, President Archeus Consulting BV.

PERFORMANCE REVIEW

Preferred shares are entitled to a cumulative preferred dividend based on the amount paid-up on such shares. Financing preferred shares are entitled to a cumulative dividend based on the par value and share premium paid on such shares.

STRATEGY & BUSINESS

PREFERRED SHARES

GOVERNANCE FINANCIAL STATEMENTS

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POWERS

STRATEGY & BUSINESS

The powers of the General Meeting of Shareholders are defined in our Articles of Association. The main powers of the shareholders are to: ››appoint, suspend and dismiss members of the Management Board and Supervisory Board; ››adopt the financial statements; ››declare dividends; ››discharge the Management Board and Supervisory Board from responsibility for the performance of their respective duties for the previous financial year; ››appoint the external auditors; ››adopt amendments to the Articles of Association; ››issue shares and grant subscriptions for shares; ››authorize the Management Board to issue shares and grant subscriptions for shares; ››withdraw pre-emptive rights of shareholders upon issuance of shares; ›› authorize the Management Board to withdraw pre-emptive rights of shareholders upon issuance of shares; and ››authorize the Management Board to repurchase or cancel outstanding shares.

PERFORMANCE REVIEW

MAJOR SHAREHOLDERS

The following table sets forth information with respect to the ownership of our common shares as of March 18, 2016 by each beneficial owner known to us of more than 3% of our common shares:

Arthur H. del Prado

2

J.P. Morgan Chase & Co

3

Eminence Capital, LLC 4 Massachusetts Financial Services Company Investec Asset Management Limited Norge Bank 8 Schroders Plc

9

7

PERCENT 

NUMBER OF VOTING RIGHTS

PERCENT 1

11,346,323

18.4%

11,346,323

18.4%

8,130,418

13.2%

8,130,418

13.2%

5,134,627

8.3%

1,910,167

3.1%

3,528,207

5.7%

3,383,183

5.5%

2,312,279

3.8%

2,442,634

4.0%

2,022,346

3.3%

2,022,346

3.3%

1,969,052

3.2%

1,969,052

3.2%





1,936,476

3.1%

FINANCIAL STATEMENTS

Calculated on the basis of 61,236,072 common shares outstanding as of March 18, 2016, and without regard to options. 2 Includes 3,039 common shares owned by Stichting Administratiekantoor ASMI, a trust controlled by Mr Arthur H. del Prado and 713,000 common shares beneficially owned by Mr Chuck D. del Prado, Mr Arthur H. del Prado’s son. 3 Of the share capital interest and voting rights held by J.P. Morgan Chase & Co, 3,209,817 shares are indirectly actual and 4,920,601 are indirectly potential. Based on the notification filed with the AFM on January 11, 2016. 4 Of the share capital interest that Eminence Capital, LLC holds, 1,910,167 shares are directly actual and 3,224,460 are directly potential. Based on the AFM notification dated May 29, 2015. 5 Massachusetts Financial Services Company’s capital interest amounts to 3,426,795 shares held directly actual and 101,412 shares indirectly actual. Of the voting rights, 2,911,778 are held directly actual and 471,405 indirectly actual. Based on the notification filed with the AFM on May 27, 2015. 6 Of the share capital interest that BlackRock, Inc holds, 2,312,279 shares are indirectly actual and 60,032 are indirectly potential. Of the voting rights, 2,442,634 are held indirectly actual and 60,032 indirectly potential. Based on the AFM notification dated October 1, 2015. 7 All of the 2,022,346 shares and voting rights held by Investec Asset Management Limited are held directly actual. Based on the AFM notification dated July 27, 2015. 8 Of the share capital interest and voting rights held by Norges Bank 1,536,961 shares are directly actual and 432,091 are directly potential. Based on the notification filed with the AFM on March 7, 2016. 9 All of the 1,936,476 voting rights held by Schroders Plc are indirectly actual. Based on the notification filed with the AFM on August 3, 2015. 1

GOVERNANCE

BlackRock, Inc 6

5

NUMBER OF SHARES

SHAREHOLDERS

Pursuant to the Dutch Financial Supervision Act (Wet op het financieel toezicht or WFT), legal entities as well as natural persons must immediately notify the Dutch Authority for the Financial Markets (AFM) when a shareholding equals or exceeds 3% of the issued capital. The AFM must be notified again when this shareholding subsequently reaches, exceeds or falls below a threshold. This can be caused by the acquisition or disposal of shares by the shareholder or because the issued capital of the issuing institution is increased or decreased. Thresholds are: 3%, 5%, 10%, 15%, 20%, 25%, 30%, 40%, 50%, 60%, 75% and 95%. The AFM incorporates the notifications in the public register, which is available on its website. Failure to disclose the shareholding qualifies as an offense, and may result in civil penalties, including suspension.

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BENEFICIAL OWNERS

DIVIDEND

In 2014, we paid a dividend of €0.50 per common share. In 2015 we paid a dividend of €0.60 per common share and in July 2013 we paid €4.25 per common share as an extraordinary capital repayment subsequent to the realized gain on the sale of a 12% share in our associate ASMPT. We proposed to the forthcoming 2016 Annual General Meeting of Shareholders to declare a dividend of €0.70 per share.

PERFORMANCE REVIEW

ASMI aims to pay a sustainable annual dividend. Annually the Supervisory Board, upon proposal of the Management Board, will assess the amount of dividend that will be proposed to the Annual General Meeting of Shareholders. The decision that a dividend be proposed to the Annual General Meeting of Shareholders will be subject to the availability of distributable profits as well as retained earnings and may be affected by our potential future funding requirements. Accordingly, dividend payments may fluctuate and could decline or be omitted in any year.

STRATEGY & BUSINESS

A ‘beneficial owner’ of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares (i) voting power which includes the power to vote, or to direct the voting of, such security and/or (ii) investment power which includes the power to dispose, or to direct the disposition, of such security. In addition, a person shall be deemed to be the beneficial owner of a security if that person has the right to acquire beneficial ownership of such security, as defined above, within 60 days, including but not limited to any right to acquire: (i) through the exercise of any option, warrant or right; (ii) through the conversion of a security; or (iii) pursuant to the power to revoke, or pursuant to the automatic termination of, a trust, discretionary account, or similar arrangement.

SHAREHOLDERS GOVERNANCE FINANCIAL STATEMENTS

ASMI STATUTORY ANNUAL REPORT 2015 | External auditor |

The external auditor is present at our General Meeting of Shareholders to respond to questions, if any, from the shareholders about the auditor’s report on the financial statements.

AUDIT COMMITTEE POLICIES AND PROCEDURES The Audit Committee has adopted the following policies and procedures for pre-approval of all audit and permitted non-audit services provided by our external auditor:

AUDIT SERVICES Management submits to the Audit Committee for pre-approval the scope and estimated fees for specific services directly related to performing the independent audit of our statutory and consolidated financial statements for the current year.

The Audit Committee may pre-approve expenditures up to a specified amount for services included in identified service categories that are related extensions of audit services and are logically performed by the auditors. Additional services exceeding the specified pre-approved limits require specific Audit Committee approval.

TAX SERVICES

SHAREHOLDERS

AUDIT-RELATED SERVICES

PERFORMANCE REVIEW

The Audit Committee has determined that the provision of services by KPMG and its member firms is compatible with maintaining KPMG’s independence. All audit and permitted non-audit services provided by KPMG and its member firms during 2015 were pre-approved by the Audit Committee.

STRATEGY & BUSINESS

In accordance with Dutch law, ASMI’s external auditor is appointed by the General Meeting of Shareholders and is nominated for appointment by the Supervisory Board upon advice from the Audit Committee and the Management Board. Our current external auditor, KPMG, was appointed as new external auditor by the 2014 General Meeting of Shareholders for the reporting year 2015, in order to comply with the mandatory audit firm rotation.

ABOUT

EXTERNAL AUDITOR

91

The Audit Committee may pre-approve expenditures up to a specified amount per engagement and in total for  identified services related to tax matters. Additional services exceeding the specified pre-approved limits, or involving service types not included in the pre-approved list, require specific Audit Committee approval.

In the case of specified services for which utilizing our external auditor creates efficiencies, minimizes disruption or preserves confidentiality, or for which management has determined that our external auditor possesses unique or superior qualifications to provide such services, the Audit Committee may pre-approve expenditures up to a specified amount per engagement and in total. Additional services exceeding the specified pre-approved limits, or involving service types not included in the pre-approved list, require specific Audit Committee approval.

GOVERNANCE

OTHER SERVICES

FINANCIAL STATEMENTS

ASMI STATUTORY ANNUAL REPORT 2015 | Declarations |

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DECLARATIONS

92

COMPLIANCE WITH DUTCH CORPORATE GOVERNANCE CODE

ASMI applies the relevant principles and best practices of the Code applicable to the Company, to the Management Board and to the Supervisory Board, in the manner set out in this Corporate Governance section, as long as it does not entail disclosure of commercially sensitive information, as accepted under the Code. In general, ASMI agrees with rule II.2.8 of the Code that in most circumstances a maximum severance payment of one year for Management Board members is appropriate. However, we want to reserve the right to agree to different amounts in case we deem this to be required by the circumstances. Any deviations will be disclosed.

Mr Danneels was first appointed as a member of the Supervisory Board during the AGM in 2000. Although Mr Danneels already had served three consecutive four year terms, he was reappointed on May 15, 2012 for a fourth term of four years. During that AGM a justification was provided which was accepted by the shareholders. After four terms Mr Danneels will not be nominated for re-election.

PERFORMANCE REVIEW

Pursuant to section III.3.5 of the Code, a Supervisory Board member can serve for a maximum period of three four-year terms. However, the Code includes best practices only and deviations are possible on the basis of the ‘comply or explain’ principle.

STRATEGY & BUSINESS

The Dutch Corporate Governance Code (the Code) was last amended on December 10, 2008. The full text of the Dutch Corporate Governance Code can be found on the website of the Monitoring Commission Corporate Governance Code (www.commissiecorporategovernance.nl).

RESPONSIBILITY STATEMENT

CORPORATE GOVERNANCE STATEMENT

The Management Board states that the information required by the December 23, 2004 (as lastly amended on December 10, 2009) decree is included in this Corporate Governance chapter and in the Risk Management chapter.

DECREE ARTICLE 10 EU TAKEOVER DIRECTIVE The Management Board states that the information required under Article 10 of the EU Takeover Directive Decree is disclosed in this Corporate Governance chapter to the extent that it is applicable to ASMI.

FINANCIAL STATEMENTS

Corporate governance-related documents are available on our website. These include the Supervisory Board Profile, Supervisory Board Rules, Management Board Rules, the Audit Committee Charter, the Nomination, Selection and Remuneration Committee Charter, the Code of Ethics, the Whistleblower Policy, the Anti-Fraud Policy, the Rules concerning Insider Trading, and the Remuneration Policy.

GOVERNANCE

According to the Government Code, the Company is required to publish a statement on corporate governance. This statement has to report on compliance with the Code. Furthermore, a description must be included of the main characteristics of the internal risk management and control systems connected with the Company’s financial reporting process. The corporate governance statement must also provide information on the functioning of the  General Meeting of Shareholders, including its main rights, the composition of the Management Board and the Supervisory Board, including its committees.

SHAREHOLDERS

The members of the Management Board state that, to the best of their knowledge, the statutory financial statements prepared in accordance with IFRS-EU and Title 9 of part 2 of the Dutch Civil Code as included in this Statutory annual report 2015 provide a true and fair view of the assets, liabilities, financial position and results of the Company and its subsidiaries included in the consolidated statements and that the management report provides a true and fair view of the position and the business of the Company and its subsidiaries, and the Statutory annual report 2015 provides a description of the principal risks and uncertainties that the Company faces.

ASMI STATUTORY ANNUAL REPORT 2015 | Risk management approach |

Doing business inherently involves taking risks. ASMI strives for a culture of openness and transparency in which identified risks are disclosed pro-actively and unexpected events are reported as soon as they occur. The following is an overview of ASMI’s approach to risk management and control systems. Also, we include an assessment of the key strategic, operational, financial and compliance risks that we consider currently impact ASMI.

As per January 1, 2015, ASMI no longer applies requirements based on the US Exchange Rules Act. This has as a result that this Risk Management paragraph has been changed in its form, and also means that the risks mentioned in this paragraph now reflects the risks to be reported in accordance with the Dutch law and requirements – among others the Dutch Corporate Governance Code (Code) and IFRS. The requirements as  provided for in the (US) Exchange Rules Act are no longer applicable and therefore certain risks may not be mentioned any more in this Statutory annual report, however these risks may still be relevant.

RISK MANAGEMENT FRAMEWORK

FINANCIAL STATEMENTS

Our Internal Risk Management and Control Framework is based on the framework in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Framework aims to provide reasonable assurance regarding effectiveness and efficiency of an entity’s operations, reliability of financial reporting, prevention of fraud, and compliance with laws and regulations.

GOVERNANCE

Supporting the Management Board are the following three pillars: ››Business & Operations management. These management functions own and manage risk, and are responsible for maintaining effective controls and for executing risk and control procedures on a daily basis. This involves identifying and assessing risks being undertaken and establishing appropriate controls to mitigate the risks. There are adequate management controls in place to monitor ongoing compliance and to highlight control breakdowns; ››Oversight functions. These management functions support Business & Operations management and help ensure that the risk and control procedures are operating as intended; and ››Internal Audit. This function provides independent objective assurance on the effectiveness of governance, risk management and internal controls including the manner in which Business & Operations Management and the oversight functions manage and control risk. Internal audit brings a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control and governance processes.

SHAREHOLDERS

A comprehensive Risk Management and Control Framework, based on the ‘three lines of defense model’, has  been established that allows the Audit Committee and the Management Board a clear overview of the effectiveness of internal controls and risk management. Within the framework, the Management Board is responsible for designing, implementing and operating an adequately functioning Internal Risk Management and Control Framework in the Company. The objective of this framework is to identify and manage the strategic, operational, financial, financial reporting and compliance risks to which the Company is exposed, to promote effectiveness and efficiency in the Company’s operations, to promote reliable financial reporting and to promote compliance with laws and regulations. The Management Board is aware that such a framework can neither provide absolute assurance that its objectives will be achieved, nor can it entirely prevent material errors, losses, fraud and the violation of laws and regulations.

PERFORMANCE REVIEW

IFRS

STRATEGY & BUSINESS

ASMI can be adversely affected by a variety of business risks and economic developments. A structured risk management process helps management to better understand how risks might impact the Company and to take appropriate risk mitigation initiatives.

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RISK MANAGEMENT APPROACH

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ABOUT

MANAGEMENT BOARD SECOND LINE OF DEFENCE

THIRD LINE OF DEFENCE

OWNERSHIP & MANAGEMENT

RISK & CONTROL FUNCTIONS

INDEPENDENT OBJECTIVE ASSURANCE

BUSINESS & OPERATIONS MANAGEMENT

OVERSIGHT FUNCTIONS

INTERNAL AUDIT

RISK APPETITE Undertaking business activity inevitably leads to taking risks. Risk appetite is the level of risk we deem acceptable to achieve our objectives. ASMI’s risk appetite is primarily established based on the defined and agreed strategy and the individual objectives within this strategy. Risk appetite is further guided by our code of ethics as well as detailed policies and procedures.

The internal audit function of ASMI forms one of the key elements to address the topics of risk management and internal control over financial reporting as required under the Code. To ensure the independence of this function, the Director Internal Audit reports to the Management Board and the Audit Committee. The Audit Committee is involved in reviewing and approving the audit plan for the year which the internal auditor executes.

GOVERNANCE

INTERNAL AUDIT

SHAREHOLDERS

Our risk appetite differs per risk type: ››Strategic risks: we aim to deliver on our strategic ambitions and priorities, and are willing to accept reasonable risks to achieve this; ››Operational risks: we face operational challenges which require an appropriate level of management attention. The overall objective is to avoid risks that could negatively impact our goal to achieve operational efficiency, while ensuring our quality standards are unaffected; ››Financial risks: our financial strategy is focused on a strong financial position and creating long-term value for our shareholders; and ››Legal and regulatory risks: we strive to be fully compliant with our code of conduct and national and international laws and regulations of the markets in which we operate.

PERFORMANCE REVIEW

FIRST LINE OF DEFENCE

STRATEGY & BUSINESS

We have embedded an Internal Risk Management and Control Framework in the Company. Within the Framework, we continue to enhance our identification and assessment of our strategic, operational, financial, financial reporting and compliance risks, and continue to expand our risk management policies. We have identified key controls over financial reporting and embedded these in common business and financial reporting processes to provide further assurance for the reliability of our financial reporting.

The internal auditor regularly provides updates on its findings to the Audit Committee.

The Management Board is responsible for ASMI’s Internal Risk Management and Control Framework. This system is designed to manage the main risks that may prevent ASMI from achieving its objectives. However, this system cannot provide absolute assurance that material misstatements, fraud and violations of laws and regulations can be avoided. The Internal Risk Management and Control Framework and the evaluation of the effectiveness of our internal controls and areas for improvement are regularly discussed with  the Audit Committee and KPMG Accountants, our external auditor. The Audit Committee reports on these matters to the Supervisory Board.

FINANCIAL STATEMENTS

CONTROL EFFECTIVENESS STATEMENT

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In view of all of the above, the Management Board believes that it complies with the requirements of best practice provision II.1.5 of the Code.

PERFORMANCE REVIEW

All internal control systems, no matter how well designed and implemented, have inherent limitations. Even systems determined to be effective may not prevent or detect misstatements or fraud and can only provide reasonable assurance with respect to disclosure and financial statement presentation and reporting. Additionally, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate due to changed conditions and that the degree of compliance with the policies or procedures may deteriorate.

STRATEGY & BUSINESS

The Management Board conducted an evaluation of the effectiveness of our internal control over financial reporting based on the Internal Control – Integrated Framework issued by the COSO. Based on this evaluation of the effectiveness of the Company’s internal control over financial reporting, all members of the Management Board concluded that, as of December 31, 2015, the Company’s internal control over financial reporting was  effective and provides reasonable assurance for the reliability of financial reporting and the preparation of  financial statements for external purposes in accordance with generally accepted accounting principles. In addition, to the best of the knowledge of the Management Board, the management report includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation as a whole, as well as a description of the principal risks and uncertainties that the Company faces. No changes to the Company’s internal control over financial reporting have occurred during 2015 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

SHAREHOLDERS GOVERNANCE FINANCIAL STATEMENTS

ASMI STATUTORY ANNUAL REPORT 2015 | Risk categories and factors |

OPERATIONAL RISKS ››The Company derives a significant percentage of its revenue from a small number of large customers.

GOVERNANCE FINANCIAL STATEMENTS

Our three largest customers accounted each for more than 10% of net sales in 2015 and 2014. The ten largest customers accounted for approximately 81.0% of net sales in 2015 (2014: 84.1%). Reduction, rescheduling or cancellation of orders would reduce our revenues. ››Our products generally have long sales cycles and implementation periods, which increase our costs of obtaining orders and reduce the predictability of our earnings. Our products are technologically complex. Prospective customers generally must commit significant resources to test and evaluate our products and to install and integrate them into larger systems. In addition, customers often require a significant number of product presentations and demonstrations, in some instances evaluating equipment on site, before reaching a sufficient level of confidence in the product’s performance and compatibility with the customer’s requirements to place an order. As a result, our sales process is often subject to delays associated with lengthy approval processes that typically accompany the design and testing of new products. ››We outsource a significant portion of the manufacturing of our business to a limited number of suppliers. If our suppliers were unable or unwilling to deliver products in a timely manner to us in the quantities we require, we may be unable to fill customer orders on a timely basis, which could negatively affect our customer relationships and financial performance. We have shifted much of our operational activities to our front-end Manufacturing Singapore (FEMS) facility. If this facility experiences a manufacturing disruption for any reason, our ability to timely meet our customers’ needs may be impaired, which would negatively affect our customer relationships and financial performance.

SHAREHOLDERS

competition from companies which have greater resources than we do, and potential competition from new companies entering the market in which we compete. Therefore we invest in research and development, in an effort to compete effectively. Our primary competitors for our wafer processing equipment include Applied Materials, LAM Research Corporation, Tokyo Electron, Hitachi Kokusai, Wonik IPS and Jusung. ››We have to recruit or retain qualified personnel or integrate qualified personnel into our organization in order to avoid reduced sales, delayed product development and diversion of management resources. Our business and future operating results depend in part upon our ability to attract and retain qualified management, technical, sales and support personnel for our operations on a worldwide basis. Competition for qualified personnel is intense, and we cannot guarantee that we will be able to continue to attract and retain qualified personnel. ››The costs of semiconductor manufacturers for switching from one semiconductor equipment supplier to another can be high, therefore it may be more difficult to sell our products to customers having a competing installed base.

PERFORMANCE REVIEW

STRATEGIC RISKS ››The semiconductor industry is highly cyclical and is subject to rapid technological change. We face intense

STRATEGY & BUSINESS

In conducting our business, we face a number of risks that may interfere with our business objectives. Some of these risks relate to our operational processes, while others relate to our business environment. It is important to understand the nature of these risks and the impact they may have on our business, financial condition and results of operations. Some of the more relevant risks are described below, which may not be in order of likelihood or materiality. These risks are not the only ones we face. Some risks may not yet be known to us and certain risks that we do not currently believe to be material could become material in the future.

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RISK CATEGORIES AND FACTORS

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››Our internal information technology systems are a fundamental component of our business operations.

LEGAL AND REGULATORY RISKS ››Our success and ability to compete depend in large part upon protecting our proprietary technology.

GOVERNANCE FINANCIAL STATEMENTS

we owned approximately 52% of the outstanding equity of ASMPT, and the assets and operating results of ASMPT were reported by us on a consolidated basis. On March 15, 2013, we disposed of a 12% stake in ASMPT, which reduced our ownership to approximately 40% of the outstanding equity. As a result of this, ASMPT ceased to be a consolidated subsidiary as of that date and our pro rata interest in the net earnings of ASMPT is reported in our consolidated statements of operations. As per December 31, 2015, our interest in ASMPT was 39.55%. Although ASMPT operates in the same industry as ASMI, ASMPT addresses a different segment of the industry, which may involve different market dynamics and competitive factors from time to time, as well as different business risks unique to their operations. ASMPT is a public company traded on the Hong Kong Stock Exchange.

SHAREHOLDERS

RISKS RELATED TO OUR MINORITY INTEREST IN ASM PACIFIC TECHNOLOGY ››A significant portion of our total assets is composed of our minority interest in ASMPT. Prior to March 2013,

PERFORMANCE REVIEW

We rely on a combination of patent, trade secret, copyright and trademark laws, non-disclosure and other contractual agreements and technical measures to protect our proprietary rights and confidential information. These agreements and measures may turn out not to be sufficient. Our technology may be infringed by third parties This however does not protect us from claims by third parties. In addition, patents issued to us may be challenged, invalidated or circumvented, rights granted to us under patents may not provide competitive advantages to us, and third parties may assert that our products infringe their patents, copyrights or trade secrets.In addition, monitoring unauthorized use of our products is difficult and we cannot be certain that the steps we have taken will prevent unauthorized use of our technology. The laws of some countries in which our products are or may be developed, manufactured or sold, including various countries in Asia, may not protect our products or intellectual property rights to the same extent as do the laws of the Netherlands and the United States and thus make the possibility of piracy of our technology and products more likely in such countries. In past years, there has been substantial litigation regarding patent and other intellectual property rights in our semiconductor and related technology industries. In the future, litigation may be necessary to enforce patents issued to us, to protect trade secrets or know-how owned by us or to defend us against claimed infringement of the rights of others and to determine the scope and validity of the proprietary rights of others. ››We are party from time to time to various legal proceedings and claims generally incidental to our business including without limitation intellectual property and product liability claims. For each of these proceedings and claims, our management evaluates, based on the relevant facts and legal principles, the likelihood of an unfavorable outcome and whether the amount of the loss can be reasonably estimated, in connection with our determination of whether or not to record a charge to earnings. ››Our operations are subject to many environmental laws and regulations wherever we operate. To the extent such regulations or directives apply to our business throughout the world, these measures could adversely affect our manufacturing costs or product sales by forcing us or our suppliers to change production processes or use more costly or scarce materials. As with other companies engaged in similar activities, we face inherent risks of environmental liability in our current and historical manufacturing, R&D activities, and operations. Accordingly, costs and regulatory fines associated with such future environmental compliance or remediation obligations could adversely affect our business. We seek to mitigate these environmental and operational risks through preventative and protective safety and health practices. ››Changes in taxation could affect our future profitability.

STRATEGY & BUSINESS

In today’s world, these systems are subject to compromise by aging and other matters such as computer viruses, unauthorized access and general system failures or unforeseen difficulties. Such incidents could result in business disruption and theft of confidential information. We focus on proactive measures to prevent and mitigate such risks.

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ABOUT

The significant risks currently considered relevant, potential consequences, and applicable mitigating measures can be outlined as follows:

Appropriate investment in R&D initiatives to support both strategic objectives and customer requests.

Ability to attract and retain appropriately qualified and experienced personnel.

Reduced sales, delayed product development and diversion of management resources.

Robust talent management and succession planning tools.

Cyclical nature of the semiconductor market.

Financial loss due to reduced demand and fixed overheads during industry downturns. Abrupt increases in demand for semiconductor devices and insufficient production capacity during industry upturns.

› Outsourcing generic manufacturing; and › Financial structure, cash, standby credit facility.

Failure to deliver product of sufficient quality or on time.

Financial loss due to penalties, rework and/or reduced future demand.

Commitment to: › delivering quality tools and equipment with robust quality assurance processes and controls in place; and › timely response to customer requests through 24/7.

Dependence on small number of large customers.

Loss of a customer or significant reduction in demand could result in significant downturn in financial results.

Commitment to: › delivering quality tools and equipment with robust quality assurance processes and controls in place; › timely response to customer requests; and › pro-actively working with customers to strengthen relationships and ensure as far as possible we meet expectations.

