ASML Holding N.V. (ASML) today publishes 2013 first-quarter results.

  • Q1 2013 gross margin within guidance, sales ahead of guidance
  • ASML reiterates expectation for full-year 2013 sales at a level similar to that of 2012
  • ASML announces share buy-back program of up to EUR 1 billion until end-2014
  • ASML leadership succession within the Board of Management
      Q1 2013       Q4 2012    
Net sales 892 1,023
...of which service and field option sales 215 257
Other income (from CCIP) 14
New systems sold (units) 25 25
Used systems sold (units) 4 9
 
Net bookings, excluding EUV 715 667
Net bookings, excluding EUV (units) 25 32
ASP of booked systems, excluding EUV 28.6 20.9
Systems backlog, excluding EUV 1,266 1,214
Systems backlog, excluding EUV (units) 42 46
Gross margin 38.2 41.1
 
End-quarter cash and cash equivalents and short-term investments 2,620 2,698
Net income 96 298
EPS (in euro)       0.24       0.66
(Figures in millions of euros unless otherwise indicated)

CEO Statement

"We achieved first quarter sales ahead of and gross margin in line with our guidance, and reiterate our expectation for a sales acceleration during the year, with a second quarter markedly stronger than the first quarter and a large second half, leading to expected 2013 full year net sales at a similar level to that of 2012. The underlying assumptions are unchanged, with foundry and logic preparing for very lithography-intensive 14-20 nm technology nodes to be used for next generation mobile end-products; while lithography investments in memory are still muted, memory chip price recovery and discussions on scanner shipment capability are signs of potential upside for second half deliveries. EUV technology industrialization continues to make steady progress on the trajectory set with the introduction of the improved source concept last year: firstly, the EUV light sources have now been demonstrated at 55 Watts with adequate dose control; secondly, the scanners themselves have demonstrated production-worthy, 10 nm node compatible imaging and overlay specifications. We therefore confirm our expectation of the ramp of EUV-enabled semiconductor production in 2015, supported by our NXE:3300B scanners, two of which are being prepared for shipment and installation in Q2 and Q3," said Eric Meurice, President and Chief Executive Officer of ASML.

First-Quarter 2013 Product Highlights

  • We shipped five TWINSCAN NXT:1960Bi systems in the quarter, the successor to our TWINSCAN NXT:1950i system. The NXT:1960Bi offers a 20 percent improvement of overlay and focus control as well as a 30 percent improvement in CD uniformity, which will support manufacturing at the 14-20 nm logic node.
  • As part of our Holistic Lithography portfolio, we released an EUV option for our Brion Tachyon Source Mask Optimization product and upgraded our EUV scanner and process modeling capabilities to more accurately simulate all aspects of EUV lithography.
  • We expanded our production facility for YieldStar metrology tools at the ASML Center of Excellence (ACE) in Taiwan to support production of up to 150 units per year. The YieldStar is a scatterometry-based metrology tool that measures overlay, focus, CD and sidewall angle with one sensor.
  • Imaging of the NXE:3300B has improved to 13 nm in a single exposure, and it has also shown to be capable of 9 nm resolution using spacer double patterning technology, which has taken optical litography imaging resolution below 10 nm.
  • We are preparing the shipments and installations of the first two NXE:3300B EUV systems, which will happen in Q2 and Q3. These systems will be used by customers to validate EUV lithography in preparation for its adoption in high-volume manufacturing. We will continue to develop the NXE:3300 to achieve the source power and throughput required.
  • Progress towards an NXE:3300B EUV light source that is powerful enough for high-volume manufacturing has been encouraging: the EUV source performs at up to 55 watts, corresponding to a NXE:3300B throughput of 43 wafers per hour, a substantial improvement from the 40 Watts we reported three months ago.
  • We have received commitments for 7 NXE:3300B systems, in addition to the existing 11 system orders, and expect more with continued source power progress.
  • Supported by our Customer Co-Investment Program, we have completed the concepts of our 450 mm architecture for use in EUV and immersion versions, so as to deliver prototypes by 2015, compatible for a 2018 production ramp, if confirmed by the industry in time.

