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 February 11, 2015
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
2
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.
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ASML HOLDING N.V. (Registrant) |
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Date: February 10, 2015 |
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By: |
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/s/ Peter T.F.M. Wennink |
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Peter T.F.M. Wennink |
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Chief Executive Officer |
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Exhibit 99.1
Statutory Annual Report 2014
Contents
A summary of all abbreviations, technical terms and definitions (of capitalized terms) used in this Statutory Annual Report
is set forth on page 144 through 147.
This report comprises regulated information within the meaning of articles 1:1 and 5:25c of the Dutch
FMSA.
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.
© 2015, ASML Holding N.V. All Rights Reserved
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ASML STATUTORY REPORT 2014 |
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Board of Management
Peter T.F.M. Wennink (1957)
President, Chief
Executive Officer and
Member of the Board of Management
First appointed in 1999
Dutch nationality
Martin A. van den Brink (1957)
President, Chief Technology Officer and
Member of the Board of Management
First appointed in
1999
Dutch nationality
Frits J. van
Hout (1960)
Executive Vice President, Chief Program Officer and
Member of the Board of Management
First appointed in 2009
Dutch nationality
Frédéric J.M.
Schneider-Maunoury (1961)
Executive Vice President, Chief Operations Officer and
Member of the Board of Management
First appointed in 2010
French nationality
Wolfgang U. Nickl (1969)
Executive Vice President, Chief Financial Officer and
Member of the Board of Management
First appointed in 2014
German nationality
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ASML STATUTORY REPORT 2014 |
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Supervisory Board
Arthur P.M. van der Poel (1948)
Chairman
Former member of the Board of Management of Royal Philips Electronics N.V.
First appointed 2004
Current term until 2016
Dutch nationality
Fritz W. Fröhlich (1942)
Vice Chairman
Former Deputy Chairman and Chief
Financial Officer of Akzo Nobel N.V.
First appointed 2004
Current term until 2015
German nationality
Pauline F.M. van der Meer Mohr (1960)
President of the Executive Board of the Erasmus University
Rotterdam
First appointed 2009
Current
term until 2017
Dutch nationality
Wolfgang H. Ziebart (1950)
Group Engineering
Director of Jaguar Land Rover Ltd.
First appointed 2009
Current term until 2017
German nationality
Clara (Carla) M.S. Smits-Nusteling (1966)
Former Chief Financial Officer and member of the Board
of Management of Royal KPN N.V.
First appointed 2013
Current term until 2017
Dutch nationality
Douglas A. Grose (1950)
Former Chief Executive Officer of GlobalFoundries
First appointed 2013
Current term until 2017
United States nationality
Johannes
(Hans) M.C. Stork (1954)
Senior Vice President and Chief Technology Officer of ON Semiconductor Corporation
First appointed in 2014
Current term until 2018
United States nationality
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ASML STATUTORY REPORT 2014 |
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Supervisory Board Report
In this section of the 2014 Statutory Annual Report of ASML, the Supervisory Board reports on its activities in 2014, and on the information required to be
provided in this report based on the Code.
Overview of 2014
The year 2014 was a milestone for ASML, as ASML celebrated its 30th anniversary. It was a very successful year. Important progress was made with the EUV technology and the first order for a NXE:3350B system
was received. Sales of ASMLs newest Immersion systems (NXT:1970Ci) increased and new Holistic Lithography products were successfully launched. Progress was further made in respect of the Cymer integration. The workforce of ASML grew to 14,072
employees measured in FTEs in 2014.
Also from a financial point of view 2014 was a good year for ASML with net sales of EUR 5,856.3 million
and net income of EUR 1,418.3 million. ASML returned EUR 968.0 million to its shareholders through combined dividend and share buybacks.
The Supervisory Board extensively discussed these topics throughout the year. Another important topic in 2014 for the Supervisory Board and the Selection
and Nomination Committee was its future composition.
At the 2014 AGM, Mr. F.J.M. (Frederic) Schneider-Maunoury was reappointed as member of
the BoM for another period of four years. ASMLs CFO Mr. W.U. (Wolfgang) Nickl was first appointed as member of the BoM for a period of four years.
Mr. J.M.C. (Hans) Stork was appointed as member of the Supervisory Board at the 2014 AGM for a period of four years and Mr. F.W. (Fritz) Fröhlich was reappointed for a period of one year.
Mr. O. (Orest) Bilous retired from the Supervisory Board. The Supervisory Board is grateful for his commitment and valuable contribution to ASMLs Supervisory Board, not only as a member of the Supervisory Board but also as member and
Chairman of the Selection and Nomination Committee and Technology and Strategy Committee.
With great sadness, the Supervisory Board remembers
the late Ms. H.C.J. (Ieke) van den Burg, member of the Supervisory Board of ASML and member of its Selection and Nomination Committee and Remuneration Committee, who passed away on September 28, 2014. Over the past nine years, Ms. Van
den Burg was an engaged and knowledgeable member of the ASML Supervisory Board. The Supervisory Board is grateful for the time she dedicated to ASML.
Meetings and Activities of the Supervisory Board
The Supervisory Board held five physical
meetings in 2014. Three conference calls were held for the purpose of discussing the quarterly results and the press releases related thereto. In addition, several informal meetings and telephone calls took place among Supervisory Board and/or BoM
members to consult with each other on various topics.
The physical Supervisory Board meetings and meetings of the Supervisory Board Committees
are held over several days, thus ensuring sufficient time for the meetings and discussion. To continuously stay abreast of the developments in the semiconductor market, the BoM provides the Supervisory Board each meeting with a market and customer
update, expectations for the near future, the development of ASMLs share price and analyst perception of ASML. The Supervisory Board further discussed specific themes such as strategy, risk management incl. ASMLs business risks,
operational performance, talent management and succession planning, business priorities and the corporate objectives and targets. The budget process at ASML is semi-annual and therefore the budget is discussed and reviewed twice per year.
The Supervisory Board also reviewed ASMLs CR strategy (for further details on ASMLs CR reference is made to the 2014 CR Report),
including the actions (to be) implemented to achieve the sustainability target set with respect thereto. CR was also addressed in the Remuneration Committee as sustainability is a long term qualitative target for the members of the BoM.
The attendance rate both of the Supervisory Board meetings and of the meetings of the four Committees was close to 100%.
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ASML STATUTORY REPORT 2014 |
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In general, after each Supervisory Board meeting, the Supervisory Board members meet inter se to discuss topics
such as the functioning and composition of the Supervisory Board and the BoM.
During all physical meetings of the Supervisory Board, most BoM
members were present. Also outside the meetings, members of the Supervisory Board and its Committees interacted regularly with the BoM and the individual members. Also, several informal meetings and telephone calls took place among Supervisory Board
members to consult with each other on various topics. In the second half of 2014 the full Supervisory Board and BoM visited Cymer and ASMLs US office in Chandler, Arizona, US and held its regular meeting there.
Annually, the Supervisory Board performs an evaluation related to the functioning of the Supervisory Board, its Committees, the individual members and the
Supervisory Boards chairman, as well as the functioning of the BoM and the individual members. Also the composition of both boards is addressed. The Supervisory Board has embedded this evaluation process in its processes and activities as the
Supervisory Board attaches great value to the evaluations. They ensure continuous focus on the quality of the activities, composition and functioning of the Supervisory Board and its Committees and relationship with the BoM. In 2013, an in-depth
evaluation of the Supervisory Board was performed by an external party. The main conclusions of this evaluation were extensively discussed in the Supervisory Board at the beginning of 2014, and subsequently, to the extent relevant, in the various
Committees and with the BoM. The Supervisory Board self-evaluation process in 2014 built on the observations and recommendations of this review.
In 2014, a delegation of the Supervisory Board met twice with the Works Council. The topics of these meetings generally evolve around important internal and
external developments relevant for ASML and its employees, ASMLs financial position and strategy. In 2014, focus was on the progress of EUV technology, the overall performance of ASML, the composition of the Supervisory Board and the
remuneration of the BoM. The Supervisory Board considers these meetings very valuable.
For further details on the structure, organization and
responsibilities of the Supervisory Board, reference is made to the Corporate Governance Paragraph of this 2014 Statutory Annual Report.
Composition of the Supervisory Board
Mr. Stork was appointed as member of the Supervisory Board at the 2014 AGM for a period of four years pursuant to the enhanced recommendation right of
the Works Council and Mr. Fröhlich was reappointed for a period of one year. Mr. Bilous retired from the Supervisory Board. The Supervisory Board is grateful for his commitment and valuable contribution to ASMLs Supervisory
Board, not only as a member of the Supervisory Board but also as chairman of the Selection and Nomination Committee and Technology and Strategy Committee.
Until the passing away of Ms. Van den Burg, the Supervisory Board consisted of eight members, of which three female. At the end of 2014, the Supervisory Board consists of seven members. Three of the
Supervisory Board members have the Dutch nationality, two members have the German nationality and two members have the United States nationality. Two of the seven Supervisory Board members are female. The average age is 61 years, whereby the ages
vary from 48 to 72 years. For information regarding the personal data of the members of the Supervisory Board, see Supervisory Board Report - Information on Supervisory Board Members.
The Supervisory Board is of the opinion that its current members are all independent as defined by the Code. Neither the Chairman nor any other member of the Supervisory Board is a former member of
ASMLs BoM, or has another relationship with ASML which can be judged not independent of ASML. Potentially, however, when looking for the most suitable candidate for a vacancy, the Supervisory Board may want - or need - to nominate
candidates for appointment to the General Meeting of Shareholders who do not fully comply with the independence criteria as listed in the Code. This could be the case if the profile for a vacancy requires particular knowledge of or experience in the
semiconductor - and related - industries, it being noted that the semiconductor industry has relatively few players. In those circumstances, ASML and the candidates will ensure that any such business relationship does not compromise the
candidates independence.
The Supervisory Board spent considerable time discussing its future composition, in view of the rotation schedule
and envisaged changes in 2015 and subsequent years. For the fulfillment of vacancies several factors are taken into consideration. The Supervisory Board profile includes the intention to have at least 30% representation of each gender in ASMLs
Supervisory Board. This aspect has been taken into account in the process that has led to the nomination of the following three new Supervisory Board members to the 2015 AGM: Ms. A. (Annet) Aris, Mr. G.J. (Gerard) Kleisterlee and
Mr. R.D. (Rolf-Dieter) Schwalb. The agenda and explanatory notes for the 2015 AGM will contain further information in this respect.
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ASML STATUTORY REPORT 2014 |
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Supervisory Board Committees
The Supervisory Board has installed four Committees: the Audit Committee, Remuneration Committee, Selection and Nomination Committee, and the Technology and Strategy Committee. Each Committee operates
pursuant to its charter, which is based on the rules and regulations of the Code, but also reflects practices developed over the years. The responsibilities and authorities of the Committees are based on a mandate of the Supervisory Board, whereas
the Supervisory Board retains full responsibility for the activities of the four Committees. The Committees prepare the decisions to be made by the full Supervisory Board, each in its own field of expertise.
In the plenary Supervisory Board meetings, the Chairman of each Committee provides a report, verbally and/or in writing, on the topics discussed during the
Committee meetings. In addition, the minutes of the Committee meetings are available for all Supervisory Board members, so that they have all information sufficient to understand ASMLs current state of affairs, thus ensuring that the full
Supervisory Board is able to make the appropriate decisions.
Audit Committee
The current members of ASMLs Audit Committee are Mr. Fröhlich (Chairman), Mr. Van der Poel, Ms. Smits-Nusteling and Ms. Van der Meer Mohr. The members of the Audit Committee
are all independent members of the Supervisory Board.
In 2014, the Audit Committee met four times and held four conference calls. Three calls
were held to discuss the quarterly results and the related press release; one call was held for the purpose of discussing the results of the year-end US GAAP and IFRS-EU audits.
In 2014, the Audit Committee focused on amongst others, revenue recognition for systems, inventory excess and obsolete provision, sensitivities in valuation of goodwill and intangible fixed assets. The Audit
Committee further discussed the operational short and long term performance with extensive discussions around the impact of various EUV performance scenarios and its impact on results, cash generations and ASMLs financing and return policy.
The financial impact of relationships with key strategic suppliers was also part of these discussions. The Audit Committee (and Supervisory Board) agree with ASMLs (conservative) principles with respect to its (future) financing policy and
return policy, which helps ASML to respond properly to the cyclical nature of the semiconductor equipment industry.
In general, the Audit
Committee continuously monitors the activities with respect to ASMLs risk management and internal controls, including the internal controls over financial reporting in light of SOX 404. The Audit Committee reviews and approves the audit plans
of the internal and external auditors and monitors their audit activities. After each physical meeting, the Audit Committee had a one-to-one meeting with the external auditor without BoM members being present. Annually, the Audit Committee reviews
amongst others ASMLs tax strategy, tax systems and tax planning as well as investor relations activities. ASMLs management of the IT landscape is reviewed on a semi-annual basis.
With respect to the external auditors Management Letters over the financial years 2013 and 2014, the Audit Committee confirms that the Management Letter contained no significant items that need to be
mentioned in this report.
In a number of meetings, the changes in the laws related to the audit profession and the consequences thereof for
external auditors in general and for ASMLs external auditor specifically were discussed.
The partner of the external auditor rotated after
the 2013 audit in order to comply with the mandatory partner rotation.
In order to comply with the mandatory audit firm rotation as per the 2016
audit, the Audit Committee has conducted an extensive selection procedure during 2014 to select a proposed new external auditor. The Audit Committee has formed a Committee specifically for that selection process, in which the various candidate audit
firms gave presentations. The Supervisory Board will propose to appoint the new auditor at the 2015 AGM, upon advice of the Audit Committee and BoM.
Selection and Nomination Committee
The current members of the Selection and Nomination Committee
are Mr. Van der Poel (Chairman), Mr. Grose and Mr. Fröhlich. Ms. Van den Burg was an active member of this Committee until she passed away on September 28, 2014.
The Selection and Nomination Committee held 3 scheduled meetings and several additional meetings on an ad-hoc basis in 2014.
The Selection and Nomination Committee prepared the decision with respect to the extension of Mr. Schneider-Maunourys appointment term as member of the BoM and the appointment of Mr. Nickl as
member of the BoM per the 2014 AGM.
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ASML STATUTORY REPORT 2014 |
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The composition of the BoM and the Supervisory Board was also discussed, and attention was paid to the future
composition of the Supervisory Board and its Committees. The profile and search processes for the new candidates of the Supervisory Board were extensively discussed. Other discussion items in 2014 were the amendment of the Supervisory Board profile,
and the functioning of the individual members of the Supervisory Board and the BoM.
The Selection and Nomination Committee is also responsible
for monitoring Corporate Governance developments.
Remuneration Committee
The current members of ASMLs Remuneration Committee are Mr. Ziebart (Chairman) and Ms. Van der Meer Mohr. Ms. Van den Burg was an active member of this Committee until she passed away on
September 28, 2014.
In 2014, the Remuneration Committee met four times in scheduled meetings, either in person or via conference call.
Other topics discussed in 2014 included: the share and option plans for the employees, the targets and remuneration package for the BoM
including adjustments to the pension arrangements for the BoM, the assessment of the shareholding positions of the BoM based upon the share ownership guideline of the Remuneration Policy and the 2014 Remuneration Report.
In cooperation with the Audit Committee and the Technology and Strategy Committee, the Remuneration Committee reviewed and proposed to the Supervisory Board
the 2014 targets for the BoM and also provided its recommendations to the Supervisory Board with respect to the achievement of the 2014 targets and related appropriate compensation levels for the BoM members over the financial year 2014.
An external advisor in the field of remuneration for members of Boards of Management assisted the Remuneration Committee in its activities. This external
advisor does not provide remuneration advice to the BoM.
Technology and Strategy Committee
The current members of ASMLs Technology and Strategy Committee are Mr. Grose (Chairman), Mr. Stork, Mr. Van der Poel, and
Mr. Ziebart. In addition, the Technology and Strategy Committee may appoint one or more advisors from within and/or from outside ASML.
In
2014, three external advisors and three internal advisors participated in the Technology and Strategy Committee meetings. The advisors to the Technology and Strategy Committee may be invited as guests to (parts of) the meetings of the Committee, but
are not entitled to vote at the meetings. The Technology and Strategy Committee held six scheduled meetings either in person or by conference call in 2014. In general, the physical meetings last a full day. One meeting was held for the purpose of
discussing the technology targets for the BoM; the achievements related thereto were discussed in a subsequent meeting.
The Technology and
Strategy Committee reviews and advises the Supervisory Board on specific ASML technology matters important at that time and discusses the proposals for ASMLs future product- and technology strategies. The Technology and Strategy Committee is
instrumental in preparing the decisions and/or advice for the Supervisory Board related to these topics. Important topics this year were the execution and implementation of technology programs and corporate strategy initiatives.
For a further description of the responsibilities of the Supervisory Board Committees, reference is made to the Corporate Governance Paragraph of this 2014
Statutory Annual Report.
Remuneration of the Supervisory Board
The remuneration of the Supervisory Board members is described in Note 31 to the Consolidated Financial Statements. The Supervisory Boards remuneration was amended in 2014 after approval thereof by the
2014 AGM. In addition to their fee as member of the Supervisory Board, Supervisory Board members also receive a fee for each Committee membership, as well as a net cost allowance. The Supervisory Board remuneration is not dependent on ASMLs
financial results. None of the members of the Supervisory Board own shares or options on ASMLs shares. ASML has not granted any loans to, nor has granted any guarantees in favor of, any of the members of the Supervisory Board.
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ASML STATUTORY REPORT 2014 |
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Composition of the Board of Management
The BoM currently consists of five members. As mentioned earlier in this report, the Supervisory Board reappointed Mr. Schneider-Maunoury for another period of four years upon notification to the 2014
AGM. The indefinite appointment term of Mr. Wennink and Mr. Van den Brink was converted into a definite appointment term of four years per the 2014 AGM. Mr. Nickl was appointed as member of the BoM upon notification to the 2014 AGM.
For further details on the members of the BoM, see page 1 of this 2014 Statutory Annual Report.
Remuneration of the Board of Management
General
In 2013, the General
Meeting of Shareholders adopted a revised version of the Remuneration Policy for the BoM, which came into effect per January 1, 2014. Some adjustments to the Remuneration Policy were proposed to the 2014 AGM which were approved and adopted,
including the share ownership guidelines which state that members of the BoM are required to hold at least two times their base salary in the form of shares.
The Remuneration Committee oversees the development and implementation of compensation and benefit programs for the BoM, as well as the compensation levels for the individual members of the BoM. It provides
advice to the BoM on the policy and implementation of the compensation for senior management below the BoM.
The Remuneration Committee reviews
the corporate objectives and targets relevant to the compensation of the members of the BoM. It ensures that targets for the BoM and senior management are aligned and support the long term strategy of ASML. These targets relate to short and long
term technology, customer and financial performance, the three main pillars of long term value creation at ASML. The Remuneration Committee cooperates with the Audit Committee and the Technology and Strategy Committee in setting the targets. The
Remuneration Committee evaluates the achievements of the BoM with respect to those objectives and targets (again, in cooperation with the Audit Committee and the Technology and Strategy Committee), and it provides recommendations to the Supervisory
Board on the resulting compensation levels for the members of the BoM. Details of the remuneration targets and their link to the ASML long term strategy can be found in the 2014 Remuneration Report.
The external auditor performs agreed-upon procedures on the targets achieved to assess compliance with the Remuneration Policy.
The Supervisory Board has the discretionary power to adjust variable remuneration components both upwards and downwards if these would, in the opinion of
the Supervisory Board, lead to an unfair result due to extraordinary circumstances during the period in which the predetermined performance criteria have been or should have been achieved (Ultimum Remedium - provision II.2.10). Besides this, the
Supervisory Board may recover from the BoM any variable remuneration awarded on the basis of incorrect financial or other data (Claw Back Clause - provision II.2.11).
Outline Remuneration Report
In summary, the total remuneration for members of the BoM is derived
from the median level of the appropriate top executive pay market (a reference market consisting of a group of European companies mainly in the ICT and Technology sector) and consists of (i) base salary; (ii) short term performance
incentives (in cash); (iii) long term performance incentives (in shares) and (iv) other benefits. The payout of the cash incentive and vesting of performance shares is dependent on the achievement of predetermined financial and
non-financial performance criteria.
The short term incentive refers to the annual performance related cash incentive that is applicable to all
members of the BoM. The target level of the short term incentive is 60% of base salary. In case of excellent performance the maximum opportunity amounts to 90% of base salary. The long term incentive refers to the share based incentive. All members
of the BoM are eligible to receive performance related shares. The target level of the long term incentive is set at 70% of base salary. In case of excellent performance the maximum opportunity amounts to 140% of base salary. See Note 31 to the
Consolidated Financial Statements for more information.
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ASML STATUTORY REPORT 2014 |
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Gratitude to ASML Employees
The Supervisory Board would like to thank and recognize all ASML employees including the temporary work force who have been able to again achieve so much this past year: the progress made with EUV, the
efforts made to supply the demand and the great overall results of ASML.
The Supervisory Board realizes the pressure that the extreme swings in
demand and in the continuing demand for leading-edge technology put on ASML employees. Therefore, the Supervisory Board wants to express its appreciation for all the efforts and achievements of ASML employees throughout these years.
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ASML STATUTORY REPORT 2014 |
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Information on Supervisory Board Members
Presented below is the personal data of all Supervisory Board members that is required to be disclosed in this report in order to comply with the Code.
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F.W. Fröhlich |
Gender |
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Male |
Age |
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72 |
Profession |
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Former Deputy Chairman and CFO of Akzo Nobel N.V. |
Principal position |
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Retired |
Nationality |
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German |
Other relevant positions |
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Chairman of the Supervisory Board of Randstad Holding N.V., member of the Supervisory Boards of Allianz Nederland N.V. and Rexel SA, member of the Board of Directors of Prysmian
Group. |
First appointed |
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2004 |
Current term until |
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2015 |
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D.A. Grose |
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Gender |
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: |
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Male |
Age |
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: |
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64 |
Profession |
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Former CEO of GlobalFoundries |
Principal position |
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Retired |
Nationality |
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: |
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United States |
Other relevant positions |
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: |
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Member of the Board of Directors of SBA Materials, Inc. |
First appointed |
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: |
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2013 |
Current term until |
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: |
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2017 |
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P.F.M. van der Meer Mohr |
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Gender |
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: |
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Female |
Age |
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: |
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54 |
Profession |
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President of the Executive Board of the Erasmus University Rotterdam |
Nationality |
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: |
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Dutch |
Other relevant positions |
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: |
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Member of the Supervisory Board of Royal DSM N.V., Chairperson of the Executive Board of the Fulbright Center and member of the Board of Directors of Stichting Het Concertgebouw
Fonds |
First appointed |
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: |
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2009 |
Current term until |
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: |
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2017 |
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A.P.M. van der Poel |
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Gender |
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: |
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Male |
Age |
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: |
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66 |
Profession |
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: |
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Former member of the Board of Management of Royal Philips Electronics N.V. |
Principal position |
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: |
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Retired |
Nationality |
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: |
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Dutch |
Other relevant positions |
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: |
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Non-executive member of the Board of Directors of Gemalto Holding N.V. and Chairman of the Supervisory Board of BDR Thermea |
First appointed |
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2004 |
Current term until |
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: |
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2016 |
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C.M.S. Smits-Nusteling |
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Gender |
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: |
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Female |
Age |
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: |
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48 |
Profession |
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: |
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Former CFO and member of the Board of Management of Royal KPN N.V. |
Nationality |
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: |
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Dutch |
Other relevant positions |
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: |
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Non-executive director of the Board of Tele2 AB |
First appointed |
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: |
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2013 |
Current term until |
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: |
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2017 |
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ASML STATUTORY REPORT 2014 |
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9 |
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J.M.C. Stork |
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Gender |
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: |
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Male |
Age |
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: |
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60 |
Profession |
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: |
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Senior Vice President and CTO of ON Semiconductor Corporation |
Nationality |
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: |
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United States |
Other relevant positions |
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: |
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Member of the Scientific Advisory Board of imec |
First appointed |
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: |
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2014 |
Current term until |
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2018 |
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W.H. Ziebart |
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Gender |
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: |
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Male |
Age |
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: |
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65 |
Profession |
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Former President and CEO of Infineon Technologies A.G. |
Principal position |
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Group Engineering Director, Jaguar Land Rover Limited |
Nationality |
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: |
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German |
Other relevant positions |
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: |
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Chairman of the Supervisory Board of Nordex SE |
First appointed |
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2009 |
Current term until |
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2017 |
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Company Secretary |
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Mr. R.F. Roelofs |
Appointed |
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2002 |
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Deputy Company Secretary |
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Ms. S.A.M. ten Haaf |
Appointed |
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The Supervisory Board,
Veldhoven, February 10, 2015
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Corporate Governance Paragraph
I. General1
ASML Holding N.V. is a public limited liability company, with registered seat in Veldhoven, the Netherlands and is governed by Dutch law.
Since 1995, ASMLs shares are listed on Euronext Amsterdam and also on NASDAQ.
ASML continuously monitors and assess applicable Dutch, U.S.
and other relevant corporate governance codes, rules, and regulations. ASML is subject to the Code. Because ASML is also listed on NASDAQ, ASML is required to comply with the Sarbanes-Oxley Act, as well as NASDAQ Listing Rules, and the rules and
regulations promulgated by the SEC.
For the full text of the Code, please refer to the Website www.commissiecorporategovernance.nl. For the full
text of the Sarbanes-Oxley Act, as well as NASDAQ listing rules, and the rules and regulations promulgated by the SEC, see www.sec.gov/about/laws/soa2002.pdf, http://nasdaq.cchwallstreet.com, and www.sec.gov/about.shtml respectively.
ASMLs Supervisory Board and BoM, who are responsible for ASMLs corporate governance structure, will continue their efforts to ensure that
ASMLs practices and procedures comply with both Dutch and U.S. corporate governance requirements. In this paragraph, we address ASMLs corporate governance structure, thereby referring to the principles and best practices set forth in the
Code, as well as with the applicable laws with respect to corporate governance. ASMLs Supervisory Board and BoM are of the opinion that ASML complies with all recommendations in the Code. However, ASML has provided explanations with respect to
one recommendation, as ASMLs practice with respect to that recommendation could be perceived as non-compliant with the Code.
Material
changes in the corporate governance structure of ASML and/or in its compliance with the Code will be discussed at the annual general meeting as a separate agenda item.
On 29 January 2015, shortly before the finalization of this report, the Dutch Corporate Governance Code Monitoring Committee published a monitoring report and announced the preparation of a consultation
document which may ultimately result in a revision of the Code. As part of the continued effort of ASMLs Supervisory Board and BoM to ensure that our practices and procedures comply with Dutch corporate governance requirements, we intend to
carefully monitor these developments and assess the implications for our corporate governance structure in the period to come.
II. Board of
Management
Role and Procedure
ASMLs BoM is responsible for managing ASML, under the chairmanship of its President and CEO and vice-chairmanship of the President and CTO,
constituting dual leadership. The current BoM comprises five members.
Although the various management tasks are divided among the members of the
BoM, the BoM remains collectively responsible for the management of ASML, the deployment of ASMLs strategy, ASMLs risk profile and policies, the achievement of ASMLs objectives, ASMLs results and the corporate social
responsibility aspects relevant to ASML.
In fulfilling its management tasks and responsibilities, the BoM considers the interests of ASML and
the business connected with it, as well as the interests of ASMLs stakeholders. The BoM is accountable to the Supervisory Board and the General Meeting of Shareholders for the performance of its management tasks.
ASML has a two-tier board structure: the Supervisory Board supervises and advises the BoM in the execution of its tasks and responsibilities. The BoM
provides the Supervisory Board with all information, in writing or otherwise, necessary for the Supervisory Board to fulfill its duties. Besides the information provided in the regular meetings, the BoM keeps the Supervisory Board frequently
informed on developments relating to ASMLs business, financials, operations, and industry developments in general.
1) |
This Corporate Governance Paragraph also includes the information that is required to be disclosed pursuant to article 2a of the Decree of 23 December 2004 regarding
further provisions on the substance of annual reports. |
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Important decisions of the BoM that require the approval of the Supervisory Board are, among others:
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The operational and financial objectives; |
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The strategy designed to achieve the objectives; |
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The parameters to be applied in relation to the strategy to achieve the objectives, and |
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Corporate responsibility issues that are relevant to ASML. |
The main elements of the operational and financial objectives, the strategy to achieve the objectives, and the parameters to be applied are included in the Report of the BoM. In the risk factors
section of this 2014 Statutory Annual Report the sensitivity of the results to both external and internal factors and variables is described.
The Rules of Procedure for the BoM contain among other topics the general responsibilities of the BoM, the relationship with the Supervisory Board and
various stakeholders, the decision making process within the BoM, and the logistics surrounding the meetings. The Rules of Procedure are posted in the Corporate Governance section of ASMLs Website.
Appointment, other functions
Members of the
BoM are appointed by the Supervisory Board upon recommendation by the Selection and Nomination Committee and upon notification to the General Meeting of Shareholders. Members of the BoM are appointed for a period of four years, where after
reappointment is possible.
At the 2014 AGM, Mr. Schneider-Maunoury was reappointed for a period of four years and Mr. Nickl,
ASMLs CFO since December 1, 2013, was appointed as member of the BoM for a period of four years. The indefinite appointment term of Mr. Wennink and Mr. Van den Brink was converted into a definite term of four years per the 2014
AGM.
The Supervisory Board may suspend and dismiss members of the BoM, but dismissal can only occur after consulting the General Meeting of
Shareholders.
Pursuant to Dutch legislation a member of the BoM may not be a supervisory board member in more than two other qualifying legal
entities (Large Company). A member of the BoM may never be the chairman of a Supervisory Board of a Large Company. BoM members may only accept a supervisory board membership of another Large Company after having obtained prior approval
from the Supervisory Board. Members of the BoM are also required to notify the Supervisory Board of other important functions held or to be held by them. Currently, no BoM member holds more than 2 Supervisory Board seats in other Large companies and
no member of the BoM is a chairman of a supervisory board of a Large Company.
Dutch legislation provides for statutory provisions to ensure a
balanced representation of men and women in management boards and supervisory boards of companies governed by this legislation. Balanced representation of men and women is deemed to exist if at least 30% of the seats are filled by men and at least
30% are filled by women. ASML currently has no seats taken by women in the BoM and as such does not qualify as balanced within the meaning of this legislation. ASML recognises the benefits of diversity, including gender balance. However, ASML feels
that gender is only one part of diversity and future members of the BoM will continue to be selected on the basis of wide ranging (technical) experience, backgrounds, skills, knowledge and insights. ASML continues to strive for more diversity in
both the Supervisory Board and BoM.
Internal Risk Management and Control Systems
The BoM is responsible for ensuring that ASML complies with applicable legislation and regulations. It is also responsible for the financing of ASML and for managing the internal and external risks related
to its business activities.
The establishment of ASMLs internal risk management and control system is based on the identification of
external and internal risk factors that could influence the operational, business continuity and financial objectives of ASML and contains a system of monitoring, reporting, and operational reviews.
To help identifying risks, ASML uses a formal risk management approach, consisting of a set of risks definitions (ASML Risk Universe) which are reviewed and
discussed by the CRSB on a quarterly basis. The CRSB is chaired by the Chief Operations Officer and consists of ASML senior management, including the CEO and CFO. Based on the outcome of the risk assessments, actions are initiated to further enhance
ASMLs risk mitigation. These actions are monitored via the CRSB. In addition, the risk landscape is reviewed by the Supervisory Board twice a year.
All material risk management activities have been discussed with the Audit Committee and the Supervisory Board. For a summary of ASMLs risk factors, we refer to ASMLs Management Board Report in
this 2014 Statutory Annual Report.
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ASML does not rank the individual risks identified in ASMLs Management Board Report, as ASML is of the
opinion that doing so defies the purpose of a comprehensive risk assessment and it would be arbitrary of nature since all risks mentioned have significant relevance for ASML and its business.
ASML publishes two annual reports in respect of the financial year 2014: this 2014 Statutory Annual Report in accordance with IFRS-EU and with Part 9 of Book 2 of the Dutch Civil Code and an Annual Report on
Form 20-F in conformity with US GAAP. Both Annual Reports describe the same risk factors that are specific to the semiconductor industry, ASML and ASMLs shares. ASML also provides sensitivity analyses by providing:
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A narrative explanation of ASMLs financial statements; |
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The context within which financial information should be analyzed; and |
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Information about the quality, and potential variability, of ASMLs earnings and cash flow. In ASMLs In Control Statement (as part
of the Directors Responsibility Statement), as included in this 2014 Statutory Annual Report, the BoM addresses ASMLs internal risk management and control systems. |
With respect to the process of drafting annual reports, ASML has extensive guidelines for the lay-out and the content of ASMLs reports. These
guidelines are primarily based on applicable laws and regulations. For the Statutory Annual Report and the Statutory Interim Report, ASML follows the requirements of Dutch law and regulations, including preparation of the consolidated financial
statements in accordance with IFRS-EU. For the Annual Report on Form 20-F, ASML applies the requirements of the U.S. Securities and Exchange Act of 1934, and prepares the financial statements included therein in accordance with US GAAP. With respect
to the preparation process of these and the other financial reports, ASML applies internal procedures to safeguard completeness and accuracy of such information as part of its disclosure controls and procedures.
ASML has a Disclosure Committee to ensure compliance with applicable disclosure requirements arising under US and Dutch law and applicable stock exchange
rules, US GAAP, IFRS as adopted by the EU and the Sarbanes-Oxley Act. The Disclosure Committee is composed of various members of senior management, and reports to the CEO and CFO. The chairman of the Disclosure Committee reports to the Audit
Committee about the outcome of the Disclosure Committee meetings. The Disclosure Committee gathers all relevant financial and non-financial information and assesses materiality, timeliness and necessity for disclosure of such information. In
addition the Disclosure Committee advises the CEO and CFO on the effectiveness of the disclosure controls and procedures and of the internal control over financial reporting (Sarbanes-Oxley Act).
ASMLs Internal Control Committee, comprising among others of three members of the Disclosure Committee, advises ASMLs Disclosure Committee in
respect of its assessment of ASMLs internal control over financial reporting under SOX 404. The Chairman of the Internal Control Committee updates the Audit Committee and to the BoM on the progress of this assessment and the Chairman of the
Audit Committee includes this item in his report to the full Supervisory Board.
Code of Conduct
ASMLs Code of Conduct describes what ASML stands for and believes in:
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We operate with business and personal integrity; |
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We manage professionally. |
The
Code of Conduct can be found on the corporate governance section of ASMLs Website.
Remuneration of the Board of Management
With respect to the remuneration of the BoM, the Supervisory Board is of the opinion that the 2014 Remuneration Policy was drafted in
accordance with the Code, and that the execution of the Policy is also in line with the Code, with the (potential) exception as mentioned more specifically at the end of this Corporate Governance Paragraph.
Performance criteria
Even though this is not
a deviation from the Code, as the Code stipulates that not disclosing the performance criteria because of competition sensitiveness is justified, we hereby want to provide ASMLs reasons for not providing all information as included in the best
practice provisions II.2.13 f and g of the Code.
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ASML provides the quantitative performance criteria, a summary and account of the methods to determine the
achievement of the performance criteria, and also the ultimate achievement level of the quantitative and qualitative performance criteria. However, ASML cannot provide the exact performance criteria data, nor the levels of achievement per
performance criterion, as this concerns highly competitive information, such as targets related to ASMLs technology, market position, etc. The Supervisory Board deems it its responsibility to set the actual targets and to determine the level
of achievement of these targets for the variable part of the remuneration of the BoM.
For more details about the BoMs remuneration, its
composition, and other relevant elements, reference is made to the 2014 Remuneration Policy and the 2014 Remuneration Report (both published on ASMLs Website), the Report of the Supervisory Board and Note 31 to the Consolidated Financial
Statements.
The external auditor performs agreed-upon procedures on the targets achieved to assess compliance with the Remuneration Policy.
Insider Trading
With respect to
trading in ASML financial instruments, ASML employees and members of the Supervisory Board and BoM are bound by ASMLs Insider Trading Rules, which are published on ASMLs Website. The ASML Insider Trading Rules stipulate, among other
items, that members of the BoM may not trade during the two months preceding the publication of the annual results, and during the three weeks before publication of quarterly results.
Indemnification
ASMLs Articles of Association provide for the indemnification of the
members of the BoM against claims that are a direct result of their tasks as members of the BoM, provided that such claim is not attributable to willful misconduct or intentional recklessness of such member of the BoM. The Supervisory Board has
further implemented the indemnification of the BoM members by means of separate indemnification agreements for each BoM member.
Conflicts of
Interest
Conflicts of interest procedures are incorporated in the BoMs Rules of Procedure and reflect the principle and best practice
provisions of the Code with respect to conflicts of interest.
There have been no transactions during 2014, and there are currently no
transactions, between ASML or any of ASMLs subsidiaries, or any significant shareholder and any member of the BoM or officer or any relative or spouse thereof, other than ordinary course compensation arrangements.
III. Supervisory Board
Role and Procedure
As mentioned before, ASMLs Supervisory Board supervises the policies of the BoM and the general course of affairs of ASML and its
subsidiaries. ASMLs Supervisory Board also supports the BoM with its advice. As ASML has and intends to keep a two-tier structure, the Supervisory Board is a separate and independent body from the BoM and from ASML.
In fulfilling its role and responsibilities, the Supervisory Board takes into consideration the interests of ASML and its subsidiaries, as well as the
relevant interests of ASMLs stakeholders. The Supervisory Board supervises and advises the BoM in performing its tasks, with a particular focus on:
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The achievement of ASMLs objectives; |
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ASMLs corporate strategy and the management of risks inherent to ASMLs business activities; |
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The structure and operation of internal risk management and control systems; |
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The financial reporting process; |
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Compliance with applicable legislation and regulations; |
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Relationship with shareholders; and |
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The corporate social responsibility issues important for ASML. |
Major management decisions, such as ASMLs strategy, major investments and budget, require the approval of the Supervisory Board. The Supervisory Board selects and appoints new BoM members, prepares the
remuneration policy for the BoM, and decides on the remuneration for the individual members of the BoM. Also, the Supervisory Board is the body that nominates new Supervisory Board candidates for appointment and submits remuneration proposals for
the Supervisory Board members to the General Meeting of Shareholders.
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The Supervisory Board, through its Selection and Nomination Committee, closely follows the developments in the
area of corporate governance and the applicability of the relevant corporate governance rules for ASML. For a more detailed description on the Supervisory Boards activities in the area of corporate governance reference is made to the
Supervisory Board Report as included in this 2014 Statutory Annual Report.
Meetings and activities of the Supervisory Board
The Supervisory Board held five physical meetings in 2014. Three conference calls were held for the purpose of discussing the quarterly results and the press
releases related thereto. During several meetings in 2014, the Supervisory Board extensively discussed ASMLs strategy, the financial position, the budget and corporate targets and achievements, the financing and return policy, the business
risks, the business priorities, investor relations, corporate responsibility, risk management, talent management and succession planning.
As
also described in the Supervisory Board Report, members of the Supervisory Board also interact with BoM members and with their colleague Supervisory Board members outside the regular meetings or conference calls.
During all physical meetings of the Supervisory Board usually all BoM members are present. In general at the end of each meeting, the Supervisory Board
meets inter se to discuss topics related to, amongst others, the composition and functioning of the BoM and the Supervisory Board, the functioning of the individual members of both bodies, and the relationship between these bodies and its individual
members.
As is common practice each year, the Supervisory Board conducted an evaluation in 2014 with respect to the functioning of the full
Supervisory Board and its Committees. For more detailed information on this topic reference is made to the Supervisory Board Report.
Members of
the Supervisory Board have semi-annual meetings with the Works Council to discuss ASMLs strategy, financial situation and any other topic that is deemed relevant at that time.
For more detailed information on the meetings and activities of the Supervisory Board in 2014, reference is made to the Supervisory Board Report.
The Rules of Procedure
The Rules of Procedure of the Supervisory Board contain requirements
based on the Code, on the Sarbanes-Oxley Act and on any other applicable laws, as well as corporate governance practices developed by the Supervisory Board over the past years. The Rules of Procedure are subject to regular review in view of the
continuous corporate governance developments. Items include among others responsibilities of the Supervisory Board and its Committees, composition of the Supervisory Board and its Committees, logistics surrounding the meetings, meeting attendance of
Supervisory Board members, and the rotation schedule for the Supervisory Board members.
The Rules of Procedure also contain the charters of the
four Committees. The Supervisory Board has assigned certain of its tasks and responsibilities to the four Committees; however, the plenary Supervisory Board remains responsible for the fulfillment of these tasks and responsibilities. The Supervisory
Board - and its Committees - may obtain information from officers and external advisors of ASML, if necessary for the execution of its tasks. Especially the Committees frequently call upon external advisors, who assist the Committees in preparing
the recommendations to be decided upon by the full Supervisory Board.
The Rules of Procedure, as well as the charters of the four Committees are
regularly reviewed and, if needed, amended. Changes to the Supervisory Boards Rules of Procedure need to be approved by the full Supervisory Board. Changes in the charters of the Committees are approved by the Committee concerned. The Audit
Committee charter is reviewed annually, to check whether the charter still complies with the applicable rules and regulations, especially those relating to the Sarbanes-Oxley Act.
Expertise, Composition, Appointment
The Supervisory Board currently
consists of seven1 members, the minimum being three members. The
Supervisory Board determines the number of Supervisory Board members required for the performance of its functions.
Per the 2014 AGM,
Mr. Bilous retired from the Supervisory Board. Mr. Fröhlich was reappointed for a period of 1 year and will retire per the 2015 AGM.
Mr. Stork was appointed for a period of four years based on the enhanced recommendation right of the Works Council.
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The late Mrs. Van den Burg, member of ASMLs Supervisory Board and member of the Selection and Nomination Committee and Remuneration Committee, passed away on
September 28, 2014; reference is made to the Overview 2014 in the Supervisory Board report. |
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The late Ms. Van den Burg would have retired by rotation per the 2015 AGM based upon the rotation schedule
of the Supervisory Board. The appointment of her successor at the 2015 AGM will be based on the enhanced recommendation right of the Works Council.
The current members of ASMLs Supervisory Board show a diverse mix with respect to background, nationality, age, gender and expertise, in line with the current profile drawn up by the Supervisory Board.
The profile of the Supervisory Board aims for an international and adequate composition reflecting the global business activities of ASML, as
well as for an adequate level of experience in financial, economic, technological, social, and legal aspects of international business. In case of (re)appointments, the Selection and Nomination Committee checks whether the candidates fit in the
Supervisory Boards profile.
Dutch legislation provides for statutory provisions to ensure a balanced representation of men and women in
management boards and supervisory boards of companies governed by this legislation. Balanced representation of men and women is deemed to exist if at least 30% of the seats are filled by men and at least 30% are filled by women. ASML currently has
28.6% seats taken by women in the Supervisory Board and as such currently does not qualify as balanced within the meaning of this legislation (before September 28, 2014, the ratio was 37.5% female members and 62.5% male members). The
Supervisory Board recognises the benefits of diversity, including gender balance and has taken this into account in the selection of successors of Supervisory Board members who are intended to be appointed per the 2015 AGM.
ASML is subject to the law applicable to large corporations (structuurregime). As such, members of the Supervisory Board are appointed by the
General Meeting of Shareholders based on nominations proposed by the Supervisory Board. The Supervisory Board informs the Annual General Meeting of Shareholders and the Works Council about upcoming retirements by rotation at the Annual General
Meeting of Shareholders in the year preceding the actual retirement(s) by rotation to ensure that the General Meeting of Shareholders and the Works Council have sufficient opportunity to recommend candidates for the upcoming vacancies. The
Supervisory Board has the right to reject the proposed recommendations. Furthermore, the Works Council has an enhanced right to make recommendations for one-third of the members of the Supervisory Board. The enhanced recommendation right implies
that the Supervisory Board may only reject the Works Councils recommendations for the following reasons: (i) if the relevant person is unsuitable or (ii) if the Supervisory Board would not be duly composed if the recommended person
were appointed as Supervisory Board member. If no agreement on the recommended person(s) can be reached between the Supervisory Board and the Works Council, the Supervisory Board may request the Enterprise Chamber of the Amsterdam Court of Appeal to
declare that the Supervisory Boards objection is legitimate. Any decision of the Enterprise Chamber on this matter is non-appealable.
Nominations by the Supervisory Board may be overruled by a resolution at the General Meeting of Shareholders with an absolute majority of the votes,
representing at least one-third of ASMLs outstanding share capital. If the votes cast in favor of such a resolution do not represent at least one-third of the total outstanding capital, a new shareholders meeting can be convened at which
the nomination can be overruled by an absolute majority.
The late Ms. Van den Burg, Mr. Stork and Ms. Van der Meer Mohr were
(re)appointed per the Works Councils enhanced recommendation right.
For newly appointed Supervisory Board members, ASML prepares an
introduction program of which the main topics are: ASMLs organization, operations, strategy, industry, technology, ASMLs financial and legal affairs, and ASMLs human resources. Supervisory Board members are regularly given the
opportunity to follow technical tutorials to maintain and increase their knowledge of ASMLs ever progressing technology. In addition, specific training is also provided for new Committee members based on individual needs. Annually, the
Supervisory Board and/or Committees members determine their need for further training on specific topics.
Supervisory Board members serve for a
maximum term of four years from the date of their appointment, or a shorter period as per the Supervisory Boards rotation schedule. Members can be reappointed, provided that their entire term of office does not exceed 12 years. The rotation
schedule is available in the Corporate Governance section on ASMLs Website.
The General Meeting of Shareholders may, by an absolute
majority of the votes representing at least one-third of the total outstanding capital, dismiss the Supervisory Board in its entirety for lack of confidence. In such case, the Enterprise Chamber of the Amsterdam Court of Appeal shall appoint one or
more Supervisory Board members at the request of the BoM.
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Legal restrictions apply to the overall number of executive board positions (including a one tier board) and
Supervisory Board positions that a member of the supervisory board (or a non-executive director in case of a one-tier board) of a Large Company, may hold. A person may not be a member of the Supervisory Board if he or she holds more than five
supervisory positions at Large Companies. Acting as a chairman of the supervisory board or a supervisory body established by the articles of association or, in case of a one-tier board, chairman of the executive board, of a Large Company will count
twice. None of the Supervisory Board members is in violation of these rules.
For detailed information on ASMLs Supervisory Board members,
reference is made to the Supervisory Board Report.
Role of the Chairman of the Supervisory Board and the Company Secretary
Mr. Van der Poel is the Chairman of ASMLs Supervisory Board and Mr. Fröhlich acts as Vice-Chairman. The role and responsibilities of the
Chairman of the Supervisory Board are described in its Rules of Procedure. The Chairman determines the agenda of the Supervisory Board meetings, he acts as the main contact between the Supervisory Board and the BoM and ensures orderly and efficient
proceedings at General Meetings of Shareholders. The Chairman will among others also ensure that:
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The members of the Supervisory Board follow an introduction and training program; |
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The members of the Supervisory Board receive all information necessary for the proper performance of their duties on a timely basis;
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There is sufficient time for consultation and decision making by the Supervisory Board; |
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The Committees function properly; |
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The performance of the BoM members and the Supervisory Board members is assessed at least once a year; and |
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The Supervisory Board has proper contact with the BoM and the Works Council. |
The Company Secretary assists the Supervisory Board in the performance of its duties, ensures that the correct procedures are followed, and that the Supervisory Board acts in accordance with its legal and
statutory obligations. The Company Secretary assists the Chairman of the Supervisory Board in the organization of the affairs of the Supervisory Board and its Committees. The Company Secretary is appointed by and may also be dismissed by the BoM
after prior approval from the Supervisory Board. The Company Secretary is assisted by a Deputy Company Secretary.
Composition and Role of the
four Committees of the Supervisory Board
Although the Supervisory Board retains ultimate responsibility, the Supervisory Board has delegated
certain of its tasks to its four Committees. Their roles and functions are described in separate chapters in the Supervisory Boards Rules of Procedure which is available on ASMLs Website.
In the plenary Supervisory Board meetings, the chairmen of the Committees report on the issues and items discussed in the Committee meetings, and also the
minutes of the Committee meetings are available for all Supervisory Board members, enabling the full Supervisory Board to make the appropriate decisions.
Audit Committee
The current members of ASMLs Audit Committee are Mr. Fröhlich
(Chairman), Mr. Van der Poel, Ms. Smits-Nusteling and Ms. Van der Meer Mohr. The members of the Audit Committee are all independent members of the Supervisory Board.
In general, the Audit Committee meets at least four times per year and always before the publication of the quarterly and annual financial results. In the first half year, the Audit Committee focuses on the
annual results, the audits over the previous financial year and the internal and external audit plans for the year ahead. Frequently discussed topics are ASMLs internal controls and risk management systems, the testing of internal controls
over financial reporting in light of Section 404, 302 and 906 of the Sarbanes-Oxley Act, ASMLs financial- and cash position, and the supervision of the enforcement of the relevant legislation and regulations.
In 2014, the Audit Committee met four times and held four conference calls. Three calls were held to discuss the quarterly results and the related press
release; one call was held for the purpose of discussing the results of the year- end US GAAP and IFRS-EU audits. The Audit Committee frequently discussed amongst others, revenue recognition for systems, inventory excess and obsolete provision.
The Audit Committee also discussed sensitivities in valuation of goodwill and intangible fixed assets.
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ASML provides the Audit Committee with all relevant information to be able to adequately and efficiently
supervise the preparation and disclosure of financial information by ASML. This includes, among other things, information on the status and development of the (semiconductor) market to be able to judge the outlook and budget for the next six to
twelve months, the application of IFRS-EU, US GAAP, the choice of accounting policies and the work of internal and external auditors. Annually, the Audit Committee discusses and reviews among others ASMLs financing policy and strategy,
tax planning policy, investor relations activities and strategy, fraud policy, and information and communication technology policy.
The Audit
Committee, on behalf of the Supervisory Board, reviews and approves the fees of the external auditor. The Audit Committee is the first point of contact for the external auditor if the external auditor discovers irregularities in the content of the
financial reports. As a general rule, the external auditor is present at meetings of the Audit Committee. In general, after each Audit Committee meeting, the Audit Committee - without management present - meets with the external auditor to discuss
the relationship between the Audit Committee and the external auditor, the relationship between the BoM and the external auditor, and any other issues deemed necessary to be discussed.
The Audit Committee generally invites ASMLs CEO, CFO, Corporate Controller, Corporate Chief Accountant, Senior Director Risk and Assurance and the Internal Auditor to its meetings. From time to time,
other ASML employees may be invited to Audit Committee meetings to address subjects that are of importance to the Audit Committee such as return policy including share buyback program, tax and IT.
Mr. Fröhlich, Chairman of the Audit Committee, is the Supervisory Boards financial expert, taking into consideration his extensive financial
background and experience.
Remuneration Committee
The current members of ASMLs Remuneration Committee are Mr. Ziebart (Chairman) and Ms. Van der Meer Mohr.
The Remuneration Committee meets at least twice a year and more frequently when deemed necessary.
The
Remuneration Committee prepares ASMLs Remuneration Policy for members of the BoM, and oversees the development and implementation of the Remuneration Policy. In cooperation with the Audit Committee and the Technology and Strategy Committee,
the Remuneration Committee reviews and proposes to the Supervisory Board corporate goals and objectives relevant to the variable part of the BoMs remuneration. Also in cooperation with the Audit Committee and the Technology and Strategy
Committee, the Remuneration Committee evaluates the performance of the members of the BoM in view of those goals and objectives, and - based on this evaluation - recommends to the Supervisory Board appropriate compensation levels for the BoM
members.
In 2014, the Remuneration Committee met 4 times in scheduled meetings. Topics of discussion in 2014 were among others the targets and
remuneration package for the BoM including adjustment to the pension arrangements of the BoM, the ASML stock option and share plans, the 2014 Remuneration Report and the determination of the required shareholding positions of the BoM members based
upon the share ownership guideline as contained the 2014 Remuneration Policy. An external expert assists the Remuneration Committee with its activities. This expert does not provide advice to the BoM with respect to matters in this area.
The Remuneration Committee prepared the 2014 Remuneration Report, which describes among others the manner in which the 2014 Remuneration Policy was
implemented and executed in 2014.
Mr. Ziebart, the Chairman of the Remuneration Committee is neither a former member of ASMLs BoM,
nor a member of the BoM of another company. Currently, no member of the Remuneration Committee is a member of the BoM of another Dutch listed company.
Selection and Nomination Committee
The current members of the Selection and Nomination Committee
are Mr. Van der Poel (Chairman), Mr. Grose, and Mr. Fröhlich.
The Selection and Nomination Committee meets at least twice a
year and more frequently when deemed necessary.
In 2014, the Selection and Nomination Committee members met three times formally and several
additional times on an ad-hoc basis. Main focus item this year was the future composition of the Supervisory Board in view of its rotation schedule and the functioning of the individual members of the Supervisory Board and of the BoM. In that
respect also the self-assessment of the Supervisory Board was discussed.
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The Selection and Nomination Committee assists the Supervisory Board in:
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Preparing the selection criteria and appointment procedures for members of ASMLs Supervisory Board and BoM; |
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Periodically evaluating the scope and composition of the BoM and the Supervisory Board, and proposing the profile of the Supervisory Board in relation
thereto; |
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Periodically evaluating the functioning of the BoM and the Supervisory Board and the individual members of those boards and reporting the results thereof
to the Supervisory Board; and |
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Proposing (re-)appointments of members of the BoM and the Supervisory Board, and supervising the policy of the BoM in relation to the selection and
appointment criteria for senior management. |
The Selection and Nomination Committee furthermore discusses imminent corporate
governance developments, for example those based on legislative proposals, but also the outcome of the Report of the Monitoring Committee with respect to compliance with the Code.
Technology and Strategy Committee
The current members of the Technology and Strategy Committee
are Mr. Grose (Chairman), Mr. Stork, Mr. Van der Poel and Mr. Ziebart.
The Technology and Strategy Committee meets at least
twice a year and more frequently when deemed necessary.
In 2014, the Technology and Strategy Committee met face to face five times and held one
conference call. During several of these meetings the technology targets, which are part of the overall performance targets set, as well as the achievements related to the technology targets were discussed. The Technology and Strategy Committee
provides the Remuneration Committee with its advice on this topic.
The Technology and Strategy Committee provides advice to the Supervisory
Board with respect to ASMLs technology strategies and ASMLs technology and product roadmaps. External experts as well as experts from within ASML may act as advisors to the Technology and Strategy Committee with respect to the subjects
reviewed and discussed in this Committee. The advisors do not have voting rights, but regularly attend Committee meetings (except for those meetings or calls specifically designated only for the technology target settings and evaluations). External
experts may include representatives of customers, suppliers and partners to increase the Committees understanding of the technology and research necessary for the development of ASMLs leading-edge systems.
In 2014, the Technology and Strategy Committee discussed the execution and implementation of technology programs (especially EUV related topics) and
corporate strategy initiatives.
The in-depth technology discussions in the Technology and Strategy Committee and the subsequent reporting on
headlines in the full Supervisory Board increases the Supervisory Boards understanding of ASML technology requirements and enables the Supervisory Board to adequately supervise the strategic choices facing ASML, including ASMLs
investment in research and development.
Conflict of Interest
Conflict of interest procedures are incorporated in the Supervisory Boards Rules of Procedure and address the principle and the best practice provisions of the Code with respect to conflicts of
interest.
There have been no transactions during 2014, and there are currently no transactions, between (i) ASML or any of its
subsidiaries, or any significant shareholder and (ii) any Supervisory Board member or any relative or spouse thereof, other than ordinary course compensation arrangements.
Remuneration of the Supervisory Board
The General Meeting of Shareholders determines the
remuneration of the Supervisory Board members; the remuneration is not dependent on ASMLs (financial) results. The 2014 AGM adopted the Supervisory Boards proposal to increase the Supervisory Boards remuneration. Detailed
information on the Supervisory Boards remuneration can be found in Note 31 to the 2014 Consolidated Financial Statements, included herein.
In addition to their fee as member of the Supervisory Board, Supervisory Board members also receive a fee for each Committee membership, as well as a net
cost allowance.
No member of the Supervisory Board personally maintains a business relationship with ASML other than as a member of the
Supervisory Board.
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The Supervisory Board members do not receive ASML shares, or rights to acquire ASML shares, as part of their
remuneration. Supervisory Board members, who acquire or have acquired ASML shares or rights to acquire ASML shares, must have the intention to keep these for long-term investment only. No member of ASMLs Supervisory Board currently owns ASML
shares or rights to acquire ASML shares. In concluding transactions in ASML shares, Supervisory Board members must comply with ASMLs Insider Trading Rules.
ASML has not granted any personal loans, guarantees, or the like to members of the Supervisory Board. ASMLs Articles of Association provide for the indemnification of the members of the Supervisory
Board against claims that are a direct result of their tasks as members of the Supervisory Board, provided that such claim is not attributable to willful misconduct or intentional recklessness of such Supervisory Board member. ASML has further
implemented the indemnification of the members of the Supervisory Board by means of separate indemnification agreements for each member of the Supervisory Board.
Insider trading
With respect to trading in ASML financial instruments, the ASML Insider Trading
Rules stipulate - among other requirements - that members of the Supervisory Board may not trade during the two months preceding the publication of the annual results, and neither during the three weeks before publication of the quarterly results.
In addition, members of the Supervisory Board may not perform transactions in ASML financial instruments during the open periods when they have inside information.
IV. Shareholders and General Meeting of Shareholders
Powers
A General Meeting of Shareholders is held at least once a year and generally takes place in Veldhoven. In this meeting, at least the following items are
discussed and/or approved:
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The written report of the BoM containing the course of affairs in ASML and the conduct of the management during the past financial year;
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The adoption of the financial statements for the past financial year, as prepared in accordance with Dutch law; |
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The discharge of the members of the BoM in respect of their management during the previous financial year; |
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The discharge of the members of the Supervisory Board in respect of their supervision during the previous financial year; |
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ASMLs reserves and dividend policy and justification thereof by the BoM; |
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Each material change in the corporate governance structure of ASML; and |
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Any other item the BoM or the Supervisory Board determine to place on the agenda. |
The General Meeting of Shareholders has furthermore (with due observance of the statutory provisions) the power:
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To resolve to amend the articles of association; |
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To resolve to dissolve ASML; |
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To resolve to issue shares if and insofar as the BoM has not been designated by the General Meeting of Shareholders for this purpose;
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To resolve to reduce the issued share capital; |
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To appoint members of the Supervisory Board; |
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To withdraw its confidence in the Supervisory Board (resulting in a dismissal of the Supervisory Board in its entirety); |
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To adopt the Remuneration Policy for members of the BoM; and |
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To determine the remuneration of the members of the Supervisory Board. |
The BoM requires the approval of the General Meeting of Shareholders and the Supervisory Board for resolutions regarding a significant change in the identity or character of ASML or its business, including
in any event:
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A transfer of the business or virtually all of the business to a third party; |
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Entry into or termination of long-term cooperation by ASML or a subsidiary with another legal entity or partnership or as a general partner with full
liability in a limited or general partnership if such cooperation or the termination thereof is of far-reaching significance for ASML; and |
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An acquisition or disposal by ASML or a subsidiary of a participation in the capital of another company, the value of which equals at least one third of
the amount of the assets according to the consolidated balance sheet (in the Consolidated Financial Statements referred to as Statement of Financial Position) with explanatory notes attached to the Annual Report as most recently adopted.
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Proposals placed on the agenda by the Supervisory Board, the BoM, or by shareholders, provided that they have
submitted the proposals in accordance with the applicable legal provisions, are discussed and resolved upon. Shareholders representing at least 1.0 percent of ASMLs outstanding share capital or representing a share value of at least EUR
50.0 million are entitled to place agenda items on the agenda of a General Meeting of Shareholders at the latest sixty days before the date of such meeting. Although Dutch legislation increased the percentage from 1.0 to 3.0 percent,
ASMLs articles of association still reflect the old requirement of 1.0 percent or EUR 50.0 million, and therefore this remains applicable for ASML. About two weeks before the closing of this sixty days term, ASML notifies its
shareholders about the closing of the term on its Website.
A recurring agenda item is the limited authorization for the BoM to issue (rights to)
shares in ASMLs capital, and to exclude pre-emptive rights for such issuances. This agenda item typically includes two elements: i) the authorization to the BoM to issue 5.0 percent (rights to) shares of ASMLs issued share capital as of
the date of authorization, plus an additional 5.0 percent of ASMLs issued share capital as of the date of authorization that may be issued in connection with mergers, acquisitions and/or (strategic) alliances, and ii) the authorization to
exclude pre-emptive rights in relation to the above share issue, with a maximum of 10.0 percent of ASMLs issued share capital as of the date of authorization.
A simple majority is required for the authorization to issue shares. For the authorization to exclude the pre-emptive rights a simple majority is required in case at least fifty percent of ASMLs issued
share capital is present or represented at the AGM, otherwise a majority of two thirds of the votes cast is required. The BoM must obtain the approval of the Supervisory Board for the issuance of ASML shares as well as for excluding the pre-emptive
rights.
It is important for ASML to be able to issue (rights to) shares and to exclude the pre-emptive shareholders rights in situations
where it is imperative to be able to act quickly, for example when financial opportunities arise or when share plans and/or stock option plans need to be executed to attract and retain top talent. This authorization has been used in the past
especially to optimize the financial position of ASML. Given the dynamics of the global capital markets, such financing transactions generally need to be executed in the shortest window of opportunity. The opportunity to issue shares or rights to
shares, such as convertible bonds, would be limited if ASML needed a resolution of the General Meeting of Shareholders to issue shares and/or to exclude the shareholders pre-emptive rights and may thus hinder the financial flexibility of ASML.
Another agenda item in 2015 will be the proposal to adopt the dividend proposal, as communicated in ASMLs press release on
January 21, 2015.
In addition to dividend payments, ASML also intends to return cash to its shareholders on a regular basis through share
buybacks or repayment of capital, subject to its actual and anticipated level of cash generated from operations, the cash requirements for investment in its business, its current share price and other market conditions and relevant factors.
On April 17, 2013 ASML announced a share buy back program, to purchase up to an amount of EUR 1 billion of ASMLs shares within the
2013-2014 timeframe. During the period from April 18, 2013 up to and including December 22, 2014, when the program was completed, ASML had purchased 14,595,554 shares at an average price of EUR 68.51 per share of which 9,464,503
shares have been cancelled in 2014, and the remainder is intended to be cancelled in 2015.
The proposal of the Supervisory Board, upon advice of
the Audit Committee and BoM, to appoint a new auditor per January 1, 2016 will be submitted to the 2015 AGM.
The BoM or Supervisory Board
may convene EGMs as often as they deem necessary. Such meetings must be held if one or more shareholders and others entitled to attend the meetings jointly representing at least one-tenth of the issued share capital make a written request to that
effect to the BoM and the Supervisory Board, specifying in detail the items to be discussed.
Logistics of the General Meeting of Shareholders
The convocation date for the Annual General Meeting of Shareholders is legally set at forty-two days, and the record date at twenty-eight
days before the Annual General Meeting of Shareholders. Those who are registered as shareholders at the record date are entitled to attend the meeting and to exercise other shareholder rights.
The BoM and Supervisory Board shall provide the shareholders with the facts and circumstances relevant to the proposed resolutions, through an explanation
to the agenda, as well as through other documents necessary and/or helpful for this purpose. All documents relevant to the General Meeting of Shareholders, including the agenda with explanations, shall be posted in the Investor Relations and
Corporate Governance sections on ASMLs Website. The agenda indicates which agenda items are voting items, and which items are for discussion only.
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ASML shareholders may appoint a proxy who can vote on their behalf in the General Meeting of Shareholders. ASML
also uses an internet proxy voting system, thus facilitating shareholder participation without having to attend in person. Shareholders who voted through internet proxy voting are required, however, to appoint a proxy to officially represent them at
the General Meeting of Shareholders in person. ASML also provides the possibility for shareholders to issue voting proxies or voting instructions to an independent third party (civil law notary) prior to the Annual General Meeting of Shareholders.
Voting results from the General Meeting of Shareholders will be made available on ASMLs Website within 15 days after the meeting.
The draft minutes of the General Meeting of Shareholders are available via ASMLs Website, and also upon request via mail or e-mail, no
later than three months after the meeting. Shareholders are given the opportunity to provide their comments in the subsequent three months, and thereafter the minutes are adopted by the Chairman and the Secretary of the meeting. The adopted minutes
are also available on ASMLs Website and, upon request, via regular mail or e-mail.
Information to the Shareholders
To ensure fair disclosure, ASML distributes company information that may influence the share price to shareholders and other parties in the financial markets
simultaneously and through means that are public to all interested parties. In case of bilateral contacts with shareholders, ASML follows the procedure related thereto as published on ASMLs Website.
When ASMLs annual and quarterly results are published by means of a press release, interested parties, including shareholders, can participate through
conference calls, listen to a webcast and view the presentation of the results on ASMLs Website. The schedule for communicating the annual financial results is in general published through a press release and is posted on ASMLs Website.
In addition, ASML provides information to its shareholders at ASMLs Annual General Meeting of Shareholders. Also ASML publishes a Corporate Responsibility Report on ASMLs Website every year, reporting on environmental, health, safety and
social performance.
It is ASMLs policy to post the presentations given to analysts and investors at investor conferences on ASMLs
Website. Information regarding presentations to investors and analysts and conference calls are announced in advance on ASMLs Website, for details see ASMLs financial calendar as published in the Investor Relations section on ASMLs
Website. Meetings and discussions with investors and analysts shall, in principle, not take place shortly before publication of regular financial information. ASML does not assess, comment upon, or correct analysts reports and valuations in
advance, other than to comment on factual errors. ASML does not pay any fees to parties carrying out research for analysts reports, or for the production or publication of analysts reports, and take no responsibility for the content of
such reports.
At the Annual General Meeting of Shareholders, the BoM and the Supervisory Board provide shareholders with all requested
information, unless this is contrary to an overriding interest of ASML. If this should be the case, the BoM and Supervisory Board will provide their reasons for not providing the requested information.
Furthermore, the Corporate Governance section on ASMLs Website provides links to Websites that contain information about ASML published or filed by
ASML in accordance with applicable rules and regulations.
ASMLs sole anti-takeover device is the possibility of issuing cumulative
preference shares in its share capital to the Foundation under an option agreement between ASML and the Foundation.
Relationship with
Institutional Investors
ASML finds it important that its institutional investors participate in its General Meetings of Shareholders. To
increase the participation rate, several measures have been taken in the past few years, including providing internet proxy voting. In addition, ASML actively approaches its institutional investors to discuss their participation at the General
Meetings of Shareholders.
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V. The Audit of Financial Reporting and the Position of the Internal and External Auditor Function
Financial Reporting
ASML has
comprehensive internal procedures in place for the preparation and publication of Annual Reports, quarterly figures, and all other financial information. These internal procedures are frequently discussed in the Audit Committee and the Supervisory
Board. The Disclosure Committee assists the BoM in overseeing ASMLs disclosure activities and ensures compliance with applicable disclosure requirements arising under Dutch and U.S. law and regulatory requirements.
The Audit Committee reviews and approves the external auditors audit plan for the audits planned during the financial year. The audit plan also
includes the activities of the external auditor with respect to their limited procedures on the quarterly results other than the annual accounts. The external auditor regularly updates the Audit Committee on the progress of the audits and other
activities.
The Supervisory Board has reviewed ASMLs 2014 Statutory Annual Report as prepared by the BoM. Deloitte has duly examined
ASMLs financial statements, and the Auditors Report is included in the Consolidated Financial Statements.
Appointment, Role,
Assessment of the Functioning of the External Auditor, and the Auditors Fee
In accordance with Dutch law, ASMLs external auditor
is appointed by the General Meeting of Shareholders and is nominated for appointment by the Supervisory Board upon advice from the Audit Committee and the BoM. ASMLs current external auditor, Deloitte, was re-appointed by the 2014 AGM for the
reporting year 2015. The appointment of a new external auditor for the reporting year 2016 will be put on the 2015 AGM agenda, in order to comply with the mandatory audit firm rotation.
Annually, the BoM and the Audit Committee provide the Supervisory Board with a report on the relationship with the external auditor. The responsible lead audit partner of the external auditor rotated after
the 2013 audit, which is relevant for the auditors independence.
The external auditor is present at ASMLs Annual General Meeting of
Shareholders to respond to questions, if any, from the shareholders about the auditors report on the Consolidated Financial Statements.
The Audit Committee, on behalf of the Supervisory Board, approves the remuneration of the external auditor after consultation with the BoM. It has been
agreed among the members of the Supervisory Board and the BoM that the Audit Committee has the most relevant insight and experience to be able to approve this item, and therefore the Supervisory Board has delegated these responsibilities to the
Audit Committee.
The Audit Committee monitors compliance with the Dutch rules on non-audit services provided by the external auditor, which
outlines strict separation of audit and advisory services for Dutch public interest entities.
In principle the external auditor attends all
meetings of the Audit Committee, unless this is deemed not necessary by the Audit Committee. The findings of the external auditor are discussed at these meetings.
The Audit Committee reports on all issues discussed with the external auditor to the Supervisory Board, including the external auditors reports with regard to the audit of the Annual Reports as well as
the content of the Annual Reports. In the independent auditors report, the external auditor refers to materiality, scope of the group audit, key audit matters (such as revenue recognition for systems, inventory excess and obsolete provision,
sensitivities in valuation in goodwill and intangible fixed assets), responsibilities of management, the Supervisory Board and the external auditor for the financial statements and reports on other legal and regulatory requirements.
Internal Audit Function
The Internal Audit
function assesses ASMLs systems of internal controls by performing independent procedures such as risk-based operational audits, IT audits and compliance audits. The Internal Audit department reports directly to the Audit Committee and BoM.
The annual Internal Audit plan is discussed with and approved by the Audit Committee. The follow-up on the Internal Audit findings and progress against the Internal Audit plan is discussed on a quarterly basis with the Audit Committee. The external
auditor and Internal Audit department have meetings on a regular basis.
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VI. Required Information Article 10 Takeover Directive
General
The EU Takeover Directive requires
that listed companies publish additional information providing insight into defensive structures and mechanisms which they apply. The relevant provision has been implemented into Dutch law by means of a decree of April 5, 2006. Pursuant to this
decree, Dutch companies whose securities have been admitted to trading on a regulated market have to include information in their annual report which could be of importance for persons who are considering taking an interest in the company.
This information comprises amongst other things:
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The capital structure of the company; |
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Restrictions on the transfer of securities and on voting rights; |
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Special powers conferred upon the holders of certain shares; |
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The rules governing the appointment and dismissal of board members and the amendment of the articles of association; |
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The rules on the issuing and the repurchasing of shares by the company; |
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Significant agreements to which the company is a party and which contain change of control rights (except where their nature is such that their disclosure
would be seriously prejudicial to the company); and |
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Agreements between the company and its board members or employees providing for a golden parachute. |
In this section the BoM and the Supervisory Board provide for an explanation to the information - if applicable to ASML - as required under Article 10 of
the Takeover Directive.
Share capital
ASMLs authorized share capital amounts to EUR 126,000,000 and is divided into:
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700,000,000 Cumulative Preference Shares with a nominal value of EUR 0.09 each; |
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699,999,000 Ordinary Shares with a nominal value of EUR 0.09 each; and |
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9,000 Ordinary Shares B with a nominal value of EUR 0.01 each. |
As at December 31, 2014, 438,073,643 ordinary shares with a nominal value of EUR 0.09 each were issued and fully paid up, of which 5,138,355 ordinary shares are held by us in treasury. No ordinary
shares B and no cumulative preference shares are issued.
A total of 96,566,077 depositary receipts for ordinary shares are issued with our
cooperation.
Our BoM has the power to issue ordinary shares and cumulative preference shares insofar as the BoM has been authorized to do so by
the General Meeting of Shareholders (either by means of a resolution or by an amendment to our Articles of Association). The BoM requires approval of the Supervisory Board for such an issue. The authorization by the General Meeting of Shareholders
can only be granted for a certain period not exceeding five years and may be extended for no longer than five years on each occasion. In case the General Meeting of Shareholders has not authorized the BoM to issue shares, the General Meeting of
Shareholders shall have the power to issue shares upon the proposal of the BoM, provided that the Supervisory Board has approved such proposal.
Shares Issued in Customer Co-Investment Program
In connection with the CCIP, on September 12, 2012, we issued 62,977,877 ordinary shares to the Stichting that holds shares on behalf of Intel and
12,595,575 ordinary shares to the Stichting that holds shares on behalf of Samsung and on October 31, 2012, ASML issued 20,992,625 ordinary shares to the Stichting that holds shares on behalf of TSMC. We received an amount of EUR
3,853.9 million in relation to the shares issued under the CCIP. For further details on our CCIP see Note 36.
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Ordinary Shares
Each ordinary share consists of 900 fractional shares. Fractional shares entitle the holder thereof to a fractional dividend but do not entitle the holder thereof to voting rights. Only those persons who
hold shares directly in the share register in the Netherlands, held by us at our address at 5504 DR Veldhoven, de Run 6501, the Netherlands, or in the New York share register, held by JP Morgan Chase Bank, N.A., P.O. Box 64506, St. Paul, MN
55164-0506, United States, can hold fractional shares. Persons who hold ordinary shares through the deposit system under the Dutch Securities Bank Giro Transactions Act (Wet giraal effectenverkeer; the Giro Act) maintained by the Dutch
central securities depository Euroclear Nederland or through the DTC cannot hold fractional shares. An ordinary share entitles the holder thereof to cast nine votes in the General Meeting of Shareholders. At our 2014 AGM, the BoM was authorized from
April 23, 2014 through October 23, 2015, subject to the approval of the Supervisory Board, to issue shares and/or rights thereto representing up to a maximum of 5.0 percent of our issued share capital at April 23, 2014, plus an
additional 5.0 percent of our issued share capital at April 23, 2014 that may be issued in connection with mergers, acquisitions and/or (strategic) alliances.
Holders of ASMLs ordinary shares have a preemptive right of subscription, in proportion to the aggregate nominal amount of the ordinary shares held by them, to any issuance of ordinary shares for cash,
which right may be restricted or excluded. Holders of ordinary shares have no pro rata preemptive right of subscription to any ordinary shares issued for consideration other than cash or ordinary shares issued to employees. If authorized for this
purpose by the General Meeting of Shareholders (either by means of a resolution or by an amendment to our Articles of Association), the BoM has the power subject to approval of the Supervisory Board, to restrict or exclude the preemptive rights of
holders of ordinary shares. At our 2014 AGM, our shareholders authorized the BoM through October 23, 2015, subject to approval of the Supervisory Board, to restrict or exclude preemptive rights of holders of ordinary shares up to a maximum of
10 percent of our issued share capital. At our 2015 AGM, our shareholders will be asked to extend this authority through October 22, 2016.
ASML may repurchase its issued ordinary shares at any time, subject to compliance with the requirements of Dutch law and our Articles of Association. Any
such repurchases are and remain subject to the approval of the Supervisory Board and the shareholders authorization, which authorization may not be for more than 18 months. At the 2014 AGM, the BoM has been authorized, subject to Supervisory
Board approval, to repurchase through October 23, 2015, up to a maximum of two times 10.0 percent of our issued share capital at April 23, 2014, at a price between the nominal value of the ordinary shares purchased and 110.0 percent of the
market price of these securities on Euronext Amsterdam or NASDAQ. At our 2015 AGM, our shareholders will be asked to extend this authority through October 22, 2016.
On April 17, 2013, we announced our intention to repurchase up to EUR 1.0 billion of our own shares within the 2013-2014 timeframe. During the period from April 18, 2013 up to and including
December 22, 2014, when the program was completed, we had purchased 14,595,554 shares at an average price of EUR 68.51 per share of which 9,464,503 shares have been cancelled in 2014, and the remainder is intended to be cancelled in 2015.
Ordinary Shares B
In 2012, the
9,000 ordinary shares B with a nominal value of EUR 0.01 were introduced. Every holder of an ordinary share B is entitled to one-ninth (1/9) of a dividend. Each ordinary share B entitles the holder thereof to cast one vote at the General
Meeting of Shareholders.
Special voting rights on the issued shares
There are no special voting rights on the issued shares in our share capital.
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Limitation voting rights on Ordinary Shares indirectly held by the Participating Customers
Pursuant to the agreements entered into with them, the Participating Customers (and their respective foundations) will not be entitled to vote the ordinary
shares that were acquired by (the foundations of) the Participating Customers as part of the CCIP or any other ordinary shares otherwise transferred to the foundations (under the circumstances described under Standstill; Additional
Purchases, see Note 36 to the Consolidated Financial Statements) prior to a Shareholder Agreement Termination Event (see Note 36 to the Consolidated Financial Statements), except when a Suspension Event (see Note 36 to the Consolidated
Financial Statements) occurs and is continuing or where the following matters are proposed at any General Meeting of Shareholders (the Voting Restrictions): (i) an issuance of ASML shares or grant of rights to subscribe for ASML
shares representing 25 percent or more of the issued and outstanding share capital of ASML or the restriction or exclusion of pre-emption rights relating thereto (in each case, on an aggregate basis during the preceding 12 months) or the designation
of the BoM as the authorized body to resolve on these matters; (ii) an authorization to repurchase 25 percent or more of ASMLs issued and outstanding share capital on an aggregate basis during the preceding 12 months; (iii) the
approval of a significant change in the identity or nature of ASML or its business, including a transfer of all or substantially all business or assets of ASML and its subsidiaries to a third party, the establishment or cancellation of a
long-lasting cooperation of essential importance with a third party and an acquisition or disposition of an interest in the capital or assets of a person with a value of at least one third of the assets of ASML (on a consolidated basis);
(iv) an amendment to ASMLs Articles of Association that would materially affect the specific voting rights of the Participating Customers, would materially affect the identity or nature of ASML or its business, or would disproportionately
(or uniquely) and adversely affect the rights or benefits attached to or derived from the ordinary shares held by the Participating Customers through the foundations as compared to the shareholders; (v) the dissolution of ASML; and
(vi) any merger or demerger which would result in a material change in the identity or nature of ASML or its business.
Cumulative
Preference Shares
In 1998, we granted the Preference Share Option to the Foundation. This option was amended and extended in 2003 and 2007. A
third amendment to the option agreement between the Foundation and ASML became effective on January 1, 2009, to clarify the procedure for the repurchase and cancellation of the preference shares when issued.
The nominal value of the cumulative preference shares amounts to EUR 0.09 and the number of cumulative preference shares included in the authorized share
capital is 700,000,000. A cumulative preference share entitles the holder thereof to cast nine votes in the General Meeting of Shareholders.
The
Foundation may exercise the Preference Share Option in situations where, in the opinion of the Board of Directors of the Foundation, ASMLs interests, ASMLs business or the interests of ASMLs stakeholders are at stake. This may be
the case if a public bid for ASMLs shares has been announced or has been made, or the justified expectation exists that such a bid will be made without any agreement having been reached in relation to such a bid with ASML. The same may apply
if one shareholder, or more shareholders acting in concert, hold a substantial percentage of ASMLs issued ordinary shares without making an offer or if, in the opinion of the Board of Directors of the Foundation, the (attempted) exercise of
the voting rights by one shareholder or more shareholders, acting in concert, is materially in conflict with ASMLs interests, ASMLs business or ASMLs stakeholders.
The objectives of the Foundation are to look after the interests of ASML and of the enterprises maintained by ASML and of the companies which are affiliated in a group with ASML, in such a way that the
interests of ASML, of those enterprises and of all parties concerned are safeguarded in the best possible way, and influences in conflict with these interests which might affect the independence or the identity of ASML and those companies are
deterred to the best of the Foundations ability, and everything related to the above or possibly conducive thereto. The Foundation seeks to realize its objects by the acquiring and holding of cumulative preference shares in the capital of ASML
and by exercising the rights attached to these shares, particularly the voting rights attached to these shares.
The Preference Share Option
gives the Foundation the right to acquire a number of cumulative preference shares as the Foundation will require, provided that the aggregate nominal value of such number of cumulative preference shares shall not exceed the aggregate nominal value
of the ordinary shares that have been issued at the time of exercise of the Preference Share Option for a subscription price equal to their nominal value. Only one-fourth of the subscription price is payable at the time of initial issuance of the
cumulative preference shares, with the other three-fourths of the nominal value only being payable when we call up this amount. Exercise of the preference share option could effectively dilute the voting power of the outstanding ordinary shares by
one-half.
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Cancellation and repayment of the issued cumulative preference shares by ASML requires the authorization by the
General Meeting of Shareholders of a proposal to do so by the BoM approved by the Supervisory Board. If the Preference Share Option is exercised and as a result cumulative preference shares are issued, ASML, at the request of the Foundation, will
initiate the repurchase or cancellation of all cumulative preference shares held by the Foundation. In that case ASML is obliged to effect the repurchase and cancellation respectively as soon as possible. A cancellation will have as a result a
repayment of the amount paid and exemption from the obligation to pay up on the cumulative preference shares. A repurchase of the cumulative preference shares can only take place when such shares are fully paid up.
If the Foundation does not request ASML to repurchase or cancel all cumulative preference shares held by the Foundation within 20 months after issuance of
these shares, we will be obliged to convene a General Meeting of Shareholders in order to decide on a repurchase or cancellation of these shares.
The Foundation is independent of ASML. The Board of Directors of the Foundation comprises four independent members from the Dutch business and academic
communities. The members of the Board of Directors of the Foundation are: Mr. H. Bodt, Mr. M.W. den Boogert, Mr. J.M. de Jong and Mr. A.H. Lundqvist.
Limitations to transfers of shares in the share capital of ASML
There are currently no
limitations, either under Dutch law or in the Articles of Association of ASML, as to the transfer of ordinary shares in the share capital of ASML. Pursuant to the Articles of Association of ASML, the approval of the Supervisory Board shall be
required for every transfer of cumulative preference shares.
Reporting obligations under the Act on the supervision of financial markets (Wet
op het financieel toezicht, the FMSA)
Holders of our shares may be subject to reporting obligations under the FMSA.
The disclosure obligations under the FMSA apply to any person or entity that acquires, holds or disposes of an interest in the voting rights and/or the
capital of a public limited company incorporated under the laws of the Netherlands whose shares are admitted to trading on a regulated market within the European Union, such as ASML. Disclosure is required when the percentage of voting rights or
capital interest of a person or an entity reaches, exceeds or falls below 3.0, 5.0, 10.0, 15.0, 20.0, 25.0, 30.0, 40.0, 50.0, 60.0, 75.0 or 95.0 percent (as a result of an acquisition or disposal by such person, or as a result of a change in our
total number of voting rights or capital issued). With respect to ASML, the FMSA requires any person or entity whose interest in the voting rights and/or capital of ASML reached, exceeded or fell below those percentage interests to notify the AFM
immediately.
ASML is required to notify the AFM immediately if our voting rights and/or capital have changed by 1.0 percent or more since its
previous notification on outstanding voting rights and capital. In addition, ASML must notify the AFM of changes of less than 1.0 percent in ASMLs outstanding voting rights and capital at least once per calendar quarter, within eight days
after the end of the quarter. Any person whose direct or indirect voting rights and/or capital interest meets or passes the thresholds referred to in the previous paragraph as a result of a change in the outstanding voting rights or capital must
notify the AFM no later than the fourth trading day after the AFM has published such a change.
Once every calendar year, within four weeks after
the end of the calendar year, holders of an interest of 3.0 percent or more in ASMLs voting rights or capital must notify the AFM of any changes in the composition of their interest resulting from certain acts (including, but not limited to,
the exchange of shares for depositary receipts and vice versa, and the exercise of rights to acquire shares).
Subsidiaries, as defined in the
FMSA, do not have independent reporting obligations under the FMSA, as interests held by them are attributed to their (ultimate) parents. Any person may qualify as a parent for purposes of the FMSA, including an individual. A person who ceases to be
a subsidiary and who disposes of an interest of 3.0 percent or more in ASMLs voting rights or capital must immediately notify the AFM. As of that moment, all notification obligations under the FMSA become applicable to the former subsidiary.
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For the purpose of calculating the percentage of capital interest or voting rights, the following interests
must, among other arrangements, be taken into account: shares and votes (i) directly held by any person, (ii) held by such persons subsidiaries, (iii) held by a third party for such persons account, (iv) held by a
third party with whom such person has concluded an oral or written voting agreement (including on the basis of an unrestricted power of attorney), (v) held by a third party with whom such person has agreed to temporarily transfer voting rights
against payment, (vi) financial instruments of which the increase in value is wholly or partially dependent on an increase in value of our shares or distributions in respect thereof (including certain cash settled financial instruments such as
contracts for difference and total return swaps), (vii) put options pursuant to which a person can be required to purchase our shares, and (vii) other contracts under which a person has a position economically comparable to having our
shares. Interests held jointly by multiple persons are attributed to those persons in accordance with their entitlement. A holder of a pledge or right of usufruct in respect of shares can also be subject to these reporting obligations if such person
has, or can acquire, the right to vote on the shares or, in case of depositary receipts, the underlying shares. The managers of certain investment funds are deemed to hold the capital interests and voting rights in the funds managed by them.
For the same purpose, the following instruments qualify as shares: (i) shares, (ii) depositary receipts for shares (or
negotiable instruments similar to such receipts), (iii) negotiable instruments for acquiring the instruments under (i) or (ii) (such as convertible bonds), and (iv) options for acquiring the instruments under (i) or (ii).
The AFM requires the notification of any gross short position in our shares. For the notification of gross short positions the same thresholds
apply as for notifying an actual or potential interest in the capital and/or or voting rights of a Dutch listed company, as referred to above. In addition, pursuant to Regulation (EU) No 236/2012, each person holding a net short position amounting
to 0.2 percent of the issued share capital of a Dutch listed company is required to report it to the AFM. Each subsequent increase of this position by 0.1 percent above 0.2 percent will also need to be reported. Each net short position equal to 0.5
percent of the issued share capital of a Dutch listed company and any subsequent increase of that position by 0.1 percent will be made public via the AFM short selling register. To calculate whether a natural person or legal person has a net short
position, their short positions and long positions must be set-off. A short transaction in a share can only be contracted if a reasonable case can be made that the shares sold can actually be delivered, which requires confirmation of a third party
that the shares have been located.
The AFM keeps a public registry of and publishes all notifications made pursuant to the FMSA.
Non-compliance with the reporting obligations under the FMSA could lead to criminal fines, administrative fines, imprisonment or other sanctions. In
addition, non-compliance with the reporting obligations under the FMSA may lead to civil sanctions, including (i) suspension of the voting rights relating to the shares held by the offender, for a period of not more than three years,
(ii) nullification of any resolution of our general meeting of shareholders to the extent that such resolution would not have been approved if the votes at the disposal of the person or entity in violation of a duty under the FMSA had not been
exercised and (iii) a prohibition on the acquisition by the offender of our shares or the voting on our ordinary shares for a period of not more than five years.
We may request Euroclear Nederland and its admitted institutions as well as intermediaries, institutions and custodians of investment funds (in the Netherlands and abroad) of which we reasonably expect that
they hold our shares other than as beneficial owner, to provide certain details on the identity and number of shares held, of their clients for whom they hold our shares. We must keep the information received confidential. We may only make such
requests during a period of 60 days prior to the day on which our general meeting of shareholders will be held. No details are required to be given in respect of shareholders with an interest of less than 0.5 percent of our issued share capital. A
shareholder who, individually or together with other shareholders, holds an interest of at least 10 percent of the issued share capital may request us to establish the identity of our shareholders in this manner so that we can forward to them
information provided by such shareholder in respect of an item on the agenda for the general meeting. This request may only be made during a period of 60 days until (and not including) the 42nd day before the day on which the general meeting of
shareholders will be held.
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The following table sets forth the total number of ordinary shares owned by each shareholder whose beneficial
ownership of ordinary shares is at least 3.0 percent of our ordinary shares issued and outstanding. The information set out below with respect to shareholders is solely based on public filings with the SEC and AFM on February 4, 2015.
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Identity of Person or Group |
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Shares Owned |
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Percent of Class6 |
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Capital Group International,
Inc1 |
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67,265,695 |
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15.54% |
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Stichting Administratiekantoor MAKTSJAB/Intel2 |
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62,977,877 |
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14.55% |
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BlackRock
Inc.3 |
|
|
22,116,072 |
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5.11% |
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Stichting Administratiekantoor TSMC/TSMC4 |
|
|
20,992,625 |
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4.85% |
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The Growth Fund of America5 |
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13,768,843 |
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3.18% |
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1 |
As reported to the AFM on April 25, 201 4, Capital Group International, Inc. and CRMC, which we believe to be an affiliate of Capital Group International, Inc.,
indirectly have 605,391,255 voting rights corresponding to 67,265,695 shares (based on nine votes per share) of our ordinary shares but do not have ownership rights related to those shares. Capital World Investors reported on a Schedule 13-G/A filed
with the SEC on February 13, 2014, that it is the beneficial owner of 45,026,116 shares of our ordinary shares as a result of its affiliation with CRMC. |
2 |
Stichting Adminstratiekantoor MAKTSJAB owns the stated percentage of our ordinary shares and has issued corresponding depository receipts to Intel.
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3 |
Based solely on the Schedule 13-G/A filed by BlackRock Inc. with the SEC on October 8, 2014. The July 2, 2013 public filing with the AFM shows aggregate holdings
of various BlackRock funds of (based on total number of issued shares as per 2 July 2013) 3.68% in shares and 4.42% in voting rights. |
4 |
Stichting Administratiekantoor TSMC owns the stated percentage of ordinary shares and has issued corresponding depository receipts to TSMC. |
5 |
As reported to the AFM on May 15, 2014, The Growth Fund of America does not hold voting rights related to 13,768,843 shares of our ordinary shares. We believe The
Growth Fund of America to be a fund managed by CRMC as referred to in footnote 1 of this table. Accordingly, there may be overlap between the shares reported to be owned by The Growth Fund of America and the shares reported to be owned by Capital
Group International, Inc. |
6 |
As a percentage of the total number of ordinary shares issued and outstanding (432,935,288) as of December 31, 2014, which excludes 5,138,355 ordinary shares
which have been issued but are held in treasury by ASML. Please note that share ownership percentages reported to the AFM are expressed as a percentage of the total number of ordinary shares issued (including treasury stock) and that accordingly,
percentages reflected in this table may differ from percentages reported to the AFM. |
Appointment of Board of Management and
Supervisory Board
Board of Management
The rules governing the appointment and dismissal of members of the BoM are described in section II above.
Supervisory Board
The rules governing the appointment and dismissal of members of the
Supervisory Board are described in section III above.
Amendment of the Articles of Association
The General Meeting of Shareholders can resolve to amend our Articles of Association. The (proposed) amendment requires the approval of the Supervisory
Board.
A resolution to amend the Articles of Association is adopted at a General Meeting of Shareholders at which more than one half of the
issued share capital is represented and with at least three-fourths of the votes cast; if the required share capital is not represented at a meeting convened for that purpose, a subsequent meeting shall be convened, to be held within four weeks of
the first meeting, at which, irrespective of the share capital represented, the resolution can be adopted with at least three-fourths of the votes cast. If a resolution to amend the Articles of Association is proposed by the BoM, the resolution will
be adopted with an absolute majority of votes cast irrespective of the represented share capital at the General Meeting of Shareholders.
The
complete proposals should be made available for inspection by the shareholders and the others entitled to attend meetings at our office and at a banking institution designated in the convocation to the General Meeting of Shareholders, as from the
date of said convocation until the close of that meeting. Furthermore, we must consult Euronext Amsterdam and the AFM, before the amendment is proposed to our shareholders.
Severance payments under agreements with members of Board of Management
Employment agreements
respectively management services agreements for members of the BoM contain specific provisions regarding severance payments. If ASML gives notice of termination of the employment agreement respectively management services agreements for reasons
which are not exclusively or mainly found in acts or omissions of the BoM member concerned, a severance payment not exceeding one year base salary will be paid upon the effective date of termination. This severance payment will also be paid in case
a BoM member gives notice of termination under the agreement in connection with a substantial difference of opinion between the respective executive and the Supervisory Board regarding his agreement, his function or ASMLs strategy.
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BoM members shall also be entitled to the aforementioned severance payments in the event ASML or its legal
successor gives notice of termination in connection with a Change of Control (as defined in the agreements) or if such BoM member gives notice of termination directly related to such Change of Control, and such notice is given within twelve months
from the date on which the Change of Control occurs.
Per July 1, 2013, the relationship between a member of the BoM and a listed company
can no longer be treated as an employment contract. Members appointed after July 1, 2013 have entered into a management services agreement; however the employment agreements entered into before July 1, 2013 will remain in effect.
VII. Deviation from the Code
For
clarity purposes, ASML lists below its deviation from the Code and the reason for doing so.
II.2.5
Although ASML does not consider ASMLs execution of this best practice a deviation from the Code, it could be interpreted as such.
The members of the Board of Management are eligible to receive performance shares which will be awarded annually under the condition of fulfillment of
predetermined performance targets, which are measured over a period of three calendar years. Once the shares are unconditionally awarded after fulfillment of the performance conditions, the shares will be retained (for a lock-up period) by the Board
of Management member for at least two years after the date of unconditional award or until the termination of employment, whichever period is shorter. The date of release lies three years after the original date of target setting, and the members of
the Board of Management have to retain the performance shares for at least two subsequent years. Accordingly, the total period before one obtains full rights to the performance shares will be five years. The Remuneration Committee believes that the
total resulting period is in compliance with the Code. At the 2014 AGM the performance share arrangement for the Board of Management as contained in the 2014 Remuneration Policy was approved.
