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ASML Holding N.V. — Interim / Quarterly Report 2011
Jul 13, 2011
3813_ir_2011-07-13-104200_45e1d24f-a8cd-4706-92a5-836660d2d910.pdf
Interim / Quarterly Report
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Statutory Interim Report for the six-month period ended June 26, 2011
ASML Holding N.V. Statutory Interim Report for the six-month period ended June 26, 2011
Contents
- 6 Introduction
- 7 Interim Management Board Report
- 12 Managing directors' statement
- 13 Consolidated Condensed Interim Financial Statements
- 29 Other Information
Thisreportcomprisesregulatedinformationwithinthemeaningof articles1:1and5:25doftheDutchActonFinancialSupervision (Wetophetfinancieeltoezicht).
Inthisreportthename"ASML"issometimesusedforconvenienceand referstoASMLHoldingN.V.and/oranyofitssubsidiaries,asappropriate. Thenameisalsousedwherenousefulpurposeisservedbyidentifying theparticularcompanyorcompanies.
©2011,ASMLHoldingN.V.AllRightsReserved
Introduction
DearShareholder,
ASMLHoldingN.V.(ASML)todaypublisheditsStatutoryInterimReportforthesix-monthperiodendedJune26, 2011.ThisreportincludesanInterimManagementBoardReport,aManagingDirectors'StatementandConsolidated CondensedInterimFinancialStatementspreparedinaccordancewithIAS34.
TheStatutoryInterimReportcomprisesregulatedinformationwithinthemeaningoftheDutchActonFinancial Supervision(Wet op het financieel toezicht).
Today,ASMLalsopublishedits2011second-quarterresultsaccordingtoUnitedStatesGenerallyAcceptedAccounting Principles("U.S.GAAP")andInternationalFinancialReportingStandards("IFRS").
Veldhoven,July13,2011
Interim Management Board Report
About ASML
ASMLHoldingN.V.("ASML"orthe"Company")isoneoftheworld'sleadingprovidersoflithographysystemsforthe semiconductorindustry,manufacturingcomplexmachinesthatarecriticaltotheproductionofintegratedcircuits("ICs") ormicrochips.ASMLdesigns,develops,integrates,marketsandservicestheseadvancedsystems,whichcontinue tohelpitscustomers-thechipmakers-reducethesizeandincreasethefunctionalityofmicrochipsandconsumer electronicequipment.
HeadquarteredinVeldhoven,theNetherlands,ASMLoperatesglobally,withactivitiesinEurope,theUnitedStatesand Asia.AsofJune26,2011,weemployed7,697payrolland2,159temporaryemployees(measuredinfull-timeemployees "FTEs").ASMLoperatesin16countriesthroughover55salesandservicelocations.
Inthefirsthalfof2011,wegeneratednetsalesofEUR2,981.6millionandanoperatingincomeofEUR922.2million. Netincomeforthefirsthalfof2011amountedtoEUR826.9million,representinganetincomeperordinaryshareof EUR1.91.
BelowweprovideanoverviewoftherisksanduncertaintiestheCompanyfacesforthesecondhalfof2011,followedby theASMLoperationsupdate.
Risk Factors
Inconductingourbusiness,wefacemanyrisksthatmayinterferewithourbusinessobjectives.Someoftheserisks relatetoouroperationalprocesses,whileothersrelatetoourbusinessenvironment.Itisimportanttounderstandthe natureoftheserisksandtheimpacttheymayhaveonourbusiness,financialconditionandresultsofoperations.Some ofthemorerelevantrisksaredescribedbelow.TheserisksarenottheonlyonesthatASMLfaces.Somerisksmaynot yetbeknowntoASMLandcertainrisksthatASMLdoesnotcurrentlybelievetobematerialcouldbecomematerialin thefuture.TheCompanyhasassessedtherisksforthesecondhalfof2011andbelievesthattherisksidentifiedarein linewiththosepresentedintheStatutoryAnnualReport2010.Foradetaileddescriptionoftherisksdefinedbelow,we refertotheStatutoryAnnualReport2010.
Strategic risks
• Wederivemostofourrevenuesfromthesaleofarelativelysmallnumberofproducts.
Risks related to the semiconductor industry
- Thesemiconductorindustryishighlycyclicalandwemaybeadverselyaffectedbyanydownturn;
- Ourbusinesswillsufferifwedonotrespondrapidlytocommercialandtechnologicalchangesinthesemiconductor industry;
- Wefaceintensecompetition.
Governmental, legal and compliance risks
- Failuretoadequatelyprotecttheintellectualpropertyrightsuponwhichwedependcouldharmourbusiness;
- Defendingagainstintellectualpropertyclaimsbroughtbyotherscouldharmourbusiness;
- Wearesubjecttorisksinourinternationaloperations;
- Becauseoflaborlawsandpractices,anyworkforcereductionsthatwemayseektoimplementinordertoreduce costscompany-widemaybedelayedorsuspended.
Operational risks
- Thenumberofsystemswecanproduceislimitedbyourdependenceonalimitednumberofsuppliersofkey components;
- Thepaceofintroductionofournewproductsisacceleratingandisaccompaniedbypotentialdesignandproduction delaysandbysignificantcosts;
- Wearedependentonthecontinuedoperationofalimitednumberofmanufacturingfacilities;
- Wemaybeunabletomakedesirableacquisitionsortointegratesuccessfullyanybusinessesweacquire;
- Ourbusinessandfuturesuccessdependonourabilitytoattractandretainasufficientnumberofadequately educatedandskilledemployees.
Financial risks
- Ahighpercentageofnetsalesisderivedfromafewcustomers;
- Fluctuationsinforeignexchangeratescouldharmourresultsofoperations.
Risks related to our ordinary shares
- Wemaynotdeclarecashdividendsatallorinanyparticularamountsinanygivenyear;
- Thepriceofourordinarysharesisvolatile;
- Restrictionsonshareholderrightsmaydilutevotingpower.
Financial Risk Management
ASMLisexposedtoavarietyoffinancialrisks:marketrisks(includingforeigncurrencyexchangeriskandinterestrate risk),creditriskandliquidityrisk.Theoverallriskmanagementprogramfocusesontheunpredictabilityoffinancial marketsandseekstominimizepotentialadverseeffectsontheCompany'sfinancialperformance.SeeNote4ofthe consolidatedcondensedinterimfinancialstatementsandtheCompany'sStatutoryAnnualReport2010.
ASML Operations Update
Setforthbelowareourconsolidatedincomestatementdataonsemi-annualbasis:
| 2010 | 2011 | For the six-month period ended June, 26, 2011 and June, 27, 2010 |
|---|---|---|
| EUR | EUR | (inmillions) |
| 1,810.5 | 2,981.6 | Totalnetsales |
| 1,124.6 | 1,696.2 | Costofsales |
| 685.9 | 1,285.4 | Grossprofitonsales |
| 176.3 | 258.4 | Researchanddevelopmentcosts |
| 83.0 | 104.8 | Selling,generalandadministrativecosts |
| 426.6 | 922.2 | Operatingincome |
| (9.4) | 0.7 | Interestincome(expense),net |
| 417.2 | 922.9 | Incomebeforeincometaxes |
| (63.3) | (96.0) | Provisionforincometaxes |
| 353.9 | 826.9 | Netincome |
Thefollowingtableshowsasummaryofkeyfinancialfiguresonsemi-annualbasis:
| 2010 | 2011 | |
|---|---|---|
| 1,810.5 | 2,981.6 | Netsales(EURmillion) |
| 1,554.6 | 2,618.0 | Netsystemsales(EURmillion) |
| 255.9 | 363.6 | Netserviceandfieldoptionsales(EURmillion) |
| 77 | 126 | Totalsalesofsystems(inunits) |
| 58 | 114 | Totalsalesofnewsystems(inunits) |
| 19 | 12 | Totalsalesofusedsystems(inunits) |
| 37.9 | 43.1 | Grossprofitonsalesasapercentageofnetsales |
| 20.2 | 20.8 | Averagesellingpriceoftotalsystemsales(EURmillion) |
| 25.7 | 22.6 | Averagesellingpriceofnewsystemsales(EURmillion) |
| 3.4 | 3.5 | Averagesellingpriceofusedsystemsales(EURmillion) |
| 2,803.4¹ | 2,755.5 | ValueofsystemsbacklogexcludingEUV(EURmillion) |
| 100¹ | 105 | SystemsbacklogexcludingEUV(inunits) |
| 28.0¹ | 26.2 | AveragesellingpriceofsystemsbacklogexcludingEUV(EURmillion) |
1 AsofJanuary1,2011,ASMLvaluesnetbookingsandsystemsbacklogatgrosssystemsalesvalue.Thecomparativefigureshavenotbeenadjusted.
