EX-99.3 4 financialstatementsusgaapq.htm EXHIBIT 99.3 Exhibit
Exhibit 99.3


ASML - Summary US GAAP Consolidated Statements of Operations 1,2 
 
 
Three months ended,
 
Six months ended,
 
 
Jul 3,

 
Jul 2,

 
Jul 3,

 
Jul 2,

 
 
2016

 
2017

 
2016

 
2017

(in millions EUR, except per share data)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net system sales 3
 
1,265.4

 
1,384.1

 
2,125.2

 
2,599.9

Net service and field option sales 3
 
474.2

 
717.3

 
947.6

 
1,445.1

Total net sales
 
1,739.6

 
2,101.4

 
3,072.8

 
4,045.0

 
 
 
 
 
 
 
 
 
Total cost of sales
 
(998.2
)
 
(1,154.9
)
 
(1,763.3
)
 
(2,173.9
)
Gross profit
 
741.4

 
946.5

 
1,309.5

 
1,871.1

 
 
 
 
 
 
 
 
 
Other income
 
23.5

 
24.0

 
46.9

 
47.9

Research and development costs
 
(270.3
)
 
(312.7
)
 
(545.0
)
 
(627.8
)
Selling, general and administrative costs
 
(90.4
)
 
(102.0
)
 
(179.2
)
 
(200.6
)
Income from operations
 
404.2

 
555.8

 
632.2

 
1,090.6

 
 
 
 
 
 
 
 
 
Interest and other, net
 
(3.6
)
 
(10.8
)
 
(7.2
)
 
(24.9
)
Income before income taxes
 
400.6

 
545.0

 
625.0

 
1,065.7

 
 
 
 
 
 
 
 
 
Benefit from (provision for) income taxes
 
(46.8
)
 
(78.7
)
 
(73.2
)
 
(147.3
)
Net income
 
353.8

 
466.3

 
551.8

 
918.4

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic net income per ordinary share
 
0.83

 
1.08

 
1.30

 
2.13

Diluted net income per ordinary share 4
 
0.83

 
1.08

 
1.29

 
2.12

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average number of ordinary shares used in computing per share amounts (in millions):
Basic
 
424.5

 
430.4

 
425.7

 
430.2

Diluted 4
 
426.5

 
432.4

 
427.8

 
432.3


ASML - Ratios and Other Data 1,2 
 
 
Three months ended,
 
Six months ended,
 
 
Jul 3,

 
Jul 2,

 
Jul 3,

 
Jul 2,

 
 
2016

 
2017

 
2016

 
2017

(in millions EUR, except otherwise indicated)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit as a percentage of net sales
 
42.6
%
 
45.0
%
 
42.6
%
 
46.3
%
Income from operations as a percentage of net sales
 
23.2
%
 
26.4
%
 
20.6
%
 
27.0
%
Net income as a percentage of net sales
 
20.3
%
 
22.2
%
 
18.0
%
 
22.7
%
Income taxes as a percentage of income before income taxes
 
11.7
%
 
14.4
%
 
11.7
%
 
13.8
%
Shareholders’ equity as a percentage of total assets
 
61.3
%
 
58.1
%
 
61.3
%
 
58.1
%
Sales of lithography systems (in units) 5
 
46

 
42

 
79

 
86

Value of systems backlog (EUR millions) 6
 
3,371

 
5,351

 
3,371

 
5,351

Lithography systems backlog (in units) 5
 
73

 
107

 
73

 
107

Value of booked systems (EUR millions) 6
 
1,566

 
2,375

 
2,401

 
4,269

Net lithography bookings (in units) 5
 
43

 
55

 
73

 
110

Number of payroll employees in FTEs
 
12,598

 
15,005

 
12,598

 
15,005

Number of temporary employees in FTEs
 
2,569

 
2,722

 
2,569

 
2,722



ASML - Summary US GAAP Consolidated Balance Sheets 1,2 

 
 
Dec 31,

 
Jul 2,

 
 
2016

 
2017

 (in millions EUR)
 
 
 
 
 
 
 
 
 
ASSETS
 
 
 