The Board of Management and the Supervisory Board,
Veldhoven, February 10, 2015
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Management Board Report
About ASML
ASML makes possible affordable
microelectronics that improve the quality of life. ASML invents and develops complex technology for high-tech lithography systems for the semiconductor industry. ASMLs guiding principle is continuing Moores Law towards ever smaller,
cheaper, more powerful and energy-efficient semiconductors. Our success is based on three pillars: technology leadership combined with customer and supplier intimacy, highly efficient processes and entrepreneurial people. We are a multinational
company with over 70 locations in 16 countries, headquartered in Veldhoven, the Netherlands. As of December 31, 2014, we employed 11,318 payroll employees (2013: 10,360) and 2,754 temporary employees (2013: 2,865), measured in FTEs. ASML is
traded on Euronext Amsterdam and NASDAQ under the symbol ASML.
In 2014, we generated net sales of EUR 5,856.3 million and operating income
of EUR 1,523.8 million or 26.0 percent of net sales. Net income in 2014 amounted to EUR 1,418.3 million or 24.2 percent of net sales, representing basic net income per ordinary share of EUR 3.24.
All information disclosed in this Management Board Report is provided as a supplement to, and should be read in conjunction with, our Corporate Governance
Paragraph, Consolidated Financial Statements and the accompanying notes to the Consolidated Financial Statements.
On May 30, 2013 we
acquired 100 percent of the issued share capital of Cymer. Comparative financial information presented in our Statutory Annual Report includes Cymer from May 30, 2013 onwards.
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 and
results of operations. Some of the more relevant risks are described 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.
Summary
Strategic Risk
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We derive most of our revenues from the sale of a relatively small number of products. |
Risks Related to the Semiconductor Industry
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The semiconductor industry is highly cyclical and we may be adversely affected by any downturn; |
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Our business will suffer if we or the industry do not respond rapidly to commercial and technological changes in the semiconductor industry; and
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We face intense competition. |
Governmental, Legal and Compliance Risks
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Failure to adequately protect the intellectual property rights upon which we depend could harm our business; |
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Defending against intellectual property claims brought by others could harm our business; |
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We are subject to risks in our international operations; and |
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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. |
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Operational Risks
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The number of systems we can produce is limited by our dependence on a limited number of suppliers of key components; |
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The time window for new product introduction is shorter and is accompanied by potential design and production delays and by significant costs;
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As lithography technologies become more complex, the success of our R&D programs becomes more uncertain and more expensive;
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We are dependent on the continued operation of a limited number of manufacturing facilities; |
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We may be unable to make desirable acquisitions or to integrate successfully any businesses we acquire; |
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Our business and future success depend on our ability to attract and retain a sufficient number of adequately educated and skilled employees;
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A disruption in our information technology systems, including those related to cybersecurity, could adversely affect our business operations; and
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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
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A high percentage of net sales is derived from a few customers; and |
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Fluctuations in foreign exchange rates could harm our results of operations. |
Risks Related to our Ordinary Shares
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We may not declare cash dividends at all or in any particular amounts in any given year; |
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Restrictions on shareholders rights may dilute voting power; and |
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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 |
Explanation Per Risk
Strategic Risk
We derive most of our
revenues from the sale of a relatively small number of products
We derive most of our revenues from the sale of a relatively small number
of lithography equipment systems (136 units in 2014 and 157 units in 2013), with an ASP per system in 2014 of EUR 31.2 million (EUR 35.6 million for new systems and EUR 5.8 million for used systems) and an ASP per system in 2013 of
EUR 25.4 million (EUR 27.4 million for new systems and EUR 6.9 million for used systems). As a result, the timing of recognition of revenue for a particular reporting period from a small number of system sales may have a material
adverse effect on our business, financial condition and results of operations in that period. Specifically, the failure to receive anticipated orders, or delays in shipments near the end of a particular reporting period, due, for example, to:
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A downturn in the highly cyclical semiconductor industry; |
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|
Volatility in the Logic and Memory end-markets as a result of oversupply and undersupply; |
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|
Cancellation or order push-back by customers; |
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Unexpected manufacturing difficulties; or |
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Delays in deliveries by suppliers |
may cause net sales in a particular reporting period to fall significantly below net sales in previous periods or below our expected net sales, and may have
a material adverse effect on our results of operations for that period. In particular, our published quarterly earnings may vary significantly from quarter to quarter and may vary in the future and reduce our visibility on future sales for the
reasons discussed above.
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ASML STATUTORY REPORT 2014 |
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Risks Related to the Semiconductor Industry
The semiconductor industry is highly cyclical and we may be adversely affected by any downturn
As a supplier to the global semiconductor industry, we are subject to the industrys business cycles, of which the timing, duration and volatility are difficult to predict. The semiconductor industry
has historically been cyclical. Sales of our lithography systems depend in large part upon the level of capital expenditures by semiconductor manufacturers. These capital expenditures depend upon a range of competitive and market factors, including:
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The current and anticipated market demand for semiconductors and for products utilizing semiconductors; |
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Semiconductor production costs and manufacturing capacity utilization for semiconductors; |
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Semiconductor equipment industry capacity; |
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Changes in semiconductor inventory levels; |
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General economic conditions; and |
Reductions
or delays in capital equipment purchases by our customers could have a material adverse effect on our business, financial condition and results of operations.
In an industry downturn, our ability to maintain profitability will depend substantially on whether we are able to lower our costs and break-even level, which is the level of sales that we must reach in a
year to achieve positive net income. If sales decrease significantly as a result of an industry downturn and we are unable to adjust our costs over the same period, our net income may decline significantly or we may suffer losses. As we need to keep
certain levels of inventory on hand to meet anticipated product and service demand, we may also incur increased costs related to inventory obsolescence in an industry downturn, and such inventory obsolescence costs may be higher with our newer
technology systems such as EUV. In addition, industry downturns generally result in overcapacity, resulting in downward pressure on sales prices and impairment of machinery and equipment, which in the past has had, and in the future could have, a
material adverse effect on our business, financial condition and results of operations.
The financial crises that affected the international
banking system and global financial markets in 2008-2009 have been in many respects unprecedented and international financial markets and the global economy have remained volatile. Instability of the financial markets and the global economy in
general can have a number of effects on our business, including (i) declining business and consumer confidence resulting in reduced, or delayed purchase of our products or shorter-term capital expenditures for our products; insolvency of key
suppliers resulting in product delays, (ii) an inability of customers to obtain credit to finance purchases of our products, delayed payments from our customers and/or customer insolvencies and (iii) other adverse effects that we cannot
currently anticipate. If global economic and market conditions deteriorate, we are likely to experience material adverse impacts on our business, financial condition and results of operations.
Conversely, in anticipation of periods of increasing demand for semiconductor manufacturing equipment, we must maintain sufficient manufacturing capacity
and inventory and we must attract, hire, integrate and retain a sufficient number of qualified employees to meet customer demand. Our ability to predict the timing and magnitude of industry fluctuations is limited and our products require
significant lead-time to successfully complete. Accordingly, we may not be able to effectively increase our production capacity to respond to an increase in customer demand in an industry upturn resulting in lost sales, damage to customer
relationships and we may lose market share.
Our business will suffer if we or the industry do not respond rapidly to commercial and
technological changes in the semiconductor industry
The semiconductor manufacturing industry is subject to:
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Rapid change towards more complex technologies; |
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Frequent new product introductions and enhancements; |
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Evolving industry standards; |
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Changes in customer requirements; and |
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Shorter product life cycles. |
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Our products could become obsolete sooner than anticipated because of a faster than anticipated change in one
or more of the technologies related to our products or in market demand for products based on a particular technology. Our success in developing new products and in enhancing our existing products depends on a variety of factors, including the
successful management of our R&D programs and the timely completion of product development and design relative to competitors. If we do not develop and introduce new and enhanced systems at competitive prices and on a timely basis, our customers
will not integrate our systems into the planning and design of new production facilities and upgrades of existing facilities, which would have a material adverse effect on our business, financial condition and results of operations.
In particular, we are investing considerable financial and other resources to develop and introduce new products and product enhancements, such as Dry,
Immersion, EUV and Holistic Lithography. If we or our suppliers are unable to successfully develop and introduce these products and technologies, or if our customers do not fully adopt the new technologies, products or product enhancements due to a
preference for more established or alternative new technologies and products, due to the failure to meet their development roadmaps which require our new technology or for any other reason, we may not recoup all of our investments in these
technologies or products, which could have a material adverse effect on our business, financial condition and results of operations.
The success
of EUV, which we believe is critical for keeping pace with Moores Law, which postulates that the number of transistors on a chip doubles approximately every 18 to 24 months at equivalent costs, remains dependent on continuing technical
advances by us and our suppliers, particularly with respect to technology related to the light source, source power, system availability, and scanner performance, without which EUV tools cannot achieve the productivity and yield required to
economically justify the higher price of these tools. A delay in the developments of these tools or a delay in such tools meeting production requirements could discourage or result in much slower adoption of this EUV technology and could delay
purchases of these tools. In addition, the introduction of alternative technologies or processes by our competitors that compete with EUV could discourage or result in much slower adoption of EUV technology. If the technologies that we pursue to
assist our customers in producing smaller and more efficient chips are not as effective as those developed by our competitors, or if our customers adopt new technological architectures that are less focused on lithography, this may adversely affect
our business, financial condition and results of operations.
We face intense competition
The semiconductor equipment industry is highly competitive. The principal elements of competition in our market are:
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The technical performance characteristics of a lithography system; |
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The value of ownership of that system based on its purchase price, maintenance costs, productivity, and customer service and support costs;
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The exchange rate of the euro, particularly against the Japanese yen- strengthening of the euro against the yen could result in a loss of market share;
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The relative strength and breadth of our portfolio of patents and other intellectual property rights; and |
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Our customers desire to obtain lithography equipment from more than one supplier. |
Our competitiveness increasingly depends upon our ability to develop new and enhanced semiconductor equipment that is competitively priced and introduced on
a timely basis, as well as our ability to protect and defend our intellectual property rights. See Note 11 and Note 26 to our Consolidated Financial Statements.
We compete primarily with Nikon and Canon. Both Nikon and Canon have substantial financial resources and broad patent portfolios. Each continues to introduce new products with improved price and performance
characteristics that compete directly with our products, which may cause a decline in our sales or a loss of market acceptance for our lithography systems. In addition, adverse market conditions, industry overcapacity or a decrease in the value of
the Japanese yen in relation to the euro or the U.S. dollar, could further intensify price-based competition in those regions that account for the majority of our sales, resulting in lower prices and margins which could have a material adverse
effect on our business, financial condition and results of operations.
In addition to competitors in lithography, we may face competition with
respect to alternative technologies for the non-critical layers or for all layers. If we fail to keep pace with Moores Law or in the event the delivery of new technology is delayed, our customers may opt for other solutions in IC manufacturing
as a substitute for purchasing our products.
In the future the IC industry may not find it economically or technically feasible to maintain the
pace of Moores Law through the use of lithography systems, which could result in our customers choosing solutions other than lithography for IC manufacturing. In addition, if the pace of Moores Law is not maintained, this could also
result in the IC industry utilizing fewer leading technology systems, which could result in lower sales and margins.
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Governmental. Legal and Compliance Risks
Failure to adequately protect the intellectual property rights upon which we depend could harm our business
We rely on intellectual property rights such as patents, copyrights and trade secrets to protect our proprietary technology. However, we face the risk that such measures could prove to be inadequate because:
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Intellectual property laws may not sufficiently support our proprietary rights or may change in the future in a manner adverse to us;
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Patent rights may not be granted or interpreted as we expect; |
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|
Patents will expire which may result in key technology becoming widely available that may hurt our competitive position; |
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|
The steps we take to prevent misappropriation or infringement of our proprietary rights may not be successful; and |
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|
Third parties may be able to develop or obtain patents for similar competing technology. |
In addition, litigation may be necessary to enforce our intellectual property rights, to determine the validity and scope of the proprietary rights of
others, or to defend against claims of infringement. Any such litigation may result in substantial costs and diversion of management resources, and, if decided unfavorably to us, could have a material adverse effect on our business, financial
condition and results of operations.
Defending against intellectual property claims brought by others could harm our business
In the course of our business, we are subject to claims by third parties alleging that our products or processes infringe upon their
intellectual property rights. If successful, such claims could limit or prohibit us from developing our technology and manufacturing our products, which could have a material adverse effect on our business, financial condition and results of
operations.
In addition, our customers may be subject to claims of infringement from third parties, alleging that our products used by such
customers in the manufacture of semiconductor products and/or the processes relating to the use of our products infringe one or more patents issued to such third parties. If such claims were successful, we could be required to indemnify customers
for some or all of any losses incurred or damages assessed against them as a result of such infringement, which could have a material adverse effect on our business, financial condition and results of operations.
We also may incur substantial licensing or settlement costs, which although potentially strengthening or expanding our intellectual property rights or
limiting our exposure to intellectual property claims of third parties, may have a material adverse effect on our business, financial condition and results of operations.
From late 2001 through 2004, ASML was a party to a series of civil litigations and administrative proceedings in which Nikon alleged ASMLs infringement of Nikon patents relating to lithography. ASML in
turn filed claims against Nikon. Pursuant to agreements executed on December 10, 2004, ASML and Nikon agreed to settle all pending worldwide patent litigation between the companies. The settlement included an exchange of releases, a patent
cross-license agreement related to lithography equipment used to manufacture semiconductor devices, and payments to Nikon by ASML.
Under the
terms of the Nikon Cross-License Agreement, beginning on January 1, 2015, the parties may bring suit for infringement of certain patents subject to the agreement, including any infringement that occurred from January 1, 2010 through
December 31, 2014 (the Cross-License Transition Period). Damages resulting from claims for patent infringement occurring during the Cross-License Transition Period are limited to three percent of the net sales price of applicable
licensed products or optical components.
Accordingly, from January 1, 2015, both Nikon and we are no longer prohibited under the agreement
from bringing claims against each other on the basis of infringement of certain patents subject to the Nikon Cross-License Agreement.
If Nikon
files suit against us alleging patent infringement, we may incur substantial legal fees and expenses, and we may not prevail. Similarly, if we file suit against Nikon alleging patent infringement, we may incur substantial legal fees and expenses,
and we may not prevail. Patent litigation is complex and may extend for a protracted period of time, giving rise to the potential for both substantial costs and diverting the attention of key management and technical personnel. Potential adverse
outcomes from patent litigation may include, without limitation, payment of significant monetary damages, injunctive relief prohibiting the sale of products, and/or settlement involving significant costs to be paid by us, any of which may have a
material adverse effect on our business, financial condition and/or results of operations. We are unable to predict at this time whether any such patent suit will in fact materialize, or, if so, what its outcome might be.
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We are subject to risks in our international operations
The majority of our sales are made to customers outside Europe. There are a number of risks inherent in doing business in some of those regions:
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Potentially adverse tax consequences; |
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Unfavorable political or economic environments; |
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Unexpected legal or regulatory changes; |
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An inability to effectively protect intellectual property; and |
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Adverse effects of foreign currency fluctuations. |
If we are unable to manage successfully the risks inherent in our international activities, our business, financial condition and results of operations could be materially and adversely affected.
In particular, 19.2 percent of our 2014 net sales and 42.4 percent of our 2013 net sales were derived from customers in Taiwan. Taiwan has a unique
international political status. The Peoples Republic of China asserts sovereignty over Taiwan and does not recognize the legitimacy of the Taiwanese government. Changes in relations between Taiwan and the Peoples Republic of China,
Taiwanese government policies and other factors affecting Taiwans political, economic or social environment could have a material adverse effect on our business, financial condition and results of operations. In addition, certain of our
manufacturing facilities as well as customers are located in South Korea. There are tensions between the Republic of South Korea and the Democratic Peoples Republic of Korea since the division of the Korean Peninsula following World War II.
The worsening of relations between those two countries or the outbreak of war on the Korean Peninsula could have a material adverse effect on our business, financial condition or results of operations.
In addition, the installation and servicing of our products requires us to travel to our customers premises. Natural disasters could affect our
ability to do so. For example, the Japanese earthquake in 2011 resulted in the disruption of our installation and servicing of systems for our customers in Japan. Natural disasters in areas where our customers are located could prevent or disrupt
the installation or servicing of our systems. In addition, we have customers located in Israel. If the geopolitical environment prevents travel to Israel, it could result in the disruption of our installation and servicing of systems for our
customers.
Lastly, if there is a pandemic outbreak located near any of our customers, it could result in the disruption of our installation and
servicing of systems for our customers near the outbreak. Therefore, if there is a natural disaster, geopolitical conflict or pandemic that prevents our ability to travel to our customers premises, our business, financial condition and results
of operations may be materially adversely effected.
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
The semiconductor market is highly cyclical and as a
consequence we may need to implement workforce reductions in case of a downturn, in order to adapt to such market changes. In accordance with labor laws and practices applicable in the jurisdictions in which we operate, a reduction of any
significance may be subject to formal procedures that can delay or may result in the modification of our planned workforce reductions. For example, ASML Netherlands B.V., our operating subsidiary in the Netherlands, has a Works Council, as required
by Dutch law. If the Works Council renders contrary advice in connection with a proposed workforce reduction in the Netherlands, but we nonetheless determine to proceed, we must temporarily suspend any action while the Works Council determines
whether to appeal to the Enterprise Chamber of the Amsterdam Court of Appeal. This appeal process can cause a delay of several months and may require us to address any procedural inadequacies identified by the Court in the way we reached our
decision. Such delays could impair our ability to reduce costs company-wide to levels comparable to those of our competitors.
Operational
Risks
The number of systems we can produce is limited by our dependence on a limited number of suppliers of key components
We rely on outside vendors for components and subassemblies used in our systems including the design thereof, each of which is obtained
from a single supplier or a limited number of suppliers. Our reliance on a limited group of suppliers involves several risks, including a potential inability to obtain an adequate supply of required components, reduced control over pricing and the
risk of untimely delivery of these components and subassemblies.
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The number of lithography systems we are able to produce may be limited by the production
capacity of Zeiss. Zeiss is our single supplier of lenses, mirrors, collectors and other critical optical components (which we refer to as optics). If Zeiss were unable to maintain and increase production levels or if we are unable to maintain our
business relationship with Zeiss in the future we could be unable to fulfill orders, which could damage relationships with current and prospective customers and have a material adverse effect on our business, financial condition and results of
operations. If Zeiss were to terminate its relationship with us or if Zeiss were unable to maintain production of optics over a prolonged period, we would effectively cease to be able to conduct our business. In addition to Zeiss current
position as a supplier of optics, a number of other critical components such as drive lasers included in our CO2 lasers used in our EUV systems are available from only a limited number of suppliers.
Designing and
manufacturing some of these components and subassemblies that we use in our manufacturing processes is an extremely complex process and could result in delays by our suppliers. A prolonged inability to obtain adequate deliveries of components or
subassemblies, or any other circumstance that requires us to seek alternative sources of supply, could significantly hinder our ability to deliver our products in a timely manner, which could damage relationships with current and prospective
customers and have a material adverse effect on our business, financial condition and results of operations.
In addition, as we develop new
technologies, such as EUV, this requires our suppliers to participate in the development process so that the components they supply will meet the requirements of our development roadmap, and this may require significant R&D spending on the part
of our suppliers. If our suppliers are unable to maintain their development roadmap in line with ours, this may delay the development and introduction of new products. In addition, our suppliers may not have or may not be willing to spend sufficient
financial resources to make the necessary R&D expenditures to enable them (and therefore us) to continue development roadmaps. In this case, we may be required to co-invest with our suppliers to continue the R&D required to continue
development roadmaps.
The time window for new product introduction is shorter and is accompanied by potential design and production delays
and by significant costs
The development and initial production, installation and enhancement of the systems we produce is often
accompanied by design and production delays and related costs of a nature typically associated with the introduction and transition to full-scale manufacturing of complex capital equipment. While we expect and plan for a corresponding learning-curve
effect in our product development cycle, we cannot predict with precision the time and expense required to overcome these initial problems and to ensure full performance to specifications. Moreover, we anticipate that this learning-curve effect will
continue to present increasingly difficult challenges with each new generation of our products as a result of increasing technological complexity. In particular, the development of an EUV volume production system is dependent on, and subject to the
successful implementation of, among other things, technology related to the light source, source power, system availability, scanner performance and other technologies specific to EUV. There is a risk that we may not be able to introduce or bring to
full-scale production new products as quickly as we anticipate in our product introduction plans, which could have a material adverse effect on our business, financial condition and results of operations.
For the market to accept technology enhancements, our customers, in many cases, must upgrade their existing technology capabilities. Such upgrades from
established technology may not be available to our customers to enable volume production using our new technology enhancements. This could result in our customers not purchasing, or pushing back or canceling orders for our technology enhancements,
which could negatively impact our business, financial condition and results of operations.
We are also dependent on our suppliers to maintain
their development roadmaps to enable us to introduce new technologies on a timely basis, and if they are unable to keep pace whether due to technological factors, lack of financial resources or otherwise, this could prevent us from meeting our
development roadmaps.
Additionally, in connection with our EUV production, we have made advanced payments to suppliers that we may not recoup if
we do not reach expected EUV sales levels in the future. We may make similar advance payments (or other investments in our suppliers) to suppliers in connection with EUV or other technologies we develop, and we may not recoup those advanced payments
or other investments (e.g. if expected sales are not met). See Note 14 to our Consolidated Financial Statements.
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As lithography technologies become more complex, the success of our R&D programs becomes more
uncertain and more expensive
Our lithography systems have become increasingly complex, and accordingly, the costs to develop new products
and technologies have increased, and we expect such costs to continue to increase. This increase in costs requires us to continue obtaining sufficient funding for our R&D programs. For example, we obtained partial funding for our EUV R&D
program through the CCIP. We may however, be unable to obtain this type of funding from customers in the future, in which case we may be unable to fund R&D investments necessary to maintain our technological leadership. The increasing complexity
of new technologies, which leads to increasing cost of R&D programs for new technologies, also increases the risk that a new product or technology may not be successful
Furthermore, as the innovation cycle becomes more complex, developing new technology, including EUV technology, requires increased R&D investments by our suppliers in order to meet the technology demands
of us and our customers. Our suppliers may not have, or may not be willing to invest, the resources necessary to continue the development of the new technologies to the extent such investments are necessary, which may result in our contributing
funds to such R&D programs or limiting the R&D investments that we can undertake.
We are dependent on the continued operation of a
limited number of manufacturing facilities
All of our manufacturing activities, including subassembly, final assembly and system testing,
take place in cleanroom facilities in Veldhoven, the Netherlands, in Wilton, Connecticut and in San Diego, California, both in the United States, in Pyeongtaek, South-Korea and in Linkou, Taiwan. These facilities may be subject to disruption for a
variety of reasons, including work stoppages, fire, energy shortages, flooding or other natural disasters. We cannot ensure that alternative production capacity would be available if a major disruption were to occur or that, if such capacity was
available, it could be obtained on favorable terms. Such a disruption could have a material adverse effect on our business, financial condition and results of operations. In addition, some of our key suppliers, including Zeiss, have a limited number
of manufacturing facilities, the disruption of which may significantly and adversely affect our production capacity.
We may be unable to
make desirable acquisitions or to integrate successfully any businesses we acquire
Our future success may depend in part on the
acquisition of businesses or technologies intended to complement, enhance or expand our current business or products or that might otherwise offer us growth opportunities. Our ability to complete such transactions may be hindered by a number of
factors, including potential difficulties in obtaining government approvals.
Any acquisition that we do make would pose risks related to the
integration of the new business or technology with our business. We cannot be certain that we will be able to achieve the benefits we expect from a particular acquisition or investment. Acquisitions may also strain our managerial and operational
resources, as the challenge of managing new operations may divert our management from day-to-day operations of our existing business. Our business, financial condition and results of operations may be materially and adversely affected if we fail to
coordinate our resources effectively to manage both our existing operations and any businesses we acquire.
In May 2013, we acquired all of the
outstanding shares of Cymer, a light source supplier with the goal of making EUV technology more efficient, preventing additional delays in the introduction of EUV technology, and simplifying the supply chain of EUV modules. If we fail to integrate
Cymer successfully, this may result in a delay in the development of EUV. Even if we are able to successfully integrate Cymer, there is no assurance that our acquisition of Cymer will result in successful or timely development of our EUV technology.
In addition, in connection with acquisitions, anti-trust regulators may impose conditions on us, including requirements to divest assets or
other conditions that could make it difficult for us to integrate the businesses that we acquire. For example, in connection with the Cymer acquisition we have agreed to maintain Cymer Light Sources as a stand-alone business.
Our business and future success depend on our ability to attract and retain a sufficient number of adequately educated and skilled employees
Our business and future success significantly depends upon our employees, including a large number of highly qualified professionals, as
well as our ability to attract and retain employees. Competition for such personnel is intense, and we may not be able to continue to attract and retain such personnel. Our R&D programs require a significant number of qualified employees. If we
are unable to attract sufficient numbers of qualified employees, this could affect our ability to conduct our research and development programs on a timely basis, which could adversely affect our business, financial condition and results of
operations.
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In addition, if we lose a key employee to retirement, illness or otherwise, particularly a number of our highly
qualified professionals and/or senior management, we may not be able to timely find a suitable replacement. Moreover, as a result of the uniqueness and complexity of our technology, qualified engineers capable of working on our systems are scarce
and generally not available (e.g. from other industries or companies). As a result, we must educate and train our employees to work on our systems. Therefore, a loss of a number of key professionals and/or senior management can be disruptive, costly
and time consuming.
Furthermore, the increasing complexity of our products results in a longer learning-curve for new and existing employees and
suppliers leading to an inability to decrease cycle times and may result in the incurrence of significant additional costs.
Our suppliers face
similar risks in attracting qualified employees, including attracting employees in connection with R&D programs that will support our R&D programs and technology developments. To the extent that our suppliers are unable to attract qualified
employees, this could adversely affect our business, financial condition and results of operations.
A disruption in our Information
technology systems, including those related to cybersecurity, could adversely affect our business operations
We rely on the accuracy,
capacity and security of our information technology systems. Despite the measures that we have implemented, including those related to cybersecurity, our systems could be breached or damaged by computer viruses and systems attacks, natural or
man-made incidents, disasters or unauthorized physical or electronic access.
From time to time we experience cybersecurity attacks on our
information technology systems, which are becoming more sophisticated and include malicious software, attempts to gain unauthorized access to data, and other electronic security breaches that could lead to disruptions in critical systems,
unauthorized release of confidential or otherwise protected information (including confidential information relating to our customers and suppliers), and corruption of data. Any system failure, accident or security breach could result in business
disruption, theft of our intellectual property, trade secrets (including our proprietary technology), customer or supplier information and unauthorized access to personnel information.
Moreover, there can be no assurance that such measures we have implemented will be sufficient to prevent a system failure, accident or security breach from occurring. To the extent that our business is
interrupted or data or proprietary technology is lost, destroyed or inappropriately used or disclosed, such disruptions could adversely affect our competitive position, relationships with customers and suppliers or our business, financial condition
and results of operations. In addition, we may be required to incur significant costs to protect against or repair the damage caused by these disruptions or security breaches in the future.
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
Hazardous substances are used in the production and operation
of our lithography systems, which subjects us to a variety of governmental regulations relating to environmental protection and employee and product health and safety, including the transport, use, storage, discharge, handling, emission, generation,
and disposal of toxic or other hazardous substances. In addition, operating our machines (which use lasers and other potentially hazardous tools) is dangerous and can result in injury. The failure to comply with current or future regulations could
result in substantial fines being imposed on us or other adverse consequences. Additionally, our products have become increasingly complex. The increasing complexity requires us to invest in continued risk assessments and development of appropriate
preventative and protective measures for health and safety for both our employees (in connection with the production and installation of our systems) and our customers employees (in connection with the operation of our systems). There can be
no assurance that the health and safety practices we develop will be adequate to mitigate all health and safety risks. Failing to comply with applicable regulations or the failure of our implemented practices for customer and employee health and
safety could subject us to significant liabilities, which could have a material adverse effect on our business, financial condition and results of operations.
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ASML STATUTORY REPORT 2014 |
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Financial Risks
A high percentage of net sales is derived from a few customers
Historically, we have sold
a substantial number of lithography systems to a limited number of customers. We expect customer concentration to increase because of continuing consolidation in the semiconductor manufacturing industry. Consequently, while the identity of our
largest customers may vary from year to year, sales may remain concentrated among relatively few customers in any particular year. In 2014, recognized sales to our largest customer accounted for EUR 1,532.1 million, or 26.2 percent of net
sales, compared with EUR 2,058.6 million, or 39.2 percent of net sales, in 2013. The loss of any significant customer or any significant reduction in orders by a significant customer may have a material adverse effect on our business, financial
condition and results of operations.
Additionally, as a result of our limited number of customers, credit risk on our receivables is
concentrated. Our three largest customers (based on net sales) accounted for EUR 643.2 million, or 49.3 percent of accounts receivable and finance receivables on December 31, 2014, compared with EUR 861.4 million, or 73.3 percent on
December 31, 2013. As a result, business failure or insolvency of one of our main customers may have a material adverse effect on our business, financial condition and results of operations.
Fluctuations in foreign exchange rates could harm our results of operations
We are exposed to currency risks. We are particularly exposed to fluctuations in the exchange rates between the U.S. dollar, Japanese yen and the euro, as we incur manufacturing costs for our systems
predominantly in euros while portions of our net sales and cost of sales are denominated in U.S. dollars.
In addition, a portion of our assets
and liabilities and operating results are denominated in U.S. dollars, particularly following our acquisition of Cymer in 2013, and a small portion of our assets, liabilities and operating results are denominated in currencies other than the euro
and the U.S. dollar. Our Consolidated Financial Statements are expressed in euros. Accordingly, our results of operations and assets and liabilities are exposed to fluctuations in exchange rates between the euro and such other currencies, and
changes in currency exchange rates can result in losses in our Consolidated Financial Statements. In general, our customers generally run their businesses in U.S. dollars and therefore a weakening of the U.S. dollar against the euro might impact the
ability or desire of our customers to purchase our products.
Furthermore, a strengthening of the euro particularly against the Japanese yen
could further intensify price-based competition in those regions that account for the majority of our sales, resulting in lower prices and margins and a material adverse effect on our business, financial condition and 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
We aim to pay an annual dividend that will be stable or growing over time. Annually, the BoM will, upon prior approval from the Supervisory Board, 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 BoMs 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, the BoM may decide to propose not to pay a dividend or pay a lower dividend with respect to any particular year in the future, which could have a negative effect on our
share price.
Restrictions on shareholder rights may dilute voting power
Our Articles of Association provide that we are subject to the provisions of Dutch law applicable to large corporations, called structuurregime. These provisions have the effect of concentrating
control over certain corporate decisions and transactions in the hands of our Supervisory Board. As a result, holders of ordinary shares may have more difficulty in protecting their interests in the face of actions by members of our Supervisory
Board than if we were incorporated in the United States or another jurisdiction.
Our authorized share capital also includes a class of
cumulative preference shares and we have granted Stichting Preferente Aandelen ASML, a Dutch foundation, an option to acquire, at their nominal value of EUR 0.09 per share, such cumulative preference shares. Exercise of the
preference share option would effectively dilute the voting power of our outstanding ordinary shares by one-half, which may discourage or significantly impede a third party from acquiring a majority of our voting shares.
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ASML STATUTORY REPORT 2014 |
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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
In the CCIP, the Participating
Customers, being Intel, Samsung and TSMC, through certain wholly-owned subsidiaries, acquired in aggregate 96,566,077 ASML shares, constituting 22.3% of ASMLs issued and outstanding shares as of December 31, 2014. In the CCIP, all of the
Participating Customers agreed to a lock-up arrangement with us which expire in the first half of 2015. Once the contractual lock ups expire, the Participating Customers will be permitted to sell their shares, subject to the following limitations:
any market sales are limited in any 6 month period to a total of 4%, 2.5% or 1.5% of our disclosed outstanding shares, in the case of Intel, TSMC and Samsung, respectively, but such limitations do not apply to underwritten sales or block trades. The
sale of a large number of these shares, or the perception that such sales may occur, could have an adverse effect on the trading price of our shares.
Additionally, the interests of the Participating Customers may not always coincide with the interests of other holders of our shares. The shares acquired by the Participating Customers are held by Dutch
foundations which have issued depositary receipts in respect thereof and the participating customers may only vote those shares in General Meetings in exceptional circumstances, including the authorization of certain significant share issuances and
share repurchases, the approval of a significant change in the identity or nature of ASML or its business, any amendment to ASMLs Articles of Association that would materially affect the specific voting rights of the Participating Customers or
that would cause a significant change in the identity or nature of ASML or its business, the dissolution of ASML, and any merger or demerger which would result in a material change in the identity or nature of ASML or its business. When such
exceptional circumstances occur, the Participating Customers, and in particular Intel (due to the percentage of our shares that Intel owns), will be able to influence matters requiring approval by the General Meeting and may vote their ordinary
shares in a way with which other shareholders may not agree.
Financial Risk Management
We are exposed to certain financial risks such as market risk (including foreign currency risk and interest rate risk), credit risk, liquidity risk and
capital risk. The overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potentially adverse effects on our financial performance. We use derivative financial instruments to hedge certain risk
exposures. None of our transactions are entered into for trading or speculative purposes. We believe that market information is the most reliable and transparent measure for our derivative financial instruments that are measured at fair value.
See Note 6 to our Consolidated Financial Statements.
Semiconductor Equipment Industry
The chip-making business is focused on shrink, or
reducing the size of chip designs, as a driver of cost reduction and increased functionality. The worldwide electronics and computer industries have experienced significant growth since the commercialization of ICs in the 1960s, largely due to the
continuous reduction of cost per function performed by ICs. Improvement in the design and manufacture of ICs with higher circuit or packing densities has resulted in smaller and lower cost ICs, capable of performing a larger number of
functions at higher throughput levels and with reduced power consumption. We believe that these long-term trends will continue for the foreseeable future and will be accompanied by a continuing demand, subject to ongoing cyclical variation and
semiconductor industry volatility, for production equipment that can accurately produce advanced ICs in high volumes at the lowest possible cost.
See Management Board Report - Business Strategy - Leading Technology and Cost Effective Products.
The costs to develop new lithography equipment are high. Accordingly, the lithography equipment industry is characterized by the presence of only a few
suppliers: ASML, Nikon, and Canon. In 2014, ASML was one of the worlds leading providers of lithography equipment (measured in revenues based upon Gartner Dataquest fourth quarter 2014 report).
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ASML STATUTORY REPORT 2014 |
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Total lithography equipment shipped by the industry as a whole in the six years ended December 31, 2014,
is set out in the following table:
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Year ended
December 31 |
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20141 |
|
|
20132 |
|
|
20122 |
|
|
20112 |
|
|
20102 |
|
|
20092 |
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|
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|
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Total units shipped |
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232 |
|
|
|
243 |
|
|
|
252 |
|
|
|
376 |
|
|
|
304 |
|
|
|
128 |
|
Total value (in millions USD) |
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6,854 |
|
|
|
6,085 |
|
|
|
6,058 |
|
|
|
8,225 |
|
|
|
6,416 |
|
|
|
2,485 |
|
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1 |
Historical data and full-year 2014 estimates as reported by Gartner Dataquest in its fourth quarter 2014 report. |
2 |
Historical data are based on figures as included in the Gartner Dataquest fourth quarter 201 4 report. Where appropriate, the estimates as included in the Gartner
Dataquest reports in prior years have been updated based on this fourth quarter 2014 report. |
For the year 2014, the latest
indications of independent market analysts show a decrease in total lithography equipment shipped to the market of 4.5 percent in unit volume and an increase of 12.6 percent in value. In 2014 ASML sold 136 systems, compared to 157 in 2013. However,
our net system sales also increased 6.3 percent (mainly NXE:3300B) in 2014 compared to 2013.
Business Strategy
General
The long-term growth of the
semiconductor industry is based on the principle that the power, cost and time required for every computation on a digital electronic device can be reduced by shrinking the size of transistors on chips. In 2014, chip makers routinely produced
electronic chip features with geometries of 20 nm, compared to typical geometries of 10,000 nm in the early 1970s, resulting in an increase in the number of transistors on leading chips from several thousand to over two billion. This trend was first
observed by Intel co-founder Gordon Moore in 1965, and is referred to as Moores Law. Moores Law is reflected in ever smaller, cheaper, more powerful and energy-efficient semiconductors. Smaller geometries allow for much lower
electrical currents to operate the chip. This has helped to stabilize the worlds energy consumption despite the proliferation of affordable computing. Using advanced semiconductors in industrial and consumer products often provides economic
benefits, user-friendliness and increased safety. The technology revolution powered by the semiconductor industry has brought many advantages: not only can information be more widely disseminated than ever before, affordable chip intelligence has
also enabled industry and service sectors to create and distribute products and ideas at lightning speed.
Our vision is that ASML makes possible
affordable microelectronics that improve the quality of life. What we do to realize our vision is to invent, develop and manufacture high-tech lithography, metrology and software solutions for the semiconductor industry that provide the
patterning of chips and hence enable the creation of smarter, smaller and more energy-efficient chips. We implement our vision and mission by executing our business strategy which consists of three elements:
1. Providing leading technology and cost-effective products and services for patterning of semiconductor devices;
2. Strong relationships with customers as well as suppliers and peers to drive the patterning eco-system; and
3. Develop our people and organization to support our growing business and industry.
When executed, this strategy results in the delivery of lithography systems which enable customers to produce chips at lower costs and with higher value per product. The superior value of ownership offered
to customers as a result of our strategy also drives our own financial performance, aligning the interests of ASML and our customers.
Leading
Technology and Cost Effective Products
Our customers need lithography scanners that continuously improve performance in three areas: imaging,
throughput and overlay. Because the image of the electronic chip circuit must be extremely small (in 2014 chip makers routinely produced electronic chip features with geometries of 20 nm), the system must be able to image billions of these features
every second and it must be able to do that with extreme precision of just a few nm (one nm is four silicon atoms). To realize and improve system performance for our customers on all three mentioned areas above, ASML needs to deliver the right
technology at the right time to meet long-term roadmaps of our customers which often extend many years into the future and are driven primarily by a desire to maintain Moores Law. Therefore, ASML is committed to significant long-term
investments in R&D.
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In order to meet the imaging, throughput and overlay demands of our customers, we have focused our R&D
investments on three core programs: EUV, DUV and holistic lithography solutions. In 2014, our R&D investments (net of credits) amounted to EUR 1,081.1 million (2013: EUR 887.7 million). A significant part of our R&D-budget has been used
for R&D jointly developed with our suppliers and technology partners. In addition, as part of the CCIP, Participating Customers are funding development costs relating to lithography projects and in 2014, we recognized other income in relation to
the contributions made by certain Participating Customers of EUR 81.0 million (2013: EUR 64.4 million) in connection with the CCIP.
Strong relations with Customers, Suppliers and Peers
Ensuring customers are served with the right products at the right time and supported by excellent service, is key to our commitment to a long-term relationship. With high-valued products, customers expect
high-quality support customized to their specific requirements. This support includes service engineers, equipped with the latest technical information, to ensure the highest level of system performance, as well as applications specialists who
support optimal system processing and new product implementation.
ASML aims to deliver lithography systems with the lowest cost of ownership.
Customer satisfaction is a critical objective of ASML. We have account teams that are specifically dedicated to customer satisfaction throughout
the lifecycle of our products.
Through 2014, all of the top 10 chipmakers worldwide, in terms of semiconductor capital expenditure, were our
customers. We also have a significant share of customers outside the top 10. We strive for continued business growth with all our customers. We expect that customer concentration might increase because of continuing consolidation in the
semiconductor manufacturing industry.
See Management Board Report - Risk Factors - A high percentage of net sales is derived from a few
customers.
In 2014, our satisfaction ratings by customers surpassed every lithography competitor. According to VLSI Research, ASML ranks
second among the large semiconductor industry equipment suppliers and first among lithography competitors. Our performance has consistently been strong: for twelve years in a row we have both ranked among the top 5 semiconductor industry suppliers
and our ranking surpassed that of any of our lithography competitors.
Another significant pillar in our business strategy is close relations
with suppliers. They provide us with components, modules and sub-systems according to our specifications.
Develop our People and Organization
to Support our Growing Business and Industry
The nature of our R&D intensive business depends on a highly skilled work force and
efficient organization that boosts inspiration and engagement.
We therefore take training and development very seriously, of our payroll and
non-payroll employees alike. Long-term employability through continuous development is important for the well-being of our employees, for ASML and for society.
As the expectations of our customers continue to increase, leading to more complex products and stakeholder interactions, it is essential we continuously look for efficiencies. We therefore continue to
improve our organization in view of the volatility of the semiconductor industry, the long-term growth of our business, and the engagement of our employees.
Corporate Responsibility
More than delivering strong financial performance, we want to create
long-term value for our stakeholders and for society as a whole. To this end, we identify and manage non-financial developments that are material to our business and performance. Investing in these non-financial or CR themes is a prerequisite for
our long-term business continuity and success. We believe that we can significantly enhance our long-term performance if we successfully manage the risks associated with these developments and seize the opportunities they offer.
In 2014, we moved CR higher on our business agenda. We have further developed our new CR strategy and policy that formulates our ambitions for the period
2015-2020. It sets out the main non-financial, social and environmental impact areas and most significant indicators we will use to measure our progress. We believe this is an important step towards further aligning our CR objectives with our
business strategy and a significant step towards integrating financial and non-financial reporting.
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ASML STATUTORY REPORT 2014 |
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43 |
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To celebrate our companys 30th anniversary on April 1, 2014 we launched 30 for Change, a
global initiative with the ASML Foundation to support 29 projects reflecting ASMLs diversity and empowering underprivileged youth through education. Our employees worldwide worked together in submitting, selecting and raising funds for the
charity projects. These projects strengthen our bonds with the community but at the same time contribute to employee involvement and our need to have access to the largest possible pool of technical talent.
The 2014 CR Report describes our CR strategy, achievements and contributions to sustainable business practices. The 2014 CR Report can be found on our
Website. Information on ASMLs Website is not incorporated into, and does not form a part of, this Statutory Annual Report.
Our Business
Model
For our business strategy, see Management Board Report - Business Strategy.
Our business model is derived from our value of ownership concept which is based on the following principles:
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Offering ongoing improvements of throughput, imaging and overlay by introducing advanced technology based modular platforms, advanced applications and
Holistic Lithography solutions outside the traditional lithography business, each resulting in lower costs or higher value per product for our customers; |
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Providing customer services that ensure efficient installation and maintenance, superior support and training to optimize manufacturing processes of our
customers; |
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Enhancing the capabilities of the installed base of our customers through ongoing field upgrades on throughput, imaging and overlay, based on further
technology developments; |
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Reducing the cycle time between a customers order of a system and the use of that system in volume production; and |
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Providing refurbishing services that effectively increase residual value by extending the life of equipment. |
To be able to execute our business model we seek to:
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Maintain appropriate levels of R&D to offer the most advanced technology suitable for enhancing/following Moores Law, as well as achieving
high-throughput and low-cost volume production at the earliest possible date; |
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Be able to attract, train, retain and motivate highly qualified, skilled and educated employees; |
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Improve the availability of our installed system base; and |
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Expand operational flexibility in R&D and manufacturing by reinforcing strategic alliances with world class partners, including outsourcing companies.
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Manufacturing, Logistics and Suppliers
The execution of our business model is supported by outsourcing production of a significant part of components and modules that comprise our lithography systems, working in partnership with suppliers from
all over the world. Our manufacturing activities comprise subassembly and testing of certain modules and the final assembly and fine tuning/ testing of a complete system from components and modules that are manufactured to our specifications by
third parties and by us. All of our manufacturing activities are performed in cleanroom facilities in Veldhoven, the Netherlands, in Wilton, Connecticut and in San Diego, California, both the United States, in Pyeongtaek, South Korea and in Linkou,
Taiwan. We procure system components and subassemblies from a single supplier or a limited group of suppliers in order to ensure overall quality and on-time delivery. We jointly operate a strategy with suppliers known as value sourcing,
which is based on competitive performance. The essence of value sourcing is to maintain a supply base that is world class and globally competitive and present.
Value sourcing is intended to align the performance of our suppliers with our requirements on quality, logistics, technology and total costs.
Our value sourcing strategy is based on the following strategic principles:
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Maintaining long-term relationships with our suppliers; |
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Sharing risks and rewards with our suppliers; |
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Dual sourcing of knowledge, globally, together with our suppliers; and |
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Single sourcing of products, where possible or required. |
Zeiss is our single supplier of lenses, mirrors, collectors and other optical components. In 2014, 26.3 percent of our aggregate cost of sales were purchased from Zeiss (2013: 26.2 percent).
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ASML STATUTORY REPORT 2014 |
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44 |
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Zeiss is highly dependent on its manufacturing and testing facilities in Oberkochen and Wetzlar, Germany, and
its suppliers. Moreover, Zeiss has a finite capacity for production of lenses and optical components included in our systems and of collectors included in our EUV sources. The expansion of this production capacity may increase their lead-time. From
time to time, the number of systems we are able to produce may be limited by the capacity of Zeiss. In 2014 our production was not limited by the deliveries from Zeiss.
Our relationship with Zeiss is structured as a strategic alliance pursuant to several agreements executed in 1997 and subsequent years. These agreements define a framework in all areas of our business
relationship. The partnership between ASML and Zeiss is focused on continuous improvement of operational excellence.
Pursuant to these
agreements, ASML and Zeiss have agreed to continue their strategic alliance until either party provides at least three years notice of its intent to terminate.
In addition to Zeiss, we also rely on other outside vendors for the components and subassemblies used in our systems and sources, each of which is obtained from a limited number of suppliers many of whom
have almost exclusive competences in their respective industries.
See also Management Board Report - Risk Factors - The number of systems
we can produce is limited by our dependence on a limited number of suppliers of key components.
We have a flexible labor model with a mix
of fixed and flexible contracted labor throughout all departments and facilities in Veldhoven, the Netherlands. Our fixed contracted labor are compensated under a partly variable salary structure through ASMLs profit sharing plan. In
facilities outside the Netherlands, the applicable local labor laws and regulations provide sufficient flexibility. This reinforces our ability to adapt more quickly to the semiconductor market cycles, including support for potential 24-hour, seven
days-a-week production activities. By maximizing the flexibility of our technically skilled workforce, we can shorten lead-times: a key driver of added value to our customers.
Organizational Structure
ASML Holding N.V. is a holding company that operates through its
subsidiaries. Our major operating subsidiaries, each of which is ultimately wholly-owned by ASML Holding N.V., are ASML Netherlands B.V., ASML Systems B.V., ASML Hong Kong Ltd. and ASML US Inc.
See Note 28 to our Consolidated Financial Statements for a list of our main subsidiaries.
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ASML STATUTORY REPORT 2014 |
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45 |
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ASML Operations Update
The following table presents the key performance indicators used by our BoM and senior management to regularly measure performance. The figures in the table below are based on US GAAP.
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Year ended December 31 (in millions) |
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|
2014 EUR |
|
|
|
%1 |
|
|
|
2013 EUR |
|
|
|
%1 |
|
|
|
|
|
|
|
|
Sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
|
5,856.3 |
|
|
|
|
|
|
|
5,245.3 |
|
|
|
|
|
Increase (decrease) in net sales (%) |
|
|
11.6 |
|
|
|
|
|
|
|
10.9 |
|
|
|
|
|
Net system sales |
|
|
4,242.8 |
|
|
|
|
|
|
|
3,993.1 |
|
|
|
|
|
Net service and field option sales |
|
|
1,613.5 |
|
|
|
|
|
|
|
1,252.2 |
|
|
|
|
|
Sales of systems (in units) |
|
|
136 |
|
|
|
|
|
|
|
157 |
|
|
|
|
|
ASP of total system sales |
|
|
31.2 |
|
|
|
|
|
|
|
25.4 |
|
|
|
|
|
ASP of new system sales |
|
|
35.6 |
|
|
|
|
|
|
|
27.4 |
|
|
|
|
|
ASP of used system sales |
|
|
5.8 |
|
|
|
|
|
|
|
6.9 |
|
|
|
|
|
Value of systems backlog |
|
|
2,772.4 |
2 |
|
|
|
|
|
|
1,953.3 |
|
|
|
|
|
Systems backlog (in units) |
|
|
82 |
2 |
|
|
|
|
|
|
56 |
|
|
|
|
|
ASP of systems backlog |
|
|
33.8 |
2 |
|
|
|
|
|
|
34.9 |
|
|
|
|
|
ASP of systems backlog (New) |
|
|
42.0 |
2 |
|
|
|
|
|
|
41.4 |
|
|
|
|
|
ASP of systems backlog (Used) |
|
|
4.7 |
2 |
|
|
|
|
|
|
4.7 |
|
|
|
|
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Immersion systems recognized (in units)3 |
|
|
76 |
|
|
|
|
|
|
|
77 |
|
|
|
|
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NXE:3300B systems recognized (in units) |
|
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5 |
|
|
|
|
|
|
|
1 |
|
|
|
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Profitability |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
2,596.4 |
|
|
|
44.3 |
|
|
|
2,177.2 |
|
|
|
41.5 |
|
Income from operations |
|
|
1,282.2 |
|
|
|
21.9 |
|
|
|
1,047.9 |
|
|
|
20.0 |
|
Net income |
|
|
1,196.6 |
|
|
|
20.4 |
|
|
|
1,015.5 |
|
|
|
19.4 |
|
Liquidity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Cash and cash equivalents |
|
|
2,419.5 |
|
|
|
|
|
|
|
2,330.7 |
|
|
|
|
|
Short-term investments |
|
|
334.9 |
|
|
|
|
|
|
|
679.9 |
|
|
|
|
|
Operating cash flow |
|
|
1,025.2 |
|
|
|
|
|
|
|
1,054.2 |
|
|
|
|
|
1 |
As a percentage of net sales. |
2 |
Our systems backlog and net bookings include sales orders for which written authorizations have been accepted and shipment and/or revenue recognition is expected within 12
months. As of 2014 we also include EUV in our backlog starting with our NXE:3350B systems. As a result, two NXE:3350B systems are now included in our systems backlog and net bookings. Before 2014, our systems backlog and net bookings include only
sales orders for which written authorizations have been accepted and system shipment and revenue recognition dates within the following 12 months have been assigned. This change has no impact on the comparative figures. |
3 |
Included in the total number of immersion systems recognized in 2014 are 48 units of our most advanced immersion technology NXT:1970Ci systems (2013: 4).
|
The Consolidated Financial Statements included in this Statutory Annual Report are based on IFRS-EU, therefore, the results of
operations analysis set out in the remainder of this paragraph are based on IFRS-EU. For a detailed explanation of the differences between US GAAP and IFRS-EU, we refer to pages 53 and 54.
Results of Operations
Set forth below are our
Consolidated Statement of Profit or Loss data for the two years ended December 31, 2014 and 2013:
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|
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|
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|
Year ended December 31 (in millions) |
|
|
2014 EUR |
|
|
|
2013 EUR |
|
|
|
|
|
|
Total net sales |
|
|
5,856.3 |
|
|
|
5,245.3 |
|
Cost of sales |
|
|
(3,358.9) |
|
|
|
(3,159.3) |
|
Gross profit |
|
|
2,497.4 |
|
|
|
2,086.0 |
|
Other income |
|
|
81.0 |
|
|
|
64.4 |
|
Research and development costs |
|
|
(735.9) |
|
|
|
(564.0) |
|
Selling, general and administrative costs |
|
|
(318.7) |
|
|
|
(311.3) |
|
Operating income |
|
|
1,523.8 |
|
|
|
1,275.1 |
|
Interest and other, net |
|
|
2.6 |
|
|
|
(18.8) |
|
Income before income taxes |
|
|
1,526.4 |
|
|
|
1,256.3 |
|
Provision for income taxes |
|
|
(108.1) |
|
|
|
(62.5) |
|
Net income |
|
|
1,418.3 |
|
|
|
1,193.8 |
|
|
|
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|
ASML STATUTORY REPORT 2014 |
|
46 |
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The following table shows a summary of net sales, units sold, gross profit and ASP data for the years ended
December 31, 2014 and 2013:
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31 (in millions EUR, unless otherwise indicated) |
|
|
2014 |
|
|
|
2013 |
|
|
|
|
|
|
Net sales |
|
|
5,856.3 |
|
|
|
5,245.3 |
|
Net system sales |
|
|
4,242.8 |
|
|
|
3,993.1 |
|
Net service and field option sales |
|
|
1,613.5 |
|
|
|
1,252.2 |
|
Total sales of systems (in units) |
|
|
136 |
|
|
|
157 |
|
Total sales of new systems (in units) |
|
|
116 |
|
|
|
142 |
|
Total sales of used systems (in units) |
|
|
20 |
|
|
|
15 |
|
Gross profit as a percentage of net sales |
|
|
42.6 |
|
|
|
39.8 |
|
ASP of system sales |
|
|
31.2 |
|
|
|
25.4 |
|
ASP of new system sales |
|
|
35.6 |
|
|
|
27.4 |
|
ASP of used system sales |
|
|
5.8 |
|
|
|
6.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
Net
sales increased by EUR 611.0 million, or 11.6 percent, to EUR 5,856.3 million in 2014 from EUR 5,245.3 million in 2013, mainly driven by the increase in net service and field option sales of EUR 361.3 million, or 28.9 percent to
EUR 1,613.5 million in 2014 from EUR 1,252.2 million in 2013. The increase in net service and field option sales is mainly caused by:
|
|
The full-year effect of Cymer in 2014, whereas 2013 only includes Cymer for seven months; and |
|
|
Holistic Lithography increased through the sales of integrated metrology and feedback loop technology. |
The increase in net system sales of EUR 249.7 million, or 6.3 percent, to EUR 4,242.8 million in 2014 from EUR 3,993.1 million in 2013 is
caused by higher NXE:3300B system sales.
The increase of the ASP of our systems sold can mainly be explained by the ASP of our new systems sold
which increased to EUR 35.6 million in 2014 from EUR 27.4 million in 2013, which was the result of a shift in the mix of systems sold towards more high-end system types (NXE:3300B and NXT:1970Ci systems) in 2014 compared to 2013.
Gross profit increased by EUR 411.4 million, or 19.7 percent, to EUR 2,497.4 million in 2014 from EUR 2,086.0 million in 2013.
The increase in gross profit was mainly driven by:
|
|
The full-year effect of Cymer in 2014, whereas 2013 only includes Cymer for seven months; |
|
|
Holistic Lithography increased through the sales of integrated metrology and feedback loop technology; and |
|
|
2014 Includes lower one-off purchase price accounting adjustments related to Cymer. |
Gross profit as a percentage of net sales increased from 39.8 percent in 2013 to 42.6 percent in 2014, for the same reasons as gross profit increased,
partly offset by higher EUV sales (which currently do not contribute to gross profit).
Other Income
Other income consists of contributions for R&D programs under the NRE funding arrangements from certain Participating Customers in the CCIP and amounted
to EUR 81.0 million for 2014 (2013: EUR 64.4 million).
Research and Development Costs
R&D investments of EUR 1,081.1 million (2013: EUR 887.7 million), comprise of R&D costs (including net development costs not eligible for
capitalization), net of credits, of EUR 735.9 million (2013: EUR 564.0 million) and capitalization of development expenditures of EUR 345.2 million (2013: EUR 323.7 million) were significantly higher than in 2013. Overall R&D
investments increased mainly due to the acceleration of certain R&D programs, primarily EUV and next-generation immersion. In addition, 2013 only includes Cymer for seven months, whereas 2014 includes Cymer for the full year.
Selling, General and Administrative costs
SG&A costs increased by EUR 7.4 million, or 2.4 percent, to EUR 318.7 million in 2014, from EUR 311.3 million in 2013. This increase was
mainly driven by the full-year effect of Cymer in 2014, whereas 2013 only includes Cymer for seven months.
Interest and Other, Net
Interest and other, net increased by EUR 21.4 million to a gain of EUR 2.6 in 2014 compared to 2013. In 2013 interest and other, net
included a loss on the partial extinguishment of our EUR 600 million 5.75 percent senior notes due 2017.
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ASML STATUTORY REPORT 2014 |
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47 |
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Income Taxes
The effective tax rate increased to 7.1 percent of income before income taxes in 2014 compared to 5.0 percent in 2013. In 2014 the tax rate was favorably impacted by settling agreements entered into by ASML
Netherlands B.V. and Cymer LLC., prior to our acquisition of Cymer in 2013, at different tax rates. In 2013, we recognized a gain as a result of the accounting for business combinations Cymer. This gain is not recognized for tax purposes and was,
apart from the R&D tax incentives, the major driver for the change in the effective tax rate in 2013.
Net Income
Net income in 2014 amounted to EUR 1,418.3 million, or 24.2 percent of net sales, representing EUR 3.24 basic net income per ordinary share, compared
with net income in 2013 of EUR 1,193.8 million, or 22.8 percent of net sales, representing EUR 2.78 basic net income per ordinary share.
Liquidity
Our cash and cash equivalents
increased to EUR 2,419.5 million as of December 31, 2014 from EUR 2,330.7 million as of December 31, 2013 and our short-term investments decreased to EUR 334.9 million as of December 31, 2014 from EUR 679.9 million
as of December 31, 2013.
We generated net cash provided by operating activities of EUR 1,374.3 million and EUR 1,381.0 million in
2014 and 2013 respectively. Lower net cash provided by operating activities in 2014 compared to 2013 relates to increased working capital, which is mainly due to a decrease in accounts payable.
We used EUR 361.3 million for investing activities in 2014 and EUR 692.0 million in 2013. In 2014, our investing activities mainly related to the
purchase of property, plant and equipment of EUR 358.3 million, mainly for the construction of our EUV production facilities in Veldhoven, the Netherlands. This was offset by the decrease of short-term investments, mainly in Dutch Treasury
Certificates and deposits with the Dutch government, of EUR 345.0 million. In 2013, our investing activities mainly related to the cash consideration paid for the acquisition of Cymer of EUR 443.7 million and the purchase of property, plant and
equipment of EUR 210.8 million, mainly related to further expansion of our EUV production facilities. This was to a large extent offset by the decrease of short-term investments, mainly in Dutch Treasury Certificates and deposits with the Dutch
government, of EUR 290.2 million.
Net cash used in financing activities was EUR 932.4 million in 2014 compared with net cash used in
financing activities of EUR 116.3 million in 2013. In 2014, net cash used in financing activities included a cash outflow of EUR 700.0 million for our regular share buyback program and our annual dividend payment of EUR 268.0 million,
slightly offset by EUR 39.7 million net proceeds from issuance of shares in connection with the exercise and purchase of employee stock and stock options. In 2013, net cash used in financing activities included the net cash proceeds of EUR
740.4 million from our notes offering and net cash proceeds of EUR 31.8 million from the issuance of shares in connection with the exercise and purchase of employee stock options, mainly offset by net cash outflows of EUR
368.3 million for our notes tender offer and unwinding of related interest rate swaps, EUR 300.0 million for our regular share buyback program and EUR 216.1 million for our annual dividend payment.
Our principal sources of liquidity consist of cash flows from operations, cash and cash equivalents as of December 31, 2014 of EUR
2,419.5 million, short-term investments as of December 31, 2014 of EUR 334.9 million and available credit facilities as of December 31, 2014 of 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.
We invest
our cash and cash equivalents and short-term investments in short-term deposits with financial institutions that have good credit ratings and with the Dutch government, in Dutch Treasury Certificates and in AAAm-rated money market funds that invest
in high-rated short-term debt securities of financial institutions and governments. Our investments are denominated in euros.
Our available
credit facility consists of a EUR 700.0 million committed revolving credit facility from a group of banks that will mature in 2018. The credit facility contains a restrictive covenant that requires us to maintain a minimum committed capital to
net total assets ratio of 40.0 percent calculated in accordance with contractually agreed definitions. At the end of 2014, we were in compliance with the covenant. Outstanding amounts under this credit facility will bear interest at EURIBOR or LIBOR
plus a margin that depends on our liquidity position. No amounts were outstanding under the credit facility as of December 31, 2014.
We
have repayment obligations in 2017, amounting to EUR 238.2 million and in 2023, amounting to EUR 750.0 million, both relating to our Eurobonds.
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ASML STATUTORY REPORT 2014 |
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48 |
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ASML seeks to ensure that cash generated from operations, together with the liquidity provided by existing cash
and cash equivalents and short-term investments and its borrowing capability, will be sufficient to satisfy its liquidity requirements throughout every phase of the industry cycles.
Our liquidity needs are affected by many factors, some of which are based on the normal on-going operations of the business, and others that relate to the uncertainties of the global economy and the
semiconductor industry. Although our cash requirements fluctuate based on the timing and extent of these factors, we believe that cash generated from operations, together with the liquidity provided by existing cash and cash equivalents and
short-term investments and our borrowing capability are sufficient to satisfy our current requirements, including our expected capital expenditures in 2015. We intend to return cash to our shareholders on a regular basis in the form of dividend
payments and, subject to our actual and anticipated liquidity requirements and other relevant factors, share buybacks or capital repayment.
See
Notes 6, 18, 19, 20 and 21 to our Consolidated Financial Statements.
Trend Information
In EUV, we have made significant progress and we have met the 500-wafer-per-day target that our customers set for us in 2014 as we have now demonstrated
these productivity levels at multiple customers over multiple days. We also demonstrated source power at 100 Watts with 96 percent die yield, a key factor to get to the productivity levels that our customers need for volume production. Our 2015
productivity target remains at 1,000 wafers per day and importantly for our customers and for our EUV program, we received the first 2 orders for our fourth-generation NXE:3350B systems, the first of which is planned for shipment mid-year 2015. In
addition, two NXE:3300B systems already delivered will be upgraded to NXE:3350B performance.
Looking ahead to the first half of 2015 for DUV, we
expect both our sales to the Memory segment and our service and field option business to continue to be strong and sales to the logic segment to increase from the second half year of 2014 to the first half year of 2015.
The following table sets forth our systems backlog as of December 31, 2014 and 2013.
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|
|
Year ended December 31 (in millions EUR, unless otherwise
indicated) |
|
|
2014 |
1 |
|
|
2013 |
|
|
|
|
New systems backlog (in units) |
|
|
64 |
|
|
|
46 |
|
Used systems backlog (in units) |
|
|
18 |
|
|
|
10 |
|
Total systems backlog (in units) |
|
|
82 |
|
|
|
56 |
|
Value of new systems backlog |
|
|
2,687.0 |
|
|
|
1,906.2 |
|
Value of used systems backlog |
|
|
85.4 |
|
|
|
47.1 |
|
Total value of systems backlog |
|
|
2,772.4 |
|
|
|
1,953.3 |
|
ASP of new systems backlog |
|
|
42.0 |
|
|
|
41.4 |
|
ASP of used systems backlog |
|
|
4.7 |
|
|
|
4.7 |
|
ASP of total systems backlog |
|
|
33.8 |
|
|
|
34.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
1 |
Our systems backlog and net bookings include sales orders for which written authorizations have been accepted and shipment and/or revenue recognition is expected within 12
months. As of 2014 we also include EUV in our backlog starting with our NXE:3350B systems. As a result, two NXE:3350B systems are now included in our systems backlog and net bookings. Before 2014, our systems backlog and net bookings include only
sales orders for which written authorizations have been accepted and system shipment and revenue recognition dates within the following 12 months have been assigned. This change has no impact on the comparative figures. |
Outlook
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 first quarter of 2015, we expect net sales of around EUR 1.6 billion and other income of about EUR 20 million, which
consists of contributions from participants of the CCIP.
On January 21, 2015 we announced a new share buyback program, to be executed
within the 2015-2016 timeframe. As part of this program, we intend to purchase up to EUR 750 million of shares which we intend to cancel upon repurchase. In addition, we intend to purchase as part of this program up to 3.3 million shares
to cover employee stock and stock option plans. This buyback program will start on January 22, 2015, and at current share price these intended repurchases represent a total value of approximately EUR 1 billion.
|
|
|
|
|
ASML STATUTORY REPORT 2014 |
|
49 |
|
|
Customer Co-Investment Program
Overview
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. The Participating Customers collectively agreed to fund EUR 1.38 billion of our research and development projects from 2013 through 2017. This
program created risk sharing with some of our largest customers while the results of ASMLs development programs will be available to every semiconductor manufacturer with no restrictions. The R&D funding program in the CCIP consists of two
funding projects: a 450mm technology development project and a next-generation EUV development project. ASML entered into NRE Funding Agreements with the Participating Customers.
Development 450mm silicon wafer technology
As previously disclosed, in November 2013, ASML
decided to pause the development of 450mm lithography systems until customer demand and the timing related to such demand is clear. We have agreed with Intel that the 450mm NRE funding will be applied to other lithography projects, including generic
developments applicable to both 300mm and 450mm. We believe that our 450mm development activities can be restarted if and when the industry demands the introduction of 450mm.
In addition to the funding commitments described above, the Participating Customers have invested in 96,566,077 of our ordinary shares, the proceeds of which, totalling EUR 3.85 billion, were returned to the
holders of ordinary shares (excluding the Participating Customers) through a synthetic share buyback executed in November 2012. For further information regarding the synthetic share buyback, see Note 19 to our Financial Statements.
Description of Investment Agreements, Shareholder Agreements and NRE Funding Agreements
In connection with the CCIP, ASML entered into an investment agreement, a shareholder agreement and NRE Funding Agreements with each of the Participating Customers. Intel is the largest participant in the
program, with an aggregate funding commitment of EUR 829 million and an investment in 62,977,877 of our ordinary shares. A description of the shareholders agreement and NRE Funding Agreements between ASML and Intel is set out below. The
shareholders agreements and the NRE Funding Agreements between ASML and the other program participants - TSMC (which acquired 20,992,625 of our ordinary shares and made an EUR 276 million funding commitment) and Samsung (which acquired
12,595,575 of our ordinary shares and made an EUR 276 million funding commitment) are on substantially the same terms as those agreed with Intel. Shares were acquired by Dutch foundations (Stichtingen) established for each
participant.
Investment Agreement
Pursuant to the Intel Investment Agreement between ASML and Intel, dated July 9, 2012, ASML agreed to issue to a foundation established for the Intel Stichting ordinary shares equal to 15 percent of
ASMLs issued ordinary shares; the Intel Stichting issued to Intel depositary receipts representing the ordinary shares. The subscription price for the ordinary shares issued to Intel was EUR 39.91 per ordinary share, which is the average
of the volume weighted average price of our shares listed at Euronext Amsterdam for the twenty trading days up to and including July 6, 2012.
Under the Intel Investment Agreement, ASML has agreed to indemnify Intel, and its affiliates for certain losses and expenses related to breaches of
representations, warranties, covenants and agreements in the Investment Agreements and with respect to certain legal proceedings related thereto, subject to certain limitations.
|
|
|
|
|
ASML STATUTORY REPORT 2014 |
|
50 |
|
|
Shareholder Agreement
In connection with the issuance of shares pursuant to the Intel Investment Agreement, on September 12, 2012 ASML, Intel and the Intel Stichting entered into a Shareholder Agreement which governs certain
matters relating to the holding of and further investment by Intel in ordinary shares of ASML, directly and indirectly through the Intel Stichting, including the matters described below.
Voting Restrictions
Pursuant to the Intel Shareholder Agreement, Intel (and the Intel Stichting)
will not be entitled to vote the ordinary shares that were acquired by the Intel Stichting as part of the CCIP or any other ordinary shares otherwise transferred to the Intel Stichting (under the circumstances described under Standstill;
Additional Purchases below) prior to a Shareholder Agreement Termination Event (as defined below), except when a Suspension Event (as described below) occurs and is continuing or where the following matters are proposed at any General Meeting
(the Voting Restrictions): (i) an issuance of ASML shares or grant of rights to subscribe for ASML shares representing 25 percent or more of the issued and outstanding share capital of ASML or the restriction or exclusion of
pre-emption rights relating thereto (in each case, on an aggregate basis during the preceding 12 months) or the designation of the BoM as the authorized body to resolve on these matters; (ii) an authorization to repurchase 25 percent or more of
ASMLs issued and outstanding share capital on an aggregate basis during the preceding 12 months; (iii) the approval of a significant change in the identity or nature of ASML or its business, including a transfer of all or substantially
all business or assets of ASML and its subsidiaries to a third party, the establishment or cancellation of a long-lasting cooperation of essential importance with a third party and an acquisition or disposition of an interest in the capital or
assets of a person with a value of at least one third of the assets of ASML (on a consolidated basis); (iv) an amendment to ASMLs Articles of Association that would materially affect the specific voting rights of Intel, would materially
affect the identity or nature of ASML or its business, or would disproportionately (or uniquely) and adversely affect the rights or benefits attached to or derived from the ordinary shares held by Intel through the Intel Stichting as compared to the
shareholders; (v) the dissolution of ASML; and (vi) any merger or demerger which would result in a material change in the identity or nature of ASML or its business.
Standstill, Lock-up and Orderly Market Arrangements
Standstill; Additional Purchases
Subject to certain exceptions, pursuant to the Shareholder Agreement, Intel (or its affiliates) may not, prior to the six-year anniversary of
the date of the Intel Shareholder Agreement (the Standstill Period), acquire more than 19.9 percent of the outstanding share capital of ASML without ASMLs prior approval (the Standstill Restriction). There is an
exception from the Standstill Restriction in the case of a suspension event, which includes certain circumstances where a third party has acquired or made an offer to acquire at least 20 percent of ASMLs outstanding shares, and the
Standstill Restriction will terminate upon the occurrence of a Shareholder Agreement Termination Event.
The Shareholder Agreement permits Intel
(and its affiliates) to acquire up to 4.99 percent of ASMLs outstanding shares (other than shares acquired through the CCIP) that may be held outside the Intel Stichting. For any additional ASML shares that Intel (or its affiliates) acquires
in excess of 4.99 percent of the outstanding shares of ASML, Intel is required to deposit such shares with the Intel Stichting in exchange for Depositary Receipts. Shares held directly by Intel or its affiliates (and which not required to be
deposited with the Intel Stichting) are not subject to the Voting Restrictions, or Lock-Up Restrictions (as defined below), but are subject to the Standstill Restriction.
The Intel Stichting will continue to hold ASML shares owned by Intel (notwithstanding termination of the Standstill Period) until the earlier of (i) such time as Intel owns (directly or through the
Intel Stichting) less than 2 percent of ASMLs outstanding shares (the relevant percentage is 1 percent for the other Participating Customers) (ii) the date of notification to ASML by Participating Customers that the aggregate amount of
ASMLs outstanding shares owned by Intel and the other Participating Customers represents less than 5 percent of ASMLs outstanding shares and (iii) a Shareholder Agreement Termination Event (as defined below), following which time
Depositary Receipts will be exchanged for the underlying ASML shares. In case Intel would acquire ASML shares within 18 months after an event described under (i) or (ii) above, any ASML shares held by Intel in excess of 4.99 percent of the
outstanding shares of ASML must be transferred to (and held by) the Intel Stichting.
Lock-up; Orderly Sell Down
Intel may not, without prior written consent of ASML, transfer any ordinary shares or Depositary Receipts until the earliest of (i) two years and six
months after the date of the Intel Shareholder Agreement, (ii) termination of the NRE Funding Agreements, and (iii) the occurrence of a Shareholder Agreement Termination Event ((i), (ii) and (iii) together, the Lock-Up
Restriction). The Lock-Up Restriction does not apply in certain circumstances where a third party offers to acquire at least 20 percent of ASMLs shares. Intel is not permitted to transfer the ASML ordinary shares it acquired in the
program in connection with an offer (before the end of the offer), or make any public statement in support of such offer, that is not recommended by the ASML Supervisory Board or Management Board, except in limited circumstances.
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|
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|
ASML STATUTORY REPORT 2014 |
|
51 |
|
|
In addition, Intel may not (even after the Lock-Up Restriction has ended), without written consent of ASML,
transfer on Euronext Amsterdam, NASDAQ or another securities exchange more than (i) in respect of Intel, 4 percent of the outstanding shares of ASML during any six month period (the relevant percentage is 1.5 percent for Samsung and 2.5 percent
for TSMC); the foregoing restriction does not apply to block trades or underwritten offerings. There are also restrictions on Intels ability to transfer ASML shares to certain competitors or customers of ASML.
Termination
The Intel Shareholder Agreement
will terminate upon the occurrence of the following events (each a Shareholder Agreement Termination Event) (i) certain change of control transactions where the shareholders of ASML prior to such a transaction are no longer entitled
to exercise at least 50 percent of the votes in the General Meeting following such transaction, (ii) in the event of a delisting of our shares listed at Euronext Amsterdam or delisting of our shares listed at NASDAQ (except for certain
voluntary delistings from NASDAQ), (iii) the winding up or liquidation of ASML, or (iv) in the event that all Depositary Receipts are exchanged for ASML shares and Intel does not acquire ASML shares in excess of 4.99 percent of the
outstanding ASML shares within 18 months of such exchange (see Standstill; Additional Purchases above).
NRE Funding Agreements
On July 9, 2012, ASML and Intel entered into two NRE Funding Agreements pursuant to which Intel has agreed to fund certain of
ASMLs R&D costs and project expenditures. One agreement relates to the Intel 450mm NRE Funding Agreement and the other relates to the Intel EUV NRE Funding Agreement (together the Intel NRE Funding Agreements). Intel has committed to
provide funding in an aggregate amount of EUR 553 million under the Intel 450mm NRE Funding Agreement and funding in an aggregate amount of EUR 276 million under the Intel EUV NRE Funding Agreement, payable over the term of the relevant
agreements (2013-2017). Under the agreements, ASML retains sole control over the development of 450mm photo lithography equipment and EUV platforms and will own all intellectual property created by ASML in connection therewith. The NRE Funding
Agreements provide that if ASML, in its reasonable discretion, determines to abandon either the 450mm or EUV development project, as a result of technical infeasibility or lack of sufficient industry demand, or if the then remaining funding exceeds
the expenditure estimate for the development project (450mm or EUV), then the parties may agree on an alternative development project. If no alternative is agreed, ASML may invoice Intel for the remaining due portion of committed funding during each
year of the remaining funding period in which ASMLs actual gross R&D expenditures exceed a minimum threshold specified in the relevant Intel NRE Funding Agreement.
The NRE Funding Agreements will terminate on December 31, 2017 or upon pre-payment by Intel of the aggregate amount of funding owed under the Intel NRE Funding Agreements.
Remuneration of the Supervisory Board
In
accordance with the Dutch Corporate Governance Code, the Supervisory Board remuneration is not dependent on the financial results of ASML. No member of the Supervisory Board personally maintains a business relationship with ASML other than as a
member of the Supervisory Board. Furthermore, the Supervisory Board does not receive benefits upon termination of employment. The Remuneration Committee is responsible for reviewing and, if appropriate, recommending changes to the remuneration of
the Supervisory Board. Any recommended changes to the remuneration of the members of the Supervisory Board must be submitted to the General Meeting of Shareholders for approval. For more details regarding the remuneration of the Supervisory Board we
refer to Note 31 to our Consolidated Financial Statements.
Remuneration of the Board of Management
The remuneration of the individual members of the BoM is determined by the Supervisory Board based on the advice of the Remuneration Committee of the
Supervisory Board. For more details regarding the remuneration of the BoM, we refer to the Corporate Governance Paragraph and Note 31 to our Consolidated Financial Statements.
Corporate Governance
ASML continuously monitors and assesses applicable Dutch, U.S., and other
relevant corporate governance codes, rules, and regulations. ASML is subject to the Code, as ASML is registered in the Netherlands and is listed on Euronext Amsterdam. For more details we refer to the Corporate Governance Paragraph.
|
|
|
|
|
ASML STATUTORY REPORT 2014 |
|
52 |
|
|
Directors Responsibility Statement
The Directors Responsibility Statement is included in this report on pages 55 and 56.
2014
Corporate Responsibility Report
More than delivering strong financial performance, we want to create long-term value for our stakeholders and
for society as a whole. To this end, we identify and manage non-financial developments that are material to our business and performance. Investing in these non-financial or CR themes is a prerequisite for our long-term business continuity and
success. We believe that we can significantly enhance our long-term performance if we successfully manage the risks associated with these developments and seize the opportunities they offer.
In 2014, we moved CR higher on our business agenda. We have further developed our new CR strategy and policy that formulates our ambitions for the period 2015-2020. It sets out the main non-financial, social
and environmental impact areas and most significant indicators we will use to measure our progress. We believe this is an important step towards further aligning our CR objectives with our business strategy and a significant step towards integrating
financial and non-financial reporting.
To celebrate our companys 30th anniversary on April 1, 2014 we launched 30 for
Change, a global initiative with the ASML Foundation to support 29 projects reflecting ASMLs diversity and empowering underprivileged youth through education. Our employees worldwide worked together in submitting, selecting and raising
funds for the charity projects. These projects strengthen our bonds with the community but at the same time contribute to employee involvement and our need to have access to the largest possible pool of technical talent.
The 2014 CR Report describes our CR strategy, achievements and contributions to sustainable business practices. The 2014 CR Report can be found on our
Website. Information on ASMLs Website is not incorporated into, and does not form a part of, this Statutory Annual Report.
Annual
Report on Form 20-F and Statutory Annual Report
General
ASML prepares two sets of Financial Statements, one based on US GAAP and one based on Dutch law and IFRS-EU. By means of regulation 1606/2002, the European Commission has stipulated that all listed
companies within the European Union member states are required to prepare their consolidated financial statements under IFRS-EU as from January 1, 2005.
The Consolidated Financial Statements included in this Statutory Annual Report are based on IFRS-EU. For internal and external reporting purposes, ASML follows US GAAP, which is ASMLs primary
accounting standard for setting financial and operational performance targets.
ASMLs Annual Report on Form 20-F, which is based on
US GAAP, may contain additional information next to its Statutory Annual Report. The Annual Report on Form 20-F, the US GAAP quarterly press releases (including summary US GAAP and IFRS-EU Consolidated Financial Statements), the
Statutory Interim Report and the Statutory Annual Report are available on ASMLs Website. For the periods presented in this Statutory Annual Report, the main differences between IFRS-EU and US GAAP for ASML relate to the following:
|
|
|
|
|
|
|
|
|
Year ended December 31 (in thousands) |
|
2014
EUR |
|
|
2013
EUR |
|
|
|
|
Net income based on US GAAP |
|
|
1,196,640 |
|
|
|
1,015,490 |
|
Development expenditures |
|
|
194,378 |
|
|
|
188,972 |
|
Share-based payments |
|
|
4,951 |
|
|
|
4,029 |
|
Income taxes |
|
|
22,351 |
|
|
|
(14,647) |
|
Net income based
on IFRS-EU |
|
|
1,418,320 |
|
|
|
1,193,844 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASML STATUTORY REPORT 2014 |
|
53 |
|
|
|
|
|
|
|
|
|
|
|
As of December 31 (in
thousands) |
|
2014
EUR |
|
|
2013
EUR |
|
|
|
|
Shareholders equity under US GAAP |
|
|
7,512,590 |
|
|
|
6,922,427 |
|
Development expenditures |
|
|
792,112 |
|
|
|
582,614 |
|
Share-based payments |
|
|
20,979 |
|
|
|
27,038 |
|
Income taxes |
|
|
40,249 |
|
|
|
12,716 |
|
|
|
|
Equity under IFRS-EU |
|
|
8,365,930 |
|
|
|
7,544,795 |
|
|
|
|
|
|
|
|
|
|
|
|
|
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.
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
718s 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 ASMLs 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 ASMLs share price do affect the deferred tax asset at period-end
and result in adjustments to the deferred tax asset.
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 sellers rather than the purchasers 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
purchasers tax jurisdiction.
2014 Statutory Interim Report
On July 16, 2014 we published our Statutory Interim Report for the six-month period ended June 29, 2014. This report includes Consolidated Condensed Interim Financial Statements prepared in
accordance with IAS 34, an Interim Management Board Report and a Managing Directors Statement. The Statutory Interim Report comprises regulated information within the meaning of the Dutch FMSA.
The Board of Management,
Veldhoven,
February 10, 2015
|
|
|
|
|
ASML STATUTORY REPORT 2014 |
|
54 |
|
|
Directors Responsibility Statement
Managing Directors Statement (EU Transparency Directive)
The Board of Management hereby declares that, to the best of its knowledge, the Financial Statements prepared in accordance with IFRS-EU and Part 9 of Book 2 of the Dutch Civil Code 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 management report includes a fair review concerning the position, as per the
statement of financial position date, the development and performance of ASML Holding N.V. and the undertakings included in the consolidation taken as a whole, together with the principal risk and uncertainties that they face.
In Control Statement (Dutch Corporate Governance Code)
As the Board of Management of ASML Holding N.V., we hereby state that we are responsible for the design, implementation and operation of ASMLs internal risk management and control systems. The purpose
of these systems is to adequately and effectively manage the significant risks to which ASML is exposed. Such systems can never provide absolute assurance regarding achievement of corporate objectives, nor can they provide an absolute assurance that
material errors, losses, fraud and the violation of laws or regulations will not occur.
Financial Reporting Risks
To comply with our duties in the area of internal risk management and control systems with respect to financial reporting risks, we use various measures
including but not limited to:
|
|
Monthly operational review meetings of the Board of Management with ASMLs senior management on financial performance and realization of operational
objectives and responses to emerging issues; |
|
|
Semi-annual financial planning meetings of the Board of Management with ASMLs senior management; |
|
|
Monthly and quarterly financial reporting to the Board of Management and ASMLs senior management; |
|
|
Letters of representation that are signed by ASMLs key senior management members on a semi-annual basis in which they confirm that for their
responsible area based upon their knowledge (i) an effective system of internal controls and procedures is maintained and (ii) the financial reports fairly present the financial position, results and cash flows;
|
|
|
Assessments by ASMLs Disclosure Committee with respect to the timely review, disclosure, and evaluation of periodic (financial) reports;
|
|
|
Assessments by ASMLs Disclosure Committee with respect to internal controls in light of among others the requirements under the Sarbanes-Oxley Act
and the Dutch Corporate Governance Code; |
|
|
Discussions on management letters and audit reports provided by ASMLs internal and external auditors within our Board of Management and Supervisory
Board; |
|
|
Quarterly review of key operational risk areas by the CRSB; |
|
|
ASMLs Code of Conduct and Business Principles, our guidelines on ethical business conduct; |
|
|
ASMLs procedure for reporting issues with respect to the Code of Conduct, including complaints of a financial nature, the Reporting Procedure; and;
|
|
|
ASMLs Anti-Fraud Policy, which facilitates the development of controls which will aid in prevention, deterrence and detection of fraud against ASML.
|
We acknowledge the importance of internal control and risk management systems. Additionally, ASML is required to properly
manage internal controls over financial reporting, per section 404 of the Sarbanes-Oxley Act of 2002. Under the supervision and with the participation of ASMLs CEO and CFO, ASMLs management conducts an annual evaluation of the
effectiveness of ASMLs internal control over financial reporting based upon the framework in Internal Control Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Outcomes of the annual assessment, periodical updates, as well as significant changes and improvements, are regularly reported to and discussed with ASMLs Audit Committee and external auditors. The Audit Committee reports about these subjects
to the Supervisory Board on a regular basis. In addition, once a year, the Board of Management discusses the implementation of this internal control framework, as well as significant changes and major improvements in internal controls, with the
Audit Committee and the full Supervisory Board.
|
|
|
|
|
ASML STATUTORY REPORT 2014 |
|
55 |
|
|
Summary
Based on the outcome of the above-mentioned measures and to the best of its knowledge and belief, the Board of Management states that:
1. |
The above-mentioned measures provide a reasonable level of assurance that the Financial Statements as of and for the year ended December 31, 2014 fairly present in
all material respects the financial position, results and cash flows of ASML and that ASMLs Financial Statements as of and for the year ended December 31, 2014 do not contain any material inaccuracy; |
2. |
The internal risk management and control systems provide a reasonable assurance that the financial reporting does not contain any errors of material importance and have
worked adequately in 2014; and |
3. |
There are no indications that ASMLs internal controls over financial reporting will not operate effectively in 2015. |
ASMLs Board of Management is currently not aware of any significant change in ASMLs internal control over financial reporting that occurred
during 2014 that has materially affected, or is reasonably likely to materially affect, ASMLs effectiveness of internal control over financial reporting.
Operational/Strategic Risks and Legal and Regulatory Risks
To comply with our duties in the area
of internal risk management and control systems with respect to operational/ strategic risks and legal and regulatory risks, we use various measures among which:
|
|
Strategic evaluations of ASMLs business by the Board of Management in consultation with the Supervisory Board; |
|
|
Semi-annual senior management meetings, which are conducted to assess ASMLs corporate initiatives which are launched in order to execute ASMLs
strategy; |
|
|
Monthly operational review meetings of the Board of Management with ASMLs senior management on financial performance and realization of operational
objectives and responses to emerging issues; |
|
|
Semi-annual financial planning meetings of the Board of Management with ASMLs senior management; |
|
|
Monthly and quarterly financial reporting to the Board of Management and ASMLs senior management; |
|
|
Letters of representation that are signed by ASMLs key senior management members on a semi-annual basis in which they confirm their responsibility
for assessing business risks and ensuring appropriate risk mitigation for their responsible area based upon their knowledge; |
|
|
Quarterly review of key operational risk areas by the CRSB; |
|
|
ASMLs Code of Conduct and Business Principles, our guidelines on ethical business conduct; |
|
|
ASMLs procedure for reporting issues with respect to the Code of Conduct, including complaints of a financial nature, the Reporting Procedure; and;
|
|
|
ASMLs Anti-Fraud Policy, which facilitates the development of controls which will aid in prevention, deterrence and detection of fraud against ASML.
|
The establishment of ASMLs internal control and risk management systems is based on the identification of external and
internal risk factors that could influence the operational and financial objectives of ASML and contains a system of monitoring, reporting and operational reviews. All material risk management activities have been discussed with the Audit Committee
and the Supervisory Board. For more information on our risk management activities and our internal control and risk management systems, we refer to Corporate Governance Paragraph Board of Management - Internal Risk Management and
Control Systems. For a summary of ASMLs Risk Factors, we refer to Management Board Report - Risk Factors.
