2006 Third Quarter Results
October 18, 2006
Safe Harbor
“Safe Harbor” Statement under the U.S. Private Securities
Litigation Reform Act of 1995: the matters discussed in this
document may include forward-looking statements that 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), competitive products
and pricing, manufacturing efficiencies, new product
development, ability to enforce patents, the outcome of
intellectual property litigation, availability of raw materials and
critical manufacturing equipment, trade environment, the
prevailing market price for ASML shares, and other risks
indicated in the risk factors included in ASML’s Annual
Report on Form 20-F and other filings with the U.S.
Securities and Exchange Commission.
/ Slide 2
Agenda
Market
Q3 2006: Execution and accomplishments
Q3 2006: Shipment and bookings review
Financial summary
Q4 2006: Outlook
Share buyback
ASML’s drivers for growth
/ Slide 3
Market
/ Slide 4
Semiconductor Growth Forecast 2006-2007
External analysts forecast for 2007 same as 2006 level
Consensus: 8.8% 9.0%
/ Slide 5
Semiconductor Industry Forecast
$6.7
$6.7
$5.0
Litho Equipment for IC production ($B)
0%
34%
-3%
Growth rate year over year
-3%
26%
-8%
Growth rate year over year
$30
$31
$25
Wafer Fab Equipment Sales ($B)
-2%
15%
0%
Growth rate year over year
$57
$59
$51
Capex ($B)
9%
19%
9%
Growth rate year over year
150
138
115
IC Unit (B)
2005
2006
2007
Source : Average of Gartner Dataquest & VLSIResearch
/ Slide 6
Growth from multiple independent segments
Each segment with its own investment cycle
Flash shrink - 12 to 15
month investment cycle
DRAM – follows Flash
investment cycle by
approx 12 months
Foundries represent classic
supply/demand cycle
Moore’s law, 18 to 24
months - invest for new
product development -
volume to Foundry
Shrink for new
functionality and cost per
function - 12 to 24 month
investment cycle
/ Slide 7
On balance 2007 is going to be a stable year
THE DOWN FORCES
Semiconductor unit forecast
coming down
Growing Inventory of ICs in
some channels
Investments are high as % of
semiconductor sales
Major build up of capacity due
to 19% IC unit growth in 2006
Overheating of flash capacity
build
THE UP FORCES
2007 semi unit projection at single
digit growth
Utilization at levels allowing
additional Capex
Current 19% IC unit growth
triggers staged fab start ups
ASML gains market share by
winning additional business at new
and existing customers
45 nm immersion volume
manufacturing is starting H2 2007
/ Slide 8
Q3 2006: Execution and accomplishments
/ Slide 9
Q3 2006: Robust execution
Growth
Revenues of € 958 million up 80% versus a year ago, strongest
quarterly sales in history of the company
Increased market share by winning new 300mm fab opportunities
Profitability
Operating profit of € 239 million or 25% of net sales, up more than
threefold versus a year ago
Record net profit of € 172 million or 17.9% of sales
Gross margin reported at 40.8%
Cash
Finalized share buy back program of € 400 million, repurchasing
25.5 million shares (5.25% of outstanding shares) of which € 148
million is paid in Q3 2006
/ Slide 10
Q3 2006: Technology accomplishments
Solid progress on immersion products
Shipped 7 TWINSCAN XT:1700i in Q3, bringing the total to 15
systems capable of 45nm IC volume production
As of Q3 2006, 4 immersion tools are shipped to Japan
Fast learning about immersion through feedback from 28
immersion tools
Development on XT:1900i on schedule. Preparations underway
for first shipment in H1 2007
EUV milestones
Shipped industry’s first full-field EUV development systems in
Q3 2006 to research facilities in Europe and USA for use in
worldwide customer evaluations and infrastructure development
/ Slide 11
Q3 2006: Shipment and bookings review
Good shipment quarter with record quarterly revenue
Shipped 71 systems with ASP of € 12.1 million up from € 11.7
million in Q2 2006 due to higher percentage of new ArF systems
Shipped 59 new systems with ASP of € 13.8 million, an increase
from € 13.7 million in Q2 2006
Mix of products contains significant i-line and KrF to support
customer production capacity
Strong order intake
Booked 95 orders in line with the increased bookings outlook
published on September 6th
Achieved record backlog value of € 2,126 million with 151 systems,
an increase of 16% over Q2 2006
Current immersion backlog is 15 units
/ Slide 12
Financial summary
/ Slide 13
Total revenues M€
179
609
351
820
526
370
329
318
785
611
616
453
548
533
763
685
629
1,959
1,543
2,465
2,529
942
958
/ Slide 14
Revenue breakdown: Q3 2006
Value per type
Value per technology
TWINSCAN
93%
Other systems
7%
Value per region
Value per end-use
Foundry
19%
Memory
62%
IDM
19%
KrF
28%
ArF
64%
i-line
8%
U.S.
22%
Taiwan
15%
Korea
38%
China
8%
Europe
10%
ROW
2%
Numbers have been rounded for readers’ convenience
units
Units
18
53
Others
TWINSCAN
20
25
26
i-line
KrF
ArF
Japan
5%
/ Slide 15
Profit & Loss statement M€
/ Slide 16
Numbers have been rounded for readers’ convenience
Q2 06
Q3 06
YTD
Net sales
942
9
58
2
,
530
Gross
profit
Gross margin %
381
40.4
%
3
91
40
.
8
%
1
,
023
40
.5
%
R&D costs
92
100
280
SG&A costs
5
1
51
153
Operating income
Operating income %
238
25
.2%
23
9
25
.