Outlook

  • For the second quarter of 2013, ASML expects net sales of about EUR 1.1 billion, a gross margin of between 41 and 42 percent, R&D costs of EUR 187 million, other income of EUR 16 million -- which consists of contributions from participants of the Customer Co-Investment Program -- and SG&A costs of EUR 63 million, including EUR 6 million in expenses related to the pending Cymer acquisition.
  • ASML reiterates expectation for full-year 2013 sales at a level similar to that of 2012
  • We continue to expect the previously announced acquisition of Cymer to close in the first half, following the recent clearance by the Antitrust Division of the United States Department of Justice and other regulators as well as the approval of the merger agreement by the Cymer shareholders. Competition authorities in South Korea and Japan are the two remaining jurisdictions considering the merger.

ASML leadership succession within the Board of Management

ASML's Supervisory Board is pleased to announce it has decided upon the new leadership of the company, as the contract of Eric Meurice, President and Chief Executive Officer, ends next year. As of 1 July 2013, ASML's leadership will be comprised as follows:

  • Peter Wennink will be President and Chief Executive Officer.
  • Martin van den Brink will be President and Chief Technology Officer.
  • Frits van Hout and Frederic Schneider-Maunoury will continue as Executive Vice Presidents in the Board of Management.
  • Eric Meurice will be Chairman of ASML Holding and act as adviser to the new leadership and the Supervisory Board until the end of his contract on 31 March 2014, ensuring a smooth and comprehensive transition of critical tasks and processes, customer contacts and relations with strategic suppliers. Eric Meurice took office as CEO and President on 1 October 2004 and is currently on his third term.
  • Peter Wennink will act as interim Chief Financial Officer until a successor has been appointed.

"Following a thorough and diligent process where internal and external succession were considered, the Supervisory Board is pleased to announce a leadership succession from within the company to ensure continuity and a smooth transition which were deemed a priority. Under Eric's leadership our company has doubled sales and the number of employees, while profitability, share price and market position have improved strongly. He has also provided the framework for ASML's further growth and knowledge creation. On behalf of all ASML stakeholders I thank him for his direction, focus and dedication," said Supervisory Board Chairman Arthur van der Poel.

Peter Wennink joined ASML as Executive Vice President, Chief Financial Officer and member of the Board of Management of ASML in 1999. Prior to his employment with ASML, he worked as a partner at Deloitte Accountants, specializing in the high technology industry with an emphasis on the semiconductor equipment industry. His accomplishments at ASML include the company's strong track record of financial flexibility and resilience in a volatile semiconductor market, thus enabling ASML's investments for technology leadership.

Martin van den Brink joined ASML when the company was founded in early 1984 and held several positions in engineering. As Vice President Technology since 1995 and Executive Vice President and member of the Board of Management since 1999 - currently as Chief Product & Technology Officer - he has led ASML's product and technology development to breakthrough innovations such as the Twinscan platform, immersion lithography, and more recently the new family of EUV technologies, taking ASML to its current position of world market leader.

New share buyback program

In addition to the previously announced proposed dividend of 0.53 euros per share, ASML today announces its intention to purchase up to an amount of EUR 1.0 billion of its own shares within the 2013-2014 timeframe, starting 18 April 2013.

Given ASML's strong financial position and operating cash flow prospects, ASML intends to continue to return excess cash to shareholders through increasing dividends and share buy back programs, thereby supporting its shareholders in their continued investment in the company.

The program will be executed within the limitations of the applicable laws and regulations, of the existing authority granted by the Annual General Meeting of Shareholders (AGM) on April 25, 2012 and, if granted, of the authority proposed to future AGMs. Any shares repurchased under the program are intended to be cancelled.

All transactions under this program are published on ASML's website (www.asml.com/investors) on a weekly basis. The share buyback programs may be suspended, modified or discontinued at any time.

About ASML

ASML is one of the world's leading providers of lithography systems for the semiconductor industry, manufacturing complex machines that are critical to the production of integrated circuits or chips. Headquartered in Veldhoven, the Netherlands, ASML is traded on Euronext Amsterdam and NASDAQ under the symbol ASML. ASML has 8,625 employees on payroll (expressed in full time equivalents), serving chip manufacturers in more than 55 locations in 16 countries. More information about our company, our products and technology, and career opportunities is available on our website: www.asml.com