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, February 10, 2015
|
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|
ASML STATUTORY REPORT 2014 |
|
56 |
|
|
Consolidated Financial Statements
|
|
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|
|
ASML STATUTORY REPORT 2014 |
|
57 |
|
|
|
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|
ASML STATUTORY REPORT 2014 |
|
58 |
|
|
Consolidated Financial Statements
|
|
|
|
|
ASML STATUTORY REPORT 2014 |
|
59 |
|
|
Consolidated Statement of Profit or Loss
|
|
|
|
|
|
|
|
|
|
|
Notes |
|
Year ended
December 31 (in thousands, except per share data) |
|
2014
EUR |
|
|
2013
EUR |
|
|
|
|
|
|
|
29 |
|
Net system sales |
|
|
4,242,790 |
|
|
|
3,993,129 |
|
|
|
Net service and field option sales |
|
|
1,613,487 |
|
|
|
1,252,197 |
|
|
|
|
|
|
|
29 |
|
Total net sales |
|
|
5,856,277 |
|
|
|
5,245,326 |
|
|
|
Cost of system sales |
|
|
(2,434,516) |
|
|
|
(2,324,903) |
|
|
|
Cost of service and field option sales |
|
|
(924,391) |
|
|
|
(834,443) |
|
|
|
|
|
|
|
30 |
|
Total cost of sales |
|
|
(3,358,907) |
|
|
|
(3,159,346) |
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
2,497,370 |
|
|
|
2,085,980 |
|
36 |
|
Other income |
|
|
81,006 |
|
|
|
64,456 |
|
30, 32 |
|
Research and development costs |
|
|
(735,947) |
|
|
|
(563,965) |
|
30 |
|
Selling, general and administrative costs |
|
|
(318,672) |
|
|
|
(311,335) |
|
|
|
|
|
|
|
|
|
Operating income |
|
|
1,523,757 |
|
|
|
1,275,136 |
|
33 |
|
Finance income |
|
|
14,526 |
|
|
|
9,187 |
|
33 |
|
Finance costs |
|
|
(11,913) |
|
|
|
(28,010) |
|
|
|
|
|
|
|
|
|
Income before income taxes |
|
|
1,526,370 |
|
|
|
1,256,313 |
|
27 |
|
Provision for income taxes |
|
|
(108,050) |
|
|
|
(62,469) |
|
|
|
|
|
|
|
|
|
Net income |
|
|
1,418,320 |
|
|
|
1,193,844 |
|
8 |
|
Basic net income per ordinary share |
|
|
3.24 |
|
|
|
2.78 |
|
8 |
|
Diluted net income per ordinary share1 |
|
|
3.23 |
|
|
|
2.75 |
|
|
|
Number of ordinary shares used in computing per
share amounts (in thousands) |
|
|
|
|
|
|
|
|
8 |
|
Basic |
|
|
437,142 |
|
|
|
429,770 |
|
8 |
|
Diluted1 |
|
|
439,693 |
|
|
|
433,446 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 REPORT 2014 |
|
60 |
|
|
Consolidated Statement of Comprehensive Income
|
|
|
|
|
|
|
|
|
|
|
Notes |
|
Year ended
December 31 (in thousands) |
|
2014
EUR |
|
|
2013
EUR |
|
|
|
|
|
|
|
|
|
Net income |
|
|
1,418,320 |
|
|
|
1,193,844 |
|
|
|
|
|
|
|
Other comprehensive income: |
|
|
|
|
|
|
|
|
|
|
Foreign currency translation, net of taxes: |
|
|
|
|
|
|
|
|
19 |
|
Gain (loss) on foreign currency translation |
|
|
254,459 |
|
|
|
(122,000) |
|
|
|
|
|
|
|
Financial instruments, net of taxes: |
|
|
|
|
|
|
|
|
6,19 |
|
Gain (loss) on derivative financial instruments |
|
|
17,375 |
|
|
|
(5,370) |
|
6,19 |
|
Transfers to net income |
|
|
6,691 |
|
|
|
(2,276) |
|
|
|
|
|
Other comprehensive income, net of taxes1 |
|
|
278,525 |
|
|
|
(129,646) |
|
|
|
|
|
|
|
Total comprehensive income, net of taxes |
|
|
1,696,845 |
|
|
|
1,064,198 |
|
|
|
Attributable to equity holders |
|
|
1,696,845 |
|
|
|
1,064,198 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 |
All items in accumulated other comprehensive income as at December 31, 2014, comprising of the hedging reserve of EUR 11.9 million gains (2013: EUR
12.2 million losses) and the currency translation reserve of EUR 18.9 million gains (2013: EUR 214.0 million losses), will be reclassified subsequently to profit or loss when specific conditions are met. |
|
|
|
|
|
ASML STATUTORY REPORT 2014 |
|
61 |
|
|
Consolidated Statement of Financial Position
(Before appropriation of net income)
|
|
|
|
|
|
|
|
|
|
|
Notes |
|
As of December 31 (in thousands) |
|
2014
EUR |
|
|
2013
EUR |
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
9 |
|
Property, plant and equipment |
|
|
1,447,523 |
|
|
|
1,217,840 |
|
10 |
|
Goodwill |
|
|
2,378,421 |
|
|
|
2,111,296 |
|
11 |
|
Other intangible assets |
|
|
1,670,098 |
|
|
|
1,375,572 |
|
27 |
|
Deferred tax assets |
|
|
142,746 |
|
|
|
302,724 |
|
16 |
|
Finance receivables |
|
|
55,261 |
|
|
|
46,017 |
|
13 |
|
Derivative financial instruments |
|
|
115,546 |
|
|
|
30,777 |
|
14 |
|
Other assets |
|
|
329,274 |
|
|
|
263,353 |
|
|
|
|
|
Total non-current assets |
|
|
6,138,869 |
|
|
|
5,347,579 |
|
|
|
|
|
15 |
|
Inventories |
|
|
2,549,837 |
|
|
|
2,393,022 |
|
27 |
|
Current tax assets |
|
|
43,876 |
|
|
|
32,333 |
|
13 |
|
Derivative financial instruments |
|
|
38,257 |
|
|
|
40,843 |
|
16 |
|
Finance receivables |
|
|
196,087 |
|
|
|
250,472 |
|
17 |
|
Accounts receivable |
|
|
1,052,504 |
|
|
|
878,321 |
|
14 |
|
Other assets |
|
|
293,630 |
|
|
|
250,217 |
|
18 |
|
Short-term investments |
|
|
334,864 |
|
|
|
679,884 |
|
18 |
|
Cash and cash equivalents |
|
|
2,419,487 |
|
|
|
2,330,694 |
|
|
|
|
|
Total current assets |
|
|
6,928,542 |
|
|
|
6,855,786 |
|
|
|
|
|
|
|
Total assets |
|
|
13,067,411 |
|
|
|
12,203,365 |
|
|
|
|
|
|
|
Equity and liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
19 |
|
Equity |
|
|
8,365,930 |
|
|
|
7,544,795 |
|
|
|
|
|
20 |
|
Long-term debt |
|
|
1,149,876 |
|
|
|
1,065,756 |
|
13 |
|
Derivative financial instruments |
|
|
2,808 |
|
|
|
2,608 |
|
27 |
|
Deferred and other tax liabilities |
|
|
249,369 |
|
|
|
439,885 |
|
22 |
|
Provisions |
|
|
3,638 |
|
|
|
4,620 |
|
23 |
|
Accrued and other liabilities |
|
|
408,847 |
|
|
|
280,534 |
|
|
|
|
|
Total non-current liabilities |
|
|
1,814,538 |
|
|
|
1,793,403 |
|
|
|
|
|
22 |
|
Provisions |
|
|
2,354 |
|
|
|
2,227 |
|
13 |
|
Derivative financial instruments |
|
|
64,947 |
|
|
|
9,044 |
|
20 |
|
Current portion of long-term debt |
|
|
4,261 |
|
|
|
4,385 |
|
27 |
|
Current tax liabilities |
|
|
36,293 |
|
|
|
15,803 |
|
23 |
|
Accrued and other liabilities |
|
|
2,282,852 |
|
|
|
2,207,838 |
|
|
|
Accounts payable |
|
|
496,236 |
|
|
|
625,870 |
|
|
|
|
|
Total current liabilities |
|
|
2,886,943 |
|
|
|
2,865,167 |
|
|
|
|
|
|
|
Total equity and liabilities |
|
|
13,067,411 |
|
|
|
12,203,365 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASML STATUTORY REPORT 2014 |
|
62 |
|
|
Consolidated Statement of Changes in Equity
(Before appropriation of net income)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issued and
Outstanding
Shares |
|
|
|
|
|
Treasury |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share |
|
|
Shares |
|
|
Retained |
|
|
Other |
|
|
Net |
|
|
|
|
|
|
|
|
Number1 |
|
|
Amount |
|
|
Premium |
|
|
at Cost |
|
|
Earnings |
|
|
Reserves2 |
|
|
Income |
|
|
Total |
|
Notes |
|
(in thousands) |
|
|
|
|
EUR |
|
|
EUR |
|
|
EUR |
|
|
EUR |
|
|
EUR |
|
|
EUR |
|
|
EUR |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at January 1, 2013 |
|
|
407,165 |
|
|
|
37,786 |
|
|
|
932,968 |
|
|
|
(465,848 |
|
|
|
2,341,048 |
|
|
|
349,901 |
|
|
|
1,302,347 |
|
|
|
4,498,202 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Appropriation of net income |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,302,347 |
|
|
|
- |
|
|
|
(1,302,347) |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
Components of statement of comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,193,844 |
|
|
|
1,193,844 |
|
19 |
|
Foreign currency translation |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(122,000) |
|
|
|
- |
|
|
|
(122,000) |
|
6,19 |
|
Loss on financial instruments, net of taxes |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(7,646) |
|
|
|
- |
|
|
|
(7,646) |
|
|
|
Total comprehensive income |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(129,646) |
|
|
|
1,193,844 |
|
|
|
1,064,198 |
|
|
|
|
|
|
|
|
|
|
|
|
|
CCIP: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,36 |
|
Fair value differences3 |
|
|
- |
|
|
|
- |
|
|
|
20,956 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
20,956 |
|
|
|
|
|
|
|
|
|
|
|
19 |
|
Purchase of treasury shares |
|
|
(4,614) |
|
|
|
- |
|
|
|
- |
|
|
|
(300,000) |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(300,000) |
|
19 |
|
Cancellation of treasury shares |
|
|
- |
|
|
|
(854) |
|
|
|
- |
|
|
|
349,261 |
|
|
|
(348,407) |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
24,30,31 |
|
Share-based payments4 |
|
|
- |
|
|
|
- |
|
|
|
116,821 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
116,821 |
|
24,30 |
|
Issuance of shares5 |
|
|
38,301 |
|
|
|
3,282 |
|
|
|
2,312,360 |
|
|
|
50,805 |
|
|
|
(5,744) |
|
|
|
- |
|
|
|
- |
|
|
|
2,360,703 |
|
19 |
|
Dividend paid |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(216,085) |
|
|
|
- |
|
|
|
- |
|
|
|
(216,085) |
|
19 |
|
Development expenditures |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(231,523) |
|
|
|
231,523 |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
Balance at December 31, 2013 |
|
|
440,852 |
|
|
|
40,214 |
|
|
|
3,383,105 |
|
|
|
(365,782) |
|
|
|
2,841,636 |
|
|
|
451,778 |
|
|
|
1,193,844 |
|
|
|
7,544,795 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Appropriation of net income |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,193,844 |
|
|
|
- |
|
|
|
(1,193,844) |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
Components of statement of comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,418,320 |
|
|
|
1,418,320 |
|
19 |
|
Foreign currency translation |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
254,459 |
|
|
|
- |
|
|
|
254,459 |
|
6,19 |
|
Gain on financial instruments, net of taxes |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
24,066 |
|
|
|
- |
|
|
|
24,066 |
|
|
|
Total comprehensive income |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
278,525 |
|
|
|
1,418,320 |
|
|
|
1,696,845 |
|
|
|
|
|
|
|
|
|
|
|
|
|
CCIP: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,36 |
|
Fair value differences3 |
|
|
- |
|
|
|
- |
|
|
|
28,086 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
28,086 |
|
|
|
|
|
|
|
|
|
|
|
19 |
|
Purchase of treasury shares |
|
|
(9,981) |
|
|
|
- |
|
|
|
- |
|
|
|
(700,000) |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(700,000) |
|
19 |
|
Cancellation of treasury shares |
|
|
- |
|
|
|
(852) |
|
|
|
- |
|
|
|
610,698 |
|
|
|
(609,846) |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
24,30,31 |
|
Share-based payments |
|
|
- |
|
|
|
- |
|
|
|
48,601 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
48,601 |
|
24,30 |
|
Issuance of shares |
|
|
2,064 |
|
|
|
64 |
|
|
|
(3,236) |
|
|
|
65,641 |
|
|
|
(46,904) |
|
|
|
- |
|
|
|
- |
|
|
|
15,565 |
|
19 |
|
Dividend paid |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(267,962) |
|
|
|
- |
|
|
|
- |
|
|
|
(267,962) |
|
19 |
|
Development expenditures |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(246,743) |
|
|
|
246,743 |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
Balance at December 31, 2014 |
|
|
432,935 |
|
|
|
39,426 |
|
|
|
3,456,556 |
|
|
|
(389,443) |
|
|
|
2,864,025 |
|
|
|
977,046 |
|
|
|
1,418,320 |
|
|
|
8,365,930 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 |
As of December 31, 2014, the number of issued shares was 438,073,643. This includes the number of issued and outstanding shares of 432,935,288 and the number of
treasury shares of 5,138,355. As of December 31, 2013, the number of issued shares was 446,822,452. This includes the number of issued and outstanding shares of 440,852,334 and the number of treasury shares of 5,970,1 18. As of
December 31, 2012, the number of issued shares was 419,852,467. This includes the number of issued and outstanding shares of 407,165,221 and the number of treasury shares of 12,687,246. |
2 |
Other reserves consist of the hedging reserve, the currency translation reserve and the reserve for capitalized development expenditures. See Note 19.
|
3 |
In 2014, EUR 28.1 million (2013: EUR 21.0 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 |
Share-based payments include an amount of EUR 66.1 million in relation to the fair value compensation of unvested equity awards exchanged as part of acquisition of
Cymer. |
5 |
Issuance of shares includes 36,464,576 ordinary shares issued in relation to the acquisition of Cymer for a total fair value of EUR 2,346.7 million.
|
|
|
|
|
|
ASML STATUTORY REPORT 2014 |
|
63 |
|
|
Consolidated Statement of Cash Flows
|
|
|
|
|
|
|
|
|
|
|
Notes |
|
Year ended
December 31 (in thousands) |
|
2014
EUR |
|
|
2013
EUR |
|
|
|
|
|
|
|
|
|
Cash Flows from Operating Activities |
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
1,418,320 |
|
|
|
1,193,844 |
|
|
|
|
|
|
|
Adjustments to reconcile net income to net
cash flows from operating activities: |
|
|
|
|
|
|
|
|
9, 11 |
|
Depreciation and amortization |
|
|
353,059 |
|
|
|
320,924 |
|
9, 11 |
|
Impairment |
|
|
10,528 |
|
|
|
13,057 |
|
9 |
|
Loss on disposal of property, plant and equipment1 |
|
|
3,502 |
|
|
|
2,823 |
|
24, 31 |
|
Share-based payments |
|
|
55,695 |
|
|
|
47,422 |
|
17 |
|
Allowance for doubtful receivables |
|
|
133 |
|
|
|
1,062 |
|
15 |
|
Allowance for obsolete inventory |
|
|
162,821 |
|
|
|
164,852 |
|
27 |
|
Deferred income taxes |
|
|
(30,096) |
|
|
|
26,018 |
|
|
|
Changes in assets and liabilities: |
|
|
|
|
|
|
|
|
17 |
|
Accounts receivable |
|
|
(164,850) |
|
|
|
(192,149) |
|
16 |
|
Finance receivables |
|
|
51,132 |
|
|
|
9,277 |
|
15 |
|
Inventories1,2 |
|
|
(293,404) |
|
|
|
(521,110) |
|
14 |
|
Other assets |
|
|
(104,658) |
|
|
|
(17,400) |
|
22, 23 |
|
Accrued and other liabilities |
|
|
36,524 |
|
|
|
(57,282) |
|
|
|
Accounts payable |
|
|
(136,192) |
|
|
|
321,486 |
|
27 |
|
Current income taxes |
|
|
11,822 |
|
|
|
68,131 |
|
|
|
|
|
Net cash provided by operating activities |
|
|
1,374,336 |
|
|
|
1,380,955 |
|
|
|
|
|
|
|
Cash Flows from Investing Activities |
|
|
|
|
|
|
|
|
9 |
|
Purchase of property, plant and equipment2 |
|
|
(358,280) |
|
|
|
(210,804) |
|
11 |
|
Purchase of intangible assets |
|
|
(348,110) |
|
|
|
(327,672) |
|
5, 18 |
|
Purchase of available for sale securities |
|
|
(504,756) |
|
|
|
(904,856) |
|
5, 18 |
|
Maturity of available for sale securities |
|
|
849,776 |
|
|
|
1,195,031 |
|
|
|
Acquisition of subsidiaries (net of cash acquired) |
|
|
- |
|
|
|
(443,712) |
3 |
|
|
|
|
Net cash used in investing activities |
|
|
(361,370) |
|
|
|
(692,013) |
|
|
|
|
|
|
|
Cash Flows from Financing Activities |
|
|
|
|
|
|
|
|
19 |
|
Dividend paid |
|
|
(267,962) |
|
|
|
(216,085) |
|
19 |
|
Purchase of shares |
|
|
(700,000) |
|
|
|
(300,000) |
|
24, 31 |
|
Net proceeds from issuance of shares |
|
|
39,679 |
|
|
|
31,822 |
|
|
|
Net proceeds from issuance of notes |
|
|
- |
|
|
|
740,445 |
4 |
|
|
Repurchase of notes |
|
|
- |
|
|
|
(368,303) |
5 |
20 |
|
Repayment of debt |
|
|
(4,128) |
|
|
|
(4,100) |
|
|
|
|
|
Net cash used in financing activities |
|
|
(932,411) |
|
|
|
(116,221) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash flows |
|
|
80,555 |
|
|
|
572,721 |
|
|
|
Effect of changes in exchange rates on cash |
|
|
8,238 |
|
|
|
(9,623) |
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents |
|
|
88,793 |
|
|
|
563,098 |
|
18 |
|
Cash and cash equivalents at beginning of the year |
|
|
2,330,694 |
|
|
|
1,767,596 |
|
|
|
|
|
|
|
18 |
|
Cash and cash equivalents at end of the year |
|
|
2,419,487 |
|
|
|
2,330,694 |
|
|
|
|
|
|
|
Supplemental Disclosures of Cash Flow Information: |
|
|
|
|
|
|
|
|
|
|
Interest received |
|
|
29,022 |
|
|
|
37,355 |
|
|
|
Interest and other paid |
|
|
(42,439) |
|
|
|
(50,535) |
|
|
|
Income taxes paid |
|
|
(124,325) |
|
|
|
(2,278) |
|
|
|
|
|
|
|
|
|
|
|
|
1 |
An amount of EUR 30.7 million (2013: EUR 48.2 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 Statement of Cash Flows. For further details see Note 9. |
2 |
An amount of EUR 95.5 million (2013: EUR 115.9 million) of the additions in property, plant and equipment relates to non-cash transfers from inventory. Other
movements include EUR 1.5 million increase (2013: EUR 12.5 million decrease), mainly relating to investments not yet paid and inceptions of finance lease arrangements. Since the transfers between inventory and property, plant and equipment
are non-cash events, these are not reflected in this Consolidated Statement of Cash Flows. For further details see Note 9. |
3 |
In addition to the cash paid in relation to the acquisition of Cymer, we issued 36,464,576 shares for an amount of EUR 2,346.7 million (non-cash event) as part of the
consideration paid. |
4 |
Net proceeds from issuance of notes relate to the total cash proceeds of EUR 740.4 million (net of incurred transaction costs) from the issuance of our EUR
750 million 3.375 percent senior notes due 2023. |
5 |
Repurchase of notes relates to the net cash outflows of EUR 368.3 million for the partial repurchase of our EUR 600 million 5.75 percent senior notes due 2017
including the partial unwinding of the related interest rate swaps. |
|
|
|
|
|
ASML STATUTORY REPORT 2014 |
|
64 |
|
|
Notes to the Consolidated Financial Statements
1. General Information
ASML, with its
corporate headquarters in Veldhoven, the Netherlands, is engaged in the development, production, marketing, selling and servicing of advanced semiconductor equipment systems, exclusively consisting of lithography systems. ASMLs principal
operations are in the Netherlands, the United States and Asia.
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.
On May 30, 2013, we acquired 100 percent
of the issued share capital of Cymer. Financial information presented in our Annual Report includes Cymer from May 30, 2013 onwards.
Our
Financial Statements were authorized for issue by the BoM on February 10, 2015 and will be filed at the Trade Register of the Chamber of Commerce in Eindhoven, the Netherlands within eight days after adoption by the 2015 AGM.
2. Adoption of New and Revised International Financial Reporting Standards
Standards and Interpretations effective in 2014
ASMLs implementation of new Standards and
Interpretations which are effective as of January 1, 2014 and had an effect on our Consolidated Financial Statements, are summarized below:
IAS 32 Amendments Offsetting Financial Assets and Financial Liabilities (effective for annual periods beginning on or after January 1,
2014). The amendments to IAS 32 clarify existing application issues relating to the offset of financial assets and financial liabilities requirements. Specifically the amendments clarify the meaning of currently has a legally enforceable right
of set-off and simultaneous realization and settlement. These amendments have no material impact on our Consolidated Financial Statements.
At the date of authorization of these consolidated financial statements, the following standards and interpretations have been issued however are not yet effective and/or have not yet been adopted by the
EU and have not yet been adopted by us
In July 2014, the IASB finalised 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 (effective for annual periods beginning on or after January 1, 20181). 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 entitys 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 15 Revenue from Contracts with Customers
(effective for annual periods beginning on or after January 1, 2017), was issued in May 2014. 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 recognising
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. |
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 is not expected to be material.
1) |
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.
|
|
|
|
|
|
ASML STATUTORY REPORT 2014 |
|
65 |
|
|
3. Summary of Significant Accounting Policies
Basis of Preparation
The accompanying Consolidated Financial Statements are stated in thousands
of EUR unless otherwise indicated. These Consolidated Financial Statements, prepared for statutory purposes, have been prepared in accordance with IFRS- EU. For internal and external reporting purposes, we apply US GAAP. US GAAP is our primary
accounting standard for setting financial and operational performance targets.
The Consolidated Financial Statements have been prepared on
historical cost convention unless stated otherwise. The principal accounting policies adopted are set out below.
Use of Estimates
The preparation of our Consolidated Financial Statements in conformity with IFRS-EU 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 dates of the Consolidated Statement of Financial Position 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 SPE of which ASML is the
primary beneficiary. All intercompany profits, balances and transactions have been eliminated in the consolidation.
Subsidiaries
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 voting rights. As from the date that these criteria are met, the financial data of the relevant company are included in the consolidation.
Business Combinations
Acquisitions of subsidiaries are included on the basis of the acquisition
method. The cost of acquisition is measured based on the consideration transferred at fair value, the fair value of identifiable assets distributed and the fair value of liabilities incurred or assumed at the acquisition date (i.e. the date at which
we obtain control). The excess of the costs of an acquired subsidiary over the net of the amounts assigned to identifiable assets acquired and liabilities incurred or assumed, is capitalized as goodwill. Acquisition-related costs are expensed when
incurred in the period they arise or the service is received.
Special Purpose Entities
When we have an interest in a SPE, we shall assess whether we are the primary beneficiary of that SPE and, thus, should consolidate the SPE.
Foreign Currency Translation
The individual
financial statements of each group entity are presented in their Functional Currency. For the purpose of the Consolidated Financial Statements, the results and financial position of each entity are expressed in euros, which is ASMLs Functional
Currency, and the presentation currency for the Consolidated Financial Statements.
In preparing the financial statements of the individual
entities, transactions in Foreign Currencies are recorded at the rates of exchange prevailing the date of the transactions. At each Consolidated Statement of Financial Position date, monetary items denominated in Foreign Currencies are translated at
the rates prevailing the Consolidated Statement of Financial Position date. Non-monetary items carried at fair value that are denominated in Foreign Currencies are translated at the rates prevailing on the date when the fair value was determined.
Non-monetary items that are measured in terms of historical cost in a Foreign Currency are not retranslated.
Exchange rate differences arising
on the settlement of monetary items, and on the translation of monetary items, are recognized in the Consolidated Statement of Profit or Loss in the period in which they arise. Exchange rate differences arising on the translation of non-monetary
items carried at fair value are recognized in the Consolidated Statement of Profit or Loss for the period except for differences arising on the translation of non-monetary items in respect of which gains and losses are recognized directly in equity.
For such non-monetary items, any exchange rate component of that gain or loss is also recognized directly in equity.
In order to hedge its
exposure to certain foreign exchange rate risks, we enter into forward contracts and currency options; see below for details of our accounting policies in respect of such derivative financial instruments.
|
|
|
|
|
ASML STATUTORY REPORT 2014 |
|
66 |
|
|
For the purpose of presenting Consolidated Financial Statements, the assets and liabilities of our foreign
subsidiaries (including comparatives) are expressed in euros using exchange rates prevailing on the Consolidated Statement of Financial Position date. Income and cost items (including comparatives) are translated at the average exchange rates for
the period, unless exchange rates fluctuated significantly during that period, in which case the exchange rates at the dates of the transactions are used. Exchange rate differences arising are classified as equity and transferred to our currency
translation reserve. Such translation differences are recognized in the Consolidated Statement of Profit or Loss in the period in which the foreign operation is disposed. Goodwill and fair value adjustments arising on the acquisition of a foreign
subsidiary are treated as assets and liabilities of foreign subsidiaries and translated at closing rate.
Property, Plant and Equipment
Property, plant and equipment are stated at cost, less accumulated depreciation and accumulated impairment losses. Costs of assets
manufactured by ASML include direct manufacturing costs, production overhead and interest costs incurred for qualifying assets during the construction period. Depreciation is calculated using the straight-line method based on the estimated useful
lives of the related assets. In the case of leasehold improvements, the estimated useful lives of the related assets do not exceed the remaining term of the corresponding lease.
The following table presents the estimated useful lives of our property, plant and equipment:
|
|
|
Category |
|
Estimated useful life |
|
|
Buildings and constructions |
|
5 - 45 years |
Machinery and equipment |
|
2 - 5 years |
Leasehold improvements |
|
5 - 10 years |
Furniture, fixtures and other equipment |
|
3 - 5 years |
|
|
|
|
|
Land is not depreciated.
Certain costs associated with the use of software are capitalized. These costs are depreciated on a straight-line basis over the period of related benefit, which ranges primarily from three to five years.
The estimated useful lives and depreciation method are reviewed at each year-end, with the effect of any changes in estimates accounted for on a
prospective basis.
The gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the
difference between the sales proceeds and the carrying amount of the asset and is recognized in the Consolidated Statement of Profit or Loss.
Intangible Assets
Goodwill
Goodwill represents the excess of the costs of an acquisition over the fair value of the amounts assigned to assets acquired and liabilities incurred or
assumed of the acquired subsidiary at the date of acquisition. Goodwill on acquisition of subsidiaries is allocated to CGUs for the purpose of impairment testing. The allocation is made to those CGUs that are expected to benefit from the business
combination in which the goodwill arose. Goodwill is tested for impairment annually at the start of the fourth quarter and whenever events or changes in circumstances indicate that the carrying amount of the goodwill may not be recoverable. If the
Recoverable Amount of the CGU is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of
the carrying amount of each asset in the unit. An impairment loss recognized for goodwill is not reversed in a subsequent period. Goodwill is stated at cost less accumulated impairment losses.
On disposal of a subsidiary, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.
Other Intangible Assets
Other intangible
assets include internally-generated intangible assets, brands, intellectual property, developed technology, customer relationships, in-process R&D and other intangible assets.
|
|
|
|
|
ASML STATUTORY REPORT 2014 |
|
67 |
|
|
Internally-generated Intangible Assets - Development Expenditures
Expenditures on research activities are recognized as costs in the period in which they incur. IFRS rexquires capitalization of development expenditures
provided if, and only if, certain criteria can be demonstrated.
An internally-generated intangible asset arising from our development is
recognized only if we can demonstrate all of the following conditions:
|
|
The technical feasibility of completing the intangible asset so that it will be available for use or sale; |
|
|
The intention to complete the intangible asset and use or sell it; |
|
|
The ability to use or sell the intangible asset; |
|
|
The probability that the asset created will generate future economic benefits; |
|
|
The availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and
|
|
|
The ability to measure reliably the expenditure attributable to the intangible asset during its development. |
For certain development programs, it was not possible to separate development activities from research activities (approximately EUR 16.5 million and
EUR 25.1 million for 2014 and 2013, respectively). Consequently, we are not able to reliably determine the amount of development expenditures incurred and therefore no amounts were capitalized for these programs.
Internally-generated intangible assets are amortized on a straight-line basis over their estimated useful lives, ranging from one to five years. Where no
internally-generated intangible asset can be recognized, development expenditure is charged to the Consolidated Statement of Profit or Loss in the period in which it is incurred.
The estimated useful lives and amortization method are reviewed at each year-end, with the effect of any changes in estimate accounted for on a prospective basis.
Brands, Intellectual Property, Developed Technology, Customer Relationships and Other Intangible Assets
Brands, intellectual property, developed technology, customer relationships and other intangible assets are stated at cost less accumulated amortization and
any accumulated impairment losses. Amortization is charged on a straight-line basis over their estimated useful lives. The estimated useful life and amortization method are reviewed at the end of each annual reporting period, with the effect of any
changes in estimate being accounted for on a prospective basis.
In-process Research and Development
In-process R&D relate to the fair value of the technology that was in development at the time of an acquisition. In-process R&D are considered to be
not yet ready for use and are therefore not amortized. At inception of amortization, the amount of in-process R&D will be reclassified to developed technology.
The following table presents the estimated useful lives of ASMLs other intangible assets:
|
|
|
Category |
|
Estimated useful life |
|
|
Brands |
|
20 years |
Development expenditures |
|
1 - 5 years |
Intellectual property |
|
3 - 10 years |
Developed technology |
|
6 - 15 years |
Customer relationships |
|
8 - 18 years |
Other |
|
2 - 6 years |
|
|
|
|
|
Impairment of Tangible and Intangible Assets Excluding Goodwill
At each Consolidated Statement of Financial Position date, we review the carrying amounts of our tangible and intangible assets (other than goodwill) to
determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the Recoverable Amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it
is not possible to estimate the Recoverable Amount of an individual asset, we estimate the Recoverable Amount of the CGU to which the asset belongs. Where a reasonable and consistent basis of allocation can be identified, corporate assets are also
allocated to individual CGUs, or otherwise they are allocated to the smallest group of CGUs for which a reasonable and consistent allocation basis can be identified.
Other intangible assets not yet available for use are tested for impairment annually, and whenever there is an indication that the asset may be impaired.
|
|
|
|
|
ASML STATUTORY REPORT 2014 |
|
68 |
|
|
If the Recoverable Amount of an asset (or CGU) is estimated to be less than its carrying amount, the carrying
amount of the asset (or CGU) is reduced to its Recoverable Amount. An impairment loss is recognized immediately in the Consolidated Statement of Profit or Loss, unless the relevant asset is carried at a revalued amount, in which case the impairment
loss is treated as a revaluation decrease.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or CGU) is
increased to the revised estimate of its Recoverable Amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset (or CGU) in prior years.
A reversal of an impairment loss is recognized immediately in the Consolidated Statement of Profit or Loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation
increase.
Financial Assets
Financial assets are classified as Financial assets at fair value through profit or loss, Available-for-sale or Loans and
receivables. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.
Financial Assets at Fair Value Through Profit or Loss
Financial assets are classified at fair
value through profit or loss when the financial asset is designated at fair value through profit or loss.
Available-for-Sale Financial Assets
Available-for-sale financial assets are non-derivatives that are either designated as available-for-sale or are not classified as
(a) loans and receivables, (b) held-to-maturity investments or (c) financial assets at fair value through profit and loss. Our available-for-sale financial assets comprise short-term investments, which consist of Dutch Treasury
Certificates and deposits with the Dutch government. Our short-term investments are stated at fair value. Fair value of our short-term investments is determined in the manner described in Note 5.
Loans and Receivables
Loans and receivables
are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the Consolidated Statement of Financial Position
date. These are classified as non-current assets. Our loans and receivables comprise of accounts receivable, finance receivables, cash and cash equivalents (excluding investments in money market funds, which are classified as financial assets at
fair value through profit and loss) and other non-current and current assets in the Consolidated Statement of Financial Position.
Loans and
receivables are initially measured at fair value and subsequently at amortized cost using the effective interest rate method.
We assess at each
Consolidated Statement of Financial Position date whether there is objective evidence that a financial asset or a group of financial assets is impaired.
Impairment of Financial Assets
Financial assets, other than those at fair value through profit
or loss, are assessed for indicators of impairment at each Consolidated Statement of Financial Position date. Financial assets are impaired if there is objective evidence as a result of one or more events that occurred after the initial recognition
of the asset (a loss event) and that loss event has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.
Financial Liabilities and Equity Instruments Issued by ASML
Financial liabilities and equity instruments issued by ASML are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity
instrument.
Financial liabilities are either classified as financial liabilities at fair value through profit or loss or other financial
liabilities. An equity instrument is any contract that evidences a residual interest in the assets of ASML after deducting all of its liabilities. Equity instruments issued by ASML are recorded at fair value, net of direct issue costs.
Financial liabilities at fair value through profit or loss are stated at fair value with any resultant gain or loss recognized in the Consolidated Statement
of Profit or Loss.
Other financial liabilities (including loans, borrowings and trade and other payables) are subsequently measured at amortized
cost using the effective interest rate method.
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Derivative Financial Instruments and Hedging Activities
We principally use derivative financial instruments for the management of foreign currency risks and interest rate risks. We measure all derivative financial
instruments based on fair values derived from market prices of the instruments. We adopt hedge accounting for hedges that are highly effective in offsetting the identified hedged risks taking into account required effectiveness criteria.
Derivatives are initially recognized at fair value on the date a derivative contract is entered into and are subsequently remeasured. The method of
recognizing the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. We designate certain derivatives as either:
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A hedge of the exposure to changes in the fair value of a recognized asset or liability, that is attributable to a particular risk (fair value hedge); or
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A hedge of the exposure to variability in the cash flows of a recognized asset or liability, or of a forecasted transaction, that is attributable to a
particular risk (cash flow hedge). |
We document at the inception of the transaction the relationship between hedging
instruments and hedged items, as well as our risk management objectives and strategy for undertaking various hedging transactions. We also document our assessment, both at hedge inception and on an ongoing basis, of whether derivatives that are used
in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items.
The fair values of various
derivative financial instruments used for hedging purposes are disclosed in Note 5, Note 6, Note 12 and Note 13. Movements in the hedging reserve within equity are shown in Note 19. The fair value part of a derivative financial instrument that has a
remaining term of less or equal to 12 months is classified as current asset or liability. When the fair value part of a derivative financial instrument has a term of more than 12 months it is classified as non-current.
Fair Value Hedge
Changes in the fair value of
a derivative financial instrument that is designated and qualifies as a fair value hedge, along with the gain or loss on the hedged asset or liability that is attributable to the hedged risk, are recorded in the Consolidated Statement of Profit or
Loss. We designate foreign currency hedging instruments as a hedge of the fair value of a recognized asset or liability in non-functional currencies.
Hedge accounting is discontinued when we revoke the hedging relationship, the hedging instrument expires or is sold, terminated or exercised, or no longer qualifies for hedge accounting. The adjustment to
the carrying amount of the hedged item arising from the hedged risk is amortized to the Consolidated Statement of Profit or Loss from that date.
Interest rate swaps that are being used to hedge the fair value of fixed loan coupons payable are designated as fair value hedges. The change in fair value
is intended to offset the change in the fair value of the underlying fixed loan coupons, which is recorded accordingly. The gain or loss relating to the ineffective portion of interest rate swaps hedging fixed loan coupons payable is recognized in
the Consolidated Statement of Profit or Loss in finance costs or finance income.
Cash Flow Hedge
The effective portion of changes in the fair value of a derivative that is designated and qualifies as a cash flow hedge is recognized in OCI and accumulated
under the heading of the hedging reserve, in equity, until the underlying hedged transaction is recognized in the Consolidated Statement of Profit or Loss. However, when the forecasted transaction that is hedged results in the recognition of a
non-financial asset or a non-financial liability, the gains and losses previously deferred in equity are transferred from equity and included in the initial measurement of the cost of the asset or liability. Hedge accounting is discontinued when we
revoke the hedging relationship, the hedging instrument expires or is sold, terminated or exercised, or no longer qualifies for hedge accounting. Any gain or loss recognized in OCI and accumulated in equity at that time remains in equity and is
recognized when the forecasted transaction is ultimately recognized in the Consolidated Statement of Profit or Loss. When a forecasted transaction is no longer expected to occur, the cumulative gain or loss that was deferred in equity is recognized
immediately in the Consolidated Statement of Profit or Loss.
Foreign currency hedging instruments that are being used to hedge cash flows
relating to future sales or purchase transactions in non-functional currencies are designated as cash flow hedges. The gain or loss relating to the ineffective portion of the foreign currency hedging instruments is recognized in the Consolidated
Statement of Profit or Loss in net sales or cost of sales.
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Interest rate swaps that are being used to hedge changes in the variability of future interest payments are
designated as cash flow hedges. The change in fair value is intended to offset the change in the fair value of the underlying assets, which is recorded accordingly in equity as hedging reserve. The maximum length of time of cash flow hedges is the
time elapsed from the moment the exposure is generated until the actual settlement. The gain or loss relating to the ineffective portion of interest rate swaps hedging the variability of future interest receipts is recognized in the Consolidated
Statement of Profit or Loss in finance income or finance costs.
Inventories
Inventories are stated at the lower of cost (first-in-first-out method) or net realizable value. The costs of inventories comprise of net prices paid for materials purchased, charges for freight and customs
duties, production labor cost and factory overhead. Net realizable value represents the estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution.
Allowances for inventory are recognized for slow-moving, obsolete or unsellable inventory. Impairment losses for inventories are determined based on the
expected demand which is derived from the sales forecasts as well as the expected market value of the inventory. A new assessment of net realizable value is made in each subsequent period. When the circumstances that previously caused inventories to
be written down below cost no longer exist or when there is clear evidence of an increase in net realizable value because of changed economic circumstances, the amount of the write-down is reversed.
Accounts Receivable
Accounts receivable are
measured at initial recognition at fair value and are subsequently measured at amortized cost using the effective interest rate method, less allowance for doubtful debts. An allowance for doubtful debts of accounts receivable is established when
there is objective evidence that we will not be able to collect all amounts due according to original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial
restructuring and default or delinquency in payments are considered indicators that the accounts receivable are impaired. The allowance recognized is measured as the difference between the assets carrying amount and the present value of
estimated future cash flows discounted at the effective interest rate computed at initial recognition.
Short-term Investments
Investments with remaining maturities longer than three months and less than one year at the date of acquisition are presented as short-term investments. The
short-term investments are classified as available-for-sale securities and are stated at fair value. Gains and losses, other than impairments, interest income and foreign exchange results, are recognized in OCI until the short-term investments are
derecognized. Upon derecognition, the cumulative gain or loss recognized in OCI, is recognized in the Consolidated Statements of Profit or Loss.
Cash and Cash Equivalents
Cash and cash
equivalents consist primarily of highly liquid investments, such as bank deposits, money market funds and interest-bearing bank accounts with insignificant interest rate risk and remaining maturities of three months or less at the date of
acquisition.
Equity
Ordinary
shares are classified as equity. Incremental costs directly attributable to the issuance of new shares or options are shown in equity as a deduction, net of income taxes, from the proceeds.
Treasury shares are deducted from equity for the consideration paid, including any directly attributable incremental costs (net of income taxes), until the shares are cancelled or reissued. Where such shares
are subsequently reissued, any consideration received, net of any directly attributable incremental transaction costs and related income tax effects is included in equity.
Accounts Payable
Accounts payable are initially measured at fair value, and are subsequently
measured at amortized cost, using the effective interest rate method.
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Revenue Recognition
In general, we recognize the revenue from the sale of a system upon shipment and the revenue from the installation of a system upon completion of that installation at the customer site. Each system
undergoes, prior to shipment, a FAT in ASMLs cleanroom facilities, effectively replicating the operating conditions that will be present on the customers 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 systems
performance is re-tested upon installation at the customers site, we have never failed to successfully complete installation of a system at a customers premises.
In connection with the introduction of new technology, such as NXE:3300B, we initially defer revenue recognition until acceptance of the new technology based system and completion of installation at the
customers 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 have no significant repurchase commitments in our general sales terms and conditions.
From time to time we repurchase systems that we have manufactured and sold and, following refurbishment, we resell those systems to other customers. This repurchase decision is mainly driven by market demand expressed by other customers and less
frequently by explicit or implicit contractual arrangements relating to the initial sale. We consider reasonable offers from any vendor, including customers, to repurchase used systems so that we can refurbish, resell, and install these systems as
part of our normal business operations. Once repurchased, the repurchase price of the used system is recorded in work-in-process inventory during the period it is being refurbished, following which the refurbished system is reflected in finished
products inventory until it is sold to the customer. As of December 31, 2014 and 2013, ASML had no repurchase commitments.
The main portion
of our revenue is derived from contractual arrangements with our customers that have multiple deliverables, such as installation and training services, service contracts and extended optic warranty contracts. 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 service contracts and extended and enhanced (optic) warranty
contracts is recognized over the term of the contract.
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). 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 revenue 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 or 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).
Revenues are recognized excluding the taxes
levied on sales (net basis).
In the event that an arrangement with a customer becomes onerous, we recognize a liability for the amount that the
cost of settling the arrangement exceeds the amount of the contract price. Obligations resulting from the arrangement can either be constructive or contractual. When we satisfy these contracts, we utilize the related liability.
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Lease Arrangements
Our lease classifications for systems are determined on a contract-by contract basis, taking the substance and details of each lease contract into consideration.
Finance Leases
Leases where substantially all
the risks and rewards incidental to ownership of an asset are transferred to the lessee are classified as finance lease arrangements. If we have offered the customer a finance lease arrangement, revenue is recognized at commencement of the lease
term. The difference between the gross finance receivable and the present value of the minimum lease payments is initially recognized as unearned interest and presented as a deduction to the gross finance receivable. Interest income is recognized in
the Consolidated Statement of Profit or Loss over the term of the lease contract using the effective interest method.
Operating Leases
Leases whereby all the risks and rewards incidental to ownership are not transferred to the lessee are classified as operating lease
arrangements. If we have offered the customer an operating lease arrangement, the system is included in property, plant and equipment upon commencement of the lease. Revenue from operating lease arrangements is recognized in the Consolidated
Statement of Profit or Loss on a straight-line basis over the term of the lease contract.
Warranty
We provide standard warranty coverage on our systems for 12 months and on certain optic parts for 60 months, providing labor and parts necessary to repair
systems during the warranty period. The estimated warranty costs are accounted for by accruing these costs for each system upon recognition of the system sale. The estimated warranty costs are based on historical product performance and service
records. We calculate the charge of average service hours and parts per system to determine the estimated warranty costs. On a semi-annual basis, we assess, and update if necessary, our accounting estimates used to calculate the standard warranty
reserve based on the latest actual historical warranty costs and expected future warranty costs. The actual product performance and/or field expense profiles may differ, and in those cases we adjust our warranty reserves accordingly. Future warranty
costs may exceed our estimates, which could lead to an increase in our cost of sales. In 2014 and 2013, the reassessments of the warranty reserve, and resulting change in accounting estimate, did not have a material effect on our Consolidated
Statement of Profit or Loss and Earnings per share amounts.
The extended and enhanced (optic) warranty on our systems is accounted for as a
separate element of multiple element revenue recognition transactions.
Customer Co-Investment Program
In connection with the CCIP, we entered into investment agreements, Shareholders Agreements, NRE Funding Agreements and a commercial agreement with
Participating Customers.
The investment agreements, Shareholder Agreements, NRE Funding Agreements and commercial agreement are accounted for as
one transaction with seperately identifiable components. The following two separate components are identified: (1) the share issuance (governed by the investment agreements and the Shareholder Agreements) and (2) the NRE funding and
commercial discounts and credits (governed by the NRE Funding Agreements and the commercial agreement with Intel).
The shares issued to the
Participating Customers are recorded at fair value based on quoted share prices (EUR 3,977.4 million) with the remaining aggregate arrangement consideration allocated to the NRE funding and commercial discounts and credits. The difference between
the fair value of the shares and the subscription price of the shares (EUR 39.91) was recorded as a deduction from equity upon issuance of the shares (EUR 123.4 million). Equity is increased to the fair value of the shares as the portion of the NRE
funding allocable to the shares is received over the NRE funding period (2013-2017). The amounts are deemed receivables from the Participating Customers in their capacity as shareholders of ASML.
A significant related party relationship exists between ASML and Intel as a result of the equity investment made by Intel as part of the CCIP. Based on the
commercial discounts and credits (governed by the Commercial Agreement with Intel) and the significant related party relationship, all NRE funding from Intel will be deferred and recognized in the Consolidated Statement of Profit or Loss only when
the commercial discounts and credits are earned.
In addition see also other income for further explanation on the accounting policies with
respect to CCIP.
Accounting for Shipping and Handling Fees and Costs
ASML bills the customer for, and recognizes as net sales, any charges for shipping and handling costs. The related costs are recognized as cost of sales.
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Cost of Sales
Cost of system sales comprise direct product costs such as materials, labor, cost of warranty, depreciation, amortization, shipping and handling costs and related overhead costs. ASML accrues for the
estimated cost of the warranty on its systems, which includes the cost of labor and parts necessary to repair systems during the warranty period. The amounts recorded in the warranty accrual are estimated based on actual historical expenses incurred
and on estimated probable future expenses related to current sales. Actual warranty costs are charged against the accrued warranty reserve.
Costs of service sales comprise direct service costs such as materials, labor, depreciation and overhead costs.
Cost of field option sales comprise direct product costs such as materials, labor, depreciation, cost of warranty, shipping and handling costs and related
overhead costs.
Other Income
The
portion of the NRE funding from TSMC and Samsung not allocable to the shares issued to those Participating Customers under the CCIP is recognized in other income when the R&D costs relating to lithography projects are recognized over the NRE
funding period (2013-2017).
Government Grants
Government grants are not recognized until there is reasonable assurance that ASML will comply with the conditions attaching to them and that the grants will be received.
Government grants whose primary condition is that ASML should purchase, construct or otherwise acquire non-current assets are recognized as deferred income
in the Consolidated Statement of Financial Position and transferred to the Consolidated Statement of Profit or Loss on a systematic and rational basis over the useful lives of the related assets.
Other government grants are recognized as income over the periods necessary to match them with the costs for which they are intended to compensate, on a
systematic basis. Government grants that are receivable as compensation for expenses or losses already incurred, or for the purpose of giving immediate financial support to ASML with no future related costs are recognized in the Consolidated
Statement of Profit or Loss in the period in which they become receivable.
Borrowing Costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a
substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time that the assets are substantially ready for their intended use or sale.
Income Taxes
Income taxes represent the sum
of the current tax position and deferred tax.
The current tax position is based on taxable base for the year. Taxable base differs from results
as reported in the Consolidated Statement of Profit or Loss because it excludes items of income or charges that are taxable or deductible in prior or later years, for example timing differences between taxable base and financial results, and it
further excludes items that are never taxable or deductible, for example permanent differences between taxable base and financial results. Our tax position is calculated using tax rates that have been enacted or substantively enacted at the
Consolidated Statement of Financial Position date.
Deferred tax is recognized on differences between the carrying amounts of assets and
liabilities in the Consolidated Financial Statements and the corresponding tax base used in the computation of taxable profit. Deferred tax liabilities are recognized for all taxable temporary differences and deferred tax assets are recognized to
the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilized. Such assets and liabilities are not recognized if the temporary difference arises from goodwill or from the initial
recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each Consolidated Statement of Financial Position date and reduced to the extent that it is no longer probable that sufficient taxable profits will
be available to allow all or part of the asset to be recovered.
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Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in
which the liability is settled or the asset realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the Consolidated Statement of Financial Position date. The measurement of deferred tax liabilities and assets
reflects the tax consequences that would follow from the manner in which we expect, at the reporting date, to recover or settle the carrying amount of our assets and liabilities.
Deferred tax assets and liabilities are offset on the Consolidated Statement of Financial Position when there is a legally enforceable right to set off current tax assets against current tax liabilities and
when they relate to income taxes levied by the same taxation authority and we intend to settle our current tax assets and liabilities on a net basis.
We recognize a liability for uncertain tax positions when it is probable that an outflow of economic resources will occur. Measurement of the liability for uncertain tax positions is based on
managements best estimate of the amount of tax benefit that will be lost.
The Consolidated Statement of Profit or Loss effect of interest
and penalties relating to liabilities for uncertain tax positions are presented based on their nature, as part of interest charges and as part of SG&A costs, respectively.
Current and deferred tax are recognized as an expense or income in the Consolidated Statement of Profit or Loss, except when they relate to items credited or debited directly to OCI or directly to equity, in
which case the tax is also recognized directly in equity, or where they arise from the initial accounting for a business combination. In the case of a business combination, the tax effect is taken into account in calculating goodwill or in
determining the excess of our interest in the net fair value of the acquired entitys identifiable assets and liabilities incurred or assumed over the cost of the business combination.
The calculation of our tax liabilities involves uncertainties in the application of complex tax laws. Our estimate for the potential outcome of any uncertain tax position is highly judgmental. However, we
believe that we have adequately provided for uncertain tax positions. Settlement of these uncertainties in a manner inconsistent with our expectations could have a material impact on our results of operations, financial condition and cash flows. We
recognize a liability for uncertain tax positions when it is probable that an outflow of economic resources will occur. Measurement of the liability for uncertain tax positions is based on managements best estimate of the amount of tax benefit
that will be lost.
Contingencies and Litigation
In connection with proceedings and claims, our management evaluates, based on the relevant facts and legal principles, the likelihood of an unfavorable outcome and whether the amount of the loss can be
reasonably estimated. In most cases, management determined that either a loss was not probable or was not reasonably estimable. Significant subjective judgments were required in these evaluations, including judgments regarding the validity of
asserted claims and the likely outcome of legal and administrative proceedings. The outcome of these proceedings, however, is subject to a number of factors beyond our control, most notably the uncertainty associated with predicting decisions by
courts and administrative agencies. In addition, estimates of the potential costs associated with legal and administrative proceedings frequently cannot be subjected to any sensitivity analysis, as damage estimates or settlement offers by claimants
may bear little or no relation to the eventual outcome. Finally, in any particular proceeding, we may agree to settle or to terminate a claim or proceeding in which we believe that it would ultimately prevail where we believe that doing so, when
taken together with other relevant commercial considerations, is more cost-effective than engaging in an expensive and protracted litigation, the outcome of which is uncertain.
We accrue for legal costs related to litigation in our Consolidated Statements of Profit or Loss at the time when the related legal services are actually provided.
Share-based Payments
Compensation expenses in
relation to share-based payments are recognized based upon the grant-date fair value of stock options and shares. The grant-date fair value of stock options is estimated using a Black-Scholes option valuation model. This Black-Scholes model requires
the use of assumptions, including expected share price volatility, the estimated life of each award and the estimated dividend yield. The risk-free interest rate used in the model is determined, based on an index populated with euro-denominated
European government agency bond with high credit ratings and with a life equal to the expected life of the equity-settled share-based payments. The grant-date fair value of shares is determined based on the closing price of our shares listed at
Euronext Amsterdam on the grant-date.
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The grant-date fair value of the equity-settled share-based payments is, based on the terms and conditions,
expensed over the vesting period, based on our estimate of equity instruments that will eventually vest. At each Consolidated Financial Statement of Financial Position date, we revise our estimate of the number of equity instruments expected to
vest. The impact of the revision of the original estimates, if any, is recognized in the Consolidated Statements of Profit or Loss in the period in which the revision is determined, with a corresponding adjustment to equity.
Our current share-based payment plans do not provide for cash settlement of options and stock.
Retirement Benefit Costs
Contributions to defined contribution retirement benefit plans are
recognized as an expense when employees have rendered service entitling them to the contributions. Payments made to state-managed retirement benefit schemes are dealt with as payments to defined contribution plans where our obligations under the
plans are equivalent to those arising in a defined contribution retirement benefit plan. ASML accounts for its multi-employer defined benefit plan as if it were a defined contribution plan for the following reasons:
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ASML is affiliated to an industrywide pension fund and uses the pension scheme in common with other participating companies; and
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Under the regulations of the pension plan, the only obligation these participating companies have towards the pension fund is to pay the annual premium
liability. Participating companies are under no obligation whatsoever to pay off any deficits the pension plan may incur. Nor have they any claim to any potential surpluses. |
Consolidated Statement of Cash Flows
The Consolidated Statement of Cash Flows has been prepared
based on the indirect method. Cash flows in foreign currencies have been translated at average exchange rates. Exchange rate difference on cash and cash equivalents are shown separately in the Consolidated Statement of Cash Flows. Acquisitions of
subsidiaries are presented net of cash balances acquired.
4. Business Combinations
On May 30, 2013, we concluded the acquisition of Cymer and obtained control through acquiring 100 percent of the issued share capital of Cymer, for a
consideration of EUR 3.1 billion. There were no contingent consideration arrangements. The total consideration was allocated to other intangible assets of EUR 751.5 million, other net assets of EUR 295.2 million and goodwill of EUR 2,073.3
million.
Prior to the acquisition, supply and R&D arrangements existed between Cymer and ASML. These pre-existing relationships were
effectively settled as a result of the acquisition in 2013. We determined that the R&D arrangement as well as the supply arrangements (excluding EUV) were at current market terms and therefore no gain or loss was recognized. We determined that
the EUV supply arrangements were favorable to ASML and therefore a gain of EUR 178.4 million was recognized in cost of sales within our 2013 Consolidated Statement of Profit or Loss. This gain was recognized separately from the business
combination as it is not part of the assets acquired or liabilities assumed. The approach for quantifying the favorable component to ASML of the EUV supply arrangements is based on the assessment of the prices for such light sources if the EUV
supply arrangements would have been renegotiated in May 2013.
The majority of the goodwill arising on the acquisition of Cymer is attributable
to the fact that we believe that the acquisition will help us achieving our strategic objective of delivering an economically viable EUV scanner to semiconductor manufacturers as soon as reasonably possible. We believe that combining Cymers
expertise in EUV light sources with our expertise in lithography systems design and integration will reduce the risks related to the successful development of and accelerate the introduction of EUV technology. Without the acquisition, we do not
believe that Cymer would have had sufficient resources to complete the development of the EUV light source and as a result, the only way to make the EUV light source development successful without additional delay was through the acquisition of
Cymer. We believe that the acquisition allows us to more effectively partition responsibilities between Cymer, its suppliers and us with respect to EUV light source development, thereby reducing risk and increasing development speed. Also, synergies
are expected from the combination. None of the goodwill recognized is expected to be deductible for income tax purposes.
In the period between
the date of acquisition and December 31, 2013, Cymer contributed EUR 178.7 million to total net sales and a loss of EUR 125.2 million to net income (including the charge of EUR 85.5 million related to the purchase price
allocation adjustments).
In 2013, we incurred EUR 7.8 million transaction costs relating to the acquisition of Cymer. These costs are
included in SG&A.
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5. 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:
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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.
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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. |
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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 instruments 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 Dutch Treasury Certificates and deposits with the Dutch
government. Dutch Treasury Certificates are traded in an active market and the fair value is determined based on quoted market prices for identical assets or liabilities. The fair value of 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 judgement.
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, discounted at
a rate that reflects the credit risk of various counterparties or our own credit risk.
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
Financial Position under derivative financial instruments (within other current assets and other non-current assets) and the carrying amounts of the Eurobonds are adjusted for the effective portion of these fair value changes only. For the actual
aggregate carrying amount and the fair value of our Eurobonds, see Note 20.
|
|
|
|
|
ASML STATUTORY REPORT 2014 |
|
77 |
|
|
The following table presents our financial assets and financial liabilities that are measured at fair value on
a recurring basis:
|
|
|
|
|
|
|
|
|
As of December 31, 2014 (in thousands) |
|
Level 1
EUR |
|
Level 2
EUR |
|
Level 3
EUR |
|
Total
EUR |
|
|
|
|
|
Assets measured at fair value |
|
|
|
|
|
|
|
|
Derivative financial
instruments1 |
|
- |
|
153,803 |
|
- |
|
153,803 |
Money market
funds2 |
|
426,742 |
|
- |
|
- |
|
426,742 |
Short-term investments3 |
|
334,864 |
|
- |
|
- |
|
334,864 |
Total |
|
761,606 |
|
153,803 |
|
- |
|
915,409 |
|
|
|
|
|
Liabilities measured at fair value |
|
|
|
|
|
|
|
|
Derivative financial
instruments1 |
|
- |
|
67,755 |
|
- |
|
67,755 |
|
|
|
|
|
Assets and Liabilities for which fair values are disclosed |
|
|
|
|
|
|
|
|
Long-term
debt4 |
|
1,139,628 |
|
- |
|
- |
|
1,139,628 |
|
|
|
|
|
|
|
|
|
1 |
Derivative financial instruments consist of forward foreign exchange contracts and interest rate swaps. See Note 6. |
2 |
Money market funds are part of our cash and cash equivalents. |
3 |
Short-term investments consist of Dutch Treasury Certificates. |
4 |
Long-term debt relates to Eurobonds, further details see Note 20. |
|
|
|
|
|
|
|
|
|
As of December 31, 2013 (in thousands) |
|
Level 1
EUR |
|
Level 2
EUR |
|
Level 3
EUR |
|
Total
EUR |
|
|
|
|
|
Assets measured at fair value |
|
|
|
|
|
|
|
|
Derivative financial
instruments1 |
|
- |
|
71,620 |
|
- |
|
71,620 |
Money market
funds2 |
|
535,000 |
|
- |
|
- |
|
535,000 |
Short-term investments3 |
|
304,884 |
|
375,000 |
|
- |
|
679,884 |
|
|
|
|
|
Total |
|
839,884 |
|
446,620 |
|
- |
|
1,286,504 |
|
|
|
|
|
Liabilities measured at fair value |
|
|
|
|
|
|
|
|
Derivative financial
instruments1 |
|
- |
|
11,652 |
|
- |
|
11,652 |
|
|
|
|
|
Assets and Liabilities for which fair values are disclosed |
|
|
|
|
|
|
|
|
Long-term
debt4 |
|
1,028,238 |
|
- |
|
- |
|
1,028,238 |
|
|
|
|
|
|
|
|
|
1 |
Derivative financial instruments consist of forward foreign exchange contracts and interest rate swaps. See Note 6. |
2 |
Money market funds are part of our cash and cash equivalents. |
3 |
Short-term investments consist of Dutch Treasury Certificates and deposits with the Dutch government. |
4 |
Long-term debt relates to Eurobonds, further details see Note 20. |
There were no transfers between levels during the years ended December 31, 2014 and December 31, 2013.
Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis
In 2014, we had no
significant fair value measurements on a nonrecurring basis. We did not recognize any impairment charges for goodwill and other intangible assets during 2014. See Notes 10 and 11 for more information.
6. Financial Risk Management
We are exposed
to certain financial risks such as market risk (including foreign currency risk and interest rate risk), credit risk, liquidity risk and capital risk. The overall risk management program focuses on the unpredictability of financial markets and seeks
to minimize potentially adverse effects on our financial performance. We use derivative financial instruments to hedge certain risk exposures. None of our transactions are entered into for trading or speculative purposes. We believe that market
information is the most reliable and transparent measure for our derivative financial instruments that are measured at fair value.
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 costs are mainly denominated in euros, to a certain extent in U.S. dollars, Taiwanese dollars and Japanese yen and to a limited extent in other currencies. Therefore, we are exposed to foreign currency exchange risk.
It is our policy to hedge material transaction exposures, such as forecasted sales and purchase transactions, and material net remeasurement exposures, such
as accounts receivable and payable. We hedge these exposures through the use of foreign exchange contracts. In line with our overall risk management program we do not hedge currency translation exposures resulting from net equity investments in
foreign subsidiaries.
|
|
|
|
|
ASML STATUTORY REPORT 2014 |
|
78 |
|
|
As of December 31, 2014, accumulated OCI includes EUR 16.3 million (2013: EUR 10.7 million) (net of
taxes: EUR 14.5 million; 2013: EUR 9.5 million loss) representing the total anticipated gain to be released to cost of sales, which will offset the EUR equivalent of foreign currency denominated forecasted purchase transactions. All amounts are
expected to be released over the next 12 months. As of December 31, 2014, no amount (2013: no amount) was included in accumulated OCI representing the total anticipated gain to be released to sales, which will be offset by the EUR equivalent of
foreign currency denominated forecasted sales transactions. The effectiveness of all contracts for which we apply hedge accounting is monitored on a quarterly basis throughout the life of the hedges. During 2013 and 2014, no ineffective hedge
relationships were recognized.
Interest Rate Risk Management
We have interest-bearing assets and liabilities that expose us to fluctuations in market interest rates. We use interest rate swaps to align the interest-typical terms of interest-bearing liabilities with
the interest-typical terms of interest-bearing assets. There may be residual interest rate risk to the extent the asset and liability positions do not fully offset.
As part of our hedging policy, we use interest rate swaps to hedge changes in fair value of our Eurobonds due to changes in market interest rates, thereby offsetting the variability of future interest
receipts on part of our cash and cash equivalents. During 2014, these hedges were highly effective in hedging the fair value exposure to interest rate movements. The changes in fair value of the Eurobonds were included at the same time in the
Consolidated Statement of Profit or Loss as the changes in the fair value of the interest rate swaps.
Furthermore, as part of our hedging
policy, we use interest rate swaps to hedge the variability of future interest cash flows relating to certain of our operating lease obligations. During 2014, these hedges were highly effective in hedging the cash flow exposure to interest rate
movements.
Financial Instruments
We use foreign exchange contracts to manage our foreign currency risk and interest rate swaps to manage our interest rate risk. The following table
summarizes the notional amounts and estimated fair values of our derivative financial instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014 |
|
|
2013 |
|
As of December 31
(in thousands) |
|
Notional
amount
EUR |
|
|
Fair Value
EUR |
|
|
Notional
amount
EUR |
|
|
Fair Value
EUR |
|
|
|
|
|
|
Forward foreign exchange contracts |
|
|
1,219,894 |
|
|
|
(52,319 |
) |
|
|
986,986 |
|
|
|
8,583 |
|
Interest rate swaps
|
|
|
1,013,053 |
|
|
|
138,367 |
|
|
|
1,013,053 |
|
|
|
51,385 |
|
Sensitivity Analysis Financial Instruments
Foreign Currency Sensitivity
We are mainly exposed to fluctuations in exchange rates between the
euro and the U.S. dollar, the euro and Taiwanese dollar and the euro and the Japanese yen. The following table details our sensitivity to a 10.0 percent strengthening of foreign currencies against the euro. The sensitivity analysis includes foreign
currency denominated monetary items outstanding and adjusts their translation at the period end for a 10.0 percent strengthening in foreign currency rates. A positive amount indicates an increase in income before income taxes or OCI, as shown.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014 |
|
|
2013 |
|
(in thousands) |
|
Impact on
income
before income
taxes
EUR |
|
|
Impact on
equity
EUR |
|
|
Impact on
income before
income
taxes
EUR |
|
|
Impact on
equity
EUR |
|
|
|
|
|
|
U.S. dollar |
|
|
4,432 |
|
|
|
15,913 |
|
|
|
(15,608 |
) |
|
|
21,059 |
|
Japanese yen |
|
|
1,516 |
|
|
|
(10,002 |
) |
|
|
183 |
|
|
|
913 |
|
Taiwanses dollar |
|
|
(2,929 |
) |
|
|
- |
|
|
|
(7,692 |
) |
|
|
- |
|
Other currencies |
|
|
(2,183 |
) |
|
|
- |
|
|
|
(9,281 |
) |
|
|
- |
|
Total
|
|
|
836 |
|
|
|
5,911 |
|
|
|
(32,398 |
) |
|
|
21,972 |
|
It is our policy to limit the effects of currency exchange rate fluctuations on our Consolidated Statement of Profit or
Loss. The decreased effect on income before income taxes in 2014 compared with 2013 reflects our lower net exposure at year end 2014. The negative effect on income before income taxes as presented in the table above for 2014 is mainly attributable
to timing differences between the arising and hedging of exposures.
|
|
|
|
|
ASML STATUTORY REPORT 2014 |
|
79 |
|
|
The effects of the fair value movements of cash flow hedges, entered into for U.S. dollar and Japanese yen
transactions are recognized in OCI. The U.S. dollar and Japanese yen effect on OCI in 2014 compared with 2013 is the result of an decrease in outstanding purchase hedges and increase in outstanding sales hedges.
For a 10.0 percent weakening of the foreign currencies against the euro, there would be approximately an equal but opposite effect on the income before
income taxes and OCI.
Interest Rate Sensitivity
The sensitivity analysis below has been determined based on the exposure to interest rates for both derivative financial and non-derivative financial instruments at the Statement of Financial Position date
with the stipulated change taking place at the beginning of the financial year and held constant throughout the reporting period. The table below shows the effect of a 1.0 percentage point increase in interest rates on our income before income taxes
and OCI. A positive amount indicates an increase in income before income taxes and OCI.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014 |
|
|
2013 |
|
(in thousands) |
|
Impact on income before income
taxes
EUR |
|
|
Impact on OCI EUR |
|
|
Impact on income before income
taxes
EUR |
|
|
Impact on OCI EUR |
|
|
|
|
|
|
Effect of a 1.0 percent point increase in interest rates |
|
|
17,956 |
|
|
|
941 |
|
|
|
19,969 |
|
|
|
1,183 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The positive effect on income before income taxes mainly relates to our cash and cash equivalents and short-term
investments. The positive effect on OCI, is mainly attributable to the fair value movements of the interest rate swaps designated as cash flow hedges.
For a 1.0 percentage point decrease in interest rates there would be a lower opposite effect on income before income taxes and OCI .
Credit Risk Management
Financial instruments that potentially subject us to significant
concentration of credit risk consist principally of cash and cash equivalents, short-term investments, derivative financial instruments used for hedging activities, accounts receivable and finance receivables.
Cash and cash equivalents, short-term investments and derivative financial instruments contain an element of risk of the counterparties being unable to meet
their obligations. Our risk management program focuses appropriately on the current environment of uncertainty in the financial markets, especially in the euro-zone. We invest our cash and cash equivalents and short-term investments in short-term
deposits with financial institutions that have good credit ratings and with the Dutch government, in Dutch Treasury Certificates and in AAAm-rated money market funds that invest in high-rated short-term debt securities of financial institutions and
governments. To mitigate the risk that any of our counterparties in hedging transactions is unable to meet its obligations, we only enter into transactions with a limited number of major financial institutions that have good credit ratings and
closely monitor the creditworthiness of our counterparties. Concentration risk is mitigated by limiting the exposure to a single counterparty.
Our customers consist of IC manufacturers located throughout the world. We perform ongoing credit evaluations of our customers financial condition. We
take additional measures to mitigate credit risk when considered appropriate by means of e.g. down payments, letters of credit or retention of ownership provisions in contracts. Retention of ownership enables us to recover the systems in the event a
customer defaults on payment.
Liquidity Risk Management
Our liquidity needs are affected by many factors, some of which are based on the normal ongoing operations of the business, and others that relate to the uncertainties of the global economy and the
semiconductor industry. Although our cash requirements fluctuate based on the timing and extent of these factors, we believe that cash generated from operations, together with the liquidity provided by existing cash and cash equivalents and
short-term investments and our borrowing capability are sufficient to satisfy our current requirements, including our 2015 capital expenditures. We intend to return cash to our shareholders on a regular basis in the form of dividend payments and,
subject to our actual and anticipated liquidity requirements and other relevant factors, share buybacks or capital repayment.
|
|
|
|
|
ASML STATUTORY REPORT 2014 |
|
80 |
|
|
Our liquidity analysis of derivative financial instruments is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
Total
EUR |
|
|
Less than 1 year
EUR |
|
|
1-3 years EUR |
|
|
3-5 years EUR |
|
|
After 5 years EUR |
|
|
|
|
|
|
|
Cash outflows |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Currency contracts |
|
|
1,622,531 |
|
|
|
1,622,531 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Interest rate swaps |
|
|
130,052 |
|
|
|
13,398 |
|
|
|
26,740 |
|
|
|
25,907 |
|
|
|
64,007 |
|
|
|
|
|
|
|
Cash inflows |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Currency contracts |
|
|
1,569,866 |
|
|
|
1,569,866 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Interest rate swaps |
|
|
269,014 |
|
|
|
39,022 |
|
|
|
78,080 |
|
|
|
50,662 |
|
|
|
101,250 |
|
For interest rate swaps included in above table the amounts disclosed have been determined by reference to the projected
interest rates as illustrated by the yield curves as at December 31, 2014.
For more information on our contractual obligations, including
the liquidity analysis in relation to our borrowings, see Note 25. Additionally other financial liabilities (including trade payables) are expected to be settled within one year.
7. 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 Financial Statements.
Our discussion and analysis of our financial condition and results of operations are based upon our Consolidated Financial Statements, which have been prepared in conformity with IFRS-EU. The preparation of
our Consolidated Financial Statements requires us 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. We evaluate our estimates continuously and we base our estimates on historical experience and on various other assumptions that we believe
to be reasonable under the circumstances. Actual results may differ from these estimates if the assumptions prove incorrect. To the extent there are material differences between actual results and these estimates, our future results could be
materially and adversely affected. We believe that the accounting policies described below require us to make significant judgments and estimates in the preparation of our Consolidated Financial Statements. Our most critical accounting estimates
include:
|
|
Contingencies and Litigation; |
|
|
Impairment of Tangible and Intangible Assets; and |
|
|
Capitalization of Development Expenditures. |
See Note 3 to our Consolidated Financial Statements for a summary of our significant accounting policies.
|
|
|
|
|
ASML STATUTORY REPORT 2014 |
|
81 |
|
|
8. Earnings per Share
Basic net income per ordinary share is calculated by dividing net income by the weighted average number of ordinary shares outstanding for that period. The dilutive effect is calculated using the treasury
stock method. Excluded from the diluted weighted average number of shares outstanding calculation are cumulative preference shares contingently issuable to the preference share foundation, since they represent a different class of stock than the
ordinary shares.
The basic and diluted net income per ordinary share has been calculated as follows:
|
|
|
|
|
|
|
|
|
As of
December 31 (in thousands, except per share data) |
|
2014 EUR |
|
|
2013 EUR |
|
|
|
|
Net income |
|
|
1,418,320 |
|
|
|
1,193,844 |
|
|
|
|
Weighted average number of shares outstanding during the year |
|
|
437,142 |
|
|
|
429,770 |
|
|
|
|
Basic net income per ordinary share |
|
|
3.24 |
|
|
|
2.78 |
|
|
|
|
Weighted average number of shares outstanding: |
|
|
437,142 |
|
|
|
429,770 |
|
Plus shares applicable to: |
|
|
|
|
|
|
|
|
Options and conditional shares |
|
|
2,551 |
|
|
|
3,676 |
|
|
|
|
Dilutive potential ordinary shares |
|
|
2,551 |
|
|
|
3,676 |
|
|
|
|
Adjusted weighted average number of shares |
|
|
439,693 |
|
|
|
433,446 |
|
|
|
|
Diluted net income per ordinary share1 |
|
|
3.23 |
|
|
|
2.75 |
|
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. |
9. Property, Plant and Equipment
Property, plant and equipment consist of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
Land,
buildings and constructions EUR |
|
|
Machinery
and
equipment EUR |
|
|
Leasehold
improvements EUR |
|
|
Furniture, fixtures and other equipment EUR |
|
|
Total
EUR |
|
|
|
Cost |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, January 1, 2013 |
|
|
847,033 |
|
|
|
690,759 |
|
|
|
214,852 |
|
|
|
336,775 |
|
|
|
2,089,419 |
|
Acquisitions through business combinations |
|
|
71,040 |
|
|
|
48,965 |
|
|
|
1,057 |
|
|
|
3,246 |
|
|
|
124,308 |
|
Additions |
|
|
123,646 |
|
|
|
171,895 |
|
|
|
11,543 |
|
|
|
32,168 |
|
|
|
339,252 |
|
Disposals |
|
|
(14 |
) |
|
|
(90,244 |
) |
|
|
(336 |
) |
|
|
(1,925 |
) |
|
|
(92,519 |
) |
Effect of changes in exchange rates |
|
|
(6,605 |
) |
|
|
(17,490 |
) |
|
|
(1,464 |
) |
|
|
(1,783 |
) |
|
|
(27,342 |
) |
Balance, December 31, 2013 |
|
|
1,035,100 |
|
|
|
803,885 |
|
|
|
225,652 |
|
|
|
368,481 |
|
|
|
2,433,118 |
|
Additions |
|
|
222,670 |
|
|
|
191,705 |
|
|
|
6,137 |
|
|
|
31,750 |
|
|
|
452,262 |
|
Disposals |
|
|
(1,557 |
) |
|
|
(222,836 |
) |
|
|
(1,208 |
) |
|
|
(100,485 |
) |
|
|
(326,086 |
) |
Effect of changes in exchange rates |
|
|
13,275 |
|
|
|
26,955 |
|
|
|
1,229 |
|
|
|
3,344 |
|
|
|
44,803 |
|
Balance, December 31, 2014 |
|
|
1,269,488 |
|
|
|
799,709 |
|
|
|
231,810 |
|
|
|
303,090 |
|
|
|
2,604,097 |
|
|
|
|
|
|
|
Accumulated depreciation and impairment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, January 1, 2013 |
|
|
187,272 |
|
|
|
417,982 |
|
|
|
158,778 |
|
|
|
295,464 |
|
|
|
1,059,496 |
|
Depreciation |
|
|
47,791 |
|
|
|
114,677 |
|
|
|
12,415 |
|
|
|
22,170 |
|
|
|
197,053 |
|
Impairment charges |
|
|
3,619 |
|
|
|
7,997 |
|
|
|
1,352 |
|
|
|
89 |
|
|
|
13,057 |
|
Disposals |
|
|
(5 |
) |
|
|
(42,625 |
) |
|
|
(266 |
) |
|
|
(1,282 |
) |
|
|
(44,178 |
) |
Effect of changes in exchange rates |
|
|
(1,116 |
) |
|
|
(8,068 |
) |
|
|
(422 |
) |
|
|
(544 |
) |
|
|
(10,150 |
) |
Balance, December 31, 2013 |
|
|
237,561 |
|
|
|
489,963 |
|
|
|
171,857 |
|
|
|
315,897 |
|
|
|
1,215,278 |
|
Depreciation |
|
|
52,242 |
|
|
|
112,090 |
|
|
|
20,936 |
|
|
|
24,236 |
|
|
|
209,504 |
|
Impairment charges |
|
|
7,403 |
|
|
|
2,983 |
|
|
|
- |
|
|
|
142 |
|
|
|
10,528 |
|
Disposals |
|
|
(90 |
) |
|
|
(190,154 |
) |
|
|
(1,204 |
) |
|
|
(100,450 |
) |
|
|
(291,898 |
) |
Effect of changes in exchange rates |
|
|
(1,017 |
) |
|
|
11,950 |
|
|
|
654 |
|
|
|
1,575 |
|
|
|
13,162 |
|
Balance, December 31, 2014 |
|
|
296,099 |
|
|
|
426,832 |
|
|
|
192,243 |
|
|
|
241,400 |
|
|
|
1,156,574 |
|
|
|
|
|
|
|
Carrying amount |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2013 |
|
|
797,539 |
|
|
|
313,922 |
|
|
|
53,795 |
|
|
|
52,584 |
|
|
|
1,217,840 |
|
December 31, 2014 |
|
|
973,389 |
|
|
|
372,877 |
|
|
|
39,567 |
|
|
|
61,690 |
|
|
|
1,447,523 |
|
|
|
|
|
|
ASML STATUTORY REPORT 2014 |
|
82 |
|
|
As of December 31, 2014, the carrying amount includes assets under construction for land, buildings and
constructions of EUR 201.1 million (2013: EUR 49.3 million), machinery and equipment of EUR 30.2 million (2013: EUR 35.9 million), leasehold improvements of EUR 2.8 million (2013: EUR 1.0 million) and furniture, fixtures and other
equipment of EUR 11.2 million (2013: EUR 13.9 million). As of December 31, 2014, the carrying amount of land amounts to EUR 82.9 million (2013: EUR 79.2 million).
The majority of the additions in 2014 in property, plant and equipment relate to the further expansion of EUV production facilities for our newest technology.
The majority of additions in 2014 in machinery and equipment mainly relates to operating leases to customers, prototypes, evaluation and training systems
which are similar to those that ASML sells in its ordinary course of business. These systems are capitalized under property, plant and equipment because they are held for own use, for operating lease and for evaluation purposes. These are recorded
at cost and depreciated over their expected useful life taking into consideration their residual value. From the time that these assets are no longer held for use but intended for sale in the ordinary course of business, they are reclassified from
property, plant and equipment to inventory at the lower of their carrying value or fair market value. Since the transfers between inventory and property, plant and equipment are non-cash events, these are not reflected in the Consolidated Statement
of Cash Flows. An amount of EUR 95.5 million (2013: EUR 115.9 million) of the additions relates to non-cash transfers from inventory and an amount of EUR 1.5 million (2013: EUR 12.5 million decrease) relates to other non-cash
movements (mainly capital expenditures not yet paid as at December 31, 2014). An amount of EUR 30.7 million (2013: EUR 48.2 million) of the disposals relates to non-cash transfers to inventory. When sold, the proceeds and cost of these
systems are recorded as net sales and cost of sales, respectively, identical to the treatment of other sales transactions. The cost of sales for these systems includes the inventory value and the additional costs of refurbishing (materials and
labor).
As of December 31, 2014, the carrying amount of machinery and equipment includes an amount of EUR 68.6 million with respect to
evaluation and operating lease systems (2013: EUR 36.7 million).
The majority of the disposals during 2014 relate to fully depreciated
long-lived assets, in general tooling and other fixtures, which have been retired from active use.
During 2014, we recorded depreciation charges
of EUR 209.5 million (2013: EUR 197.1 million) of which we recorded EUR 153.9 million (2013: EUR 144.1 million) in cost of sales, EUR 36.3 million (2013 EUR 35.0 million) in R&D costs and EUR 19.3 million (2013: EUR 18.0
million) in SG&A costs.
Special Purpose Entity
The carrying amount of land, buildings and constructions includes an amount of EUR 29.5 million (2013: EUR 30.9 million) relating to our headquarters in Veldhoven, the Netherlands, which is owned by
Koppelenweg II B.V., a SPE.
As of 2003, we are leasing the Veldhoven headquarters for a period of 15 years (starting in 2003) from
an entity (lessor) that was incorporated by the SPE Shareholders. The lessors equity amounts to EUR 1.9 million and has not changed since 2003.
The SPE shareholders each granted a loan of EUR 11.6 million and a fourth bank granted a loan of EUR 12.3 million (EUR 47.1 million in total) to the parent of the lessor. ASML provided the
parent of the lessor with a subordinated loan of EUR 5.4 million and has a purchase option that is exercisable either at the end of the lease in 2018, at a price of EUR 24.5 million, or during the lease at a price equal to the book value
of the assets. The total assets of the lessor entity amounted to EUR 54.5 million at inception of the lease. The entity is determined to be a SPE because the equity investors do not have sufficient equity at risk for the legal entity to finance
its activities without sufficient additional subordinated support.
The primary purpose for which the SPE was created was to provide ASML with
use of the building for 15 years, where ASML does not retain substantially all the risks and rewards from changes in value of the building. The main activities of the entity are to rent, re-market and ultimately sell the building that is owned by
the SPE. The economic performance of the SPE is most significantly impacted by the ability of the lessee (ASML) to exercise the purchase option at any time during the lease term, and thus we could potentially benefit from increases in the fair value
of the building.
While the debt holders have an interest, and may absorb losses, and the equity holders have an interest and may receive
benefits, they do not have the power to direct activities that most significantly impact the entitys economic performance and therefore, cannot be the primary beneficiary. Through the pre-determined price of the call option ASML has the power
over the SPE, therefore only ASML meets both the power and losses/benefit criterion and consolidates the SPE.
|
|
|
|
|
ASML STATUTORY REPORT 2014 |
|
83 |
|
|
10. Goodwill
Changes in goodwill are summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31
(in thousands) |
|
2014 EUR |
|
|
2013 EUR |
|
|
|
|
|
|
Cost |
|
|
|
|
|
|
|
|
Balance, January 1 |
|
|
2,111,296 |
|
|
|
158,067 |
|
Acquisition through business combinations |
|
|
- |
|
|
|
2,073,311 |
|
Effect of changes in exchange rates |
|
|
267,125 |
|
|
|
(120,082) |
|
|
|
|
Balance, December 31
|
|
|
2,378,421 |
|
|
|
2,111,296 |
|
Goodwill is tested for impairment annually at the start of the fourth quarter and whenever events or changes in
circumstances indicate that the carrying amount of the goodwill may not be recoverable.
Goodwill mainly relates to the acquisition of Cymer.
Within ASML we have identified two CGUs, which are CGU ASML and CGU CLS.
As of December 31, 2014 the goodwill allocated to CGU ASML amounts
to EUR 1,933.5 million (2013: EUR 1,717.2 million) and for CGU CLS this amounts to EUR 444.9 million (2013: EUR 394.1 million).
For
2014 and 2013, the Recoverable Amounts of the CGUs are based on value in use calculations. The value in use calculations were performed by discounting the future cash flows generated from the continuing use of the CGUs. Cash flows beyond the
forecasted period of five years have been extrapolated using a 0 percent growth rate.
The pre-tax WACC used to determine the expected discounted
future cash flows is 10.5 percent for CGU ASML and 11.8 percent for CGU CLS.
Based on the recoverability testing during the annual goodwill
impairment test, we believe that the Recoverable Amounts of the CGUs substantially exceed their carrying amounts, and therefore goodwill was not impaired as of December 31, 2014.
|
|
|
|
|
ASML STATUTORY REPORT 2014 |
|
84 |
|
|
11. Other Intangible Assets
Other intangible assets consist of development expenditures, brands, intellectual property, developed technology, customer relationships, and other. Development expenditures, brands, developed technology,
customer relationships, and other were partly obtained from the acquisitions of Cymer (2013) and Brion (2007).
Other intangible assets
consist of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
Development expenditures EUR |
|
|
Brands EUR |
|
|
Intellectual
property
EUR |
|
|
Developed technology EUR |
|
|
Customer relationships EUR |
|
|
Other
EUR |
|
|
Total
EUR |
|
Cost |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, January 1, 2013 |
|
|
1,115,904 |
|
|
|
- |
|
|
|
54,908 |
|
|
|
48,997 |
|
|
|
8,733 |
|
|
|
2,231 |
|
|
|
1,230,773 |
|
Acquisitions through business combinations |
|
|
147,485 |
|
|
|
13,280 |
|
|
|
- |
|
|
|
427,797 |
|
|
|
162,980 |
|
|
|
- |
|
|
|
751,542 |
|
Additions |
|
|
323,672 |
|
|
|
- |
|
|
|
4,000 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
327,672 |
|
Effect of changes in exchange rates |
|
|
(14,055) |
|
|
|
(726) |
|
|
|
- |
|
|
|
(23,380) |
|
|
|
(8,907) |
|
|
|
- |
|
|
|
(47,068) |
|
|
|
Balance, December 31, 2013 |
|
|
1,573,006 |
|
|
|
12,554 |
|
|
|
58,908 |
|
|
|
453,414 |
|
|
|
162,806 |
|
|
|
2,231 |
|
|
|
2,262,919 |
|
Additions |
|
|
345,158 |
|
|
|
- |
|
|
|
2,952 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
348,110 |
|
Effect of changes in exchange rates |
|
|
30,359 |
|
|
|
1,621 |
|
|
|
- |
|
|
|
52,228 |
|
|
|
19,897 |
|
|
|
- |
|
|
|
104,105 |
|
|
|
Balance, December 31, 2014 |
|
|
1,948,523 |
|
|
|
14,175 |
|
|
|
61,860 |
|
|
|
505,642 |
|
|
|
182,703 |
|
|
|
2,231 |
|
|
|
2,715,134 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated amortization |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, January 1, 2013 |
|
|
664,919 |
|
|
|
- |
|
|
|
48,028 |
|
|
|
48,317 |
|
|
|
6,369 |
|
|
|
2,212 |
|
|
|
769,845 |
|
Amortization |
|
|
92,149 |
|
|
|
382 |
|
|
|
2,135 |
|
|
|
18,694 |
|
|
|
6,332 |
|
|
|
19 |
|
|
|
119,711 |
|
Effect of changes in exchange rates |
|
|
(1,426) |
|
|
|
(13) |
|
|
|
- |
|
|
|
(596) |
|
|
|
(174) |
|
|
|
- |
|
|
|
(2,209) |
|
|
|
Balance, December 31, 2013 |
|
|
755,642 |
|
|
|
369 |
|
|
|
50,163 |
|
|
|
66,415 |
|
|
|
12,527 |
|
|
|
2,231 |
|
|
|
887,347 |
|
Amortization |
|
|
98,415 |
|
|
|
649 |
|
|
|
2,649 |
|
|
|
30,593 |
|
|
|
9,990 |
|
|
|
- |
|
|
|
142,296 |
|
Effect of changes in exchange rates |
|
|
8,781 |
|
|
|
107 |
|
|
|
- |
|
|
|
5,039 |
|
|
|
1,466 |
|
|
|
- |
|
|
|
15,393 |
|
|
|
Balance, December 31, 2014 |
|
|
862,838 |
|
|
|
1,125 |
|
|
|
52,812 |
|
|
|
102,047 |
|
|
|
23,983 |
|
|
|
2,231 |
|
|
|
1,045,036 |
|
|
|
|
|
|
|
|
|
Carrying amount |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2013 |
|
|
817,364 |
|
|
|
12,185 |
|
|
|
8,745 |
|
|
|
386,999 |
|
|
|
150,279 |
|
|
|
- |
|
|
|
1,375,572 |
|
December 31, 2014
|
|
|
1,085,685 |
|
|
|
13,050 |
|
|
|
9,048 |
|
|
|
403,595 |
|
|
|
158,720 |
|
|
|
- |
|
|
|
1,670,098 |
|
Development expenditures mainly relate to the capitalized expenditures regarding our core programs: EUV, immersion and
Holistic Lithography.
Intellectual property relates to licenses and patents purchased from third parties. During 2014, we acquired intellectual
property from third parties for an amount of EUR 3.0 million (2013: EUR 4.0 million).
During 2014, we recorded amortization charges of
EUR 142.3 million (2013: EUR 119.7 million) which were recorded in cost of sales for EUR 140.6 million (2013: EUR 118.2 million) and in R&D costs for EUR 1.7 million (2013: EUR 1.5 million).
As of December 31, 2014, the other intangible assets not yet available for use as included in the development expenditures amount to
EUR 926.0 million (2013: EUR 573.3 million) and are allocated to CGU ASML. The increase in other intangible assets not yet available for use mainly relates to EUV.
During 2014 and 2013, we did not record any impairment charges for other intangible assets.
During
2014, we capitalized borrowing costs for EUR 11.6 million, using a capitalization rate of 2.00 percent (2013: capitalized borrowing costs EUR 8.1 million; capitalization rate used 2.00 percent).
|
|
|
|
|
ASML STATUTORY REPORT 2014 |
|
85 |
|
|
As at December 31, 2014, the estimated amortization expenses for other intangible assets, for the next
five years and thereafter, are as follows:
|
|
|
|
|
|
|
(in
thousands) |
|
EUR |
|
2015 |
|
|
112,206 |
|
2016 |
|
|
272,646 |
|
2017 |
|
|
265,083 |
|
2018 |
|
|
216,634 |
|
2019 |
|
|
205,167 |
|
Thereafter |
|
|
598,362 |
|
|
|
Total
|
|
|
1,670,098 |
|
12. Financial Instruments by Category
The accounting policies for financial instruments have been applied to the line items below and represent the fair value of these financial instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2014
(in thousands) |
|
Financial assets at fair value through profit or loss EUR |
|
|
Available for
sale financial assets EUR |
|
|
Loans and receivables EUR |
|
|
Total
EUR |
|
|
|
|
|
|
Assets as per statement of financial position date |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative financial instruments |
|
|
153,803 |
|
|
|
- |
|
|
|
- |
|
|
|
153,803 |
|
Accounts receivable |
|
|
- |
|
|
|
- |
|
|
|
1,052,504 |
|
|
|
1,052,504 |
|
Finance receivables |
|
|
- |
|
|
|
- |
|
|
|
251,348 |
|
|
|
251,348 |
|
Other non-current and current assets |
|
|
- |
|
|
|
- |
|
|
|
129,870 |
|
|
|
129,870 |
|
Short-term investments |
|
|
- |
|
|
|
334,864 |
|
|
|
- |
|
|
|
334,864 |
|
Cash and cash equivalents |
|
|
426,742 |
|
|
|
- |
|
|
|
1,992,745 |
|
|
|
2,419,487 |
|
|
|
Total |
|
|
580,545 |
|
|
|
334,864 |
|
|
|
3,426,467 |
|
|
|
4,341,876 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2014
(in thousands) |
|
Financial liabilities at fair value through profit or loss
EUR |
|
|
Other financial liabilities EUR |
|
|
Total
EUR |
|
|
|
|
|
Liabilities as per statement of financial position date |
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt1 |
|
|
- |
|
|
|
1,154,137 |
|
|
|
1,154,137 |
|
Derivative financial instruments |
|
|
67,755 |
|
|
|
- |
|
|
|
67,755 |
|
Accrued and other liabilities |
|
|
- |
|
|
|
713,212 |
|
|
|
713,212 |
|
Accounts payable |
|
|
- |
|
|
|
496,236 |
|
|
|
496,236 |
|
|
|
Total |
|
|
67,755 |
|
|
|
2,363,585 |
|
|
|
2,431,340 |
|
|
|
1 |
Long-term debt includes our Eurobonds. Because the Eurobonds serve as hedged item in a fair value hedge relationship, the carrying amount is adjusted for fair value
changes as a result of changes in market interest rates. See note 20. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2013
(in thousands) |
|
Financial assets at fair value through profit or loss
EUR |
|
|
Available for sale financial assets EUR |
|
|
Loans and receivables EUR |
|
|
Total
EUR |
|
|
|
|
|
|
Assets as per statement of financial position date |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative financial instruments |
|
|
71,620 |
|
|
|
- |
|
|
|
- |
|
|
|
71,620 |
|
Accounts receivable |
|
|
- |
|
|
|
- |
|
|
|
878,321 |
|
|
|
878,321 |
|
Finance receivables |
|
|
- |
|
|
|
- |
|
|
|
296,489 |
|
|
|
296,489 |
|
Other non-current and current assets |
|
|
- |
|
|
|
- |
|
|
|
104,188 |
|
|
|
104,188 |
|
Short-term investments |
|
|
- |
|
|
|
679,884 |
|
|
|
- |
|
|
|
679,884 |
|
Cash and cash equivalents |
|
|
535,000 |
|
|
|
- |
|
|
|
1,795,694 |
|
|
|
2,330,694 |
|
|
|
Total |
|
|
606,620 |
|
|
|
679,884 |
|
|
|
3,074,692 |
|
|
|
4,361,196 |
|
|
|
|
|
|
|
|
ASML STATUTORY REPORT 2014 |
|
86 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2013
(in thousands) |
|
Financial liabilities at fair value through profit or loss
EUR |
|
|
Other financial liabilities EUR |
|
|
Total
EUR |
|
|
|
|
|
Liabilities as per statement of financial position date |
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt1 |
|
|
- |
|
|
|
1,070,141 |
|
|
|
1,070,141 |
|
Derivative financial instruments |
|
|
11,652 |
|
|
|
- |
|
|
|
11,652 |
|
Accrued and other liabilities |
|
|
- |
|
|
|
699,580 |
|
|
|
699,580 |
|
Accounts payable |
|
|
- |
|
|
|
625,870 |
|
|
|
625,870 |
|
|
|
Total |
|
|
11,652 |
|
|
|
2,395,591 |
|
|
|
2,407,243 |
|
|
|
1 |
Long-term debt includes our Eurobonds. Because the Eurobonds serve as hedged item in a fair value hedge relationship, the carrying amount is adjusted for fair value
changes as a result of changes in market interest rates. See note 20. |
See Note 5 for the fair value measurement hierarchy.
The carrying amounts of the accounts receivable, finance receivables and other assets approximate their fair value.
The amounts reflected above represent our maximum exposure to credit risk for financial assets. See Note 6 for credit risk management in relation to our
financial assets.
13. Derivative Financial Instruments
The derivative financial instruments consist of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014 |
|
|
2013 |
|
As of December 31 (in thousands) |
|
|
|
Assets EUR |
|
|
Liabilities EUR |
|
|
|
|
Assets EUR |
|
|
Liabilities EUR |
|
|
|
|
|
|
|
|
|
|
Interest rate swaps - cash flow hedges |
|
|
|
|
- |
|
|
|
3,586 |
|
|
|
|
|
- |
|
|
|
3,598 |
|
Interest rate swaps - fair value hedges |
|
|
|
|
141,953 |
|
|
|
- |
|
|
|
|
|
54,983 |
|
|
|
- |
|
Forward foreign exchange contracts - cash flow hedges |
|
|
|
|
8,777 |
|
|
|
36 |
|
|
|
|
|
3 |
|
|
|
6,039 |
|
Forward foreign exchange contracts - other hedges (no hedge accounting) |
|
|
|
|
3,073 |
|
|
|
64,133 |
|
|
|
|
|
16,634 |
|
|
|
2,015 |
|
|
|
Total |
|
|
|
|
153,803 |
|
|
|
67,755 |
|
|
|
|
|
71,620 |
|
|
|
11,652 |
|
|
|
|
|
|
|
|
Less non-current portion: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate swaps - cash flow hedges |
|
|
|
|
- |
|
|
|
2,808 |
|
|
|
|
|
- |
|
|
|
2,608 |
|
Interest rate swaps - fair value hedges |
|
|
|
|
115,546 |
|
|
|
- |
|
|
|
|
|
30,777 |
|
|
|
- |
|
|
|
Total non-current portion |
|
|
|
|
115,546 |
|
|
|
2,808 |
|
|
|
|
|
30,777 |
|
|
|
2,608 |
|
|
|
|
|
|
|
|
|
|
Total current portion
|
|
|
|
|
38,257 |
|
|
|
64,947 |
|
|
|
|
|
40,843 |
|
|
|
9,044 |
|
The fair value part of a hedging derivative financial instruments that has a remaining term of 12 months or less after
Statement of Financial Position date is classified as current asset or liability. When the fair value part of a hedging derivative has a term of more than 12 months after Statement of Financial Position date, it is classified as non-current asset or
liability.
Foreign Exchange Contracts
The notional principal amounts of the outstanding forward foreign exchange contracts in the main currencies U.S. dollar, Japanese yen and Taiwanese dollar at December 31, 2014 are USD
958.0 million, JPY 44.8 billion and TWD 6.2 billion (2013: USD 1,144.0 million, JPY 2.2 billion and TWD 2.7 billion).
The hedged
highly probable forecasted transactions denominated in foreign currency are expected to occur at various dates during the coming 12 months. Gains and losses recognized in OCI on forward foreign exchange contracts as of December 31, 2014 will be
recognized in the Consolidated Statement of Profit or Loss in the period during which the hedged forecasted transactions affect the Consolidated Statement of Profit or Loss.
In 2014, we recognized a net amount of EUR 6.7 million loss (2013: EUR 2.3 million gain) in the Consolidated Statement of Profit or Loss resulting from effective cash flow hedges for forecasted
sales and purchase transactions that occurred in the year. Furthermore, we recognized a net amount of EUR 119.3 million loss in the Consolidated Statement of Profit or Loss resulting from derivative financial instruments measured at fair value
through profit or loss (2013: EUR 62.5 million gain).
|
|
|
|
|
ASML STATUTORY REPORT 2014 |
|
87 |
|
|
Interest Rate Swaps
The notional principal amount of the outstanding interest rate swap contracts as of December 31, 2014 was EUR 1,013.1 million (2013: EUR 1,013.1 million).
14. Other Assets
Other current assets consist
of the following:
|
|
|
|
|
|
|
|
|
As of
December 31 (in thousands) |
|
2014
EUR |
|
|
2013
EUR |
|
|
|
|
|
|
Advance payments to Zeiss |
|
|
69,307 |
|
|
|
99,415 |
|
Prepaid expenses |
|
|
103,278 |
|
|
|
54,716 |
|
Operations to be invoiced |
|
|
40,912 |
|
|
|
8,114 |
|
VAT |
|
|
41,121 |
|
|
|
67,381 |
|
Other assets |
|
|
39,012 |
|
|
|
20,591 |
|
|
|
|
|
|
Other current assets |
|
|
293,630 |
|
|
|
250,217 |
|
|
|
|
Zeiss is our sole supplier of main optical systems (lenses, mirrors, collectors and other critical optical components) and,
from time to time, receives non-interest bearing advance payments from us that support Zeiss work-in-process, thereby securing lens and optical module deliveries to us. Amounts owed under these advance payments are settled through future lens
or EUV optical module deliveries which explains the decrease in 2014 compared to 2013.
The increase in prepaid expenses in 2014 mainly relates
to prepayments in relation to our joint development projects with one of our research partners.
Other non-current assets consist of the
following:
|
|
|
|
|
|
|
|
|
As of
December 31 (in thousands) |
|
2014
EUR |
|
|
2013
EUR |
|
|
|
|
|
|
Advance payments to Zeiss |
|
|
285,659 |
|
|
|
224,123 |
|
Compensation plan assets1 |
|
|
26,172 |
|
|
|
20,174 |
|
Prepaid expenses |
|
|
6,525 |
|
|
|
10,950 |
|
Subordinated loan granted to lessor in respect of Veldhoven headquarters2 |
|
|
5,445 |
|
|
|
5,445 |
|
Other |
|
|
5,473 |
|
|
|
7,090 |
|
|
|
|
|
|
Other non-current assets |
|
|
329,274 |
|
|
|
263,353 |
|
|
|
|
1 |
For further details on compensation plan assets see Note 24. |
2 |
For further details on loan granted to lessor in respect of Veldhoven headquarters see Note 9. |
The increase in the advance payments to Zeiss in 2014 compared to 2013 is mainly driven by a prepayment under an EUV agreement.
The carrying amount of the non-current and current other assets approximates the fair value.
15.
Inventories
Inventories consist of the following:
|
|
|
|
|
|
|
|
|
As of
December 31 (in thousands) |
|
2014
EUR |
|
|
2013
EUR |
|
|
|
|
|
|
Raw materials |
|
|
456,685 |
|
|
|
438,853 |
|
Work-in-process |
|
|
1,477,041 |
|
|
|
1,549,119 |
|
Finished products |
|
|
927,493 |
|
|
|
666,648 |
|
|
|
|
Inventories, gross |
|
|
2,861,219 |
|
|
|
2,654,620 |
|
Allowance for obsolescence and/or lower market value |
|
|
(311,382) |
|
|
|
(261,598) |
|
|
|
|
|
|
Inventories, net
|
|
|
2,549,837 |
|
|
|
2,393,022 |
|
|
|
|
|
|
ASML STATUTORY REPORT 2014 |
|
88 |
|
|
The increase in finished products in 2014 compared to 2013 is mainly caused by a change in products towards
more high-end system types (NXT:1965Ci and NXT:1970Ci) and the build up of spare parts to service our NXE:3100 and NXE:3300B systems.
A summary
of activity in the allowance for obsolescence and/or lower market value is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31
(in thousands) |
|
2014 EUR |
|
|
2013 EUR |
|
|
|
|
|
|
Balance at beginning of year |
|
|
(261,598) |
|
|
|
(267,366) |
|
Addition for the year |
|
|
(162,821) |
|
|
|
(164,852) |
|
Effect of changes in exchange rates |
|
|
(8,848) |
|
|
|
2,532 |
|
Utilization of the provision |
|
|
121,885 |
|
|
|
168,088 |
|
|
|
|
Balance at end of year
|
|
|
(311,382) |
|
|
|
(261,598) |
|
In 2014, the addition for the year is recorded in cost of sales EUR 146.3 million and in R&D costs EUR
16.5 million (2013: cost of sales EUR 155.4 million and R&D costs EUR 9.5 million). The 2014 addition for the year mainly related to inventory items which ceased to be used due to technological developments and design changes which
resulted in obsolescence of certain parts.
Utilization of the provision mainly relates to the sale and scrapping of obsolete inventories. In
2014 and 2013 ASML made insignificant profit on the sale of inventories that had been previously written down.
The cost of inventories
recognized as costs and included in cost of sales amounted to EUR 1,980.0 million (2013: EUR 2,131.3 million).