 
Cash and cash equivalents
 
2,906.9

 
1,914.2

Short-term investments
 
1,150.0

 
600.0

Accounts receivable, net
 
700.2

 
1,224.6

Finance receivables, net
 
447.4

 
413.6

Current tax assets
 
11.6

 
32.6

Inventories, net
 
2,780.9

 
3,136.9

Other assets
 
560.4

 
719.6

Total current assets
 
8,557.4

 
8,041.5

 
 
 
 
 
Finance receivables, net
 
117.2

 
120.2

Deferred tax assets
 
34.9

 
30.1

Other assets
 
612.3

 
634.6

Equity method investments
 
—

 
1,002.1

Goodwill
 
4,873.9

 
4,645.9

Other intangible assets, net
 
1,323.0

 
1,230.4

Property, plant and equipment, net
 
1,687.2

 
1,567.3

Total non-current assets
 
8,648.5

 
9,230.6

 
 
 
 
 
Total assets
 
17,205.9

 
17,272.1

 
 
 
 
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 
 
 
Total current liabilities
 
3,280.6

 
3,125.0

 
 
 
 
 
Long-term debt
 
3,071.8

 
2,995.5

Deferred and other tax liabilities
 
396.9

 
337.9

Provisions
 
20.5

 
20.5

Accrued and other liabilities
 
615.7

 
760.6

Total non-current liabilities
 
4,104.9

 
4,114.5

 
 
 
 
 
Total liabilities
 
7,385.5

 
7,239.5

 
 
 
 
 
Total shareholders’ equity
 
9,820.4

 
10,032.6

Total liabilities and shareholders’ equity
 
17,205.9

 
17,272.1




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

 
 
Three months ended,
 
Six months ended,
 
 
Jul 3,

 
Jul 2,

 
Jul 3,

 
Jul 2,

 
 
2016

 
2017

 
2016

 
2017

 (in millions EUR)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CASH FLOWS FROM OPERATING ACTIVITIES
 
 
 
 
 
 
 
 
Net income
 
353.8

 
466.3

 
551.8

 
918.4

 
 
 
 
 
 
 
 
 
Adjustments to reconcile net income to net cash flows from operating activities:
 
 
 
 
 
 
 
 
Depreciation and amortization
 
84.1

 
103.9

 
166.1

 
214.0

Impairment
 
0.4

 
7.6

 
0.9

 
7.8

Loss on disposal of property, plant and equipment
 
0.9

 
0.8

 
2.1

 
1.1

Share-based payments
 
10.9

 
10.1

 
24.1

 
23.6

Allowance for doubtful receivables
 
0.8

 
1.3

 
1.7

 
2.5

Allowance for obsolete inventory
 
22.5

 
31.3

 
59.1

 
60.6

Deferred income taxes
 
(6.6
)
 
(1.5
)
 
(11.1
)
 
14.8

Changes in assets and liabilities
 
14.3

 
(89.5
)
 
(319.4
)
 
(880.9
)
Net cash provided by (used in) operating activities
 
481.1

 
530.3

 
475.3

 
361.9

 
 
 
 
 
 
 
 
 
CASH FLOWS FROM INVESTING ACTIVITIES
 
 
 
 
 
 
 
 
Purchase of property, plant and equipment
 
(98.9
)
 
(56.3
)
 
(154.1
)
 
(94.9
)
Purchase of intangible assets
 
(1.3
)
 
(5.0
)
 
(4.9
)
 
(10.2
)
Purchase of short-term investments
 
(350.0
)
 
(275.0
)
 
(700.0
)
 
(350.0
)
Maturity of short-term investments
 
425.0

 
600.0

 
650.0

 
900.0

Cash from (used for) derivative financial instruments
 
7.7

 
(16.5
)
 
8.8

 
(47.2
)
Loans issued and other investments
 
(6.0
)
 
—

 
(6.0
)
 
—

Acquisition of equity method investments
 
—

 
(1,002.1
)
 
—

 
(1,002.1
)
Acquisition of subsidiaries (net of cash acquired)
 
—

 
—

 
—

 
—

Net cash provided by (used in) investing activities
 
(23.5
)
 
(754.9
)
 
(206.2
)
 
(604.4
)
 
 
 
 
 
 
 
 
 
CASH FLOWS FROM FINANCING ACTIVITIES
 
 
 
 
 
 
 
 
Dividend paid
 
(445.9
)
 
(516.7
)
 
(445.9
)
 
(516.7
)
Purchase of shares
 
(171.9
)
 
