ASML - Summary IFRS Consolidated Statements of Operations1
| Three months ended, | Twelve months ended, | ||||||||||||
| Dec 31, 2004 | Dec 31, 2005 | Dec 31, 2004 | Dec 31, 2005 | ||||||||||
| (Amounts in thousands EUR) | |||||||||||||
| Net system sales | 709,839 | 456,016 | 2,174,908 | 2,227,678 | |||||||||
| Net service sales | 75,323 | 91,853 | 290,469 | 301,289 | |||||||||
| Net sales | 785,162 | 547,869 | 2,465,377 | 2,528,967 | |||||||||
| Cost of sales | 477,748 | 358,259 | 1,563,046 | 1,583,189 | |||||||||
| Gross profit on sales | 307,414 | 189,610 | 902,331 | 945,778 | |||||||||
| Research costs | 81,589 | 58,893 | 355,621 | 247,217 | |||||||||
| Research credits | (6,413 | ) | (3,336 | ) | (21,961 | ) | (16,692 | ) | |||||
| Selling, general and administrative expenses | 52,801 | 48,182 | 204,409 | 205,334 | |||||||||
| Restructuring expenses | - | - | (5,862 | ) | - | ||||||||
| Total expenses | 127,977 | 103,739 | 532,207 | 435,859 | |||||||||
| Operating income | 179,437 | 85,871 | 370,124 | 509,919 | |||||||||
| Financial income/(expense), net | (4,565 | ) | (11,671 | ) | (16,073 | ) | (49,368 | ) | |||||
| Income before income taxes | 174,872 | 74,200 | 354,051 | 460,551 | |||||||||
| Provision for income taxes | (67,192 | ) | (16,863 | ) | (127,100 | ) | (127,725 | ) | |||||
| Net income | 107,680 | 57,337 | 226,951 | 332,826 | |||||||||
ASML - Summary IFRS Consolidated Balance Sheets1
| Dec 31, | March 27, | June 26, | Sep 25, | Dec 31, | ||||||||||||
| 2004 | 2005 | 2005 | 2005 | 2005 | ||||||||||||
| (Amounts in thousands EUR) | ||||||||||||||||
ASSETS | ||||||||||||||||
| Cash and cash equivalents | 1,228,130 | 1,319,651 | 1,544,078 | 1,699,763 | 1,904,609 | |||||||||||
| Accounts receivable, net | 503,153 | 483,898 | 485,352 | 403,489 | 302,572 | |||||||||||
| Inventories, net | 717,688 | 728,378 | 695,330 | 653,098 | 777,200 | |||||||||||
| Other current assets | 230,346 | 223,768 | 211,583 | 210,705 | 199,651 | |||||||||||
| Total current assets | 2,679,317 | 2,755,695 | 2,936,343 | 2,967,055 | 3,184,032 | |||||||||||
| Deferred tax asset | 202,279 | 212,970 | 208,965 | 198,461 | 208,984 | |||||||||||
| Other assets | 27,840 | 30,266 | 30,932 | 36,882 | 31,873 | |||||||||||
| Intangible assets | 31,818 | 45,882 | 69,519 | 85,986 | 98,545 | |||||||||||
| Property, plant and equipment | 303,691 | 310,316 | 306,919 | 292,799 | 278,581 | |||||||||||
| Total assets | 3,244,945 | 3,355,129 | 3,552,678 | 3,581,183 | 3,802,015 | |||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||||
| Current liabilities | 813,141 | 765,667 | 776,784 | 765,463 | 1,419,982 | |||||||||||
| Convertible subordinated bonds | 802,810 | 708,059 | 749,169 | 758,034 | 293,091 | |||||||||||
| Long term debt and deferred liabilities | 236,213 | 313,805 | 338,102 | 316,914 | 267,971 | |||||||||||
| Shareholders’ equity | 1,392,781 | 1,567,598 | 1,688,623 | 1,740,772 | 1,820,971 | |||||||||||
| Total liabilities and Shareholders’ equity | 3,244,945 | 3,355,129 | 3,552,678 | 3,581,183 | 3,802,015 | |||||||||||
| 1.) | All figures are unaudited. |
ASML - Summary IFRS Consolidated Statements of Cash Flows1
| Three months ended, | Twelve months ended | ||||||||||||