16. Finance Receivables
Finance receivables consist of receivables in relation to finance leases. The following table lists the components of the finance receivables
as of December 31, 2014 and 2013:
|
|
|
|
|
|
|
|
|
As of
December 31 (in thousands) |
|
2014
EUR |
|
|
2013
EUR |
|
|
|
|
|
|
Finance receivables, gross |
|
|
256,703 |
|
|
|
302,977 |
|
Unearned interest |
|
|
(5,355) |
|
|
|
(6,488) |
|
|
|
Finance receivables, net |
|
|
251,348 |
|
|
|
296,489 |
|
Current portion of finance receivables, gross |
|
|
198,803 |
|
|
|
254,227 |
|
Current portion of unearned interest |
|
|
(2,716) |
|
|
|
(3,755) |
|
|
|
Non-current portion of finance
receivables, net |
|
|
55,261 |
|
|
|
46,017 |
|
The decrease in finance receivables as of December 31, 2014 compared to December 31, 2013 was caused by a change
in products, lower number of high-end system types included at the end of 2014 compared to 2013.
As of December 31, 2014 and 2013, the
minimum lease payments and present value of minimum lease payments is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Minimum lease
payments |
|
|
Present value of minimum lease payments |
|
As of December 31 (in thousands) |
|
2014 EUR |
|
|
2013 EUR |
|
|
2014 EUR |
|
|
2013 EUR |
|
|
|
|
|
|
|
|
Not later than one year |
|
|
198,803 |
|
|
|
254,227 |
|
|
|
196,087 |
|
|
|
250,472 |
|
Later than one year and not later than five years |
|
|
57,900 |
|
|
|
48,750 |
|
|
|
55,261 |
|
|
|
46,017 |
|
|
|
|
|
|
256,703 |
|
|
|
302,977 |
|
|
|
251,348 |
|
|
|
296,489 |
|
Less: unearned interest |
|
|
(5,355) |
|
|
|
(6,488) |
|
|
|
n/a |
|
|
|
n/a |
|
|
|
Present value of minimum lease payments
receivable |
|
|
251,348 |
|
|
|
296,489 |
|
|
|
251,348 |
|
|
|
296,489 |
|
We perform ongoing credit evaluations on our customers financial condition. We periodically review whether a provision
for credit losses is needed by considering factors such as historical payment experience, credit quality, the aging of the finance receivables balances, and current economic conditions that may affect a customers ability to pay. In 2014 and
2013 we did not record any expected credit losses from finance receivables. As of December 31, 2014, the finance receivables were neither past due nor impaired.
|
|
|
|
|
ASML STATUTORY REPORT 2014 |
|
89 |
|
|
17. Accounts Receivable
Accounts receivable consist of the following:
|
|
|
|
|
|
|
|
|
As of December 31 (in thousands) |
|
2014 EUR |
|
|
2013 EUR |
|
|
|
|
Accounts receivable, gross |
|
|
1,054,574 |
|
|
|
880,169 |
|
Allowance for doubtful receivables |
|
|
(2,070) |
|
|
|
(1,848) |
|
|
|
|
Accounts receivable, net
|
|
|
1,052,504 |
|
|
|
878,321 |
|
The increase in accounts receivable as of December 31, 2014 compared to December 31, 2013 was mainly caused by a
change in products towards more high-end system types.
The carrying amount of the accounts receivable approximates the fair value. We perform
ongoing credit evaluations on our customers financial condition. We periodically review whether a provision for credit losses is needed by considering factors such as historical payment experience, credit quality, aging of the accounts
receivable balances, and current economic conditions that may affect a customers ability to pay.
The main part of the carrying value of
accounts receivable consists of euro balances.
Accounts receivable are impaired and provided for on an individual basis. As of December 31,
2014, accounts receivable of EUR 67.1 million (2013: EUR 89.5 million) were past due but not impaired. These balances are still considered to be recoverable because they relate to customers for whom there is no recent history of default and
there has not been a significant change in credit quality. The table below shows the ageing analysis of the accounts receivable that are up to three months past due and over three months past due. Accounts receivable are past due when the payment
term has expired.
|
|
|
|
|
|
|
|
|
As of December 31 (in thousands) |
|
2014 EUR |
|
|
2013 EUR |
|
|
|
|
Up to three months past due |
|
|
54,350 |
|
|
|
81,312 |
|
Over three months past due |
|
|
14,829 |
|
|
|
10,065 |
|
|
|
|
|
|
Total past due
|
|
|
69,179 |
|
|
|
91,377 |
|
We provided extended payment terms to some of our customers. The average days outstanding increased to 66 days in 2014 from
58 days in 2013.
Movements of the allowance for doubtful receivables are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
Year
ended December 31 (in thousands) |
|
2014
EUR |
|
|
2013
EUR |
|
|
|
|
Balance at beginning of year |
|
|
(1,848) |
|
|
|
(2,071) |
|
Addition for the
year1 |
|
|
(133) |
|
|
|
(1,062) |
|
Effect of changes in exchange rates |
|
|
(98) |
|
|
|
128 |
|
Utilization of the provision |
|
|
9 |
|
|
|
1,157 |
|
|
|
|
|
|
Balance at end of year
|
|
|
(2,070) |
|
|
|
(1,848) |
|
1 |
The addition for the year is recorded in the cost of sales. |
In 2014 and 2013, we did not record any expected credit losses for accounts receivable on system sales.
18. Cash and Cash Equivalents and Short-term Investments
Cash and cash equivalents at December 31, 2014 include deposits with financial institutions that have good credit ratings and with the Dutch government of EUR 1,200.0 million (2013: EUR 853.5
million), investments in AAAm-rated money market funds that invest in debt securities of financial institutions that have good credit ratings and governments of EUR 426.7 million (2013: EUR 535.0 million) and interest-bearing bank accounts of
EUR 792.8 million (2013: EUR 942.2 million). Our cash and cash equivalents are predominantly denominated in euros and partly in U.S. dollars.
|
|
|
|
|
ASML STATUTORY REPORT 2014 |
|
90 |
|
|
Cash and cash equivalents have insignificant interest rate risk and remaining maturities of three months or
less at the date of acquisition. Except for an amount of EUR 5.1 million, no restrictions on usage of cash and cash equivalents exist. The carrying amount of these assets approximates their fair value.
Short-term investments have insignificant interest rate risk and remaining maturities longer than three months but less than one year at the date of
acquisition.
Short-term investments (classified as available for sale securities) consist of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of
December 31, 2014 (in thousands) |
|
Cost basis |
|
|
Unrealized Gains |
|
|
Unrealized Losses |
|
|
Recorded Basis |
|
|
|
|
|
|
Dutch Treasury Certificates |
|
|
334,864 |
|
|
|
- |
|
|
|
- |
|
|
|
334,864 |
|
Deposits |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
Total
|
|
|
334,864 |
|
|
|
- |
|
|
|
- |
|
|
|
334,864 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of
December 31, 2013 (in thousands) |
|
Cost basis |
|
|
Unrealized Gains |
|
|
Unrealized Losses |
|
|
Recorded Basis |
|
|
|
|
|
|
Dutch Treasury Certificates |
|
|
304,884 |
|
|
|
- |
|
|
|
- |
|
|
|
304,884 |
|
Deposits |
|
|
375,000 |
|
|
|
- |
|
|
|
- |
|
|
|
375,000 |
|
|
|
|
|
|
|
|
Total
|
|
|
679,884 |
|
|
|
- |
|
|
|
- |
|
|
|
679,884 |
|
19. Equity
ASMLs authorized share capital amounts to EUR 126,000,000 and is divided into:
|
|
700,000,000 Cumulative Preference Shares with a nominal value of EUR 0.09 each; |
|
|
699,999,000 Ordinary Shares with a nominal value of EUR 0.09 each; and |
|
|
9,000 Ordinary Shares B with a nominal value of EUR 0.01 each. |
As at December 31, 2014, 438,073,643 ordinary shares with a nominal value of EUR 0.09 each were issued and fully paid up, of which 5,138,355 ordinary shares are held by us in treasury. No ordinary
shares B and no cumulative preference shares are issued.
Our BoM has the power to issue ordinary shares and cumulative preference shares insofar
as the BoM has been authorized to do so by the General Meeting of Shareholders (either by means of a resolution or by an amendment to our Articles of Association). The BoM requires approval of the Supervisory Board for such an issue. The
authorization by the General Meeting of Shareholders can only be granted for a certain period not exceeding five years and may be extended for no longer than five years on each occasion. In case the General Meeting of Shareholders has not authorized
the BoM to issue shares, the General Meeting of Shareholders shall have the power to issue shares upon the proposal of the BoM, provided that the Supervisory Board has approved such proposal.
Shares Issued as a Result of the Acquisition of Cymer
A subsidiary of ASML and Cymer completed a
merger pursuant to which ASML acquired Cymer on May 30, 2013. As a result of the merger, each share of Cymer common stock outstanding immediately prior to the completion of the merger was converted into the right to receive USD 20.00 in cash
plus 1.1502 ASML ordinary shares. As of December 31, 2014, we have issued 36,468,733 ordinary shares for an aggregate amount of EUR 2,347.0 million in relation to the acquisition of Cymer.
Shares Issued in Relation to Share-based Compensation
We have adopted various share and option plans for our employees. Whenever ordinary shares have to be delivered pursuant to these plans, we typically deliver treasury shares that we purchase in share
buy-back programs for this purpose. Because these treasury shares were no longer available in the course of 2014, we issued new ordinary shares from time to time to meet our delivery obligations under the plans. As of December 31, 2014, we
issued 707,195 ordinary shares with an aggregate fair value of EUR 51.3 million (2013: EUR nil million) in relation to our share (option) plans for our employees. Fair value is determined on the closing price of our ordinary shares at Amsterdam
Euronext at the date of respective issuance.
Synthetic Share Buyback
At the EGM held on September 7, 2012, several changes in the Articles of Association of ASML were adopted, in connection with the synthetic share buyback effectuated in connection with the CCIP.
|
|
|
|
|
ASML STATUTORY REPORT 2014 |
|
91 |
|
|
Consequently, on November 24, 2012, the Articles of Association were amended as follows. Upon the first
amendment, the ordinary shares to be held for the benefit of the participants to the CCIP were converted into ordinary shares M and all other ordinary shares were converted into ordinary shares A. Upon the second amendment, the par value per
ordinary share A was increased from EUR 0.09 to EUR 9.24 at the expense of the share premium reserve. Upon the third amendment, the nominal value per ordinary share A was reduced to an amount of EUR 0.06, by decreasing the nominal value per ordinary
share A by an amount of EUR 9.18, which resulted in a repayment of the same amount per share to holders of ordinary shares into which the ordinary shares A were converted. The fourth amendment provided for the consolidation of the ordinary shares A
through the exchange of each 100 ordinary shares for 77 ordinary shares, resulting in an increase of the nominal value per ordinary share from EUR 0.06 to EUR 0.09, whereby the aggregate difference was booked at the expense of the share premium
reserve. The fifth and last amendment provided for the deletion of the share class M for participants to the CCIP and the share class A for the other shareholders. The ordinary shares M and A were converted thereafter into ordinary shares without a
specific letter mark attached to it.
These amendments in substance constitute a synthetic share buyback in which we effectively repurchased
93,411,216 shares at an average price of EUR 39.91 for a total amount of EUR 3,728.3 million. The difference of EUR 125.6 million between the capital repayment of EUR 3,728.3 million and the net proceeds from issuance of shares of EUR
3,853.9 million relates to the capital repayment on ASMLs treasury shares which were part of the synthetic share buyback.
Shares
Issued in Customer Co-Investment Program
In connection with the CCIP, on September 12, 2012, we issued 62,977,877 ordinary shares to the
Stichting that holds shares on behalf of Intel and 12,595,575 ordinary shares to the Stichting that holds shares on behalf of Samsung and on October 31, 2012, ASML issued 20,992,625 ordinary shares to the Stichting that holds shares on behalf
of TSMC. We received an amount of EUR 3,853.9 million in relation to the shares issued under the CCIP. For further details on our CCIP see Note 36.
Ordinary Shares
Each ordinary share consists of 900 fractional shares. Fractional shares entitle
the holder thereof to a fractional dividend but do not entitle the holder thereof to voting rights. Only those persons who hold shares directly in the share register in the Netherlands, held by us at our address at 5504 DR Veldhoven, de Run 6501,
the Netherlands, or in the New York share register, held by JP Morgan Chase Bank, N.A., P.O. Box 64506, St. Paul, MN 55164-0506, United States, can hold fractional shares. Persons who hold ordinary shares through the deposit system under the Dutch
Securities Bank Giro Transactions Act (Wet giraal effectenverkeer; the Giro Act) maintained by the Dutch central securities depository Euroclear Nederland or through the DTC cannot hold fractional shares. An ordinary share
entitles the holder thereof to cast nine votes in the General Meeting of Shareholders. At our 2014 AGM, the BoM was authorized from April 23, 2014 through October 23, 2015, subject to the approval of the Supervisory Board, to issue shares
and/or rights thereto representing up to a maximum of 5.0 percent of our issued share capital at April 23, 2014, plus an additional 5.0 percent of our issued share capital at April 23, 2014 that may be issued in connection with mergers,
acquisitions and/or (strategic) alliances.
Holders of ASMLs ordinary shares have a preemptive right of subscription, in proportion to the
aggregate nominal amount of the ordinary shares held by them, to any issuance of ordinary shares for cash, which right may be restricted or excluded. Holders of ordinary shares have no pro rata preemptive right of subscription to any ordinary shares
issued for consideration other than cash or ordinary shares issued to employees. If authorized for this purpose by the General Meeting of Shareholders (either by means of a resolution or by an amendment to our Articles of Association), the BoM has
the power subject to approval of the Supervisory Board, to restrict or exclude the preemptive rights of holders of ordinary shares. At our 2014 AGM, our shareholders authorized the BoM through October 23, 2015, subject to approval of the
Supervisory Board, to restrict or exclude preemptive rights of holders of ordinary shares up to a maximum of 10 percent of our issued share capital. At our 2015 AGM, our shareholders will be asked to extend this authority through October 22,
2016.
Ordinary Shares B
In 2012,
the 9,000 ordinary shares B with a nominal value of EUR 0.01 were introduced. Every holder of an ordinary share B is entitled to one-ninth (1/9) of a dividend. Each ordinary share B entitles the holder thereof to cast one vote at the General
Meeting of Shareholders.
|
|
|
|
|
ASML STATUTORY REPORT 2014 |
|
92 |
|
|
Cumulative Preference Shares
In 1998, we granted the Preference Share Option to the Foundation. This option was amended and extended in 2003 and 2007. A third amendment to the option agreement between the Foundation and ASML became
effective on January 1, 2009, to clarify the procedure for the repurchase and cancellation of the preference shares when issued.
The
nominal value of the cumulative preference shares amounts to EUR 0.09 and the number of cumulative preference shares included in the authorized share capital is 700,000,000. A cumulative preference share entitles the holder thereof to cast nine
votes in the General Meeting of Shareholders.
The Foundation may exercise the Preference Share Option in situations where, in the opinion of the
Board of Directors of the Foundation, ASMLs interests, ASMLs business or the interests of ASMLs stakeholders are at stake. This may be the case if a public bid for ASMLs shares has been announced or has been made, or the
justified expectation exists that such a bid will be made without any agreement having been reached in relation to such a bid with ASML. The same may apply if one shareholder, or more shareholders acting in concert, hold a substantial percentage of
ASMLs issued ordinary shares without making an offer or if, in the opinion of the Board of Directors of the Foundation, the (attempted) exercise of the voting rights by one shareholder or more shareholders, acting in concert, is materially in
conflict with ASMLs interests, ASMLs business or ASMLs stakeholders.
The objectives of the Foundation are to look after the
interests of ASML and of the enterprises maintained by ASML and of the companies which are affiliated in a group with ASML, in such a way that the interests of ASML, of those enterprises and of all parties concerned are safeguarded in the best
possible way, and influences in conflict with these interests which might affect the independence or the identity of ASML and those companies are deterred to the best of the Foundations ability, and everything related to the above or possibly
conducive thereto. The Foundation seeks to realize its objects by the acquiring and holding of cumulative preference shares in the capital of ASML and by exercising the rights attached to these shares, particularly the voting rights attached to
these shares.
The Preference Share Option gives the Foundation the right to acquire a number of cumulative preference shares as the Foundation
will require, provided that the aggregate nominal value of such number of cumulative preference shares shall not exceed the aggregate nominal value of the ordinary shares that have been issued at the time of exercise of the Preference Share Option
for a subscription price equal to their nominal value. Only one-fourth of the subscription price is payable at the time of initial issuance of the cumulative preference shares, with the other three-fourths of the nominal value only being payable
when we call up this amount. Exercise of the preference share option could effectively dilute the voting power of the outstanding ordinary shares by one-half.
Cancellation and repayment of the issued cumulative preference shares by ASML requires the authorization by the General Meeting of Shareholders of a proposal to do so by the BoM approved by the Supervisory
Board. If the Preference Share Option is exercised and as a result cumulative preference shares are issued, ASML, at the request of the Foundation, will initiate the repurchase or cancellation of all cumulative preference shares held by the
Foundation. In that case ASML is obliged to effect the repurchase and cancellation respectively as soon as possible. A cancellation will have as a result a repayment of the amount paid and exemption from the obligation to pay up on the cumulative
preference shares. A repurchase of the cumulative preference shares can only take place when such shares are fully paid up.
If the Foundation
does not request ASML to repurchase or cancel all cumulative preference shares held by the Foundation within 20 months after issuance of these shares, we will be obliged to convene a General Meeting of Shareholders in order to decide on a repurchase
or cancellation of these shares.
The Foundation is independent of ASML. The Board of Directors of the Foundation comprises four independent
members from the Dutch business and academic communities. The members of the Board of Directors of the Foundation are: Mr. H. Bodt, Mr. M.W. den Boogert, Mr. J.M. de Jong and Mr. A.H. Lundqvist.
|
|
|
|
|
ASML STATUTORY REPORT 2014 |
|
93 |
|
|
Other Reserves
ASML is a company incorporated under Dutch Law. In accordance with the Dutch Civil Code, other reserves consist of legal reserves that have to be established in certain circumstances. The legal reserves
consist of the hedging reserve, the currency translation reserve and the reserve for capitalized development expenditures. Legal reserves are not for distribution to our shareholders. If the currency translation reserve or the hedging reserve has a
negative balance, distributions to our shareholders are restricted to the extent of the negative balance.
Changes in other reserves during 2014
and 2013 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
Hedging reserve EUR |
|
|
Currency
translation reserve EUR |
|
|
Reserve for capitalized development expenditures EUR |
|
|
Total
EUR |
|
|
|
|
|
|
|
|
Balance at January 1, 2013 |
|
|
(4,563) |
|
|
|
(96,521) |
|
|
|
450,985 |
|
|
|
349,901 |
|
|
|
|
|
|
Components of statement of comprehensive income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain (loss) on foreign currency translation |
|
|
- |
|
|
|
(122,000) |
|
|
|
- |
|
|
|
(122,000) |
|
Financial instruments, net of taxes: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain (Loss) on derivative financial instruments |
|
|
(5,370) |
|
|
|
- |
|
|
|
- |
|
|
|
(5,370) |
|
Transfers to net income |
|
|
(2,276) |
|
|
|
- |
|
|
|
- |
|
|
|
(2,276) |
|
|
|
|
|
|
Development expenditures |
|
|
- |
|
|
|
- |
|
|
|
231,523 |
|
|
|
231,523 |
|
Currency translation on development expenditures |
|
|
- |
|
|
|
4,570 |
|
|
|
(4,570) |
|
|
|
- |
|
|
|
Balance at December 31, 2013 |
|
|
(12,209) |
|
|
|
(213,951) |
|
|
|
677,938 |
|
|
|
451,778 |
|
|
|
|
|
|
Components of statement of comprehensive income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain (loss) on foreign currency translation |
|
|
- |
|
|
|
254,459 |
|
|
|
- |
|
|
|
254,459 |
|
|
|
|
|
|
Financial instruments, net of taxes: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain (loss) on derivative financial instruments |
|
|
17,375 |
|
|
|
- |
|
|
|
- |
|
|
|
17,375 |
|
Transfers to net income |
|
|
6,691 |
|
|
|
- |
|
|
|
- |
|
|
|
6,691 |
|
|
|
|
|
|
Development expenditures |
|
|
- |
|
|
|
- |
|
|
|
246,743 |
|
|
|
246,743 |
|
Currency translation on development expenditures |
|
|
- |
|
|
|
(21,578) |
|
|
|
21,578 |
|
|
|
- |
|
|
|
Balance at December 31, 2014 |
|
|
11,857 |
|
|
|
18,930 |
|
|
|
946,259 |
|
|
|
977,046 |
|
|
|
|
Exchange rate differences relating to the translation from our foreign subsidiaries into euro are recognized in the currency
translation reserve. Gains and losses on hedging instruments that are designated as hedges of net investments in foreign operations are included in the currency translation reserve.
Hedging reserve represents hedging gains and losses on the effective portion of cash flow hedges.
Appropriation of Net Income
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 Supervisory Board, 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 BoMs 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.
For 2014, a proposal to declare a dividend of EUR 0.70 per ordinary share of EUR 0.09 nominal value will be submitted to the 2015 AGM.
Dividends on ordinary shares are payable out of net income or retained earnings as shown in our Financial Statements as adopted by our General Meeting of
Shareholders, after payment first of (accumulated) dividends out of net income on any issued cumulative preference shares.
|
|
|
|
|
ASML STATUTORY REPORT 2014 |
|
94 |
|
|
Share Buyback Programs
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 April 17, 2013, we announced our intention to
repurchase up to EUR 1.0 billion of our own shares within the 2013-2014 timeframe. During the period from April 18, 2013 up to and including December 22, 2014, when the program was completed, we had purchased 14,595,554 shares at an
average price of EUR 68.51 per share of which 9,464,503 shares have been cancelled in 2014, and the remainder is intended to be cancelled in 2015.
The following tables provide a summary of shares repurchased by ASML in 2014 and a historic overview of previous share buyback programs, respectively:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period |
|
Total number of shares purchased |
|
|
Average price paid per Share (EUR) |
|
|
Total number
of shares purchased as part of publicly announced plans or programs |
|
|
Maximum value of shares
that may yet be purchased under the program (EUR) |
|
|
|
|
|
|
|
|
January 20 - 31, 2014 |
|
|
547,500 |
|
|
|
64.44 |
|
|
|
547,500 |
|
|
|
664,718,936 |
|
February 1 - 28, 2014 |
|
|
962,536 |
|
|
|
63.92 |
|
|
|
1,510,036 |
|
|
|
603,190,359 |
|
March 1 - 31, 2014 |
|
|
765,284 |
|
|
|
65.55 |
|
|
|
2,275,320 |
|
|
|
553,029,170 |
|
April 1 - 30, 2014 |
|
|
739,855 |
|
|
|
63.23 |
|
|
|
3,015,175 |
|
|
|
506,251,123 |
|
May 2 - 31, 2014 |
|
|
783,500 |
|
|
|
59.98 |
|
|
|
3,798,675 |
|
|
|
459,253,716 |
|
June 1 - 30,2014 |
|
|
1,061,649 |
|
|
|
66.52 |
|
|
|
4,860,324 |
|
|
|
388,627,554 |
|
July 1 - 31, 2014 |
|
|
1,048,739 |
|
|
|
66.71 |
|
|
|
5,909,063 |
|
|
|
318,664,411 |
|
August 1 - 31, 2014 |
|
|
602,125 |
|
|
|
70.14 |
|
|
|
6,511,188 |
|
|
|
276,431,931 |
|
September 1 - 30, 2014 |
|
|
736,294 |
|
|
|
76.62 |
|
|
|
7,247,482 |
|
|
|
220,019,568 |
|
October 1 - 31, 2014 |
|
|
1,004,378 |
|
|
|
74.58 |
|
|
|
8,251,860 |
|
|
|
145,116,399 |
|
November 1 - 30, 2014 |
|
|
883,971 |
|
|
|
81.85 |
|
|
|
9,135,831 |
|
|
|
72,765,162 |
|
December 1 - 22, 2014 |
|
|
845,544 |
|
|
|
86.06 |
|
|
|
9,981,375 |
|
|
|
- |
|
|
|
|
|
|
Total |
|
|
9,981,375 |
|
|
|
70.13 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period |
|
Year |
|
|
Total amount paid (in EUR millions) |
|
|
Total Number of Shares Purchased |
|
|
Average Price Paid per Share
(EUR) |
|
|
Reduction of Shares Outstanding vs Beginning of Year (Percentage) |
|
|
|
|
|
|
|
|
|
Share Buybacks |
|
|
2006 |
|
|
|
677.2 |
|
|
|
40,385,139 |
|
|
|
16.77 |
|
|
|
8.3 |
|
Synthetic Share Buyback |
|
|
2007 |
|
|
|
1,011.9 |
|
|
|
55,093,409 |
|
|
|
18.37 |
|
|
|
11.5 |
|
Share Buybacks |
|
|
2007 |
|
|
|
359.8 |
|
|
|
17,000,000 |
|
|
|
21.16 |
|
|
|
3.6 |
|
Share Buybacks |
|
|
2008 |
|
|
|
87.6 |
|
|
|
5,000,000 |
|
|
|
17.52 |
|
|
|
1.1 |
|
Share Buybacks |
|
|
2011 |
|
|
|
700.0 |
|
|
|
25,674,576 |
|
|
|
27.26 |
|
|
|
5.9 |
|
Synthetic Share Buyback |
|
|
2012 |
|
|
|
3,728.3 |
|
|
|
93,411,216 |
|
|
|
39.91 |
|
|
|
22.6 |
|
Share Buybacks |
|
|
2012 |
|
|
|
535.2 |
|
|
|
13,478,058 |
|
|
|
39.71 |
|
|
|
3.3 |
|
Share Buybacks |
|
|
2013 |
|
|
|
300.0 |
|
|
|
4,614,179 |
|
|
|
65.02 |
|
|
|
1.1 |
|
Share Buybacks |
|
|
2014 |
|
|
|
700.0 |
|
|
|
9,981,375 |
|
|
|
70.13 |
|
|
|
2.3 |
|
|
|
Total / Average1 |
|
|
|
|
|
|
4,371.7 |
|
|
|
171,226,736 |
|
|
|
25.53 |
|
|
|
35.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 |
Totals, average and percentage are excluding the synthetic share buyback executed in 2012 as part of our CCIP. The percentage represents the reduction of shares issued and
outstanding compared to January 1, 2006. |
20. Long-term Debt
Long-term debt consists of the following:
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31 (in thousands) |
|
2014 EUR |
|
|
2013 EUR |
|
|
|
|
|
|
EUR 600 million 5.75 percent senior notes due 2017, carrying amount |
|
|
264,085 |
|
|
|
748,083 |
|
EUR 750 million 3.375 percent senior notes due 2023, carrying amount |
|
|
841,514 |
|
|
|
269,418 |
|
Loan headquarter
building1 |
|
|
29,507 |
|
|
|
30,936 |
|
Other |
|
|
19,031 |
|
|
|
21,704 |
|
|
|
|
|
|
Long-term debt |
|
|
1,154,137 |
|
|
|
1,070,141 |
|
Less: current portion of long term debt |
|
|
4,261 |
|
|
|
4,385 |
|
|
|
Non-current portion of long term
debt |
|
|
1,149,876 |
|
|
|
1,065,756 |
|
1 |
This loan relates to our SPE, see Note 9. |
|
|
|
|
|
ASML STATUTORY REPORT 2014 |
|
95 |
|
|
Our obligations to make principal repayments under our Eurobonds and other borrowing arrangements excluding
interest expense as of December 31, 2014, for the next five years and thereafter, are as follows:
|
|
|
|
|
|
|
(in thousands) |
|
EUR |
|
|
|
2015 |
|
|
4,261 |
|
2016 |
|
|
4,606 |
|
2017 |
|
|
242,361 |
|
2018 |
|
|
27,997 |
|
2019 |
|
|
1,762 |
|
Thereafter |
|
|
755,705 |
|
|
|
Long-term debt |
|
|
1,036,692 |
|
Less: current portion of long-term debt |
|
|
4,261 |
|
|
|
Non-current portion of long-term
debt |
|
|
1,032,431 |
|
Eurobonds
The
following table summarizes the carrying amount of our outstanding Eurobonds, including the fair value of interest rate swaps used to hedge the change in the fair value of the Eurobonds:
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31
(in thousands) |
|
2014 EUR |
|
|
2013 EUR |
|
|
|
Amortized cost amount |
|
|
978,242 |
|
|
|
976,862 |
|
Fair value interest rate swaps1 |
|
|
127,357 |
|
|
|
40,639 |
|
|
|
Carrying amount
|
|
|
1,105,599 |
|
|
|
1,017,501 |
|
1 |
The fair value of the interest rate swaps excludes accrued interest. |
In June 2007, we completed an offering of our EUR 600 million 5.75 percent senior notes due 2017, with interest payable annually on June 13. 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 June 13, 2017. In September 2013, we repurchased a nominal amount of EUR 361.8 million of
these notes in a tender offer for a cash amount of EUR 423.0 million including accrued interest.
In September 2013, we completed an
offering of our EUR 750 million 3.375 percent senior notes due 2023, with interest payable annually on September 19. 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 September 19, 2023.
The 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 Statement of Financial Position under derivative financial instruments and the carrying amount of the Eurobonds is adjusted for these fair value changes only. Following the repurchase of part of our EUR 600 million
5.75 percent senior notes due 2017, the corresponding part of the interest rate swaps was simultaneously terminated in 2013.
The following table
summarizes the estimated fair value of our Eurobonds:
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31
(in thousands) |
|
2014 EUR |
|
|
2013 EUR |
|
|
|
Principal amount |
|
|
988,153 |
|
|
|
988,153 |
|
Carrying amount |
|
|
1,105,599 |
|
|
|
1,017,501 |
|
Fair value1 |
|
|
1,139,628 |
|
|
|
1,028,238 |
|
1 |
Source: Bloomberg Finance LP |
The fair value of our
Eurobonds is estimated based on quoted market prices as of December 31, 2014. Due to changes in market interest rates and credit spreads since the issue of our Eurobonds which carry a fixed coupon interest rate, the fair value deviates from the
principal amount.
|
|
|
|
|
ASML STATUTORY REPORT 2014 |
|
96 |
|
|
21. Lines of Credit
Our available credit facilities amount to EUR 700.0 million as of December 31, 2014 and EUR 700.0 million as of December 31, 2013. No amounts were outstanding under these credit
facilities at the end of 2014 and 2013.
The amounts available at December 31, 2014 and 2013 consist of one EUR 700 million committed
revolving credit facility from a group of banks that will mature in 2018. The credit facility contains a restrictive covenant that requires us to maintain a minimum long-term committed capital to net total assets ratio of 40.0 percent calculated in
accordance with contractually agreed definitions. Long-term committed capital includes, among other things, equity and debt maturing at least one year after the maturity date of the credit facility, while net total assets mainly comprises total
assets minus cash, cash equivalents and certain short-term investments. Furthermore, adjustments are made for e.g. intangibles and operating leases. As of December 31, 2014 this ratio was 82.8 percent (2013: 89.6 percent). Therefore, we were in
compliance with the covenant at the end of 2014 and 2013. Outstanding amounts under this credit facility will bear interest at EURIBOR or LIBOR plus a margin that depends on our liquidity position.
22. Provisions
The movement in the provision
for lease contract termination costs is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
2014
EUR |
|
|
2013
EUR |
|
|
|
|
Balance, January 1 |
|
|
6,847 |
|
|
|
10,254 |
|
Utilization of the provision |
|
|
(2,517) |
|
|
|
(2,790) |
|
Release of the provision |
|
|
- |
|
|
|
(1,011) |
|
Unwinding of discount |
|
|
918 |
|
|
|
391 |
|
Effect of exchange rates |
|
|
744 |
|
|
|
3 |
|
|
|
Provision for lease contract termination costs |
|
|
5,992 |
|
|
|
6,847 |
|
Less: current portion of provision for lease contract termination costs |
|
|
2,354 |
|
|
|
2,227 |
|
|
|
Non-current portion of provision for
lease contract termination costs |
|
|
3,638 |
|
|
|
4,620 |
|
The provision for lease contract termination costs relates to an operating lease contract for a building for which no
economic benefits are expected. The provision for lease contract termination costs is expected to be fully utilized by 2017.
23. Accrued and
Other Liabilities
Accrued and other liabilities consist of the following:
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31
(in thousands) |
|
2014
EUR |
|
|
2013
EUR |
|
|
|
|
Deferred revenue |
|
|
1,268,633 |
|
|
|
939,358 |
|
Costs to be paid |
|
|
411,725 |
|
|
|
440,010 |
|
Down payments from customers |
|
|
647,317 |
|
|
|
821,959 |
|
Personnel related items |
|
|
301,075 |
|
|
|
247,246 |
|
Standard warranty reserve |
|
|
41,508 |
|
|
|
27,475 |
|
Other |
|
|
21,441 |
|
|
|
12,324 |
|
|
|
Total accrued and other liabilities |
|
|
2,691,699 |
|
|
|
2,488,372 |
|
Less: non-current portion of accrued and other liabilities1 |
|
|
408,847 |
|
|
|
280,534 |
|
|
|
|
|
|
Current portion of accrued and other
liabilities |
|
|
2,282,852 |
|
|
|
2,207,838 |
|
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
deferrals with respect to services. |
The increase in accrued and other liabilities mainly relates to the increases in deferred
revenue and personnel related items, which are partly offset by a decrease in down payments from our customers and costs to be paid.
Deferred
revenue as of December 31, 2014 mainly consists of credits regarding free or discounted products or services as part of volume purchase agreements amounting to EUR 925.2 million (2013: EUR 660.1 million) and extended and enhanced (optic)
warranty contracts amounting to EUR 313.8 million (2013: EUR 261.2 million). Both include deferrals with respect to our third-generation EUV systems, NXE:3300B. The total deferred revenue of the third-generation EUV systems, NXE:3300B, is
EUR 102.5 million (2013: EUR 87.6 million).
We receive down payments from our customers prior to shipment of systems included in our
current product portfolio or systems currently under development. The decrease in down payments from our customers is mainly due to the shipment of NXE:3300B systems.
|
|
|
|
|
ASML STATUTORY REPORT 2014 |
|
97 |
|
|
Costs to be paid as of December 31, 2014 include an amount of EUR 124.0 million (2013: EUR 171.2
million) relating to the expected losses to upgrade the first 11 NXE:3300B 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 costs for unbilled services provided by
suppliers including contracted labor, outsourced services and consultancy.
Personnel related items mainly consist of accrued management bonuses,
accrued profit sharing, accrued vacation days, accrued vacation allowance, accrued wage tax, social securities and accrued pension premiums.
Changes in standard warranty reserve for the years 2014 and 2013 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31
(in thousands) |
|
2014 EUR |
|
|
2013 EUR |
|
|
|
|
|
|
Balance at beginning of year |
|
|
27,475 |
|
|
|
21,626 |
|
Acquisitions through business combinations |
|
|
- |
|
|
|
2,978 |
|
Additions for the year |
|
|
42,420 |
|
|
|
37,124 |
|
Utilization of the reserve |
|
|
(22,749) |
|
|
|
(19,924) |
|
Release of the reserve |
|
|
(5,468) |
|
|
|
(13,076) |
|
Effect of exchange rates |
|
|
(170) |
|
|
|
(1,253) |
|
|
|
|
|
|
Balance at end of year
|
|
|
41,508 |
|
|
|
27,475 |
|
The increase of the total standard warranty reserve is mainly related to accrued warranties for NXE:3300B systems. This
increase is included in cost of sales.
24. Employee Benefits
Our bonus expenses for the BoM, former BoM and senior management were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31
(in thousands) |
|
2014 EUR |
|
|
2013 EUR |
|
|
|
|
|
|
Bonus expenses
|
|
|
48,957 |
|
|
|
32,698 |
|
Bonus expenses include an amount of EUR 3.5 million (2013: EUR 2.1 million) in relation to the STI cash bonus for our
BoM and former BoM (we refer to Note 31). The increase in bonus expenses in 2014 compared to 2013 is mainly attributable to the full year inclusion of Cymer.
We have a performance related bonus plan for our senior management, who are not members of the BoM. Under this plan, the bonus amounts depend on actual performance against corporate and personal targets.
Within ASML, the bonus for members of senior management can range between 0.0 percent and 75.0 percent of their annual salaries. Within Cymer, bonuses can range between 0.0 percent and 200.0 percent of their annual salary. The performance targets
are set for a whole year. The bonuses over 2014 are accrued for in the Consolidated Statement of Financial Position as of December 31, 2014 and are expected to be paid in the first quarter of 2015.
|
|
|
|
|
ASML STATUTORY REPORT 2014 |
|
98 |
|
|
Our bonus expenses under these plans were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31
(in thousands) |
|
2014 EUR |
|
|
2013 EUR |
|
|
|
|
|
|
Bonus expenses
|
|
|
45,462 |
|
|
|
30,631 |
|
Profit-sharing Plan
We have a profit-sharing plan covering all European and US non-sales employees who are not members of the BoM or senior management. Under the plan, eligible employees receive an annual profit-sharing, based
on a percentage of net income relative to total net sales ranging from 0.0 to 20.0 percent of their annual salary. The profit sharing for the years 2014 and 2013 was 16.0 percent or EUR 71.3 million and 14.0 percent or EUR 55.9 million,
respectively. Our profit is also one of the criteria for the individual variable pay programs for employees in Asia and employees eligible to the sales reward plan, which amount to EUR 28.0 million for 2014 (including EUR 2.1 million for
the sales reward plan) and EUR 25.8 million (including EUR 2.3 million for the sales reward plan) for 2013.
Share-based
Compensation
In the past we have adopted various share and option plans for our employees. Starting January 1, 2014 the Employee
Umbrella Share Plan has become effective, covering all grants made as of that date for our employees. The AGM approves each year the maximum number of shares that can be used by ASML to execute share-based incentives. Within this limit, the
Supervisory Board determines the maximum number of shares that is granted to the BoM in line with the 2014 Remuneration Policy and the BoM determines the total maximum of shares that can be granted in that year for eligible employees in line with
existing policies. Our current share-based compensation plans do not provide cash settlement of options and shares.
The total gross amount of
recognized compensation expenses associated with share-based payments (including share-based payments to the BoM) was EUR 55.7 million in 2014 and EUR 47.4 million in 2013. The tax benefit recognized related to the recognized share-based
compensation costs amounted to EUR 11.7 million in 2014 and EUR 9.3 million in 2013.
Total compensation costs to be recognized in
future periods amount to EUR 65.5 million as of December 31, 2014 (2013: EUR 62.4 million). The weighted average period over which these costs are expected to be recognized is calculated at 1.6 years (2013: 1.7 years).
Employee Umbrella Share Plan
The Employee Umbrella Share Plan, effective as of January 1, 2014 covers all employees. Within this plan, we distinguish between performance and
incentive shares. Within the incentive category, employees can choose, at inception, to convert the shares into options. All grants under the Employee Umbrella Share Plan typically have a three year vesting period.
Share plans
Our current share plans
typically include a three year service period and some plans have vesting conditions which are based on performance. The fair value of shares is determined on the closing trading price of our shares listed at Euronext Amsterdam on the grant date.
Details with respect to shares granted during the year are set out in the following table:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EUR-denominated |
|
|
USD-denominated |
|
Year ended December 31 |
|
2014 |
|
|
2013 |
|
|
2014 |
|
|
2013 |
|
|
|
|
|
|
|
|
Total fair value at vesting date of shares vested during the year (in thousands) |
|
|
56,214 |
|
|
|
38,280 |
|
|
|
76,605 |
|
|
|
51,798 |
|
Weighted average fair value of shares granted |
|
|
65.71 |
|
|
|
55.83 |
|
|
|
84.62 |
|
|
|
83.58 |
|
|
|
|
|
|
|
|
|
ASML STATUTORY REPORT 2014 |
|
99 |
|
|
A summary of the status of conditionally outstanding shares as of December 31, 2014, and changes during
the year ended December 31, 2014, is presented below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EUR-denominated |
|
|
USD-denominated |
|
|
|
Number of
shares |
|
|
Weighted
average
fair value at grant date (EUR) |
|
|
Number of
shares |
|
|
Weighted
average
fair value at grant date (USD) |
|
Conditional shares outstanding at January 1, 2014 |
|
|
1,544,332 |
|
|
|
40.21 |
|
|
|
1,380,320 |
|
|
|
79.55 |
|
Granted |
|
|
409,626 |
|
|
|
65.71 |
|
|
|
475,146 |
|
|
|
84.62 |
|
Vested |
|
|
(847,131 |
) |
|
|
34.78 |
|
|
|
(872,231 |
) |
|
|
79.56 |
|
Forfeited |
|
|
(13,649 |
) |
|
|
40.83 |
|
|
|
(62,020 |
) |
|
|
79.57 |
|
|
|
Conditional shares outstanding at December 31, 2014 |
|
|
1,093,178 |
|
|
|
53.96 |
|
|
|
921,215 |
|
|
|
82.16 |
|
|
|
|
Option Plans
Our current option plans typically vest over a three year service period with any unexercised stock options expiring ten years after the grant date. Options granted have fixed exercise prices equal to the
closing price of our shares listed at Euronext Amsterdam on grant date. The fair value of stock options is determined using a Black-Scholes option valuation model.
The Black-Scholes option valuation of our stock options is based on the following assumptions:
|
|
|
|
|
|
|
|
|
Year ended
December 31 |
|
2014 |
|
|
2013 |
|
|
|
|
|
|
Weighted average share price (in EUR) |
|
|
65.0 |
|
|
|
60.6 |
|
Volatility (in percentage) |
|
|
23.5 |
|
|
|
27.0 |
|
Expected life (in years) |
|
|
5.6 |
|
|
|
5.6 |
|
Risk free interest rate |
|
|
0.5 |
|
|
|
0.8 |
|
Expected dividend yield (in EUR) |
|
|
2.25 |
|
|
|
2.00 |
|
Forfeiture
rate1 |
|
|
- |
|
|
|
- |
|
|
|
|
1 |
For the years ending December 31, 2014 and 2013, forfeitures are estimated to be nil. |
When establishing the expected life assumption we annually take into account the contractual terms of the stock options as well as historical employee exercise behavior.
Details with respect to stock options are set out in the following table:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EUR-denominated |
|
|
USD-denominated |
|
Year ended December 31 |
|
2014 |
|
|
2013 |
|
|
2014 |
|
|
2013 |
|
|
|
|
|
|
|
|
Weighted average fair value of stock options granted |
|
|
13.94 |
|
|
|
14.22 |
|
|
|
18.57 |
|
|
|
21.74 |
|
Weighted average share price at the exercise date of stock options |
|
|
71.69 |
|
|
|
59.53 |
|
|
|
93.19 |
|
|
|
77.25 |
|
Aggregate intrinsic value of stock options exercised (in thousands) |
|
|
12,098 |
|
|
|
15,924 |
|
|
|
9,497 |
|
|
|
11,086 |
|
Aggregate remaining contractual term of currently exercisable options (years) |
|
|
2.94 |
|
|
|
3.09 |
|
|
|
3.79 |
|
|
|
3.12 |
|
Aggregate intrinsic value of exercisable stock options (in thousands) |
|
|
39,020 |
|
|
|
37,441 |
|
|
|
17,942 |
|
|
|
22,781 |
|
Aggregate intrinsic value of outstanding stock options (in thousands) |
|
|
40,428 |
|
|
|
38,718 |
|
|
|
19,171 |
|
|
|
25,369 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASML STATUTORY REPORT 2014 |
|
100 |
|
|
The number and weighted average exercise prices of stock options as of December 31, 2014, and changes
during the year then ended are presented below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EUR-denominated |
|
|
USD-denominated |
|
|
|
Number of options |
|
|
Weighted average
exercise price
per ordinary
share (EUR) |
|
|
Number of options |
|
|
Weighted average
exercise price per ordinary share (USD) |
|
|
|
Outstanding, January 1, 2014 |
|
|
782,302 |
|
|
|
18.55 |
|
|
|
406,635 |
|
|
|
31.31 |
|
Granted |
|
|
32,672 |
|
|
|
65.68 |
|
|
|
20,654 |
|
|
|
87.98 |
|
Exercised |
|
|
(212,530) |
|
|
|
14.77 |
|
|
|
(129,530) |
|
|
|
19.87 |
|
Forfeited |
|
|
(1,350) |
|
|
|
21.48 |
|
|
|
(12,587) |
|
|
|
31.51 |
|
Expired |
|
|
(1,338) |
|
|
|
14.70 |
|
|
|
- |
|
|
|
- |
|
|
|
Outstanding, December 31, 2014 |
|
|
599,756 |
|
|
|
22.09 |
|
|
|
285,172 |
|
|
|
40.60 |
|
Exercisable, December 31, 2014 |
|
|
559,556 |
|
|
|
19.77 |
|
|
|
246,285 |
|
|
|
34.98 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Details with respect to the stock options outstanding are set out in the following table:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EUR-denominated |
|
|
USD-denominated |
|
Range of exercise prices (EUR) |
|
|
Number of outstanding options at
December 31, 2014 |
|
|
Weighted average remaining
contractual life
of outstanding
options (years) |
|
|
Range of exercise prices (USD) |
|
|
Number of outstanding options at
December 31, 2014 |
|
|
Weighted average remaining
contractual life
of outstanding
options (years) |
|
|
|
|
|
0 - 10 |
|
|
|
- |
|
|
|
- |
|
|
|
0 - 10 |
|
|
|
14,543 |
|
|
|
1.07 |
|
|
10 - 15 |
|
|
|
220,179 |
|
|
|
2.28 |
|
|
|
10 - 15 |
|
|
|
48,397 |
|
|
|
0.18 |
|
|
15 - 20 |
|
|
|
160,772 |
|
|
|
2.15 |
|
|
|
15 - 20 |
|
|
|
3,911 |
|
|
|
3.80 |
|
|
20 - 25 |
|
|
|
126,712 |
|
|
|
2.94 |
|
|
|
20 - 25 |
|
|
|
66,462 |
|
|
|
2.97 |
|
|
25 - 40 |
|
|
|
16,736 |
|
|
|
6.77 |
|
|
|
25 - 40 |
|
|
|
58,168 |
|
|
|
3.87 |
|
|
40 - 50 |
|
|
|
23,959 |
|
|
|
7.80 |
|
|
|
40 - 50 |
|
|
|
1,082 |
|
|
|
6.59 |
|
|
50 - 60 |
|
|
|
13,593 |
|
|
|
8.88 |
|
|
|
50 - 60 |
|
|
|
8,382 |
|
|
|
7.73 |
|
|
60 - 70 |
|
|
|
27,239 |
|
|
|
8.93 |
|
|
|
60 - 70 |
|
|
|
1,281 |
|
|
|
8.07 |
|
|
70 - 80 |
|
|
|
10,566 |
|
|
|
9.81 |
|
|
|
70 - 80 |
|
|
|
43,860 |
|
|
|
8.14 |
|
|
80 - 90 |
|
|
|
- |
|
|
|
- |
|
|
|
80 - 90 |
|
|
|
15,005 |
|
|
|
9.22 |
|
|
90 - 100 |
|
|
|
- |
|
|
|
- |
|
|
|
90 - 100 |
|
|
|
24,081 |
|
|
|
9.11 |
|
|
|
|
|
Total |
|
|
|
599,756 |
|
|
|
3.31 |
|
|
|
Total |
|
|
|
285,172 |
|
|
|
4.41 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee Purchase Plan
Every quarter, we offer our worldwide payroll employees the opportunity to buy our shares or our stock options against fair value using their net salary. The BoM is excluded from participation in this plan.
The fair value for shares is based on the closing price of our shares listed at Euronext Amsterdam on grant date. Within the employee purchase plan employees can choose to convert the shares into options. The fair value of the stock options is
determined using a Black-Scholes option valuation model. The assumptions on which the Black-Scholes option valuation model is used, see the disclosure above under the caption Option Plans. The maximum net amount for which employees can
participate in the plan amounts to 10.0 percent of their annual gross base salary. When employees retain the shares and/or stock options for a minimum of 12 months, we will pay out a 20.0 percent cash bonus on the initial participation amount.
Deferred Compensation Plans
In
July 2002, we adopted a non-qualified deferred compensation plan for our US employees that allows a select group of management or highly compensated employees to defer a portion of their salary, bonus, and commissions. The plan allows us to credit
additional amounts to the participants account balances. The participants divide their funds among the investments available in the plan. Participants elect to receive their funds in future periods after the earlier of their employment
termination or their withdrawal election, at least three years after deferral. There were minor expenses relating to this plan in 2014 and 2013. Cymer has a similar non-qualified deferred compensation plan for a selected group of management level
employees in the US in which the employee may elect to defer receipt of current compensation in order to provide retirement and other benefits on behalf of such employee backed by Cymer owned life insurance policies.
As of December 31, 2014, and 2013, our liability under deferred compensation plans was EUR 29.4 million and EUR 23.5 million, respectively.
|
|
|
|
|
ASML STATUTORY REPORT 2014 |
|
101 |
|
|
Pension Plans
We maintain various pension plans covering substantially all of our employees. Eligible employees in the Netherlands, 5,802 FTEs, participate in a multi-employer union plan (PME) determined in accordance
with the collective bargaining agreements effective for the industry in which we operate. This collective bargaining agreement has no expiration date. This multi-employer union plan covers approximately 1,259 companies and approximately 144,000
contributing members. Our contribution to the multi-employer union plan was 5.7 percent of the total contribution to the plan as per the Annual Report for the year ended December 31, 2013. The plan monitors its risks on a global basis, not by
company or employee, and is subject to regulation by Dutch governmental authorities. By law (the Dutch Pension Act), a multiemployer union plan must be monitored against specific criteria, including the coverage ratio of the plans assets to
its obligations. As of January 1, 2015 new pension legislation has been enacted. This legislation results in amongst others, an increase of legally required coverage levels. The coverage percentage is calculated by dividing the funds capital by
the total sum of pension liabilities and is based on actual market interest rates. The coverage ratio as per December 31, 2014 of 102.0 percent (December 31, 2013: 103.4 percent) is calculated giving consideration to the new pension
legislation and is below the legally required level. We have however no obligation whatsoever to pay off any deficits the pension fund may incur, nor have we any claim to any potential surpluses.
Every company participating in the multi-employer union plan (PME) contributes a premium calculated as a percentage of its total pensionable salaries, with
each company subject to the same percentage contribution rate. Although the premium can fluctuate yearly based on the coverage ratio of the multi-employer union plan, for the 5-year period 2015-2019 the contribution percentage has been fixed at 23.6
percent (2014: 24.1 percent). The pension rights of each employee are based upon the employees average salary during employment.
Our net
periodic pension cost for this multi-employer union plan for any period is the amount of the required employer contribution for that period.
We
also participate in several defined contribution pension plans, with our expenses for these plans equaling the employer contributions made in the relevant period.
Our pension and retirement expenses for all employees for the years ended December 31, 2014 and 2013 were:
|
|
|
|
|
|
|
|
|
|
|
|
Year
ended December 31 (in thousands) |
|
2014
EUR |
|
|
2013
EUR |
|
|
|
|
Pension plan based on multi-employer union plan |
|
|
46,542 |
|
|
|
40,476 |
|
Pension plans based on defined contribution |
|
|
24,774 |
|
|
|
19,799 |
|
|
|
|
|
|
Pension and retirement expenses |
|
|
71,316 |
|
|
|
60,275 |
|
|
|
|
|
|
25. Commitments, Contingencies and Guarantees
We have various contractual obligations, some of which are required to be recorded as liabilities in our Financial Statements, including long- and short-term debt. Other contractual obligations, namely
operating lease commitments, purchase obligations and guarantees, are generally not required to be recognized as liabilities on our Consolidated Balance Sheets but are required to be disclosed.
Our contractual obligations as of December 31, 2014 can be summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments due by period (in thousands) |
|
Total EUR |
|
|
1 year EUR |
|
|
2 year EUR |
|
|
3 year EUR |
|
|
4 year EUR |
|
|
5 year EUR |
|
|
After
5 years
EUR |
|
|
|
|
|
|
|
|
|
|
|
Long-Term Debt Obligations, including interest expense1 |
|
|
1,311,503 |
|
|
|
44,958 |
|
|
|
45,302 |
|
|
|
283,058 |
|
|
|
54,155 |
|
|
|
27,075 |
|
|
|
856,955 |
|
Operating Lease Obligations |
|
|
89,209 |
|
|
|
29,280 |
|
|
|
22,590 |
|
|
|
11,534 |
|
|
|
8,256 |
|
|
|
6,961 |
|
|
|
10,588 |
|
Purchase Obligations |
|
|
1,588,977 |
|
|
|
1,464,451 |
|
|
|
113,606 |
|
|
|
10,186 |
|
|
|
158 |
|
|
|
556 |
|
|
|
20 |
|
Liability for uncertain tax positions, including interest expense |
|
|
83,738 |
|
|
|
- |
|
|
|
12,813 |
|
|
|
14,092 |
|
|
|
2,858 |
|
|
|
2,367 |
|
|
|
51,608 |
|
|
|
|
|
|
|
|
|
|
|
Total Contractual
Obligations |
|
|
3,073,427 |
|
|
|
1,538,689 |
|
|
|
194,311 |
|
|
|
318,870 |
|
|
|
65,427 |
|
|
|
36,959 |
|
|
|
919,171 |
|
1 |
See Note 20 for the amounts excluding interest expense. |
Long-term debt obligations mainly relate to interest payments and principal amounts of our Eurobonds. See Note 20 to our Financial Statements.
|
|
|
|
|
ASML STATUTORY REPORT 2014 |
|
102 |
|
|
Operating lease obligations include leases of equipment and facilities. Lease payments recognized as an expense
were EUR 43.9 million and EUR 42.0 million for the years ended December 31, 2014 and 2013, respectively.
Several operating leases
for our buildings contain purchase options, exercisable at the end of the lease, and in some cases, during the term of the lease. The amounts to be paid if ASML should exercise these purchase options at the end of the lease as of December 31,
2014 can be summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase options
due by period
(in thousands) |
|
Total EUR |
|
|
1 year EUR |
|
|
2 year EUR |
|
|
3 year EUR |
|
|
4 year EUR |
|
|
5 year EUR |
|
|
After 5 years EUR |
|
|
|
|
|
|
|
|
|
|
|
Purchase options
|
|
|
13,983 |
|
|
|
- |
|
|
|
13,983 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
Purchase obligations include purchase commitments with suppliers in the ordinary course of business. ASML expects that it
will honor these purchase obligations to fulfill future sales, in line with the timing of those future sales. The general terms and conditions of the agreements relating to the major part of our purchase commitments as of December 31, 2014
contain clauses that enable us to delay or cancel delivery of ordered goods and services up to the dates specified in the corresponding purchase contracts. These terms and conditions that we typically agree with our supply chain partners gives us
additional flexibility to adapt our purchase obligations to our requirements in light of the inherent cyclicality of the industry in which we operate. We establish a provision for cancellation costs when it is probable that the liability has been
incurred and the amount of cancellation fees is reasonably estimable.
We have a non-committed guarantee facility of EUR 25.0 million under
which guarantees in the ordinary course of business can be provided to third parties.
ASML Holding N.V. forms a tax unity together with certain
of its Dutch subsidiaries, for purposes of Dutch tax laws and are as such jointly and severally liable for the tax debts of the unity: The fiscal unity comprises as of December 31, 2014 of ASML Holding N.V., ASML Netherlands B.V. and ASML
Systems B.V.
26. Legal Contingencies
ASML is party to various legal proceedings generally incidental to our business. ASML also faces exposures from other actual or potential claims and legal proceedings. In addition, ASMLs customers may
be subject to claims of infringement from third parties alleging that the ASML equipment used by those customers in the manufacture of semiconductor products, and/or the methods relating to use of the ASML equipment, infringes one or more patents
issued to those third parties. If these claims were successful, ASML could be required to indemnify such customers for some or all of the losses incurred or damages assessed against them as a result of that infringement.
We accrue for legal costs related to litigation and legal proceedings in our Consolidated Statement of Profit or Loss at the time when the related legal
services are actually provided to ASML. In 2014, EUR 12.9 million estimated losses were recorded as a charge to our Consolidated Statement of Profit or Loss (2013: EUR 3.2 million).
From late 2001 through 2004, ASML was a party to a series of civil litigations and administrative proceedings in which Nikon alleged ASMLs infringement of Nikon patents relating to lithography. ASML in
turn filed claims against Nikon. Pursuant to agreements executed on December 10, 2004, ASML and Nikon agreed to settle all pending worldwide patent litigation between the companies. The settlement included an exchange of releases, a patent
cross-license agreement related to lithography equipment used to manufacture semiconductor devices, and payments to Nikon by ASML.
In 2004, the
Nikon Cross-License Agreement was signed. Under the Nikon Cross-License Agreement, (i) ASML granted Nikon a non-exclusive license to manufacture and sell lithography equipment under patents owned or otherwise sublicensable by ASML and
(ii) Nikon granted ASML a non-exclusive license to manufacture and sell lithography equipment under patents owned or otherwise sublicensable by Nikon. These license grants cover patents having an effective application date before
December 31, 2002 (Class A Patents), as well as patents with an effective application date after December 31, 2002 that were issued worldwide before the end of 2009 (Class B Patents), but exclude certain specified
patents set forth in the Nikon Cross-License Agreement. The license period is perpetual for Class A Patents, and the licenses for Class B Patents terminated at the end of 2009.
|
|
|
|
|
ASML STATUTORY REPORT 2014 |
|
103 |
|
|
At any time until June 30, 2015, each of ASML and Nikon has a right to designate up to five Class B
patents (or patents related to lithography issued from 2010 to 2015) of the other party as Class A patents. Any patents acquired after the date of the Nikon Cross-License Agreement are deemed Class B Patents. In addition, pursuant to the terms
of the Nikon Cross-License Agreement, the parties have agreed, from January 1, 2010 through December 31, 2014, not to bring suit for claims related to infringement of patents issued and not perpetually licensed, including the Class B
Patents. Under the terms of the Nikon Cross-License Agreement, beginning on January 1, 2015, the parties may bring suit for infringement of certain patents subject to the agreement, including any infringement that occurred from January 1,
2010 through December 31, 2014. Damages resulting from claims for patent infringement occurring during the CrossLicense Transition Period are limited to three percent of the net sales price of applicable licensed products or optical components.
Accordingly, from January 1, 2015, both Nikon and we are no longer prohibited under the agreement from bringing claims against each other
on the basis of infringement of certain patents subject to the Nikon Cross-License Agreement.
If Nikon files suit against us alleging patent
infringement, we may incur substantial legal fees and expenses, and we may not prevail. Similarly, if we file suit against Nikon alleging patent infringement, we may incur substantial legal fees and expenses, and we may not prevail. Patent
litigation is complex and may extend for a protracted period of time, giving rise to the potential for both substantial costs and diverting the attention of key management and technical personnel. Potential adverse outcomes from patent litigation
may include, without limitation, payment of significant monetary damages, injunctive relief prohibiting the sale of products, and/or settlement involving significant costs to be paid by us, any of which may have a material adverse effect on our
business, financial condition and/or results of operations. We are unable to predict at this time whether any such patent suit will in fact materialize, or, if so, what its outcome might be.
27. Income Taxes
The components of the provision for income taxes are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31 (in thousands) |
|
2014
EUR |
|
|
2013
EUR |
|
|
|
|
Current tax |
|
|
(141,059 |
) |
|
|
(69,974 |
) |
Deferred tax |
|
|
33,009 |
|
|
|
7,505 |
|
|
|
Total |
|
|
(108,050 |
) |
|
|
(62,469 |
) |
|
|
|
The Dutch statutory tax rate was 25.0 percent in 2014 and 2013. Tax amounts in other jurisdictions are calculated at the
rates prevailing in the relevant jurisdictions.
The reconciliation of the provision for income taxes is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31 (in thousands) |
|
2014
EUR |
|
|
% |
|
|
2013
EUR |
|
|
% |
|
|
|
|
|
|
Income before income taxes |
|
|
1,526,370 |
|
|
|
100.0 |
|
|
|
1,256,313 |
|
|
|
100.0 |
|
Income tax provision based on ASMLs domestic rate |
|
|
(381,593) |
|
|
|
25.0 |
|
|
|
(314,078) |
|
|
|
25.0 |
|
Effects of tax rates in foreign jurisdictions |
|
|
(13,452) |
|
|
|
0.9 |
|
|
|
15,315 |
|
|
|
(1.2) |
|
Adjustments in respect of tax exempt income |
|
|
23,899 |
|
|
|
(1.6) |
|
|
|
29,430 |
|
|
|
(2.3) |
|
Adjustments in respect of tax incentives |
|
|
181,585 |
|
|
|
(11.9) |
|
|
|
144,225 |
|
|
|
(11.5) |
|
Adjustments in respect of prior years current taxes |
|
|
(6,474) |
|
|
|
0.4 |
|
|
|
5,155 |
|
|
|
(0.4) |
|
Adjustments in respect of prior years deferred taxes |
|
|
1,325 |
|
|
|
(0.1) |
|
|
|
16,164 |
|
|
|
(1.3) |
|
Movements in the liability for uncertain tax positions |
|
|
(7,946) |
|
|
|
0.5 |
|
|
|
(3,484) |
|
|
|
0.3 |
|
Tax effects in respect of Cymer acquisition related items |
|
|
77,909 |
|
|
|
(5.1) |
|
|
|
67,730 |
|
|
|
(5.4) |
|
Other credits and non-taxable items |
|
|
16,697 |
|
|
|
(1.1 |
) |
|
|
(22,926 |
) |
|
|
1.8 |
|
|
|
Provision for income taxes |
|
|
(108,050) |
|
|
|
7.1 |
|
|
|
(62,469) |
|
|
|
5.0 |
|
|
|
|
Income Tax Provision Based on ASMLs Domestic Rate
The provision for income taxes based on ASMLs domestic rate is based on the Dutch statutory income tax rate. It reflects the provision for income taxes
that would have been applicable assuming that all of our income is taxable against the Dutch statutory tax rate and there were no permanent differences between taxable base and financial results and no Dutch tax incentives are applied.
|
|
|
|
|
ASML STATUTORY REPORT 2014 |
|
104 |
|
|
Effects of Tax Rates in Foreign Jurisdictions
A portion of our results is realized in countries other than the Netherlands where different tax rates are applicable. In 2013, the distribution effect of
tax rates in foreign jurisdictions was impacted by a shift in the mix of taxable income across tax jurisdictions as a result of the acquisition of Cymer as per May 30, 2013.
Adjustments in Respect of Tax Exempt Income
In certain jurisdictions part of the
income generated is tax exempted.
Adjustments in Respect of Tax Incentives
Adjustments in respect of tax incentives relate to reduced tax rates in several jurisdictions, mainly consisting of the Dutch Innovation Box and
the RDA. The Innovation box is a facility under Dutch corporate tax law pursuant to which income associated with R&D is partially exempted from taxation. The RDA is a tax incentive providing for an additional tax deduction for qualified
(non-labor) cost incurred for R&D activities performed in the Netherlands.
Adjustments in Respect of Prior Years Current
Taxes
The effect of adjustments in respect of prior years current taxes in 2014 and 2013 are considered to be limited.
Adjustments in Respect of Prior Years Deferred Taxes
In 2013, we recognized a tax benefit of EUR 16.2 million or 1.3 percent of income before income taxes as result of a partly release of a valuation allowance for NID credits or NID stock to the extent we
expect future taxable profits to realize these NID credits before expiration of those credits.
Movements in the Liability for
Uncertain Tax Positions
The movements in the liability for uncertain tax positions in 2014 and 2013 are considered to be limited.
Tax effects in respect of Cymer Acquisition related items
In 2014 the tax rate was favorably impacted by settling agreements entered into by ASML Netherlands B.V. and Cymer LLC., prior to our acquisition of Cymer in May 2013, at different tax rates. In 2013 we
recognized a gain as a result of the accounting for business combinations Cymer. This gain is not recognized for tax purposes and was, apart from the R&D tax incentives, the major driver for the change in the effective tax rate in 2013.
Other Credits and Non-taxable Items
Other credits and non-taxable items reflect the impact on statutory rates of permanent non-taxable items such as nondeductible taxes, non-deductible interest expense, and non-deductible meals and
entertainment expenses, as well as the impact of (the reversal of) various tax credits on our provision for income taxes.
Income Taxes
Recognized Directly in Equity
Income taxes recognized directly in equity (including OCI) are as follows:
|
|
|
|
|
|
|
|
|
Income tax recognized in equity (in thousands) |
|
2014
EUR |
|
|
2013
EUR |
|
Current tax |
|
|
|
|
|
|
|
|
OCI (financial instruments) |
|
|
2,977 |
|
|
|
(759) |
|
Issuance of shares |
|
|
(3,972) |
|
|
|
(3,110) |
|
|
|
|
Deferred tax |
|
|
|
|
|
|
|
|
Share-based payments |
|
|
1,442 |
|
|
|
(3,327) |
|
|
|
Income tax recognized in equity |
|
|
447 |
|
|
|
(7,196) |
|
|
|
|
Liability for Uncertain Tax Positions and Deferred Taxes
The liability for uncertain tax positions and total deferred tax position recorded on the Consolidated Statement of Financial Position are as follows:
|
|
|
|
|
|
|
|
|
As of December 31 (in thousands) |
|
2014
EUR |
|
|
2013
EUR |
|
Liability for uncertain tax positions |
|
|
(83,738) |
|
|
|
(74,069) |
|
Deferred tax position |
|
|
(22,885) |
|
|
|
(63,092) |
|
|
|
Total |
|
|
(106,623) |
|
|
|
(137,161) |
|
|
|
|
|
|
|
|
|
ASML STATUTORY REPORT 2014 |
|
105 |
|
|
Uncertain Tax Positions
The calculation of our liability for uncertain tax positions involves uncertainties in the application of complex tax laws. Our estimate for the potential outcome of any uncertain tax issue is highly
judgmental. We conclude that we have adequately provided for uncertain tax positions. However, settlement of these uncertain tax positions in a manner inconsistent with our expectations could have a material impact on our Consolidated Financial
Statements.
Consistent with the provisions of IAS 12, as of December 31, 2014, ASML has a liability for uncertain tax positions of EUR
83.7 million (2013: EUR 74.1 million) which is classified as non-current deferred and other tax liabilities. The total liability for uncertain tax positions, if reversed, would have a favorable effect on our effective tax rate.
A reconciliation of the beginning and ending balance of the liability for uncertain tax positions is as follows:
|
|
|
|
|
|
|
|
|
As of December 31 (in thousands) |
|
2013
EUR |
|
|
2012
EUR |
|
|
|
|
Balance, January 1 |
|
|
74,069 |
|
|
|
59,967 |
|
Gross increases tax positions in prior period |
|
|
10,185 |
|
|
|
6,045 |
|
Gross decreases tax positions in prior period |
|
|
(12,743) |
|
|
|
(2,025) |
|
Gross increases tax positions in current period |
|
|
12,227 |
|
|
|
6,796 |
|
Increase resulting from acquisition |
|
|
- |
|
|
|
6,514 |
|
Settlements |
|
|
- |
|
|
|
(2,964) |
|
Lapse of statute of limitations |
|
|
- |
|
|
|
(264) |
|
Total liability for uncertain tax positions |
|
|
83,738 |
|
|
|
74,069 |
|
|
|
|
We conclude our allowances for tax contingencies to be appropriate. Based on the information currently available, we do not
anticipate a significant increase or decrease in our liability for uncertain tax positions within the next 12 months.
We are subject to tax
audits in certain of our major tax jurisdictions, for years from and including 2009 onwards in Korea and for years from and including 2007 onwards in the US. In the course of such audits, local tax authorities may challenge the positions taken by
us.
|
|
|
|
|
ASML STATUTORY REPORT 2014 |
|
106 |
|
|
The composition of total deferred tax assets and liabilities in the Consolidated Financial Statements is as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred taxes
(in thousands) |
|
January 1, 2014
EUR |
|
|
Consolidated Statement of Profit or Loss EUR |
|
|
Equity
EUR |
|
|
Effect of changes in exchange rates EUR |
|
|
December 31,
2014
EUR |
|
Deferred tax assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized profits resulting from intercompany transactions |
|
|
58,077 |
|
|
|
32,683 |
|
|
|
- |
|
|
|
7,693 |
|
|
|
98,453 |
|
Capitalized R&D expenditures |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
R&D credits |
|
|
11,242 |
|
|
|
29,496 |
|
|
|
- |
|
|
|
2,623 |
|
|
|
43,361 |
|
Inventories |
|
|
46,661 |
|
|
|
10,639 |
|
|
|
- |
|
|
|
5,712 |
|
|
|
63,012 |
|
Deferred revenue |
|
|
16,409 |
|
|
|
3,061 |
|
|
|
- |
|
|
|
1,779 |
|
|
|
21,249 |
|
Accrued and other liabilities |
|
|
45,460 |
|
|
|
(3,630) |
|
|
|
- |
|
|
|
5,520 |
|
|
|
47,350 |
|
Installation and warranty reserve |
|
|
6,702 |
|
|
|
5,821 |
|
|
|
- |
|
|
|
1,147 |
|
|
|
13,670 |
|
Tax effect carry-forward losses |
|
|
67,282 |
|
|
|
(33,465) |
|
|
|
- |
|
|
|
5,289 |
|
|
|
39,106 |
|
Property, plant and equipment |
|
|
11,785 |
|
|
|
(6,102) |
|
|
|
- |
|
|
|
612 |
|
|
|
6,295 |
|
Restructuring and impairment |
|
|
3,361 |
|
|
|
(1,442) |
|
|
|
- |
|
|
|
364 |
|
|
|
2,283 |
|
Alternative minimum tax credits1 |
|
|
6,342 |
|
|
|
(1,467) |
|
|
|
- |
|
|
|
630 |
|
|
|
5,505 |
|
Share-based payments |
|
|
28,984 |
|
|
|
(12,330) |
|
|
|
(1,442) |
|
|
|
3,847 |
|
|
|
19,059 |
|
Other temporary differences |
|
|
11,661 |
|
|
|
14,099 |
|
|
|
- |
|
|
|
638 |
|
|
|
26,398 |
|
Total deferred tax assets2 |
|
|
313,966 |
|
|
|
37,363 |
|
|
|
(1,442) |
|
|
|
35,854 |
|
|
|
385,741 |
|
|
|
|
|
|
|
Deferred tax liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capitalized R&D expenditures |
|
|
(82,938) |
|
|
|
(59,886) |
|
|
|
- |
|
|
|
(6,330) |
|
|
|
(149,154) |
|
Intangible fixed assets |
|
|
(261,905) |
|
|
|
68,719 |
|
|
|
- |
|
|
|
(25,955) |
|
|
|
(219,141) |
|
Property, plant and equipment |
|
|
(17,592) |
|
|
|
(9,232) |
|
|
|
- |
|
|
|
(2,611) |
|
|
|
(29,435) |
|
Borrowing costs |
|
|
(1,823) |
|
|
|
(64) |
|
|
|
- |
|
|
|
- |
|
|
|
(1,887) |
|
Other temporary differences |
|
|
(12,800) |
|
|
|
4,055 |
|
|
|
- |
|
|
|
(264) |
|
|
|
(9,009) |
|
Total deferred tax liabilities |
|
|
(377,058) |
|
|
|
3,592 |
|
|
|
- |
|
|
|
(35,160) |
|
|
|
(408,626) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net deferred tax assets (liabilities) |
|
|
(63,092) |
|
|
|
40,955 |
|
|
|
(1,442) |
|
|
|
694 |
|
|
|
(22,885) |
|
|
|
|
|
|
|
Classified as: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax assets - non-current |
|
|
302,724 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
142,746 |
|
Deferred tax liabilities - non-current |
|
|
(365,816) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(165,631) |
|
Net deferred tax assets (liabilities) |
|
|
(63,092) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(22,885) |
|
|
|
|
1 |
Alternative minimum tax credits relate to prepaid US taxes which are credited against future taxable profits after the carry-forward losses used. |
2 |
Unrecognized tax assets as at December 31, 2014 amounted to EUR 25.4 million (2013: EUR 25.0 million). |
|
|
|
|
|
ASML STATUTORY REPORT 2014 |
|
107 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred taxes
(in thousands) |
|
January 1, 2013
EUR |
|
|
Acquisition
through
business
combinations
EUR |
|
|
Consolidated Statement of Profit or Loss EUR |
|
|
Equity
EUR |
|
|
Effect
of changes in exchange rates EUR |
|
|
December 31,
2013
EUR |
|
Deferred tax assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized profits resulting from intercompany transactions |
|
|
60,174 |
|
|
|
14,467 |
|
|
|
(11,893) |
|
|
|
- |
|
|
|
(4,671) |
|
|
|
58,077 |
|
Capitalized R&D expenditures |
|
|
8,669 |
|
|
|
- |
|
|
|
(8,669) |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Inventories |
|
|
28,167 |
|
|
|
10,258 |
|
|
|
9,269 |
|
|
|
- |
|
|
|
(1,033) |
|
|
|
46,661 |
|
Deferred revenue |
|
|
20,572 |
|
|
|
41,679 |
|
|
|
(43,035) |
|
|
|
- |
|
|
|
(2,807) |
|
|
|
16,409 |
|
Accrued and other liabilities |
|
|
21,528 |
|
|
|
7,148 |
|
|
|
17,960 |
|
|
|
- |
|
|
|
(1,176) |
|
|
|
45,460 |
|
Installation and warranty reserve |
|
|
7,151 |
|
|
|
- |
|
|
|
(174) |
|
|
|
- |
|
|
|
(275) |
|
|
|
6,702 |
|
Tax effect carry-forward losses |
|
|
5,557 |
|
|
|
754 |
|
|
|
61,551 |
|
|
|
- |
|
|
|
(580) |
|
|
|
67,282 |
|
Property, plant and equipment |
|
|
7,798 |
|
|
|
4,140 |
|
|
|
325 |
|
|
|
- |
|
|
|
(478) |
|
|
|
11,785 |
|
Restructuring and impairment |
|
|
4,336 |
|
|
|
- |
|
|
|
(791) |
|
|
|
- |
|
|
|
(184) |
|
|
|
3,361 |
|
Alternative minimum tax credits1 |
|
|
5,227 |
|
|
|
- |
|
|
|
1,349 |
|
|
|
- |
|
|
|
(234) |
|
|
|
6,342 |
|
Share-based payments |
|
|
5,493 |
|
|
|
16,885 |
|
|
|
4,550 |
|
|
|
3,327 |
|
|
|
(1,271) |
|
|
|
28,984 |
|
Other temporary differences |
|
|
13,966 |
|
|
|
2,234 |
|
|
|
(20) |
|
|
|
- |
|
|
|
(4,519) |
|
|
|
11,661 |
|
Total deferred tax assets2 |
|
|
188,638 |
|
|
|
97,565 |
|
|
|
30,422 |
|
|
|
3,327 |
|
|
|
(17,228) |
|
|
|
302,724 |
|
|
|
|
|
|
|
|
Deferred tax liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capitalized R&D expenditures |
|
|
(44,256) |
|
|
|
- |
|
|
|
(28,000) |
|
|
|
- |
|
|
|
560 |
|
|
|
(71,696) |
|
Intangible fixed assets |
|
|
- |
|
|
|
(286,337) |
|
|
|
8,730 |
|
|
|
- |
|
|
|
15,702 |
|
|
|
(261,905) |
|
Property, plant and equipment |
|
|
(25,890) |
|
|
|
(4,786) |
|
|
|
12,517 |
|
|
|
- |
|
|
|
567 |
|
|
|
(17,592) |
|
Borrowing costs |
|
|
(1,958) |
|
|
|
- |
|
|
|
135 |
|
|
|
- |
|
|
|
- |
|
|
|
(1,823) |
|
Other temporary differences |
|
|
(763) |
|
|
|
(303) |
|
|
|
(12,086) |
|
|
|
- |
|
|
|
352 |
|
|
|
(12,800) |
|
Total deferred tax liabilities |
|
|
(72,867) |
|
|
|
(291,426) |
|
|
|
(18,704) |
|
|
|
- |
|
|
|
17,181 |
|
|
|
(365,816) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net deferred tax assets (liabilities) |
|
|
115,771 |
|
|
|
(193,861) |
|
|
|
11,718 |
|
|
|
3,327 |
|
|
|
(47) |
|
|
|
(63,092) |
|
|
|
|
|
|
|
|
Classified as: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax assets - non-current |
|
|
188,638 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
302,724 |
|
Deferred tax liabilities - non-current |
|
|
(72,867) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(365,816) |
|
Net deferred tax assets (liabilities) |
|
|
115,771 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(63,092) |
|
|
|
|
1 |
Alternative minimum tax credits relate to prepaid US taxes which are credited against future taxable profits after the carry-forward losses used. |
2 |
Unrecognized tax assets as at December 31, 2013 amounted to EUR 25.0 million (2012: EUR 30.5 million). |
Tax Effect Carry-forward Losses
Deferred tax
assets from carry-forward losses recognised as per December 31, 2014 result predominantly from net operating loss carry-forwards incurred relating to NID stock in Belgium and various qualifying state tax losses in the US.
NID stock in Belgium can generally be offset against future profits realized in the 7 years following the year in which the NID stock occurs. The total
amount of NID stock is EUR 37.5 million (2013: 47.6 million) taxable base and EUR 12.7 million (2013: EUR 16.2 million) tax effect.
Net operating losses qualifying as tax losses under US federal tax laws incurred by US group companies can in general be offset against future profits
realized in 20 years following the year in which the losses are incurred. The total amount of losses carried forward under US federal tax laws as of December 31, 2014, is EUR 44.6 million (2013: EUR 67.5 million) tax basis or EUR
15.6 million (2013: EUR 23.6 million) tax effect. The total amount of losses carried forward under US state tax laws as of December 31, 2014, is EUR 77.7 million (2013: EUR 254.3 million) tax basis or EUR 3.7 million (2013: EUR
7.9 million) tax effect. Our ability to use US state tax loss carry forwards in existence at December 31, 2014, is subject to varying state statutes (providing for periods of between 5 and 20 years).
|
|
|
|
|
ASML STATUTORY REPORT 2014 |
|
108 |
|
|
28. Subsidiaries
Details of our main subsidiaries at December 31, 2014 are as follows:
|
|
|
Legal Entity |
|
Country of Incorporation |
Main subsidiaries of ASML Holding N.V.1: |
|
|
ASML Netherlands B.V. |
|
Netherlands (Veldhoven) |
ASML Systems B.V. |
|
Netherlands (Veldhoven) |
ASML Germany GmbH |
|
Germany (Dresden) |
ASML France S.a.r.l. |
|
France (Bernin) |
ASML (UK) Ltd. |
|
UK (Edinburgh (Scotland)) |
ASML Israel (2001) Ltd. |
|
Israel (Ramat-Gan) |
ASML Ireland Ltd. |
|
Ireland (Dublin) |
ASML Italy S.r.l. |
|
Italy (Avezzano) |
ASML Hong Kong Ltd. |
|
Hong Kong SAR |
ASML Singapore Pte. Ltd. |
|
Singapore |
ASML Korea Co. Ltd. |
|
Korea (Kyunggi-Do) |
ASML Japan Co. Ltd. |
|
Japan (Kawasaki-shi, Kanagawa-Ken) |
ASML (Shanghai) Lithography Facilities Science and Technology Co. Ltd. |
|
China (Shanghai) |
ASML Taiwan Ltd. |
|
Taiwan (Hsinchu) |
ASML Equipment Malaysia Sdn. Bhd. |
|
Malaysia (Penang) |
ASML Belgium BVBA |
|
Belgium (Essen) |
ASML Belgium Finance CV |
|
Belgium (Essen) |
Brion Technologies (Shenzhen) Co. Ltd. |
|
China (Shenzhen) |
Brion Technologies, Inc. |
|
US (Wilmington, Delaware) |
ASML US, Inc. |
|
US (Wilmington, Delaware) |
ASML Capital US, Inc. |
|
US (Wilmington, Delaware) |
ASML MaskTools, Inc. |
|
US (Dover, Delaware) |
ASML Participations US Inc. |
|
US (Wilmington, Delaware) |
Lehrer Pearson, Inc. |
|
US (Wilmington, Delaware) |
ASML Ventures 1, Inc. |
|
US (Wilmington, Delaware) |
Cymer, LLC. |
|
US (Reno, Nevada) |
eLith LLC. |
|
US (Wilmington, Delaware) |
ASML Hong Kong Logistic Services Ltd. |
|
Hong Kong SAR |
Cymer B.V. |
|
Netherlands (Amsterdam) |
Cymer Japan, Inc. |
|
Japan (Tokyo) |
Cymer Korea, Inc. |
|
Korea (Kyunggi-Do) |
Cymer Singapore Pte Ltd. |
|
Singapore |
Cymer Southeast Asia Ltd. |
|
Taiwan (Hsinchu) |
Cymer Semiconductor Equipment (Shanghai) Co. Ltd. |
|
China (Pudong) |
TCZ, LLC. |
|
US (Reno, Nevada) |
TCZ Pte Ltd. |
|
Singapore |
TCZ GmbH |
|
Germany (Oberkochen) |
1 |
All of our subsidiaries are (directly or indirectly) wholly-owned, with exception of eLith LLC, in which we hold an interest of 50 percent. |
29. Segment Disclosure
Segment information
has been prepared in accordance with IFRS 8, Operating Segments.
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:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31
(in thousands) |
|
2014 EUR |
|
|
2013 EUR |
|
|
|
|
|
|
New systems |
|
|
4,127,433 |
|
|
|
3,890,154 |
|
Used systems |
|
|
115,357 |
|
|
|
102,975 |
|
|
|
Net system sales |
|
|
4,242,790 |
|
|
|
3,993,129 |
|
|
|
|
|
|
ASML STATUTORY REPORT 2014 |
|
109 |
|
|
Net system sales per technology were as follows:
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31 (in thousands) |
|
Net system sales in units |
|
|
Net system sales in EUR |
|
|
|
2014 |
|
|
|
|
|
|
|
|
EUV |
|
|
5 |
|
|
|
299,845 |
|
ArFi |
|
|
76 |
|
|
|
3,477,718 |
|
ArF dry |
|
|
3 |
|
|
|
32,611 |
|
KrF |
|
|
38 |
|
|
|
381,436 |
|
I-line |
|
|
14 |
|
|
|
51,180 |
|
|
|
Total |
|
|
136 |
|
|
|
4,242,790 |
|
|
|
|
2013 |
|
|
|
|
|
|
|
|
EUV |
|
|
1 |
|
|
|
60,100 |
|
ArFi |
|
|
77 |
|
|
|
3,120,719 |
|
ArF dry |
|
|
2 |
|
|
|
38,019 |
|
KrF |
|
|
64 |
|
|
|
720,053 |
|
I-line |
|
|
13 |
|
|
|
54,238 |
|
|
|
Total |
|
|
157 |
|
|
|
3,993,129 |
|
The increase in net system sales of EUR 249.7 million, or 6.3 percent, to EUR 4,242.8 million in 2014 from EUR 3,993.1 million in 2013 is caused by higher NXE:3300B system sales.
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.
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31 (in thousands) |
|
2014 EUR |
|
|
2013 EUR |
|
|
|
|
|
|
Net system sales |
|
|
4,242,790 |
|
|
|
3,993,129 |
|
Net service and field option sales |
|
|
1,613,487 |
|
|
|
1,252,197 |
|
|
|
|
|
|
Total net sales |
|
|
5,856,277 |
|
|
|
5,245,326 |
|
Cost of system sales |
|
|
(2,335,512) |
|
|
|
(2,233,621) |
|
Cost of service and field option sales |
|
|
(924,391) |
|
|
|
(834,443) |
|
|
|
|
|
|
Total cost of sales |
|
|
(3,259,903) |
|
|
|
(3,068,064) |
|
|
|
|
Gross profit |
|
|
2,596,374 |
|
|
|
2,177,262 |
|
Other income |
|
|
81,006 |
|
|
|
64,456 |
|
Research and development costs |
|
|
(1,074,035) |
|
|
|
(882,029) |
|
Selling, general and administrative costs |
|
|
(321,110) |
|
|
|
(311,741) |
|
|
|
|
|
|
Income from operations |
|
|
1,282,235 |
|
|
|
1,047,948 |
|
Interest and other, net |
|
|
(8,600) |
|
|
|
(24,471) |
|
|
|
|
|
|
Income before income taxes |
|
|
1,273,635 |
|
|
|
1,023,477 |
|
Provision for income taxes |
|
|
(76,995) |
|
|
|
(7,987) |
|
|
|
|
|
|
Net income |
|
|
1,196,640 |
|
|
|
1,015,490 |
|
Differences US GAAP and IFRS-EU |
|
|
221,680 |
|
|
|
178,354 |
|
|
|
|
|
|
Net income based on IFRS-EU |
|
|
1,418,320 |
|
|
|
1,193,844 |
|
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:
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31
(in thousands) |
|
2014 EUR |
|
|
2013 EUR |
|
|
|
|
|
|
Total assets for management reporting purposes |
|
|
12,203,945 |
|
|
|
11,513,730 |
|
Differences US GAAP and IFRS-EU |
|
|
863,466 |
|
|
|
689,635 |
|
|
|
Total assets based on IFRS-EU |
|
|
13,067,411 |
|
|
|
12,203,365 |
|
For geographical reporting, 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.
|
|
|
|
|
ASML STATUTORY REPORT 2014 |
|
110 |
|
|
Net sales and non-current assets by geographic region were as follows:
|
|
|
|
|
|
|
|
|
Year ended December 31 (in thousands) |
|
Net sales EUR |
|
|
Non- current assets EUR |
|
|
|
2014 |
|
|
|
|
|
|
|
|
Japan |
|
|
477,110 |
|
|
|
3,990 |
|
Korea |
|
|
1,624,059 |
|
|
|
18,021 |
|
Singapore |
|
|
132,593 |
|
|
|
879 |
|
Taiwan |
|
|
1,124,883 |
|
|
|
64,575 |
|
Rest of Asia |
|
|
405,576 |
|
|
|
3,826 |
|
Netherlands |
|
|
1,334 |
|
|
|
2,287,968 |
|
Rest of Europe |
|
|
196,332 |
|
|
|
6,479 |
|
United States |
|
|
1,894,390 |
|
|
|
3,403,907 |
|
|
|
Total |
|
|
5,856,277 |
|
|
|
5,789,645 |
|
|
|
|
2013 |
|
|
|
|
|
|
|
|
Japan |
|
|
201,664 |
|
|
|
2,679 |
|
Korea |
|
|
1,286,509 |
|
|
|
13,347 |
|
Singapore |
|
|
139,313 |
|
|
|
837 |
|
Taiwan |
|
|
2,221,426 |
|
|
|
48,076 |
|
Rest of Asia |
|
|
478,234 |
|
|
|
3,427 |
|
Netherlands |
|
|
11,525 |
|
|
|
1,783,999 |
|
Rest of Europe |
|
|
187,030 |
|
|
|
1,830 |
|
United States |
|
|
719,625 |
|
|
|
3,084,872 |
|
|
|
Total |
|
|
5,245,326 |
|
|
|
4,939,067 |
|
In 2014, net sales to the largest customer accounted for EUR 1,532.1 million, or 26.2 percent, of net sales (2013: EUR 2,058.6 million, or 39.2 percent, of net sales). Our three largest customers
(based on net sales) accounted for EUR 643.2 million, or 49.3 percent, of accounts receivable and finance receivables at December 31, 2014, compared with EUR 861.4 million, or 73.3 percent, at December 31, 2013.
Substantially all of our sales were export sales in 2014 and 2013.
30. Selected Operating Expenses and Additional Information
Personnel expenses for all payroll
employees were:
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31 (in thousands) |
|
2014 EUR |
|
|
2013 EUR |
|
|
|
Wages and salaries |
|
|
985,883 |
|
|
|
835,563 |
|
Social security expenses |
|
|
81,721 |
|
|
|
69,839 |
|
Pension and retirement expenses |
|
|
71,316 |
|
|
|
60,275 |
|
Share-based payments |
|
|
55,695 |
|
|
|
47,422 |
|
|
|
|
|
|
Personnel expenses |
|
|
1,194,615 |
|
|
|
1,013,099 |
|
The average number of payroll employees in FTEs during 2014 and 2013 was 10,942 and 9,540, respectively.
|
|
|
|
|
ASML STATUTORY REPORT 2014 |
|
111 |
|
|
The total number of payroll and temporary employees in FTEs per sector was:
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31 |
|
2014 |
|
|
2013 |
|
|
|
Customer Support |
|
|
3,289 |
|
|
|
2,949 |
|
SG&A |
|
|
1,240 |
|
|
|
1,098 |
|
Industrial
Engineering1 |
|
|
- |
|
|
|
785 |
|
Manufacturing & Logistics |
|
|
3,846 |
|
|
|
3,658 |
|
R&D |
|
|
5,697 |
|
|
|
4,735 |
|
|
|
Total employees (in FTEs) |
|
|
14,072 |
|
|
|
13,225 |
|
|
|
Less: Temporary employees (in FTEs) |
|
|
2,754 |
|
|
|
2,865 |
|
|
|
|
|
|
Payroll employees (in FTEs) |
|
|
11,318 |
|
|
|
10,360 |
|
1 |
As of January 1, 2014, our industrial engineering department has been incorporated into R&D |
The average number of payroll employees in FTEs in our operations in the Netherlands during 2014 and 2013 was 5,589 and 5,112, respectively. The increase in
2014 compared to 2013 in payroll employees in FTEs is in line with our net sales growth.
31. Board of Management and Supervisory Board Remuneration
The remuneration of the BoM for the financial year 2014 is based upon the 2014 Remuneration Policy, as adopted by the General Meeting of
Shareholders on April 24, 2013, and which became effective per January 1, 2014. Some adjustments to the 2014 Remuneration Policy were adopted by the General Meeting of Shareholders on April 23, 2014, and are applicable retro-actively
as from January 1, 2014. The Supervisory Board ensures that the policy and its implementation are linked to the companys objectives.
Appointment of Mr. Nickl as new member of the Board of Management
ASMLs CFO Mr. Nickl was first appointed as member of the BoM per the General Meeting of Shareholders on April 23, 2014 for a period of four years. The remuneration package of Mr. Nickl,
which has been laid down in a management services agreement, is fully in line with the 2014 Remuneration Policy and the applicable Corporate Governance standards. The management services agreement contains specific provisions regarding benefits upon
termination of the agreement; a severance amount is restricted to one year base salary.
ASML compensated part of the shares and stock options
that were forfeited when Mr. Nickl left his former company in the United States. This compensation takes the form of a maximum of 56,000 performance related shares awarded in 2014, subject to the performance conditions, a three year vesting
period and a two year holding period as applicable under the 2014 Remuneration Policy.
Termination of the employment agreement with
Mr. Meurice
The employment agreement with Mr. Meurice has continued until March 31, 2014. The terms and conditions under the
employment contract have been honored until that date, in accordance with the 2010 Remuneration Policy.
A pro-rated compensation (consisting of
2013 base salary and an short term incentive at target) has applied for the period from January through March 2014. In addition, for the services in the first quarter of 2014, the share-based compensation element of Mr. Meurices
remuneration has been settled in cash and calculated as 15,167.75 shares, multiplied by the share price effective as of the date of termination of the employment agreement. ASML has reimbursed reasonable repatriation and moving costs made. No
severance payment has been given to Mr. Meurice.
2014 Remuneration Table - Board of Management and former Board of Management
Effective January 1, 2014, the base salary for all members of the BoM has been set according to the 2014 Remuneration Policy. Part of
this policy is the change in the pay mix at ASML: a shift to less variable pay and more fixed pay, which is reflected in the 2014 base salaries. The base salary for the Presidents is set in the middle of the CEO benchmark and the CTO/CFO benchmark.
