Oct. 14, 2009 (Business Wire) -- ASML Holding NV (ASML)(NASDAQ:ASML)(Amsterdam:ASML) today announces 2009 third quarter results according to US GAAP as follows:

• Q3 2009 net sales of EUR 555 million versus Q2 2009 net sales of EUR 277 million (Q3 2008 net sales of EUR 696 million).
• Q3 2009 operating income of EUR 39 million, or 6.9 percent of net sales, versus a Q2 2009 operating loss of EUR 124 million or 45.0 percent of net sales (Q3 2008 operating income of EUR 83 million or 12.0 percent of net sales).
• Q3 2009 net income of EUR 20 million, or 3.6 percent of net sales, versus a Q2 2009 net loss of EUR 104 million or 37.6 percent of net sales (Q3 2008 net income of EUR 73 million or 10.5 percent of net sales).
• Q3 2009 net bookings valued at EUR 777 million with 35 systems including 27 new and 8 used systems, leading to an order backlog valued at EUR 1,353 million as of September 27, 2009.

“ASML’s third quarter sales doubled from the second quarter, stemming from technology transition demand for our state-of-the-art immersion lithography systems as new DRAM devices are introduced and as Foundry customers are ramping 40 nanometer (nm) products,” said Eric Meurice, president and Chief Executive Officer of ASML. “We shipped our first NXT:1950i system, offering best-in-class overlay of less than three nanometers and improved imaging, enabling the next generation of semiconductors with patterning below 30 nm. We kept a close rein on costs and retained a healthy cash position above EUR 1 billion even as we invest in working capital to prepare for sales growth,” Meurice added.

Operations Update

In Q3 2009, ASML’s net sales of EUR 555 million included 17 new and 7 used systems, resulting in net system sales of EUR 459 million, and net service and field options sales of EUR 96 million. Net system sales for Q2 2009 included the shipment of 4 new and 6 used machines, totaling EUR 183 million, and net service and field options sales of EUR 94 million.

The Q3 2009 average selling price for a new system was EUR 23.4 million, compared with the Q2 2009 average selling price for a new system of EUR 31.1 million as a result of a blend of immersion and non-immersion systems. The Q3 2009 average selling price for all ASML systems sold was EUR 19.1 million, compared with the Q2 2009 average selling price for all systems sold of EUR 18.3 million.

Q3 2009 net bookings totaled 35 systems valued at EUR 777 million, including 18 immersion systems.

ASML’s order backlog as of September 27, 2009 was EUR 1,353 million, totaling 54 systems with an average selling price of EUR 25.1 million. ASML’s backlog as of June 28, 2009 was valued at EUR 1,064 million, totaling 43 systems with an average selling price of EUR 24.7 million.

In Q3 2009, ASML generated net income of EUR 20 million, or EUR 0.05 per ordinary share as compared with a net loss in Q2 2009 of EUR 104 million or EUR 0.24 per ordinary share.

The company’s Q3 2009 gross margin was 34.4 percent, compared with the Q2 2009 gross margin of 12.5 percent, reflecting the better coverage of fixed production costs as a result of increased sales.

Q3 2009 R&D costs were EUR 115 million net of credits, versus EUR 118 million in Q2 2009.

Selling, general and administrative (SG&A) costs were EUR 38 million in Q3 2009, compared with EUR 41 million SG&A costs in Q2 2009.

Net cash used in operations was EUR 65 million in Q3 2009 as increasing sales result in higher accounts receivable. ASML ended Q3 2009 with EUR 1,018 million in cash and cash equivalents, compared with EUR 1,093 million at the end of Q2 2009.

Outlook

“We booked 35 systems worth EUR 777 million in the third quarter, nearly twice the level booked in the second quarter; this level reflects accelerated technology investments in the DRAM memory and Foundry segments after a nine month period of very low capital spending,” Meurice said. “This recovery mainly supports new Integrated Circuits product introductions, not so much an overall significant wafer capacity increase. ASML’s Q3 order intake, and that of Q4 which we expect to be at least of similar value, is for deliveries in the first half of 2010 and will translate into significant sales growth versus Q3 levels. This substantial order increase does not factor in a full worldwide economic recovery, which, if it materializes, could sustain the first half sales level into the second half of 2010,” Meurice added.

