EX-99.3 4 usgaapfinancialstatementsq.htm EXHIBIT 99.3 US GAAP Financial statements Q2 2015 - US GAAP PROCESS
Exhibit 99.3


ASML - Summary US GAAP Consolidated Statements of Operations 1,2 
 
 
Three months ended,
 
Six months ended,
 
 
 
Jun 29,

 
Jun 28,

 
Jun 29,

 
Jun 28,

 
 
 
2014

 
2015

 
2014

 
2015

 
(in millions EUR, except per share data)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net system sales
 
1,243.0

 
1,134.5

 
2,273.0

 
2,381.0

 
Net service and field option sales
 
400.6

 
519.6

 
767.1

 
923.0

 
Total net sales
 
1,643.6

 
1,654.1

 
3,040.1

 
3,304.0

 
 
 
 
 
 
 
 
 
 
 
Total cost of sales
 
(891.7
)
 
(900.3
)
 
(1,678.7
)
 
(1,771.6
)
 
Gross profit
 
751.9

 
753.8

 
1,361.4

 
1,532.4

 
 
 
 
 
 
 
 
 
 
 
Other income
 
20.3

 
20.8

 
40.5

 
41.6

 
Research and development costs
 
(266.9
)
 
(267.4
)
 
(546.0
)
 
(528.8
)
 
Selling, general and administrative costs
 
(79.9
)
 
(88.3
)
 
(164.8
)
 
(170.6
)
 
Income from operations
 
425.4

 
418.9

 
691.1

 
874.6

 
 
 
 
 
 
 
 
 
 
 
Interest and other, net
 
(1.4
)
 
(4.2
)
 
(4.0
)
 
(7.7
)
 
Income before income taxes
 
424.0

 
414.7

 
687.1

 
866.9

 
 
 
 
 
 
 
 
 
 
 
Benefit from (provision for) income taxes
 
(25.3
)
 
(45.0
)
 
(39.3
)
 
(94.5
)
 
Net income
 
398.7

 
369.7

 
647.8

 
772.4

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic net income per ordinary share
 
0.91

 
0.86

 
1.47

 
1.79

 
Diluted net income per ordinary share
3 
0.90

 
0.85

 
1.46

 
1.78

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average number of ordinary shares used in computing per share amounts (in millions):
Basic
 
438.5

 
431.4

 
439.2

 
432.0

 
Diluted
3 
441.6

 
433.8

 
442.3

 
434.4

 

ASML - Ratios and Other Data 1,2 
 
 
Three months ended,
 
Six months ended,
 
 
 
Jun 29,

 
Jun 28,

 
Jun 29,

 
Jun 28,

 
 
 
2014

 
2015

 
2014

 
2015

 
(in millions EUR, except otherwise indicated)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit as a percentage of net sales
 
45.7

 
45.6

 
44.8

 
46.4

 
Income from operations as a percentage of net sales
 
25.9

 
25.3

 
22.7

 
26.5

 
Net income as a percentage of net sales
 
24.3

 
22.4

 
21.3

 
23.4

 
Income taxes as a percentage of income before income taxes
 
6.0

 
10.8

 
5.7

 
10.9

 
Shareholders’ equity as a percentage of total assets
 
59.6

 
62.8

 
59.6

 
62.8

 
Sales of systems (in units)
 
31

 
41

 
71

 
88

 
Average selling price of system sales (EUR millions)
 
40.1

 
27.7

 
32.0

 
27.1

 
Value of systems backlog (EUR millions)
 
1,763

 
3,015

4 
1,763

 
3,015

4 
Systems backlog (in units)
 
46

 
81

4 
46

 
81

4 
Average selling price of systems backlog (EUR millions)
 
38.3

 
37.2

4 
38.3

 
37.2

4 
Value of booked systems (EUR millions)
 
1,048

 
1,523

4 
2,118

 
2,551

4 
Net bookings (in units)
 
29

 
46

4 
59

 
86

4 
Average selling price of booked systems (EUR millions)
 
36.1

 
33.1

4 
35.9

 
29.7

4 
Number of payroll employees in FTEs
 
10,786

 
11,676

 
10,786

 
11,676

 
Number of temporary employees in FTEs
 
2,820

 
2,527

 
2,820

 
2,527

 