Investor and Media Conference Call

A conference call for investors and media will be hosted by CEO Eric Meurice and CFO Peter Wennink at 15:00 PM Central European Time / 09:00 AM Eastern U.S. time. Dial-in numbers are: in the Netherlands + 31 20 794 8504 and the US +1 480 629 9692 (US participants will have to quote the following confirmation code when dialing into the conference: 4611668). To listen to the conference call, access is also available via www.asml.com

A replay of the Investor and Media Call will be available on www.asml.com

US GAAP and IFRS Financial Reporting

ASML's primary accounting standard for quarterly earnings releases and annual reports is US GAAP, the accounting standard generally accepted in the United States. Quarterly US GAAP consolidated statements of operations, consolidated statements of cash flows and consolidated balance sheets, and a reconciliation of net income and equity from US GAAP to IFRS as adopted by the EU are available on www.asml.com

In addition to reporting financial figures in accordance with US GAAP, ASML also reports financial figures in accordance with IFRS for statutory purposes. The most significant differences between US GAAP and IFRS that affect ASML concern the capitalization of certain product development costs, the accounting of share-based payment plans and the accounting of income taxes. ASML's quarterly IFRS consolidated statement of profit or loss, consolidated statement of cash flows, consolidated statement of financial position and a reconciliation of net income and equity from US GAAP to IFRS are available on www.asml.com

The consolidated balance sheets of ASML Holding N.V. as of 31 March, 2013, the related consolidated statements of operations and consolidated statements of cash flows for the quarter ended 31 March, 2013 as presented in this press release are unaudited.

Regulated Information

This press release, the US GAAP consolidated financial statements and the IFRS consolidated financial statements published on www.asml.com comprise regulated information within the meaning of the Dutch Financial Markets Supervision Act (Wet op het financieel toezicht).

Forward Looking Statements

"Safe Harbor" Statement under the US Private Securities Litigation Reform Act of 1995: the matters discussed in this document may include forward-looking statements, including statements made about our outlook, realization of systems backlog, IC unit demand, financial results, average selling price, gross margin and expenses, dividend policy and intention to repurchase shares and resignations and appointments of executive officers. These forward looking statements are subject to risks and uncertainties including, but not limited to: economic conditions, product demand and semiconductor equipment industry capacity, worldwide demand and manufacturing capacity utilization for semiconductors (the principal product of our customer base), including the impact of general economic conditions on consumer confidence and demand for our customers' products, competitive products and pricing, the impact of manufacturing efficiencies and capacity constraints, the continuing success of technology advances and the related pace of new product development and customer acceptance of new products, our ability to enforce patents and protect intellectual property rights, the risk of intellectual property litigation, availability of raw materials and critical manufacturing equipment, trade environment, changes in exchange rates, available cash, distributable reserves for dividend payments and share repurchases, our ability to successfully complete the Cymer transaction, including the ability to obtain regulatory approval for the merger, the satisfaction of other conditions to the closing of the merger and the possibility that the length of time necessary to consummate the merger may be longer than anticipated, and other risks indicated in the risk factors included in ASML's Annual Report on Form 20-F and other filings with the US Securities and Exchange Commission.

 
ASML - Summary U.S. GAAP Consolidated Statements of Operations 1,2
         
Three months ended,
Mar 31, Apr 1,
2013 2012
(in millions EUR, except per share data)                
 
Net system sales 676.9 1,050.0
Net service and field option sales       215.2         201.9  
Total net sales 892.1 1,251.9
 
Total cost of sales       (551.4 )       (728.3 )
Gross profit 340.7 523.6
 
Other income 14.2 -
Research and development costs (184.8 ) (145.3 )
Selling, general and administrative costs       (62.6 )       (55.4 )
Income from operations 107.5 322.9
 
Interest income (expense), net       (3.3 )       0.6  
Income before income taxes 104.2 323.5
 
Benefit from (provision for) income taxes       (8.0 )       (41.5 )
Net income 96.2 282.0
 
 
Basic net income per ordinary share 0.24 0.68
Diluted net income per ordinary share (3 ) 0.23 0.68
 
Weighted average number of ordinary shares used in computing per share amounts (in millions):
Basic 407.5 411.8
Diluted (3 ) 410.6 415.0
 
 
 
 
ASML - Ratios and Other Data 1,2
 
Three months ended,
Mar 31, Apr 1,
2013 2012
(in millions EUR, except otherwise indicated)                
 
