ASM International N.V.

Mary Jo Dieckhaus - IR Chuck del Prado - Chairman, President, and CEO Peter van Bommel - CFO

Peter Olofsen - Kepler Cheuvreux Chetan Udeshi - JPMorgan Tammy Qiu - Berenberg Robin van den Broek - ING Financial Markets Philip Scholte - Rabobank Equity Research David O'Connor - Exane BNP Paribas

Thank you, Tiara. ASM issued its 2014 third quarter results last evening.

For those of you who have not seen the press release, it, along with the latest investor presentation is accessible on the Web site asm.com. We remind you that this conference call may contain information relating to ASM's future business or results in addition to historical information.

These forward-looking statements involve risks and uncertainties that could cause actual results to vary materially from those expressed or implied in such statements. These include without limitation, statements relating to revenues, margins, cost reduction programs, liquidity, breakeven levels, strategies and economic conditions.

Please refer to the ASMI press releases and filings with the U.S. Securities and Exchange Commission on Forms 20-F and 6-K for more information on the risk factors that could affect results.

All forward-looking statements are based on information as of today October 30, 2014 and the Company assumes no obligation to update these statements. I will now turn the call over to Chuck del Prado, President and CEO.

Please go ahead sir.

Thank you, Mary Jo and thanks to everyone for attending our third quarter 2014 results conference call and for your continued interest in ASM International. After a review of operations, Peter van Bommel, our CFO will join me in answering any questions you may have.

Q3 was another solid quarter for ASM. Bookings rebounded by 31%.

Revenue dropped by 18%. The gross margins increased slightly and operating margin and cash flow remained at healthy levels.

In addition, we announced a share buyback program for up to €100 million. So let's first have a look at our financial results.

Revenue in the third quarter decreased to €122 million, an 18% decrease compared to the previous quarter. Third quarter revenue decreased sequentially as anticipated as some customers were absorbing the investments they made in the preceding quarters in their current notes before resuming spending on the next notes.

In terms of product lines, the overall driver behind sales was again our portfolio of ALD and PEALD technologies. By market segment, third quarter revenue was again led by memory customers, followed by the foundry and logic segments.

Despite the sequential drop in Q3, sales for the first nine months of the year increased by a solid 30%, year-over-year. The gross margin increased to 43.2% in the third quarter, up from 42.3% in the second quarter and up from 39.1% in the third quarter of last year.

On the back of a stronger order intake and rising backlog, utilization remains at healthy levels during the quarter. We also had the benefit from a strong mix in the third quarter.

In addition, gross margins were supported by the supply chain programs that we have been implementing, particularly when compared to the same period last year. SG&A expenses were flat compared to the second quarter and increased as a percentage of sales from 13% to 16%.

R&D increased by 2% compared to the second quarter. Relative to sales, R&D increased from 9% to 13%.

Operating income amounted to 17.2 million in the euro in the third quarter down from 27.4 million in the second quarter and up from €11.6 million in the third quarter of last year. The operating margin fell to 14.1% down from 18.5% in the second quarter.

We also want to mention the result on financing, as it came in relatively high in the third quarter at €16.1 million positive. This is explained by a translation gain of €16.6 million in the third quarter.

A substantial part of ASMI's cash position is denominated in U.S. dollar.

Appreciation of the U.S. dollar led to the aforementioned translation gain.

In the second quarter, the financial result included the translation gain of €2.5 million. Results from investments which comprise of our 40% investment in ASMPT increased to €30.7 million for the quarter up strongly from €15.8 million in the previous quarter and €10.8 million in the year ago period.

This excludes the ongoing amortization charge which amounted to 5.7 million in euro in the third quarter. For the full year 2014, the amortization charge is protected to be approximately €22 million.

In the third quarter, ASMPT sales grew quarter-on-quarter by 41% to HK$4.9 billion. Compared to the third quarter of last year this was an increase of 56%.

The increase in the third quarter includes the consolidation of the DEK Company. Excluding DEK sales grew quarter-on-quarter with 32%.

On a 100% basis ASMPT net profits were €77 million in the third quarter. ASMPT reported bookings of US$533 million for the third quarter a decrease of 16% compared to the second quarter but an increase of 45% compared to the third quarter of last year.

The book-to-bill decreased from 1.4 in the second quarter to 0.9 in the third quarter for PT. Now turning back to ASMI’s consolidated operations.

Our net earnings on a normalized basis amounted to €60.2 million in the third quarter, up from €40.1 million in the second quarter and €16.3 million in the third quarter of last year. New bookings increased by 31% compared to the second quarter to a level of €156 million.