ASML - Summary US GAAP Consolidated Balance Sheets 1,2 

 
 
Dec 31,

 
Jun 28,

 
 
 
2014

 
2015

 
 (in millions EUR)
 
 
 
 
 
 
 
 
 
 
 
ASSETS
 
 
 
 
 
Cash and cash equivalents
 
2,419.5

 
2,495.0

 
Short-term investments
 
334.9

 
25.0

 
Accounts receivable, net
 
1,052.5

 
1,282.3

 
Finance receivables, net
 
196.1

 
251.2

 
Current tax assets
 
43.9

 
52.3

 
Inventories, net
 
2,549.8

 
2,592.1

 
Deferred tax assets
 
159.5

 
178.1

 
Other assets
 
390.0

 
435.8

 
Total current assets
 
7,146.2

 
7,311.8

 
 
 
 
 
 
 
Finance receivables, net
 
55.3

 
55.7

 
Deferred tax assets
 
28.8

 
33.3

 
Other assets
 
444.8

 
435.0

 
Goodwill
 
2,357.5

 
2,569.4

 
Other intangible assets, net
 
723.8

 
751.2

 
Property, plant and equipment, net
 
1,447.5

 
1,518.9

 
Total non-current assets
 
5,057.7

 
5,363.5

 
 
 
 
 
 
 
Total assets
 
12,203.9

 
12,675.3

 
 
 
 
 
 
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 
 
 
 
Total current liabilities
 
2,888.8

 
2,853.9

 
 
 
 
 
 
 
Long-term debt
 
1,149.9

 
1,115.8

 
Deferred and other tax liabilities
 
237.3

 
269.5

 
Provisions
 
3.6

 
3.2

 
Accrued and other liabilities
 
411.7

 
470.3

 
Total non-current liabilities
 
1,802.5

 
1,858.8

 
 
 
 
 
 
 
Total liabilities
 
4,691.3

 
4,712.7

 
 
 
 
 
 
 
Total shareholders’ equity
 
7,512.6

 
7,962.6

 
Total liabilities and shareholders’ equity
 
12,203.9

 
12,675.3

 



ASML - Summary US GAAP Consolidated Statements of Cash Flows 1,2 

 
 
Three months ended,
 
Six months ended,
 
 
Jun 29,

 
Jun 28,

 
Jun 29,

 
Jun 28,

 
 
2014

 
2015

 
2014

 
2015

 (in millions EUR)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CASH FLOWS FROM OPERATING ACTIVITIES
 
 
 
 
 
 
 
 
Net income
 
398.7

 
369.7

 
647.8

 
772.4

 
 
 
 
 
 
 
 
 
Adjustments to reconcile net income to net cash flows from operating activities:
 
 
 
 
 
 
 
 
Depreciation and amortization
 
67.0

 
72.8

 
131.7

 
138.9

Impairment
 
2.5

 
0.6

 
6.4

 
0.6

Loss on disposal of property, plant and equipment
 
0.5

 
0.4

 
1.2

 
1.3

Share-based payments
 
13.5

 
15.0

 
36.6

 
29.6

Allowance for doubtful receivables
 
0.1

 
1.7

 
0.2

 
2.1

Allowance for obsolete inventory
 
45.2

 
60.3

 
86.7

 
97.3

Deferred income taxes
 
11.0

 
(9.4
)
 
(18.9
)
 
7.1

Changes in assets and liabilities
 
(340.1
)
 
(227.3
)
 
(489.9
)
 
(428.3
)
Net cash provided by (used in) operating activities
 
198.4

 
283.8

 
401.8

 
621.0

 
 
 
 
 
 
 
 
 
CASH FLOWS FROM INVESTING ACTIVITIES
 
 
 
 
 
 
 
 
Purchase of property, plant and equipment
 
(70.7
)
 
(79.2
)
 
(146.2
)
 
(164.8
)
Purchase of intangible assets
 
(3.0
)
 
—

 
(3.0
)
 
(1.1
)
Purchase of available for sale securities
 
(174.9
)
 
—

 
(369.7
)
 
—

Maturity of available for sale securities
 
175.0

 
35.0

 
450.0

 
309.9

Cash from (used for) derivative financial instruments
 
—

 
(63.0
)
 
