Exhibit 99.3
ASML — Summary IFRS Consolidated Income Statements1,2
Three months ended, | Six months ended, | |||||||||||||||
(in thousands EUR) | Jul 1, 2007 | Jun 29, 2008 | Jul 1, 2007 | Jun 29, 2008 | ||||||||||||
Net system sales | 825,818 | 725,586 | 1,673,194 | 1,545,572 | ||||||||||||
Net service and field option sales | 104,405 | 118,571 | 205,700 | 217,793 | ||||||||||||
Total net sales | 930,223 | 844,157 | 1,878,894 | 1,763,365 | ||||||||||||
Cost of sales | 573,116 | 525,228 | 1,153,220 | 1,086,915 | ||||||||||||
Gross profit on sales | 357,107 | 318,929 | 725,674 | 676,450 | ||||||||||||
Research and development costs, net of credits | 97,692 | 87,066 | 191,350 | 169,789 | ||||||||||||
Selling, general and administrative costs | 56,317 | 55,331 | 112,473 | 113,027 | ||||||||||||
Operating income | 203,098 | 176,532 | 421,851 | 393,634 | ||||||||||||
Interest income | 5,167 | 4,973 | 12,483 | 8,548 | ||||||||||||
Income before income taxes | 208,265 | 181,505 | 434,334 | 402,182 | ||||||||||||
Benefit from (provision for) income taxes | (53,789 | ) | 28,986 | (114,203 | ) | (25,231 | ) | |||||||||
Net income | 154,476 | 210,491 | 320,131 | 376,951 |
ASML — Summary IFRS Consolidated Balance Sheets1,2
(in thousands EUR) | Dec 31, 2007 | Jun 29, 2008 | ||||||
ASSETS | ||||||||
Property, plant and equipment | 380,894 | 458,100 | ||||||
Goodwill | 136,246 | 127,274 | ||||||
Other intangible assets | 216,908 | 260,478 | ||||||
Deferred tax assets | 220,863 | 238,364 | ||||||
Derivative financial instruments | 20,930 | 1,464 | ||||||
Other non-current assets | 32,828 | 31,964 | ||||||
Total non-current assets | 1,008,669 | 1,117,644 | ||||||
Inventories | 1,102,210 | 1,130,239 | ||||||
Derivative financial instruments | 12,319 | 46,559 | ||||||
Accounts receivables | 637,975 | 516,886 | ||||||
Other current assets | 193,415 | 185,945 | ||||||
Cash and cash equivalents | 1,271,636 | 1,360,898 | ||||||
Total current assets | 3,217,555 | 3,240,527 | ||||||
Total assets | 4,226,224 | 4,358,171 | ||||||
EQUITY AND LIABILITIES | ||||||||
Equity | 2,039,011 | 2,242,605 | ||||||
Other long-term debt | 595,783 | 585,665 | ||||||
Derivative financial instruments | — | 11,163 | ||||||
Deferred tax and other liabilities | 257,325 | 260,202 | ||||||
Other deferred liabilities | 7,935 | 7,366 | ||||||
Total non-current liabilities | 861,043 | 864,396 | ||||||
Accounts payable | 282,953 | 267,148 | ||||||
Accrued liabilities and other | 927,841 | 910,803 | ||||||
Current tax liabilities | 104,095 | 50,787 | ||||||
Derivative financial instruments | 11,281 | 22,432 | ||||||
Total current liabilities | 1,326,170 | 1,251,170 | ||||||
Total equity and liabilities | 4,226,224 | 4,358,171 |
ASML — Summary IFRS Consolidated Statements of Cash Flows1,2
Three months ended, | Six months ended, | |||||||||||||||
(in thousands EUR) | Jul 1, 2007 | Jun 29, 2008 | Jul 1, 2007 | Jun 29, 2008 | ||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||||||||
Net income | 154,476 | 210,491 | 320,131 | 376,951 | ||||||||||||
Depreciation and amortization | 49,800 | 44,816 | 102,881 | 91,586 | ||||||||||||
Disposal of property, plant and equipment | 9,923 | 1,311 | 10,874 | 2,414 | ||||||||||||
Share-based payments | 4,362 | 2,873 | 6,667 | 6,277 | ||||||||||||