Gross profit as a percentage of net sales 38.2 41.8
Income from operations as a percentage of net sales 12.1 25.8
Net income as a percentage of net sales 10.8 22.5
Income taxes as a percentage of income before income taxes 7.6 12.8
Shareholders' equity as a percentage of total assets 54.8 48.8
Sales of systems (in units) 29 52
Average selling price of system sales (EUR millions) 23.3 20.2
Value of systems backlog excluding EUV (EUR millions) 1,266 1,598
Systems backlog excluding EUV (in units) 42 56
Average selling price of systems backlog excluding EUV (EUR millions) 30.1 28.5
Value of booked systems excluding EUV (EUR millions) 715 865
Net bookings excluding EUV (in units) 25 36
Average selling price of booked systems excluding EUV (EUR millions) 28.6 24.0
Number of payroll employees in FTEs 8,625 7,986
Number of temporary employees in FTEs 2,249 1,833
 
 
 
 

ASML - Summary U.S. GAAP Consolidated Balance Sheets 1,2

 
Mar 31, Dec 31,
2013 2012
(in millions EUR)
 
ASSETS
Cash and cash equivalents 1,780.1 1,767.6
Short-term investments 840.0 930.0
Accounts receivable, net 689.8 605.3
Finance receivables, net 300.8 265.2
Current tax assets 64.8 57.1
Inventories, net 2,005.8 1,857.0
Deferred tax assets 105.1 103.7
Other assets       278.6         246.0  
Total current assets 6,065.0 5,831.9
 
Finance receivables, net 17.4 38.6
Deferred tax assets 40.3 39.4
Other assets 312.7 311.6
Goodwill 153.2 149.2
Other intangible assets, net 12.6 9.9
Property, plant and equipment, net       1,012.3         1,029.9  
Total non-current assets 1,548.5 1,578.6
 
Total assets 7,613.5 7,410.5
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Total current liabilities 2,346.4 2,086.3
 
Long-term debt 746.6 755.9
Deferred and other tax liabilities 92.1 88.3
Provisions 6.6 8.0
Accrued and other liabilities       249.7         405.1  
Total non-current liabilities 1,095.0 1,257.3
                 
Total liabilities 3,441.4 3,343.6
 
Total shareholders' equity       4,172.1         4,066.9  
Total liabilities and shareholders' equity 7,613.5 7,410.5
 
 
 
 
ASML - Summary U.S. GAAP Consolidated Statements of Cash Flows 1,2
 
Three months ended,
Mar 31, Apr 1,
2013 2012
(in millions EUR)                
 
CASH FLOWS FROM OPERATING ACTIVITIES
Net income 96.2 282.0
 
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation and amortization 44.5 49.6
Impairment 0.1 -
Loss on disposal of property, plant and equipment 0.1 0.3
Share-based payments 5.7 4.4
Allowance for doubtful receivables 0.3 0.2
Allowance for obsolete inventory 30.4 23.6
Deferred income taxes 0.3 21.6
Changes in assets and liabilities       (233.9 )       13.9  
Net cash provided by (used in) operating activities (56.3 ) 395.6
 
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment (27.3 ) (47.2 )
Purchase of intangible assets (4.0 ) (3.3 )
Purchase of available for sale securities (350.0 ) -
Maturity of available for sale securities 440.0 -
Acquisition of subsidiaries (net of cash acquired)       -         -  
Net cash provided by (used in) investing activities 58.7 (50.5 )
 
CASH FLOWS FROM FINANCING ACTIVITIES
Dividend paid - -
Purchase of shares - (135.7 )
Net proceeds from issuance of shares 10.4 16.3
Capital repayment - -
Repayment of debt (0.8 ) (0.7 )
Tax benefit from share-based payments       -         0.1  
Net cash provided by (used in) financing activities 9.6 (120.0 )
                 
Net cash flows 12.0 225.1
 
Effect of changes in exchange rates on cash       0.5         (3.5 )
Net increase (decrease) in cash and cash equivalents 12.5 221.6
 
 
ASML - Quarterly Summary U.S. GAAP Consolidated Statements of Operations 1,2
       
Three months ended,
 
Mar 31, Dec 31, Sep 30, Jul 1, Apr 1,
2013 2012 2012 2012 2012
(in millions EUR, except per share data)                    
 
