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ASML Announces 2012 Fourth Quarter and Full Year Results in Line with Guidance

ASML Holding N.V. (ASML) today publishes 2012 fourth-quarter results and full year results:

                 
  Q4 2012   Q3 2012   FY2012   FY2011
Net sales 1,023 1,229 4,732 5,651
...of which service and field option sales 257 229 930 767
New systems sold (units) 25 32 146 195
Used systems sold (units) 9 8 24 27
 
Net bookings, excluding EUV 667 831 3,312 2,909
Net bookings, excluding EUV (units) 32 33 144 134
ASP of booked systems, excluding EUV 20.9 25.2 23.0 21.7
Systems backlog, excluding EUV 1,214 1,340 1,214 1,733
Systems backlog, excluding EUV (units) 46 48 46 71
Gross margin 41.1 43.2 42.4 43.3
 
End-quarter cash and cash equivalents and short-term investments 2,698 6,159 2,698 2,732
Net income 298 275 1,146 1,467
EPS (in euro) 0.66 0.65 2.70 3.45
Adjusted EPS* (in euro)   0.73   0.67   2.80   3.45
(Figures in millions of euros unless otherwise indicated)

* Adjusted EPS is a non-GAAP measure which adjusts EPS for the temporary share increase in Q4 and Q3 2012 due to the Customer Co-Investment Program.¹

Outlook

“2012 fourth-quarter and full year sales and profit came in as expected, making the year our second best ever. The high level of sales was mainly supported by the large 28-32 nanometer (nm) capacity investment made by the Foundry industry, while Memory capacity investments represented only 25 percent of total net sales, never really picking up, as its major driver, the PC business, shrunk compared to 2011. We plan net sales for 2013 at a similar level to that of 2012, with a slow Q1 start, recovering in Q2 and a relatively large second half. This full-year perspective is supported by two engines that are less dependent on macroeconomic circumstances: Firstly, there is a strategic technology transition need for very lithography-intensive 14-20 nm foundry and logic nodes, which will enable the next generation portable products, for which all semiconductor architecture leaders have designs pending and need initial capacity. Secondly, ASML will ship its first NXE:3300B EUV tool in Q2 targeting for a maximum of 11 potential shipments in 2013, representing a net sales value of around EUR 700 million. We are encouraged by the latest EUV development performance as we have now demonstrated a stable 40 Watts of EUV source power against a production target of 105 Watts. Also, the source design was tested successfully at up to 60 Watts for debris mitigation. Furthermore, the NXE:3300B first system has shown good overlay and imaging performance. We expect the DRAM and NAND Flash memory segments to continue investing at a minimum level in 2013, generating an upside revenue opportunity for ASML if the PC business picks up with good related Solid State Drive attach rates,” said Eric Meurice, President and Chief Executive Officer of ASML.

For the first quarter of 2013, ASML expects net sales of about EUR 850 million, gross margin of about 38 percent, R&D costs of EUR 185 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.

Fourth-Quarter Product Highlights

  • Our TWINSCAN NXT lithography system has achieved record matched machine overlay of less than 4 nm, a 2 nm improvement.
  • Holistic Lithography continued to expand and integrated metrology and feedback loops which enable shrink, reduce drift and improve yield contributed to record sales from service and field options of EUR 257 million.
  • In our EUV program, our NXE:3100 pre-production systems have exposed a cumulative total of more than 30,000 wafers at customer sites, enabling successful recipe development for the sub-14 nm Logic and 22 nm DRAM nodes, which may soon lead to additional orders for production systems for delivery targeted in 2014.
  • Imaging of the NXE:3300B, the system intended for high-volume manufacturing, continues to improve, shows excellent results down to 14 nm. The first NXE:3300B customer system is in final stage of test and qualification in our cleanroom in Veldhoven.
  • Progress towards an EUV light source powerful enough for high-volume manufacturing has been encouraging and steady: We have seen in the past quarter results from the first fully integrated EUV source with stable full-field expose power of up to 40 Watts with good dose control over extended time. This allows us to prepare initial shipments of the NXE:3300B and gives us confidence in the ability to implement improvements over time to power levels enabling 70 wafers per hour at customers mid-2014.
  • For our new 450mm development program, ASML is expanding the design team in line with the targeting of pre-production systems for 2016 and production for 2018

Cash return programs

Due to ASML's strong financial position and operating cash flow prospects, we intend to continue to return excess cash to shareholders through increasing dividends and share buy back programs, thus supporting our shareholders in their continued investment in ASML.

