##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 20-F

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|(Box)   |  | Registration Statement pursuant to Section 12(b) or (g) of the Securities Exchange Act of 1934                                  
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|(X Box) |  | Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the fiscal year ended December 31, 2001
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|(Box)   |  | Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934                                        
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|        |  | For the transition period from    to                                                                                            

Commission File Number: 0-13355

ASM INTERNATIONAL N.V.fka ADVANCED SEMICONDUCTOR MATERIALS INTERNATIONAL N.V.

(Exact name of Registrant as specified in its charter)


The Netherlands

(Jurisdiction of incorporation or organization)


Jan van Eycklaan 10, 3723 BC Bilthoven, the Netherlands

(Address of principal executive offices)


Securities registered or to be registered pursuant to
Section 12(b) of the Act: None

Securities registered or to be registered pursuant to
Section 12(g) of the Act: Common Shares

Securities for which there is a reporting obligation
pursuant to Section 15(d) of the Act: None

Indicate the number of outstanding shares of each of the issuers classes
of capital or common stock as of the close of the period covered by the annual
report: 49,070,296 common shares; no preferred shares.

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

|             |  |          
|------------ |  | ---------
|Yes  (X Box) |  | No  (Box)

Indicate by check mark which financial statement item the registrant has elected to follow:

|               |  |                 
|-------------- |  | ----------------
|Item 17  (Box) |  | Item 18  (X Box)

Part I.

Item 1.   Identity of Directors, Senior Management and Advisors

Not Applicable
-1-Table of ContentsItem 2.   Offer Statistics and Expected TimetableNot ApplicableItem 3.   Key InformationA.
        
        Selected Consolidated Financial DataYou should read the following selected financial data in conjunction with
Operating and Financial Review and Prospectus and our financial statements
and the notes thereto included elsewhere in this report. The selected
consolidated financial data presented below as of December 31, 2000 and 2001
and for each of the three years ended December 31, 2001 have been derived from
the audited consolidated financial statements of ASM International included
elsewhere herein. The selected consolidated financial data presented below as
of December 31, 1997, 1998 and 1999 and for each of the two years in the period
ended December 31, 1998 have been derived from the audited consolidated
financial statements of ASM International which are not included herein.

|                                                                                               |                                     |                          |          |         |          |      |          |                                                 |         |      |          |         |          |   |          |          |          |   |          |          |          |  
|---------------------------------------------------------------------------------------------- | ----------------------------------- | ------------------------ | -------- | ------- | -------- | ---- | -------- | ----------------------------------------------- | ------- | ---- | -------- | ------- | -------- | - | -------- | -------- | -------- | - | -------- | -------- | -------- | -
|                                                                                               |                                     |                          |          | 1997    |          | 1998 |          | 1999                                            |         | 2000 |          | 2001   
|                                                                                               |                                     |                          |          |         |          |      |          |                                                 |         |      |          |        
|                                                                                               |                                     |                          |          |         |          |      |          | (Euros in thousands, except per share data (2)) |         |      |          |        
|Consolidated Statements of Operations Data:                                                    |                                     |                          |          |         |          |      |          |                                                 |         |      |          |         |          |   |          |          |          |   |          |         
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|Net sales                                                                                      |                                     |                         | 321,582  |         |          |     | 288,111  |                                                 |         |     | 414,495  |         |          |  | 935,212  |          |          |  | 561,064  |         
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|Costs of sales                                                                                 |                                     |                          | (182,259 | )       |          |      | (179,326 | )                                               |         |      | (244,485 | )       |          |   | (518,027 | )        |          |   | (337,743 | )       
|                                                                                               |                                     |                          |          |         |          |      |          |                                                 |         |      |          |         |          |   |          |          |          |   |          |         
|Gross profit                                                                                   |                                     |                          | 139,323  |         |          |      | 108,785  |                                                 |         |      | 170,010  |         |          |   | 417,185  |          |          |   | 223,321  |         
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|Operating expenses:                                                                            |                                     |                          |          |         |          |      |          |                                                 |         |      |          |         |          |   |          |          |          |   |          |         
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                               | Selling, general and administrative |                          |          | (74,675 | )        |      |          | (59,924                                         | )       |      |          | (83,170 | )        |   |          | (147,318 | )        |   |          | (111,851 | )       
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                               | Research and development, net       |                          |          | (39,000 | )        |      |          | (36,277                                         | )       |      |          | (47,145 | )        |   |          | (73,800  | )        |   |          | (79,661  | )       
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                               | Amortization of goodwill            |                          |          |         |          |      |          | (93                                             | )       |      |          | (340    | )        |   |          | (4,295   | )        |   |          | (7,558   | )       
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                               | Litigation settlement               |                          |          | (79,669 | )        |      |          |                                                |         |      |          |        |          |   |          |         |          |   |          |         |         
|                                                                                               |                                     |                          |          |         |          |      |          |                                                 |         |      |          |         |          |   |          |          |          |   |          |         
|                                                                                               |                                     | Total operating expenses |          |         | (193,344 | )    |          |                                                 | (96,294 | )    |          |         | (130,655 | ) |          |          | (225,413 | ) |          |          | (199,070 | )
|                                                                                               |                                     |                          |          |         |          |      |          |                                                 |         |      |          |         |          |   |          |          |          |   |          |         
|Earnings (loss) from operations                                                                |                                     |                          | (54,021  | )       |          |      | 12,491   |                                                 |         |      | 39,355   |         |          |   | 191,772  |          |          |   | 24,251   |         
|                                                                                               |                                     |                          |          |         |          |      |          |                                                 |         |      |          |         |          |   |          |          |          |   |          |         
|Net interest and other financial income
(expenses)                                             |                                     |                          | (3,239   | )       |          |      | (5,350   | )                                               |         |      | (8,608   | )       |          |   | (1,595   | )        |          |   | (984     | )       
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|Income taxes                                                                                   |                                     |                          | (2,761   | )       |          |      | (648     | )                                               |         |      | (1,274   | )       |          |   | (22,830  | )        |          |   | (4,711   | )       
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|Minority interest                                                                              |                                     |                          | (10,455  | )       |          |      | (6,261   | )                                               |         |      | (18,374  | )       |          |   | (69,285  | )        |          |   | (13,373  | )       
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|Gain on dilution of investment in subsidiary                                                   |                                     |                          |         |         |          |      |         |                                                 |         |      |         |         |          |   |         |          |          |   | 915      |         
|                                                                                               |                                     |                          |          |         |          |      |          |                                                 |         |      |          |         |          |   |          |          |          |   |          |         
|Net earnings (loss) before cumulative effect of
change in accounting principle                 |                                     |                         | (70,476  | )       |          |     | 232      |                                                 |         |     | 11,099   |         |          |  | 98,062   |          |          |  | 6,098    |         
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|Cumulative effect of change in accounting
principle, net of tax (1)                            |                                     |                          |         |         |          |      |         |                                                 |         |      |         |         |          |   | (3,790   | )        |          |   |         |         
|                                                                                               |                                     |                          |          |         |          |      |          |                                                 |         |      |          |         |          |   |          |          |          |   |          |         
|Net earnings (loss)                                                                            |                                     |                         | (70,476  | )       |          |     | 232      |                                                 |         |     | 11,099   |         |          |  | 94,272   |          |          |   | 6,098    |         
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|Basic net earnings (loss) per share
Before cumulative effect of change in
accounting principle |                                     |                         | (2.12    | )       |          |     | 0.01     |                                                 |         |     | 0.30     |         |          |  | 2.09     |          |          |   | 0.12     |         
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|Cumulative effect of change in accounting
principle (1)                                        |                                     |                          |         |         |          |      |         |                                                 |         |      |         |         |          |   | (0.08    | )        |          |   |         |         
|                                                                                               |                                     |                          |          |         |          |      |          |                                                 |         |      |          |         |          |   |          |          |          |   |          |         
|After cumulative effect of change in accounting
principle                                      |                                     |                         | (2.12    | )       |          |     | 0.01     |                                                 |         |     | 0.30     |         |          |  | 2.01     |          |          |  | 0.12     |         
|                                                                                               |                                     |                          |          |         |          |      |          |                                                 |         |      |          |         |          |   |          |          |          |   |          |         
|Diluted net earnings (loss) per share
Before cumulative change of accounting principle         |                                     |                         | (2.12    | )       |          |     | 0.01     |                                                 |         |     | 0.29     |         |          |  | 2.02     |          |          |   | 0.12     |         
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|Cumulative change of accounting principle                                                      |                                     |                          |         |         |          |      |         |                                                 |         |      |         |         |          |   | (0.08    | )        |          |   |         |         
|                                                                                               |                                     |                          |          |         |          |      |          |                                                 |         |      |          |         |          |   |          |          |          |   |          |         
|After cumulative effect of change in accounting
principle                                      |                                     |                         | (2.12    | )       |          |     | 0.01     |                                                 |         |     | 0.29     |         |          |  | 1.94     |          |          |  | 0.12     |         
|                                                                                               |                                     |                          |          |         |          |      |          |                                                 |         |      |          |         |          |   |          |          |          |   |          |         
|Basic weighted average number of shares                                                        |                                     |                          | 33,232   |         |          |      | 33,794   |                                                 |         |      | 37,301   |         |          |   | 46,810   |          |          |   | 48,944   |         
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|Diluted weighted average number of
shares                                                      |                                     |                          | 33,232   |         |          |      | 34,743   |                                                 |         |      | 40,664   |         |          |   | 48,703   |          |          |   | 49,958   |         
|                                                                                              
|                                                                                               |                                     |                          |          | 1997    |          | 1998 |          | 1999                                            |         | 2000 |          | 2001   
|                                                                                               |                                     |                          |          |         |          |      |          |                                                 |         |      |          |        
|Pro forma amounts assuming the new accounting
principle was applied retroactively(1)           |                                     |                          |          |         |          |      |          |                                                 |         |      |          |         |          |   |          |          |          |   |          |         
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|Net earnings (loss)                                                                            |                                    |                          | (70,720  | )       |          |     | 585      |                                                 |         |     | 8,881    |         |          |  | 98,062   |          |          |  | 6,098    |         
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|Net earnings (loss) per share:                                                                 |                                     |                          |          |         |          |      |          |                                                 |         |      |          |         |          |   |          |          |          |   |          |         
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                               | Basic                               |                          |         |         | (2.13    | )    |          |                                                | 0.02    |      |          |        | 0.24     |   |          |         | 2.09     |   |          |         | 0.12     |  
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                               | Diluted                             |                          |         |         | (2.13    | )    |          |                                                | 0.02    |      |          |        | 0.23     |   |          |         | 2.02     |   |          |         | 0.12     |  

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|                                 |  |              |         |      |  |                                                 |         |      |  |      |         |  |  |  |         |  |  |  |         | 
|-------------------------------- |  | ------------ | ------- | ---- |  | ----------------------------------------------- | ------- | ---- |  | ---- | ------- |  |  |  | ------- |  |  |  | ------- | 
|                                 |  | December 31,
|                                 |  |             
|                                 |  | 1997         |         | 1998 |  | 1999                                            |         | 2000 |  | 2001
|                                 |  |              |         |      |  |                                                 |         |      |  |     
|                                 |  |              |         |      |  | (Euros in thousands, except per share data (2)) |         |      |  |     
|                                 |  |              |         |      |  |                                                 |         |      |  |     
|Consolidated Balance Sheet Data: |  |              |         |      |  |                                                 |         |      |  |      |         |  |  |  |         |  |  |  |         | 
|                                
|                                
|                                
|                                
|Cash and cash equivalents        |  |              | 27,446  |      |  |                                                 | 11,724  |      |  |      | 14,153  |  |  |  | 106,805 |  |  |  | 107,577 | 
|                                
|                                
|                                
|                                
|Total assets                     |  |              | 328,589 |      |  |                                                 | 282,950 |      |  |      | 425,035 |  |  |  | 777,940 |  |  |  | 757,065 | 
|                                
|                                
|                                
|                                
|Total debt                       |  |              | 167,417 |      |  |                                                 | 148,756 |      |  |      | 119,893 |  |  |  | 76,280  |  |  |  | 160,858 | 
|                                
|                                
|                                
|                                
|Total shareholders equity       |  |              | 16,019  |      |  |                                                 | 20,464  |      |  |      | 65,552  |  |  |  | 308,322 |  |  |  | 320,910 | 



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| |  | (1) The cumulative effect of the change in the accounting principle
relates to the effect on prior years of the impact of the adoption of SEC Staff
Accounting Bulletin 101, effective as of January 1, 2001 sets forth guidelines
on the timing of revenue recognition of sales. The pro forma amounts presented
assume that these accounting principles were applied retroactively.                                                                                                                                                 
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
|
|
|
| |  | (2) Balances prior to January 1, 1999 were restated from Netherlands
guilders into Euros using the fixed exchange rate as of January 1, 1999 (1.00
= NLG 2.20371). The comparative balances reported in Euros depict the same
trends as would have been presented if the Company had continued to present
balances in Netherlands guilders. Balances prior to January 1, 1999 are not
comparable to the balances of other companies that report in Euros having
restated amounts from a different currency than Netherlands guilders.

Exchange Rate Information

The following table sets forth, for each period indicated, the high and
low exchange rates based on the noon buying rate of New York City for cable
transfers payable in Euros as certified for customs purposes by the Federal
Reserve Bank of New York, which is often referred to as the noon buying rate.
On February 11, 2002, the noon buying rate was 0.8778 United States dollar per
Euro.

US Dollar Equivalent of Euro
(except where noted)

|     |  |           |       |      |  |       |       |       |  |       |       |      |  |  |       |  |  |  |       |  |  |  |       | 
|---- |  | --------- | ----- | ---- |  | ----- | ----- | ----- |  | ----- | ----- | ---- |  |  | ----- |  |  |  | ----- |  |  |  | ----- | 
|     |  | Months of
|     |  |          
|     |  | 8/01      |       | 9/01 |  | 10/01 |       | 11/01 |  | 12/01 |       | 1/02
|     |  |           |       |      |  |       |       |       |  |       |       |     
|High |  |           | .9194 |      |  |       | .9310 |       |  |       | .9181 |      |  |  | .9044 |  |  |  | .9044 |  |  |  | .9031 | 
|    
|    
|    
|    
|Low  |  |           | .8775 |      |  |       | .8868 |       |  |       | .8893 |      |  |  | .8770 |  |  |  | .8773 |  |  |  | .8594 | 

|                                   |  |                          |        |      |  |      |        |      |  |      |        |  |  |  |        |  |  |  |        | 
|---------------------------------- |  | ------------------------ | ------ | ---- |  | ---- | ------ | ---- |  | ---- | ------ |  |  |  | ------ |  |  |  | ------ | 
|                                   |  | Years ended December 31,
|                                   |  |                         
|                                   |  | 1997                     |        | 1998 |  | 1999 |        | 2000 |  | 2001
|                                   |  |                          |        |      |  |      |        |      |  |     
|Average High/Low
exchange rate (1) |  |                          | 1.1267 | (2)  |  |      | 1.1224 | (2)  |  |      | 1.0588 |  |  |  | 0.9207 |  |  |  | 0.8909 | 



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|(1) |  | Average high/low exchange rate calculation is based on the average of the
exchange rates on the last day of each month during the year.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | Exchange rate is given in United States dollar per European Currency Unit
for 1997 and 1998.                                           



|B. |  | Capitalization and Indebtedness
|-- |  | -------------------------------

Not applicable.



|C. |  | Reasons for the offer and Use of Proceeds
|-- |  | -----------------------------------------

Not applicable.



|D. |  | Risk Factors
|-- |  | ------------

Some of the information in this report constitute forward-looking
statements within the meaning of the United States federal securities laws.
These statements include, among others, statements regarding future
expenditures, sufficiency of cash generated from operations, maintenance of
majority interest in ASM Pacific Technology Ltd. (ASMPT), business strategy,
product development, product acceptance, market penetration, market demand,
return on investment in new products and product shipment dates. These
statements may be found under Operating and Financial Review and Prospects,
and elsewhere in this report. Forward-looking statements typically are
identified by use of terms such as believe, anticipate, estimate,
expect, intend, plan, will, may and similar words, although some

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forward-looking statements are expressed differently. You should be aware
that our actual results could differ materially from those contained in the
forward-looking statements due to a number of factors, including the matters
discussed in Item 4. Information on the Company and below.

RISKS RELATED TO OUR INDUSTRY

Our business could be adversely affected by the cyclical nature of the semiconductor industry.

We sell our products to the semiconductor industry, which is subject to
sudden, extreme, cyclical variations in product supply and demand. Since late
2000, the semiconductor industry has been in a cyclical downturn characterized
by reduced demand for products, lower average selling prices, reduced
investment in semiconductor capital equipment and other factors all of which
have resulted in lower sales and earnings for our business. The timing, length
and severity of these cycles are difficult to predict. In some cases, these
cycles have lasted more than a year. Semiconductor manufacturers may contribute
to these cycles by misinterpreting the conditions in the industry and over- or
under-investing in semiconductor manufacturing capacity and equipment. We may
not be able to respond effectively to these industry cycles.

Downturns in the semiconductor industry often occur in connection with, or
anticipation of, maturing product cycles and declines in general economic
conditions. Industry downturns have been characterized by reduced demand for
semiconductor devices and equipment, production over-capacity and accelerated
decline in average selling prices. During a period of declining demand, we must
be able to quickly and effectively reduce expenses and motivate and retain key
employees. Our ability to reduce expenses in response to any downturn in the
semiconductor industry is limited by our need for continued investment in
engineering and research and development and extensive ongoing customer service
and support requirements. In addition, although we order materials and
subassemblies in response to firm orders, the long lead time for production and
delivery of some of our products creates a risk that we may incur expenditures
or purchase inventories for products which we cannot sell.

Industry upturns have been characterized by abrupt increases in demand for
semiconductor devices and equipment and production under-capacity. During a
period of increasing demand and rapid growth, we must be able to quickly
increase manufacturing capacity to meet customer demand and hire and assimilate
a sufficient number of additional qualified personnel. Our inability to quickly
respond in times of increased demand could harm our reputation and cause some
of our existing or potential customers to place orders with our competitors
rather than us.

Our industry is subject to rapid technological change and we may not be able to
forecast or respond to commercial and technological trends in time to avoid
competitive harm.

Our growth strategy and future success depend upon commercial acceptance
of products incorporating technologies we are developing, such as atomic layer
chemical vapor deposition, rapid thermal processing, low-k dielectrics and
silicon germanium epitaxy. The semiconductor industry and the semiconductor
equipment industry are subject to rapid technological change and frequent
introductions of enhancements to existing products. Technological changes have
had and will continue to have a significant impact on our business. Our
operating results and our ability to remain competitive are affected by our
ability to accurately anticipate customer and market requirements and develop
technologies and products to meet these requirements. Our success in
developing, introducing and selling new and enhanced products depends upon a
variety of factors, including:



| |  |  | successful innovation of processes and equipment;                           
| | - |  | ----------------------------------------------------------------------------
|
| |  |  | accurate technology and product selection;                                  
|
| |  |  | timely and efficient completion of product design and development;          
|
| |  |  | timely and efficient implementation of manufacturing and assembly processes;
|
| |  |  | successful product performance in the field;                                

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| |  |  | effective and timely product support and service; and
| | - |  | -----------------------------------------------------
|
| |  |  | effective product sales and marketing.               

We may not be able to accurately forecast or respond to commercial and
technical trends in the semiconductor industry or to the development of new
technologies and products by our competitors. Our competitors may develop
technologies and products that are more effective than ours or that may be more
widely accepted. In addition, we may incur substantial unanticipated costs to
ensure the functionality and reliability of our current and future products. If
our products are unreliable or do not meet our customers expectations, then we
may experience reduced orders, higher manufacturing costs, delays in collecting
accounts receivable, or additional service and warranty expense. We have
experienced delays from time to time in the introduction of, and some technical
and manufacturing difficulties with, some of our systems and enhancements. We
may also experience delays and technical and manufacturing difficulties in
future introductions or volume production of new systems or enhancements.
Significant delays can occur between a products introduction and the
commencement of volume production of that product. Any of these events could
negatively impact our ability to generate the return we intend to achieve on
our investments in new products.

We face intense competition and potential competition from companies with
greater resources than ours, and if we are unable to compete effectively with
these companies, our market share may decline and our business could be harmed.

We face intense competition in both the Front-end and Back-end segments of
the semiconductor equipment industry from other established companies. Our
primary competitors in the Front-end business include Applied Materials,
Novellus, Tokyo Electron, and Kokusai. Our primary competitors in the Back-end
business include Kulicke & Soffa, ESEC, Shinkawa, Apic Yamada, BE
Semiconductor, Towa, Shinko and Mitsui. A number of our competitors have
significantly greater financial, technological, engineering, manufacturing,
marketing and distribution resources than we do. Their greater capabilities in
these areas may enable them to:



| |  |  | better withstand periodic downturns in the semiconductor industry;        
| | - |  | --------------------------------------------------------------------------
|
| |  |  | compete more effectively on the basis of price and technology;            
|
| |  |  | more quickly develop enhancements to, and new generations of products; and
|
| |  |  | more effectively retain existing customers and attract new customers.     

In addition, new companies may enter the markets in which we compete, further
increasing competition in the semiconductor equipment industry.

We believe that our ability to compete successfully depends on a number of factors, including:



| |  |  | our success in developing new products and enhancements;
| | - |  | --------------------------------------------------------
|
| |  |  | performance of our products;                            
|
| |  |  | quality of our products;                                
|
| |  |  | ease of use of our products;                            
|
| |  |  | reliability of our products;                            
|
| |  |  | cost of owning our products;                            
|
| |  |  | our ability to ship products in a timely manner;        
|
| |  |  | quality of the technical service we provide;            
|
| |  |  | timeliness of the services we provide;                  
|
| |  |  | existing market and economic conditions; and            

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| |  |  | price of our products and our competitors products.
| | - |  | ----------------------------------------------------

Many of these factors are outside our control. We may not be able to
compete successfully in the future, and increased competition may result in
price reductions, reduced profit margins, loss of market share, and inability
to generate cash flows that are sufficient to maintain or expand our
development of new products.

RISKS RELATED TO OUR BUSINESS

Our quarterly revenues and operating results fluctuate due to a variety of
factors, which may result in volatility or a decrease in the price of our
common shares.

Our quarterly revenues and operating results have varied significantly in
the past and may vary in the future due to a number of factors, including:



| |  |  | cyclicality and other economic conditions in the semiconductor industry;                           
| | - |  | ---------------------------------------------------------------------------------------------------
|
| |  |  | production capacity constraints;                                                                   
|
| |  |  | the timing of customer orders, cancellations and shipments;                                        
|
| |  |  | the length and variability of the sales cycle for our products;                                    
|
| |  |  | the introduction of new products and enhancements by us and our competitors;                       
|
| |  |  | the emergence of new industry standards;                                                           
|
| |  |  | product obsolescence;                                                                              
|
| |  |  | disruptions in sources of supply;                                                                  
|
| |  |  | our ability to time our expenditures in anticipation of future orders;                             
|
| |  |  | our ability to fund our capital requirements;                                                      
|
| |  |  | changes in our pricing and pricing by our suppliers and competitors;                               
|
| |  |  | our product and revenue mix;                                                                       
|
| |  |  | seasonal fluctuations in demand for our products;                                                  
|
| |  |  | exchange rate fluctuations; and                                                                    
|
| |  |  | economic conditions generally or in various geographic areas
where we or our customers do business.

In addition, we derive a substantial portion of our net sales from
products that have a high average selling price and significant lead times
between initial order and delivery of the product. The timing and recognition
of net sales from customer orders can cause significant fluctuations in our
operating results from quarter to quarter. Gross margins realized on product
sales vary depending upon a variety of factors, including the mix of products
sold during a particular period, negotiated selling prices, the timing of new
product introductions and enhancements and manufacturing costs. A delay in a
shipment near the end of a fiscal quarter or year, due, for example, to
rescheduling or cancellations by customers or to unexpected manufacturing
difficulties experienced by us, may cause sales in a particular period to fall
significantly below our expectations and may materially adversely affect our
operating results for that period. Further, our need to continue expenditures
for research and development and engineering make it difficult for us to reduce
expenses in a particular quarter even if our sales goals for that quarter are
not met. Our inability to adjust spending quickly enough to compensate for any
sales shortfall would magnify the adverse impact of a sales shortfall on our
operating results. In addition, announcements by us or our competitors of new
products and technologies could cause customers to defer purchases of our
existing systems, which could negatively impact our earnings and our financial
position.

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As a result of these factors, our operating results may vary significantly
from quarter to quarter. Any shortfall in revenues or net income from levels
expected by securities analysts and investors could cause a decrease in the
trading price of our common shares.

Our products generally have long sales cycles and implementation periods, which
increase our costs in 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. The sales cycles of
our products often last for many months or even years. Longer sales cycles
require us to invest significant resources in attempting to make sales and
delay the generation of revenue.

Long sales cycles also subject us to other risks, including customers
budgetary constraints, internal acceptance reviews and cancellations. In
addition, orders expected in one quarter could shift to another because of the
timing of customers purchase decisions. The time required for our customers to
incorporate our products into their systems can vary significantly with the
needs of our customers and generally exceeds several months, which further
complicates our planning processes and reduces the predictability of our
operating results.

Our reliance on a primary supplier could result in disruption of our
operations.

We
outsource a substantial portion of the manufacturing of our Front-end
business to a single supplier, Philips High Tech Electronics Group
(formerly Philips Machinefabrieken Nederland B.V.) based in the Netherlands.
Purchases from Philips represented approximately 23.1% of our total
costs of
sales in the Front-end segment in fiscal 2001. Approximately 40% of
this amount represents manufacturing for which we have one or more
additional suppliers. The remainder represents manufacturing for
which Philips is the sole supplier. We are exploring the feasibility
of developing additional internal and external sources of supply for
these manufacturing processes to reduce our dependence on a single
supplier in the future. If Philips were unable or unwilling to
deliver products to us in the quantities we require for any reason,
including natural disaster, labor unrest, capacity constraints,
supply chain management problems or contractual disputes, we may be
unable to fill customer orders on a timely basis, which could
negatively affect our financial performance and customer
relationships.

We derive a significant percentage of our revenue from sales to a small number
of large customers, and if we are not able to retain these customers, or they
reschedule, reduce or cancel orders, our revenues would be reduced and our
financial results would suffer.

Our largest customers account for a significant percentage of our
revenues. Our ten largest customers accounted for approximately 35.5% of our
net sales in 2001 and 45.2% of our net sales in 2000. Sales to these large
customers have varied significantly from year to year and will continue to
fluctuate in the future. These sales also may fluctuate significantly from
quarter to quarter. We may not be able to retain our key customers or they may
cancel purchase orders or reschedule or decrease their level of purchases from
us. Any substantial decrease or delay in sales to one or more of our key
customers could harm our sales and financial results. In addition, any
difficulty in collecting amounts due from one or more key customers could harm
our financial results.

We may need additional funds to finance our future growth, and if we are unable
to obtain such funds, we may not be able to expand our business as planned.

In recent years, we have experienced severe capital constraints that
adversely affected our operations and ability to compete. We may require
substantial additional capital to finance our future growth and fund our
ongoing research and development activities beyond 2002. Our capital
requirements depend on many factors, including acceptance of and demand for our
products, and the extent to which we invest in new technology and research and
development projects.

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If we raise additional funds through the issuance of equity securities,
the percentage ownership of our existing shareholders would be diluted. If we
finance our capital requirements we may incur significant interest costs.
Additional financing may not be available to us when needed or, if available,
may not be available on terms acceptable to us.

Although we are a majority shareholder, ASMPT is not obligated to pay dividends
to us and may take actions or enter into transactions that are detrimental to
us.

ASMPT is a Cayman Islands limited liability company that is based in Hong
Kong and listed on the Hong Kong Stock Exchange. As of December 31, 2001, we
owned 54.4% of ASMPT through our wholly-owned subsidiary, ASM Netherlands
Antilles N.V., a Netherlands Antilles company, and the remaining 45.6% was
owned by the public.

Although three of the six directors of ASMPT are affiliates of ASM
International, they are under no obligation to take any actions that are
beneficial to us. Issues and conflicts of interest therefore may arise which
might not be resolved in our best interests.

In addition, the directors of ASMPT are under no obligation to declare a
payment of dividends to shareholders. As a shareholder of ASMPT, we can approve
the payment of dividends, but cannot compel their payment or size. With respect
to the payment of dividends, the directors must consider the financial position
of ASMPT after the dividend. Since a portion of our cash flows are derived from
the dividends we receive from ASMPT, its failure to declare dividends in any
year would have a negative impact on the cash position of our Front-end segment
for that year. Cash dividends received from ASMPT totaled 6.2 million, 15.4
million and 35.7 million in 1999, 2000 and 2001, respectively.

The directors of ASMPT owe their fiduciary duties to ASMPT, and may
approve transactions to which we are a party only if the transactions are
commercially beneficial to ASMPT. Further, under the listing rules of the Hong
Kong Stock Exchange, directors who are on the boards of both ASMPT and ASM
International are not permitted to vote on a transaction involving both
entities. This would disqualify all three of the affiliates of ASM
International who currently serve on the board of ASMPT from voting on any such
transaction.

As a shareholder of ASMPT, we can vote our shares in accordance with our
own interests. However, we may not be entitled to vote on transactions
involving both us and ASMPT under the listing rules of the Hong Kong Stock
Exchange and the Hong Kong Takeover Code. For example, under the Hong Kong
Takeover Code, we would be excluded from voting if we were directly involved in
a takeover of ASMPT in a transaction requiring a shareholder vote.

Because the costs to semiconductor manufacturers of switching from one
semiconductor equipment supplier to another can be high, it may be more
difficult to sell our products to new customers which could limit our growth in
sales and market share.

We believe that once a semiconductor manufacturer has selected a
suppliers equipment for a particular product line, that manufacturer generally
continues to rely on that supplier for future equipment requirements, including
new generations of similar products. Changing from one equipment supplier to
another is expensive and requires a substantial investment of resources by the
customer. Accordingly, it is difficult to achieve significant sales to a
customer currently using another suppliers equipment. Our inability to sell
our products to potential customers who currently use another suppliers
equipment could adversely affect our growth in revenue and market share.

Our ability to compete could be jeopardized if we are unable to protect our
intellectual property rights from challenges by third parties.

Our success and ability to compete depend in large part upon protecting
our proprietary technology. We rely on a combination of patent, trade secret,
copyright and trademark laws, nondisclosure and other contractual agreements
and technical measures to protect our proprietary rights.

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These agreements and measures may not be sufficient to protect our
technology from third party infringements, or to protect us from the claims of
others. 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. Third parties could also independently
develop similar products or duplicate our products. We are currently involved
in a patent litigation in the United States with Genus, Inc. involving claims
and counter-claims over certain patent infringement. See Item 4  Business
Overview  Intellectual Property for further discussion.

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 these
countries. If competitors are able to use our technology as their own, our
ability to compete effectively could be harmed.

We are dependent upon our worldwide sales and operations; economic, political,
military or other events in a country where we make significant sales or have
significant operations could interfere with our success or operations there and
harm our business.

We market and sell our products and services throughout the world. We have
assembly facilities in the Netherlands, Finland, the United States, Japan, Hong
Kong and Singapore, and manufacturing facilities in China and Malaysia. We are
subject to risks inherent in doing business internationally. In particular,
the September 11, 2001 attacks in New York and Washington, D.C. disrupted
commerce throughout the United States and other parts of the world. The
continued threat of similar attacks throughout the world and the military
action taken by the United States and other nations may cause significant
disruption to commerce throughout the world. To the extent that such
disruptions further slow the global economy or, more particularly, result in
delays or cancellations of purchase orders, our business and results of
operations could be materially and adversely affected. We are unable to predict
whether the threat of new attacks or the responses thereto will result in any
long-term commercial disruptions or if such activities or responses will have a
long-term material adverse effect on our business, results of operations or
financial condition.

We are subject to other risks related to international business, including:



| |  |  | unexpected changes in regulatory requirements;                                                                   
| | - |  | -----------------------------------------------------------------------------------------------------------------
|
| |  |  | fluctuations in exchange rates and currency controls;                                                            
|
| |  |  | political and economic conditions and instability;                                                               
|
| |  |  | tariffs and other trade barriers, including current and
future import and export restrictions, and freight rates;
|
| |  |  | difficulty in staffing, coordinating and managing international operations;                                      
|
| |  |  | burden of complying with a wide variety of foreign laws and licensing requirements;                              
|
| |  |  | difficulty in protecting intellectual property rights in some foreign countries;                                 
|
| |  |  | limited ability to enforce agreements and other rights in some foreign countries;                                
|
| |  |  | longer accounts receivable payment cycles in some countries; and                                                 
|
| |  |  | business interruption and damage from natural disasters.                                                         

In particular, our operations in China are subject to the economic and
political uncertainties affecting that country. For example, the Chinese
economy has experienced significant growth in the past decade, but such growth
has been uneven across geographic and economic sectors and has recently been

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slowing. This growth may continue to decrease and any slowdown may have a
negative effect on our business.

We may not be able to recruit or retain qualified personnel or integrate
qualified personnel into our organization. Consequently, we could experience
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. Availability of qualified technical
personnel varies from country to country, and may affect the operations of our
subsidiaries in some parts of the world. Our operations could be negatively
affected if we lose key executives or employees or are unable to attract and
retain skilled executives and employees as needed. In particular, if our growth
strategies are successful, we may not have sufficient personnel to manage that
growth and may not be able to attract the personnel needed. We do not maintain
insurance to protect against the loss of key executives or employees. Further,
we have agreements with some, but not all, employees, restricting their ability
to compete with us after their employment terminates. Our future growth and
operating results will depend on:



| |  |  | our ability to continue to broaden our senior management group;                                         
| | - |  | --------------------------------------------------------------------------------------------------------
|
| |  |  | our ability to attract, hire and retain skilled employees; and                                          
|
| |  |  | the ability of our officers and key employees to continue to
expand, train and manage our employee base.

In response to current market conditions, we have enacted a hiring freeze
and have reduced personnel. Although we are not currently focused on attracting
new key personnel, we have in the past experienced the intense competition for
skilled personnel during market expansions and believe competition will again
be intense when the semiconductor market rebounds. Consequently, we generally
attempt to minimize reductions in skilled personnel as a reaction to industry
downturns, which reduces our ability to lower costs by payroll reduction. We
continue to monitor market and economic developments and are ready to implement
further measures if circumstances warrant.

Our operational results could be negatively impacted by currency fluctuations.

As of January 1, 1999, the Netherlands, the location of our international
headquarters, adopted a second legal currency, the Euro, in addition to the
Netherlands guilder. The Euro became the sole currency of the Netherlands on
January 1, 2002. On December 31, 1998, the European Economic and Monetary Union
permanently fixed the exchange rate of the Netherlands guilder to the Euro at
1.00 Euro to 2.20371 Nlg.

Our assets, liabilities and operating expenses and those of our
subsidiaries are to a large extent denominated in the currency of the country
where each entity is established. Our financial statements, including our
consolidated financial statements, are expressed in Euros. The translation
exposures that result from the inclusion of financial statements of our
subsidiaries that are expressed in the currencies of the countries where the
subsidiaries are located are not hedged. As a result, our operational results
are exposed to fluctuations of various exchange rates. These net translation
exposures are taken into account in determining shareholders equity.

In addition, foreign currency fluctuations may affect the prices of our
products. Prices for our products are currently denominated in United States
dollars, Euros and Japanese yen for sales to our customers throughout the
world. If there is a significant devaluation of the currency in a specific
country, the prices of our products will increase relative to that countrys
currency and our products may be less competitive in that country. Also, we
cannot be sure that our international customers will continue to be willing to
place orders denominated in these currencies. If they do not, our revenue and
operating results will be subject to additional foreign exchange rate
fluctuations.

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Although we monitor our exposure to currency fluctuations, these
fluctuations could negatively impact our earnings, cash flow and financial
position.

Claims or litigation regarding intellectual property rights could seriously
harm our business or require us to incur significant costs.

In recent years, there has been substantial litigation regarding patent
and other intellectual property rights in semiconductor-related industries. In
the future, additional 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. Any such litigation could result
in substantial cost and diversion of effort by us, which would have an adverse
effect on our business, financial condition and operating results.

Any claims that our products infringe proprietary rights would force us to
defend ourselves and possibly our customers or suppliers against the alleged
infringement. These claims and any resulting lawsuit, if successful, could
subject us to significant liability for damages and invalidate our proprietary
rights. These lawsuits, regardless of whether they are successful, would likely
be time-consuming and expensive to resolve and would divert management time and
attention. Any potential intellectual property litigation could force us to do
one or more of the following, any one of which could severely harm our
business:



| |  |  | forfeit our proprietary rights;                                                                                                                                                                                                   
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | stop manufacturing or selling our products that incorporate
the challenged intellectual property;                                                                                                                                 
|
| |  |  | obtain from the owner of the infringed intellectual property
right a license to sell or use the relevant technology, which
license may not be available on reasonable terms or at all or may
involve significant royalty payments;
|
| |  |  | pay damages, including treble damages and attorneys fees in some circumstances; or                                                                                                                                               
|
| |  |  | redesign those products that use the challenged intellectual property.                                                                                                                                                            

We are currently involved in a patent litigation in the United States with
Genus, Inc. involving claims and counter-claims over certain patent
infringement. See Item 4  Business Overview  Intellectual Property for
further discussion.

In October 1997, we entered into an agreement to settle mutual patent
infringement litigation with Applied Materials, Inc. pursuant to which Applied
Materials agreed to grant us a worldwide, non-exclusive and royalty-bearing
license to use all of the litigated patents and certain additional patents that
were not part of the litigation. In return, we agreed to pay Applied Materials
$80.0 million and to grant it a worldwide, non-exclusive license to use a
number of our patents that we were enforcing in the litigation. All licenses
expire at the end of the life of the underlying patents. In addition, the
settlement agreement includes covenants for limited periods during which the
parties will not litigate the issue of whether certain of our products infringe
any of Applied Materials patents that were not licensed to us under the
settlement agreement. The covenants last for different periods of time for
different products and have already expired as to some products. Applied
Materials can file new litigation after these covenants expire. Also,
litigation between the parties on other matters or the operation of the
settlement agreement itself could occur. Future litigation with Applied
Materials, which has greater financial resources than we do, could negatively
impact our earnings and our financial position.

If our products are found to be defective, product liability claims may be
asserted against us and we may not have sufficient liability insurance or
resources available to satisfy such claims.

One or more of our products may be found to be defective after we have
already shipped the products in volume, requiring a product replacement or
recall. We may also be subject to product returns

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that could impose substantial costs and have a material and adverse effect
on our business, financial condition and results of operations.

Product liability claims may be asserted with respect to our products.
Although we currently have product liability insurance, we cannot assure you
that we have obtained sufficient insurance coverage, that we will have
sufficient insurance coverage in the future or that we will have sufficient
resources to satisfy any product liability claims.

Environmental laws and regulations may expose us to liability and increase our
costs.

Our operations are subject to many environmental laws and regulations
wherever we operate governing, among other things, air emissions, wastewater
discharges, the use and handling of hazardous substances, waste disposal and
the investigation and remediation of soil and groundwater contamination. A
proposal of the European Commission, which has been approved by the European
Parliament in principle would result in take-back obligations of
manufacturers and/or the responsibility of manufacturers for the financing of
the collection, recovery and disposal of electrical and electronic equipment.
A further proposal of the European Commission forming part of the approved
package provides for a ban on the use of lead and some flame retardants in
manufacturing electronic components. Those proposals, if adopted, could
adversely affect our manufacturing costs or product sales by forcing us or our
suppliers to change production processes or use more costly materials. Our
customers may require us to conform to the proposed new standards in advance of
their adoption by the European Commission.

As with other companies engaged in similar activities, we face inherent
risks of environmental liability in our current and historical manufacturing
activities. Costs associated with future environmental compliance or
remediation obligations could adversely affect our business.

Although we currently are a majority shareholder of ASMPT, we may not be able
to maintain our majority interest, which, if other circumstances are such that
we do not control ASMPT, would prevent us from consolidating its results of
operations with ours; moreover, if we cease to own 50.1% of its shares we would
be in default under our revolving credit facility. Either of these events
would have a significant negative effect on our consolidated earnings from
operations and liquidity.

We derive a significant portion of our net sales, earnings from operations
and net earnings from the consolidation of the results of operations of ASMPT
with our results. If we do not maintain our majority interest in ASMPT, and if
other circumstances are such that we do not control it through other means, we
would no longer be able to consolidate its results of operations with ours. Any
such determination of whether we could continue to consolidate would be based
on whether we still have a controlling financial interest within the meaning
of United States generally accepted accounting principles. If we were to
become unable to consolidate the results of operations of ASMPT with our
results, the results of operations of ASMPT would no longer be included in our
earnings from operations. Instead, our proportionate share of ASMPTs earnings
would be reflected as a separate line-item called share of results from
investments in our consolidated statements of operations. We would no longer
be able to consolidate the assets and liabilities of ASMPT and would have to
reflect the net investment in ASMPT in the line-item investments in our
consolidated balance sheet. In addition, decrease in our equity ownership
interest in ASMPT below 50.1% is an event of default under our 90.0 million
revolving credit facility. These events would have a significant negative
effect on our consolidated earnings from operations and liquidity.

We maintain our majority interest in ASMPT by purchasing shares from time
to time as necessary. ASMPT has an employee share incentive program pursuant to
which it can issue up to an aggregate of 5.0% of its total issued shares,
excluding shares subscribed for or purchased under the program, to directors
and employees as an incentive. When ASMPT issues shares pursuant to this
program, our ownership interest is diluted, but would continue to be above
50.0%. In addition, our controlling interest could be diluted if ASMPT issues
additional equity. However, such a decision by ASMPT requires the approval by
ASMPTs shareholders and we currently hold more than 50% of the

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votes. Although we intend to continue to purchase shares of ASMPT as
necessary to maintain our majority interest, we could lose our majority
position if there is an insufficient number of shares available for purchase,
if we fail to purchase shares in a timely manner or if we do not have
sufficient financial resources to purchase shares when necessary.

Our directors and officers control approximately 25% of our voting power which
gives them significant influence over matters voted on by our shareholders,
including the election of directors, and may make it more difficult for a
shareholder group to remove or elect directors not supported by management.

Our directors and officers controlled approximately 25% of our voting
power as of December 31, 2001. Accordingly, in the event they were to vote
together in connection with matters submitted to a shareholder vote, such as
the appointment of our management board by the shareholders, they would have
significant influence on the outcome of those matters and on our direction and
future operations. This makes it more difficult for a group of shareholders to
remove or elect directors not supported by management.

Any investments we may make could disrupt our business and severely harm our
financial condition.

We intend to consider investments in complementary businesses, products or
technologies. In the third quarter of 2001, we invested $18.0 million in
NuTool, Inc., a semiconductor equipment company that develops copper deposition
technologies. We also entered into a strategic technology and marketing
agreement with Genitech, Inc. in which we committed to provide $5.0 million
over the next three years for technology development. While we have no other
current agreements or specific investment plans, we may acquire businesses,
products or technologies in the future. In the event of any future
acquisitions, we could:



| |  |  | issue shares that would dilute our current shareholders percentage ownership;
| | - |  | ------------------------------------------------------------------------------
|
| |  |  | incur debt;                                                                   
|
| |  |  | assume liabilities;                                                           
|
| |  |  | incur amortization expenses related to goodwill and other tangible assets; or 
|
| |  |  | incur large and immediate accounting write-offs.                              

Our operation of any acquired business will also involve numerous risks, including:



| |  |  | problems integrating the purchased operations, technologies or products;                                 
| | - |  | ---------------------------------------------------------------------------------------------------------
|
| |  |  | unanticipated costs and liabilities for which we are not able
to obtain indemnification from the sellers;
|
| |  |  | diversion of managements attention from our core business;                                              
|
| |  |  | adverse effects on existing business relationships with customers;                                       
|
| |  |  | risks associated with entering markets in which we have no,
or limited, prior experience; and            
|
| |  |  | potential loss of key employees, particularly those of the
acquired organizations.                       

We may not be able to successfully integrate any businesses, products or
technologies or personnel that we might acquire in the future and also may not
realize any anticipated benefits from those acquisitions.

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If we fail to adequately invest in research and development, or lose our
relationships with independent research institutes and universities, we may be
unable to compete effectively.

We have limited resources to allocate to research and development, and
must allocate our resources among a wide variety of projects in our Front-end
and Back-end businesses. Because of intense competition in our industry, the
cost of failing to invest in strategic products is high. In order to enhance
the benefits obtained from our research and development expenditures, we have
contractual and other relationships with independent research institutes. If
we fail to adequately invest in research and development or lose our ability to
collaborate with these independent research entities, we may be unable to
compete effectively in the Front-end and Back-end markets in which we operate.

Our anti-takeover provisions and our settlement agreement with Applied
Materials may prevent a beneficial change of control.

Our shareholders have granted to Stichting Continuiteit ASMI, or
Stichting, a non-membership organization with a board composed of our President
and Chief Executive Officer, the Chairman of our Supervisory Board and three
independent members, the right to acquire and vote our preferred shares to
maintain the continuity of our company. Toward that objective, Stichting will
evaluate, when called for, whether a takeover offer is in our best interest,
and may, if it determines that such action is appropriate, acquire preferred
shares with voting power equal to 50.0% of the voting power of the outstanding
common shares. This is likely to be sufficient to enable it to prevent a change
of control from occurring. For additional information regarding Stichting, see
Item 7  Major Shareholders and Related Party Transactions.

Pursuant to a settlement agreement with Applied Materials, one of our
competitors, if we desire to effect a change of control transaction, as defined
in the settlement agreement, 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 arms-length offer made by that competitor. If Applied Materials rejects
the offer, we are free for 90 days following receipt of Applied Materials
rejection to enter into an agreement to sell at an equal or greater price and
upon terms which, in the aggregate, are no more favorable to the buyer than
those offered to Applied Materials.

These provisions may prevent us from entering into change of control
transactions that may otherwise offer our shareholders an opportunity to sell
shares at a premium over the market price.

Our stock price has fluctuated and may continue to fluctuate widely.

The market price of our common shares has fluctuated substantially in the
past. Between January 1, 2001 and December 31, 2001, the sales price of our
common shares, as reported on the Nasdaq National Market, ranged from a low of
$9.35 to a high of $27.29. The market price of our common shares will continue
to be subject to significant fluctuations in the future in response to a
variety of factors, including the risk factors discussed in this report.