Net system sales 676.9 766.5 1,000.3 984.8 1,050.0
Net service and field option sales   215.2     256.6     228.5     242.9     201.9  
Total net sales 892.1 1,023.1 1,228.8 1,227.7 1,251.9
 
Total cost of sales   (551.4 )   (602.9 )   (697.8 )   (697.3 )   (728.3 )
Gross profit 340.7 420.2 531.0 530.4 523.6
 
Other income 14.2 - - - -
Research and development costs (184.8 ) (155.4 ) (143.8 ) (144.6 ) (145.3 )
Selling, general and administrative costs   (62.6 )   (79.5 )   (69.7 )   (54.7 )   (55.4 )
Income from operations 107.5 185.3 317.5 331.1 322.9
 
Interest income (expense), net   (3.3 )   (3.4 )   (2.5 )   (0.9 )   0.6  
Income before income taxes 104.2 181.9 315.0 330.2 323.5
 
Benefit from (provision for) income taxes   (8.0 )   115.8     (40.3 )   (38.3 )   (41.5 )
Net income 96.2 297.7 274.7 291.9 282.0
 
 
Basic net income per ordinary share 0.24 0.66 0.65 0.71 0.68
Diluted net income per ordinary share (3 ) 0.23 0.65 0.65 0.71 0.68
 
Weighted average number of ordinary shares used in computing per share amounts (in millions):
Basic 407.5 452.5 422.5 409.5 411.8
Diluted (3 ) 410.6 455.4 425.7 412.7 415.0
 
 
 
 
ASML - Quarterly Summary Ratios and other data 1,2
 
Three months ended,
 
Mar 31, Dec 31, Sep 30, Jul 1, Apr 1,
2013 2012 2012 2012 2012
(in millions EUR, except otherwise indicated)                    
 
Gross profit as a percentage of net sales 38.2 41.1 43.2 43.2 41.8
Income from operations as a percentage of net sales 12.1 18.1 25.8 27.0 25.8
Net income as a percentage of net sales 10.8 29.1 22.4 23.8 22.5
Income taxes as a percentage of income before income taxes 7.6 (63.7 ) 12.8 11.6 12.8
Shareholders' equity as a percentage of total assets 54.8 54.9 65.2 49.8 48.8
Sales of systems (in units) 29 34 40 44 52
Average selling price of system sales (EUR millions) 23.3 22.5 25.0 22.4 20.2
Value of systems backlog excluding EUV (EUR millions) 1,266 1,214 1,340 1,503 1,598
Systems backlog excluding EUV (in units) 42 46 48 55 56
Average selling price of systems backlog excluding EUV (EUR millions) 30.1 26.4 27.9 27.3 28.5
Value of booked systems excluding EUV (EUR millions) 715 667 831 949 865
Net bookings excluding EUV (in units) 25 32 33 43 36
Average selling price of booked systems excluding EUV (EUR millions) 28.6 20.9 25.2 22.1 24.0
Number of payroll employees in FTEs 8,625 8,497 8,203 8,010 7,986
Number of temporary employees in FTEs 2,249 2,139 2,027 1,860 1,833
 
 
 
 
ASML - Quarterly Summary U.S. GAAP Consolidated Balance Sheets 1,2
 
Mar 31, Dec 31, Sep 30, Jul 1, Apr 1,
2013 2012 2012 2012 2012
(in millions EUR)                    
 
ASSETS
Cash and cash equivalents 1,780.1 1,767.6 5,118.8 1,851.8 2,953.4
Short-term investments 840.0 930.0 1,040.0 850.0 -
Accounts receivable, net 689.8 605.3 326.8 631.7 761.2
Finance receivables, net 300.8 265.2 221.6 122.3 78.8
Current tax assets 64.8 57.1 36.6 23.6 15.6
Inventories, net 2,005.8 1,857.0 1,920.0 1,721.2 1,607.6
Deferred tax assets 105.1 103.7 111.0 123.4 117.3
Other assets   278.6     246.0     235.0     235.2     233.2  
Total current assets 6,065.0 5,831.9 9,009.8 5,559.2 5,767.1
 
Finance receivables, net 17.4 38.6 44.7 - -
Deferred tax assets 40.3 39.4 38.3 40.1 38.0
Other assets 312.7 311.6 304.9 290.5 318.0
Goodwill 153.2 149.2 145.9 150.2 141.5
Other intangible assets, net 12.6 9.9 7.2 8.6 10.1
Property, plant and equipment, net   1,012.3     1,029.9     1,036.9     1,169.2     1,124.6  
Total non-current assets 1,548.5 1,578.6 1,577.9 1,658.6 1,632.2
 