—

 
(127.0
)
Net cash provided by (used in) investing activities
 
(73.6
)
 
(107.2
)
 
(68.9
)
 
17.0

 
 
 
 
 
 
 
 
 
CASH FLOWS FROM FINANCING ACTIVITIES
 
 
 
 
 
 
 
 
Dividend paid
 
(268.0
)
 
(302.3
)
 
(268.0
)
 
(302.3
)
Purchase of shares
 
(154.9
)
 
(165.6
)
 
(299.9
)
 
(282.7
)
Net proceeds from issuance of shares
 
8.1

 
10.1

 
13.6

 
14.5

Repayment of debt
 
(1.0
)
 
(0.7
)
 
(2.1
)
 
(1.5
)
Tax benefit from share-based payments
 
1.9

 
0.6

 
1.9

 
2.4

Net cash provided by (used in) financing activities
 
(413.9
)
 
(457.9
)
 
(554.5
)
 
(569.6
)
 
 
 
 
 
 
 
 
 
Net cash flows
 
(289.1
)
 
(281.3
)
 
(221.6
)
 
68.4

 
 
 
 
 
 
 
 
 
Effect of changes in exchange rates on cash
 
2.0

 
(2.2
)
 
1.9

 
7.1

Net increase (decrease) in cash and cash equivalents
 
(287.1
)
 
(283.5
)
 
(219.7
)
 
75.5




ASML - Quarterly Summary US GAAP Consolidated Statements of Operations 1,2 

 
Three months ended,
 
 
 
Jun 29,

 
Sep 28,

 
Dec 31,

 
Mar 29,

 
Jun 28,

 
 
 
2014

 
2014

 
2014

 
2015

 
2015

 
 (in millions EUR, except per share data)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net system sales
 
1,243.0

 
884.5

 
1,085.3

 
1,246.5

 
1,134.5

 
Net service and field option sales
 
400.6

 
437.7

 
408.7

 
403.4

 
519.6

 
Total net sales
 
1,643.6

 
1,322.2

 
1,494.0

 
1,649.9

 
1,654.1

 
 
 
 
 
 
 
 
 
 
 
 
 
Total cost of sales
 
(891.7
)
 
(744.1
)
 
(837.1
)
 
(871.3
)
 
(900.3
)
 
Gross profit
 
751.9

 
578.1

 
656.9

 
778.6

 
753.8

 
 
 
 
 
 
 
 
 
 
 
 
 
Other income
 
20.3

 
20.3

 
20.2

 
20.8

 
20.8

 
Research and development costs
 
(266.9
)
 
(260.1
)
 
(268.0
)
 
(261.4
)
 
(267.4
)
 
Selling, general and administrative costs
 
(79.9
)
 
(76.9
)
 
(79.4
)
 
(82.3
)
 
(88.3
)
 
Income from operations
 
425.4

 
261.4

 
329.7

 
455.7

 
418.9

 
 
 
 
 
 
 
 
 
 
 
 
 
Interest and other, net
 
(1.4
)
 
(2.0
)
 
(2.6
)
 
(3.5
)
 
(4.2
)
 
Income before income taxes
 
424.0

 
259.4

 
327.1

 
452.2

 
414.7

 
 
 
 
 
 
 
 
 
 
 
 
 
Benefit from (provision for) income taxes
 
(25.3
)
 
(15.4
)
 
(22.3
)
 
(49.5
)
 
(45.0
)
 
Net income
 
398.7

 
244.0

 
304.8

 
402.7

 
369.7

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic net income per ordinary share
 
0.91

 
0.56

 
0.70

 
0.93

 
0.86

 
Diluted net income per ordinary share
3 
0.90

 
0.56

 
0.70

 
0.93

 
0.85

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average number of ordinary shares used in computing per share amounts (in millions):
 
 
 
 
 
Basic
 
438.5

 
436.1

 
434.1

 
432.6

 
431.4

 
Diluted
3 
441.6

 
439.0

 
436.7

 
435.3

 
433.8

 

ASML - Quarterly Summary Ratios and other data 1,2 
 
Three months ended,
 
 
 
Jun 29,

 
Sep 28,

 
Dec 31,

 
Mar 29,

 
Jun 28,

 
 