Furthermore, stock prices for many companies, and high technology
companies in particular, fluctuate widely for reasons that may be unrelated to
their operating results.

Those fluctuations and general economic, political and market conditions,
such as recessions or international currency fluctuations, may adversely affect
the market price of our common shares.

You may have difficulty protecting your rights as an investor and in enforcing
civil liabilities because we are a Netherlands limited liability company.

Our affairs are governed by our articles of association and by the laws
governing limited liability companies formed in the Netherlands. Our executive
offices and the majority of our assets are located outside the United States.
In addition, most of the members of our management board and supervisory board
and executive officers named in this report are residents of jurisdictions
other than the United

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States. As a result, it may be difficult for investors to serve process
within the United States upon us, members of our management board or
supervisory board or our executive officers named in this report or to enforce
against them in United States courts judgments of those courts, to enforce
outside the United States judgments obtained against them in United States
courts, or to enforce in United States courts judgments obtained against them
in courts in jurisdictions outside the United States, in any action, including
actions that derive from the civil liability provisions of the United States
securities laws. In addition, it may be difficult for investors to enforce, in
original actions brought in courts in jurisdictions located outside the United
States, liabilities that derive from the United States securities laws.

Item 4.   Information on the Company

Except for historical information, the information in this report contains
forward-looking statements which are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. These
forward-looking statements involve risks and uncertainties that could cause our
actual results to differ materially from those contained in any forward-looking
statements. Factors which could cause or contribute to such differences
include, but are not limited to, those discussed in Item 3 under Risks
Factors.

As used in this report, the terms we, us, our, ASM and ASM
International mean ASM International N.V. and its subsidiaries, unless the
context indicates another meaning, and the term common shares means our
common shares, par value 0.04 per share. Since we are a Netherlands company,
the par value of our common shares is expressed in Euros ().



|A. |  | History and Significant Transactions of the Company.
|-- |  | ----------------------------------------------------

ASM International N.V. was incorporated on March 4, 1968 as a Netherlands
naamloze vennootschap, or public limited liability company, and was known as
Advanced Semiconductor Materials International N.V. until November 1996. Our
principal executive offices are located at Jan van Eycklaan 10, 3723 BC
Bilthoven, the Netherlands. Our telephone number at that location is (011) (31)
30 229 84 11. Our authorized agent in the United States is our subsidiary ASM
America, Inc., a Delaware corporation, located at 3440 East University Drive,
Phoenix, Arizona 85034.

Effective in July 1999, we purchased all of the outstanding shares of
Microchemistry, a company located in Finland, for an approximately 3.9 million
promissory note convertible at $10.00 per share into our common shares and
renamed the company ASM Microchemistry. Prior to our purchase, Microchemistry
developed the process to grow or deposit films one layer at a time by means of
a process called Atomic Layer Chemical Vapor Deposition (ALCVD), and marketed
ALCVD processes to manufacturers of flat panel displays and tape magnetic head
products. Following our acquisition, ASM Microchemistry is shifting its focus
to manufacturers of semiconductor devices.

In December 1999, we purchased a 24% interest in NanoPhotonics AG, a
German supplier of precision thin film metrology equipment for 407,000. The
technology supplied by NanoPhotonics allows for the integration of
high-resolution, ellipsometric thin film metrology directly in a
wafer-processing tool. We believe that this investment will enable us to equip
our batch and single wafer equipment with integrated thin film metrology.

In April of 2000, we sold 4,250,000 shares of our common stock in the
United States in a registered public offering. Our net proceeds, after we paid
the underwriting discount and other estimated expenses, for the offering were
approximately $114.6 million (or approximately  119.7 million). We used the
proceeds raised in the offering to repay debt of 76.8 million, releasing
assets used to secure these loans. The remainder of the funds raised were used
to fund our working capital needs.

In early July 2000, we acquired 4.7% of the outstanding shares of ASMPT,
our Back-end subsidiary, for cash. The financing of this acquisition came from
our own cash resources and from the loan facility we received from Canadian
Imperial Bank of Commerce (CIBC) of which we used $69 million.

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In connection with this loan facility, we entered into an equity line of
credit with Canadian Imperial Holdings, Inc. (CIHI), an affiliate of CIBC,
pursuant to which we have the right to sell up to an aggregate of $65 million
of newly issued shares to CIHI from time to time over a two-year period ending
July 2002. We are entitled, subject to certain restrictions and limitations, to
sell up to $10 million in common shares to CIHI as often as every five business
days. The purchase price of the shares will be equal to 95.5% of the simple
average of the daily volume weighted average sale price during the five trading
days preceding the date of sale. CIHI, however, is under no obligation to purchase
if such a purchase would cause the aggregate number of our common shares
beneficially owned by CIHI and its affiliates, to exceed 9.9% of all of our
issued and outstanding common shares.

Pursuant
to the equity line, we registered with the U.S.
Securities and Exchange Commission 4,581,498 of our common shares for offer
and sale pursuant to the equity line. The registration statement must
remain in effect for the duration of the equity line. CIHI is under no
obligation to purchase our newly issued common shares under the equity line if
effectiveness of our registration statement is withdrawn, certain conditions
precedent to the equity line are not satisfied or certain covenants are not
complied with.

In October 2001, we entered into a strategic alliance with and made in
equity investment in NuTool, Inc., a privately held semiconductor technology
company located in Milpitas, California. NuTool provides innovative copper
deposition technologies to the semiconductor industry. Its patented
electrochemical mechanical deposition technology offers new process solutions
for copper deposition and planarization, providing significant savings in
integrated circuit manufacturing and enabling new integrated circuit designs
and new process technologies. We made a total equity investment of
$18.0 million, giving us a total equity interest of approximately 15.4%.

On June 27, 2001 we entered into a  90.0 million multicurrency revolving
facilities agreement with a consortium of banks to be utilized solely for our
Front-end operations in Europe and the United States. We cannot use any funds
under this facility to finance Back-end operations. The loan consists of two
facilities of  45.0 million each. Advances bear interest at a per annum rate
equal to LIBOR for-non-Euro currency advances or EURIBOR for Euro currency
advances, plus 80 to 160 basis points for the first facility of  45.0 million
and 100 to 180 basis points for the second facility of  45.0 million, in each
case depending on our solvency ratio at the time. The term of the first
facility is one year and the term of the second facility is 18 months. The
loan facility contains certain financial covenants with respect to solvency
ratio and interest coverage ratio. The loan facility is secured by a portion
of our shareholding in ASMPT which varies depending on the market price of the
ASMPT common shares on the Hong Kong stock exchange and, depending on such
price, could include all of our shareholding. On July 2, 2001 we repaid  41.3
million in long-term debt to CIBC and  9.0 million for short-term bridge loans
from advances from this facility.

In
November 2001, we sold an initial $100.0 million of 5.0% Convertible
Subordinated Notes due November 15, 2005 to CIBC World Markets. In December
2001, CIBC exercised its greenshoe option and purchased an additional $15.0
million of the notes. Of the proceeds, $15.0 million was used to fund part of
the investment in NuTool, $63.4 million was used to repay outstanding balances
under our  90.0 million revolving credit facility and the remainder, after
expenses incurred undertaking the transaction, was allocated to working
capital.

There are no principal capital expenditures or divestitures currently in
progress.

There have been no public takeover offers by third parties during or since
the end of the 2001 fiscal year.

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|B. |  | Business Overview.
|-- |  | ------------------

Introduction

We design, manufacture and sell equipment and solutions used to produce
semiconductor devices, or integrated circuits. Our production equipment and
systems are used by both the Front-end and Back-end segments of the
semiconductor market. Front-end equipment performs various fabrication
processes in which multiple thin films, or layers, of electronically insulating
or conductive material are grown or deposited onto a round slice of silicon,
called a wafer. Back-end equipment separates these processed wafers into
numerous individual dies, each containing the circuitry of a single
semiconductor device, and assembles, packages and tests the dies in order to
create semiconductor devices. We believe that the Front-end and Back-end react
to different market forces in the highly cyclical semiconductor industry and
that operating in both segments reduces the impact of business cycles on our
operations.

Our Front-end facilities in the Netherlands, the United States, Japan and
Finland enable us to interact closely with customers in the worlds major
semiconductor design and wafer processing markets: Europe, North America and
Asia. Our products in the Front-end market segment grow or deposit thin films
onto wafers primarily using a process called chemical vapor deposition, or CVD.
CVD deposits films on the wafers surface through chemical reactions using
gases at high temperatures. Front-end operations accounted for 40.6% of our
net sales in 2000, and 60.0% of our net sales in 2001.

Our Back-end business is conducted through our facilities in Hong Kong,
Singapore, China and Maylaysia, close to where most assembly and packaging
operations are located. Our products in the Back-end market assemble and
package individual dies into finished semiconductor devices using stand alone
and automated lines of equipment. We also manufacture leadframes, copper
carriers on which dies are mounted as part of the Back-end assembly process.
Back-end operations accounted for 59.4% of our net sales in 2000 and 40.0% of
our net sales in 2001.

Our Front-end business is conducted through wholly-owned subsidiaries, the
most significant of which are ASM Europe, B.V., located in the Netherlands, ASM
America, Inc., located in the United States, ASM Microchemistry Ltd., located
in Finland, and ASM Japan K.K., located in Japan. Our Back-end business is
conducted through a majority-owned subsidiary, ASMPT, with principal operations
in Hong Kong, Singapore and China. As of December 31, 2001, we owned 54.36% of
the outstanding equity of ASMPT.

Industry and Products

A.       General.

The Semiconductor and Semiconductor Equipment Industries

Semiconductor devices are the key enablers of the electronic age.
Starting with the invention of the transistor, constant advances in design and
manufacture of these devices have made possible the extraordinary variety of
smart products widely available today but unheard of just a few years ago. Two
products in particular were spawned by the evolution in semiconductor
technology: the personal computer and the mobile telephone, which together have
revolutionized communication and information sharing. These products were made
possible by advances in integrated circuits (large numbers of individual
transistors and components designed as a system) that allow increasingly large
numbers of operations to be performed by increasingly small devices in
decreasing fractions of a second. The markets for personal computers and mobile
phones have grown dramatically over the last few years. These markets demand
increased performance and functionality. This, plus the constant increase in
the number of applications for semiconductor devices, has created continuing
demand for devices that are smaller, faster, more energy efficient and cheaper.
The mobile phone and other wireless communication devices have accelerated
this demand because smaller size and lower power consumption are particularly
important.

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In the early stages of the semiconductor industry, semiconductor device
manufacturers developed their own production equipment. However, the diverging
skill sets of increasingly complex electronic circuit design and the physics
and material science aspect of semiconductor manufacturing gave rise to
specialized equipment manufacturers that focus on specific areas of
semiconductor equipment design and production. The semiconductor equipment
industry has grown with the demand for semiconductor devices and developed
specialized expertise to address the technological challenges in the
manufacturing process.

The primary focus in achieving better performing integrated circuits has
been to reduce the size of individual transistors to increase the number of
transistors that can fit within a given size device. Shrinking also reduces
the power needed to activate the transistors and increases speed by reducing
the distance between transistors. The primary focus in reducing cost has been
to increase the size of the wafer (the silicon substrate upon which
semiconductors are built) so that more devices can be produced in each
production cycle. In order to implement these advances in technology through
shrinking devices or increasing wafer size, device manufacturers must upgrade
their equipment. As a result, semiconductor equipment companies develop tools
along a broadly defined technology roadmap and once tools for each step of the
new production process have been established, customers build a new line to
incorporate the latest technology. Because semiconductor manufacturers are
subject to business and consumer purchase patterns that are driven by demand
for new products or applications and larger macroeconomic factors, they
attempt to time the large increase in supply created by a new fab with the
demand factors for their end products. The inherent difficulty in matching new
supply and the ever-shortening product life-cycles results in the high
volatility associated with the semiconductor industry.

Semiconductor equipment sales depend significantly upon the level of
capital expenditures by semiconductor manufacturers, which in turn depends
significantly upon the current and anticipated market supply and demand for
semiconductor devices and products using semiconductor devices. Growth in the
semiconductor market is being fueled by rapidly expanding end-user demand for
smaller, less-expensive and better-performing electronic products which has led
to an increased concentration of semiconductor devices in electronic products.

B.  Semiconductor Manufacturing Process

The semiconductor equipment market is composed of two segments: the
Front-end and the Back-end. The Back-end is also referred to as assembly and
packaging. In the Front-end, three subsegments can be considered: wafer
manufacturing, Front-End-Of-Line (FEOL) wafer processing and Back-End-Of-Line
(BEOL) wafer processing.

In the wafer manufacturing segment 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, either by epitaxy or diffusion/oxidation (see below). Epitaxial wafers
are even flatter and contain less defects at the surface than polished wafers
do. The finished wafers, still without a pattern on it, are shipped to the
integrated device manufacturers wafer processing factory or fab.

During FEOL and BEOL wafer processing, multiple thin films of either
electrically insulating material, also called dielectrics, or conductive
material are grown or deposited on a silicon wafer. First, several material
deposition and processing cycles are used in the FEOL to build the basic
transistor. Second, several deposition and processing cycles are used in the
BEOL to electrically connect the hundreds of millions of transistors.
Patterning of the layers with Lithography and etching (see below) creates the
transistors and connecting wires, which together make up the integrated
circuit. Each integrated circuit is a chip or a die on the wafer. A
finished wafer may contain a few dozen to several thousand individual dies.
Front-end processes are performed either one wafer at a time in single wafer
processing systems or many wafers at a time in batch processing systems.
Multiple processes are repeated on each layer as the wafer is processed. The
number and precise order of the process steps vary depending upon the
complexity and design of the device. The performance of the device is
determined in part by the

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various electrical characteristics of the materials used in the layers of
the device and the wafer. The Front-end production phase is capital intensive,
requiring multiple units and a range of different types of processing equipment
in a fabrication line.

In the Back-end, or assembly and packaging, segment wafers are cut into
individual dies or chips. These chips or dies are mounted in a package with
electrical connections to the outside world, while still hermetically sealing
the chip in the package. This will be described in more detail later.

The primary steps involved in wafer processing are described below. These
steps are repeated depending on the function of the device which determines its
complexity. Complex microprocessors typically are composed of more than 50
layers of alternating conducting and insulating material.

ASM is mostly active in the deposition processes, i.e. those steps which
involve creation of insulating, conducting and semiconducting layers on the
wafer surface.



| |  |  | Atomic Layer Deposition (ALD)is an advanced technology which
deposits single atomic layers on wafers one at a time at low
temperatures. This process is used to create ultra-thin films of
exceptional quality and flatness.                                                                                                                                                                                                                                                                                                 
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Chemical Mechanical Polishing (CMP)is a technology which
planarizes, or levels, layers deposited on wafers by polishing them
with a chemical solution called slurry. Planarization reduces the
vertical height differences of the various layers. This increases
the number of layers which can be processed without introducing
reliability problems with an abrasive chemical solution or an
abrasive pad in a chemically active environment. Planarization
increases the number of layers which can be processed reliably.
|
| |  |  | Chemical Vapor Deposition (CVD)is a technique in which one
or more gaseous reactors are used to form a solid, insulating or
conducting layer on the surface of a wafer. Several forms of CVD
exist, each used for a particular application. These different
forms are explained below.                                                                                                                                                                                                                                       
|
| |  |  | Cleanremoves undesirable contaminants from the wafers
surface.                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| |  |  | Diffusion and Oxidationare high-temperature processes that
change the electrical characteristics of layers. Diffusion is used
to make impurities introduced by ion implantation electrically
active. Oxidation forms a silicon oxide layer on the wafers
surface, which acts as an insulative or protective layer over the
wafers surface.                                                                                                                                                                                 
|
| |  |  | Electro Chemical Mechanical Deposition (ECMD)deposits a
layer of metal through a process called electroplating, while
simultaneously planarizing the surface.                                                                                                                                                                                                                                                                                                                                                                
|
| |  |  | Epitaxyinvolves the deposition of silicon or silicon
compounds on the wafer, continuing and perfecting the crystal
structure of the bare wafer underneath. Epitaxy improves the
electrical characteristics of the wafer surface, making it suitable
for highly complex microprocessors and memory devices.                                                                                                                                                                                                                   
|
| |  |  | Etchreproduces the pattern imprinted by lithography by
removing excess material from the uppermost layer of the wafer.                                                                                                                                                                                                                                                                                                                                                                                                       
|
| |  |  | Ion Implantationis a process in which wafers are bombarded
with ions to introduce dopant atoms, or impurities, into the wafer
to improve its electrical characteristics. Silicon conducts little
or no electricity. In order to have electrical current within a
layer, it is necessary to place small amounts of impurities into the
layer.                                                                                                                                                                                 

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| |  |  | Lithographyis used to print the various layer patterns of
the semiconductor device on the uppermost layer of the wafer. These
patterns determine the functions of the semiconductor device.                                         
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Low Pressure Chemical Vapor Deposition (LPCVD)performs CVD
under high temperature, low pressure conditions to deposit
insulating or conductive layers.                                                                              
|
| |  |  | Metal Organic Chemical Vapor Deposition (MOCVD)is a special
CVD process which employs Metal-Organic compounds to deposit metal
films. Metal-Organic compounds are used to more easily turn the
metals into a metal containing vapor.
|
| |  |  | Metrologyis used to measure the width of lines on
semiconductor devices, the thickness of layers, the surface profiles
of layers, and certain electrical properties of layers.                                                      
|
| |  |  | Plasma Enhanced Chemical Vapor Deposition (PECVD)performs
CVD by the use of a vapor containing electrically charged particles
or plasma. The plasma makes the vapor more reactive.                                                  
|
| |  |  | Physical Vapor Deposition (PVD)deposits a thin layer of
metal on the wafer surface for electrical contacts and wires through
a process called sputtering.                                                                         
|
| |  |  | Probingis a process in which electrical and functional tests
are performed on each die and defective ones are marked.                                                                                                               
|
| |  |  | Rapid Thermal Chemical Vapor Deposition (RTCVD)is a
technique similar to LPCVD, but deposits a film on one single wafer
at a time.                                                                                                  
|
| |  |  | Rapid Thermal Processing(RTP) is used to expose single
wafers to heat over a short period of time.                                                                                                                                  

The Front-end process is complete when all of the layers have been
deposited and patterned on the wafer. The introduction of even trace levels of
foreign particles can make a device or even an entire wafer unusable. To
reduce the level of foreign particles, Front-end processing is performed in
clean rooms with ultra low contaminant levels. Once the Front-end processing
is complete, the entire wafer is shipped to a Back-end facility where it is
assembled, packaged and tested before final shipment to the end customer.
Back-end processes do not require the same level of contaminant control and are
performed in different facilities than Front-end processes.

The assembly and packaging or Back-end process consists of sawing or
dicing the processed wafer into individual dies, mounting them on carriers such
as leadframes and connecting them to the appropriate electrical leads. Wire
bonding onto leadframes is the most common interconnection method, although
alternative interconnection techniques and materials, such as ceramic packages,
flip chips and different chip-scale packaging methods, are available. After the
assembly process, the dies are packaged to protect them from environmental
influences and prepare them for use, resulting in completed semiconductor
devices.

The primary processes in the Back-end, or assembly and packaging segment
are described below. ASM is active in providing assembly and packaging
equipment, as well as in the manufacturing of materials such as leadframes.



| |  |  | Die Bondingmounts the dies onto carriers such as leadframes
using a die bonder.             
| | - |  | --------------------------------------------------------------------------------------------
|
| |  |  | Die Inspectioninspects every die or proper performance
before the next steps are undertaken.
|
| |  |  | Die Separationseparates the dies on the wafer into
individual units using wafer saws.       

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| |  |  | Encapsulation or Moldingencases the dies in a protective
housing, often epoxy, using transfer molds.                                                                                                                                                                                                
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Leadframesare produced by stamping a pattern through a strip
of copper or iron-nickel alloy. For high precision (and fast
turnaround purposes) leadframes are usually produced by an etching
process. This is required when the space between the leads is finer
than the thickness of the material.
|
| |  |  | Leadframe platingdeposits a thin layer of gold or silver on
appropriate places.                                                                                                                                                                                                                     
|
| |  |  | Packagingdeals with the housing of the chip to protect it
from environmental influences and to finalize the product for
industrial use.                                                                                                                                                             
|
| |  |  | Product Testingtests the performance of the completed
semiconductor device.                                                                                                                                                                                                                         
|
| |  |  | Trim and Formcuts away the excess portion of the leadframe
and bends the leads into the desired shape, resulting in the
completed semiconductor device.                                                                                                                                             
|
| |  |  | Unit Inspectioninspects every mounted chip before
encapsulation and inspects each die throughout the assembly process
and prior to packaging.                                                                                                                                                       
|
| |  |  | Wire Bondingattaches extremely thin gold or aluminum wires
between the die and the leadframe for electrical connections using a
wire bonder.                                                                                                                                                        

C.       Industry Trends

The continuous demand for smaller, faster and cheaper semiconductors
drives the technology advances in the material fabrication process. The size
of the transistors is measured by the individual feature sizes, or line widths,
and current leading-edge devices are produced with line widths as small as 130
nanometers (one billionth of a meter). In order to be ready for the next
transition, the industry is already developing pilot production lines on 90
nanometer feature sizes and critical process equipment is being developed and
tested for line widths at or below 65 nanometers. Today, we are leveraging our
capabilities to support 130nm technology equipment and are beta testing our 90
nm technology. 65nm technology is currently developed in our laboratories.

In developing and piloting these advanced tools, the industry has
encountered new physical barriers that require different solutions. In
lithography, the most advanced light sources are based on 193 nanometer
wavelengths resulting in feature sizes that now are smaller than the wavelength
of the light source. This is similar to painting a thin line with a thick
brush. Smaller feature sizes are beneficial in that they shorten the distance
between transistors allowing even faster processing speeds. In the
ultra-competitive market for microprocessors, faster speed and lower price are
the defining characteristics and both are satisfied by smaller feature sizes.
In order to realize the faster transistor speeds, the focus has shifted to the
interconnection layer between the transistors. This layer historically has
been aluminum, but the superior performance of copper has resulted in a shift
toward copper. Copper is not as easy to work with because it cannot be
deposited using the same processes as aluminum. Instead, it must be
electroplated. Additionally, copper can contaminate and needs to have a
barrier layer placed around it to avoid contamination of the other layers. New
methods of depositing ultra-thin layers, including Atomic Layer Deposition are
being developed to address these challenges.

The move to copper and low-k is still in its infancy, with less than 3
percent of semiconductor wafers currently using copper connections, and still
poses several obstacles at 100 nanometer feature sizes and below. The trend is
toward harder dielectrics, which are more resistant to the necessary polishing
step, and lower forces during the polishing step. Our partner NuTool offers
the lowest force during the deposition and CMP of copper, and at greatly
reduced cost per wafer.

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Understanding the mechanical forces inherent in packaging processes is a
key consideration in the industrys transition to copper and low-k interconnect
structures. For example, applying force that exceeds the cohesive strength of
the low-k dielectric, or the adhesive strength of one of the interfaces in a
stack, will result in failure. ASM has a team exploring these and other
integration issues.

An optimized holistic approach to wafer processing and assembly-packaging
may become increasingly important in the not too distant future. As the only
company in the industry with both Front-end and Back-end segments, ASM is
uniquely positioned to benefit from further synergies between these segments,
and to provide an ultimate seamless solution that could revolutionize
semiconductor production processes.

The industry seeks to improve transistor performance as well, for example
by introducing new materials and device designs Silicon-Germanium (SiGe) is
critical to the formation of high-frequency transistors used in broadband and
wireless telecommunications. In 2001, ASM was also selected by a major US
device maker for applications of Silicon Germanium Carbon epitaxy for its
cutting edge RF BiCMOS technology. Silicon Germanium Carbon further reduces
power consumption of RF chips, while maintaining operating frequency.

The next generation of ultra-thin transistors will require new process
technology such as the use of silicon-on-insulator, or SOI wafers. SOI is an
advanced isolation technology, which will be used in most advanced, low power
microprocessors.

For line-widths below 100 nanometers, new and extremely thin gate
dielectrics are needed. New gate insulators of high-k dielectric materials,
with reduced leakage, require atomic layer deposition. For electronic
manufacturers, the lower power advantages provided by high-k gate insulator
electronics will extend the battery-life of electronic products, which in turn
will accelerate advances in portable electronics.

Semiconductor manufacturers are also seeking to reduce the cost of
producing semiconductor devices by increasing the diameter of the wafers on
which the semiconductor devices are being layered. The maximum diameter of
wafers is increasing from the current industry standard introduced in the early
1990s of 200mm, or eight inches, to 300mm, or twelve inches. The move toward
larger wafer sizes is driven by cost efficiency, since a 300mm wafer holds
approximately 2.25 times more dies than a conventional 200mm wafer. Presently,
most large semiconductor companies have committed to 300mm facilities.

The industry faces the dual challenges of increasingly small line widths
and larger wafer sizes. Historically, once a manufacturer has been designed
into a production line it is very difficult for a new manufacturer to displace
them. In the current environment, the massive shifts in technology and size
create an opportunity to replace incumbent suppliers. In the Front-end, the
competitive dynamics are driven by technology and cost. Our investments in
technology over the last five years have provided us with a strong platform
from which to successfully compete for orders in this transition environment.

To achieve improved yield, semiconductor equipment manufacturers have
focused on in-process metrology as a way to isolate and improve specific steps
in the manufacture of devices. The measurements conducted by metrology
equipment are becoming a more integral part of the semiconductor manufacturing
process. Semiconductor manufacturers are requiring equipment that can make
more precise and new kinds of measurements, and provide results of these
measurements faster by integration of the measurement tools into the processing
equipment. We have responded by integrating certain metrology functions in our
A412 vertical furnaces.

Technological developments in the Front-end process have resulted in the
need for new technology in the Back-end process. The ability to place millions
of transistors onto a thumbnail size device has created the opportunity to
place entire systems on a chip. Instead of many individual components and
simple circuits interconnected on a printed circuit board, these systems can
now be constructed into one integrated circuit. In addition, computer systems
are more interactive with the

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external environment and therefore require a greater number of
input/output (I/O) pins. The challenge for Back-end equipment providers is to
connect an increasing number of I/Os on a package that is constantly
decreasing in size. Wire bonding has been at the forefront of this transition
as this process connects each of the I/O pins on the individual dies to the
external package. Wire bonding must not only address decreasing wire diameters
but also increasing throughput to reduce the overall cost of the device. For
integrated circuits with very high I/O counts, the industry has developed ball
grid array (BGA) and flip-chip packaging that use the entire surface of a die
and not just the periphery of the device to attach I/Os. In addition,
semiconductor manufacturers are looking to automation and integration of
Back-end equipment as ways to reduce costs and increase productivity.

We believe the steady advance of semiconductor technology in Front-end and
Back-end processes will continue and will consequently drive the demand for new
equipment systems.

D.       Products.

We design, manufacture and sell products used in both Front-end wafer
processing and Back-end assembly, packaging and materials. The following table
sets forth the main manufacturing processes used in the Front-end and Back-end
market segments and indicates the markets in which we participate.

(Flow Chart)



---

|*   |  | Indicates markets in which we participate.                                                
|--- |  | ------------------------------------------------------------------------------------------
|   
|   
|   
|   
|**  |  | We participate in advanced cleaning technologies integrated with our deposition equipment.
|   
|   
|   
|   
|*** |  | We participate through ASMs investment in NuTuool.                                       

We combine hardware, software and processes to develop innovative products
for the creation of thin films on silicon wafers. These films, etched in
certain well-defined sub-micron patterns, form

-23-



---



##### Table of Contents



transistors and interconnection circuitry connecting those transistors.
Our equipment controls the properties of such films and assures that they are
deposited on atomically clean surfaces.

Films can be formed in several ways. For example, the surface of a wafer
can be exposed to oxygen to form a layer of silicon oxide, an insulator. A film
can also be deposited onto the heated surface of a wafer by introducing gas
compounds, usually at low pressure, in a CVD process. The CVD process can be
used to deposit conductive or insulating films. To deposit films at lower
temperatures other technologies such as PECVD is used. ALD or ALCVDTM
processes grow the films one atomic layer at a time, and is used when extremely
high quality and very flat films are required. We have products which perform
all of these deposition processes.

Front-end Products

The following table lists our principal Front-end equipment and the years
in which initial production units were first made available to customers.

|                                             |  |                                 |  |                                                                                                 |  |                         
|-------------------------------------------- |  | ------------------------------- |  | ----------------------------------------------------------------------------------------------- |  | ------------------------
|                                             |  |                                 |  |                                                                                                 |  | YEAR                    
|PRODUCT FAMILY                               |  | KEY PROCESSES                   |  | PRODUCTS                                                                                        |  | INTRODUCED              
|                                             |  |                                 |  |                                                                                                 |  |                         
|Single Wafer Thermal
CVD Systems             |  |  Epitaxy
 CVD
 RTCVD         |  | Epsilon® One(1)
Epsilon® Two(1)
Epsilon® 2000
Epsilon® 2500
Epsilon® 3000 (300mm)               |  | 1988
1990
1997
1997
1997
|                                            
|                                            
|                                            
|                                            
|                                             |  |                                 |  |                                                                                                 |  |                         
|Vertical Batch
Processing Systems            |  |  LPCVD
 Diffusion
 Oxidation |  | Advance®
A400 SeriesA600 UHVAdvance® 412 (200 and 300mm)                                       |  | 1994
1996
1998          
|                                            
|                                            
|                                            
|                                            
|                                             |  |                                 |  |                                                                                                 |  |                         
|Single Wafer Plasma
Enhanced CVD Systems     |  |  PECVD                         |  | Eagle® 10 (2 chambers)
Eagle® 10 Trident (3 chambers)
Eagle® 12 Rapid Fire (300mm)              |  | 1993
1997
1998          
|                                            
|                                            
|                                            
|                                            
|                                             |  |                                 |  |                                                                                                 |  |                         
|Single Wafer Atomic
Layer Deposition Systems |  |  ALD                           |  | F 120(2)F
450 and F 950(2)Pulsar® 2000                                                          |  | 1998
1997
1999          
|                                            
|                                            
|                                            
|                                            
|                                             |  |                                 |  |                                                                                                 |  |                         
|Single Wafer RTP
Systems                     |  |  Anneal
 Oxidation            |  | Levitor® 4000                                                                                   |  | 2000                    
|                                            
|                                            
|                                            
|                                            
|                                             |  |                                 |  |                                                                                                 |  |                         
|Single Wafer Cluster
Systems and Modules     |  |  Clean
 RTCVD
 ALD           |  | Vapor Clean Module
Epsilon® 2500 Module (3)
Pulsar® 2000 Module(3)
Pulsar® 3000 Module (300 mm) |  | 1999
1997
1999
2001     
|                                             |  |                                 |  |                                                                                                 |  |                         
|                                            
|                                            
|                                            
|                                            
|Platforms                                    |  |  Clustered
   processes        |  | Polygon TM 8200
Polygon TM 8300                                                                 |  | 1997
2001               



---

|(1) |  | This product has been replaced by the Epsilon 2000 and Epsilon 2500.
Although it is no longer sold, it still forms an important part of our
installed base and generates service and spare parts revenue.             
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | Used for non-wafer applications such as flat panel displays and magnetic
heads.                                                                                                                                       
|   
|   
|   
|   
|(3) |  | The Epsilon and Pulsar modules share the same reactor section as the
Epsilon and Pulsar single wafer stand-alone systems.                                                                                             
|   
|   
|   
|   
|(4) |  | Epsilon®, Advance®, Eagle®, Pulsar®, Levitor®, Aurora, ALCVD, Atomic
Layer CVD, Polygon, Trident, Rapidfile, A400 and A412 are used,
pending or registered as ASM trademarks in the US and/or other countries.

Single Wafer Thermal CVD Systems

Our Epsilon® products heat wafers to high temperatures using infrared
lamps, forming a film on the surface of a single wafer by applying CVD. The
main current use of the Epsilon® is for epitaxy of silicon and
silicon-germanium alloys.

In 2000, the Epsilon® 2000 received a prestigious Editors Choice Best
Product Award from Semiconductor International magazine, honoring products that
make a difference in semiconductor manufacturing. The high productivity
version of the Epsilon®, the Epsilon® 2500, offers the highest throughput in
the industry for epitaxial silicon applications. Our Epsilon® 3000 is the
first 300 mm SiGe System used in production. We offer both stand-alone
equipment and modules that can be integrated with our Polygon system.

-24-



---



##### Table of Contents



Vertical Batch Processing Systems

The Advance® 400 series vertical batch processing systems process up to
150 wafers at a time at high temperatures. These reactors load wafers into a
carrier, which is pushed into the heated reactor for diffusion, oxidation or
CVD processing. The Advance® A400 vertical batch processing system and the
Advance® A412 300 mm version has demonstrated to be the most productive systems
of their kind in the industry.

Single Wafer Plasma Enhanced CVD Systems

The Eagle® series reactors are single wafer systems that deposit films on
wafers using a plasma. The Eagle® 10 TridentEagle® systems are most often
utilized for depositing insulators, such as silicon oxide, silicon nitride, and
low-k dielectric films used in interconnect circuits. The Eagle® 12 Rapidfire
(300 mm) have three chambers configured for enhanced productivity. The
simplicity of these systems results in low cost, high reliability and low
maintenance.

Atomic Layer Deposition Systems

Our Pulsar® ALCVD product for atomic layer deposition is already in
commercial production in the markets for flat panel displays and magnetic
heads. It is currently being selected for advanced (<100 nm) device
manufacturing. The Pulsar® 2000 was awarded an Editors choice Best Product
Award from Semiconductor International magazine in 2000. With the Pulsar® 2000
and the Pulsar® 3000 (300 mm), we offer both stand-alone equipment and modules
that can be integrated with our Polygon cluster systems.

Single Wafer RTP Systems

In our new RTP product, the Levitor®, the wafer floats on a cushion of gas
and does not require lamps for heating. Compared to existing lamp-based RTP
systems, the Levitor® allows very fast heating and cooling of the wafers and a
more efficient and cost-effective solution. The product is currently being
evaluated by two European R&D labs and two end-users.

Single Wafer Cluster Systems and Modules.

At times, several processes must be performed sequentially on the wafer
without allowing them to be contaminated by air. Our Polygon single wafer
cluster systems (Polygon 8200 and Polygon 8300 for 300 mm) allow the
integration of up to four modules on a single vacuum handler. We currently
have Epsilon®, Pulsar® and vapor clean modules available, the latter to clean
unwanted oxide from the incoming wafer with a patented process.

Back-end or Assembly Packaging Products

The following table lists our principal Back-end products, and the years
in which initial production units were first made available to customers.

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##### Table of Contents



|                                                                                                      |  |                                                                            |  |                                             |  |                                   
|----------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------- |  | ------------------------------------------- |  | ----------------------------------
|                                                                                                      |  | KEY                                                                        |  |                                             |  | YEAR                              
|PRODUCT FAMILY                                                                                        |  | PROCESSES                                                                  |  | PRODUCTS                                    |  | INTRODUCED                        
|                                                                                                      |  |                                                                            |  |                                             |  |                                   
|Assembly                                                                                              |  | Die Bonding                                                                |  | AD809
AD829A
AD819
AD889A
AD898
AD8912      |  | 1990
1999
1998
1999
2000
2000     
|                                                                                                      |  |                                                                            |  |                                             |  |                                   
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                      |  | Wire Bonding                                                               |  | AB520
AB559A
AB339 Eagle
AB339 Eagle
AB339  |  | 2000
1997
1997
2000
1997          
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                      |  |                                                                            |  |                                             |  |                                   
|Packaging                                                                                             |  | Encapsulation and Packaging Processing                                     |  | PMC139
IDEALmold                           |  | 1999
2000                         
|                                                                                                      |  |                                                                            |  |                                             |  |                                   
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                      |  | Trim and Form                                                              |  | MP209
BGA289
CS500
CS800
CS900
BPLine
DS500 |  | 1996
1998
1999
2000
2000
2000
2000
|                                                                                                      |  |                                                                            |  |                                             |  |                                   
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|Automated Systems                                                                                     |  | Full integration of the above
assembly and packaging steps into one
system |  | IDEALine                                   |  | 1999                              
|                                                                                                      |  |                                                                            |  |                                             |  |                                   
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|Materials                                                                                             |  | Manufacture of carriers on which
dies are mounted                          |  | Leadframes                                  |  | 1980                              
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                      |  |                                                                            |  |                                             |  |                                   
|Eagle®, IDEALmold
are used, pending
or registered as
ASM trademarks in
the US and/or
other countries

Die bonding

We manufacture several die bonding models to address various markets
including semiconductor and optoelectronic devices. The AD889 features an
automatic wafer handling system, programmable epoxy dispensing system and
sophisticated inspection and pattern recognition systems. AD889 has a high
throughput at relatively low cost. The AD829 and AD809 models address the
large market for die sizes under 30 mils square. A mil is 1/1000 of a inch.
In addition to the semiconductor device market, the small die category includes
optoelectronic devices. The model AD819 is a high precision machine designed
for laser diode optoelectronic devices. Machines may be configured to operate
stand-alone or connected to epoxy curing ovens and wire bonders.

Wire bonding

We introduced our Eagle gold wire bonder in 2000. This is the successor
to our acclaimed AB339 generation bonder. The Eagle offers significant output
increase over existing models. It has the industry leading fine pitch
capability and favorable price/performance ratio as well as an ultralight bond
head, advanced pattern recognition software and automatic wire bonder
inspection capability. The AB510 and AB559A are ultrasonic wedge bonders used
for aluminum wire bonding at room temperature on printed circuit boards. These
machines address the consumer products market which focuses on cost effective
solutions. The AB356 is a gold wire bonder that serves the large
substrate/hybrid device market.

Encapsulation

The EM649 features a very fast load/unload time and uses modular
components for rapid product conversion and adaptable system configuration,
which makes it very flexible. The EM649 is offered in stand-alone and in-line
configurations. The IDEALmold, introduced in 2000, specifically designed to
be manufactured in a modular format allowing customers to specify the system
capacity from two to eight leadframes. This product specifically addresses the
in-line market which requires molding systems of varying capabilities to allow
for proper line balancing. The PMC109 allows customers to directly transfer
encapsulated semiconductor devices to a high capacity multi-chamber oven for
continuous automatic post mold curing of epoxy molding compound.

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Trim and Form

Our MP209 is a high speed, motorized trim and form equipment catering to
different packages. The modular set-up of the system allows integration of
third party testing, marking and inspection functions, which in turn allows
more cost-efficient production for our customers. These systems may also be
integrated into our IDEALine.

Automated Systems

The IDEALine integrates Back-end assembly and packaging equipment. We
believe we are the only manufacturer of Back-end equipment capable of offering
such an extensive integrated line using our own equipment. These lines
integrate serial process steps with mechanical and software linkages. Offered
in a modular format, customers may integrate some or all of the following
processes that we supply: die bonding and inspection, epoxy curing, wire
bonding and inspection, encapsulation, post mold curing and trimming, and
forming. In addition, we work with third party suppliers to offer various
additional processes.

Research and Development

We believe that our future success depends to a large extent upon our
ability to develop new products and add improved features to existing products.
Accordingly, our centralized product development policies and local activities
are directed toward expanding and improving present product lines to
incorporate technology advances and enable timely penetration of new markets
for automated semiconductor processing, assembly and packaging equipment. These
activities require the application of physics, chemistry, process technology,
electrical engineering, precision mechanical engineering and software
development. We are also continuing to develop new applications as well as
software and hardware for our Back-end products.

Our net research and development expenses, as a percentage of net sales,
were 11.4%, 7.9% and 14.2% during 1999, 2000 and 2001, respectively. We expect
to continue investing significant resources in research and development to
enhance our product solutions.

Our research and development activities are conducted in the principal
semiconductor markets of the world, which enables us to draw on innovative and
technical capabilities on an international basis. Each geographic center
provides expertise for specific products or technologies. This approach,
combined with interactions between the individual centers, permits efficient
allocation of technical resources and allows for customer orientation combined
with the necessary product specialization.

|                 |  |                                                                                                              |  |                  
|---------------- |  | ------------------------------------------------------------------------------------------------------------ |  | -----------------
|                 |  |                                                                                                              |  | NUMBER OF R & D  
|                 |  |                                                                                                              |  | EMPLOYEES AS OF  
|BUSINESS SEGMENT |  | LOCATION                                                                                                     |  | DECEMBER 31, 2001
|                 |  |                                                                                                              |  |                  
|Front-end        |  | Bilthoven, the Netherlands
Leuven, Belgium (IMEC)
Espoo, Finland
Phoenix, Arizona, United States
Tama, Japan |  | 89
22
19
50
45   
|                
|                
|                
|                
|                
|Back-end         |  | Hong Kong
Singapore                                                                                          |  | 306
206          
|                
|                
|                
|                
|                

As part of our research and development activities, we are engaged in
various formal and informal arrangements with customers and institutes. These
arrangements are made on a development program basis and allow us to develop
products that meet customer requirements and obtain access to new technology
and expertise. We currently are engaged in a development program with several
customers for 300mm applications of our Eagle products. The Eagle 10 was
developed in close collaboration with Japanese customers, while the Advance 400
product performance was enhanced in cooperation with a number of customers. The
A-600 UHV was further upgraded in cooperation with a major Japanese customer.
In cooperation with NuTool, Inc., a United States supplier of copper plating
and CMP equipment, we are developing production solutions for copper
applications.

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##### Table of Contents



We participate in European programs focusing on developing the production
technology for semiconductor devices with line widths of 130, 90 and 65nm. We
are the project manager in a number of projects that were awarded under the
European Strategic Program for Research and Development in Information
Technology, or ESPRIT, an initiative of the European Union. Since 1990, the
board of Micro Electronics Development for European Applications, MEDEA and
MEDEA+ also an initiative of the European Union, and its predecessor approved
extensive development programs in which we are a leading partner. We are
currently working on a project with MEDEA+ in connection with possible uses of
our ALCVD technology. Mr. Arthur H. del Prado, our President and Chief
Executive Officer, is a member of the board of MEDEA+.

The integration of new product solutions into process modules is done in
ASM Europes application laboratory, which shares IMECs clean rooms in Leuven,
Belgium. This integration within IMECs facilities gives us access to all the
additional process steps needed to create sub-micron devices, including
sub-micron patterning. Development of customer applications usually occurs with
the active participation of IMEC, suppliers of complementary and non-critical
equipment, and end-users of our products.

In addition to cooperating with third parties such as customers and other
equipment companies in research and development projects, we enter into
projects with technical universities, particularly in the Netherlands, Japan
and Finland. As part of these projects, we may sell our equipment to customers
who will use grants or research loans to acquire these products or we may
receive grants or research loans directly. We have received such loans in the
past from the Netherlands government, of which  10.1 million was outstanding
at December 31, 2001, and are repaying these loans from the sales proceeds of
the products developed with their assistance at repayment rates of up to 100%
of the amounts of the loans. Our subsidiary, ASM Microchemistry, received
similar loans from the Finnish government.

Manufacturing and Suppliers.

Our manufacturing operations consist of the fabrication and assembly of
various critical components, product assembly, quality control and testing.

In the Front-end process, we outsource the manufacture of major subsystems
and subassemblies and some design, assembly and testing functions to
specialized companies. We believe that outsourcing enables us to minimize our
fixed costs and capital expenditures while also providing the ability to
rapidly increase production capacity. We also work closely with our suppliers
to achieve mutual cost reduction through joint design efforts.

Philips High Tech Electronics Group (formerly Philips Machinefabricken
Nederland B.V.) supplies a substantial part of the major subassemblies used in
the manufacture of the Advance A400and Advance A412.Although we work with a
limited number of suppliers, we seek not to rely on a sole supplier, and have
back-up suppliers for most subsystems and subassemblies that are outsourced.

In addition, we purchase the metrology equipment that we integrate into
some of our Front-end products from NanoPhotonics. As of February 11, 2002 we
had a 24% equity interest in NanoPhotonics and our Chief Executive Officer had
a 44.5% interest. See Item 5. Operating and Financial Review and Prospects
and Item 7. Related Party Transactions.

Our Back-end operations are vertically integrated to insure quality
production of component parts where the quality of subassemblers does not
otherwise meet our standards. The manufacturing activities in Hong Kong and
Singapore consist primarily of assembling and testing components and
subassemblies manufactured at our main manufacturing facilities in China and
Malaysia.

Marketing and Sales

We sell and market our products with the objective of developing and
maintaining an ongoing, highly interactive service and support relationship
with our customers. Our marketing strategy includes

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##### Table of Contents



advertising and participating in various industry trade shows. We provide
prospective customers with extensive process and product data, provide
opportunities for tests on demonstration equipment and, if required, install
evaluation equipment available at the customers site. Once equipment has been
installed, we support our customers with, among other things, extensive
training, on-site service, spare parts and process support. All of this is
further supported by in-house development to enhance the productive life of
existing equipment. We make hardware improvements available in the form of
retrofit kits as well as joint development with our customers of new
applications. We encourage our engineers to submit technical papers in relevant
magazines and to give lectures in symposia.

We also install our equipment with semiconductor manufacturers for
evaluation in order to strengthen our existing customer relationships as well
as develop new customers.

Because of the significant investment required to purchase our systems and
their highly technical nature, the sales process is complex, requiring
interaction with several levels of a customers organization and extensive
technical exchanges, product demonstrations and commercial negotiations. As a
result, the full sales cycle can be as long as 12 to 18 months for sales of
Front-end equipment and three to six months for sales of Back-end equipment.
Purchase decisions are generally made at a high level within a customers
organization, and the sales process involves broad participation across our
organization, from senior executive management to the engineers who designed
the product.

Our sales process usually starts with high-level introduction meetings.
Early in the process we also meet with operational personnel to discuss the
intended uses of our equipment, technical requirements, solutions, and the
overall production process of the customer. Demonstrations and evaluation of
test results take time. Once we agree upon the technological terms of the sale,
the process continues with price and delivery negotiations and, when completed
successfully, with the issuance by the customer of a letter of intent to secure
a slot in the manufacturing and assembly planning schedule, followed by a
purchase order.

To market our products, we operate demonstration and training centers
where customers can examine our equipment in operation and can, if desired,
process their wafers or individual dies for further in-house evaluation.
Customers are also trained to properly use purchased equipment.