ASML intends to again increase the dividend by 15 percent compared with last year. Therefore, we will submit a proposal to the 2013 Annual General Meeting of Shareholders (AGM) to declare a dividend in respect of 2012 of EUR 0.53 per ordinary share (for a total amount of approximately EUR 215 million), compared with a dividend of EUR 0.46 per ordinary share paid in respect of 2011. The proposed dividend represents 19.6 percent of earnings per share in 2012.

For regulatory reasons, ASML will not announce any new share buy back program before Cymer’s Extraordinary General Meeting of Shareholders, which will be held on 5 February 2013.

Additional information

  • In the fourth quarter, we announced the intended cash-and-stock acquisition of lithographic light source supplier Cymer. As part of the regulatory review process, clearance has been granted by the U.S. Committee on Foreign Investment in the United States (CFIUS) and German anti-trust authorities. We continue to expect the transaction to close in the first half of 2013.
  • In the fourth quarter ASML released EUR 119.5 million of its liability for unrecognized tax benefits after successful conclusion of tax audits in different jurisdictions, which resulted in a net tax benefit of EUR 115.8 million for the quarter. The release of the liability for unrecognized tax benefits almost completely offsets the income tax due over ASML’s earnings for the year.
  • SG&A of EUR 79.5 million reflected exceptional additional costs of EUR 14 million, related to the acquisition offer for Cymer.

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 8,500 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

Press Conference

A press conference hosted by CEO Eric Meurice and CFO Peter Wennink will be held at our office in Veldhoven at 11:00 AM Central European Time / 05:00 AM Eastern U.S. time. To listen to the press conference, access is available via www.asml.com

A presentation about 2012 fourth quarter and full year results is available on www.asml.com

A video statement of CFO Peter Wennink is available on 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 20 531 5871 and the US +1 646 254 3367 (US participants will have to quote the following confirmation code when dialing into the conference: 6663104). 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

2012 Annual Report

ASML will publish its 2012 annual report on Form 20-F, Statutory Annual Report and Remuneration Report on 13 February 2013. The reports will be published on our website at 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, the accounting of income taxes and the accounting of reversal of inventory write-downs. ASML’s quarterly IFRS consolidated income statement, 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 December 31, 2012, the related consolidated statements of operations and consolidated statements of cash flows for the quarter ended December 31, 2012 as presented in this press release are unaudited.

Regulated Information

This press release, the US GAAP consolidated financial statements, the IFRS consolidated financial statements and the Statutory Interim Report 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, including expected sales trends, expected shipments of tools, productivity of our tools, purchase commitments, IC unit demand, financial results, expected gross margin and expenses and statements about our plans to return funds to our shareholders. 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, risks associated with our co-investment program, including whether the 450mm and EUV research and development programs will be successful and ASML’s ability to hire additional workers as part of the 450mm and EUV development programs, our ability to successfully complete acquisitions, including the Cymer transaction or the expected benefits of the Cymer transaction 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.

The foregoing risk list of factors is not exhaustive. You should consider carefully the foregoing factors and the other risks and uncertainties that affect the business of ASML described in the risk factors included in ASML's Annual Report on Form 20-F and other documents filed by ASML from time to time with the SEC. ASML disclaims any obligation to update the forward-looking statements contained herein.