This was substantially higher than our guidance for orders, to be around the same level as Q2. Overall demand was solid during the quarter the upside in Q3 bookings was caused by specific orders for ALD and PEALD which came in earlier than anticipated.

In terms of product lines bookings were again driven by ALD and PEALD. In terms of customer segments bookings were led by the memory segment followed by logic and foundry.

We experienced sustained demand for our PEALD solutions from DRAM customers and also strong demand from NAND flash in the third quarter. We also would like to highlight the increased contribution from customers beyond the typical top three CapEx spenders.

In recent quarters we have booked substantial orders with several customers beyond the top three CapEx spenders. Book-to-bill amounted to 1.3 in the quarter and the backlog increased from €109 million to €147 million at the end of the third quarter.

Now let’s look at the balance sheet and cash flow in the third quarter. At the end of September cash amounted to €410 million, up from up from €368 million at the end of Q2.

Next to the positive free cash flow and as received dividends from ASMPT, the increase in cash flow is in part also the result of €17 million currency translation effect. Cash flow from operations amounted to €22 million during the quarter up from €18 million in the previous quarter.

Profitability decreased in the third quarter, but this was more than offset by changes in working capital which stood from a negative figure in Q2 to slightly positive in Q3. Free cash flow for the first three quarters amounted to €83 million, at the end of September net working capital increased to €100 million up from 95 million at the end of the second quarter.

This increase was caused by translation differences and the number of outstanding days of working capital measured against quarterly sales increase from 57 days at the end of Q2 to 73 days at the end of Q3 but it decreased compared to the 84 days at the end of Q3 last year. Dividends received on our 40% shareholding in ASMPT amounted to €12.5 million in the quarter.

So now let’s make a few comments on the share buyback program. With the Q3 earnings release we announced the authorization of a share buyback program for up to €100 million of the Company’s common shares.

This program will be executed within the 2014-2015 timeframe and will end as soon as the aggregate purchase price of the common shares acquired by ASM has reached €100 million. The share buyback program is part of ASMI’s commitment to use excess cash for the benefit of its shareholders and it takes into consideration our Company’s steady and solid performance and the Company’s healthy cash position.

Now a closer look at some of the trends we’re seeing in our ALD and PEALD business. Demand for our leading ALD and PEALD solutions continues to be strong.

In the third quarter demand was particularly strong for PEALD. The leading application of our PEALD products is for SDDPs, so-called space of space defined double patterning.

As we also discuss in earlier conference calls, SDDP is a specific form of multiple patterning that is used extensively in the memory segment, and helps to enable our customers to stay sustained more as well. In the logic and foundry sector, the leading application of our ALD products is for high-k metal gate.

In addition as we have reported in recent quarters, we have one PEALD application in the logic and foundry segments that are contributing to our overall ALD revenue. Apart from a broadening set of applications, the ALD market is also driven by an increasing number of customers that use ALD in high volume manufacturing.

We earlier highlighted the increased contribution to bookings in recent quarters from customers beyond the top three CapEx spenders. While some of the leading players have already ramped several technology generations using ALD, some other customers are now deploying ALD and PEALD for the first time in substantial volumes.

So let’s now look at the market environment in general. For 2014 industry observers such as VLSI and Gartner, forecast an increase of approximately 17% in WFE, so wafer fabric equipment spending for this year.

They also expect another positive year for our industry in 2015, with further increases of as currently estimated 5% to 10% in wafer fab equipment spending projected next year. In memory, the short-term outlook continues to be supported by healthy spending in advanced nodes.

An area where we are well positioned was particularly our PEALD products. In logic and foundry while we see solid interest for the next nodes being 16, 15 and 10-nanometer depending on what customer you look at.

We continue to experience limited visibility around the exact timing of investments in these new nodes. However, we believe the underlying trend remains healthy across the board as the market penetration of ALD and PEALD continues to increase at the new technology nodes.

Now let’s look at our outlook. For Q4, as we shared in our press release overnight, we expect a flat to single-digit sales increase on a currency comparable level, while our new orders are expected to be in the €130 million to €150 million range.

This would bring new orders for the second half of the year at approximately the same level as for the first half of the year. At this point, we are more than happy to any questions you may have.

Tiara we are ready to begin the Q&A.

A couple of questions, first, on the order intake in Q3, you mentioned that some orders had come in earlier than expected. Could you indicate from which segment these orders are?