Each of our major product lines has a dedicated product manager,
responsible for positioning the product in the market, developing it over time
and evaluating its relative performance compared to the competition. Each
product manager sets priorities in terms of technical development and sales
support.

To execute the sales and service functions, we have established a direct,
integrated sales force for Front-end products reporting on a geographical basis
to the managers in charge of Europe, North America, Korea, Taiwan, Southeast
Asia and Japan. At the end of 2001, the Front-end units had 83 employees fully
dedicated to sales and marketing, representing 7.4% of total Front-end staff.
Dedicated support and sales forces are maintained for our various geographic
units, enabling us to serve our global customers with an equally global
organization. Each of our geographic Front-end units is responsible for sales
of all of our Front-end products in its region. We believe the integration of
our sales force promotes cross selling of Front-end products.

In addition to the sales activities undertaken at the principal offices of
our various manufacturing units, we have sales offices located in Europe (in
the United Kingdom, France, Italy and Germany), and in the United States (in
California, Texas and Pennsylvania). In Japan, our sales offices are located in
Tokyo and Osaka.

We use independent sales agents in Malaysia and China for Front-end
products and to support our sales efforts for ALCVD equipment in the
non-semiconductor markets, such as flat panel displays and magnetic heads.

Sales of Back-end equipment and materials are provided by our principal
offices in Hong Kong and Singapore, through direct sales offices in Taiwan, the
Philippines, Malaysia, Thailand, Japan, Europe

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---



##### Table of Contents



and North America, and through sales representatives in Korea and some
parts of the United States. At the end of 2001, there were 308 staff members
employed in sales and marketing of Back-end products, representing 6.4% of
total Back-end staff.

Customers

We sell our products predominantly to manufacturers of semiconductor
devices and manufacturers of silicon wafers. Our customers include most leading
semiconductor and wafer manufacturers. Our customers vary from independent
semiconductor manufacturers that sell their products on the open market, to
large electronic system companies that manufacture semiconductor devices for
their own use. While some semiconductor manufacturers have consolidated in
recent years, the number of foundries and semiconductor assemblers has been
expanding rapidly.

The following table lists a sample of recent customers of ours:

|                         |  |                     |  |                    
|------------------------ |  | ------------------- |  | -------------------
|CUSTOMERS               
|                        
|Agere Group              |  | Intel               |  | Philips            
|                        
|                        
|                        
|                        
|Agilent                  |  | Hitachi             |  | Samsung            
|                        
|                        
|                        
|                        
|Amkor Technology         |  | Hyundai             |  | Sony               
|                        
|                        
|                        
|                        
|Chippac                  |  | Lucent Technologies |  | ST Microelectronics
|                        
|                        
|                        
|                        
|Fairchild Semiconductors |  | Micron              |  | Texas Instruments  
|                        
|                        
|                        
|                        
|Fujitsu                  |  | Mitsubishi          |  | Toshiba            
|                        
|                        
|                        
|                        
|IBM                      |  | Motorola            |  | TSMC               
|                        
|                        
|                        
|                        
|Infineon                 |  | NEC                 |  | UMC Group          

Our largest customer accounted for approximately 11.0%, 14.2% and 7.2% of
our net sales in 1999, 2000 and 2001, respectively. Our ten largest customers
accounted for approximately 43.1%, 45.2% and 35.5% of our net sales in 1999,
2000 and 2001, respectively. Historically, a significant percentage of our net
sales in each year has been attributable to a limited number of customers;
however, the largest customers for our products may vary from year to year
depending upon, among other things, a customers budget for capital
expenditures, plans for new fabrication facilities and new product
introductions.

The following table shows the distribution of net sales according to
geographic destination of the product and segment:

|     |  |           |  |                   |       |                        |  |                                      |  |               |  |             
|---- |  | --------- |  | ----------------- | ----- | ---------------------- |  | ------------------------------------ |  | ------------- |  | ------------
|     |  |           |  | PERCENTAGE OF NET |       |                        |  |                                      |  |              
|     |  | SEGMENT   |  | SALES             |       | GEOGRAPHIC DESTINATION |  | PERCENTAGE OF NET SALES             
|     |  |           |  |                   |       |                        |  |                                     
|     |  |           |  |                   |       |                        |  |                                      |  | Front End     |  | Back End    
|     |  |           |  |                   |       |                        |  |                                      |  |               |  |             
|2001 |  | Front-End |  |                   | 60.0% |                        |  | S.E. Asia
       Europe              |  | 8.5%  
18.1%  |  | 34.0%  
2.0%
|    
|    
|    
|    
|     |  | Back End  |  |                   | 40.0% |                        |  | North and South America
       Japan |  | 18.5%  
14.9% |  | 1.5%  
2.5% 

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##### Table of Contents



|     |  |           |  |                   |       |                        |  |                                      |  |               |  |             
|---- |  | --------- |  | ----------------- | ----- | ---------------------- |  | ------------------------------------ |  | ------------- |  | ------------
|     |  |           |  | PERCENTAGE OF NET |       |                        |  |                                      |  |              
|     |  | SEGMENT   |  | SALES             |       | GEOGRAPHIC DESTINATION |  | PERCENTAGE OF NET SALES             
|     |  |           |  |                   |       |                        |  |                                     
|     |  |           |  |                   |       |                        |  |                                      |  | Front End     |  | Back End    
|     |  |           |  |                   |       |                        |  |                                      |  |               |  |             
|2000 |  | Front-End |  |                   | 40.6% |                        |  | S.E. Asia
       Europe              |  | 7.8%  
9.3%   |  | 54.2%  
2.4%
|    
|    
|    
|    
|     |  | Back End  |  |                   | 59.4% |                        |  | North and South America
       Japan |  | 11.8%  
11.7% |  | 1.8%  
1.0% 

|     |  |           |  |                   |       |                        |  |                                      |  |               |  |             
|---- |  | --------- |  | ----------------- | ----- | ---------------------- |  | ------------------------------------ |  | ------------- |  | ------------
|     |  |           |  | PERCENTAGE OF NET |       |                        |  |                                      |  |              
|     |  | SEGMENT   |  | SALES             |       | GEOGRAPHIC DESTINATION |  | PERCENTAGE OF NET SALES             
|     |  |           |  |                   |       |                        |  |                                     
|     |  |           |  |                   |       |                        |  |                                      |  | Front End     |  | Back End    
|     |  |           |  |                   |       |                        |  |                                      |  |               |  |             
|1999 |  | Front-End |  |                   | 43.8% |                        |  | S.E. Asia
       Europe              |  | 11.4%  
9.8%  |  | 50.9%  
1.5%
|    
|    
|    
|    
|     |  | Back End  |  |                   | 56.2% |                        |  | North and South America
       Japan |  | 12.5%  
10.1% |  | 2.4%  
1.4% 

Customer Service

We provide responsive customer technical assistance to support our
marketing and sales. Technical assistance is becoming an increasingly important
factor in our business as most of our equipment is used in critical phases of
semiconductor manufacturing. Field engineers install the systems, perform
preventive maintenance and repair services, and are available for assistance in
solving customer problems. Our global presence permits us to provide these
functions in proximity to our customers. We also maintain local spare part
supply centers to facilitate quick support.

We provide maintenance during the product warranty period, usually one to
two years, and thereafter perform maintenance pursuant to individual orders
issued by the customer. In addition to providing ongoing service, our customer
service operations are responsible for customer training programs, spare parts
sales and technical publications. In appropriate circumstances, we will send
technical personnel to customer locations to support the customer for extended
periods of time to optimize the use of the equipment for the customers
specific processes. For our Front-end business, where the availability of field
support is particularly important for a sale, there are approximately 323
support staff employees, or 28.7% of our total Front-end employees.

Competition

The semiconductor equipment industry is intensely competitive, and is
fragmented among companies of varying size, each with a limited number of
products serving a particular segment of the semiconductor process. Technical
specifications of the individual products are an important competitive factor,
especially concerning capabilities for manufacturing of new generations of
semiconductor devices. As each product category encompasses a specific blend of
different technologies, our competitive position from a technology standpoint
may vary within each category. Customers are evaluating manufacturing equipment
based on a mixture of technical performance and cost of ownership over the life
of the product. Main competitive factors include overall product performance,
yield, reliability, maintainability, service, support and price. We believe
that we are competitive with respect to each of these factors, and that our
products are cost effective.

As the variety and complexity of available machinery increases, some
semiconductor manufacturers are attempting to limit their suppliers. In
addition, semiconductor manufacturers are located throughout the world, and
expect their equipment suppliers to have offices worldwide to meet

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their supply and service needs. Semiconductor equipment manufacturers with
a more limited local presence are finding it increasingly difficult to compete
in an increasingly global industry.

Our primary competitors in the Front-end business are from the United
States and Japan. Our primary competitors in the Back-end business are from the
United States, Europe and Japan. In each of our product lines, we compete
primarily with two or three companies which vary from small to large firms in
terms of the size of their net sales and range of products. Our primary
competitors in the Front-end business include Applied Materials, Novellus,
Tokyo Electron and Kokusai. Our primary competitors in the Back-end business
include Kulicke & Soffa, ESEC, Shinkawa, Apic Yamada, BE Semiconductor, Towa,
Shinko and Mitsui.

Intellectual Property

Because of the rapid technological advances in the microelectronics field,
we believe that our products will be subject to continuing change and
enhancement. Accordingly, we believe that our success will depend upon the
technical competence and creative ability of our personnel and the ownership of
our intellectual property rights.

We have patents some of which cover key technologies, features and
operations of our major Front-end products, with many patents registered in
every major country where semiconductor devices or equipment are manufactured.
We own a number of patents and patent applications for semiconductor wafer
processing equipment. We also own patents and patent applications for LPCVD,
PECVD, ALCVD and epitaxial technology. The following table shows the number of
patents for which we made an initial filing during the indicated period and the
number of patents in force as of the end of the indicated period:

|                       |  |      |     |      |  |      |     |      |  |      |     |  |  |  |     |  |  |  |     | 
|---------------------- |  | ---- | --- | ---- |  | ---- | --- | ---- |  | ---- | --- |  |  |  | --- |  |  |  | --- | 
|                       |  | Year |     | Year |  | Year |     | Year |  | Year
|                       |  | 1997 |     | 1998 |  | 1999 |     | 2000 |  | 2001
|                       |  |      |     |      |  |      |     |      |  |     
|Initial patent filings |  |      | 22  |      |  |      | 34  |      |  |      | 40  |  |  |  | 58  |  |  |  | 49  | 
|                      
|                      
|                      
|                      
|Issued patents         |  |      | N/A |      |  |      | N/A |      |  |      | 167 |  |  |  | 215 |  |  |  | 277 | 

We have entered into worldwide, non-exclusive, non-transferable and
non-assignable licenses with Applied Materials for patents related to epitaxy
and some chemicals used to deposit insulating layers for PECVD. To maintain
these licenses, we pay Applied Materials a royalty on sales of equipment that
use the patented technology. These patents expire at various times between 2002
and 2010. Upon expiration of the patents, the technology may be used
royalty-free by the public, including us.

In the Back-end market segment, companies generally compete on the basis
of their cumulative expertise in applying well known technologies to improve
productivity and cost-efficiency. As a result, we file fewer patents related
to our Back-end business but where possible, we file for protection of
innovations made by our Back-end subsidiary. We also own certain trademarks
and other proprietary information that we consider important to our business.

There has been substantial litigation regarding patent and other
intellectual property rights in semiconductor-related industries. In the
future, additional 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. Any such litigation could result
in substantial cost and diversion of effort by us, which could have a material
adverse effect on our business, financial condition and operating results.
Adverse determinations in such litigation could result in our loss of
proprietary rights, subject us to significant liabilities to third parties,
require us to seek licenses from third parties or prevent us from manufacturing
or selling our products, any of which could have a material adverse effect on
our business, financial condition and operating results.

From time to time, we may be subject to litigation and claims in the
normal course of operations. At present, we are not involved in any litigation
which we believe is likely to have a materially adverse effect on our financial
position. However, we have been named as a counter-defendant in a patent

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infringement litigation which our subsidiary, ASM America, Inc. recently
filed, the outcome of which cannot be determined at present.

On June 6, 2001, ASM America Inc. filed a lawsuit in the U.S. District
Court for the Northern District of California against Genus, Inc. alleging
infringement of two patents involving sequential chemical vapor deposition and
methods for growing thin films. On August 1, 2001, Genus filed an answer
denying the claims of patent infringement, and raising an affirmative defense
(among others) that the patents had been procured by inequitable conduct.
Genus also brought a counter-claim for a declaratory judgment that the patents
are invalid and not infringed, as well as an antitrust counter-claim alleging
that ASM America and ASMI have engaged in a pattern of conduct designed to
monopolize the alleged atomic layer deposition market. In addition, Genus
brought a counter-claim against ASM America and ASMI alleging infringement of
United States Patent No. 5,294,568 involving Method of Selective Etching of
Native Oxide. On January 9, 2002, in a procedural ruling, the court permitted
ASM America to bring an additional cause of action against Genus for
infringement of ASM Americas showerhead patent, United States Patent No.
4,798,165 (entitled Apparatus for Chemical Vapor Deposition Using an Axially
Symmetric Gas Flow). The court also severed and stayed the anti-trust claims
and all related discovery until after trial on the patents at issue. The case
is currently in the midst of discovery and exchange of disclosures under the
Northern District of California local patent rules. The patents at issue are
important to ASM America for the development and marketing of proprietary
atomic layer deposition equipment and processes. If the court should determine
that ASM Americas patents are invalid in whole or in part, ASM Americas
atomic layer deposition program could be materially adversely affected. Given
the stage of the proceedings, it is not possible to predict the outcome of the
claim and counter-claims at this time, or range of potential recovery or loss.
ASMI and ASM America intend to pursue this lawsuit vigorously.



|C. |  | Organizational Structure.
|-- |  | -------------------------

As of February 11, 2002, the following chart presents the jurisdiction of
incorporation of our significant subsidiaries and our percentage of ownership
interest in those subsidiaries:

|                                                  |  |                                  |  |                         |       |  
|------------------------------------------------- |  | -------------------------------- |  | ----------------------- | ----- | -
|                                                  |  |                                  |  | Percentage Owned by    
|Subsidiary Name and Location                      |  | Country of Incorporation         |  | ASM International, N.V.
|                                                  |  |                                  |  |                        
|ASM Europe, B.V.
Bilthoven, the Netherlands       |  | The Netherlands                  |  |                         | 100   | %
|                                                 
|                                                 
|                                                 
|                                                 
|                                                 
|ASM Microchemistry, Ltd.
Espoo, Finland           |  | Belgium                          |  |                         | 100   | %
|                                                 
|                                                 
|                                                 
|                                                 
|                                                 
|ASM America, Inc.
Phoenix, Arizona, United States |  | State of Delaware, United States |  |                         | 100   | %
|                                                 
|                                                 
|                                                 
|                                                 
|                                                 
|ASM Japan, KK
Tama, Japan                         |  | Japan                            |  |                         | 100   | %
|                                                 
|                                                 
|                                                 
|                                                 
|                                                 
|ASM Pacific Technology Ltd.
Hong Kong, China      |  | Hong Kong, China                 |  |                         | 54.36 | %



|D. |  | Property, Plants and Equipment.
|-- |  | -------------------------------

To develop and manufacture products to local specifications and to market
and service products more effectively in the worldwide semiconductor market,
our Front-end manufacturing facilities are located in Europe, the United States
and Japan and our Back-end facilities are located in Hong Kong, China,
Singapore and Malaysia. Our principal facilities are summarized below:

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|          |  |                            |  |                                                                                                        |  |                |         | 
|--------- |  | -------------------------- |  | ------------------------------------------------------------------------------------------------------ |  | -------------- | ------- | 
|          |  |                            |  |                                                                                                        |  | APPROXIMATE   
|BUSINESS  |  |                            |  |                                                                                                        |  | AGGREGATE     
|SEGMENT   |  | LOCATION                   |  | PRIMARY USES                                                                                           |  | SQUARE FOOTAGE
|          |  |                            |  |                                                                                                        |  |               
|          |  | Bilthoven, The
Netherlands |  | Wafer processing equipment
manufacturing, marketing, research and
executive offices                    |  |                | 231,000 | 
|         
|         
|         
|         
|          |  |                           
|          |  | Tama and Niigata,
Japan    |  | Wafer processing equipment manufacturing,
marketing, research and offices                              |  |                | 333,000 | 
|         
|         
|         
|         
|          |  |                           
|Front-end |  | Phoenix, Arizona,
USA      |  | Wafer processing equipment manufacturing,
marketing, research and offices                              |  |                | 175,000 | 
|         
|         
|         
|         
|          |  |                           
|          |  | Almere,
The Netherlands    |  | Wafer processing equipment manufacturing
and offices                                                   |  |                | 77,000  | 
|         
|         
|         
|         
|          |  |                           
|          |  | Espoo, Finland             |  | Wafer processing equipment manufacturing,
marketing, research and offices                              |  |                | 40,000  | 
|         
|         
|         
|         
|         
|          |  | Hong Kong                  |  | Assembly and encapsulation equipment
manufacturing, leadframe plating,
marketing, research and offices |  |                | 250,000 | 
|         
|         
|         
|         
|          |  |                           
|          |  | Shenzhen, China            |  | Precision metal part and subassembly
fabrication, stamped leadframe
manufacturing and offices          |  |                | 651,000 | 
|         
|         
|         
|         
|          |  |                           
|Back-end  |  | Singapore                  |  | Assembly equipment and etched leadframe
manufacturing, marketing, research and
offices                 |  |                | 333,000 | 
|         
|         
|         
|         
|          |  |                           
|          |  | Johor Bahru,
Malaysia      |  | Precision metal part and subassembly
fabrication, and offices                                          |  |                | 38,000  | 

Our principal facilities in the Netherlands, the United States, Finland,
Hong Kong, China, Singapore and Malaysia are subject to leases expiring at
various times from 2002 to 2026. The facilities we own are subject to
mortgages. We believe that our facilities are maintained in good operating
condition and are adequate for our present level of operations.

Item 5.  Operating and Financial Review and Prospects.

Overview

We design, manufacture and sell equipment and systems used to produce
semiconductor devices, or integrated circuits. Our production equipment and
systems are used by both the Front-end and Back-end segments of the
semiconductor market. Front-end equipment performs various fabrication
processes in which multiple thin films of electrically insulating or conductive
material are grown or deposited onto a round slice of silicon, called a wafer.
Back-end equipment separates these processed wafers into numerous individual
dies, each containing the circuitry of a single semiconductor device, and
assembles, packages and tests the dies in order to create semiconductor
devices. We conduct our Front-end business, which accounted for 60.0% of our
net sales in 2001, through facilities in the Netherlands, the United States,
Japan and Finland. We conduct our Back-end business, which accounted for 40.0%
of our net sales in 2001, through facilities in Hong Kong, China, Singapore and
Malaysia. Our Back-end operations are conducted through our 54.4%
majority-owned subsidiary, ASM Pacific Technology Ltd. (ASMPT).

We sell our products worldwide to the semiconductor industry, which is
subject to sudden and extreme cyclical variations in product supply and demand.
Since late 2000, the semiconductor industry has been in a cyclical downturn
characterized by reduced demand for products, lower average selling prices
across certain product lines, reduced investment in semiconductor capital
equipment and other factors all of which have led to lower sales and earnings
for our business. We have experienced some order cancellations and rescheduled
deliveries from our customers as a result of this downturn. In the Front-end
segment, we are able to reduce manufacturing costs in a market downturn because
we outsource a substantial portion of our manufacturing requirements and
because part of our European and Japanese workforce is composed of temporary
contract employees, the number of which can be reduced as necessary. In the
Back-end segment, where we are highly vertically integrated, we are able to
adapt to adverse market conditions by reducing headcount and encouraging our
employees to take long-term holidays. Since we enjoy a cost advantage in our
Back-end operations due to the location of our manufacturing facilities and
because we can efficiently reduce variable costs quickly in response to changes
in market demand, a tightening market for our Back-end products may also
present opportunities for market penetration.

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Presently, the industry is transitioning to new processes and materials
and to a larger, 300mm wafer size from the current 200mm standard. This
transition requires equipment providers to develop entirely new sets of tools
and presents to us an opportunity to displace existing suppliers to major
semiconductor manufacturers.

Sales

The sales cycle from quotation to shipment for our Front-end equipment can
take several months, depending on capacity utilization and the urgency of the
order. The acceptance period after installation may be as short as four to five
weeks. However, if customers are unfamiliar with our equipment or are receiving
new product models, the acceptance period may take as long as ten weeks or
more. The sales cycle is longer for equipment which 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.

The sales cycle for Back-end products typically is shorter than for
Front-end products. Generally, the majority of our Back-end equipment is built
in standard configurations. We build Back-end products that are approximately
85% complete in anticipation of customer orders. Upon receipt of a customers
order and specifications, the remaining 15% of the manufacturing is completed.
This allows us to complete the assembly of our equipment in a short period of
time. We therefore require between two to six weeks for final manufacturing,
testing, crating, and shipment of our Back-end equipment. Our Back-end
customers acceptance periods generally are shorter than those for Front-end
equipment. We provide installation, training and technical support to our
customers with local staff in all of our major markets.

Our Front-end sales are concentrated in the United States, Europe, Japan
and Southeast Asia and our Back-end sales are concentrated in Southeast Asia.
The following table shows the geographic distribution of our Front-end and
Back-end sales for 2000 and 2001:

|               |  |                   |       |                   |  |  |       |  
|-------------- |  | ----------------- | ----- | ----------------- |  |  | ----- | -
|               |  | Year Ended        |       | Year Ended       
|Region         |  | December 31, 2000 |       | December 31, 2001
|               |  |                   |       |                  
|Front-end:     |  |                   |       |                   |  |  |       |  
|              
|              
|              
|              
|United States  |  |                   | 29.1  | %                 |  |  | 30.9  | %
|              
|              
|              
|              
|Europe         |  |                   | 23.0  |                   |  |  | 30.2  |  
|              
|              
|              
|              
|Japan          |  |                   | 28.6  |                   |  |  | 24.8  |  
|              
|              
|              
|              
|Southeast Asia |  |                   | 19.3  |                   |  |  | 14.1  |  
|               |  |                   |       |                   |  |  |       |  
|               |  |                   | 100.0 | %                 |  |  | 100.0 | %
|               |  |                   |       |                   |  |  |       |  
|Back-end:      |  |                   |       |                   |  |  |       |  
|              
|              
|              
|              
|Taiwan         |  |                   | 17.9  | %                 |  |  | 16.7  | %
|              
|              
|              
|              
|Malaysia       |  |                   | 23.1  |                   |  |  | 14.9  |  
|              
|              
|              
|              
|China          |  |                   | 6.8   |                   |  |  | 13.2  |  
|              
|              
|              
|              
|Singapore      |  |                   | 7.4   |                   |  |  | 10.1  |  
|              
|              
|              
|              
|Philippines    |  |                   | 11.5  |                   |  |  | 9.0   |  
|              
|              
|              
|              
|Hong Kong      |  |                   | 4.6   |                   |  |  | 7.6   |  
|              
|              
|              
|              
|Thailand       |  |                   | 9.6   |                   |  |  | 6.8   |  
|              
|              
|              
|              
|Korea          |  |                   | 9.2   |                   |  |  | 5.1   |  
|              
|              
|              
|              
|Other          |  |                   | 9.9   |                   |  |  | 16.6  |  
|               |  |                   |       |                   |  |  |       |  
|               |  |                   | 100.0 | %                 |  |  | 100.0 | %
|               |  |                   |       |                   |  |  |       |  

A substantial portion of our Front-end sales is for equipping new or
upgraded fabrication plants where device manufacturers are installing a
complete complement of fabrication equipment. As a result, our Front-end sales
tend to be uneven across customers and financial periods. Sales to our ten
largest Front-end customers accounted for 55.4% of Front-end net sales in 2000
and 48.6 % in 2001. The composition of our ten largest Front-end customers
changes from year to year. The largest Front-end customer accounted for 13.1%
of Front-end net sales in 2000 and the largest Front-end customer accounted for
12.1% of Front-end net sales in 2001.

Back-end sales per customer tend to be more level over time than Front-end
sales because Back-end operations can be scaled up in smaller increments at
existing facilities. Sales to our ten largest Back-end customers accounted for
54.5% of Back-end sales in 2000 and 39.6% in 2001. Because our customers
Back-end needs are more level over time, the composition of our ten largest
customers is more stable from year to year than in the Front-end. Our largest
Back-end customer accounted for 17.0% of Back-end net sales in 2000 and 10.7%
in 2001.

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Research and Development

We invested  73.8 million in research and development during 2000 and 
79.7 million in 2001. As part of our research and development activities, we
are engaged in various development programs with customers and research
institutes that allow us to develop products that meet customer requirements
and to obtain access to new technology and expertise. We expense rather than
capitalize our research and development expenses. We charge to costs of sales
the costs relating to prototype and experimental models which we may
subsequently sell to customers.

Our reported research and development expenses are after research and
development credits, which were 2.2 million in 2000 and  5.6 million in
2001. Our Netherlands, Belgium, Finland and Singapore research and development
operations receive research and development grants and credits from various
governmental sources.

Some of the research and development grants we received in the Netherlands
are contingently repayable to the extent we recognize sales of products to
which the credit is related. We do not recognize a liability on our balance
sheet in respect of these credits until we recognize sales of products to which
the credit relates. These repayments vary and range from 1.0% to 4.0% of the
realized sales, depending on the products sold. Our actual and contingent
repayments accrue at interest rates ranging from 5.0% to 8.0% per annum. Our
contingent liability related to possible future repayments was  12.0 million
at December 31, 2000 and  10.1 million at December 31, 2001. In 1999, 2000
and 2001 the Company made repayments in the amount of  1.4 million, 1.5
million and  2.9 million, respectively.

Acquisitions and Strategic Investments

In October 2001, we entered into a strategic alliance with and made a
15.4% equity investment of 20.3 million in NuTool, Inc., a privately held
semiconductor technology company located in Milpitas, California. The purchase
price of the investment was determined amongst others by reference to prices
paid by other recent strategic investors. NuTool provides innovative copper
deposition technologies to the semiconductor industry. Its patented
electrochemical mechanical deposition technology offers new process solutions
for copper deposition and planarization, providing significant savings in
integrated circuit manufacturing and enabling new integrated circuit designs
and new process technologies. The strategic alliance with NuTool provides us
with more competitive solutions to address the industrys transition to copper
metalization.

As a result of the issuance of common shares under the ASMPT Employee
Incentive Scheme in March 2000, our shareholding in ASMPT dropped slightly
below 50.0%. In various transactions in April and June 2000, we acquired 0.3%
of the outstanding common shares of ASMPT, thereby restoring its total
shareholding in that company to over 50.0%. Throughout this period, we
maintained control over ASMPT. In July 2000, we purchased approximately 4.7% of
the outstanding shares of ASM Pacific Technology from an institutional
shareholder for  73.0 million. At December 31, 2001, we owned 54.4 %, of the
outstanding common shares of ASMPT.

In December 1999, we acquired a 24.0% interest in NanoPhotonics AG, a
German supplier of precision thin film metrology equipment, for  407,000. Our
Chief Executive Officer also purchased a 44.5% interest in NanoPhotonics AG.
The technology supplied by NanoPhotonics integrates high-resolution,
ellipsometric thin film metrology directly into a wafer processing tool. This
investment enables us to equip our batch and single wafer equipment with
integrated thin film metrology. We have a five-year option to purchase the
44.5% interest from our Chief Executive Officer at the same price he paid for
his interest in the initial transaction. At December 31, 2000 and December 31,
2001, we have provided NanoPhotonics with additional financing of  0.4
million and  1.2 million, respectively. In 2000 and 2001 we purchased
equipment and materials from NanoPhotonics in the amount of  0.2 million and
 0.7 million, respectively.

In July 1999, we purchased all of the outstanding shares of Microchemistry
Oy, located in Finland, for approximately 3.9 million. In September 1999,
Microchemistry was renamed ASM

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Microchemistry. Prior to our purchase, Microchemistry developed the
process to grow or deposit films one layer at a time by means of Atomic Layer
Deposition, and marketed its ALCVD processes to manufacturers of flat panel
displays and tape magnetic head products. Following our acquisition, ASM
Microchemistry shifted its focus to manufacturers of semiconductor devices. In
November 2001, we made the decision to shift the manufacturing of Atomic Layer
Deposition systems to our United States subsidiary, ASM America, Inc., and have
ASM Microchemistry concentrate on the research and development of Atomic Layer
Deposition. We expect the shift of manufacturing to the United States to be
completed in the first half of 2002.

Issuance of shares and Convertible Subordinated Notes

In November 2001, we sold US$ 100.0 million in principal amount of 5.0%
Convertible Subordinated Notes due on November 15, 2005 in a private offering.
In December 2001, we sold an additional US$ 15.0 million of the notes in an
over-allotment purchase. The notes are convertible into common shares at any
time before their maturity unless we have previously redeemed or repurchased
them at a conversion rate of 53.0504 shares per each US$1,000 principal amount
of notes, subject to adjustment in certain circumstances. This is equivalent to
an initial conversion price of approximately US$ 18.85 per share. The proceeds
of the sale have been used to fund our strategic investment in NuTool, Inc, to
repay outstanding debt and for general corporate purposes, including working
capital and capital expenditures.

In April 2000, we completed a public offering of 4,250,000 common shares
at a price of US$ 29.00 per share. The net proceeds of  119.7 million were
used to repay outstanding loans and fund our working capital needs.

Critical accounting policies

Our discussion and analysis of our financial condition and results of
operations are based upon our Consolidated Financial Statements, which have
been prepared in accordance with accounting principles generally accepted in
the United States. The preparation of these financial statements requires us to
make certain estimates, judgments and assumptions that we believe are
reasonable based upon the information available. These estimates and
assumptions affect the reported amounts of assets and liabilities at the date
of the financial statements and the reported amounts of revenues and expenses
during the periods presented. The significant accounting policies which we
believe are the most critical to aid in fully understanding and evaluating our
reported financial results include the following:

Revenue recognition.

Our revenue recognition policy is significant because our revenue is a key
component of our results of operations. We follow very specific and detailed
guidelines in measuring revenue following principles of revenue recognition
described in Staff Accounting Bulletin No. 101 Revenue Recognition in
Financial Statements (SAB 101), issued by the staff of the Securities and
Exchange Commission (the SEC) in December 1999, and adopted by us effective
January 1, 2000. However, certain judgments affect the application of our
revenue policy. Revenue results are difficult to predict, and any shortfall in
revenue or delay in recognizing revenue could cause our operating results to
vary significantly from quarter to quarter and could result in future operating
losses.

Our net sales include product revenues derived primarily from sales of
Front-end and Back-end equipment used by both segments of the semiconductor
equipment market. We recognize revenue from equipment sales upon shipment of
our products when it is proven prior to shipment that the equipment has met all
of the customers criteria and specifications. The installation process is not
believed to be essential to the functionality of our products. However, since
under most of our sales contracts the timing of payment of a portion of the
sales price is coincident with installation, such installation is not
considered to be inconsequential or perfunctory under the guidance of SAB 101.
Therefore, at the time of shipment, we defer that portion of the sales price
related to the fair value of installation. We believe we have an enforceable
claim for the portion of the sales price not related to the fair value of the
installation should

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we not fulfill our installation obligation. The fair value of the
installation process is measured based upon the per-hour amounts charged by
third parties for similar installation services. When we can only satisfy the
customer acceptance criteria or specifications at the customers location,
revenue is deferred until final acceptance by the customer or until contractual
conditions lapse.

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

Before January 1, 2000, we recognized revenue from the sale of all
equipment including installation services at the time of transfer of title, and
when no significant contractual obligations remained. Revenue recognition for
the sale of spare parts and services has not changed.

The adoption of SAB 101 affects the amounts of revenue and net earnings
reported in previous periods. The effect of this change as of January 1, 2000
was to defer  12.2 million of net sales and  3.8 million of net earnings to
future periods. The effect on net earnings as of January 1, 2000 has been
recorded as a cumulative effect of the change in accounting principle in our
statement of operations for the year ended December 31, 2000.

Consolidation of ASMPT.

Although we currently are a majority shareholder of ASMPT, we may not be
able to maintain our majority interest, which, if other circumstances are such
that we do not control ASMPT, would prevent us from consolidating its results
of operations with ours. Any such determination of whether we could continue to
consolidate would be based on whether we still have a controlling financial
interest within the meaning of United States generally accepted accounting
principles. If we were to become unable to consolidate the results of
operations of ASMPT with our results, the results of operations of ASMPT would
no longer be included in our earnings from operations. Instead, our
proportionate share of ASMPTs earnings would be reflected as a separate line
item called share of results from investments in our Consolidated Statements
of Operations. In addition we would no longer be able to consolidate the assets
and liabilities of ASMPT and would have to reflect the net investment in ASMPT
in the line item investments in our Consolidated Balance Sheet. ASMPT has an
employee share incentive program pursuant to which it can issue up to an
aggregate of 5.0% of its total issued shares, excluding shares subscribed for
or purchased under the program, to directors and employees as an incentive.
When ASMPT issues shares pursuant to this program, our ownership interest is
diluted, but would continue to be above 50.0%. In addition, our controlling
interest could be diluted if ASMPT issues additional equity. However, such
decision by ASMPT requires the approval from the meeting of shareholders in
which we currently hold more than 50.0% of the votes. Although we intend to
continue to purchase shares of ASMPT as necessary to maintain our majority
interest, we could lose our majority position if there is an insufficient
number of shares available for purchase, if we fail to purchase shares in a
timely manner or if we do not have sufficient financial resources to purchase
shares when necessary.

Goodwill.

Goodwill represents the excess of the cost of businesses acquired over the
fair market value of identifiable net assets on the date of acquisition. Until
December 31, 2001 goodwill arising on acquisitions is amortized on a
straight-line basis over the estimated useful life thereof and its value
reviewed for impairment whenever facts or circumstances indicate that the
carrying amounts may not be recoverable, based on an evaluation of the
estimated future undiscounted cash flows associated with the underlying
business operation compared to the carrying amount of goodwill to determine if
a write-down is required. If such an assessment indicates that the
undiscounted future cash flows will not be recovered, the carrying amount is
reduced to the estimated fair value. As from January 1, 2002 we will adopt a
new accounting standard issued by the Financial Accounting Standards Board no:
SFAS No. 141, Business Combinations and SFAS No. 142, Goodwill and Other
Intangible Assets., which requires that goodwill and intangible assets with
indefinite lives will not be amortized, but will rather be tested at least
annually for impairment. Any impairment loss incurred is recorded as a charge
to current period earnings.

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At December 31, 2001 we have  64.3 million in bookvalue recorded as
goodwill. We are currently evaluating the provisions of the new accounting
principle and we do not expect to record an impairment loss upon the adoption
of this new accounting principle. In future periods however we may be required
to record an impairment loss based on the impairment test performed, which may
significantly influence our result of operations at that time.

Results of Operations

Year Ended December 31, 2001 Compared to Year Ended December 31, 2000.

Net Sales.The market for semiconductor equipment weakened substantially
in 2001. Our consolidated net sales for 2001 decreased 40.0% to  561.1 million
compared to  935.2 million for the year 2000. Front-end sales decreased 11.2%
from  379.3 million in 2000 to  336.6 million in 2001. Back-end sales
decreased 59.6% from  555.9 million in 2000 to  224.5 million in 2001. The
decrease in net sales reflects the impact of the extraordinarily severe
downturn in the semiconductor industry, as semiconductor manufacturers delayed
purchases and cut capital spending, thus reducing the demand for semiconductor
equipment during 2001. Our sales in the first half of 2001 were still at high
levels as a result of our backlog at the end of 2000, with a contraction in the
second half of the year. Sales in Front-end were strong in our vertical
furnaces product line, where we were able to gain from design-in wins at first
tier customers for the 300mm vertical furnace, and in our thin film product
line. Sales in other product lines declined substantially due to contraction,
in particular in 200mm equipment. The decline in Back-end sales was primarily
due to the decrease in sales of wire bonding and die bonding equipment and, to
a somewhat lesser extent, leadframes.

Gross Profit.Our consolidated gross profit decreased from 44.6% of net
sales in 2000 to 39.8% of net sales in 2001. The Front-end business gross
profit decreased 1.2 percentage point from 40.3% of net sales in 2000 to 39.1%
of net sales in 2001, and the Back-end business gross profit decreased from
47.6% of net sales in 2000 to 40.8% of net sales in 2001. The decrease in gross
profit for 2001 as a percentage of sales is the result of the significantly
lower sales volumes, in particular in the second half of 2001, which resulted
in underutilization of our manufacturing capacity. We have implemented programs
to reduce fixed costs to respond to the lower sales volumes.

Selling, General and Administrative.Our selling, general and
administrative expenses decreased from
 147.3 million
in 2000 to  111.9
million in 2001. As a percentage of net sales, selling, general and
administrative expenses increased from 15.8% for 2000 to 19.9% for 2001.
Front-end selling, general and administrative expenses increased from  66.2
million in 2000 to  72.3 million in 2001, while Back-end selling, general and
administrative expenses decreased from  81.1 million in 2000 to  39.6 million
in 2001. The increase in Front-end was partly due to the continued high level
of sales in the first half of 2001 and the related growth in supporting staff
functions offset by expense reduction programs in the second half of 2001,
including temporary reduction in management salaries and a hiring freeze. In
our Back-end operations we were able to respond to the market conditions and to
reduce our selling, general and administrative expenses in line with the lower
sales volumes through cost cutting programs resulting in lower bonus and
incentive expenses, lower sales commissions and reduction of staff.

Research and Development.Research and development expenses increased by
7.9% from  73.8 million in 2000 to  79.7 million in 2001. Front-end research
and development expenses increased by 16.4% from  47.9 million in 2000 to 
55.8 million in 2001, while Back-end research and development expenses
decreased 7.7% from  25.9 million in 2000 to  23.9 million in 2001. Net
research and development expenses increased from 7.9% of net sales in 2000 to
14.2% of net sales in 2001 due to substantially lower sales. The amounts of
research and development credits offset against research and development
expenses amounted to 
2.2 million in 2000 and
 5.6 million in 2001. We
focused our investment in research and development on the equipment and
products for the next generations of semiconductor devices. In our Front-end,
these investments were concentrated on Silicon-germanium, high-k dielectrics,
low-k dielectrics, ALCVD, 300mm applications and the Levitor RTP system.
Research and development in the Back-end is concentrated on performance
improvements and new products such as our next generation, high speed
integrated circuit die bonders for 300mm and 200mm

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wafers and our high precision, eutectic solder process bonder for flip
chip packaging applications. Despite our lower sales levels, we have kept our
research and development expenditures at a high level in 2001 and continue to
invest heavily in the research and development of new generation technology.

Amortization of Goodwill.The amortization of goodwill increased from 
4.3 million in 2000 to  7.6 million in 2001. This increase relates to the
amortization of goodwill resulting from the acquisition of an additional 4.7%
interest in ASMPT in July 2000, resulting in a full year of amortization during
the year 2001.

Net Interest and Other Financial Income (Expenses).Net interest and other
financial income (expenses) decreased by 38.3% from a net expense of  1.6
million in 2000 to a net expense of  1.0 million in 2001 due principally to
the repayment of relatively higher interest rate loans with the proceeds of the
public offering of common shares we completed in April 2000, lower interest
rates on our credit lines and with cash generated from operations. The strength
of the United States dollar and the Hong Kong dollar versus the Euro, our
reporting currency, resulted in transaction exchange gains.

Income Taxes.We incurred  4.7 million in income taxes during 2001,
compared to  22.8 million in 2000. As of December 31, 2001, we have a  280.0
million net operating loss carryforward, which we can apply primarily against
future earnings reported in the United States and the Netherlands.

Net Earnings.Our net earnings in 2001 were  6.1 million compared to 
94.3 million in 2000 primarily due to decreased net sales. The 2000 net
earnings were reduced by a cumulative effect of change in accounting principle
of  3.8 million due to the adoption of new accounting guidelines for revenue
recognition. Our Front-end operation reported a net loss of  10.0 million in
2001 compared to net earnings before the cumulative effect of change in
accounting principle of  18.6 million in 2000. Our portion of our Back-end
operations net earnings before the cumulative effect of change in accounting
principle was  16.1 million compared to  79.5 million in 2000.

Year Ended December 31, 2000 Compared to Year Ended December 31, 1999.

Net Sales.The market for semiconductor equipment was strong in the first
three quarters of 2000 and started to become weaker at the end of the year.
Consolidated net sales increased 125.6% to  935.2 million in 2000 compared to
 414.5 million in 1999. Front-end sales increased 108.8% from  181.7 million
in 1999 to  379.3 million in 2000. Back-end sales increased 138.8% from 
232.8 million in 1999 to  555.9 million in 2000. The Front-end sales increase
was over all product lines. The Back-end sales increase was primarily due to
increased sales of wire bonding and die bonding equipment and, to a lesser
extent, leadframes.

Gross Profit.Our consolidated gross profit increased from 41.0% of net
sales in 1999 to 44.6% of net sales in 2000. The Front-end business gross
profit decreased slightly from 40.5% of net sales in 1999 to 40.3% of net sales
in 2000, while the Back-end business gross profit grew from 41.4% of net sales
in 1999 to 47.6% of net sales in 2000. The decrease in gross profit as a
percentage of sales in Front-end was, despite efficiency improvements in the
manufacturing of existing product lines, caused by initial lower margins on the
introduction of new technology in ALCVD and 300 mm equipment. The improvement
in our Back-end segment was achieved through manufacturing efficiencies related
to the increased volumes and partly through better pricing conditions for our
products.

Selling, General and Administrative.Our selling, general and
administrative expenses increased from
 83.2 million in
1999 to  147.3
million in 2000. Front-end and Back-end selling, general and administrative
expenses increased from
 48.6 million
and  34.6 million in 1999 to  66.2
million and  81.1 million in 2000. These increases resulted from the
expansion of our support and overhead departments in order to handle increased
product and order volumes. Staff levels increased from 2,387 at December 31,
1999 to 2,895 at December 31, 2000. As a percentage of net sales, selling,
general and administrative expenses decreased from 20.1% for 1999 to 15.8% for
2000.

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Research and Development.Research and development expenses increased by
56.5% from  47.1 million in 1999 to  73.8 million in 2000. Front-end research
and development expenses increased by 63.4% from  29.3 million in 1999 to 
47.9 million in 2000 while Back-end research and development expenses increased
45.2% from  17.8 million in 1999 to  25.9 million in 2000. Net research and
development expenses declined from 11.4% of net sales in 1999 to 7.9% of net
sales in 2000. The amounts of research and development credits offset against
research and development expenses amounted to  3.3 million in 1999 and  2.2
million in 2000. Investments in research and development have been concentrated
on the products that have pushed our growth in the last three years. In the
Front-end the concentration was on high-k dielectrics, low-k dielectrics,
ALCVD, RTP and 300 mm process applications while in the Back-end our
concentration was on performance improvements and the release of new or
upgraded products.

Amortization of Goodwill.The amortization of goodwill increased from 
0.3 million in 1999 to  4.3 million in 2000. This increase relates to the
amortization of goodwill resulting from the acquisition of an additional 5.0%
interest in ASM Pacific Technology in 2000 and the acquisition of
Microchemistry and NanoPhotonics in 1999.

Net Interest and Other Financial Income (Expenses).Net interest and other
financial income (expenses) decreased by 81.5% from a net expense of  8.6
million in 1999 to a net expense of  1.6 million in 2000 due principally to
the repayment of short-term loans with the proceeds of the public offering of
common shares we completed in April 2000 and with cash generated from
operations. The strength of the United States dollar and the Hong Kong dollar
versus the Euro, our reporting currency, resulted in transaction exchange
gains.

Income Taxes.We incurred  22.8 million in income taxes during 2000,
compared to  1.3 million in 1999. As of December 31, 2000, we have a  260.0
million net operating loss carryforward, which we can apply primarily against
future earnings reported in the United States and the Netherlands.

Net Earnings.Our net earnings in 2000 were approximately  94.3 million
compared to  11.1 million in 1999 primarily due to increased net sales. The
2000 net earnings were influenced by a cumulative effect of change in
accounting principle of  3.8 million due to the adoption of new accounting
guidelines for revenue recognition. Our Front-end operation reported net
earnings before the cumulative effect of change in accounting principle of 
18.6 million in 2000 compared to a net loss of  7.6 million in 1999. Our
portion of our Back-end operations net earnings before the cumulative effect
of change in accounting principle was  79.5 million compared to  18.7 million
in 1999.

Backlog

New orders received in the year 2001 decreased 67.9% to  348.0 million
from  1,084.8 million in the year 2000. Overall backlog at December 31, 2001
was  132.6 million, a 61.6% decrease from  345.6 million at December 31,
2000. From our backlog at December 31, 2001,  107.2 million relates to our
Front-end operations and  25.4 million to our Back-end operations as compared
to  211.6 million and  134.0 million at December 31, 2000, respectively. The
largest part of the backlog in Front-end relates to 300mm equipment. Our
backlog consists of orders of products by purchase orders or letters of intent
for future periods, typically for up to one year. In some markets, such as
Japan, it is common practice for letters of intent to be used instead of firm
purchase orders. Under specific circumstances, customers can cancel or
reschedule deliveries. In addition, purchase orders are subject to price
negotiations and changes in quantities of products ordered as a result of
changes in customers requirements. Depending on the complexity of an order,
we generally ship our products from one to six months after receipt of an
order. We include in the backlog only orders for which a delivery schedule has
been specified and to which the customer has assigned an order number.
Rescheduled deliveries are included in backlog if they have a firm delivery
date.

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Liquidity and Capital Resources

Our liquidity is affected by many factors, some of which are related to
our ongoing operations and others of which 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 the
arrangements governing our financing arrangements, will be sufficient to fund
working capital, capital expenditures and other ongoing business requirements
for at least the next twelve months. Given the cyclicality of the industry,
which could result in lower customer demand and continued fixed costs, the cash
generated by operations may be lower than forecasted. In such a situation we
might need to further utilize our short-term credit facilities.