Change in tax assets and liabilities | (2,798 | ) | (102,422 | ) | 24,558 | (72,669 | ) | |||||||||
Change in assets and liabilities | 69,103 | 21,959 | 12,610 | 87,350 | ||||||||||||
Net cash provided by operating activities | 284,866 | 179,028 | 477,721 | 491,909 | ||||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||||||||
Purchases of property, plant and equipment | (39,723 | ) | (65,441 | ) | (75,512 | ) | (120,473 | ) | ||||||||
Proceeds from sale of property, plant and equipment | — | — | 3,355 | — | ||||||||||||
Purchase of intangible assets | (13,017 | ) | (43,083 | ) | (35,479 | ) | (88,610 | ) | ||||||||
Acquisition of subsidiary (net of cash acquired) | — | — | (188,011 | ) | — | |||||||||||
Net cash used in investing activities | (52,740 | ) | (108,524 | ) | (295,647 | ) | (209,083 | ) | ||||||||
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 | — | (107,447 | ) | — | (107,447 | ) | ||||||||||
Net proceeds from issuance of shares and stock options | 10,629 | 553 | 26,397 | 3,528 | ||||||||||||
Net proceeds from issuance of bonds | 593,790 | — | 593,790 | — | ||||||||||||
Redemption and/or repayment of debt | (111 | ) | — | (345 | ) | — | ||||||||||
Net cash provided by (used in) financing activities | 604,308 | (106,894 | ) | 463,589 | (191,522 | ) | ||||||||||
Net cash flows | 836,434 | (36,390 | ) | 645,663 | 91,304 | |||||||||||
Effect of changes in exchange rates on cash | (387 | ) | 144 | (2,261 | ) | (2,042 | ) | |||||||||
Net increase (decrease) in cash and cash equivalents | 836,047 | (36,246 | ) | 643,402 | 89,262 |
ASML — Quarterly Summary IFRS Consolidated Income Statements1,2
Three months ended, | ||||||||||||||||||||
Jul 1, | Sep 30, | Dec 31, | Mar 30, | Jun 29, | ||||||||||||||||
(in millions EUR) | 2007 | 2007 | 2007 | 2008 | 2008 | |||||||||||||||
Net system sales | 825.8 | 843.2 | 834.9 | 820.0 | 725.6 | |||||||||||||||
Net service and field option sales | 104.4 | 91.2 | 120.0 | 99.2 | 118.6 | |||||||||||||||
Total net sales | 930.2 | 934.4 | 954.9 | 919.2 | 844.2 | |||||||||||||||
Cost of sales | 573.1 | 581.9 | 583.7 | 561.7 | 525.3 | |||||||||||||||
Gross profit on sales | 357.1 | 352.5 | 371.2 | 357.5 | 318.9 | |||||||||||||||
Research & development costs, net of credits | 97.7 | 76.8 | 84.7 | 82.7 | 87.1 | |||||||||||||||
Selling, general and administrative costs | 56.3 | 56.0 | 73.5 | 57.7 | 55.3 | |||||||||||||||
Operating income | 203.1 | 219.7 | 213.0 | 217.1 | 176.5 | |||||||||||||||
Interest income (charges) | 5.2 | 9.1 | (2.2 | ) | 3.6 | 5.0 | ||||||||||||||
Income before income taxes | 208.3 | 228.8 | 210.8 | 220.7 | 181.5 | |||||||||||||||
Benefit from (provision for) income taxes | (53.8 | ) | (54.9 | ) | 18.5 | (54.2 | ) | 29.0 | ||||||||||||
Net income | 154.5 | 173.9 | 229.3 | 166.5 | 210.5 |
ASML — Summary IFRS Consolidated Balance Sheets1,2
Jul 1, | Sep 30, | Dec 31, | Mar 30, | Jun 29, | ||||||||||||||||
(in millions EUR) | 2007 | 2007 | 2007 | 2008 | 2008 | |||||||||||||||
ASSETS | ||||||||||||||||||||
Property, plant and equipment | 313.5 | 343.3 | 380.9 | 401.4 | 458.1 | |||||||||||||||
Goodwill | 148.9 | 141.7 | 136.3 | 127.2 | 127.3 | |||||||||||||||
Other intangible assets | 190.6 | 198.4 | 216.9 | 238.0 | 260.5 | |||||||||||||||
Deferred tax assets | 312.2 | 252.3 | 220.9 | 213.3 | 238.4 | |||||||||||||||
Derivative financial instruments | 0.2 | 9.9 | 20.9 | 47.7 | 1.4 | |||||||||||||||