Is it from the memory side, or is it more from the logic and foundry side? And then, I have two questions on foundry, foundry and logic, where it seems that in the first half spending was fairly concentrated.

Looking at your bookings and backlog, do you see that broadening in the second half? And then on ALD, PEALD intensity, with the move to smaller nodes, and with the shift from 28-nanometer with high-K metal gate to 16, 14-nanometer with FinFET, what does it mean for the ALD intensity of the process?

Can you put a number on that?

A couple of questions, first, on the order intake in Q3, you mentioned that some orders had come in earlier than expected. Could you indicate from which segment these orders are?

Is it from the memory side, or is it more from the logic and foundry side? And then, I have two questions on foundry, foundry and logic, where it seems that in the first half spending was fairly concentrated.

Looking at your bookings and backlog, do you see that broadening in the second half? And then on ALD, PEALD intensity, with the move to smaller nodes, and with the shift from 28-nanometer with high-K metal gate to 16, 14-nanometer with FinFET, what does it mean for the ALD intensity of the process?

Can you put a number on that?

Okay, yes Peter okay so three questions, first of all on the order intake, so the orders that came in from later in the year into Q3 that mostly relates to memory. So that answers your first question.

Then on logic and foundry, your question was whether the amount of application is changing in the second half of the year. Well I think what in generally we can say is that not necessarily the amount of applications in the second half of this year is broadening, but as we said the -- if you look at the coverage in the top-10 that the stronger contribution is taking place throughout the year by the complete of 10 and not only the top three and that continues to be the case in the second half of the year which is I think a very good favorable development for the company that we have been seeding on for quite some time.

And then yes, your question on ALD in general where FinFET is going to way I interpret your question is whether FinFET is going to strengthen the demand for ALD while in general we view that indeed it’s going to strengthen the demand for ALD. So knowing that of course and some key logic players have adopted FinFET sometime ago and as soon as let's say followers are going to use FinFETs in meaningful volumes in the '14 to '16 nanometer note we view that we will benefit from that and we see that in FinFET area in the 3D transition area not only let's say our traditional thermal ALD, is applicable but that also increasingly like we shared in earlier calls that PEALD is also step-by-step making it's inroads in the logic and foundry segment.

So yes, our view is that we are well positioned to benefit from the investments in new technology notes when our customers are ready to do so.

Okay, but you're not in a position to quantify the benefit that you will see from the shift 14-16 nanometer and the introduction of FinFET relative to 28 for instance?

Okay, but you're not in a position to quantify the benefit that you will see from the shift 14-16 nanometer and the introduction of FinFET relative to 28 for instance?

No that's difficult but we do see I think maybe that's interesting for you and the complete audience to share. We shared a few quarters ago that we assess the market, our served market, the single-wafer, mini-batch part of the ALD market to be around US$400 million last year.

And we expected that market to double in three to four years. I don’t know if you would translate that on a year-to-year basis, it would be 15% CAGR or so.

But we now see, already, our revised assessment of the single-wafer, mini-batch market that brings us to an estimate for this year that that market is already bigger than US$600 million, so the overall market. We don't talk to our market share but in general.

So it gives an indication how well that market we serve is developing and that it's going faster than we even last year forecasted.

Okay. Maybe coming back on the comment you made on the -- basically the upside in the bookings, so, it's coming from the memory side.

Does that mean that the bulk of the orders for 16-14 nanometer FinFET, these orders still have to come, then?

Okay. Maybe coming back on the comment you made on the -- basically the upside in the bookings, so, it's coming from the memory side.

Does that mean that the bulk of the orders for 16-14 nanometer FinFET, these orders still have to come, then?

Well I think that the only orders that have been placed by parties that still have to, that are still preparing for HVM have only been R&D orders yes. So besides only the leading logic player that has placed significant HVM orders in the industry as far as we know in our field.

And for the following, let's say the foundry, our foundry segment that we serve, let's say HVM orders still have to come at the moment they are ready for it.

Okay, that's good. Then, maybe changing topics to the cash return.

Well, I think the market is pleased by today's announcement, but looking at the stake you still have in ASM Pacific, that's about two-thirds of your current market cap. So, while you have this unique ALD story, some people might less -- feel less comfortable with investing in a back-end type of business.

So, basically, my question is, have you considered maybe a more drastic step, maybe going beyond returning some of the cash that is sitting on your balance sheet?

Okay, that's good. Then, maybe changing topics to the cash return.

Well, I think the market is pleased by today's announcement, but looking at the stake you still have in ASM Pacific, that's about two-thirds of your current market cap. So, while you have this unique ALD story, some people might less -- feel less comfortable with investing in a back-end type of business.

