ASML International N.V.
Annual Report 2012

Plain-text annual report

Annual Report 2012 Form 20-F ASML￿ANNUAL￿REPORT￿2012 United￿States Securities￿and￿Exchange￿Commission Washington, D.C. 20549 Form￿20-F ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 for the fiscal year ended December 31, 2012 Commission file number 025566 ASML HOLDING N.V. (Exact￿Name￿of￿Registrant￿as￿Specified￿in￿Its￿Charter) THE NETHERLANDS (Jurisdiction￿of￿Incorporation￿or￿Organization) DE RUN 6501 5504 DR VELDHOVEN THE NETHERLANDS (Address￿of￿Principal￿Executive￿Offices) Craig DeYoung Telephone: +1 480 383 4005 Facsimile: +1 480 383 3978 E-mail: craig.deyoung@asml.com 8555 South River Parkway, Tempe, AZ 85284, USA (Name,￿Telephone,￿E-mail,￿and￿/￿or￿Facsimile￿number￿and￿Address￿of￿Company￿Contact￿Person) Securities￿registered￿or￿to￿be￿registered￿pursuant￿to￿Section￿12(b)￿of￿the￿Act: Title of each class Ordinary￿Shares (nominal￿value￿EUR￿0.09￿per￿share) Name of each exchange on which registered The￿NASDAQ￿Stock￿Market￿LLC Securities￿registered￿or￿to￿be￿registered￿pursuant￿to￿Section￿12(g)￿of￿the￿Act: None (Title￿of￿Class) Securities￿for￿which￿there￿is￿a￿reporting￿obligation￿pursuant￿to￿Section￿15(d)￿of￿the￿Act: None (Title￿of￿Class) Indicate￿the￿number￿of￿outstanding￿shares￿of￿each￿of￿the￿issuer’s￿classes￿of capital￿or￿common￿stock￿as￿of￿the￿close￿of￿the￿period￿covered￿by￿the￿annual￿report. 407,165,221 Ordinary Shares (nominal value EUR 0.09 per share) Indicate￿by￿check￿mark￿if￿the￿registrant￿is￿a￿well-known￿seasoned￿issuer,￿as￿defined￿in￿Rule￿405￿of￿the￿Securities￿Act. Yes￿(x)￿No￿(￿) If￿this￿report￿is￿an￿annual￿or￿transition￿report,￿indicate￿by￿check￿mark￿if￿the￿registrant is￿not￿required￿to￿file￿reports￿pursuant￿to￿Section￿13￿or￿15(d)￿of￿the￿Securities￿Exchange￿Act￿of￿1934. Yes￿(￿)￿No￿(x) Indicate￿by￿check￿mark￿whether￿the￿registrant:￿(1)￿has￿filed￿all￿reports￿required￿to￿be￿filed￿by￿Section￿13￿or￿15(d)￿of￿the Securities￿Exchange￿Act￿of￿1934￿during￿the￿preceding￿12￿months￿(or￿for￿such￿shorter￿period￿that￿the￿registrant was￿required￿to￿file￿such￿reports),￿and￿(2)￿has￿been￿subject￿to￿such￿filing￿requirements￿for￿the￿past￿90￿days. Yes￿(x)￿No￿(￿) Indicate￿by￿check￿mark￿whether￿the￿registrant￿has￿submitted￿electronically and￿posted￿on￿its￿corporate￿web￿site,￿if￿any,￿every￿Interactive Data￿File￿required￿to￿be￿submitted￿and￿posted￿pursuant￿to￿Rule 405￿of￿Regulation￿S-T￿(§232.405￿of￿this￿chapter)￿during￿the preceding￿12￿months￿(or￿for￿such￿shorter￿period￿that￿the￿registrant￿was￿required￿to￿submit￿and￿post￿such￿files). Yes￿(x)￿No￿(￿) Indicate￿by￿check￿mark￿whether￿the￿registrant￿is￿a￿large￿accelerated￿filer,￿an￿accelerated￿filer,￿or￿a￿non-accelerated￿filer. See￿definition￿of￿"accelerated￿filer￿and￿large￿accelerated￿filer"￿in￿Rule￿12b-2￿of￿the￿Exchange￿Act.￿(Check￿one): Large￿accelerated￿filer￿(x)￿Accelerated￿filer￿(￿)￿Non-accelerated￿filer￿(￿) Indicate￿by￿check￿mark￿which￿basis￿of￿accounting￿the￿registrant￿has￿used￿to￿prepare the￿financial￿statements￿included￿in￿this￿filing: U.S.￿GAAP￿(x)￿International￿Financial￿Reporting￿Standards￿as￿issued￿by￿the ￿International￿Accounting￿Standards￿Board￿(￿)￿Other￿(￿) If￿"Other"￿has￿been￿checked￿in￿response￿to￿the￿previous￿question,￿indicate￿by￿checkmark which￿financial￿statement￿item￿the￿registrant￿has￿elected￿to￿follow. Item￿17￿(￿)￿Item￿18(￿) If￿this￿is￿an￿annual￿report,￿indicate￿by￿check￿mark￿whether￿the￿registrant￿is￿a shell￿company￿(as￿defined￿in￿Rule￿12b-2￿of￿the￿Exchange￿Act) Yes￿(￿)￿No￿(x) Name￿and￿address￿of￿person￿authorized￿to￿receive￿notices￿and￿communications from￿the￿Securities￿and￿Exchange￿Commission: Richard A. Ely Skadden, Arps, Slate, Meagher & Flom (UK) LLP 40 Bank Street, Canary Wharf London E14 5DS England ASML￿ANNUAL￿REPORT￿2012 Contents Part I Item 1 Identity of Directors, Senior Management and Advisors Item 2 Offer Statistics and Expected Timetable Item 3 Key Information A. Selected￿Financial￿Data B. Capitalization￿and￿Indebtedness C. Reasons￿for￿the￿Offer￿and￿Use￿of￿Proceeds D. Risk￿Factors Item 4 Information on the Company A. History￿and￿Development￿of￿the￿Company B. Business￿Overview C. Organizational￿Structure D. Property,￿Plant￿and￿Equipment Item 4A Unresolved Staff Comments Item 5 Operating and Financial Review and Prospects A. Operating￿Results B. Liquidity￿and￿Capital￿Resources C. Research￿and￿Development,￿Patents￿and￿Licenses,￿etc D. Trend￿Information E. Off-Balance￿Sheet￿Arrangements F. Tabular￿Disclosure￿of￿Contractual￿Obligations G. Safe￿Harbor Item 6 Directors, Senior Management and Employees A. Directors￿and￿Senior￿Management B. Compensation C. Board￿Practices D. Employees E. Share￿Ownership Item 7 Major Shareholders and Related Party Transactions A. Major￿Shareholders B. Related￿Party￿Transactions C. Interests￿of￿Experts￿&￿Counsel Item 8 Financial Information A. Consolidated￿Statements￿and￿Other￿Financial￿Information B. Significant￿Changes Item 9 The Offer and Listing A. Offer￿and￿Listing￿Details B. Plan￿of￿Distribution C. Markets D. Selling￿Shareholders E. Dilution F. Expenses￿of￿the￿Issue Item 10 Additional Information A. Share￿Capital B. Memorandum￿and￿Articles￿of￿Association C. Material￿Contracts D. Exchange￿Controls E. Taxation F. Dividends￿and￿Paying￿Agents G. Statement￿by￿Experts H. Documents￿on￿Display I. Subsidiary￿Information 1 ￿ 1 ￿ 1 ￿ 11 ￿ 20 ￿ 20 ￿ 40 ￿ 48 ￿ 51 ￿ 51 ￿ 53 ￿ ASML￿ANNUAL￿REPORT￿2012 Item 11 Quantitative and Qualitative Disclosures About Market Risk Item 12 Description of Securities Other Than Equity Securities 63 ￿ 65 ￿ Part II 67 ￿ 67 ￿ 67 ￿ 67 Item 13 Defaults, Dividend Arrearages and Delinquencies Item 14 Material Modifications to the Rights of Security Holders and Use of Proceeds Item 15 Controls and Procedures Item 16 A. Audit￿Committee￿Financial￿Expert B. Code￿of￿Ethics C. Principal￿Accountant￿Fees￿and￿Services D. Exemptions￿from￿the￿Listing￿Standards￿for￿Audit￿Committees E. Purchases￿of￿Equity￿Securities￿by￿the￿Issuer￿and￿Affiliated￿Purchasers F. Change￿in￿Registrant’s￿Certifying￿Accountant G. Corporate￿Governance H. Mine￿Safety￿Disclosure ￿ Part III Item 17 Financial Statements Item 18 Financial Statements Item 19 Exhibits 73 ￿ 73 ￿ 73 ￿ ASML￿ANNUAL￿REPORT￿2012 ASML￿ANNUAL￿REPORT￿2012 Part I Special Note Regarding Forward-Looking Statements In￿addition￿to￿historical￿information,￿this￿Annual￿Report￿on￿Form￿20-F￿("Annual￿Report")￿contains￿statements￿relating￿to our￿future￿business￿and/or￿results.￿These￿statements￿include￿certain￿projections￿and￿business￿trends￿that￿are￿"forward- looking"￿within￿the￿meaning￿of￿the￿Private￿Securities￿Litigation￿Reform￿Act￿of￿1995.￿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.￿They appear￿in￿a￿number￿of￿places￿throughout￿this￿report￿and￿include,￿without￿limitation,￿expected￿sales￿trends,￿expected shipments￿of￿tools,￿productivity￿of￿our￿tools,￿purchase￿commitments,￿intercircuit￿("IC")￿unit￿demand,￿financial￿results, statements￿about￿our￿co-investment￿program￿including￿potential￿funding￿commitments￿in￿connection￿with￿that￿program, statements￿about￿our￿agreement￿to￿acquire￿Cymer￿Inc.￿("Cymer")￿including￿the￿expected￿benefits￿of￿the￿acquisition and￿the￿development￿of￿EUV￿technology￿and￿volume￿production￿systems.￿These￿statements￿are￿not￿historical￿facts, but￿rather￿are￿based￿on￿current￿expectations,￿estimates,￿assumptions￿and￿projections￿about￿the￿business￿and￿future financial￿results￿of￿ASML￿and￿readers￿should￿not￿place￿undue￿reliance￿on￿them. Forward-looking￿statements￿do￿not￿guarantee￿future￿performance￿and￿involve￿risks￿and￿uncertainties.￿Actual￿results may￿differ￿materially￿from￿projected￿results￿as￿a￿result￿of￿certain￿risks￿and￿uncertainties.￿These￿risks￿and￿uncertainties include,￿without￿limitation,￿those￿described￿under￿Item￿3.D.￿"Risk￿Factors"￿and￿those￿detailed￿from￿time￿to￿time￿in our￿other￿filings￿with￿the￿United￿States￿Securities￿and￿Exchange￿Commission￿(the￿"Commission"￿or￿the￿"SEC").￿These forward-looking￿statements￿are￿made￿only￿as￿of￿the￿date￿of￿this￿annual￿report￿on￿Form￿20-F.￿We￿do￿not￿undertake￿to update￿or￿revise￿the￿forward-looking￿statements,￿whether￿as￿a￿result￿of￿new￿information,￿future￿events￿or￿otherwise. Item 1 Identity of Directors, Senior Management and Advisors Not￿applicable. Item 2 Offer Statistics and Expected Timetable Not￿applicable. Item 3 Key Information A. Selected Financial Data The￿following￿selected￿consolidated￿financial￿data￿should￿be￿read￿in￿conjunction￿with￿Item￿5￿"Operating￿and￿Financial Review￿and￿Prospects"￿and￿Item￿18￿"Financial￿Statements". ASML￿ANNUAL￿REPORT￿2012 1 Five-Year Financial Summary Year ended December 31 (in thousands, except per share data) ￿ Consolidated Statements of Operations data Net￿sales Cost￿of￿sales ￿ Gross profit on sales Research￿and￿development￿costs Selling,￿general￿and￿administrative￿costs ￿ Income (loss) from operations Interest￿income￿(expense),￿net ￿ Income (loss) before income taxes (Provision￿for)￿benefit￿from￿income￿taxes ￿ Net income (loss) ￿ Earnings per share data Basic￿net￿income￿(loss)￿per￿ordinary￿share Diluted￿net￿income￿(loss)￿per￿ordinary￿share1 ￿ Number￿of￿ordinary￿shares￿used￿in computing￿per￿share￿amounts￿(in￿thousands) Basic Diluted1 2012 EUR ￿ ￿ ￿ ￿ 4,731,555 ￿ 2,726,298 ￿ ￿ ￿ 2,005,257 ￿ 589,182 ￿ 259,301 ￿ ￿ ￿ 1,156,774 ￿ (6,196) ￿ ￿ ￿ 1,150,578 ￿ (4,262) ￿ ￿ ￿ 1,146,316 ￿ ￿ ￿ ￿ ￿ 2.70 ￿ 2.68 ￿ ￿ ￿ ￿ ￿ ￿ ￿ 424,096 ￿ 426,986 ￿ 2011 2 EUR ￿ ￿ ￿ ￿ 5,651,035 ￿ 3,201,645 ￿ ￿ ￿ 2,449,390 ￿ 590,270 ￿ 217,904 ￿ ￿ ￿ 1,641,216 ￿ 7,419 ￿ ￿ ￿ 1,648,635 ￿ (181,675) ￿ ￿ ￿ 1,466,960 ￿ ￿ ￿ ￿ ￿ 3.45 ￿ 3.42 ￿ ￿ ￿ ￿ ￿ ￿ ￿ 425,618 ￿ 429,053 ￿ 2010 EUR ￿ ￿ 4,507,938 2,552,768 ￿ 1,955,170 523,426 181,045 ￿ 1,250,699 (8,176) ￿ 1,242,523 (220,703) ￿ 1,021,820 ￿ ￿ 2.35 2.33 ￿ ￿ ￿ 435,146 438,974 2009 EUR ￿ ￿ 1,596,063 1,137,671 ￿ 458,392 466,761 154,756 ￿ (163,125) (8,425) ￿ (171,550) 20,625 ￿ (150,925) ￿ ￿ (0.35) (0.35) ￿ ￿ ￿ 432,615 432,615 2008 EUR ￿ ￿ 2,953,678 1,938,164 ￿ 1,015,514 516,128 210,172 ￿ 289,214 20,430 ￿ 309,644 12,726 ￿ 322,370 ￿ ￿ 0.75 0.74 ￿ ￿ ￿ 431,620 434,205 1 The￿calculation￿of￿diluted￿net￿income￿per￿ordinary￿share￿assumes￿the￿exercise￿of￿options￿issued￿under￿ASML￿stock￿option￿plans￿and￿the￿issuance￿of shares￿under￿ASML￿share￿plans￿for￿periods￿in￿which￿exercises￿or￿issuances￿would￿have￿a￿dilutive￿effect.￿The￿calculation￿of￿diluted￿net￿income￿per ordinary￿share￿does￿not￿assume￿exercise￿of￿such￿options￿or￿issuance￿of￿shares￿when￿such￿exercises￿or￿issuance￿would￿be￿anti-dilutive. 2 As￿of￿January￿1,￿2011,￿we￿adopted￿Accounting￿Standards￿Update￿("ASU")￿2009-13,￿"Revenue￿Arrangements￿with￿Multiple￿Deliverables"￿which amended￿ASC￿605-25.￿The￿ASU￿was￿adopted￿prospectively￿and￿had￿an￿insignificant￿impact￿on￿timing￿and￿allocation￿of￿revenues.￿See￿Note￿1￿to￿the consolidated￿financial￿statements. ASML￿ANNUAL￿REPORT￿2012 2 Five-Year Financial Summary 2012 EUR As of December 31 (in thousands, unless otherwise indicated) Consolidated Balance Sheets data Cash￿and￿cash￿equivalents Short-term￿investments Working￿capital2 Total￿assets Long-term￿debt3 Total￿shareholders’￿equity Share￿capital ￿ Consolidated Statements of Cash Flows data Depreciation￿and￿amortization Impairment Net￿cash￿provided￿by￿operating￿activities Purchase￿of￿property,￿plant￿and￿equipment ￿ ￿ 1,767,596 ￿ 930,005 ￿ 3,745,559 ￿ 7,410,478 ￿ 759,490 ￿ 4,066,893 ￿ 37,470 ￿ ￿ ￿ ￿ ￿ 186,620 ￿ 3,234 ￿ 703,478 ￿ (171,879) ￿ Purchase￿of￿available￿for￿sale￿securities (1,379,997) ￿ 449,993 ￿ (10,292) ￿ Net￿cash￿used￿in￿investing￿activities (1,119,833) ￿ 3,907,666 ￿ (3,728,324) ￿ - ￿ Maturity￿of￿available￿for￿sale￿securities Acquisition￿of￿subsidiary￿(net￿of￿cash￿acquired) Net￿proceeds￿from￿issuance￿of￿shares Capital￿repayment Purchase￿of￿shares￿in￿conjunction￿with￿conversion￿rights of￿bondholders￿and￿share-based￿payments Dividend￿paid Deposits￿from￿customers Purchase￿of￿shares Net￿cash￿provided￿by￿(used￿in)￿financing￿activities Net￿increase￿(decrease)￿in￿cash￿and￿cash￿equivalents ￿ Ratios and other data Gross￿profit￿as￿a￿percentage￿of￿net￿sales Income￿(loss)￿from￿operations￿as￿a￿percentage￿of￿net￿sales Net￿income￿(loss)￿as￿a￿percentage￿of￿net￿sales Shareholders’￿equity￿as￿a￿percentage￿of￿total￿assets Income￿taxes￿as￿a￿percentage￿of￿income￿(loss)￿before￿income￿taxes Sales￿of￿systems￿(in￿units) Average￿selling￿price￿of￿system￿sales￿(in￿millions) Value￿of￿systems￿backlog￿excluding￿EUV￿(in￿millions)4,5 Systems￿backlog￿excluding￿EUV￿(in￿units)4,5 Average￿selling￿price￿of￿systems￿backlog￿excluding￿EUV￿(in￿millions)4,5 Value￿of￿booked￿systems￿excluding￿EUV￿(in￿millions)4,5 Net￿bookings￿excluding￿EUV￿(in￿units)4,5 Average￿selling￿price￿of￿booked￿systems￿excluding￿EUV￿(in￿millions)4,5 Number￿of￿payroll￿employees￿in￿FTEs6 Number￿of￿temporary￿employees￿in￿FTEs6 Increase￿(decrease)￿net￿sales￿in￿percentage Number￿of￿ordinary￿shares￿issued￿and￿outstanding￿(in￿thousands) ASML￿share￿price￿in￿euro7 Volatility￿260￿days￿in￿percentage￿of￿ASML￿shares8 Dividend￿per￿ordinary￿share￿in￿euro Dividend￿per￿ordinary￿share￿in￿U.S.￿dollar (188,892) ￿ - ￿ (535,373) ￿ (545,583) ￿ (964,186) ￿ ￿ ￿ ￿ ￿ 42.4 ￿ 24.4 ￿ 24.2 ￿ 54.9 ￿ 0.4 ￿ 170 ￿ 22.4 ￿ 1,214.1 ￿ 46 ￿ 26.4 ￿ 3,312.3 ￿ 144 ￿ 23.0 ￿ 8,497 ￿ 2,139 ￿ (16.3) ￿ 407,165 ￿ 48.00 ￿ 28.64 ￿ 0.53 9 0.73 9,10 2011 1 EUR ￿ ￿ 2,731,782 ￿ - ￿ 3,473,767 ￿ 7,260,815 ￿ 736,368 ￿ 3,444,154 ￿ 38,354 ￿ ￿ ￿ ￿ ￿ 165,185 ￿ 12,272 ￿ 2,070,440 ￿ (300,898) ￿ - ￿ - ￿ - ￿ (300,898) ￿ 34,084 ￿ - ￿ - ￿ (172,645) ￿ (150,000) ￿ (700,452) ￿ (991,561) ￿ 781,948 ￿ ￿ ￿ ￿ ￿ 43.3 ￿ 29.0 ￿ 26.0 ￿ 47.4 ￿ 11.0 ￿ 222 ￿ 22.0 ￿ 1,732.5 ￿ 71 ￿ 24.4 ￿ 2,909.3 ￿ 134 ￿ 21.7 ￿ 7,955 ￿ 1,935 ￿ 25.4 ￿ 413,669 ￿ 32.48 ￿ 32.46 ￿ 0.46 ￿ 0.60 ￿ 2010 EUR ￿ 1,949,834 - 2,787,220 6,180,358 710,060 2,773,908 39,293 ￿ ￿ 151,444 8,563 940,048 (128,728) - - - (124,903) 31,000 - - (86,960) 150,000 - 92,702 912,760 ￿ ￿ 43.4 27.7 22.7 44.9 17.8 197 19.8 3,855.7 157 24.6 6,212.7 285 21.8 7,184 2,061 182.4 436,593 28.90 30.25 0.40 0.54 2009 EUR ￿ 1,037,074 - 1,704,714 3,764,151 699,756 1,774,768 39,028 ￿ ￿ 141,631 15,896 99,194 (104,959) - - - (98,082) 11,073 - - (86,486) - - (74,874) (72,110) ￿ ￿ 28.7 (10.2) (9.5) 47.1 12.0 70 16.8 2,113.7 69 30.6 2,535.4 98 25.9 6,548 1,137 (46.0) 433,639 24.00 38.45 0.20 0.27 2008 EUR ￿ 1,109,184 - 1,964,906 3,977,478 685,134 1,988,769 38,887 ￿ ￿ 121,423 25,109 282,979 (259,770) - - - (259,805) 11,475 - (87,605) (107,841) - - (186,471) (162,452) ￿ ￿ 34.4 9.8 10.9 50.0 (4.1) 151 16.7 857.3 41 20.9 1,730.9 103 16.8 6,930 1,329 (21.6) 432,074 12.75 51.14 0.20 0.26 1 As￿of￿January￿1,￿2011,￿we￿adopted￿Accounting￿Standards￿Update￿("ASU")￿2009-13,￿"Revenue￿Arrangements￿with￿Multiple￿Deliverables"￿which amended￿ASC￿605-25.￿The￿ASU￿was￿adopted￿prospectively￿and￿had￿an￿insignificant￿impact￿on￿timing￿and￿allocation￿of￿revenues.￿See￿Note￿1￿to￿the consolidated￿financial￿statements. 2 Working￿capital￿is￿calculated￿as￿the￿difference￿between￿total￿current￿assets￿and￿total￿current￿liabilities. 3 4 Our￿systems￿backlog￿and￿net￿bookings￿include￿only￿orders￿for￿which￿written￿authorizations￿have￿been￿accepted￿and￿system￿shipment￿and￿revenue Long-term￿debt￿includes￿the￿current￿portion￿of￿long-term￿debt. 5 recognition￿dates￿within￿the￿following￿12￿months￿have￿been￿assigned. From￿January￿1,￿2011,￿we￿value￿our￿net￿bookings￿and￿systems￿backlog￿at￿system￿sales￿value￿including￿factory￿options.￿Before￿January￿1,￿2011,￿we valued￿net￿bookings￿and￿systems￿backlog￿at￿full￿order￿value￿(i.e.￿including￿factory￿options,￿field￿options￿and￿services).￿The￿comparative￿figures￿for prior￿periods￿have￿not￿been￿adjusted￿because￿the￿impact￿on￿the￿comparative￿figures￿is￿insignificant￿(approximately￿EUR￿20.0￿million￿negative￿impact on￿backlog￿value￿as￿of￿December￿31,￿2010). Full-time￿employees￿("FTEs"). 6 7 Closing￿price￿at￿year-end￿of￿our￿ordinary￿shares￿listed￿on￿NYSE￿Euronext￿Amsterdam￿("NYSE￿Euronext￿Amsterdam")￿(source:￿Bloomberg￿Finance￿LP). 8 Volatility￿represents￿the￿variability￿in￿our￿share￿price￿on￿NYSE￿Euronext￿Amsterdam￿as￿measured￿over￿the￿260￿business￿days￿of￿each￿year￿presented (source:￿Bloomberg￿Finance￿LP). 9 Subject￿to￿approval￿of￿the￿Annual￿General￿Meeting￿of￿Shareholders￿("AGM")￿to￿be￿held￿on￿April￿24,￿2013. 10 The￿exchange￿rate￿used￿to￿convert￿the￿proposed￿dividend￿per￿ordinary￿share￿is￿the￿exchange￿rate￿at￿February￿1,￿2013. ASML￿ANNUAL￿REPORT￿2012 3 Exchange Rate Information We￿publish￿our￿consolidated￿financial￿statements￿in￿euros.￿In￿this￿Annual￿Report,￿references￿to￿"euro"￿or￿"EUR"￿are￿to euros,￿and￿references￿to￿"U.S.￿dollar"￿or￿"USD"￿are￿to￿United￿States￿dollars. A￿portion￿of￿our￿net￿sales￿and￿expenses￿is,￿and￿historically￿has￿been,￿denominated￿in￿currencies￿other￿than￿the￿euro.￿For a￿discussion￿of￿the￿impact￿of￿exchange￿rate￿fluctuations￿on￿our￿financial￿condition￿and￿results￿of￿operations,￿see￿Item 5.A.￿"Operating￿Results￿-￿Foreign￿Exchange￿Management". The￿following￿are￿the￿Noon￿Buying￿Rates￿certified￿by￿the￿Federal￿Reserve￿Bank￿for￿customs￿purposes￿(the￿"Noon￿Buying Rate"),￿expressed￿in￿U.S.￿dollars￿per￿euro. Calendar year ￿ Period￿End Period￿Average￿1 Period￿High Period￿Low 2013 (through February 1, 2013) ￿ 1.37 1.36 1.37 1.30 2012 ￿ 1.32 1.29 1.35 1.21 2011 ￿ 1.30 1.40 1.49 1.29 2010 ￿ 1.33 1.33 1.45 1.20 2009 ￿ 1.43 1.39 1.51 1.25 2008 ￿ 1.39 1.47 1.60 1.24 1 The￿average￿of￿the￿Noon￿Buying￿Rates￿on￿the￿last￿business￿day￿of￿each￿month￿during￿the￿period￿presented. Months of ￿ Period￿High Period￿Low February 2013 (through February 1, 2013) ￿ 1.37 1.37 January 2013 ￿ 1.36 1.30 December 2012 ￿ 1.33 1.29 November 2012 ￿ 1.30 1.27 October 2012 ￿ 1.31 1.29 September 2012 ￿ 1.31 1.26 August 2012 ￿ 1.26 1.21 B. Capitalization and Indebtedness Not￿applicable. C. Reasons for the Offer and Use of Proceeds Not￿applicable. D. 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. 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￿industry’s￿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: the￿current￿and￿anticipated￿market￿demand￿for￿semiconductors￿and￿for￿products￿utilizing￿semiconductors; • • semiconductor￿prices; • semiconductor￿production￿costs; • changes￿in￿semiconductor￿inventory￿levels; • general￿economic￿conditions;￿and • access￿to￿capital. 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￿net￿income.￿If￿sales ASML￿ANNUAL￿REPORT￿2012 4 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￿demand,￿we￿may￿also￿incur￿increased￿costs￿related￿to￿inventory￿obsolescence￿in￿an industry￿downturn.￿In￿addition,￿industry￿downturns￿generally￿result￿in￿overcapacity,￿resulting￿in￿downward￿pressure￿on 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￿ongoing￿financial￿crises￿that￿have￿affected￿the￿international￿banking￿system￿and￿global￿financial￿markets￿since￿2008 have￿been￿in￿many￿respects￿unprecedented.￿Concerns￿persist￿over￿the￿debt￿burden￿of￿certain￿Eurozone￿countries￿and their￿ability￿to￿meet￿future￿obligations,￿the￿overall￿stability￿of￿the￿euro,￿and￿the￿suitability￿of￿the￿euro￿as￿a￿single￿currency given￿the￿diverse￿economic￿and￿political￿circumstances￿in￿individual￿Eurozone￿countries.￿These￿concerns￿could￿lead￿to the￿re-introduction￿of￿the￿individual￿currencies￿in￿one￿or￿more￿Eurozone￿countries,￿or￿in￿more￿extreme￿circumstances, the￿possible￿dissolution￿of￿the￿euro￿currency￿entirely.￿These￿potential￿developments,￿or￿market￿perceptions￿concerning these￿and￿related￿issues,￿could￿adversely￿affect￿the￿value￿of￿our￿euro-denominated￿assets￿and￿obligations.￿In￿addition, remaining￿concerns￿over￿the￿effect￿of￿this￿financial￿crisis￿on￿financial￿institutions￿in￿Europe￿and￿globally,￿and￿the instability￿of￿the￿financial￿markets￿and￿the￿global￿economy￿in￿general￿could￿result￿in￿a￿number￿of￿follow-on￿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￿revenues,￿damage￿to￿customer￿relationships￿and￿we￿may￿lose￿market￿share. Our Business Will Suffer If We Do Not Respond Rapidly to Commercial and Technological Changes in the Semiconductor Industry The￿semiconductor￿manufacturing￿industry￿is￿subject￿to: rapid￿change￿towards￿more￿complex￿technologies; frequent￿new￿product￿introductions￿and￿enhancements; • • • evolving￿industry￿standards; • changes￿in￿customer￿requirements;￿and • continued￿shortening￿of￿product￿life￿cycles. 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￿research￿and￿development￿("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￿Extreme￿Ultraviolet￿lithography￿("EUV")￿and￿450mm￿wafer￿technology.￿If￿we￿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￿or￿for￿any￿other￿reasons,￿we￿would￿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￿remains￿particularly￿dependent￿on￿light￿source￿(laser)￿availability￿and￿continuing￿related￿technical advances￿by￿us￿and￿our￿suppliers,￿as￿well￿as￿infrastructure￿developments￿in￿masks￿and￿photoresists,￿without￿which￿the 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￿could￿discourage￿or￿result￿in￿much￿slower￿adoption￿of￿this￿technology.￿If￿the technologies￿that￿we￿pursue￿to￿assist￿our￿customers￿in￿producing￿smaller￿and￿more￿efficient￿chips,￿are￿not￿as￿effective ASML￿ANNUAL￿REPORT￿2012 5 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: • • the￿technical￿performance￿characteristics￿of￿a￿lithography￿system; the￿value￿of￿ownership￿of￿that￿system￿based￿on￿its￿purchase￿price,￿maintenance￿costs,￿productivity,￿and￿customer service￿and￿support￿costs; the￿exchange￿rate￿of￿the￿euro￿particularly￿against￿the￿Japanese￿yen￿which￿results￿in￿varying￿prices￿and￿margins; the￿strength￿and￿breadth￿of￿our￿portfolio￿of￿patents￿and￿other￿intellectual￿property￿rights;￿and • • • 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￿Item￿4.B.￿"Business￿Overview,￿Intellectual￿Property",￿Note￿10￿and￿Note￿18￿to￿our￿consolidated financial￿statements. We￿compete￿primarily￿with￿Nikon￿Corporation￿("Nikon")￿and￿to￿a￿lesser￿degree￿with￿Canon￿Kabushiki￿Kaisha￿("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.￿The￿failure￿to￿keep￿pace￿with￿Moore's￿law,￿which￿postulates￿that￿the￿number￿of￿transistors on￿a￿chip￿doubles￿approximately￿every￿18￿to￿24￿months￿at￿equivalent￿marginal￿costs,￿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. Risks￿Related￿to￿ASML 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￿the￿components￿and￿subassemblies￿used￿in￿our￿systems,￿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￿and￿the￿risk￿of￿untimely￿delivery￿of these￿components￿and￿subassemblies. The￿number￿of￿lithography￿systems￿we￿are￿able￿to￿produce￿is￿limited￿by￿the￿production￿capacity￿of￿Carl￿Zeiss￿SMT￿AG ("Zeiss").￿Zeiss￿is￿our￿single￿supplier￿of￿lenses￿and￿other￿critical￿optical￿components.￿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￿lenses￿over￿a￿prolonged￿period,￿we￿would￿effectively￿cease to￿be￿able￿to￿conduct￿our￿business.￿See￿Item￿4.B.￿"Business￿Overview￿-￿Manufacturing,￿Logistics￿and￿Suppliers".￿In addition￿to￿Zeiss’￿current￿position￿as￿our￿single￿supplier￿of￿lenses,￿the￿excimer￿laser￿illumination￿systems￿that￿provide the￿ultraviolet￿light￿source,￿used￿in￿our￿high￿resolution￿steppers￿and￿Step￿&￿Scan￿systems,￿and￿the￿extreme￿ultraviolet light￿source,￿used￿in￿our￿third-generation￿(NXE:3300B)￿EUV￿systems,￿are￿available￿from￿only￿a￿very￿limited￿number￿of suppliers. 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. ASML￿ANNUAL￿REPORT￿2012 6 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,￿we￿expect￿sales￿to￿remain concentrated￿among￿relatively￿few￿customers￿in￿any￿particular￿year.￿In￿2012,￿recognized￿sales￿to￿our￿largest￿customer accounted￿for￿EUR￿1,236.1￿million,￿or￿26.1￿percent￿of￿net￿sales,￿compared￿with￿EUR￿1,311.7￿million,￿or￿23.2￿percent￿of net￿sales,￿in￿2011.￿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￿58.9￿percent￿of￿accounts￿receivable￿and￿finance￿receivables￿at December￿31,￿2012,￿compared￿with￿35.5￿percent￿at￿December￿31,￿2011.￿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. We Derive Most of Our Revenues from the Sale of a Relatively Small Number of Systems We￿derive￿most￿of￿our￿revenues￿from￿the￿sale￿of￿a￿relatively￿small￿number￿of￿lithography￿equipment￿systems￿(170￿units in￿2012￿and￿222￿units￿in￿2011),￿with￿an￿average￿selling￿price￿("ASP")￿in￿2012￿of￿EUR￿22.4￿million￿(EUR￿24.8￿million￿for new￿systems￿and￿EUR￿7.6￿million￿for￿used￿systems)￿and￿an￿ASP￿in￿2011￿of￿EUR￿22.0￿million￿(EUR￿24.5￿million￿for￿new systems￿and￿EUR￿3.8￿million￿for￿used￿systems).￿As￿a￿result,￿the￿timing￿of￿recognition￿of￿revenue￿from￿a￿small￿number of￿system￿sales￿may￿have￿a￿significant￿impact￿on￿our￿net￿sales￿and￿operating￿results￿for￿a￿particular￿reporting￿period. Specifically,￿the￿failure￿to￿receive￿anticipated￿orders,￿or￿delays￿in￿shipments￿near￿the￿end￿of￿a￿particular￿reporting￿period, due,￿for￿example,￿to: • a￿downturn￿in￿the￿highly￿cyclical￿semiconductor￿industry; • unanticipated￿shipment￿rescheduling; • cancellation￿or￿order￿push-back￿by￿customers; • unexpected￿manufacturing￿difficulties;￿and • 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￿for￿the￿reasons discussed￿above. The Pace of Introduction of Our New Products Is Accelerating 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￿every￿new￿generation￿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,￿technology￿related￿to￿the￿light￿source￿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. ASML￿ANNUAL￿REPORT￿2012 7 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: • intellectual￿property￿laws￿may￿not￿sufficiently￿support￿our￿proprietary￿rights￿or￿may￿change￿in￿the￿future￿in￿a￿manner adverse￿to￿us; • patent￿rights￿may￿not￿be￿granted￿or￿construed￿as￿we￿expect; • patents￿will￿expire￿which￿may￿result￿in￿key￿technology￿becoming￿widely￿available￿that￿may￿hurt￿our￿competitive position; the￿steps￿we￿take￿to￿prevent￿misappropriation￿or￿infringement￿of￿our￿proprietary￿rights￿may￿not￿be￿successful;￿and 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￿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￿party￿to￿a￿series￿of￿civil￿litigations￿and￿administrative￿proceedings￿in￿which Nikon￿alleged￿ASML’s￿infringement￿of￿Nikon￿patents￿relating￿to￿lithography.￿ASML￿in￿turn￿filed￿claims￿against￿Nikon. Pursuant￿to￿agreements￿executed￿on￿December￿10,￿2004,￿ASML,￿Zeiss￿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￿(the￿“Nikon￿Cross-License Agreement”)￿and￿payments￿to￿Nikon￿by￿ASML￿and￿Zeiss.￿Beginning￿on￿January￿1,￿2015,￿the￿parties￿may￿bring￿suit￿for infringement￿of￿patents￿subject￿to￿the￿Nikon￿Cross-License￿Agreement,￿including￿any￿infringement￿that￿occurred￿during the￿Cross-License￿Transition￿Period.￿Damages￿related￿to￿claims￿for￿patent￿infringement￿occurring￿during￿the￿Cross- License￿Transition￿Period￿are￿limited￿to￿three￿percent￿of￿the￿net￿sales￿price￿of￿products￿utilizing￿patents￿that￿are￿valid and￿enforceable. 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,￿including￿the￿following: • potentially￿adverse￿tax￿consequences; • unfavorable￿political￿or￿economic￿environments; • unexpected￿legal￿or￿regulatory￿changes;￿and • an￿inability￿to￿effectively￿protect￿intellectual￿property. 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,￿31.3￿percent￿of￿our￿2012￿net￿sales￿and￿20.3￿percent￿of￿our￿2011￿net￿sales￿were￿derived￿from￿customers in￿Taiwan.￿Taiwan￿has￿a￿unique￿international￿political￿status.￿The￿People’s￿Republic￿of￿China￿asserts￿sovereignty￿over Taiwan￿and￿does￿not￿recognize￿the￿legitimacy￿of￿the￿Taiwanese￿government.￿Changes￿in￿relations￿between￿Taiwan￿and the￿People’s￿Republic￿of￿China,￿Taiwanese￿government￿policies￿and￿other￿factors￿affecting￿Taiwan’s￿political,￿economic or￿social￿environment￿could￿have￿a￿material￿adverse￿effect￿on￿our￿business,￿financial￿condition￿and￿results￿of￿operations. ASML￿ANNUAL￿REPORT￿2012 8 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￿clean￿room facilities￿in￿Veldhoven,￿the￿Netherlands,￿in￿Wilton,￿Connecticut,￿the￿United￿States￿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￿it￿were￿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. 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.￿Also￿see Item￿6.D￿"Employees". 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￿and￿Japanese￿yen. In￿addition,￿a￿portion￿of￿our￿assets￿and￿liabilities￿and￿operating￿results￿are￿denominated￿in￿U.S.￿dollars,￿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￿various￿currencies.￿In￿general,￿our customers￿run￿their￿businesses￿in￿U.S.￿dollars￿and￿therefore￿a￿weakening￿of￿the￿U.S.￿dollar￿against￿the￿euro￿might impact￿the￿ability￿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. See￿Item￿5.A.￿"Operating￿Results￿-￿Foreign￿Exchange￿Management". 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. We￿have￿entered￿into￿an￿agreement￿to￿acquire￿all￿of￿the￿outstanding￿shares￿of￿Cymer￿Inc.￿("Cymer").￿However￿the￿Cymer acquisition￿is￿subject￿to￿closing￿conditions,￿including￿review￿by￿U.S.￿and￿international￿regulators.￿Although￿closing￿is expected￿to￿occur￿within￿the￿first￿half￿of￿2013,￿there￿is￿no￿assurance￿that￿the￿transaction￿will￿be￿completed￿within￿the expected￿time￿period￿or￿at￿all.￿If￿our￿acquisition￿of￿Cymer￿is￿not￿completed,￿we￿may￿need￿to￿develop￿EUV￿light￿source technology￿ourselves,￿which￿could￿lead￿to￿significant￿costs￿and￿delays￿in￿the￿introduction￿of￿EUV￿systems. ASML￿ANNUAL￿REPORT￿2012 9 We￿expect￿that￿the￿acquisition￿of￿Cymer￿will￿make￿EUV￿technology￿more￿efficient,￿prevent￿additional￿delays￿in￿the introduction￿of￿EUV￿technology,￿and￿simplify￿the￿supply￿chain￿of￿EUV￿modules.￿However,￿achieving￿the￿benefits￿of￿the acquisition￿will￿depend￿in￿part￿on￿the￿integration￿of￿our￿development￿organization,￿operations￿and￿employees￿with￿those of￿Cymer￿in￿a￿timely￿and￿efficient￿manner,￿so￿as￿to￿minimize￿the￿risk￿that￿the￿transaction￿will￿result￿in￿a￿delay￿in￿the development￿of￿EUV￿as￿result￿of￿the￿loss￿of￿key￿employees￿of￿Cymer￿or￿the￿diversion￿of￿the￿attention￿of￿management. There￿can￿be￿no￿assurance￿that￿Cymer￿will￿be￿successfully￿integrated￿in￿our￿business￿or￿that￿any￿of￿the￿anticipated benefits￿will￿be￿realized.￿Even￿if￿we￿are￿able￿to￿successfully￿integrate￿Cymer,￿there￿is￿no￿assurance￿that￿this￿transaction will￿result￿in￿successful￿development￿of￿our￿EUV￿technology. 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￿depend￿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.￿The￿EUV￿and￿450mm￿R&D￿programs￿associated with￿the￿non-recurring￿research￿and￿development￿("NRE")￿commitments￿under￿the￿Customer￿Co-Investment￿Program will￿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￿EUV￿and￿450mm￿research￿programs￿on￿a￿timely￿basis,￿which could￿adversely￿affect￿our￿business,￿financial￿condition￿and￿results￿of￿operations. In￿addition,￿the￿increasing￿complexity￿of￿our￿products￿results￿in￿a￿longer￿learning-curve￿for￿new￿and￿existing￿employees leading￿to￿an￿inability￿to￿decrease￿cycle￿times￿and￿may￿result￿in￿the￿incurrence￿of￿significant￿additional￿costs,￿which could￿adversely￿affect￿our￿business,￿financial￿condition￿and￿results￿of￿operations. See￿Item￿4.B.￿"Business￿Overview,￿Customer￿Co-Investment￿Program". 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￿Board￿of￿Management￿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￿Board￿of￿Management’s views￿on￿our￿potential￿future￿liquidity￿requirements,￿including￿for￿investments￿in￿production￿capacity,￿the￿funding￿of our￿research￿and￿development￿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￿Board￿of￿Management￿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. The Price of Our Ordinary Shares is Volatile The￿current￿market￿price￿of￿our￿ordinary￿shares￿may￿not￿be￿indicative￿of￿prices￿that￿will￿prevail￿in￿the￿future.￿In￿particular, the￿market￿price￿of￿our￿ordinary￿shares￿has￿in￿the￿past￿experienced￿significant￿fluctuation,￿including￿fluctuation￿that￿is unrelated￿to￿our￿performance.￿This￿fluctuation￿may￿continue￿in￿the￿future. 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. See￿Item￿6.C.￿"Board￿Practices"￿and￿Item￿10.B.￿"Memorandum￿and￿Articles￿of￿Association". ASML￿ANNUAL￿REPORT￿2012 10 Participating Customers in our Customer Co-Investment Program Together Own a Significant Amount of our Ordinary Shares In￿the￿Customer￿Co-Investment￿Program,￿Intel￿Corporation￿("Intel"),￿Taiwan￿Semiconductor￿Manufacturing￿Company Ltd.￿("TSMC")￿and￿Samsung￿Electronics￿Corporation￿("Samsung")￿(collectively￿referred￿to￿as￿"participating￿customers") through￿certain￿wholly-owned￿subsidiaries,￿acquired￿15%,￿5%￿and￿3%,￿of￿our￿shares,￿respectively￿(such￿percentages give￿effect￿to￿our￿Synthetic￿Share￿Buyback￿in￿November￿2012). 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￿the￿Articles of￿Association￿that￿would￿materially￿affect￿the￿specific￿voting￿rights￿of￿Intel,￿TSMC￿and￿Samsung￿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,￿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. The￿participating￿customers￿have￿also￿agreed￿that￿they￿will￿not,￿without￿our￿prior￿written￿consent,￿transfer￿any￿of￿the ordinary￿shares￿they￿acquired￿in￿the￿Customer￿Co-Investment￿Program￿(or￿depositary￿receipts￿representing￿those shares)￿until￿two￿years￿and￿six￿months￿after￿the￿date￿they￿acquired￿such￿shares￿(September￿12,￿2012￿for￿Intel￿and Samsung;￿October￿31,￿2012￿for￿TSMC).￿Upon￿expiry￿of￿such￿period,￿the￿ordinary￿shares￿held￿by￿participating￿customers are￿freely￿transferable,￿subject￿to￿orderly￿market￿arrangements￿and￿certain￿other￿restrictions.￿Any￿sales￿of￿significant amounts￿of￿shares￿by￿participating￿customers￿in￿the￿program￿could￿have￿a￿negative￿effect￿on￿our￿share￿price. See￿Item￿4.B.￿"Business￿Overview,￿Customer￿Co-Investment￿Program". Item 4 Information on the Company A. History and Development of the Company We￿commenced￿business￿operations￿in￿1984.￿ASM￿Lithography￿Holding￿N.V.￿was￿incorporated￿in￿the￿Netherlands￿on October￿3,￿1994￿to￿serve￿as￿the￿holding￿company￿for￿our￿worldwide￿operations,￿which￿include￿operating￿subsidiaries in￿the￿Netherlands,￿the￿United￿States,￿Italy,￿France,￿Germany,￿the￿United￿Kingdom,￿Ireland,￿Belgium,￿Korea,￿Taiwan, Singapore,￿China￿(including￿Hong￿Kong),￿Japan,￿Malaysia￿and￿Israel.￿In￿2001,￿we￿changed￿our￿name￿to￿ASML￿Holding N.V.￿Our￿registered￿office￿is￿located￿at￿De￿Run￿6501,￿5504￿DR￿Veldhoven,￿the￿Netherlands,￿telephone￿number￿+31￿40 268￿3000. From￿time￿to￿time,￿we￿pursue￿acquisitions￿of￿businesses￿that￿we￿believe￿will￿complement￿or￿enhance￿our￿core lithography￿business.￿These￿have￿included￿amongst￿others￿the￿acquisition￿of￿MaskTools￿division￿in￿1999,￿Silicon￿Valley Group￿("SVG")￿in￿2001,￿Brion￿Technologies,￿Inc.￿("Brion")￿in￿2007￿and￿the￿acquisition￿of￿Wijdeven￿Motion￿Holding￿B.V. and￿Wijdeven￿Motion￿B.V.￿(hereafter￿jointly￿referred￿to￿as￿"Wijdeven￿Motion")￿in￿October￿2012. On￿October￿16,￿2012,￿we￿entered￿into￿a￿merger￿agreement￿(the￿"Merger￿Agreement")￿with￿Cymer.￿Pursuant￿to￿the￿merger agreement,￿we￿will￿acquire￿each￿share￿of￿Cymer’s￿common￿stock￿for￿consideration￿per￿Cymer￿share￿of￿USD￿20.00￿in cash￿and￿ordinary￿shares￿of￿ASML￿equal￿to￿a￿fixed￿ratio￿of￿1.1502￿ASML￿ordinary￿shares￿per￿share￿of￿Cymer￿common stock.￿The￿Merger￿Agreement￿provides￿for￿the￿acquisition￿of￿all￿of￿the￿outstanding￿shares￿of￿Cymer￿by￿a￿wholly-owned subsidiary￿of￿ASML￿US￿Inc.,￿an￿indirect￿wholly-owned￿subsidiary￿of￿ASML￿Holding￿N.V.￿Completion￿of￿the￿merger￿is subject￿to￿customary￿closing￿conditions,￿including￿expiration￿or￿termination￿of￿the￿applicable￿waiting￿period￿under￿the Hart-Scott-Rodino￿Act￿and￿receipt￿of￿approvals￿under￿other￿foreign￿competition￿laws.￿On￿february￿5,￿2013,￿the￿Cymer Stockholders￿approved￿the￿merger￿agreement.￿We￿expect￿the￿transaction￿to￿close￿in￿the￿first￿half￿of￿2013,￿however￿there is￿no￿assurance￿that￿the￿transaction￿will￿be￿completed￿within￿the￿expected￿time￿period￿or￿at￿all.￿See￿"Risk￿Factors,￿We May￿Be￿Unable￿to￿Make￿Desirable￿Acquisitions￿or￿to￿Integrate￿Any￿Businesses￿We￿Successfully￿Acquire". See￿Item￿4.B.￿"Business￿overview,￿Research￿and￿development"￿and￿item￿10.C.￿"Material￿Contracts,￿Cymer￿Merger"￿for more￿information￿on￿our￿agreements￿to￿acquire￿Cymer. ASML￿ANNUAL￿REPORT￿2012 11 Capital￿Expenditures￿and￿Divestures Our￿capital￿expenditures￿(purchases￿of￿property,￿plant￿and￿equipment)￿for￿2012,￿2011￿and￿2010￿amounted￿to￿EUR￿171.9 million,￿EUR￿300.9￿million￿and￿EUR￿128.7￿million,￿respectively.￿Our￿capital￿expenditures￿in￿these￿years￿mainly￿related to￿(i)￿the￿construction￿of￿our￿production￿facilities￿in￿Veldhoven,￿the￿Netherlands,￿for￿our￿latest￿technologies￿such￿as EUV￿and￿an￿improved￿version￿of￿the￿TWINSCAN￿platform,￿(ii)￿information￿technology￿investments,￿and￿(iii)￿leasehold improvements￿to￿our￿facilities.￿Capital￿expenditures￿are￿primarily￿financed￿through￿cash￿provided￿by￿operating￿activities. Divestures,￿mainly￿consisting￿of￿machinery￿and￿equipment,￿amounted￿to￿EUR￿2.3￿million￿for￿2012,￿EUR￿3.4￿million￿for 2011￿and￿EUR￿6.7￿million￿for￿2010.￿See￿Note￿11￿to￿our￿consolidated￿financial￿statements. B. Business Overview We￿are￿one￿of￿the￿world's￿leading￿providers￿(measured￿in￿revenue)￿of￿lithography￿systems￿for￿the￿semiconductor industry,￿manufacturing￿complex￿machines￿that￿are￿critical￿to￿the￿production￿of￿integrated￿circuits￿or￿chips. Headquartered￿in￿Veldhoven,￿the￿Netherlands,￿ASML￿is￿traded￿on￿Euronext￿Amsterdam￿and￿NASDAQ￿under￿the symbol￿ASML.￿ASML￿has￿approximately￿8,500￿employees￿on￿payroll￿(expressed￿in￿full￿time￿equivalents),￿serving￿chip manufacturers￿in￿more￿than￿55￿locations￿in￿16￿countries. Our￿business￿model Our￿business￿model￿is￿derived￿from￿our￿"Value￿of￿Ownership"￿concept￿which￿is￿based￿on￿the￿following￿principles: • offering￿ongoing￿improvements￿in￿productivity,￿imaging￿and￿overlay￿by￿introducing￿advanced￿technology￿based￿on modular￿platforms￿and￿advanced￿applications￿outside￿the￿traditional￿lithography￿business,￿each￿resulting￿in￿lower costs￿or￿higher￿value￿per￿product￿for￿our￿customers; • providing￿customer￿services￿that￿ensure￿rapid,￿efficient￿installation￿and￿superior￿support￿and￿training￿to￿optimize manufacturing￿processes￿of￿our￿customers￿and￿improve￿productivity; • maintaining￿appropriate￿levels￿of￿R&D￿to￿offer￿the￿most￿advanced￿technology￿suitable￿for￿high-throughput￿and￿low- cost￿volume￿production￿at￿the￿earliest￿possible￿date￿enhancing/following￿Moore's￿law; • enhancing￿the￿capabilities￿of￿the￿installed￿base￿of￿our￿customers￿through￿ongoing￿field￿upgrades￿of￿key￿value￿drivers (productivity,￿imaging￿and￿overlay)￿based￿on￿further￿technology￿developments; reducing￿the￿cycle￿time￿between￿a￿customer’s￿order￿of￿a￿system￿and￿the￿use￿of￿that￿system￿in￿volume￿production; • • expanding￿operational￿flexibility￿in￿research￿and￿manufacturing￿by￿reinforcing￿strategic￿alliances￿with￿world￿class partners,￿including￿outsourcing￿companies; improving￿the￿reliability￿and￿uptime￿of￿our￿installed￿system￿base;￿and • • providing￿refurbishing￿services￿that￿effectively￿increase￿residual￿value￿by￿extending￿the￿life￿of￿equipment. Market￿and￿Technology￿Overview The￿chip-making￿business￿is￿focused￿on￿"shrink"￿or￿reducing￿the￿size￿of￿chip￿designs.￿The￿worldwide￿electronics￿and computer￿industries￿have￿experienced￿significant￿growth￿since￿the￿commercialization￿of￿ICs￿in￿the￿1960s,￿largely￿due to￿the￿continual￿reduction￿in￿the￿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￿greater number￿of￿functions￿at￿faster￿speeds￿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,￿for￿production￿equipment￿that￿can￿accurately￿produce￿advanced￿ICs￿in￿high￿volumes￿at￿the￿lowest￿possible cost.￿Lithography￿is￿used￿to￿print￿complex￿circuit￿patterns￿onto￿the￿wafers￿that￿are￿the￿primary￿raw￿material￿for￿ICs￿and is￿one￿of￿the￿most￿critical￿and￿expensive￿steps￿in￿their￿fabrication.￿It￿is￿therefore￿a￿significant￿focus￿of￿the￿IC￿industry’s demand￿for￿cost-efficient￿enhancements￿to￿production￿technology. We￿primarily￿design,￿manufacture,￿market￿and￿service￿semiconductor￿processing￿equipment￿used￿in￿the￿fabrication of￿ICs.￿Our￿lithography￿equipment￿includes￿Step￿&￿Scan￿systems,￿which￿combine￿stepper￿technology￿with￿a￿photo- scanning￿method. Our￿systems￿use￿a￿mask￿to￿achieve￿the￿required￿chip￿pattern.￿A￿mask￿is￿a￿flat,￿transparent￿quartz￿plate￿containing￿an opaque￿microscopic￿pattern:￿an￿image￿of￿the￿electronic￿circuitry￿for￿one￿layer￿of￿a￿chip.￿The￿mask￿is￿placed￿in￿a￿scanner where￿intense￿light￿passing￿through￿it￿projects￿the￿pattern,￿via￿a￿series￿of￿reducing￿lenses,￿onto￿part￿of￿the￿wafer.￿Before exposure,￿the￿wafer￿is￿coated￿with￿photo￿resist￿and￿positioned￿so￿that￿the￿projected￿pattern￿aligns￿with￿existing￿features on￿the￿wafer.￿After￿exposure￿and￿developing,￿the￿pattern￿left￿on￿the￿wafer￿surface￿is￿used￿to￿selectively￿process￿and build￿up￿the￿next￿layer. ASML￿ANNUAL￿REPORT￿2012 12 Customer￿Roadmaps The￿four￿major￿customer￿sectors￿to￿which￿we￿sell￿our￿products￿are￿micro-processor￿manufacturers￿and￿Foundries (together￿"Logic"),￿NAND-Flash￿memory￿and￿DRAM￿memory￿chipmakers￿(together￿"Memory"). Supported￿by￿their￿technology￿roadmaps,￿IC￿manufacturers￿continue￿to￿show￿interest￿in￿shrinking￿resolution￿as￿a￿means to￿lower￿manufacturing￿costs￿per￿unit￿or￿adding￿value￿through￿more￿functional￿integration.￿We￿believe￿that￿the￿leading IC￿manufacturers￿have￿plans￿to￿migrate￿their￿production￿capabilities￿in￿the￿foreseeable￿future￿to￿resolutions￿beyond￿10 nanometer￿("nm"),￿for￿which￿they￿will￿require￿state-of-the-art￿lithography￿equipment. Products We￿develop￿lithography￿systems￿and￿related￿products￿for￿the￿semiconductor￿industry￿and￿related￿patterning applications.￿Our￿product￿development￿strategy￿focuses￿on￿the￿development￿of￿product￿families￿based￿on￿a￿modular, upgradeable￿design. Our￿older￿PAS￿2500￿and￿PAS￿5000￿lithography￿systems,￿which￿we￿no￿longer￿manufacture￿but￿continue￿to￿refurbish, are￿used￿for￿g-line￿and￿i-line￿processing￿of￿wafers￿up￿to￿150￿mm￿in￿diameter￿and￿are￿employed￿in￿manufacturing environments￿and￿in￿special￿applications￿for￿which￿design￿resolutions￿no￿more￿precise￿than￿0.5￿microns￿are￿required. Our￿PAS￿5500￿product￿family￿comprises￿advanced￿wafer￿steppers￿and￿Step￿&￿Scan￿systems￿suitable￿for￿i-line,￿Krypton Fluoride￿("KrF")￿and￿Argon￿Fluoride￿("ArF")￿processing￿of￿wafers￿up￿to￿200￿mm￿in￿diameter￿and￿are￿employed￿in￿volume manufacturing￿to￿achieve￿design￿nodes￿requiring￿resolutions￿down￿to￿90￿nm. We￿offer￿TWINSCAN￿systems,￿based￿on￿i-line,￿KrF￿and￿ArF￿processing￿of￿wafers￿up￿to￿300￿mm￿in￿diameter￿for manufacturing￿environments￿for￿which￿design￿resolutions￿down￿to￿38￿nm￿are￿required.￿The￿modular￿upgradeable￿design philosophy￿of￿the￿PAS￿5500￿product￿family￿has￿been￿further￿refined￿and￿applied￿in￿the￿design￿TWINSCAN.￿Introduced in￿2000,￿the￿TWINSCAN￿platform,￿is￿the￿basis￿for￿our￿current￿and￿next-generation￿Step-and￿Scan￿systems,￿which￿are capable￿of￿extending￿shrink￿technology￿down￿to￿the￿38￿nm￿node￿and￿beyond. We￿are￿one￿of￿the￿world's￿leaders￿(measured￿in￿revenues)￿in￿the￿innovation￿of￿immersion￿technologies￿and￿we￿were￿the world’s￿first￿producer￿of￿dual-stage￿design￿TWINSCAN￿systems.￿Wafer￿measurement,￿including￿focus￿and￿alignment, is￿completed￿on￿the￿dry￿stage,￿while￿the￿imaging￿process,￿using￿water￿applied￿between￿the￿wafer￿and￿the￿lens,￿is completed￿on￿the￿wet￿stage.￿The￿dual-stage￿advantage￿of￿TWINSCAN￿immersion￿systems￿enables￿our￿customers￿to benefit￿from￿the￿process￿enhancements￿of￿immersion￿while￿continuing￿to￿use￿familiar￿and￿proven￿metrology￿technology. Furthermore,￿we￿continuously￿develop￿and￿sell￿a￿range￿of￿product￿options￿and￿enhancements￿designed￿to￿increase productivity￿and￿improve￿imaging￿and￿overlay￿to￿optimize￿value￿of￿ownership￿over￿the￿entire￿life￿of￿our￿systems. The￿NXE￿platform￿("NXE")￿is￿based￿on￿a￿new￿platform￿utilizing￿the￿concepts￿of￿the￿TWINSCAN￿platform.￿NXE￿extends the￿industry￿proven￿modularity￿of￿our￿TWINSCAN￿NXT￿system￿("NXT")￿with￿new￿innovative￿technologies￿to￿support EUV￿imaging￿in￿several￿system￿critical￿areas,￿including￿the￿EUV￿light￿source,￿the￿reflective￿mirror￿optical￿system￿and￿all encompassed￿within￿a￿vacuum￿system.￿NXE￿is￿targeted￿for￿production￿of￿ICs￿down￿to￿16￿nm￿and￿beyond.￿It￿is￿equipped with￿EUV￿light￿source￿technology,￿based￿upon￿tin￿plasma,￿producing￿light￿at￿a￿wavelength￿of￿13.5￿nm.￿In￿addition,￿the NXE￿system￿has￿an￿innovative￿optical￿technology￿utilizing￿reflective￿mirrors￿rather￿than￿the￿traditional￿refractive￿optics with￿a￿numerical￿aperture￿("NA")￿of￿0.25￿–￿0.33.￿The￿light￿in￿NXE￿operates￿in￿a￿vacuum￿environment,￿through￿the￿entire optical￿train￿to￿wafer￿level.￿With￿the￿combination￿of￿these￿revolutionary￿technologies,￿EUV￿offers￿the￿potential￿to￿provide our￿customers￿a￿roadmap￿for￿future￿shrink,￿and￿we￿expect￿it￿to￿become￿the￿Lithography￿technology￿for￿the￿coming years.￿The￿success￿of￿EUV￿remains￿particularly￿dependent￿on￿light￿source￿(laser)￿availability￿and￿continuing￿related technical￿advances￿by￿us￿and￿our￿suppliers,￿as￿well￿as￿infrastructure￿developments￿in￿masks￿and￿photoresists.￿We￿are actively￿working￿with￿our￿suppliers￿to￿improve￿the￿availability￿and￿performance￿of￿the￿light￿source￿and￿to￿achieve￿these related￿technical￿advances. ASML￿ANNUAL￿REPORT￿2012 13 Cymer We￿have￿agreed￿to￿acquire￿Cymer,￿subject￿to￿certain￿closing￿conditions.￿We￿believe￿that￿the￿acquisition￿of￿Cymer, if￿completed,￿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￿Cymer's￿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￿sufficient￿resources￿to￿complete￿the￿development￿of￿the￿EUV￿source￿and￿as￿a￿result,￿the￿only￿way￿to make￿the￿EUV￿source￿development￿successful￿without￿additional￿delay￿is￿through￿the￿acquisition￿of￿Cymer.￿In￿addition we￿believe￿that￿the￿acquisition￿will￿allow￿us￿to￿more￿effectively￿partition￿responsibilities￿between￿Cymer,￿its￿suppliers￿and us￿with￿respect￿to￿EUV￿light￿source￿development,￿reducing￿risk￿and￿increasing￿development￿speed. Completion￿of￿the￿merger￿is￿subject￿to￿customary￿closing￿conditions,￿including￿expiration￿or￿termination￿of￿the applicable￿waiting￿period￿under￿the￿Hart-Scott-Rodino￿Act￿and￿receipt￿of￿approvals￿under￿other￿foreign￿competition laws.￿On￿february￿5,￿2013,￿the￿Cymer￿Stockholders￿approved￿the￿merger￿agreement.￿We￿expect￿the￿transaction￿to￿close in￿the￿first￿half￿of￿2013,￿however￿there￿is￿no￿assurance￿that￿the￿transaction￿will￿be￿completed￿within￿the￿expected￿time period￿or￿at￿all.￿See￿"Risk￿Factors,￿We￿May￿Be￿Unable￿to￿Make￿Desirable￿Acquisitions￿or￿to￿Integrate￿Any￿Businesses￿We Successfully￿Acquire". See￿also￿Item￿10.C￿"Material￿Contracts,￿Cymer￿Merger". Product￿Development In￿2003,￿we￿introduced￿the￿second-generation￿of￿TWINSCAN￿("XT")￿systems￿with￿a￿50￿percent￿reduction￿in￿the￿main production￿area￿occupied￿by￿our￿system. In￿2004,￿we￿shipped￿our￿first￿lithography￿systems￿based￿on￿immersion￿technology.￿These￿shipments￿marked￿the￿delivery of￿the￿industry’s￿first￿high￿productivity￿immersion￿scanners￿for￿mainstream￿production. In￿2006,￿we￿shipped￿the￿industry’s￿first￿EUV￿Alpha￿Demo￿Tools￿to￿two￿research￿institutions,￿which￿work￿closely￿with most￿of￿the￿world’s￿major￿IC￿manufacturers￿in￿developing￿manufacturing￿processes￿and￿materials. Also￿in￿2006,￿we￿started￿volume￿production￿of￿the￿TWINSCAN￿XT:1700i￿("XT:1700i"),￿a￿193￿nm￿immersion￿scanner capable￿of￿imaging￿at￿the￿45￿nm￿node￿in￿volume￿production￿environments.￿With￿a￿catadioptric￿lens￿design,￿this￿system featured￿a￿NA￿of￿1.2,￿substantially￿higher￿than￿that￿of￿its￿predecessor,￿the￿XT:1400,￿which￿had￿a￿NA￿of￿0.93,￿exceeding the￿non-immersion￿barrier￿of￿1.0.￿The￿XT:1700i￿has￿enabled￿chipmakers￿to￿improve￿resolution￿by￿30￿percent￿and￿has been￿employed￿in￿the￿development￿and￿manufacturing￿of￿the￿latest￿advanced￿generation￿of￿ICs. The￿acquisition￿of￿Brion￿in￿2007￿enabled￿us￿to￿improve￿the￿implementation￿of￿optical￿proximity￿correction￿("OPC") technology￿and￿resolution￿enhancement￿techniques￿("RET")￿such￿as￿double￿patterning￿technology￿("DPT")￿and￿Source- Mask￿Optimization￿("SMO")￿for￿masks.￿These￿improvements￿are￿extending￿the￿practical￿resolution￿limits￿of￿our￿ArF immersion￿products.￿Brion’s￿computational￿lithography￿capabilities￿have￿enabled￿us￿to￿offer￿products￿that￿further improve￿the￿set-up￿and￿control￿of￿our￿lithography￿systems. Our￿current￿computational￿lithography￿portfolio￿comprises￿both￿traditional￿products￿(such￿as￿RET/OPC/DPT/SMO),￿as well￿as￿solutions￿that￿directly￿interface￿with￿the￿numerous￿calibration￿controls￿in￿our￿scanner￿to￿optimize￿performance. Our￿computational￿lithography￿products￿capture￿detailed￿knowledge￿of￿scanner￿design￿and￿real￿performance,￿which enables￿them￿to￿accurately￿predict￿real-life￿manufacturing￿performance.￿These￿predictions￿are￿essential￿in￿addressing possible￿ramp-up￿and￿yield￿problems￿in￿advance,￿potentially￿avoiding￿months￿of￿delay￿in￿time-to-market￿for￿our customers.￿The￿same￿prediction￿capabilities￿allow￿our￿scanners￿to￿be￿optimally￿calibrated￿for￿improved￿performance￿in production,￿given￿specific￿chip￿designs￿or￿masks,￿thereby￿achieving￿improved￿yield. Once￿a￿scanner￿is￿optimally￿set-up￿for￿a￿given￿application,￿we￿also￿offer￿scanner￿control￿solutions￿that￿ensure￿that￿the performance￿of￿the￿lithographic￿process￿remains￿optimal￿and￿stable￿throughout￿production.￿These￿scanner￿control solutions￿leverage￿the￿scanner￿controls￿to￿compensate￿for￿potential￿performance￿drifts￿in￿the￿scanner￿itself,￿as￿well as￿in￿other￿steps￿of￿the￿device￿manufacturing￿process,￿such￿as￿mask￿deterioration,￿resist￿coating￿fingerprints,￿etching fingerprints,￿or￿chemical-mechanical￿polishing￿fingerprints.￿To￿provide￿a￿total￿solution￿for￿scanner￿control￿we￿offer￿our own￿advanced￿wafer￿metrology￿system￿("Yieldstar"). In￿2007,￿we￿began￿volume￿shipment￿of￿the￿XT:1900i,￿with￿a￿new￿industry￿benchmark￿of￿1.35￿NA,￿which￿is￿close￿to￿the practical￿limit￿for￿water-based￿immersion￿technology.￿This￿optical￿lithography￿system￿is￿capable￿of￿volume￿production￿of ICs￿down￿to￿40￿nm￿and￿below￿and￿is￿used￿for￿high￿volume￿IC￿manufacturing￿at￿multiple￿customers￿worldwide. ASML￿ANNUAL￿REPORT￿2012 14 In￿2008,￿we￿partly￿discontinued￿research￿into￿optical￿maskless￿lithography￿due￿to￿the￿reduced￿market￿opportunity￿for this￿technology.￿Research￿studies￿on￿alternative￿technologies￿continue￿for￿both￿mask-based￿and￿maskless￿lithography. In￿2009,￿we￿started￿shipments￿of￿XT:1950i￿systems,￿the￿enhanced￿version￿of￿the￿XT:1900i,￿with￿improved￿throughput of￿148￿wafers￿per￿hour,￿resolution￿of￿38￿nm￿and￿a￿scheduled￿overlay￿of￿4￿nm.￿This￿system￿extended￿the￿performance, imaging￿and￿overlay￿specifications￿of￿the￿successful￿XT:1900i￿system. In￿2009,￿we￿announced￿Tachyon￿SMO,￿a￿new￿product￿that￿provides￿the￿industry￿with￿improved￿manufacturable￿imaging solutions￿and￿is￿a￿major￿advancement￿of￿our￿industry￿standard￿SMO￿technology,￿which￿was￿currently￿in￿use￿by￿leading logic￿and￿memory￿manufacturers. In￿2009,￿we￿introduced￿FlexRayTM￿programmable￿illumination￿and￿BaseLiner TM￿scanner￿matching￿technology.￿Together, they￿offer￿scanner￿stability￿optimization￿and￿stabilize￿manufacturing￿process￿windows. Also￿in￿2009,￿we￿announced￿an￿improved￿version￿of￿the￿TWINSCAN￿platform￿called￿NXT￿featuring￿new￿stage￿and position￿control￿technology,￿providing￿improved￿imaging￿and￿overlay￿performance￿for￿immersion.￿Initial￿shipments started￿in￿the￿third￿quarter￿of￿2009￿and￿volume￿production￿and￿shipments￿commenced￿in￿2010.￿By￿the￿end￿of￿2011, three￿TWINSCAN￿NXT￿systems￿with￿throughput￿of￿200￿wafers￿per￿hour￿had￿been￿shipped￿to￿customers. In￿2010,￿we￿shipped￿the￿first￿second-generation￿EUV￿system￿called￿NXE:3100,￿and￿five￿more￿were￿shipped￿in￿2011.￿EUV will￿provide￿a￿large￿"process￿window"￿and￿much￿greater￿shrink￿compared￿with￿current￿approaches￿and￿we￿expect￿it￿to become￿the￿lithography￿solution￿for￿the￿next￿decade.￿The￿NXE:3100￿combine￿a￿wavelength￿of￿13.5￿nm￿and￿an￿optical system￿with￿a￿NA￿of￿0.25￿to￿provide￿imaging￿at￿a￿resolution￿of￿27￿nm. In￿2011,￿we￿received￿11￿orders￿for￿the￿successor￿to￿the￿NXE:3100,￿the￿third-generation,￿high-volume￿EUV￿system ("NXE:3300B").￿We￿expect￿to￿ship￿our￿first￿NXT:3300B￿in￿the￿second￿quarter￿of￿2013￿and￿we￿are￿targeting￿for￿a￿maximum of￿11￿potential￿shipments￿in￿2013.￿The￿third-generation￿EUV￿systems￿combine￿a￿wavelength￿of￿13.5￿mm￿and￿an￿optical system￿with￿a￿numerical￿aperture￿of￿0.33￿to￿provide￿imaging￿at￿a￿resolution￿of￿22￿nm.￿The￿enhancements￿or￿extensions of￿the￿NXE:3300B￿enable￿the￿improved￿performance,￿in￿the￿same￿manner￿that￿upgrades￿to￿the￿NXT￿platform￿improve￿its productivity. Also￿in￿2012,￿we￿delivered￿TWINSCAN￿NXT:19X0￿immersion￿systems￿which￿enable￿our￿customers￿to￿increase￿the productivity￿to￿more￿than￿200￿wafers￿per￿hour. The￿table￿below￿outlines￿our￿current￿product￿portfolio￿of￿Stepper￿and￿Scanner￿Systems￿by￿resolution￿and￿wavelength. ASML￿lithography￿product￿portfolio￿of￿Step￿&￿Scan￿Systems System PAS 5500 SYSTEMS PAS￿5500/4X0 PAS￿5500/750 PAS￿5500/850 PAS￿5500/1150 ￿ TWINSCAN SYSTEMS TWINSCAN￿XT:400 TWINSCAN￿XT:450 TWINSCAN￿XT:8X0 TWINSCAN￿XT:1000 TWINSCAN￿XT:1450 TWINSCAN￿XT:1700￿immersion TWINSCAN￿XT:1900￿immersion TWINSCAN￿XT:1950￿immersion TWINSCAN￿NXT:19X0￿immersion ￿ EUV NXE:3100 NXE:3300B Resolution ￿ 280￿nm 130￿nm 110￿nm 90￿nm ￿ ￿ 350￿nm 220￿nm 110￿nm 80￿nm 65￿nm 45￿nm 40￿nm 38￿nm 38￿nm ￿ ￿ 27￿nm 22￿nm Wavelength ￿ 365￿nm 248￿nm 248￿nm 193￿nm ￿ ￿ 365￿nm 365￿nm 248￿nm 248￿nm 193￿nm 193￿nm 193￿nm 193￿nm 193￿nm ￿ ￿ 13.5￿nm 13.5￿nm Lightsource ￿ i-line KrF KrF ArF ￿ ￿ i-line i-line KrF KrF ArF ArF ArF ArF ArF ￿ ￿ EUV EUV Numerical aperture ￿ 0.48-0.65 0.50-0.70 0.55-0.80 0.50-0.75 ￿ ￿ 0.48-0.65 0.48-0.65 0.55-0.80 0.50-0.93 0.65-0.93 0.75-1.20 0.85-1.35 0.85-1.35 0.85-1.35 ￿ ￿ 0.25 0.33 ASML￿ANNUAL￿REPORT￿2012 15 The￿table￿above￿can￿be￿further￿explained￿by￿the￿following￿notes: • This￿table￿does￿not￿include￿older￿(including￿pre-used)￿products￿sold￿on￿the￿PAS￿2500,￿PAS￿5000￿and￿PAS￿5500 platforms￿or￿system￿enhancements￿on￿steppers￿and￿scanners￿and￿other￿products￿(e.g.￿Yieldstar￿or￿computational lithography￿products). • XT￿is￿a￿TWINSCAN￿system￿for￿200￿and￿300￿mm￿wafer￿sizes. • Wavelength￿refers￿to￿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. • 1￿nm￿is￿equal￿to￿one￿billionth￿of￿a￿meter. • The￿X￿in￿the￿product￿number￿represents￿different￿models￿in￿the￿product￿portfolio￿within￿the￿same￿resolution.￿For example￿XT:8X0￿can￿either￿represent￿XT:800￿or￿XT:850. • NXT￿is￿an￿improved￿version￿of￿the￿current￿TWINSCAN￿system,￿introducing￿new￿stages￿and￿stage￿position￿control technology,￿which￿enable￿improved￿imaging￿and￿overlay. • NXE￿is￿a￿new￿platform￿utilizing￿the￿concepts￿of￿the￿TWINSCAN￿platform￿with￿complete￿new￿technologies￿in￿three areas:￿light￿source,￿lens￿system,￿and￿vacuum￿body. We￿have￿been￿developing￿Yieldstar￿for￿overlay￿and￿critical￿dimension￿(CD)￿measurements￿by￿using￿scatterometry technology.￿Yieldstar￿scatterometry￿provides￿high￿accuracy￿and￿low￿cost￿wafer￿metrology￿data￿that￿can￿be￿used￿for further￿improving￿the￿NXT/NXE￿performance.￿￿￿￿￿￿￿￿￿￿￿￿ Sales,￿Customer￿Support￿and￿Customers￿ We￿support￿our￿customers￿with￿a￿broad￿range￿of￿applications,￿services,￿and￿technical￿support￿products￿to￿maintain￿and maximize￿the￿performance￿of￿our￿systems￿at￿customer￿sites.￿We￿also￿offer￿refurbished￿and￿remanufactured￿tools,￿system upgrades￿and￿enhancements,￿and￿technical￿training. We￿market￿and￿sell￿our￿products￿through￿our￿direct￿sales￿force. Our￿field￿sales,￿field￿engineers￿and￿applications,￿service￿and￿technical￿support￿specialists￿are￿located￿throughout￿Asia, the￿United￿States￿and￿Europe.￿We￿have￿established￿the￿ASML￿Center￿of￿Excellence￿("ACE")￿in￿Taiwan,￿Asia.￿The￿primary goal￿of￿ACE￿is￿to￿serve￿as￿a￿supplementary￿engine￿to￿propel￿ASML’s￿long-term￿growth.￿ACE￿features￿customer￿support, training,￿logistics,￿refurbishment,￿technology,￿application￿development￿and￿will￿also￿produce￿all￿Yieldstar￿systems.￿ACE also￿enables￿sourcing￿of￿selected￿equipment￿modules,￿components￿and￿services￿in￿the￿region.￿Finally,￿ACE￿is￿used￿as￿a training￿center￿to￿develop￿worldwide￿talent￿for￿our￿workforce. Customers￿and￿Geographic￿Regions￿ In￿2012,￿recognized￿sales￿to￿our￿largest￿customer￿accounted￿for￿EUR￿1,236.1￿million,￿or￿26.1￿percent￿of￿net￿sales, compared￿with￿EUR￿1,311.7￿million,￿or￿23.2￿percent￿of￿net￿sales,￿in￿2011￿(2010:￿EUR￿1,270.8￿million￿or￿28.2￿percent￿of net￿sales).￿We￿expect￿that￿sales￿to￿a￿limited￿number￿of￿customers￿will￿continue￿to￿account￿for￿a￿high￿percentage￿of￿our net￿sales￿in￿any￿particular￿period￿for￿the￿foreseeable￿future. In￿2012,￿we￿derived￿70.7￿percent￿of￿net￿sales￿from￿Asia,￿23.9￿percent￿from￿the￿United￿States￿and￿5.4￿percent￿from Europe￿(2011:￿Asia:￿66.5￿percent;￿US:￿24.6￿percent￿and￿Europe:￿8.9￿percent;￿2010:￿Asia:￿80.5￿percent;￿US:￿15.0￿percent and￿Europe:￿4.5￿percent).￿See￿Note￿20￿to￿our￿consolidated￿financial￿statements. Manufacturing,￿Logistics￿and￿Suppliers￿ Our￿business￿model￿is￿based￿on￿outsourcing￿production￿of￿a￿significant￿part￿of￿the￿components￿and￿modules￿that comprise￿our￿lithography￿systems,￿working￿in￿partnership￿with￿suppliers￿from￿all￿over￿the￿world.￿Our￿manufacturing activities￿comprise￿the￿subassembly￿and￿testing￿of￿certain￿modules￿and￿the￿final￿assembly￿and￿fine￿tuning/testing￿of a￿finished￿system￿from￿components￿and￿modules￿that￿are￿manufactured￿to￿our￿specifications￿by￿third￿parties￿and￿by us.