Consolidated sales and gross profit
NetsalesincreasedbyEUR1,171.1millionfromEUR1,810.5millionforthefirsthalfof2010toEUR2,981.6million forthefirsthalfof2011andthenumberofsystemsshippedincreasedfrom77systemsinthefirsthalfof2010to126 systemsinthefirsthalfof2011.Theincreaseinnetsalesiscausedbyincreaseddemandforallchiplayers:customers continuetoinvestinnewleading-edgeimmersiontechnologyaswellasdrylithographytoolsinordertoexecutetheir strategicfabinvestmentsinnewtechnologyandcapacitytomeetdemand.Asaresultofinvestmentsindrylithography toolsforcapacity,theaveragesellingprice("ASP")ofournewsystemsdecreasedby12.1percentfromEUR25.7
millioninthefirsthalfof2010toEUR22.6millioninthefirsthalfof2011.TheASPofourusedsystems(EUR3.5million) inthefirsthalfof2011wasinlinewiththeASPinthefirsthalfof2010.
GrossprofitonsalesincreasedfromEUR685.9millionor37.9percentofnetsalesforthefirsthalfof2010toEUR 1,285.4millionor43.1percentofnetsalesforthefirsthalfof2011.Thehighergrossprofitwasmainlyattributabletoa significantincreaseinnetsalesasaresultoftheincreaseddemandbyourcustomersforallchiplayers.Furthermore,in thefirsthalfof2010,thegrossprofitwaspartlyoffsetbyincreasedmanufacturingcostsaaresultlongerlead-times.
Westarted2011withabacklogof157systems.Duringthefirsthalfof2011,webookedordersfor74systemsand recognizedsalesfor126systems.Thisresultedinabacklogof105systemsasofJune26,2011.Thetotalvalueofour systemsbacklogasofJune26,2011amountedtoEUR2,755.5millionwithanASPofEUR26.2million,reflectingamix ofsystemsforallchiplayers.ThesystemsbacklogasofDecember31,2010amountedtoEUR3,855.7millionwithan ASPofEUR24.6million.
Research and development
Researchanddevelopment("R&D")investments(whichincludeR&Dcosts,netofcreditsandadditionstoother intangibleassetsregardingdevelopmentexpenditures)increasedbyEUR44.6millionor18.2percentfromEUR245.5 millionforthefirsthalfof2010(EUR176.3millionR&DcostsandEUR69.2millionadditionstootherintangibleassets regardingdevelopmentexpenditures)toEUR290.1million(EUR258.4millionR&DcostsandEUR31.7millionaddition tootherintangibleassetsregardingdevelopmentexpenditures)forthefirsthalfof2011.TheR&Dinvestmentsincreased asaresultofspendingonourstrategicprograms,inparticularimmersion,doublepatterningandExtremeUltraviolet ("EUV").Theadditionsinotherintangibleassetsregardingcapitalizeddevelopmentexpendituresdecreasedduetoan increaseinsubsequentdevelopmentcosts,relatingtoourstrategicprograms,whichcannotbecapitalized.
Income taxes
Incometaxexpenseisrecognizedbasedonmanagement'sbestestimateoftheannualincometaxrateforthefull financialyear.Theestimatedannualtaxrateforthesix-monthperiodendedJune26,2011is10.4percentcomparedto 15.2percentforthesix-monthperiodendedJune27,2010.
InDecember2010,ASMLreachedagreementwiththeDutchfiscalauthoritiesregardingtheapplicationofthe "InnovationBox",afacilityunderDutchcorporatetaxlawpursuanttowhichincomeassociatedwithR&Dispartially exemptedfromtaxation.ThistaxrulinghasretroactiveeffecttoJanuary1,2007andisvalidthroughDecember 31,2016.Thereafterthevalidityofthisrulingmaybeextendedorthisrulingmaybeadaptedincaseachangeof circumstancesoccurs.For2010thebeneficialimpactoftheInnovationBoxwaspartiallyoffsetwiththecumulative negativeRoyaltyBoxeffectsincurredintheNetherlandsduringtheperiod2007-2009.Inthefirsthalfof2011,the InnovationBoxeffectisnolongeroffsetbytheseprioryeareffects.Furthermorethedecreaseoftheestimatedannual taxrateforthesix-monthperiodendedJune26,2011comparedtothesix-monthperiodendedJune27,2010isdueto anincreaseintheInnovationBoxbenefitforthe2011period.
Liquidity
OurprincipalsourcesofliquidityasofJune26,2011consistofEUR2,742.1millionofcashandcashequivalents (December31,2010:EUR1,949.8million),EUR500.0millionofavailablecreditfacilities(December31,2010:EUR 700.0million)andexpectedfuturecashflowsfromoperations.
Wehaverepaymentobligationsin2017,amountingtoEUR600.0million,onour5.75percentseniornotes.Wecurrently intendtofundanyfuturerepaymentobligationsprimarilywithcashonhandandcashgeneratedfromoperations.
TheCompany'savailablecreditfacilitiesamounttoEUR500.0millionasofJune26,2011(December31,2010:EUR 700.0million)andconsistofoneEUR500.0millioncreditfacility.Thiscreditfacilityhasatermoffiveyearsandcontains arestrictivecovenantwhichrequirestheCompanytomaintainaminimumcommittedcapitaltonettotalassetsratio of40.0percentcalculatedinaccordancewithcontractuallyagreeddefinitions.AsofJune26,2011andDecember31, 2010thisratiowas83.9percentand78.0percent,respectively.Therefore,theCompanywasincompliancewiththe covenantasofJune26,2011.OutstandingamountsunderthiscreditfacilitywillbearinterestatEURIBORorLIBOR plusamarginthatdependsontheCompany'sliquidityposition.Noamountswereoutstandingunderthiscreditfacility asofJune26,2011.
TheundrawnEUR200.0millionloanfacility(betweenTheCompanyandtheEuropeanInvestmentBank)hasmaturedin thefirsthalfof2011,astheavailabilityperiodtodrawthefacilityendedonMarch31,2011.
TheCompanycurrentlydoesnotexpectanydifficultyincontinuingtomeetitscovenantrequirements.SeealsoNote4 toourconsolidatedcondensedinterimfinancialstatements.