In 2014, the Short Term Incentive resulted in a cash payout of 127.95% percent of the target payout. 1 out of 5 performance criteria was
achieved just above target and 2 performance criteria were achieved between target and maximum. Two criteria were achieved at maximum performance level. The outcome thereof results in a cash payout of EUR 2.85 million representing 76.77%
percent of the base salary of the members of the BoM.
|
|
|
|
|
ASML STATUTORY REPORT 2014 |
|
112 |
|
|
Total Direct Compensation, Pension and Other Benefits
The remuneration of the members of the BoM and former members of the BoM in 2014, 2013 and 2012 was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed
|
|
Short-term (variable)
|
|
Long-term
(variable) |
|
|
|
Subtotal Remuneration |
|
Other
|
|
Total Remuneration |
|
|
|
|
|
|
|
|
|
|
Board of Management |
|
Financial Year |
|
Base salary EUR |
|
STI (Cash)1
EUR |
|
LTI (share awards)2 EUR |
|
|
|
Subtotal6 EUR |
|
Pension EUR |
|
|
Other benefits and
expense reimbursement7 EUR |
|
Total13 EUR |
P.T.F.M. Wennink |
|
2014 |
|
935,000 |
|
717,800 |
|
1,676,213 |
|
3 |
|
3,329,013 |
|
|
161,271 |
|
|
49,462 |
|
3,539,747 |
|
|
2013 |
|
681,500 |
|
407,673 |
|
1,349,115 |
|
4 |
|
2,438,288 |
|
|
106,033 |
|
|
45,848 |
|
2,590,169 |
|
|
2012 |
|
508,000 |
|
304,800 |
|
1,289,415 |
|
5 |
|
2,102,215 |
|
|
79,190 |
|
|
46,275 |
|
2,227,680 |
M.A. van den Brink |
|
2014 |
|
935,000 |
|
717,800 |
|
1,752,299 |
|
3 |
|
3,405,099 |
|
|
161,271 |
|
|
49,105 |
|
3,615,475 |
|
|
2013 |
|
697,000 |
|
416,945 |
|
1,429,197 |
|
4 |
|
2,543,142 |
|
|
112,481 |
|
|
45,920 |
|
2,701,543 |
|
|
2012 |
|
538,000 |
|
322,800 |
|
1,366,039 |
|
5 |
|
2,226,839 |
|
|
83,990 |
|
|
47,540 |
|
2,358,369 |
W.U. Nickl |
|
2014 |
|
600,000 |
|
460,620 |
|
1,385,835 |
|
|
|
2,446,455 |
|
|
44,578 |
|
|
145,34612 |
|
2,636,379 |
|
|
201311 |
|
50,000 |
|
65,0009 |
|
- |
|
|
|
115,000 |
|
|
4,547 |
|
|
12,936 |
|
132,483 |
|
|
2012 |
|
- |
|
- |
|
- |
|
|
|
- |
|
|
- |
|
|
- |
|
- |
F.J. van Hout |
|
2014 |
|
627,000 |
|
481,348 |
|
1,388,070 |
|
3 |
|
2,496,418 |
|
|
82,216 |
|
|
43,244 |
|
2,621,878 |
|
|
2013 |
|
458,000 |
|
273,976 |
|
1,182,907 |
|
4 |
|
1,914,883 |
|
|
71,164 |
|
|
42,910 |
|
2,028,957 |
|
|
2012 |
|
445,000 |
|
267,000 |
|
1,131,676 |
|
5 |
|
1,843,676 |
|
|
69,110 |
|
|
37,313 |
|
1,950,099 |
F.J.M. Schneider-Manoury |
|
2014 |
|
611,000 |
|
469,065 |
|
1,351,343 |
|
3 |
|
2,431,408 |
|
|
80,072 |
|
|
28,812 |
|
2,540,292 |
|
|
2013 |
|
446,000 |
|
266,797 |
|
1,150,392 |
|
4 |
|
1,863,189 |
|
|
69,244 |
|
|
28,426 |
|
1,960,859 |
|
|
2012 |
|
433,000 |
|
259,800 |
|
1,144,137 |
|
|
|
1,836,937 |
|
|
67,190 |
|
|
28,889 |
|
1,933,016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed
|
|
Short-term (variable)
|
|
Long-term (variable) |
|
|
|
Subtotal Remuneration |
|
Other
|
|
Total Remuneration |
|
|
|
|
|
|
|
|
|
|
Former Board of Management |
|
Financial Year |
|
Base salary EUR |
|
STI (Cash) EUR |
|
LTI (share awards)2 EUR |
|
|
|
Subtotal6 EUR |
|
Pension EUR |
|
|
Other benefits and
expense reimbursement7 EUR |
|
Total13 EUR |
E. Meurice |
|
2014 |
|
210,750 |
|
1,177,79010 |
|
- |
|
|
|
1,388,540 |
|
|
36,293 |
|
|
19,256 |
|
1,444,089 |
|
|
2013 |
|
843,000 |
|
630,3531 |
|
5,837,399 |
|
4,8 |
|
7,310,752 |
|
|
172,593 |
|
|
107,500 |
|
7,590,845 |
|
|
2012 |
|
818,000 |
|
613,5001 |
|
2,079,601 |
|
5 |
|
3,511,101 |
|
|
167,427 |
|
|
127,116 |
|
3,805,644 |
1 |
Actual STI (cash) chargeable to the company in the financial year (i.e. STI relating to performance in the current year but paid out in the next financial year).
|
2 |
The remuneration reported as part of the LTI (share awards) is based on cost incurred under US GAAP and IFRS-EU. The costs of share awards are charged to the
Consolidated Statement of Profit or Loss over the 3 year vesting period based on the maximum achievable number of share awards. Therefore the costs for e.g. the financial year 2014 include costs of the BoM performance share plan 2014, 2013 and 2012.
Furthermore the difference between the amount based on the maximum achievable number of share awards and the amount based on the actual number of share awards that vest, is released to the Consolidated Statement of Profit or Loss in the financial
year in which the share awards vest. For actual number of share awards and more details see the details of shares held by members of the BoM. |
3 |
The remuneration reported as part of the LTI (share awards) for the year 201 4 includes an adjustment for the BoM performance share plan 2011 based on the actual number of
share awards vested in 2014. The adjustment for Mr Wennink, Mr van den Brink, Mr van Hout and Mr. Schneider-Maunoury amounts to EUR -77,769, EUR -82,409, EUR -68,320, EUR -66,312, respectively. |
4 |
The remuneration reported as part of the LTI (share awards) for the year 201 3 includes an adjustment for the BoM performance share plan 201 0 based on the actual number
of share awards vested in 2013. The adjustment for Mr Wennink, Mr van den Brink, Mr van Hout, Mr. Schneider-Maunoury and for Mr Meurice amounts to EUR -63,035, EUR -66,795, EUR -55,376, EUR -53,748, EUR -101,740, respectively.
|
5 |
The remuneration reported as part of the LTI (share awards) for the year 2012 includes an adjustment for the BoM performance share plan 2009 based on the actual number of
share awards vested in 2012. The adjustment for Mr Wennink, Mr van den Brink, Mr van Hout and for Mr Meurice amounts to EUR -65,785, EUR -69,831, EUR -57,838, EUR -106,266, respectively. |
6 |
This subtotal reflects base salary, STI (cash) and LTI (share awards). |
7 |
Other benefits and expense reimbursement are gross amounts and may include housing costs, company car costs, travel expenses, social security costs, health and disability
insurance costs and representation allowances. |
8 |
The remuneration reported as part of the LTI (share awards) for the year 201 3 mainly includes costs related to the accellerated vesting of the share awards for the share
plans 2011, 2012 and 2013. |
9 |
Mr. Nickl is partly compensated for his loss of 2013 variable income at his previous employer; he has received from ASML Euro 65,000 per month for every month in
function in 2013. |
10 |
Mr. Meurice received a pro-rated compensation of the short term incentive of 75% of his gross salary in 2014 which is equal to EUR 158,063. In addition, the
share-based compensation element of Mr. Meurices remuneration was calculated as 15,167.75 shares and has been settled in cash at a share price of EUR 67.23. Both have been paid in 2014. |
11 |
Mr. Nickl was not part of BoM during 2013. |
12 |
During 201 4, Mr. Nickl received a temporary allowance of EUR 99,026 to cover relocation and housing costs (gross amount before taxes). |
13 |
This total reflects the Subtotal Remuneration, Pension and the Other benefits and expense reimbursement. |
Short-term Incentive (STI)
The Short Term
Incentive refers to the annual performance related cash incentive that is applicable to all members of the BoM. The target level of the STI is 60% of base salary. In case of excellent performance the maximum opportunity amounts to 90% of base
salary.
In order to achieve alignment between the remuneration of the BoM and other ASML employees, the policy includes a modifier on the STI
payout that is connected to the profit sharing program for employees. This modifier enables the Supervisory Board to discretionary adjust the STI payout of the BoM upward with 10% of base salary or downward with 20% of base salary. In 2014, the
Supervisory Board has not made adjustments to the STI payout based on this modifier.
|
|
|
|
|
ASML STATUTORY REPORT 2014 |
|
113 |
|
|
For the Short Term Incentive the following performance criteria have been applied in 2014:
|
|
|
|
|
|
|
On target payout (as % of base salary) |
|
|
|
Financial |
|
Board of Management |
|
|
|
1 Direct Material Margin on New Systems (excl. EUV) |
|
|
12.0% |
|
2 Total Company Cost Base |
|
|
12.0% |
|
3 Cash (Free Cash Flow and Cash Conversion Cycle) |
|
|
12.0% |
|
|
|
Qualitative |
|
|
|
|
|
|
4 Technology Leadership Index |
|
|
12.0% |
|
5 Market Position |
|
|
12.0% |
|
|
|
Total |
|
|
60.0% |
|
These performance measures reflect the drivers for ASML in a balanced mix of qualitative measures based on technology objectives and the quality of our service to customers, and quantitative financial
measures. The weighting is equally set for all five performance measures on 20%, being 12% of base salary.
For each of the performance criteria
the Supervisory Board sets challenging, but realistic target levels. The target setting and performance review occur in principle on an annual basis. Direct Material Margin on New Systems, Total Company Cost Base and Free Cash Flow are set and
reviewed semi-annually. All performance measures are set in advance and do not change during the performance period. The overall payout is annual and will be executed in the next financial year. The cash incentive is accrued during the performance
period.
The performance target setting and performance evaluation are conducted in cooperation with the relevant Committees of the Supervisory
Board. The technology target is set and evaluated in cooperation with the Technology and Strategy Committee, whereas financial targets are set and evaluated in cooperation with the Audit Committee. The Companys external auditor is engaged to
perform agreed upon procedures to verify the consistent application of the approved calculation method and the accuracy of the calculations of STI outcomes.
The payout levels are prorated upon the level of achievement of the five performance criteria. There is no payout below threshold performance. Meeting threshold performance will result in a payout of 50% of
target payout. In case of excellent performance the maximum payout is capped at 150% of target payout. The target payout is 60% of base salary.
Long Term Incentive (LTI)
The Long Term
Incentive refers to the share based incentive. All members of the BoM are eligible to receive performance related shares. The target level of the Long Term Incentive is set at 70% of base salary. In case of excellent performance the maximum
opportunity amounts to 140% of base salary.
The performance shares are conditionally granted on an annual basis to the members of the BoM. The
shares will become unconditional depending on the achievement of predetermined performance targets during a three-year performance period. Each performance period starts on the first day of the year of the grant. The number of performance shares to
be conditionally awarded is calculated at the beginning of the period, using the volume weighted average share price of ASML during the last quarter of the year preceding the conditional award. Performance shares are granted in January of the year
in which the three-year performance period starts, two days after the publication of ASMLs annual results.
Two types of performance
measures relate to the Long Term Incentive: ASMLs relative Return On Average Invested Capital (ROAIC) position compared to the performance Peer Group and long term strategic qualitative targets to ensure ASMLs ability to keep performing
at high standards. For the performance period 2014-2016 the qualitative targets relate to the longer term Technology Leadership Index and Sustainability. Like with the STI performance criteria, also the LTI criteria reflect the drivers of ASML: push
technology development, earn the money to enable this, and do it in a responsible way. Details of the Companys approach on sustainability are published in ASMLs Corporate Responsibility Report.
|
|
|
|
|
ASML STATUTORY REPORT 2014 |
|
114 |
|
|
The LTI performance measures have the following weights:
|
|
|
|
|
LTI performance measure |
|
Weight |
|
|
|
ROAIC |
|
|
80% |
|
Technology Leadership Index |
|
|
15% |
|
Sustainability |
|
|
5% |
|
|
|
Total |
|
|
100% |
|
The intention is to increase the weight of the qualitative LTI measures over time while reducing the weight of the ROAIC component.
The maximum number of conditionally granted shares that the member of the BoM may acquire if specific performance criteria are achieved, and provided that applicable employment conditions are met, is
included in the table below. If the specific performance criteria are not achieved, and/or applicable employment conditions are not met, no performance shares will become unconditional.
The table below provides a comprehensive overview of conditional share awards that are granted in the performance period and unconditional share awards that are included in the holding period or that have
become free tradable in 2014.
Details of performance shares granted to members of the BoM are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Board of Management |
|
Grant date |
|
|
Status |
|
|
Full control |
|
|
Number of shares at grant
date |
|
|
Fair value at grant date1 |
|
|
Vesting date |
|
|
Number of shares at vesting date |
|
|
End of lock- up date |
|
|
|
P.T.F.M. Wennink |
|
|
1/24/2014 |
|
|
|
Conditional |
|
|
|
No |
|
|
|
19,280 |
|
|
|
64.39 |
|
|
|
1/24/2017 |
|
|
|
- |
|
|
|
1/24/2019 |
|
|
|
|
4/19/2013 |
|
|
|
Conditional |
|
|
|
No |
|
|
|
35,035 |
|
|
|
55.47 |
|
|
|
4/19/2016 |
|
|
|
- |
|
|
|
4/19/2018 |
|
|
|
|
4/18/2012 |
|
|
|
Conditional |
|
|
|
No |
|
|
|
45,689 |
|
|
|
37.33 |
|
|
|
4/18/2015 |
|
|
|
- |
|
|
|
4/18/2017 |
|
|
|
|
4/13/2011 |
|
|
|
Unconditional |
|
|
|
No |
|
|
|
54,974 |
|
|
|
28.29 |
|
|
|
4/13/2014 |
|
|
|
52,225 |
|
|
|
4/13/2016 |
|
|
|
|
2/1/2010 |
|
|
|
Unconditional |
|
|
|
No |
|
|
|
54,974 |
|
|
|
22.93 |
|
|
|
2/1/2013 |
|
|
|
52,225 |
|
|
|
2/1/2015 |
|
|
|
|
2/2/2009 |
|
|
|
Unconditional |
|
|
|
Yes |
|
|
|
35,287 |
|
|
|
13.05 |
|
|
|
2/2/2012 |
|
|
|
30,246 |
2 |
|
|
2/2/2014 |
|
M.A. van den Brink |
|
|
1/24/2014 |
|
|
|
Conditional |
|
|
|
No |
|
|
|
19,280 |
|
|
|
64.39 |
|
|
|
1/24/2017 |
|
|
|
- |
|
|
|
1/24/2019 |
|
|
|
|
4/19/2013 |
|
|
|
Conditional |
|
|
|
No |
|
|
|
37,111 |
|
|
|
55.47 |
|
|
|
4/19/2016 |
|
|
|
- |
|
|
|
4/19/2018 |
|
|
|
|
4/18/2012 |
|
|
|
Conditional |
|
|
|
No |
|
|
|
48,387 |
|
|
|
37.33 |
|
|
|
4/18/2015 |
|
|
|
- |
|
|
|
4/18/2017 |
|
|
|
|
4/13/2011 |
|
|
|
Unconditional |
|
|
|
No |
|
|
|
58,256 |
|
|
|
28.29 |
|
|
|
4/13/2014 |
|
|
|
55,343 |
|
|
|
4/13/2016 |
|
|
|
|
2/1/2010 |
|
|
|
Unconditional |
|
|
|
No |
|
|
|
58,256 |
|
|
|
22.93 |
|
|
|
2/1/2013 |
|
|
|
55,343 |
|
|
|
2/1/2015 |
|
|
|
|
2/2/2009 |
|
|
|
Unconditional |
|
|
|
Yes |
|
|
|
37,458 |
|
|
|
13.05 |
|
|
|
2/2/2012 |
|
|
|
32,107 |
2 |
|
|
2/2/2014 |
|
W.U. Nickl |
|
|
1/24/2014 |
|
|
|
Conditional |
|
|
|
No |
|
|
|
12,373 |
|
|
|
64.39 |
|
|
|
1/24/2017 |
|
|
|
- |
|
|
|
1/24/2019 |
|
|
|
|
1/24/2014 |
|
|
|
Conditional |
|
|
|
No |
|
|
|
56,000 |
3 |
|
|
64.39 |
|
|
|
1/24/2017 |
|
|
|
- |
|
|
|
1/24/2019 |
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
F.J. van Hout |
|
|
1/24/2014 |
|
|
|
Conditional |
|
|
|
No |
|
|
|
12,929 |
|
|
|
64.39 |
|
|
|
1/24/2017 |
|
|
|
- |
|
|
|
1/24/2019 |
|
|
|
|
4/19/2013 |
|
|
|
Conditional |
|
|
|
No |
|
|
|
30,681 |
|
|
|
55.47 |
|
|
|
4/19/2016 |
|
|
|
- |
|
|
|
4/19/2018 |
|
|
|
|
4/18/2012 |
|
|
|
Conditional |
|
|
|
No |
|
|
|
40,023 |
|
|
|
37.33 |
|
|
|
4/18/2015 |
|
|
|
- |
|
|
|
4/18/2017 |
|
|
|
|
4/13/2011 |
|
|
|
Unconditional |
|
|
|
No |
|
|
|
48,293 |
|
|
|
28.29 |
|
|
|
4/13/2014 |
|
|
|
45,878 |
|
|
|
4/13/2016 |
|
|
|
|
2/1/2010 |
|
|
|
Unconditional |
|
|
|
No |
|
|
|
48,293 |
|
|
|
22.93 |
|
|
|
2/1/2013 |
|
|
|
45,878 |
|
|
|
2/1/2015 |
|
|
|
|
2/2/2009 |
|
|
|
Unconditional |
|
|
|
Yes |
|
|
|
31,021 |
|
|
|
13.05 |
|
|
|
2/2/2012 |
|
|
|
26,589 |
2 |
|
|
2/2/2014 |
|
F.J.M. Schneider-Maunoury |
|
|
1/24/2014 |
|
|
|
Conditional |
|
|
|
No |
|
|
|
12,599 |
|
|
|
64.39 |
|
|
|
1/24/2017 |
|
|
|
- |
|
|
|
1/24/2019 |
|
|
|
|
4/19/2013 |
|
|
|
Conditional |
|
|
|
No |
|
|
|
29,877 |
|
|
|
55.47 |
|
|
|
4/19/2016 |
|
|
|
- |
|
|
|
4/19/2018 |
|
|
|
|
4/18/2012 |
|
|
|
Conditional |
|
|
|
No |
|
|
|
38,944 |
|
|
|
37.33 |
|
|
|
4/18/2015 |
|
|
|
- |
|
|
|
4/18/2017 |
|
|
|
|
4/13/2011 |
|
|
|
Unconditional |
|
|
|
No |
|
|
|
46,886 |
|
|
|
28.29 |
|
|
|
4/13/2014 |
|
|
|
44,542 |
|
|
|
4/13/2016 |
|
|
|
|
2/1/2010 |
|
|
|
Unconditional |
|
|
|
No |
|
|
|
46,886 |
|
|
|
22.93 |
|
|
|
2/1/2013 |
|
|
|
44,542 |
|
|
|
2/1/2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Former Board of Management |
|
Grant date |
|
|
Status |
|
|
Full control |
|
|
Number of shares at grant
date |
|
|
Fair value at grant date1 |
|
|
Vesting date |
|
|
Number of shares at vesting date |
|
|
End of lock- up date |
|
|
|
E. Meurice |
|
|
4/19/2013 |
|
|
|
Unconditional |
|
|
|
Yes |
|
|
|
56,471 |
|
|
|
55.47 |
|
|
|
4/7/2014 |
|
|
|
53,647 |
|
|
|
4/7/2014 |
|
|
|
|
4/18/2012 |
|
|
|
Unconditional |
|
|
|
Yes |
|
|
|
73,570 |
|
|
|
37.33 |
|
|
|
4/7/2014 |
|
|
|
69,891 |
|
|
|
4/7/2014 |
|
|
|
|
4/13/2011 |
|
|
|
Unconditional |
|
|
|
Yes |
|
|
|
88,732 |
|
|
|
28.29 |
|
|
|
1/31/2014 |
|
|
|
84,295 |
|
|
|
1/31/2014 |
|
|
|
|
2/1/2010 |
|
|
|
Unconditional |
|
|
|
Yes |
|
|
|
29,578 |
|
|
|
22.93 |
|
|
|
2/1/2013 |
|
|
|
28,099 |
|
|
|
1/2/2014 |
|
|
|
|
2/2/2009 |
|
|
|
Unconditional |
|
|
|
Yes |
|
|
|
19,000 |
|
|
|
13.05 |
|
|
|
2/2/2012 |
|
|
|
16,287 |
2,4 |
|
|
1/2/2014 |
|
1 |
The fair value of the shares as of the grant date. |
2 |
The number of shares included in the lock-up period were reduced in 2012 as a result of the synthetic share buy back due to an exchange for each 100 ordinary shares for 77
ordinary shares. The number of shares vested in 2012 after the synthetic share buy back for Mr. Wennink, Mr. van den Brink and for Mr. van Hout are 23,289 shares, 24,722 shares and 20,473 shares, respectively.
|
3 |
ASML compensated part of the shares and stock options that were forfeited when Mr. Nickl left his former company in the United States. This compensation takes the
form of a maximum of 56,000 performance related shares awarded in 2014, subject to the performance conditions, a three year vesting period and a two year holding period as applicable under the 2014 Remuneration Policy. |
4 |
The number of shares vested in 2012 after the synthetic share buy back for Mr. Meurice was 37,621 shares for which 25,080 shares were already out of the lock-up
period in 2013. |
|
|
|
|
|
ASML STATUTORY REPORT 2014 |
|
115 |
|
|
Pensions
The pension arrangement for the BoM is set at the median of executive pensions in the Netherlands. The arrangement is aligned with the supplementary pension arrangement for ASML employees in the Netherlands.
The plan is a defined contribution opportunity as laid down in Dutch fiscal regulations. The total defined contribution is a percentage of the pensionable salary, which is equal to the base salary minus Witteveen-threshold1, and depends on the participants age at the beginning of the year. The
total net contribution is according to the maximum level as allowed by Dutch fiscal legislation, of which the participant contributes 4% of his pensionable salary.
Dependants pension and disability pension are insured on a risk basis, the premium of which is paid by ASML.
In 2014, the pension arrangement for members of the BoM is adjusted to comply with changes in Dutch pension legislation. The pensionable age moved from 65 years to 67 years of age; the accrual rates and
premiums for risk insurances have been adjusted accordingly. In 2015, further changes as a result of amendments in Dutch pension legislation will be implemented.
Term of appointment
Members of the BoM are appointed for a period of four years, after which
reappointment is possible for consecutive terms of maximum four years. The appointment term of Messrs. Wennink and Van den Brink was converted from an indefinite period into a definite term of four years per the Annual General Meeting of
Shareholders of April 23, 2014.
Notice period
The members of the BoM have a termination notice period of three months. ASML would need to apply a notice period of six months for termination without cause under the applicable employment or management
services agreements with the members of the BoM.
Severance Agreement
Employment agreements or management services agreements of members of the BoM contain specific provisions regarding benefits upon termination of these agreements. If the company gives notice under the
agreement for reasons which are not exclusively or mainly found in acts or omissions on the side of the member of the BoM, a severance amount equal to one year base salary will be made available upon the effective date of termination.
This severance payment will also be made available in the event the member of the BoM gives notice of termination of the employment agreement or management
services agreement due to a substantial difference of opinion between the respective member of the BoM and the Supervisory Board regarding his employment/management services agreement, his function or the ASML strategy.
Change in control
BoM members are also
entitled to the aforementioned severance payment in the event ASML or its legal successor gives notice of termination under the employment contract or management services agreement due to a change in control or if the member of the BoM gives notice
of termination which is directly related to such change in control and such notice is given within twelve months from the date on which the change in control occurs.
The Change in control provision includes a limitation of the payout under the LTI. This entails that the share price will be fixed on the average of i) the average closing share price over a period of 15
trading days prior to the first public announcement of change in control negotiations and ii) the average closing share price over a period of 30 trading days prior to the closing of the transaction.
Supervisory Board
The remuneration of the
Supervisory Board has been reviewed by the Supervisory Board upon the recommendation of the Remuneration Committee. The proposed adjustment was approved by the General Meeting of Shareholders on April 23, 2014 and became effective per
April 1, 2014. The remuneration arrangement is set out in the table below.
In accordance with the Dutch Corporate Governance Code, the
Supervisory Board remuneration is not dependent on the financial results of the Company. No member of the Supervisory Board personally maintains a business relationship with the Company other than as a member of the Supervisory Board. Furthermore,
the Supervisory Board does not receive benefits upon termination of employment.
1) |
Dutch pension arrangements have a threshold in the buildup of pension entitlements. This threshold exists because all participants are assumed to be entitled to the Dutch
state pension (AOW) and therefore do not need an additional pension over the first part of their pensionable income. The minimum level in the fiscal legislation for this threshold is related to the AOW allowance and is known as the
Witteveen-threshold. This threshold is calculated as the annual AOW allowance (including holiday allowance) for a married person times 10/7. The Witteveen-threshold for 2014 is Euro 13,449.00. |
|
|
|
|
|
ASML STATUTORY REPORT 2014 |
|
116 |
|
|
The following table sets forth an overview of the remuneration awarded to Supervisory Board Members in 2014 and
2013:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2014 |
|
Total |
|
|
Supervisory Board |
|
|
Audit Committee |
|
|
Remuneration Committee |
|
|
Selection and Nomination Committee |
|
|
Technology and Strategy Committee |
|
|
Other1,2 |
|
|
|
Arthur P.M. van der Poel |
|
|
117,750 |
|
|
|
88,750 |
|
|
|
10,000 |
|
|
|
- |
|
|
|
11,000 |
4 |
|
|
8,000 |
|
|
|
- |
|
OB Bilous |
|
|
28,500 |
|
|
|
20,000 |
5 |
|
|
- |
|
|
|
- |
|
|
|
3,000 |
5 |
|
|
3,000 |
5 |
|
|
2,500 |
|
Fritz W. Fröhlich |
|
|
85,500 |
|
|
|
57,500 |
|
|
|
15,000 |
|
|
|
- |
|
|
|
8,000 |
|
|
|
- |
|
|
|
5,000 |
|
Hendrika (leke) C.J. van den
Burg6 |
|
|
52,500 |
|
|
|
42,500 |
5 |
|
|
- |
|
|
|
6,000 |
5 |
|
|
4,000 |
5 |
|
|
- |
|
|
|
- |
|
Pauline F.M. van der Meer Mohr |
|
|
73,000 |
|
|
|
57,500 |
|
|
|
7,500 |
5 |
|
|
8,000 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Douglas A. Grose |
|
|
99,000 |
|
|
|
80,000 |
|
|
|
- |
|
|
|
- |
|
|
|
8,000 |
|
|
|
11,000 |
4 |
|
|
- |
|
Clara (Carla) M.S. Smits-Nusteling |
|
|
67,500 |
|
|
|
57,500 |
|
|
|
10,000 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Johannes (Hans) M.C.
Stork3 |
|
|
88,000 |
|
|
|
80,000 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
8,000 |
|
|
|
- |
|
Wolfgang H. Ziebart |
|
|
77,500 |
|
|
|
57,500 |
|
|
|
- |
|
|
|
12,000 |
|
|
|
- |
|
|
|
8,000 |
|
|
|
- |
|
|
|
Total |
|
|
689,250 |
|
|
|
541,250 |
|
|
|
42,500 |
|
|
|
26,000 |
|
|
|
34,000 |
|
|
|
38,000 |
|
|
|
7,500 |
|
|
|
|
|
|
|
|
|
Year ended December 31, 2013 |
|
Total |
|
|
Supervisory Board |
|
|
Audit Committee |
|
|
Remuneration Committee |
|
|
Selection and Nomination Committee |
|
|
Technology and Strategy Committee |
|
|
Other1,2 |
|
|
|
Arthur P.M. van der Poel |
|
|
96,000 |
|
|
|
70,000 |
|
|
|
10,000 |
|
|
|
- |
|
|
|
8,000 |
|
|
|
8,000 |
|
|
|
- |
|
OB Bilous |
|
|
112,000 |
|
|
|
80,000 |
|
|
|
- |
|
|
|
- |
|
|
|
11,000 |
4 |
|
|
11,000 |
4 |
|
|
10,000 |
|
Fritz W. Fröhlich |
|
|
76,000 |
|
|
|
50,000 |
|
|
|
15,000 |
|
|
|
- |
|
|
|
6,000 |
5 |
|
|
- |
|
|
|
5,000 |
|
Hendrika (Ieke) C.J. van den Burg |
|
|
58,000 |
|
|
|
50,000 |
|
|
|
- |
|
|
|
8,000 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
William T. Siegle |
|
|
29,133 |
|
|
|
25,333 |
5 |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
3,800 |
5 |
|
|
- |
|
Pauline F.M. van der Meer Mohr |
|
|
58,000 |
|
|
|
50,000 |
|
|
|
- |
|
|
|
8,000 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Doug Grose7 |
|
|
94,000 |
|
|
|
80,000 |
|
|
|
- |
|
|
|
- |
|
|
|
6,000 |
5 |
|
|
8,000 |
|
|
|
- |
|
Clara (Carla)
Smits-Nusteling7 |
|
|
60,000 |
|
|
|
50,000 |
|
|
|
10,000 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Wolfgang H. Ziebart |
|
|
71,500 |
|
|
|
50,000 |
|
|
|
2,500 |
5 |
|
|
11,000 |
4 |
|
|
- |
|
|
|
8,000 |
|
|
|
- |
|
|
|
Total |
|
|
654,633 |
|
|
|
505,333 |
|
|
|
37,500 |
|
|
|
27,000 |
|
|
|
31,000 |
|
|
|
38,800 |
|
|
|
15,000 |
|
1 |
To compensate for certain obligations ASML has towards the U.S. government as a result of the acquisition of Silicon Valley Group in 2001, one U.S. member receives an
additional EUR 2,500 (2013: 10,000) to fulfill these obligations. |
2 |
In addition to the annual fixed fee, the Vice-Chairman of the Supervisory Board receives EUR 5,000 per year to fulfill his role. |
3 |
During 2014 Johannes (Hans) M.C. Stork was appointed as member of the Supervisory Board and therefore received an observer fee in the first quarter.
|
4 |
Amount differs from the annual compensation due to a role change from member to chairman of the Committee. |
5 |
Amount differs from the annual compensation as the member was not part of the Supervisory Board / Committee for the full year. |
6 |
Ms. Hendrika (Ieke) C. J. van den Burg passed away on September 28, 2014. |
7 |
During 2013 Doug Grose and Clara Smits-Nusteling were appointed as member of the Supervisory Board and therefore received an observer fee in the first quarter.
|
Additional reimbursements
IIn addition, ASML paid a net cost allowance amounting to EUR 1,800 in 2014 to each Supervisory Board member, and EUR 2,400 to the Chairman of the Supervisory Board in 2014.
Share ownership
Members of the Supervisory
Board are free to acquire or dispose ASML shares or options for their own account, provided they comply with the applicable ASML Insider Trading Rules. Those securities are not part of their remuneration from the Company and are therefore not
included. None of the members of the Supervisory Board currently owns shares or options on shares of the Company.
The annual remuneration for
the members and former members of the BoM and Supervisory Board members over 2014 amounts to EUR 17.1 million (2013: EUR 17.7 million).
32. Research and Development Costs
R&D
costs (net of credits and excluding contributions under the NRE Funding Agreements from certain Participating Customers in the CCIP) increased by EUR 171.9 million, or 30.5 percent, to EUR 735.9 million in 2014 from EUR 564.0 million
in 2013. R&D costs increased mainly due to the acceleration of certain R&D programs, primarily EUV and next-generation immersion.
R&D costs include credits of EUR 15.1 million and EUR 9.2 million million in 2014 and 2013 respectively. R&D credits relate to worldwide
(inter-)governmental funding for certain strategic development programs designed to stimulate high-risk research for the medium and long term future. The increase relates to entering into a number of strategic development programs providing funding
for the next generation immersion and EUV lithography systems during 2014.
|
|
|
|
|
ASML STATUTORY REPORT 2014 |
|
117 |
|
|
33. Finance Income and Costs
Finance income of EUR 14.5 million (2013: EUR 9.2 million) mainly relates to interest income on deposits, short-term investments, money market funds, bank accounts and on finance receivables.
Finance costs of EUR 11.9 million (2013: EUR 28.0 million) mainly consists of net interest expense on our Eurobonds and related interest
rate swaps, interest on lease obligations and amortized financing costs of a total of EUR 7.8 million (2013: EUR 16.2 million). In 2013, there was a one-off loss of EUR 8.9 million relating the partial extinguishment of our EUR
600 million 5.75 percent senior notes due 2017.
Interest on cash pools is reported on a gross basis in the Consolidated Statement of Profit
or Loss under both Finance income and Finance costs. From an economic and legal perspective, the interest on cash pools of EUR 3.2 million (2013: EUR 1.9 million) recorded in finance income nets off against the same amount recorded in finance
expense.
34. Vulnerability Due to Certain Concentrations
We rely on outside vendors for components and subassemblies used in our systems including the design thereof, each of which is obtained from a single supplier or a limited number of suppliers. Our reliance
on a limited group of suppliers involves several risks, including a potential inability to obtain an adequate supply of required components, reduced control over pricing and the risk of untimely delivery of these components and subassemblies.
The number of lithography systems we are able to produce may be limited by the production capacity of Zeiss. Zeiss is our single supplier of
lenses, mirrors, collectors and other critical optical components (which we refer to as optics) and is capable of producing these items only in limited numbers and only through the use of its manufacturing and testing facility in Oberkochen and
Wetzlar, Germany. During 2014, our production was not limited by the deliveries from Zeiss.
Business failure or insolvency of one of our main
customers may have an adverse effect on our business, financial condition and profit or loss.
35. Principal Accountant Fees and Services
Deloitte has served as our auditor for the years ending December 31, 2014 and 2013. The following table sets out the aggregate fees for
professional audit services and other services rendered by Deloitte and its member firms and/or affiliates in 2014 and 2013:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31
(in thousands) |
|
2014
Deloitte
Accountants
B.V.
EUR |
|
|
Deloitte
Network
EUR |
|
|
Total
EUR |
|
|
2013
Deloitte
Accountants
B.V.
EUR |
|
|
Deloitte
Network
EUR |
|
|
Total
EUR |
|
Audit fees in relation to annual reports |
|
|
1,331 |
|
|
|
- |
|
|
|
1,331 |
|
|
|
1,679 |
|
|
|
- |
|
|
|
1,679 |
|
Other audit fees |
|
|
61 |
|
|
|
298 |
|
|
|
359 |
|
|
|
61 |
|
|
|
303 |
|
|
|
364 |
|
Tax fees |
|
|
128 |
|
|
|
81 |
|
|
|
209 |
|
|
|
128 |
|
|
|
219 |
|
|
|
347 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal accountant fees and services |
|
|
1,520 |
|
|
|
379 |
|
|
|
1,899 |
|
|
|
1,868 |
|
|
|
522 |
|
|
|
2,390 |
|
Audit fees in relation to annual reports and other audit fees
Audit fees primarily relate to the audit of the Financial Statements as set out in our Annual Report on Form 20-F, this Statutory Annual Report, limited
procedures on our quarterly results, agreed upon procedures related to the remuneration report and services related to statutory and regulatory filings of ASML and its subsidiaries.
Tax fees
The tax fees include tax compliance services and tax advisory services.
The Audit Committee has approved the external audit plan and related audit fees for the year 2014.
The Audit Committee monitors compliance with the Dutch and US rules on non-audit services provided by our independent registered public accounting firm, which outlines strict separation of audit and advisory
services for Dutch public interest entities.
|
|
|
|
|
ASML STATUTORY REPORT 2014 |
|
118 |
|
|
36. Customer Co-Investment Program
Overview
On July 9, 2012, we announced our CCIP to accelerate our development of EUV
technology and our development of future 450mm silicon wafer technology. The Participating Customers collectively agreed to fund EUR 1.38 billion of our R&D projects from 2013 through 2017. This program created risk sharing with some of our
largest customers while the results of our development programs will be available to every semiconductor manufacturer with no restrictions.
Development 450mm silicon wafer technology
As
previously disclosed, in November 2013, ASML decided to pause the development of 450mm lithography systems until customer demand and the timing related to such demand is clear. We have agreed with Intel that the 450mm NRE funding will be applied to
other lithography projects, including generic developments applicable to both 300mm and 450mm. We believe that our 450mm development activities can be restarted if and when the industry demands the introduction of 450mm.
In addition to the funding commitments described above, the Participating Customers have invested in ordinary shares equal, in aggregate, to 23 percent of
ASMLs issued share capital (calculated giving effect to our synthetic share buyback in November 2012). The proceeds of the share issuance, EUR 3.85 billion, were returned to the holders of ordinary shares (excluding the Participating
Customers) through a synthetic share buyback executed in November 2012.
For further information regarding the synthetic share buyback, see Note
19.
Description of Investment Agreements, Shareholder Agreements and NRE Funding Agreements
In connection with the CCIP, ASML entered into an investment agreement, a shareholder agreement and NRE funding agreements with each of the Participating
Customers. Intel is the largest participant in the program, with an aggregate funding commitment of EUR 829 million and an investment in 15 percent of our ordinary shares (calculated giving effect to our synthetic share buyback in November
2012). A description of the investment agreement, shareholders agreement and NRE funding agreements between ASML and Intel is set out below. The agreements between ASML and the other participants - TSMC (which acquired 5 percent of our shares and
made an EUR 276 million funding commitment) and Samsung (which acquired 3 percent of our shares and made an EUR 276 million funding commitment) are on substantially the same terms as those agreed with Intel. Shares were acquired by Dutch
foundations (Stichtingen) established for each participant.
Investment Agreements
Pursuant to the Intel Investment Agreement, dated July 9, 2012, ASML issued to Intel Stichting ordinary shares equal to 15 percent of the issued and
outstanding ordinary shares with simultaneous issuance by the Intel Stichting to Intel of the corresponding depositary receipts.
Pursuant to the
TSMC Investment Agreement, dated August 5, 2012, ASML issued to TSMC Stichting ordinary shares equal to 5 percent of the issued and outstanding ordinary shares with simultaneous issuance by the TSMC Stichting to TSMC of the corresponding
depositary receipts.
Pursuant to the Samsung Investment Agreement, dated August 27, 2012 ASML issued to the Samsung Stichting ordinary
shares equal to 3 percent of the issued and outstanding ordinary shares with simultaneous issuance by the Samsung Stichting to Samsung of the corresponding depositary receipts.
The subscription price for the ordinary shares under the Investment Agreements was EUR 39.91 per ordinary share, which is the average of the volume weighted average price of our shares listed at
Euronext Amsterdam for the twenty trading days up to and including July 6, 2012.
Based upon the subscription price (EUR 39.91) included in
the Investment Agreements, the equity participation of Intel (15 percent), TSMC (5 percent) and Samsung (3 percent) amount to EUR 2,513 million, EUR 838 million and EUR 503 million, respectively.
Under the Intel Investment Agreements, ASML has agreed to indemnify the Participating Customers and their affiliates for certain losses and expenses related
to breaches of representations, warranties, covenants and agreements in the Investment Agreements and with respect to certain legal proceedings related thereto, subject to certain limitations.
Shareholder Agreements
In connection
with the issuance of shares pursuant to the Intel Investment Agreement, on September 12, 2012 ASML, Intel and the Intel Stichting entered into a Shareholder Agreement which governs certain matters relating to the holding of and further
investment by Intel in ordinary shares of ASML, directly and indirectly through the Intel Stichting, including the matters described below.
The
Shareholder Agreements between ASML and the other program participants (TSMC and Samsung) are on substantially the same terms as those agreed with Intel.
|
|
|
|
|
ASML STATUTORY REPORT 2014 |
|
119 |
|
|
Voting Restrictions
Pursuant to the Shareholder Agreement, Intel (and the Intel Stichting) will not be entitled to vote the ordinary shares that were acquired by the Intel Stichting as part of the CCIP or any other ordinary
shares otherwise transferred to the Intel Stichting (under the circumstances described under Standstill; Additional Purchases below) prior to a Shareholder Agreement Termination Event (as defined below), except when a Suspension Event
(as described below) occurs and is continuing or where the following matters are proposed at any General Meeting (the Voting Restrictions): (i) an issuance of ASML shares or grant of rights to subscribe for ASML shares representing
25 percent or more of the issued and outstanding share capital of ASML or the restriction or exclusion of pre-emption rights relating thereto (in each case, on an aggregate basis during the preceding 12 months) or the designation of the BoM as the
authorized body to resolve on these matters; (ii) an authorization to repurchase 25 percent or more of ASMLs issued and outstanding share capital on an aggregate basis during the preceding 12 months; (iii) the approval of a
significant change in the identity or nature of ASML or our business, including a transfer of all or substantially all business or assets of ASML and our subsidiaries to a third party, the establishment or cancellation of a long-lasting cooperation
of essential importance with a third party and an acquisition or disposition of an interest in the capital or assets of a person with a value of at least one third of the assets of ASML (on a consolidated basis); (iv) an amendment to
ASMLs Articles of Association that would materially affect the specific voting rights of Intel, would materially affect the identity or nature of ASML or our business, or would disproportionately (or uniquely) and adversely affect the rights
or benefits attached to or derived from the ordinary shares held by Intel through the Intel Stichting as compared to the shareholders; (v) the dissolution of ASML; and (vi) any merger or demerger which would result in a material change in
the identity or nature of ASML or its business.
Standstill, Lock-up and Orderly Market Arrangements
Standstill; Additional Purchases
Subject to
certain exceptions, pursuant to the Shareholder Agreement, Intel (or its affiliates) may not, prior to the six-year anniversary of the date of the Intel Shareholder Agreement (the Standstill Period), acquire more than 19.9 percent of the
outstanding share capital of ASML without ASMLs prior approval (the Standstill Restriction). There is an exception from the Standstill Restriction in the case of a suspension event, which includes certain circumstances
where a third party has acquired or made an offer to acquire at least 20 percent of ASMLs outstanding shares, and the Standstill Restriction will terminate upon the occurrence of a Shareholder Agreement Termination Event.
The Shareholder Agreement permits Intel (and its affiliates) to acquire up to 4.99 percent of ASMLs outstanding shares (other than shares acquired
through the CCIP) that may be held outside the Intel Stichting. For any additional ASML shares that Intel (or its affiliates) acquires in excess of 4.99 percent of the outstanding shares of ASML, Intel is required to deposit such shares with the
Intel Stichting in exchange for Depositary Receipts. Shares held directly by Intel or its affiliates (and which not required to be deposited with the Intel Stichting) are not subject to the Voting Restrictions, or Lock-Up Restrictions (as defined
below), but are subject to the Standstill Restriction.
The Intel Stichting will continue to hold ASML shares owned by Intel (notwithstanding
termination of the Standstill Period) until the earlier of (i) such time as Intel owns (directly or through the Intel Stichting) less than 2 percent of ASMLs outstanding shares (the relevant percentage is 1 percent for the other
Participating Customers) (ii) the date of notification to ASML by Participating Customers that the aggregate amount of ASMLs outstanding shares owned by Intel and the other Participating Customers represents less than 5 percent of
ASMLs outstanding shares and (iii) a Shareholder Agreement Termination Event (as defined below), following which time Depositary Receipts will be exchanged for the underlying ASML shares. In case Intel would acquire ASML shares within 18
months after an event described under (i) or (ii) above, any ASML shares held by Intel in excess of 4.99 percent of the outstanding shares of ASML must be transferred to (and held by) the Intel Stichting.
Lock-up; Orderly Sell Down
Intel may not,
without prior written consent of ASML, transfer any ordinary shares or Depositary Receipts until the earliest of (i) two years and six months after the date of the Intel Shareholder Agreement, (ii) termination of the NRE Funding
Agreements, and (iii) the occurrence of a Shareholder Agreement Termination Event ((i), (ii) and (iii) together, the Lock-Up Restriction). The Lock-Up Restriction does not apply in certain circumstances where a third party
offers to acquire at least 20 percent of ASMLs shares. Intel is not permitted to transfer the ASML ordinary shares it acquired in the program in connection with an offer (before the end of the offer), or make any public statement in support of
such offer, that is not recommended by the ASML Supervisory Board or BoM, except in limited circumstances.
|
|
|
|
|
ASML STATUTORY REPORT 2014 |
|
120 |
|
|
In addition, Intel may not (even after the Lock-Up Period has ended), without written consent of ASML, transfer
on Euronext Amsterdam, NASDAQ or another securities exchange more than 4 percent of the outstanding shares of ASML during any six month period (the relevant percentage is 1.5 percent for Samsung and 2.5 percent for TSMC); the foregoing restriction
does not apply to block trades or underwritten offers. There are also restrictions on Intels ability to transfer ASML shares to certain competitors or customers of ASML.
Termination
The Intel Shareholder Agreement will terminate upon the occurrence of the following
events (each a Shareholder Agreement Termination Event) (i) certain change of control transactions where the shareholders of ASML prior to such a transaction are no longer entitled to exercise at least 50 percent of the votes in the
General Meeting following such transaction, (ii) in the event of a delisting of our shares listed at Euronext Amsterdam or delisting of our shares listed at NASDAQ (except for certain voluntary delistings from NASDAQ), (iii) the winding up
or liquidation of ASML, or (iv) in the event that all Depositary Receipts are exchanged for ASML shares and Intel does not acquire ASML shares in excess of 4.99 percent of the outstanding ASML shares within 1S months of such exchange (see
Standstill; Additional Purchases above).
NRE Funding Agreements
On July 9, 2012, ASML and Intel entered into two NRE Funding Agreements pursuant to which Intel will support ASMLs R&D costs and project
expenditures. One agreement relates to the Intel 450mm NRE Funding Agreement and the other relates to the Intel EUV NRE Funding Agreement (together the Intel NRE Funding Agreements). Intel has committed to provide EUR 553 million in
funding under the Intel 450mm NRE Funding Agreement and EUR 276 million in funding under the Intel EUV NRE Funding Agreement, payable over the respective terms (2013-2017) of the Intel NRE Funding Agreements.
On August 5, 2012, ASML and TSMC entered into the TSMC NRE Funding Agreement pursuant to which TSMC will support ASMLs R&D costs and project
expenditures relating to the development of 450mm lithography equipment and EUV platforms. TSMC has committed to provide EUR 276 million in funding payable over the term (2013-2017) of the TSMC NRE Funding Agreement.
On August 27, 2012, ASML and Samsung entered into the Samsung NRE Funding Agreement pursuant to which Samsung will support ASMLs R&D costs
and project expenditures relating to the development of 300mm/450mm and EUV platforms. Samsung has committed to provide EUR 276 million in funding payable over the term (2013-2017) of the Samsung NRE Funding Agreement.
Under the NRE Funding Agreements, ASML will retain sole control over the development of 450mm photo lithography equipment and EUV platforms and will own all
intellectual property created by ASML in connection therewith. The NRE Funding Agreements provide that if ASML, in its reasonable discretion, determines to abandon either the 450mm or EUV development project, as a result of technical infeasibility
or lack of sufficient industry demand, or if the then remaining funding exceeds the expenditure estimate for the development project (450mm or EUV) then the parties may agree on an alternative development project, and if no alternative is agreed,
ASML may invoice the Participating Customers for the remaining due portion of committed funding during each year of the remaining funding period in which ASMLs actual gross R&D expenditures exceed a minimum threshold specified in the NRE
Funding Agreements. The NRE Funding Agreements will terminate on December 31, 2017 or upon pre-payment by the Participating Customer of the aggregate amount of funding owed under its respective NRE Funding Agreement.
Commercial Agreement
On July 9,
2012, ASML and Intel entered into a Commercial Agreement, pursuant to which ASML and Intel established a contractual framework for Intel to purchase equipment related to the 450mm and EUV next-generation lithography equipment. Under this agreement,
Intel has committed to purchase specified numbers of 450mm and EUV systems. In April of 2014, ASML and Intel amended the commercial agreement so that Intel would have an option of purchasing either 450mm systems or 300mm systems in addition to EUV
systems. The agreement and amendment set forth pricing terms for the systems as well as milestones related to product deliveries, and provides for certain commercial discounts in the form of credits in exchange for Intels early purchase
commitments and volume purchase commitments and for specified additional credits in the event that certain schedules are not met. In addition, subject to certain conditions, ASML has agreed to install sufficient capacity to meet Intels
potential forecasted 450mm lithography equipment needs through 2022.
For further details regarding the share issuances to the Participating
Customers and the synthetic share buyback effectuated in connection with our CCIP, see Note 19.
|
|
|
|
|
ASML STATUTORY REPORT 2014 |
|
121 |
|
|
37. 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 to Intel (and its affiliates) in 2014 amounted to EUR 1,007.6 million (2013: EUR 494.7 million), whereas the outstanding liability as of December 31, 2014 amounted to EUR 386.8 million (December 31, 2013: EUR 182.3 million).
There have been no transactions during our most recent fiscal year, 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 our most recent fiscal year, there has been no, and at present there is
no, outstanding indebtedness to ASML owed or owing by any director or officer of ASML or any associate thereof.
For our disclosures in relation
to key management personnel, see Note 31.
38. Subsequent Events
Subsequent events were evaluated up to February 10, 2015, which is the issuance date of this 2014 Annual Report. There are no subsequent events to report.
Veldhoven, the Netherlands
February 10, 2015
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 REPORT 2014 |
|
122 |
|
|
Company Financial Statements
|
|
|
|
|
ASML STATUTORY REPORT 2014 |
|
123 |
|
|
|
|
|
|
|
ASML STATUTORY REPORT 2014 |
|
124 |
|
|
Company Financial Statements
|
|
|
|
|
ASML STATUTORY REPORT 2014 |
|
125 |
|
|
Company Balance Sheet
(Before appropriation of net income)
|
|
|
|
|
|
|
|
|
|
|
Notes |
|
As of
December 31 (in thousands) |
|
2014
EUR |
|
|
2013
EUR |
|
|
|
|
|
Non-current assets |
|
|
|
|
|
|
|
|
3 |
|
Investments in subsidiaries |
|
|
10,984,095 |
|
|
|
9,838,641 |
|
|
|
Loans to subsidiaries |
|
|
11,112 |
|
|
|
1,239 |
|
|
|
Deferred tax assets |
|
|
- |
|
|
|
1,680 |
|
4 |
|
Derivative financial instruments |
|
|
115,546 |
|
|
|
30,777 |
|
|
|
Other non-current assets |
|
|
2,011 |
|
|
|
2,646 |
|
|
|
|
|
|
|
|
|
Total non-current assets |
|
|
11,112,764 |
|
|
|
9,874,983 |
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
10 |
|
Amounts due from subsidiaries |
|
|
519,861 |
|
|
|
431,705 |
|
|
|
Current tax assets |
|
|
- |
|
|
|
- |
|
4 |
|
Derivative financial instruments |
|
|
92,695 |
|
|
|
42,588 |
|
|
|
Other current assets |
|
|
3,442 |
|
|
|
2,941 |
|
|
|
Short-term investments |
|
|
- |
|
|
|
375,000 |
|
|
|
Cash and cash equivalents |
|
|
950,295 |
|
|
|
1,133,431 |
|
|
|
|
|
|
|
|
|
Total current assets |
|
|
1,566,293 |
|
|
|
1,985,665 |
|
|
|
Total assets |
|
|
12,679,057 |
|
|
|
11,860,648 |
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
|
|
|
|
Issued and outstanding shares |
|
|
39,426 |
|
|
|
40,214 |
|
|
|
Share premium |
|
|
3,456,556 |
|
|
|
3,383,105 |
|
|
|
Treasury shares at cost |
|
|
(389,443 |
) |
|
|
(365,782 |
) |
|
|
Retained earnings |
|
|
2,864,025 |
|
|
|
2,841,636 |
|
|
|
Legal reserves |
|
|
977,046 |
|
|
|
451,778 |
|
|
|
Net income |
|
|
1,418,320 |
|
|
|
1,193,844 |
|
|
|
|
|
|
|
5 |
|
Total equity |
|
|
8,365,930 |
|
|
|
7,544,795 |
|
|
|
|
|
|
|
Non-current liabilities |
|
|
|
|
|
|
|
|
6 |
|
Long-term debt |
|
|
1,105,599 |
|
|
|
1,017,501 |
|
|
|
Deferred and other tax liabilities |
|
|
113,709 |
|
|
|
103,722 |
|
|
|
|
|
|
|
|
|
Total non-current liabilities |
|
|
1,219,308 |
|
|
|
1,121,223 |
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
10 |
|
Amounts due to subsidiaries |
|
|
2,985,021 |
|
|
|
3,156,618 |
|
|
|
Accrued and other liabilities |
|
|
15,253 |
|
|
|
15,038 |
|
|
|
Current tax liabilities |
|
|
28,642 |
|
|
|
8,338 |
|
4 |
|
Derivative financial instruments |
|
|
64,903 |
|
|
|
14,636 |
|
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
3,093,819 |
|
|
|
3,194,630 |
|
|
|
Total equity and liabilities |
|
|
12,679,057 |
|
|
|
11,860,648 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASML STATUTORY REPORT 2014 |
|
126 |
|
|
Abbreviated Company Statement of Profit or Loss
|
|
|
|
|
|
|
|
|
|
|
Notes |
|
Year ended
December 31 (in thousands) |
|
2014
EUR |
|
|
2013
EUR |
|
|
|
|
|
|
|
3 |
|
Net income from subsidiaries |
|
|
1,461,052 |
|
|
|
1,202,542 |
|
|
|
Gain (Loss) after taxes |
|
|
(42,732 |
) |
|
|
(8,698 |
) |
|
|
|
|
|
|
|
|
Net income |
|
|
1,418,320 |
|
|
|
1,193,844 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASML STATUTORY REPORT 2014 |
|
127 |
|
|
Notes to the Company Financial Statements
1. General Information
The description of our
activities and our structure, as included in the Notes to the Consolidated Financial Statements, also apply to the Company Financial Statements.
In accordance with article 362 sub 8 Part 9 of Book 2 of the Dutch Civil Code, we have prepared our Company Financial Statements in accordance with Dutch
GAAP applying the accounting principles as adopted in the Consolidated Financial Statements, except for the accounting for investments in subsidiaries and our consolidated SPE. Investments in subsidiaries and consolidated SPE are stated at net asset
value as we effectively exercise control over the operational and financial activities of these investments. The net asset value is determined on the basis of the IFRS accounting principles applied by ASML in its Consolidated Financial Statements.
In accordance with article 402 Part 9 of Book 2 of the Dutch Civil Code the Company Statement of Profit or Loss is presented in abbreviated
form.
2. Summary of Significant Accounting Policies
Significant Accounting Policies
The accounting policies used in the preparation of the Company
Financial Statements are the same as those used in the preparation of the Consolidated Financial Statements (in accordance with article 362 sub 8 Part 9 of Book 2 of the Dutch Civil Code). See the Notes to the Consolidated Financial Statements. In
addition to those accounting policies, the following accounting policy applies to the Company Financial Statements.
The accompanying Company
Financial Statements are stated in thousands of EUR unless otherwise indicated.
Investments in Subsidiaries
Investments in subsidiaries are stated at net asset value as we effectively exercise influence of significance over the operational and financial activities
of these investments. The net asset value is determined on the basis of the IFRS-EU as applied in the preparation of the Consolidated Financial Statements.
3. Investments in Subsidiaries
Changes in investments in subsidiaries during 2014 and 2013 were
as follows:
|
|
|
|
|
|
|
|
|
(in thousands) |
|
2014
EUR |
|
|
2013
EUR |
|
|
|
|
|
|
Balance, January 1 |
|
|
9,838,641 |
|
|
|
6,415,214 |
|
|
|
|
Capital contributions |
|
|
6,733 |
|
|
|
2,855,529 |
|
Capital repayment |
|
|
- |
|
|
|
(492,751 |
) |
Dividends received |
|
|
(600,856 |
) |
|
|
(13,384 |
) |
Net income from subsidiaries |
|
|
1,461,052 |
|
|
|
1,202,542 |
|
Effect of exchange rates |
|
|
254,459 |
|
|
|
(120,863 |
) |
Derivative financial instruments |
|
|
24,066 |
|
|
|
(7,646 |
) |
|
|
|
|
|
Balance, December 31 |
|
|
10,984,095 |
|
|
|
9,838,641 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASML STATUTORY REPORT 2014 |
|
128 |
|
|
4. Derivative Financial Instruments
We use derivative financial instruments for the management of foreign currency risks and interest rate risks. See Note 6 and 13 to the Consolidated Financial Statements.
5. Equity
Changes in equity during 2014 and
2013 were as follows (before appropriation of net income):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issued and Outstanding Shares |
|
|
Share
Premium
EUR |
|
|
Treasury Shares at
Cost EUR |
|
|
Retained
Earnings
EUR |
|
|
Legal
Reserves3
EUR |
|
|
Net
Income
EUR |
|
|
Total
EUR |
|
Notes1 |
|
(in thousands) |
|
Number2
- |
|
|
Amount EUR |
|
|
|
|
|
|
|
|
|
|
|
Balance at January 1, 2013 |
|
|
407,165 |
|
|
|
37,786 |
|
|
|
932,968 |
|
|
|
(465,848 |
) |
|
|
2,341,048 |
|
|
|
349,901 |
|
|
|
1,302,347 |
|
|
|
4,498,202 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Appropriation of net income |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,302,347 |
|
|
|
- |
|
|
|
(1,302,347 |
) |
|
|
- |
|
|
|
Components of statement of comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,193,844 |
|
|
|
1,193,844 |
|
19 |
|
Foreign currency translation |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(122,000 |
) |
|
|
- |
|
|
|
(122,000 |
) |
6,19 |
|
Loss on financial instruments, net of taxes |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(7,646 |
) |
|
|
- |
|
|
|
(7,646 |
) |
|
|
Total comprehensive income |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(129,646 |
) |
|
|
1,193,844 |
|
|
|
1,064,198 |
|
|
|
|
|
|
|
|
|
|
|
|
|
CCIP: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,36 |
|
Fair value
differences4 |
|
|
- |
|
|
|
- |
|
|
|
20,956 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
20,956 |
|
|
|
|
|
|
|
|
|
|
|
19 |
|
Purchase of treasury shares |
|
|
(4,614 |
) |
|
|
- |
|
|
|
- |
|
|
|
(300,000 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(300,000 |
) |
19 |
|
Cancellation of treasury shares |
|
|
- |
|
|
|
(854 |
) |
|
|
- |
|
|
|
349,261 |
|
|
|
(348,407 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
24,30,31 |
|
Share-based
payments5 |
|
|
- |
|
|
|
- |
|
|
|
116,821 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
116,821 |
|
24,30 |
|
Issuance of
shares6 |
|
|
38,301 |
|
|
|
3,282 |
|
|
|
2,312,360 |
|
|
|
50,805 |
|
|
|
(5,744 |
) |
|
|
- |
|
|
|
- |
|
|
|
2,360,703 |
|
19 |
|
Dividend paid |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(216,085 |
) |
|
|
- |
|
|
|
- |
|
|
|
(216,085 |
) |
19 |
|
Development expenditures |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(231,523 |
) |
|
|
231,523 |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
Balance at December 31, 2013 |
|
|
440,852 |
|
|
|
40,214 |
|
|
|
3,383,105 |
|
|
|
(365,782 |
) |
|
|
2,841,636 |
|
|
|
451,778 |
|
|
|
1,193,844 |
|
|
|
7,544,795 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Appropriation of net income |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,193,844 |
|
|
|
- |
|
|
|
(1,193,844 |
) |
|
|
- |
|
|
|
Components of statement of comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,418,320 |
|
|
|
1,418,320 |
|
19 |
|
Foreign currency translation |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
254,459 |
|
|
|
- |
|
|
|
254,459 |
|
6,19 |
|
Gain on financial instruments, net of taxes |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
24,066 |
|
|
|
- |
|
|
|
24,066 |
|
|
|
Total comprehensive income |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
278,525 |
|
|
|
1,418,320 |
|
|
|
1,696,845 |
|
|
|
|
|
|
|
|
|
|
|
|
|
CCIP: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,36 |
|
Fair value
differences4 |
|
|
- |
|
|
|
- |
|
|
|
28,086 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
28,086 |
|
|
|
|
|
|
|
|
|
|
|
19 |
|
Purchase of treasury shares |
|
|
(9,981 |
) |
|
|
- |
|
|
|
- |
|
|
|
(700,000 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(700,000 |
) |
19 |
|
Cancellation of treasury shares |
|
|
- |
|
|
|
(852 |
) |
|
|
- |
|
|
|
610,698 |
|
|
|
(609,846 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
24,30,31 |
|
Share-based payments |
|
|
- |
|
|
|
- |
|
|
|
48,601 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
48,601 |
|
24,30 |
|
Issuance of shares |
|
|
2,064 |
|
|
|
64 |
|
|
|
(3,236 |
) |
|
|
65,641 |
|
|
|
(46,904 |
) |
|
|
- |
|
|
|
- |
|
|
|
15,565 |
|
19 |
|
Dividend paid |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(267,962 |
) |
|
|
- |
|
|
|
- |
|
|
|
(267,962 |
) |
19 |
|
Development expenditures |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(246,743 |
) |
|
|
246,743 |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
Balance at December 31, 2014 |
|
|
432,935 |
|
|
|
39,426 |
|
|
|
3,456,556 |
|
|
|
(389,443 |
) |
|
|
2,864,025 |
|
|
|
977,046 |
|
|
|
1,418,320 |
|
|
|
8,365,930 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 |
Note reference numbers included below relate to the notes to the Consolidated Financial Statements. |
2 |
As of December 31, 2014, the number of issued shares was 438,073,643. This includes the number of issued and outstanding shares of 432,935,288 and the number of
treasury shares of 5,138,355. As of December 31, 2013, the number of issued shares was 446,822,452. This includes the number of issued and outstanding shares of 440,852,334 and the number of treasury shares of 5,970,118. As of December 31,
2012, the number of issued shares was 419,852,467. This includes the number of issued and outstanding shares of 407,165,221 and the number of treasury shares of 12,687,246. |
3 |
Legal reserves consist of the hedging reserve, the currency translation reserve and the reserve for capitalized development expenditures. See Note 19.
|
4 |
In 2014, EUR 28.1 million (2013: EUR 21.0 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). |
5 |
Share-based payments include an amount of EUR 66.1 million in relation to the fair value compensation of unvested equity awards exchanged as part of acquisition of
Cymer. |
6 |
Issuance of shares includes 36,464,576 ordinary shares issued in relation to the acquisition of Cymer for a total fair value of EUR 2,346.7 million.
|
|
|
|
|
|
ASML STATUTORY REPORT 2014 |
|
129 |
|
|
ASMLs authorized share capital amounts to EUR 126,000,000 and is divided into:
|
|
700,000,000 Cumulative Preference Shares with a nominal value of EUR 0.09 each; |
|
|
699,999,000 Ordinary Shares with a nominal value of EUR 0.09 each; and |
|
|
9,000 Ordinary Shares B with a nominal value of EUR 0.01 each. |
As at December 31, 2014, 438,073,643 ordinary shares with a nominal value of EUR 0.09 each were issued and fully paid up, of which 5,138,355 ordinary shares are held by us in treasury. No ordinary
shares B and no cumulative preference shares are issued.
Our BoM has the power to issue ordinary shares and cumulative preference shares insofar
as the BoM has been authorized to do so by the General Meeting of Shareholders (either by means of a resolution or by an amendment to our Articles of Association). The BoM requires approval of the Supervisory Board for such an issue. The
authorization by the General Meeting of Shareholders can only be granted for a certain period not exceeding five years and may be extended for no longer than five years on each occasion. In case the General Meeting of Shareholders has not authorized
the BoM to issue shares, the General Meeting of Shareholders shall have the power to issue shares upon the proposal of the BoM, provided that the Supervisory Board has approved such proposal.
Shares Issued as a Result of the Acquisition of Cymer
A subsidiary of ASML and Cymer completed a
merger pursuant to which ASML acquired Cymer on May 30, 2013. As a result of the merger, each share of Cymer common stock outstanding immediately prior to the completion of the merger was converted into the right to receive USD 20.00 in cash
plus 1.1502 ASML ordinary shares. As of December 31, 2014, we have issued 36,468,733 ordinary shares for an aggregate amount of EUR 2,347.0 million in relation to the acquisition of Cymer.
Synthetic Share Buyback
At the EGM held on
September 7, 2012, several changes in the Articles of Association of ASML were adopted, in connection with the synthetic share buyback effectuated in connection with the CCIP.
Consequently, on November 24, 2012, the Articles of Association were amended as follows. Upon the first amendment, the ordinary shares to be held for the benefit of the participants to the CCIP were
converted into ordinary shares M and all other ordinary shares were converted into ordinary shares A. Upon the second amendment, the par value per ordinary share A was increased from EUR 0.09 to EUR 9.24 at the expense of the share premium reserve.
Upon the third amendment, the nominal value per ordinary share A was reduced to an amount of EUR 0.06, by decreasing the nominal value per ordinary share A by an amount of EUR 9.18, which resulted in a repayment of the same amount per share to
holders of ordinary shares into which the ordinary shares A were converted. The fourth amendment provided for the consolidation of the ordinary shares A through the exchange of each 100 ordinary shares for 77 ordinary shares, resulting in an
increase of the nominal value per ordinary share from EUR 0.06 to EUR 0.09, whereby the aggregate difference was booked at the expense of the share premium reserve. The fifth and last amendment provided for the deletion of the share class M for
participants to the CCIP and the share class A for the other shareholders. The ordinary shares M and A were converted thereafter into ordinary shares without a specific letter mark attached to it.
These amendments in substance constitute a synthetic share buyback in which we effectively repurchased 93,411,216 shares at an average price of EUR 39.91
for a total amount of EUR 3,728.3 million. The difference of EUR 125.6 million between the capital repayment of EUR 3,728.3 million and the net proceeds from issuance of shares of EUR 3,853.9 million relates to the capital repayment
on ASMLs treasury shares which were part of the synthetic share buyback.
Shares Issued in Customer Co-Investment Program
In connection with the CCIP, on September 12, 2012, we issued 62,977,877 ordinary shares to the Stichting that holds shares on behalf of
Intel and 12,595,575 ordinary shares to the Stichting that holds shares on behalf of Samsung and on October 31, 2012, ASML issued 20,992,625 ordinary shares to the Stichting that holds shares on behalf of TSMC. We received an amount of EUR
3,853.9 million in relation to the shares issued under the CCIP. For further details on our CCIP see Note 36.
|
|
|
|
|
ASML STATUTORY REPORT 2014 |
|
130 |
|
|
Ordinary Shares
Each ordinary share consists of 900 fractional shares. Fractional shares entitle the holder thereof to a fractional dividend but do not entitle the holder thereof to voting rights. Only those persons who
hold shares directly in the share register in the Netherlands, held by us at our address at 5504 DR Veldhoven, de Run 6501, the Netherlands, or in the New York share register, held by JP Morgan Chase Bank, N.A., P.O. Box 64506, St. Paul, MN
55164-0506, United States, can hold fractional shares. Persons who hold ordinary shares through the deposit system under the Dutch Securities Bank Giro Transactions Act (Wet giraal effectenverkeer; the Giro Act) maintained by the
Dutch central securities depository Euroclear Nederland or through the DTC cannot hold fractional shares. An ordinary share entitles the holder thereof to cast nine votes in the General Meeting of Shareholders. At our 2014 AGM, the BoM was
authorized from April 23, 2014 through October 23, 2015, subject to the approval of the Supervisory Board, to issue shares and/or rights thereto representing up to a maximum of 5.0 percent of our issued share capital at April 23,
2014, plus an additional 5.0 percent of our issued share capital at April 23, 2014 that may be issued in connection with mergers, acquisitions and/or (strategic) alliances.
Holders of ASMLs ordinary shares have a preemptive right of subscription, in proportion to the aggregate nominal amount of the ordinary shares held by them, to any issuance of ordinary shares for cash,
which right may be restricted or excluded. Holders of ordinary shares have no pro rata preemptive right of subscription to any ordinary shares issued for consideration other than cash or ordinary shares issued to employees. If authorized for this
purpose by the General Meeting of Shareholders (either by means of a resolution or by an amendment to our Articles of Association), the BoM has the power subject to approval of the Supervisory Board, to restrict or exclude the preemptive rights of
holders of ordinary shares. At our 2014 AGM, our shareholders authorized the BoM through October 23, 2015, subject to approval of the Supervisory Board, to restrict or exclude preemptive rights of holders of ordinary shares up to a maximum of
10 percent of our issued share capital. At our 2015 AGM, our shareholders will be asked to extend this authority through October 22, 2016.
Ordinary Shares B
In 2012, the 9,000 ordinary
shares B with a nominal value of EUR 0.01 were introduced. Every holder of an ordinary share B is entitled to one-ninth (1/9) of a dividend. Each ordinary share B entitles the holder thereof to cast one vote at the General Meeting of
Shareholders.
Cumulative Preference Shares
In 1998, we granted the Preference Share Option to the Foundation. This option was amended and extended in 2003 and 2007. A third amendment to the option agreement between the Foundation and ASML became
effective on January 1, 2009, to clarify the procedure for the repurchase and cancellation of the preference shares when issued.
The nominal
value of the cumulative preference shares amounts to EUR 0.09 and the number of cumulative preference shares included in the authorized share capital is 700,000,000. A cumulative preference share entitles the holder thereof to cast nine votes in the
General Meeting of Shareholders.
The Foundation may exercise the Preference Share Option in situations where, in the opinion of the Board of
Directors of the Foundation, ASMLs interests, ASMLs business or the interests of ASMLs stakeholders are at stake. This may be the case if a public bid for ASMLs shares has been announced or has been made, or the justified
expectation exists that such a bid will be made without any agreement having been reached in relation to such a bid with ASML. The same may apply if one shareholder, or more shareholders acting in concert, hold a substantial percentage of
ASMLs issued ordinary shares without making an offer or if, in the opinion of the Board of Directors of the Foundation, the (attempted) exercise of the voting rights by one shareholder or more shareholders, acting in concert, is materially in
conflict with ASMLs interests, ASMLs business or ASMLs stakeholders.
The objectives of the Foundation are to look after the
interests of ASML and of the enterprises maintained by ASML and of the companies which are affiliated in a group with ASML, in such a way that the interests of ASML, of those enterprises and of all parties concerned are safeguarded in the best
possible way, and influences in conflict with these interests which might affect the independence or the identity of ASML and those companies are deterred to the best of the Foundations ability, and everything related to the above or possibly
conducive thereto. The Foundation seeks to realize its objects by the acquiring and holding of cumulative preference shares in the capital of ASML and by exercising the rights attached to these shares, particularly the voting rights attached to
these shares.
|
|
|
|
|
ASML STATUTORY REPORT 2014 |
|
131 |
|
|
The Preference Share Option gives the Foundation the right to acquire a number of cumulative preference shares
as the Foundation will require, provided that the aggregate nominal value of such number of cumulative preference shares shall not exceed the aggregate nominal value of the ordinary shares that have been issued at the time of exercise of the
Preference Share Option for a subscription price equal to their nominal value. Only one-fourth of the subscription price is payable at the time of initial issuance of the cumulative preference shares, with the other three-fourths of the nominal
value only being payable when we call up this amount. Exercise of the preference share option could effectively dilute the voting power of the outstanding ordinary shares by one-half.
Cancellation and repayment of the issued cumulative preference shares by ASML requires the authorization by the General Meeting of Shareholders of a proposal to do so by the BoM approved by the Supervisory
Board. If the Preference Share Option is exercised and as a result cumulative preference shares are issued, ASML, at the request of the Foundation, will initiate the repurchase or cancellation of all cumulative preference shares held by the
Foundation. In that case ASML is obliged to effect the repurchase and cancellation respectively as soon as possible. A cancellation will have as a result a repayment of the amount paid and exemption from the obligation to pay up on the cumulative
preference shares. A repurchase of the cumulative preference shares can only take place when such shares are fully paid up.
If the Foundation
does not request ASML to repurchase or cancel all cumulative preference shares held by the Foundation within 20 months after issuance of these shares, we will be obliged to convene a General Meeting of Shareholders in order to decide on a repurchase
or cancellation of these shares.
The Foundation is independent of ASML. The Board of Directors of the Foundation comprises four independent
members from the Dutch business and academic communities. The members of the Board of Directors of the Foundation are: Mr. H. Bodt, Mr. M.W. den Boogert, Mr. J.M. de Jong and Mr. A.H. Lundqvist.
Legal Reserves
ASML is a company incorporated
under Dutch Law. In accordance with the Dutch Civil Code, other reserves consist of legal reserves that have to be established in certain circumstances. The legal reserves consist of the hedging reserve, the currency translation reserve and the
reserve for capitalized development expenditures made by our subsidiaries. Legal reserves are not for distribution to our shareholders. If the currency translation reserve or the hedging reserve has a negative balance, distributions to our
shareholders are restricted to the extent of the negative balance.
Changes in legal reserves during 2014 and 2013 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
Hedging reserve EUR |
|
|
Currency translation reserve EUR |
|
|
Reserve for capitalized development expenditures EUR |
|
|
Total EUR |
|
|
|
|
|
|
Balance at January 1, 2013 |
|
|
(4,563 |
) |
|
|
(96,521 |
) |
|
|
450,985 |
|
|
|
349,901 |
|
|
|
|
|
|
Components of statement of comprehensive income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain (loss) on foreign currency translation |
|
|
- |
|
|
|
(122,000 |
) |
|
|
- |
|
|
|
(122,000 |
) |
Financial instruments, net of taxes: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain (Loss) on derivative financial instruments |
|
|
(5,370 |
) |
|
|
- |
|
|
|
- |
|
|
|
(5,370 |
) |
Transfers to net income |
|
|
(2,276 |
) |
|
|
- |
|
|
|
- |
|
|
|
(2,276 |
) |
|
|
|
|
|
Development expenditures |
|
|
- |
|
|
|
- |
|
|
|
231,523 |
|
|
|
231,523 |
|
Currency translation on development expenditures |
|
|
- |
|
|
|
4,570 |
|
|
|
(4,570 |
) |
|
|
- |
|
|
|
Balance at December 31, 2013 |
|
|
(12,209 |
) |
|
|
(213,951 |
) |
|
|
677,938 |
|
|
|
451,778 |
|
|
|
|
|
|
Components of statement of comprehensive income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain (loss) on foreign currency translation |
|
|
- |
|
|
|
254,459 |
|
|
|
- |
|
|
|
254,459 |
|
|
|
|
|
|
Financial instruments, net of taxes: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain (loss) on derivative financial instruments |
|
|
17,375 |
|
|
|
- |
|
|
|
- |
|
|
|
17,375 |
|
Transfers to net income |
|
|
6,691 |
|
|
|
- |
|
|
|
- |
|
|
|
6,691 |
|
|
|
|
|
|
Development expenditures |
|
|
- |
|
|
|
- |
|
|
|
246,743 |
|
|
|
246,743 |
|
Currency translation on development expenditures |
|
|
- |
|
|
|
(21,578 |
) |
|
|
21,578 |
|
|
|
- |
|
|
|
Balance at December 31, 2014 |
|
|
11,857 |
|
|
|
18,930 |
|
|
|
946,259 |
|
|
|
977,046 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASML STATUTORY REPORT 2014 |
|
132 |
|
|
Exchange rate differences relating to the translation from our foreign subsidiaries into euro are recognized in
the currency translation reserve. Gains and losses on hedging instruments that are designated as hedges of net investments in foreign operations are included in the currency translation reserve.
Hedging reserve represents hedging gains and losses on the effective portion of cash flow hedges.
Appropriation of Net Income
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 Supervisory Board, 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 BoMs 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.
For 2014, a proposal to declare a dividend of EUR
0.70 per ordinary share of EUR 0.09 nominal value will be submitted to the 2015 AGM.
Dividends on ordinary shares are payable out of net
income or retained earnings as shown in our Financial Statements as adopted by our General Meeting of Shareholders, after payment first of (accumulated) dividends out of net income on any issued cumulative preference shares.
Share Buyback Programs
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 April 17, 2013, we announced our intention to repurchase up to EUR 1.0 billion of our own shares within the
2013-2014 timeframe. During the period from April 18, 2013 up to and including December 22, 2014, when the program was completed, we had purchased 14,595,554 shares at an average price of EUR 68.51 per share of which 9,464,503 shares
have been cancelled in 2014, and the remainder is intended to be cancelled in 2015.
|
|
|
|
|
ASML STATUTORY REPORT 2014 |
|
133 |
|
|
The following tables provide a summary of shares repurchased by ASML in 2014 and a historic overview of
previous share buyback programs, respectively:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period |
|
Total number of shares purchased |
|
|
Average price paid per Share (EUR) |
|
|
Total number of shares purchased as part of
publicly announced plans or programs |
|
|
Maximum value of shares
that may yet
be purchased under the program (EUR) |
|
|
|
|
|
|
|
|
January 20 - 31, 2014 |
|
|
547,500 |
|
|
|
64.44 |
|
|
|
547,500 |
|
|
|
664,718,936 |
|
February 1 - 28, 2014 |
|
|
962,536 |
|
|
|
63.92 |
|
|
|
1,510,036 |
|
|
|
603,190,359 |
|
March 1 - 31, 2014 |
|
|
765,284 |
|
|
|
65.55 |
|
|
|
2,275,320 |
|
|
|
553,029,170 |
|
April 1 - 30, 2014 |
|
|
739,855 |
|
|
|
63.23 |
|
|
|
3,015,175 |
|
|
|
506,251,123 |
|
May 2 - 31, 2014 |
|
|
783,500 |
|
|
|
59.98 |
|
|
|
3,798,675 |
|
|
|
459,253,716 |
|
June 1 - 30, 2014 |
|
|
1,061,649 |
|
|
|
66.52 |
|
|
|
4,860,324 |
|
|
|
388,627,554 |
|
July 1 - 31, 2014 |
|
|
1,048,739 |
|
|
|
66.71 |
|
|
|
5,909,063 |
|
|
|
318,664,411 |
|
August 1 - 31, 2014 |
|
|
602,125 |
|
|
|
70.14 |
|
|
|
6,511,188 |
|
|
|
276,431,931 |
|
September 1 - 30, 2014 |
|
|
736,294 |
|
|
|
76.62 |
|
|
|
7,247,482 |
|
|
|
220,019,568 |
|
October 1 - 31, 2014 |
|
|
1,004,378 |
|
|
|
74.58 |
|
|
|
8,251,860 |
|
|
|
145,116,399 |
|
November 1 - 30, 2014 |
|
|
883,971 |
|
|
|
81.85 |
|
|
|
9,135,831 |
|
|
|
72,765,162 |
|
December 1 - 22, 2014 |
|
|
845,544 |
|
|
|
86.06 |
|
|
|
9,981,375 |
|
|
|
- |
|
|
|
|
|
|
Total |
|
|
9,981,375 |
|
|
|
70.13 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period |
|
Year |
|
|
Total amount paid (in EUR millions) |
|
|
Total Number of Shares Purchased |
|
|
Average Price Paid per Share (EUR) |
|
|
Reduction of Shares
Outstanding vs
Beginning of Year (Percentage) |
|
|
|
|
|
|
|
|
|
Share Buybacks |
|
|
2006 |
|
|
|
677.2 |
|
|
|
40,385,139 |
|
|
|
16.77 |
|
|
|
8.3 |
|
Synthetic Share Buyback |
|
|
2007 |
|
|
|
1,011.9 |
|
|
|
55,093,409 |
|
|
|
18.37 |
|
|
|
11.5 |
|
Share Buybacks |
|
|
2007 |
|
|
|
359.8 |
|
|
|
17,000,000 |
|
|
|
21.16 |
|
|
|
3.6 |
|
Share Buybacks |
|
|
2008 |
|
|
|
87.6 |
|
|
|
5,000,000 |
|
|
|
17.52 |
|
|
|
1.1 |
|
Share Buybacks |
|
|
2011 |
|
|
|
700.0 |
|
|
|
25,674,576 |
|
|
|
27.26 |
|
|
|
5.9 |
|
Synthetic Share Buyback |
|
|
2012 |
|
|
|
3,728.3 |
|
|
|
93,411,216 |
|
|
|
39.91 |
|
|
|
22.6 |
|
Share Buybacks |
|
|
2012 |
|
|
|
535.2 |
|
|
|
13,478,058 |
|
|
|
39.71 |
|
|
|
3.3 |
|
Share Buybacks |
|
|
2013 |
|
|
|
300.0 |
|
|
|
4,614,179 |
|
|
|
65.02 |
|
|
|
1.1 |
|
Share Buybacks |
|
|
2014 |
|
|
|
700.0 |
|
|
|
9,981,375 |
|
|
|
70.13 |
|
|
|
2.3 |
|
|
|
Total / Average1 |
|
|
|
|
|
|
4,371.7 |
|
|
|
171,226,736 |
|
|
|
25.53 |
|
|
|
35.3 |
|
1 |
Totals, average and percentage are excluding the synthetic share buyback executed in 2012 as part of our CCIP. The percentage represents the reduction of shares issued and
outstanding compared to January 1, 2006. |
6. Long-term Debt
Long-term debt consists of our Eurobonds. See Note 20 to the Consolidated Financial Statements.
7.
Personnel
The average number of employees employed by ASML Holding N.V. at year-end 2014 was five (2013: five). Other benefits and expense
reimbursement as disclosed in Note 30 to the Consolidated Financial Statements, include social security costs for an amount of EUR 24.9 million (2013: EUR 21.0 million).
As a result of enacted Dutch tax legislation (Wet uitwerking fiscale maatregelen Begrotingsakkoord 2013) the Company incurred an expense of EUR
3.1 million in relation to the (former) members of the BoM during 2013. During 2014 no expenses relating this topic incurred as this legislation is no longer in place.
ASML does not consider the Dutch Tax legislation (Wet uitwerking fiscale maatregelen Begrotingsakkoord 2013) to be a remuneration or an employee benefit. For information regarding the
remuneration of the (former) members of the BoM see Note 31 to the Consolidated Financial Statements.
8. Principal Accountant Fees and
Services
For information regarding auditors fees, see Note 35 to the Consolidated Financial Statements.
|
|
|
|
|
ASML STATUTORY REPORT 2014 |
|
134 |
|
|
9. Commitments and Contingencies
ASML Holding N.V. has assumed joint and several liabilities in accordance with article 403 Part 9 of Book 2 of The Dutch Civil Code with respect to the following Dutch subsidiaries: ASML Netherlands B.V. and
Cymer B.V. Furthermore, ASML Holding N.V. has guaranteed all liabilities outstanding at December 31, 2014, until all are satisfied in full, in accordance with section 479C of the UK Companies Act 2006 with respect to its overseas subsidiary
ASML (UK) Ltd (registered number SC176574) and accordingly, under section 479A of that Act ASML (UK) Ltd is exempt from the requirement to have its financial statements audited.
From time to time we provide guarantees to third parties in connection with transactions entered into by our Dutch subsidiaries in the ordinary course of business.
ASML Holding N.V. forms a tax unity together with certain of its Dutch subsidiaries, for purposes of Dutch tax laws and are as such jointly and severally
liable for the tax debts of the unity. The fiscal unity comprises as of December 31, 2014 of ASML Holding N.V., ASML Netherlands B.V. and ASML Systems B.V. All tax positions attributable to the fiscal unity (current and deferred) are reported
within ASML Holding N.V. due to the method of settlement within the fiscal unity. The tax positions are settled via the current account with the subsidiaries.
10. Amounts due from/ due to Subsidiaries
Interest on amounts due from subsidiaries is
calculated based on monthly base rates plus a market-conform mark-up, interest on amounts due to subsidiaries is calculated based on monthly base rate, minus a small fee, with a minimum of 0 percent. All balances due from/due to subsidiaries are
repayable on demand.
Veldhoven, the Netherlands
February 10, 2015
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 REPORT 2014 |
|
135 |
|
|
Other Information
The additional information below includes a brief summary of the most significant provisions of our Articles of Association. See Note 19 of the Consolidated Financial Statements.
Adoption of Financial Statements
The BoM will
submit our statutory annual report, together with a certificate of the auditor in respect thereof, to the General Meeting of Shareholders for adoption.
Statements Appropriation and Determination of Net Income
Dividends may be payable out of net
income or retained earnings shown in the Company Financial Statements as adopted by our General Meeting of Shareholders, after payment first of (accumulated) dividends on any outstanding cumulative preference shares. At its discretion, however,
subject to statutory provisions, the BoM may, with the prior approval of the Supervisory Board, distribute one or more interim dividends on the ordinary shares before the Financial Statements for any financial year have been adopted by the General
Meeting of Shareholders. The BoM, with the approval of the Supervisory Board, may decide that all or part of our net income should be retained and not be made available for distribution to shareholders, except for dividends on the cumulative
preference shares. Those net incomes that are not retained may be distributed to shareholders pursuant to a shareholders resolution, provided that the distribution does not reduce equity below the amount of reserves required by Dutch law.
Existing reserves that are distributable in accordance with Dutch law may be made available to the General Meeting of Shareholders for distribution upon a proposal by the BoM, subject to prior approval of the Supervisory Board. As regards cash
payments, the rights to dividends and distributions shall lapse if such dividends or distributions are not claimed within five years following the day after the date on which they were made available.
Annually, the BoM will assess the amount of dividend that will be proposed to the Annual General Meeting of Shareholders. For 2013, a dividend was declared
of EUR 0.61 per ordinary share of EUR 0.09 nominal value which was paid in 2014.
A proposal will be submitted to the Annual General Meeting
of Shareholders on April 22, 2015 to declare a dividend for 2014 of EUR 0.70 per ordinary share of EUR 0.09 nominal value.
Voting
Rights
We are subject to the relevant provisions of Dutch law applicable to large corporations (the structuurregime). These
provisions have the effect of concentrating control over certain corporate decisions and transactions in the hands of the Supervisory Board. Members of the BoM are appointed by the Supervisory Board. The Supervisory Board shall notify the General
Meeting of Shareholders of intended appointments to the BoM. General Meetings of Shareholders will be held at least once a year. We do not solicit from or nominate proxies for our shareholders. However, shareholders and other persons entitled to
attend General Meetings of Shareholders may be represented by proxies.
EGMs may be held as often as deemed necessary by the Supervisory Board or
BoM and must be held if one or more ordinary or cumulative preference shareholders jointly representing at least ten percent of the issued share capital make a written request to that effect to the Supervisory Board and the BoM specifying in detail
the business to be dealt with.
Resolutions are adopted at General Meetings of Shareholders by an absolute majority of the votes cast (except
where a different proportion of votes are required by the Articles of Association or Dutch law) and there are generally no quorum requirements applicable to such meetings. In the General Meeting of Shareholders each share confers the right to cast
one vote.
Subsequent Events
Subsequent events were evaluated up to February 10, 2015, which is the issuance date of this 2014 Annual Report. There are no subsequent events to
report.
|
|
|
|
|
ASML STATUTORY REPORT 2014 |
|
136 |
|
|
Independent Auditors Report
To: The shareholders and Supervisory Board of ASML Holding N.V.
Report on the audit of the
financial statements 2014
Our opinion
We have audited the financial statements 2014 of ASML Holding N.V. (ASML or the Company), based in Veldhoven. The financial statements include the consolidated financial statements
and the Company financial statements.
In our opinion:
|
|
the consolidated financial statements give a true and fair view of the financial position of ASML Holding N.V. as at December 31, 2014, and of its
result and its cash flows for 2014 in accordance with International Financial Reporting Standards as adopted by the European Union (IFRS-EU) and with Part 9 of Book 2 of the Dutch Civil Code. |
|
|
the Company financial statements give a true and fair view of the financial position of ASML Holding N.V. as at December 31, 2014, and of its result
for 2014 in accordance with Part 9 of Book 2 of the Dutch Civil Code. |
The consolidated financial statements comprise:
1. |
the consolidated statement of financial position as at December 31, 2014; |
2. |
the following statements for 2014: consolidated statements of profit and loss and other comprehensive income, changes in equity and cash flows for the year then ended; and
|
3. |
the notes comprising a summary of the significant accounting policies and other explanatory information. |
The Company financial statements comprise:
1. |
the Company balance sheet as at December 31, 2014; |
2. |
the abbreviated profit and loss account for 2014; and |
3. |
the notes comprising a summary of the significant accounting policies and other explanatory information. |
Basis for our opinion
We conducted our audit
in accordance with Dutch law, including the Dutch Standards on Auditing. Our responsibilities under those standards are further described in the Our responsibilities for the audit of the financial statements section as included in the
appendix to our report.
We are independent of ASML Holding N.V. in accordance with the Verordening inzake de onafhankelijkheid van accountants
bij assurance-opdrachten (ViO) and other relevant independence requirements in the Netherlands. Furthermore, we have complied with the Verordening gedrags- en beroepsregels accountants (VGBA).
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Materiality
Misstatements can arise from
fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. The materiality affects the nature,
timing and extent of our audit procedures and the evaluation of the effect of identified misstatements on our opinion.
Based on our professional
judgment we determined the materiality for the financial statements as a whole at EUR 83 million. The materiality is based on 8% of normalized profit before tax. We have also taken into account misstatements and/or possible misstatements that in our
opinion are material for qualitative reasons for the users of the financial statements. We established a lower materiality for certain account balances and disclosures based on qualitative reasons.
We agreed with the Supervisory Board that misstatements in excess of EUR 4 million, which are identified during the audit, would be reported to them,
as well as smaller misstatements that in our view must be reported on qualitative grounds.
Scope of the group audit
ASML is the head of a group of entities. The financial information of this group is included in the consolidated financial statements of ASML. Because we are
ultimately responsible for the opinion, we are also responsible for directing, supervising and performing the group audit.
|
|
|
|
|
ASML STATUTORY REPORT 2014 |
|
137 |
|
|
A large part of the Companys operations are based in the Netherlands. In addition, the financial
administration for a significant number of group entities (also foreign entities) is centralized in the Netherlands. Consequently, we have centralized our audit approach and used other auditors in foreign locations only to a limited extent.
We have determined the nature and extent of the audit procedures to be carried out for each of the group entities. Decisive were the size and /
or the risk profile of the group entities or operations. On this basis, we selected group entities for which an audit or review had to be carried out on the complete set of financial information or on specific items. We performed review procedures
or specified audit procedures at the other (less significant) entities.
By performing the procedures we have been able to obtain sufficient and
appropriate audit evidence about the groups financial information to provide an opinion about the consolidated financial statements.
Our key audit matters
Key audit matters are
those matters that, in our professional judgment, were of most significance in our audit of the financial statements. We have communicated the key audit matters to the Supervisory Board. The key audit matters are not a comprehensive reflection of
all matters discussed. These matters were addressed in the context of our audit of the financial statements as a whole and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Revenue recognition for systems
Total systems
revenue for the year 2014 amounts to EUR 4,243 million. Sales of systems are usually concluded with customers under volume purchase agreements (VPAs). These VPAs also include agreements with customers involving various other
products and services of the Company such as software, service and warranty. For revenue recognition purposes, the consideration received from customers is allocated to the various products and services contracted under the VPAs based on the
relative selling price of these elements (multiple element arrangement accounting). This revenue allocation requires significant judgment and determines the timing and amount of revenue recognized in each reporting period. Our audit procedures
included, amongst others, the review of significant VPAs to assess the identification of all relevant products and services sold. We also focused on the allocation of revenue to the various elements in the VPAs, as well as, the timing of
the revenue recognized.
From time to time, the Company introduces new technology systems to the market, for example the introduction of EUV.
Revenue recognition for new technology systems requires a higher degree of judgment than proven technology systems, especially around the timing of revenue recognition. Our audit focused on the assessment of performance obligations related to new
technology systems and whether revenue for such systems was recognized in the correct period.
In connection with the introduction of EUV, the
Company committed to the future upgrade of the original light sources of the first 11 EUV systems sold to customers. In connection with this commitment, the Company recorded a provision for expected losses in the 2013 financial statements. The
remaining balance of this provision amounts to EUR 124 million as of December 31, 2014. This area was significant to our audit because of the complexity and subjectivity around assessing the expected losses. We evaluated the reasonableness
of the key assumptions used in calculating the expected losses.
Inventory excess & obsolete provision
The total inventory and related excess and obsolete provision as of December 31, 2014 amounts to EUR 2,861 million and EUR 311 million,
respectively. The excess and obsolete provision mainly relates to raw materials and spare parts because finished products (and related work in process) are manufactured only when a client order is received. We focused on this area because the gross
inventory and related provision are material to the financial statements, involve a high level of judgment and are subject to uncertainty due to rapid technological changes. We evaluated, amongst others, the analyses and assessments made by
management with respect to slow moving and obsolete stock; the expected demand and market value related to service parts and raw materials; the provision for future purchase commitments; and the provision for lenses including anticipated repair
costs.
Sensitivities in valuation of goodwill and other intangible fixed assets
The goodwill as of December 31, 2014 amounts to EUR 2,378 million and is allocated to Cash Generating Unit (CGU) ASML for an amount of EUR 1,933 million and to CGU Cymer Light
Source (CLS) for an amount of EUR 445 million. The other intangible fixed assets as per December 31, 2014 amounts to EUR 1,670 million. The goodwill and intangible fixed assets primarily relate to the 2013 acquisition of Cymer and
capitalized development expenses. Under IFRS-EU, the Company is required to annually test goodwill for impairment and intangible fixed assets not yet available for use. For other intangible fixed assets with finite useful lives, the Company is
required to assess whether impairment indicators exists.
|
|
|
|
|
ASML STATUTORY REPORT 2014 |
|
138 |
|
|
We focused on this area because of the materiality of these assets the valuation of which involves complex and
subjective judgements made by management about near and long term sales and operating margins. Our audit procedures included assessing the reasonableness of the valuation models used. In performing this assessment, we involved internal valuation
experts to assist us in evaluating the assumptions and methodologies used in these valuation models. Furthermore, we assessed managements process in evaluating different market scenarios underlying the valuation models. These scenarios were,
amongst others, used to analyse the sensitivity of the key assumptions used in the valuation models.
Responsibilities of management and the
Supervisory Board for the financial statements
Management is responsible for the preparation and fair presentation of the financial
statements in accordance with IFRS-EU and Part 9 of Book 2 of the Dutch Civil Code, and for the preparation of the management board report in accordance with Part 9 of Book 2 of the Dutch Civil Code. Furthermore, management is responsible for such
internal control as management determines is necessary to enable the preparation of the financial statements that are free from material misstatement, whether due to fraud or error.
As part of the preparation of the financial statements, management is responsible for assessing the Companys ability to continue as a going concern. Based on the financial reporting frameworks
mentioned, management should prepare the financial statements using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. Management
should disclose events and circumstances that may cast significant doubt on the Companys ability to continue as a going concern in the financial statements.
The Supervisory Board is responsible for overseeing the Companys financial reporting process.
Our responsibilities for the audit of the financial statements
Our objective is to plan and perform the audit assignment in a manner that allows us to obtain sufficient and appropriate audit evidence for our opinion.
Our audit has been performed with a high, but not absolute, level of assurance, which means we may not have detected all errors and fraud.