At December 31, 2001, our available principal sources of liquidity
consisted of 
107.6 million in cash and cash equivalents and
 167.7 million
in undrawn bank lines. Approximately  70.8 million of the cash and cash
equivalents and  42.9 million of the undrawn bank lines are restricted to use
in our Back-end operations. In addition, we have an equity line of credit with
Canadian Imperial Holdings, Inc. (CIHI) pursuant to which we may sell up to
an aggregate of US$ 65.0 million of newly issued common shares to CIHI from
time to time over a two-year period ending July 2002. We may sell up to US$10.0
million of our common shares as often as every five business days, subject to
certain volume restrictions based on weekly trading volume. The purchase price
of the shares is equal to 95.5% of the simple average of the daily volume
weighted average sale price during the five trading days preceding the date of
sale. We registered 4,581,498 of our common shares with the SEC for offer and
sale pursuant to the equity line. CIHI is under no obligation to purchase our
common shares under the equity line if effectiveness of our registration
statement is withdrawn or certain conditions precedent to the equity line are
not satisfied.

During 2001, we generated net cash flows from operating activities of 
32.3 million, compared to  153.1 million for 2000. The decrease was primarily
the result of lower earnings due to lower sales, partially offset by a net cash
outflow of  28.6 million in other assets and liabilities in 2001 compared to a
 72.7 million net cash outflow in 2000. At December 31, 2001 we have entered
into purchase commitments for delivery in 2002 with suppliers in the amount of
 58.3 million.

During 2001, we invested  71.6 million in capital equipment and
facilities, particularly in our new 300mm A412 assembly and testing facility in
the Netherlands, and new clean rooms in the United States and Japan. We expect
capital expenditure in 2002 to be approximately half the level of 2001. Our
capital expenditure commitments at December 31, 2000 were  15.0 million, and
at December 31, 2001 were  3.4 million. We also made a strategic equity
investment of  20.3 million in NuTool, Inc., a privately held semiconductor
technology company located in Milpitas, California.

Net cash provided by financing activities was  51.8 million in 2001.
During that period, we repaid  55.4 million of long-term debt and received
proceeds of  3.0 million from new long-term loans and  124.8 million from the
sale of US$ 115.0 million of convertible subordinated notes.

On November 15, 2001 we sold US$ 100.0 million in principal amount of 5.0%
Convertible Subordinated Notes due on November 15, 2005 in a private offering.
In December 2001, we sold an additional US$ 15.0 million of the notes in an
over-allotment purchase, with interest payable on May 15 and November 15 of
each year. The first interest payment will be made on May 15, 2002. The notes
are subordinated in right of payment to our existing and future senior debt.
The notes are convertible into common shares at any time before their maturity
unless we have previously redeemed or repurchased them. The conversion rate is
53.0504 shares per each $1,000 principal amount of notes, subject to
adjustment in certain circumstances. This is equivalent to an initial
conversion price of approximately US$ 18.85 per share. The Convertible
Subordinated Notes amounted to  130.7 million at December 31, 2001. The
proceeds of the offering have been used to fund our strategic investment in
NuTool Inc., to repay outstanding balances under our multicurrency revolving
credit facility and for general corporate purposes, including working capital
and capital expenditures.

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On June 27, 2001 we entered into a  90.0 million multicurrency revolving
facilities agreement with a consortium of banks to be utilized solely for our
Front-end operations in Europe and the United States. We cannot use any funds
under this facility to finance Back-end operations. The loan consists of two
facilities of  45.0 million each. Advances bear interest at a per annum rate
equal to LIBOR for non-Euro currency advances or EURIBOR for Euro currency
advances, plus 80 to 160 basis points for the first facility of  45.0 million
and 100 to 180 basis points for the second facility of  45.0 million, in each
case depending on our solvency ratio at the time of drawing. The term of the
first facility is one year and the term of the second facility is 18 months.
The loan facility contains certain financial covenants with respect to solvency
ratio and interest coverage ratio. The loan facility is secured by a portion of
our shareholding in ASMPT which varies depending on the market price of the
ASMPT common shares on the Hong Kong Stock Exchange and, depending on such
price, could include all of our shareholding. On July 2, 2001 we repaid 
41.3 million in long-term debt to Canadian Imperial Bank of Commerce (CIBC)
and  9.0 million for short-term bridge loans from advances from this facility.
On November 15, 2001 we repaid the outstanding balances under the
multicurrency facility from the proceeds of the sale of US $115.0 million
convertible subordinated notes. The per annum interest rates on the advances
drawn in 2001 were LIBOR plus 100 basis points for the first facility and LIBOR
and EURIBOR plus 120 basis points for the second facility. There were no
outstanding borrowings on these facilities as at December 31, 2001. In June
2002 the term of the first facility of
 45.0 million and in December 2002 the
term of the second facility of  45.0 million will lapse. We have started
negotiations for extension of the facilities and or new facilities and we
expect that based on our forecasts we will be able to obtain sufficient
facilities at terms acceptable to us.

In July 2000, we completed the purchase of approximately 4.7% of the
outstanding shares in ASMPT, bringing our total shareholding in this company to
54.88% at that date. The investment, including some smaller purchases of shares
in April and June of 2000, amounted to
 75.5 million. The purchase was funded
with cash and with the proceeds of a two-year, US$ 75 million loan facility
with CIBC, of which US$ 69.0 million was taken down. The loan was secured by
our shareholding in ASMPT. The excess of the purchase price over the fair
market value of the underlying net assets acquired in the amount of  65.0
million has been recorded as goodwill and is amortized over a period of ten
years, on a straight line basis. The fair market value approximated the book
value of the assets and liabilities of ASMPT. In the fourth quarter of 2000 we
repaid US$ 23.0 million in principal amount under the CIBC loan facility and in
the first six months of 2001 we repaid US$ 11.0 million and on July 2, 2001, we
cancelled the loan facility and repaid the remaining outstanding balance of US$
35.0 million of the loan from the proceeds of our multicurrency revolving
credit facility.

In April 2000, we completed a public offering of common shares, which gave
us net proceeds of approximately  119.7 million. We used  76.8 million of
these proceeds for repayment of loans. Following the repayment, the assets
securing these loans have been released from their liens.

In April 2000 we repaid a term loan of  25.0 million to the Nationale
Investeringsbank N.V. (NIB) from the proceeds of the share offering and
during the year 2000 we repaid the remaining installments of a subordinated
loan to the NIB in the amount of
 2.0 million
and a  1.4 million subordinated
loan to a related party.

In March and April 2000 we repaid the remaining US$ 35.0 million in
interest bearing notes provided by Applied Materials, following the settlement of
the patent dispute in 1997, from the proceeds of the exercise of 1,500,000
warrants issued to Applied Materials and from the proceeds of the share
offering.

In February 2000 a group of United States institutional investors
exercised 2,037,957 warrants with an exercise price of US$ 9.81 per share under
cancellation of a 6% zero-coupon debentures with a maturity value of US$ 20.0
million, issued in October 1999 and a cash contribution of  4.9 million.

We finance the operation of our Front-end business from operating cash
flows, from borrowings and equity offerings. We support borrowings of our
Front-end subsidiaries with guarantees. We have also granted security interests
in our land and buildings and our shareholdings in ASMPT to secure Front-end
borrowings.

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ASM Pacific Technology Ltd. (ASMPT)

Our Back-end operations, which are conducted through our 54.4%-owned
subsidiary ASMPT, are entirely self-financed by ASMPT. However, the earnings,
cash resources and borrowing capacity of ASMPT are not available to our
Front-end operations due to restrictions imposed by the Hong Kong Stock
Exchange, on which the ASMPT common shares are listed.

We rely on dividends from ASMPT for a portion of our cash flow for use in
our Front-end operations. Cash dividends received from ASMPT during 1999, 2000
and 2001 were  6.2 million,  15.4 million and  35.7 million, respectively.
For the year 2002 we expect lower dividends.

Although several of the directors of ASMPT are affiliates of ASM
International, they are under no obligation to declare dividends to
shareholders or enter into transactions that are beneficial to us. As a
majority shareholder, we can approve the payment of dividends, but cannot
compel their payment or size.

The directors of ASMPT owe their fiduciary duties to that company, and may
approve transactions to which we are a party only if the transactions are
commercially beneficial to ASMPT. Further, under the listing rules of the Hong
Kong Stock Exchange, directors who are on the boards of both ASMPT and ASM
International are not permitted to vote on a transaction involving both
entities. This would disqualify all of the affiliates of ASM International who
currently serve on the board of ASMPT from voting on any such transaction. In
addition, the independent directors of ASMPT and the shareholders other than
ASM International and its affiliates must approve transactions involving both
entities. Therefore, while our interests and the interests of ASMPT may be
aligned to the extent we are both part of the same corporate group, there can
be no guarantee that the directors of ASMPT will not take any actions that
could be detrimental to us.

As a shareholder of ASMPT, we can vote our shares in accordance with our
own interests. However, we may not be entitled to vote on transactions
involving both us and ASMPT under the listing rules of the Hong Kong Stock
Exchange and the Hong Kong Takeover Code. For example, under the Hong Kong
Takeover Code, we would be excluded from voting if we were directly involved in
a takeover of ASMPT.

The market value of our investment in ASMPT at the end of 2001 was
approximately  464.2 million, which is higher than the market value at the
end of 2000, which was approximately  318.4 million.

Item 6.   Directors, Senior Management and Employees



|A. |  | Directors and Senior Management
|-- |  | -------------------------------

The names of our directors and senior management and those of our
significant subsidiaries and the years of their birth are as follows:

|                         |               |          |      |  |  |                                                  
|------------------------ | ------------- | -------- | ---- |  |  | -------------------------------------------------
|Name                     | Year of Birth | Position
|                         |               |         
|Paul C. van den Hoek*    |               |          | 1939 |  |  | Chairman of the Supervisory Board
(Expiring 2005)
|                        
|                        
|                        
|                        
|Adri Baan                |               |          | 1942 |  |  | Supervisory Director (Expiring 2005)             
|                        
|                        
|                        
|                        
|Johan M.R. Danneels      |               |          | 1949 |  |  | Supervisory Director (Expiring 2004)             
|                        
|                        
|                        
|                        
|Jacobus den Hoed RA*     |               |          | 1937 |  |  | Supervisory Director (Expiring 2003)             
|                        
|                        
|                        
|                        
|Ferdinand C. Rauwenhoff* |               |          | 1930 |  |  | Supervisory Director (Expiring 2002)             

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|                      |               |          |      |  |  |                                                                                               
|--------------------- | ------------- | -------- | ---- |  |  | ----------------------------------------------------------------------------------------------
|Name                  | Year of Birth | Position
|                      |               |         
|                     
|                     
|                     
|                     
|Arthur H. del Prado   |               |          | 1931 |  |  | Chairman of Management Board,
President and Chief Executive
Officer                           
|                     
|                     
|                     
|                     
|Patrick Lam See-Pong  |               |          | 1948 |  |  | Member of the Management Board,
Vice President Asian Operations and
Managing Director of ASMPT
|                     
|                     
|                     
|                     
|Robert L. de Bakker   |               |          | 1950 |  |  | Member of the Management Board and
Chief Financial Officer                                    
|                     
|                     
|                     
|                     
|Daniel G. Queyssac    |               |          | 1940 |  |  | Chief Operating Officer of
Front-end Operations and President
of ASM America                  
|                     
|                     
|                     
|                     
|Fukumi Tomino         |               |          | 1949 |  |  | Vice President Japanese Operations
and Managing Director of ASM Japan                         
|                     
|                     
|                     
|                     
|Han F.M. Westendorp   |               |          | 1956 |  |  | General Manager of ASM Europe                                                                 
|                     
|                     
|                     
|                     
|Hans A. Wunderl       |               |          | 1951 |  |  | General Manager and Executive Vice
President of ASM America                                   
|                     
|                     
|                     
|                     
|Ivo M. M. Raaijmakers |               |          | 1957 |  |  | Director of Research and
Development and Chief Technology
Officer of Front-end Operations     



---

|* |  | Member of Audit Committee
|- |  | -------------------------

Paul C. van den Hoekbecame a Supervisory Director in March 1981 and is
now Chairman of the Supervisory Board. Mr. van den Hoek is a partner in the
European law firm of Stibbe, which is our general legal counsel and has been
with Stibbe since 1965. Mr. van den Hoek also serves on the boards of directors
of various European companies. At December 31, 2001, Mr. Van den Hoek owned
300,000 of our common shares.

Adri Baanwas elected to the Supervisory Board in May 2001. Mr. Baan, who
holds a masters degree in physics from the University of Amsterdam, served as
the Chief Executive Officer of the Business Electronics Division of Philips, N.
V. from 1993 until March 2001, and served as a member of Philips Group
Management Committee from 1996 and Board of Management from 1998 until March
2001. Mr. Baan further serves on the board of directors of various European
Companies and is a director of PSA Corporation Limited, Port Singapore
Authority.

Johan M.R. Danneelswas elected to the Supervisory Board in May 2000. Mr.
Danneels spent most of his career with Alcatel, most recently as Director of
Industrial Coordination and Chief Executive Officer of Alcatel
Microelectronics.

Jacobus den Hoed RAbecame a Supervisory Director in June 1999. Mr. den
Hoed is a certified accountant. He joined AKZO Nobel N.V., a global chemical
company in 1969, and served in various financial management positions, most
recently as Vice President and Chief Financial Officer from 1996 to 1998 when
he retired. Mr. den Hoed serves on the boards of directors of various European
companies and since 1998 as a member of the board of directors of the
International Accounting Standards Committee, or IASC.

Ferdinand C. Rauwenhoffbecame a Supervisory Director in October 1991 and
Vice-Chairman in 1999. Mr. Rauwenhoff holds an Engineering degree in physics
from Delft Technical University as well as a law degree from Leiden University.
He joined N. V. Philips Gloeilampen in 1958 and served in various executive
capacities worldwide. In 1984 he was appointed chairman of the senior
management committee

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##### Table of Contents



of the Netherlands Philips Companies, and retired in October 1990. Mr.
Rauwenhoff further serves on the boards of directors of various European
companies.

Arthur H. del Prado,our founder, has served as a Managing Director,
President and Chief Executive Officer since our formation in 1968. Mr. del
Prado is also a founder of ASM Lithography N.V. through a joint venture with
Philips Electronics N.V. He serves as a director of MEDEA+, and previously
served for many years as a director of its predecessor, JESSI. Mr. del Prado
also serves on the board of directors of various European companies and on the
board of the Netherlands-Japanese Trade Federation.

Patrick Lam See-Pongbecame Vice President of our Asian Operations in
March 1981 and a Managing Director in June 1995. Mr. Lam has been employed in
various capacities with us since 1975. He holds a B.Sc. degree in electrical
engineering from the University of Manitoba in Canada and an MBA from the
Chinese University of Hong Kong.

Robert L. de Bakkerjoined us as Chief Financial Officer in January 2001.
Prior to his joining ASM International, Mr. de Bakker was Chief Financial
Officer of NKF Holding N.V., a Netherlands multinational public company, where
he continued his activities after its merger at the end of 1999 with Draka
Holding N.V., another Dutch multinational public company in the same sector of
activity, industrial cables.

Daniel G. Queyssacjoined us as Chief Operating Officer for Front-end
operations and President of ASM America in November 1996. Mr. Queyssac joined
us after a career at Motorola and SGS Thomson, now STMicroelectronics. His
previous positions included Vice President and Assistant General Manager of the
New Venture Group of SGS Thomson Microelectronics from 1993 to 1996, and
President of SGS Thomson Microelectronics in Phoenix, Arizona from 1980 to
1991.

Fukumi Tominobecame Vice President Japanese Operations and Managing
Director of ASM Japan in 1994 after having held roles in sales, marketing,
engineering and process development since the founding of ASM Japan in 1982. He
holds a Bachelors Degree in electro-communication from the University of
Electro-Communication (Tokyo).

Han F. M. Westendorpjoined us as General Manager of ASM Europe in July
1999. Mr. Westendorp worked in various management capacities at Tokyo Electron
Massachusetts from 1991 to mid-1999, most recently as Vice President of Metal
CVD and Administration General Manager. Before joining Tokyo Electron, he
worked with us on the development of our ion implantation technology. Mr.
Westendorp holds a Ph.D. in Physics and Mathematics from the University of
Utrecht in the Netherlands.

Hans A. Wunderljoined us in January 1991 as Director-Technical Operations
of the A-600business unit. Mr. Wunderl started his international career at
Data General in the United States, France and the Netherlands and worked
previously at IBM in the Netherlands. In November 1992, Mr. Wunderl became
General Manager of ASM Europe located in Bilthoven, the Netherlands and in July
1999 he became General Manager and Executive Vice President of ASM America. Mr.
Wunderl holds an engineering degree in electronics from the Technical
University in Eindhoven.

Ivo M .M. Raaijmakersbecame Director of Research and Development and
Chief Technology Officer of Front-end Operations in July 1999. He served as
Vice President of Development for ASM America from July 1996 to July 1999. He
previously held various positions of increasing responsibility in technology
development and management at Philips Research Labs, Novellus and Applied
Materials since 1982, most recently with Applied Materials from 1993 to 1996.
Mr. Raaijmakers holds a Ph.D and Masters Degree in Physics from Eindhoven
University of Technology in the Netherlands.

Under Netherlands law, supervisory directors have the duty to supervise
and advise the managing directors. The supervisory directors are appointed by
our shareholders generally for terms of four years. The supervisory directors
can be re-elected twice, but are subject to mandatory retirement under
Netherlands law at the age of 72.

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The managing directors are entrusted with our management under the
supervision of the supervisory board and have the general authority to enter
into binding agreements with third parties. Managing directors are nominated by
the supervisory directors and elected by the common shareholders at the general
meeting of shareholders. The shareholders may reject a binding nomination at
the general meeting of shareholders by a supermajority vote of two-thirds of
the total issued and outstanding shares eligible to vote. The shareholders may
at any time suspend and dismiss managing directors by a super majority vote of
two-thirds of the total issued and outstanding shares eligible to vote. A
managing director can be suspended at any time by the supervisory board. There
is no statutory term of office for managing directors. Compensation of managing
directors is determined by the supervisory board. Currently, our managing
directors are Arthur H. del Prado, Patrick Lam See-Pong and Robert L. de
Bakker.

Our other officers serve at the discretion and under the direction of the
managing directors.



|B. |  | Compensation
|-- |  | ------------

The following table sets forth as to all executive officers and directors
as a group information concerning all remuneration from us (including our
subsidiaries) for services in all capacities during the fiscal year ended
December 31, 2001:

|                                                   |  |                                                |  |                                      |         |  |  |  |  |  |  | 
|-------------------------------------------------- |  | ---------------------------------------------- |  | ------------------------------------ | ------- |  |  |  |  |  |  | 
|                                                   |  | Cash and Cash-Equivalent Forms of Remuneration |  |                                      |         |  |  | 
|                                                   |  |                                                |  |                                      |         |  |  | 
|                                                   |  | Salaries, Bonuses, and                         |  | Insurance Benefits or Reimbursement, |         |  |  |  |  | 
|                                                   |  | Directors' Fees                                |  | Personal Benefits (1)                |         |  |  |  |  | 
|                                                   |  |                                                |  |                                      |         |  |  |  |  | 
|All directors and
officers as a group
(13 persons) |  | 
           3,361,000                         |  |                                     | 424,000 |  |  |  |  |  |  | 



---

|(1) |  | Includes payments for personal pension plans.
|--- |  | ---------------------------------------------

We generally contribute to investment funds managed by outside fund
managers on behalf of all of our employees. None of the funds so contributed
are separately earmarked for directors or senior management.

We have granted stock options to certain key employees. For information
regarding such options see Note K to the Consolidated Financial Statements.
Options to purchase 967,500 common shares are held by our executive officers
and directors at December 31, 2001. As of February 11, 2002, options to
acquire 967,500 common shares were held by executive officers and directors at
exercise prices ranging from $0.25 to $19.32, with expiration dates from
December 31, 2002 to December 20, 2010.

We have not entered into any service contracts providing for benefits upon
termination of employment with our directors.

We have an audit committee composed of Messrs. Van den Hoek, den Hoed and
Rauwenhoff.

The audit committee meets periodically to recommend a firm to be appointed
as independent auditors to audit financial statements and to perform services
related to the audit, review the scope and results of the audit with the
independent auditors, review with management and the independent auditors our
annual operating results and consider the adequacy of the internal accounting
procedures and the effect of the procedures relating to the auditors
independence.



|C. |  | Board Practices
|-- |  | ---------------

The supervisory directors are elected by the shareholders of common stock
at the annual general meeting of the shareholders and serve for a term of four
years. The supervisory directors may be re-elected twice, but by Netherlands
law the supervisory director must resign at the end of the term in which he or
she attains the age of 72.

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##### Table of Contents



A managing director is nominated by the supervisory directors and elected
by the shareholders of common stock at the general meeting of shareholders.
The shareholders may reject a binding nomination at the general meeting of the
shareholders by a supermajority vote of two-thirds of the total issued and
outstanding shares eligible to vote. The shareholders may at any time suspend
and dismiss managing directors by a super majority vote of two-thirds of the
total issued and outstanding shares eligible to vote. A managing director can
be suspended at any time by the supervisory board. There is no statutory term
of office for managing directors.



|D. |  | Employees
|-- |  | ---------

As of December 31, 2001, we had 5,955 employees, including 737 employees
primarily involved in research and development activities, 391 in marketing and
sales, 446 in customer service, 298 in finance and administration, and 4,083 in
manufacturing.

The following table lists the total number of our employees and the number
of our employees in our Front-end and Back-end business at the dates indicated.

|                  |  |           |       |          |  |       |       |  |  |  |       | 
|----------------- |  | --------- | ----- | -------- |  | ----- | ----- |  |  |  | ----- | 
|YEAR              |  | FRONT-END |       | BACK-END |  | TOTAL
|                  |  |           |       |          |  |      
|December 31, 1999 |  |           | 798   |          |  |       | 4,628 |  |  |  | 5,426 | 
|                 
|                 
|                 
|                 
|December 31, 2000 |  |           | 1,064 |          |  |       | 6,027 |  |  |  | 7,091 | 
|                 
|                 
|                 
|                 
|December 31, 2001 |  |           | 1,125 |          |  |       | 4,830 |  |  |  | 5,955 | 

Our Netherlands operation, which employs approximately 378 persons, is
subject to standardized industry bargaining under Netherlands law, and is
required to pay wages and meet conditions established as a result of
negotiations between all Netherlands employers in their industry and unions
representing employees of those employers. Additionally, management personnel
in the Netherlands facilities meet as required by Netherlands law with a works
council consisting of elected representatives of the employees to discuss
working conditions and personnel policies as well as to explain major corporate
decisions and to solicit their advice on major issues.

Many of our employees are highly skilled, and our continued success will
depend in part upon our ability to continue to attract and retain these
employees, who are in great demand. Because of the current market conditions in
the semiconductor industry, we have enacted a worldwide hiring freeze and
reduced our work force. We believe that our employee relations are good.



|E. |  | Share Ownership.
|-- |  | ----------------

The following table presents information regarding the share ownership and
option ownership of our share capital stock as of February 11, 2002 by our
directors and senior management:

|                        |  |              |            |                    |  |             |         |  |  |               |       |  
|----------------------- |  | ------------ | ---------- | ------------------ |  | ----------- | ------- |  |  | ------------- | ----- | -
|                        |  |              |            |                    |  |             |         |  |  | Percentage of
|Name                    |  | Shares Owned |            | Options for Shares |  | Outstanding
|                        |  |              |            |                    |  |            
|Paul C. van den Hoek    |  |              | *          |                    |  |             |        |  |  |               | *     |  
|                       
|                       
|                       
|                       
|Adri Baan               |  |              |           |                    |  |             |        |  |  |               |      |  
|                       
|                       
|                       
|                       
|Johan M.R. Danneels     |  |              |           |                    |  |             |        |  |  |               |      |  
|                       
|                       
|                       
|                       
|Jacobus den Hoed RA     |  |              |           |                    |  |             |        |  |  |               |      |  
|                       
|                       
|                       
|                       
|Ferdinand C. Rauwenhoff |  |              |           |                    |  |             |        |  |  |               |      |  
|                       
|                       
|                       
|                       
|Arthur
H. del Prado(1)  |  |              | 11,454,292 |                    |  |             | 275,000 |  |  |               | 23.34 | %
|                       
|                       
|                       
|                       
|Patrick Lam See-Pong    |  |              | 507,300    |                    |  |             | 192,000 |  |  |               | 1.03  | %
|                       
|                       
|                       
|                       
|Robert L. de Bakker     |  |              | *          |                    |  |             | *       |  |  |               | *     |  
|                       
|                       
|                       
|                       
|Daniel G. Queyssac      |  |              | *          |                    |  |             | *       |  |  |               | *     |  
|                       
|                       
|                       
|                       
|Fukumi Tomino           |  |              |           |                    |  |             | *       |  |  |               | *     |  
|                       
|                       
|                       
|                       
|Han F.M. Westendorp     |  |              |           |                    |  |             | *       |  |  |               | *     |  

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##### Table of Contents



|                     |  |              |   |                    |  |             |   |  |  |               |   | 
|-------------------- |  | ------------ | - | ------------------ |  | ----------- | - |  |  | ------------- | - | 
|                     |  |              |   |                    |  |             |   |  |  | Percentage of
|Name                 |  | Shares Owned |   | Options for Shares |  | Outstanding
|                     |  |              |   |                    |  |            
|                    
|                    
|                    
|                    
|Hans A. Wunderl      |  |              | * |                    |  |             | * |  |  |               | * | 
|                    
|                    
|                    
|                    
|Ivo M.M. Raaijmakers |  |              | * |                    |  |             | * |  |  |               | * | 



---

|*   |  | Less than 1%.                                                                                                                                                                                                                                                        
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(1) |  | Includes the 7,692,039 common shares shown in the table above that are
owned by Stichting Administratiekantoor ASMI, a trust controlled by our
President, Arthur H. del Prado, and 3,762,253 common shares owned by Mr.
Del Prado or members of his immediate family.

Item 7.  Major Shareholders and Related Party Transactions.



|A. |  | Major Shareholders
|-- |  | ------------------

The following table sets forth information with respect to the ownership
of our common shares as of February 11, 2002 certain information with respect
to the ownership of our outstanding common shares by each beneficial owner of
more than 5% of our common shares and by all of our officers and directors as a
group:

|                                                                                                        |  |                  |            |         |  |  |      |  
|------------------------------------------------------------------------------------------------------- |  | ---------------- | ---------- | ------- |  |  | ---- | -
|                                                                                                        |  | Number of Shares |            | Percent
|                                                                                                        |  |                  |            |        
|Stichting Administratiekantoor ASMI   
Jan van Eycklaan 10,   
3723 BC Bilthoven,   
the Netherlands(1) |  |                  | 7,692,039  |         |  |  | 15.7 | %
|                                                                                                       
|                                                                                                       
|                                                                                                       
|                                                                                                       
|Capital Guardian Group
International, Inc.(3)                                                           |  |                  | 4,800,900  |         |  |  | 9.8  | %
|                                                                                                       
|                                                                                                       
|                                                                                                       
|                                                                                                       
|All officers and directors as a group
(13 persons)(2)                                                   |  |                  | 12,327,603 |         |  |  | 25.1 | %



---

|(1) |  | Trust controlled by our President, Arthur H. del Prado.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | Includes the 7,692,039 common shares shown in the table above that are
owned by Stichting Administratiekantoor ASMI, a trust controlled by our
President, Arthur H. del Prado, and 3,762,253 common shares owned by Mr.
Del Prado or members of his immediate family.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   
|   
|   
|   
|(3) |  | Derived from the
February 14, 2002 Amendment No. 1 to the Form 13G of
Capital Guardian Group International, Inc. which is the parent
holding company of a group of investment management companies that
holds investment power and, in some cases, voting power over
4,800,900 shares of our common shares. The investment management
companies provide investment advisory and management services to
their respective clients which include registered investment
companies and institutional accounts. One of the investment
management companies, Capital Guardian Trust Company is deemed to be
the beneficial owner of 4,708,000 shares of our common shares as a
result of its serving as investment manager of various institutional
accounts.

On May 28, 1997, we entered into an agreement with Stichting Continuïteit
ASM International, or Stichting, pursuant to which Stichting was granted an
option to acquire up to that number of our preferred shares that has a total
par value equal to 50% of the par value of our common shares issued and
outstanding at the date of the exercise. Stichting is a non-membership
organization organized under Netherlands law. The objective of Stichting is to
own and vote our preferred shares in order to maintain our continuity in case
of a takeover attempt. Toward that objective, Stichting will evaluate, when
called for, whether a takeover offer is in our best interests. The Euronext
Amsterdam Market in Amsterdam requires that a majority of the board members of
Stichting be unrelated to us. As of December 31, 2001, the members of the board
of Stichting are:

|                       |  |                                                         
|---------------------- |  | --------------------------------------------------------
|Arthur H. del Prado    |  | President and Chief Executive Officer, ASM
International
|                      
|                      
|                      
|                      
|Paul C. van den Hoek   |  | Chairman of the Supervisory Board, ASM International    
|                      
|                      
|                      
|                      
|Michiel J.C. van Galen |  | Former Managing Director, Breevast N.V.                 
|                      
|                      
|                      
|                      
|Rinze Veenenga Kingma  |  | President Archeus Consulting B.V.                       
|                      
|                      
|                      
|                      
|Laurus Traas           |  | Emeritus Professor, Vrije Universiteit Amsterdam        

ASM is unaware of any arrangement which it anticipates will result in a
change in its control.

Of our 49,083,040 outstanding Common Shares at February 11, 2002,
9,042,039 are registered with us in the Netherlands, 14,091,681 shares are
registered with a transfer agent in the Netherlands, ABN AMROBANK N. V., and
25,949,320 are registered with a transfer agent in the United States, Citibank,
N. A., New York. Our common shares registered with Citibank, N.A., New York
are quoted on the

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---



##### Table of Contents



Nasdaq National Market under the symbol ASMI. As of February 11, 2002
there were approximately 207 record holders in the United States. The common
shares registered with ABN AMRO Bank, Breda, the Netherlands, are in bearer
form and are traded on the Euronext Amsterdam Market in Amsterdam under the
symbol ASM.



|B. |  | Related Party Transactions
|-- |  | --------------------------

In December 1999, we acquired 24.0% of the outstanding equity of
NanoPhotonics AG, a German supplier of precision metrology equipment, for  0.4 million, and our Chief Executive Officer also purchased a 44.5% interest in
NanoPhotonics AG. We have a five-year option to purchase the 44.5% interest
from our Chief Executive Officer at the same price he paid for his interest in
the initial transaction. At December 31, 2000 and December 31, 2001, we
provided NanoPhotonics with additional financing of  0.4 million and  1.2 million, respectively. In 2000 and 2001, we purchased equipment and materials
from NanoPhotonics in the amount of  0.2 million and  0.7 million,
respectively.

In December 1997, we loaned our Chief Operating Officer Front-end
operations  0.2 million at an average interest rate for 2001 of 4.2%. This
interest-bearing loan is outstanding at December 31, 2001 and is repayable upon
the exercise of stock options.

In March 2000, we made an interest-bearing loan of  2.2 million to our
Chief Executive Officer in connection with the exercise of stock options at an
average interest rate for 2001 of 5.4%. The loan is outstanding at December 31,
2001 and is secured by the shares received in the stock option exercise. We
have custody of the shares until the loan is repaid.

The Chairman of the Supervisory Board, Mr. van den Hoek, is a partner in
the European law firm of Stibbe. Another partner at Stibbe serves as our
general legal counsel. Mr. van den Hoek has been with Stibbe since 1965. Mr.
van den Hoek also serves on the boards of directors of various European
companies.

In October 2001, we have entered into a strategic alliance with and made a
15.4% equity investment of  20.3 million in NuTool, Inc., a privately held
semiconductor technology company located in Milpitas, California. The purchase
price of the investment was determined amongst others by reference to prices
paid by other recent strategic investors. NuTool provides innovative copper
deposition technologies to the semiconductor industry. Its patented
electrochemical mechanical deposition technology offers new process solutions
for copper deposition and planarization, providing significant savings in
integrated circuit manufacturing and enabling new integrated circuit designs
and new process technologies. The strategic alliance with NuTool provides us
with more competitive solutions to address the industrys transition to copper
metalization. We have a seat in the Board of NuTool, Inc. No other transactions
occurred in 2001.

-50-



---



##### Table of Contents



Item 8.   Financial Information

Financial Highlights and Selected Comparative Financial Data

|                                                                                    |                                                                                               |           |           |       |                             |        |       |       |       |        |       |       |       |        |       |       |       |        |       |       |       |        |       |       |       |        |  
|----------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------- | --------- | --------- | ----- | --------------------------- | ------ | ----- | ----- | ----- | ------ | ----- | ----- | ----- | ------ | ----- | ----- | ----- | ------ | ----- | ----- | ----- | ------ | ----- | ----- | ----- | ------ | -
|                                                                                    |                                                                                               |           |           |       | In Euros and US Dollars (1)
|                                                                                    |                                                                                               |           |           |       |                            
|                                                                                    |                                                                                               |           |           |       | Year ended December 31,    
|                                                                                    |                                                                                               |           |           |       |                            
|(millions, except per share data and full-time equivalents)                         |                                                                                               | 1997      |           | 1998  |                             | 1999   |       | 2000  |       | 2001   |       | 2001 
|                                                                                    |                                                                                               |           |           |       |                             |        |       |       |       |        |       |      
|                                                                                    |                                                                                               |           |           |       |                            |        |      |       |      |        |      |       |      |        | US$  
|                                                                                    |                                                                                               |           |           |       |                             |        |       |       |       |        |       |       |       |        |      
|Operations:                                                                         |                                                                                               |           |           |       |                             |        |       |       |       |        |       |       |       |        |       |       |       |        |       |       |       |        |       |      
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                    | Net sales:                                                                                    |           |           | 321.6 |                             |        |       | 288.1 |       |        |       | 414.5 |       |        |       | 935.2 |       |        |       | 561.1 |       |        |       | 499.4 |      
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                    |                                                                                               |           | Front-End |       |                             | 152.6  |       |       |       | 132.9  |       |       |       | 181.7  |       |       |       | 379.3  |       |       |       | 336.6  |       |       |       | 299.6  |  
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                    |                                                                                               |           | Back-End  |       |                             | 169.0  |       |       |       | 155.2  |       |       |       | 232.8  |       |       |       | 555.9  |       |       |       | 224.5  |       |       |       | 199.8  |  
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                    | Earnings (loss) from operations, before
unusual items:                                        |           |           | 25.7  |                             |        |       | 12.5  |       |        |       | 39.4  |       |        |       | 191.8 |       |        |       | 24.3  |       |        |       | 21.6  |      
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                    |                                                                                               |           | Front-End |       |                             |       |       |       |       | (1.6   | )     |       |       | (0.8   | )     |       |       | 34.5   |       |       |       | (3.7   | )     |       |       | (3.3   | )
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                    |                                                                                               |           | Back-End  |       |                             | 25.7   |       |       |       | 14.1   |       |       |       | 40.2   |       |       |       | 157.3  |       |       |       | 28.0   |       |       |       | 24.9   |  
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                    | Unusual items (2)                                                                             |           |           | (79.7 | )                           |        |       |      |       |        |       |      |       |        |       |      |       |        |       |      |       |        |       |      |      
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                    | Earnings (loss) from operations                                                               |           |           | (54.0 | )                           |        |       | 12.5  |       |        |       | 39.4  |       |        |       | 191.8 |       |        |       | 24.3  |       |        |       | 21.6  |      
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                    | Net earnings (loss) before cumulative effect of change
in accounting principle                |           |           | (70.5 | )                           |        |       | 0.2   |       |        |       | 11.1  |       |        |       | 98.1  |       |        |       | 6.1   |       |        |       | 5.4   |      
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                    | Cumulative effect of change in accounting principle,
net of tax (3)                           |           |           |      |                             |        |       |      |       |        |       |      |       |        |       | (3.8  | )     |        |       |      |       |        |       |      |      
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                    | Net earnings (loss)                                                                           |           |           | (70.5 | )                           |        |       | 0.2   |       |        |       | 11.1  |       |        |       | 94.3  |       |        |       | 6.1   |       |        |       | 5.4   |      
|                                                                                    |                                                                                               |           |           |       |                             |        |       |       |       |        |       |       |       |        |       |       |       |        |       |       |       |        |       |      
|Balance sheet:                                                                      |                                                                                               |           |           |       |                             |        |       |       |       |        |       |       |       |        |       |       |       |        |       |       |       |        |       |      
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                    | Net working capital (4)                                                                       |           |           | 98.7  |                             |        |       | 99.9  |       |        |       | 110.2 |       |        |       | 190.9 |       |        |       | 198.4 |       |        |       | 176.6 |      
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                    | Total assets                                                                                  |           |           | 328.6 |                             |        |       | 282.9 |       |        |       | 425.0 |       |        |       | 777.9 |       |        |       | 757.1 |       |        |       | 673.8 |      
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                    | Net debt (5)                                                                                  |           |           | 140.0 |                             |        |       | 137.0 |       |        |       | 105.7 |       |        |       | (30.5 | )     |        |       | 53.3  |       |        |       | 47.4  |      
|                                                                                    |                                                                                               |           |           |       |                             |        |       |       |       |        |       |       |       |        |       |       |       |        |       |       |       |        |       |      
|Backlog:                                                                            |                                                                                               |           | 110.5     |       |                             |        | 52.8  |       |       |        | 183.7 |       |       |        | 345.6 |       |       |        | 132.6 |       |       |        | 118.0 |      
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                    |                                                                                               | Front-End |           |       | 54.5                        |        |       |       | 27.0  |        |       |       | 72.5  |        |       |       | 211.6 |        |       |       | 107.2 |        |       |       | 95.4  |       
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                    |                                                                                               | Back-End  |           |       | 56.0                        |        |       |       | 25.8  |        |       |       | 111.2 |        |       |       | 134.0 |        |       |       | 25.4  |        |       |       | 22.6  |       
|                                                                                    |                                                                                               |           |           |       |                             |        |       |       |       |        |       |       |       |        |       |       |       |        |       |       |       |        |       |      
|Number of staff
Full-time equivalents:                                              |                                                                                               |           | 4,514     |       |                             |        | 4,436 |       |       |        | 5,426 |       |       |        | 7,091 |       |       |        | 5,955 |       |       |        | 5,955 |      
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                    |                                                                                               | Front-End |           |       | 860                         |        |       |       | 756   |        |       |       | 798   |        |       |       | 1,064 |        |       |       | 1,125 |        |       |       | 1,125 |       
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                    |                                                                                               | Back-End  |           |       | 3,654                       |        |       |       | 3,680 |        |       |       | 4,628 |        |       |       | 6,027 |        |       |       | 4,830 |        |       |       | 4,830 |       
|                                                                                    |                                                                                               |           |           |       |                             |        |       |       |       |        |       |       |       |        |       |       |       |        |       |       |       |        |       |      
|Per share data:                                                                     |                                                                                               |           |           |       |                             |        |       |       |       |        |       |       |       |        |       |       |       |        |       |       |       |        |       |      
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                    | Net earnings (loss) per share from operations:                                                |           |           |       |                             |        |       |       |       |        |       |       |       |        |       |       |       |        |       |       |       |        |       |       |      
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                    |                                                                                               |           | Basic     |       |                             | (1.62  | )     |       |       | 0.37   |       |       |       | 1.06   |       |       |       | 4.10   |       |       |       | 0.50   |       |       |       | 0.44   |  
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                    |                                                                                               |           | Diluted   |       |                             | (1.62  | )     |       |       | 0.36   |       |       |       | 0.98   |       |       |       | 3.95   |       |       |       | 0.49   |       |       |       | 0.43   |  
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                    | Net earnings (loss) per share before cumulative effect of
change in accounting principle (3): |           |           |       |                             |        |       |       |       |        |       |       |       |        |       |       |       |        |       |       |       |        |       |       |      
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                    |                                                                                               |           | Basic     |       |                             | (2.12  | )     |       |       | 0.01   |       |       |       | 0.30   |       |       |       | 2.09   |       |       |       | 0.12   |       |       |       | 0.11   |  
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                    |                                                                                               |           | Diluted   |       |                             | (2.12  | )     |       |       | 0.01   |       |       |       | 0.29   |       |       |       | 2.02   |       |       |       | 0.12   |       |       |       | 0.11   |  
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                    | Net earnings (loss) per share after cumulative effect of
change in accounting principle(3):   |           |           |       |                             |        |       |       |       |        |       |       |       |        |       |       |       |        |       |       |       |        |       |       |      
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                    |                                                                                               |           | Basic     |       |                             | (2.12  | )     |       |       | 0.01   |       |       |       | 0.30   |       |       |       | 2.01   |       |       |       | 0.12   |       |       |       | 0.11   |  
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                    |                                                                                               |           | Diluted   |       |                             | (2.12  | )     |       |       | 0.01   |       |       |       | 0.29   |       |       |       | 1.94   |       |       |       | 0.12   |       |       |       | 0.11   |  
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                    | Weighted average number of shares used in computing per
share amounts (in thousands):         |           |           |       |                             |        |       |       |       |        |       |       |       |        |       |       |       |        |       |       |       |        |       |       |      
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                    |                                                                                               |           | Basic     |       |                             | 33,232 |       |       |       | 33,794 |       |       |       | 37,301 |       |       |       | 46,810 |       |       |       | 48,944 |       |       |       | 48,944 |  
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                    |                                                                                               |           | Diluted   |       |                             | 33,232 |       |       |       | 34,743 |       |       |       | 40,664 |       |       |       | 48,703 |       |       |       | 49,958 |       |       |       | 49,958 |  
|                                                                                    |                                                                                               |           |           |       |                             |        |       |       |       |        |       |       |       |        |       |       |       |        |       |       |       |        |       |      
|Proforma amounts assuming the new accounting
principle is applied retroactively (3) |                                                                                               |           |           |       |                             |        |       |       |       |        |       |       |       |        |       |       |       |        |       |       |       |        |       |      
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|Net earnings (loss)                                                                 |                                                                                               |           | (70.7     | )     |                             |        | 0.6   |       |       |        | 8.9   |       |       |        | 98.1  |       |       |        | 6.1   |       |       |        | 5.4   |      
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|Net earnings (loss) per share:                                                      |                                                                                               |           |           |       |                             |        |       |       |       |        |       |       |       |        |       |       |       |        |       |       |       |        |       |      
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                    |                                                                                               |           | Basic     |       |                             | (2.13  | )     |       |       | 0.02   |       |       |       | 0.24   |       |       |       | 2.09   |       |       |       | 0.12   |       |       |       | 0.11   |  
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                    |                                                                                               |           | Diluted   |       |                             | (2.13  | )     |       |       | 0.02   |       |       |       | 0.23   |       |       |       | 2.02   |       |       |       | 0.12   |       |       |       | 0.11   |  
|                                                                                    |                                                                                               |           |           |       |                             |        |       |       |       |        |       |       |       |        |       |       |       |        |       |       |       |        |       |      



---

|(1) |  | For the convenience of the reader, Financial Highlights and Selected
Comparative Financial Data for 2001 have been converted into US Dollars at
the exchange rate of 0.8901 United States Dollar per Euro, which was the
noon buying rate in New York City for cable transfers payable in Euros at
December 31, 2001. Balances prior to January 1, 1999 were restated from
Netherlands guilders into Euros using the fixed exchange rate as of
January 1, 1999 ( 1.00 = NLG 2.20371). The comparative balances reported
in Euros depict the same trends as would have been presented if the
Company had continued to present balances in Netherlands guilders.
Balances prior to January 1, 1999 are not comparable to the balances of
other companies that report in Euros having restated amounts from a
different currency than Netherlands guilders.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | Unusual items in 1997 reflect litigation settlement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   
|   
|   
|   
|(3) |  | The cumulative effect of change in accounting principle relates to the
effect on prior years of the impact of the adoption of Staff Accounting
Bulletin 101.This Bulletin, effective as of January 1, 2000, sets forth
guidelines on the timing of revenue recognition of sales. See note A to
the Notes to Consolidated Financial Statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   
|   
|   
|   
|(4) |  | Accounts receivable, inventories, other current assets, accounts payable,
accrued expenses, advance payments from customers and deferred revenue.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   
|   
|   
|   
|(5) |  | Net debt includes long-term debt, convertible subordinated debt and notes
payable to banks, less cash and cash equivalents.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

-51-



---



##### Table of Contents



SCHEDULE I
CONDENSED FINANCIAL STATEMENTS
ASM INTERNATIONAL N.V., HOLDING COMPANY

(Thousands of Euro)
Condensed Balance Sheets of ASM International N.V.

|                                                             |  |              |         |      |  |      |         |  |  |  |         | 
|------------------------------------------------------------ |  | ------------ | ------- | ---- |  | ---- | ------- |  |  |  | ------- | 
|                                                             |  | December 31,
|                                                             |  |             
|                                                             |  | 1999         |         | 2000 |  | 2001
|                                                             |  |              |         |      |  |     
|Assets:                                                      |  |              |         |      |  |      |         |  |  |  |         | 
|                                                            
|                                                            
|                                                            
|                                                            
|Total current assets                                         |  |              | 21,865  |      |  |      | 98,173  |  |  |  | 186,974 | 
|                                                            
|                                                            
|                                                            
|                                                            
|Investments                                                  |  |              | 90,707  |      |  |      | 264,970 |  |  |  | 261,303 | 
|                                                            
|                                                            
|                                                            
|                                                            
|Total noncurrent assets                                      |  |              | 42,800  |      |  |      | 13,114  |  |  |  | 29,413  | 
|                                                             |  |              |         |      |  |      |         |  |  |  |         | 
|                                                             |  |              | 155,372 |      |  |      | 376,257 |  |  |  | 477,690 | 
|                                                             |  |              |         |      |  |      |         |  |  |  |         | 
|Liabilities & Shareholders Equity
Total current liabilities |  |              | 87,947  |      |  |      | 46,467  |  |  |  | 24,675  | 
|                                                            
|                                                            
|                                                            
|                                                            
|Total noncurrent liabilities                                 |  |              | 1,873   |      |  |      | 21,468  |  |  |  | 132,105 | 
|                                                             |  |              |         |      |  |      |         |  |  |  |         | 
|Total liabilities                                            |  |              | 89,820  |      |  |      | 67,935  |  |  |  | 156,780 | 
|                                                            
|                                                            
|                                                            
|                                                            
|Shareholders equity                                         |  |              | 65,552  |      |  |      | 308,322 |  |  |  | 320,910 | 
|                                                             |  |              |         |      |  |      |         |  |  |  |         | 
|                                                             |  |              | 155,372 |      |  |      | 376,257 |  |  |  | 477,690 | 
|                                                             |  |              |         |      |  |      |         |  |  |  |         | 

Condensed Statements of Earnings ASM International N.V.

|                         |  |                         |        |      |  |      |        |   |  |  |       | 
|------------------------ |  | ----------------------- | ------ | ---- |  | ---- | ------ | - |  |  | ----- | 
|                         |  | Year ended December 31,
|                         |  |                        
|                         |  | 1999                    |        | 2000 |  | 2001
|                         |  |                         |        |      |  |     
|Earnings subsidiaries    |  |                         | 18,786 |      |  |      | 97,460 |   |  |  | 5,923 | 
|                        
|                        
|                        
|                        
|Losses ASM International |  |                         | (7,687 | )    |  |      | (3,188 | ) |  |  | 175   | 
|                         |  |                         |        |      |  |      |        |   |  |  |       | 
|Net earnings             |  |                         | 11,099 |      |  |      | 94,272 |   |  |  | 6,098 | 
|                         |  |                         |        |      |  |      |        |   |  |  |       | 

Condensed Cash Flow Statements ASM International N.V.

|                                                                            |  |                         |       |      |  |      |        |  |  |  |        | 
|--------------------------------------------------------------------------- |  | ----------------------- | ----- | ---- |  | ---- | ------ |  |  |  | ------ | 
|                                                                            |  | Year ended December 31,
|                                                                            |  |                        
|                                                                            |  | 1999                    |       | 2000 |  | 2001
|                                                                            |  |                         |       |      |  |     
|Net cash provided by (used in) operating, financing
or investing activities |  |                         | 1,565 |      |  |      | 43,654 |  |  |  | 47,593 | 
|                                                                            |  |                         |       |      |  |      |        |  |  |  |        | 
|Cash and cash equivalents at the beginning of the year                      |  |                         | 643   |      |  |      | 2,208  |  |  |  | 45,862 | 
|                                                                            |  |                         |       |      |  |      |        |  |  |  |        | 
|Cash and cash equivalents at the end of the year                            |  |                         | 2,208 |      |  |      | 45,862 |  |  |  | 93,455 | 
|                                                                            |  |                         |       |      |  |      |        |  |  |  |        | 

Notes to Condensed Financial Statements of ASM International N.V.:

Restrictions which limit the availability of retained earnings, net income
for dividend purposes and other funds transfers from subsidiaries to ASM
International N.V.:

ASMPT

Subject to the availability of adequate funds, all the retained earnings
of ASMPT group can be distributed to its shareholders, including ASMI, on a
basis proportional to shareholdings of each shareholder. Such retained
earnings at December 31, 2001 according to Hong Kong GAAP amounts to
approximately HK$644.6 million. Other than the above, ASMPT group is
prohibited from making loans or advances, other than trade receivables in the
normal course of business, to ASMI under the Hong Kong Listing Rules.