So, basically, my question is, have you considered maybe a more drastic step, maybe going beyond returning some of the cash that is sitting on your balance sheet?

Well if you are -- I trust you are referring to significantly reducing our stake in PT is that what you mean.

Yes, or basically we have seen the announcement last year, but have you considered going -- well, further reducing your stake?

Yes, or basically we have seen the announcement last year, but have you considered going -- well, further reducing your stake?

The Company's position in that respect has not changed compared to what we shared at the AGM last year and at the AGM this year. We are of course high priority for the company and its management is to continuously look at how we can further create value for the company, it’s employees and its shareholders, and basically every stakeholder of the company and that will not change.

But we also said as part of those considerations we said that in this phase of the company we view maintaining a significant stake in PT as strategic to the company, strategic to in this phase of the development of the ASMI business. And that position has not changed.

And then to clarify on the buyback the press release says up to 100 million. I assume your intention is clearly to go 200 million?

And then to clarify on the buyback the press release says up to 100 million. I assume your intention is clearly to go 200 million?

Yes.

Chuck one question you kind of addressed this earlier on the call. But one of the main players in the 16 nanometer foundry market has pulled in 16-nanometer by a quarter to end of Q1 or early 2Q.

So, I mean, I think previously you had said you expect orders on 16 nanometers 14 nanometers from foundries in first quarter or second quarter. But do you think the earlier ramp of 16-nanometer at a leading foundry player could mean that you could see orders from 14 nanometer 16 nanometer foundry segment earlier than was previously expected?

Chuck one question you kind of addressed this earlier on the call. But one of the main players in the 16 nanometer foundry market has pulled in 16-nanometer by a quarter to end of Q1 or early 2Q.

So, I mean, I think previously you had said you expect orders on 16 nanometers 14 nanometers from foundries in first quarter or second quarter. But do you think the earlier ramp of 16-nanometer at a leading foundry player could mean that you could see orders from 14 nanometer 16 nanometer foundry segment earlier than was previously expected?

I think yes our guidance to the market was part of the call here the introduction has been that again there is -- at this moment I am still limited to visibility on when let’s say the leading foundries will really start their bookings for 16-14. This visibility is still limited, does not mean that we think it’s not going to happen, we just cannot confirm the exact timing of it at this moment in time.

And what I meant with my earlier comment that only the leading logic player in the industry has ramped 16-14 in a meaningful way so far, just to clarify that.

So, even in your Q4 order guidance, you don't necessarily factor material orders on 16 nanometers 14 nanometers outside the leading logic company. Is that correct?

So, even in your Q4 order guidance, you don't necessarily factor material orders on 16 nanometers 14 nanometers outside the leading logic company. Is that correct?

I don’t want to go much further than saying that we expect memory to be the number one driver of the estimated bookings in, the number one but it does not mean that the other segments will contribute. But I don’t want to specify too much on what note it will be but again in general I can say that the most significant investments in 14-16 are not expected to happen before the calendar year 2015 Chetan.

And maybe one question on cash return. Earlier this year you did not raise your dividend, but now you are doing €100 million buyback.

So, can you just run through your thought process on why did you announce a buyback now when you didn't raise the dividend earlier this year? Is it mainly because you are more positive on outlook for next year?

Or is there other consideration that you took into -- I mean other considerations?

And maybe one question on cash return. Earlier this year you did not raise your dividend, but now you are doing €100 million buyback.

So, can you just run through your thought process on why did you announce a buyback now when you didn't raise the dividend earlier this year? Is it mainly because you are more positive on outlook for next year?

Or is there other consideration that you took into -- I mean other considerations?

Let me give you there a little bit of color and it’s aligned with the policy that we have defined earlier. We have said we want to have a consistent dividend policy.

That was one of the reasons why we also not increased the dividend there and we didn’t decrease it in 2013 and we have good reasons for that. We didn’t increase it in 2014.

We have always stated that excess cash will be used one way or another for the benefit of our shareholders. And we also have indicated during the AGM that we thought that the share price as it stood on that moment was undervaluing the company.

And we took this as the right moment to bring that metrics further cost to the market where we’re basically -- and where we said okay the best way to create additional shareholders value is with the share buyback program. That’s the thought process behind it.

The first thing is about the end-market for single-wafer ALD. So, you have mentioned that the market is actually growing faster than you originally expected.

If I say the market probably can go to 1.5 billion, do you think is that too aggressive, or if we can see any upside from your $800 million forecast early on, what is going to be the driver? Thanks.

