ASML Announces 2010 First Quarter Results

[ Back ] [ More News ] [ Home ]

Sustained Bookings Indicate Potential Record Revenues in 2010

VELDHOVEN, Netherlands — (BUSINESS WIRE) — April 13, 2010 — ASML Holding NV (ASML)(NASDAQ: ASML)(Amsterdam: ASML) today announces 2010 first quarter results according to US GAAP as follows:

Q1 2010 net sales of EUR 742 million versus Q4 2009 net sales of EUR 581 million (Q1 2009 net sales of EUR 184 million).
Q1 2010 net income of EUR 107 million, or 14.5 percent of net sales, versus a Q4 2009 net income of EUR 50 million or 8.7 percent of net sales (Q1 2009 net loss of EUR 117 million or 63.8 percent of net sales).
Q1 2010 net bookings valued at EUR 1,004 million with 50 systems including 33 new and 17 used systems, leading to an order backlog valued at EUR 2,170 million as of March 28, 2010.

“Our first quarter 2010 sales rose to above EUR 740 million and bookings came in at EUR 1 billion, in line with our expectations and adding confidence in a prolonged recovery of the semiconductor industry,” said Eric Meurice, President and Chief Executive Officer of ASML. “To enable our customers’ next technology nodes, we have now shipped nine NXT:1950is, our most advanced TWINSCAN^™ dual stage scanner, having proven critical dimension (CD) imaging uniformity well below 1 nanometer (nm) and overlay of less than 2 nm, which is industry leading performance. By the end of the quarter we had 28 NXT:1950i systems in backlog and expect to ship 11 in Q2 2010. In parallel, we continue to make good progress with our next generation of optical lithography, Extreme Ultraviolet (EUV): we received our sixth order for our NXE:3100 pre-production system, confirming the appetite from all semiconductor segments for EUV as a production-robust, cost-effective shrink enabler for the future. The first NXE:3100s are scheduled to be shipped during the second half of 2010,” Meurice added.

Operations Update

In Q1 2010, ASML’s net sales of EUR 742 million included 23 new and 11 used systems, totaling net system sales of EUR 632 million, and net service and field options sales of EUR 110 million. Net system sales for Q4 2009 included the shipment of 19 new and 6 used machines, totaling EUR 432 million, and net service and field options sales of EUR 149 million.

The Q1 2010 average selling price for a new system was EUR 25.8 million, compared with the Q4 2009 average selling price for a new system of EUR 19.7 million. The Q1 2010 average selling price for all ASML systems sold was EUR 18.6 million, compared with the Q4 2009 average selling price of EUR 17.3 million.

Q1 2010 net bookings totaled 50 systems valued at EUR 1,004 million, including advanced immersion systems for critical layers as well as KrF systems for less critical layers mainly ordered by Foundry customers for capacity additions, with a total average selling price of EUR 20.1 million.

ASML’s order backlog as of March 28, 2010 was EUR 2,170 million, totaling 85 systems with an average selling price of EUR 25.5 million. ASML’s backlog as of December 31, 2009 was valued at EUR 1,853 million, totaling 69 systems with an average selling price of EUR 26.8 million.

In Q1 2010, ASML generated net income of EUR 107 million, or EUR 0.25 per ordinary share as compared with net income in Q4 2009 of EUR 50 million or EUR 0.12 per ordinary share.

The company’s Q1 2010 gross margin was 40.3 percent compared with the Q4 2009 gross margin of 38.0 percent.

Q1 2010 research and development (R&D) costs were EUR 120 million including credits, compared with Q4 2009 R&D costs of EUR 115 million including credits.

As anticipated, selling, general and administrative (SG&A) costs were EUR 41 million in Q1 2010, compared with SG&A costs of EUR 36 million in Q4 2009.

Net cash from operations was EUR 41 million in Q1 2010. ASML ended Q1 2010 with EUR 1,087 million in cash and cash equivalents, compared with EUR 1,037 million at the end of Q4 2009.

Outlook

“We booked EUR 1,004 million worth of systems in the first quarter of 2010 and expect a similar level of bookings in the second quarter, confirming the semiconductor industry executing on its upturn cycle,” Eric Meurice said. “We expect this cycle to be sustained by the normal technology transitions of the early adopters, the subsequent technology conversions by second tier DRAM makers, the next Flash memory upgrade cycle anticipated for the second half of 2010, as well as Foundry’s structural capacity build at advanced nodes. This puts ASML on a track to 2010 full year sales above our 2007 peak of EUR 3.8 billion; we calculate that the lithography systems sold in 2010 will add approximately 15 percent integrated circuit (IC) unit production capacity to the semiconductor market, conforming to the demand prediction of most industry analysts. This controlled capacity increase supports the possibility of sustained growth in 2011 if IC unit growth continues per the historical trend,” Meurice said.