-52-



---



##### Table of Contents



SCHEDULE II
VALUATION RESERVES

(Thousands of Euro)

|                                |  |              |        |                     |  |            |        |        |  |                      |        |                    |  |  |       |   |  |  |        | 
|------------------------------- |  | ------------ | ------ | ------------------- |  | ---------- | ------ | ------ |  | -------------------- | ------ | ------------------ |  |  | ----- | - |  |  | ------ | 
|                                |  | Balance at   |        | Charged or released |  |            |        |        |  |                      |        |                    |  |  |       |  
|Class of valuation              |  | beginning of |        | to cost and         |  |            |        |        |  | Currency translation |        | Balance at the end
|reserve                         |  | period       |        | expenses            |  | Deductions |        | effect |  | of period           
|                                |  |              |        |                     |  |            |        |        |  |                     
|Allowance for doubtful
accounts |  |              |        |                     |  |            |        |        |  |                      |        |                    |  |  |       |   |  |  |        | 
|                               
|                               
|                               
|                               
|Year ended 12/31/01             |  |              | 8,734  |                     |  |            | (2,055 | )      |  |                      | (45    | )                  |  |  | 318   |   |  |  | 6,952  | 
|                               
|                               
|                               
|                               
|Year ended 12/31/00             |  |              | 1,432  |                     |  |            | 7,868  |        |  |                      | (428   | )                  |  |  | (138  | ) |  |  | 8,734  | 
|                               
|                               
|                               
|                               
|Year ended 12/31/99             |  |              | 1,839  |                     |  |            | 14     |        |  |                      | (569   | )                  |  |  | 148   |   |  |  | 1,432  | 
|                               
|                               
|                               
|                               
|Provision for inventory         |  |              |        |                     |  |            |        |        |  |                      |        |                    |  |  |       |   |  |  |        | 
|                               
|                               
|                               
|                               
|Year ended 12/31/01             |  |              | 20,275 |                     |  |            | 4,416  |        |  |                      | (4,337 | )                  |  |  | 658   |   |  |  | 21,012 | 
|                               
|                               
|                               
|                               
|Year ended 12/31/00             |  |              | 13,079 |                     |  |            | 10,295 |        |  |                      | (3,814 | )                  |  |  | 715   |   |  |  | 20,275 | 
|                               
|                               
|                               
|                               
|Year ended 12/31/99             |  |              | 10,131 |                     |  |            | 2,029  |        |  |                      | (362   | )                  |  |  | 1,281 |   |  |  | 13,079 | 

Item 9.  The Offer and Listing.



|A. |  | Offer and Listing Details
|-- |  | -------------------------

The following table sets forth, for the periods indicated, the high and
low closing prices of our common shares as reported on the Nasdaq National
Market and the high and low closing price as reported on Euronext Amsterdam
Market:

Price Range of Common Shares

|                      |                |  |                       |       |                         |  |      |       |     |  |     |       |  |  |     |       | 
|--------------------- | -------------- |  | --------------------- | ----- | ----------------------- |  | ---- | ----- | --- |  | --- | ----- |  |  | --- | ----- | 
|                      |                |  | Nasdaq Closing Prices |       | Euronext Closing Prices
|                      |                |  |                       |       |                        
|                      |                |  | High                  |       | Low                     |  | High |       | Low
|                      |                |  |                       |       |                         |  |      |       |    
|Annual Information    |                |  |                       |       |                         |  |      |       |     |  |     |       |  |  |     |      
|                     
|                     
|                     
|                     
|                      | 1997           |  | $                     | 20.13 |                         |  | $    | 8.44  |     |  | Nlg | 40.80 |  |  | Nlg | 16.30 | 
|                     
|                     
|                     
|                     
|                      | 1998           |  |                       | 12.88 |                         |  |      | 2.50  |     |  | Nlg | 26.90 |  |  | Nlg | 4.90  | 
|                     
|                     
|                     
|                     
|                      | 1999           |  |                       | 23.94 |                         |  |      | 3.63  |     |  |    | 23.00 |  |  |    | 3.55  | 
|                     
|                     
|                     
|                     
|                      | 2000           |  |                       | 35.63 |                         |  |      | 9.31  |     |  |    | 38.00 |  |  |    | 10.75 | 
|                     
|                     
|                     
|                     
|                      | 2001           |  |                       | 26.84 |                         |  |      | 10.40 |     |  |    | 31.45 |  |  |    | 10.10 | 
|                     
|                     
|                     
|                     
|Quarterly Information |                |  |                       |       |                         |  |      |       |     |  |     |       |  |  |     |      
|                     
|                     
|                     
|                     
|                      | 2000:          |  |                       |       |                         |  |      |       |     |  |     |       |  |  |     |       | 
|                     
|                     
|                     
|                     
|                      | First Quarter  |  | $                     | 35.63 |                         |  | $    | 20.69 |     |  |    | 36.40 |  |  |    | 19.50 | 
|                     
|                     
|                     
|                     
|                      | Second Quarter |  |                       | 34.88 |                         |  |      | 23.00 |     |  |     | 38.00 |  |  |     | 26.40 | 
|                     
|                     
|                     
|                     
|                      | Third Quarter  |  |                       | 29.75 |                         |  |      | 17.50 |     |  |     | 31.45 |  |  |     | 20.15 | 
|                     
|                     
|                     
|                     
|                      | Fourth Quarter |  |                       | 17.75 |                         |  |      | 9.31  |     |  |     | 20.65 |  |  |     | 10.75 | 
|                     
|                     
|                     
|                     
|                      | 2001:          |  |                       |       |                         |  |      |       |     |  |     |       |  |  |     |       | 
|                     
|                     
|                     
|                     
|                      | First Quarter  |  | $                     | 19.88 |                         |  | $    | 9.63  |     |  |    | 20.70 |  |  |    | 10.10 | 
|                     
|                     
|                     
|                     
|                      | Second Quarter |  |                       | 26.84 |                         |  |      | 15.31 |     |  |     | 31.45 |  |  |     | 17.35 | 
|                     
|                     
|                     
|                     
|                      | Third Quarter  |  |                       | 23.76 |                         |  |      | 10.40 |     |  |     | 26.80 |  |  |     | 10.90 | 
|                     
|                     
|                     
|                     
|                      | Fourth Quarter |  |                       | 19.51 |                         |  |      | 14.81 |     |  |     | 21.75 |  |  |     | 11.05 | 
|                     
|                     
|                     
|                     
|Monthly Information   |                |  |                       |       |                         |  |      |       |     |  |     |       |  |  |     |      
|                     
|                     
|                     
|                     
|                      | August 2001    |  | $                     | 23.76 |                         |  | $    | 20.46 |     |  |    | 26.80 |  |  |    | 22.40 | 
|                     
|                     
|                     
|                     
|                      | September 2001 |  |                       | 20.13 |                         |  |      | 10.40 |     |  |     | 23.30 |  |  |     | 10.90 | 
|                     
|                     
|                     
|                     
|                      | October 2001   |  |                       | 16.52 |                         |  |      | 10.55 |     |  |     | 18.20 |  |  |     | 11.05 | 
|                     
|                     
|                     
|                     
|                      | November 2001  |  |                       | 17.35 |                         |  |      | 14.35 |     |  |     | 20.39 |  |  |     | 16.25 | 
|                     
|                     
|                     
|                     
|                      | December 2001  |  |                       | 19.51 |                         |  |      | 14.82 |     |  |     | 21.75 |  |  |     | 16.75 | 
|                     
|                     
|                     
|                     
|                      | January 2002   |  |                       | 22.34 |                         |  |      | 17.95 |     |  |     | 25.00 |  |  |     | 20.95 | 



|B. |  | Plan of Distribution
|-- |  | --------------------

Not Applicable

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|C. |  | Markets
|-- |  | -------

Our common shares are quoted on The Nasdaq National Market under the
symbol ASMI and listed on the Euronext Amsterdam stock exchange under the
symbol ASM.



|D. |  | Selling Shareholders 
|-- |  | ---------------------
|  
|   |  | Not Applicable       
|  
|E. |  | Dilution             
|  
|   |  | Not Applicable       
|  
|F. |  | Expenses of the Issue
|  
|   |  | Not Applicable       

Item 10.  Additional Information.



|A. |  | Share Capital                        
|-- |  | -------------------------------------
|  
|   |  | Not Applicable                       
|  
|B. |  | Memorandum of Articles of Association

Incorporated by reference to our Registration Statement on Form F-3 filed
with the United States Securities and Exchange Commission on December 15, 1997
and filed as Exhibit 3.1 to our Form 6-K on November 6, 2001.



|C. |  | Material Contracts
|-- |  | ------------------

For a description of the material contracts we entered into in the last
two fiscal years, please see Item 4. Information on the Company.



|D. |  | Exchange Controls
|-- |  | -----------------

There are no foreign exchange controls or other governmental laws, decrees
or regulations in the Netherlands restricting the import or export of capital
or affecting the remittance of dividends, interest or other payments to
non-resident shareholders. Neither the laws of the Netherlands nor the
Articles of Association of ASM International restrict remittances to
non-resident shareholders or the right to hold or vote such securities.



|E. |  | Taxation
|-- |  | --------

Summary of Dutch Tax Provisions Applicable to Nonresident Shareholders with a
particular focus on US Shareholders

The statements below briefly summarize the current Dutch tax laws, based
on the law as in force at January 1, 2002. The description is limited to the
tax implications for shareholders who neither are nor are deemed to be a
resident of the Netherlands for purposes of the relevant tax codes. The
description does not address special rules that may apply to holders of special
classes of shares and should not be interpreted as extending by implication to
matters not specifically referred to in this document. As to individual tax
consequences, shareholders are advised to consult their own tax advisors.

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Withholding Tax

Dividends distributed by us generally are subject to a withholding tax
imposed by the Netherlands at a rate of 25%. The expression dividends
distributed includes, among other things:



| |  |  | distributions in cash or in kind, deemed and constructive
distributions and repayments of paid-in capital not recognized for
Dutch dividend withholding tax purposes;                                                                                                                                                                                                                                           
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | liquidation proceeds, proceeds of redemption of ordinary shares or
consideration for the repurchase of ordinary shares by us, or one of
our subsidiaries, to the extent that such consideration exceeds the
average paid-in capital recognized for Dutch dividend withholding tax
purposes;                                                                                                                     
|
| |  |  | the par value of ordinary shares issued to a holder of ordinary
shares or an increase in the par value of ordinary shares, as the case
may be, to the extent that it does not appear that a contribution,
recognized for Dutch dividend withholding tax purposes, has been made
or will be made; and                                                                                                            
|
| |  |  | partial repayment of paid-in capital, recognized for Dutch dividend
withholding tax purposes, if and insofar as there are net profits
(zuivere winst), unless the general meeting of our shareholders has
resolved in advance to make such repayment and provided that the par
value of the ordinary shares concerned has been reduced by an equal
amount by way of an amendment to the articles of association.

If a holder of ordinary shares resides in a country other than the
Netherlands and if a double taxation convention is in effect between the
Netherlands and such other country, such holder of ordinary shares may,
depending on the terms of that double taxation convention, be eligible for a
full or partial exemption from, or refund of, Dutch dividend withholding tax.
The Netherlands has concluded such a convention with the United States, among
other countries.

Under the Convention between the United States of America and the Kingdom
of the Netherlands for the Avoidance of Double Taxation and the Prevention of
Fiscal Evasion with Respect to Taxes on Income (the US Tax Treaty) currently
in effect, dividends we pay to a holder of our common shares who is not, or is
not deemed to be, a resident of the Netherlands for Dutch tax purposes but who
is a resident of the United States as defined in the US Tax Treaty are
generally eligible for a reduction of the 25% Dutch withholding tax to 15% or,
in the case of certain US corporate shareholders owning at least 10% of ASMI
voting power, to 5%, provided that such shareholder does not have an enterprise
or an interest in an enterprise that is, in whole or in part, carried on
through a permanent establishment or permanent representative in the
Netherlands to which the dividends are attributable. The US Tax Treaty provides
for complete exemption from tax on dividends received by exempt pension trusts
and exempt organizations, as defined therein. Except in the case of exempt
organizations, the reduced dividend withholding rate (or exemption from
withholding) can be applied at the source upon payment of the dividends,
provided that the proper forms have been filed prior to the payment. Exempt
organizations remain subject to the statutory withholding rate of 25% and are
required to file an application for a refund of such withholding.

A holder who is not, or is not deemed to be, a resident of the Netherlands may
not claim the benefits of the US Tax Treaty unless:



| |  |  | the holder is a resident of the United States as defined therein;
and                                                                    
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | the holders entitlement to such benefits is not limited by the
provisions of Article 26 (limitation on benefits) of the US Tax
Treaty.

Under current Dutch law, we may be permitted under limited circumstances
to deduct and retain from the withholding a portion of the amount that
otherwise would be required to be remitted to the Dutch Tax Authorities. That
amount generally may not exceed 3% of the total dividend distributed by us. If
we withhold an amount from dividends paid to Dutch resident individuals or
Dutch resident entities, the amount cannot be credited against their income tax
or corporate income tax liability. We will endeavor to

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provide you with information concerning the extent to which we have
applied the reduction described above to dividends paid to you.

On August 30, 2001, a bill was submitted to the Dutch Parliament
containing measures against what are known as dividend-stripping
transactions. According to this bill, as of April 27, 2001, a refund,
reduction, exemption or credit of Dutch dividend withholding tax on the basis
of Dutch tax law or on the basis of a tax treaty between the Netherlands and
another state, will be granted only if the dividends are paid to the beneficial
owner of the dividends. The term beneficial owner has not been defined.
However, the bill does include a non-exhaustive description of various
situations in which the recipient of the dividend distribution is not deemed to
be the beneficial owner. In general terms, dividend stripping can be
described as the situation in which a foreign or domestic person (usually, but
not necessarily, the original shareholder) has transferred his shares or his
entitlement to the dividend distributions to a party that has a more favorable
right to a refund or reduction of Dutch dividend withholding tax than the
foreign or domestic person. In these situations, the foreign or domestic person
(usually the original shareholder), by transferring his shares or his
entitlement to the dividend distributions, avoids Dutch dividend withholding
tax while retaining his beneficial interest in the shares and the dividend
distributions.

Income Tax and Corporate Income Tax on Dividends

A nonresident individual or corporate shareholder will not be subject to
Dutch income tax with respect to dividends distributed by us on or with respect
to capital gains derived from the sale, disposal or deemed disposal of our
common shares, provided that:



| |  |  | such holder is neither resident nor deemed to be resident in the
Netherlands nor has made an election for the application of the rules
of the Dutch 2001 Income Tax Act as they apply to residents of the
Netherlands; and                                                                                                                                                                                                                                    
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | such holder does not have, and is not deemed to have, an enterprise
or an interest in an enterprise which is, in whole or in part, carried
on through a permanent establishment, a deemed permanent establishment,
or a permanent representative in the Netherlands and to which
enterprise or part of an enterprise the shares are attributable, nor
does such holder carry out any other activities in the Netherlands that
exceed regular asset management;
|
| |  |  | such holder does not have a profit share in, or any other
entitlement to the assets or income of an enterprise, other than by way
of securities, which enterprise is effectively managed in the
Netherlands and to which enterprise the shares are attributable;                                                                                                                                                                                              
|
| |  |  | such holder does not carry out and has not carried out employment
activities with which the holding of the shares is connected directly
or indirectly; and                                                                                                                                                                                                                                                                                                    
|
| |  |  | such holder, individuals relating to such holder and some of their
relations by blood or marriage in the direct line (including foster
children) do not have a substantial interest or deemed substantial
interest in an entity resident or deemed resident in the Netherlands,
or, if such holder has a substantial interest or a deemed substantial
interest, it forms part of the assets of an enterprise.                                                 

Generally, a nonresident holder will have a substantial interest if he, his
partner, certain other relatives (including foster children) or certain persons
sharing his household, alone or together, directly or indirectly:



| |  |  | hold shares representing 5% or more of our total issued and
outstanding capital (or the issued and outstanding capital of any class
of our shares);                                                                                                                                                                       
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | hold or have rights to acquire shares (including the right to
convert notes or stock options into shares), whether or not already
issued, that at any time (and from time to time) represent 5% or more
of our total issued and outstanding capital (or the issued and
outstanding capital of any class of our shares); or

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| |  |  | hold or own certain profit-participating rights that relate to 5%
or more of our annual profit and/or to 5% or more of our liquidation
proceeds.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------

The same criteria apply to a nonresident entity, save for the extension to
partners, certain other relatives, and certain persons sharing the holders
household.

Gift and Inheritance Tax

In principle, liability for Dutch gift tax or inheritance tax arises in
respect of any gifts of common shares by or inheritance of common shares from
any person who resides in the Netherlands at the time of the gift or death.

A gift or inheritance of common shares from a nonresident shareholder will
not be subject to Dutch gift and inheritance tax, provided that:



| |  |  | the nonresident shareholder does not have an enterprise or an interest
in an enterprise that is, in whole or in part, carried on through a
permanent establishment or a permanent representative in the
Netherlands to which or to whom the common shares are attributable;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | the nonresident shareholder is not entitled to a share in the profits
of an enterprise that is effectively managed in the Netherlands other
than by way of securities or through an employment contract, the
common shares being attributable to that enterprise; and      
|
| |  |  | the nonresident shareholder makes a gift of shares and dies within 180
days after the date of the gift, while being resident or deemed to be
resident in the Netherlands at the time of his death.                                                                         

For the purposes of Dutch gift and inheritance tax, a Dutch national is
deemed to be a resident of the Netherlands if he resided in that country at any
time during a period of ten years preceding the date of the gift or death, as
the case may be. In addition, for the purposes of Dutch gift tax, a person not
possessing Dutch nationality is also deemed to be a Dutch resident,
irrespective of his nationality, if he was a Dutch resident at any time during
a period of twelve months preceding the time at which the gift was made.

Summary of US Federal Tax Provisions Applicable to United States Security
Holders

The following is a general description of the material United States
(U.S.) federal income tax consequences of the ownership and disposition of
the common shares. This summary only applies to U.S. Holders (as defined
below) that hold their shares as capital assets. This discussion does not
purport to deal with all aspects of U.S. federal income taxation that may be
relevant to holders of shares in view of their particular circumstances (for
example, persons subject to the alternative minimum tax provisions of the
Internal Revenue Code), and does not deal with holders subject to special
rules, such as, but not limited to dealers in securities or foreign currencies,
traders in securities that elect to use a mark-to-market method of accounting,
certain financial institutions, tax exempt organizations, insurance companies,
persons that actually or constructively own 10% or more of our voting stock,
persons holding common shares as part of a straddle, hedging, conversion or
constructive sale transaction or holders of common shares whose functional
currency is not the U.S. dollar.

This discussion is based on the Internal Revenue Code of 1986, as amended
to the date hereof, final, temporary and proposed Treasury Department
regulations promulgated thereunder, and administrative and judicial
interpretations thereof, changes to any of which subsequent to the date hereof,
possibly with retroactive effect may affect the tax consequences described
herein. In addition, there can be no assurance that the Internal Revenue
Service will not challenge one or more of the tax consequences described
herein, and we have not obtained, nor do we intend to obtain, a ruling from the
Internal Revenue Service or an opinion of counsel with respect to the U.S.
federal income tax consequences of acquiring or holding shares. Prospective
holders of shares should consult their own tax advisors as to the application
of the U.S. federal income tax laws to their particular situation as well as
any tax

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consequences that may arise under the U.S. federal estate or gift tax and
any state, local and foreign tax laws from the ownership and disposition of the
shares.

The following discussion is a summary of the tax rules applicable to U.S.
Holders of shares and does not consider any U.S. federal income tax
consequences to non-U.S. Holders. As used herein, U.S. Holder means a
beneficial owner of shares that is (i) an individual who is a citizen or
resident of the United States, (ii) a corporation (or other entity taxable as a
corporation for U.S. federal income tax purposes) created or organized in or
under the laws of the United States or any political subdivision thereof, (iii)
an estate the income of which is subject to U.S. federal income taxation
regardless of its source, (iv) a trust if a court within the United States is
able to exercise primary supervision over the administration of the trust and
one or more U.S. persons have the authority to control all substantial
decisions of the trust, or a trust in existence on August 20, 1996 that was
treated as U.S. persons under the law in effect immediately prior to that date
and that made a valid election to be treated as a U.S. person, or (v) any other
person or entity that would be subject to U.S. federal income tax on a net
income basis in respect of the common shares. A non-U.S. Holder is a
beneficial owner of common shares that is not a U.S. Holder as so defined
herein.

Taxation of Dispositions

A U.S. Holder will recognize gain or loss for U.S. federal income tax
purposes upon the sale or other disposition of the shares in an amount equal to
the difference between the amount realized and the U.S. Holders adjusted tax
basis in the shares. For these purposes, a U.S. Holders adjusted tax basis in
the shares generally will equal the U.S. dollar cost of such shares to such
U.S. Holder. Subject to the passive foreign investment company rules described
below, gain or loss realized by a U.S. Holder on such sale or other disposition
generally will be treated as capital gain or loss, and will be long-term
capital gain or loss if the shares were held for more than one year. Any such
gain will generally be treated as U.S. source income for U.S. foreign tax
credit purposes. Net long-term capital gain recognized by a U.S. Holder who is
an individual generally is subject to reduced rates of taxation. The deduction
of capital losses is subject to certain limitations. Prospective investors
should consult their own tax advisors in this regard.

If we repurchase shares, the repurchase generally will be treated as a
sale or exchange of the shares subject to the rules discussed above. However,
under certain circumstances as provided in Section 302 of the Internal Revenue
Code, the repurchase may be treated fully or partially as a dividend taxable as
described below under Taxation of Dividends. U.S. Holders should consult
their own tax advisors concerning the U.S. federal income tax consequences of a
repurchase of their shares.

Taxation of Dividends

Subject to the passive foreign investment company rules described below,
the gross amount of any distribution paid (including amounts withheld to pay
Netherlands taxes) with respect to the shares, other than certain pro rata
distributions of our shares, will be included in the gross income of a U.S.
Holder as foreign source dividend income to the extent paid out of our current
or accumulated earnings and profits, as determined under U.S. federal income
tax principles. The amount of any distribution of property other than cash
will be the fair market value of such property on the date of distribution. If
a U.S. Holder receives a dividend in Netherlands guilders or in Euros, the
amount of the dividend for U.S. federal income tax purposes will be the U.S.
dollar value of the dividend, determined at the spot rate in effect on the date
of such payment, regardless of whether the payment is later converted into U.S.
dollars. In the case of such later conversion, the U.S. Holder may recognize
U.S. source ordinary income or loss as a result of currency fluctuations
between the date on which the dividend is paid and the date the dividend amount
is converted to U.S. dollars. Distributions treated as dividends will not be
eligible for the dividends received deduction generally allowed to corporations
under the Internal Revenue Code. To the extent that the amount of any
distribution exceeds our current and accumulated earnings and profits for a
taxable year, the distribution will first be treated as a tax-free return of
capital to the extent of the U.S. Holders adjusted tax basis in the shares
(thereby increasing the amount of gain and decreasing the amount of loss to be
recognized on the subsequent disposition of the shares), and to the extent that
such

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distribution exceeds the U.S. Holders adjusted tax basis in the shares
such excess will be taxed as capital gain. We do not maintain calculations of
our earnings and profits under U.S. federal income tax principles, and
therefore all amounts distributed to U.S. Holders will be treated as dividends.

Subject to certain conditions and limitations set forth in Sections 901
and 904 of the Internal Revenue Code, including certain holding period
requirements, foreign tax withheld or paid with respect to dividends on common
shares generally will be eligible for credit against a U.S. Holders U.S.
federal income tax liability. Alternatively, a U.S. Holder may claim a
deduction for such amount of withheld foreign taxes, but only for a year for
which such U.S. Holder elects to do so with respect to all foreign income
taxes. Under current Dutch law, we may be permitted under limited
circumstances to deduct and retain from the withholding a portion of the amount
that otherwise would be required to be remitted to the taxing authorities in
the Netherlands. This amount generally may not exceed 3% of the total dividend
distributed by us. If we withhold an amount from dividends paid to a U.S.
Holder that we then are not required to remit to any taxing authority in the
Netherlands, the amount will not qualify as a creditable tax for U.S. federal
income tax purposes. We will endeavor to provide U.S. Holders with information
concerning the extent to which we have applied the reduction described above to
dividends paid to U.S. Holders.

The overall limitation on foreign taxes eligible for credit is calculated
separately with respect to specific classes of income. For this purpose,
dividends distributed by us generally will be passive income, or, in the case
of certain U.S. Holders, financial services income. To the extent such
dividends on common shares are treated as capital gains, such gain would be
U.S. source. Accordingly, a U.S. Holder would not be able to use the foreign
tax credit arising from any Netherlands withholding taxes imposed on such
distribution unless such credit can be applied (subject to applicable
limitations) against U.S. tax due on other foreign source income in the
appropriate category for foreign tax credit purposes.

The rules relating to the determination of the U.S. foreign tax credit are
complex. U.S. Holders should consult their own tax advisors with respect to
the availability of a foreign tax credit or deduction for foreign, including
Netherlands, taxes withheld.

Anti-Deferral Tax Rules

The Internal Revenue Code contains various provisions that impose current
U.S. federal income tax on certain foreign corporations or their U.S.
shareholders if such corporations derive certain types of passive income and
fail to make adequate distribution of profits to their U.S. shareholders. These
provisions include the passive foreign investment company, foreign investment
company, foreign personal holding company, personal holding company and
controlled foreign corporation rules. While we do not believe that any of
these rules will likely apply to us, we are not certain that we can avoid these
tax rules because we cannot predict with any degree of certainty the amount and
character of our future income or the amount of our shares any particular U.S.
Holder will own. Accordingly, we will only briefly summarize those provisions
and then only the rules that we believe would have the greatest likelihood of
applying to us in the future.

Passive Foreign Investment Company

The passive foreign investment company (PFIC) provisions of the Internal
Revenue Code can have significant tax effects on U.S. Holders. In general, a
foreign corporation will be a PFIC in a particular tax year and for all
succeeding tax years if:



| |  | 75% or more of its gross income (including the foreign corporations pro
rata share of the gross income of any U.S. or foreign company in which the
corporation owns or is considered to own 25% or more of the shares by
value) in a taxable year is passive income; or
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | at least 50% of the average value of the corporations assets in a
taxable year (average determined as of the end of each quarter of the
corporations taxable year and ordinarily determined based on fair                                                             

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| |  | market value, including the pro rata share of the assets of any U.S. or
foreign company in which the corporation owns or is considered to own 25% or
more of the shares by value) produce, or are held for the production of,
passive income.
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

If we were a PFIC for a taxable year during which a U.S. Holder owned our
shares, and the U.S. Holder did not make an election either to treat us as a
qualified electing fund (within the meaning of the Internal Revenue Code) for
the first taxable year in the U.S. Holders holding period that we were a PFIC
or to mark our shares to market, then:



| |  | Excess distributions paid to a U.S. Holder will be taxed in a special
way. Excess distributions are amounts received by a U.S. Holder with
respect to our shares in any taxable year that exceed 125% of the
average distributions received by the U.S. Holder from us in the three
previous years before the current taxable year (or, if shorter, the
U.S. Holders holding period for the shares). The portion of an
actual distribution that is not an excess distribution is not taxed
under the excess distribution rules, but rather is taxed as described
above under Taxation of Dividends. Excess distributions must be
allocated ratably to each day that a U.S. Holder has held our shares.
A U.S. Holder must report amounts allocated to the current taxable
year (and to prior taxable years during which we were not a PFIC) as
ordinary income for the current taxable year. Amounts allocated to
each prior taxable year for which we were a PFIC are subject to the
highest rate of tax for the year to which allocated, and each of the
resulting amounts of tax incurs an interest charge as if it were an
underpayment of taxes for the year in question. Amounts allocated to
prior years during which we were a PFIC are never included in a U.S.
Holders taxable income. Rather, the tax and interest determined
under the rules (the Deferred Tax Amount) described herein is added
to the U.S. Holders tax liability and is an actual tax liability,
regardless the U.S. Holders other income or losses. Thus, even if
the U.S. Holder otherwise is not liable for tax (i.e., because of a
net operating loss), the U.S. Holder will still have to pay the
Deferred Tax Amount.
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | the entire amount of gain that is recognized by a U.S. Holder upon a
sale or other disposition of shares will also be considered an excess
distribution and will be subject to tax as described above.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

If a U.S. Holder makes a qualified electing fund (QEF) election for all
taxable years during which the U.S. Holder owned our shares and we were a PFIC,
the PFIC rules described above will not apply to that U.S. Holder. Instead,
the electing U.S. Holder is required for each taxable year to include in income
a pro rata share of the ordinary earnings of the PFIC as ordinary income and a
pro rata share of the net capital gain of the PFIC as long-term capital gain.
The QEF election is made on a shareholder-by-shareholder basis and can be
revoked only with the consent of the Internal Revenue Service. The QEF
election, however, may only be made if the PFIC agrees to make available the
information necessary to determine inclusions under the QEF rules and to assure
compliance. If we are or become a PFIC, we may be unable or unwilling to
satisfy the record keeping requirements that would enable a U.S. Holder to make
a QEF election. A U.S. Holder that has made a QEF election is permitted, by
election, to defer actual payment of the tax liability arising from a QEF
inclusion. Generally, payment is deferred until the PFIC makes actual
distributions of amounts previously included in the U.S. Holders income
pursuant to the QEF election. A U.S. Holder that elects to defer tax on the
QEF inclusion amount must pay interest on the deferred tax liability until the
liability is actually paid at the normal rate for underpayments of tax. The
deferral election is made on a year-by-year basis with respect to each years
QEF inclusion.

In lieu of making a qualified electing fund election, a U.S. Holder of
publicly traded PFIC shares could elect to mark the shares to market annually,
in which case if the fair market value of the U.S. Holders PFIC shares exceeds
the U.S. Holders adjusted tax basis in those shares as of the close of the
U.S. Holders taxable year, the U.S. Holder will recognize the amount of the
excess as ordinary income. Likewise, if the fair market value of the U.S.
Holders PFIC shares is less than the U.S. Holders adjusted tax basis in those
shares as of the close of the U.S. Holders taxable year, the U.S. Holder may
recognize the difference as ordinary loss. Losses may be deducted only to the
extent of net gain previously included in taxable income by the U.S. Holder
under the election for prior taxable years. Provided that if the U.S. Holder
has elected to mark our shares to market for all taxable years during which (i)
the U.S. Holder owned our shares and (ii) we were a PFIC, the PFIC rules
generally will not apply to such U.S. Holder.

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If U.S. Holders own shares during any year in which we are a PFIC, the U.S
Holders must file Internal Revenue Service Form 8621.

We believe that we are not a PFIC, and we do not expect to become a PFIC.
However, we cannot assure you that we will not qualify as a PFIC in the future.

Foreign Personal Holding Company Rules

Special U.S. tax rules apply to a shareholder of a foreign personal
holding company (FPHC). A foreign corporation will be classified as a FPHC
for U.S. federal income tax purposes if the following two tests are satisfied:



| |  | five or fewer individuals who are U.S. citizens or residents (a U.S.
Group) actually or constructively own, under attribution rules, more
than 50% of all classes of the corporations shares measured by voting
power or value at any time during the corporations taxable year; and                                                                                
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | the corporation receives at least 60% (50% if the corporation has
qualified as a foreign personal holding corporation in a prior taxable
year) of its gross income regardless of source (foreign or domestic),
as specifically adjusted, from passive sources (e.g., dividends,
interest, gains from the sale or exchange of shares or securities,
rents and royalties).

If we are a FPHC, each U.S. Holder that owned our shares on the last day
of the our taxable year or if earlier, the last day of our taxable year on
which a U.S. Group currently exists with respect to us, must include in gross
income as dividends such U.S. Holders pro rata share the amount the U.S.
Holder would have received if we had distributed a dividend equal to our
undistributed foreign personal holding company income, as defined for U.S.
federal income tax purposes. The imputed income is taxable as a dividend even
if no cash dividend is actually paid.

We believe that we are not a FPHC, and we do not expect to become a FPHC.
However, we can not assure you that we will not qualify as a FPHC in the
future.

Personal Holding Company Rules

A foreign corporation may be classified as a personal holding company for
U.S. federal income tax purposes if the following two tests are satisfied:



| |  | If at any time during the last half of the corporations taxable year,
five or fewer individuals (without regard to their citizenship or
residency) actually or constructively own, under attribution rules, more
than 50% of the shares of the corporation by value; and                           
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | 60% or more of the foreign corporations gross income derived from U.S.
sources or effectively connected with a U.S. trade or business, as
specifically adjusted, is from passive sources (e.g., dividends, interest,
gains from the sale or exchange of shares or securities, rents and
royalties).

For tax year 2002, a personal holding company generally is taxed currently
at a rate of 38.6% on its undistributed personal holding company income, which
is calculated based generally on the corporations taxable income after
deducting dividends paid and making certain other adjustments. The PHC tax on
a foreign corporation is limited to the corporations U.S. source income. Even
if we were to become a PHC, we do not expect to have material undistributed PHC
income. However, we cannot assure you that we will not become a PHC because of
uncertainties regarding the application of the constructive ownership rules and
the possibility of changes in our shareholder base and income or other
circumstances that could change the application of the PHC rules to us. In
addition, if we become a PHC we cannot assure you that the amount of our PHC
income will be immaterial.

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Controlled Foreign Corporation Rules

If more than 50% of the voting power or total value of all classes of our
shares is owned, directly or indirectly, by U.S. shareholders, each of which
owns 10% or more of the total combined voting power of all classes of our
shares, we could be treated as a controlled foreign corporation (CFC) under
Subpart F of the Internal Revenue Code. This classification would require such
10% or greater shareholders to include in income their pro rata shares of our
Subpart F Income, as defined in the Internal Revenue Code. In addition,
under Section 1248 of the Internal Revenue Code, gain from the sale or exchange
of shares by a U.S. Holder who is or was a 10% or greater shareholder at any
time during the five year period ending with the sale or exchange will be
dividend income to the extent of our earnings and profits attributable to the
shares sold or exchanged and accumulated during the periods that we were a CFC.
We believe that we are not a CFC and we will not become a CFC, however, we can
not assure you that we will not become a CFC in the future.

United States Backup Withholding Tax and Information Reporting

Under certain circumstances, a U.S. Holder may be subject to information
reporting and backup withholding with respect to certain payments made in
respect of the shares and the proceeds received on the disposition of the
shares paid within the U.S. (and in certain cases, outside the U.S.). Such
amounts may be subject to a 30% U.S. backup withholding tax unless the U.S.
Holder otherwise establishes an exemption. For example, backup withholding
will not apply to a U.S. Holder who (1) is a corporation or comes within
certain other exempt categories and, when required, demonstrates that fact, or
(2) furnishes a correct taxpayer identification number and makes certain other
required certifications as provided by the backup withholding rules.

The amount of any backup withholding from a payment to a U.S. Holder will
be allowed as a credit against the U.S. Holders U.S. federal income tax
liability and may entitle a U.S. Holder to a refund, provided that the required
information is furnished to the Internal Revenue Service.

* * *

The discussion set forth above is included for general information only
and may not be applicable depending upon a holders particular situation.
Holders should consult their tax advisors with respect to the tax consequences
to them of the purchase, ownership and disposition of shares including the tax
consequences under state, local and other tax laws and the possible effects of
changes in U.S. federal and other tax laws.



|F. |  | Dividends and Paying Agents
|-- |  | ---------------------------
|  
|   |  | Not Applicable             
|  
|G. |  | Statement by Experts       
|  
|   |  | Not Applicable             
|  
|H. |  | Documents on Display       

Whenever a reference is made in this Form 20-F to any contract, agreement
or other document, the reference may not be complete and you should refer to
the copy of that contract, agreement or other document filed as an exhibit to
one of our previous SEC filings.

We file annual and special reports and other information with the SEC. You
may read and copy all or any portion of the registration statement and any
other document we file with the SEC at the SECs public reference room at 450
Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330 for further information about the public reference room.
Commencing with filings made this year, such material may also be obtained at
the Internet site the SEC maintains at http://www.sec.gov

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which contains reports, proxy and information statements and other
information regarding issuers that file electronically with the SEC.



|I. |  | Subsidiary Information
|-- |  | ----------------------
|  
|   |  | Not Applicable        

Item 11.  Quantitative and Qualitative Disclosures about Market Risk

Market Risk Disclosure

We are exposed to market risk from changes in interest rates and foreign
currency exchange rates, most notably fluctuations of the United States dollar,
the Hong Kong dollar and the Japanese yen against the Euro. We report our
operating results and financial position in Euros, while foreign affiliates
report their operating results and financial position in their respective
functional currencies. 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
shareholders equity and for the year ended December 31, 2001, we realized a
favorable adjustment of  5.1 million.

Foreign exchange risk management.

Our operations are exposed to foreign exchange risk arising from cash
flows and financial instruments that are denominated in currencies other then
the functional currency of ASM International or the respective subsidiary
conducting the business. The purpose of our foreign currency management is to
manage the effect of exchange rate fluctuations on certain foreign currency
denominated revenues, costs and eventual cash flows and on foreign currency
assets and liabilities.

We adopted Statement of Financial Accounting Standards No. 133 (SFAS 133),
Accounting for Derivative Instruments and Hedging Activities, as amended by
SFAS 137 and SFAS 138, in the first quarter of 2001. SFAS 133 establishes
accounting and reporting standards for derivative instruments and hedging
activities, and requires that all derivatives, including foreign currency
exchange contracts, be recognized on the balance sheet at fair value. Changes
in the fair value of derivatives that do not qualify for hedge treatment, as
well as the ineffective portion of any hedges, must be recognized currently in
earnings. All of the Companys derivative financial instruments are recorded at
their fair value in other current assets or accrued expenses. The transition
adjustment upon adoption of SFAS 133 was not material.

The terms of currency instruments used for hedging purposes are generally
consistent with the timing of the transactions being hedged. We do not use
derivative financial instruments for trading or speculative purposes. We use
derivative financial instruments, such as forward exchange contracts, to hedge
certain forecasted foreign currency denominated transactions expected to occur
within the next 12 months. As a policy we only hedge anticipated foreign
currency sales and purchase transactions for which we have a firm
commitment from a customer or to a supplier. In accordance with SFAS 133, hedges related to
anticipated 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 other comprehensive income in shareholders equity, and is
reclassified into earnings when the hedged transaction affects earnings. An
amount of approximately  0.5 million included in other comprehensive income at December 31, 2001
will be reclassified to earnings within 12 months upon completion of the
underlying transaction. If the underlying transaction being hedged fails to
occur, or if a portion of any derivative is ineffective, the gain or loss is
immediately recognized in earnings under net interest and other financial
income (expenses) on the Statement of Operations.

Furthermore, we continue to hedge certain foreign currency receivables and
payables with forward exchange contracts, currency swaps and debt borrowings in
other currencies than our functional currency or the functional currency of our
subsidiary conducting the business to reduce the risk that

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earnings and cash flow will be adversely affected by changes in foreign
currency exchange rates. These hedges are designated as fair value hedges, and
the changes in the fair value of the hedges are recorded immediately in
earnings under net interest and other financial income (expenses) on the
Statement of Operations to offset the changes in the fair value of the assets
or liabilities being hedged. The operations of our subsidiaries are generally
financed with debt issued in the currency of the country in which each
subsidiary is located in an effort to limit our foreign currency exposure.

The change in accounting from the adoption of SFAS 133 did not materially
affect net earnings in 2001. Gains or losses recognized resulting from the
ineffectiveness of cash flow and fair value hedges or resulting from the
cancellation of the underlying transaction being hedged were not material for
the year ended December 31, 2001.

As of December 31, 2001, we have entered into forward exchange contracts
with terms less than twelve months to sell in total US$ 36.2 million and to
receive  40.5 million and to buy in total US$ 12.1 million for payment of 
13.3 million. At December 31, 2001, the fair market value of these forward
exchange contracts were to receive  41.2 million and to pay  13.8 million,
respectively. The fair market values of these contracts are based on external
quotes from banks for similar contracts.

The following analysis sets out the sensitivity of the fair value of our
financial instruments to an immediate change in foreign currency rates. Fair
values represent the present value of forecasted future cash flows at market
exchange rates. The sensitivity analysis assumes an immediate 10% favorable or
unfavorable change in all foreign currency exchange rates against the Euro from
their levels as of December 31, 2001 with all other variables kept constant. A
favorable 10% change indicates a strengthening of the currency in which our
financial instruments are dominated, primarily the US dollar, against the Euro
and an unfavorable change indicates a weakening of the currency in which our
financial instruments are dominated, primarily the US Dollar, against the Euro.
The selection of 10% favorable or unfavorable change in exchange rates should
not be construed as a prediction by us of future market events, but rather, to
illustrate the potential impact of such event. The modeling technique used to
calculate the exposure does not take into account correlation among foreign
currency exchange rates, or correlation among various markets (i.e., the
foreign exchange, equity and fixed-income markets). Even though we believe it
to be unlikely that all of the foreign currency exchange rates to which we are
exposed would simultaneously change by 10%, we find it meaningful to stress
test our exposure under this and other hypothetical extreme adverse market
scenarios. Our actual experience may differ from the results in the table below
due to the correlation assumptions utilized, or if events occur that were not
included in the methodology, such as significant liquidity or market events.

|                                                             |                      |               |             |                 |       |                 |      |            |       |                       |      |        |       |           |      |                      |       |     |      |  |  | 
|------------------------------------------------------------ | -------------------- | ------------- | ----------- | --------------- | ----- | --------------- | ---- | ---------- | ----- | --------------------- | ---- | ------ | ----- | --------- | ---- | -------------------- | ----- | --- | ---- |  |  | 
|As of December 31, 2001                                     
|                                                            
|                                                             |                      |               |             |                 |       |                 |      |            |       |                       |      |        |       |           |      | Sensitivity analysis
|                                                             |                      |               |             | Currency and    |       |                 |      |            |       |                       |      |        |       | Favorable |      | Unfavorable change  
|                                                             |                      |               |             | notional amount |       | Carrying amount |      | Fair value |       | change of 10%         |      | of 10%
|                                                             |                      |               |             |                 |       |                 |      |            |       |                       |      |       
|                                                             |                      |               |             | (in millions)   |       |                 |      |            |       | (in millions of Euro) |      |        |       |          
|Notes payable to banks,
due within twelve months             |                      | Yen   1,877.5 |             |                 | 16.2  |                 |      |            | 16.2  |                       |      |        | 14.6  |           |      |                      | 17.8  |    
|                                                            
|                                                            
|                                                            
|                                                            
|Long-term debt with maturities:                              |                      |               |             |                 |       |                 |      |            |       |                       |      |        |       |           |      |                      |       |     |      | 
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | due from 2006  2026 |               | Euro   5.6  |                 |       | 5.6             |      |            |       | 5.4                   |      |        |       | 5.6       |      |                      |       | 5.6 |     
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | due from 2004 - 2006 |               | Yen   937.8 |                 |       | 8.1             |      |            |       | 8.1                   |      |        |       | 7.3       |      |                      |       | 8.9 |     
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | due from 2002  2005 |               | US$  0.2    |                 |       | 0.2             |      |            |       | 0.2                   |      |        |       | 0.2       |      |                      |       | 0.2 |     
|                                                             |                      |               |             |                 |       |                 |      |            |       |                       |      |        |       |           |      |                      |       |     |      | 
|                                                             |                      |               |             |                 |       |                 | 13.9 |            |       |                       | 13.7 |        |       |           | 13.1 |                      |       |     | 14.7 | 
|                                                            
|                                                            
|                                                            
|                                                            
|Convertible subordinated debt,
due November 15, 2005         |                      | US$  115.0    |             |                 | 130.7 |                 |      |            | 137.6 |                       |      |        | 117.7 |           |      |                      | 143.8 |    
|                                                            
|                                                            
|                                                            
|                                                            
|Foreign exchange contracts,
settlement within twelve months: |                      |               |             |                 |       |                 |      |            |       |                       |      |        |       |           |      |                      |       |     |      | 
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             |                      | purchase      |             | US$  12.1       |       |                 | 13.3 |            |       |                       | 13.8 |        |       |           | 12.4 |                      |       |     | 15.2 | 
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             |                      | sale          |             | US$  36.2       |       |                 | 40.5 |            |       |                       | 41.2 |        |       |           | 37.1 |                      |       |     | 45.3 | 

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As
our borrowings are primarily in other currencies than the Euro, a change
in foreign currency exchange rates will have an impact on our net earnings. A
hypothetical change of 10% in foreign currencies against the Euro would result
in  0.8 million change in interest expenses at December 31, 2001 borrowing
levels.

