ASML International N.V.
Annual Report 2013

Plain-text annual report

Annual￿Report 2013 13 Form 20-F 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, 2013 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: +1 480 696 2762 E-mail: craig.deyoung@asml.com 2650 W Geronimo Place Chandler, AZ 85224, 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. 440,852,334 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: James A. McDonald Skadden, Arps, Slate, Meagher & Flom (UK) LLP 40 Bank Street, Canary Wharf London E14 5DS England ASML￿ANNUAL￿REPORT￿2013 Contents Part I 1 1 1 13 21 21 36 43 46 46 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 Executive￿Summary 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 ASML￿ANNUAL￿REPORT￿2013 47 56 58 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 Item 11 Quantitative and Qualitative Disclosures About Market Risk Item 12 Description of Securities Other Than Equity Securities Part II 59 59 59 60 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 63 63 63 Item 17 Financial Statements Item 18 Financial Statements Item 19 Exhibits ASML￿ANNUAL￿REPORT￿2013 ASML￿ANNUAL￿REPORT￿2013 Part I Special Note Regarding Forward-Looking Statements In￿addition￿to￿historical￿information,￿this￿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￿statements￿with￿respect￿to￿expected￿financial￿results,￿including￿expected￿sales levels￿made￿on￿expected￿gross￿margin￿and￿expenses,￿realization￿of￿systems￿backlog,￿expected￿shipment￿of￿tools, productivity￿of￿our￿tools,￿purchase￿commitments,￿IC￿unit￿demand,￿statements￿about￿our￿CCIP,￿the￿expected￿benefits￿of the￿Cymer￿acquisition￿and￿the￿development￿of￿EUV￿technology￿and￿the￿number￿of￿EUV￿systems￿expected￿to￿be￿shipped and￿recognized￿in￿revenue￿and￿the￿timing￿of￿shipments,￿our￿dividend￿policy￿and￿our￿intention￿to￿repurchase￿shares. These￿statements￿are￿not￿historical￿facts,￿but￿rather￿are￿based￿on￿current￿expectations,￿estimates,￿assumptions￿and projections￿about￿the￿business￿and￿our￿future￿financial￿results￿and￿readers￿should￿not￿place￿undue￿reliance￿on￿them. Forward-looking￿statements￿do￿not￿guarantee￿future￿performance￿and￿involve￿risks￿and￿uncertainties.￿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".￿These￿forward-looking￿statements￿are￿made only￿as￿of￿the￿date￿of￿this￿Annual￿Report.￿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". On￿May￿30,￿2013,￿we￿acquired￿100￿percent￿of￿the￿issued￿share￿capital￿of￿Cymer.￿Comparative￿financial￿information presented￿in￿our￿Annual￿Report￿does￿not￿include￿Cymer,￿unless￿indicated￿otherwise. A￿summary￿of￿all￿abbreviations￿and￿technical￿terms￿used￿in￿this￿Annual￿Report￿is￿set￿forth￿on￿pages￿D-1￿through￿D-4. ASML￿ANNUAL￿REPORT￿2013 1 Five-Year Financial Summary Year ended December 31 (in thousands, except per share data) 2013 EUR 2012 EUR 2011 1 EUR 2010 EUR 2009 EUR Consolidated Statements of Operations data Net￿sales Cost￿of￿sales 5,245,326 (3,068,064) 4,731,555 (2,726,298) 5,651,035 (3,201,645) 4,507,938 (2,552,768) 1,596,063 (1,137,671) Gross profit Other￿income Research￿and￿development￿costs Selling,￿general￿and￿administrative￿costs 2,177,262 64,456 (882,029) (311,741) 2,005,257 - (589,182) (259,301) 2,449,390 - (590,270) (217,904) 1,955,170 - (523,426) (181,045) 458,392 - (466,761) (154,756) Income (loss) from operations Interest￿and￿other,￿net 1,047,948 (24,471) 1,156,774 (6,196) 1,641,216 7,419 1,250,699 (8,176) (163,125) (8,425) Income (loss) before income taxes (Provision￿for)￿benefit￿from￿income￿taxes 1,023,477 (7,987) 1,150,578 (4,262) 1,648,635 (181,675) 1,242,523 (220,703) (171,550) 20,625 Net income (loss) 1,015,490 1,146,316 1,466,960 1,021,820 (150,925) Earnings per share data Basic￿net￿income￿(loss)￿per￿ordinary￿share Diluted￿net￿income￿(loss)￿per￿ordinary￿share2 Number￿of￿ordinary￿shares￿used￿in computing￿per￿share￿amounts￿(in￿thousands) Basic Diluted2 2.36 2.34 2.70 2.68 3.45 3.42 2.35 2.33 (0.35) (0.35) 429,770 433,446 424,096 426,986 425,618 429,053 435,146 438,974 432,615 432,615 1 2 As￿of￿January￿1,￿2011,￿we￿adopted￿ASU￿2009-13,￿"Sales￿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￿Financial￿Statements. The￿calculation￿of￿diluted￿net￿income￿per￿ordinary￿share￿assumes￿the￿exercise￿of￿options￿issued￿under￿our￿stock￿option￿plans￿and￿the￿issuance￿of shares￿under￿our￿share￿plans￿for￿periods￿in￿which￿exercises￿or￿issuances￿would￿have￿a￿dilutive￿effect.￿The￿calculation￿of￿diluted￿net￿income￿per ordinary￿share￿does￿not￿assume￿exercise￿of￿such￿options￿or￿issuance￿of￿shares￿when￿such￿exercises￿or￿issuance￿would￿be￿anti-dilutive. ASML￿ANNUAL￿REPORT￿2013 2 2013 EUR 2012 EUR 2011 1 EUR 2010 EUR 2009 EUR Five-Year Financial Summary 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￿(used￿in)￿operating￿activities Purchase￿of￿property,￿plant￿and￿equipment4 Purchase￿of￿available￿for￿sale￿securities Maturity￿of￿available￿for￿sale￿securities Acquisition￿of￿subsidiary￿(net￿of￿cash￿acquired) Net￿cash￿provided￿by￿(used￿in)￿investing￿activities Net￿proceeds￿from￿issuance￿of￿shares Capital￿repayment Dividend￿paid Deposits￿from￿customers Purchase￿of￿shares Net￿proceeds￿from￿issuance￿of￿notes Repurchase￿of￿notes Net￿cash￿provided￿by￿(used￿in)￿financing￿activities Net￿increase￿(decrease)￿in￿cash￿and￿cash￿equivalents 2,330,694 679,884 4,156,917 11,513,730 1,074,570 6,922,427 40,092 228,775 13,057 1,054,173 (210,804) (904,856) 1,195,031 (443,712) 5 (368,341) 31,822 - (216,085) - (300,000) 740,445 8 (368,303) 9 (113,111) 563,098 1,767,596 930,005 3,745,559 7,410,478 759,490 4,066,893 37,470 186,620 3,234 703,478 (171,878) (1,379,997) 449,992 (10,292) (1,119,833) 3,907,666 6 (3,728,324) 7 (188,892) - (535,373) - - (545,583) (964,186) 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) ASP￿of￿system￿sales￿(in￿millions) Value￿of￿systems￿backlog￿excluding￿EUV￿(in￿millions)10,11 Systems￿backlog￿excluding￿EUV￿(in￿units)10,11 ASP￿of￿systems￿backlog￿excluding￿EUV￿(in￿millions)10,11 Value￿of￿booked￿systems￿excluding￿EUV￿(in￿millions)10,11 Net￿bookings￿excluding￿EUV￿(in￿units)10,11 ASP￿of￿booked￿systems￿excluding￿EUV￿(in￿millions)10,11 Number￿of￿payroll￿employees￿(in￿FTEs) Number￿of￿temporary￿employees￿(in￿FTEs) Increase￿(decrease)￿net￿sales￿in￿percentage Number￿of￿ordinary￿shares￿issued￿and￿outstanding￿(in￿thousands) ASML￿share￿price￿in￿EUR12 Volatility￿260￿days￿in￿percentage￿of￿our￿shares￿listed￿at￿NYSE Euronext￿Amsterdam13 ASML￿share￿price￿in￿USD14 Volatility￿260￿days￿in￿percentage￿of￿our￿shares￿listed￿at￿NASDAQ15 Dividend￿per￿ordinary￿share￿in￿EUR Dividend￿per￿ordinary￿share￿in￿USD 41.5 20.0 19.4 60.1 0.8 157 25.4 1,953.3 56 34.9 4,644.0 166 28.0 10,360 2,865 10.9 440,852 68.04 23.98 93.70 24.01 0.61 16 0.00 16,17 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 64.39 30.05 0.53 0.73 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 41.79 41.83 0.46 0.60 1,949,834 - 2,787,220 6,180,358 710,060 2,773,908 39,293 1,037,074 - 1,704,714 3,764,151 699,756 1,774,768 39,028 151,444 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 38.34 35.25 0.40 0.54 141,631 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 34.09 44.82 0.20 0.27 1 As￿of￿January￿1,￿2011,￿we￿adopted￿ASU￿2009-13,￿"Sales￿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￿Financial￿Statements. 2 Working￿capital￿is￿calculated￿as￿the￿difference￿between￿total￿current￿assets￿and￿total￿current￿liabilities. 3 4 Long-term￿debt￿includes￿the￿current￿portion￿of￿long-term￿debt. An￿amount￿of￿EUR￿115.9￿million￿(2012:￿EUR￿204.8￿million,￿2011:￿EUR￿300.5￿million,￿2010:￿EUR￿214.1￿million,￿2009:￿EUR￿159.0￿million)￿of￿the￿additions in￿property,￿plant￿and￿equipment￿relates￿to￿non-cash￿transfers￿from￿inventory,￿an￿amount￿of￿EUR￿12.5￿million￿(2012:￿EUR￿9.6￿million,￿2011:￿EUR 17.7￿million,￿2010￿and￿2009:￿EUR￿nil￿million)￿relates￿to￿other￿non-cash￿movements￿(mainly￿investments￿not￿yet￿paid￿and￿inceptions￿of￿finance￿lease arrangements).￿For￿further￿details￿see￿Note￿12￿to￿the￿Financial￿Statements. In￿addition￿to￿the￿cash￿paid￿in￿relation￿to￿the￿acquisition￿of￿Cymer,￿we￿issued￿36,464,576￿shares￿for￿an￿amount￿of￿EUR￿2,346.7￿million￿(non-cash event)￿as￿part￿of￿the￿consideration￿paid. 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￿CCIP. 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. Net￿proceeds￿from￿issuance￿of￿notes￿relate￿to￿the￿total￿cash￿proceeds￿of￿EUR￿740.4￿million￿(net￿of￿incurred￿transaction￿costs)￿from￿the￿offering￿of￿our EUR￿750￿million￿3.375￿percent￿senior￿notes￿due￿2023. Repurchase￿of￿notes￿relates￿to￿the￿net￿cash￿outflows￿of￿EUR￿368.3￿million￿for￿the￿partial￿repurchase￿of￿our￿EUR￿600￿million￿5.75￿percent￿senior￿notes due￿2017￿and￿partial￿unwinding￿of￿the￿related￿interest￿rate￿swaps. 5 6 7 8 9 10 Our￿systems￿backlog￿and￿net￿bookings￿include￿only￿orders￿for￿which￿written￿authorizations￿have￿been￿accepted￿and￿system￿shipment￿and￿revenue recognition￿dates￿within￿the￿following￿12￿months￿have￿been￿assigned. ASML￿ANNUAL￿REPORT￿2013 3 11 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). 12 Closing￿ASML￿share￿price￿on￿NYSE￿Euronext￿Amsterdam￿of￿the￿relevant￿year￿(source:￿Bloomberg￿Finance￿LP). 13 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). 14 Closing￿ASML￿share￿price￿on￿NASDAQ￿of￿the￿relevant￿year￿(source:￿Bloomberg￿Finance￿LP). 15 Volatility￿represents￿the￿variability￿in￿our￿share￿price￿on￿NASDAQ￿as￿measured￿over￿the￿260￿business￿days￿of￿each￿year￿presented￿(source:￿Bloomberg Finance￿LP). 16 Subject￿to￿approval￿of￿the￿AGM￿to￿be￿held￿on￿April￿23,￿2014. 17 The￿exchange￿rate￿used￿to￿convert￿the￿proposed￿dividend￿per￿ordinary￿share￿is￿the￿exchange￿rate￿at￿February￿5,￿2014. ASML￿ANNUAL￿REPORT￿2013 4 Exchange Rate Information We￿publish￿our￿Financial￿Statements￿in￿euro.￿A￿portion￿of￿our￿net￿sales￿and￿costs￿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,￿expressed￿in￿U.S. dollars￿per￿euro. Calendar year 2014 (through January 31, 2014) Period￿End Period￿Average￿1 Period￿High Period￿Low 1.35 1.35 1.37 1.35 2013 1.38 1.33 1.38 1.28 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 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 January 2014 December 2013 November 2013 October 2013 September 2013 1.37 1.35 1.38 1.36 1.36 1.34 1.38 1.35 1.35 1.31 2009 1.43 1.39 1.51 1.25 August 2013 1.34 1.32 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. 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. ASML￿ANNUAL￿REPORT￿2013 5 In￿an￿industry￿downturn,￿our￿ability￿to￿maintain￿profitability￿will￿depend￿substantially￿on￿whether￿we￿are￿able￿to￿lower our￿costs￿and￿break-even￿level,￿which￿is￿the￿level￿of￿sales￿that￿we￿must￿reach￿in￿a￿year￿to￿achieve￿positive￿net￿income. If￿sales￿decrease￿significantly￿as￿a￿result￿of￿an￿industry￿downturn￿and￿we￿are￿unable￿to￿adjust￿our￿costs￿over￿the￿same period,￿our￿net￿income￿may￿decline￿significantly￿or￿we￿may￿suffer￿losses.￿As￿we￿need￿to￿keep￿certain￿levels￿of￿inventory on￿hand￿to￿meet￿anticipated￿product￿and￿service￿demand,￿we￿may￿also￿incur￿increased￿costs￿related￿to￿inventory obsolescence￿in￿an￿industry￿downturn.￿In￿addition,￿industry￿downturns￿generally￿result￿in￿overcapacity,￿resulting￿in downward￿pressure￿on￿sales￿prices￿and￿impairment￿of￿machinery￿and￿equipment,￿which￿in￿the￿past￿has￿had,￿and￿in￿the future￿could￿have,￿a￿material￿adverse￿effect￿on￿our￿business,￿financial￿condition￿and￿results￿of￿operations. The￿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￿potential developments￿or￿market￿perceptions￿concerning￿these￿and￿related￿issues,￿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￿sales,￿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￿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￿EUV,￿Immersion￿and￿holistic￿lithography.￿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￿reason,￿we￿may￿not￿recoup￿all￿of￿our￿investments￿in￿these￿technologies￿or￿products,￿which￿could￿have￿a￿material adverse￿effect￿on￿our￿business,￿financial￿condition￿and￿results￿of￿operations. ASML￿ANNUAL￿REPORT￿2013 6 The￿success￿of￿EUV￿remains￿particularly￿dependent￿on￿light￿source￿availability￿and￿continuing￿related￿technical advances￿by￿us￿and￿our￿suppliers,￿as￿well￿as￿infrastructure￿developments￿in￿masks￿and￿photoresists,￿without￿which EUV￿tools￿cannot￿achieve￿the￿productivity￿and￿yield￿required￿to￿economically￿justify￿the￿higher￿price￿of￿these￿tools.￿A delay￿in￿the￿developments￿of￿these￿tools￿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 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￿11￿and￿Note￿19￿to￿the￿Financial Statements. We￿compete￿primarily￿with￿Nikon￿and￿to￿a￿lesser￿degree￿with￿Canon.￿Both￿Nikon￿and￿Canon￿have￿substantial￿financial resources￿and￿broad￿patent￿portfolios.￿Each￿continues￿to￿introduce￿new￿products￿with￿improved￿price￿and￿performance characteristics￿that￿compete￿directly￿with￿our￿products,￿which￿may￿cause￿a￿decline￿in￿our￿sales￿or￿a￿loss￿of￿market acceptance￿for￿our￿lithography￿systems.￿In￿addition,￿adverse￿market￿conditions,￿industry￿overcapacity￿or￿a￿decrease￿in the￿value￿of￿the￿Japanese￿yen￿in￿relation￿to￿the￿euro￿or￿the￿U.S.￿dollar,￿could￿further￿intensify￿price-based￿competition in￿those￿regions￿that￿account￿for￿the￿majority￿of￿our￿sales,￿resulting￿in￿lower￿prices￿and￿margins￿which￿could￿have￿a material￿adverse￿effect￿on￿our￿business,￿financial￿condition￿and￿results￿of￿operations. In￿addition￿to￿competitors￿in￿lithography,￿we￿may￿face￿competition￿with￿respect￿to￿alternative￿technologies￿for￿the￿non- critical￿layers￿or￿for￿all￿layers.￿If￿we￿fail￿to￿keep￿pace￿with￿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. Also,￿in￿the￿future￿the￿IC￿industry￿may￿not￿find￿it￿economically￿feasible￿to￿maintain￿the￿pace￿of￿Moore’s￿law￿through the￿use￿of￿lithography￿systems,￿￿which￿could￿result￿in￿our￿customers￿choosing￿other￿solutions￿than￿lithography￿for IC￿manufacturing.￿If￿the￿pace￿of￿Moore’s￿law￿is￿not￿maintained,￿this￿could￿also￿result￿in￿the￿IC￿industry￿utilizing￿fewer leading￿technology￿systems,￿which￿could￿result￿in￿lower￿sales￿and￿margins. 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￿may￿be￿limited￿by￿the￿production￿capacity￿of￿Zeiss.￿Zeiss is￿our￿single￿supplier￿of￿lenses,￿collectors￿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,￿the￿CO2￿lasers￿used￿in￿our￿third-generation￿(NXE:3300B)￿EUV￿systems￿are￿available from￿only￿a￿limited￿number￿of￿suppliers. ASML￿ANNUAL￿REPORT￿2013 7 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. 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￿2013,￿recognized￿sales￿to￿our￿largest￿customer accounted￿for￿EUR￿2,058.6￿million,￿or￿39.2￿percent￿of￿net￿sales,￿compared￿with￿EUR￿1,236.1￿million,￿or￿26.1￿percent￿of net￿sales,￿in￿2012.￿The￿loss￿of￿any￿significant￿customer￿or￿any￿significant￿reduction￿in￿orders￿by￿a￿significant￿customer may￿have￿a￿material￿adverse￿effect￿on￿our￿business,￿financial￿condition￿and￿results￿of￿operations. Additionally,￿as￿a￿result￿of￿our￿limited￿number￿of￿customers,￿credit￿risk￿on￿our￿receivables￿is￿concentrated.￿Our￿three largest￿customers￿(based￿on￿net￿sales)￿accounted￿for￿EUR￿861.4￿million,￿or￿73.3￿percent￿of￿accounts￿receivable￿and finance￿receivables￿at￿December￿31,￿2013,￿compared￿with￿EUR￿535.1￿million,￿or￿58.9￿percent￿at￿December￿31,￿2012. 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￿(157￿units￿in 2013￿and￿170￿units￿in￿2012),￿with￿an￿ASP￿per￿system￿in￿2013￿of￿EUR￿25.4￿million￿(EUR￿27.4￿million￿for￿new￿systems￿and EUR￿6.9￿million￿for￿used￿systems)￿and￿an￿ASP￿per￿system￿in￿2012￿of￿EUR￿22.4￿million￿(EUR￿24.8￿million￿for￿new￿systems and￿EUR￿7.6￿million￿for￿used￿systems).￿As￿a￿result,￿the￿timing￿of￿recognition￿of￿revenue￿for￿a￿particular￿reporting￿period from￿a￿small￿number￿of￿system￿sales￿may￿have￿a￿material￿adverse￿effect￿on￿our￿business,￿financial￿condition￿and￿results of￿operations￿in￿that￿period.￿Specifically,￿the￿failure￿to￿receive￿anticipated￿orders,￿or￿delays￿in￿shipments￿near￿the￿end￿of a￿particular￿reporting￿period,￿due,￿for￿example,￿to: • A￿downturn￿in￿the￿highly￿cyclical￿semiconductor￿industry; • Unanticipated￿shipment￿rescheduling; • Cancellation￿or￿order￿push-back￿by￿customers; • Unexpected￿manufacturing￿difficulties;￿or • 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￿each￿new￿generation￿of￿our￿products￿as￿a￿result￿of increasing￿technological￿complexity.￿In￿particular,￿the￿development￿of￿an￿EUV￿volume￿production￿system￿is￿dependent on,￿and￿subject￿to￿the￿successful￿implementation￿of,￿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￿2013 8 As Lithography Technologies become More Complex, our R&D Programs become More Risky and More Expensive Our￿lithography￿systems￿have￿become￿increasingly￿complex,￿and￿accordingly,￿the￿costs￿to￿develop￿new￿products￿and technologies￿have￿increased,￿and￿we￿expect￿such￿costs￿to￿continue￿to￿increase.￿This￿increase￿in￿costs￿requires￿us￿to continue￿obtaining￿sufficient￿funding￿for￿our￿R&D￿programs.￿For￿example,￿we￿obtained￿funding￿for￿our￿450mm￿and￿EUV R&D￿programs￿through￿the￿CCIP.￿We￿may￿however,￿be￿unable￿to￿obtain￿this￿type￿of￿funding￿from￿customers￿in￿the￿future, in￿which￿case￿we￿may￿be￿unable￿to￿fund￿R&D￿investments￿necessary￿to￿maintain￿our￿technological￿leadership.￿The increasing￿cost￿of￿R&D￿programs￿for￿new￿technologies￿also￿increases￿the￿risk￿that￿a￿new￿product￿or￿technology￿may￿not be￿successful,￿which￿could￿result￿in￿significant￿costs￿not￿being￿recovered. Furthermore,￿as￿the￿innovation￿cycle￿becomes￿more￿complex,￿developing￿new￿technology￿requires￿increased￿R&D investments￿by￿our￿suppliers￿in￿order￿to￿meet￿the￿technology￿demands￿of￿us￿and￿our￿customers.￿Our￿suppliers￿may￿not have,￿or￿may￿not￿be￿willing￿to￿invest,￿the￿resources￿necessary￿to￿continue￿the￿development￿of￿the￿new￿technologies￿to the￿extent￿such￿investments￿are￿necessary,￿which￿may￿result￿in￿our￿contributing￿funds￿to￿such￿R&D￿programs￿or￿limiting the￿R&D￿programs￿we￿undertake. 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￿and￿Nikon￿agreed￿to￿settle￿all￿pending￿worldwide patent￿litigation￿between￿the￿companies.￿The￿settlement￿included￿an￿exchange￿of￿releases,￿a￿patent￿Cross-License agreement￿related￿to￿lithography￿equipment￿used￿to￿manufacture￿semiconductor￿devices￿and￿payments￿to￿Nikon￿by ASML.￿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 resulting￿from￿claims￿for￿patent￿infringement￿occurring￿during￿the￿Cross-License￿Transition￿Period￿are￿limited￿to￿three percent￿of￿the￿net￿sales￿price￿of￿products￿found￿to￿infringe￿valid￿and￿enforceable￿patents. ASML￿ANNUAL￿REPORT￿2013 9 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: • Potentially￿adverse￿tax￿consequences; • Unfavorable￿political￿or￿economic￿environments; • Unexpected￿legal￿or￿regulatory￿changes; • An￿inability￿to￿effectively￿protect￿intellectual￿property;￿and • Adverse￿effects￿of￿foreign￿currency￿fluctuations. If￿we￿are￿unable￿to￿manage￿successfully￿the￿risks￿inherent￿in￿our￿international￿activities,￿our￿business,￿financial￿condition and￿results￿of￿operations￿could￿be￿materially￿and￿adversely￿affected. In￿particular,￿42.4￿percent￿of￿our￿2013￿net￿sales￿and￿31.3￿percent￿of￿our￿2012￿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. In￿addition,￿the￿installation￿and￿servicing￿of￿our￿products￿requires￿us￿to￿travel￿to￿our￿customers￿premises.￿Natural disasters￿could￿affect￿our￿ability￿to￿do￿so.￿For￿example,￿the￿Japanese￿earthquake￿in￿2011￿resulted￿in￿the￿disruption￿of our￿installation￿and￿servicing￿of￿systems￿for￿our￿customers￿in￿Japan.￿Natural￿disasters￿in￿areas￿where￿our￿customers￿are located￿could￿prevent￿or￿disrupt￿the￿installation￿or￿servicing￿of￿our￿systems. 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￿and￿in￿San￿Diego,￿California,￿both￿in￿the￿United States,￿in￿Pyongtaek-City,￿South-Korea￿and￿in￿Linkou,￿Taiwan.￿These￿facilities￿may￿be￿subject￿to￿disruption￿for￿a￿variety of￿reasons,￿including￿work￿stoppages,￿fire,￿energy￿shortages,￿flooding￿or￿other￿natural￿disasters.￿We￿cannot￿ensure that￿alternative￿production￿capacity￿would￿be￿available￿if￿a￿major￿disruption￿were￿to￿occur￿or￿that,￿if￿such￿capacity was￿available,￿it￿could￿be￿obtained￿on￿favorable￿terms.￿Such￿a￿disruption￿could￿have￿a￿material￿adverse￿effect￿on￿our business,￿financial￿condition￿and￿results￿of￿operations.￿In￿addition,￿some￿of￿our￿key￿suppliers,￿including￿Zeiss,￿have￿a limited￿number￿of￿manufacturing￿facilities,￿the￿disruption￿of￿which￿may￿significantly￿and￿adversely￿affect￿our￿production capacity. 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￿Financial￿Statements￿are￿expressed￿in￿euros.￿Accordingly,￿our￿results￿of￿operations￿and￿assets￿and￿liabilities are￿exposed￿to￿fluctuations￿in￿exchange￿rates￿between￿the￿euro￿and￿such￿other￿currencies.￿In￿general,￿our￿customers generally￿run￿their￿businesses￿in￿U.S.￿dollars￿and￿therefore￿a￿weakening￿of￿the￿U.S.￿dollar￿against￿the￿euro￿might￿impact the￿ability￿or￿desire￿of￿our￿customers￿to￿purchase￿our￿products. ASML￿ANNUAL￿REPORT￿2013 10 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. Changes￿in￿currency￿exchange￿rates￿also￿affect￿the￿carrying￿value￿of￿assets￿on￿our￿Consolidated￿Balance￿Sheets,￿which depending￿on￿the￿balance￿sheet￿classification￿of￿the￿relevant￿asset,￿can￿result￿in￿losses￿on￿our￿Consolidated￿Balance Sheets.￿In￿particular,￿the￿Cymer￿acquisition￿has￿significantly￿increased￿our￿U.S.￿dollar￿denominated￿assets,￿and￿as￿a result,￿we￿are￿more￿exposed￿to￿fluctuations￿in￿the￿U.S.￿dollar. 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. In￿May￿2013,￿we￿acquired￿all￿of￿the￿outstanding￿shares￿of￿Cymer,￿a￿light￿source￿supplier.￿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￿operations￿and￿employees￿with￿those￿of￿Cymer￿in￿a￿timely￿and￿efficient￿manner,￿and￿if￿we￿fail￿to￿do so,￿this￿may￿result￿in￿a￿delay￿in￿the￿development￿of￿EUV.￿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. In￿addition,￿in￿connection￿with￿acquisitions,￿anti-trust￿regulators￿may￿impose￿conditions￿on￿us,￿including￿requirements to￿divest￿assets￿or￿other￿conditions￿that￿could￿make￿it￿difficult￿for￿us￿to￿integrate￿the￿businesses￿that￿we￿acquire.￿For example,￿in￿connection￿with￿the￿Cymer￿Acquisition￿we￿have￿agreed￿to￿maintain￿Cymer￿Light￿Sources￿as￿a￿stand-alone business￿which￿will￿make￿it￿more￿difficult￿to￿integrate￿Cymer￿Light￿Sources￿into￿our￿business￿operations. 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￿R&D￿programs￿associated￿with￿the￿commitments made￿under￿the￿NRE￿funding￿arrangements￿signed￿in￿relation￿to￿the￿CCIP,￿require￿a￿significant￿number￿of￿qualified employees.￿If￿we￿are￿unable￿to￿attract￿sufficient￿numbers￿of￿qualified￿employees,￿this￿could￿affect￿our￿ability￿to￿conduct our￿research￿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 and￿suppliers￿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". ASML￿ANNUAL￿REPORT￿2013 11 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 R&D￿programs￿and￿for￿acquisition￿opportunities￿that￿may￿arise￿from￿time￿to￿time;￿and￿by￿future￿changes￿in￿applicable income￿tax￿and￿corporate￿laws.￿Accordingly,￿the￿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. 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". Participating Customers in our Customer Co-Investment Program Together Own a Significant Amount of our Ordinary Shares In￿the￿CCIP,￿the￿Participating￿Customers,￿through￿certain￿wholly-owned￿subsidiaries,￿acquired￿15￿percent,￿5￿percent￿and 3￿percent,￿of￿our￿then￿outstanding￿shares,￿respectively￿(after￿giving￿effect￿to￿our￿Synthetic￿Share￿Buyback￿conducted￿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￿ASML's Articles￿of￿Association￿that￿would￿materially￿affect￿the￿specific￿voting￿rights￿of￿the￿Participating￿Customers￿or￿that would￿cause￿a￿significant￿change￿in￿the￿identity￿or￿nature￿of￿ASML￿or￿its￿business,￿the￿dissolution￿of￿ASML,￿and￿any merger￿or￿demerger￿which￿would￿result￿in￿a￿material￿change￿in￿the￿identity￿or￿nature￿of￿ASML￿or￿its￿business.￿When such￿exceptional￿circumstances￿occur,￿the￿Participating￿Customers,￿and￿in￿particular￿Intel￿(due￿to￿the￿percentage￿of￿our shares￿that￿Intel￿owns),￿will￿be￿able￿to￿influence￿matters￿requiring￿approval￿by￿the￿General￿Meeting￿and￿may￿vote￿their ordinary￿shares￿in￿a￿way￿with￿which￿other￿shareholders￿may￿not￿agree. 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￿CCIP￿(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￿CCIP￿could￿have￿a￿negative￿effect￿on￿our￿share￿price. See￿Item￿4.B.￿"Business￿Overview￿-￿Customer￿Co-Investment￿Program". ASML￿ANNUAL￿REPORT￿2013 12 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:￿the￿acquisition￿of￿MaskTools￿(business￿unit￿of￿MicroUnity￿Systems￿Engineering,￿Inc.)￿in￿1999, Silicon￿Valley￿Group,￿Inc.￿in￿2001,￿Brion￿Technologies,￿Inc.￿in￿2007￿and￿the￿acquisition￿of￿Wijdeven￿Motion￿Holding B.V.￿and￿Wijdeven￿Motion￿B.V.￿in￿2012.￿On￿May￿30,￿2013,￿we￿completed￿the￿acquisition￿of￿Cymer,￿Inc.￿a￿San￿Diego, California,￿the￿United￿States￿based￿light￿source￿supplier.￿See￿Note￿2￿to￿our￿Financial￿Statements￿for￿more￿information￿on the￿acquisition￿of￿Cymer. Capital￿Expenditures￿and￿Divestures Our￿capital￿expenditures￿(purchases￿of￿property,￿plant￿and￿equipment)￿for￿2013,￿2012￿and￿2011￿amounted￿to￿EUR￿210.8 million,￿EUR￿171.9￿million￿and￿EUR￿300.9￿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￿Immersion￿platform,￿(ii)￿information￿technology￿investments,￿and￿(iii)￿machinery￿and￿equipment￿for￿our￿facilities. Capital￿expenditures￿are￿primarily￿financed￿through￿cash￿provided￿by￿operating￿activities.￿See￿item￿4.D.￿"Business Overview￿-￿Property,￿Plant￿and￿Equipment"￿for￿our￿expected￿capital￿expenditures￿in￿2014. Divestures,￿mainly￿consisting￿of￿machinery￿and￿equipment,￿amounted￿to￿EUR￿2.8￿million￿for￿2013,￿EUR￿2.3￿million￿for 2012￿and￿EUR￿3.4￿million￿for￿2011.￿See￿Consolidated￿Statements￿of￿Cash￿Flows￿to￿our￿Financial￿Statements. B. Business Overview ASML￿makes￿possible￿affordable￿microelectronics￿that￿improve￿the￿quality￿of￿life.￿ASML￿invents￿and￿develops￿complex technology￿for￿high-tech￿lithography,￿metrology￿and￿software￿solutions￿for￿the￿semiconductor￿industry.￿ASML's￿guiding principle￿is￿continuing￿Moore's￿Law￿towards￿ever￿smaller,￿cheaper,￿more￿powerful￿and￿energy-efficient￿semiconductors. Our￿success￿is￿based￿on￿three￿pillars:￿technology￿leadership￿combined￿with￿customer￿and￿supplier￿intimacy,￿highly efficient￿processes￿and￿entrepreneurial￿people.￿We￿are￿a￿multinational￿company￿with￿over￿70￿locations￿in￿16￿countries, headquartered￿in￿Veldhoven,￿the￿Netherlands.￿As￿of￿December￿31,￿2013,￿we￿employed￿10,360￿payroll￿employees￿(2012: 8,497)￿and￿2,865￿temporary￿employees￿(2012:￿2,139),￿measured￿in￿FTEs.￿ASML￿is￿traded￿on￿NYSE￿Euronext￿Amsterdam and￿NASDAQ￿under￿the￿symbol￿ASML. 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￿throughput,￿imaging￿and￿overlay￿by￿introducing￿advanced￿technology￿based modular￿platforms,￿advanced￿applications￿and￿holistic￿lithography￿solutions￿outside￿the￿traditional￿lithography business,￿each￿resulting￿in￿lower￿costs￿or￿higher￿value￿per￿product￿for￿our￿customers; • Providing￿customer￿services￿that￿ensure￿rapid,￿efficient￿installation,￿superior￿support￿and￿training￿to￿optimize manufacturing￿processes￿of￿our￿customers; • 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￿throughput, 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. ASML￿ANNUAL￿REPORT￿2013 13 Market￿and￿Technology￿Overview The￿chip-making￿business￿is￿focused￿on￿"shrink"￿or￿reducing￿the￿size￿of￿chip￿designs￿as￿a￿driver￿of￿cost￿reduction￿and increased￿functionality.