—

 
(385.4
)
 
—

Net proceeds from issuance of shares
 
12.1

 
11.9

 
22.7

 
24.9

Net proceeds from issuance of notes
 
—

 
—

 
—

 
—

Repayment of debt
 
(1.2
)
 
(239.5
)
 
(2.4
)
 
(240.7
)
Tax benefit from share-based payments
 
0.1

 
—

 
0.1

 
—

Net cash provided by (used in) financing activities
 
(606.8
)
 
(744.3
)
 
(810.9
)
 
(732.5
)
 
 
 
 
 
 
 
 
 
Net cash flows
 
(149.2
)
 
(968.9
)
 
(541.8
)
 
(975.0
)
 
 
 
 
 
 
 
 
 
Effect of changes in exchange rates on cash
 
11.9

 
(27.5
)
 
9.2

 
(17.7
)
Net increase (decrease) in cash and cash equivalents
 
(137.3
)
 
(996.4
)
 
(532.6
)
 
(992.7
)



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

 
Three months ended,
 
 
Jul 3,

 
Oct 2,

 
Dec 31,

 
Apr 2,

 
Jul 2,

 
 
2016

 
2016

 
2016

 
2017

 
2017

 (in millions EUR, except per share data)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net system sales 3
 
1,265.4

 
1,257.7

 
1,289.1

 
1,215.8

 
1,384.1

Net service and field option sales 3
 
474.2

 
556.9

 
618.3

 
727.8

 
717.3

Total net sales
 
1,739.6

 
1,814.6

 
1,907.4

 
1,943.6

 
2,101.4

 
 
 
 
 
 
 
 
 
 
 
Total cost of sales
 
(998.2
)
 
(980.2
)
 
(1,006.8
)
 
(1,019.0
)
 
(1,154.9
)
Gross profit
 
741.4

 
834.4

 
900.6

 
924.6

 
946.5

 
 
 
 
 
 
 
 
 
 
 
Other income
 
23.5

 
23.4

 
23.5

 
23.9

 
24.0

Research and development costs
 
(270.3
)
 
(273.4
)
 
(287.4
)
 
(315.1
)
 
(312.7
)
Selling, general and administrative costs
 
(90.4
)
 
(88.8
)
 
(106.8
)
 
(98.6
)
 
(102.0
)
Income from operations
 
404.2

 
495.6

 
529.9

 
534.8

 
555.8

 
 
 
 
 
 
 
 
 
 
 
Interest and other, net
 
(3.6
)
 
(33.9
)
 
74.8

 
(14.1
)
 
(10.8
)
Income before income taxes
 
400.6

 
461.7

 
604.7

 
520.7

 
545.0

 
 
 
 
 
 
 
 
 
 
 
Benefit from (provision for) income taxes
 
(46.8
)
 
(65.8
)
 
(80.5
)
 
(68.6
)
 
(78.7
)
Net income
 
353.8

 
395.9

 
524.2

 
452.1

 
466.3

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic net income per ordinary share
 
0.83

 
0.93

 
1.23

 
1.05

 
1.08

Diluted net income per ordinary share 4
 
0.83

 
0.93

 
1.22

 
1.05

 
1.08

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average number of ordinary shares used in computing per share amounts (in millions):
 
 
 
 
Basic
 
424.5

 
423.8

 
427.1

 
430.1

 
430.4

Diluted 4
 
426.5

 
425.8

 
429.2

 
432.3

 
432.4


ASML - Quarterly Summary Ratios and other data 1,2 
 
 
 
 
 
Jul 3,

 
Oct 2,

 
Dec 31,

 
Apr 2,

 
Jul 2,

 
 
2016

 
2016

 
2016

 
2017

 
2017

(in millions EUR, except otherwise indicated)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit as a percentage of net sales
 