Other non-current assets | 33.2 | 33.3 | 32.8 | 31.8 | 32.0 | |||||||||||||||
Total non-current assets | 998.6 | 978.9 | 1,008.7 | 1,059.4 | 1,117.7 | |||||||||||||||
Inventories | 972.9 | 1,021.2 | 1,102.2 | 1,152.0 | 1,130.2 | |||||||||||||||
Derivative financial instruments | 12.8 | 23.5 | 12.3 | 36.5 | 46.6 | |||||||||||||||
Accounts receivables | 567.8 | 611.7 | 638.0 | 741.5 | 516.9 | |||||||||||||||
Other current assets | 184.6 | 211.8 | 193.4 | 202.4 | 185.9 | |||||||||||||||
Cash and cash equivalents | 2,299.2 | 2,445.2 | 1,271.6 | 1,397.1 | 1,360.9 | |||||||||||||||
Total current assets | 4,037.3 | 4,313.4 | 3,217.5 | 3,529.5 | 3,240.5 | |||||||||||||||
Total assets | 5,035.9 | 5,292.3 | 4,226.2 | 4,588.9 | 4,358.2 | |||||||||||||||
EQUITY AND LIABILITIES | ||||||||||||||||||||
Equity | 2,459.7 | 1,961.8 | 2,039.0 | 2,121.8 | 2,242.6 | |||||||||||||||
Convertible subordinated debt | 339.8 | 40.1 | — | — | — | |||||||||||||||
Other long-term debt | 587.6 | 597.8 | 595.8 | 609.1 | 585.6 | |||||||||||||||
Derivative financial instruments | 15.6 | 0.7 | — | — | 11.2 | |||||||||||||||
Deferred tax and other liabilities | 293.1 | 259.3 | 257.3 | 282.9 | 260.2 | |||||||||||||||
Other deferred liabilities | 8.1 | 8.2 | 7.9 | 7.2 | 7.4 | |||||||||||||||
Total non-current liabilities | 1,244.2 | 906.1 | 861.0 | 899.2 | 864.4 | |||||||||||||||
Accounts payable | 311.4 | 320.9 | 283.0 | 479.6 | 267.2 | |||||||||||||||
Accrued liabilities and other | 828.8 | 1,933.0 | 927.8 | 957.7 | 910.8 | |||||||||||||||
Current tax liabilities | 184.2 | 151.9 | 104.1 | 111.5 | 50.8 | |||||||||||||||
Derivative financial instruments | 7.6 | 18.6 | 11.3 | 19.1 | 22.4 | |||||||||||||||
Total current liabilities | 1,332.0 | 2,424.4 | 1,326.2 | 1,567.9 | 1,251.2 | |||||||||||||||
Total equity and liabilities | 5,035.9 | 5,292.3 | 4,226.2 | 4,588.9 | 4,358.2 |
ASML — Summary IFRS Consolidated Statements of Cash Flows1,2
Three months ended, | ||||||||||||||||||||
Jul 1, | Sep 30, | Dec 31, | Mar 30, | Jun 29, | ||||||||||||||||
(in millions EUR) | 2007 | 2007 | 2007 | 2008 | 2008 | |||||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||||||||||||
Net income | 154.5 | 173.9 | 229.3 | 166.5 | 210.5 | |||||||||||||||
Depreciation and amortization | 49.8 | 58.3 | 49.2 | 46.8 | 44.8 | |||||||||||||||
Disposal of property, plant and equipment | 9.9 | 1.7 | 1.6 | 1.1 | 1.3 | |||||||||||||||
Share-based payments | 4.4 | 3.7 | 6.8 | 3.4 | 2.9 | |||||||||||||||
Change in tax assets and liabilities | (2.8 | ) | 4.0 | (26.7 | ) | 29.7 | (102.4 | ) | ||||||||||||
Change in assets and liabilities | 69.1 | (6.3 | ) | (126.6 | ) | 65.4 | 21.9 | |||||||||||||
Net cash provided by operating activities | 284.9 | 235.3 | 133.6 | 312.9 | 179.0 | |||||||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||||||||||||
Purchases of property, plant and equipment | (39.7 | ) | (49.7 | ) | (54.0 | ) | (55.1 | ) | (65.4 | ) | ||||||||||
Proceeds from property, plant and equipment | — | — | 1.7 | — | — | |||||||||||||||
Purchases of intangible assets | (13.0 | ) | (60.7 | ) | (40.4 | ) | (45.5 | ) | (43.1 | ) | ||||||||||
Acquisition of subsidiary (net of cash acquired) | — | — | — | — | — | |||||||||||||||
Net cash used in investing activities | (52.7 | ) | (110.4 | ) | (92.7 | ) | (100.6 | ) | (108.5 | ) | ||||||||||
