Note 31. Reconciliation of IFRS to US GAAP
Since ASMI's initial listing on Nasdaq, ASMI has followed accounting principles generally accepted in the United States of America ('US GAAP'), both for internal as well as external purposes.
ASMI's annual report on Form 20-F, which is based on US GAAP, may contain additional information next to its Statutory annual report. The Annual report on Form 20-F, the US GAAP quarterly press releases, the Statutory interim report and the Statutory annual report are available on the Company's website (www.asm.com). For the periods presented in this Statutory annual report, the main differences between IFRS and US GAAP for ASMI relate to the following:
|Year ended December 31,|
|Net earnings allocated to the parent of the Company in accordance with IFRS||1,062,675||141,317|
|GAAP differences investments||–||(781)|
|Debt issuance fees||(459)||960|
|Net earnings allocated to the parent of the Company in accordance with US GAAP||1,051,893||137,308|
|Shareholders' equity in accordance with IFRS||1,495,641||1,742,906|
|GAAP differences investments||–||(851)|
|Debt issuance fees||276||1,236|
|Shareholders' equity bin accordance with US GAAP||1,447,249||1,690,200|
IFRS 1 First time adoption of IFRS includes a transition option to apply IFRS 3 prospectively from the transition date (January 1, 2004). ASMI has elected to apply this option and accordingly, all accounting under Dutch GAAP for business combinations prior to January 1, 2004 is fixed at the transition date and the corresponding value of goodwill is fixed as well. As a result of amortization of goodwill under Dutch GAAP prior to January 1, 2004, the value of goodwill under IFRS as of January 1, 2004 is lower when compared to the value of goodwill under US GAAP as of January 1, 2004. Since the difference relates to non-euro denominated acquisitions, this difference will fluctuate over time with currency rate fluctuations. In addition, IFRS requires the inclusion of contingent consideration in the cost of acquisition if it is probable and can be estimated reliably, while under US GAAP, contingent consideration is generally excluded from the cost of acquisition until the contingency is resolved. As a result of the sale of the 12% share in ASMPT the difference in goodwill between US GAAP and IFRS was released.
Under US GAAP a write-down of inventory to market is not reversed for subsequent recoveries in value. IAS 2 requires a reversal of the write-down if the net realizable value of an item subsequently increases.
GAAP differences investments
Under US GAAP, the elimination of unrealized net income from intercompany transactions that are eliminated from the carrying amount of assets in consolidation give rise to a temporary difference for which prepaid taxes must be recognized in consolidation. Under US GAAP the prepaid taxes are calculated based on the tax rate applicable in the sellers' jurisdiction. Contrary to US GAAP, the deferred taxes under IFRS are calculated based on the tax rate applicable in the purchaser's tax jurisdiction.
Debt issuance fees
Under US GAAP debt issuance fees related to a credit facility are capitalized and amortized during the economic life of the facility. Under IFRS such debt issuance fees are recognized as expenses when incurred.
IAS 38 Intangible assets requires capitalization of development expenses if, and only if, an entity can demonstrate all of the following:
- the technical feasibility of completing the intangible asset so that it will be available for use or sale;
- its intention to complete the intangible asset and use or sell it;
- its ability to use or sell the intangible asset;
- how the intangible asset will generate probable future economic benefits;
- the availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and
- its ability to measure the expenditure attributable to the intangible asset during its development reliably.
From 2005 onwards ASMI capitalizes development expenses that meet the above-mentioned criteria in its Consolidated financial statements prepared in accordance with IFRS. US GAAP prohibits capitalization of research and development costs.
Under US GAAP, ASMI applies ASC 715, Employers' accounting for defined benefit pension and other post retirement plans - an amendment of SFAS No. 87, 88, 106, and 132(R). Accordingly, the Company recognizes in its Consolidated balance sheet an asset or a liability for the plan's overfunded status or underfunded status respectively. IAS 19 Employee benefits does not require recognition of a plan's overfunded status or underfunded status. In accordance with IAS 19R, the Company recognizes a plan's net assets or liabilities, taking into account unrecognized actuarial losses and transition amounts.