Inadditiontocashandavailablecreditfacilities,fromtimetotimewemayraiseadditionalcapitalindebtandequity markets.Ourliquidityneedsareaffectedbymanyfactors,someofwhicharebasedonthenormalongoingoperations ofthebusiness,andotherswhichrelatetotheuncertaintiesoftheglobaleconomyandthesemiconductorindustry. ASMLbelievesthatcashgeneratedfromoperations,togetherwiththeliquidityprovidedbyexistingcashbalancesand borrowingcapacity,willbesufficienttosatisfyitspresentrequirements.
Dividends and Share buybacks
Weaimtopayasustainableannualdividendthatwillbestableorgrowingovertime.Annually,theSupervisoryBoard, uponproposaloftheBoardofManagement,willassesstheamountofdividendthatwillbeproposedtotheAnnual GeneralMeetingofShareholders.TheCompanyincreaseditsdividendpay-outinrespectof2010toEUR0.40per ordinaryshareofEUR0.09,whichwasapprovedbytheannualgeneralMeetingofShareholdersonApril20,2011.Asa result,anamountofEUR172.6millionwaspaidtoourshareholdersinMay2011.
Weintend,nexttodividendpayments,toreturncashtoourshareholdersonaregularbasisthroughsharebuybacks orrepaymentofcapital,subjecttoouractualandanticipatedlevelofcashgeneratedfromoperations,thecash requirementsforinvestmentinASML'sbusiness,ASML'scurrentsharepriceandothermarketconditionsandrelevant factors.
AsannouncedonJanuary19,2011,andapprovedbyourGeneralMeetingofShareholdersonApril20,2011,ASMLwill repurchaseuptoEUR1.0billionofitsownshareswithintwoyears.AsofJune26,2011,theaggregateamountof sharesrepurchasedamountstoEUR373.8million,whichrepresents37.4percentoftheprogram.ASMLintendsto canceltherepurchasedshares.
Cash Flows from Operating Activities
WegeneratedcashfromoperatingactivitiesofEUR1,631.6millionandEUR306.9millioninthefirsthalfof2011and 2010,respectively.Cashprovidedbyoperatingactivitiesinthefirsthalfof2011mainlyrelatestoincreasedsaleslevels asaresultofincreaseddemandinthesemiconductorequipmentindustry,partlyoffsetbyinvestingininventories tosupportgrowthinsaleslevels.Furthermore,operatingcashispositivelyimpactedbyanincreaseinaccruedand otherliabilitiesduetoadvancesreceivedfromcustomers,forsystemsincludedinASML'scurrentproductportfolioor systemscurrentlyunderdevelopment,intheformofdownpayments,mainlyrelatingtoEUV.
Cash Flows from Investing Activities
WeusedEUR159.1millionforinvestingactivitiesinthefirsthalfof2011andEUR94.5millioninthefirsthalfof2010. Themajorityofthefirsthalfof2011expendituresrelatedtocapitalizationofdevelopmentexpenditures,buildingsand constructionsandmachineryandequipment.
Cash Flows from Financing Activities
NetcashusedinfinancingactivitieswasEUR666.0millioninthefirsthalfof2011comparedtoEUR73.0millioninthe firsthalfof2010.Netcashusedinfinancingactivitiesinthefirsthalfof2011mainlyincludedEUR172.6millionasa resultofthedividendpaymentandEUR365.7millionasaresultofsharebuybacks,partlyoffsetbynetproceedsfrom issuanceofsharesandstockoptionsundershareandstockoptionplans.
Related party transactions
FordisclosureregardingrelatedpartytransactionsseeNote15oftheconsolidatedcondensedinterimfinancial statements.
Auditors' involvement
Thisstatutoryinterimreportandtheconsolidatedcondensedinterimfinancialstatementsincludedhereinhavenotbeen auditedorreviewedbyanexternalauditor.
2011 Second half perspectives
Operational outlook
WebookedEUR840millionworthofsystems,excludingEUV,inthesecondquarterof2011,severalsystemsbelow expectations.Ourcustomersarecurrentlytakingsometimetoassessthesemiconductorend-demandtrendsfor2012 beforedeterminingtheiroverallcapacityplanslevelsandtimings.Wethereforeanticipatethirdquarterorderslikelynot toexceedEUR500million.
WehighlightthatourEUVtechnologyhasprogressedtothepointthatwewillrecognizethefirsttwoNXE:3100systems inthirdquartersales,astheplatformisbeingusedbyourcustomerstodevelopprocessrecipes.Theordersfor NXE:3100,withanASPofEUR42million,includefoursystemsthatwillberecognizedinnetsystemsalesovercoming quarters,oneoperatingleasecontractandoneR&DsystemtoberecognizedintheR&Dlineinthecomingquarters. TheNXE:3100isoursecond-generationEUVsystem;ASMLplanstointroduceitsvolumeproductionsystemNXE:3300 bynextyear.
Financial outlook
ThefollowingtablesetsforthoursystemsbacklogasofJune26,2011andDecember31,2010:
| June 26, 2011 | December 31, 2010 | |
|---|---|---|
| NewsystemsbacklogexcludingEUV(inunits) | 86 | 135 1 |
| UsedsystemsbacklogexcludingEUV(inunits) | 19 | 22 1 |
| TotalsystemsbacklogexcludingEUV(inunits) | 105 | 157 1 |
| ValueofnewsystemsbacklogexcludingEUV(EURmillion) | 2,691.1 | 3,744.3 1 |
| ValueofusedsystemsbacklogexcludingEUV(EURmillion) | 64.4 | 111.4 1 |
| ValueoftotalsystemsbacklogexcludingEUV(EURmillion) | 2,755.5 | 3,855.7 1 |
| AveragesellingpriceofnewsystemsbacklogexcludingEUV(EURmillion) | 31.3 | 27.7 1 |
| AveragesellingpriceofusedsystemsbacklogexcludingEUV(EURmillion) | 3.4 | 5.1 1 |
| AveragesellingpriceoftotalsystemsbacklogexcludingEUV(EURmillion) | 26.2 | 24.6 1 |
1 AsofJanuary1,2011,ASMLvaluesnetbookingsandsystemsbacklogatgrosssystemsalesvalue.Thecomparativefigureshavenotbeenadjusted.
Oursystemsbacklogincludesonlysystemordersforwhichwrittenauthorizationshavebeenacceptedandshipment dateswithin12monthshavebeenassigned.Historically,ordershavebeensubjecttocancellationordelayby customers.Duetopossiblecustomerchangesindeliveryschedulesandtocancellationoforders,oursystemsbacklog atanyparticulardateisnotnecessarilyindicativeofactualsalesforanysucceedingperiod.
Forthe2011thirdquarter,ASMLexpectsnetsalesofaroundEUR1.4billion,includingtwosecondgenerationEUV systemswhichrepresenttotalsalesofaroundEUR80millionwithzeroprofitmargin.Weexpect2011fullyearsalesto exceedEUR5.0billion,excludingEUV.
Great people at ASML
AsofJune26,2011,weemployed7,697payrollemployeesinFTEsprimarilyinmanufacturing,productdevelopment andcustomersupportactivities(December31,2010:7,184).Inaddition,asofJune26,2011,thetotalnumberof temporaryemployeesinFTEswas2,159(December31,2010:2,061).Werelyonourabilitytovarythenumberof temporaryemployeestorespondtofluctuatingmarketdemandforourproducts.
Ourfuturesuccesswilldependonourabilitytoattract,train,retainandmotivatehighlyqualified,skilledandeducated employees,whoareingreatdemand.Weareparticularlyreliantforourcontinuedsuccessontheservicesofseveral keyemployees,includinganumberofsystemsdevelopmentspecialistswithadvanceduniversityqualificationsin engineering,opticsandcomputing.
