May 31, 2007 – A trio of semiconductor equipment firms have made a range of moves to shore up their balance sheets, boost capital and return profits to shareholders, through several transactions involving shares and convertible notes.

Confident in its ability to churn our profits, ASML says it will return about 960 million euros (US $1.29 billion) to its shareholders through a capital repayment (2.04 euros/share, or ~$2.75), in combination with an 8/9 reverse stock split that will reduce the number of outstanding ordinary shares by 11%. “ASML has clearly shown its ability to be profitable throughout industry cycles and generate cash above its operational needs,” said company CFO Peter Wennink, in a statement, adding that the company has determined that its debt-to-equity ratio “could be further optimized and have undertaken initiatives to address that issue.” Few details of the proposed payout or share reduction plan were disclosed, other than that shareholders will vote on the proposal at an extraordinary general meeting on July 17.

Marketwatch scanned the investor landscape, reporting that investors warmly received the news. The near-billion-euro return was nearly twice what Victor Bareno of SNS Securities had expected, and “combined with the increase in leverage, it underlines management’s focus on shareholder value and their confidence in capacity to generate positive cash flow throughout the cycle,” Bareno wrote in a research note. Merrill Lynch’s Jonathan Crossfield pointed out the move smartly allows ASML to reduce share capital without having to pay Dutch withholding tax, as it would have to do in a straight share buyback, according to Marketwatch. And Dutch broker Kempen & Co. noted the cash return will help ease pressure on the company’s shares which had been built up in anticipation of a weak 2Q07.

Meanwhile, Brooks Automation also wants to return money to its shareholders following the sale of its software division to Applied Materials, and so will use much of that ~$120 million in cash for a modified “Dutch Auction” to purchase about 6 million shares of its common stock, representing about 8% of total outstanding shares. Under terms of the offer, shareholders can tender some or all of their shares at a price between $16.50 and $19.00/share net without interest, representing a maximum 12.4% premium. Edward Grady, president/CEO of Brooks Automation, said the plan reflects the company’s belief that its stock “represents an attractive investment opportunity,” and a desire to support shareholders through a tender offer that “provides an efficient way […] to sell all or a portion of their shares as compared to market transactions.”

Elsewhere, Kulicke & Soffa Industries Inc. is proposing a $100 million offering of convertible subordinated notes due 2010, of which $40 million will be used to purchase its own shares, and the balance to retire part of other notes due in 2008. Overallotments could add another $10 million aggregate principle to the placement, which is private and not open to the general public. The notes will rank equally with existing 0.5% convertible subordinated notes due 2008 and 1.0% convertible subordinated notes due 2010, and will pay interest semi-annually, convertible upon satisfaction “of certain conditions,” the company stated.