 
2014

 
2014

 
2014

 
2015

 
2015

 
(in millions EUR, except otherwise indicated)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit as a percentage of net sales
 
45.7

 
43.7

 
44.0

 
47.2

 
45.6

 
Income from operations as a percentage of net sales
 
25.9

 
19.8

 
22.1

 
27.6

 
25.3

 
Net income as a percentage of net sales
 
24.3

 
18.5

 
20.4

 
24.4

 
22.4

 
Income taxes as a percentage of income before income taxes
 
6.0

 
5.9

 
6.8

 
11.0

 
10.8

 
Shareholders’ equity as a percentage of total assets
 
59.6

 
60.5

 
61.6

 
61.7

 
62.8

 
Sales of systems (in units)
 
31

 
30

 
35

 
47

 
41

 
Average selling price of system sales (EUR millions)
 
40.1

 
29.5

 
31.0

 
26.5

 
27.7

 
Value of systems backlog (EUR millions)
 
1,763

 
2,406

 
2,772

4 
2,602

4 
3,015

4 
Systems backlog (in units)
 
46

 
65

 
82

4 
75

4 
81

4 
Average selling price of systems backlog (EUR millions)
 
38.3

 
37.0

 
33.8

4 
34.7

4 
37.2

4 
Value of booked systems (EUR millions)
 
1,048

 
1,397

 
1,387

4 
1,028

4 
1,523

4 
Net bookings (in units)
 
29

 
47

 
51

4 
40

4 
46

4 
Average selling price of booked systems (EUR millions)
 
36.1

 
29.7

 
27.2

4 
25.7

4 
33.1

4 
Number of payroll employees in FTEs
 
10,786

 
11,076

 
11,318

 
11,533

 
11,676

 
Number of temporary employees in FTEs
 
2,820

 
2,771

 
2,754

 
2,644

 
2,527

 


ASML - Quarterly Summary US GAAP Consolidated Balance Sheets 1,2 

 
 
Jun 29,

 
Sep 28,

 
Dec 31,

 
Mar 29,

 
Jun 28,

 
 
 
2014

 
2014

 
2014

 
2015

 
2015

 
(in millions EUR)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ASSETS
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
2,111.0

 
2,144.8

 
2,419.5

 
2,778.5

 
2,495.0

 
Short-term investments
 
599.7

 
539.8

 
334.9

 
60.0

 
25.0

 
Accounts receivable, net
 
1,085.6

 
961.2

 
1,052.5

 
1,270.6

 
1,282.3

 
Finance receivables, net
 
297.3

 
255.9

 
196.1

 
184.0

 
251.2

 
Current tax assets
 
94.0

 
76.7

 
43.9

 
94.3

 
52.3

 
Inventories, net
 
2,615.5

 
2,676.8

 
2,549.8

 
2,607.5

 
2,592.1

 
Deferred tax assets
 
108.6

 
144.2

 
159.5

 
173.8

 
178.1

 
Other assets
 
378.6

 
362.2

 
390.0

 
456.4

 
435.8

 
Total current assets
 
7,290.3

 
7,161.6

 
7,146.2

 
7,625.1

 
7,311.8

 
 
 
 
 
 
 
 
 
 
 
 
 
Finance receivables, net
 
46.4

 
119.3

 
55.3

 
55.3

 
55.7

 
Deferred tax assets
 
126.2

 
115.8

 
28.8

 
30.5

 
33.3

 
Other assets
 
347.9

 
349.9

 
444.8

 
472.2

 
435.0

 
Goodwill
 
2,116.1

 
2,264.9

 
2,357.5

 
2,610.8

 
2,569.4

 
Other intangible assets, net
 
686.5

 
712.7

 
723.8

 
773.8

 
751.2

 
Property, plant and equipment, net
 
1,275.1

 
1,372.4

 
1,447.5

 
1,523.4

 
1,518.9

 
Total non-current assets
 
4,598.2

 
4,935.0

 
5,057.7

 
5,466.0

 
5,363.5

 
 
 
 
 
 
 
 
 
 
 
 
 
Total assets
 
11,888.5

 
12,096.6

 
12,203.9

 
13,091.1

 
12,675.3

 
 
 
 
 
 
 
 
 
 
 
 
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 
 
 
 
 
 
 
 
 
 