OursuccesseswereachievedthankstoASML'speopleineverypartofourorganization.Ourworldrenownedexperts innano-scalelithographyhavecumulativeexperiencethatissecondtonone.Ourculturethrivesonverystrong commitmenttoleadership,achievementsandcustomersatisfaction.OurpeoplehavenotonlydrivenASML'sreputation tothehighestlevels,theyhavealsopositionedASMLwelltomeettheeverincreasingtechnicalrequirementsofour customers.
TheBoardofManagement, Veldhoven,July13,2011
Managing directors' statement
TheBoardofManagementherebydeclaresthat,tothebestofitsknowledge,theconsolidatedcondensedinterim financialstatementspreparedinaccordancewithIAS34,"InterimFinancialReporting",provideatrueandfairviewof theassets,liabilities,financialpositionandprofitorlossofASMLHoldingN.V.andtheundertakingsincludedinthe consolidationtakenasawhole,andtheManagementBoardReportincludesafairreviewoftheinformationrequired pursuanttosection5:25d(8)/(9)oftheDutchActonFinancialSupervision(Wet op het financieel toezicht).
TheBoardofManagement,
EricMeurice,President,ChiefExecutiveOfficer
PeterT.F.M.Wennink,ExecutiveVicePresident,ChiefFinancialOfficer MartinA.vandenBrink,ExecutiveVicePresident,ChiefProductandTechnologyOfficer FritsJ.vanHout,ExecutiveVicePresident,ChiefMarketingOfficer FredericSchneider-Maunoury,ExecutiveVicePresident,ChiefOperatingOfficer
Veldhoven,July13,2011
Consolidated Condensed Interim Financial Statements
Consolidated Condensed Interim Financial Statements
- ConsolidatedCondensedIncomeStatement
- ConsolidatedCondensedStatementofComprehensiveIncome
- ConsolidatedCondensedStatementofFinancialPosition
- ConsolidatedCondensedStatementofChangesinEquity
- ConsolidatedCondensedStatementofCashFlows
- NotestotheConsolidatedCondensedInterimFinancialStatements
| For the six-month period ended June, 26, 2011 and June, 27, 2010 | Unaudited | Unaudited | |
|---|---|---|---|
| Notes | 2011 | 2010 | |
| (inthousands,exceptpersharedata) | EUR | EUR | |
| 13 | Netsystemsales | 2,618,045 | 1,554,638 |
| 13 | Netserviceandfieldoptionsales | 363,538 | 255,841 |
| Total net sales | 2,981,583 | 1,810,479 | |
| Costofsystemsales | 1,510,062 | 984,597 | |
| Costofserviceandfieldoptionsales | 186,099 | 140,008 | |
| Total cost of sales | 1,696,161 | 1,124,605 | |
| Gross profit on sales | 1,285,422 | 685,874 | |
| Researchanddevelopmentcosts | 258,411 | 176,290 | |
| Selling,generalandadministrativecosts | 104,840 | 82,954 | |
| Operating income | 922,171 | 426,630 | |
| Interestincome | 15,312 | 4,519 | |
| Interestcharges | (14,575) | (13,962) | |
| Income before income taxes | 922,908 | 417,187 | |
| 12 | Provisionforincometaxes | (95,958) | (63,329) |
| Net income | 826,950 | 353,858 | |
| 6 6 |
Basicnetincomeperordinaryshare Dilutednetincomeperordinaryshare Numberofordinarysharesusedincomputing |
1.91 1.89 |
0.81 0.81 |
| pershareamounts(inthousands): Basic Diluted |
432,928 436,461 |
434,578 438,504 |
Consolidated Condensed Statement of Comprehensive Income
| Unaudited | Unaudited | For the six-month period ended June, 26, 2011 and June, 27, 2010 |
|---|---|---|
| 2010 | 2011 | |
| EUR | EUR | (inthousands) |
| 353,858 | 826,950 | Net income |
| Other comprehensive income: | ||
| Foreign currency translation, net of taxes: | ||
| 44,724 | 1,769 | Gainsontranslationofforeignoperations |
| Derivative financial instruments, net of taxes: | ||
| (10,100) | 53,169 | Fairvaluegainsforthesix-monthperiod |
| (6,164) | (30,843) | Transferstonetincome |
| 28,460 | 24,095 | Other comprehensive income for the period, net of taxes |
| 382,318 | 851,045 | Total comprehensive income for the period, net of taxes |
| 382,318 | 851,045 | AttributabletoEquityholders: |
Consolidated Condensed Statement of Financial Position
| Unaudited | |||
|---|---|---|---|
| Notes | June 26, 2011 | December 31, 2010 | |
| (inthousands) | EUR | EUR | |
| Assets | |||
| 7 | Property,plantandequipment | 960,170 | 745,331 |
| Goodwill | 140,665 | 150,071 | |
| Otherintangibleassets | 247,300 | 277,038 | |
| 12 | Deferredtaxassets | 247,759 | 234,194 |
| Financereceivables | - | 28,905 | |
| 4 | Derivativefinancialinstruments | 49,487 | 71,779 |
| Otherassets | 161,100 | 159,603 | |
| Total non-current assets | 1,806,481 | 1,666,921 | |
| 8 | Inventories | 1,616,652 | 1,500,072 |
| 12 | Currenttaxassets | 982 | 12,678 |
| 4 | Derivativefinancialinstruments | 32,340 | 24,401 |
| Financereceivables | 61,906 | 12,648 | |
| 9 | Accountsreceivable | 895,120 | 1,123,534 |
| Otherassets | 183,822 | 163,745 | |
| Cashandcashequivalents | 2,742,108 | 1,949,834 | |
| Total current assets | 5,532,930 | 4,786,912 | |
| Total assets | 7,339,411 | 6,453,833 | |
| Equity and liabilities | |||
| Equity | 3,353,304 | 3,022,462 | |
| Long-termdebt1 | 701,677 | 704,302 | |
| 4 | Derivativefinancialinstruments | 1,895 | 1,981 |
| 12 | Deferredandothertaxliabilities | 211,011 | 185,009 |
| Provisions | 10,090 | 11,811 | |
| 10 | Accruedandotherliabilities | 831,916 | 371,089 |
| Total non-current liabilities | 1,756,589 | 1,274,192 | |
| Provisions | 2,109 | 2,250 | |
| 4 | Derivativefinancialinstruments | 6,676 | 32,917 |
| Currentportionoflong-termdebt1 | 2,561 | 1,429 | |
| 12 | Currentandothertaxliabilities | 84,823 | 79,354 |
| 10 | Accruedandotherliabilities | 1,509,002 | 1,485,832 |
| Accountspayable | 624,347 | 555,397 | |
| Total current liabilities | 2,229,518 | 2,157,179 | |
| Total equity and liabilities | 7,339,411 | 6,453,833 |
1 AsofJanuary1,2011thecurrentportionoflong-termdebtispresentedaspartofthecurrentliablities.Thecomparativefigureshavebeenadjustedto reflectthischangeinpresentation(EUR1.4million).
