EX-99 5 ifrs.htm EXHIBIT 99.3 Exhibit 99.3

Exhibit 99.3



ASML – Summary IFRS Consolidated Statements of Operations1


  Three months ended, Nine months ended,
  Sep 26, 2004 Sep 25, 2005 Sep 26, 2004 Sep 25, 2005
(Amounts in thousands EUR)        
Net sales   610,472   533,154   1,680,215   1,981,098  
Cost of sales   380,524   343,277   1,085,299   1,224,930  
Gross profit on sales   229,948   189,876   594,916   756,168  
Research costs   124,923   56,248   274,033   188,325  
Research credits   (5,726 ) (990 ) (15,548 ) (13,357 )
Selling, general and administrative expenses   52,622   49,166   151,607   157,152  
Restructuring expenses   0   0   (5,862 ) 0  
Total expenses   171,819   104,424   404,230   332,120  
Operating income   58,129   85,452   190,686   424,048  
Financial income/(expense), net   (3,051 ) (14,140 ) (11,508 ) (37,697 )
Income before income taxes   55,078   71,312   179,178   386,351  
Provision for income taxes   (19,712 ) (19,742 ) (59,907 ) (110,862 )
Net income   35,366   51,570   119,271   275,489  


ASML – Summary IFRS Consolidated Balance Sheets1


  Sep 26, Dec 31, March 27, June 26, Sep 25,
  2004 2004 2005 2005 2005
(Amounts in thousands EUR)          
ASSETS            
Cash and cash equivalents   1,315,758   1,228,130   1,319,651   1,544,078   1,699,763  
Accounts receivable, net   397,064   503,153   483,898   485,352   403,489  
Inventories, net   685,969   717,688   728,378   695,330   653,098  
Other current assets   165,276   230,346   223,768   211,583   210,705  
Total current assets   2,564,067   2,679,317   2,755,695   2,936,343   2,967,055  
Deferred tax asset   331,418   202,279   212,970   208,965 2 198,461  
Other assets   30,071   27,840   30,266   30,932   36,882  
Intangible assets   34,919   31,818   45,882   69,519   292,799  
Property, plant and equipment   315,487   303,691   310,316   306,919   85,986  
Total assets   3,275,962   3,244,945   3,355,129   3,552,678   3,581,183  
LIABILITIES AND SHAREHOLDERS' EQUITY  
Current liabilities   923,081   813,141   765,667   776,784   765,463  
Convertible subordinated bonds   848,350   802,810   708,059   749,169   758,034  
Long term debt and deferred liabilities   215,611   236,213   313,805   338,102 2 316,914  
Shareholders' equity   1,288,920   1,392,781   1,567,598   1,688,623   1,740,772  
Total liabilities and Shareholders' equity   3,275,962   3,244,945   3,355,129   3,552,678   3,581,183  


1.) All figures are unaudited.
2.) ASML has re-evaluated its deferred taxes presentation as of June 26, 2005, as reported in its earnings release of Q2 2005, and has concluded that this presentation was not consistent with prior quarters and current quarter. The effect of this amendment on ASML#146;s presentation on deferred tax assets and liabilities as of June 26, 2005 in the aggregate is zero. In the earnings release of Q2 2005, ASML reported for the period ended June 26, 2005 deferred tax assets of EUR 143,837 and long term debt and deferred liabilities of EUR 272,974.