Total current liabilities
 
3,065.2

 
2,926.0

 
2,888.8

 
3,194.3

 
2,853.9

 
 
 
 
 
 
 
 
 
 
 
 
 
Long-term debt
 
1,118.4

 
1,137.4

 
1,149.9

 
1,155.5

 
1,115.8

 
Deferred and other tax liabilities
 
318.0

 
304.7

 
237.3

 
269.3

 
269.5

 
Provisions
 
4.1

 
4.0

 
3.6

 
3.7

 
3.2

 
Accrued and other liabilities
 
302.4

 
400.4

 
411.7

 
391.5

 
470.3

 
Total non-current liabilities
 
1,742.9

 
1,846.5

 
1,802.5

 
1,820.0

 
1,858.8

 
 
 
 
 
 
 
 
 
 
 
 
 
Total liabilities
 
4,808.1

 
4,772.5

 
4,691.3

 
5,014.3

 
4,712.7

 
 
 
 
 
 
 
 
 
 
 
 
 
Total shareholders’ equity
 
7,080.4

 
7,324.1

 
7,512.6

 
8,076.8

 
7,962.6

 
Total liabilities and shareholders’ equity
 
11,888.5

 
12,096.6

 
12,203.9

 
13,091.1

 
12,675.3

 



ASML - Quarterly Summary US GAAP Consolidated Statements of Cash Flows 1,2  

 
Three months ended,
 
 
 
Jun 29,

 
Sep 28,

 
Dec 31,

 
Mar 29,

 
Jun 28,

 
 
 
2014

 
2014

 
2014

 
2015

 
2015

 
 (in millions EUR)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CASH FLOWS FROM OPERATING ACTIVITIES
 
 
 
 
 
 
 
 
 
 
 
Net income
 
398.7

 
244.0

 
304.8

 
402.7

 
369.7

 
 
 
 
 
 
 
 
 
 
 
 
 
Adjustments to reconcile net income to net cash flows from operating activities:
 
 
 
 
 
 
 
 
 
 
 
Depreciation and amortization
 
67.0

 
60.4

 
62.5

 
66.1

 
72.8

 
Impairment
 
2.5

 
3.6

 
0.5

 
—

 
0.6

 
Loss on disposal of property, plant and equipment
 
0.5

 
0.9

 
1.4

 
0.9

 
0.4

 
Share-based payments
 
13.5

 
13.7

 
13.1

 
14.6

 
15.0

 
Allowance for doubtful receivables
 
0.1

 
0.1

 
(0.2
)
 
0.4

 
1.7

 
Allowance for obsolete inventory
 
45.2

 
35.8

 
40.3

 
37.0

 
60.3

 
Deferred income taxes
 
11.0

 
(39.0
)
 
(1.2
)
 
16.5

 
(9.4
)
 
Changes in assets and liabilities
 
(340.1
)
 
(105.3
)
 
(12.0
)
 
(201.0
)
 
(227.3
)
 
Net cash provided by (used in) operating activities
 
198.4

 
214.2

 
409.2

 
337.2

 
283.8

 
 
 
 
 
 
 
 
 
 
 
 
 
CASH FLOWS FROM INVESTING ACTIVITIES
 
 
 
 
 
 
 
 
 
 
 
Purchase of property, plant and equipment
 
(70.7
)
 
(84.2
)
 
(127.9
)
 
(85.6
)
 
(79.2
)
 
Purchase of intangible assets
 
(3.0
)
 
—

 
—

 
(1.1
)
 
—

 
Purchase of available for sale securities
 
(174.9
)
 
(110.0
)
 
(25.0
)
 
—

 
—

 
Maturity of available for sale securities
 
175.0

 
169.9

 
229.9

 
274.9

 
35.0

 
Cash from (used for) derivative financial instruments
 
—

 
—

 
—

 
(64.0
)
 
(63.0
)
 
Net cash provided by (used in) investing activities
 
(73.6
)
 
(24.3
)
 
77.0

 
124.2

 
(107.2
)
 
 
 
 
 
 
 
 
 
 
 
 
 
CASH FLOWS FROM FINANCING ACTIVITIES
 
 
 
 
 
 
 
 
 
 
 
Dividend paid
 
(268.0
)
 
—

 
—

 
—

 
(302.3
)
 
Purchase of shares
 
(154.9
)
 