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 | ) | ||||||||||||||
Net proceeds from issuance of shares and stock options | 10.6 | 25.4 | 11.5 | 3.0 | 0.6 | |||||||||||||||
Net proceeds from issuance of bonds | 593.7 | — | — | — | — | |||||||||||||||
Redemption and/or repayment of debt | (0.1 | ) | (1.5 | ) | (7.9 | ) | — | — | ||||||||||||
Net cash provided by (used in) financing activities | 604.2 | 23.9 | (1,211.9 | ) | (84.6 | ) | (106.9 | ) | ||||||||||||
Net cash flows | 836.4 | 148.8 | (1,171.0 | ) | 127.7 | (36.4 | ) | |||||||||||||
Effect of changes in exchange rates on cash | (0.4 | ) | (2.8 | ) | (2.6 | ) | (2.2 | ) | 0.2 | |||||||||||
Net increase (decrease) in cash and cash equivalents | 836.0 | 146.0 | (1,173.6 | ) | 125.5 | (36.2 | ) |
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 — IFRS1,2
Net income | ||||||||||||||||
Three months ended, | Six months ended, | |||||||||||||||
(in thousands EUR) | Jul 1, 2007 | Jun 29, 2008 | Jul 1, 2007 | Jun 29, 2008 | ||||||||||||
Net income under U.S. GAAP | 159,505 | 191,977 | 312,180 | 337,100 | ||||||||||||
Share-based payments (see Note 1) | (108 | ) | 245 | 14 | (518 | ) | ||||||||||
Capitalization of development costs (see Note 2) | (2,701 | ) | 18,649 | 19,981 | 40,330 | |||||||||||
Convertible subordinated notes (see Note 3) | (2,220 | ) | — | (4,396 | ) | — | ||||||||||
Income taxes (see Note 4) | — | (380 | ) | (7,648 | ) | 39 | ||||||||||
Net income under IFRS | 154,476 | 210,491 | 320,131 | 376,951 |
Shareholders’ equity
Jul 1, | Sep 30, | Dec 31, | Mar 30, | Jun 29, | ||||||||||||||||
(in thousands EUR) | 2007 | 2007 | 2007 | 2008 | 2008 | |||||||||||||||
Shareholders’ equity under U.S. GAAP | 2,318,002 | 1,831,438 | 1,890,948 | 1,958,159 | 2,060,575 | |||||||||||||||
Share-based payments (see Note 1) | 3,924 | 7,126 | 787 | (3,420 | ) | (3,266 | ) | |||||||||||||
Capitalization of development costs (see Note 2) | 110,749 | 120,344 | 138,424 | 157,900 | 176,818 | |||||||||||||||
Convertible subordinated notes (see Note 3) | 27,019 | 2,894 | — | — | — | |||||||||||||||
Income taxes (see Note 4) | — | — | 8,852 | 9,186 | 8,478 | |||||||||||||||
Shareholders’ equity under IFRS | 2,459,694 | 1,961,802 | 2,039,011 | 2,121,825 | 2,242,605 |
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, until December 31, 2005, ASML accounted for stock option plans using the intrinsic value method in accordance with APB 25 “Accounting for stock issued to employees” and provided pro forma disclosure of the impact of the fair value method on net income and earnings per share in accordance with SFAS No. 123 “Accounting for Stock Based Compensation”. As of January 1, 2006, 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”. During the second half of 2004, ASML made changes to its administrative systems in order to provide sufficient information to comply with IFRS beginning from January 1, 2005. Sufficient reliable information to account for capitalization of development expenditures under IFRS before January 1, 2005 is not available. Under 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, 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 | As of January 1, 2008 ASML has early adopted IFRIC 13 “Customer Loyalty Programmes”. 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. |