ASML Announces 2010 Q4 and Full Year Results, along with Increased Dividend Proposal and Share Buy Back Program

ASML Holding NV (ASML) (NASDAQ:ASML) (Amsterdam:ASML) today announces 2010 fourth quarter and full year results according to US GAAP as follows:

• Q4 2010 net sales of EUR 1,521 million versus Q3 2010 net sales of EUR 1,176 million (Q4 2009 net sales of EUR 581 million). Full year 2010 net sales were EUR 4,508 million, up 182.4 percent versus 2009 net sales of EUR 1,596 million.
• Q4 2010 net income of EUR 407 million, or 26.7 percent of net sales, versus a Q3 2010 net income of EUR 269 million, or 22.8 percent of net sales (Q4 2009 net income of EUR 50 million or 8.7 percent of net sales). Full year 2010 net income amounted to EUR 1,022 million or 22.7 percent of net sales, compared with 2009 net loss of EUR 151 million or 9.5 percent of net sales.
• Q4 2010 net bookings of EUR 2,315 million (see page 3), with 117 systems including 104 new and 13 used systems, leading to a systems backlog valued at EUR 3,856 million as of December 31, 2010.

"The fourth quarter was a strong close to a remarkable year in the history of ASML during which we achieved record sales, profit and bookings,” said Eric Meurice, President and Chief Executive Officer of ASML. "In order to meet brisk demand for our advanced technology products as well as for our capacity tools, we almost tripled the output of our factory in 2010 compared with 2009, through expansion of our fixed and flexible workforce, and by structural cycle time improvements. In the quarter, we shipped 13 TWINSCAN XT:1950 systems, our immersion workhorse, in addition to 14 of our most advanced volume production immersion system TWINSCAN NXT:1950 which has now become the industry’s premier immersion platform capable of overlay of less than 3 nanometers (nm) in high volume production. While we have taken immersion imaging performance to the next level, we have also enhanced productivity to new record, as four immersion systems succeeded to process more than one million wafers each over 2010. During the fourth quarter, we also shipped the first of our second generation EUV systems, the NXE:3100 and successfully exposed wafers at a customer manufacturing site. In coming months, five more customers will receive their NXE:3100 systems, as EUV is now confirmed the most likely lithography platform to continue Moore’s Law towards smaller, cheaper and more energy-efficient semiconductors,” Meurice added.

Operations Update

Full year 2010 net sales of EUR 4,508 million consisted of system sales of EUR 3,895 million, as the company shipped a total of 197 systems, including 154 new and 43 used, and net service and field option sales which amounted to EUR 613 million. 2009 net sales of EUR 1,596 million consisted of net system sales of EUR 1,175 million, as the company shipped a total of 70 systems, including 47 new and 23 used, and net service and field option sales which amounted to EUR 421 million.

In Q4 2010, ASML’s net sales of EUR 1,521 million included 56 new and 13 used systems, totaling net system sales of EUR 1,313 million, and net service and field options sales of EUR 208 million. Net system sales for Q3 2010 included the shipment of 40 new and 11 used machines, totaling EUR 1,027 million, and net service and field options sales of EUR 149 million.

The Q4 2010 average selling price for a new system was EUR 22.4 million, compared with the Q3 2010 average selling price for a new system of EUR 24.1 million. The Q4 2010 average selling price for all ASML systems sold was EUR 19.0 million, compared with the Q3 2010 average selling price of EUR 20.1 million.

Q4 2010 net bookings totaled 117 systems valued at EUR 2,315 million, with a total average selling price of EUR 19.8 million. This record bookings level was driven by NAND Flash memory investments for the high volume ramp of new technologies and Foundry/Logic commitments for new strategic fab projects, while DRAM lithography demand weakened less than originally planned.

ASML’s systems backlog as of December 31, 2010, was EUR 3,856 million, totaling 157 systems with an average selling price of EUR 24.6 million, reflecting a mix of technology and capacity systems. ASML’s systems backlog as of September 26, 2010, was valued at EUR 2,983 million, totaling 109 systems with an average selling price of EUR 27.4 million.

