Sales set for new high amid increasing semiconductor fab spend
VELDHOVEN, Netherlands–(Business Wire)–
ASML Holding NV (ASML) today announces 2010 second quarter results according to
US GAAP as follows:

* Q2 2010 net sales of EUR 1,069 million versus Q1 2010 net sales of EUR 742
million (Q2 2009 net sales of EUR 277 million).
* Q2 2010 net income of EUR 239 million, or 22.4 percent of net sales, versus a
Q1 2010 net income of EUR 107 million or 14.5 percent of net sales (Q2 2009 net
loss of EUR 104 million or 37.6 percent of net sales).
* Q2 2010 net bookings valued at EUR 1,179 million with 59 systems including 48
new and 11 used systems, leading to a systems backlog valued at EUR 2,401
million as of June 27, 2010.

“Our second quarter sales came in at EUR 1.069 billion, confirming the continued
strong demand in the semiconductor industry for our leading edge lithography
systems,” said Eric Meurice, President and Chief Executive Officer of ASML. “Our
NXT:1950i is now enabling volume production of the most advanced and
cost-efficient semiconductor nodes, with close to 20 systems shipped and half a
million silicon wafers already exposed. The excellent overlay and imaging
performance of our NXTs is further enhanced by our unique suite of Holistic
Lithography products which optimize manufacturing tolerances and provide a
faster start to chip production. All ASML`s leading edge NXT scanners sold
include one or more holistic lithography components. Regarding next generation
products, to be used beyond 20 nanometers (nm), we are in the process of final
integration test of our Extreme Ultraviolet (EUV) production systems and
delivery of six of these EUV systems will happen over the course of the next 12
months,” Meurice added.

Operations Update

In Q2 2010, ASML`s net sales of EUR 1,069 million included 35 new and 8 used
systems, totaling net system sales of EUR 923 million, and net service and field
options sales of EUR 146 million. Net system sales for Q1 2010 included the
shipment of 23 new and 11 used machines, totaling EUR 632 million, and net
service and field options sales of EUR 110 million.

The Q2 2010 average selling price for a new system was EUR 25.6 million,
compared with the Q1 2010 average selling price for a new system of EUR 25.8
million. The Q2 2010 average selling price for all ASML systems sold was EUR
21.5 million, compared with the Q1 2010 average selling price of EUR 18.6
million.

Q2 2010 net bookings totaled 59 systems valued at EUR 1,179 million, including
advanced immersion systems for critical layers as well as KrF systems for less
critical layers for capacity additions, with a total average selling price of
EUR 20.0 million.

ASML`s systems backlog as of June 27, 2010 was EUR 2,401 million, totaling 101
systems with an average selling price of EUR 23.8 million, reflecting a mix of
systems for all chip layers. ASML`s backlog as of March 28, 2010 was valued at
EUR 2,170 million, totaling 85 systems with an average selling price of EUR 25.5
million.

In Q2 2010, ASML generated net income of EUR 239 million, or EUR 0.55 per
ordinary share as compared with net income in Q1 2010 of EUR 107 million or EUR
0.25 per ordinary share.

The company`s Q2 2010 gross margin was 43.0 percent compared with the Q1 2010
gross margin of 40.3 percent.

Q2 2010 research and development (R&D) costs were EUR 125 million including
credits, compared with Q1 2010 R&D costs of EUR 120 million including credits.

Selling, general and administrative (SG&A) costs were EUR 42 million in Q2 2010,
compared with SG&A costs of EUR 41 million in Q1 2010.

Net cash from operations was EUR 193 million in Q2 2010. ASML ended Q2 2010 with
EUR 1,189 million in cash and cash equivalents, compared with EUR 1,087 million
at the end of Q1 2010.