The first thing is about the end-market for single-wafer ALD. So, you have mentioned that the market is actually growing faster than you originally expected.

If I say the market probably can go to 1.5 billion, do you think is that too aggressive, or if we can see any upside from your $800 million forecast early on, what is going to be the driver? Thanks.

Okay first of all your question on the absolute size of 1.5 billion, yes, I think again, we just reach, relatively, reasonably reassessed the size of the 2014. The market that we serve based on that we also now studying what that observation or that does with our projections for the coming years and it’s very well possible that we will get to higher numbers looking at the next three to four years.

But if that will end up to $1.5 billion, I think that’s too early to tell. The only thing we can say is that if you look at the total deposition markets, those are the size of the total deposition market.

It’s multiple billion U.S. markets and the rule of physics tells us that have and have existing deposition technologies run out of steam so that this market will grow beyond the US$1 billion figure at some point in time that’s pretty well that’s pretty logical that that will happen.

The only thing is what the timing and we have to take a closer look at that by continued dialogue with our customers. And what are the key drivers for further growth?

Well, we’ve seen just to repeat some history, of course we have seen initial driver being the thermal ALD with high-K metal gates which has been and will stay a solid contributor to the business. But we have also rapidly seen plasma ALD developing initially in memory but now also increasingly in logic and foundry.

And we see that technology really accelerating. And so it’s a combination of both and we view that with the 15 years that we -- yes that we built to knowhow experience in these areas that we have good position regardless of some healthy competition that of course is also developing in this market which is logical phenomenon that we are in a good position to grow our revenue.

And our aim is really to keep growing faster than the faster as we have on average from 2011 until 2013 and on average over the last three years. And if you look at our run rate in 2014 so far then we’re also going faster growing faster than the overall way for fabric equipment market in 2015 until this moment in time.

And so our ambition is to stay on that track-record of course future will prove how success we will be.

Okay that’s very helpful. And secondly, just on your capital return program, actually, can I assume that EUR100 million will be something going forward 2016-'17, as well?

So, as long as you have some excess cash beyond the EUR300 million you require for maintenance, you will be open to return to that to the shareholders as a form of buyback or special dividend?

Okay that’s very helpful. And secondly, just on your capital return program, actually, can I assume that EUR100 million will be something going forward 2016-'17, as well?

So, as long as you have some excess cash beyond the EUR300 million you require for maintenance, you will be open to return to that to the shareholders as a form of buyback or special dividend?

Our statement has been and I only can reconfirm that it has always been that we strive for consistent dividend policy and moreover that we will use the excess cash that we have for the one way or another for the benefit of the shareholders and this time this was share buyback and we will look at it every time again than such a thing would occur.

We've talked about how the ALD market will progress going forward, but I would also like to spend some time on your market share developments going forward. I think you could have some good visibility on how qualification processes are going for 14-16 FinFET, and even, yes, one of your larger Taiwanese clients is speeding up its 10-nanometer roadmap.

So, I was wondering what you see there from a presence point of view of your competitors? Do you believe you can maintain your current market share at those nodes, yes, as you see it now?

Or do you see some risk of some erosion to your market share? Secondly, I was -- this is more a question relating to ASMPT, but I hope you can help me answer it anyway.

I think there were talks about the SMT business basically developing a more tailored tool for the Asian market. I think ASMPT has been gaining market share in China, by selling a high-end tool to lower-end customers, and, as a side track, was developing a more tailored machine for the Asian market.

That was supposed, I think, to being in qualification mode in H2 2014, so, I was wondering if you can give an update on that status. And thirdly, and this is probably more a question for you, Peter, on operating leverage, what kind of sales levels do you think can be supported by current OpEx levels?

And what I mean by that, of course, I think Chuck already said it in the introduction is that VLSI is still positive on next year and knowing your ALD position, you're probably going to outperform the market. But, yes, how do you think that will influence your OpEx, yes, say, if revenues increase by 10%, for example?

Thank you.

We've talked about how the ALD market will progress going forward, but I would also like to spend some time on your market share developments going forward. I think you could have some good visibility on how qualification processes are going for 14-16 FinFET, and even, yes, one of your larger Taiwanese clients is speeding up its 10-nanometer roadmap.

So, I was wondering what you see there from a presence point of view of your competitors? Do you believe you can maintain your current market share at those nodes, yes, as you see it now?

Or do you see some risk of some erosion to your market share? Secondly, I was -- this is more a question relating to ASMPT, but I hope you can help me answer it anyway.