￿All￿of￿our￿manufacturing￿activities￿(subassembly,￿final￿assembly￿and￿system￿fine￿tuning/testing)￿are￿performed￿in clean￿room￿facilities￿in￿Veldhoven,￿the￿Netherlands,￿in￿Wilton,￿Connecticut,￿the￿United￿States￿and￿in￿Linkou,￿Taiwan. We￿procure￿stepper￿and￿scanner￿system￿components￿and￿subassemblies￿from￿a￿single￿supplier￿or￿a￿limited￿group￿of suppliers￿in￿order￿to￿ensure￿overall￿quality￿and￿timeliness￿of￿delivery.￿We￿jointly￿operate￿a￿formal￿strategy￿with￿suppliers known￿as￿"value￿sourcing",￿which￿is￿based￿on￿competitive￿performance￿in￿quality,￿logistics,￿technology￿and￿total￿cost. The￿essence￿of￿value￿sourcing￿is￿to￿maintain￿a￿supply￿base￿that￿is￿world￿class,￿globally￿competitive￿and￿globally￿present. Our￿value￿sourcing￿strategy￿is￿based￿on￿the￿following￿strategic￿principles: •￿￿￿￿￿￿maintaining￿long-term￿relationships￿with￿our￿suppliers; •￿￿￿￿￿￿sharing￿risks￿and￿rewards￿with￿our￿suppliers; •￿￿￿￿￿￿dual￿sourcing￿of￿knowledge,￿globally,￿together￿with￿our￿suppliers;￿and •￿￿￿￿￿￿single,￿dual￿or￿multiple￿sourcing￿of￿products,￿where￿possible￿or￿required. ASML￿ANNUAL￿REPORT￿2012 16 Value￿sourcing￿is￿intended￿to￿align￿the￿performance￿of￿our￿suppliers￿with￿our￿requirements￿on￿quality,￿logistics, technology￿and￿total￿costs. Zeiss￿is￿our￿sole￿external￿supplier￿of￿main￿optical￿systems￿and￿one￿of￿the￿suppliers￿of￿other￿components.￿In￿2012,￿28.0 percent￿of￿our￿aggregate￿cost￿of￿sales￿was￿purchased￿from￿Zeiss￿(2011:￿28.7￿percent;￿2010:￿31.4￿percent). 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￿for￿our￿systems.￿The expansion￿of￿this￿production￿capacity￿may￿require￿significant￿lead-time.￿From￿time￿to￿time,￿the￿number￿of￿systems￿we have￿been￿able￿to￿produce￿has￿been￿limited￿by￿the￿capacity￿of￿Zeiss￿to￿provide￿us￿with￿lenses￿and￿optical￿components. However,￿in￿2012￿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, each￿of￿which￿is￿obtained￿from￿a￿single￿supplier￿or￿a￿limited￿number￿of￿suppliers. See￿also￿Item￿3.D.￿"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￿in￿its￿manufacturing￿and￿R&D￿facilities in￿Veldhoven,￿the￿Netherlands,￿and￿payroll￿employees￿compensated￿under￿a￿partly￿variable￿salary￿structure￿through ASML’s￿profit￿sharing￿plan.￿This￿reinforces￿our￿ability￿to￿adapt￿more￿quickly￿to￿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￿for￿customers.￿Flexibility￿also￿reduces￿our working￿capital￿requirements. Research￿and￿Development￿ The￿semiconductor￿manufacturing￿industry￿is￿subject￿to￿rapid￿technological￿changes￿and￿new￿product￿introductions￿and enhancements.￿We￿believe￿that￿continued￿and￿timely￿development￿and￿introduction￿of￿new￿and￿enhanced￿systems￿are essential￿for￿us￿to￿maintain￿our￿competitive￿position.￿As￿a￿result,￿we￿have￿historically￿devoted￿a￿significant￿portion￿of our￿financial￿resources￿to￿R&D￿programs,￿and￿we￿expect￿to￿continue￿to￿allocate￿significant￿resources￿to￿these￿efforts. In￿addition,￿we￿have￿established￿sophisticated￿development￿centers￿in￿the￿Netherlands,￿the￿United￿States￿and￿Asia. We￿are￿also￿involved￿in￿joint￿R&D￿programs￿with￿both￿public￿and￿private￿partnerships￿and￿consortiums,￿involving independent￿research￿centers,￿leading￿chip￿manufacturers￿and￿governmental￿programs.￿We￿aim￿to￿own￿or￿license￿our jointly￿developed￿technology￿and￿designs￿of￿critical￿components. We￿apply￿for￿subsidy￿payments￿in￿connection￿with￿specific￿development￿projects￿under￿programs￿sponsored￿by￿the Dutch￿government,￿the￿European￿Union,￿the￿United￿States￿government￿and￿the￿Taiwanese￿government.￿These￿direct government￿grants￿are￿designed￿to￿stimulate￿high-risk￿research￿for￿the￿medium￿and￿long￿term￿future.￿R&D￿credits amounted￿to￿EUR￿17.9￿million￿in￿2012,￿compared￿with￿EUR￿25.1￿million￿in￿2011￿and￿EUR￿29.5￿million￿in￿2010. Our￿innovative￿immersion￿lithography￿systems￿place￿a￿fluid￿between￿the￿wafer￿and￿a￿system’s￿projection￿lens￿to￿enhance focus￿and￿enable￿circuit￿line-width￿to￿shrink￿to￿smaller￿dimensions￿than￿what￿is￿possible￿with￿"dry"￿lithography￿systems. ASML￿pioneered￿this￿"wet"￿technology￿and￿has￿experienced￿strong￿demand￿for￿immersion-based￿systems,￿which￿have been￿adopted￿by￿most￿of￿our￿customers. We￿have￿developed￿different￿immersion￿systems￿for￿different￿customer￿needs.￿We￿have￿optimized￿our￿TWINSCAN￿XT immersion￿systems￿for￿cost-effective￿imaging￿down￿to￿38￿nm￿and￿beyond￿patterning,￿and￿have￿developed￿a￿new￿dual wafer￿stage￿system￿called￿TWINSCAN￿NXT￿with￿improved￿positioning￿("overlay")￿and￿imaging.￿The￿TWINSCAN￿NXT platform￿enables￿next￿generations￿of￿semiconductors￿through￿the￿so-called￿double￿patterning￿technique￿which￿requires two￿exposures￿per￿layer￿on￿a￿chip,￿enabling￿precise￿imaging￿patterns￿and￿lines￿by￿using￿our￿TWINSCAN￿NXT￿planar wafer￿stage￿and￿breakthrough￿grid￿metrology. Our￿customers￿optimize￿their￿scanner￿performance￿by￿taking￿into￿account￿the￿entire￿chip￿creation￿process,￿from￿design to￿volume￿manufacturing￿-￿we￿call￿this￿approach￿"holistic￿lithography".￿We￿complement￿our￿scanner￿products￿with￿a rapidly￿expanding￿holistic￿lithography￿portfolio￿of￿software￿and￿metrology￿products￿to￿help￿our￿customers￿optimize ASML￿ANNUAL￿REPORT￿2012 17 semiconductor￿scanner￿performance,￿provide￿a￿faster￿start￿to￿chip￿production￿and￿achieve￿better￿imaging￿at￿higher resolutions.￿In￿2012,￿the￿use￿of￿holistic￿lithography￿solutions￿continued￿to￿grow.￿Semiconductor￿manufacturers￿face increasingly￿smaller￿margins￿of￿error￿as￿they￿shrink￿chip￿features.￿Holistic￿lithography￿provides￿a￿way￿to￿shrink￿within these￿margins,￿offering￿significant￿revenue-generating￿and￿cost-saving￿opportunities￿to￿our￿customers. In￿2010,￿we￿achieved￿a￿major￿milestone￿with￿EUV￿lithography￿when￿we￿shipped￿our￿first￿second-generation￿(NXE:3100) system￿to￿a￿customer’s￿manufacturing￿site.￿In￿2011￿five￿additional￿EUV￿systems￿were￿shipped.￿These￿second generation-systems￿(NXE:3100)￿are￿used￿by￿our￿customers￿to￿develop￿their￿EUV￿manufacturing￿process￿before￿high- volume￿EUV￿systems￿will￿become￿available. In￿2011,￿we￿received￿11￿orders￿for￿the￿successor￿to￿the￿NXE:3100,￿the￿third-generation,￿high-volume￿EUV￿system.￿We expect￿to￿ship￿our￿first￿NXT:3300B￿in￿the￿second￿quarter￿of￿2013￿and￿we￿are￿targeting￿for￿a￿maximum￿of￿11￿potential shipments￿in￿2013.￿The￿third-generation￿EUV￿systems￿combine￿a￿wavelength￿of￿13.5￿mm￿and￿an￿optical￿system￿with￿a numerical￿aperture￿of￿0.33￿to￿provide￿imaging￿at￿a￿resolution￿of￿22￿nm. During￿2012,￿our￿NXE:3100￿pre-production￿systems￿have￿exposed￿a￿cumulative￿total￿of￿more￿than￿30,000￿wafers￿at customers￿sites,￿enabling￿successful￿recipe￿developments￿for￿the￿sub￿14￿nm￿Logic￿and￿22￿nm￿DRAM￿nodes.￿Imaging￿of the￿NXE:3300B￿continues￿to￿improve￿by￿showing￿results￿down￿to￿14￿nm.￿With￿respect￿to￿the￿EUV￿light￿source￿power,￿we have￿been￿able￿to￿show￿a￿stable￿full-field￿expose￿power￿of￿up￿to￿40￿Watts. Also￿in￿2012,￿we￿delivered￿TWINSCAN￿NXT:19X0￿immersion￿systems￿which￿enable￿our￿customers￿to￿increase￿the productivity￿to￿more￿than￿200￿wafers￿per￿hour. We￿invested￿EUR￿589.1￿million￿in￿R&D￿in￿2012,￿compared￿with￿EUR￿590.3￿million￿in￿2011￿and￿EUR￿523.4￿million￿in￿2010. We￿focused￿our￿R&D￿investments￿on￿EUV,￿immersion,￿and￿holistic￿lithography￿solutions￿and￿we￿accelerated￿our￿450mm wafer￿size￿R&D￿investments,￿also￿as￿result￿of￿the￿Customer￿Co-Investment￿Program,￿announced￿July￿9,￿2012.￿See￿item 4.B.￿"Research￿and￿Development,￿Customer￿Co-Investment￿Program". Customer Co-Investment Program On￿July￿9,￿2012,￿we￿announced￿our￿Customer￿Co-Investment￿program￿to￿accelerate￿our￿development￿of￿EUV￿technology beyond￿the￿current￿generation￿and￿our￿development￿of￿future￿450mm￿silicon￿wafer￿technology.￿The￿participating customers￿agreed￿to￿fund￿EUR￿1.38￿billion￿of￿our￿research￿and￿development￿projects￿from￿2013￿through￿2017.￿This program￿creates￿risk￿sharing￿with￿some￿of￿our￿largest￿customers￿while￿the￿results￿of￿ASML’s￿development￿programs￿will be￿available￿to￿every￿semiconductor￿manufacturer￿with￿no￿restrictions.￿The￿R&D￿funding￿program￿in￿the￿Customer￿Co- Investment￿Program￿consist￿of￿two￿funding￿projects:￿a￿450mm￿technology￿development￿project￿and￿a￿next-generation EUV￿development￿project.￿ASML￿has￿entered￿into￿Non￿Recurring￿Engineering￿funding￿agreements￿with￿the￿participating customers. In￿addition,￿the￿participating￿customers￿also￿agreed￿to￿invest￿in￿ordinary￿shares￿equal￿to￿an￿aggregate￿for￿all participating￿customers￿of￿23%￿of￿ASML's￿issued￿share￿capital￿(calculated￿giving￿effect￿to￿our￿Synthetic￿Share￿Buyback in￿November￿2012)￿with￿the￿proceeds￿of￿the￿share￿issuance,￿EUR￿3.85￿billion,￿being￿returned￿to￿the￿holders￿of￿ordinary shares￿(excluding￿the￿participating￿customers)￿through￿a￿Synthetic￿Share￿Buyback,￿executed￿in￿November￿2012. See￿Item￿10.C￿"Material￿Contracts,￿Customer￿Co-Investment￿Program". Cymer We￿have￿agreed￿to￿acquire￿Cymer,￿subject￿to￿certain￿closing￿conditions.￿We￿believe￿that￿the￿acquisition￿of￿Cymer, if￿completed,￿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￿Cymer's￿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￿sufficient￿resources￿to￿complete￿the￿development￿of￿the￿EUV￿source￿and￿as￿a￿result,￿the￿only￿way￿to make￿the￿EUV￿source￿development￿successful￿without￿additional￿delay￿is￿through￿the￿acquisition￿of￿Cymer.￿In￿addition we￿believe￿that￿the￿acquisition￿will￿allow￿us￿to￿more￿effectively￿partition￿responsibilities￿between￿Cymer,￿its￿suppliers￿and us￿with￿respect￿to￿EUV￿light￿source￿development,￿reducing￿risk￿and￿increasing￿development￿speed. Completion￿of￿the￿merger￿is￿subject￿to￿customary￿closing￿conditions,￿including￿expiration￿or￿termination￿of￿the applicable￿waiting￿period￿under￿the￿Hart-Scott-Rodino￿Act￿and￿receipt￿of￿approvals￿under￿other￿foreign￿competition laws.￿On￿february￿5,￿2013,￿the￿Cymer￿Stockholders￿approved￿the￿merger￿agreement.￿We￿expect￿the￿transaction￿to￿close in￿the￿first￿half￿of￿2013,￿however￿there￿is￿no￿assurance￿that￿the￿transaction￿will￿be￿completed￿within￿the￿expected￿time ASML￿ANNUAL￿REPORT￿2012 18 period￿or￿at￿all.￿See￿"Risk￿Factors,￿We￿May￿Be￿Unable￿to￿Make￿Desirable￿Acquisitions￿or￿to￿Integrate￿Any￿Businesses￿We Successfully￿Acquire". See￿also￿Item￿10.C￿"Material￿Contracts,￿Cymer￿Merger". Intellectual￿Property￿ We￿rely￿on￿intellectual￿property￿rights￿such￿as￿patents,￿copyrights￿and￿trade￿secrets￿to￿protect￿our￿proprietary technology.￿We￿aim￿to￿obtain￿ownership￿rights￿on￿technology￿developed￿by￿or￿for￿us,￿alternatively,￿to￿have￿license￿rights in￿place￿with￿respect￿to￿such￿technology. In￿2007,￿ASML￿and￿Zeiss￿signed￿an￿agreement￿with￿Canon￿for￿the￿global￿cross-license￿of￿patents￿in￿their￿respective fields￿of￿semiconductor￿lithography￿and￿optical￿components,￿used￿to￿manufacture￿ICs.￿There￿was￿no￿transfer￿of technology￿and￿no￿payment￿was￿made￿among￿the￿parties. From￿late￿2001￿through￿2004,￿we￿were￿party￿to￿a￿series￿of￿civil￿litigations￿and￿administrative￿proceedings￿in￿which Nikon￿alleged￿ASML’s￿infringement￿of￿Nikon￿patents￿relating￿to￿lithography.￿ASML￿in￿turn￿filed￿claims￿against￿Nikon. Pursuant￿to￿agreements￿executed￿on￿December￿10,￿2004,￿ASML,￿Zeiss￿and￿Nikon￿agreed￿to￿settle￿all￿pending￿worldwide patent￿litigation￿between￿the￿companies.￿The￿settlement￿included￿an￿exchange￿of￿releases￿and￿a￿patent￿cross-license agreement￿related￿to￿lithography￿equipment￿used￿to￿manufacture￿semiconductor￿devices￿(the￿"Nikon￿Cross-License Agreement")￿and￿payments￿to￿Nikon￿by￿ASML￿and￿Zeiss.￿In￿connection￿with￿the￿settlement,￿ASML￿and￿Zeiss￿made settlement￿payments￿to￿Nikon￿from￿2004￿to￿2007.￿The￿license￿period￿for￿certain￿patents￿subject￿to￿the￿Nikon￿Cross- License￿Agreement,￿which￿were￿not￿perpetually￿licensed,￿ended￿on￿December￿31,￿2009.￿Pursuant￿to￿the￿terms￿of￿the Nikon￿Cross-License￿Agreement,￿the￿parties￿have￿agreed,￿from￿January￿1,￿2010￿to￿December￿31,￿2014￿(the￿"Cross- License￿Transition￿Period"),￿not￿to￿bring￿suit￿for￿claims￿related￿to￿infringement￿of￿those￿patents￿or￿for￿claims￿related to￿infringement￿of￿patents￿issued￿during￿the￿Cross-License￿Transition￿Period.￿However,￿under￿the￿terms￿of￿the￿Cross- License￿Agreement,￿beginning￿on￿January￿1,￿2015,￿the￿parties￿may￿bring￿suit￿for￿infringement￿of￿patents￿subject￿to￿the Nikon￿Cross-License￿Agreement,￿including￿any￿infringement￿that￿occurred￿during￿the￿Cross-License￿Transition￿Period. Damages￿related￿to￿claims￿for￿patent￿infringement￿occurring￿during￿the￿Cross-License￿Transition￿Period￿are￿limited￿to three￿percent￿of￿the￿net￿sales￿price￿of￿products￿utilizing￿patents￿that￿are￿valid￿and￿enforceable. See￿Item￿3.D.￿"Risk￿Factors,￿Failure￿to￿Adequately￿Protect￿the￿Intellectual￿Property￿Rights￿Upon￿Which￿We￿Depend Could￿Harm￿Our￿Business"￿and￿"Risk￿Factors,￿Defending￿Against￿Intellectual￿Property￿Claims￿Brought￿by￿Others￿Could Harm￿Our￿Business." Competition￿ The￿semiconductor￿equipment￿industry￿is￿highly￿competitive.￿The￿principal￿elements￿of￿competition￿in￿our￿market￿are: • • the￿technical￿performance￿characteristics￿of￿a￿lithography￿system; the￿value￿of￿ownership￿of￿that￿system￿based￿on￿its￿purchase￿price,￿maintenance￿costs,￿productivity,￿and￿customer service￿and￿support￿costs; the￿exchange￿rate￿of￿the￿euro￿particularly￿against￿the￿Japanese￿yen￿which￿results￿in￿varying￿prices￿and￿margins; the￿strength￿and￿breadth￿of￿our￿portfolio￿of￿patents￿and￿other￿intellectual￿property￿rights;￿and • • • our￿customers’￿desire￿to￿obtain￿lithography￿equipment￿from￿more￿than￿one￿supplier. We￿believe￿that￿the￿market￿segment￿for￿lithography￿systems￿and￿the￿investments￿required￿to￿be￿a￿significant￿competitor in￿this￿market￿segment￿have￿resulted￿in￿increased￿competition￿for￿market￿share￿through￿the￿aggressive￿prosecution￿of patents.￿Our￿competitiveness￿will￿increasingly￿depend￿upon￿our￿ability￿to￿protect￿and￿defend￿our￿patents,￿as￿well￿as￿our ability￿to￿develop￿new￿and￿enhanced￿semiconductor￿equipment￿that￿is￿competitively￿priced￿and￿introduced￿on￿a￿timely basis. ￿￿￿￿ Government￿Regulation Our￿business￿is￿subject￿to￿direct￿and￿indirect￿regulation￿in￿each￿of￿the￿countries￿in￿which￿our￿customers￿or￿we￿do business.￿As￿a￿result,￿changes￿in￿various￿types￿of￿regulations￿could￿affect￿our￿business￿adversely.￿The￿implementation of￿new￿technological,￿safety￿or￿legal￿requirements￿could￿impact￿our￿products,￿or￿our￿manufacturing￿or￿distribution processes,￿and￿could￿affect￿the￿timing￿of￿product￿introductions,￿the￿cost￿of￿our￿production,￿and￿products￿as￿well￿as￿their commercial￿success.￿Moreover,￿environmental￿and￿other￿regulations￿that￿adversely￿affect￿the￿pricing￿of￿our￿products could￿adversely￿affect￿our￿financial￿condition￿and￿our￿results￿of￿operations.￿The￿impact￿of￿these￿changes￿in￿regulation could￿adversely￿affect￿our￿business￿even￿where￿the￿specific￿regulations￿do￿not￿directly￿apply￿to￿us￿or￿to￿our￿products. ASML￿ANNUAL￿REPORT￿2012 19 C. Organizational Structure ASML￿Holding￿N.V.￿is￿a￿holding￿company￿that￿operates￿through￿its￿subsidiaries.￿Our￿major￿operating￿subsidiaries,￿each of￿which￿is￿a￿wholly-owned￿(direct￿or￿indirect)￿subsidiary,￿are￿ASML￿Netherlands￿B.V.,￿ASML￿Systems￿B.V.,￿ASML￿Hong Kong￿Limited￿and￿ASML￿US￿Inc. See￿Exhibit￿8.1￿for￿a￿list￿of￿our￿main￿subsidiaries. D. Property, Plant and Equipment We￿lease￿a￿number￿of￿our￿facilities￿under￿operating￿leases.￿We￿also￿own￿a￿number￿of￿buildings,￿mainly￿consisting￿of production￿facilities￿in￿the￿Netherlands,￿United￿States￿and￿Taiwan.￿The￿book￿value￿of￿land,￿buildings￿and￿constructions owned￿amounted￿to￿EUR￿659.8￿million￿as￿of￿December￿31,￿2012￿compared￿with￿EUR￿586.3￿million￿as￿of￿December￿31, 2011.￿See￿Note￿11￿to￿our￿consolidated￿financial￿statements. Subject￿to￿market￿conditions,￿we￿expect￿that￿our￿capital￿expenditures￿(purchases￿of￿property,￿plant￿and￿equipment) in￿2013￿will￿be￿approximately￿EUR￿369.8￿million￿(2012:￿EUR￿171.9￿million).￿These￿expenditures￿will￿mainly￿consist￿of investments￿used￿for￿the￿finalization￿of￿capacity￿expansion￿of￿EUV￿production￿facilities,￿which￿we￿plan￿to￿finalize￿by the￿end￿of￿2014,￿and￿expansion￿of￿our￿facilities￿to￿support￿our￿450mm￿activities.￿We￿expect￿to￿finance￿these￿capital expenditures￿through￿cash￿generated￿by￿operations￿and￿cash￿and￿cash￿equivalents. Facilities￿in￿Europe Our￿headquarters,￿main￿manufacturing￿facilities,￿applications￿laboratory￿and￿R&D￿facilities￿are￿located￿at￿a￿single￿site in￿Veldhoven,￿the￿Netherlands.￿This￿state-of-the-art￿facility￿includes￿63￿thousand￿square￿meter￿of￿office￿space￿and￿42 thousand￿square￿meters￿of￿buildings￿used￿for￿manufacturing￿and￿R&D￿activities￿and￿21￿thousand￿square￿meters￿of warehouses.￿We￿lease￿the￿majority￿of￿these￿facilities￿through￿long-term￿operating￿leases￿that￿contain￿purchase￿options. Some￿of￿our￿office￿facilities￿at￿our￿headquarters￿in￿Veldhoven,￿the￿Netherlands,￿are￿financed￿through￿a￿special￿purpose vehicle￿that￿is￿a￿variable￿interest￿entity￿("VIE").￿We￿also￿lease￿several￿sales￿and￿service￿facilities￿at￿locations￿across Europe. Facilities￿in￿the￿United￿States Our￿United￿States￿head￿office￿is￿located￿in￿a￿9￿thousand￿square￿meter￿office￿building￿in￿Tempe,￿Arizona.￿We￿maintain lithography￿research,￿development￿and￿manufacturing￿operations￿in￿a￿27￿thousand￿square￿meter￿facility￿in￿Wilton, Connecticut,￿and￿a￿5￿thousand￿square￿meter￿facility￿in￿Santa￿Clara,￿California.￿We￿also￿lease￿several￿sales￿and￿service facilities￿at￿locations￿across￿the￿United￿States. Facilities￿in￿Asia Our￿Asian￿headquarters￿is￿located￿in￿a￿425￿square￿meter￿office￿space￿in￿Hong￿Kong,￿The￿People's￿Republic￿of￿China.￿In addition,￿our￿ACE￿facility￿in￿Linkou,￿Taiwan￿comprises￿clean￿room￿(approximately￿3￿thousand￿square￿meters)￿and office￿space￿(approximately￿6￿thousand￿square￿meters).￿The￿ACE￿facility￿supports￿customers￿in￿the￿Asia-Pacific￿region by￿focusing￿on￿technology￿and￿applications￿development,￿equipment￿support,￿training,￿logistics￿and￿refurbishment. ACE￿also￿enables￿local￿sourcing￿of￿equipment,￿components,￿services￿and￿will￿produce￿all￿Yieldstar￿systems.￿Our￿facility in￿Korea￿comprises￿a￿clean￿room￿(approximately￿700￿square￿meters)￿and￿office￿space￿(approximately￿6￿thousand￿square meters).￿The￿purpose￿of￿this￿facility￿is￿to￿support￿a￿closer￿working￿relationship￿with￿our￿customers￿in￿Korea.￿We￿also lease￿and￿own￿several￿sales,￿service￿and￿training￿facilities￿at￿locations￿across￿Asia. Item 4A Unresolved Staff Comments Not￿applicable. Item 5 Operating and Financial Review and Prospects Executive Summary Introduction ASML￿is￿one￿of￿the￿world's￿leading￿providers￿(measured￿in￿revenue)￿of￿lithography￿systems￿for￿the￿semiconductor industry,￿manufacturing￿complex￿machines￿that￿are￿critical￿to￿the￿production￿of￿ICs￿or￿chips.￿Headquartered￿in Veldhoven,￿the￿Netherlands,￿ASML￿is￿traded￿on￿NYSE￿Euronext￿Amsterdam￿and￿NASDAQ￿under￿the￿symbol￿ASML.￿As￿of December￿31,￿2012,￿we￿employed￿8,497￿payroll￿employees￿(2011:￿7,955)￿and￿2,139￿temporary￿employees￿(2011:￿1,935), measured￿in￿full-time￿equivalents.￿We￿provide￿services￿to￿our￿customers￿to￿optimize￿their￿manufacturing￿processes￿in more￿than￿55￿locations￿in￿16￿countries. ASML￿ANNUAL￿REPORT￿2012 20 In￿2012,￿we￿generated￿net￿sales￿of￿EUR￿4,731.5￿million￿and￿income￿from￿operations￿of￿EUR￿1,156.8￿million,￿or￿24.4 percent￿of￿net￿sales.￿Net￿income￿in￿2012￿amounted￿to￿EUR￿1,146.3￿million,￿or￿24.2￿percent￿of￿net￿sales,￿representing basic￿net￿income￿per￿ordinary￿share￿of￿EUR￿2.70. In￿the￿executive￿summary￿below￿we￿provide￿an￿update￿of￿the￿semiconductor￿equipment￿industry,￿followed￿by￿a discussion￿of￿our￿business￿strategy￿and￿our￿key￿performance￿indicators.￿All￿information￿disclosed￿in￿this￿section￿is provided￿as￿a￿supplement￿to,￿and￿should￿be￿read￿in￿conjunction￿with,￿our￿Financial￿Statements￿and￿the￿accompanying Notes￿to￿the￿Consolidated￿Financial￿Statements. Semiconductor￿equipment￿industry The￿chip-making￿business￿is￿focused￿on￿"shrink",￿or￿reducing￿the￿size￿of￿chip￿designs.￿Historically￿the￿semiconductor industry￿has￿experienced￿significant￿growth￿largely￿due￿to￿the￿continual￿reduction￿of￿cost￿per￿function￿performed￿by ICs.￿Improvement￿in￿the￿design￿and￿manufacture￿of￿ICs￿with￿higher￿circuit￿densities￿resulted￿in￿smaller￿and￿cheaper￿ICs capable￿of￿performing￿a￿larger￿number￿of￿functions￿at￿higher￿speeds￿with￿lower￿power￿consumption.￿We￿believe￿that these￿long-term￿trends￿will￿continue￿for￿the￿foreseeable￿future￿and￿will￿be￿accompanied￿by￿a￿continuing￿demand￿for production￿equipment￿that￿is￿capable￿of￿accurate￿production￿of￿advanced￿ICs￿in￿high￿volumes￿at￿the￿lowest￿possible cost. Lithography￿equipment￿is￿used￿to￿print￿complex￿circuit￿patterns￿onto￿silicon￿wafers,￿which￿are￿the￿primary￿raw￿materials for￿ICs.￿The￿printing￿process￿is￿one￿of￿the￿most￿critical￿and￿expensive￿steps￿in￿wafer￿fabrication.￿Lithography￿equipment is￿therefore￿a￿significant￿focus￿of￿the￿IC￿industry’s￿demand￿for￿cost-efficient￿enhancements￿to￿production￿technology. The￿costs￿to￿develop￿new￿lithography￿equipment￿are￿high.￿Accordingly,￿the￿lithography￿equipment￿industry￿is characterized￿by￿the￿presence￿of￿only￿a￿few￿primary￿suppliers:￿ASML￿and￿Nikon,￿and￿(to￿a￿lesser￿degree)￿Canon.￿In 2012,￿ASML￿was￿one￿of￿the￿world’s￿leading￿providers￿of￿lithography￿equipment￿(measured￿in￿revenues). Total￿lithography￿equipment￿shipped￿by￿the￿industry￿as￿a￿whole￿in￿the￿six￿years￿ended￿December￿31,￿2012,￿is￿set￿out￿in the￿following￿table: Year ended December 31 ￿ Total￿units￿shipped1 Total￿value￿(in￿millions￿USD)1 2012 ￿ 270 6,451 2011 ￿ 376 8,186 2010 ￿ 304 6,416 2009 ￿ 128 2,485 2008 ￿ 344 5,388 2007 ￿ 604 7,144 1 Historical￿data￿and￿full-year￿2012￿estimates￿as￿reported￿by￿Gartner￿Dataquest￿in￿its￿fourth￿quarter￿2012￿report. For￿the￿year￿2012,￿the￿latest￿indications￿of￿independent￿market￿analysts￿show￿a￿decrease￿in￿total￿lithography￿equipment shipped￿to￿the￿market￿by￿the￿industry￿of￿28.2￿percent￿in￿unit￿volume￿and￿21.2￿percent￿in￿value.￿Our￿net￿sales￿decreased by￿16.3￿percent￿compared￿to￿2011.￿Despite￿lower￿net￿sales￿during￿2012,￿it￿was￿our￿second￿best￿year￿ever￿based￿on￿total net￿sales￿and￿profitability.￿During￿2012,￿the￿majority￿of￿the￿system￿sales￿was￿generated￿from￿Logic. Business￿strategy The￿long-term￿growth￿of￿the￿semiconductor￿industry￿is￿the￿result￿of￿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 2012,￿chip￿makers￿routinely￿produced￿electronic￿chip￿features￿with￿geometries￿of￿32￿nanometers,￿compared￿to￿typical geometries￿of￿10,000￿nanometers￿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￿‘Moore’s￿Law’.￿Moore’s￿Law￿has￿resulted￿in￿our￿information￿society￿with￿fast￿wired￿and wireless￿communications￿–￿built￿on￿affordable￿chips.￿Moore’s￿Law￿also￿has￿an￿impact￿on￿the￿energy￿usage￿of￿chips. Smaller￿geometries￿allow￿for￿much￿lower￿electrical￿currents￿to￿operate￿the￿chip.￿This￿has￿helped￿to￿contain￿the￿world’s 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￿semiconductors￿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. Smarter,￿smaller￿and￿more￿energy-efficient￿chips￿are￿made￿with￿increasingly￿sophisticated￿lithography￿systems￿produced by￿ASML.￿Lithography￿systems￿are￿crucial￿to￿the￿roadmaps￿of￿chipmakers￿to￿make￿smaller￿transistors￿on￿chips.￿Our business￿strategy￿is￿based￿on￿maintaining￿and￿further￿developing￿our￿position￿as￿a￿technology￿leader￿in￿semiconductor lithography.￿When￿executed,￿this￿strategy￿results￿in￿the￿delivery￿of￿lithography￿systems￿which￿enable￿customers￿to ASML￿ANNUAL￿REPORT￿2012 21 produce￿highest￿performance￿and￿lowest￿cost￿chips.￿The￿superior￿value￿of￿ownership￿offered￿to￿customers￿as￿a￿result￿of our￿strategy￿also￿maximizes￿our￿own￿financial￿performance,￿aligning￿the￿interests￿of￿ASML￿and￿our￿customers. Sustainability￿over￿the￿long￿term￿is￿essential￿in￿the￿relationship￿between￿ASML￿and￿its￿customers,￿because￿customers rely￿on￿us￿for￿their￿long-term￿roadmaps￿towards￿smarter￿and￿more￿energy￿efficient￿microchips. Sustainability Strategy Our￿customers￿want￿chip-making￿machines￿that￿produce￿more￿chips￿faster,￿using￿less￿energy￿and￿fewer￿natural resources,￿at￿a￿similar￿cost.￿They￿also￿want￿us,￿as￿their￿supplier,￿to￿operate￿according￿to￿the￿highest￿environmental, social￿and￿governance￿standards.￿Our￿sustainability￿strategy￿thus￿goes￿hand￿in￿hand￿with￿our￿business￿strategy,￿aimed at￿maintaining￿and￿further￿developing￿our￿position￿as￿a￿technology￿leader￿in￿the￿semiconductor￿industry. ASML’s￿sustainability￿strategy￿focuses￿on￿four￿domains:￿sustainable￿operations,￿sustainable￿products,￿sustainable￿value chain￿and￿sustainable￿culture: • Focusing￿on￿sustainable￿operations￿means￿we￿seek￿to￿reduce￿the￿environmental￿impact￿of￿both￿our￿manufacturing process￿and￿our￿research￿and￿development￿activities. • Providing￿sustainable￿product￿means￿we￿continuously￿strive￿to￿make￿our￿chip-making￿machines￿more￿efficient, enabling￿our￿customers￿to￿reduce￿their￿energy￿and￿natural￿resources￿consumption￿per￿chip￿produced. • Focusing￿on￿a￿sustainable￿value￿chain￿signifies￿our￿ambition￿to￿stimulate￿our￿suppliers￿to￿meet￿increasingly￿high sustainability￿standards￿and￿to￿enable￿our￿customers￿to￿positively￿influence￿their￿impact￿on￿environment￿and￿society. • Focusing￿on￿a￿sustainable￿culture￿means￿we￿seek￿to￿provide￿a￿working￿environment￿that￿inspires￿our￿highly-skilled workforce￿and￿respects￿their￿cultural￿and￿individual￿differences.￿It￿also￿means￿we￿seek￿to￿make￿a￿positive￿contribution to￿the￿well-being￿of￿the￿communities￿in￿which￿we￿operate. Sustainability Governance In￿2009,￿ASML￿decided￿to￿significantly￿strengthen￿its￿commitment￿in￿the￿area￿of￿sustainability￿by￿setting￿a￿number of￿stringent￿objectives￿to￿be￿reached￿by￿2015.￿It￿is￿the￿mission￿of￿the￿Sustainability￿Board￿to￿monitor￿the￿realization of￿these￿objectives.￿The￿mandate￿given￿by￿the￿Board￿of￿Management￿to￿the￿Sustainability￿Board￿is￿to￿review￿and make￿recommendations￿on￿our￿sustainability￿management￿system￿and￿policies,￿authorize￿or￿recommend￿plans￿to￿the Board￿of￿Management,￿provide￿guidance￿to￿management￿on￿objectives￿and￿targets,￿monitor￿and￿provide￿guidance on￿sustainability￿performance￿and￿targets,￿monitor￿and￿oversee￿sustainability￿risk￿management￿review￿and￿monitor stakeholder￿relations,￿and￿review￿and￿make￿recommendations￿on￿sustainability￿impacts￿of￿major￿business￿decisions. The￿Sustainability￿Board￿also￿determines￿the￿scope,￿provides￿input,￿and￿recommends￿to￿the￿Board￿of￿Management adoption￿of￿the￿Sustainability￿Report. In￿2010,￿the￿Sustainability￿Board￿established￿the￿Corporate￿Sustainability￿department￿to￿coordinate￿the￿implementation of￿the￿overall￿sustainability￿strategy￿and￿policies￿on￿a￿day-to-day￿basis. In￿2011,￿senior￿management￿decided￿to￿expand￿the￿Sustainability￿Governance￿structure￿by￿nominating￿a￿‘domain￿owner’ for￿each￿of￿the￿four￿strategic￿focus￿areas.￿Domain￿owners￿are￿responsible￿for￿coordinating￿the￿implementation￿of￿the sustainability￿goals￿in￿their￿respective￿domains. In￿2012,￿as￿result￿of￿the￿nomination￿of￿domain￿owners￿in￿2011,￿the￿implementation￿of￿our￿sustainability￿strategy accelerated,￿leading￿to￿achievement￿of￿several￿of￿our￿targets￿earlier￿than￿anticipated. Customer focus Ensuring￿customers￿are￿served￿with￿the￿right￿products￿at￿the￿right￿time,￿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￿levels￿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￿and￿highest￿earnings. 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￿2012,￿all￿of￿the￿top￿10￿chip￿makers￿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 ASML￿ANNUAL￿REPORT￿2012 22 with￿all￿our￿customers.￿We￿expect￿customer￿concentration￿to￿increase￿because￿of￿continuing￿consolidation￿in￿the semiconductor￿manufacturing￿industry. In￿2012,￿our￿satisfaction￿ratings￿by￿customers￿surpassed￿every￿lithography￿competitor￿for￿the￿tenth￿successive￿year, according￿to￿VLSI￿Research,￿an￿independent￿industry￿research￿firm￿that￿surveyed￿customers￿representing￿95.0￿percent of￿the￿world’s￿total￿semiconductor￿market. Technology leadership Our￿customers￿need￿lithography￿scanners￿that￿continuously￿improve￿performance￿in￿three￿areas:￿resolution,￿speed and￿precision.￿The￿image￿of￿the￿electronic￿chip￿circuit￿must￿be￿extremely￿small￿(currently￿the￿smallest￿features￿have a￿size￿of￿less￿than￿30￿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￿this system￿performance￿for￿our￿customers,￿ASML￿needs￿to￿deliver￿the￿right￿technology￿at￿the￿right￿time￿to￿meet￿long- term￿roadmaps￿which￿often￿extend￿many￿years￿into￿the￿future.￿Therefore,￿ASML￿is￿committed￿to￿significant￿long-term investments￿in￿R&D￿that￿are￿not￿significantly￿impacted￿by￿short-term￿cyclical￿swings.￿In￿2012,￿our￿R&D￿investments￿(net of￿credits)￿amounted￿to￿EUR￿589.1￿million￿(2011:￿EUR￿590.3￿million;￿2010:￿EUR￿523.4￿million).￿A￿significant￿part￿of￿this budget￿was￿used￿for￿R&D￿jointly￿developed￿with￿our￿suppliers￿and￿technology￿partners. Our￿lithography￿scanners￿are￿based￿on￿our￿dual-stage￿wafer￿imaging￿platform￿–￿the￿TWINSCAN￿system￿–￿which￿we introduced￿in￿2000￿and￿which￿allows￿exposure￿of￿one￿wafer￿while￿simultaneously￿measuring￿the￿wafer￿which￿will￿be exposed￿next.￿Our￿strong￿leadership￿in￿this￿capability￿has￿allowed￿us￿to￿achieve￿the￿industry’s￿highest￿productivity, enabling￿reduced￿cost-per-exposure￿per￿wafer.￿Dual-stage￿lithography￿also￿supports￿the￿required￿accuracy￿to￿position electronic￿features￿on￿the￿wafer,￿as￿it￿allows￿for￿more￿time￿to￿measure￿the￿wafer￿prior￿to￿exposure.￿We￿are￿the￿only lithography￿manufacturer￿that￿enables￿volume￿production￿based￿on￿dual-stage￿systems. In￿order￿to￿meet￿the￿resolution,￿speed￿and￿accuracy￿demands￿of￿our￿customers,￿we￿have￿focused￿our￿R&D￿investments on￿three￿core￿programs:￿EUV,￿Immersion￿and￿holistic￿lithography￿solutions. Our￿innovative￿immersion￿lithography￿systems￿place￿a￿fluid￿between￿the￿wafer￿and￿a￿system’s￿projection￿lens￿to￿enhance focus￿and￿enable￿circuit￿line-width￿to￿shrink￿to￿smaller￿dimensions￿than￿what￿is￿possible￿with￿"dry"￿lithography￿systems. ASML￿pioneered￿this￿"wet"￿technology￿and￿has￿experienced￿strong￿demand￿for￿immersion-based￿systems,￿which￿have been￿adopted￿by￿most￿of￿our￿customers. We￿have￿developed￿different￿immersion￿systems￿for￿different￿customer￿needs.￿We￿have￿optimized￿our￿TWINSCAN￿XT immersion￿systems￿for￿cost-effective￿imaging￿down￿to￿38￿nm￿and￿beyond￿patterning,￿and￿have￿developed￿a￿new￿dual wafer￿stage￿system￿called￿TWINSCAN￿NXT￿with￿improved￿positioning￿("overlay")￿and￿imaging.￿The￿TWINSCAN￿NXT platform￿enables￿next￿generations￿of￿semiconductors￿through￿the￿so-called￿double￿patterning￿technique￿which￿requires two￿exposures￿per￿layer￿on￿a￿chip,￿enabling￿precise￿imaging￿patterns￿and￿lines￿by￿using￿our￿TWINSCAN￿NXT￿planar wafer￿stage￿and￿breakthrough￿grid￿metrology. In￿2011,￿we￿shipped￿five￿second-generation￿(NXE:3100)￿EUV￿systems,￿in￿addition￿to￿one￿shipped￿in￿2010.￿Our customers￿are￿using￿the￿NXE:3100￿system￿to￿develop￿their￿EUV￿manufacturing￿processes￿before￿high-volume￿EUV systems￿will￿become￿available.￿As￿of￿December￿31,￿2011,￿we￿had￿received￿11￿orders￿for￿the￿successor￿to￿the￿NXE:3100, the￿third-generation￿(NXE:3300B)￿high-volume￿EUV￿systems.￿The￿NXE￿(EUV)￿system,￿utilizing￿an￿evolved￿TWINSCAN platform,￿enables￿our￿customers￿to￿extend￿their￿roadmap￿towards￿smaller￿chip￿features.￿EUV￿permits￿chip￿makers￿to expose￿a￿critical￿layer￿in￿just￿one￿single￿step￿–￿as￿opposed￿to￿double￿patterning￿which￿requires￿multiple￿steps.￿EUV￿also has￿a￿roadmap￿from￿the￿initial￿27￿nm￿resolution￿down￿to￿16￿nm￿and￿beyond.￿We￿have￿published￿a￿roadmap￿to￿develop￿a range￿of￿EUV￿models,￿offering￿the￿greatest￿extendibility￿at￿the￿lowest￿cost￿of￿ownership￿for￿the￿future￿of￿lithography. During￿2012,￿our￿NXE:3100￿pre-production￿systems￿have￿exposed￿a￿cumulative￿total￿of￿more￿than￿30,000￿wafers￿at customers￿sites,￿enabling￿successful￿recipe￿developments￿for￿the￿sub￿14-nm￿Logic￿and￿22￿nm￿DRAM￿nodes.￿Imaging￿of the￿NXE:3300B￿continues￿to￿improve￿by￿showing￿results￿down￿to￿14￿nm.￿With￿respect￿to￿the￿EUV￿light￿source￿power,￿we have￿been￿able￿to￿show￿a￿stable￿full-field￿expose￿power￿of￿up￿to￿40￿Watts. On￿October￿16,￿2012,￿we￿agreed￿to￿acquire￿Cymer,￿subject￿to￿certain￿closing￿conditions.￿The￿acquisition￿of￿Cymer, if￿completed,￿will￿help￿us￿to￿achieving￿our￿strategic￿objective￿of￿delivering￿an￿economically￿viable￿EUV￿scanner￿to semiconductor￿manufacturers￿as￿soon￿as￿reasonably￿possible.￿We￿believe￿that￿combining￿Cymer’s￿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. ASML￿ANNUAL￿REPORT￿2012 23 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.￿In￿2012￿the￿use￿of￿holistic￿lithography￿solutions￿continued￿to￿grow. Semiconductor￿manufacturers￿face￿increasingly￿smaller￿margins￿of￿error￿as￿they￿shrink￿chip￿features.￿Holistic￿lithography provides￿a￿way￿to￿shrink￿within￿these￿margins,￿offering￿significant￿revenue-generating￿and￿cost-saving￿opportunities￿to our￿customers. Operational excellence We￿strive￿to￿sustain￿our￿business￿success￿based￿on￿our￿technological￿leadership￿by￿continuing￿to￿execute￿our fundamental￿operating￿strategy,￿including￿reducing￿lead-times￿while￿improving￿our￿cost￿competitiveness.￿Lead-time￿is the￿time￿from￿a￿customer’s￿order￿to￿a￿tool￿delivery. Our￿business￿strategy￿includes￿outsourcing￿the￿manufacturing￿of￿the￿majority￿of￿components￿and￿subassemblies￿that make￿up￿our￿products.￿We￿work￿in￿partnership￿with￿suppliers,￿collaborating￿on￿quality,￿logistics,￿technology￿and￿total cost.￿By￿operating￿our￿strategy￿of￿value￿sourcing,￿we￿strive￿to￿attain￿flexibility￿and￿cost￿efficiencies￿from￿our￿suppliers through￿mutual￿commitment￿and￿shared￿risk￿and￿reward.￿Value￿sourcing￿also￿allows￿the￿flexibility￿to￿adapt￿to￿the cyclicality￿of￿the￿world￿market￿for￿semiconductor￿lithography￿systems. We￿have￿a￿flexible￿labor￿model￿with￿a￿mix￿of￿fixed￿and￿flexible￿contracted￿labor￿in￿its￿manufacturing￿and￿R&D￿facilities in￿Veldhoven,￿the￿Netherlands,￿and￿payroll￿employees￿compensated￿under￿a￿partly￿variable￿salary￿structure￿through ASML’s￿profit￿sharing￿plan.￿This￿reinforces￿our￿ability￿to￿adapt￿more￿quickly￿to￿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￿for￿customers.￿Flexibility￿also￿reduces￿our working￿capital￿requirements. In￿view￿of￿the￿economic￿volatility￿of￿the￿semiconductor￿industry,￿we￿continue￿to￿strive￿improving￿efficiencies￿in￿our operations:￿addressing￿our￿cost￿structure￿and￿strengthening￿our￿capability￿to￿generate￿cash. ASML￿ANNUAL￿REPORT￿2012 24 ASML￿operations￿update￿on￿key￿performance￿indicators The￿following￿table￿presents￿the￿key￿performance￿indicators￿used￿by￿our￿Board￿of￿Management￿and￿senior￿management to￿measure￿performance￿in￿our￿monthly￿operational￿review￿meetings. Year ended December 31 (in millions) ￿ Sales Net￿sales Increase￿(decrease)￿in￿net￿sales￿(%) Net￿system￿sales Net￿service￿and￿field￿option￿sales Sales￿of￿systems￿(in￿units) Average￿selling￿price￿of￿total￿system￿sales Average￿selling￿price￿of￿new￿system￿sales Average￿selling￿price￿of￿used￿system￿sales Value￿of￿systems￿backlog￿excluding￿EUV￿3,4 Systems￿backlog￿excluding￿EUV￿(in￿units)￿3,4 Average￿selling￿price￿of￿systems￿backlog￿excluding￿EUV￿3,4 Average￿selling￿price￿of￿systems￿backlog￿excluding￿EUV￿(New)￿3,4 Average￿selling￿price￿of￿systems￿backlog￿excluding￿EUV￿(Used)￿3,4 Immersion￿systems￿recognized￿(in￿units)5 NXE￿systems￿recognized￿(in￿units)6 Profitability Gross￿profit Income￿from￿operations Net￿income Liquidity Cash￿and￿cash￿equivalents Short-term￿investments Operating￿cash￿flow %² 42.4 24.4 24.2 2012 EUR ￿ ￿ ￿ ￿ 4,731.5 ￿ (16.3) ￿ 3,801.6 ￿ 929.9 ￿ 170 ￿ 22.4 ￿ 24.8 ￿ 7.6 ￿ 1,214.1 ￿ 46 ￿ 26.4 ￿ 29.8 ￿ 4.0 ￿ 72 ￿ 1 ￿ ￿ ￿ 2,005.2 ￿ 1,156.8 ￿ 1,146.3 ￿ ￿ ￿ 1,767.6 ￿ 930.0 ￿ 703.5 ￿ ￿ ￿ ￿ ￿ ￿ ￿ ￿ ￿ ￿ ￿ ￿ ￿ ￿ ￿ ￿ ￿ ￿ ￿ ￿ ￿ ￿ ￿ %² 43.3 29.0 26.0 2011 1 EUR ￿ ￿ ￿ ￿ 5,651.0 ￿ 25.4 ￿ 4,883.9 ￿ 767.1 ￿ 222 ￿ 22.0 ￿ 24.5 ￿ 3.8 ￿ 1,732.5 ￿ 71 ￿ 24.4 ￿ 27.9 ￿ 3.0 ￿ 101 ￿ 3 ￿ ￿ ￿ 2,449.4 ￿ 1,641.2 ￿ 1,467.0 ￿ ￿ ￿ 2,731.8 ￿ - ￿ 2,070.4 ￿ ￿ ￿ ￿ ￿ ￿ ￿ ￿ ￿ ￿ ￿ ￿ ￿ ￿ ￿ ￿ ￿ ￿ ￿ ￿ ￿ ￿ ￿ %² 43.4 27.7 22.7 2010 EUR ￿ ￿ ￿ ￿ 4,507.9 ￿ 182.4 ￿ 3,894.7 ￿ 613.2 ￿ 197 ￿ 19.8 ￿ 24.1 ￿ 4.4 ￿ 3,855.7 ￿ 157 ￿ 24.6 ￿ 27.7 ￿ 5.1 ￿ 95 ￿ - ￿ ￿ ￿ 1,955.2 ￿ 1,250.7 ￿ 1,021.8 ￿ ￿ ￿ 1,949.8 ￿ - ￿ 940.0 ￿ ￿ ￿ ￿ ￿ ￿ ￿ ￿ ￿ ￿ ￿ ￿ ￿ ￿ ￿ ￿ ￿ ￿ ￿ ￿ ￿ ￿ ￿ 1 As￿of￿January￿1,￿2011,￿ASML￿adopted￿Accounting￿Standards￿Update￿("ASU")￿2009-13,￿"Revenue￿Arrangements￿with￿Multiple￿Deliverables"￿which amended￿ASC￿605-25.￿The￿ASU￿was￿adopted￿prospectively,￿and￿had￿an￿insignificant￿impact￿on￿timing￿and￿allocation￿of￿revenues.￿See￿Note￿1￿to￿the consolidated￿financial￿statements. 2 As￿a￿percentage￿of￿net￿sales. 3 Our￿systems￿backlog￿and￿net￿bookings￿include￿only￿orders￿for￿which￿written￿authorizations￿have￿been￿accepted￿and￿system￿shipment￿and￿revenue 4 5 6 recognition￿dates￿within￿the￿following￿12￿months￿have￿been￿assigned. From￿January￿1,￿2011,￿we￿value￿our￿net￿bookings￿and￿systems￿backlog￿at￿system￿sales￿value￿including￿factory￿options.￿Before￿January￿1,￿2011,￿we valued￿net￿bookings￿and￿systems￿backlog￿at￿full￿order￿value￿(i.e.￿including￿factory￿options,￿field￿options￿and￿services).￿The￿comparative￿figures￿for prior￿periods￿have￿not￿been￿adjusted￿because￿the￿impact￿on￿the￿comparative￿figures￿is￿insignificant￿(approximately￿EUR￿20.0￿million￿negative￿impact on￿backlog￿value￿as￿of￿December￿31,￿2010). Included￿in￿the￿total￿number￿of￿immersion￿system￿recognized￿in￿2012￿are￿68￿of￿our￿most￿advanced￿immersion￿technology￿NXT:19X0i￿systems￿(2011:￿78 and￿2010:￿34). Through￿December￿31,￿2012￿a￿total￿of￿six￿NXE:3100￿systems￿had￿been￿shipped.￿Three￿of￿these￿systems￿were￿recognized￿in￿net￿system￿sales￿in￿2011, one￿was￿recognized￿in￿2012,￿one￿was￿shipped￿under￿the￿condition￿of￿an￿operating￿lease￿contract￿and￿one￿is￿shipped￿to￿a￿research￿institute. Sales For￿the￿longer￿term,￿and￿based￿on￿industry￿analysts￿IC￿unit￿growth￿forecasts,￿we￿expect￿our￿sales￿level￿to￿grow.￿Our sales￿levels￿depend￿on￿multiple￿growth￿drivers:￿macro-economic￿developments,￿technological￿developments,￿market development,￿market￿share￿development￿and￿a￿broadening￿of￿our￿product￿and￿services￿scope. Net￿sales￿decreased￿by￿EUR￿919.5￿million,￿or￿16.3￿percent,￿to￿EUR￿4,731.5￿million￿in￿2012￿from￿EUR￿5,651.0￿million￿in 2011￿(2010:￿EUR￿4,507.9￿million).￿The￿decrease￿in￿net￿sales￿mainly￿resulted￿from￿a￿decrease￿in￿net￿system￿sales￿of￿EUR 1,082.3￿million,￿or￿22.2￿percent,￿to￿EUR￿3,801.6￿million￿in￿2012￿from￿EUR￿4,883.9￿million￿in￿2011￿(2010:￿EUR￿3,894.7 million),￿partly￿offset￿by￿an￿increase￿in￿net￿service￿and￿field￿option￿sales￿of￿EUR￿162.8￿million￿or￿21.2￿percent￿to￿EUR 929.9￿million￿in￿2012￿from￿EUR￿767.1￿million￿in￿2011￿(2010:￿EUR￿613.2￿million),￿mainly￿due￿the￿further￿expansion￿of Holistic￿Lithography,￿integrated￿metrology￿and￿feedback￿loops.￿The￿number￿of￿total￿systems￿sold￿decreased￿by￿23.4 percent￿to￿170￿systems￿in￿2012￿from￿222￿systems￿in￿2011￿(2010:197),￿mainly￿caused￿by￿decreased￿demand￿in￿Memory, as￿its￿major￿driver,￿the￿PC￿business￿shrunk￿compared￿to￿2011.￿During￿2012,￿the￿majority￿of￿the￿system￿sales￿were generated￿from￿Logic. The￿ASP￿of￿our￿systems￿in￿2012￿EUR￿22.4￿million￿is￿in￿line￿with￿2011￿EUR￿22.0￿million￿(2010:￿EUR￿19.8￿million). We￿started￿2012￿with￿a￿systems￿backlog￿excluding￿EUV￿of￿71￿systems.￿In￿2012,￿we￿booked￿orders￿for￿148￿systems, received￿order￿cancellations￿for￿4￿systems￿and￿recognized￿sales￿for￿169￿systems.￿This￿resulted￿in￿a￿systems￿backlog￿of 46￿as￿of￿December￿31,￿2012. ASML￿ANNUAL￿REPORT￿2012 25 As￿of￿December￿31,￿2012,￿our￿systems￿backlog￿excluding￿EUV￿was￿valued￿at￿EUR￿1,214.1￿million￿and￿includes￿46 systems￿with￿an￿ASP￿of￿EUR￿26.4￿million.￿As￿of￿December￿31,￿2011,￿the￿systems￿backlog￿was￿valued￿at￿EUR￿1,732.5 million￿and￿included￿71￿systems￿with￿an￿ASP￿of￿EUR￿24.4￿million. Profitability Our￿general￿strategy￿is￿to￿achieve￿annual￿income￿from￿operations￿to￿net￿sales￿of￿13.0￿to￿18.0￿percent￿at￿the￿trough￿of the￿industry's￿business￿cycle￿and￿25.0￿to￿30.0￿percent￿at￿the￿peak.￿However￿in￿exceptional￿circumstances,￿as￿evidenced by￿the￿financial￿and￿economic￿crisis￿in￿2009,￿we￿could￿see￿periods￿with￿income￿from￿operations￿that￿are￿substantially below￿our￿minimum￿target￿level. Income￿from￿operations￿decreased￿to￿EUR￿1,156.8￿million,￿or￿24.4￿percent￿of￿net￿sales,￿in￿2012￿from￿an￿income￿from operations￿of￿EUR￿1,641.2￿million,￿or￿29.0￿percent￿of￿net￿sales,￿in￿2011￿(2010:￿EUR￿1,250.7￿million,￿or￿27.7￿percent￿of net￿sales).￿The￿EUR￿484.4￿million￿decrease￿was￿mainly￿driven￿by￿the￿decrease￿of￿gross￿profit￿on￿the￿system￿sales￿of￿EUR 487.3￿million. Gross￿profit￿on￿sales￿decreased￿to￿EUR￿2,005.2￿million￿or￿42.4￿percent￿of￿net￿sales￿in￿2012￿from￿EUR￿2,449.4￿million￿or 43.3￿percent￿of￿net￿sales￿in￿2011￿(2010:￿EUR￿1,955.2￿million￿or￿43.4￿percent￿of￿net￿sales).￿Lower￿gross￿profit￿was￿mainly driven￿by￿the￿decreased￿number￿of￿total￿systems￿sold.￿Gross￿profit￿as￿a￿percentage￿of￿net￿sales￿in￿2012￿decreased compared￿to￿2011,￿mainly￿due￿to￿increased￿infrastructure￿and￿manufacturing￿cost,￿driven￿primarily￿by￿EUV￿production, lower￿utilization￿of￿our￿production￿capacity￿and￿higher￿cost￿incurred￿in￿relation￿to￿excess￿and￿obsolete￿inventory￿as result￿of￿technological￿developments￿and￿design￿changes. R&D￿costs￿(net￿of￿credits)￿in￿2012￿(EUR￿589.1￿million)￿are￿in￿line￿with￿2011￿(EUR￿590.3￿million).￿R&D￿spending￿remained stable￿and￿mainly￿related￿to￿our￿strategic￿programs,￿in￿particular￿EUV,￿immersion￿and￿holistic￿lithography. Selling,￿general￿and￿administrative￿("SG&A")￿costs￿increased￿by￿EUR￿41.4￿million,￿or￿19.0￿percent,￿to￿EUR￿259.3￿million in￿2012,￿or￿5.5￿percent￿of￿net￿sales,￿from￿EUR￿217.9￿million￿in￿2011,￿or￿3.9￿percent￿of￿net￿sales.￿The￿increase￿was mainly￿driven￿by￿transaction￿costs￿incurred￿of￿EUR￿26.1￿million￿related￿to￿the￿Customer￿Co-Investment￿Program￿and transaction￿costs￿related￿to￿the￿proposed￿acquisition￿of￿Cymer￿and￿costs￿to￿implement￿and￿support￿IT￿solutions￿of￿EUR 10.2￿million. The￿effective￿tax￿rate￿was￿0.4￿percent￿of￿income￿before￿income￿taxes￿in￿2012,￿compared￿with￿11.0￿percent￿of income￿before￿income￿taxes￿in￿2011.￿The￿change￿in￿the￿effective￿tax￿rate￿is￿mainly￿due￿to￿a￿release￿of￿our￿liability￿for unrecognized￿tax￿benefits￿of￿EUR￿92.5￿million￿after￿successful￿conclusion￿of￿tax￿audits￿in￿different￿jurisdictions￿which almost￿completely￿offsets￿the￿tax￿expenses,￿resulting￿in￿an￿income￿tax￿expense￿of￿EUR￿4.3￿million￿(2011:￿EUR￿181.7 million). Net￿income￿in￿2012￿amounted￿to￿EUR￿1,146.3￿million,￿or￿24.2￿percent￿of￿net￿sales,￿representing￿EUR￿2.70￿basic￿net income￿per￿ordinary￿share,￿compared￿with￿net￿income￿in￿2011￿of￿EUR￿1,467.0￿million,￿or￿26.0￿percent￿of￿net￿sales, representing￿EUR￿3.45￿basic￿net￿income￿per￿ordinary￿share￿(2010:￿EUR￿1,021.8￿million￿or￿22.7￿percent￿of￿net￿sales, representing￿EUR￿2.35￿basic￿net￿income￿per￿ordinary￿share). Liquidity 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￿cash￿and￿cash￿equivalents￿decreased￿to￿EUR￿1,767.6￿million￿as￿of￿December￿31,￿2012￿from￿EUR￿2,731.8￿million￿as of￿December￿31,￿2011￿and￿our￿short-term￿investments￿increased￿to￿EUR￿930.0￿million￿(2011:￿nil). We￿generated￿net￿cash￿from￿operating￿activities￿of￿EUR￿703.5￿million￿in￿2012.￿We￿used￿EUR￿1,119.8￿million￿for￿investing activities￿in￿2012￿primarily￿relating￿to￿our￿purchased￿short-term￿investments￿in￿Dutch￿Treasury￿Certificates￿and￿our deposits￿with￿the￿Dutch￿government.￿Net￿cash￿used￿in￿financing￿activities￿was￿EUR￿545.6￿million￿in￿2012.￿In￿2012￿net cash￿used￿in￿financing￿activities￿includes￿the￿net￿cash￿outflow￿of￿EUR￿3,728.3￿million￿for￿the￿Synthetic￿Share￿Buyback, EUR￿535.4￿million￿for￿our￿regular￿share￿buyback￿programs￿and￿EUR￿188.9￿million￿for￿our￿annual￿dividend￿payment,￿to￿a large￿extent￿offset￿by￿the￿proceeds￿of￿EUR￿3,853.9￿million￿from￿issuance￿of￿shares￿under￿the￿Customer￿Co-Investment Program￿and￿EUR￿53.8￿million￿net￿proceeds￿from￿issuance￿of￿shares￿in￿connection￿with￿the￿exercise￿and￿purchase￿of employee￿stock￿options. ASML￿ANNUAL￿REPORT￿2012 26 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￿EUR￿3,853.9￿million￿relates￿to￿the￿capital￿repayment￿on￿ASML's￿treasury￿shares￿which￿was￿also￿part of￿the￿Synthetic￿Share￿Buyback￿in￿November￿2012. ASML’s￿available￿credit￿facility￿amounts￿to￿EUR￿500.0￿million.￿No￿amounts￿were￿drawn￿or￿outstanding￿under￿this￿facility during￿2012￿(2011:￿nil). A. Operating Results Critical￿accounting￿policies￿using￿significant￿estimates￿ 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￿accounting￿principles￿generally￿accepted￿in￿the United￿States￿of￿America￿("US￿GAAP").￿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￿revenue￿and￿expenses￿during￿the reported￿periods.￿Actual￿results￿could￿differ￿from￿those￿estimates.￿We￿evaluate￿our￿estimates￿continually￿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￿of￿operations￿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. Revenue￿recognition ASML￿recognizes￿revenue￿when￿all￿four￿revenue￿recognition￿criteria￿are￿met:￿persuasive￿evidence￿of￿an￿arrangement exists;￿delivery￿has￿occurred￿or￿services￿have￿been￿rendered;￿seller’s￿price￿to￿buyer￿is￿fixed￿or￿determinable;￿and collectability￿is￿reasonably￿assured.￿This￿policy￿generally￿results￿in￿revenue￿recognition￿from￿the￿sale￿of￿a￿system￿upon delivery.￿The￿revenue￿from￿the￿installation￿of￿a￿system￿is￿generally￿recognized￿upon￿completion￿of￿that￿installation￿at the￿customer￿site.￿Each￿system￿undergoes,￿prior￿to￿shipment,￿a￿"Factory￿Acceptance￿Test"￿in￿our￿clean￿room￿facilities, effectively￿replicating￿the￿operating￿conditions￿that￿will￿be￿present￿on￿the￿customer's￿site,￿in￿order￿to￿verify￿whether the￿system￿will￿meet￿its￿standard￿specifications￿and￿any￿additional￿technical￿and￿performance￿criteria￿agreed￿with￿the customer,￿if￿any.￿A￿system￿is￿shipped,￿and￿revenue￿is￿recognized,￿only￿after￿all￿contractual￿specifications￿are￿met￿and customer￿sign-off￿is￿received￿or￿waived.￿In￿case￿not￿all￿specifications￿are￿met￿and￿the￿remaining￿performance￿obligation is￿not￿essential￿to￿the￿functionality￿of￿the￿system￿but￿is￿substantive￿rather￿than￿inconsequential￿or￿perfunctory,￿a￿portion of￿the￿sales￿price￿is￿deferred.￿Although￿each￿system's￿performance￿is￿re-tested￿upon￿installation￿at￿the￿customer's￿site, we￿have￿never￿failed￿to￿successfully￿complete￿installation￿of￿a￿system￿at￿a￿customer’s￿premises. In￿connection￿with￿the￿introduction￿of￿new￿technology,￿such￿as￿our￿second-generation￿EUV￿systems￿(NXE:3100),￿we initially￿defer￿revenue￿recognition￿until￿completion￿of￿installation￿and￿acceptance￿of￿the￿new￿technology￿based￿system at￿customer￿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:￿2010￿(EUV)￿and￿1999￿(TWINSCAN). We￿have￿no￿significant￿repurchase￿commitments￿in￿our￿general￿sales￿terms￿and￿conditions.￿From￿time￿to￿time￿the we￿repurchase￿systems￿that￿we￿have￿manufactured￿and￿sold￿and,￿following￿refurbishment,￿resell￿those￿systems￿to other￿customers.￿This￿repurchase￿decision￿is￿driven￿by￿market￿demand￿expressed￿by￿other￿customers￿and￿not￿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,￿2012￿and￿2011,￿ASML￿had￿no￿repurchase commitments. 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￿volume￿discounts￿to￿certain customers.￿In￿some￿instances￿these￿volume￿discounts￿can￿be￿used￿to￿purchase￿field￿options￿(system￿enhancements). The￿related￿amount￿is￿recorded￿as￿a￿reduction￿in￿revenue￿at￿time￿of￿shipment.￿From￿time￿to￿time,￿we￿offer￿free￿or discounted￿products￿or￿services￿(award￿credits)￿to￿our￿customers￿as￿part￿of￿a￿volume￿purchase￿agreement.￿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.￿The￿amount￿allocable￿to ASML￿ANNUAL￿REPORT￿2012 27 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￿revenues￿(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.￿When￿we￿satisfy￿the￿onerous￿arrangement,￿we derecognize￿the￿related￿liability. Multiple element arrangements The￿main￿portion￿of￿our￿revenue￿is￿derived￿from￿contractual￿arrangements￿with￿our￿customers￿that￿have￿multiple deliverables,￿which￿mainly￿include￿the￿sale￿of￿our￿systems,￿installation￿and￿training￿services￿and￿prepaid￿extended￿and enhanced￿(optic)￿warranty￿contracts.￿As￿of￿January￿1,￿2011,￿we￿have￿adopted￿ASU￿2009-13,￿"Revenue￿Arrangements with￿Multiple￿Deliverables"￿which￿amended￿the￿guidance￿on￿arrangements￿with￿multiple￿deliverables￿in￿ASC￿605-25. The￿amended￿standard￿changes￿the￿requirements￿for￿establishing￿separate￿units￿of￿accounting￿in￿a￿multiple￿element arrangement￿and￿requires￿the￿allocation￿of￿arrangement￿consideration￿to￿each￿deliverable￿to￿be￿based￿on￿the￿relative selling￿price.￿We￿apply￿this￿accounting￿guidance￿prospectively￿to￿arrangements￿originating￿or￿materially￿modified￿on￿or after￿January￿1,￿2011.￿The￿implementation￿resulted￿in￿additional￿qualitative￿disclosures￿that￿are￿included￿below,￿but￿did not￿result￿in￿additional￿units￿of￿accounting￿and￿only￿had￿an￿insignificant￿impact￿on￿timing￿and￿allocation￿of￿revenues. Each￿element￿in￿the￿arrangement￿is￿accounted￿for￿as￿a￿separate￿unit￿of￿accounting￿provided￿the￿following￿criteria￿are met:￿the￿delivered￿products￿or￿services￿have￿value￿to￿the￿customer￿on￿a￿standalone￿basis;￿and￿for￿an￿arrangement that￿includes￿a￿general￿right￿of￿return￿relative￿to￿the￿delivered￿products￿or￿services,￿delivery￿or￿performance￿of￿the undelivered￿product￿or￿service￿is￿considered￿probable￿and￿is￿substantially￿controlled￿by￿us.￿We￿consider￿a￿deliverable to￿have￿stand-alone￿value￿if￿the￿product￿or￿service￿is￿sold￿separately￿by￿us￿or￿another￿vendor￿or￿could￿be￿resold￿by￿the customer.￿Further,￿our￿revenue￿arrangements￿do￿not￿include￿a￿general￿right￿of￿return￿relative￿to￿the￿delivered￿products. Where￿the￿aforementioned￿criteria￿for￿a￿separate￿unit￿of￿accounting￿are￿not￿met,￿the￿deliverable￿is￿combined￿with￿the undelivered￿element(s)￿and￿treated￿as￿a￿single￿unit￿of￿accounting￿for￿the￿purposes￿of￿allocation￿of￿the￿arrangement consideration￿and￿revenue￿recognition. The￿hierarchy￿of￿evidence￿to￿determine￿a￿selling￿price￿in￿ASC￿605-25￿is￿as￿follows: • Vendor-Specific￿Objective￿Evidence￿("VSOE")￿–￿the￿price￿at￿which￿we￿sell￿the￿element￿in￿a￿separate￿stand-alone transaction; • Third-Party￿Evidence￿("TPE")￿–￿evidence￿from￿us￿or￿other￿companies￿of￿the￿value￿of￿a￿largely￿interchangeable￿element in￿a￿transaction; • Best￿Estimate￿of￿Selling￿Price￿("BESP")￿–￿our￿best￿estimate￿of￿the￿selling￿price￿of￿an￿element￿in￿the￿transaction. To￿determine￿the￿selling￿price￿in￿multiple￿elements￿arrangements,￿we￿establish￿VSOE￿of￿the￿selling￿price￿for￿installation and￿training￿services￿and￿prepaid￿extended￿and￿enhanced￿(optic)￿warranty￿contracts.￿VSOE￿is￿determined￿based￿on￿the prices￿that￿we￿charge￿for￿installation￿and￿comparable￿services￿(such￿as￿relocating￿a￿system￿to￿another￿customer￿site) and￿prepaid￿extended￿and￿enhanced￿(optic)￿warranty￿contracts￿on￿a￿stand-alone￿basis,￿which￿are￿subject￿to￿normal price￿negotiations.￿Revenue￿from￿installation￿and￿training￿services￿is￿recognized￿when￿the￿services￿are￿completed. Revenue￿from￿prepaid￿extended￿and￿enhanced￿(optic)￿warranty￿contracts￿is￿recognized￿over￿the￿term￿of￿the￿contract. When￿we￿are￿unable￿to￿establish￿the￿selling￿price￿using￿VSOE￿or￿TPE,￿we￿use￿BESP.￿The￿objective￿of￿using￿estimated selling￿price-based￿methodology￿is￿to￿determine￿the￿price￿at￿which￿we￿would￿transact￿a￿sale￿if￿the￿product￿or￿service were￿sold￿on￿a￿stand-alone￿basis.￿Accordingly,￿we￿determine￿BESP￿considering￿several￿internal￿and￿external￿factors including,￿but￿not￿limited￿to,￿pricing￿practices,￿gross￿margin￿objectives,￿market￿conditions,￿competitive￿environment, internal￿costs￿and￿geographies.￿We￿review￿selling￿prices￿every￿reporting￿period￿and￿maintain￿internal￿controls￿over￿the establishment￿and￿updates￿of￿these￿estimates. For￿arrangements￿entered￿into￿through￿December￿31,￿2010,￿we￿primarily￿recognized￿revenue￿based￿on￿the￿previous guidance￿of￿ASC￿605-25.￿The￿revenue￿relating￿to￿the￿installation￿and￿training￿services￿and￿prepaid￿extended￿and enhanced￿(optic)￿warranty￿contracts￿was￿deferred￿at￿their￿fair￿value￿until￿delivery￿of￿these￿elements.￿￿When￿we￿were￿not able￿to￿determine￿the￿fair￿value￿for￿the￿system,￿but￿were￿able￿to￿determine￿the￿fair￿value￿for￿all￿other￿elements￿in￿the arrangement,￿revenue￿was￿allocated￿as￿the￿difference￿between￿the￿total￿arrangement￿consideration￿less￿the￿aggregate fair￿value￿of￿all￿other￿elements￿in￿the￿arrangement,￿and￿no￿revenue￿was￿recognized￿until￿all￿elements￿without￿fair￿value had￿been￿delivered. ASML￿ANNUAL￿REPORT￿2012 28 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￿and￿optic￿parts￿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￿field￿expenses.￿Based￿upon￿historical￿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 2012,￿2011￿and￿2010,￿any￿reassessments￿of￿the￿warranty￿reserve,￿and￿resulting￿change￿in￿accounting￿estimate,￿did￿not have￿a￿material￿effect￿on￿our￿consolidated￿statements￿of￿operations￿and￿per￿share￿amounts. ￿￿￿￿￿￿ Evaluation￿of￿long-lived￿assets￿for￿impairment Long-lived￿assets￿include￿goodwill,￿other￿intangible￿assets￿and￿property,￿plant￿and￿equipment. Goodwill￿is￿tested￿for￿impairment￿annually￿on￿September￿30￿and￿whenever￿events￿or￿changes￿in￿circumstances￿indicate that￿the￿carrying￿amount￿of￿the￿goodwill￿may￿not￿be￿recoverable.￿These￿events￿or￿circumstances￿could￿include￿a significant￿change￿in￿the￿business￿climate,￿legal￿factors,￿operating￿performance￿indicators,￿competition,￿or￿sale￿or disposition￿of￿a￿significant￿portion￿of￿a￿reporting￿unit.￿The￿test￿is￿based￿on￿a￿two-step￿approach￿for￿each￿reporting unit￿(being￿an￿operating￿segment￿or￿one￿level￿below￿an￿operating￿segment)￿in￿which￿goodwill￿has￿been￿recorded. First,￿recoverability￿is￿tested￿by￿comparing￿the￿carrying￿amount￿of￿the￿reporting￿unit￿including￿goodwill￿with￿the￿fair value￿of￿the￿reporting￿unit.￿If￿the￿carrying￿amount￿of￿the￿reporting￿unit￿is￿higher￿than￿the￿fair￿value￿of￿the￿reporting￿unit, the￿second￿step￿should￿be￿performed.￿Goodwill￿impairment￿is￿measured￿as￿the￿excess￿of￿the￿carrying￿amount￿of￿the goodwill￿over￿its￿implied￿fair￿value.￿The￿implied￿fair￿value￿of￿goodwill￿is￿determined￿by￿calculating￿the￿fair￿value￿of￿the various￿assets￿and￿liabilities￿included￿in￿the￿reporting￿unit￿in￿the￿same￿manner￿as￿goodwill￿is￿determined￿in￿a￿business combination. Other￿intangible￿assets￿and￿property,￿plant￿and￿equipment￿are￿reviewed￿for￿impairment￿whenever￿events￿or￿changes￿in circumstances￿indicate￿that￿the￿carrying￿amount￿of￿those￿assets￿may￿not￿be￿recoverable.￿Other￿intangible￿assets￿and property,￿plant￿and￿equipment￿are￿tested￿for￿impairment￿based￿on￿a￿two-step￿approach.￿First,￿the￿recoverability￿is￿tested by￿comparing￿the￿carrying￿amount￿of￿the￿other￿intangible￿assets￿and￿property,￿plant￿and￿equipment￿with￿their￿fair￿value, being￿the￿sum￿of￿the￿related￿undiscounted￿future￿cash￿flows.￿Second,￿if￿the￿carrying￿amount￿of￿the￿other￿intangible assets￿and￿property,￿plant￿and￿equipment￿is￿higher￿than￿this￿fair￿value￿the￿assets￿are￿considered￿to￿be￿impaired.￿The impairment￿to￿be￿recognized￿is￿measured￿by￿the￿amount￿by￿which￿the￿carrying￿amount￿of￿the￿assets￿exceeds￿the￿fair value￿of￿the￿asset. In￿determining￿the￿fair￿value￿of￿a￿long-lived￿asset￿(other￿than￿goodwill),￿we￿make￿estimates￿about￿future￿cash￿flows. These￿estimates￿are￿based￿on￿our￿financial￿plan￿updated￿with￿the￿latest￿available￿projection￿of￿the￿semiconductor market￿conditions￿and￿our￿sales￿and￿cost￿expectations,￿which￿are￿consistent￿with￿the￿plans￿and￿estimates￿that we￿use￿to￿manage￿our￿business.￿We￿also￿make￿estimates￿and￿assumptions￿concerning￿Weighted￿Average￿Cost￿of Capital￿("WACC")￿and￿future￿inflation￿rates.￿It￿is￿possible￿that￿actual￿results￿may￿differ￿from￿our￿plans,￿estimates￿and assumptions,￿which￿may￿require￿impairment￿of￿certain￿long-lived￿assets.￿Future￿adverse￿changes￿in￿market￿conditions may￿also￿require￿impairment￿of￿certain￿long-lived￿assets,￿which￿could￿have￿a￿material￿adverse￿effect￿on￿our￿financial condition￿and￿results￿of￿operations. Inventories Inventories,￿including￿spare￿parts￿and￿lenses,￿are￿stated￿at￿the￿lower￿of￿cost￿(first-in,￿first-out￿method)￿or￿market￿value. Costs￿include￿net￿prices￿paid￿for￿materials￿purchased,￿charges￿for￿freight￿and￿customs￿duties,￿production￿labor￿cost and￿factory￿overhead.￿Allowances￿are￿made￿for￿slow￿moving,￿obsolete￿or￿unsellable￿inventory￿and￿are￿reviewed￿on￿a quarterly￿basis.￿Our￿methodology￿involves￿matching￿our￿on-hand￿and￿on-order￿inventory￿with￿our￿requirements￿based￿on the￿expected￿demand￿and￿resulting￿manufacturing￿forecast.￿In￿determining￿inventory￿allowances,￿we￿evaluate￿inventory in￿excess￿of￿our￿forecasted￿needs￿on￿both￿technological￿and￿economic￿criteria￿and￿make￿appropriate￿provisions￿to reflect￿the￿risk￿of￿obsolescence.￿This￿methodology￿is￿significantly￿affected￿by￿our￿forecasted￿needs￿for￿inventory.￿If actual￿requirements￿were￿to￿be￿lower￿than￿estimated,￿additional￿inventory￿allowances￿for￿excess￿or￿obsolete￿inventory may￿be￿required,￿which￿could￿have￿a￿material￿adverse￿effect￿on￿our￿business,￿financial￿condition￿and￿results￿of operations. ASML￿ANNUAL￿REPORT￿2012 29 Accounts￿receivable￿and￿finance￿receivables A￿majority￿of￿our￿accounts￿receivable￿and￿finance￿receivables￿are￿derived￿from￿sales￿to￿a￿limited￿number￿of￿large multinational￿semiconductor￿manufacturers￿throughout￿the￿world.￿In￿order￿to￿monitor￿potential￿credit￿losses,￿we￿perform ongoing￿credit￿evaluations￿of￿our￿customers'￿financial￿condition.￿Respective￿allowances￿for￿credit￿losses￿on￿both accounts￿receivable￿and￿finance￿receivables￿are￿maintained￿based￿upon￿management's￿assessment￿of￿the￿expected collectability￿of￿all￿accounts￿receivable￿and￿finance￿receivables.￿The￿respective￿allowances￿for￿credit￿losses￿on￿accounts receivable￿and￿finance￿receivables￿are￿reviewed￿periodically￿to￿assess￿the￿adequacy￿of￿these￿allowances.