Form 6-K ASML HOLDING NV For: Jul 20
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________
______________________
FORM 6-K
REPORT OF A FOREIGN ISSUER
PURSUANT TO RULE 13A-16 OR 15D-16
OF THE SECURITIES EXCHANGE ACT OF 1934
For July 20, 2016
______________________
ASML Holding N.V.
De Run 6501
5504 DR Veldhoven
The Netherlands
(Address of principal executive offices)
______________________
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F x Form 40-F ¨
Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes ¨ No x
If ‘‘Yes’’ is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b):
EXHIBITS 99.1, 99.3, 99.4, AND 99.5 TO THIS REPORT ON FORM 6-K ARE INCORPORATED BY REFERENCE IN THE REGISTRATION STATEMENT ON FORM S-8 (FILE NO. 333-116337), THE REGISTRATION STATEMENT ON FORM S-8 (FILE NO. 333-126340), THE REGISTRATION STATEMENT ON FORM S-8 (FILE NO. 333-136362), THE REGISTRATION STATEMENT ON FORM S-8 (FILE NO. 333-141125), THE REGISTRATION STATEMENT ON FORM S-8 (FILE NO. 333-142254), THE REGISTRATION STATEMENT ON FORM S-8 (FILE NO. 333-144356), THE REGISTRATION STATEMENT ON FORM S-8 (FILE NO. 333-147128), THE REGISTRATION STATEMENT ON FORM S-8 (FILE NO. 333-153277), THE REGISTRATION STATEMENT ON FORM S-8 (FILE NO. 333-162439), THE REGISTRATION STATEMENT ON FORM S-8 (FILE NO. 333-170034), THE REGISTRATION STATEMENT ON FORM S-8 (FILE NO. 333-188938), THE REGISTRATION STATEMENT ON FORM S-8 (FILE NO. 333-190023), THE REGISTRATION STATEMENT ON FORM S-8 (FILE NO. 333-192951) AND THE REGISTRATION STATEMENT ON FORM S-8 (FILE NO. 333-203390) OF ASML HOLDING N.V. AND IN THE OUTSTANDING PROSPECTUSES CONTAINED IN SUCH REGISTRATION STATEMENTS.
Exhibits
99.1 | “Strong logic ramp and healthy memory drive ASML second-quarter sales. New EUV orders intended for volume manufacturing”, press release dated July 20, 2016 |
99.2 | “Strong logic ramp and healthy memory drive ASML second-quarter sales. New EUV orders intended for volume manufacturing”, presentation dated July 20, 2016 |
99.3 | Summary U.S. GAAP Consolidated Financial Statements |
99.4 | Summary IFRS Consolidated Financial Statements |
99.5 | Statutory Interim Report for the six-month period ended July 3, 2016 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
ASML HOLDING N.V. (Registrant)
Date: July 20, 2016 By: /s/ Peter T.F.M. Wennink
Peter T.F.M. Wennink
Chief Executive Officer
Exhibit 99.1
Media Relations Contacts
Lucas van Grinsven - Corporate Communications - +31 6 101 99 532 - Veldhoven, the Netherlands
Niclas Mika - Corporate Communications - +31 6 201 528 63 - Veldhoven, the Netherlands
Investor Relations Contacts
Craig DeYoung - Investor Relations - +1 480 696 2762 - Chandler, Arizona, USA
Marcel Kemp - Investor Relations - +31 40 268 6494 - Veldhoven, the Netherlands
Strong logic ramp and healthy memory drive ASML second-quarter sales
New EUV orders intended for volume manufacturing
VELDHOVEN, the Netherlands, July 20, 2016 - ASML Holding N.V. (ASML) today publishes its 2016 second-quarter results.
• | Q2 net sales of EUR 1.74 billion, gross margin 42.6 percent |
• | ASML guides Q3 2016 net sales at approximately EUR 1.7 billion and a gross margin of around 47 percent |
• | ASML expects full-year 2016 sales to exceed 2015 record year |
(Figures in millions of euros unless otherwise indicated) | Q1 2016 | Q2 2016 |
Net sales | 1,333 | 1,740 |
...of which service and field option sales | 477 | 486 |
Other income (Co-Investment Program) | 23 | 23 |
New systems sold (units) | 28 | 39 |
Used systems sold (units) | 5 | 7 |
Average Selling Price (ASP) of net system sales | 25.9 | 27.3 |
Net bookings | 835 | 1,566 |
Systems backlog | 3,018 | 3,371 |
Gross profit | 568 | 741 |
Gross margin (%) | 42.6 | 42.6 |
Net income | 198 | 354 |
EPS (basic; in euros) | 0.46 | 0.83 |
End-quarter cash and cash equivalents and short-term investments | 3,138 | 2,926 |
A complete summary of US GAAP Consolidated Statements of Operations is published on www.asml.com
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CEO Statement
"Our business continues to perform well. We recorded second-quarter orders of EUR 1.6 billion and posted net sales of over EUR 1.7 billion. System sales were weighted towards logic customers, supporting the initial ramp of the 10 nanometer node. System sales to memory customers remained healthy, as manufacturers continued their technology investments in DRAM and added capacity for 3D NAND. Our second-quarter net sales included around EUR 100 million in partial revenue recognition for two NXE:3350B EUV systems, which we had shipped in the fourth quarter of 2015. Confirming our previous statements on overall business trends, we now expect our full-year 2016 sales to exceed our 2015 record year. The ultimate level will depend on the timing of our EUV revenue recognition and the size of the combined 10/7 nanometer node ramp," ASML President and Chief Executive Officer Peter Wennink said.
"We took new orders for four EUV systems from foundry and memory customers, bringing our backlog to 10 units worth about EUR 1 billion. These systems are intended for volume manufacturing sites. We expect to take additional orders in the second half of this year," Wennink said.
"We announced our plans to acquire Hermes Microvision, Inc., to enhance our Holistic Lithography offering and thereby address the challenges chip makers are facing as they enter sub-10 nanometer resolutions and 3D integration. On 4 July we issued two bonds totaling EUR 1.5 billion that are intended to partially fund this acquisition."
Product and Business Highlights
• | In Deep Ultraviolet (DUV) lithography, the rollout of our TWINSCAN NXT:1980i ArF immersion systems is progressing well. Since introduction we have shipped a total of 23 systems and upgraded an additional five systems at customer sites to NXT:1980 specifications. We have also installed an enhanced version of the TWINSCAN XT:1460 ArF dry system with a 40 percent improvement in matched machine overlay, demonstrating our commitment to continue to improve the performance of our dry lithography product portfolio. |
• | In Holistic Lithography, we have shipped multiple YieldStar 350E metrology systems to our leading customers to support the qualification and ramp of the 10 nanometer logic node. We also released a new version of our process window enhancement |
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software suite, which includes a new approach to SRAF (Sub-Resolution Assist Features) placement that improves the quality of patterning. This leading resolution enhancement technique is aimed at helping to maximize manufacturing yield for EUV and immersion-based lithography at the 7 and 5 nanometer logic and 1x memory nodes.
• | In Extreme Ultraviolet (EUV) lithography, we continued to demonstrate progress towards manufacturing insertion with productivity and availability improvements. An NXE:3350B EUV system at a customer site processed 1,200 wafers per day. We are progressing well toward our 2016 target of 1,500 wafers per day, evidenced by the peak performance achieved on a NXE:3350B at ASML of 1,488 wafers per day. |
Outlook
For the third-quarter of 2016, ASML expects net sales at approximately EUR 1.7 billion, a gross margin of around 47 percent, R&D costs of about EUR 275 million, other income of about EUR 23 million -- which consists of contributions from participants of the Customer Co-Investment Program, SG&A costs of about EUR 90 million and an effective annualized tax rate of around 12 percent.
Update Share Buyback Program
As part of ASML's financial policy to return excess cash to shareholders through dividends and regularly timed share buyback programs, ASML in January 2016 announced its intention to purchase up to EUR 1.5 billion of shares to be executed within the 2016-2017 time frame. ASML intends to cancel the shares upon repurchase.
Through July 3, 2016, ASML has acquired 4.6 million shares under this program for a total consideration of EUR 387 million. The repurchased shares will be canceled.
We will pause our share buyback program for a few quarters while we are in the midst of the HMI acquisition process. We continue to expect to complete the full 2016-2017 program, yet it may be further suspended, modified or discontinued at any time. Any transactions under this program will be published on ASML's website (www.asml.com/investors) on a weekly basis.
About ASML
ASML is one of the world’s leading manufacturers of chip-making equipment. Our vision is to enable affordable microelectronics that improve the quality of life. To achieve this, our mission is to invent, develop, manufacture and service advanced technology for high-tech lithography, metrology and software solutions for the semiconductor industry. ASML's guiding principle is continuing Moore's Law towards ever smaller, cheaper, more powerful
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and energy-efficient semiconductors. This results in increasingly powerful and capable electronics that enable the world to progress within a multitude of fields, including healthcare, technology, communications, energy, mobility, and entertainment. We are a multinational company with over 70 locations in 16 countries, headquartered in Veldhoven, the Netherlands.We employ more than 15,000 people on payroll and flexible contracts (expressed in full time equivalents). ASML is traded on Euronext Amsterdam and NASDAQ under the symbol ASML. More information about ASML, our products and technology, and career opportunities is available on www.asml.com.
Investor and Media Conference Call
A conference call for investors and media will be hosted by CEO Peter Wennink and CFO Wolfgang Nickl at 15:00 PM Central European Time / 09:00 AM U.S. Eastern time. To register for the call and receive dial-in information, go to www.asml.com/qresultscall. Listen-only access is also available via www.asml.com.
US GAAP and IFRS Financial Reporting
ASML's primary accounting standard for quarterly earnings releases and annual reports is US GAAP, the accounting principles generally accepted in the United States of America. Quarterly US GAAP consolidated statements of operations, consolidated statements of cash flows and consolidated balance sheets, and a reconciliation of net income and equity from US GAAP to IFRS as adopted by the EU (‘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 and the accounting of income taxes. ASML’s quarterly IFRS consolidated statement of profit or loss, consolidated statement of cash flows, consolidated statement of financial position and a reconciliation of net income and equity from US GAAP to IFRS are available on www.asml.com.
Today, July 20, 2016, ASML has also published the Statutory Interim Report for the six-month period ended July 3, 2016. This report is in accordance with the requirements of the EU Transparency Directive as implemented in the Netherlands, and includes consolidated
4
condensed interim financial statements prepared in accordance with IAS 34 ‘Interim Financial Reporting’, an Interim Management Board Report and a Managing Directors' Statement and is available on www.asml.com.
The consolidated balance sheets of ASML Holding N.V. as of July 3, 2016, the related consolidated statements of operations and consolidated statements of cash flows for the quarter ended July 3, 2016 as presented in this press release are unaudited.
Regulated Information
This press release contains inside information within the meaning of Article 7(1) of the EU Market Abuse Regulation.
Forward Looking Statements
This document contains statements relating to certain projections and business trends that are forward-looking, including statements with respect to our outlook, including expected customer demand in specified market segments including memory, logic and foundry, expected trends and outlook, including expected levels of service sales, systems backlog, expected financial results for the third quarter and full year 2016, including expected sales, other income, gross margin, R&D and SG&A expenses and effective annualized tax rate, annual revenue opportunity for ASML and EPS potential by end of decade, productivity of our tools and systems performance, including EUV system performance (such as endurance tests), expected industry trends and expected trends in the business environment, statements with respect to the acquisition of HMI by ASML, the expected benefits of the acquisition of HMI by ASML, including expected earnings accretion, enhancement of ASML’s existing product portfolio, the creation of a new class of products which improves yield and time to market, the accelerated introduction of reticle defect detection to support future EUV ramp and related opportunity in 2020, improvement in ASML and HMI’s metrology technologies and support of EUV technologies, the benefits of the acquisition to ASML’s holistic lithography strategy, the growth opportunity represented by patterning control and expansion of market opportunity by 2020 and expected timing of completion of HMI acquisition, statements with respect to EUV targets, including availability, productivity and shipments, including the number of EUV systems expected to be shipped and timing of shipments, and roadmaps, shrink being key driver to industry growth, expected industry adoption of EUV and statements with respect to the intent of customers to insert EUV into production, the expected continuation of Moore's law and that EUV will continue to enable Moore’s law and drive long term value, goals for holistic lithography, intention to return excess cash to shareholders, and statements about our proposed dividend, 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 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, 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 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.
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Strong logic ramp and healthy memory drive ASML second-quarter sales
New EUV orders intended for volume manufacturing
ASML 2016 Second-Quarter Results
Veldhoven, the Netherlands
July 20, 2016
Public
Public
Slide 2
July 20, 2016
Agenda
• Investor key messages
• HMI acquisition highlights
• Business highlights
• Business environment
• Outlook
• EUV highlights
• Financial statements
Public
Slide 3
July 20, 2016
Investor key messages
Public
Slide 4
July 20, 2016
Investor key messages
• Shrink is the key industry driver supporting innovation and providing long term industry growth
• Lithography enables affordable shrink and therefore delivers compelling value for our customers
• EUV will enable continuation of Moore’s Law and will drive long term value for ASML
• Current EUV focus shifts from WHEN to HOW MANY in what timeframe
• ASML’s strategy of large R&D investments in lithography product roadmaps supports future
industry needs
• DUV product improvement roadmaps and Holistic Litho enable multi-pass immersion patterning
today, with Holistic Litho supporting EUV in the future. These highly differentiated products
provide unique value drivers for us and our customers
• ASML models an annual revenue opportunity of € 10 billion* by 2020 and given the significant
leverage in our financial model this will allow a potential tripling of EPS* by the end of this
decade, compared to calendar year 2014, thereby creating significant value for all stakeholders
• We expect to continue to return excess cash to our shareholders through dividends that are
stable or growing and regularly timed share buybacks in line with our policy
• Planned HMI acquisition provides market leading e-beam metrology capability which expands
our integrated Holistic Lithography solutions to include a new class of pattern fidelity control
* HMI acquisition not included, see Press Release (date June 16th 2016 on www.asml.com)
Public
Slide 5
July 20, 2016
HMI acquisition highlights
Public
Slide 6
July 20, 2016
HMI acquisition to enhance Holistic Lithography portfolio
Rationale:
• Combination of HMI e-beam metrology technology and ASML Holistic Lithography will create a
new class of products for patterning control which improves yield and time to market needed to
support extension of Moore’s law
• Patterning control represents a major growth opportunity in the next 5 to 10 years, expands the
addressable market opportunity for qualification, monitoring and control to € 2.3 billion in 2020
• In addition, ASML and HMI will accelerate introduction of reticle defect detection to support
coming EUV ramp, an opportunity of € 200 million in 2020
• The transaction will be accretive to ASML earnings immediately (before the impact of purchase-
price accounting)
Status:
• ASML placed € 1.5 billion Eurobonds on July 4th offering intended for partial finance of the
acquisition
• The transaction is expected to close in Q4 2016 and is subject to customary closing conditions.