Important Information for Investors and Stockholders

This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended. The proposed transaction will be submitted to the stockholders of Cymer for their consideration. In connection with the proposed transaction, Cymer has filed a proxy statement with the SEC and ASML has filed a registration statement on Form F-4 with additional information concerning the transaction, including a proxy statement/prospectus. CYMER STOCKHOLDERS ARE ADVISED TO READ THESE DOCUMENTS CAREFULLY AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. The proxy statement, the registration statement, and other documents containing other important information about Cymer and ASML filed or furnished to the SEC may be read and copied at the SEC’s public reference room located at 100 F Street, N.E., Washington, D.C. 20549. Information on the operation of the Public Reference Rooms may be obtained by calling the SEC at 1-800-SEC-0330. The SEC also maintains a website, www.sec.gov, from which any electronic filings made by ASML and Cymer may be obtained without charge. In addition, investors and shareholders may obtain copies of the documents filed with or furnished to the SEC upon oral or written request without charge. Requests may be made in writing by regular mail by contacting ASML at the following address: De Run 6501, 5504 DR, Veldhoven, The Netherlands, Attention: Investor Relations, or by contacting Cymer at the following address: 17075 Thornmint Court, San Diego, CA, 92127, Attention: Investor Relations, +1 858 385 6097.

Cymer and ASML and their respective directors, executive officers and employees and other persons may be deemed to be participants in the solicitation of proxies in respect of the transaction. Information regarding Cymer’s directors and executive officers and their ownership of Cymer common stock is available in Cymer’s proxy statement for its 2012 meeting of stockholders, as filed with the SEC of Schedule 14A on April 11, 2012. Information about ASML’s directors and executive officers and their ownership of ASML ordinary shares is available in its Annual Report on Form 20-F for the year ended December 31, 2011 and is available in the joint proxy statement/prospectus . Other information regarding the interests of such individuals as well as information regarding Cymer’s and ASML’s directors and officers is also set forth in the proxy statement/prospectus. These documents can be obtained free of charge from the sources indicated above.

1 Adjusted EPS is calculated using the weighted average number of shares outstanding excluding the shares issued (in October and November 2012) to the participants in the Customer Co-Investment Program. EPS was calculated based on a weighted average basic number of shares of 452,452 thousand in Q4, 422,516 thousand in Q3, and 424,096 thousand for the full year 2012. Adjusted EPS was calculated based on an adjusted weighted average basic number of shares of 406,801 thousand in Q4, 409,229 thousand in Q3, and 409,340 thousand for the full year 2012. No adjustments were made to net income in calculating Adjusted EPS.

 

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

 
Three months ended, Twelve months ended,
Dec 31, Dec 31, Dec 31, Dec 31,
2012 2011 2012 2011
(in millions EUR, except per share data)                
 
Net system sales 766.5 992.7 3,801.6 4,883.9
Net service and field option sales   256.6   218.2   929.9   767.1
Total net sales 1,023.1 1,210.9 4,731.5 5,651.0
 
Total cost of sales   602.9   714.5   2,726.3   3,201.6
Gross profit 420.2 496.4 2,005.2 2,449.4
 
Research and development costs 155.4 150.4 589.1 590.3
Selling, general and administrative costs   79.5   56.3   259.3   217.9
Income from operations 185.3 289.7 1,156.8 1,641.2
 
Interest income (expense), net   (3.4)   1.5   (6.2)   7.4
Income before income taxes 181.9 291.2 1,150.6 1,648.6
 
Benefit from (provision for) income taxes (3.7) (6.5) (96.8) (181.6)
Benefit from release of liability for unrecognized tax benefits   119.5 4 -   92.5 4 -
Net income 297.7 284.7 1,146.3 1,467.0
 
 
Basic net income per ordinary share 0.66 0.69 2.70 3.45
Diluted net income per ordinary share 3 0.65 0.68 2.68 3.42
 
Weighted average number of ordinary shares used in computing per share amounts (in millions):
Basic 452.5 415.6 424.1 425.6
Diluted

3

455.4 419.0 427.0 429.1
 
 

ASML - Ratios and Other Data 1,2

 
Three months ended, Twelve months ended,
Dec 31, Dec 31, Dec 31, Dec 31,
2012 2011 2012 2011
(in millions EUR, except otherwise indicated)                
 