￿The￿worldwide￿electronics￿and￿computer￿industries￿have￿experienced￿significant￿growth￿since the￿commercialization￿of￿ICs￿in￿the￿1960s,￿largely￿due￿to￿the￿continuous￿reduction￿of￿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￿higher￿throughput￿levels￿and￿with reduced￿power￿consumption.￿We￿believe￿that￿these￿long-term￿trends￿will￿continue￿for￿the￿foreseeable￿future￿and￿will be￿accompanied￿by￿a￿continuing￿demand,￿subject￿to￿ongoing￿cyclical￿variation,￿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. Customer￿Roadmaps The￿four￿major￿customer￿sectors￿to￿which￿we￿sell￿our￿products￿are￿Integrated￿Device￿Manufacturers￿("IDM")￿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￿imaging￿at￿a￿resolution beyond￿10￿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￿with￿g-line￿and￿i-line￿light￿sources￿for￿processing￿wafers￿up￿to￿150￿mm￿in￿diameter￿and￿are￿employed￿in manufacturing￿environments￿and￿in￿special￿applications￿for￿which￿design￿resolutions￿of￿0.5￿microns￿and￿above￿are required. Our￿PAS￿5500￿product￿family￿comprises￿advanced￿wafer￿steppers￿and￿Step￿&￿Scan￿systems￿equipped￿with￿i-line,￿KrF and￿ArF￿light￿sources￿for￿processing￿wafers￿up￿to￿200￿mm￿in￿diameter￿and￿are￿employed￿in￿volume￿manufacturing￿to achieve￿design￿nodes￿requiring￿imaging￿at￿a￿resolution￿down￿to￿90￿nm. We￿offer￿TWINSCAN￿systems,￿equipped￿with￿i-line,￿KrF￿and￿ArF￿light￿sources￿for￿processing￿wafers￿up￿to￿300￿mm￿in diameter￿for￿manufacturing￿environments￿for￿which￿imaging￿at￿a￿resolution￿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￿38￿nm￿and￿beyond￿with￿multiple￿patterning techniques. 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.￿With￿a￿TWINSCAN￿system,￿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. ASML￿ANNUAL￿REPORT￿2013 14 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. NXE￿is￿based￿on￿a￿new￿platform￿utilizing￿the￿concepts￿of￿the￿NXT￿platform.￿NXE￿extends￿the￿industry￿proven￿modularity of￿our￿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￿13￿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￿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￿predominant￿lithography￿technology￿for￿the￿coming￿years.￿The￿success￿of￿EUV￿remains￿particularly￿dependent￿on light￿source￿(laser)￿availability￿and￿on￿maintaining￿EUV-related￿technical￿advances￿by￿us￿and￿our￿suppliers,￿as￿well￿as infrastructure￿developments￿in￿masks￿and￿photoresists.￿In￿order￿to￿accelerate￿the￿availability￿and￿integration￿of￿the light￿source￿for￿EUV￿in￿2013￿we￿acquired￿Cymer,￿the￿industry￿leading￿supplier￿of￿laser￿light￿sources￿for￿lithography applications. Product￿Development 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 semiconductor￿scanner￿performance,￿provide￿a￿faster￿start￿to￿chip￿production￿and￿achieve￿better￿imaging￿at￿higher resolutions.￿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. 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"). We￿have￿been￿developing￿YieldStar￿for￿overlay￿and￿CD￿measurements￿by￿using￿scatterometry￿technology.￿YieldStar scatterometry￿provides￿high￿overlay￿and￿low￿cost￿wafer￿metrology￿data￿that￿can￿be￿used￿for￿further￿improving￿the￿NXT/ NXE￿performance. In￿2012,￿ASML￿began￿shipment￿of￿the￿third￿generation￿YieldStar￿Metrology￿system,￿the￿S200C,￿which￿featured￿higher throughput￿and￿measurement￿overlay￿to￿support￿tighter￿on￿product￿wafer￿overlay￿and￿focus￿control￿performance￿of￿the NXT:19X0￿systems.￿In￿2013,￿we￿completed￿shipment￿of￿our￿100th￿YieldStar￿metrology￿system. We￿have￿developed￿different￿immersion￿systems￿for￿different￿customer￿needs.￿The￿TWINSCAN￿NXT￿platform￿enables next￿generations￿of￿semiconductors￿through￿the￿so-called￿DPT￿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￿2013,￿we￿shipped￿our￿first￿five￿NXT:1970Ci￿systems,￿which￿offer￿overlay￿below￿2￿nm,￿focus￿control￿of￿less than￿20￿nm￿and￿throughput￿of￿more￿than￿250￿wafers￿per￿hour.￿Approximately￿250￿NXT:1950i￿and￿NXT:1960Bi￿systems are￿currently￿in￿use￿by￿our￿customers,￿which￿are￿field-upgradeable￿to￿the￿same￿performance￿level￿as￿our￿NXT:1970Ci system. In￿2010,￿we￿achieved￿a￿major￿milestone￿with￿EUV￿lithography￿when￿we￿shipped￿our￿first￿NXE:3100.￿The￿NXE:3100 combined￿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.￿Through￿2013,￿our￿NXE:3100￿pre-production￿systems￿exposed￿a￿cumulative￿total￿of￿more￿than￿44,000￿wafers￿at customers￿sites,￿enabling￿successful￿recipe￿developments￿for￿the￿sub￿14￿nm￿Logic￿and￿22￿nm￿DRAM￿nodes. ASML￿ANNUAL￿REPORT￿2013 15 The￿successor￿of￿the￿NXE:3100,￿the￿NXE:3300B￿combines￿a￿wavelength￿of￿13.5￿nm￿and￿an￿optical￿system￿with￿a NA￿of￿0.33￿to￿provide￿imaging￿at￿a￿resolution￿of￿22￿nm.￿The￿enhancements￿of￿the￿NXE:3300B￿enable￿the￿improved performance,￿in￿the￿same￿manner￿that￿upgrades￿to￿the￿NXT￿platform￿improve￿its￿productivity.￿In￿2013,￿the￿first￿of￿our third-generation￿EUV￿scanners￿has￿been￿recognized￿in￿sales.￿As￿per￿year￿end￿2013,￿the￿second￿and￿third￿NXE:3300B systems￿are￿being￿installed￿at￿customer￿sites. ASML￿Lithography￿Product￿Portfolio￿of￿Step￿&￿Scan￿Systems System PAS 5500 SYSTEMS1,2 PAS￿5500/4X0 PAS￿5500/750 PAS￿5500/850 PAS￿5500/1150 TWINSCAN SYSTEMS2 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 Wavelength Light source Numerical aperture 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 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 i-line KrF KrF ArF i-line i-line KrF KrF ArF ArF ArF ArF ArF EUV EUV 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 1 2 This￿table￿does￿not￿include￿older￿(including￿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). 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. 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￿sources￿and￿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￿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￿and￿training,￿logistics, refurbishment,￿technology,￿application￿development￿and￿also￿produces￿all￿YieldStar￿systems.￿ACE￿also￿enables￿sourcing of￿selected￿equipment￿modules,￿components￿and￿services￿in￿the￿region.￿Finally,￿ACE￿is￿also￿used￿as￿a￿training￿center￿to develop￿worldwide￿talent￿for￿our￿workforce. Furthermore,￿as￿a￿consequence￿of￿the￿acquisition￿of￿Cymer,￿we￿are￿now￿able￿to￿offer￿our￿customers￿OnPulse contracts.￿These￿contracts￿offer￿a￿comprehensive￿approach￿to￿enhancing￿light￿source￿productivity,￿offering￿our customers￿predictable￿light￿source￿running￿costs￿that￿scale￿directly￿with￿pulse￿utilization.￿We￿provide￿our￿OnPulse contract￿customers￿on-site￿support￿from￿certified￿service￿engineers￿and￿continuous￿real-time￿light￿source￿monitoring. Replacement￿parts￿and￿support￿are￿covered￿under￿the￿OnPulse￿contract,￿which￿facilitates￿cost￿savings￿for￿our customers￿as￿well￿as￿simplified￿order￿and￿asset￿management.￿We￿believe￿that￿our￿OnPulse￿contracts￿offer￿our customers￿many￿compelling￿benefits,￿and￿this￿product￿has￿been￿well-received￿by￿our￿customers. Customers￿and￿Geographic￿Regions￿ In￿2013,￿net￿sales￿to￿our￿largest￿customer￿accounted￿for￿EUR￿2,058.6￿million,￿or￿39.2￿percent,￿of￿net￿sales￿(2012:￿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).￿We￿expect￿that￿the 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￿2013,￿we￿derived￿82.5￿percent￿of￿net￿sales￿from￿Asia,￿13.7￿percent￿from￿the￿United￿States￿and￿3.8￿percent￿from Europe￿(2012:￿Asia:￿70.7￿percent;￿US:￿23.9￿percent￿and￿Europe:￿5.4￿percent;￿2011:￿Asia:￿66.5￿percent;￿US:￿24.6￿percent and￿Europe:￿8.9￿percent).￿See￿Note￿21￿to￿our￿Financial￿Statements. ASML￿ANNUAL￿REPORT￿2013 16 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￿and￿sources,￿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￿complete￿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￿and￿in￿San￿Diego,￿California, both￿the￿United￿States,￿in￿Pyongtaek,￿South￿Korea￿and￿in￿Linkou,￿Taiwan.￿We￿procure￿stepper,￿source￿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￿sourcing￿of￿products,￿where￿possible￿or￿required. Value￿sourcing￿is￿intended￿to￿align￿the￿performance￿of￿our￿suppliers￿with￿our￿requirements￿on￿quality,￿logistics, technology￿and￿total￿costs. Zeiss￿is￿our￿single￿supplier￿of￿lenses,￿collectors￿and￿other￿critical￿optical￿components.￿In￿2013,￿27.4￿percent￿of￿our aggregate￿cost￿of￿sales￿was￿purchased￿from￿Zeiss￿(2012:￿28.0￿percent;￿2011:￿28.7￿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￿and￿of collectors￿for￿our￿EUV￿sources.￿The￿expansion￿of￿this￿production￿capacity￿may￿require￿significant￿lead-time.￿From￿time to￿time,￿the￿number￿of￿systems￿we￿are￿able￿to￿produce￿may￿be￿limited￿by￿the￿capacity￿of￿Zeiss￿to￿provide￿us￿with￿lenses, collectors￿and￿other￿critical￿optical￿components.￿In￿2013￿our￿production￿was￿not￿limited￿by￿the￿deliveries￿from￿Zeiss. Our￿relationship￿with￿Zeiss￿is￿structured￿as￿a￿strategic￿alliance￿pursuant￿to￿several￿agreements￿executed￿in￿1997￿and subsequent￿years.￿These￿agreements￿define￿a￿framework￿in￿all￿areas￿of￿our￿business￿relationship.￿The￿partnership between￿ASML￿and￿Zeiss￿is￿focused￿on￿continuous￿improvement￿of￿operational￿excellence. Pursuant￿to￿these￿agreements,￿ASML￿and￿Zeiss￿have￿agreed￿to￿continue￿their￿strategic￿alliance￿until￿either￿party provides￿at￿least￿three￿years￿notice￿of￿its￿intent￿to￿terminate. In￿addition￿to￿Zeiss,￿we￿also￿rely￿on￿other￿outside￿vendors￿for￿the￿components￿and￿subassemblies￿used￿in￿our￿systems and￿light￿sources,￿each￿of￿which￿is￿obtained￿from￿a￿limited￿number￿of￿suppliers. See￿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￿our￿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.￿Furthermore￿in￿other￿facilities￿outside￿the￿Netherlands,￿the￿applicable￿local￿labor￿laws￿and regulations￿provide￿sufficient￿flexibility.￿Both￿models￿reinforce￿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￿our￿customers. ASML￿ANNUAL￿REPORT￿2013 17 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￿Veldhoven,￿the￿Netherlands,￿in￿Wilton, Connecticut,￿in￿San￿Diego,￿California,￿both￿in￿the￿United￿States,￿in￿Pyongtaek-City,￿South-Korea￿and￿in￿Linkou,￿Taiwan. 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.￿During￿2013,￿together￿with￿imec￿(an￿independent research￿partner),￿we￿announced￿the￿establishment￿of￿an￿advanced￿patterning￿center￿located￿at￿the￿imec￿campus￿in Leuven,￿Belgium.￿Together￿we￿plan￿to￿tackle￿upcoming￿scaling￿challenges￿due￿to￿the￿chip￿industry's￿move￿towards single￿digit￿nanometer￿dimensions.￿Furthermore￿we￿plan￿to￿establish￿an￿Institute￿for￿Nanolithography￿in￿Amsterdam together￿with￿FOM/NWO￿and￿UvA/VU.￿This￿institute￿will￿conduct￿fundamental￿and￿applied￿research￿in￿areas￿that￿are￿key to￿unlocking￿innovation￿in￿the￿global￿semiconductor￿industry. We￿apply￿for￿subsidy￿payments￿in￿connection￿with￿specific￿development￿projects￿under￿programs￿sponsored￿by￿the Dutch￿government,￿the￿European￿Union￿and￿the￿Taiwanese￿government.￿These￿direct￿government￿grants￿are￿designed to￿stimulate￿high-risk￿research￿for￿the￿medium￿and￿long￿term￿future.￿R&D￿costs￿include￿credits￿for￿an￿amount￿of￿EUR 16.0￿million,￿EUR￿17.9￿million￿and￿EUR￿25.1￿million￿in￿2013,￿2012￿and￿2011￿respectively.￿R&D￿credits￿relate￿to￿worldwide (inter-)governmental￿funding￿for￿certain￿strategic￿development￿programs.￿The￿decrease￿in￿R&D￿credits￿is￿the￿result￿of￿a change￿in￿government￿programs￿from￿subsidy￿payments￿to￿fiscal￿incentives.￿These￿incentives￿lead￿to￿tax￿deductions￿in mainly￿Dutch￿and￿United￿States￿tax￿jurisdictions. Our￿R&D￿efforts￿have￿led￿to￿immersion￿technology.￿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.￿The￿TWINSCAN￿NXT￿platform￿enables next￿generations￿of￿semiconductors￿through￿the￿so-called￿DPT￿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￿2013,￿we￿shipped￿our￿first￿five￿NXT:1970Ci￿systems,￿which￿offer￿overlay￿below￿2￿nm,￿focus￿control￿of￿less than￿20￿nm￿and￿throughput￿of￿more￿than￿250￿wafers￿per￿hour.￿Approximately￿250￿NXT:1950i￿and￿NXT:1960Bi￿systems are￿currently￿in￿use￿by￿our￿customers,￿which￿are￿field-upgradeable￿to￿the￿same￿performance￿level￿as￿our￿NXT:1970Ci system. In￿2010,￿we￿achieved￿a￿major￿milestone￿with￿EUV￿lithography￿when￿we￿shipped￿our￿first￿NXE:3100.￿The￿NXE:3100 combined￿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.￿Through￿2013,￿our￿NXE:3100￿pre-production￿systems￿exposed￿a￿cumulative￿total￿of￿more￿than￿44,000￿wafers￿at customers￿sites,￿enabling￿successful￿recipe￿developments￿for￿the￿sub￿14￿nm￿Logic￿and￿22￿nm￿DRAM￿nodes. The￿successor￿of￿the￿NXE:3100,￿the￿NXE:3300B￿combines￿a￿wavelength￿of￿13.5￿nm￿and￿an￿optical￿system￿with￿a NA￿of￿0.33￿to￿provide￿imaging￿at￿a￿resolution￿of￿22￿nm.￿The￿enhancements￿of￿the￿NXE:3300B￿enable￿the￿improved performance,￿in￿the￿same￿manner￿that￿upgrades￿to￿the￿NXT￿platform￿improve￿its￿productivity.￿In￿2013,￿the￿first￿of￿our third-generation￿EUV￿scanners￿has￿been￿recognized￿in￿sales.￿As￿per￿year￿end￿2013,￿the￿second￿and￿third￿NXE:3300B systems￿are￿being￿installed￿at￿customer￿sites. 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 semiconductor￿scanner￿performance,￿provide￿a￿faster￿start￿to￿chip￿production￿and￿achieve￿better￿imaging￿at￿higher resolutions.￿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. ASML￿ANNUAL￿REPORT￿2013 18 Customer Co-Investment Program On￿July￿9,￿2012,￿we￿announced￿our￿CCIP￿to￿accelerate￿our￿development￿of￿EUV￿technology￿beyond￿the￿current generation￿and￿our￿development￿of￿future￿450mm￿silicon￿wafer￿technology.￿The￿Participating￿Customers￿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￿CCIP￿consist￿of￿two￿funding￿projects: a￿450mm￿technology￿development￿project￿and￿a￿next-generation￿EUV￿development￿project.￿ASML￿has￿entered￿into￿NRE Funding￿Agreements￿with￿the￿Participating￿Customers. See￿Item￿5.A.￿"Operating￿Results￿-￿Results￿of￿Operations￿2013￿Compared￿with￿2012,￿Other￿Income". In￿addition,￿the￿Participating￿Customers￿also￿agreed￿to￿invest￿in￿ordinary￿shares￿equal￿to￿an￿aggregate￿for￿all Participating￿Customers￿of￿23￿percent￿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". Development 450mm silicon wafer technology In￿November￿2013,￿following￿our￿customers’￿decision,￿ASML￿decided￿to￿pause￿the￿development￿of￿450mm￿lithography systems￿until￿customer￿demand￿and￿the￿timing￿related￿to￿such￿demand￿is￿clear.￿We￿believe￿that￿our￿450mm development￿activities￿can￿be￿restarted￿if￿and￿when￿the￿industry￿demands￿the￿introduction￿of￿450mm.￿Since￿450mm requires￿both￿generic￿developments￿and￿wafer￿size-specific￿developments,￿many￿of￿our￿employees￿involved￿in￿the 450mm￿project￿are￿doing￿work￿that￿is￿just￿as￿relevant￿for￿future￿DUV￿and￿EUV￿platforms.￿The￿teams￿and￿people￿have therefore￿been￿reassigned￿to￿different￿projects. Under￿our￿CCIP,￿we￿are￿party￿to￿a￿450mm￿NRE￿Funding￿Agreement￿with￿Intel￿for￿a￿total￿NRE￿funding￿commitment￿of EUR￿553￿million.￿We￿are￿currently￿in￿discussions￿with￿Intel￿to￿determine￿appropriate￿projects￿to￿which￿to￿apply￿the 450mm￿NRE￿funding. Under￿the￿CCIP,￿we￿are￿also￿party￿to￿EUV￿NRE￿agreements￿with￿Intel￿(total￿funding￿of￿EUR￿276￿million),￿TSMC￿(total funding￿of￿EUR￿276￿million)￿and￿Samsung￿(total￿funding￿of￿EUR￿276￿million),￿all￿of￿which￿funding￿is￿being￿used￿for￿EUV projects. 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￿2004,￿the￿Nikon￿Cross-License￿Agreement￿was￿signed.￿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,￿during￿the￿Cross-License￿Transition￿Period,￿not￿to bring￿suit￿for￿claims￿related￿to￿infringement￿of￿patents￿issued￿and￿not￿perpetually￿licensed.￿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￿resulting￿from￿claims￿for￿patent infringement￿occurring￿during￿the￿Cross-License￿Transition￿Period￿are￿limited￿to￿three￿percent￿of￿the￿net￿sales￿price￿of products￿found￿to￿infringe￿valid￿and￿enforceable￿patents. In￿2007,￿ASML￿and￿Canon￿signed￿the￿Canon￿Cross-License￿Agreement,￿used￿to￿manufacture￿ICs.￿The￿Canon￿Cross- License￿Agreement￿ends￿on￿December￿31,￿2016. 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." ASML￿ANNUAL￿REPORT￿2013 19 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￿for￿lithography￿systems￿and￿the￿investments￿required￿to￿be￿a￿significant￿competitor￿in￿this market￿segment￿has￿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￿regulations￿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. 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￿Veldhoven,￿the￿Netherlands,￿in￿Wilton,￿Connecticut,￿in￿San￿Diego,￿California,￿both￿in￿the￿United States,￿in￿Pyongtaek-City,￿South-Korea￿and￿in￿Linkou,￿Taiwan.￿The￿book￿value￿of￿land,￿buildings￿and￿constructions owned￿amounted￿to￿EUR￿797.5￿million￿as￿of￿December￿31,￿2013￿compared￿with￿EUR￿659.8￿million￿as￿of￿December￿31, 2012.￿See￿Note￿12￿to￿our￿Financial￿Statements. Subject￿to￿market￿conditions,￿we￿expect￿that￿our￿capital￿expenditures￿(purchases￿of￿property,￿plant￿and￿equipment)￿in 2014￿will￿be￿about￿EUR￿480￿million￿(2013:￿EUR￿210.8￿million).￿These￿expenditures￿will￿mainly￿consist￿of￿investments used￿for￿the￿further￿expansion￿of￿our￿EUV￿production￿facilities￿enabling￿us￿to￿meet￿future￿demand￿for￿EUV￿systems￿and of￿investments￿in￿our￿other￿strategic￿programs￿(e.g.￿Immersion).￿We￿expect￿to￿finance￿these￿capital￿expenditures￿through cash￿generated￿by￿operations￿and￿cash￿and￿cash￿equivalents,￿as￿well￿as￿NRE￿funding. 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￿65￿thousand￿square￿meter￿of￿office￿space￿and￿42 thousand￿square￿meters￿of￿buildings￿used￿for￿manufacturing￿and￿R&D￿activities￿and￿24￿thousand￿square￿meters￿of warehouses.￿Our￿facilities￿in￿Veldhoven,￿the￿Netherlands￿are￿partly￿owned￿and￿partly￿leased￿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￿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￿5￿thousand￿square￿meter￿office￿building￿in￿Chandler,￿Arizona.￿We￿maintain lithography￿research,￿development￿and￿manufacturing￿operations￿in￿a￿28￿thousand￿square￿meter￿facility￿in￿Wilton, Connecticut,￿and￿a￿5￿thousand￿square￿meter￿facility￿in￿Santa￿Clara,￿California.￿As￿a￿result￿of￿the￿acquisition￿of￿Cymer, we￿acquired￿various￿facilities,￿mainly￿located￿in￿San￿Diego,￿California.￿Cymer’s￿San￿Diego￿facilities￿include￿44￿thousand square￿meters￿of￿buildings￿used￿for￿manufacturing,￿R&D￿activities,￿warehousing￿and￿office￿space. ASML￿ANNUAL￿REPORT￿2013 20 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.￿As￿a￿result￿of￿the￿Cymer￿acquisition we￿acquired￿a￿manufacturing￿facility￿in￿Pyongtaek-city,￿South￿Korea￿of￿3￿thousand￿square￿meters￿mainly￿used￿for refurbishment￿activities￿of￿light￿sources.￿Additionally,￿Cymer￿leases￿various￿smaller￿locations￿accross￿Asia￿which￿are mainly￿used￿for￿local￿sales￿and￿service￿activities. Item 4A Unresolved Staff Comments Not￿applicable. Item 5 Operating and Financial Review and Prospects   In￿the￿Executive￿Summary￿as￿included￿below,￿we￿provide￿an￿update￿of￿the￿Semiconductor￿Equipment￿Industry,￿followed by￿a￿discussion￿of￿our￿Business￿Strategy￿and￿an￿explanation￿of￿our￿Operating￿Results￿and￿Liquidity￿and￿Capital Resources.￿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￿included￿in￿Item 18￿"Financial￿Statements". Executive Summary Introduction ASML￿makes￿possible￿affordable￿microelectronics￿that￿improve￿the￿quality￿of￿life.￿ASML￿invents￿and￿develops￿complex technology￿for￿high-tech￿lithography,￿metrology￿and￿software￿solutions￿for￿the￿semiconductor￿industry.￿ASML's￿guiding principle￿is￿continuing￿Moore's￿Law￿towards￿ever￿smaller,￿cheaper,￿more￿powerful￿and￿energy-efficient￿semiconductors. Our￿success￿is￿based￿on￿three￿pillars:￿technology￿leadership￿combined￿with￿customer￿and￿supplier￿intimacy,￿highly efficient￿processes￿and￿entrepreneurial￿people.￿We￿are￿a￿multinational￿company￿with￿over￿70￿locations￿in￿16￿countries, headquartered￿in￿Veldhoven,￿the￿Netherlands.￿As￿of￿December￿31,￿2013,￿we￿employed￿10,360￿payroll￿employees￿(2012: 8,497)￿and￿2,865￿temporary￿employees￿(2012:￿2,139),￿measured￿in￿FTEs.￿ASML￿is￿traded￿on￿NYSE￿Euronext￿Amsterdam and￿NASDAQ￿under￿the￿symbol￿ASML. 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￿suppliers:￿ASML,￿Nikon,￿and￿(to￿a￿lesser￿degree)￿Canon.￿In￿2013,￿ASML￿was one￿of￿the￿world’s￿leading￿providers￿of￿lithography￿equipment￿(measured￿in￿revenues￿based￿upon￿Gartner￿Dataquest fourth￿quarter￿2013￿report). ASML￿ANNUAL￿REPORT￿2013 21 Total￿lithography￿equipment￿shipped￿by￿the￿industry￿as￿a￿whole￿in￿the￿six￿years￿ended￿December￿31,￿2013,￿is￿set￿out￿in the￿following￿table: Year ended December 31 2013 1 2012 2 2011 2 2010 2 2009 2 2008 2 Total￿units￿shipped Total￿value￿(in￿millions￿USD) 238 5,641 251 6,002 376 8,225 304 6,416 128 2,485 344 5,388 1 2 Historical￿data￿and￿full-year￿2013￿estimates￿as￿reported￿by￿Gartner￿Dataquest￿in￿its￿fourth￿quarter￿2013￿report. Historical￿data￿are￿based￿on￿figures￿as￿included￿in￿the￿Gartner￿Dataquest￿fourth￿quarter￿2013￿report.￿Where￿appropriate,￿the￿estimates￿as￿included￿in the￿Gartner￿Dataquest￿reports￿in￿prior￿years￿have￿been￿updated￿based￿on￿this￿fourth￿quarter￿2013￿report. For￿the￿year￿2013,￿the￿latest￿indications￿of￿independent￿market￿analysts￿show￿a￿decrease￿in￿total￿lithography￿equipment shipped￿to￿the￿market￿by￿the￿industry￿of￿5.2￿percent￿in￿unit￿volume￿and￿6.0￿percent￿in￿value.￿In￿2013,￿the￿value￿of￿our net￿systems￿sales￿increased￿by￿5.0￿percent￿compared￿to￿2012. Business￿Strategy General 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￿2013,￿chip￿makers￿routinely￿produced￿electronic￿chip￿features￿with￿geometries￿of￿28￿nm,￿compared￿to￿typical geometries￿of￿10,000￿nm￿in￿the￿early￿1970s,￿resulting￿in￿an￿increase￿in￿the￿number￿of￿transistors￿on￿leading￿chips from￿several￿thousand￿to￿over￿two￿billion.￿This￿trend￿was￿first￿observed￿by￿Intel￿co-founder￿Gordon￿Moore￿in￿1965, and￿is￿referred￿to￿as￿"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 produce￿the￿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. Corporate Responsibility Corporate￿Responsibility￿Strategy:￿Our￿customers￿want￿lithography￿systems￿that￿produce￿more￿chips￿faster,￿using￿less energy￿and￿fewer￿natural￿resources,￿at￿a￿similar￿cost.￿Customers￿also￿want￿us,￿as￿their￿supplier,￿to￿operate￿according￿to the￿highest￿environmental,￿social￿and￿governance￿standards.￿ASML's￿corporate￿responsibility￿strategy￿is￿based￿on￿and fully￿aligned￿to￿our￿business￿strategy,￿aimed￿at￿maintaining￿and￿further￿developing￿our￿position￿as￿a￿technology￿leader￿in the￿semiconductor￿industry. In￿2013,￿we￿performed￿a￿comprehensive￿and￿structured￿materiality￿assessment￿in￿order￿to￿identify￿the￿non-financial themes￿that￿are￿most￿relevant￿to￿our￿stakeholders￿and￿for￿our￿sustained￿long-term￿business￿success. Most￿of￿the￿material￿themes￿identified￿are￿already￿included￿in￿our￿strategy￿and￿high￿on￿our￿priority￿list.￿We￿identified eight￿material￿non-financial￿themes￿validated￿by￿the￿CRSB: Innovation; • • Knowledge￿&￿intellectual￿property￿management; • Sustainable￿relationship￿with￿our￿suppliers; • Sustainable￿relationship￿with￿our￿customers; • Product￿stewardship; • Talent￿management; • Training￿&￿development;￿and • Sustainable￿relationship￿with￿our￿employees. ASML￿ANNUAL￿REPORT￿2013 22 In￿addition,￿we￿recognize￿that￿there￿are￿certain￿other￿themes￿on￿which￿our￿stakeholders￿expect￿us￿to￿act￿as￿a responsible￿corporate￿citizen.￿These￿themes￿have￿been￿labeled￿as￿responsible￿business￿themes.￿The￿outcome￿of￿the materiality￿assessment￿will￿be￿used￿in￿2014￿to￿refocus￿our￿corporate￿responsibility￿strategy. Corporate￿Responsibility￿Governance:￿Corporate￿responsibility￿is￿driven￿by￿the￿Executive￿Vice￿President￿Operations￿and Order￿Fulfillment￿Process,￿Frédéric￿J.M.￿Schneider-Maunoury,￿who￿chairs￿the￿CRSB,￿which￿supervises￿the￿execution of￿our￿corporate￿responsibility￿strategy.￿The￿CRSB￿is￿made￿up￿of￿senior￿management￿representatives￿from￿all￿sectors within￿ASML.￿It￿is￿the￿mission￿of￿the￿CRSB￿to￿monitor￿the￿realization￿of￿our￿corporate￿responsibility￿targets￿and￿KPIs, and￿to￿review￿and￿approve￿related￿policy￿changes￿and￿improvement￿activities.￿The￿CRSB￿met￿four￿times￿in￿2013. The￿meetings￿focused￿on￿reviewing￿the￿progress￿of￿ASML’s￿non-financial￿performance￿indicators￿with￿respect￿to￿our corporate￿responsibility￿targets,￿KPIs￿and￿projects. The￿Corporate￿Risk￿&￿Assurance￿department￿coordinates￿the￿day-to-day￿implementation￿of￿the￿corporate￿responsibility strategy,￿policies￿and￿improvement￿activities,￿while￿business￿owners￿have￿the￿operational￿responsibility￿to￿implement￿the corporate￿responsibility￿policies. Customer Focus Ensuring￿customers￿are￿served￿with￿the￿right￿products￿at￿the￿right￿time￿and￿supported￿by￿excellent￿service,￿is￿key￿to￿our commitment￿to￿a￿long-term￿relationship.￿With￿high-valued￿products,￿customers￿expect￿high-quality￿support￿customized to￿their￿specific￿requirements.￿This￿support￿includes￿service￿engineers,￿equipped￿with￿the￿latest￿technical￿information, to￿ensure￿the￿highest￿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. 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￿2013,￿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 with￿all￿our￿customers.￿We￿expect￿that￿customer￿concentration￿might￿increase￿because￿of￿continuing￿consolidation￿in the￿semiconductor￿manufacturing￿industry. In￿2013,￿our￿satisfaction￿ratings￿by￿customers￿surpassed￿every￿lithography￿competitor,￿according￿to￿VLSI￿Research, ASML￿ranks￿third￿in￿the￿semiconductor￿industry￿equipment￿suppliers￿and￿first￿among￿lithography￿competitors.￿Our performance￿has￿consistently￿been￿good:￿for￿eleven￿years￿in￿a￿row￿we￿have￿both￿ranked￿among￿the￿top￿5￿semiconductor industry￿suppliers￿and￿our￿ranking￿surpassed￿that￿of￿any￿of￿our￿lithography￿competitors. Technology Leadership Our￿customers￿need￿lithography￿scanners￿that￿continuously￿improve￿performance￿in￿three￿areas:￿imaging,￿throughput and￿overlay.￿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.￿In￿2013,￿our￿R&D￿investments￿(net￿of￿credits)￿amounted￿to￿EUR￿882.0￿million￿(2012:￿EUR￿589.1 million;￿2011:￿EUR￿590.3￿million).￿A￿significant￿part￿of￿our￿R&D-budget￿was￿used￿for￿R&D￿jointly￿developed￿with￿our suppliers￿and￿technology￿partners.￿Furthermore,￿in￿2013,￿we￿recognized￿Other￿Income￿in￿relation￿to￿the￿contributions made￿by￿our￿Participating￿Customers￿of￿EUR￿64.4￿million. 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￿overlay￿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￿imaging,￿overlay￿and￿throughput￿demands￿of￿our￿customers,￿we￿have￿focused￿our￿R&D￿investments on￿three￿core￿programs:￿EUV,￿Immersion￿and￿holistic￿lithography￿solutions. ASML￿ANNUAL￿REPORT￿2013 23 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.￿The￿TWINSCAN￿NXT￿platform￿enables next￿generations￿of￿semiconductors￿through￿the￿so-called￿DPT￿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￿2013,￿we￿shipped￿our￿first￿five￿NXT:1970Ci￿systems,￿which￿offer￿overlay￿below￿2￿nm,￿focus￿control￿of￿less than￿20￿nm￿and￿throughput￿of￿more￿than￿250￿wafers￿per￿hour.￿Approximately￿250￿NXT:1950i￿and￿NXT:1960Bi￿systems are￿currently￿in￿use￿by￿our￿customers,￿which￿are￿field-upgradeable￿to￿the￿same￿performance￿level￿as￿our￿NXT:1970Ci system. In￿2010,￿we￿achieved￿a￿major￿milestone￿with￿EUV￿lithography￿when￿we￿shipped￿our￿first￿NXE:3100.