ASML is closing long-term contracts with customers that involve systems and increasingly certain options and services which have become a sizeable part of the total order value. Until the fourth quarter, ASML did not include these additional items in "systems bookings” or "backlog”. To better represent the value of our systems bookings and backlog, and therefore our real future sales potential, ASML will report from the fourth quarter of 2010 full order values which include all contract-committed items associated with a system sale. Not included in the order book and backlog will still be the separate service and field options orders for the already installed base of ASML systems at customer sites. Had ASML used the original definition instead of the new bookings definition, net bookings in the fourth quarter would have amounted to EUR 2,011 million and backlog per December 31, 2010, would have been EUR 3,381 million.

In Q4 2010, ASML generated net income of EUR 407 million, or EUR 0.94 per ordinary share as compared with net income in Q3 2010 of EUR 269 million or EUR 0.61 per ordinary share. Full year 2010 net income amounted to EUR 1,022 million (EUR 2.35 net income per ordinary share), compared with a full year 2009 net loss of EUR 151 million (EUR 0.35 net loss per ordinary share).

The company’s Q4 2010 gross margin was 45.0 percent compared with the Q3 2010 gross margin of 43.6 percent.

Q4 2010 research and development (R&D) costs were EUR 141 million, compared with Q3 2010 R&D costs of EUR 137 million. Over the full year 2010 ASML invested EUR 523 million in technology development. ASML has one of the highest private R&D budgets invested in the Netherlands. A significant part of this sum was used for R&D jointly with our suppliers and technology partners.

Selling, general and administrative (SG&A) costs were EUR 50 million in Q4 2010, compared with SG&A costs of EUR 48 million in Q3 2010.

Net cash from operations was EUR 302 million in Q4 2010. ASML ended Q4 2010 with EUR 1,950 million in cash and cash equivalents, compared with EUR 1,548 million at the end of Q3 2010.

Outlook

"We booked more than EUR 2 billion worth of orders in the fourth quarter of 2010, leading to a record year-end backlog of EUR 3.9 billion of systems shippable in 2011. This record-breaking backlog and the additional expected Q1 bookings 2011 confirm a potential for more than EUR 5 billion of net sales in 2011,” Eric Meurice said. "The overall macro-economic drivers are still mixed since the end of the summer, but the semiconductor market is sustained by a very rich leading edge technology mix, which in turn justifies the large backlog for our products. Indeed, NAND Flash memory, DRAM memory, micro-processors and overall Logic manufacturers are all ramping their new nodes at the same time, in parallel to some strategic or catch-up investments in lithography, thus ensuring a very positive short term to mid term investment level. Beyond 2011, we foresee further technology transitions through the insertion of EUV, based on our third generation platform, the NXE:3300 for which we have received nine orders to date; it is certainly too early to commit numbers for 2012, as the industry still needs a number of months to confirm EUV plans, performance and roadmaps, but it is encouraging to envision this other engine of growth for 2012 and beyond,” Meurice said.

ASML expects Q1 2011 net sales of around EUR 1.4 billion. ASML expects a gross margin in Q1 2011 of between 44 and 45 percent. R&D costs are expected to be at EUR 145 million and SG&A costs are expected at EUR 55 million.

Dividend and share buy back program

Thanks to ASML’s strong financial position and operating cash flow prospects, we intend to pay a sustained annual dividend through the semiconductor industry cycle, thus rewarding our shareholders for their continued investment and attracting new categories of investors. Furthermore, ASML intends to return excess cash to shareholders through regularly timed share buy back programs.

ASML will submit a proposal to the 2011 General Meeting of Shareholders to declare a dividend in respect of 2010 of EUR 0.40 per ordinary share (for a total amount of approximately EUR 175 million), representing 17 percent of net income per ordinary share, compared with a dividend of EUR 0.20 per ordinary share paid in respect of 2009.

ASML also announces its intention to purchase up to EUR 1 billion of its own shares within two years. The program will be executed within the limitations of the existing authority granted by the Annual General Meeting of Shareholders (AGM) on March 24, 2010 and, if granted, of the authority proposed to future AGMs. The purpose of the share buy back program is to return cash to shareholders through reduction of the number of issued shares.