Total assets 7,613.5 7,410.5 10,587.7 7,217.8 7,399.3
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Total current liabilities 2,346.4 2,086.3 2,301.8 2,075.0 2,091.6
 
Long-term debt 746.6 755.9 747.3 741.8 736.8
Deferred and other tax liabilities 92.1 88.3 215.2 205.1 193.8
Provisions 6.6 8.0 8.7 9.5 9.4
Accrued and other liabilities   249.7     405.1     409.0     590.9     755.7  
Total non-current liabilities 1,095.0 1,257.3 1,380.2 1,547.3 1,695.7
                     
Total liabilities 3,441.4 3,343.6 3,682.0 3,622.3 3,787.3
 
Total shareholders' equity   4,172.1     4,066.9     6,905.7     3,595.5     3,612.0  
Total liabilities and shareholders' equity 7,613.5 7,410.5 10,587.7 7,217.8 7,399.3
 
 
 
 
ASML - Quarterly Summary U.S. GAAP Consolidated Statements of Cash Flows 1,2
 

Three months ended,

 
Mar 31, Dec 31, Sep 30, Jul 1, Apr 1,
2013 2012 2012 2012 2012
(in millions EUR)                    
 
CASH FLOWS FROM OPERATING ACTIVITIES
Net income 96.2 297.7 274.7 291.9 282.0
 
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation and amortization 44.5 43.5 36.7 56.8 49.6
Impairment 0.1 0.5 1.7 1.1 -
Loss on disposal of property, plant and equipment 0.1 0.2 0.5 1.2 0.3
Share-based payments 5.7 5.0 4.9 4.4 4.4
Allowance for doubtful receivables 0.3 (0.3 ) 0.5 0.1 0.2
Allowance for obsolete inventory 30.4 22.9 31.0 53.4 23.6
Deferred income taxes 0.3 (120.3 ) 25.6 0.7 21.6
Changes in assets and liabilities   (233.9 )   (504.7 )   113.7     (335.5 )   13.9  
Net cash provided by (used in) operating activities (56.3 ) (255.5 ) 489.3 74.1 395.6
 
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment (27.3 ) (35.7 ) (50.2 ) (38.8 ) (47.2 )
Purchase of intangible assets (4.0 ) (4.3 ) - - (3.3 )
Purchase of available for sale securities (350.0 ) (90.0 ) (440.0 ) (850.0 ) -
Maturity of available for sale securities 440.0 200.0 250.0 - -
Acquisition of subsidiaries (net of cash acquired)   -     (10.3 )   -     -     -  
Net cash provided by (used in) investing activities 58.7 59.7 (240.2 ) (888.8 ) (50.5 )
 
CASH FLOWS FROM FINANCING ACTIVITIES
Dividend paid - - - (188.9 ) -
Purchase of shares - (265.7 ) (25.2 ) (108.8 ) (135.7 )
Net proceeds from issuance of shares 10.4 840.7 3,046.5 4.2 16.3
Capital repayment - (3,728.3 ) - - -
Repayment of debt (0.8 ) (0.8 ) (0.7 ) (0.7 ) (0.7 )
Tax benefit from share-based payments   -     0.6     1.5     -     0.1  
Net cash provided by (used in) financing activities 9.6 (3,153.5 ) 3,022.1 (294.2 ) (120.0 )
                     
Net cash flows 12.0 (3,349.3 ) 3,271.2 (1,108.9 ) 225.1
 
Effect of changes in exchange rates on cash   0.5     (1.9 )   (4.2 )   7.3     (3.5 )
Net increase (decrease) in cash and cash equivalents 12.5 (3,351.2 ) 3,267.0 (1,101.6 ) 221.6
 

Notes to the Summary U.S. GAAP Consolidated Financial Statements

Basis of Presentation

The accompanying consolidated financial statements are stated in millions of euros ('EUR') unless otherwise indicated. ASML follows accounting principles generally accepted in the United States of America ("U.S. GAAP"). Further disclosures, as required under U.S. GAAP in annual reports, are not included in the summary consolidated financial statements.