I think there were talks about the SMT business basically developing a more tailored tool for the Asian market. I think ASMPT has been gaining market share in China, by selling a high-end tool to lower-end customers, and, as a side track, was developing a more tailored machine for the Asian market.

That was supposed, I think, to being in qualification mode in H2 2014, so, I was wondering if you can give an update on that status. And thirdly, and this is probably more a question for you, Peter, on operating leverage, what kind of sales levels do you think can be supported by current OpEx levels?

And what I mean by that, of course, I think Chuck already said it in the introduction is that VLSI is still positive on next year and knowing your ALD position, you're probably going to outperform the market. But, yes, how do you think that will influence your OpEx, yes, say, if revenues increase by 10%, for example?

Thank you.

Okay, Robin, so a few questions. The overall market share development 16-14 nanometer and then especially related to competitive dynamics that's what your first question.

So but on competition, we've said and that will also apply to our earlier comments on competition do apply to also the 16-14 nanometer notes. We do see that for yes, for selected applications at selected customers, competition is increasing.

One competitor goes up for this application at customer A and other competitor has a customer B with application C and so that we will see that in the 16-14 nanometer arena also. Sometimes the competition is head on let's say specific markets that we are strongly engaged in sometimes it's in more peripheral areas.

And so that will continue but we feel that it does not prevent us from the ambition from reaching the ambition that we shared with you earlier in this call and that is to keep growing faster than the market. Will it mean that our relative market it very likely will mean that our relative market share, so our percentage market share for the total ALD market will slightly go down and I think that is realistic.

If the market becomes more significant to the industry as a whole and more competitors step in, big competitors step in. It's very unlikely that you maintain your very high percentage market shares.

But even if those decline somewhat, if the market keeps growing at a pace that we just provided some color on, then we can be in very good shape and our shareholders will also. And so that's what we are focusing on and that is our belief that at this point in time because again we are confident that we are well positioned to grow our business in the ALD market.

So I trust that answers your first question. Then on SMT China, yes, of course, for details it is better to go through our respective colleagues at PT W.K.

and his crew but as far as know that because we have to look at what they also publically share they indeed have made some meaningful inroads with SMT into the Chinese market. So that was part of their strategy, also, when acquiring the SEAS unit from Siemens, to really use the infrastructure of ASMPT and the technology strengths call it knowhow of the SEAS organization to increase penetration in the Asian markets and you see now the first results of that in our view.

At the same time you are referring to specific products with the cost structure for that part of the market. I recommend you to validate a few things in more detail with PT but our view is that you will start to see the real results of that as of -- the initial results of that as of next year and that is starting to kick in then.

That is our view on your question there and then your last question was related to OpEx. Peter?

Yes, basically in the breakeven point, van Bommel, and I understand you well. And what you have seen is when you look to our OpEx cost, they are gradually slightly increasing.

They are two major drivers behind that. One is RMV because with the extension of the customer base automatically that all leads to more investments in the RMV area and the other thing is also related to the broader customer base that we have.

So we are increasing some cost in product marketing. So for the sake of reasoning when you looked at these costs are now somewhere slightly above the 25 million.

So with what we have earlier indicated that also in a downturn that we expect that we can deliver on high 30 gross margin percentage and then switch it down with the current cost curve that we have in place, we think as a breakeven point we will be somewhere between the €80 million and €100 million that will fluctuate off the quarter, of course little bit. But I think that gives you at least a color of where you were looking for.

And then maybe -- you again mentioned mix as the reason why the margin was strong, but I reckon that is mainly related to the fact that you are on boarding new clients for your, basically crown jewel ALD tool?

And then maybe -- you again mentioned mix as the reason why the margin was strong, but I reckon that is mainly related to the fact that you are on boarding new clients for your, basically crown jewel ALD tool?

Yes there are two effects always, this quarter the biggest effect was eval tools indeed, we had in Q1 I have given that indication after the Q1 on the call that we have relatively low eval tools that quarter in the second quarter we had relatively high eval tools and in the third quarter it was relatively low again. And the other elements of course that some -- that is as you know not customer driven and not product line driven but there are certain products when we deliver them they are causing a relatively lower margin than others.

And we didn’t have that many of those products in the third quarter.

A question actually on the R&D costs, because they are, indeed, creeping up a bit, but the investments in R&D doesn't -- don't seem to really ramp up. So, the first question is, do you expect you can maintain that limited level of increases?