(171.1
)
 
(229.0
)
 
(117.1
)
 
(165.6
)
 
Net proceeds from issuance of shares
 
8.1

 
10.6

 
15.5

 
4.4

 
10.1

 
Repayment of debt
 
(1.0
)
 
(1.2
)
 
(0.8
)
 
(0.8
)
 
(0.7
)
 
Tax benefit from share-based payments
 
1.9

 
0.9

 
1.2

 
1.8

 
0.6

 
Net cash provided by (used in) financing activities
 
(413.9
)
 
(160.8
)
 
(213.1
)
 
(111.7
)
 
(457.9
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Net cash flows
 
(289.1
)
 
29.1

 
273.1

 
349.7

 
(281.3
)
 
 
 
 
 
 
 
 
 
 
 
 
 
       Effect of changes in exchange rates on cash
 
2.0

 
4.7

 
1.6

 
9.3

 
(2.2
)
 
Net increase (decrease) in cash and cash equivalents
 
(287.1
)
 
33.8

 
274.7

 
359.0

 
(283.5
)
 




Notes to the Summary US GAAP Consolidated Financial Statements


Basis of Presentation
The accompanying summary consolidated financial statements are stated in millions of euros (“EUR”) unless otherwise indicated. ASML follows accounting principles generally accepted in the United States of America (“US GAAP”). Further disclosures, as required under US GAAP in annual reports, are not included in the summary consolidated financial statements.

Use of estimates
The preparation of our consolidated financial statements in conformity with US 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 net sales and costs during the reported periods. Actual results could differ from those estimates.

Principles of consolidation
The consolidated financial statements include the financial statements of ASML Holding N.V. and all of its subsidiaries and the variable interest entity of which ASML is the primary beneficiary (referred to as “ASML”). All intercompany profits, balances and transactions have been eliminated in the consolidation. Subsidiaries are all entities over which ASML has the power to govern the financial and operating policies generally accompanying a shareholding of more than 50 percent of the voting rights.

Revenue recognition
In general, 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 cleanroom 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. In case not all specifications are met and the remaining performance obligation is not essential to the functionality of the system but is 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, we have never failed to successfully complete installation of a system at a customer’s premises.

In connection with the introduction of new technology, such as NXE:3300B, we initially defer revenue recognition until acceptance of the new technology based system and completion of installation at the customer's premises. As our systems are based largely on two product platforms that permit incremental, modular upgrades, the introduction of genuinely “new” technology occurs infrequently, and in the past 15 years, has occurred on only two occasions: 2000 (TWINSCAN) and 2010 (EUV).

The main portion of our revenue is derived from contractual arrangements with our customers that have multiple deliverables, which mainly include the sale of our systems, installation and training services and prepaid extended and enhanced (optic) warranty contracts. For each of the specified deliverables ASML determines the selling price by using either vendor specific objective evidence (‘VSOE’), third party evidence (‘TPE’) or by best estimate of the selling price (‘BESP’). When we are unable to establish relative selling price using VSOE or TPE, ASML uses BESP in its allocation of arrangement consideration. The total arrangement consideration is allocated at inception of the arrangement to all deliverables on the basis of their relative selling price. The revenue relating to the undelivered elements of the arrangements is deferred at their relative selling prices until delivery of these elements. 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.

For our NXE:3300B systems, we are unable to determine VSOE for prepaid extended, enhanced (optic) warranty contracts and installation. We determined for NXE:3300B systems that BESP is the appropriate reference in the fair value hierarchy for prepaid extended and enhanced (optic) warranty contracts. We review selling prices periodically and maintain internal controls over the establishment and updates of these elements.

Foreign currency risk management
Our sales are predominately denominated in euros. Exceptions may occur on a customer by customer basis. Our cost of sales and other expenses are mainly denominated in euros, to a certain extent in US dollars, Taiwanese dollars and Japanese yen and to a limited extent in other currencies. Therefore, we are exposed to foreign currency exchange risk.

It is our policy to hedge material transaction exposures, such as forecasted sales and purchase transactions, and material net remeasurement exposures, such as accounts receivable and payable. We hedge these exposures through the use of foreign exchange contracts.