Gross profit as a percentage of net sales 41.1 41.0 42.4 43.3
Income from operations as a percentage of net sales 18.1 23.9 24.4 29.0
Net income as a percentage of net sales 29.1 23.5 24.2 26.0
Income taxes as a percentage of income before income taxes (63.7) 4 2.3 0.4 4 11.0
Shareholders’ equity as a percentage of total assets 54.9 47.4 54.9 47.4
Sales of systems (in units) 34 41 170 222
Average selling price of system sales (EUR millions) 22.5 24.2 22.4 22.0
Value of systems backlog excluding EUV (EUR millions) 1,214 1,733 1,214 1,733
Systems backlog excluding EUV (in units) 46 71 46 71
Average selling price of systems backlog excluding EUV (EUR millions) 26.4 24.4 26.4 24.4
Value of booked systems excluding EUV (EUR millions) 667 710 3,312 2,909
Net bookings excluding EUV (in units) 32 37 144 134
Average selling price of booked systems excluding EUV (EUR millions) 20.9 19.2 23.0 21.7
Number of payroll employees in FTEs 8,497 7,955 8,497 7,955
Number of temporary employees in FTEs 2,139 1,935 2,139 1,935
 
 
ASML - Summary U.S. GAAP Consolidated Balance Sheets 1,2
 
Dec 31, Dec 31,
2012 2011
(in millions EUR)                
 
ASSETS
Cash and cash equivalents 1,767.6 2,731.8
Short-term investments 930.0 -
Accounts receivable, net 605.3 880.6
Finance receivables, net 265.2 78.9
Current tax assets 57.1 32.1
Inventories, net 1,857.0 1,624.6
Deferred tax assets 103.7 120.7
Other assets   246.0   238.1        
Total current assets 5,831.9 5,706.8
 
Finance receivables, net 38.6 -
Deferred tax assets 39.4 38.7
Other assets 311.6 307.3
Goodwill 149.2 146.0
Other intangible assets, net 9.9 8.4
Property, plant and equipment, net   1,029.9   1,053.6        
Total non-current assets 1,578.6 1,554.0
 
Total assets 7,410.5 7,260.8
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities 2,086.3 2,233.0
 
Long-term debt 755.9 733.8
Deferred and other tax liabilities 88.3 4 176.7
Provisions 8.0 10.0
Accrued and other liabilities   405.1   663.1        
Total non-current liabilities 1,257.3 1,583.6
                 
Total liabilities 3,343.6 3,816.6
 
Shareholders’ equity   4,066.9   3,444.2        
Total liabilities and shareholders’ equity 7,410.5 7,260.8
 
 
ASML - Summary U.S. GAAP Consolidated Statements of Cash Flows 1,2
 
Three months ended, Twelve months ended,
Dec 31, Dec 31, Dec 31, Dec 31,
2012 2011 2012 2011
(in millions EUR)                
 
CASH FLOWS FROM OPERATING ACTIVITIES
Net income 297.7 284.7 1,146.3 1,467.0
 
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation and amortization 43.5 40.1 186.6 165.2
Impairment 0.5 2.5 3.3 12.3
Loss on disposal of property, plant and equipment 0.2 1.2 2.2 3.4
Share-based payments 5.0 3.6 18.7 12.4
Allowance for doubtful receivables (0.3) 0.5 0.5 0.8
Allowance for obsolete inventory 22.9 23.0 130.9 60.2
Deferred income taxes (120.3) 4 27.6 (72.4) 4 63.2
Changes in assets and liabilities   (504.7)   (250.8)   (712.6)   286.0
Net cash provided by (used in) operating activities (255.5) 132.4 703.5 2,070.5
 
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment (35.7) (93.8) (171.9) (301.0)
Purchase of intangible assets (4.3) - (7.6) -
Purchase of available for sale securities (90.0) - (1,380.0) -
Maturity of available for sale securities 200.0 - 450.0 -
Acquisition of subsidiaries (net of cash acquired)   (10.3)   -   (10.3)   -
Net cash provided by (used in) investing activities 59.7 (93.8) (1,119.8) (301.0)
 
CASH FLOWS FROM FINANCING ACTIVITIES
Dividend paid - - (188.9) (172.6)
Purchase of shares (265.7) (161.1) (535.4) (700.5)
Net proceeds from issuance of shares 840.7 8.0 3,907.7 5 34.1
Capital repayment (3,728.3) - (3,728.3) 5 -
Deposits from customers - - - (150.0)
Repayment of debt (0.8) (0.7) (2.9) (2.6)
Tax benefit from share-based payments   0.6   -   2.2   -
Net cash provided by (used in) financing activities (3,153.5) (153.8) (545.6) (991.6)
                 