ASML – Summary IFRS Consolidated Statements of Cash Flows1


Three months ended, Nine months ended
Sep 26, 2004 Sep 25, 2005 Sep 26, 2004 Sep 25, 2005
EUR EUR EUR EUR
CASH FLOWS FROM OPERATING ACTIVITIES:          
Net income   35,366   51,570   119,271   275,489  
Depreciation and amortization   22,098   28,297   72,370   78,903  
Change in tax assets and liabilities   16,424   16,590   50,382   142,711  
Change in assets and liabilities   31,469   102,047   57,255   75,672  
Net cash provided by operating activities   105,357   198,504   299,278   572,775  
CASH FLOWS FROM INVESTING ACTIVITIES:  
Capital expenditures   (28,001 ) (34,406 ) (46,928 ) (120,823 )
Disposals   1,172   426   13,527   4,441  
Net cash used in investing activities   (26,829 ) (33,980 ) (33,401 ) (116,382 )
Net cash provided by operating and  
investing activities   78,528   164,524   265,877   456,393  
CASH FLOWS FROM FINANCING ACTIVITIES:  
Redemption and/or repayment of loans   (292 ) (12,069 ) (828 ) (12,642 )
Proceeds from share issuance   3,911   3,388   18,953   10,298  
Net cash provided by financing activities   3,619   (8,681 ) 18,125   (2,344 )
Net cash flow   82,147   155,843   284,002   454,049  
Effect of changes in exchange rates on cash   (2,000 ) (158 ) 3,950   17,584  
Net increase in cash and cash equivalents   80,147   155,685   287,952   471,633  


ASML – Quarterly Summary IFRS Consolidated Statements of operations1


Three months ended,
Sep 26, Dec 31, March 27, June 26, Sep 25,
2004 2004 2005 2005 2005
(Amounts in millions EUR)
Net sales   610 .5 785 .1 684 .7 763 .3 533 .2
Cost of sales   380 .5 477 .7 414 .4 467 .3 343 .3
Gross profit on sales   230 .0 307 .4 270 .3 296 .0 189 .9
Research costs, net of credits   119 .2 75 .2 64 .9 54 .8 55 .3
Selling, general and administrative expenses   52 .6 52 .8 52 .2 55 .8 49 .1
Total expenses   171 .8 128 .0 117 .1 110 .6 104 .4
Operating income   58 .2 179 .4 153 .2 185 .4 85 .5
Financial income/(expense), net   (3 .0) (4 .5) (12 .0) (11 .5) (14 .2)
Income before Income taxes   55 .2 174 .9 141 .2 173 .9 71 .3
Provision for income taxes   (19 .8) (67 .2) (40 .3) (50 .9) (19 .7)
Net income   35 .4 107 .7 100 .9 123 .0 51 .6


ASML – Notes to the Summary IFRS Consolidated Financial Statements


Basis of Presentation
ASML has prepared the accompanying summary consolidated financial statements in accordance with International Financial Reporting Standards (“IFRS”) in order to satisfy European Union requirements applicable to companies quoted on a European Stock Exchange. Further disclosures, as required under IFRS in annual reports and interim reporting (IAS 34), are not included. The accompanying consolidated financial statements are stated in thousands of euros (‘EUR’), except otherwise indicated.

ASML intends to continue publishing U.S. GAAP financial statements, as has been its historical practice.

Principles of consolidation
The accompanying consolidated financial statements include the accounts of ASML Holding N.V. and all of its majority-owned subsidiaries. All inter-company profits, transactions and balances have been eliminated in the consolidation.

Recognition of revenues
ASML recognizes revenue when all four revenue recognition criteria are met: persuasive evidence of an arrangement exists; delivery has occurred or services have been rendered; the seller’s price to the buyer is fixed or determinable; and collectibility is reasonably assured. At ASML, this policy generally results in revenue recognition from the sale of a system upon shipment and the revenue from the installation of a system upon completion of that installation at the customer site. Each system undergoes, prior to shipment, a "Factory Acceptance Test" in ASML's clean room facilities, effectively replicating the operating conditions that will be present on the customer's site, in order to verify whether the system will meet its standard specifications and any additional technical and performance criteria agreed with the customer. A system is shipped, and revenue recognized, only after all specifications are met and customer sign-off is received or waived. Although each system's performance is re-tested upon installation at the customer's site, ASML has never failed to successfully complete installation of a system at a customer premises.

The fair value of installation services provided to the customers is initially deferred and is recognized when the installation is completed. Sales from service contracts are recognized when performed. Revenue from prepaid service contracts is recognized over the life of the contract.

Use of estimates
The preparation of ASML’s consolidated financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities on the balance sheet dates and the reported amounts of revenue and expense during the reported periods. Actual results could differ from those estimates.

Pensions
Under IFRS, ASML applies IAS 19, “Employee benefits”, in accounting for its multi-employer defined benefit plans. In accordance with IAS 19, ASML accounts for its multi-employer defined benefit plan as if it were a defined contribution plan as the pension union managing the plan is not able to provide ASML with sufficient information to enable ASML to account for the plan as a defined benefit plan.