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 7,100 employees on payroll (expressed in full time equivalents), serving chip manufacturers in more than 55 locations in 16 countries. More information about our company, our products and technology, and career opportunities is available on our website: www.asml.com

Press Conference

A press conference hosted by CEO Eric Meurice and CFO Peter Wennink will be held at our office in Veldhoven at 11:00 AM Central European Time / 05:00 AM Eastern U.S. time. To listen to the press conference, access is available via www.asml.com

A presentation about 2010 fourth quarter and full year results is available on www.asml.com

A video statement of CFO Peter Wennink is available on 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 10 29 44 271 and the US +1 718 247 0888 (US participants will have to quote the following confirmation code when dialing into the conference: 7644773). To listen to the conference call, access is also available via www.asml.com

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

2010 Annual Reports

ASML will publish its 2010 Annual Report on Form 20-F, Statutory Annual Report and Remuneration Report on February 15, 2011. The reports will be published on our website at www.asml.com.

IFRS Financial Reporting

ASML's primary accounting standard for quarterly earnings releases and annual reports is US GAAP, the accounting standard generally accepted in the United States. Quarterly US GAAP consolidated statements of operations, consolidated statements of cash flows and consolidated balance sheets, and a reconciliation of net income/(loss) and equity from US GAAP to 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. ASML’s quarterly IFRS consolidated income statement, consolidated statement of cash flows, consolidated statement 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 Dec 31, 2010, the related consolidated statements of operations and consolidated statements of cash flows for the quarter ended Dec 31, 2010 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, dividend policy and intention to repurchase shares. 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 general economic conditions on consumer confidence and demand for our customers’ products, competitive products and pricing, the impact of manufacturing efficiencies and capacity constraints, the pace of new product development and customer acceptance of new products, our ability to enforce patents and protect intellectual property rights, the risk of intellectual property litigation, availability of raw materials and critical manufacturing equipment, trade environment, changes in exchange rates available cash, distributable reserves for dividend payments and share repurchases 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 - Summary U.S. GAAP Consolidated Statements of Operations 1,2
		Three months ended,						Twelve months ended,
		Dec 31, 2009			Dec 31, 2010			Dec 31, 2009			Dec 31, 2010
(in millions EUR, except per share data)
Net system sales		431.8			1,313.1			1,174.9			3,894.7
Net service and field option sales		148.8			208.3			421.2			613.2
Total net sales		580.6			1,521.4			1,596.1			4,507.9
Cost of sales		360.3			836.7			1,137.7			2,552.7
Gross profit on sales		220.3			684.7			458.4			1,955.2
Research and development costs		115.4			141.0			466.8			523.4
Selling, general and administrative costs	3	36.5			50.1			154.7			181.1
Income (loss) from operations		68.4			493.6			(163.1	)		1,250.7
Interest expense	3	(3.5	)		(1.1	)		(8.4	)		(8.2	)
Income (loss) from operations before income taxes		64.9			492.5			(171.5	)		1,242.5
(Provision for) benefit from income taxes		(14.4	)		(85.7	)		20.6			(220.7	)
Net income (loss)		50.5			406.8			(150.9	)		1,021.8
Basic net income (loss) per ordinary share		0.12			0.94			(0.35	)		2.35
Diluted net income (loss) per ordinary share	4	0.12			0.93			(0.35	)		2.33
Number of ordinary shares used in computing per share amounts (in millions):
