EX-99.3 4 u56735exv99w3.htm EXHIBIT 99.3 exv99w3
Exhibit 99.3
ASML — Summary IFRS Consolidated Income Statements 1,2
                                 
    Three months ended,     Nine months ended,  
(in thousands EUR)   Sep 30, 2007     Sep 28, 2008     Sep 30, 2007     Sep 28, 2008  
 
 
                               
Net system sales
    843,232       590,723       2,516,425       2,136,296  
Net service and field option sales
    91,142       105,770       296,842       323,562  
 
Total net sales
    934,374       696,493       2,813,267       2,459,858  
 
                               
Cost of sales
    581,839       452,713       1,735,058       1,539,628  
 
Gross profit on sales
    352,535       243,780       1,078,209       920,230  
 
                               
Research and development costs, net of credits
    76,886       88,571       268,236       258,360  
Selling, general and administrative costs
    55,977       52,245       168,449       165,272  
 
Operating income
    219,672       102,964       641,524       496,598  
 
                               
Interest income
    9,089       6,599       21,571       15,147  
 
Income before income taxes
    228,761       109,563       663,095       511,745  
 
                               
Provision for income taxes
    (54,873 )     (27,013 )     (169,076 )     (52,244 )
 
Net income
    173,888       82,550       494,019       459,501  

 


 

ASML — Summary IFRS Consolidated Balance Sheets 1,2
                 
(in thousands EUR)   Dec 31, 2007     Sep 28, 2008  
 
 
               
ASSETS
               
 
               
Property, plant and equipment
    380,894       503,057  
Goodwill
    136,246       137,273  
Other intangible assets
    216,908       281,323  
Deferred tax assets
    220,863       228,605  
Derivative financial instruments
    20,930       12,297  
Other non-current assets
    32,828       32,607  
 
Total non-current assets
    1,008,669       1,195,162  
 
               
Inventories
    1,102,210       1,134,039  
Derivative financial instruments
    12,319       20,953  
Accounts receivable, net
    637,975       574,230  
Other current assets
    193,415       210,579  
Cash and cash equivalents
    1,271,636       1,312,993  
 
Total current assets
    3,217,555       3,252,794  
 
               
Total assets
    4,226,224       4,447,956  
 
               
EQUITY AND LIABILITIES
               
 
               
Equity
    2,039,011       2,314,693  
 
               
Other long-term debt
    595,783       590,971  
Derivative financial instruments
          891  
Deferred tax and other liabilities
    257,325       256,866  
Other deferred liabilities
    7,935       7,859  
 
Total non-current liabilities
    861,043       856,587  
 
               
Accounts payable
    282,953       270,932  
Accrued liabilities and other
    927,841       948,139  
Current tax liabilities
    104,095       42,395  
Derivative financial instruments
    11,281       15,210  
 
Total current liabilities
    1,326,170       1,276,676  
 
               
Total equity and liabilities
    4,226,224       4,447,956  

 


 

ASML — Summary IFRS Consolidated Statements of Cash Flows 1,2
                                 
    Three months ended,     Nine months ended,  
(in thousands EUR)   Sep 30, 2007     Sep 28, 2008     Sep 30, 2007     Sep 28, 2008  
 
 
                               
CASH FLOWS FROM OPERATING ACTIVITIES
                               
 
                               
Net income
    173,888       82,550       494,019       459,501  
 
                               
Depreciation and amortization
    58,330       50,662       161,211       142,247  
Disposals of property, plant and equipment
    1,698       1,413       12,572       3,827  
Share-based payments
    3,675       3,581       10,342       9,858  
Change in tax assets and liabilities
    3,928       2,242       28,486       (70,426 )
Change in assets and liabilities
    (6,268 )     (80,071 )     6,342       7,279  
 
Net cash provided by operating activities
    235,251       60,377       712,972       552,286  
 
                               
CASH FLOWS FROM INVESTING ACTIVITIES
                               
 
                               
Purchases of property, plant and equipment
    (49,676 )     (68,237 )     (125,188 )     (188,711 )
Proceeds from sale of property, plant and equipment
                3,355        
Purchases of intangible assets
    (60,659 )     (41,502 )     (96,138 )     (130,111 )
Acquisition of subsidiary (net of cash acquired)
                (188,011 )      
 