Closing is also subject to approval by HMI's shareholders. The HMI Extraordinary General
Meeting is scheduled for August 3rd 2016
For further information on the transaction see our Press Release (date June 16th 2016 on www.asml.com)
Public
Slide 7
July 20, 2016
ASML holistic lithography future - a new paradigm:
E-beam added: ASML model guides e-beam to improve coverage of critical
features; e-beam data enhances ASML model and control of scanner
Detailed presentation available on the HMI acquisition on www.asml.com
Public
Slide 8
July 20, 2016
Business highlights
Public
Slide 9
July 20, 2016
Q2 results summary
• Net sales of € 1,740 million, including around € 100 million EUV, 46 litho systems
sold valued at € 1,254 million, net service and field option sales at € 486 million
• Average selling price of € 27.3 million per system
• Gross margin of 42.6%
• Operating margin of 23.2%
• Net bookings of € 1,566 million, including 4 new EUV systems
• Backlog at € 3,371 million, including 10 EUV systems
Numbers have been rounded for readers’ convenience
Public
Slide 10
July 20, 2016
Sales in Units
EUV ArF i ArFdry KrF I-Line
2
19
2
16
7
EUV ArF i ArFdry KrF I-Line
15
2
12
4
Net system sales breakdown in value
Technology
EUV 8%
ArF Immersion
76%
ArF Dry 3%
KrF
11%
I-line 2%
End-Use
Memory
35% Foundry
40%
IDM
25%
Q2’16
total value
€ 1,254
million
Q1’16
total value
€ 856
million ArF Immersion
79%
ArF Dry 5%
KrF
14% I-line 2%
Memory
42%
Foundry
48%
IDM 10%
Numbers have been rounded for readers’ convenience
USA 10%
Korea
27%Taiwan
20%
China
35%
Japan 7%
Rest of Asia 1%
Region (ship to location)
USA
21%
Korea
20%
Taiwan
28%
China
15%
Japan 4%
Rest of Asia 8%
Europe 4%
Public
Slide 11
July 20, 2016
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
N
et
Sa
le
s
2011 2012 2013 2014 2015 2016
1,452 1,252 892
1,397 1,650 1,333
1,529
1,228
1,187
1,644
1,654
1,740
1,459
1,229
1,318
1,322
1,549
1,211
5,651
1,023
4,732
1,848
5,245
1,494
1,434
6,287
Total net sales million € by quarter
Q4
Q3
Q2
Q1
Numbers have been rounded for readers’ convenience
3,073 YTD
5,856
Public
Slide 12
July 20, 2016
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
N
et
Sa
le
s
2011 2012 2013 2014 2015 2016
2,184
935
1,489
2,225 2,115
793
844
588
440
831
514
402
1,856
2,279
2,064
1,186
1,608
915
767
5,651
930
4,732
1,252
5,245
1,614
5,856
2,050
6,287
963
Total net sales million € by End-use
3,073 YTD
Service & Options
Foundry
IDM
Memory
Numbers have been rounded for readers’ convenience
Public
Slide 13
July 20, 2016
Bookings activity by sector
Q2’16 total value
€ 1,566 million
New
systems
Used
systems
Units 40 3
Value M€ 1,555 11
New
systems
Used
systems
Units 24 6
Value M€ 802 33
Q1’16 total value
€ 835 million
Memory
25%
Foundry
57%IDM
18%
Memory
14%
Foundry
67%
IDM
19%
Numbers have been rounded for readers’ convenience
Public
Slide 14
July 20, 2016
System backlog in value
Technology
EUV
31%ArF
Immersion
59%
ArF Dry 2% KrF 7%
I-line 1%
Region (ship to location)
USA
26%Korea22%
Taiwan
35%
China 5%
Japan 2%
Rest of Asia 3%
Europe 7%
End-Use
Memory
18%
Foundry
51%IDM
31%
Q2’16
total value
€ 3,371
million
Q1’16
total value
€ 3,018
million
Memory
24% Foundry
41%
IDM
35%
USA
39%
Korea
20%
Taiwan
26%
China 8%
Rest of Asia 4%
Europe 3%
New
systems
Used
systems
Units 65 8
Value M€ 3,335 36
New
systems
Used
systems
Units 64 12
Value M€ 2,975 43
Numbers have been rounded for readers’ convenience
EUV
24%
ArF
Immersion
61%
ArF Dry 3% KrF 10%
I-line 2%
Public
Slide 15
July 20, 2016
Capital return to shareholders
• ASML paid € 446 million in dividend or € 1.05 per ordinary share in Q2
• Purchased € 387 million worth of shares in Q1 and Q2 as part of our 2016/2017
share buyback program for up to € 1.5 billion
◦ Share buyback program will be paused for a few quarters while we are in
the midst of the HMI acquisition process
Dividend history
1.2
1.0
0.8
0.6
0.4
0.2
0.0
D
iv
id
en
d
(e
ur
o)
2008 2009 2010 2011 2012 2013 2014 2015
0.20 0.20
0.40 0.46
0.53 0.61
0.70
1.05
Cumulative capital return
8,000
6,000
4,000
2,000
0
€
m
illi
on
2008 2009 2010 2011 2012 2013 2014 2015 2016
Dividend
Share buyback
The dividend for a year is paid in the subsequent year
Numbers have been rounded for readers’ convenience
YTD
Public
Slide 16
July 20, 2016
Business environment
Public
Slide 17
July 20, 2016
• 2x nm DRAM node progressing, 1x nm node initial production starting
• 3D NAND technology ramping
• X-Point initial production expected to start this year
• Tool shipments continue across multiple nodes
• 10 nm foundry and MPU volume ramping
• Growing service and field options business continues to be driven by
Holistic Litho, growing installed base and upgrade products which
allows for improved process control and capital efficiency
Business environment
Service &
field options
Memory
Logic
Public
Slide 18
July 20, 2016
Outlook
Public
Slide 19
July 20, 2016
Outlook
• Q3 net sales approximately € 1.7 billion
• Gross margin around 47%
• R&D costs of about € 275 million
• SG&A costs of about € 90 million
• Other income (Customer Co-Investment Program) of about € 23 million
• Effective annualized tax rate around 12%
• Our guidance for third-quarter:
Numbers have been rounded for readers’ convenience
• Full-year 2016 sales:
• Expected to exceed our 2015 record sales, ultimate level depends on timing
of EUV revenue recognition and size of the combined 10/7 nm node ramp
Public
Slide 20
July 20, 2016
EUV highlights
Public
Slide 21
July 20, 2016
EUV 2016 targets and achievements
• More than 1,200 wafers per day (wpd) exposed on NXE:3350B at a customer site
• Peak performance near target (1,488 wpd achieved at ASML)
• Five customer systems have achieved a four-week average availability of more than 80%, however consistency
still needs to be improved
• On track for target: one NXE:3350B system shipped in Q1, one NXE:3350B system shipped in Q2
Productivity - Target: 1500 wafers per day
Availability - Target: 80%
NXE shipments: 6-7
Public
Slide 22
July 20, 2016
Financial statements
Public
Slide 23
July 20, 2016
Consolidated statements of operations M€
Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016
Net sales 1,654 1,549 1,434 1,333 1,740
Gross profit 754 703 660 568 741
Gross margin % 45.6% 45.4% 46.0% 42.6% 42.6%
Other income* 21 21 21 23 23
R&D costs (267) (267) (273) (275) (270)
SG&A costs (88) (86) (90) (89) (90)
Income from operations 419 372 318 228 404
Operating income % 25.3% 24.0% 22.2% 17.1% 23.2%
Net income 370 322 292 198 354
Net income as a % of net sales 22.4% 20.8% 20.4% 14.9% 20.3%
Earnings per share (basic) € 0.86 0.75 0.68 0.46 0.83
Earnings per share (diluted) € 0.85 0.75 0.68 0.46 0.83
Litho units sold 41 44 37 33 46
ASP new litho systems 32.5 24.2 26.9 29.5 31.6
Net booking value 1,523 904 1,184 835 1,566
* Customer Co-Investment Program (CCIP)
Numbers have been rounded for readers’ convenience
Public
Slide 24
July 20, 2016
Cash flows M€
Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016
Net income 370 322 292 198 354
Net cash provided by (used in) operating activities 284 420 985 (6) 481
Net cash provided by (used in) investing activities (107) (99) (1,078) (183) (24)
Net cash provided by (used in) financing activities (458) (133) (131) (204) (607)
Net increase (decrease) in cash & cash equivalents (284) 186 (222) (395) (137)
Free cash flow* 205 333 864 (65) 381
* Free cash flow is defined as net cash provided by (used in) operating activities minus investments in Capex (Purchase of Property,
plant and equipment and intangibles), see US GAAP Consolidated Financial Statements
Numbers have been rounded for readers’ convenience
Public
Slide 25
July 20, 2016
Balance sheets M€
Assets Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016
Cash & cash equivalents and short-term investments 2,520 2,681 3,409 3,138 2,926
Net accounts receivable and finance receivables 1,589 1,593 1,208 1,302 1,362
Inventories, net 2,592 2,537 2,574 2,750 2,715
Other assets 871 846 940 987 1,146
Tax assets 264 203 181 143 228
Goodwill 2,569 2,574 2,624 2,538 2,603
Other intangible assets 751 739 738 706 714
Property, plant and equipment 1,519 1,533 1,621 1,580 1,609
Total assets 12,675 12,706 13,295 13,144 13,303
Liabilities and shareholders' equity
Current liabilities 2,854 2,711 3,107 3,248 3,720
Non-current liabilities 1,859 1,850 1,799 1,593 1,434
Shareholders' equity 7,962 8,145 8,389 8,303 8,149
Total liabilities and shareholders' equity 12,675 12,706 13,295 13,144 13,303
As of January 1, 2016 ASML early adopted the amendment to ASC 740 “Income taxes (Topic 740): Balance Sheet Classification of Deferred Taxes”, which requires that deferred
tax liabilities and assets are classified as non-current in the consolidated balance sheets. The comparative figures have not been adjusted to reflect this change in accounting
policy.
Numbers have been rounded for readers’ convenience
Public
Slide 26
July 20, 2016
This document contains statements relating to certain projections and business trends that are forward-looking, including statements with respect to our outlook,
including expected customer demand in specified market segments including memory, logic and foundry, expected trends and outlook, including expected levels
of service sales, systems backlog, expected financial results for the third quarter and full year 2016, including expected sales, other income, gross margin, R&D
and SG&A expenses and effective annualized tax rate, annual revenue opportunity for ASML and EPS potential by end of decade, productivity of our tools and
systems performance, including EUV system performance (such as endurance tests), expected industry trends and expected trends in the business
environment, statements with respect to the acquisition of HMI by ASML, the expected benefits of the acquisition of HMI by ASML, including expected earnings
accretion, enhancement of ASML’s existing product portfolio, the creation of a new class of products which improves yield and time to market, the accelerated
introduction of reticle defect detection to support future EUV ramp and related opportunity in 2020, improvement in ASML and HMI’s metrology technologies and
support of EUV technologies, the benefits of the acquisition to ASML’s holistic lithography strategy, the growth opportunity represented by patterning control and
expansion of market opportunity by 2020 and expected timing of completion of HMI acquisition, statements with respect to EUV targets, including availability,
productivity and shipments, including the number of EUV systems expected to be shipped and timing of shipments, and roadmaps, shrink being key driver to
industry growth, expected industry adoption of EUV and statements with respect to the intent of customers to insert EUV into production, the expected
continuation of Moore's law and that EUV will continue to enable Moore’s law and drive long term value, goals for holistic lithography, intention to return excess
cash to shareholders, and statements about our proposed dividend, 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 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, 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 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.
Forward looking statements
Exhibit 99.3
ASML - Summary US GAAP Consolidated Statements of Operations 1,2
Three months ended, | Six months ended, | |||||||||||
Jun 28, | Jul 3, | Jun 28, | Jul 3, | |||||||||
2015 | 2016 | 2015 | 2016 | |||||||||
(in millions EUR, except per share data) | ||||||||||||
Net system sales | 1,134.5 | 1,254.1 | 2,381.0 | 2,109.9 | ||||||||
Net service and field option sales | 519.6 | 485.5 | 923.0 | 962.9 | ||||||||
Total net sales | 1,654.1 | 1,739.6 | 3,304.0 | 3,072.8 | ||||||||
Total cost of sales | (900.3 | ) | (998.2 | ) | (1,771.6 | ) | (1,763.3 | ) | ||||
Gross profit | 753.8 | 741.4 | 1,532.4 | 1,309.5 | ||||||||
Other income | 20.8 | 23.5 | 41.6 | 46.9 | ||||||||
Research and development costs | (267.4 | ) | (270.3 | ) | (528.8 | ) | (545.0 | ) | ||||
Selling, general and administrative costs | (88.3 | ) | (90.4 | ) | (170.6 | ) | (179.2 | ) | ||||
Income from operations | 418.9 | 404.2 | 874.6 | 632.2 | ||||||||
Interest and other, net | (4.2 | ) | (3.6 | ) | (7.7 | ) | (7.2 | ) | ||||
Income before income taxes | 414.7 | 400.6 | 866.9 | 625.0 | ||||||||
Benefit from (provision for) income taxes | (45.0 | ) | (46.8 | ) | (94.5 | ) | (73.2 | ) | ||||
Net income | 369.7 | 353.8 | 772.4 | 551.8 | ||||||||
Basic net income per ordinary share | 0.86 | 0.83 | 1.79 | 1.30 | ||||||||
Diluted net income per ordinary share 3 | 0.85 | 0.83 | 1.78 | 1.29 | ||||||||
Weighted average number of ordinary shares used in computing per share amounts (in millions): | ||||||||||||
Basic | 431.4 | 424.5 | 432.0 | 425.7 | ||||||||
Diluted 3 | 433.8 | 426.5 | 434.4 | 427.8 |
ASML - Ratios and Other Data 1,2
Three months ended, | Six months ended, | |||||||||||
Jun 28, | Jul 3, | Jun 28, | Jul 3, | |||||||||
2015 | 2016 | 2015 | 2016 | |||||||||
(in millions EUR, except otherwise indicated) | ||||||||||||
Gross profit as a percentage of net sales | 45.6 | % | 42.6 | % | 46.4 | % | 42.6 | % | ||||
Income from operations as a percentage of net sales | 25.3 | % | 23.2 | % | 26.5 | % | 20.6 | % | ||||
Net income as a percentage of net sales | 22.4 | % | 20.3 | % | 23.4 | % | 18.0 | % | ||||
Income taxes as a percentage of income before income taxes | 10.8 | % | 11.7 | % | 10.9 | % | 11.7 | % | ||||
Shareholders’ equity as a percentage of total assets | 62.8 | % | 61.3 | % | 62.8 | % | 61.3 | % | ||||
Sales of systems (in units) | 41 | 46 | 88 | 79 | ||||||||
Average selling price of system sales (EUR millions) | 27.7 | 27.3 | 27.1 | 26.7 | ||||||||
Value of systems backlog (EUR millions) 4 | 3,015 | 3,371 | 3,015 | 3,371 | ||||||||
Systems backlog (in units) 4 | 81 | 73 | 81 | 73 | ||||||||
Average selling price of systems backlog (EUR millions) 4 | 37.2 | 46.2 | 37.2 | 46.2 | ||||||||
Value of booked systems (EUR millions) 4 | 1,523 | 1,566 | 2,551 | 2,401 | ||||||||
Net bookings (in units) 4 | 46 | 43 | 86 | 73 | ||||||||
Average selling price of booked systems (EUR millions) 4 | 33.1 | 36.4 | 29.7 | 32.9 | ||||||||
Number of payroll employees in FTEs | 11,676 | 12,598 | 11,676 | 12,598 | ||||||||
Number of temporary employees in FTEs | 2,527 | 2,569 | 2,527 | 2,569 |
ASML - Summary US GAAP Consolidated Balance Sheets 1,2
Dec 31, | Jul 3, | |||||
2015 | 2016 | |||||
(in millions EUR) | ||||||
ASSETS | ||||||
Cash and cash equivalents | 2,458.7 | 1,926.1 | ||||
Short-term investments | 950.0 | 1,000.0 | ||||
Accounts receivable, net | 803.7 | 732.4 | ||||
Finance receivables, net | 280.5 | 524.0 | ||||
Current tax assets | 19.1 | 178.0 | ||||
Inventories, net | 2,573.7 | 2,715.3 | ||||
Deferred tax assets 5 | 133.1 | — | ||||
Other assets | 488.8 | 504.7 | ||||
Total current assets | 7,707.6 | 7,580.5 | ||||
Finance receivables, net | 124.0 | 105.7 | ||||
Deferred tax assets 5 | 29.0 | 50.0 | ||||
Other assets | 450.9 | 641.2 | ||||