￿The￿NXE:3100 combined￿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.￿Through￿2013,￿our￿NXE:3100￿pre-production￿systems￿exposed￿a￿cumulative￿total￿of￿more￿than￿44,000￿wafers￿at customers￿sites,￿enabling￿successful￿recipe￿developments￿for￿the￿sub￿14￿nm￿Logic￿and￿22￿nm￿DRAM￿nodes. The￿successor￿of￿the￿NXE:3100,￿the￿NXE:3300B￿combines￿a￿wavelength￿of￿13.5￿nm￿and￿an￿optical￿system￿with￿a NA￿of￿0.33￿to￿provide￿imaging￿at￿a￿resolution￿of￿22￿nm.￿The￿enhancements￿of￿the￿NXE:3300B￿enable￿the￿improved performance,￿in￿the￿same￿manner￿that￿upgrades￿to￿the￿NXT￿platform￿improve￿its￿productivity.￿In￿2013,￿the￿first￿of￿our third-generation￿EUV￿scanners￿has￿been￿recognized￿in￿sales.￿As￿per￿year￿end￿2013,￿the￿second￿and￿third￿NXE:3300B systems￿are￿being￿installed￿at￿customer￿sites. On￿May￿30,￿2013,￿we￿concluded￿the￿acquisition￿of￿Cymer￿for￿a￿total￿consideration￿of￿EUR￿3.1￿billion￿(USD￿4.0￿billion). See￿Note￿2￿to￿the￿Financial￿Statements.￿We￿expect￿that￿the￿acquisition￿of￿Cymer￿will￿help￿us￿to￿achieve￿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.￿This￿integration￿work￿on￿our￿NXE:3300B￿scanners￿and￿light￿sources￿is￿progressing￿steadily.￿We￿remain on￿target￿to￿deliver￿systems￿with￿a￿throughput￿of￿70￿wafers￿per￿hour￿in￿2014,￿upgradeable￿to￿125￿wafers￿per￿hour￿in 2015. Furthermore,￿as￿a￿consequence￿of￿the￿acquisition￿of￿Cymer,￿we￿are￿now￿able￿to￿offer￿our￿customers￿OnPulse contracts.￿These￿contracts￿offer￿a￿comprehensive￿approach￿to￿enhancing￿light￿source￿productivity,￿offering￿our customers￿predictable￿light￿source￿running￿costs￿that￿scale￿directly￿with￿pulse￿utilization.￿We￿provide￿our￿OnPulse contract￿customers￿on-site￿support￿from￿certified￿service￿engineers￿and￿continuous￿real-time￿light￿source￿monitoring. Replacement￿parts￿and￿support￿are￿covered￿under￿the￿OnPulse￿contract,￿which￿facilitates￿cost￿savings￿for￿our customers￿as￿well￿as￿simplified￿order￿and￿asset￿management.￿We￿believe￿that￿our￿OnPulse￿contracts￿offer￿our customers￿many￿compelling￿benefits,￿and￿this￿product￿has￿been￿well-received￿by￿our￿customers. Also,￿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.￿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￿2013,￿we￿boosted￿sales￿of￿YieldStar metrology￿systems￿to￿our￿leading￿edge￿customers.￿These￿machines￿generate￿the￿data￿used￿by￿our￿holistic￿lithography products￿to￿control￿overlay,￿CD￿and￿focus￿for￿the￿most￿advanced￿process￿nodes. 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. ASML￿ANNUAL￿REPORT￿2013 24 We￿have￿a￿flexible￿labor￿model￿with￿a￿mix￿of￿fixed￿and￿flexible￿contracted￿labor￿in￿our￿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.￿Furthermore￿in￿other￿facilities￿outside￿the￿Netherlands,￿the￿applicable￿local￿labor￿laws￿and regulations￿provide￿sufficient￿flexibility.￿Both￿models￿reinforce￿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￿our￿customers. In￿view￿of￿the￿economic￿volatility￿of￿the￿semiconductor￿industry,￿we￿continue￿to￿strive￿to￿achieve￿more￿efficiencies￿in￿our operations￿by￿addressing￿our￿cost￿structure￿and￿strengthening￿our￿capability￿to￿generate￿cash. 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) 2013 EUR %1 2012 EUR %1 2011 EUR %1 Sales Net￿sales Increase￿(decrease)￿in￿net￿sales￿(%) Net￿system￿sales Net￿service￿and￿field￿option￿sales Sales￿of￿systems￿(in￿units) ASP￿of￿total￿system￿sales ASP￿of￿new￿system￿sales ASP￿of￿used￿system￿sales Value￿of￿systems￿backlog￿excluding￿EUV￿2 Systems￿backlog￿excluding￿EUV￿(in￿units)￿2 ASP￿of￿systems￿backlog￿excluding￿EUV￿2 ASP￿of￿systems￿backlog￿excluding￿EUV￿(New)￿2 ASP￿of￿systems￿backlog￿excluding￿EUV￿(Used)￿2 Immersion￿systems￿recognized￿(in￿units)3 NXE￿systems￿recognized￿(in￿units)4 Profitability Gross￿profit Income￿from￿operations Net￿income Liquidity Cash￿and￿cash￿equivalents Short-term￿investments Operating￿cash￿flow 5,245.3 10.9 3,993.1 1,252.2 157 25.4 27.4 6.9 1,953.3 56 34.9 41.4 4.7 77 1 2,177.2 1,047.9 1,015.5 2,330.7 679.9 1,054.2 41.5 20.0 19.4 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 42.4 24.4 24.2 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 43.3 29.0 26.0 1 2 3 4 As￿a￿percentage￿of￿net￿sales. Our￿systems￿backlog￿and￿net￿bookings￿include￿only￿orders￿for￿which￿written￿authorizations￿have￿been￿accepted￿and￿system￿shipment￿and￿revenue recognition￿dates￿within￿the￿following￿12￿months￿have￿been￿assigned. Included￿in￿the￿total￿number￿of￿immersion￿systems￿recognized￿in￿2013￿is￿4￿units￿of￿our￿most￿advanced￿immersion￿technology￿NXT:1970Ci￿systems (2012:￿nil￿and￿2011:￿nil) In￿2013,￿the￿first￿of￿our￿third-generation￿EUV￿scanners￿has￿been￿recognized￿in￿sales.￿As￿per￿year￿end￿2013,￿the￿second￿and￿third￿NXE:3300B￿systems are￿being￿installed￿at￿customer￿sites. Backlog We￿started￿2013￿with￿a￿systems￿backlog￿excluding￿EUV￿of￿46￿systems.￿In￿2013,￿we￿booked￿orders￿for￿166￿systems excluding￿EUV,￿and￿recognized￿sales￿for￿156￿systems￿excluding￿EUV.￿This￿resulted￿in￿a￿systems￿backlog￿excluding￿EUV of￿56￿as￿of￿December￿31,￿2013. As￿of￿December￿31,￿2013,￿our￿systems￿backlog￿excluding￿EUV￿was￿valued￿at￿EUR￿1,953.3￿million￿and￿includes￿56 systems￿with￿an￿ASP￿of￿EUR￿34.9￿million.￿As￿of￿December￿31,￿2012,￿the￿systems￿backlog￿excluding￿EUV￿was￿valued at￿EUR￿1,214.1￿million￿and￿included￿46￿systems￿with￿an￿ASP￿of￿EUR￿26.4￿million.￿The￿ASP￿of￿our￿systems￿backlog excluding￿EUV￿increased￿in￿2013￿compared￿to￿2012￿as￿a￿result￿of￿a￿shift￿in￿the￿mix￿of￿systems￿towards￿more￿high-end system￿types￿(e.g.￿NXT:1970Ci). For￿discussion￿on￿the￿main￿key￿performance￿indicators￿indicated￿above,￿we￿refer￿to￿Item￿5.A.￿"Operating￿Results"￿and Item￿5.B.￿"Liquidity￿and￿Capital￿Resources". ASML￿ANNUAL￿REPORT￿2013 25 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￿Financial Statements,￿which￿have￿been￿prepared￿in￿conformity￿with￿US￿GAAP.￿The￿preparation￿of￿our￿Financial￿Statements requires￿us￿to￿make￿estimates￿and￿assumptions￿that￿affect￿the￿reported￿amounts￿of￿assets￿and￿liabilities￿and￿the disclosure￿of￿contingent￿assets￿and￿liabilities￿on￿the￿balance￿sheet￿dates,￿and￿the￿reported￿amounts￿of￿net￿sales and￿costs￿during￿the￿reported￿periods.￿Actual￿results￿could￿differ￿from￿those￿estimates.￿We￿evaluate￿our￿estimates 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￿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￿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.￿At￿ASML￿this￿policy￿generally￿results￿in￿revenue￿recognition￿from￿the￿sale￿of￿a system￿upon￿shipment.￿The￿revenue￿from￿the￿installation￿of￿a￿system￿is￿generally￿recognized￿upon￿completion￿of￿that installation￿at￿the￿customer￿site.￿Prior￿to￿shipment,￿systems￿undergo￿a￿"Factory￿Acceptance￿Test"￿in￿our￿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-￿and￿third-generation￿EUV￿systems (NXE:3100￿and￿NXE:3300B),￿we￿initially￿defer￿revenue￿recognition￿until￿acceptance￿of￿the￿new￿technology￿based￿system and￿completion￿of￿installation￿at￿the￿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:￿1999￿(TWINSCAN)￿and￿2010￿(EUV). We￿have￿no￿significant￿repurchase￿commitments￿in￿our￿general￿sales￿terms￿and￿conditions.￿From￿time￿to￿time￿we repurchase￿systems￿that￿we￿have￿manufactured￿and￿sold￿and,￿following￿refurbishment,￿we￿resell￿those￿systems￿to other￿customers.￿This￿repurchase￿decision￿is￿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,￿2013￿and￿2012,￿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.￿In￿addition,￿we￿offer￿volume￿discounts￿to￿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￿net￿sales￿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￿sales￿transaction￿as￿the￿agreements￿involve￿the￿delivery of￿multiple￿products.￿The￿consideration￿received￿from￿the￿sales￿transaction￿is￿allocated￿between￿the￿award￿credits￿and the￿other￿elements￿of￿the￿sales￿transaction.￿The￿consideration￿allocated￿to￿the￿award￿credits￿is￿recognized￿as￿deferred revenue￿until￿award￿credits￿are￿delivered￿to￿the￿customer.￿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). Net￿sales￿are￿recognized￿excluding￿the￿taxes￿levied￿on￿sales￿(net￿basis). ASML￿ANNUAL￿REPORT￿2013 26 In￿the￿event￿of￿expected￿losses￿on￿executory￿contracts,￿we￿recognize￿a￿liability￿for￿the￿amount￿that￿the￿cost￿of￿settling the￿contract￿exceeds￿the￿amount￿of￿the￿contract￿price.￿When￿we￿satisfy￿these￿contracts,￿we￿derecognize￿the￿related liability. Multiple Element Arrangements The￿main￿portion￿of￿our￿net￿sales￿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,￿"Sales￿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. 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￿sales￿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: • VSOE￿–￿the￿price￿at￿which￿we￿sell￿the￿element￿in￿a￿separate￿stand-alone￿transaction; • TPE￿–￿evidence￿from￿us￿or￿other￿companies￿of￿the￿value￿of￿a￿largely￿interchangeable￿element￿in￿a￿transaction; • 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, training￿services￿and￿prepaid￿extended￿and￿enhanced￿(optic)￿warranty￿contracts.￿VSOE￿for￿installation￿is￿determined based￿on￿the￿prices￿that￿we￿charge￿for￿billable￿labor￿and￿materials￿consumed￿in￿comparable￿services￿(such￿as￿relocating a￿system￿to￿another￿customer￿site).￿VSOE￿for￿prepaid￿extended￿and￿enhanced￿(optic)￿warranty￿contracts￿is￿determined on￿the￿basis￿of￿similair￿products￿we￿sell￿on￿a￿standalone￿basis,￿such￿as￿full￿service￿contracts￿and￿billable￿lens￿swaps, and￿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￿annualy￿and￿maintain￿internal￿controls over￿the￿establishment￿and￿updates￿of￿these￿estimates. Business￿Combinations Acquisitions￿of￿subsidiaries￿are￿included￿on￿the￿basis￿of￿the￿acquisition￿method.￿The￿cost￿of￿acquisition￿is￿measured based￿on￿the￿consideration￿transferred￿at￿fair￿value,￿the￿fair￿value￿of￿identifiable￿assets￿distributed￿and￿the￿fair￿value￿of liabilities￿incurred￿or￿assumed￿at￿the￿acquisition￿date￿(i.e.,￿the￿date￿at￿which￿we￿obtain￿control).￿The￿excess￿of￿the￿costs of￿an￿acquired￿subsidiary￿over￿the￿net￿of￿the￿amounts￿assigned￿to￿identifiable￿assets￿acquired￿and￿liabilities￿incurred￿or assumed,￿is￿capitalized￿as￿goodwill.￿Acquisition-related￿costs￿are￿expensed￿when￿incurred￿in￿the￿period￿they￿arise￿or￿the service￿is￿received. 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￿at￿the￿end￿of￿the￿third￿quarter￿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 ASML￿ANNUAL￿REPORT￿2013 27 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￿assets. 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￿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￿(other￿than￿goodwill).￿Future￿adverse￿changes￿in￿market￿conditions￿may￿also￿require￿impairment of￿certain￿long-lived￿assets￿(other￿than￿goodwill),￿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￿2013 28 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￿liabilities￿for￿uncertain￿tax￿positions￿based￿on￿a￿two-step￿process.￿The￿first￿step￿is￿to￿evaluate￿the￿tax position￿for￿recognition￿by￿determining￿if￿the￿weight￿of￿available￿evidence￿indicates￿that￿it￿is￿more￿likely￿than￿not￿that the￿position￿will￿be￿sustained￿on￿audit,￿including￿resolution￿of￿related￿appeals￿or￿litigation￿processes,￿if￿any.￿The￿second step￿is￿to￿measure￿the￿tax￿benefit￿as￿the￿largest￿amount￿that￿is￿more￿than￿50￿percent￿likely￿of￿being￿realized￿upon settlement.￿While￿we￿believe￿we￿have￿appropriate￿support￿for￿the￿positions￿taken￿on￿our￿tax￿returns,￿we￿regularly￿assess the￿potential￿outcomes￿of￿examinations￿by￿tax￿authorities￿in￿determining￿the￿adequacy￿of￿our￿provision￿for￿income￿taxes, and￿adjust￿the￿income￿tax￿provision,￿income￿taxes￿payable￿and￿deferred￿taxes￿in￿the￿period￿in￿which￿the￿facts￿that￿give rise￿to￿a￿revision￿become￿known. Results￿of￿Operations￿2013￿Compared￿with￿2012 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￿years￿ended￿December￿31,￿2013￿and￿2012: Year ended December 31 (in￿millions) Total￿net￿sales Cost￿of￿sales Gross￿profit Other￿income Research￿and￿development￿costs Selling,￿general￿and￿administrative￿costs Income￿from￿operations Interest￿and￿other,￿net Income￿before￿income￿taxes Provision￿for￿income￿taxes Net￿income 2013 EUR 5,245.3 (3,068.1) 2,177.2 64.4 (882.0) (311.7) 1,047.9 (24.4) 1,023.5 (8.0) 1,015.5 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 Set￿out￿below￿are￿our￿Consolidated￿Statements￿of￿Operations￿data￿for￿the￿years￿ended￿December￿31,￿2013￿and￿2012 expressed￿as￿a￿percentage￿of￿our￿total￿net￿sales: Year ended December 31 Total￿net￿sales Cost￿of￿sales Gross￿profit Other￿income Research￿and￿development￿costs Selling,￿general￿and￿administrative￿costs Income￿from￿operations Interest￿and￿other,￿net Income￿before￿income￿taxes Provision￿for￿income￿taxes Net￿income 2013 % 100.0 (58.5) 41.5 1.2 (16.8) (5.9) 20.0 (0.5) 19.5 (0.1) 19.4 2012 % 100.0 (57.6) 42.4 - (12.5) (5.5) 24.4 (0.1) 24.3 (0.1) 24.2 ASML￿ANNUAL￿REPORT￿2013 29 Net Sales and Gross Profit The￿following￿table￿shows￿a￿summary￿of￿net￿sales,￿units￿sold,￿gross￿profit￿and￿ASP￿data￿for￿the￿years￿ended￿December 31,￿2013￿and￿2012: Year ended December 31 (in millions EUR, unless otherwise indicated) Net￿sales Net￿system￿sales Net￿service￿and￿field￿option￿sales 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 ASP￿of￿new￿system￿sales ASP￿of￿used￿system￿sales 2013 2012 5,245.3 3,993.1 1,252.2 157 142 15 41.5 25.4 27.4 6.9 4,731.5 3,801.6 929.9 170 146 24 42.4 22.4 24.8 7.6 Net￿sales￿increased￿by￿EUR￿513.8￿million,￿or￿10.9￿percent,￿to￿EUR￿5,245.3￿million￿in￿2013￿from￿EUR￿4,731.5￿million￿in 2012,￿mainly￿driven￿by￿the￿increase￿in￿net￿service￿and￿field￿option￿sales￿of￿EUR￿322.3￿million,￿or￿34.7￿percent￿to￿EUR 1,252.2￿million￿in￿2013￿from￿EUR￿929.9￿million￿in￿2012.￿The￿increase￿in￿net￿service￿and￿field￿option￿sales￿is￿mainly caused￿by￿the￿expansion￿of￿Holistic￿Lithography￿through￿increased￿sales￿of￿integrated￿metrology￿and￿feedback￿loop technology￿and￿by￿OnPulse￿revenues￿as￿a￿result￿of￿the￿acquisition￿of￿Cymer. The￿increase￿in￿net￿system￿sales￿of￿EUR￿191.5￿million,￿or￿5.0￿percent,￿to￿EUR￿3,993.1￿million￿in￿2013￿from￿EUR￿3,801.6 million￿in￿2012￿is￿mainly￿caused￿by￿an￿increased￿ASP￿which￿more￿than￿offsets￿the￿lower￿amount￿of￿systems￿sold. The￿increase￿of￿the￿ASP￿of￿our￿systems￿sold￿can￿mainly￿be￿explained￿by￿the￿ASP￿of￿our￿new￿systems￿sold￿which increased￿to￿EUR￿27.4￿million￿in￿2013￿from￿EUR￿24.8￿million￿in￿2012,￿which￿was￿the￿result￿of￿a￿shift￿in￿the￿mix￿of systems￿sold￿towards￿more￿high-end￿system￿types,￿NXT:1960Bi￿and￿NXT:1970Ci￿and￿including￿one￿NXE:3300B. Through￿2013,￿all￿of￿the￿top￿10￿chipmakers￿worldwide,￿in￿terms￿of￿semiconductor￿capital￿expenditure,￿were￿our customers.￿In￿2013,￿recognized￿sales￿to￿our￿largest￿customer￿accounted￿for￿EUR￿2,058.6￿million,￿or￿39.2￿percent￿of￿our net￿sales.￿In￿2012,￿recognized￿sales￿to￿our￿largest￿customer￿accounted￿for￿EUR￿1,236.1￿million,￿or￿26.1￿percent￿of￿our net￿sales. Gross￿profit￿increased￿by￿EUR￿172.0￿million￿to￿EUR￿2,177.2￿million￿or￿41.5￿percent￿of￿net￿sales￿in￿2013￿from￿EUR 2,005.2￿million￿or￿42.4￿percent￿of￿net￿sales￿in￿2012.￿Higher￿gross￿profit￿was￿mainly￿driven￿by￿the￿increased￿net￿system sales.￿Gross￿profit￿as￿a￿percentage￿of￿net￿sales￿in￿2013￿decreased￿compared￿to￿2012,￿mainly￿due￿to￿a￿1.6￿percent impact￿from￿non-cash￿purchase￿price￿accounting￿adjustments￿related￿to￿the￿Cymer￿acquisition. Other Income Other￿income￿consists￿of￿contributions￿for￿R&D￿programs￿under￿the￿NRE￿funding￿arrangements￿from￿Participating Customers￿of￿the￿CCIP￿and￿amounted￿to￿EUR￿64.4￿million￿for￿2013￿(2012:nil). Research and Development Costs  R&D￿costs￿(net￿of￿credits￿and￿excluding￿contributions￿under￿the￿NRE￿funding￿agreements￿from￿Participating￿Customers of￿the￿CCIP)￿increased￿by￿EUR￿292.9￿million,￿or￿49.7￿percent,￿to￿EUR￿882.0￿million￿in￿2013￿from￿EUR￿589.1￿million￿in 2012.￿R&D￿spending￿mainly￿increased￿due￿the￿additional￿investments￿in￿EUV￿source￿development￿as￿a￿result￿of￿the acquisition￿of￿Cymer￿and￿further￿investments￿in￿our￿other￿strategic￿programs￿(Immersion￿and￿holistic￿lithography). Selling, General and Administrative Costs SG&A￿costs￿increased￿by￿EUR￿52.4￿million,￿or￿20.2￿percent,￿to￿EUR￿311.7￿million￿in￿2013,￿from￿EUR￿259.3￿million￿in 2012.￿The￿increase￿was￿mainly￿driven￿by￿the￿acquisition￿and￿subsequent￿integration￿of￿Cymer￿and￿incurred￿restructuring expenses. Profitability Our￿target￿is￿to￿achieve￿annual￿income￿from￿operations￿as￿percentage￿of￿net￿sales￿of￿greater￿than￿20￿percent.￿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. ASML￿ANNUAL￿REPORT￿2013 30 Interest and Other, Net Interest￿and￿other,￿net￿increased￿by￿EUR￿18.2￿million￿to￿EUR￿24.4￿million￿expense￿in￿2013￿from￿EUR￿6.2￿million￿expense in￿2012.￿This￿increase￿is￿mainly￿explained￿by￿the￿loss￿on￿the￿partial￿extinguishment￿of￿our￿EUR￿600￿million￿5.75￿percent senior￿notes￿due￿2017￿and￿a￿lower￿yield￿generated￿on￿our￿cash￿and￿cash￿equivalents￿and￿short-term￿investments. Income Taxes The￿effective￿tax￿rate￿increased￿to￿0.8￿percent￿of￿income￿before￿income￿taxes￿in￿2013￿compared￿to￿0.4￿percent￿in 2012.￿In￿2013,￿the￿effective￿tax￿rate￿was￿impacted￿by￿the￿settlement￿of￿the￿favorable￿pre-existing￿relationships￿between Cymer￿and￿ASML.￿This￿settlement￿gain￿is￿not￿recognized￿for￿tax￿purposes￿and￿was,￿apart￿from￿the￿R&D￿tax￿incentives, the￿major￿driver￿for￿the￿change￿in￿the￿effective￿tax￿rate￿in￿2013.￿In￿2012,￿the￿effective￿tax￿rate￿was￿amongst￿others impacted￿by￿a￿one-time￿tax￿benefit￿resulting￿from￿successful￿conclusion￿of￿tax￿audits.￿The￿movement￿in￿the￿liability￿for unrecognized￿tax￿benefits￿in￿2013￿is￿considered￿to￿be￿limited￿compared￿to￿2012. Net Income Net￿income￿in￿2013￿amounted￿to￿EUR￿1,015.5￿million,￿or￿19.4￿percent￿of￿net￿sales,￿representing￿EUR￿2.36￿basic￿net income￿per￿ordinary￿share,￿compared￿with￿net￿income￿in￿2012￿of￿EUR￿1,146.3￿million,￿or￿24.2￿percent￿of￿net￿sales, representing￿EUR￿2.70￿basic￿net￿income￿per￿ordinary￿share. Results￿of￿Operations￿2012￿Compared￿with￿2011 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￿years￿ended￿December￿31,￿2012￿and￿2011: Year ended December 31 (in￿millions) Total￿net￿sales Cost￿of￿sales Gross￿profit Research￿and￿development￿costs Selling,￿general￿and￿administrative￿costs Income￿from￿operations Interest￿and￿other,￿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 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 Set￿out￿below￿are￿our￿Consolidated￿Statements￿of￿Operations￿data￿for￿the￿years￿ended￿December￿31,￿2012￿and￿2011 expressed￿as￿a￿percentage￿of￿our￿total￿net￿sales: Year ended December 31 Total￿net￿sales Cost￿of￿sales Gross￿profit Research￿and￿development￿costs Selling,￿general￿and￿administrative￿costs Income￿from￿operations Interest￿and￿other,￿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 ASML￿ANNUAL￿REPORT￿2013 31 Net Sales and Gross Profit The￿following￿table￿shows￿a￿summary￿of￿net￿sales,￿units￿sold,￿gross￿profit￿and￿ASP￿data￿for￿the￿years￿ended￿December 31,￿2012￿and￿2011: Year ended December 31 (in millions EUR, unless otherwise indicated) Net￿sales Net￿system￿sales Net￿service￿and￿field￿option￿sales 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 ASP￿of￿new￿system￿sales ASP￿of￿used￿system￿sales 2012 2011 4,731.5 3,801.6 929.9 170 146 24 42.4 22.4 24.8 7.6 5,651.0 4,883.9 767.1 222 195 27 43.3 22.0 24.5 3.8 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.￿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,￿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, 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,￿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￿was￿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￿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.￿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)￿were￿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 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￿CCIP￿and￿transaction￿costs￿related￿to￿the￿proposed￿acquisition￿of￿Cymer￿and￿costs￿to implement￿and￿support￿IT￿solutions￿of￿EUR￿10.2￿million. Interest and Other, Net Interest￿and￿other,￿net￿decrease￿by￿EUR￿13.6￿million￿to￿EUR￿6.2￿million￿expense￿in￿2012￿from￿EUR￿7.4￿million￿income￿in 2011.￿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. ASML￿ANNUAL￿REPORT￿2013 32 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￿offset￿the￿tax￿expenses,￿resulting￿in￿an￿income￿tax￿expense￿of￿EUR￿4.3￿million￿(2011:￿EUR￿181.6 million). 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￿4￿to￿our￿Financial￿Statements. B. Liquidity and Capital Resources Our￿cash￿and￿cash￿equivalents￿increased￿to￿EUR￿2,330.7￿million￿as￿of￿December￿31,￿2013￿from￿EUR￿1,767.6￿million￿as of￿December￿31,￿2012￿and￿our￿short-term￿investments￿decreased￿to￿EUR￿679.9￿million￿as￿of￿December￿31,￿2013￿from EUR￿930.0￿million￿as￿of￿December￿31,￿2012. We￿generated￿net￿cash￿from￿operating￿activities￿of￿EUR￿1,054.2￿million,￿EUR￿703.5￿million￿and￿EUR￿2,070.4￿million￿in 2013,￿2012￿and￿2011,￿respectively.￿Higher￿net￿cash￿provided￿by￿operating￿activities￿in￿2013￿compared￿to￿2012￿relates to￿increased￿sales￿levels￿and￿a￿decrease￿of￿our￿working￿capital,￿mainly￿due￿to￿an￿increase￿in￿accounts￿payable.￿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. We￿used￿EUR￿368.4￿million￿for￿investing￿activities￿in￿2013,￿EUR￿1,119.8￿million￿in￿2012￿and￿EUR￿300.9￿million￿in￿2011. In￿2013,￿our￿investing￿activities￿mainly￿related￿to￿the￿cash￿consideration￿paid￿for￿the￿acquisition￿of￿Cymer￿of￿EUR￿443.7 million￿and￿the￿purchase￿of￿property,￿plant￿and￿equipment￿of￿EUR￿210.8￿million,￿mainly￿related￿to￿further￿expansion of￿our￿EUV￿production￿facilities.￿This￿was￿to￿a￿large￿extent￿offset￿by￿the￿decrease￿of￿short-term￿investments,￿mainly in￿Dutch￿Treasury￿Certificates￿and￿deposits￿with￿the￿Dutch￿government,￿of￿EUR￿290.2￿million.￿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. Net￿cash￿used￿in￿financing￿activities￿was￿EUR￿113.1￿million￿in￿2013,￿EUR￿545.6￿million￿in￿2012,￿and￿EUR￿991.6￿million in￿2011.￿In￿September￿2013,￿we￿completed￿an￿offering￿of￿EUR￿750￿million￿3.375￿percent￿senior￿notes￿due￿2023￿with interest￿payable￿annually￿on￿September￿19￿and,￿simultaneously,￿we￿repurchased￿a￿nominal￿amount￿of￿EUR￿361.8￿million of￿our￿EUR￿600￿million￿5.75￿percent￿senior￿notes￿due￿2017￿in￿a￿tender￿offer. In￿2013,￿net￿cash￿used￿in￿financing￿activities￿included￿the￿net￿cash￿proceeds￿of￿EUR￿740.4￿million￿from￿our￿notes offering￿and￿net￿cash￿proceeds￿of￿EUR￿31.8￿million￿from￿the￿issuance￿of￿shares￿in￿connection￿with￿the￿exercise￿and purchase￿of￿employee￿stock￿options,￿mainly￿offset￿by￿net￿cash￿outflows￿of￿EUR￿368.3￿million￿for￿our￿notes￿tender￿offer and￿unwinding￿of￿related￿interest￿rate￿swaps,￿EUR￿300.0￿million￿for￿our￿regular￿share￿buyback￿program￿and￿EUR￿216.1 million￿for￿our￿annual￿dividend￿payment.￿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￿CCIP￿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. Our￿principal￿sources￿of￿liquidity￿consist￿of￿cash￿flows￿from￿operations,￿cash￿and￿cash￿equivalents￿as￿of￿December￿31, 2013￿of￿EUR￿2,330.7￿million,￿short-term￿investments￿as￿of￿December￿31,￿2013￿of￿EUR￿679.9￿million￿and￿available￿credit facilities￿as￿of￿December￿31,￿2013￿of￿EUR￿700.0￿million.￿In￿addition,￿we￿may￿from￿time￿to￿time￿raise￿additional￿capital￿in debt￿and￿equity￿markets.￿Our￿goal￿is￿to￿remain￿an￿investment￿grade￿rated￿company￿and￿maintain￿a￿capital￿structure￿that supports￿this. We￿invest￿our￿cash￿and￿cash￿equivalents￿and￿short-term￿investments￿in￿short-term￿deposits￿with￿financial￿institutions that￿have￿good￿credit￿ratings￿and￿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￿U.S.￿dollars. ASML￿ANNUAL￿REPORT￿2013 33 Our￿available￿credit￿facility￿consists￿of￿an￿EUR￿700.0￿million￿committed￿revolving￿credit￿facility￿from￿a￿group￿of￿banks that￿will￿mature￿in￿2018.￿The￿credit￿facility￿contains￿a￿restrictive￿covenant￿that￿requires￿us￿to￿maintain￿a￿minimum committed￿capital￿to￿net￿total￿assets￿ratio￿of￿40.0￿percent￿calculated￿in￿accordance￿with￿contractually￿agreed definitions.￿At￿the￿end￿of￿2013,￿we￿were￿in￿compliance￿with￿the￿covenant.￿Outstanding￿amounts￿under￿this￿credit facility￿will￿bear￿interest￿at￿EURIBOR￿or￿LIBOR￿plus￿a￿margin￿that￿depends￿on￿our￿liquidity￿position.￿No￿amounts￿were outstanding￿under￿the￿credit￿facility￿as￿of￿the￿end￿of￿2013. We￿have￿repayment￿obligations￿in￿2017,￿amounting￿to￿EUR￿238.2￿million￿and￿in￿2023,￿amounting￿to￿EUR￿750.0￿million, both￿relating￿to￿our￿Eurobonds. ASML￿seeks￿to￿ensure￿that￿cash￿generated￿from￿operations,￿together￿with￿the￿liquidity￿provided￿by￿existing￿cash and￿cash￿equivalents￿and￿short-term￿investments￿and￿its￿borrowing￿capability,￿will￿be￿sufficient￿to￿satisfy￿its￿liquidity requirements￿throughout￿every￿phase￿of￿the￿industry￿cycles. Our￿liquidity￿needs￿are￿affected￿by￿many￿factors,￿some￿of￿which￿are￿based￿on￿the￿normal￿on-going￿operations￿of￿the business,￿and￿others￿that￿relate￿to￿the￿uncertainties￿of￿the￿global￿economy￿and￿the￿semiconductor￿industry.￿Although our￿cash￿requirements￿fluctuate￿based￿on￿the￿timing￿and￿extent￿of￿these￿factors,￿we￿believe￿that￿cash￿generated￿from operations,￿together￿with￿the￿liquidity￿provided￿by￿existing￿cash￿and￿cash￿equivalents￿and￿short-term￿investments￿and our￿borrowing￿capability￿are￿sufficient￿to￿satisfy￿our￿current￿requirements,￿including￿our￿expected￿capital￿expenditures￿in 2014.￿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￿4,￿5,￿15,￿16,￿26￿and￿27￿to￿our￿Financial￿Statements￿for￿further￿reference. 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 In￿2013,￿our￿business￿was￿supported￿by￿continuing￿momentum￿in￿the￿Logic￿segment￿with￿customers￿starting￿to￿add capacity￿at￿the￿20nm￿node,￿driven￿by￿the￿mobile￿applications￿market.￿The￿memory￿segment￿continued￿to￿pick￿up￿in￿light of￿tight￿mobile￿DRAM￿capacity.￿NAND￿memory￿bit￿demand￿is￿on￿a￿steady￿growth￿path￿with￿a￿stable￿market￿outlook, underpinning￿technology￿and￿capacity￿investments￿in￿2014. The￿following￿table￿sets￿forth￿our￿systems￿backlog,￿excluding￿EUV,￿as￿of￿December￿31,￿2013￿and￿2012. Year ended December 31 (in millions EUR, unless otherwise indicated) 2013 2012 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 Value￿of￿used￿systems￿backlog￿excluding￿EUV Total￿value￿of￿systems￿backlog￿excluding￿EUV ASP￿of￿new￿systems￿backlog￿excluding￿EUV ASP￿of￿used￿systems￿backlog￿excluding￿EUV ASP￿of￿total￿systems￿backlog￿excluding￿EUV 46 10 56 1,906.2 47.1 1,953.3 41.4 4.7 34.9 40 6 46 1,190.1 24.0 1,214.1 29.8 4.0 26.4 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. ASML￿ANNUAL￿REPORT￿2013 34 For￿the￿first￿quarter￿of￿2014,￿we￿expect￿net￿sales￿of￿around￿EUR￿1.4￿billion,￿a￿gross￿margin￿of￿around￿42￿percent,￿R&D costs￿of￿about￿EUR￿280￿million,￿other￿income￿of￿about￿EUR￿20￿million,￿which￿consists￿of￿contributions￿from￿participants of￿the￿CCIP￿and￿SG&A￿costs￿of￿about￿EUR￿85￿million. 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"￿and￿item￿3.D.￿"Risk￿Factors". E. Off-Balance Sheet Arrangements We￿have￿various￿contractual￿obligations,￿some￿of￿which￿are￿required￿to￿be￿recognized￿as￿liabilities￿in￿our￿Financial Statements,￿including￿long-￿and￿short-term￿debt.