Net cash used in investing activities
    (110,335 )     (109,739 )     (405,982 )     (318,822 )
 
                               
CASH FLOWS FROM FINANCING ACTIVITIES
                               
 
                               
Purchase of shares in conjunction with conversion rights of bond holders and stock options
                (156,253 )     (87,603 )
Dividend paid
          (394 )           (107,841 )
Net proceeds from issuance of shares and stock options
    25,428       1,439       51,825       4,967  
Net proceeds from issuance of bonds
                593,790        
Redemption and/or repayment of debt
    (1,530 )     (1,280 )     (1,875 )     (1,280 )
 
Net cash provided by (used in) financing activities
    23,898       (235 )     487,487       (191,757 )
 
                               
 
Net cash flows
    148,814       (49,597 )     794,477       41,707  
Effect of changes in exchange rates on cash
    (2,846 )     1,692       (5,107 )     (350 )
 
Net increase (decrease) in cash & cash equivalents
    145,968       (47,905 )     789,370       41,357  

 


 

ASML — Quarterly Summary IFRS Consolidated Income Statements 1,2
                                         
    Three months ended,  
    Sep 30,     Dec 31,     Mar 30,     Jun 29,     Sep 28,  
(in millions EUR)   2007     2007     2008     2008     2008  
 
 
                                       
Net system sales
    843.2       834.9       820.0       725.6       590.7  
Net service and field option sales
    91.2       120.0       99.2       118.6       105.8  
 
Total net sales
    934.4       954.9       919.2       844.2       696.5  
 
                                       
Cost of sales
    581.9       583.7       561.7       525.3       452.7  
 
Gross profit on sales
    352.5       371.2       357.5       318.9       243.8  
 
                                       
Research and development costs, net of credits
    76.8       84.7       82.7       87.1       88.6  
Selling, general and administrative costs
    56.0       73.5       57.7       55.3       52.2  
 
Operating income
    219.7       213.0       217.1       176.5       103.0  
 
                                       
Interest income (charges)
    9.1       (2.2 )     3.6       5.0       6.6  
 
Income before income taxes
    228.8       210.8       220.7       181.5       109.6  
 
                                       
Benefit from (provision for) income taxes
    (54.9 )     18.5       (54.2 )     29.0       (27.0 )
 
Net income
    173.9       229.3       166.5       210.5       82.6  

 


 

ASML — Summary IFRS Consolidated Balance Sheets 1,2
                                         
    Sep 30,     Dec 31,     Mar 30,     Jun 29,     Sep 28,  
(in millions EUR)   2007     2007     2008     2008     2008  
 
 
                                       
ASSETS
                                       
 
                                       
Property, plant and equipment
    343.3       380.9       401.4       458.1       503.1  
Goodwill
    141.7       136.3       127.2       127.3       137.3  
Other intangible assets
    198.4       216.9       238.0       260.5       281.3  
Deferred tax assets
    252.3       220.9       213.3       238.4       228.6  
Derivative financial instruments
    9.9       20.9       47.7       1.4       12.3  
Other non-current assets
    33.3       32.8       31.8       32.0       32.6  
 
Total non-current assets
    978.9       1,008.7       1,059.4       1,117.7       1,195.2  
 
                                       
Inventories
    1,021.2       1,102.2       1,152.0       1,130.2       1,134.0  
Derivative financial instruments
    23.5       12.3       36.5       46.6       21.0  
Accounts receivable, net
    611.7       638.0       741.5       516.9       574.2  
Other current assets
    211.8       193.4       202.4       185.9       210.6  
Cash and cash equivalents
    2,445.2       1,271.6       1,397.1       1,360.9       1,313.0  
 
Total current assets
    4,313.4       3,217.5       3,529.5       3,240.5       3,252.8  
 
                                       
Total assets
    5,292.3       4,226.2       4,588.9       4,358.2       4,448.0  
 
                                       
EQUITY AND LIABILITIES
                                       
 
                                       
Equity
    1,961.8       2,039.0       2,121.8       2,242.6       2,314.7  
 
                                       
Convertible subordinated debt
    40.1                          
Other long-term debt
    597.8       595.8       609.1       585.6       591.0  
Derivative financial instruments
    0.7                   11.2       0.9  
Deferred tax and other liabilities
    259.3       257.3       282.9       260.2       256.9  
Other deferred liabilities
    8.2       7.9       7.2       7.4       7.8  
 
