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SMT & Inspection | April 20, 2006

Sales up at BE Semiconductor

BE Semiconductor Industries N.V reports net sales for the first quarter of 2006 were € 44.5 million, representing an increase of 21.6% as compared to net sales of € 36.6 million in the first quarter of 2005 and a decrease of 6.5% as compared to net sales of € 47.6 million in the fourth quarter of 2005.
BE Semiconductor Industries N.V., a Dutch manufacturer of assembly equipment for the semiconductor industry, today announced its financial results for the first quarter ended March 31, 2006.

The decrease in net sales in the first quarter of 2006 as compared to the fourth quarter of 2005 was in line with prior guidance and was due primarily to lower net sales of singulation and die bonding systems for array connect applications. Equipment sales for conventional leadframe applications were approximately the same in both the first quarter of 2006 and the fourth quarter of 2005.

Besi's net income for the first quarter of 2006 was € 1.0 million, or € 0.03 per diluted share, as compared to a net loss for the first quarter of 2005 of € 4.5 million, or a loss of € 0.14 per diluted share, and net income of € 2.6 million, or € 0.07 per diluted share, in the fourth quarter of 2005. The year over year improvement in net income reflects improved industry conditions as well as cost and efficiency benefits realized from Besi's operational restructuring in 2005.
Net bookings for the first quarter of 2006 were € 59.7 million, an increase of 48.1% as compared to net bookings for the first quarter of 2005 of € 40.3 million and an increase of 21.8% as compared to net bookings of € 49.0 million in the fourth quarter of 2005. On a customer basis, order growth in the first quarter of 2006 as compared to the fourth quarter of 2005 resulted from a 49.3% increase in orders by independent device manufacturers (“IDMs”).
Backlog at March 31, 2006 was € 72.0 million as compared to € 56.8 million at December 31, 2005, representing an increase of 26.8%. Approximately 70% and 30%, respectively, of backlog at March 31, 2006 was for array connect and leadframe assembly applications as compared to 76% and 24%, respectively, of backlog at December 31, 2005. The book-to-bill ratio was 1.34 in the first quarter of 2006 as compared to 1.10 in the first quarter of 2005 and 1.03 in the fourth quarter of 2005.

Besi's gross margin for the first quarter of 2006 was 38.3% as compared to 28.0% for the first quarter of 2005 and 39.1% for the fourth quarter of 2005. Gross margins during the quarter exceeded guidance due primarily to better than anticipated efficiencies realized in the sale of its conventional leadframe products.
Besi's operating expenses decreased to € 14.9 million, or 33.5% of net sales, in the first quarter of 2006, as compared to € 15.7 million, or 42.9% of net sales in the first quarter of 2005 and € 15.5 million, or 32.6% of net sales, in the fourth quarter of 2005. The decrease in operating expenses was due primarily to the benefits of restructuring efforts that occurred during 2005, partially offset by higher research and development expenses for new product introductions which occurred in the first quarter of 2006.
At March 31, 2006, cash and cash equivalents were € 74.5 million as compared to € 73.0 million at December 31, 2005. Total debt and capital leases at March 31, 2006 were € 86.2 million as compared to € 82.8 million at December 31, 2005.

Richard W. Blickman, President and Chief Executive Officer of the Company, commented: "The first quarter of 2006 was better than anticipated as we benefited from efficiencies realized from our operational restructuring last year as well as improved semiconductor industry conditions. We met or exceeded our guidance for sales and gross margins during the quarter and continued to reduce our operating expenses. We generated net income of € 1.0 million in the first quarter of 2006 as compared to a net loss of € 4.5 million in the comparable quarter of the prior year which underscores our accomplishments over the past twelve months in restructuring the business, integrating Datacon's operations, improving production efficiencies and shifting certain production capabilities to our Asian operations. Our profitability was further enhanced by the continued positive development in our gross margins for conventional leadframe applications. We also experienced a 21.8% increase in orders this quarter which was substantially higher than we had originally anticipated, principally due to an acceleration of certain systems orders into the first quarter of 2006 that had been anticipated to be received in the second and third quarters of 2006. Customers accelerated equipment expenditures this quarter to add incremental assembly production capabilities, particularly for conventional leadframe applications, in light of increased industry demand for wireless applications and personal computing devices and higher capacity utilization rates at customer production facilities.”

Outlook

Based on current backlog and customer shipment schedules, Besi expects that its net sales will increase by approximately 15%-20% in the second quarter of 2006 as compared to the first quarter of 2006 primarily as a result of higher shipments of systems for array connect applications and, to a lesser extent, increased shipments of systems for leadframe assembly applications. Orders for the second quarter of 2006 are expected to decrease by approximately 20%-25% as compared to the first quarter of 2006 due to the impact of orders accelerated into the first quarter of 2006 from the second

and third quarters of 2006 combined with lower orders generally anticipated for both conventional leadframe and array connect applications. Besi anticipates that quarterly order levels could continue to fluctuate this year based on customer capital spending trends. Besi expects that its gross margins will increase to a range of between 38%-40% in the second quarter of 2006 due to an increase in the proportion of its product mix represented by sales of array connect products. Besi anticipates that operating expenses for the second quarter of 2006 will increase by approximately 5% as compared to the first quarter of 2006. Capital expenditures are forecast to be approximately € 1.0 million in the second quarter of 2006, up from € 0.5 million in the first quarter of 2006.

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