Consolidated Condensed Statement of Changes in Equity
| Issued and outstanding shares |
||||||||
|---|---|---|---|---|---|---|---|---|
| Number1 | Amount | Share Premium |
Retained Earnings |
Treasury Shares at cost |
Other Reserves2 |
Net Income (Loss) |
Total | |
| (inthousands) | EUR | EUR | EUR | EUR | EUR | EUR | EUR | |
| Balance at December 31, 2009 Appropriation of net loss |
433,639 - |
40,448 - |
- | 923,487 1,215,492 (81,443) |
(219,623) - |
172,446 - |
81,443 | (81,443) 2,050,807 - |
| Netincome | - | - | - | - | - | - | 353,858 | 353,858 |
| Foreigncurrencytranslation,netoftaxes | - | - | - | - | - | 44,724 | - | 44,724 |
| Derivativefinancialinstruments,netof taxes |
- | - | - | - | - | (16,264) | - | (16,264) |
| Total comprehensive income | - | - | - | - | - | 28,460 | 353,858 | 382,318 |
| Share-based payments | - | - | 3,053 | - | - | - | - | 3,053 |
| Dividend paid3 | - | - | - | (86,952) | - | - | - | (86,952) |
| Issuance of shares and stock options Development expenditures |
1,732 - |
156 - |
(12,049) - |
(8,947) (186) |
39,016 - |
- 186 |
- - |
18,176 - |
| Balance at June 27, 2010 (unaudited) | 435,371 | 40,604 | 914,491 1,037,964 | (180,607) | 201,092 | 353,858 2,367,402 | ||
| Netincome | - | - | - | - | - | - | 631,595 | 631,595 |
| Foreigncurrencytranslation,netoftaxes | - | - | - | - | - | (17,418) | - | (17,418) |
| Derivativefinancialinstruments,netof taxes |
- | - | - | - | - | 15,043 | - | 15,043 |
| Total comprehensive income | - | - | - | - | - | (2,375) | 631,595 | 629,220 |
| Share-based payments | - | - | 13,201 | - | - | - | - | 13,201 |
| Dividend paid3 | - | - | - | (8) | - | - | - | (8) |
| Issuance of shares and stock options | 1,222 | 109 | (5,351) | (9,626) | 27,515 | - | - | 12,647 |
| Development expenditures | - | - | - | 68,339 | - | (68,339) | - | - |
| Balance at December 31, 2010 | 436,593 | 40,713 | 922,341 1,096,669 | (153,092) | 130,378 | 985,453 3,022,462 | ||
| Appropriation of net income | - | - | - | 985,453 | - | - | (985,453) | - |
| Netincome | - | - | - | - | - | - | 826,950 | 826,950 |
| Foreigncurrencytranslation,netoftaxes | - | - | - | - | - | 1,769 | - | 1,769 |
| Derivativefinancialinstruments,netof taxes |
- | - | - | - | - | 22,326 | - | 22,326 |
| Total comprehensive income | - | - | - | - | - | 24,095 | 826,950 | 851,045 |
| Purchases of treasury shares4 | (13,185) | - | - | - | (373,801) | - | - | (373,801) |
| Share-based payments | - | - | 2,620 | - | - | - | - | 2,620 |
| Dividend paid3 | - | - | - | (172,645) | - | - | - | (172,645) |
| Issuance of shares and stock options | 1,907 | - | (7,076) | (12,219) | 42,918 | - | - | 23,623 |
| Development expenditures | - | - | - | 25,683 | - | (25,683) | - | - |
| Balance at June 26, 2011 (unaudited) | 425,315 | 40,713 | 917,885 1,922,941 | (483,975) | 128,790 | 826,950 3,353,304 |
1 AsofJune26,2011,thenumberofissuedshareswas444,480,095.Thisincludesthenumberofissuedandoutstandingsharesof425,315,091andthe numberoftreasurysharesof19,165,004.AsofJune27,2010,thenumberofissuedshareswas444,480,095.Thisincludedthenumberofissuedand outstandingsharesof435,371,194andthenumberoftreasurysharesof9,108,901.
2 Otherreservesconsistofthehedgingreserve,thecurrencytranslationreserveandthereserveforcapitalizeddevelopmentexpenditures.
3 Duringthesix-monthperiodendedJune26,2011,ASMLpaidoutadividendofEUR172.6milliontoitsshareholders.During2010,ASMLpaidouta dividendofEUR87.0milliontoitsshareholders.SeeNote14forfurtherinformation.
4 Duringthesix-monthperiodendedJune26,2011,ASMLrepurchasedsharesforanamountofEUR373.8million.AsofJune26,2011,EUR8.1million ofthetotalrepurchaseamountremainedunpaidandisrecordedinaccruedandothercurrentliabilities.Seenote14forfurtherinformation.
Consolidated Condensed Statement of Cash Flows
| For the six-month period ended June, 26, 2011 and June, 27, 2010 | Unaudited | Unaudited |
|---|---|---|
| 2011 | 2010 | |
| Notes (inthousands) |
EUR | EUR |
| Cash Flows from Operating Activities | ||
| Netincome | 826,950 | 353,858 |
| Adjustmentstoreconcilenetincometonetcash flowsfromoperatingactivities: |
||
| 7 Depreciationandamortization |
138,227 | 134,261 |
| 7 Impairment |
551 | 8,658 |
| 7 Lossondisposalsofproperty,plantandequipment |
1,898 | 1,626 |
| Share-basedpayments | 4,796 | 5,220 |
| 9 Allowancefordoubtfuldebts |
1,173 | 203 |
| 8 Allowanceforobsoleteinventory |
13,505 | 16,903 |
| 12 Deferredincometaxes |
25,149 | 6,205 |
| Changesinassetsandliabilities: | ||
| 9 Accountsreceivable |
292,353 | (437,972) |
| Financereceivables | (20,353) | 19,222 |
| 8 Inventories¹ |
(259,531) | (489,239) |
| Otherassets | (26,110) | 10,259 |
| 10 Accruedandotherliabilities |
588,404 | 369,787 |
| Accountspayable | 40,144 | 372,490 |
| 12 Incometaxespayable |
93,117 | 24,571 |
| Cash generated from operations | 1,720,273 | 396,052 |
| Interestreceived | 27,340 | 29,336 |
| Interestpaid | (35,115) | (34,845) |
| 12 Incometaxespaid |
(80,934) | (83,673) |
| Net cash provided by operating activities | 1,631,564 | 306,870 |
| Cash Flows from Investing Activities | ||
| 7 Purchasesofproperty,plantandequipment¹ |
(127,321) | (25,224) |
| 7 Proceedsfromsaleofproperty,plantandequipment |
- | - |
| Purchaseofintangibleassets | (31,730) | (69,260) |
| Net cash used in investing activities | (159,051) | (94,484) |
| Cash Flows from Financing Activities | ||
| 14 Dividendpaid |
(172,645) | (86,952) |
| 14 Purchaseofshares² |
(365,680) | - |
| Netproceedsfromissuanceofsharesandstockoptions | 23,623 | 18,176 |
| Depositsfromcustomers | (150,000) | - |
| Repaymentofdebt | (1,265) | (4,192) |
| Net cash used in financing activities | (665,967) | (72,968) |
| Netcashflows | 806,546 | 139,418 |
| Effectofchangesinexchangeratesoncash | (14,272) | 12,100 |
| Net increase in cash and cash equivalents | 792,274 | 151,518 |
| Cashandcashequivalentsatbeginningoftheyear | 1,949,834 | 1,037,074 |
| Cash and cash equivalents at June 26, 2011 and June 27, 2010 | 2,742,108 | 1,188,592 |
1 AnamountofEUR156.2million(2010:EUR214.1million)oftheadditionsinproperty,plantandequipmentrelatestonon-cashtransfersfrominventory andanamountofEUR7.5million(2010:EUR110.4million)ofthedisposalsofproperty,plantandequipmentrelatestonon-cashtransferstoinventory. 2 Duringthesix-monthperiodendedJune26,2011,ASMLrepurchasedsharesforanamountofEUR373.8million.AsofJune26,2011,EUR8.1million
ofthetotalrepurchaseamountremainedunpaidandisrecordedinaccruedandothercurrentliabilities.Seenote14forfurtherinformation.