For our responsibilities we refer to the appendix.
Report on other legal and regulatory requirements
Report on the management board report and the other information
Pursuant to legal requirements
of Part 9 of Book 2 of the Dutch Civil Code (concerning our obligation to report about the management board report and other information):
|
|
We have no deficiencies to report as a result of our examination whether the management board report, to the extent we can assess, has been prepared in
accordance with Part 9 of Book 2 of the Dutch Civil Code, and whether the information as required by Part 9 of Book 2 of the Dutch Civil Code has been annexed. |
|
|
We report that the management board report, to the extent we can assess, is consistent with the financial statements. |
Engagement
We were appointed as auditor of
ASML Holding N.V. by the shareholders meeting as of the audit for the year 1984 and have operated as statutory auditor ever since that date.
P.J. van de Goor
Deloitte Accountants B.V.
Eindhoven, the Netherlands
February 10, 2015
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ASML STATUTORY REPORT 2014 |
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Appendix to the independent auditors report: Our responsibilities for the audit of the financial
statements
We have exercised professional judgment and have maintained professional skepticism throughout the audit, in accordance with Dutch
Standards on Auditing, ethical requirements and independence requirements. Our audit included e.g.:
|
|
Identifying and assessing the risks of material misstatement of the financial statements, whether due to fraud or error, designing and performing audit
procedures responsive to those risks, and obtaining audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. |
|
|
Obtaining an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the Companys internal control. |
|
|
Evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
|
|
|
Concluding on the appropriateness of managements use of the going concern basis of accounting, and based on the audit evidence obtained, whether a
material uncertainty exists related to events or conditions that may cast significant doubt on the Companys ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our
auditors report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors report.
However, future events or conditions may cause the Company ceasing to continue as a going concern. |
|
|
Evaluating the overall presentation, structure and content of the financial statements, including the disclosures; and |
|
|
Evaluating whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
|
We communicate with the Supervisory Board regarding, among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant findings in internal control that we identify during our audit.
We provide the Supervisory
Board with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where
applicable, related safeguards.
From the matters communicated with the Supervisory Board, we determine those matters that were of most
significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors report unless law or regulation precludes public disclosure about the matter or, in
extremely rare circumstances, when non-mentioning is in the public interest
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ASML STATUTORY REPORT 2014 |
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140 |
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Information and Investor Relations
Financial Calendar
April 15, 2015
Announcement of First Quarter results for 2015
April 22, 2015
General Meeting of Shareholders
July 15, 2015
Announcement of Second
Quarter results for 2015
October 14, 2015
Announcement of Third Quarter results for 2015
Fiscal Year
ASMLs fiscal year ends on December 31, 2015
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 (www.asml.com).
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141 |
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ASML STATUTORY REPORT 2014 |
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142 |
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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 Offices
2650 W
Geronimo Place
Chandler, AZ 85224
U.S.A.
Asia Main Office
Suite 1702-3,
17F
100 Queens Road Central
Hong Kong
Corporate Communications
phone:
+31 40 268 7870
email: corpcom@asml.com
Investor Relations
phone: +31 40 268 3938
email: investor.relations@asml.com
For
more information please visit our
website www.asml.com
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Definitions
|
|
|
|
|
Name |
|
Description |
|
|
AFM |
|
Autoriteit Financiële Markten; the Netherlands Authority for the Financial Markets |
|
|
AGM |
|
Annual General Meeting of Shareholders (held on April 23, 2014, April 24, 2013 and planned for April 22, 2015) |
|
|
Annual Reports |
|
The Annual Report in accordance with IFRS-EU and with Part 9 of Book 2 of the Dutch Civil Code and the Annual Report in conformity with US GAAP |
|
|
ArF |
|
Argon Fluoride |
|
|
ArFi |
|
Argon Fluoride Immersion |
|
|
ASML |
|
ASML Holding N.V. and its subsidiaries |
|
|
ASMLs Website |
|
www.asml.com |
|
|
ASP |
|
Average Selling Price |
|
|
BoM |
|
Board of Management |
|
|
Brion |
|
Brion Technologies, Inc. |
|
|
Canon |
|
Canon Kabushiki Kaisha |
|
|
CCIP |
|
Customer Co-Investment Program |
|
|
CD |
|
Critical Dimension |
|
|
CEO |
|
Chief Executive Officer |
|
|
CFO |
|
Chief Financial Officer |
|
|
CGU |
|
Cash Generating Unit |
|
|
CGU ASML |
|
Cash Generating Unit ASML (which is ASML consolidated excluding CGU CLS) |
|
|
CGU CLS |
|
Cash Generating Unit Cymer Light Sources |
|
|
CMO |
|
Chief Marketing Officer |
|
|
Code |
|
Dutch Corporate Governance Code |
|
|
Code of Conduct |
|
Code of ethics and conduct |
|
|
Company |
|
ASML Holding N.V. |
|
|
COO |
|
Chief Operations Officer |
|
|
COSO |
|
Committee of Sponsoring Organizations of the Treadway Commission |
|
|
CPO |
|
Chief Program Officer |
|
|
CR |
|
Corporate Responsibility |
|
|
CRMC |
|
Capital Research & Management Company |
|
|
Cross-License Transition Period |
|
The period between January 1, 2010 and December 31, 2014 |
|
|
CRSB |
|
Corporate Risk and Sustainability Board |
|
|
CTO |
|
Chief Technology Officer |
|
|
Customer Stichtingen |
|
Intel Stichting and TSMC Stichting jointly referred. Shares held by Participating Customers in the CCIP, are held through Foundations that issued to the Participating Customers
depository receipts representing shares held by these Foundations. |
|
|
Cymer |
|
Cymer Inc. and its subsidiaries |
|
|
De Nederlandsche Bank |
|
The Dutch Central Bank, which is the supervisor of all pension companies in the Netherlands |
|
|
Deloitte |
|
Deloitte Accountants B.V. |
|
|
DPT |
|
Double Patterning Technology |
|
|
DTC |
|
Depositary Trust Company |
|
|
|
|
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ASML STATUTORY REPORT 2014 |
|
144 |
|
|
|
|
|
|
|
Name |
|
Description |
|
|
Dutch GAAP |
|
Accounting principles generally accepted in the Netherlands |
|
|
EGM |
|
Extraordinary General Meeting of Shareholders |
|
|
EPS |
|
Earnings per share |
|
|
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 |
|
|
Euroclear Nederland |
|
Nederlands Centraal Instituut voor Giraal Effectenverkeer B.V. |
|
|
EUV |
|
Extreme Ultraviolet |
|
|
EVP |
|
Executive Vice President |
|
|
FASB |
|
Financial Accounting Standards Board |
|
|
FAT |
|
Factory Acceptance Test |
|
|
FIRPTA |
|
Foreign Investment in Real Property Tax Act |
|
|
FMSA |
|
Financial Markets Supervision Act (Wet op het financieel toezicht (Wft)) |
|
|
Foreign Currency |
|
Currency other than the currency of the primary economic environment in which the entity operates |
|
|
Foundation |
|
Stichting Preferente Aandelen ASML |
|
|
FTEs |
|
Full-time equivalents |
|
|
Functional Currency |
|
The currency of the primary economic environment in which the entity operates |
|
|
Holistic Lithography |
|
Optimize the scanner performance by taken into account the entire chip creation process, from design to volume manufacturing |
|
|
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 |
|
|
Intel 450mm NRE Funding Agreement |
|
Agreement with Intel related to the development of 450mm lithography equipment |
|
|
Intel EUV NRE Funding Agreement |
|
Agreement with Intel related to the development of EUV lithography equipment |
|
|
Intel Investment Agreement |
|
The investment agreement between ASML and Intel |
|
|
Intel NRE Funding Agreements |
|
The Intel Funding Agreements related to the development of 450mm and EUV lithography equipment |
|
|
Intel Stichting |
|
Stichting Administratiekantoor MAKTSJAB |
|
|
KrF |
|
Krypton Fluoride |
|
|
Logic |
|
Micro-processor manufacturers and Foundries |
|
|
Memory |
|
NAND-Flash memory and DRAM memory chip makers |
|
|
mm |
|
Millimeter (one thousandth of a meter) |
|
|
MPT |
|
Multiple Patterning Technology |
|
|
NASDAQ |
|
NASDAQ Stock Market LLC |
|
|
NID |
|
Notional Interest Deduction |
|
|
Nikon |
|
Nikon Corporation |
|
|
Nikon Cross-License Agreement |
|
The patent Cross-License agreement between Nikon and ASML related to lithography equipment used to manufacture semiconductor devices |
|
|
nm |
|
Nanometer (one billionth of a meter) |
|
|
|
|
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ASML STATUTORY REPORT 2014 |
|
145 |
|
|
|
|
|
|
|
Name |
|
Description |
|
|
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 |
|
|
NWO |
|
Dutch Organization for Scientific Research (Nederlandse Organisatie voor Wetenschappelijk onderzoek) |
|
|
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 |
|
|
NXE:3100 |
|
Second-generation EUV systems |
|
|
NXE:3300B |
|
Third-generation EUV systems |
|
|
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 |
|
|
OCI |
|
Other Comprehensive Income |
|
|
Participating Customers |
|
The participants in the Customer Co-Investment Program: Intel Corporation (Intel), Taiwan Semiconductor Manufacturing Company Ltd. (TSMC) and Samsung
Electronics Corporation (Samsung) |
|
|
PME |
|
Bedrijfstakpensioenfonds Metalektro |
|
|
Preference Share Option |
|
An option to acquire cumulative preference shares in our capital |
|
|
R&D |
|
Research and Development |
|
|
RDA |
|
Research and Development Deduction (Research and Development Aftrek) |
|
|
Recoverable Amount |
|
The higher amount of fair value less costs to sell and value in use |
|
|
Remuneration Policy |
|
The 2014 Remuneration Policy as approved by the Supervisory Board and adopted by the AGM on April 23, 2014 |
|
|
RU CLS |
|
Reporting Unit Cymer Light Sources |
|
|
Samsung |
|
Samsung Electronics Corporation |
|
|
Samsung Investment Agreement |
|
The investment agreement between ASML and Samsung |
|
|
Samsung NRE Funding Agreement |
|
The NRE funding agreement between ASML and Samsung |
|
|
Sarbanes-Oxley Act |
|
The Sarbanes-Oxley Act of 2002 |
|
|
SEC |
|
The United States Securities and Exchange Commission |
|
|
SG&A |
|
Selling, General and Administrative |
|
|
Shareholder Agreement |
|
In connection with the issuance of shares pursuant to the Intel Investment Agreement, on September 12, 2012 ASML, Intel and the Intel Stichting entered into a shareholder agreement (we
refer to page 51) |
|
|
SOX 404 |
|
Section 404 of the Sarbanes-Oxley Act of 2002 |
|
|
SPE |
|
Special Purpose Entity |
|
|
SPE Shareholders |
|
Syndicate of three banks solely for the purpose of leasing the headquarter in Veldhoven |
|
|
STI |
|
Short-term incentive |
|
|
the Intel Investment Agreement |
|
The investment agreement between ASML and Intel |
|
|
TSMC |
|
Taiwan Semiconductor Manufacturing Company Ltd. |
|
|
TSMC Investment Agreement |
|
The investment agreement between ASML and TSMC |
|
|
TSMC NRE Funding Agreement |
|
The NRE funding agreement between ASML and TSMC |
|
|
TSMC Stichting |
|
Stichting Administratiekantoor TSMC |
|
|
US GAAP |
|
Generally accepted accounting principles in the United States of America |
|
|
|
|
|
ASML STATUTORY REPORT 2014 |
|
146 |
|
|
|
|
|
|
|
Name |
|
Description |
|
|
VAT |
|
Value-added tax |
|
|
VLSI Research |
|
An independent industry research firm that surveyed customers representing 95.0 percent of the worlds total semiconductor market |
|
|
WACC |
|
Weighted Average Cost of Capital |
|
|
Wavelength |
|
The frequency of light going through projection lenses; the shorter the wavelength, the smaller the line-width and the finer the pattern on the IC |
|
|
Works Council |
|
Works Council of ASML Netherlands B.V. |
|
|
YieldStar |
|
Advanced wafer metrology system |
|
|
Zeiss |
|
Carl Zeiss SMT AG |
|
|
|
|
|
ASML STATUTORY REPORT 2014 |
|
147 |
|
|
|
|
|
|
|
ASML STATUTORY REPORT 2014 |
|
148 |
|
|
Exhibit 99.2
ASML Holding N.V.
Remuneration Report
Contents
|
|
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|
|
ASML HOLDING N.V. - REMUNERATION REPORT 2014 |
|
|
|
|
Message of the Supervisory Board
Dear Shareholders, dear Stakeholders,
We are
pleased to present the Remuneration Report over the financial year 2014 (the Report). In this report you will find information on the remuneration of the Board of Management and the Supervisory Board of ASML Holding N.V.
(ASML or the Company), based on the Remuneration Policy as adopted at the Annual Meeting of Shareholders on April 24, 2013 and effective per January 1, 2014 (the 2014 Remuneration Policy).
The 2014 Remuneration Policy builds on the core principles that have served us for more than ten years:
|
|
Transparency: the policy and its execution need to be clear and practical; |
|
|
Alignment: the remuneration is aligned with the ASML business needs and the remuneration policies for ASMLs senior management and other ASML
employees; |
|
|
Long-term orientation: the incentives to management need to focus on long-term value creation; |
|
|
Compliance: ASML adopts the highest standards of good corporate governance, and |
|
|
Simplicity: the policy and its execution are as simple as possible and easily understandable for all stakeholders. |
This Report will provide a summary of the 2014 Remuneration Policy and its application in 2014.
In order to adequately support the Supervisory Board the Remuneration Committee met several times in 2014. The Supervisory Board decided upon the following main topics as prepared by the Remuneration
Committee:
|
|
The performance levels achieved in 2014 and the corresponding variable remuneration pay-out; |
|
|
The conditions for the long term incentive (LTI) award 2014-2016 and the applicable performance peer group; |
|
|
The performance measures applicable for the variable remuneration 2014; |
|
|
The proposal to the AGM to determine the number of shares needed for ASML employee share based incentives and the proposal to the AGM to approve the
number of shares needed for the share based incentives for the Board of Management; |
|
|
The base salary of the members of the Board of Management for 2014; |
|
|
The preparation to adjustments to the pension arrangements of the Board of Management; |
|
|
The preparation of some amendments to the 2014 Remuneration Policy. |
With great sadness, the Remuneration Committee remembers Ms. H.C.J. (leke) van den Burg who passed away on September 28, 2014. leke was an engaged and knowledgeable member of the Remuneration
committee and focused particularly on corporate governance, social policy and employee participation. The Remuneration Committee is grateful for the time leke dedicated to ASML over the past nine years.
We trust this report is sufficiently clear in outlining the remuneration details of the Board of Management and Supervisory Board in the financial year
2014.
The Supervisory Board
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|
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|
ASML HOLDING N.V. - REMUNERATION REPORT 2014 |
|
6 |
|
|
The Remuneration Committee
The Remuneration Committee of ASML advises the Supervisory Board, and prepares resolutions with respect to the review and execution of the 2014 Remuneration
Policy. The Supervisory Board approves the proposals of the Remuneration Committee and, in case of policy changes, submits the proposed remuneration policy to the General Meeting of Shareholders for adoption. On September 28, 2014, late
Ms. H.C.J. (leke) van den Burg passed away and since then the Remuneration Committee is formed by Mr. W.H. (Wolfgang) Ziebart (Chairman) and P.F.M. (Pauline) van der Meer Mohr. The successor of leke van den Burg will be appointed by the
Annual General Meeting on April 22, 2015 based upon the strengthened recommendation right of ASMLs Works Council.
Responsibilities
of the Remuneration Committee
The Remuneration Committee:
|
|
Oversees the development and implementation of compensation and benefits programs for the members of the Board of Management;
|
|
|
Reviews and proposes the corporate objectives and targets relevant to the compensation of all members of the Board of Management, in cooperation with the
Audit Committee and the Technology and Strategy Committee; |
|
|
Evaluates the achievements of the Board of Management with respect to the short and long-term quantitative performance criteria in cooperation with the
Audit Committee and the Technology and Strategy Committee. The full Supervisory Board evaluates the qualitative performance criteria. Furthermore, the Remuneration Committee recommends to the Supervisory Board the resulting compensation levels for
the members of the Board of Management, based on this evaluation; |
|
|
Conducts internal pay relativity analyses in order to assure appropriate pay differentials within the Company; |
|
|
Analyses possible outcomes of the variable remuneration components and assesses how they may affect the remuneration of the Board of Management (scenario
analyses); |
|
|
Assesses the shareholding positions of the members of the Board of Management against the share ownership guideline of the 2014 Remuneration Policy; and
|
|
|
Reviews and proposes the remuneration of the Supervisory Board. |
For a more comprehensive overview of the responsibilities of the Remuneration Committee, please refer to the Rules of Procedure of the Remuneration Committee as published on the website www.asml.com.
Activities during 2014
In 2014,
the Remuneration Committee met four times in scheduled meetings. The Remuneration Committee meets without the Board of Management being present.
Role of the external advisor
The external
advisor to the Remuneration Committee does not perform any other services for the Board of Management.
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|
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|
|
ASML HOLDING N.V. - REMUNERATION REPORT 2014 |
|
7 |
|
|
2014 Remuneration Policy - Board of Management
The 2014 Remuneration Policy was adopted by the Annual General Meeting of Shareholders of April 24, 2013 and became effective per January 1, 2014.
Some adjustments to this policy were adopted by the Annual General Meeting of Shareholders of April 23, 2014, and are applicable retro-actively as of January 1, 2014.
The 2014 Remuneration Policy supports the long-term development of the company in a highly dynamic environment, while aiming at fulfilling all stakeholders requirements. More than ever, the challenge
for ASML is to drive technology, to serve its customers and to satisfy its stakeholders. These drivers are the backbone of the 2014 Remuneration Policy.
In this section, an overview is provided of the 2014 Remuneration Policy for the Board of Management, and the application thereof in 2014.
|
|
|
|
|
2014 Remuneration Policy |
|
|
|
|
Base salary |
|
|
|
Derived from the median level of the benchmark on Total Direct Compensation (conducted once every two years). |
|
|
|
|
The Remuneration Committee considers the appropriateness of any change in base salary in light of the market levels, as well as salary
adjustments for other ASML employees. |
Short term incentive |
|
|
|
On target level (as % of base salary): 60% |
|
|
|
|
Maximum level (as % of base salary): 90% |
|
|
|
|
Targets are set on a mix of annual and semi-annual basis. |
|
|
|
|
Annual payout in cash, determined by the performance on financial objectives (weighted 60% in total) and qualitative objectives (weighted 40% in
total). |
Long term incentive |
|
|
|
On target level (as % of base salary): 70% |
|
|
|
|
Maximum level (as % of base salary): 140% |
|
|
|
|
Annual award is based on the VWAP (Volume Weighted Average Price) of Q4 of the year preceding the grant. |
|
|
|
|
Number of shares at vesting is determined by both a financial (ROAIC - weighted 80%) and qualitative (weighted 20%) performance metric measured
over a period of three calendar years. |
Pension benefits |
|
|
|
Positioned in line with general industry sample of companies in The Netherlands. |
Philosophy and
objectives
The objective of the 2014 Remuneration Policy is to enable ASML to attract, motivate and retain qualified
industry professionals for the Board of Management in order to achieve ASMLs strategic goals. The policy acknowledges the internal and external context as well as the ASML business needs and long term strategy. The policy is designed to
encourage behavior that is focused on long-term value creation, while adopting the highest standards of good corporate governance. The policy is aimed at motivating for outstanding achievements, using a combination of non-financial and financial
performance measures. Technology leadership and customer value creation are the key drivers of sustainable returns to our shareholders.1
Reference
group and market positioning
ASML offers a remuneration package that is competitive as compared to a relevant labor market. To define this
market a reference group is created, consisting of companies that are comparable to ASML in terms of size and complexity, data transparency and geographical area. The median level in this reference group serves as a reference in determining the
level of pay for the Board of Management.
1) |
The Supervisory Board intends to propose certain amendments to the remuneration policy. The final proposal, together with an explanation, will be submitted by the
Supervisory Board to the General Meeting of Shareholders for its approval. The amendments include (i) an amendment to the definition of ROAIC, which would be calculated on the basis of Net Operating Profit After Tax rather than Net Operating
Profit and (ii) one of the performance measures for the short term incentive, Operating Cash Flow, will be substituted by Free Cash Flow and Cash Conversion Cycle. Both redefined performance measures have been applied in setting the variable
pay of the Board of Management in 2014. |
|
|
|
|
|
ASML HOLDING N.V. - REMUNERATION REPORT 2014 |
|
8 |
|
|
The reference group consists of the following companies:
|
|
|
Company |
|
|
Ahold |
|
Infineon Technologies |
Akzo Nobel |
|
KPN |
ASM International |
|
Philips |
DSM |
|
Randstad |
Electrolux |
|
Rolls Royce |
Fugro |
|
Sandvik |
Gemalto |
|
SBM offshore |
Heineken |
|
Unilever |
Imtech |
|
|
In principle a benchmark with the reference group is conducted every two years. In the years without a market assessment, the Supervisory Board considers the appropriateness of any change of base salary on
the market environment as well as the salary adjustments for other ASML employees. The Supervisory Board reviews the composition of the reference group with the frequency of the benchmark. Substantial changes to the composition will be submitted to
the shareholders.
As a guiding principle, the ASML Total Direct Compensation (TDC) at the target level is benchmarked against the median TDC
level of the reference group. TDC consists of base salary, a short term incentive (STI) and a long term incentive (LTI).
Base Salary
The level of base salary is not separately benchmarked, but derived from the Total Direct Compensation as described above and the policy on
STI and LTI, as described below.
For 2014, the base salaries for ASMLs Presidents Mr. Wennink and Mr. Van den Brink were set in
the middle between the benchmark results of a CEO and a benchmark of CTO/CFO-roles. The base salaries for the other members of the Board of Management were set in accordance with the benchmark results.
Short Term Incentive (STI)
The Short Term
Incentive refers to the annual performance related cash incentive that is applicable to all members of the Board of Management. The target level of the STI is 60% of base salary. In case of excellent performance the maximum opportunity amounts to
90% of base salary.
In order to achieve alignment between the remuneration of the Board of Management and other ASML employees, the policy
includes a modifier on the STI payout that is connected to the profit sharing program for employees. This modifier enables the Supervisory Board to discretionary adjust the STI payout of the Board of Management upward with 10% of base salary or
downward with 20% of base salary. In 2014, the Supervisory Board has not made adjustments to the STI payout based on this modifier.
For the
Short Term Incentive the following performance criteria have been applied in 2014:
|
|
|
|
|
|
|
|
|
On target payout (as % of base salary) |
|
|
|
Financial |
|
Board of Management |
|
|
|
1 Direct Material Margin on New Systems (excl. EUV) |
|
|
12.0% |
|
2 Total Company Cost Base |
|
|
12.0% |
|
3 Cash (Free Cash Flow and Cash Conversion Cycle) |
|
|
12.0% |
|
|
|
Qualitative |
|
|
|
|
|
|
4 Technology Leadership Index |
|
|
12.0% |
|
5 Market Position |
|
|
12.0% |
|
|
|
Total |
|
|
60.0% |
|
These performance measures reflect the drivers for ASML in a balanced mix of qualitative measures based on technology objectives and the quality of our service to customers, and quantitative financial
measures. The weighting is equally set for all five performance measures on 20%, being 12% of base salary.
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|
|
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|
ASML HOLDING N.V. - REMUNERATION REPORT 2014 |
|
9 |
|
|
For each of the performance criteria the Supervisory Board sets challenging, but realistic target levels. The
target setting and performance review occur in principle on an annual basis. Direct Material Margin on New Systems, Total Company Cost Base and Free Cash Flow are set and reviewed semi-annually. All performance measures are set in advance and do not
change during the performance period. The overall payout is annual and will be executed in the next financial year. The cash incentive is accrued during the performance period.
The performance target setting and performance evaluation are conducted in cooperation with the relevant committees of the Supervisory Board. The technology target is set and evaluated in cooperation with
the Technology and Strategy Committee, whereas financial targets are set and evaluated in cooperation with the Audit Committee. The Companys external auditor is engaged to perform agreed upon procedures to verify the consistent application of
the approved calculation method and the accuracy of the calculations of STI outcomes.
The payout levels are prorated upon the level of
achievement of the five performance criteria. There is no payout below threshold performance. Meeting threshold performance will result in a payout of 50% of target payout. In case of excellent performance the maximum payout is capped at 150% of
target payout. The target payout is 60% of base salary.
Long Term Incentive (LTI)
The Long Term Incentive refers to the share based incentive. All members of the Board of Management are eligible to receive performance related shares. The
target level of the Long Term Incentive is set at 70% of base salary. In case of excellent performance the maximum opportunity amounts to 140% of base salary.
The performance shares are conditionally granted on an annual basis to the members of the Board of Management.
The shares will become unconditional depending on the achievement of predetermined performance targets during a three-year performance period. Each performance period starts on the first day of the year of
the grant. The number of performance shares to be conditionally awarded is calculated at the beginning of the period, using the volume weighted average share price of ASML during the last quarter of the year preceding the conditional award.
Performance shares are granted in January of the year in which the three-year performance period starts, two days after the publication of ASMLs annual results.
Two types of performance measures relate to the Long Term Incentive: ASMLs relative Return On Average Invested Capital (ROAIC) position compared to the performance Peer Group and long term strategic
qualitative targets to ensure ASMLs ability to keep performing at high standards. For the performance period 2014-2016 the qualitative targets relate to the longer term Technology Leadership Index and Sustainability. Like with the STI
performance criteria, also the LTI criteria reflect the drivers of ASML: push technology development, earn the money to enable this, and do it in a responsible way. Details of the Companys approach on sustainability are published in
ASMLs Corporate Responsibility Report.
The LTI performance measures have the following weights:
|
|
|
|
|
|
|
LTI performance measure |
|
Weight |
|
|
|
ROAIC |
|
|
80% |
|
Technology Leadership Index |
|
|
15% |
|
Sustainability |
|
|
5% |
|
|
|
Total |
|
|
100% |
|
The intention is to increase the weight of the qualitative LTI measures over time while reducing the weight of the ROAIC component.
ROAIC as performance measure
ROAIC provides ASMLs rate of return on capital it has put to
work, regardless of the capital structure of the Company. In other words, ROAIC is a fundamental metric to measure the value creation of the Company. In 2014, the ROAIC is calculated by dividing Net Operating Profit After Tax (NOPAT) by the Average
Invested Capital (AIC).
The ROAIC of ASML is compared to a peer group consisting of a number of globally active companies in primarily the
semiconductor industry, complemented by companies with a high capital base, high R&D investments and a long term investment horizon. These companies have been verified to show similar trend lines as ASML and compete with ASML for shareholder
preference.
|
|
|
|
|
ASML HOLDING N.V. - REMUNERATION REPORT 2014 |
|
10 |
|
|
ROAIC peer group
|
|
|
Company |
|
|
|
Advanced Energy |
|
KLA-Tencor |
|
Applied Materials |
|
LAM Research |
|
ASM International |
|
MKS Instruments |
|
Caterpillar |
|
Rockwell Collins |
|
Joy Global |
|
Teradyne |
The peer group is reviewed and verified by the Supervisory Board on an annual basis in order to ensure the appropriateness of its composition before each conditional grant. The Supervisory Board may adjust
the peer group on the basis of market circumstances (mergers, acquisitions, or other corporate activities significantly affecting their comparability with ASML). If a peer company is not available for the full three-year performance period, it will
be replaced for this full performance period by a substitute company. These substitute companies have been identified in advance of each performance cycle and an objective model has been developed that determines which substitute replaces the peer
company that no longer qualifies.
In 2013, Cymer was replaced by Teradyne according to the rules governing the substitutions of peer group
companies for the LTI performance cycles of 2011, 2012 and 2013. The ROAIC evaluation of the 2012 performance cycle will be executed using the adjusted peer group after the completion of this cycle in 2014. Peer group data for this evaluation will
be available in Q2 of 2015.
Performance incentive zone
The vesting of performance shares depends on the relative ROAIC position as compared to the peer group and the evaluation of the qualitative targets by the Supervisory Board. The vesting will be calculated
at the end of the three-year performance period for all performance measures, based on a predefined payout matrix.
LTI payout matrix ROAIC
|
|
|
|
|
|
|
|
ROAIC - Vesting scheme |
|
|
|
|
|
Relative ROAIC position (quantitative) |
|
Payout as a % of target |
|
Payout as a % of
base salary |
|
1 |
|
200% |
|
112% |
2 |
|
175% |
|
98% |
3 |
|
150% |
|
84% |
4 |
|
125% |
|
70% |
5 |
|
100% |
|
56% |
6 |
|
75% |
|
42% |
7 |
|
50% |
|
28% |
8 |
|
0% |
|
0% |
9 |
|
0% |
|
0% |
10 |
|
0% |
|
0% |
11 |
|
0% |
|
0% |
LTI payout matrix qualitative targets
For the Technology Leadership Index and Sustainability
targets, the same threshold and maximum levels apply. The Supervisory Board, in cooperation with the relevant committees (Technology and Strategy Committee, Audit Committee and Remuneration Committee) will assess the performance achieved against the
qualitative targets.
|
|
|
|
|
|
|
|
Performance assessment |
|
Payout as % of target |
|
Payout as % of base salary |
|
Excellent |
|
200% |
|
28% |
|
Overachieved |
|
100% - 200% |
|
14% - 28% |
|
Achieved |
|
100% |
|
14% |
|
Almost achieved |
|
50% - 100% |
|
7% - 14% |
|
Threshold |
|
50% |
|
7% |
|
Not achieved |
|
0% |
|
0% |
The Companys external auditor is engaged to perform agreed upon procedures to verify the consistent application of the approved calculation method and the accuracy of the calculations of LTI outcomes.
|
|
|
|
|
ASML HOLDING N.V. - REMUNERATION REPORT 2014 |
|
11 |
|
|
The cost of the Company is calculated based on the maximum amount of shares that can be awarded and spread over
the three-year performance period. Any performance shares granted shall, in any event, not be exercised in the first three years after the date of grant. The cost impact of the difference between the actual achievement after three years and the
maximum achievement will be adjusted after the final performance year.
Holding period
The minimum holding period for members of the Board of Management is two years after the vesting date. This also applies to the members of the Board of
Management at termination of their employment contract/management services agreement. The period before the Board of Management member obtains full rights to the shares will be five years in total.
In case tax payment is due by the members of the Board of Management over the retrieved variable income, performance shares may be partially sold within the
holding period (sell to cover).
Share ownership guideline
In accordance with the 2014 Remuneration Policy, members of the Board of Management are required to hold at least the value of two times base salary in the form of shares. This ensures an alignment of the
interest of members of the Board of Management with long term shareholder value throughout their employment with ASML.
Pensions
The pension arrangement for the Board of Management is set at the median of executive pensions in the Netherlands. The
arrangement is aligned with the supplementary pension arrangement for ASML employees in the Netherlands. The plan is a defined contribution opportunity as laid down in Dutch fiscal regulations. The total defined contribution is a percentage of the
pensionable salary, which is equal to the base salary minus Witteveen-threshold2, and depends on the participants age at the beginning of the year. The total net contribution is according to the maximum level as allowed by Dutch fiscal legislation, of which the participant contributes
4% of his pensionable salary.
Dependants pension and disability pension are insured on a risk basis, the premium of which is paid by ASML.
In 2014, the pension arrangement for members of the Board of Management is adjusted to comply with changes in Dutch pension legislation. The
pensionable age moved from 65 years to 67 years of age; the accrual rates and premiums for risk insurances have been adjusted accordingly. In 2015, further changes as a result of amendments in Dutch pension legislation will be implemented.
Other benefits and expense reimbursements
In addition to the pension benefits mentioned, the members of the Board of Management also receive other benefits and expense reimbursements, such as company car costs, travel expenses, social security
costs, health and disability insurance costs, and representation allowances. From December 2013 until May 2014, Mr. Nickl received a temporary allowance to cover relocation and housing costs (gross amount before taxes). Mr Meurice received
a housing allowance until March 31, 2014.
Claw back, ultimum remedium, scenario analyses
In order to comply with the highest standards of corporate governance, the employment contracts/management services agreements of the members of the Board of
Management include ultimate remedium and claw back provisions as well as a change of control arrangement as referred to below.
Extensive
scenario analyses of the possible outcome of the variable remuneration component and its effect on the remuneration of the Board of Management are conducted once every two years. For this purpose, the effect of different performance scenarios on the
level and composition of the remuneration have been analyzed and used for the design of the 2014 Remuneration Policy. An update of this scenario analyses will be executed in 2015.
2) |
Dutch pension arrangements have a threshold in the buildup of pension entitlements. This threshold exists because all participants are assumed to be entitled to the Dutch
state pension (AOW) and therefore do not need an additional pension over the first part of their pensionable income. The minimum level in the fiscal legislation for this threshold is related to the AOW allowance and is known as the
Witteveen-threshold. This threshold is calculated as the annual AOW allowance (including holiday allowance) for a married person times 10/7. The Witteveen-threshold for 2014 is Euro 13,449.00. |
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|
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ASML HOLDING N.V. - REMUNERATION REPORT 2014 |
|
12 |
|
|
Term of appointment
Members of the Board of Management are appointed for a period of four years, after which reappointment is possible for consecutive terms of maximum four years. The appointment term of Messrs. Wennink and Van
den Brink was converted from an indefinite period into a definite term of four years per the Annual General Meeting of Shareholders of April 23, 2014.
Notice period
The members of the Board of Management have a termination notice period of three
months. ASML would need to apply a notice period of six months for termination without cause under the applicable employment or management services agreements with the members of the Board of Management.
Severance agreement
Employment agreements or
management services agreements of members of the Board of Management contain specific provisions regarding benefits upon termination of these agreements. If the company gives notice under the agreement for reasons which are not exclusively or mainly
found in acts or omissions on the side of the member of the Board of Management, a severance amount equal to one year base salary will be made available upon the effective date of termination.
This severance payment will also be made available in the event the member of the Board of Management gives notice of termination of the employment
agreement or management services agreement due to a substantial difference of opinion between the respective member of the Board of Management and the Supervisory Board regarding his employment/management services agreement, his function or the ASML
strategy.
Change in control
Board
of Management members are also entitled to the aforementioned severance payment in the event ASML or its legal successor gives notice of termination under the employment contract or management services agreement due to a change in control or if the
member of the Board of Management gives notice of termination which is directly related to such change in control and such notice is given within twelve months from the date on which the change in control occurs.
The Change in control provision includes a limitation of the payout under the LTI. This entails that the share price will be fixed on the average of i) the
average closing share price over a period of 15 trading days prior to the first public announcement of change in control negotiations and ii) the average closing share price over a period of 30 trading days prior to the closing of the transaction.
Loans
ASML does not grant any
personal loans or guarantees to members of the Board of Management.
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|
|
|
|
ASML HOLDING N.V. - REMUNERATION REPORT 2014 |
|
13 |
|
|
2014 Remuneration - Board of Management
The remuneration of the Board of Management for the financial year 2014 is based upon the 2014 Remuneration Policy, as adopted by the General Meeting of
Shareholders on April 24, 2013, and which became effective per January 1, 2014. Some adjustments to the 2014 Remuneration Policy were adopted by the General Meeting of Shareholders on April 23, 2014, and are applicable retro-actively
as from January 1, 2014. The Supervisory Board ensures that the policy and its implementation are linked to the companys objectives.
Appointment of Mr. Nickl as new member of the Board of Management
ASMLs CFO Mr. Nickl was first appointed as member of the Board of Management per the General Meeting of Shareholders on April 23, 2014 for a period of four years. The remuneration package of
Mr. Nickl, which has been laid down in a management services agreement, is fully in line with the 2014 Remuneration Policy and the applicable Corporate Governance standards. The management services agreement contains specific provisions
regarding benefits upon termination of the agreement; a severance amount is restricted to one year base salary.
ASML compensated part of the
shares and stock options that were forfeited when Mr. Nickl left his former company in the United States. This compensation takes the form of a maximum of 56,000 performance related shares awarded in 2014, subject to the performance conditions,
a three year vesting period and a two year holding period as applicable under the 2014 Remuneration Policy.
Termination of the employment
agreement with Mr. Meurice
The employment agreement with Mr. Meurice has continued until March 31, 2014. The terms and
conditions under the employment contract have been honored until that date, in accordance with the 2010 Remuneration Policy.
A pro-rated
compensation (consisting of 2013 base salary and an short term incentive at target) has applied for the period from January through March 2014. In addition, for the services in the first quarter of 2014, the share-based compensation element of
Mr. Meurices remuneration has been settled in cash and calculated as 15,167.75 shares, multiplied by the share price effective as of the date of termination of the employment agreement. ASML has reimbursed reasonable repatriation and
moving costs made. No severance payment has been given to Mr. Meurice.
2014 Remuneration Table - Board of Management and former Board of
Management
Effective January 1, 2014, the base salary for all members of the Board of Management has been set according to the 2014
Remuneration Policy. Part of this policy is the change in the pay mix at ASML: a shift to less variable pay and more fixed pay, which is reflected in the 2014 base salaries. The base salary for the Presidents is set in the middle of the CEO
benchmark and the CTO/CFO benchmark.
In 2014, the Short Term Incentive resulted in a cash payout of 127.95% percent of the target payout. 1 out
of 5 performance criteria was achieved just above target and 2 performance criteria were achieved between target and maximum. Two criteria were achieved at maximum performance level. The outcome thereof results in a cash payout of EUR
2.85 million representing 76.77% percent of the base salary of the members of the Board of Management.
|
|
|
|
|
ASML HOLDING N.V. - REMUNERATION REPORT 2014 |
|
14 |
|
|
The table below reflects the total remuneration per member of the Board of Management. Please note that the
reported figures reflect costs related to remuneration incurred for the Company in 2014, 2013 and 2012 under the Generally Accepted Accounting Principles in the United States (US GAAP) and the International Financial Reporting Standards
as adopted by the European Union (IFRS-EU):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed |
|
Short-term (variable)
|
|
Long-term (variable) |
|
|
|
Total
Remuneration |
|
Other
|
|
Board of
Management |
|
Financial Year |
|
Base
salary EUR |
|
STI (Cash)1 EUR |
|
LTI (share awards)2 EUR |
|
|
|
Total6
EUR |
|
Pension
EUR |
|
Other
benefits and expense
reimbursement7 EUR |
|
P.T.F.M. Wennink |
|
2014 |
|
935,000 |
|
717,800 |
|
1,676,213 |
|
3 |
|
3,329,013 |
|
161,271 |
|
49,462 |
|
2013 |
|
681,500 |
|
407,673 |
|
1,349,115 |
|
4 |
|
2,438,288 |
|
106,033 |
|
45,848 |
|
2012 |
|
508,000 |
|
304,800 |
|
1,289,415 |
|
5 |
|
2,102,215 |
|
79,190 |
|
46,275 |
M.A. van den Brink |
|
2014 |
|
935,000 |
|
717,800 |
|
1,752,299 |
|
3 |
|
3,405,099 |
|
161,271 |
|
49,105 |
|
2013 |
|
697,000 |
|
416,945 |
|
1,429,197 |
|
4 |
|
2,543,142 |
|
112,481 |
|
45,920 |
|
2012 |
|
538,000 |
|
322,800 |
|
1,366,039 |
|
5 |
|
2,226,839 |
|
83,990 |
|
47,540 |
W.U. Nickl |
|
2014 |
|
600,000 |
|
460,620 |
|
1,385,835 |
|
|
|
2,446,455 |
|
44,578 |
|
145,34612 |
|
201311 |
|
50,000 |
|
65,0009 |
|
- |
|
|
|
115,000 |
|
4,547 |
|
12,936 |
|
2012 |
|
- |
|
- |
|
- |
|
|
|
- |
|
- |
|
- |
F.J. van Hout |
|
2014 |
|
627,000 |
|
481,348 |
|
1,388,070 |
|
3 |
|
2,496,418 |
|
82,216 |
|
43,244 |
|
2013 |
|
458,000 |
|
273,976 |
|
1,182,907 |
|
4 |
|
1,914,883 |
|
71,164 |
|
42,910 |
|
2012 |
|
445,000 |
|
267,000 |
|
1,131,676 |
|
5 |
|
1,843,676 |
|
69,110 |
|
37,313 |
F.J.M. Schneider-Maunoury |
|
2014 |
|
611,000 |
|
469,065 |
|
1,351,343 |
|
3 |
|
2,431,408 |
|
80,072 |
|
28,812 |
|
2013 |
|
446,000 |
|
266,797 |
|
1,150,392 |
|
4 |
|
1,863,189 |
|
69,244 |
|
28,426 |
|
2012 |
|
433,000 |
|
259,800 |
|
1,144,137 |
|
|
|
1,836,937 |
|
67,190 |
|
28,889 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed |
|
Short-term (variable)
|
|
Long-term (variable) |
|
|
|
Total
Remuneration |
|
Other
|
|
Former Board of
Management |
|
Financial
Year |
|
Base
salary EUR |
|
STI
(Cash) EUR |
|
LTI (share awards)2 EUR |
|
|
|
Total6
EUR |
|
Pension
EUR |
|
Other
benefits and expense
reimbursement7 EUR |
|
E. Meurice |
|
2014 |
|
210,750 |
|
1,177,79010 |
|
- |
|
|
|
1,388,540 |
|
36,293 |
|
19,256 |
|
|
2013 |
|
843,000 |
|
630,3531 |
|
5,837,399 |
|
4,8 |
|
7,310,752 |
|
172,593 |
|
107,500 |
|
|
2012 |
|
818,000 |
|
613,5001 |
|
2,079,601 |
|
5 |
|
3,511,101 |
|
167,427 |
|
127,116 |
1 |
Actual STI (cash) chargeable to the company in the financial year (i.e. STI relating to performance in the current year but paid out in the next financial year).
|
2 |
The remuneration reported as part of the LTI (share awards) is based on cost incurred under US GAAP and IFRS-EU. The costs of share awards are charged to the
Consolidated Statement of Profit or Loss over the 3 year vesting period based on the maximum achievable number of share awards. Therefore the costs for e.g. the financial year 2014 include costs of the Board of Management performance share plan
2014, 2013 and 2012. Furthermore the difference between the amount based on the maximum achievable number of share awards and the amount based on the actual number of share awards that vest, is released to the Consolidated Statement of Profit or
Loss in the financial year in which the share awards vest. For actual number of share awards and more details see the details of shares held by members of the Board of Management. |
3 |
The remuneration reported as part of the LTI (share awards) for the year 2014 includes an adjustment for the Board of Management performance share plan 2011 based on the
actual number of share awards vested in 2014. The adjustment for Mr Wennink, Mr van den Brink, Mr van Hout and Mr. Schneider-Maunoury amounts to EUR -77,769, EUR -82,409, EUR -68,320, EUR -66,312, respectively. |
4 |
The remuneration reported as part of the LTI (share awards) for the year 2013 includes an adjustment for the Board of Management performance share plan 2010 based on the
actual number of share awards vested in 2013. The adjustment for Mr Wennink, Mr van den Brink, Mr van Hout, Mr. Schneider-Maunoury and for Mr Meurice amounts to EUR -63,035, EUR -66,795, EUR -55,376, EUR -53,748, EUR -101,740, respectively.
|
5 |
The remuneration reported as part of the LTI (share awards) for the year 2012 includes an adjustment for the Board of Management performance share plan 2009 based on the
actual number of share awards vested in 2012. The adjustment for Mr Wennink, Mr van den Brink, Mr van Hout and for Mr Meurice amounts to EUR -65,785, EUR -69,831, EUR -57,838, EUR -106,266, respectively.
|
6 |
This total reflects base salary, STI (cash) and LTI (share awards). |
7 |
Other benefits and expense reimbursement are gross amounts and may include housing costs, company car costs, travel expenses, social security costs, health and disability
insurance costs and representation allowances. |
8 |
The remuneration reported as part of the LTI (share awards) for the year 2013 mainly includes costs related to the accelerated vesting of the share awards for the share
plans 2011, 2012 and 2013. |
9 |
Mr. Nickl is partly compensated for his loss of 2013 variable income at his previous employer; he has received from ASML Euro 65,000 per month for every month in
function in 2013. |
10 |
Mr. Meurice received a pro-rated compensation of the short term incentive of 75% of his gross salary in 2014 which is equal to EUR 158,063. In addition, the
share-based compensation element of Mr. Meurices remuneration was calculated as 15,167.75 shares and has been settled in cash at a share price of EUR 67.23. Both have been paid in 2014. |
11 |
Mr. Nickl was not part of Board of Management during 2013. |
12 |
During 2014, Mr. Nickl received a temporary allowance of EUR 99,026 to cover relocation and housing costs (gross amount before taxes). |
The maximum number of conditionally granted shares that the members of the Board of Management may acquire if specific performance criteria are achieved,
and provided that applicable employment conditions are met, is included in the table below. If the specific performance criteria are not achieved, and/or applicable employment conditions are not met, no performance shares will become unconditional.
|
|
|
|
|
ASML HOLDING N.V. - REMUNERATION REPORT 2014 |
|
15 |
|
|
The table below provides a comprehensive overview of conditional share awards that are granted in the
performance period and unconditional share awards that are included in the holding period or that have become free tradable in 2014.
Overview of
share awards (as per December 31, 2014):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At moment of grant |
|
|
|
|
|
|
|
|
|
|
|
At moment of vesting |
|
|
|
|
|
|
|
|
At end of lock-up period |
|
|
|
|
|
|
|
|
|
Board of
Management |
|
Grant date |
|
|
Status |
|
|
Full control |
|
|
Number |
|
|
Fair1
value
EUR |
|
|
Total2
fair
value
EUR |
|
|
Vesting date |
|
|
Number |
|
|
Share price at
vesting
EUR |
|
|
Total5
(pre-tax)
market
value
EUR |
|
|
End of lock-
up date |
|
|
Number |
|
|
Share price at end of
lock-up EUR |
|
|
Total6
(pre-tax) market value
EUR |
|
|
|
P.T.F.M. Wennink |
|
|
1/24/2014 |
|
|
|
Conditional |
|
|
|
No |
|
|
|
19,280 |
|
|
|
64.39 |
|
|
|
1,241,439 |
|
|
|
1/24/2017 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1/24/2019 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
4/19/2013 |
|
|
|
Conditional |
|
|
|
No |
|
|
|
35,035 |
|
|
|
55.47 |
|
|
|
1,943,391 |
|
|
|
4/19/2016 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
4/19/2018 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
4/18/2012 |
|
|
|
Conditional |
|
|
|
No |
|
|
|
45,689 |
|
|
|
37.33 |
|
|
|
1,705,570 |
|
|
|
4/18/2015 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
4/18/2017 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
4/13/2011 |
|
|
|
Unconditional |
|
|
|
No |
|
|
|
54,974 |
|
|
|
28.29 |
|
|
|
1,555,214 |
|
|
|
4/13/2014 |
|
|
|
52,225 |
|
|
|
63.53 |
|
|
|
3,317,854 |
|
|
|
4/13/2016 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
2/1/2010 |
|
|
|
Unconditional |
|
|
|
No |
|
|
|
54,974 |
|
|
|
22.93 |
|
|
|
1,260,554 |
|
|
|
2/1/2013 |
|
|
|
52,225 |
|
|
|
56.59 |
|
|
|
2,955,413 |
|
|
|
2/1/2015 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
2/2/2009 |
|
|
|
Unconditional |
|
|
|
Yes |
|
|
|
35,287 |
|
|
|
13.05 |
|
|
|
460,495 |
|
|
|
2/2/2012 |
|
|
|
30,246 |
3 |
|
|
33.92 |
|
|
|
1,025,944 |
|
|
|
2/2/2014 |
|
|
|
23,289 |
|
|
|
62.98 |
|
|
|
1,466,741 |
|
|
|
M.A. van den Brink |
|
|
1/24/2014 |
|
|
|
Conditional |
|
|
|
No |
|
|
|
19,280 |
|
|
|
64.39 |
|
|
|
1,241,439 |
|
|
|
1/24/2017 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1/24/2019 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
4/19/2013 |
|
|
|
Conditional |
|
|
|
No |
|
|
|
37,111 |
|
|
|
55.47 |
|
|
|
2,058,547 |
|
|
|
4/19/2016 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
4/19/2018 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
4/18/2012 |
|
|
|
Conditional |
|
|
|
No |
|
|
|
48,387 |
|
|
|
37.33 |
|
|
|
1,806,287 |
|
|
|
4/18/2015 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
4/18/2017 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
4/13/2011 |
|
|
|
Unconditional |
|
|
|
No |
|
|
|
58,256 |
|
|
|
28.29 |
|
|
|
1,648,062 |
|
|
|
4/13/2014 |
|
|
|
55,343 |
|
|
|
63.53 |
|
|
|
3,515,941 |
|
|
|
4/13/2016 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
2/1/2010 |
|
|
|
Unconditional |
|
|
|
No |
|
|
|
58,256 |
|
|
|
22.93 |
|
|
|
1,335,810 |
|
|
|
2/1/2013 |
|
|
|
55,343 |
|
|
|
56.59 |
|
|
|
3,131,860 |
|
|
|
2/1/2015 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
2/2/2009 |
|
|
|
Unconditional |
|
|
|
Yes |
|
|
|
37,458 |
|
|
|
13.05 |
|
|
|
488,827 |
|
|
|
2/2/2012 |
|
|
|
32,107 |
3 |
|
|
33.92 |
|
|
|
1,089,069 |
|
|
|
2/2/2014 |
|
|
|
24,722 |
|
|
|
62.98 |
|
|
|
1,556,992 |
|
|
|
W.U. Nickl |
|
|
1/24/2014 |
|
|
|
Conditional |
|
|
|
No |
|
|
|
12,373 |
|
|
|
64.39 |
|
|
|
796,697 |
|
|
|
1/24/2017 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1/24/2019 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1/24/2014 - |
|
|
|
Conditional - |
|
|
|
No - |
|
|
|
56,000 - |
7 |
|
|
64.39 - |
|
|
|
3,605,840 - |
|
|
|
1/24/2017 - |
|
|
|
- - |
|
|
|
- - |
|
|
|
- - |
|
|
|
1/24/2019 - |
|
|
|
- - |
|
|
|
- - |
|
|
|
- - |
|
|
|
F.J. van Hout |
|
|
1/24/2014 |
|
|
|
Conditional |
|
|
|
No |
|
|
|
12,929 |
|
|
|
64.39 |
|
|
|
832,498 |
|
|
|
1/24/2017 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1/24/2019 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
4/19/2013 |
|
|
|
Conditional |
|
|
|
No |
|
|
|
30,681 |
|
|
|
55.47 |
|
|
|
1,701,875 |
|
|
|
4/19/2016 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
4/19/2018 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
4/18/2012 |
|
|
|
Conditional |
|
|
|
No |
|
|
|
40,023 |
|
|
|
37.33 |
|
|
|
1,494,059 |
|
|
|
4/18/2015 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
4/18/2017 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
4/13/2011 |
|
|
|
Unconditional |
|
|
|
No |
|
|
|
48,293 |
|
|
|
28.29 |
|
|
|
1,366,209 |
|
|
|
4/13/2014 |
|
|
|
45,878 |
|
|
|
63.53 |
|
|
|
2,914,629 |
|
|
|
4/13/2016 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
2/1/2010 |
|
|
|
Unconditional |
|
|
|
No |
|
|
|
48,293 |
|
|
|
22.93 |
|
|
|
1,107,358 |
|
|
|
2/1/2013 |
|
|
|
45,878 |
|
|
|
56.59 |
|
|
|
2,596,236 |
|
|
|
2/1/2015 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
2/2/2009 |
|
|
|
Unconditional |
|
|
|
Yes |
|
|
|
31,021 |
|
|
|
13.05 |
|
|
|
404,824 |
|
|
|
2/2/2012 |
|
|
|
26,589 |
3 |
|
|
33.92 |
|
|
|
901,899 |
|
|
|
2/2/2014 |
|
|
|
20,473 |
|
|
|
62.98 |
|
|
|
1,289,390 |
|
|
|
F.J.M. Schneider-
Maunoury |
|
|
1/24/2014 |
|
|
|
Conditional |
|
|
|
No |
|
|
|
12,599 |
|
|
|
64.39 |
|
|
|
811,250 |
|
|
|
1/24/2017 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1/24/2019 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
4/19/2013 |
|
|
|
Conditional |
|
|
|
No |
|
|
|
29,877 |
|
|
|
55.47 |
|
|
|
1,657,277 |
|
|
|
4/19/2016 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
4/19/2018 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
4/18/2012 |
|
|
|
Conditional |
|
|
|
No |
|
|
|
38,944 |
|
|
|
37.33 |
|
|
|
1,453,780 |
|
|
|
4/18/2015 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
4/18/2017 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
4/13/2011 |
|
|
|
Unconditional |
|
|
|
No |
|
|
|
46,886 |
|
|
|
28.29 |
|
|
|
1,326,405 |
|
|
|
4/13/2014 |
|
|
|
44,542 |
|
|
|
63.53 |
|
|
|
2,829,753 |
|
|
|
4/13/2016 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
2/1/2010 |
|
|
|
Unconditional |
|
|
|
No |
|
|
|
46,886 |
|
|
|
22.93 |
|
|
|
1,075,096 |
|
|
|
2/1/2013 |
|
|
|
44,542 |
|
|
|
56.59 |
|
|
|
2,520,632 |
|
|
|
2/1/2015 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At moment of grant |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At moment of vesting |
|
|
|
|
|
|
|
|
At end of lock-up period |
|
|
|
|
|
|
|
|
|
Former Board
of Management |
|
Grant date |
|
|
Status |
|
|
Full control |
|
|
Number |
|
|
Fair1
value
EUR |
|
|
Total2
fair
value
EUR |
|
|
Vesting date |
|
|
Number |
|
|
Share price at
vesting
EUR |
|
|
Total5
(pre-tax)
market
value
EUR |
|
|
End of lock-
up date |
|
|
Number |
|
|
Share price at end of
lock-up EUR |
|
|
Total6
(pre-tax)
market
value
EUR |
|
|
|
E. Meurice |
|
|
4/19/2013 |
|
|
|
Unconditional |
|
|
|
Yes |
|
|
|
56,471 |
|
|
|
55.47 |
|
|
|
3,132,446 |
|
|
|
4/7/2014 |
|
|
|
53,647 |
|
|
|
66.13 |
|
|
|
3,547,676 |
|
|
|
4/7/2014 |
|
|
|
53,647 |
|
|
|
66.13 |
|
|
|
3,547,676 |
|
|
|
|
4/18/2012 |
|
|
|
Unconditional |
|
|
|
Yes |
|
|
|
73,570 |
|
|
|
37.33 |
|
|
|
2,746,368 |
|
|
|
4/7/2014 |
|
|
|
69,891 |
|
|
|
66.13 |
|
|
|
4,621,892 |
|
|
|
4/7/2014 |
|
|
|
69,891 |
|
|
|
66.13 |
|
|
|
4,621,892 |
|
|
|
|
4/13/2011 |
|
|
|
Unconditional |
|
|
|
Yes |
|
|
|
88,732 |
|
|
|
28.29 |
|
|
|
2,510,228 |
|
|
|
1/31/2014 |
|
|
|
84,295 |
|
|
|
62.98 |
|
|
|
5,308,899 |
|
|
|
1/31/2014 |
|
|
|
84,295 |
|
|
|
62.98 |
|
|
|
5,308,899 |
|
|
|
|
2/1/2010 |
|
|
|
Unconditional |
|
|
|
Yes |
|
|
|
29,578 |
|
|
|
22.93 |
|
|
|
678,224 |
|
|
|
2/1/2013 |
|
|
|
28,099 |
|
|
|
56.59 |
|
|
|
1,590,122 |
|
|
|
1/2/2014 |
|
|
|
28,099 |
|
|
|
67.76 |
|
|
|
1,903,988 |
|
|
|
|
2/2/2009 |
|
|
|
Unconditional |
|
|
|
Yes |
|
|
|
19,000 |
|
|
|
13.05 |
|
|
|
247,950 |
|
|
|
2/2/2012 |
|
|
|
16,287 |
3,4 |
|
|
33.92 |
|
|
|
552,455 |
|
|
|
1/2/2014 |
|
|
|
12,541 |
|
|
|
67.76 |
|
|
|
849,778 |
|
1 |
The fair value of the shares as of the grant date. |
2 |
Total fair value is calculated by multiplying the number of shares awards with the fair value at grant date. Under USGAAP and IFRS-EU, the fair value of the share awards
is charged to the Consolidated Statement of Profit or Loss over the vesting period. |
3 |
The number of shares included in the lock-up period were reduced in 2012 as a result of the synthetic share buy back due to an exchange for each 100 ordinary shares for 77
ordinary shares. The number of shares vested in 2012 after the synthetic share buy back for Mr. Wennink, Mr. van den Brink and for Mr. van Hout are 23,289 shares, 24,722 shares and 20,473 shares, respectively.
|
4 |
The number of shares vested in 2012 after the synthetic share buy back for Mr. Meurice was 37,621 shares for which 25,080 shares were already out of the lock-up
period in 2013. |
5 |
Total (pre-tax) market value is calculated by multiplying the number of vested shares by the share price as per the vesting date. |
6 |
Total (pre-tax) market value is calculated by multiplying the number of vested shares by the share price as per the end of lock-up period. |
7 |
ASML compensated part of the shares and stock options that were forfeited when Mr. Nickl left his former company in the United States. This compensation takes the
form of a maximum of 56,000 performance related shares awarded in 2014, subject to the performance conditions, a three year vesting period and a two year holding period as applicable under the 2014 Remuneration Policy. |
|
|
|
|
|
ASML HOLDING N.V. - REMUNERATION REPORT 2014 |
|
16 |
|
|
The overview below provides the actual outstanding share awards of each individual member of the Board of
Management per December 31, 2014 (i.e. reflecting the development in the number of ASML shares held during 2014).
Details of shares held by
members of the Board of Management:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dec. 31, 2014 |
|
|
|
Board of
Management |
|
Jan. 1, 2014 |
|
|
Shares vested |
|
|
Shares sold1 |
|
|
Total |
|
|
Free tradable2 |
|
|
With
lock-up restriction2 |
|
|
|
P.T.F.M. Wennink |
|
|
35,303 |
|
|
|
52,225 |
|
|
|
38,696 |
|
|
|
48,832 |
|
|
|
- |
|
|
|
48,832 |
|
M.A. van den Brink |
|
|
37,431 |
|
|
|
55,343 |
|
|
|
41,026 |
|
|
|
51,748 |
|
|
|
- |
|
|
|
51,748 |
|
W.U. Nickl |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
F.J. van Hout |
|
|
31,020 |
|
|
|
45,878 |
|
|
|
34,000 |
|
|
|
42,898 |
|
|
|
- |
|
|
|
42,898 |
|
F.J.M Schneider-Maunoury |
|
|
27,939 |
|
|
|
44,542 |
|
|
|
16,603 |
|
|
|
55,878 |
|
|
|
- |
|
|
|
55,878 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dec. 31, 2014 |
|
|
|
Former Board of Management |
|
Jan. 1, 2014 |
|
|
Shares vested |
|
|
Shares sold1 |
|
|
Total |
|
|
Free tradable2 |
|
|
With
lock-up restriction2 |
|
|
|
E. Meurice |
|
|
25,491 |
|
|
|
207,833 |
|
|
|
233,324 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
1 |
Shares sold in 2014 includes sell to cover for tax purposes. |
2 |
All shares are held by an independent third party trust. |
Share ownership guideline
The Remuneration Committee has assessed the shareholding positions of
the members of the Board of Management per December 31, 2014 based upon the share ownership guideline of the 2014 Remuneration Policy. All members of the Board of Management meet the guideline to hold at least the value of two times base salary
in shares.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dec. 31, 2014 |
|
|
|
Board of Management |
|
Base salary |
|
|
Shares guideline1 |
|
|
Actual number of shares |
|
|
Value1 |
|
|
Factor2 |
|
|
|
P.T.F.M. Wennink |
|
|
935,000 |
|
|
|
20,894 |
|
|
|
48,832 |
|
|
|
4,370,464 |
|
|
|
4.7 |
|
M.A. van den Brink |
|
|
935,000 |
|
|
|
20,894 |
|
|
|
51,748 |
|
|
|
4,631,446 |
|
|
|
5.0 |
|
W.U. Nickl |
|
|
600,000 |
|
|
|
13,408 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
F.J. van Hout |
|
|
627,000 |
|
|
|
14,012 |
|
|
|
42,898 |
|
|
|
3,839,371 |
|
|
|
6.1 |
|
F.J.M. Schneider-Maunoury |
|
|
611,000 |
|
|
|
13,654 |
|
|
|
55,878 |
|
|
|
5,001,081 |
|
|
|
8.2 |
|
1 |
Share price at December 31, 2014 is EUR 89.50. |
2 |
Factor is calculated by dividing the value of shares by the base salary. |
In accordance with the share ownership guideline, Mr. Nickl is allowed to meet the guideline three years after his appointment as a member of the Board of Management. Since Mr. Nickl is first
appointed by the Annual Meeting of Shareholders on April 23, 2014, Mr. Nickl is required to first meet the guideline per April 23, 2017. It is expected that Mr. Nickl will meet the guideline by then.
|
|
|
|
|
ASML HOLDING N.V. - REMUNERATION REPORT 2014 |
|
17 |
|
|
2014 Remuneration - Supervisory Board
The Remuneration Committee is responsible for reviewing and, if appropriate, recommending changes to the remuneration of the Supervisory Board. Any
recommended changes to the remuneration of the members of the Supervisory Board must be submitted to the General Meeting of Shareholders for approval.
Fee levels
The remuneration of the Supervisory Board has been reviewed by the Supervisory Board
upon the recommendation of the Remuneration Committee. The proposed adjustment was approved by the General Meeting of Shareholders on April 23, 2014 and became effective per April 1, 2014. The remuneration arrangement is set out in the
table below.
In accordance with the Dutch Corporate Governance Code, the Supervisory Board remuneration is not dependent on the financial
results of the Company. No member of the Supervisory Board personally maintains a business relationship with the Company other than as a member of the Supervisory Board. Furthermore, the Supervisory Board does not receive benefits upon termination
of employment.
Supervisory Board fee levels:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Role |
|
Annual (fixed) fee EUR |
|
|
Audit Committee EUR |
|
|
Other committees EUR |
|
|
|
Chairman |
|
|
95,000 |
|
|
|
15,000 |
|
|
|
12,000 |
|
|
|
Non-European member1 |
|
|
80,000 |
|
|
|
10,000 |
|
|
|
8,000 |
|
|
|
European member1 |
|
|
60,000 |
|
|
|
10,000 |
|
|
|
8,000 |
|
1 |
In addition to the annual (fixed) fee, the Vice-Chairman of the Supervisory Board receives EUR 5,000 to fulfill this role. |
Additional reimbursements
In addition, ASML
paid a net cost allowance amounting to EUR 1,800 in 2014 to each Supervisory Board member, and EUR 2,400 to the Chairman of the Supervisory Board in 2014.
Share ownership
Members of the Supervisory Board are free to acquire or dispose ASML shares or
options for their own account, provided they comply with the applicable ASML Insider Trading Rules. Those securities are not part of their remuneration from the Company and are therefore not included. None of the members of the Supervisory Board
currently owns shares or options on shares of the Company.
Loans
The Company has not granted any (personal) loans to, nor has it granted any guarantees or the like in favor of, any of the members of the Supervisory Board.
|
|
|
|
|
ASML HOLDING N.V. - REMUNERATION REPORT 2014 |
|
18 |
|
|
Remuneration awarded in 2014
In the table below an overview is provided of the remuneration awarded to Supervisory Board members in 2014.
Supervisory Board remuneration in 2014:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014 |
|
|
Supervisory Board |
|
|
Audit Committee |
|
|
Remuneration Committee |
|
|
Selection and Nomination Committee |
|
|
Technology and Strategy Committee |
|
|
Other |
|
|
|
Arthur P.M. van der Poel |
|
|
117,750 |
|
|
|
88,750 |
|
|
|
10,000 |
|
|
|
- |
|
|
|
11,000 |
4 |
|
|
8,000 |
|
|
|
- |
|
OB Bilous |
|
|
28,500 |
|
|
|
20,000 |
5 |
|
|
- |
|
|
|
- |
|
|
|
3,000 |
5 |
|
|
3,000 |
5 |
|
|
2,500 |
1 |
Fritz W. Fröhlich |
|
|
85,500 |
|
|
|
57,500 |
|
|
|
15,000 |
|
|
|
- |
|
|
|
8,000 |
|
|
|
- |
|
|
|
5,000 |
2 |
Hendrika (leke) C.J. van den Burg6 |
|
|
52,500 |
|
|
|
42,500 |
5 |
|
|
- |
|
|
|
6,000 |
5 |
|
|
4,000 |
5 |
|
|
- |
|
|
|
- |
|
Pauline F.M. van der Meer Mohr |
|
|
73,000 |
|
|
|
57,500 |
|
|
|
7,500 |
5 |
|
|
8,000 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Douglas A. Grose |
|
|
99,000 |
|
|
|
80,000 |
|
|
|
- |
|
|
|
- |
|
|
|
8,000 |
|
|
|
11,000 |
4 |
|
|
- |
|
Clara (Carla) M.S. Smits-Nusteling |
|
|
67,500 |
|
|
|
57,500 |
|
|
|
10,000 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Johannes (Hans) M.C. Stork3 |
|
|
88,000 |
|
|
|
80,000 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
8,000 |
|
|
|
- |
|
Wolfgang H. Ziebart |
|
|
77,500 |
|
|
|
57,500 |
|
|
|
- |
|
|
|
12,000 |
|
|
|
- |
|
|
|
8,000 |
|
|
|
- |
|
|
|
Total |
|
|
689,250 |
|
|
|
541,250 |
|
|
|
42,500 |
|
|
|
26,000 |
|
|
|
34,000 |
|
|
|
38,000 |
|
|
|
7,500 |
|
1 |
To compensate for certain obligations ASML has towards the US government as a result of the merger with SVG in 2001, one US member receives an additional EUR 2,500 to
fulfill these obligations. |
2 |
In addition to the annual fixed fee, the Vice-Chairman of the Supervisory Board receives EUR 5,000 per year to fulfill his role. |
3 |
During 201 4 Johannes (Hans) M.C. Stork was appointed as member of the Supervisory Board and therefore received an observer fee in the first quarter.
|
4 |
Amount differs from the annual compensation due to a role change from member to chairman of the committee. |
5 |
Amount differs from the annual compensation as the member was not part of the Supervisory Board / committee for the full year. |
6 |
Ms. Hendrika (leke) C.J. van den Burg passed away on September 28, 2014. |
|
|
|
|
|
ASML HOLDING N.V. - REMUNERATION REPORT 2014 |
|
19 |
|
|
Exhibit 99.3
ASML Holding N.V.
Corporate Responsibility Report 2014
Contents
|
|
|
|
|
ASML Corporate Responsibility Report 2014 |
|
|
|
|
Message from the Presidents
Dear reader,
The semiconductor industry is the base
on which all electronic innovation is built. Developments in areas as diverse as 3D printing, health care, automotive electronics, agriculture, transportation, and biotech are contributing to megatrends such as big data analytics and the
Internet of Things. ASML plays a crucial role in enabling this continuous innovation that is adding value to peoples lives.
In
2014, we generated net sales of 5,856 million euros and an operating income of 1,282 million euros. Net income amounted to 1,197 million euros or 20% of net sales, representing basic net income per ordinary share of 2.74 euros.
More than delivering a strong financial performance, ASML wants to create long-term value for our stakeholders and for society as a whole. To
this end we identify and manage non-financial developments that are material to our business and performance. These could vary from a potential scarcity of highly-skilled technicians, to growing customer demand for more energy efficient chip-making
machines, and the trend towards even greater transparency and accountability. Investing in these non-financial, or corporate responsibility themes is a prerequisite for ASMLs long-term business continuity and success. We can significantly
enhance our long-term performance if we successfully manage the risks associated with these developments and seize the opportunities they offer.
In 2014, we moved corporate responsibility (CR) higher on ASMLs business agenda. We further developed our CR strategy and policy that formulates our
ambitions for the period 2015-2020. It sets out the main non-financial, social and environmental impact areas and key performance indicators we will use to measure our progress. The CR indicators will be the basis, among other indicators, for senior
management remuneration. Together with our financial objectives focusing on time to profitability, we believe this is an important step towards further aligning our corporate responsibility objectives with our business strategy and a significant
step towards the integration of financial and non-financial reporting.
This CR report describes our strategy, achievements and contributions to
sustainable business practices in 2014. Our strategy is based on three pillars: technology leadership, customer and supplier intimacy, and entrepreneurial people. This is complemented with responsible behavior as a prerequisite in executing our
strategy. The following paragraphs below reflect the main achievements in 2014 and address the dilemmas that have been prioritized going forward with respect to each of these elements.
Technology Leadership
Strong sales of our most advanced machines and applications in 2014
reflect the strength of our innovations. Our EUV program showed substantial progress in 2014. Fueling future innovation, all installed NXE:3300B EUV systems have been upgraded to a wafer processing capability of more than 500 wafers per day. The
integration with the light source is progressing steadily. We remain on target to deliver systems with a productivity of 1500 wafers per day in 2016. In our software and metrology products portfolio, demand for Yieldstar systems continued to grow.
Our application experts are engaged with our key customers to jointly deliver the best lithography performance. Intensifying training in the technical competencies and functions of our products supports these advances. But we cannot drive innovation
on our own. A priority for us is to collaborate even more closely with our customers and suppliers and share knowledge in an open innovation environment to enable industry growth in a sustainable way and achieve our joint goal of achieving
cost-effective shrink and fueling continuous innovation that is adding value to peoples lives.
People
To manage and attract talent, we focused our efforts on promoting technology and offering scholarships as well as developing our existing talent by
implementing an improved people performance management system. In 2014, we carried out more Great Place to Work (GPTW) projects to engage our employees, such as refurbishing our outdoor campus, creating flexible workplaces in our offices and
executing a vitality program to help employees maintain a healthy work-life balance. Although our annual employee satisfaction survey results show appreciation among employees for development opportunities, it remains an area for continuous
improvement. The survey also showed a number of improvements related to employee roles and responsibilities, which we will address as a priority going forward.
Customer and supplier intimacy
To enhance the quality of our relationships with customers and
suppliers we collaborate closely with them on innovation, entrepreneurship, partnership and risk, thereby ensuring our joint success. We changed our Strategic Sourcing and Procurement organization and held regular customer review meetings to better
align and support the challenges we face in producing ever more value-effective and energy-efficient chips. Achieving this, in balance with responsible behavior, remains a priority for our approach.
|
|
|
|
|
ASML Corporate Responsibility Report 2014 |
|
6 |
|
|
Responsible business behavior
We achieved the objectives set out in our 2010-2015 plan related to reducing our net CO2 emissions and increasing our waste recycling rate. As a result of our company
growth, we did not achieve our target to reduce the overall waste. Balancing our company growth and responsible behavior is a continued priority going forward.
To celebrate our companys 30th anniversary on April 1, 2014, we launched 30 for Change, a global initiative with the ASML Foundation to support 29 projects reflecting ASMLs diversity and
empowering underprivileged youth through education. Our company is founded on a deep understanding of science and technology, combined with the creative drive to tackle any challenge. Success would not be possible without the cornerstone of quality
education. Our employees worldwide worked together in submitting, selecting and raising funds for the charity projects highlighted throughout this report. These projects strengthen our bonds with the community, while at the same time contributing to
employee involvement and our need to have access to the largest possible pool of technical talent.
We are committed to continually improving our
CR strategy, related policies, standards, and programs to meet our stakeholders needs and expectations.
Peter Wennink
President and Chief Executive Officer
Dated:
February 10, 2015
Martin van den Brink
President and Chief Technology Officer
Dated: February 10, 2015
|
|
|
|
|
ASML Corporate Responsibility Report 2014 |
|
7 |
|
|
About ASML
Our company
ASML is a leading manufacturer of chip-making equipment
and a key supplier for the semiconductor industry worldwide. We design and develop complex technology for high-tech lithography machines that are used to produce chips to power electronic, communications and information technology products.
We help to continue Moores Law1 by providing cutting-edge technology so our customers can manufacture ever smaller, cheaper, more powerful and
energy-efficient semiconductors.
ASML is a multinational company with over 70 locations in 16 countries. Our headquarters are in Veldhoven, the
Netherlands. We have manufacturing sites in Veldhoven (Netherlands), Wilton and San Diego (U.S.), Linkou (Taiwan) and Pyeongtaek (Korea). Technology development centers and training facilities are located in Japan, Korea, the Netherlands, Taiwan and
the United States. In most of our other locations we operate our customer support activities.
In 2014, we generated net sales of EUR
5,856 million and operating income of EUR 1,282 million or 22% of net sales. Net income in 2014 amounted to EUR 1,197 million or 20% of net sales, representing basic net income per ordinary share of EUR 2.74. More information on our
financial performance can be found in our annual report.
As at December 31, 2014, ASML employed 11,318 payroll employees (2013: 10,360) and
2,754 temporary workers (2013: 2,865), measured in FTEs. Our multicultural workforce represents more than 85 nationalities.
Founded in 1984,
ASML is traded on Euronext Amsterdam and NASDAQ under the symbol ASML.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General indicators ASML1 |
|
2011 |
|
|
2012 |
|
|
2013 |
|
|
2014 |
|
|
|
Net sales in million euros |
|
|
5,651 |
|
|
|
4,732 |
|
|
|
5,245 |
|
|
|
5,856 |
|
Number of systems sold |
|
|
222 |
|
|
|
170 |
|
|
|
157 |
|
|
|
136 |
|
R&D investments in million euros |
|
|
590 |
|
|
|
589 |
|
|
|
882 |
|
|
|
1,074 |
|
Number of payroll employees in FTEs |
|
|
7,955 |
|
|
|
8,424 |
|
|
|
10,360 |
|
|
|
11,318 |
|
Number of temporary employees in FTEs |
|
|
1,935 |
|
|
|
2,137 |
|
|
|
2,865 |
|
|
|
2,754 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 |
Numbers are derived from the US GAAP Consolidated Financial Statements (Annual Report on Form 20-F) and as of 2013 include ASML Motion and Cymer.
|
1) |
Intel co-founder Gordon Moore stated in 1965 that the number of transistors per chip (same surface of silicon) would double every year at same cost. Later adjusted to
every two years, the trend has held for more than four decades. |
|
|
|
|
|
ASML Corporate Responsibility Report 2014 |
|
8 |
|
|
Our products
ASML is a key supplier to the chip industry. We develop lithography systems and related products. Lithography systems are used to print complex circuit patterns onto wafers. Wafers are the primary raw
material for integrated circuits (also called ICs or chips). To help our customers make smaller, faster, and more energy-efficient chips we focus on three core areas: Twinscan NXT (DUV), Twinscan NXE (EUV), and holistic lithography solutions.
|
|
We offer Twinscan DUV systems for processing wafers and imaging at a resolution down to 38 nm. Twinscan systems also include immersion lithography systems
(Twinscan NXT). A fluid is placed between the wafer and the projection lens to enhance focus and shrink the circuit patterns, enabling customers to make the integrated circuits smaller or add more functionality. Finer circuit patterns allow
electricity to move across the chip faster, boosting its performance. ASML pioneered this wet technology and there is strong demand for our immersion-based systems. |
|
|
Our next-generation lithographic machines (Twinscan NXE) are equipped with an entirely new extreme ultraviolet (EUV) light source technology and a new
optical technology that uses reflective mirrors rather than the traditional refractive optics. The EUV platform will produce integrated circuits of 16 nanometer resolution and smaller. |
|
|
We complement our scanner products with a rapidly expanding holistic lithography portfolio of software and metrology products to help our customers
optimize semiconductor scanner performance, provide a faster start to chip production, and achieve better imaging at higher resolutions. |
ASML also provides customer services that ensure rapid, efficient installation of the systems, superior support and training to optimize manufacturing processes of our customers. We continue to refurbish
older lithography systems (PAS), extending thus the life of the equipment and effectively increasing its residual value.
|
|
|
|
|
ASML Corporate Responsibility Report 2014 |
|
9 |
|
|
Our value chain
Key to ASMLs success is the concept of open innovation. We define open innovation as collaborating with partners outside our
company and sharing the risks and rewards of the outcome and process. Innovation is risky and few ideas for new technologies culminate in success. Developing new lithography equipment is expensive. Accordingly, there are only a few primary suppliers
active in the industry: ASML, Nikon, and Canon. In 2014, ASML was one of the worlds leading providers of lithography equipment, based on revenue as measured by Gartner Dataquest2.
ASML has built a
collaborative community of suppliers, customers, solution partners and universities that we work with to minimize the cost of innovation and maximize the chance of a successful outcome, resulting in our products. We outsource production of a
significant part of components and modules to our supply chain. Our manufacturing activities comprise subassembly and testing of certain modules and the final assembly and fine tuning / testing of a complete system from components and modules that
are manufactured to our specifications by third parties and by us. Our products are delivered to Integrated Device Manufacturers (IDM) and Foundries (together Logic), NAND-Flash memory, and DRAM memory chip makers (together Memory). In turn,
customers of our customers use the integrated circuits in various cheaper, more powerful, and energy-efficient consumer electronics and applications.
The value we create
We have identified several areas related to our financial, social, and environmental impact, which are depicted in the value creation diagram below:
|
|
Stakeholder interests as well as global trends are input when defining our strategy. |
|
|
Our purpose is to support the chip-making industry to realize shrink, or reducing the size of chip designs. Thats because the growth of
the semiconductor industry is dependent on continually making chips smaller and cheaper yet able to perform more functions at higher speeds and using less power. This is a long-term trend that will continue for the foreseeable future and will be
accompanied by ongoing demand for equipment that can produce these advanced integrated circuits in high volumes at the lowest possible cost. |
|
|
Our strategy is based on three pillars: technology leadership, customer and supplier intimacy, and entrepreneurial people. This is complemented with
responsible behavior as a prerequisite in executing our strategy. |
|
|
ASML is uniquely positioned in the semiconductor industry, providing highly-advanced imaging solutions. |
|
|
ASML creates economic value by realizing financial results and stimulating employment opportunities. ASML also creates social value. Our focus on
innovation with partners and highly skilled employees stimulates welfare and knowledge sharing across the value chain. In addition, we have a direct effect on the technological possibilities for our customers and in turn proliferation of technology
to their customers our multiplier effect. By improving our lithography technology we make it possible for our customers to introduce new and ever-improving electronic |
2) |
Based upon Gartner Dataquest fourth quarter 201 4 report. |
|
|
|
|
|
ASML Corporate Responsibility Report 2014 |
|
10 |
|
|
|
products that enhance the quality of peoples lives. For example, more powerful chips enable affordable, high-quality video calls on smartphones, self-navigating cars, and double the imaging
resolution of medical scanners making it easier to detect tumors. Finally, our focus on shrink and increasing the number of functions on a chip has an environmental impact because the energy efficiency of chips is relative to the number of functions
on a chip. |
|
|
|
|
|
ASML Corporate Responsibility Report 2014 |
|
11 |
|
|
Our stakeholders and corporate responsibility strategy
Stakeholder engagement
We continually and openly communicate with all our main stakeholder groups. We use their input to identify corporate responsibility (CR) issues that reflect their concerns, needs, and expectations, and our
CR strategy takes their perspectives into account. In defining the content of our CR report we also consider topics of interest and specific questions raised by our stakeholders.
We have identified five main stakeholder groups, based on whether we think they have a direct stake in our companys long-term business success or can influence it, as well as whether our activities
impact them. These are: customers, shareholders, employees, suppliers, and society.
In 2014, we worked to further improve our dialogue with
stakeholders. To a large degree, stakeholder engagement is already part of our day-to-day business. Our challenge in 2015 is to better structure and align the outcome of our discussions and follow-up process. In addition, we want to be more
proactive in identifying our stakeholders opinions on our CR strategy and performance.
We communicate with our stakeholders through
various channels (see table in this section) and at a variety of levels - including Board of Management and senior management representatives - involving several departments, including Investor Relations, Communications, Research, Human
Resources & Organization (HR&O), Corporate Responsibility, Sales and Customer Management, Marketing, Sourcing and Procurement, and Environment, Health and Safety. Our CEO is ultimately responsible for stakeholder management and
engagement. The Corporate Responsibility team is responsible for coordinating stakeholder engagement and performing materiality assessments.
30 For Change
In 2014, ASML celebrated its
30th anniversary. As part of our commemorative 30 For Change
initiative, we are delivering a variety of community projects around the world, focused on education and equipping the next generation to face the challenges of the future. Some examples of these projects are featured in green boxes throughout this
report. For further information, please see the Community Involvement section.
30 for change: Bridging education gaps in Luoshan
The Technology Bridge project aims to boost access to education for over 100 children from the Luoshan Primary School and
some 300 young people from the Entrepreneurs Center for Youth in the Luoshan village. Luoshan is one of the most impoverished regions in China, lacking good quality educational resources for children and youth. This year, the initiative delivered a
mini-library with 2,000 books and a lab with 10 computers, giving young residents access to the internet and a range of reading materials. The youth center will also benefit from new computers, projectors and speakers, while volunteers from the
XiaMen University will offer summer courses for young entrepreneurs.
Students from the Luoshan Primary School supported by The Technology
Bridge project.
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In addition to the main communication channels in the table below, individual stakeholders can ask questions
and give us feedback by phone, email, or during meetings with our staff. There is a dedicated email address internal stakeholders can use to communicate with members of the Corporate Responsibility team. External stakeholders can contact us via
corpcom@asml.com.
Below is an overview of our main stakeholder groups, the way we communicate with them, and an overview of topics they
raised, which we took into account in our materiality analysis and when defining our corporate responsibility strategy. Specific information about how we address these topics can be found in the respective sections of this report.
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Stakeholder |
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Main communication channels |
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Topics raised |
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Customers |
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Customer Loyalty survey; direct interaction via account teams and field-based quality managers; technology review meetings (TRMs) and executive review meetings (ERMs); different
technology symposia and special events (e.g. Intel Supplier Sustainability Leadership Summit). |
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Roadmap alignment
Cost and complexity of solutions
Partnership
ASMLs compliance to the EICC Code of Conduct
Risk and continuity management process
Product resource efficiency
Management of hazardous substances |
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Shareholders |
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Direct interaction with the Investor Relations department (e.g. financial results conference calls, investors visits to ASML in Veldhoven, NL, visits to investors during
roadshows); Annual General Meeting of shareholders; Investor Day; different investor conferences (e.g. Credit Suisse annual technology conference, UBS global technology conference, Deutsche bank technology conference, Morgan Stanley technology,
media & telecom conference in US, Natixis technology seminar in France); various self-assessments and survey feedback (e.g. Dow Jones Sustainability Index self-assessment; the Dutch association of investors for sustainable development (VBDO:
responsible supply chain benchmark). |
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Growth opportunities and profit potential
Technology leadership
Competitive position
Integrated reporting
Enterprise risk management
Tax strategy & transparency
Human rights |
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Employees1 |
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Employee satisfaction survey; feedback from online training programs (ethics / Code of Conduct and EHS); Works Council; Young
ASML2; intranet articles; onboarding sessions for new employees;
lunches with board members; all-employee meetings; senior management meetings; departmental meetings. |
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Role clarity
Development opportunities |
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Suppliers |
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ASMLs supplier days; direct interaction via supplier account teams / procurement account managers; supplier audits. |
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Long-term supply chain partnerships |
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Society |
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Good corporate citizenship |
Industry peers |
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SEMI meetings; EICC meetings and workgroups;
FME3 events and meetings. |
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Governments4 |
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Meetings with municipalities and regional and national government officials; EU joint technology initiatives. |
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Technical talent attraction & retention
Immigration facilities
Labor relations
R&D activities in the manufacturing supply chain |
Universities |
|
ASML scholarship programs; internships; partnerships with universities and institutes (e.g. in the Netherlands, Korea, Taiwan); labor market communication program. |
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Local communities & other |
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Neighbor events; Brainport;5 Jet-Net; Dutch technology week; company visits; meetings with various schools and local cultural institutions (e.g. in the Netherlands and U.S.). |
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1 |
Including Works Council and unions. |
2 |
Internal platform that aims to connect, develop, and support young professionals within ASML via social and professional initiatives. |
3 |
FME is a Dutch organization that represents employers and businesses in the technology industry. |
4 |
Including regulatory bodies in the countries where ASML operates and municipalities. |
5 |
Brainport Eindhoven Region (NL) is an innovative technology region, home to world-class businesses, knowledge institutes, and research institutions.
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RobecoSAM Sustainability Yearbook
ASML has been included in the RobecoSAM Sustainability Yearbook 2015 which lists the top 15% most
sustainable companies of their industry as determined by their score in RobecoSAMs annual Corporate Sustainability Assessment 2014.
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Examples of stakeholder dialogue in 2014
Investor Day
In November 2014, we organized the ASML Investor Day in London. During this event
we shared ASMLs long-term growth opportunities and profit potential in the coming years with investors and financial analysts. Our main message is that ASML sees opportunities to grow net sales to about 10 billion euros and triple earnings per
share by 2020. Current and future product portfolios and roadmaps were presented for DUV, EUV, and holistic lithography. There was also an opportunity to ask ASMLs Board of Management questions about any business-related topic. The main topics
of interest for the investors were growth opportunities and profit potential, technology leadership, and the competitive position of ASML.
Local community relations
We have appointed a
dedicated manager for community relations, with a focus on government relations and local community. One of the new activities we organized in 2014 was a neighbor event in Veldhoven, the Netherlands, (for details see section Community
involvement).
Intel Supplier Sustainability Leadership Summit
We attended the third Intel Supplier Sustainability Leadership Summit where a call for action was addressed to the Intel supply chain on labor ethics, conflict minerals, and safety (including use of personal
protective equipment, the availability and access to unobstructed exits, and worker exposure to hazards).
Non-Product Related Supplier Day
In 2014, we organized the second edition of the Non-Product Related (NPR) Supplier Day, with the theme Partnership for Growth.
The days purpose was to share insights about the challenges ASML faces in optimizing the supply chain, increase flexibility and create innovation as well as emphasize the importance of partnership for further growth. We also explained the
updated supplier profile requirements, which include a sustainability section as of 2014, and more focus on supplier idea generation. It ended with an inspiring presentation for invited guests about innovation, sustainability, and cooperation.
Suppliers indicated they appreciated the presentations and opportunity to meet other suppliers.
FTSE4Good index
ASMLs efforts in the area of sustainability are underlined by our inclusion in the FTSE4Good index. ASML has been included in this index since 2003. The FTSE4Good is a series of ethical stock market
indices, measuring the performance of listed companies that meet globally recognized corporate responsibility standards in an objective way.
Materiality analysis and risk factors
Materiality analysis
We performed a comprehensive corporate responsibility materiality
assessment in 2013 to identify the non-financial issues that we consider most important to our stakeholders and for sustaining ASMLs long-term business success. We used the outcome of our continuous dialogue with individual stakeholders as
input for our materiality analysis and to define our corporate responsibility strategy. This was complemented with an updated view of topics relevant to our industry and globally. Issues we consider relevant include the cyclical characteristics of
our industry, supply chain management, the need for continuous innovation, the scarcity of technology professionals, and integrated reporting (see ASMLs stakeholder groups and environment graphic). The materiality assessment is
facilitated by the Corporate Responsibility (CR) team and the outcome is validated by ASML senior management as part of our corporate risk management process (see also section Business risk and business continuity).
In 2014, we updated the materiality analysis and, based on stakeholder input and external developments, we included tax strategy and transparency as an
additional topic in our responsible business themes.
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The table below provides an overview of material themes, with reference to the page in this report where a particular
theme is addressed. These aspects directly influence our policies and long-term business success and are therefore material for our organization. In some cases the scope expands to the value chain customers (Sustainable relationship with our
customers) and the supply chain (Sustainable relationship with our suppliers, Business ethics and human rights, Conflict minerals, Business risk and business continuity, Innovation). In the section Our corporate responsibility strategy
an overview of the relationship of the material themes with the identified main impact areas is presented.
ASML does not rank the individual
themes identified in terms of importance, as such a ranking would be arbitrary; all themes mentioned are important to ASML and our business.
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Material themes |
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Page number
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Technology leadership |
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Innovation |
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20 |
Knowledge management1 |
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21 |
Product stewardship |
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23 |
People |
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Talent management2 |
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25 |
Sustainable relationship with our people |
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26 |
Customer and supplier intimacy |
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Sustainable relationship with customers |
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28 |
Sustainable relationship with suppliers |
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30 |
1 |
Intellectual property management is part of this theme |
2 |
Training and development has been incorporated with the Talent management theme. |
We recognize that, next to the material themes, there are certain issues on which our stakeholders expect us to act as a responsible corporate citizen. These have been labelled as responsible business
behavior themes (see table below).
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Responsible business behavior themes |
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Page number
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Business risk & business continuity |
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33 |
Business ethics & human rights |
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34 |
Tax strategy & transparency |
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36 |
Labor relations & fair remuneration |
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36 |
Community involvement |
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38 |
Conflict minerals |
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41 |
Product safety & compliance |
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41 |
Environmental efficiency own operations |
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43 |
Employee health & safety |
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48 |
In addition to the themes above, we also consider themes that are currently less relevant for ASML and our stakeholders: climate change strategy, biodiversity, political involvement and lobbying, and
resource scarcity. Every year we re-evaluate the materiality of these themes.
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Main risk factors
ASML faces many risks that could interfere with our business objectives. It is important that we understand the nature of these risks and their potential impact on our business, as well as identify
opportunities that could create sustainable value for our stakeholders. ASML continuously evaluates its business model and underlying governance, processes, and controls to assess our resilience to these risks and ensure there are appropriate
responses to mitigate them. We monitor developments in the risk landscape to set our strategic business direction.
The types of risks ASML faces
include:
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Risks that impact the viability of the current business model and future growth options (such as industry cycles, technological changes, business
environment, and competition risk). |
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|
Risks that threaten the execution of the corporate strategy and achievement of business objectives (such as supplier dependencies and product complexity
risk). |
ASML has a collaborative, integrated approach to identify, assess, maintain and provide assurance
on the risk landscape so senior management can make informed decisions when responding to risks. Examples of relevant enterprise risks3 are:
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The semiconductor manufacturing industry is subject to frequent and rapid change towards more complex technologies. It could harm our business if we do
not respond rapidly to the introduction of new products and enhancements, evolving industry standards, changing customer requirements, and ever shorter product life cycles. |
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Our business and future success significantly depends upon our employees. It is vital that we are able to attract and retain highly qualified
professionals in a fiercely competitive market. |
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ASML is dependent on a limited number of suppliers and derives its business from a relatively small number of customers. This requires investing in high
quality and intimate relationships. |
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|
Hazardous substances are used in the production of our systems, which requires us to implement appropriate practices for health and safety for both our
employees (in connection with the production and installation of our systems) and our customers employees (in connection with the operation of our systems). |
Our corporate responsibility strategy
Corporate responsibility
(CR) has moved higher on ASMLs business agenda. We have further developed our corporate responsibility strategy and policy. ASML believes investing in corporate responsibility is crucial for long-term business continuity and success. Our
business performance will increasingly be judged not only on technological leadership and financial results, but also on the extent to which we achieve our corporate responsibility targets. Through our newly published CR policy, we recognize our
corporate responsibility to our customers, shareholders, suppliers, employees, and society at large. We aim to achieve our business objectives in a responsible manner that takes into account the economic, social, and environmental impact of our
activities.
Following the 2013 review of our corporate responsibility strategy, in 2014 we formulated new ambitions and plans to achieve our CR
objectives. We believe this is another important step towards further aligning our corporate responsibility objectives with our business strategy. We aim to make achieving our corporate responsibility targets increasingly important. We have defined
a number of CR-related KPIs that measure the non-financial value created, which we will start using in 2015. Amongst others the CR-related KPIs will be the basis for senior management remuneration.
Our strategy is based on three pillars: technology leadership, customer and supplier intimacy, and entrepreneurial people. This is complemented with
responsible behavior as a prerequisite in executing our strategy.
3) |
A comprehensive overview of all risks can be found in our annual report available on the ASML website. |
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In 2014, we identified our main financial, social and environmental impact areas (see section The value we
create), as well as how these link to our CR strategy (see table at the end of this section).
Technology leadership
ASML seeks to lead in innovation. Thats why we foster a strong innovative culture. As part of this we have mature knowledge management processes to
identify, create, and share knowledge inside and outside of our organization. We strive to make our products ever more efficient, using less energy and fewer resources.
To measure our success in realizing these ambitions we have defined KPIs for each of these three areas. To gauge the success of our innovation, we use the Technology Leadership Index as a KPI. It is an
internal metric that measures our ability to meet customers technology needs. To measure the success of our knowledge management processes we will measure our knowledge maturity and number of training hours. We will also continue to measure
the energy efficiency of our systems.
Customer and supplier intimacy
ASML creates strong partnerships with its customers and suppliers. Only by working together can we continue to realize Moores Law. This close collaboration and alignment with our customers and
suppliers helps to sustain the growth of the industry as a whole. Our performance in the area of customer and supplier intimacy will be monitored using a KPI measuring the quality of the relationship with both customers and suppliers.
People
ASMLs business continuity and
success largely depends on our ability to attract and retain the right people in the right place at the right time. To realize this, we are committed to maintaining the highest standards in our human resources strategy and strongly focus on talent
management, training and development, and building a sustainable relationship with our employees. We strive to provide an inspiring workplace where employees can work, meet, share, and learn. Our overall employee engagement score will be the main
KPI to measure performance in this area. In addition we will measure the attrition and promotion rates of high performers as a measure for the ability to attract, retain, and develop human capital.