IT security breaches including cyber attacks.

Reputation damage.

IT risk management framework.

Failure of contract manufacturer to deliver.

Financial loss due to penalties, rework and/or reduced future demand.

Effective disaster recovery plan in place for contract manufacturers.

Disruption of material supplies.

Loss of reputation and/or financial loss.

Effective disaster recovery plan to ensure continuity of material supplies.

Disruption of critical business processes through IT downtime.

Potential loss of reputation and/or financial loss.

Comprehensive IT disaster recovery plan based on detailed business impact analysis.

Safety, health and environment (SHE).

Incidents and accidents in the supply chain.

Effective global SHE organization and tracking, monitoring and evaluation of accidents.

Reputation damage and/or financial loss.

Finance Control Framework.

Non adherence to laws and regulations in respect of environment, labor and data privacy.

Reputation damage and/or financial loss.

Detailed policies, procedures and work instructions.

Failure to adequately protect our Intellectual Property (IP) and/or leakage of our IP.

Loss of competitive advantage could adversely impact demand and financial performance.

Robust governance framework and controls in place to establish, maintain and protect our intellectual property rights. Control framework established to minimize as far as possible the risk of data leakage.

OPERATIONAL

FINANCIAL Financial reporting is not complete or accurate. LEGAL AND REGULATORY RISKS

FINANCIAL STATEMENTS

Financial loss due to decreased orders and/or reputation damage.

GOVERNANCE

Ability to respond to changes in product demand and technology change.

STRATEGIC

SHAREHOLDERS

MITIGATING MEASURES

PERFORMANCE REVIEW

POTENTIAL CONSEQUENCES

STRATEGY & BUSINESS

RISK

ASMI STATUTORY ANNUAL REPORT 2015 99

ABOUT

FINANCIAL STATEMENTS

STRATEGY & BUSINESS

EURO

COMPANY FINANCIAL STATEMENTS Company balance sheet Abbreviated company statement

155

of comprehensive income101

of profit or loss

156

Consolidated statement

Notes to the company financial statements157

of financial position102 Consolidated statement of changes in equity103 Consolidated statement of cash flows 104 Notes to the consolidated financial statements105

FINANCIAL STATEMENTS

Consolidated statement of profit or loss100 Consolidated statement

GOVERNANCE

CONSOLIDATED FINANCIAL STATEMENTS

SHAREHOLDERS

IFRS

PERFORMANCE REVIEW

CURRENCY

ASMI STATUTORY ANNUAL REPORT 2015 | Consolidated statement of profit or loss | 100

ABOUT

CONSOLIDATED STATEMENT OF PROFIT OR LOSS   (EUR thousand, except per share data)

YEAR ENDED DECEMBER 31,

NOTES

2014

2015

19

545,604

669,621

Cost of sales

(310,326)

(374,094)

19

235,278

295,527

Selling, general and administrative

21

(80,606)

(94,729)

Research and development

22

(61,298)

(89,735)

(141,904)

(184,464)

93,374

111,063

GROSS PROFIT

Operating expenses:

TOTAL OPERATING EXPENSES RESULT FROM OPERATIONS

19

1,583

1,112

Finance expense

(3,272)

(1,620)

26,439

25,264

39,413

16,108

157,537

151,927

Foreign currency exchange gain (loss), net Share in income of investments in associates

6

INCOME BEFORE INCOME TAXES Income taxes

3,157



141,317

157,277

From continuing operations

2.18

2.53

From discontinued operations

0.05



FROM OPERATIONS

2.23

2.53

From continuing operations

2.15

2.50

From discontinued operations

0.05



FROM OPERATIONS

2.20

2.50

Basic

63,510

62,114

Diluted

64,209

62,928

Net earnings from discontinued operations

6

NET EARNINGS FROM OPERATIONS, ATTRIBUTABLE TO COMMON SHAREHOLDERS Per share data

23

Basic net earnings per share (EUR):

Diluted net earnings per share (EUR):

Weighted average number of shares (thousand):

GOVERNANCE

5,350 157,277

SHAREHOLDERS

(19,377) 138,160

20

NET EARNINGS FROM CONTINUING OPERATIONS

PERFORMANCE REVIEW

Finance income

STRATEGY & BUSINESS

Net sales

 

CHANGES OF PRESENTATION We reclassified certain items to conform to the current presentation. FINANCIAL STATEMENTS

ASMI STATUTORY ANNUAL REPORT 2015 | Consolidated statement of comprehensive income | 101

ABOUT

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME   (EUR thousand)

  NOTES

Foreign currency translation effect Proportionate part in other comprehensive income (loss) investments in associates Reclassification of deferred accumulative translation result to income following the sale of the 12% share of ASMPT TOTAL Related tax 11

2015

141,317

157,277

146,025

136,744

(2,179)

567

(3,157)



140,689

137,311





282,006

294,588

PERFORMANCE REVIEW

TOTAL COMPREHENSIVE INCOME, ATTRIBUTABLE TO COMMON SHAREHOLDERS

2014

STRATEGY & BUSINESS

NET EARNINGS FROM OPERATIONS, ATTRIBUTABLE TO COMMON SHAREHOLDERS Other comprehensive income, items that may be subsequently reclassified to profit or loss:

YEAR ENDED DECEMBER 31,

SHAREHOLDERS GOVERNANCE FINANCIAL STATEMENTS

ASMI STATUTORY ANNUAL REPORT 2015 | Consolidated statement of financial position | 102

ABOUT

CONSOLIDATED STATEMENT OF FINANCIAL POSITION   (EUR thousand)

 

DECEMBER 31, 2014

2015

Property, plant and equipment

3

79,236

91,794

Goodwill

4

11,270

11,270

Other intangible assets

5

65,214

81,535

Investments in associates

6

1,092,948

1,180,839

20

3,217

11,563

7

17,767

28,999

1,269,652

1,406,000

8

125,930

113,502

Deferred tax assets Evaluation tools at customers TOTAL NON-CURRENT ASSETS Inventories Income taxes receivable

9

81,971

90,190

20

2,868

515

23,087

18,855

10

385,777

446,915

619,633

669,977

1,889,285

2,075,977

Other current assets Cash and cash equivalents TOTAL CURRENT ASSETS

TOTAL ASSETS Equity and liabilities 11

1,743,021

1,948,379

Pension liabilities

12

1,782

1,170

Deferred tax liabilities

20

9,952

11,332

TOTAL NON-CURRENT LIABILITIES

11,734

12,502

Accounts payable

61,053

54,441

Provision for warranty

13

9,910

9,023

Income taxes payable

20

15,952

6,841

Accrued expenses and other payables

14

44,791

134,530

115,096

TOTAL LIABILITIES

146,264

127,598

1,889,285

2,075,977

TOTAL EQUITY AND LIABILITIES

CHANGES OF PRESENTATION We reclassified certain items to conform to the current presentation.

GOVERNANCE

47,615

TOTAL CURRENT LIABILITIES

SHAREHOLDERS

EQUITY

PERFORMANCE REVIEW

Accounts receivable

STRATEGY & BUSINESS

NOTES

Assets

FINANCIAL STATEMENTS

ASMI STATUTORY ANNUAL REPORT 2015  |  Consolidated statement of changes in equity  | 103

ABOUT

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (EUR thousand except for share data)

CAPITAL IN EXCESS OF PAR VALUE

TREASURY SHARES

RETAINED EARNINGS

63,468,390

2,539

203,945



1,375,874

























12



12

BALANCE AS OF JANUARY 1, 2014

Dividend paid to common shareholders Compensation expense share based payments Exercise stock options by issue of common shares Exercise stock options out of treasury shares Purchase of common shares Withdrawal shares following the settlement of the Lehman treasury shares

TOTAL EQUITY

141,317



141,317



140,689

140,689



141,317

140,689

282,006





(31,828)



(31,828)



7,476







7,476

354,650

14

5,398







5,412

124,339



(497)

4,158

(1,762)



1,899

11

(953,552)





(31,891)





(31,891)

11

(25,643)













6









3,561



3,561

6









9,947



9,947

62,968,184

2,553

216,322

(27,733)

1,497,109

54,770

1,743,021









157,277



157,277











137,311

137,311







157,277

137,311

294,588









(37,158)



(37,158)





8,213







8,213

12

630,600



(2,667)

20,985

(6,886)

_

11,432

11

(1,892,397)





(77,252)





(77,252)

6









5,535



5,535

61,706,387

2,553

221,868

(84,000)

1,615,877

192,081

1,948,379

11

Other movements in investments in associates: Dilution Allocation equity component convertible bond 2 BALANCE AS OF DECEMBER 31, 2014 Net earnings Other comprehensive income TOTAL COMPREHENSIVE INCOME (LOSS) Dividend paid to common shareholders Compensation expense share based payments Exercise stock options out of treasury shares Purchase of common shares

11

12

Other movements in investments in associates: Dilution

BALANCE AS OF DECEMBER 31, 2015

Other reserves consist of the currency translation reserve and the reserve for proportionate share in other comprehensive income investments in associates. See Note 11. 2 In 2014 convertible bonds were issued by ASMPT that containing both liability and conversion option components. These components are classified separately into respective items on initial recognition in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument. The conversion option classified as equity is determined by deducting the amount of the liability component from the fair value of the compound instrument as a whole. This is recognized and included in equity, net of income tax effects, and is not subsequently remeasured. In addition, the conversion option classified as equity will remain in equity until the conversion option is exercised.

GOVERNANCE

1,496,439

SHAREHOLDERS

(85,919)

Net earnings Other comprehensive income TOTAL COMPREHENSIVE INCOME (LOSS)

OTHER RESERVES 1

PERFORMANCE REVIEW

COMMON SHARES

STRATEGY & BUSINESS

NUMBER OF COMMON SHARES

NOTES

1

FINANCIAL STATEMENTS

ASMI STATUTORY ANNUAL REPORT 2015 | Consolidated statement of cash flows | 104

ABOUT

CONSOLIDATED STATEMENT OF CASH FLOWS   (EUR thousand)

YEAR ENDED DECEMBER 31, NOTES

2015

141,317

157,277

3,5

33,008

54,290

12

7,476

8,213

(22,265)

(17,105)

(39,413)

(16,108)

19,377

(5,350)

(3,157)



Net earnings from operations Adjustments to reconcile net earnings to net cash from operating activities Depreciation, amortization and impairments Share-based compensation Non cash financing costs Share in income of investments in associates

6

Income tax Net earnings from discontinued operations Accounts receivable Inventories Other current assets Accounts payable and accrued expenses Income tax paid NET CASH FROM OPERATING ACTIVITIES

6,756

(2,835)

(20,022)

13,436

(7,531)

(4,860)

20,979

(2,976)

(11,789)

(9,165)

124,736

174,817

Cash flows from investing activities 3

(30,647)

(33,576)

Proceeds from sale of property, plant and equipment

3

359

411

Capitalized development expenditure

5

(14,346)

(30,178)

Purchase of intangible assets

5

(1,496)

(7,215)

19,974

42,865

Dividend received from associates Investments in associates

6

NET CASH USED IN INVESTING ACTIVITIES



(900)

(26,156)

(28,593)

Cash flows from financing activities Debt issuance fees paid Purchase of treasury shares ASMI

11

Proceeds from issuance of shares and exercise of stock options

12

(1,416)



(29,338)

(79,076) 11,323

(31,828)

(37,158)

NET CASH USED IN FINANCING ACTIVITIES

(57,824)

(104,911)

32,584

19,825

FOREIGN CURRENCY TRANSLATION EFFECT ON CASH AND CASH EQUIVALENTS

73,340

61,138

Cash and cash equivalents at beginning of year

10

312,437

385,777

CASH AND CASH EQUIVALENTS AT END OF YEAR

10

385,777

446,915

NET INCREASE IN CASH AND CASH EQUIVALENTS

We reclassified certain items to conform to the current presentation.

FINANCIAL STATEMENTS

CHANGES OF PRESENTATION

GOVERNANCE

4,758

Dividends to common shareholders of ASMI

SHAREHOLDERS

Capital expenditures

PERFORMANCE REVIEW

Changes in assets and liabilities

STRATEGY & BUSINESS

2014

Cash flows from operating activities

ASMI STATUTORY ANNUAL REPORT 2015  |  Notes to the consolidated financial statements  | 105

GENERAL INFORMATION ASM International NV (ASMI or the Company) is a Dutch public liability company domiciled in the Netherlands with its principal operations in Europe, the United States and Asia. The Company dedicates its resources to the research, development, manufacturing, marketing and servicing of equipment and materials used to produce mainly semiconductor devices. The Company’s shares are listed for trading on the Euronext Amsterdam Stock Exchange (symbol ASM).

BASIS OF ACCOUNTING The Consolidated financial statements for the year ended December 2015 have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union and also comply with the financial reporting requirements included Section 362(9) of Part 9, Book 2 of the Dutch Civil Code. As the financial data of ASM International NV (the parent company) are included in the Consolidated financial statements, the statement of profit or loss in the parent company financial statements is presented in condensed form (in accordance with section 402, Part 9, Book 2 of the Dutch Civil Code).

The accompanying Consolidated financial statements are presented in thousands of euro (EUR), which is the Company’s functional currency. All financial information is presented in euro thousand unless stated otherwise and has been rounded to the nearest thousand.

The Financial statements will be filed at the Trade Register of the Chamber of Commerce in Almere, the Netherlands within eight days after adoption by the 2016 AGM.

USE OF ESTIMATES AND JUDGMENTS

FINANCIAL STATEMENTS

The preparation of the Company’s Consolidated financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the amounts reported in the Financial statements and accompanying notes. Actual results could differ materially from those estimates. On an ongoing basis we evaluate our estimates and underlying assumptions. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.

GOVERNANCE

The Financial statements have been prepared by the Management Board of the Company and authorized for issue on April 13, 2016 and will be submitted for adoption to the Annual General Meeting of Shareholders (AGM) on May 25, 2016.

SHAREHOLDERS

The Consolidated financial statements have been prepared under the historical cost convention, unless otherwise indicated. The Company applies the going concern basis in preparing its Financial statements.

PERFORMANCE REVIEW

The accompanying Consolidated financial statements include the financial statements of ASM International NV, headquartered in Almere, the Netherlands, and its consolidated subsidiaries (together referred to as ASMI or the Company). ASMI’s significant subsidiaries and associates are listed in Note 2.

STRATEGY & BUSINESS

NOTE 1. GENERAL INFORMATION/SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ABOUT

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

ASMI STATUTORY ANNUAL REPORT 2015  |  Notes to the consolidated financial statements  | 106

ABOUT

CRITICAL ACCOUNTING POLICIES

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Consolidation

Control exists when ASMI has: ››the power over an investee; ››exposure, or rights, to variable returns from its involvement with the investee; and ››the ability to use its power over the investee to affect the amount of the investor’s returns.

FINANCIAL STATEMENTS

As from the date that these criteria are met, the financial data of the relevant company are included in the consolidation. The financial data are deconsolidated from the date on which ASMI’s control ceases.

GOVERNANCE

The Consolidated financial statements include the accounts of ASMI NV and all of its subsidiaries where ASMI holds a controlling interest. Non-controlling interest is disclosed separately, as appropriate, in the Consolidated financial statements. All intercompany profits, transactions and balances have been eliminated in the consolidation. Unrealized inter company losses are eliminated in the same way as unrealized gains, but only to the extent that there is no evidence of impairment.

SHAREHOLDERS

Management believes that the following are critical accounting policies: ››revenue recognition; ››inventories; ››warranty; ››evaluation of long-lived assets for impairment; ››evaluation of investments in associates for impairment; ››contingencies and litigation; and ››income taxes.

PERFORMANCE REVIEW

Estimates and assumptions about future events and their effects cannot be determined with certainty. ASMI bases its estimates on historical experience and on various other assumptions believed to be applicable and  reasonable under the circumstances. These estimates may change as new events occur, as additional information is obtained and as ASMI’s operating environment changes. These changes have historically been minor and have been included in the Consolidated financial statements as soon as they became known. In addition, management is periodically faced with uncertainties, the outcomes of which are not within its control and will not be known for prolonged periods of time. Based on a critical assessment of its accounting policies and the underlying judgments and uncertainties affecting the application of those policies, management believes that ASMI’s Consolidated financial statements are fairly stated in accordance with IFRS, and provide a meaningful presentation of ASMI’s financial condition and results of operations. An analysis of specific sensitivity to changes of estimates and assumptions is included in the notes to the financial statement.

STRATEGY & BUSINESS

A critical accounting policy is defined as one that is both material to the presentation of ASMI’s Consolidated financial statements and that requires management to make difficult, subjective or complex judgments that could have a material effect on ASMI’s financial condition or results of operations. Specifically, these policies have the following attributes: (1) ASMI is required to make assumptions about matters that are highly uncertain at the time of the estimate; and (2) different estimates ASMI could reasonably have used, or changes in the estimate that are reasonably likely to occur, would have a material effect on ASMI’s financial condition or results of operations.

ASMI STATUTORY ANNUAL REPORT 2015  |  Notes to the consolidated financial statements  | 107

ABOUT

Loss of control

Discontinued operations

Business combinations ASMI records business combinations under the acquisition method of accounting. Accordingly, the purchase price is allocated to the tangible assets and liabilities and intangible assets acquired, based on their estimated fair values. The excess purchase price over the fair value is recorded as goodwill. Purchased intangibles with definite lives are amortized over their respective useful lives.

Foreign currency translation

SHAREHOLDERS

Before recognizing a gain on a bargain purchase, the Company reassesses whether it has correctly identified all of the assets acquired and all of the liabilities assumed and recognizes any additional assets or liabilities that are identified in that review. The Company then reviews the procedures used to measure the amounts IFRS requires to be recognized at the acquisition date for all of the following: the identifiable assets acquired and liabilities assumed; the non-controlling interest in the acquiree, if any; and the consideration transferred.

PERFORMANCE REVIEW

An operation is classified as discontinued at the date on which the operation meets the criteria to be classified as held for sale or when the entity has disposed of the operation. Although statement of financial position information is neither restated nor remeasured for discontinued operations, the statement of (comprehensive) income information is restated for the comparative period. Discontinued operations are presented separately in  the statement of profit or loss and the cash flow statement. The date of disposal of a subsidiary or disposal group is the date on which control passes. The consolidated statement of profit or loss includes the results of a subsidiary or disposal group up to the date of disposal; the gain or loss on disposal is the difference between (a) the carrying amount of the net assets plus any attributable goodwill and amounts accumulated in other comprehensive income (for example, foreign translation adjustments and available-for-sale reserves); and (b) the proceeds of sale.

STRATEGY & BUSINESS

Upon the loss of control, ASMI derecognizes the assets and liabilities of the subsidiary, any non-controlling interests and the other components of equity related to the subsidiary. Any surplus or deficit arising on the loss of control is recognized in profit or loss. If ASMI retains any interest in the previous subsidiary, then such interest is measured at fair value at the date that control is lost. Subsequently it is accounted for as an equity-accounted investee or as an available-for-sale financial asset depending on the level of influence retained.

The individual financial statements of each group entity are presented in their functional currency. For the purpose of the Consolidated financial statements, the results and financial position of each entity are expressed in euros, which is ASMI’s functional currency, and the presentation currency for the Consolidated financial statements.

FINANCIAL STATEMENTS

Exchange rate differences arising on the settlement of monetary items, and on the translation of monetary items, are recognized in the consolidated statement of profit or loss in the period in which they arise. Exchange rate differences arising on the translation of non-monetary items carried at fair value are recognized in the consolidated statement of profit or loss for the period except for differences arising on the translation of non-monetary items in respect of which gains and losses are recognized directly in equity.

GOVERNANCE

In preparing the financial statements of the individual entities, transactions in foreign currencies are recorded at the rates of exchange prevailing the date of the transactions. At each balance sheet date, monetary items denominated in foreign currencies are translated at the rates prevailing the balance sheet date. Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing on the date when the fair value was determined.

ASMI STATUTORY ANNUAL REPORT 2015  |  Notes to the consolidated financial statements  | 108

ABOUT

Segment reporting The back-end segment is still reported as a separate segment after the Company ceased control on March 15, 2013, since the full results of the back-end segment are continued to be reviewed by our Chief Operating Decision Maker (CODM).

Accordingly, the asset and profit/loss information regarding the operations that comprise are  disclosed. The full financial results are reviewed by the CODM, the external reporting of are  on  an  equity method investment basis. The total of all segments’ financial amounts are the  corresponding amounts reported in the Consolidated financial statements, eliminations in  the  reconciling column for amounts reported in excess of those amounts reflected in the financial statements.

the segment the segment reconciled to are reflected Consolidated

The back-end segment manufactures and sells equipment and materials used in assembly and packaging, encompassing the processes in which silicon wafers are separated into individual circuits and subsequently assembled, packaged and tested. The segment is organized in ASM Pacific Technology Ltd, in which the Company holds a 39.55% interest, whilst the remaining shares are listed on the Stock Exchange of Hong Kong.

ASMI and its subsidiaries conduct business in a number of foreign countries, with certain transactions denominated in currencies other than the functional currency of the Company (euro) or one of its subsidiaries conducting the business. The purpose of the Company’s foreign currency management is to manage the effect of exchange rate fluctuations on income, expenses, cash flows and assets and liabilities denominated in selected foreign currencies, in particular denominated in US dollar.

FINANCIAL STATEMENTS

We may use forward exchange contracts to hedge our foreign exchange risk of anticipated sales or purchase transactions in the normal course of business, which occur within the next twelve months, for which we have a firm commitment from a customer or to a supplier. The terms of these contracts are consistent with the timing of the transactions being hedged. The hedges related to forecasted transactions are designated and documented at the inception of the hedge as cash flow hedges, and are evaluated for effectiveness quarterly. The effective portion of the gain or loss on these hedges is reported as a component of accumulated other comprehensive income (loss) net of taxes in equity, and is reclassified into earnings when the hedged transaction affects earnings.

GOVERNANCE

Derivative financial Instruments

SHAREHOLDERS

The front-end segment manufactures and sells equipment used in wafer processing, encompassing the fabrication steps in which silicon wafers are layered with semiconductor devices. The segment is a product driven organizational unit comprised of manufacturing, service, and sales operations in Europe, the United States, Japan and Southeast Asia.

PERFORMANCE REVIEW

The Company organizes its activities in two operating segments, front-end and back-end. Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Executive Officer (CEO), which is the CODM.

STRATEGY & BUSINESS

For the purpose of presenting Consolidated financial statements, the assets and liabilities of our foreign subsidiaries (including comparatives) are expressed in euros using exchange rates prevailing on the balance sheet date. Income and cost items (including comparatives) are translated at the average exchange rates for the period. Exchange rate differences arising are classified as other comprehensive income in equity. Such translation differences are recognized in the consolidated statement of profit or loss in the period in which  the foreign operation is disposed. Currency differences on intercompany loans that have the nature of a long-term investment are also accounted for directly in equity.

ASMI STATUTORY ANNUAL REPORT 2015  |  Notes to the consolidated financial statements  | 109

ABOUT

We do not use forward exchange contracts for trading or speculative purposes. Financial assets and financial liabilities are recognized on the Company’s consolidated statement of financial position when the Company becomes a party to the contractual provisions of the instrument.

Fixed assets Fixed assets include goodwill, other intangible assets, property, plant and equipment and Evaluation tools at customers.

Business combinations are accounted for under the acquisition method. The Company reviews its recorded goodwill and other intangible assets with indefinite lives for impairment each year on December 31 and whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

In determining the capitalization of development expenses the Company makes estimates and assumptions based on expected future economic benefits generated by products that are the result of these development expenses. Other important estimates and assumptions are the required internal rate of return, the distinction between research, development and high-volume manufacturing and the estimated useful life.

FINANCIAL STATEMENTS

Other intangible assets are carried at cost, less accumulated amortization and any impairment losses. Amortization is calculated using the straight-line method over the estimated useful lives.

GOVERNANCE

Goodwill represents the excess of the costs of an acquisition over the fair value of the amounts assigned to assets acquired and liabilities incurred or assumed of the acquired subsidiary at the date of acquisition. Goodwill on acquisition of subsidiaries is allocated to cash generating units (CGUs) for the purpose of impairment testing. The allocation is made to those CGUs that are expected to benefit from the business combination in which the goodwill arose. Goodwill is tested for impairment annually at the start of the December and whenever events or changes in circumstances indicate that the carrying amount of the goodwill may not be recoverable. If the recoverable amount of the CGU is less than the carrying amount of the unit, the impairment loss is recognized. An impairment loss recognized for goodwill is not reversed in a subsequent period. Goodwill is stated at cost less accumulated impairment losses.

SHAREHOLDERS

Property, plant and equipment are carried at cost, less accumulated depreciation and any impairment losses. Finance leased assets are recorded at the present value of future lease obligations. Depreciation is calculated using the straight-line method over the estimated useful lives. Leasehold improvements are depreciated over the lesser of the estimated useful life of the leasehold improvement or the term of the underlying lease.

PERFORMANCE REVIEW

Furthermore, we might manage the currency exposure of certain receivables and payables using derivative instruments, such as forward exchange contracts (fair value hedges) and currency swaps, and non-derivative instruments, such as debt borrowings in foreign currencies. The gains or losses on these instruments provide an offset to the gains or losses recorded on receivables and payables denominated in foreign currencies. The derivative instruments are recorded at fair value and changes in fair value are recorded in earnings under foreign currency exchange gains (losses) in the consolidated statement of profit or loss. Receivables and payables denominated in foreign currencies are recorded at the exchange rate at the balance sheet date and gains and losses as a result of changes in exchange rates are recorded in earnings under foreign currency exchange gains (losses) in the consolidated statement of profit or loss.

STRATEGY & BUSINESS

Changes in the fair value of derivatives that do not qualify for hedge treatment, as well as the ineffective portion of any hedges, are recognized in earnings. We record all derivatives, including forward exchange contracts, on the statement of financial position at fair value at inception or at trade date and balance sheet date in other current assets or accrued expenses and other payables or in long-term assets or long-term payables.