￿Other￿contractual￿obligations,￿namely￿operating￿lease￿commitments, purchase￿obligations￿and￿guarantees,￿are￿generally￿not￿required￿to￿be￿recognized￿as￿liabilities￿on￿our￿balance￿sheet￿but are￿required￿to￿be￿disclosed. F. Tabular Disclosure of Contractual Obligations Our￿contractual￿obligations￿as￿of￿December￿31,￿2013￿can￿be￿summarized￿as￿follows: Payments due by period (in￿thousands) Total EUR 1 year EUR Long-Term￿Debt￿Obligations,￿including￿interest￿expense1 1,341,380 74,946 Operating￿Lease￿Obligations 45,079 30,293 Purchase￿Obligations 2,012,913 1,894,455 580 74,069 Unrecognized￿Tax￿Benefits,￿including￿interest￿expense 2 year EUR 44,952 21,543 85,548 945 3 year EUR 44,907 14,081 16,223 7,680 4 year EUR 275,640 4,803 13,772 26,105 5 year EUR 54,155 2,539 2,382 785 After 5 years EUR 876,647 1,687 533 37,974 Total Contractual Obligations 3,503,308 1,970,407 152,988 82,891 320,320 59,861 916,841 1 See￿Note￿15￿to￿our￿Financial￿Statements￿for￿the￿amounts￿excluding￿interest￿expense. Long-term￿debt￿obligations￿mainly￿relate￿to￿interest￿payments￿and￿principal￿amounts￿of￿our￿Eurobonds.￿See￿Note￿15￿to our￿Financial￿Statements. Operating￿lease￿obligations￿include￿leases￿of￿equipment￿and￿facilities.￿Lease￿payments￿recognized￿as￿an￿expense were￿EUR￿42.0￿million,￿EUR￿41.6￿million￿and￿EUR￿40.6￿million￿for￿the￿years￿ended￿December￿31,￿2013,￿2012￿and￿2011, respectively. Several￿operating￿leases￿for￿our￿buildings￿contain￿purchase￿options,￿exercisable￿at￿the￿end￿of￿the￿lease,￿and￿in￿some cases,￿during￿the￿term￿of￿the￿lease.￿The￿amounts￿to￿be￿paid￿if￿ASML￿should￿exercise￿these￿purchase￿options￿at￿the￿end of￿the￿lease￿as￿of￿December￿31,￿2013￿can￿be￿summarized￿as￿follows: Purchase options due by period (in￿thousands) Purchase￿options Total EUR 13,983 1 year EUR - 2 year EUR - 3 year EUR 13,983 4 year EUR - 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, 2013￿contain￿clauses￿that￿enable￿us￿to￿delay￿or￿cancel￿delivery￿of￿ordered￿goods￿and￿services￿up￿to￿the￿dates￿specified in￿the￿corresponding￿purchase￿contracts.￿These￿terms￿and￿conditions￿that￿we￿typically￿agree￿with￿our￿supply￿chain partners￿gives￿us￿additional￿flexibility￿to￿adapt￿our￿purchase￿obligations￿to￿our￿requirements￿in￿light￿of￿the￿inherent cyclicality￿of￿the￿semiconductor￿equipment￿industry￿in￿which￿we￿operate.￿We￿establish￿a￿provision￿for￿cancellation￿costs when￿it￿is￿probable￿that￿the￿liability￿has￿been￿incurred￿and￿the￿amount￿of￿cancellation￿fees￿is￿reasonably￿estimable. G. Safe Harbor See￿Part￿I￿"Special￿Note￿Regarding￿Forward-Looking￿Statements". ASML￿ANNUAL￿REPORT￿2013 35 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 Fritz￿W.￿Fröhlich1,2 Hendrika￿(Ieke)￿C.J.￿van￿den￿Burg4 OB￿Bilous2,3 Pauline￿F.M.￿van￿der￿Meer￿Mohr4 Wolfgang￿H.￿Ziebart3,4 Clara￿(Carla)￿M.S.￿Smits-Nusteling1 Douglas￿A.￿Grose2,3 Peter￿T.F.M.￿Wennink Martin￿A.￿van￿den￿Brink Frits￿J.￿van￿Hout Frédéric￿J.M.￿Schneider-Maunoury Wolfgang￿U.￿Nickl6 Title Chairman￿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 Member￿of￿the￿Supervisory￿Board President,￿Chief￿Executive￿Officer￿and￿member￿of￿the￿Board￿of Management President,￿Chief￿Technology￿Officer￿and￿member￿of￿the￿Board of￿Management Executive￿Vice￿President,￿CPO￿and￿member￿of￿the￿Board￿of Management Executive￿Vice￿President￿Operations￿and￿Order￿Fulfillment Process￿and￿Member￿of￿the￿Board￿of￿Management Executive￿Vice￿President,￿CFO￿and￿Member￿of￿the￿Board￿of Management Year of Birth 1948 1942 1952 1938 1960 1950 1966 1950 1957 Term Expires 2016 2014 2015 2014 2017 2017 2017 2017 N/A5 1957 1960 1961 1969 N/A5 2017 2014 2018 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 The￿appointment￿term￿will￿be￿changed￿from￿an￿indefinite￿term￿to￿a￿definite￿term￿of￿four￿years￿upon￿notification￿to￿the￿AGM,￿scheduled￿on￿April￿23, 2014. 6 Mr.￿Nickl's￿appointment￿to￿ASML's￿Board￿of￿Management￿is￿subject￿to￿the￿notification￿of￿the￿AGM,￿scheduled￿to￿be￿held￿on￿April￿23,￿2014. Mmes.￿Van￿den￿Burg￿and￿Van￿der￿Meer￿Mohr￿and￿Messrs.￿Siegle,￿Westerburgen￿and￿Ziebart￿retired￿by￿rotation￿in￿2013. Mr.￿Siegle￿and￿Mr.￿Westerburgen￿retired￿from￿the￿Supervisory￿Board￿per￿the￿AGM￿of￿April￿24,￿2013.￿In￿2013,￿Ms.￿Van￿den Burg￿was￿reappointed￿for￿a￿maximum￿period￿of￿two￿years￿in￿line￿with￿the￿Supervisory￿Board's￿profile;￿Ms.￿Van￿der￿Meer Mohr￿and￿Mr.￿Ziebart￿were￿reappointed￿for￿a￿maximum￿period￿of￿four￿years￿in￿line￿with￿the￿Supervisory￿Board's￿profile. Ms.￿Smits-Nusteling￿and￿Mr.￿Grose￿were￿appointed￿as￿member￿of￿the￿Supervisory￿Board￿in￿2013￿for￿a￿maximum￿period of￿four￿years. 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 AGM,￿Ms.￿Van￿den￿Burg￿was￿appointed￿pursuant￿to￿this￿recommendation￿right,￿and￿at￿the￿2009￿AGM￿and￿the￿2013 AGM￿she￿was￿reappointed￿in￿accordance￿with￿this￿recommendation￿right.￿At￿the￿2009￿AGM,￿Ms.￿Van￿der￿Meer￿Mohr was￿appointed￿pursuant￿to￿this￿recommendation￿right,￿and￿at￿the￿2013￿General￿Meeting￿of￿Shareholders￿she￿was reappointed￿in￿accordance￿with￿this￿recommendation￿right. There￿are￿no￿family￿relationships￿among￿the￿members￿of￿our￿Supervisory￿Board￿and￿Board￿of￿Management. 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￿CEO￿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￿currently￿serves￿as￿a￿member￿of￿the￿Board￿of￿Directors￿of￿Gemalto￿Holding￿N.V.,￿as￿a￿member￿of￿the Supervisory￿Board￿of￿Royal￿HaskoningDHV￿B.V.￿and￿as￿the￿chairman￿of￿the￿Supervisory￿Board￿of￿BDR￿Thermea. Fritz W. Fröhlich Mr.￿Fröhlich￿was￿appointed￿to￿our￿Supervisory￿Board￿in￿March￿2004.￿He￿is￿the￿former￿Deputy￿Chairman￿and￿CFO￿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. ASML￿ANNUAL￿REPORT￿2013 36 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.￿She￿was￿a￿member￿of￿the￿Supervisory￿Board￿of￿APG￿Group￿N.V.￿until￿May 15,￿2013.￿Ms.￿Van￿den￿Burg￿was￿recently￿appointed￿for￿a￿new￿four-year￿mandate￿in￿the￿Dutch￿Monitoring￿Committee Corporate￿Governance￿Code.￿She￿also￿serves￿as￿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￿is￿also￿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. Pauline F.M. van der Meer Mohr Ms.￿Van￿der￿Meer￿Mohr￿was￿appointed￿to￿our￿Supervisory￿Board￿in￿March￿2009.￿Since￿January￿1,￿2010,￿Ms.￿Van￿der Meer￿Mohr￿serves￿as￿President￿of￿the￿Executive￿Board￿of￿the￿Erasmus￿University￿Rotterdam,￿the￿Netherlands.￿Prior to￿2010￿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￿and￿chairperson￿of￿the￿Executive￿Board￿of￿the￿Fulbright￿Center. Wolfgang H. Ziebart Mr.￿Ziebart￿was￿appointed￿to￿our￿Supervisory￿Board￿in￿March￿2009.￿Mr.￿Ziebart￿is￿the￿Group￿Engineering￿Director￿of Jaguar￿Land￿Rover￿Ltd.￿Until￿May￿2008,￿he￿was￿President￿and￿CEO￿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. Carla M.S. Smits-Nusteling Ms.￿Smits-Nusteling￿was￿appointed￿to￿our￿Supervisory￿Board￿in￿April￿2013.￿Ms.￿Smits-Nusteling￿was￿CFO￿and￿member of￿the￿Board￿of￿Management￿of￿Royal￿KPN￿N.V.￿until￿2012,￿and￿also￿held￿several￿finance￿and￿business￿related￿positions in￿Royal￿KPN￿N.V.￿and￿PostNL.￿Ms.￿Smits-Nusteling￿is￿a￿member￿of￿the￿Supervisory￿Board￿of￿Tele2￿AB. Douglas A. Grose Mr.￿Grose￿was￿appointed￿to￿our￿Supervisory￿Board￿in￿April￿2013.￿Mr.￿Grose￿was￿CEO￿of￿GlobalFoundries￿from￿its inception￿in￿2009￿until￿2011￿and￿before￿that,￿Mr.￿Grose￿served￿as￿senior￿vice￿president￿of￿technology￿development, manufacturing￿and￿supply￿chain￿for￿AMD.￿Prior￿to￿joining￿AMD￿in￿2007,￿Mr.￿Grose￿spent￿25￿years￿at￿IBM￿as￿general manager￿of￿technology￿development￿and￿manufacturing￿for￿the￿systems￿and￿technology￿group.￿Currently,￿Mr.￿Grose￿is￿a director￿of￿SBA￿Materials. Peter T.F.M. Wennink Mr.￿Wennink￿joined￿ASML￿on￿January￿1,￿1999￿and￿was￿appointed￿as￿Executive￿Vice￿President,￿CFO￿of￿ASML￿and member￿of￿our￿Board￿of￿Management￿on￿July￿1,￿1999.￿He￿was￿appointed￿as￿President￿and￿CEO￿on￿July￿1,￿2013.￿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￿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￿1984.￿He￿held￿several￿positions￿in￿engineering and￿from￿1995￿he￿served￿as￿Vice￿President￿Technology￿and￿member￿of￿the￿Board￿of￿Management.￿Mr.￿Van￿den￿Brink was￿appointed￿as￿Executive￿Vice￿President￿Product￿&￿Technology￿and￿member￿of￿the￿Board￿of￿Management￿in￿1999. On￿July￿1,￿2013,￿Mr.￿Van￿den￿Brink￿was￿appointed￿as￿President￿and￿CTO.￿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,￿the Netherlands. ASML￿ANNUAL￿REPORT￿2013 37 Frits J. van Hout Mr.￿Van￿Hout￿was￿appointed￿as￿Executive￿Vice￿President￿and￿Chief￿Program￿Officer￿on￿July￿1,￿2013.￿Prior￿thereto￿he served￿as￿Executive￿Vice￿President,￿CMO￿and￿Member￿of￿our￿Board￿of￿Management￿since￿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￿CEO￿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. Wolfgang U. Nickl Mr.￿Nickl￿joined￿ASML￿on￿December￿1,￿2013,￿as￿Executive￿Vice￿President￿and￿CFO.￿He￿will￿be￿appointed￿as￿member￿of ASML's￿Board￿of￿Management￿upon￿the￿notification￿to￿the￿AGM,￿scheduled￿on￿April￿23,￿2014.￿Prior￿to￿joining￿ASML, Mr.￿Nickl￿served￿as￿Executive￿Vice￿President￿and￿CFO￿at￿Western￿Digital￿Corporation,￿a￿U.S.-headquartered,￿NASDAQ- listed￿developer￿and￿manufacturer￿of￿storage￿devices,￿where￿he￿held￿several￿financial￿and￿operational￿leadership￿roles since￿joining￿Western￿Digital￿in￿1995.￿Before￿Western￿Digital,￿Mr.￿Nickl￿gained￿experience￿in￿finance￿and￿IT￿consulting. He￿earned￿a￿BA￿in￿Business￿from￿the￿University￿of￿Cooperative￿Education￿in￿Stuttgart,￿Germany,￿and￿an￿MBA￿from￿the University￿of￿Southern￿California’s￿Marshall￿School￿of￿Business￿in￿Los￿Angeles,￿United￿States. B. Compensation The￿information￿required￿by￿Item￿6.B.￿is￿incorporated￿by￿reference￿from￿pages￿16,￿17,￿18,￿19,￿21￿and￿22￿of￿ASML’s￿2013 Remuneration￿Report￿which￿is￿included￿as￿exhibit￿99.2￿on￿Form￿6-K￿furnished￿with￿the￿Commission￿on￿February￿12, 2014. 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. 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. ASML￿ANNUAL￿REPORT￿2013 38 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".￿Further￿information￿relating￿to￿the￿Board￿of￿Management￿required￿by￿Item￿6.C.￿is￿incorporated￿by reference￿from￿pages￿16,￿17,￿18￿and￿19￿of￿ASML’s￿2013￿Remuneration￿Report￿which￿is￿included￿as￿exhibit￿99.2￿on￿Form 6-K,￿furnished￿with￿the￿Commission￿on￿February￿12,￿2014. 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 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. ASML￿ANNUAL￿REPORT￿2013 39 For￿details￿of￿the￿terms￿of￿office￿of￿the￿current￿members￿of￿the￿Supervisory￿Board,￿see￿Item￿6.A￿"Directors￿and￿Senior Management".￿Further￿information￿relating￿to￿the￿Supervisory￿Board￿required￿by￿Item￿6.C.￿is￿incorporated￿by￿reference from￿pages￿21￿and￿22￿of￿ASML’s￿2013￿Remuneration￿Report￿which￿is￿included￿as￿exhibit￿99.2￿on￿Form￿6-K,￿furnished with￿the￿Commission￿on￿February￿12,￿2014. 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￿our￿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￿NASDAQ￿and￿by￿the￿SEC.￿See￿also￿Item￿16.G.￿"Corporate￿Governance". The￿Dutch￿Corporate￿Governance￿Code￿came￿into￿effect￿on￿January￿1,￿2004￿and￿was￿amended￿as￿of￿January￿1,￿2009. 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￿Dutch￿Corporate￿Governance￿Code￿in￿its￿Statutory￿Annual￿Report￿for￿the￿year ended￿December￿31,￿2013. 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￿Carla￿Smits-Nusteling,￿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￿CEO,￿our￿CFO,￿our￿Corporate￿Controller,￿our￿Corporate Chief￿Accountant,￿our￿Senior￿Director￿Corporate￿Risk￿and￿Assurance￿(Internal￿Audit),￿as￿well￿as￿other￿ASML￿employees invited￿by￿the￿chairman￿of￿the￿Audit￿Committee￿may￿also￿attend￿the￿meetings￿of￿the￿Audit￿Committee. ASML￿ANNUAL￿REPORT￿2013 40 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￿our￿disclosure￿controls￿and￿procedures￿(as￿defined￿in￿the￿Exhange￿Act￿Rules￿13a-15(e)￿and￿15d-15(e))￿and • internal￿control￿over￿financial￿reporting. In￿2013,￿the￿Audit￿Committee￿held￿eight￿scheduled￿meetings,￿either￿in￿person￿or￿via￿conference￿call. Remuneration Committee ASML's￿Remuneration￿Committee￿is￿composed￿of￿three￿members￿of￿the￿Supervisory￿Board.￿The￿current￿members of￿our￿Remuneration￿Committee￿are￿Wolfgang￿Ziebart￿(chairman),￿Ieke￿van￿den￿Burg￿and￿Pauline￿van￿der￿Meer￿Mohr. The￿Remuneration￿Committee￿advices￿the￿Supervisory￿Board￿and￿preparers￿resolutions￿with￿respect￿to￿the￿review￿and execution￿of￿the￿Remuneration￿Policy￿as￿adopted￿by￿General￿Meeting￿of￿Shareholders. 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￿2013,￿the￿Remuneration￿Committee￿held￿five￿scheduled￿meetings￿and￿several￿ad￿hoc￿meetings,￿either￿in￿person￿or￿via conference￿call. Selection and Nomination Committee ASML's￿Selection￿and￿Nomination￿Committee￿is￿composed￿of￿four￿members￿of￿the￿Supervisory￿Board.￿The￿current members￿of￿our￿Selection￿and￿Nomination￿Committee￿are￿OB￿Bilous￿(chairman),￿Arthur￿van￿der￿Poel,￿Fritz￿Fröhlich￿and Douglas￿Grose. 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￿2013,￿the￿Selection￿and￿Nomination￿Committee￿held￿three￿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￿OB￿Bilous￿(chairman),￿Arthur￿van￿der￿Poel,￿Douglas￿Grose￿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. ASML￿ANNUAL￿REPORT￿2013 41 The￿Technology￿and￿Strategy￿Committee￿assists￿the￿Supervisory￿Board￿in￿relation￿to￿the￿following￿responsibilities￿and may￿prepare￿resolutions￿for￿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￿2013,￿the￿Technology￿and￿Strategy￿Committee￿held￿five￿scheduled￿meetings,￿either￿in￿person￿or￿via￿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￿CEO￿and￿CFO.￿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￿CEO￿and CFO￿in￿the￿maintenance￿and￿evaluation￿of￿disclosure￿controls￿and￿procedures. During￿2013,￿the￿Disclosure￿Committee￿reviewed￿the￿quarterly￿financial￿result￿announcements,￿the￿Statutory￿Interim Report,￿the￿Annual￿Report￿on￿Form￿20-F,￿the￿Statutory￿Annual￿Report,￿and￿the￿prospectus￿in￿connection￿with the￿offering￿for￿the￿EUR￿750￿million￿3.375￿percent￿senior￿notes￿due￿2023￿issued￿on￿September￿12,￿2013.￿The Committee￿also￿advises￿the￿CEO￿and￿CFO￿on￿the￿assessment￿of￿ASML's￿disclosure￿controls￿and￿procedures￿and￿on￿the assessment￿of￿ASML's￿internal￿control￿over￿financial￿reporting. D. Employees The￿following￿table￿presents￿our￿total￿numbers￿of￿payroll￿employees￿and￿temporary￿employees￿as￿of￿December￿31, 2013,￿2012￿and￿2011￿(in￿FTEs),￿primarily￿in￿manufacturing,￿product￿development￿and￿customer￿support￿activities: As of December 31 Payroll￿Employees Temporary￿Employees Employees (in FTEs) 2013 10,360 2,865 13,225 2012 8,497 2,139 10,636 2011 7,955 1,935 9,890 During￿2013,￿the￿average￿number￿of￿payroll￿employees￿in￿FTEs￿employed￿was￿9,540,￿and￿the￿average￿number￿of temporary￿employees￿in￿FTEs￿employed￿was￿2,546.￿The￿increase￿in￿employees￿expressed￿in￿FTEs￿is￿mainly￿explained￿by the￿acquisition￿of￿Cymer￿as￿per￿May￿30,￿2013. For￿a￿more￿detailed￿description￿of￿payroll￿employee￿information,￿including￿a￿breakdown￿of￿our￿employees￿in￿FTEs by￿sector,￿see￿Notes￿18￿and￿22￿to￿our￿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 ASML￿ANNUAL￿REPORT￿2013 42 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".￿Further￿information￿required￿by￿Item￿6.E.￿is￿incorporated￿by￿reference from￿page￿20￿of￿ASML’s￿2013￿Remuneration￿Report￿which￿is￿included￿as￿exhibit￿99.2￿on￿Form￿6-K,￿furnished￿with￿the Commission￿on￿February￿12,￿2014.￿Information￿with￿respect￿to￿the￿grant￿of￿shares￿and￿stock￿options￿to￿employees￿is included￿in￿Note￿18￿to￿our￿Financial￿Statements. 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￿3.0￿percent￿of￿our￿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,￿2013.￿The information￿set￿out￿below￿is￿solely￿based￿on￿public￿filings￿with￿the￿SEC￿and￿AFM￿on￿February￿5,￿2014. Identity of Person or Group Stichting￿Administratiekantoor￿MAKTSJAB/Intel1 Capital￿Group￿International,￿Inc2 BlackRock￿Inc.3 Stichting￿Administratiekantoor￿TSMC/TSMC4 FMR￿LLC5 Members￿of￿ASML’s￿Board￿of￿Management￿and￿its￿Chief￿Financial￿Officer6,￿as￿a￿group￿(5￿persons)7,8 Shares Owned 62,977,877 51,453,097 22,982,001 20,992,625 19,537,364 99,678 Percent of Class9 14.29% 11.67% 5.21% 4.76% 4.43% 0.02% 1 2 3 4 5 Stichting￿Adminstratiekantoor￿MAKTSJAB￿owns￿the￿stated￿percentage￿of￿our￿ordinary￿shares￿and￿has￿issued￿corresponding￿depository￿receipts￿to Intel. As￿reported￿to￿the￿Dutch￿Authority￿for￿the￿Financial￿Markets￿on￿September￿3,￿2012,￿Capital￿Group￿International,￿Inc.￿indirectly￿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,￿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￿but￿does￿not￿have￿ownership￿rights￿related￿to￿those￿shares.￿Capital￿World￿Investors reported￿on￿a￿Schedule￿13-G/A￿filed￿with￿the￿Commission￿on￿June￿10,￿2013,￿that￿it￿is￿the￿beneficial￿owner￿of￿45,026,116￿shares￿of￿our￿ordinary￿shares as￿a￿result￿of￿its￿affiliation￿with￿CRMC. Based￿solely￿on￿the￿Schedule￿13-G/A￿filed￿by￿BlackRock￿Inc.￿with￿the￿Commission￿on￿February￿3,￿2014.￿The￿July￿2,￿2013￿public￿filing￿with￿the￿AFM shows￿aggregate￿holdings￿of￿various￿BlackRock￿funds￿of￿(based￿on￿total￿number￿of￿issued￿shares￿as￿per￿2￿July￿2013)￿3.68%￿in￿shares￿and￿4.42%￿in voting￿rights. Stichting￿Administratiekantoor￿TSMC￿owns￿the￿stated￿percentage￿of￿ordinary￿shares￿and￿has￿simultaneously￿issued￿corresponding￿depository receipts￿to￿TSMC. Based￿solely￿on￿the￿Schedule￿13-G/A￿filed￿by￿FMR￿LLC￿with￿the￿Commission￿on￿February￿14,￿2013.￿FMR￿LLC￿previously￿reported￿on￿the￿Schedule 13-G/A￿filed￿with￿the￿Commission￿on￿February￿12,￿2012￿that￿it￿owned￿36,311,008￿of￿our￿ordinary￿shares. 6 Mr.￿Nickl's￿appointment￿to￿ASML's￿Board￿of￿Management￿is￿subject￿to￿the￿notification￿of￿the￿AGM,￿scheduled￿to￿be￿held￿on￿April￿23,￿2014. 7 Does￿not￿include￿unvested￿shares￿and￿shares￿underlying￿options￿granted￿to￿members￿of￿ASML's￿Board￿of￿Management.￿Further￿information￿required by￿Item￿7.A.￿is￿incorporated￿by￿reference￿from￿page￿20￿of￿ASML’s￿2013￿Remuneration￿Report￿which￿is￿included￿as￿exhibit￿99.2￿on￿Form￿6-K,￿furnished with￿the￿Commission￿on￿February￿12,￿2014. No￿shares￿are￿owned￿by￿members￿of￿the￿Supervisory￿Board. As￿a￿percentage￿of￿the￿total￿number￿of￿ordinary￿shares￿outstanding￿(440,852,334)￿as￿of￿December￿31,￿2013. 8 9 The￿Intel￿Stichting￿and￿the￿TSMC￿Stichting￿acquired￿the￿shares￿indicated￿above￿as￿part￿of￿our￿CCIP￿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￿shareholder￿agreements.￿Intel￿and￿TSMC,￿are￿not￿entitled￿to￿vote￿on￿the ASML￿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.￿For￿more￿information￿see￿Item￿10.B.￿"Memorandum￿and￿Articles￿of￿Association". As￿of￿December￿31,￿2013,￿91,263,480￿NASDAQ￿shares￿were￿held￿by￿379￿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. ASML￿ANNUAL￿REPORT￿2013 43 Obligations￿of￿Shareholders￿to￿Disclose￿Holdings￿under￿Dutch￿Law Holders￿of￿our￿shares￿may￿be￿subject￿to￿reporting￿obligations￿under￿the￿FMSA. The￿disclosure￿obligations￿under￿the￿FMSA￿apply￿to￿any￿person￿or￿entity￿that￿acquires,￿holds￿or￿disposes￿of￿an￿interest in￿the￿voting￿rights￿and/or￿the￿capital￿of￿a￿public￿limited￿company￿incorporated￿under￿the￿laws￿of￿the￿Netherlands￿whose shares￿are￿admitted￿to￿trading￿on￿a￿regulated￿market￿within￿the￿European￿Union,￿such￿as￿ASML.￿Disclosure￿is￿required when￿the￿percentage￿of￿voting￿rights￿or￿capital￿interest￿of￿a￿person￿or￿an￿entity￿reaches,￿exceeds￿or￿falls￿below￿3.0, 5.0,￿10.0,￿15.0,￿20.0,￿25.0,￿30.0,￿40.0,￿50.0,￿60.0,￿75.0￿or￿95.0￿percent￿(as￿a￿result￿of￿an￿acquisition￿or￿disposal￿by￿such person,￿or￿as￿a￿result￿of￿a￿change￿in￿our￿total￿number￿of￿voting￿rights￿or￿capital￿issued).￿With￿respect￿to￿ASML,￿the FMSA￿requires￿any￿person￿or￿entity￿whose￿interest￿in￿the￿voting￿rights￿and/or￿capital￿of￿ASML￿reached,￿exceeded￿or￿fell below￿those￿percentage￿interests￿to￿notify￿the￿AFM￿immediately. ASML￿is￿required￿to￿notify￿the￿AFM￿immediately￿if￿our￿voting￿rights￿and/or￿capital￿have￿changed￿by￿1.0￿percent￿or more￿since￿its￿previous￿notification￿on￿outstanding￿voting￿rights￿and￿capital.￿In￿addition,￿ASML￿must￿notify￿the￿AFM￿of changes￿of￿less￿than￿1.0￿percent￿in￿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￿3.0￿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￿FMSA,￿do￿not￿have￿independent￿reporting￿obligations￿under￿the￿FMSA,￿as￿interests held￿by￿them￿are￿attributed￿to￿their￿(ultimate)￿parents.￿Any￿person￿may￿qualify￿as￿a￿parent￿for￿purposes￿of￿the￿FMSA, including￿an￿individual.￿A￿person￿who￿ceases￿to￿be￿a￿subsidiary￿and￿who￿disposes￿of￿an￿interest￿of￿3.0￿percent￿or￿more in￿ASML's￿voting￿rights￿or￿capital￿must￿immediately￿notify￿the￿AFM.￿As￿of￿that￿moment,￿all￿notification￿obligations￿under the￿FMSA￿become￿applicable￿to￿the￿former￿subsidiary. 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),￿(v)￿held by￿a￿third￿party￿with￿whom￿such￿person￿has￿agreed￿to￿temporarily￿transfer￿voting￿rights￿against￿payment,￿(vi)￿financial instruments￿of￿which￿the￿increase￿in￿value￿is￿wholly￿or￿partially￿dependent￿on￿an￿increase￿in￿value￿of￿our￿shares￿or distributions￿in￿respect￿thereof￿(including￿certain￿cash￿settled￿financial￿instruments￿such￿as￿contracts￿for￿difference￿and total￿return￿swaps),￿(vii)￿put￿options￿pursuant￿to￿which￿a￿person￿can￿be￿required￿to￿purchase￿our￿shares,￿and￿(vii)￿other contracts￿under￿which￿a￿person￿has￿a￿position￿economically￿comparable￿to￿having￿our￿shares.￿Interests￿held￿jointly￿by multiple￿persons￿are￿attributed￿to￿those￿persons￿in￿accordance￿with￿their￿entitlement.￿A￿holder￿of￿a￿pledge￿or￿right￿of usufruct￿in￿respect￿of￿shares￿can￿also￿be￿subject￿to￿these￿reporting￿obligations￿if￿such￿person￿has,￿or￿can￿acquire,￿the right￿to￿vote￿on￿the￿shares￿or,￿in￿case￿of￿depositary￿receipts,￿the￿underlying￿shares.￿The￿managers￿of￿certain￿investment funds￿are￿deemed￿to￿hold￿the￿capital￿interests￿and￿voting￿rights￿in￿the￿funds￿managed￿by￿them. For￿the￿same￿purpose,￿the￿following￿instruments￿qualify￿as￿"shares":￿(i)￿shares,￿(ii)￿depositary￿receipts￿for￿shares￿(or negotiable￿instruments￿similar￿to￿such￿receipts),￿(iii)￿negotiable￿instruments￿for￿acquiring￿the￿instruments￿under￿(i)￿or￿(ii) (such￿as￿convertible￿bonds),￿and￿(iv)￿options￿for￿acquiring￿the￿instruments￿under￿(i)￿or￿(ii). Since￿July￿1,￿2013,￿a￿requirement￿to￿notify￿the￿AFM￿of￿any￿gross￿short￿position￿in￿our￿shares￿applies.￿For￿the￿notification of￿gross￿short￿positions￿the￿same￿thresholds￿apply￿as￿for￿notifying￿an￿actual￿or￿potential￿interest￿in￿the￿capital￿and/or or￿voting￿rights￿of￿a￿Dutch￿listed￿company,￿as￿referred￿to￿above.￿In￿addition,￿pursuant￿to￿Regulation￿(EU)￿No￿236/2012, each￿person￿holding￿a￿net￿short￿position￿amounting￿to￿0.2￿percent￿of￿the￿issued￿share￿capital￿of￿a￿Dutch￿listed￿company is￿required￿to￿report￿it￿to￿the￿AFM.￿Each￿subsequent￿increase￿of￿this￿position￿by￿0.1￿percent￿above￿0.2￿percent￿will￿also need￿to￿be￿reported.￿Each￿net￿short￿position￿equal￿to￿0.5￿percent￿of￿the￿issued￿share￿capital￿of￿a￿Dutch￿listed￿company and￿any￿subsequent￿increase￿of￿that￿position￿by￿0.1￿percent￿will￿be￿made￿public￿via￿the￿AFM￿short￿selling￿register.￿To calculate￿whether￿a￿natural￿person￿or￿legal￿person￿has￿a￿net￿short￿position,￿their￿short￿positions￿and￿long￿positions￿must be￿set-off.￿A￿short￿transaction￿in￿a￿share￿can￿only￿be￿contracted￿if￿a￿reasonable￿case￿can￿be￿made￿that￿the￿shares￿sold can￿actually￿be￿delivered,￿which￿requires￿confirmation￿of￿a￿third￿party￿that￿the￿shares￿have￿been￿located. The￿AFM￿keeps￿a￿public￿registry￿of￿and￿publishes￿all￿notifications￿made￿pursuant￿to￿the￿FMSA. ASML￿ANNUAL￿REPORT￿2013 44 Non-compliance￿with￿the￿reporting￿obligations￿under￿the￿FMSA￿could￿lead￿to￿criminal￿fines,￿administrative￿fines, imprisonment￿or￿other￿sanctions.￿In￿addition,￿non-compliance￿with￿the￿reporting￿obligations￿under￿the￿FMSA￿may￿lead￿to civil￿sanctions,￿including￿(i)￿suspension￿of￿the￿voting￿rights￿relating￿to￿the￿shares￿held￿by￿the￿offender,￿for￿a￿period￿of￿not more￿than￿three￿years,￿(ii)￿nullification￿of￿any￿resolution￿of￿our￿general￿meeting￿of￿shareholders￿to￿the￿extent￿that￿such resolution￿would￿not￿have￿been￿approved￿if￿the￿votes￿at￿the￿disposal￿of￿the￿person￿or￿entity￿in￿violation￿of￿a￿duty￿under the￿FMSA￿had￿not￿been￿exercised￿and￿(iii)￿a￿prohibition￿on￿the￿acquisition￿by￿the￿offender￿of￿our￿shares￿or￿the￿voting￿on our￿ordinary￿shares￿for￿a￿period￿of￿not￿more￿than￿five￿years. Since￿July￿1,￿2013,￿we￿may￿request￿Euroclear￿Nederland￿and￿its￿admitted￿institutions￿as￿well￿as￿intermediaries, institutions￿and￿custodians￿of￿investment￿funds￿(in￿the￿Netherlands￿and￿abroad)￿of￿which￿we￿reasonably￿expect￿that they￿hold￿our￿shares￿other￿than￿as￿beneficial￿owner,￿to￿provide￿certain￿details￿on￿the￿identity￿and￿number￿of￿shares￿held, of￿their￿clients￿for￿whom￿they￿hold￿our￿shares.￿We￿must￿keep￿the￿information￿received￿confidential.￿We￿may￿only￿make such￿requests￿during￿a￿period￿of￿60￿days￿prior￿to￿the￿day￿on￿which￿our￿general￿meeting￿of￿shareholders￿will￿be￿held.￿No details￿are￿required￿to￿be￿given￿in￿respect￿of￿shareholders￿with￿an￿interest￿of￿less￿than￿0.5￿percent￿of￿our￿issued￿share capital.￿A￿shareholder￿who,￿individually￿or￿together￿with￿other￿shareholders,￿holds￿an￿interest￿of￿at￿least￿10￿percent of￿the￿issued￿share￿capital￿may￿request￿us￿to￿establish￿the￿identity￿of￿our￿shareholders￿in￿this￿manner￿so￿that￿we￿can forward￿to￿them￿information￿provided￿by￿such￿shareholder￿in￿respect￿of￿an￿item￿on￿the￿agenda￿for￿the￿general￿meeting. This￿request￿may￿only￿be￿made￿during￿a￿period￿of￿60￿days￿until￿(and￿not￿including)￿the￿42nd￿day￿before￿the￿day￿on￿which the￿general￿meeting￿of￿shareholders￿will￿be￿held. B. Related Party Transactions Intel Agreements under Customer Co-Investment Program On￿July￿9,￿2012,￿we￿announced￿our￿CCIP￿to￿accelerate￿our￿development￿of￿EUV￿technology￿beyond￿the￿current generation￿and￿our￿development￿of￿future￿450mm￿silicon￿wafer￿technology.￿The￿Participating￿Customers￿collectively agreed￿to￿fund￿EUR￿1.38￿billion￿of￿our￿research￿and￿development￿projects￿from￿2013￿through￿2017.￿This￿program 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￿CCIP￿consists￿of two￿funding￿projects:￿a￿450mm￿technology￿development￿project￿and￿a￿next-generation￿EUV￿development￿project.￿ASML has￿entered￿into￿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.￿ 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￿(after￿giving￿effect￿to￿the￿Synthetic￿Share￿Buyback￿in￿November￿2012). Please￿see￿Item￿10.C￿“Material￿Contracts￿-￿Customer￿Co-Investment￿Program”￿and￿Note￿28￿to￿our￿Financial￿Statements for￿more￿information￿about￿the￿CCIP.￿See￿Note￿29￿to￿our￿Financial￿Statements￿for￿details￿on￿sales￿to￿Intel￿in￿2013￿and outstanding￿balances￿as￿of￿December￿31,￿2013. 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￿Note￿18￿to￿our￿Financial￿Statements.￿Furthermore,￿ASML￿has￿not￿granted￿any￿personal￿loans, guarantees,￿or￿the￿like￿to￿members￿of￿the￿Board￿of￿Management￿or￿Supervisory￿Board. C. Interests of Experts & Counsel Not￿applicable. ASML￿ANNUAL￿REPORT￿2013 45 Item 8 Financial Information A. Consolidated Statements and Other Financial Information Consolidated Financial Statements See￿Item￿18￿"Financial￿Statements". Export Sales See￿Note￿21￿to￿our￿Financial￿Statements. Legal Proceedings See￿Item￿4.B.￿"Business￿Overview￿-￿Intellectual￿Property"￿and￿Note￿19￿to￿our￿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￿R&D￿programs￿and￿for￿acquisition￿opportunities￿that￿may￿arise￿from￿time￿to￿time;￿and￿by future￿changes￿in￿applicable￿income￿tax￿and￿corporate￿laws.