Interest risk.

At December 31, 2001 we had convertible subordinated debt borrowings
outstanding of  130.7 million at a fixed interest rate, maturing in November
2005,  13.9 million in long-term debt at fixed interest rates, due from
2002-2026, and  16.2 million in other borrowings with variable short-term
interest rates. We are exposed to interest rate risk primarily through our
borrowing activities. We do not enter into financial instrument transactions
for trading or speculative purposes or to manage interest rate exposure. A
hypothetical change in the average interest rate by 10% on the portion of our
debt bearing interest at variable rates would not result in a material change
in interest expense at December 31, 2001 borrowing levels.

Credit risk.

Credit risk represents the accounting loss that would be recognized at the
reporting date if counterparties failed completely to perform as contracted and
from movements in interest rates and foreign exchange rates. We do not
anticipate nonperformance by counterparties. We generally do not require
collateral or other security to support financial instruments with credit risk.
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. Financial instruments on the balance sheet that potentially
subject us to concentrations of credit risk consist primarily of cash and cash
equivalents and accounts receivable. We maintain a policy providing for the
diversification of cash and cash equivalent investments and placement of
investments in high quality financial institutions to limit the amount of
credit risk exposure. A significant percentage of our revenue is derived from
a limited number of large customers. Our largest customer accounted for
approximately 7.2% of our net sales in 2001 and our ten largest customers
accounted for approximately 35.5% of our net sales in 2001. Sales to these
large customers also may fluctuate significantly from time to time depending on
the timing and level of purchases from us. Significant orders from such
customers may expose us to a concentration of credit risk and difficulties in
collecting amounts due, which might harm our financial results. At December 31,
2001 one customer accounted for 10.5% of the outstanding balance in accounts
receivable.

Part II

Item 12.  Description of Securities Other Than Equity Securities.

Not Applicable

Item 13.  Defaults, Dividend Arrearages and Delinquencies.

None

Item 14.  Material Modification to the Rights of Security Holders and Use of Proceeds.

In
the third quarter of 2001, we issued $115.0 million of 5.0%
Convertible Subordinated Notes due on November 15, 2005. The notes are
convertible into common shares at any time before their maturity unless we have
previously redeemed or repurchased them at a conversion rate of 53.0504 shares
per each $1,000 principal amount of notes, subject to adjustment in certain
circumstances.

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Part III

Item 17.  Financial Statements.

Not Applicable

Item 18.  Financial Statements.

See pages F-1 through 26,
incorporated herein by reference

Item 19.  Exhibits

|               |  |                                                                                                                       |  |                                                                     |  |                  |  | 
|-------------- |  | --------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------- |  | ---------------- |  | 
|Exhibit Number |  | Description                                                                                                           |  | Incorporated by Reference to:                                       |  | Included Herein:
|               |  |                                                                                                                       |  |                                                                     |  |                 
|1.1            |  | English translation of ASM
International N.V.s Compiled
Articles of Association, as
amended                          |  | Exhibit 3.1 to Registrants
6-K filed on November 6,
2001          
|              
|              
|              
|              
|               |  |                                                                                                                       |  |                                                                    
|              
|              
|              
|              
|4.1            |  | 1994 Stock Option Plan                                                                                                |  | Exhibit 99.1 to the
Registrants S-8 filed
October 25, 1999        
|              
|              
|              
|              
|               |  |                                                                                                                       |  |                                                                    
|              
|              
|              
|              
|4.2            |  | Debenture Purchase Agreement Part 1                                                                                   |  | Exhibit 4.2 to the
Registrants Form F-3 filed
on December 13, 1999
|              
|              
|              
|              
|               |  |                                                                                                                       |  |                                                                    
|              
|              
|              
|              
|4.3            |  | Debenture Purchase Agreement Part 2                                                                                   |  | Exhibit 4.2 to the
Registrants Form F-3 filed
on December 13, 1999
|              
|              
|              
|              
|               |  |                                                                                                                       |  |                                                                    
|              
|              
|              
|              
|4.4            |  | Zero Coupon Debenture                                                                                                 |  | Exhibit 4.3 to the
Registrants Form F-3 filed
on December 13, 1999
|              
|              
|              
|              
|               |  |                                                                                                                       |  |                                                                    
|              
|              
|              
|              
|4.5            |  | Common Stock Purchase Warrant                                                                                         |  | Exhibit 4.4 to the
Registrants Form F-3 filed
on December 13, 1999
|              
|              
|              
|              
|               |  |                                                                                                                       |  |                                                                    
|              
|              
|              
|              
|4.6            |  | Supplemental Common Stock Purchase
Warrant                                                                            |  | Exhibit 4.5 to the
Registrants Form F-3 filed
on December 13, 1999
|              
|              
|              
|              
|               |  |                                                                                                                       |  |                                                                    
|              
|              
|              
|              
|4.7            |  | Registration Rights Agreement                                                                                         |  | Exhibit 4.6 to the
Registrants Form F-3 filed
on December 13, 1999
|              
|              
|              
|              
|               |  |                                                                                                                       |  |                                                                    
|              
|              
|              
|              
|4.8            |  | Equity Line Financing Agreement
between ASM International N.V. and
Canadian Imperial Holdings Inc.
dated July 6, 2000 |  | Exhibit 23.1 to Registrants
6-K filed on September 6,
2000        
|              
|              
|              
|              
|               |  |                                                                                                                       |  |                                                                    
|              
|              
|              
|              
|4.9            |  | Amendment No. 1 to the Equity Line
Agreement between ASM
International N.V. and Canadian
Imperial Holdings Inc.       |  | Exhibit 4.9 to Registrants
20-F filed on March 9, 2001            

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|               |  |                                                                                                                                                                                  |  |                                                                 |  |                  |   | 
|-------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------- |  | ---------------- | - | 
|Exhibit Number |  | Description                                                                                                                                                                      |  | Incorporated by Reference to:                                   |  | Included Herein:
|               |  |                                                                                                                                                                                  |  |                                                                 |  |                 
|              
|              
|              
|              
|4.10           |  | Credit Agreement among ASM
International N.V., Canadian
Imperial Bank of Commerce and
Advanced Semiconductor Materials
(Netherlands Antilles) N.V. dated
July 6, 2000            |  | Exhibit 23.2 to Registrants
6-K filed on September 6,
2000    
|              
|              
|              
|              
|               |  |                                                                                                                                                                                  |  |                                                                
|              
|              
|              
|              
|4.11           |  | Amendment No. 1 to the Credit
Agreement among ASM International
N.V. and Canadian Imperial Bank of
Commerce, Advanced Semiconductor
Materials (Netherlands Antilles)
N.V.        |  | Exhibit 4.11 to Registrants
20-F filed on March 9, 2001       
|              
|              
|              
|              
|               |  |                                                                                                                                                                                  |  |                                                                
|              
|              
|              
|              
|4.12           |  | Registration Rights Agreement
between ASM International N.V. and
Canadian Imperial Holdings Inc.
dated July 6, 2000                                                              |  | Exhibit 23.3 to Registrants
6-K filed on September 6,
2000    
|              
|              
|              
|              
|               |  |                                                                                                                                                                                  |  |                                                                
|              
|              
|              
|              
|4.13           |  | Amendment No. 1 to the
Registration Rights Agreement
between ASM International N.V. and
Canadian Imperial Holdings Inc.                                                          |  | Exhibit 4.13 to Registrants
20-F filed on March 9, 2001       
|              
|              
|              
|              
|               |  |                                                                                                                                                                                  |  |                                                                
|              
|              
|              
|              
|4.14           |  | Security Agreement among ASM
International N.V., Advanced
Semiconductor Materials
(Netherlands Antilles), N.V. and
Canadian Imperial Bank of Commerce
dated July 6, 2000         |  | Exhibit 23.4 to the
Registrants 6-K filed on
September 6, 2000
|              
|              
|              
|              
|               |  |                                                                                                                                                                                  |  |                                                                
|              
|              
|              
|              
|4.15           |  | Supplement No. 1 to the Security
Agreement between ASM
International N.V. , Advanced
Semiconductor Materials
(Netherlands Antilles), N.V. and
Canadian Imperial Bank of Commerce |  | Exhibit 4.15 of Registrants
20-F filed on March 9, 2001       
|              
|              
|              
|              
|               |  |                                                                                                                                                                                  |  |                                                                
|              
|              
|              
|              
|10.1           |  | Auditors Consent                                                                                                                                                                |  |                                                                 |  |                  | X

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SIGNATURES

The registrant certifies that it meets all of the requirements for
filing on Form 20-F and has duly caused and authorized the undersigned to
sign this annual report on its behalf.

|      |  |                |  |                                                                                         
|----- |  | -------------- |  | ----------------------------------------------------------------------------------------
|      |  |                |  | ASM INTERNATIONAL N.V.                                                                  
|     
|      |  |                |  |                                                                                         
|     
|      |  |                |  |                                                                                         
|     
|Date: |  | March 28, 2002 |  | /s/ Arthur H. Del PradoArthur H. del Prado
Managing Director and
Chief Executive Officer

S-1



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##### Table of Contents



INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

|                                                                                                     |  |     
|---------------------------------------------------------------------------------------------------- |  | ----
|                                                                                                     |  | Page
|ASM International N.V.                                                                               |  |     
|                                                                                                    
|                                                                                                    
|                                                                                                    
|                                                                                                    
|Independent Auditors Report of Deloitte & Touche Accountants                                        |  | F-2 
|                                                                                                    
|                                                                                                    
|                                                                                                    
|                                                                                                    
|Consolidated Balance Sheets as of December 31, 2000 and 2001                                         |  | F-3 
|                                                                                                    
|                                                                                                    
|                                                                                                    
|                                                                                                    
|Consolidated Statements of Operations for the years ended December
31, 1999, 2000 and 2001           |  | F-4 
|                                                                                                    
|                                                                                                    
|                                                                                                    
|                                                                                                    
|Consolidated Statements of Comprehensive Income                                                      |  | F-5 
|                                                                                                    
|                                                                                                    
|                                                                                                    
|                                                                                                    
|Consolidated Statements of Shareholders Equity for the years ended
December 31, 1999, 2000 and 2001 |  | F-5 
|                                                                                                    
|                                                                                                    
|                                                                                                    
|                                                                                                    
|Consolidated Statements of Cash Flows for the years ended December
31, 1999, 2000 and 2001           |  | F-6 
|                                                                                                    
|                                                                                                    
|                                                                                                    
|                                                                                                    
|Notes to the Consolidated Financial Statements                                                       |  | F-7 

F-1



---

TABLE OF CONTENTS



|                                                |                                                                       |  |  |  |  |  |  | 
|----------------------------------------------- | --------------------------------------------------------------------- |  |  |  |  |  |  | 
|Independent Auditors Report                   
|Consolidated Balance Sheets                    
|Consolidated Statements of Operations          
|Consolidated Statements of Comprehensive Income
|Consolidated Statements of Shareholders Equity
|Consolidated Statements of Cash Flows          
|Notes to Consolidated Financial Statements     
|                                                | NOTE A Summary of Significant Accounting Policies                    
|                                                | NOTE B Cash and Cash Equivalents, Marketable Securities              
|                                                | NOTE C Inventories                                                   
|                                                | NOTE D Property, Plant and Equipment                                 
|                                                | NOTE E Goodwill                                                      
|                                                | NOTE F Other Assets                                                  
|                                                | NOTE G Notes Payable to Banks                                        
|                                                | NOTE H Long-term Debt                                                
|                                                | NOTE I Convertible Subordinated Debt                                 
|                                                | NOTE J Shareholders Equity                                          
|                                                | NOTE K Employee Stock Option Plan and Employee Share Incentive Scheme
|                                                | NOTE L Pension Plans                                                 
|                                                | NOTE M Commitments and Contingencies                                 
|                                                | NOTE N Financial Instruments and Risk Management                     
|                                                | NOTE O Research and Development                                      
|                                                | NOTE P Net Interest and other Financial Income and (Expenses)        
|                                                | NOTE Q Income Taxes                                                  
|                                                | NOTE R Earnings per Share                                            
|                                                | NOTE S Disclosures about Segments and Related Information            
|                                                | NOTE T Selected Operating Expenses and Additional Information        
|                                                | NOTE U Related Party Transactions                                    
|EX-10.1                                        



---



##### Table of Contents






Independent Auditors Report

Board of Directors and Shareholders
ASM International N.V.
Bilthoven, The Netherlands

We have audited the accompanying consolidated balance sheets of ASM
International N.V. and subsidiaries (collectively, the Company) as of
December 31, 2000 and 2001, and the related consolidated statements of
operations, comprehensive income, shareholders equity and cash flows for each
of the three years in the period ended December 31, 2001. These financial
statements are the responsibility of the Companys management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements referred to above
present fairly, in all material respects, the financial position of ASM
International N.V. and subsidiaries as of December 31, 2000 and 2001, and the
results of their operations and their cash flows for each of the three years in
the period ended December 31, 2001, in conformity with generally accepted
accounting principles in the United States of America.

Deloitte & Touche
Accountants



Amsterdam, the Netherlands,
February 11, 2002

F-2



---



##### Table of Contents






Consolidated Balance Sheets

|                                                                                                         |  |      |   |      |  |      |         |   |  |              |         | 
|-------------------------------------------------------------------------------------------------------- |  | ---- | - | ---- |  | ---- | ------- | - |  | ------------ | ------- | 
|(thousands except share data)                                                                            |  |      |   |      |  |      |         |   |  |            
|                                                                                                         |  |      |   |      |  |      |         |   |  |             
|                                                                                                         |  |      |   |      |  |      |         |   |  | December 31,
|                                                                                                         |  |      |   |      |  |      |        
|Assets                                                                                                   |  | Note |   | 2000 |  | 2001
|                                                                                                         |  |      |   |      |  |     
|Cash and cash equivalents                                                                                |  |      | B |      |  |      | 106,805 |   |  |              | 107,577 | 
|                                                                                                        
|                                                                                                        
|                                                                                                        
|                                                                                                        
|Marketable securities                                                                                    |  |      | B |      |  |      | 5       |   |  |              | 5       | 
|                                                                                                        
|                                                                                                        
|                                                                                                        
|                                                                                                        
|Accounts receivable (less allowance for doubtful
accounts of  8,734 and  6,952)                        |  |      |   |      |  |      | 238,620 |   |  |              | 136,615 | 
|                                                                                                        
|                                                                                                        
|                                                                                                        
|                                                                                                        
|Inventories                                                                                              |  |      | C |      |  |      | 188,001 |   |  |              | 206,027 | 
|                                                                                                        
|                                                                                                        
|                                                                                                        
|                                                                                                        
|Income taxes receivable                                                                                  |  |      |   |      |  |      |        |   |  |              | 4,103   | 
|                                                                                                        
|                                                                                                        
|                                                                                                        
|                                                                                                        
|Other current assets                                                                                     |  |      |   |      |  |      | 23,828  |   |  |              | 21,110  | 
|                                                                                                        
|Total current assets                                                                                     |  |      |   |      |  |      | 557,259 |   |  |              | 475,437 | 
|                                                                                                        
|                                                                                                        
|                                                                                                        
|                                                                                                        
|Property, plant and equipment, net                                                                       |  |      | D |      |  |      | 152,168 |   |  |              | 191,081 | 
|                                                                                                        
|                                                                                                        
|                                                                                                        
|                                                                                                        
|Goodwill, net                                                                                            |  |      | E |      |  |      | 68,513  |   |  |              | 64,306  | 
|                                                                                                        
|                                                                                                        
|                                                                                                        
|                                                                                                        
|Other assets                                                                                             |  |      | F |      |  |      |        |   |  |              | 26,241  | 
|                                                                                                        
|Total Assets                                                                                             |  |      |   |      |  |      | 777,940 |   |  |              | 757,065 | 
|                                                                                                        
|Liabilities
and Shareholders Equity                                                                    
|                                                                                                        
|Notes payable to banks                                                                                   |  |      | G |      |  |      | 13,136  |   |  |              | 16,231  | 
|                                                                                                        
|                                                                                                        
|                                                                                                        
|                                                                                                        
|Accounts payable                                                                                         |  |      |   |      |  |      | 142,342 |   |  |              | 61,737  | 
|                                                                                                        
|                                                                                                        
|                                                                                                        
|                                                                                                        
|Accrued expenses                                                                                         |  |      |   |      |  |      | 88,703  |   |  |              | 85,794  | 
|                                                                                                        
|                                                                                                        
|                                                                                                        
|                                                                                                        
|Advance payments from customers                                                                          |  |      |   |      |  |      | 13,623  |   |  |              | 6,309   | 
|                                                                                                        
|                                                                                                        
|                                                                                                        
|                                                                                                        
|Deferred revenue                                                                                         |  |      |   |      |  |      | 14,913  |   |  |              | 11,562  | 
|                                                                                                        
|                                                                                                        
|                                                                                                        
|                                                                                                        
|Income taxes payable                                                                                     |  |      | Q |      |  |      | 22,988  |   |  |              | 4,227   | 
|                                                                                                        
|                                                                                                        
|                                                                                                        
|                                                                                                        
|Current portion of long-term debt                                                                        |  |      | H |      |  |      | 31,484  |   |  |              | 2,179   | 
|                                                                                                        
|Total current liabilities                                                                                |  |      |   |      |  |      | 327,189 |   |  |              | 188,039 | 
|                                                                                                        
|                                                                                                        
|                                                                                                        
|                                                                                                        
|Deferred income taxes                                                                                    |  |      | Q |      |  |      | 838     |   |  |              | 1,977   | 
|                                                                                                        
|                                                                                                        
|                                                                                                        
|                                                                                                        
|Long-term debt                                                                                           |  |      | H |      |  |      | 31,660  |   |  |              | 11,720  | 
|                                                                                                        
|                                                                                                        
|                                                                                                        
|                                                                                                        
|Convertible subordinated debt                                                                            |  |      | I |      |  |      |         |   |  |              | 130,728 | 
|                                                                                                        
|Total liabilities                                                                                        |  |      |   |      |  |      | 359,687 |   |  |              | 332,464 | 
|                                                                                                        
|                                                                                                        
|                                                                                                        
|                                                                                                        
|Minority interest in subsidiary                                                                          |  |      |   |      |  |      | 109,931 |   |  |              | 103,691 | 
|                                                                                                        
|                                                                                                        
|                                                                                                        
|                                                                                                        
|Shareholders Equity:                                                                                    |  |      |   |      |  |      |         |   |  |              |         | 
|                                                                                                        
|                                                                                                        
|                                                                                                        
|                                                                                                        
|Common
shares                                                                                            |  |      |   |      |  |      |         |   |  |              |         | 
|                                                                                                        
|                                                                                                        
|                                                                                                        
|                                                                                                        
|Authorized
110,000,000 shares, par value  0.04, issued and outstanding 48,797,346 and
49,070,296 shares |  |      |   |      |  |      | 221     |   |  |              | 1,963   | 
|                                                                                                        
|                                                                                                        
|                                                                                                        
|                                                                                                        
|Financing
preferred shares                                                                               |  |      |   |      |  |      |         |   |  |              |         | 
|                                                                                                        
|                                                                                                        
|                                                                                                        
|                                                                                                        
|Authorized 8,000 shares, par value  40, none issued                                                     |  |      |   |      |  |      |        |   |  |              |        | 
|                                                                                                        
|                                                                                                        
|                                                                                                        
|                                                                                                        
|Preferred
shares                                                                                         |  |      |   |      |  |      |         |   |  |              |         | 
|                                                                                                        
|                                                                                                        
|                                                                                                        
|                                                                                                        
|Authorized 118,000 shares, par value  40, none issued                                                   |  |      |   |      |  |      |        |   |  |              |        | 
|                                                                                                        
|                                                                                                        
|                                                                                                        
|                                                                                                        
|Capital in excess of par value                                                                           |  |      |   |      |  |      | 252,784 |   |  |              | 252,892 | 
|                                                                                                        
|                                                                                                        
|                                                                                                        
|                                                                                                        
|Retained earnings                                                                                        |  |      |   |      |  |      | 58,818  |   |  |              | 64,916  | 
|                                                                                                        
|                                                                                                        
|                                                                                                        
|                                                                                                        
|Accumulated other comprehensive income (loss)                                                            |  |      |   |      |  |      | (3,501  | ) |  |              | 1,139   | 
|                                                                                                        
|Total Shareholders Equity                                                                               |  |      | J |      |  |      | 308,322 |   |  |              | 320,910 | 
|                                                                                                        
|Total Liabilities and Shareholders Equity                                                               |  |      |   |      |  |      | 777,940 |   |  |              | 757,065 | 
|                                                                                                        

See Notes to Consolidated Financial Statements.

F-3



---



##### Table of Contents






Consolidated Statements of Operations

|                                                                                                        |                          |  |      |   |      |  |          |          |      |  |          |          |   |                         |          |          |  
|------------------------------------------------------------------------------------------------------- | ------------------------ |  | ---- | - | ---- |  | -------- | -------- | ---- |  | -------- | -------- | - | ----------------------- | -------- | -------- | -
|                                                                                                        |                          |  |      |   |      |  |          |          |      |  |          |          |   |                         |        
|(thousands except per share data)                                                                       |                          |  |      |   |      |  |          |          |      |  |          |          |   | Year ended December 31,
|                                                                                                        |                          |  |      |   |      | 
|                                                                                                        |                          |  | Note |   | 1999 |  | 2000     |          | 2001
|                                                                                                        |                          |  |      |   |      |  |          |          |     
|Net sales                                                                                               |                          |  | S    |   |      |  | 414,495  |          |      |  | 935,212  |          |   |                         | 561,064  |         
|                                                                                                       
|                                                                                                       
|                                                                                                       
|                                                                                                       
|Cost of sales                                                                                           |                          |  |      |   |      |  | (244,485 | )        |      |  | (518,027 | )        |   |                         | (337,743 | )       
|                                                                                                       
|Gross profit                                                                                            |                          |  |      |   |      |  | 170,010  |          |      |  | 417,185  |          |   |                         | 223,321  |         
|                                                                                                       
|                                                                                                       
|                                                                                                       
|                                                                                                       
|Operating expenses:                                                                                     |                          |  |      |   |      |  |          |          |      |  |          |          |   |                         |          |         
|                                                                                                       
|                                                                                                       
|                                                                                                       
|                                                                                                       
|Selling, general and administrative costs                                                               |                          |  |      |   |      |  | (83,170  | )        |      |  | (147,318 | )        |   |                         | (111,851 | )       
|                                                                                                       
|                                                                                                       
|                                                                                                       
|                                                                                                       
|Research and development, net                                                                           |                          |  | O    |   |      |  | (47,145  | )        |      |  | (73,800  | )        |   |                         | (79,661  | )       
|                                                                                                       
|                                                                                                       
|                                                                                                       
|                                                                                                       
|Amortization of goodwill                                                                                |                          |  | E    |   |      |  | (340     | )        |      |  | (4,295   | )        |   |                         | (7,558   | )       
|                                                                                                       
|                                                                                                        | Total operating expenses |  |      |   |      |  |          | (130,655 | )    |  |          | (225,413 | ) |                         |          | (199,070 | )
|                                                                                                       
|Earnings from operations                                                                                |                          |  | S    |   |      |  | 39,355   |          |      |  | 191,772  |          |   |                         | 24,251   |         
|                                                                                                       
|                                                                                                       
|                                                                                                       
|                                                                                                       
|Net interest and other financial income (expenses)                                                      |                          |  | P    |   |      |  | (8,608   | )        |      |  | (1,595   | )        |   |                         | (984     | )       
|                                                                                                       
|Earnings before income taxes, minority interest
and cumulative effect of change in accounting
principle |                          |  |      |   |      |  | 30,747   |          |      |  | 190,177  |          |   |                         | 23,267   |         
|                                                                                                       
|                                                                                                       
|                                                                                                       
|                                                                                                       
|Income taxes                                                                                            |                          |  | Q    |   |      |  | (1,274   | )        |      |  | (22,830  | )        |   |                         | (4,711   | )       
|                                                                                                       
|Earnings before minority interest and cumulative
effect of change in accounting principle               |                          |  |      |   |      |  | 29,473   |          |      |  | 167,347  |          |   |                         | 18,556   |         
|                                                                                                       
|                                                                                                       
|                                                                                                       
|                                                                                                       
|Minority interest                                                                                       |                          |  |      |   |      |  | (18,519  | )        |      |  | (71,107  | )        |   |                         | (13,373  | )       
|                                                                                                       
|                                                                                                       
|                                                                                                       
|                                                                                                       
|Gain on dilution of investment in subsidiary                                                            |                          |  | K    |   |      |  | 145      |          |      |  | 1,822    |          |   |                         | 915      |         
|                                                                                                       
|                                                                                                       
|                                                                                                       
|                                                                                                       
|                                                                                                       
|Net earnings before cumulative effect of change in
accounting principle                                 |                          |  | S    |   |      |  | 11,099   |          |      |  | 98,062   |          |   |                         | 6,098    |         
|                                                                                                       
|                                                                                                       
|                                                                                                       
|                                                                                                       
|Cumulative effect of change in accounting
principle, net of tax                                         |                          |  | A    |   |      |  |         |          |      |  | (3,790   | )        |   |                         |         |         
|                                                                                                       
|Net earnings                                                                                            |                          |  |      |   |      |  | 11,099   |          |      |  | 94,272   |          |   |                         | 6,098    |         
|                                                                                                       
|Basic net earnings per share:                                                                           |                          |  |      |   |      |  |          |          |      |  |          |          |   |                         |          |         
|                                                                                                       
|                                                                                                       
|                                                                                                       
|                                                                                                       
|Net earnings before cumulative effect of change in
accounting principle                                 |                          |  |      |   |      |  | 0.30     |          |      |  | 2.09     |          |   |                         | 0.12     |         
|                                                                                                       
|                                                                                                       
|                                                                                                       
|                                                                                                       
|Cumulative effect of change in accounting principle                                                     |                          |  | A    |   |      |  |         |          |      |  | (0.08    | )        |   |                         |         |         
|                                                                                                       
|Net earnings                                                                                            |                          |  |      |   |      |  | 0.30     |          |      |  | 2.01     |          |   |                         | 0.12     |         
|                                                                                                       
|Diluted net earnings per share:                                                                         |                          |  |      |   |      |  |          |          |      |  |          |          |   |                         |          |         
|                                                                                                       
|                                                                                                       
|                                                                                                       
|                                                                                                       
|Net earnings before cumulative effect of change in
accounting principle                                 |                          |  |      |   |      |  | 0.29     |          |      |  | 2.02     |          |   |                         | 0.12     |         
|                                                                                                       
|                                                                                                       
|                                                                                                       
|                                                                                                       
|Cumulative effect of change in accounting principle                                                     |                          |  | A    |   |      |  |         |          |      |  | (0.08    | )        |   |                         |         |         
|                                                                                                       
|Net earnings                                                                                            |                          |  |      |   |      |  | 0.29     |          |      |  | 1.94     |          |   |                         | 0.12     |         
|                                                                                                       
|Pro forma amounts assuming the new accounting
principle is applied retroactively:                       |                          |  | A    |   |      |  |          |          |      |  |          |          |   |                         |          |         
|                                                                                                       
|                                                                                                       
|                                                                                                       
|                                                                                                       
|Net earnings                                                                                            |                          |  |      |   |      |  | 8,881    |          |      |  | 98,062   |          |   |                         | 6,098    |         
|                                                                                                       
|                                                                                                       
|                                                                                                       
|                                                                                                       
|Basic net earnings per share                                                                            |                          |  |      |   |      |  | 0.24     |          |      |  | 2.09     |          |   |                         | 0.12     |         
|                                                                                                       
|                                                                                                       
|                                                                                                       
|                                                                                                       
|Diluted net earnings per share                                                                          |                          |  |      |   |      |  | 0.23     |          |      |  | 2.02     |          |   |                         | 0.12     |         
|                                                                                                       
|Weighted average number of shares used in
computing per share amounts (in thousands):                   |                          |  |      |   |      |  |          |          |      |  |          |          |   |                         |          |         
|                                                                                                       
|                                                                                                       
|                                                                                                       
|                                                                                                       
|                                                                                                        | Basic                    |  |      | R |      |  |          | 37,301   |      |  |          | 46,810   |   |                         |          | 48,944   |  
|                                                                                                       
|                                                                                                       
|                                                                                                       
|                                                                                                       
|                                                                                                        | Diluted                  |  |      | R |      |  |          | 40,664   |      |  |          | 48,703   |   |                         |          | 49,958   |  
|                                                                                                       

See Notes to Consolidated Financial Statements.

F-4



---



##### Table of Contents






Consolidated Statements of Comprehensive Income

|                                  |                                                     |  |        |       |      |  |        |      |   |   |                         |       |  
|--------------------------------- | --------------------------------------------------- |  | ------ | ----- | ---- |  | ------ | ---- | - | - | ----------------------- | ----- | -
|(thousands)                       |                                                     |  |        |       |      |  |        |      |   | 
|                                  |                                                     |  |        |       |      |  |        |      |   |  
|                                  |                                                     |  |        |       |      |  |        |      |   |   | Year ended December 31,
|                                  |                                                     |  |        |      
|                                  |                                                     |  | 1999   |       | 2000 |  | 2001  
|                                  |                                                     |  |        |       |      |  |       
|Net earnings                      |                                                     |  | 11,099 |       |      |  | 94,272 |      |   |   | 6,098                   |      
|                                 
|                                 
|                                 
|                                 
|Other comprehensive income (loss) |                                                     |  |        |       |      |  |        |      |   |   |                         |      
|                                 
|                                 
|                                 
|                                 
|                                  | Exchange rate changes for the year                  |  |        | 9,448 |      |  |        | (882 | ) |   |                         | 5,091 |  
|                                 
|                                 
|                                 
|                                 
|                                  | Unrealized gains (losses) on derivative instruments |  |        |      |      |  |        |     |   |   |                         | (451  | )
|                                 
|                                  | Total other comprehensive income (loss)             |  |        | 9,448 |      |  |        | (882 | ) |   |                         | 4,640 |  
|                                 
|Comprehensive income              |                                                     |  | 20,547 |       |      |  | 93,390 |      |   |   | 10,738                  |      
|                                 

See Notes to Consolidated Financial Statements.




Consolidated Statements of Shareholders Equity

|                                                    |                                  |  |      |   |                         |  |               |           |                               |  |                           |    |                                             |  |                          |         |  |  |         |   |  |   |         |   |  |  |         |         | 
|--------------------------------------------------- | -------------------------------- |  | ---- | - | ----------------------- |  | ------------- | --------- | ----------------------------- |  | ------------------------- | -- | ------------------------------------------- |  | ------------------------ | ------- |  |  | ------- | - |  | - | ------- | - |  |  | ------- | ------- | 
|(thousands, except for number of common shares)     |                                  |  |      |   |                         |  |               |           |                               |  |                           |    |                                             |  |                          |         |  |  |         |   |  | 
|                                                    |                                  |  |      |   |                         |  |               |           |                               |  |                           |    |                                             |  |                          |         |  |  |         |   |  |  
|                                                    |                                  |  | Note |   | Number
of common shares |  | Common
Shares |           | Capital
in excessof par value |  | Retainedearnings(deficit) |    | Accumulated
othercomprehensiveincome (loss) |  | TotalShareholdersEquity
|                                                    |                                  |  |      |   |                         |  |               |           |                               |  |                           |    |                                             | 
|Balance December 31, 1998                           |                                  |  |      |   |                         |  | 34,540,843    |           |                               |  | 157                       |    |                                             |  | 78,927                   |         |  |  | (46,553 | ) |  |   | (12,067 | ) |  |  | 20,464  |        
|                                                   
|                                                   
|                                                   
|                                                   
|Issuance of common shares:                          |                                  |  |      |   |                         |  |               |           |                               |  |                           |    |                                             |  |                          |         |  |  |         |   |  |   |         |   |  |  |         |        
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | For stock options                |  |      | K |                         |  |               | 169,900   |                               |  |                           | 1  |                                             |  |                          | 495     |  |  |         |  |  |   |         |  |  |  |         | 496     | 
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Conversion of
subordinated notes |  |      | J |                         |  |               | 5,397,041 |                               |  |                           | 24 |                                             |  |                          | 24,021  |  |  |         |  |  |   |         |  |  |  |         | 24,045  | 
|                                                   
|                                                   
|                                                   
|                                                   
|Net earnings                                        |                                  |  |      |   |                         |  |              |           |                               |  |                          |    |                                             |  |                         |         |  |  | 11,099  |   |  |   |        |   |  |  | 11,099  |        
|                                                   
|                                                   
|                                                   
|                                                   
|Other comprehensive income                          |                                  |  |      |   |                         |  |              |           |                               |  |                          |    |                                             |  |                         |         |  |  |        |   |  |   | 9,448   |   |  |  | 9,448   |        
|                                                   
|Balance December 31, 1999                           |                                  |  |      |   |                         |  | 40,107,784    |           |                               |  | 182                       |    |                                             |  | 103,443                  |         |  |  | (35,454 | ) |  |   | (2,619  | ) |  |  | 65,552  |        
|                                                   
|                                                   
|                                                   
|                                                   
|Issuance of common shares:                          |                                  |  |      |   |                         |  |               |           |                               |  |                           |    |                                             |  |                          |         |  |  |         |   |  |   |         |   |  |  |         |        
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | For stock options                |  |      | K |                         |  |               | 901,605   |                               |  |                           | 4  |                                             |  |                          | 3,123   |  |  |         |  |  |   |         |  |  |  |         | 3,127   | 
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Exercise of warrants             |  |      | J |                         |  |               | 3,537,957 |                               |  |                           | 16 |                                             |  |                          | 27,514  |  |  |         |  |  |   |         |  |  |  |         | 27,530  | 
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Public offering                  |  |      | J |                         |  |               | 4,250,000 |                               |  |                           | 19 |                                             |  |                          | 119,692 |  |  |         |  |  |   |         |  |  |  |         | 119,711 | 
|                                                   
|                                                   
|                                                   
|                                                   
|Net earnings                                        |                                  |  |      |   |                         |  |              |           |                               |  |                          |    |                                             |  |                         |         |  |  | 94,272  |   |  |   |        |   |  |  | 94,272  |        
|                                                   
|                                                   
|                                                   
|                                                   
|Fair value of put option
for structured equity
line |                                  |  |      |   |                         |  |              |           |                               |  |                          |    |                                             |  | (988                     | )       |  |  |        |   |  |   |        |   |  |  | (988    | )      
|                                                   
|                                                   
|                                                   
|                                                   
|Other comprehensive (loss)                          |                                  |  |      |   |                         |  |              |           |                               |  |                          |    |                                             |  |                         |         |  |  |        |   |  |   | (882    | ) |  |  | (882    | )      
|                                                   
|Balance December 31, 2000                           |                                  |  |      |   |                         |  | 48,797,346    |           |                               |  | 221                       |    |                                             |  | 252,784                  |         |  |  | 58,818  |   |  |   | (3,501  | ) |  |  | 308,322 |        
|                                                   
|                                                   
|                                                   
|                                                   
|Issuance of common shares:                          |                                  |  |      |   |                         |  |               |           |                               |  |                           |    |                                             |  |                          |         |  |  |         |   |  |   |         |   |  |  |         |        
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | For stock options                |  |      | J |                         |  |               | 272,950   |                               |  |                           | 3  |                                             |  |                          | 1,847   |  |  |         |  |  |   |         |  |  |  |         | 1,850   | 
|                                                   
|                                                   
|                                                   
|                                                   
|Change in par value
per share                       |                                  |  | J    |   |                         |  |              |           |                               |  | 1,739                     |    |                                             |  | (1,739                   | )       |  |  |        |   |  |   |        |   |  |  |        |        
|                                                   
|                                                   
|                                                   
|                                                   
|Net earnings                                        |                                  |  |      |   |                         |  |              |           |                               |  |                          |    |                                             |  |                         |         |  |  | 6,098   |   |  |   |        |   |  |  | 6,098   |        
|                                                   
|                                                   
|                                                   
|                                                   
|Other comprehensive income                          |                                  |  |      |   |                         |  |              |           |                               |  |                          |    |                                             |  |                         |         |  |  |        |   |  |   | 4,640   |   |  |  | 4,640   |        
|                                                   
|                                                   
|                                                   
|                                                   
|                                                   
|Balance December 31, 2001                           |                                  |  |      |   |                         |  | 49,070,296    |           |                               |  | 1,963                     |    |                                             |  | 252,892                  |         |  |  | 64,916  |   |  |   | 1,139   |   |  |  | 320,910 |        
|                                                   
|                                                   
|                                                   
|                                                   
|                                                   

See Notes to Consolidated Financial Statements.

F-5



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##### Table of Contents






Consolidated Statements of Cash Flows

|                                                    |                                                                              |                                                                                     |                                                                 |        |         |         |          |        |         |         |         |       |         |                         |   | 
|--------------------------------------------------- | ---------------------------------------------------------------------------- | ----------------------------------------------------------------------------------- | --------------------------------------------------------------- | ------ | ------- | ------- | -------- | ------ | ------- | ------- | ------- | ----- | ------- | ----------------------- | - | 
|(thousands)                                         |                                                                              |                                                                                     |                                                                 |        |         |         |          |        |         |       
|                                                    |                                                                              |                                                                                     |                                                                 |        |         |         |          |        |         |        
|                                                    |                                                                              |                                                                                     |                                                                 |        |         |         |          |        |         |         |         |       |         | Year ended December 31,
|                                                    |                                                                              |                                                                                     |                                                                 |        |         |        
|                                                    |                                                                              |                                                                                     |                                                                 |        |         | 1999    |          | 2000   |         | 2001   
|                                                    |                                                                              |                                                                                     |                                                                 |        |         |         |          |        |         |        
|Cash flows from operating activities:               |                                                                              |                                                                                     |                                                                 |        |         |         |          |        |         |         |         |      
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Net earnings                                                                 |                                                                                     |                                                                 | 11,099 |         |         |          | 94,272 |         |         |         | 6,098 |        
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Adjustments to reconcile net earnings to net cash from
operating activities: |                                                                                     |                                                                 |        |         |         |          |        |         |         |         |       |        
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |                                                                              |                                                                                     | Depreciation and amortization                                   |        |         | 24,487  |          |        |         | 52,223  |         |       |         | 42,763                  |  
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |                                                                              |                                                                                     | Amortization debt issuance costs                                |        |         | 1,421   |          |        |         | 1,575   |         |       |         | 173                     |  
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |                                                                              |                                                                                     | Cumulative effect of change in accounting principle, net
of tax |        |         |        |          |        |         | 3,790   |         |       |         |                        |  
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |                                                                              |                                                                                     | Deferred income taxes                                           |        |         | (123    | )        |        |         | (2,652  | )       |       |         | 1,139                   |  
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |                                                                              |                                                                                     | Minority interest                                               |        |         | 18,519  |          |        |         | 71,107  |         |       |         | 13,373                  |  
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |                                                                              |                                                                                     | Gain on dilution of investment in subsidiary                    |        |         | (145    | )        |        |         | (1,822  | )       |       |         | (915                    | )
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |                                                                              |                                                                                     | Increase (decrease) in allowance for doubtful receivables       |        |         | (407    | )        |        |         | 7,302   |         |       |         | (1,782                  | )
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Changes in other assets and liabilities:                                     |                                                                                     |                                                                 |        |         |         |          |        |         |         |         |       |        
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |                                                                              |                                                                                     | Accounts receivable                                             |        |         | (64,514 | )        |        |         | (96,807 | )       |       |         | 103,787                 |  
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |                                                                              |                                                                                     | Inventories                                                     |        |         | (42,644 | )        |        |         | (73,462 | )       |       |         | (18,026                 | )
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |                                                                              |                                                                                     | Other current assets                                            |        |         | (7,091  | )        |        |         | (7,984  | )       |       |         | 2,718                   |  
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |                                                                              |                                                                                     | Accounts payable and accrued expenses                           |        |         | 102,928 |          |        |         | 74,757  |         |       |         | (83,514                 | )
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |                                                                              |                                                                                     | Advance payments from customers                                 |        |         | 1,468   |          |        |         | 9,028   |         |       |         | (7,314                  | )
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |                                                                              |                                                                                     | Deferred revenue                                                |        |         |        |          |        |         | 2,664   |         |       |         | (3,351                  | )
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |                                                                              |                                                                                     | Income taxes                                                    |        |         | 1,904   |          |        |         | 19,101  |         |       |         | (22,864                 | )
|                                                   
|Net cash provided by operating activities           |                                                                              |                                                                                     | 46,902                                                          |        |         |         | 153,092  |        |         |         | 32,285  |      
|                                                   
|                                                   
|                                                   
|                                                   
|Cash flows from investing activities:               |                                                                              |                                                                                     |                                                                 |        |         |         |          |        |         |         |         |      
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |                                                                              | Capital expenditures                                                                |                                                                 |        | (30,587 | )       |          |        | (71,366 | )       |         |       | (71,563 | )                      
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |                                                                              | Acquisition of shares from minority shareholders                                    |                                                                 |        |        |         |          |        | (75,461 | )       |         |       |        |                        
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |                                                                              | Acquisition of business                                                             |                                                                 |        | (1,267  | )       |          |        | (96     | )       |         |       | (20,278 | )                      
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |                                                                              | Proceeds from sale of property, plant and equipment                                 |                                                                 |        | 2,453   |         |          |        | 4,332   |         |         |       | 621     |                        
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |                                                                              | Proceeds from sale of marketable securities                                         |                                                                 |        | 2,607   |         |          |        | 6,214   |         |         |       |        |                        
|                                                   
|Net cash (used in) investing activities             |                                                                              |                                                                                     | (26,794                                                         | )      |         |         | (136,377 | )      |         |         | (91,220 | )    
|                                                   
|                                                   
|                                                   
|                                                   
|Cash flows from financing activities:               |                                                                              |                                                                                     |                                                                 |        |         |         |          |        |         |         |         |      
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |                                                                              | Notes payable to banks, net                                                         |                                                                 |        | (15,372 | )       |          |        | (9,531  | )       |         |       | 3,095   |                        
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |                                                                              | Proceeds from long-term debt and subordinated debt                                  |                                                                 |        | 16,652  |         |          |        | 78,466  |         |         |       | 127,849 |                        
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |                                                                              | Repayments of long-term debt and subordinated debt                                  |                                                                 |        | (19,690 | )       |          |        | (96,202 | )       |         |       | (55,387 | )                      
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |                                                                              | Proceeds from issuance of common shares                                             |                                                                 |        | 496     |         |          |        | 126,813 |         |         |       | 1,850   |                        
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |                                                                              | Fair value of put option for structured equity line                                 |                                                                 |        |        |         |          |        | (988    | )       |         |       |        |                        
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |                                                                              | Dividends to minority shareholders                                                  |                                                                 |        | (8,384  | )       |          |        | (28,249 | )       |         |       | (25,656 | )                      
|                                                   
|Net cash provided by (used in) financing activities |                                                                              |                                                                                     | (26,298                                                         | )      |         |         | 70,309   |        |         |         | 51,751  |      
|                                                   
|                                                   
|                                                   
|                                                   
|Exchange rate effects                               |                                                                              |                                                                                     | 8,619                                                           |        |         |         | 5,628    |        |         |         | 7,956   |      
|                                                   
|Net increase in cash and cash equivalents           |                                                                              |                                                                                     | 2,429                                                           |        |         |         | 92,652   |        |         |         | 772     |      
|                                                   
|                                                   
|                                                   
|                                                   
|Cash and cash equivalents at beginning of year      |                                                                              |                                                                                     | 11,724                                                          |        |         |         | 14,153   |        |         |         | 106,805 |      
|                                                   
|Cash and cash equivalents at end of year            |                                                                              |                                                                                     | 14,153                                                          |        |         |         | 106,805  |        |         |         | 107,577 |      
|                                                   
|Supplemental
disclosures of cash flow information   |                                                                              |                                                                                     |                                                                 |        |         |         |          |        |         |         |         |      
|Cash paid (received) during the year for:           |                                                                              |                                                                                     |                                                                 |        |         |         |          |        |         |         |         |      
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |                                                                              | Interest                                                                            |                                                                 |        | 7,916   |         |          |        | 2,257   |         |         |       | 1,491   |                        
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |                                                                              | Income taxes                                                                        |                                                                 |        | (505    | )       |          |        | 6,381   |         |         |       | 26,436  |                        
|                                                   
|Non cash investing activities:                      |                                                                              |                                                                                     |                                                                 |        |         |         |          |        |         |         |         |      
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |                                                                              | Acquisition of business through issuance of convertible note                        |                                                                 |        | (3,868  | )       |          |        |        |         |         |       |        |                        
|                                                   
|Non cash financing activities:                      |                                                                              |                                                                                     |                                                                 |        |         |         |          |        |         |         |         |      
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |                                                                              | Conversion of subordinated notes and 6.0% zero-coupon
debentures into common shares |                                                                 |        | 24,045  |         |          |        | 23,555  |         |         |       |        |                        
|                                                   

See Notes to Consolidated Financial Statements.