ASMI STATUTORY ANNUAL REPORT 2015  |  Notes to the consolidated financial statements  | 110

ABOUT

Evaluation tools at customers (evaluation tools) are systems generally delivered to customers under evaluation or a conditional purchase order and include substantial customization by our engineers and R&D staff in the field. Evaluation tools are recorded at cost and depreciated over their estimated useful life of 5 years, or their shorter economic life. The depreciation expenses are reported as cost of sales.

Impairment of fixed assets Each year on December 31 the Company reviews the carrying amounts of its tangible and intangible assets (other than goodwill) to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any).

Associates Associates are investments in entities in which ASMI can exert significant influence but which ASMI does not control, generally by ASMI having between 20% and 50% of the voting rights. These entities are accounted for using the equity method and are initially recognized at cost. Dividend income from the Company’s associated companies is recognized when the right to receive payment is established.Their carrying value includes goodwill identified upon acquisition, net of any accumulated impairment.

FINANCIAL STATEMENTS

Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its Recoverable Amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset in prior years. A reversal of an impairment loss is recognized immediately in the Consolidated Statement of Profit or Loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

GOVERNANCE

If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognized immediately in the Consolidated Statement of Profit or Loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

SHAREHOLDERS

On final acceptance of the system the purchase consideration is recognized as revenue. The carrying value of the evaluation system at that point in time is recognized as cost of sales. In the circumstance that the system is returned, at the end of the evaluation period, a detailed impairment review takes place, and future sales opportunities and additional costs are identified. Only when the fair value is below the carrying value of the evaluation tool an additional depreciation is recognized. The remaining carrying value is recognized as finished goods (inventory).

PERFORMANCE REVIEW

The Company capitalizes development expenses that meet the above-mentioned criteria in its Consolidated financial statements. Amortization of capitalized development expenses is calculated using the straight-line method over the estimated useful lives of the developed product. Amortization starts when the developed product is transferred to high volume manufacturing. Other intangible assets with finite lives are amortized over  the estimated useful lives using the straight-line method.

STRATEGY & BUSINESS

Development expenses are capitalized when all of the following criteria are demonstrated: ››the technical feasibility of completing the intangible asset so that it will be available for use or sale; ››its intention to complete the intangible asset and use or sell it; ››its ability to use or sell the intangible asset; ››how the intangible asset will generate probable future economic benefits; ››the availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and ››its ability to measure the expenditure attributable to the intangible asset during its development reliably.

ASMI STATUTORY ANNUAL REPORT 2015  |  Notes to the consolidated financial statements  | 111

ABOUT

When ASMI’s share of losses in an associate equals or exceeds its interest in the associate, including any other receivables for which settlement is neither planned nor likely to occur in the foreseeable future, ASMI does not recognize further losses, unless ASMI has obligations to or made payments on behalf of the associate.

Equity method investments are tested for prolonged decline in value. If the fair value of an investment is less than its carrying value, the Company determines whether the decline in value is temporary or prolonged. A prolonged decline in value is measured as of a balance sheet date. If after a prior recognized impairment the fair value is more than its carrying value this impairment is reversed. The determination of whether an investment is impaired is made at the individual security level in each reporting period.

Inventories

Allowances for obsolescence of inventory are determined based on the expected demand as well as the expected market value of the inventory. We regularly evaluate the value of our inventory of components and raw materials, work in progress and finished goods, based on a combination of factors including the following: forecasted sales, historical usage, product end of life cycle, estimated current and future market values, service inventory requirements and new product introductions, as well as other factors. Purchasing requirements and alternative uses for the inventory are explored within these processes to mitigate inventory exposure. We record write downs for inventory based on the above factors and take into account worldwide quantities and demand into our analysis.

Accounts receivable are measured at initial recognition at fair value, and are subsequently measured at amortized cost using the effective interest rate method.

FINANCIAL STATEMENTS

A significant percentage of our accounts receivable is derived from sales to a limited number of large multinational semiconductor device manufacturers located throughout the world. In order to monitor potential credit losses, we perform ongoing credit evaluations of our customers’ financial condition. An allowance for doubtful accounts is maintained for potential credit losses based upon management’s assessment of the expected collectability of all accounts receivable. The allowance for doubtful accounts is reviewed periodically to assess the adequacy of the allowance. In making this assessment, management takes into consideration any circumstances of which we are aware regarding a customer’s inability to meet its financial obligations; and our judgments as to potential prevailing economic conditions in the industry and their potential impact on the Company’s customers.

GOVERNANCE

Accounts receivable

SHAREHOLDERS

Inventories are stated at the lower of cost (first-in, first-out method) or net realisable value. Costs include net prices paid for materials purchased, charges for freight and custom duties, production labor cost and factory overhead. Allowances are made for slow moving, obsolete or unsellable inventory.

PERFORMANCE REVIEW

ASMI does not separately test associates’ underlying assets for impairment. However, ASMI recognizes its share of any impairment charge recorded by an investee and considers the effect, if any, of the impairment on the basis difference in the assets giving rise to the investee’s impairment charge. A loss in value of an investment which is significant or prolonged will be recognized. Significant is defined as at least 20% over an uninterrupted period of nine months, or more than 40% on the reporting date. Prolonged is defined as measured below cost for more than a year.

STRATEGY & BUSINESS

At each reporting date, the Company determines if there is any objective evidence that the associate is impaired. An impairment, being the difference between the recoverable amount of the associate and its carrying value, is recognized in the Consolidated Statement of Profit or Loss.

ASMI STATUTORY ANNUAL REPORT 2015  |  Notes to the consolidated financial statements  | 112

ABOUT

Cash and cash equivalents Cash and cash equivalents comprise deposits held at call with banks and other short-term highly liquid investments with original maturity of three months or less. Bank overdrafts are included in notes payable to banks in current liabilities.

Accounts payable

Revenue recognition The Company recognizes revenue when all four revenue recognition criteria have been met: persuasive evidence of an arrangement exists; delivery has occurred or services have been rendered; seller’s price to buyer is fixed or determinable; and collectability is reasonably assured. The Company’s revenue includes revenue from contractual arrangements consisting of multiple deliverables, such as equipment and installation. The revenue for the total transaction is first allocated to its components, based on their relative selling prices. Then the revenue that was allocated to the undelivered component is deferred.The revenue from the undelivered element of the arrangement is deferred at their relative selling prices until delivery of the element.

In general, the Company recognizes revenue from sales of equipment upon shipment of equipment, only if testing at the factory has proved that the equipment has met substantially all of the customer’s criteria and specifications.

We provide training and technical support service to customers. Revenue related to such services is recognized when the service is rendered. Revenue from the sale of spare parts and materials is recognized when the goods are shipped.

FINANCIAL STATEMENTS

The Company’s sales frequently involve complex equipment, which may include customer-specific criteria, sales to new customers or equipment with new technology. For each sale, the decision whether to recognize revenue is, in addition to shipment and factory acceptance, based on the contractual agreement with a customer, the experience with a particular customer, the technology and the number of similarly configured equipment previously delivered. Instead of recognizing revenue, the Company could decide to defer revenue recognition until completion of installation at the customer’s site and obtaining final acceptance from the customer.

GOVERNANCE

The Company recognizes revenue from installation of equipment upon completion of installation at the customer’s site. At the time of shipment, the Company defers that portion of the sales price related to the installation. The  relative selling price of the installation process is measured based upon the per-hour amounts charged by  third parties for similar installation services. Installation is completed when testing at the customer’s site has  proved that the equipment has met all of the customer’s criteria and specifications. The completion of installation is signed-off by the customer (final acceptance). The revenue relating to the undelivered elements of the arrangements is deferred at their relative selling prices until delivery of these elements.

SHAREHOLDERS

A major portion of our revenue is derived from contractual arrangements with customers that have multiple deliverables, such as installation. The revenue relating to the undelivered elements of the arrangements, the installation, is deferred until delivery of these elements.

PERFORMANCE REVIEW

Accounts payable are measured at initial recognition at fair value, and are subsequently measured at amortized cost using the effective interest rate method.

STRATEGY & BUSINESS

The allowance is based on historical experience, credit evaluations, specific customer collection history and any customer-specific issues ASMI has identified. Changes in circumstances, such as an unexpected adverse material change in a major customer’s ability to meet its financial obligation to ASMI or its payment trends, may require us to further adjust our estimates of the recoverability of amounts due to ASMI, which could have an adverse material effect on ASMI’s financial condition and results of operations.

ASMI STATUTORY ANNUAL REPORT 2015  |  Notes to the consolidated financial statements  | 113

ABOUT

Freight charges billed to customers are recognized as revenue, the related costs are recognized as cost of sales. Revenues are recognized excluding the taxes levied on revenues.

Cost of sales comprise direct costs such as labor, materials, cost of warranty, depreciation, shipping and handling costs and related overhead costs. Cost of sales also includes third party commission, depreciation expenses of evaluation tools at customers, royalty payments and costs relating to prototype and experimental products, which the Company may subsequently sell to customers. Costs of warranty include the cost of labor, material and related overhead necessary to repair a product during the warranty period.

Warranty

Income tax

Deferred income taxes Deferred income tax positions are recognized for temporary differences between the tax basis of assets and liabilities and their carrying values in ASMI’s Consolidated Statement of Financial Position.

Deferred tax positions are stated at nominal value and are measured at the corporate income tax rates the Company expects to be applicable in the year when the asset is realized or liability is settled based on enacted or substantially enacted tax laws.

FINANCIAL STATEMENTS

Deferred tax liabilities are recognized for all taxable temporary differences except when they affect neither the  profit or loss reported in the Consolidated Statement of Profit or Loss nor the taxable profit or loss. Also,  no  deferred tax liabilities are recorded for taxable temporary differences associated with investments in subsidiaries when the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

GOVERNANCE

Deferred tax assets are recognized for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognized only to the extent that it is probable that  future taxable profits will be available against which the temporary differences can be utilized. Both the recognized and unrecognized deferred tax assets are reassessed at each reporting date. Deferred tax assets are recorded for deductible temporary differences associated with investments in subsidiaries and are recorded only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilized.

SHAREHOLDERS

Current income tax The current corporate income tax charge recognized in the Consolidated Statement of Profit or Loss is calculated in accordance with the prevailing tax regulations and rates, taking into account non-taxable income and nondeductible expenses. The current income tax expense reflects the amount for the current reporting period that the Company expects to recover from or pay to the tax authorities. Current income tax related to items recognized directly in equity is recorded in equity and not in the Consolidated Statement of Profit or Loss. ASMI’s management periodically evaluates positions taken in the tax returns regarding situations in which applicable tax regulations are subject to interpretation and establishes provisions when deemed appropriate.

PERFORMANCE REVIEW

We provide maintenance on our systems during the warranty period, on average one year. Costs of warranty include the cost of labor, material and related overhead necessary to repair a product during the warranty period. We accrue for the estimated cost of the warranty on products shipped in a provision for warranty, upon recognition of the sale of the product. The costs are estimated based on actual historical expenses incurred and on estimated future expenses related to current sales, and are updated periodically. Actual warranty costs are charged against the provision for warranty. The actual warranty costs may differ from estimated warranty costs, and we adjust our provision for warranty accordingly. Future warranty costs may exceed our estimates, which could result in an increase of our cost of sales.

STRATEGY & BUSINESS

Cost of sales

ASMI STATUTORY ANNUAL REPORT 2015  |  Notes to the consolidated financial statements  | 114

ABOUT

Deferred income tax assets and liabilities are netted if there is a legally enforceable right to set off current tax assets against current tax liabilities, deferred income tax assets and deferred income tax liabilities relate to income taxes levied by the same taxation authority on the same taxable entity and there is an intention to settle on a net basis.

Retirement benefit costs

The Company’s employees in Japan participate in defined benefit plans. Pension costs in respect to this defined benefit plan are determined using the projected unit credit method. These costs primarily represent the increase in the actuarial present value of the obligation for pension benefits based on employee service during the year and the interest on this obligation in respect to employee service in previous years, net of the expected return on plan assets.

Share-based payments

The grant date fair value of the stock options and shares is expensed on a straight-line basis over the vesting period, based on the Company’s estimate of stock options and shares that will eventually vest. The impact of the true up of the estimates is recognized in the Consolidated Statement of Profit or Loss in the period in which the revision is determined. The total estimated share-based compensation expense, determined under the fair value based method is amortized proportionally over the option vesting periods.

Leases in which the company is the lessee and in which substantially all risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are recognized in the Statement of Profit or Loss on a straight-line basis over the term of the lease.

FINANCIAL STATEMENTS

Operating lease

GOVERNANCE

The costs relating to employee stock options and shares (compensation expense) are recognized based upon the grant date fair value of the stock options or the shares. The fair value at grant date of employee stock options is estimated using a Black-Scholes option valuation model. This model requires the use of assumptions including expected stock price volatility, the estimated life of each award and the estimated dividend yield. The risk-free interest rate used in the model is determined, based on an euro government bond with a life equal to the expected life of the options. The estimated fair value at grant date of shares is based on the share price of the ASMI share at grant date minus the discounted value of expected dividends during the vesting period.

SHAREHOLDERS

For the defined benefit plan the Company recognizes in its Consolidated Statement of Financial Position an asset or a liability for the plan’s over-funded status or underfunded status respectively. Actuarial gains and losses are recognized when incurred.

PERFORMANCE REVIEW

The Company has retirement plans covering substantially all employees. The principal plans are defined contribution plans, except for the plans of the Company’s operations in the Netherlands and Japan. The Company’s employees in the Netherlands participate in a multi-employer defined benefit plan. Payments  to  defined contribution plans and the multi-employer plan are recognized as an expense in the Consolidated Statement of Profit or Loss as they fall due. The Company accounts for the multi-employer plan as if it were a defined contribution plan since the manager of the plan is not able to provide the Company with the required Companyspecific information to enable the Company to account for the plan as a defined benefit plan.

STRATEGY & BUSINESS

We recognize a liability for uncertain tax positions when it is probable that an outflow of economic resources will occur. Measurement of the liability for uncertain tax positions is based on management’s best estimate of the amount of tax benefit that will be lost.

ASMI STATUTORY ANNUAL REPORT 2015  |  Notes to the consolidated financial statements  | 115

ABOUT

Issuance of shares by an associate

Commitments and contingencies The Company has various contractual obligations such as operating lease commitments, purchase commitments and commitments for capital expenditure. These obligations are generally not recognized as liabilities on the Company’s statement of financial position but are disclosed in the notes to the Financial statements.

Comprehensive income Comprehensive income consists of net earnings (loss) and other comprehensive income. Other comprehensive income includes gains and losses that are not included in net earnings, but are recorded directly in equity.

Implementation of new and revised IFRS-EU in 2015 did not have a material impact on our Consolidated financial statements. At the date of authorization of these Consolidated financial statements, the following standards and interpretations have been issued however are not yet effective and/or have not yet been adopted by the EU and have not yet been adopted by us.

FINANCIAL STATEMENTS

IFRS 16 ‘Leases’ was issued in January 2016. The standard has an effective date of January 1, 2019. Endorsement has not been scheduled yet. IFRS 16 will replace IAS 17 and introduces on balance sheet accounting for (almost) all leases. Therefore, assets in use under an operating lease contract, reported as off balance sheet obligation under IAS 17, will be recognized on the balance sheet. Paid lease fees will no longer be part of operating expenses but will become part of depreciation and interest expenses. The standard will have an impact on our consolidated statement of financial position due to the recognition of the leased assets and corresponding financial liabilities. Also, an impact is expected on our consolidated statement of profit or  loss. Result from operations is expected to increase, but the impact on income before income taxes is not expected to be material. We are currently reviewing the extent of the impact of this new standard.

GOVERNANCE

IFRS 15 ‘Revenue from Contracts with Customers’ was issued in May 2014. In April 2015, the effective date of this standard has been postponed to January 1, 2018. Endorsement is expected in 2016. IFRS 15 introduces new guidance on the recognition and measurement requirements of revenues. The standard applies to revenue from contracts with customers and also provides a model for the sale of some non-financial assets that are not an output of a company’s ordinary business activities. IFRS 15 provides more detailed requirements than the current standards. We are currently reviewing the extent of the impact of this new standard in anticipation of endorsement

SHAREHOLDERS

In July 2014, the IASB finalized the reform of financial instruments accounting and issued IFRS 9 (as revised in  2014), which will supersede IAS 39 ‘Financial Instruments: Recognition and Measurement’ in its entirety (the IASB tentatively decided that the mandatory effective date of IFRS 9 will be no earlier than annual periods beginning on or after January 1, 2018). Compared to IFRS 9 (as revised in 2013), the 2014 version includes limited amendments to the classification and measurement requirements by introducing a ‘fair value through other comprehensive income’ measurement category for simple debt instruments. It also adds the impairment requirements relating to the accounting for an entity’s expected credit losses on its financial assets and commitments to extend credit. The completed IFRS 9 (as revised in 2014) contains the requirements for a) the classification and measurement of financial assets and financial liabilities, b) impairment methodology, and c) general hedge accounting.

PERFORMANCE REVIEW

ADOPTION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS AND INTERPRETATIONS EFFECTIVE IN 2015 OR THEREAFTER

STRATEGY & BUSINESS

The associate ASMPT yearly issues common shares pursuant to their Employee Share Incentive Scheme. The  effect of these issuances is a dilution of the Company’s ownership in ASMPT. The Company recognizes the impact of these issuances directly into equity.

ASMI STATUTORY ANNUAL REPORT 2015  |  Notes to the consolidated financial statements  | 116

ABOUT

Changes to Standards following Amendments by the IASB and the Annual Improvement Cycles as issued per date of these Financial statements are not expected to have a material impact on our Financial statements.

Unless otherwise indicated, these are, directly or indirectly, wholly-owned subsidiaries. With respect to the separate Financial statements of the Dutch legal entities included in the consolidation, the Company availed itself of the exemption laid down in section 403, subsection 1 of Book 2 of the Dutch Civil Code. % OWNERSHIP DECEMBER 31,

NAME

LOCATION

2014

2015

Almere, the Netherlands

100%

100%

Subsidiaries (consolidated) ASM Europe BV 1 ASM United Kingdom Sales BV

100%

100%

100%

ASM Pacific Holding BV

Almere, the Netherlands

100%

100%

ASM France SARL

Crolles, France

100%

100%

ASM Belgium NV

Leuven, Belgium

100%

100%

ASM Italia Srl

Agrate, Italy

100%

100%

ASM Microchemistry Oy

Helsinki, Finland

100%

100%

ASM Services and Support Ireland Ltd

Dublin, Ireland

100%

100%

ASM Services and Support Israel Ltd

Kiryat Gat, Israel

100%

100%

ASM America, Inc

Phoenix, Arizona, United States of America

100%

100%

ASM Japan KK

Tokyo, Japan

100%

100%

ASM Netherlands Holding BV

Almere, the Netherlands

100%

100%

ASM China Ltd

Shanghai, People’s Republic of China

100%

100%

ASM Wafer Process Equipment Singapore Pte Ltd

Singapore

100%

100%

ASM Front-End Sales & Services Taiwan Co Ltd

Hsin-Chu, Taiwan

100%

100%

ASM Services & Support Malaysia SDN BDH

Kuala Lumpur, Malaysia

100%

100%

ASM Front-End Manufacturing Singapore Pte Ltd

Singapore

100%

100%

ASM Genitech Korea Ltd

Cheonan, South Korea

100%

100%

ASM IP Holding BV

1 3

100%

100%

Wilmington, Delaware, United States of America

100%

100%

ASM Europe Holding BV

Almere, the Netherlands

100%

100%

Beheer- en Beleggingsmaatschappij Ingebel BV

Almere, the Netherlands

100%

100%

ASM Ion Implant BV

Almere, the Netherlands

100%

100%

Hamilcar Investments BV

Almere, the Netherlands

100%

100%

CVTR Development BV

Almere, the Netherlands

100%

100%

Rembrand Lease and Finance BV

Almere, the Netherlands

100%

100%

ASM Waver Process Equipment Ltd

Hong Kong, People's Republic of China

100%

100%

Levitech BV

Almere, the Netherlands

ASM Pacific Technology Ltd 2

Kwai Chung, Hong Kong, People’s Republic of China

19.9%

24.0%

39.75%

39.55%

For these subsidiaries ASM International NV has filed statements at the Dutch Chamber of Commerce assuming joint and several liability in accordance with Article 403 of Book 2, Part 9 of the Netherlands Civil Code. This shareholding diluted in December 2015 as a result of the issuance of shares to 39.55%. 3 ASM Pacific Holding BV holds 39.55% of the shares in ASM Pacific Technology Ltd. 1

2

FINANCIAL STATEMENTS

Associates (non-consolidated)

GOVERNANCE

Almere, the Netherlands

ASM NuTool Inc

1

SHAREHOLDERS

100%

Almere, the Netherlands

PERFORMANCE REVIEW

Almere, the Netherlands

ASM Germany Sales BV 1

1

STRATEGY & BUSINESS

NOTE 2. SUBSIDIARIES

ASMI STATUTORY ANNUAL REPORT 2015  |  Notes to the consolidated financial statements  | 117

ABOUT

NOTE 3. PROPERTY, PLANT AND EQUIPMENT The changes in the amount of property, plant and equipment are as follows:

MACHINERY, EQUIPMENT

FURNITURE AND FIXTURES AND OTHER EQUIPMENT

ASSETS UNDER CONSTRUCTION

TOTAL

At cost 37,931

102,882

20,860

9,133

170,806

Capital expenditures

353

749

425

29,120

30,647

Retirements and sales

(809)

(13,388)

(3,683)

(25)

(17,905)

Transfers from assets under construction

657

20,881

645

(22,183)



BALANCE JANUARY 1, 2014

1,764

8,818

510

1,698

12,790

BALANCE DECEMBER 31, 2014

39,896

119,942

18,757

17,743

196,338

123

707

821

31,925

33,576

Capital expenditures Retirements and sales



(5,563)

(1,773)



(7,336)

Transfer from assets under construction

230

31,132

30

(31,392)



Reclassification to other intangible assets

117

(44)

3

(441)

(365)

Reclassification to evaluation tools







(4,659)

(4,659)

Foreign currency translation effect

2,928

12,727

1,652

1,559

18,866

43,294

158,901

19,490

14,735

236,420

19,713

76,396

18,166

BALANCE DECEMBER 31, 2015 Accumulated depreciation and impairment BALANCE JANUARY 1, 2014 Retirements and sales

114,275

2,001

9,256

1,320

12,577

(732)

(13,137)

(3,677)

(17,546)

Foreign currency translation effect

1,040

6,397

359

7,796

BALANCE DECEMBER 31, 2014

22,022

78,912

16,168

117,102

1,830

16,692

1,226

19,748

Depreciation for the year Impairment charges



2,378



2,378

Retirements and sales



(5,274)

(1,741)

(7,015)

Foreign currency translation effect

9,406

1,458

12,413

102,114

17,111

144,626

DECEMBER 31, 2014

17,874

41,030

2,589

17,743

79,236

DECEMBER 31, 2015

17,893

56,787

2,379

14,735

91,794

10-25

2-10

2-10

Carrying amounts

Useful lives in years

FINANCIAL STATEMENTS

The impairment charges in 2015 on machinery and equipment relates to a write off of remaining 450 mm assets and is reported in the consolidated statement of profit and loss as research and development expenses.

GOVERNANCE

1,549 25,401

BALANCE DECEMBER 31, 2015

SHAREHOLDERS

Depreciation for the year

PERFORMANCE REVIEW

Foreign currency translation effect

STRATEGY & BUSINESS

LAND, ­BUILDINGS AND LEASEHOLD IMPROVEMENTS

ASMI STATUTORY ANNUAL REPORT 2015  |  Notes to the consolidated financial statements  | 118

ABOUT

NOTE 4. GOODWILL The carrying amount of the goodwill is related to the acquisitions operations in the following business units: DECEMBER 31,

 

2014

2015

Thermal products business unit

2,611

2,611

Plasma products business unit

8,659

8,659

11,270

11,270

TOTAL

For back-end, goodwill is included in the investment value of ASMPT. For the impairment test reference is made to Note 6.

These estimates are consistent with the plans and estimated costs we use to manage the underlying business. Based on this analysis management concluded that as per December  31, 2015 the recoverable amount of the CGUs exceeded the carrying value. The excess was over 100% for each of the CGUs. Sensitivity analysis demonstrated that no reasonable possible change in estimated cash flows or the discount rate used in calculating the fair value would cause the carrying value of goodwill to exceed the fair value.

SHAREHOLDERS

The material assumptions used for the discounted future cash flows of the cash generating units (CGUs) are: ››an average discount rate of 11.2% (2014: 13.0%) representing the pre-tax weighted average cost of capital; ››external market segment data, historical data and strategic plans to estimate cash flow growth per product line; and ››cash flow calculations are limited to 4 years of cash flow; after these 4 years perpetuity growth rates are set based on market maturity of the products. For maturing product the perpetuity growth rates used are 1% or less and for enabling technology products the rate used is 3% or less.

PERFORMANCE REVIEW

We perform an annual impairment test at December 31 of each year or if events or changes in circumstances indicate that the carrying amount of goodwill exceeds its recoverable amount. For the front-end impairment test and the determination of the recoverable amount a discounted future cash flow approach is used which makes use of our estimates of future revenues, driven by assumed market growth and estimated costs as well as appropriate discount rates.