Outlook

“We booked EUR 1,179 million worth of systems in the second quarter of 2010 and
we anticipate bookings levels of around EUR 1.3 billion in the third quarter; we
now expect full year 2010 sales to grow 10 to 15 percent above our historical
peak sales of EUR 3.8 billion,” Eric Meurice said. “This level of sales is
expected to continue into 2011, barring a major macro-economic downturn, as it
is supported by a number of fundamental growth drivers, including:

* The more than doubling, between 2009 and 2010, of the average number of
immersion layer exposures due to the growing sub-50nm nodes mix, with a
continued upward trend into 2011.
* The memory makers` upgrades to more advanced nodes with second tier DRAM
manufacturers now transferring to 40nm nodes while leading DRAM vendors are
preparing for 30nm node manufacturing, and NAND Flash manufacturers migrating to
sub-30nm chip production.
* Foundries` and Integrated Device Manufacturers` (IDMs) continued catch-up on
under-investments of the past two to three years; this structural addition in
current 65nm and new 40nm technology capacity, is necessary to service the
richer technology mix and the increased load of IDM-driven demand at foundries,
following IDMs` retirement of obsolete capacity.

In order to support this strong structural demand we will add flexible
manufacturing capacity; we will also increase our research and development (R&D)
investments in order to strengthen our leadership further,” Meurice said.

ASML expects Q3 2010 net sales of around EUR 1.1 billion, and gross margin in Q3
2010 of about 43 percent. R&D expenditures are expected to be at EUR 137 million
including credits and SG&A costs are expected at EUR 50 million due to a higher
sales level including workforce recruitment costs.

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 6,600 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 0888 (US participants will have to quote the following confirmation code
when dialing into the conference: 9234869). 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 consolidated statements of operations, consolidated
statements of cash flows and consolidated 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. ASML`s quarterly IFRS consolidated income
statement, consolidated statement of cash flows, consolidated statements of
financial position and a reconciliations of net income/(loss) and equity from US
GAAP to IFRS are available on www.asml.com

Today, July 14, 2010, ASML will also publish its Statutory Interim Report for
the six months period ended June 27, 2010. This report is in accordance with the
requirements of the EU Transparency Directive as implemented in the Netherlands,
will include consolidated condensed interim financial statements prepared in
accordance with IAS 34, “Interim Financial Reporting”, an Interim Management
Board Report and a Managing Directors’ Statement and will be available on
www.asml.com.

The consolidated balance sheets of ASML Holding N.V. as of June 27, 2010, the
related consolidated statements of operations and consolidated statements of
cash flows for the quarter ended June 27, 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, the impact of manufacturing efficiencies and capacity constraints,
the 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 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, Six months ended,
Jun 28, 2009 Jun 27, 2010 Jun 28, 2009 Jun 27, 2010
(in millions EUR, except per share data)

Net system sales 183.3 923.0 284.4 1,554.6
Net service and field option sales 93.3 145.7 175.8 255.9
Total net sales 276.6 1,068.7 460.2 1,810.5

Cost of sales 242.2 609.3 413.4 1,052.5
Gross profit on sales 34.4 459.4 46.8 758.0

Research and development costs 117.9 125.3 236.2 245.6
Selling, general and administrative costs 3 40.3 41.7 80.7 83.1
Income (loss) from operations (123.8 ) 292.4 (270.1 ) 429.3

Interest expense 3 (0.9 ) (2.7 ) (2.6 ) (5.5 )
Income (loss) from operations before income taxes (124.7 ) 289.7 (272.7 ) 423.8

(Provision for) benefit from income taxes 20.7 (50.5 ) 51.5 (77.3 )
Net income (loss) (104.0 ) 239.2 (221.2 ) 346.5

Basic net income (loss) per ordinary share (0.24 ) 0.55 (0.51 ) 0.80
Diluted net income (loss) per ordinary share 4 (0.24 ) 0.54 (0.51 ) 0.79

Number of ordinary shares used in computing per share amounts (in millions):
Basic 432.5 435.1 432.3 434.6
Diluted 4 432.5 438.9 432.3 438.3

ASML – Ratios and Other Data 1,2

Three months ended, Six months ended,
Jun 28, 2009 Jun 27, 2010 Jun 28, 2009 Jun 27, 2010