Goodwill | 2,624.6 | 2,603.7 | ||||
Other intangible assets, net | 738.2 | 713.5 | ||||
Property, plant and equipment, net | 1,620.7 | 1,608.9 | ||||
Total non-current assets | 5,587.4 | 5,723.0 | ||||
Total assets | 13,295.0 | 13,303.5 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||
Total current liabilities 5 | 3,107.2 | 3,720.1 | ||||
Long-term debt | 1,125.5 | 901.9 | ||||
Deferred and other tax liabilities 5 | 256.7 | 196.4 | ||||
Provisions | 2.4 | 12.6 | ||||
Accrued and other liabilities | 414.4 | 323.3 | ||||
Total non-current liabilities | 1,799.0 | 1,434.2 | ||||
Total liabilities | 4,906.2 | 5,154.3 | ||||
Total shareholders’ equity | 8,388.8 | 8,149.2 | ||||
Total liabilities and shareholders’ equity | 13,295.0 | 13,303.5 |
ASML - Summary US GAAP Consolidated Statements of Cash Flows 1,2
Three months ended, | Six months ended, | |||||||||||
Jun 28, | Jul 3, | Jun 28, | Jul 3, | |||||||||
2015 | 2016 | 2015 | 2016 | |||||||||
(in millions EUR) | ||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||||||
Net income | 369.7 | 353.8 | 772.4 | 551.8 | ||||||||
Adjustments to reconcile net income to net cash flows from operating activities: | ||||||||||||
Depreciation and amortization | 72.8 | 84.1 | 138.9 | 166.1 | ||||||||
Impairment | 0.6 | 0.4 | 0.6 | 0.9 | ||||||||
Loss on disposal of property, plant and equipment | 0.4 | 0.9 | 1.3 | 2.1 | ||||||||
Share-based payments | 15.0 | 10.9 | 29.6 | 24.1 | ||||||||
Allowance for doubtful receivables | 1.7 | 0.8 | 2.1 | 1.7 | ||||||||
Allowance for obsolete inventory | 60.3 | 22.5 | 97.3 | 59.1 | ||||||||
Deferred income taxes | (9.4 | ) | (6.6 | ) | 7.1 | (11.1 | ) | |||||
Changes in assets and liabilities | (227.3 | ) | 14.3 | (428.3 | ) | (319.4 | ) | |||||
Net cash provided by (used in) operating activities | 283.8 | 481.1 | 621.0 | 475.3 | ||||||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||||||
Purchase of property, plant and equipment | (79.2 | ) | (98.9 | ) | (164.8 | ) | (154.1 | ) | ||||
Purchase of intangible assets | — | (1.3 | ) | (1.1 | ) | (4.9 | ) | |||||
Purchase of available for sale securities | — | (350.0 | ) | — | (700.0 | ) | ||||||
Maturity of available for sale securities | 35.0 | 425.0 | 309.9 | 650.0 | ||||||||
Cash from (used for) derivative financial instruments | (63.0 | ) | 7.7 | (127.0 | ) | 8.8 | ||||||
Loans issued and other investments | — | (6.0 | ) | — | (6.0 | ) | ||||||
Net cash provided by (used in) investing activities | (107.2 | ) | (23.5 | ) | 17.0 | (206.2 | ) | |||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||||||
Dividend paid | (302.3 | ) | (445.9 | ) | (302.3 | ) | (445.9 | ) | ||||
Purchase of shares | (165.6 | ) | (171.9 | ) | (282.7 | ) | (385.4 | ) | ||||
Net proceeds from issuance of shares | 10.1 | 12.1 | 14.5 | 22.7 | ||||||||
Repayment of debt | (0.7 | ) | (1.2 | ) | (1.5 | ) | (2.4 | ) | ||||
Tax benefit from share-based payments | 0.6 | 0.1 | 2.4 | 0.1 | ||||||||
Net cash provided by (used in) financing activities | (457.9 | ) | (606.8 | ) | (569.6 | ) | (810.9 | ) | ||||
Net cash flows | (281.3 | ) | (149.2 | ) | 68.4 | (541.8 | ) | |||||
Effect of changes in exchange rates on cash | (2.2 | ) | 11.9 | 7.1 | 9.2 | |||||||
Net increase (decrease) in cash and cash equivalents | (283.5 | ) | (137.3 | ) | 75.5 | (532.6 | ) |
ASML - Quarterly Summary US GAAP Consolidated Statements of Operations 1,2
Three months ended, | |||||||||||||||
Jun 28, | Sep 27, | Dec 31, | Apr 3, | Jul 3, | |||||||||||
2015 | 2015 | 2015 | 2016 | 2016 | |||||||||||
(in millions EUR, except per share data) | |||||||||||||||
Net system sales | 1,134.5 | 975.3 | 880.9 | 855.8 | 1,254.1 | ||||||||||
Net service and field option sales | 519.6 | 573.9 | 553.3 | 477.4 | 485.5 | ||||||||||
Total net sales | 1,654.1 | 1,549.2 | 1,434.2 | 1,333.2 | 1,739.6 | ||||||||||
Total cost of sales | (900.3 | ) | (845.7 | ) | (774.4 | ) | (765.1 | ) | (998.2 | ) | |||||
Gross profit | 753.8 | 703.5 | 659.8 | 568.1 | 741.4 | ||||||||||
Other income | 20.8 | 20.8 | 20.8 | 23.4 | 23.5 | ||||||||||
Research and development costs | (267.4 | ) | (266.3 | ) | (273.0 | ) | (274.7 | ) | (270.3 | ) | |||||
Selling, general and administrative costs | (88.3 | ) | (85.6 | ) | (89.5 | ) | (88.8 | ) | (90.4 | ) | |||||
Income from operations | 418.9 | 372.4 | 318.1 | 228.0 | 404.2 | ||||||||||
Interest and other, net | (4.2 | ) | (4.2 | ) | (4.6 | ) | (3.6 | ) | (3.6 | ) | |||||
Income before income taxes | 414.7 | 368.2 | 313.5 | 224.4 | 400.6 | ||||||||||
Benefit from (provision for) income taxes | (45.0 | ) | (45.8 | ) | (21.1 | ) | (26.4 | ) | (46.8 | ) | |||||
Net income | 369.7 | 322.4 | 292.4 | 198.0 | 353.8 | ||||||||||
Basic net income per ordinary share | 0.86 | 0.75 | 0.68 | 0.46 | 0.83 | ||||||||||
Diluted net income per ordinary share 3 | 0.85 | 0.75 | 0.68 | 0.46 | 0.83 | ||||||||||
Weighted average number of ordinary shares used in computing per share amounts (in millions): | |||||||||||||||
Basic | 431.4 | 429.9 | 428.8 | 427.0 | 424.5 | ||||||||||
Diluted 3 | 433.8 | 432.3 | 430.8 | 429.1 | 426.5 |
ASML - Quarterly Summary Ratios and other data 1,2
Jun 28, | Sep 27, | Dec 31, | Apr 3, | Jul 3, | |||||||||||
2015 | 2015 | 2015 | 2016 | 2016 | |||||||||||
(in millions EUR, except otherwise indicated) | |||||||||||||||
Gross profit as a percentage of net sales | 45.6 | % | 45.4 | % | 46.0 | % | 42.6 | % | 42.6 | % | |||||
Income from operations as a percentage of net sales | 25.3 | % | 24.0 | % | 22.2 | % | 17.1 | % | 23.2 | % | |||||
Net income as a percentage of net sales | 22.4 | % | 20.8 | % | 20.4 | % | 14.9 | % | 20.3 | % | |||||
Income taxes as a percentage of income before income taxes | 10.8 | % | 12.4 | % | 6.7 | % | 11.7 | % | 11.7 | % | |||||
Shareholders’ equity as a percentage of total assets | 62.8 | % | 64.1 | % | 63.1 | % | 63.2 | % | 61.3 | % | |||||
Sales of systems (in units) | 41 | 44 | 37 | 33 | 46 | ||||||||||
Average selling price of system sales (EUR millions) | 27.7 | 22.2 | 23.8 | 25.9 | 27.3 | ||||||||||
Value of systems backlog (EUR millions) 4 | 3,015 | 2,880 | 3,184 | 3,018 | 3,371 | ||||||||||
Systems backlog (in units) 4 | 81 | 72 | 79 | 76 | 73 | ||||||||||
Average selling price of systems backlog (EUR millions) 4 | 37.2 | 40.0 | 40.3 | 39.7 | 46.2 | ||||||||||
Value of booked systems (EUR millions) 4 | 1,523 | 904 | 1,184 | 835 | 1,566 | ||||||||||
Net bookings (in units) 4 | 46 | 35 | 44 | 30 | 43 | ||||||||||
Average selling price of booked systems (EUR millions) 4 | 33.1 | 25.8 | 26.9 | 27.8 | 36.4 | ||||||||||
Number of payroll employees in FTEs | 11,676 | 11,920 | 12,168 | 12,407 | 12,598 | ||||||||||
Number of temporary employees in FTEs | 2,527 | 2,498 | 2,513 | 2,492 | 2,569 |
ASML - Quarterly Summary US GAAP Consolidated Balance Sheets 1,2
Jun 28, | Sep 27, | Dec 31, | Apr 3, | Jul 3, | |||||||||||
2015 | 2015 | 2015 | 2016 | 2016 | |||||||||||
(in millions EUR) | |||||||||||||||
ASSETS | |||||||||||||||
Cash and cash equivalents | 2,495.0 | 2,680.9 | 2,458.7 | 2,063.4 | 1,926.1 | ||||||||||
Short-term investments | 25.0 | — | 950.0 | 1,075.0 | 1,000.0 | ||||||||||
Accounts receivable, net | 1,282.3 | 1,089.4 | 803.7 | 753.2 | 732.4 | ||||||||||
Finance receivables, net | 251.2 | 453.7 | 280.5 | 446.5 | 524.0 | ||||||||||
Current tax assets | 52.3 | 42.8 | 19.1 | 96.0 | 178.0 | ||||||||||
Inventories, net | 2,592.1 | 2,537.0 | 2,573.7 | 2,750.0 | 2,715.3 | ||||||||||
Deferred tax assets 5 | 178.1 | 127.6 | 133.1 | — | — | ||||||||||
Other assets | 435.8 | 416.1 | 488.8 | 502.1 | 504.7 | ||||||||||
Total current assets | 7,311.8 | 7,347.5 | 7,707.6 | 7,686.2 | 7,580.5 | ||||||||||
Finance receivables, net | 55.7 | 49.8 | 124.0 | 102.2 | 105.7 | ||||||||||
Deferred tax assets 5 | 33.3 | 32.8 | 29.0 | 47.4 | 50.0 | ||||||||||
Other assets | 435.0 | 429.4 | 450.9 | 483.8 | 641.2 | ||||||||||
Goodwill | 2,569.4 | 2,574.0 | 2,624.6 | 2,537.7 | 2,603.7 | ||||||||||
Other intangible assets, net | 751.2 | 739.5 | 738.2 | 706.0 | 713.5 | ||||||||||
Property, plant and equipment, net | 1,518.9 | 1,532.6 | 1,620.7 | 1,580.3 | 1,608.9 | ||||||||||
Total non-current assets | 5,363.5 | 5,358.1 | 5,587.4 | 5,457.4 | 5,723.0 | ||||||||||
Total assets | 12,675.3 | 12,705.6 | 13,295.0 | 13,143.6 | 13,303.5 | ||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||||||||
Total current liabilities 5 | 2,853.9 | 2,711.3 | 3,107.2 | 3,246.8 | 3,720.1 | ||||||||||
Long-term debt | 1,115.8 | 1,125.3 | 1,125.5 | 1,144.3 | 901.9 | ||||||||||
Deferred and other tax liabilities 5 | 269.5 | 259.2 | 256.7 | 138.0 | 196.4 | ||||||||||
Provisions | 3.2 | 2.8 | 2.4 | — | 12.6 | ||||||||||
Accrued and other liabilities | 470.3 | 462.1 | 414.4 | 311.1 | 323.3 | ||||||||||
Total non-current liabilities | 1,858.8 | 1,849.4 | 1,799.0 | 1,593.4 | 1,434.2 | ||||||||||
Total liabilities | 4,712.7 | 4,560.7 | 4,906.2 | 4,840.2 | 5,154.3 | ||||||||||
Total shareholders’ equity | 7,962.6 | 8,144.9 | 8,388.8 | 8,303.4 | 8,149.2 | ||||||||||
Total liabilities and shareholders’ equity | 12,675.3 | 12,705.6 | 13,295.0 | 13,143.6 | 13,303.5 |
ASML - Quarterly Summary US GAAP Consolidated Statements of Cash Flows 1,2
Three months ended, | |||||||||||||||
Jun 28, | Sep 27, | Dec 31, | Apr 3, | Jul 3, | |||||||||||
2015 | 2015 | 2015 | 2016 | 2016 | |||||||||||
(in millions EUR) | |||||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||||||||
Net income | 369.7 | 322.4 | 292.4 | 198.0 | 353.8 | ||||||||||
Adjustments to reconcile net income to net cash flows from operating activities: | |||||||||||||||
Depreciation and amortization | 72.8 | 77.5 | 80.5 | 82.0 | 84.1 | ||||||||||
Impairment | 0.6 | 0.2 | 1.5 | 0.5 | 0.4 | ||||||||||
Loss on disposal of property, plant and equipment | 0.4 | 0.3 | — | 1.2 | 0.9 | ||||||||||
Share-based payments | 15.0 | 14.8 | 14.7 | 13.2 | 10.9 | ||||||||||
Allowance for doubtful receivables | 1.7 | 0.6 | 1.2 | 0.9 | 0.8 | ||||||||||
Allowance for obsolete inventory | 60.3 | 56.3 | 58.2 | 36.6 | 22.5 | ||||||||||
Deferred income taxes | (9.4 | ) | 41.0 | (2.8 | ) | (4.5 | ) | (6.6 | ) | ||||||
Changes in assets and liabilities | (227.3 | ) | (93.3 | ) | 539.0 | (333.7 | ) | 14.3 | |||||||
Net cash provided by (used in) operating activities | 283.8 | 419.8 | 984.7 | (5.8 | ) | 481.1 | |||||||||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||||||||
Purchase of property, plant and equipment | (79.2 | ) | (86.5 | ) | (120.5 | ) | (55.2 | ) | (98.9 | ) | |||||
Purchase of intangible assets | — | — | — | (3.6 | ) | (1.3 | ) | ||||||||
Purchase of available for sale securities | — | — | (950.0 | ) | (350.0 | ) | (350.0 | ) | |||||||
Maturity of available for sale securities | 35.0 | 25.0 | — | 225.0 | 425.0 | ||||||||||
Cash from (used for) derivative financial instruments | (63.0 | ) | (37.8 | ) | (7.1 | ) | 1.1 | 7.7 | |||||||
Loans issued and other investments | — | — | — | — | (6.0 | ) | |||||||||
Net cash provided by (used in) investing activities | (107.2 | ) | (99.3 | ) | (1,077.6 | ) | (182.7 | ) | (23.5 | ) | |||||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||||||||
Dividend paid | (302.3 | ) | — | — | — | (445.9 | ) | ||||||||
Purchase of shares | (165.6 | ) | (141.5 | ) | (140.7 | ) | (213.5 | ) | (171.9 | ) | |||||
Net proceeds from issuance of shares | 10.1 | 9.0 | 9.7 | 10.6 | 12.1 | ||||||||||
Repayment of debt | (0.7 | ) | (1.0 | ) | (1.1 | ) | (1.2 | ) | (1.2 | ) | |||||
Tax benefit from share-based payments | 0.6 | 0.5 | 0.8 | — | 0.1 | ||||||||||
Net cash provided by (used in) financing activities | (457.9 | ) | (133.0 | ) | (131.3 | ) | (204.1 | ) | (606.8 | ) | |||||
Net cash flows | (281.3 | ) | 187.5 | (224.2 | ) | (392.6 | ) | (149.2 | ) | ||||||
Effect of changes in exchange rates on cash | (2.2 | ) | (1.6 | ) | 2.0 | (2.7 | ) | 11.9 | |||||||
Net increase (decrease) in cash and cash equivalents | (283.5 | ) | 185.9 | (222.2 | ) | (395.3 | ) | (137.3 | ) |
Notes to the Summary US GAAP Consolidated Financial Statements
Basis of Preparation
The accompanying Consolidated Financial Statements are stated in millions of euros unless indicated otherwise. The accompanying Consolidated Financial Statements have been prepared in conformity with 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 financial and operating policies generally accompanying a shareholding of more than 50 percent of the outstanding voting rights. As from the date that these criteria are met, the financial data of the relevant subsidiaries are included in the consolidation.
Revenue Recognition
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. Prior to shipment, systems undergo a "Factory Acceptance Test" in our 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. A system is shipped, and revenue is recognized, only after all contractual 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 and NXE:3350B, 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 2 occasions: 2000 (TWINSCAN) and 2010 (EUV).
We offer customers discounts in the normal course of sales negotiations. These discounts are directly deducted from the gross sales price at the moment of revenue recognition. From time to time, we offer free or discounted products or services (award credits) to our customers as part of a volume purchase agreement. In some instances these volume discounts can be used to purchase field options (system enhancements) and services. The related amount is recorded as a reduction in net sales at time of system shipment. The sales transaction that gives rise to these award credits is accounted for as a multiple element sales transaction as the agreements involve the delivery of multiple products. The consideration received from the sales transaction is allocated between the award credits and the other elements of the sales transaction. The consideration allocated to the award credits is recognized as deferred revenue until award credits are delivered to the customer and earned. The amount allocable to a delivered item is limited to the amount that is not contingent upon the delivery of additional items or meeting other specified performance conditions (the non-contingent amount).
The main portion of our net sales is derived from contractual arrangements with our customers that have multiple deliverables (elements), which mainly include the sale of our systems, installation and training services and extended and enhanced (optic) warranty contracts. The requirements for establishing separate units of accounting in a multiple element arrangement require that the allocation of arrangement consideration to each deliverable is based on the relative selling price of the deliverable.
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 and NXE:3350B systems, we are unable to determine VSOE for extended, enhanced (optic) warranty contracts and installation. We determined for NXE:3300B and NXE:3350B systems that BESP is the appropriate reference in the fair value hierarchy for 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 risks.