￿In￿making￿this assessment,￿management￿takes￿into￿consideration￿(i)￿any￿circumstances￿of￿which￿we￿are￿aware￿regarding￿a￿customer's inability￿to￿meet￿its￿financial￿obligations;￿and￿(ii)￿our￿judgments￿as￿to￿potential￿prevailing￿economic￿conditions￿in￿the industry￿and￿their￿potential￿impact￿on￿our￿customers.￿Where￿we￿deem￿it￿prudent￿to￿do￿so,￿we￿may￿require￿some￿form￿of credit￿enhancement,￿such￿as￿letters￿of￿credit,￿down￿payments￿and￿retention￿of￿ownership￿provisions￿in￿contracts,￿before shipping￿systems￿to￿certain￿customers,￿which￿are￿intended￿to￿recover￿the￿systems￿in￿the￿event￿a￿customer￿defaults￿on payment.￿We￿have￿not￿incurred￿any￿material￿accounts￿receivable￿or￿finance￿receivable￿credit￿losses￿during￿the￿past￿three years.￿A￿business￿failure￿of￿one￿of￿our￿main￿customers￿could￿result￿in￿a￿substantial￿credit￿loss￿in￿respect￿to￿amounts owed￿to￿us￿by￿that￿customer,￿which￿could￿adversely￿affect￿our￿business,￿financial￿condition￿and￿results￿of￿operations. Income￿taxes We￿operate￿in￿various￿tax￿jurisdictions￿in￿Europe,￿Asia,￿and￿the￿United￿States￿and￿must￿comply￿with￿the￿tax￿laws￿and regulations￿of￿each￿of￿these￿jurisdictions. We￿use￿the￿asset￿and￿liability￿method￿in￿accounting￿for￿income￿taxes.￿Under￿this￿method,￿deferred￿tax￿assets￿and liabilities￿are￿recognized￿for￿tax￿consequences￿attributable￿to￿differences￿between￿the￿balance￿sheet￿carrying￿amounts of￿existing￿assets￿and￿liabilities￿and￿their￿respective￿tax￿bases.￿Furthermore￿tax￿assets￿are￿recognized￿for￿the￿tax￿effect of￿incurred￿net￿operating￿losses.￿If￿it￿is￿more￿likely￿than￿not￿that￿the￿carrying￿amounts￿of￿deferred￿tax￿assets￿will￿not￿be realized,￿a￿valuation￿allowance￿is￿recorded￿to￿reduce￿the￿carrying￿amounts￿of￿those￿assets. We￿recognize￿the￿tax￿benefit￿from￿an￿uncertain￿tax￿position￿in￿accordance￿with￿ASC￿740.￿ASC￿740￿also￿provides guidance￿on￿derecognition￿of￿income￿tax￿assets￿and￿liabilities,￿classification￿of￿current￿and￿deferred￿income￿tax￿assets and￿liabilities,￿accounting￿for￿interest￿and￿penalties￿associated￿with￿tax￿positions,￿and￿income￿tax￿disclosures.￿Judgment is￿required￿in￿assessing￿the￿future￿tax￿consequences￿of￿events￿that￿have￿been￿recognized￿in￿our￿consolidated￿financial statements￿or￿tax￿returns.￿Variations￿in￿the￿actual￿outcome￿of￿these￿future￿tax￿consequences￿could￿materially￿impact￿our financial￿statements. Results￿of￿Operations￿ The￿following￿discussion￿and￿analysis￿of￿results￿of￿operations￿should￿be￿viewed￿in￿the￿context￿of￿the￿risks￿that￿may interfere￿with￿our￿business￿objectives,￿described￿in￿Item￿3.D.￿"Risk￿Factors". Set￿out￿below￿our￿consolidated￿statements￿of￿operations￿data￿for￿the￿three￿years￿ended￿December￿31,￿2012,￿2011￿and 2010: Year ended December 31 (in millions) ￿ Total￿net￿sales Cost￿of￿sales Gross￿profit￿on￿sales Research￿and￿development￿costs Selling,￿general￿and￿administrative￿costs Income￿from￿operations Interest￿income￿(expense),￿net Income￿before￿income￿taxes Provision￿for￿income￿taxes Net￿income 2012 EUR ￿ ￿ 4,731.5 ￿ 2,726.3 ￿ 2,005.2 ￿ 589.1 ￿ 259.3 ￿ 1,156.8 ￿ (6.2) ￿ 1,150.6 ￿ (4.3) ￿ 1,146.3 ￿ 2011 1 EUR ￿ ￿ 5,651.0 ￿ 3,201.6 ￿ 2,449.4 ￿ 590.3 ￿ 217.9 ￿ 1,641.2 ￿ 7.4 ￿ 1,648.6 ￿ (181.6) ￿ 1,467.0 ￿ 2010 EUR ￿ 4,507.9 2,552.7 1,955.2 523.4 181.1 1,250.7 (8.2) 1,242.5 (220.7) 1,021.8 1 As￿of￿January￿1,￿2011,￿ASML￿adopted￿Accounting￿Standards￿Update￿("ASU")￿2009-13,￿"Revenue￿Arrangements￿with￿Multiple￿Deliverables"￿which amended￿ASC￿605-25.￿The￿ASU￿was￿adopted￿prospectively￿and￿had￿an￿insignificant￿impact￿on￿timing￿and￿allocation￿of￿revenues.￿See￿Note￿1￿to￿the consolidated￿financial￿statements. ASML￿ANNUAL￿REPORT￿2012 30 Set￿out￿below￿are￿our￿consolidated￿statements￿of￿operations￿data￿for￿the￿three￿years￿ended￿December￿31,￿2012,￿2011 and￿2010￿expressed￿as￿a￿percentage￿of￿our￿total￿net￿sales: Year ended December 31 (as a percentage of net sales) ￿ Total￿net￿sales Cost￿of￿sales Gross￿profit￿on￿sales Research￿and￿development￿costs Selling,￿general￿and￿administrative￿costs Income￿from￿operations Interest￿income￿(expense),￿net Income￿before￿income￿taxes Provision￿for￿income￿taxes Net￿income 2012 ￿ 100.0 57.6 42.4 12.5 5.5 24.4 (0.1) 24.3 (0.1) 24.2 2011 ￿ 100.0 56.7 43.3 10.4 3.9 29.0 0.2 29.2 (3.2) 26.0 2010 ￿ 100.0 56.6 43.4 11.6 4.1 27.7 (0.1) 27.6 (4.9) 22.7 ASML￿ANNUAL￿REPORT￿2012 31 Results￿of￿operations￿2012￿compared￿with￿2011 Net sales and gross profit The￿following￿table￿shows￿a￿summary￿of￿net￿sales￿(revenue￿and￿units￿sold),￿gross￿profit￿and￿ASP￿data￿on￿an￿annual￿and semi-annual￿basis￿for￿the￿years￿2012￿and￿2011. Net￿sales￿(EUR￿million) Net￿system￿sales￿(EUR￿million) Net￿service￿and￿field￿option￿sales￿(EUR￿million) Total￿sales￿of￿systems￿(in￿units) Total￿sales￿of￿new￿systems￿(in￿units) Total￿sales￿of￿used￿systems￿(in￿units) Gross￿profit￿as￿a￿percentage￿of￿net￿sales ASP￿of￿system￿sales￿(EUR￿million) ASP￿of￿new￿system￿sales￿(EUR￿million) ASP￿of￿used￿system￿sales￿(EUR￿million) First half year 2,479.6 2,034.8 444.8 96 89 7 42.5 21.2 22.7 2.4 2012 Second half year 2,251.9 1,766.8 485.1 74 57 17 42.2 23.9 28.1 9.7 Full year 4,731.5 3,801.6 929.9 170 146 24 42.4 22.4 24.8 7.6 First half year 2,981.6 2,618.0 363.6 126 114 12 44.9 20.8 22.6 3.5 2011 1 Second half year 2,669.4 2,265.9 403.5 96 81 15 41.6 23.6 27.2 4.0 Full year 5,651.0 4,883.9 767.1 222 195 27 43.3 22.0 24.5 3.8 1 As￿of￿January￿1,￿2011,￿ASML￿adopted￿Accounting￿Standards￿Update￿("ASU")￿2009-13,￿"Revenue￿Arrangements￿with￿Multiple￿Deliverables"￿which amended￿ASC￿605-25.￿The￿ASU￿was￿adopted￿prospectively,￿and￿had￿an￿insignificant￿impact￿on￿timing￿and￿allocation￿of￿revenues.￿See￿Note￿1￿to￿the consolidated￿financial￿statements. Net￿sales￿decreased￿by￿EUR￿919.5￿million,￿or￿16.3￿percent,￿to￿EUR￿4,731.5￿million￿in￿2012￿from￿EUR￿5,651.0￿million￿in 2011￿(2010:￿EUR￿4,507.9￿million).￿The￿decrease￿in￿net￿sales￿mainly￿resulted￿from￿a￿decrease￿in￿net￿system￿sales￿of￿EUR 1,082.3￿million,￿or￿22.2￿percent,￿to￿EUR￿3,801.6￿million￿in￿2012￿from￿EUR￿4,883.9￿million￿in￿2011￿(2010:￿EUR￿3,894.7 million),￿partly￿offset￿by￿an￿increase￿in￿net￿service￿and￿field￿option￿sales￿of￿EUR￿162.8￿million￿or￿21.2￿percent￿to￿EUR 929.9￿million￿in￿2012￿from￿EUR￿767.1￿million￿in￿2011￿(2010:￿EUR￿613.2￿million),￿mainly￿due￿the￿further￿expansion￿of Holistic￿Lithography,￿integrated￿metrology￿and￿feedback￿loops.￿The￿number￿of￿total￿systems￿sold￿decreased￿by￿23.4 percent￿to￿170￿systems￿in￿2012￿from￿222￿systems￿in￿2011￿(2010:197),￿mainly￿caused￿by￿decreased￿demand￿in￿Memory, as￿its￿major￿driver,￿the￿PC￿business￿shrunk￿compared￿to￿2011.￿During￿2012,￿the￿majority￿of￿the￿system￿sales￿were generated￿from￿Logic. The￿ASP￿of￿our￿new￿systems￿in￿2012￿EUR￿24.8￿million￿is￿in￿line￿with￿2011￿EUR￿24.5￿million. From￿time￿to￿time,￿we￿repurchase￿systems￿that￿we￿have￿manufactured￿and￿sold￿and,￿following￿factory-rebuild￿or refurbishment,￿resell￿those￿systems￿to￿other￿customers.￿This￿repurchase￿decision￿is￿mainly￿driven￿by￿market￿demand for￿capacity￿expressed￿by￿other￿customers￿and￿not￿by￿explicit￿or￿implicit￿contractual￿arrangements￿relating￿to￿the initial￿sale.￿The￿number￿of￿used￿systems￿sold￿in￿2012￿decreased￿to￿24￿from￿27￿in￿2011.￿The￿ASP￿of￿our￿used￿systems increased￿by￿100.0￿percent￿to￿EUR￿7.6￿million￿in￿2012￿from￿EUR￿3.8￿million￿in￿2011,￿which￿was￿the￿result￿of￿a￿shift￿in￿the mix￿of￿used￿systems￿sold￿toward￿more￿high-end￿system￿types. Through￿2012,￿all￿of￿the￿top￿10￿chipmakers￿worldwide,￿in￿terms￿of￿semiconductor￿capital￿expenditure,￿were￿our customers.￿In￿2012,￿recognized￿sales￿to￿our￿largest￿customer￿accounted￿for￿EUR￿1,236.1￿million,￿or￿26.1￿percent￿of￿our net￿sales.￿In￿2011,￿recognized￿sales￿to￿our￿largest￿customer￿accounted￿for￿EUR￿1,311.7￿million,￿or￿23.2￿percent￿of￿our net￿sales. Gross￿profit￿on￿sales￿decreased￿to￿EUR￿2,005.2￿million￿or￿42.4￿percent￿of￿net￿sales￿in￿2012￿from￿EUR￿2,449.4￿million￿or 43.3￿percent￿of￿net￿sales￿in￿2011￿(2010:￿EUR￿1,955.2￿million￿or￿43.4￿percent￿of￿net￿sales).￿Lower￿gross￿profit￿was￿mainly driven￿by￿the￿decreased￿number￿of￿total￿systems￿sold.￿Gross￿profit￿as￿a￿percentage￿of￿net￿sales￿in￿2012￿decreased compared￿to￿2011,￿mainly￿due￿to￿increased￿infrastructure￿and￿manufacturing￿cost,￿driven￿primarily￿by￿EUV￿production, lower￿utilization￿of￿our￿production￿capacity￿and￿higher￿cost￿incurred￿in￿relation￿to￿excess￿and￿obsolete￿inventory￿as result￿of￿technological￿developments￿and￿design￿changes. Research and development costs  R&D￿costs￿(net￿of￿credits)￿in￿2012￿(EUR￿589.1￿million)￿are￿in￿line￿with￿2011￿(EUR￿590.3￿million).￿R&D￿spending￿remained stable￿and￿mainly￿related￿to￿our￿strategic￿programs,￿in￿particular￿EUV,￿immersion￿and￿holistic￿lithography. Selling, general and administrative costs Selling,￿general￿and￿administrative￿("SG&A")￿costs￿increased￿by￿EUR￿41.4￿million,￿or￿19.0￿percent,￿to￿EUR￿259.3￿million in￿2012,￿or￿5.5￿percent￿of￿net￿sales,￿from￿EUR￿217.9￿million￿in￿2011,￿or￿3.9￿percent￿of￿net￿sales.￿The￿increase￿was mainly￿driven￿by￿transaction￿costs￿incurred￿of￿EUR￿26.1￿million￿related￿to￿the￿Customer￿Co-Investment￿Program￿and ASML￿ANNUAL￿REPORT￿2012 32 transaction￿costs￿related￿to￿the￿proposed￿acquisition￿of￿Cymer￿and￿costs￿to￿implement￿and￿support￿IT￿solutions￿of￿EUR 10.2￿million. Interest income (expense), net Net￿interest￿expense￿in￿2012￿was￿EUR￿6.2￿million￿compared￿with￿a￿net￿interest￿income￿in￿2011￿of￿EUR￿7.4￿million. Interest￿income￿relates￿to￿interest￿earned￿on￿our￿cash￿and￿cash￿equivalents￿and￿short-term￿investments;￿interest￿income declined￿in￿2012￿due￿to￿a￿lower￿yield￿earned￿on￿cash￿and￿cash￿equivalents￿and￿short-term￿investments,￿and￿was￿more than￿offset￿by￿the￿interest￿expense￿on￿our￿outstanding￿debt. Income taxes The￿effective￿tax￿rate￿was￿0.4￿percent￿of￿income￿before￿income￿taxes￿in￿2012,￿compared￿with￿11.0￿percent￿of income￿before￿income￿taxes￿in￿2011.￿The￿change￿in￿the￿effective￿tax￿rate￿is￿mainly￿due￿to￿a￿release￿of￿our￿liability￿for unrecognized￿tax￿benefits￿of￿EUR￿92.5￿million￿after￿successful￿conclusion￿of￿tax￿audits￿in￿different￿jurisdictions￿which almost￿completely￿offsets￿the￿tax￿expenses,￿resulting￿in￿an￿income￿tax￿expense￿of￿EUR￿4.3￿million￿(2011:￿EUR￿181.7 million). ASML￿ANNUAL￿REPORT￿2012 33 Results￿of￿operations￿2011￿compared￿with￿2010￿ Net sales and gross profit The￿following￿table￿shows￿a￿summary￿of￿net￿sales￿(revenue￿and￿units￿sold),￿gross￿profit￿on￿sales￿and￿ASP￿data￿on￿an annual￿and￿semi-annual￿basis￿for￿the￿years￿ended￿December￿31,￿2011￿and￿2010. Net￿sales￿(EUR￿million) Net￿system￿sales￿(EUR￿million) Net￿service￿and￿field￿option￿sales￿(EUR￿million) Total￿sales￿of￿systems￿(in￿units) Total￿sales￿of￿new￿systems￿(in￿units) Total￿sales￿of￿used￿systems￿(in￿units) Gross￿profit￿as￿a￿percentage￿of￿net￿sales ASP￿of￿system￿sales￿(EUR￿million) ASP￿of￿new￿system￿sales￿(EUR￿million) ASP￿of￿used￿system￿sales￿(EUR￿million) First half year 2,981.6 2,618.0 363.6 126 114 12 44.9 20.8 22.6 3.5 2011 1 Second half year 2,669.4 2,265.9 403.5 96 81 15 41.6 23.6 27.2 4.0 Full year 5,651.0 4,883.9 767.1 222 195 27 43.3 22.0 24.5 3.8 First half year 1,810.5 1,554.6 255.9 77 58 19 41.9 20.2 25.7 3.4 2010 Second half year 2,697.4 2,340.1 357.3 120 96 24 44.4 19.5 23.1 5.2 Full year 4,507.9 3,894.7 613.2 197 154 43 43.4 19.8 24.1 4.4 1 As￿of￿January￿1,￿2011,￿we￿adopted￿Accounting￿Standards￿Update￿("ASU")￿2009-13,￿"Revenue￿Arrangements￿with￿Multiple￿Deliverables"￿which amended￿ASC￿605-25.￿The￿ASU￿was￿adopted￿prospectively￿and￿had￿an￿insignificant￿impact￿on￿timing￿and￿allocation￿of￿revenues.￿See￿Note￿1￿to￿the consolidated￿financial￿statements. Net￿sales￿increased￿by￿EUR￿1,143.1￿million,￿or￿25.4￿percent￿to￿EUR￿5,651.0￿million￿in￿2011￿from￿EUR￿4,507.9￿million in￿2010.￿The￿increase￿in￿net￿sales￿mainly￿resulted￿from￿an￿increase￿in￿net￿system￿sales￿of￿EUR￿989.2￿million,￿or￿25.4 percent￿to￿EUR￿4,883.9￿million￿in￿2011￿from￿EUR￿3,894.7￿million￿in￿2010.￿Net￿service￿and￿field￿option￿sales￿increased to￿EUR￿767.1￿million￿in￿2011￿from￿EUR￿613.2￿million￿in￿2010.￿The￿number￿of￿total￿systems￿sold￿increased￿by￿12.7 percent￿to￿222￿systems￿in￿2011￿from￿197￿systems￿in￿2010.￿The￿increase￿in￿total￿net￿sales￿was￿caused￿by￿increased demand￿for￿lithography￿imaging￿systems￿required￿for￿all￿of￿the￿various￿chip￿layers:￿customers￿continued￿to￿invest￿in￿new leading-edge￿immersion￿technology￿as￿well￿as￿dry￿lithography￿tools￿in￿order￿to￿execute￿their￿strategic￿investments￿in new￿technology￿and￿capacity￿to￿meet￿demand.￿Sales￿were￿derived￿from￿all￿two￿major￿markets￿in￿which￿our￿customers operate,￿with￿Logic￿generating￿the￿majority￿of￿system￿sales￿and￿Memory￿generating￿the￿remainder. The￿ASP￿of￿our￿systems￿increased￿by￿11.1￿percent￿to￿EUR￿22.0￿million￿in￿2011￿from￿EUR￿19.8￿million￿in￿2010￿(2009: EUR￿16.8￿million)￿resulting￿from￿a￿decrease￿in￿the￿number￿of￿used￿systems￿sold￿with￿relatively￿lower￿ASPs.￿The￿ASP￿of our￿new￿systems￿increased￿by￿1.7￿percent￿to￿EUR￿24.5￿million￿in￿2011￿from￿EUR￿24.1￿million￿in￿2010￿(2009:￿EUR￿21.1 million),￿which￿was￿mainly￿driven￿by￿three￿NXE:3100￿systems￿recognized￿with￿an￿ASP￿of￿EUR￿39.8￿million,￿partly￿offset by￿a￿change￿in￿product￿mix. The￿number￿of￿used￿systems￿sold￿in￿2011￿decreased￿to￿27￿from￿43￿in￿2010.￿The￿ASP￿of￿our￿used￿systems￿decreased￿by 13.6￿percent￿to￿EUR￿3.8￿million￿in￿2011￿from￿EUR￿4.4￿million￿in￿2010,￿which￿was￿the￿result￿of￿a￿shift￿in￿the￿mix￿of￿used systems￿sold￿toward￿more￿low-end￿system￿types. Through￿2011,￿all￿of￿the￿top￿10￿chipmakers￿worldwide,￿in￿terms￿of￿semiconductor￿capital￿expenditure,￿were￿our customers.￿In￿2011,￿recognized￿sales￿to￿our￿largest￿customer￿accounted￿for￿EUR￿1,311.7￿million,￿or￿23.2￿percent￿of￿our net￿sales.￿In￿2010,￿recognized￿sales￿to￿our￿three￿largest￿customers￿accounted￿for￿EUR￿1,270.8￿million,￿or￿28.2￿percent￿of our￿net￿sales. Gross￿profit￿increased￿to￿EUR￿2,449.4￿million￿or￿43.3￿percent￿of￿net￿sales￿in￿2011￿from￿EUR￿1,955.2￿million￿or￿43.4 percent￿of￿net￿sales￿in￿2010￿(2009:￿EUR￿458.4￿gross￿profit￿or￿28.7￿percent￿of￿net￿sales).￿The￿higher￿gross￿profit￿reflects increased￿demand￿for￿lithography￿imaging￿systems￿across￿all￿chip￿layers:￿customers￿continued￿to￿invest￿in￿new￿leading- edge￿immersion￿technology￿as￿well￿as￿dry￿lithography￿tools￿in￿order￿to￿execute￿their￿strategic￿investments￿both￿in￿new technology￿and￿in￿capacity￿to￿meet￿demand.￿Gross￿profit￿as￿a￿percentage￿of￿net￿sales￿in￿2011￿is￿approximately￿the same￿as￿the￿2010￿percentage,￿which￿is￿due￿to￿the￿following:￿2011￿net￿sales￿and￿cost￿of￿sales￿included￿three￿NXE:3100 systems￿which￿represented￿net￿sales￿of￿approximately￿EUR￿120.0￿million￿with￿zero￿gross￿profit￿at￿the￿time￿these were￿recognized￿as￿revenue.￿Our￿gross￿profit￿was￿negatively￿impacted￿by￿increased￿cost￿of￿sales￿incurred￿on￿all￿six NXE:3100￿systems￿shipped￿to￿our￿customers￿as￿a￿result￿of￿significant￿costs￿due￿to￿the￿introduction￿of￿the￿EUV￿program. These￿effects￿had￿a￿negative￿impact￿on￿the￿2011￿gross￿profit￿as￿a￿percentage￿of￿net￿sales￿of￿1.5￿percent.￿In￿addition, manufacturing￿costs￿increased￿in￿2011￿compared￿to￿2010￿(mainly￿EUV￿related￿expenditures). ASML￿ANNUAL￿REPORT￿2012 34 Research and development costs R&D￿costs￿(net￿of￿credits)￿increased￿by￿EUR￿66.8￿million,￿or￿12.8￿percent￿to￿EUR￿590.3￿million￿in￿2011,￿or￿10.4￿percent of￿net￿sales,￿from￿EUR￿523.4￿million￿in￿2010,￿or￿11.6￿percent￿of￿net￿sales.￿This￿increase￿reflected￿our￿acceleration of￿strategic￿investment￿in￿the￿development￿and￿enhancement￿of￿the￿next-generation￿TWINSCAN￿systems￿based￿on Immersion,￿EUV￿and￿holistic￿lithography￿solutions￿to￿extend￿these￿systems. Selling, general and administrative costs SG&A￿costs￿increased￿by￿EUR￿36.9￿million,￿or￿20.4￿percent,￿to￿EUR￿217.9￿million￿in￿2011￿as￿a￿result￿of￿both￿a￿higher sales￿level￿and￿increased￿costs￿to￿implement￿and￿support￿IT￿solutions￿and￿for￿improvement￿programs￿(relating￿mainly￿to employee￿development￿costs). Interest income (expense), net Net￿interest￿income￿in￿2011￿was￿EUR￿7.4￿million￿compared￿with￿a￿net￿interest￿expense￿in￿2010￿of￿EUR￿8.2￿million. Interest￿income￿relates￿to￿interest￿earned￿on￿our￿cash￿and￿cash￿equivalents￿and￿increased￿in￿2011￿mainly￿due￿to￿a significantly￿higher￿cash￿balance,￿which￿was￿only￿partly￿offset￿by￿net￿interest￿expense￿on￿our￿outstanding￿debt. Income taxes The￿effective￿tax￿rate￿was￿11.0￿percent￿of￿income￿before￿income￿taxes￿in￿2011,￿compared￿with￿17.8￿percent￿of￿income before￿income￿taxes￿in￿2010.￿This￿decrease￿is￿mainly￿caused￿by￿the￿fact￿that￿ASML￿reached￿agreement￿with￿the Dutch￿fiscal￿authorities￿regarding￿the￿application￿of￿the￿"Innovation￿Box"￿in￿December￿2010,￿a￿facility￿under￿Dutch corporate￿tax￿law￿pursuant￿to￿which￿income￿associated￿with￿R&D￿is￿partially￿exempted￿from￿taxation.￿This￿tax￿ruling￿has retroactive￿effect￿to￿January￿1,￿2007￿and￿is￿valid￿through￿December￿31,￿2016.￿Thereafter￿the￿validity￿of￿this￿ruling￿may be￿extended￿or￿this￿ruling￿may￿be￿adapted￿depending￿on￿a￿possible￿change￿of￿circumstances.￿For￿2010,￿the￿beneficial impact￿of￿the￿Innovation￿Box￿was￿partially￿offset￿with￿the￿cumulative￿negative￿Innovation￿Box￿effects￿(previously￿called "Royalty￿Box")￿incurred￿in￿The￿Netherlands￿during￿the￿period￿2007-2009.￿In￿2011,￿the￿Innovation￿Box￿effect￿is￿no￿longer offset￿by￿these￿prior￿year￿effects. Foreign￿Exchange￿Management See￿Item￿3.D.￿"Risk￿Factors,￿Fluctuations￿in￿Foreign￿Exchange￿Rates￿Could￿Harm￿Our￿Results￿of￿Operations",￿Item 11￿"Quantitative￿and￿Qualitative￿Disclosures￿About￿Market￿Risk",￿Note￿1￿and￿Note￿3￿to￿our￿consolidated￿financial statements. New￿U.S.￿GAAP￿Accounting￿Pronouncements In￿June￿2011,￿the￿FASB￿issued￿ASU￿No.￿2011-05,￿“Comprehensive￿Income￿(Topic￿220)”.￿Under￿the￿ASU,￿an￿entity has￿the￿option￿to￿present￿comprehensive￿income￿in￿either￿one￿continuous￿statement￿or￿two￿consecutive￿financial statements.￿Under￿both￿options,￿an￿entity￿is￿required￿to￿present￿each￿component￿of￿net￿income￿along￿with￿total￿net income,￿each￿component￿of￿other￿comprehensive￿income￿(“OCI”)￿along￿with￿a￿total￿for￿OCI￿and￿a￿total￿amount￿for comprehensive￿income.￿The￿option￿under￿current￿guidance￿which￿permits￿the￿presentation￿of￿components￿of￿OCI￿as part￿of￿the￿statement￿of￿changes￿in￿shareholders’￿equity￿has￿been￿eliminated.￿In￿December￿2011,￿the￿FASB￿issued ASU￿2011-12￿which￿indefinitely￿defers￿certain￿provisions￿of￿ASU￿2011-05,￿the￿main￿deferred￿provision￿relating￿to￿a requirement￿for￿entities￿to￿present￿reclassification￿adjustments￿out￿of￿accumulated￿OCI￿by￿component￿in￿both￿the statements￿in￿which￿net￿income￿is￿presented￿and￿the￿statement￿in￿which￿OCI￿in￿any￿period￿is￿presented.￿The￿ASU￿is effective￿for￿annual￿and￿interim￿periods￿beginning￿after￿December￿15,￿2011.￿￿We￿have￿early￿adopted￿this￿standard; adoption￿had￿no￿impact￿on￿our￿consolidated￿financial￿statements. In￿December￿2011,￿the￿Financial￿Accounting￿Standards￿Board￿("FASB")￿issued￿ASU￿No.￿2011-11￿"Disclosures￿about Offsetting￿Assets￿and￿Liabilities".￿Under￿the￿new￿guidance,￿the￿entities￿must￿disclose￿both￿gross￿information￿and￿net information￿about￿both￿instruments￿and￿transactions￿eligible￿for￿offset￿on￿the￿balance￿sheet￿in￿accordance￿with￿the offsetting￿guidance￿in￿ASC￿210-20-45￿or￿ASC￿815-10-45,￿and￿instruments￿and￿transactions￿subject￿to￿an￿agreement similar￿to￿a￿master￿netting￿arrangement.￿The￿new￿guidance￿will￿be￿effective￿for￿us￿beginning￿January￿1,￿2013.￿Other￿than requiring￿some￿additional￿disclosures,￿we￿do￿not￿anticipate￿material￿impacts￿on￿our￿consolidated￿financial￿statements upon￿adoption. In￿July￿2012,￿the￿FASB￿issued￿ASU￿No.￿2012-02￿"Testing￿Indefinite-Lived￿Intangible￿Assets￿for￿Impairment".￿This￿ASU amends￿the￿guidance￿in￿ASC￿350-30￿on￿testing￿indefinite-lived￿intangible￿assets,￿other￿than￿goodwill,￿for￿impairment. The￿FASB￿issued￿the￿ASU￿in￿response￿to￿feedback￿on￿ASU￿2011-08,￿which￿amended￿the￿goodwill￿impairment￿testing requirements￿by￿allowing￿an￿entity￿to￿perform￿a￿qualitative￿impairment￿assessment￿before￿proceeding￿to￿the￿two-step ASML￿ANNUAL￿REPORT￿2012 35 impairment￿test.￿The￿new￿guidance￿will￿be￿effective￿for￿annual￿and￿interim￿impairment￿tests￿performed￿for￿fiscal￿years beginning￿after￿September￿15,￿2012.￿The￿ASU￿2012-02￿will￿not￿have￿any￿effect￿on￿our￿consolidated￿financial￿statements. In￿October￿2012,￿the￿FASB￿issued￿ASU￿No.￿2014-04￿"Technical￿Corrections￿and￿Improvements".￿This￿ASU￿makes￿certain technical￿corrections￿(i.e.,￿relatively￿minor￿corrections￿and￿clarifications)￿and￿“conforming￿fair￿value￿amendments”￿to the￿FASB￿Accounting￿Standards￿Codification￿(the￿“Codification”).￿The￿new￿guidance￿will￿be￿effective￿for￿fiscal￿years beginning￿after￿December￿15,￿2012.￿We￿do￿not￿anticipate￿material￿impacts￿on￿our￿consolidated￿financial￿statements upon￿adoption. B. Liquidity and Capital Resources We￿generated￿net￿cash￿from￿operating￿activities￿of￿EUR￿703.5￿million,￿EUR￿2,070.4￿million￿and￿EUR￿940.0￿million￿in 2012,￿2011￿and￿2010,￿respectively.￿Lower￿net￿cash￿provided￿by￿operating￿activities￿in￿2012￿compared￿to￿2011￿relates to￿decreased￿sales￿levels￿and￿decreased￿accrued￿and￿other￿liabilities￿mainly￿as￿a￿result￿of￿lower￿amounts￿of￿EUV down￿payments￿received￿in￿2012.￿Higher￿net￿cash￿provided￿by￿operating￿activities￿in￿2011￿compared￿to￿2010￿was primarily￿related￿to￿increased￿sales￿levels￿and￿an￿increase￿in￿accrued￿and￿other￿liabilities￿mainly￿as￿a￿result￿of￿EUV￿down payments,￿partly￿offset￿by￿an￿increase￿of￿our￿working￿capital.￿This￿net￿increase￿in￿working￿capital￿mainly￿related￿to￿a decrease￿in￿accounts￿payable. We￿used￿EUR￿1,119.8￿million￿for￿investing￿activities￿in￿2012￿and￿EUR￿300.9￿million￿in￿2011￿(2010:￿EUR￿124.9￿million). In￿2012￿our￿investing￿activities￿primarily￿related￿to￿our￿short-term￿investments￿in￿Dutch￿Treasury￿Certificates￿and deposits￿with￿the￿Dutch￿government￿of￿EUR￿930.0￿million￿and￿purchases￿of￿property,￿plant￿and￿equipment￿of￿EUR 171.9￿million.￿In￿2011￿our￿investing￿activities￿mainly￿related￿to￿machinery￿and￿equipment,￿EUV￿and￿NXT￿production facilities￿in￿Veldhoven,￿the￿Netherlands,￿information￿technology￿and￿leasehold￿improvements￿to￿our￿facilities.￿In￿2010￿our investing￿activities￿were￿mainly￿related￿to￿machinery￿and￿equipment￿and￿the￿start￿of￿the￿second￿part￿of￿the￿EUV￿and￿NXT production￿facilities￿in￿Veldhoven,￿the￿Netherlands. Net￿cash￿used￿in￿financing￿activities￿was￿EUR￿545.6￿million￿in￿2012￿compared￿with￿EUR￿991.6￿million￿in￿2011￿(2010:￿net cash￿provided￿by￿financing￿activities￿of￿EUR￿92.7￿million).￿In￿2012￿net￿cash￿used￿in￿financing￿activities￿includes￿the￿net cash￿outflow￿of￿EUR￿3,728.3￿million￿for￿the￿Synthetic￿Share￿Buyback,￿EUR￿535.4￿million￿for￿our￿regular￿share￿buyback programs￿and￿EUR￿188.9￿million￿for￿our￿annual￿dividend￿payment,￿to￿a￿large￿extent￿offset￿by￿the￿proceeds￿of￿EUR 3,853.9￿million￿from￿issuance￿of￿shares￿under￿the￿Customer￿Co-Investment￿Program￿and￿EUR￿53.8￿million￿net￿proceeds from￿issuance￿of￿shares￿in￿connection￿with￿the￿exercise￿and￿purchase￿of￿employee￿stock￿options.￿In￿2011￿net￿cash￿used in￿financing￿activities￿included￿the￿cash￿outflow￿of￿EUR￿700.5￿million￿used￿in￿our￿regular￿share￿buyback￿program,￿our annual￿dividend￿payment￿of￿EUR￿172.6￿million￿and￿a￿repayment￿of￿deposits￿from￿our￿customers￿of￿EUR￿150.0￿million, partly￿offset￿by￿the￿net￿proceeds￿from￿issuance￿of￿shares￿in￿connection￿with￿the￿exercise￿and￿purchase￿of￿employee stock￿options￿of￿EUR￿34.1￿million.￿In￿2010￿net￿cash￿provided￿by￿financing￿activities￿included￿EUR￿150.0￿million￿cash inflow￿from￿deposits￿from￿customers￿and￿EUR￿31.0￿million￿cash￿inflow￿from￿the￿issuance￿of￿shares￿in￿connection￿with the￿exercise￿and￿purchase￿of￿employee￿stock￿options,￿partly￿offset￿by￿EUR￿87.0￿million￿cash￿outflow￿for￿our￿annual dividend￿payment. Our￿principal￿sources￿of￿liquidity￿consist￿of￿cash￿flows￿from￿operations,￿cash￿and￿cash￿equivalents￿as￿of￿December￿31, 2012￿of￿EUR￿1,767.6￿million,￿short-term￿investments￿as￿of￿December￿31,￿2012￿of￿EUR￿930.0￿million￿and￿available￿credit facilities￿as￿of￿December￿31,￿2012￿of￿EUR￿500.0￿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￿high-rated￿financial institutions￿and￿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 predominantly￿denominated￿in￿euros￿and￿partly￿in￿US￿dollars. Our￿available￿credit￿facility￿consists￿of￿an￿EUR￿500.0￿million￿committed￿revolving￿credit￿facility￿from￿a￿group￿of￿banks that￿will￿mature￿in￿2015.￿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.￿In￿2012,￿we￿were￿in￿compliance￿with￿the￿covenant￿and￿currently￿do￿not￿expect￿any￿difficulty￿in￿continuing￿to meet￿our￿covenant￿requirement.￿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￿this￿credit￿facility￿at￿the￿end￿of 2012￿and￿2011. We￿have￿repayment￿obligations￿in￿2017,￿amounting￿to￿EUR￿600.0￿million,￿on￿our￿5.75￿percent￿senior￿notes￿due￿2017 (“Eurobond”).￿The￿coupons￿on￿the￿Eurobond￿have￿been￿swapped￿to￿a￿floating￿rate￿thereby￿creating￿a￿partial￿fair￿value ASML￿ANNUAL￿REPORT￿2012 36 hedge￿of￿the￿floating￿rate￿cash￿flows￿which￿we￿receive￿from￿investments￿of￿our￿cash￿and￿cash￿equivalents￿and￿short- term￿investments. 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￿2013￿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. See￿Notes￿3,￿4,￿14￿and￿15￿to￿our￿consolidated￿financial￿statements￿for￿discussion￿of￿our￿counterparty￿risk￿management, our￿cash￿and￿cash￿equivalents￿and￿short-term￿investments,￿our￿long-term￿debt￿and￿credit￿lines￿and￿Notes￿26￿and￿27￿for information￿on￿dividend,￿share￿buybacks￿and￿capital￿repayments. C. Research and Development, Patents and Licenses, etc Research￿and￿Development See￿Item￿4.B.￿"Business￿Overview,￿Research￿and￿Development"￿and￿Item￿5.A.￿"Operating￿Results,￿Results￿of operations". Intellectual￿Property￿Matters See￿Item￿3.D.￿"Risk￿Factors,￿Failure￿to￿Adequately￿Protect￿the￿Intellectual￿Property￿Rights￿Upon￿Which￿We￿depend Could￿Harm￿Our￿Business"￿and￿"Risk￿Factors,￿Defending￿Against￿Intellectual￿Property￿Claims￿by￿Others￿Could￿Harm￿Our Business"￿and￿Item￿4.B.￿"Business￿Overview,￿Intellectual￿Property". D. Trend Information The￿year￿2012￿was￿characterized￿by￿a￿decreased￿demand￿for￿lithography￿imaging￿systems.￿Customers￿mainly￿decreased their￿Memory￿capacity￿investments￿as￿the￿PC￿business￿shrunk￿compared￿to￿2011.￿The￿majority￿of￿system￿sales￿was generated￿from￿Logic. The￿following￿table￿sets￿forth￿our￿systems￿backlog,￿excluding￿EUV,￿as￿of￿December￿31,￿2012￿and￿2011. Year ended December 31 ￿ New￿systems￿backlog￿excluding￿EUV￿(in￿units) Used￿systems￿backlog￿excluding￿EUV￿(in￿units) Total￿systems￿backlog￿excluding￿EUV￿(in￿units) Value￿of￿new￿systems￿backlog￿excluding￿EUV￿(EUR￿million) Value￿of￿used￿systems￿backlog￿excluding￿EUV￿(EUR￿million) Total￿value￿of￿systems￿backlog￿excluding￿EUV￿(EUR￿million) ASP￿of￿new￿systems￿backlog￿excluding￿EUV￿(EUR￿million) ASP￿of￿used￿systems￿backlog￿excluding￿EUV￿(EUR￿million) ASP￿of￿total￿systems￿backlog￿excluding￿EUV￿(EUR￿million) 2012 ￿ ￿ 40 ￿ 6 ￿ 46 ￿ 1,190.1 ￿ 24.0 ￿ 1,214.1 ￿ 29.8 ￿ 4.0 ￿ 26.4 ￿ 2011 ￿ 61 10 71 1,702.7 29.8 1,732.5 27.9 3.0 24.4 Our￿systems￿backlog￿includes￿only￿orders￿for￿which￿written￿authorizations￿have￿been￿accepted￿and￿system￿shipment and￿revenue￿recognition￿dates￿within￿12￿months￿have￿been￿assigned.￿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. We￿expect￿net￿sales￿for￿2013￿to￿be￿in￿line￿with￿2012￿supported￿by￿the￿strategic￿technology￿transition￿need￿for￿very lithography-intensive￿14-20￿nm￿foundry￿and￿logic￿nodes.￿These￿nodes￿will￿enable￿the￿next￿generation￿portable￿products, for￿which￿all￿semiconductor￿architecture￿leaders￿have￿designs￿pending￿and￿need￿initial￿capacity.￿In￿addition￿we￿will￿ship our￿first￿NXE:3300B￿EUV￿tool￿in￿the￿second￿quarter￿targeting￿for￿a￿maximum￿of￿11￿potential￿shipments￿in￿2013. For￿the￿first￿quarter￿of￿2013,￿we￿expect￿net￿sales￿of￿about￿EUR￿850￿million,￿gross￿margin￿of￿about￿38￿percent,￿R&D￿costs of￿EUR￿185￿million,￿other￿income￿of￿EUR￿16￿million￿which￿consists￿of￿contributions￿from￿participants￿of￿the￿Customer Co-Investment￿Program￿and￿SG&A￿costs￿of￿EUR￿63￿million￿including￿EUR￿6￿million￿expenses￿related￿to￿the￿pending Cymer￿acquisition. ASML￿ANNUAL￿REPORT￿2012 37 In￿the￿fourth￿quarter￿of￿2012,￿we￿announced￿the￿intended￿cash-and-stock￿acquisition￿of￿lithographic￿light￿source supplier￿Cymer.￿As￿part￿of￿the￿regulatory￿review￿process,￿clearance￿has￿been￿granted￿by￿the￿U.S.￿Committee￿on￿Foreign Investment￿in￿the￿United￿States￿(CFIUS)￿and￿German￿anti-trust￿authorities.￿Completion￿of￿the￿merger￿is￿subject￿to customary￿closing￿conditions,￿including￿expiration￿or￿termination￿of￿the￿applicable￿waiting￿period￿under￿the￿Hart-Scott- Rodino￿Act￿and￿receipt￿of￿approvals￿under￿other￿foreign￿competition￿laws.￿On￿february￿5,￿2013,￿the￿Cymer￿Stockholders approved￿the￿merger￿agreement.￿We￿continue￿to￿expect￿the￿transaction￿to￿close￿in￿the￿first￿half￿of￿2013.￿See￿also￿Item 10.C￿"Material￿Contract,￿Cymer￿Merger". The￿trends￿discussed￿in￿this￿Item￿5.D.￿"Trend￿information"￿are￿subject￿to￿risks￿and￿uncertainties.￿See￿"Part￿I￿–￿Special Note￿Regarding￿Forward￿Looking￿Statements". E. Off-Balance Sheet Arrangements We￿have￿various￿contractual￿obligations,￿some￿of￿which￿are￿required￿to￿be￿recorded￿as￿liabilities￿in￿our￿consolidated 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 balance￿sheet￿but￿are￿required￿to￿be￿disclosed. On￿October￿16,￿2012,￿we￿entered￿into￿a￿merger￿agreement￿with￿Cymer,￿a￿company￿engaged￿in￿the￿development, manufacturing￿and￿marketing￿of￿light￿sources￿for￿sale￿to￿customers￿who￿manufacture￿photolithography￿tools￿in￿the semiconductor￿equipment￿industry￿(the￿"Merger￿Agreement"),￿under￿which￿ASML￿will￿acquire￿all￿outstanding￿shares￿of common￿stock￿of￿Cymer￿for￿a￿consideration￿per￿Cymer￿share￿of￿Cymer￿common￿stock￿of￿USD￿20.00￿in￿cash￿and￿a￿fixed ratio￿of￿1.1502￿ASML￿Ordinary￿Shares).￿Completion￿of￿the￿merger￿is￿subject￿to￿customary￿closing￿conditions,￿including expiration￿or￿termination￿of￿the￿applicable￿waiting￿period￿under￿the￿Hart-Scott-Rodino￿Act￿and￿receipt￿of￿approvals under￿other￿foreign￿competition￿laws.￿On￿february￿5,￿2013,￿the￿Cymer￿Stockholders￿approved￿the￿merger￿agreement. We￿expect￿the￿transaction￿to￿close￿in￿the￿first￿half￿of￿2013,￿however￿there￿is￿no￿assurance￿that￿the￿transaction￿will be￿completed￿within￿the￿expected￿time￿period￿or￿at￿all.￿See￿"Risk￿Factors,￿We￿May￿Be￿Unable￿to￿Make￿Desirable Acquisitions￿or￿to￿Integrate￿Any￿Businesses￿We￿Successfully￿Acquire".￿See￿also￿Item￿10.C￿"Material￿Contracts,￿Cymer Merger".￿On￿October￿16,￿2012,￿we￿also￿entered￿into￿an￿EUV￿source￿R&D￿cooperation￿agreement￿and￿an￿EUV￿source supply￿agreement￿with￿Cymer. F. Tabular Disclosure of Contractual Obligations Our￿contractual￿obligations￿as￿of￿December￿31,￿2012￿can￿be￿summarized￿as￿follows: Payments due by period (in thousands) ￿ Long-Term￿Debt￿Obligations,￿including￿interest￿expense1 Operating￿Lease￿Obligations 1 year EUR ￿ 39,801 32,195 Purchase￿Obligations 1,643,955 1,557,021 2,964 ￿ Total Contractual Obligations 2,633,943 1,631,981 Unrecognized￿Tax￿Benefits,￿including￿interest￿expense ￿ Total EUR ￿ 831,194 98,827 59,967 ￿ 2 year EUR ￿ 39,726 22,267 84,012 4,209 ￿ 150,214 3 year EUR ￿ 39,726 17,192 2,876 - ￿ 59,794 4 year EUR ￿ 39,726 13,465 32 - ￿ 53,223 5 year EUR ￿ 639,726 5,265 14 16,957 ￿ 661,962 After 5 years EUR ￿ 32,489 8,443 - 35,837 ￿ 76,769 1 See￿Note￿14￿for￿the￿amounts￿excluding￿interest￿expenses. Long-term￿debt￿obligations￿mainly￿relate￿to￿interest￿payments￿and￿principal￿amount￿of￿the￿Eurobond.￿See￿Note￿14￿to￿our consolidated￿financial￿statements. Operating￿lease￿obligations￿include￿leases￿of￿equipment￿and￿facilities.￿Lease￿payments￿recognized￿as￿an￿expense were￿EUR￿41.6￿million,￿EUR￿40.6￿million￿and￿EUR￿37.9￿million￿for￿the￿years￿ended￿December￿31,￿2012,￿2011￿and￿2010, respectively. ASML￿ANNUAL￿REPORT￿2012 38 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,￿2012￿can￿be￿summarized￿as￿follows: Purchase options due by period (in thousands) Purchase￿options Total EUR 22,982 1 year EUR - 2 year EUR 8,999 3 year EUR - 4 year EUR 13,983 5 year EUR - After 5 years EUR - 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, 2012￿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￿had￿agreed￿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￿semiconductor￿equipment￿industry￿in￿which￿we￿operate.￿We￿establish￿a￿provision￿for￿cancellation￿fees￿when￿it￿is probable￿that￿the￿liability￿has￿been￿incurred￿and￿the￿amount￿of￿cancellation￿fees￿is￿reasonably￿estimable. G. Safe Harbor See￿Part￿I￿"Special￿Note￿Regarding￿Forward-Looking￿Statements". ASML￿ANNUAL￿REPORT￿2012 39 Item 6 Directors, Senior Management and Employees A. Directors and Senior Management The￿members￿of￿our￿Supervisory￿Board￿and￿our￿Board￿of￿Management￿are￿as￿follows: Name Arthur￿P.M.￿van￿der￿Poel1,2,3 Jos￿W.B.￿Westerburgen2,4 Fritz￿W.￿Fröhlich1 Hendrika￿(Ieke)￿C.J.￿van￿den￿Burg4 OB￿Bilous2,3 William￿T.￿Siegle3 Pauline￿F.M.￿van￿der￿Meer￿Mohr4 Wolfgang￿H.￿Ziebart￿1,3,4 Eric￿Meurice Peter￿T.F.M.￿Wennink Martin￿A.￿van￿den￿Brink Frits￿J.￿van￿Hout Frédéric￿J.M.￿Schneider-Maunoury Title Chairman￿of￿the￿Supervisory￿Board Member￿of￿the￿Supervisory￿Board Vice￿Chairman￿and￿Member￿of￿the￿Supervisory￿Board Member￿of￿the￿Supervisory￿Board Member￿of￿the￿Supervisory￿Board Member￿of￿the￿Supervisory￿Board Member￿of￿the￿Supervisory￿Board Member￿of￿the￿Supervisory￿Board President,￿Chief￿Executive￿Officer￿and￿Chairman￿of￿the￿Board of￿Management Executive￿Vice￿President,￿Chief￿Financial￿Officer￿and￿Member of￿the￿Board￿of￿Management Executive￿Vice￿President,￿Chief￿Product￿and￿Technology Officer￿and￿Member￿of￿the￿Board￿of￿Management Executive￿Vice￿President,￿Chief￿Marketing￿Officer￿and￿Member of￿the￿Board￿of￿Management Executive￿Vice￿President,￿Chief￿Operating￿Officer￿and￿Member of￿the￿Board￿of￿Management Year of Birth 1948 1942 1942 1952 1938 1939 1960 1950 1956 Term Expires 2016 ￿ 2013 ￿ 2014 ￿ 2013 ￿ 2014 ￿ 2013 ￿ 2013 ￿ 2013 ￿ 2014 5 1957 1957 1960 1961 N/A 6 N/A 6 2013 ￿ 2014 ￿ 1 Member￿of￿the￿Audit￿Committee. 2 Member￿of￿the￿Selection￿and￿Nomination￿Committee. 3 Member￿of￿the￿Technology￿and￿Strategy￿Committee. 4 Member￿of￿the￿Remuneration￿Committee. 5 Upon￿notification￿to￿the￿AGM￿held￿on￿April￿25,￿2012,￿ASML's￿Supervisory￿Board￿extended￿Eric￿Meurice's￿appointment￿term￿as￿President,Chief Executive￿Officer￿and￿Chairman￿of￿the￿Board￿of￿Management￿of￿ASML￿until￿the￿2014￿AGM,￿with￿the￿option￿to￿further￿extend￿the￿appointment￿term￿by another￿two￿years￿if￿both￿parties￿agree. There￿are￿no￿specified￿terms￿for￿members￿of￿the￿Board￿of￿Management￿appointed￿prior￿to￿March￿2004. 6 Messrs.￿Bilous￿and￿Fröhlich￿retired￿by￿rotation￿in￿2012￿and￿were￿reappointed￿for￿a￿maximum￿period￿of￿two￿years￿in line￿with￿the￿Supervisory￿Board's￿profile.￿Mr.￿Van￿der￿Poel￿also￿retired￿by￿rotation￿and￿was￿reappointed￿for￿a￿maximum period￿of￿four￿years.￿No￿new￿Supervisory￿Board￿members￿were￿appointed￿in￿2012. There￿are￿no￿family￿relationships￿among￿the￿members￿of￿our￿Supervisory￿Board￿and￿Board￿of￿Management. Since￿2005,￿the￿Works￿Council￿of￿ASML￿Netherlands￿B.V.￿has￿an￿enhanced￿right￿to￿make￿recommendations￿for nomination￿of￿one-third￿of￿the￿members￿of￿the￿Supervisory￿Board,￿which￿recommendations￿may￿be￿rejected￿by￿the Supervisory￿Board￿in￿limited￿circumstances.￿See￿Item￿6.C.￿"Board￿Practices,￿Supervisory￿Board".￿At￿the￿2005￿General Meeting￿of￿Shareholders,￿Ms.￿Van￿den￿Burg￿was￿appointed￿pursuant￿to￿this￿recommendation￿right,￿and￿at￿the￿2009 General￿Meeting￿of￿Shareholders￿she￿was￿reappointed￿in￿accordance￿with￿this￿recommendation￿right.￿At￿the￿2009 General￿Meeting￿of￿Shareholders,￿Ms.￿Van￿der￿Meer￿Mohr￿was￿appointed￿pursuant￿to￿this￿recommendation￿right. Director and Officer Biographies Arthur P.M. van der Poel Mr.￿Van￿der￿Poel￿was￿appointed￿to￿our￿Supervisory￿Board￿in￿March￿2004￿and￿was￿appointed￿as￿Chairman￿in￿2007. Until￿2001,￿he￿was￿the￿Chief￿Executive￿Officer￿of￿Philips￿Semiconductors.￿Mr.￿Van￿der￿Poel￿is￿a￿former￿member￿of￿the Board￿of￿Management￿(until￿April￿2003)￿and￿a￿former￿member￿of￿the￿Group￿Management￿Committee￿of￿Royal￿Philips Electronics￿N.V.￿Mr.￿Van￿der￿Poel￿was￿a￿member￿of￿the￿Supervisory￿Board￿of￿PSV￿N.V.￿until￿June,￿2012.￿He￿currently serves￿as￿a￿member￿of￿the￿Board￿of￿Directors￿of￿Gemalto￿Holding￿N.V.￿and￿as￿a￿member￿of￿the￿Supervisory￿Board￿of Royal￿HaskoningDHV￿B.V.￿and￿since￿October￿2012,￿as￿member￿of￿the￿Supervisory￿Board￿of￿BDR￿Thermea. Jos W.B. Westerburgen Mr.￿Westerburgen￿was￿appointed￿to￿our￿Supervisory￿Board￿in￿March￿2002.￿Mr.￿Westerburgen￿has￿extensive￿experience￿in the￿field￿of￿corporate￿law￿and￿tax.￿Mr.￿Westerburgen￿is￿former￿Company￿Secretary￿and￿Head￿of￿Tax￿of￿Unilever￿N.V.￿and Plc.￿Mr.￿Westerburgen￿served￿as￿Supervisory￿Board￿member￿of￿Unibail-Rodamco￿S.E.￿until￿2010￿and￿was￿Vice-Chairman of￿the￿Board￿of￿the￿Association￿of￿Aegon￿N.V.￿until￿April￿2012. ASML￿ANNUAL￿REPORT￿2012 40 Fritz W. Fröhlich Mr.￿Fröhlich￿was￿appointed￿to￿our￿Supervisory￿Board￿in￿March￿2004.￿He￿is￿the￿former￿Deputy￿Chairman￿and￿Chief Financial￿Officer￿of￿Akzo￿Nobel￿N.V.￿Mr.￿Fröhlich￿is￿the￿Chairman￿of￿the￿Supervisory￿Board￿of￿Randstad￿Holding￿N.V.￿Mr. Fröhlich￿also￿serves￿as￿a￿member￿of￿the￿Supervisory￿Boards￿of￿Allianz￿Nederland￿N.V.￿and￿Rexel￿S.A.￿and￿as￿a￿member of￿the￿Board￿of￿Directors￿of￿Prysmian￿Group. Hendrika (Ieke) C.J. van den Burg Ms.￿Van￿den￿Burg￿was￿appointed￿to￿our￿Supervisory￿Board￿in￿March￿2005.￿Ms.￿Van￿den￿Burg￿was￿a￿member￿of￿the European￿Parliament￿from￿1999￿until￿2009.￿Currently￿she￿is￿a￿member￿of￿the￿Supervisory￿Board￿of￿APG￿Group￿N.V., serves￿as￿a￿member￿of￿the￿Dutch￿Monitoring￿Committee￿Corporate￿Governance￿Code,￿is￿chairperson￿of￿the￿Monitoring Foundation￿Dutch￿Insurance￿Companies￿(Stichting Toetsing Verzekeraars)￿and￿is￿a￿member￿of￿the￿Advisory￿Boards￿of￿the Dutch￿Data￿Protection￿Authority￿(College Bescherming Persoonsgegevens)￿and￿Dutch￿National￿Register￿of￿Supervisory Directors￿(Nationaal Register Commissarissen en Toezichthouders).￿Ms.￿Van￿den￿Burg￿also￿serves￿as￿a￿member￿of￿the Advisory￿Scientific￿Systemic￿Committee￿European￿Risk￿Board￿(ECB￿Frankfurt)￿and￿as￿a￿member￿of￿the￿Advisory￿Council International￿Affairs￿Commission￿Human￿Rights￿(Dutch￿Ministry￿Foreign￿Affairs). OB Bilous Mr.￿Bilous￿was￿appointed￿to￿our￿Supervisory￿Board￿in￿March￿2005.￿From￿1960￿until￿2000￿Mr.￿Bilous￿held￿various management￿positions￿at￿IBM,￿including￿General￿Manager￿and￿Vice￿President￿Worldwide￿Manufacturing￿of IBM’s￿Microelectronics￿Division.￿Mr.￿Bilous￿also￿served￿on￿the￿Boards￿of￿SMST,￿ALTIS￿Semiconductor,￿Dominion Semiconductor￿and￿was￿chairman￿of￿the￿Board￿of￿Sematech￿from￿2000￿to￿2009.￿Mr.￿Bilous￿currently￿serves￿as￿Board member￿of￿Nantero,￿Inc. William T. Siegle Mr.￿Siegle￿was￿appointed￿to￿our￿Supervisory￿Board￿in￿March￿2007.￿From￿1964￿until￿1990￿Mr.￿Siegle￿held￿various technical,￿management￿and￿executive￿positions￿at￿IBM,￿including￿Director￿of￿the￿Advanced￿Technology￿Center.￿From 1990￿until￿2005￿Mr.￿Siegle￿served￿as￿Senior￿Vice￿President￿and￿Chief￿Scientist￿at￿AMD,￿responsible￿for￿the￿development of￿technology￿platforms￿and￿manufacturing￿operations￿worldwide.￿He￿was￿also￿chairman￿of￿the￿Board￿of￿Directors￿of SRC,￿member￿of￿the￿Board￿of￿Directors￿of￿Sematech￿and￿Director￿of￿Etec,￿Inc.￿and￿DuPont￿Photomask,￿Inc.￿Currently, Mr.￿Siegle￿is￿a￿member￿of￿the￿Advisory￿Board￿of￿Acorn￿Technologies,￿Inc. Pauline F.M. van der Meer Mohr Ms.￿Van￿der￿Meer￿Mohr￿was￿appointed￿to￿our￿Supervisory￿Board￿in￿March￿2009.￿As￿of￿January￿1,￿2010,￿Ms.￿Van￿der Meer￿Mohr￿serves￿as￿President￿of￿the￿Executive￿Board￿of￿the￿Erasmus￿University￿Rotterdam.￿Prior￿thereto￿she￿was managing￿partner￿of￿the￿Amstelbridge￿Group,￿Senior￿Executive￿Vice￿President￿at￿ABN￿AMRO￿Bank,￿Head￿of￿Group Human￿Resources￿at￿TNT￿N.V.,￿and￿held￿several￿senior￿executive￿roles￿at￿the￿Royal/Dutch￿Shell￿Group￿of￿Companies in￿various￿areas.￿Currently,￿Ms.￿Van￿der￿Meer￿Mohr￿is￿a￿member￿of￿the￿Supervisory￿Boards￿of￿Royal￿DSM￿N.V.￿and Duisenberg￿School￿of￿Finance. Wolfgang H. Ziebart Mr.￿Ziebart￿was￿appointed￿to￿our￿Supervisory￿Board￿in￿March￿2009.￿Until￿May￿2008,￿he￿was￿President￿and￿Chief Executive￿Officer￿of￿Infineon￿Technologies￿A.G.￿Before￿Infineon,￿Mr.￿Ziebart￿was￿on￿the￿Boards￿of￿Management￿of￿car components￿manufacturer￿Continental￿A.G.￿and￿automobile￿producer￿BMW￿A.G.￿Mr.￿Ziebart￿is￿the￿chairman￿of￿the Supervisory￿Board￿of￿Nordex￿S.E.￿and￿of￿Novaled￿A.G.￿He￿also￿serves￿as￿member￿of￿the￿Board￿of￿Autoliv,￿Inc. Eric Meurice Mr.￿Meurice￿joined￿ASML￿on￿October￿1,￿2004￿as￿President,￿Chief￿Executive￿Officer￿and￿Chairman￿of￿the￿Board￿of Management.￿Prior￿to￿joining￿ASML,￿and￿since￿March￿2001,￿he￿was￿Executive￿Vice￿President￿of￿Thomson￿Television Worldwide.￿Between￿1995￿and￿2001,￿Mr.￿Meurice￿served￿as￿Vice￿President￿for￿Dell￿Computer,￿where￿he￿ran￿the￿Western, Eastern￿Europe￿and￿Dell’s￿Emerging￿Markets￿business￿within￿EMEA.￿Before￿1995,￿he￿gained￿extensive￿technology experience￿in￿the￿semiconductor￿industry￿at￿ITT￿Semiconductors￿Group￿and￿Intel￿Corporation,￿in￿the￿microcontroller group. ASML￿ANNUAL￿REPORT￿2012 41 Peter T.F.M. Wennink Mr.￿Wennink￿joined￿ASML￿on￿January￿1,￿1999￿and￿was￿appointed￿as￿Executive￿Vice￿President,￿Chief￿Financial￿Officer of￿ASML￿and￿member￿of￿our￿Board￿of￿Management￿on￿July￿1,￿1999.￿Mr.￿Wennink￿has￿an￿extensive￿background￿in finance￿and￿accounting.￿Prior￿to￿his￿employment￿with￿ASML,￿Mr.￿Wennink￿worked￿as￿a￿partner￿at￿Deloitte￿Accountants, specializing￿in￿the￿high￿technology￿industry￿with￿an￿emphasis￿on￿the￿semiconductor￿equipment￿industry.￿Mr.￿Wennink was￿a￿member￿of￿the￿Supervisory￿Board￿of￿PSV￿N.V.￿until￿June￿30,￿2012.￿Mr.￿Wennink￿is￿a￿member￿of￿the￿Dutch￿Institute of￿Registered￿Accountants.￿Mr.￿Wennink￿is￿currently￿a￿member￿of￿the￿Supervisory￿Board￿of￿Bank￿Insinger￿de￿Beaufort N.V. Martin A. van den Brink Mr.￿Van￿den￿Brink￿joined￿ASML￿when￿the￿company￿was￿founded￿in￿early￿1984.￿He￿held￿several￿positions￿in￿engineering and￿from￿1995￿he￿served￿as￿Vice￿President￿Technology.￿Mr.￿Van￿den￿Brink￿was￿appointed￿as￿member￿of￿the￿Board￿of Management￿in￿1999￿and￿is￿currently￿ASML's￿Executive￿Vice￿President￿and￿Chief￿Product￿&￿Technology￿Officer.￿Mr.￿Van den￿Brink￿has￿earned￿a￿degree￿in￿Electrical￿Engineering￿from￿HTS￿Arnhem￿(HAN￿University),￿and￿a￿degree￿in￿Physics (1984)￿from￿the￿University￿of￿Twente,￿the￿Netherlands.￿In￿2012,￿he￿was￿awarded￿an￿honorary￿doctorate￿in￿physics￿by￿the University￿of￿Amsterdam. Frits J. van Hout Mr.￿Van￿Hout￿was￿appointed￿as￿Executive￿Vice￿President,￿Chief￿Marketing￿Officer￿and￿Member￿of￿our￿Board￿of Management￿in￿2009.￿Mr.￿Van￿Hout￿was￿previously￿an￿ASML￿employee￿from￿its￿founding￿in￿1984￿to￿1992,￿in￿various roles￿in￿engineering￿and￿sales.￿From￿1998￿to￿2001,￿Mr.￿Van￿Hout￿served￿as￿Chief￿Executive￿Officer￿of￿the￿Beyeler￿Group, based￿in￿the￿Netherlands￿and￿Germany.￿After￿rejoining￿ASML￿in￿2001,￿he￿served￿as￿Senior￿Vice￿President￿Customer Support￿and￿two￿Business￿Units.￿In￿2008,￿Mr.￿Van￿Hout￿was￿appointed￿Executive￿Vice￿President￿Integral￿Efficiency. Frédéric J.M. Schneider-Maunoury Mr.￿Schneider-Maunoury￿joined￿ASML￿on￿December￿1,￿2009￿as￿Executive￿Vice￿President￿and￿Chief￿Operations￿Officer and￿was￿appointed￿to￿ASML’s￿Board￿of￿Management￿on￿March￿24,￿2010.￿Before￿joining￿ASML,￿Mr.￿Schneider-Maunoury served￿as￿Vice￿President￿Thermal￿Products￿Manufacturing￿of￿the￿power￿generation￿and￿rail￿transport￿equipment￿group ALSTOM.￿Previously,￿he￿ran￿the￿worldwide￿Hydro￿Business￿of￿ALSTOM￿as￿general￿manager.￿Before￿joining￿ALSTOM￿in 1996,￿Mr.￿Schneider-Maunoury￿held￿various￿positions￿at￿the￿French￿Ministry￿of￿Trade￿and￿Industry. B. Compensation For￿details￿on￿Board￿of￿Management￿and￿Supervisory￿Board￿remuneration￿as￿well￿as￿benefits￿upon￿termination,￿see￿Note 21￿to￿our￿consolidated￿financial￿statements. ASML￿has￿not￿established￿in￿the￿past￿and￿does￿not￿intend￿to￿establish￿in￿the￿future￿any￿stock￿(option)￿or￿purchase￿plans or￿other￿equity￿compensation￿arrangements￿for￿the￿members￿of￿our￿Supervisory￿Board. Bonus and Profit-sharing plans For￿details￿of￿employee￿bonus￿and￿profit-sharing￿plans,￿see￿Note￿17￿to￿our￿consolidated￿financial￿statements. Pension plans For￿details￿of￿employee￿pension￿plans,￿see￿Note￿17￿to￿our￿consolidated￿financial￿statements. C. Board Practices General We￿endorse￿the￿importance￿of￿good￿corporate￿governance,￿in￿which￿independent￿supervision,￿accountability￿and transparency￿are￿the￿most￿significant￿elements.￿Within￿the￿framework￿of￿corporate￿governance,￿it￿is￿important￿that a￿relationship￿of￿trust￿exists￿between￿the￿Board￿of￿Management,￿the￿Supervisory￿Board,￿our￿employees￿and￿our shareholders. We￿pursue￿a￿policy￿of￿active￿communication￿with￿our￿shareholders.￿In￿addition￿to￿the￿exchange￿of￿ideas￿at￿the￿General Meeting￿of￿Shareholders,￿other￿important￿forms￿of￿communication￿include￿the￿publication￿of￿our￿annual￿and￿quarterly financial￿results￿as￿well￿as￿press￿releases￿and￿publications￿posted￿on￿our￿website. ASML￿ANNUAL￿REPORT￿2012 42 Our￿corporate￿governance￿structure￿is￿intended￿to: • provide￿shareholders￿with￿regular,￿reliable,￿relevant￿and￿transparent￿information￿regarding￿our￿activities,￿structure, financial￿condition,￿performance￿and￿other￿information,￿including￿information￿on￿our￿social,￿ethical￿and￿environmental records￿and￿policies; • apply￿high-quality￿standards￿for￿disclosure,￿accounting￿and￿auditing;￿and • apply￿stringent￿rules￿with￿regard￿to￿insider￿securities￿trading. Two-tier board structure ASML￿is￿incorporated￿under￿Dutch￿law￿and￿has￿a￿two-tier￿board￿structure.￿Responsibility￿for￿the￿management￿of￿ASML lies￿with￿the￿Board￿of￿Management.￿Independent,￿non-executive￿members￿serve￿on￿the￿Supervisory￿Board,￿which supervises￿and￿advises￿the￿members￿of￿the￿Board￿of￿Management￿in￿performing￿their￿management￿tasks.￿The￿Board of￿Management￿has￿the￿duty￿to￿keep￿the￿Supervisory￿Board￿informed,￿consult￿with￿the￿Supervisory￿Board￿on￿important matters￿and￿submit￿certain￿important￿decisions￿to￿the￿Supervisory￿Board￿for￿its￿approval.￿The￿Supervisory￿Board￿is responsible￿for￿supervising,￿monitoring￿and￿advising￿the￿Board￿of￿Management￿on:￿(i)￿the￿achievement￿of￿ASML’s objectives,￿(ii)￿the￿corporate￿strategy￿and￿management￿of￿risks￿inherent￿to￿ASML’s￿business￿activities,￿(iii)￿the￿structure and￿operation￿of￿internal￿risk￿management￿and￿control￿systems,￿(iv)￿the￿financial￿reporting￿process￿and￿(v)￿compliance with￿applicable￿legislation￿and￿regulations. Supervisory￿Board￿members￿are￿prohibited￿from￿serving￿as￿officers￿or￿employees￿of￿ASML,￿and￿members￿of￿the￿Board of￿Management￿cannot￿serve￿on￿the￿Supervisory￿Board. Board of Management The￿Board￿of￿Management￿consists￿of￿at￿least￿two￿members￿or￿such￿larger￿number￿of￿members￿as￿determined￿by￿the Supervisory￿Board.￿Members￿of￿the￿Board￿of￿Management￿are￿appointed￿by￿the￿Supervisory￿Board.￿The￿Supervisory Board￿must￿notify￿the￿General￿Meeting￿of￿Shareholders￿of￿the￿intended￿appointment￿of￿a￿member￿of￿the￿Board￿of Management.￿As￿a￿result￿of￿our￿compliance￿with￿the￿Dutch￿Corporate￿Governance￿Code,￿members￿of￿the￿Board￿of Management￿that￿are￿initially￿appointed￿in￿2004￿or￿later￿shall￿be￿appointed￿for￿a￿maximum￿period￿of￿four￿years,￿but￿may be￿re-appointed.￿Members￿of￿the￿Board￿of￿Management￿serve￿until￿the￿end￿of￿the￿term￿of￿their￿appointment,￿voluntary retirement,￿or￿suspension￿or￿dismissal￿by￿the￿Supervisory￿Board.￿In￿the￿case￿of￿dismissal,￿the￿Supervisory￿Board￿must first￿inform￿the￿General￿Meeting￿of￿Shareholders￿of￿the￿intended￿removal. The￿Supervisory￿Board￿determines￿the￿remuneration￿of￿the￿individual￿members￿of￿the￿Board￿of￿Management,￿in￿line￿with the￿remuneration￿policy￿adopted￿by￿the￿General￿Meeting￿of￿Shareholders,￿upon￿a￿proposal￿of￿the￿Supervisory￿Board. ASML’s￿remuneration￿policy￿is￿included￿in￿the￿Remuneration￿Report. For￿details￿of￿the￿terms￿of￿office￿of￿the￿current￿members￿of￿the￿Board￿of￿Management,￿see￿Item￿6.A￿"Directors￿and Senior￿Management".￿For￿details￿of￿the￿benefits￿provided￿to￿members￿of￿Board￿of￿Management￿upon￿termination,￿see Note￿21￿to￿our￿consolidated￿financial￿statements. Supervisory Board The￿Supervisory￿Board￿consists￿of￿at￿least￿three￿members￿or￿such￿larger￿number￿as￿determined￿by￿the￿Supervisory Board.￿The￿Supervisory￿Board￿prepares￿a￿profile￿in￿relation￿to￿its￿size￿and￿composition;￿ASML's￿Supervisory￿Board profile￿is￿posted￿on￿ASML’s￿website. Members￿of￿the￿Supervisory￿Board￿are￿appointed￿by￿the￿General￿Meeting￿of￿Shareholders￿from￿nominations￿of￿the Supervisory￿Board.￿Nominations￿must￿be￿reasoned￿and￿must￿be￿made￿available￿to￿the￿General￿Meeting￿of￿Shareholders and￿the￿Works￿Council￿simultaneously.￿Before￿the￿Supervisory￿Board￿presents￿its￿nominations,￿both￿the￿General￿Meeting of￿Shareholders￿and￿the￿Works￿Council￿may￿make￿recommendations￿(which￿the￿Supervisory￿Board￿may￿reject).￿In addition,￿the￿Works￿Council￿has￿an￿enhanced￿right￿to￿make￿recommendations￿for￿nomination￿of￿at￿least￿one-third￿of the￿members￿of￿the￿Supervisory￿Board,￿which￿recommendation￿may￿only￿be￿rejected￿by￿the￿Supervisory￿Board:￿(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￿a￿Supervisory￿Board￿member.￿If￿no￿agreement￿can￿be￿reached￿between￿the￿Supervisory￿Board and￿the￿Works￿Council￿on￿these￿recommendations,￿the￿Supervisory￿Board￿may￿request￿the￿Enterprise￿Chamber￿of￿the Amsterdam￿Court￿to￿declare￿its￿objection￿legitimate.￿Any￿decision￿of￿the￿Enterprise￿Chamber￿on￿this￿matter￿is￿non- appealable. Nominations￿of￿the￿Supervisory￿Board￿may￿be￿rejected￿by￿the￿General￿Meeting￿of￿Shareholders￿by￿an￿absolute￿majority of￿the￿votes￿representing￿at￿least￿one-third￿of￿the￿total￿outstanding￿capital.￿If￿the￿votes￿cast￿in￿favor￿of￿such￿resolution do￿not￿represent￿at￿least￿one-third￿of￿the￿total￿outstanding￿capital,￿a￿new￿meeting￿can￿be￿convened￿at￿which￿the ASML￿ANNUAL￿REPORT￿2012 43 nomination￿can￿be￿rejected￿by￿an￿absolute￿majority.￿If￿a￿nomination￿is￿rejected,￿the￿Supervisory￿Board￿must￿make￿a￿new nomination.￿If￿a￿nomination￿is￿not￿rejected￿and￿the￿General￿Meeting￿of￿Shareholders￿does￿not￿appoint￿the￿nominated person,￿the￿Supervisory￿Board￿will￿appoint￿the￿nominated￿person. Members￿of￿the￿Supervisory￿Board￿serve￿for￿a￿maximum￿term￿of￿four￿years￿from￿the￿date￿of￿their￿appointment,￿or￿a shorter￿period￿as￿set￿out￿in￿the￿rotation￿schedule￿as￿adopted￿by￿the￿Supervisory￿Board.￿They￿may￿be￿re-appointed, provided￿that￿their￿entire￿term￿of￿office￿does￿not￿exceed￿twelve￿years.￿The￿General￿Meeting￿of￿Shareholders￿may,￿with 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￿event,￿the￿Enterprise￿Chamber￿of￿the￿Amsterdam￿Court￿shall￿appoint one￿or￿more￿members￿of￿the￿Supervisory￿Board￿at￿the￿request￿of￿the￿Board￿of￿Management. Upon￿the￿proposal￿of￿the￿Supervisory￿Board,￿the￿General￿Meeting￿of￿Shareholders￿determines￿the￿remuneration￿of￿the members￿of￿the￿Supervisory￿Board.￿A￿member￿of￿the￿Supervisory￿Board￿may￿not￿be￿granted￿any￿shares￿or￿option￿rights by￿way￿of￿remuneration. For￿details￿of￿the￿terms￿of￿office￿of￿the￿current￿members￿of￿the￿Supervisory￿Board,￿see￿Item￿6.A￿"Directors￿and￿Senior Management".￿For￿details￿of￿the￿benefits￿provided￿to￿members￿of￿Supervisory￿Board￿upon￿termination,￿see￿Note￿21￿to our￿consolidated￿financial￿statements. Approval of Board of Management Decisions The￿Board￿of￿Management￿requires￿prior￿approval￿of￿the￿General￿Meeting￿of￿Shareholders￿for￿resolutions￿concerning￿an important￿change￿in￿the￿identity￿or￿character￿of￿ASML￿or￿its￿business,￿including: • a￿transfer￿of￿all￿or￿substantially￿all￿of￿the￿business￿of￿ASML￿to￿a￿third￿party; • entering￿into￿or￿the￿termination￿of￿a￿long-term￿material￿joint￿venture￿between￿ASML￿and￿a￿third￿party;￿and • an￿acquisition￿or￿divestment￿by￿ASML￿of￿an￿interest￿in￿the￿capital￿of￿a￿company￿with￿a￿value￿of￿at￿least￿one-third￿of ASML’s￿assets￿(determined￿by￿reference￿to￿ASML’s￿most￿recently￿adopted￿Statutory￿Annual￿Report). Rules of Procedure The￿Board￿of￿Management￿and￿the￿Supervisory￿Board￿have￿adopted￿Rules￿of￿Procedure￿for￿each￿of￿the￿Board￿of Management,￿Supervisory￿Board￿and￿the￿four￿Committees￿of￿the￿Supervisory￿Board.￿These￿Rules￿of￿Procedure￿are posted￿on￿ASML’s￿website. Directors and Officers Insurance and Indemnification Members￿of￿the￿Board￿of￿Management￿and￿Supervisory￿Board,￿as￿well￿as￿certain￿senior￿management￿members, are￿insured￿under￿ASML’s￿Directors￿and￿Officers￿Insurance￿Policy.￿Although￿the￿insurance￿policy￿provides￿for￿a wide￿coverage,￿our￿directors￿and￿officers￿may￿incur￿uninsured￿liabilities.￿ASML￿has￿agreed￿to￿indemnify￿its￿Board￿of Management￿and￿Supervisory￿Board￿against￿any￿claims￿arising￿in￿connection￿with￿their￿position￿as￿director￿and￿officer of￿ASML,￿provided￿that￿such￿claim￿is￿not￿attributable￿to￿willful￿misconduct￿or￿intentional￿recklessness￿of￿such￿officer￿or director. Corporate Governance Developments ASML￿continuously￿monitors￿and￿assesses￿applicable￿corporate￿governance￿rules,￿including￿recommendations￿and initiatives￿regarding￿principles￿of￿corporate￿governance.￿These￿include￿rules￿that￿have￿been￿promulgated￿in￿the￿United States￿both￿by￿The￿NASDAQ￿Stock￿Market￿LLC￿("NASDAQ")￿and￿by￿the￿SEC. The￿Dutch￿Corporate￿Governance￿Code￿came￿into￿effect￿on￿January￿1,￿2004￿and￿was￿amended￿as￿of￿January￿1,￿2009 (the￿"Code").￿Dutch￿listed￿companies￿are￿required￿to￿either￿comply￿with￿the￿principles￿and￿the￿best￿practice￿provisions of￿the￿Code,￿or￿to￿explain￿on￿which￿points￿they￿deviate￿from￿these￿best￿practice￿provisions￿and￿why. ASML￿reports￿on￿its￿compliance￿with￿the￿amended￿Code￿in￿its￿Statutory￿Annual￿Report￿for￿the￿year￿ended￿December￿31, 2012. ASML￿ANNUAL￿REPORT￿2012 44 Committees of ASML's Supervisory Board While￿retaining￿overall￿responsibility,￿the￿Supervisory￿Board￿assigns￿certain￿of￿its￿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. The￿chairman￿of￿each￿committee￿reports￿to￿the￿Supervisory￿Board￿verbally￿and￿when￿deemed￿necessary￿in￿writing,￿the issues￿and￿items￿discussed￿in￿each￿meeting.￿In￿addition,￿the￿minutes￿of￿each￿committee￿are￿available￿to￿all￿members￿of the￿Supervisory￿Board,￿enabling￿the￿Supervisory￿Board￿to￿make￿the￿appropriate￿decisions. Audit Committee ASML's￿Audit￿Committee￿is￿composed￿of￿three￿members￿of￿the￿Supervisory￿Board.￿The￿current￿members￿of￿our￿Audit Committee￿are￿Fritz￿Fröhlich￿(chairman),￿Arthur￿van￿der￿Poel￿and￿Wolfgang￿Ziebart,￿each￿of￿whom￿is￿an￿independent, non-executive￿member￿of￿our￿Supervisory￿Board.￿The￿Supervisory￿Board￿has￿determined￿that￿Fritz￿Fröhlich￿qualifies as￿the￿Audit￿Committee￿financial￿expert￿pursuant￿to￿Section￿407￿of￿the￿Sarbanes-Oxley￿Act￿of￿2002￿and￿the￿rules promulgated￿thereunder.￿Our￿external￿auditor,￿our￿Chief￿Executive￿Officer,￿our￿Chief￿Financial￿Officer,￿our￿Senior￿Vice President￿Finance,￿our￿Corporate￿Chief￿Accountant,￿our￿Senior￿Director￿Corporate￿Risk￿and￿Assurance,￿as￿well￿as￿other ASML￿employees￿invited￿by￿the￿chairman￿of￿the￿Audit￿Committee￿may￿also￿attend￿the￿meetings￿of￿the￿Audit￿Committee. The￿Audit￿Committee￿assists￿the￿Supervisory￿Board￿in: • overseeing￿the￿integrity￿of￿our￿financial￿statements￿and￿related￿financial￿and￿non-financial￿disclosures; • overseeing￿the￿qualifications,￿independence￿and￿performance￿of￿the￿external￿auditor;￿and • overseeing￿the￿integrity￿of￿our￿systems￿of￿disclosure￿controls￿and￿procedures￿and￿the￿system￿of￿internal￿controls￿over financial￿reporting. In￿2012,￿the￿Audit￿Committee￿held￿nine￿scheduled￿meetings,￿either￿in￿person￿or￿via￿conference￿calls. Remuneration Committee ASML's￿Remuneration￿Committee￿is￿currently￿composed￿of￿four￿members￿of￿the￿Supervisory￿Board.￿The￿current members￿of￿our￿Remuneration￿Committee￿are￿Jos￿Westerburgen￿(chairman),￿Ieke￿van￿den￿Burg,￿Pauline￿van￿der￿Meer Mohr￿and￿Wolfgang￿Ziebart.￿The￿Remuneration￿Committee￿is￿responsible￿for￿the￿preparation￿and￿implementation￿of￿the remuneration￿policy￿for￿the￿Board￿of￿Management. The￿Remuneration￿Committee￿prepares￿and￿the￿Supervisory￿Board￿establishes￿ASML’s￿general￿compensation philosophy￿for￿members￿of￿the￿Board￿of￿Management,￿and￿oversees￿the￿development￿and￿implementation￿of compensation￿programs￿for￿members￿of￿the￿Board￿of￿Management.￿The￿Remuneration￿Committee￿reviews￿and￿proposes to￿the￿Supervisory￿Board￿corporate￿goals￿and￿objectives￿relevant￿to￿the￿compensation￿of￿members￿of￿the￿Board￿of Management.￿The￿Committee￿further￿evaluates￿the￿performance￿of￿members￿of￿the￿Board￿of￿Management￿in￿view￿of those￿goals￿and￿objectives,￿and￿makes￿recommendations￿to￿the￿Supervisory￿Board￿on￿the￿compensation￿levels￿of￿the members￿of￿the￿Board￿of￿Management￿based￿on￿this￿evaluation. In￿proposing￿to￿the￿Supervisory￿Board￿the￿actual￿remuneration￿elements￿and￿levels￿applicable￿to￿the￿members￿of￿the Board￿of￿Management,￿the￿Remuneration￿Committee￿considers,￿among￿other￿factors,￿the￿remuneration￿policy,￿the desired￿levels￿of￿and￿emphasis￿on￿particular￿aspects￿of￿ASML’s￿short￿and￿long-term￿performance,￿as￿well￿as￿current compensation￿and￿benefits￿structures￿and￿levels￿benchmarked￿against￿relevant￿peers.￿External￿compensation￿survey data￿and,￿where￿necessary,￿external￿consultants￿are￿used￿to￿benchmark￿ASML’s￿remuneration￿levels￿and￿structures. In￿2012,￿the￿Remuneration￿Committee￿held￿seven￿scheduled￿meetings￿and￿several￿ad￿hoc￿meetings,￿either￿in￿person￿or via￿conference￿call. ASML￿ANNUAL￿REPORT￿2012 45 Selection and Nomination Committee ASML's￿Selection￿and￿Nomination￿Committee￿is￿composed￿of￿three￿members￿of￿the￿Supervisory￿Board.