ASML expects Q2 2010 net sales of around EUR 1 billion, EUR 50 million higher than guided at the publication of our Q4 2009 results, and gross margin in Q2 2010 of about 42 percent. R&D expenditures are expected to be at EUR 125 million including credits and SG&A costs are expected at EUR 42 million.

About ASML

ASML is the world's leading provider 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 more than 6,500 employees (expressed in full time equivalents), serving chip manufacturers in more than 60 locations in 15 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 10 29 44 271 and the US +1 718 247 0884 (US participants will have to quote the following confirmation code when dialing into the conference: 1546105). 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

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 statements of operations, statements of cash flows and balance sheets, and a reconciliation of net income/(loss) and equity from US GAAP to IFRS 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, the accounting of income taxes and the accounting of reversal of inventory write-downs. Quarterly IFRS consolidated income statement, consolidated statement of cash flows, consolidated statement of financial position and a reconciliation of net income/(loss) and equity from US GAAP to IFRS are available on www.asml.com

The consolidated balance sheets of ASML Holding N.V. as of March 28, 2010, the related consolidated statements of operations and consolidated statements of cash flows for the quarter ended March 28, 2010 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 backlog, IC unit demand, financial results, average selling price, gross margin and expenses. 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, manufacturing efficiencies, new product development and customer acceptance of new products, 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 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 29, 2009	Mar 28, 2010
(in millions EUR, except per share data)

Net system sales		101.1	631.6
Net service and field option sales		82.5	110.2
Total net sales		183.6	741.8

Cost of sales		171.2	443.2
Gross profit on sales		12.4	298.6

Research and development costs		118.3	120.3
Selling, general and administrative costs	³	40.4	41.4
Income (loss) from operations		(146.3)	136.9

Interest expense	³	(1.7)	(2.8)
Income (loss) from operations before income taxes		(148.0)	134.1

(Provision for) benefit from income taxes		30.8	(26.8)
Net income (loss)		(117.2)	107.3


Basic net income (loss) per ordinary share		(0.27)	0.25
Diluted net income (loss) per ordinary share	⁴	(0.27)	0.25

Number of ordinary shares used in computing per share amounts (in millions):
Basic		432.1	434.0
Diluted	⁴	432.1	437.9




ASML - Ratios and Other Data ^1,2

		Three months ended,
		Mar 29, 2009	Mar 28, 2010


Gross profit as a % of net sales		6.7	40.3
Income (loss) from operations as a % of net sales	³	(79.7)	18.5
Net income (loss) as a % of net sales		(63.8)	14.5
Shareholders’ equity as a % of total assets	³	47.5	41.2
Income taxes as a % of income before income taxes		(20.8)	(20.0)
Sales of systems (in units)		11	34
ASP of systems sales (EUR million)		9.2	18.6
Value of systems backlog (EUR million)		853	2,170
Systems backlog (in units)		38	85
ASP of systems backlog (EUR million)		22.4	25.5
Value of booked systems (EUR million)		207	1,004
Net bookings (in units)		8	50
ASP of booked systems (EUR million)		25.8	20.1
Number of payroll employees in FTEs		6,715	6,591
Number of temporary employees in FTEs		959	1,331



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

		Dec 31, 2009	Mar 28, 2010
(in millions EUR)

ASSETS
Cash and cash equivalents		1,037.1	1,087.3
Accounts receivable, net		377.4	629.8
Finance receivables, net		21.6	23.3
Current tax assets		11.3	37.5
Inventories, net		963.4	1,155.5
Deferred tax assets		119.4	107.5
Other assets		218.7	247.3
Total current assets		2,748.9	3,288.2

Deferred tax assets		133.3	127.9
Other assets		77.0	99.1
Goodwill		131.5	141.1
Other intangible assets, net		18.1	17.8
Property, plant and equipment, net	³	655.4	720.7
Total non-current assets		1,015.3	1,106.6

Total assets		3,764.2	4,394.8

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities		1,044.2	1,613.0

Accrued liabilities and other liabilities		44.3	45.9
Deferred and other tax liabilities		188.4	200.1
Provisions		12.7	13.0
Long-term debt	³	699.8	711.8
Total non-current liabilities		945.2	970.8