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 28, | Jul 3, | Jun 28, | Jul 3, | ||||||
2015 | 2016 | 2015 | 2016 | ||||||
(in millions EUR) | |||||||||
Net income based on US GAAP | 369.7 | 353.8 | 772.4 | 551.8 | |||||
Development expenditures (see Note 1) | 62.9 | 80.3 | 132.4 | 125.2 | |||||
Share-based payments (see Note 2) | 0.8 | (0.9 | ) | 2.0 | 0.7 | ||||
Income taxes (see Note 3) | (12.1 | ) | (62.8 | ) | (15.5 | ) | (76.5 | ) | |
Net income based on IFRS | 421.3 | 370.4 | 891.3 | 601.2 |
Shareholders' equity | Jun 28, | Sep 27, | Dec 31, | Apr 3, | Jul 3, | |||||
2015 | 2015 | 2015 | 2016 | 2016 | ||||||
(in millions EUR) | ||||||||||
Shareholders' equity based on US GAAP | 7,962.6 | 8,144.9 | 8,388.8 | 8,303.4 | 8,149.2 | |||||
Development expenditures (see Note 1) | 937.9 | 995.7 | 1,054.5 | 1,091.1 | 1,178.2 | |||||
Share-based payments (see Note 2) | 22.0 | 18.3 | 16.5 | 17.8 | 17.0 | |||||
Income taxes (see Note 3) | 29.1 | 32.9 | 31.4 | 17.1 | (44.9 | ) | ||||
Equity based on IFRS | 8,951.6 | 9,191.8 | 9,491.2 | 9,429.4 | 9,299.5 |
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 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 expected customer demand in specified market segments including memory, logic and foundry, expected trends and outlook, including expected levels of service sales, systems backlog, expected financial results for the third quarter and full year 2016, including expected sales, other income, gross margin, R&D and SG&A expenses and effective annualized tax rate, annual revenue opportunity for ASML and EPS potential by end of decade, productivity of our tools and systems performance, including EUV system performance (such as endurance tests), expected industry trends and expected trends in the business environment, statements with respect to the acquisition of HMI by ASML, the expected benefits of the acquisition of HMI by ASML, including expected earnings accretion, enhancement of ASML’s existing product portfolio, the creation of a new class of products which improves yield and time to market, the accelerated introduction of reticle defect detection to support future EUV ramp and related opportunity in 2020, improvement in ASML and HMI’s metrology technologies and support of EUV technologies, the benefits of the acquisition to ASML’s holistic lithography strategy, the growth opportunity represented by patterning control and expansion of market opportunity by 2020 and expected timing of completion of HMI acquisition, statements with respect to EUV targets, including availability, productivity and shipments, including the number of EUV systems expected to be shipped and timing of shipments, and roadmaps, shrink being key driver to industry growth, expected industry adoption of EUV and statements with respect to the intent of customers to insert EUV into production, the expected continuation of Moore's law and that EUV will continue to enable Moore’s law and drive long term value, goals for holistic lithography, intention to return excess cash to shareholders, and statements about our proposed dividend, 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 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, 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 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 | 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). |
5 | As of January 1, 2016 ASML early adopted the amendment to ASC 740 “Income taxes (Topic 740): Balance Sheet Classification of Deferred Taxes”, which requires that deferred tax liabilities and assets are classified as non-current in the consolidated balance sheets. The comparative figures have not been adjusted to reflect this change in accounting policy. |
Exhibit 99.4
ASML - Summary IFRS Consolidated Statement of Profit or Loss 1,2
Three months ended, | Six months ended, | |||||||||||
Jun 28, | Jul 3, | Jun 28, | Jul 3, | |||||||||
2015 | 2016 | 2015 | 2016 | |||||||||
(in millions EUR) | ||||||||||||
Net system sales | 1,134.5 | 1,254.1 | 2,381.0 | 2,109.9 | ||||||||
Net service and field option sales | 519.6 | 485.5 | 923.0 | 962.9 | ||||||||
Total net sales | 1,654.1 | 1,739.6 | 3,304.0 | 3,072.8 | ||||||||
Total cost of sales | (916.7 | ) | (1,018.1 | ) | (1,802.1 | ) | (1,802.5 | ) | ||||
Gross profit | 737.4 | 721.5 | 1,501.9 | 1,270.3 | ||||||||
Other income | 20.8 | 23.5 | 41.6 | 46.9 | ||||||||
Research and development costs | (176.8 | ) | (151.9 | ) | (340.9 | ) | (351.0 | ) | ||||
Selling, general and administrative costs | (87.9 | ) | (90.3 | ) | (170.6 | ) | (179.0 | ) | ||||
Operating income | 493.5 | 502.8 | 1,032.0 | 787.2 | ||||||||
Interest and other, net | (1.1 | ) | — | (2.0 | ) | (0.3 | ) | |||||
Income before income taxes | 492.4 | 502.8 | 1,030.0 | 786.9 | ||||||||
Income tax expense | (71.1 | ) | (132.4 | ) | (138.7 | ) | (185.7 | ) | ||||
Net income | 421.3 | 370.4 | 891.3 | 601.2 |
ASML - Summary IFRS Consolidated Statement of Financial Position 1,2
Dec 31, | Jul 3, | |||||
2015 | 2016 | |||||
(in millions EUR) | ||||||
ASSETS | ||||||
Property, plant and equipment | 1,620.7 | 1,608.9 | ||||
Goodwill | 2,647.8 | 2,626.8 | ||||
Other intangible assets | 2,018.5 | 2,153.0 | ||||
Deferred tax assets | 139.6 | 165.2 | ||||
Finance receivables | 124.0 | 105.7 | ||||
Derivative financial instruments | 81.8 | 121.5 | ||||
Other assets | 369.1 | 367.5 | ||||
Total non-current assets | 7,001.5 | 7,148.6 | ||||
Inventories | 2,573.7 | 2,715.3 | ||||
Current tax assets | 19.1 | 178.0 | ||||
Derivative financial instruments | 52.0 | 43.0 | ||||
Finance receivables | 280.5 | 524.0 | ||||
Accounts receivable | 803.7 | 732.4 | ||||
Other assets | 375.6 | 395.0 | ||||
Short-term investments | 950.0 | 1,000.0 | ||||
Cash and cash equivalents | 2,458.7 | 1,926.1 | ||||
Total current assets | 7,513.3 | 7,513.8 | ||||
Total assets | 14,514.8 | 14,662.4 | ||||
EQUITY AND LIABILITIES | ||||||
Equity | 9,491.2 | 9,299.5 | ||||
Long-term debt | 1,125.5 | 901.9 | ||||
Derivative financial instruments | 1.9 | 1.2 | ||||
Deferred and other tax liabilities | 376.5 | 405.0 | ||||
Provisions | 2.4 | 12.6 | ||||
Accrued and other liabilities | 412.5 | 322.1 | ||||
Total non-current liabilities | 1,918.8 | 1,642.8 | ||||
Provisions | 2.4 | 2.9 | ||||
Derivative financial instruments | 19.0 | 34.3 | ||||
Current portion of long-term debt | 4.2 | 253.6 | ||||
Current and other tax liabilities | 3.7 | 170.9 | ||||
Accrued and other liabilities | 2,547.6 | 2,524.2 | ||||
Accounts payable | 527.9 | 734.2 | ||||
Total current liabilities | 3,104.8 | 3,720.1 | ||||
Total equity and liabilities | 14,514.8 | 14,662.4 |
ASML - Summary IFRS Consolidated Statement of Cash Flows 1,2
Three months ended, | Six months ended, | |||||||||||
Jun 28, | Jul 3, | Jun 28, | Jul 3, | |||||||||
2015 | 2016 | 2015 | 2016 | |||||||||
(in millions EUR) | ||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||||||
Net income | 421.3 | 370.4 | 891.3 | 601.2 | ||||||||
Adjustments to reconcile net income to net cash flows from operating activities: | ||||||||||||
Depreciation and amortization | 89.3 | 103.9 | 169.6 | 205.2 | ||||||||
Impairment | 0.6 | 0.4 | 0.6 | 0.9 | ||||||||
Loss on disposal of property, plant and equipment | 0.4 | 0.9 | 1.3 | 2.1 | ||||||||
Share-based payments | 14.2 | 10.5 | 27.6 | 24.1 | ||||||||
Allowance for doubtful receivables | 1.7 | 0.8 | 2.1 | 1.7 | ||||||||
Allowance for obsolete inventory | 60.3 | 22.5 | 97.3 | 59.1 | ||||||||
Deferred income taxes | 14.8 | 81.9 | 54.9 | 105.0 | ||||||||
Changes in assets and liabilities | (223.8 | ) | 11.9 | (426.4 | ) | (323.3 | ) | |||||
Net cash provided by (used in) operating activities | 378.8 | 603.2 | 818.3 | 676.0 | ||||||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||||||
Purchase of property, plant and equipment | (79.2 | ) | (98.9 | ) | (164.8 | ) | (154.1 | ) | ||||
Purchase of intangible assets | (94.4 | ) | (123.3 | ) | (196.0 | ) | (205.5 | ) | ||||
Purchase of available for sale securities | — | (350.0 | ) | — | (700.0 | ) | ||||||
Maturity of available for sale securities | 35.0 | 425.0 | 309.9 | 650.0 | ||||||||
Cash from (used for) derivative financial instruments | (63.0 | ) | 7.7 | (127.0 | ) | 8.8 | ||||||
Loans issued and other investments | — | (6.0 | ) | — | (6.0 | ) | ||||||
Net cash provided by (used in) investing activities | (201.6 | ) | (145.5 | ) | (177.9 | ) | (406.8 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||||||
Dividend paid | (302.3 | ) | (445.9 | ) | (302.3 | ) | (445.9 | ) | ||||
Purchase of shares | (165.6 | ) | (171.9 | ) | (282.7 | ) | (385.4 | ) | ||||
Net proceeds from issuance of shares | 10.1 | 12.1 | 14.5 | 22.7 | ||||||||
Repayment of debt | (0.7 | ) | (1.2 | ) | (1.5 | ) | (2.4 | ) | ||||
Net cash provided by (used in) financing activities | (458.5 | ) | (606.9 | ) | (572.0 | ) | (811.0 | ) | ||||
Net cash flows | (281.3 | ) | (149.2 | ) | 68.4 | (541.8 | ) | |||||
Effect of changes in exchange rates on cash | (2.2 | ) | 11.9 | 7.1 | 9.2 | |||||||
Net increase (decrease) in cash and cash equivalents | (283.5 | ) | (137.3 | ) | 75.5 | (532.6 | ) |
ASML - Quarterly Summary IFRS Consolidated Statement of Profit or Loss 1,2
Three months ended, | |||||||||||||||
Jun 28, | Sep 27, | Dec 31, | Apr 3, | Jul 3, | |||||||||||
2015 | 2015 | 2015 | 2016 | 2016 | |||||||||||
(in millions EUR) | |||||||||||||||
Net system sales | 1,134.5 | 975.3 | 880.9 | 855.8 | 1,254.1 | ||||||||||
Net service and field option sales | 519.6 | 573.9 | 553.3 | 477.4 | 485.5 | ||||||||||
Total net sales | 1,654.1 | 1,549.2 | 1,434.2 | 1,333.2 | 1,739.6 | ||||||||||
Total cost of sales | (916.7 | ) | (860.0 | ) | (792.2 | ) | (784.4 | ) | (1,018.1 | ) | |||||
Gross profit | 737.4 | 689.2 | 642.0 | 548.8 | 721.5 | ||||||||||
Other income | 20.8 | 20.8 | 20.8 | 23.4 | 23.5 | ||||||||||
Research and development costs | (176.8 | ) | (179.5 | ) | (189.8 | ) | (199.1 | ) | (151.9 | ) | |||||
Selling, general and administrative costs | (87.9 | ) | (85.2 | ) | (89.5 | ) | (88.7 | ) | (90.3 | ) | |||||
Operating income | 493.5 | 445.3 | 383.5 | 284.4 | 502.8 | ||||||||||
Interest and other, net | (1.1 | ) | (4.3 | ) | 1.6 | (0.3 | ) | — | |||||||
Income before income taxes | 492.4 | 441.0 | 385.1 | 284.1 | 502.8 | ||||||||||
Income tax expense | (71.1 | ) | (57.1 | ) | (40.8 | ) | (53.3 | ) | (132.4 | ) | |||||
Net income | 421.3 | 383.9 | 344.3 | 230.8 | 370.4 |
ASML - Quarterly Summary IFRS Consolidated Statement of Financial Position 1,2
Jun 28, | Sep 27, | Dec 31, | Apr 3, | Jul 3, | |||||||||||
2015 | 2015 | 2015 | 2016 | 2016 | |||||||||||
(in millions EUR) | |||||||||||||||
ASSETS | |||||||||||||||
Property, plant and equipment | 1,518.9 | 1,532.6 | 1,620.7 | 1,580.3 | 1,608.9 | ||||||||||
Goodwill | 2,592.2 | 2,596.8 | 2,647.8 | 2,560.3 | 2,626.8 | ||||||||||
Other intangible assets | 1,881.9 | 1,942.7 | 2,018.5 | 2,033.0 | 2,153.0 | ||||||||||
Deferred tax assets | 146.8 | 147.2 | 139.6 | 123.4 | 165.2 | ||||||||||
Finance receivables | 55.7 | 49.8 | 124.0 | 102.2 | 105.7 | ||||||||||
Derivative financial instruments | 87.0 | 82.9 | 81.8 | 118.2 | 121.5 | ||||||||||
Other assets | 348.0 | 346.5 | 369.1 | 365.6 | 367.5 | ||||||||||
Total non-current assets | 6,630.5 | 6,698.5 | 7,001.5 | 6,883.0 | 7,148.6 | ||||||||||
Inventories | 2,592.1 | 2,537.0 | 2,573.7 | 2,750.0 | 2,715.3 | ||||||||||
Current tax assets | 52.3 | 42.8 | 19.1 | 96.0 | 178.0 | ||||||||||
Derivative financial instruments | 51.0 | 52.1 | 52.0 | 56.8 | 43.0 | ||||||||||
Finance receivables | 251.2 | 453.7 | 280.5 | 446.5 | 524.0 | ||||||||||
Accounts receivable | 1,282.3 | 1,089.4 | 803.7 | 753.2 | 732.4 | ||||||||||
Other assets | 320.4 | 302.7 | 375.6 | 386.3 | 395.0 | ||||||||||
Short-term investments | 25.0 | — | 950.0 | 1,075.0 | 1,000.0 | ||||||||||
Cash and cash equivalents | 2,495.0 | 2,680.9 | 2,458.7 | 2,063.4 | 1,926.1 | ||||||||||
Total current assets | 7,069.3 | 7,158.6 | 7,513.3 | 7,627.2 | 7,513.8 | ||||||||||
Total assets | 13,699.8 | 13,857.1 | 14,514.8 | 14,510.2 | 14,662.4 | ||||||||||
EQUITY AND LIABILITIES | |||||||||||||||
Equity | 8,951.6 | 9,191.8 | 9,491.2 | 9,429.4 | 9,299.5 | ||||||||||
Long-term debt | 1,115.8 | 1,125.3 | 1,125.5 | 1,144.3 | 901.9 | ||||||||||
Derivative financial instruments | 2.3 | 2.1 | 1.9 | 1.4 | 1.2 | ||||||||||
Deferred and other tax liabilities | 305.2 | 363.9 | 376.5 | 378.6 | 405.0 | ||||||||||
Provisions | 3.2 | 2.8 | 2.4 | — | 12.6 | ||||||||||
Accrued and other liabilities | 468.0 | 460.0 | 412.5 | 309.7 | 322.1 | ||||||||||
Total non-current liabilities | 1,894.5 | 1,954.1 | 1,918.8 | 1,834.0 | 1,642.8 | ||||||||||
Provisions | 2.4 | 2.4 | 2.4 | 4.0 | 2.9 | ||||||||||
Derivative financial instruments | 38.1 | 18.4 | 19.0 | 24.8 | 34.3 | ||||||||||
Current portion of long-term debt | 4.2 | 4.2 | 4.2 | 4.2 | 253.6 | ||||||||||
Current and other tax liabilities | 18.1 | 1.6 | 3.7 | 8.6 | 170.9 | ||||||||||
Accrued and other liabilities | 1,952.2 | 2,057.8 | 2,547.6 | 2,560.7 | 2,524.2 | ||||||||||
Accounts payable | 838.7 | 626.8 | 527.9 | 644.5 | 734.2 | ||||||||||
Total current liabilities | 2,853.7 | 2,711.2 | 3,104.8 | 3,246.8 | 3,720.1 | ||||||||||
Total equity and liabilities | 13,699.8 | 13,857.1 | 14,514.8 | 14,510.2 | 14,662.4 |
ASML - Quarterly Summary IFRS Consolidated Statement of Cash Flows 1,2
Three months ended, | |||||||||||||||
Jun 28, | Sep 27, | Dec 31, | Apr 3, | Jul 3, | |||||||||||
2015 | 2015 | 2015 | 2016 | 2016 | |||||||||||
(in millions EUR) | |||||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||||||||
Net income | 421.3 | 383.9 | 344.3 | 230.8 | 370.4 | ||||||||||
Adjustments to reconcile net income to net cash flows from operating activities: | |||||||||||||||
Depreciation and amortization | 89.3 | 91.9 | 98.4 | 101.3 | 103.9 | ||||||||||
Impairment | 0.6 | 0.2 | 1.5 | 0.5 | 0.4 | ||||||||||
Loss on disposal of property, plant and equipment | 0.4 | 0.3 | — | 1.2 | 0.9 | ||||||||||
Share-based payments | 14.2 | 9.9 | 12.6 | 13.6 | 10.5 | ||||||||||
Allowance for doubtful receivables | 1.7 | 0.6 | 1.2 | 0.9 | 0.8 | ||||||||||
Allowance for obsolete inventory | 60.3 | 56.3 | 58.2 | 36.6 | 22.5 | ||||||||||
Deferred income taxes | 14.8 | 59.4 | 20.5 | 23.1 | 81.9 | ||||||||||
Changes in assets and liabilities | (223.8 | ) | (95.8 | ) | 537.8 | (335.2 | ) | 11.9 | |||||||
Net cash provided by (used in) operating activities | 378.8 | 506.7 | 1,074.5 | 72.8 | 603.2 | ||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||||||||
Purchase of property, plant and equipment | (79.2 | ) | (86.5 | ) | (120.5 | ) | (55.2 | ) | (98.9 | ) | |||||
Purchase of intangible assets | (94.4 | ) | (86.4 | ) | (89.0 | ) | (82.2 | ) | (123.3 | ) | |||||
Purchase of available for sale securities | — | — | (950.0 | ) | (350.0 | ) | (350.0 | ) | |||||||
Maturity of available for sale securities | 35.0 | 25.0 | — | 225.0 | 425.0 | ||||||||||
Cash from (used for) derivative financial instruments | (63.0 | ) | (37.8 | ) | (7.1 | ) | 1.1 | 7.7 | |||||||
Loans issued and other investments | — | — | — | — | (6.0 | ) | |||||||||
Net cash provided by (used in) investing activities | (201.6 | ) | (185.7 | ) | (1,166.6 | ) | (261.3 | ) | (145.5 | ) | |||||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||||||||
Dividend paid | (302.3 | ) | — | — | — | (445.9 | ) | ||||||||
Purchase of shares | (165.6 | ) | (141.5 | ) | (140.7 | ) | (213.5 | ) | (171.9 | ) | |||||
Net proceeds from issuance of shares | 10.1 | 9.0 | 9.7 | 10.6 | 12.1 | ||||||||||
Repayment of debt | (0.7 | ) | (1.0 | ) | (1.1 | ) | (1.2 | ) | (1.2 | ) | |||||
Net cash provided by (used in) financing activities | (458.5 | ) | (133.5 | ) | (132.1 | ) | (204.1 | ) | (606.9 | ) | |||||
Net cash flows | (281.3 | ) | 187.5 | (224.2 | ) | (392.6 | ) | (149.2 | ) | ||||||
Effect of changes in exchange rates on cash | (2.2 | ) | (1.6 | ) | 2.0 | (2.7 | ) | 11.9 | |||||||
Net increase (decrease) in cash and cash equivalents | (283.5 | ) | 185.9 | (222.2 | ) | (395.3 | ) | (137.3 | ) |
Notes to the Summary IFRS Consolidated Financial Statements
Basis of Preparation
The accompanying Consolidated Financial Statements are stated in millions of euros unless indicated otherwise.