ASML – IFRS Reconciliation U.S. GAAP – IFRS1


Quarterly Net income Sep 26, Dec 31, March 27, June 26, Sep 25,
2004 2004 2005 2005 2005
(Amounts in thousands EUR)
Quarterly Net income under U.S. GAAP   40,912   108,637   100,262   111,815   47,766  
Share Based Payments (see Note 1)   (5,087 ) (1,464 ) (6,734 ) (1,950 ) (2,088 )
Capitalization of development costs (see Note 2)   -   -   16,110   25,683   18,514  
Convertible bonds (see Note 3)   -   -   (7,445 ) (7,712 ) (10,230 )
Taxes   (459 ) 507   (1,248 ) (4,862 ) (2,392 )
Quarterly Net income under IFRS   35,366   107,680   100,945   122,974   51,570  



Shareholders’ Equity Sep 26, Dec 31, March 27, June 26, Sep 25,
2004 2004 2005 2005 2005
(Amounts in thousands EUR)
Shareholders’ equity under U.S. GAAP   1,228,287   1,391,602   1,482,661   1,590,510   1,636,767  
Share Based Payments (see Note 1)   633   1,179   2,152   2,325   2,492  
Capitalization of development costs (see Note 2)   -   -   11,035   28,628   41,310  
Convertible subordinated bonds (see Note 3)   -   -   71,750   67,160   60,203  
Shareholders’ equity under IFRS   1,288,920   1,392,781   1,567,598   1,688,623   1,740,772  


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


Note 1 Share Based Payments
Under IFRS, ASML applies IFRS 2, “Share based payments” beginning from January 1, 2004. In accordance with IFRS 2, ASML records as an expense the fair value of its share based payments with respect to stock options granted to its employees after November 7, 2002.

Under U.S. GAAP, ASML accounts for stock option plans using the intrinsic value method in accordance with APB 25 “Accounting for stock issued to employees” and provides pro forma disclosure of the impact of the fair value method on net income and earnings per share in accordance with SFAS 123 “Accounting for stock based compensation”.

Note 2 Capitalization of development costs
Under IFRS, ASML applies IAS 38, “Intangible Assets” beginning from January 1, 2005. During the second half of 2004, ASML made changes to its administrative systems in order to provide sufficient information to comply with IFRS beginning from January 1, 2005. Sufficient reliable information relating to development costs under IFRS before January 1, 2005 is not available. Under IAS 38, capitalized development costs are amortized over the expected useful life of the related product generally ranging between 2 and 3 years. Amortization starts when the developed product is ready for volume production.

Under U.S. GAAP, ASML applies SFAS 2, “Accounting for Research and Development Costs”. In accordance with SFAS 2, ASML charges costs relating to research and development to operating expense as incurred.

Note 3 Convertible subordinated bonds
Under IFRS, ASML applies IAS 32 “Financial instruments: Disclosure and presentation” and IAS 39 “Financial instruments: Recognition and measurement” beginning from January 1, 2005. In accordance with IAS 32 and IAS 39, ASML accounts separately for the equity and liability component of its convertible bonds. The equity component relates to the grant of a conversion option to shares to the holder of the bond.

The liability component creates a financial liability that is measured at amortized cost which results in additional interest charges.

Under U.S. GAAP, ASML accounts for its convertible bonds as a liability at the principal amount outstanding.

"Safe Harbor" Statement under the U.S. Private Securities Litigation Reform Act of 1995: the matters discussed in this document may include forward-looking statements that are subject to risks and uncertainties including, but not limited to: economic conditions, product demand and semiconductor equipment industry capacity, worldwide demand and manufacturing capacity utilization for semiconductors (the principal product of our customer base), competitive products and pricing, manufacturing efficiencies, new product development, ability to enforce patents, the outcome of intellectual property litigation, availability of raw materials and critical manufacturing equipment, trade environment, and other risks indicated in the risk factors included in ASML’s Annual Report on Form 20-F and other filings with the U.S. Securities and Exchange Commission.