Use of estimates

The preparation of our consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities on the balance sheet dates, and the reported amounts of revenue and expenses during the reported periods. Actual results could differ from those estimates.

Principles of consolidation

The consolidated financial statements include the financial statements of ASML Holding N.V. and all of its subsidiaries and the variable interest entities in which ASML is the primary beneficiary (referred to as "ASML"). All intercompany profits, balances and transactions have been eliminated in the consolidation. Subsidiaries are all entities over which ASML has the power to govern the financial and operating policies generally accompanying a shareholding of more than one-half of the voting rights.

Revenue recognition

In general, ASML recognizes revenue when all four revenue recognition criteria are met: persuasive evidence of an arrangement exists; delivery has occurred or services have been rendered; seller's price to buyer is fixed or determinable; and collectability is reasonably assured. At ASML this policy generally results in revenue recognition from the sale of a system upon shipment. The revenue from the installation of a system is generally recognized upon completion of that installation at the customer site. Each system undergoes, prior to shipment, a "Factory Acceptance Test" in ASML's cleanroom facilities, effectively replicating the operating conditions that will be present on the customer's site, in order to verify whether the system will meet its standard specifications and any additional technical and performance criteria agreed with the customer, if any. A system is shipped, and revenue is recognized, only after all specifications are met and customer sign-off is received or waived. In case not all specifications are met and the remaining performance obligation is not essential to the functionality of the system but is substantive rather than inconsequential or perfunctory, a portion of the sales price is deferred. Although each system's performance is re-tested upon installation at the customer's site, ASML has never failed to successfully complete installation of a system at a customer's premises.

The main portion of ASML's revenue is derived from contractual arrangements with our customers that have multiple deliverables, which mainly include the sale of our systems, installation and training services and prepaid extended and enhanced (optic) warranty contracts. For each of the specified deliverables ASML determines the selling price by using either vendor specific objective evidence ('VSOE'), third party evidence ('TPE') or by best estimate of the selling price ('BESP'). When we are unable to establish relative selling price using VSOE or TPE, ASML uses BESP in its allocation of arrangement consideration. The total arrangement consideration is allocated at inception of the arrangement to all deliverables on the basis of their relative selling price. The revenue relating to the undelivered elements of the arrangements is deferred at their relative selling prices until delivery of these elements. Revenue from installation and training services is recognized when the services are completed. Revenue from prepaid extended and enhanced (optic) warranty contracts is recognized over the term of the contract.

Foreign currency risk management

Our sales are predominately denominated in euros. Exceptions may occur on a customer by customer basis. Our cost of sales and other expenses are mainly dominated in euros, to a certain extent in U.S. dollar and Japanese yen and to a limited extent in other currencies. Therefore, we are exposed to foreign currency exchange risk.

It is our policy to hedge material transaction exposures, such as forecasted sales and purchase transactions, and material net remeasurement exposures, such as accounts receivable and payable. We hedge these exposures through the use of foreign exchange contracts.

ASML - Reconciliation U.S. GAAP - IFRS 1,2

       
Net income Three months ended,
Mar 31,   Apr 1,
2013 2012
(in millions EUR)        
Net income based on U.S. GAAP 96.2 282.0
Development expenditures (see Note 1) 58.0 35.1
Share-based payments (see Note 2) 0.8 -
Income taxes (see Note 3) 0.7 1.0
Reversal of write-downs (see Note 4)   -   (0.7 )
Net income based on IFRS 155.7 317.4
 
 
Shareholders' equity Mar 31, Dec 31, Sep 30, Jul 1, Apr 1,
2013 2012 2012 2012 2012
(in millions EUR)                    
Shareholders' equity based on U.S. GAAP 4,172.1 4,066.9 6,905.7 3,595.5 3,612.0
Development expenditures (see Note 1) 456.1 396.8 356.6 308.7 267.3
Share-based payments (see Note 2) 4.2 4.1 4.1 4.0 3.7
Income taxes (see Note 3) 32.1 30.4 35.0 36.4 31.4
Reversal of write-downs (see Note 4)   -   -     14.0   14.4   6.5
Equity based on IFRS 4,664.5 4,498.2 7,315.4 3,959.0 3,920.9
 

Notes to the reconciliation from U.S. GAAP to IFRS

Note 1 Development expenditures

Under U.S. GAAP, ASML applies ASC 730, "Research and Development". In accordance with ASC 730, ASML charges costs relating to research and development to operating expense as incurred.