And the second question is partly related to that, because I am very happy with the launch of your share buyback, but that still means that you will keep about 150 million on your balance sheet for investments in growth, and does that still mean investments, also, in R&D, or also are you still looking at external opportunities?

A question actually on the R&D costs, because they are, indeed, creeping up a bit, but the investments in R&D doesn't -- don't seem to really ramp up. So, the first question is, do you expect you can maintain that limited level of increases?

And the second question is partly related to that, because I am very happy with the launch of your share buyback, but that still means that you will keep about 150 million on your balance sheet for investments in growth, and does that still mean investments, also, in R&D, or also are you still looking at external opportunities?

What we have indicated in the earlier calls is that we expect that we have an R&D percentage within the low to mid-10s. And it’s gradually creeping up, it’s not going that fast, because we think that on this moment we do all the things that we have to do.

But we will see a continuation of this trend. And so it can be that some quarters it will be a little bit faster than other quarters but it will not be very big jumps Philip, because also embedding R&D people in your own organization will cost you certain times.

And the time is of course an issue that we want to do there are things that we want to do very gradually. With regards to the 150 million that we still have on the balance sheet, there our message is not changing.

I mean we have been very careful to opportunities as well in the R&D area as on the M&A field. And that will continue, so it’s part and parcel to normal life.

Just a couple of quick follow-ups on my side, firstly, maybe for Chuck, on the order intake, you mentioned memory was quite strong. Is that from one client, or multiple clients?

Second question is on the ALD mix. Wondering, Chuck, could you provide us a bit more detail on the mix there, high-K metal gate versus the spacer-defined?

Any kind of color within that would be quite useful, I think. And then, for Peter, I'm just curious on the buyback, you know, the thought process there, and you factor in M&A to GD.

Just wondering, did you look at M&A before announcing this buyback, or what was the kind of thought process there? And last question is on the order intake on Q4, the €130 million to €150 million, what's the -- could you give us an indication what's the delta there, and what's needed, really to hit the high-end of that?

Just a couple of quick follow-ups on my side, firstly, maybe for Chuck, on the order intake, you mentioned memory was quite strong. Is that from one client, or multiple clients?

Second question is on the ALD mix. Wondering, Chuck, could you provide us a bit more detail on the mix there, high-K metal gate versus the spacer-defined?

Any kind of color within that would be quite useful, I think. And then, for Peter, I'm just curious on the buyback, you know, the thought process there, and you factor in M&A to GD.

Just wondering, did you look at M&A before announcing this buyback, or what was the kind of thought process there? And last question is on the order intake on Q4, the €130 million to €150 million, what's the -- could you give us an indication what's the delta there, and what's needed, really to hit the high-end of that?

So first on the memory whether it was single or multiple customers? Answer would be its multiple customers.

Then on ALD the current sales I think you referred to the sales. It really is a mix between logic and foundry customers on Q3 that we saw revenue on, so not from one specific customer.

I trust that answers your question there.

And then the thought process regarding the buyback, it’s basically what I already explained earlier in the call, so we want to keep what we have indicated earlier that we want to have approximately 300 million on a balance sheet that is one hand the amount that we need for operational things. On the other hand, we want to have the flexibility than smaller M&A issues or M&A issues in general pop up or when we need additional money for doing R&D investments that we have the possibility to do so.

And that has been part and parcel the thought process where we have said okay and with the knowledge that we have today we perceive that we an excess cash what was the best usage for that excess cash on this moment given the development of the share prices and for stabilizing in the past period or even coming a little bit down. We said we expect to create the most shareholders’ value by announcing share buyback program over the last night.

And the last question I missed, sorry can you repeat that.

My last question was related to the order intake guidance for Q4, the delta there? What will make you hit the high end, or what do you need to happen to hit the high end of that range?

Thanks.

My last question was related to the order intake guidance for Q4, the delta there? What will make you hit the high end, or what do you need to happen to hit the high end of that range?

Thanks.

It’s just from - like you start when we gave guidance for Q3, it’s just that one or two customers that place a few orders in one quarter or the next quarter can already make significant changes on these let’s say revenue levels. So that is just what you should read into this and no more than that.

But we thought that it was important to by providing you the range between 130 and 150 into this way to show you that even though that some orders were pulled in into Q3 that we still believe that we can meet this range in Q4. And that’s why we thought it was beneficial in informing the market to use range with numbers this time.

Yes, I wanted to touch on two of the other product lines, epitaxy and PECVD. On epitaxy, given what we see in the -- globally in the economy, what are you seeing in epitaxy in the analog and power management market?