Net cash flows (3,349.3) (115.2) (961.9) 777.9
 
Effect of changes in currency rates on cash   (1.9)   8.9   (2.3)   4.1
Net increase (decrease) in cash and cash equivalents (3,351.2) (106.3) (964.2) 782.0
 
   
ASML - Quarterly Summary U.S. GAAP Consolidated Statements of Operations 1,2
 
Three months ended,
 
Dec 31, Sep 30, Jul 1, Apr 1, Dec 31,
2012 2012 2012 2012 2011
(in millions EUR, except per share data)                    
 
Net system sales 766.5 1,000.3 984.8 1,050.0 992.7
Net service and field option sales   256.6   228.5   242.9   201.9   218.2
Total net sales 1,023.1 1,228.8 1,227.7 1,251.9 1,210.9
 
Total cost of sales   602.9   697.8   697.3   728.3   714.5
Gross profit 420.2 531.0 530.4 523.6 496.4
 
Research and development costs 155.4 143.8 144.6 145.3 150.4
Selling, general and administrative costs   79.5   69.7   54.7   55.4   56.3
Income from operations 185.3 317.5 331.1 322.9 289.7
 
Interest income (expense), net   (3.4)   (2.5)   (0.9)   0.6   1.5
Income before income taxes 181.9 315.0 330.2 323.5 291.2
 
Benefit from (provision for) income taxes   115.8 4 (40.3)   (38.3)   (41.5)   (6.5)
Net income 297.7 274.7 291.9 282.0 284.7
 
 
Basic net income per ordinary share 0.66 0.65 0.71 0.68 0.69
Diluted net income per ordinary share 3 0.65 0.65 0.71 0.68 0.68
 
Weighted average number of ordinary shares used in computing per share amounts (in millions):
Basic 452.5 422.5 409.5 411.8 415.6
Diluted 3 455.4 425.7 412.7 415.0 419.0
 
 
ASML - Quarterly Summary Ratios and other data 1,2
 
Three months ended,
 
Dec 31, Sep 30, Jul 1, Apr 1, Dec 31,
2012 2012 2012 2012 2011
(in millions EUR, except otherwise indicated)                    
 
Gross profit as a percentage of net sales 41.1 43.2 43.2 41.8 41.0
Income from operations as a percentage of net sales 18.1 25.8 27.0 25.8 23.9
Net income as a percentage of net sales 29.1 22.4 23.8 22.5 23.5
Income taxes as a percentage of income before income taxes (63.7) 4 12.8 11.6 12.8 2.3
Shareholders’ equity as a percentage of total assets 54.9 65.2 49.8 48.8 47.4
Sales of systems (in units) 34 40 44 52 41
Average selling price of system sales (EUR millions) 22.5 25.0 22.4 20.2 24.2
Value of systems backlog excluding EUV (EUR millions) 1,214 1,340 1,503 1,598 1,733
Systems backlog excluding EUV (in units) 46 48 55 56 71
Average selling price of systems backlog excluding EUV (EUR millions) 26.4 27.9 27.3 28.5 24.4
Value of booked systems excluding EUV (EUR millions) 667 831 949 865 710
Net bookings excluding EUV (in units) 32 33 43 36 37
Average selling price of booked systems excluding EUV (EUR millions) 20.9 25.2 22.1 24.0 19.2
Number of payroll employees in FTEs 8,497 8,203 8,010 7,986 7,955
Number of temporary employees in FTEs 2,139 2,027 1,860 1,833 1,935
 
 
ASML - Quarterly Summary U.S. GAAP Consolidated Balance Sheets 1,2
 
Dec 31, Sep 30, Jul 1, Apr 1, Dec 31,
2012 2012 2012 2012 2011
(in millions EUR)                    
 
ASSETS
Cash and cash equivalents 1,767.6 5,118.8 1,851.8 2,953.4 2,731.8
Short-term investments 930.0 1,040.0 850.0 - -
Accounts receivable, net 605.3 326.8 631.7 761.2 880.6
Finance receivables, net 265.2 221.6 122.3 78.8 78.9
Current tax assets 57.1 36.6 23.6 15.6 32.1
Inventories, net 1,857.0 1,920.0 1,721.2 1,607.6 1,624.6
Deferred tax assets 103.7 111.0 123.4 117.3 120.7
Other assets   246.0   235.0   235.2   233.2   238.1
Total current assets 5,831.9 9,009.8 5,559.2 5,767.1 5,706.8
 