42.6
%
 
46.0
%
 
47.2
%
 
47.6
%
 
45.0
%
Income from operations as a percentage of net sales
 
23.2
%
 
27.3
%
 
27.8
%
 
27.5
%
 
26.4
%
Net income as a percentage of net sales
 
20.3
%
 
21.8
%
 
27.5
%
 
23.3
%
 
22.2
%
Income taxes as a percentage of income before income taxes
 
11.7
%
 
14.2
%
 
13.3
%
 
13.2
%
 
14.4
%
Shareholders’ equity as a percentage of total assets
 
61.3
%
 
57.5
%
 
57.1
%
 
59.1
%
 
58.1
%
Sales of lithography systems (in units) 5
 
46

 
40

 
38

 
44

 
42

Value of systems backlog (EUR millions) 6
 
3,371

 
3,462

 
3,961

 
4,509

 
5,351

Lithography systems backlog (in units) 5
 
73

 
76

 
83

 
94

 
107

Value of booked systems (EUR millions) 6
 
1,566

 
1,415

 
1,580

 
1,894

 
2,375

Net bookings lithography systems (in units) 5
 
43

 
43

 
44

 
55

 
55

Number of payroll employees in FTEs
 
12,598

 
12,933

 
13,991

 
14,483

 
15,005

Number of temporary employees in FTEs
 
2,569

 
2,599

 
2,656

 
2,657

 
2,722



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

 
 
Jul 3,


Oct 2,


Dec 31,

 
Apr 2,

 
Jul 2,

 
 
2016


2016


2016

 
2017

 
2017

(in millions EUR)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ASSETS
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
1,926.1

 
2,913.0

 
2,906.9

 
2,910.6

 
1,914.2

Short-term investments
 
1,000.0

 
1,400.0

 
1,150.0

 
925.0

 
600.0

Accounts receivable, net
 
732.4

 
858.4

 
700.2

 
864.8

 
1,224.6

Finance receivables, net
 
524.0

 
663.5

 
447.4

 
346.9

 
413.6

Current tax assets
 
178.0

 
143.5

 
11.6

 
137.0

 
32.6

Inventories, net
 
2,715.3

 
2,696.9

 
2,780.9

 
2,995.7

 
3,136.9

Other assets
 
504.7

 
540.4

 
560.4

 
589.6

 
719.6

Total current assets
 
7,580.5

 
9,215.7

 
8,557.4

 
8,769.6

 
8,041.5

 
 
 
 
 
 
 
 
 
 
 
Finance receivables, net
 
105.7

 
71.8

 
117.2

 
213.6

 
120.2

Deferred tax assets
 
50.0

 
39.1

 
34.9

 
34.5

 
30.1

Other assets
 
641.2

 
623.2

 
612.3

 
621.1

 
634.6

Equity method investments
 
—

 
—

 
—

 
—

 
1,002.1

Goodwill
 
2,603.7

 
2,571.0

 
4,873.9

 
4,784.1

 
4,645.9

Other intangible assets, net
 
713.5

 
694.0

 
1,323.0

 
1,279.5

 
1,230.4

Property, plant and equipment, net
 
1,608.9

 
1,587.4

 
1,687.2

 
1,622.4

 
1,567.3

Total non-current assets
 
5,723.0

 
5,586.5

 
8,648.5

 
8,555.2

 
9,230.6

 
 
 
 
 
 
 
 
 
 
 
Total assets
 
13,303.5

 
14,802.2

 
17,205.9

 
17,324.8

 
17,272.1

 
 
 
 
 
 
 
 
 
 
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 
 
 
 
 
 
 
 
 
Total current liabilities
 
3,720.1

 
3,272.2

 
3,280.6

 
2,875.4

 
3,125.0

 
 
 
 
 
 
 
 
 
 
 
Long-term debt
 
901.9

 
2,390.6

 
3,071.8

 
3,040.3

 
2,995.5

Deferred and other tax liabilities
 
196.4

 
222.1

 
396.9

 
410.1

 
337.9

Provisions
 
12.6

 
16.5

 
20.5

 
20.5

 
20.5

Accrued and other liabilities
 
323.3

 
387.6

 
615.7

 
735.5

 
760.6

Total non-current liabilities
 
1,434.2

 
3,016.8

 
4,104.9

 
4,206.4

 
4,114.5

 
 
 
 
 
 
 
 
 
 
 
Total liabilities
 
5,154.3

 
6,289.0

 
7,385.5

 
7,081.8

 
7,239.5

 
 
 
 
 
 
 
 
 
 