￿The￿current members￿of￿our￿Selection￿and￿Nomination￿Committee￿are￿Jos￿Westerburgen￿(chairman),￿Arthur￿van￿der￿Poel￿and￿OB Bilous. ￿The￿Selection￿and￿Nomination￿Committee￿assists￿the￿Supervisory￿Board￿in: • preparing￿the￿selection￿criteria￿and￿appointment￿procedures￿for￿members￿of￿ASML's￿Supervisory￿Board￿and￿Board￿of Management; • periodically￿evaluating￿the￿scope￿and￿composition￿of￿the￿Board￿of￿Management￿and￿the￿Supervisory￿Board,￿and proposing￿the￿profile￿of￿the￿Supervisory￿Board￿in￿relation￿thereto; • periodically￿evaluating￿the￿functioning￿of￿the￿Board￿of￿Management￿and￿the￿Supervisory￿Board￿and￿the￿individual members￿of￿those￿boards￿and￿reporting￿the￿results￿thereof￿to￿the￿Supervisory￿Board;￿and • proposing￿(re-)appointments￿of￿members￿of￿the￿Board￿of￿Management￿and￿the￿Supervisory￿Board,￿and￿supervising the￿policy￿of￿the￿Board￿of￿Management￿in￿relation￿to￿the￿selection￿and￿appointment￿criteria￿for￿senior￿management. In￿2012,￿the￿Selection￿and￿Nomination￿Committee￿held￿four￿scheduled￿meetings￿and￿several￿ad￿hoc￿meetings,￿either￿in person￿or￿by￿conference￿call. Technology and Strategy Committee ASML's￿Technology￿and￿Strategy￿Committee￿is￿composed￿of￿four￿members￿of￿the￿Supervisory￿Board.￿The￿current members￿of￿our￿Technology￿and￿Strategy￿Committee￿are￿William￿Siegle￿(chairman),￿Arthur￿van￿der￿Poel,￿OB￿Bilous￿and Wolfgang￿Ziebart.￿In￿addition,￿the￿Technology￿and￿Strategy￿Committee￿may￿appoint￿one￿or￿more￿advisors￿from￿within and/or￿from￿outside￿ASML.￿The￿advisors￿to￿the￿Technology￿and￿Strategy￿Committee￿may￿be￿invited￿as￿guests￿to￿the meetings,￿or￿parts￿thereof,￿of￿the￿Committee,￿but￿are￿not￿entitled￿to￿vote￿in￿the￿meetings. The￿Technology￿and￿Strategy￿Committee￿assists￿the￿Supervisory￿Board￿in￿relation￿to￿the￿following￿responsibilities￿and may￿prepare￿resolutions￿of￿the￿Supervisory￿Board￿related￿thereto: • familiarization￿with￿and￿risk￿assessment￿and￿study￿of￿potential￿strategies,￿required￿technical￿resources,￿technology roadmaps￿and￿product￿roadmaps;￿and • providing￿advice￿to￿the￿Supervisory￿Board￿with￿respect￿to￿matters￿related￿thereto. ￿In￿2012,￿the￿Technology￿and￿Strategy￿Committee￿held￿five￿meetings,￿either￿in￿person￿or￿by￿conference￿call. Disclosure Committee ASML￿has￿a￿Disclosure￿Committee￿to￿ensure￿compliance￿with￿applicable￿disclosure￿requirements￿arising￿under￿US￿and Dutch￿law￿and￿applicable￿stock￿exchange￿rules.￿The￿Disclosure￿Committee￿is￿composed￿of￿various￿members￿of￿senior management,￿and￿reports￿to￿the￿Chief￿Executive￿Officer￿and￿Chief￿Financial￿Officer.￿The￿Disclosure￿Committee￿informs the￿Audit￿Committee￿about￿the￿outcome￿of￿the￿Disclosure￿Committee￿meetings.￿Furthermore,￿members￿of￿the￿Disclosure Committee￿are￿in￿close￿contact￿with￿our￿external￿legal￿counsel￿and￿our￿external￿auditor. 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￿assists￿the￿Chief Executive￿Officer￿and￿Chief￿Financial￿Officer￿in￿the￿maintenance￿and￿evaluation￿of￿disclosure￿controls￿and￿procedures. During￿2012,￿the￿Disclosure￿Committee￿reviewed￿the￿quarterly￿financial￿result￿announcements,￿Statutory￿Interim￿Report, the￿Annual￿Report￿on￿Form￿20-F￿and￿the￿Statutory￿Annual￿Report,￿the￿Form￿F-4￿registration￿filed￿with￿the￿SEC￿in connection￿with￿our￿merger￿agreement￿with￿Cymer￿and￿the￿prospectus￿filed￿with￿the￿Dutch￿AFM￿in￿connection￿with the￿shares￿issued￿to￿participating￿customers￿in￿our￿Customer￿Co-Investment￿Program￿both￿including￿the￿audited consolidated￿financial￿statements￿and￿other￿public￿announcements￿containing￿financial￿information.￿They￿also￿advise￿the Chief￿Executive￿Officer￿and￿Chief￿Financial￿Officer￿on￿the￿assessment￿of￿ASML's￿disclosure￿controls￿and￿procedures￿and on￿the￿assessment￿of￿ASML’s￿internal￿controls￿over￿financial￿reporting. ASML￿ANNUAL￿REPORT￿2012 46 D. Employees The￿following￿table￿presents￿our￿total￿numbers￿of￿payroll￿employees￿and￿temporary￿employees￿as￿of￿December￿31, 2012,￿2011￿and￿2010￿(in￿FTEs),￿primarily￿in￿manufacturing,￿product￿development￿and￿customer￿support￿activities: As of December 31 Payroll￿Employees Temporary￿Employees Employees (in FTEs) 2012 8,497 2,139 10,636 2011 7,955 1,935 9,890 2010 7,184 2,061 9,245 During￿2012,￿the￿average￿number￿of￿payroll￿employees￿in￿FTEs￿employed￿was￿8,140,￿and￿the￿average￿number￿of temporary￿employees￿in￿FTE's￿employed￿was￿1,934. For￿a￿more￿detailed￿description￿of￿payroll￿employee￿information,￿including￿a￿breakdown￿of￿our￿employees￿in￿FTEs by￿sector,￿see￿Notes￿17￿and￿22￿to￿our￿consolidated￿financial￿statements.￿We￿rely￿on￿our￿ability￿to￿vary￿the￿number￿of temporary￿employees￿to￿respond￿to￿fluctuating￿market￿demand￿for￿our￿products. Our￿future￿success￿will￿depend￿on￿our￿ability￿to￿attract,￿train,￿retain￿and￿motivate￿highly￿qualified,￿skilled￿and￿educated employees,￿who￿are￿in￿great￿demand.￿We￿are￿particularly￿reliant￿for￿our￿continued￿success￿on￿the￿services￿of￿several key￿employees,￿including￿a￿number￿of￿systems￿development￿specialists￿with￿advanced￿university￿qualifications￿in engineering,￿optics￿and￿computing.￿See￿Item￿3.D.￿"Risk￿Factors,￿Our￿Business￿and￿Future￿Success￿Depend￿on￿Our Ability￿to￿Attract￿and￿Retain￿a￿Sufficient￿Number￿of￿Adequately￿Educated￿and￿Skilled￿Employees." ASML￿Netherlands￿B.V.,￿our￿operating￿subsidiary￿in￿the￿Netherlands,￿has￿a￿Works￿Council,￿as￿required￿by￿Dutch law.￿A￿Works￿Council￿is￿a￿representative￿body￿of￿the￿employees￿of￿a￿Dutch￿company￿elected￿by￿the￿employees.￿The Board￿of￿Management￿of￿any￿Dutch￿company￿that￿runs￿an￿enterprise￿with￿a￿Works￿Council￿must￿seek￿the￿non-binding advice￿of￿the￿Works￿Council￿before￿taking￿certain￿decisions￿with￿respect￿to￿ASML,￿such￿as￿those￿related￿to￿a￿major restructuring,￿a￿change￿of￿control,￿or￿the￿appointment￿or￿dismissal￿of￿a￿member￿of￿the￿Board￿of￿Management.￿In￿case the￿Works￿Council￿renders￿a￿contrary￿advice￿on￿a￿particular￿decision￿and￿the￿Board￿of￿Management￿nonetheless￿wishes to￿proceed,￿the￿Board￿of￿Management￿must￿temporarily￿suspend￿any￿further￿action￿while￿the￿Works￿Council￿determines whether￿to￿appeal￿to￿the￿Enterprise￿Chamber￿of￿the￿Amsterdam￿Court￿of￿Appeal.￿Other￿decisions￿directly￿involving employment￿matters￿that￿apply￿either￿to￿all￿employees,￿or￿certain￿groups￿of￿employees,￿may￿only￿be￿taken￿with￿the Works￿Council’s￿approval.￿Failing￿approval￿of￿the￿Works￿Council,￿the￿decision￿first￿has￿to￿be￿submitted￿to￿the￿Enterprise Chamber￿for￿mediation.￿If￿no￿resolution￿has￿been￿reached,￿the￿decision￿can￿only￿be￿taken￿by￿with￿the￿approval￿of￿the Dutch￿District￿Court. E. Share Ownership Information￿with￿respect￿to￿share￿ownership￿of￿members￿of￿our￿Supervisory￿Board￿and￿Board￿of￿Management￿is included￿in￿Item￿7A￿"Major￿Shareholders"￿and￿Note￿21￿to￿our￿consolidated￿financial￿statements.￿Information￿with￿respect to￿the￿grant￿of￿shares￿and￿stock￿options￿to￿employees￿is￿included￿in￿Note￿17￿to￿our￿consolidated￿financial￿statements. ASML￿ANNUAL￿REPORT￿2012 47 Item 7 Major Shareholders and Related Party Transactions A. Major Shareholders The￿following￿table￿sets￿forth￿the￿total￿number￿of￿ordinary￿shares￿owned￿by￿each￿shareholder￿whose￿beneficial ownership￿of￿ordinary￿shares￿is￿at￿least￿5.0￿percent￿of￿the￿ordinary￿shares￿issued￿and￿outstanding,￿as￿well￿as￿the ordinary￿shares￿(including￿options)￿owned￿by￿members￿of￿the￿Board￿of￿Management￿(which￿includes￿those￿persons specified￿in￿Item￿6￿"Directors,￿Senior￿Management￿and￿Employees"),￿as￿a￿group,￿as￿of￿December￿31,￿2012.￿The information￿set￿out￿below￿is￿solely￿based￿on￿public￿filings￿with￿the￿SEC￿and￿AFM￿(Autoriteit Financiële Markten; the Netherlands￿Authority￿for￿the￿Financial￿Markets)￿as￿through￿February￿6,￿2013. Identity of Person or Group Capital￿Group￿International,￿Inc1 FMR￿LLC2 Stichting￿Administratiekantoor￿MAKTSJAB/Intel3 Stichting￿Administratiekantoor￿TSMC/TSMC3 BlackRock￿Inc4 Members￿of￿ASML’s￿Board￿of￿Management,￿as￿a￿group￿(5￿persons)5,6 Shares Owned 51,453,097 36,311,008 62,977,877 20,992,625 22,878,489 101,657 Percent of Class7 12.64% 8.92% 15.47% 5.16% 5.62% 0.02% 1 As￿reported￿to￿the￿Dutch￿Authority￿for￿the￿Financial￿Markets￿on￿September￿3,￿2012,￿Capital￿Group￿International,￿Inc.￿has￿voting￿rights￿related￿to 51,453,097￿shares￿of￿our￿ordinary￿shares￿but￿does￿not￿have￿ownership￿rights￿related￿to￿those￿shares.￿In￿addition,￿Capital￿Research￿&￿Management Company￿("CRMC"),￿which￿we￿believe￿to￿be￿an￿affiliate￿of￿Capital￿Group￿International,￿Inc.,￿reported￿to￿the￿Dutch￿Authority￿for￿the￿Financial￿Markets on￿August￿2,￿2011,￿that￿it￿holds￿voting￿rights￿related￿to￿44,579,832￿shares￿of￿our￿ordinary￿shares.￿Capital￿World￿Investors￿reported￿on￿a￿Schedule 13-G/A￿filed￿with￿the￿Commission￿on￿February￿10,￿2012￿that￿it￿is￿the￿beneficial￿owner￿of￿41,253,546￿shares￿of￿our￿ordinary￿shares￿as￿a￿result￿of￿its affiliation￿with￿CRMC. 2 Based￿solely￿on￿the￿Schedule￿13-G/A￿filed￿by￿FMR￿LLC￿with￿the￿Commission￿on￿February￿14,￿2012. 3 Stichting￿Administratiekantoor￿MAKTSJAB￿and￿Stichting￿Administratiekantoor￿TSMC￿own￿the￿stated￿percentage￿of￿ordinary￿shares￿and￿have simultaneously￿issued￿corresponding￿depository￿receipts￿to￿Intel￿respectively￿TSMC. 4 Based￿solely￿on￿the￿Schedule￿13G￿filed￿by￿BlackRock￿Inc.￿with￿the￿Commission￿on￿January￿30,￿2013. 5 Does￿not￿include￿unvested￿shares￿and￿shares￿underlying￿options￿granted￿to￿members￿of￿ASML's￿Board￿of￿Management.￿For￿further￿information,￿please refer￿to￿Note￿21￿to￿our￿consolidated￿financial￿statements. 6 No￿shares￿are￿owned￿by￿members￿of￿the￿Supervisory￿Board. 7 As￿a￿percentage￿of￿the￿total￿number￿of￿shares￿outstanding￿(407,165,221)￿as￿of￿December￿31,￿2012. The￿Synthetic￿Share￿Buyback￿completed￿in￿November￿2012￿resulted￿in￿a￿reduction￿of￿the￿number￿of￿shares￿held￿by￿all￿of our￿shareholders￿(through￿a￿100￿for￿77￿share￿exchange)￿other￿than￿the￿customers￿who￿participated￿in￿our￿Customer￿Co- Investment￿Program￿(Intel,￿TSMC￿and￿Samsung). Stichting￿Administratiekantoor￿MAKTSJAB￿(the￿"Intel￿Stichting")￿and￿Stichting￿Administratiekantoor￿TSMC￿(the￿"TSMC Stichting"),￿(together￿referred￿to￿as￿the￿"Customer￿Stichtingen"￿and￿each￿a￿"Customer￿Stichting")￿acquired￿the￿shares indicated￿above￿as￿part￿of￿our￿Customer￿Co-Investment￿Program￿in￿the￿second￿half￿of￿2012.￿The￿Customer￿Stichtingen do￿not￿vote￿on￿the￿ordinary￿shares￿held￿by￿them,￿unless￿instructed￿to￿do￿so￿by￿Intel￿and￿TSMC￿in￿accordance￿with their￿respective￿shareholders￿agreements.￿Intel￿and￿TSMC,￿are￿not￿entitled￿to￿vote￿on￿the￿listing￿shares￿held￿by￿the Customer￿Stichtingen,￿except￿in￿certain￿exceptional￿circumstances,￿including￿the￿authorization￿of￿certain￿significant share￿issuances￿and￿share￿repurchases,￿any￿amendment￿to￿the￿Articles￿of￿Association￿that￿would￿materially￿affect￿the specific￿voting￿rights￿of￿Intel￿or￿TSMC￿or￿any￿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￿(see￿Item￿10.C.￿"Material￿Contracts,￿Customer￿Co-Investment￿Program"). We￿do￿not￿issue￿share￿certificates,￿except￿for￿registered￿New￿York￿Shares.￿For￿more￿information￿see￿Item￿10.B. "Memorandum￿and￿Articles￿of￿Association". As￿of￿December￿31,￿2012,￿72,689,511￿million￿ordinary￿shares￿were￿held￿by￿323￿registered￿holders￿with￿a￿registered address￿in￿the￿United￿States.￿Since￿certain￿of￿our￿ordinary￿shares￿were￿held￿by￿brokers￿and￿nominees,￿the￿number of￿record￿holders￿in￿the￿United￿States￿may￿not￿be￿representative￿of￿the￿number￿of￿beneficial￿holders￿or￿of￿where￿the beneficial￿holders￿are￿resident. Obligations￿of￿Shareholders￿to￿Disclose￿Holdings￿under￿Dutch￿Law Holders￿of￿our￿shares￿may￿be￿subject￿to￿reporting￿obligations￿under￿the￿Dutch￿Financial￿Markets￿Supervision￿Act￿￿(Wet op het financieel toezicht, the￿"Act"). The￿disclosure￿obligations￿under￿the￿Act￿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￿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 ASML￿ANNUAL￿REPORT￿2012 48 person,￿or￿as￿a￿result￿of￿a￿change￿in￿our￿total￿number￿of￿voting￿rights￿or￿capital￿issued).￿With￿respect￿to￿ASML,￿the￿Act 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. A￿legislative￿proposal￿pursuant￿to￿which￿an￿initial￿threshold￿of￿3.0￿percent￿will￿be￿introduced￿has￿been￿adopted￿and is￿currently￿expected￿to￿enter￿into￿force￿on￿July￿1,￿2013.￿The￿proposal￿would￿also￿introduce￿a￿mechanism￿pursuant￿to which￿ASML￿would￿be￿able￿to￿identify,￿and￿communicate￿with,￿beneficial￿holders￿of￿its￿shares￿through￿the￿respective custodians.￿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￿ASML's￿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￿5.0￿percent￿or more￿in￿ASML's￿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￿Act,￿do￿not￿have￿independent￿reporting￿obligations￿under￿the￿Act,￿as￿interests￿held￿by them￿are￿attributed￿to￿their￿(ultimate)￿parents.￿Any￿person￿may￿qualify￿as￿a￿parent￿for￿purposes￿of￿the￿Act,￿including an￿individual.￿A￿person￿who￿ceases￿to￿be￿a￿subsidiary￿and￿who￿disposes￿of￿an￿interest￿of￿5.0￿percent￿or￿more￿in￿ASML's voting￿rights￿or￿capital￿must￿immediately￿notify￿the￿AFM.￿As￿of￿that￿moment,￿all￿notification￿obligations￿under￿the￿Act become￿applicable￿to￿the￿former￿subsidiary. 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￿person’s subsidiaries,￿(iii)￿held￿by￿a￿third￿party￿for￿such￿person’s￿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)￿and￿(v)￿held by￿a￿third￿party￿with￿whom￿such￿person￿has￿agreed￿to￿temporarily￿transfer￿voting￿rights￿against￿payment.￿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￿keeps￿a￿public￿registry￿of￿and￿publishes￿all￿notifications￿made￿pursuant￿to￿the￿Act. Non-compliance￿with￿the￿reporting￿obligations￿under￿the￿Act￿could￿lead￿to￿criminal￿fines,￿administrative￿fines, imprisonment￿or￿other￿sanctions.￿In￿addition,￿non-compliance￿with￿the￿reporting￿obligations￿under￿the￿Act￿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￿Act￿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. ASML￿ANNUAL￿REPORT￿2012 49 B. Related Party Transactions Loan Agreement With PSV N.V. Consistent￿with￿ASML's￿corporate￿responsibilities￿to￿its￿surrounding￿community￿and￿together￿with￿several￿other companies￿in￿the￿region,￿in￿prior￿year￿ASML￿entered￿into￿a￿loan￿agreement￿with￿a￿local￿sports￿club￿PSV￿N.V.,￿pursuant￿to which￿ASML￿provided￿PSV￿N.V.,￿as￿of￿August￿1,￿2011,￿a￿14￿year,￿interest￿free,￿subordinated￿loan￿of￿EUR￿5.0￿million.￿As of￿June￿30,￿2012￿the￿chairman￿of￿the￿Supervisory￿Board￿of￿ASML,￿Mr.￿Arthur￿van￿der￿Poel,￿and￿Chief￿Financial￿Officer￿of ASML,￿Mr.￿Peter￿Wennink,￿resigned￿as￿members￿of￿the￿Supervisory￿Board￿of￿PSV￿N.V.￿Therefore￿the￿loan￿agreement￿with PSV￿N.V.￿is￿concluded￿to￿no￿longer￿classify￿as￿a￿related￿party￿transaction￿from￿that￿date￿onwards. Intel Agreements On￿July￿9,￿2012,￿we￿announced￿our￿Customer￿Co-Investment￿Program￿to￿accelerate￿our￿development￿of￿EUV￿technology beyond￿the￿current￿generation￿and￿our￿development￿of￿future￿450mm￿silicon￿wafer￿technology.￿The￿participating collectively￿agreed￿to￿fund￿EUR￿1.38￿billion￿of￿our￿research￿and￿development￿projects￿from￿2013￿through￿2017.￿This program￿creates￿risk￿sharing￿with￿some￿of￿our￿largest￿customers￿while￿the￿results￿of￿ASML’s￿development￿programs￿will be￿available￿to￿every￿semiconductor￿manufacturer￿with￿no￿restrictions.￿The￿R&D￿funding￿program￿in￿the￿Customer￿Co- Investment￿Program￿consists￿of￿two￿funding￿projects:￿a￿450mm￿technology￿development￿project￿and￿a￿next-generation EUV￿development￿project.￿ASML￿has￿entered￿into￿Non￿Recurring￿Engineering￿("NRE")￿funding￿agreements￿with￿the participating￿customers. In￿addition￿to￿the￿funding￿commitments￿described￿above,￿the￿participating￿customers￿have￿invested￿in￿ordinary￿shares equal,￿in￿aggregate,￿to￿23￿percent￿of￿ASML's￿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￿26￿to￿our￿consolidated￿financial statements. Investment Agreement:￿Pursuant￿to￿the￿investment￿agreement￿between￿ASML￿and￿Intel,￿dated￿July￿9,￿2012￿("the￿Intel Investment￿Agreement"),￿ASML￿agreed￿to￿issue￿to￿a￿foundation￿established￿for￿Intel￿(the￿“Intel￿Stichting”)￿ordinary shares￿equal￿to￿15￿percent￿of￿ASML’s￿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￿the￿ordinary￿shares￿on￿NYSE￿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. 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￿(the￿“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. NRE Funding Agreement:￿On￿July￿9,￿2012,￿ASML￿and￿Intel￿entered￿into￿two￿NRE￿funding￿agreements￿pursuant￿to which￿Intel￿has￿agreed￿to￿fund￿certain￿of￿ASML’s￿R&D￿costs￿and￿project￿expenditures.￿One￿agreement￿relates￿to￿the development￿of￿450mm￿lithography￿equipment￿(the￿"Intel￿450mm￿NRE￿Funding￿Agreement"￿)￿and￿the￿other￿agreement relates￿to￿the￿development￿of￿EUV￿lithography￿equipment￿(the￿"Intel￿EUV￿NRE￿Funding￿Agreement").￿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￿ASML's￿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. ASML￿ANNUAL￿REPORT￿2012 50 Commercial Agreement:￿On￿July￿9,￿2012,￿ASML￿and￿Intel￿entered￿into￿the￿Commercial￿Agreement,￿pursuant￿to￿which ASML￿and￿Intel￿established￿a￿contractual￿framework￿for￿Intel￿to￿purchase￿equipment￿related￿to￿the￿450mm￿and￿next- generation￿EUV￿lithography￿equipment.￿Under￿this￿agreement,￿Intel￿has￿committed￿to￿purchase￿specified￿numbers of￿450mm￿and￿next-generation￿EUV￿tools.￿The￿agreement￿sets￿forth￿pricing￿terms￿for￿the￿tools￿as￿well￿as￿milestones related￿to￿product￿deliveries,￿and￿provides￿for￿certain￿commercial￿discounts￿in￿the￿form￿of￿credits￿in￿exchange￿for￿Intel’s 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￿Intel’s￿forecasted￿450mm￿lithography￿equipment￿needs￿through￿2022. Please￿see￿Item￿10.C￿“Material￿Contracts,￿Customer￿Co-Investment￿Program”￿and￿Note￿28￿to￿our￿consolidated￿financial statements￿for￿more￿information￿about￿the￿Customer￿Co-Investment￿Program. There￿have￿been￿no￿other￿transactions￿during￿our￿most￿recent￿fiscal￿year,￿and￿there￿are￿currently￿no￿transactions, between￿ASML￿or￿any￿of￿its￿subsidiaries,￿and￿any￿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,￿other￿than￿the￿virtual￿financing￿arrangement￿with￿respect￿to￿shares￿and￿stock￿options described￿under￿Notes￿17￿and￿21￿to￿our￿consolidated￿financial￿statements. C. Interests of Experts & Counsel Not￿applicable. Item 8 Financial Information A. Consolidated Statements and Other Financial Information Consolidated￿Statements See￿Item￿18￿"Financial￿Statements". Export￿Sales See￿Note￿20￿to￿our￿consolidated￿financial￿statements. Legal￿Proceedings See￿Item￿4.B.￿"Business￿Overview,￿Intellectual￿Property"￿and￿Note￿18￿to￿our￿consolidated￿financial￿statements. Dividend￿Policy As￿part￿of￿our￿financing￿policy,￿we￿aim￿to￿pay￿an￿annual￿dividend￿that￿will￿be￿stable￿or￿growing￿over￿time.￿Annually,￿the Board￿of￿Management￿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 Board￿of￿Management's￿views￿on￿our￿potential￿future￿liquidity￿requirements,￿including￿for￿investments￿in￿production capacity,￿the￿funding￿of￿our￿research￿and￿development￿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￿2012,￿a￿proposal￿to￿declare￿a￿dividend￿of￿EUR￿0.53￿per￿ordinary￿share￿of￿EUR￿0.09￿nominal￿value￿will￿be￿submitted to￿the￿AGM￿to￿be￿held￿on￿April￿24,￿2013. B. Significant Changes No￿significant￿changes￿have￿occurred￿since￿the￿date￿of￿our￿consolidated￿financial￿statements.￿See￿Item￿5.D.￿"Trend Information". Item 9 The Offer and Listing A. Offer and Listing Details Our￿ordinary￿shares￿are￿listed￿for￿trading￿in￿the￿form￿of￿registered￿shares￿on￿NASDAQ￿("New￿York￿shares")￿and￿in￿the form￿of￿registered￿shares￿on￿NYSE￿Euronext￿Amsterdam￿("Amsterdam￿Shares").￿The￿principal￿trading￿market￿of￿our ordinary￿shares￿is￿NYSE￿Euronext￿Amsterdam.￿For￿more￿information￿see￿Item￿10.B.￿“Memorandum￿and￿Articles￿of Association”. ASML￿ANNUAL￿REPORT￿2012 51 New￿York￿shares￿are￿registered￿with￿J.P.￿Morgan￿Chase￿Bank,￿N.A.￿(the￿"New￿York￿Transfer￿Agent"),￿4￿New￿York￿Plaza, New￿York,￿New￿York,￿pursuant￿to￿the￿terms￿of￿a￿transfer,￿registrar￿and￿dividend￿disbursing￿agreement￿(the￿"Transfer Agent￿Agreement")￿between￿ASML￿and￿the￿New￿York￿Transfer￿Agent.￿Amsterdam￿shares￿are￿held￿in￿dematerialized￿form through￿the￿facilities￿of￿Nederlands￿Centraal￿Instituut￿voor￿Giraal￿Effectenverkeer￿B.V.￿("Euroclear￿Nederland"),￿the￿Dutch centralized￿securities￿custody￿and￿administration￿system.￿The￿New￿York￿Transfer￿Agent￿charges￿shareholders￿a￿fee￿of USD￿5.00￿per￿100￿shares￿for￿the￿exchange￿of￿New￿York￿shares￿for￿Amsterdam￿shares￿and￿vice￿versa. Dividends￿payable￿on￿New￿York￿shares￿are￿declared￿in￿euro￿and￿converted￿by￿us￿to￿U.S.￿dollars￿at￿the￿rate￿of￿exchange at￿the￿close￿of￿business￿on￿the￿date￿determined￿and￿announced￿by￿the￿Board￿of￿Management.￿The￿resulting￿amounts￿are distributed￿through￿the￿New￿York￿Transfer￿Agent￿and￿no￿charge￿is￿payable￿by￿holders￿of￿New￿York￿shares￿in￿connection with￿this￿conversion￿or￿distribution. Pursuant￿to￿the￿terms￿of￿the￿Transfer￿Agent￿Agreement,￿we￿have￿agreed￿to￿reimburse￿the￿New￿York￿Transfer￿Agent￿for certain￿out￿of￿pocket￿expenses,￿including￿in￿connection￿with￿any￿mailing￿of￿notices,￿reports￿or￿other￿communications made￿generally￿available￿by￿ASML￿to￿holders￿of￿ordinary￿shares￿and￿the￿New￿York￿Transfer￿Agent￿has￿waived￿its￿fees associated￿with￿routine￿services￿to￿ASML￿associated￿with￿the￿New￿York￿shares.￿In￿addition,￿the￿New￿York￿Transfer￿Agent has￿agreed￿to￿reimburse￿certain￿reasonable￿expenses￿incurred￿by￿ASML￿in￿connection￿with￿the￿issuance￿and￿transfer of￿New￿York￿shares.￿In￿the￿year￿ended￿December￿31,￿2012,￿the￿Transfer￿Agent￿reimbursed￿USD￿849,377￿of￿expenses incurred￿by￿ASML,￿which￿mainly￿comprised￿legal,￿audit￿and￿accounting￿fees￿incurred￿due￿to￿the￿existence￿of￿the￿New York￿shares. The￿following￿table￿sets￿forth,￿for￿the￿periods￿indicated,￿the￿high￿and￿low￿closing￿prices￿of￿our￿ordinary￿shares￿on NASDAQ,￿as￿well￿as￿on￿NYSE￿Euronext￿Amsterdam. Annual Information 2012 2011 2010 2009 2008 Quarterly Information 4th￿quarter￿2012 3rd￿quarter￿2012 2nd￿quarter￿2012 1st￿quarter￿2012 ￿ 4th￿quarter￿2011 3rd￿quarter￿2011 2nd￿quarter￿2011 1st￿quarter￿2011 Monthly Information February￿(through￿February￿4)￿2013 January￿2013 December￿2012 November￿2012 October￿2012 September￿2012 August￿2012 NASDAQ USD High ￿ ￿ ￿ ￿ 64.68 45.82 38.45 34.67 30.47 64.68 58.86 51.54 50.14 43.55 38.64 44.43 45.82 78.21 75.47 64.68 62.57 56.29 57.87 58.86 ￿ ￿ ￿ ￿ Low 40.91 31.08 24.73 14.28 12.66 50.08 48.46 43.80 40.91 33.50 31.08 34.98 35.90 76.43 63.08 61.42 53.54 50.08 52.39 55.84 Euronext Amsterdam EUR ￿ ￿ ￿ ￿ High 49.36 32.81 29.26 24.24 20.97 49.36 48.14 40.88 37.48 32.50 27.40 31.43 32.81 56.80 56.23 49.36 48.21 43.55 45.58 47.30 ￿ ￿ ￿ ￿ Low 31.81 22.28 19.68 11.35 10.68 39.15 39.75 35.17 31.81 25.56 22.28 24.43 27.35 56.59 47.20 47.04 42.22 39.15 40.57 44.67 B. Plan of Distribution Not￿applicable. C. Markets See￿Item￿9.A.￿"Offer￿and￿Listing￿Details". D. Selling Shareholders Not￿applicable. ASML￿ANNUAL￿REPORT￿2012 52 E. Dilution Not￿applicable. F. Expenses of the Issue Not￿applicable. Item 10 Additional Information A. Share Capital Not￿applicable. B. Memorandum and Articles of Association The￿information￿required￿by￿Item￿10.B.￿is￿incorporated￿by￿reference￿in￿ASML’s￿Report￿on￿Form￿6-K,￿filed￿with￿the Commission￿on￿February￿8,￿2013. Current￿Authorizations￿to￿Issue￿and￿Repurchase￿Ordinary￿Shares Our￿Board￿of￿Management￿has￿the￿power￿to￿issue￿ordinary￿shares￿and￿preference￿shares￿if￿and￿insofar￿as￿the￿Board￿of Management￿has￿been￿authorized￿to￿do￿so￿by￿the￿General￿Meeting￿of￿Shareholders￿(whether￿by￿means￿of￿an￿authorizing resolution￿or￿by￿an￿amendment￿to￿our￿Articles￿of￿Association).￿The￿Board￿of￿Management￿requires￿the￿approval, however,￿of￿the￿Supervisory￿Board￿for￿such￿an￿issue.￿An￿authorization￿of￿the￿Board￿of￿Management￿to￿issue￿ordinary shares￿or￿preference￿shares￿may￿be￿effective￿for￿a￿specified￿period￿of￿up￿to￿five￿years￿and￿may￿be￿renewed.￿In￿the absence￿of￿such￿authorization,￿the￿General￿Meeting￿of￿Shareholders￿has￿the￿power￿to￿authorize￿the￿issuance￿of￿ordinary shares￿or￿preference￿shares,￿upon￿the￿proposal￿of￿the￿Board￿of￿Management,￿which￿proposal￿must￿be￿authorized￿by￿the Supervisory￿Board. At￿our￿Extraordinary￿General￿Meeting￿of￿Shareholders￿("EGM"),￿held￿on￿September￿7,￿2012,￿the￿Board￿of￿Management was￿authorized￿from￿September￿7,￿2012￿through￿October￿25,￿2013,￿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￿as￿of￿April 25,￿2012,￿plus￿an￿additional￿5.0￿percent￿of￿our￿issued￿share￿capital￿as￿of￿April￿25,￿2012￿that￿may￿be￿issued￿in￿connection with￿mergers,￿acquisitions￿and/or￿(strategic)￿alliances.￿With￿this￿authorization,￿the￿corresponding￿authorization￿granted at￿the￿AGM￿held￿on￿April￿25,￿2012,￿ceased￿to￿apply￿to￿the￿extent￿not￿already￿used.￿At￿our￿AGM￿to￿be￿held￿on￿April￿24, 2013,￿our￿shareholders￿will￿be￿asked￿to￿authorize￿the￿Board￿of￿Management￿(subject￿to￿the￿approval￿of￿the￿Supervisory Board)￿to￿issue￿shares￿and/or￿rights￿thereto￿through￿October￿24,￿2014,￿up￿to￿an￿aggregate￿maximum￿of￿10.0￿percent of￿ASML's￿issued￿share￿capital.￿This￿authorization￿would￿supercede￿the￿authorization￿described￿above￿granted￿at￿the September￿2012,￿EGM. Holders￿of￿ASML’s￿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.￿Ordinary￿shareholders￿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￿Board of￿Management￿has￿the￿power￿subject￿to￿approval￿of￿the￿Supervisory￿Board,￿to￿restrict￿or￿exclude￿the￿preemptive￿rights of￿holders￿of￿ordinary￿shares.￿At￿our￿EGM￿held￿on￿September￿7,￿2012,￿the￿Board￿of￿Management￿was￿authorized￿from September￿7,￿2012￿through￿October￿25,￿2013,￿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￿as￿of￿April 25,￿2012.￿With￿this￿authorization,￿the￿corresponding￿authorization￿granted￿at￿the￿AGM￿held￿on￿April￿25,￿2012,￿ceased￿to apply￿to￿the￿extent￿not￿already￿used. At￿our￿EGM￿held￿on￿September￿7,￿2012,￿the￿Board￿of￿Management￿was￿also￿authorized￿from￿September￿7,￿2012￿through July￿31,￿2013,￿to￿issue￿shares￿or￿rights￿to￿subscribe￿for￿shares￿in￿our￿capital￿in￿connection￿with￿the￿Customer￿Co- Investment￿Program,￿subject￿to￿Supervisory￿Board￿approval,￿up￿to￿25.0￿percent￿of￿our￿issued￿share￿capital￿as￿of￿April 25,￿2012,￿and￿to￿restrict￿or￿exclude￿the￿pre-emption￿rights￿accruing￿to￿shareholders￿in￿connection￿with￿the￿issue￿of these￿shares￿or￿rights.￿We￿issued￿shares￿(on￿September￿12,￿2012￿and￿October￿31,￿2012)￿pursuant￿to￿the￿Customer Co-Investment￿Program￿equaling￿23.0￿percent￿of￿the￿issued￿share￿capital￿in￿ASML￿as￿of￿April￿25,￿2012￿as￿per￿this authorization.￿At￿September￿7,￿2012,￿the￿Customer￿Co-Investment￿Program￿was￿closed￿for￿other￿participants. At￿the￿EGM￿held￿on￿September￿7,￿2012,￿several￿changes￿in￿the￿articles￿of￿association￿of￿ASML￿were￿adopted. 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￿Customer￿Co-Investment￿Program￿were converted￿into￿ordinary￿shares￿M￿and￿all￿other￿ordinary￿shares￿were￿converted￿into￿ordinary￿shares￿A.￿Upon￿the￿second ASML￿ANNUAL￿REPORT￿2012 53 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￿is￿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￿Customer￿Co-Investment￿Program￿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. In￿addition,￿the￿articles￿of￿association￿provide￿for￿9,000￿ordinary￿shares￿B￿with￿a￿nominal￿value￿of￿EUR￿0.01￿to￿allow holders￿of￿fractional￿shares,￿created￿as￿a￿result￿of￿the￿share￿consolidation,￿to￿obtain￿voting￿rights￿with￿respect￿to￿those fractional￿shares. We￿may￿repurchase￿our￿issued￿ordinary￿shares￿at￿any￿time,￿subject￿to￿compliance￿with￿the￿requirements￿of￿Dutch￿law and￿our￿Articles￿of￿Association.￿Any￿such￿repurchases￿are￿subject￿to￿the￿approval￿of￿the￿Supervisory￿Board￿and￿the authorization￿of￿shareholders￿at￿our￿General￿Meeting￿of￿Shareholders,￿which￿authorization￿may￿not￿be￿for￿more￿than￿18 months.￿The￿Board￿of￿Management￿is￿currently￿authorized,￿subject￿to￿Supervisory￿Board￿approval,￿to￿repurchase￿as￿of April￿25,￿2012￿through￿October￿25,￿2013,￿up￿to￿a￿maximum￿of￿two￿times￿10.0￿percent￿of￿ASML's￿issued￿share￿capital as￿of￿April￿25,￿2012,￿at￿a￿price￿between￿the￿nominal￿value￿of￿the￿ordinary￿shares￿purchased￿and￿110.0￿percent￿of￿the market￿price￿of￿these￿securities￿on￿NYSE￿Euronext￿Amsterdam￿or￿NASDAQ. C. Material Contracts Overview On￿July￿9,￿2012,￿we￿announced￿our￿Customer￿Co-Investment￿Program￿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￿creates￿risk￿sharing￿with￿some￿of￿our￿largest￿customers￿while￿the￿results￿of￿ASML’s￿development programs￿will￿be￿available￿to￿every￿semiconductor￿manufacturer￿with￿no￿restrictions.￿The￿R&D￿funding￿program￿in the￿Customer￿Co-Investment￿Program￿consists￿of￿two￿funding￿projects:￿a￿450mm￿technology￿development￿project and￿a￿next-generation￿EUV￿development￿project.￿ASML￿has￿entered￿into￿Non￿Recurring￿Engineering￿("NRE")￿funding agreements￿with￿the￿participating￿customers. In￿addition￿to￿the￿funding￿commitments￿described￿above,￿the￿participating￿customers￿have￿invested￿in￿ordinary￿shares equal,￿in￿aggregate,￿to￿23￿percent￿of￿ASML's￿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￿26￿to￿our￿consolidated￿financial statements￿. Description of Investment Agreements, Shareholder Agreements and NRE Funding Agreements In￿connection￿with￿the￿Customer￿Co-Investment￿Program,￿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￿program￿participants￿-￿￿TSMC￿(which￿acquired￿5￿percent￿of￿our￿shares￿and made￿an￿EUR￿277￿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 Agreement Pursuant￿to￿the￿investment￿agreement￿between￿ASML￿and￿Intel,￿dated￿July￿9,￿2012￿("the￿Intel￿Investment￿Agreement"), ASML￿agreed￿to￿issue￿to￿a￿foundation￿established￿for￿Intel￿(the￿“Intel￿Stichting”)￿ordinary￿shares￿equal￿to￿15￿percent￿of ASML’s￿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 ASML￿ANNUAL￿REPORT￿2012 54 the￿volume￿weighted￿average￿price￿of￿the￿ordinary￿shares￿on￿NYSE￿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. 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￿(the￿“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￿Customer￿Co-Investment￿Program￿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￿Board￿of Management￿as￿the￿authorized￿body￿to￿resolve￿on￿these￿matters;￿(ii)￿an￿authorization￿to￿repurchase￿25￿percent￿or￿more of￿ASML’s￿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￿ASML’s￿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￿ASML’s￿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￿ASML’s￿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￿ASML's￿outstanding￿shares (other￿than￿shares￿acquired￿through￿the￿Customer￿Co-Investment￿Program)￿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 ASML’s￿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￿ASML’s￿outstanding￿shares￿owned by￿Intel￿and￿the￿other￿participating￿customers￿represents￿less￿than￿5￿percent￿of￿ASML’s￿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 ASML￿ANNUAL￿REPORT￿2012 55 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￿ASML’s￿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. In￿addition,￿Intel￿may￿not￿(even￿after￿the￿Lock-Up￿Period￿has￿ended),￿without￿written￿consent￿of￿ASML,￿transfer￿on NYSE￿Euronext￿Amsterdam,￿NASDAQ￿or￿another￿securities￿exchange￿more￿than￿(i)￿in￿respect￿of￿Intel,￿4￿percent￿of￿the outstanding￿shares￿of￿ASML￿(the￿relevant￿percentage￿is￿1.5￿percent￿for￿Samsung￿and￿2.5￿percent￿for￿TSMC).￿There￿are also￿restrictions￿on￿Intel's￿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￿were￿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￿the￿Ordinary￿Shares￿from￿NYSE￿Euronext￿Amsterdam￿or￿de￿listing￿from NASDAQ￿(except￿for￿certain￿voluntary￿delistings￿from￿NASDAQ),￿(iii)￿the￿winding￿up￿or￿liquidation￿of￿ASML,￿or￿(vi)￿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 Intel 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￿ASML’s￿R&D￿costs￿and￿project￿expenditures.￿One￿agreement￿relates￿to￿the￿development￿of￿450mm￿lithography equipment￿(the￿"Intel￿450mm￿NRE￿Funding￿Agreement"￿)￿and￿the￿other￿agreement￿relates￿to￿the￿development￿of￿EUV lithography￿equipment￿(the￿"Intel￿EUV￿NRE￿Funding￿Agreement").￿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￿ASML's￿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. ASML￿ANNUAL￿REPORT￿2012 56 Cymer Merger The Merger On￿October￿16,￿2012,￿we￿entered￿into￿a￿merger￿agreement￿with￿Cymer,￿a￿company￿engaged￿in￿the￿development, manufacturing￿and￿marketing￿of￿light￿sources￿for￿sale￿to￿customers￿who￿manufacture￿photolithography￿tools￿in￿the semiconductor￿equipment￿industry￿(the￿"Merger￿Agreement"),￿under￿which￿ASML￿will￿acquire￿all￿outstanding￿shares￿of common￿stock￿of￿Cymer￿for￿a￿consideration￿per￿Cymer￿share￿of￿Cymer￿common￿stock￿of￿USD￿20.00￿in￿cash￿and￿a￿fixed ratio￿of￿1.1502￿ASML￿Ordinary￿Shares.￿Completion￿of￿the￿merger￿is￿subject￿to￿customary￿closing￿conditions,￿including expiration￿or￿termination￿of￿the￿applicable￿waiting￿period￿under￿the￿Hart-Scott-Rodino￿Act￿and￿receipt￿of￿approvals under￿other￿foreign￿competition￿laws.￿On￿february￿5,￿2013,￿the￿Cymer￿Stockholders￿approved￿the￿merger￿agreement. We￿expect￿the￿transaction￿to￿close￿in￿the￿first￿half￿of￿2013,￿however￿there￿is￿no￿assurance￿that￿the￿transaction￿will be￿completed￿within￿the￿expected￿time￿period￿or￿at￿all.￿See￿"Risk￿Factors,￿We￿May￿Be￿Unable￿to￿Make￿Desirable Acquisitions￿or￿to￿Integrate￿Any￿Businesses￿We￿Successfully￿Acquire". The Merger Agreement Merger Consideration The￿Merger￿Agreement￿provides￿that￿each￿share￿of￿Cymer￿common￿stock￿outstanding￿immediately￿prior￿to￿the consummation￿of￿the￿Merger￿(other￿than￿shares￿owned￿by￿ASML,￿ASML￿US￿Inc.￿("Holdco"),￿Kona￿Acquisition￿Company Inc.￿("Merger￿Sub"),￿Kona￿Technologies￿LLC￿("Merger￿Sub￿2"),￿any￿other￿wholly￿owned￿subsidiary￿of￿ASML,￿or￿held￿in the￿treasury￿of￿Cymer￿or￿owned￿by￿any￿wholly￿owned￿subsidiary￿of￿Cymer￿(the￿“Excluded￿Shares”￿))￿will￿be￿converted into￿the￿right￿to￿receive￿from￿Holdco￿(i)￿USD￿20.00￿in￿cash,￿without￿interest￿thereon,￿and￿(ii)￿1.1502￿ASML￿Ordinary Shares.￿No￿fractional￿Ordinary￿Shares￿will￿be￿issued.￿In￿lieu￿of￿fractional￿Ordinary￿Shares,￿Cymer￿stockholders￿that would￿otherwise￿be￿entitled￿to￿a￿fractional￿Ordinary￿Share￿will￿receive￿in￿cash￿an￿amount￿equal￿to￿the￿product￿of￿the ASML￿Share￿Price￿(as￿defined￿in￿the￿Merger￿Agreement)￿and￿the￿fractional￿Ordinary￿Share￿to￿which￿such￿holder￿would otherwise￿be￿entitled. In￿addition,￿for￿purposes￿of￿complying￿with￿requirements￿of￿Dutch￿law,￿upon￿consummation￿of￿the￿merger,￿each￿holder of￿Cymer￿capital￿stock￿(other￿than￿holders￿of￿Excluded￿Shares)￿will￿be￿entitled￿to￿receive￿the￿Dutch￿Compensation Amount￿(as￿defined￿in￿the￿Merger￿Agreement)￿from￿ASML,￿to￿be￿set￿off￿against￿the￿obligation￿to￿pay￿up￿the￿Ordinary Shares￿as￿described￿below.￿By￿virtue￿of￿the￿Merger,￿each￿Cymer￿stockholder￿will￿be￿deemed￿to￿have￿subscribed￿for￿the Ordinary￿Shares￿to￿be￿issued￿to￿such￿holder￿pursuant￿to￿the￿Merger.￿In￿accordance￿with￿the￿laws￿of￿The￿Netherlands, each￿Cymer￿stockholder,￿as￿a￿result￿of￿such￿deemed￿subscription,￿will￿be￿obligated￿to￿pay￿up￿such￿Ordinary￿Shares￿in an￿amount,￿determined￿solely￿for￿the￿purpose￿of￿satisfying￿such￿obligation,￿equal￿to￿the￿Dutch￿Compensation￿Amount to￿which￿such￿holder￿is￿entitled￿by￿virtue￿of￿the￿Merger.￿Such￿obligation￿will￿be￿satisfied￿by￿such￿Cymer￿stockholder by￿set￿off￿by￿ASML￿of￿such￿obligation￿against￿the￿right￿of￿such￿Cymer￿common￿stockholder￿to￿receive￿from￿ASML￿the Dutch￿Compensation￿Amount,￿and￿will￿have￿no￿effect￿on￿the￿receipt￿by￿a￿Cymer￿common￿stockholder￿of￿the￿merger consideration. Conditions to the Merger Each￿party’s￿obligation￿to￿effect￿the￿Merger￿is￿subject￿to￿satisfaction￿or￿waiver,￿at￿or￿prior￿to￿the￿closing￿of￿the￿merger, of￿certain￿conditions,￿including,￿among￿other￿things,￿certain￿regulatory￿approvals￿(including￿the￿expiration￿or￿termination of￿all￿applicable￿waiting￿periods￿under￿the￿U.S.￿Hart-Scott-Rodino￿Antitrust￿Improvements￿Act￿of￿1976,￿as￿amended, and￿approval￿of￿the￿Committee￿on￿Foreign￿Investment￿in￿the￿United￿States),￿obtaining￿certain￿required￿clearances￿under certain￿foreign￿merger￿control￿laws,￿effectiveness￿of￿the￿registration￿statement￿filed￿in￿the￿United￿States￿relating￿to￿the Merger,￿and￿the￿accuracy￿of￿certain￿representations￿and￿warranties￿provided￿by￿each￿party￿under￿the￿Merger￿Agreement. Representations and Warranties The￿Merger￿Agreement￿contains￿representations￿and￿warranties￿that￿Cymer,￿on￿the￿one￿hand,￿and￿ASML,￿Holdco, Merger￿Sub￿and￿Merger￿Sub￿2,￿on￿the￿other￿hand,￿have￿made￿to￿each￿other,￿including,￿among￿other￿things,￿organization, corporate￿power￿and￿authority,￿financial￿condition,￿compliance￿with￿laws,￿environmental￿matters,￿intellectual￿property, real￿property￿and￿availability￿of￿cash￿consideration. Covenants The￿Merger￿Agreement￿contains￿covenants￿of￿both￿parties,￿including￿restrictions￿on￿Cymer￿with￿regard￿to￿the￿ability￿to, among￿other￿things,￿issue,￿sell,￿pledge￿or￿redeem￿shares￿of￿Cymer￿common￿stock,￿make￿acquisitions￿or￿investments, dispose￿of￿assets,￿create￿security￿rights￿and￿incur￿indebtedness.￿In￿the￿Merger￿Agreement,￿the￿parties￿have￿stated ASML￿ANNUAL￿REPORT￿2012 57 their￿intent￿that,￿subject￿to￿the￿terms￿of￿the￿Merger￿Agreement,￿ASML￿and￿its￿subsidiaries￿are￿free￿to￿conduct￿their businesses￿and￿operations￿without￿restrictions￿between￿the￿date￿of￿the￿Merger￿Agreement￿and￿the￿closing￿of￿the￿merger, except￿for￿certain￿restrictions￿on￿the￿ability￿of￿ASML￿to￿redeem￿Ordinary￿Shares,￿pay￿dividends￿or￿otherwise￿make a￿payment￿to￿holders￿of￿Ordinary￿Shares￿(other￿than￿pursuant￿to￿the￿Synthetic￿Share￿Buyback)￿and￿the￿entering￿into contracts￿that￿could￿reasonably￿be￿expected￿to￿prevent￿or￿materially￿delay￿the￿consummation￿of￿the￿Merger. For￿a￿period￿of￿six￿years￿after￿consummation￿of￿the￿Merger,￿ASML￿and￿the￿surviving￿entity￿will,￿to￿the￿fullest￿extent permitted￿under￿applicable￿law,￿indemnify￿and￿hold￿harmless,￿each￿of￿Cymer’s￿and￿its￿subsidiaries’￿present￿and￿former directors,￿officers￿and￿employees￿against￿all￿costs￿and￿expenses￿(including￿attorneys’￿fees),￿judgments,￿fines,￿losses, claims,￿damages,￿liabilities￿and￿settlement￿amounts￿paid￿in￿connection￿with￿any￿claim,￿action,￿suit,￿proceeding￿or investigation￿to￿the￿extent￿they￿were￿indemnified￿under￿Cymer’s￿articles,￿bylaws￿and￿indemnification￿contracts￿in￿effect as￿of￿the￿date￿of￿the￿Merger￿Agreement￿with￿respect￿to￿any￿action￿or￿omission￿in￿their￿capacity￿as￿an￿officer,￿director￿or employee,￿at￿or￿prior￿to￿the￿consummation￿of￿the￿merger. Termination The￿Merger￿Agreement￿may￿be￿terminated￿at￿any￿time￿prior￿to￿the￿effective￿time￿of￿the￿merger,￿(i)￿by￿the￿mutual written￿consent￿of￿ASML￿and￿Cymer￿and￿(ii)￿by￿ASML￿or￿Cymer￿if￿(a)￿a￿court￿or￿governmental￿entity￿issues￿a￿final order￿prohibiting￿the￿Merger,￿(b)￿the￿Cymer￿stockholders￿do￿not￿approve￿the￿Merger￿Agreement,￿(c)￿the￿Merger￿is￿not consummated￿on￿or￿before￿July￿16,￿2013￿and￿parties￿have￿not￿extended￿this￿date,￿(d)￿the￿other￿party￿has￿breached or￿failed￿to￿perform￿its￿representations￿and￿warranties,￿covenants￿or￿agreements￿in￿the￿Merger￿Agreement￿or￿(e)￿the Cymer￿board￿changes￿its￿recommendation￿to￿Cymer￿stockholders￿to￿approve￿the￿Merger￿Agreement￿or￿fails￿to￿include its￿recommendation￿in￿the￿proxy￿statement/prospectus￿that￿has￿been￿filed￿with￿the￿SEC. All￿costs￿and￿expenses￿incurred￿by￿the￿parties￿in￿connection￿with￿the￿Merger￿Agreement￿and￿the￿transactions contemplated￿thereby￿are￿to￿be￿paid￿by￿the￿party￿that￿has￿incurred￿such￿costs￿and￿expenses,￿whether￿or￿not￿the￿Merger is￿consummated.￿However,￿Cymer￿must￿pay￿ASML￿a￿termination￿fee￿of￿USD￿75,000,000￿if￿the￿Merger￿Agreement is￿terminated￿on￿certain￿grounds￿including,￿among￿other￿things,￿termination￿because￿the￿Cymer￿board￿changes￿its recommendation￿to￿Cymer￿stockholders￿to￿approve￿the￿Merger￿Agreement￿in￿connection￿with￿a￿superior￿acquisition proposal￿or￿an￿intervening￿event￿or￿(subject￿to￿certain￿conditions)￿the￿Merger￿is￿not￿consummated￿on￿or￿before￿July￿16, 2013￿(or￿any￿date￿to￿which￿the￿termination￿date￿is￿extended,￿but￿not￿later￿than￿October￿16,￿2013). D. Exchange Controls There￿are￿currently￿no￿limitations,￿either￿under￿the￿laws￿of￿the￿Netherlands￿or￿in￿the￿Articles￿of￿Association￿of￿ASML,￿to the￿rights￿of￿non-residents￿to￿hold￿or￿vote￿ordinary￿shares.￿Cash￿distributions,￿if￿any,￿payable￿in￿euros￿on￿Amsterdam Shares￿may￿be￿officially￿transferred￿by￿a￿bank￿from￿the￿Netherlands￿and￿converted￿into￿any￿other￿currency￿without￿being subject￿to￿any￿Dutch￿legal￿restrictions.￿However,￿for￿statistical￿purposes,￿such￿payments￿and￿transactions￿must￿be reported￿by￿ASML￿to￿the￿Dutch￿Central￿Bank.￿Furthermore,￿no￿payments,￿including￿dividend￿payments,￿may￿be￿made￿to jurisdictions￿subject￿to￿certain￿sanctions,￿adopted￿by￿the￿government￿of￿the￿Netherlands,￿implementing￿resolutions￿of the￿Security￿Council￿of￿the￿United￿Nations.￿Cash￿distributions,￿if￿any,￿on￿New￿York￿Shares￿shall￿be￿declared￿in￿euros￿but paid￿in￿U.S.￿dollars,￿converted￿by￿us￿at￿the￿rate￿of￿exchange￿at￿the￿close￿of￿business￿on￿the￿date￿fixed￿for￿that￿purpose by￿the￿Board￿of￿Management￿in￿accordance￿with￿the￿Articles￿of￿Association. E. Taxation Dutch￿Taxation The￿statements￿below￿represent￿a￿summary￿of￿current￿Dutch￿tax￿laws,￿regulations￿and￿judicial￿interpretations￿thereof. The￿description￿is￿limited￿to￿the￿material￿tax￿implications￿for￿a￿holder￿of￿ordinary￿shares￿who￿is￿not,￿or￿is￿not￿deemed to￿be,￿a￿resident￿of￿the￿Netherlands￿for￿Dutch￿tax￿purposes￿("Non-resident￿Holder").￿This￿summary￿does￿not￿address special￿rules￿that￿may￿apply￿to￿special￿classes￿of￿holders￿of￿ordinary￿shares￿and￿should￿not￿be￿read￿as￿extending￿by implication￿to￿matters￿not￿specifically￿referred￿to￿herein.￿As￿to￿individual￿tax￿consequences,￿each￿investor￿in￿ordinary shares￿should￿consult￿his￿or￿her￿tax￿counsel. General The￿acquisition￿of￿ordinary￿shares￿by￿a￿non-resident￿of￿the￿Netherlands￿should￿not￿be￿treated￿as￿a￿taxable￿event￿for Dutch￿tax￿purposes.￿The￿income￿consequences￿in￿connection￿with￿owning￿and￿disposing￿of￿our￿ordinary￿shares￿are discussed￿below. Substantial Interest A￿person￿that,￿(inter￿alia)￿directly￿or￿indirectly,￿and￿either￿independently￿or￿jointly￿with￿his￿partner￿(as￿defined￿in￿the￿Dutch Personal￿Income￿Tax￿Act￿2001),￿owns￿5.0￿percent￿or￿more￿of￿our￿share￿capital,￿owns￿profit￿participating￿rights￿that ASML￿ANNUAL￿REPORT￿2012 58 correspond￿to￿at￿least￿5.0￿percent￿of￿the￿annual￿profits￿of￿a￿Dutch￿company￿or￿to￿at￿least￿5.0￿percent￿of￿the￿liquidation proceeds￿of￿such￿company￿or￿holds￿options￿to￿purchase￿5.0￿percent￿or￿more￿of￿our￿share￿capital,￿is￿deemed￿to￿have￿a substantial￿interest￿in￿our￿shares,￿or￿our￿options,￿as￿applicable.￿Specific￿rules￿apply￿in￿case￿certain￿family￿members￿of the￿Non-resident￿hold￿a￿substantial￿interest.￿A￿deemed￿substantial￿interest￿also￿exists￿if￿(part￿of)￿a￿substantial￿interest has￿been￿disposed￿of,￿or￿is￿deemed￿to￿be￿disposed￿of,￿in￿a￿transaction￿where￿no￿taxable￿gain￿has￿been￿recognized. Special￿attribution￿rules￿exist￿in￿determining￿the￿presence￿of￿a￿substantial￿interest. Income Tax Consequences for Individual Non-resident Holders on Owning and Disposing of the Ordinary Shares An individual who is a Non-resident Holder will not be subject to Dutch income tax on received income in respect of our ordinary shares or capital gains derived from the sale, exchange or other disposition of our ordinary shares, provided that such holder: • Does￿not￿carry￿on￿and￿has￿not￿carried￿on￿a￿business￿in￿the￿Netherlands￿through￿a￿permanent￿establishment￿or￿a permanent￿representative￿to￿which￿the￿ordinary￿shares￿are￿attributable; • Does￿not￿hold￿and￿has￿not￿held￿a￿(deemed)￿substantial￿interest￿in￿our￿share￿capital￿or,￿in￿the￿event￿the￿Non-resident Holder￿holds￿or￿has￿held￿a￿(deemed)￿substantial￿interest￿in￿our￿share￿capital,￿such￿interest￿is,￿or￿was,￿a￿business asset￿in￿the￿hands￿of￿the￿holder; • Does￿not￿share￿and￿has￿not￿shared￿directly￿(through￿the￿beneficial￿ownership￿of￿ordinary￿shares￿or￿similar￿securities) in￿the￿profits￿of￿an￿enterprise￿managed￿and￿controlled￿in￿the￿Netherlands￿which￿(is￿deemed￿to)￿own(s),￿or￿(is￿deemed to￿have)￿has￿owned,￿our￿ordinary￿shares; • Does￿not￿carry￿out￿and￿has￿not￿carried￿out￿any￿activities￿which￿generate￿taxable￿profit￿or￿taxable￿income￿to￿which￿the holding￿of￿our￿ordinary￿shares￿was￿connected; Is￿not￿an￿individual￿that￿has￿elected￿to￿be￿taxed￿as￿a￿resident￿of￿the￿Netherlands. • Corporate Income Tax Consequences for Corporate Non-resident Holders Income￿derived￿from￿ordinary￿shares￿or￿capital￿gains￿derived￿from￿the￿sale,￿exchange￿or￿disposition￿of￿ordinary￿shares by￿a￿corporate￿Non-resident￿Holder￿is￿taxable￿if: • The￿holder￿carries￿on￿a￿business￿in￿the￿Netherlands￿through￿a￿permanent￿establishment￿or￿a￿permanent￿agent￿in￿the Netherlands￿(Dutch￿enterprise)￿and￿the￿ordinary￿shares￿are￿attributable￿to￿this￿permanent￿establishment￿or￿permanent agent,￿unless￿the￿participation￿exemption￿(discussed￿below)￿applies;￿or • The￿holder￿is￿a￿resident￿of￿Aruba,￿Curacao￿or￿Saint￿Martin￿with￿a￿permanent￿establishment￿or￿permanent representative￿in￿Bonaire,￿Eustatius￿or￿Saba￿to￿which￿out￿ordinary￿shares￿are￿attributable,￿while￿the￿profits￿of￿such holder￿are￿taxable￿in￿the￿Netherlands￿pursuant￿to￿article￿17(3)(c)￿of￿the￿Dutch￿Corporate￿Income￿Tax￿Act￿1969;￿or • The￿holder￿has￿a￿substantial￿interest￿in￿our￿share￿capital,￿which￿is￿held￿with￿the￿primary￿aim￿or￿one￿of￿the￿primary aims￿to￿evade￿the￿levy￿of￿income￿tax￿or￿dividend￿withholding￿tax￿at￿the￿level￿of￿another￿person￿and￿which￿is￿not attributable￿to￿his￿enterprise;￿or • Certain￿assets￿of￿the￿holder￿are￿deemed￿to￿be￿treated￿as￿a￿Dutch￿enterprise￿under￿Dutch￿tax￿law￿and￿the￿ordinary shares￿are￿attributable￿to￿this￿Dutch￿enterprise. To￿qualify￿for￿the￿Dutch￿participation￿exemption,￿the￿holder￿must￿generally￿hold￿at￿least￿5.0￿percent￿of￿our￿nominal￿paid- in￿capital￿and￿meet￿certain￿other￿requirements. Dividend Withholding Tax In￿general,￿a￿dividend￿distributed￿by￿us￿in￿respect￿of￿our￿ordinary￿shares￿will￿be￿subject￿to￿a￿withholding￿tax￿imposed￿by the￿Netherlands￿at￿the￿statutory￿rate￿of￿15.0￿percent. Dividends￿include: • Dividends￿in￿cash￿and￿in￿kind; • Deemed￿and￿constructive￿dividends; • Consideration￿for￿the￿repurchase￿or￿redemption￿of￿ordinary￿shares￿(including￿a￿purchase￿by￿a￿direct￿or￿indirect￿ASML subsidiary)￿in￿excess￿of￿qualifying￿average￿paid-in￿capital￿unless￿such￿repurchase￿is￿made￿for￿temporary￿investment purposes￿or￿is￿exempt￿by￿law; • Stock￿dividends￿up￿to￿their￿nominal￿value￿(unless￿distributed￿out￿of￿qualifying￿paid-in￿capital); • Any￿(partial)￿repayment￿of￿paid-in￿capital￿not￿qualifying￿as￿capital￿for￿Dutch￿dividend￿withholding￿tax￿purposes;￿and • Liquidation￿proceeds￿in￿excess￿of￿qualifying￿average￿paid-in￿capital￿for￿Dutch￿dividend￿withholding￿tax￿purposes. ASML￿ANNUAL￿REPORT￿2012 59 A￿reduction￿of￿Dutch￿dividend￿withholding￿tax￿can￿be￿obtained￿if: • The￿participation￿exemption￿applies￿and￿the￿ordinary￿shares￿are￿attributable￿to￿a￿business￿carried￿out￿in￿the Netherlands; • The￿dividends￿are￿distributed￿to￿a￿qualifying￿EU￿corporate￿holder￿satisfying￿the￿conditions￿of￿article￿4(2)￿and￿4(3)￿of the￿Dutch￿Dividend￿Withholding￿Tax￿Act￿1965;￿or • The￿rate￿is￿reduced￿by￿a￿Tax￿Treaty. A￿Non-resident￿Holder￿of￿ordinary￿shares￿can￿be￿eligible￿for￿a￿partial￿or￿complete￿exemption￿or￿refund￿of￿all￿or￿a￿portion of￿the￿above￿withholding￿tax￿under￿a￿Tax￿Treaty￿that￿is￿in￿effect￿between￿the￿Netherlands￿and￿the￿Non-resident￿Holder’s country￿of￿residence.￿The￿Netherlands￿has￿concluded￿such￿treaties￿with￿the￿United￿States,￿Canada,￿Switzerland,￿Japan, most￿European￿Union￿member￿states,￿as￿well￿as￿many￿other￿countries.￿Under￿the￿Treaty￿between￿the￿United￿States and￿the￿Netherlands￿for￿the￿Avoidance￿of￿Double￿Taxation￿and￿the￿Prevention￿of￿Fiscal￿Evasion￿with￿Respect￿to￿Taxes on￿Income￿(the￿"Tax￿Treaty"),￿dividends￿paid￿by￿us￿to￿a￿Non-resident￿Holder￿that￿is￿a￿resident￿of￿the￿United￿States￿as defined￿in￿the￿Tax￿Treaty￿(other￿than￿an￿exempt￿organization￿or￿exempt￿pension￿trust,￿as￿discussed￿below)￿are￿generally liable￿to￿15.0￿percent￿Dutch￿withholding￿tax￿or,￿in￿the￿case￿of￿certain￿United￿States￿corporate￿shareholders￿owning￿at least￿10.0￿percent￿of￿our￿voting￿power,￿a￿reduction￿to￿5.0￿percent,￿provided￿that￿the￿Holder￿does￿not￿have￿an￿enterprise or￿an￿interest￿in￿an￿enterprise￿that￿is,￿in￿whole￿or￿in￿part,￿carried￿on￿through￿a￿permanent￿establishment￿or￿permanent representative￿in￿the￿Netherlands￿to￿which￿the￿dividends￿are￿attributable.￿The￿Tax￿Treaty￿also￿provides￿for￿a￿dividend withholding￿tax￿exemption￿on￿dividends,￿but￿only￿for￿a￿shareholders￿owning￿at￿least￿80.0￿percent￿of￿our￿voting￿power and￿meeting￿all￿other￿requirements.￿The￿Tax￿Treaty￿provides￿for￿a￿complete￿exemption￿from￿tax￿on￿dividends￿received by￿exempt￿pension￿trusts￿and￿exempt￿organizations,￿as￿defined￿therein.￿Except￿in￿the￿case￿of￿exempt￿organizations,￿the reduced￿dividend￿withholding￿tax￿rate￿(or￿exemption￿from￿withholding)￿can￿be￿applied￿at￿the￿source￿upon￿payment￿of the￿dividends,￿provided￿that￿the￿proper￿forms￿have￿been￿filed￿in￿advance￿of￿the￿payment.￿Exempt￿organizations￿remain subject￿to￿the￿statutory￿withholding￿rate￿of￿15.0￿percent￿and￿are￿required￿to￿file￿for￿a￿refund￿of￿such￿withholding. A￿Non-resident￿Holder￿may￿not￿claim￿the￿benefits￿of￿the￿Tax￿Treaty￿unless￿(i)￿he/she￿is￿a￿resident￿of￿the￿United￿States￿as defined￿therein,￿or￿(ii)￿he/she￿is￿deemed￿to￿be￿a￿resident￿on￿the￿basis￿of￿the￿provisions￿of￿article￿24(4)￿of￿the￿Tax￿Treaty, and￿(iii)￿his￿or￿her￿entitlement￿to￿those￿benefits￿is￿not￿limited￿by￿the￿provisions￿of￿article￿26￿(limitation￿on￿benefits)￿of￿the Tax￿Treaty. Dividend Stripping Rules Under￿Dutch￿tax￿legislation￿regarding￿anti-dividend￿stripping,￿no￿exemption￿from,￿or￿refund￿of,￿Dutch￿dividend withholding￿tax￿is￿granted￿if￿the￿recipient￿of￿dividends￿paid￿by￿us￿is￿not￿considered￿the￿beneficial￿owner￿of￿such dividends. Gift or Inheritance Taxes Dutch￿gift￿or￿inheritance￿taxes￿will￿not￿be￿levied￿on￿the￿transfer￿of￿ordinary￿shares￿by￿way￿of￿gift,￿or￿upon￿the￿death￿of￿a Non-resident￿Holder,￿unless: (1)￿The￿transfer￿is￿construed￿as￿an￿inheritance￿or￿as￿a￿gift￿made￿by￿or￿on￿behalf￿of￿a￿person￿who,￿at￿the￿time￿of￿the￿gift￿or death,￿is￿deemed￿to￿be,￿resident￿of￿the￿Netherlands;￿or (2)￿The￿ordinary￿shares￿are￿attributable￿to￿an￿enterprise￿or￿part￿thereof￿that￿is￿carried￿on￿through￿a￿permanent establishment￿or￿a￿permanent￿representative￿in￿the￿Netherlands. Gift￿tax￿and￿inheritance￿tax￿are￿levied￿on￿the￿beneficiary.￿For￿purposes￿of￿Dutch￿gift￿and￿inheritance￿tax,￿an￿individual of￿Dutch￿nationality￿is￿deemed￿to￿be￿a￿resident￿of￿the￿Netherlands￿if￿he￿has￿been￿a￿resident￿thereof￿at￿any￿time￿during the￿ten￿years￿preceding￿the￿time￿of￿the￿gift￿or￿death.￿For￿purposes￿of￿Dutch￿gift￿tax,￿a￿person￿not￿possessing￿Dutch nationality￿is￿deemed￿to￿be￿a￿resident￿of￿the￿Netherlands￿if￿he/she￿has￿resided￿therein￿at￿any￿time￿in￿the￿twelve￿months preceding￿the￿gift. Value Added Tax No￿Dutch￿value￿added￿tax￿is￿imposed￿on￿dividends￿in￿respect￿of￿our￿ordinary￿shares￿or￿on￿the￿transfer￿of￿our￿shares. Residence A￿Non-resident￿Holder￿will￿not￿become￿resident,￿or￿be￿deemed￿to￿be￿resident,￿in￿the￿Netherlands￿solely￿as￿a￿result￿of holding￿our￿ordinary￿shares￿or￿of￿the￿execution,￿performance,￿delivery￿and/or￿enforcement￿of￿rights￿in￿respect￿of￿our ordinary￿shares. ASML￿ANNUAL￿REPORT￿2012 60 United States Taxation The￿following￿is￿a￿discussion￿of￿the￿material￿United￿States￿federal￿income￿tax￿consequences￿relating￿to￿the￿acquisition, ownership￿and￿disposition￿of￿Ordinary￿Shares￿by￿a￿United￿States￿Holder￿(as￿defined￿below)￿acting￿in￿the￿capacity￿of￿a beneficial￿owner￿who￿is￿not￿a￿tax￿resident￿of￿the￿Netherlands.￿This￿discussion￿deals￿only￿with￿Ordinary￿Shares￿held￿as capital￿assets￿and￿does￿not￿deal￿with￿the￿tax￿consequences￿applicable￿to￿all￿categories￿of￿investors,￿some￿of￿which (such￿as￿tax-exempt￿entities,￿financial￿institutions,￿regulated￿investment￿companies,￿dealers￿in￿securities/traders￿in securities￿that￿elect￿a￿mark-to-market￿method￿of￿accounting￿for￿securities￿holdings,￿insurance￿companies,￿investors owning￿directly,￿indirectly￿or￿constructively￿10.0￿percent￿or￿more￿of￿ASML's￿outstanding￿voting￿shares,￿investors￿who hold￿Ordinary￿Shares￿as￿part￿of￿hedging￿or￿conversion￿transactions￿and￿investors￿whose￿functional￿currency￿is￿not the￿U.S.￿dollar)￿may￿be￿subject￿to￿special￿rules.￿In￿addition,￿the￿discussion￿does￿not￿address￿any￿alternative￿minimum tax￿or￿any￿state,￿local,￿FIRPTA￿related￿United￿States￿federal￿income￿tax￿consequences,￿or￿non-United￿States￿tax consequences. This￿discussion￿is￿based￿on￿the￿U.S.-Dutch￿Income￿Tax￿Treaty￿("Treaty")￿and￿the￿Internal￿Revenue￿Code￿of￿1986, as￿amended￿to￿the￿date￿hereof,￿final,￿temporary￿and￿proposed￿Treasury￿Department￿regulations￿promulgated,￿and administrative￿and￿judicial￿interpretations￿thereof,￿changes￿to￿any￿of￿which￿subsequent￿to￿the￿date￿hereof,￿possibly￿with retroactive￿effect,￿may￿affect￿the￿tax￿consequences￿described￿herein.￿In￿addition,￿there￿can￿be￿no￿assurance￿that￿the Internal￿Revenue￿Service￿("IRS")￿will￿not￿challenge￿one￿or￿more￿of￿the￿tax￿consequences￿described￿herein,￿and￿ASML has￿not￿obtained,￿nor￿does￿ASML￿intend￿to￿obtain,￿a￿ruling￿from￿the￿IRS￿or￿an￿opinion￿of￿counsel￿with￿respect￿to￿the United￿States￿federal￿income￿tax￿consequences￿of￿acquiring￿or￿holding￿shares.￿Prospective￿purchasers￿of￿Ordinary Shares￿are￿advised￿to￿consult￿their￿tax￿advisers￿with￿respect￿to￿their￿particular￿circumstances￿and￿with￿respect￿to￿the effects￿of￿United￿States￿federal,￿state,￿local￿or￿non-United￿States￿tax￿laws￿to￿which￿they￿may￿be￿subject. As￿used￿herein,￿the￿term￿‘United￿States￿Holder’￿means￿a￿beneficial￿owner￿of￿Ordinary￿Shares￿for￿United￿States￿federal income￿tax￿purposes￿whose￿holding￿of￿such￿Ordinary￿Shares￿does￿not￿form￿part￿of￿the￿business￿property￿or￿assets￿of￿a permanent￿establishment￿or￿fixed￿base￿in￿the￿Netherlands;￿who￿is￿fully￿entitled￿to￿the￿benefits￿of￿the￿Treaty￿in￿respect￿of such￿Ordinary￿Shares;￿and￿is: • an￿individual￿citizen￿or￿tax￿resident￿of￿the￿United￿States; • a￿corporation￿or￿other￿entity￿treated￿as￿a￿corporation￿for￿United￿States￿federal￿income￿tax￿purposes￿created￿or organized￿in￿or￿under￿the￿laws￿of￿the￿United￿States￿or￿of￿any￿political￿subdivision￿thereof; • an￿estate￿of￿which￿the￿income￿is￿subject￿to￿United￿States￿federal￿income￿taxation￿regardless￿of￿its￿source;￿or • a￿trust￿whose￿administration￿is￿subject￿to￿the￿primary￿supervision￿of￿a￿court￿within￿the￿United￿States￿and￿which￿has one￿or￿more￿United￿States￿persons￿who￿have￿the￿authority￿to￿control￿all￿of￿its￿substantial￿decisions. If￿an￿entity￿treated￿as￿a￿partnership￿for￿United￿States￿federal￿income￿tax￿purposes￿owns￿ordinary￿shares,￿the￿United States￿federal￿income￿tax￿treatment￿of￿a￿partner￿in￿such￿partnership￿will￿generally￿depend￿upon￿the￿status￿and￿tax residency￿of￿the￿partner￿and￿the￿activities￿of￿the￿partnership.￿A￿partnership￿that￿owns￿Ordinary￿Shares￿and￿the￿partners in￿such￿partnership￿should￿consult￿their￿tax￿advisors￿about￿the￿United￿States￿federal￿income￿tax￿consequences￿of holding￿and￿disposing￿of￿the￿ordinary￿Shares. Passive Foreign Investment Company Considerations ASML￿believes￿it￿was￿not￿a￿Passive￿Foreign￿Investment￿Company￿("PFIC")￿for￿U.S.￿federal￿income￿tax￿purposes￿in￿2012 and￿that￿it￿will￿not￿be￿a￿PFIC￿in￿2013.￿However,￿as￿PFIC￿status￿is￿a￿factual￿matter￿that￿must￿be￿determined￿annually￿at the￿close￿of￿each￿taxable￿year,￿there￿can￿be￿no￿certainty￿as￿to￿ASML’s￿actual￿PFIC￿status￿in￿any￿particular￿year￿until the￿close￿of￿the￿taxable￿year￿in￿question.￿ASML￿has￿not￿conducted￿a￿detailed￿study￿at￿this￿time￿to￿confirm￿its￿non- PFIC￿status.￿If￿ASML￿were￿treated￿as￿a￿PFIC￿in￿any￿year￿during￿which￿a￿United￿States￿Holder￿owned￿common￿shares, certain￿adverse￿tax￿consequences￿could￿apply.￿Investors￿should￿consult￿their￿tax￿advisors￿with￿respect￿to￿any￿PFIC considerations. Taxation￿of￿Dividends United￿States￿Holders￿should￿generally￿include￿in￿gross￿income,￿as￿foreign-source￿dividend￿income￿the￿gross￿amount of￿any￿non-liquidating￿distribution￿(before￿reduction￿for￿Dutch￿withholding￿taxes)￿ASML￿makes￿out￿of￿its￿current￿or accumulated￿earnings￿and￿profits￿(as￿determined￿for￿United￿States￿federal￿income￿tax￿purposes)￿when￿the￿distribution is￿actually￿or￿constructively￿received￿by￿the￿United￿States￿Holder.￿Distributions￿will￿not￿be￿eligible￿for￿the￿dividends- received￿deduction￿generally￿allowed￿to￿United￿States￿corporations￿in￿respect￿of￿dividends￿received￿from￿other￿United States￿corporations.￿The￿amount￿of￿the￿dividend￿distribution￿includible￿in￿income￿of￿a￿United￿States￿Holder￿should￿be the￿U.S.￿dollar￿value￿of￿the￿foreign￿currency￿(e.g.￿euros)￿paid,￿determined￿by￿the￿spot￿rate￿of￿exchange￿on￿the￿date￿of￿the distribution,￿regardless￿of￿whether￿the￿payment￿is￿in￿fact￿converted￿into￿U.S.￿dollars.￿Distributions￿in￿excess￿of￿current and￿accumulated￿earnings￿and￿profits,￿as￿determined￿for￿United￿States￿federal￿income￿tax￿purposes,￿will￿be￿treated as￿a￿non-taxable￿return￿of￿capital￿to￿the￿extent￿of￿the￿United￿States￿Holder’s￿U.S.￿tax￿basis￿in￿the￿Ordinary￿Shares￿and ASML￿ANNUAL￿REPORT￿2012 61 thereafter￿as￿taxable￿capital￿gain.￿ASML￿presently￿does￿not￿maintain￿calculations￿of￿its￿earnings￿and￿profits￿under￿United States￿federal￿income￿tax￿principles.￿If￿ASML￿does￿not￿report￿to￿a￿United￿States￿Holder￿the￿portion￿of￿a￿distribution that￿exceeds￿earnings￿and￿profits,￿the￿distribution￿will￿generally￿be￿taxable￿as￿a￿dividend￿even￿if￿that￿distribution￿would otherwise￿be￿treated￿as￿a￿non-taxable￿return￿of￿capital￿or￿as￿capital￿gain￿under￿the￿rules￿described￿above. Subject￿to￿limitations￿provided￿in￿the￿United￿States￿Internal￿Revenue￿Code,￿a￿United￿States￿Holder￿may￿generally deduct￿from￿its￿United￿States￿federal￿taxable￿income,￿or￿credit￿against￿its￿United￿States￿federal￿income￿tax￿liability, the￿amount￿of￿qualified￿Dutch￿withholding￿taxes.