F-6



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##### Table of Contents






Notes to Consolidated Financial Statements
( in thousands, except per share data and unless otherwise stated)




NOTE ASummary of Significant Accounting Policies

Basis of Presentation ASM International N.V. (ASMI or the Company) is a
corporation domiciled in the Netherlands with principal operations in Europe,
the United States, Southeast Asia and Japan. The Company dedicates its
resources to the research, development, manufacturing, marketing and servicing
of equipment and materials used to produce semiconductor devices. The Company
provides production solutions for the main areas of semiconductor production:
wafer processing (Front-end), assembly and packaging (Back-end). The Company
follows accounting principles generally accepted in the United States of
America.

Principles of Consolidation The Consolidated Financial Statements include the
accounts of ASMI and its subsidiaries (the Company), in all of which ASMI
holds a controlling interest. The minority interest of third parties is
disclosed separately in the Financial Statements. All intercompany profits,
transactions and balances have been eliminated in consolidation. Intercompany
profits included in inventory are recognized in the Statement of Operations
upon the sale of the respective inventory.

Foreign Currency Translation The financial information for subsidiaries
outside the Netherlands is measured using local currencies as the functional
currency of that subsidiary. Assets and liabilities of foreign subsidiaries are
translated into Euros at exchange rates prevailing at the end of the year.
Revenues and costs relating to the operation of such subsidiaries are
translated at average exchange rates during the period. Resulting translation
adjustments are directly recorded in Shareholders Equity. Foreign currency
transaction gains and losses are included in determining net earnings. Exchange
rate differences on translations of other transactions in foreign currencies
are reflected in the Statement of Operations.

Derivative Financial Instruments The Company uses derivative instruments to
manage certain exposures to foreign currency risks. The Companys objectives
for holding derivatives are to minimize these risks using the most effective
methods to eliminate or reduce the impact of such exposure.

The Company adopted Statement of Financial Accounting Standards No. 133 (SFAS
133), Accounting for Derivative Instruments and Hedging Activities, as
amended by SFAS 137 and SFAS 138, in the first quarter of 2001. SFAS 133
establishes accounting and reporting standards for derivative instruments and
hedging activities, and requires that all derivatives, including foreign
currency exchange contracts, be recognized on the balance sheet at fair value.
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
currently in earnings. All of the Companys derivative financial instruments
are recorded at their fair value in other current assets or accrued expenses.
The transition adjustment upon adoption of SFAS 133 was not material.

ASMI and its subsidiaries conduct business in a number of foreign countries,
with certain transactions denominated in other currencies than the functional
currency of the respective subsidiary conducting the business. The purpose of
our foreign currency management is to manage the effect of exchange rate
fluctuations on certain foreign currency denominated revenues, costs and eventual cash
flows. The terms of currency instruments used for hedging purposes are
generally consistent with the timing of the transactions being hedged. The
Company does not use derivative financial instruments for trading or
speculative purposes. The Company uses derivative financial instruments, such
as forward exchange contracts, to hedge certain forecasted foreign currency
denominated sales and purchase transactions expected to occur within the next
12 months. As a policy, the Company only hedges anticipated foreign currency transactions
for which we have a firm commitment from a customer or to a supplier. In
accordance with SFAS 133, these hedges related to anticipated 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 other comprehensive
income in Shareholders Equity, and is reclassified into earnings when the
hedged transaction affects earnings. All amounts included in other
comprehensive income at December 31, 2001 will be reclassified to earnings
within 12 months upon completion of the underlying transaction. If the
underlying transaction being hedged fails to occur, or if a portion of any
derivative is ineffective, the gain or loss is immediately recognized in
earnings under net interest and other financial income (expenses) on the
Statement of Operations.

Furthermore, the Company continues to hedge certain foreign currency
receivables and payables with forward exchange contracts, currency swaps and
debt borrowings in other currencies than the functional currency of the Company
or the subsidiary conducting the business to reduce the risk that earnings and
cash flow will be adversely effected by changes in foreign currency exchange
rates. These hedges are designated as fair value hedges, and the changes in the
fair value of the hedges are recorded immediately in earnings under net
interest and other financial income (expenses) on the Statement of Operations
to offset the changes in the fair value of the assets or liabilities being
hedged.

F-7



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##### Table of Contents



The change in accounting from the adoption of SFAS 133 did not materially
affect net income in 2001. Gains or losses recognized resulting from the
ineffectiveness of cash flow and fair value hedges were not material for the
year ended December 31, 2001.

Revenue Recognition- Effective January 1, 2000 the Company adopted new
guidance on revenue recognition as is described in Staff Accounting Bulletin
No. 101 Revenue Recognition in Financial Statements
(SAB 101), issued by the
staff of the Securities and Exchange Commission (the SEC) in December 1999.

Net revenues include product revenues derived primarily from sales of Front-end
and Back-end equipment used by both segments of the semiconductor equipment
market. The Company recognizes revenue from equipment sales upon shipment of
its products when it is proven prior to shipment that the equipment has met all
of the customers criteria and specifications. The installation process is not
believed to be essential to the functionality of the products. However, since
under most of the sales contracts, the timing of payment of a portion of the
sales price is coincident with installation, such installation is not
considered to be inconsequential or perfunctory under the guidance of SAB 101.
Therefore, at the time of shipment, the Company defers that portion of the
sales price related to the fair value of installation at the time of shipment.
The Company believes it has an enforceable claim for that portion of the sales
price not related to the fair value of the installation should it not fulfill
its installation obligation. The fair value of the installation process is
measured based upon the per-hour amounts charged by third parties for similar
installation services. When the Company can only satisfy the customer
acceptance criteria or specifications at the customers location, revenue is
deferred until final acceptance by the customer or until contractual conditions
lapse.

The Company provides training and technical support to customers. Revenue
related to such services is recognized when the service is completed. Revenue
from the sale of spare parts and materials is recognized when the goods are
shipped.

The Company previously recognized revenue from the sale of all equipment sales
including installation services at the time of transfer of title, and when no
significant contractual obligations remained. Revenue recognition for sale of
spare parts and services has not been changed.

Cash and Cash Equivalents- Cash and cash equivalents include cash on hand,
current accounts with banks, and short-term deposits with a maturity of three
months or less at the date of purchase.

Marketable Securities- All investments in marketable securities are classified
as available for sale which requires to report these investments at fair market
value and record the unrealized gains and losses, after tax, as a component of
Shareholders Equity. In the accompanying Financial Statements the marketable
securities are carried at cost which approximates fair market value. Realized
gains and losses on securities sold are included in net earnings.

Inventories- Inventories are stated at the lower of cost (first-in, first-out
method) or market. Costs include net prices paid for materials purchased,
charges for freight and custom duties, direct wages of employees and charges
for factory production overhead.

Property, Plant and Equipment- Property, plant and equipment are carried at
cost (net of government grants), less accumulated depreciation. Capital 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 underlying property and the lease term.

Goodwill- Goodwill represents the excess of the cost of businesses acquired
over the fair market value of identifiable net assets at the dates of
acquisition. Goodwill arising on acquisitions is amortized on a straight-line
basis over the estimated useful life thereof. The Company reviews goodwill for
impairment whenever facts or circumstances indicate that the carrying amounts
may not be recoverable. If an evaluation is required, the estimated future
undiscounted cash flows associated with the underlying business operation are
compared to the carrying amount of goodwill to determine if a write-down is
required. If such an assessment indicates that the undiscounted future cash
flows will not be recovered, the carrying amount is reduced to the estimated
fair value.

Strategic Investments- ASMI has certain strategic minority investments in non
publicly traded companies. These investments are included in other assets on
the Consolidated Balance Sheet. Investments with a capital investment of 20%
or more are valued using the equity method of accounting. Investments with a
capital investment of less than 20% are carried at cost. ASMI monitors these
investments for impairment and makes appropriate reductions in carrying values
when necessary.

Recoverability of Long-Lived Assets- In accordance with Statement of Financial
Accounting Standard (SFAS) No. 121, Accounting for the Impairment of
Long-Lived Assets and Long-Lived Assets to be Disposed Of, long-lived assets
and certain identifiable intangibles held and used by a company are required to
be reviewed for impairment whenever events or changes in circumstances

F-8



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##### Table of Contents



indicate that the carrying amount of an asset may not be recoverable. In
performing the review for recoverability, the Company estimates the future cash
flows expected to result from the use of the asset and its eventual
disposition. If the undiscounted future cash flow is less than the carrying
amount of the asset, the asset is deemed impaired. The amount of the impairment
is measured as the difference between the carrying value and the fair value of
the asset. Generally, long-lived assets and certain identifiable intangibles to
be disposed of are reported at the lower of carrying amount or fair value less
cost to sell.

Income Taxes- The Company accounts for income taxes under the provisions of
SFAS No. 109, Accounting for Income Taxes (SFAS 109). SFAS 109 requires
recognition of deferred tax assets and liabilities for the estimated future tax
consequences of events attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases and operating loss and tax credit carryforwards. Deferred
tax assets and liabilities are measured using enacted rates in effect for the
year in which the differences are expected to be recovered or settled. The
effect on deferred tax assets and liabilities of changes in tax rates is
recognized in the Statement of Operations in the period in which the enactment
date changes. Deferred tax assets and liabilities are reduced through the
establishment of a valuation allowance at such time as, based on available
evidence, it is more likely than not that the deferred tax assets will not be
realized.

Stock-Based Compensation- ASMI accounts for its stock option and stock-based
compensation plans using the intrinsic-value method prescribed in Accounting
Principles Board Opinion No. 25, Accounting for Stock Issued to Employees
(APB 25). Accordingly, ASMI computes compensation costs for each employee
stock option granted as the amount by which the estimated fair value of the
ASMI common shares on the date of the grant exceeds the amount the employee
must pay to acquire the shares. As required by SFAS No. 123, Accounting for
Stock-Based Compensation (SFAS 123), ASMI has included, in Note K, the
required SFAS 123 pro forma disclosures of net income (loss) and earnings
(loss) per share as if the fair value-based method of accounting had been
applied.

Research and Development Expenses- Research and development costs are expensed
as incurred. Costs, which relate to prototype and experimental models, which
are sold to customers, are charged to cost of sales. Subsidies and other
governmental credits to cover research and development costs relating to
approved projects are recorded as research and development credits in the
period when such project costs occur. Technical development credits (Technische
Ontwikkelings Kredieten or TOKs) received from the Netherlands government to
offset the cost of certain research and development projects are contingently
repayable to the extent sales of equipment developed in such projects occur.
Such repayments are calculated as a percentage of sales and are charged to cost
of sales. No such repayments are required if such sales do not occur (see Note
O).

Sales of Shares by a Subsidiary- As further
described in the Notes to Consolidated Financial Statements herein, from time to time, the consolidated subsidiary
ASMPT will issue common shares pursuant to their Employee Share Incentive
Scheme. The effect of these issuances is a dilution of the ownership
in ASM Pacific Technology Ltd. (ASMPT).
The Company recognizes the impact of these issuances, and other qualifying
issuances as discussed in the SECs Staff Accounting Bulletin Accounting for
Sales of Stock by a Subsidiary (SAB 51), in the Statement of Operations as a
Gain (Loss) on dilution of investment in subsidiary.

New Accounting Pronouncements- In June 2001, the Financial Accounting
Standards Board issued SFAS No. 141, Business Combinations and SFAS No. 142,
Goodwill and Other Intangible Assets. SFAS No. 141 requires that all
business combinations initiated after June 30, 2001 is accounted for under the
purchase method and addresses the initial recognition and measurement of
goodwill and other intangible assets acquired in a business combination. In
the event goodwill is acquired subsequent to June 30, 2001, it will not be
amortized. SFAS No. 142 addresses the initial recognition and measurement of
intangible assets acquired outside of a business combination and the accounting
for goodwill and other intangible assets subsequent to their acquisition. SFAS
No. 142 provides that intangible assets with finite useful lives be amortized
and that goodwill and intangible assets with indefinite lives will not be
amortized, but will rather be tested at least annually for impairment. Under
the provisions of SFAS No. 142, any impairment loss identified upon adoption of
this standard is recognized as a cumulative effect of a change in accounting
principle, which is charged to the Statement of Operations. Any impairment loss
incurred subsequent to initial adoption of SFAS No. 142 is recorded as a charge
to current period earnings. The Company will adopt SFAS No. 142 as of January
2002 and, at that time, will stop amortizing goodwill that resulted from
business combinations completed prior to the adoption of SFAS No. 141.
Goodwill is currently being amortized at approximately
 7,558 annually and has
a net carrying value of  64,306 at December 31, 2001. The Company is
currently evaluating the provisions of SFAS No. 142 and does not expect to
record an impairment loss upon adoption of SFAS 142 in 2002.

In October 2001, the FASB issued FAS 144, Accounting for the Impairment or
Disposal of Long-Lived Assets. Statement 144 requires that long-lived assets
be measured at the lower of carrying amount or fair value less cost to sell,
whether reported in continuing operations or in discontinued operations. The
standard is effective for 2002 and generally is to be applied prospectively.
The implementation of this standard is not expected to have a material impact
on the Companys financial position or results of operations.

F-9



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##### Table of Contents



Use of Estimates- The preparation of the Companys consolidated financial
statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities
at the balance sheet dates and the reported amounts of revenue and expense
during the reported periods. Actual results could differ from those estimates.

Reclassifications- Certain reclassifications have been made to the prior year
consolidated financial statements to conform to the current year presentation.

Cumulative Effect of Change in Accounting Principle- As more fully described
under Revenue Recognition, the Company adopted the guidance outlined in SAB
101. The new method of revenue recognition was adopted as of January 1, 2000
and has been applied retroactively to revenue earned in prior years. The effect
of the change in 2000 was to decrease net earnings by  1,710 (or  0.04 per
basic and diluted earnings per share). The adjustment of  3,790 to apply
retroactively the new method is included in the Statement of Operations for the
year ended December 31, 2000. The pro forma amounts shown on the income
statement have been adjusted for the effect of retroactive application on
revenues and costs and related income taxes.




NOTE BCash and Cash Equivalents, Marketable Securities

At December 31, 2001, cash and cash equivalents and marketable securities of
the Companys subsidiary ASMPT amounting to  70,821 are restricted to
use in the operations of this company only.




NOTE CInventories

Inventories consists of the following:

|                             |  |      |         |      |  |              |         | 
|---------------------------- |  | ---- | ------- | ---- |  | ------------ | ------- | 
|                             |  |      |         |      |  | December 31,
|                             |  |     
|                             |  | 2000 |         | 2001
|                             |  |      |         |     
|Components and raw materials |  |      | 68,786  |      |  |              | 85,864  | 
|                            
|                            
|                            
|                            
|Work in process              |  |      | 104,875 |      |  |              | 83,854  | 
|                            
|                            
|                            
|                            
|Finished goods               |  |      | 14,340  |      |  |              | 36,309  | 
|                            
|Total inventories            |  |      | 188,001 |      |  |              | 206,027 | 
|                            




NOTE DProperty, Plant and Equipment

|                                   |                           |  |               |        |              |  |         |         |   |  |         |         |  
|---------------------------------- | ------------------------- |  | ------------- | ------ | ------------ |  | ------- | ------- | - |  | ------- | ------- | -
|                                   |                           |  | Land,         |        | Machinery,   |  |         |         |  
|                                   |                           |  | buildings     |        | equipment,   |  |         |         |  
|                                   |                           |  | and leasehold |        | furniture    |  |         |         |  
|                                   |                           |  | improvements  |        | and fixtures |  | Total  
|                                   |                           |  |               |        |              |  |        
|At cost:                           |                           |  |               |        |              |  |         |         |   |  |         |        
|                                  
|                                  
|                                  
|                                  
|Balance January 1, 2001            |                           |  | 83,212        |        |              |  | 237,676 |         |   |  | 320,888 |        
|                                  
|                                  
|                                  
|                                  
|                                   | Capital expenditures      |  |               | 14,336 |              |  |         | 57,227  |   |  |         | 71,563  |  
|                                  
|                                  
|                                  
|                                  
|                                   | Retirements and sales     |  |               | (108   | )            |  |         | (2,535  | ) |  |         | (2,643  | )
|                                  
|                                  
|                                  
|                                  
|                                   | Translation effect        |  |               | 4,043  |              |  |         | 2,483   |   |  |         | 6,526   |  
|                                  
|Balance December 31, 2001          |                           |  | 101,483       |        |              |  | 294,851 |         |   |  | 396,334 |        
|                                  
|Accumulated depreciation:          |                           |  |               |        |              |  |         |         |   |  |         |        
|                                  
|                                  
|                                  
|                                  
|Balance January 1, 2001            |                           |  | 40,686        |        |              |  | 128,034 |         |   |  | 168,720 |        
|                                  
|                                  
|                                  
|                                  
|                                   | Depreciation for the year |  |               | 5,205  |              |  |         | 30,000  |   |  |         | 35,205  |  
|                                  
|                                  
|                                  
|                                  
|                                   | Retirements and sales     |  |               | (68    | )            |  |         | (1,954  | ) |  |         | (2,022  | )
|                                  
|                                  
|                                  
|                                  
|                                   | Translation effect        |  |               | 2,221  |              |  |         | 1,129   |   |  |         | 3,350   |  
|                                  
|Balance December 31, 2001          |                           |  | 48,044        |        |              |  | 157,209 |         |   |  | 205,253 |        
|                                  
|Property, plant and equipment, net |                           |  |               |        |              |  |         |         |   |  |         |         |  
|                                  
|                                  
|                                  
|                                  
|                                   | January 1, 2001           |  |               | 42,526 |              |  |         | 109,642 |   |  |         | 152,168 |  
|                                  
|                                  
|                                  
|                                  
|                                   | December 31, 2001         |  |               | 53,439 |              |  |         | 137,642 |   |  |         | 191,081 |  
|                                  

|                       |  |                                        |  |      
|---------------------- |  | -------------------------------------- |  | -----
|Useful lives in years: |  | - Buildings and leasehold improvements |  | 10-25
|                      
|                      
|                      
|                      
|                       |  | - Machinery and equipment              |  | 2-10 
|                      
|                      
|                      
|                      
|                       |  | - Furniture and fixtures               |  | 2-10 

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##### Table of Contents






NOTE EGoodwill

|                          |                           |  |        |        | 
|------------------------- | ------------------------- |  | ------ | ------ | 
|At cost:                  |                           |  |        |       
|                         
|                         
|                         
|                         
|Balance January 1, 2001   |                           |  | 73,069 |       
|                         
|                         
|                         
|                         
|                          | Acquired                  |  |        | -      | 
|                         
|                         
|                         
|                         
|                          | Translation effect        |  |        | 3,671  | 
|                         
|Balance December 31, 2001 |                           |  | 76,740 |       
|                         
|Accumulated amortization: |                           |  |        |       
|                         
|                         
|                         
|                         
|Balance January 1, 2001   |                           |  | 4,556  |       
|                         
|                         
|                         
|                         
|                          | Amortization for the year |  |        | 7,558  | 
|                         
|                         
|                         
|                         
|                          | Translation effect        |  |        | 320    | 
|                         
|Balance December 31, 2001 |                           |  | 12,434 |       
|                         
|Goodwill, net:            |                           |  |        |       
|                         
|                         
|                         
|                         
|                          | January 1, 2001           |  |        | 68,513 | 
|                         
|                         
|                         
|                         
|                          | December 31, 2001         |  |        | 64,306 | 
|                         

Following the issuance of common shares under the ASMPT Employee Incentive
Scheme in March 2000, the Companys shareholding in ASMPT dropped slightly
below 50.0%. In various transactions in April and June 2000 the Company
acquired 0.3% of the outstanding common shares of ASMPT, thereby restoring its
total shareholding in that company to over 50.0%. Throughout this entire
period, the Company maintained control over ASMPT.

On July 6, 2000, the Company completed a purchase of approximately 4.7% of the
outstanding common shares in ASMPT from one institutional investor. The total
purchase price of the acquired shares of ASMPT in 2000 amounted to  74,757.
The acquisition of these shares was accounted for using the purchase method and
the excess of the purchase price over the fair market value of the underlying
net assets acquired in the amount of  64,985 has been recorded as goodwill.
The fair market value approximates the book value of such assets and
liabilities of ASMPT. The pro forma impact on the Statement of Operations for
the year ended December 31, 1999 and 2000, based on the assumption that the
Company acquired the total additional 5.0% interest in ASMPT as of January 1,
1999 and 2000, was a decrease on minority interest and an increase in net
earnings of  1,964 and  3,182, respectively. The pro forma impact on basic
and diluted earnings per share for the year ended December 31, 1999 and 2000
was  0.05 and 0.07, respectively.

In July 1999, the Company acquired all the outstanding shares of Microchemistry
Limited. The acquisition was accounted for using the purchase method. Total
consideration paid amounted to FIM (Finnish Marks) 23.2 million or  3,868 and
after adding the assets deficiency the recorded goodwill totaled  4,747.

In December 1999, the Company acquired a 24.0% interest in NanoPhotonics AG, a
German supplier of precision thin film metrology equipment, for  407. An
officer of the Company also purchased a 44.5% interest in NanoPhotonics. The
Company has a five-year option to purchase the 44.5% interest from the officer
at the same price he paid for his interest in the initial transaction. In
exchange for this option, the Company granted the officer a five-year option to
purchase 25,000 common shares in ASMI at the fair market value of the shares at
the option grant date.

The weighted average amortization period for acquired goodwill is 10 years.

F-11



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##### Table of Contents






NOTE FOther Assets

Other assets consist of the following:

|                          |  |                    |        |                     |  |                    |       |   |  |  |        |  
|------------------------- |  | ------------------ | ------ | ------------------- |  | ------------------ | ----- | - |  |  | ------ | -
|                          |  | Strategic minority |        |                     |  |                    |       |   |  | 
|                          |  | investments        |        | Debt issuance costs |  | Total other assets
|                          |  |                    |        |                     |  |                   
|Balance January 1, 2001   |  |                    |       |                     |  |                    |      |   |  |  |       |  
|                         
|                         
|                         
|                         
|Additions                 |  |                    | 20,278 |                     |  |                    | 6,150 |   |  |  | 26,428 |  
|                         
|                         
|                         
|                         
|Amortization              |  |                    |       |                     |  |                    | (173  | ) |  |  | (173   | )
|                         
|                         
|                         
|                         
|Translation effect        |  |                    |       |                     |  |                    | (14   | ) |  |  | (14    | )
|                         
|Balance December 31, 2001 |  |                    | 20,278 |                     |  |                    | 5,963 |   |  |  | 26,241 |  
|                         

In October 2001, the Company entered into a strategic alliance with and made an
equity investment in NuTool, Inc., a privately owned semiconductor equipment
company. The Company made an equity investment of  20,278 in this
California-based company that is a provider of innovative copper deposition
technologies, giving a total equity interest of approximately 15.4%, in
NuTool, Inc.

The debt issuance costs relate to fees incurred for
the issuance of US$ 115.0 million convertible subordinated notes in November and December 2001 and are
amortized by the interest method as interest cost during the life of the debt.




NOTE GNotes Payable to Banks

Information on notes payable to banks is as follows:

|                                |           |      |  |        |  |              |  |        | 
|------------------------------- | --------- | ---- |  | ------ |  | ------------ |  | ------ | 
|Short-term debt outstanding in: |           |      |  |        |  | December 31,
|                                |           |     
|                                |           | 2000 |  | 2001  
|                                |           |      |  |       
|                                | Japan     |      |  | 13,132 |  |              |  | 16,231 | 
|                               
|                               
|                               
|                               
|                                | Hong Kong |      |  | 4      |  |              |  |       | 
|                               
|                                |           |      |  | 13,136 |  |              |  | 16,231 | 
|                               

|                                                 |  |      |           |      |  |              |           |  | 
|------------------------------------------------ |  | ---- | --------- | ---- |  | ------------ | --------- |  | 
|Short-term debt outstanding in local currencies: |  |      |           |      |  |              |           | 
|(thousands)                                      |  |      |           |      |  | December 31,
|                                                 |  |     
|                                                 |  | 2000 |           | 2001
|                                                 |  |      |           |     
|Japanese Yen                                     |  |      | 1,404,854 |      |  |              | 1,877,516 | 
|                                                
|                                                
|                                                
|                                                
|Hong Kong Dollars                                |  |      | 30        |      |  |              |          | 
|                                                

ASMI and its individual subsidiaries borrow under separate short-term lines of
credit with banks in the countries where they are located. The lines contain
general provisions concerning renewal and continuance at the option of the
banks. The weighted average interest rate of the outstanding notes payable was
1.61% at December 31, 2001.

Total short-term lines of credit available amounted to  183,951 at December
31, 2001. The amount outstanding at December 31, 2001 was  16,231 and the
unused portion totaled  167,720. The unused portion includes  42,945 relating
to ASMPT, in which the Company holds a 54.36 % interest, and such amount is
authorized solely for use in the operations of ASMPT.

At December 31, 2001 ASMI has guaranteed available short-term facilities of
certain subsidiaries in the amount of  46,855. The Company does not provide
guarantees for borrowings of ASMPT and there are no guarantees from ASMPT to
secure indebtedness of the Company. 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 affiliates.

On June 27, 2001 ASMI entered into a multicurrency revolving credit facility
with a consortium of banks in the amount of  90,000 to be utilized solely for
the Companys operations in Europe and the United States, excluding ASMPT. The
credit facility consists of two facilities of  45,000 each and bears interest
at a per annum rate equal to LIBOR for non Euro currency advances or EURIBOR
for Euro currency advances, plus 80 to 160 basis points for the first facility
of  45,000 and plus 100 to 180 basis points for the second facility of 
45,000 in each case depending on the solvency ratio at the time of drawing. The
term of the first facility is 12 months and the term of the second facility is
18 months. The credit facility contains certain financial covenants with
respect to solvency ratio and interest coverage ratio. Based on the Companys
solvency ratio the per annum interest on the facilities drawn in 2001 were
LIBOR plus 100 basis points for the first facility and LIBOR or EURIBOR,
depending on the currency drawn, plus 120 basis points for the second facility.
The credit facility is secured by a portion of the Companys shareholding in
ASMPT. At December 31, 2001 the

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##### Table of Contents



LIBOR rate was 1.87% and the EURIBOR rate was 3.33%. There were no outstanding
borrowings on these facilities at December 31, 2001.




NOTE HLong-term Debt

Long-term debt consists of the following:

|                   |                                              |  |         |        |      |  |              |       | 
|------------------ | -------------------------------------------- |  | ------- | ------ | ---- |  | ------------ | ----- | 
|                   |                                              |  |         |        |      |  | December 31,
|                   |                                              |  |        
|                   |                                              |  | 2000    |        | 2001
|                   |                                              |  |         |        |     
|Term Loans:        |                                              |  |         |        |      |  |              |      
|                  
|                  
|                  
|                  
|                   | US$ facility, repaid on July 2, 2001         |  |         | 49,607 |      |  |              |      | 
|                  
|                  
|                  
|                  
|                   | Japan, 2.15-3.30%, due 2005  2006           |  |         | 3,459  |      |  |              | 2,472 | 
|                  
|                  
|                  
|                  
|                   | Finland, 1.0-3.0%, due 2002  2006           |  |         | 3,383  |      |  |              | 3,956 | 
|                  
|                  
|                  
|                  
|Mortgage loans:    |                                              |  |         |        |      |  |              |      
|                  
|                  
|                  
|                  
|                   | The Netherlands, 5.35-6.75%, due 2006  2026 |  |         | 1,873  |      |  |              | 1,625 | 
|                  
|                  
|                  
|                  
|                   | Japan, 1.71-2.63%, due 2005  2006           |  |         | 4,468  |      |  |              | 3,671 | 
|                  
|                  
|                  
|                  
|Lease commitments: |                                              |  |         |        |      |  |              |      
|                  
|                  
|                  
|                  
|                   | United States, 7.2-14.0%, due 2002  2005    |  |         | 354    |      |  |              | 215   | 
|                  
|                  
|                  
|                  
|                   | Japan, 0.3-0.5%, due 2004  2005             |  |         |       |      |  |              | 1,960 | 
|                  
|                   |                                              |  | 63,144  |        |      |  | 13,899       |      
|                  
|                  
|                  
|                  
|Current portion    |                                              |  | (31,484 | )      |      |  | (2,179       | )    
|                  
|                   |                                              |  | 31,660  |        |      |  | 11,720       |      
|                  

Long-term debt outstanding in local currencies:

|                           |                      |  |      |         |      |              |  |         | 
|-------------------------- | -------------------- |  | ---- | ------- | ---- | ------------ |  | ------- | 
|(thousands)                |                      |  |      |         |      | December 31,
|                           |                      | 
|                           |                      |  | 2000 |         | 2001
|                           |                      |  |      |         |     
|Including current portion: |                      |  |      |         |      |              |  |        
|                          
|                          
|                          
|                          
|                           | Euro                 |  |      | 24,247  |      |              |  | 5,581   | 
|                          
|                          
|                          
|                          
|                           | United States dollar |  |      | 46,328  |      |              |  | 189     | 
|                          
|                          
|                          
|                          
|                           | Japanese yen         |  |      | 847,990 |      |              |  | 937,877 | 
|                          

Aggregate annual principal repayments for years subsequent to December 31, 2001
are:

|           |      |  |        |       | 
|---------- | ---- |  | ------ | ----- | 
|           | 2002 |  |        | 2,179 | 
|          
|          
|          
|          
|           | 2003 |  |        | 2,091 | 
|          
|          
|          
|          
|           | 2004 |  |        | 2,174 | 
|          
|          
|          
|          
|           | 2005 |  |        | 3,562 | 
|          
|          
|          
|          
|           | 2006 |  |        | 1,225 | 
|          
|          
|          
|          
|Thereafter |      |  | 2,668  |      
|          
|           |      |  | 13,899 |      
|          

On July 6, 2000, the Company entered into two financing arrangements. Pursuant
to the first such financing arrangement, the Company received a two-year,
non-revolving credit facility of US$ 75.0 million from Canadian Imperial Bank
of Commerce (CIBC), acting through its New York agency, carrying a variable
interest rate linked to LIBOR and secured by substantially all of the Companys
shareholdings in ASMPT. On July 6, 2000 the Company drew down US$ 69.0 million
of this facility and the funds were used to purchase additional shares in ASMPT
from an ASMPT shareholder. The facility had a quarterly repayment schedule.
In the fourth quarter of 2000 the Company repaid US$ 23.0 million consisting of
a US$ 5.5 million installment and a US$ 17.5 million partial prepayment. In
the first six months of 2001 the Company repaid US$ 11.0 million consisting of
two installments of US$ 5.5 million each and on July 2, 2001, the Company
cancelled the agreement and repaid the remaining outstanding balance of the
loan from the proceeds of its multicurrency revolving credit facility.

Pursuant to the second facility, the Company entered into a structured equity
line (the Line) with an investor who is an affiliate of CIBC. Under the Line,
the Company can issue over the term of the agreement which ends on July 6,
2002, with intervals of at least five business days between two issuances,
common shares to the investor in amounts not exceeding US$ 10.0 million and for
a total not exceeding US$ 65.0 million. The investor has committed to purchase
these shares at market price, which is defined as the volume weighted average
price of the five trading days immediately preceding the date of issuance,
minus a discount of 4.5%. The investor is not obligated to purchase shares if
the purchase would cause the aggregate number of common shares of the Company
owned by the investor, including those purchased during the previous 60 days,
to exceed 9.9% of all of the issued and outstanding common shares of the
Company. The investor is also under no obligation to purchase newly issued
shares under the Line in the event that the

F-13



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##### Table of Contents



Companys SEC registration statement registering the sale and resale of the
shares is not effective and certain conditions precedent to the Line are not
satisfied. In May 2001, the Companys registration statement for these
securities became effective. As of December 31, 2001, the Company did not issue
any common shares under the agreement.

The long-term facilities offered by the Japanese banks to ASM Japan are
collateralized by the real estate and other assets of ASM Japan, with
additional parent guarantees provided by ASMI. In Finland, the long-term loans
are collateralized by machinery and equipment of ASM Microchemistry and
guaranteed by ASMI.

Lease commitments relate to lease commitments on property, equipment and
machines.




NOTE IConvertible Subordinated Debt

In November 2001, ASMI sold US$ 100.0 million
in principle amount of 5.0%
Convertible Subordinated Notes due on November 15, 2005 in a private offering.
In December 2001, ASMI sold an additional US$15.0 million of the notes in an
over-allotment. Interest is payable on May 15 and November 15 of each year. The
first interest payment will be made on May 15, 2002. The notes are subordinated
in right of payment to our existing and future senior debt. The notes are
convertible into common shares at any time before their maturity unless ASMI
has previously redeemed or repurchased them. The conversion rate is 53.0504
shares per each US$ 1,000 principal amount of notes, subject to adjustment in
certain circumstances. This is equivalent to an initial conversion price of
approximately US$ 18.85 per share. The Convertible Subordinated Notes amounted
to  130,728 as at December 31, 2001.

ASMI may redeem, under certain conditions, some or all of the notes at any time
after November 30, 2003 and prior to maturity at a redemption price of US$1,000
per US$1,000 principal amount of notes, plus accrued and unpaid interest, if
any, to, but excluding, the redemption date, if the closing price of our common
shares has exceeded 150% of the conversion price then in effect for at least 20
trading days within a period of 30 consecutive trading days ending on the
trading day before the date of mailing of the redemption notice. ASMI will make
an additional payment in cash with respect to the notes called for provisional
redemption in an amount equal to US$199.44 per US$1,000 principal amount of
notes, less the amount of any interest actually paid on the notes before the
date of redemption. In the event of a change in control ASMI may be required to
repurchase the notes.

The notes and the common shares issuable upon conversion of the notes have not
been registered under the Securities Act and have been sold in the United
States only to qualified institutional buyers in reliance on Rule 144A under
the Securities Act.

The proceeds of the offering have been used to fund our strategic investment in
NuTool, Inc., to repay outstanding balances under our multicurrency revolving
credit facility and for general corporate purposes, including working capital
and capital expenditures.




NOTE JShareholders Equity

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 49,070,296
common shares and no preferred or financing preferred shares were outstanding
as at December 31, 2001. There are currently no preferred or financing
preferred shares issued. All shares have one vote per  0.04 par value, except
for shares the Company or its subsidiaries own, which have no voting rights.

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 our 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.

Preferred shares carry the right to a cumulative preferred dividend. Financing
preferred shares are also entitled to a cumulative dividend based on the par
value and share premium paid on such shares. Dividends distributable to common
shareholders are limited to retained earnings of ASMI decreased by the legal
reserves, which must be maintained. At December 31, 2001, ASMI had no
distributable retained earnings.

F-14



---



##### Table of Contents



Warrants and Conversion of Subordinated Notes into Common Shares

In December 1998, in conjunction with the restructuring of a subordinated
convertible note with Applied Materials, Inc., the Company issued to Applied
Materials warrants to purchase 1,500,000 of ASMIs common shares, at a price of
US$ 5.375 per share. Exercise of 750,000 warrants was contingent upon the
Company not repaying all outstanding debt due to Applied Materials by February
15, 1999. At December 31, 1998 it was determined that the Company would be
unable to repay the outstanding debt by February 15, 1999 and, therefore, the
entire fair value of the warrants amounting to  2,500 has been added to
Shareholders Equity in 1998. In March 2000, Applied Materials exercised the
warrants and the proceeds therefrom were used to reduce the outstanding balance
of the subordinated note.

In conjunction with a US$ 20 million five-year zero-bond debentures issued on
October 1, 1999, the Company issued 2,037,957 non-detachable exercise warrants
and 200,000 supplemental warrants on common shares of the Company at a price of
US$ 9.81 per share, a premium to market at the date of issuance of 20.0%. In
February 2000 the 2,037,957 warrants were exercised and the debentures were
cancelled in partial payment of the exercise price of the warrants. The
remaining portion of the exercise price was fulfilled by the investors
contributing  4,903 in cash. At December 31, 2001 the 200,000 supplemental
warrants have not been exercised.

In December 1998, the Company issued a  20,420, 6 % convertible note, with a
group of strategic and financial investors. The note was fully converted in
1999 at a conversion price of  4.08 per common share. In August 1999, the
Company issued a  3,868, 5% subordinated convertible note in conjunction with
the acquisition of all of the outstanding shares of Microchemistry Ltd. The
note was fully converted in November 1999 at an exercise price of US$ 10.00 per
common share.

Public Offering of Common Shares

In April 2000, the Company completed a public offering of 4,250,000 common
shares at a price of US$29.00 per share. The net proceeds amounted to 
119,711, which were used to repay outstanding loans and fund working capital
needs.

Change in Par Value

In October 2001, the Company has changed the par value per common share from
Nlg 0.01 to  0.04 par value per share. The change resulted in an increase of
the outstanding amount of common shares and a decrease of the capital in excess
of par value of  1,739.




NOTE KEmployee Stock Option Plan and Employee Share Incentive Scheme

Employee Stock Option Plan

The Company has adopted various stock option plans and has entered into stock
option agreements with various key management personnel. Under these plans, key
employees may purchase a specific number of shares of the Companys common
stock. Options are generally priced at market value in Euros or US dollars on
the date of grant and generally expire after five or ten years. Shares subject
to these agreements, which expire at various dates through 2011, totaled
2,193,863 at December 31, 2001.

The Company applies the intrinsic value method allowed by APB 25 in accounting
for its stock option plans. Under APB 25, compensation expense resulting from
awards under fixed plans is measured as the difference between the market price
and the exercise price at the grant date. All fixed plan options were granted
at an exercise price equal to market value at the measurement date.
Accordingly, no compensation expense has been recognized in the consolidated
statements of operations pursuant to APB 25.

F-15



---



##### Table of Contents



Following is a summary of changes in shares under option:

|                          |                   |  |           |          |              |  |                |                   |              |  |         |          |              |  |                |               | 
|------------------------- | ----------------- |  | --------- | -------- | ------------ |  | -------------- | ----------------- | ------------ |  | ------- | -------- | ------------ |  | -------------- | ------------- | 
|                          |                   |  |           |          |              |  | Option price   |                   |              |  |         |          | Option price
|                          |                   |  | Number of |          | per share in |  | Number of      |                   | per share in
|                          |                   |  | shares    |          | US dollars   |  | shares         |                   |            
|                          |                   |  |           |          |              |  |                |                   |             
|Balance December 31, 1998 |                   |  | 1,992,300 |          |              |  | 0.250 - 13.625 |                   |              |  | 328,000 |          |              |  | 2.41 -    8.44 |              
|                         
|                         
|                         
|                         
|                          | Options granted   |  |           | 230,000  |              |  |                | 5.625 - 15.625    |              |  |         | 75,000   |              |  |                | 6.90 - 19.20  | 
|                         
|                         
|                         
|                         
|                          | Options cancelled |  |           | (80,000  | )            |  |                | 3.625 - 12.375    |              |  |         | (9,000   | )            |  |                | 7.67          | 
|                         
|                         
|                         
|                         
|                          | Options exercised |  |           | (114,700 | )            |  |                | 0.250  -    8.688 |              |  |         | (55,200  | )            |  |                | 2.41 -   7.67 | 
|                         
|Balance December 31, 1999 |                   |  | 2,027,600 |          |              |  | 0.250 - 15.625 |                   |              |  | 338,800 |          |              |  | 6.90 - 19.20   |              
|                         
|                         
|                         
|                         
|                          | Options granted   |  |           | 200,783  |              |  |                | 8.563 - 26.438    |              |  |         | 120,000  |              |  |                | 11.41 - 26.45 | 
|                         
|                         
|                         
|                         
|                          | Options cancelled |  |           | (107,799 | )            |  |                | 0.250 - 24.625    |              |  |         | (1,800   | )            |  |                | 7.67          | 
|                         
|                         
|                         
|                         
|                          | Options exercised |  |           | (893,205 | )            |  |                | 0.250 - 10.750    |              |  |         | (8,400   | )            |  |                | 6.90 -   7.67 | 
|                         
|Balance December 31, 2000 |                   |  | 1,227,379 |          |              |  | 0.250 - 26.438 |                   |              |  | 448,600 |          |              |  | 6.90 - 26.45   |              
|                         
|                         
|                         
|                         
|                          | Options granted   |  |           | 689,983  |              |  |                | 8.563 - 19.940    |              |  |         | 138,500  |              |  |                | 12.15 - 20.00 | 
|                         
|                         
|                         
|                         
|                          | Options cancelled |  |           | (26,999  | )            |  |                | 0.250 - 24.625    |              |  |         | (10,650  | )            |  |                | 7.67 - 26.45  | 
|                         
|                         
|                         
|                         
|                          | Options exercised |  |           | (149,150 | )            |  |                | 0.250 - 13.625    |              |  |         | (123,800 | )            |  |                | 6.90 -   8.44 | 
|                         
|Balance December 31, 2001 |                   |  | 1,741,213 |          |              |  | 0.250 - 26.438 |                   |              |  | 452,650 |          |              |  | 6.90 - 26.45   |              
|                         

Had compensation cost been determined consistent with Statement of Financial
Accounting Standards No. 123, Accounting for Stock-Based Compensation (SFAS
123), pro forma net earnings, basic and diluted earnings per share would have
been as follows:

|                            |             |  |        |        |      |  |        |        |  |  |                         |       | 
|--------------------------- | ----------- |  | ------ | ------ | ---- |  | ------ | ------ |  |  | ----------------------- | ----- | 
|                            |             |  |        |        |      |  |        |        |  |  | Year ended December 31,
|                            |             |  |       
|                            |             |  | 1999   |        | 2000 |  | 2001  
|                            |             |  |        |        |      |  |       
|Expected life (years)       |             |  | 3 - 10 |        |      |  | 3 - 10 |        |  |  | 3 - 10                  |      
|                           
|                           
|                           
|                           
|Risk free interest rate     |             |  | 5.0    | %      |      |  | 5.0    | %      |  |  | 5.0                     | %    
|                           
|                           
|                           
|                           
|Volatility                  |             |  | 85.0   | %      |      |  | 81.0   | %      |  |  | 88.0                    | %    
|                           
|                           
|                           
|                           
|Assumed forfeitures         |             |  |       |        |      |  |       |        |  |  |                        |      
|                           
|                           
|                           
|                           
|Net earnings:               |             |  |        |        |      |  |        |        |  |  |                         |      
|                           
|                           
|                           
|                           
|                            | As reported |  |        | 11,099 |      |  |        | 94,272 |  |  |                         | 6,098 | 
|                           
|                           
|                           
|                           
|                            | Pro forma   |  |        | 9,621  |      |  |        | 92,921 |  |  |                         | 2,108 | 
|                           
|                           
|                           
|                           
|Basic earnings per share:   |             |  |        |        |      |  |        |        |  |  |                         |      
|                           
|                           
|                           
|                           
|                            | As reported |  |        | 0.30   |      |  |        | 2.01   |  |  |                         | 0.12  | 
|                           
|                           
|                           
|                           
|                            | Pro forma   |  |        | 0.26   |      |  |        | 1.98   |  |  |                         | 0.04  | 
|                           
|                           
|                           
|                           
|Diluted earnings per share: |             |  |        |        |      |  |        |        |  |  |                         |      
|                           
|                           
|                           
|                           
|                            | As reported |  |        | 0.29   |      |  |        | 1.94   |  |  |                         | 0.12  | 
|                            | Pro forma   |  |        | 0.25   |      |  |        | 1.90   |  |  |                         | 0.04  | 
|                           

The average remaining contractual life of the outstanding options granted in
2001 is 4.79 years at December 31, 2001.

|              |  |                     |           |                     |  |              |      |                |  |              |       |  |  |  |           |  |  |  |       | 
|------------- |  | ------------------- | --------- | ------------------- |  | ------------ | ---- | -------------- |  | ------------ | ----- |  |  |  | --------- |  |  |  | ----- | 
|              |  | Options Outstanding |           | Options Exercisable
|              |  |                     |           |                    
|              |  |                     |           |                     |  | Weighted     |      |                |  |              |       |  |  |  |           |  |  | 
|              |  | Number              |           | Average             |  | Weighted     |      | Number         |  | Weighted    
|Range of      |  | Outstanding at      |           | Remaining           |  | Average      |      | Exercisable at |  | Average     
|Exercise      |  | December 31,        |           | Contractual         |  | Exercise     |      | December 31,   |  | Exercise    
|Prices in US$ |  | 2001                |           | Life, in years      |  | Price in US$ |      | 2001           |  | Price in US$
|0.25 -   3.00 |  |                     | 96,000    |                     |  |              | 1.40 |                |  |              | 0.38  |  |  |  | 96,000    |  |  |  | 0.38  | 
|             
|             
|             
|             
|3.00 -   6.00 |  |                     | 284,663   |                     |  |              | 5.86 |                |  |              | 5.15  |  |  |  | 232,270   |  |  |  | 5.14  | 
|             
|             
|             
|             
|6.00 -   9.00 |  |                     | 633,450   |                     |  |              | 3.12 |                |  |              | 7.83  |  |  |  | 479,050   |  |  |  | 8.00  | 
|             
|             
|             
|             
|9.00 - 14.00  |  |                     | 345,000   |                     |  |              | 6.71 |                |  |              | 11.29 |  |  |  | 81,600    |  |  |  | 10.31 | 
|             
|             
|             
|             
|14.00 - 20.00 |  |                     | 802,250   |                     |  |              | 4.77 |                |  |              | 16.73 |  |  |  | 116,021   |  |  |  | 15.71 | 
|20.00 - 30.00 |  |                     | 32,500    |                     |  |              | 6.83 |                |  |              | 24.77 |  |  |  | 6,500     |  |  |  | 24.77 | 
|             
|0.25 - 30.00  |  |                     | 2,193,863 |                     |  |              | 4.62 |                |  |              | 11.20 |  |  |  | 1,011,441 |  |  |  | 7.80  | 
|             
|

F-16



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##### Table of Contents



Employee Share Incentive Scheme ASMPT

In 1989, the shareholders of ASMPT approved a plan
to issue up to 5% of
the total issued shares of ASMPT to directors and employees. The directors
annually may approve an amount of supplemental compensation to the designated
directors and officers, which will be used to issue or purchase ASMPTs common
shares for the designees at current market value.