￿Accordingly,￿it￿may￿be￿decided￿to￿propose￿not￿to￿pay￿a dividend￿or￿to￿pay￿a￿lower￿dividend￿with￿respect￿to￿any￿particular￿year￿in￿the￿future. For￿2013,￿a￿proposal￿to￿declare￿a￿dividend￿of￿EUR￿0.61￿per￿ordinary￿share￿of￿EUR￿0.09￿nominal￿value￿will￿be￿submitted to￿the￿AGM￿to￿be￿held￿on￿April￿23,￿2014. B. Significant Changes No￿significant￿changes￿have￿occurred￿since￿the￿date￿of￿our￿Financial￿Statements.￿See￿Item￿5.D.￿"Trend￿Information"￿and Note￿30￿to￿the￿Financial￿Statements. Item 9 The Offer and Listing A. Offer and Listing Details Our￿ordinary￿shares￿are￿listed￿for￿trading￿in￿the￿form￿of￿registered￿ASML￿NASDAQ￿shares￿and￿in￿the￿form￿of￿registered ASML￿shares￿NYSE￿Euronext￿Amsterdam.￿The￿principal￿trading￿market￿of￿our￿ordinary￿shares￿is￿NYSE￿Euronext Amsterdam.￿Our￿ordinary￿shares￿also￿trade￿on￿NASDAQ.￿For￿more￿information￿see￿Item￿10.B.￿“Memorandum￿and Articles￿of￿Association”. Our￿shares￿listed￿at￿NASDAQ￿are￿registered￿with￿J.P.￿Morgan,￿the￿New￿York￿Transfer￿Agent,￿pursuant￿to￿the￿terms￿of the￿Transfer￿Agent￿Agreement￿between￿ASML￿and￿the￿New￿York￿Transfer￿Agent.￿Our￿shares￿listed￿at￿NYSE￿Euronext Amsterdam￿are￿held￿in￿dematerialized￿form￿through￿the￿facilities￿of￿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￿our￿shares￿listed￿at￿NASDAQ￿for￿our￿shares￿listed￿at￿NYSE￿Euronext￿Amsterdam￿and￿vice versa. Dividends￿payable￿on￿our￿shares￿listed￿at￿NASDAQ￿are￿declared￿in￿euro￿and￿converted￿to￿U.S.￿dollars￿at￿the￿rate￿of exchange￿at￿the￿close￿of￿business￿on￿the￿date￿determined￿by￿the￿Board￿of￿Management.￿The￿resulting￿amounts￿are distributed￿through￿the￿New￿York￿Transfer￿Agent￿and￿no￿charge￿is￿payable￿by￿holders￿of￿our￿shares￿listed￿at￿NASDAQ￿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￿our￿shares￿listed￿at￿NASDAQ.￿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￿our￿shares￿listed￿at￿NASDAQ.￿In￿the￿year￿ended￿December￿31,￿2013,￿the￿Transfer￿Agent￿reimbursed￿USD 2,495,352￿of￿expenses￿incurred￿by￿ASML,￿which￿mainly￿comprised￿of￿legal￿and￿listing￿fees￿incurred￿due￿to￿the￿existence of￿our￿shares￿listed￿at￿NASDAQ. ASML￿ANNUAL￿REPORT￿2013 46 The￿following￿table￿sets￿forth,￿for￿the￿periods￿indicated,￿the￿high￿and￿low￿closing￿prices￿of￿our￿shares￿listed￿at￿NASDAQ and￿our￿shares￿listed￿at￿NYSE￿Euronext￿Amsterdam. Annual Information 2013 2012 2011 2010 2009 Quarterly Information 4th￿quarter￿2013 3rd￿quarter￿2013 2nd￿quarter￿2013 1st￿quarter￿2013 4th￿quarter￿2012 3rd￿quarter￿2012 2nd￿quarter￿2012 1st￿quarter￿2012 Monthly Information February￿(through￿February￿4)￿2014 January￿2014 December￿2013 November￿2013 October￿2013 September￿2013 August￿2013 ASML shares NASDAQ USD ASML shares NYSE Euronext Amsterdam EUR High 100.96 64.68 45.82 38.45 34.67 100.96 98.76 84.08 78.21 64.68 58.86 51.54 50.14 84.56 92.36 94.07 93.59 100.96 98.76 92.99 Low 63.08 40.91 31.08 24.73 14.28 86.94 78.40 66.08 63.08 50.08 48.46 43.80 40.91 84.09 84.40 87.91 86.94 92.84 88.39 87.06 High 74.30 49.36 32.81 29.26 24.24 74.30 73.00 65.55 56.80 49.36 48.14 40.88 37.48 62.86 67.76 69.25 69.11 74.30 73.00 70.33 Low 47.20 31.81 22.28 19.68 11.35 63.87 60.66 50.62 47.20 39.15 39.75 35.17 31.81 62.53 62.05 63.87 64.54 67.40 66.79 65.94 B. Plan of Distribution Not￿applicable. C. Markets See￿Item￿9.A.￿"Offer￿and￿Listing￿Details". D. Selling Shareholders Not￿applicable. 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 Our￿Articles￿of￿Association￿included￿as￿Exhibit￿99.1￿to￿our￿form￿6-K￿filed￿furnished￿with￿the￿SEC￿on￿February￿8,￿2013 (the￿"Articles￿of￿Association"). 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￿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 ASML￿ANNUAL￿REPORT￿2013 47 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￿AGM￿on￿April￿24,￿2013,￿our￿shareholders￿authorized￿the￿Board￿of￿Management￿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.￿At￿our AGM￿to￿be￿held￿on￿April￿23,￿2014,￿our￿shareholders￿will￿be￿asked￿to￿extend￿this￿authority￿through￿October￿23,￿2015. 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￿AGM￿on￿April￿24,￿2013,￿our￿shareholders￿authorized￿the￿Board￿of￿Management through￿October￿24,￿2014,￿subject￿to￿approval￿of￿the￿Supervisory￿Board,￿to￿restrict￿or￿exclude￿preemptive￿rights￿of holders￿of￿ordinary￿shares￿up￿to￿a￿maximum￿of￿10￿percent￿of￿our￿issued￿share￿capital.￿At￿our￿AGM￿to￿be￿held￿on￿April 23,￿2014,￿our￿shareholders￿will￿be￿asked￿to￿extend￿this￿authority￿through￿October￿23,￿2015. 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￿Synthetic￿Share￿Buyback,￿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￿24,￿2013￿through￿October￿24,￿2014,￿up￿to￿a￿maximum￿of￿two￿times￿10.0￿percent￿of￿ASML's￿issued￿share￿capital as￿of￿April￿24,￿2013,￿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￿23,￿2014, our￿shareholders￿will￿be￿asked￿to￿extend￿this￿through￿October￿23,￿2015. C. Material Contracts Overview On￿July￿9,￿2012,￿we￿announced￿our￿CCIP￿to￿accelerate￿our￿development￿of￿EUV￿technology￿beyond￿the￿current generation￿and￿our￿development￿of￿future￿450mm￿silicon￿wafer￿technology.￿The￿Participating￿Customers￿collectively agreed￿to￿fund￿EUR￿1.38￿billion￿of￿our￿research￿and￿development￿projects￿from￿2013￿through￿2017.￿This￿program created￿risk￿sharing￿with￿some￿of￿our￿largest￿customers￿while￿the￿results￿of￿ASML’s￿development￿programs￿will￿be available￿to￿every￿semiconductor￿manufacturer￿with￿no￿restrictions.￿The￿R&D￿funding￿program￿in￿the￿CCIP￿consists￿of two￿funding￿projects:￿a￿450mm￿technology￿development￿project￿and￿a￿next-generation￿EUV￿development￿project.￿ASML entered￿into￿NRE￿Funding￿Agreements￿with￿the￿Participating￿Customers. 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￿Financial￿Statements. Description of Investment Agreements, Shareholder Agreements and NRE Funding Agreements In￿connection￿with￿the￿CCIP,￿ASML￿entered￿into￿an￿investment￿agreement,￿a￿shareholder￿agreement￿and￿NRE￿Funding Agreements￿with￿each￿of￿the￿Participating￿Customers.￿Intel￿is￿the￿largest￿participant￿in￿the￿program,￿with￿an￿aggregate funding￿commitment￿of￿EUR￿829￿million￿and￿an￿investment￿in￿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￿276 million￿funding￿commitment)￿and￿Samsung￿(which￿acquired￿3￿percent￿of￿our￿shares￿and￿made￿an￿EUR￿276￿million funding￿commitment)￿are￿on￿substantially￿the￿same￿terms￿as￿those￿agreed￿with￿Intel.￿￿Shares￿were￿acquired￿by￿Dutch foundations￿(“Stichtingen”)￿established￿for￿each￿participant. ASML￿ANNUAL￿REPORT￿2013 48 Investment Agreement Pursuant￿to￿the￿Intel￿Investment￿Agreement￿between￿ASML￿and￿Intel,￿dated￿July￿9,￿2012,￿ASML￿agreed￿to￿issue￿to￿a foundation￿established￿for￿the￿lntel￿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￿our￿shares￿listed￿at￿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￿which￿governs￿certain￿matters￿relating￿to￿the￿holding of￿and￿further￿investment￿by￿Intel￿in￿ordinary￿shares￿of￿ASML,￿directly￿and￿indirectly￿through￿the￿Intel￿Stichting,￿including the￿matters￿described￿below. Voting Restrictions Pursuant￿to￿the￿Intel￿Shareholder￿Agreement,￿Intel￿(and￿the￿Intel￿Stichting)￿will￿not￿be￿entitled￿to￿vote￿the￿ordinary￿shares that￿were￿acquired￿by￿the￿Intel￿Stichting￿as￿part￿of￿the￿CCIP￿or￿any￿other￿ordinary￿shares￿otherwise￿transferred￿to￿the Intel￿Stichting￿(under￿the￿circumstances￿described￿under￿"Standstill;￿Additional￿Purchases"￿below)￿prior￿to￿a￿Shareholder Agreement￿Termination￿Event￿(as￿defined￿below),￿except￿when￿a￿Suspension￿Event￿(as￿described￿below)￿occurs￿and is￿continuing￿or￿where￿the￿following￿matters￿are￿proposed￿at￿any￿General￿Meeting￿(the￿"Voting￿Restrictions"):￿(i)￿an issuance￿of￿ASML￿shares￿or￿grant￿of￿rights￿to￿subscribe￿for￿ASML￿shares￿representing￿25￿percent￿or￿more￿of￿the￿issued and￿outstanding￿share￿capital￿of￿ASML￿or￿the￿restriction￿or￿exclusion￿of￿pre-emption￿rights￿relating￿thereto￿(in￿each case,￿on￿an￿aggregate￿basis￿during￿the￿preceding￿12￿months)￿or￿the￿designation￿of￿the￿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￿CCIP)￿that￿may￿be￿held￿outside￿the￿Intel￿Stichting.￿For￿any￿additional￿ASML shares￿that￿Intel￿(or￿its￿affiliates)￿acquires￿in￿excess￿of￿4.99￿percent￿of￿the￿outstanding￿shares￿of￿ASML,￿Intel￿is￿required to￿deposit￿such￿shares￿with￿the￿Intel￿Stichting￿in￿exchange￿for￿Depositary￿Receipts.￿Shares￿held￿directly￿by￿Intel￿or￿its affiliates￿(and￿which￿not￿required￿to￿be￿deposited￿with￿the￿Intel￿Stichting)￿are￿not￿subject￿to￿the￿Voting￿Restrictions,￿or Lock-Up￿Restrictions￿(as￿defined￿below),￿but￿are￿subject￿to￿the￿Standstill￿Restriction. The￿Intel￿Stichting￿will￿continue￿to￿hold￿ASML￿shares￿owned￿by￿Intel￿(notwithstanding￿termination￿of￿the￿Standstill Period)￿until￿the￿earlier￿of￿(i)￿￿such￿time￿as￿Intel￿owns￿(directly￿or￿through￿the￿Intel￿Stichting)￿less￿than￿2￿percent￿of ASML’s￿outstanding￿shares￿(the￿relevant￿percentage￿is￿1￿percent￿for￿the￿other￿Participating￿Customers)￿(ii)￿the￿date ASML￿ANNUAL￿REPORT￿2013 49 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. 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￿Restriction￿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￿during￿any￿six￿month￿period￿(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￿our￿shares￿listed￿at￿NYSE￿Euronext￿Amsterdam￿or￿delisting￿of￿our￿shares listed￿at￿NASDAQ￿(except￿for￿certain￿voluntary￿delistings￿from￿NASDAQ),￿(iii)￿the￿winding￿up￿or￿liquidation￿of￿ASML,￿or (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￿Intel￿450mm￿NRE￿Funding Agreement￿and￿the￿other￿relates￿to￿the￿Intel￿EUV￿NRE￿Funding￿Agreement￿(together￿the￿Intel￿NRE￿Funding￿Agreements). Intel￿has￿committed￿to￿provide￿funding￿in￿an￿aggregate￿amount￿of￿EUR￿553￿million￿under￿the￿Intel￿450mm￿NRE￿Funding Agreement￿and￿funding￿in￿an￿aggregate￿amount￿of￿EUR￿276￿￿million￿under￿the￿Intel￿EUV￿NRE￿Funding￿Agreement, payable￿over￿the￿term￿of￿the￿relevant￿agreements￿(2013-2017).￿Under￿the￿agreements,￿ASML￿retains￿sole￿control￿over the￿development￿of￿450mm￿photo￿lithography￿equipment￿and￿EUV￿platforms￿and￿will￿own￿all￿intellectual￿property created￿by￿ASML￿in￿connection￿therewith.￿The￿NRE￿Funding￿Agreements￿provide￿that￿if￿ASML,￿in￿its￿reasonable discretion,￿determines￿to￿abandon￿either￿the￿450mm￿or￿EUV￿development￿project,￿as￿a￿result￿of￿technical￿infeasibility or￿lack￿of￿sufficient￿industry￿demand,￿or￿if￿the￿then￿remaining￿funding￿exceeds￿the￿expenditure￿estimate￿for￿the development￿project￿(450mm￿or￿EUV),￿then￿the￿parties￿may￿agree￿on￿an￿alternative￿development￿project.￿If￿no￿alternative is￿agreed,￿ASML￿may￿invoice￿Intel￿for￿the￿remaining￿due￿portion￿of￿committed￿funding￿during￿each￿year￿of￿the￿remaining funding￿period￿in￿which￿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. Development 450mm silicon wafer technology In￿November￿2013,￿following￿our￿customers’￿decision,￿ASML￿decided￿to￿pause￿the￿development￿of￿450mm￿lithography systems￿until￿customer￿demand￿and￿the￿timing￿related￿to￿such￿demand￿is￿clear.￿We￿believe￿that￿our￿450mm development￿activities￿can￿be￿restarted￿if￿and￿when￿the￿industry￿demands￿the￿introduction￿of￿450mm.￿Since￿450mm requires￿both￿generic￿developments￿and￿wafer￿size-specific￿developments,￿many￿of￿our￿employees￿involved￿in￿the ASML￿ANNUAL￿REPORT￿2013 50 450mm￿project￿are￿doing￿work￿that￿is￿just￿as￿relevant￿for￿future￿DUV￿and￿EUV￿platforms.￿The￿teams￿and￿people￿have therefore￿been￿reassigned￿to￿different￿projects. Under￿our￿CCIP,￿we￿are￿party￿to￿a￿450mm￿NRE￿Funding￿Agreement￿with￿Intel￿for￿a￿total￿NRE￿funding￿commitment￿of EUR￿553￿million.￿We￿are￿currently￿in￿discussions￿with￿Intel￿to￿determine￿appropriate￿projects￿to￿which￿to￿apply￿the 450mm￿NRE￿funding. Under￿the￿CCIP,￿we￿are￿also￿party￿to￿EUV￿NRE￿agreements￿with￿Intel￿(total￿funding￿of￿EUR￿276￿million),￿TSMC￿(total funding￿of￿EUR￿276￿million)￿and￿Samsung￿(total￿funding￿of￿EUR￿276￿million),￿all￿of￿which￿funding￿is￿being￿used￿for￿EUV projects. Cymer Merger Agreement On￿October￿16,￿2012,￿ASML￿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”).￿The￿Merger￿Agreement￿provided￿for￿the￿acquisition￿of all￿outstanding￿shares￿of￿Cymer￿by￿a￿wholly-owned￿subsidiary,￿ASML￿US￿inc.,￿an￿indirect￿wholly-owned￿subsidiary of￿ASML.￿The￿Merger￿Agreement￿also￿contained￿certain￿customary￿representations￿and￿warranties,￿covenants￿and indemnities.￿The￿transaction￿was￿completed￿on￿May￿30,￿2013,￿in￿accordance￿with￿the￿terms￿of￿the￿Merger￿Agreement, for￿a￿total￿consideration￿of￿EUR￿3.1￿billion￿(USD￿4.0￿billion).￿See￿Note￿2￿to￿the￿Financial￿Statements. 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￿our￿shares listed￿at￿NYSE￿Euronext￿Amsterdam￿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￿our￿shares￿listed￿at NASDAQ￿shall￿be￿declared￿in￿euros￿but￿paid￿in￿U.S.￿dollars,￿converted￿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￿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￿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￿Holder￿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. ASML￿ANNUAL￿REPORT￿2013 51 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;￿and 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￿2013 52 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￿,￿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 of￿America￿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￿2013 53 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￿our￿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￿Tax￿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￿IRS￿will￿not￿challenge￿one￿or￿more￿of the￿tax￿consequences￿described￿herein,￿and￿we￿have￿not￿obtained,￿nor￿do￿we￿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 We￿believe￿we￿were￿not￿a￿PFIC￿for￿US￿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￿our￿actual￿PFIC￿status￿in￿any￿particular￿year￿until￿the￿close￿of￿the￿taxable￿year￿in￿question.￿We have￿not￿conducted￿a￿detailed￿study￿at￿this￿time￿to￿confirm￿its￿non-PFIC￿status.￿If￿we￿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)￿we￿makes￿out￿of￿our￿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￿US￿tax￿basis￿in￿the￿Ordinary￿Shares￿and thereafter￿as￿taxable￿capital￿gain.￿We￿presently￿do￿not￿maintain￿calculations￿of￿our￿earnings￿and￿profits￿under￿United States￿federal￿income￿tax￿principles.￿If￿we￿do￿not￿report￿to￿a￿United￿States￿Holder￿the￿portion￿of￿a￿distribution￿that ASML￿ANNUAL￿REPORT￿2013 54 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￿we￿are￿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￿we￿are￿required￿to￿pay￿to￿the￿Dutch￿Tax￿Administration￿but￿does￿not￿reduce￿the￿amount￿of￿tax￿we￿are required￿to￿withhold￿from￿dividends. For￿US￿foreign￿tax￿credit￿purposes,￿dividends￿paid￿by￿us￿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￿US-source￿gain￿or￿loss.￿The rules￿governing￿the￿foreign￿tax￿credit￿are￿complex￿and￿we￿suggest￿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￿PFIC)￿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￿us￿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￿US￿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￿US 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￿US￿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 amounts￿withheld￿under￿the￿backup￿withholding￿rules￿might￿be￿refunded￿(or￿credited￿against￿the￿beneficial￿owner’s ASML￿ANNUAL￿REPORT￿2013 55 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￿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.￿Our￿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￿good￿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￿risks. It￿is￿our￿policy￿to￿hedge￿material￿transaction￿exposures,￿such￿as￿forecasted￿sales￿and￿purchase￿transactions,￿and material￿net￿remeasurement￿exposures,￿such￿as￿accounts￿receivable￿and￿payable.￿We￿hedge￿these￿exposures￿through the￿use￿of￿foreign￿exchange￿contracts.￿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￿4￿to￿the￿Financial Statements. ASML￿ANNUAL￿REPORT￿2013 56 Interest￿Rate￿Risk￿Management We￿have￿interest-bearing￿assets￿and￿liabilities￿that￿expose￿us￿to￿fluctuations￿in￿market￿interest￿rates.￿We￿use￿interest rate￿swaps￿to￿align￿the￿interest-typical￿terms￿of￿interest-bearing￿liabilities￿with￿the￿interest-typical￿terms￿of￿interest- bearing￿assets.￿There￿may￿be￿residual￿interest￿rate￿risk￿to￿the￿extent￿the￿asset￿and￿liability￿positions￿do￿not￿fully￿offset. As￿part￿of￿our￿hedging￿policy,￿we￿use￿interest￿rate￿swaps￿to￿hedge￿changes￿in￿fair￿value￿of￿our￿Eurobonds￿due￿to changes￿in￿market￿interest￿rates,￿thereby￿offsetting￿the￿variability￿of￿future￿interest￿receipts￿on￿part￿of￿our￿cash￿and￿cash equivalents. 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￿4￿to￿the￿Financial￿Statements. Financial￿Instruments We￿use￿foreign￿exchange￿contracts￿to￿manage￿our￿foreign￿currency￿risk￿and￿interest￿rate￿swaps￿to￿manage￿our￿interest rate￿risk.￿The￿following￿table￿summarizes￿the￿notional￿amounts￿and￿estimated￿fair￿values￿of￿our￿derivative￿financial instruments: (in thousands) Forward￿foreign￿exchange￿contracts¹ Interest￿rate￿swaps² As of December 31 Notional amount EUR 986,986 1,013,053 Fair Value Notional amount EUR 262,146 624,900 EUR 8,583 51,385 Fair Value EUR 16,805 124,050 2013 2012 1 2 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. Relates￿to￿interest￿rate￿swaps￿assigned￿as￿a￿hedge￿to￿interest￿bearing￿assets￿and￿liabilities,￿mainly￿related￿to￿our￿Eurobonds.￿The￿fair￿value￿of￿the interest￿rate￿swaps￿includes￿accrued￿interest.￿The￿increase￿in￿notional￿amount￿is￿mainly￿explained￿by￿the￿net￿increase￿in￿our￿Eurobonds￿which￿serve as￿hedged￿items.￿The￿net￿decrease￿in￿fair￿value￿is￿mainly￿explained￿by￿the￿unwinding￿of￿part￿of￿the￿Interest￿rate￿swaps￿relating￿to￿our￿EUR￿600￿million 5.75￿percent￿senior￿notes.￿See￿note￿15￿to￿the￿Financial￿Statements. 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￿OCI,￿as￿shown. 2013 2012 (in thousands) U.S.￿dollar Japanese￿yen Taiwanese￿dollar Other￿currencies Total Impact on income before income taxes EUR (15,801) 183 (7,692) (9,281) (32,591) Impact on OCI EUR 21,059 913 - - 21,972 Impact on income before income taxes EUR (5,646) 465 (4,956) (2,718) (12,855) Impact on OCI EUR 13,669 (3,218) - - 10,451 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￿2013￿compared￿with￿2012￿reflects￿our￿higher￿net￿exposure at￿year￿end.￿The￿negative￿effect￿on￿income￿before￿income￿taxes￿as￿presented￿in￿the￿table￿above￿for￿2013￿is￿mainly attributable￿to￿timing￿differences￿between￿the￿arising￿and￿hedging￿of￿exposures. ASML￿ANNUAL￿REPORT￿2013 57 The￿effects￿of￿the￿fair￿value￿movements￿of￿cash￿flow￿hedges,￿entered￿into￿for￿U.S.￿dollar￿and￿Japanese￿yen￿transactions are￿recognized￿in￿OCI.￿The￿increased￿U.S.￿dollar￿and￿Japanese￿yen￿effect￿on￿OCI￿in￿2013￿compared￿with￿2012￿is￿the result￿of￿an￿increase￿in￿outstanding￿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￿OCI. Interest￿Rate￿Sensitivity The￿sensitivity￿analysis￿below￿has￿been￿determined￿based￿on￿the￿exposure￿to￿interest￿rates￿for￿both￿derivative￿financial and￿non-derivative￿financial￿instruments￿at￿the￿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￿OCI.￿A￿positive￿amount￿indicates an￿increase￿in￿income￿before￿income￿taxes￿and￿OCI. (in thousands) Effect￿of￿a￿1.0￿percent￿point￿increase￿in￿interest￿rates 2013 2012 Impact on income before income taxes EUR 19,969 Impact on OCI EUR 1,183 Impact on income before income taxes EUR 20,706 Impact on OCI EUR 1,488 The￿positive￿effect￿on￿income￿before￿income￿taxes￿mainly￿relates￿to￿our￿cash￿and￿cash￿equivalents￿and￿short-term investments.￿The￿positive￿effect￿on￿OCI,￿is￿mainly￿attributable￿to￿the￿fair￿value￿movements￿of￿the￿interest￿rate￿swaps designated￿as￿cash￿flow￿hedges. For￿a￿1.0￿percentage￿point￿decrease￿in￿interest￿rates￿there￿would￿be￿a￿lower￿opposite￿effect￿on￿income￿before￿income taxes￿and￿OCI￿due￿to￿the￿current￿interest￿rates. See￿notes￿4￿and￿5￿to￿our￿Financial￿Statements￿for￿more￿information￿on￿our￿Financial￿Risk￿Management￿including￿Credit Risk￿Management. Item 12 Description of Securities Other Than Equity Securities Not￿applicable. ASML￿ANNUAL￿REPORT￿2013 58 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,￿2013,￿ASML's￿senior￿management￿conducted￿an￿evaluation,￿under￿the￿supervision￿and￿with￿the participation￿of￿ASML’s￿CEO￿and￿CFO,￿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￿CEO￿and￿CFO have￿concluded￿that,￿as￿of￿December￿31,￿2013,￿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￿CEO￿and￿CFO,￿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.￿Under￿the￿supervision￿and￿with￿the￿participation￿of￿ASML’s￿CEO and￿CFO,￿ASML’s￿management￿conducted￿an￿evaluation￿of￿the￿effectiveness￿of￿ASML’s￿internal￿control￿over￿financial reporting￿as￿of￿December￿31,￿2013￿based￿upon￿the￿framework￿in￿"Internal￿Control￿–￿Integrated￿Framework"￿(1992) 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,￿2013 at￿providing￿reasonable￿assurance￿regarding￿the￿reliability￿of￿financial￿reporting￿and￿the￿preparation￿of￿the￿Financial Statements￿for￿external￿purposes￿in￿conformity￿with￿US￿GAAP. Deloitte￿Accountants￿B.V.,￿an￿independent￿registered￿public￿accounting￿firm,￿has￿audited￿the￿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,￿2013￿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. ASML￿ANNUAL￿REPORT￿2013 59 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￿6.A.￿"Directors￿and￿Senior Management"￿and￿Item￿6.C.￿"Practices". B. Code of Ethics Code of Conduct We￿strive￿to￿do￿business￿on￿the￿basis￿of￿fairness,￿good￿faith￿and￿integrity.￿Our￿Code￿of￿Conduct,￿which￿amongst￿others applies￿to￿all￿our￿employees￿sets￿out￿our￿ethical￿position￿on￿topics￿such￿as: • Respect￿for￿the￿different￿cultural￿identities￿of￿our￿employees,￿stakeholders￿and￿customers; • Zero￿tolerance￿of￿any￿form￿of￿discrimination￿or￿harassment; • Promoting￿honest,￿ethical￿and￿transparent￿conduct,￿including￿in￿the￿handling￿of￿actual￿or￿apparent￿conflicts￿of￿interest between￿personal￿and￿professional￿relationships; • Conducting￿our￿business￿in￿good￿faith￿and￿with￿integrity;￿and • Complying￿with￿all￿applicable￿laws￿and￿regulations. The￿complete￿Code￿of￿Conduct￿can￿be￿found￿in￿the￿corporate￿governance￿section￿of￿our￿corporate￿website. Business Principles The￿Code￿of￿Conduct￿has￿been￿translated￿into￿an￿internal￿set￿of￿practical￿Business￿Principles￿which￿contain￿rules￿for day-to-day￿operations￿for￿employees.￿These￿Business￿Principles￿focus￿on￿five￿areas: • Show￿respect￿for￿people￿and￿the￿planet; • Operate￿with￿integrity; • Preserve￿intellectual￿Property￿and￿other￿assets; • Manage￿exposures￿by￿following￿processes;￿and • Adhere￿to￿our￿Business￿Principles￿and￿applicable￿laws. Code of Conduct Complaints We￿encourage￿our￿employees￿to￿discuss￿or￿report￿any￿behavior￿that￿may￿violate￿our￿Code￿of￿Conduct.￿ASML has￿a￿procedure￿for￿reporting￿issues￿breaching￿the￿Code￿of￿Conduct￿including￿complaints￿of￿a￿financial￿nature (Whistleblower’s￿policy).￿We￿encourage￿our￿employees￿to￿speak￿up￿and￿feel￿free￿to￿raise￿ethical￿issues￿without￿the￿fear of￿retaliation.￿For￿those￿who￿feel￿more￿comfortable￿speaking￿up￿anonymously,￿there￿is￿an￿external￿hotline￿(phone￿and webmail).￿The￿reporting￿procedures￿for￿Code￿of￿Conduct￿violations￿can￿be￿found￿in￿the￿corporate￿governance￿section￿of our￿corporate￿website. C. Principal Accountant Fees and Services Deloitte￿Accountants￿B.V.￿has￿served￿as￿our￿independent￿registered￿public￿accounting￿firm￿for￿the￿years￿ending December￿31,￿2013￿and￿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￿2013￿and￿2012: Year ended December 31 (in thousands) Audit￿fees￿in￿relation￿to￿annual￿reports Other￿audit￿fees Audit-related￿fees Tax￿fees Other 2013 Deloitte Accountants B.V. EUR 1,559 - 120 - - Deloitte Network EUR - 364 - 347 - Principal accountant fees and services 1,679 711 2012 Deloitte Accountants B.V. EUR 1,002 - 149 - - Deloitte Network EUR - 352 - 353 247 1,151 952 Total EUR 1,559 364 120 347 - 2,390 Total EUR 1,002 352 149 353 247 2,103 ASML￿ANNUAL￿REPORT￿2013 60 Audit￿Fees￿and￿Other￿Audit￿Fees Audit￿fees￿primarily￿relate￿to￿the￿audit￿of￿our￿Financial￿Statements￿as￿set￿out￿in￿our￿Annual￿Report,￿our￿Statutory￿Annual Report,￿agreed￿upon￿procedures￿on￿our￿quarterly￿financial￿results￿and￿services￿related￿to￿statutory￿and￿regulatory￿filings of￿ASML￿and￿its￿subsidiaries. Audit-related￿Fees Audit-related￿fees￿mainly￿related￿to￿various￿audit￿services￿not￿related￿to￿our￿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 2013 EUR 186 2 159 347 2012 EUR 123 79 151 353 The￿Audit￿Committee￿has￿approved￿the￿external￿audit￿plan￿and￿related￿audit￿fees￿for￿the￿year￿2013. The￿Audit￿Committee￿will￿monitor￿compliance￿with￿the￿Dutch￿rules￿on￿non-audit￿services￿provided￿by￿our￿independent registered￿public￿accounting￿firm,￿which￿outlines￿strict￿separation￿of￿audit￿and￿advisory￿services￿for￿Dutch￿public interest￿entities.￿Furthermore,￿we￿will￿start￿our￿audit￿proposal￿process￿(mandatory￿firm￿rotation,￿not￿applicable￿to financial￿years￿before￿January￿1,￿2016)￿in￿2014. 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￿17,￿2013,￿we￿announced￿our￿intention￿to￿purchase￿up￿to￿an￿amount￿of￿EUR￿1.0￿billion￿of￿our￿own￿shares￿within the￿2013-2014￿timeframe,￿starting￿April￿18,￿2013.￿Up￿to￿December￿31,￿2013,￿we￿had￿purchased￿4,614,179￿of￿our￿shares at￿an￿average￿price￿of￿EUR￿65.02￿per￿share.￿The￿shares￿purchased￿are￿intended￿to￿be￿cancelled￿in￿2014. The￿following￿tables￿provide￿a￿summary￿of￿shares￿repurchased￿by￿ASML￿in￿2013￿and￿a￿historic￿overview￿of￿previous share￿buyback￿programs,￿respectively: Period April￿18￿-￿30,￿2013 May￿2￿-￿31,￿2013 June￿1￿-￿30,￿2013 July￿1￿-￿31,￿2013 August￿1￿-￿31,￿2013 September￿1￿-￿30,￿2013 October￿3￿-￿31,￿2013 November￿1￿-￿30,￿2013 December￿1￿-￿31,￿2013 Total Total number of shares purchased Average price paid per Share (EUR) 297,500 389,974 749,434 321,486 283,097 179,146 556,443 962,146 874,953 4,614,179 55.35 61.76 60.39 65.20 67.83 69.06 69.34 66.76 67.25 65.02 Total number of shares purchased as part of publicly announced plans or programs 297,500 687,474 1,436,908 1,758,394 2,041,491 2,220,637 2,777,080 3,739,226 4,614,179 Maximum value of shares that may yet be purchased under the program (EUR) 983,534,770 959,449,401 914,192,630 893,232,250 874,028,834 861,656,533 823,072,791 758,841,727 700,000,036 ASML￿ANNUAL￿REPORT￿2013 61 Period Share￿Buybacks Synthetic￿Share￿Buyback Share￿Buybacks Share￿Buybacks Share￿Buybacks Synthetic￿Share￿Buyback Share￿Buybacks Share￿Buybacks Total / Average1 Year 2006 2007 2007 2008 2011 2012 2012 2013 Total amount paid (in EUR millions) 677.2 1,011.9 359.8 87.6 700.0 3,728.3 535.2 300.0 3,671.7 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 4,614,179 161,245,361 Average Price Paid per Share (EUR) 16.77 18.37 21.16 17.52 27.26 39.91 39.71 65.02 22.77 Reduction of Shares Outstanding vs Beginning of Year (Percentage) 8.3 11.5 3.6 1.1 5.9 22.6 3.3 1.1 33.3 1 Totals,￿average￿and￿percentage￿are￿excluding￿the￿synthetic￿share￿buyback￿executed￿in￿2012￿as￿part￿of￿our￿CCIP.