 
Total shareholders’ equity
 
8,149.2

 
8,513.2

 
9,820.4

 
10,243.0

 
10,032.6

Total liabilities and shareholders’ equity
 
13,303.5

 
14,802.2

 
17,205.9

 
17,324.8

 
17,272.1




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

 
Three months ended,
 
 
Jul 3,

 
Oct 2,

 
Dec 31,

 
Apr 2,

 
Jul 2,

 
 
2016

 
2016

 
2016

 
2017

 
2017

 (in millions EUR)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CASH FLOWS FROM OPERATING ACTIVITIES
 
 
 
 
 
 
 
 
 
 
Net income
 
353.8

 
395.9

 
524.2

 
452.1

 
466.3

 
 
 
 
 
 
 
 
 
 
 
Adjustments to reconcile net income to net cash flows from operating activities:
 
 
 
 
 
 
 
 
 
 
Depreciation and amortization
 
84.1

 
87.7

 
103.1

 
110.1

 
103.9

Impairment
 
0.4

 
1.4

 
1.2

 
0.2

 
7.6

Loss on disposal of property, plant and equipment
 
0.9

 
1.7

 
1.4

 
0.3

 
0.8

Share-based payments
 
10.9

 
11.6

 
12.0

 
13.5

 
10.1

Allowance for doubtful receivables
 
0.8

 
0.7

 
0.8

 
1.2

 
1.3

Allowance for obsolete inventory
 
22.5

 
2.9

 
11.0

 
29.3

 
31.3

Deferred income taxes
 
(6.6
)
 
37.2

 
(26.7
)
 
16.3

 
(1.5
)
Changes in assets and liabilities
 
14.3

 
(541.8
)
 
566.3

 
(791.4
)
 
(89.5
)
Net cash provided by (used in) operating activities
 
481.1

 
(2.7
)
 
1,193.3

 
(168.4
)
 
530.3

 
 
 
 
 
 
 
 
 
 
 
CASH FLOWS FROM INVESTING ACTIVITIES
 
 
 
 
 
 
 
 
 
 
Purchase of property, plant and equipment
 
(98.9
)
 
(66.3
)
 
(95.9
)
 
(38.6
)
 
(56.3
)
Purchase of intangible assets
 
(1.3
)
 
(2.6
)
 
(0.9
)
 
(5.2
)
 
(5.0
)
Purchase of short-term investments
 
(350.0
)
 
(770.0
)
 
(1,050.0
)
 
(75.0
)
 
(275.0
)
Maturity of short-term investments
 
425.0

 
370.0

 
1,300.0

 
300.0

 
600.0

Cash from (used for) derivative financial instruments
 
7.7

 
(14.4
)
 
(9.4
)
 
(30.7
)
 
(16.5
)
Loans issued and other investments
 
(6.0
)
 
(1.2
)
 
(0.2
)
 
—

 
—

Acquisition of equity method investments
 
—

 
—

 
—

 
—

 
(1,002.1
)
Acquisition of subsidiaries
 
—

 
—

 
(2,641.3
)
 
—

 
—

Net cash provided by (used in) investing activities
 
(23.5
)
 
(484.5
)
 
(2,497.7
)
 
150.5

 
(754.9
)
 
 
 
 
 
 
 
 
 
 
 
CASH FLOWS FROM FINANCING ACTIVITIES
 
 
 
 
 
 
 
 
 
 
Dividend paid
 
(445.9
)
 
—

 
—

 
—

 
(516.7
)
Purchase of shares
 
(171.9
)
 
(14.6
)
 
—

 
—

 
—

Net proceeds from issuance of shares
 
12.1

 
11.7

 
548.3

 
13.0

 
11.9

Net proceeds from issuance of notes
 
—

 
1,484.7

 
745.9

 
—

 
—

Repayment of debt
 
(1.2
)
 
(1.1
)
 
(1.2
)
 
(1.2
)
 
(239.5
)
Tax benefit from share-based payments
 
0.1

 
0.5

 
0.3

 
—

 
—

Net cash provided by (used in) financing activities
 
(606.8
)
 
1,481.2

 
1,293.3

 
11.8

 
(744.3
)
 
 
 
 
 
 
 
 
 
 
 
Net cash flows
 
(149.2
)
 
994.0

 
(11.1
)
 
(6.1
)
 
(968.9
)
 
 
 
 
 
 
 
 
 
 
 
       Effect of changes in exchange rates on cash
 
11.9

 
(7.1
)
 