￿However,￿Dutch￿withholding￿tax￿may￿be￿credited￿only￿if￿the￿United States￿Holder￿does￿not￿claim￿a￿deduction￿for￿any￿Dutch￿or￿other￿non-United￿States￿taxes￿paid￿or￿accrued￿in￿that￿year. In￿addition,￿Dutch￿dividend￿withholding￿taxes￿will￿likely￿not￿be￿creditable￿against￿the￿United￿States￿Holder’s￿United States￿tax￿liability￿to￿the￿extent￿ASML￿is￿not￿required￿to￿pay￿over￿the￿amount￿withheld￿to￿the￿Dutch￿Tax￿Administration. Currently,￿a￿Dutch￿corporation￿that￿receives￿dividends￿from￿qualifying￿non-Dutch￿subsidiaries￿may￿credit￿source￿country tax￿withheld￿from￿those￿dividends￿against￿Dutch￿withholding￿tax￿imposed￿on￿a￿dividend￿paid￿by￿a￿Dutch￿corporation,￿up to￿a￿maximum￿of￿3.0￿percent￿of￿the￿dividend￿paid￿by￿the￿Dutch￿corporation.￿The￿credit￿reduces￿the￿amount￿of￿dividend withholding￿that￿ASML￿is￿required￿to￿pay￿to￿the￿Dutch￿Tax￿Administration￿but￿does￿not￿reduce￿the￿amount￿of￿tax￿ASML is￿required￿to￿withhold￿from￿dividends. For￿U.S.￿foreign￿tax￿credit￿purposes,￿dividends￿paid￿by￿ASML￿generally￿will￿be￿treated￿as￿foreign-source￿income￿and￿as ‘passive￿category￿income’￿(or￿in￿the￿case￿of￿certain￿holders,￿as￿‘general￿category￿income’).￿Gains￿or￿losses￿realized￿by a￿United￿States￿Holder￿on￿the￿sale￿or￿exchange￿of￿Ordinary￿Shares￿generally￿will￿be￿treated￿as￿U.S.-source￿gain￿or￿loss. The￿rules￿governing￿the￿foreign￿tax￿credit￿are￿complex￿and￿ASML￿suggests￿that￿each￿United￿States￿Holder￿consult￿his￿or her￿own￿tax￿advisor￿to￿determine￿whether,￿and￿to￿what￿extent,￿a￿foreign￿tax￿credit￿will￿be￿available. Dividends￿received￿by￿a￿United￿States￿Holder￿will￿generally￿be￿taxed￿at￿ordinary￿income￿tax￿rates.￿However,￿the￿Jobs and￿Growth￿Tax￿Reconciliation￿Act￿of￿2003,￿as￿amended￿by￿the￿Tax￿Increase￿and￿Prevention￿Act￿of￿2005￿and￿the￿Tax Relief,￿Unemployment￿Insurance￿Reauthorization,￿and￿Job￿Creation￿Act￿of￿2010￿￿reduce￿to￿15.0￿percent￿the￿maximum tax￿rate￿for￿certain￿dividends￿received￿by￿individuals￿through￿taxable￿years￿beginning￿on￿or￿before￿December￿31,￿2012, so￿long￿as￿certain￿exclusions￿do￿not￿apply￿and￿the￿stock￿has￿been￿held￿for￿at￿least￿60￿days￿during￿the￿121-day￿period beginning￿60￿days￿before￿the￿ex-dividend￿date.￿Dividends￿received￿from￿‘qualified￿foreign￿corporations’￿generally￿qualify for￿the￿reduced￿rate.￿A￿non-United￿States￿corporation￿(other￿than￿a￿passive￿foreign￿investment￿company)￿generally￿will be￿considered￿to￿be￿a￿qualified￿foreign￿corporation￿if:￿(i)￿the￿shares￿of￿the￿non-United￿States￿corporation￿are￿readily tradable￿on￿an￿established￿securities￿market￿in￿the￿United￿States￿or￿(ii)￿the￿non-United￿States￿corporation￿is￿eligible￿for the￿benefits￿of￿a￿comprehensive￿income￿tax￿treaty￿with￿the￿United￿States￿that￿has￿been￿identified￿as￿a￿qualifying￿treaty and￿contains￿an￿exchange￿of￿information￿program.￿Individual￿United￿States￿Holders￿should￿consult￿their￿tax￿advisors regarding￿the￿impact￿of￿this￿provision￿on￿their￿particular￿situations. Dividends￿paid￿by￿ASML￿generally￿will￿constitute￿‘portfolio￿income’￿for￿purposes￿of￿the￿limitations￿on￿the￿use￿of￿passive activity￿losses￿(and,￿therefore,￿generally￿may￿not￿be￿offset￿by￿passive￿activity￿losses)￿and￿as￿‘investment￿income’￿for purposes￿of￿the￿limitation￿on￿the￿deduction￿of￿investment￿interest￿expense. Taxation￿on￿Sale￿or￿Other￿Disposition￿of￿Ordinary￿Shares Upon￿a￿sale￿or￿other￿disposition￿of￿Ordinary￿Shares,￿a￿United￿States￿Holder￿will￿generally￿recognize￿capital￿gain￿or￿loss for￿United￿States￿federal￿income￿tax￿purposes￿in￿an￿amount￿equal￿to￿the￿difference￿between￿the￿amount￿realized,￿if￿paid in￿U.S.￿dollars,￿or￿the￿U.S.￿dollar￿value￿of￿the￿amount￿realized￿(determined￿at￿the￿spot￿rate￿on￿the￿settlement￿date￿of￿the sale)￿if￿proceeds￿are￿paid￿in￿currency￿other￿than￿the￿U.S.￿dollar,￿as￿the￿case￿may￿be,￿and￿the￿United￿States￿Holder’s￿U.S. tax￿basis￿(determined￿in￿U.S.￿dollars)￿in￿such￿Ordinary￿Shares.￿Generally,￿the￿capital￿gain￿or￿loss￿will￿be￿long-term￿capital gain￿or￿loss￿if￿the￿holding￿period￿of￿the￿United￿States￿Holder￿in￿the￿Ordinary￿Shares￿exceeds￿one￿year￿at￿the￿time￿of￿the sale￿or￿other￿disposition.￿The￿deductibility￿of￿capital￿losses￿is￿subject￿to￿limitations￿for￿United￿States￿federal￿income￿tax purposes.￿Gain￿or￿loss￿from￿the￿sale￿or￿other￿disposition￿of￿Ordinary￿Shares￿generally￿will￿be￿treated￿as￿United￿States source￿income￿or￿loss￿for￿United￿States￿foreign￿tax￿credit￿purposes.￿Generally,￿any￿gain￿or￿loss￿resulting￿from￿currency fluctuations￿during￿the￿period￿between￿the￿date￿of￿the￿sale￿of￿the￿Ordinary￿Shares￿and￿the￿date￿the￿sale￿proceeds￿are converted￿into￿U.S.￿dollars￿will￿be￿treated￿as￿ordinary￿income￿or￿loss￿from￿sources￿within￿the￿United￿States.￿Each￿United States￿Holder￿should￿consult￿his￿or￿her￿tax￿advisor￿with￿regard￿to￿the￿translation￿rules￿applicable￿when￿computing￿its adjusted￿U.S.￿tax￿basis￿and￿the￿amount￿realized￿upon￿a￿sale￿or￿other￿disposition￿of￿its￿Ordinary￿Shares￿if￿purchased￿in, or￿sold￿or￿disposed￿of￿for,￿a￿currency￿other￿than￿U.S.￿dollar. Information￿Reporting￿and￿Backup￿Withholding Information￿returns￿may￿be￿filed￿with￿the￿IRS￿in￿connection￿with￿payments￿on￿the￿Ordinary￿Shares￿or￿proceeds￿from￿a sale,￿redemption￿or￿other￿disposition￿of￿the￿Ordinary￿Shares.￿A￿‘backup￿withholding’￿tax￿may￿be￿applied￿to,￿and￿withheld from,￿these￿payments￿if￿the￿beneficial￿owner￿fails￿to￿provide￿a￿correct￿taxpayer￿identification￿number￿to￿the￿paying￿agent and￿to￿comply￿with￿certain￿certification￿procedures￿or￿otherwise￿establish￿an￿exemption￿from￿backup￿withholding.￿Any ASML￿ANNUAL￿REPORT￿2012 62 amounts￿withheld￿under￿the￿backup￿withholding￿rules￿might￿be￿refunded￿(or￿credited￿against￿the￿beneficial￿owner’s United￿States￿federal￿income￿tax￿liability,￿if￿any)￿depending￿on￿the￿facts￿and￿provided￿that￿the￿required￿information￿is furnished￿to￿the￿IRS. The￿discussion￿set￿out￿above￿is￿included￿for￿general￿information￿only￿and￿may￿not￿be￿applicable￿depending￿upon￿a holder’s￿particular￿situation.￿Holders￿should￿consult￿their￿tax￿advisors￿with￿respect￿to￿the￿tax￿consequences￿to￿them￿of the￿purchase,￿ownership￿and￿disposition￿of￿shares￿including￿the￿tax￿consequences￿under￿state,￿local￿and￿other￿tax￿laws and￿the￿possible￿effects￿of￿changes￿in￿United￿States￿federal￿and￿other￿tax￿laws. F. Dividends and Paying Agents Not￿applicable. G. Statement by Experts Not￿applicable. H. Documents on Display We￿are￿subject￿to￿certain￿reporting￿requirements￿of￿the￿US￿Securities￿Exchange￿Act￿of￿1934￿(the￿"Exchange￿Act").￿As a￿"foreign￿private￿issuer",￿we￿are￿exempt￿from￿the￿rules￿under￿the￿Exchange￿Act￿prescribing￿certain￿disclosure￿and procedural￿requirements￿for￿proxy￿solicitations,￿and￿our￿officers,￿directors￿and￿principal￿shareholders￿are￿exempt￿from the￿reporting￿and￿"short-swing"￿profit￿recovery￿provisions￿contained￿in￿Section￿16￿of￿the￿Exchange￿Act,￿with￿respect to￿their￿purchases￿and￿sales￿of￿shares.￿In￿addition,￿we￿are￿not￿required￿to￿file￿reports￿and￿financial￿statements￿with the￿Commission￿as￿frequently￿or￿as￿promptly￿as￿companies￿that￿are￿not￿foreign￿private￿issuers￿whose￿securities￿are registered￿under￿the￿Exchange￿Act.￿However,￿we￿are￿required￿to￿file￿with￿the￿Commission,￿within￿four￿months￿after the￿end￿of￿each￿fiscal￿year,￿an￿annual￿report￿on￿Form￿20-F￿containing￿financial￿statements￿audited￿by￿an￿independent accounting￿firm￿and￿interactive￿data￿comprising￿financial￿statements￿in￿extensible￿business￿reporting￿language. We￿publish￿unaudited￿interim￿financial￿information￿after￿the￿end￿of￿each￿quarter.￿We￿furnish￿this￿quarterly￿financial information￿to￿the￿Commission￿under￿cover￿of￿a￿Form￿6-K. Documents￿we￿file￿with￿the￿Commission￿are￿publicly￿available￿at￿its￿public￿reference￿room￿at￿100￿F￿Street,￿N.E., Washington,￿DC￿20549.￿The￿Commission￿also￿maintains￿a￿website￿that￿contains￿reports￿and￿other￿information regarding￿registrants￿that￿are￿required￿to￿file￿electronically￿with￿the￿Commission.￿The￿address￿of￿this￿website￿is￿http:// www.sec.gov.￿Please￿call￿the￿Commission￿at￿1-800-SEC-0330￿for￿further￿information￿on￿the￿operation￿of￿the￿public reference￿facilities. I. Subsidiary Information See￿Item￿4.C.￿"Organizational￿Structure". Item 11 Quantitative and Qualitative Disclosures About Market Risk We￿are￿exposed￿to￿certain￿financial￿risks￿such￿as￿market￿risk￿(including￿foreign￿currency￿exchange￿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.￿To￿mitigate￿the￿risk￿that￿any￿of￿our￿counterparties￿in￿hedging transactions￿is￿unable￿to￿meets￿its￿obligations,￿we￿only￿enter￿into￿transactions￿with￿a￿limited￿number￿of￿major￿financial institutions￿that￿have￿high￿credit￿ratings￿and￿closely￿monitor￿the￿creditworthiness￿of￿our￿counterparties.￿Concentration risk￿is￿mitigated￿by￿limiting￿the￿exposure￿to￿a￿single￿counterparty.￿Our￿risk￿management￿program￿focuses￿appropriately on￿the￿current￿environment￿of￿uncertainty￿in￿the￿financial￿markets,￿especially￿in￿the￿euro-zone. Foreign￿currency￿risk￿management Our￿sales￿are￿predominately￿denominated￿in￿euros.￿Exceptions￿may￿occur￿on￿a￿customer￿by￿customer￿basis.￿Our￿cost￿of sales￿and￿other￿expenses￿are￿mainly￿denominated￿in￿euros,￿to￿a￿certain￿extent￿in￿U.S.￿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 ASML￿ANNUAL￿REPORT￿2012 63 the￿use￿of￿foreign￿exchange￿contracts.￿It￿is￿our￿policy￿not￿to￿hedge￿currency￿translation￿exposures￿resulting￿from￿net equity￿investments￿in￿foreign￿subsidiaries. Details￿of￿the￿forward￿foreign￿exchange￿contracts￿and￿hedging￿activities￿are￿included￿in￿Note￿3￿of￿our￿consolidated financial￿statements. 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￿Eurobond￿due￿to changes￿in￿market￿interest￿rates,￿thereby￿offsetting￿the￿variability￿of￿future￿interest￿receipts￿on￿part￿of￿our￿cash￿and￿cash equivalents. 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. Details￿of￿the￿interest￿rate￿swaps￿and￿hedging￿activities￿are￿included￿in￿Note￿3￿of￿the￿consolidated￿financial￿statements. Financial￿instruments We￿use￿foreign￿exchange￿contracts￿to￿manage￿our￿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￿financial￿instruments: (in thousands) Forward￿foreign￿exchange￿contracts¹ Interest￿rate￿swaps² As of December 31 Notional amount EUR 262,146 624,900 Fair Value EUR 16,805 124,050 Notional amount EUR 389,579 641,500 Fair Value EUR (23,999) 109,991 2012 2011 1 Relates￿to￿forward￿contracts￿assigned￿as￿a￿hedge￿to￿forecasted￿sales￿and￿purchase￿transactions￿and￿to￿monetary￿assets￿and￿liabilities,￿mainly￿in￿U.S. dollar￿and￿Japanese￿Yen. 2 Relates￿to￿interest￿rate￿swaps￿assigned￿as￿a￿hedge￿to￿interest￿bearing￿assets￿and￿liabilities,￿mainly￿related￿to￿the￿Eurobond;￿the￿fair￿value￿of￿the interest￿rate￿swaps￿includes￿accrued￿interest. The￿valuation￿technique￿used￿to￿determine￿the￿fair￿value￿of￿forward￿foreign￿exchange￿contracts￿(used￿for￿hedging purposes)￿approximates￿the￿Net￿Present￿Value￿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 Net￿Present￿Value￿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. Sensitivity￿analysis￿financial￿instruments Foreign currency sensitivity We￿are￿mainly￿exposed￿to￿fluctuations￿in￿exchange￿rates￿between￿the￿euro￿and￿the￿U.S.￿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￿other￿comprehensive￿income,￿as￿shown. 2012 2011 (in thousands) U.S.￿dollar Japanese￿yen Other￿currencies Total Impact on income before income taxes EUR (5,646) 465 (7,674) (12,855) Impact on other comprehensive income EUR 13,669 (3,218) - 10,451 Impact on income before income taxes EUR (2,317) (902) (3,628) (6,847) Impact on other comprehensive income EUR 17,293 (6,255) - 11,038 ASML￿ANNUAL￿REPORT￿2012 64 It￿is￿our￿policy￿to￿limit￿the￿effects￿of￿currency￿exchange￿rate￿fluctuations￿on￿our￿consolidated￿statements￿of￿operations. The￿increased￿effect￿on￿income￿before￿income￿taxes￿in￿2012￿compared￿with￿2011￿reflects￿our￿higher￿net￿exposure at￿year￿end.￿The￿negative￿effect￿on￿income￿before￿income￿taxes￿as￿presented￿in￿the￿table￿above￿for￿2012￿is￿mainly attributable￿to￿timing￿differences￿between￿the￿arising￿and￿hedging￿of￿exposures. The￿effects￿of￿the￿fair￿value￿movements￿of￿cash￿flow￿hedges,￿entered￿into￿for￿U.S.￿dollar￿and￿Japanese￿yen￿transactions are￿recognized￿in￿other￿comprehensive￿income.￿The￿decreased￿U.S.￿dollar￿and￿Japanese￿yen￿effect￿on￿other comprehensive￿income￿in￿2012￿compared￿with￿2011￿is￿the￿result￿of￿a￿decrease￿in￿outstanding￿sales￿and￿purchase 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￿other￿comprehensive￿income. 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￿balance￿sheet￿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￿other￿comprehensive￿income.￿A positive￿amount￿indicates￿an￿increase￿in￿income￿before￿income￿taxes￿and￿other￿comprehensive￿income. Effect￿of￿a￿1.0￿percent￿point￿increase￿in￿interest￿rates (in thousands) 2012 2011 Impact on income before income taxes EUR 20,706 Impact on other comprehensive income EUR 1,488 Impact on income before income taxes EUR 21,020 Impact on other comprehensive income EUR 1,691 The￿positive￿effect￿on￿income￿before￿income￿taxes￿mainly￿relates￿to￿our￿cash￿and￿cash￿equivalents￿and￿short-term investments.￿The￿positive￿effect￿on￿other￿comprehensive￿income,￿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￿other￿comprehensive￿income￿due￿to￿the￿current￿interest￿rates. See￿Note￿3￿to￿our￿consolidated￿financial￿statements￿for￿more￿information￿on￿our￿financial￿risk￿management. Item 12 Description of Securities Other Than Equity Securities Not￿applicable. ASML￿ANNUAL￿REPORT￿2012 65 ASML￿ANNUAL￿REPORT￿2012 66 Part II Item 13 Defaults, Dividend Arrearages and Delinquencies None. Item 14 Material Modifications to the Rights of Security Holders and Use of Proceeds None. Item 15 Controls and Procedures Disclosure Controls and Procedures As￿of￿December￿31,￿2012,￿the￿management￿of￿ASML￿conducted￿an￿evaluation,￿under￿the￿supervision￿and￿with￿the participation￿of￿ASML’s￿Chief￿Executive￿Officer￿and￿Chief￿Financial￿Officer,￿of￿the￿effectiveness￿of￿the￿design￿and operation￿of￿ASML’s￿disclosure￿controls￿and￿procedures￿(as￿defined￿in￿Rule￿13a-15(e)￿under￿the￿Exchange￿Act).￿Based on￿such￿evaluation,￿ASML’s￿Chief￿Executive￿Officer￿and￿Chief￿Financial￿Officer￿have￿concluded￿that,￿as￿of￿December￿31, 2012,￿ASML’s￿disclosure￿controls￿and￿procedures￿are￿effective￿in￿recording,￿processing,￿summarizing￿and￿reporting,￿on a￿timely￿basis,￿information￿required￿to￿be￿disclosed￿by￿ASML￿in￿the￿reports￿that￿it￿files￿or￿submits￿under￿the￿Exchange Act￿and￿are￿effective￿in￿ensuring￿that￿information￿required￿to￿be￿disclosed￿by￿ASML￿is￿accumulated￿and￿communicated to￿ASML’s￿management,￿including￿ASML’s￿Chief￿Executive￿Officer￿and￿Chief￿Financial￿Officer,￿as￿appropriate￿to￿allow timely￿decisions￿regarding￿required￿disclosure. Management's Report on Internal Control over Financial Reporting ASML’s￿management￿is￿responsible￿for￿establishing￿and￿maintaining￿adequate￿internal￿control￿over￿financial￿reporting, as￿defined￿in￿Rule￿13a-15(f)￿under￿the￿Exchange￿Act,￿for￿ASML.￿Under￿the￿supervision￿and￿with￿the￿participation of￿ASML’s￿Chief￿Executive￿Officer￿and￿Chief￿Financial￿Officer,￿ASML’s￿management￿conducted￿an￿evaluation￿of￿the effectiveness￿of￿ASML’s￿internal￿control￿over￿financial￿reporting￿as￿of￿December￿31,￿2012￿based￿upon￿the￿framework in￿"Internal￿Control￿–￿Integrated￿Framework"￿issued￿by￿the￿Committee￿of￿Sponsoring￿Organizations￿of￿the￿Treadway Commission.￿Based￿on￿that￿evaluation,￿management￿has￿concluded￿that￿ASML’s￿internal￿control￿over￿financial￿reporting was￿effective￿as￿of￿December￿31,￿2012￿at￿providing￿reasonable￿assurance￿regarding￿the￿reliability￿of￿financial￿reporting and￿the￿preparation￿of￿financial￿statements￿for￿external￿purposes￿in￿conformity￿with￿US￿GAAP. Deloitte￿Accountants￿B.V.,￿an￿independent￿registered￿public￿accounting￿firm,￿has￿audited￿the￿consolidated￿financial statements￿included￿in￿Item￿18￿"Financial￿Statements"￿and,￿as￿part￿of￿the￿audit,￿has￿issued￿a￿report,￿included￿herein,￿on the￿effectiveness￿of￿ASML’s￿internal￿control￿over￿financial￿reporting. Changes in Internal Control over Financial Reporting During￿the￿year￿ended￿December￿31,￿2012￿there￿have￿been￿no￿changes￿in￿our￿internal￿control￿over￿financial￿reporting that￿have￿materially￿affected,￿or￿are￿reasonably￿likely￿to￿materially￿affect,￿our￿internal￿control￿over￿financial￿reporting. Inherent Limitations of Disclosure Controls and Procedures in Internal Control over Financial Reporting It￿should￿be￿noted￿that￿any￿system￿of￿controls,￿however￿well-designed￿and￿operated,￿can￿provide￿only￿reasonable,￿and not￿absolute,￿assurance￿that￿the￿objectives￿of￿the￿system￿will￿be￿met.￿In￿addition,￿the￿design￿of￿any￿control￿system￿is based￿in￿part￿upon￿certain￿assumptions￿about￿the￿likelihood￿of￿future￿events. Item 16    A. Audit Committee Financial Expert Our￿Supervisory￿Board￿has￿determined￿that￿effective￿March￿18,￿2004,￿Mr.￿Fritz￿Fröhlich,￿an￿independent￿member￿of￿the Supervisory￿Board,￿qualifies￿as￿the￿Audit￿Committee￿Financial￿Expert.￿See￿also￿Item￿6A. ASML￿ANNUAL￿REPORT￿2012 67 B. Code of Ethics Within￿ASML,￿we￿use￿a￿code￿of￿ethics￿and￿conduct￿("Code￿of￿Conduct"),￿that￿focuses￿on￿the￿following￿five￿key￿areas: show￿respect￿for￿people￿and￿planet; 1. 2. operate￿with￿integrity; 3. preserve￿intellectual￿property￿and￿other￿assets; 4. manage￿exposure￿by￿following￿processes;￿and 5. adhere￿to￿the￿ASML￿business￿principles￿and￿applicable￿laws,￿and￿speak￿up. The￿five￿key￿areas￿of￿the￿Code￿of￿Conduct￿are￿translated￿into￿a￿set￿of￿Business￿Principles,￿an￿internal￿set￿of￿practical rules￿and￿procedures￿that￿support￿the￿ASML￿employees￿in￿their￿the￿day-to-day￿activities￿and￿decision￿making￿process. The￿Code￿of￿Conduct￿is￿available￿on￿our￿website￿(www.asml.com). Furthermore,￿in￿order￿to￿enhance￿adherence￿to￿and￿enforcement￿of￿the￿Code￿of￿Conduct￿and￿internal￿Business Principles,￿we￿use￿a￿reporting￿procedure￿that￿provides￿for￿whistleblower￿protection￿when￿reporting￿fraud￿and￿other breaches￿of￿the￿Code￿of￿Conduct￿and￿Business￿Principles.￿The￿reporting￿procedure￿is￿also￿posted￿on￿our￿website (www.asml.com). C. Principal Accountant Fees and Services Deloitte￿Accountants￿B.V.￿has￿served￿as￿our￿independent￿registered￿public￿accounting￿firm￿for￿each￿of￿the￿three￿financial years￿up￿to￿December￿31,￿2012.￿The￿following￿table￿sets￿out￿the￿aggregate￿fees￿for￿professional￿audit￿services￿and￿other services￿rendered￿by￿Deloitte￿Accountants￿B.V.￿and￿its￿member￿firms￿and/or￿affiliates￿in￿2012￿and￿2011: Year ended December 31 (in thousands) Audit￿fees￿in￿relation￿to￿annual￿reports Other￿audit￿fees Audit-related￿fees Tax￿fees Other ￿ Principal accountant fees and services 2012 Deloitte Accountants B.V. EUR 1,002 - 149 - - ￿ ￿ 1,151 Deloitte Network EUR - 352 - 353 247 ￿ 952 2011 Deloitte Accountants B.V. EUR 1,022 40 49 - - ￿ ￿ 1,111 Deloitte Network EUR - 382 - 322 - ￿ 704 Total EUR 1,002 352 149 353 247 2,103 Total EUR 1,022 422 49 322 - 1,815 Audit￿fees￿and￿other￿audit￿fees Audit￿fees￿primarily￿relate￿to￿the￿audit￿of￿our￿annual￿consolidated￿financial￿statements￿set￿out￿in￿our￿Annual￿Report￿on Form￿20-F,￿our￿Statutory￿Annual￿Report,￿agreed￿upon￿procedures￿on￿our￿quarterly￿financial￿results￿and￿services￿related to￿statutory￿and￿regulatory￿filings￿of￿ASML￿Holding￿N.V.￿and￿its￿subsidiaries. Audit-related￿fees Audit-related￿fees￿mainly￿related￿to￿various￿audit￿services￿not￿related￿to￿the￿ASML's￿consolidated￿financial￿statements. Tax￿fees Tax￿fees￿can￿be￿detailed￿as￿follows: Year ended December 31 (in thousands) Corporate￿Income￿Tax￿compliance￿services Tax￿assistance￿for￿expatriate￿employees Other￿tax￿advisory￿and￿compliance ￿ Tax fees 2012 EUR 123 79 151 ￿ 353 2011 EUR 73 179 70 ￿ 322 The￿Audit￿Committee￿has￿approved￿the￿external￿audit￿plan￿and￿related￿audit￿fees￿for￿the￿year￿2012.￿The￿Audit Committee￿has￿adopted￿a￿policy￿regarding￿audit￿and￿non-audit￿services,￿in￿consultation￿with￿Deloitte￿Accountants￿B.V. This￿policy￿ensures￿the￿independence￿of￿our￿auditors￿by￿expressly￿setting￿forth￿all￿services￿that￿the￿auditors￿may￿not perform￿and￿reinforcing￿the￿principle￿of￿independence￿regardless￿of￿the￿type￿of￿work￿performed.￿Certain￿non-audit services,￿such￿as￿certain￿tax-related￿services￿and￿acquisition￿advisory￿services,￿are￿permitted.￿The￿Audit￿Committee￿pre- ASML￿ANNUAL￿REPORT￿2012 68 approves￿all￿audit￿and￿non-audit￿services￿not￿specifically￿prohibited￿under￿this￿policy￿and￿reviews￿the￿annual￿external audit￿plan￿and￿any￿subsequent￿engagements. The￿Audit￿Committee￿will￿monitor￿compliance￿with￿the￿new￿Dutch￿rules￿on￿non-audit￿services￿provided￿by￿our￿auditor, which￿outlines￿strict￿separation￿of￿audit￿and￿advisory￿services￿for￿Dutch￿public￿interest￿entities.￿Furthermore,￿we￿will evaluate￿the￿implication￿of￿the￿mandatory￿firm￿rotation￿(not￿applicable￿to￿financial￿years￿before￿January￿1,￿2016)￿which applies￿to￿all￿Dutch￿public￿interest￿entities. D. Exemptions from the Listing Standards for Audit Committees Not￿applicable. E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers 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￿25,￿2012,￿the￿General￿Meeting￿of￿Shareholders￿authorized￿the￿repurchase￿of￿up￿to￿a￿maximum￿of￿two￿times￿10.0 percent￿of￿our￿issued￿share￿capital￿as￿of￿the￿date￿of￿authorization￿through￿October￿25,￿2013. On￿January￿19,￿2011,￿we￿announced￿our￿intention￿to￿repurchase￿up￿to￿EUR￿1.0￿billion￿of￿our￿own￿shares￿within￿the next￿two￿years.￿On￿January￿18,￿2012,￿we￿announced￿to￿increase￿the￿size￿of￿the￿program￿to￿a￿maximum￿amount￿of￿EUR 1,130￿million.￿During￿the￿period￿from￿January￿20,￿2011￿up￿to￿and￿including￿November￿22,￿2012,￿when￿the￿program￿was completed,￿we￿had￿purchased￿36,952,634￿of￿our￿shares￿at￿an￿average￿price￿of￿EUR￿30.58￿per￿share.￿Of￿the￿shares purchased,￿24,627,581￿have￿been￿cancelled￿with￿the￿remaining￿shares￿intended￿to￿be￿cancelled￿in￿2013. Furthermore,￿on￿January￿18,￿2012,￿we￿announced￿our￿intention￿to￿purchase￿up￿to￿2.2￿million￿of￿additional￿shares￿during 2012￿for￿the￿purpose￿of￿covering￿outstanding￿employee￿stock￿and￿stock￿option￿plans.￿During￿the￿period￿from￿November 22,￿2012￿up￿to￿and￿including￿December￿14,￿2012,￿when￿the￿program￿was￿completed,￿a￿total￿number￿of￿2.2￿million￿shares was￿purchased￿for￿a￿total￿amount￿of￿EUR￿105.2￿million￿at￿an￿average￿price￿of￿EUR￿47.81￿per￿share.￿These￿shares￿will￿be held￿as￿treasury￿shares￿pending￿delivery￿pursuant￿to￿such￿plans. Both￿programs￿had￿been￿suspended￿between￿July￿10,￿2012￿and￿October￿18,￿2012￿following￿the￿announcement￿of￿the Customer￿Co-Investment￿Program￿on￿July￿9,￿2012. The￿following￿table￿provides￿a￿summary￿of￿shares￿repurchased￿by￿ASML￿in￿2012￿(excluding￿the￿effect￿of￿the￿Synthetic Share￿Buyback): Period January￿20￿-￿31,￿2012 February￿1￿-￿28,￿2012 March￿1￿-￿31,￿2012 April￿1￿-￿30,￿2012 May￿2￿-￿31,￿2012 June￿1￿-￿30,￿2012 July￿1￿-￿29,￿2012 August￿1￿-￿31,￿2012 September￿1￿-￿30,￿2012 October￿3￿-￿31,￿2012 November￿1￿-￿30,￿2012 December￿1￿-￿31,￿2012 ￿ Total Total number of shares purchased 2,132,366 1,025,407 949,726 654,169 1,219,480 1,133,550 428,000 - - 1,153,112 3,240,099 1,542,149 ￿ 13,478,058 Average price paid per Share (EUR) 32.65 34.71 35.76 37.18 36.88 38.61 40.65 - - 41.86 44.10 48.24 ￿ 39.71 Total number of shares purchased as part of publicly announced plans or programs 2,132,366 3,157,773 4,107,499 4,761,668 5,981,148 7,114,698 7,542,698 7,542,698 7,542,698 8,695,810 11,935,909 13,478,058 ￿ ￿ Maximum value of shares that may yet be purchased under the program1 (EUR) 360,369,363 324,780,615 290,820,741 266,501,698 221,530,029 177,764,616 160,366,940 160,366,940 160,366,940 112,099,413 - - ￿ ￿ Maximum number of shares that may yet be purchased under the program2 2,200,000 2,200,000 2,200,000 2,200,000 2,200,000 2,200,000 2,200,000 2,200,000 2,200,000 2,200,000 1,542,149 - ￿ ￿ 1 Program￿to￿purchase￿shares￿up￿to￿a￿maximum￿amount￿of￿EUR￿1,130￿million.￿We￿have￿or￿will￿cancel￿these￿shares. 2 Program￿to￿purchase￿up￿to￿2.2￿million￿shares￿for￿the￿purpose￿of￿covering￿outstanding￿employee￿stock￿and￿stock￿option￿plans. At￿the￿EGM￿held￿on￿September￿7,￿2012,￿a￿resolution￿was￿passed￿to￿amend￿the￿Articles￿of￿Association￿in￿connection￿with the￿Synthetic￿Share￿Buyback￿to￿be￿effected￿in￿connection￿with￿the￿Customer￿Co-Investment￿Program.￿We￿refer￿to￿Item 10￿B.￿"Memorandum￿and￿Articles￿of￿Association"￿for￿a￿summary￿description￿of￿these￿amendments.￿On￿November￿24, ASML￿ANNUAL￿REPORT￿2012 69 2012,￿we￿effectuated￿the￿amendments￿consisting￿of￿a￿repayment￿to￿shareholders￿(excluding￿participating￿customers)￿of EUR￿9.18￿per￿ordinary￿share￿and￿the￿exchange￿of￿each￿100￿ASML￿ordinary￿shares￿for￿77￿ASML￿ordinary￿shares. As￿a￿result￿of￿these￿amendments,￿which￿in￿substance￿constitute￿a￿Synthetic￿Share￿Buyback,￿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. Period Share￿Buybacks Synthetic￿Share￿Buyback Share￿Buybacks Share￿Buybacks Share￿Buybacks Synthetic￿Share￿Buyback Share￿Buybacks Total￿/￿Average1 Year 2006 2007 2007 2008 2011 2012 2012 Total amount paid (in EUR millions) 677.2 1,011.9 359.8 87.6 700.0 3,728.3 535.2 3,371.7 Total Number of Shares Purchased 40,385,139 55,093,409 17,000,000 5,000,000 25,674,576 93,411,216 13,478,058 156,631,182 ￿ Average Price Paid per Share (EUR) 16.77 18.37 21.16 17.52 27.26 39.91 39.71 21.53 Reduction of Shares Outstanding vs Beginning of Year (Percentage) 8.3 11.5 3.6 1.1 5.9 22.6 3.3 32.3 1 Totals,￿average￿and￿percentage￿are￿excluding￿the￿synthetic￿share￿buyback￿executed￿in￿2012￿as￿part￿of￿our￿Customer￿Co-Investment￿Program.￿The percentage￿represents￿the￿reduction￿of￿shares￿outstanding￿compared￿to￿January￿1,￿2006. F. Change in Registrant’s Certifying Accountant Not￿applicable. G. Corporate Governance NASDAQ￿rules￿provide￿that￿foreign￿private￿issuers￿may￿follow￿home￿country￿practice￿in￿lieu￿of￿the￿NASDAQ￿corporate governance￿standards￿subject￿to￿certain￿exceptions￿and￿except￿to￿the￿extent￿that￿such￿exemptions￿would￿be￿contrary￿to US￿federal￿securities￿laws.￿The￿practices￿followed￿by￿ASML￿in￿lieu￿of￿NASDAQ￿rules￿are￿described￿below: • ASML￿does￿not￿follow￿NASDAQ’s￿quorum￿requirements￿applicable￿to￿meetings￿of￿ordinary￿shareholders.￿In accordance￿with￿Dutch￿law￿and￿Dutch￿generally￿accepted￿business￿practice,￿ASML’s￿Articles￿of￿Association￿provide that￿there￿are￿no￿quorum￿requirements￿generally￿applicable￿to￿General￿Meetings￿of￿Shareholders. • ASML￿does￿not￿follow￿NASDAQ’s￿requirements￿regarding￿the￿provision￿of￿proxy￿statements￿for￿General￿Meetings￿of Shareholders.￿Dutch￿law￿does￿not￿have￿a￿regulatory￿regime￿for￿the￿solicitation￿of￿proxies:￿the￿solicitation￿of￿proxies￿is not￿a￿generally￿accepted￿business￿practice￿in￿the￿Netherlands.￿ASML￿does￿provide￿shareholders￿with￿an￿agenda￿and other￿relevant￿documents￿for￿the￿General￿Meeting￿of￿Shareholders. • Dutch￿law￿requires￿that￿ASML’s￿external￿auditors￿be￿appointed￿by￿the￿AGM￿and￿not￿by￿the￿Audit￿Committee￿as contemplated￿by￿NASDAQ￿rules. • ASML￿does￿not￿follow￿NASDAQ's￿requirement￿regarding￿distribution￿to￿shareholders￿of￿copies￿of￿an￿Annual￿Report containing￿audited￿financial￿statements￿prior￿to￿our￿AGM.￿The￿distribution￿of￿Annual￿Reports￿to￿shareholders￿is￿not required￿under￿Dutch￿corporate￿law￿or￿Dutch￿securities￿laws,￿or￿by￿NYSE￿Euronext￿Amsterdam.￿Furthermore,￿it￿is generally￿accepted￿business￿practice￿for￿Dutch￿companies￿not￿to￿distribute￿annual￿reports.￿In￿part,￿this￿is￿because the￿Dutch￿system￿of￿bearer￿shares￿has￿made￿it￿impractical￿to￿keep￿a￿current￿list￿of￿holders￿of￿the￿bearer￿shares￿in order￿to￿distribute￿the￿Annual￿Reports.￿Instead,￿we￿make￿our￿annual￿report￿available￿at￿our￿corporate￿head￿office in￿the￿Netherlands￿(and￿at￿the￿offices￿of￿our￿Dutch￿listing￿agent￿as￿stated￿in￿the￿convening￿notice￿for￿the￿meeting) approximately￿two￿weeks￿prior￿to￿convocation￿of￿the￿AGM.￿In￿addition,￿we￿post￿a￿copy￿of￿our￿annual￿report￿on￿our website￿prior￿to￿the￿Annual￿General￿Meeting￿of￿Shareholders. • ASML￿does￿not￿follow￿NASDAQ’s￿requirement￿to￿obtain￿shareholder￿approval￿of￿stock￿option￿or￿purchase￿plans￿or other￿equity￿compensation￿arrangements￿available￿to￿officers,￿directors￿or￿employees.￿It￿is￿not￿required￿under￿Dutch law￿or￿generally￿accepted￿practice￿for￿Dutch￿companies￿to￿obtain￿shareholder￿approval￿of￿equity￿compensation arrangements￿available￿to￿officers,￿directors￿or￿employees.￿The￿AGM￿adopts￿the￿remuneration￿policy￿for￿the￿Board of￿Management,￿approves￿equity￿compensation￿arrangements￿for￿the￿Board￿of￿Management￿and￿approves￿the remuneration￿for￿the￿Supervisory￿Board.￿The￿actual￿total￿remuneration￿(including￿equity￿compensation)￿for￿individual members￿of￿the￿Board￿of￿Management￿is￿determined￿by￿the￿Supervisory￿Board.￿Equity￿compensation￿arrangements for￿employees￿are￿adopted￿by￿the￿Board￿of￿Management￿within￿limits￿approved￿by￿the￿AGM. ASML￿ANNUAL￿REPORT￿2012 70 H. Mine Safety Disclosure Not￿applicable. ASML￿ANNUAL￿REPORT￿2012 71 ASML￿ANNUAL￿REPORT￿2012 72 Part III Item 17 Financial Statements Not￿applicable. Item 18 Financial Statements In￿response￿to￿this￿item,￿ASML￿incorporates￿herein￿by￿reference￿the￿consolidated￿financial￿statements￿of￿ASML￿set￿out on￿pages￿F-2￿through￿F-55￿hereto. Item 19 Exhibits Exhibit No. 1 Description ￿ Articles￿of￿Association￿of￿ASML￿Holding￿N.V.￿(English￿translation)￿(Incorporated￿by￿reference￿to￿Amendment￿No.￿13￿to￿the Registrant’s,￿Registration￿Statement￿on￿Form￿8-A/A,￿filed￿with￿the￿Commission￿on￿February￿8,￿2013) 2.1 ￿ Fiscal￿Agency￿Agreement￿between￿ASML￿Holding￿N.V.,￿Deutsche￿Bank￿AG,￿London￿Branch￿and￿Deutsche￿Bank Luxembourg￿S.A.￿relating￿to￿the￿Registrant’s￿5.75￿percent￿Notes￿due￿2017￿(Incorporated￿by￿reference￿to￿the￿Registrant’s Annual￿Report￿for￿the￿year￿ended￿December￿31,￿2008) 4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 4.9 4.10 4.11 4.12 4.13 4.14 4.15 4.16 ￿ Agreement￿between￿ASM￿Lithography￿B.V.￿and￿Carl￿Zeiss,￿dated￿March￿17,￿2000￿(Incorporated￿by￿reference￿to￿the Registrant’s￿Annual￿Report￿on￿Form￿20-F￿for￿the￿fiscal￿year￿ended￿December￿31,￿2000)￿1 ￿ Agreement￿between￿ASML￿Holding￿N.V.￿and￿Carl￿Zeiss,￿dated￿October￿24,￿2003￿(Incorporated￿by￿reference￿to￿the Registrant’s￿Annual￿Report￿on￿Form￿20-F￿for￿the￿year￿ended￿December￿31,￿2003)￿1 ￿ Form￿of￿Indemnity￿Agreement￿between￿ASML￿Holding￿N.V.￿and￿members￿of￿its￿Board￿of￿Management￿(Incorporated￿by reference￿to￿the￿Registrant’s￿Annual￿Report￿on￿Form￿20-F￿for￿the￿year￿ended￿December￿31,￿2003) ￿ Form￿of￿Indemnity￿Agreement￿between￿ASML￿Holding￿N.V.￿and￿members￿of￿its￿Supervisory￿Board￿(Incorporated￿by reference￿to￿the￿Registrant’s￿Annual￿Report￿on￿Form￿20-F￿for￿the￿year￿ended￿December￿31,￿2003) ￿ Form￿of￿Employment￿Agreement￿for￿members￿of￿the￿Board￿of￿Management￿(Incorporated￿by￿reference￿to￿the￿Registrant’s Annual￿Report￿on￿Form￿20-F￿for￿the￿fiscal￿year￿ended￿December￿31,￿2003) ￿ Nikon-ASML￿Patent￿Cross-License￿Agreement,￿dated￿December￿10,￿2004,￿between￿ASML￿Holding￿N.V.￿and￿Nikon Corporation￿(Incorporated￿by￿reference￿to￿the￿Registrant’s￿Annual￿Report￿on￿Form￿20-F￿for￿the￿fiscal￿year￿ended December￿31,￿2004)￿1 ￿ ASML/Zeiss￿Sublicense￿Agreement,￿2004,￿dated￿December￿10,￿2004,￿between￿Carl￿Zeiss￿SMT￿AG￿and￿ASML￿Holding￿N.V. (Incorporated￿by￿reference￿to￿the￿Registrant’s￿Annual￿Report￿on￿Form￿20-F￿for￿the￿fiscal￿year￿ended￿December￿31,￿2004)￿1 ￿ ￿ASML￿New￿Hires￿and￿Incentive￿Stock￿Option￿Plan￿For￿Management￿(Version￿2003)￿(Incorporated￿by￿reference￿to￿the Registrant’s￿Statement￿on￿Form￿S-8,￿filed￿with￿the￿Commission￿on￿September￿2,￿2003￿(File￿No.￿333-109154)) ￿ ￿ASML￿Incentive￿and￿New￿Hire￿Option￿Plan￿for￿Board￿of￿Management￿(Incorporated￿by￿reference￿to￿the￿Registrant’s Registration￿Statement￿on￿Form￿S-8,￿filed￿with￿the￿Commission￿on￿June￿9,￿2004￿(File￿No.￿333-116337)) ￿ ￿ASML￿Option￿Plan￿for￿Management￿of￿ASML￿Holding￿Group￿Companies￿(Incorporated￿by￿reference￿to￿the￿Registrant’s Registration￿Statement￿on￿Form￿S-8￿filed￿with￿the￿Commission￿on￿June￿30,￿2005￿(file￿No.￿333-126340)) ￿ ￿ASML￿Stock￿Option￿Plan￿for￿New￿Hire￿Options￿granted￿to￿Members￿of￿the￿Board￿of￿Management￿(Version￿April￿2006) (Incorporated￿by￿reference￿to￿the￿Registrant’s￿Registration￿Statement￿on￿Form￿S-8￿filed￿with￿the￿Commission￿on￿August￿7, 2006￿(file￿No.￿333-136362)) ￿ ￿ASML￿Stock￿Option￿Plan￿for￿Incentive￿or￿New￿Hire￿Options￿granted￿to￿Senior￿and￿Executive￿Management￿(Version￿April 2006)￿(Incorporated￿by￿reference￿to￿the￿Registrant’s￿Registration￿Statement￿on￿Form￿S-8￿filed￿with￿the￿Commission￿on August￿7,￿2006￿(file￿No.￿333-136362)) ￿ ￿ASML￿Stock￿Option￿Plan￿for￿Incentive￿or￿New￿Hire￿Options￿granted￿to￿Senior￿and￿Executive￿Management￿(Version￿July 2006)￿(Incorporated￿by￿reference￿to￿the￿Registrant’s￿Registration￿Statement￿on￿Form￿S-8￿filed￿with￿the￿Commission￿on August￿7,￿2006￿(file￿No.￿333-136362)) ￿ ASML￿Stock￿Option￿Plan￿for￿Incentive￿or￿New￿Hire￿Options￿granted￿to￿Senior￿and￿Executive￿Management￿(Version October￿2006)￿(Incorporated￿by￿reference￿to￿the￿Registrant’s￿Registration￿Statement￿on￿Form￿S-8￿filed￿with￿the Commission￿on￿August￿7,￿2006￿(file￿No.￿333-136362)) ￿ ASML￿Restricted￿Stock￿Plan￿(Incorporated￿by￿reference￿to￿the￿Registrant’s￿Registration￿Statement￿on￿Form￿S-8￿filed￿with the￿Commission￿on￿March￿7,￿2007￿(file￿No.￿333-141125)) ￿ ￿Brion￿Technologies,￿Inc.,￿2002￿Stock￿Option￿Plan￿(as￿amended￿on￿March￿25,￿2005;￿March￿24,￿2006;￿and￿November￿17, 2006)￿(Incorporated￿by￿reference￿to￿the￿Registrant’s￿Registration￿Statement￿on￿Form￿S-8￿filed￿with￿the￿Commission￿on April￿20,￿2007￿(file￿No.￿333-142254)) 4.17 ￿ ASML￿Stock￿Option￿Plan￿for￿Incentive￿or￿New￿Hire￿Options￿granted￿to￿Senior￿and￿Executive￿Management￿(Version￿January 4.18 4.19 4.20 4.21 4.22 2007)￿(Incorporated￿by￿reference￿to￿the￿Registrant’s￿Registration￿Statement￿on￿Form￿S-8￿filed￿with￿the￿Commission￿on July￿5,￿2007￿(file￿No.￿333-144356)) ￿ ASML￿Stock￿Option￿Plan￿for￿Incentive￿or￿New￿Hire￿Options￿granted￿to￿Senior￿and￿Executive￿Management￿(Version￿April 2007)￿(Incorporated￿by￿reference￿to￿the￿Registrant’s￿Registration￿Statement￿on￿Form￿S-8￿filed￿with￿the￿Commission￿on July￿5,￿2007￿(file￿No.￿333-144356)) ￿ ASML￿Stock￿Option￿Plan￿for￿Incentive￿or￿New￿Hire￿Options￿granted￿to￿Senior￿and￿Executive￿Management￿(Version￿July 2007)￿(Incorporated￿by￿reference￿to￿the￿Registrant’s￿Registration￿Statement￿on￿Form￿S-8￿filed￿with￿the￿Commission￿on July￿5,￿2007￿(file￿No.￿333-144356)) ￿ ASML￿Stock￿Option￿Plan￿for￿Incentive￿or￿New￿Hire￿Options￿granted￿to￿Senior￿and￿Executive￿Management￿(Version October￿2007)￿(Incorporated￿by￿reference￿to￿the￿Registrant’s￿Registration￿Statement￿on￿Form￿S-8￿filed￿with￿the Commission￿on￿July￿5,￿2007￿(file￿No.￿333-144356)) ￿ ASML￿Performance￿Stock￿Plan￿for￿Members￿of￿the￿Board￿of￿Management￿(Version￿1)￿(Incorporated￿by￿reference￿to￿the Registrant’s￿Registration￿Statement￿on￿Form￿S-8￿filed￿with￿the￿Commission￿on￿July￿5,￿2007￿(file￿No.￿333-144356)) ￿ ASML￿Performance￿Stock￿Option￿Plan￿for￿Members￿of￿the￿Board￿of￿Management￿(Version￿2)￿(Incorporated￿by￿reference￿to the￿Registrant’s￿Registration￿Statement￿on￿Form￿S-8￿filed￿with￿the￿Commission￿on￿July￿5,￿2007￿(file￿No.￿333-144356)) ASML￿ANNUAL￿REPORT￿2012 73 Exhibit No. 4.23 Description ￿ ASML￿Stock￿Option￿Plan￿from￿Base￿Salary￿for￿Senior￿&￿Executive￿Management￿(Version￿October￿2007)￿(Incorporated￿by 4.24 4.25 4.26 4.27 4.28 4.29 4.30 4.31 4.32 4.33 4.34 4.35 8.1 12.1 13.1 reference￿to￿the￿Registrant’s￿Registration￿Statement￿on￿Form￿S-8￿filed￿with￿the￿Commission￿on￿November￿2,￿2007￿(file￿No. 333-147128)) ￿ ASML￿Performance￿Stock￿Option￿Plan￿for￿Senior￿and￿Executive￿Management￿(version￿1)￿(Incorporated￿by￿reference￿to￿the Registrant’s.￿Registration￿Statement￿on￿Form￿S-8￿filed￿with￿the￿Commission￿on￿August￿29,￿2008￿(file￿No.￿333-153277)) ￿ ASML￿Performance￿Share￿Plan￿for￿Senior￿and￿Executive￿Management￿(version￿1)￿(Incorporated￿by￿reference￿to￿the Registrant’s￿Registration￿Statement￿on￿Form￿S-8￿filed￿with￿the￿Commission￿on￿August￿29,￿2008￿(file￿No.￿333-153277)) ￿ ASML￿Restricted￿Stock￿Plan￿(version￿2)￿(Incorporated￿by￿reference￿to￿the￿Registrant’s￿Registration￿Statement￿on￿Form￿S-8 filed￿with￿the￿Commission￿on￿August￿29,￿2008￿(file￿No.￿333-153277)) ￿ ASML￿Performance￿Stock￿Plan￿for￿Members￿of￿the￿Board￿of￿Management￿(Incorporated￿by￿reference￿to￿the￿Registrant’s Registration￿Statement￿on￿Form￿S-8￿filed￿with￿the￿Commission￿on￿October￿13,￿2009￿(file￿No.￿333-162439)) ￿ ASML￿Performance￿Stock￿Option￿Plan￿for￿Senior￿and￿Executive￿Management￿(version￿1)￿(Incorporated￿by￿reference￿to￿the Registrant’s.￿Registration￿Statement￿on￿Form￿S-8￿filed￿with￿the￿Commission￿on￿October￿13,￿2009￿(file￿No.￿333-162439)) ￿ ASML￿Performance￿Share￿Plan￿for￿Senior￿and￿Executive￿Management￿(version￿1)￿(Incorporated￿by￿reference￿to￿the Registrant’s￿Registration￿Statement￿on￿Form￿S-8￿filed￿with￿the￿Commission￿on￿October￿13,￿2009￿(file￿No.￿333-162439)) ￿ ASML￿Share￿and￿Option￿Purchase￿Plan￿for￿Employees￿(Incorporated￿by￿reference￿to￿the￿Registrant’s￿Registration Statement￿on￿Form￿S-8￿filed￿with￿the￿Commission￿on￿October￿20,￿2010￿(file￿No.￿333-170034)) ￿ Investment￿Agreement￿between￿ASML￿Holding￿N.V.￿and￿Intel￿Corporation,￿dated￿July￿9,￿2012￿2 ￿ 450mm￿NRE￿Funding￿Agreement￿between￿ASML￿Holding￿N.V.,￿and￿Intel￿Corporation,￿dated￿July￿9,￿20121,￿2 ￿ EUV￿NRE￿Funding￿Agreement￿between￿ASML￿Holding￿N.V.,￿and￿Intel￿Corporation,￿dated￿July￿9,￿20121,￿2 ￿ Shareholder￿Agreement￿between￿ASML￿Holding￿N.V.￿and￿Intel￿Holdings￿B.V.,￿Intel￿Corporation￿and￿Stichting Administratiekantoor￿MAKTSJAB￿dated￿September￿12,￿2012￿2 ￿ Agreement￿and￿Plan￿of￿Merger￿by￿and￿among￿ASML￿Holding￿N.V.,￿Kona￿Acquisition￿Company,￿Inc.￿Cymer,￿Inc.￿and certain￿other￿parties￿set￿forth￿therein,￿date￿October￿16,￿2012￿(incorporated￿by￿reference￿to￿Annex￿A￿to￿the￿Registrant's Registration￿Statement￿on￿Form￿F-4￿filed￿with￿the￿Commission￿on￿November￿21,￿2012￿(file￿No.￿333-185120)) ￿ List￿of￿Main￿Subsidiaries￿2 ￿ Certification￿of￿CEO￿and￿CFO￿Pursuant￿to￿Rule￿13a-14(a)￿of￿the￿Securities￿Exchange￿Act￿of￿1934￿2 ￿ Certification￿of￿CEO￿and￿CFO￿Pursuant￿to￿Rule￿13a-14(b)￿of￿the￿Securities￿Exchange￿Act￿of￿1934￿and￿18￿U.S.C.￿Section 1350￿as￿Adopted￿Pursuant￿to￿Section￿906￿of￿the￿Sarbanes-Oxley￿Act￿of￿2002￿2 15.1 101.INS 101.SCH 101.CAL 101.DEF 101.LAB 101.PRE ￿ Consent￿of￿Deloitte￿Accountants￿B.V.2 ￿ XBRL￿Instance￿Document￿2 ￿ XBRL￿Taxonomy￿Extension￿Schema￿Document￿2 ￿ XBRL￿Taxonomy￿Extension￿Calculation￿Linkbase￿Document￿2 ￿ XBRL￿Taxonomy￿Extension￿Definition￿Linkbase￿Document￿2 ￿ XBRL￿Taxonomy￿Extension￿Label￿Linkbase￿Document￿2 ￿ XBRL￿Taxonomy￿Extension￿Presentation￿Linkbase￿Document￿2 1￿Certain￿information￿omitted￿pursuant￿to￿a￿request￿for￿confidential￿treatment￿filed￿separately￿with￿the￿Securities￿and￿Exchange￿Commission. 2￿Filed￿at￿the￿Commission￿herewith. ASML￿Holding￿N.V.￿hereby￿certifies￿that￿it￿meets￿all￿of￿the￿requirements￿for￿filing￿on￿Form￿20-F￿and￿that￿it￿has￿duly caused￿and￿authorized￿the￿undersigned￿to￿sign￿this￿Annual￿Report￿on￿its￿behalf.￿ ASML￿Holding￿N.V.￿(Registrant)￿ ￿￿ ￿/s/￿Eric￿Meurice Eric￿Meurice President,￿Chief￿Executive￿Officer￿and￿Chairman￿of￿the￿Board￿of￿Management Dated:￿February￿12,￿2013￿￿￿ /s/￿Peter￿T.F.M.￿Wennink Peter￿T.F.M.￿Wennink Executive￿Vice￿President,￿Chief￿Financial￿Officer￿and￿Member￿of￿the￿Board￿of￿Management Dated:￿February￿12,￿2013 ASML￿ANNUAL￿REPORT￿2012 74 Financial Statements Index to Financial Statements F-2 F-2 F-3 F-4 F-5 F-6 Consolidated￿Statements￿of￿Operations Consolidated￿Statements￿of￿Comprehensive￿Income Consolidated￿Balance￿Sheets Consolidated￿Statements￿of￿Shareholders’￿Equity Consolidated￿Statements￿of￿Cash￿Flows Notes￿to￿the￿Consolidated￿Financial￿Statements F-55 Report￿of￿Independent￿Registered￿Public￿Accounting￿Firm ASML￿ANNUAL￿REPORT￿2012 F-1 Consolidated Statements of Operations Year ended December 31 (in thousands, except per share data) ￿ Net￿system￿sales Net￿service￿and￿field￿option￿sales ￿ Total net sales Cost￿of￿system￿sales Cost￿of￿service￿and￿field￿option￿sales ￿ Total cost of sales ￿ Gross profit on sales Research￿and￿development￿costs Selling,￿general￿and￿administrative￿costs ￿ Income from operations Interest￿income Interest￿expense ￿ Income before income taxes Provision￿for￿income￿taxes ￿ Net income Basic￿net￿income￿per￿ordinary￿share Diluted￿net￿income￿per￿ordinary￿share1 Number￿of￿ordinary￿shares￿used￿in￿computing￿per￿share￿amounts (in￿thousands) Basic Diluted1 2012 EUR ￿ 3,801,632 929,923 ￿ 4,731,555 2,198,921 527,377 ￿ 2,726,298 ￿ 2,005,257 589,182 259,301 ￿ 1,156,774 16,585 (22,781) ￿ 1,150,578 (4,262) ￿ 1,146,316 2.70 2.68 ￿ 2011 2 EUR ￿ ￿ 4,883,913 ￿ 767,122 ￿ ￿ ￿ 5,651,035 ￿ 2,793,931 ￿ 407,714 ￿ ￿ ￿ 3,201,645 ￿ ￿ ￿ 2,449,390 ￿ 590,270 ￿ 217,904 ￿ ￿ ￿ 1,641,216 ￿ 41,156 ￿ (33,737) ￿ ￿ ￿ 1,648,635 ￿ (181,675) ￿ ￿ ￿ 1,466,960 ￿ 3.45 ￿ 3.42 ￿ ￿ ￿ 424,096 426,986 425,618 ￿ 429,053 ￿ 2010 EUR ￿ 3,894,742 613,196 ￿ 4,507,938 2,222,965 329,803 ￿ 2,552,768 ￿ 1,955,170 523,426 181,045 ￿ 1,250,699 15,125 (23,301) ￿ 1,242,523 (220,703) ￿ 1,021,820 2.35 2.33 ￿ 435,146 438,974 Notes ￿ 20 ￿ ￿ 20 ￿ ￿ ￿ 22 ￿ ￿ 22,￿23 22 ￿ ￿ 24 24 ￿ ￿ 19 ￿ ￿ ￿ ￿ ￿ ￿ ￿ 1 The￿calculation￿of￿diluted￿net￿income￿per￿ordinary￿share￿assumes￿the￿exercise￿of￿options￿issued￿under￿ASML￿stock￿option￿plans￿and￿the￿issuance￿of shares￿under￿ASML￿share￿plans￿for￿periods￿in￿which￿exercises￿or￿issuances￿would￿have￿a￿dilutive￿effect.￿The￿calculation￿of￿diluted￿net￿income￿per ordinary￿share￿does￿not￿assume￿exercise￿of￿such￿options￿or￿issuance￿of￿shares￿when￿such￿exercises￿or￿issuance￿would￿be￿anti-dilutive. 2 As￿of￿January￿1,￿2011,￿we￿adopted￿Accounting￿Standards￿Update￿("ASU")￿2009-13,￿"Revenue￿Arrangements￿with￿Multiple￿Deliverables"￿which amended￿ASC￿605-25.￿The￿ASU￿was￿adopted￿prospectively￿and￿had￿an￿insignificant￿impact￿on￿timing￿and￿allocation￿of￿revenues.￿See￿Note￿1￿to￿the consolidated￿financial￿statements. Consolidated Statements of Comprehensive Income Notes ￿ ￿ ￿ ￿ 3 ￿ ￿ 3 3 ￿ ￿ Year ended December 31 (in thousands) ￿ Net income ￿ Foreign currency translation: Gain￿(loss)￿on￿foreign￿currency￿translation ￿ Financial instruments, net of taxes: Gain￿(loss)￿on￿derivative￿financial￿instruments Transfers￿to￿net￿income ￿ Comprehensive income 2012 EUR ￿ 1,146,316 ￿ ￿ 8,063 ￿ ￿ 214 (7,761) ￿ 1,146,832 2011 EUR ￿ 1,466,960 ￿ ￿ (17,473) ￿ ￿ (4,610) 51,963 ￿ 1,496,840 2010 EUR ￿ 1,021,820 ￿ ￿ 22,286 ￿ ￿ (49,175) 47,954 ￿ 1,042,885 ASML￿ANNUAL￿REPORT￿2012 F-2 Consolidated Balance Sheets Notes ￿ ￿ 4 4 5 6 19 7 19 8 ￿ ￿ 6 19 8 9 10 11 ￿ ￿ ￿ ￿ ￿ ￿ 12 19 14 13 19 ￿ ￿ 14 19 13 12 ￿ ￿ ￿ ￿ 16,￿18 ￿ ￿ ￿ ￿ ￿ ￿ ￿ ￿ ￿ ￿ ￿ ￿ ￿ ￿ ￿ ￿ ￿ ￿ ￿ ￿ 26 ￿ ￿ As of December 31 (in thousands, except share and per share data) ￿ Assets Cash￿and￿cash￿equivalents Short-term￿investments Accounts￿receivable,￿net Finance￿receivables,￿net Current￿tax￿assets Inventories,￿net Deferred￿tax￿assets Other￿assets Total current assets ￿ Finance￿receivables,￿net Deferred￿tax￿assets Other￿assets Goodwill Other￿intangible￿assets,￿net Property,￿plant￿and￿equipment,￿net Total non-current assets ￿ Total assets ￿ Liabilities and shareholders’ equity Accounts￿payable Accrued￿and￿other￿liabilities Current￿tax￿liabilities Current￿portion￿of￿long-term￿debt Provisions Deferred￿and￿other￿tax￿liabilities Total current liabilities ￿ Long-term￿debt Deferred￿and￿other￿tax￿liabilities Provisions Accrued￿and￿other￿liabilities Total non-current liabilities ￿ Total liabilities ￿ Commitments￿and￿contingencies ￿ Cumulative￿Preference￿Shares;￿EUR￿0.09￿nominal￿value; 700,000,000￿shares￿authorized￿at￿December￿31,￿2012￿and￿2011; none￿issued￿and￿outstanding￿at￿December￿31,￿2012￿and￿2011; ￿ Ordinary￿Shares￿B;￿EUR￿0.01￿nominal￿value; 9,000￿shares￿authorized￿at￿December￿31,￿2012; none￿issued￿and￿outstanding￿per￿December￿31,￿2012; not￿applicable￿per￿December￿31,￿2011; ￿ Ordinary￿Shares;￿EUR￿0.09￿nominal￿value; 699,999,000￿shares￿authorized￿at￿December￿31,￿2012; 407,165,221￿issued￿and￿outstanding￿at￿December￿31,￿2012; 700,000,000￿shares￿authorized￿at￿December￿31,￿2011; 413,669,257￿issued￿and￿outstanding￿at￿December￿31,￿2011; Issued￿and￿outstanding￿shares Share￿premium Treasury￿shares￿at￿cost Retained￿earnings Accumulated￿other￿comprehensive￿income Total shareholders’ equity ￿ Total liabilities and shareholders’ equity 2012 EUR ￿ ￿ 1,767,596 930,005 605,288 265,167 57,116 1,856,970 103,695 246,005 5,831,842 ￿ 38,621 39,443 311,538 149,168 9,943 1,029,923 1,578,636 ￿ 7,410,478 ￿ ￿ 188,961 1,880,370 10,791 3,610 2,280 271 2,086,283 ￿ 755,880 88,307 7,974 405,141 1,257,302 ￿ 3,343,585 ￿ - ￿ ￿ ￿ - ￿ ￿ ￿ - ￿ ￿ ￿ ￿ ￿ ￿ ￿ 37,470 483,651 (464,574) 3,931,359 78,987 4,066,893 ￿ 7,410,478 2011 EUR ￿ ￿ 2,731,782 - 880,627 78,853 32,105 1,624,627 120,720 238,095 5,706,809 ￿ - 38,735 307,251 146,044 8,366 1,053,610 1,554,006 ￿ 7,260,815 ￿ ￿ 444,269 1,768,647 14,999 2,587 2,326 214 2,233,042 ￿ 733,781 176,727 10,012 663,099 1,583,619 ￿ 3,816,661 ￿ - ￿ ￿ ￿ - ￿ ￿ ￿ ￿ - ￿ ￿ ￿ ￿ ￿ ￿ 38,354 473,043 (416,417) 3,270,703 78,471 3,444,154 ￿ 7,260,815 ASML￿ANNUAL￿REPORT￿2012 F-3 Consolidated Statements of Shareholders’ Equity Issued and Outstanding Shares (in thousands) Balance at January 1, 2010 Number1 433,639 ￿ ￿ ￿ Notes ￿ ￿ ￿ ￿ 3 3 ￿ 17,￿21,￿22 17,￿21 26 17,￿19 ￿ ￿ ￿ ￿ 3 3 ￿ ￿ ￿ 17,￿21,￿22 17,￿21 26 17,￿19 ￿ ￿ ￿ ￿ 3 3 ￿ ￿ 26,￿28 26,￿28 26,￿28 ￿ 26 26 17,￿21,￿22 17,￿21 26 17,￿19 ￿ Components of comprehensive income: Net￿income Foreign￿Currency￿Translation,￿net￿of taxes Loss￿on￿financial￿instruments,￿net￿of taxes ￿ Share-based payments Issuance of shares Dividend paid Tax benefit from share-based payments Balance at December 31, 2010 Components of comprehensive income: Net￿income Foreign￿Currency￿Translation,￿net￿of taxes Gain￿on￿financial￿instruments,￿net￿of taxes ￿ Purchase of treasury shares Cancellation of treasury shares Share-based payments Issuance of shares Dividend paid Tax deficit from share-based payments Balance at December 31, 2011 Components of comprehensive income: Net￿income Foreign￿Currency￿Translation Loss￿on￿financial￿instruments,￿net￿of taxes ￿ Customer Co-Investment Program: Issuance￿of￿shares Fair￿value￿differences3 Capital￿repayment4 ￿ Purchase of treasury shares Cancellation of treasury shares Share-based payments Issuance of shares Dividend paid Tax benefit from share-based payments Balance at December 31, 2012 ￿ ￿ ￿ - - - - 2,954 - - 436,593 ￿ ￿ ￿ - - - (25,675) - - 2,751 - - 413,669 ￿ ￿ - - - ￿ ￿ 96,566 - (93,411) ￿ (13,478) - - 3,819 - - Accumulated Other Compre- hensive Income EUR 27,526 ￿ Retained Earnings EUR 1,450,156 ￿ ￿ ￿ ￿ ￿ ￿ Total EUR 1,774,768 1,021,820 - - ￿ 22,286 ￿ 1,021,820 22,286 - (1,221) ￿ (1,221) Share Premium EUR 476,261 Treasury Shares at cost EUR (218,203) ￿ ￿ ￿ - - - ￿ ￿ ￿ - - - 12,109 (17,223) - 106 - 66,531 - - - (18,573) (86,960) - ￿ ￿ ￿ - ￿ - ￿ - ￿ - ￿ 12,109 31,000 (86,960) 106 471,253 (151,672) 2,366,443 48,591 2 2,773,908 ￿ ￿ ￿ - - - ￿ ￿ ￿ - - - ￿ ￿ ￿ ￿ ￿ ￿ 1,466,960 - - ￿ (17,473) ￿ 1,466,960 (17,473) - 47,353 ￿ 47,353 - - 12,430 (10,629) - (11) (700,452) 373,801 - 61,906 - - - (372,614) - (17,441) (172,645) - ￿ ￿ ￿ - ￿ - ￿ - ￿ - ￿ - ￿ - ￿ (700,452) - 12,430 34,084 (172,645) (11) 473,043 (416,417) 3,270,703 78,471 2 3,444,154 ￿ ￿ ￿ ￿ ￿ ￿ ￿ ￿ ￿ ￿ - - - - - 125,628 (535,175) 294,752 - 66,638 - - - - - 3,968,677 (123,416) (3,845,261) - - 18,714 (10,222) - 2,116 ￿ ￿ ￿ ￿ ￿ ￿ 1,146,316 - - - ￿ 8,063 ￿ (7,547) ￿ 1,146,316 8,063 (7,547) - - - - (293,722) - (3,046) (188,892) - ￿ ￿ ￿ ￿ ￿ ￿ - ￿ - ￿ - ￿ ￿ ￿ ￿ - ￿ - ￿ - ￿ - ￿ - ￿ - ￿ 3,977,368 (123,416) (3,728,324) (535,373) - 18,714 53,714 (188,892) 2,116 Amount EUR 39,028 ￿ ￿ - - - ￿ - 265 - - ￿ ￿ ￿ 39,293 ￿ ￿ ￿ ￿ - - - ￿ ￿ - (1,187) - 248 - - 38,354 ￿ ￿ ￿ ￿ - - - ￿ ￿ ￿ ￿ ￿ 8,691 - (8,691) ￿ (198) (1,030) - 344 - - 407,165 37,470 483,651 (464,574) 3,931,359 78,987 2 4,066,893 1 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.￿As￿of￿December￿31,￿2011,￿the￿number￿of￿issued￿shares￿was￿431,294,790.￿This￿includes￿the￿number of￿issued￿and￿outstanding￿shares￿of￿413,669,257￿and￿the￿number￿of￿treasury￿shares￿of￿17,625,533. 2 As￿of￿December￿31,￿2012,￿accumulated￿other￿comprehensive￿income,￿net￿of￿taxes,￿consists￿of￿EUR￿83.5￿million￿relating￿to￿foreign￿currency￿translation 3 4 (2011:￿EUR￿75.5￿million;￿2010:￿EUR￿93.0￿million)￿and￿EUR￿4.5￿million￿relating￿to￿unrealized￿losses￿on￿financial￿instruments￿(2011:￿EUR￿3.0￿million gains;￿2010:￿EUR￿44.4￿million￿losses). The￿difference￿between￿the￿fair￿value￿of￿the￿shares￿and￿the￿subscription￿price￿of￿the￿shares￿issued￿to￿the￿participating￿customers￿in￿the￿Customer￿Co- Investment￿Program. In￿2012,￿as￿part￿of￿the￿capital￿repayment,￿EUR￿3,728.3￿million￿of￿shareholders'￿equity￿was￿returned￿to￿our￿shareholders￿(excluding￿Intel￿Corporation (“Intel”),￿Taiwan￿Semiconductor￿Manufacturing￿Company￿Ltd.￿(“TSMC”)￿and￿Samsung￿Electronics￿Corporation￿(“Samsung”)￿(collectively￿referred￿to￿as “participating￿customers”￿in￿the￿Customer￿Co-investment￿Program))￿and￿the￿number￿of￿shares￿was￿reduced￿by￿23￿percent.￿See￿Note￿26. ASML￿ANNUAL￿REPORT￿2012 F-4 Consolidated Statements of Cash Flows Notes ￿ ￿ ￿ ￿ ￿ 10,￿11 9,￿10,￿11 11 17,21 5 7 19 ￿ 5 6 7 8 12,￿13 ￿ 19 ￿ ￿ ￿ 11 11 10 4 4 ￿ ￿ ￿ ￿ 26 27 17,21 26 ￿ 14 17,19 ￿ ￿ ￿ ￿ ￿ 4 4 ￿ ￿ ￿ ￿ Year ended December 31 (in thousands) ￿ Cash Flows from Operating Activities Net￿income ￿ Adjustments￿to￿reconcile￿net￿income￿to￿net￿cash￿flows￿from￿operating activities: Depreciation￿and￿amortization Impairment Loss￿on￿disposal￿of￿property,￿plant￿and￿equipment1 Share-based￿payments Allowance￿for￿doubtful￿receivables Allowance￿for￿obsolete￿inventory Deferred￿income￿taxes Changes in assets and liabilities: Accounts￿receivable Finance￿receivables Inventories1 Other￿assets Accrued￿and￿other￿liabilities Accounts￿payable Current￿income￿taxes Net cash provided by operating activities ￿ Cash Flows from Investing Activities Purchase￿of￿property,￿plant￿and￿equipment1 Proceeds￿from￿sale￿of￿property,￿plant￿and￿equipment1 Purchase￿of￿intangible￿assets Purchase￿of￿available￿for￿sale￿securities Maturity￿of￿available￿for￿sale￿securities Acquisition￿of￿subsidiaries￿(net￿of￿cash￿acquired) Net cash used in investing activities ￿ Cash Flows from Financing Activities Dividend￿paid Purchase￿of￿shares Net￿proceeds￿from￿issuance￿of￿shares Capital￿Repayment Deposits￿from￿customers Repayment￿of￿debt Tax￿benefit￿(deficit)￿from￿share-based￿payments Net cash provided by (used in) financing activities ￿ Net￿cash￿flows Effect￿of￿changes￿in￿exchange￿rates￿on￿cash Net increase (decrease) in cash and cash equivalents Cash￿and￿cash￿equivalents￿at￿beginning￿of￿the￿year Cash and cash equivalents at end of the year ￿ Supplemental Disclosures of Cash Flow Information: Interest￿paid Taxes￿paid 2012 EUR ￿ ￿ ￿ ￿ 1,146,316 ￿ ￿ ￿ ￿ ￿ 186,620 ￿ 3,234 ￿ 2,272 ￿ 18,714 ￿ 458 ￿ 130,911 ￿ (72,374) ￿ ￿ ￿ 246,982 ￿ (225,103) ￿ (352,716) ￿ 19,117 ￿ (147,691) ￿ (225,083) ￿ (28,179) ￿ 703,478 ￿ ￿ ￿ ￿ ￿ (171,878) ￿ - ￿ (7,658) ￿ (1,379,997) ￿ 449,992 ￿ (10,292) ￿ (1,119,833) ￿ ￿ ￿ ￿ ￿ (188,892) ￿ (535,373) ￿ 3,907,666 2 (3,728,324) 3 - ￿ (2,776) ￿ 2,116 ￿ (545,583) ￿ ￿ ￿ (961,938) ￿ (2,248) ￿ (964,186) ￿ 2,731,782 ￿ 1,767,596 ￿ ￿ ￿ ￿ ￿ (37,906) ￿ (109,504) ￿ 2011 EUR ￿ ￿ 1,466,960 ￿ ￿ 165,185 12,272 3,368 12,430 849 60,300 63,250 ￿ 267,209 (37,301) (276,243) (58,292) 589,217 (126,234) (72,530) 2,070,440 ￿ ￿ (300,898) - - - - - (300,898) ￿ ￿ (172,645) (700,452) 34,084 - (150,000) (2,537) (11) (991,561) ￿ 777,981 3,967 781,948 1,949,834 2,731,782 ￿ ￿ (35,919) (202,312) 2010 EUR ￿ ￿ 1,021,820 ￿ ￿ 151,444 8,563 2,913 12,109 (1,256) 55,691 28,053 ￿ (748,898) (20,000) (706,233) (114,003) 862,919 350,231 36,695 940,048 ￿ ￿ (128,728) 3,825 - - - - (124,903) ￿ ￿ (86,960) - 31,000 - 150,000 (1,444) 106 92,702 ￿ 907,847 4,913 912,760 1,037,074 1,949,834 ￿ ￿ (35,559) (148,915) 1 An￿amount￿of￿EUR￿204.8￿million￿(2011:￿EUR￿300.5￿million,￿2010:￿EUR￿214.1￿million)￿of￿the￿additions￿in￿property,￿plant￿and￿equipment￿relates￿to￿non- cash￿transfers￿from￿inventory,￿an￿amount￿of￿EUR￿9.6￿million￿relates￿to￿other￿non-cash￿movements￿(mainly￿investments￿not￿yet￿paid￿and￿inceptions of￿finance￿lease￿arrangements)￿and￿an￿amount￿of￿EUR￿222.9￿million￿(2011:￿EUR￿145.3￿million,￿2010:￿EUR￿110.4￿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￿these￿consolidated￿statements￿of￿cash￿flows.￿For￿further￿details￿see￿Note￿11. The￿net￿proceeds￿from￿issuance￿of￿shares￿includes￿an￿amount￿of￿EUR￿3,853.9￿million￿related￿to￿the￿share￿issuances￿in￿connection￿to￿the￿Customer￿Co- Investment￿Program. 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￿ASML's￿treasury￿shares￿which￿was￿also￿part￿of￿the￿Synthetic￿Share￿Buyback￿in￿November￿2012. 2 3 ASML￿ANNUAL￿REPORT￿2012 F-5 Notes to the Consolidated Financial Statements 1. General information / Summary of significant accounting policies ASML￿Holding￿N.V.￿("ASML"),￿with￿its￿corporate￿headquarters￿in￿Veldhoven,￿the￿Netherlands,￿is￿engaged￿in￿the development,￿production,￿marketing,￿sale￿and￿servicing￿of￿advanced￿semiconductor￿equipment￿systems￿exclusively consisting￿of￿lithography￿systems.￿ASML's￿principal￿operations￿are￿in￿the￿Netherlands,￿the￿United￿States￿of￿America￿and Asia. Our￿shares￿are￿listed￿for￿trading￿in￿the￿form￿of￿registered￿shares￿on￿NASDAQ￿and￿on￿NYSE￿Euronext￿Amsterdam.￿The principal￿trading￿market￿of￿our￿ordinary￿shares￿is￿NYSE￿Euronext￿Amsterdam. Basis of preparation The￿accompanying￿consolidated￿financial￿statements￿are￿stated￿in￿thousands￿of￿euros￿("EUR")￿unless￿indicated otherwise. The￿accompanying￿consolidated￿financial￿statements￿have￿been￿prepared￿in￿conformity￿with￿accounting￿principles generally￿accepted￿in￿the￿United￿States￿of￿America￿("U.S.￿GAAP"). Use of estimates The￿preparation￿of￿ASML’s￿consolidated￿financial￿statements￿in￿conformity￿with￿U.S.￿GAAP￿requires￿management to￿make￿estimates￿and￿assumptions￿that￿affect￿the￿reported￿amounts￿of￿assets￿and￿liabilities￿and￿the￿disclosure￿of contingent￿assets￿and￿liabilities￿on￿the￿balance￿sheet￿dates,￿and￿the￿reported￿amounts￿of￿revenue￿and￿expenses￿during the￿reported￿periods.￿Actual￿results￿could￿differ￿from￿those￿estimates. Principles of consolidation The￿consolidated￿financial￿statements￿include￿the￿financial￿statements￿of￿ASML￿Holding￿N.V.￿and￿all￿of￿its￿subsidiaries and￿the￿variable￿interest￿entities￿in￿which￿ASML￿is￿the￿primary￿beneficiary￿(referred￿to￿as￿"ASML").￿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￿half￿of￿the￿voting￿rights.￿As￿from￿the￿date￿that￿these￿criteria￿are￿met,￿the financial￿data￿of￿the￿relevant￿subsidiaries￿are￿included￿in￿the￿consolidation. Acquisitions￿of￿subsidiaries￿are￿included￿on￿the￿basis￿of￿the￿acquisition￿method.￿The￿cost￿of￿acquisition￿is￿measured based￿on￿the￿consideration￿transferred,￿the￿fair￿value￿of￿other￿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￿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. Variable Interest Entities We￿assess￿whether￿we￿have￿a￿controlling￿financial￿interest￿in￿any￿Variable￿Interest￿Entity￿("VIE")￿and,￿thus,￿whether￿we are￿the￿VIE’s￿primary￿beneficiary.￿ASML￿shall￿be￿deemed￿to￿have￿a￿controlling￿financial￿interest￿in￿a￿VIE￿if￿it￿has￿both of￿the￿following￿characteristics:￿(a.)￿the￿power￿to￿direct￿the￿activities￿of￿a￿VIE￿that￿most￿significantly￿impact￿the￿VIE’s economic￿performance￿and￿(b.)￿the￿obligation￿to￿absorb￿losses￿of￿the￿VIE￿that￿could￿potentially￿be￿significant￿to￿the￿VIE or￿the￿right￿to￿receive￿benefits￿from￿the￿VIE￿that￿could￿potentially￿be￿significant￿to￿the￿VIE.￿If￿ASML￿has￿a￿controlling financial￿interest￿in￿a￿VIE,￿it￿is￿required￿to￿consolidate￿the￿VIE. Foreign currency translation The￿financial￿information￿for￿subsidiaries￿outside￿the￿euro-zone￿is￿generally￿measured￿using￿local￿currencies￿as￿the functional￿currency.￿The￿financial￿statements￿of￿those￿foreign￿subsidiaries￿are￿translated￿into￿euros￿in￿the￿preparation￿of ASML’s￿consolidated￿financial￿statements.￿Assets￿and￿liabilities￿are￿translated￿into￿euros￿at￿the￿exchange￿rate￿in￿effect on￿the￿respective￿balance￿sheet￿dates.￿Income￿and￿expenses￿are￿translated￿into￿euros￿based￿on￿the￿average￿exchange rate￿for￿the￿corresponding￿period.￿The￿resulting￿translation￿adjustments￿are￿recorded￿directly￿in￿shareholders’￿equity. Currency￿differences￿on￿intercompany￿loans￿that￿have￿the￿nature￿of￿a￿long-term￿investment￿are￿also￿accounted￿for directly￿in￿shareholders’￿equity. Derivative financial instruments We￿principally￿use￿derivative￿hedging￿instruments￿for￿the￿management￿of￿foreign￿currency￿risks￿and￿interest￿rate￿risks. We￿measure￿all￿derivative￿hedging￿instruments￿based￿on￿fair￿values￿derived￿from￿market￿prices￿of￿the￿instruments.￿We ASML￿ANNUAL￿REPORT￿2012 F-6 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￿at￿their￿fair￿value.￿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:￿ • A￿hedge￿of￿the￿exposure￿to￿changes￿in￿the￿fair￿value￿of￿a￿recognized￿asset￿or￿liability,￿or￿of￿an￿unrecognized￿firm commitment,￿that￿are￿attributable￿to￿a￿particular￿risk￿(fair￿value￿hedge); • 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);￿or • A￿hedge￿of￿the￿foreign￿currency￿exposure￿of￿a￿net￿investment￿in￿a￿foreign￿operation￿(net￿investment￿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. Fair value hedge Changes￿in￿the￿fair￿value￿of￿a￿derivative￿financial￿instrument￿that￿is￿designated￿and￿qualified￿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￿statements￿of￿operations. 