The accompanying Consolidated Financial Statements have been prepared in conformity with International Financial Reporting Standards as adopted by the EU (“IFRS”) accounting principles generally accepted in the Netherlands for companies quoted on Euronext Amsterdam. Further disclosures, as required under IFRS in annual reports and interim reporting (IAS 34), are not included in the summary consolidated financial statements.
For internal and external reporting purposes, we apply accounting principles generally accepted in the United States of America ("US GAAP"). US GAAP is our primary accounting standard for the setting of financial and operational performance targets.
Use of Estimates
The preparation of our 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 net sales and costs during the reported periods. Actual results could differ from those estimates.
Basis of Consolidation
The Consolidated Financial Statements include the Financial Statements of ASML Holding N.V. and all of its subsidiaries and the special purpose 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 financial and operating policies generally accompanying a shareholding of more than 50 percent of the outstanding voting rights. As from the date that these criteria are met, the financial data of the relevant subsidiaries are included in the consolidation.
Revenue Recognition
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. Prior to shipment, systems undergo a "Factory Acceptance Test" in our 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. A system is shipped, and revenue is recognized, only after all contractual 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 and NXE:3350B, 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).
We offer customers discounts in the normal course of sales negotiations. These discounts are directly deducted from the gross sales price at the moment of revenue recognition. From time to time, we offer free or discounted products or services (award credits) to our customers as part of a volume purchase agreement. In some instances these volume discounts can be used to purchase field options (system enhancements) and services. The related amount is recorded as a reduction in net sales at time of system shipment. The sales transaction that gives rise to these award credits is accounted for as a multiple element sales transaction as the agreements involve the delivery of multiple products. The consideration received from the sales transaction is allocated between the award credits and the other elements of the sales transaction. The consideration allocated to the award credits is recognized as deferred revenue until award credits are delivered to the customer and earned. The amount allocable to a delivered item is limited to the amount that is not contingent upon the delivery of additional items or meeting other specified performance conditions (the non-contingent amount).
The main portion of our net sales is derived from contractual arrangements with our customers that have multiple deliverables (elements), which mainly include the sale of our systems, installation and training services and extended and enhanced (optic) warranty contracts. The requirements for establishing separate units of accounting in a multiple element arrangement require that the allocation of arrangement consideration to each deliverable is based on the relative selling price of the deliverable. The revenue relating to the undelivered elements of the arrangements is deferred 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.
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 risks.
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 28, | Jul 3, | Jun 28, | Jul 3, | ||||||
2015 | 2016 | 2015 | 2016 | ||||||
(in millions EUR) | |||||||||
Net income based on US GAAP | 369.7 | 353.8 | 772.4 | 551.8 | |||||
Development expenditures (see Note 1) | 62.9 | 80.3 | 132.4 | 125.2 | |||||
Share-based payments (see Note 2) | 0.8 | (0.9 | ) | 2.0 | 0.7 | ||||
Income taxes (see Note 3) | (12.1 | ) | (62.8 | ) | (15.5 | ) | (76.5 | ) | |
Net income based on IFRS | 421.3 | 370.4 | 891.3 | 601.2 |
Shareholders' equity | Jun 28, | Sep 27, | Dec 31, | Apr 3, | Jul 3, | |||||
2015 | 2015 | 2015 | 2016 | 2016 | ||||||
(in millions EUR) | ||||||||||
Shareholders' equity based on US GAAP | 7,962.6 | 8,144.9 | 8,388.8 | 8,303.4 | 8,149.2 | |||||
Development expenditures (see Note 1) | 937.9 | 995.7 | 1,054.5 | 1,091.1 | 1,178.2 | |||||
Share-based payments (see Note 2) | 22.0 | 18.3 | 16.5 | 17.8 | 17.0 | |||||
Income taxes (see Note 3) | 29.1 | 32.9 | 31.4 | 17.1 | (44.9 | ) | ||||
Equity based on IFRS | 8,951.6 | 9,191.8 | 9,491.2 | 9,429.4 | 9,299.5 |
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 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 expected customer demand in specified market segments including memory, logic and foundry, expected trends and outlook, including expected levels of service sales, systems backlog, expected financial results for the third quarter and full year 2016, including expected sales, other income, gross margin, R&D and SG&A expenses and effective annualized tax rate, annual revenue opportunity for ASML and EPS potential by end of decade, productivity of our tools and systems performance, including EUV system performance (such as endurance tests), expected industry trends and expected trends in the business environment, statements with respect to the acquisition of HMI by ASML, the expected benefits of the acquisition of HMI by ASML, including expected earnings accretion, enhancement of ASML’s existing product portfolio, the creation of a new class of products which improves yield and time to market, the accelerated introduction of reticle defect detection to support future EUV ramp and related opportunity in 2020, improvement in ASML and HMI’s metrology technologies and support of EUV technologies, the benefits of the acquisition to ASML’s holistic lithography strategy, the growth opportunity represented by patterning control and expansion of market opportunity by 2020 and expected timing of completion of HMI acquisition, statements with respect to EUV targets, including availability, productivity and shipments, including the number of EUV systems expected to be shipped and timing of shipments, and roadmaps, shrink being key driver to industry growth, expected industry adoption of EUV and statements with respect to the intent of customers to insert EUV into production, the expected continuation of Moore's law and that EUV will continue to enable Moore’s law and drive long term value, goals for holistic lithography, intention to return excess cash to shareholders, and statements about our proposed dividend, 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 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, 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 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. |
Exhibit 99.5
ASML Holding N.V.
Statutory Interim Report
for the six-month period ended July 3, 2016
Contents
A summary of all abbreviations, technical terms and definitions (of capitalized terms) used in this Statutory Interim Report is set forth on page 30.
This report comprises regulated information within the meaning of articles 1:1 and 5:25d of the Dutch Financial Markets Supervision Act (Wet op het Financieel Toezicht).
In this report the name "ASML" is sometimes used for convenience in contexts where reference is made to ASML Holding N.V. and/or any of its subsidiaries in general. The name is also used where no useful purpose is served by identifying the particular company or companies.
© 2016, ASML Holding N.V. All Rights Reserved
ASML Statutory Interim Report 2016
ASML Statutory Interim Report 2016
Introduction
Dear Stakeholder,
On July 20, 2016, we published our Statutory Interim Report for the six-month period ended July 3, 2016. This includes an Interim Management Board Report, a Managing Directors' Statement and Consolidated Condensed Interim Financial Statements prepared in accordance with IAS 34.
We also published our 2016 second-quarter results in accordance with US GAAP and IFRS-EU on July 20, 2016.
Cautionary Statement Regarding Forward-Looking Statements
This document contains statements relating to certain projections and business trends that are forward-looking, including statements with respect to our outlook, including expected customer demand in specified market segments including memory, logic and foundry, expected trends and outlook, including expected levels of service sales, systems backlog, expected financial results for the third quarter and full year 2016, including expected sales, other income, gross margin, R&D and SG&A expenses and effective annualized tax rate, annual revenue opportunity for ASML and EPS potential by end of decade, productivity of our tools and systems performance, including EUV system performance (such as endurance tests), expected industry trends and expected trends in the business environment, statements with respect to the acquisition of HMI by ASML, the expected benefits of the acquisition of HMI by ASML, including expected earnings accretion, enhancement of ASML’s existing product portfolio, the creation of a new class of products which improves yield and time to market, the accelerated introduction of reticle defect detection to support future EUV ramp and related opportunity in 2020, improvement in ASML and HMI’s metrology technologies and support of EUV technologies, the benefits of the acquisition to ASML’s holistic lithography strategy, the growth opportunity represented by patterning control and expansion of market opportunity by 2020 and expected timing of completion of HMI acquisition, statements with respect to EUV targets, including availability, productivity and shipments, including the number of EUV systems expected to be shipped and timing of shipments, and roadmaps, shrink being key driver to industry growth, expected industry adoption of EUV and statements with respect to the intent of customers to insert EUV into production, the expected continuation of Moore's law and that EUV will continue to enable Moore’s law and drive long term value, goals for holistic lithography, intention to return excess cash to shareholders, and statements about our proposed dividend, 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 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, 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 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.
ASML Statutory Interim Report 2016 1
Interim Management Board Report
About ASML
ASML is one of the world’s leading manufacturers of chip-making equipment. Our vision is to enable affordable microelectronics that improve the quality of life. To achieve this, our mission is to invent, develop, manufacture and service advanced technology for high-tech lithography, metrology and software solutions for the semiconductor industry. ASML's guiding principle is continuing Moore's Law towards ever smaller, cheaper, more powerful and energy-efficient semiconductors. This results in increasingly powerful and capable electronics that enable the world to progress within a multitude of fields, including healthcare, technology, communications, energy, mobility, and entertainment. We are a multinational company with over 70 locations in 16 countries, headquartered in Veldhoven, the Netherlands. As of July 3, 2016, we employed 12,598 payroll employees (December 31, 2015: 12,168) and 2,569 temporary employees (December 31, 2015: 2,513), measured in FTEs. ASML is traded on Euronext Amsterdam and NASDAQ under the symbol ASML.
As per our AGM held on April 29, 2016 Mr. Van der Poel retired from our Supervisory Board. On February 4, 2016, we announced that our Supervisory Board appointed Mr. Kleisterlee as its new Chairman which became effective upon closing of our AGM held on April 29, 2016.
On June 16, 2016, ASML and HMI, a leading supplier of pattern verification systems used for advanced semiconductor devices, announced that they entered into an agreement under which ASML will acquire all outstanding shares of HMI in a cash transaction valued at about TWD 100 billion (approximately EUR 2.8 billion). Both companies are leaders in their respective fields and are already developing joint approaches that IC manufacturers can use to improve yields in the production of the most advanced microchips. The combination will allow ASML and HMI to further integrate and enhance their product offering at an accelerated pace. The transaction will entitle each HMI shareholder to receive TWD 1,410 per share in cash.
The transaction is expected to close in the fourth quarter of 2016 and is subject to customary closing conditions, including review by Taiwanese, U.S. and international regulators. Closing is also subject to approval by HMI's shareholders. HEC and certain affiliates, as well as certain officers of HMI, own approximately 48% of HMI shares in total and have entered into agreements with ASML pursuant to which they have agreed to vote in favor of, and otherwise support, the transaction.
As part of the transaction, HEC and certain HMI officers have also agreed to (re)invest in ASML part of the proceeds to be received by them from selling their HMI shares in the transaction, underscoring their belief in the strategic rationale for the transaction and their commitment to the combined businesses going forward. Accordingly, ASML expects to issue a total number of 5.9 million ASML shares (corresponding to approximately 1% of ASML shares currently issued and outstanding) at a subscription price of TWD 3,106 per share (equivalent to EUR 85.24, for an aggregate value of approximately EUR 500 million)1. The newly issued ASML shares will be subject to a minimum holding period of two and a half years.
On July 7, 2016, we settled two eurobond offerings for an aggregate amount of EUR 1,500 million Senior Notes, consisting of EUR 500 million of bonds due 2022 and EUR 1,000 million of bonds due 2026, with interest payable annually on July 7. The notes are redeemable at the option of ASML, in whole or in part, at any time by paying a make whole premium, and unless previously redeemed, will be redeemed at 100 percent of their principal amount on July 7, 2022 and July 7, 2026 respectively.
ASML expects to finance the acquisition of HMI partially with the eurobond offerings as described above, approximately EUR 500 million of ASML equity to be purchased by HEC and the relevant HMI officers as noted above, and the remainder from available cash and cash equivalents.
In the first half year of 2016, we generated net sales of EUR 3,072.8 million (first half year of 2015: EUR 3,304.0 million) and an operating income of EUR 787.2 million or 25.6 percent of net sales (first half year of 2015: EUR 1,032.0 million or 31.2 percent). Net income for the first half year of 2016 amounted to EUR 601.2 million or 19.6 percent of net sales (first half year of 2015: EUR 891.3 million or 27.0 percent), representing basic net income per ordinary share of EUR 1.41 (first half of 2015: EUR 2.06).
Below we provide an update of the risks and uncertainties we face in the second half year of 2016, followed by the ASML Operations Update, Auditor's Involvement and 2016 Second Half Year Perspectives.
Risk Factors
In conducting our business, we face many risks that may interfere with our business objectives. Some of these risks relate to our operational processes, while others relate to our business environment. It is important to understand the nature of these risks and the impact they may have on our business, financial condition, results of operations and the price of our shares. Some of the more relevant risks are defined below. These risks are not the only ones that we face. Some risks may not yet be known to us and certain risks that we do not currently believe to be material could become material in the future.
We have assessed the risks for the second half year of 2016 and believe that the risks identified are in line with those presented in our Statutory Annual Report 2015. For a detailed description of the risks defined below, we refer to our Statutory Annual Report 2015.
1 Based on the VWAP for the 30 trading days on Euronext Amsterdam up to and including June 13, 2016 and the prevailing EUR/TWD exchange rate on June 13, 2016.
ASML Statutory Interim Report 2016 2
Summary
Strategic risk
• | We derive most of our revenues from the sale of a relatively small number of products. |
Risks related to the semiconductor industry
• | The semiconductor industry is highly cyclical and we may be adversely affected by any downturn; |
• | Our business will suffer if we or the industry do not respond rapidly to commercial and technological changes in the semiconductor industry; |
• | Cadence for the introduction of new systems is lengthening; |
• | Industry adoption of EUV technology may be delayed; and |
• | We face intense competition. |
Governmental, legal and compliance risks
• | Failure to adequately protect the intellectual property rights upon which we depend could harm our business; |
• | Defending against intellectual property claims brought by others could harm our business; |
• | We are subject to risks in our international operations; |
• | Because of labor laws and practices, any workforce reductions that we may seek to implement in order to reduce costs company-wide may be delayed or suspended; and |
• | Changes in taxation could affect our future profitability. |
Operational risks
• | The number of systems we can produce is limited by our dependence on a limited number of suppliers of key components; |
• | The time window for new product introduction is short and is accompanied by potential design and production delays and by significant costs; |
• | As lithography technologies become more complex, the success of our R&D programs becomes more uncertain, while their cost rises; |
• | We are dependent on the continued operation of a limited number of manufacturing facilities; |
• | We may be unable to make desirable acquisitions or to integrate successfully any businesses we acquire; |
• | Our business and future success depend on our ability to attract and retain a sufficient number of adequately educated and skilled employees; |
• | A disruption in our information technology systems, including incidents related to cyber security, could adversely affect our business operations; and |
• | Hazardous substances are used in the production and operation of our systems and failure to comply with applicable regulations or failure to implement appropriate practices for customer and employee environment, health and safety could subject us to significant liabilities. |
Financial risks
• | A high percentage of net sales is derived from a few customers; and |
• | Fluctuations in foreign exchange rates could harm our results of operations. |
Risks related to our ordinary shares
• | We may not declare cash dividends at all or in any particular amounts in any given year; |
• | Restrictions on shareholder rights may dilute voting power; and |
• | Participating customers in our Customer Co-Investment Program together own a significant amount of our ordinary shares and their interests may not coincide with the interests of our other shareholders. |
ASML Statutory Interim Report 2016 3
ASML Operations Update
The Consolidated Condensed Interim Financial Statements for the six-month period ended July 3, 2016 included in this Statutory Interim Report have been prepared in accordance with IAS 34. For internal and external reporting purposes, ASML follows US GAAP, which is ASML’s primary accounting standard for setting financial and operational performance targets.
Based on US GAAP, net income, as explained in the table below, is measured differently from net income based on IFRS-EU.
Unaudited | Unaudited | |||
For the six-month period ended June 28, 2015 and July 3, 2016 | 2015 | 2016 | ||
(in millions) | EUR | EUR | ||
Net income based on US GAAP | 772.4 | 551.8 | ||
Development expenditures | 132.4 | 125.2 | ||
Share-based payments | 2.0 | 0.7 | ||
Income taxes | (15.5 | ) | (76.5 | ) |
Net income based on IFRS-EU | 891.3 | 601.2 | ||
Set forth below are certain extracts of our Consolidated Condensed Statement of Profit or Loss data on a semi-annual basis (based on IFRS-EU):
Unaudited | Unaudited | |||
For the six-month period ended June 28, 2015 and July 3, 2016 | 2015 | 2016 | ||
(in millions) | EUR | EUR | ||
Total net sales | 3,304.0 | 3,072.8 | ||
Total cost of sales | (1,802.1 | ) | (1,802.5 | ) |
Gross profit | 1,501.9 | 1,270.3 | ||
Other income | 41.6 | 46.9 | ||
Research and development costs | (340.9 | ) | (351.0 | ) |
Selling, general and administrative costs | (170.6 | ) | (179.0 | ) |
Operating income | 1,032.0 | 787.2 | ||
Finance income (costs) | (2.0 | ) | (0.3 | ) |
Income before income taxes | 1,030.0 | 786.9 | ||
Income tax expense | (138.7 | ) | (185.7 | ) |
Net income | 891.3 | 601.2 | ||
The following table shows a summary of key financial figures on a semi-annual basis:
Unaudited | Unaudited | |||
For the six-month period ended June 28, 2015 and July 3, 2016 | 2015 | 2016 | ||
(in millions EUR, unless otherwise indicated) | ||||
Total net sales | 3,304.0 | 3,072.8 | ||
Net system sales | 2,381.0 | 2,109.9 | ||
Net service and field option sales | 923.0 | 962.9 | ||
Total sales of systems (in units) | 88 | 79 | ||
Total sales of new systems (in units) | 73 | 67 | ||
Total sales of used systems (in units) | 15 | 12 | ||
Gross profit as a percentage of total net sales | 45.5 | 41.3 | ||
ASP of system sales | 27.1 | 26.7 | ||
ASP of new system sales | 31.6 | 30.7 | ||
ASP of used system sales | 5.1 | 4.2 | ||
Consolidated Sales and Gross Profit
Total net sales decreased by EUR 231.2 million to EUR 3,072.8 million for the first half year of 2016 from EUR 3,304.0 million for the first half year of 2015. This decrease is caused by decreased net system sales of EUR 271.1 million, partly offset by increased net service and field option sales of EUR 39.9 million. The decrease in net system sales is primarily caused by a lower number of systems sold.