STRATEGY & BUSINESS

 

GOVERNANCE FINANCIAL STATEMENTS

ASMI STATUTORY ANNUAL REPORT 2015  |  Notes to the consolidated financial statements  | 119

ABOUT

NOTE 5. OTHER INTANGIBLE ASSETS

DEVELOPMENT COSTS

SOFTWARE

PURCHASED TECHNOLOGY AND OTHER INTANGIBLE ASSETS

BALANCE JANUARY 1, 2014

84,292

15,603

7,042

106,937

Additions

14,346

1,496



15,842

TOTAL

At cost





2,269

2,269

Disposals



(414)

(1,202)

(1,616)

Foreign currency translation effect

5,008

216

680

5,904

BALANCE DECEMBER 31, 2014

103,646

16,901

8,789

129,336

30,178

3,826

3,300

37,304



365



365

(24,900)

(50)

(888)

(25,838)

Additions Reclassification Disposals Foreign currency translation effect

161

503

9,723

21,203

11,704

150,890

BALANCE JANUARY 1, 2014

28,700

11,608

5,400

45,708

Amortization for the year

10,893

3,695

1,033

15,621

Accumulated amortization and impairment losses

Impairments

893





893

Reclassification from evaluation tools





878

878

Disposals



(414)

(1,202)

(1,616)

1,906

193

539

2,638

BALANCE DECEMBER 31, 2014

42,392

15,082

6,648

64,122

Amortization for the year

11,794

446

2,067

14,307

Impairments

12,854





12,854

Disposals

(24,900)

(50)

(888)

(25,838)

3,365

136

409

3,910

45,505

15,614

8,236

69,355

DECEMBER 31, 2014

61,254

1,819

2,141

65,214

DECEMBER 31, 2015

72,478

5,589

3,468

81,535

Foreign currency translation effect

BALANCE DECEMBER 31, 2015 Carrying amounts

GOVERNANCE

Foreign currency translation effect

SHAREHOLDERS

9,059 117,983

BALANCE DECEMBER 31, 2015

PERFORMANCE REVIEW

Reclassification from evaluation tools

STRATEGY & BUSINESS

Other intangible assets include capitalized development expenditure, software developed or purchased (including licenses) for internal use and purchased technology from third parties. The changes in the amount of  other intangible assets are as follows:

FINANCIAL STATEMENTS

ASMI STATUTORY ANNUAL REPORT 2015  |  Notes to the consolidated financial statements  | 120

ABOUT STRATEGY & BUSINESS

Impairment charges on capitalized development costs are included in operating expenses under research and  development. Impairment of capitalized development expenses primarily related to development of new hardware for which the customers demand has shifted out in time, and purchased technology which became obsolete. The impairment charge for 2015 relates for an amount of €10.1 million to the impairment of capitalized development expenditures related to the 450mm technology and for an amount of €2.8 million to the capitalized development expenditures of other projects. As a result of these impairments the carrying value of these project was reduced to zero. The purchased technology in 2015 amounting €3.3 million relates to patents acquired from our equity investment Levitech BV. Capitalized development costs are amortized over their estimated useful lives of 5 years, other intangible assets are amortized over their estimated useful lives of 3 to 7 years.

SOFTWARE

2016

11,719

754

1,204

13,677

2017

16,911

1,299

669

18,879

2018

14,459

1,081

660

16,200

2019

12,084

925

660

13,669

2020

10,733

872

275

11,880

6,572

658



7,230

72,478

5,589

3,468

81,535

Years thereafter

TOTAL

TOTAL

SHAREHOLDERS

DEVELOPMENT COSTS

PURCHASED TECHNOLOGY AND OTHER INTANGIBLE ASSETS

PERFORMANCE REVIEW

Estimated amortization expenses relating to other intangible assets are as follows:

GOVERNANCE FINANCIAL STATEMENTS

ASMI STATUTORY ANNUAL REPORT 2015  |  Notes to the consolidated financial statements  | 121

ABOUT

NOTE 6. INVESTMENTS IN ASSOCIATES The changes in the investment and associates are as follows: ASMPT NET EQUITY SHARE

BALANCE JANUARY 1, 2014

278

264,750

161,531

517,394

943,675

943,953

Share in net earnings of investments in associates

GOODWILL

TOTAL ASMPT

TOTAL

62,209





62,209

61,931



(2,109)





(2,109)

(2,109)

Amortization recognized (in) tangible assets





(22,517)



(22,517)

(22,517)

Dividends



(19,974)





(19,974)

(19,974)

Dilution ASMPT share to 39.75%



3,561





3,561

3,561

Allocation equity component convertible bond 1



9,947





9,947

9,947

Foreign currency translation effect



28,179

19,830

70,147

118,156

118,156

BALANCE DECEMBER 31, 2014



346,563

158,844

587,541

1,092,948

1,092,948

Increase of interest









900



44,158





44,158

44,158

Other comprehensive income of investments in associates



567





567

567

Amortization recognized (in) tangible assets





(27,151)



(27,151)

(27,151)

Value reduction as resulting from start-up costs









(900)



(42,865)





(42,865)

(42,865)

Dilution ASMPT share to 39.55%



5,535





5,535

5,535

Foreign currency translation effect



21,214

18,169

68,264

107,647

107,647

BALANCE DECEMBER 31, 2015



375,172

149,862

655,805

1,180,839

1,180,839

FINANCIAL STATEMENTS

In 2014 convertible bonds were issued by ASMPT that containing both liability and conversion option components. These components are classified separately into respective items on initial recognition in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument. The conversion option classified as equity is determined by deducting the amount of the liability component from the fair value of the compound instrument as a whole. This is recognized and included in equity, net of income tax effects, and is not subsequently remeasured. In addition, the conversion option classified as equity will remain in equity until the conversion option is exercised. 2 Investments reflects the net equity value of the interest in Levitech BV resulting from the management buy-out in 2009 of the RTP business. ASM International NV obtained a 20% interest in Levitech BV. In 2015 ASMI increased its interest to 24%. The value has been reduced in 2014 and 2015 due to (start-up) losses of Levitech caused by the introduction of their advanced products in the market. 1

GOVERNANCE

(900)

Dividends

SHAREHOLDERS

900

Share in net earnings of investments in associates

PERFORMANCE REVIEW

(278)

Other comprehensive income of investments in associates

STRATEGY & BUSINESS

LEVITECH 2

OTHER( IN) TANGIBLE ASSETS

ASMI STATUTORY ANNUAL REPORT 2015  |  Notes to the consolidated financial statements  | 122

ABOUT STRATEGY & BUSINESS

On March  15, 2013, the Company divested a controlling stake in its subsidiary ASM Pacific Technology Ltd (ASMPT). After the initial accounting of the sale transaction and related gains future income from ASMPT was  adjusted for the fair value adjustments arising from the ‘basis differences’ as if a business combination had occurred under IFRS 3R, ‘Business Combinations’, i.e. a purchase price allocation (PPA). The purchase of the associate has been recognized at fair value, being the value of the ASMPT shares on the day of closing of the purchase transaction. The composition of this fair value was determined through a PPA. The PPA resulted in the recognition of intangible assets for customer relationship, technology, trade name, product names and goodwill. For inventories and property, plant & equipment a fair value adjustment was recognized. The ASMPT investment is accounted for under the equity method on a go forward basis. Equity method investments are tested for prolonged impairment. An investment is considered impaired if the fair value of the investment is less than its carrying value.

PERFORMANCE REVIEW

If the fair value of an investment is less than its carrying value at the balance sheet date, the Company determines whether the impairment is temporary or prolonged. The amount per share recognized as per December 31, 2015 under equity accounting amounts to HK$62.27 whereas the level 1 fair value per share (being the market price of a share on the Hong Kong Stock Exchange) was HK$60.90 as per December 31, 2015. Management concluded that based on quantitative analysis no impairment of its share in ASMPT existed as per December 31, 2015. In December 2015, 2,010,800 common shares of ASMPT were issued, for cash at par value of HK$0.10 per  share, pursuant to the Employee Share Incentive Scheme of ASMPT. The shares issued under the plan in 2015 have diluted ASMI’s ownership in ASMPT to 39.55% as of December 31, 2015.

SHAREHOLDERS

At December 31, 2015, the book value of our equity method investment after the aforementioned impairment in ASMPT was €1,181 million. The historical cost basis of our 39.55% share of net assets on the books of ASMPT under IFRS was €375 million as of December 31, 2015, resulting in a basis difference of €806 million. €150 million of this basis difference has been allocated to property, plant and equipment and intangibles assets. The remaining amount was allocated to equity method goodwill. Each individual, identifiable asset will periodically be reviewed for any indicators of potential impairment. We amortize the basis differences allocated to the assets on a straight-line basis, and include the impact within the results of our equity method investments. Amortization and depreciation are adjusted for related deferred tax impacts. Included in net income attributable to ASMI for 2015 was after-tax expense of €27 million, representing the depreciation and amortization of the basis differences.

Summarized 100% earnings information for ASMPT equity method investment excluding basis adjustments (foreign currency exchange rate per December 31, 2015 1 HK$: €0.119 for December 31, 2014: 1HK$: €0.106). (HK$ million)

2015

12,977

Income before income tax

2,028

1,363

Net earnings

1,600

953

(353)

(384)

1,247

569

Other comprehensive income Total comprehensive income

FINANCIAL STATEMENTS

2014

14,229

Net sales

GOVERNANCE

The market value of our 39.55% investment ASMPT at December 31, 2015 approximates €1,155 million.

ASMI STATUTORY ANNUAL REPORT 2015  |  Notes to the consolidated financial statements  | 123

ABOUT

Summarized 100% statement of financial position information for ASMPT equity method investment excluding basis adjustments (foreign currency exchange rate average 2015 1 HK$: €0.11852 for December 31, 2014: 1 HK$: €0.097).

Current assets

2014

2015

10,840

10,094

Non-current assets

3,654

3,774

Current liabilities

3,759

3,133

Non-current liabilities

2,532

2,699

Equity

8,203

8,036

PERFORMANCE REVIEW

Equity of ASMPT per December 31, 2015 translated into euro at a rate of 0.11852 was €952 million (our 39.55% share: €375 million). The ASMPT Board is responsible for ongoing monitoring of the performance of the back-end activities. The actual results of the back-end operating unit are discussed with the ASMPT Audit Committee, which includes the representative of ASMI. The ASMI representative reports to the ASMI Management Board and  the  Audit Committee of ASMI on a quarterly basis. Our share of income taxes incurred directly by the associates is reported in result from investments in associates and as such is not included in income taxes in our Consolidated financial statements.

The changes in the amount of evaluation tools are as follows: DECEMBER 31, 2015

BALANCE AT BEGINNING OF YEAR

13,332

17,767

Evaluation tools shipped

12,845

15,651

Depreciation

(3,448)

(5,003)

Evaluation tools sold

(4,814)

(6,313)

Reclassification to purchased technology

(1,391)





4,659

Foreign currency translation effect

BALANCE AT END OF YEAR

1,243

2,238

17,767

28,999

Useful lives in years:

FINANCIAL STATEMENTS

The gross carrying amount of the evaluation tools at customers per December 31, 2015 was €38,631 (2014: €23,133) accumulated depreciation per December 31, 2015 was €9,632 (2014: €5,366).

5

GOVERNANCE

2014

SHAREHOLDERS

NOTE 7. EVALUATION TOOLS AT CUSTOMERS

Reclassification from assets under construction

STRATEGY & BUSINESS

DECEMBER 31, (HK$ million)

ASMI STATUTORY ANNUAL REPORT 2015  |  Notes to the consolidated financial statements  | 124

ABOUT

NOTE 8. INVENTORIES Inventories consist of the following:  DECEMBER 31,

 

2014

2015

Components and raw materials

69,709

74,362

Work in process

30,040

30,627

Finished goods TOTAL INVENTORIES, GROSS Allowance for obsolescence

TOTAL INVENTORIES, NET

45,064

27,863

144,813

132,852

(18,883)

(19,350)

125,930

113,502

DECEMBER 31,

BALANCE AT BEGINNING OF YEAR Charged to cost of sales Reversals

2014

2015

(23,696)

(18,883)

(2,282)

(5,204)

279

3,859

Utilization of the provision

8,514

2,167

Foreign currency translation effect

(1,698)

(1,289)

(18,883)

(19,350)

BALANCE AT END OF YEAR

PERFORMANCE REVIEW

The changes in the allowance for obsolescence are as follows:

STRATEGY & BUSINESS

 

SHAREHOLDERS

On December 31, 2015 our allowance for inventory obsolescence amounted to €19,350, which is 14.6% of total inventory. The major part of the allowance is related to components and raw materials. The addition for the years 2014 and 2015 mainly relate to inventory items which were ceased to be used due to technological developments and design changes which resulted in in obsolescence of certain parts. The cost of inventories recognized as costs and included in cost of sales amounted to €288.7 million (2014: €234.3 million).

GOVERNANCE

NOTE 9. ACCOUNTS RECEIVABLE A significant percentage of our accounts receivable is derived from sales to a limited number of large multinational semiconductor device manufacturers located throughout the world. In order to monitor potential credit losses, we perform ongoing credit evaluations of our customers’ financial condition. The carrying amount of accounts receivable is as follows: DECEMBER 31, 2015

80,569

Overdue <30 days

5,949

3,046

Overdue 31-60 days

2,142

1,117

Overdue 61-120 days

1,785

3,443

Overdue >120 days

6,110

2,015

81,971

90,190

TOTAL

FINANCIAL STATEMENTS

2014

65,985

Current

ASMI STATUTORY ANNUAL REPORT 2015  |  Notes to the consolidated financial statements  | 125

ABOUT

The changes in the allowance for doubtful accounts receivable are as follows: DECEMBER 31,

BALANCE AT BEGINNING OF YEAR Charged to selling, general and administrative expenses Foreign currency translation effect

BALANCE AT END OF YEAR

2015

(73)

(19)



(22)

57



(3)

(3)

(19)

(44)

Accounts receivable are impaired and provided for on an individual basis. As of December 31, 2015, accounts receivable of €9.6 million were past due but not impaired. These balances are still considered to be recoverable because they relate to customers for whom there is neither recent history of default nor expectation this will incur.

PERFORMANCE REVIEW

Utilization of the provision

2014

STRATEGY & BUSINESS

An allowance for doubtful accounts receivable is maintained for potential credit losses based upon management’s assessment of the expected collectability of all accounts receivable. The allowance for doubtful accounts is reviewed periodically to assess the adequacy of the allowance. In making this assessment, management takes into consideration any circumstances of which we are aware regarding a customer’s inability to meet its financial obligations; and our judgments as to potential prevailing economic conditions in the industry and their potential impact on the Company’s customers.

For further information on credit risk see Note 16.

Cash and cash equivalents at December 31, 2015 include deposits with financial institutions that have good credit ratings of €101 million (2014: €99 million) and interest-bearing bank accounts of €346 million (2014: €287 million). Our cash and cash equivalents are predominantly denominated in US dollar and partly in euro and Korean won. Cash and cash equivalents have insignificant interest rate risk and remaining maturities of three months or less at the date of acquisition. Except for an amount of €3.7 million (2014: €3.4 million), no restrictions on usage of cash and cash equivalents exist. The carrying amount of these assets approximates their fair value.

Our Management Board has the power to issue ordinary shares and (financing) preference shares insofar as the Management Board has been authorized to do so by the General Meeting of Shareholders. The Management Board requires approval of the Supervisory Board for such an issue. The authorization by the General Meeting of Shareholders can only be granted for a certain period. In case the General Meeting of Shareholders has not authorized the Management Board to issue shares, the General Meeting of Shareholders shall have the power to issue shares.

The authorized capital of the Company amounts to 110,000,000 common shares of €0.04 par value, 118,000 preferred shares of €40 par value and 8,000 financing preferred shares of €40 par value. As at December 31, 2015, 63,797,394 ordinary shares with a nominal value of €0.04 each were issued and fully paid up, of which 2,091,007 ordinary shares are held by us in treasury. All shares have one vote per €0.04 par value. Treasury shares held by the Company cannot be voted on. Of our 61,706,387 outstanding common shares at December 31, 2015, 2,142,039 are registered with us in the Netherlands, 59,025,925 are registered with our transfer agent in the Netherlands, ABN AMRO Bank NV and 487,391 are registered with our transfer agent in the United States, Citibank, NA, New York.

FINANCIAL STATEMENTS

COMMON SHARES, PREFERRED AND FINANCING PREFERRED SHARES

GOVERNANCE

NOTE 11. EQUITY

SHAREHOLDERS

NOTE 10. CASH AND CASH EQUIVALENTS

ASMI STATUTORY ANNUAL REPORT 2015  |  Notes to the consolidated financial statements  | 126

ABOUT

Financing preferred shares are designed to allow ASMI to finance equity with an instrument paying a preferred dividend, linked to EURIBOR loans and government loans, without the dilutive effects of issuing additional common shares.

As per December 31, 2015 no preference shares are issued.

RETAINED EARNINGS Distributions to common shareholders are limited to the extent the total amount of shareholders’ equity exceeds the amounts of nominal paid-in share capital (exclusive any share premium) and any reserves to be formed pursuant to law or the Company’s articles of association. The amounts are derived from the Statutory financial statements of ASM International NV.

In 2015 we paid a dividend of €0.60 per common share. We proposed to the forthcoming 2016 Annual General Meeting of Shareholders to declare a dividend of €0.70 per share.

TREASURY SHARES On October 29, 2014, ASMI announced a share buyback program, to purchase up to an amount of €100 million of its own shares within the 2014-2015 time frame. The repurchase program is part of ASMI’s commitment to use excess cash for the benefit of its shareholders.

GOVERNANCE

Results on dilution of investments in associates are accounted for directly in equity. For 2015 and 2014 these dilution results were €5,535 and €3,561 respectively.

SHAREHOLDERS

ASMI aims to pay a sustainable annual dividend. Annually the Supervisory Board, upon proposal of the Management Board, will assess the amount of dividend that will be proposed to the Annual General Meeting of Shareholders. The decision that a dividend be proposed to the Annual General Meeting of Shareholders will be subject to the availability of distributable profits as well as retained earnings and may be affected by our potential future funding requirements. Accordingly, dividend payments may fluctuate and could decline or be omitted in any year.

PERFORMANCE REVIEW

Preferred shares are entitled to a cumulative preferred dividend based on the amount paid-up on such shares. Financing preferred shares are entitled to a cumulative dividend based on the par value and share premium paid on such shares.

STRATEGY & BUSINESS

Preferred and financing preferred shares are issued in registered form only and are subject to transfer restrictions. Essentially, a preferred or financing preferred shareholder must obtain the approval of the Company’s Supervisory Board to transfer shares. If the approval is denied, the Supervisory Board will provide a  list of acceptable prospective buyers who are willing to purchase the shares at a cash price to be fixed by consent of the Supervisory Board and seller within two months after the approval is denied. If the transfer is approved, the shareholder must complete the transfer within three months, at which time the approval expires.

ASMI intends to use part of the shares for commitments under employee share-based compensation schemes.

On October 29, 2015, ASMI announced a share buyback program, to purchase up to an amount of €100 million of its own shares within the 2015-2016 time frame. The program started on November 26, 2015. On December 31, 2015 of the program 9% was repurchased.

FINANCIAL STATEMENTS

The buyback program was executed by intermediaries through on-exchange purchases or through off-exchange trades. ASMI updated the markets on the progress of the buyback program on a weekly basis. The program started on November 24, 2014, and was completed on May 20, 2015. Under the 2014-2015 share buyback program we repurchased 2,593,970 shares at an average price of €38.55.

ASMI STATUTORY ANNUAL REPORT 2015  |  Notes to the consolidated financial statements  | 127

ABOUT

OTHER RESERVES The changes in the amount of other reserves are as follows:

TRANSLATION RESERVE

TOTAL OTHER RESERVES

480

(86,399)

(85,919)

Proportionate share in other comprehensive income investments in associates

(2,179)



(2,179)

Reclassification of deferred accumulative translation result to income following the sale of the 12% share of ASMPT



(3,157)

(3,157)

Foreign currency translation effect on translation of foreign operations



146,025

146,025

(1,699)

56,469

54,770

BALANCE JANUARY 1, 2014

BALANCE DECEMBER 31, 2014

Foreign currency translation effect on translation of foreign operations

BALANCE DECEMBER 31, 2015 1

567



567



136,744

136,744

(1,132)

193,213

192,081

Proportionate share in other comprehensive income investments in associates and translation reserve, items may be subsequently reclassified to profit or loss.

PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

The maximum of shares that may yet be purchased under the program takes into account the treasury shares held by the Company (at December 31, 2015 there were 2,091,007 treasury shares held) and the maximum number of common shares which the Company can hold according to its Articles of Association. This maximum is 10% of the number of common shares issued.

SHAREHOLDERS

On May 21, 2015, the General Meeting of Shareholders authorized the Company, for an 18-month period, to be calculated from the date of the General Meeting, to repurchase its own shares up to the statutory maximum, at a price at least equal to the shares’ nominal value and at most a price equal to 110% of the share’s average closing price according to the listing on the Euronext Amsterdam stock exchange during the five trading days preceding the purchase date.

PERFORMANCE REVIEW

Proportionate share other comprehensive income investments in associates

STRATEGY & BUSINESS

PROPORTIONATE SHARE IN OTHER COMPREHENSIVE INCOME INVESTMENTS IN ASSOCIATES 1

On October 29, 2014, ASMI announced a share buyback program, to purchase up to an amount of €100 million of its own shares within the 2014-2015 time frame. GOVERNANCE FINANCIAL STATEMENTS

ASMI STATUTORY ANNUAL REPORT 2015  |  Notes to the consolidated financial statements  | 128

ABOUT

The following tables provide a summary of shares repurchased by ASMI under this program:

AVERAGE PRICE PAID PER SHARE (EUR)

November, 2014

555,671

€33.18

555,671

81,563

December, 2014

397,881

€33.86

953,552

68,092

January, 2015

259,302

€35.12

1,212,854

58,986

February, 2015

200,710

€36.97

1,413,564

51,586

March, 2015

277,253

€42.76

1,690,817

39,731

April, 2015

629,381

€44.36

2,320,198

11,815

273,772

€43.17

2,593,970



2,593,970

€38.55

Share buyback program 2014-2015:

May, 2015

TOTAL

On October 29, 2015, ASMI announced a share buyback program, to purchase up to an amount of €100 million of its own shares within the 2015-2016 time frame. The following tables provide a summary of shares repurchased by ASMI under this program:

TOTAL NUMBER OF SHARES PURCHASED

AVERAGE PRICE PAID PER SHARE (EUR)

November, 2015

23,788

€37.59

23,788

99,105

December, 2015

228,191

€36.16

251,979

90,853

TOTAL

251,979

€36.30

PERIOD Share buy back program 2015-2016:

SHAREHOLDERS

MAXIMUM VALUE OF SHARES THAT MAY YET BE PURCHASED UNDER THE PROGRAM (EUR)

CUMULATIVE NUMBER OF SHARES PURCHASED

PERFORMANCE REVIEW

TOTAL NUMBER OF SHARES PURCHASED

PERIOD

STRATEGY & BUSINESS

MAXIMUM VALUE OF SHARES THAT MAY YET BE PURCHASED UNDER THE PROGRAM (EUR)

CUMULATIVE NUMBER OF SHARES PURCHASED

NOTE 12. EMPLOYEE BENEFITS PENSION PLANS

Multi-employer plan

FINANCIAL STATEMENTS

There are 148 eligible employees in the Netherlands. These employees participate in a multi-employer union plan (PME) determined in accordance with the collective bargaining agreements effective for the industry in which we operate. This collective bargaining agreement has no expiration date. This multi-employer union plan, accounted for as a defined-contribution plan, covers approximately 1,282 companies and approximately 147,000 contributing members. Our contribution to the multi-employer union plan was less than 5 percent of the total contribution to the plan as per the Statutory annual report for the year ended December 31, 2014. The plan monitors its risks on a global basis, not by participating company or employee, and is subject to regulation by Dutch governmental authorities. By law (the Dutch Pension Act), a multi-employer union plan must be monitored against specific criteria, including the coverage ratio of the plan’s assets to its obligations. As of January 1, 2015 new pension legislation has been enacted. This legislation results in amongst others, an increase of legally required coverage levels. The coverage percentage is calculated by dividing the funds capital by the total sum of pension liabilities and is based on actual market interest rates. The coverage ratio as per December 31, 2015 of 97.7 percent (December 31, 2014: 104.1 percent) is calculated giving consideration to the new pension legislation and is

GOVERNANCE

The Company has retirement plans covering substantially all employees. The principal plans are defined contribution plans, except for the plans of the Company’s operations in the Netherlands and Japan.

ASMI STATUTORY ANNUAL REPORT 2015  |  Notes to the consolidated financial statements  | 129

ABOUT

below the legally required level. We have however no obligation to pay off any deficits the pension fund may incur, nor have we any claim to any potential surpluses.

STRATEGY & BUSINESS

Every company participating in the PME contributes a premium calculated as a percentage of its total pensionable salaries, with each company subject to the same contribution rate. The premium can fluctuate yearly based on the coverage ratio of the multi-employer union plan, for 2015 the contribution percentage was 23.6%, for 2016 this will be 23.2% (approximately €3.4 million). The pension rights of each employee are based upon the employee’s average salary during employment. Our net periodic pension cost for this multi-employer union plan for any period is the amount of the required employer contribution for that period.