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￿operations￿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￿statements￿of￿operations￿as￿"interest￿income"￿or "interest￿expense". Cash flow hedge Changes￿in￿the￿fair￿value￿of￿a￿derivative￿that￿is￿designated￿and￿qualified￿as￿a￿cash￿flow￿hedge￿are￿recorded￿in￿other comprehensive￿income,￿net￿of￿taxes,￿until￿the￿underlying￿hedged￿transaction￿is￿recognized￿in￿the￿consolidated statements￿of￿operations.￿In￿the￿event￿that￿the￿underlying￿hedge￿transaction￿will￿not￿occur￿within￿the￿specified￿time period,￿the￿gain￿or￿loss￿on￿the￿related￿cash￿flow￿hedge￿is￿released￿from￿other￿comprehensive￿income￿and￿included￿in the￿consolidated￿statements￿of￿operations,￿unless,￿extenuating￿circumstances￿exist￿that￿are￿related￿to￿the￿nature￿of the￿forecasted￿transaction￿and￿are￿outside￿our￿control￿or￿influence￿and￿which￿cause￿the￿forecasted￿transaction￿to￿be probable￿of￿occurring￿on￿a￿date￿that￿is￿beyond￿the￿specified￿time￿period. Foreign￿currency￿hedging￿instruments￿that￿are￿being￿used￿to￿hedge￿cash￿flows￿related￿to￿forecasted￿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￿statements￿of￿operations￿in￿"sales" or￿"cost￿of￿sales". Interest￿rate￿swaps￿that￿are￿being￿used￿to￿hedge￿changes￿in￿the￿variability￿of￿future￿interest￿cash￿flows￿to￿certain￿of our￿operating￿lease￿obligations￿are￿designated￿as￿cash￿flow￿hedges.￿The￿changes￿in￿fair￿value￿of￿the￿derivatives￿are intended￿to￿offset￿changes￿in￿future￿interest￿cash￿flows￿of￿such￿operating￿lease￿obligations.￿The￿gain￿or￿loss￿relating to￿the￿ineffective￿portion￿of￿interest￿rate￿swaps￿hedging￿the￿variability￿of￿future￿interest￿cash￿flows￿is￿recognized￿in￿the consolidated￿statements￿of￿operations￿as￿"interest￿income"￿or￿"interest￿expense". Net investment hedge Foreign￿currency￿hedging￿instruments￿that￿are￿being￿used￿to￿hedge￿changes￿in￿the￿value￿of￿a￿net￿investment￿are designated￿as￿net￿investment￿hedges.￿Changes￿in￿the￿fair￿value￿of￿a￿derivative￿that￿is￿designated￿and￿qualifies￿as￿a￿net investment￿hedge￿are￿recorded￿in￿other￿comprehensive￿income,￿net￿of￿taxes.￿The￿gain￿or￿loss￿relating￿to￿the￿ineffective portion￿is￿recognized￿in￿the￿consolidated￿statements￿of￿operations￿as￿"interest￿income"￿or￿"interest￿expense".￿Gains￿and losses￿accumulated￿in￿other￿comprehensive￿income￿are￿recognized￿in￿the￿consolidated￿statements￿of￿operations￿when the￿foreign￿operation￿is￿(partially)￿disposed￿or￿sold. ASML￿ANNUAL￿REPORT￿2012 F-7 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. 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￿comprehensive￿income￿until￿the￿short-term￿investments￿are￿derecognized.￿Upon￿derecognition,￿the cumulative￿gain￿or￿loss￿recognized￿in￿comprehensive￿income,￿is￿recognized￿in￿the￿consolidated￿statement￿of￿operations. Inventories Inventories￿are￿stated￿at￿the￿lower￿of￿cost￿(first-in,￿first-out￿method)￿or￿market￿value.￿Cost￿includes￿net￿prices￿paid￿for materials￿purchased,￿charges￿for￿freight￿and￿customs￿duties,￿production￿labor￿cost￿and￿factory￿overhead.￿Allowances are￿made￿for￿slow-moving,￿obsolete￿or￿unsellable￿inventory. Allowances￿for￿inventory￿are￿determined￿based￿on￿the￿expected￿demand￿which￿is￿derived￿from￿sales￿forecasts￿as￿well￿as the￿expected￿market￿value￿of￿the￿inventory. 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￿reporting￿units￿for￿the￿purpose￿of￿impairment￿testing.￿The￿allocation￿is￿made￿to￿those reporting￿units￿that￿are￿expected￿to￿benefit￿from￿the￿business￿combination￿in￿which￿the￿goodwill￿arose.￿Goodwill￿is tested￿for￿impairment￿annually￿on￿September￿30￿and￿whenever￿events￿or￿changes￿in￿circumstances￿indicate￿that￿the carrying￿amount￿of￿the￿goodwill￿may￿not￿be￿recoverable.￿Goodwill￿is￿stated￿at￿cost￿less￿accumulated￿impairment￿losses. Other intangible assets Other￿intangible￿assets￿include￿acquired￿intellectual￿property￿rights,￿developed￿technology,￿customer￿relationships￿and other￿intangible￿assets.￿Other￿intangible￿assets￿are￿stated￿at￿cost,￿less￿accumulated￿amortization￿and￿any￿accumulated impairment￿losses.￿Amortization￿is￿calculated￿using￿the￿straight-line￿method￿based￿on￿the￿estimated￿useful￿lives￿of￿the assets.￿The￿following￿table￿presents￿the￿estimated￿useful￿lives￿of￿ASML’s￿other￿intangible￿assets: Category Intellectual￿property Developed￿technology Customer￿relationships Other Estimated useful life 3￿-￿10￿years 6￿years 8￿years 2￿-￿6￿years 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￿ASML’s￿property,￿plant￿and￿equipment: Category Buildings￿and￿constructions Machinery￿and￿equipment Leasehold￿improvements Furniture,￿fixtures￿and￿other￿equipment Estimated useful life 5￿-￿40￿years 2￿-￿5￿years 5￿-￿10￿years 3￿-￿5￿years Land￿is￿not￿depreciated. Certain￿internal￿and￿external￿costs￿associated￿with￿the￿purchase￿and/or￿development￿of￿internally￿used￿software￿are capitalized￿when￿both￿the￿preliminary￿project￿stage￿is￿completed￿and￿management￿has￿authorized￿further￿funding￿for ASML￿ANNUAL￿REPORT￿2012 F-8 the￿project,￿which￿it￿has￿deemed￿probable￿to￿be￿completed￿and￿to￿be￿usable￿for￿the￿intended￿function.￿These￿costs￿are depreciated￿on￿a￿straight-line￿basis￿over￿the￿period￿of￿related￿benefit,￿which￿ranges￿primarily￿from￿three￿to￿five￿years. Evaluation of long-lived assets for impairment Long-lived￿assets￿include￿goodwill,￿other￿intangible￿assets￿and￿property,￿plant￿and￿equipment. Goodwill￿is￿tested￿for￿impairment￿at￿the￿reporting￿unit￿level￿(operating￿segment￿or￿one￿level￿below￿an￿operating￿segment) on￿an￿annual￿basis￿(September￿30)￿and￿whenever￿events￿or￿changes￿in￿circumstances￿indicate￿that￿the￿carrying￿amount of￿the￿goodwill￿may￿not￿be￿recoverable.￿The￿test￿is￿based￿on￿a￿two-step￿approach.￿First,￿the￿recoverability￿is￿tested￿by comparing￿the￿carrying￿amount￿of￿the￿reporting￿unit￿(including￿goodwill￿allocated￿to￿such￿unit)￿with￿the￿fair￿value￿of￿that reporting￿unit.￿If￿the￿carrying￿amount￿of￿the￿reporting￿unit￿is￿higher￿than￿the￿fair￿value￿of￿the￿reporting￿unit,￿the￿second step￿should￿be￿performed.￿In￿the￿second￿step￿the￿goodwill￿impairment￿is￿measured￿as￿the￿excess￿of￿the￿carrying￿amount of￿the￿goodwill￿over￿its￿implied￿fair￿value.￿The￿implied￿fair￿value￿of￿goodwill￿is￿determined￿by￿calculating￿the￿fair￿value of￿the￿various￿assets￿and￿liabilities￿included￿in￿the￿reporting￿unit￿in￿the￿same￿manner￿as￿goodwill￿is￿determined￿in￿a business￿combination. Other￿intangible￿assets￿and￿property,￿plant￿and￿equipment￿are￿tested￿for￿impairment￿whenever￿events￿or￿changes￿in circumstances￿indicate￿that￿the￿carrying￿amount￿of￿those￿assets￿may￿not￿be￿recoverable.￿Other￿intangible￿assets￿and property,￿plant￿and￿equipment￿are￿tested￿for￿impairment￿based￿on￿a￿two-step￿approach.￿First,￿the￿recoverability￿is tested￿by￿comparing￿the￿carrying￿amount￿of￿the￿other￿intangible￿assets￿and￿property,￿plant￿and￿equipment￿with￿the fair￿value￿being￿the￿sum￿of￿the￿related￿undiscounted￿future￿cash￿flows.￿Second,￿if￿the￿carrying￿amount￿of￿the￿other intangible￿assets￿and￿property,￿plant￿and￿equipment￿is￿higher￿than￿the￿fair￿value￿the￿assets￿are￿considered￿to￿be impaired.￿An￿impairment￿expense￿is￿recognized￿as￿the￿difference￿between￿the￿carrying￿amount￿and￿the￿fair￿value￿of￿the other￿intangible￿assets￿and￿property,￿plant￿and￿equipment. Provisions Provisions￿for￿lease￿contract￿termination￿costs￿are￿recognized￿when￿costs￿will￿continue￿to￿be￿incurred￿under￿a￿contract for￿its￿remaining￿term￿without￿economic￿benefit￿to￿us￿and￿we￿cease￿using￿the￿rights￿conveyed￿by￿the￿contract.￿The provisions￿are￿measured￿at￿fair￿value￿which￿for￿an￿operating￿lease￿contract￿is￿determined￿based￿on￿the￿remaining￿lease payments￿reduced￿by￿the￿estimated￿sublease￿payments￿that￿could￿be￿reasonably￿obtained. Revenue recognition ASML￿recognizes￿revenue￿when￿all￿four￿revenue￿recognition￿criteria￿are￿met:￿persuasive￿evidence￿of￿an￿arrangement exists;￿delivery￿has￿occurred￿or￿services￿have￿been￿rendered;￿seller’s￿price￿to￿buyer￿is￿fixed￿or￿determinable;￿and collectability￿is￿reasonably￿assured.￿At￿ASML￿this￿policy￿generally￿results￿in￿revenue￿recognition￿from￿the￿sale￿of￿a system￿upon￿shipment.￿The￿revenue￿from￿the￿installation￿of￿a￿system￿is￿generally￿recognized￿upon￿completion￿of￿that installation￿at￿the￿customer￿site.￿Each￿system￿undergoes,￿prior￿to￿shipment,￿a￿"Factory￿Acceptance￿Test"￿in￿ASML's clean￿room￿facilities,￿effectively￿replicating￿the￿operating￿conditions￿that￿will￿be￿present￿on￿the￿customer's￿site,￿in￿order to￿verify￿whether￿the￿system￿will￿meet￿its￿standard￿specifications￿and￿any￿additional￿technical￿and￿performance￿criteria agreed￿with￿the￿customer,￿if￿any.￿A￿system￿is￿shipped,￿and￿revenue￿is￿recognized,￿only￿after￿all￿specifications￿are￿met and￿customer￿sign-off￿is￿received￿or￿waived.￿In￿case￿not￿all￿specifications￿are￿met￿and￿the￿remaining￿performance obligation￿is￿not￿essential￿to￿the￿functionality￿of￿the￿system￿but￿is￿substantive￿rather￿than￿inconsequential￿or￿perfunctory, a￿portion￿of￿the￿sales￿price￿is￿deferred.￿Although￿each￿system's￿performance￿is￿re-tested￿upon￿installation￿at￿the customer's￿site,￿ASML￿has￿never￿failed￿to￿successfully￿complete￿installation￿of￿a￿system￿at￿a￿customer’s￿premises. In￿connection￿with￿the￿introduction￿of￿new￿technology,￿such￿as￿our￿second-generation￿EUV￿systems￿(NXE:3100),￿we initially￿defer￿revenue￿recognition￿until￿completion￿of￿installation￿and￿acceptance￿of￿the￿new￿technology￿based￿system at￿customer￿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￿12￿years,￿has￿occurred￿on only￿two￿occasions:￿2010￿(EUV)￿and￿1999￿(TWINSCAN). In￿2012,￿we￿recognized￿system￿sales￿revenue￿for￿one￿NXE:3100￿system￿(2011:￿three￿NXE:3100￿systems;￿2010:￿no NXE:3100￿systems)￿that￿was￿installed￿at￿the￿customer￿location￿and￿was￿accepted￿by￿our￿customer,￿for￿an￿amount￿of EUR￿43.7￿million￿(2011:￿EUR￿119.3￿million￿and￿2010:￿EUR￿nil).￿As￿of￿December￿31,￿2012,￿no￿amounts￿were￿deferred￿in relation￿to￿NXE:3100￿systems￿(2011:￿EUR￿48.6￿million￿and￿2010:￿EUR￿38.5￿million). ASML￿has￿no￿significant￿repurchase￿commitments￿in￿its￿general￿sales￿terms￿and￿conditions.￿From￿time￿to￿time￿we repurchase￿systems￿that￿we￿have￿manufactured￿and￿sold￿and,￿following￿refurbishment,￿resell￿those￿systems￿to￿other customers.￿This￿repurchase￿decision￿is￿driven￿by￿market￿demand￿expressed￿by￿other￿customers￿and￿not￿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 ASML￿ANNUAL￿REPORT￿2012 F-9 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,￿2012￿and￿2011￿ASML￿had￿no￿repurchase commitments. 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￿volume￿discounts￿to￿certain customers.￿In￿some￿instances￿these￿volume￿discounts￿can￿be￿used￿to￿purchase￿field￿options￿(system￿enhancements). The￿related￿amount￿is￿recorded￿as￿a￿reduction￿in￿revenue￿at￿time￿of￿shipment.￿From￿time￿to￿time,￿we￿offer￿free￿or discounted￿products￿or￿services￿(award￿credits)￿to￿our￿customers￿as￿part￿of￿a￿volume￿purchase￿agreement.￿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.￿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￿revenues￿(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.￿When￿we￿satisfy￿the￿onerous￿arrangement,￿we derecognize￿the￿related￿liability. Multiple element arrangements The￿main￿portion￿of￿ASML’s￿revenue￿is￿derived￿from￿contractual￿arrangements￿with￿our￿customers￿that￿have￿multiple deliverables,￿which￿mainly￿include￿the￿sale￿of￿our￿systems,￿installation￿and￿training￿services￿and￿prepaid￿extended￿and enhanced￿(optic)￿warranty￿contracts.￿As￿of￿January￿1,￿2011,￿ASML￿adopted￿Accounting￿Standards￿Update￿("ASU") 2009-13,￿"Revenue￿Arrangements￿with￿Multiple￿Deliverables"￿which￿amended￿the￿guidance￿on￿arrangements￿with multiple￿deliverables￿in￿ASC￿605-25.￿The￿new￿standard￿changes￿the￿requirements￿for￿establishing￿separate￿units of￿accounting￿in￿a￿multiple￿element￿arrangement￿and￿requires￿the￿allocation￿of￿arrangement￿consideration￿to￿each deliverable￿to￿be￿based￿on￿the￿relative￿selling￿price.￿We￿apply￿this￿accounting￿guidance￿prospectively￿to￿arrangements originating￿or￿materially￿modified￿on￿or￿after￿January￿1,￿2011.￿The￿implementation￿resulted￿in￿additional￿qualitative disclosures￿that￿are￿included￿below,￿but￿did￿not￿result￿in￿additional￿units￿of￿accounting￿and￿only￿had￿an￿insignificant impact￿on￿timing￿and￿allocation￿of￿revenues. Each￿element￿in￿the￿arrangement￿is￿accounted￿for￿as￿a￿separate￿unit￿of￿accounting￿provided￿the￿following￿criteria￿are met:￿the￿delivered￿products￿or￿services￿have￿value￿to￿the￿customer￿on￿a￿standalone￿basis;￿and￿for￿an￿arrangement that￿includes￿a￿general￿right￿of￿return￿relative￿to￿the￿delivered￿products￿or￿services,￿delivery￿or￿performance￿of￿the undelivered￿product￿or￿service￿is￿considered￿probable￿and￿is￿substantially￿controlled￿by￿us.￿We￿consider￿a￿deliverable to￿have￿stand-alone￿value￿if￿the￿product￿or￿service￿is￿sold￿separately￿by￿us￿or￿another￿vendor￿or￿could￿be￿resold￿by￿the customer.￿Further,￿our￿revenue￿arrangements￿do￿not￿include￿a￿general￿right￿of￿return￿relative￿to￿the￿delivered￿products. Where￿the￿aforementioned￿criteria￿for￿a￿separate￿unit￿of￿accounting￿are￿not￿met,￿the￿deliverable￿is￿combined￿with￿the undelivered￿element(s)￿and￿treated￿as￿a￿single￿unit￿of￿accounting￿for￿the￿purposes￿of￿allocation￿of￿the￿arrangement consideration￿and￿revenue￿recognition. The￿hierarchy￿of￿evidence￿to￿determine￿a￿selling￿price￿in￿ASC￿605-25￿is￿as￿follows: • Vendor-Specific￿Objective￿Evidence￿("VSOE")￿–￿the￿price￿at￿which￿we￿sell￿the￿element￿in￿a￿separate￿standalone transaction; • Third-Party￿Evidence￿("TPE")￿–￿evidence￿from￿us￿or￿other￿companies￿of￿the￿value￿of￿a￿largely￿interchangeable￿element in￿a￿transaction; • Best￿Estimate￿of￿Selling￿Price￿("BESP")￿–￿our￿best￿estimate￿of￿the￿selling￿price￿of￿an￿element￿in￿the￿transaction. To￿determine￿the￿selling￿price￿in￿multiple￿elements￿arrangements,￿we￿establish￿VSOE￿of￿the￿selling￿price￿for￿installation and￿training￿services￿and￿prepaid￿extended￿and￿enhanced￿(optic)￿warranty￿contracts.￿VSOE￿is￿determined￿based￿on￿the prices￿that￿ASML￿charges￿for￿installation￿and￿comparable￿services￿(such￿as￿relocating￿a￿system￿to￿another￿customer site)￿and￿prepaid￿extended￿and￿enhanced￿(optic)￿warranty￿contracts￿on￿a￿stand-alone￿basis,￿which￿are￿subject￿to￿normal price￿negotiations.￿Revenue￿from￿installation￿and￿training￿services￿is￿recognized￿when￿the￿services￿are￿completed. Revenue￿from￿prepaid￿extended￿and￿enhanced￿(optic)￿warranty￿contracts￿is￿recognized￿over￿the￿term￿of￿the￿contract. When￿we￿are￿unable￿to￿establish￿the￿selling￿price￿using￿VSOE￿or￿TPE,￿we￿use￿BESP.￿The￿objective￿of￿using￿estimated selling￿price-based￿methodology￿is￿to￿determine￿the￿price￿at￿which￿we￿would￿transact￿a￿sale￿if￿the￿product￿or￿service were￿sold￿on￿a￿stand-alone￿basis.￿Accordingly,￿we￿determine￿BESP￿considering￿several￿internal￿and￿external￿factors ASML￿ANNUAL￿REPORT￿2012 F-10 including,￿but￿not￿limited￿to,￿pricing￿practices,￿gross￿margin￿objectives,￿market￿conditions,￿competitive￿environment, internal￿costs￿and￿geographies.￿We￿review￿selling￿prices￿every￿reporting￿period￿and￿maintain￿internal￿controls￿over￿the establishment￿and￿updates￿of￿these￿estimates. For￿arrangements￿entered￿into￿through￿December￿31,￿2010,￿we￿primarily￿recognize￿revenue￿based￿on￿the￿previous guidance￿of￿ASC￿605-25.￿The￿revenue￿relating￿to￿the￿installation￿and￿training￿services￿and￿prepaid￿extended￿and enhanced￿(optic)￿warranty￿contracts￿is￿deferred￿at￿their￿fair￿value￿until￿delivery￿of￿these￿elements.￿￿As￿we￿are￿not￿able to￿determine￿the￿fair￿value￿for￿the￿system,￿but￿we￿are￿able￿to￿determine￿the￿fair￿value￿for￿all￿other￿elements￿in￿the arrangement,￿revenue￿is￿allocated￿as￿the￿difference￿between￿the￿total￿arrangement￿consideration￿less￿the￿aggregate￿fair value￿of￿all￿other￿elements￿in￿the￿arrangement,￿and￿no￿revenue￿is￿recognized￿until￿all￿elements￿without￿fair￿value￿have been￿delivered. Lease arrangements A￿lease￿is￿classified￿as￿a￿sales-type￿lease￿if￿any￿of￿the￿following￿lease￿classification￿criteria￿are￿met￿at￿its￿inception: 1. The￿lease￿transfers￿ownership￿of￿the￿property￿to￿the￿lessee￿by￿the￿end￿of￿the￿lease￿term; 2. The￿lease￿contains￿a￿bargain￿purchase￿option; 3. The￿lease￿term￿is￿equal￿to￿75￿percent￿or￿more￿of￿the￿estimated￿economic￿life￿of￿the￿leased￿property;￿and 4. The￿present￿value￿at￿the￿beginning￿of￿the￿lease￿term￿of￿the￿minimum￿lease￿payments,￿excluding￿that￿portion￿of the￿payments￿representing￿executory￿costs￿such￿as￿insurance,￿maintenance,￿and￿taxes￿to￿be￿paid￿by￿the￿lessor, including￿any￿profit￿thereon,￿equals￿or￿exceeds￿90￿percent￿of￿the￿excess￿of￿the￿fair￿value￿of￿the￿leased￿property to￿the￿lessor￿at￿lease￿inception￿over￿any￿related￿investment￿tax￿credit￿retained￿by￿the￿lessor￿and￿expected￿to￿be realized￿by￿the￿lessor. In￿addition￿revenue￿is￿recognized￿at￿commencement￿of￿the￿lease￿term.￿The￿present￿value￿of￿the￿lease￿payments￿is recognized￿as￿a￿finance￿receivable.￿The￿difference￿between￿the￿gross￿receivable￿and￿the￿present￿value￿of￿the￿receivable is￿recognized￿as￿unearned￿interest￿in￿the￿consolidated￿statements￿of￿operations. A￿lease￿is￿classified￿as￿an￿operating￿lease￿if￿the￿lease￿classification￿criteria￿(as￿described￿above)￿are￿not￿met.￿If￿ASML has￿offered￿its￿customers￿an￿operating￿lease￿arrangement,￿the￿contract￿consideration￿is￿recognized￿in￿the￿consolidated statements￿of￿operations￿on￿a￿straight-line￿basis￿over￿the￿period￿of￿the￿lease. 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￿and￿optic￿parts￿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￿field￿expenses.￿Based￿upon￿historical￿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￿extended￿and￿enhanced￿(optic)￿warranty￿on￿our￿system￿is￿accounted￿for￿as￿a￿separate￿element￿of￿multiple￿element revenue￿recognition￿transactions. Accounting for shipping and handling fees and costs ASML￿bills￿the￿customer￿for,￿and￿recognizes￿as￿revenue,￿any￿charges￿for￿shipping￿and￿handling￿costs.￿The￿related￿costs are￿recognized￿as￿cost￿of￿sales. Cost of sales Cost￿of￿system￿sales￿comprise￿direct￿product￿costs￿such￿as￿materials,￿labor,￿cost￿of￿warranty,￿depreciation,￿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￿accrued￿warranty￿reserve￿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,￿cost￿of￿warranty,￿depreciation, shipping￿and￿handling￿costs￿and￿related￿overhead￿costs. ASML￿ANNUAL￿REPORT￿2012 F-11 Research and development costs and credits Costs￿relating￿to￿research￿and￿development￿("R&D")￿are￿charged￿to￿operating￿expenses￿as￿incurred.￿ASML￿receives subsidies￿and￿other￿credits￿from￿several￿Dutch￿and￿international￿(inter-)governmental￿institutes.￿These￿subsidies￿and other￿governmental￿credits￿that￿cover￿R&D￿costs￿relating￿to￿approved￿projects￿are￿recorded￿as￿R&D￿credits￿in￿the￿R&D line￿in￿the￿consolidated￿statements￿of￿operations￿in￿the￿period￿in￿which￿such￿costs￿occur. Share-based payments The￿cost￿of￿employee￿services￿received￿(compensation￿expenses)￿in￿exchange￿for￿awards￿of￿equity￿instruments￿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￿AAA￿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￿ordinary￿shares￿on￿NYSE Euronext￿Amsterdam￿on￿the￿grant-date. The￿grant-date￿fair￿value￿of￿the￿equity-settled￿share-based￿payments￿is￿expensed￿on￿a￿straight-line￿basis￿over￿the vesting￿period,￿based￿on￿our￿estimate￿of￿equity￿instruments￿that￿will￿eventually￿vest.￿At￿each￿balance￿sheet￿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￿operations￿in￿the￿period￿in￿which￿the￿revision￿is determined,￿with￿a￿corresponding￿adjustment￿to￿shareholders'￿equity. Our￿current￿share-based￿payment￿plans￿do￿not￿provide￿for￿cash￿settlement￿of￿options￿and￿stock. Income taxes The￿asset￿and￿liability￿method￿is￿used￿in￿accounting￿for￿income￿taxes.￿Under￿this￿method,￿deferred￿tax￿assets￿and liabilities￿are￿recognized￿for￿the￿tax￿effect￿of￿incurred￿net￿operating￿losses￿and￿for￿tax￿consequences￿attributable￿to differences￿between￿the￿balance￿sheet￿carrying￿amounts￿of￿existing￿assets￿and￿liabilities￿and￿their￿respective￿tax￿bases. If￿it￿is￿more￿likely￿than￿not￿that￿the￿carrying￿amounts￿of￿deferred￿tax￿assets￿will￿not￿be￿realized,￿a￿valuation￿allowance￿is recorded￿to￿reduce￿the￿carrying￿amounts￿of￿those￿assets. Deferred￿tax￿assets￿and￿liabilities￿are￿measured￿using￿enacted￿tax￿rates￿expected￿to￿apply￿to￿taxable￿income￿in￿the years￿in￿which￿those￿temporary￿differences￿are￿expected￿to￿be￿recovered￿or￿settled.￿The￿effect￿on￿deferred￿tax￿assets and￿liabilities￿of￿a￿change￿in￿tax￿rates￿is￿recognized￿in￿the￿consolidated￿statements￿of￿operations￿in￿the￿period￿that includes￿the￿enactment￿date. On￿January￿1,￿2007￿we￿adopted￿the￿provisions￿of￿FIN￿48￿"Accounting￿for￿Uncertainty￿in￿Income￿Taxes"￿after￿codification included￿in￿ASC￿740.￿ASC￿740￿clarifies￿the￿accounting￿for￿income￿taxes￿by￿prescribing￿a￿minimum￿recognition￿threshold a￿tax￿position￿is￿required￿to￿meet￿before￿being￿recognized￿in￿the￿financial￿statements.￿ASC￿740￿also￿provides￿guidance on￿derecognition,￿measurement,￿classification,￿interest￿and￿penalties,￿accounting￿in￿interim￿periods,￿disclosure￿and transition. Contingencies and litigation We￿are￿party￿to￿various￿legal￿proceedings￿generally￿incidental￿to￿our￿business,￿as￿disclosed￿in￿Note￿18.￿In￿connection with￿these￿proceedings￿and￿claims,￿our￿management￿evaluated,￿based￿on￿the￿relevant￿facts￿and￿legal￿principles,￿the likelihood￿of￿an￿unfavorable￿outcome￿and￿whether￿the￿amount￿of￿the￿loss￿could￿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￿operations￿at￿the￿time￿when￿the￿related legal￿services￿are￿actually￿provided. ASML￿ANNUAL￿REPORT￿2012 F-12 Net income per ordinary 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.￿See Note￿26￿for￿further￿discussion. The￿basic￿and￿diluted￿net￿income￿per￿ordinary￿share￿has￿been￿calculated￿in￿accordance￿with￿the￿following￿schedule: Year ended December 31 (in thousands, except per share data) Net income ￿ Weighted average number of shares outstanding during the year (after deduction of treasury stock) ￿ Basic net income per ordinary share ￿ Weighted average number of shares: Plus￿shares￿applicable￿to: Options￿and￿conditional￿shares1 ￿ Dilutive potential ordinary shares ￿ Adjusted weighted average number of shares ￿ Diluted net income per ordinary share1 2012 EUR 1,146,316 ￿ ￿ 424,096 ￿ 2.70 ￿ 424,096 ￿ 2,890 ￿ 2,890 ￿ 426,986 ￿ 2.68 2011 EUR 1,466,960 ￿ ￿ 425,618 ￿ 3.45 ￿ 425,618 ￿ 3,435 ￿ 3,435 ￿ 429,053 ￿ 3.42 2010 EUR 1,021,820 ￿ ￿ 435,146 ￿ 2.35 ￿ 435,146 ￿ 3,828 ￿ 3,828 ￿ 438,974 ￿ 2.33 1 The￿calculation￿of￿diluted￿net￿income￿per￿ordinary￿share￿assumes￿the￿exercise￿of￿options￿issued￿under￿ASML￿stock￿option￿plans￿and￿the￿issuance￿of shares￿under￿ASML￿share￿plans￿for￿periods￿in￿which￿exercises￿or￿issuances￿would￿have￿a￿dilutive￿effect.￿The￿calculation￿of￿diluted￿net￿income￿per ordinary￿share￿does￿not￿assume￿exercise￿of￿such￿options￿or￿issuance￿of￿shares￿when￿such￿exercises￿or￿issuance￿would￿be￿anti-dilutive. Comprehensive income Comprehensive￿income￿consists￿of￿net￿income￿(loss)￿and￿other￿comprehensive￿income. Other￿comprehensive￿income￿refers￿to￿revenues,￿expenses,￿gains￿and￿losses￿that￿are￿not￿included￿in￿net￿income￿(loss), but￿recorded￿directly￿in￿shareholders’￿equity.￿For￿the￿year￿ending￿December￿31,￿2012,￿comprehensive￿income￿consists of￿net￿income,￿unrealized￿gains￿and￿losses￿on￿financial￿instruments,￿being￿available-for-sale￿securities￿and￿derivative financial￿instruments￿designated￿for￿hedge￿accounting,￿net￿of￿taxes,￿and￿unrealized￿gains￿and￿losses￿on￿foreign￿currency translation,￿net￿of￿taxes.￿For￿the￿years￿ended￿December￿31,￿2011￿and￿2010￿comprehensive￿income￿consists￿of￿net income,￿unrealized￿gains￿and￿losses￿on￿financial￿instruments,￿being￿derivative￿financial￿instruments￿designated￿for hedge￿accounting,￿net￿of￿taxes,￿and￿unrealized￿gains￿and￿losses￿on￿foreign￿currency￿translation,￿net￿of￿taxes. New U.S. GAAP Accounting Pronouncements In￿June￿2011,￿the￿FASB￿issued￿ASU￿No.￿2011-05,￿“Comprehensive￿Income￿(Topic￿220)”.￿Under￿the￿ASU,￿an￿entity has￿the￿option￿to￿present￿comprehensive￿income￿in￿either￿one￿continuous￿statement￿or￿two￿consecutive￿financial statements.￿Under￿both￿options,￿an￿entity￿is￿required￿to￿present￿each￿component￿of￿net￿income￿along￿with￿total￿net income,￿each￿component￿of￿other￿comprehensive￿income￿(“OCI”)￿along￿with￿a￿total￿for￿OCI￿and￿a￿total￿amount￿for comprehensive￿income.￿The￿option￿under￿current￿guidance￿which￿permits￿the￿presentation￿of￿components￿of￿OCI￿as part￿of￿the￿statement￿of￿changes￿in￿shareholders’￿equity￿has￿been￿eliminated.￿In￿December￿2011,￿the￿FASB￿issued ASU￿2011-12￿which￿indefinitely￿defers￿certain￿provisions￿of￿ASU￿2011-05,￿the￿main￿deferred￿provision￿relating￿to￿a requirement￿for￿entities￿to￿present￿reclassification￿adjustments￿out￿of￿accumulated￿OCI￿by￿component￿in￿both￿the statements￿in￿which￿net￿income￿is￿presented￿and￿the￿statement￿in￿which￿OCI￿in￿any￿period￿is￿presented.￿The￿ASU￿is effective￿for￿annual￿and￿interim￿periods￿beginning￿after￿December￿15,￿2011.￿￿We￿have￿early￿adopted￿this￿standard; adoption￿had￿no￿impact￿on￿our￿consolidated￿financial￿statements. In￿December￿2011,￿the￿Financial￿Accounting￿Standards￿Board￿("FASB")￿issued￿ASU￿No.￿2011-11￿"Disclosures￿about Offsetting￿Assets￿and￿Liabilities".￿Under￿the￿new￿guidance,￿the￿entities￿must￿disclose￿both￿gross￿information￿and￿net information￿about￿both￿instruments￿and￿transactions￿eligible￿for￿offset￿on￿the￿balance￿sheet￿in￿accordance￿with￿the offsetting￿guidance￿in￿ASC￿210-20-45￿or￿ASC￿815-10-45,￿and￿instruments￿and￿transactions￿subject￿to￿an￿agreement similar￿to￿a￿master￿netting￿arrangement.￿The￿new￿guidance￿will￿be￿effective￿for￿us￿beginning￿January￿1,￿2013.￿Other￿than ASML￿ANNUAL￿REPORT￿2012 F-13 requiring￿some￿additional￿disclosures,￿we￿do￿not￿anticipate￿material￿impacts￿on￿our￿consolidated￿financial￿statements upon￿adoption. In￿July￿2012,￿the￿FASB￿issued￿ASU￿No.￿2012-02￿"Testing￿Indefinite-Lived￿Intangible￿Assets￿for￿Impairment".￿This￿ASU amends￿the￿guidance￿in￿ASC￿350-30￿on￿testing￿indefinite-lived￿intangible￿assets,￿other￿than￿goodwill,￿for￿impairment. The￿FASB￿issued￿the￿ASU￿in￿response￿to￿feedback￿on￿ASU￿2011-08,￿which￿amended￿the￿goodwill￿impairment￿testing requirements￿by￿allowing￿an￿entity￿to￿perform￿a￿qualitative￿impairment￿assessment￿before￿proceeding￿to￿the￿two-step impairment￿test.￿The￿new￿guidance￿will￿be￿effective￿for￿annual￿and￿interim￿impairment￿tests￿performed￿for￿fiscal￿years beginning￿after￿September￿15,￿2012.￿The￿ASU￿2012-02￿will￿not￿have￿any￿effect￿on￿our￿consolidated￿financial￿statements. In￿October￿2012,￿the￿FASB￿issued￿ASU￿No.￿2014-04￿"Technical￿Corrections￿and￿Improvements".￿This￿ASU￿makes￿certain technical￿corrections￿(i.e.,￿relatively￿minor￿corrections￿and￿clarifications)￿and￿“conforming￿fair￿value￿amendments”￿to the￿FASB￿Accounting￿Standards￿Codification￿(the￿“Codification”).￿The￿new￿guidance￿will￿be￿effective￿for￿fiscal￿years beginning￿after￿December￿15,￿2012.￿We￿do￿not￿anticipate￿material￿impacts￿on￿our￿consolidated￿financial￿statements upon￿adoption. 2. Fair value measurements Fair￿value￿is￿the￿price￿that￿would￿be￿received￿to￿sell￿an￿asset￿or￿paid￿to￿transfer￿a￿liability￿in￿an￿orderly￿transaction between￿market￿participants￿at￿the￿measurement￿date.￿The￿fair￿value￿measurement￿hierarchy￿prioritizes￿the￿inputs￿to valuation￿techniques￿used￿to￿measure￿fair￿value￿as￿follows: • Level￿1:￿Valuations￿based￿on￿inputs￿such￿as￿quoted￿prices￿for￿identical￿assets￿or￿liabilities￿in￿active￿markets￿that￿the entity￿has￿the￿ability￿to￿access. • Level￿2:￿Valuations￿based￿on￿inputs￿other￿than￿level￿1￿inputs￿such￿as￿quoted￿prices￿for￿similar￿assets￿or￿liabilities, quoted￿prices￿in￿markets￿that￿are￿not￿active,￿or￿other￿inputs￿that￿are￿observable￿or￿can￿be￿corroborated￿by￿observable data￿for￿substantially￿the￿full￿term￿of￿the￿assets￿or￿liabilities. • Level￿3:￿Valuations￿based￿on￿inputs￿that￿are￿supported￿by￿little￿or￿no￿market￿activity￿and￿that￿are￿significant￿to￿the￿fair value￿of￿the￿assets￿or￿liabilities. The￿fair￿value￿hierarchy￿gives￿the￿highest￿priority￿to￿quoted￿prices￿(unadjusted)￿in￿active￿markets￿for￿identical￿assets or￿liabilities￿(Level￿1)￿and￿the￿lowest￿priority￿to￿unobservable￿inputs￿(Level￿3).￿A￿financial￿instrument’s￿fair￿value classification￿is￿based￿on￿the￿lowest￿level￿of￿any￿input￿that￿is￿significant￿in￿the￿fair￿value￿measurement￿hierarchy. Financial assets and financial liabilities measured at fair value on a recurring basis Investments￿in￿money￿market￿funds￿(as￿part￿of￿our￿cash￿and￿cash￿equivalents)￿have￿fair￿value￿measurements￿which￿are all￿based￿on￿quoted￿prices￿for￿identical￿assets￿or￿liabilities. Our￿available-for￿sale￿financial￿instruments￿consist￿of￿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￿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￿Net￿Present￿Value￿technique￿("NPV")￿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 Net￿Present￿Value￿technique,￿which￿is￿the￿estimated￿amount￿that￿a￿bank￿would￿receive￿or￿pay￿to￿terminate￿the￿swap agreements￿at￿the￿reporting￿date,￿taking￿into￿account￿current￿interest￿rates. Our￿5.75￿percent￿senior￿notes￿due￿2017￿(“Eurobond”)￿serve￿as￿a￿hedged￿item￿in￿a￿fair￿value￿hedge￿relationship￿in which￿we￿hedge￿the￿variability￿of￿changes￿in￿the￿fair￿value￿of￿our￿Eurobond￿due￿to￿changes￿in￿market￿interest￿rates with￿interest￿rate￿swaps.￿The￿fair￿value￿changes￿of￿these￿interest￿rate￿swaps￿are￿recorded￿on￿the￿balance￿sheet￿under derivative￿financial￿instruments￿(within￿other￿current￿assets￿and￿other￿non-current￿assets)￿and￿the￿carrying￿amount￿of￿the ASML￿ANNUAL￿REPORT￿2012 F-14 Eurobond￿is￿adjusted￿for￿these￿fair￿value￿changes￿only.￿For￿the￿actual￿fair￿value,￿including￿credit￿risk￿considerations,￿see Note￿14. The￿following￿table￿presents￿our￿financial￿assets￿and￿financial￿liabilities￿that￿are￿measured￿at￿fair￿value￿on￿a￿recurring basis: As of December 31, 2012 (in thousands) Assets Derivative￿financial￿instruments￿1 Money￿market￿funds￿2 Short-term￿investments￿3 Total ￿ Liabilities Long-term￿debt￿4 Derivative￿financial￿instruments￿1 Total ￿ ￿ As of December 31, 2011 (in￿thousands) Assets Derivative￿financial￿instruments￿1 Money￿market￿funds￿2 Total ￿ Liabilities Long-term￿debt￿4 Derivative￿financial￿instruments￿1 Total Level 1 EUR ￿ - 385,420 279,988 665,408 ￿ ￿ - - - ￿ ￿ Level 1 EUR ￿ - 369,238 369,238 ￿ ￿ - - - Level 2 EUR ￿ 151,748 - 650,017 801,765 ￿ ￿ 759,490 10,893 770,383 ￿ ￿ Level 2 EUR ￿ 126,351 - 126,351 ￿ ￿ 736,368 40,359 776,727 Level 3 EUR ￿ - - - - ￿ ￿ - - - ￿ ￿ Level 3 EUR ￿ - - - ￿ ￿ - - - Total EUR ￿ 151,748 385,420 930,005 1,467,173 ￿ ￿ 759,490 10,893 770,383 ￿ ￿ Total EUR ￿ 126,351 369,238 495,589 ￿ ￿ 736,368 40,359 776,727 1 Derivative￿financial￿instruments￿consist￿of￿forward￿foreign￿exchange￿contracts￿and￿interest￿rate￿swaps.￿See￿Note￿3. 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￿mainly￿relates￿to￿our￿EUR￿600.0￿million￿Eurobond￿(fair￿value￿as￿at￿December￿31,￿2012:￿EUR￿710.1￿million￿(2011:￿EUR￿695.6￿million)) and￿excludes￿accrued￿interest.￿For￿further￿details￿see￿Note￿14. There￿were￿no￿transfers￿between￿levels￿during￿the￿years￿ended￿December￿31,￿2012￿and￿December￿31,￿2011. Assets and liabilities measured at fair value on a nonrecurring basis In￿2012,￿we￿recognized￿impairment￿charges￿of￿EUR￿3.2￿million￿(2011:￿EUR￿12.3￿million;￿2010:￿EUR￿8.6￿million)￿on￿our property,￿plant￿and￿equipment,￿mainly￿relating￿to￿furniture,￿fixture￿and￿other￿equipment.￿Valuation￿of￿these￿assets￿is classified￿as￿Level￿3￿in￿the￿fair￿value￿hierarchy￿since￿their￿fair￿values￿were￿determined￿based￿on￿unobservable￿inputs. The￿impairment￿charge￿is￿determined￿based￿on￿the￿difference￿between￿the￿assets’￿estimated￿fair￿value￿(being￿EUR￿0.1 million)￿and￿their￿carrying￿amount.￿For￿further￿information,￿see￿Note￿11. We￿did￿not￿recognize￿any￿impairment￿charges￿for￿goodwill￿and￿other￿intangible￿assets￿during￿2012.￿See￿Notes￿9￿and￿10 for￿more￿information. 3. Financial risk management We￿are￿exposed￿to￿certain￿financial￿risks￿such￿as￿market￿risk￿(including￿foreign￿currency￿exchange￿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￿expenses￿are￿mainly￿denominated￿in￿euros,￿to￿a￿certain￿extent￿in￿U.S.￿dollar￿and￿Japanese￿yen￿and￿to￿a limited￿extent￿in￿other￿currencies.￿Therefore,￿we￿are￿exposed￿to￿foreign￿currency￿exchange￿risk. ASML￿ANNUAL￿REPORT￿2012 F-15 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. As￿of￿December￿31,￿2012,￿accumulated￿other￿comprehensive￿income￿includes￿EUR￿4.9￿million￿gain￿(net￿of￿taxes: EUR￿4.3￿million￿gain;￿2011:￿EUR￿4.4￿million￿loss)￿representing￿the￿total￿anticipated￿gain￿to￿be￿released￿to￿sales,￿and EUR￿6.0￿million￿loss￿(net￿of￿taxes:￿EUR￿5.3￿million￿loss;￿2011:￿EUR￿10.3￿million￿gain)￿to￿be￿charged￿to￿cost￿of￿sales, which￿will￿offset￿the￿EUR￿equivalent￿of￿foreign￿currency￿denominated￿forecasted￿sales￿and￿purchase￿transactions.￿All amounts￿are￿expected￿to￿be￿released￿over￿the￿next￿12￿months.￿The￿effectiveness￿of￿all￿contracts￿for￿which￿we￿apply hedge￿accounting￿is￿monitored￿on￿a￿quarterly￿basis￿throughout￿the￿life￿of￿the￿hedges.￿During￿2012,￿no￿ineffective￿hedge relationships￿were￿recognized￿(2011:￿loss￿of￿EUR￿0.2￿million￿related￿to￿sales￿transactions). 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￿Eurobond￿due￿to changes￿in￿market￿interest￿rates,￿thereby￿offsetting￿the￿variability￿of￿future￿interest￿receipts￿on￿part￿of￿our￿cash￿and cash￿equivalents.￿During￿2012,￿the￿hedge￿was￿100￿percent￿effective￿in￿hedging￿the￿fair￿value￿exposure￿to￿interest￿rate movements.￿The￿changes￿in￿fair￿value￿of￿the￿Eurobond￿were￿included￿at￿the￿same￿time￿in￿the￿consolidated￿statement￿of operations￿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￿2012,￿these￿hedges￿were￿100￿percent￿effective￿in hedging￿the￿cash￿flow￿exposure￿to￿interest￿rate￿movements. Financial instruments We￿use￿foreign￿exchange￿contracts￿to￿manage￿our￿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￿financial￿instruments: (in thousands) Forward￿foreign￿exchange￿contracts¹ Interest￿rate￿swaps² As of December 31 Notional amount EUR 262,146 624,900 Fair Value EUR 16,805 124,050 Notional amount EUR 389,579 641,500 Fair Value EUR (23,999) 109,991 2012 2011 1 Relates￿to￿forward￿contracts￿assigned￿as￿a￿hedge￿to￿forecasted￿sales￿and￿purchase￿transactions￿and￿to￿monetary￿assets￿and￿liabilities,￿mainly￿in￿U.S. dollar￿and￿Japanese￿Yen. 2 Relates￿to￿interest￿rate￿swaps￿assigned￿as￿a￿hedge￿to￿interest￿bearing￿assets￿and￿liabilities,￿mainly￿related￿to￿the￿Eurobond;￿the￿fair￿value￿of￿the interest￿rate￿swaps￿includes￿accrued￿interest. The￿following￿table￿summarizes￿our￿derivative￿financial￿instruments￿per￿category: As of December 31 (in thousands) Interest￿rate￿swaps￿-￿cash￿flow￿hedges Interest￿rate￿swaps￿-￿fair￿value￿hedges Forward￿foreign￿exchange￿contracts￿-￿cash￿flow￿hedges Forward￿foreign￿exchange￿contracts￿-￿other￿hedges￿(no￿hedge￿accounting) Total ￿ Less￿non-current￿portion: Interest￿rate￿swaps￿-￿cash￿flow￿hedges Interest￿rate￿swaps￿-￿fair￿value￿hedges Total non-current portion ￿ Total current portion 2012 2011 Assets EUR - 128,830 5,975 16,943 151,748 ￿ ￿ - 101,651 101,651 ￿ 50,097 Liabilities EUR 4,780 - 5,688 425 10,893 ￿ ￿ ￿ 4,032 - 4,032 Assets EUR - 113,924 11,332 1,095 126,351 ￿ ￿ - 92,534 92,534 ￿ Liabilities EUR 3,933 - 3,019 33,407 40,359 ￿ ￿ ￿ 3,210 - 3,210 6,861 33,817 37,149 The￿fair￿value￿part￿of￿a￿hedging￿derivative￿that￿has￿a￿remaining￿term￿of￿12￿months￿or￿less￿after￿balance￿sheet￿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￿balance￿sheet￿date,￿it￿is￿classified￿as￿non-current.￿The￿current￿portion￿of￿derivative￿financial￿instruments￿is￿included ASML￿ANNUAL￿REPORT￿2012 F-16 in￿respectively￿other￿current￿assets￿and￿current￿accrued￿and￿other￿liabilities￿in￿the￿balance￿sheet.￿The￿non-current portion￿of￿derivative￿financial￿instruments￿is￿included￿in,￿respectively,￿other￿non-current￿assets￿and￿non-current￿accrued and￿other￿liabilities￿in￿the￿balance￿sheet. For￿further￿information￿regarding￿our￿derivative￿financial￿instruments,￿see￿Notes￿1,￿2,￿8￿and￿12. Foreign exchange contracts The￿notional￿principal￿amounts￿of￿the￿outstanding￿forward￿foreign￿exchange￿contracts￿in￿the￿main￿currencies￿U.S.￿dollar and￿Japanese￿yen￿at￿December￿31,￿2012￿are￿U.S.￿dollar￿159.8￿million￿and￿Japanese￿yen￿8.4￿billion￿(2011:￿U.S.￿dollar 48.9￿million￿and￿Japanese￿yen￿37.2￿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￿other￿comprehensive￿income￿on￿forward￿foreign exchange￿contracts￿as￿of￿December￿31,￿2012￿will￿be￿recognized￿in￿the￿consolidated￿statements￿of￿operations￿in￿the period￿or￿periods￿during￿which￿the￿hedged￿forecasted￿transactions￿affect￿the￿consolidated￿statements￿of￿operations. In￿2012,￿we￿recognized￿a￿net￿amount￿of￿EUR￿8.7￿million￿gain￿(2011:￿EUR￿58.1￿million￿loss;￿2010:￿EUR￿43.5￿million loss)￿in￿the￿consolidated￿statements￿of￿operations￿resulting￿from￿effective￿cash￿flow￿hedges￿for￿forecasted￿sales￿and purchase￿transactions￿that￿occurred￿in￿the￿year.￿Furthermore,￿we￿recognized￿an￿amount￿of￿EUR￿3.0￿million￿gain￿in￿the consolidated￿statements￿of￿operations￿resulting￿from￿derivative￿financial￿instruments￿measured￿at￿fair￿value￿through profit￿or￿loss￿(2011:￿EUR￿38.3￿million￿loss;￿2010:￿EUR￿32.9￿million￿loss). Interest rate swaps The￿notional￿principal￿amounts￿of￿the￿outstanding￿interest￿rate￿swap￿contracts￿as￿of￿December￿31,￿2012￿were￿EUR 624.9￿million￿(2011:￿EUR￿641.5￿million). 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￿high-rated￿financial￿institutions￿and￿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￿high￿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￿Integrated￿Circuit￿("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,￿and￿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￿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￿2013￿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￿ANNUAL￿REPORT￿2012 F-17 4. Cash and cash equivalents and short-term investments Cash￿and￿cash￿equivalents￿at￿December￿31,￿2012￿include￿deposits￿with￿high-rated￿financial￿institutions￿and￿the Dutch￿government￿of￿EUR￿775.6￿million￿(2011:￿EUR￿1,818.6￿million),￿investments￿in￿AAAm-rated￿money￿market￿funds that￿invest￿in￿high-rated￿debt￿securities￿of￿financial￿institutions￿and￿governments￿of￿EUR￿385.4￿million￿(2011:￿EUR 369.2￿million)￿and￿interest-bearing￿bank￿accounts￿of￿EUR￿606.6￿million￿(2011:￿EUR￿544.0￿million).￿Our￿cash￿and￿cash equivalents￿are￿predominantly￿denominated￿in￿euros￿and￿partly￿in￿US￿dollars. Cash￿and￿cash￿equivalents￿have￿insignificant￿interest￿rate￿risk￿and￿remaining￿maturities￿of￿three￿months￿or￿less￿at￿the date￿of￿acquisition.￿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, 2012 (in thousands) Dutch￿Treasury￿Certificates Deposits Total Cost basis 279,988 650,017 930,005 Unrealized Gains - - - Unrealized Losses Recorded Basis 279,988 650,017 930,005 - - - We￿had￿no￿short-term￿investments￿as￿of￿December￿31,￿2011. 5. Accounts receivable Accounts￿receivable￿consist￿of￿the￿following: As of December 31 (in thousands) Accounts￿receivable,￿gross Allowance￿for￿doubtful￿receivables ￿ Accounts receivable, net 2012 EUR 607,359 (2,071) ￿ 605,288 2011 EUR 883,209 (2,582) ￿ 880,627 The￿carrying￿amount￿of￿the￿accounts￿receivable￿approximates￿the￿fair￿value.￿ASML￿performs￿ongoing￿credit￿evaluations on￿its￿customers’￿financial￿condition.￿ASML￿periodically￿reviews￿whether￿an￿allowance￿for￿credit￿losses￿is￿needed￿by considering￿factors￿such￿as￿historical￿payment￿experience,￿credit￿quality,￿aging￿accounts￿receivables￿balances,￿and current￿economic￿conditions￿that￿may￿affect￿a￿customer’s￿ability￿to￿pay. Movements￿of￿the￿allowance￿for￿doubtful￿receivables￿are￿as￿follows: Year ended December 31 (in thousands) Balance￿at￿beginning￿of￿year Addition￿for￿the￿year1 Utilization￿of￿the￿provision ￿ Allowance for doubtful receivables 2012 EUR (2,582) (458) 969 ￿ (2,071) 2011 EUR (1,945) (849) 212 ￿ (2,582) 1 Addition￿for￿the￿year￿is￿recorded￿in￿cost￿of￿sales. ASML￿ANNUAL￿REPORT￿2012 F-18 6. Finance receivables Finance￿receivables￿consist￿of￿the￿net￿investment￿in￿sales-type￿leases.￿The￿following￿table￿lists￿the￿components￿of￿the finance￿receivables￿as￿of￿December￿31,￿2012￿and￿2011: As of December 31 (in thousands) Finance￿receivables,￿gross Unearned￿interest Finance receivables, net Current￿portion￿of￿finance￿receivables,￿gross Current￿portion￿of￿unearned￿interest Non-current portion of finance receivables, net 2012 EUR 309,616 (5,828) 303,788 268,617 (3,450) 38,621 2011 EUR 78,853 - 78,853 78,853 - - The￿increase￿in￿finance￿receivables￿as￿of￿December￿31,￿2012￿compared￿to￿December￿31,￿2011￿is￿caused￿by￿an increased￿number￿of￿sales-type￿leases.￿At￿December￿31,￿2012,￿the￿finance￿receivables￿due￿for￿payment￿in￿each￿of￿the next￿five￿years￿and￿thereafter￿are￿as￿follows: (in thousands) 2013 2014 2015 2016 2017 Thereafter Finance receivables, gross EUR 268,617 7,501 7,516 13,681 12,301 - 309,616 ASML￿performs￿ongoing￿credit￿evaluations￿on￿its￿customers’￿financial￿condition.￿ASML￿periodically￿reviews￿whether an￿allowance￿for￿credit￿losses￿is￿needed￿by￿considering￿factors￿such￿as￿historical￿payment￿experience,￿credit￿quality, aging￿finance￿receivable￿balances,￿and￿current￿economic￿conditions￿that￿may￿affect￿a￿customer’s￿ability￿to￿pay.￿In￿2012 and￿2011,￿we￿did￿not￿record￿any￿expected￿credit￿losses￿from￿finance￿receivables.￿As￿of￿December￿31,￿2012￿the￿finance receivables￿were￿neither￿past￿due￿nor￿impaired. 7. Inventories Inventories￿consist￿of￿the￿following: As of December 31 (in thousands) Raw￿materials Work-in-process Finished￿products ￿ Inventories, gross Allowance￿for￿obsolescence￿and/or￿lower￿market￿value Inventories, net 2012 EUR 307,315 1,074,042 742,979 ￿ 2,124,336 (267,366) 1,856,970 A￿summary￿of￿activity￿in￿the￿allowance￿for￿obsolescence￿and/or￿lower￿market￿value￿is￿as￿follows: Year ended December 31 (in thousands) Balance￿at￿beginning￿of￿year Addition￿for￿the￿year Effect￿of￿changes￿in￿exchange￿rates Utilization￿of￿the￿provision Allowance for obsolescence and/or lower market value 2012 EUR (193,513) (130,911) 1,009 56,049 (267,366) 2011 EUR 258,712 1,026,872 532,556 ￿ 1,818,140 (193,513) 1,624,627 2011 EUR (189,235) (60,300) (883) 56,905 (193,513) In￿2012,￿the￿addition￿for￿the￿year￿is￿recorded￿in￿cost￿of￿sales￿for￿an￿amount￿of￿EUR￿125.2￿million￿and￿R&D￿costs￿for an￿amount￿of￿EUR￿5.7￿million￿(2011:￿cost￿of￿sales￿EUR￿60.0￿million￿and￿R&D￿costs￿for￿an￿amount￿of￿EUR￿0.3￿million). Addition￿for￿the￿year￿mainly￿relates￿to￿write￿downs￿as￿result￿of￿technological￿developments￿and￿inventory￿parts￿which became￿obsolete￿and￿includes￿EUR￿43.5￿million￿(2011:￿EUR￿17.0￿million)￿with￿respect￿to￿lower￿of￿cost￿or￿market adjustments. ASML￿ANNUAL￿REPORT￿2012 F-19 Utilization￿of￿the￿provision￿mainly￿relates￿to￿sale￿and￿scrap￿of￿obsolete￿inventories.￿In￿2012￿ASML￿made￿EUR￿2.3￿million profit￿on￿the￿sale￿of￿inventories￿that￿had￿been￿previously￿written￿down￿(2011:￿EUR￿4.5￿million). 8. Other assets Other￿current￿assets￿consist￿of￿the￿following: As of December 31 (in thousands) Advance￿payments￿to￿Zeiss Prepaid￿expenses Derivative￿financial￿instruments VAT Other￿receivables Other current assets 2012 EUR 70,257 64,708 50,097 25,215 35,728 246,005 2011 EUR 66,203 56,300 33,817 47,543 34,232 238,095 Zeiss￿is￿our￿sole￿supplier￿of￿main￿optical￿systems￿(including￿lenses)￿and,￿from￿time￿to￿time,￿receives￿non-interest￿bearing advance￿payments￿from￿us￿that￿assist￿in￿financing￿Zeiss'￿work-in-process￿and￿thereby￿secure￿lens￿and￿optical￿module deliveries￿to￿us.￿Amounts￿owed￿under￿these￿advance￿payments￿are￿repaid￿or￿settled￿through￿lens￿or￿EUV￿optical￿module deliveries￿over￿the￿following￿12￿months. Prepaid￿expenses￿include￿a￿tax￿prepayment￿on￿intercompany￿profit,￿not￿realized￿by￿the￿ASML￿group￿of￿EUR￿29.8￿million as￿of￿December￿31,￿2012￿(2011:￿EUR￿27.5￿million). Derivative￿financial￿instruments￿consist￿of￿forward￿foreign￿exchange￿contracts￿and￿the￿current￿part￿of￿the￿aggregate￿fair value￿of￿interest￿rate￿swaps￿which￿includes￿accrued￿interest. Other￿non-current￿assets￿consist￿of￿the￿following: As of December 31 (in thousands) Advance￿payments￿to￿Zeiss Derivative￿financial￿instruments Compensation￿plan￿assets1 Prepaid￿expenses Subordinated￿loan￿granted￿to￿lessor￿in￿respect￿of￿Veldhoven￿headquarters2 Other Other non-current assets 2012 EUR 183,025 101,651 12,080 4,462 5,445 4,875 311,538 2011 EUR 187,950 92,534 10,577 5,749 5,445 4,996 307,251 1 2 For￿further￿details￿on￿compensation￿plan￿assets￿see￿Note￿17. For￿further￿details￿on￿the￿loan￿granted￿to￿lessor￿in￿respect￿of￿Veldhoven￿headquarters￿see￿Note￿11. The￿non-current￿part￿of￿advance￿payments￿to￿Zeiss￿mainly￿relates￿to￿payments￿made￿to￿support￿the￿Zeiss'￿investments in￿ASML’s￿EUV￿program,￿which￿are￿expected￿to￿be￿repaid￿or￿settled￿through￿EUV￿optical￿module￿deliveries. Derivative￿financial￿instruments￿consist￿of￿the￿non-current￿part￿of￿the￿fair￿value￿of￿interest￿rate￿swaps. ASML￿ANNUAL￿REPORT￿2012 F-20 9. Goodwill Changes￿in￿goodwill￿are￿summarized￿as￿follows: Year ended December 31 (in thousands) Cost Balance,￿January￿1 Acquisition￿subsidiary Effect￿of￿changes￿in￿exchange￿rates Goodwill 2012 EUR ￿ 146,044 6,038 (2,914) 149,168 2011 EUR ￿ 141,286 - 4,758 146,044 Goodwill￿is￿tested￿for￿impairment￿annually￿on￿September￿30￿and￿whenever￿events￿or￿changes￿in￿circumstances￿indicate that￿the￿carrying￿amount￿of￿the￿goodwill￿may￿not￿be￿recoverable. Due￿to￿changes￿in￿our￿reporting￿structure,￿we￿have￿re-evaluated￿our￿reporting￿units￿during￿2012.￿As￿result,￿all￿goodwill recognized￿in￿relation￿to￿the￿acquisition￿of￿Brion￿in￿2007￿is￿allocated￿to￿the￿operating￿segment￿ASML￿(in￿2011￿and￿2010 assigned￿to￿the￿reporting￿unit￿Brion). Due￿to￿the￿re-evaluation￿of￿our￿reporting￿units,￿resulting￿in￿the￿recognized￿goodwill￿being￿allocated￿to￿the￿operating segment￿ASML,￿we￿also￿changed￿the￿recoverability￿testing￿of￿the￿annual￿impairment￿test.￿As￿a￿result,￿the￿fair￿value￿of the￿operating￿segment￿ASML￿is￿based￿on￿ASML's￿market￿capitalization,￿while￿the￿sum￿of￿discounted￿future￿cash￿flows relating￿to￿the￿reporting￿units￿was￿used￿in￿prior￿years. We￿believe￿that,￿as￿per￿September￿30,￿2012,￿ASML's￿market￿capitalization,￿determined￿on￿basis￿of￿the￿quoted￿share price￿of￿ASML's￿publicly￿traded￿outstanding￿shares,￿is￿the￿best￿evidence￿of￿the￿fair￿value￿of￿the￿operating￿segment ASML. Based￿on￿the￿recoverability￿testing￿during￿the￿annual￿goodwill￿impairment￿test,￿management￿believes￿that￿the￿fair￿value of￿the￿reporting￿unit￿substantially￿exceeded￿its￿carrying￿value,￿therefore￿goodwill￿was￿not￿impaired￿as￿of￿December￿31, 2012￿and￿December￿31,￿2011. ￿ Acquisition￿subsidiary￿relates￿to￿Wijdeven￿Motion￿Holding￿B.V.￿and￿its￿wholly-owned￿subsidiary￿Wijdeven￿Motion￿B.V. (hereafter￿jointly￿referred￿to￿as￿"Wijdeven￿Motion")￿acquired￿in￿the￿fourth￿quarter￿of￿2012.￿Wijdeven￿Motion￿builds￿a portion￿of￿the￿complex￿linear￿motors￿used￿in￿ASML’s￿wafer￿and￿reticle￿stages.￿Assets￿acquired￿and￿liabilities￿incurred,￿or assumed,￿following￿the￿acquisition￿have￿been￿assigned￿to￿the￿operating￿segment￿ASML. ASML￿ANNUAL￿REPORT￿2012 F-21 10. Other intangible assets Other￿intangible￿assets￿consist￿of￿the￿following: (in thousands) Cost Balance,￿January￿1,￿2011 ￿ Balance,￿December￿31,￿2011 Additions Balance, December 31, 2012 ￿ Accumulated amortization ￿ Balance,￿January￿1,￿2011 Amortization ￿ Balance,￿December￿31,￿2011 Amortization Balance, December 31, 2012 ￿ Carrying amount December￿31,￿2011 December 31, 2012 Intellectual property EUR ￿ 47,250 ￿ 47,250 7,658 54,908 ￿ ￿ ￿ 47,224 4 ￿ 47,228 800 48,028 ￿ ￿ 22 6,880 Developed technology EUR ￿ 25,883 ￿ 25,883 - 25,883 ￿ ￿ ￿ 17,043 4,080 ￿ 21,123 4,080 25,203 ￿ ￿ 4,760 680 Customer relationships EUR ￿ 8,733 ￿ 8,733 - 8,733 ￿ ￿ ￿ 4,185 1,092 ￿ 5,277 1,092 6,369 ￿ ￿ 3,456 2,364 In-process R&D EUR ￿ 23,148 ￿ 23,148 - 23,148 ￿ ￿ ￿ 23,148 - ￿ 23,148 - 23,148 ￿ ￿ - - Other EUR ￿ 2,231 ￿ 2,231 - 2,231 ￿ ￿ ￿ 1,994 109 ￿ 2,103 109 2,212 ￿ ￿ 128 19 Total EUR ￿ 107,245 ￿ 107,245 7,658 114,903 ￿ ￿ ￿ 93,594 5,285 ￿ 98,879 6,081 104,960 ￿ ￿ 8,366 9,943 Intellectual￿property￿relates￿to￿licenses￿and￿patents￿purchased￿from￿third￿parties.￿During￿2012,￿we￿acquired￿intellectual property￿from￿third￿parties￿for￿an￿amount￿of￿EUR￿7.7￿million.￿Developed￿technology,￿customer￿relationships,￿in-process R&D￿and￿other￿were￿obtained￿in￿the￿acquisition￿of￿Brion. During￿2012,￿we￿recorded￿amortization￿charges￿of￿EUR￿6.1￿million￿(2011:￿EUR￿5.3￿million;￿2010:￿EUR￿5.5￿million)￿which were￿recorded￿in￿cost￿of￿sales￿for￿EUR￿6.0￿million￿(2011:￿EUR￿5.3￿million;￿2010:￿EUR￿5.5￿million)￿and￿in￿R&D￿costs￿for EUR￿0.1￿million￿(2011￿and￿2010:￿nil). During￿2012,￿2011￿and￿2010,￿we￿did￿not￿record￿any￿impairment￿charges￿for￿other￿intangible￿assets. As￿at￿December￿31,￿2012,￿estimated￿amortization￿expenses￿relating￿to￿other￿intangible￿assets￿for￿the￿next￿five￿years￿and thereafter￿are￿as￿follows: (in thousands) 2013 2014 2015 2016 2017 Thereafter ￿ Amortization expenses EUR 3,322 2,624 1,714 1,533 750 - ￿ 9,943 ASML￿ANNUAL￿REPORT￿2012 F-22 11. Property, plant and equipment Property,￿plant￿and￿equipment￿consist￿of￿the￿following: (in thousands) Cost Balance,￿January￿1,￿2011 Additions Disposals Effect￿of￿changes￿in￿exchange￿rates Balance,￿December￿31,￿2011 Additions Disposals Effect￿of￿changes￿in￿exchange￿rates Balance, December 31, 2012 ￿ Accumulated depreciation and impairment Balance,￿January￿1,￿2011 Depreciation Impairment￿charges Disposals Effect￿of￿changes￿in￿exchange￿rates Balance,￿December￿31,￿2011 Depreciation Impairment￿charges Disposals Effect￿of￿changes￿in￿exchange￿rates Balance, December 31, 2012 ￿ Carrying amount December￿31,￿2011 December 31, 2012 Land, buildings and constructions EUR ￿ 526,855 213,513 - 1,773 742,141 106,234 (347) (995) 847,033 ￿ ￿ 127,509 27,362 - - 1,006 155,877 31,598 649 (347) (505) 187,272 ￿ ￿ 586,264 659,761 Machinery and equipment EUR ￿ 609,253 355,358 (212,286) 11,698 764,023 248,429 (317,022) (4,671) 690,759 ￿ ￿ 358,026 99,968 3,508 (64,417) 4,715 401,800 110,571 906 (92,205) (3,090) 417,982 ￿ ￿ 362,223 272,777 Leasehold improvements EUR ￿ 185,635 20,918 (216) 323 206,660 8,883 (300) (391) 214,852 ￿ ￿ 129,741 13,128 2,789 (41) 158 145,775 13,416 - (248) (165) 158,778 ￿ ￿ 60,885 56,074 Furniture, fixtures and other equipment EUR ￿ 316,244 29,314 (1,619) 1,040 344,979 22,749 (30,894) (59) 336,775 ￿ ￿ 277,380 17,575 5,975 (988) 799 300,741 23,668 1,679 (30,575) (49) 295,464 ￿ ￿ 44,238 41,311 Total EUR ￿ 1,637,987 619,103 (214,121) 14,834 2,057,803 386,295 (348,563) (6,116) 2,089,419 ￿ ￿ 892,656 158,033 12,272 (65,446) 6,678 1,004,193 179,253 3,234 (123,375) (3,809) 1,059,496 ￿ ￿ 1,053,610 1,029,923 As￿of￿December￿31,￿2012,￿the￿carrying￿amount￿includes￿assets￿under￿construction￿for￿land,￿buildings￿and￿constructions of￿EUR￿5.5￿million￿(2011:￿EUR￿165.0￿million),￿machinery￿and￿equipment￿of￿EUR￿21.8￿million￿(2011:￿EUR￿16.6￿million), leasehold￿improvements￿of￿EUR￿1.0￿million￿(2011:￿EUR￿1.3￿million)￿and￿furniture,￿fixtures￿and￿other￿equipment￿of￿EUR 9.3￿million￿(2011:￿EUR￿8.0￿million).￿As￿of￿December￿31,￿2012,￿the￿carrying￿amount￿of￿land￿amounts￿to￿EUR￿60.7￿million (2011:￿EUR￿51.1￿million). The￿majority￿of￿the￿additions￿and￿disposals￿in￿2012￿and￿2011￿relate￿to￿machinery￿and￿equipment￿(including￿operating leases￿to￿customers,￿prototypes,￿evaluation￿and￿training￿systems).￿These￿systems￿are￿similar￿to￿those￿that￿ASML￿sells in￿its￿ordinary￿course￿of￿business.￿The￿systems￿are￿capitalized￿under￿property,￿plant￿and￿equipment￿because￿they￿are held￿for￿own￿use,￿for￿rental￿and￿for￿evaluation￿purposes.￿These￿systems￿are￿recorded￿at￿cost￿and￿depreciated￿over￿their expected￿useful￿life.￿From￿the￿time￿that￿these￿assets￿are￿no￿longer￿held￿by￿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￿statements￿of￿cash￿flows.￿An￿amount￿of￿EUR￿204.8￿million￿(2011: EUR￿300.5￿million)￿of￿the￿additions￿relates￿to￿non-cash￿transfers￿from￿inventory￿and￿an￿amount￿of￿EUR￿9.6￿million (2011:￿EUR￿17.7￿million)￿relates￿to￿other￿non-cash￿movements￿(mainly￿investments￿not￿yet￿paid).￿An￿amount￿of￿EUR 222.9￿million￿(2011:￿EUR￿145.3￿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). The￿impairment￿charges￿recorded￿in￿2012￿mainly￿related￿to￿furniture,￿fixture￿and￿other￿equipment￿(EUR￿1.7￿million). We￿recorded￿impairment￿charges￿with￿respect￿to￿software￿which￿are￿ceased￿to￿be￿used.￿The￿impairment￿charges￿were determined￿based￿on￿the￿difference￿between￿the￿assets’￿estimated￿fair￿value￿(being￿EUR￿0.1￿million)￿and￿their￿carrying amount. The￿impairment￿charges￿recorded￿in￿2011￿mainly￿related￿to￿machinery￿and￿equipment￿and￿furniture,￿fixture￿and￿other equipment￿(EUR￿9.5￿million).￿We￿recorded￿impairment￿charges￿with￿respect￿to￿technical￿equipment￿and￿software￿which ASML￿ANNUAL￿REPORT￿2012 F-23 are￿ceased￿to￿be￿used.￿The￿impairment￿charges￿were￿determined￿based￿on￿the￿difference￿between￿the￿assets’￿estimated fair￿value￿(being￿EUR￿1.9￿million)￿and￿their￿carrying￿amount. The￿impairment￿charges￿recorded￿in￿2010￿mainly￿related￿to￿buildings￿and￿constructions￿(EUR￿6.7￿million).￿We￿recorded impairment￿charges￿with￿respect￿to￿several￿technical￿infrastructure￿items￿which￿are￿ceased￿to￿be￿used￿due￿to￿technical changes￿relating￿to￿NXE￿(EUV)￿development.￿The￿impairment￿charges￿were￿determined￿based￿on￿the￿difference￿between the￿assets’￿estimated￿fair￿value￿(being￿EUR￿0.4￿million)￿and￿their￿carrying￿amount. In￿determining￿the￿fair￿value￿of￿an￿asset,￿we￿make￿estimates￿about￿future￿cash￿flows.￿These￿estimates￿are￿based￿on￿our financial￿plan,￿updated￿with￿the￿latest￿available￿projections￿of￿the￿semiconductor￿market￿conditions￿and￿our￿sales￿and cost￿expectations,￿which￿is￿consistent￿with￿what￿ASML￿uses￿to￿manage￿its￿business. As￿of￿December￿31,￿2012,￿the￿carrying￿amount￿of￿machinery￿and￿equipment￿includes￿an￿amount￿of￿EUR￿82.2￿million￿with respect￿to￿evaluation￿and￿operating￿lease￿systems￿(2011:￿EUR￿201.4￿million). During￿2012,￿we￿recorded￿impairment￿charges￿of￿EUR￿3.2￿million￿(2011:￿EUR￿12.3￿million;￿2010:￿EUR￿8.6￿million)￿of which￿we￿recorded￿EUR￿1.0￿million￿(2011:￿EUR￿6.2￿million;￿2010:￿EUR￿7.3￿million)￿in￿cost￿of￿sales,￿EUR￿0.5￿million￿(2011: EUR￿3.5￿million;￿2010:￿EUR￿0.7￿million)￿in￿R&D￿costs￿and￿EUR￿1.7￿million￿(2011:￿EUR￿2.6￿million;￿2010:￿EUR￿0.6￿million) in￿SG&A￿costs. During￿2012,￿we￿recorded￿depreciation￿charges￿of￿EUR￿179.3￿million￿(2011:￿EUR￿158.0￿million;￿2010:￿EUR￿144.6￿million) of￿which￿we￿recorded￿EUR￿147.7￿million￿(2011:￿EUR￿117.7￿million;￿2010:￿EUR￿108.7￿million)￿in￿cost￿of￿sales,￿EUR￿15.3 million￿(2011￿EUR￿24.9￿million;￿2010:￿EUR￿16.7￿million)￿in￿R&D￿costs￿and￿EUR￿16.3￿million￿(2011:￿EUR￿15.4￿million;￿2010: EUR￿19.2￿million)￿in￿SG&A￿costs. Variable Interest Entity The￿carrying￿amount￿of￿land,￿buildings￿and￿constructions￿includes￿an￿amount￿of￿EUR￿32.4￿million￿(2011:￿EUR￿33.8 million)￿relating￿to￿our￿headquarters￿in￿Veldhoven,￿the￿Netherlands,￿which￿is￿owned￿by￿Koppelenweg￿II￿B.V.,￿a￿"VIE". As￿of￿2003,￿we￿are￿leasing￿the￿Veldhoven￿headquarters￿for￿a￿period￿of￿15￿years￿(from￿2003)￿from￿an￿entity￿("lessor")￿that was￿incorporated￿by￿a￿syndicate￿of￿three￿banks￿("VIE￿shareholders")￿solely￿for￿the￿purpose￿of￿leasing￿this￿building.￿The lessor’s￿shareholders'￿equity￿amounts￿to￿EUR￿1.9￿million￿and￿has￿not￿changed￿since￿2003. The￿VIE￿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￿VIE￿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￿VIE￿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￿VIE.￿The￿economic￿performance of￿the￿VIE￿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￿a￿variable￿interest,￿and￿may￿absorb￿losses,￿and￿the￿equity￿holders￿have￿a￿variable￿interest and￿may￿receive￿benefits,￿they￿do￿not￿have￿the￿power￿to￿direct￿activities￿that￿most￿significantly￿impact￿the￿entity’s economic￿performance￿and￿therefore,￿cannot￿be￿the￿primary￿beneficiary.￿Through￿the￿pre-determined￿price￿of￿the￿call option￿ASML￿has￿the￿power￿over￿the￿VIE,￿therefore￿only￿ASML￿meets￿both￿the￿power￿and￿losses/benefit￿criterion￿and consolidates￿the￿VIE. ASML￿ANNUAL￿REPORT￿2012 F-24 12. Accrued and other liabilities Accrued￿and￿other￿liabilities￿consist￿of￿the￿following: As of December 31 (in thousands) Deferred￿revenue Costs￿to￿be￿paid Down￿payments￿from￿customers Personnel￿related￿items Derivative￿financial￿instruments Standard￿warranty￿reserve Other Accrued and other liabilities Less:￿non-current￿portion￿of￿accrued￿and￿other￿liabilities1 Current portion of accrued and other liabilities 2012 EUR 739,136 278,066 1,033,768 200,670 10,893 21,626 1,352 2,285,511 405,141 1,880,370 2011 EUR 816,045 260,651 1,057,046 212,059 40,359 43,273 2,313 2,431,746 663,099 1,768,647 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. The￿decrease￿in￿accrued￿and￿other￿liabilities￿mainly￿relates￿to￿the￿decrease￿in￿deferred￿revenue,￿standard￿warranty reserve￿and￿derivative￿financial￿instruments. Deferred￿revenue￿mainly￿consists￿of￿prepaid￿extended￿and￿enhanced￿(optic)￿warranty￿contracts￿and￿award￿credits regarding￿free￿or￿discounted￿products￿or￿services.