Responsible business behavior
ASML is
committed to doing business according to high ethical and professional standards. This means we seek to comply with the laws and regulations applicable in the countries and regions where we operate. ASML has a moral obligation to provide safe and
healthy working conditions while minimizing our impact on the environment. We expect our people to respect human rights and expect the same from our business partners. Our Code of Conduct and Business Principles help us make ethically sound
decisions. We also want to contribute to our local communities in which we operate through collaborative and consultative partnerships supporting their activities.
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The main KPI that we will use to measure our responsible business behavior performance will be our score in the
Dow Jones Sustainability Indices (DJSI) assessment (RobecoSAMs Corporate Sustainability Assessment).
In the table below an integrated view
of our strategy for 2015-2020, ambition, key performance indicators and risks, as well as the link to the main impact / outcome areas is presented.
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Strategic priorities |
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Ambition |
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Main KPI |
|
Key Risk |
|
Impact / outcome
area |
Technology leadership |
|
ASML is recognized as a leader in innovation, maintaining a strong innovative technology needs culture. We ensure the right knowledge is available to the right people at the right
time. ASML also fosters energy and resource efficiency in its products, supporting the production and use of increasingly more powerful and energy-efficient electronics. |
|
Meeting customer
Technical competence maturity, function maturity, and number of training hours
Energy and resource efficiency |
|
Commercial and technological changes in the semiconductor industry |
|
Financial results
Affordable technology
Knowledge creation & sharing
Employee welfare
Resource efficient chips |
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People |
|
ASML is recognized as a top employer in the industry, offering people opportunities to develop their talents and a working environment in which they feel included, engaged and can
perform. ASML establishes a mutually beneficial long-term relationship with its employees, who are proud to work for ASML. |
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Attrition rate high performers
Promotion rate high performers
Employee engagement |
|
Ability to attract and retain skilled employees |
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Financial results
Employment creation
Employee welfare |
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Customer and supplier intimacy |
|
ASML aligns the interests of customers and suppliers with its own roadmaps to manage the increasing complexity in the industry, while continuing to work to produce ever more
value-effective and energy-efficient chips. |
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Customer Loyalty Survey score
Supplier Intimacy Survey score |
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Customer and supplier dependencies |
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Financial results
Employment creation
Affordable technology
Knowledge creation & sharing
Resource efficient chips |
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Responsible business behavior |
|
ASML ensures that it conducts business according to high ethical and professional standards. We nurture a company culture in which health, safety, ethical integrity, and compliance
with laws and regulations are safeguarded. We also place high value on good labor relations and fair remuneration. We contribute to the communities in which we operate, and continuously strive to reduce the environmental impact of our
operations. |
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DJSI assessment score |
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Use of hazardous substances |
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Our license to operate |
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Our current performance in this area is driven by the targets and KPIs related to our strategy 2010-2015 and is reflected
below.
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Actual & target indicators for 2010-20151 |
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Actual 2010 |
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Actual 2011 |
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Actual 2012 |
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Actual 2013 |
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Actual 2014 |
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Target 2014 |
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Target 2015 |
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Environmental operations |
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Net CO2-emissions
[kton] |
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88.7 |
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63.8 |
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50.1 |
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46.0 |
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40.2 |
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46.0 |
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44.3 |
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Energy efficiency savings
[TJ]2 |
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n/a |
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6.8 |
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33.2 |
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71.7 |
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131.8 |
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70.0 |
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92.0 |
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Gross waste reduction
(%)3 |
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n/a |
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n/a |
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n/a |
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0.3% |
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2.4% |
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3% |
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5% |
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Waste recycling (%) |
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n/a |
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n/a |
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94% |
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96% |
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98% |
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> 85% |
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> 85% |
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Waste towards landfill (%) |
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n/a |
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n/a |
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n/a |
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1% |
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1% |
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< 5% |
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< 5% |
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Water efficiency savings (%) |
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n/a |
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n/a |
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n/a |
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15% |
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13% |
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13% |
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15% |
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1 |
All target and KPI definitions are listed in appendix Non-financial data definitions. |
2 |
Cumulated energy savings in reporting year (since 2010). |
3 |
Cumulated waste savings in reporting year (since 2012); as of 2013 gross waste reduction is independent of production rate. |
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Governance
ASML Holding N.V., incorporated under Dutch law, has a two-tier board structure. Executive responsibility for ASMLs management lies with the Board of Management. The Supervisory Board, which is
composed of independent, non-executive members, supervises and advises the Board of Management. The Supervisory Board retains overall responsibility and assigns specific tasks to its four committees: the Audit Committee, the Remuneration Committee,
the Selection and Nomination Committee, and the Technology and Strategy Committee. Members of these committees are appointed from among the Supervisory Board members.
Board of Management
The Board of Management currently consists of five members and is
responsible for achieving ASMLs aims and setting the strategy, associated risk profile, the development of results and corporate social responsibility issues relevant to ASML. The Board of Management is accountable to the Supervisory Board and
the General Meeting of Shareholders.
The Board of Management has installed the Corporate Risk and Sustainability Board (CRSB), which is
responsible for the progress of ASMLs non-financial performance, including corporate responsibility targets and performance indicators. It also reviews related policy changes and improvement activities. The CRSB is chaired by the COO and
comprises senior management representatives from all sectors within ASML, including the CEO and CFO. In 2014, the CRSB met four times.
ASMLs Corporate Responsibility (CR) team, which coordinates the day-to-day implementation of the overall CR strategy, policies and improvement
activities, forms part of the Corporate Risk and Assurance department, which reports to the Board of Management. The CR team has identified the relevant themes for ASML (see chapter Our stakeholders and corporate responsibility
strategy), upon which we base our CR strategy. Each theme is the responsibility of a theme owner within the organization.
Supervisory
Board
The role of the Supervisory Board is to supervise the policies of the Board of Management and the general affairs of ASML and
affiliated enterprises. The Supervisory Board also advises the Board of Management. At least once a year it addresses corporate social responsibility issues that are relevant to ASML.
Remuneration Committee
This committee reviews and proposes to the Supervisory Board the
corporate goals and objectives relevant for the variable part of compensation of the Board of Management, which includes the corporate responsibility objectives and metrics disclosed in this report (for further details, refer to the 2014
Remuneration Policy and the Remuneration Report 2014).
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Performance
Technology leadership
ASML seeks to be recognized as a leader in
innovation, maintaining a strong innovative culture. We ensure the right knowledge is available to the right people at the right time. ASML also fosters efficiency of energy and resources in its products, supporting the production and use of
increasingly more powerful and energy-efficient electronics.
Innovation
Consistent innovation is ASMLs lifeblood, the engine that drives our business and ensures we make machines that produce microchips that are
increasingly faster, smaller, cheaper, and more energy efficient.
ASML wants to be recognized as a leader in innovation, maintaining a strong
innovative culture. We embed innovation in the following ways:
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|
Creating a culture of innovation. An innovative attitude is inherent to how employees at every level of our organization solve day-to-day problems.
Successful innovations are celebrated and the engineers involved are publicly and financially rewarded, for example through our Patent Award Program. |
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|
Attracting and retaining talented people. We attract talent through initiatives such as the ASML Technology Scholarship Program for talented
students, and master classes. Recruiting and retaining highly educated and skilled employees is crucial to our innovation and technology leadership (see section Talent management). |
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Open innovation and partnerships. We share and co-develop expertise and knowledge through partnerships with customers, suppliers, universities, and
research institutes. Examples include our collaboration with several institutions to set up the Advanced Research Center for Nanolithography in the Netherlands (Amsterdam) and the Advanced Patterning Centre in Belgium (Leuven). Successful innovation
requires us to align our technology and product plans with those of our suppliers, our customers, and their customers. One way we do this is by organizing technology review meetings with our customers. Another example is the ASML Technology
Conference, which was established to highlight key technical projects, both within ASML and by our customers, suppliers, and peers. |
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|
R&D spending. We invest heavily in research and development and maintain this level of spending through the economic business cycles.
|
Innovation is defined as the process of translating an idea or invention into a good or service
that creates value or for which customers will pay4.
ASMLs Research department, using an extensive network of external technology partners, is a key source of inventions. It consists of approximately 110 FTEs and reports to the SVP Technology, who in turn reports to the Chief Technology Officer.
Ideas are translated into products by our Development and Engineering department, consisting of around 4,300 FTEs and reporting to the EVP Development and Engineering, who also reports to the CTO. Our product generation process (PGP) defines all
major R&D steps. We execute design reviews regularly in the various phases of the product design lifecycle.
The assembly of an EUV system in Veldhoven, the Netherlands.
What we did in 2014
We moved ahead with our partnerships with respect to the Advanced Patterning
Centre and the Advanced Research Center for Nanolithography (ARCNL), both set up in 2013. ASML and imec signed a contract to set up the Advanced Patterning Centre. ARCNL is a public-private partnership initiated by the Foundation for Fundamental
Research on Matter (FOM), the University of Amsterdam, the Free University (VU) Amsterdam, and ASML. It began operating on January 1, 2014, at the Amsterdam Science Park, initiating its first research experiments in a temporary office building.
4) |
www.businessdictionary.com/definition/innovation.html. |
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In 2014, we spent 1,074 million euros on R&D, up from 882 million euros in 2013.
Strong sales and shipping of our most advanced machines and applications in 2014 reflect our innovative strength. Our EUV program showed substantial
progress in 2014. Fueling future innovation, all installed NXE:3300B EUV systems have been upgraded to a wafer processing capability of more than 500 wafers per day. The integration with the light source is progressing steadily. We remain on target
to deliver systems with a productivity of 1500 wafers per day in 2016. We also saw strong demand for our TWINSCAN NXT:1970Ci systems, our most advanced production scanner. In our software and metrology products portfolio, demand for Yieldstar
systems continued to grow. Our application experts are engaged with our key customers to jointly deliver the best lithography performance.
In
order to reduce waste in our product life cycle, product and process innovations aim to extend the product lifetime and performance. We offer customers the possibility to upgrade our NXT:1950/1960 to NXT:1970. We also transformed our future roadmap
to include upgrading existing systems to the performance level of new types of machines, instead of replacing them with the new-type machines. In addition, hardware made obsolete by system upgrades will be repurposed, rather than being wasted.
Finally, we offer our customers product upgrades in order to improve the productivity of our dry systems. This enables them to upgrade their installed base, rather than having to add new systems.
Outlook 2015
To gauge the success of our
innovation, we use the Technology Leadership Index as a KPI. It is an internal metric that measures our ability to meet customers technology needs.
In the coming years we will further streamline our support structure for innovation. This means continuing our efforts to develop a highly skilled, highly educated and productive workforce (also see chapter
on People). We also want to foster a culture of collaboration throughout ASMLs value chain.
30 for change: Promoting literacy for children in Cameroon
The Rural Reading Program in northwest Cameroon aims to provide textbooks, reading tests, and literacy education resources to
primary schools. Most schools in the region do not have access to textbooks, creating a situation where many pupils are unable to read and write when they leave primary school. These resources will enable children to learn how to read in an
effective and inspirational way. Teacher training is also provided as part of the program.
Rural primary school pupils supported by the Rural Reading Program in the northwest
region of Cameroon.
Knowledge management
To maintain our technological leadership, it is crucial ASML shares knowledge quickly and efficiently, both within the company and with external partners
such as suppliers and customers. Faster access to knowledge means faster development, faster problem solving, and better use of our investments in knowledge creation. On the other hand, appropriate control of such knowledge exchange is important, to
preserve proprietary knowledge.
Knowledge management also covers intellectual property rights (IPR) management. Our IPR management focuses on
protecting ASMLs intellectual property and ensuring we respect the intellectual property of other parties. ASML owns and vests rights in the technology we develop and if appropriate, acquires licensing or ownership rights to apply
non-proprietary technology in our products. IPR is thus related to both the creation and application phases of knowledge management. Preservation of intellectual property and other assets is one of our business principles and part of our Code of
Conduct.
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Good knowledge management is essential to enhance well-informed decision making and to foster our
competitiveness. The EVP Development and Engineering is responsible for knowledge management and the execution is managed by staff reporting to the EVP. Frequency of reporting on the KPIs (see Outlook 2015 below) is bi-annual, while
progress of specific projects is reported regularly in steering committees. Technical training plays a prominent role in disseminating knowledge and is run by training centers in ASMLs business sectors, such as development and engineering,
manufacturing, and customer support.
Our ambition
Our ambition is to ensure that top quality knowledge is available to the right people at the right time. Employees must be knowledgeable about what technical information can be shared and what cannot. We
work towards documenting all applicable technical knowledge and making it easily accessible from a single source.
A machine is divided into 45
distinct (machine) functions and responsibility for each function is assigned to a team of experts. We call this function ownership. Each function must increase its individual function maturity and its interaction with other functions in accordance
with our maturity concept (see What we did in 2014 below).
Technical competence management refers to dividing and categorizing areas
of knowledge that are relevant for ASML technology. Each technical competence may relate to more than one machine function. We have identified over 80 competences, each of which must increase its competence maturity in accordance with our maturity
concept (see What we did in 2014 below).
What we did in 2014
To enhance our knowledge management we deployed the following activities in 2014:
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Our training centers offered considerably more trainings and raised awareness among management of the training programs. This resulted in a substantial
increase in training activities and more employees attending trainings. The training center for the Development and Engineering department offered training to 2,697 employees5 (male: 2,411, female: 286), who completed 4,532 technical classroom trainings, amounting to a total of 76,542 training
hours. This is up from 1,582 employees5 who completed 2,209
technical trainings, or 37,943 training hours, in 20136. In
2014, employees in the Development and Engineering department accounted for 81% of the technical classroom training hours, a total of 61,688 hours (male employees: 55,436 hours, female employees: 6,252 hours), which amounts to an average of 14 hours
of training per FTE (male: 14 hours, female:16 hours). |
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We took steps to improve the documentation of our processes and produced the first chapters of a new handbook for processes and technical information in
our Development and Engineering department. It is easily accessible online via the departments intranet home page. |
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We improved the maturity of technical competences and function ownership. |
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We developed two new key performance indicators for knowledge management: the function maturity score and the technical competence
maturity score. Maturity refers to the extent to which knowledge is available and embedded in our processes and practices. The KPIs distinguish five levels of maturity, varying from having the basic knowledge management competences available
to the ability to use knowledge management to increase customer satisfaction and value creation. |
Outlook 2015
In 2015, we plan to take the following steps:
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Complete the technical knowledge handbook of our Development and Engineering department. |
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Continue developing new technical training courses and programs, and improve our approach to programs for individual needs. |
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Improve digital learning possibilities (available anywhere, anytime). |
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Better align knowledge management across different departments, particularly Development and Engineering, Customer Support, and Manufacturing, e.g., set
up knowledge management sector teams to realize this cross-sectoral alignment. |
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Expand our function and technical competence management with respect to topics (e.g. industrialization) and locations outside Veldhoven.
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Start reporting on our new KPIs: function maturity score and technical competence maturity score. |
5) |
This refers to headcount in- and outside the Development and Engineering department. |
6) |
Improvement in administration of training data resulted in a correction of the 2013 data. |
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Product stewardship
ASML is a major contributor to the chip manufacturing industry, actively supporting the trend to produce and use increasingly powerful and energy-efficient
electronics.
We design machines that can produce ever smaller integrated circuits, allowing our customers to produce higher density chips. This
high density translates into fewer natural resources and less energy consumption per transistor over chip lifetime compared to older-generation chips. We work towards realizing this by investing in R&D in close cooperation with our suppliers and
customers (see sections Sustainable relationship with suppliers and Sustainable relationship with customers).
By
producing more powerful, smaller, cheaper, and more energy-efficient chips our industry enables technology to become increasingly sophisticated, improving the quality of life of people around the world. For example, equipment in healthcare, such as
new-generation MRI scanners, wearable sensors, lab-on-a-chip devices to quickly diagnose some diseases and DNA analysis tools, and the smart grid an IT-driven electricity distribution model that helps households and companies use
electricity more efficiently.
Our approach
We focus on three aspects of our lithography machines to facilitate the production of more efficient chips:
Chips are produced on
wafers, which are silicon disks that are patterned by our lithography machines. These are then polished, rinsed, and cut into chip-sized pieces. As one wafer can contain hundreds of chips, increasing productivity means making machines that produce
more chips per hour and can run continually for longer periods of time, without requiring maintenance. A key indicator of productivity is the number of wafers our machines produce per hour.
Shrink is the process of developing smaller transistors on chips, using increasingly sophisticated lithography techniques. The smaller the transistors become, the more can fit on one wafer. Over the years,
we have developed machines that drive the miniaturization of semiconductors. Our latest-generation machines use EUV technology. Since this will not be the last generation, shrink remains a focal point of our R&D activities.
Increasing yield means having machines that produce wafers with ever fewer defects. Just one dust particle can disturb the lithographic process, rendering
one or several chips on a wafer useless. By creating the cleanest possible conditions and the clearest possible lenses, we can reduce the number of flawed chips per wafer and hence increase the yield.
The product generation process starts with Product Policy, where the roadmap is determined. The Product Policy is composed by senior management, including
board members. This is being elaborated into detailed product requirements where Product Management and System Engineering will play crucial roles before it goes into the execution phase, managed by Program Management.
What we did in 2014
We
introduced a new-generation NXT:1970Ci machine with a throughput of 250 wafers per hour in 2013. Our calculations had predicted the energy efficiency of these machines would improve from about 0.50 kWh in 2012 to 0.45 kWh per wafer. In 2014 we ran a
program in Veldhoven to measure their actual energy efficiency based on SEMI S23 standards.7
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Year |
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2010/2011 |
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2012 |
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2013/2014 |
Product |
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Twinscan NXT:1950i |
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Twinscan NXT:1960Bi |
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Twinscan NXT:1970Ci |
Simulated energy efficiency - NXT (kWh/wafer)1 |
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0.63 |
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0.5 |
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0.45 |
Measured energy efficiency - NXT (kWh/wafer)2 |
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n/a |
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0.46 |
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0.51 |
1 |
Simulated power consumption (including laser) based on scaled IRM electrical power requirements and 100% availability. |
2 |
Measured power consumption according to SEMI S23 (excluding laser; including gas and water supplies) scaled to 100% availability. |
The measurements showed the actual energy efficiency of these NXT machines was lower than our calculations had anticipated (see table above for last
years calculated figures and 2014 measurement results). We found the reason for this discrepancy was because higher stage accelerations needed to achieve a higher throughput were using more power, which had not been properly accounted for.
This will be corrected in future modelling.
7) |
SEMI S23 Guide for Conservation of Energy, Utilities, and Materials Used by Semiconductor Manufacturing Equipment prescribes a method to collect, analyze, and
report energy-consuming semiconductor manufacturing equipment utility data. |
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The energy efficiency of our new NXTs is slightly lower however, they enable further shrink, allowing
more transistors per wafer. Restricting ourselves only to the energy usage of ASML machines in the chip production process, we can assess the energy amount needed to produce a transistor (based on the number of transistors per wafer, chip layer
stacking and typical machine set needed to perform the litho steps for this layer stacking). From that we may conclude that for the litho steps of a 20 nm logic chip about 25% less energy is needed than for a 28 nm logic chip. For a 16 nm chip the
energy used will be about the same as for a 20 nm chip.
We will start reporting the energy efficiency of our NXE machines using EUV technology
as this product further matures.
Ongoing improvements
Our business success and market leadership are closely tied to our ability to enable our customers to produce smaller, more energy-efficient chips. We continued our R&D programs to make further progress
in this area (see section Innovation). At present, the most advanced customers use structures down to 19 nm in their chips. Our roadmap identifies products with a resolution finer than 10 nm using EUV single patterning technology.
Chips with the same number of transistors, but with transistors produced at finer resolution, consume less energy. Our first focus is to realize
our plans to develop machines that produce increasingly smaller and energy-efficient chips and to ensure they are economically viable. Once we have achieved this objective, well work to make further energy efficiency improvements. For
instance, for EUV we expect to start energy recovery initiatives.
Producing a chip is a complex process involving hundreds of processes and
measurements, including multiple lithographic steps. ASML supports this process with a suite of holistic lithography products. Holistic lithography is our way of optimizing scanner performance for customers by taking into account the entire chip
creation process, from design to volume manufacturing. Holistic lithography integrates computational lithography, wafer lithography and process control to optimize production tolerances and reduce time to money for chip makers. Yieldstar
metrology tools contribute to ASMLs holistic lithography approach.
In addition to expanding the Linkou premises in Taiwan to produce
Yieldstar metrology tools, we enlarged them for 200 mm refurbishments. In the near future we will add capacity to refurbish 300 mm wafer machines.
Tackling the growth challenge
By enabling the
production of cheaper and more powerful computer chips, ASML also fuels the development of new electronic applications. This development poses a challenge for our entire industry; for ASML, it confirms the importance of working with all stakeholders
in the value chain to make our industry more sustainable and contribute to this process through research and innovation.
30 for change: Developing education infrastructure with Adream Centers
Our Adream Centers project targets public schools in rural China as well as the children of migrant
workers. It provides funding for Adream Centers, which are multimedia classrooms equipped with modern teaching aids, including computers and software, and durable furniture and equipment. The centers also include an extensive library,
with over a thousand books. Teachers at the centers are trained to encourage values such as critical thinking, tolerance and mutual respect, helping pupils to develop their personal interests and confidence, and equipping them to deal with any
future challenges head-on. This project has set up one Adream Center, which will serve three schools.
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People
We want ASML to be recognized as a top employer in the industry, offering people ample opportunities to develop their talents and a working environment in which they feel included, engaged, and able to
perform. ASML aspires to establish mutually beneficial long-term relationships with employees who are proud to work for our company. To achieve this aim, we focus on two main themes:
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Talent management (which also includes training and development). |
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A sustainable relationship with our people. |
Talent management
Attracting and retaining talent is
crucial to maintaining our high pace of innovation and technology leadership and is therefore essential to our long-term success as a high-tech company.
Highly skilled people with a technical background are scarce in the labor market. The increasing complexity of our products results in a steep learning curve for new and existing employees. We therefore seek
to develop our talented and highly skilled professionals through tailor-made training and development programs. This ensures continuity in our workforce and retains the required knowledge, skills, and competences of our people.
As our company grows, we are committed to further develop our managers leadership skills to ensure they meet the requirements of our expanding
organization.
Because our people are our most important driver of innovation, we ascertain the business-critical skills and competencies we
require in the medium and long term. To do this, we align our resource planning with plans regarding the technological development and innovation of our systems. We also take into account labor market forecasts and global trends to identify new
markets and to develop the new technologies needed to serve them.
Developing our people is a crucial part of our human resources process. Every
year we use the People Performance Management (PPM) process to align our business targets with employees individual development plans, to define the actions required to achieve short-term goals as well as longer-term career development.
Identifying talent and our succession planning process complete the annual cycle, ensuring further career opportunities for high-potential employees and their participation in specific development programs. To attract talent we focus on two areas:
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Internal talent. We assess the potential of employees as part of our integrated people development cycle and to identify successors for critical
roles. Employees and managers discuss their career ambitions and jointly consider next steps. Employees can pursue opportunities themselves or be approached within the organization. We also have internal career fairs. |
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External talent. We cooperate closely with universities in three geographical areas (Europe, the U.S., and Asia) to attract highly talented staff.
One way we do this is by offering internships and scholarships. For positions that cannot be developed and filled internally, ASML scans the labor market for the skills it needs, creating a global sourcing map to attract senior staff for critical
roles in the organization. |
Furthermore we retain talent through HR&O (Human Resources and Organization)
efforts such as the Great Place to Work project (see section Sustainable relationship with our people), and by offering fair pay to employees (see section Labor relations and fair remuneration).
All activities related to talent management are facilitated and coordinated by the HR&O function, which reports to the CEO.
What we did in 2014
Our efforts to retain
employees contributed to an attrition of 3.6% in 2014 (2013: 3.2%). ASMLs attrition rate is below the industry average in all regions.
To
attract highly talented university students we redefined our scholarship program. In line with our policy to promote technology studies in the Netherlands, we granted ASML Technology Scholarships to 25 masters students, as well as awarded the
existing Henk Bodt Scholarship for excellent academic performance. In addition, we organized Phd-master classes, in-house days, business courses, and knowledge fairs for students.
We implemented a new PPM process that we developed in 2013. All managers were trained at three different moments for every step of the process and employees were offered computer-based training throughout
2013 and 2014. Because of the new process, we are able to set targets for teams and individual employees much earlier in the year and schedule performance appraisal meetings in 2014 much later than before, leading to a more comprehensive assessment
of our employees annual performance.
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The new process also allows us to better streamline the design and execution of personal development action
plans (DAPs), which we encourage employees to make to set goals and identify concrete steps for career planning and personal development. In 2014, more than 85% of employees defined and began implementing their personal DAPs.
We offer a global training curriculum of non-product related (behavioral) training programs. Employees can choose a combination of
training programs that are aligned with their personal DAP. In 2014, we trained 5,863 (2013: 3,591) employees with 9,963 (2013: 5,517) non-product related training programs, which are all organized via HR&O. This is equivalent to an average of
12 hours per FTE (19 hours per female FTE and 11 hours per male FTE; 2013: 11 hours per FTE).8
We launched three Potentials Acceleration Programs to address all levels in the organization (senior,
middle, and newly-appointed managers). These programs develop technical as well as leadership skills.
Our employees working in the EUV fab in Veldhoven, the Netherlands.
Outlook 2015
We will improve our process to
attract external talent by implementing our global sourcing roadmap and expanding our recruitment efforts globally, including a global governance structure. We will also continue implementing our redefined scholarship programs.
We will continue to run our standardized annual HR&O cycle for our training and development efforts. Within the new PPM process the annual performance
of employees will be evaluated, which will complete the whole cycle in this new process for the first time. Furthermore we will deploy certain processes like succession planning further down into the organization.
Sustainable relationship with our people
Building sustainable relationships will motivate our people to develop themselves, use their talents, and perform well, improving ASMLs productivity, innovative strength, and competitiveness.
Cornerstones of a sustainable relationship with our employees are employee engagement and employability. Our employability and engagement initiatives are managed by the Human Resources and Organization (HR&O) department, which reports to the
CEO.
Our Great Place to Work (GPTW) project was launched a few years ago to increase engagement. Complimentary to all human resources
initiatives, it aims to boost and channel investments into the well-being of our people, to make them more creative, innovative, productive, and boost their satisfaction of working at ASML. Among the projects initiatives is reconstructing our
outdoor campus to make it more attractive for employees to spend time there and office refurbishments to create flexible work places. The project also seeks to promote a sense of community among our employees and help them reduce stress and maintain
a healthy work-life balance. Our HR&O department is represented in the GPTW project team, ensuring employees voices are heard when decisions are made about office and campus refurbishments. The GPTW project is managed by a dedicated
steering committee, chaired by our COO, and comprises representatives of several departments. In 2014, we created a GPTW core team with members from all our businesses worldwide to coordinate the projects activities on a day-to-day basis.
We aim to increase the employability of our people. Employability refers to the mid to long term sustainable effective performance of ASML
employees and their readiness for changing requirements, based on three pillars:
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Competency. Development of knowledge, skills, and effective behaviors (also see sections Talent management and Knowledge
management). |
8) |
Please note 2013 training numbers and hours have been restated to only include those from non-product related training (i.e excluding D&E training).
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Vitality. Employees physical and mental fitness to effectively deal with work and life challenges; energy, personal drive, resilience.
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Commitment and engagement. Employees commitment to the company and engagement with their tasks. |
What we did in 2014
We continued to implement
the GPTW project, starting with refurbishing offices at five company departments in Veldhoven to create flexible activity-based workplaces for 500 to 700 employees. This means these employees decide daily what activity they want to do
and the space they need, from a silent room to a meeting room or an individual flexible desk space in an open office environment. Activity-based working fits our open innovation concept, making it easier to spend more working hours with different
groups of colleagues in different settings, and should thus lead to increased collaboration and easier exchange of ideas and knowledge. Activity-based working also facilitates our companys growth because we can accommodate more employees per
square meter of office space. In Asia and the U.S. projects and initiatives have also been started to optimize and build new work places that fit the activity-based concept mentioned above.
Our main indicator for measuring our success in forging sustainable relationships with our employees is our employee engagement score.
We see this score as the aggregate indicator of our employees commitment and motivation. We gauge engagement through our Me@ASML survey. In 2014, the overall employee engagement score was 6.9 out of 10 (2013: 6.9)9. The response rate was 83% (2013: 85%).
Although survey results show appreciation among employees for development opportunities, it remains an area for continuous improvement. It also showed
employees would like additional clarity about their roles and responsibilities. In response to this feedback, we have asked managers to discuss roles and responsibilities with individual employees and improve clarity about ASMLs expectations
as an employer. Managers have a tool, which is part of the Me@ASML software, to record improvement plans, allowing them and the HR&O department to monitor progress and outcomes.
ASML is committed to supporting employees to develop the skills and competences they need for their current role as well as their potential future job, whether inside or outside ASML. While employees are
primarily responsible for sustaining their own employability, ASML helps them achieve their objectives, for instance by offering training.
Employee vitality is an important part of improving employability and in 2014 we continued several vitality initiatives and launched an app for employees to
monitor their physical and mental condition and get tailored advice on improving their personal vitality. For instance, the app notices when an employee enters a different time zone, advising when and what to eat and when to sleep, helping reduce
the negative effects of jetlag.
Increased awareness of our lifestyle intervention programs, such as mindfulness sessions and quit
smoking courses, led to more employees participating. Our quit smoking program, which was also opened to employees family members, achieved good results, with 81 % of participants confirming they were still non-smokers in a survey
conducted six months after the course.
Outlook 2015
We will further strengthen and implement the GPTW project. We plan to develop and distribute guidelines on using the flexible office spaces, including identifying which jobs are suitable for flexible
working, and renew the policy for working from home.
We will recalibrate our GPTW project vision and review its scope and governance structure
in early 2015. We also plan to implement an employability action plan.
We will write a global mission statement about corporate vitality,
translate this into local initiatives, and support the program with high-tech tools, available for all employees worldwide.
9) |
The 2013 engagement score previously published was 6.6. Effectory has revised this score to 6.9 after changes to the method of calculating engagement.
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Customer and supplier intimacy
ASML aims to align the interests of customers and suppliers with its own roadmaps to manage the increasing complexity in the industry, while continuing to
work to produce ever more cost-effective and energy-efficient chips.
Sustainable relationship with customers
Our top priority is to provide our customers with the best possible products and services. We work closely with them to ensure we
understand their needs, priorities, and challenges. Only by collaborating and aligning with our customers can we help them to produce ever smaller and more energy-efficient chips, thereby realizing Moores Law and sustaining the growth of the
industry as a whole.
Our customers use our systems to produce logic and memory chips for a wide range of electronic
products including, for example, computers, tablets, and smartphones. Logic chips control the processes that run devices. Memory chips are used to store data. ASML also provides systems for producing specialized applications such as photonics, disk
drive heads, and the fast-growing Internet of Things. Our customers include the worlds biggest chip makers and many of the smaller ones. With our strong market position comes a responsibility to our customers that we take very
seriously.
We strive to meet the needs of our customers by regularly reviewing and aligning, at all levels, with their markets demand,
their product roadmaps, support requirements, and business terms.
Our Sales and Customer Management department is responsible for building and
maintaining our customer relationships. It reports monthly to the Board of Management and supervises the account teams, which manage day-to-day customer relations from our various business locations.
We also have a customer focus group within the QPI (Quality and Process Improvement) department, consisting of Quality Managers who liaise with our
customers on quality and attend management review meetings, mostly at customer production sites, to discuss customer issues in detail. Their role is to communicate the customer voice on quality into the organization, with focus on:
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Addressing customer complaints. |
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Maintaining customer quality dashboards and Customer Issued Scorecards to monitor and improve Customer Quality Indicators. |
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Supporting customer audits. |
What we did in 2014
To build and sustain
close relationships with our customers, we hold regular meetings at different levels. In 2014, we held at least 18 executive review meetings (ERMs) to discuss commercial and business issues at the executive level. We also held 14 technology review
meetings (TRMs) to discuss our customers technical requirements for the next five years and their specifications for our chip-making machines. TRMs are also held at executive level and in most cases attended by our CTO. In addition, there were
33 other executive level meetings with customers, bringing the total number of meetings between ASML senior executives and customers to 65 in 2014.
The main performance indicators for our customer relationships are customer issued scorecards, our Customer Loyalty Survey and the annual VLSI survey, conducted among customers by research company VLSI,
which specializes in the semiconductor industry and nanotechnology.
Customer account teams monitor and create action items around key areas of
dissatisfaction as expressed by each customer in their scorecard.
The VLSI survey showed ASML ranks high on the best suppliers of large
chip-making equipment list (2nd place) and the best suppliers of FAB equipment list (also 2nd place) with a score of 8.93 out of 10 in both categories. We scored 9.5 in the VLSI technical leadership category (2013: 9.4).
Overall we scored 74.5% in the 2014 Customer Loyalty Survey. The 2014 survey indicated we scored highly in the categories:
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ASML works in collaboration with our organization. |
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ASML is aligned with our strategic goals and objectives. |
We were pleased to see customer feedback reflects our philosophy to work together as partners (see box out on customer feedback).
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Forging partnerships with customers
Our relationship is more like a development
partnership, rather than supplier and customer.
Customer comment in ASML Customer Loyalty Survey 2014.
Based on the previous surveys, ASML took action in three major areas that have affected our 2014 survey questions as well as final score.
1. |
Improving intake and solving customer-specific issues more efficiently: We adjusted our issue-handling process, training our account teams to better identify and
prioritize issues at customer sites. We also increased the number of engineering staff who are available to resolve customer-specific issues. |
2. |
Customers also indicated they want more guidance with configuring our machines for optimal performance and return on investment (ROI). In response, we
provided more detailed information on configurations and gauged the value of certain adjustments or upgrades of machines versus costs. As an example, through an Eclipse10 project in 2013-2014, we enabled one customer to upgrade 7 XT:1900 machines, saving the customer the need to buy multiple
NXT machines. However, it is clear from the 2014 results that customers remain concerned about the ROI and economic viability of ASML lithography products. We will accordingly focus on further addressing this topic in 2015-2016.
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3. |
NXT-specific issues: Customers asked for more NXT machine parts to be available for faster replacement and to ensure fewer parts malfunction upon arrival. To address these
issues, we redesigned the shipment packaging, increased local stocks of parts and redesigned a key part of the NXT machine. The operational performance against our commitments for parts stocking in the fields over the last 24 months did improve
significantly. For the last 18 months we have been consistently meeting about 98% of all our commitments concerning parts supply. However, the 2014 Customer Loyalty Survey also showed the parts malfunction upon arrival rate was still an area of
dissatisfaction. This will be an area for improvement in 2015. |
In 2014, we received several awards from our customers, such as the
Samsung Best in Value award (recognition of ASMLs outstanding support and contribution to mutual success), the UMC Best Vendor EHS award (recognition for ASMLs effort in the areas of environment, health and safety), and the Micron
Technology Partnership award (recognition of successful collaboration in a recent joint project).
Outlook 2015
We will continue our efforts to help customers enhance shrink, meaning we will help them to produce increasingly smaller, faster, and more energy-efficient
chips via our machines, upgrades, and services. We will initiate account team follow-up activities to the 2014 Customer Loyalty Survey which includes understanding the customers lithography return on investment, improving spare parts
malfunction on arrival rate, and improving our customer communication and problem resolution skills.
10) |
ASML also offers holistic lithography as an integrated package called EclipseTM. With detailed knowledge of our scanner characteristics and interfaces, and computational
lithography solutions, ASML can work closely with a specific customers node and application to integrate and optimize litho for the best performance. |
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Sustainable relationship with suppliers
Our suppliers are our partners. ASML relies heavily on its suppliers to develop innovative parts and modules that will make our machines increasingly
sophisticated and efficient. We support them in this by sharing our knowledge so they can use it to advance technical innovation and we encourage them to apply this knowledge to their business with other customers.
ASML continues to build a world-class supplier network that enables us to concentrate on our core strengths and capabilities and enables our suppliers to
gain fair benefits from working with ASML and each other. To realize this ambition, we will continue with our value-sourcing strategy and increase our focus on supplier intimacy.
Supply chain composition
In 2014, we spent 4.1 billion euros on goods and services provided by
864 product-related suppliers and 4,730 non product-related suppliers around the world, compared with 3.8 billion euros in 2013. Product-related (PR) suppliers deliver the machine parts and technology that are required to manufacture the machines.
Non-product related (NPR) suppliers provide other services and products such as temporary labor, design outsourcing, professional services, and office supplies.
The table below reflects the spend per supplier category. We distinguish between business critical (SAT) and remaining suppliers, because our management approach is different between the two
categories11. Business critical suppliers are managed through
dedicated supplier account teams that focus on risk mitigation, supplier development, and long-term relationships. In 2014, we reassessed our SAT supplier base, which resulted in a lower number of SAT suppliers. Also due to the acquisition of Cymer,
the PR SAT spend in 2014 decreased compared to 2013. In 2014, we categorized our NPR spend also to reflect our business critical NPR spend, which will enable us to focus more on our critical NPR suppliers.
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Product-related spend 2014 |
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million euros |
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number of suppliers |
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% of spend |
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Spend 2014 at business critical PR suppliers |
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|
1,787 |
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56 |
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68% |
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Spend 2014 at remaining PR suppliers |
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836 |
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|
|
808 |
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32% |
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Total PR spend 2014 |
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|
2,623 |
|
|
|
864 |
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100% |
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Non-product related spend 2014 |
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million euros |
|
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number of suppliers |
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|
% of spend |
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|
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Spend 2014 at business critical NPR suppliers |
|
|
320 |
|
|
|
49 |
|
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21% |
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Spend 2014 at remaining NPR suppliers |
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|
1,179 |
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4,681 |
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79% |
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Total NPR spend 2014 |
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1,499 |
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4,730 |
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100% |
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The pie chart below reflects our total sourcing spend per region12.
11) |
Compared to the 2013 report, we have simplified our categorization of suppliers into two main groups and as a result the categories of key and
non-key have disappeared. |
12) |
The Netherlands is deemed to be local spend. |
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Managing risk and performance in our supply chain
ASML has three processes to manage the overall supply chain risk and performance:
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Risk assessment. A risk assessment is executed annually for all suppliers evaluating four areas of risk, including spend, sourcing strategy
(addressing the risk resulting from single sourcing and supplier performance), financial stability (addressing the health of a supplier) and supply disruption (addressing the risk of natural hazards or calamities for a supplier manufacturing
location). |
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Risk mitigation. Significant risks that surface in the yearly risk assessment are addressed in our sourcing strategy. At the same time we work with
suppliers to improve their quality management, logistics management, technology management, cost management, and sustainability (so-called QLTCS). |
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Supplier audits. We execute supplier audits in order to address risks identified in the yearly risk assessment and to ensure that we match the
required performance levels with actual performance. Our goal is also to audit our SAT suppliers once every two years. |
What
we did in 2014
Enhanced supplier management
In 2014, we changed our Strategic Sourcing and Procurement organization to better support the challenges we see in cooperating with our suppliers. One of these challenges is to explain to our suppliers how
our technology and product roadmap translates into expectations from our suppliers today and in the future.
For this, we have installed the
Sourcing Policy Board (SPB), consisting of senior management reporting to the Presidents, which ensures our internal product and technology roadmap is aligned with our supplier roadmaps. The outcome of the SPB is reported to the Board of Management.
To support transitions within our supplier landscape we have also introduced dedicated transformation sourcing project managers to ensure a smooth transition. An example of such a transition in our supplier landscape is the outsourcing of all the
wafer handler activities to VDL.
We believe that this new approach will lead to faster innovation and closer cooperation with our suppliers.
Also, instead of just looking at reducing the cost of goods, we believe that driving down the total cost of ownership is something we can do more efficiently in collaboration with our suppliers.
Prominent place for sustainability criteria
As indicated in our 2013 report, we have incorporated sustainability measures into our QLTCS process. We base our corporate responsibility criteria on the
EICC Code of Conduct. Meeting these criteria is a long-term prerequisite for doing business with ASML.
EICC supports a responsible supply chain
The EICC is a coalition of the worlds leading electronic companies. It aims to improve efficiency
and increase social, ethical, and environmental responsibility in the global supply chain. Its members include electronics manufacturers, software firms, ICT firms, and manufacturing service providers that produce electronic goods or other materials
or services. The EICC Code of Conduct provides important guidelines facilitating the achievement of an organizations goals. See also www.eicc.info.
In all long-term supplier agreements we aim to include compliance to the EICC Code of Conduct as a requirement. We ask all our PR SAT suppliers to acknowledge the EICC Code of Conduct. We also include in our
QLTCS performance requirements and audit them on these accordingly.
Audit frequency and scope vary between suppliers. In the audits and
assessments we rate suppliers on meeting our sustainability requirements, scoring them from 1 - 5 (5 being the best). Failure to meet our minimum requirements will lead to a nonconformance report, setting out corrective action our suppliers must
take to close the gap.
In 2013, we added one new SAT supplier to our supply base, which will be audited in 2015 on the full
sustainability criteria.13
13) |
The full sustainability criteria includes environmental, labor, health and safety, ethics, compliance, and business continuity assessments. |
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Supplier audits overall |
|
2012 |
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|
2013 |
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|
2014 |
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Executed |
|
|
110 |
|
|
|
106 |
|
|
|
99 |
|
Covering
sustainability1 |
|
|
48 |
|
|
|
61 |
|
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48 |
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Number of sustainability NCs
raised2 |
|
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43 |
|
|
|
55 |
|
|
|
33 |
|
1 |
Previously we reported 77 audits covering sustainability in 2012 and 80 in 2013. The 2012 and 2013 figures have been restated to exclude NC follow up audits as a full
assessment on sustainability is not conducted during these audits. |
2 |
Previously we reported 28 NCs in 2012 and 2013. The 2012 and 2013 figures have been restated to include business continuity NCs which were moved from Q
(Quality) to S (Sustainability) within QLTCS as part of the new supplier profiles. |
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Supplier audits on business critical product-related suppliers1 |
|
2012 |
|
|
2013 |
|
|
2014 |
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Executed |
|
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50 |
|
|
|
38 |
|
|
|
36 |
|
Covering
sustainability2 |
|
|
20 |
|
|
|
25 |
|
|
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11 |
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Number of sustainability NCs
raised3 |
|
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15 |
|
|
|
14 |
|
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4 |
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1 |
The business critical supplier base has been reassessed in 2014. The 2012 and 2013 figures have been restated to reflect the current SAT base. |
2 |
NC follow-up audits have been excluded from audits covering sustainability and 2012-2014 figures reflect this change in definition from previous years.
|
3 |
Business continuity NCs have been included in the number of sustainability NCs raised. 2012-2014 figures reflect this change from previous years. |
Supplier Day and Recognition Award
Representatives of more than 50 suppliers from around the world gathered at our Veldhoven Campus in June 2014 for ASMLs
Supplier Day. Here they attended workshops and discussed ASMLs new organizational structure and increased focus on supplier intimacy with senior members of our organization.
To celebrate successful collaboration with our suppliers, we introduced the ASML Supplier Recognition
Award. The first two awards were presented during our Supplier Day to M+W Product and VDL. M+W Product was recognized for its consistent and outstanding performance on quality, logistics, technology, and cost (QLTC)14. VDL won the award for taking over the full responsibility of developing
and manufacturing the wafer handler, an important component of our chip-making machines, from initial design to end of life management.
Outlook 2015
We are looking forward to building even stronger relationships with our suppliers
in 2015. Besides developing new technologies and reducing the total cost of ownership together, we will start measuring our supplier intimacy. For this we will conduct an extensive survey that will focus on improving our relationship
with our SAT suppliers.
14) |
This award was based on the previous QLTC profile before the inclusion of S in the new profile. Previously sustainability was assessed more
generically within Q. |
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Responsible business behavior
ASML conducts business according to high ethical and professional standards. We nurture a company culture in which health, safety, ethical integrity, and
compliance with laws and regulations are safeguarded. We also place high value on good labor relations and fair remuneration. We contribute to the communities in which we operate and continuously strive to reduce the environmental impact of our
operations. We believe that responsible business behavior is a prerequisite for maintaining our license to operate.
Business risk and business continuity
Risk management and business continuity are vital for generating long-term, sustainable, and
profitable value for our key stakeholders as a supplier of technological solutions and equipment.
Effective risk management for ASML is based on
three lines of defense:
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Line management has initial responsibility for understanding and assessing the risks in their daily business, applying internal controls, and implementing
mitigation measures. |
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Corporate Risk and support functions monitor the activities of the first line and set the policies and procedures. |
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Internal Audit and independent external financial audit functions provide objective assurance of control and governance processes. They report directly to
the Audit Committee and Board of Management. |
ASML has a collaborative, integrated approach to identify, assess, maintain, and
provide assurance on the risk landscape so senior management can make informed decisions when responding to risks. This approach includes:
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A multi-disciplinary assessment of risk via competence areas in risk, security, ethics, compliance, continuity, corporate responsibility, and internal
audit. |
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Supporting senior management in defining the risk appetite. |
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Maintaining an up-to-date overview of the risk landscape. |
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Advising on and providing best practice solutions for responding to risks. |
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|
Providing insights into the gaps between risk appetite and actual exposure. |
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Providing assurance on the effectiveness and efficiency of mitigation measures. |
The overall risk landscape and results of the risk management process are discussed within the Corporate Risk and Sustainability Board on a quarterly basis.
ASMLs Corporate Incident Management team handles our end-to-end response to crises and major business disruptions. It sets the standards
and provides an overview of incident response and business continuity programs across ASML. Every business unit and location is required to embed business continuity into their core business practices. Business continuity is driven by the COO.
ASML performs regular impact analyses and routinely tests disaster action plans for all of our sites, facilities, and operations. We also drive
continuity with our strategic suppliers. As a global company with locations and suppliers all over the world, we must be prepared to respond to a wide range of disasters and keep our business running. Our programs are designed to provide a quick
response and ensure the safety of our personnel, safeguard our facilities, and begin the return to normal operations.
In 2014, we
handled a range of scenarios that could impact our operations, including response to natural hazards, failures in infrastructure, and pandemic response. We also completed a full update of our enterprise-wide risk landscape as the basis for
identifying and evaluating risk.
In 2015, we want to introduce and implement integrated risk and compliance self-assessments as an assurance
process across all our operations. We will measure our performance by monitoring the planned execution of internal risk assessment and audits, and by ensuring high priority action items resulting from risk assessments are resolved on time.
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Business ethics and human rights
ASML fosters a culture of integrity where people comply with the law and with ASMLs Code of Conduct and Business Principles. We promote an open and
honest culture that encourages people to speak up about irregularities and where senior management sets the right example.
We promote awareness
about the importance of ethical behavior and pro-actively identify and respond to actual and suspected breaches of our Code of Conduct and Business Principles. Our policies include respecting human rights and anti-discriminatory measures and are
laid out in our ethics program. The ethics program provides guidance on standards and procedures regarding ethical behavior, as well as training and communication to enhance awareness. The program also outlines how we monitor and measure ethical
behavior, report and investigate allegations, and take disciplinary action.
Code of Conduct
The ASML Code of Conduct describes what ASML stands for and believes in15:
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Respect for the different cultural identities of our employees, stakeholders, and customers. |
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Zero tolerance of any form of discrimination or harassment. |
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Promoting honest, ethical, and transparent conduct, including in the handling of actual or apparent conflicts of interests between personal and
professional relationships. |
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Conducting our business in good faith and with integrity. |
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Complying with all applicable laws and regulations. |
ASML Business Principles
The Code of Conduct has been translated into a set of practical
Business Principles for all employees. The Business Principles help to drive ethical and balanced behavior, control our business exposure, and safeguard ASMLs reputation. Employees must consult the Business Principles for their day-to-day
guidance. The Business Principles focus on five areas:
We have policies addressing various topics related to the Business Principles such as, but not limited to: insider
trading, gifts and entertainment, anti-bribery and corruption, anti-trust, and knowledge protection.
Code of Conduct standards
ASML strives to conduct business on the basis of fairness, good faith, and integrity, and we expect the same from our business partners. ASML
is a member of the Electronics Industry Citizenship Coalition (EICC) and we have integrated all EICC membership requirements into our way of working. We expect all our business critical suppliers to acknowledge their compliance with the EICC Code of
Conduct (see section Sustainable relationship with our suppliers).
ASML supports the principles laid down in the Organization for
Economic Cooperation and Development (OECD) Guidelines for Multinational Enterprises and those in the International Labor Organizations (ILO) Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy. We
believe that human rights, as defined by the United Nations in its Universal Declaration of Human Rights, are a common standard that all employers should uphold, and we encourage our employees to respect these rights by committing to our Code of
Conduct, Business Principles, and related policies.
15) |
The complete Code of Conduct can be found in the corporate governance section of our website, www.asml.com. |
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ASML respects the rule of law and strives to comply with all national laws, regulations, and administrative
practices of the countries in which we operate. Within that legal framework, we strive to conduct our activities in a competitive and ethical manner.
Ethics organization
ASMLs Ethics Board determines our ethics approach and supervises our
compliance with ethical requirements. It comprises senior managers, including board members. The Ethics Board meets each quarter and gives guidance on relevant issues. Our ethics program is overseen and implemented by the ethics office at our
corporate headquarters. This is led by our Ethics Officer, who is supported throughout the business by Ethics Liaisons. These are employees who help to embed the ethics program within the organization. They are also a local point of contact for
employees who have a question, remark, or concern relating to the Code of Conduct or Business Principles.
Code of Conduct complaints
We encourage our employees to discuss or report any confirmed or suspected violations of our Code of Conduct or Business Principles. ASML has
a procedure for reporting issues breaching the Code of Conduct, including complaints of a financial nature (the Whistleblower Policy). We encourage our employees to speak up and raise ethical issues without fear of retaliation. For
employees who are more comfortable remaining anonymous, there is an external Speak Up line (phone or web mail). The reporting procedure for Code of Conduct violations can be found in the corporate governance section of our website.
In our reporting administration we make a distinction between reports and formal complaints. A report is a question, remark, or concern relating to the Code
of Conduct or Business Principles. A complaint is a formal report relating to an actual or potential violation of the Code of Conduct or Business Principles and must be investigated by the Complaints Committee according to our reporting procedure.
In 2014, 132 reports were made worldwide relating to one of the five Business Principles. In 2014, the complaints committee received two
complaints. ASML is not aware of any claims of violation of anti-trust and monopoly legislation against ASML in 2014.
What we did in 2014
In 2014, we expanded our ethics governance structure to include Cymer. This means our Code of Conduct and Business Principles apply to all
Cymer employees. We also increased the number of Ethics Liaisons to 29 from 23 in 2013 to ensure every business sector is represented by a liaison.
We introduced new online refresher training on the Code of Conduct and Business Principles. The training focuses on topics that are relevant because of regulatory changes or because employees raised them in
the previous year. In 2014, the focus was on respecting people, following processes, and ethical aspects of activities employees undertake outside the workplace. A total 16,231 employees and contractors16 were invited (2013: 11,462) and 90% (2013: 93%) completed the training per
December 31, 2014. We will continue to take action to achieve 100% completion.
Employees were informed about the ethics training on our
intranet. To raise awareness about our external Speak Up line we provided additional information on this anonymous reporting channel to employees. We trained the majority of our middle management in Asia and at three locations in the U.S.
We reviewed our human rights approach to assess which elements of the UN Declaration of Human Rights, the ILO guidelines, United Nations Guiding
Principles on Business and Human Rights (Ruggie principles), and other international guidelines apply to ASML. We determined that the most relevant were: diversity and nondiscrimination, child and forced labor, freedom of association and collective
bargaining. Following this assessment, we published a human rights policy on our intranet.
Outlook 2015
We aim to implement an updated human rights policy in 2015. We will offer a mandatory online refresher training, focusing on ethical topics deemed most
relevant by the Ethics Board. We will continue training middle managers in all our entities worldwide. In addition, we will further deepen the ethics training for senior management. We also plan to review the Code of Conduct and Business Principles
to assess whether the current versions, from 2011, need updating.
16) |
This includes all payroll employees, temporary employees (employed longer than one month) and contractors (employed longer than three months, working on ASML premises and
having an ASML IT account). |
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Tax strategy and transparency
Tax principles
ASML operates under a Code of
Conduct. ASMLs Code of Conduct is published on our website under Code of Conduct in the Governance section (also see section Business ethics and human rights). The tax principles under which ASML operates are derived from
ASMLs Code of Conduct. This code and the related tax principles guide ASMLs dealings with all different type of taxes which it is obliged to report and pay in the jurisdiction in which it operates, including taxes on profits, trade
taxes, and taxes paid on employee income.
The rule and spirit of the tax laws
ASML will report and pay taxes in the jurisdiction in which it operates in accordance with all relevant tax laws and regulations. ASML will comply with such laws and regulations as well as with the spirit of
those laws and regulations.
Profit allocation
ASMLs worldwide profits are allocated to the various jurisdictions in which ASML operates based on the value created by ASMLs business in those jurisdictions. ASMLs allocation method for
its worldwide profits is based on internationally accepted standards of profit allocation as published by the Organization for Economic Cooperation and Development (OECD) and relevant rules and regulations in the jurisdictions in which ASML
operates.
Timely and complete compliance
ASML aims to file all the required tax-relevant filings with the appropriate tax authorities in a timely and complete manner. To assure timeliness and completeness, tax filings will be monitored through
ASMLs corporate control framework and comprehensive tax control frameworks. The control frameworks are regularly reviewed and tested. Furthermore, ASML aims for timely payment of its taxes due to the tax authorities.
Transparency
ASML strives for open and
constructive dialogue with tax authorities on the basis of disclosure of all relevant facts and circumstances. ASML aims to be clear about all aspects pertaining to its tax position and share these in a transparent manner with tax authorities to
achieve upfront certainty on tax matters.
Tax governance embedded in company management
To safeguard adherence to these tax principles, ASML maintains a well-educated and adequate staff of tax professionals who are in constant dialogue with
ASMLs business and ASMLs senior management. ASMLs senior management is engaged and involved in ASML tax matters.
Labor relations and fair remuneration
Labor relations
ASML wants to be recognized as a top employer in the industry, offering people ample opportunities to develop their talents and a working environment in which they feel included, engaged, and can perform to
the best of their capabilities. We therefore promote sound labor relations and fair remuneration.
Promoting good labor relations
Freedom of association and the right to collective bargaining are self-evident, fundamental rights. As such, ASML is committed to creating
the conditions that allow employees and their organizations to negotiate fair wages and working conditions. We want to provide fair labor conditions and social protection for all our employees. That includes those employees on a fixed contract and
temporary workers. One way of ensuring this is to negotiate with and consult labor unions and our Works Council. A collective bargaining agreement applies for the majority of our payroll employees in Europe, representing around 50% of our total
worldwide payroll workforce.
At ASML, the principle of free choice of employment is sacrosanct. It applies to every
employee in every country we operate in. We adhere to the EICC Code of Conduct and support the principles laid down in the ILO Convention. In the Netherlands, we are a member of FME, the Dutch technology industrys employers organization,
which negotiates collective bargaining agreements. In 2014, ASML continued to be a member of AWVN17, a general Dutch employers organization that exchanges information on labor relations and labor market trends with its members.
17) |
AWVN is the largest employers organization in the Netherlands, and is operational in the entire field of employership, employment conditions, and employment
relationships. |
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We have a flexible labor model with a mix of fixed and flexible contracted labor throughout all departments and
facilities in Veldhoven, the Netherlands. This reinforces our ability to adapt to semiconductor market cycles, including support for potential 24-hour, seven-days-a-week production activities. In the Netherlands, we distinguish three categories of
flex workers who are not on ASMLs payroll:
|
|
Workers who are on the payroll of private employment agencies (who are covered by a collective bargaining agreement for private employment agencies).
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|
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Workers who are on the payroll of external companies or agencies and seconded to ASML. |
Maximizing the flexibility of our technically-skilled workforce means we can shorten lead-times, adding value for customers. Flexibility also reduces our
working capital requirements. ASML has standards regarding the maximum number of working hours per day or week. We pay ongoing attention to balancing the flexibility requirements with all of our stakeholders and are always open to discuss concerns
related to our flex model. Labor relations are managed by the Bestuurdersoffice (labor relations office) reporting to the senior vice president Human Resources and Organization (HR&O).
What we did in 2014
In 2014, we made good
progress towards expanding our flex model to more employees in our Operations department, while safeguarding the regulation and remuneration relating to their overall working hours. We also finalized a global project to adjust our management
structure, with the support of our Dutch Works Council.
Outlook 2015
As ASML grows, our company becomes increasingly international. From 2015 onwards, we want to collect information on labor relations in different countries where we operate, to get a better insight into
national standards and requirements.
30 for change: Encouraging Mexican students to stay in school
The Education Advancement in Tarahumara project is aimed at improving education amongst 50 young people from indigenous
communities in Sierra Tarahumara, a region of Mexico where few students complete primary school. The project addresses the problem of school desertion, ensuring that middle school, high school, and university students are fully enrolled in school in
order to improve their results. Students will also receive leadership skills training, helping boost their self-esteem and improve their chance of success in both school and employment.
Mexican students supported by The Education Advancement
project in Tarahumara.
Fair remuneration
ASML wants to build long-term, sustainable relationships with its employees. One way to achieve this is to pay fair and balanced salaries and benefits. We base our remuneration policy on the philosophy that
we ask more from our employees than the average company and that we also pay them above average. We believe people should not join ASML just for money, nor should they leave for money. We think employees are key to the success of our company and
they deserve to share in this success.
Remuneration is based on an individual employees contribution to the company, their personal
growth, and on local market circumstances. The objective of fair remuneration is to build and maintain a work environment in which employees can develop, grow into new roles, and make a good living. We let managers take charge of rewarding people.
Remuneration is based on objective criteria and is unrelated to gender, nationality, religion, social position, age, or any other such consideration. We want to maintain a fair balance between company remuneration costs and our goal to provide a
good return to employees.
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The Board of Management is responsible for determining the approach to employee remuneration, which is executed
by all ASMLs managers with support from HR&O. HR&O also develops the relevant policies, guidelines, and processes. Performance indicators are derived from ASMLs KPIs on business goals.
What we did in 2014
In
2014, we updated our remuneration policy for employees18, to
further align remuneration to both ASMLs management remuneration framework and the market. The policy outlines the principles we use to determine salaries and benefits worldwide. Employee remuneration consists of a base salary, variable
payment based on performance, and benefits such as pension and insurance.
Outlook 2015
We will develop projects to further improve and implement our remuneration policy in the coming years. In 2015, the updated remuneration policy will be
finalized and transferred into the design of our remuneration tools. We will apply this adjusted policy in the U.S. and Asia from January 1, 2016. In Europe, it will be phased in gradually, mainly connected to collective labor agreements in the
Netherlands in the coming years. We will further adjust our pay mix model for managers, to further align it with international practices.
We
will make a long-term action plan in 2015 containing steps to ensure we realize our ambition, working with the following performance indicators:
|
|
ASMLs pay positioning compared to the local technology markets. |
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|
ASMLs pay positioning compared to our peers, which means we aim to pay better than our main competitors. |
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|
Remuneration satisfaction scores as measured in our me@ASML employee survey, where we aim to be above the benchmark. |
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Employee remuneration costs as a percentage of total company costs. |
Community involvement
To secure ASMLs future success, we
need to forge good relationships with the communities in which we operate. We believe that being a responsible and engaged member of the community is a prerequisite for maintaining our license to operate. By fostering close community ties we can
contribute to social initiatives and raise awareness about our business, industry, and interests.
Our community relations program falls under
the remit of our CEO and is coordinated by our Communications department. A community involvement office provides a central framework for setting targets, selecting projects, and defining priorities. Within this framework, individual sites choose
their own community involvement activities, which are overseen by local coordinators. In 2014, we had three community objectives:
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To help ensure sufficient technical talent is available to the industry, which is key for future growth. Therefore we actively support the target 4
out of 10 set for the Topsector High Tech Systems and Materials (HTSM) /Techniekpact, adopted from Platform Beta Techniek. This means that by 2015, four out of ten graduates should have a degree from a beta / technical study.
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As diversity and multiculturalism are part of ASML, we need to support the integration and wellbeing of over 85 nationalities working within ASML. We
support charities and community events and actively build relationships in order to be a visible and trustworthy member of the local society. |
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|
To represent ASML and community interests towards local and national governments. We focus on the following topics: technical talent attraction and
retention, immigration facilities, labor relations, and R&D activities in the manufacturing supply chain. |
Technical
talent
It is crucial that our business has access to the largest possible pool of technical talent, both globally and locally, allowing us to
recruit the high-tech professionals we need. It is also in our interest that our suppliers can recruit the technological talent they need. ASML supports initiatives that encourage youngsters to become interested in technology, enlarging the local
and regional talent pool and offering career and development opportunities that are well paid and fulfilling.
In 2014, ASML volunteers dedicated
their time to giving guest lectures, or other activities, promoting technology at Dutch primary and high schools or at our campus. We hosted additional primary and secondary school pupils and students through various other events. In the Netherlands
these included:
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Sponsoring Dutch Technology Week, an annual event in the Eindhoven region. |
18) |
For our Board of Management remuneration policy, see the Governance section on asml.com. |
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ASML supported the First Lego League, a technology contest for 9-to 15-year-olds organized by the Dutch Technology Promotion Foundation (Stichting
Techniekpromotie). |
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We continued to partner with two secondary schools near our Veldhoven headquarters to develop technology education programs. |
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|
We again participated in the Jet-Net (Youth and Technology Network Netherlands) initiative, a partnership between businesses, schools, and government to
promote technology. In addition to this we support the Ontdekfabriek, a technology experience center for children from the ages of 6 to 12 years. |
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ASML joined the Tech United Robotics school tour, visiting 12 secondary schools to promote interest in high tech. |
In the U.S., ASML hosted ASML4Kids sessions at ASML locations and schools around the country. One event specifically focused on girls. This event was called
GEMS (Girls Excelling in Math and Science). Volunteer hours were spent teaching children about technology topics such as hovercraft, air pollution, and cleanrooms.
ASML and the community
We are closely connected to the world around us. We cannot operate
without a license to operate from the communities where were active. ASML colleagues connect with local communities to share their time, talent, and energy. They undertake volunteering activities, individually or with their
colleagues. And our company shows its commitment through sponsoring and partnerships in local communities on the topics that are most important to us, such as technology education.
In order to get to know our immediate neighbors in Veldhoven better, we organized two neighbor events in September 2014. Some 1,100 households near our head office received an invitation to attend a guided
tour of our premises. More than 300 neighbors attended the tours. Several local media reported on the events. We gathered valuable feedback through an on-line survey which showed that our neighbors highly appreciated the opportunity to visit us. We
also collected information on what topics our neighbors would like to be informed of. We hope this will mark the first of many such neighbor events in the future.
Within ASML, charity and community support takes place in three ways: through the ASML Foundation, corporate sponsoring, and fundraising. ASML Foundation supports education projects across the world to
improve economic and social self-reliance for targeted groups, primarily children. To celebrate ASMLs 30th anniversary we launched the 30 for Change project, which supports 29 education projects worldwide (see section ASML
Foundation below and throughout this report). Our corporate sponsoring activities concentrate mainly on sponsoring activities in our local communities.
30 for change: Sparking engineering imaginations in the Netherlands
The Prototyping Dream Machines project is aimed at children who are interested in science, technology,
engineering, or mathematics. It involves 40 elementary school children from low-income families in Amsterdam and The Hague through three semesters, who are guided by ASML staff during the development and construction of their own dream
machines, from idea to prototype. Students are encouraged to come up with ideas for a problem or issue they would like to solve via the machine. The project aims to encourage children from working class backgrounds to consider a future career
in science and technology.
Through our corporate sponsoring program, ASML committed a total amount of approximately 434,000 euros to
various institutions mainly in the Eindhoven region (2013: 487,000 euros). ASML donates to institutions operating in four different areas: community / charity, sports, education, and culture. Examples include:
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Cultural events and organizations such as the Muziekgebouw concert hall in Eindhoven, and Glow, a platform for artists, designers, and architects working
with light. |
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The Eindhoven marathon. |
ASML
supports employees who organize or participate in fundraising events involving physical activities such as running or cycling. The maximum contribution is set at 1,000 euros per participant per event. In 2014, a total of 40,000 euros (2013: 30,000
euros) was committed to causes that our employees support worldwide and that match the objectives of our community involvement program.
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ASML Foundation and 30 For Change
In 2001, ASML Foundation was founded as a legal entity (stichting) under Dutch law. Although closely linked to
our company, it operates independently. ASML Foundations main focus is to improve the economic and social self-reliance of targeted groups, mainly children and especially girls, by supporting educational projects around the world. Through our
community involvement, ASML aims to achieve long-term results. ASML Foundation is our charity of choice.
In
2014, ASML contributed 300,000 euros to the Foundation. ASML has committed to donate 300,000 euros per year for a period of five years, from 2010-2014, enabling ASML Foundation to maintain an adequate fund level. We also supported ASML Foundation in
kind by, for example, employing its director and assistant. And in addition, two ASML employees sit on ASML Foundations Supervisory Board. ASML will continue to support ASML Foundation in this manner.
ASML Foundation aims to donate around 700,000 euros annually. In 2014, ASML Foundation agreed to support a total of 42
educational projects in various countries worldwide, including the United States, the Netherlands, Taiwan, China, Japan, France, Germany, South Korea, India, and a few countries in Africa. Out of this total, 29 projects were part of 30 For
Change.
The 30 For Change initiative was announced on ASMLs 30th birthday on April 1, 2014. The anniversary brought ASML, its
employees and ASML Foundation together and marked ASMLs responsibility for the local communities in which it operates. From April until the end of May, employees around the world could submit charity projects requesting financial support for
an education-related purpose. Over 100 projects were submitted, of which 29 projects ultimately were selected to receive donations from ASML Foundation. In total, approximately 500,000 euros has been committed to these projects.
Most projects relate to enabling targeted groups to attend school, who would otherwise have no access to education. In that
respect, ASML Foundation especially focuses on vocational training projects for youth and young adults. The Foundation closely monitors the projects it supports. All project supervisors must provide regular updates as well as final evaluation
reports on the results realized.
Projects supported by ASML Foundation should preferably be
ASML-related, i.e. either supported by an ASML employee, or executed in an ASML country.
Additional
and up-to-date information about ASML Foundation can be found at:
www.asmlfoundation.org
Representing ASML and community interests to (local and national) governments
In addition to our educational initiatives we entered into dialogue with external stakeholders such as national and local Dutch politicians. Legislation,
public debates, and changes in our society will affect ASML and we need to be aware and be involved. We met Ministers and Members of Parliament as well as members of local city councils. We discussed the need to promote technology education,
explained why its important for ASML to have a flexible workforce - it enables us to respond to fluctuations in our industrys business cycle - and explained our mission to have a strong regional supply chain that not only manufactures
but also invests in R&D. ASML wants to continue to be actively involved in these ongoing discussions.
We commissioned a survey into the
impact of a new student loan system in the Netherlands. It showed the system may discourage students from pursuing a masters degree after completing their bachelor study, potentially leading to a greater shortage of technical talent for ASML and our
suppliers in the Netherlands. The survey helped put the issue on the public agenda in the Netherlands. However the new loan system will still be implemented in 2015. We have initiated 50 scholarships to help alleviate the impact with 25 scholarships
awarded in 2014 and another 25 scholarships planned for 2015.
Outlook 2015
We want to maintain our current activities and continue to improve our impact. In addition, we currently measure our performance regarding community involvement by analyzing the impact of individual
technology promotion projects and the total cash we contribute through sponsorship and charity.
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Conflict minerals
As of 2012, the Dodd-Frank Act in the U.S. (Section 1502) requires companies to publicly disclose their use of conflict minerals originating from the Democratic Republic of the Congo (DRC) or an adjoining
country. These include minerals mined under conditions of armed conflict and human rights abuses. Minerals identified as potentially originating from these regions (so called 3TG minerals) are gold, cassiterite, wolframite, and coltan. Derivatives
of these minerals, including tin, tantalum and tungsten, are also subject to the disclosure requirements.
Some of our machines contain 3TG
minerals; our TWINSCAN systems, for instance, contain gold and tin. All minerals included in our systems are in prefabricated components produced by our suppliers. ASML does not directly buy these minerals as raw materials. As a result, we are only
able to determine whether the 3TG included in our systems are derived from DRC or one of its neighboring countries through information provided to us by our suppliers.
In line with our conflict minerals policy, we inform our suppliers about our expectations regarding the use of conflict minerals. We perform due diligence by conducting surveys among suppliers based on a
template developed by industry organizations EICC and GeSI.19
We also trained our procurement staff on conflict minerals. In assessing the presence of conflict minerals, we use resources provided by the
Conflict-Free Sourcing Initiative (CFSI), including its Conflict-Free Smelter Program (CFSP), which uses a third party audit to identify smelters and refiners that only use conflict-free minerals.
As required, we have filed our first conflict minerals report with the SEC as of May 31, 2014. The ASML statement concerning conflict minerals is
available on our website.
Outlook 2015
To ensure compliance with the Dodd-Frank Act, ASML will continue to report annually on use of conflict minerals in compliance with the Dodd-Frank Act. To further improve our due diligence and the
transparency of our mineral supply chain, we anticipate taking the following steps over the next few years:
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Extend the scope of our due diligence to include more suppliers. |
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Increase the response rate and quality of suppliers smelter surveys. |
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Encourage increased certification of smelters through our continued support of the EICC and the CFSI. |
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Compare information we gather through our reasonable country of origin enquiry (RCOI) with information collected through the conflict-free
smelter validation programs, such as the CFSP. |
Product safety and compliance
The safety of our products and their compliance with legislation are non-negotiable and essential for maintaining our good relationship with our customers
and other stakeholders. Thats why we build product safety and compliance into our systems and processes from the earliest design stage through to manufacturing and field services.
Safety issues are treated with the highest priority. ASMLs Product Safety team, reporting to the Board of Management, tracks all safety issues related to our machines. These are defined as
product-related near misses, incidents that cause material or environmental damage and accidents causing injury. Product-related safety issues (whether at ASML, supplier, or customer sites) are analyzed to determine the root cause. This analysis is
used to determine the required engineering changes in ASML products at the appropriate sites by means of safety field change orders. These implementations are given highest priority by ASMLs customer services organization (in close agreement
with our customers). Where equipment hazards cannot be fully offset by design, we incorporate safeguards into the machine to ensure a system failure or operator error cannot endanger the operator, service engineer, facility, or environment.
Ambition
Our ultimate aim is for
zero safety incidents and lost time accidents (LTA). Compliance with laws and regulations is self- evident. We regularly update the standards and regulations we comply with and how we manage compliance. In the coming years, we will embed product
safety and compliance in a transparent way in all relevant departments: System Engineering, Development and Engineering, Research, Manufacturing, Customer Support, and Suppliers.
What we did in 2014
Based on our research into customer requirements and international
standards, including the standards of industry organization SEMI, we updated the list of safety requirements for our products. ASMLs Product Safety team, which manages product safety initiatives, started using an external monitoring program to
track changes in regulations. This program maintains a database of global regulations, which is updated daily and provides compliance software.
19) |
Global e-Sustainability Initiative (GeSI) is a leading source of impartial information, resources, and best practices for achieving integrated social and environmental
sustainability through ICT (www.GEsi.org). |
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The number of product safety issues has been very low over the past years. In 2014, 14 product-related safety
issues were reported at client sites (2013: 8). One of these led to a LTA due to a broken finger in a fan unit. Most product safety issues were related to the EUV machine. An example is the melting of EUV mirrors containing Thorium. When applicable,
these incidents have been reported to all relevant authorities. No environmental damage has been detected. For more information about these incidents and applied measures see section: Environment, health and safety.
In analyzing the cause of the incidents, we looked at the design of our systems, our way of working, and other quality issues. Follow-up actions depend on
the cause and vary from replacing or redesigning a part to changing our way of working.
The Product Safety team did not receive any reports on
fines or warnings for non-compliance regarding product safety. To verify the safety and compliance of our products, external assessors perform safety reviews of all ASML products using SEMI S2 safety guidelines for semiconductor manufacturing
equipment. In 2014, a new SEMI S2 safety assessment was done on the Yieldstar S250 / T250 systems and we started to update the SEMI S2 reports on the NXE system to include NXE:3350. This last assessment was still in progress at the end of 2014.
In addition to legal requirements, ASML also has to balance industry standards and customer requests. ASML discusses these requirements with
customers and, if feasible, takes them into account when designing and manufacturing our machines.
Restricting the use of hazardous
substances
The RoHS directive and the REACH directive, both issued by the European Union, set out the most important legislation for the
semiconductor industry on hazardous substances (RoHS) and on substances of very high concern (REACH). ASML is committed to complying with both directives even though the products we manufacture are currently excluded from the RoHS directive.
Over the past years we have taken steps to reduce the use of hazardous substances in our products. Our dedicated RoHS-REACH project team has
been identifying any hazardous substances and substances of very high concern in our products since 2011. In 2014, we expanded the scope of these efforts to our acquired company Cymer. As their product parts were not yet subject to RoHS and REACH
legislation this will impact our previous commitment to be fully compliant by the end of 2015.
To the best of our knowledge, our systems and
service parts do not contain any substances of very high concern above the legal threshold. ASML continuously assesses its systems on RoHS noncompliant parts and aims to replace noncompliant parts with RoHS compliant alternatives by the end of 2015.
In addition, we will develop a plan to identify and determine follow up for noncompliant parts found as a result of the Cymer acquisition.
Outlook 2015
To enhance efficiency and ensure
no safety risks escape ASMLs attention, we will more closely align product safety management with people and asset safety management. We will assess whether we need training for employees on product safety and compliance.
We will measure the percentage of product-related safety field change orders implemented and use this score as a performance indicator for our product
safety management. A field change order is a written instruction to make minor adjustments to our products, tools, or procedures.
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Environment, health and safety
ASML believes it has a moral and legal obligation to provide safe and healthy working conditions for all of its employees, contractors, and visitors while
ensuring a minimum impact on the environment. Responsible care is carried out by our dedicated work force that contributes to a safe working environment by fostering safe working attitudes and by operating in an environmentally responsible manner.
Our stakeholders expect us to apply high professional standards and continuously improve our environment, health, and safety (EHS) performance. Compliance with applicable legislation and regulations is non-negotiable and self-evident.
Due to the fast pace of innovation, the complexity of our lithography systems and the fact that our lithography systems are not mass produced, our EHS
approach centers on enhancing situational awareness in our operations, as well as compliance. This means we encourage our employees to be alert to their surroundings, ask questions, and identify hazards before and while performing work activities.
Our employees are guided in this by our global EHS roadmap. Initiatives on asset safety (this concerns the safety of our premises), our energy and water master plan, green building, and risk benchmarking are guided by our corporate risk
initiatives and included in the Asset Management roadmap.
ASML continuously provides safer working conditions and strives to reduce the number
of LTAs (lost time accidents). To do this in a structured and proactive way we want to incorporate the fundamentals of OHSAS 18001 (international standard for occupational health and safety management systems requirements) in our certified ISO 14001
environmental management system to form a combined EHS management system in the next few years. Our manufacturing location Linkou has already been certified according to OHSAS 18001.
Organization
Environment, health, and safety management is addressed at various levels and areas
of expertise in our organization. Responsibility for EHS starts at the top of ASML represented by our COO within the Board of Management. Our corporate EHS Manager aligns EHS policies, strategy, and best practices worldwide and ensures knowledge is
shared across the EHS organization.
Our local EHS organizations ensure EHS policies are embedded and that compliance with local legislation and
requirements is observed. We also assigned EHS responsibilities to line management and area management at our manufacturing locations, development facilities, and customer support locations.
To further globalize our EHS strategy, we started to set up a Global EHS Competence Center in 2014. The Center is tasked with assessing our EHS requirements worldwide and works as an EHS knowledge institute
to help embed ASML EHS standards, processes, and procedures locally.
In 2014, we introduced a new safety governance model, based on close
cooperation between the departments responsible for people safety, product safety, and asset safety to ensure alignment between these three domains.
Training and communication
It is ASMLs policy to train all our employees and contractors
on environmental, health, and safety-related issues through our electronic learning portal. To help raise general awareness, we introduced the EHS Guide at our Veldhoven manufacturing location, which contains information about actions to take in the
event of an emergency, our EHS guiding principles, our critical safety procedures, and dos and donts regarding EHS issues.
In 2015, we
will strengthen and further globalize our EHS management, expanding our Global EHS Competence Center geographically and the competences it covers. We will continue to align people safety management with asset safety and product safety management, to
ensure all safety hazards are identified and managed.
Environmental efficiency own operations
As a responsible corporate citizen, we invest time and resources to ensure our operations meet stringent environmental standards. Our employees, contractors,
customers, and other stakeholders expect us to use the resources we require for our products and operations responsibly, safely, and as efficiently as possible. We take steps to:
1. |
Use energy efficiently and lower our carbon footprint. |
2. |
Use water efficiently. |
3. |
Reduce, recover, and recycle company waste. |
4. |
Deal responsibly with other environmental issues. |
Our strategy to improve environmental efficiency is based on finding a balance between the results we can achieve from specific measures and the costs
involved, while at the same time securing the supply of energy, water, and other resources. We seek to recoup efficiency investments in three years. Our baseline for environmental reporting is the environmental performance as reported over 2010 for
water and energy, and over 2012 for waste.
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What we did in 2014
In 2014, we started to expand the scope of our environmental efficiency management to include the operations of Cymer and started to collect and report data on electricity, gas, water usage, and waste
disposal for this manufacturing location. We will be able to fully report on our achievements for our manufacturing sites, including Cymer, in 2015.
We introduced an approach to manage environmental aspects of our buildings and installations following the principles, terminology, and management system of ISO 55000 (International Standard for Asset
Management).
We conducted a project to assess the risk of failure of our buildings, installations, and systems, including the risk of
interruptions to the supply of energy, water, and other resources necessary to continue operating. We updated our internal benchmark for environmental performance. We will use the results of this risk assessment and benchmark when making decisions
on future investments and on the strategy to enhance our environmental performance.
1. Use energy efficiently and lower our carbon
footprint
Although ASMLs total energy consumption is higher, compared to previous years, due to the growth of
our business, we seek to reduce our CO2 emissions in several ways
(as reflected in the graphic below):
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Buying renewable energy certificates. |
Our target is to reduce ASMLs CO2 footprint by 50% in 2015 compared to the 2010 level. This means lowering our
CO2 emissions from 88.7 kilotons in 2010, to 44.3 kilotons by
year-end 2015. By achieving a net CO2 emissions level of 40.2
kilotons in 2014, we met our target to have net 46 kilotons CO2
emissions by end 2014. We expect to meet our target of net 44.3 kilotons CO2 emissions by the end of 2015.
More details about our CO2 emissions can be found in the appendix.
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We measure our energy savings compared to the energy we estimate we would have used without these efficiency
efforts. Over the period 2010-2014 we invested a total of 2.7 million euros in energy efficiency, leading to an operational cost reduction of 1.3 million euros for 2014. We have run 35 energy-saving projects since 2010 in three of our
manufacturing sites (excluding San Diego), including 10 in 2014 (projects implemented and delivering savings).
The graphics
below show our progress between 2011 and 2014 in energy and CO2.
More details about energy footprint and savings can be found in the appendix.
More details about CO2 footprint and reduction can be found in the appendix.
Our key achievements in achieving our energy savings through improved installations are listed below:
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Replacing an old co-generation heat-power system in Veldhoven with a new rotating uninterrupted power supply unit (saving 38.3 TJ).
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Improving the efficiency of ventilation systems (with reconditioned air and heat recovery) at our manufacturing site in Veldhoven (saving 13.1 TJ).
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Improving the automated process control system in Wilton (saving 2.8 TJ). |
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Savings in IT-related energy consumption (saving 0.47 TJ). |
Furthermore we saved energy via improved production processes (18.2 TJ). By producing our machines faster (cycle time reduction) we increased the number of machines we produce per factory,
reducing the energy use per unit.
ASML additionally compensates for indirect CO2 emissions (69.2 kilotons) at our Veldhoven manufacturing location through
renewable energy certificates (Guarantees of origin).
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Outlook 2015
We will continue our efforts to improve the efficiency of technical installations. We plan to further increase the amount of CO2 certificates we purchase that ensure we are investing in new renewable energy sources. In 2015 we will review our ambition
and strategy to 2020.
We also will introduce a new KPI measuring the percentage of renewable energy in our energy mix.
We will continue to expand the use of ISO 55000 principles across all our operations, seeking conformity with these standards.
Our aim is to embed risk benchmarking / landscaping on reliability, safety, and performance of technical installations in our processes to aid decision
making.
2. Use water efficiently
Most of the water we use is regular tap water supplied by local utility companies - some salt water is only used at our manufacturing site in Linkou. We use water in three ways: to cool lithographic systems,
clean rooms, and offices; for processing our lithographic immersion systems; and for domestic use in bathrooms, cafeteria, kitchens, etc. The total water usage at three of our manufacturing sites rose to 713,300 m3 in 2014. Despite our relatively low water consumption, ASML strives to
continuously reduce this amount, ensuring responsible and sustainable manufacturing.
ASML has a water master plan outlining our objectives and
plans to reduce the amount of water used at our manufacturing sites for the 2011 -2015 period. Our water master plan includes the following goals:
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Realize water saving projects by 2015 that represents 15% (102,900 m3) of our 2010 water use. |
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Improve the way we measure our water intake, our three principal water streams (cooling, process water, and domestic), and our water discharge.
|
We achieved our 2014 target of 13% water efficiency savings.
3. Reduce, recover, and recycle company waste
We work to manage and prevent waste by
addressing three aspects:
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Gross waste reduction (waste efficiency savings through waste-saving projects). The 2014 target was a reduction of our total waste tonnage by 3% compared
to 2012. |
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Improving waste recycling (amount of waste recycled from total waste disposed). Our 2014 target was to recycle more than 85% of our total waste.
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Zero emissions (amount of waste towards landfill of total waste disposed). Related to our zero emission goal, we set a 2014 target for less than 5% of
total waste disposed to landfills. |
In 2014, we generated 3,325 and 426 metric tons of nonhazardous and hazardous waste respectively. Overall, waste
increased by 23%, due to expansion of our business and reconstruction work at several manufacturing sites (including soil disposal (other nonhazardous waste) at our Wilton manufacturing site). The waste ASML generates on-site is
collected, transported, and disposed by acknowledged waste contractors.
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We achieved all of our waste targets except for the gross waste reduction target. We managed to achieve a gross
waste reduction of 2.4%, compared to the 2012 total waste disposal (instead of the 3% as targeted). Major waste reduction and waste saving initiatives in 2014 were:
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Double printing by introducing a new printing system the amount of paper used was reduced, leading to an estimated waste reduction of about 15 tons
in 2014. |
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Reuse of wood pallets the improved reuse of wooden pallets has led to an estimated waste reduction of 30 tons in 2014.
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Reuse of sulfuric acid the continuous reuse of sulfuric acid led to a waste reduction of 8 tons in 2014. |
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Launching a global laptop replacement program, where old laptops are upgraded for external re-use. |
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In September 2014, our Wilton manufacturing site began testing a pilot waste water treatment system for our lead / arsenic-contaminated optical
manufacturing waste water. Initial results are very positive and further results will be reported over 2015. |
We evaluated our
waste targets in 2014 and will focus our efforts on just one key performance indicator in 2015 - gross waste reduction. We aim to reduce gross waste by 5% in 2015 compared to the total gross waste production in 2012.
Of total hazardous waste disposed worldwide, 95% consists of hazardous liquids (e.g sulphuric acid and grinding sludges). The use of hazardous liquids
increased at our Veldhoven manufacturing location due to increased production. For example we used more sulfuric acid (due to increased number of wafers being processed and cleaned). In Veldhoven, the amount of hazardous waste liquids disposed rose
by 23%. Control measures will be introduced in 2015 to improve hazardous liquids waste management.
4. Deal responsibly with other
environmental issues
Managing and reducing hazardous substances
ASML seeks to reduce the use of hazardous substances in our production processes and in our machines. To build our lithography systems, we mainly use nonhazardous materials, such as metals, glass, and modest
amounts of plastics and wiring. We test machines by processing wafers, using various hazardous substances for coating and developing them. Our lithography systems use extra clean dry air and inert gases such as nitrogen, xenon, neon, and helium for
rinsing and conditioning, and hydrogen for cleaning.
We manage the introduction of all new hazardous substances through our hazardous substance
management (HSM) process. The aim of the HSM process is to ensure safe use of hazardous substances, comply with all relevant legislation, and provide up-to-date information to our employees.
In 2014, we restructured our worldwide hazardous substance documentation, concentrating all applicable information in sets of safety data sheets written in local languages and available on a
web-based platform. Before making these documents available to our employees, we updated the information with the help of our suppliers.
Environmental incidents
In 2014, six
environmental incidents were reported at our manufacturing locations in Veldhoven and Wilton. These incidents were reported to all relevant authorities. No environmental damage was detected and no fines were imposed. Investigations took place to
identify the root causes of the incidents and corrective and preventive measures were defined. No grievances about environmental impacts were filed through formal grievance mechanisms in 2014. The environmental incidents that occurred are as
follows:
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At our Veldhoven manufacturing location, where we manufacture our EUV machines, incidents occurred with EUV mirrors which accidentally melted. These
mirrors have a coating that contains thorium, a radioactive chemical element. |
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A supplier spilled glue from a delivery truck at our gas storage location in Veldhoven. |
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At our Veldhoven manufacturing location a leaking connection occurred within our hydrogen installation, resulting in a leakage of gaseous hydrogen.
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At our Veldhoven location glycol was accidentally discharged into our sewer system during maintenance operations at our cooling towers.
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One very small spill of automotive coolant from a vendors vehicle was reported at our Wilton manufacturing location (less than one liter of coolant
agent was leaked onto asphalt pavement). |
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A small spill of diesel fuel occurred on the pavement near the cogeneration plant at our Wilton manufacturing location during refill of the power washer
engine. |
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At ASML Wilton we discovered in 2014 two underground storage tanks during a ground-penetrating radar survey.
These tanks were unknown to ASML and are believed to be operated by site owners in the 1940-50s. The tanks leaked gasoline and were removed from ASML premises in 2014.
Recertification ISO 14001
In 2014, we renewed our ISO 14001 certification (aligned with our ISO
9001 certification) for a period of three years beginning December 1, 2014. We brought our Motion location within the scope of these two ISO standards.
We carry out centrally coordinated internal audits on our environmental management system and take corrective actions where necessary. Based on these, and following a recent management review, our worldwide
environmental management system complies with the basic requirements of ISO 14001.
We improved our audit review process by integrating the
results of all audits into one summary, giving us an overview of all potential nonconformities. This enables us to take more efficient action in response to nonconformities. We aggregate results of external audits, internal audits, EHS
certification audits, government audits, and client audits.
Environmental permits
A major achievement in 2014 was the renewal of our environmental permit for the Veldhoven manufacturing site. The permit provides us a framework for
sustainable growth, an important step as it directly affects our business continuity.
As a follow-up action after the thorium incident (see
above), we assessed whether there are other parts in our machines or equipment containing thorium. Because several other parts were found to contain the radioactive substance, we obtained a nuclear energy permit from the Dutch government
for our Netherlands operations. This means the authorities confirmed that our procedures to work with these materials meet the required safety standards.
Employee health and safety
Employee health and safety in 2014
A key objective of our EHS roadmap is to reduce the number of LTAs at our locations and activities worldwide, creating a safer ASML with no incidents.
Our LTA rate dropped from 0.18 in 2013 to 0.10 in 2014, with a total of 12 LTAs (see table). We attribute the downward
trend to our process of dealing with incidents and accidents, which includes evaluating every incident and accident, analyzing the root causes, and taking action to resolve any equipment or process shortcomings to prevent similar incidents and
accidents from happening again. Furthermore, several major safety improvement projects have started which significantly improved safety awareness in our facilities.
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Asia |
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Europe |
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U.S. |
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Total |
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Injuries per region |
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17 |
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99 |
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30 |
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146 |
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LTAs per region |
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1 |
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6 |
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5 |
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12 |
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Our quarterly global EHS meetings, chaired by our COO, address awareness and ways to prevent accidents. They also
evaluate LTAs and define the preventive and corrective actions that need to be taken based on these evaluations.
A
worldwide online incident reporting tool is available to all employees20. All incidents, including safety incidents, near-misses, damage to property, and environmental incidents, are reported via this tool. Incidents involving injury leading to absence have to be reported to the
COO within 24 hours and an analysis identifying the root causes must be completed within two weeks. For all major incidents (LTAs and environmental incidents) we carry out a root cause analysis. Additionally we register our occupational disease
rate.
30 for change: Equipping girls with skills for the future
The Girls Education Program aims to provide girls in San Francisco, U.S., with the expertise and skills to further their
studies or become employed after graduating from secondary school. This year, the project aims to provide close to 60 young women with support, in the form of academic counselling, mentoring, and life skills training.
The Girls Education Program in San Fransico.