Notes to the Consolidated Condensed Interim Financial Statements
1. General Information
ASMLHoldingN.V.,withitscorporateheadquartersinVeldhoven,theNetherlands,isengagedinthedevelopment, production,marketing,saleandservicingofadvancedsemiconductorequipmentsystemsexclusivelyconsistingof lithographysystemsandmetrologyforlithography.ASML'sprincipaloperationsareintheNetherlands,theUnited StatesofAmericaandAsia.
ASML'ssharesarelistedfortradingintheformofregisteredsharesontheNASDAQStockMarketLLC("NASDAQ") andintheformofregisteredsharesonEuronextAmsterdambyNYSEEuronext("EuronextAmsterdam").Theprincipal tradingmarketofASML'sordinarysharesisEuronextAmsterdam.
TheconsolidatedcondensedinterimfinancialstatementsincludethefinancialstatementsofASMLHoldingN.V. headquarteredinVeldhoven,theNetherlands,anditsconsolidatedsubsidiaries(togetherreferredtoas"ASML"or"the Company").
TheconsolidatedcondensedinterimfinancialstatementsoftheCompanywereauthorizedforissuebytheBoardof ManagementonJuly13,2011.
Theconsolidatedcondensedinterimfinancialstatementshavenotbeenauditedorreviewedbyanexternalauditor.
2. Basis of Preparation
Theconsolidatedcondensedinterimfinancialstatementsforthesix-monthperiodendedJune26,2011havebeen preparedinaccordancewithInternationalAccountingStandard34,"InterimFinancialReporting".Theconsolidated condensedinterimfinancialstatementsdonotincludealltheinformationanddisclosuresrequiredintheannualfinancial statements,andshouldbereadinconjunctionwiththestatutoryfinancialstatements2010,whichhavebeenprepared inaccordancewithInternationalFinancialReportingStandards("IFRS")asadoptedbytheEuropeanUnion("EU").
Theconsolidatedcondensedinterimfinancialstatementsarestatedinthousandsofeuros("EUR")unlessotherwise indicated.
3. Summary of Significant Accounting Policies
Theaccountingpoliciesadoptedinthepreparationoftheconsolidatedcondensedinterimfinancialstatementsare consistentwiththoseappliedinthepreparationoftheCompany'sstatutoryfinancialstatements2010.
Incometaxexpenseisrecognizedbasedonmanagement'sbestestimateoftheannualincometaxrateexpectedforthe fullfinancialyear.
Adoption of new and revised International Financial Reporting Standards
TheCompany'sadoptionofnewStandardsandInterpretationswhichbecameeffectiveasofJanuary1,2011,arenoted below.
IAS24(Revised),"RelatedPartyDisclosures"(effectiveforannualperiodsbeginningonorafterJanuary1,2011).The revisedstandardsimplifiesthedisclosurerequirementsforgovernment-relatedentitiesbyprovidingapartialexemption forgovernment-relatedentitiesandclarifiesthedefinitionofarelatedparty.TheadoptionoftheRevisedStandarddid nothaveanyimpactontheCompany'sconsolidatedcondensedinterimfinancialstatements.
IAS32(Amendment)"ClassificationofRightsIssues"(effectiveforannualperiodsbeginningonorafterFebruary 1,2010).TheamendmenttoIAS32addressestheaccountingforrightsissues(rights,optionsorwarrants)thatare denominatedinacurrencyotherthanthefunctionalcurrencyoftheissuer.Theamendmentrequiresthat,provided certainconditionsaremet,suchrightsissuesareclassifiedasequityregardlessofthecurrencyinwhichtheexercise priceisdenominated.TheadoptionoftheRevisedStandarddidnothaveanyimpactontheCompany'sconsolidated condensedinterimfinancialstatements.
IFRIC19,'Extinguishingfinancialliabilitieswithequityinstruments'(effectiveforannualperiodsbeginningonor afterJuly1,2010).Theinterpretationclarifiestheaccountingbyanentitywhenthetermsofafinancialliabilityare renegotiatedandresultintheentityissuingequityinstrumentstoacreditoroftheentitytoextinguishallorpartofthe financialliability(debtforequityswap).Itrequiresagainorlosstoberecognisedinprofitorloss,whichismeasuredas thedifferencebetweenthecarryingamountofthefinancialliabilityandthefairvalueoftheequityinstrumentsissued.If thefairvalueoftheequityinstrumentsissuedcannotbereliablymeasured,theequityinstrumentsshouldbemeasured
toreflectthefairvalueofthefinancialliabilityextinguished.TheadoptionoftheRevisedStandarddidnothaveany impactontheCompany'sconsolidatedcondensedinterimfinancialstatements.
4. Financial Risk Management
Financial Risk Factors
ASMLisexposedtoavarietyoffinancialrisks:marketrisks(includingforeigncurrencyexchangerateriskandinterest raterisk),creditriskandliquidityandcapitalrisk.Theoverallriskmanagementprogramfocusesontheunpredictability offinancialmarketsandseekstominimizepotentialadverseeffectsontheCompany'sfinancialperformance.The Companyusesderivativefinancialinstrumentstohedgecertainrisks:noneofthetransactionsareenteredintofor tradingorspeculativepurposes.
TheCompany'sFinancialRiskManagementPolicydidnotchangecomparedtothepoliciesdescribedinthestatutory financialstatements2010.
Foreign currency exchange rate risk management
TheCompanyusestheeuroasitsprimaryinvoicingcurrencyinordertolimittheexposuretoforeigncurrency movements.Exceptionsmayoccuronacustomer-by-customerbasis.Totheextentthatinvoicingisdoneinacurrency otherthantheeuro,theCompanyisexposedtoforeigncurrencyrisk.
ItistheCompany'spolicytohedgematerialtransactionexposures,suchasforecastedsalestransactions,forecasted purchasetransactions,accountsreceivableandaccountspayable.TheCompanyhedgestheseexposuresthroughthe useofcurrencycontracts.
AsofJune26,2011,equityincludesEUR17.8millionloss(netoftaxes:EUR15.9millionloss;December31,2010EUR 35.9millionloss)representingthetotalanticipatedlosstobechargedtosales,andEUR4.7millionloss(netoftaxes: EUR4.2millionloss;December31,2010EUR6.1millionloss)tobechargedtocostofsales,whichwilloffsetthehigher EURequivalentofforeigncurrencydenominatedforecastedsalesandpurchasetransactions.Itisanticipatedthatan amountofEUR17.8millionlosswillbechargedtosalesandEUR4.7millionlosswillbechargedtocostofsalesover thenexttwelvemonths,astheforecastedsalesandpurchasetransactionsoccur.
Lines of credit
TheCompany'savailablecreditfacilitiesamounttoEUR500.0millionasofJune26,2011(December31,2010:EUR 700.0million)andconsistofoneEUR500.0millioncreditfacility.Thiscreditfacilityhasatermoffiveyearsandcontains arestrictivecovenantwhichrequirestheCompanytomaintainaminimumcommittedcapitaltonettotalassetsratio of40.0percentcalculatedinaccordancewithcontractuallyagreeddefinitions.AsofJune26,2011andDecember31, 2010thisratiowas83.9percentand78.0percent,respectively.Therefore,theCompanywasincompliancewiththe covenantasofJune26,2011.OutstandingamountsunderthiscreditfacilitywillbearinterestatEURIBORorLIBOR plusamarginthatdependsontheCompany'sliquidityposition.Noamountswereoutstandingunderthiscreditfacility asofJune26,2011.