￿The￿decrease￿in￿deferred￿revenue￿is￿mainly￿caused￿by￿product deliveries￿in￿2012￿that￿were￿deferred￿as￿of￿December￿31,￿2011￿including￿one￿NXE:3100￿system￿of￿which￿revenues￿were deferred￿for￿an￿amount￿of￿EUR￿48.6￿million￿as￿of￿December￿31,￿2011. The￿deferred￿revenue￿balance￿from￿extended￿and￿enhanced￿(optic)￿warranty￿contracts￿as￿of￿December￿31,￿2012, amounted￿to￿EUR￿242.2￿million￿(2011:￿EUR￿280.1￿million). The￿deferred￿revenue￿balance￿from￿installation￿and￿training￿services￿as￿of￿December￿31,￿2012￿amounted￿to￿EUR￿4.0 million￿(2011:￿EUR￿1.8￿million)￿and￿EUR￿12.4￿million￿(2011:￿EUR￿11.9￿million),￿respectively. Costs￿to￿be￿paid￿mainly￿relate￿to￿accrued￿cost￿for￿unbilled￿services￿provided￿by￿suppliers￿including￿contracted￿labor, outsourced￿services￿and￿consultancy. We￿receive￿advances￿from￿customers￿prior￿to￿shipment￿for￿systems￿included￿in￿ASML’s￿current￿product￿portfolio￿or systems￿currently￿under￿development￿in￿the￿form￿of￿down￿payments. 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. Derivative￿financial￿instruments￿consist￿of￿foreign￿currency￿contracts￿and￿the￿aggregate￿fair￿value￿of￿interest￿rate￿swaps which￿includes￿accrued￿interest. Changes￿in￿standard￿warranty￿reserve￿for￿the￿years￿2012￿and￿2011￿are￿as￿follows: (in thousands) Balance,￿January￿1 Additions￿of￿the￿year Utilization￿of￿the￿reserve Release￿of￿the￿reserve Effect￿of￿exchange￿rates Standard warranty reserve 2012 EUR 43,273 35,735 (33,746) (22,733) (903) 21,626 2011 EUR 37,965 61,279 (26,968) (29,415) 412 43,273 The￿release￿of￿the￿reserve￿is￿due￿to￿a￿change￿in￿accounting￿estimate￿based￿on￿lower￿than￿expected￿historical￿warranty expenses￿as￿a￿result￿of￿an￿improved￿learning-curve￿concerning￿ASML’s￿systems.￿The￿release￿has￿been￿included￿in￿cost of￿sales. ASML￿ANNUAL￿REPORT￿2012 F-25 13. Provisions The￿movement￿in￿the￿provision￿for￿lease￿contract￿termination￿costs￿is￿as￿follows: (in thousands) Balance,￿January￿1 Utilization￿of￿the￿provision Unwinding￿of￿discount Effect￿of￿exchange￿rates Provision for lease contract termination costs Less:￿current￿portion￿of￿provision￿for￿lease￿contract￿termination￿costs Non-current portion of provision for lease contract termination costs 2012 EUR 12,338 (2,545) 628 (167) 10,254 2,280 7,974 2011 EUR 14,061 (2,452) 421 308 12,338 2,326 10,012 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￿utilized￿by￿2017. 14. Long-term debt The￿long-term￿debt￿consists￿of￿the￿following: As of December 31 (in thousands) Eurobond,￿carrying￿amount Loan￿headquarter￿building1 Other Long-term debt Less:￿current￿portion￿of￿long-term￿debt Non-current portion of long-term debt 2012 EUR 710,095 32,366 17,029 759,490 3,610 755,880 2011 EUR 695,618 33,795 6,955 736,368 2,587 733,781 1 This￿loan￿relates￿to￿our￿Variable￿Interest￿Entity,￿see￿Note￿11. Our￿obligations￿to￿make￿principal￿repayments￿under￿the￿Eurobond￿and￿other￿borrowing￿arrangements￿excluding￿interest expense￿as￿of￿December￿31,￿2012,￿for￿the￿next￿five￿years￿and￿thereafter,￿are￿as￿follows: (in thousands) 2013 2014 2015 2016 2017 Thereafter Long-term debt Less:￿current￿portion￿of￿long-term￿debt Non-current portion of long-term debt EUR 3,610 3,535 3,535 3,535 603,535 31,644 649,394 3,610 645,784 Eurobond The￿following￿table￿summarizes￿the￿carrying￿amount￿of￿our￿outstanding￿Eurobond,￿including￿the￿fair￿value￿of￿interest￿rate swaps￿used￿to￿hedge￿the￿change￿in￿the￿fair￿value￿of￿the￿Eurobond: As of December 31 (in thousands) Principal￿amount Fair￿value￿interest￿rate￿swaps1 Carrying amount 2012 EUR 600,000 110,095 710,095 2011 EUR 600,000 95,618 695,618 1 The￿fair￿value￿of￿the￿interest￿rate￿swaps￿excludes￿accrued￿interest. In￿June￿2007,￿we￿completed￿an￿offering￿of￿EUR￿600.0￿million￿principal￿amount￿of￿our￿5.75￿percent￿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. ASML￿ANNUAL￿REPORT￿2012 F-26 The￿Eurobond￿serves￿as￿a￿hedged￿item￿in￿a￿fair￿value￿hedge￿relationship￿in￿which￿we￿hedge￿the￿variability￿of￿changes￿in the￿fair￿value￿of￿our￿Eurobond￿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￿balance￿sheets￿under￿derivative￿financial￿instruments￿(within other￿current￿assets￿and￿other￿non-current￿assets)￿and￿the￿carrying￿amount￿of￿the￿Eurobond￿is￿adjusted￿for￿these￿fair value￿changes￿only.￿The￿following￿table￿summarizes￿amongst￿others￿the￿estimated￿fair￿value￿of￿the￿Eurobond: As of December 31 (in thousands) Principal￿amount Carrying￿amount Fair￿value1 2012 EUR 600,000 710,095 700,644 2011 EUR 600,000 695,618 640,500 1 Source:￿Bloomberg￿Finance￿LP The￿fair￿value￿of￿our￿Eurobond￿is￿estimated￿based￿on￿quoted￿market￿prices￿as￿of￿December￿31,￿2012.￿The￿fair￿value￿of the￿Eurobond￿is￿higher￿than￿the￿principal￿amount￿as￿a￿result￿of￿lower￿market￿interest￿rates￿compared￿to￿the￿fixed￿5.75% coupon￿rate￿of￿the￿Eurobond. 15. Lines of credit Our￿available￿credit￿facilities￿amount￿to￿EUR￿500.0￿million￿as￿of￿December￿31,￿2012￿and￿as￿of￿December￿31,￿2011. The￿amount￿at￿December￿31,￿2012￿consists￿of￿one￿EUR￿500.0￿million￿committed￿revolving￿credit￿facility￿from￿a￿group of￿banks￿that￿will￿mature￿in￿2015.￿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.￿As￿of￿December￿31,￿2012￿and￿December￿31,￿2011,￿this￿ratio￿was￿85.8￿percent￿and￿87.7￿percent, respectively.￿Therefore,￿we￿are￿in￿compliance￿with￿the￿covenant￿at￿the￿end￿of￿2012￿and￿2011.￿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￿this￿credit￿facility￿at￿the￿end￿of￿2012￿and￿2011. ASML￿ANNUAL￿REPORT￿2012 F-27 16. Commitments, contingencies and guarantees We￿have￿various￿contractual￿obligations,￿some￿of￿which￿are￿required￿to￿be￿recorded￿as￿liabilities￿in￿our￿consolidated 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 balance￿sheet￿but￿are￿required￿to￿be￿disclosed. Our￿contractual￿obligations￿as￿of￿December￿31,￿2012￿can￿be￿summarized￿as￿follows: Payments due by period (in thousands) ￿ Long-Term￿Debt￿Obligations,￿including￿interest￿expense1 Operating￿Lease￿Obligations 1 year EUR ￿ 39,801 32,195 Purchase￿Obligations 1,643,955 1,557,021 2,964 ￿ Total Contractual Obligations 2,633,943 1,631,981 Unrecognized￿Tax￿Benefits,￿including￿interest￿expense ￿ Total EUR ￿ 831,194 98,827 59,967 ￿ 2 year EUR ￿ 39,726 22,267 84,012 4,209 ￿ 150,214 3 year EUR ￿ 39,726 17,192 2,876 - ￿ 59,794 4 year EUR ￿ 39,726 13,465 32 - ￿ 53,223 5 year EUR ￿ 639,726 5,265 14 16,957 ￿ 661,962 After 5 years EUR ￿ 32,489 8,443 - 35,837 ￿ 76,769 1 See￿Note￿14￿for￿the￿amounts￿excluding￿interest￿expenses. Long-term￿debt￿obligations￿mainly￿relate￿to￿interest￿payments￿and￿the￿principal￿amount￿of￿the￿Eurobond.￿See￿Note￿14. Operating￿lease￿obligations￿include￿leases￿of￿equipment￿and￿facilities.￿Lease￿payments￿recognized￿as￿an￿expense were￿EUR￿41.6￿million,￿EUR￿40.6￿million￿and￿EUR￿37.9￿million￿for￿the￿years￿ended￿December￿31,￿2012,￿2011￿and￿2010, 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￿would￿exercise￿these￿purchase￿options￿at￿the￿end of￿the￿lease￿as￿of￿December￿31,￿2012￿can￿be￿summarized￿as￿follows: Purchase options due by period (in thousands) Purchase￿options Total EUR 22,982 1 year EUR - 2 year EUR 8,999 3 year EUR - 4 year EUR 13,983 5 year EUR - After 5 years EUR - 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,￿2012￿contain￿clauses￿that￿enables￿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￿have￿agreed￿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￿semiconductor￿equipment￿industry￿in￿which￿we￿operate.￿We￿establish￿a￿provision￿for￿cancellation￿fees when￿it￿is￿probable￿that￿the￿liability￿has￿been￿incurred￿and￿the￿amount￿of￿cancellation￿fees￿is￿reasonably￿estimable. 17. Employee benefits Bonus plan Our￿bonus￿expenses￿for￿all￿participants￿of￿all￿bonus￿plans￿were: Year ended December 31 (in thousands) ￿ Bonus￿expenses 2012 EUR ￿ 16,474 2011 EUR ￿ 15,557 2010 EUR ￿ 12,489 Bonus￿expenses￿include￿an￿amount￿of￿EUR￿1.8￿million￿(2011:￿EUR￿1.7￿million;￿2010:￿EUR￿1.6￿million)￿in￿relation￿to￿the short-term￿incentive￿("STI")￿cash￿bonus￿for￿the￿Board￿of￿Management￿(we￿refer￿to￿Note￿21)￿and￿EUR￿0.1￿million￿(2011: EUR￿0.7￿million;￿2010:￿EUR￿1.2￿million)￿in￿relation￿to￿the￿Brion￿retention￿bonus￿plan. ASML￿ANNUAL￿REPORT￿2012 F-28 ASML￿has￿a￿performance￿related￿bonus￿plan￿for￿senior￿management,￿who￿are￿not￿members￿of￿the￿Board￿of Management.￿Under￿this￿plan,￿the￿bonus￿amount￿is￿dependent￿on￿actual￿performance￿against￿corporate,￿departmental and￿personal￿targets.￿The￿bonus￿for￿members￿of￿senior￿management￿can￿range￿between￿0.0￿percent￿and￿40.0￿percent, or￿0.0￿percent￿and￿70.0￿percent,￿of￿their￿annual￿salaries,￿depending￿upon￿their￿seniority.￿The￿performance￿targets￿are￿set for￿each￿half￿year.￿The￿bonus￿of￿the￿first￿half￿of￿2012￿was￿paid￿in￿the￿second￿half￿of￿2012.￿The￿bonus￿of￿the￿second￿half is￿accrued￿for￿in￿the￿consolidated￿balance￿sheet￿as￿of￿December￿31,￿2012￿and￿is￿expected￿to￿be￿paid￿in￿the￿first￿quarter of￿2013.￿Our￿bonus￿expenses￿under￿this￿plan￿were: Year ended December 31 (in thousands) ￿ Bonus￿expenses 2012 EUR ￿ 14,588 2011 EUR ￿ 13,131 2010 EUR ￿ 9,694 Profit-sharing plan ASML￿has￿a￿profit-sharing￿plan￿covering￿all￿European￿and￿US￿non-sales￿employees￿who￿are￿not￿members￿of￿the￿Board of￿Management￿or￿senior￿management.￿Under￿the￿plan,￿eligible￿employees￿receive￿an￿annual￿profit-sharing,￿based on￿a￿percentage￿of￿net￿income￿relative￿to￿sales￿ranging￿from￿0.0￿to￿20.0￿percent￿of￿annual￿salary.￿The￿profit￿sharing for￿the￿years￿2012,￿2011￿and￿2010￿was￿18.0￿percent￿or￿EUR￿64.5￿million,￿20.0￿percent￿or￿EUR￿64.0￿million￿and￿18.0 percent￿or￿EUR￿52.2￿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￿24.4￿million￿for￿2012￿(including EUR￿2.6￿million￿for￿the￿sales￿reward￿plan),￿EUR￿23.2￿million￿for￿2011￿and￿EUR￿23.1￿million￿for￿2010. Share-based compensation We￿have￿adopted￿various￿share￿(option)￿plans￿for￿our￿employees.￿Each￿year,￿the￿Board￿of￿Management￿determines,￿by category￿of￿ASML￿personnel,￿the￿total￿available￿number￿of￿stock￿options￿and￿maximum￿number￿of￿shares￿that￿can￿be granted￿in￿that￿year.￿The￿determination￿is￿subject￿to￿the￿approval￿of￿our￿Supervisory￿Board.￿For￿members￿of￿the￿Board of￿Management￿ASML￿has￿separate￿share-based￿payment￿plans,￿for￿details￿on￿service￿and￿vesting￿conditions￿see￿below and￿for￿additional￿information￿see￿note￿21.￿Our￿current￿share-based￿payment￿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￿Board￿of￿Management)￿was￿EUR￿18.7￿million￿in￿2012,￿EUR￿12.4￿million￿in￿2011￿and￿EUR￿12.1 million￿in￿2010.￿The￿tax￿benefit￿recognized￿related￿to￿the￿recognized￿expenses￿amounts￿to￿EUR￿0.9￿million￿in￿2012,￿EUR 0.5￿million￿in￿2011￿and￿EUR￿1.0￿million￿in￿2010.￿ Total￿compensation￿expenses￿related￿to￿non-vested￿awards￿to￿be￿recognized￿in￿future￿periods￿amount￿to￿EUR￿30.4 million￿as￿per￿December￿31,￿2012￿(2011:￿EUR￿23.3￿million;￿2010:￿EUR￿16.7￿million).￿The￿weighted￿average￿period￿over which￿these￿costs￿are￿expected￿to￿be￿recognized￿is￿calculated￿at￿2.0￿years￿(2011:￿1.9￿years;￿2010:￿2.0￿years).￿ Option plans Options￿granted￿under￿ASML’s￿stock￿option￿plans￿have￿fixed￿exercise￿prices￿equal￿to￿the￿closing￿price￿of￿our￿ordinary shares￿on￿NYSE￿Euronext￿Amsterdam￿or￿NASDAQ￿on￿the￿applicable￿grant-dates.￿Granted￿stock￿options￿generally￿vest over￿a￿three-year￿period￿with￿any￿unexercised￿stock￿options￿expiring￿ten￿years￿after￿the￿grant-date. ASML￿has￿five￿different￿stock￿option￿plans: • Employee￿plan • Option￿purchase￿plan • Brion￿stock￿option￿plan • Senior￿management￿plan • Stock￿option￿extension￿plan The￿Option￿purchase￿plan￿and￿Stock￿option￿extension￿plan￿have￿no￿service￿and￿vesting￿conditions.￿The￿other￿plans typically￿have￿a￿three￿to￿four￿year￿service￿condition.￿Furthermore￿senior￿management￿and￿Board￿of￿Management￿plans have￿vesting￿conditions￿based￿on￿performance.￿The￿fair￿value￿of￿the￿stock￿options￿is￿determined￿using￿a￿Black-Scholes option￿valuation￿model.￿￿ ASML￿ANNUAL￿REPORT￿2012 F-29 The￿Black-Scholes￿option￿valuation￿of￿our￿stock￿options￿is￿based￿on￿the￿following￿assumptions: Year ended December 31 ￿ Weighted￿average￿share￿price￿(in￿EUR) Volatility￿(in￿percentage) Expected￿life￿(in￿years) Risk￿free￿interest￿rate Expected￿dividend￿yield￿(in￿EUR) Forfeiture￿rate1 2012 ￿ 40.3 25.6 5.0 2.1 1.45 - 2011 ￿ 28.0 37.8 4.8 2.9 1.25 - 2010 ￿ 24.1 36.4 4.6 2.5 1.06 - 1 As￿of￿year￿end￿for￿each￿of￿the￿three￿years￿ended￿December￿31,￿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.￿ Other￿details￿with￿respect￿to￿stock￿options￿are￿set￿out￿in￿the￿following￿table: Year ended December 31 2012 ￿ ￿ Weighted￿average￿fair￿value￿of￿stock￿options￿granted Weighted￿average￿share￿price￿at￿the￿exercise￿date￿of￿stock￿options Aggregate￿intrinsic￿value￿of￿stock￿options￿exercised￿(in￿thousands) Aggregate￿remaining￿contractual￿term￿of￿currently￿exercisable￿options￿(years) Aggregate￿intrinsic￿value￿of￿exercisable￿stock￿options￿(in￿thousands) Aggregate￿intrinsic￿value￿of￿outstanding￿stock￿options￿(in￿thousands) 8.97 40.45 71,331 3.59 34,438 35,671 ￿ 2011 ￿ ￿ 8.28 29.39 30,204 2.08 39,384 45,141 2010 ￿ 8.22 ￿ 25.77 ￿ 22,720 ￿ 2.86 ￿ 54,109 ￿ 65,240 ￿ 2012 11.87 50.88 12,684 3.17 21,882 22,433 ￿ 2011 ￿ 10.42 41.94 11,323 1.80 20,492 20,791 2010 11.10 33.79 13,669 2.59 25,780 28,024 EUR- denominated USD- denominated The￿number￿and￿weighted￿average￿exercise￿prices￿of￿stock￿options￿as￿of￿December￿31,￿2012,￿and￿changes￿during￿the year￿then￿ended￿are￿presented￿below: Outstanding,￿January￿1,￿2012 Granted Exercised Forfeited Expired Outstanding, December 31, 2012 Exercisable,￿December￿31,￿2012 EUR-denominated USD-denominated Number of options 5,133,659 32,240 (2,928,641) (5,530) (1,103,566) 1,128,162 1,060,262 Weighted average exercise price per ordinary share (EUR) 24.48 39.52 16.07 18.22 55.45 16.38 15.52 Number of options 1,792,305 11,041 (362,071) (350) (946,089) 494,836 472,586 Weighted average exercise price per ordinary share (USD) 34.01 51.79 15.87 33.75 48.98 19.06 18.09 Details￿with￿respect￿to￿the￿stock￿options￿outstanding￿are￿set￿out￿in￿the￿following￿table: EUR-denominated USD-denominated Range of exercise prices (EUR) 0￿-￿10 10￿-￿15 15￿-￿20 20￿-￿25 25￿-￿40 40￿-￿50 50￿-￿60 Total Number of outstanding options at December 31, 2012 - 602,473 292,093 176,120 30,422 27,054 - 1,128,162 Weighted average remaining contractual life of outstanding options (years) - 3.00 3.91 5.18 8.77 9.79 - 3.89 Range of exercise prices (USD) 0￿-￿10 10￿-￿15 15￿-￿20 20￿-￿25 25￿-￿40 40￿-￿50 50￿-￿60 Total Number of outstanding options at December 31, 2012 55,260 230,215 5,424 101,697 90,116 2,077 10,047 494,836 Weighted average remaining contractual life of outstanding options (years) 2.75 1.64 5.80 4.49 6.16 8.66 9.70 3.41 ASML￿ANNUAL￿REPORT￿2012 F-30 In￿2012,￿2011￿and￿2010￿only￿repurchased￿shares￿were￿used￿to￿satisfy￿the￿option￿rights￿upon￿exercise.￿For￿more information￿with￿respect￿to￿repurchased￿shares￿we￿refer￿to￿Note￿27.￿ Share￿plans Shares￿granted￿under￿ASML’s￿share￿plans￿include￿a￿three￿to￿four￿year￿service￿period￿and￿for￿some￿plans￿performance conditions.￿The￿fair￿value￿of￿shares￿is￿determined￿based￿on￿the￿closing￿trading￿price￿of￿our￿shares￿on￿NYSE￿Euronext Amsterdam￿or￿NASDAQ￿on￿the￿grant￿date. ASML￿has￿six￿different￿share￿plans: • Employee￿plan • Share￿purchase￿plan • New￿hire￿performance￿share￿plan • Brion￿performance￿share￿plan • Senior￿management￿plan • Board￿of￿management￿performance￿share￿plan￿(we￿refer￿to￿Note￿21)￿ The￿Share￿purchase￿plan￿has￿no￿service￿and￿vesting￿conditions.￿The￿employee￿plan￿has￿only￿service￿conditions.￿The other￿plans￿have￿service￿conditions￿which￿are￿similar￿and￿have￿vesting￿conditions￿which￿are￿based￿on￿performance. Details￿with￿respect￿to￿shares￿are￿set￿out￿in￿the￿following￿table: Total￿fair￿value￿at￿vesting￿date￿of￿shares￿vested￿during￿the￿year￿(in￿thousands) Weighted￿average￿fair￿value￿of￿shares￿granted 16,179 36.15 Year ended December 31 2012 ￿ ￿ ￿ 2011 ￿ 9,155 28.09 2010 ￿ 6,165 ￿ 23.51 ￿ ￿ 2012 5,392 47.71 2011 ￿ 1,956 39.00 2010 ￿ 8,856 31.66 EUR- denominated USD- denominated A￿summary￿of￿the￿status￿of￿conditionally￿outstanding￿shares￿as￿of￿December￿31,￿2012,￿and￿changes￿during￿the￿year ended￿December￿31,￿2012,￿is￿presented￿below: Conditional shares outstanding at January 1, 2012 Granted Vested/Issued Forfeited Conditional shares outstanding at December 31, 2012 EUR-denominated USD-denominated Weighted average fair value at grant Number of shares 1,479,297 678,505 (421,902) (42,290) 1,693,610 date (EUR) Number of shares 264,891 110,465 (106,500) (19,762) 249,094 24.19 36.15 20.88 19.91 29.92 Weighted average fair value at grant date (USD) 32.35 47.71 31.05 37.55 40.71 Other plans Stock Option Extension Plans and Financing In￿2002,￿employees￿were￿offered￿an￿extension￿of￿the￿option￿period￿for￿options￿granted￿in￿2000.￿As￿a￿result￿the￿option period￿was￿extended￿until￿2012.￿Employees￿who￿accepted￿the￿extension￿became￿subject￿to￿additional￿exercise￿periods in￿respect￿of￿their￿options.￿At￿the￿modification￿date,￿there￿was￿no￿intrinsic￿value￿of￿the￿modified￿award￿because￿the exercise￿price￿under￿each￿plan￿still￿exceeded￿ASML’s￿stock￿price￿on￿the￿modification￿date.￿As￿a￿result,￿these￿stock option￿extensions￿did￿not￿result￿in￿recognition￿of￿any￿additional￿compensation￿expense￿in￿accordance￿with￿ASC￿718. Stock￿option￿plans￿that￿were￿issued￿before￿2001￿were￿constructed￿with￿a￿virtual￿financing￿arrangement￿in￿compliance with￿the￿applicable￿laws￿and￿after￿obtaining￿the￿necessary￿corporate￿approvals,￿whereby￿ASML￿loaned￿the￿tax￿value￿of the￿options￿granted￿to￿employees￿subject￿to￿the￿Dutch￿tax-regime.￿The￿interest-free￿loans￿issued￿under￿this￿arrangement were￿repayable￿to￿ASML￿on￿the￿exercise￿date￿of￿the￿respective￿option,￿provided￿that￿the￿option￿was￿actually￿exercised. If￿the￿options￿expired￿unexercised,￿the￿loans￿were￿forgiven.￿ASML’s￿Supervisory￿Board￿approved￿the￿Stock￿Option￿Plans 2000￿at￿the￿time,￿including￿the￿interest-free￿loans,￿as￿these￿were￿part￿of￿the￿Stock￿Option￿Plan. In￿2006,￿we￿launched￿a￿stock￿option￿plan￿for￿Dutch￿employees￿holding￿stock￿options￿granted￿in￿2000￿(option￿"A"), which￿expired￿in￿2012.￿In￿this￿plan￿we￿granted￿options￿(option￿"B")￿which￿only￿became￿effective￿after￿option￿"A" expired￿unexercised￿in￿2012.￿During￿2012￿option￿type￿"A"￿expired￿and￿option￿type￿"B"￿has￿been￿fully￿exercised￿and￿all amounts￿due￿to￿ASML￿under￿the￿virtual￿financing￿arrangement￿were￿repaid￿upon￿exercise￿of￿the￿option.￿No￿amounts￿are outstanding￿under￿this￿virtual￿financing￿arrangement￿as￿of￿December￿31,￿2012.￿No￿compensation￿expenses￿in￿relation￿to ASML￿ANNUAL￿REPORT￿2012 F-31 these￿specific￿Stock￿Option￿Extension￿Plans￿are￿recognized￿in￿the￿consolidated￿statements￿of￿operations￿for￿the￿years 2012,￿2011￿and￿2010. Employee Purchase Plan Every￿quarter,￿ASML￿offers￿its￿worldwide￿payroll￿employees￿the￿opportunity￿to￿buy￿ASML￿shares￿or￿ASML￿stock￿options against￿fair￿value￿out￿of￿their￿net￿salary.￿The￿fair￿value￿for￿shares￿is￿determined￿based￿on￿the￿closing￿price￿of￿the￿ordinary shares￿on￿NYSE￿Euronext￿Amsterdam￿on￿the￿grant-date.￿The￿fair￿value￿of￿the￿stock￿options￿is￿determined￿using￿a￿Black- Scholes￿option￿valuation￿model.￿For￿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￿gross￿base￿salary.￿When￿employees￿retain￿the￿shares￿and/or￿stock￿options￿for￿a minimum￿of￿12￿months,￿ASML￿will￿pay￿out￿a￿20.0￿percent￿cash￿bonus￿on￿the￿net￿invested￿amount. Deferred compensation plans In￿July￿2002,￿ASML￿adopted￿a￿non-qualified￿deferred￿compensation￿plan￿for￿its￿United￿States￿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￿ASML￿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￿2012,￿2011￿and￿2010.￿As￿of￿December￿31,￿2012,￿and￿2011,￿our￿liability under￿the￿deferred￿compensation￿plan￿was￿EUR￿11.8￿million￿and￿EUR￿10.2￿million,￿respectively. Pension plans ASML￿maintains￿various￿pension￿plans￿covering￿substantially￿all￿of￿its￿employees.￿Our￿employees￿in￿the￿Netherlands, 4,778￿in￿full-time￿equivalents￿("FTEs"),￿participate￿in￿a￿multi-employer￿union￿plan￿("Bedrijfstakpensioenfonds￿Metalektro" "PME")￿determined￿in￿accordance￿with￿the￿collective￿bargaining￿agreements￿effective￿for￿the￿industry￿in￿which ASML￿operates.￿This￿collective￿bargaining￿agreement￿has￿no￿expiration￿date.￿This￿multi-employer￿union￿plan￿covers approximately￿1,220￿companies￿and￿approximately￿150,000￿contributing￿members.￿ASML’s￿contribution￿to￿the￿multi- employer￿union￿plan￿is￿less￿than￿5.0%￿of￿the￿total￿contribution￿to￿the￿plan￿as￿per￿the￿annual￿report￿for￿the￿year￿ended December￿31,￿2011.￿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￿multi-employer￿union￿plan￿must￿be monitored￿against￿specific￿criteria,￿including￿the￿coverage￿ratio￿of￿the￿plan's￿assets￿to￿its￿obligations.￿This￿coverage ratio￿must￿exceed￿104.25￿percent￿for￿the￿total￿plan.￿Every￿company￿participating￿in￿a￿Dutch￿multi-employer￿union￿plan contributes￿a￿premium￿calculated￿as￿a￿percentage￿of￿its￿total￿pensionable￿salaries,￿with￿each￿company￿subject￿to￿the same￿percentage￿contribution￿rate.￿The￿premium￿can￿fluctuate￿yearly￿based￿on￿the￿coverage￿ratio￿of￿the￿multi-employer union￿plan.￿The￿pension￿rights￿of￿each￿employee￿are￿based￿upon￿the￿employee's￿average￿salary￿during￿employment.￿￿ ASML's￿net￿periodic￿pension￿cost￿for￿this￿multi-employer￿union￿plan￿for￿any￿period￿is￿the￿amount￿of￿the￿required contribution￿for￿that￿period.￿A￿contingent￿liability￿may￿arise￿from,￿for￿example,￿possible￿actuarial￿losses￿relating￿to￿other participating￿entities￿because￿each￿entity￿that￿participates￿in￿a￿multi-employer￿union￿plan￿shares￿in￿the￿actuarial￿risks￿of every￿other￿participating￿entity￿or￿any￿responsibility￿under￿the￿terms￿of￿a￿plan￿to￿finance￿any￿shortfall￿in￿the￿plan￿if￿other entities￿cease￿to￿participate.￿ The￿coverage￿ratio￿of￿the￿multi-employer￿union￿plan￿increased￿to￿93.9￿percent￿as￿of￿December￿31,￿2012￿(December￿31, 2011:￿90.0￿percent).￿Because￿of￿the￿low￿coverage￿ratio,￿PME￿prepared￿and￿executed￿a￿so-called￿"Recovery￿Plan"￿which was￿approved￿by￿De￿Nederlandsche￿Bank￿(the￿Dutch￿central￿bank,￿which￿is￿the￿supervisor￿of￿all￿pension￿companies in￿the￿Netherlands).￿Due￿to￿the￿low￿coverage￿ratio￿and￿according￿to￿the￿obligation￿of￿the￿"Recovery￿Plan"￿the￿pension premium￿percentage￿is￿24.0￿in￿both￿2013￿and￿2012.￿The￿coverage￿ratio￿is￿calculated￿by￿dividing￿the￿fund’s￿capital￿by￿the total￿sum￿of￿pension￿liabilities￿and￿is￿based￿on￿actual￿market￿interest.￿￿ ASML￿ANNUAL￿REPORT￿2012 F-32 ASML￿also￿participates￿in￿several￿defined￿contribution￿pension￿plans,￿with￿ASML's￿expenses￿for￿these￿plans￿equaling the￿contributions￿made￿in￿the￿relevant￿period. Our￿pension￿and￿retirement￿expenses￿for￿all￿employees￿for￿the￿three￿years￿ended￿December￿31,￿2012,￿2011￿and￿2010 were: Year ended December 31 (in thousands) ￿ Pension￿plan￿based￿on￿multi-employer￿union￿plan Pension￿plans￿based￿on￿defined￿contribution ￿ Pension and retirement expenses 2012 EUR ￿ 34,525 15,773 ￿ 50,298 2011 EUR ￿ 31,819 14,128 ￿ 45,947 2010 EUR ￿ 29,643 10,950 ￿ 40,593 18. 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,￿ASML￿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 any￿losses￿incurred￿or￿damages￿assessed￿against￿them￿as￿a￿result￿of￿that￿infringement. We￿accrue￿for￿legal￿costs￿related￿to￿litigation￿in￿our￿statement￿of￿operations￿at￿the￿time￿when￿the￿related￿legal￿services are￿actually￿provided￿to￿ASML.￿In￿2012,￿no￿estimated￿losses￿were￿recorded￿as￿a￿charge￿to￿our￿consolidated￿statements of￿operations￿(2011:￿no￿estimated￿losses￿were￿recorded￿and￿2010:￿EUR￿1.5￿million￿losses￿were￿recorded). From￿late￿2001￿through￿2004,￿we￿were￿party￿to￿a￿series￿of￿civil￿litigations￿and￿administrative￿proceedings￿in￿which Nikon￿alleged￿ASML’s￿infringement￿of￿Nikon￿patents￿relating￿to￿lithography.￿ASML￿in￿turn￿filed￿claims￿against￿Nikon. Pursuant￿to￿agreements￿executed￿on￿December￿10,￿2004,￿ASML,￿Zeiss￿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￿(the￿"Nikon￿Cross-License Agreement")￿and￿payments￿to￿Nikon￿by￿ASML￿and￿Zeiss.￿In￿connection￿with￿the￿settlement,￿ASML￿and￿Zeiss￿made settlement￿payments￿to￿Nikon￿from￿2004￿to￿2007.￿The￿license￿period￿for￿certain￿patents￿subject￿to￿the￿Nikon￿Cross- License￿Agreement,￿which￿were￿not￿perpetually￿licensed,￿ended￿on￿December￿31,￿2009.￿Pursuant￿to￿the￿terms￿of￿the Nikon￿Cross-License￿Agreement,￿the￿parties￿have￿agreed,￿from￿January￿1,￿2010￿to￿December￿31,￿2014￿(the￿"Cross- License￿Transition￿Period"),￿not￿to￿bring￿suit￿for￿claims￿related￿to￿infringement￿of￿those￿patents￿or￿for￿claims￿related to￿infringement￿of￿patents￿issued￿during￿the￿Cross-License￿Transition￿Period.￿However,￿beginning￿on￿January￿1, 2015,￿the￿parties￿may￿bring￿suit￿for￿infringement￿of￿patents￿subject￿to￿the￿Nikon￿Cross-License￿Agreement,￿including any￿infringement￿that￿occurred￿during￿the￿Cross-License￿Transition￿Period.￿Damages￿related￿to￿claims￿for￿patent infringement￿occurring￿during￿the￿Cross-License￿Transition￿Period￿are￿limited￿to￿three￿percent￿of￿the￿net￿sales￿price￿of products￿utilizing￿patents￿that￿are￿valid￿and￿enforceable. 19. Income taxes The￿components￿of￿the￿provision￿for￿income￿taxes￿are￿as￿follows: Year ended December 31 (in thousands) ￿ Current tax Deferred tax Provision for income taxes 2012 EUR ￿ (79,255) 74,993 (4,262) 2011 EUR ￿ (129,127) (52,548) (181,675) 2010 EUR ￿ (180,613) (40,090) (220,703) The￿Dutch￿statutory￿tax￿rate￿was￿25.0￿percent￿in￿2012￿and￿2011￿and￿25.5￿percent￿in￿2010.￿Tax￿amounts￿in￿other jurisdictions￿are￿calculated￿at￿the￿rates￿prevailing￿in￿the￿relevant￿jurisdictions. ASML￿ANNUAL￿REPORT￿2012 F-33 The￿reconciliation￿of￿the￿provision￿for￿income￿taxes￿shown￿in￿the￿consolidated￿statements￿of￿operations,￿based￿on￿the effective￿tax￿rate,￿with￿the￿Dutch￿statutory￿tax￿rate,￿is￿as￿follows: Year ended December 31 (in thousands) ￿ 2012 EUR ￿ ￿ % 2011 EUR ￿ ￿ % 2010 EUR ￿ ￿ Income￿tax￿provision￿based￿on￿ASML's￿domestic￿rate Effects￿of￿tax￿rates￿in￿foreign￿jurisdictions Adjustments￿in￿respect￿of￿tax￿exempt￿income Adjustments￿in￿respect￿of￿changes￿in￿the￿applicable￿tax￿rate1 Adjustments￿in￿respect￿of￿tax￿incentives Adjustments￿in￿respect￿of￿prior￿years'￿current￿taxes Movements￿in￿the￿liability￿for￿unrecognized￿tax￿benefits Other￿credits￿and￿non-taxable￿items Provision for income taxes Income before income taxes 1,150,578 (287,644) 9,786 23,532 - 143,160 18,275 95,465 (6,836) (4,262) 100.0 1,648,635 (412,159) 20,663 19,134 - 180,096 9,097 6,634 (5,140) (181,675) 25.0 (0.9) (2.0) - (12.4) (1.6) (8.3) 0.6 0.4 100.0 1,242,523 (316,843) 15,878 19,987 (569) 66,881 25,648 (28,796) (2,889) (220,703) 25.0 (1.3) (1.2) - (10.9) (0.6) (0.4) 0.4 11.0 % 100.0 25.5 (1.3) (1.6) 0.1 (5.4) (2.1) 2.3 0.3 17.8 1 At￿the￿end￿of￿2010,￿the￿Dutch￿government￿enacted￿a￿tax￿rate￿reduction￿from￿25.5￿percent￿in￿2010￿to￿25.0￿percent￿in￿2011. Income tax provision based on ASML's domestic rate The￿provision￿for￿income￿taxes￿based￿on￿ASML's￿domestic￿rate￿is￿based￿on￿the￿Dutch￿statutory￿income￿tax￿rate￿and reflects￿the￿provision￿for￿income￿taxes￿that￿would￿have￿been￿applicable￿if￿all￿of￿our￿income￿was￿derived￿from￿our￿Dutch operations￿and￿there￿were￿no￿permanent￿book￿tax￿differences￿and￿no￿other￿tax￿facilities. Effects of tax rates in foreign jurisdictions A￿portion￿of￿ASML’s￿results￿are￿realized￿in￿countries￿other￿than￿the￿Netherlands￿where￿different￿tax￿rates￿are￿applicable. 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 agreement￿with￿the￿Dutch￿fiscal￿authorities￿of￿December￿2010￿regarding￿the￿application￿of￿the￿"Innovation￿Box",￿and￿the research￿and￿development￿deduction￿("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.￿This￿tax￿ruling￿has￿retroactive￿effect￿to￿January 1,￿2007￿and￿is￿valid￿through￿December￿31,￿2016.￿Thereafter￿the￿validity￿of￿this￿ruling￿may￿be￿extended￿or￿this￿ruling￿may be￿adapted￿depending￿on￿a￿possible￿change￿in￿law￿or￿change￿of￿circumstances. Adjustments in respect of prior years’ current taxes In￿2012,￿we￿recognized￿a￿tax￿benefit￿of￿EUR￿18.3￿million￿or￿1.6￿percent￿of￿income￿before￿taxes￿mainly￿attributable￿to￿the application￿of￿tax￿exemptions￿for￿prior￿years,￿which￿had￿a￿favorable￿effect￿on￿the￿effective￿tax￿rate￿for￿2012. In￿2010,￿we￿recognized￿a￿tax￿benefit￿of￿EUR￿25.6￿million￿or￿2.1￿percent￿of￿income￿before￿income￿taxes￿mainly attributable￿to￿the￿application￿of￿the￿Innovation￿Box￿for￿prior￿years,￿which￿had￿a￿favorable￿effect￿on￿the￿effective￿tax￿rate for￿2010￿(EUR￿37.5￿million￿including￿interest￿or￿3.0￿percent). Movements in the liability for unrecognized tax benefits In￿2012,￿ASML￿recognized￿a￿tax￿benefit￿of￿EUR￿95.5￿million￿or￿8.3￿percent￿of￿income￿before￿income￿taxes￿mainly￿as￿a result￿of￿the￿successful￿conclusion￿of￿tax￿audits￿in￿different￿jurisdictions￿(EUR￿92.5￿million). 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￿non- deductible￿taxes,￿non-deductible￿interest￿expense,￿and￿non-deductible￿meals￿and￿entertainment,￿as￿well￿as￿the￿impact of￿(the￿reversal￿of)￿various￿tax￿credits￿on￿our￿provision￿for￿income￿taxes. ASML￿ANNUAL￿REPORT￿2012 F-34 Income taxes recognized directly in shareholders' equity Income￿taxes￿recognized￿directly￿in￿shareholders'￿equity￿(including￿other￿comprehensive￿income)￿are￿as￿follows: Income tax recognized in shareholders' equity (in thousands) Current tax Derivative￿financial￿instruments1 Tax￿(benefit)￿deficit￿from￿share-based￿payments Total income tax recognized in shareholders' equity 2012 EUR ￿ (1,066) (2,116) (3,182) 2011 EUR ￿ 6,257 11 6,268 2010 EUR ￿ 8,262 (106) 8,156 1 Recognized￿directly￿in￿Other￿Comprehensive￿Income. Liability for unrecognized tax benefits and deferred taxes The￿deferred￿tax￿position￿and￿liability￿for￿unrecognized￿tax￿benefits￿recorded￿on￿the￿consolidated￿balance￿sheets￿are￿as follows: As of December 31 (in thousands) Liability￿for￿unrecognized￿tax￿benefits Deferred￿tax￿position Total 2012 EUR (59,967) 114,527 54,560 2011 EUR (155,432) 137,946 (17,486) Liability for unrecognized tax benefits The￿calculation￿of￿our￿liability￿for￿unrecognized￿tax￿benefits￿involves￿uncertainties￿in￿the￿application￿of￿complex￿tax laws.￿Our￿estimate￿for￿the￿potential￿outcome￿of￿any￿uncertain￿tax￿issue￿is￿highly￿judgmental.￿We￿believe￿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￿ASC￿740,￿as￿of￿December￿31,￿2012,￿ASML￿has￿a￿liability￿for￿unrecognized￿tax￿benefits of￿EUR￿60.0￿million￿(2011:￿EUR￿155.4￿million)￿which￿is￿classified￿as￿non-current￿deferred￿and￿other￿tax￿liabilities.￿The total￿liability￿for￿unrecognized￿tax￿benefits,￿if￿reversed,￿would￿have￿a￿favorable￿effect￿on￿our￿effective￿tax￿rate. Expected￿interest￿and￿penalties￿related￿to￿income￿tax￿liabilities￿have￿been￿accrued￿for￿and￿are￿included￿in￿the￿liability￿for unrecognized￿tax￿benefits￿and￿in￿the￿provision￿for￿income￿taxes.￿The￿balance￿of￿accrued￿interest￿and￿penalties￿recorded in￿the￿consolidated￿balance￿sheets￿as￿per￿December￿31,￿2012￿amounted￿to￿EUR￿21.4￿million￿(2011:￿EUR￿24.5￿million). Accrued￿interest￿and￿penalties￿recorded￿in￿the￿consolidated￿statement￿of￿operations￿of￿2012￿amounted￿to￿a￿tax￿benefit of￿EUR￿3.1￿million￿(2011:￿tax￿benefit￿of￿EUR￿9.3￿million;￿2010:￿tax￿charge￿of￿EUR￿5.3￿million). A￿reconciliation￿of￿the￿beginning￿and￿ending￿balance￿of￿the￿liability￿for￿unrecognized￿tax￿benefits￿is￿as￿follows: As of December 31 (in thousands) ￿ Balance,￿January￿1 Gross￿increases￿–￿tax￿positions￿in￿prior￿period Gross￿decreases￿–￿tax￿positions￿in￿prior￿period Gross￿increases￿–￿tax￿positions￿in￿current￿period Settlements Lapse￿of￿statute￿of￿limitations Total liability for unrecognized tax benefits 2012 EUR ￿ 155,432 4,297 (92,521) 3,255 - (10,496) 59,967 2011 EUR ￿ 162,066 11,121 (24,566) 21,258 (10,403) (4,044) 155,432 For￿2012￿the￿gross￿decreases￿in￿tax￿positions￿in￿prior￿period￿mainly￿relates￿to￿the￿release￿of￿tax￿positions￿after succesfull￿conclusion￿of￿tax￿audits￿in￿different￿jurisdictions. We￿estimate￿that￿the￿total￿liability￿for￿unrecognized￿tax￿benefits￿will￿decrease￿by￿EUR￿3.0￿million￿within￿the￿next￿12 months.￿The￿estimated￿changes￿to￿the￿liability￿for￿unrecognized￿tax￿benefits￿within￿the￿next￿12￿months￿are￿mainly￿due￿to expected￿settlements￿with￿tax￿authorities. We￿are￿subject￿to￿tax￿audits￿in￿our￿major￿tax￿jurisdictions￿for￿years￿from￿and￿including￿2007￿onwards￿in￿the￿Netherlands, for￿years￿from￿and￿including￿2006￿onwards￿in￿Hong￿Kong,￿and￿for￿years￿from￿and￿including￿2001￿onwards￿in￿the￿United ASML￿ANNUAL￿REPORT￿2012 F-35 States.￿In￿the￿course￿of￿such￿audits,￿local￿tax￿authorities￿may￿challenge￿the￿positions￿taken￿by￿us.￿For￿the￿years￿2006 through￿2010,￿the￿partial￿exemption￿of￿taxable￿profits￿is￿subject￿to￿tax￿audits￿in￿certain￿tax￿jurisdictions. Deferred tax position The￿changes￿in￿deferred￿income￿tax￿assets￿and￿liabilities￿consist￿of￿the￿following￿elements: Changes in deferred tax assets and liabilities (in thousands) Balance, January 1 Consolidated￿statements￿of￿operations Effect￿of￿changes￿in￿exchange￿rates Balance, December 31 The￿deferred￿tax￿position￿is￿classified￿in￿the￿consolidated￿balance￿sheets￿as￿follows: As of December 31 (in thousands) ￿ Deferred￿tax￿assets￿–￿current Deferred￿tax￿assets￿–￿non-current Total deferred tax assets Deferred￿tax￿liabilities￿–￿current Deferred￿tax￿liabilities￿–￿non-current Total deferred tax liabilities Total 2012 EUR 137,946 (20,242) (3,177) 114,527 2012 EUR ￿ 103,695 39,443 143,138 (271) (28,340) (28,611) 114,527 2011 EUR 193,587 (59,539) 3,898 137,946 2011 EUR ￿ 120,720 38,735 159,455 (214) (21,295) (21,509) 137,946 The￿composition￿of￿total￿deferred￿tax￿assets￿and￿liabilities￿in￿the￿consolidated￿financial￿statements￿is￿as￿follows: Deferred tax assets composition of temporary differences (in thousands) Capitalized￿research￿and￿development￿expenditures Inventories Deferred￿revenue Provisions Installation￿and￿warranty￿reserve Tax￿effect￿carry-forward￿losses Fixed￿assets Restructuring￿and￿impairment Alternative￿minimum￿tax￿credits1 Bilateral￿advance￿pricing￿agreement￿2 Share-based￿payments Other￿temporary￿differences Total January 1, 2012 EUR 34,374 35,820 23,892 14,515 8,772 7,735 6,495 5,146 5,028 1,426 950 15,302 159,455 Consolidated statements of operations EUR (6,465) (7,351) (3,083) 7,296 (1,508) (2,219) 1,454 (733) 229 (1,278) 516 140 (13,002) Effect of changes in exchange December 31, 2012 EUR 27,403 28,167 20,572 21,528 7,151 5,557 7,798 4,336 5,227 148 1,433 13,818 143,138 rates EUR (506) (302) (237) (283) (113) 41 (151) (77) (30) - (33) (1,624) (3,315) 1 Alternative￿minimum￿tax￿credits￿relate￿to￿prepaid￿US￿taxes￿which￿are￿credited￿against￿future￿taxable￿profits￿after￿the￿carry-forward￿losses￿used. 2 The￿Bilateral￿advance￿pricing￿agreement￿relates￿to￿intellectual￿property￿which￿is￿capitalized￿from￿a￿tax￿perspective￿resulting￿in￿a￿temporary￿difference. Deferred tax liabilities composition of of temporary differences (in thousands) Fixed￿assets Borrowing￿costs Other￿temporary￿differences Total January 1, 2012 EUR (19,108) (1,554) (847) (21,509) Consolidated statements of operations EUR (6,965) (404) 129 (7,240) Effect of changes in exchange December 31, 2012 EUR (25,890) (1,958) (763) (28,611) rates EUR 183 - (45) 138 ASML￿ANNUAL￿REPORT￿2012 F-36 Deferred tax assets composition of of temporary differences (in thousands) Capitalized￿research￿and￿development￿expenditures Inventories Deferred￿revenue Provisions Installation￿and￿warranty￿reserve Tax￿effect￿carry-forward￿losses Fixed￿assets Restructuring￿and￿impairment Alternative￿minimum￿tax￿credits1 Bilateral￿advance￿pricing￿agreement2 Share-based￿payments Other￿temporary￿differences Total January 1, 2011 EUR 27,239 71,124 10,890 21,828 8,092 27,756 4,386 6,074 4,658 7,993 1,678 13,719 205,437 Consolidated statements of operations EUR 5,501 (35,813) 11,746 (7,463) 98 (18,695) 1,872 (1,063) 112 (6,583) (808) 936 (50,160) Effect of changes in exchange December 31, 2011 EUR 34,374 35,820 23,892 14,515 8,772 7,735 6,495 5,146 5,028 1,426 950 15,302 159,455 rates EUR 1,634 509 1,256 150 582 (1,326) 237 135 258 16 80 647 4,178 1 Alternative￿minimum￿tax￿credits￿relate￿to￿prepaid￿US￿taxes￿which￿are￿credited￿against￿future￿taxable￿profits￿after￿the￿carry-forward￿losses￿used. 2 The￿Bilateral￿advance￿pricing￿agreement￿relates￿to￿intellectual￿property￿which￿is￿capitalized￿from￿a￿tax￿perspective￿resulting￿in￿a￿temporary￿difference. Deferred tax liabilities composition of of temporary differences (in thousands) Fixed￿assets Borrowing￿costs Other￿temporary￿differences Total January 1, 2011 EUR (9,661) (1,231) (958) (11,850) Consolidated statements of operations EUR (9,175) (323) 119 (9,379) Effect of changes in exchange December 31, 2011 EUR (19,108) (1,554) (847) (21,509) rates EUR (272) - (8) (280) Tax effect carry-forward losses Deferred￿tax￿assets￿from￿carry-forward￿losses￿result￿predominantly￿from￿net￿operating￿loss￿carry-forwards￿incurred￿in the￿United￿States￿prior￿to￿2011. Net￿operating￿losses￿qualified￿as￿tax￿losses￿under￿United￿States￿federal￿tax￿laws￿were￿fully￿utilized￿to￿offset￿taxable income￿during￿2012.￿Net￿operating￿losses￿qualified￿as￿tax￿losses￿under￿United￿States￿state￿tax￿laws￿incurred￿by￿United States￿group￿companies￿can￿in￿general￿be￿offset￿against￿future￿profits￿realized￿in￿the￿5￿to￿20￿years￿following￿the￿year in￿which￿the￿losses￿are￿incurred.￿The￿period￿of￿net￿operating￿loss￿carry￿forward￿for￿United￿States￿state￿tax￿purposes depends￿on￿the￿state￿in￿which￿the￿tax￿loss￿arose.￿Our￿ability￿to￿use￿United￿States￿state￿tax￿loss￿carry￿forwards￿in existence￿at￿December￿31,￿2012,￿is￿subject￿to￿varying￿state￿statutes￿(providing￿for￿periods￿of￿between￿5￿and￿20￿years) and￿valuation￿allowances￿have￿been￿set￿up￿for￿state￿carry￿forward￿losses￿that￿are￿not￿expected￿to￿be￿realized￿before they￿expire.￿The￿total￿amount￿of￿losses￿carried￿forward￿under￿United￿States￿state￿tax￿laws￿as￿of￿December￿31,￿2012,￿is EUR￿503.7￿million￿tax￿basis￿or￿EUR￿5.6￿million￿tax￿effect. ASML￿ANNUAL￿REPORT￿2012 F-37 20. Segment disclosure Segment￿information￿has￿been￿prepared￿in￿accordance￿with￿ASC￿280,￿"Segment￿Reporting". ASML￿operates￿in￿one￿reportable￿segment￿for￿the￿development,￿production,￿marketing,￿sale￿and￿servicing￿of￿advanced semiconductor￿equipment￿systems￿exclusively￿consisting￿of￿lithography￿systems.￿In￿accordance￿with￿ASC￿280,￿ASML’s Chief￿Executive￿Officer￿has￿been￿identified￿as￿the￿chief￿operating￿decision-maker,￿who￿reviews￿operating￿results￿to￿make decisions￿about￿allocating￿resources￿and￿assessing￿performance￿for￿ASML. Management￿reporting￿includes￿net￿system￿sales￿figures￿of￿new￿and￿used￿systems.￿Net￿system￿sales￿for￿new￿and￿used systems￿were￿as￿follows: Year ended December 31 (in thousands) ￿ New￿systems Used￿systems ￿ Net system sales 2012 EUR ￿ 3,620,260 181,372 ￿ 3,801,632 2011 EUR ￿ 4,780,720 103,193 ￿ 4,883,913 2010 EUR ￿ 3,704,290 190,452 ￿ 3,894,742 Net￿system￿sales￿decreased￿by￿EUR￿1,082.3￿million,￿or￿22.2￿percent￿to￿EUR￿3,801.6￿million￿in￿2012￿from￿EUR￿4,883.9 million￿in￿2011￿(2010:￿EUR￿3,894.7￿million).￿The￿decrease￿in￿net￿system￿sales￿was￿mainly￿caused￿by￿decreased￿demand in￿Memory.￿During￿2012,￿the￿majority￿of￿the￿system￿sales￿were￿generated￿from￿Logic. For￿geographical￿reporting,￿net￿sales￿are￿attributed￿to￿the￿geographic￿location￿in￿which￿the￿customers’￿facilities￿are located.￿Identifiable￿assets￿are￿attributed￿to￿the￿geographic￿location￿in￿which￿these￿assets￿are￿located.￿Net￿sales￿and identifiable￿assets￿(total￿assets￿excluding￿goodwill￿and￿other￿intangible￿assets)￿by￿geographic￿region￿were￿as￿follows: Year ended December 31 (in thousands) 2012 ￿ Japan Korea Singapore Taiwan Rest￿of￿Asia Europe United￿States Total ￿ ￿ 2011 ￿ Japan Korea Singapore Taiwan Rest￿of￿Asia Europe United￿States Total ￿ ￿ 2010 ￿ Japan Korea Singapore Taiwan Rest￿of￿Asia Europe United￿States Total Net sales EUR 292,309 1,276,304 98,554 1,479,768 197,262 256,192 1,131,166 4,731,555 405,595 1,318,777 436,308 1,146,601 450,796 505,129 1,387,829 5,651,035 396,748 1,396,028 215,357 1,380,400 239,914 203,548 675,943 4,507,938 Identifiable assets EUR ￿ 128,750 85,022 15,696 138,010 999,392 5,412,758 471,739 7,251,367 ￿ ￿ 414,264 56,765 14,179 87,833 817,496 5,207,509 508,359 7,106,405 ￿ ￿ 345,160 31,859 17,189 77,125 1,749,879 3,382,117 422,092 6,025,421 In￿2012,￿sales￿to￿the￿largest￿customer￿accounted￿for￿EUR￿1,236.1￿million￿or￿26.1￿percent￿of￿net￿sales￿(2011:￿EUR￿1,311.7 million￿or￿23.2￿percent￿of￿net￿sales;￿2010:￿EUR￿1,270.8￿million￿or￿28.2￿percent￿of￿net￿sales).￿ASML's￿three￿largest customers￿(based￿on￿net￿sales)￿accounted￿for￿58.9￿percent￿of￿accounts￿receivable￿and￿finance￿receivables￿at￿December 31,￿2012,￿35.5￿percent￿of￿accounts￿receivable￿and￿finance￿receivables￿at￿December￿31,￿2011,￿and￿36.9￿percent￿of accounts￿receivable￿and￿finance￿receivables￿at￿December￿31,￿2010. ASML￿ANNUAL￿REPORT￿2012 F-38 Substantially￿all￿of￿ASML’s￿sales￿were￿export￿sales￿in￿2012,￿2011￿and￿2010. 21. Board of Management and Supervisory Board remuneration The￿remuneration￿of￿the￿members￿of￿the￿Board￿of￿Management￿is￿determined￿by￿the￿Supervisory￿Board￿on￿the￿advice of￿the￿Remuneration￿Committee.￿The￿2010￿Remuneration￿Policy,￿as￿adopted￿by￿the￿General￿Meeting￿of￿Shareholders￿on March￿24,￿2010,￿was￿not￿changed￿in￿2012. The￿2010￿Remuneration￿Policy￿enables￿ASML￿to￿continue￿to￿attract,￿reward￿and￿retain￿qualified￿and￿experienced industry￿professionals￿in￿an￿international￿labor￿market.￿The￿remuneration￿structure￿and￿levels￿are￿assessed￿against￿a reference￿market￿by￿benchmarking.￿The￿total￿remuneration￿in￿2012￿consists￿of￿base￿salary,￿short-term￿performance incentives￿(in￿cash),￿long-term￿performance￿incentives￿(in￿shares)￿and￿other￿benefits. Total￿direct￿compensation,￿pension￿and￿other￿benefits The￿remuneration￿of￿the￿members￿of￿the￿Board￿of￿Management￿in￿2012,￿2011￿and￿2010￿was￿as￿follows: ￿ ￿ ￿ E.￿Meurice ￿ ￿ P.T.F.M. Wennink ￿ M.A.￿van￿den Brink ￿ F.J.￿van￿Hout ￿ ￿ F.J.M. Schneider- Maunoury ￿ ￿ Year 2012 2011 2010 2012 2011 2010 2012 2011 2010 2012 2011 2010 2012 2011 2010 Fixed ￿ ￿ Short-term (variable) ￿ ￿ Long-term (variable) Total Remuneration ￿ ￿ ￿ ￿ Total7 Base salary STI (Cash)1 Option awards2 LTI (share awards)3 EUR 818,000 787,000 757,000 508,000 488,000 469,000 538,000 517,000 497,000 445,000 428,000 412,000 433,000 416,000 400,000 EUR 613,500 586,709 566,236 304,800 291,043 280,650 322,800 308,339 297,405 267,000 255,259 246,541 259,800 248,102 239,360 EUR - - 42,648 - - 26,401 - - 28,025 - - 23,209 - - - EUR ￿ 2,079,601 4 1,413,218 5 935,617 6 1,289,415 4 875,493 5 579,321 6 1,366,039 4 927,912 5 617,004 6 1,131,676 4 832,201 ￿ 471,700 ￿ 1,144,137 ￿ 676,945 ￿ 326,947 ￿ EUR 3,511,101 2,786,927 2,301,501 2,102,215 1,654,536 1,355,372 2,226,839 1,753,251 1,439,434 1,843,676 1,515,460 1,153,450 1,836,937 1,341,047 966,307 Other ￿ ￿ Pension8 Compensation Pension Premium9 EUR - 88,050 - - 94,455 - - 181,826 - - 9,735 - - 4,290 - EUR 167,427 140,113 136,697 79,190 85,994 84,229 83,990 91,243 90,388 69,110 75,134 65,300 67,190 56,475 55,011 Other benefits and expense reimbursement10 EUR 127,116 136,765 132,630 46,275 44,669 43,627 47,540 45,502 44,817 37,313 35,190 34,549 28,889 28,313 34,788 1 Actual￿short-term￿incentives￿("STI")￿(cash)￿chargeable￿to￿us￿in￿the￿financial￿year￿(i.e.￿STI￿relating￿to￿performance￿in￿the￿current￿year￿but￿paid￿out￿in￿the 2 3 4 5 6 7 8 9 next￿financial￿year). The￿remuneration￿reported￿as￿part￿of￿the￿option￿awards￿is￿based￿on￿costs￿incurred￿under￿U.S.￿GAAP.￿The￿costs￿of￿the￿option￿awards￿are￿based￿on￿the actual￿vested￿number￿of￿option￿awards￿multiplied￿by￿the￿fair￿value￿of￿the￿option￿awards￿at￿grant￿date￿and￿are￿recorded￿in￿the￿consolidated￿statements of￿operations￿on￿a￿straight￿line￿basis￿over￿the￿vesting￿period.￿The￿use￿of￿performance￿stock￿options￿in￿the￿short￿term￿incentive￿plan￿was￿withdrawn￿as of￿2010.￿The￿last￿performance￿option￿awards￿were￿granted￿in￿2009￿and￿became￿unconditional￿in￿2010. The￿remuneration￿reported￿as￿part￿of￿the￿long-term￿incentives￿("LTI")￿(share￿awards)￿is￿based￿on￿costs￿incurred￿under￿U.S.￿GAAP.￿The￿costs￿of￿share awards￿are￿charged￿to￿the￿consolidated￿statements￿of￿operations￿over￿the￿3￿year￿vesting￿period￿based￿on￿the￿maximum￿achievable￿number￿of￿share awards.￿Therefore￿the￿costs￿for￿e.g.￿the￿financial￿year￿2012￿include￿costs￿of￿the￿Board￿of￿Management's￿performance￿share￿plan￿2012,￿2011￿and￿2010. 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￿statements￿of￿operations￿in￿the￿financial￿year￿in￿which￿the￿share￿awards￿vest. 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.￿Meurice,￿Mr.￿Wennink,￿Mr.￿van￿den￿Brink￿and￿Mr.￿van Hout￿amounts￿to￿EUR￿-106,266,￿EUR￿-65,785,￿EUR￿-69,831￿and￿EUR￿-57,838,￿respectively. The￿remuneration￿reported￿as￿part￿of￿the￿LTI￿(share￿awards)￿for￿the￿year￿2011￿includes￿an￿adjustment￿for￿the￿Board￿of￿Management￿performance￿share plan￿2008￿based￿on￿the￿actual￿number￿of￿share￿awards￿vested￿in￿2011.￿The￿adjustment￿for￿Mr.￿Meurice,￿Mr.￿Wennink￿and￿Mr.￿van￿den￿Brink￿amounts￿to EUR￿-148,040,￿EUR￿-91,645￿and￿EUR￿-97,281,￿respectively. The￿remuneration￿reported￿as￿part￿of￿the￿LTI￿(share￿awards)￿for￿the￿year￿2010￿includes￿an￿adjustment￿for￿the￿Board￿of￿Management￿performance￿share plan￿2007￿based￿on￿the￿actual￿number￿of￿share￿awards￿vested￿in￿2010.￿The￿adjustment￿for￿Mr.￿Meurice,￿Mr.￿Wennink￿and￿Mr.￿van￿den￿Brink￿amounts￿to EUR￿-296,287,￿EUR￿-183,612￿and￿EUR￿-191,972,￿respectively. This￿total￿reflects￿base￿salary,￿STI￿(cash),￿option￿awards￿and￿LTI￿(share￿awards). The￿pension￿arrangement￿has￿been￿adjusted￿upwards￿to￿match￿common￿market￿practice￿as￿from￿2010.￿Furthermore,￿since￿the￿pension￿arrangement for￿members￿of￿the￿Board￿of￿Management￿is￿a￿defined￿contribution￿plan,￿we￿do￿not￿have￿additional￿pension￿obligations￿beyond￿the￿annual￿premium contribution.￿As￿per￿2010,￿the￿employee￿contribution￿to￿the￿pension￿plan￿is￿4.0￿percent￿of￿the￿pension￿base. In￿2011,￿compensation￿was￿paid￿to￿the￿Board￿of￿Management￿regarding￿the￿risk￿premium￿for￿spouse/orphan￿pensions,￿to￿align￿the￿Board￿of Management￿pension￿arrangement￿with￿senior￿management.￿This￿concerned￿a￿reimbursement￿for￿risk￿premiums￿that￿were￿erroneously￿paid￿by￿the participants￿in￿the￿past. 10 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. ASML￿ANNUAL￿REPORT￿2012 F-39 Short-term incentive The￿annual￿performance-related￿cash￿incentive￿will￿have￿an￿on-target￿level￿of￿75.0￿percent￿of￿base￿salary￿for￿the￿Chief Executive￿Officer￿("CEO")￿and￿60.0￿percent￿for￿the￿other￿members￿of￿the￿Board￿of￿Management.￿The￿payouts￿are￿pro- rated,￿on￿a￿linear￿basis￿to￿the￿level￿of￿achievement￿of￿six￿performance￿criteria.￿Of￿the￿five￿quantitative￿performance criteria,￿three￿are￿based￿on￿the￿achievement￿of￿measurable￿financial￿targets,￿one￿on￿Technology￿Leadership￿Index￿(which also￿included￿qualitative￿elements)￿and￿one￿on￿achievements￿in￿the￿market￿position.￿Additionally,￿the￿qualitative￿target￿is based￿on￿the￿achievement￿of￿agreed￿key￿objectives. In￿principle,￿the￿weighting￿of￿each￿of￿the￿five￿quantitative￿criteria￿is￿equal￿(weighted￿80.0￿percent￿in￿total).￿The￿sixth target￿is￿based￿on￿qualitative￿objectives￿(weighted￿20.0￿percent).￿The￿setting￿and￿measuring￿period￿of￿the￿financial and￿technology￿based￿targets￿is￿semiannual,￿and￿for￿the￿market￿related￿and￿qualitative￿targets￿it￿is￿annual.￿The￿overall payout￿is￿annual￿and￿the￿cash￿incentive￿is￿accrued￿during￿the￿performance￿period. The￿Remuneration￿Committee￿evaluated￿the￿Board￿of￿Managements’￿performance￿on￿above￿six￿criteria.￿Based￿on￿the 2012￿evaluation,￿6￿out￿of￿6￿performance￿criteria￿were￿achieved￿on￿target￿or￿above￿target￿result,￿resulting￿in￿a￿cash payout￿of￿EUR￿1.8￿million￿representing￿75.0￿percent￿of￿Mr.￿Meurice's￿base￿salary,￿60.0￿percent￿of￿Messrs.￿Wennink's, Van￿den￿Brink's,￿van￿Hout's￿and￿Schneider-Maunoury's￿base￿salary. Performance Stock Options In￿order￿to￿shift￿the￿focus￿from￿the￿short-term￿to￿the￿long-term,￿performance￿stock￿options￿are￿not￿a￿part￿of￿the￿2010 Remuneration￿Policy.￿The￿value￿of￿this￿part￿of￿the￿remuneration￿has￿been￿moved￿into￿the￿long-term￿incentive￿plan￿which is￿paid￿in￿shares.￿2009￿was￿the￿last￿year￿in￿which￿performance￿stock￿options￿were￿granted￿to￿the￿members￿of￿the￿Board of￿Management,￿which￿means￿the￿actual￿number￿of￿performance￿stock￿options￿for￿2009￿achievement￿were￿awarded￿for the￿last￿time￿in￿2010.￿Once￿the￿options￿are￿unconditionally￿awarded￿after￿fulfillment￿of￿the￿performance￿conditions,￿the options￿will￿be￿retained￿(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￿fair￿value￿of￿the￿options granted￿is￿determined￿based￿on￿the￿Black-Scholes￿option￿valuation￿model.￿Details￿of￿vested￿options￿held￿by￿members of￿the￿Board￿of￿Management￿to￿purchase￿ordinary￿shares￿of￿ASML￿Holding￿N.V.￿are￿set￿out￿below: Jan. 1, 2012 Exercised during 2012 23,270 88,371 95,146 42,448 84,895 31,500 52,554 31,500 27,894 55,788 46,201 - 23,270 88,371 95,146 42,448 84,895 - 52,554 - 27,894 55,788 46,201 - Share price on exercise date (EUR) 35.12 36.70 43.89 36.67 34.93 - 33.60 - 34.38 33.60 33.60 - Vested during 2012 Expired during 2012 Dec. 31, 2012 - - - - - - - - - - - - - - - - - 31,500 - 31,500 - - - - - - - - - - - - - - - - Exercise price (EUR) 11.53 17.90 20.39 17.20 12.39 58.00 12.39 58.00 17.20 12.39 12.39 - Expiration date 1/19/2015 1/18/2016 1/17/2017 2/4/2018 2/2/2019 1/20/2012 2/2/2019 1/20/2012 2/4/2018 2/2/2019 2/2/2019 - E.￿Meurice ￿ ￿ ￿ ￿ P.T.F.M.￿Wennink ￿ M.A.￿van￿den￿Brink ￿ ￿ F.J.￿van￿Hout F.J.M.￿Schneider- Maunoury Long-term incentive 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.￿These￿targets￿are￿measured￿over￿a￿period￿of three￿calendar￿years.￿The￿performance￿measures￿for￿obtaining￿performance￿targets￿will￿be￿ASML’s￿relative￿Return￿On Average￿Invested￿Capital￿("ROAIC")￿position￿compared￿with￿the￿peer￿group￿(weighted￿80.0￿percent)￿and￿a￿qualitative target￿related￿to￿ASML’s￿long-term￿ability￿to￿keep￿performing￿at￿high￿standards￿(weighted￿20.0￿percent). The￿maximum￿number￿of￿performance￿shares￿to￿be￿conditionally￿awarded￿will￿equal￿146.25￿percent￿of￿base￿salary divided￿by￿the￿value￿of￿one￿performance￿share￿(i.e.￿reflecting￿maximum￿achievement).￿ASML￿defines￿stretching￿targets, whereas￿for￿on￿target￿achievement,￿the￿value￿of￿performance￿shares￿will￿be￿80.0￿percent￿of￿base￿salary. For￿the￿determination￿of￿the￿number￿of￿performance￿shares￿that￿will￿be￿conditionally￿awarded,￿ASML￿applies￿a￿fixed number￿approach.￿Under￿this￿approach,￿the￿number￿of￿shares￿is￿fixed￿for￿two￿consecutive￿years.￿Every￿two￿years,￿the fixed￿number￿is￿calculated￿using￿the￿maximum￿achievable￿value￿of￿146.25￿percent￿of￿base￿salary￿divided￿by￿the￿value of￿the￿performance￿share￿at￿the￿moment￿of￿grant￿in￿the￿respective￿year.￿In￿2012,￿the￿fixed￿number￿calculation￿has￿been conducted. ASML￿ANNUAL￿REPORT￿2012 F-40 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.￿ASML￿accounts￿for￿this￿share￿award￿performance plan￿as￿a￿variable￿plan. Details￿of￿performance￿shares￿granted￿to￿members￿of￿the￿Board￿of￿Management￿are￿as￿follows: Board of management Grant date Status Full control Number of shares at grant date Fair value at grant date Vesting date Number of shares at vesting date End of lock- up date E.￿Meurice ￿ ￿ ￿ ￿ ￿ P.T.F.M.￿Wennink ￿ ￿ ￿ ￿ ￿ M.A.￿van￿den￿Brink ￿ ￿ ￿ ￿ ￿ F.J.￿van￿Hout ￿ ￿ ￿ F.J.M.￿Schneider- Maunoury ￿ Conditional 4/18/2012 Conditional 4/13/2011 2/1/2010 Conditional 2/2/2009 Unconditional 2/4/2008 Unconditional 1/17/2007 Unconditional Conditional 4/18/2012 Conditional 4/13/2011 2/1/2010 Conditional 2/2/2009 Unconditional 2/4/2008 Unconditional 1/17/2007 Unconditional Conditional 4/18/2012 Conditional 4/13/2011 2/1/2010 Conditional 2/2/2009 Unconditional 2/4/2008 Unconditional 1/17/2007 Unconditional Conditional 4/18/2012 Conditional 4/13/2011 2/1/2010 Conditional 2/2/2009 Unconditional Conditional Conditional Conditional 4/18/2012 4/13/2011 2/1/2010 No No No No No Yes No No No No No Yes No No No No No Yes No No No No No No No 73,570 88,732 88,732 57,002 57,002 66,338 45,689 54,974 54,974 35,287 35,287 41,111 48,387 58,256 58,256 37,458 37,458 42,980 40,023 48,293 48,293 31,021 38,944 46,886 46,886 EUR 37.33 28.29 22.93 13.05 18.18 20.39 37.33 28.29 22.93 13.05 18.18 20.39 37.33 28.29 22.93 13.05 18.18 20.39 37.33 28.29 22.93 13.05 37.33 28.29 22.93 4/18/2015 4/13/2014 2/1/2013 2/2/2012 2/4/2011 1/17/2010 4/18/2015 4/13/2014 2/1/2013 2/2/2012 2/4/2011 1/17/2010 4/18/2015 4/13/2014 2/1/2013 2/2/2012 2/4/2011 1/17/2010 4/18/2015 4/13/2014 2/1/2013 2/2/2012 4/18/2015 4/13/2014 2/1/2013 - - - - - - ￿ ￿ ￿ 48,859 1 48,859 1 51,807 ￿ ￿ ￿ ￿ 30,246 1 30,246 1 32,106 ￿ ￿ ￿ ￿ 32,107 1 32,107 1 33,565 ￿ ￿ ￿ ￿ 26,589 1 ￿ ￿ ￿ - - - - - - - - - 4/18/2017 4/13/2016 2/1/2015 2/2/2014 2/4/2013 1/17/2012 4/18/2017 4/13/2016 2/1/2015 2/2/2014 2/4/2013 1/17/2012 4/18/2017 4/13/2016 2/1/2015 2/2/2014 2/4/2013 1/17/2012 4/18/2017 4/13/2016 2/1/2015 2/2/2014 4/18/2017 4/13/2016 2/1/2015 1 The￿number￿of￿shares￿included￿in￿the￿lock-up￿period￿is￿reduced￿as￿a￿result￿of￿the￿synthetic￿share￿buyback￿due￿to￿an￿exchange￿for￿each￿100￿ordinary shares￿for￿77￿ordinary￿shares.￿The￿number￿of￿shares￿vested￿in￿2012￿after￿the￿synthetic￿share￿buyback￿for￿Mr.￿Meurice,￿Mr.￿Wennink,￿Mr.￿van￿den￿Brink and￿for￿Mr.￿van￿Hout￿are￿37,621￿shares,￿23,289￿shares,￿24,722￿shares￿and￿20,474￿shares,￿respectively.￿The￿number￿of￿shares￿vested￿in￿2011￿after￿the synthetic￿share￿buyback￿for￿Mr.￿Meurice,￿Mr.￿Wennink￿and￿for￿Mr.￿van￿den￿Brink￿are￿37,621￿shares,￿23,289￿shares￿and￿24,722￿share,￿respectively. Pension Benefits Members￿of￿the￿Board￿of￿Management￿are￿offered￿a￿pension￿plan￿based￿on￿defined￿contribution.￿The￿total￿defined contribution￿is￿a￿percentage￿of￿the￿pensionable￿salary￿and￿is￿dependent￿on￿the￿participant's￿age￿at￿the￿beginning￿of the￿year.￿In￿2011,￿compensation￿was￿paid￿to￿the￿Board￿of￿Management￿regarding￿the￿spouse/orphan￿risk￿premium￿to align￿the￿Board￿of￿Management￿pension￿arrangement￿with￿senior￿management.￿￿This￿concerned￿a￿reimbursement￿for￿risk premiums￿that￿were￿erroneously￿paid￿by￿the￿participants￿in￿the￿past. Benefits upon termination of employment Term￿of￿appointment/employment Members￿of￿the￿Board￿of￿Management￿appointed￿after￿the￿2004￿amendment￿of￿the￿Articles￿of￿Association,￿are appointed￿for￿a￿period￿of￿four￿years,￿after￿which￿reappointment￿is￿possible￿for￿consecutive￿four-year￿terms.￿Messrs.￿P. Wennink￿and￿M.￿van￿den￿Brink’s￿appointment￿to￿the￿Board￿of￿Management￿is￿for￿an￿indefinite￿period￿of￿time,￿as￿their initial￿appointment￿was￿before￿2004.￿The￿existing￿employment￿contracts,￿including￿all￿rights￿and￿obligations￿under￿these contracts,￿will￿be￿honored. Severance￿agreement Employment￿agreements￿with￿the￿Board￿of￿Management￿members￿concluded￿prior￿to￿March￿31,￿2004￿(i.e.￿Messrs. Wennink￿and￿Van￿den￿Brink)￿do￿not￿contain￿specific￿provisions￿regarding￿benefits￿upon￿termination￿of￿those agreements.￿Potential￿severance￿payments￿in￿such￿case￿will￿be￿according￿to￿applicable￿law￿(e.g.￿cantonal￿formula￿in￿the Netherlands). ASML￿ANNUAL￿REPORT￿2012 F-41 Employment￿agreements￿for￿members￿of￿the￿Board￿of￿Management￿appointed￿after￿March￿31,￿2004￿(i.e.￿Messrs. Meurice,￿Van￿Hout￿and￿Schneider-Maunoury)￿do￿contain￿specific￿provisions￿regarding￿benefits￿upon￿termination￿of￿those agreements. If￿we￿give￿notice￿of￿termination￿of￿the￿employment￿agreement￿for￿reasons￿which￿are￿exclusively￿or￿mainly￿found￿in￿acts or￿omissions￿on￿the￿side￿of￿the￿Board￿of￿Management￿member,￿no￿severance￿amount￿will￿be￿granted.￿If￿this￿is￿not￿the case,￿a￿severance￿amount￿equal￿to￿one￿year￿base￿salary￿or￿a￿severance￿consistent￿with￿the￿Dutch￿Labor￿laws￿will￿be made￿available￿upon￿the￿effective￿date￿of￿termination. This￿severance￿payment￿will￿also￿be￿made￿available￿in￿case￿the￿Board￿of￿Management￿member￿gives￿notice￿of termination￿of￿the￿employment￿agreement￿due￿to￿a￿significant￿difference￿of￿opinion￿between￿the￿respective￿executives and￿the￿Supervisory￿Board￿regarding￿his￿employment￿agreement,￿his￿function￿or￿our￿strategy. Change￿of￿control Board￿of￿Management￿members￿with￿an￿employment￿agreement￿dated￿after￿March￿31,￿2004￿(i.e.￿Messrs.￿Meurice,￿Van Hout￿and￿Schneider-Maunoury)￿shall￿also￿be￿entitled￿to￿the￿aforementioned￿severance￿amount￿in￿the￿event￿ASML￿or￿its legal￿successor￿gives￿notice￿of￿termination￿due￿to￿a￿Change￿of￿Control￿(as￿defined￿in￿the￿employment￿agreement)￿or￿if the￿Board￿of￿Management￿member￿gives￿notice￿of￿termination,￿which￿is￿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. In￿order￿to￿comply￿with￿the￿highest￿standards￿of￿corporate￿governance,￿the￿Supervisory￿Board￿decided￿to￿mitigate￿the potential￿benefit￿of￿a￿Change￿of￿Control￿under￿the￿long-term￿incentive￿arrangements.￿This￿arrangement￿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 first￿public￿announcement￿of￿Change￿of￿Control￿negotiations,￿and￿ii)￿the￿average￿closing￿share￿price￿over￿a￿period￿of￿30 trading￿days￿prior￿to￿closing￿of￿the￿transaction.￿￿ ASML￿ANNUAL￿REPORT￿2012 F-42 Supervisory Board The￿annual￿remuneration￿for￿Supervisory￿Board￿members￿covers￿the￿period￿from￿one￿Annual￿General￿Meeting￿of Shareholders￿("AGM")￿to￿the￿next￿one.￿The￿annual￿remuneration￿is￿paid￿in￿quarterly￿installments￿starting￿after￿the AGM.￿In￿2011￿the￿Supervisory￿Board￿proposed￿and￿the￿General￿Meeting￿of￿Shareholders￿approved￿an￿adjustment of￿the￿remuneration￿of￿the￿Supervisory￿Board,￿effective￿as￿per￿April￿1,￿2011.￿Furthermore￿the￿General￿Meeting￿of Shareholders￿approved￿a￿further￿increase￿of￿the￿annual￿(fixed)￿fee￿with￿a￿maximum￿amount￿of￿EUR￿5,000￿depending￿on circumstances,￿which￿the￿Supervisory￿Board￿implemented￿per￿April￿1,￿2012. The￿following￿table￿sets￿forth￿an￿overview￿of￿the￿remuneration￿awarded￿to￿Supervisory￿Board￿Members￿in￿2012￿and 2011: Year ended December 31, 2012 Arthur￿P.M.