Gross profit as a % of net sales 12.5 43.0 10.2 41.9
Income (loss) from operations as a % of net sales 3 (44.7 ) 27.4 (58.7 ) 23.7
Net income (loss) as a % of net sales (37.6 ) 22.4 (48.1 ) 19.1
Shareholders` equity as a % of total assets 3 47.2 42.7 47.2 42.7
Income taxes as a % of income before income taxes (16.6 ) (17.4 ) (18.9 ) (18.3 )
Sales of systems (in units) 10 43 21 77
ASP of systems sales (EUR million) 18.3 21.5 13.5 20.2
Value of systems backlog (EUR million) 1,064 2,401 1,064 2,401
Systems backlog (in units) 43 101 43 101
ASP of systems backlog (EUR million) 24.7 23.8 24.7 23.8
Value of booked systems (EUR million) 394 1,179 601 2,183
Net bookings (in units) 15 59 23 109
ASP of booked systems (EUR million) 26.3 20.0 26.1 20.0
Number of payroll employees in FTEs 6,597 6,691 6,597 6,691
Number of temporary employees in FTEs 868 1,500 868 1,500

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

Dec 31, 2009 Jun 27, 2010
(in millions EUR)

ASSETS
Cash and cash equivalents 1,037.1 1,188.6
Accounts receivable, net 377.4 811.5
Finance receivables, net 21.6 –
Current tax assets 11.3 74.7
Inventories, net 963.4 1,309.3
Deferred tax assets 119.4 100.7
Other assets 218.7 248.7
Total current assets 2,748.9 3,733.5

Deferred tax assets 133.3 126.4
Other assets 77.0 94.4
Goodwill 131.5 153.2
Other intangible assets, net 18.1 16.4
Property, plant and equipment, net 3 655.4 742.8
Total non-current assets 1,015.3 1,133.2

Total assets 3,764.2 4,866.7

LIABILITIES AND SHAREHOLDERS` EQUITY
Current liabilities 1,044.2 1,782.7

Accrued liabilities and other liabilities 44.3 57.3
Deferred and other tax liabilities 188.4 205.0
Provisions 12.7 13.8
Long-term debt 3 699.8 728.6
Total non-current liabilities 945.2 1,004.7

Total liabilities 1,989.4 2,787.4

Shareholders` equity 1,774.8 2,079.3
Total liabilities and shareholders` equity 3,764.2 4,866.7

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

Three months ended, Six months ended,
Jun 28, 2009 Jun 27, 2010 Jun 28, 2009 Jun 27, 2010
(in millions EUR)

CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) (104.0 ) 239.2 (221.2 ) 346.5

Depreciation and amortization 3 35.1 36.2 73.8 70.9
Impairment 4.4 0.7 7.0 1.5
Loss on disposals of property, plant and equipment (0.4 ) 1.0 2.2 1.6
Share-based payments 2.6 2.4 6.1 5.2
Allowance for doubtful debts 1.1 – 1.1 0.2
Allowance for obsolete inventory 43.9 21.2 66.0 35.0
Deferred income taxes (31.2 ) 6.1 (58.2 ) 29.8
Change in assets and liabilities 110.7 (113.8 ) 268.0 (256.6 )
Net cash provided by operating activities 62.2 193.0 144.8 234.1

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment (39.9 ) (18.0 ) (83.8 ) (25.2 )
Proceeds from sale of property, plant and equipment 5.7 – 6.9 –
Net cash used in investing activities (34.2 ) (18.0 ) (76.9 ) (25.2 )

CASH FLOWS FROM FINANCING ACTIVITIES
Dividend paid (86.5 ) (87.0 ) (86.5 ) (87.0 )
Net proceeds from issuance of shares and stock options 0.4 7.8 0.5 18.2
Excess tax benefits from stock options 0.5 – 0.3 –
Net proceeds from other long-term debt 0.1 – 0.1 –
Redemption and/or repayment of debt 3 (0.4 ) (0.3 ) (0.8 ) (0.7 )
Net cash used in financing activities (85.9 ) (79.5 ) (86.4 ) (69.5 )

Net cash flows (57.9 ) 95.5 (18.5 ) 139.4

Effect of changes in exchange rates on cash (0.4 ) 5.8 2.0 12.1
Net increase (decrease) in cash & cash equivalents (58.3 ) 101.3 (16.5 ) 151.5

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

Three months ended,

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

Net system sales 183.3 458.7 431.8 631.6 923.0
Net service and field option sales 93.3 96.6 148.8 110.2 145.7
Total net sales 276.6 555.3 580.6 741.8 1,068.7