5.0

 
9.8

 
(27.5
)
Net increase (decrease) in cash and cash equivalents
 
(137.3
)
 
986.9

 
(6.1
)
 
3.7

 
(996.4
)




Notes to the Summary US GAAP Consolidated Financial Statements

Basis of Preparation
The accompanying Summary Consolidated Financial Statements are stated in millions of euros unless indicated otherwise. The accompanying Summary Consolidated Financial Statements have been prepared in conformity with accounting principles generally accepted in the United States of America ("US GAAP"). For further details on our Summary of Significant Accounting Policies refer to the Notes to the Consolidated Financial Statements as recorded in our Annual Report on Form 20-F which is available on www.asml.com. Further disclosures, as required under US GAAP in annual reports, are not included in the Summary Consolidated Financial Statements.

Revenue From Contracts With Customers
In March 2014 the FASB issued ASU No. 2014-9 "Revenue From Contracts With Customers". In August 2015 the FASB amended ASU No. 2014-9 to defer the effective date by one year to annual reporting periods beginning after December 15, 2017 (ASU 2015-14 "Revenue From Contracts With Customers (Topic 606): Deferral of the Effective Date"). In March 2016, the FASB released ASU No. 2016-08 "Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net)" which clarifies the implementation guidance on principal versus agent considerations. In April 2016, the FASB issued ASU No. 2016-10 "Revenue from Contracts with Customers (Topic 606)" which clarifies guidance related to identifying performance obligations and licensing implementation guidance contained in the new revenue recognition standard. In May 2016 ASU No. 2016-12 "Revenue from Contracts with Customers (Topic 606) - Narrow-Scope Improvements and Practical Expedients" was issued by the FASB which affects entities with transactions included within the scope of Topic 606. The scope of that Topic includes entities that enter into contracts with customers to transfer goods or services (that are an output of the entity’s ordinary activities) in exchange for consideration. ASU No. 2016-20 “Technical corrections and improvements to Topic 606, revenue from contracts with customers” covers a variety of topics related to the new revenue recognition standard. The amendments in this Update represent minor corrections and improvements to the Codification that are not expected to have a significant effect on current accounting practice or create a significant administrative cost to most entities. In ASU No. 2017-03 “Accounting Changes and Error Corrections (Topic 250) and Investments - Equity Method and Joint Ventures (Topic 323): Amendments to SEC Paragraphs Pursuant to Staff Announcements at the September 22, 2016 and November 17, 2016 EITF Meetings” the standard is amended to include the SEC Staff announcement on September 22, 2016. It requires a registrant to include appropriate financial statement disclosures about the potential material effects of ASUs, which have not yet been adopted.
The standard is a joint project of the FASB and the IASB, to clarify the principles for recognizing revenue and to develop a common revenue standard for US GAAP and IFRS that would:
•
Remove inconsistencies and weaknesses in previous revenue recognition requirements;
•
Provide a more robust framework for addressing revenue issues;
•
Improve comparability of revenue recognition practices across entities, industries, jurisdictions and capital markets;
•
Provide more useful information to users of financial statements through improved disclosure requirements; and
•
Simplify the preparation of financial statements by reducing the number of requirements to which an entity must refer.
The new standard is effective for interim and annual periods beginning after December 15, 2017 and allows for either full retrospective adoption or modified retrospective adoption. We selected full retrospective adoption and will therefore restate all prior years presented in our 2018 Consolidated Financial Statements upon adoption.
We are finalizing our impact assessment of the new revenue recognition standard on our accounting policies and our contracts affecting our 2016 results. At this time, we cannot reasonably estimate the exact financial impact of implementing this new standard. However, for 2016 we expect an increase of our total net sales between zero and five percent and an increase of our net income between two and seven percent due to a shift in timing of revenue recognition. Based on our assessment of the impact of ASC 606 on the Consolidated Balance Sheets we expect a significant decrease in deferred income as of December 31, 2016.
The most significant changes in our accounting policies as a consequence of adopting ASC 606 are:
•
Certain upgrades and services change from point in time revenue recognition upon completion of the performance obligation to over time revenue recognition throughout the upgrade and service period;
•
Options to buy additional goods or services provided within our contracts, offered at a discount incremental to our stand-alone selling price, are now considered performance obligations and therefore consideration is allocated from the contract. Revenue is recognized for these material rights when the future goods or services are transferred or the option to buy expires;
•
For bill-and-hold transactions there is no longer a required fixed schedule of delivery and when a customer requests for the bill-and-hold transaction there is assumed to be a substantial reason. We will follow the requirements under ASC 606 in order to recognize revenue; and
•
A change from allocating the consideration of a contract to the elements of the contract using relative selling price determined through vendor-specific objective evidence or best estimate of selling price under ASC 605 to allocating the consideration of a contract based on stand-alone selling prices determined using the adjusted market approach in accordance with ASC 606.
 