￿The￿percentage￿represents￿the reduction￿of￿shares￿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￿AGM. • 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. H. Mine Safety Disclosure Not￿applicable. ASML￿ANNUAL￿REPORT￿2013 62 Part III Item 17 Financial Statements Not￿applicable. Item 18 Financial Statements In￿response￿to￿this￿item,￿we￿incorporate￿herein￿by￿reference￿our￿Financial￿Statements￿set￿out￿on￿pages￿F-2￿through￿F-54 hereto. Item 19 Exhibits Exhibit￿No. 1 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 4.17 4.18 4.19 4.20 4.21 4.22 4.23 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￿SEC￿on￿February￿8,￿2013) 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￿SEC￿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￿SEC￿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￿SEC￿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￿SEC￿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￿SEC￿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￿SEC￿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￿SEC￿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￿January 2007)￿(Incorporated￿by￿reference￿to￿the￿Registrant’s￿Registration￿Statement￿on￿Form￿S-8￿filed￿with￿the￿SEC￿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￿SEC￿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￿SEC￿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￿SEC￿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￿SEC￿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￿SEC￿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￿SEC￿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￿SEC￿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￿SEC￿on￿August￿29,￿2008￿(file￿No.￿333-153277)) ASML￿ANNUAL￿REPORT￿2013 63 Exhibit￿No. 4.24 4.25 4.26 4.27 4.28 4.29 4.30 4.31 8.1 12.1 13.1 15.1 101.INS 101.SCH 101.CAL 101.DEF 101.LAB 101.PRE Description 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￿SEC￿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￿SEC￿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￿SEC￿on￿October￿13,￿2009￿(file￿No.￿333-162439)) Investment￿Agreement￿between￿ASML￿Holding￿N.V.￿and￿Intel￿Corporation,￿dated￿July￿9,￿2012￿(Incorporated￿by￿reference to￿the￿Registrant’s￿Annual￿Report￿on￿Form￿20-F￿for￿the￿year￿ended￿December￿31,￿2012) 450mm￿NRE￿Funding￿Agreement￿between￿ASML￿Holding￿N.V.,￿and￿Intel￿Corporation,￿dated￿July￿9,￿2012￿(Incorporated￿by reference￿to￿the￿Registrant’s￿Annual￿Report￿on￿Form￿20-F￿for￿the￿year￿ended￿December￿31,￿2012)1 EUV￿NRE￿Funding￿Agreement￿between￿ASML￿Holding￿N.V.,￿and￿Intel￿Corporation,￿dated￿July￿9,￿2012￿(Incorporated￿by reference￿to￿the￿Registrant’s￿Annual￿Report￿on￿Form￿20-F￿for￿the￿year￿ended￿December￿31,￿2012)1 Shareholder￿Agreement￿between￿ASML￿Holding￿N.V.￿and￿Intel￿Holdings￿B.V.,￿Intel￿Corporation￿and￿Stichting Administratiekantoor￿MAKTSJAB￿dated￿September￿12,￿2012￿(Incorporated￿by￿reference￿to￿the￿Registrant’s￿Annual￿Report on￿Form￿20-F￿for￿the￿year￿ended￿December￿31,￿2012) 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￿SEC￿on￿November￿21,￿2012￿(file￿No.￿333-185120)) List￿of￿Main￿Subsidiaries2 Certification￿of￿CEO￿and￿CFO￿Pursuant￿to￿Rule￿13a-14(a)￿of￿the￿Securities￿Exchange￿Act￿of￿19342 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￿20022 Consent￿of￿Deloitte￿Accountants￿B.V.2 XBRL￿Instance￿Document2 XBRL￿Taxonomy￿Extension￿Schema￿Document2 XBRL￿Taxonomy￿Extension￿Calculation￿Linkbase￿Document2 XBRL￿Taxonomy￿Extension￿Definition￿Linkbase￿Document2 XBRL￿Taxonomy￿Extension￿Label￿Linkbase￿Document2 XBRL￿Taxonomy￿Extension￿Presentation￿Linkbase￿Document2 1 2 Certain￿information￿omitted￿pursuant￿to￿a￿request￿for￿confidential￿treatment￿filed￿separately￿with￿the￿SEC. Filed￿at￿the￿SEC￿herewith. ASML￿is￿party￿to￿two￿debt￿instruments￿under￿which￿the￿total￿amount￿of￿securities￿under￿each￿debt￿instrument￿does￿not exceed￿10￿percent￿of￿the￿total￿assets￿of￿ASML￿and￿its￿subsidiaries￿on￿a￿consolidated￿basis.￿Pursuant￿to￿paragraph￿2(b) (i)￿of￿the￿instructions￿to￿the￿exhibits￿to￿Form￿20-F,￿ASML￿agrees￿to￿furnish￿a￿copy￿of￿such￿instruments￿to￿the￿Commission upon￿request. 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/￿Peter￿T.F.M.￿Wennink Peter￿T.F.M.￿Wennink President,￿CEO￿and￿member￿of￿the￿Board￿of￿Management Dated:￿February￿11,￿2014￿￿￿ /s/￿Wolfgang￿U.￿Nickl Wolfgang￿U.￿Nickl Executive￿Vice￿President￿and￿CFO Dated:￿February￿11,￿2014 ASML￿ANNUAL￿REPORT￿2013 64 Financial Statements Index to Financial Statements F-2 F-3 F-4 F-5 F-6 F-7 F-54 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 Report￿of￿Independent￿Registered￿Public￿Accounting￿Firm ASML￿ANNUAL￿REPORT￿2013 F-1 Consolidated Statements of Operations Notes 21 21 22 28 22,￿23 22 24 20 1 1 1 1 1 Year ended December 31 (in thousands, except per share data) 2013 EUR 2012 EUR 2011 EUR Net￿system￿sales Net￿service￿and￿field￿option￿sales 3,993,129 1,252,197 3,801,632 929,923 4,883,913 767,122 Total net sales Cost￿of￿system￿sales Cost￿of￿service￿and￿field￿option￿sales 5,245,326 (2,233,621) (834,443) 4,731,555 (2,198,921) (527,377) 5,651,035 (2,793,931) (407,714) Total cost of sales (3,068,064) (2,726,298) (3,201,645) Gross profit Other￿income Research￿and￿development￿costs Selling,￿general￿and￿administrative￿costs Income from operations Interest￿and￿other,￿net 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 2,177,262 64,456 (882,029) (311,741) 1,047,948 (24,471) 1,023,477 (7,987) 1,015,490 2.36 2.34 2,005,257 - (589,182) (259,301) 2,449,390 - (590,270) (217,904) 1,156,774 (6,196) 1,641,216 7,419 1,150,578 (4,262) 1,648,635 (181,675) 1,146,316 2.70 2.68 1,466,960 3.45 3.42 429,770 433,446 424,096 426,986 425,618 429,053 The￿calculation￿of￿diluted￿net￿income￿per￿ordinary￿share￿assumes￿the￿exercise￿of￿options￿issued￿under￿our￿stock￿option￿plans￿and￿the￿issuance￿of shares￿under￿our￿share￿plans￿for￿periods￿in￿which￿exercises￿or￿issuances￿would￿have￿a￿dilutive￿effect.￿The￿calculation￿of￿diluted￿net￿income￿per ordinary￿share￿does￿not￿assume￿exercise￿of￿such￿options￿or￿issuance￿of￿shares￿when￿such￿exercises￿or￿issuance￿would￿be￿anti-dilutive. ASML￿ANNUAL￿REPORT￿2013 F-2 Consolidated Statements of Comprehensive Income Notes 4 4 4 Year ended December 31 (in thousands) 2013 EUR 2012 EUR 2011 EUR Net income 1,015,490 1,146,316 1,466,960 Other comprehensive income: Foreign currency translation, net of taxes: Gain￿(loss)￿on￿foreign￿currency￿translation Financial instruments, net of taxes: Gain￿(loss)￿on￿derivative￿financial￿instruments Transfers￿to￿net￿income Other comprehensive income, net of taxes (113,779) 8,063 (17,473) (5,370) (2,276) (121,425) 214 (7,761) 516 (4,610) 51,963 29,880 Total comprehensive income, net of taxes 894,065 1,146,832 1,496,840 Attributable￿to￿equity￿holders 894,065 1,146,832 1,496,840 ASML￿ANNUAL￿REPORT￿2013 F-3 Consolidated Balance Sheets Notes As of December 31 (in thousands, except share and per share data) 2013 EUR 2012 EUR 5 5 6 7 20 8 20 9 7 20 9 10 11 12 13 20 15 14 20 15 20 14 13 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 2,330,694 679,884 878,321 250,472 32,333 2,393,022 124,431 336,421 7,025,578 46,017 139,513 298,559 2,088,589 697,634 1,217,840 4,488,152 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 Total assets 11,513,730 7,410,478 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 625,870 2,216,882 15,803 4,385 2,227 3,494 2,868,661 1,070,185 364,695 4,620 283,142 1,722,642 188,961 1,880,370 10,791 3,610 2,280 271 2,086,283 755,880 88,307 7,974 405,141 1,257,302 Total liabilities 4,591,303 3,343,585 17,￿19 Commitments￿and￿contingencies Cumulative￿Preference￿Shares;￿EUR￿0.09￿nominal￿value; 700,000,000￿shares￿authorized￿at￿December￿31,￿2013￿and￿2012; none￿issued￿and￿outstanding￿at￿December￿31,￿2013￿and￿2012; Ordinary￿Shares￿B;￿EUR￿0.01￿nominal￿value; 9,000￿shares￿authorized￿at￿December￿31,￿2013￿and￿2012; none￿issued￿and￿outstanding￿per￿December￿31,￿2013￿and￿2012; Ordinary￿Shares;￿EUR￿0.09￿nominal￿value; 699,999,000￿shares￿authorized￿at￿December￿31,￿2013; 440,852,334￿issued￿and￿outstanding￿at￿December￿31,￿2013; 699,999,000￿shares￿authorized￿at￿December￿31,￿2012; 407,165,221￿issued￿and￿outstanding￿at￿December￿31,￿2012; Issued￿and￿outstanding￿shares Share￿premium Treasury￿shares￿at￿cost Retained￿earnings Accumulated￿other￿comprehensive￿income Total shareholders’ equity 26 - - - - - - 40,092 2,912,862 (364,702) 4,376,613 (42,438) 6,922,427 37,470 483,651 (464,574) 3,931,359 78,987 4,066,893 Total liabilities and shareholders’ equity 11,513,730 7,410,478 ASML￿ANNUAL￿REPORT￿2013 F-4 Consolidated Statements of Shareholders’ Equity Issued and Outstanding Shares Notes 4 4 26,￿27 26,￿27 18,￿22 18 26 18,￿20 4 4 26,￿28 26,￿28 26,￿28 26,￿27 26,￿27 18,￿22 18 26 18,￿20 4 4 26,￿28 26,￿27 26,￿27 18,￿22 18 26 18,￿20 (in thousands) Balance at January 1, 2011 Number1 436,593 Amount EUR 39,293 Share Premium EUR 471,253 Treasury shares at cost EUR Retained Earnings EUR (151,672) 2,366,443 Accumulated OCI EUR 48,591 Total EUR 2,773,908 Components of comprehensive income: Net￿income Foreign￿Currency￿Translation,￿net￿of￿taxes Gain￿on￿financial￿instruments,￿net￿of￿taxes Total comprehensive income - - - - - - - - - - - - - 1,466,960 - - - - - 1,466,960 - (17,473) 47,353 29,880 1,466,960 (17,473) 47,353 1,496,840 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 (25,675) - - 2,751 - - 413,669 - (1,187) - 248 - - 38,354 - - 12,430 (10,629) - (11) 473,043 (700,452) 373,801 - 61,906 - - - (372,614) - (17,441) (172,645) - (416,417) 3,270,703 - - - - - - (700,452) - 12,430 34,084 (172,645) (11) 78,471 2 3,444,154 Components of comprehensive income: Net￿income Foreign￿Currency￿Translation Loss￿on￿financial￿instruments,￿net￿of￿taxes Total comprehensive income - - - - - - - - - - - - - 1,146,316 - - - - - 1,146,316 - 8,063 (7,547) 516 1,146,316 8,063 (7,547) 1,146,832 CCIP: 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 Components of comprehensive income: Net￿income Foreign￿Currency￿Translation Loss￿on￿financial￿instruments,￿net￿of￿taxes Total comprehensive income CCIP: Fair￿value￿differences5 96,566 - (93,411) (13,478) - - 3,819 - - 407,165 - - - - - Purchase of treasury shares Cancellation of treasury shares Share-based payments6 Issuance of shares7 Dividend paid Tax benefit from share-based payments Balance at December 31, 2013 (4,614) - - 38,301 - - 440,852 8,691 3,968,677 (123,416) (8,691) (3,845,261) - - - 125,628 - - - - - - 3,977,368 (123,416) (3,728,324) (198) (1,030) - 344 - - 37,470 - - 18,714 (10,222) - 2,116 483,651 (535,175) 294,752 - 66,638 - - - (293,722) - (3,046) (188,892) - (464,574) 3,931,359 - - - - - - (535,373) - 18,714 53,714 (188,892) 2,116 78,987 2 4,066,893 - - - - - - - - - - 1,015,490 - - - - - 1,015,490 - (113,779) (7,646) (121,425) 1,015,490 (113,779) (7,646) 894,065 20,956 - - - 20,956 - (854) - - - 95,895 3,476 2,309,250 - 3,110 40,092 2,912,862 - - (300,000) 349,261 - 50,611 - - - (348,407) - (5,744) (216,085) - (364,702) 4,376,613 - - - - - - (300,000) - 95,895 2,357,593 (216,085) 3,110 (42,438) 2 6,922,427 1 2 3 4 5 6 7 As￿of￿December￿31,￿2013,￿the￿number￿of￿issued￿shares￿was￿446,822,452.￿This￿includes￿the￿number￿of￿issued￿and￿outstanding￿shares￿of￿440,852,334 and￿the￿number￿of￿treasury￿shares￿of￿5,970,118.￿As￿of￿December￿31,￿2012,￿the￿number￿of￿issued￿shares￿was￿419,852,467.￿This￿includes￿the￿number of￿issued￿and￿outstanding￿shares￿of￿407,165,221￿and￿the￿number￿of￿treasury￿shares￿of￿12,687,246. As￿of￿December￿31,￿2013,￿accumulated￿OCI,￿net￿of￿taxes,￿consists￿of￿EUR￿30.2￿million￿relating￿to￿foreign￿currency￿translation￿loss￿(2012:￿EUR￿83.5 million;￿2011:￿EUR￿75.5￿million)￿and￿EUR￿12.2￿million￿relating￿to￿unrealized￿losses￿on￿financial￿instruments￿(2012:￿EUR￿4.5￿million￿losses;￿2011:￿EUR 3.0￿million￿gains). The￿difference￿between￿the￿fair￿value￿of￿the￿shares￿and￿the￿subscription￿price￿of￿the￿shares￿issued￿to￿the￿Participating￿Customers￿in￿the￿CCIP. In￿2012,￿as￿part￿of￿the￿capital￿repayment,￿EUR￿3,728.3￿million￿of￿shareholders'￿equity￿was￿returned￿to￿our￿shareholders￿(excluding￿Participating Customers￿in￿the￿CCIP)￿and￿the￿number￿of￿shares￿was￿reduced￿by￿23￿percent.￿See￿Note￿26. EUR￿21.0￿million￿is￿recognized￿to￿increase￿equity￿to￿the￿fair￿value￿of￿the￿shares￿issued￿to￿the￿Participating￿Customers￿in￿the￿CCIP.￿The￿portion￿of￿the NRE￿funding￿allocable￿to￿the￿shares￿is￿recognized￿over￿the￿NRE￿Funding￿Agreements￿period￿(2013-2017). Share-based￿payments￿include￿an￿amount￿of￿EUR￿43.5￿million￿in￿relation￿to￿the￿fair￿value￿compensation￿of￿unvested￿equity￿awards￿exchanged￿as￿part of￿acquisition￿of￿Cymer. Issuance￿of￿shares￿includes￿36,464,576￿ordinary￿shares￿issued￿in￿relation￿to￿the￿acquisition￿of￿Cymer￿for￿a￿total￿fair￿value￿of￿EUR￿2,346.7￿million. The￿difference￿of￿EUR￿1.0￿million￿with￿the￿fair￿value￿of￿shares￿as￿disclosed￿in￿Note￿2￿is￿explained￿by￿14,533￿shares￿still￿to￿be￿issued￿to￿former￿Cymer shareholders. ASML￿ANNUAL￿REPORT￿2013 F-5 Consolidated Statements of Cash Flows Notes 11,￿12 10,￿11,￿12 12 18 6 8 20 6 7 8 9 13,￿14 20 12 11 5 5 26 26,￿27 26 15 18,￿20 5 5 1 2 3 4 5 6 Year ended December 31 (in thousands) 2013 EUR 2012 EUR 2011 EUR Cash Flows from Operating Activities Net￿income 1,015,490 1,146,316 1,466,960 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 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 Net￿proceeds￿from￿issuance￿of￿notes Repurchase￿of￿notes 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 Income￿taxes￿paid 228,775 13,057 2,823 52,371 1,062 164,852 (22,658) (192,149) 9,277 (518,121) (32,941) (57,282) 321,486 68,131 1,054,173 (210,804) (4,000) (904,856) 1,195,031 (443,712) 2 (368,341) (216,085) (300,000) 31,822 740,445 4 (368,303) 5 - - (4,100) 3,110 (113,111) 572,721 (9,623) 563,098 1,767,596 2,330,694 186,620 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 3 - - (3,728,324) 6 - (2,776) 2,116 (545,583) (961,938) (2,248) (964,186) 2,731,782 1,767,596 165,185 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 (50,535) (2,278) (37,906) (109,504) (35,919) (202,312) An￿amount￿of￿EUR￿115.9￿million￿(2012:￿EUR￿204.8￿million,￿2011:￿EUR￿300.5￿million)￿of￿the￿additions￿in￿property,￿plant￿and￿equipment￿relates￿to￿non- cash￿transfers￿from￿inventory,￿an￿amount￿of￿EUR￿12.5￿million￿(2012:￿EUR￿9.6￿million,￿2011:￿EUR￿17.7￿million)￿relates￿to￿other￿non-cash￿movements (mainly￿investments￿not￿yet￿paid￿and￿inceptions￿of￿finance￿lease￿arrangements)￿and￿an￿amount￿of￿EUR￿48.2￿million￿(2012:￿EUR￿222.9￿million,￿2011: EUR￿145.3￿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￿12. In￿addition￿to￿the￿cash￿paid￿in￿relation￿to￿the￿acquisition￿of￿Cymer,￿we￿issued￿36,464,576￿shares￿for￿an￿amount￿of￿EUR￿2,346.7￿million￿(non-cash event)￿as￿part￿of￿the￿consideration￿paid. 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￿CCIP. Net￿proceeds￿from￿issuance￿of￿notes￿relate￿to￿the￿total￿cash￿proceeds￿of￿EUR￿740.4￿million￿(net￿of￿incurred￿transaction￿costs)￿from￿the￿offering￿of￿our EUR￿750￿million￿3.375￿percent￿senior￿notes￿due￿2023. Repurchase￿of￿notes￿relates￿to￿the￿net￿cash￿outflows￿of￿EUR￿368.3￿million￿for￿the￿partial￿repurchase￿of￿our￿EUR￿600￿million￿5.75￿percent￿senior￿notes due￿2017￿including￿the￿partial￿unwinding￿of￿the￿related￿interest￿rate￿swaps. 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. ASML￿ANNUAL￿REPORT￿2013 F-6 Notes to the Consolidated Financial Statements 1. General Information / Summary of Significant Accounting Policies ASML,￿with￿its￿corporate￿headquarters￿in￿Veldhoven,￿the￿Netherlands,￿is￿engaged￿in￿the￿development,￿production, marketing,￿selling￿and￿servicing￿of￿advanced￿semiconductor￿equipment￿systems,￿exclusively￿consisting￿of￿lithography systems.￿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￿EUR￿unless￿indicated￿otherwise. The￿accompanying￿Consolidated￿Financial￿Statements￿have￿been￿prepared￿in￿conformity￿with￿US￿GAAP. On￿May￿30,￿2013￿we￿acquired￿100￿percent￿of￿the￿issued￿share￿capital￿of￿Cymer.￿Comparative￿financial￿information presented￿in￿the￿Consolidated￿Financial￿Statements￿does￿not￿include￿Cymer,￿unless￿stated￿otherwise. Use of Estimates The￿preparation￿of￿ASML’s￿Consolidated￿Financial￿Statements￿in￿conformity￿with￿US￿GAAP￿requires￿management to￿make￿estimates￿and￿assumptions￿that￿affect￿the￿reported￿amounts￿of￿assets￿and￿liabilities￿and￿the￿disclosure￿of contingent￿assets￿and￿liabilities￿on￿the￿balance￿sheet￿dates,￿and￿the￿reported￿amounts￿of￿sales￿and￿costs￿during￿the reported￿periods.￿Actual￿results￿could￿differ￿from￿those￿estimates. Principles of Consolidation The￿Consolidated￿Financial￿Statements￿include￿the￿Financial￿Statements￿of￿ASML￿Holding￿N.V.￿and￿all￿of￿its￿subsidiaries and￿the￿VIE￿of￿which￿ASML￿is￿the￿primary￿beneficiary.￿All￿intercompany￿profits,￿balances￿and￿transactions￿have￿been eliminated￿in￿the￿consolidation. Subsidiaries Subsidiaries￿are￿all￿entities￿over￿which￿ASML￿has￿the￿power￿to￿govern￿financial￿and￿operating￿policies￿generally accompanying￿a￿shareholding￿of￿more￿than￿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. Business Combinations Acquisitions￿of￿subsidiaries￿are￿included￿on￿the￿basis￿of￿the￿acquisition￿method.￿The￿cost￿of￿acquisition￿is￿measured based￿on￿the￿consideration￿transferred￿at￿fair￿value,￿the￿fair￿value￿of￿identifiable￿assets￿distributed￿and￿the￿fair￿value￿of liabilities￿incurred￿or￿assumed￿at￿the￿acquisition￿date￿(i.e.￿the￿date￿at￿which￿we￿obtain￿control).￿The￿excess￿of￿the￿costs of￿an￿acquired￿subsidiary￿over￿the￿net￿of￿the￿amounts￿assigned￿to￿identifiable￿assets￿acquired￿and￿liabilities￿incurred￿or assumed,￿is￿capitalized￿as￿goodwill.￿Acquisition-related￿costs￿are￿expensed￿when￿incurred￿in￿the￿period￿they￿arise￿or￿the service￿is￿received. Variable Interest Entities We￿assess￿whether￿we￿have￿a￿controlling￿financial￿interest￿in￿any￿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￿costs￿are￿translated￿into￿euros￿based￿on￿the￿average￿exchange￿rate for￿the￿corresponding￿period.￿The￿resulting￿translation￿adjustments￿are￿recorded￿directly￿in￿shareholders’￿equity. ASML￿ANNUAL￿REPORT￿2013 F-7 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 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);￿or • A￿hedge￿of￿the￿exposure￿to￿variability￿in￿the￿cash￿flows￿of￿a￿recognized￿asset￿or￿liability,￿or￿of￿a￿forecasted transaction,￿that￿is￿attributable￿to￿a￿particular￿risk￿(cash￿flow￿hedge). We￿document￿at￿the￿inception￿of￿the￿transaction￿the￿relationship￿between￿hedging￿instruments￿and￿hedged￿items,￿as well￿as￿our￿risk￿management￿objectives￿and￿strategy￿for￿undertaking￿various￿hedging￿transactions.￿We￿also￿document our￿assessment,￿both￿at￿hedge￿inception￿and￿on￿an￿ongoing￿basis,￿of￿whether￿derivatives￿that￿are￿used￿in￿hedging transactions￿are￿highly￿effective￿in￿offsetting￿changes￿in￿fair￿values￿or￿cash￿flows￿of￿hedged￿items. 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￿Statements￿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￿and￿other, net". Cash Flow Hedge Changes￿in￿the￿fair￿value￿of￿a￿derivative￿that￿is￿designated￿and￿qualified￿as￿a￿cash￿flow￿hedge￿are￿recorded￿in￿OCI,￿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￿OCI￿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￿"net 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￿and￿other,￿net". 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￿OCI,￿net￿of￿taxes.￿The￿gain￿or￿loss￿relating￿to￿the￿ineffective￿portion￿is￿recognized in￿the￿Consolidated￿Statements￿of￿Operations￿as￿"interest￿and￿other,￿net".￿Gains￿and￿losses￿accumulated￿in￿OCI￿are recognized￿in￿the￿Consolidated￿Statements￿of￿Operations￿when￿the￿foreign￿operation￿is￿(partially)￿disposed￿or￿sold. ASML￿ANNUAL￿REPORT￿2013 F-8 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￿OCI￿until￿the￿short-term￿investments￿are￿derecognized.￿Upon￿derecognition,￿the￿cumulative￿gain￿or￿loss recognized￿in￿OCI,￿is￿recognized￿in￿the￿Consolidated￿Statements￿of￿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￿at￿the￿end￿of￿the￿third￿quarter￿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￿brands,￿intellectual￿property,￿developed￿technology,￿customer￿relationships,￿in-process R&D￿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￿finite-lived￿other￿intangible￿assets: Category Brands Intellectual￿property Developed￿technology Customer￿relationships Other Estimated useful life 20￿years 3-10￿years 6-15￿years 8-18￿years 2-6￿years Infinite-lived￿other￿intangibles￿assets￿are￿tested￿for￿impairment￿annually￿at￿the￿end￿of￿the￿third￿quarter￿and￿whenever events￿or￿changes￿in￿circumstances￿indicate￿that￿the￿carrying￿amount￿of￿the￿infinite-lived￿other￿intangible￿assets￿may not￿be￿recoverable. ASML￿ANNUAL￿REPORT￿2013 F-9 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￿-￿45￿years 2￿-￿10￿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 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￿annually￿at￿the￿end￿of￿the￿third￿quarter￿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￿assets. 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￿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￿(other￿than￿goodwill).￿Future￿adverse￿changes￿in￿market￿conditions￿may￿also￿require￿impairment of￿certain￿long-lived￿assets￿(other￿than￿goodwill),￿which￿could￿have￿a￿material￿adverse￿effect￿on￿our￿financial￿condition and￿results￿of￿operations. 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. ASML￿ANNUAL￿REPORT￿2013 F-10 Revenue Recognition ASML￿recognizes￿revenue￿when￿all￿four￿revenue￿recognition￿criteria￿are￿met:￿persuasive￿evidence￿of￿an￿arrangement exists;￿delivery￿has￿occurred￿or￿services￿have￿been￿rendered;￿seller’s￿price￿to￿buyer￿is￿fixed￿or￿determinable;￿and collectability￿is￿reasonably￿assured.￿At￿ASML￿this￿policy￿generally￿results￿in￿revenue￿recognition￿from￿the￿sale￿of￿a system￿upon￿shipment.￿The￿revenue￿from￿the￿installation￿of￿a￿system￿is￿generally￿recognized￿upon￿completion￿of￿that installation￿at￿the￿customer￿site.￿Prior￿to￿shipment,￿systems￿undergo￿a￿"Factory￿Acceptance￿Test"￿in￿our￿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-￿and￿third-generation￿EUV￿systems (NXE:3100￿and￿NXE:3300B),￿we￿initially￿defer￿revenue￿recognition￿until￿acceptance￿of￿the￿new￿technology￿based￿system and￿completion￿of￿installation￿at￿the￿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:￿1999￿(TWINSCAN)￿and￿2010￿(EUV). We￿have￿no￿significant￿repurchase￿commitments￿in￿our￿general￿sales￿terms￿and￿conditions.￿From￿time￿to￿time￿we repurchase￿systems￿that￿we￿have￿manufactured￿and￿sold￿and,￿following￿refurbishment,￿we￿resell￿those￿systems￿to other￿customers.￿This￿repurchase￿decision￿is￿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,￿2013￿and￿2012,￿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.￿In￿addition,￿we￿offer￿volume￿discounts￿to￿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￿net￿sales￿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￿sales￿transaction￿as￿the￿agreements￿involve￿the￿delivery of￿multiple￿products.￿The￿consideration￿received￿from￿the￿sales￿transaction￿is￿allocated￿between￿the￿award￿credits￿and the￿other￿elements￿of￿the￿sales￿transaction.￿The￿consideration￿allocated￿to￿the￿award￿credits￿is￿recognized￿as￿deferred revenue￿until￿award￿credits￿are￿delivered￿to￿the￿customer.￿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). Net￿sales￿are￿recognized￿excluding￿the￿taxes￿levied￿on￿sales￿(net￿basis). In￿the￿event￿of￿expected￿losses￿on￿executory￿contracts,￿we￿recognize￿a￿liability￿for￿the￿amount￿that￿the￿cost￿of￿settling the￿contract￿exceeds￿the￿amount￿of￿the￿contract￿price.￿When￿we￿satisfy￿these￿contracts,￿we￿derecognize￿the￿related liability. Multiple Element Arrangements The￿main￿portion￿of￿our￿net￿sales￿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,￿"Sales￿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. 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 ASML￿ANNUAL￿REPORT￿2013 F-11 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￿sales￿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: • VSOE￿–￿the￿price￿at￿which￿we￿sell￿the￿element￿in￿a￿separate￿stand-alone￿transaction; • TPE￿–￿evidence￿from￿us￿or￿other￿companies￿of￿the￿value￿of￿a￿largely￿interchangeable￿element￿in￿a￿transaction; • 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, training￿services￿and￿prepaid￿extended￿and￿enhanced￿(optic)￿warranty￿contracts.￿VSOE￿for￿installation￿is￿determined based￿on￿the￿prices￿that￿we￿charge￿for￿billable￿labor￿and￿materials￿consumed￿in￿comparable￿services￿(such￿as￿relocating a￿system￿to￿another￿customer￿site).￿VSOE￿for￿prepaid￿extended￿and￿enhanced￿(optic)￿warranty￿contracts￿is￿determined on￿the￿basis￿of￿similair￿products￿we￿sell￿on￿a￿standalone￿basis,￿such￿as￿full￿service￿contracts￿and￿billable￿lens￿swaps, and￿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￿annualy￿and￿maintain￿internal￿controls over￿the￿establishment￿and￿updates￿of￿these￿estimates. Lease Arrangements A￿lease￿is￿classified￿as￿a￿sales-type￿lease￿if￿any￿of￿the￿following￿lease￿classification￿criteria￿is￿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. ASML￿ANNUAL￿REPORT￿2013 F-12 Customer Co-Investment Program In￿connection￿with￿the￿CCIP,￿we￿entered￿into￿investment￿agreements,￿Shareholders￿Agreements￿and￿NRE￿Funding Agreements￿and￿commercial￿agreements￿with￿Participating￿Customers. 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￿and￿the￿commercial￿agreement￿with Intel). The￿shares￿issued￿to￿the￿Participating￿Customers￿are￿recorded￿at￿fair￿value￿based￿on￿quoted￿share￿prices￿(EUR￿3,977.4 million)￿with￿the￿remaining￿aggregate￿arrangement￿consideration￿allocated￿to￿the￿NRE￿funding￿and￿commercial￿discounts and￿credits.￿The￿difference￿between￿the￿fair￿value￿of￿the￿shares￿and￿the￿subscription￿price￿of￿the￿shares￿(EUR￿39.91) was￿recorded￿as￿a￿deduction￿from￿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￿CCIP.￿Based￿on￿the￿commercial￿discounts￿and￿credits￿(governed￿by￿the￿Commercial￿Agreement￿with Intel)￿and￿the￿significant￿related￿party￿relationship,￿all￿NRE￿funding￿will￿be￿deferred￿and￿recognized￿in￿the￿Consolidated Statement￿of￿Operations￿only￿when￿the￿commercial￿discounts￿and￿credits￿are￿earned. In￿addition￿see￿also￿other￿income￿for￿further￿explanation￿on￿the￿accounting￿policies￿with￿respect￿to￿CCIP. Accounting for Shipping and Handling Fees and Costs ASML￿bills￿the￿customer￿for,￿and￿recognizes￿as￿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. Other Income The￿portion￿of￿the￿NRE￿funding￿from￿TSMC￿and￿Samsung￿not￿allocable￿to￿the￿shares￿issued￿to￿those￿Participating Customers￿under￿the￿CCIP￿is￿recognized￿in￿Other￿income￿when￿the￿R&D￿costs￿relating￿to￿the￿development￿of￿450mm lithography￿equipment￿and￿EUV￿platforms￿are￿recognized￿over￿the￿NRE￿funding￿period￿(2013-2017). R&D Costs and Credits Costs￿relating￿to￿R&D￿are￿charged￿to￿operating￿expenses￿as￿incurred.￿ASML￿receives￿subsidies￿and￿other￿grants￿from several￿Dutch￿and￿international￿(inter-)governmental￿institutes.￿These￿subsidies￿and￿other￿government￿grants￿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. Government￿grants￿are￿not￿recognized￿until￿there￿is￿reasonable￿assurance￿that￿ASML￿will￿comply￿with￿the￿conditions attaching￿to￿them￿and￿that￿the￿grants￿will￿be￿received. Government￿grants￿whose￿primary￿condition￿is￿that￿ASML￿should￿purchase,￿construct￿or￿otherwise￿acquire￿non-current assets￿are￿recognized￿as￿deferred￿income￿in￿the￿Consolidated￿Balance￿Sheets￿and￿transferred￿to￿the￿Consolidated Statements￿of￿Operations￿on￿a￿systematic￿and￿rational￿basis￿over￿the￿useful￿lives￿of￿the￿related￿assets.