Finance receivables, net 38.6 44.7 - - -
Deferred tax assets 39.4 38.3 40.1 38.0 38.7
Other assets 311.6 304.9 290.5 318.0 307.3
Goodwill 149.2 145.9 150.2 141.5 146.0
Other intangible assets, net 9.9 7.2 8.6 10.1 8.4
Property, plant and equipment, net   1,029.9   1,036.9   1,169.2   1,124.6   1,053.6
Total non-current assets 1,578.6 1,577.9 1,658.6 1,632.2 1,554.0
 
Total assets 7,410.5 10,587.7 7,217.8 7,399.3 7,260.8
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities 2,086.3 2,301.8 2,075.0 2,091.6 2,233.0
 
Long-term debt 755.9 747.3 741.8 736.8 733.8
Deferred and other tax liabilities 88.3 4 215.2 205.1 193.8 176.7
Provisions 8.0 8.7 9.5 9.4 10.0
Accrued and other liabilities   405.1   409.0   590.9   755.7   663.1
Total non-current liabilities 1,257.3 1,380.2 1,547.3 1,695.7 1,583.6
                     
Total liabilities 3,343.6 3,682.0 3,622.3 3,787.3 3,816.6
 
Shareholders’ equity   4,066.9   6,905.7   3,595.5   3,612.0   3,444.2
Total liabilities and shareholders’ equity 7,410.5 10,587.7 7,217.8 7,399.3 7,260.8
 
 
ASML - Quarterly Summary U.S. GAAP Consolidated Statements of Cash Flows 1,2
 
Three months ended,
 
Dec 31, Sep 30, Jul 1, Apr 1, Dec 31,
2012 2012 2012 2012 2011
(in millions EUR)                    
 
CASH FLOWS FROM OPERATING ACTIVITIES
Net income 297.7 274.7 291.9 282.0 284.7
 
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation and amortization 43.5 36.7 56.8 49.6 40.1
Impairment 0.5 1.7 1.1 - 2.5
Loss on disposal of property, plant and equipment 0.2 0.5 1.2 0.3 1.2
Share-based payments 5.0 4.9 4.4 4.4 3.6
Allowance for doubtful receivables (0.3) 0.5 0.1 0.2 0.5
Allowance for obsolete inventory 22.9 31.0 53.4 23.6 23.0
Deferred income taxes (120.3) 4 25.6 0.7 21.6 27.6
Changes in assets and liabilities   (504.7)   113.7   (335.5)   13.9   (250.8)
Net cash provided by (used in) operating activities (255.5) 489.3 74.1 395.6 132.4
 
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment (35.7) (50.2) (38.8) (47.2) (93.8)
Purchase of intangible assets (4.3) - - (3.3) -
Purchase of available for sale securities (90.0) (440.0) (850.0) - -
Maturity of available for sale securities 200.0 250.0 - - -
Acquisition of subsidiaries (net of cash acquired)   (10.3)   -   -   -   -
Net cash provided by (used in) investing activities 59.7 (240.2) (888.8) (50.5) (93.8)
 
CASH FLOWS FROM FINANCING ACTIVITIES
Dividend paid - - (188.9) - -
Purchase of shares (265.7) (25.2) (108.8) (135.7) (161.1)
Net proceeds from issuance of shares 840.7 3,046.5 4.2 16.3 8.0
Capital repayment (3,728.3) - - - -
Repayment of debt (0.8) (0.7) (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 (3,153.5) 3,022.1 (294.2) (120.0) (153.8)
                     
Net cash flows (3,349.3) 3,271.2 (1,108.9) 225.1 (115.2)
 
Effect of changes in currency rates on cash   (1.9)   (4.2)   7.3   (3.5)   8.9
Net increase (decrease) in cash and cash equivalents (3,351.2) 3,267.0 (1,101.6) 221.6 (106.3)
 

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 millions of euros (‘EUR’).

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 (together referred to as “ASML” or the “Company”). 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 expenses during the reported periods. Actual results could differ from those estimates.