| Dec 31, 2004 | Dec 31, 2005 | Dec 31, 2004 | Dec 31, 2005 | ||||||||||
| (Amounts in thousands EUR) | EUR | EUR | EUR | EUR | |||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||||||
| Net income | 107,680 | 57,337 | 226,951 | 332,826 | |||||||||
| Depreciation and amortization | 20,774 | 43,685 | 93,144 | 122,589 | |||||||||
| Change in tax assets and liabilities | 63,977 | (38 | ) | 114,359 | 142,674 | ||||||||
| Change in assets and liabilities | (240,442 | ) | 136,125 | (183,187 | ) | 211,795 | |||||||
| Net cash provided by operating activities | (48,011 | ) | 237,109 | 251,267 | 809,884 | ||||||||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||||||
| Capital expenditures | (28,607 | ) | (51,604 | ) | (75,535 | ) | (172,427 | ) | |||||
| Disposals | 1,609 | 8,794 | 15,136 | 13,235 | |||||||||
| Net cash used in investing activities | (26,998 | ) | (42,810 | ) | (60,399 | ) | (159,192 | ) | |||||
| Net cash provided by operating and | |||||||||||||
| investing activities | (75,009 | ) | 194,299 | 190,868 | 650,692 | ||||||||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||||||
| Redemption and/or repayment of loans | (331 | ) | (307 | ) | (1,159 | ) | (12,949 | ) | |||||
| Proceeds from share issuance | 1,077 | 5,530 | 20,030 | 15,828 | |||||||||
| Net cash provided by financing activities | 746 | 5,223 | 18,871 | 2,879 | |||||||||
| Net cash flow | (74,263 | ) | 199,522 | 209,739 | 653,571 | ||||||||
| Effect of changes in exchange rates on cash | (13,366 | ) | 5,324 | (9,418 | ) | 22,908 | |||||||
| Net increase in cash and cash equivalents | (87,629 | ) | 204,846 | 200,321 | 676,479 | ||||||||
ASML - Quarterly Summary IFRS Consolidated Statements of Operations1
| Three months ended, | ||||||||||||||||
| Dec 31, | March 27, | June 26, | Sep 25, | Dec 31, | ||||||||||||
| 2004 | 2005 | 2005 | 2005 | 2005 | ||||||||||||
| (Amounts in millions EUR) | ||||||||||||||||
| Net system sales | 709.8 | 632.1 | 680.6 | 459.0 | 456.0 | |||||||||||
| Net service sales | 75.3 | 52.6 | 82.7 | 74.2 | 91.9 | |||||||||||
| Net sales | 785.1 | 684.7 | 763.3 | 533.2 | 547.9 | |||||||||||
| Cost of sales | 477.7 | 414.4 | 467.3 | 343.3 | 358.3 | |||||||||||
| Gross profit on sales | 307.4 | 270.3 | 296.0 | 189.9 | 189.6 | |||||||||||
| Research costs, net of credits | 75.2 | 64.9 | 54.8 | 55.3 | 55.6 | |||||||||||
| Selling, general and administrative expenses | 52.8 | 52.2 | 55.8 | 49.1 | 48.1 | |||||||||||
| Total expenses | 128.0 | 117.1 | 110.6 | 104.4 | 103.7 | |||||||||||
| Operating income | 179.4 | 153.2 | 185.4 | 85.5 | 85.9 | |||||||||||
| Financial income/(expense), net | (4.5 | ) | (12.0 | ) | (11.5 | ) | (14.2 | ) | (11.7 | ) | ||||||
| Income before Income taxes | 174.9 | 141.2 | 173.9 | 71.3 | 74.2 | |||||||||||
| Provision for income taxes | (67.2 | ) | (40.3 | ) | (50.9 | ) | (19.7 | ) | (16.9 | ) | ||||||
| Net income | 107.7 | 100.9 | 123.0 | 51.6 | 57.3 | |||||||||||
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”) in order to satisfy European Union requirements applicable to companies quoted on a European Stock Exchange. 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.