￿ ASML￿ANNUAL￿REPORT￿2013 F-13 Other￿government￿grants￿are￿recognized￿as￿income￿over￿the￿periods￿necessary￿to￿match￿them￿with￿the￿costs￿for which￿they￿are￿intended￿to￿compensate,￿on￿a￿systematic￿basis.￿Government￿grants￿that￿are￿received￿as￿compensation for￿expenses￿or￿losses￿already￿incurred,￿or￿for￿the￿purpose￿of￿giving￿immediate￿financial￿support￿to￿ASML￿with￿no future￿related￿costs￿are￿recognized￿in￿the￿Consolidated￿Statements￿of￿Operations￿in￿the￿period￿in￿which￿they￿become receivable.￿ Borrowing Costs Borrowing￿costs￿directly￿attributable￿to￿the￿acquisition,￿construction￿or￿production￿of￿qualifying￿assets,￿which￿are￿assets that￿necessarily￿take￿a￿substantial￿period￿of￿time￿to￿get￿ready￿for￿their￿intended￿use￿or￿sale,￿are￿added￿to￿the￿cost￿of those￿assets,￿until￿such￿time￿that￿the￿assets￿are￿substantially￿ready￿for￿their￿intended￿use￿or￿sale.￿ 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￿high￿credit￿ratings￿and￿with￿a￿life￿equal￿to￿the￿expected￿life￿of￿the￿equity-settled￿share- based￿payments.￿The￿grant-date￿fair￿value￿of￿shares￿is￿determined￿based￿on￿the￿closing￿price￿of￿our￿shares￿listed￿at 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. 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. We￿recognize￿liabilities￿for￿uncertain￿tax￿positions￿based￿on￿a￿two-step￿process.￿The￿first￿step￿is￿to￿evaluate￿the￿tax position￿for￿recognition￿by￿determining￿if￿the￿weight￿of￿available￿evidence￿indicates￿that￿it￿is￿more￿likely￿than￿not￿that the￿position￿will￿be￿sustained￿on￿audit,￿including￿resolution￿of￿related￿appeals￿or￿litigation￿processes,￿if￿any.￿The￿second step￿is￿to￿measure￿the￿tax￿benefit￿as￿the￿largest￿amount￿that￿is￿more￿than￿50￿percent￿likely￿of￿being￿realized￿upon settlement.￿While￿we￿believe￿we￿have￿appropriate￿support￿for￿the￿positions￿taken￿on￿our￿tax￿returns,￿we￿regularly￿assess the￿potential￿outcomes￿of￿examinations￿by￿tax￿authorities￿in￿determining￿the￿adequacy￿of￿our￿provision￿for￿income￿taxes, and￿adjust￿the￿income￿tax￿provision,￿income￿taxes￿payable￿and￿deferred￿taxes￿in￿the￿period￿in￿which￿the￿facts￿that￿give rise￿to￿a￿revision￿become￿known. ASML￿ANNUAL￿REPORT￿2013 F-14 Contingencies and Litigation We￿are￿party￿to￿various￿legal￿proceedings￿generally￿incidental￿to￿our￿business,￿as￿disclosed￿in￿Note￿19.￿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. 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 2013 EUR 1,015,490 2012 EUR 1,146,316 2011 EUR 1,466,960 Weighted average number of shares outstanding during the year (after deduction of treasury stock) 429,770 424,096 425,618 Basic net income per ordinary share 2.36 2.70 3.45 Weighted average number of shares: Plus￿shares￿applicable￿to: Options￿and￿conditional￿shares 429,770 424,096 425,618 3,676 2,890 3,435 Dilutive potential ordinary shares 3,676 2,890 3,435 Adjusted weighted average number of shares 433,446 426,986 429,053 Diluted net income per ordinary share1 2.34 2.68 3.42 1 The￿calculation￿of￿diluted￿net￿income￿per￿ordinary￿share￿assumes￿the￿exercise￿of￿options￿issued￿under￿our￿stock￿option￿plans￿and￿the￿issuance￿of shares￿under￿our￿share￿plans￿for￿periods￿in￿which￿exercises￿or￿issuances￿would￿have￿a￿dilutive￿effect.￿The￿calculation￿of￿diluted￿net￿income￿per ordinary￿share￿does￿not￿assume￿exercise￿of￿such￿options￿or￿issuance￿of￿shares￿when￿such￿exercises￿or￿issuance￿would￿be￿anti-dilutive. Comprehensive Income Comprehensive￿income￿consists￿of￿net￿income￿(loss)￿and￿OCI. OCI￿refers￿to￿gains￿and￿losses￿that￿are￿not￿included￿in￿net￿income￿(loss),￿but￿recorded￿directly￿in￿shareholders’￿equity. For￿the￿years￿ending￿December￿31,￿2013￿and￿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 year￿ending￿December￿31,￿2011￿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. ASML￿ANNUAL￿REPORT￿2013 F-15 New US GAAP Accounting Pronouncements For￿the￿below￿mentioned￿ASUs,￿issued￿in￿2013,￿the￿impact￿on￿our￿Financial￿Statements￿needs￿to￿be￿assessed: • • • In￿February￿2013,￿FASB￿issued￿ASU￿No.￿2013-04￿"Liabilities￿(Topic￿405):￿Obligations￿Resulting￿from￿Joint￿and￿Several Liability￿Arrangements￿for￿which￿the￿Total￿Amount￿of￿the￿Obligation￿is￿Fixed￿at￿the￿Reporting￿Date".￿The￿objective￿of the￿amendments￿in￿this￿Update￿is￿to￿provide￿guidance￿for￿the￿recognition,￿measurement￿and￿disclosure￿of￿obligations resulting￿from￿joint￿an￿several￿liability￿arrangements￿for￿which￿the￿total￿amount￿of￿the￿obligation￿within￿the￿scope￿of this￿guidance￿is￿fixed￿at￿the￿reporting￿date,￿except￿for￿obligations￿addressed￿within￿existing￿guidance￿in￿US￿GAAP. The￿amendments￿in￿this￿Update￿are￿effective￿for￿fiscal￿years,￿and￿interim￿periods￿within￿those￿years,￿beginning￿after December￿15,￿2013. In￿March￿2013,￿FASB￿issued￿ASU￿No.￿2013-05￿"Foreign￿Currency￿Matters￿(Topic￿830):￿Parent’s￿Accounting￿for￿the Cumulative￿Translation￿Adjustment￿upon￿Derecognition￿of￿Certain￿Subsidiaries￿or￿Groups￿of￿Assets￿within￿a￿Foreign Entity￿or￿of￿an￿Investment￿in￿a￿Foreign￿Entity".￿The￿objective￿of￿the￿amendments￿in￿this￿Update￿is￿to￿resolve￿the diversity￿in￿practice￿about￿whether￿Subtopic￿810-10,￿“Consolidation-Overall”,￿or￿Subtopic￿830-30,￿“”Foreign￿Currency Matters-Translation￿of￿Financial￿Statements”,￿applies￿to￿the￿release￿of￿the￿cumulative￿translation￿adjustment￿into￿net income￿when￿a￿parent￿either￿sells￿a￿part￿or￿all￿of￿its￿investment￿in￿a￿foreign￿entity￿or￿no￿longer￿holds￿a￿controlling financial￿interest￿in￿a￿subsidiary￿or￿group￿of￿assets￿that￿is￿a￿nonprofit￿activity￿or￿a￿business￿(other￿than￿a￿sale￿of￿in substance￿real￿estate￿or￿conveyance￿of￿oil￿and￿gas￿mineral￿rights)￿within￿a￿foreign￿entity.￿The￿amendments￿in￿this Update￿are￿effective￿for￿fiscal￿years,￿and￿interim￿periods￿within￿those￿years,￿beginning￿after￿December￿15,￿2013. In￿July￿2013,￿FASB￿issued￿ASU￿No.￿2013-11￿"Income￿Taxes￿(Topic￿740):￿Presentation￿of￿an￿Unrecognized￿Tax Benefit￿When￿a￿Net￿Operating￿Loss￿Carry￿forward,￿a￿Similar￿Tax￿Loss,￿or￿a￿Tax￿Credit￿Carry￿forward￿Exists".￿Topic 740,￿Income￿Taxes,￿does￿not￿include￿explicit￿guidance￿on￿the￿financial￿statement￿presentation￿of￿an￿unrecognized tax￿benefit￿when￿a￿net￿operating￿loss￿carry￿forward,￿a￿similar￿tax￿loss,￿or￿a￿tax￿credit￿carry￿forward￿exists.￿There is￿diversity￿in￿practice￿in￿the￿presentation￿of￿unrecognized￿tax￿benefits￿in￿those￿instances.￿Some￿entities￿present unrecognized￿tax￿benefits￿as￿a￿liability￿unless￿the￿unrecognized￿tax￿benefit￿is￿directly￿associated￿with￿a￿tax￿position taken￿in￿a￿tax￿year￿that￿results￿in,￿or￿that￿resulted￿in,￿the￿recognition￿of￿a￿net￿operating￿loss￿or￿tax￿credit￿carry￿forward has￿not￿been￿utilized.￿Other￿entities￿present￿unrecognized￿tax￿benefits￿as￿a￿reduction￿of￿a￿deferred￿tax￿asset￿for￿a￿net operating￿loss￿or￿tax￿credit￿carry￿forward￿in￿certain￿circumstances.￿The￿objective￿of￿the￿amendments￿in￿this￿Update is￿to￿eliminate￿that￿diversity￿in￿practice.￿The￿amendments￿in￿this￿Update￿are￿effective￿for￿fiscal￿years,￿and￿interim periods￿within￿those￿years,￿beginning￿after￿December￿15,￿2013. 2. Business Combinations On￿May￿30,￿2013,￿we￿concluded￿the￿acquisition￿of￿Cymer￿and￿obtained￿control￿through￿acquiring￿100￿percent￿of the￿issued￿share￿capital￿of￿Cymer,￿for￿a￿consideration￿of￿EUR￿3.1￿billion.￿There￿are￿no￿contingent￿consideration arrangements. Prior￿to￿the￿acquisition,￿Cymer￿was￿an￿industry￿leader￿in￿developing￿and￿servicing￿lithography￿light￿sources￿used￿by chip￿manufacturers￿worldwide￿to￿pattern￿advanced￿semiconductor￿chips.￿Cymer￿has￿production￿facilities￿in￿San￿Diego, California,￿the￿United￿States￿of￿America￿and￿in￿Pyongtaek-city,￿South￿Korea,￿Asia. The￿acquisition￿of￿Cymer￿will￿support￿our￿strategic￿objective￿of￿delivering￿an￿economically￿viable￿EUV￿scanner￿to semiconductor￿manufacturers￿within￿the￿timeline￿required￿by￿our￿customers.￿In￿addition,￿there￿are￿opportunities￿to further￿enhance￿Cymer’s￿growing￿advanced￿immersion￿systems￿and￿related￿installed￿base￿products￿business. ASML￿ANNUAL￿REPORT￿2013 F-16 The￿following￿table￿summarizes￿the￿major￿classes￿of￿consideration￿transferred,￿and￿the￿recognized￿amounts￿of￿the￿fair value￿of￿the￿identifiable￿assets￿distributed￿and￿the￿fair￿value￿of￿the￿liabilities￿incurred￿or￿assumed￿at￿the￿acquisition￿date. (in thousands) Cash￿and￿cash￿equivalents Short-term￿investments Accounts￿receivable,￿net Finance￿receivables,￿net Current￿tax￿assets Inventories,￿net Deferred￿tax￿assets Other￿assets,￿current￿and￿non-current Other￿intangible￿assets,￿net Property,￿plant￿and￿equipment,￿net May 30, 2013 EUR1 84,129 40,055 121,395 611 37,289 301,279 90,045 29,418 751,542 124,308 Assets acquired 1,580,071 Accounts￿payable Accrued￿and￿other￿liabilities,￿current￿and￿non-current Deferred￿and￿other￿tax￿liabilities Long-term￿debt,￿current￿and￿non-current Liabilities assumed Total net identifiable assets Consideration￿paid￿in￿cash￿for￿the￿transaction￿on￿May￿30,￿2013 Fair￿value￿of￿shares2 Fair￿value￿of￿equity￿awards￿cash￿settled Fair￿value￿of￿unvested￿equity￿awards￿to￿be￿exchanged Gain￿on￿settlement￿of￿pre-existing￿relationships Consideration transferred Goodwill on acquisition 151,412 90,900 297,977 609 540,898 1,039,173 486,325 2,347,663 41,516 43,527 178,427 3,097,458 2,058,285 1 2 Amounts￿were￿converted￿into￿euro￿at￿the￿rate￿of￿USD/EUR￿1.3043. As￿part￿of￿the￿consideration￿transferred,￿Cymer￿shares￿were￿converted￿into￿a￿right￿to￿receive￿36,479,109￿ASML￿ordinary￿shares.￿These￿shares￿were valued￿at￿USD￿83.94￿being￿the￿opening￿price￿on￿NASDAQ￿at￿May￿30,￿2013.￿As￿at￿December￿31,￿2013,￿14,533￿ASML￿ordinary￿shares￿are￿still￿to￿be issued. Prior￿to￿the￿acquisition,￿supply￿and￿R&D￿arrangements￿existed￿between￿Cymer￿and￿ASML.￿These￿pre-existing relationships￿were￿effectively￿settled￿as￿a￿result￿of￿the￿acquisition.￿We￿determined￿that￿the￿R&D￿arrangement￿as￿well￿as the￿supply￿arrangements￿(excluding￿EUV)￿were￿at￿current￿market￿terms￿and￿therefore￿no￿gain￿or￿loss￿was￿recognized.￿We determined￿that￿the￿EUV￿supply￿arrangements￿were￿favorable￿to￿ASML￿and￿therefore￿a￿gain￿of￿EUR￿178.4￿million￿was recognized￿in￿cost￿of￿sales￿within￿our￿Consolidated￿Statements￿of￿Operations.￿This￿gain￿was￿recognized￿separately￿from the￿business￿combination￿as￿it￿is￿not￿part￿of￿the￿assets￿acquired￿or￿liabilities￿assumed.￿The￿approach￿for￿quantifying￿the favorable￿component￿to￿ASML￿of￿the￿EUV￿supply￿arrangements￿is￿based￿on￿the￿assessment￿of￿the￿prices￿for￿such￿light sources￿if￿the￿EUV￿supply￿arrangements￿would￿have￿been￿renegotiated￿in￿May￿2013.￿This￿approach￿is￿in￿line￿with￿(and offsets)￿the￿expected￿losses￿(for￿which￿a￿liability￿is￿recognized￿of￿EUR￿171.2￿million￿included￿in￿costs￿to￿be￿paid,￿see Note￿13)￿to￿upgrade￿the￿first￿11￿EUV￿sources￿in￿the￿field,￿which￿was￿assumed￿by￿ASML￿as￿a￿result￿of￿the￿acquisition￿of Cymer. The￿majority￿of￿the￿goodwill￿arising￿on￿the￿acquisition￿of￿Cymer￿is￿attributable￿to￿the￿fact￿that￿we￿believe￿that the￿acquisition￿will￿help￿us￿achieving￿our￿strategic￿objective￿of￿delivering￿an￿economically￿viable￿EUV￿scanner￿to semiconductor￿manufacturers￿as￿soon￿as￿reasonably￿possible.￿We￿believe￿that￿combining￿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￿light￿source￿and￿as￿a￿result,￿the￿only way￿to￿make￿the￿EUV￿light￿source￿development￿successful￿without￿additional￿delay￿was￿through￿the￿acquisition￿of Cymer.￿We￿believe￿that￿the￿acquisition￿will￿allow￿us￿to￿more￿effectively￿partition￿responsibilities￿between￿Cymer,￿its suppliers￿and￿us￿with￿respect￿to￿EUV￿light￿source￿development,￿thereby￿reducing￿risk￿and￿increasing￿development speed.￿Also,￿synergies￿are￿expected￿from￿the￿combination.￿All￿goodwill￿has￿been￿allocated￿to￿the￿RU￿ASML.￿None￿of￿the goodwill￿recognized￿is￿expected￿to￿be￿deductible￿for￿income￿tax￿purposes. ASML￿ANNUAL￿REPORT￿2013 F-17 Cymer￿contributed￿EUR￿178.7 million￿to￿net￿sales￿and￿a￿loss￿of￿EUR￿138.5￿million￿to￿net￿income￿(including￿a￿charge￿of EUR￿85.5￿million￿related￿to￿the￿purchase￿price￿allocation￿adjustments)￿for￿the￿period￿between￿the￿date￿of￿acquisition￿and December￿31,￿2013. In￿2013,￿we￿incurred￿EUR￿7.8￿million￿transaction￿costs￿relating￿to￿the￿acquisition￿of￿Cymer.￿These￿costs￿are￿included￿in SG&A. The￿following￿unaudited￿pro￿forma￿summary￿presents￿estimated￿consolidated￿information￿of￿ASML￿as￿if￿the￿Cymer acquisition￿had￿occurred￿on￿January￿1,￿2012.￿These￿amounts￿have￿been￿calculated￿after￿applying￿our￿accounting policies￿and￿adjusting￿the￿results￿of￿Cymer￿to￿reflect￿the￿charges￿and￿benefits￿assuming￿the￿fair￿value￿adjustments￿had been￿applied￿from￿January￿1,￿2012￿with￿the￿consequential￿tax￿effects. Pro Forma Year ended December 31 (in millions) Total￿net￿sales Net￿income Unaudited 2013 EUR 5,362 1,031 1 Unaudited 2012 EUR 5,053 965 2 1 2 Pro￿forma￿net￿income￿was￿adjusted￿to￿exclude￿EUR￿60￿million￿of￿non-recurring￿costs￿related￿to￿the￿fair￿value￿adjustments￿to￿acquisition￿date inventory￿and￿exclude￿EUR￿30￿million￿of￿acquisition￿related￿costs￿incurred￿in￿2013. Pro￿forma￿net￿income￿was￿adjusted￿to￿include￿EUR￿60￿million￿of￿non-recurring￿costs￿related￿to￿the￿fair￿value￿adjustments￿to￿acquisition￿date￿inventory and￿exclude￿EUR￿15￿million￿of￿acquisition￿related￿costs￿incurred￿in￿2012. 3. 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￿NPV￿technique￿which￿is￿the￿estimated￿amount￿that￿a￿bank￿would￿receive￿or￿pay￿to￿terminate the￿forward￿foreign￿exchange￿contracts￿at￿the￿reporting￿date,￿taking￿into￿account￿current￿interest￿rates￿and￿current exchange￿rates. The￿valuation￿technique￿used￿to￿determine￿the￿fair￿value￿of￿interest￿rate￿swaps￿(used￿for￿hedging￿purposes)￿is￿the￿NPV technique,￿which￿is￿the￿estimated￿amount￿that￿a￿bank￿would￿receive￿or￿pay￿to￿terminate￿the￿swap￿agreements￿at￿the reporting￿date,￿taking￿into￿account￿current￿interest￿rates. ASML￿ANNUAL￿REPORT￿2013 F-18 Our￿Eurobonds￿serve￿as￿hedged￿items￿in￿fair￿value￿hedge￿relationships￿in￿which￿we￿hedge￿the￿variability￿of￿changes￿in the￿fair￿value￿of￿our￿Eurobonds￿due￿to￿changes￿in￿market￿interest￿rates￿with￿interest￿rate￿swaps.￿The￿fair￿value￿changes of￿these￿interest￿rate￿swaps￿are￿recorded￿on￿the￿Consolidated￿Balance￿Sheets￿under￿derivative￿financial￿instruments (within￿other￿current￿assets￿and￿other￿non-current￿assets)￿and￿the￿carrying￿amounts￿of￿the￿Eurobonds￿are￿adjusted￿for these￿fair￿value￿changes￿only.￿For￿the￿actual￿aggregate￿carrying￿amount￿and￿the￿fair￿value￿of￿our￿Eurobonds,￿see￿Note 15. The￿following￿table￿presents￿our￿financial￿assets￿and￿financial￿liabilities￿that￿are￿measured￿at￿fair￿value￿on￿a￿recurring basis: As of December 31, 2013 (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, 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 Level 1 EUR - 535,000 304,884 839,884 Level 2 EUR 71,620 - 375,000 446,620 - - - 1,021,930 11,652 1,033,582 Level 1 EUR - 385,420 279,988 665,408 - - - Level 2 EUR 151,748 - 650,017 801,765 759,490 10,893 770,383 Level 3 EUR - - - - - - - Level 3 EUR - - - - - - - Total EUR 71,620 535,000 679,884 1,286,504 1,021,930 11,652 1,033,582 Total EUR 151,748 385,420 930,005 1,467,173 759,490 10,893 770,383 Derivative￿financial￿instruments￿consist￿of￿forward￿foreign￿exchange￿contracts￿and￿interest￿rate￿swaps.￿See￿Note￿4. 1 2 Money￿market￿funds￿are￿part￿of￿our￿cash￿and￿cash￿equivalents. 3 4 Short-term￿investments￿consist￿of￿Dutch￿Treasury￿Certificates￿and￿deposits￿with￿the￿Dutch￿government. Long-term￿debt￿mainly￿relates￿to￿our￿Eurobonds￿(carrying￿amount￿as￿at￿December￿31,￿2013:￿EUR￿1,021.9￿million￿(2012:￿EUR￿710.1￿million))￿and excludes￿accrued￿interest.￿For￿further￿details￿see￿Note￿15. There￿were￿no￿transfers￿between￿levels￿during￿the￿years￿ended￿December￿31,￿2013￿and￿December￿31,￿2012. Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis In￿2013,￿we￿recognized￿impairment￿charges￿of￿EUR￿13.1￿million￿(2012:￿EUR￿3.2￿million;￿2011:￿EUR￿12.3￿million)￿on our￿property,￿plant￿and￿equipment,￿mainly￿relating￿to￿buildings￿(EUR￿3.6￿million)￿and￿machinery￿and￿equipment￿(EUR 8.0￿million).￿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￿16.4￿million)￿and￿their￿carrying￿amount.￿For￿further￿information,￿see￿Note￿12. We￿did￿not￿recognize￿any￿impairment￿charges￿for￿goodwill￿and￿other￿intangible￿assets￿during￿2013.￿See￿Notes￿10￿and￿11 for￿more￿information.￿For￿fair￿value￿measurements￿in￿relation￿to￿the￿acquisition￿of￿Cymer,￿we￿refer￿to￿Note￿2. 4. Financial Risk Management We￿are￿exposed￿to￿certain￿financial￿risks￿such￿as￿market￿risk￿(including￿foreign￿currency￿risk￿and￿interest￿rate￿risk), credit￿risk,￿liquidity￿risk￿and￿capital￿risk.￿The￿overall￿risk￿management￿program￿focuses￿on￿the￿unpredictability￿of financial￿markets￿and￿seeks￿to￿minimize￿potentially￿adverse￿effects￿on￿our￿financial￿performance.￿We￿use￿derivative financial￿instruments￿to￿hedge￿certain￿risk￿exposures.￿None￿of￿our￿transactions￿are￿entered￿into￿for￿trading￿or speculative￿purposes.￿We￿believe￿that￿market￿information￿is￿the￿most￿reliable￿and￿transparent￿measure￿for￿our￿derivative financial￿instruments￿that￿are￿measured￿at￿fair￿value. Foreign Currency Risk Management Our￿sales￿are￿predominately￿denominated￿in￿euros.￿Exceptions￿may￿occur￿on￿a￿customer￿by￿customer￿basis.￿Our￿cost of￿sales￿and￿other￿costs￿are￿mainly￿denominated￿in￿euros,￿to￿a￿certain￿extent￿in￿U.S.￿dollar￿and￿Japanese￿Yen￿and￿to￿a limited￿extent￿in￿other￿currencies.￿Therefore,￿we￿are￿exposed￿to￿foreign￿currency￿exchange￿risk. ASML￿ANNUAL￿REPORT￿2013 F-19 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,￿2013,￿accumulated￿OCI￿includes￿EUR￿10.7￿million￿(net￿of￿taxes:￿EUR￿9.5￿million;￿2012:￿EUR￿5.3 million￿loss)￿representing￿the￿total￿anticipated￿loss￿to￿be￿charged￿to￿cost￿of￿sales,￿which￿will￿offset￿the￿EUR￿equivalent￿of foreign￿currency￿denominated￿forecasted￿purchase￿transactions.￿All￿amounts￿are￿expected￿to￿be￿charged￿over￿the￿next 12￿months.￿As￿of￿December￿31,￿2013,￿no￿amount￿was￿included￿in￿accumulated￿OCI￿representing￿the￿total￿anticipated gain￿to￿be￿released￿to￿sales￿(2012:￿EUR￿4.3￿million￿gain,￿net￿of￿taxes).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￿and￿2013,￿no ineffective￿hedge￿relationships￿were￿recognized. Interest Rate Risk Management We￿have￿interest-bearing￿assets￿and￿liabilities￿that￿expose￿us￿to￿fluctuations￿in￿market￿interest￿rates.￿We￿use￿interest rate￿swaps￿to￿align￿the￿interest-typical￿terms￿of￿interest-bearing￿liabilities￿with￿the￿interest-typical￿terms￿of￿interest- bearing￿assets.￿There￿may￿be￿residual￿interest￿rate￿risk￿to￿the￿extent￿the￿asset￿and￿liability￿positions￿do￿not￿fully￿offset. As￿part￿of￿our￿hedging￿policy,￿we￿use￿interest￿rate￿swaps￿to￿hedge￿changes￿in￿fair￿value￿of￿our￿Eurobonds￿due￿to changes￿in￿market￿interest￿rates,￿thereby￿offsetting￿the￿variability￿of￿future￿interest￿receipts￿on￿part￿of￿our￿cash￿and cash￿equivalents.￿During￿2013,￿these￿hedges￿were￿highly￿effective￿in￿hedging￿the￿fair￿value￿exposure￿to￿interest￿rate movements.￿The￿changes￿in￿fair￿value￿of￿the￿Eurobonds￿were￿included￿at￿the￿same￿time￿in￿the￿Consolidated￿Statements 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￿2013,￿these￿hedges￿were￿highly￿effective￿in￿hedging the￿cash￿flow￿exposure￿to￿interest￿rate￿movements. Financial Instruments We￿use￿foreign￿exchange￿contracts￿to￿manage￿our￿foreign￿currency￿risk￿and￿interest￿rate￿swaps￿to￿manage￿our￿interest rate￿risk.￿The￿following￿table￿summarizes￿the￿notional￿amounts￿and￿estimated￿fair￿values￿of￿our￿derivative￿financial instruments: (in thousands) Forward￿foreign￿exchange￿contracts¹ Interest￿rate￿swaps² As of December 31 Notional amount EUR 986,986 1,013,053 Fair Value Notional amount EUR 262,146 624,900 EUR 8,583 51,385 Fair Value EUR 16,805 124,050 2013 2012 1 2 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. Relates￿to￿interest￿rate￿swaps￿assigned￿as￿a￿hedge￿to￿interest￿bearing￿assets￿and￿liabilities,￿mainly￿related￿to￿our￿Eurobonds;￿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 2013 2012 Assets EUR - 54,983 3 16,634 71,620 - 30,777 30,777 Liabilities EUR 3,598 - 6,039 2,015 11,652 2,608 - 2,608 Assets EUR - 128,830 5,975 16,943 151,748 - 101,651 101,651 Total current portion 40,843 9,044 50,097 Liabilities EUR 4,780 - 5,688 425 10,893 4,032 - 4,032 6,861 ASML￿ANNUAL￿REPORT￿2013 F-20 The￿fair￿value￿part￿of￿a￿hedging￿derivative￿financial￿instruments￿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￿asset￿or￿liability.￿The￿current portion￿of￿derivative￿financial￿instruments￿is￿included￿in￿respectively￿other￿current￿assets￿and￿current￿accrued￿and￿other liabilities￿in￿the￿Consolidated￿Balance￿Sheets.￿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￿Consolidated￿Balance￿Sheets. For￿further￿information￿regarding￿our￿derivative￿financial￿instruments,￿see￿Notes￿1￿and￿3. 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,￿2013￿are￿USD￿1,144.0￿million￿and￿JPY￿2.2￿billion￿(2012:￿USD￿159.8￿million￿and￿JPY 8.4￿billion). The￿hedged￿highly￿probable￿forecasted￿transactions￿denominated￿in￿foreign￿currency￿are￿expected￿to￿occur￿at￿various dates￿during￿the￿coming￿12￿months.￿Gains￿and￿losses￿recognized￿in￿OCI￿on￿forward￿foreign￿exchange￿contracts￿as￿of December￿31,￿2013￿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￿2013,￿we￿recognized￿a￿net￿amount￿of￿EUR￿2.3￿million￿gain￿(2012:￿EUR￿8.7￿million￿gain;￿2011:￿EUR￿58.1￿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￿a￿net￿amount￿of￿EUR￿62.5￿million￿gain￿in the￿Consolidated￿Statements￿of￿Operations￿resulting￿from￿derivative￿financial￿instruments￿measured￿at￿fair￿value￿through profit￿or￿loss￿(2012:￿EUR￿3.0￿million￿gain;￿2011:￿EUR￿38.3￿million￿loss). Interest Rate Swaps The￿notional￿principal￿amounts￿of￿the￿outstanding￿interest￿rate￿swap￿contracts￿as￿of￿December￿31,￿2013￿were￿EUR 1,013.1￿million￿(2012:￿EUR￿624.9￿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￿good￿credit￿ratings￿and￿closely￿monitor￿the￿creditworthiness￿of￿our￿counterparties.￿Concentration risk￿is￿mitigated￿by￿limiting￿the￿exposure￿to￿a￿single￿counterparty. Our￿customers￿consist￿of￿IC￿manufacturers￿located￿throughout￿the￿world.￿We￿perform￿ongoing￿credit￿evaluations￿of our￿customers’￿financial￿condition.￿We￿take￿additional￿measures￿to￿mitigate￿credit￿risk￿when￿considered￿appropriate￿by means￿of￿e.g.￿down￿payments,￿letters￿of￿credit￿or￿retention￿of￿ownership￿provisions￿in￿contracts.￿Retention￿of￿ownership enables￿us￿to￿recover￿the￿systems￿in￿the￿event￿a￿customer￿defaults￿on￿payment. ASML￿ANNUAL￿REPORT￿2013 F-21 5. Cash and Cash Equivalents and Short-term Investments Cash￿and￿cash￿equivalents￿at￿December￿31,￿2013￿include￿deposits￿with￿high-rated￿financial￿institutions￿and￿the￿Dutch government￿of￿EUR￿853.5￿million￿(2012:￿EUR￿775.6￿million),￿investments￿in￿AAAm-rated￿money￿market￿funds￿that￿invest in￿high-rated￿debt￿securities￿of￿financial￿institutions￿and￿governments￿of￿EUR￿535.0￿million￿(2012:￿EUR￿385.4￿million) and￿interest-bearing￿bank￿accounts￿of￿EUR￿942.2￿million￿(2012:￿EUR￿606.6￿million).￿Our￿cash￿and￿cash￿equivalents￿are predominantly￿denominated￿in￿euros￿and￿partly￿in￿U.S.￿dollars. Cash￿and￿cash￿equivalents￿have￿insignificant￿interest￿rate￿risk￿and￿remaining￿maturities￿of￿three￿months￿or￿less￿at￿the date￿of￿acquisition.￿Except￿for￿an￿amount￿of￿EUR￿4.7￿million,￿no￿restrictions￿on￿usage￿of￿cash￿and￿cash￿equivalents exist.￿The￿carrying￿amount￿of￿these￿assets￿approximates￿their￿fair￿value. Short-term￿investments￿have￿insignificant￿interest￿rate￿risk￿and￿remaining￿maturities￿longer￿than￿three￿months￿but￿less than￿one￿year￿at￿the￿date￿of￿acquisition. Short-term￿investments￿(classified￿as￿available￿for￿sale￿securities)￿consist￿of￿the￿following: As of December 31, 2013 (in thousands) Dutch￿Treasury￿Certificates Deposits Total As of December 31, 2012 (in thousands) Dutch￿Treasury￿Certificates Deposits Total Cost basis 304,884 375,000 679,884 Cost basis 279,988 650,017 930,005 Unrealized Gains - - - Unrealized Gains - - - Unrealized Losses - - - Recorded Basis 304,884 375,000 679,884 Unrealized Losses - - - Recorded Basis 279,988 650,017 930,005 6. Accounts Receivable Accounts￿receivable￿consist￿of￿the￿following: As of December 31 (in thousands) Accounts￿receivable,￿gross Allowance￿for￿doubtful￿receivables Accounts receivable, net 2013 EUR 880,169 (1,848) 878,321 2012 EUR 607,359 (2,071) 605,288 The￿increase￿in￿accounts￿receivable￿as￿of￿December￿31,￿2013￿compared￿to￿December￿31,￿2012￿is￿mainly￿caused￿by￿an increased￿number￿of￿systems￿shipped￿and￿recognized￿in￿sales￿in￿the￿last￿months￿of￿2013￿compared￿to￿the￿last￿months of￿2012. The￿carrying￿amount￿of￿the￿accounts￿receivable￿approximates￿the￿fair￿value.￿We￿perform￿ongoing￿credit￿evaluations on￿our￿customers’￿financial￿condition.￿We￿periodically￿review￿whether￿an￿allowance￿for￿credit￿losses￿is￿needed￿by considering￿factors￿such￿as￿historical￿payment￿experience,￿credit￿quality,￿aging￿of￿the￿accounts￿receivable￿balances,￿and current￿economic￿conditions￿that￿may￿affect￿a￿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 2013 EUR (2,071) (1,062) 1,285 (1,848) 2012 EUR (2,582) (458) 969 (2,071) 1 The￿addition￿for￿the￿year￿is￿recorded￿in￿the￿cost￿of￿sales. ASML￿ANNUAL￿REPORT￿2013 F-22 7. 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,￿2013￿and￿2012: 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 2013 EUR 302,977 (6,488) 296,489 254,227 (3,755) 46,017 2012 EUR 309,616 (5,828) 303,788 268,617 (3,450) 38,621 The￿slight￿decrease￿in￿finance￿receivables￿as￿of￿December￿31,￿2013￿compared￿to￿December￿31,￿2012￿is￿caused￿by￿a change￿in￿the￿product￿mix￿(lower￿number￿of￿high-end￿system￿types￿included￿at￿the￿end￿of￿2013￿compared￿to￿2012).￿At December￿31,￿2013,￿the￿finance￿receivables￿due￿for￿payment￿in￿each￿of￿the￿next￿five￿years￿and￿thereafter￿are￿as￿follows: (in thousands) 2014 2015 2016 2017 2018 Thereafter Finance receivables, gross EUR 254,227 - 6,150 36,450 6,150 - 302,977 We￿perform￿ongoing￿credit￿evaluations￿on￿our￿customers’￿financial￿condition.￿We￿periodically￿review￿whether￿an allowance￿for￿credit￿losses￿is￿needed￿by￿considering￿factors￿such￿as￿historical￿payment￿experience,￿credit￿quality,￿the aging￿of￿the￿finance￿receivables￿balances,￿and￿current￿economic￿conditions￿that￿may￿affect￿a￿customer’s￿ability￿to￿pay. In￿2013￿and￿2012,￿we￿did￿not￿record￿any￿expected￿credit￿losses￿from￿finance￿receivables.￿As￿of￿December￿31,￿2013￿the finance￿receivables￿were￿neither￿past￿due￿nor￿impaired. 8. 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 2013 EUR 438,853 1,549,119 666,648 2,654,620 (261,598) 2,393,022 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 2013 EUR (267,366) (164,852) 2,532 168,088 (261,598) 2012 EUR 307,315 1,074,042 742,979 2,124,336 (267,366) 1,856,970 2012 EUR (193,513) (130,911) 1,009 56,049 (267,366) In￿2013,￿the￿addition￿for￿the￿year￿is￿recorded￿in￿cost￿of￿sales￿for￿an￿amount￿of￿EUR￿155.4￿million￿and￿R&D￿costs￿for an￿amount￿of￿EUR￿9.5￿million￿(2012:￿cost￿of￿sales￿EUR￿125.2￿million￿and￿R&D￿costs￿for￿an￿amount￿of￿EUR￿5.7￿million). The￿2013￿addition￿for￿the￿year￿mainly￿relates￿to￿inventory￿items￿which￿were￿ceased￿to￿be￿used￿due￿to￿technological developments￿and￿design￿changes￿which￿resulted￿in￿obsolescence￿of￿certain￿parts. Utilization￿of￿the￿provision￿mainly￿relates￿to￿the￿sale￿and￿scrapping￿of￿obsolete￿inventories.