Under IFRS, ASML applies IAS 38, "Intangible Assets". In accordance with IAS 38, ASML capitalizes certain development expenditures that are amortized over the expected useful life of the related product generally ranging between one and three years. Amortization starts when the developed product is ready for volume production.

Note 2 Share-based Payments

Under U.S. GAAP, ASML applies ASC 718 "Compensation- Stock Compensation" which requires companies to recognize the cost of employee services received in exchange for awards of equity instruments based upon the grant-date fair value of those instruments. ASC 718's general principle is that a deferred tax asset is established as we recognize compensation costs for commercial purposes for awards that are expected to result in a tax deduction under existing tax law. Under U.S. GAAP, the deferred tax recorded on share-based compensation is computed on the basis of the expense recognized in the financial statements. Therefore, changes in ASML's share price do not affect the deferred tax asset recorded in our financial statements.

Under IFRS, ASML applies IFRS 2, "Share-based Payments". In accordance with IFRS 2, ASML records as an expense the fair value of its share-based payments with respect to stock options and stock granted to its employees after November 7, 2002. Under IFRS, at period end a deferred tax asset is computed on the basis of the tax deduction for the share-based payments under the applicable tax law and is recognized to the extent it is probable that future taxable profit will be available against which these deductible temporary differences will be utilized. Therefore, changes in ASML's share price do affect the deferred tax asset at period-end and result in adjustments to the deferred tax asset.

Note 3 Income taxes

Under U.S. 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. Contrary to IFRS, the prepaid taxes under U.S. GAAP are calculated based on the tax rate applicable in the seller's rather than the purchaser's tax jurisdiction.

Under IFRS, ASML applies IAS 12, "Income Taxes" beginning from January 1, 2005. In accordance with IAS 12 unrealized net income resulting from intercompany transactions that are eliminated from the carrying amount of assets in consolidation give rise to a temporary difference for which deferred taxes must be recognized in consolidation. The deferred taxes are calculated based on the tax rate applicable in the purchaser's tax jurisdiction.

Note 4 Reversal of write-downs

Under U.S. GAAP, ASML applies ASC 330 "Inventory". In accordance with ASC 330 reversal of a write-down is prohibited as a write-down creates a new cost basis.

Under IFRS, ASML applies IAS 2 (revised), "Inventories". In accordance with IAS 2, reversal of a prior period write-down as a result of a subsequent increase in value of inventory should be recognized in the period in which the value increase occurs.

"Safe Harbor" Statement under the US Private Securities Litigation Reform Act of 1995: the matters discussed in this document may include forward-looking statements, including statements made about our outlook, realization of systems backlog, IC unit demand, financial results, average selling price, gross margin and expenses, dividend policy and intention to repurchase shares. These forward looking statements are subject to risks and uncertainties including, but not limited to: economic conditions, product demand and semiconductor equipment industry capacity, worldwide demand and manufacturing capacity utilization for semiconductors (the principal product of our customer base), including the impact of general economic conditions on consumer confidence and demand for our customers' products, competitive products and pricing, the impact of manufacturing efficiencies and capacity constraints, the continuing success of technology advances and the related pace of new product development and customer acceptance of new products, our ability to enforce patents and protect intellectual property rights, the risk of intellectual property litigation, availability of raw materials and critical manufacturing equipment, trade environment, changes in exchange rates, available cash, distributable reserves for dividend payments and share repurchases, our ability to successfully complete the Cymer transaction, including the ability to obtain regulatory approval for the merger, the satisfaction of other conditions to the closing of the merger and the possibility that the length of time necessary to consummate the merger may be longer than anticipated, and other risks indicated in the risk factors included in ASML's Annual Report on Form 20-F and other filings with the US Securities and Exchange Commission.

1 These financial statements are unaudited.

2 Numbers have been rounded.

3 The calculation of diluted net income per ordinary share assumes the exercise of options issued under ASML stock option plans and the issuance of shares under ASML share plans for periods in which exercises or issuances would have a dilutive effect. The calculation of diluted net income per ordinary share does not assume exercise of such options or issuance of shares when such exercises or issuance would be anti-dilutive.

ASML Holding N.V.
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