Basic		433.2			435.9			432.6			435.1
Diluted	4	437.0			439.9			432.6			439.0
ASML - Ratios and Other Data 1,2
		Three months ended,						Twelve months ended,
		Dec 31, 2009			Dec 31, 2010			Dec 31, 2009			Dec 31, 2010
Gross profit as a % of net sales		38.0			45.0			28.7			43.4
Income (loss) from operations as a % of net sales	3	11.8			32.4			(10.2	)		27.7
Net income (loss) as a % of net sales		8.7			26.7			(9.5	)		22.7
Shareholders’ equity as a % of total assets	3	47.1			44.9			47.1			44.9
Income taxes as a % of income (loss) before income taxes		22.2			17.4			12.0			17.8
Sales of systems (in units)		25			69			70			197
ASP of systems sales (EUR million)		17.3			19.0			16.8			19.8
Value of systems backlog (EUR million)	5	2,114			3,856			2,114			3,856
Systems backlog (in units)	5	69			157			69			157
ASP of systems backlog (EUR million)	5	30.6			24.6			30.6			24.6
Value of booked systems (EUR million)	5	1,059			2,315			2,535			6,213
Net bookings (in units)	5	40			117			98			285
ASP of booked systems (EUR million)	5	26.5			19.8			25.9			21.8
Number of payroll employees in FTEs		6,548			7,184			6,548			7,184
Number of temporary employees in FTEs		1,137			2,061			1,137			2,061
ASML - Summary U.S. GAAP Consolidated Balance Sheets 1,2
		Dec 31, 2009			Dec 31, 2010
(in millions EUR)
ASSETS
Cash and cash equivalents		1,037.1			1,949.8
Accounts receivable, net		377.4			1,123.5
Finance receivables, net		21.6			12.6
Current tax assets		11.3			12.7
Inventories, net		963.4			1,497.2
Deferred tax assets		119.4			134.5
Other assets		218.7			214.2
Total current assets		2,748.9			4,944.5
Finance receivables, net		-			28.9
Deferred tax assets		133.3			71.0
Other assets		77.0			235.7
Goodwill		131.5			141.3
Other intangible assets, net		18.1			13.7
Property, plant and equipment, net	3	655.4			745.3
Total non-current assets		1,015.3			1,235.9
Total assets		3,764.2			6,180.4
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities		1,044.2			2,155.8
Accrued liabilities and other liabilities		44.3			373.1
Deferred and other tax liabilities		188.4			155.7
Provisions		12.7			11.8
Long-term debt	3	699.8			710.1
Total non-current liabilities		945.2			1,250.7
Total liabilities		1,989.4			3,406.5
Shareholders’ equity		1,774.8			2,773.9
Total liabilities and shareholders’ equity		3,764.2			6,180.4
ASML - Summary U.S. GAAP Consolidated Statements of Cash Flows 1,2
		Three months ended,						Twelve months ended,
		Dec 31, 2009			Dec 31, 2010			Dec 31, 2009			Dec 31, 2010
(in millions EUR)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)		50.5			406.8			(150.9	)		1,021.8
Depreciation and amortization	3	34.0			39.5			141.6			151.4
Impairment		0.3			7.0			15.9			8.6
Loss on disposals of property, plant and equipment		1.0			0.9			4.1			2.9
Share-based payments		4.5			2.3			13.4			12.1
Allowance for doubtful debts		0.1			(2.1	)		2.0			(1.3	)
Allowance for obsolete inventory		7.4			5.2			86.6			55.7
Deferred income taxes		13.3			(43.1	)		(49.4	)		28.1
Change in assets and liabilities		(91.7	)		(114.1	)		35.9			(339.3	)
Net cash provided by operating activities		19.4			302.4			99.2			940.0
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment		(7.7	)		(68.9	)		(105.0	)		(128.7	)
Proceeds from sale of property, plant and equipment		-			3.8			6.9			3.8
Net cash used in investing activities		(7.7	)		(65.1	)		(98.1	)		(124.9	)
CASH FLOWS FROM FINANCING ACTIVITIES
Dividend paid		-			-			(86.5	)		(87.0	)
Net proceeds from issuance of shares and stock options		6.4			10.5			11.1			31.0
Excess tax benefits from stock options		1.0			(0.3	)		2.0			0.1
Deposits from customers		-			150.0			-			150.0
Net proceeds from other long-term debt		-			-			0.1			-
Redemption and/or repayment of debt	3	(0.4	)		(0.3	)		(1.6	)		(1.4	)
Net cash provided by (used in) financing activities		7.0			159.9			(74.9	)		92.7
Net cash flows		18.7			397.2			(73.8	)		907.8
Effect of changes in exchange rates on cash		0.4			4.6			1.7			4.9
Net increase (decrease) in cash & cash equivalents		19.1			401.8			(72.1	)		912.7