Total non-current liabilities
    906.1       861.0       899.2       864.4       856.6  
 
                                       
Accounts payable
    320.9       283.0       479.6       267.2       271.0  
Accrued liabilities and other
    1,933.0       927.8       957.7       910.8       948.1  
Current tax liabilities
    151.9       104.1       111.5       50.8       42.4  
Derivative financial instruments
    18.6       11.3       19.1       22.4       15.2  
 
Total current liabilities
    2,424.4       1,326.2       1,567.9       1,251.2       1,276.7  
 
                                       
Total equity and liabilities
    5,292.3       4,226.2       4,588.9       4,358.2       4,448.0  

 


 

ASML — Summary IFRS Consolidated Statements of Cash Flows 1,2
                                         
    Three months ended,  
    Sep 30,     Dec 31,     Mar 30,     Jun 29,     Sep 28,  
(in millions EUR)   2007     2007     2008     2008     2008  
 
 
                                       
CASH FLOWS FROM OPERATING ACTIVITIES
                                       
 
                                       
Net income
    173.9       229.3       166.5       210.5       82.6  
 
                                       
Depreciation and amortization
    58.3       49.2       46.8       44.8       50.7  
Disposals of property, plant and equipment
    1.7       1.6       1.1       1.3       1.4  
Share-based payments
    3.7       6.8       3.4       2.9       3.6  
Change in tax assets and liabilities
    4.0       (26.7 )     29.7       (102.4 )     2.2  
Change in assets and liabilities
    (6.3 )     (126.6 )     65.4       21.9       (80.1 )
 
Net cash provided by operating activities
    235.3       133.6       312.9       179.0       60.4  
 
                                       
CASH FLOWS FROM INVESTING ACTIVITIES
                                       
 
                                       
Purchases of property, plant and equipment
    (49.7 )     (54.0 )     (55.1 )     (65.4 )     (68.2 )
Proceeds from sale of property, plant and equipment
          1.7                    
Purchases of intangible assets
    (60.7 )     (40.4 )     (45.5 )     (43.1 )     (41.5 )
 
Net cash used in investing activities
    (110.4 )     (92.7 )     (100.6 )     (108.5 )     (109.7 )
 
                                       
CASH FLOWS FROM FINANCING ACTIVITIES
                                       
 
                                       
Capital repayment
          (1,011.9 )                  
Purchase of shares in conjunction with conversion rights of bond holders and stock options
          (203.6 )     (87.6 )            
Dividend paid
                      (107.5 )     (0.4 )
Net proceeds from issuance of shares and stock options
    25.4       11.5       3.0       0.6       1.4  
Redemption and/or repayment of debt
    (1.5 )     (7.9 )                 (1.3 )
 
Net cash provided by (used in) financing activities
    23.9       (1,211.9 )     (84.6 )     (106.9 )     (0.3 )
 
                                       
 
Net cash flows
    148.8       (1,171.0 )     127.7       (36.4 )     (49.6 )
 
                                       
Effect of changes in exchange rates on cash
    (2.8 )     (2.6 )     (2.2 )     0.2       1.7  
 
Net increase (decrease) in cash & cash equivalents
    146.0       (1,173.6 )     125.5       (36.2 )     (47.9 )

 


 

ASML — Notes to the Summary IFRS Consolidated Financial Statements
Basis of Presentation
ASML has prepared the accompanying summary consolidated financial statements in accordance with International Financial Reporting Standards (“IFRS”) as adopted by the EU — accounting principles generally accepted in the Netherlands for companies quoted on Euronext Amsterdam. Further disclosures, as required under IFRS in annual reports and interim reporting (IAS 34), are not included. The accompanying consolidated financial statements are stated in thousands of euros (‘EUR’), except otherwise indicated.
For internal and external reporting purposes, ASML follows accounting principles generally accepted in the United States of America (“U.S. GAAP”). U.S. GAAP is ASML’s primary accounting standard for the Company’s setting of financial and operational performance targets.
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 IFRS 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 the buyer is fixed or determinable; and collectibility 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 clean room 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. A system is shipped, and revenue recognized, only after all specifications are met and customer sign-off is received or waived. 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.