Defined benefit plan PERFORMANCE REVIEW

The Company’s employees in Japan participate in a defined benefit plan. The Company makes contributions to defined benefit plans in Japan that provide pension benefits for employees upon retirement. These are averagepay plans, based on the employees’ years of service and compensation near retirement. The most recent actuarial valuations of plan assets and the present value of the defined benefit obligation were carried out at December 31, 2015. The present value of the defined benefit obligation and the related current service cost and passed service cost were measured using the Projected Unit Credit Method. Significant actuarial assumptions for the determination of the defined obligation are discount rate, future general salary increases and future pension increases. The net liability of the plan developed as follows:

  Defined benefit obligations Fair value of plan assets

NET LIABILITY FOR DEFINED BENEFIT PLANS

DECEMBER 31, 2014

2015

(8,079)

(9,800)

6,297

8,630

(1,782)

(1,170)

SHAREHOLDERS

 

GOVERNANCE FINANCIAL STATEMENTS

ASMI STATUTORY ANNUAL REPORT 2015  |  Notes to the consolidated financial statements  | 130

ABOUT

The changes in defined benefit obligations and fair value of plan assets are as follows:  

DECEMBER 31,

 

2014

2015

7,604

8,079

Current service cost

515

567

Interest on obligation

69

77

98

236

(164)

(54)

BALANCE JANUARY 1

Remeasurement losses (gains) Benefits paid Foreign currency translation effect

BALANCE DECEMBER 31

895 9,800

5,127

6,297

52

65

Fair value of plan assets BALANCE JANUARY 1 Interest income Return on plan assets

113

294

Company contribution

1,162

1,306

Benefits paid Foreign currency translation effect

BALANCE DECEMBER 31

(164)

(54)

7

722

6,297

8,630

 

DECEMBER 31,

 

2014

2015

515

567

Net interest costs

17

12

Other

(69)



463

579

Current service cost

NET DEFINED BENEFIT COST

 

2014

2015

Discount rate for obligations

0.90%

0.80%

Expected rate of compensation increase

2.93%

2.93%

The main risk on the pension plan relates to the discount rate. The defined benefit obligation is sensitive to a  change in discount rates, a relative change of the discount rate with 25 basis points would have resulted in a change of the defined benefit obligation with 2.52%.

FINANCIAL STATEMENTS

Assumptions regarding life expectancy are based on mortality tables published in 2015 by the Ministry of Health, Labour and Welfare of Japan.

GOVERNANCE

The assumptions in calculating the actuarial present value of benefit obligations and net periodic benefit cost are as follows:

SHAREHOLDERS

The defined benefit cost consists of the following:

PERFORMANCE REVIEW

(43) 8,079

STRATEGY & BUSINESS

Defined benefit obligations

ASMI STATUTORY ANNUAL REPORT 2015  |  Notes to the consolidated financial statements  | 131

ABOUT

The allocation of plan assets is as follows:    

DECEMBER 31, 2014

2015

1,655

26%

2,390

28%

Bonds

3,639

58%

4,702

54%

Loans

674

11%

947

11%

78

1%

105

1%

Real estate Other

TOTAL

251

4%

486

6%

6,297

100%

8,630

100%

PERFORMANCE REVIEW

The investment strategy is determined based on an asset-liability study in consultation with investment advisers and within the boundaries given by regulatory bodies for pension funds. Equity securities consist primarily of publicly traded Japanese companies and common collective funds. Publicly traded equities are valued at the closing prices reported in the active market in which the individual securities are traded (level 1). Common collective funds are valued at the published price (level 1) per share multiplied by the number of shares held as of the measurement date.

STRATEGY & BUSINESS

Equity

Fixed income (bonds and loans) consists of corporate bonds, government securities and common collective funds. Corporate and government securities are valued by third-party pricing sources (level 2). Common collective funds are valued at the net asset value per share (level 2) multiplied by the number of shares held as  of the measurement date.

SHAREHOLDERS

Real estate fund and other values are primarily reported by the fund manager and are based on valuation of the  underlying investments (level 3) which include inputs such as cost, discounted cash flows, independent appraisals and market based comparable data. The plan assets do not include any of the Company’s shares.

Retirement plan costs ASMI contributed €1,306 to the defined benefit plan in 2015. The Company expects to pay benefits for years subsequent to December 31, 2015 as follows:

2016

378

2017

577

2018

746

2019

698

2020

473 3,335

TOTAL

6,207

FINANCIAL STATEMENTS

Aggregate for the years 2021-2025

GOVERNANCE

EXPECTED CONTRIBUTION DEFINED BENEFIT PLAN

ASMI STATUTORY ANNUAL REPORT 2015  |  Notes to the consolidated financial statements  | 132

ABOUT

Retirement plan costs consist of the following:  

 

DECEMBER 31, 2015

2,479

3,407

Multi-employer plans

1,220

1,465

Defined benefit plans

463

579

4,162

5,451

TOTAL RETIREMENT PLAN COSTS

The Company does not provide for any significant post-retirement benefits other than pensions.

STRATEGY & BUSINESS

2014

Defined contribution plans

MANAGEMENT BOARD AND EMPLOYEE AND LONG-TERM INCENTIVE PLAN PERFORMANCE REVIEW

The Company has adopted various share plans (e.g. stock option plans, a restricted share plan and a performance share plan) and has entered into share agreements with the Management Board and various employees. Under the stock option plans, the Management Board and employees may purchase per the vesting date a specific number of shares of the Company’s common stock at a certain price. Options are priced at market value in euro or US dollars on the date of grant. Under the restricted share plan, employees receive per the vesting date a specific number of shares of the Company’s common stock. Under the performance share plan, the Management Board receives per the vesting date and provided the performance criteria have been met a specific number of shares of the Company’s common stock.

Authority to issue options and shares

2011 Long-term Incentive Plan

For employees and existing Management Board members the Grant Date for all options granted is December 31 of the relevant year. In each of these situations the three year Vesting Period starts at the Grant Date. The exercise price in euro of all options issued under the ESOP and the MSOP is determined on the basis of the market value of the ASMI shares at (i.e. immediately prior to) the Grant Date. The exercise period is 4 years starting at the 3rd anniversary of the grant date.

FINANCIAL STATEMENTS

In 2011 a Stock Option Plan was adopted. In this plan to limit potential dilution, the amount of outstanding (vested and non-vested) options granted to the Management Board and to other employees will not exceed 7.5% of the issued ordinary share capital of ASMI. The Stock Option Plan 2011 consists of two sub-plans: the ASMI Stock Option Plan for employees (ESOP) and the ASMI Stock Option for members of the Management Board (MSOP).

GOVERNANCE

The ASM International N.V. 2014 Long Term Incentive Plan for Employees (ELTI) is principally administered by the Management Board and the ASM International N.V. 2014 Long Term Incentive Plan for members of the Management Board (MLTI).is principally administered by the Supervisory Board. This complies with applicable corporate governance standards. However, the Supervisory Board has no power to represent the Company. For external purposes the Management Board remains the competent body under both LTI plans. The LTI plans envisage that the Supervisory Board, or – in the case of the ELTI – the Management Board with the approval of the Supervisory Board, will determine the number of options and shares to be granted to the Management Board members and to employees.

SHAREHOLDERS

By resolution of the Annual General Meeting (AGM) of May 21, 2015 the formal authority to issue options and shares was allocated to the Management Board subject to the approval of the Supervisory Board. This authority is valid for 18 months and needs to be refreshed by the 2016-AGM to allow the continued application of the Long-Term Incentive (LTI) plans beyond November 20, 2016.

ASMI STATUTORY ANNUAL REPORT 2015  |  Notes to the consolidated financial statements  | 133

ABOUT

The following table is a summary of changes in options outstanding under the 2011 and previous Long-term Incentive Plan: EURO-PLANS

US DOLLAR-PLANS

NUMBER OF OPTIONS

WEIGHTED AVERAGE EXERCISE PRICE IN US$

2,920,352

20.22

388,150

18.75

Options forfeited

(37,121)

22.13





Options expired

(4,245)

20.86

(1,416)

18.08

BALANCE JANUARY 1, 2014

Options exercised BALANCE DECEMBER 31, 2014

Options expired Options exercised

BALANCE DECEMBER 31, 2015

15.68

(300,509)

12.53

20.49

86,225

21.18

(105,968)

23.30





(19,360)

12.80

(1,887)

19.33

(565,298)

18.08

(62,129)

21.69

2,012,710

21.09

22,209

19.91

The total intrinsic value of options exercised was €11,432 for the year ended December 31, 2015 (2014: €7,311). In 2015 treasury shares have been sold for the exercise of 627,427 options.

PERFORMANCE REVIEW

Options forfeited

(175,650) 2,703,336

STRATEGY & BUSINESS

NUMBER OF OPTIONS

WEIGHTED AVERAGE EXERCISE PRICE IN €

On December 31, 2015 options outstanding and options exercisable classified by range of exercise prices are: OPTIONS OUTSTANDING

OPTIONS EXERCISABLE

NUMBER OUTSTANDING

WEIGHTED AVERAGE REMAINING CONTRACTUAL LIFE

WEIGHTED AVERAGE EXERCISE PRICE

NUMBER EXERCISABLE

WEIGHTED AVERAGE EXERCISE PRICE

 

In years

In US$

 

In US$

US$1.00-20.00

11,804

2.7

11.62

11,804

11.62

US$20.00-30.00

10,405

1.1

29.30

10,405

29.30

US$1.00-30.00

22,209

1.9

19.91

22,209

19.91

In years

In EUR

RANGE OF EXERCISE PRICES US dollar plans

Euro plans

SHAREHOLDERS

 

In EUR

283,039

1.1

11.85

283,039

11.85

€15.00-20.00

282,001

3.0

18.94

282,001

18.94

€20.00-25.00

1,447,670

4.5

23.32

734,519

22.83

€1.00-25.00

2,012,710

3.8

21.09

1,299,559

19.59

At December 31, 2015, the aggregate intrinsic value of all options outstanding and exercisable under these plans is €35,976 and €10,189.

2014 Long-Term Incentive Plan In 2014 a new Long-Term Incentive Plan was adopted. In the new plan to limit potential dilution, the amount of  outstanding (vested and non-vested) options and shares granted to the Management Board and to other employees will not exceed 5% of the issued ordinary share capital of ASMI. The new Long-Term Incentive Plan 2014 consists of two sub-plans: ELTI and the MLTI.

FINANCIAL STATEMENTS

Under these plans no more options to purchase shares can be issued. Under the various stock option plans a  total of 2,034,919 options to purchase common stock were outstanding at December  31, 2015, expiring at various dates through 2020.

GOVERNANCE

€1.00-15.00

ASMI STATUTORY ANNUAL REPORT 2015  |  Notes to the consolidated financial statements  | 134

ABOUT STRATEGY & BUSINESS

Options and performance shares are issued to Management Board members and restricted shares are issued to employees once per annum on the date following the publication of the first quarter results of the relevant year. Possible grant to newly hired employees can be issued once a quarter, on the date following the publication of the financial results of the relevant quarter. The number of options and shares outstanding under the Long-Term Incentive plans or under any other plan or arrangement in aggregate may never exceed 5% of ASMI’s share capital. In accordance with the ASMI Remuneration Policy an exception is made for a transition period of four years, during which the dilution may exceed 5% but will not exceed 7.5%. Performance and Restricted shares outstanding The following table is a summary of changes in performance shares and restricted shares outstanding under the 2014 Long-term Incentive Plan.

Unconditional

€30.53

165,519

Unconditional

€43.79

12,994



Conditional

€43.21

Shares vested



(3,173)

Shares forfeited



(6,224)

12,994

166,337

NUMBER OF RESTRICTED SHARES

BALANCE JANUARY 1, 2014





Shares granted



15,381

Shares forfeited



(5,166)

BALANCE DECEMBER 31, 2014



10,215

Shares granted, employees



Shares granted, Management Board

BALANCE DECEMBER 31, 2015

SHAREHOLDERS

In 2015 treasury shares have been sold for the vesting of 3,173 restricted shares. Options outstanding The following table is a summary of changes in options outstanding under the 2014 Long-term Incentive Plan. EXERCISE PRICE IN €





Options granted, April 24, 2015

42,659

44.24

BALANCE DECEMBER 31, 2015

42,659

BALANCE JANUARY 1, 2015

FAIR VALUE AT GRANT DATE

€17.33

GOVERNANCE

NUMBER OF OPTIONS

The cost relating to stock options is measured at fair value on the grant date. The fair value was determined using the Black-Scholes option valuation model with the following weighted average assumptions:   Risk free interest rate Dividend yield Expected volatility

2015

7 2.27% 1.34% 40.85%

Exercise price

€44.24

Fair value per grant date

€17.33

FINANCIAL STATEMENTS

Expected life (years)

PERFORMANCE REVIEW

STATUS

FAIR VALUE AT GRANT DATE (WEIGHTED AVERAGE)

NUMBER OF PERFORMANCE SHARES

ASMI STATUTORY ANNUAL REPORT 2015  |  Notes to the consolidated financial statements  | 135

ABOUT

The expected volatility measured at the standard deviation of continuously compounded share returns is based on statistical analysis of daily share prices over the last seven years.

STRATEGY & BUSINESS

At December 31, 2015, the aggregate intrinsic value of all options outstanding and exercisable under the 2014 Long-Term Incentive Plan is nil.

Share based payments expenses The grant date fair value of the stock options, the restricted shares and the performance shares is expensed on a straight-line basis over the vesting period, based on the Company’s estimate of stock options, restricted shares and performance shares that will eventually vest. The impact of the true up of the estimates is recognized in the consolidated statement of profit or loss in the period in which the revision is determined. We recorded compensation expenses of €8,312 for 2015 (2014: €7,476). The compensation expenses for 2015 include a true up for a lower non-vesting assessment of €568.

The changes in the amount of provision for warranty are as follows: DECEMBER 31, 2014

2015

BALANCE JANUARY 1

7,966

9,910

Charged to cost of sales

11,779

10,675

Deductions

(10,172)

(9,755)

Releases

(377)

(2,571)

Foreign currency translation effect

714

764

9,910

9,023

BALANCE DECEMBER 31

Costs of warranty include the cost of labor, material and related overhead necessary to repair a product during the warranty period. The majority of warranty period is one year. The Company accrues for the estimated cost of the warranty on its products shipped in the provision for warranty, upon recognition of the sale of the product. The costs are estimated based on actual historical expenses incurred and on estimated future expenses related to current sales, and are updated periodically. Actual warranty costs are charged against the provision for warranty.

SHAREHOLDERS

 

PERFORMANCE REVIEW

NOTE 13. PROVISION FOR WARRANTY

NOTE 14. ACCRUED EXPENSES AND OTHER PAYABLES  

DECEMBER 31,

 

2014

2015

21,898

23,657

8,409

6,198

Personnel related items Deferred revenue Financing related items

1,059

14,202

13,877

TOTAL ACCRUED EXPENSES AND OTHER PAYABLES

47,615

44,791

Personnel related items comprise accrued management bonuses, accrued vacation days, accrued wage tax, social securities and pension premiums. Deferred revenue consists of the revenue relating to the undelivered elements of the arrangements. This part of revenue is deferred at their relative selling prices until delivery of these elements. Financing related items as of December 31, 2015 comprises the accrual for settlement of shares repurchased. Other include accruals for VAT and other taxes and down payments from customers.

FINANCIAL STATEMENTS

3,106

Other

GOVERNANCE

Accrued expenses and other payables consist of the following:

ASMI STATUTORY ANNUAL REPORT 2015  |  Notes to the consolidated financial statements  | 136

ABOUT

NOTE 15. CREDIT FACILITY As per December 31, 2015 ASMI is debt-free. ASMI may borrow under separate short-term lines of credit with banks. The lines contain general provisions concerning renewal and continuance at the option of the banks.

The credit facility of €150 million includes two financial covenants: ››minimum consolidated tangible net worth; and ››consolidated total net debt/total equity ratio.

The minimum level of consolidated tangible net worth for the year ended December 31, 2015 required was €320 million, the consolidated tangible net worth as per that date was €1,072 million. Consolidated tangible net worth is defined as the net assets, deducting any amount shown in respect of goodwill or other intangible assets (including any value arising from any valuation of ASMPT).

The net debt/total equity ratio should not exceed 1.5. For the year ended December 31, 2015 net cash was €447 million and total equity amounted to €1,072 million. The Company is in compliance with these financial covenants as of June 30, 2015 and as of December 31, 2015.

GOVERNANCE

ASMI does not provide guarantees for borrowings of ASMPT and there are no guarantees from ASMPT to secure indebtedness of ASMI. Under the rules of the Stock Exchange of Hong Kong, ASMPT is precluded from providing loans and advances other than trade receivables in the normal course of business, to ASMI or its non ASMPT subsidiaries.

SHAREHOLDERS

Total equity is defined as the aggregate of: ››the amounts paid up on the issued common shares; ››share capital in excess of par value; ››retained earnings; ››accumulated other comprehensive income and loss; and ››deducting any amount shown in respect of goodwill or other intangible assets (including any value arising from any valuation of ASMPT).

PERFORMANCE REVIEW

These financial covenants are measured twice each year, at June 30 and December 31.

STRATEGY & BUSINESS

Total short-term lines of credit amounted to €150 million at December  31, 2015. The amount outstanding at December 31, 2015 was nil so the undrawn portion totaled €150 million. The undrawn portion represents the Company’s standby revolving credit facility of €150 million with a consortium of banks. The facility will be available through December  31, 2018. Once the facility is used, this usage is secured by a portion of  the  Company’s shareholding in ASMPT or accounts receivable.

FINANCIAL STATEMENTS

ASMI STATUTORY ANNUAL REPORT 2015  |  Notes to the consolidated financial statements  | 137

ABOUT

NOTE 16. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT FINANCIAL INSTRUMENTS

 

DECEMBER 31,

 

2014

2015

385,777

446,915

81,971

90,190

61,053

54,441

Financial assets: Cash and cash equivalents Accounts receivable Financial liabilities: Accounts payable

Gains or losses related to financial instruments are as follows:   Interest income Interest expense Result from foreign currency exchange

2015

1,112

(3,272)

(1,620)

26,439

25,264



(22)

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASMI uses the following fair value hierarchy, which prioritizes the inputs to valuation techniques used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:

SHAREHOLDERS

Addition to allowance for doubtful accounts receivable

2014

1,583

PERFORMANCE REVIEW

The carrying amounts of cash and cash equivalents, accounts receivable and accounts payable equal their fair values because of the short-term nature of these instruments.

STRATEGY & BUSINESS

Financial instruments include:

Level 1

Level 2 Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

GOVERNANCE

Quoted prices in active markets that are accessible at the measurement date for identical assets and liabilities.

Level 3

There were no transfers between levels during the years ended December 31, 2015 and December 31, 2014.

FINANCIAL RISK FACTORS ASMI is exposed to a number of risk factors: market risks (including foreign exchange risk), credit risk, liquidity risk and equity price risk. The Company may use forward exchange contracts to hedge its foreign exchange risk. The Company does not enter into financial instrument transactions for trading or speculative purposes.

FINANCIAL STATEMENTS

Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

ASMI STATUTORY ANNUAL REPORT 2015  |  Notes to the consolidated financial statements  | 138

ABOUT

Foreign Exchange Risk

Changes in the fair value of derivatives that do not qualify for hedge treatment, as well as the ineffective portion of any hedges, are recognized in earnings. We record all derivatives, including forward exchange contracts, on the statement of financial position at fair value in accrued expenses and payables. In case contacts extend beyond one year these are classified as long-term.

We do not use forward exchange contracts for trading or speculative purposes. Financial assets and financial liabilities are recognized on the Company’s consolidated statement of financial position when the Company becomes a party to the contractual provisions of the instrument.

Per December 31, 2014 and December 31, 2015 there were no forward exchange contracts outstanding.

FINANCIAL STATEMENTS

The following table analyzes the Company’s sensitivity to a hypothetical 10% strengthening and 10% weakening of the US dollar, Singapore dollar, Hong Kong dollar, Korean won and Japanese yen against the euro as of December 31, 2014 and December 31, 2015. This analysis includes foreign currency denominated monetary items and adjusts their translation at year end for a 10% increase and 10% decrease against the euro. A positive amount indicates an increase in equity. Recognized in equity is the revaluation effect of subsidiaries denominated in US dollar, Singapore dollar, Hong Kong dollar, Korean won and Japanese yen.

GOVERNANCE

To the extent that exchange rate fluctuations impact the value of the Company’s investments in its foreign subsidiaries, they are not hedged. The cumulative effect of these fluctuations is separately reported in Consolidated Shareholders’ Equity. Reference is made to Note 11.

SHAREHOLDERS

Furthermore, we might manage the currency exposure of certain receivables and payables using derivative instruments, such as forward exchange contracts (fair value hedges) and currency swaps, and non-derivative instruments, such as debt borrowings in foreign currencies. The gains or losses on these instruments provide an offset to the gains or losses recorded on receivables and payables denominated in foreign currencies. The derivative instruments are recorded at fair value and changes in fair value are recorded in earnings under foreign currency exchange gains (losses) in the consolidated statement of profit or loss. Receivables and payables denominated in foreign currencies are recorded at the exchange rate at the balance sheet date and gains and losses as a result of changes in exchange rates are recorded in earnings under foreign currency exchange gains (losses) in the consolidated statement of profit or loss.

PERFORMANCE REVIEW

We may use forward exchange contracts to hedge our foreign exchange risk of anticipated sales or purchase transactions in the normal course of business, which occur within the next twelve months, for which we have a firm commitment from a customer or to a supplier. The terms of these contracts are consistent with the timing of the transactions being hedged. The hedges related to forecasted transactions are designated and documented at the inception of the hedge as cash flow hedges, and are evaluated for effectiveness quarterly. The effective portion of the gain or loss on these hedges is reported as a component of accumulated other comprehensive income (loss) net of taxes in equity, and is reclassified into earnings when the hedged transaction affects earnings.

STRATEGY & BUSINESS

ASMI and its subsidiaries conduct business in a number of foreign countries, with certain transactions denominated in currencies other than the functional currency of the Company (euro) or one of its subsidiaries conducting the business. The purpose of the Company’s foreign currency management is to manage the effect of exchange rate fluctuations on income, expenses, cash flows and assets and liabilities denominated in selected foreign currencies, in particular denominated in US dollar.

ASMI STATUTORY ANNUAL REPORT 2015  |  Notes to the consolidated financial statements  | 139

ABOUT

 

 

IMPACT ON EQUITY 2015

10% increase of US dollar versus euro

9,381

11,109

10% decrease of US dollar versus euro

(9,381)

(11,109)

10% increase of Singapore dollar versus euro

7,967

9,925

10% decrease of Singapore dollar versus euro

(7,967)

(9,925)

10% increase of Hong Kong dollar versus euro

109,211

118,085

10% decrease of Hong Kong dollar versus euro

(109,211)

(118,085)

10% increase of Korean won versus euro

8,163

12,123

10% decrease of Korean won versus euro

(8,163)

(12,123)

10% increase of Japanese yen versus euro

6,925

8,211

10% decrease of Japanese yen versus euro

(6,925)

(8,211)

PERFORMANCE REVIEW

A hypothetical 10% strengthening or 10% weakening of any other currency against the euro as of December 31, 2014 and December 31, 2015 would not result in a material impact on equity. The revaluation effect of subsidiaries denominated in other currencies than euro are recognized in equity. The following table analyzes the Company’s sensitivity to a hypothetical 10% strengthening and 10% weakening of the US dollar, Singapore dollar, Hong Kong dollar, Korean won and Japanese yen against the euro at average exchange rates for the years 2014 and 2015. A positive amount indicates an increase in net earnings.  

IMPACT ON NET EARNINGS 2014

2015

10% increase of US dollar versus euro

520

640

10% decrease of US dollar versus euro

(520)

(640)

10% increase of Singapore dollar versus euro

1,233

1,580

10% decrease of Singapore dollar versus euro

(1,233)

(1,580)

10% increase of Hong Kong dollar versus euro

3,969

1,700

10% decrease of Hong Kong dollar versus euro

(3,969)

(1,700)

1,552

3,509

10% decrease of Korean won versus euro

(1,552)

(3,509)

10% increase of Japanese yen versus euro

1,125

344

10% decrease of Japanese yen versus euro

(1,125)

(344)

A hypothetical 10% strengthening or 10% weakening of any other currency against the euro as of December 31, 2014 and December 31, 2015 would not result in a material impact on net earnings.

GOVERNANCE

10% increase of Korean won versus euro

SHAREHOLDERS

 

STRATEGY & BUSINESS

2014

Interest Risk FINANCIAL STATEMENTS

We are not exposed to interest rate risk through our borrowing activities. The Company does not enter into financial instrument transactions for trading or speculative purposes or to manage interest rate exposure. As per December 31, 2015 the Company had no debt.

ASMI STATUTORY ANNUAL REPORT 2015  |  Notes to the consolidated financial statements  | 140

ABOUT

Credit Risk

Our customers are semiconductor device manufacturers located throughout the world. We perform ongoing credit evaluations of our customers’ financial condition. We take additional measures to mitigate credit risk when considered appropriate by means of down payments or letters of credit. We generally do not require collateral or other security to support financial instruments with credit risk.

We derive a significant percentage of its revenue from a small number of large customers. Our three largest customers accounted each for more than 10% of net sales in 2015 and 2014. The ten largest customers accounted for approximately 81.0% of net sales in 2015 (2014: 84.1%). Sales to these large customers also may fluctuate significantly from time to time depending on the timing and level of purchases by  these customers. Significant orders from such customers may expose the Company to a concentration of credit risk and difficulties in collecting amounts due, which could harm the Company’s financial results. At  December  31, 2015 one customer accounted for 20.5% of total accounts receivable.

The maximum credit exposure is equal to the carrying values of cash and cash equivalent and accounts receivable.

SHAREHOLDERS

We invest our cash and cash equivalents in short-term deposits and derivative instruments with high-rated financial institutions. We only enter into transactions with a limited number of major financial institutions that have high credit ratings and we closely monitor the creditworthiness of our counterparties. Concentration risk is mitigated by limiting the exposure to a single counter party.

PERFORMANCE REVIEW

Concentrations of credit risk (whether on- or off-balance sheet) that arise from financial instruments exist for groups of customers or counterparties when they have similar economic characteristics that would cause their ability to meet contractual obligations to be similarly affected by changes in economic or other conditions.

STRATEGY & BUSINESS

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents, accounts receivable and derivative instruments. These instruments contain a risk of counterparties failing to discharge their obligations. We monitor credit risk and manage credit risk exposure by type of financial instrument by assessing the creditworthiness of counterparties. We do not anticipate nonperformance by counterparties given their high creditworthiness.

Liquidity Risk Our policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business.

FINANCIAL STATEMENTS

We intend to return cash to our shareholders on a regular basis in the form of dividend payments and, subject to our actual and anticipated liquidity requirements and other relevant factors, share buybacks.