0
%
591
23.4
%
Net income
Net income %
167
17
.7%
1
72
1
7
.
9
%
419
16.6
%
Key financial trends 2005 - 2006
/ Slide 17
Numbers have been rounded for readers’ convenience
Profit & Loss Statement
M€
Q3 05
Q4 05
Q1 06
Q2 06
Q3 06
Units
39
47
51
72
71
Sales
533
548
629
942
958
Gross profit
Gross margin %
197
37.0
%
204
37.3
%
252
40.0
%
381
40.4
%
39
1
40.8
%
R&D
80
82
87
92
100
SG&A
48
47
50
51
51
Operating income
Operatin
g income %
69
12.9
%
75
13.6
%
114
18.2
%
238
25.2%
239
25.0
%
Net income
Net income %
48
9.0
%
52
9.4
%
80
12.7
%
167
17.7
%
172
17.9
%
ASP New Systems
15.0
12.5
13.5
13.7
13.
8
Booking Units
46
55
62
93
95
Cash flow M€
/ Slide 18
Including payment for share buyback, Q2 Euro 253 million, Q3 Euro 148 million
1
Numbers have been rounded for readers’ convenience
Q2 06
Q3 06
YTD
Net income
167
1
72
419
Depreciation and amortization
21
30
72
Changes in tax assets and liabilities
65
6
2
74
Effects of changes in inventories
12
7
2
(8
1)
Effects of changes in other assets and
liabilities
65
(
3
34
)
(37
1)
Cash flow fr
om operations
330
2
11
3
Cash flow from investing activities
(13)
(15
)
(45
)
Cash flow from financing activities
(246)
1
(139
)
1
(378
)
1
Effect of changes in exchange rates on cash
(11
)
1
(14
)
Net cash flow
60
(151
)
(324
)
Current liabilities include USD 575 million principal amount of ASML’s 5.75 percent Convertible Subordinated
Notes due October 15, 2006.
Balance sheet as of Oct 1, 2006 M€
/ Slide 19
1
Numbers have been rounded for readers’ convenience
ASSETS
June 2006
Oct
200
6
Cash and cash equivalents
1
,
731
44 %
1
,
581
41
%
Accounts receivable, net
540
14 %
675
17
%
Inventories, net
916
23 %
837
22
%
Other assets
167
4 %
194
5
%
Tax assets
273
7 %
267
7
%
Fixed assets
308
8 %
301
8
%
TOTAL ASSETS
3
,
935
100%
3
,
855
100%
LIABILITIES and SHAREHOLDERS’ EQUITY
Current liabilities
1
1
,
656
42 %
1
,
519
39
%
Convertible subordinated bonds
380
10 %
380
10 %
Long term debts and deferred liabilities
242
6 %
2
14
6
%
Shareholders’ equity
1657
42 %
1
,
742
45
%
TOTAL LIABILITIES & SHAREHOLDERS’ EQUITY
3
,
935
100%
3
,
8
55
100%
Backlog as of Oct 1, 2006
74 % of unit backlog carry Q4 ‘06 + Q1 ‘07 shipment dates
Q3 net bookings of 95 systems with a value € 1,193 million
including 88 new tools with an ASP of € 13.2 million
Note: Due to possible customer changes in delivery schedules and to cancellation of orders, our backlog at any
particular date is not necessarily indicative of actual sales for any succeeding period
Numbers have been rounded for readers’ convenience
New Systems
Used Systems
Total Backlog
M€ 2,099
M€ 27
M€ 2,126
M€ 14.7
M€ 3.4
M€ 14.1
Backlog
Backlog
143
8
151
Units
Value
ASP
/ Slide 20
Backlog: litho units and value
/ Slide 21
Backlog lithography per Oct 1, 2006
Total value € 2,126 million
Value per type
Value per technology
TWINSCAN
97%
Other systems
3%
I-line
9%
ArF dry
50 %
Value per region
Value per end-use
Foundry
20%
Memory
58%
IDM
22%
KrF
22%
ArF immersion
19 %
Numbers have been rounded for readers’ convenience
U.S.
27%
Taiwan
20%
Korea
23%
China
8%
Europe
6%
Singapore
10%
Japan
6%
/ Slide 22
Q4 2006: Outlook
Bookings expected to remain high at 65 units with additional upside potential
reflecting two drivers: need for production capacity in segments other than flash
and an increase in ASML’s market share
Shipment of 69 systems expected in Q4
ASP for new system shipments expected to be € 14.2 million and
€ 12.9 million for new + refurbished systems
Gross margin expected at 40% – 41%
R&D is expected to increase to € 105 million net of credit in support of advanced
immersion and EUV systems development
SG&A are expected to remain at € 51 million
Build 10 immersion systems in Q4
Lithography demand for ASML tools in 2007 is expected at about our 2006 level,
assuming single digit semiconductor unit growth
/ Slide 23
Share buy back
Repurchased 40.4 million shares through share buyback
program and in conjunction with convertible bond
redemption
After bond redemption the amount of outstanding shares is
reduced by 8.4 million shares
ASML is near its net cash target of € 1 billion
ASML reiterates its commitment to return cash above its net
cash target to shareholders through share buy backs
resulting in reduction of the number of shares outstanding
/ Slide 24
ASML’s drivers for growth
Growing needs for Lithography per node:
More tools for more layers
Higher ASP to address complexity
ASML continues to grow its worldwide market share as
Technology leadership is fueled by R&D strength and scale
Five industry segments work together resulting in milder industry
cycles as each segment represents different growth drivers, all
together contributing to steady, long term industry growth
/ Slide 25
Commitment