TheundrawnEUR200.0millionloanfacility(betweenTheCompanyandtheEuropeanInvestmentBank)hasmaturedin thefirsthalfof2011,astheavailabilityperiodtodrawthefacilityendedonMarch31,2011.
ForfurtherinformationregardingtheCompany'sFinancialRiskManagement,seetheCompany'sstatutoryfinancial statements2010.
5. Critical Accounting Judgments and Key sources of Estimation uncertainty
IntheprocessofapplyingtheCompany'saccountingpolicies,managementhasmadesomejudgmentsthathavea significanteffectontheamountsrecognizedintheconsolidatedcondensedinterimfinancialstatements.Thecritical accountingjudgmentsandkeysourcesofestimationuncertaintyareconsistentwiththosedescribedintheCompany's statutoryfinancialstatements2010.
6. Earnings per Share
Theearningspershare("EPS")datahavebeencalculatedasfollows:
| For the six-month period ended June, 26, 2011 and June, 27, 2010 | Unaudited | Unaudited |
|---|---|---|
| 2011 | 2010 | |
| (inthousands,exceptpersharedata) | EUR | EUR |
| Net income | 826,950 | 353,858 |
| Weighted average number of shares outstanding (after deduction of treasury stock) during the year | 432,928 | 434,578 |
| Basic net income per ordinary share | 1.91 | 0.81 |
| Weighted average number of shares: Plussharesapplicableto: |
432,928 | 434,578 |
| Stockoptions/Restrictedshares1 | 3,533 | 3,926 |
| Dilutive potential common shares | 3,533 | 3,926 |
| Adjusted weighted average number of shares | 436,461 | 438,504 |
| Diluted earnings per share1 | 1.89 | 0.81 |
1 ThecalculationofdilutednetincomeperordinaryshareassumestheexerciseofoptionsissuedunderASMLstockoptionplansandtheissueofshares underASMLshareplansforperiodsinwhichexercisesorissueswouldhaveadilutiveeffect.Thecalculationofdilutednetincomeperordinaryshare doesnotassumeexerciseofsuchoptionsorissueofshareswhensuchexercisesorissuewouldbeantidilutive.
7. Property, Plant and Equipment
Theincreaseofthecarryingamountoftheproperty,plantandequipmentmainlyrelatestoadditionsinbuildingsand constructions(EUR94.5million)andmachineryandequipment,mainlyprototypes,demonstrationandtrainingsystems (EUR184.0million).Theadditionsinbuildingsandconstructionsrelatetoinvestmentsofnewcleanroomandoffice facilitiesinVeldhoven.Formachineryandequipment,thesystemsarecapitalizedunderproperty,plantandequipment becausetheyareheldforownuse,forrentalandforevaluationpurposes,andatthetimetheyareplacedinservice theyareexpectedtobeusedforaperiodlongerthanoneyear.Thesesystemsarerecordedatcostanddepreciated overtheirexpectedusefullife.Fromthetimethattheseassetsarenolongerheldforusebutintendedforsaleinthe ordinarycourseofbusiness,theyarereclassifiedfromproperty,plantandequipmenttoinventoryattheloweroftheir carryingvalueorfairmarketvalue.Sincethetransfersbetweeninventoryandproperty,plantandequipmentarenoncashevents,thesearenotreflectedintheconsolidatedcondensedinterimstatementofcashflows.
8. Inventories
TheincreasedinventorybalancecomparedtoDecember31,2010mainlyconsistsofinventoriesregardingNXE:3100 andNXT:1950isystems.
9. Accounts Receivable
Thedecreaseintheaccountsreceivablesreflectscashinflowsfromourcustomersduringthefirsthalfof2011regarding receivablesthatwerepastduebutnotimpairedasofDecember31,2010.
| Unaudited | ||
|---|---|---|
| June 26, 2011 | December 31, 2010 | |
| (inthousands) | EUR | EUR |
| Deferredrevenue | 870,462 | 543,145 |
| Coststobepaid | 290,012 | 270,836 |
| Depositsfromcustomers | - | 150,000 |
| Downpaymentsfromcustomers¹ | 959,137 | 675,636 |
| Personnelrelateditems | 172,784 | 177,025 |
| Warranty | 46,575 | 37,965 |
| Other | 1,948 | 2,314 |
| Total accrued and other liabilities | 2,340,918 | 1,856,921 |
| Less:non-currentportionofaccruedandotherliabilities¹ | 831,916 | 371,089 |
| Current portion of accrued and other liabilities | 1,509,002 | 1,485,832 |
1 TheCompanyreceivesadvancesfromcustomerspriortoshipmentforsystemsincludedinASML'scurrentproductportfolioorsystemscurrentlyunder developmentintheformofdownpayments,mainlyrelatingtoEUV.
11. Commitments, Contingencies and Guarantees
Thenature,scaleandscopeofthecommitments,contingenciesandguaranteesisinlinewiththecommitments, contingenciesandguaranteesdisclosedintheCompany'sstatutoryfinancialstatements2010.
12. Income Taxes
Incometaxexpenseisrecognizedbasedonmanagement'sbestestimateoftheannualincometaxrateforthefull financialyear.Theestimatedannualtaxrateforthesix-monthperiodendedJune26,2011is10.4percentcomparedto 15.2percentforthesix-monthperiodendedJune27,2010.
InDecember2010,ASMLreachedagreementwiththeDutchfiscalauthoritiesregardingtheapplicationofthe "InnovationBox",afacilityunderDutchcorporatetaxlawpursuanttowhichincomeassociatedwithR&Dispartially exemptedfromtaxation.ThistaxrulinghasretroactiveeffecttoJanuary1,2007andisvalidthroughDecember 31,2016.Thereafterthevalidityofthisrulingmaybeextendedorthisrulingmaybeadaptedincaseachangeof circumstancesoccurs.For2010thebeneficialimpactoftheInnovationBoxwaspartiallyoffsetwiththecumulative negativeRoyaltyBoxeffectsincurredintheNetherlandsduringtheperiod2007-2009.Inthefirsthalfof2011,the InnovationBoxeffectisnolongeroffsetbytheseprioryeareffects.Furthermorethedecreaseoftheestimatedannual taxrateforthesix-monthperiodendedJune26,2011comparedtothesix-monthperiodendedJune27,2010isdueto anincreaseintheInnovationBoxbenefitforthe2011period.
Currenttaxassetshavedecreasedasaresultoftaxesrepaidbytaxauthorities.Themajorityofthedeferredandother taxliabilitiesisclassifiedasnon-currentbecausepaymentofcashisnotexpectedwithinoneyear.
13. Segment Disclosure
ASMLoperatesinonereportablesegmentforthedevelopment,manufacture,marketingandservicingoflithography equipment,andthereforethereisnochangetotheidentificationoftheCompany'ssegment.ASML'sChiefExecutive Officerhasbeenidentifiedaschiefoperatingdecision-maker,whoreviewsoperatingresultstomakedecisionsabout allocatingresourcesandassessingperformancefortheentireCompany.