￿van￿der￿Poel Jos￿W.B.￿Westerburgen OB￿Bilous Fritz￿W.￿Fröhlich Hendrika￿(Ieke)￿C.J.￿van￿den Burg William￿T.￿Siegle Pauline￿F.M.￿van￿der￿Meer￿Mohr Wolfgang￿H.￿Ziebart Total ￿ ￿ ￿ Year ended December 31, 2011 Total 94,750 96,116 104,750 68,750 56,750 Supervisory board 68,750 48,750 78,750 48,750 48,750 Audit committee 10,000 - - 15,000 - Remuneration - committee ￿ 12,000 ￿ - ￿ ￿ - 8,000 ￿ 90,750 56,750 72,750 641,366 ￿ ￿ ￿ 78,750 48,750 48,750 470,000 ￿ ￿ ￿ Total Supervisory board - - 10,000 35,000 ￿ ￿ ￿ Audit committee ￿ - 8,000 ￿ 6,000 4 34,000 ￿ ￿ ￿ ￿ ￿ ￿ ￿ ￿ Remuneration committee Arthur￿P.M.￿van￿der￿Poel Jos￿W.B.￿Westerburgen OB￿Bilous Fritz￿W.￿Fröhlich Hendrika￿(Ieke)￿C.J.￿van￿den Burg William￿T.￿Siegle Pauline￿F.M.￿van￿der￿Meer￿Mohr Wolfgang￿H.￿Ziebart Total 88,250 66,750 99,500 62,500 51,625 85,250 51,625 61,625 567,125 62,500 43,750 73,750 43,750 43,750 73,750 43,750 43,750 428,750 10,000 - - 15,000 - - - 10,000 35,000 - ￿ 11,500 ￿ ￿ - ￿ - 7,875 ￿ ￿ - 7,875 ￿ ￿ - 27,250 ￿ Selection and nomination committee 8,000 12,000 8,000 - - - - - 28,000 ￿ ￿ ￿ Selection and nomination committee 7,875 11,500 7,875 - - - - - 27,250 Technology and strategy committee 8,000 - 8,000 - - 12,000 - 8,000 36,000 ￿ ￿ ￿ Technology and strategy committee 7,875 - 7,875 - - 11,500 - 7,875 35,125 Other1,2 - ￿ 23,366 3 10,000 ￿ 5,000 ￿ ￿ - - - - ￿ ￿ ￿ 38,366 ￿ ￿ ￿ ￿ ￿ ￿ ￿ ￿ Other1,2 - - ￿ ￿ 10,000 ￿ 3,750 ￿ ￿ - - - - ￿ ￿ ￿ 13,750 ￿ 1 2 3 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￿10,000￿to￿fulfill￿these￿obligations. In￿addition￿to￿the￿annual￿fixed￿fee,￿the￿Vice-Chairman￿of￿the￿Supervisory￿Board￿receives￿EUR￿5,000￿per￿year￿to￿fulfill￿this￿role.￿As￿the￿adjustment￿of￿the Supervisory￿Board's￿remuneration￿became￿effective￿as￿per￿April￿1,￿2011,￿the￿Vice-Chairman￿fee￿paid￿over￿the￿financial￿year￿2011￿amounted￿to￿EUR 3,750. In￿2012￿Jos￿Westerburgen￿received￿a￿provisional￿payment￿related￿to￿the￿supervisory￿board￿remuneration￿for￿the￿period￿January￿to￿April￿2013.￿As legislation￿regarding￿VAT￿registration￿for￿Supervisory￿Board￿members￿will￿change￿as￿from￿2013￿and￿Jos￿Westerburgen￿will￿resign￿in￿2013￿it￿was discussed￿and￿agreed￿with￿the￿Dutch￿tax￿authorities￿to￿pay￿the￿remuneration￿fee￿in￿advance. 4 During￿2012￿Wolfgang￿H.￿Ziebart￿was￿appointed￿as￿member￿of￿the￿Remuneration￿Committee￿and￿therefore￿received￿a￿partial￿fee. In￿addition,￿a￿net￿cost￿allowance￿was￿paid￿to￿each￿Supervisory￿Board￿member￿in￿2012,￿amounting￿to￿EUR￿1,800￿per year,￿and￿EUR￿2,400￿per￿year￿for￿the￿Chairman￿of￿the￿Supervisory￿Board. Members￿of￿the￿Board￿of￿Management￿and/or￿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￿members’￿remuneration￿and￿are￿therefore￿not￿included.￿None￿of￿the￿members￿of￿the￿Supervisory￿Board￿currently owns￿shares￿or￿options￿on￿ASML￿shares. ASML￿ANNUAL￿REPORT￿2012 F-43 22. Selected operating expenses and additional information Personnel￿expenses￿for￿all￿payroll￿employees￿were: Year ended December 31 (in thousands) Wages￿and￿salaries Social￿security￿expenses Pension￿and￿retirement￿expenses Share-based￿payments Personnel expenses 2012 EUR 711,039 58,180 50,298 18,714 838,231 2011 EUR 648,869 52,550 45,947 12,430 759,796 2010 EUR 551,683 42,468 40,593 12,109 646,853 The￿average￿number￿of￿payroll￿employees￿in￿FTEs￿employed￿during￿2012,￿2011￿and￿2010￿was￿8,140,￿7,627￿and￿6,785 respectively.￿The￿total￿number￿of￿payroll￿and￿temporary￿personnel￿employed￿in￿FTEs￿per￿sector￿was: As of December 31 Customer￿Support SG&A Industrial￿Engineering Manufacturing￿&￿Logistics R&D Total employees (in FTEs) Less:￿Temporary￿employees￿(in￿FTEs) Payroll employees (in FTEs) 2012 2,538 869 637 2,856 3,736 10,636 2,139 8,497 2011 2,478 723 420 2,852 3,417 9,890 1,935 7,955 2010 2,236 727 398 2,659 3,225 9,245 2,061 7,184 The￿average￿number￿of￿payroll￿employees￿in￿FTEs￿in￿our￿operations￿in￿the￿Netherlands￿during￿2012,￿2011￿and￿2010￿was 4,620,￿4,313￿and￿3,805￿respectively. 23. Research and development costs R&D￿costs￿include￿credits￿for￿an￿amount￿of￿EUR￿17.9￿million,￿EUR￿25.1￿million,￿EUR￿29.5￿million￿during￿2012,￿2011 and￿2010￿respectively.￿R&D￿credits￿relate￿to￿world-wide￿(inter-)governmental￿funding￿for￿certain￿strategic￿development programs. 24. Interest income and expense Interest￿income￿of￿EUR￿16.6￿million￿(2011:￿EUR￿41.2￿million￿and￿2010:￿EUR￿15.1￿million)￿mainly￿relates￿to￿interest income￿on￿deposits,￿short-term￿investments,￿money￿market￿funds￿and￿on￿bank￿accounts.￿Interest￿expense￿of￿EUR￿22.8 million￿(2011:￿EUR￿33.8￿million￿and￿2010:￿EUR￿23.3￿million)￿mainly￿consists￿of￿net￿interest￿expense￿of￿our￿Eurobond￿and related￿interest￿rate￿swaps. Interest￿on￿cash￿pools￿is￿reported￿on￿a￿gross￿basis￿in￿the￿consolidated￿statements￿of￿operations￿under￿both interest￿income￿and￿interest￿expense.￿From￿an￿economic￿and￿legal￿perspective￿the￿interest￿on￿cash￿pools￿of EUR￿4.2￿million￿(2011:￿EUR￿6.8￿million￿and￿2010:￿EUR￿3.6￿million)￿recorded￿in￿interest￿income￿nets￿off￿against￿the￿same amount￿recorded￿in￿interest￿expense. 25. Vulnerability due to certain concentrations ASML￿relies￿on￿outside￿vendors￿to￿manufacture￿the￿components￿and￿subassemblies￿used￿in￿its￿systems,￿each￿of which￿is￿obtained￿from￿a￿sole￿supplier￿or￿a￿limited￿number￿of￿suppliers.￿ASML’s￿reliance￿on￿a￿limited￿group￿of￿suppliers involves￿several￿risks,￿including￿a￿potential￿inability￿to￿obtain￿an￿adequate￿supply￿of￿required￿components￿and￿reduced control￿over￿pricing￿and￿timely￿delivery￿of￿these￿subassemblies￿and￿components.￿In￿particular,￿from￿time￿to￿time,￿the number￿of￿systems￿ASML￿has￿been￿able￿to￿produce￿has￿been￿limited￿by￿the￿production￿capacity￿of￿Zeiss.￿Zeiss￿is currently￿ASML’s￿sole￿external￿supplier￿of￿lenses￿and￿other￿critical￿optical￿components￿and￿is￿capable￿of￿producing these￿lenses￿only￿in￿limited￿numbers￿and￿only￿through￿the￿use￿of￿its￿manufacturing￿and￿testing￿facility￿in￿Oberkochen and￿Wetzlar,￿Germany.￿During￿2012,￿ASML’s￿production￿was￿not￿limited￿by￿the￿deliveries￿from￿Zeiss. For￿our￿light￿source￿technology￿used￿in￿our￿EUV￿systems￿we￿also￿depend￿on￿a￿limited￿number￿of￿suppliers.￿Our￿main supplier￿for￿light￿source￿technology￿is￿Cymer.￿We￿have￿agreed￿to￿acquire￿Cymer,￿subject￿to￿certain￿closing￿conditions. We￿believe￿that￿the￿acquisition￿of￿Cymer,￿if￿completed,￿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￿Cymer's￿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 ASML￿ANNUAL￿REPORT￿2012 F-44 the￿acquisition,￿we￿do￿not￿believe￿that￿Cymer￿would￿have￿sufficient￿resources￿to￿complete￿the￿development￿of￿the EUV￿source￿and￿as￿a￿result,￿the￿only￿way￿to￿make￿the￿EUV￿source￿development￿successful￿without￿additional￿delay￿is through￿the￿acquisition￿of￿Cymer.￿In￿addition￿we￿believe￿that￿the￿acquisition￿will￿allow￿us￿to￿more￿effectively￿partition responsibilities￿between￿Cymer,￿its￿suppliers￿and￿us￿with￿respect￿to￿EUV￿light￿source￿development,￿reducing￿risk￿and increasing￿development￿speed. Completion￿of￿the￿acquisition￿is￿subject￿to￿customary￿closing￿conditions,￿including￿expiration￿or￿termination￿of￿the applicable￿waiting￿period￿under￿the￿Hart-Scott-Rodino￿Act￿and￿receipt￿of￿approvals￿under￿other￿foreign￿competition laws.￿On￿february￿5,￿2013,￿the￿Cymer￿Stockholders￿approved￿the￿merger￿agreement.￿We￿expect￿the￿transaction￿to￿close in￿the￿first￿half￿of￿2013,￿there￿is￿no￿assurance￿that￿the￿transaction￿will￿be￿completed￿within￿the￿expected￿time￿period￿or at￿all. Business￿failure￿or￿insolvency￿of￿one￿of￿our￿main￿customers￿may￿have￿an￿adverse￿effect￿on￿our￿business,￿financial condition￿and￿results￿of￿operations.￿See￿Note￿20. 26. Shareholders' equity Share capital ASML's￿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. Per￿December￿31,￿2012,￿419,852,467￿ordinary￿shares￿with￿a￿nominal￿value￿of￿EUR￿0.09￿each￿were￿issued￿and￿fully￿paid in,￿of￿which￿12,687,246￿ordinary￿shares￿are￿held￿by￿us￿in￿treasury.￿No￿ordinary￿shares￿B￿and￿no￿cumulative￿preference shares￿are￿issued.￿96,566,077￿depositary￿receipts￿for￿ordinary￿shares￿are￿issued￿with￿our￿cooperation. Our￿Board￿of￿Management￿has￿the￿power￿to￿issue￿ordinary￿shares￿and￿cumulative￿preference￿shares￿insofar￿as￿the Board￿of￿Management￿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￿Board￿of￿Management￿requires￿approval￿of￿the Supervisory￿Board￿for￿such￿an￿issue.￿The￿authorization￿by￿the￿General￿Meeting￿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￿Board￿of￿Management￿to￿issue￿shares,￿the￿General￿Meeting￿of Shareholders￿shall￿have￿the￿power￿to￿issue￿shares￿upon￿the￿proposal￿of￿the￿Board￿of￿Management,￿provided￿that￿the Supervisory￿Board￿has￿approved￿such￿proposal. Shares issued in Customer Co-Investment Program On￿September￿12,￿2012,￿we￿issued￿62,977,877￿ordinary￿shares￿to￿Stichting￿Administratiekantoor￿MAKTSJAB￿("Intel Stichting")￿and￿12,595,575￿ordinary￿shares￿to￿Stichting￿Administratiekantoor￿Samsung￿and￿on￿October￿31,￿2012,￿ASML issued￿20,992,625￿ordinary￿shares￿to￿Stichting￿Administratiekantoor￿TSMC￿with￿respect￿to￿the￿Customer￿Co-Investment Program.￿We￿received￿an￿amount￿of￿EUR￿3,853.9￿million￿in￿relation￿to￿the￿shares￿issued￿under￿the￿Customer￿Co- Investment￿Program.￿For￿further￿details￿on￿our￿Customer￿Co-Investment￿Program￿see￿Note￿28. Synthetic Share Buyback At￿the￿Extraordinary￿General￿Meeting￿of￿Shareholders￿("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￿Customer￿Co-Investment￿Program.￿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￿Customer￿Co-Investment￿Program￿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￿is￿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 ASML￿ANNUAL￿REPORT￿2012 F-45 Customer￿Co-Investment￿Program￿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￿ASML's￿treasury￿shares￿which￿was￿also￿part￿of￿the￿Synthetic￿Share￿Buyback. 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 (Nederlands Centraal Insituut voor Giraal Effectenverkeer B.V.,￿"Euroclear￿Nederland")￿or￿through￿the￿Depositary￿Trust Company￿("DTC")￿cannot￿hold￿fractional￿shares.￿An￿ordinary￿share￿entitles￿the￿holder￿thereof￿to￿cast￿nine￿votes￿in￿the General￿Meeting￿of￿Shareholders.￿At￿our￿EGM￿held￿on￿September￿7,￿2012,￿the￿Board￿of￿Management￿was￿authorized from￿September￿7,￿2012￿through￿October￿25,￿2013,￿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￿25,￿2012,￿plus an￿additional￿5.0￿percent￿of￿our￿issued￿share￿capital￿at￿April￿25,￿2012￿that￿may￿be￿issued￿in￿connection￿with￿mergers, acquisitions￿and/or￿(strategic)￿alliances. Holders￿of￿ASML’s￿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.￿Ordinary￿shareholders￿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￿Board of￿Management￿has￿the￿power￿subject￿to￿approval￿of￿the￿Supervisory￿Board,￿to￿restrict￿or￿exclude￿the￿preemptive￿rights of￿holders￿of￿ordinary￿shares.￿At￿our￿EGM￿held￿on￿September￿7,￿2012,￿the￿Board￿of￿Management￿was￿authorized￿from September￿7,￿2012￿through￿October￿25,￿2013,￿subject￿to￿approval￿of￿the￿Supervisory￿Board,￿to￿restrict￿or￿exclude preemptive￿rights￿of￿holders￿of￿ordinary￿shares￿up￿to￿a￿maximum￿of￿10.0￿percent￿of￿our￿issued￿share￿capital￿at￿April￿25, 2012.￿With￿this￿authorization,￿the￿corresponding￿authorization￿granted￿at￿the￿AGM￿held￿on￿April￿25,￿2012,￿ceased￿to apply￿to￿the￿extent￿not￿already￿used. We￿may￿repurchase￿our￿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￿authorization￿of￿shareholders￿at￿ASML’s￿AGM,￿which￿authorization￿may￿not￿be￿for￿more￿than￿18￿months.￿At￿the AGM￿held￿on￿April￿25,￿2012,￿the￿Board￿of￿Management￿has￿been￿authorized,￿subject￿to￿Supervisory￿Board￿approval,￿to repurchase￿through￿October￿25,￿2013,￿up￿to￿a￿maximum￿of￿two￿times￿10.0￿percent￿of￿our￿issued￿share￿capital￿at￿April 25,￿2012,￿at￿a￿price￿between￿the￿nominal￿value￿of￿the￿ordinary￿shares￿purchased￿and￿110.0￿percent￿of￿the￿market￿price of￿these￿securities￿on￿NYSE￿Euronext￿Amsterdam￿or￿NASDAQ.￿At￿our￿AGM￿to￿be￿held￿on￿April￿24,￿2013,￿we￿shall￿request the￿authorization￿for￿the￿Board￿of￿Management￿to￿repurchase￿and￿cancel￿shares￿for￿a￿period￿of￿18￿months￿as￿of￿the 2013￿AGM,￿i.e.￿until￿October￿24,￿2014,￿all￿in￿conformity￿with￿the￿provisions￿of￿the￿law￿and￿our￿Articles￿of￿Association. Ordinary shares B As￿part￿of￿the￿most￿recent￿changes￿in￿our￿Articles￿of￿Association,￿adopted￿at￿the￿EGM￿held￿on￿September￿7,￿2012, the￿9,000￿ordinary￿shares￿B￿with￿a￿nominal￿value￿of￿EUR￿0.01￿were￿introduced.￿A￿person￿who￿holds￿(a￿multiple￿of)￿100 fractional￿shares,￿may￿exchange￿those￿fractional￿shares￿for￿an￿ordinary￿share￿B.￿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. Cumulative preference shares In￿1998,￿we￿granted￿to￿the￿preference￿share￿foundation,￿"Stichting￿Preferente￿Aandelen￿ASML"￿(the￿"Foundation")￿an option￿to￿acquire￿cumulative￿preference￿shares￿in￿our￿capital￿(the￿"Preference￿Share￿Option").￿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. ASML￿ANNUAL￿REPORT￿2012 F-46 Per￿the￿amendment￿of￿our￿Articles￿of￿Association￿of￿May￿6,￿2011,￿the￿nominal￿value￿of￿the￿cumulative￿preference￿shares was￿increased￿to￿EUR￿0.09.￿The￿number￿of￿cumulative￿preference￿shares￿included￿in￿the￿authorized￿share￿capital￿was decreased￿to￿700,000,000.￿This￿was￿done￿to￿simplify￿the￿Articles￿of￿Association,￿and￿to￿give￿each￿share￿the￿right￿to￿cast one￿vote￿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,￿our￿interests,￿our￿business￿or￿the￿interests￿of￿our￿stakeholders￿are￿at￿stake.￿This￿may￿be￿the￿case if￿a￿public￿bid￿for￿our￿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￿us.￿The￿same￿may￿apply￿if one￿shareholder,￿or￿more￿shareholders￿acting￿in￿concert,￿hold￿a￿substantial￿percentage￿of￿our￿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￿our￿interests,￿our business￿or￿our￿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￿Foundation’s￿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￿us￿requires￿the￿authorization￿by￿the￿General Meeting￿of￿Shareholders￿of￿a￿proposal￿to￿do￿so￿by￿the￿Board￿of￿Management￿approved￿by￿the￿Supervisory￿Board.￿If the￿preference￿share￿option￿is￿exercised￿and￿as￿a￿result￿cumulative￿preference￿shares￿are￿issued,￿we,￿at￿the￿request￿of the￿Foundation,￿will￿initiate￿the￿repurchase￿or￿cancellation￿of￿all￿cumulative￿preference￿shares￿held￿by￿the￿Foundation. In￿that￿case￿we￿are￿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￿will￿not￿request￿us￿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￿voting members￿from￿the￿Dutch￿business￿and￿academic￿communities.￿As￿of￿January￿1,￿2012,￿the￿members￿of￿the￿Board￿of Directors￿of￿the￿Foundation￿are:￿Mr.￿A.￿Baan,￿Mr.￿M.W.￿den￿Boogert,￿Mr.￿J.M.￿de￿Jong￿and￿Mr.￿A.H.￿Lundqvist. Dividend proposal As￿part￿of￿our￿financing￿policy,￿we￿aim￿to￿pay￿an￿annual￿dividend￿that￿will￿be￿stable￿or￿growing￿over￿time.￿Annually,￿the Board￿of￿Management￿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 Board￿of￿Management's￿views￿on￿our￿potential￿future￿liquidity￿requirements,￿including￿for￿investments￿in￿production capacity,￿the￿funding￿of￿our￿research￿and￿development￿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￿2012,￿a￿proposal￿to￿declare￿a￿dividend￿of￿EUR￿0.53￿per￿ordinary￿share￿of￿EUR￿0.09￿nominal￿value￿will￿be￿submitted to￿the￿AGM￿to￿be￿held￿on￿April￿24,￿2013. ASML￿ANNUAL￿REPORT￿2012 F-47 27. Purchases of Equity Securities by the Issuer and Affiliated Purchasers 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￿25,￿2012,￿the￿General￿Meeting￿of￿Shareholders￿authorized￿the￿repurchase￿of￿up￿to￿a￿maximum￿of￿two￿times￿10.0 percent￿of￿our￿issued￿share￿capital￿as￿of￿the￿date￿of￿authorization￿through￿October￿25,￿2013. On￿January￿19,￿2011,￿we￿announced￿our￿intention￿to￿repurchase￿up￿to￿EUR￿1.0￿billion￿of￿our￿own￿shares￿within￿the next￿two￿years.￿On￿January￿18,￿2012,￿we￿announced￿to￿increase￿the￿size￿of￿the￿program￿to￿a￿maximum￿amount￿of￿EUR 1,130￿million.￿During￿the￿period￿from￿January￿1,￿2012￿up￿to￿and￿including￿November￿22,￿2012,￿when￿the￿program￿was completed,￿we￿had￿purchased￿11,278,058￿of￿our￿shares￿for￿a￿total￿amount￿of￿EUR￿430.0￿million￿at￿an￿average￿price￿of EUR￿38.13￿per￿share.￿These￿shares￿are￿intended￿to￿be￿cancelled￿in￿2013. Furthermore,￿on￿January￿18,￿2012,￿we￿announced￿our￿intention￿to￿purchase￿up￿to￿2.2￿million￿of￿additional￿shares￿during 2012￿for￿the￿purpose￿of￿covering￿outstanding￿employee￿stock￿and￿stock￿option￿plans.￿During￿the￿period￿from￿November 22,￿2012￿up￿to￿and￿including￿December￿14,￿2012,￿when￿the￿program￿was￿completed,￿a￿total￿number￿of￿2.2￿million￿shares was￿purchased￿for￿a￿total￿amount￿of￿EUR￿105.2￿million￿at￿an￿average￿price￿of￿EUR￿47.81￿per￿share.￿These￿shares￿will￿be held￿as￿treasury￿shares￿pending￿delivery￿pursuant￿to￿such￿plans. Both￿programs￿had￿been￿suspended￿between￿July￿10,￿2012￿and￿October￿18,￿2012￿following￿the￿announcement￿of￿the Customer￿Co-Investment￿Program￿on￿July￿9,￿2012. The￿following￿table￿provides￿a￿summary￿of￿our￿repurchased￿shares￿in￿2012￿(excluding￿the￿Synthetic￿Share￿Buyback effectuated￿in￿November￿2012): Period January￿20￿-￿31,￿2012 February￿1￿-￿28,￿2012 March￿1￿-￿31,￿2012 April￿1￿-￿30,￿2012 May￿2￿-￿31,￿2012 June￿1￿-￿30,￿2012 July￿1￿-￿29,￿2012 August￿1￿-￿31,￿2012 September￿1￿-￿30,￿2012 October￿3￿-￿31,￿2012 November￿1￿-￿30,￿2012 December￿1￿-￿31,￿2012 ￿ Total Total number of shares purchased 2,132,366 1,025,407 949,726 654,169 1,219,480 1,133,550 428,000 - - 1,153,112 3,240,099 1,542,149 ￿ 13,478,058 Average price paid per Share (EUR) 32.65 34.71 35.76 37.18 36.88 38.61 40.65 - - 41.86 44.10 48.24 ￿ 39.71 Total number of shares purchased as part of publicly announced plans or programs 2,132,366 3,157,773 4,107,499 4,761,668 5,981,148 7,114,698 7,542,698 7,542,698 7,542,698 8,695,810 11,935,909 13,478,058 ￿ ￿ Maximum value of shares that may yet be purchased under the program1 (EUR) 360,369,363 324,780,615 290,820,741 266,501,698 221,530,029 177,764,616 160,366,940 160,366,940 160,366,940 112,099,413 - - ￿ ￿ Maximum number of shares that may yet be purchased under the program2 2,200,000 2,200,000 2,200,000 2,200,000 2,200,000 2,200,000 2,200,000 2,200,000 2,200,000 2,200,000 1,542,149 - ￿ ￿ 1 Program￿to￿purchase￿shares￿up￿to￿a￿maximum￿amount￿of￿EUR￿1,130￿million.￿We￿have￿or￿will￿cancel￿these￿shares. 2 Program￿to￿purchase￿up￿to￿2.2￿million￿shares￿for￿the￿purpose￿of￿covering￿outstanding￿employee￿stock￿and￿stock￿option￿plans At￿the￿EGM￿held￿on￿September￿7,￿2012,￿a￿resolution￿was￿passed￿to￿amend￿the￿Articles￿of￿Association￿in￿connection￿with the￿Synthetic￿Share￿Buyback￿to￿be￿effected￿in￿connection￿with￿the￿Customer￿Co-Investment￿Program.￿We￿refer￿to￿Note 26￿for￿a￿summary￿description￿of￿these￿amendments.￿On￿November￿24,￿2012,￿we￿effectuated￿the￿amendments￿consisting of￿a￿repayment￿to￿shareholders￿(excluding￿participating￿customers)￿of￿EUR￿9.18￿per￿ordinary￿share￿and￿the￿exchange￿of each￿100￿ASML￿ordinary￿shares￿for￿77￿ASML￿ordinary￿shares. As￿a￿result￿of￿these￿amendments,￿which￿in￿substance￿constitute￿a￿Synthetic￿Share￿Buyback,￿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. ASML￿ANNUAL￿REPORT￿2012 F-48 28. Customer Co-Investment Program Overview On￿July￿9,￿2012,￿we￿announced￿our￿Customer￿Co-Investment￿Program￿to￿accelerate￿our￿development￿of￿EUV￿technology beyond￿the￿current￿generation￿and￿our￿development￿of￿future￿450mm￿silicon￿wafer￿technology.￿The￿participating customers￿agreed￿to￿fund￿EUR￿1.38￿billion￿of￿our￿research￿and￿development￿projects￿from￿2013￿through￿2017.￿This program￿creates￿risk￿sharing￿with￿some￿of￿our￿largest￿customers￿while￿the￿results￿of￿ASML’s￿development￿programs￿will be￿available￿to￿every￿semiconductor￿manufacturer￿with￿no￿restrictions.￿The￿R&D￿funding￿program￿in￿the￿Customer￿Co- Investment￿Program￿consists￿of￿two￿funding￿projects:￿a￿450mm￿technology￿development￿project￿and￿a￿next-generation EUV￿development￿project.￿ASML￿has￿entered￿into￿Non￿Recurring￿Engineering￿("NRE")￿funding￿agreements￿with￿the participating￿customers. In￿addition￿to￿the￿funding￿commitments￿described￿above,￿the￿participating￿customers￿have￿invested￿in￿ordinary￿shares equal,￿in￿aggregate,￿to￿23￿percent￿of￿ASML's￿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￿26￿to￿our￿consolidated￿financial statements. Description of Investment Agreements, Shareholder Agreements and NRE Funding Agreements In￿connection￿with￿the￿Customer￿Co-Investment￿Program,￿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￿program￿participants￿-￿￿TSMC￿(which￿acquired￿5￿percent￿of￿our￿shares￿and made￿an￿EUR￿277￿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￿investment￿agreement￿between￿ASML￿and￿Intel,￿dated￿July￿9,￿2012￿("the￿Intel￿Investment￿Agreement"), ASML￿has￿issued￿and￿delivered￿to￿Intel￿Stichting￿ordinary￿shares￿equal￿to￿15￿percent￿of￿the￿issued￿ordinary￿shares￿with simultaneous￿issuance￿by￿the￿Intel￿Stichting￿to￿Intel￿of￿the￿corresponding￿depositary￿receipts. Pursuant￿to￿the￿investment￿agreement￿between￿ASML￿and￿TSMC,￿dated￿August￿5,￿2012￿(the￿"TSMC￿Investment Agreement")￿ASML￿has￿issued￿and￿delivered￿to￿Stichting￿Administratiekantoor￿TSMC￿("TSMC￿Stichting")￿ordinary￿shares equal￿to￿5￿percent￿of￿the￿issued￿ordinary￿shares￿with￿simultaneous￿issuance￿by￿the￿TSMC￿Stichting￿to￿TSMC￿of￿the corresponding￿depositary￿receipts. Pursuant￿to￿the￿investment￿agreement￿between￿ASML￿and￿Samsung,￿dated￿August￿27,￿2012￿(the￿"Samsung￿Investment Agreement"￿and￿together￿with￿the￿Intel￿Investment￿Agreement￿and￿TSMC￿Investment￿Agreement,￿the￿"Investment Agreements"),￿ASML￿has￿issued￿and￿delivered￿to￿the￿Samsung￿Stichting￿ordinary￿shares￿equal￿to￿3￿percent￿of￿the￿issued 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￿the￿ordinary￿shares￿on￿NYSE￿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. ASML￿ANNUAL￿REPORT￿2012 F-49 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￿(the￿“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.￿ 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￿Customer￿Co-Investment￿Program￿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￿Board￿of Management￿as￿the￿authorized￿body￿to￿resolve￿on￿these￿matters;￿(ii)￿an￿authorization￿to￿repurchase￿25￿percent￿or￿more of￿ASML’s￿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￿ASML’s￿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￿ASML’s￿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￿ASML’s￿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￿ASML's￿outstanding￿shares (other￿than￿shares￿acquired￿through￿the￿Customer￿Co-Investment￿Program)￿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 ASML’s￿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￿ASML’s￿outstanding￿shares￿owned by￿Intel￿and￿the￿other￿participating￿customers￿represents￿less￿than￿5￿percent￿of￿ASML’s￿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. ASML￿ANNUAL￿REPORT￿2012 F-50 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￿ASML’s￿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. In￿addition,￿Intel￿may￿not￿(even￿after￿the￿Lock-Up￿Period￿has￿ended),￿without￿written￿consent￿of￿ASML,￿transfer￿on NYSE￿Euronext￿Amsterdam,￿NASDAQ￿or￿another￿securities￿exchange￿more￿than￿(i)￿in￿respect￿of￿Intel,￿4￿percent￿of￿the outstanding￿shares￿of￿ASML￿(the￿relevant￿percentage￿is￿1.5￿percent￿for￿Samsung￿and￿2.5￿percent￿for￿TSMC).￿There￿are also￿restrictions￿on￿Intel's￿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￿were￿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￿the￿Ordinary￿Shares￿from￿NYSE￿Euronext￿Amsterdam￿or￿delisting￿from NASDAQ￿(except￿for￿certain￿voluntary￿delistings￿from￿NASDAQ),￿(iii)￿the￿winding￿up￿or￿liquidation￿of￿ASML,￿or￿(vi)￿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￿will￿support￿ASML’s R&D￿costs￿and￿project￿expenditures.￿One￿agreement￿relates￿to￿the￿development￿of￿450mm￿lithography￿equipment (the￿"Intel￿450mm￿NRE￿Funding￿Agreement")￿and￿the￿other￿relates￿to￿the￿development￿of￿EUV￿lithography￿equipment (the￿"Intel￿EUV￿NRE￿Funding￿Agreement"￿and￿together￿with￿the￿Intel￿450mm￿NRE￿Funding￿Agreement,￿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￿(the￿"TSMC￿NRE￿Funding Agreement")￿pursuant￿to￿which￿TSMC￿will￿support￿ASML’s￿R&D￿costs￿and￿project￿expenditures￿relating￿to￿the development￿of￿450mm￿lithography￿equipment￿and￿EUV￿platforms.￿TSMC￿has￿committed￿to￿provide￿EUR￿277￿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￿(the￿"Samsung￿NRE Funding￿Agreement")￿pursuant￿to￿which￿Samsung￿will￿support￿ASML’s￿R&D￿costs￿and￿project￿expenditures￿relating to￿the￿development￿of￿300mm/450mm￿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￿Intel￿NRE￿Funding￿Agreements,￿the￿TSMC￿NRE￿Funding￿Agreement,￿and￿the￿Samsung￿NRE￿Funding Agreement￿(together￿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￿ASML's￿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. ASML￿ANNUAL￿REPORT￿2012 F-51 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￿tools. The￿agreement￿sets￿forth￿pricing￿terms￿for￿the￿tools￿as￿well￿as￿milestones￿related￿to￿product￿deliveries,￿and￿provides for￿certain￿commercial￿discounts￿in￿the￿form￿of￿credits￿in￿exchange￿for￿Intel’s￿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￿Intel’s￿forecasted￿450mm lithography￿equipment￿needs￿through￿2022. Accounting Policies The￿Investment￿Agreements,￿Shareholder￿Agreements,￿NRE￿Funding￿Agreements￿and￿Commercial￿Agreement￿are accounted￿for￿as￿a￿multiple-element￿arrangement￿with￿each￿of￿the￿participating￿customers.￿Based￿upon￿ASC￿605-25 “Multiple-Element￿Arrangements”￿guidance,￿the￿following￿two￿separate￿elements￿are￿identified￿for￿each￿arrangement: (1)￿the￿share￿issuance￿(governed￿by￿the￿Investment￿Agreement￿and￿the￿Shareholder￿Agreement)￿and￿(2)￿the￿NRE￿funding and￿commercial￿discounts￿and￿credits￿(governed￿by￿the￿NRE￿Funding￿Agreement(s)￿and￿the￿Commercial￿Agreement). The￿shares￿issued￿to￿the￿participating￿customers￿are￿recorded￿at￿fair￿value￿based￿on￿quoted￿share￿prices￿(EUR￿3,968.7 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)￿is recorded￿as￿a￿deduction￿from￿shareholders’￿equity￿upon￿issuance￿of￿the￿shares￿(EUR￿123.4￿million).￿Shareholders’￿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￿Customer￿Co-Investment￿Program.￿Based￿on￿the￿commercial￿discounts￿and￿credits￿(governed￿by￿the Commercial￿Agreement)￿and￿the￿significant￿related￿party￿relationship,￿all￿NRE￿funding￿will￿be￿deferred￿and￿recognized￿in the￿consolidated￿income￿statement￿only￿when￿the￿commercial￿discounts￿and￿credits￿are￿earned.￿The￿portion￿of￿the￿NRE funding￿from￿TSMC￿and￿Samsung,￿not￿allocable￿to￿the￿shares,￿will￿be￿recognized￿in￿the￿consolidated￿income￿statement when￿the￿R&D￿costs￿relating￿to￿the￿development￿of￿450mm￿lithography￿equipment￿and￿EUV￿platforms￿are￿recognized over￿the￿NRE￿funding￿period. For￿further￿details￿regarding￿the￿share￿issuances￿to￿the￿participating￿customers￿and￿the￿Synthetic￿Share￿Buyback effectuated￿in￿connection￿with￿our￿Customer￿Co-Investment￿Program,￿see￿Note￿26. ASML￿ANNUAL￿REPORT￿2012 F-52 29. Related Party Transactions Consistent￿with￿our￿corporate￿responsibilities￿to￿our￿surrounding￿community￿and￿together￿with￿several￿other￿companies in￿the￿region,￿in￿prior￿year￿ASML￿entered￿into￿a￿loan￿agreement￿with￿a￿local￿sports￿club￿PSV￿N.V.;￿pursuant￿to￿which ASML￿provided￿PSV￿N.V.,￿as￿of￿August￿1,￿2011,￿a￿14￿year,￿interest￿free,￿subordinated￿loan￿of￿EUR￿5.0￿million.￿As￿of￿June 30,￿2012￿the￿chairman￿of￿the￿Supervisory￿Board￿of￿ASML,￿Mr.￿Arthur￿van￿der￿Poel￿and￿Chief￿Financial￿Officer￿of￿ASML, Mr.￿Peter￿Wennink￿resigned￿as￿members￿of￿the￿Supervisory￿Board￿of￿PSV￿N.V.,￿therefore￿the￿loan￿agreement￿with￿PSV N.V.￿is￿concluded￿to￿no￿longer￿classify￿as￿a￿related￿party￿transaction￿from￿that￿date￿onwards. On￿July￿9,￿2012,￿we￿announced￿our￿Customer￿Co-Investment￿Program￿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.￿Due￿to￿the￿equity￿investment,￿Intel￿is￿considered￿a￿related￿party of￿ASML￿as￿of￿July￿9,￿2012. We￿have￿entered￿into￿various￿agreements￿with￿Intel￿and￿have￿recognized￿sales￿and￿incurred￿costs￿of￿systems, services￿and￿field￿options￿provided￿by￿ASML￿since￿the￿date￿that￿Intel￿became￿a￿related￿party.￿We￿believe￿that￿all￿such transactions￿have￿been￿entered￿into￿in￿the￿ordinary￿course￿of￿business,￿with￿the￿exception￿of￿certain￿terms￿included￿in the￿agreements￿entered￿into￿as￿part￿of￿the￿Customer￿Co-Investment￿Program: • Investment￿Agreement:￿Pursuant￿to￿the￿Intel￿Investment￿Agreement,￿ASML￿agreed￿to￿issue￿to￿Intel￿Stichting￿ordinary shares￿equal￿to￿15￿percent￿of￿the￿issued￿ordinary￿shares￿which￿the￿Intel￿Stichting￿then￿issued￿to￿Intel￿a￿corresponding number￿of￿depositary￿receipts￿representing￿these￿shares.￿The￿subscription￿price￿for￿the￿ordinary￿shares￿under￿the investment￿agreement￿was￿EUR￿39.91￿per￿ordinary￿share,￿which￿is￿the￿average￿of￿the￿volume￿weighted￿average￿price of￿the￿ordinary￿shares￿on￿Euronext￿for￿the￿twenty￿trading￿days￿up￿to￿and￿including￿July￿6,￿2012.￿Under￿the￿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￿agreement￿and￿with￿respect￿to￿certain legal￿proceedings￿related￿thereto,￿subject￿to￿certain￿limitations. • Shareholder￿Agreement:￿In￿connection￿with￿the￿issuance￿of￿the￿ordinary￿shares￿to￿the￿Intel￿Stichting,￿Intel￿and￿its relevant￿subsidiaries,￿the￿Intel￿Stichting￿and￿ASML￿have￿entered￿into￿the￿shareholder￿agreement,￿which￿governs certain￿matters￿relating￿to￿the￿holding￿and￿disposing￿of￿and￿further￿investments￿in￿ordinary￿shares￿by￿Intel,￿directly and￿indirectly￿through￿the￿Intel￿Stichting. • NRE￿Funding￿Agreement:￿On￿July￿9,￿2012,￿ASML￿and￿Intel￿entered￿into￿the￿Intel￿NRE￿Funding￿Agreement￿pursuant￿to which￿Intel￿has￿agreed￿to￿provide￿funding￿for￿certain￿of￿ASML’s￿R&D￿costs￿and￿project￿expenditures.￿One￿agreement relates￿to￿the￿development￿of￿450mm￿lithography￿equipment￿(the￿“Intel￿450mm￿NRE￿Funding￿Agreement”)￿and￿the other￿relates￿to￿the￿development￿of￿EUV￿lithography￿equipment￿(the￿“Intel￿EUV￿NRE￿Funding￿Agreement”).￿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￿agreement￿(2013-2017).￿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￿Intel￿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￿ASML’s￿actual￿gross￿R&D￿expenditures￿exceed￿a￿minimum￿threshold￿specified￿in￿the￿relevant 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￿relevant￿funding￿agreement.￿ • Commercial￿Agreement:￿On￿July￿9,￿2012,￿ASML￿and￿Intel￿entered￿into￿the￿Commercial￿Agreement,￿pursuant￿to which￿ASML￿and￿Intel￿established￿a￿contractual￿framework￿for￿Intel￿to￿purchase￿equipment￿related￿to￿the￿450mm and￿next-generation￿EUV￿lithography￿equipment.￿Under￿this￿agreement,￿Intel￿has￿committed￿to￿purchase￿specified numbers￿of￿450mm￿and￿EUV￿tools.￿The￿agreement￿sets￿forth￿pricing￿terms￿for￿the￿tools￿as￿well￿as￿milestones￿related to￿product￿deliveries,￿and￿provides￿for￿certain￿commercial￿discounts￿in￿the￿form￿of￿credits￿in￿exchange￿for￿Intel’s 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￿Intel’s￿forecasted￿450mm￿lithography￿equipment￿needs￿through￿2022. The￿total￿net￿sales￿to￿Intel￿(and￿its￿affiliates)￿for￿the￿period￿from￿July￿9,￿2012￿to￿December￿31,￿2012￿amounted￿to￿EUR 301.7￿million￿whereas￿the￿outstanding￿balances￿as￿of￿December￿31,￿2012￿amount￿to￿EUR￿65.0￿million.￿ Except￿for￿the￿above,￿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 ASML￿ANNUAL￿REPORT￿2012 F-53 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,￿other￿than￿the￿virtual￿financing￿arrangement￿with￿respect￿to￿shares￿and￿stock options￿as￿described￿under￿Note￿17.￿All￿amounts￿due￿to￿ASML￿under￿the￿virtual￿financing￿arrangement￿were￿repaid during￿2012. 30. Subsequent Events On￿february￿5,￿2013,￿the￿Cymer￿Stockholders￿approved￿the￿previously￿announced￿merger￿agreement,￿dated￿October￿16, 2012￿at￿the￿special￿meeting￿of￿Cymer￿Stockholders.￿See￿Note￿25￿for￿additional￿information. Veldhoven,￿the￿Netherlands February￿12,￿2013 ￿ ￿ ￿/s/￿Eric￿Meurice, Eric￿Meurice,￿Chief￿Executive￿Officer ￿￿ ￿ ￿/s/￿Peter￿T.F.M.￿Wennink, Peter￿T.F.M.￿Wennink,￿Chief￿Financial￿Officer ASML￿ANNUAL￿REPORT￿2012 F-54 Report of Independent Registered Public Accounting Firm To￿the￿Supervisory￿Board￿and￿Shareholders￿of￿ASML￿Holding￿N.V.: We￿have￿audited￿the￿accompanying￿consolidated￿balance￿sheets￿of￿ASML￿Holding￿N.V.￿and￿subsidiaries￿(collectively,￿the "Company")￿as￿of￿December￿31,￿2012￿and￿2011,￿and￿the￿related￿consolidated￿statements￿of￿operations,￿comprehensive income,￿shareholders'￿equity,￿and￿cash￿flows￿for￿each￿of￿the￿three￿years￿in￿the￿period￿ended￿December￿31,￿2012￿(all expressed￿in￿euros).￿We￿also￿have￿audited￿the￿Company's￿internal￿control￿over￿financial￿reporting￿as￿of￿December￿31, 2012,￿based￿on￿criteria￿established￿in￿Internal￿Control￿—￿Integrated￿Framework￿issued￿by￿the￿Committee￿of￿Sponsoring Organizations￿of￿the￿Treadway￿Commission.￿The￿Company's￿management￿is￿responsible￿for￿these￿financial￿statements, for￿maintaining￿effective￿internal￿control￿over￿financial￿reporting,￿and￿for￿its￿assessment￿of￿the￿effectiveness￿of￿internal control￿over￿financial￿reporting,￿included￿in￿the￿accompanying￿Management’s￿Report￿on￿Internal￿Control￿over￿Financial Reporting.￿Our￿responsibility￿is￿to￿express￿an￿opinion￿on￿these￿financial￿statements￿and￿an￿opinion￿on￿the￿Company's internal￿control￿over￿financial￿reporting￿based￿on￿our￿audits. We￿conducted￿our￿audits￿in￿accordance￿with￿the￿standards￿of￿the￿Public￿Company￿Accounting￿Oversight￿Board￿(United States).￿Those￿standards￿require￿that￿we￿plan￿and￿perform￿the￿audit￿to￿obtain￿reasonable￿assurance￿about￿whether￿the financial￿statements￿are￿free￿of￿material￿misstatement￿and￿whether￿effective￿internal￿control￿over￿financial￿reporting￿was maintained￿in￿all￿material￿respects.￿Our￿audits￿of￿the￿financial￿statements￿included￿examining,￿on￿a￿test￿basis,￿evidence supporting￿the￿amounts￿and￿disclosures￿in￿the￿financial￿statements,￿assessing￿the￿accounting￿principles￿used￿and significant￿estimates￿made￿by￿management,￿and￿evaluating￿the￿overall￿financial￿statement￿presentation.￿Our￿audit￿of internal￿control￿over￿financial￿reporting￿included￿obtaining￿an￿understanding￿of￿internal￿control￿over￿financial￿reporting, assessing￿the￿risk￿that￿a￿material￿weakness￿exists,￿and￿testing￿and￿evaluating￿the￿design￿and￿operating￿effectiveness of￿internal￿control￿based￿on￿the￿assessed￿risk.￿Our￿audits￿also￿included￿performing￿such￿other￿procedures￿as￿we considered￿necessary￿in￿the￿circumstances.￿We￿believe￿that￿our￿audits￿provide￿a￿reasonable￿basis￿for￿our￿opinions. A￿company's￿internal￿control￿over￿financial￿reporting￿is￿a￿process￿designed￿by,￿or￿under￿the￿supervision￿of,￿the company's￿principal￿executive￿and￿principal￿financial￿officers,￿or￿persons￿performing￿similar￿functions,￿and￿effected￿by the￿company's￿board￿of￿directors,￿management,￿and￿other￿personnel￿to￿provide￿reasonable￿assurance￿regarding￿the reliability￿of￿financial￿reporting￿and￿the￿preparation￿of￿financial￿statements￿for￿external￿purposes￿in￿accordance￿with generally￿accepted￿accounting￿principles.￿A￿company's￿internal￿control￿over￿financial￿reporting￿includes￿those￿policies and￿procedures￿that￿(1)￿pertain￿to￿the￿maintenance￿of￿records￿that,￿in￿reasonable￿detail,￿accurately￿and￿fairly￿reflect the￿transactions￿and￿dispositions￿of￿the￿assets￿of￿the￿company;￿(2)￿provide￿reasonable￿assurance￿that￿transactions￿are recorded￿as￿necessary￿to￿permit￿preparation￿of￿financial￿statements￿in￿accordance￿with￿generally￿accepted￿accounting principles,￿and￿that￿receipts￿and￿expenditures￿of￿the￿company￿are￿being￿made￿only￿in￿accordance￿with￿authorizations of￿management￿and￿directors￿of￿the￿company;￿and￿(3)￿provide￿reasonable￿assurance￿regarding￿prevention￿or￿timely detection￿of￿unauthorized￿acquisition,￿use,￿or￿disposition￿of￿the￿company's￿assets￿that￿could￿have￿a￿material￿effect￿on the￿financial￿statements. Because￿of￿the￿inherent￿limitations￿of￿internal￿control￿over￿financial￿reporting,￿including￿the￿possibility￿of￿collusion or￿improper￿management￿override￿of￿controls,￿material￿misstatements￿due￿to￿error￿or￿fraud￿may￿not￿be￿prevented￿or detected￿on￿a￿timely￿basis.￿Also,￿projections￿of￿any￿evaluation￿of￿the￿effectiveness￿of￿the￿internal￿control￿over￿financial reporting￿to￿future￿periods￿are￿subject￿to￿the￿risk￿that￿the￿controls￿may￿become￿inadequate￿because￿of￿changes￿in conditions,￿or￿that￿the￿degree￿of￿compliance￿with￿the￿policies￿or￿procedures￿may￿deteriorate. In￿our￿opinion,￿the￿consolidated￿financial￿statements￿referred￿to￿above￿present￿fairly,￿in￿all￿material￿respects,￿the financial￿position￿of￿ASML￿Holding￿N.V.￿and￿subsidiaries￿as￿of￿December￿31,￿2012￿and￿2011,￿and￿the￿results￿of￿their operations￿and￿their￿cash￿flows￿for￿each￿of￿the￿three￿years￿in￿the￿period￿ended￿December￿31,￿2012,￿in￿conformity￿with accounting￿principles￿generally￿accepted￿in￿the￿United￿States￿of￿America.￿Also,￿in￿our￿opinion,￿the￿Company￿maintained, in￿all￿material￿respects,￿effective￿internal￿control￿over￿financial￿reporting￿as￿of￿December￿31,￿2012,￿based￿on￿the￿criteria established￿in￿Internal￿Control￿—￿Integrated￿Framework￿issued￿by￿the￿Committee￿of￿Sponsoring￿Organizations￿of￿the Treadway￿Commission. /s/￿Deloitte￿Accountants￿B.V. Eindhoven,￿The￿Netherlands February￿12,￿2013 ASML￿ANNUAL￿REPORT￿2012 F-55 Exhibits Exhibit Index Exhibit No. 1 Description ￿ Articles￿of￿Association￿of￿ASML￿Holding￿N.V.￿(English￿translation)￿(Incorporated￿by￿reference￿to￿Amendment￿No.￿13￿to￿the Registrant’s,￿Registration￿Statement￿on￿Form￿8-A/A,￿filed￿with￿the￿Commission￿on￿February￿8,￿2013) 2.1 ￿ Fiscal￿Agency￿Agreement￿between￿ASML￿Holding￿N.V.,￿Deutsche￿Bank￿AG,￿London￿Branch￿and￿Deutsche￿Bank Luxembourg￿S.A.￿relating￿to￿the￿Registrant’s￿5.75￿percent￿Notes￿due￿2017￿(Incorporated￿by￿reference￿to￿the￿Registrant’s Annual￿Report￿for￿the￿year￿ended￿December￿31,￿2008) 4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 4.9 4.10 4.11 4.12 4.13 4.14 4.15 4.16 ￿ Agreement￿between￿ASM￿Lithography￿B.V.￿and￿Carl￿Zeiss,￿dated￿March￿17,￿2000￿(Incorporated￿by￿reference￿to￿the Registrant’s￿Annual￿Report￿on￿Form￿20-F￿for￿the￿fiscal￿year￿ended￿December￿31,￿2000)￿1 ￿ Agreement￿between￿ASML￿Holding￿N.V.￿and￿Carl￿Zeiss,￿dated￿October￿24,￿2003￿(Incorporated￿by￿reference￿to￿the Registrant’s￿Annual￿Report￿on￿Form￿20-F￿for￿the￿year￿ended￿December￿31,￿2003)￿1 ￿ Form￿of￿Indemnity￿Agreement￿between￿ASML￿Holding￿N.V.￿and￿members￿of￿its￿Board￿of￿Management￿(Incorporated￿by reference￿to￿the￿Registrant’s￿Annual￿Report￿on￿Form￿20-F￿for￿the￿year￿ended￿December￿31,￿2003) ￿ Form￿of￿Indemnity￿Agreement￿between￿ASML￿Holding￿N.V.￿and￿members￿of￿its￿Supervisory￿Board￿(Incorporated￿by reference￿to￿the￿Registrant’s￿Annual￿Report￿on￿Form￿20-F￿for￿the￿year￿ended￿December￿31,￿2003) ￿ Form￿of￿Employment￿Agreement￿for￿members￿of￿the￿Board￿of￿Management￿(Incorporated￿by￿reference￿to￿the￿Registrant’s Annual￿Report￿on￿Form￿20-F￿for￿the￿fiscal￿year￿ended￿December￿31,￿2003) ￿ Nikon-ASML￿Patent￿Cross-License￿Agreement,￿dated￿December￿10,￿2004,￿between￿ASML￿Holding￿N.V.￿and￿Nikon Corporation￿(Incorporated￿by￿reference￿to￿the￿Registrant’s￿Annual￿Report￿on￿Form￿20-F￿for￿the￿fiscal￿year￿ended December￿31,￿2004)￿1 ￿ ASML/Zeiss￿Sublicense￿Agreement,￿2004,￿dated￿December￿10,￿2004,￿between￿Carl￿Zeiss￿SMT￿AG￿and￿ASML￿Holding￿N.V. (Incorporated￿by￿reference￿to￿the￿Registrant’s￿Annual￿Report￿on￿Form￿20-F￿for￿the￿fiscal￿year￿ended￿December￿31,￿2004)￿1 ￿ ￿ASML￿New￿Hires￿and￿Incentive￿Stock￿Option￿Plan￿For￿Management￿(Version￿2003)￿(Incorporated￿by￿reference￿to￿the Registrant’s￿Statement￿on￿Form￿S-8,￿filed￿with￿the￿Commission￿on￿September￿2,￿2003￿(File￿No.￿333-109154)) ￿ ￿ASML￿Incentive￿and￿New￿Hire￿Option￿Plan￿for￿Board￿of￿Management￿(Incorporated￿by￿reference￿to￿the￿Registrant’s Registration￿Statement￿on￿Form￿S-8,￿filed￿with￿the￿Commission￿on￿June￿9,￿2004￿(File￿No.￿333-116337)) ￿ ￿ASML￿Option￿Plan￿for￿Management￿of￿ASML￿Holding￿Group￿Companies￿(Incorporated￿by￿reference￿to￿the￿Registrant’s Registration￿Statement￿on￿Form￿S-8￿filed￿with￿the￿Commission￿on￿June￿30,￿2005￿(file￿No.￿333-126340)) ￿ ￿ASML￿Stock￿Option￿Plan￿for￿New￿Hire￿Options￿granted￿to￿Members￿of￿the￿Board￿of￿Management￿(Version￿April￿2006) (Incorporated￿by￿reference￿to￿the￿Registrant’s￿Registration￿Statement￿on￿Form￿S-8￿filed￿with￿the￿Commission￿on￿August￿7, 2006￿(file￿No.￿333-136362)) ￿ ￿ASML￿Stock￿Option￿Plan￿for￿Incentive￿or￿New￿Hire￿Options￿granted￿to￿Senior￿and￿Executive￿Management￿(Version￿April 2006)￿(Incorporated￿by￿reference￿to￿the￿Registrant’s￿Registration￿Statement￿on￿Form￿S-8￿filed￿with￿the￿Commission￿on August￿7,￿2006￿(file￿No.￿333-136362)) ￿ ￿ASML￿Stock￿Option￿Plan￿for￿Incentive￿or￿New￿Hire￿Options￿granted￿to￿Senior￿and￿Executive￿Management￿(Version￿July 2006)￿(Incorporated￿by￿reference￿to￿the￿Registrant’s￿Registration￿Statement￿on￿Form￿S-8￿filed￿with￿the￿Commission￿on August￿7,￿2006￿(file￿No.￿333-136362)) ￿ ASML￿Stock￿Option￿Plan￿for￿Incentive￿or￿New￿Hire￿Options￿granted￿to￿Senior￿and￿Executive￿Management￿(Version October￿2006)￿(Incorporated￿by￿reference￿to￿the￿Registrant’s￿Registration￿Statement￿on￿Form￿S-8￿filed￿with￿the Commission￿on￿August￿7,￿2006￿(file￿No.￿333-136362)) ￿ ASML￿Restricted￿Stock￿Plan￿(Incorporated￿by￿reference￿to￿the￿Registrant’s￿Registration￿Statement￿on￿Form￿S-8￿filed￿with the￿Commission￿on￿March￿7,￿2007￿(file￿No.￿333-141125)) ￿ ￿Brion￿Technologies,￿Inc.,￿2002￿Stock￿Option￿Plan￿(as￿amended￿on￿March￿25,￿2005;￿March￿24,￿2006;￿and￿November￿17, 2006)￿(Incorporated￿by￿reference￿to￿the￿Registrant’s￿Registration￿Statement￿on￿Form￿S-8￿filed￿with￿the￿Commission￿on April￿20,￿2007￿(file￿No.￿333-142254)) 4.17 ￿ ASML￿Stock￿Option￿Plan￿for￿Incentive￿or￿New￿Hire￿Options￿granted￿to￿Senior￿and￿Executive￿Management￿(Version￿January 4.18 4.19 4.20 4.21 4.22 4.23 4.24 4.25 4.26 4.27 4.28 2007)￿(Incorporated￿by￿reference￿to￿the￿Registrant’s￿Registration￿Statement￿on￿Form￿S-8￿filed￿with￿the￿Commission￿on July￿5,￿2007￿(file￿No.￿333-144356)) ￿ ASML￿Stock￿Option￿Plan￿for￿Incentive￿or￿New￿Hire￿Options￿granted￿to￿Senior￿and￿Executive￿Management￿(Version￿April 2007)￿(Incorporated￿by￿reference￿to￿the￿Registrant’s￿Registration￿Statement￿on￿Form￿S-8￿filed￿with￿the￿Commission￿on July￿5,￿2007￿(file￿No.￿333-144356)) ￿ ASML￿Stock￿Option￿Plan￿for￿Incentive￿or￿New￿Hire￿Options￿granted￿to￿Senior￿and￿Executive￿Management￿(Version￿July 2007)￿(Incorporated￿by￿reference￿to￿the￿Registrant’s￿Registration￿Statement￿on￿Form￿S-8￿filed￿with￿the￿Commission￿on July￿5,￿2007￿(file￿No.￿333-144356)) ￿ ASML￿Stock￿Option￿Plan￿for￿Incentive￿or￿New￿Hire￿Options￿granted￿to￿Senior￿and￿Executive￿Management￿(Version October￿2007)￿(Incorporated￿by￿reference￿to￿the￿Registrant’s￿Registration￿Statement￿on￿Form￿S-8￿filed￿with￿the Commission￿on￿July￿5,￿2007￿(file￿No.￿333-144356)) ￿ ASML￿Performance￿Stock￿Plan￿for￿Members￿of￿the￿Board￿of￿Management￿(Version￿1)￿(Incorporated￿by￿reference￿to￿the Registrant’s￿Registration￿Statement￿on￿Form￿S-8￿filed￿with￿the￿Commission￿on￿July￿5,￿2007￿(file￿No.￿333-144356)) ￿ ASML￿Performance￿Stock￿Option￿Plan￿for￿Members￿of￿the￿Board￿of￿Management￿(Version￿2)￿(Incorporated￿by￿reference￿to the￿Registrant’s￿Registration￿Statement￿on￿Form￿S-8￿filed￿with￿the￿Commission￿on￿July￿5,￿2007￿(file￿No.￿333-144356)) ￿ ASML￿Stock￿Option￿Plan￿from￿Base￿Salary￿for￿Senior￿&￿Executive￿Management￿(Version￿October￿2007)￿(Incorporated￿by reference￿to￿the￿Registrant’s￿Registration￿Statement￿on￿Form￿S-8￿filed￿with￿the￿Commission￿on￿November￿2,￿2007￿(file￿No. 333-147128)) ￿ ASML￿Performance￿Stock￿Option￿Plan￿for￿Senior￿and￿Executive￿Management￿(version￿1)￿(Incorporated￿by￿reference￿to￿the Registrant’s.￿Registration￿Statement￿on￿Form￿S-8￿filed￿with￿the￿Commission￿on￿August￿29,￿2008￿(file￿No.￿333-153277)) ￿ ASML￿Performance￿Share￿Plan￿for￿Senior￿and￿Executive￿Management￿(version￿1)￿(Incorporated￿by￿reference￿to￿the Registrant’s￿Registration￿Statement￿on￿Form￿S-8￿filed￿with￿the￿Commission￿on￿August￿29,￿2008￿(file￿No.￿333-153277)) ￿ ASML￿Restricted￿Stock￿Plan￿(version￿2)￿(Incorporated￿by￿reference￿to￿the￿Registrant’s￿Registration￿Statement￿on￿Form￿S-8 filed￿with￿the￿Commission￿on￿August￿29,￿2008￿(file￿No.￿333-153277)) ￿ ASML￿Performance￿Stock￿Plan￿for￿Members￿of￿the￿Board￿of￿Management￿(Incorporated￿by￿reference￿to￿the￿Registrant’s Registration￿Statement￿on￿Form￿S-8￿filed￿with￿the￿Commission￿on￿October￿13,￿2009￿(file￿No.￿333-162439)) ￿ ASML￿Performance￿Stock￿Option￿Plan￿for￿Senior￿and￿Executive￿Management￿(version￿1)￿(Incorporated￿by￿reference￿to￿the Registrant’s.￿Registration￿Statement￿on￿Form￿S-8￿filed￿with￿the￿Commission￿on￿October￿13,￿2009￿(file￿No.￿333-162439)) Exhibit No. 4.29 Description ￿ ASML￿Performance￿Share￿Plan￿for￿Senior￿and￿Executive￿Management￿(version￿1)￿(Incorporated￿by￿reference￿to￿the 4.30 4.31 4.32 4.33 4.34 4.35 8.1 12.1 13.1 Registrant’s￿Registration￿Statement￿on￿Form￿S-8￿filed￿with￿the￿Commission￿on￿October￿13,￿2009￿(file￿No.￿333-162439)) ￿ ASML￿Share￿and￿Option￿Purchase￿Plan￿for￿Employees￿(Incorporated￿by￿reference￿to￿the￿Registrant’s￿Registration Statement￿on￿Form￿S-8￿filed￿with￿the￿Commission￿on￿October￿20,￿2010￿(file￿No.￿333-170034)) ￿ Investment￿Agreement￿between￿ASML￿Holding￿N.V.￿and￿Intel￿Corporation,￿dated￿July￿9,￿2012￿2 ￿ 450mm￿NRE￿Funding￿Agreement￿between￿ASML￿Holding￿N.V.,￿and￿Intel￿Corporation,￿dated￿July￿9,￿20121,￿2 ￿ EUV￿NRE￿Funding￿Agreement￿between￿ASML￿Holding￿N.V.,￿and￿Intel￿Corporation,￿dated￿July￿9,￿20121,￿2 ￿ Shareholder￿Agreement￿between￿ASML￿Holding￿N.V.￿and￿Intel￿Holdings￿B.V.,￿Intel￿Corporation￿and￿Stichting Administratiekantoor￿MAKTSJAB￿dated￿September￿12,￿2012￿2 ￿ Agreement￿and￿Plan￿of￿Merger￿by￿and￿among￿ASML￿Holding￿N.V.,￿Kona￿Acquisition￿Company,￿Inc.￿Cymer,￿Inc.￿and certain￿other￿parties￿set￿forth￿therein,￿date￿October￿16,￿2012￿(incorporated￿by￿reference￿to￿Annex￿A￿to￿the￿Registrant's Registration￿Statement￿on￿Form￿F-4￿filed￿with￿the￿Commission￿on￿November￿21,￿2012￿(file￿No.￿333-185120)) ￿ List￿of￿Main￿Subsidiaries￿2 ￿ Certification￿of￿CEO￿and￿CFO￿Pursuant￿to￿Rule￿13a-14(a)￿of￿the￿Securities￿Exchange￿Act￿of￿1934￿2 ￿ Certification￿of￿CEO￿and￿CFO￿Pursuant￿to￿Rule￿13a-14(b)￿of￿the￿Securities￿Exchange￿Act￿of￿1934￿and￿18￿U.S.C.￿Section 1350￿as￿Adopted￿Pursuant￿to￿Section￿906￿of￿the￿Sarbanes-Oxley￿Act￿of￿2002￿2 15.1 101.INS 101.SCH 101.CAL 101.DEF 101.LAB 101.PRE ￿ Consent￿of￿Deloitte￿Accountants￿B.V.2 ￿ XBRL￿Instance￿Document￿2 ￿ XBRL￿Taxonomy￿Extension￿Schema￿Document￿2 ￿ XBRL￿Taxonomy￿Extension￿Calculation￿Linkbase￿Document￿2 ￿ XBRL￿Taxonomy￿Extension￿Definition￿Linkbase￿Document￿2 ￿ XBRL￿Taxonomy￿Extension￿Label￿Linkbase￿Document￿2 ￿ XBRL￿Taxonomy￿Extension￿Presentation￿Linkbase￿Document￿2 1￿Certain￿information￿omitted￿pursuant￿to￿a￿request￿for￿confidential￿treatment￿filed￿separately￿with￿the￿Securities￿and￿Exchange￿Commission. 2￿Filed￿at￿the￿Commission￿herewith. ￿ Exhibit 8.1 List of main subsidiaries Legal Entity ￿ Main subsidiaries of ASML Holding N.V.1: ASML￿Netherlands￿B.V. ASML￿MaskTools￿B.V. ASML￿Systems￿B.V. ASML￿Motion￿B.V.2 ASML￿Motion￿Sub￿B.V.3 ASML￿Germany￿GmbH ASML￿France￿S.a.r.l. ASML￿(UK)￿Ltd. ASML￿Israel￿(2001)￿Ltd. ASML￿Ireland￿Ltd. ASML￿Dublin￿Ltd. ASML￿Italy￿S.r.l. ASML￿Hong￿Kong￿Ltd. ASML￿Singapore￿Pte.￿Ltd. ASML￿Korea￿Co.￿Ltd. ASML￿Japan￿Co.￿Ltd. ASML￿Lithography￿Facilities￿Science￿and￿Technology￿Co.￿Ltd. ASML￿Taiwan￿Ltd. ASML￿Equipment￿Malaysia￿Sdn.￿Bhd. ASML￿Belgium￿BVBA ASML￿Belgium￿Finance￿CV Brion￿Technologies￿(Shenzhen)￿Co.￿Ltd. Brion￿Technologies,￿Inc. ASML￿US,￿Inc. ASML￿Capital￿US,￿Inc ASML￿MaskTools,￿Inc. ASML￿Participations￿US￿Inc. Lehrer￿Pearson,￿Inc. ASML￿Ventures￿1,￿Inc. Kona￿Acquisition￿Company,￿Inc. Kona￿Technologies,￿LCC eLith￿LLC. ASML￿Hong￿Kong￿Logistic￿Services￿Ltd. Country of Incorporation ￿ ￿ Netherlands￿(Veldhoven) Netherlands￿(Veldhoven) Netherlands￿(Veldhoven) Netherlands￿(Oirschot) Netherlands￿(Oirschot) Germany￿(Dresden) France￿(Montbonnot) UK￿(Paisley￿(Scotland)) Israel￿(Ramat-Gan) Ireland￿(Dublin) Ireland￿(Dublin) Italy￿(Avezzano) Hong￿Kong￿SAR Singapore Korea￿(Kyunggi-Do) Japan￿(Kawasaki-shi,￿Kanagawa-Ken) China￿(Tianjin) Taiwan￿(Hsinchu) Malaysia￿(Penang) Belgium￿(Essen) Belgium￿(Essen) China￿(Shenzhen) US￿(Delaware) US￿(Delaware) US￿(Delaware) US￿(Delaware) US￿(Delaware) US￿(Delaware) US￿(Delaware) US￿(Reno,￿Nevada) US￿(Reno,￿Nevada) US￿(Delaware) Hong￿Kong￿SAR 1 All￿of￿our￿subsidiaries￿are￿(directly￿or￿indirectly)￿wholly-owned,￿with￿exception￿of￿Elith￿LLC,￿in￿which￿we￿hold￿an￿interest￿of￿50%. 2 Wijdeven￿Motion￿Holding￿B.V.￿was￿renamed￿to￿ASML￿Motion￿B.V. 3 Wijdeven￿Motion￿B.V.￿was￿renamed￿to￿ASML￿Motion￿Sub￿B.V. Exhibit 12.1 Certification of the Chief Executive Officer I,￿Eric￿Meurice,￿certify￿that: 1.￿I￿have￿reviewed￿this￿annual￿report￿on￿Form￿20-F￿of￿ASML￿Holding￿N.V.; 2.￿Based￿on￿my￿knowledge,￿this￿report￿does￿not￿contain￿any￿untrue￿statement￿of￿a￿material￿fact￿or￿omit￿to￿state￿a material￿fact￿necessary￿to￿make￿the￿statements￿made,￿in￿light￿of￿the￿circumstances￿under￿which￿such￿statements￿were made,￿not￿misleading￿with￿respect￿to￿the￿period￿covered￿by￿this￿report; 3.￿Based￿on￿my￿knowledge,￿the￿financial￿statements,￿and￿other￿financial￿information￿included￿in￿this￿report,￿fairly￿present in￿all￿material￿respects￿the￿financial￿condition,￿results￿of￿operations￿and￿cash￿flows￿of￿the￿company￿as￿of,￿and￿for,￿the periods￿presented￿in￿this￿report; 4.￿The￿company's￿other￿certifying￿officer(s)￿and￿I￿are￿responsible￿for￿establishing￿and￿maintaining￿disclosure￿controls and￿procedures￿(as￿defined￿in￿Exchange￿Act￿Rules￿13a-15(e)￿and￿15d-15(e))￿and￿internal￿control￿over￿financial￿reporting (as￿defined￿in￿Exchange￿Act￿Rules￿13a-15(f)￿and￿15d-15(f))for￿the￿company￿and￿have: a)￿Designed￿such￿disclosure￿controls￿and￿procedures,￿or￿caused￿such￿disclosure￿controls￿and￿procedures￿to￿be designed￿under￿our￿supervision,￿to￿ensure￿that￿material￿information￿relating￿to￿the￿company,￿including￿its￿consolidated subsidiaries,￿is￿made￿known￿to￿us￿by￿others￿within￿those￿entities,￿particularly￿during￿the￿period￿in￿which￿this￿report￿is being￿prepared; b)￿Designed￿such￿internal￿control￿over￿financial￿reporting,￿or￿caused￿such￿internal￿control￿over￿financial￿reporting￿to￿be designed￿under￿our￿supervision,￿to￿provide￿reasonable￿assurance￿regarding￿the￿reliability￿of￿financial￿reporting￿and￿the preparation￿of￿financial￿statements￿for￿external￿purposes￿in￿accordance￿with￿generally￿accepted￿accounting￿principles; c)￿Evaluated￿the￿effectiveness￿of￿the￿company’s￿disclosure￿controls￿and￿procedures￿and￿presented￿in￿this￿report￿our conclusions￿about￿the￿effectiveness￿of￿the￿disclosure￿controls￿and￿procedures,￿as￿of￿the￿end￿of￿the￿period￿covered￿by this￿report￿based￿on￿such￿evaluation;￿and d)￿Disclosed￿in￿this￿report￿any￿change￿in￿the￿company’s￿internal￿control￿over￿financial￿reporting￿that￿occurred￿during the￿period￿covered￿by￿the￿annual￿report￿that￿has￿materially￿affected,￿or￿is￿reasonably￿likely￿to￿materially￿affect,￿the company’s￿internal￿control￿over￿financial￿reporting;￿and 5.￿The￿company’s￿other￿certifying￿officer(s)￿and￿I￿have￿disclosed,￿based￿on￿our￿most￿recent￿evaluation￿of￿internal￿control over￿financial￿reporting,￿to￿the￿company’s￿auditors￿and￿the￿audit￿committee￿of￿the￿company's￿board￿of￿directors￿(or persons￿performing￿the￿equivalent￿functions): a)￿All￿significant￿deficiencies￿and￿material￿weaknesses￿in￿the￿design￿or￿operation￿of￿internal￿control￿over￿financial reporting￿which￿are￿reasonably￿likely￿to￿adversely￿affect￿the￿company’s￿ability￿to￿record,￿process,￿summarize￿and￿report financial￿information;￿and b)￿Any￿fraud,￿whether￿or￿not￿material,￿that￿involves￿management￿or￿other￿employees￿who￿have￿a￿significant￿role￿in￿the company’s￿internal￿control￿over￿financial￿reporting. Date:￿February￿12,￿2013 ￿ /s/￿Eric￿Meurice Eric￿Meurice,￿Chief￿Executive￿Officer Certification of the Chief Financial Officer I,￿Peter￿T.F.M.￿Wennink,￿certify￿that: 1.￿I￿have￿reviewed￿this￿annual￿report￿on￿Form￿20-F￿of￿ASML￿Holding￿N.V.; 2.￿Based￿on￿my￿knowledge,￿this￿report￿does￿not￿contain￿any￿untrue￿statement￿of￿a￿material￿fact￿or￿omit￿to￿state￿a material￿fact￿necessary￿to￿make￿the￿statements￿made,￿in￿light￿of￿the￿circumstances￿under￿which￿such￿statements￿were made,￿not￿misleading￿with￿respect￿to￿the￿period￿covered￿by￿this￿report; 3.￿Based￿on￿my￿knowledge,￿the￿financial￿statements,￿and￿other￿financial￿information￿included￿in￿this￿report,￿fairly￿present in￿all￿material￿respects￿the￿financial￿condition,￿results￿of￿operations￿and￿cash￿flows￿of￿the￿company￿as￿of,￿and￿for,￿the periods￿presented￿in￿this￿report; 4.￿The￿company’s￿other￿certifying￿officer(s)￿and￿I￿are￿responsible￿for￿establishing￿and￿maintaining￿disclosure￿controls￿and procedures￿(as￿defined￿in￿Exchange￿Act￿Rules￿13a-15(e)￿and￿15d-15(e))￿and￿internal￿control￿over￿financial￿reporting￿(as defined￿in￿Exchange￿Act￿Rules￿13a-15(f)￿and￿15d-15(f))for￿the￿company￿and￿have: a)￿Designed￿such￿disclosure￿controls￿and￿procedures,￿or￿caused￿such￿disclosure￿controls￿and￿procedures￿to￿be designed￿under￿our￿supervision,￿to￿ensure￿that￿material￿information￿relating￿to￿the￿company,￿including￿its￿consolidated subsidiaries,￿is￿made￿known￿to￿us￿by￿others￿within￿those￿entities,￿particularly￿during￿the￿period￿in￿which￿this￿report￿is being￿prepared; b)￿Designed￿such￿internal￿control￿over￿financial￿reporting,￿or￿caused￿such￿internal￿control￿over￿financial￿reporting￿to￿be designed￿under￿our￿supervision,￿to￿provide￿reasonable￿assurance￿regarding￿the￿reliability￿of￿financial￿reporting￿and￿the preparation￿of￿financial￿statements￿for￿external￿purposes￿in￿accordance￿with￿generally￿accepted￿accounting￿principles; c)￿Evaluated￿the￿effectiveness￿of￿the￿company’s￿disclosure￿controls￿and￿procedures￿and￿presented￿in￿this￿report￿our conclusions￿about￿the￿effectiveness￿of￿the￿disclosure￿controls￿and￿procedures,￿as￿of￿the￿end￿of￿the￿period￿covered￿by this￿report￿based￿on￿such￿evaluation;￿and d)￿Disclosed￿in￿this￿report￿any￿change￿in￿the￿company’s￿internal￿control￿over￿financial￿reporting￿that￿occurred￿during the￿period￿covered￿by￿the￿annual￿report￿that￿has￿materially￿affected,￿or￿is￿reasonably￿likely￿to￿materially￿affect,￿the company’s￿internal￿control￿over￿financial￿reporting;￿and 5.￿The￿company’s￿other￿certifying￿officer(s)￿and￿I￿have￿disclosed,￿based￿on￿our￿most￿recent￿evaluation￿of￿internal￿control over￿financial￿reporting,￿to￿the￿company’s￿auditors￿and￿the￿audit￿committee￿of￿the￿company's￿board￿of￿directors￿(or persons￿performing￿the￿equivalent￿functions): a)￿All￿significant￿deficiencies￿and￿material￿weaknesses￿in￿the￿design￿or￿operation￿of￿internal￿control￿over￿financial reporting￿which￿are￿reasonably￿likely￿to￿adversely￿affect￿the￿company’s￿ability￿to￿record,￿process,￿summarize￿and￿report financial￿information;￿and b)￿Any￿fraud,￿whether￿or￿not￿material,￿that￿involves￿management￿or￿other￿employees￿who￿have￿a￿significant￿role￿in￿the company’s￿internal￿control￿over￿financial￿reporting. ￿ Date:￿February￿12,￿2013 ￿ /s/￿Peter￿T.F.M.￿Wennink Peter￿T.F.M.￿Wennink,￿Chief￿Financial￿Officer Exhibit 13.1 Certification of CEO and CFO Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 In￿connection￿with￿the￿Annual￿Report￿on￿Form￿20-F￿of￿ASML￿Holding￿N.V.￿(the￿“Company”)￿for￿the￿fiscal￿year￿ended December￿31,￿2012￿as￿filed￿with￿the￿Securities￿and￿Exchange￿Commission￿on￿the￿date￿hereof￿(the￿“Report”),￿Eric Meurice,￿as￿Chief￿Executive￿Officer￿of￿the￿Company,￿and￿Peter￿T.F.M.￿Wennink,￿as￿Chief￿Financial￿Officer￿of￿the Company,￿each￿hereby￿certifies,￿pursuant￿to￿18￿U.S.C.￿Section￿1350,￿as￿adopted￿pursuant￿to￿Section￿906￿of￿the Sarbanes-Oxley￿Act￿of￿2002,￿that,￿to￿the￿best￿of￿his￿knowledge: (1)The￿Report￿fully￿complies￿with￿the￿requirements￿of￿Section￿13(a)￿or￿15(d)￿of￿the￿Securities￿Exchange￿Act￿of￿1934;￿and (2)The￿information￿contained￿in￿the￿Report￿fairly￿presents,￿in￿all￿material￿respects,￿the￿financial￿condition￿and￿results￿of operations￿of￿the￿Company. ￿ ￿￿ /s/Eric￿Meurice Name:￿Eric￿Meurice Title:￿Chief￿Executive￿Officer Date:￿February￿12,￿2013 ￿ ￿ /s/Peter￿T.F.M.￿Wennink Name:￿Peter￿T.F.M.￿Wennink Title:￿Chief￿Financial￿Officer Date:￿February￿12,￿2013 A￿signed￿original￿of￿this￿written￿statement￿required￿by￿Section￿906￿of￿the￿Sarbanes-Oxley￿Act￿of￿2002￿has￿been￿provided to￿the￿Company￿and￿will￿be￿retained￿by￿the￿Company￿and￿furnished￿to￿the￿Securities￿and￿Exchange￿Commission￿or￿its staff￿upon￿request. This￿certification￿accompanies￿the￿Report￿pursuant￿to￿section￿906￿of￿the￿Sarbanes-Oxley￿Act￿of￿2002￿and￿shall￿not, except￿to￿the￿extent￿required￿by￿the￿Sarbanes-Oxley￿Act￿of￿2002,￿be￿deemed￿filed￿by￿the￿Company￿for￿purposes￿of section￿18￿of￿the￿Securities￿Exchange￿Act￿of￿1934. Exhibit 15.1 Consent of Independent Registered Public Accounting Firm To￿the￿Supervisory￿Board￿and￿Shareholders￿of￿ASML￿Holding￿N.V.: We￿consent￿to￿the￿incorporation￿by￿reference￿in￿the￿following￿Registration￿Statements￿on￿Form￿S-8￿(Nos.￿333-109154, 333-105600,￿333-116337,￿333-126340,￿333-136362,￿333-141125,￿333-142254,￿333-144356,￿333-147128,￿333-153277, 333-162439￿and￿333-170034)￿of￿our￿report￿dated￿February￿12,￿2013,￿relating￿to￿the￿financial￿statements￿of￿ASML Holding￿N.V.￿and￿subsidiaries￿(collectively,￿the￿“Company”)￿and￿the￿effectiveness￿of￿the￿Company's￿internal￿control￿over financial￿reporting,￿appearing￿in￿this￿Annual￿Report￿on￿Form￿20-F￿of￿the￿Company￿for￿the￿year￿ended￿December￿31, 2012. ￿ /s/￿Deloitte￿Accountants￿B.V. Deloitte￿Accountants￿B.V. Eindhoven,￿The￿Netherlands February￿12,￿2013 

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