Total liabilities		1,989.4	2,583.8

Shareholders’ equity		1,774.8	1,811.0
Total liabilities and shareholders’ equity		3,764.2	4,394.8



ASML - Summary U.S. GAAP Consolidated Statements of Cash Flows ^1,2

		Three months ended,
		Mar 29, 2009	Mar 28, 2010
(in millions EUR)

CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)		(117.2)	107.3

Depreciation and amortization	³	38.7	34.7
Impairment		2.6	0.8
Loss on disposals of property, plant and equipment		2.6	0.6
Share-based payments		3.5	2.8
Allowance for doubtful debts		-	0.2
Allowance for obsolete inventory		22.1	13.8
Deferred income taxes		(27.0)	23.7
Change in assets and liabilities		157.3	(142.8)
Net cash provided by operating activities		82.6	41.1

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment		(43.9)	(7.2)
Proceeds from sale of property, plant and equipment		1.2	-
Net cash used in investing activities		(42.7)	(7.2)

CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from issuance of shares and stock options		0.1	10.4
Excess tax deficiencies from stock options		(0.2)	-
Redemption and/or repayment of debt	³	(0.4)	(0.4)
Net cash provided by (used in) financing activities		(0.5)	10.0

Net cash flows		39.4	43.9

Effect of changes in exchange rates on cash		2.4	6.3
Net increase in cash & cash equivalents		41.8	50.2


ASML - Quarterly Summary U.S. GAAP Consolidated Statements of Operations ^1,2

		Three months ended,

		Mar 29,	Jun 28,	Sep 27,	Dec 31,	Mar 28,
		2009	2009	2009	2009	2010
(in millions EUR, except per share data)

Net system sales		101.1	183.3	458.7	431.8	631.6
Net service and field option sales		82.5	93.3	96.6	148.8	110.2
Total net sales		183.6	276.6	555.3	580.6	741.8

Cost of sales		171.2	242.2	364.0	360.3	443.2
Gross profit on sales		12.4	34.4	191.3	220.3	298.6

Research and development costs		118.3	117.9	115.2	115.4	120.3
Selling, general and administrative costs	³	40.4	40.3	37.5	36.5	41.4
Income (loss) from operations		(146.3)	(123.8)	38.6	68.4	136.9

Interest expense	³	(1.7)	(0.9)	(2.4)	(3.5)	(2.8)
Income (loss) from operations before income taxes		(148.0)	(124.7)	36.2	64.9	134.1

(Provision for) benefit from income taxes		30.8	20.7	(16.4)	(14.4)	(26.8)
Net income (loss)		(117.2)	(104.0)	19.8	50.5	107.3


Basic net income (loss) per ordinary share		(0.27)	(0.24)	0.05	0.12	0.25
Diluted net income (loss) per ordinary share	⁴	(0.27)	(0.24)	0.05	0.12	0.25

Number of ordinary shares used in computing per share amounts (in millions):
Basic		432.1	432.5	432.7	433.2	434.0
Diluted	⁴	432.1	432.5	435.0	437.0	437.9




ASML - Quarterly Summary Ratios and other data ^1,2

		Three months ended,

		Mar 29,	Jun 28,	Sep 27,	Dec 31,	Mar 28,
		2009	2009	2009	2009	2010


Gross profit as a % of net sales		6.7	12.5	34.4	38.0	40.3
Income (loss) from operations as a % of net sales	³	(79.7)	(44.7)	6.9	11.8	18.5
Net income (loss) as a % of net sales		(63.8)	(37.6)	3.6	8.7	14.5
Shareholders’ equity as a % of total assets	³	47.5	47.2	47.3	47.1	41.2
Income taxes as a % of income before income taxes		(20.8)	(16.6)	(45.4)	(22.2)	(20.0)
Sales of systems (in units)		11	10	24	25	34
ASP of system sales (EUR million)		9.2	18.3	19.1	17.3	18.6
Value of systems backlog (EUR million)		853	1,064	1,353	1,853	2,170
Systems backlog (in units)		38	43	54	69	85
ASP of systems backlog (EUR million)		22.4	24.7	25.1	26.8	25.5
Value of booked systems (EUR million)		207	394	777	956	1,004
Net bookings (in units)		8	15	35	40	50
ASP of booked systems (EUR million)		25.8	26.3	22.2	23.9	20.1
Number of payroll employees in FTEs		6,715	6,597	6,529	6,548	6,591
Number of temporary employees in FTEs		959	868	917	1,137	1,331



