ASML Holding N.V. (ASML) has reported total net sales of EUR2.9 billion for the year-end 2008, down 21.6%, compared with the total net sales of EUR3.8 billion in the previous year-end. It has also reported a net income of EUR322.4 million, or EUR0.74 per diluted share, for the year-end 2008, compared with the net income of EUR671 million, or EUR1.41 per diluted share, in the previous year-end.

Fourth quarter 2008 net sales of EUR494 million versus third quarter 2008 net sales of EUR696 million (Fourth quarter 2007 net sales of EUR955 million).

Fourth quarter 2008 net loss of EUR88 million, or 17.8% of net sales, including restructuring and impairment charges of EUR138 million. Excluding the effect of these fourth quarter charges net of taxes, ASML would have booked net income of EUR11 million or 2.3% of net sales, versus third quarter 2008 net income of EUR73 million or 10.5% of net sales (Fourth quarter 2007 net income of EUR193 million or 20.2% of net sales).

Fourth quarter 2008 net bookings valued at EUR127 million with 13 systems including 5 new and 8 used systems, leading to an order backlog valued at EUR755 million as of December 31, 2008.

As per our December 18, 2008 announcement, net sales in the fourth quarter of 2008 fell just below EUR500 million and net bookings were very weak, confirming the major impact of the worldwide recession on the semiconductor equipment industry, said Eric Meurice, president and chief executive officer of ASML. Fourth quarter sales were impacted compared with previous guidance, as three systems were delayed by memory customers. Low fourth quarter bookings of 13 units were the result of a virtual freeze in capital expenditure by most customers, due to declining utilization rates and the inability of some customers to finance their technology transition plans. In view of the medium-term market prospects, we took restructuring and impairment charges in the fourth quarter of EUR138 million, reflecting our implementation of measures to structurally lower our cost base and the introduction of new, more cost-competitive, scanner models, Meurice said.

Operations Update:

Full year 2008 net sales of EUR2,954 million consisted of system sales of EUR2,517 million, as the company shipped a total of 151 systems, including 115 new and 36 used, and net service and field option sales which amounted to EUR437 million. 2007 net sales of EUR3,768 million consisted of net system sales of EUR3,351 million, as the company shipped a total of 260 systems, including 235 new and 25 used and net service and field option sales of EUR417 million.

In fourth quarter 2008, ASML’s net sales of EUR494 million included 15 new and 10 used systems, totaling net system sales of EUR381 million, and net service and field options sales of EUR113 million. Net system sales for third quarter 2008 included the shipment of 26 new and 11 used machines, totaling EUR591 million, and net service and field options sales of EUR105 million.

The fourth quarter 2008 average selling price for a new system was EUR20.4 million, compared with the third quarter 2008 average selling prices for a new system of EUR21.6 million. The fourth quarter 2008 average selling price for all ASML systems sold was EUR15.2 million, compared with the third quarter 2008 ASP of EUR16.0 million.

Fourth quarter 2008 net bookings totaled 13 systems valued at EUR127 million.

ASML’s order backlog as of December 31, 2008 was EUR755 million, totaling 41 systems with an average selling price of EUR18.4 million. ASML’s backlog as of September 28, 2008 was valued at EUR1,028 million, totaling 53 systems with an average selling price of EUR19.4 million.

In fourth quarter 2008, ASML generated a net loss of EUR88 million, including exceptional restructuring and impairment charges of EUR138 million, or a net loss of EUR0.20 per ordinary share as compared with a net income in third quarter 2008 of EUR73 million or EUR0.17 per ordinary share. We recorded net income of EUR322 million (EUR0.75 per ordinary share) for the full year, compared with EUR671 million (EUR1.45 per ordinary share) for 2007.

The company’s fourth quarter 2008 gross margin was 7.9%. Excluding restructuring and impairment charges gross margin would have been 35.5%. This margin is the result of a lower level of net sales and compares with the third quarter 2008 gross margin of 38.1%.

Fourth quarter 2008 research and development (R&D) costs were EUR127 million net of credits (including impairment charges of EUR1 million) down from third quarter 2008 R&D costs of EUR130 million net of credits.

Selling, general and administrative (SG&A) costs were EUR47 million in fourth quarter 2008 (including restructuring charges of EUR1 million), compared with SG&A costs of EUR52 million in third quarter 2008.

Net cash used was EUR204 million in fourth quarters 2008. The major items affecting this cash outflow were: suddenly delayed system deliveries which had an impact on inventories for which we still paid our suppliers, back-end loaded shipments for which receivables were not due in the quarter, paid income taxes for prior years, and investments in our new Extreme Ultraviolet (EUV) factory. ASML ended fourth quarter 2008 with EUR1,109 million in cash and cash equivalents, compared with EUR1,313 million by the end of third quarter.


The severity of the global economic downturn has caused semiconductor manufacturers to delay their investment plans. The uncertainty as to the timing of a semiconductor end-product demand pick up and the time needed to complete the current consolidation and restructuring activities in the memory sector, makes a recovery prediction impossible. We have therefore taken decisive actions to adjust our cost structure to cope with these exceptional economic circumstances so we can generate cash at a low level of sales, while not impacting our current aggressive technology development roadmap. In addition, we plan to maintain a level of manufacturing capacity to ramp production to customer needs without lengthy lead times, as the lithography market may pick up quickly once end-product demand recovers, Meurice said.

ASML expects first quarter 2009 net sales between EUR180 million to EUR200 million, and gross margin in first quarter 2009 of about 8%. R&D expenditures are expected to be at EUR117 million net of credits and SG&A costs are expected at EUR44 million.

ASML will submit a proposal to the 2009 General Meeting of Shareholders to declare a dividend of EUR0.20 per share (about EUR86 million), representing 27% of net income per ordinary share, compared with a dividend of EUR0.25 per ordinary share paid in 2008, representing 17% of net income per ordinary share.

ASML has reduced costs through a comprehensive company-wide efficiency program, while not impacting key research and development projects. We have been able to react quickly by using the flexibility of our business model, including significant use of contract and flexible labor. ASML still has an extensive pool of flexible contracts and we intend to avoid forced redundancies. By first quarter 2009 we expect to have cut our operational expenses by EUR50 million per quarter. We expect that these savings, in combination with reduced components purchasing and the assembly of components already in inventory, will help us generate a positive first quarter operating cash flow. Also, about half of our quarterly cost savings will be sustainable when the economy recovers, making ASML a much leaner and more profitable company.

The company will continue investing in new Double Patterning and EUV lithography platforms to address the 32 nanometer node and beyond, in order to lead the semiconductor industry to the next generations of chip manufacturing technologies. The company’s EUV production system roadmap supports cost-effective chip manufacturing to 22 nanometers and smaller; we will start deliveries of five production systems already in 2010. In addition, ASML has developed a range of resolution enhancement techniques which leading vendors are implementing to reduce cost per chip. These techniques, from advanced illumination shaping to radical mask pattern enhancements, require powerful computational modeling and intimate knowledge of the scanner systems.