In 2001, 1,782,500 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.
In 2000 and 1999, respectively 2,828,000 and 1,796,000 ASMPT shares were issued
to certain directors and employees under the plan. The effect of this
transaction on ASMI was a dilution of its ownership interest in ASMPT of 0.26%
in 2001, 0.41% in 2000, and 0.24% in 1999. Following the issuance of 1,043,000
common shares under the plan in March 2000, the Companys shareholding in ASMPT
dropped slightly below 50.0%. In various transactions in April, June and July
of 2000, the Company acquired 18,897,500 of the outstanding common shares of
ASMPT, thereby restoring its total shareholding in that company to 54.88% at
that time. Throughout this entire period, the Company maintained control over
ASMPT. In December 2000 1,785,000 shares were issued under the plan diluting
ASMIs ownership in ASMPT to 54.62% as of December 31, 2000. The 1,782,500
shares issued under the plan in 2001 have diluted ASMIs ownership in ASMPT to
54.36% as of December 31, 2001. In December 2001 the management of ASMPT has
determined that 1,800,000 common shares will be allocated to employees for
their services in the year 2001, which shares will be issued in the year 2002.
Total compensation expense related to the Employee Share Incentive Scheme of
ASMPT of respectively  5,463 in 1999,  2,773 in 2000 and  3,995 in 2001 was
charged to the Statement of Operations. The dilution in ownership has resulted
in a gain on the investment in ASMPT of  145 in 1999,  1,822 in 2000 and 
915 in 2001, which gain has been separately included in the Statement of
Operations. Due to the participation exemption in the Netherlands no deferred
income taxes have been provided for these gains.




NOTE LPension Plans

The Company has retirement plans covering substantially all employees. The
principal plans are defined contribution plans, except that of the Companys
Japanese operations, which is a defined benefit pension plan. The Company has
no major continuing obligations other than the payment of annual contributions.
Aggregate retirement plan contributions including those for the Japanese
operations were
 3,225 in 1999,  5,756 in 2000 and  7,215 in 2001.
Employees of the Companys Japanese operations terminating their employment are
generally entitled to a lump-sum severance payment or to pension plan benefits
based on years of service and certain other factors. Plan assets are held by a
life insurance company. There are no unrecognized prior service costs.

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




NOTE MCommitments and Contingencies

Capital leases included in property, plant and equipment are as follows:

|                              |  |              |      |      |  |  |       |  
|----------------------------- |  | ------------ | ---- | ---- |  |  | ----- | -
|                              |  | December 31,
|                              |  |             
|                              |  | 2000         |      | 2001
|                              |  |              |      |     
|Machinery and equipment       |  |              | 402  |      |  |  | 2,255 |  
|                             
|                             
|                             
|                             
|Furniture and fixtures        |  |              | 420  |      |  |  | 426   |  
|                             
|                              |  |              | 822  |      |  |  | 2,681 |  
|                             
|                             
|                             
|                             
|Less accumulated depreciation |  |              | (484 | )    |  |  | (904  | )
|                             
|                              |  |              | 338  |      |  |  | 1,777 |  
|                             

The Company leases certain office and plant facilities and equipment under
various operating lease arrangements. Original non-cancelable lease terms
typically are between 1 and 15 years.

F-17



---



##### Table of Contents



At December 31, 2001 minimum rental commitments under capital leases and
operating leases having initial or remaining non-cancelable terms in excess of
one year are as follows:

|                                            |  |         |       |           |  |  |        | 
|------------------------------------------- |  | ------- | ----- | --------- |  |  | ------ | 
|                                            |  | Capital |       | Operating
|                                            |  | Leases  |       | Leases   
|                                            |  |         |       |          
|2002                                        |  |         | 774   |           |  |  | 9,749  | 
|                                           
|                                           
|                                           
|                                           
|2003                                        |  |         | 666   |           |  |  | 7,571  | 
|                                           
|                                           
|                                           
|                                           
|2004                                        |  |         | 580   |           |  |  | 4,844  | 
|                                           
|                                           
|                                           
|                                           
|2005                                        |  |         | 195   |           |  |  | 3,334  | 
|                                           
|                                           
|                                           
|                                           
|2006                                        |  |         | 3     |           |  |  | 2,547  | 
|                                           
|                                           
|                                           
|                                           
|Thereafter                                  |  |         |      |           |  |  | 17,258 | 
|                                           
|Total                                       |  |         | 2,218 |           |  |  | 45,303 | 
|                                           
|                                           
|                                           
|                                           
|Less amount representing interest           |  |         | (43   | )         |  |  |        | 
|                                            |  |         |       |           |  |  |        | 
|Present value of net minimum lease payments |  |         | 2,175 |           |  |  |        | 
|                                           

Aggregate rental expense for operating leases in 1999 was  8,039, in 2000 
9,847 and in 2001  10,576.

At December 31, 2001 the Company had entered into purchase commitments with
suppliers in the amount of  58,289 for purchases within the next 12 months.
Commitments for capital expenditures at December 31, 2001 were  3,369.

Litigation and Environmental Matters

The Company is party to various legal proceedings generally 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 materially adverse effect
on the consolidated financial position of the Company but could materially
affect consolidated results of operations in a given year.

At present, we have been named as a counter-defendant in a patent infringement
litigation, which our subsidiary, ASM America, Inc. recently filed, the outcome
of which cannot be determined at present.

On June 6, 2001, ASM America, Inc. filed a lawsuit in the U.S. District Court
for the Northern District of California against Genus, Inc. alleging
infringement of two patents involving sequential chemical vapor deposition and
methods for growing thin films. On August 1, 2001, Genus filed an answer
denying the claims of patent infringement, and raising an affirmative defense
(among others) that the patents had been procured by inequitable conduct.
Genus also brought a counter-claim for a declaratory judgment that the patents
are invalid and not infringed, as well as an antitrust counterclaim alleging
that ASM America and ASMI have engaged in a pattern of conduct designed to
monopolize the alleged atomic layer deposition market. In addition, Genus
brought a counter-claim against ASM America and ASMI alleging infringement of
United States Patent No. 5,294,568 involving Method of Selective Etching of Native
Oxide. On January 9, 2002, in a procedural ruling, the court permitted ASM
America to bring an additional cause of action against Genus for infringement
of ASM Americas showerhead patent, United States Patent No. 4,798,165
(entitled Apparatus for Chemical Vapor Deposition Using an Axially Symmetric
Gas Flow). The court also severed and stayed the anti-trust claims and all
related discovery until after trial on the patents at issue. The case is
currently in the midst of discovery and exchange of disclosures under the
Northern District of California local patent rules. The patents at issue are
important to ASM America for the development and marketing of proprietary
atomic layer deposition equipment and processes. If the court should determine
that ASM Americas patents are invalid in whole or in part, ASM Americas
atomic layer deposition program could be materially adversely affected. Given
the stage of the proceedings, it is not possible to predict the outcome of the
claims and counter-claims at this time, or the range of potential recovery or
loss. ASMI and ASM America intend to pursue this lawsuit vigorously.




NOTE NFinancial Instruments and Risk Management

Derivatives

The Company uses forward exchange contracts to hedge certain operational cash
flow exposures resulting from changes in foreign currency exchange rates to
occur within the next 12 months. The Company enters into these foreign exchange
contracts to hedge anticipated sales or purchase transactions in the normal
course of business for which we have a firm commitment from a customer or

F-18



---



##### Table of Contents



to a supplier. The terms of these contracts are generally consistent with the
timing of the transactions being hedged. The Company does not use such
instruments for trading or speculative purposes. The Company records changes in
the fair value of the forward exchange contracts designated as a cash flow
hedge of forecasted transactions in accumulated other comprehensive income,
until the forecasted transaction occur. The gain or loss on the related cash
flow hedge will then be reclassified from accumulated other comprehensive
income to net sales or cost of sales on the Statement of Operations. If the
underlying transaction being hedged fails to occur, or if a portion of any
derivative is ineffective, the gain or loss is immediately recognized in
earnings under net interest and other financial income (expenses) on the
Statement of Operations.

Furthermore, the Company continues to hedge certain foreign currency
receivables and payables with forward exchange contracts, currency swaps and
debt borrowings in other currencies than the functional currency of the Company
or the subsidiary conducting the business to reduce the risk that earnings and
cash flow will be adversely effected by changes in foreign currency exchange
rates. These hedges are designated as fair value hedges, and the changes in the
fair value of the hedges are recorded immediately in earnings under net
interest and other financial income (expenses) on the Statement of Operations
to offset the changes in the fair value of the assets or liabilities being
hedged.

The outstanding currency forward exchange contracts are as follows

|                   |  |                     |   |                  |         |            |  |            |         |                   |  |                    |      |                   |  |  |      |             |  |  | 
|------------------ |  | ------------------- | - | ---------------- | ------- | ---------- |  | ---------- | ------- | ----------------- |  | ------------------ | ---- | ----------------- |  |  | ---- | ----------- |  |  | 
|                   |  |                     |   |                  |         |            |  |            |         |                   |  |                    |      |                   |  |  |      | Included in
|                   |  | Currency and        |   |                  |         |            |  |            |         |                   |  | Difference between |      | accumulated other
|                   |  | notional amount (in |   | Forward contract |         |            |  |            |         | forward value and |  | comprehensive     
|                   |  | thousands)          |   | value            |         | Fair value |  | fair value |         | income (loss)    
|                   |  |                     |   |                  |         |            |  |            |         |                  
|December 31, 2000: |  |                     |   |                  |         |            |  |            |         |                   |  |                    |      |                   |  |  |      |             |  | 
|                  
|                  
|                  
|                  
|Fair value hedges: |  |                     |   |                  |         |            |  |            |         |                   |  |                    |      |                   |  |  |      |             |  | 
|                  
|                  
|                  
|                  
|purchase           |  | US  $5,096          |   |                  | 5,495   |            |  |            | 5,761   |                   |  |                    | 266  |                   |  |  |     |            
|                  
|                  
|                  
|                  
|sale               |  | US$  (7,000         | ) |                  | (7,549  | )          |  |            | (7,141  | )                 |  |                    | (408 | )                 |  |  |     |            
|                  
|December 31, 2001: |  |                     |   |                  |         |            |  |            |         |                   |  |                    |      |                   |  |  |      |             |  | 
|                  
|                  
|                  
|                  
|Cash flow hedges:  |  |                     |   |                  |         |            |  |            |         |                   |  |                    |      |                   |  |  |      |             |  | 
|                  
|                  
|                  
|                  
|purchase           |  | US  $1,400          |   |                  | 1,580   |            |  |            | 1,600   |                   |  |                    | 20   |                   |  |  | 20   |            
|                  
|                  
|                  
|                  
|sale               |  | US$  (24,055        | ) |                  | (26,925 | )          |  |            | (27,396 | )                 |  |                    | (471 | )                 |  |  | (471 | )          
|                  
|                  
|                  
|                  
|Fair value hedges: |  |                     |   |                  |         |            |  |            |         |                   |  |                    |      |                   |  |  |      |             |  | 
|                  
|                  
|                  
|                  
|purchase           |  | US   $10,728        |   |                  | 11,769  |            |  |            | 12,230  |                   |  |                    | 461  |                   |  |  |     |            
|                  
|                  
|                  
|                  
|sale               |  | US$  (12,171        | ) |                  | (13,530 | )          |  |            | (13,844 | )                 |  |                    | (314 | )                 |  |  |     |            
|                  

The Company estimates that  451 of unrealized losses included in accumulated
other comprehensive income as of December 31, 2001 will be reclassified to net
earnings within the next 12 months upon completion of the underlying
transaction. As of December 31, 2000 no cash flow hedges were outstanding.
Hedge ineffectiveness had no impact for the year ended December 31, 2001.

Long-term Debt and Subordinated Debt

At December 31, 2001 we had convertible subordinated debt borrowings
outstanding of  130,728 at a fixed interest rate, maturing in November 2005,
 13,899 in long-term debt at fixed interest rates and  16,231 in other
borrowings with variable short-term interest rates. We are exposed to interest
rate risk primarily through our borrowing activities. We do not enter into
financial instrument transactions for trading or speculative purposes or to
manage interest rate exposure.

The fair value amounts of our long-term debt and convertible subordinated debt
are as follows:

|                                          |  |          |        |       |  |          |        |       |  |  |         |  |  |  |         | 
|----------------------------------------- |  | -------- | ------ | ----- |  | -------- | ------ | ----- |  |  | ------- |  |  |  | ------- | 
|                                          |  | 2000     |        | 2001 
|                                          |  |          |        |      
|                                          |  | Carrying |        | Fair  |  | Carrying |        | Fair 
|                                          |  | amount   |        | value |  | amount   |        | value
|                                          |  |          |        |       |  |          |        |      
|Long-term debt, including
current portion |  |          | 63,144 |       |  |          | 64,691 |       |  |  | 13,899  |  |  |  | 13,708  | 
|                                         
|                                         
|                                         
|                                         
|Convertible subordinated debt             |  |          |       |       |  |          |       |       |  |  | 130,728 |  |  |  | 137,608 | 
|                                         

F-19



---



##### Table of Contents



Methods and Assumptions Used in Estimating Fair Value Disclosure for Financial Instruments:

For cash and cash equivalents, marketable securities, accounts receivable,
notes payable to banks, accounts payable and accrued expenses, the carrying
amounts approximate fair value due to their short maturities.

For long-term debt, the estimated fair values of the Companys long-term debt
are based on current interest rates available to the Company for debt
instruments with similar terms and remaining maturities.

For forward exchange contracts market values based on external quotes from
banks have been used to determine the fair value.

Credit Risk

Credit risk represents the accounting loss that would be recognized at the
reporting date if counterparties failed completely to perform as contracted and
from movements in interest rates and foreign exchange rates. The Company does
not anticipate nonperformance by counterparties. The Company generally does not
require collateral or other security to support financial instruments with
credit risk. 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. Financial instruments on the balance
sheet that potentially subject the Company to concentrations of credit risk
consist primarily of cash and cash equivalents and accounts receivable. The
Company maintains a policy providing for the diversification of cash and cash
equivalent investments and places its investments in high quality financial
institutions to limit the amount of credit risk exposure. The Company derives
a significant percentage of its revenue from a small number of large customers.
Our largest customer accounted for approximately 7.2% of our net sales in 2001
and our ten largest customers accounted for approximately 35.5% of our net
sales in 2001. Sales to these large customers also may fluctuate significantly
from time to time depending on the timing and level of purchases from
the Company.
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, 2001 one customer accounted
for 10.5% of the outstanding balance in accounts receivable.




NOTE OResearch and Development

The Companys Netherlands, Finnish and Singapore operations receive research
and development grants and credits from various governmental sources. The
amount of research and development credits offset against research and
development expenses amounted to
 3,293,  2,167 and  5,609 in 1999, 2000
and 2001, respectively.

Some of the research and development grants received in the Netherlands are
contingently repayable to the extent the Company recognize sales of products to
which the credit is related. We do not recognize a liability on our balance
sheet in respect of these credits until we recognize sales of products to which
the credit relates, and is then charged to cost of sales when such sale is
recorded. These repayments vary and range from 1.0% to 4.0% of the realized
sales, depending on the products sold. The actual and contingent repayments
accrue at interest rates ranging from 5.0% to 8.0% per annum. The contingent
liability related to possible future repayments was  12,044 at December 31,
2000 and  10,124 at
December 31, 2001.

In 1999, 2000 and 2001 the Company made TOK repayments in the amount of 
1,411,  1,505 and  2,883, respectively.




NOTE PNet Interest and Other Financial Income (Expenses)

Net interest and other financial income (expenses) consists of the following:

|                                                   |  |                         |         |      |  |      |        |   |  |  |        |  
|-------------------------------------------------- |  | ----------------------- | ------- | ---- |  | ---- | ------ | - |  |  | ------ | -
|                                                   |  | Year ended December 31,
|                                                   |  |                        
|                                                   |  | 1999                    |         | 2000 |  | 2001
|                                                   |  |                         |         |      |  |     
|Interest income                                    |  |                         | 913     |      |  |      | 4,699  |   |  |  | 3,690  |  
|                                                  
|                                                  
|                                                  
|                                                  
|Interest expense                                   |  |                         | (13,210 | )    |  |      | (8,236 | ) |  |  | (5,031 | )
|                                                  
|                                                  
|                                                  
|                                                  
|Foreign currency transaction gains                 |  |                         | 3,689   |      |  |      | 1,942  |   |  |  | 357    |  
|                                                  
|Net interest and other financial
income (expenses) |  |                         | (8,608  | )    |  |      | (1,595 | ) |  |  | (984   | )
|                                                  

F-20



---



##### Table of Contents






NOTE QIncome Taxes

The components of earnings (loss) before income taxes, minority interest and
cumulative effect of change in accounting principle consist of:

|                |  |                         |         |      |  |      |         |   |  |  |        | 
|--------------- |  | ----------------------- | ------- | ---- |  | ---- | ------- | - |  |  | ------ | 
|                |  | Year
ended December 31,
|                |  |                        
|                |  | 1999                    |         | 2000 |  | 2001
|                |  |                         |         |      |  |     
|The Netherlands |  |                         | (11,159 | )    |  |      | (2,582  | ) |  |  | 3,958  | 
|               
|               
|               
|               
|Other countries |  |                         | 41,906  |      |  |      | 192,759 |   |  |  | 19,309 | 
|               
|                |  |                         | 30,747  |      |  |      | 190,177 |   |  |  | 23,267 | 
|               

The provisions for income taxes consist of:

|                           |                 |  |                         |      |      |  |         |         |   |  |        |        |  
|-------------------------- | --------------- |  | ----------------------- | ---- | ---- |  | ------- | ------- | - |  | ------ | ------ | -
|                           |                 |  | Year ended December 31,
|                           |                 |  |                        
|                           |                 |  | 1999                    |      | 2000 |  | 2001   
|                           |                 |  |                         |      |      |  |        
|Current:                   |                 |  |                         |      |      |  |         |         |   |  |        |       
|                          
|                          
|                          
|                          
|                           | The Netherlands |  |                         | (37  | )    |  |         |        |   |  |        |       |  
|                          
|                          
|                          
|                          
|                           | Other countries |  |                         | (968 | )    |  |         | (25,809 | ) |  |        | (3,760 | )
|                          
|                           |                 |  | (1,005                  | )    |      |  | (25,809 | )       |   |  | (3,760 | )     
|                          
|                          
|                          
|                          
|Deferred:                  |                 |  |                         |      |      |  |         |         |   |  |        |       
|                          
|                          
|                          
|                          
|                           | The Netherlands |  |                         |     |      |  |         |        |   |  |        |       |  
|                          
|                          
|                          
|                          
|                           | Other countries |  |                         | (269 | )    |  |         | 2,979   |   |  |        | (951   | )
|                          
|                           |                 |  | (269                    | )    |      |  | 2,979   |         |   |  | (951   | )     
|                          
|Provision for income taxes |                 |  | (1,274                  | )    |      |  | (22,830 | )       |   |  | (4,711 | )     
|                          

The provisions for income taxes as shown in the Consolidated Statements of
Operations differ from the amounts computed by applying the Netherlands
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
statutory Netherlands income tax rates is set forth below:

|                                                                                                        |  |                         |         |      |  |      |         |   |  |  |        |  
|------------------------------------------------------------------------------------------------------- |  | ----------------------- | ------- | ---- |  | ---- | ------- | - |  |  | ------ | -
|                                                                                                        |  | Year ended December 31,
|                                                                                                        |  |                        
|                                                                                                        |  | 1999                    |         | 2000 |  | 2001
|                                                                                                        |  |                         |         |      |  |     
|Earnings before income taxes, minority interest and
cumulative effect of change in accounting
principle |  |                         | 30,747  |      |  |      | 190,177 |   |  |  | 23,267 |  
|                                                                                                       
|                                                                                                       
|                                                                                                       
|                                                                                                       
|Netherlands statutory tax rate                                                                          |  |                         | 35.0    | %    |  |      | 35.0    | % |  |  | 35.0   | %
|                                                                                                       
|                                                                                                       
|                                                                                                       
|                                                                                                       
|Income tax provision at statutory rate                                                                  |  |                         | (10,761 | )    |  |      | (66,562 | ) |  |  | (8,143 | )
|                                                                                                       
|                                                                                                       
|                                                                                                       
|                                                                                                       
|Non-deductible expenses                                                                                 |  |                         | (1,126  | )    |  |      | (1,211  | ) |  |  | (1,391 | )
|                                                                                                       
|                                                                                                       
|                                                                                                       
|                                                                                                       
|Foreign taxes at a rate other than the Netherlands
statutory rate                                       |  |                         | 6,576   |      |  |      | 21,313  |   |  |  | 4,199  |  
|                                                                                                       
|                                                                                                       
|                                                                                                       
|                                                                                                       
|Valuation allowance                                                                                     |  |                         | (5,018  | )    |  |      | 98      |   |  |  | (2,923 | )
|                                                                                                       
|                                                                                                       
|                                                                                                       
|                                                                                                       
|Non-taxable income                                                                                      |  |                         | 8,215   |      |  |      | 24,875  |   |  |  | 4,214  |  
|                                                                                                       
|                                                                                                       
|                                                                                                       
|                                                                                                       
|Other                                                                                                   |  |                         | 840     |      |  |      | (1,343  | ) |  |  | (667   | )
|                                                                                                       
|Provision for income taxes                                                                              |  |                         | (1,274  | )    |  |      | (22,830 | ) |  |  | (4,711 | )
|                                                                                                       

Non-taxable income relates primarily to our Singapore operation where income is
non-taxable under a tax incentive scheme granted by the Singapore tax
authority. The original tax exemption applies to income for a period of 10
years ending on December 31, 2001. In 2001, the Singapore operation has
obtained tax incentives covering certain new products for a term of ten years
as from January 1, 2002.

F-21



---



##### Table of Contents



Deferred income taxes consist of the following:

|                          |                                  |  |              |        |      |  |         |        | 
|------------------------- | -------------------------------- |  | ------------ | ------ | ---- |  | ------- | ------ | 
|                          |                                  |  | December 31,
|                          |                                  |  |             
|                          |                                  |  | 2000         |        | 2001
|                          |                                  |  |              |        |     
|Deferred tax assets:      |                                  |  |              |        |      |  |         |       
|                         
|                         
|                         
|                         
|                          | Reserves and allowances          |  |              | 2,053  |      |  |         | 1,504  | 
|                         
|                         
|                         
|                         
|                          | Net operating loss carryforwards |  |              | 91,476 |      |  |         | 95,487 | 
|                         
|                         
|                         
|                         
|                          | Other                            |  |              | 1,571  |      |  |         | 703    | 
|                         
|Gross deferred tax assets |                                  |  | 95,100       |        |      |  | 97,694  |       
|                         
|                         
|                         
|                         
|Less: valuation allowance |                                  |  | (86,200      | )      |      |  | (90,596 | )     
|                         
|                         
|                         
|                         
|                         
|Net deferred tax assets   |                                  |  | 8,900        |        |      |  | 7,098   |       
|                         
|                         
|                         
|                         
|Deferred tax liabilities: |                                  |  |              |        |      |  |         |       
|                         
|                         
|                         
|                         
|                          | Depreciation                     |  |              | 5,523  |      |  |         | 5,097  | 
|                         
|                         
|                         
|                         
|                          | Research and development credits |  |              | 4,215  |      |  |         | 3,603  | 
|                         
|                         
|                         
|                         
|                          | Other                            |  |              |       |      |  |         | 375    | 
|                         
|Deferred tax liabilities  |                                  |  | 9,738        |        |      |  | 9,075   |       
|                         
|Net deferred income taxes |                                  |  | (838         | )      |      |  | (1,977  | )     
|                         

Deferred income taxes are classified in the balance sheet as non-current
deferred tax liabilities.

Based on tax filings, ASMI and its individual subsidiaries have net operating
losses available at December 31, 2001, of 279,959 for tax return purposes to
reduce future income taxes, mainly in Europe and the United States. ASMI
believes that realization of its net deferred tax assets is dependent on the
ability of ASMI to generate taxable profits in the future. Given the volatile
nature of the semiconductor equipment industry, past experience, and the tax
jurisdictions where ASMI has net operating loss carryforwards, ASMI believes
that there is currently insufficient evidence to substantiate recognition of
substantially all net deferred tax assets with respect to net operating loss
carryforwards in the financial statements. Accordingly, a valuation reserve of
 86,200 in 2000 and  90,596 in 2001 has been recorded.

The amounts and expiration dates of net operating loss carryforwards for tax purposes are as follows:

|                                 |  |                   |         | 
|-------------------------------- |  | ----------------- | ------- | 
|Expiration year                  |  | December
31, 2001
|                                 |  |                  
|2002                             |  |                   | 8,236   | 
|                                
|                                
|                                
|                                
|2003                             |  |                   | 6,183   | 
|                                
|                                
|                                
|                                
|2004                             |  |                   | 9,360   | 
|                                
|                                
|                                
|                                
|2005                             |  |                   | 641     | 
|                                
|                                
|                                
|                                
|2007                             |  |                   | 1,551   | 
|                                
|                                
|                                
|                                
|2009                             |  |                   | 1,746   | 
|                                
|                                
|                                
|                                
|2017                             |  |                   | 84,067  | 
|                                
|                                
|                                
|                                
|2018                             |  |                   | 8,405   | 
|                                
|                                
|                                
|                                
|2019                             |  |                   | 181     | 
|                                
|                                
|                                
|                                
|2020                             |  |                   | 5,526   | 
|                                
|                                
|                                
|                                
|Unlimited                        |  |                   | 154,063 | 
|                                
|Net operating loss carryforwards |  |                   | 279,959 | 
|                                

The Company has not provided for deferred foreign withholding taxes, if
any, on undistributed earnings of its foreign subsidiaries, because it
considers such earnings to be indefinitely reinvested in those subsidiaries. At
December 31, 2001 undistributed earnings of subsidiaries, subject to
withholding taxes, were approximately  21,020. These earnings could become
subject to foreign withholding taxes if they were remitted as dividends or if
the Company should sell its interest in the subsidiaries. However, the Company
believes that Netherlands tax credits would largely eliminate any foreign
withholding tax that might otherwise be due.

F-22



---



##### Table of Contents






NOTE REarnings per Share

The following represents a reconciliation of net earnings and weighted average
number of shares outstanding (in thousands) for purposes of calculating basic
and diluted net earnings per share:

|                                                                                                                                |         |  |                        |      |      |  |        |      |  |  |        |      | 
|------------------------------------------------------------------------------------------------------------------------------- | ------- |  | ---------------------- | ---- | ---- |  | ------ | ---- |  |  | ------ | ---- | 
|                                                                                                                                |         |  | Year ended December 31
|                                                                                                                                |         |  |                       
|                                                                                                                                |         |  | 1999                   |      | 2000 |  | 2001  
|                                                                                                                                |         |  |                        |      |      |  |       
|Net earnings used for purpose of computing basic
earnings per share                                                             |         |  | 11,099                 |      |      |  | 94,272 |      |  |  | 6,098  |     
|                                                                                                                               
|                                                                                                                               
|                                                                                                                               
|                                                                                                                               
|After-tax equivalent of interest expense on
convertible
notes and exercisable warrants                                          |         |  | 565                    |      |      |  | 430    |      |  |  | -      |     
|                                                                                                                               
|Net earnings used for purposes of computing diluted
net earnings per share                                                      |         |  | 11,664                 |      |      |  | 94,702 |      |  |  | 6,098  |     
|                                                                                                                               
|Basic weighted average number of shares outstanding
at the end of period used for purpose of computing
basic earnings per share |         |  | 37,301                 |      |      |  | 46,810 |      |  |  | 48,944 |     
|                                                                                                                               
|                                                                                                                               
|                                                                                                                               
|                                                                                                                               
|Dilutive effect of stock options                                                                                                |         |  | 934                    |      |      |  | 1,112  |      |  |  | 922    |     
|                                                                                                                               
|                                                                                                                               
|                                                                                                                               
|                                                                                                                               
|Dilutive effect of convertible notes and exercisable
warrants                                                                   |         |  | 2,429                  |      |      |  | 781    |      |  |  | 92     |     
|                                                                                                                               
|Dilutive weighted average number of shares
outstanding                                                                          |         |  | 40,664                 |      |      |  | 48,703 |      |  |  | 49,958 |     
|                                                                                                                               
|Net
earnings per share:                                                                                                         |         |  |                        |      |      |  |        |      |  |  |        |     
|                                                                                                                                | Basic   |  |                        | 0.30 |      |  |        | 2.01 |  |  |        | 0.12 | 
|                                                                                                                               
|                                                                                                                               
|                                                                                                                               
|                                                                                                                               
|                                                                                                                                | Diluted |  |                        | 0.29 |      |  |        | 1.94 |  |  |        | 0.12 | 
|                                                                                                                               




NOTE SDisclosures about Segments and Related Information

The Company organizes its activities in two operating segments, Front-end and
Back-end.

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.

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 majority of 54.36% interest, whilst the remaining shares
are listed on the Stock Exchange of Hong Kong. The segments main operations
are located in Hong Kong, Singapore, the Peoples Republic of China and
Malaysia.

F-23



---



##### Table of Contents



|                                                                        |  |           |         |          |  |       |         |   |  |  |         |  
|----------------------------------------------------------------------- |  | --------- | ------- | -------- |  | ----- | ------- | - |  |  | ------- | -
|                                                                        |  | Front-end |         | Back-end |  | Total
|                                                                        |  |           |         |          |  |      
|Year
ended 31 December, 1999                                           
|Net sales to unaffiliated customers                                     |  |           | 181,737 |          |  |       | 232,758 |   |  |  | 414,495 |  
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|Earnings (loss) from operations                                         |  |           | (805    | )        |  |       | 40,160  |   |  |  | 39,355  |  
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|Net interest and other financial income (expenses)                      |  |           | (6,841  | )        |  |       | (1,767  | ) |  |  | (8,608  | )
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|Income tax                                                              |  |           | (141    | )        |  |       | (1,133  | ) |  |  | (1,274  | )
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|Gain on dilution of investment in subsidiary                            |  |           | 145     |          |  |       |        |   |  |  | 145     |  
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|Minority interest                                                       |  |           |        |          |  |       | (18,519 | ) |  |  | (18,519 | )
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|Net earnings (loss)                                                     |  |           | (7,642  | )        |  |       | 18,741  |   |  |  | 11,099  |  
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|Capital expenditures                                                    |  |           | 8,996   |          |  |       | 21,591  |   |  |  | 30,587  |  
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|Depreciation and amortization                                           |  |           | 8,964   |          |  |       | 15,523  |   |  |  | 24,487  |  
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|Total assets                                                            |  |           | 182,268 |          |  |       | 242,767 |   |  |  | 425,035 |  
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|Short-term debt                                                         |  |           | 88,953  |          |  |       | 22,943  |   |  |  | 111,896 |  
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|Long-term debt                                                          |  |           | 7,997   |          |  |       |        |   |  |  | 7,997   |  
|                                                                       
|Year
ended 31 December, 2000                                           
|Net sales to unaffiliated customers                                     |  |           | 379,283 |          |  |       | 555,929 |   |  |  | 935,212 |  
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|Earnings from operations                                                |  |           | 34,520  |          |  |       | 157,252 |   |  |  | 191,772 |  
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|Net interest and other financial income (expenses)                      |  |           | (5,560  | )        |  |       | 3,965   |   |  |  | (1,595  | )
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|Income tax                                                              |  |           | (12,176 | )        |  |       | (10,654 | ) |  |  | (22,830 | )
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|Gain on dilution of investment in subsidiary                            |  |           | 1,822   |          |  |       |        |   |  |  | 1,822   |  
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|Minority interest                                                       |  |           |        |          |  |       | (71,107 | ) |  |  | (71,107 | )
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|Net earnings before cumulative effect of change in
accounting principle |  |           | 18,606  |          |  |       | 79,456  |   |  |  | 98,062  |  
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|Capital expenditures                                                    |  |           | 48,018  |          |  |       | 23,348  |   |  |  | 71,366  |  
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|Depreciation and amortization                                           |  |           | 17,850  |          |  |       | 34,373  |   |  |  | 52,223  |  
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|Total assets                                                            |  |           | 376,852 |          |  |       | 401,088 |   |  |  | 777,940 |  
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|Short-term debt                                                         |  |           | 44,616  |          |  |       | 4       |   |  |  | 44,620  |  
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|Long-term debt                                                          |  |           | 31,660  |          |  |       |        |   |  |  | 31,660  |  
|                                                                       
|Year
ended 31 December, 2001                                           
|Net sales to unaffiliated customers                                     |  |           | 336,625 |          |  |       | 224,439 |   |  |  | 561,064 |  
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|Earnings
(loss) from operations                                         |  |           | (3,771  | )        |  |       | 28,022  |   |  |  | 24,251  |  
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|Net interest and other financial income (expenses)                      |  |           | (4,983  | )        |  |       | 3,999   |   |  |  | (984    | )
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|Income tax                                                              |  |           | (2,156  | )        |  |       | (2,555  | ) |  |  | (4,711  | )
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|Gain on dilution of investment in subsidiary                            |  |           | 915     |          |  |       |        |   |  |  | 915     |  
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|Minority interest                                                       |  |           |        |          |  |       | (13,373 | ) |  |  | (13,373 | )
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|Net earnings (loss)                                                     |  |           | (9,995  | )        |  |       | 16,093  |   |  |  | 6,098   |  
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|Capital expenditures                                                    |  |           | 49,691  |          |  |       | 21,872  |   |  |  | 71,563  |  
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|Depreciation and amortization                                           |  |           | 20,894  |          |  |       | 21,869  |   |  |  | 42,763  |  
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|Total assets                                                            |  |           | 441,165 |          |  |       | 315,900 |   |  |  | 757,065 |  
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|Short-term debt                                                         |  |           | 14,259  |          |  |       | 4,151   |   |  |  | 18,410  |  
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|Long-term debt                                                          |  |           | 142,448 |          |  |       |        |   |  |  | 142,448 |  
|                                                                       

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 identical 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.

F-24



---



##### Table of Contents



Segmentation of the business by geographic area, in which the Company has
operating units, in sales to unaffiliated customers and fixed assets is
summarized as follows:

|                                    |  |        |         |               |  |          |         |       |  |           |         |              |  |  |         |  |  |  |        |  |  |  |         | 
|----------------------------------- |  | ------ | ------- | ------------- |  | -------- | ------- | ----- |  | --------- | ------- | ------------ |  |  | ------- |  |  |  | ------ |  |  |  | ------- | 
|                                    |  | Europe |         | United States |  | Far East |         | Japan |  | Corporate |         | Consolidated
|Year ended December 31, 1999       
|Net sales to unaffiliated
customers |  |        | 49,299  |               |  |          | 55,650  |       |  |           | 231,471 |              |  |  | 78,075  |  |  |  |       |  |  |  | 414,495 | 
|                                   
|                                   
|                                   
|                                   
|Fixed assets                        |  |        | 8,345   |               |  |          | 9,230   |       |  |           | 87,048  |              |  |  | 20,370  |  |  |  | 7,941  |  |  |  | 132,934 | 
|                                   
|Year ended December 31, 2000        |  |        |         |               |  |          |         |       |  |           |         |              |  |  |         |  |  |  |        |  |  |  |         | 
|                                   
|                                   
|                                   
|                                   
|Net sales to unaffiliated
customers |  |        | 91,737  |               |  |          | 126,371 |       |  |           | 554,509 |              |  |  | 162,595 |  |  |  |       |  |  |  | 935,212 | 
|                                   
|                                   
|                                   
|                                   
|Fixed assets                        |  |        | 9,988   |               |  |          | 9,821   |       |  |           | 106,715 |              |  |  | 23,657  |  |  |  | 70,500 |  |  |  | 220,681 | 
|                                   
|Year ended December 31, 2001        |  |        |         |               |  |          |         |       |  |           |         |              |  |  |         |  |  |  |        |  |  |  |         | 
|                                   
|                                   
|                                   
|                                   
|Net sales to unaffiliated
customers |  |        | 123,365 |               |  |          | 120,263 |       |  |           | 221,494 |              |  |  | 95,942  |  |  |  |       |  |  |  | 561,064 | 
|                                   
|                                   
|                                   
|                                   
|Fixed assets                        |  |        | 21,512  |               |  |          | 29,504  |       |  |           | 110,763 |              |  |  | 27,408  |  |  |  | 92,441 |  |  |  | 281,628 | 
|                                   

In 2001 one single customer accounted for 7.2% of the total net sales. In 2000
one single customer accounted for 14.2% of total net sales. In 1999 one single
customer accounted for 11.0 % of total net sales.




NOTE TSelected Operating Expenses and Additional Information

Aggregate cash compensation paid or accrued by ASMI for the Management Board of
the Company was  1,366 in 1999,  1,925 in 2000 and  2,154 in 2001. Aggregate
compensation for the members of the Supervisory Board amounted to  59 in 1999,
 61 in 2000 and  68 in 2001.

Personnel expenses for employees were as follows:

|                                   |  |                         |         |      |  |      |         |  |  |  |         | 
|---------------------------------- |  | ----------------------- | ------- | ---- |  | ---- | ------- |  |  |  | ------- | 
|                                   |  | Year ended December 31,
|                                   |  |                        
|                                   |  | 1999                    |         | 2000 |  | 2001
|                                   |  |                         |         |      |  |     
|Wages, salaries and social charges |  |                         | 105,137 |      |  |      | 178,427 |  |  |  | 151,902 | 
|                                  
|                                  
|                                  
|                                  
|Pensions                           |  |                         | 3,225   |      |  |      | 5,756   |  |  |  | 7,215   | 
|                                  
|                                  
|                                  
|                                  
|                                  
|                                   |  |                         | 108,362 |      |  |      | 184,183 |  |  |  | 159,117 | 
|                                  

The average number of employees, exclusive of temporary workers, by geographic
area during the year was as follows:

|                         |  |                         |       |      |  |      |       |  |  |  |       | 
|------------------------ |  | ----------------------- | ----- | ---- |  | ---- | ----- |  |  |  | ----- | 
|                         |  | Year ended December 31,
|                         |  |                        
|                         |  | 1999                    |       | 2000 |  | 2001
|                         |  |                         |       |      |  |     
|The Netherlands          |  |                         | 226   |      |  |      | 284   |  |  |  | 355   | 
|                        
|                        
|                        
|                        
|Other European countries |  |                         | 53    |      |  |      | 103   |  |  |  | 146   | 
|                        
|                        
|                        
|                        
|United States of America |  |                         | 254   |      |  |      | 279   |  |  |  | 343   | 
|                        
|                        
|                        
|                        
|Far East                 |  |                         | 4,026 |      |  |      | 5,622 |  |  |  | 5,558 | 
|                        
|                        
|                        
|                        
|Japan                    |  |                         | 180   |      |  |      | 203   |  |  |  | 223   | 
|                        
|                        
|                        
|                        
|                        
|                         |  |                         | 4,739 |      |  |      | 6,491 |  |  |  | 6,625 | 
|                        




NOTE URelated Party Transactions

In December 1999, the Company acquired 24.0% of the outstanding equity of
NanoPhotonics AG, a German supplier of precision metrology equipment, for 
407, and our Chief Executive Officer also purchased a 44.5% interest in
NanoPhotonics AG. The Company has a five-year option to purchase the 44.5%
interest from our Chief Executive Officer at the same price he paid for his
interest in the initial transaction. At December 31, 2000 and December 31,
2001, the Company has provided NanoPhotonics with additional financing of 
372 and  1,176, respectively. In 2000 and 2001 the Company purchased equipment
and materials from NanoPhotonics in the amount of  150 and  700,
respectively.

In December 1997, the Company loaned its Chief
Operating Officer Front-end
operations  227 at an average interest rate for 2001 of 4.2%. This
interest-bearing loan is outstanding at December 31, 2001 and is repayable upon
the exercise of stock options.

F-25



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##### Table of Contents



In March 2000, the Company made an interest-bearing loan of  2,175 to its
Chief Executive Officer in connection with the exercise of stock options at an
average interest rate for 2001 of 5.4%. The loan is outstanding at December 31,
2001 and is secured by the shares received in the stock option exercise. The
Company has custody of the shares until the loan is repaid.

The Chairman of the Supervisory Board, Mr. van den Hoek is a partner in the
European law firm of Stibbe. Another partner at Stibbe serves as the Companys
general legal counsel. Mr. van den Hoek has been with Stibbe since 1965. Mr.
van den Hoek also serves on the boards of directors of various European
companies.

In October 2001, the Company entered into a strategic alliance with and made a
15.4% equity investment of
 20,278 in NuTool, Inc., a privately held
semiconductor technology company located in Milpitas, California. The purchase
price of the investment was determined amongst others by reference to prices
paid by other recent strategic investors. NuTool, Inc. provides innovative copper
deposition technologies to the semiconductor industry. Its patented
electrochemical mechanical deposition technology offers new process solutions
for copper deposition and planarization, providing significant savings in
integrated circuit manufacturing and enabling new integrated circuit designs
and new process technologies. The strategic alliance with NuTool, Inc. provides us
with more competitive solutions to address the industrys transition to copper
metalization. The Company has a seat in the Board of NuTool, Inc. No other
transactions occurred in 2001.

F-26



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##### Table of Contents



Exhibit Index

|               |  |                                                                                                                       |  |                                                                     |  |                  |  | 
|-------------- |  | --------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------- |  | ---------------- |  | 
|Exhibit Number |  | Description                                                                                                           |  | Incorporated by Reference to:                                       |  | Included Herein:
|               |  |                                                                                                                       |  |                                                                     |  |                 
|1.1            |  | English translation of ASM
International N.V.s Compiled
Articles of Association, as
amended                          |  | Exhibit 3.1 to Registrants
6-K filed on November 6,
2001          
|              
|              
|              
|              
|               |  |                                                                                                                       |  |                                                                    
|              
|              
|              
|              
|4.1            |  | 1994 Stock Option Plan                                                                                                |  | Exhibit 99.1 to the
Registrants S-8 filed
October 25, 1999        
|              
|              
|              
|              
|               |  |                                                                                                                       |  |                                                                    
|              
|              
|              
|              
|4.2            |  | Debenture Purchase Agreement Part 1                                                                                   |  | Exhibit 4.2 to the
Registrants Form F-3 filed
on December 13, 1999
|              
|              
|              
|              
|               |  |                                                                                                                       |  |                                                                    
|              
|              
|              
|              
|4.3            |  | Debenture Purchase Agreement Part 2                                                                                   |  | Exhibit 4.2 to the
Registrants Form F-3 filed
on December 13, 1999
|              
|              
|              
|              
|               |  |                                                                                                                       |  |                                                                    
|              
|              
|              
|              
|4.4            |  | Zero Coupon Debenture                                                                                                 |  | Exhibit 4.3 to the
Registrants Form F-3 filed
on December 13, 1999
|              
|              
|              
|              
|               |  |                                                                                                                       |  |                                                                    
|              
|              
|              
|              
|4.5            |  | Common Stock Purchase Warrant                                                                                         |  | Exhibit 4.4 to the
Registrants Form F-3 filed
on December 13, 1999
|              
|              
|              
|              
|               |  |                                                                                                                       |  |                                                                    
|              
|              
|              
|              
|4.6            |  | Supplemental Common Stock Purchase
Warrant                                                                            |  | Exhibit 4.5 to the
Registrants Form F-3 filed
on December 13, 1999
|              
|              
|              
|              
|               |  |                                                                                                                       |  |                                                                    
|              
|              
|              
|              
|4.7            |  | Registration Rights Agreement                                                                                         |  | Exhibit 4.6 to the
Registrants Form F-3 filed
on December 13, 1999
|              
|              
|              
|              
|               |  |                                                                                                                       |  |                                                                    
|              
|              
|              
|              
|4.8            |  | Equity Line Financing Agreement
between ASM International N.V. and
Canadian Imperial Holdings Inc.
dated July 6, 2000 |  | Exhibit 23.1 to Registrants
6-K filed on September 6,
2000        
|              
|              
|              
|              
|               |  |                                                                                                                       |  |                                                                    
|              
|              
|              
|              
|4.9            |  | Amendment No. 1 to the Equity Line
Agreement between ASM
International N.V. and Canadian
Imperial Holdings Inc.       |  | Exhibit 4.9 to Registrants
20-F filed on March 9, 2001            



---



##### Table of Contents



|               |  |                                                                                                                                                                                  |  |                                                                 |  |                  |  | 
|-------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------- |  | ---------------- |  | 
|Exhibit Number |  | Description                                                                                                                                                                      |  | Incorporated by Reference to:                                   |  | Included Herein:
|               |  |                                                                                                                                                                                  |  |                                                                 |  |                 
|              
|              
|              
|              
|4.10           |  | Credit Agreement among ASM
International N.V., Canadian
Imperial Bank of Commerce and
Advanced Semiconductor Materials
(Netherlands Antilles) N.V. dated
July 6, 2000            |  | Exhibit 23.2 to Registrants
6-K filed on September 6,
2000    
|              
|              
|              
|              
|               |  |                                                                                                                                                                                  |  |                                                                
|              
|              
|              
|              
|4.11           |  | Amendment No. 1 to the Credit
Agreement among ASM International
N.V. and Canadian Imperial Bank of
Commerce, Advanced Semiconductor
Materials (Netherlands Antilles)
N.V.        |  | Exhibit 4.11 to Registrants
20-F filed on March 9, 2001       
|              
|              
|              
|              
|               |  |                                                                                                                                                                                  |  |                                                                
|              
|              
|              
|              
|4.12           |  | Registration Rights Agreement
between ASM International N.V. and
Canadian Imperial Holdings Inc.
dated July 6, 2000                                                              |  | Exhibit 23.3 to Registrants
6-K filed on September 6,
2000    
|              
|              
|              
|              
|               |  |                                                                                                                                                                                  |  |                                                                
|              
|              
|              
|              
|4.13           |  | Amendment No. 1 to the
Registration Rights Agreement
between ASM International N.V. and
Canadian Imperial Holdings Inc.                                                          |  | Exhibit 4.13 to Registrants
20-F filed on March 9, 2001       
|              
|              
|              
|              
|               |  |                                                                                                                                                                                  |  |                                                                
|              
|              
|              
|              
|4.14           |  | Security Agreement among ASM
International N.V., Advanced
Semiconductor Materials
(Netherlands Antilles), N.V. and
Canadian Imperial Bank of Commerce
dated July 6, 2000         |  | Exhibit 23.4 to the
Registrants 6-K filed on
September 6, 2000
|              
|              
|              
|              
|               |  |                                                                                                                                                                                  |  |                                                                
|              
|              
|              
|              
|4.15           |  | Supplement No. 1 to the Security
Agreement between ASM
International N.V. , Advanced
Semiconductor Materials
(Netherlands Antilles), N.V. and
Canadian Imperial Bank of Commerce |  | Exhibit 4.15 of Registrants
20-F filed on March 9, 2001       
|              
|10.1           |  | Auditors Consent                                                                                                                                                                |  |                                                                 |  | X