 


 

ASML — Reconciliation U.S. GAAP — IFRS 1,2
Net income
                                 
    Three months ended,     Nine months ended,  
(in thousands EUR)   Sep 30, 2007     Sep 28, 2008     Sep 30, 2007     Sep 28, 2008  
 
Net income under U.S. GAAP
    166,279       73,294       478,460       410,394  
Share-based payments (see Note 1)
    280       (2,492 )     293       (3,009 )
Capitalization of development costs (see Note 2)
    9,594       14,867       29,575       55,197  
Convertible subordinated notes (see Note 3)
    (2,265 )           (6,661 )      
Income taxes (see Note 4)
          (3,119 )     (7,648 )     (3,081 )
 
Net income under IFRS
    173,888       82,550       494,019       459,501  
Shareholders’ equity
                                         
    Sep 30,     Dec 31,     Mar 30,     Jun 29,     Sep 28,  
(in thousands EUR)   2007     2007     2008     2008     2008  
 
Shareholders’ equity under U.S. GAAP
    1,831,438       1,890,948       1,958,159       2,060,575       2,122,848  
Share-based payments (see Note 1)
    7,126       787       (3,420 )     (3,266 )     (7,904 )
Capitalization of development costs (see Note 2)
    120,344       138,424       157,900       176,818       193,780  
Convertible subordinated notes (see Note 3)
    2,894                          
Income taxes (see Note 4)
          8,852       9,186       8,478       5,969  
 
Shareholders’ equity under IFRS
    1,961,802       2,039,011       2,121,825       2,242,605       2,314,693  
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 granted to its employees after November 7, 2002.
Under U.S. GAAP, ASML applies SFAS No. 123(R) “Share-Based Payment” which is a revision of SFAS No.123. SFAS 123(R) 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.
Note 2 Capitalization of development costs
Under IFRS, ASML applies IAS 38, “Intangible Assets”. In accordance with IAS 38, capitalized development expenditures are amortized over the expected useful life of the related product generally ranging between 2 and 3 years. Amortization starts when the developed product is ready for volume production.
Under U.S. GAAP, ASML applies SFAS No. 2, “Accounting for Research and Development Costs”. In accordance with SFAS No. 2, ASML charges costs relating to research and development to operating expense as incurred.
Note 3 Convertible Subordinated Notes
Under IFRS, ASML applies IAS 32 “Financial instruments: Disclosure and presentation” and IAS 39 “Financial instruments: Recognition and measurement” beginning from January 1, 2005. In accordance with IAS 32 and IAS 39, ASML accounts separately for the equity and liability component of its convertible notes (“Split accounting”). The equity component relates to the grant of a conversion option to shares to the holder of the bond. Split accounting results in additional interest charges.
Under U.S. GAAP, ASML accounts for its convertible bonds as a liability at the principal amount outstanding. As of December 31, 2007 ASML has no Convertible Subordinated Notes outstanding.

 


 

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 is eliminated from the carrying amount of assets on consolidation gives rise to a temporary difference for which deferred taxes must be recognized on 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 on consolidation, give rise to a temporary difference for which prepaid taxes must be recognized on consolidation. Contrary to IFRS, the prepaid taxes under U.S. GAAP are calculated based on the tax rate applicable in the seller’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, realization of backlog, IC unit demand, financial results, average sales price, gross margin and expenses. These forward looking statements are subject to risks and uncertainties including, but not limited to: economic conditions, credit market deterioration on consumer confidence which could affect our customers, product demand and semiconductor equipment industry capacity, worldwide demand and manufacturing capacity utilization for semiconductors (the principal product of our customer base), 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 outcome 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.

 


 

 
1   All quarterly information in this press release is unaudited.
 
2   In anticipation of endorsement by the European Union in Q4 2008, ASML has early adopted IFRIC 13 “Customer Loyalty Programmes” as of January 1, 2008. IFRIC 13 requires award credits offered to its customers as part of a volume purchase agreement to be accounted for using the deferred revenue model. Until December 31, 2007 cost accrual method was used. ASML early adopted this interpretation because the deferred revenue model better reflects the business rationale for offering award credits. Comparative figures for 2007 were adjusted to reflect this change in accounting policy. The impact of this change on equity as per January 1, 2007 amounted to EUR 8.1 million (decrease) and on net income for the year 2007 and the first quarter of 2008 amounted to EUR 8.6 million (decrease) and EUR 0.1 million (increase) respectively.