ASML - Quarterly Summary U.S. GAAP Consolidated Statements of Operations 1,2
			Three months ended,
			Dec 31,		Mar 28,		Jun 27,		Sep 26,		Dec 31,
			2009		2010		2010		2010		2010
(in millions EUR, except per share data)
Net system sales			431.8		631.6		923.0		1,027.0		1,313.1
Net service and field option sales			148.8		110.2		145.7		149.0		208.3
Total net sales			580.6		741.8		1,068.7		1,176.0		1,521.4
Cost of sales			360.3		443.2		609.3		663.5		836.7
Gross profit on sales			220.3		298.6		459.4		512.5		684.7
Research and development costs			115.4		120.3		125.3		136.8		141.0
Selling, general and administrative costs	3		36.5		41.4		41.7		47.9		50.1
Income from operations			68.4		136.9		292.4		327.8		493.6
Interest expense	3		(3.5)		(2.8)		(2.7)		(1.6)		(1.1)
Income from operations before income taxes			64.9		134.1		289.7		326.2		492.5
Provision for income taxes			(14.4)		(26.8)		(50.5)		(57.7)		(85.7)
Net income			50.5		107.3		239.2		268.5		406.8
Basic net income per ordinary share			0.12		0.25		0.55		0.61		0.94
Diluted net income per ordinary share	4		0.12		0.25		0.54		0.61		0.93
Number of ordinary shares used in computing per share amounts (in millions):
Basic			433.2		434.0		435.1		435.5		435.9
Diluted	4		437.0		437.9		438.9		439.3		439.9
ASML - Quarterly Summary Ratios and other data 1,2
			Three months ended,
			Dec 31,		Mar 28,		Jun 27,		Sep 26,		Dec 31,
			2009		2010		2010		2010		2010
Gross profit as a % of net sales			38.0		40.3		43.0		43.6		45.0
Income from operations as a % of net sales	3		11.8		18.5		27.4		27.9		32.4
Net income as a % of net sales			8.7		14.5		22.4		22.8		26.7
Shareholders’ equity as a % of total assets	3		47.1		41.2		42.7		42.5		44.9
Income taxes as a % of income before income taxes			22.2		20.0		17.4		17.7		17.4
Sales of systems (in units)			25		34		43		51		69
ASP of system sales (EUR million)			17.3		18.6		21.5		20.1		19.0
Value of systems backlog (EUR million)	5		2,114		2,524		2,803		2,983		3,856
Systems backlog (in units)	5		69		85		100		109		157
ASP of systems backlog (EUR million)	5		30.6		29.7		28.0		27.4		24.6
Value of booked systems (EUR million)	5		1,059		1,165		1,342		1,391		2,315
Net bookings (in units)	5		40		50		58		60		117
ASP of booked systems (EUR million)	5		26.5		23.3		23.1		23.2		19.8
Number of payroll employees in FTEs			6,548		6,591		6,691		6,919		7,184
Number of temporary employees in FTEs			1,137		1,331		1,500		1,803		2,061
ASML - Quarterly Summary U.S. GAAP Consolidated Balance Sheets 1,2
			Dec 31,		Mar 28,		Jun 27,		Sep 26,		Dec 31,
			2009		2010		2010		2010		2010
(in millions EUR)
ASSETS
Cash and cash equivalents			1,037.1		1,087.3		1,188.6		1,548.0		1,949.8
Accounts receivable, net			377.4		629.8		811.5		915.0		1,123.5
Finance receivables, net			21.6		23.3		-		12.3		12.6
Current tax assets			11.3		37.5		74.7		82.4		12.7
Inventories, net			963.4		1,155.5		1,309.3		1,449.8		1,497.2
Deferred tax assets			119.4		107.5		100.7		71.2		134.5