GOVERNANCE

Our liquidity needs are affected by many factors, some of which are based on the normal on-going operations of the business, and others that relate to the uncertainties of the global economy and the semiconductor industry. Although our cash requirements fluctuate based on the timing and extent of these factors, we believe that cash generated from operations, together with our principal sources of liquidity are sufficient to satisfy our current requirements, including our expected capital expenditures in 2016.

ASMI STATUTORY ANNUAL REPORT 2015  |  Notes to the consolidated financial statements  | 141

ABOUT

The following table summarizes the Company’s contractual and other obligations as at December 31, 2015. LESS THAN 1 YEAR

1-3 YEARS

3-5 YEARS

MORE THAN 5 YEARS

54,441

54,441







6,841

6,841







Accrued expenses and other payables

44,791

44,791







Operating leases

21,577

6,052

8,917

5,300

1,308

Pension liabilities

6,207

378

1,323

1,171

3,335

Accounts payable Income tax payable

Purchase obligations: Purchase commitments to suppliers

53,985

53,985







Capital expenditure and other commitments

1,068

1,068







TOTAL CONTRACTUAL OBLIGATIONS

188,910

167,556

10,240

6,471

4,643

STRATEGY & BUSINESS

TOTAL

PERFORMANCE REVIEW

Total short-term lines of credit amounted to €150,000 at December.31, 2015. The amount outstanding at December  31, 2015 was nil and the undrawn portion totaled €150,000. The standby revolving credit facility of €150,000 with a consortium of banks will be available through December 20, 2018 is secured by a portion of the Company’s shareholding in ASMPT and certain accounts receivable. For the majority of purchase commitments, the Company has flexible delivery schedules depending on the market conditions, which allows the Company, to a certain extent, to delay delivery beyond originally planned delivery schedules.

SHAREHOLDERS

Equity price risk The shares of ASMPT, our 39.55% equity investment, are listed on the Hong Kong Stock Exchange. If the fair value of an investment is less than its carrying value at the balance sheet date, the Company determines whether the impairment is temporary or prolonged. The amount per share recognized as per December 31, 2015 under equity accounting amounts to HK$62.27 whereas the level 1 fair value per share (being the market price of a share on the Hong Kong Stock Exchange) was HK$60.90. Management concluded that based on quantitative analysis no impairment of its share in ASMPT existed as per December 31, 2015.

NOTE 17. COMMITMENTS AND CONTINGENCIES

2016

6,052

2017

4,897

2018

4,020

2019

2,703

2020

2,597

Years thereafter

Operating lease obligations include leases of equipment and facilities. Lease payments recognized as an expense were €6,886 for the year ended December 31, 2015 (2014: €5,964). Per December 31, 2015 the Company had entered into purchase commitments with suppliers in the amount of €53,985 for purchases within the next 12 months. Commitments for capital expenditures and other commitments per December 31, 2015 were €1,068.

1,308 21,577

FINANCIAL STATEMENTS

TOTAL

GOVERNANCE

At December 31, 2015 operating leases having initial or remaining non-cancelable terms in excess of one year are as follows:

ASMI STATUTORY ANNUAL REPORT 2015  |  Notes to the consolidated financial statements  | 142

ABOUT

CHANGE OF CONTROL TRANSACTION

NOTE 18. LITIGATION AND ENVIRONMENTAL MATTERS

NOTE 19. SEGMENT DISCLOSURE The Company organizes its activities in two operating segments, front-end and back-end. Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Executive Officer (CEO), which is the chief operating decision maker. The front-end segment manufactures and sells equipment used in wafer processing, encompassing the fabrication steps in which silicon wafers are layered with semiconductor devices. The segment is a product driven organizational unit comprised of manufacturing, service, and sales operations in Europe, the United States, Japan, South Korea and Southeast Asia.

Accordingly, the asset and result information regarding the operations that comprise the segment are disclosed. The full financial results are reviewed by the CODM, the external reporting of the segment are on an equity method investment basis. The total of all segments’ financial amounts are reconciled to the corresponding amounts reported in the Consolidated financial statements, eliminations are reflected in the reconciling column for amounts reported in excess of those amounts reflected in the Consolidated financial statements.

GOVERNANCE

The back-end segment remains reported as a separate segment since the cease of control per March 15, 2013. Since that date the segment is reported as an equity method investment as the CEO reviews this information as part of his CODM package.

SHAREHOLDERS

The back-end segment manufactures and sells equipment and materials used in assembly and packaging, encompassing the processes in which silicon wafers are separated into individual circuits and subsequently assembled, packaged and tested. The segment is organized in ASM Pacific Technology Ltd, in which the Company holds a substantial share of 39.55% interest, whilst the remaining shares are listed on the Stock Exchange of Hong Kong. The segment’s main operations are located in Hong Kong, the People’s Republic of China, Singapore, Malaysia and Germany.

PERFORMANCE REVIEW

The Company is a party to various legal proceedings incidental to its business and is subject to a variety of  environmental and pollution control laws and regulations. As is the case with other companies in similar industries, the Company faces exposure from actual or potential claims and legal proceedings. Although the ultimate disposition of legal proceedings cannot be predicted with certainty, it is the opinion of the Company’s management that the outcome of any claim which is pending or threatened, either individually or on a combined basis, will not have a material effect on the financial position of the Company, its cash flows and result of operations.

STRATEGY & BUSINESS

Pursuant to our 1997 settlement agreement with Applied Materials, as amended and restated in 1998, if we desire to effect a change of control transaction, as defined in the settlement agreement which generally involves our operations and not our investment in ASMPT, with a competitor of Applied Materials, we must first offer the change of control transaction to Applied Materials on the same terms as we would be willing to accept from that competitor pursuant to a bona fide arm’s-length offer made by that competitor.

FINANCIAL STATEMENTS

ASMI STATUTORY ANNUAL REPORT 2015  |  Notes to the consolidated financial statements  | 143

ABOUT

YEAR ENDED DECEMBER 31, 2014 BACK-END 100%

DECONSOLIDATED

TOTAL

Net sales

545,604

1,386,776

(1,386,776)

545,604

Gross profit

235,278

492,137

(492,137)

235,278

93,374

209,439

(209,439)

93,374

1,583





1,583

Result from operations Interest income Interest expense Foreign currency exchange gains (losses), net Result on investments in associates Income tax expense Net earnings discontinued operations Net earnings (loss)

(11,745)

11,745

(3,272)





26,439

(278)



39,691

39,413

(19,377)

(43,728)

43,728

(19,377)





3,157

3,157

98,469

153,966

(111,118)

141,317

124,736

144,734

(144,734)

124,736

Cash flows from investing activities

(46,130)

(142,431)

162,405

(26,156)

Cash flows from financing activities

(57,824)

104,222

(104,222)

(57,824)

Cash and cash equivalents

385,777

275,431

(275,431)

385,777

Goodwill

11,270

43,076

(43,076)

11,270

Other intangible assets

65,214

66,617

(66,617)

65,214





1,092,948

1,092,948

Investments in associates

334,076

755,106

(755,106)

334,076

Total assets

796,337

1,140,230

(47,282)

1,889,285



247,608

(247,608)



1,635

15,946

(15,946)

1,635

Total debt Headcount 1 1

Headcount includes those employees with a fixed contract, and is exclusive of temporary workers.

SHAREHOLDERS

Other identifiable assets

PERFORMANCE REVIEW

Cash flows from operating activities

(3,272) 26,439

STRATEGY & BUSINESS

FRONT-END

GOVERNANCE FINANCIAL STATEMENTS

ASMI STATUTORY ANNUAL REPORT 2015  |  Notes to the consolidated financial statements  | 144

ABOUT

YEAR ENDED DECEMBER 31, 2015 BACK-END 100%

DECONSOLIDATED

TOTAL

Net sales

669,621

1,505,625

(1,505,625)

669,621

Gross profit

295,527

547,079

(547,079)

295,527

Result from operations

111,063

176,360

(176,360)

111,063

1,112





1,112

Interest income Interest expense Foreign currency exchange gains (losses), net

(1,620)

(18,181)

18,181

(1,620)

25,264





25,264

(900)



17,008

16,108

Result on investments in associates Income tax expense

(47,622)

47,622

5,350

140,269

110,557

(93,549)

157,277

Cash flows from operating activities

174,817

137,991

(137,991)

174,817

Cash flows from investing activities

(71,458)

(34,470)

77,335

(28,593)

Cash flows from financing activities

(104,911)

(112,571)

112,571

(104,911)

Cash and cash equivalents

446,915

239,428

(239,428)

446,915

Goodwill

11,270

50,697

(50,697)

11,270

Other intangible assets

81,535

71,691

(71,691)

81,535

Investments in associates



1,180,839

1,180,839

355,418

910,481

(910,481)

355,418

Total assets

895,138

1,272,297

(91,458)

2,075,977



304,775

(304,775)



1,597

14,348

(14,348)

1,597

Total debt Headcount 1 1

Headcount includes those employees with a fixed contract, and is exclusive of temporary workers.

There are no inter-segment transactions, other than charges for management services, which are based on actual cost. The accounting policies used to measure the net earnings and total assets in each segment are consistent to those used in the Consolidated financial statements. The measurement methods used to determine reported segment earnings are consistently applied for all periods presented. There were no asymmetrical allocations to segments.

EUROPE

UNITED STATES OF AMERICA

JAPAN

SOUTH KOREA

TAIWAN

OTHER ASIA

94,518

177,006

62,482

93,595

81,143

36,860



545,604

6,762

33,881

15,598

11,667

51

11,253

24

79,236

99,326

123,859

179,595

109,919

106,833

50,089



669,621

7,467

37,091

19,776

16,008

139

11,272

41

91,794

CORPORATE

CONSOLIDATED

Year ended December 31, 2014

Net sales Non-current assets

GOVERNANCE

Geographical information is summarized as follows:

SHAREHOLDERS



Other identifiable assets

PERFORMANCE REVIEW

5,350

Net earnings (loss)

STRATEGY & BUSINESS

FRONT-END

Year ended December 31, 2015

Non-current assets

For geographical reporting, net sales are attributed to the geographic location in which the customer’s facilities are located.

FINANCIAL STATEMENTS

Net sales

ASMI STATUTORY ANNUAL REPORT 2015  |  Notes to the consolidated financial statements  | 145

ABOUT

NOTE 20. INCOME TAXES The components of income before income taxes consist of:  

YEAR ENDED DECEMBER 31, 2014

2015

The Netherlands

91,466

95,760

Other countries

66,071

56,167

157,537

151,927

INCOME BEFORE INCOME TAXES

The income tax expense consists of:  

YEAR ENDED DECEMBER 31, 2014

2015

(4,539)

736

Current: The Netherlands Other countries

(9,988)

(2,850)

(14,527)

(2,114)

Deferred: The Netherlands Other countries

INCOME TAX (EXPENSE) BENEFIT



5,000

(4,850)

2,464

(19,377)

5,350

 

YEAR ENDED DECEMBER 31,

 

2014

EARNINGS BEFORE INCOME TAXES FROM CONTINUING OPERATIONS Income tax provision based on Dutch statutory income tax rate

2015

157,537

100.0%

151,927

100.0%

25.0%

(37,982)

25.0%

(4,727)

3.0%

(3,027)

2.0%

Foreign taxes at a rate other than the Dutch statutory rate

(1,454)

0.9%

255

(0.2%)

Recognition of net operating losses



6,619

(4.4%)

15,322

(9.7%)

17,805

(11.7%)

Non-taxable income 1

11,888

(7.5%)

5,514

(3.6%)





9,470

(6.2%)

(1,022)

0.6%

6,696

(4.4%)

(19,377)

12.3%

5,350

(3.5%)

Adjustments in respect of prior years' current taxes 2 3

INCOME TAX (EXPENSE) BENEFIT

Non-taxable income for 2015 mainly consist of revenues deriving from the share in income of investments in associates which are exempt under the Dutch participation exemption. The Adjustments prior years mainly regards one off benefits due to tax refunds for prior years from the Korean Tax Authorities relating to higher tax exemptions than originally assumed. 3 Other in 2015 mainly consists of tax credits, withholding taxes, changes in (enacted) tax laws and revaluation of certain assets. 1

2

Included in Other for 2015 is €2,684 regarding the Company’s manufacturing operations in Singapore and other countries where income covering certain products is subject to concessional tax rates under tax incentive

FINANCIAL STATEMENTS



Utilization of net operating losses, previously not recognized

GOVERNANCE

(39,384)

Non-deductible expenses

SHAREHOLDERS

The provisions for income taxes as shown in the Consolidated statements of profit or loss differ from the amounts computed by applying the Dutch statutory income tax rate to earnings before taxes. A reconciliation of the provisions for income taxes and the amounts that would be computed using the Dutch statutory income tax rate is set forth as follows:

PERFORMANCE REVIEW

 

Other

STRATEGY & BUSINESS

 

ASMI STATUTORY ANNUAL REPORT 2015  |  Notes to the consolidated financial statements  | 146

ABOUT

schemes granted by the local tax authority. The majority of these tax incentive schemes have terms ending by July 1, 2018.

STRATEGY & BUSINESS

On June 8, 2009 the Singapore Economic Development Board (EDB) granted a Pioneer Certificate to ASM Front End Manufacturing Singapore Pte Ltd (FEMS), a principal subsidiary of the Group, to the effect that profits arising from certain manufacturing activities by FEMS of front-end equipment will in principle be exempted from tax for a period of 10 years effective from July 1, 2008, subject to fulfillment of certain criteria during the period. In Korea a High Technology Tax Exemption has been granted to the effect that profits arising from certain equipment sales will in principle be partly exempted from tax in the period ending by 2016, subject to fulfillment of certain criteria during the period.

Deferred income taxes consist of the following:

EQUITY

EXCHANGE DIFFERENCES

DECEMBER 31, 2014

Reserves and allowances

2,970

(983)

45

77

2,109

Depreciation

1,334

(744)



37

627

571

(251)



161

481

4,875

(1,978)

45

275

3,217

(8,055)

(1,762)



8

(9,809)

(133)

(8)



(2)

(143)

DEFERRED TAX LIABILITIES

(8,188)

(1,770)



6

(9,952)

NET DEFERRED INCOME TAXES

(3,313)

(3,748)

45

281

(6,735)

JANUARY 1, 2015

CONSOLIDATED STATEMENT OF PROFIT OR LOSS

EQUITY

EXCHANGE DIFFERENCES

DECEMBER 31, 2015

2,109

(502)

(4)

308

1,911

627

1,630



96

2,353

  Deferred tax assets:

Other DEFERRED TAX ASSETS Deferred tax liabilities: Capitalized development expenses Other

  Deferred tax assets: Reserves and allowances Depreciation Recognition net operating losses Other

6,619

(74)

6,545

230



43

754

3,217

7,977

(4)

373

11,563

(9,809)

(607)



(866)

(11,282)

Deferred tax liabilities: Capitalized development expenses Other

(143)

93





(50)

DEFERRED TAX LIABILITIES

(9,952)

(514)



(866)

(11,332)

NET DEFERRED INCOME TAXES

(6,735)

7,463

(4)

(493)

231

FINANCIAL STATEMENTS

DEFERRED TAX ASSETS

– 481

GOVERNANCE

CONSOLIDATED STATEMENT OF PROFIT OR LOSS

SHAREHOLDERS

JANUARY 1, 2014

PERFORMANCE REVIEW

Since 2011 the Dutch statutory tax rate amounts to 25%. Taxation for other jurisdictions is calculated at the rates prevailing in the relevant jurisdictions. The Company’s deferred tax assets and liabilities have been determined in accordance with these statutory income tax rates.

ASMI STATUTORY ANNUAL REPORT 2015  |  Notes to the consolidated financial statements  | 147

ABOUT STRATEGY & BUSINESS

Based on tax filings, ASMI and its individual subsidiaries have net operating losses available at December 31, 2015 of €161,028 to reduce future income taxes, mainly in Europe. The Company believes that realization of its net deferred tax assets is dependent on the ability of the Company to generate taxable income in the future. Given the volatile nature of the semiconductor equipment industry, past experience, and the tax jurisdictions where the Company has net operating losses, the Company believes that there is currently sufficient evidence to recognize a deferred tax asset in the amount of €6,619. The amounts and expiration dates of net operating losses for tax purposes are as follows:

  NET OPERATING LOSSES FOR TAX PURPOSES THE NETHERLANDS

NET OPERATING LOSSES FOR TAX PURPOSES OTHER COUNTRIES

2018

10,112

10,112



2019

35,905

35,905



2020

204



204

2021

58,478

58,478



2022

26,815

26,815



2023

16



16

2025

15,959



15,959

2029

8,752



8,752

2030

4,787



4,787

161,028

131,310

29,718

TOTAL

PERFORMANCE REVIEW

TOTAL OF NET OPERATING LOSSES FOR TAX PURPOSES

EXPIRATION YEAR

SHAREHOLDERS

The Company has not provided for deferred foreign withholding taxes, if any, on undistributed earnings of its foreign subsidiaries. At December 31, 2015 the undistributed earnings of subsidiaries, subject to withholding taxes, were approximately €28,812. These earnings could become subject to foreign withholding taxes if they were remitted as dividends and/or if the Company should sell its interest in the subsidiaries. A summary of open tax years by major jurisdiction is as follows: JURISDICTION

 

2011-2015

The Netherlands

2013-2015

Singapore

2011-2015

United States of America

1997-2015

South Korea

2010-2015

FINANCIAL STATEMENTS

The calculation of the Company’s tax liabilities involves dealing with uncertainties in the application of complex tax laws. The Company’s estimate for the potential outcome of any unrecognized tax benefits is highly judgmental. Settlement of unrecognized tax benefits in a manner inconsistent with the Company’s expectations could have a material impact on the Company’s financial position, net earnings and cash flows. The Company is subject to tax audits in its major tax jurisdictions, local tax authorities may challenge the positions taken by the Company.

GOVERNANCE

Japan

ASMI STATUTORY ANNUAL REPORT 2015  |  Notes to the consolidated financial statements  | 148

ABOUT

NOTE 21. SELECTED OPERATING EXPENSES AND ADDITIONAL INFORMATION Personnel expenses for employees were as follows: DECEMBER 31,

 

2014

2015

Wages and salaries

96,468

115,622

Social security

11,342

14,857

Pension expenses

4,162

5,451

Share based payment expenses

7,476

8,213

Restructuring expenses

TOTAL

80

1,710

119,528

145,853

DECEMBER 31,

GEOGRAPHIC LOCATION

2015

- the Netherlands

140

146

- EMEA

171

168

United States

600

516

Japan

186

209

South Korea

123

148

Singapore

325

318

Asia, other

90

92

1,635

1,597

Europe:

TOTAL

The number of employees, exclusive of temporary workers, by function at year end was as follows:

SHAREHOLDERS

2014

PERFORMANCE REVIEW

The number of employees, exclusive of temporary workers, by geographic area during the year was as follows:

STRATEGY & BUSINESS

 

DECEMBER 31,

PER FUNCTION

2015

Research and development

365

420

Manufacturing

286

283

Marketing and sales

303

253

Customer service

517

476

Finance and administration

TOTAL

164

165

1,635

1,597

GOVERNANCE

2014

FINANCIAL STATEMENTS

ASMI STATUTORY ANNUAL REPORT 2015  |  Notes to the consolidated financial statements  | 149

ABOUT

NOTE 22. RESEARCH AND DEVELOPMENT Research and Development consists of the following:  

YEAR ENDED DECEMBER 31, 2014

2015

Research and development expenses, net of capitalized development expenses

50,417

62,772

Amortization of capitalized development expenses

10,893

11,794

Research and development grants and credits

TOTAL RESEARCH AND DEVELOPMENT EXPENSES Impairment of research and development related assets

TOTAL

(905)

(985)

60,405

73,581

893

16,154

61,298

89,735

PERFORMANCE REVIEW

The impairment of capitalized development expenses are primarily related to development of new hardware for which the customers demand has shifted out in time, and purchased technology which became obsolete. Of the impairment of capitalized development expenses an amount of relates to the 450mm development. The Company’s operations in the Netherlands and the United States receive research and development grants and credits from various sources.

NOTE 23. EARNINGS PER SHARE

SHAREHOLDERS

Basic net earnings per common share is calculated by dividing net income attributable to common shareholders by the weighted average number of common shares outstanding for that period. The dilutive effect is calculated using the treasury stock method. The calculation of diluted net income per share assumes the exercise of options issued under our stock option plans (and the issuance of shares under our share plans) for periods in which exercised (or issuances) would have a dilutive effect.The calculation of diluted net income per share does not assume exercise of options (or issuance of shares) when such exercises (or issuances) would be anti-dilutive. The calculation of basic and diluted net income per share attributable to common shareholders is based on the following data: DECEMBER 31,

 

2014

2015

138,160

157,277

Net earnings used for purposes of calculating net income per common share Net earnings from discontinued operations

– 157,277

Basic weighted average number of shares outstanding during the year (thousands)

63,510

62,114

Effect of dilutive potential common shares from stock options and restricted shares

699

814

64,209

62,928

from continuing operations

2.18

2.53

from discontinued operations

0.05



from operations

2.23

2.53

from continuing operations

2.15

2.50

from discontinued operations

0.05



from operations

2.20

2.50

DILUTIVE WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING Basic net earnings per share:

Diluted net earnings per share:

FINANCIAL STATEMENTS

3,157 141,317

NET EARNINGS FROM OPERATIONS

GOVERNANCE

 

Net earnings from continuing operations, attributable to common shareholders

STRATEGY & BUSINESS

 

ASMI STATUTORY ANNUAL REPORT 2015  |  Notes to the consolidated financial statements  | 150

ABOUT

NOTE 24. BOARD REMUNERATION The remuneration of members of the Management Board has been determined by the Supervisory Board.

The following table sets forth as to all current members of the Management Board of the Company, information concerning all remuneration from the Company (including its subsidiaries) for services in all capacities:

PENSIONS

SHARE BASED PAYMENT EXPENSES 1

FRINGE BENEFITS

TOTAL

631

81

697

67

2,048

520

663

78

762

60

2,083

2015

397

340

66

446

45

1,294

2014

386

412

69

528

46

1,441

BASE­ COMPENSATION

BONUSES

2015

572

2014

 

STRATEGY & BUSINESS

During 2015, the Company considered the members of the Management Board and the Supervisory Board to be the key management personnel. Total remuneration for key management personnel in 2015 amounts to €3,619 (2014: €3,800).

Management Board:

P.A.M. van Bommel

1

These amounts represent the vesting expenses related to the financial year.

PERFORMANCE REVIEW

C.D. del Prado

SHORT-TERM INCENTIVE (CASH BONUS)

LONG-TERM INCENTIVE (STOCK OPTIONS/PERFORMANCE SHARES)

PENSION ARRANGEMENT

FRINGE BENEFITS Fringe benefits are covering compensation relative to use of a (company) car, a representation and expense allowance, social security premium and premium for health and disability insurance.

FINANCIAL STATEMENTS

As of 2015, the members of the Management Board no longer participate in the industry wide pension fund. They are offered participation of a defined contribution plan for their salary up to €100,000. For their salary above €100,000, the members of the Management Board are compensated with an amount equal to the employer pension contribution. The members of the Management Board have the option to participate in a net pension plan offered by the company or to have the compensation paid out in cash.

GOVERNANCE

The members of the Management Board are eligible to receive stock options and performance shares under the ASM International NV 2014 Long-Term Incentive Plan for members of the Management Board (plan) in order to focus on the long term interest of the company. Stock options vest after three years subject to continued employment and expire after seven years. Performance shares vest after three years subject to meeting certain conditions. The members of the Management Board are required to hold the vested performance shares for an additional two years, however, they are allowed to sell a part of the unconditional shares after three years for tax purposes. The next grant of stock options and restricted shares will take place in April 2016.

SHAREHOLDERS

Each year, a short-term incentive can be earned, based on achievement of specific challenging targets. These targets are for 75% based on company financial targets and for 25% based on non-financial targets. The on-target bonus percentage for the CEO is 100% of base salary, with a maximum pay-out of 150% of  base salary. The on-target bonus percentage for the other members of the Management Board is 75% of base salary, with a maximum pay-out of 125% of base salary. For the year 2015 the Management Board exceeded the company financial targets and met the non-financial targets.

ASMI STATUTORY ANNUAL REPORT 2015  |  Notes to the consolidated financial statements  | 151

ABOUT

OUTSTANDING OPTIONS The following table shows the outstanding options to purchase ASM International NV common shares held by current members of the Management Board, and changes in such holdings during 2015: OUTSTANDING JANUARY 1, 2015

GRANTED IN 2015

EXERCISED IN 2015 4

OUTSTANDING DECEMBER 31, 2015

EXERCISE PRICE

END DATE

C.D. del Prado 1

2007

23,168



(23,168)



€ 16.51

May 23, 2015

C.D. del Prado 1

2008

147,416





147,416

€ 10.78

Mar 1, 2016

C.D. del Prado 2

2009

58,967





58,967

€ 12.79

Nov 30, 2017

C.D. del Prado 3

2011

88,450





88,450

€ 18.93

Dec 31, 2018

C.D. del Prado

3

2012

70,760



70,760

€ 22.93

Dec 31, 2019

C.D. del Prado 3

2013

75,000





75,000

€ 23.73

Dec 31, 2020

C.D. del Prado



28,050



28,050

€ 44.24

Apr 24, 2022

2010

29,483





29,483

€ 13.80

July 1, 2017

3

P.A.M. van Bommel 

2011

62,504





62,504

€ 18.93

Dec 31, 2018

P.A.M. van Bommel 3

2012

47,173





47,173

€ 22.93

Dec 31, 2019

3

P.A.M. van Bommel 

2013

53,000





53,000

€ 23.73

Dec 31, 2020

P.A.M. van Bommel 3

2015



14,609



14,609

€ 44.24

Apr 24, 2022

655,921

42,659

(23,168)

675,412

TOTAL

The vesting of these options was conditional. A percentage, not exceeding 150%, of the options which have been granted conditionally became unconditional after three years, based on the total return of the Company’s shares for the three years after the options are granted compared to the average total return of the shares of a relevant number of companies which are similar to the Company during the same three-year period. The options are granted for a term of eight years. 2 Options are granted for a term of eight years, and become exercisable after a three year vesting period. 3 Options are granted for a term of seven years and become exercisable after a three year vesting period. 4 Options were exercised on May 22, 2015 at a share price of €43.83. 1

PERFORMANCE REVIEW

2015

P.A.M. van Bommel 3

3

STRATEGY & BUSINESS

YEAR OF GRANT

 

SHAREHOLDERS

The fair value per option of options granted to current members of the Management Board was €17.33 in 2015. In 2015, 23,168 options to purchase ASM International NV common shares were exercised and 23,168 treasury shares were sold for the exercise of these options.