Managementreportingincludesnetsystemsalesfiguresofnewandusedsystems.Netsalesfornewandusedsystems wereasfollows:
| For the six-month period ended June, 26, 2011 and June, 27, 2010 | Unaudited | Unaudited |
|---|---|---|
| 2011 | 2010 | |
| (inthousands) | EUR | EUR |
| Newsystems | 2,575,460 | 1,489,386 |
| Usedsystems | 42,585 | 65,252 |
| Total net system sales | 2,618,045 | 1,554,638 |
SegmentperformanceisevaluatedbytheCompany'smanagementbasedonUSGAAPnetincomeorlosswhich incertainrespects,asexplainedinthetablebelow,ismeasureddifferentlyfromnetincomeorlossreportedbythe Companyinitsstatutoryfinancialstatements,whicharebasedonIFRSasadoptedbytheEU.
| For the six-month period ended June, 26, 2011 and June, 27, 2010 | Unaudited | Unaudited |
|---|---|---|
| 2011 | 2010 | |
| (inthousands) | EUR | EUR |
| Netsystemsales | 2,618,045 | 1,554,638 |
| Netserviceandfieldoptionsales | 363,538 | 255,841 |
| Total net sales | 2,981,583 | 1,810,479 |
| Costofsales | 1,642,012 | 1,052,525 |
| Gross profit on sales | 1,339,571 | 757,954 |
| Researchanddevelopmentcosts | 290,106 | 245,550 |
| Selling,generalandadministrativecosts | 105,262 | 83,077 |
| Income from operations | 944,203 | 429,327 |
| Interestincome(expense),net | 3,692 | (5,529) |
| Income before income taxes | 947,895 | 423,798 |
| (Provisionfor)benefitsfromincometaxes | (120,858) | (77,343) |
| Net income | 827,037 | 346,455 |
| DifferencesU.S.GAAPandIFRS | (87) | 7,403 |
| Net income for IFRS | 826,950 | 353,858 |
SegmentperformanceisalsoevaluatedbytheCompany'smanagementbasedonUSGAAPfortotalassets.Thetable belowpresentsthemeasurementsandthereconciliationtototalassetsintheconsolidatedcondensedinterimfinancial statements:
| Unaudited | ||
|---|---|---|
| June 26, 2011 | December 31, 2010 | |
| (inthousands) | EUR | EUR |
| Totalassetsformanagementreportingpurposes | 7,076,099 | 6,180,358 |
| DifferencesU.S.GAAPandIFRS | 263,312 | 273,475 |
| TotalassetsforIFRS | 7,339,411 | 6,453,833 |
Forgeographicalreporting,netsalesareattributedtothegeographiclocationinwhichthecustomers'facilitiesare located.Totalnon-currentassetsareattributedtothegeographiclocationinwhichtheyarelocatedandexclude deferredtaxassetsandderivativefinancialinstruments.Netsalesandnon-currentassetsbygeographicregionwereas follows:
| Unaudited | Unaudited | |
|---|---|---|
| Net sales | Non-current assets | |
| (inthousands) | EUR | EUR |
| For the six-month period ended June 26, 2011: | ||
| Japan | 146,092 | 45,693 |
| Korea | 495,141 | 7,799 |
| Singapore | 229,628 | 1,150 |
| Taiwan | 786,148 | 44,672 |
| RestofAsia | 184,161 | 1,659 |
| Europe | 321,916 | 1,188,266 |
| UnitedStates | 818,497 | 219,996 |
| Total | 2,981,583 | 1,509,235 |
| For the six-month period ended June 27, 2010: | ||
| Japan | 69,808 | 37,916 |
| Korea | 497,907 | 2,321 |
| Singapore | 115,531 | 678 |
| Taiwan | 680,485 | 46,014 |
| RestofAsia | 81,412 | 1,213 |
| Europe | 115,051 | 922,752 |
| UnitedStates | 250,285 | 270,490 |
| Total | 1,810,479 | 1,281,384 |
Duringthesix-monthperiodendedJune26,2011,salestothelargestcustomeraccountedforEUR616.5millionor20.7 percentofnetsales(2010:EUR580.4millionor32.1percent).
ASML'sthreelargestcustomers(basedonnetsales)accountedfor17.8percentofaccountsreceivableatJune26, 2011and41.4percentofaccountsreceivableatJune27,2010.
Substantiallyalloursaleswereexportsalesduringthesix-monthperiodendedJune26,2011andJune27,2010.
14. Dividends and Share Buybacks
Weaimtopayasustainableannualdividendthatwillbestableorgrowingovertime.Annually,theSupervisoryBoard, uponproposaloftheBoardofManagement,willassesstheamountofdividendthatwillbeproposedtotheAnnual GeneralMeetingofShareholders.TheCompanyincreaseditsdividendpay-outinrespectof2010toEUR0.40per ordinaryshareofEUR0.09,whichwasapprovedbytheannualgeneralMeetingofShareholdersonApril20,2011.Asa result,anamountofEUR172.6millionwaspaidtoourshareholdersinMay2011.
Weintend,nexttodividendpayments,toreturncashtoourshareholdersonaregularbasisthroughsharebuybacks orrepaymentofcapital,subjecttoouractualandanticipatedlevelofcashgeneratedfromoperations,thecash requirementsforinvestmentinASML'sbusiness,ASML'scurrentsharepriceandothermarketconditionsandrelevant factors.
AsannouncedonJanuary19,2011,andapprovedbyourGeneralMeetingofShareholdersonApril20,2011,ASMLwill repurchaseuptoEUR1.0billionofitsownshareswithintwoyears.AsofJune26,2011,theaggregateamountof sharesrepurchasedamountstoEUR373.8million,whichrepresents37.4percentoftheprogram.ASMLintendsto canceltherepurchasedshares.
15. Related Party Transactions
Therehavebeennosignificantrelatedpartytransactionsthatcouldhaveamaterialeffectonthefinancialpositionor performanceoftheCompanyinthesix-monthperiodendedJune26,2011.
16. Subsequent Events
SubsequenteventshavebeenevaluatedbytheCompanyuntilJuly13,2011whichistheissuancedateofthisinterim report2011.Therearenosubsequenteventstoreport.
Veldhoven,theNetherlands July13,2011
Preparedby TheBoardofManagement: EricMeurice PeterT.F.M.Wennink MartinA.vandenBrink FritsJ.vanHout FredericSchneider-Maunoury
Other Information
Information and Investor Relations
Financial calendar
October 12, 2011 AnnouncementofThirdQuarterresultsfor2011
January 18, 2012 AnnouncementofFourthQuarterresultsfor2011andAnnualResultsfor2011
April 25, 2012 GeneralMeetingofShareholders
Fiscal Year
ASML'sfiscalyearendsonDecember31,2011
Listing
TheordinarysharesoftheCompanyarelistedontheofficialmarketoftheEuronextAmsterdambyNYSEEuronextand intheUnitedStatesontheNASDAQStockMarketLLC,underthesymbol"ASML".ASML'sordinarysharesmayalso tradeonotherstockexchangesfromtimetotime,althoughASMLhasnotappliedforlistingsonthoseexchangesand doesnotendorseandmaynotbenotifiedofsuchtrading.
Investor Relations
ASMLInvestorRelationswillsupplyinformationorcopiesoftheAnnualReportonForm20-FfiledwiththeUS SecuritiesandExchangeCommissionandtheStatutoryAnnualandInterimReport.TheseAnnualReports,Interim Reports,quarterlyreleasesandotherinformationarealsoavailableonandcanbedownloadedfromtheASMLwebsite (www.asml.com).
ASML Worldwide Contact Information
Corporate Headquarters
DeRun6501 5504DRVeldhoven TheNetherlands
Mailing address
P.O.Box324 5500AHVeldhoven TheNetherlands
United States main offices
8555SouthRiverParkway Tempe,AZ85284 U.S.A.
77DanburyRoad Wilton,CT06897 U.S.A.
Asia main office
17thFloorSuite1702-3 Queen'sroadCentral100 HongKong
Corporate Communications
phone:+31402687870 email:[email protected]
Investor Relations
phone:+31402683938 email:[email protected]
Formoreinformationpleasevisitour websitewww.asml.com