Other assets			218.7		247.3		248.7		269.4		214.2
Total current assets			2,748.9		3,288.2		3,733.5		4,348.1		4,944.5
Finance receivables, net			-		-		-		32.2		28.9
Deferred tax assets			133.3		127.9		126.4		93.7		71.0
Other assets			77.0		99.1		94.4		110.6		235.7
Goodwill			131.5		141.1		153.2		140.9		141.3
Other intangible assets, net			18.1		17.8		16.4		15.0		13.7
Property, plant and equipment, net	3		655.4		720.7		742.8		720.6		745.3
Total non-current assets			1,015.3		1,106.6		1,133.2		1,113.0		1,235.9
Total assets			3,764.2		4,394.8		4,866.7		5,461.1		6,180.4
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities			1,044.2		1,613.0		1,782.7		2,163.2		2,155.8
Accrued liabilities and other liabilities			44.3		45.9		57.3		58.4		373.1
Deferred and other tax liabilities			188.4		200.1		205.0		172.7		155.7
Provisions			12.7		13.0		13.8		12.1		11.8
Long-term debt	3		699.8		711.8		728.6		735.4		710.1
Total non-current liabilities			945.2		970.8		1,004.7		978.6		1,250.7
Total liabilities			1,989.4		2,583.8		2,787.4		3,141.8		3,406.5
Shareholders’ equity			1,774.8		1,811.0		2,079.3		2,319.3		2,773.9
Total liabilities and shareholders’ equity			3,764.2		4,394.8		4,866.7		5,461.1		6,180.4
ASML - Quarterly Summary U.S. GAAP Consolidated Statements of Cash Flows 1,2
			Three months ended,
			Dec 31,		Mar 28,		Jun 27,		Sep 26,		Dec 31,
			2009		2010		2010		2010		2010
(in millions EUR)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income			50.5		107.3		239.2		268.5		406.8
Depreciation and amortization	3		34.0		34.7		36.2		41.0		39.5
Impairment			0.3		0.8		0.7		0.1		7.0
Loss on disposals of property, plant and equipment			1.0		0.6		1.0		0.4		0.9
Share-based payments			4.5		2.8		2.4		4.6		2.3
Allowance for doubtful debts			0.1		0.2		-		0.6		(2.1)
Allowance for obsolete inventory			7.4		13.8		21.2		15.5		5.2
Deferred income taxes			13.3		23.7		6.1		41.4		(43.1)
Change in assets and liabilities			(91.7)		(142.8)		(113.8)		31.4		(114.1)
Net cash provided by operating activities			19.4		41.1		193.0		403.5		302.4
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment			(7.7)		(7.2)		(18.0)		(34.6)		(68.9)
Proceeds from sale of property, plant and equipment			-		-		-		-		3.8
Net cash used in investing activities			(7.7)		(7.2)		(18.0)		(34.6)		(65.1)
CASH FLOWS FROM FINANCING ACTIVITIES
Dividend paid			-		-		(87.0)		-		-
Net proceeds from issuance of shares and stock options			6.4		10.4		7.8		2.3		10.5
Excess tax benefits from stock options			1.0		-		-		0.4		(0.3)
Deposits from customers			-		-		-		-		150.0
Redemption and/or repayment of debt	3		(0.4)		(0.4)		(0.3)		(0.4)		(0.3)
Net cash provided by (used in) financing activities			7.0		10.0		(79.5)		2.3		159.9
Net cash flows			18.7		43.9		95.5		371.2		397.2
Effect of changes in exchange rates on cash			0.4		6.3		5.8		(11.8)		4.6
Net increase in cash & cash equivalents			19.1		50.2		101.3		359.4		401.8