Recognition of revenues

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 its 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 the Company is unable to establish relative selling price using VSOE or TPE, the Company 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

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 forecasted sales and purchase transactions and material net remeasurement exposures, such as accounts receivable and payable. The Company hedges these exposures through the use of foreign exchange contracts.

As of December 31, 2012, shareholders’ equity includes EUR 4.9 million gain (net of taxes: EUR 4.3 million gain; December 31, 2011: EUR 4.4 million loss) representing the total anticipated gain to be released to sales, and EUR 6.0 million loss (net of taxes: EUR 5.3 million loss; December 31, 2011: EUR 10.3 million gain) to be charged to cost of sales, which will offset the EUR equivalent of foreign currency denominated forecasted sales and purchase transactions.

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

Net income   Three months ended,     Twelve months ended,
Dec 31,   Dec 31, Dec 31,   Dec 31,
2012 2011 2012 2011
(in millions EUR)                    
Net income based on U.S. GAAP 297.7 284.7 1,146.3 1,467.0
Development expenditures (see Note 1) 41.1 25.8 164.8 (2.2)
Share-based payments (see Note 2) (1.4) 0.3 (1.0) (0.3)
Reversal of write-downs (see Note 3) (14.0) 3.4 (7.2) 4.6
Income taxes (see Note 4)   (2.6)   2.8       (0.6)   24.9
Net income based on IFRS 320.8 317.0 1,302.3 1,494.0
 
 
Shareholders’ equity Dec 31, Sep 30, Jul 1, Apr 1, Dec 31,
2012 2012 2012 2012 2011
(in millions EUR)                    
Shareholders’ equity based on U.S. GAAP 4,066.9 6,905.7 3,595.5 3,612.0 3,444.2
Development expenditures (see Note 1) 396.8 356.6 308.7 267.3 233.0
Share-based payments (see Note 2) 4.1 4.1 4.0 3.7 2.7
Reversal of write-downs (see Note 3) - 14.0 14.4 6.5 7.2
Income taxes (see Note 4)   30.4   35.0   36.4   31.4   32.7
Equity based on IFRS 4,498.2 7,315.4 3,959.0 3,920.9 3,719.8

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

Note 1 Development expenditures

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 2 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 ASML’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 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.

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.

“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, including expected sales trends, expected shipments of tools, productivity of our tools, purchase commitments, IC unit demand, financial results, expected gross margin and expenses and statements about our plans to return funds to our shareholders. 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, risks associated with our co-investment program, including whether the 450mm and EUV research and development programs will be successful and ASML’s ability to hire additional workers as part of the 450mm and EUV development programs, our ability to successfully complete acquisitions, including the Cymer transaction or the expected benefits of the Cymer transaction 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.

The foregoing risk list of factors is not exhaustive. You should consider carefully the foregoing factors and the other risks and uncertainties that affect the business of ASML described in the risk factors included in ASML's Annual Report on Form 20-F and other documents filed by ASML from time to time with the SEC. ASML disclaims any obligation to update the forward-looking statements contained herein.

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 issue of shares under ASML share plans for periods in which exercises or issues would have a dilutive effect. The calculation of diluted net income per ordinary share does not assume exercise of such options or issuances of shares when such exercises or issuances would be anti-dilutive.

4 In Q4 ASML released EUR 119.5 million of its liability for unrecognized tax benefits after successful conclusion of tax audits in different jurisdictions, which resulted in a net tax benefit of EUR 115.8 million in the fourth quarter. The difference between the amount released in Q4 (EUR 119.5 million) and the full year 2012 (EUR 92.5 million) relates to the additions to the liability for unrecognized tax benefits during the first three quarters of 2012. The net release of the liability for unrecognized tax benefits almost completely offsets the income tax due over ASML’s income before income taxes for the year.

5 The net proceeds from issuance of shares includes an amount of EUR 3,853.9 million related to the Customer Co-Investment Program. The difference of EUR 125.6 million between the capital repayment of EUR 3,728.3 million and the net proceeds from issuance of shares totaling EUR 3,853.9 million related to the Customer Co-Investment Program relates to the capital repayment on ASML’s treasury shares which participated in the Synthetic Share Buyback in November 2012.

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