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

		Mar 29,	Jun 28,	Sep 27,	Dec 31,	Mar 28,
		2009	2009	2009	2009	2010
(in millions EUR)

ASSETS
Cash and cash equivalents		1,151.0	1,092.7	1,018.0	1,037.1	1,087.3
Accounts receivable, net		291.6	213.5	382.1	377.4	629.8
Finance receivables, net		6.2	0.1	21.1	21.6	23.3
Current tax assets		-	-	-	11.3	37.5
Inventories, net		936.8	926.1	882.4	963.4	1,155.5
Deferred tax assets		74.9	70.5	69.0	119.4	107.5
Other assets		240.6	220.2	224.2	218.7	247.3
Total current assets		2,701.1	2,523.1	2,596.8	2,748.9	3,288.2

Finance receivables, net		29.2	20.6	-	-	-
Deferred tax assets		173.2	198.9	193.5	133.3	127.9
Other assets		89.5	53.8	68.1	77.0	99.1
Goodwill		139.7	134.5	128.6	131.5	141.1
Other intangible assets, net		25.6	22.3	19.0	18.1	17.8
Property, plant and equipment, net	³	624.4	629.3	598.7	655.4	720.7
Total non-current assets		1,081.6	1,059.4	1,007.9	1,015.3	1,106.6

Total assets		3,782.7	3,582.5	3,604.7	3,764.2	4,394.8

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities		1,017.5	940.9	949.3	1,044.2	1,613.0

Accrued liabilities and other liabilities		48.2	45.6	44.7	44.3	45.9
Deferred and other tax liabilities		204.9	200.6	193.7	188.4	200.1
Provisions		16.9	14.8	13.5	12.7	13.0
Long-term debt	³	699.2	689.3	697.2	699.8	711.8
Total non-current liabilities		969.2	950.3	949.1	945.2	970.8

Total liabilities		1,986.7	1,891.2	1,898.4	1,989.4	2,583.8

Shareholders’ equity		1,796.0	1,691.3	1,706.3	1,774.8	1,811.0
Total liabilities and shareholders’ equity		3,782.7	3,582.5	3,604.7	3,764.2	4,394.8



ASML - Summary U.S. GAAP Consolidated Statements of Cash Flows ^1,2

		Three months ended,

		Mar 29,	Jun 28,	Sep 27,	Dec 31,	Mar 28,
		2009	2009	2009	2009	2010
(in millions EUR)

CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)		(117.2)	(104.0)	19.8	50.5	107.3

Depreciation and amortization	³	38.7	35.1	33.8	34.0	34.7
Impairment		2.6	4.4	8.6	0.3	0.8
Loss (gain) on disposals of property, plant and equipment		2.6	(0.4)	0.9	1.0	0.6
Share-based payments		3.5	2.6	2.8	4.5	2.8
Allowance for doubtful debts		-	1.1	0.7	0.1	0.2
Allowance for obsolete inventory		22.1	43.9	13.2	7.4	13.8
Deferred income taxes		(27.0)	(31.2)	(4.5)	13.3	23.7
Change in assets and liabilities		157.3	110.7	(140.3)	(91.7)	(142.8)
Net cash provided by (used in) operating activities		82.6	62.2	(65.0)	19.4	41.1

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment		(43.9)	(39.9)	(13.5)	(7.7)	(7.2)
Proceeds from sale of property, plant and equipment		1.2	5.7	-	-	-
Net cash used in investing activities		(42.7)	(34.2)	(13.5)	(7.7)	(7.2)

CASH FLOWS FROM FINANCING ACTIVITIES
Dividend paid		-	(86.5)	-	-	-
Net proceeds from issuance of shares and stock options		0.1	0.4	4.2	6.4	10.4
Excess tax benefits (deficiencies) from stock options		(0.2)	0.5	0.7	1.0	-
Net proceeds from other long-term debt		-	0.1	-	-	-
Redemption and/or repayment of debt	³	(0.4)	(0.4)	(0.4)	(0.4)	(0.4)
Net cash provided by (used in) financing activities		(0.5)	(85.9)	4.5	7.0	10.0

Net cash flows		39.4	(57.9)	(74.0)	18.7	43.9

Effect of changes in exchange rates on cash		2.4	(0.4)	(0.7)	0.4	6.3
Net increase (decrease) in cash & cash equivalents		41.8	(58.3)	(74.7)	19.1	50.2

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

Basis of Presentation

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. Unless stated otherwise, the accompanying consolidated financial statements are stated in thousands of euros (‘EUR’).