Gross profit on sales decreased by EUR 231.6 million to EUR 1,270.3 million for the first half year of 2016 from EUR 1,501.9 million for the first half year of 2015. This is mainly driven by a lower system sales volume. The gross margin decreased to 41.3 percent for the first half year of 2016 from 45.5 percent for the first half year of 2015. The first half year of 2016 was negatively impacted by the sale of two NXE:3350B systems, for which full cost of sales is recognized, while part of the revenue is deferred. The first half year of 2015 included one NXE:3300B which did not contribute to gross profit.
We started 2016 with a systems backlog of 79 systems. During the first half year of 2016, we booked orders for 73 systems and recognized sales for 79 systems. This resulted in a systems backlog of 73 systems as of July 3, 2016.
ASML Statutory Interim Report 2016 4
As of July 3, 2016, our systems backlog was valued at EUR 3,371.1 million and includes 73 systems with an ASP of EUR 46.2 million. As of December 31, 2015, the systems backlog was valued at EUR 3,184.3 million and included 79 systems with an ASP of EUR 40.3 million. The ASP of our systems backlog as of July 3, 2016 increased compared to December 31, 2015 as a result of a shift in the mix of systems towards more high-end system types including 4 additional EUV orders.
For further details regarding our backlog, we refer to 2016 Second Half Year Perspectives - Financial Outlook.
Other Income
Other income consists of contributions for R&D programs under the NRE Funding Agreements from certain Participating Customers in the CCIP and amounted to EUR 46.9 million for the first half year of 2016 (first half year of 2015: EUR 41.6 million).
Research and Development
R&D investments for the first half year of 2016 of EUR 551.7 million are in line with the first half year of 2015 (EUR 535.8 million). The R&D investments comprise of R&D costs net of credits (including net development costs not eligible for capitalization), of EUR 351.0 million (first half year of 2015: EUR 340.9 million) and capitalization of development expenditures of EUR 200.7 million (first half year of 2015: EUR 194.9 million). Capitalization of development expenditures during the first half year of 2016 increased compared to the first half of 2015 due to additional DUV products having entered the development phase. In the first half of 2016 our R&D activities mainly related to:
• | EUV - Further improving availability and productivity, and supporting the design of our NXE:3400B system (first half year of 2015: mainly NXE:3350B system); |
• | DUV immersion - Focused on the final stages of development relating to our NXT:1980 system, of which we shipped the first systems in 2015, as well as development of future DUV platform NXT:20x0 (first half year of 2015: mainly NXT:1980 system); and |
• | Holistic Lithography - Further development of Yieldstar and process window control solutions. |
Selling, General and Administrative Costs
Selling, general and administrative costs of EUR 179.0 million for the first half year of 2016 are in line with the first half year of 2015 (EUR 170.6 million).
Related Party Transactions
For disclosure regarding related party transactions see Note 13 to the Consolidated Condensed Interim Financial Statements.
ASML Statutory Interim Report 2016 5
Auditor's Involvement
This Statutory Interim Report for the six-month period ended July 3, 2016 and the Consolidated Condensed Interim Financial Statements included herein have not been audited or reviewed by an external auditor.
2016 Second Half Year Perspectives
Operational Outlook
We expect our full-year 2016 total net sales to exceed our 2015 record year. The total net sales level will depend on the timing of our EUV revenue recognition and the size of the combined 10/7 nanometer node ramp.
We took new orders for four EUV systems from Foundry and Memory customers, bringing our backlog to 10 units worth about EUR 1 billion. These systems are intended for volume manufacturing sites. We expect to take additional orders in the second half of this year.
Financial Outlook
The following table sets forth our systems backlog as of December 31, 2015 and July 3, 2016:
Unaudited | Unaudited | |||
(in millions EUR, unless otherwise indicated) | December 31, 2015 | July 3, 2016 | ||
New systems backlog (in units) | 68 | 65 | ||
Used systems backlog (in units) | 11 | 8 | ||
Total systems backlog (in units) | 79 | 73 | ||
Value of new systems backlog | 3,149.6 | 3,335.4 | ||
Value of used systems backlog | 34.7 | 35.7 | ||
Total value of systems backlog | 3,184.3 | 3,371.1 | ||
ASP of new systems backlog | 46.3 | 51.3 | ||
ASP of used systems backlog | 3.2 | 4.5 | ||
ASP of total systems backlog | 40.3 | 46.2 |
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). Historically, orders have been subject to cancellation or delay by the customer. Due to possible customer changes in delivery schedules and to cancellation of orders, our systems backlog at any particular date is not necessarily indicative of actual sales for any succeeding period.
For the third quarter of 2016, we expect total net sales at approximately EUR 1.7 billion and other income of about EUR 23 million, which consists of contributions from participations of the CCIP.
The Board of Management,
Peter T.F.M. Wennink, President, Chief Executive Officer and Chairman of the Board of Management
Martin A. van den Brink, President, Chief Technology Officer and Vice Chairman of the Board of Management
Frits J. van Hout, Executive Vice President and Chief Program Officer
Frédéric J.M. Schneider-Maunoury, Executive Vice President and Chief Operations Officer
Wolfgang U. Nickl, Executive Vice President and Chief Financial Officer
Veldhoven, July 19, 2016
ASML Statutory Interim Report 2016 6
Managing Directors’ Statement
The Board of Management hereby declares that, to the best of its knowledge, the Consolidated Condensed Interim Financial Statements prepared in accordance with IAS 34, "Interim Financial Reporting", provide a true and fair view of the assets, liabilities, financial position and profit or loss of ASML Holding N.V. and the undertakings included in the consolidation taken as a whole and that the Interim Management Board Report includes a fair review of the information required pursuant to section 5:25d(8)/(9) of the Dutch Financial Markets Supervision Act (Wet op het Financieel Toezicht).
The Board of Management,
Peter T.F.M. Wennink, President, Chief Executive Officer and Chairman of the Board of Management
Martin A. van den Brink, President, Chief Technology Officer and Vice Chairman of the Board of Management
Frits J. van Hout, Executive Vice President and Chief Program Officer
Frédéric J.M. Schneider-Maunoury, Executive Vice President and Chief Operations Officer
Wolfgang U. Nickl, Executive Vice President and Chief Financial Officer
Veldhoven, July 19, 2016
ASML Statutory Interim Report 2016 7
ASML Statutory Interim Report 2016 8
Consolidated Condensed
Interim Financial Statements
Interim Financial Statements
ASML Statutory Interim Report 2016 9
ASML Statutory Interim Report 2016 10
Consolidated Condensed Interim Financial Statements
Consolidated Condensed Statement of Profit or Loss | |
Consolidated Condensed Statement of Comprehensive Income | |
Consolidated Condensed Statement of Financial Position | |
Consolidated Condensed Statement of Changes in Equity | |
Consolidated Condensed Statement of Cash Flows | |
ASML Statutory Interim Report 2016 11
Consolidated Condensed Statement of Profit or Loss
Unaudited | Unaudited | ||||
For the six-month period ended June 28, 2015 and July 3, 2016 | 2015 | 2016 | |||
Notes | (in thousands, except per share data) | EUR | EUR | ||
11 | Net system sales | 2,381,037 | 2,109,928 | ||
11 | Net service and field option sales | 922,918 | 962,849 | ||
Total net sales | 3,303,955 | 3,072,777 | |||
Cost of system sales | (1,260,848 | ) | (1,185,584 | ) | |
Cost of service and field option sales | (541,246 | ) | (616,865 | ) | |
Total cost of sales | (1,802,094 | ) | (1,802,449 | ) | |
Gross profit | 1,501,861 | 1,270,328 | |||
Other income | 41,600 | 46,889 | |||
Research and development costs | (340,852 | ) | (350,984 | ) | |
Selling, general and administrative costs | (170,577 | ) | (179,039 | ) | |
Operating income | 1,032,032 | 787,194 | |||
Finance income | 4,579 | 7,142 | |||
Finance costs | (6,581 | ) | (7,401 | ) | |
Income before income taxes | 1,030,030 | 786,935 | |||
10 | Income tax expense | (138,775 | ) | (185,717 | ) |
Net income | 891,255 | 601,218 | |||
7 | Basic net income per ordinary share | 2.06 | 1.41 | ||
7 | Diluted net income per ordinary share1 | 2.05 | 1.41 | ||
Number of ordinary shares used in computing per share amounts (in thousands): | |||||
7 | Basic | 431,985 | 425,749 | ||
7 | Diluted1 | 434,429 | 427,797 | ||
1 | The calculation of diluted net income per ordinary share assumes the exercise of options issued under our stock option plans and the issuance of shares under our 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. |
ASML Statutory Interim Report 2016 12
Consolidated Condensed Statement of Comprehensive Income
Unaudited | Unaudited | |||
For the six-month period ended June 28, 2015 and July 3, 2016 | 2015 | 2016 | ||
(in thousands) | EUR | EUR | ||
Net income | 891,255 | 601,218 | ||
Other comprehensive income: | ||||
Foreign currency translation, net of taxes: | ||||
Gain (loss) on translation of foreign operations | 239,790 | (6,409 | ) | |
Financial instruments, net of taxes: | ||||
Gain (loss) on derivative financial instruments | 8,390 | (983 | ) | |
Transfers to net income | (10,384 | ) | 102 | |
Other comprehensive income, net of taxes1 | 237,796 | (7,290 | ) | |
Total comprehensive income, net of taxes | 1,129,051 | 593,928 | ||
Attributable to Equity holders | 1,129,051 | 593,928 | ||
1 | All items in accumulated other comprehensive income as at July 3, 2016, comprising of the hedging reserve of EUR 1.1 million losses (June 28, 2015: EUR 9.9 million gains) and the currency translation reserve of EUR 286.1 million gains (June 28, 2015: EUR 238.4 million gains), will be reclassified subsequently to profit or loss when specific conditions are met. |
ASML Statutory Interim Report 2016 13
Consolidated Condensed Statement of Financial Position
(Before appropriation of net income)
Unaudited | |||||
December 31, 2015 | July 3, 2016 | ||||
Notes | (in thousands) | EUR | EUR | ||
Assets | |||||
Property, plant and equipment | 1,620,678 | 1,608,921 | |||
Goodwill | 2,647,809 | 2,626,792 | |||
Other intangible assets | 2,018,514 | 2,152,984 | |||
Deferred tax assets | 139,622 | 165,164 | |||
Finance receivables | 124,036 | 105,679 | |||
4 | Derivative financial instruments | 81,777 | 121,461 | ||
Other assets | 369,105 | 367,590 | |||
Total non-current assets | 7,001,541 | 7,148,591 | |||
Inventories | 2,573,730 | 2,715,253 | |||
Current tax assets | 19,080 | 178,043 | |||
4 | Derivative financial instruments | 52,026 | 42,991 | ||
Finance receivables | 280,523 | 523,964 | |||
Accounts receivable | 803,696 | 732,404 | |||
Other assets | 375,467 | 395,127 | |||
4, 5 | Short-term investments | 950,000 | 1,000,000 | ||
4, 5 | Cash and cash equivalents | 2,458,717 | 1,926,052 | ||
Total current assets | 7,513,239 | 7,513,834 | |||
Total assets | 14,514,780 | 14,662,425 | |||
Equity and liabilities | |||||
Equity | 9,491,151 | 9,299,518 | |||
Long-term debt | 1,125,474 | 901,871 | |||
4 | Derivative financial instruments | 1,878 | 1,166 | ||
Deferred and other tax liabilities | 376,548 | 405,065 | |||
Provisions | 2,445 | 12,563 | |||
8 | Accrued and other liabilities | 412,491 | 322,183 | ||
Total non-current liabilities | 1,918,836 | 1,642,848 | |||
Provisions | 2,441 | 2,928 | |||
4 | Derivative financial instruments | 18,982 | 34,264 | ||
Current portion of long-term debt | 4,211 | 253,632 | |||
Current tax liabilities | 3,654 | 170,896 | |||
8 | Accrued and other liabilities | 2,547,611 | 2,524,110 | ||
Accounts payable | 527,894 | 734,229 | |||
Total current liabilities | 3,104,793 | 3,720,059 | |||
Total equity and liabilities | 14,514,780 | 14,662,425 | |||
ASML Statutory Interim Report 2016 14
Consolidated Condensed Statement of Changes in Equity
(Before appropriation of net income)
(in thousands) | Issued and outstanding shares | Treasury Shares at cost EUR | |||||||||||||||
Number1 | Amount EUR | Share Premium EUR | Retained Earnings EUR | Other Reserves2 EUR | Net Income EUR | Total EUR | |||||||||||
Balance at January 1, 2015 | 432,935 | 39,426 | 3,456,556 | (389,443 | ) | 2,864,025 | 977,046 | 1,418,320 | 8,365,930 | ||||||||
Appropriation of net income | — | — | — | — | 1,418,320 | — | (1,418,320 | ) | — | ||||||||
Components of statement of comprehensive income | |||||||||||||||||
Net income | — | — | — | — | — | — | 891,255 | 891,255 | |||||||||
Foreign currency translation | — | — | — | — | — | 239,790 | — | 239,790 | |||||||||
Loss on financial instruments, net of taxes | — | — | — | — | — | (1,994 | ) | — | (1,994 | ) | |||||||
Total comprehensive income | — | — | — | — | — | 237,796 | 891,255 | 1,129,051 | |||||||||
CCIP: | |||||||||||||||||
Fair value differences3 | — | — | 5,616 | — | — | — | — | 5,616 | |||||||||
Purchases of treasury shares4 | (2,976 | ) | (268 | ) | — | (284,448 | ) | — | — | — | (284,716 | ) | |||||
Cancellation of treasury shares | — | (462 | ) | — | 389,302 | (388,840 | ) | — | — | — | |||||||
Share-based payments | — | — | 26,690 | — | — | — | — | 26,690 | |||||||||
Issuance of shares | 694 | 62 | 16,702 | 28,208 | (33,667 | ) | — | — | 11,305 | ||||||||
Dividend paid | — | — | — | — | (302,310 | ) | — | — | (302,310 | ) | |||||||
Development expenditures | — | — | — | — | (164,143 | ) | 164,143 | — | — | ||||||||
Balance at June 28, 2015 unaudited | 430,653 | 38,758 | 3,505,564 | (256,381 | ) | 3,393,385 | 1,378,985 | 891,255 | 8,951,566 | ||||||||
Appropriation of net income | — | — | — | — | — | — | — | — | |||||||||
Components of statement of comprehensive income | |||||||||||||||||
Net income | — | — | — | — | — | — | 728,234 | 728,234 | |||||||||
Foreign currency translation | — | — | — | — | — | 58,227 | — | 58,227 | |||||||||
Loss on financial instruments, net of taxes | — | — | — | — | — | (10,129 | ) | — | (10,129 | ) | |||||||
Total comprehensive income | — | — | — | — | — | 48,098 | 728,234 | 776,332 | |||||||||
CCIP: | |||||||||||||||||
Fair value differences3 | — | — | 12,272 | — | — | — | — | 12,272 | |||||||||
Purchases of treasury shares4 | (3,297 | ) | (29 | ) | — | (280,142 | ) | — | — | — | (280,171 | ) | |||||
Cancellation of treasury shares | — | — | — | — | — | — | — | — | |||||||||
Share-based payments | — | — | 23,455 | — | — | — | — | 23,455 | |||||||||
Issuance of shares | 631 | 57 | (25,378 | ) | 59,601 | (26,583 | ) | — | — | 7,697 | |||||||
Dividend paid | — | — | — | — | — | — | — | — | |||||||||
Development expenditures | — | — | — | — | (143,094 | ) | 143,094 | — | — | ||||||||
Balance at December 31, 2015 | 427,987 | 38,786 | 3,515,913 | (476,922 | ) | 3,223,708 | 1,570,177 | 1,619,489 | 9,491,151 | ||||||||
Appropriation of net income | — | — | — | — | 1,619,489 | — | (1,619,489 | ) | — | ||||||||
Components of statement of comprehensive income | |||||||||||||||||
Net income | — | — | — | — | — | — | 601,218 | 601,218 | |||||||||
Foreign currency translation | — | — | — | — | — | (6,409 | ) | — | (6,409 | ) | |||||||
Loss on financial instruments, net of taxes | — | — | — | — | — | (881 | ) | — | (881 | ) | |||||||
Total comprehensive income | — | — | — | — | — | (7,290 | ) | 601,218 | 593,928 | ||||||||
CCIP: | |||||||||||||||||
Fair value differences3 | — | — | 13,963 | — | — | — | — | 13,963 | |||||||||
Purchases of treasury shares4 | (4,611 | ) | — | — | (386,542 | ) | — | — | — | (386,542 | ) | ||||||
Cancellation of treasury shares | — | — | — | — | — | — | — | — | |||||||||
Share-based payments | — | — | 24,105 | — | — | — | — | 24,105 | |||||||||
Issuance of shares | 479 | 43 | (22,277 | ) | 45,182 | (14,170 | ) | — | — | 8,778 | |||||||
Dividend paid | — | — | — | — | (445,865 | ) | — | — | (445,865 | ) | |||||||
Development expenditures | — | — | — | — | (161,499 | ) | 161,499 | — | — | ||||||||
Balance at July 3, 2016 unaudited | 423,855 | 38,829 | 3,531,704 | (818,282 | ) | 4,221,663 | 1,724,386 | 601,218 | 9,299,518 | ||||||||
ASML Statutory Interim Report 2016 15
1 | As of July 3, 2016, the number of issued shares was 431,438,058. This includes the number of issued and outstanding shares of 423,855,472 and the number of treasury shares of 7,582,586. As of December 31, 2015, the number of issued shares was 433,332,573. This includes the number of issued and outstanding shares of 427,986,682 and the number of treasury shares of 5,345,891. As of June 28, 2015, the number of issued shares was 433,332,427. This included the number of issued and outstanding shares of 430,652,782 and the number of treasury shares of 2,679,645. |
2 | Other reserves consist of the hedging reserve, the currency translation reserve and the reserve for capitalized development expenditures. |