ASML intends to continue publishing U.S. GAAP financial statements, as has been its historical practice.
Principles of consolidation
The accompanying consolidated financial statements include the accounts of ASML Holding N.V. and all of its majority-owned subsidiaries. All inter-company profits, transactions and balances have been eliminated in the consolidation.
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; the 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 and the revenue from the installation of a system 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 premises.
The fair value of installation services provided to the customers is initially deferred and is recognized when the installation is completed. Sales from service contracts are recognized when performed. Revenue from prepaid service contracts is recognized over the life of the contract.
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.
Pensions
Under IFRS, ASML applies IAS 19, “Employee benefits”, in accounting for its multi-employer defined benefit plans. In accordance with IAS 19, ASML accounts for its multi-employer defined benefit plan as if it were a defined contribution plan as the pension union managing the plan is not able to provide ASML with sufficient information to enable ASML to account for the plan as a defined benefit plan.
ASML - Reconciliation U.S. GAAP - IFRS1
Net income | Three months ended, | Twelve months ended, | |||||||||||
| Dec 31, 2004 | Dec 31, 2005 | Dec 31, 2004 | Dec 31, 2005 | ||||||||||
| (Amounts in thousands EUR) | |||||||||||||
Net income under U.S. GAAP | 108,637 | 51,621 | 235,460 | 311,464 | |||||||||
| Share Based Payments (see Note 1) | (957 | ) | 197 | (8,509 | ) | (9,435 | ) | ||||||
| Capitalization of development costs (see Note 2) | - | 10,504 | - | 51,814 | |||||||||
| Convertible bonds (see Note 3) | - | (4,985 | ) | - | (21,017 | ) | |||||||
Net income under IFRS | 107,680 | 57,337 | 226,951 | 332,826 | |||||||||
Shareholders’ Equity
| Dec 31, 2004 | Dec 31, 2005 | Dec 31, 2004 | Dec 31, 2005 | ||||||||||
| (Amounts in thousands EUR) | |||||||||||||
Shareholders’ equity under U.S. GAAP | 1,391,602 | 1,711,837 | 1,391,602 | 1,711,837 | |||||||||
| Share Based Payments (see Note 1) | 1,179 | 2,100 | 1,179 | 2,100 | |||||||||
| Capitalization of development costs (see Note 2) | - | 51,815 | - | 51,815 | |||||||||
| Convertible subordinated bonds (see Note 3) | - | 55,219 | - | 55,219 | |||||||||
Shareholders’ equity under IFRS | 1,392,781 | 1,820,971 | 1,392,871 | 1,820,971 | |||||||||
Notes to the reconciliation from U.S. GAAP to IFRS
Note 1 Share Based Payments
Under IFRS, ASML applies IFRS 2, “Share based payments” beginning from January 1, 2004. In accordance with IFRS 2, ASML records as an expense the fair value of its share based payments with respect to stock options granted to its employees after November 7, 2002.
Under U.S. GAAP, ASML accounts for stock option plans using the intrinsic value method in accordance with APB 25 “Accounting for stock issued to employees” and provides pro forma disclosure of the impact of the fair value method on net income and earnings per share in accordance with SFAS 123 “Accounting for stock based compensation”.
Note 2 Capitalization of development costs
Under IFRS, ASML applies IAS 38, “Intangible Assets” beginning from January 1, 2005. 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 relating to development costs under IFRS before January 1, 2005 is not available. Under IAS 38, capitalized development costs 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 2, “Accounting for Research and Development Costs”. In accordance with SFAS 2, ASML charges costs relating to research and development to operating expense as incurred.
Note 3 Convertible subordinated bonds
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 bonds. The equity component relates to the grant of a conversion option to shares to the holder of the bond.
The liability component creates a financial liability that is measured at amortized cost which results in additional interest charges.
Under U.S. GAAP, ASML accounts for its convertible bonds as a liability at the principal amount outstanding.
"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, 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.