Cost of sales 242.2 364.0 360.3 443.2 609.3
Gross profit on sales 34.4 191.3 220.3 298.6 459.4

Research and development costs 117.9 115.2 115.4 120.3 125.3
Selling, general and administrative costs 3 40.3 37.5 36.5 41.4 41.7
Income (loss) from operations (123.8) 38.6 68.4 136.9 292.4

Interest expense 3 (0.9) (2.4) (3.5) (2.8) (2.7)
Income (loss) from operations before income taxes (124.7) 36.2 64.9 134.1 289.7

(Provision for) benefit from income taxes 20.7 (16.4) (14.4) (26.8) (50.5)
Net income (loss) (104.0) 19.8 50.5 107.3 239.2

Basic net income (loss) per ordinary share (0.24) 0.05 0.12 0.25 0.55
Diluted net income (loss) per ordinary share 4 (0.24) 0.05 0.12 0.25 0.54

Number of ordinary shares used in computing per share amounts (in millions):
Basic 432.5 432.7 433.2 434.0 435.1
Diluted 4 432.5 435.0 437.0 437.9 438.9

ASML – Quarterly Summary Ratios and other data 1,2

Three months ended,

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

Gross profit as a % of net sales 12.5 34.4 38.0 40.3 43.0
Income (loss) from operations as a % of net sales 3 (44.7) 6.9 11.8 18.5 27.4
Net income (loss) as a % of net sales (37.6) 3.6 8.7 14.5 22.4
Shareholders` equity as a % of total assets 3 47.2 47.3 47.1 41.2 42.7
Income taxes as a % of income before income taxes (16.6) (45.4) (22.2) (20.0) (17.4)
Sales of systems (in units) 10 24 25 34 43
ASP of system sales (EUR million) 18.3 19.1 17.3 18.6 21.5
Value of systems backlog (EUR million) 1,064 1,353 1,853 2,170 2,401
Systems backlog (in units) 43 54 69 85 101
ASP of systems backlog (EUR million) 24.7 25.1 26.8 25.5 23.8
Value of booked systems (EUR million) 394 777 956 1,004 1,179
Net bookings (in units) 15 35 40 50 59
ASP of booked systems (EUR million) 26.3 22.2 23.9 20.1 20.0
Number of payroll employees in FTEs 6,597 6,529 6,548 6,591 6,691
Number of temporary employees in FTEs 868 917 1,137 1,331 1,500

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

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

ASSETS
Cash and cash equivalents 1,092.7 1,018.0 1,037.1 1,087.3 1,188.6
Accounts receivable, net 213.5 382.1 377.4 629.8 811.5
Finance receivables, net 0.1 21.1 21.6 23.3 –
Current tax assets – – 11.3 37.5 74.7
Inventories, net 926.1 882.4 963.4 1,155.5 1,309.3
Deferred tax assets 70.5 69.0 119.4 107.5 100.7
Other assets 220.2 224.2 218.7 247.3 248.7
Total current assets 2,523.1 2,596.8 2,748.9 3,288.2 3,733.5

Finance receivables, net 20.6 – – – –
Deferred tax assets 198.9 193.5 133.3 127.9 126.4
Other assets 53.8 68.1 77.0 99.1 94.4
Goodwill 134.5 128.6 131.5 141.1 153.2
Other intangible assets, net 22.3 19.0 18.1 17.8 16.4
Property, plant and equipment, net 3 629.3 598.7 655.4 720.7 742.8
Total non-current assets 1,059.4 1,007.9 1,015.3 1,106.6 1,133.2

Total assets 3,582.5 3,604.7 3,764.2 4,394.8 4,866.7

LIABILITIES AND SHAREHOLDERS` EQUITY
Current liabilities 940.9 949.3 1,044.2 1,613.0 1,782.7

Accrued liabilities and other liabilities 45.6 44.7 44.3 45.9 57.3
Deferred and other tax liabilities 200.6 193.7 188.4 200.1 205.0
Provisions 14.8 13.5 12.7 13.0 13.8
Long-term debt 3 689.3 697.2 699.8 711.8 728.6
Total non-current liabilities 950.3 949.1 945.2 970.8 1,004.7