ASML expects Q4 2009 net sales of around EUR 550 million and gross margin in Q4 2009 of about 37 percent. R&D expenditures are expected to be at EUR 115 million net of credits and SG&A costs are expected at EUR 37 million. We expect our cash balance in Q4 2009 to be at a similar level as per end-Q3, even as we prepare to ramp NXT shipments in the first half of 2010 and to build EUV systems planned for delivery in the second half of 2010.

About ASML

ASML is the world's leading provider of lithography systems for the semiconductor industry, manufacturing complex machines that are critical to the production of integrated circuits or chips. Headquartered in Veldhoven, the Netherlands, ASML is traded on Euronext Amsterdam and NASDAQ under the symbol ASML. ASML has more than 6,500 employees (expressed in full time equivalents), serving chip manufacturers in more than 60 locations in 15 countries. For more information, visit our website: www.asml.com

Investor and Media Conference Call

A conference call for investors and media will be hosted by CEO Eric Meurice and CFO Peter Wennink at 15:00 PM Central European Time / 09:00 AM Eastern U.S. time. Dial-in numbers are: in the Netherlands +31 70 304 3371 and the US +1 706 679 0473. To listen to the conference call, access is also available via www.asml.com

A presentation about 2009 third quarter results is available on www.asml.com

A video statement of CFO Peter Wennink is available on www.asml.com

A replay of the Investor and Media Call will be available on www.asml.com

IFRS Financial Reporting

ASML's primary accounting standard for quarterly earnings releases and annual reports is US GAAP, the accounting principles generally accepted in the United States. Quarterly US GAAP consolidated statements of operations, consolidated statements of cash flows, consolidated balance sheets, and a reconciliation of net income/(loss) and equity from US GAAP to IFRS as adopted by the European Union (IFRS) are available on www.asml.com

In addition to reporting financial figures in accordance with US GAAP, ASML also reports financial figures in accordance with IFRS for statutory purposes. The most significant differences between US GAAP and IFRS that affect ASML concern the capitalization of certain product development costs, the accounting of share-based payment plans, the accounting of income taxes and the accounting of reversal of inventory write-downs. Quarterly IFRS consolidated income statements, consolidated statements of cash flows, consolidated statements of financial position and a reconciliation of net income/(loss) and equity from US GAAP to IFRS are available on www.asml.com

The consolidated balance sheets of ASML Holding N.V. as of September 27, 2009, the related consolidated statements of operations and consolidated statements of cash flows for the quarter ended September 27, 2009 as presented in this press release are unaudited.

Regulated Information

This press release, the US GAAP consolidated financial statements and the IFRS consolidated financial statements published on www.asml.com comprise regulated information within the meaning of the Dutch Financial Markets Supervision Act (Wet op het financieel toezicht).

Forward Looking Statements

"Safe Harbor" Statement under the US Private Securities Litigation Reform Act of 1995: the matters discussed in this document may include forward-looking statements, including statements made about our outlook, realization of backlog, IC unit demand, financial results, average selling price, gross margin and expenses. These forward looking statements are subject to risks and uncertainties including, but not limited to: economic conditions, product demand and semiconductor equipment industry capacity, worldwide demand and manufacturing capacity utilization for semiconductors (the principal product of our customer base), including the impact of credit market deterioration on consumer confidence and demand for our customers’ products, 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.

ASML - Notes to the Summary U.S. GAAP Consolidated Financial Statements

Basis of Presentation

ASML follows accounting principles generally accepted in the United States of America (“U.S. GAAP”). Further disclosures, as required under U.S. GAAP in annual reports, are not included in the summary consolidated financial statements. Unless stated otherwise, the accompanying consolidated financial statements are stated in thousands of euros (‘EUR’).

Principles of consolidation

The consolidated financial statements include the accounts of ASML Holding N.V. and all of its majority-owned subsidiaries. Subsidiaries are all entities over which ASML has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. All intercompany profits, balances and transactions have been eliminated in the consolidation.

Use of estimates

The preparation of ASML’s consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities 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.

Foreign currency risk management

The Company uses the euro as its invoicing currency in order to limit the exposure to foreign currency movements. Exceptions may occur on a customer by customer basis. To the extent that invoicing is done in a currency other than the euro, the Company is exposed to foreign currency risk.

It is the Company’s policy to hedge material transaction exposures, such as sales transactions and forecasted purchase transactions. The Company hedges these exposures through the use of foreign exchange options and forward contracts. The use of a mix of foreign exchange options and forward contracts is aimed at reflecting the likelihood of the transactions occurring.