OUTSTANDING PERFORMANCE SHARES The following table shows the outstanding performance shares granted to members of the Management Board in 2015 and held by members of the Management Board per December 31, 2015:

STATUS

NUMBER OF SHARES AT GRANT DATE

FAIR VALUE AT GRANT DATE

VESTING DATE

C.D. del Prado

April 24, 2015

Conditional

8,544

€43.21

April 24, 2018

P.A.M. van Bommel

April 24, 2015

Conditional

4,450

€43.21

April 24, 2018

FINANCIAL STATEMENTS

The shares will become unconditional after three years depending on the achievement of predetermined targets. The financial targets to be achieved are measured over a three year performance period and relate to a sales growth compared to market and an average EBIT percentage performance measure. The Management Board members will hold the unconditional shares for at least an additional two years, however they are allowed to sell a part of the unconditional shares after three years for tax purposes.

GOVERNANCE

GRANT DATE

ASMI STATUTORY ANNUAL REPORT 2015  |  Notes to the consolidated financial statements  | 152

ABOUT

The following table sets forth as to all current and former members of the Supervisory Board of the Company information concerning all remuneration (base compensation, no bonuses or pensions were paid) from the Company (including its subsidiaries) for services in all capacities:  

YEAR ENDED DECEMBER 31,

 

2015

J.C. Lobbezoo

70

70

J.M.R. Danneels

50

50

H.W. Kreutzer

53

53

M.C.J. van Pernis

53

53

U.H.R. Schumacher

50

50

276

276

TOTAL

The remuneration of members of the Supervisory Board has been determined by the General Meeting of Shareholders. No stock options or performance shares have been granted to members of the Supervisory Board.

NOTE 25. SHARE OWNERSHIP AND RELATED PARTY TRANSACTIONS The ownership or controlling interest of outstanding common shares of ASM International NV by members of the Management Board and Supervisory Board or members of their immediate family are as follows:

  A.H. del Prado C.D. del Prado (member of the Management Board) Stichting Administratiekantoor ASMI

DECEMBER 31, 2014

DECEMBER 31, 2015

SHARES OWNED

PERCENTAGE OF COMMON SHARES OUTSTANDING

SHARES OWNED

PERCENTAGE OF COMMON SHARES OUTSTANDING

9,204,284

14.62%

9,204,284

14.92%

132,945

0.21%

132,945

0.22%

2,142,039

3.40%

2,142,039

3.47%

The Company has a related party relationship with its subsidiaries, equity accounted investees and members of the Supervisory Board and the Management Board. Related party transactions are conducted on an at arm’s length basis with terms comparable to transactions with third parties. For transactions with the Supervisory Board and the Management Board see Note 24.

The Group has no other significant transactions or outstanding balances with its equity-accounted investees other than its equity-interest holdings.

FINANCIAL STATEMENTS

In May 2015 the company entered into an agreement with Levitech BV for the acquisition of certain patents for an amount of €3.3 million. Levitech BV is a 24% owned equity investment of ASMI.

GOVERNANCE

Stichting Administratiekantoor ASMI is a trust controlled by Mr A.H. del Prado. The number of shares owned by  Stichting Administratiekantoor ASMI includes 713,000 common shares which are beneficially owned by Mr C.D. del Prado.

SHAREHOLDERS

 

PERFORMANCE REVIEW

2014

Supervisory Board:

STRATEGY & BUSINESS

 

ASMI STATUTORY ANNUAL REPORT 2015  |  Notes to the consolidated financial statements  | 153

ABOUT

NOTE 26. PRINCIPAL ACCOUNTANT FEES AND SERVICES

 

2014

 

DELOITTE ACCOUNTANTS BV

KPMG ACCOUNTANTS NV

KPMG NETWORK

KPMG TOTAL

Audit fees

2015

535

345

95

440

Audit-related fees

21







Tax fees

10







Other fees

65







631

345

95

440

TOTAL

The Audit Committee has determined that the provision of services by KPMG described in the preceding paragraphs is compatible with maintaining KPMG’s independence. All audit and permitted non-audit services provided by KPMG during 2015 were pre-approved by the Audit Committee. The Audit Committee has adopted the following policies and procedures for pre-approval of all audit and permitted non-audit services provided by our external auditor:

PERFORMANCE REVIEW

AUDIT COMMITTEE PRE-APPROVAL POLICIES

STRATEGY & BUSINESS

KPMG Accountants NV has served as our external auditor for the year 2015 (2014: Deloitte Accountants BV). The following table sets out the aggregate fees for professional audit services and other services rendered by the external auditors and its member firms and/or affiliates in 2014 and 2015:

Audit Services

Audit-Related Services The Audit Committee may pre-approve expenditures up to a specified amount for services included in identified service categories that are related extensions of audit services and are logically performed by the auditors. Additional services exceeding the specified pre-approved limits require specific Audit Committee approval.

SHAREHOLDERS

Management submits to the Audit Committee for pre-approval the scope and estimated fees for specific services directly related to performing the independent audit of our Consolidated financial statements for the current year.

Tax Services

Other Services

FINANCIAL STATEMENTS

In the case of specified services for which utilizing our external auditor creates efficiencies, minimizes disruption, or preserves confidentiality, or for which management has determined that our external auditor possesses unique or superior qualifications to provide such services, the Audit Committee may pre-approve expenditures up to a specified amount per engagement and in total. Additional services exceeding the specified pre-approved limits, or involving service types not included in the pre-approved list, require specific Audit Committee approval.

GOVERNANCE

The Audit Committee may pre-approve expenditures up to a specified amount per engagement and in total for  identified services related to tax matters. Additional services exceeding the specified pre-approved limits, or involving service types not included in the pre-approved list, require specific Audit Committee approval.

ASMI STATUTORY ANNUAL REPORT 2015  |  Notes to the consolidated financial statements  | 154

ABOUT

NOTE 27. SUBSEQUENT EVENTS Subsequent events were evaluated up to April 13, 2016, which is the issuance date of this Statutory annual report 2015. There are no subsequent events to report.

Almere April 13, 2016

SUPERVISORY BOARD

MANAGEMENT BOARD C.D. del Prado P.A.M. van Bommel

PERFORMANCE REVIEW

J.C. Lobbezoo J.M.R. Danneels H.W. Kreutzer M.C.J. van Pernis U.H.R. Schumacher

STRATEGY & BUSINESS

SIGNING

SHAREHOLDERS GOVERNANCE FINANCIAL STATEMENTS

ASMI STATUTORY ANNUAL REPORT 2015 | Company balance sheet | 155

ABOUT

COMPANY BALANCE SHEET (before proposed appropriation of net earnings for the year)  

(EUR thousand except per share data)

DECEMBER 31, 2014

2015

Goodwill, net

4

11,270

11,270

Other intangible assets, net

3

2,602

8,628

Property, plant and equipment, net

5

23

41

Investments in subsidiaries

2

1,467,921

1,695,681

Loans to subsidiaries

2

45,934

48,958

Deferred tax assets

6



5,000

1,527,750

1,769,578

16



47,676

6,692

5,966

297

Cash and cash equivalents

180,655

189,234

TOTAL CURRENT ASSETS

234,313

196,223

1,762,063

1,965,801

Non-current

TOTAL NON-CURRENT ASSETS

Current assets Accounts receivable, net Amounts due from subsidiaries Other current assets

TOTAL ASSETS

Common shares Capital in excess of par value Treasury shares

2,553

2,553

216,322

221,868

(27,733)

(84,000)

54,770

192,081

1,109,000

1,228,688

246,792

229,912

Legal reserves Translation reserve Other legal reserves Accumulated net earnings Net earnings current year TOTAL EQUITY

157,277

1,743,021

1,948,379

423

654

8

18,473

16,594

Current liabilities Amounts due to subsidiaries Accrued expenses and other payables Taxes and social securities TOTAL CURRENT LIABILITIES

TOTAL EQUITY AND LIABILITIES

146

174

19,042

17,422

1,762,063

1,965,801

GOVERNANCE

141,317

7

SHAREHOLDERS

Equity

PERFORMANCE REVIEW

NOTES

STRATEGY & BUSINESS

 

FINANCIAL STATEMENTS

ASMI STATUTORY ANNUAL REPORT 2015  |  Abbreviated company statement of profit or loss  | 156

ABOUT

ABBREVIATED COMPANY STATEMENT OF PROFIT OR LOSS YEAR ENDED DECEMBER 31, (EUR thousand)

Net earnings from holding activities

TOTAL NET EARNINGS

 

2014

2015

132,843

134,504

8,474

22,773

141,317

157,277

STRATEGY & BUSINESS

Net earnings from subsidiaries

PERFORMANCE REVIEW SHAREHOLDERS GOVERNANCE FINANCIAL STATEMENTS

ASMI STATUTORY ANNUAL REPORT 2015  |  Notes to the company financial statements  | 157

ABOUT

NOTES TO THE COMPANY FINANCIAL STATEMENTS NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

STRATEGY & BUSINESS

ASM International NV (‘ASMI’ or ‘the Company’) is a Dutch public liability company. Statutory seat: Versterkerstraat 8, 1322AP Almere, the Netherlands. The description of our activities and our structure, as included in the Notes to the Consolidated financial statements, also apply to the Company financial statements. In accordance with article 402 Part 9 of Book 2 of the Dutch Civil Code the Company Statement of Profit or Loss is presented in abbreviated form. The accompanying Company financial statements are stated in thousands of euro unless otherwise indicated.

PERFORMANCE REVIEW

ACCOUNTING POLICIES APPLIED The Financial statements of the Company included in this section are prepared in accordance with Part 9 of Book 2 of the Dutch Civil Code. Section 362 (8), Book 2, Dutch Civil Code, allows companies that apply IFRS as endorsed by the European Union in their Consolidated financial statements to use the same measurement principles in their Company financial statements. The Company has prepared these Company financial statements using this provision.

Investments in subsidiaries

NOTE 2. INVESTMENTS AND LOAN ADVANCES DUE FROM SUBSIDIARIES

BALANCE JANUARY 1, 2014 Net result of subsidiaries Other comprehensive income investments

INVESTMENTS IN SUBSIDIARIES

LOAN ADVANCES SUBSIDIARIES

TOTAL

1,206,249

40,310

1,246,559

132,843



132,843



(2,179)

(19,974)



(19,974)

Issuance of loans



218

218

Foreign currency translation effect

150,982

5,406

156,388

BALANCE DECEMBER 31, 2014

1,467,921

45,934

1,513,855

134,504



134,504

Net result of subsidiaries Other comprehensive income investments



567

(94,322)



(94,322)

Capitalizations

48,556



48,556



(2,223)

(2,223)

Repayments of loans Dilution Foreign currency translation effect

BALANCE DECEMBER 31, 2015

5,535



5,535

132,920

5,247

138,167

1,695,681

48,958

1,744,639

The interest on the loan to subsidiaries is based on the Bank of America’s prime rate with a rise of 2 percent points. The repayment schedule of the loan is as follows: 24 annual installments of US$2 million, starting December 31, 2018 followed by a final installment of US$5.3 million on December 31, 2043.

FINANCIAL STATEMENTS

567

Dividend received

GOVERNANCE

(2,179)

Dividend received

SHAREHOLDERS

Investments in subsidiaries are stated at net asset value as we effectively exercise influence of significance over the operational and financial activities of these investments. For a list of all significant subsidiaries see Note 2 of the Consolidated financial statements.

ASMI STATUTORY ANNUAL REPORT 2015  |  Notes to the company financial statements  | 158

ABOUT

ASMI’s share in the negative equity of an equity investment as per December 31, 2015 amounts to €(1,097), ASMI’s share in the net loss for the year 2015 of the same equity investments amounts to €(900). The investment is valued at nil since the are no liabilities for ASMI.

The changes in the carrying amount of other intangible assets are as follows:

TOTAL

12,778

3,097

15,875

1,276



1,276

14,054

3,097

17,151

3,904

3,300

7,204

17,958

6,397

24,355

9,124

1,455

10,579

At cost: BALANCE JANUARY 1, 2014 Additions BALANCE DECEMBER 31, 2014 Additions

BALANCE DECEMBER 31, 2015 Accumulated amortization: BALANCE JANUARY 1, 2014 Amortization for the year

545

3,970

2,000

14,549

249

929

1,178

12,798

2,929

15,727

DECEMBER 31, 2014

1,505

1,097

2,602

DECEMBER 31, 2015

5,160

3,468

8,628

Amortization for the year

BALANCE DECEMBER 31, 2015 Other intangible assets net:

Other intangible assets are amortized over their useful lives of 3 to 7 years. Estimated amortization expenses relating to other intangible assets are as follows:

2016

571

1,204

1,775

2017

1,156

669

1,825

2018

1,014

660

1,674

2019

897

660

1,557

2020

864

275

1,139

Years thereafter

658



658

5,160

3,468

8,628

TOTAL

TOTAL

GOVERNANCE

SOFTWARE

PURCHASED TECHNOLOGY AND OTHER INTANGIBLE ASSETS

SHAREHOLDERS

3,425 12,549

BALANCE DECEMBER 31, 2014

PERFORMANCE REVIEW

SOFTWARE

PURCHASED TECHNOLOGY AND OTHER INTANGIBLE ASSETS

STRATEGY & BUSINESS

NOTE 3. OTHER INTANGIBLE ASSETS

FINANCIAL STATEMENTS

ASMI STATUTORY ANNUAL REPORT 2015  |  Notes to the company financial statements  | 159

ABOUT

NOTE 4. GOODWILL The carrying amount of the goodwill is related to the acquisitions operations in the following business units:

2014

2015

Thermal products business unit

2,611

2,611

Plasma products business unit

8,659

8,659

11,270

11,270

LAND, BUILDINGS AND LEASEHOLD IMPROVEMENTS

FURNITURE AND FIXTURES

TOTAL

TOTAL

NOTE 5. PROPERTY, PLANT AND EQUIPMENT The changes in the amount of property, plant and equipment are as follows:

At cost: 47

252

299

Disposal



(7)

(7)

Additions



1

1

47

246

293



30

30

47

276

323

47

209

256

BALANCE JANUARY 1, 2014

BALANCE DECEMBER 31, 2014 Additions

BALANCE DECEMBER 31, 2015

PERFORMANCE REVIEW

DECEMBER 31,

 

STRATEGY & BUSINESS

 

Accumulated depreciation: Disposal



(7)

(7)

Depreciation for the year



21

21

47

223

270



12

12

47

235

282

DECEMBER 31, 2014



23

23

DECEMBER 31, 2015



41

41

BALANCE DECEMBER 31, 2014 Depreciation for the year

BALANCE DECEMBER 31, 2015

SHAREHOLDERS

BALANCE JANUARY 1, 2014

Property, plant and equipment, net:

Land, buildings and leasehold improvements Furniture and fixtures

Based on tax filings, ASMI has net operating losses available at December 31, 2015 of €131,310 to reduce future income taxes. The Company believes that realization of its net deferred tax assets is dependent on the ability of the Company to generate taxable income in the future. Given the volatile nature of the semiconductor equipment industry and past experience, the Company believes that there is currently sufficient evidence to recognize a deferred tax asset in the amount of €5,000.

2-10

FINANCIAL STATEMENTS

NOTE 6. DEFERRED TAX ASSETS

10-25

GOVERNANCE

USEFUL LIVES IN YEARS:

ASMI STATUTORY ANNUAL REPORT 2015  |  Notes to the company financial statements  | 160

ABOUT

NOTE 7. EQUITY The changes in equity are as follows: CAPITAL IN EXCESS OF PAR VALUE

TREASURY SHARES

ACCUMULATED NET EARNINGS

NET EARNINGS CURRENT YEAR

(EUR thousand except for share data)

BALANCE AS OF JANUARY 1, 2014 Appropriation of net earnings

LEGAL RESERVES

TRANSLATION RESERVE

OTHER LEGAL RESERVES

TOTAL EQUITY

2,539

203,945



(660,605)

1,062,675

(85,919)

973,804

1,496,439







1,062,675

(1,062,675)







141,317





141,317

140,689



140,689

Components of comprehensive income Net earnings









Other comprehensive income

















141,317

140,689



282,006

Compensation expense stock options



7,476











7,476

14

5,398











5,412

(497)

4,158

(1,762)







1,899



(31,891)

Exercise stock options by issue of common shares Exercise stock options out of treasury shares





(31,891)







Dividend paid to common shareholders







(31,828)







(31,828)

Increased retained earnings subsidiaries







(59,643)





59,643



Fair value accounting investments





(69,891)





69,891









(5,662)





5,662



Dilution







3,561







3,561

Allocation equity component convertible bond







9,947







9,947

2,553

216,322

(27,733)

246,792

141,317

54,770

1,109,000

1,743,021







141,317

(141,317)







Net earnings









157,277





157,277







137,311



137,311

Capitalized development expenses subsidiaries Other movements in investments in associates:

BALANCE AS OF DECEMBER 31, 2014 Appropriation of net earnings

SHAREHOLDERS

Repurchase shares

PERFORMANCE REVIEW

TOTAL COMPREHENSIVE INCOME (LOSS)

STRATEGY & BUSINESS

COMMON SHARES

Components of comprehensive income – –







157,277

137,311



294,588

Compensation expense stock options



8,213











8,213

Exercise stock options out of treasury shares

20,985

(6,886)







11,432





(77,252)









(77,252)

Dividend paid to common shareholders







(37,158)







(37,158)

Increased retained earnings subsidiaries







(46,893)





46,893



Fair value accounting investments





(61,571)





61,571







(11,224)





11,224



Capitalized development expenses subsidiaries Other movements in investments in associates: Dilution

BALANCE AS OF DECEMBER 31, 2015









5,535







5,535

2,553

221,868

(84,000)

229,912

157,277

192,081

1,228,688

1,948,379

FINANCIAL STATEMENTS

(2,667)

Repurchase shares

GOVERNANCE

Other comprehensive income TOTAL COMPREHENSIVE INCOME (LOSS)

ASMI STATUTORY ANNUAL REPORT 2015  |  Notes to the company financial statements  | 161

ABOUT

COMMON SHARES, PREFERRED AND FINANCING PREFERRED SHARES The authorized capital of the Company amounts to 110,000,000 common shares of €0.04 par value, 118,000 preferred shares of €40 par value and 8,000 financing preferred shares of €40 par value.

As at December 31, 2015 no preferred shares are issued.

TREASURY SHARES

ASMI intends to use part of the shares for commitments under employee share-based compensation schemes. The buyback program was executed by intermediaries through on-exchange purchases or through off-exchange trades. ASMI updated the markets on the progress of the buyback program on a weekly basis. The program started on November 24, 2014, and was completed on May 20, 2015. Under the 2014-2015 share buyback program we repurchased 2,594,420 shares at an average price of €38.55.

OTHER LEGAL RESERVES Legal reserves include reserves regarding participating interests, capitalized development expenses and  the  cumulative foreign currency translation effect on translation of foreign operations and is included in the accumulated other comprehensive income (loss).

In accordance with applicable legal provisions, a legal reserve for the carrying amount of €72,478 (2014: €61,254) has been recognized for capitalized development and start-up costs.

GOVERNANCE

The legal reserve for participating interests regarding retained earnings, which amounts to €1,156,210 (2014: €1,047,746), pertains to participating interests that are accounted for according to the equity accounting method. The reserve represents the difference between the participating interests’ retained profit and direct changes in equity, as determined on the basis of the Company’s accounting policies, and the share thereof that the Company may distribute. As to the latter share, this takes into account any profits that may not be distributable by participating interests that are Dutch limited companies based on the distribution tests to be performed by the management of those companies. The legal reserve is determined on an individual basis.

SHAREHOLDERS

On October 29, 2015, ASMI announced a share buyback program, to purchase up to an amount of €100 million of its own shares within the 2015-2016 time frame. The program started on November 26, 2015. On December 31, 2015 of the program 9% was repurchased.

PERFORMANCE REVIEW

On October 29, 2014, ASMI announced a share buyback program, to purchase up to an amount of €100 million of its own shares within the 2014-2015 time frame. The repurchase program is part of ASMI’s commitment to use excess cash for the benefit of its shareholders.

STRATEGY & BUSINESS

As at December 31, 2015, 63,797,394 ordinary shares with a nominal value of €0.04 each were issued and fully paid up, of which 2,091,007 ordinary shares are held by us in treasury. All shares have one vote per €0.04 par value. Treasury shares held by the Company cannot be voted on.

FINANCIAL STATEMENTS

ASMI STATUTORY ANNUAL REPORT 2015  |  Notes to the company financial statements  | 162

ABOUT

Changes in legal reserves in 2014 and 2015 were as follows: OTHER LEGAL RESERVES

918,212

55,592

973,804

Retained earnings subsidiaries and investments

59,643



59,643

Fair value accounting investments

69,891



69,891



5,662

5,662

1,047,746

61,254

1,109,000

Retained earnings subsidiaries and investments

46,893



46,893

Fair value accounting investments

61,571



61,571



11,224

11,224

1,156,210

72,478

1,228,688

BALANCE AS OF JANUARY 1, 2014

Development expenditures BALANCE AS OF DECEMBER 31, 2014

Development expenditures

BALANCE AS OF DECEMBER 31, 2015

For more detailed information, reference is made to Note 11 to the Consolidated financial statements.

EMPLOYEE STOCK OPTION PLAN AND EMPLOYEE RESTRICTED SHARES PLAN The Company has adopted various stock option plans and restricted share plans and has entered into related  agreements with various employees. For detailed information, reference is made to Note 12 to the Consolidated financial statements.

PERFORMANCE REVIEW

RESERVE FOR PARTICIPATING INTERESTS, REGARDING CAPITALIZED DEVELOPMENT EXPENSES

STRATEGY & BUSINESS

RESERVE FOR PARTICIPATING INTERESTS, REGARDING RETAINED EARNINGS

NOTE 8. ACCRUED EXPENSES AND OTHER PAYABLES

NOTE 9. SHARE OWNERSHIP OF THE MANAGEMENT BOARD AND SUPERVISORY BOARD With respect to share ownership of the Management Board and Supervisory Board, reference is made to Note 24 and 25 to the Consolidated financial statements.

SHAREHOLDERS

The major part of accrued expenses and other payables is related to personnel, Personnel related items comprise accrued management bonuses, accrued vacation days, accrued wage tax, social securities  and pension premiums.

NOTE 10. PERSONNEL

For information on the parent company’s defined benefit pension plan, the remuneration of the Corporate Executive Board and the Supervisory Board and the parent company’s share-based compensation plans, see Notes 12 and 24, to the Consolidated financial statements.

GOVERNANCE

The average number of employees of ASMI in full-time equivalents during 2015 was 22.7  (2014: 20.5). Salaries, social security charges and pension expenses amounted to €5,589, €77 and €476, respectively, for 2015 (2014: expenses of €4,942, €85 and €340, respectively). Further information of the number of employees can be found in Note 21 on the consolidated financial statements.

FINANCIAL STATEMENTS

ASMI STATUTORY ANNUAL REPORT 2015  |  Notes to the company financial statements  | 163

ABOUT

NOTE 11. COMMITMENTS AND CONTINGENCIES With respect to certain Dutch subsidiaries ASM International NV has assumed joint and several liability in accordance with Article 403, Part 9 of Book 2 of the Netherlands Civil Code.

For information regarding auditor’s fees we refer to Note 26 of the Consolidated financial statements.

SIGNING

PERFORMANCE REVIEW

NOTE 12. AUDITOR’S FEES

STRATEGY & BUSINESS

ASM International NV forms a fiscal unity (tax group for Corporate Income Tax purposes) together with its Dutch subsidiaries for purposes of Dutch tax laws and is as such jointly and severally liable for the tax debts of the unity. The tax unity consists of ASM International NV and the following subsidiaries: ››ASM Europe BV (operational company) ››ASM UK Sales BV (operational company) ››ASM Germany Sales BV (operational company) ››ASM Pacific Holding BV (holding company) ››CVTR Development BV ››Beheer- en Beleggingsmaatschappij Ingebel BV ››Hamilcar Investments BV ››Rembrandt Lease and Finance BV ››ASM IP Holding BV (operational company) ››ASM Netherlands Holding BV (holding company)

Almere April 13, 2016

J.C. Lobbezoo J.M.R. Danneels H.W. Kreutzer M.C.J. van Pernis U.H.R. Schumacher

SHAREHOLDERS

SUPERVISORY BOARD

MANAGEMENT BOARD GOVERNANCE

C.D. del Prado P.A.M. van Bommel

FINANCIAL STATEMENTS

ASMI STATUTORY ANNUAL REPORT 2015 | Independent auditor’s report | 164

ABOUT

INDEPENDENT AUDITOR’S REPORT To: the General Meeting and the Supervisory Board of ASM International NV

OPINION

WHAT WE HAVE AUDITED We have audited the Financial statements 2015 of ASM International NV (ASMI), based in Almere. The Financial statements include the Consolidated financial statements and the company financial statements. The Consolidated financial statements comprise: ››the Consolidated statement of financial position as at December 31, 2015; ››the following Consolidated statements for 2015: the statement of profit or loss, the statements of comprehensive income, changes in equity and cash flows; and ››the notes comprising a summary of the significant accounting policies and other explanatory information.