And on PECVD, you are one of the two leaders when it comes to low-k films. Are there any applications beyond low-k films that you may address in coming years?

Yes, I wanted to touch on two of the other product lines, epitaxy and PECVD. On epitaxy, given what we see in the -- globally in the economy, what are you seeing in epitaxy in the analog and power management market?

And on PECVD, you are one of the two leaders when it comes to low-k films. Are there any applications beyond low-k films that you may address in coming years?

Yes okay well, at the analog and power, we really see us 2010-11 was pretty strong environment for analog power and we shared in the earlier calls that we really saw some traction developing again in analog power over the last few quarters and that this basically continuing. So that we have to see how that plays out, but at least it’s developing in the right direction that’s on that part.

Then on PECVD, PECVD yes we’re indeed a leader in the low-K area and we’re just carefully looking at how based on the successes in PEALD. It can also share this in the PECVD down the road.

And we’re looking at that on a case-by-case basis. And when material successes would be we might share that this with the market.

That’s the way we look at it. But we have very focused strategy in that part of the market this moment in time which is healthy profitable and cash flow generating.

So, does that mean for 2015 low-k films will be -- still be the main driver for that particular business and that any other opportunities are more longer term?

So, does that mean for 2015 low-k films will be -- still be the main driver for that particular business and that any other opportunities are more longer term?

Yes, I think the low-k is key part of the market and there is around the low-K, but course that is let's say the most advanced position that we have.

Yes. Good afternoon, again.

Maybe one question on your comfort zone on the memory order intake, do you see that level of memory order intake continuing, and how sustainable do you think that is? And what I'm trying to look for, basically, is it seems that there will still be quite some chunky order intake coming down the road for '14, '16, and even 10 nanometers.

So, I'm trying to get a feel whether, yeah, that can really be upside for your sales next year? And secondly, and this one is also for you, Peter.

Your tax rate was near 10% for this quarter. I was wondering if you have any potential to start using the innovation box in Netherlands more and more, or whether this one off low, basically?

Thank you.

Yes. Good afternoon, again.

Maybe one question on your comfort zone on the memory order intake, do you see that level of memory order intake continuing, and how sustainable do you think that is? And what I'm trying to look for, basically, is it seems that there will still be quite some chunky order intake coming down the road for '14, '16, and even 10 nanometers.

So, I'm trying to get a feel whether, yeah, that can really be upside for your sales next year? And secondly, and this one is also for you, Peter.

Your tax rate was near 10% for this quarter. I was wondering if you have any potential to start using the innovation box in Netherlands more and more, or whether this one off low, basically?

Thank you.

Okay, Robin first on memory. Well in general like we shared before, memory in the second half so far and so also our expectation related to the guidance that we gave for Q4 will be in the lead versus logic and foundry.

That's also let's say overall industry that this is in line with let's say overall industry spending. And also the expectation for 2015 is that memory might be, might still be in the lead, both DRAM and flash, maybe DRAM at a somewhat slower pace than this year, but still both will contribute and that is the way we view it also.

Yes, in selected segments of those markets, we have an interesting good position. So depending on how those customers will develop going into the New Year, we can benefit from that and that we are very focused on positioning ourselves well for that part of the market.

That's basically answer on your first question, the second one on the tax rate.

Yes, the tax rate. First of all your question about the innovation box in the Netherlands, we are making use of that and we are also not planning to make use of that and it's mainly driven by the fact that most of our R&D efforts are done outside the Netherlands.

So in our case it doesn’t make that much chance. When I look to the tax rate in the quarter, then it's solely related of course to also our result of financial that we had which basically tax -- which have a very low tax rate and it's of course there -- it's mostly translation differences.

But the rest of the tax rate and that's in line with all the indications that I have given that is around the 15% to 20% range. That is hardly depending also on what sort of products that we are delivering because the tax rates in different countries are different.

We have done quite some work in the past years. So the stabilize the tax rates and make optimal use of the deferred tax assets that we have in the company.

But as a consequence of debt, they might still fluctuate a little bit quarter-on-quarter and when you compare that with the net income at the front-end you are seeing this quarter that of course it's a very low-end.

Okay. Thank you.

It seems that 2015 could be a very good year for you, as well. Thank you.

Okay. Thank you.

It seems that 2015 could be a very good year for you, as well. Thank you.

Well, thank you all for joining the call today. Thank you for all of your questions we had good dialogue after the introduction.

And looking forward to staying in touch with all of you throughout the coming quarter and yes, remains us to say wish you a very good rest of your day. Thank you again for joining the call.

Thank you very much.