20) |
ASML incident and accident reporting is done with the help of a live incident reporting database. |
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Appendix
Other indicators
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KPIs 2011-2014 |
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2011 |
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2012 |
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2013 |
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2014 |
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Environmental operations |
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|
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Fuels purchased [TJ] |
|
359 |
|
443 |
|
445 |
|
|
334 |
|
Electricity purchased [TJ] |
|
552 |
|
555 |
|
592 |
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|
682 |
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Water use (x 1,000
m3) |
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641 |
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601 |
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609 |
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713 |
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Total waste materials disposed (x 1,000 kg) |
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2,186 |
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2,228 |
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3,039 |
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3,751 |
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Number of accidents with injury |
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105 |
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102 |
|
153 |
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|
146 |
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of which LTAs |
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27 |
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18 |
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20 |
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|
12 |
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LTA rate |
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0.28 |
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0.18 |
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0.18 |
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0.10 |
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Product |
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|
|
|
|
|
|
|
|
|
Product safety accidents |
|
1 |
|
- |
|
- |
|
|
1 |
|
|
|
|
|
|
People |
|
|
|
|
|
|
|
|
|
|
Employee attrition (%) |
|
4.2 |
|
3.3 |
|
3.2 |
|
|
3.6 |
|
Absenteeism Europe
(%)1 |
|
3.1 |
|
3.3 |
|
2.7 |
|
|
2.3 |
|
Absenteeism U.S. (%) |
|
2.3 |
|
1.6 |
|
1.7 |
|
|
1.2 |
|
Absenteeism Asia
(%)2 |
|
0.7 |
|
0.3 |
|
0.4 |
|
|
0.6 |
|
Workforce by gender (men / women in %) |
|
89 / 11 |
|
89 / 11 |
|
89 / 11 |
|
|
88 / 12 |
|
1 |
The figures for 2011 only include Dutch employees. As of 2012, all European time-registering employees are taken into account. |
2 |
In some countries, such as Japan, sick leave is regarded as annual leave, so illness-related absenteeism is recorded as 0%. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CO2 footprint (direct (scope 1) and indirect (scope 2))1 |
|
2011 |
|
2012 |
|
2013 |
|
2014 |
|
|
|
CO2 footprint (direct (scope 1) [kton]2 |
|
27.8 |
|
23.8 |
|
24.0 |
|
|
17.6 |
|
CO2 footprint (indirect (scope 2)[kton] |
|
62.3 |
|
70.2 |
|
74.7 |
|
|
91.8 |
|
Gross CO2 footprint
[kton] |
|
90.1 |
|
94.0 |
|
98.7 |
|
|
109.4 |
|
Renewable energy certificates (GOs) reduction [kton] |
|
26.3 |
|
43.9 |
|
52.7 |
|
|
69.2 |
|
Net CO2 footprint (with GOs
taken into account)[kton] |
|
63.8 |
|
50.1 |
|
46.0 |
|
|
40.2 |
|
1 |
For scope 1 as well as scope 2 we choose only to report on CO2, because CO2 is the only material GHG gas for ASML production locations. The other GHG gasses are only by-products of burning natural gas and purchasing electricity. In 2011, we did a
materiality check on other GHG gasses. Only CO2 is material for ASML. |
2 |
Biogenic CO2 emissions are not in scope because theyre not emitted by ASML
and / or not caused by producing electricity by ASML. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Energy footprint and savings |
|
2011 |
|
2012 |
|
2013 |
|
2014 |
|
|
|
No effort energy use [TJ] |
|
927.9 |
|
1,051.5 |
|
1,115.7 |
|
|
1,165.7 |
|
Energy savings due to improved production process [TJ] |
|
10.0 |
|
20.0 |
|
7.4 |
|
|
18.2 |
|
Energy savings due to improved installations [TJ] |
|
6.8 |
|
33.2 |
|
71.7 |
|
|
131.8 |
|
Actual total energy use [TJ] |
|
911.1 |
|
998.3 |
|
1,036.6 |
|
|
1,015.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CO2 footprint and reduction |
|
2011 |
|
2012 |
|
2013 |
|
2014 |
|
|
|
No effort CO2 footprint
[kton] |
|
92.0 |
|
101.8 |
|
107.7 |
|
|
120.2 |
|
CO2 reduction due to improved
production process [kton] |
|
1.2 |
|
2.4 |
|
0.9 |
|
|
2.5 |
|
CO2 reduction due to improved
installations [kton]1 |
|
0.7 |
|
5.4 |
|
8.1 |
|
|
8.3 |
|
Renewable energy certificates (GOs) reduction [kton] |
|
26.3 |
|
43.9 |
|
52.7 |
|
|
69.2 |
|
Actual total CO2 footprint
[kton] |
|
63.8 |
|
50.1 |
|
46.0 |
|
|
40.2 |
|
1 |
CO2 reduction by improved installation (energy savings) and reduction by
cogeneration. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of nationalities working for ASML |
|
2011 |
|
2012 |
|
2013 |
|
2014 |
|
|
|
Asia |
|
20 |
|
21 |
|
22 |
|
|
24 |
|
Europe |
|
65 |
|
66 |
|
65 |
|
|
67 |
|
U.S. |
|
22 |
|
33 |
|
52 |
|
|
58 |
|
Total |
|
71 |
|
72 |
|
80 |
|
|
88 |
|
|
|
|
|
|
ASML Corporate Responsibility Report 2014 |
|
50 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-local nationalities (%) working for ASML |
|
2011 |
|
2012 |
|
2013 |
|
2014 |
|
|
|
Asia |
|
n/a |
|
n/a |
|
n/a |
|
|
7 |
|
Europe |
|
n/a |
|
n/a |
|
n/a |
|
|
20 |
|
U.S. |
|
n/a |
|
n/a |
|
n/a |
|
|
17 |
|
Total |
|
n/a |
|
n/a |
|
n/a |
|
|
17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 |
|
Supervisory Board |
|
|
Board of Management |
|
|
Senior management |
|
|
Middle management |
|
|
Other employees |
|
|
|
Gender |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Female |
|
|
2 |
|
|
|
- |
|
|
|
15 |
|
|
|
69 |
|
|
|
1,119 |
|
Male |
|
|
7 |
|
|
|
5 |
|
|
|
190 |
|
|
|
717 |
|
|
|
7,873 |
|
Age group |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
< 30 |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
2 |
|
|
|
1,167 |
|
30-50 |
|
|
1 |
|
|
|
1 |
|
|
|
126 |
|
|
|
606 |
|
|
|
6,381 |
|
>50 |
|
|
8 |
|
|
|
4 |
|
|
|
79 |
|
|
|
178 |
|
|
|
1,444 |
|
1 |
These figures are based on headcount and excluding Cymer as the job grades of ASML and Cymer are not yet aligned. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of employees in FTEs |
|
Asia 2011 |
|
2012 |
|
2013 |
|
2014 |
|
Europe 2011 |
|
2012 |
|
2013 |
|
2014 |
|
|
|
Number of payroll employees |
|
1,676 |
|
1,812 |
|
2,184 |
|
2,377 |
|
4,730 |
|
4,995 |
|
5,654 |
|
|
6,085 |
|
Female (%) |
|
13 |
|
12 |
|
11 |
|
13 |
|
11 |
|
11 |
|
12 |
|
|
12 |
|
Male (%) |
|
87 |
|
88 |
|
89 |
|
87 |
|
89 |
|
89 |
|
88 |
|
|
88 |
|
Number of temporary employees |
|
19 |
|
13 |
|
17 |
|
14 |
|
1,793 |
|
2,060 |
|
2,618 |
|
|
2,507 |
|
Female (%) |
|
58 |
|
77 |
|
76 |
|
93 |
|
8 |
|
10 |
|
11 |
|
|
12 |
|
Male (%) |
|
42 |
|
23 |
|
24 |
|
7 |
|
92 |
|
90 |
|
89 |
|
|
88 |
|
Total payroll & temporary |
|
1,695 |
|
1,825 |
|
2,201 |
|
2,391 |
|
6,523 |
|
7,055 |
|
8,272 |
|
|
8,592 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of employees in FTEs |
|
U.S. 2011 |
|
2012 |
|
2013 |
|
2014 |
|
Total 2011 |
|
2012 |
|
2013 |
|
2014 |
|
|
|
Number of payroll employees |
|
1,549 |
|
1,617 |
|
2,522 |
|
2,856 |
|
7,955 |
|
8,424 |
|
10,360 |
|
|
11,318 |
|
Female (%) |
|
11 |
|
11 |
|
12 |
|
13 |
|
11 |
|
11 |
|
11 |
|
|
12 |
|
Male (%) |
|
89 |
|
89 |
|
88 |
|
87 |
|
89 |
|
89 |
|
89 |
|
|
88 |
|
Number of temporary employees |
|
123 |
|
64 |
|
230 |
|
233 |
|
1,935 |
|
2,137 |
|
2,865 |
|
|
2,754 |
|
Female (%) |
|
8 |
|
9 |
|
9 |
|
16 |
|
9 |
|
10 |
|
11 |
|
|
13 |
|
Male (%) |
|
92 |
|
91 |
|
91 |
|
84 |
|
91 |
|
90 |
|
89 |
|
|
87 |
|
Total payroll & temporary |
|
1,672 |
|
1,681 |
|
2,752 |
|
3,089 |
|
9,890 |
|
10,561 |
|
13,225 |
|
|
14,072 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Age group payroll employees in FTEs |
|
Asia 2011 |
|
2012 |
|
2013 |
|
2014 |
|
Europe 2011 |
|
2012 |
|
2013 |
|
2014 |
|
|
|
< 30 |
|
399 |
|
400 |
|
438 |
|
490 |
|
464 |
|
447 |
|
499 |
|
|
536 |
|
30-50 |
|
1,236 |
|
1,369 |
|
1,704 |
|
1,824 |
|
3,595 |
|
3,747 |
|
4,284 |
|
|
4,531 |
|
>50 |
|
41 |
|
43 |
|
42 |
|
55 |
|
671 |
|
801 |
|
871 |
|
|
1,018 |
|
Total |
|
1,676 |
|
1,812 |
|
2,184 |
|
2,3771 |
|
4,730 |
|
4,995 |
|
5,654 |
|
|
6,085 |
|
1 |
For Asia 2014, 8 unknown. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Age group payroll employees in FTEs |
|
U.S. 2011 |
|
2012 |
|
2013 |
|
2014 |
|
Total 2011 |
|
2012 |
|
2013 |
|
2014 |
|
|
|
< 30 |
|
97 |
|
104 |
|
195 |
|
248 |
|
960 |
|
951 |
|
1,132 |
|
|
1,274 |
|
30-50 |
|
883 |
|
873 |
|
1,423 |
|
1,512 |
|
5,714 |
|
5,989 |
|
7,411 |
|
|
7,867 |
|
>50 |
|
569 |
|
620 |
|
904 |
|
958 |
|
1,281 |
|
1,464 |
|
1,817 |
|
|
2,031 |
|
Total |
|
1,549 |
|
1,6171 |
|
2,522 |
|
2,8562 |
|
7,955 |
|
8,424 |
|
10,360 |
|
|
11,318 |
|
1 |
For U.S. 2012, 20 unknown. |
2 |
For U.S. 2014, 138 unknown. |
|
|
|
|
|
ASML Corporate Responsibility Report 2014 |
|
51 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Full-time & part-time payroll employees in
FTEs |
|
Asia 2011 |
|
2012 |
|
2013 |
|
2014 |
|
Europe 2011 |
|
2012 |
|
2013 |
|
2014 |
|
|
|
Full-time |
|
1,675 |
|
1,811 |
|
2,184 |
|
2,376 |
|
4,197 |
|
4,421 |
|
4,988 |
|
|
5,333 |
|
Female (%) |
|
13 |
|
12 |
|
11 |
|
13 |
|
7 |
|
8 |
|
8 |
|
|
9 |
|
Male (%) |
|
87 |
|
88 |
|
89 |
|
87 |
|
93 |
|
92 |
|
92 |
|
|
91 |
|
Part-time |
|
1 |
|
1 |
|
- |
|
1 |
|
533 |
|
574 |
|
666 |
|
|
752 |
|
Female (%) |
|
67 |
|
66 |
|
- |
|
- |
|
36 |
|
35 |
|
36 |
|
|
36 |
|
Male(%) |
|
33 |
|
34 |
|
- |
|
100 |
|
64 |
|
65 |
|
64 |
|
|
64 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Full-time & part-time payroll employees in
FTEs |
|
U.S. 2011 |
|
2012 |
|
2013 |
|
2014 |
|
Total 2011 |
|
2012 |
|
2013 |
|
2014 |
|
|
|
Full-time |
|
1,546 |
|
1,610 |
|
2,517 |
|
2,850 |
|
7,418 |
|
7,842 |
|
9,689 |
|
|
10,559 |
|
Female (%) |
|
11 |
|
11 |
|
11 |
|
13 |
|
9 |
|
9 |
|
10 |
|
|
11 |
|
Male (%) |
|
89 |
|
89 |
|
89 |
|
87 |
|
91 |
|
91 |
|
90 |
|
|
89 |
|
Part-time |
|
3 |
|
7 |
|
5 |
|
6 |
|
537 |
|
582 |
|
671 |
|
|
759 |
|
Female (%) |
|
63 |
|
66 |
|
61 |
|
66 |
|
37 |
|
35 |
|
36 |
|
|
37 |
|
Male(%) |
|
38 |
|
34 |
|
39 |
|
34 |
|
63 |
|
65 |
|
64 |
|
|
63 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASMLs employee attrition in FTEs |
|
Asia 2011 |
|
2012 |
|
2013 |
|
2014 |
|
Europe 2011 |
|
2012 |
|
2013 |
|
2014 |
|
|
|
Involuntary |
|
19 |
|
18 |
|
17 |
|
16 |
|
27 |
|
37 |
|
85 |
|
|
52 |
|
Voluntary |
|
116 |
|
71 |
|
59 |
|
82 |
|
66 |
|
61 |
|
49 |
|
|
79 |
|
Total |
|
135 |
|
89 |
|
76 |
|
98 |
|
93 |
|
98 |
|
134 |
|
|
131 |
|
Gender |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Female |
|
21 |
|
13 |
|
23 |
|
12 |
|
16 |
|
23 |
|
22 |
|
|
26 |
|
Male |
|
114 |
|
76 |
|
53 |
|
86 |
|
77 |
|
75 |
|
112 |
|
|
105 |
|
Age group |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
< 30 |
|
53 |
|
25 |
|
24 |
|
21 |
|
19 |
|
24 |
|
17 |
|
|
16 |
|
30-50 |
|
79 |
|
61 |
|
48 |
|
72 |
|
62 |
|
57 |
|
99 |
|
|
89 |
|
>50 |
|
3 |
|
3 |
|
4 |
|
5 |
|
12 |
|
17 |
|
18 |
|
|
26 |
|
Total |
|
135 |
|
89 |
|
76 |
|
98 |
|
93 |
|
98 |
|
134 |
|
|
131 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASMLs employee attrition in FTEs |
|
U.S. 2011 |
|
2012 |
|
2013 |
|
2014 |
|
Total 2011 |
|
2012 |
|
2013 |
|
2014 |
|
|
|
Involuntary |
|
21 |
|
21 |
|
27 |
|
30 |
|
67 |
|
76 |
|
129 |
|
|
98 |
|
Voluntary |
|
67 |
|
59 |
|
50 |
|
131 |
|
249 |
|
191 |
|
158 |
|
|
292 |
|
Total |
|
88 |
|
80 |
|
77 |
|
161 |
|
316 |
|
267 |
|
287 |
|
|
390 |
|
Gender |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Female |
|
9 |
|
13 |
|
15 |
|
26 |
|
46 |
|
49 |
|
60 |
|
|
64 |
|
Male |
|
79 |
|
67 |
|
62 |
|
135 |
|
270 |
|
218 |
|
227 |
|
|
326 |
|
Age group |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
< 30 |
|
14 |
|
9 |
|
15 |
|
20 |
|
86 |
|
58 |
|
56 |
|
|
57 |
|
30-50 |
|
58 |
|
49 |
|
39 |
|
72 |
|
199 |
|
167 |
|
186 |
|
|
233 |
|
>50 |
|
16 |
|
22 |
|
23 |
|
69 |
|
31 |
|
42 |
|
45 |
|
|
100 |
|
Total |
|
88 |
|
80 |
|
77 |
|
161 |
|
316 |
|
267 |
|
287 |
|
|
390 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New hires payroll employees in FTEs |
|
Asia 2011 |
|
2012 |
|
2013 |
|
2014 |
|
Europe 2011 |
|
2012 |
|
2013 |
|
2014 |
|
|
|
Total number of new hires |
|
291 |
|
207 |
|
218 |
|
310 |
|
638 |
|
405 |
|
645 |
|
|
614 |
|
Rate of new hires (%) |
|
17 |
|
11 |
|
10 |
|
13 |
|
13 |
|
8 |
|
11 |
|
|
10 |
|
Gender |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Female |
|
42 |
|
26 |
|
28 |
|
39 |
|
84 |
|
52 |
|
139 |
|
|
104 |
|
Male |
|
249 |
|
181 |
|
190 |
|
271 |
|
554 |
|
353 |
|
506 |
|
|
510 |
|
Age group |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
< 30 |
|
151 |
|
70 |
|
118 |
|
1841 |
|
220 |
|
97 |
|
165 |
|
|
197 |
|
30-50 |
|
138 |
|
134 |
|
99 |
|
1161 |
|
373 |
|
258 |
|
417 |
|
|
386 |
|
>50 |
|
2 |
|
3 |
|
1 |
|
21 |
|
45 |
|
50 |
|
63 |
|
|
31 |
|
1 |
For Asia 2014, 8 unknown. |
|
|
|
|
|
ASML Corporate Responsibility Report 2014 |
|
52 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New hires payroll employees in FTEs |
|
U.S. 2011 |
|
2012 |
|
2013 |
|
2014 |
|
Total 2011 |
|
2012 |
|
2013 |
|
2014 |
|
|
|
Total number of new hires |
|
168 |
|
139 |
|
121 |
|
429 |
|
1,097 |
|
751 |
|
984 |
|
|
1,353 |
|
Rate of new hires (%) |
|
11 |
|
9 |
|
5 |
|
15 |
|
14 |
|
9 |
|
10 |
|
|
12 |
|
Gender |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Female |
|
24 |
|
231 |
|
24 |
|
672 |
|
150 |
|
101 |
|
191 |
|
|
210 |
|
Male |
|
144 |
|
1081 |
|
97 |
|
3402 |
|
947 |
|
642 |
|
793 |
|
|
1,121 |
|
Age group |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
< 30 |
|
30 |
|
15 |
|
33 |
|
843 |
|
401 |
|
182 |
|
316 |
|
|
465 |
|
30-50 |
|
92 |
|
72 |
|
68 |
|
1653 |
|
603 |
|
464 |
|
584 |
|
|
667 |
|
>50 |
|
46 |
|
52 |
|
20 |
|
383 |
|
93 |
|
105 |
|
84 |
|
|
71 |
|
1 |
For U.S. 2012, 8 unknown. |
2 |
For U.S. 2014, 22 unknown. |
3 |
For U.S. 2014, 142 unknown. |
|
|
|
|
|
ASML Corporate Responsibility Report 2014 |
|
53 |
|
|
Independent assurance statement
We have been engaged by ASML to provide external assurance on its Corporate Responsibility Report 2014 (further referred to as The Report). The
content of The Report and the identification of material issues are the responsibility of ASML management. Our responsibility is to present an assurance statement providing readers of The Report with an independent opinion on the integrity of
information, based on our review.
Our engagement: scope, objective, and level of assurance
Our engagement was designed to provide moderate assurance on whether the information in The Report is fairly presented in accordance with the reporting
criteria described below. Therefore, our assurance activities are aimed at determining the plausibility of information disclosed by ASML in The Report, and are less extensive than those for a high level of assurance; evidence gathering is focused at
corporate level and limited sampling at lower levels of the organization. We do not provide assurance on the achievability of targets, plans, and expectations of ASML.
Which reporting criteria ASML used
ASML applies the Sustainability Reporting Guidelines G4
(core) of the Global Reporting Initiative. It is important to view the performance data and trends in combination with the reporting criteria, the scope and limitations explained by ASML in the appendix About the report, as well as the
appendix Non-financial data definitions.
Which assurance methods and audit principles we applied
We applied a structured evidence-based verification process based on AA1000AS (verification of quality of information disclosed, not the AA1000 Principles)
and the Dutch Standard 3810N for assurance engagements in relation to sustainability reports. We applied all relevant procedures for evidence gathering to evaluate the quality of disclosures and underlying evidence and controls, specified by these
standards and summarized below under our assurance activities. For the level of assurance and our assurance conclusion we used the AA1000 wording and terminology. We ensured that our assurance team possesses the required subject matter and assurance
competences to review The Report, and we adhere to the principles of auditing regarding ethical conduct, professional integrity, and independence.
Work undertaken: our assurance activities
To
come to our conclusions we performed the following activities:
|
|
Risk analysis, including media review, to identify relevant sustainability issues for ASML in 2014. |
|
|
Review of the design and implementation of corporate level systems, processes and internal controls for collection and aggregation of both quantitative
and qualitative information in The Report, including the reporting criteria, scope, and definitions described in Appendices About the Report and Non-financial data definitions. |
|
|
Review of Internal Audit procedures and findings in relation to The Report and underlying reporting processes. ASML analyzed and reviewed their internal
reporting, validation, and aggregation processes and systems, and interviewed theme owners and other staff involved in providing data and information for The Report. |
|
|
Interviews with staff at corporate level, responsible for reporting material CSR themes and Responsible Business themes. |
|
|
Review of internal and external documentation to determine whether reported information is supported by relevant underlying evidence.
|
|
|
Review of several drafts of The Report to assess whether relevant text assertions in The Report are supported by underlying evidence, to evaluate the
information presented against our findings from above mentioned activities, and to evaluate the references in the GRI content list and the compliance with GRI G4. With reference to our media review, we also assessed the balance and overall
presentation of The Report. We discussed changes to the various drafts of The Report and ensured that the final version of The Report reflects our findings. |
Our conclusion
Based on our work undertaken, we conclude that the information in The Report is
fairly presented, in all material respect, in accordance with the reporting criteria.
The Hague, February 10, 2015
Sustainable-Business
|
|
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ASML Corporate Responsibility Report 2014 |
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54 |
|
|
About the report
Introduction
We are proud to present our tenth corporate responsibility (CR) report as
part of our annual external reporting. It provides an overview of ASMLs performance in the area of corporate responsibility during 2014. The report is available in full in digital format on www.asml.com. This section provides specific
information on the reporting process and reporting methods used to arrive at the figures and topics included in this report.
Reporting
time frame
This corporate responsibility report provides an overview of ASMLs performance in the area of sustainability during
2014. It covers ASMLs activities from January 1, 2014, to December 31, 2014. The previous corporate responsibility report was prepared using the GRI 4.0 in accordance with core option and was published on March 7,
2014.
Reporting criteria
The 2014 corporate responsibility report has been prepared in accordance with the latest version of the international sustainability reporting guidelines,
GRI 4.0.
The GRI content index in the appendix lists the material GRI aspects that, on the basis of our materiality assessment findings, we
consider to be relevant to our stakeholders and our long-term strategy. The GRI content index shows what information has been verified by our external assurance provider and where there are any GRI omissions. The sections where information
concerning each GRI disclosure can be found are also listed in the index. The index reflects GRI 4.0, in accordance with option Core. For more information about GRI and the options to be in accordance with GRI, please see
www.globalreporting.org.
We are required by GRI to report only on the material themes, however for reasons of transparency and completeness we
have also included some GRI disclosures and related indicators for the responsible business behavior themes.
Reporting process
Each theme has an owner who is responsible for the theme ambition, strategy, and relevant performance indicators, timely delivery of
content and relevant data for CR reporting and for monitoring the execution of the strategy. The data is consolidated by the Finance department, which reviews the data and text submitted. The responsibility for the reporting and planning process for
the corporate responsibility report lies within the Finance department (as of October 2013), which reports to the CFO. A Corporate Responsibility Reporting Manager was appointed in a newly-created role to advance the non-financial reporting process
and bring it closer to integration with the financial report. We aim to align the processes as much as possible with the annual report, which is why we are publishing this report on the same day as the annual report. We also aim to embed more
regular collection and review of the data provided in the corporate responsibility report.
Internal audit is also involved in the review of the
2014 report, as is our external assurance provider. Internal Audit performed certain procedures to assess the system of internal controls with respect to CR reporting and the CR report. The external assurance provider takes into consideration the
findings of the internal auditor.
Reporting scope
GRI 4.0 requires us to perform an analysis of the impact per theme in order to determine the report content. In general this report provides an overview of the corporate responsibility performance for all
ASML locations worldwide, similar to the annual report. In other words, all information about our strategy, policies, procedures, and initiatives, and about the associated indicators is relevant to our own organization. In some cases the scope
expands to the value chain (Customers, Sustainable relationship with our customers) and the supply chain (Sustainable relationship with our suppliers, Business ethics and human rights, Conflict minerals, Business risk and business continuity,
Innovation).
There have been no significant changes during the reporting period regarding the organizations size, structure, ownership, or
its supply chain. There have been no significant changes with regard to the scope of the report content from 2013.
In some cases, the scope of
the data reported differs from the scope of the report content (ASML worldwide).
The manufacturing location Cymer was acquired May 30,
2013, and full integration of the acquisition is still taking place. In the 2013 corporate responsibility report, Cymer operations were not included in the results of ASML unless stated otherwise. For the 2014 report, where integration has taken
place and the information is readily available, results do include Cymer for this year.
|
|
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|
ASML Corporate Responsibility Report 2014 |
|
55 |
|
|
Please see Non-financial data definitions where the scope of the data reported has been clarified
per theme and explains where the scope of the data provided is different from the scope of the report content.
Reporting indicators
A detailed overview of the non-financial data definitions, scope, and calculations for performance and target indicators is included in
the appendix Non-financial data definitions. The data disclosed in this report is derived from various sources. Due to its nature, some data is subject to a degree of uncertainty caused by limitations in measuring and estimating data.
Based on the internal and external audit findings, ASML will continue to improve its corporate responsibility control environment to further
increase the accuracy and completeness of the data.
Reporting restatements
There have been restatements of information provided in previous reports and these have been explained in footnotes in the chapters where applicable. In
summary, the restatements are related to:
|
|
Improvement in administration of technical training data resulted in a correction of the 2013 data previously reported (Knowledge management).
|
|
|
Non-product related training hours restated to exclude D&E training which was previously included in the scope (Talent management).
|
|
|
From 2014, we now include measurements of the energy efficiency of our machines (Product stewardship). |
|
|
The 2013 engagement score was revised by Effectory following changes to the method of calculating engagement (Sustainable relationship with our people).
|
|
|
The definition for the number of audits covering sustainability has changed to exclude NC follow-up audits as a full assessment on sustainability is not
conducted during these audits. |
|
|
The number of sustainability NCs raised is based on the latest supplier profile for S within QLTCS. The comparative years have been updated to
be comparable and align with the latest definition (Sustainable relationship with suppliers). |
|
|
The definition for the percentage of PR business critical suppliers audited on S now excludes NC follow-up audits as a full assessment on
sustainability is not conducted during these audits. |
Verification of this report
Information in this corporate responsibility report has been subject to internal audit. In addition, we want to have an independent review of our information
and therefore the information in this report is subject to external assurance. The brief to our external assurance provider by the Board of Management was to provide assurance on the entire report and we asked Sustainable-Business to provide this
service. The independent assurance statement, including details of the work carried out, is provided in the appendix Independent assurance statement.
|
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|
Non-financial data definitions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014 indicators |
|
Chapter |
|
(K)PI definition and calculation |
|
Scope of data* |
|
Changes from 2013 |
|
Research and development (R&D) spend |
|
Innovation |
|
All expenses incurred for the research and development of the product roadmap during the reporting year |
|
ASML worldwide |
|
None |
|
|
|
|
|
# of technical training hours per FTE |
|
Knowledge management |
|
The number of hours related to training started and registered in SAP system during the reporting year (excluding HR&O organized training) for D&E employees divided by average
number of D&E employees (FTE) during the reporting year. The split between male and female hrs per FTE is also given. |
|
D&E organized training for D&E employees (excluding Cymer) |
|
New metric in 2014 |
|
|
|
|
|
# of technical training programs and # of employees attending the programs |
|
Knowledge management |
|
All technical training programs started during the reporting year (organized by D&E) and registered in SAP system excluding HR organized training completed by payroll and temporary
employees |
|
D&E organized training for mostly D&E employees (excluding Cymer) |
|
Yes - Improvement in administration of training data resulted in a correction of the 2013 data |
|
|
|
|
|
Measured energy efficiency, NXT (kWh / wafer) |
|
Product stewardship |
|
Power consumption measured based on SEMI standards on latest NXT machine (excluding laser, but including gas and water supplies), scaled to 100% availability. Energy reflected per
wafer pass. |
|
Latest product (2013 / 2014, Twinscan NXT: 1970Ci) |
|
New metric in 2014. Previously a simulated calculation was reported based on electrical power requirements for both scanner and laser. |
|
|
|
|
|
Attrition % |
|
Talent management /
Other indicators |
|
The percentage of payroll employees that left ASML during the current reporting period.
The number of payroll FTE that left ASML / number of FTE (last day of last month)*100%. |
|
ASML worldwide |
|
None |
|
|
|
|
|
DAP % implemented |
|
Talent management |
|
Percentage of total employees (FTE) that have an implemented DAP in the HR4U system during the reporting year |
|
ASML worldwide (excluding Cymer) |
|
None |
|
|
|
|
|
# of non-product related training programs and # of employees attending the programs |
|
Talent management |
|
All training programs started and registered in SAP system during the reporting year excluding D&E organized training completed by payroll employees (excluding interns) |
|
HR&O organized training for payroll employees (excluding Cymer) |
|
Yes - Previously D&E organized training was included |
|
|
|
|
|
# of non-product related training hours per FTE |
|
Talent management |
|
The number of hours related to training started and registered in SAP system during the reporting year (excluding D&E organized training) for all payroll employees divided by the
average number of payroll employees (excludes interns) in the reporting year. The split between male and female hrs per FTE is also given. |
|
HR&O organized training for payroll employees (excluding Cymer) |
|
Yes - Previously D&E organized training was included |
|
|
|
|
|
Me@ASML survey results |
|
Sustainable relationship with our people |
|
Relevant results from the ASML employee survey run by an external company, Effectory, every 18 months |
|
ASML worldwide (excluding Cymer) |
|
None |
|
|
|
|
|
VLSI survey scores |
|
Sustainable relationship with customers |
|
Third party research: Overall satisfaction rate compared to competitors. Satisfaction rate in technical leadership compared to competitors. |
|
ASML as company / brand worldwide |
|
None |
|
|
|
|
|
Customer Loyalty Survey score |
|
Sustainable relationship with customers |
|
Survey created by ASML and administered by a third party every two years. Asks for customer feedback from management, purchasing, and engineering in the following areas: people,
technology, operational effectiveness, cost of ownership. |
|
ASMLs customers |
|
New metric in 2014 |
|
|
|
|
|
Business critical PR spend and suppliers |
|
Sustainable relationship with suppliers |
|
The value of the purchases (invoices posted in the SAP system excluding VAT) during the reporting year (on system parts) from suppliers who are classified as SAT suppliers (i.e.
managed by a Supplier Account team) |
|
ASML worldwide excluding Cymer Light Source supplier spend |
|
Yes - The classification of business critical is reassessed on a regular basis |
|
|
|
|
|
Business critical NPR spend and suppliers |
|
Sustainable relationship with suppliers |
|
The value of the purchases (invoices posted in the SAP system excluding VAT) during the reporting year (on non-system parts) from suppliers who are classified as SAT suppliers (i.e.
managed by a Supplier Account team) |
|
ASML worldwide excluding Cymer Light Source supplier spend |
|
Yes - In 2014, business critical is a new classification for NPR |
|
|
|
|
|
Remaining PR spend and suppliers |
|
Sustainable relationship with suppliers |
|
The value of the purchases (invoices posted in the SAP system excluding VAT) during the reporting year (on system parts) from suppliers who are not classified as SAT
suppliers |
|
ASML worldwide excluding Cymer Light Source supplier spend (includes purchases from Cymer Light Source as the ERP application is not fully integrated for this division) |
|
Yes - The classification of business critical is reassessed on a regular basis |
|
|
|
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57 |
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014 indicators |
|
Chapter |
|
(K)PI definition and calculation |
|
Scope of data* |
|
Changes from 2013 |
|
Remaining NPR spend and suppliers |
|
Sustainable relationship with suppliers |
|
The value of the purchases (invoices posted in the SAP system excluding VAT) during the reporting year (on non-system parts) from suppliers who are not classified as SAT
suppliers |
|
ASML worldwide excluding Cymer Light Source supplier spend (includes purchases from Cymer Light Source as the ERP application is not fully integrated for this division) |
|
Yes - In 2014, business critical is a new classification for NPR |
|
|
|
|
|
Sourcing spend per region |
|
Sustainable relationship with suppliers |
|
Total value of the purchases (invoices posted in the SAP system excluding VAT) during the reporting year from non-product and product-related suppliers by region divided by the total
value of purchases from non-product and product-related suppliers during the reporting year |
|
ASML worldwide excluding Cymer Light Source supplier spend (includes purchases from Cymer Light Source as the ERP application is not fully integrated for this division) |
|
None |
|
|
|
|
|
# of supplier audits executed |
|
Sustainable relationship with suppliers |
|
All types of audits (includes theme, re-qualification, full qualification, new competency qualification audit, follow up on nonconformities) executed in the reporting year by QPI on
selected supplier locations |
|
ASML worldwide supply chain (excludes Cymer Light source suppliers) |
|
None |
|
|
|
|
|
# of supplier audits executed covering sustainability |
|
Sustainable relationship with suppliers |
|
Audits (includes theme, re-qualification, full qualification, new competency qualification audit but excludes follow up on nonconformities) executed in the reporting year by QPI on
selected supplier locations where sustainability assessment (S block) scores are included in the scope and reported |
|
ASML worldwide supply chain (excludes Cymer Light Source suppliers) |
|
Yes - NC follow up audits are now excluded from the definition |
|
|
|
|
|
# of sustainability NCs raised |
|
Sustainable relationship with suppliers |
|
The number of nonconformities against the ASML required level of (sustainability) performance resulting from a supplier audit executed by QPI and recorded in the AIR system in the
reporting year |
|
ASML worldwide supply chain (excludes Cymer Light Source suppliers) |
|
Yes - S block now includes an assessment on business continuity which was previously included under Q |
|
|
|
|
|
# of business critical supplier audits executed |
|
Sustainable relationship with suppliers |
|
All types of audits (includes theme, re-qualification, full qualification, new competency qualification audit, follow up on nonconformities) executed in the reporting year by QPI on
selected supplier locations that are classified as PR business critical (SAT) vendors |
|
ASML worldwide supply chain (excludes Cymer Light Source suppliers) |
|
Yes - The classification of business critical is reassessed on a regular basis |
|
|
|
|
|
# of business critical supplier audits executed covering sustainability |
|
Sustainable relationship with suppliers |
|
Audits (includes theme, re-qualification, full qualification, new competency qualification audit but excludes follow up on nonconformities) executed in the reporting year by QPI on
selected supplier locations classified as PR business critical (SAT) vendors where sustainability assessments (S block) scores are included in the scope and reported |
|
ASML worldwide supply chain (excludes Cymer Light Source suppliers) |
|
Yes - NC follow up audits are now excluded from the definition and classification of business critical is reassessed on a regular basis |
|
|
|
|
|
# of business critical sustainability NCs raised |
|
Sustainable relationship with suppliers |
|
The number of nonconformities against the ASML required level of (sustainability) performance resulting from a PR business critical supplier audit executed by QPI and recorded in the
AIR system in the reporting year |
|
ASML worldwide supply chain (excludes Cymer Light Source suppliers) |
|
Yes - S block now includes an assessment on business continuity which was previously included under Q and classification of business critical is reassessed on a
regular basis |
|
|
|
|
|
% of PR suppliers that acknowledged EICC code of conduct |
|
Sustainable relationship with suppliers |
|
% of PR business critical (SAT) suppliers that have either signed an EICC acknowledgement letter or whose code of conduct is assessed to be acceptable as it covers the same principles
of the EICC code of conduct |
|
ASML worldwide SAT population |
|
Yes - The classification of business critical is reassessed on a regular basis |
|
|
|
|
|
% of suppliers audited on sustainability |
|
Sustainable relationship with suppliers |
|
% of PR business critical (SAT) suppliers that have had an audit executed by QPI covering sustainability assessments (excludes NC follow up audits) between 2012 and 2014 divided by the
total PR business critical (SAT) suppliers |
|
ASML worldwide supply chain (excludes Cymer Light Source suppliers) |
|
Yes - The classification of business critical is reassessed on a regular basis and NC follow up audits are excluded from the definition |
|
|
|
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58 |
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
2014 indicators |
|
Chapter |
|
(K)PI definition and calculation |
|
Scope of data* |
|
Changes from 2013 |
|
% of new suppliers audited on sustainability criteria |
|
Sustainable relationship with suppliers |
|
The number of suppliers that have been added to the supply base in the previous year, are considered to be business critical (SAT) and have been audited by QPI on the full
S block divided by the total number of suppliers that have been added to the supply base in the previous year and are considered to be business critical (SAT) |
|
ASML worldwide (excludes Cymer Light Source suppliers) |
|
This is a new metric in 2014 |
|
|
|
|
|
# of Ethics Liaisons |
|
Business ethics and human rights |
|
Total number of appointed Ethics Liaisons (employees) in all ASML offices / locations as at year end |
|
ASML worldwide |
|
Yes - Includes Cymer in 2014 |
|
|
|
|
|
# of employees invited to / % completed online Code of Conduct and Business Principles training |
|
Business ethics and human rights |
|
All employees invited to complete the online Code of Conduct and Business Principles training launched in Q4 2014 and % of those that
completed the training. Applicable to all payroll employees, all temporary employees (if employed longer than a month) and all contractors
(employed longer than three months working on ASML premises and having an ASML IT account). |
|
ASML worldwide (and including contractors) |
|
Yes - New training launched in 2014 which includes Cymer |
|
|
|
|
|
# of reports made relating to the five Business Principles |
|
Business ethics and human rights |
|
The number of questions / remarks / concerns reported to the Ethics Office (related to a potential violation of the Code of Conduct and Business Principles) in the reporting
year |
|
ASML worldwide |
|
Yes - Includes Cymer for part of the year |
|
|
|
|
|
# of complaints made relating to the five Business Principles |
|
Business ethics and human rights |
|
The number of formal reports according to the Reporting Procedure communicated to the Ethics Office (related to a potential violation of the Code of Conduct and Business Principles) in
the reporting year deemed serious enough to warrant an investigation by the Complaints Committee |
|
ASML worldwide |
|
Yes - Includes Cymer for part of the year |
|
|
|
|
|
# of claims of violation of anti-trust and monopoly legislation |
|
Business ethics and human rights |
|
The number of any official claims (from a regulatory body), charges brought, or where there is an investigation regarding anti-trust / monopoly legislation as recorded by the Legal
department during the reporting year |
|
ASML worldwide |
|
None |
|
|
|
|
|
% of employees subject to collective bargaining agreement |
|
Labor relations and fair remuneration |
|
The number of payroll employees (excluding senior management) located in Belgium and Holland at year end divided by the total number of payroll employees at year end |
|
ASML worldwide |
|
None |
|
|
|
|
|
Euros committed through corporate sponsoring |
|
Community
involvement |
|
Value in euros of committed donations to the community through the corporate sponsoring program in the reporting year |
|
ASML Netherlands |
|
None |
|
|
|
|
|
Euros committed through fundraising |
|
Community
involvement |
|
Value in euros of committed donations to the community through fundraising in the reporting year |
|
ASML worldwide (excluding Cymer) |
|
None |
|
|
|
|
|
# of product-related safety issues |
|
Product safety and compliance |
|
The number of accidents where the product or product design is a factor |
|
ASML worldwide |
|
Yes - Includes Cymer in 2014 |
|
|
|
|
|
# of product-related lost time accidents (LTAs) |
|
Product safety and compliance |
|
The number of accidents where the product or product design is a factor that resulted in a lost work day |
|
ASML worldwide |
|
Yes - Includes Cymer in 2014 |
|
|
|
|
|
# of reports on fines for noncompliance |
|
Product safety and compliance |
|
Total number of incidents of noncompliance with regulations or voluntary codes concerning the health and safety impacts of products and services, resulting in a fine or
penalty |
|
ASML worldwide (excluding Cymer) |
|
None |
|
|
|
|
Environmental data (general) |
|
Environmental efficiency own operations |
|
As the environmental data focuses only on our manufacturing locations, it excludes our CS locations, which, in 2010, were assessed as being immaterial regarding their
energy footprint. The environmental data also excludes Cymer, ASML Motion, and ASML Brion. For our Veldhoven manufacturing location, all manufacturing-related buildings are taken into account, meaning all our campus buildings in Veldhoven and our
manufacturing building at Eindhoven Airport. Regarding waste and water, we apply the same scope as for energy, since the ASML waste and water footprint is also strongly related to our manufacturing processes. ASMLs environmental data is
measured by external experts and suppliers, reported to ASML and then consolidated and verified by an internal management system. In a number of cases data had to be estimated due to lack of reliable external data. Actual figures may differ from
estimates. |
|
|
|
|
|
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|
ASML Corporate Responsibility Report 2014 |
|
59 |
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014 indicators |
|
Chapter |
|
(K)PI definition and calculation |
|
Scope of data* |
|
Changes from 2013 |
|
Environmental data
(waste) |
|
Environmental efficiency own operations |
|
Part of our waste (on average around 5% of the waste streams) is removed from our premises in containers of a predetermined weight. These estimated weights are weights for
standardized packaging sizes (indicators) based on average weights in the country determined by our waste handling company. This can result in inaccuracies. In addition, the definition of waste differs between various locations due to differences in
local legislation, e.g. in the U.S. other definitions are used for disposing hazardous and nonhazardous waste. Within this corporate responsibility report ASML tried to align all waste streams with the European definitions. Only in cases where a
certain waste stream is not seen as waste in the U.S. can this cause inaccuracies in the reporting data. |
|
|
|
|
|
|
|
Net CO2-emissions (kilotons) |
|
Environmental efficiency own operations |
|
Total of net
CO2 emissions from ASML manufacturing locations in kilotons
calculated by adding the direct and indirect CO2 emissions
resulting from gas, electricity, fuel oil, and propane purchased minus the amount of renewable energy certificates purchased in the reporting period. Local figures for gas, electricity, fuel oil, and propane are converted with conversion factors derived from local suppliers. |
|
Veldhoven, Wilton, and Linkou |
|
None |
|
|
|
|
|
Energy efficiency savings (TJ) |
|
Environmental efficiency own operations |
|
Cumulated energy savings for ASML manufacturing locations in reporting year (since base year 2010) through improved technical installations |
|
Veldhoven, Wilton, and Linkou |
|
None |
|
|
|
|
|
Water use (m3) |
|
Environmental efficiency own operations |
|
Total water purchased in reporting period for ASML manufacturing locations, calculated in 1,000 m3 |
|
Veldhoven, Wilton, and Linkou |
|
None |
|
|
|
|
|
Total waste materials disposed (x 1,000 kg) |
|
Environmental efficiency own operations |
|
Total amount of waste disposed in reporting period from ASML manufacturing locations, calculated in tons |
|
Veldhoven, Wilton, and Linkou |
|
None |
|
|
|
|
|
Gross waste reduction
(%) |
|
Environmental efficiency own operations |
|
Cumulated waste savings reached through waste re-use or reduction programs since 2012 until end of reporting period for all manufacturing
locations. Cumulated waste savings divided by the total waste materials disposed in 2012. |
|
Veldhoven, Wilton, and Linkou |
|
None |
|
|
|
|
|
Waste recycling (%) |
|
Environmental efficiency own operations |
|
The percentage of recyclable waste (including material recovery and incineration with energy recovery) for all manufacturing locations,
disposed in reporting period. Tons of recyclable waste divided by the total waste in reporting period. |
|
Veldhoven, Wilton, and Linkou |
|
None |
|
|
|
|
|
Waste towards landfill
(%) |
|
Environmental efficiency own operations |
|
The percentage of waste disposed to landfill in reporting period for all manufacturing locations. Tons of waste disposed to landfill divided by the total amount of waste disposed in
the reporting period. |
|
Veldhoven, Wilton, and Linkou |
|
None |
|
|
|
|
|
Water efficiency savings
(%) |
|
Environmental efficiency own operations |
|
Cumulated water savings in reporting year (since base year 2010) through improved technical installations for all manufacturing locations |
|
Veldhoven, Wilton, and Linkou |
|
None |
|
|
|
|
|
# of fines imposed |
|
Environmental efficiency own operations |
|
Number of fines or grievances filed for environmental impacts or incidents of noncompliance with environmental laws and regulations |
|
ASML worldwide (excluding Cymer) |
|
None |
|
|
|
|
|
Lost time accident rate |
|
Employee health and safety |
|
LTA rate is the number of accidents of payroll and temporary employees (per 100 FTEs) resulting in the victim not being able to return to work on the next originally scheduled working
day |
|
ASML worldwide (excluding Cymer) |
|
None |
|
|
|
|
|
# of accidents |
|
Employee health and safety |
|
Number of accidents of payroll and temporary employees with personal injury in reporting period for all ASML locations and activities worldwide (excluding commuting
accidents) |
|
ASML worldwide (excluding Cymer) |
|
None |
|
|
|
|
|
# of Lost time accidents (LTA) |
|
Employee health and safety |
|
Number of accidents of payroll and temporary employees with personal injury in reporting period for all ASML locations worldwide, that result in the victim not being able to return to
work on the next originally scheduled working day |
|
ASML worldwide (excluding Cymer) |
|
None |
|
|
|
|
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|
|
|
|
|
|
|
|
|
2014 indicators |
|
Chapter |
|
(K)PI definition and calculation |
|
Scope of data* |
|
Changes from 2013 |
|
Fuels purchased (TJ) |
|
Appendix: Other
indicators |
|
Total of natural gas, fuel oil, hydrogen, and propane purchased in the reporting period for ASML manufacturing locations, calculated in TJ with the help of global conversion
factors |
|
Veldhoven, Wilton, and Linkou |
|
None |
|
|
|
|
|
Electricity purchased (TJ) |
|
Appendix: Other
indicators |
|
Total electricity purchased in the reporting period for ASML manufacturing locations, calculated in TJ with the help of global conversion factors |
|
Veldhoven, Wilton, and Linkou |
|
None |
|
|
|
|
|
Absenteeism Europe % |
|
Appendix: Other
indicators |
|
The number of calendar days (including weekends) of sick leave for ASML European for payroll employees in the observation period, divided
by the labor volume (in full-time equivalents) multiplied by the number of calendar days in the observation period. Total number of calendar days
of sick leave * sick leave percentage * employment percentage / number of FTE (per last day of reporting period) * calendar days in period. |
|
All Veldhoven (100%) and rest of Europe time-registering personnel (80%) |
|
None |
|
|
|
|
|
Absenteeism U.S. % |
|
Appendix: Other
indicators |
|
The number of calendar days (including weekends) of sick leave for ASML U.S. for payroll employees in the observation period, divided by
the labor volume (in full-time equivalents) multiplied by the number of calendar days in the observation period. Total number of calendar days of
sick leave * sick leave percentage * employment percentage / number of FTE (per last day of reporting period) * calendar days in period. |
|
All U.S. personnel (100%) |
|
None |
|
|
|
|
|
Absenteeism Asia % |
|
Appendix: Other
indicators |
|
The number of calendar days (including weekends) of sick leave for ASML Asia for payroll employees in the observation period, divided by
the labor volume (in full-time equivalents) multiplied by the number of calendar days in the observation period. Total number of calendar days of
sick leave * sick leave percentage * employment percentage / number of FTE (per last day of reporting period) * calendar days in period. |
|
Asia time-registering personnel (90%) |
|
None |
|
|
|
|
|
Workforce by gender (men / women %) |
|
Appendix: Other
indicators |
|
Percentage of male versus female payroll FTE employees versus total number of payroll FTE employees for ASML worldwide, at the last day of reporting period |
|
ASML worldwide |
|
Yes - gender is now included for Cymer |
|
|
|
|
|
CO2 footprint
(direct scope 1)(kilotons) |
|
Appendix: Other
indicators |
|
CO2 footprint
consists of natural gas (Veldhoven and Wilton), propane (Wilton) and fuel oil (Veldhoven and Linkou). It is calculated by multiplying the specific consumptions by the local conversion factors x kg CO2 / m3 gas / propane and fuel oil. They are all summed together. |
|
Veldhoven, Wilton, and Linkou |
|
New metric in 2014. Previously we didnt split our
CO2 footprint in direct (scope 1) and indirect (scope 2) CO2. |
|
|
|
|
|
CO2 footprint
(indirect scope 2)(kilotons) |
|
Appendix: Other
indicators |
|
CO2 footprint
is calculated by multiplying electricity consumption of Veldhoven, Wilton and Linkou by local conversion factors x kg
CO2 / kWh. They are all summed together. |
|
Veldhoven, Wilton, and Linkou |
|
New metric in 2014. Previously we didnt split our
CO2 footprint in direct (scope 1) and indirect (scope 2) CO2. |
|
|
|
|
|
Gross CO2 footprint (no effort emissions)(kilotons) |
|
Appendix: Other
indicators |
|
Total gross CO2 emissions from ASML manufacturing locations in kilotons calculated by adding the direct and indirect CO2 emissions resulting from gas, electricity, fuel oil, and propane purchased |
|
Veldhoven, Wilton, and Linkou |
|
New metric in 2014 |
|
|
|
|
|
Renewable energy certificates (GOs) reduction (kilotons) |
|
Appendix: Other
indicators |
|
The total number of RECs (GOs) purchased at our manufacturing location in Veldhoven in the reporting year (Sum of purchased per quarter) |
|
Veldhoven, Wilton, and Linkou |
|
None |
|
|
|
|
|
# of nationalities working for ASML |
|
Appendix: Other
indicators |
|
The number of nationalities on the last reporting day working for ASML by region (U.S., Asia and Europe). This is for payroll employees. |
|
ASML worldwide |
|
None |
|
|
|
|
|
Non-local nationalities (%) working for ASML |
|
Appendix: Other
indicators |
|
The percentage of non-local payroll and temporary employees on the last day of the reporting period with another nationality than the country the employee is working in |
|
ASML worldwide |
|
New metric in 2014 |
|
|
|
|
|
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|
61 |
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014 indicators |
|
Chapter |
|
(K)PI definition and calculation |
|
Scope of data* |
|
Changes from 2013 |
|
Number of employees in FTE by region, type, and gender |
|
Appendix: Other
indicators |
|
The total number of employees in FTE on the last day of the reporting period by region and employment type. This is also reported by gender %. |
|
ASML worldwide |
|
Yes - gender is now included for Cymer |
|
|
|
|
|
Age group payroll employees in FTE by region |
|
Appendix: Other
indicators |
|
The number of payroll employees in FTE on the last day of the reporting period by region and age group |
|
ASML worldwide |
|
None |
|
|
|
|
|
Full-time and part-time payroll employees in FTE by region and gender |
|
Appendix: Other
indicators |
|
The number of full-time and part-time payroll employees on the last day of the reporting period by region. This is also reported by gender %. |
|
ASML worldwide |
|
Yes - gender is now included for Cymer |
|
|
|
|
|
Employee attrition in FTE by voluntary / involuntary, region, gender, and age group |
|
Appendix: Other
indicators |
|
Employee attrition is the number of payroll employees in FTE that left ASML during the current reporting period by region, voluntary / involuntary leave, gender, and age
group |
|
ASML worldwide |
|
Yes - gender is now included for Cymer |
|
|
|
|
|
New hires payroll employees in FTE by gender and age group |
|
Appendix: Other
indicators |
|
The number of new payroll employees in FTE that joined ASML during the current reporting period by region, gender, and age group. This is also reported as rate of new hires
%. |
|
ASML worldwide. Sometimes, gender is not included for U.S. employees. |
|
Yes - gender is now included for Cymer |
* |
ASML worldwide includes ASML Holdings N.V. and its subsidiaries (please refer to annual report). |
|
|
|
|
|
ASML Corporate Responsibility Report 2014` |
|
62 |
|
|
GRI content index for In accordance Core
Where a yes exists in the external assurance column, compliance with this indicator has been assessed as part of the external assurance
procedures for The Report. Please see the independent assurance statement on page 54. There are no GRI omissions for the material themes. Where a yes* exists in the external assurance column, for the figures adopted, please refer to the
annual report and the report of the independent registered public accounting firm.
|
|
|
|
|
|
|
|
|
GRI
disclosure # |
|
GRI description
|
|
Reference |
|
Page #
|
|
External
assurance |
STRATEGY AND ANALYSIS |
G4-1 |
|
Statement from the most senior decision-maker about the relevance of sustainability to the
organization and the organizations strategy for addressing sustainability. The statement should include:
Strategic priorities and key topics for the short and medium term with regard to
sustainability, including respect for internationally recognized standards and how such standards relate to long-term organizational strategy and success
Broader trends (such as macroeconomic or political) affecting the organization and
influencing sustainability priorities Key events, achievements, and failures
during the reporting period Views on performance with respect to
targets Outlook on the organizations main challenges and targets for the
next year and goals for the coming 3-5 years Other items pertaining to the
organizations strategic approach |
|
Message from the Presidents |
|
6 & 7 |
|
Yes |
ORGANIZATIONAL PROFILE |
G4-3 |
|
Report the name of the organization |
|
About ASML |
|
8 |
|
Yes |
|
|
|
|
|
G4-4 |
|
Report the primary brands, products, and services |
|
About ASML |
|
9 |
|
Yes |
|
|
|
|
|
G4-5 |
|
Report the location of the organizations headquarters |
|
About ASML |
|
8 |
|
Yes |
|
|
|
|
|
G4-6 |
|
Report the number of countries where the organization operates, and names of countries where either the organization has significant operations or that are specifically relevant to the
sustainability topics covered in the report |
|
About ASML Annual report (List of main subsidiaries) |
|
8 |
|
Yes* |
|
|
|
|
|
G4-7 |
|
Report the nature of ownership and legal form |
|
Annual report
(Organizational structure) |
|
|
|
Yes* |
|
|
|
|
|
G4-8 |
|
Report the markets served (including geographic breakdown, sectors served, and types of customers and beneficiaries) |
|
Annual report (Segment disclosure) |
|
|
|
Yes* |
|
|
|
|
|
G4-9 |
|
Report the scale of the organization: Total number of employees |
|
About ASML Annual report (Information on the company) |
|
8 & 51 |
|
Yes |
|
|
Total number of operations |
|
Other indicators About ASML Annual report (Information on the company) |
|
8 |
|
Yes* |
|
|
Net sales (for private sector organizations) or Net revenues (for public sector
organizations) |
|
About ASML Annual report (Consolidated statement of operations) |
|
8 |
|
Yes* |
|
|
Total capitalization broken down in terms of debt and equity (for private sector
organizations) |
|
Annual report (Consolidated balance sheets) |
|
|
|
Yes* |
|
|
Quantity of products or services provided |
|
About ASML Annual report
(Segment disclosure) |
|
8 |
|
Yes* |
|
|
|
|
|
G4-10 |
|
a. Report the total number of employees by employment contract and gender |
|
Other indicators |
|
51 |
|
Yes |
|
|
b. Report the total number of permanent employees by employment type and gender |
|
Other indicators |
|
52 |
|
Yes |
|
|
c. Report the total workforce by employees and supervised workers and by gender |
|
Other indicators |
|
51 |
|
Yes |
|
|
d. Report the total workforce by region and gender |
|
Other indicators |
|
50 & 51 |
|
Yes |
|
|
e. Report whether a substantial portion of the organizations work is performed by workers who are legally recognized as self-employed, or by individuals other than employees or
supervised workers, including employees and supervised employees of contractors |
|
Labor relations and fair remuneration |
|
36 & 37 |
|
Yes |
|
|
f. Report any significant variations in employment numbers (such as seasonal variations in employment in the tourism or agricultural industries) |
|
N/A - please see Other indicators |
|
50 - 53 |
|
Yes |
|
|
|
|
|
ASML Corporate Responsibility Report 2014 |
|
63 |
|
|
|
|
|
|
|
|
|
|
|
GRI
disclosure # |
|
GRI description
|
|
Reference |
|
Page #
|
|
External
assurance |
STRATEGY AND ANALYSIS |
|
|
|
|
|
G4-11 |
|
Report the percentage of total employees covered by collective bargaining agreements |
|
Labor relations and fair remunerations |
|
36 |
|
Yes |
|
|
|
|
|
G4-12 |
|
Describe the organizations supply chain |
|
Sustainable relationship with suppliers |
|
30 |
|
Yes |
|
|
|
|
|
G4-13 |
|
Report any significant changes during the reporting period regarding the organizations size, structure, ownership, or its supply chain including: |
|
About the report Annual report (Information on the company) |
|
55 |
|
Yes |
|
|
|
|
|
|
|
Changes in the location of, or changes in, operations, including facility openings, closings, and
expansions |
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes in the share capital structure and other capital formation,
maintenance, and alteration operations (for private sector organizations) |
|
Annual report (Shareholders equity) About the report |
|
|
|
Yes* |
|
|
Changes in the location of suppliers, the structure of the supply chain, or in relationships with suppliers,
including selection and termination |
|
Annual report (Information on the company) |
|
55 |
|
Yes |
|
|
|
|
|
G4-14 |
|
Report whether and how the precautionary approach or principle is addressed by the organization |
|
Business risk and business continuity |
|
33 |
|
Yes |
|
|
|
|
|
G4-15 |
|
List externally developed economic, environmental and social charters, principles, or other initiatives to which the organization subscribes or which it endorses |
|
Sustainable relationship with suppliers, Business ethics and human rights, Product safety and compliance |
|
31, 34 & 41 |
|
Yes |
|
|
|
|
|
G4-16 |
|
List memberships of associations (such as industry associations) and national or international advocacy organizations in which the
organization:
Holds a position on the governance body
Participates in projects or committees
Provides substantive funding beyond routine membership dues
Views membership as strategic |
|
Sustainable relationship with suppliers, Business ethics and human rights, Labor relations |
|
31, 34, 36 |
|
Yes |
IDENTIFIED MATERIAL ASPECTS AND BOUNDARIES |
G4-17 |
|
a. List all entities included in the organizations consolidated financial statements or equivalent documents |
|
Annual report (Exhibit index: List of main subsidiaries) |
|
|
|
Yes* |
|
|
|
|
|
|
|
b. Report whether any entity included in the organizations consolidated financial statements or equivalent documents is not covered by the report |
|
Non-financial data definitions |
|
57-62 |
|
Yes |
|
|
|
|
|
G4-18 |
|
a. Explain the process for defining the report content and the Aspect Boundaries b. Explain how the organization has implemented the Reporting Principles for Defining Report Content |
|
Our stakeholders and CR strategy |
|
14 & 15 |
|
Yes |
|
|
|
|
|
G4-19 |
|
List all the material Aspects identified in the process for defining report content |
|
Our stakeholders and CR strategy |
|
15 |
|
Yes |
|
|
|
|
|
G4-20 |
|
For each material Aspect, report the Aspect Boundary within the organization, as follows:
Report whether the
Aspect is material within the organization If the Aspect is not material for all
entities within the organization (as described in G4-17), select one of the following two approaches and report either: The list of entities or groups of entities included in G4-17 for which the Aspect is not material or
The list of entities or groups of entities included in G4-17 for which the Aspects is
material Report any specific limitation regarding the Aspect Boundary within the
organization |
|
Our stakeholders and CR strategy |
|
15 |
|
Yes |
|
|
|
|
|
ASML Corporate Responsibility Report 2014 64 |
|
64 |
|
|
|
|
|
|
|
|
|
|
|
GRI
disclosure # |
|
GRI description
|
|
Reference |
|
Page #
|
|
External
assurance |
STRATEGY AND ANALYSIS |
G4-21 |
|
For each material Aspect, report the Aspect Boundary outside the organization, as follows: |
|
Our stakeholders and CR strategy |
|
15 |
|
Yes |
|
|
Report whether the Aspect is material outside of the organization
If the Aspect is material outside of the organization, identify the entities, groups of
entities or elements for which the Aspect is material. In addition, describe the geographical location where the Aspect is material for the entities identified
Report any specific limitation regarding the Aspect Boundary outside the
organization |
|
|
|
|
|
|
|
|
|
|
G4-22 |
|
Report the effect of any restatements of information provided in previous reports, and the reasons for such restatements |
|
About the report |
|
56 |
|
Yes |
|
|
|
|
|
G4-23 |
|
Report significant changes from previous reporting periods in the Scope and Aspect Boundaries |
|
About the report |
|
55 |
|
Yes |
STAKEHOLDER ENGAGEMENT |
G4-24 |
|
Provide a list of stakeholder groups engaged by the organization |
|
Our stakeholders and CR strategy |
|
12, 13 & 14 |
|
Yes |
|
|
|
|
|
G4-25 |
|
Report the basis for identification and selection of stakeholders with whom to engage |
|
Our stakeholders and CR strategy |
|
12, 13 & 14 |
|
Yes |
|
|
|
|
|
G4-26 |
|
Report the organizations approach to stakeholder engagement, including frequency of engagement by type and by stakeholder group, and an indication of whether any of the
engagement was undertaken specifically as part of the report preparation process |
|
Our stakeholders and CR strategy |
|
12, 13 & 14 |
|
Yes |
|
|
|
|
|
G4-27 |
|
Report key topics and concerns that have been raised through stakeholder engagement, and how the organization has responded to those key topics and concerns, including through its
reporting. Report the stakeholder groups that raised each of the key topics and concerns. |
|
Our stakeholders and CR strategy |
|
12, 13 & 14 |
|
Yes |
REPORT PROFILE |
G4-28 |
|
Reporting period (such as fiscal or calendar year) for information provided |
|
About the report |
|
55 |
|
Yes |
|
|
|
|
|
G4-29 |
|
Date of most recent previous report (if any) |
|
About the report |
|
55 |
|
Yes |
|
|
|
|
|
G4-30 |
|
Reporting cycle (such as annual, biennial) |
|
About the report |
|
55 |
|
Yes |
|
|
|
|
|
G4-31 |
|
Provide the contact point for questions regarding the report or its contents |
|
AMSL contact information |
|
76 |
|
Yes |
|
|
|
|
|
G4-32 |
|
a. Report the in accordance option the organization has chosen b. Report the GRI Content Index for the chosen option c. Report the reference to the External Assurance
Report, if the report has been externally assured. GRI recommends the use of external assurance but it is not a requirement to be in accordance with the Guidelines. |
|
About the report |
|
55 & 56 |
|
Yes |
|
|
|
|
|
G4-33 |
|
a. Report the organizations policy and current practice with regard to seeking external assurance for the report
b. If not included in the assurance report accompanying the sustainability report, report the scope and basis of any external assurance provided
c. Report the relationship between the organization and the assurance providers d. Report whether the highest governance body or senior executives are involved in seeking assurance for the organizations sustainability report |
|
About the report |
|
56 |
|
Yes |
GOVERNANCE |
G4-34 |
|
Report the governance structure of the organization, including committees of the highest governance body. Identify any committees responsible for decision-making on economic,
environmental and social impacts |
|
Governance |
|
19 |
|
Yes |
ETHICS AND INTEGRITY |
G4-56 |
|
Describe the organizations values, principles, standards and norms of behavior such as codes of conduct and codes of ethics |
|
Business ethics and human rights |
|
34 |
|
Yes |
|
|
|
|
|
ASML Corporate Responsibility Report 2014 |
|
65 |
|
|
|
|
|
|
|
|
|
|
|
GRI
disclosure # |
|
GRI description
|
|
GRI sub-heading |
|
Page #
|
|
External
assurance |
|
MATERIAL THEMES |
Innovation |
DMA |
|
a. Report why the Aspect is material. Report the impacts that make this Aspect material.
b. Report how the organization manages the material Aspect or its impacts c. Report the evaluation of the management approach, including:
The mechanisms for evaluating the effectiveness of the management approach
The results of the evaluation of the management approach
Any related adjustments to the management approach |
|
DMA |
|
18, 20 & 21 |
|
Yes |
|
|
|
|
Own indicator |
|
There is no specific GRI indicator for this theme but we report against R&D spend |
|
8 & 21 |
|
Yes* |
Knowledge management |
DMA |
|
a. Report why the Aspect is material. Report the impacts that make this Aspect material.
b. Report how the organization manages the material Aspect or its impacts c. Report the evaluation of the management approach, including:
The mechanisms for evaluating the effectiveness of the management approach
The results of the evaluation of the management approach
Any related adjustments to the management approach |
|
DMA |
|
18, 21 & 22 |
|
Yes |
|
|
|
|
Own indicator |
|
There is no specific GRI indicator for this theme but we report # of technical training hours per FTE, # of technical training programs and # employees who completed a
technical training course |
|
22 |
|
Yes |
Product stewardship |
DMA |
|
a. Report why the Aspect is material. Report the impacts that make this Aspect material.
b. Report how the organization manages the material Aspect or its impacts c. Report the evaluation of the management approach, including:
The mechanisms for evaluating the effectiveness of the management approach
The results of the evaluation of the management approach
Any related adjustments to the management approach |
|
DMA |
|
18, 23 & 24 |
|
Yes |
|
|
|
|
|
G4-EN27 |
|
a. Report quantitatively the extent to which environmental impacts of products and services have been mitigated during the reporting
period b. If use-oriented figures are employed, report the underlying assumptions regarding consumption patterns or normalization
factors |
|
Product and Services (Environmental) |
|
23 |
|
Yes |
Talent management |
DMA |
|
a. Report why the Aspect is material. Report the impacts that make this Aspect material.
b. Report how the organization manages the material Aspect or its impacts c. Report the evaluation of the management approach, including:
The mechanisms for evaluating the effectiveness of the management approach
The results of the evaluation of the management approach
Any related adjustments to the management approach |
|
DMA |
|
18, 25 & 26 |
|
Yes |
|
|
|
|
|
G4-LA9 |
|
Report the average hours of training that the organizations employees have undertaken during the reporting period, by:
Gender
Employee category |
|
Training and Education (Labor practices and decent work) |
|
22 & 26 (Employee category not deemed material to disclose) |
|
Yes |
Own indicator |
|
We also choose to disclose development plan implementation % and attrition % |
|
|
|
25 & 26 |
|
Yes |
Sustainable relationship with our people |
DMA |
|
a. Report why the Aspect is material. Report the impacts that make this Aspect material.
b. Report how the organization manages the material Aspect or its impacts c. Report the evaluation of the management approach, including:
The mechanisms for evaluating the effectiveness of the management approach
The results of the evaluation of the management approach
Any related adjustments to the management approach |
|
DMA |
|
18, 26 & 27 |
|
Yes |
|
|
|
|
|
G4-LA1 |
|
a. Report the total number and rate of new employee hires during the reporting period, by age group, gender and region |
|
Employment (Labor practices and decent work) |
|
52 & 53 |
|
Yes |
|
|
b. Report the total number and rate of employee turnover during the reporting period, by age group, gender and region |
|
|
25, 50 & 52 |
|
Yes |
|
|
|
|
Please also see G4-9 and G4-10 |
|
|
|
|
|
|
Own indicator |
|
We also choose to disclose information on our employee survey, Me@ASML, as well as other relevant metrics (please see appendix) for
example nationalities |
|
27, 50 & 51 |
|
Yes |
|
|
|
|
|
ASML Corporate Responsibility Report 2014 |
|
66 |
|
|
|
|
|
|
|
|
|
|
|
GRI
disclosure # |
|
GRI description
|
|
GRI sub-heading |
|
Page #
|
|
External
assurance |
MATERIAL THEMES |
Sustainable relationship with our customers |
DMA |
|
a. Report why the Aspect is material. Report the impacts that make this Aspect material. |
|
DMA |
|
18, 28 & 29 |
|
Yes |
|
|
b. Report how the organization manages the material Aspect or its impacts c. Report the evaluation of the management approach, including:
The mechanisms for evaluating the effectiveness of the management approach
The results of the evaluation of the management approach
Any related adjustments to the management approach |
|
|
|
|
|
|
|
|
|
|
|
G4-PR5 |
|
Report the results or key conclusions of customer satisfaction surveys (based on statistically relevant sample sizes) conducted in the
reporting period relating to information about: The organization as a
whole A major product or service category
Significant locations of operation |
|
Product and Service labelling (product responsibility) |
|
28 |
|
Yes |
Sustainable relationship with our suppliers |
DMA |
|
a. Report why the Aspect is material. Report the impacts that make this Aspect material.
b. Report how the organization manages the material Aspect or its impacts c. Report the evaluation of the management approach, including:
The mechanisms for evaluating the effectiveness of the management approach
The results of the evaluation of the management approach
Any related adjustments to the management approach |
|
DMA |
|
18, 30, 31 & 32 |
|
Yes |
|
|
|
|
|
G4-EC9 |
|
a. Report the percentage of the procurement budget used for significant locations of operation spent on suppliers local to that operation (such as percentage of products and services
purchased locally) |
|
Procurement Practices (Economic) |
|
30 |
|
Yes |
|
|
b. Report the organizations geographical definition of local |
|
|
|
30 |
|
Yes |
|
|
c. Report the definition used for significant locations of operation |
|
|
|
8 |
|
Yes |
|
|
|
|
|
G4-EN32 |
|
Report the percentage of new suppliers that were screened using environmental criteria |
|
Supplier Environmental
Assessment (Environmental) |
|
31 |
|
Yes |
|
|
|
|
|
G4-EN33 |
|
a. Report the number of suppliers subject to environmental impact assessments b. Report the number of suppliers identified as having significant actual and potential negative environmental impacts c. Report the significant actual and potential negative environmental impacts identified in the supply chain d. Report the percentage of suppliers identified as having significant actual and potential negative environmental impacts with which improvements were agreed upon as a result of assessment
e. Report the percentage of suppliers identified as having significant actual and potential negative environmental impacts with which relationships were
terminated as a result of assessment, and why |
|
Supplier Environmental
Assessment (Environmental) |
|
31 & 32
(for business
critical suppliers
only) |
|
Yes |
|
|
|
|
|
G4-LA14 |
|
Report the percentage of new suppliers that were screened using labor practices criteria |
|
Supplier Assessment for Labor Practices (Labor Practices and Decent Work) |
|
31 |
|
Yes |
|
|
|
|
|
G4-LA15 |
|
a. Report the number of suppliers subject to impact assessments for labor practices b. Report the number of suppliers identified as having significant actual and potential negative impacts for labor practices c. Report the significant actual and potential negative impacts for labor practices identified in the supply chain d. Report the percentage of suppliers identified as having significant actual and potential negative impacts for labor practices with which improvements were agreed upon as a result of assessment
e. Report the percentage of suppliers identified as having significant actual and potential negative impacts for labor practices with which relationships
were terminated as a result of assessment, and why |
|
Supplier Assessment for Labor Practices (Labor Practices and Decent Work) |
|
31 & 32
(for business
critical suppliers
only) |
|
Yes |
|
|
|
|
|
G4-HR10 |
|
Report the percentage of new suppliers that were screened using human rights criteria |
|
Supplier Human Rights Assessment
(Human rights) |
|
31 |
|
Yes |
|
|
|
|
|
G4-HR11 |
|
a. Report the number of suppliers subject to human rights impact assessments b. Report the number of suppliers identified as having significant actual and potential negative human rights impacts c. Report the significant actual and potential negative human rights impacts identified in the supply chain |
|
Supplier Human Rights Assessment
(Human rights) |
|
31 & 32
(for business
critical suppliers
only) |
|
Yes |
|
|
|
|
|
ASML Corporate Responsibility Report 2014 |
|
67 |
|
|
|
|
|
|
|
|
|
|
|
GRI
disclosure # |
|
GRI description
|
|
GRI sub-heading |
|
Page #
|
|
External
assurance |
MATERIAL THEMES |
|
|
d. Report the percentage of suppliers identified as having significant actual and potential negative human rights impacts with which
improvements were agreed upon as a result of assessment e. Report the percentage of suppliers identified as having significant actual and
potential negative human rights impacts with which relationships were terminated as a result of assessment, and why |
|
|
|
|
|
|
|
|
|
|
|
G4-SO9 |
|
Report the percentage of new suppliers that were screened using criteria for impacts on society |
|
Supplier assessment for Impacts on Society (Society) |
|
31 |
|
Yes |
|
|
|
|
|
G4-SO10 |
|
a. Report the number of suppliers subject to assessments for impacts on society b. Report the number of suppliers identified as having significant actual and potential negative impacts on society c. Report the significant actual and potential negative impacts on society identified in the supply chain
d. Report the percentage of suppliers identified as having significant actual and potential negative impacts on society with which improvements were agreed
upon as a result of assessment e. Report the percentage of suppliers identified as having significant actual and potential negative impacts on
society with which relationships were terminated as a result of assessment, and why |
|
Supplier assessment for Impacts on Society (Society) |
|
31 & 32
(for business critical suppliers only) |
|
Yes |
|
|
|
|
Please also see G4-12 |
|
|
|
|
|
|
Own indicator |
|
We also choose to disclose additional information on our supplier audits and different types of suppliers and spend |
|
30 & 32 |
|
Yes |
We are required by GRI to report only on the material
themes, however for transparency and completeness reasons we are also including some GRI disclosures for the responsible business behavior themes. These have been included below. We therefore dont always fully comply with the GRI indicator and
omissions are mentioned in the reference (page #) column. Where a yes* exists in the external assurance column, for the figures adopted, please refer to the annual report and the report of the independent registered public accounting
firm. |
GRI
disclosure # |
|
GRI description
|
|
GRI sub-heading |
|
Page #
|
|
External
assurance |
RESPONSIBLE BUSINESS BEHAVIOR THEMES |
Business Risk and business continuity |
DMA |
|
a. Report why the Aspect is material. Report the impacts that make this Aspect material.
b. Report how the organization manages the material Aspect or its impacts c. Report the evaluation of the management approach, including:
The mechanisms for evaluating the effectiveness of the management approach
The results of the evaluation of the management approach
Any related adjustments to the management approach |
|
DMA |
|
33 |
|
Yes |
|
|
|
|
|
G4-EC1 |
|
a. Report the direct economic value generated and distributed (EVG&D) on an accruals basis including the basic components for the
organizations global operations. If data is presented on a cash basis, report the justification for this decision and report the basic components as listed below: Direct economic value generated:
Revenues Economic value distributed: Operating
costs Employee wages and benefits
Payments to providers of capital
Payments to government (by country)
Community investments
Economic value retained (calculated as Direct economic value generated less
Economic value distributed) b. To better assess local economic impacts, report EVG&D separately at country, regional, or market
levels, where significant. Report the criteria used for defining significance |
|
Economic Performance (Economic) |
|
Annual report |
|
Yes* |
Please also see G4-14 |
|
|
|
|
|
ASML Corporate Responsibility Report 2014 |
|
68 |
|
|
|
|
|
|
|
|
|
|
|
GRI
disclosure # |
|
GRI description
|
|
GRI sub-heading |
|
Page #
|
|
External
assurance |
RESPONSIBLE BUSINESS BEHAVIOR THEMES |
Business ethics and human rights |
DMA |
|
a. Report why the Aspect is material. Report the impacts that make this Aspect material. |
|
DMA |
|
34 & 35 |
|
Yes |
|
|
b. Report how the organization manages the material Aspect or its impacts c. Report the evaluation of the management approach, including:
The mechanisms for evaluating the effectiveness of the management approach
The results of the evaluation of the management approach
Any related adjustments to the management approach |
|
|
|
|
|
|
|
|
|
|
|
G4-SO4 |
|
a. Report the total number and percentage of governance body members that the organizations anti-corruption policies and procedures
have been communicated to, broken down by region |
|
Anti-corruption (Society) |
|
Not disclosed |
|
N/A |
|
|
b. Report the total number and percentage of employees that the organizations anti-corruption policies and procedures have been
communicated to, broken down by employee category and region |
|
|
|
Not disclosed |
|
N/A |
|
|
c. Report the total number and percentage of business partners that the organizations anti-corruption policies and procedures have
been communicated to, broken down by type of business partner and region |
|
|
|
Not disclosed |
|
N/A |
|
|
d. Report the total number and percentage of governance body members that have received training on anti-corruption, broken down by region
|
|
|
|
35 disclosed
on a total basis not by employee type or region) |
|
Yes |
|
|
e. Report the total number and percentage of employees that have received training on anti-corruption, broken down by employee category and
region |
|
|
|
35 disclosed
on a total basis not by employee type or region) |
|
Yes |
|
|
|
|
|
G4-SO7 |
|
a. Report the total number of legal actions pending or completed during the reporting period regarding anti-competitive behavior and
violations of antitrust and monopoly legislation in which the organization has been identified as a participant b. Report the main outcomes of
completed legal actions, including any decisions or judgments |
|
Anti-competitive behavior (Society) |
|
35 |
|
Yes |
|
|
|
|
|
G4-SO8 |
|
a. Report significant fines and non-monetary sanctions in terms of:
Total monetary value of significant fines
Total number of non-monetary sanctions
Cases brought through dispute resolution mechanisms
b. If the organization has not identified any noncompliance with laws or regulations, a brief statement of this fact is sufficient
c. Report the context against which significant fines and non-monetary sanctions were incurred |
|
Compliance (Society) |
|
Annual report (Legal proceedings) |
|
Yes* |
|
|
Please also see G4-HR10 and G4-HR11 (Sustainable relationship with suppliers) and G4-56 |
|
|
Own indicator |
|
We also choose to disclose # of ethics liaisons, # of reports and complaints of noncompliance with our code of conduct |
|
35 |
|
Yes |
Tax strategy and transparency
|
DMA |
|
a. Report why the Aspect is material. Report the impacts that make this Aspect material.
b. Report how the organization manages the material Aspect or its impacts c. Report the evaluation of the management approach, including:
The mechanisms for evaluating the effectiveness of the management approach
The results of the evaluation of the management approach
Any related adjustments to the management approach |
|
DMA |
|
36 part a not addressed and
part c partially addressed |
|
Yes |
|
|
There is no specific GRI indicator for this theme |
|
|
|
|
Labor relations and fair remuneration |
DMA |
|
a. Report why the Aspect is material. Report the impacts that make this Aspect material.
b. Report how the organization manages the material Aspect or its impacts c. Report the evaluation of the management approach, including:
The mechanisms for evaluating the effectiveness of the management approach
The results of the evaluation of the management approach
Any related adjustments to the management approach |
|
DMA |
|
36, 37 & 38 |
|
Yes |
|
|
Please also see G4-LA14 and G4-LA15 (Sustainable relationship with suppliers), G4-11 and G4-10e |
|
|
|
|
Community involvement |
DMA |
|
a. Report why the Aspect is material. Report the impacts that make this Aspect material.
b. Report how the organization manages the material Aspect or its impacts |
|
DMA |
|
38, 39 & 40 |
|
Yes |
|
|
|
|
|
ASML Corporate Responsibility Report 2014 |
|
69 |
|
|
|
|
|
|
|
|
|
|
|
GRI
disclosure # |
|
GRI description
|
|
GRI sub-heading |
|
Page #
|
|
External
assurance |
RESPONSIBLE BUSINESS BEHAVIOR THEMES |
|
|
c. Report the evaluation of the management approach, including:
The mechanisms for evaluating the effectiveness of the management approach
The results of the evaluation of the management approach
Any related adjustments to the management approach |
|
|
|
|
|
|
|
|
|
|
|
G4-SO1 |
|
Report the percentage of operations with implemented local community engagement, impact assessments, and development programs, including
the use of: Social impact assessments, including gender impact assessments, based
on participatory processes Environmental impact assessments and ongoing
monitoring Public disclosure of results of environmental and social impact
assessments Local community development programs based on local communities
needs Stakeholder engagement plans based on stakeholder mapping
Broad based local community consultation committees and processes that include vulnerable
groups Works councils, occupational health and safety committees and other
employee representation bodies to deal with impacts Formal local community
grievance processes |
|
Local Communities (Society) |
|
38, 39 & 40 (Local
community development
and stakeholder engagement addressed
but loose link to indicator |
|
Yes |
|
|
|
|
Please also see G4-SO9 and G4-SO10 (Sustainable relationship with suppliers) |
|
|
|
|
|
|
Own indicator |
|
We choose to disclose information on sponsorship spend |
|
39 & 40 |
|
Yes |
Conflict minerals |
DMA |
|
a. Report why the Aspect is material. Report the impacts that make this Aspect material.
b. Report how the organization manages the material Aspect or its impacts c. Report the evaluation of the management approach, including:
The mechanisms for evaluating the effectiveness of the management approach
The results of the evaluation of the management approach
Any related adjustments to the management approach |
|
DMA |
|
41 |
|
Yes |
|
There is no specific GRI indicator for this theme |
Product safety and compliance |
DMA |
|
a. Report why the Aspect is material. Report the impacts that make this Aspect material.
b. Report how the organization manages the material Aspect or its impacts c. Report the evaluation of the management approach, including:
The mechanisms for evaluating the effectiveness of the management approach
The results of the evaluation of the management approach
Any related adjustments to the management approach |
|
DMA |
|
41 & 42 |
|
Yes |
|
|
|
|
|
G4-PR2 |
|
a. Report the total number of incidents of noncompliance with regulations and voluntary codes concerning the health and safety impacts of
products and services within the reporting period, by: Incidents of noncompliance with
regulations resulting in a fine or penalty Incidents of noncompliance with regulations
resulting in a warning Incidents of noncompliance with voluntary codes
b. If the organization has not identified any noncompliance with regulations and voluntary codes, a brief statement of this fact is
sufficient |
|
Customer Health and Safety (Product
Responsibility) |
|
42 & 50 |
|
Yes |
|
|
|
|
|
G4-PR9 |
|
a. Report the total monetary value of significant fines for noncompliance with laws and regulations
concerning the provision and use of products and services b. If the organization has not identified any noncompliance with laws or regulations, a
brief statement of this fact is sufficient |
|
Compliance (Product Responsibility) |
|
42 |
|
Yes |
Environmental efficiency own operations |
DMA |
|
a. Report why the Aspect is material. Report the impacts that make this Aspect material.
b. Report how the organization manages the material Aspect or its impacts c. Report the evaluation of the management approach, including:
The mechanisms for evaluating the effectiveness of the management approach
The results of the evaluation of the management approach
Any related adjustments to the management approach |
|
DMA |
|
43 - 48 |
|
Yes |
|
|
|
|
|
G4-EN8 |
|
a. Report the total volume of water withdrawn from the following sources: |
|
Water
(Environmental) |
|
46 & 50 |
|
Yes |
|
|
Surface water, including water from wetlands, rivers, lakes, and
oceans Ground water
Rainwater collected directly and stored by the organization
Waste water from another organization
Municipal water supplies or other water utilities |
|
|
|
|
|
b. Report standards, methodologies, and assumptions used |
|
|
|
Not deemed necessary to disclose due to source of water used |
|
Yes |
|
|
|
|
|
ASML Corporate Responsibility Report 2014 |
|
70 |
|
|
|
|
|
|
|
|
|
|
|
GRI
disclosure # |
|
GRI description
|
|
GRI
sub-heading |
|
Page #
|
|
External
assurance |
|
RESPONSIBLE BUSINESS BEHAVIOR THEMES |
|
G4-EN15 |
|
a. Report gross direct (Scope 1) GHG emissions in metric tons of CO2 equivalent, independent of any GHG trades, such as purchases, sales, or transfers of offsets or allowances |
|
Emissions
(Environmental) |
|
50 |
|
Yes |
|
|
b. Report gases included in the calculation (whether CO2,
CH4, N2O, HFCs, PFCs, SF6,
NF3, or all) |
|
|
|
50 |
|
Yes |
|
|
c. Report biogenic
CO2 emissions in metric tons of CO2 equivalent separately from the gross direct (Scope 1) GHG
emissions |
|
|
|
50 |
|
Yes |
|
|
d. Report the chosen base year, the rationale for choosing the base year, emissions in the base year, and the context for any significant
changes in emissions that triggered recalculations of base year emissions |
|
|
|
44 (rationale
for base year, gross
emissions in base year not
disclosed) |
|
Yes |
|
|
e. Report standards, methodologies, and assumptions used |
|
|
|
59, 60 & 61 |
|
Yes |
|
|
f. Report the source of the emission factors used and the global warming potential (GWP) rates used or a reference to the GWP source |
|
|
|
Not disclosed |
|
N/A |
|
|
g. Report the chosen consolidation approach for emissions (equity share, financial control, operational control) |
|
|
|
Not disclosed |
|
N/A |
|
|
|
|
|
G4-EN16 |
|
a. Report gross energy indirect (Scope 2) GHG emissions in metric tons of CO2 equivalent, independent of any GHG trades, such as purchases, sales, or transfers of offsets or allowances |
|
Emissions
(Environmental) |
|
50 |
|
Yes |
|
|
b. Report gases included in the calculation, if available |
|
|
|
50 |
|
Yes |
|
|
c. Report the chosen base year, the rationale for choosing the base year, emissions in the base year, and the context for any significant
changes in emissions that triggered recalculations of base year emissions |
|
|
|
44 (rationale
for base year, gross
emissions in base year not
disclosed) |
|
Yes |
|
|
d. Report standards, methodologies, and assumptions used |
|
|
|
59, 60 & 61 |
|
Yes |
|
|
e. Report the source of the emission factors used and the global warming potential (GWP) rates used or a reference to the GWP source, if available |
|
|
|
Not disclosed |
|
N/A |
|
|
f. Report the chosen consolidation approach for emissions (equity share, financial control, operational control) |
|
|
|
Not disclosed |
|
N/A |
|
|
|
|
|
G4-EN23 |
|
a. Report the total weight of hazardous and nonhazardous waste, by the following disposal methods:
Reuse
Recycling
Composting
Recovery, including energy recovery
Incineration (mass burn)
Deep well injection
Landfill
On-site storage
Other (to be specified by the organization) |
|
Effluents and Waste
(Environmental) |
|
46 & 50 Waste
recycling reported at a
total level - please refer
to definitions on page 60
for what comprises
this figure |
|
Yes |
|
|
b. Report how the waste disposal method has been determined:
Disposed of directly by the organization or otherwise directly confirmed
Information provided by the waste disposal contractor
Organizational defaults of the waste disposal contractor |
|
|
|
|
|
|
|
|
|
|
|
G4-EN29 |
|
a. Report significant fines and non-monetary sanctions in terms of:
Total monetary value of significant fines
Total number of non-monetary sanctions
Cases brought through dispute resolution mechanisms
b. Where organizations have not identified any noncompliance with laws or regulations, a brief statement of this fact is sufficient |
|
Compliance
(Environmental) |
|
47 |
|
Yes |
|
|
|
|
|
G4-EN34 |
|
a. Report the total number of grievances about environmental impacts filed through formal grievance mechanisms during the reporting
period b. Of the identified grievances, report how many were:
Addressed during the reporting period
Resolved during the reporting period c. Report the total number of grievances about environmental impacts filed prior to the reporting period that were resolved during the reporting period |
|
Environmental
Grievance Mechanisms
(Environmental) |
|
47 |
|
Yes |
|
|
|
Please also see G4-EN32 and G4-EN33 (Sustainable relationship with suppliers) |
|
|
|
|
Own indicator |
|
We also choose to disclosure information on energy usage, energy & CO2 reduction, and other relevant metrics |
|
18, 45 & 50 |
|
Yes |
|
|
|
|
|
|
ASML Corporate Responsibility Report 2014 |
|
71 |
|
|
|
|
|
|
|
|
|
|
|
GRI
disclosure # |
|
GRI description
|
|
GRI sub-heading |
|
Page #
|
|
External
assurance |
RESPONSIBLE BUSINESS BEHAVIOR THEMES |
Employee health and safety |
DMA |
|
a. Report why the Aspect is material. Report the impacts that make this Aspect material. |
|
DMA |
|
48 & 49 |
|
Yes |
|
|
b. Report how the organization manages the material Aspect or its impacts c. Report the evaluation of the management approach, including:
The mechanisms for evaluating the effectiveness of the management approach
The results of the evaluation of the management approach
Any related adjustments to the management approach |
|
|
|
|
|
|
|
|
|
|
|
G4-LA6 |
|
a. Report types of injury, injury rate (IR), occupational diseases rate (ODR), lost day rate (LDR), absentee rate (AR) and work-related
fatalities, for the total workforce (that is, total employees plus supervised workers), by:
Region - Gender |
|
Occupational Health and Safety (Labor Practices and Decent Work) |
|
48, 49 & 50 (No disclosure on ODR or IR. Disclosures by gender also not given.) |
|
Yes |
|
|
b. Report types of injury, injury rate (IR), occupational diseases rate (ODR), lost day rate (LDR), absentee rate (AR) and work-related
fatalities for independent contractors working on-site to whom the organization is liable for the general safety of the working environment, by: Region - Gender |
|
|
|
Not disclosed for independent contractors |
|
N/A |
|
|
c. Report the system of rules applied in recording and reporting accident statistics
|
|
|
|
49 |
|
Yes |
|
|
|
|
|
ASML Corporate Responsibility Report 2014 |
|
72 |
|
|
Forward looking statements
This report contains statements relating to certain statements that are forward-looking, including (i) statements with respect to expected developments
in the semiconductor industry and industry trends, including the continuation of Moores Law, and lithography industry trends, (ii) ASMLs goals, strategies and ambitions, including its strategies, priorities, targets, KPIs and key
risks with respect to ASMLs corporate responsibility (CR) strategy and ASMLs CR outlook for 2015, (iii) development of technology, including EUV technology, performance of our EUV systems, including targeted EUV system performance
and integration of light source, and other development goals, including reducing cost of ownership of tools, (iv) expected or indicative financial results or targets, including revenue and earnings per share, and R&D spending,
(v) ASMLs plans to use obsolete hardware in new systems and its strategy to make its tools more resource efficient, (vi) ASMLs technological roadmap, including with respect to shrink, and ASMLs outlook with respect to
customer service and its efforts to help customers enhance shrink, (vii) ASMLs supply chain risk and performance and strategies and goals with respect to customer and supplier intimacy, strategies and goals with respect to risk management
and compliance, (viii) ASMLs code of conduct and business principles, including ethical behavior, sustainable business practice, tax transparency, labor relations, remuneration policy, community involvement, conflict minerals, product
safety, and compliance, employee health and safety and the use of hazardous substances, and (ix) environmental efficiency goals, including ASMLs goal to reduce its carbon footprint, carbon reduction targets and energy savings, use of
renewable energy and water consumption, management of waste, and the management and reduction of hazardous substances.
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 goals,
expectations, estimates, assumptions, and strategies about ASMLs business and our future performance 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 economic conditions, product demand and semiconductor equipment industry capacity, worldwide demand and manufacturing capacity utilization for semiconductors (the principal product of ASMLs
customer base), the impact of general economic conditions on consumer confidence and demand for ASMLs customers products, competitive products and pricing, affordability of shrink, the continuation of Moores Law, the impact of
manufacturing efficiencies and capacity constraints, performance of ASMLs systems, including EUV systems, the continuing success of technology advances and the related pace of new product development and customer acceptance of new products and
customers meeting their own development roadmaps, market demand for our existing products and for new products, ASMLs ability to reduce costs, ASMLs ability to maintain or increase market share, ASMLs ability to meet or perform its
goals, strategies, ambitions, targets and KPIs set out in this report and other risks indicated in the risk factors included in ASMLs 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. ASML does not undertake to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise.
|
|
|
|
|
ASML Corporate Responsibility Report 2014 |
|
73 |
|
|
List of abbreviations
|
|
|
Abbreviation |
|
Description |
AIR |
|
ASML Issue Resolution system |
Annual Report |
|
Annual Report on Form 20-F |
ARCNL |
|
Advanced Research Center for Nanolithography |
ASML |
|
ASML Holdings N.V. and its subsidiaries |
ASMLs website |
|
www.asml.com |
Canon |
|
Canon Kabushiki Kaisha |
CEO |
|
Chief Executive Officer |
CFO |
|
Chief Financial Officer |
COO |
|
Chief Operations Officer |
CR |
|
Corporate responsibility |
CRSB |
|
Corporate Risk and Sustainability Board |
CS |
|
Customer Support |
CTO |
|
Chief Technology Officer |
Cymer |
|
Cymer Inc. and its subsidiaries |
D&E |
|
Development and engineering |
DAP |
|
Development Action Plan |
DJSI |
|
Dow Jones Sustainability Indices |
DRAM |
|
Dynamic Random Access Memory |
DUV |
|
Deep ultraviolet |
EHS |
|
Environment, health, and safety |
EICC |
|
Electronic Industry Citizenship Coalition |
EPS |
|
Earnings per share |
ERMs |
|
Executive review meetings |
EU |
|
European Union |
EUV |
|
Extreme Ultraviolet |
EVP |
|
Executive Vice President |
FAB |
|
Fabrication plant (semiconductors) |
FOM |
|
Foundation for Fundamental Research on Matter and part of NWO (Stichting voor Fundamenteel onderzoek der Materie en onderdeel van NWO) |
FTEs |
|
Full-time equivalents |
GeSI |
|
Global e-Sustainability Initiative |
GHG |
|
Greenhouse Gas |
GOs |
|
Guarantees of origin |
GPTW |
|
Great Place to Work |
GRI |
|
Global Reporting Initiative |
HR&O |
|
Human Resources and Organization |
HR4U |
|
ASMLs integrated Human Resources information system |
HSM |
|
Hazardous Substance Management |
ILO |
|
International Labour Organization |
imec |
|
Interuniversitair Micro-Elektronica Centrum |
IPR |
|
Intellectual Property Rights |
IRM |
|
Installation Requirement Manual |
KPI |
|
Key performance indicator |
kWh |
|
kilo Watt hour |
Logic |
|
Micro-processor manufacturers and Foundries |
LTA |
|
Lost time accident |
Memory |
|
NAND-Flash memory and DRAM memory chip makers |
NASDAQ |
|
NASDAQ Stock Market LLC |
NAND |
|
A binary operator composite of NOT AND |
NC |
|
Nonconformance |
Nikon |
|
Nikon Corporation |
NL |
|
The Netherlands |
nm |
|
Nanometer (one billionth of a meter) |
NPR |
|
Non-product related |
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 |
NXE:3300B |
|
Third-generation EUV systems |
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 |
OECD |
|
Organization for Economic Cooperation and Development |
PAS |
|
Philips Automatic Stepper |
PGP |
|
Product Generation Process |
PPM |
|
People Performance Management Process |
PR |
|
Product related |
QLTCS |
|
Quality, Logistics, Technology, Cost, and Sustainability management |
QPI |
|
Quality and Process Improvement department |
R&D |
|
Research and Development |
RECs |
|
Renewable Energy Certificates |
REACH |
|
Registration, Evaluation, Authorization, and Restriction of Chemicals |
ROAIC |
|
Return on average invested capital |
RoHS |
|
Reduction of Hazardous Substances |
SAT |
|
Supplier Account Team (also the term used for a business critical supplier) |
SEC |
|
The United States Securities and Exchange Commission |
SEMI |
|
Semiconductor Equipment and Materials International |
|
|
|
|
|
ASML Corporate Responsibility Report 2014 |
|
74 |
|
|
|
|
|
Abbreviation |
|
Description |
SPB |
|
Sourcing Policy Board |
SVP |
|
Senior Vice President |
TJ |
|
Terajoule |
TRMs |
|
Technology review meetings |
U.S. |
|
United States of America |
US GAAP |
|
Generally accepted accounting principles in the United States of America |
VBDO |
|
De Vereniging van Beleggers voor Duurzame Ontwikkeling (the Dutch association of investors for sustainable development) |
VLSI |
|
An independent industry research firm that surveyed customers representing 95% of the worlds total semiconductor market |
Yieldstar |
|
Advanced wafer metrology system
|
|
|
|
|
|
ASML Corporate Responsibility Report 2014 |
|
75 |
|
|
ASML contact information
Corporate headquarters
De Run 6501
5504 DR Veldhoven
The Netherlands
Mailing address
P.O. Box 324
5500 AH Veldhoven
The Netherlands
Corporate Communications
Tel: +31 40 268 4941
Fax: +31 40 268 3655
E-mail:
corpcom@asml.com
Investor Relations
Tel: +31 40 268 3938
E-mail:
investor.relations@asml.com
For more information, visit our website:
www.asml.com
|
|
|
|
|
ASML Corporate Responsibility Report 2014 |
|
76 |
|
|
Exhibit 99.4
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
ASML publishes 2014 Annual Reports
VELDHOVEN, the Netherlands, 11 February 2015 - ASML Holding N.V. (ASML) today will file its 2014 Annual Report on
Form 20-F with the U.S. Securities and Exchange Commission (SEC), and will file its 2014 Statutory Annual Report with the Dutch Authority for the Financial Markets (AFM). In addition, ASML publishes its
2014 Corporate Responsibility Report and 2014 Remuneration Report.
|
|
|
ASMLs 2014 Annual Report on Form 20-F, 2014 Statutory Annual Report, 2014 Remuneration Report and 2014 Corporate Responsibility Report are available at www.asml.com/annualreport2014, where also our
financial statements can be downloaded in the Excel spreadsheet format; ASMLs annual reports will also be available at www.sec.gov |
|
|
|
ASML will hold its Annual General Meeting of Shareholders (AGM) on 22 April 2015 and the AGM agenda with all related documents will be available online at www.asml.com/agm2015 on 4 March 2015.
|
About ASML
ASML makes possible
affordable microelectronics that improve the quality of life. ASML invents and develops complex technology for high-tech lithography machines for the semiconductor industry. ASMLs guiding principle is continuing Moores Law towards ever
smaller, cheaper, more powerful and energy-efficient semiconductors. Our success is based on three pillars: technology leadership combined with customer and supplier intimacy, highly efficient processes and entrepreneurial people. We are a
multinational company with over 70 locations in 16 countries, headquartered in Veldhoven, the Netherlands. We employ more than 14,000 people on payroll and flexible contracts (expressed in full time equivalents). Our company is an inspiring place
where employees work, meet, learn and share. 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
Forward Looking Statements
This press release contains statements that constitute forward-looking statements, including statements relating to the date of ASMLs annual general
meeting of shareholders and the publication of documents related thereto. 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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