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, 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 buyer is fixed or determinable; and collectability 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, if any. A system is shipped, and revenue is recognized, only after all specifications are met and customer sign-off is received or waived. Where not all specifications are met and the remaining performance obligation is not essential to the functionality of the system but substantive rather than inconsequential or perfunctory a portion of the sales price is deferred. 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.

The main portion of our revenue is derived from contractual arrangements with our customers that have multiple deliverables, such as installation and training services and prepaid extended and enhanced (optic) warranty contracts. The revenue relating to the undelivered elements of the arrangements is deferred at fair value until delivery of these elements. The fair value is determined by vendor specific objective evidence ("VSOE") except the fair value of the prepaid extended and enhanced (optic) warranty contracts, which is based on the list price. VSOE is determined based upon the prices that we charge for installation and comparable services (such as relocating a system to another customer site) on a stand-alone basis, which are subject to normal price negotiations. Revenue from installation and training services is recognized when the services are completed. Revenue from prepaid extended and enhanced (optic) warranty contracts is recognized over the term of the contract.

Foreign currency risk management

The Company uses the euro as its invoicing currency in order to limit 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 forecasted sales and purchase transactions. The Company hedges these exposures through the use of currency contracts.

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

As of December 31, 2010, equity includes EUR 40.8 million loss (net of taxes: EUR 35.9; December 31, 2009: EUR 41.8 million loss) representing the total anticipated loss to be charged to sales, and EUR 7.0 million loss (net of taxes: EUR 6.1 loss; December 31, 2009: EUR 0.5 million gain) to be charged to cost of sales, which will offset the higher EUR equivalent of foreign currency denominated forecasted sales and purchase transactions.

ASML – Reconciliation U.S. GAAP – IFRS 1,2
Net income		Three months ended,						Twelve months ended,
		Dec 31, 2009			Dec 31, 2010			Dec 31, 2009			Dec 31, 2010
(in thousands EUR)
Net income (loss) under U.S. GAAP		50.5			406.8			(150.9	)		1,021.8
Share-based payments (see Note 1)		0.1			0.5			2.4			0.3
Development costs (see Note 2)		(8.0	)		(33.2	)		49.8			(19.5	)
Reversal of write-downs (see Note 3)		(11.4	)		(5.1	)		17.1			(14.6	)
Income taxes (see Note 4)		3.6			(6.8	)		0.2			(2.5	)
Net income (loss) under IFRS		34.8			362.2			(81.4	)		985.5
Shareholders’ equity		Dec 31,			Mar 28,			Jun 27,			Sep 26,			Dec 31,
		2009			2010			2010			2010			2010
(in thousands EUR)
Shareholders’ equity under U.S. GAAP		1,774.8			1,811.0			2,079.3			2,319.3			2,773.9
Share-based payments (see Note 1)		2.4			3.5			0.5			(0.2	)		6.6
Development costs (see Note 2)		251.5			255.8			269.1			268.0			234.3
Reversal of write-downs (see Note 3)		17.1			13.8			17.3			7.6			2.6
Income taxes (see Note 4)		5.0			0.8			1.2			11.5			5.1
Shareholders’ equity under IFRS		2,050.8			2,084.9			2,367.4			2,606.2			3,022.5

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 "Compensation- Stock Compensation” 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 Development costs

Under IFRS, ASML applies IAS 38, "Intangible Assets”. In accordance with IAS 38, ASML capitalizes certain development expenditures that 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.

Under U.S. GAAP, ASML applies ASC 730, "Research and Development”. 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, dividend policy and intention to repurchase shares. 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 general economic conditions on consumer confidence and demand for our customers’ products, competitive products and pricing, the impact of manufacturing efficiencies and capacity constraints, the pace of new product development and customer acceptance of new products, our ability to enforce patents and protect intellectual property rights, the risk of intellectual property litigation, availability of raw materials and critical manufacturing equipment, trade environment, changes in exchange rates, available cash, distributable reserves for dividend payments and share repurchases 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 This press release is unaudited.

² Numbers have been rounded.

³ As of January 1, 2010 ASML adopted ASC 810 "Amendments to FIN 46(R)" which resulted in the consolidation of the Variable Interest Entity which owns ASML's headquarters located in The Netherlands. The comparative figures have been adjusted to reflect this change in accounting policy. As of January 1, 2010 the total impact on Property, plant and equipment and Long-term debt amounts to EUR 36.7 million.

⁴ The calculation of diluted net income per ordinary share assumes the exercise of options issued under ASML stock option plans for periods in which exercise would have a dilutive effect. The calculation of diluted net income per ordinary share does not assume exercise of such options when such exercise would be antidilutive.

⁵ In the past, ASML valued net bookings and systems backlog at net system sales value, which does not reflect the full order value because it excludes the value of options and services related to the systems. Starting with the fourth quarter of 2010, in order to more adequately reflect the business circumstances, ASML values net bookings and systems backlog at full order value (i.e., including options and services). The comparative figures have been adjusted to reflect this change.