Equity method investments
We will recognize our proportionate share of the income or loss of Carl Zeiss SMT Holding GmbH & Co. KG on a one-quarter time lag.



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

Six months ended,

Jul 3,

Jul 2,


Jul 3,

Jul 2,


2016

2017


2016

2017

(in millions EUR)





Net income based on US GAAP
353.8

466.3


551.8

918.4

Development expenditures (see Note 1)
80.3

15.3


125.2

21.1

Income taxes (see Note 2)
(62.8
)
(6.0
)

(76.5
)
(2.9
)
Other
(0.9
)
—


0.7

(0.1
)
Net income based on IFRS
370.4

475.6


601.2

936.5


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 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 expected trends and outlook, including expected customer insertion of EUV in volume manufacturing, including expected volume orders, systems backlog, expected financial results and trends for the third quarter of 2017, including expected sales, gross margin, R&D and SG&A expenses, other income, and annualized effective tax rate, expected financial results and trends for the full year 2017, including expected revenue growth and growth in logic and memory, trends in DUV systems revenue, Holistic Lithography and installed base management revenues, annual revenue opportunity for ASML and EPS potential by 2020 with significant further growth potential into the next decade, expected industry trends and expected trends in the business environment, including our expectation that the trends exhibited in the second quarter of 2017 will continue into 2018, statements with respect to EUV targets, manufacturing, supply chain and service capabilities, and ASML’s commitment to secure system performance, shipments and support for volume manufacturing, including availability, productivity, throughput and shipments, including timing of shipments and the ability to support a larger installed base, statements with respect to the benefits of the hardware innovations in the new DUV lithography immersion system, EUV-high volume manufacturing adoption inflection, statements with respect to HMI, including expected expansion of the integrated Holistic Lithography roadmap, introduction of a new class of pattern fidelity control for memory and logic production in 2018 and expected multi-e-beam innovation, statements with respect to the acquisition of Carl Zeiss SMT and its expected benefits, statements relating to the development of a training center with Circuit Research and Development Center Ltd., including its expected benefits, and the Chinese IC industry, including expected new fab demand and lithography market opportunity and expected shipments, shrink being a key driver supporting innovation and providing long-term industry growth, lithography enabling affordable shrink and delivering value to customers, expected industry adoption of EUV and statements with respect to the intent of customers to insert EUV into production, the extension of EUV beyond the next decade, the expected continuation of Moore's law and that EUV will continue to enable Moore’s law and drive long term value for ASML beyond the next decade, intention to return excess cash to shareholders, and statements about our proposed dividend, dividend policy and intention to repurchase shares and statements with respect to the share repurchase plan, including its expected resumption. 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", "targets", "commits to secure" 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 any 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 including EUV, the number and timing of EUV systems expected to be shipped and recognized in revenue, delays in EUV systems production and development and volume production by customers, including meeting development requirements for volume production, demand for EUV systems being sufficient to result in utilization of EUV facilities in which ASML has made significant investments, potential inability to integrate HMI’s systems into our Holistic Lithography portfolio, 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 and liquidity, our ability to refinance our indebtedness, distributable reserves for dividend payments and share repurchases and timing of resumption of the share repurchase plan, the pace of development of the Chinese IC industry, 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 
As per January 1, 2017, ASML presents net sales with respect to metrology and inspection systems as part of Net system sales instead of Net service and field option sales. The comparative numbers have been adjusted to reflect this change in accounting policy.
4  
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.
5        Lithography systems do not include metrology and inspection systems.  
6
Our systems backlog and net bookings include all system sales orders for which written authorizations have been accepted (for EUV starting with the NXE:3350B). As per January 1, 2017 our systems backlog and net bookings also include metrology and inspection systems.