It is the Company’s policy to hedge material remeasurement exposures. These net exposures from certain monetary assets and liabilities in non-functional currencies are hedged with forward contracts.

As of September 27, 2009 EUR 39.8 million loss is classified as other comprehensive income, net of taxes, representing the total anticipated loss to be charged to net sales, and EUR 0.9 million loss representing the total anticipated loss to be released to cost of sales when the forecasted revenue and purchase transactions occur.

ASML – Reconciliation U.S. GAAP – IFRS ¹

Notes to the reconciliation from U.S. GAAP to IFRS

Note 1 Share-based Payments

Under IFRS, ASML applies IFRS 2, “Share-based Payments” beginning from January 1, 2004. In accordance with IFRS 2, ASML records as an expense the fair value of its share-based payments with respect to stock options and stock granted to its employees after November 7, 2002. Under IFRS, at period end a deferred tax asset is computed on the basis of the tax deduction for the share-based payments under the applicable tax law and is recognized to the extent it is probable that future taxable profit will be available against which these deductible temporary differences will be utilized. Therefore, changes in the Company’s share price do affect the deferred tax asset at period-end and result in adjustments to the deferred tax asset.

As of January 1, 2006, ASML applies ASC 718 “Share-Based Payment” which requires companies to recognize the cost of employee services received in exchange for awards of equity instruments based upon the grant-date fair value of those instruments. ASC 718’s general principle is that a deferred tax asset is established as the Company recognizes compensation costs for commercial purposes for awards that are expected to result in a tax deduction under existing tax law. Under U.S. GAAP, the deferred tax recorded on share-based compensation is computed on the basis of the expense recognized in the financial statements. Therefore, changes in the Company’s share price do not affect the deferred tax asset recorded in the Company’s financial statements.

Note 2 Capitalization of development costs

Under IFRS, ASML applies IAS 38, “Intangible Assets”. In accordance with IAS 38, ASML capitalizes certain development expenditures which are amortized over the expected useful life of the related product generally ranging between one and three years. Amortization starts when the developed product is ready for volume production. In 2008, we recognized an impairment charge for an amount of EUR 18.3 million.

Under U.S. GAAP, ASML applies ASC 730, “Accounting for Research and Development Costs”. In accordance with ASC 730, ASML charges costs relating to research and development to operating expense as incurred.

Note 3 Reversal of write-downs

Under IFRS, ASML applies IAS 2 (revised), “Inventories”. In accordance with IAS 2, reversal of a prior period write-down as a result of a subsequent increase in value of inventory should be recognized in the period in which the value increase occurs.

Under U.S. GAAP, ASML applies ASC 330 Inventory. In accordance with ASC 330 reversal of a write-down is prohibited as a write-down creates a new cost basis.

Note 4 Income taxes

Under IFRS, ASML applies IAS 12, “Income Taxes” beginning from January 1, 2005. In accordance with IAS 12 unrealized net income resulting from intercompany transactions that are eliminated from the carrying amount of assets in consolidation, give rise to a temporary difference for which deferred taxes must be recognized in consolidation. The deferred taxes are calculated based on the tax rate applicable in the purchaser’s tax jurisdiction.

Under U.S. GAAP, the elimination of unrealized net income from intercompany transactions that are eliminated from the carrying amount of assets in consolidation, give rise to a temporary difference for which prepaid taxes must be recognized in consolidation. Contrary to IFRS, the prepaid taxes under U.S. GAAP are calculated based on the tax rate applicable in the seller’s rather than the purchaser’s tax jurisdiction.

"Safe Harbor" Statement under the US Private Securities Litigation Reform Act of 1995: the matters discussed in this document may include forward-looking statements, including statements made about our outlook, realization of backlog, IC unit demand, financial results, average selling price, gross margin and expenses. These forward looking statements are subject to risks and uncertainties including, but not limited to: economic conditions, product demand and semiconductor equipment industry capacity, worldwide demand and manufacturing capacity utilization for semiconductors (the principal product of our customer base), including the impact of credit market deterioration on consumer confidence and demand for our customers’ products, 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 The calculation of diluted net income per ordinary share assumes the exercise of options issued under ASML stock option plans for periods in which exercises would have a dilutive effect, the calculation of diluted net income per ordinary share does not assume exercise of such options when such exercises would be antidilutive.