BASIS FOR OUR OPINION

SHAREHOLDERS

The Company financial statements comprise: ››the company balance sheet as at December 31, 2015; ››the company abbreviated statement of profit or loss for 2015; and ››the notes comprising a summary of the significant accounting policies and other explanatory information.

PERFORMANCE REVIEW

In our opinion: ›› the Consolidated financial statements give a true and fair view of the financial position of ASM International NV as at December 31, 2015, and of its result and its cash flows for 2015 in accordance with International Financial Reporting Standards as adopted by the European Union (EU-IFRS) and with Part 9 of Book 2 of the Netherlands Civil Code; ››the Company financial statements give a true and fair view of the financial position of ASM International NV as at December 31, 2015, and of its result for 2015 in accordance with Part 9 of Book 2 of the Netherlands Civil Code.

STRATEGY & BUSINESS

REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS 2015

We conducted our audit in accordance with Dutch law, including the Dutch Standards on Auditing. Our responsibilities under those standards are further described in the ‘Our responsibilities for the audit of the Financial statements’ section of our report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

GOVERNANCE

We are independent of ASM International NV in accordance with the ‘Verordening inzake de onafhankelijkheid van accountants bij assurance-opdrachten’ (ViO) and other relevant independence regulations in the Netherlands. Furthermore, we have complied with the ‘Verordening gedrags- en beroepsregels accountants’ (VGBA).

FINANCIAL STATEMENTS

ASMI STATUTORY ANNUAL REPORT 2015 | Independent auditor’s report | 165

ABOUT

AUDIT APPROACH SUMMARY

First year audit

Overall materiality of €5 million

MATERIALITY

3.3% of income before taxes

Revenue recognition Investments in associated companies

Capitalized development cost

AUDIT SCOPE

Coverage of 100% of net sales 98% of income before income taxes 98% of total assets

PERFORMANCE REVIEW

Income taxes

KEY AUDIT MATTERS

STRATEGY & BUSINESS

UNQUALIFIED AUDIT OPINION

Materiality

The audits undertaken for group reporting purposes at the group entities were all performed with materiality levels set by, or agreed with, us. In our audit instructions sent to our component auditors, we instructed the component auditors to apply allocated group materiality in the range of €2.7 million and €4.0 million depending on the size of the respective group entities or, in case of a statutory audit requirement, the lower statutory materiality.

FINANCIAL STATEMENTS

We agreed with the Supervisory Board that misstatements in excess of €250,000, which are identified during the audit, would be reported to them, as well as smaller misstatements that in our view must be reported on qualitative grounds.

GOVERNANCE

Based on our professional judgment we determined the materiality for the Financial statements as a whole at €5 million. The materiality is determined with reference to income before income taxes (3.3%). We have also taken into account misstatements and/or possible misstatements that in our opinion are material for qualitative reasons for the users of the Financial statements, such as possible misstatements in the information on remuneration disclosures.

SHAREHOLDERS

Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these  Financial statements. The materiality affects the nature, timing and extent of our audit procedures and the evaluation of the effect of identified misstatements on our opinion.

ASMI STATUTORY ANNUAL REPORT 2015 | Independent auditor’s report | 166

ABOUT

Scope of the group audit

Our group audit mainly focused on significant group entities where account balances are of significant size, have significant risks of material misstatement to the Group associated with them or are considered significant for other reasons.

We sent detailed instructions to all component auditors, covering the significant areas that should be covered (which included the relevant risks of material misstatement detailed below) and set out the information required to be reported to the group auditor. We visited Singapore and ‘ASMPT’ in Hong  Kong for site visits and file reviews and held various telephone calls with the auditors of the components, to discuss the Group audit, risks, audit approach and instructions, as well as the audit findings and observations reported to the group auditor.

NET SALES

INCOME BEFORE INCOME TAXES

TOTAL ASSETS

2

2

36

40

62 100 Combined group audit and component auditor

Limited procedures

FINANCIAL STATEMENTS

58

Group audit and SSC procedures

GOVERNANCE

By performing the procedures mentioned above at group entities, together with additional procedures at group level, we have been able to obtain sufficient and appropriate audit evidence about the group’s financial information to provide an opinion on the Financial statements.

SHAREHOLDERS

Our procedures cover the significant operations in Japan, Korea, the Netherlands, Singapore and the United States of America, all mainly through our audit procedures in the shared services center(SSC), supplemented with local audit procedures for audits of account balances. Further, our procedures cover the (results from) investment in associates, including the work performed by the non-KPMG member firm auditors of ASM Pacific Technology Ltd. Further, we performed limited procedures on the remaining balances, including desktop reviews and audit procedures on specific transactions.

PERFORMANCE REVIEW

Considering our ultimate responsibility for the opinion, we are also responsible for directing, supervising and performing the group audit. In this context, we have determined the nature and extent of the audit procedures to be carried out for group entities. Decisive factors were the significance and/or the risk profile of the group entities or operations (components). On this basis, we selected components for which an audit of account balance or specified procedures had to be performed. Furthermore, we have determined the nature and extent of the audit procedures that we perform at group level and in the shared services center.

STRATEGY & BUSINESS

ASM International NV is the parent company of a group of entities. The financial information of this group is included in the Financial statements of ASM International NV

ASMI STATUTORY ANNUAL REPORT 2015 | Independent auditor’s report | 167

ABOUT

Our key audit matters STRATEGY & BUSINESS

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Financial statements. We have communicated the key audit matters to the Supervisory Board. The key audit matters are not a comprehensive reflection of all matters discussed. These matters were addressed in the context of our audit of the Financial statements as a whole and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

FIRST YEAR AUDIT Financial year 2015 is the first year that KPMG Accountants NV audited the Financial statements of ASMI. As a result, our audit involved considerations not associated with recurring audits. Additional planning activities and considerations were necessary to establish an appropriate audit strategy and audit plan.

OUR RESPONSE

REVENUE RECOGNITION KEY AUDIT MATTER

OUR RESPONSE

FINANCIAL STATEMENTS

Our audit procedures included, among other things, assessing the appropriateness of ASMI’s revenue recognition accounting policy in line with IFRS. We tested the effectiveness of controls over the various categories of net sales. In addition to testing the internal controls, we also assessed the existence and accuracy of the sales recorded, based among other things on inspection of sales contracts, final acceptances, and the allocation of revenue to the various elements in the contracts, reconciliation of cash received throughout the year for revenue recognized and sales transactions taking place before and after year-end to ensure that net sales was recognized in the correct period. We further assessed the adequacy of the net sales disclosures contained in Note 19 Segment disclosure.

GOVERNANCE

Net sales is measured taking into account multiple element arrangements, for example a single sales transaction that combines the delivery of goods and rendering of (installation) services, as contracts with customers typically include separately identifiable components that are recognized based on the relative selling price. Furthermore, net sales is recognized when the risk and rewards of products and services have been transferred to the customer. Due to the multitude and variety of contractual terms, the different pricing elements and the risk of management override, revenue recognition is considered to be complex and involves significant management judgement.

SHAREHOLDERS

Our audit procedures included, among other things, meeting with the Board of Management and Audit Committee in the final meeting with the predecessor auditor. We have had several meetings at the Company’s headquarters and shared services center to gain an initial understanding of the Company and its business, including its control environment and information systems, sufficient to make audit risk assessments and develop the audit strategy and audit plan. We also have inquired with the predecessor auditor and performed a file review to obtain sufficient appropriate audit evidence in respect of the opening balance per January 1, 2015, including evidence with respect to the appropriate selection and application of accounting principles. During the performance of our procedures, we were provided with sufficient information to gain an understanding to base our audit strategy and detailed audit plan on.

PERFORMANCE REVIEW

KEY AUDIT MATTER

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ACCOUNTING FOR INVESTMENTS IN ASSOCIATED COMPANIES KEY AUDIT MATTER STRATEGY & BUSINESS

ASMI owns 39.55% in ASM Pacific Technology Ltd (ASMPT), an entity listed on the Hong Kong Stock Exchange. The investments in associated companies are accounted for under the equity method and considered for impairment in case of a significant or prolonged decline in value. The accounting for the results of and investment in ASMPT is significant to our audit due to the share in ASMI’s net income, the book value of the investment, the fluctuating share price of ASMPT and judgment applied in determining if a decline in value is significant and temporary or prolonged. At December 31, 2015, the Investments in associates amounted to €1,181 million, including goodwill and other intangibles of €806 million, and the share in income from investments in associates amounted to €16 million and mainly relates to the investment in ASMPT, including amortization of recognized (in)tangible assets.

OUR RESPONSE

KEY AUDIT MATTER

OUR RESPONSE

FINANCIAL STATEMENTS

We have, among other things, performed audit procedures on the completeness and accuracy of the amounts recognized as current and deferred tax, including the assessment of correspondence with tax authorities and the evaluation of tax exposures. In addition, in respect of deferred tax assets, we reviewed and tested management’s assumptions that substantiate the probability that deferred tax assets (un)recognized in the balance sheet will be recovered through taxable income in future years and available tax planning strategies. During our procedures, we use, among other things, budgets, forecasts and tax laws and in addition, we assessed the historical accuracy of management’s assumptions. In those components determined to be part of jurisdictions with significant tax risk, we involved tax specialists to analyze the tax positions and to challenge the assumptions used to determine the tax positions. Based on our procedures performed we consider management’s key assumptions to be within a reasonable range. We also assessed the adequacy of the company’s disclosure in Note 20 Income taxes.

GOVERNANCE

Income tax positions are significant to our audit because the assessment process is complex, includes a certain level of estimation uncertainty and the amounts involved are material to the Financial statements as a whole. ASMI’s operations are subject to income taxes in various jurisdictions which results in complexities of transfer pricing and the applicability of various tax legislation. Furthermore, the Company has a significant amount of unrecognized Deferred Tax Assets for net operating losses. At December 31, 2015, the deferred tax assets amounted to €12 million and the total net operating losses amounted to €161 million.

SHAREHOLDERS

ACCOUNTING FOR INCOME TAX POSITIONS

PERFORMANCE REVIEW

Our audit procedures included, among other things, instructing the statutory auditor of ASMPT to perform an audit on the relevant financial information of ASMPT for the purpose of the Consolidated financial statements of ASMI. During the year, we discussed the risk assessment, audit strategy of the statutory auditor, as well as any significant developments on a quarterly basis. Subsequently we have performed a file review at the statutory auditor’s office. We have further evaluated management’s considerations of the impairment indicators of the investment, including goodwill and other intangibles, in ASMPT. In such consideration, the fair value of the listed shares of ASMPT is used as a starting point to assess whether any significant or prolonged and other than temporary decline in value exists, next to a qualitative assessment. We have among other things analyzed the trend in the share price of ASMPT to the Hong Kong Stock Exchange, compared the share price with external data used by analysts expectations, and evaluated the results of ASMPT for potential valuation issues for the investment in ASMPT. We also assessed the adequacy of the company’s disclosure in Note 6 Investments in associates.

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ACCOUNTING FOR CAPITALIZED DEVELOPMENT COSTS DESCRIPTION

OUR RESPONSE

RESPONSIBILITIES OF THE MANAGEMENT BOARD AND THE SUPERVISORY BOARD FOR THE FINANCIAL STATEMENTS

The Supervisory Board is responsible for overseeing the company’s financial reporting process.

OUR RESPONSIBILITIES FOR THE AUDIT OF FINANCIAL STATEMENTS

FINANCIAL STATEMENTS

Our objective is to plan and perform the audit to obtain sufficient and appropriate audit evidence for our opinion. Our audit has been performed with a high, but not absolute, level of assurance, which means we may not have detected all errors and fraud. For a further description of our responsibilities in respect of an audit of Financial statements we refer to the website of the professional body for accountants in the Netherlands (NBA) www.nba.nl/standardtexts-auditorsreport.

GOVERNANCE

As part of the preparation of the Financial statements, the Management Board is responsible for assessing the company’s ability to continue as a going concern. Based on the financial reporting framework mentioned, the Management Board should prepare the Financial statements using the going concern basis of accounting unless the Management Board either intends to liquidate the company or to cease operations, or has no realistic alternative but to do so. The Management Board should disclose events and circumstances that may  cast significant doubt on the company’s ability to continue as a going concern in the Financial statements.

SHAREHOLDERS

The Management Board is responsible for the preparation and fair presentation of the Financial statements in accordance with EU-IFRS and with Part 9 of Book 2 of the Netherlands Civil Code and for the preparation of the Management Board Report in accordance with Part 9 of Book 2 of the Netherlands Civil Code. Furthermore, the Management Board is responsible for such internal control as the Management Board determines is necessary to enable the preparation of the Financial statements that are free from material misstatement, whether due to errors or fraud.

PERFORMANCE REVIEW

We have performed audit procedures over the accuracy and valuation of amounts recognized. Our audit procedures included, among other things, assessing the recognition criteria for intangible assets, challenging the key assumptions used or estimates made in capitalizing development costs, including the authorization of the stage of the project in the development phase and the accuracy of costs included and assessing the useful economic life attributed to the asset. In addition, we considered whether any indicators of impairment were present by understanding the business rationale for projects and performing reviews for indicators of impairment. We also assessed the adequacy of the company’s disclosure in Note 5 Other intangible assets.

STRATEGY & BUSINESS

Capitalized development costs of €72 million are deemed significant to our audit, given the significance of  the position per December 31, 2015, the rapid technological change in the industry, as well as the specific criteria that have to be met for capitalization. This involves management judgment, such as with respect to technical feasibility, intention and ability to complete the intangible asset, ability to use or sell the asset, generation of future economic benefits and the ability to measure the costs reliably. In addition, determining whether there is any indication of impairment of the carrying value of assets, requires management judgment and assumptions which are affected by future market or economic developments.

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REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS REPORT ON THE MANAGEMENT BOARD REPORT AND THE OTHER INFORMATION

ENGAGEMENT

Amsterdam, April 13, 2016 KPMG Accountants N.V. R.P. Kreukniet RA

PERFORMANCE REVIEW

We were engaged for the first time by the Annual General Meeting as auditor of ASM International NV on May 21, 2014, as of the audit for year 2015.

STRATEGY & BUSINESS

Pursuant to legal requirements of Part 9 of Book 2 of the Netherlands Civil Code (concerning our obligation to report about the Management Board Report and other information): ››We have no deficiencies to report as a result of our examination whether the Management Board Report to the extent we can assess, has been prepared in accordance with Part 9 of Book 2 of the Netherlands Civil Code, and whether the information as required by Part 9 of Book 2 of the Netherlands Civil Code has been annexed. ››We report that the Management Board Report, to the extent we can assess, is consistent with the Financial statements.

SHAREHOLDERS GOVERNANCE FINANCIAL STATEMENTS

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INFORMATION ON THE PROVISIONS IN THE ARTICLES OF ASSOCIATION RELATING TO THE APPROPRIATION OF PROFIT The Articles of Association of ASM International NV (the Company) provides the following with regard to distribution of profit and can be summarized as follows:

Second, a dividend, if possible, is distributed on financing preferred shares. The dividend is a percentage of  the  par value, plus share premium paid, on the financing preferred shares. The percentage is determined by the Management Board, subject to approval of the Supervisory Board. The percentage is related to the average effective yield on government loans with a weighted average remaining term of no more than ten years, if necessary increased or decreased by no more than three percent, subject to the then prevailing market conditions. If profits are insufficient, the dividend shall be paid from the reserves. If the reserves are insufficient, the dividend deficit has to be made up in future years;

The Company may only make distributions to the shareholders and other persons entitled to profit eligible for distribution insofar as its equity exceeds the amount of the paid-up and called amount of the share capital increased with the reserves that must be kept by virtue of law;

SHAREHOLDERS

With the approval of the Supervisory Board, the Management Board will determine which part of the profit remaining after adoption of the provisions of the previous paragraphs will be reserved. The profit after reserving will be at the disposal of the General Meeting;

PERFORMANCE REVIEW

From the profits, distributions shall in the first place, if possible, be made on the preferred shares equal to the EURIBOR-rate for six months’ loans, increased by one and a half, on the paid up amount which had to be paid on the preferred shares, weighted to the number of days to which this was applicable. If profits are insufficient, the dividend will be paid from the reserves with priority over any dividends. If the reserves are insufficient, the dividend deficit has to be made up in future years;

STRATEGY & BUSINESS

The additional information below includes a brief summary of the most significant provisions of our Articles of Association.

ABOUT

OTHER INFORMATION

Article 33, para 3 of the Articles of Association provides that dividend claims expire after the lapse of five years.

It is proposed that the net earnings for the year 2015 are carried to the accumulated deficit/net earnings. The Management Board proposed to the forthcoming Annual General Meeting of Shareholders to declare a dividend of €0.70 per share to be paid from the available reserves.

SPECIAL STATUTORY CONTROL RIGHTS

GOVERNANCE

THE PROPOSED APPROPRIATION OF THE RESULT

Article 27 of the Articles of Association provides that each common share gives the right to cast one vote, each preferred financing share to cast one thousand votes and each preferred share to cast one thousand votes. FINANCIAL STATEMENTS

Article 29 of the Articles of Association provides that meetings of holders of preferred shares or of financing preferred shares shall be convened as often and insofar as a decision of the meeting of holders of preferred shares or financing shares desires this, and furthermore as often as the Management Board and or the Supervisory Board shall decide to hold such a meeting. At the meeting resolutions will be passed with an absolute majority of the votes. In the event that there is a tie of votes, no resolution will take effect.

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ABOUT

STICHTING CONTINUÏTEIT ASM INTERNATIONAL The objective of Stichting Continuïteit ASM International (Stichting) is to serve the interests of the Company. To  that objective Stichting may, amongst others, acquire, own and vote on our preferred shares in order to maintain our independence and/or continuity and/or identity.

LIST OF SUBSIDIARIES AND OFFICES The subsidiaries and offices of the Company are listed on page 116 of the Statutory annual report.

SUBSEQUENT EVENTS Subsequent events were evaluated up to April 13, 2016, which is the issuance date of this Statutory annual report 2015. There are no subsequent events to report.

PERFORMANCE REVIEW

The members of the board of Stichting are: ››Dick Bouma, retired Chairman Board Pels Rijcken & Droogleever Fortuijn ››Rob Ruijter, Chairman Supervisory Board Delta Loyd ››Rinze Veenenga Kingma, President Archeus Consulting BV

STRATEGY & BUSINESS

The following resolutions and actions can only be taken on a proposal by the Management Board and the Supervisory Board: ››the amendment of the Articles of the Company; and ››the dissolution of the Company.

STATUTORY ANNUAL REPORT SHAREHOLDERS

A copy of our Statutory annual report prepared in accordance with International Financial Reporting Standards  (IFRS), is available free of charge by writing to our corporate offices, sending an email to [email protected] or downloading the file through our website.

GOVERNANCE FINANCIAL STATEMENTS

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LOCATIONS WORLDWIDE EUROPE ASM International NV (HEADQUARTERS) Versterkerstraat 8 1322 AP Almere T: +31 88 100 8810 F: +31 88 100 8830

ASM Services & Support Ireland Ltd Unit 23, Hills Industrial Estate Lucan, Co Dublin T: +353 1 621 9100 F: +353 1 628 0206

BELGIUM

NORTH AMERICA UNITED STATES ASM America, Inc 3440 East University Drive Phoenix, AZ 85034-7200 T: +1 602 470 5700 Regional Sales/Service Office: 97 East Brokaw Road Suite 100 San Jose, CA 95112-4209 T: +1 408 451 0830

FRANCE

GERMANY

Kumamoto Service Center 3F, Mayfair-Suizenji 21-30, 1-chome, Suizenji Chuo-ku, Kumamoto-shi Kumamoto, 862-0950 T: +81 96 387 7300 F: +81 96 387 7301 Nagaoka Factory 392-1 Mishimashimbo Nagaoka-shi Niigata 940-2311 T: +81 258 42 2400 F: +81 258 41 2490 Yokkaichi Service Center 3F, KOSCO-Yokkaichi-Nishiura Building 5-10, 1-chome, Yasujima, Yokkaichi-shi Mie 510-0075 T: +81 59 340 6100 F: +81 59 340 6099

FINANCIAL STATEMENTS

ASM Germany Sales BV Bretonischer Ring 16 85630 Grasbrunn T: +49 89 462 3650 F: +49 89 462 36566

Regional Service Office: 2500 NW 229th Avenue Suite 100 Hillsboro, OR 97124-7114 T: +1 503 629 1360

ASM Japan KK 23-1, 6-chome Nagayama Tama-shi Tokyo 206-0025 T: +81 42 337 6311 F: +81 42 389 7555

GOVERNANCE

ASM France SARL 223 Rue de Bécasses 38920 Crolles T: +33 4 7692 2824 F: +33 4 3892 0472

JAPAN

SHAREHOLDERS

ASM Microchemistry Oy Pietari Kalmin katu 1 F 2 00560 Helsinki T: +358 9 525 540 F: +358 9 525 54600

ASM China Ltd A/N, 15F, No 720 Pudong Avenue Shanghai 200120 T: +86 21 50 368588 F: +86 21 50 368878

PERFORMANCE REVIEW

ASM Europe BV Versterkerstraat 8 1322 AP Almere T: +31 36 540 6711 F: +31 36 540 6710

FINLAND

CHINA

ISRAEL ASM Services & Support Israel Ltd Intel 2 Hazaron St Kiryat-Gat 82109 T: +972 8 6123077

ASM Belgium NV Kapeldreef 75 3001 Leuven T: +32 16 28 1639

ASIA STRATEGY & BUSINESS

THE NETHERLANDS

IRELAND

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TAIWAN

ASM Genitech Korea Ltd BunDang Branch Office 10F, 1-Dong, 17, 228 st Pankyo-ro Bundang-ku, Sungnam-si Kyounggi-do, 13487 T: +82 70 7596 7788 F: +82 31 8016 9970

ASM Front-End Sales & Services Taiwan Co, Ltd Hsin-Chu Office 2F-5, No 1, Jinshan 8th St East Dist, Hsinchu City 300 T: +886 3 666 7722 F: +886 3 564 8899

ASM Genitech Korea Ltd Head Office SungKong-kwan 1 Dong Cheonan Valley, ChungNam Techno Park 136, Jiksan-ro, Jiksan-eup Seobuk-ku, Cheonan-si Chungcheongnam-do, 310356 T: +82 70 7596 7800 F: +82 41 5890 201

ASM Front-End Sales & Services Taiwan Co, Ltd Lin-Kuo Office 2F, No 50, Fuxing 3rd Rd Guishan Dist, Taoyuan City 333 T: +886 3 211 5279 F: +886 3 328 5358

SINGAPORE ASM Front-End Manufacturing Singapore Pte Ltd 543 Yishun Industrial Park A Singapore 768765 T: +65 6512 2922 F: +65 6512 2966

ASM Front-End Sales & Services Taiwan Co, Ltd Tai-Nan Office Rm 612, 6F, No 13, Guoji Rd Xinshi Dist, Tainan City 744 T: +886 6 589 2368 F: +886 6 589 2710

SHAREHOLDERS

ASM Wafer Process Equipment Singapore Pte Ltd 543 Yishun Industrial Park A Singapore 768765 T: +65 6512 2962 F: +65 6512 2961

ASM Front-End Sales & Services Taiwan Co, Ltd Tai-Chung Office No 20-2, Ln 1230, Sec 4 Taiwan Blvd Xitun Dist, Taichung City 407 T: +886 4 2465 1086 F: +886 4 2463 3707

PERFORMANCE REVIEW

SOUTH KOREA

ASM Services & Support Malaysia Sdn Bhd Suite 17 and 18, First Floor Incubator Block, Kulim Techno Centre Kulim Hi-Tech Park 09000, Kulim Kedah Darul Aman T: +604 403 9330 F: +604 403 9330

STRATEGY & BUSINESS

MALAYSIA

GOVERNANCE FINANCIAL STATEMENTS

ASMI STATUTORY ANNUAL REPORT 2015 | Safe harbor statement | 175

SHAREHOLDERS

Forward-looking statements do not guarantee future performance and involve risks and uncertainties. You should be aware that our actual results may differ materially from those contained in the forward-looking statements as a result of certain risks and uncertainties. These risks and uncertainties include, but are not limited to, economic conditions and trends in the semiconductor industry and the duration of industry downturns, currency fluctuations, the timing of significant orders, market acceptance of new products, competitive factors, litigation involving intellectual property, shareholder or other issues, commercial and economic disruption due to natural disasters, terrorist activity, armed conflict or political instability, epidemics and other risks indicated in our most recently filed Annual report and other filings from time to time. The risks described are not the only ones. Some risks are not yet known and some that we do not currently believe to be material could later become material. Each of these risks could materially affect our business, revenues, income, assets, liquidity and capital resources. All statements are made as of the date of posting unless otherwise noted, and we assume no obligation to update or revise any forward-looking statements to reflect future developments or circumstances.

PERFORMANCE REVIEW

You can identify forward looking statements by the use of words like ‘may’, ‘could’, ‘should’, ‘project’, ‘believe’ ‘anticipate’, ‘expect’, ‘plan’, ‘estimate’, ‘forecast’, ‘potential’, ‘intend’, ‘continue’ and variations of these words or comparable words.

STRATEGY & BUSINESS

In addition to historical information, some of the information posted or referenced in this report contains statements relating to our future business and/or results, including, among others, statements regarding future revenue, sales, income, expenditures, sufficiency of cash generated from operations, maintenance of majority interest in ASM Pacific Technology Ltd., business strategy, product development, product acceptance, market penetration, market demand, return on investment in new products, facility completion dates and product shipment dates, corporate transactions, restructurings, liquidity and financing matters, outlooks, and any other  non-historical information. These statements include certain projections and business trends, which are ‘forward-looking’. We caution readers that no forward-looking statement is a guarantee of future performance and that actual results could differ materially from those contained in the forward-looking statements.

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SAFE HARBOR STATEMENT

GOVERNANCE FINANCIAL STATEMENTS

ASM International Versterkerstraat 8 1322 AP Almere The Netherlands