Total liabilities 1,891.2 1,898.4 1,989.4 2,583.8 2,787.4

Shareholders` equity 1,691.3 1,706.3 1,774.8 1,811.0 2,079.3
Total liabilities and shareholders` equity 3,582.5 3,604.7 3,764.2 4,394.8 4,866.7

ASML – Quarterly Summary U.S. GAAP Consolidated Statements of Cash Flows 1,2

Three months ended,

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

CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) (104.0) 19.8 50.5 107.3 239.2

Depreciation and amortization 3 35.1 33.8 34.0 34.7 36.2
Impairment 4.4 8.6 0.3 0.8 0.7
Loss (gain) on disposals of property, plant and equipment (0.4) 0.9 1.0 0.6 1.0
Share-based payments 2.6 2.8 4.5 2.8 2.4
Allowance for doubtful debts 1.1 0.7 0.1 0.2 –
Allowance for obsolete inventory 43.9 13.2 7.4 13.8 21.2
Deferred income taxes (31.2) (4.5) 13.3 23.7 6.1
Change in assets and liabilities 110.7 (140.3) (91.7) (142.8) (113.8)
Net cash provided by (used in) operating activities 62.2 (65.0) 19.4 41.1 193.0

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment (39.9) (13.5) (7.7) (7.2) (18.0)
Proceeds from sale of property, plant and equipment 5.7 – – – –
Net cash used in investing activities (34.2) (13.5) (7.7) (7.2) (18.0)

CASH FLOWS FROM FINANCING ACTIVITIES
Dividend paid (86.5) – – – (87.0)
Net proceeds from issuance of shares and stock options 0.4 4.2 6.4 10.4 7.8
Excess tax benefits from stock options 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) (0.3)
Net cash provided by (used in) financing activities (85.9) 4.5 7.0 10.0 (79.5)

Net cash flows (57.9) (74.0) 18.7 43.9 95.5

Effect of changes in exchange rates on cash (0.4) (0.7) 0.4 6.3 5.8
Net increase (decrease) in cash & cash equivalents (58.3) (74.7) 19.1 50.2 101.3

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, 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. Where
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 those
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 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. The net
exposures from certain monetary assets and liabilities in non-functional
currencies are hedged with forward contracts.

As of June 27, 2010, equity includes EUR 88.2 million loss (net of taxes: EUR
65.7; December 31, 2009 EUR 41.8 million loss) representing the total
anticipated loss to be charged to sales, and EUR 12.6 million gain (net of
taxes: EUR 9.4 million gain; December 31, 2009 EUR 0.5 million 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, Six months ended,
Jun 28, 2009 Jun 27, 2010 Jun 28, 2009 Jun 27, 2010
(in thousands EUR)
Net income (loss) under U.S. GAAP (104.0) 239.2 (221.2) 346.5
Share-based payments (see Note 1) 1.4 0.1 0.9 0.2
Development costs (see Note 2) 21.8 10.1 33.3 12.1
Reversal of write-downs (see Note 3) – 3.5 – 0.2
Income taxes (see Note 4) (0.4) (0.3) (2.0) (5.1)
Net income (loss) under IFRS (81.2) 252.6 (189.0) 353.9

Shareholders` equity Jun 28, Sep 27, Dec 31, Mar 28, Jun 27,
2009 2009 2009 2010 2010
(in thousands EUR)
Shareholders` equity under U.S. GAAP 1,691.3 1,706.3 1,774.8 1,811.0 2,079.3
Share-based payments (see Note 1) (4.9) (0.5) 2.4 3.5 0.5
Development costs (see Note 2) 235.9 259.7 251.5 255.8 269.1
Reversal of write-downs (see Note 3) – 28.5 17.1 13.8 17.3
Income taxes (see Note 4) 2.8 1.4 5.0 0.8 1.2
Shareholders` equity under IFRS 1,925.1 1,995.4 2,050.8 2,084.9 2,367.4

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.

“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, the impact of manufacturing efficiencies and capacity constraints,
the 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 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 This press release is unaudited.

2 Numbers have been rounded.

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 debt 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 exercise
would have a dilutive effect. The calculation of diluted net income per ordinary
share does not assume exercise of such options when such exercise would be
antidilutive.

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

Copyright Business Wire 2010