3 | In the first half year of 2016, EUR 14.0 million (second half year of 2015: EUR 12.3 million; first half year of 2015: EUR 5.6 million) is recognized to increase equity to the fair value of the shares issued to the Participating Customers in the CCIP. The portion of the NRE funding allocable to the shares is recognized over the NRE Funding Agreements period (2013-2017). |
4 | In the first half year of 2016, ASML repurchased shares for an amount of EUR 386.5 million (second half year of 2015: EUR 280.2 million; first half year of 2015: EUR 284.7 million). As of July 3, 2016, EUR 1.1 million of the total repurchased amount remained unpaid and is recorded in accrued and other current liabilities (December 31, 2015: nil; June 28, 2015: EUR 2.0 million). |
ASML Statutory Interim Report 2016 16
Consolidated Condensed Statement of Cash Flows
Unaudited | Unaudited | ||||
For the six-month period ended June 28, 2015 and July 3, 2016 | 2015 | 2016 | |||
Notes | (in thousands) | EUR | EUR | ||
Cash Flows from Operating Activities | |||||
Net income | 891,255 | 601,218 | |||
Adjustments to reconcile net income to net cash flows from operating activities: | |||||
Depreciation and amortization 1 | 169,644 | 205,215 | |||
Impairment | 615 | 915 | |||
Loss on disposal of property, plant and equipment 2 | 1,320 | 2,105 | |||
Share-based payments | 27,568 | 24,105 | |||
Allowance for doubtful receivables | 2,078 | 1,729 | |||
Allowance for obsolete inventory | 97,322 | 59,098 | |||
Deferred income taxes | 54,856 | 104,980 | |||
Changes in assets and liabilities: | |||||
Accounts receivable | (212,789 | ) | 92,819 | ||
Finance receivables | (51,820 | ) | (225,360 | ) | |
Inventories 2,3 | 6,378 | (126,581 | ) | ||
Other assets | (110,933 | ) | (72,173 | ) | |
8 | Accrued and other liabilities | (254,764 | ) | (99,532 | ) |
Accounts payable | 221,895 | 200,881 | |||
10 | Current income taxes | (24,316 | ) | (93,414 | ) |
Net cash provided by operating activities | 818,309 | 676,005 | |||
Cash Flows from Investing Activities | |||||
Purchase of property, plant and equipment 3 | (164,784 | ) | (154,091 | ) | |
Purchase of intangible assets | (195,993 | ) | (205,568 | ) | |
4 | Purchase of available for sale securities | — | (700,000 | ) | |
4 | Maturity of available for sale securities | 309,850 | 650,000 | ||
Cash from (used for) derivative financial instruments | (127,022 | ) | 8,816 | ||
Loans issued and other investments | — | (6,000 | ) | ||
Net cash used in investing activities | (177,949 | ) | (406,843 | ) | |
Cash Flows from Financing Activities | |||||
12 | Dividend paid | (302,310 | ) | (445,865 | ) |
12 | Purchase of shares 4 | (282,702 | ) | (385,448 | ) |
Net proceeds from issuance of shares | 14,535 | 22,658 | |||
Repayment of debt | (1,510 | ) | (2,367 | ) | |
Net cash used in financing activities | (571,987 | ) | (811,022 | ) | |
Net cash flows | 68,373 | (541,860 | ) | ||
Effect of changes in exchange rates on cash | 7,097 | 9,195 | |||
Net increase (decrease) in cash and cash equivalents | 75,470 | (532,665 | ) | ||
Cash and cash equivalents at beginning of the year | 2,419,487 | 2,458,717 | |||
Cash and cash equivalents at June 28, 2015 and July 3, 2016 | 2,494,957 | 1,926,052 | |||
Supplemental Disclosures of Cash Flow Information: | |||||
Interest received | 8,276 | 8,010 | |||
Interest and other paid | (15,141 | ) | (15,221 | ) | |
10 | Income taxes paid | (112,293 | ) | (171,722 | ) |
1 | For the six-month period ended July 3, 2016, depreciation and amortization includes EUR 139.8 million of depreciation of property, plant and equipment (June 28, 2015: EUR 112.9 million), EUR 65.0 million of amortization of intangible assets (June 28, 2015: EUR 56.1 million) and EUR 0.4 million of amortization of underwriting commissions related to bonds and credit facility (June 28, 2015: EUR 0.6 million). |
2 | For the six-month period ended July 3, 2016, an amount of EUR 19.8 million (June 28, 2015: EUR 24.5 million) of the disposal of property, plant and equipment relates to non-cash transfers to inventory. Since the transfers between inventory and property, plant and equipment are non-cash events, these are not reflected in this Consolidated Condensed Statement of Cash Flows. |
3 | For the six-month period ended July 3, 2016, an amount of EUR 2.6 million (June 28, 2015: EUR 17.5 million) of the additions in property, plant and equipment relates to non-cash transfers from inventory. Since the transfers between inventory and property, plant and equipment are non-cash events, these are not reflected in this Consolidated Condensed Statement of Cash Flows. Other movements include EUR 5.0 million (June 28, 2015: EUR 2.0 million) relating to a decrease in additions not yet paid. |
4 | In the first half year of 2016, ASML repurchased shares for an amount of EUR 385.4 million (first half year of 2015: EUR 284.7 million). As of July 3, 2016, EUR 1.1 million of the total repurchased amount remained unpaid and is recorded in accrued and other current liabilities (June 28, 2015: EUR 2.0 million). |
ASML Statutory Interim Report 2016 17
Notes to the Consolidated Condensed Interim Financial Statements
1. General Information
Our shares are listed for trading in the form of registered shares on NASDAQ and on Euronext Amsterdam. The principal trading market of our ordinary shares is Euronext Amsterdam.
The Consolidated Condensed Interim Financial Statements include the financial statements of ASML Holding N.V. and its subsidiaries and special purpose entities over which ASML Holding N.V. has control (together referred to as "ASML"). All intercompany profits, balances and transactions have been eliminated in the consolidation.
The Consolidated Condensed Interim Financial Statements were authorized for issuance by the Board of Management on July 19, 2016 and have not been audited or reviewed by an external auditor.
2. Basis of Preparation
The Consolidated Condensed Interim Financial Statements for the six-month period ended July 3, 2016 have been prepared in accordance with IAS 34, "Interim Financial Reporting". The Consolidated Condensed Interim Financial Statements do not include all the information and disclosures as required in the Statutory Annual Report and should be read in conjunction with the Statutory Annual Report 2015, which has been prepared in accordance with IFRS-EU.
The Consolidated Condensed Interim Financial Statements are stated in thousands of EUR unless indicated otherwise.
3. Summary of Significant Accounting Policies
The accounting policies adopted in the preparation of the Consolidated Condensed Interim Financial Statements are consistent with those applied in the preparation of the Consolidated Financial Statements 2015, except for income tax expense which is recognized based on management’s best estimate of the annual income tax rate for the full financial year. Implementation of new and revised IFRS-EU over the six-month period ended July 3, 2016 did not have a material impact on our Consolidated Condensed Interim Financial Statements.
On July 3, 2016 the following standards and interpretations have been issued however are not yet effective and/or have not yet been adopted by the EU and and have not yet been adopted by us
IFRS 15 "Revenue from Contracts with Customers", was issued in May 2014. In May 2015, the IASB proposed to defer the effective date of IFRS 15 by one year to January 1, 2018. The Standard is subject to endorsement by the EU. IFRS 15 is a joint project of the IASB and the FASB, to clarify the principles for recognizing revenue and to develop a common revenue standard for IFRS and US GAAP that would:
• | Remove inconsistencies and weaknesses in previous revenue 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. |
In July 2014, the IASB finalized the reform of financial instruments accounting and issued IFRS 9 (as revised in 2014), which will supersede IAS 39 "Financial Instruments: Recognition and Measurement" in its entirety (the IASB tentatively decided that the mandatory effective date of IFRS 9 will be no earlier than annual periods beginning on or after January 1, 2018). Compared to IFRS 9 (as revised in 2013), the 2014 version includes limited amendments to the classification and measurement requirements by introducing a 'fair value through other comprehensive income' measurement category for simple debt instruments. It also adds the impairment requirements relating to the accounting for an entity's expected credit losses on its financial assets and commitments to extend credit. The completed IFRS 9 (as revised in 2014) contains the requirements for a) the classification and measurement of financial assets and financial liabilities, b) impairment methodology, and c) general hedge accounting.
IFRS 16 "Leases", was issued in January 2016. The Standard will become effective as of January 1, 2019 and is subject to endorsement by the EU. IFRS 16 is the result of a project initiated by IASB and the FASB and supersedes IAS 17 "Leases" and its associated interpretive guidance.
IAS 7 'Statement of Cash Flows' was issued in January 2016. The amendments will become effective as of January 1, 2017, with earlier application being permitted and is subject to endorsement by the EU. These amendments are intended to clarify IAS 7 to improve information provided to users of financial statements about an entity's financing activities.
IAS 12 'Income Taxes: Recognition of Deferred Tax Assets for Unrealised Losses' was issued in January 2016. The amendments will become effective as of January 1, 2017, with earlier application being permitted and is subject to endorsement by the EU. The IASB had concluded that the diversity in practice around the recognition of a deferred tax asset that is related to a debt instrument measured at fair value is mainly attributable to uncertainty about the application of some of the principles in IAS 12. With the amendments IASB wants to further clarify interpretation of the Standard.
IFRS 2 'Share-based Payment' was issued in June 2016. The amendments will become effective as of January 1, 2018, with earlier application being permitted and is subject to endorsement by the EU. The amendments address several requests that the IASB and the IFRS Interpretations Committee received and are therefore intended to provide further clarification on the interpretation of the Standard.
ASML Statutory Interim Report 2016 18
We are currently in the process of determining the impact of implementing these Standards on our Consolidated (Condensed Interim) Financial Statements.
We believe that the effect of all other IFRSs not yet adopted by the EU is not expected to be material.
4. Fair Value Measurements
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement hierarchy prioritizes the inputs to valuation techniques used to measure fair value as follows:
• | Level 1: Valuations based on inputs such as quoted prices for identical assets or liabilities in active markets that the entity has the ability to access. |
• | Level 2: Valuations based on inputs other than level 1 inputs such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities. |
• | Level 3: Valuations based on inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. |
The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). A financial instrument‘s fair value classification is based on the lowest level of any input that is significant in the fair value measurement hierarchy.
Financial Assets and Financial Liabilities Measured at Fair Value on a Recurring Basis
Investments in money market funds (as part of our cash and cash equivalents) have fair value measurements which are all based on quoted prices for identical assets or liabilities.
Our available-for-sale financial instruments consist of deposits with an original maturity beyond three months with financial institutions that have good credit ratings. The fair value of the deposits is determined with reference to quoted market prices in an active market for similar assets or discounted cash flow analysis.
The principal market in which we execute our derivative contracts is the institutional market in an over-the-counter environment with a high level of price transparency. The market participants usually are large commercial banks. The valuation inputs for our derivative contracts are based on quoted prices and quoting pricing intervals from public data sources; they do not involve management judgment.
The valuation technique used to determine the fair value of forward foreign exchange contracts (used for hedging purposes) approximates the NPV technique which is the estimated amount that a bank would receive or pay to terminate the forward foreign exchange contracts at the reporting date, taking into account current interest rates and current exchange rates.
The valuation technique used to determine the fair value of interest rate swaps (used for hedging purposes) is the NPV technique, which is the estimated amount that a bank would receive or pay to terminate the swap agreements at the reporting date, taking into account current interest rates.
Our Eurobonds serve as hedged items in fair value hedge relationships in which we hedge the variability of changes in the fair value of our Eurobonds due to changes in market interest rates with interest rate swaps. The fair value changes of these interest rate swaps are recorded on the Consolidated Condensed Statement of Financial Position under derivative financial instruments and the carrying amounts of the Eurobonds are adjusted for the effective portion of these fair value changes only.
ASML Statutory Interim Report 2016 19
The following table presents our financial assets and financial liabilities that are measured at fair value on a recurring basis:
Unaudited | ||||||||
As of July 3, 2016 | Level 1 | Level 2 | Level 3 | Total | ||||
(in thousands) | EUR | EUR | EUR | EUR | ||||
Assets measured at fair value | ||||||||
Derivative financial instruments 1 | — | 164,452 | — | 164,452 | ||||
Money market funds 2 | 869,659 | — | — | 869,659 | ||||
Short-term investments 3 | — | 1,000,000 | — | 1,000,000 | ||||
Total | 869,659 | 1,164,452 | — | 2,034,111 | ||||
Liabilities measured at fair value | ||||||||
Derivative financial instruments 1 | — | 35,430 | — | 35,430 | ||||
Assets and Liabilities for which fair values are disclosed | ||||||||
Long-term debt 4 | 1,131,016 | — | — | 1,131,016 | ||||
As of December 31, 2015 | Level 1 | Level 2 | Level 3 | Total | ||||
(in thousands) | EUR | EUR | EUR | EUR | ||||
Assets measured at fair value | ||||||||
Derivative financial instruments 1 | — | 133,803 | — | 133,803 | ||||
Money market funds 2 | 659,295 | — | — | 659,295 | ||||
Short-term investments 3 | — | 950,000 | — | 950,000 | ||||
Total | 659,295 | 1,083,803 | — | 1,743,098 | ||||
Liabilities measured at fair value | ||||||||
Derivative financial instruments 1 | — | 20,860 | — | 20,860 | ||||
Assets and Liabilities for which fair values are disclosed | ||||||||
Long-term debt 4 | 1,100,849 | — | — | 1,100,849 | ||||
1 Derivative financial instruments consist of forward foreign exchange contracts and interest rate swaps.
2 Money market funds are part of our cash and cash equivalents.
3 Short-term investments consist of deposits with an original maturity longer than three months.
4 Long-term debt relates to the Eurobonds.
There were no transfers between levels during the first half year of 2016 and 2015.
Financial assets and financial liabilities that are not measured at fair value
The carrying amount of cash and cash equivalents, accounts payable, and other current financial assets and liabilities approximate their fair value because of the short-term nature of these instruments. Accounts receivable and finance receivables also approximate their fair value because of the fact that any recoverability loss is reflected in an impairment loss.
Assets and Liabilities Measured at Fair Value on a Non-recurring Basis
For the six-month period ended July 3, 2016, we had no significant fair value measurements on a non-recurring basis. We did not recognize any impairment charges for goodwill and other intangible assets during the first half year of 2016.
5. Liquidity
Our principal sources of liquidity consist of cash flows from operations, cash and cash equivalents as of July 3, 2016 of EUR 1,926.1 million (December 31, 2015: EUR 2,458.7 million), short-term investments as of July 3, 2016 of EUR 1,000.0 million (December 31, 2015: EUR 950.0 million) and available credit facilities as of July 3, 2016 of EUR 700.0 million (December 31, 2015: EUR 700.0 million). In addition, we may from time to time raise additional capital in debt and equity markets. Our goal is to remain an investment grade rated company and maintain a capital structure that supports this.
6. Critical Accounting Judgments and Key sources of Estimation Uncertainty
In the process of applying our accounting policies, management has made some judgments that have significant effect on the amounts recognized in the Consolidated Condensed Interim Financial Statements. The critical accounting judgments and key sources of estimation uncertainty are consistent with those described in the Statutory Annual Report 2015.