ASML – Reconciliation US GAAP – IFRS 1,2 
Net income
Three months ended,

Six months ended,

Jun 29,

Jun 28,


Jun 29,

Jun 28,


2014

2015


2014

2015

(in millions EUR)





Net income based on US GAAP
398.7

369.7


647.8

772.4

Development expenditures (see Note 1)
35.6

62.9


63.1

132.4

Share-based payments (see Note 2)
3.5

0.8


4.2

2.0

Income taxes (see Note 3)
14.0

(12.1
)

20.0

(15.5
)
Net income based on IFRS
451.8

421.3


735.1

891.3


Shareholders' equity
Jun 29,

Sep 28,

Dec 31,

Mar 29,

Jun 28,


2014

2014

2014

2015

2015

(in millions EUR)





Shareholders' equity based on US GAAP
7,080.4

7,324.1

7,512.6

8,076.8

7,962.6

Development expenditures (see Note 1)
646.9

702.3

792.1

878.1

937.9

Share-based payments (see Note 2)
20.1

20.7

21.0

22.4

22.0

Income taxes (see Note 3)
33.7

43.8

40.2

42.1

29.1

Equity based on IFRS
7,781.1

8,090.9

8,365.9

9,019.4

8,951.6



Notes to the reconciliation from US GAAP to IFRS

Note 1 Development expenditures
Under US 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.

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 five years. Amortization starts when the developed product is ready for volume production.

Note 2 Share-based Payments
Under US GAAP, 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 we recognize compensation costs for commercial purposes for awards that are expected to result in a tax deduction under existing tax law. Under US 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 ASML’s share price do not affect the deferred tax asset recorded in our financial statements.

Under IFRS, ASML applies IFRS 2, “Share-based Payments”. In accordance with IFRS 2, ASML records as an expense the fair value of its share-based payments with respect to stock options and shares granted to its employees. 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 ASML’s share price do affect the deferred tax asset at period-end and result in adjustments to the deferred tax asset.

Note 3 Income taxes
Under US 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 US GAAP are calculated based on the tax rate applicable in the seller’s rather than the purchaser’s tax jurisdiction.

Under IFRS, ASML applies IAS 12, “Income Taxes”. 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.










This document contains statements relating to certain projections and business trends that are forward-looking, including statements with respect to our outlook, including expectations for the third quarter and second half of 2015, backlog, expected customer demand in specified market segments including memory, logic and foundry, expected trends, expected levels of service sales, systems backlog, expected financial results, including expected sales, other income, gross margin, earnings per share and R&D and SG&A expenses and effective tax rate, annual revenue opportunity for ASML, productivity of our tools and systems performance, TWINSCAN and EUV system performance (such as endurance tests), expected industry trends, statements with respect to expected system shipments, including the number of EUV systems expected to be shipped and timing of shipments and other EUV targets (including availability, productivity and shipments), the expected continuation of Moore's law, expected annual revenue growth and goals for holistic lithography, intention to return excess cash to shareholders, and statements about our dividend policy and intention to repurchase shares. You can generally identify these statements by the use of words like "may", "will", "could", "should", "project", "believe", "anticipate", "expect", "plan", "estimate", "forecast", "potential", "intend", "continue" and variations of these words or comparable words. These statements are not historical facts, but rather are based on current expectations, estimates, assumptions and projections about the business and our future financial results and readers should not place undue reliance on them. Forward-looking statements do not guarantee future performance and involve risks and uncertainties. These risks and uncertainties include, without limitation, 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, performance of our systems, the continuing success of technology advances and the related pace of new product development and customer acceptance of new products, the number and timing of EUV systems expected to be shipped and recognized in revenue, 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, changes in tax 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. These forward-looking statements are made only as of the date of this document. We do not undertake to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise.







1  
These financial statements are unaudited.
2  
Numbers have been rounded.
3
The calculation of diluted net income per ordinary share assumes the exercise of options issued under ASML stock option plans and the issuance of shares under ASML share plans for periods in which exercises or issuances would have a dilutive effect. The calculation of diluted net income per ordinary share does not assume exercise of such options or issuance of shares when such exercises or issuance would be anti-dilutive.
4
As of Q2 2015, our systems backlog and net bookings include all system sales orders for which written authorizations have been accepted (for EUV starting as of the NXE:3350B). This change has no impact on the comparative figures.