Principles of consolidation

The consolidated financial statements include the accounts of ASML Holding N.V. and all of its majority-owned subsidiaries. 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. All intercompany profits, balances and transactions have been eliminated in the consolidation.

Use of estimates

The preparation of ASML’s 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 expense during the reported periods. Actual results could differ from those estimates.

Recognition of revenues

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 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.

For arrangements containing multiple elements, the revenue relating to the undelivered elements is deferred at estimated fair value until delivery of these elements. Revenue from installation services and service contracts provided to our customers is initially deferred and is recognized when the installation is completed and, in case of service contracts, over the life of those contracts. Revenue from extended and enhanced warranties is recognized in income on a straight-line basis over the contract period. The costs of providing services under extended and enhanced warranties are recognized when they occur.

Foreign currency risk management

The Company uses the euro as its invoicing currency in order to limit the exposure to foreign currency movements. Exceptions may occur on a customer by customer basis. To the extent that invoicing is done in a currency other than the euro, the Company is exposed to foreign currency risk.

It is the Company’s policy to hedge material transaction exposures, such as sales transactions and forecasted purchase transactions. The Company hedges these exposures through the use of currency contracts.

It is the Company’s policy to hedge material remeasurement exposures. These net exposures from certain monetary assets and liabilities in non-functional currencies are hedged with forward contracts.

As of March 28, 2010 other comprehensive income, within equity, includes EUR 60.3 million loss, net of taxes, representing the total anticipated loss to be charged to net sales, and EUR 3.9 million gain representing the total anticipated gain to be released to cost of sales which will offset the higher EUR equivalent of foreign currency denominated forecasted sales and purchase transactions.


ASML – Reconciliation U.S. GAAP – IFRS ^1,2

Net income	Three months ended,
	Mar 29, 2009	Mar 28, 2010
(in thousands EUR)
Net income (loss) under U.S. GAAP	(117.2)	107.3
Share-based payments (see Note 1)	(0.5)	0.1
Development costs (see Note 2)	11.5	2.0
Reversal of write-downs (see Note 3)	-	(3.3)
Income taxes (see Note 4)	(1.6)	(4.8)
Net income (loss) under IFRS	(107.8)	101.3


Shareholders’ equity	Mar 29,	Jun 28,	Sep 27,	Dec 31,	Mar 28,
	2009	2009	2009	2009	2010
(in thousands EUR)
Shareholders’ equity under U.S. GAAP	1,796.0	1,691.3	1,706.3	1,774.8	1,811.0
Share-based payments (see Note 1)	(7.1)	(4.9)	(0.5)	2.4	3.5
Development costs (see Note 2)	215.4	235.9	259.7	251.5	255.8
Reversal of write-downs (see Note 3)	-	-	28.5	17.1	13.8
Income taxes (see Note 4)	3.4	2.8	1.4	5.0	0.8
Shareholders’ equity under IFRS	2,007.7	1,925.1	1,995.4	2,050.8	2,084.9

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

Note 1 Share-based Payments

Under IFRS, ASML applies IFRS 2, “Share-based Payments” beginning from January 1, 2004. 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 the Company’s share price do affect the deferred tax asset at period-end and result in adjustments to the deferred tax asset.

As of January 1, 2006, 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 the Company recognizes 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 the Company’s share price do not affect the deferred tax asset recorded in the Company’s financial statements.

Note 2 Development costs

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.

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.

Note 3 Reversal of write-downs

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.

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.

Note 4 Income taxes

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.

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.

¹All quarterly information in this press release is unaudited.

²Numbers have been rounded for readers’ convenience.

³ As of January 1, 2010 ASML adopted ASC 810 "Amendments to FIN 46(R)" which resulted in the consolidation of the Variable Interest Entity which owns ASML's headquarters located in The Netherlands. The comparative figures have been adjusted to reflect this change in accounting policy. As of January 1, 2010 the total impact on Property, plant and equipment and Long-term dept amounts to EUR 36.7 million.

⁴ The calculation of diluted net income per ordinary share assumes the exercise of options issued under ASML stock option plans for periods in which exercises would have a dilutive effect, the calculation of diluted net income per ordinary share does not assume exercise of such options when such exercises would be antidilutive.

Contact:

ASML Holding NV
Media Relations:
Corporate Communications
Lucas van Grinsven, +31 40 268 3949
Veldhoven, the Netherlands
or
Investor Relations:
Craig DeYoung, +1 480 383 4005
Tempe, Arizona, USA
or
Franki D’Hoore, +31 40 268 6494
Veldhoven, the Netherlands