ASML Statutory Interim Report 2016 20
7. Earnings per Share
The basic and diluted net income per ordinary share has been calculated as follows:
Unaudited | Unaudited | |||
For the six-month period ended June 28, 2015 and July 3, 2016 | 2015 | 2016 | ||
(in thousands, except per share data) | EUR | EUR | ||
Net income | 891,255 | 601,218 | ||
Weighted average number of shares outstanding | 431,985 | 425,749 | ||
Basic net income per ordinary share | 2.06 | 1.41 | ||
Weighted average number of shares outstanding: | 431,985 | 425,749 | ||
Plus shares applicable to: | ||||
Options and conditional shares | 2,444 | 2,048 | ||
Dilutive potential ordinary shares | 2,444 | 2,048 | ||
Diluted weighted average number of shares | 434,429 | 427,797 | ||
Diluted net income per ordinary share 1 | 2.05 | 1.41 | ||
1 | The calculation of diluted net income per ordinary share assumes the exercise of options issued under our stock option plans and the issuance of shares under our 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. |
8. Accrued and Other Liabilities
Accrued and other liabilities consist of the following:
Unaudited | ||||
December 31, 2015 | July 3, 2016 | |||
(in thousands) | EUR | EUR | ||
Deferred revenue | 1,737,391 | 1,798,668 | ||
Costs to be paid | 224,597 | 158,571 | ||
Down payments from customers | 606,804 | 504,087 | ||
Personnel related items | 341,554 | 288,587 | ||
Standard warranty reserve | 18,803 | 23,808 | ||
Other | 30,953 | 72,572 | ||
Accrued and other liabilities | 2,960,102 | 2,846,293 | ||
Less: non-current portion of accrued and other liabilities 1 | 412,491 | 322,183 | ||
Current portion of accrued and other liabilities | 2,547,611 | 2,524,110 | ||
1 | The main part of the non-current portion of accrued and other liabilities relates to down payments received from customers regarding future shipments of EUV systems and deferred revenues with respect to services. |
The decrease in accrued and other liabilities mainly relates to the decrease in costs to be paid, down payments from customers, and personnel related items, which is partly offset by an increase in deferred revenue.
Deferred revenue as of July 3, 2016 mainly consists of deferred revenue for system shipments and credits regarding free or discounted products or services as part of volume purchase agreements amounting to EUR 1,421.8 million (December 31, 2015: EUR 1,402.6 million) and extended and enhanced (optic) warranty contracts amounting to EUR 341.6 million (December 31, 2015: EUR 303.3 million). Both include deferred revenues with respect to our EUV systems, NXE:3300B and NXE:3350B. The total deferred revenue for these EUV systems is EUR 216.4 million (December 31, 2015: EUR 251.5 million).
Costs to be paid include an amount of EUR 44.7 million (December 31, 2015: EUR 92.7 million) relating to the expected losses to upgrade EUV sources in the field, which was assumed by ASML as a result of the acquisition of Cymer. In addition, costs to be paid include accrued cost for unbilled services provided by suppliers including contracted labor, outsourced services and consultancy.
Down payments from customers relate to advance payments received from customers for systems that will be shipped in future periods. The decrease in down payments from customers is caused by the shipments of such systems.
Personnel related items mainly consist of accrued profit sharing, accrued management bonuses, accrued vacation days, accrued pension premiums, accrued wage tax and accrued December allowance. The personnel related items mainly decreased as a result of the payment of the annual profit sharing 2015, the 2015 Board of Management bonus and 2015 senior management bonus.
ASML Statutory Interim Report 2016 21
9. Commitments, Contingencies and Guarantees
The nature, scale and scope of the commitments, contingencies and guarantees are in line with those disclosed in the Statutory Annual Report 2015.
10. Income Taxes
Income tax expense is recognized based on management’s best estimate of the annual income tax rate for the full financial year. The estimated annual tax rate for the six-month period ended July 3, 2016 is 23.6 percent compared to 13.5 percent for the six-month period ended June 28, 2015. The increase in the estimated annual tax rate is mainly explained by a so-called bi-lateral advance pricing agreement between the US and Dutch tax authorities on an inter group transfer of intellectual property rights.
11. Segment Disclosure
ASML has one reportable segment, for the development, production, marketing, sale and servicing of advanced semiconductor equipment systems exclusively consisting of lithography related systems. Its operating results are regularly reviewed by the CODM in order to make decisions about resource allocation and assess performance.
Management reporting includes net system sales figures of new and used systems and includes sales by technology.
Net system sales for new and used systems were as follows:
Unaudited | Unaudited | |||
For the six-month period ended June 28, 2015 and July 3, 2016 | 2015 | 2016 | ||
(in thousands) | EUR | EUR | ||
New systems | 2,304,960 | 2,059,466 | ||
Used systems | 76,077 | 50,462 | ||
Net system sales | 2,381,037 | 2,109,928 | ||
Net system sales per technology were as follows:
Unaudited | Unaudited | |||
For the six-month period ended June 28, 2015 and July 3, 2016 | Net system sales | Net system sales | ||
(in thousands) | in units | in EUR | ||
For the six-month period ended July 3, 2016 | ||||
EUV | 2 | 95,993 | ||
ArFi | 34 | 1,642,241 | ||
ArF dry | 4 | 78,919 | ||
KrF | 28 | 252,987 | ||
I-line | 11 | 39,788 | ||
Total | 79 | 2,109,928 | ||
For the six-month period ended June 28, 2015 | ||||
EUV | 1 | 70,473 | ||
ArFi | 42 | 1,943,786 | ||
ArF dry | 4 | 52,886 | ||
KrF | 30 | 277,430 | ||
I-line | 11 | 36,462 | ||
Total | 88 | 2,381,037 | ||
The decrease in net system sales is primarily caused by a lower number of systems sold.
ASML Statutory Interim Report 2016 22
Segment performance is evaluated by our CODM based on US GAAP net income which is measured differently from net income reported in our Consolidated Financial Statements based on IFRS-EU.
Unaudited | Unaudited | |||
For the six-month period ended June 28, 2015 and July 3, 2016 | 2015 | 2016 | ||
(in thousands) | EUR | EUR | ||
Net system sales | 2,381,037 | 2,109,928 | ||
Net service and field option sales | 922,918 | 962,849 | ||
Total net sales | 3,303,955 | 3,072,777 | ||
Cost of system sales | (1,230,324 | ) | (1,146,462 | ) |
Cost of service and field option sales | (541,246 | ) | (616,865 | ) |
Total cost of sales | (1,771,570 | ) | (1,763,327 | ) |
Gross profit | 1,532,385 | 1,309,450 | ||
Other income | 41,600 | 46,889 | ||
Research and development costs | (528,805 | ) | (544,885 | ) |
Selling, general and administrative costs | (170,570 | ) | (179,218 | ) |
Income from operations | 874,610 | 632,236 | ||
Interest and other, net | (7,685 | ) | (7,227 | ) |
Income before income taxes | 866,925 | 625,009 | ||
Income tax expense | (94,495 | ) | (73,251 | ) |
Net income | 772,430 | 551,758 | ||
Differences US GAAP and IFRS-EU | 118,825 | 49,460 | ||
Net income based on IFRS-EU | 891,255 | 601,218 | ||
Segment performance is also evaluated by our CODM based on US GAAP for total assets. The table below presents the measurements and the reconciliation to total assets in the Consolidated Statement of Financial Position:
Unaudited | ||||
December 31, 2015 | July 3, 2016 | |||
(in thousands) | EUR | EUR | ||
Total assets for management reporting purposes | 13,295,031 | 13,303,456 | ||
Differences US GAAP and IFRS-EU | 1,219,749 | 1,358,969 | ||
Total assets based on IFRS-EU | 14,514,780 | 14,662,425 | ||
ASML Statutory Interim Report 2016 23
For geographical reporting, total net sales are attributed to the geographic location in which the customers’ facilities are located. Total non-current assets are attributed to the geographic location in which these assets are located and exclude deferred tax assets, financial instruments, post-employment benefit assets and rights arising under insurance contracts.
Total net sales by geographic region were as follows:
Unaudited | Unaudited | |||
For the six-month period ended June 28, 2015 and July 3, 2016 | 2015 | 2016 | ||
(in thousands) | EUR | EUR | ||
Japan | 368,724 | 196,008 | ||
Korea | 1,020,088 | 804,241 | ||
Singapore | 58,467 | 135,406 | ||
Taiwan | 778,270 | 701,190 | ||
China | 242,812 | 568,420 | ||
Rest of Asia | 1,092 | 887 | ||
Netherlands | 1,708 | 1,328 | ||
Rest of Europe | 139,782 | 102,980 | ||
United States | 693,012 | 562,317 | ||
Total | 3,303,955 | 3,072,777 | ||
Non-current assets by geographic region were as follows:
Unaudited | ||||
December 31, 2015 | July 3, 2016 | |||
(in thousands) | EUR | EUR | ||
Japan | 3,957 | 5,155 | ||
Korea | 28,122 | 13,570 | ||
Singapore | 661 | 907 | ||
Taiwan | 65,664 | 65,986 | ||
China | 1,788 | 1,728 | ||
Rest of Asia | 2,095 | 2,772 | ||
Netherlands | 2,613,605 | 2,694,332 | ||
Rest of Europe | 5,877 | 5,802 | ||
United States | 3,893,553 | 3,908,193 | ||
Total | 6,615,322 | 6,698,445 | ||
For the six-month period ended July 3, 2016, net sales to the largest customer accounted for EUR 682.1 million or 22.2 percent of total net sales (June 28, 2015: EUR 837.3 million or 25.3 percent). Our three largest customers (based on net sales) accounted for EUR 708.6 million or 52.0 percent of accounts receivable and finance receivables at July 3, 2016 (December 31, 2015: EUR 704.1 million or 58.3 percent).
Substantially all of our sales were export sales during the six-month periods ended July 3, 2016 and June 28, 2015.
12. Dividends and Share Buybacks
As part of our financing policy, we aim to pay an annual dividend that will be stable or growing over time. Annually, the BoM will, upon prior approval from the SB, submit a proposal to the AGM with respect to the amount of dividend to be declared with respect to the prior year. The dividend proposal in any given year will be subject to the availability of distributable profits or retained earnings and may be affected by, among other factors, the BoM’s views on our potential future liquidity requirements, including for investments in production capacity, the funding of our R&D programs and for acquisition opportunities that may arise from time to time; and by future changes in applicable income tax and corporate laws. Accordingly, it may be decided to propose not to pay a dividend or to pay a lower dividend with respect to any particular year in the future.
In the AGM of April 29, 2016, a dividend of EUR 1.05 per ordinary share of EUR 0.09 nominal value was adopted for 2015. As a result, a total dividend amount of EUR 445.9 million was paid to our shareholders on May 17, 2016.
In addition to dividend payments, we intend to return cash to our shareholders on a regular basis through share buybacks or capital repayment, subject to our actual and anticipated level of liquidity requirements, our current share price, other market conditions and other relevant factors.
On January 20, 2016 we announced a new share buyback program, to be executed within the 2016-2017 time frame. As part of this program, we intend to purchase shares up to EUR 1.5 billion, which includes an amount of approximately EUR 500 million remaining from the prior program, announced on January 21, 2015. We intend to cancel the shares upon repurchase. This buyback program started on January 21, 2016. Through July 3, 2016 we acquired 4.6 million shares under this program for a total consideration of EUR 386.5 million. We will pause our share buyback program for a few quarters while we are in the midst of the HMI acquisition process. We continue to expect to complete the full 2016-2017 program, yet it may be further suspended, modified or discontinued at any time.
ASML Statutory Interim Report 2016 24
13. Related Party Transactions
On July 9, 2012, we announced our CCIP to accelerate our development of EUV technology beyond the current generation and our development of future 450mm silicon wafer technology. One of the Participating Customers, Intel, agreed to fund EUR 829 million for our R&D projects. In addition Intel also agreed to invest in ordinary shares equal to 15 percent of our issued share capital (calculated giving effect to our synthetic share buyback in November 2012). Due to the equity investment, Intel is considered a related party of ASML as of July 9, 2012.
The total net sales and the net outstanding liability to Intel (and its affiliates) were as follows:
For the six-month period ended | June 28, 2015 | July 3, 2016 | ||
(in thousands) | EUR | EUR | ||
Total net sales to Intel | 357,098 | 682,094 | ||
December 31, 2015 | July 3, 2016 | |||
(in thousands) | EUR | EUR | ||
Net outstanding liability to Intel | 700,156 | 465,149 | ||
There have been no transactions during the first half year of 2016, and there are currently no transactions, between ASML or any of its subsidiaries, and any other significant shareholder, and any director or officer or any relative or spouse thereof other than ordinary course compensation arrangements. During the first half year of 2016, there has been no, and at present there is no, outstanding indebtedness to ASML owed by or owing to any director or officer of ASML or any associate thereof.
14. Subsequent Events
Subsequent events were evaluated up to July 19, 2016 which is the date the Consolidated Condensed Interim Financial Statements included in this Statutory Interim Report for the six-month period ended July 3, 2016 were approved.
On July 7, 2016, we settled two eurobond offerings for an aggregate amount of EUR 1,500 million Senior Notes, consisting of EUR 500 million of bonds due 2022 and EUR 1,000 million of bonds due 2026, with interest payable annually on July 7. The notes are redeemable at the option of ASML, in whole or in part, at any time by paying a make whole premium, and unless previously redeemed, will be redeemed at 100 percent of their principal amount on July 7, 2022 and July 7, 2026 respectively. Both eurobond offerings are intended to partially fund the intended acquisition of HMI.
Veldhoven, the Netherlands
July 19, 2016
Prepared by
The Board of Management:
Peter T.F.M. Wennink
Martin A. van den Brink
Frits J. van Hout
Frédéric J.M. Schneider-Maunoury
Wolfgang U. Nickl
ASML Statutory Interim Report 2016 25
ASML Statutory Interim Report 2016 26
Other Information
ASML Statutory Interim Report 2016 27
Information and Investor Relations
Financial Calendar
October 19, 2016
Announcement of Third Quarter results for 2016
January 18, 2017
Announcement of Fourth Quarter Results for 2016 and Annual Results for 2016
April 26, 2017
Annual General Meeting of Shareholders
Fiscal Year
ASML’s fiscal year ends on December 31, 2016
Listing
Our ordinary shares are listed for trading in the form of registered ASML NASDAQ shares and in the form of registered ASML shares Euronext Amsterdam. The principal trading market of our ordinary shares is Euronext Amsterdam. Our ordinary shares also trade on NASDAQ.
Investor Relations
ASML Investor Relations supplies information regarding the company and its business opportunities to investors and financial analysts. Annual Reports, quarterly releases and other information are also available on our Website.
ASML Statutory Interim Report 2016 28
ASML Worldwide Contact Information
Corporate Headquarters
De Run 6501
5504 DR Veldhoven
The Netherlands
Mailing Address
P.O. Box 324
5500 AH Veldhoven
The Netherlands
United States Main Office
2650 W Geronimo Place
Chandler, AZ 85224
U.S.A.
Asia Main Office
Suite 1702-3, 17F
100 Queens Road Central
Hong Kong
Investor Relations
phone: +31 40 268 3938
email: [email protected]
For additional contact information please visit our Website.
ASML Statutory Interim Report 2016 29
Definitions
Name | Description | |
AFM | Autoriteit Financiële Markten; Authority for the Financial Markets of the Netherlands | |
AGM | Annual General Meeting of Shareholders | |
ArF | Argon Fluoride | |
ArFi | Argon Fluoride Immersion | |
ASML | ASML Holding N.V. and its subsidiaries | |
ASP | Average Selling Price | |
BoM | Board of Management of ASML | |
CCIP | Customer Co-Investment Program | |
CODM | Chief Operating Decision Maker | |
Cymer | Cymer Inc., Cymer LLC and its subsidiaries | |
EPS | Earnings per share | |
ESOP | Employee Stock and Stock Option Plans | |
EU | European Union | |
Eurobonds | Our EUR 600 million 5.75 percent senior notes due 2017 and our EUR 750 million 3.375 percent senior notes due 2023 | |
EUV | Extreme Ultraviolet | |
FASB | Financial Accounting Standards Board | |
FTEs | Full-time equivalents | |
HEC | Hermes-Epitek Corporation | |
HMI | Hermes Microvision, Inc. | |
Holistic Lithography | Adjusting the patterning process steps as a whole, in order to support optimization of the entire chip making process | |
i-line | Lithography system with a mercury lamp as light source | |
IAS | International Accounting Standards | |
IASB | International Accounting Standards Board | |
IC | Integrated Circuit | |
IFRS | International Financial Reporting Standards | |
IFRS-EU | International Financial Reporting Standards as adopted by the European Union | |
Intel | Intel Corporation | |
KrF | Krypton Fluoride | |
Logic | Integrated Device Manufacturers and Foundries | |
Memory | NAND-Flash Memory and DRAM Memory chip makers | |
NASDAQ | NASDAQ Stock Market LLC | |
NPV | Net Present Value | |
NRE | Non Recurring Engineering | |
NRE Funding Agreements | The Intel NRE Funding Agreements, the TSMC NRE Funding Agreement, and the Samsung NRE Funding Agreement | |
NXE | NXE platform; a new platform utilizing the concepts of the TWINSCAN platform with complete new technologies in three areas: light source, lens system, and vacuum body | |
NXT | TWINSCAN NXT systems; an improved version of the TWINSCAN systems, introducing new stages and stage position control technology, which enables improved imaging and overlay | |
Participating Customers | The participants in the Customer Co-Investment Program: Intel, TSMC, and Samsung | |
R&D | Research and Development | |
SB | Supervisory Board of ASML | |
VWAP | Volume-Weighted Average Price | |
US GAAP | Generally Accepted Accounting Principles in the United States of America | |
Website | www.asml.com | |
ASML Statutory Interim Report 2016 30
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