￿In￿2013￿ASML￿made￿no￿profit on￿the￿sale￿of￿inventories￿that￿had￿been￿previously￿written￿down￿(2012:￿EUR￿2.3￿million). ASML￿ANNUAL￿REPORT￿2013 F-23 9. 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 2013 EUR 99,415 100,077 40,843 67,381 28,705 336,421 2012 EUR 70,257 64,708 50,097 25,215 35,728 246,005 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￿supports￿Zeiss'￿work-in-process,￿thereby￿securing￿lens￿and￿optical￿module￿deliveries￿to us.￿Amounts￿owed￿under￿these￿advance￿payments￿are￿settled￿through￿future￿lens￿or￿EUV￿optical￿module￿deliveries. Prepaid￿expenses￿include￿prepaid￿income￿taxes￿on￿intercompany￿profit,￿not￿realized￿by￿the￿ASML￿group￿of￿EUR￿45.4 million￿as￿of￿December￿31,￿2013￿(2012:￿EUR￿29.8￿million). Derivative￿financial￿instruments￿consist￿of￿forward￿foreign￿exchange￿contracts￿and￿the￿current￿part￿of￿the￿aggregate￿fair value￿of￿interest￿rate￿swaps,￿see￿Note￿4. 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 2013 EUR 224,123 30,777 20,174 10,950 5,445 7,090 298,559 2012 EUR 183,025 101,651 12,080 4,462 5,445 4,875 311,538 1 2 For￿further￿details￿on￿compensation￿plan￿assets￿see￿Note￿18. For￿further￿details￿on￿the￿loan￿granted￿to￿lessor￿in￿respect￿of￿Veldhoven￿headquarters￿see￿Note￿12. The￿non-current￿part￿of￿non-interest￿bearing￿advance￿payments￿to￿Zeiss￿mainly￿relates￿to￿payments￿made￿to￿support Zeiss'￿investments￿in￿ASML’s￿EUV￿program,￿which￿are￿settled￿through￿future￿EUV￿optical￿module￿deliveries. Derivative￿financial￿instruments￿consist￿of￿the￿non-current￿part￿of￿the￿fair￿value￿of￿interest￿rate￿swaps,￿see￿Note￿4. 10. Goodwill Changes￿in￿goodwill￿are￿summarized￿as￿follows: Year ended December 31 (in thousands) Cost Balance,￿January￿1 Acquisition￿through￿business￿combinations Effect￿of￿changes￿in￿exchange￿rates Goodwill 2013 EUR 149,168 2,058,285 (118,864) 2,088,589 2012 EUR 146,044 6,038 (2,914) 149,168 Goodwill￿increased￿due￿to￿the￿acquisition￿of￿Cymer.￿For￿more￿information￿with￿respect￿to￿business￿combinations,￿see Note￿2. Goodwill￿is￿tested￿for￿impairment￿annually￿at￿the￿end￿of￿the￿third￿quarter￿and￿whenever￿events￿or￿changes￿in circumstances￿indicate￿that￿the￿carrying￿amount￿of￿the￿goodwill￿may￿not￿be￿recoverable. Due￿to￿the￿acquisition￿of￿Cymer￿we￿have￿re-evaluated￿our￿RU￿structure￿in￿2013.￿As￿a￿result,￿all￿goodwill￿recognized￿in relation￿to￿the￿acquisition￿of￿Cymer￿is￿allocated￿to￿the￿RU￿ASML.￿The￿fair￿value￿of￿the￿RU￿ASML￿is￿based￿on￿ASML's market￿capitalization. ASML￿ANNUAL￿REPORT￿2013 F-24 Based￿on￿the￿recoverability￿testing￿during￿the￿annual￿goodwill￿impairment￿test,￿we￿believe￿that￿the￿fair￿value￿of￿the RU￿ASML￿substantially￿exceeds￿its￿carrying￿value,￿therefore￿goodwill￿was￿not￿impaired￿as￿of￿December￿31,￿2013￿and December￿31,￿2012. 11. Other Intangible Assets Other￿intangible￿assets￿consist￿of￿both￿finite-lived￿intangible￿assets￿and￿indefinite-lived￿intangible￿assets.￿The￿main￿part of￿the￿other￿intangible￿assets￿was￿acquired￿as￿part￿of￿the￿acquisitions￿of￿Brion￿and￿Cymer.￿For￿more￿information￿with respect￿to￿business￿combinations,￿see￿Note￿2. Finite-lived￿other￿intangible￿assets￿consist￿of￿the￿following: (in thousands) Cost Balance,￿January￿1,￿2012 Additions Balance,￿December￿31,￿2012 Acquisitions￿through￿business￿combinations Additions Effect￿of￿changes￿in￿exchange￿rates Balance, December 31, 2013 Accumulated amortization Balance,￿January￿1,￿2012 Amortization Balance,￿December￿31,￿2012 Amortization Effect￿of￿changes￿in￿exchange￿rates Balance, December 31, 2013 Brands EUR - - - 13,280 - (726) 12,554 - - - 382 (13) 369 Carrying amount December￿31,￿2012 December 31, 2013 - 12,185 Intellectual property EUR Developed technology EUR Customer relationships EUR 49,031 - 49,031 427,797 - (23,380) 453,448 44,271 4,080 48,351 18,694 (596) 66,449 8,733 - 8,733 162,980 - (8,907) 162,806 5,277 1,092 6,369 6,332 (174) 12,527 Other EUR 2,231 - 2,231 - - - 2,231 2,103 109 2,212 19 - 2,231 Total EUR 107,245 7,658 114,903 604,057 4,000 (33,013) 689,947 98,879 6,081 104,960 27,562 (783) 131,739 680 386,999 2,364 150,279 19 - 9,943 558,208 47,250 7,658 54,908 - 4,000 - 58,908 47,228 800 48,028 2,135 - 50,163 6,880 8,745 The￿weighted-average￿amortization￿period￿for￿the￿total￿finite-lived￿other￿intangible￿assets￿acquired,￿as￿a￿result￿of￿the acquisition￿of￿Cymer,￿is￿15.2￿years. The￿weighted-average￿amortization￿period￿for￿the￿finite-lived￿other￿intangible￿assets￿acquired,￿as￿a￿result￿of￿the acquisition￿of￿Cymer,￿by￿major￿intangible￿asset￿class￿is￿as￿follows: (in years) Weighted-average￿amortization￿period Brands 20.0 Developed technology Customer relationships 17.9 14.0 Acquired￿finite-lived￿other￿intangible￿assets￿are￿amortized￿on￿a￿straight-line￿basis￿not￿taking￿into￿account￿any￿residual value. Intellectual￿property￿relates￿to￿licenses￿and￿patents￿purchased￿from￿third￿parties.￿During￿2013,￿we￿acquired￿intellectual property￿from￿third￿parties￿for￿an￿amount￿of￿EUR￿4.0￿million￿(2012:￿EUR￿7.7￿million). ASML￿ANNUAL￿REPORT￿2013 F-25 Indefinite-lived￿other￿intangible￿assets￿consist￿of￿the￿following: (in thousands) Cost Balance,￿January￿1,￿2012 Additions Balance,￿December￿31,￿2012 Acquisitions￿through￿business￿combinations Additions Effect￿of￿changes￿in￿exchange￿rates Carrying amount, December 31, 2013 In-process R&D EUR - - - 147,485 - (8,059) 139,426 All￿acquired￿infinite-lived￿other￿intangible￿assets￿are￿allocated￿to￿the￿RU￿ASML. Brands,￿Developed￿technology,￿Customer￿relationships,￿In-process￿R&D￿and￿Other￿were￿obtained￿from￿the￿acquisitions of￿Cymer￿(2013)￿and￿Brion￿(2007). During￿2013,￿we￿recorded￿amortization￿charges￿of￿EUR￿27.6￿million￿(2012:￿EUR￿6.1￿million;￿2011:￿EUR￿5.3￿million)￿which were￿recorded￿in￿cost￿of￿sales￿for￿EUR￿27.0￿million￿(2012:￿EUR￿6.0￿million;￿2011:￿EUR￿5.3￿million)￿and￿in￿R&D￿costs￿for EUR￿0.6￿million￿(2012:EUR￿0.1￿million￿and￿2011:￿nil). During￿2013,￿2012￿and￿2011,￿we￿did￿not￿record￿any￿impairment￿charges￿for￿other￿intangible￿assets. As￿at￿December￿31,￿2013,￿the￿estimated￿amortization￿expenses￿for￿other￿intangible￿assets,￿for￿the￿next￿five￿years￿and thereafter,￿are￿as￿follows: (in thousands) 2014 2015 2016 2017 2018 Thereafter EUR 42,227 41,317 52,753 51,958 50,619 458,760 Amortization expenses 697,634 ASML￿ANNUAL￿REPORT￿2013 F-26 12. Property, Plant and Equipment Property,￿plant￿and￿equipment￿consist￿of￿the￿following: Land, buildings and constructions EUR Machinery and equipment EUR Leasehold improvements EUR Furniture, fixtures and other equipment EUR (in thousands) Cost Balance,￿January￿1,￿2012 Additions Disposals Effect￿of￿changes￿in￿exchange￿rates Balance,￿December￿31,￿2012 Acquisitions￿through￿business￿combinations Additions Disposals Effect￿of￿changes￿in￿exchange￿rates Balance, December 31, 2013 Accumulated depreciation and impairment Balance,￿January￿1,￿2012 Depreciation Impairment￿charges Disposals Effect￿of￿changes￿in￿exchange￿rates Balance,￿December￿31,￿2012 Depreciation Impairment￿charges Disposals Effect￿of￿changes￿in￿exchange￿rates Balance, December 31, 2013 Carrying amount December￿31,￿2012 December 31, 2013 742,141 106,234 (347) (995) 847,033 71,040 123,646 (14) (6,605) 1,035,100 155,877 31,598 649 (347) (505) 187,272 47,791 3,619 (5) (1,116) 237,561 659,761 797,539 764,023 248,429 (317,022) (4,671) 690,759 48,965 171,895 (90,244) (17,490) 803,885 401,800 110,571 906 (92,205) (3,090) 417,982 114,677 7,997 (42,625) (8,068) 489,963 272,777 313,922 206,660 8,883 (300) (391) 214,852 1,057 11,543 (336) (1,464) 225,652 145,775 13,416 - (248) (165) 158,778 12,415 1,352 (266) (422) 171,857 56,074 53,795 Total EUR 2,057,803 386,295 (348,563) (6,116) 2,089,419 124,308 339,252 (92,519) (27,342) 2,433,118 1,004,193 179,253 3,234 (123,375) (3,809) 1,059,496 197,053 13,057 (44,178) (10,150) 1,215,278 344,979 22,749 (30,894) (59) 336,775 3,246 32,168 (1,925) (1,783) 368,481 300,741 23,668 1,679 (30,575) (49) 295,464 22,170 89 (1,282) (544) 315,897 41,311 52,584 1,029,923 1,217,840 Property,￿plant￿and￿equipment￿include￿amounts￿recorded￿as￿a￿result￿of￿the￿acquisition￿of￿Cymer.￿For￿more￿information with￿respect￿to￿business￿combinations,￿we￿refer￿to￿Note￿2. As￿of￿December￿31,￿2013,￿the￿carrying￿amount￿includes￿assets￿under￿construction￿for￿land,￿buildings￿and￿constructions of￿EUR￿49.3￿million￿(2012:￿EUR￿5.5￿million),￿machinery￿and￿equipment￿of￿EUR￿35.9￿million￿(2012:￿EUR￿21.8￿million), leasehold￿improvements￿of￿EUR￿1.0￿million￿(2012:￿EUR￿1.0￿million)￿and￿furniture,￿fixtures￿and￿other￿equipment￿of￿EUR 13.9￿million￿(2012:￿EUR￿9.3￿million).￿As￿of￿December￿31,￿2013,￿the￿carrying￿amount￿of￿land￿amounts￿to￿EUR￿79.2￿million (2012:￿EUR￿60.7￿million). The￿majority￿of￿the￿additions￿and￿disposals￿in￿2013￿and￿2012￿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￿operating￿lease￿and￿for￿evaluation￿purposes.￿These￿systems￿are￿recorded￿at￿cost￿and￿depreciated over￿their￿expected￿useful￿life￿taking￿into￿consideration￿their￿residual￿value.￿From￿the￿time￿that￿these￿assets￿are￿no longer￿held￿for￿use￿but￿intended￿for￿sale￿in￿the￿ordinary￿course￿of￿business,￿they￿are￿reclassified￿from￿property,￿plant￿and equipment￿to￿inventory￿at￿the￿lower￿of￿their￿carrying￿value￿or￿fair￿market￿value.￿Since￿the￿transfers￿between￿inventory and￿property,￿plant￿and￿equipment￿are￿non-cash￿events,￿these￿are￿not￿reflected￿in￿the￿Consolidated￿Statements￿of Cash￿Flows.￿An￿amount￿of￿EUR￿115.9￿million￿(2012:￿EUR￿204.8￿million)￿of￿the￿additions￿relates￿to￿non-cash￿transfers from￿inventory￿and￿an￿amount￿of￿EUR￿12.5￿million￿(2012:￿EUR￿9.6￿million)￿relates￿to￿other￿non-cash￿movements￿(mainly capital￿expenditures￿not￿yet￿paid￿as￿at￿December￿31,￿2013).￿An￿amount￿of￿EUR￿48.2￿million￿(2012:￿EUR￿222.9￿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￿2013￿mainly￿related￿to￿buildings￿(EUR￿3.6￿million)￿and￿machinery￿and￿equipment (EUR￿8.0￿million).￿We￿recorded￿impairment￿charges￿in￿buildings￿relating￿to￿the￿rebuild￿of￿cleanroom￿cabins￿and￿in machinery￿and￿equipment￿relating￿to￿proto￿types.￿The￿total￿impairment￿charges￿were￿determined￿based￿on￿the￿difference between￿the￿assets’￿estimated￿fair￿value￿(being￿EUR￿16.4￿million)￿and￿their￿carrying￿amount. ASML￿ANNUAL￿REPORT￿2013 F-27 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￿ceased￿to￿be￿used.￿The￿total￿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￿ceased￿to￿be￿used.￿The￿total￿impairment￿charges￿were￿determined￿based￿on￿the￿difference￿between￿the￿assets’ estimated￿fair￿value￿(being￿EUR￿1.9￿million)￿and￿their￿carrying￿amount. As￿of￿December￿31,￿2013,￿the￿carrying￿amount￿of￿machinery￿and￿equipment￿includes￿an￿amount￿of￿EUR￿36.7￿million￿with respect￿to￿evaluation￿and￿operating￿lease￿systems￿(2012:￿EUR￿82.2￿million). During￿2013,￿we￿recorded￿impairment￿charges￿of￿EUR￿13.1￿million￿(2012:￿EUR￿3.2￿million;￿2011:￿EUR￿12.3￿million)￿of which￿we￿recorded￿EUR￿6.3￿million￿(2012:￿EUR￿1.0￿million;￿2011:￿EUR￿6.2￿million)￿in￿cost￿of￿sales,￿EUR￿6.7￿million￿(2012: EUR￿0.5￿million;￿2011:￿EUR￿3.5￿million)￿in￿R&D￿costs￿and￿EUR￿0.1￿million￿(2012:￿EUR￿1.7￿million;￿2011:￿EUR￿2.6￿million) in￿SG&A￿costs. During￿2013,￿we￿recorded￿depreciation￿charges￿of￿EUR￿197.1￿million￿(2012:￿EUR￿179.3￿million;￿2011:￿EUR￿158.0￿million) of￿which￿we￿recorded￿EUR￿144.1￿million￿(2012:￿EUR￿147.7￿million;￿2011:￿EUR￿117.7￿million)￿in￿cost￿of￿sales,￿EUR￿35.0 million￿(2012￿EUR￿15.3￿million;￿2011:￿EUR￿24.9￿million)￿in￿R&D￿costs￿and￿EUR￿18.0￿million￿(2012:￿EUR￿16.3￿million;￿2011: EUR￿15.4￿million)￿in￿SG&A￿costs. Variable Interest Entity The￿carrying￿amount￿of￿land,￿buildings￿and￿constructions￿includes￿an￿amount￿of￿EUR￿30.9￿million￿(2012:￿EUR￿32.4 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￿(starting￿in￿2003)￿from￿an￿entity￿("lessor") that￿was￿incorporated￿by￿the￿VIE￿Shareholders.￿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￿an￿interest,￿and￿may￿absorb￿losses,￿and￿the￿equity￿holders￿have￿an￿interest￿and￿may￿receive benefits,￿they￿do￿not￿have￿the￿power￿to￿direct￿activities￿that￿most￿significantly￿impact￿the￿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￿2013 F-28 13. 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 2013 EUR 939,358 440,010 821,959 247,246 11,652 27,475 12,324 2,500,024 283,142 2,216,882 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 1 The￿main￿part￿of￿the￿non-current￿portion￿of￿accrued￿and￿other￿liabilities￿relates￿to￿down￿payments￿received￿from￿customers￿regarding￿future shipments￿of￿EUV￿systems￿and￿deferrals￿with￿respect￿to￿services. The￿increase￿in￿accrued￿and￿other￿liabilities￿mainly￿relates￿to￿the￿increase￿in￿deferred￿revenue￿and￿costs￿to￿be￿paid, partly￿offset￿by￿the￿decrease￿in￿down￿payments￿from￿customers. Deferred￿revenue￿as￿of￿December￿31,￿2013￿mainly￿consists￿of￿award￿credits￿regarding￿free￿or￿discounted￿products or￿services￿as￿part￿of￿volume￿purchase￿agreements￿amounting￿to￿EUR￿660.1￿million￿(2012:￿EUR￿581.5￿million)￿and prepaid￿extended￿and￿enhanced￿(optic)￿warranty￿contracts￿amounting￿to￿EUR￿261.2￿million￿(2012:￿EUR￿242.2￿million).￿In addition,￿the￿deferred￿revenue￿also￿includes￿deferrals￿with￿respect￿to￿our￿first￿third-generation￿EUV￿system,￿NXE:3300B. Costs￿to￿be￿paid￿include￿an￿amount￿of￿EUR￿171.2￿million￿relating￿to￿the￿expected￿losses￿to￿upgrade￿the￿first￿11￿EUV sources￿in￿the￿field,￿which￿was￿assumed￿by￿ASML￿as￿a￿result￿of￿the￿acquisition￿of￿Cymer.￿In￿addition,￿costs￿to￿be￿paid include￿accrued￿cost￿for￿unbilled￿services￿provided￿by￿suppliers￿including￿contracted￿labor,￿outsourced￿services￿and consultancy. We￿receive￿down￿payments￿from￿customers￿prior￿to￿shipment￿for￿systems￿included￿in￿ASML’s￿current￿product￿portfolio or￿systems￿currently￿under￿development. 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￿the￿fair￿value￿of￿foreign￿currency￿contracts￿and￿the￿aggregate￿fair￿value￿of interest￿rate￿swaps￿which￿includes￿accrued￿interest,￿see￿Note￿4. Changes￿in￿standard￿warranty￿reserve￿for￿the￿years￿2013￿and￿2012￿are￿as￿follows: (in thousands) Balance,￿January￿1 Acquisitions￿through￿business￿combinations Additions￿for￿the￿year Utilization￿of￿the￿reserve Release￿of￿the￿reserve Effect￿of￿exchange￿rates Standard warranty reserve 2013 EUR 21,626 2,978 37,124 (19,924) (13,076) (1,253) 27,475 2012 EUR 43,273 - 35,735 (33,746) (22,733) (903) 21,626 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￿our￿systems.￿The￿release￿has￿been￿included￿in￿cost￿of sales. ASML￿ANNUAL￿REPORT￿2013 F-29 14. Provisions The￿movement￿in￿the￿provision￿for￿lease￿contract￿termination￿costs￿is￿as￿follows: (in thousands) Balance,￿January￿1 Utilization￿of￿the￿provision Release￿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 2013 EUR 10,254 (2,790) (1,011) 391 3 6,847 2,227 4,620 2012 EUR 12,338 (2,545) - 628 (167) 10,254 2,280 7,974 The￿provision￿for￿lease￿contract￿termination￿costs￿relates￿to￿an￿operating￿lease￿contract￿for￿a￿building￿for￿which￿no economic￿benefits￿are￿expected.￿The￿provision￿for￿lease￿contract￿termination￿costs￿is￿expected￿to￿be￿fully￿utilized￿by 2017. 15. Long-term Debt Long-term￿debt￿consists￿of￿the￿following: As of December 31 (in thousands) EUR￿600￿million￿5.75￿percent￿senior￿notes￿due￿2017,￿carrying￿amount EUR￿750￿million￿3.375￿percent￿senior￿notes￿due￿2023,￿carrying￿amount Loan￿headquarter￿building1 Other Long-term debt Less:￿current￿portion￿of￿long-term￿debt Non-current portion of long-term debt 2013 EUR 270,339 751,591 30,936 21,704 1,074,570 4,385 1,070,185 2012 EUR 710,095 - 32,366 17,029 759,490 3,610 755,880 1 This￿loan￿relates￿to￿our￿VIE,￿see￿Note￿12. Our￿obligations￿to￿make￿principal￿repayments￿under￿our￿Eurobonds￿and￿other￿borrowing￿arrangements￿excluding interest￿expense￿as￿of￿December￿31,￿2013,￿for￿the￿next￿five￿years￿and￿thereafter,￿are￿as￿follows: Long-term debt Less:￿current￿portion￿of￿long-term￿debt Non-current portion of long-term debt (in thousands) 2014 2015 2016 2017 2018 Thereafter EUR 4,385 4,252 4,211 242,361 27,997 757,467 1,040,673 4,385 1,036,288 Eurobonds The￿following￿table￿summarizes￿the￿carrying￿amount￿of￿our￿outstanding￿Eurobonds,￿including￿the￿fair￿value￿of￿interest rate￿swaps￿used￿to￿hedge￿the￿change￿in￿the￿fair￿value￿of￿the￿Eurobonds: As of December 31 (in thousands) Amortized￿cost￿amount Fair￿value￿interest￿rate￿swaps1 Carrying amount 2013 EUR 981,291 40,639 1,021,930 2012 EUR 600,000 110,095 710,095 1 The￿fair￿value￿of￿the￿interest￿rate￿swaps￿excludes￿accrued￿interest. ASML￿ANNUAL￿REPORT￿2013 F-30 In￿June￿2007,￿we￿completed￿an￿offering￿of￿our￿EUR￿600￿million￿5.75￿percent￿senior￿notes￿due￿2017,￿with￿interest￿payable annually￿on￿June￿13.￿The￿notes￿are￿redeemable￿at￿the￿option￿of￿ASML,￿in￿whole￿or￿in￿part,￿at￿any￿time￿by￿paying￿a￿make whole￿premium,￿and￿unless￿previously￿redeemed,￿will￿be￿redeemed￿at￿100￿percent￿of￿their￿principal￿amount￿on￿June￿13, 2017.￿In￿September￿2013,￿we￿repurchased￿a￿nominal￿amount￿of￿EUR￿361.8￿million￿of￿these￿notes￿in￿a￿tender￿offer￿for￿a cash￿amount￿of￿EUR￿423.0￿million￿including￿accrued￿interest. In￿September￿2013,￿we￿completed￿an￿offering￿of￿our￿EUR￿750￿million￿3.375￿percent￿senior￿notes￿due￿2023,￿with￿interest payable￿annually￿on￿September￿19.￿The￿notes￿are￿redeemable￿at￿the￿option￿of￿ASML,￿in￿whole￿or￿in￿part,￿at￿any￿time by￿paying￿a￿make￿whole￿premium,￿and￿unless￿previously￿redeemed,￿will￿be￿redeemed￿at￿100￿percent￿of￿their￿principal amount￿on￿September￿19,￿2023. The￿Eurobonds￿serve￿as￿hedged￿items￿in￿fair￿value￿hedge￿relationships￿in￿which￿we￿hedge￿the￿variability￿of￿changes￿in the￿fair￿value￿of￿our￿Eurobonds￿due￿to￿changes￿in￿market￿interest￿rates￿with￿interest￿rate￿swaps.￿The￿fair￿value￿changes of￿these￿interest￿rate￿swaps￿are￿recorded￿on￿the￿Consolidated￿Balance￿Sheets￿under￿derivative￿financial￿instruments (within￿other￿current￿assets￿and￿other￿non-current￿assets)￿and￿the￿carrying￿amount￿of￿the￿Eurobonds￿is￿adjusted￿for these￿fair￿value￿changes￿only.￿Following￿the￿repurchase￿of￿part￿of￿our￿EUR￿600￿million￿5.75￿percent￿senior￿notes￿due 2017,￿the￿corresponding￿part￿of￿the￿interest￿rate￿swaps￿has￿been￿terminated,￿simultaneously. The￿following￿table￿summarizes￿amongst￿others￿the￿estimated￿fair￿value￿of￿the￿Eurobonds: As of December 31 (in thousands) Principal￿amount Carrying￿amount Fair￿value1 2013 EUR 988,153 1,021,930 1,028,238 2012 EUR 600,000 710,095 700,644 1 Source:￿Bloomberg￿Finance￿LP The￿fair￿value￿of￿our￿Eurobonds￿is￿estimated￿based￿on￿quoted￿market￿prices￿as￿of￿December￿31,￿2013.￿Due￿to￿changes in￿market￿interest￿rates￿and￿credit￿spreads￿since￿the￿issue￿of￿our￿Eurobonds￿which￿carry￿a￿fixed￿coupon￿interest￿rate,￿the fair￿value￿deviates￿from￿the￿principal￿amount. 16. Lines of Credit Our￿available￿credit￿facilities￿amount￿to￿EUR￿700.0￿million￿as￿of￿December￿31,￿2013￿and￿EUR￿500.0￿million￿as￿of December￿31,￿2012.￿No￿amounts￿were￿outstanding￿under￿these￿credit￿facilities￿at￿the￿end￿of￿2013￿and￿2012. The￿amount￿at￿December￿31,￿2013￿consists￿of￿one￿EUR￿700￿million￿committed￿revolving￿credit￿facility￿from￿a￿group￿of banks￿that￿will￿mature￿in￿2018.￿This￿credit￿facility￿replaced￿our￿EUR￿500￿million￿committed￿revolving￿credit￿facility￿that was￿due￿to￿expire￿in￿May￿2015￿and￿that￿we,￿in￿line￿with￿our￿financing￿policy,￿cancelled￿in￿March￿2013.￿The￿new￿credit facility￿contains￿a￿similar￿restrictive￿covenant￿as￿the￿credit￿facility￿it￿replaced￿and￿that￿requires￿us￿to￿maintain￿a￿minimum long-term￿committed￿capital￿to￿net￿total￿assets￿ratio￿of￿40.0￿percent￿calculated￿in￿accordance￿with￿contractually￿agreed definitions.￿Long-term￿committed￿capital￿contains,￿among￿others,￿shareholders’￿equity￿and￿debt￿maturing￿at￿least￿one year￿after￿the￿maturity￿date￿of￿the￿credit￿facility,￿while￿net￿total￿assets￿mainly￿comprises￿of￿total￿assets￿minus￿cash,￿cash equivalents￿and￿certain￿short-term￿investments.￿Furthermore,￿adjustments￿are￿made￿for￿e.g.￿intangibles￿and￿operating leases. As￿of￿December￿31,￿2013￿this￿ratio￿was￿89.6￿percent.￿Therefore,￿we￿are￿in￿compliance￿with￿the￿covenant￿at￿the end￿of￿2013.￿Outstanding￿amounts￿under￿this￿credit￿facility￿will￿bear￿interest￿at￿EURIBOR￿or￿LIBOR￿plus￿a￿margin￿that depends￿on￿our￿liquidity￿position. The￿amount￿at￿December￿31,￿2012,￿consisted￿of￿one￿EUR￿500￿million￿committed￿revolving￿credit￿facility￿from￿a￿group￿of banks￿that￿we￿cancelled￿in￿March￿2013.￿The￿credit￿facility￿contained￿a￿restrictive￿covenant￿that￿required￿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,￿this￿ratio￿was￿85.8￿percent.￿Therefore,￿we￿were￿in￿compliance￿with￿the￿covenant￿at the￿end￿of￿2012. ASML￿ANNUAL￿REPORT￿2013 F-31 17. Commitments, Contingencies and Guarantees We￿have￿various￿contractual￿obligations,￿some￿of￿which￿are￿required￿to￿be￿recorded￿as￿liabilities￿in￿our￿Financial Statements,￿including￿long-￿and￿short-term￿debt.￿Other￿contractual￿obligations,￿namely￿operating￿lease￿commitments, purchase￿obligations￿and￿guarantees,￿are￿generally￿not￿required￿to￿be￿recognized￿as￿liabilities￿on￿our￿Consolidated Balance￿Sheets￿but￿are￿required￿to￿be￿disclosed. Our￿contractual￿obligations￿as￿of￿December￿31,￿2013￿can￿be￿summarized￿as￿follows: Payments due by period (in￿thousands) Total EUR 1 year EUR Long-Term￿Debt￿Obligations,￿including￿interest￿expense1 1,341,380 74,946 Operating￿Lease￿Obligations 45,079 30,293 Purchase￿Obligations 2,012,913 1,894,455 580 74,069 Unrecognized￿Tax￿Benefits,￿including￿interest￿expense 2 year EUR 44,952 21,543 85,548 945 3 year EUR 44,907 14,081 16,223 7,680 4 year EUR 275,640 4,803 13,772 26,105 5 year EUR 54,155 2,539 2,382 785 After 5 years EUR 876,647 1,687 533 37,974 Total Contractual Obligations 3,503,308 1,970,407 152,988 82,891 320,320 59,861 916,841 1 See￿Note￿15￿for￿the￿amounts￿excluding￿interest￿expenses. Long-term￿debt￿obligations￿mainly￿relate￿to￿interest￿payments￿and￿the￿principal￿amount￿of￿our￿Eurobonds.￿See￿Note￿15. Operating￿lease￿obligations￿include￿leases￿of￿equipment￿and￿facilities.￿Lease￿payments￿recognized￿as￿an￿expense were￿EUR￿42.0￿million,￿EUR￿41.6￿million￿and￿EUR￿40.6￿million￿for￿the￿years￿ended￿December￿31,￿2013,￿2012￿and￿2011, 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,￿2013￿can￿be￿summarized￿as￿follows: Purchase options due by period (in￿thousands) Purchase￿options Total EUR 13,983 1 year EUR - 2 year EUR - 3 year EUR 13,983 4 year EUR - 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,￿2013￿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. 18. Employee Benefits Our￿bonus￿expenses￿for￿the￿Board￿of￿Management￿(including￿Mr.￿Nickl￿and￿Mr.￿Meurice)￿and￿senior￿management￿were as￿follows: Year ended December 31 (in thousands) 2013 EUR 2012 EUR 2011 EUR Bonus￿expenses 32,698 16,474 15,557 Bonus￿expenses￿include￿an￿amount￿of￿EUR￿2.1￿million￿(2012:￿EUR￿1.8￿million;￿2011:￿EUR￿1.7￿million)￿in￿relation￿to￿the STI￿cash￿bonus￿for￿our￿Board￿of￿Management,￿Mr.￿Nickl￿and￿Mr.￿Meurice. ASML￿ANNUAL￿REPORT￿2013 F-32 We￿have￿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.￿Within￿ASML￿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￿over￿the￿first￿half￿of￿2013￿was￿paid￿in￿the￿second￿half￿of￿2013.￿The￿bonus￿over￿the second￿half￿of￿2013￿is￿accrued￿for￿in￿the￿Consolidated￿Balance￿Sheets￿as￿of￿December￿31,￿2013￿and￿is￿expected￿to￿be paid￿in￿the￿first￿quarter￿of￿2014.￿As￿a￿result￿of￿the￿acquisition￿of￿Cymer,￿we￿assumed￿all￿existing￿bonus￿plans￿eligible￿to Cymer￿employees.￿Within￿Cymer￿bonuses￿can￿range￿between￿0.0￿percent￿and￿150.0￿percent,￿or￿0.0￿percent￿and￿200.0 percent￿of￿the￿relevant￿employee's￿annual￿salary,￿depending￿upon￿such￿employee's￿seniority￿and￿respective￿division. The￿performance￿targets￿are￿set￿for￿a￿whole￿year.￿The￿bonus￿over￿2013￿is￿accrued￿for￿in￿the￿Consolidated￿Balance Sheets￿as￿of￿December￿31,￿2013￿and￿is￿expected￿to￿be￿paid￿in￿the￿first￿quarter￿of￿2014. Our￿bonus￿costs￿under￿these￿plans￿were￿as￿follows: Year ended December 31 (in thousands) 2013 EUR 2012 EUR 2011 EUR Bonus￿expenses 30,631 14,588 13,131 The￿increase￿in￿bonus￿costs￿in￿2013￿compared￿to￿2012￿is￿mainly￿attributable￿to￿the￿acquisition￿of￿Cymer. Profit-sharing Plan We￿have￿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￿their￿annual￿salary.￿The￿profit￿sharing for￿the￿years￿2013,￿2012￿and￿2011￿was￿14.0￿percent￿or￿EUR￿55.9￿million,￿18.0￿percent￿or￿EUR￿64.5￿million￿and￿20.0 percent￿or￿EUR￿64.0￿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￿25.8￿million￿for￿2013￿(including EUR￿2.3￿million￿for￿the￿sales￿reward￿plan),￿EUR￿24.4￿million￿for￿2012￿and￿EUR￿23.2￿million￿for￿2011. Share-based Compensation We￿have￿adopted￿various￿share￿(option)￿plans￿for￿our￿employees.￿Each￿year,￿the￿Board￿of￿Management￿determines, by￿category￿of￿our￿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,￿we￿have￿separate￿share-based￿payment￿plans,￿for￿details￿on￿service￿and￿vesting￿conditions￿see￿below. 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￿52.4￿million￿in￿2013,￿EUR￿18.7￿million￿in￿2012￿and￿EUR 12.4￿million￿in￿2011.￿Compensation￿expenses￿in￿2013￿included￿EUR￿25.2￿million￿relating￿to￿incurred￿post-acquisition expenses￿for￿share-based￿compensation￿awards￿exchanged￿as￿part￿of￿the￿acquisition￿of￿Cymer,￿see￿Note￿2.￿Details concerning￿the￿share￿(option)￿plans￿which￿have￿been￿adopted￿by￿ASML￿as￿part￿of￿the￿Cymer￿acquisition￿are￿included￿in the￿tables￿below.￿The￿tax￿benefit￿recognized￿related￿to￿the￿recognized￿share-based￿compensation￿costs￿amounts￿to￿EUR 10.7￿million￿in￿2013,￿EUR￿0.9￿million￿in￿2012￿and￿EUR￿0.5￿million￿in￿2011.￿ Total￿compensation￿costs￿related￿to￿non-vested￿awards￿to￿be￿recognized￿in￿future￿periods￿amount￿to￿EUR￿78.9￿million as￿per￿December￿31,￿2013￿(2012:￿EUR￿30.4￿million;￿2011:￿EUR￿23.3￿million).￿The￿weighted￿average￿period￿over￿which these￿costs￿are￿expected￿to￿be￿recognized￿is￿calculated￿at￿1.6￿years￿(2012:￿2.0￿years;￿2011:￿1.9￿years).￿ Option Plans Options￿granted￿under￿our￿stock￿option￿plans￿have￿fixed￿exercise￿prices￿equal￿to￿the￿closing￿price￿of￿our￿shares￿listed at￿NYSE￿Euronext￿Amsterdam￿or￿our￿shares￿listed￿at￿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. We￿have￿five￿different￿stock￿option￿plans: • Employee￿plan • Option￿purchase￿plan • Brion￿stock￿option￿plan • Cymer￿stock￿option￿plan • Senior￿management￿plan￿(already￿vested) ASML￿ANNUAL￿REPORT￿2013 F-33 The￿Option￿purchase￿plan￿has￿no￿service￿and￿vesting￿conditions.￿The￿other￿plans￿typically￿have￿a￿three￿to￿four￿year service￿condition.￿The￿fair￿value￿of￿the￿stock￿options￿is￿determined￿using￿a￿Black-Scholes￿option￿valuation￿model.￿￿ The￿Black-Scholes￿option￿valuation￿of￿our￿stock￿options￿is￿based￿on￿the￿following￿assumptions: Year ended December 31 Weighted￿average￿share￿price￿(in￿EUR) Volatility￿(in￿percentage) Expected￿life￿(in￿years) Risk￿free￿interest￿rate Expected￿dividend￿yield￿(in￿EUR) Forfeiture￿rate1 2013 62.0 27.0 5.6 0.8 2.00 - 2012 40.3 25.6 5.0 2.1 1.45 - 2011 28.0 37.8 4.8 2.9 1.25 - 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 2013 2012 2011 2013 2012 2011 EUR- denominated USD- denominated 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) 14.22 59.53 15,924 3.09 37,441 38,718 8.97 40.45 71,331 3.59 34,438 35,671 8.28 29.39 30,204 2.08 39,384 45,141 21.74 77.25 11,086 3.12 22,781 25,369 11.87 50.88 12,684 3.17 21,882 22,433 10.42 41.94 11,323 1.80 20,492 20,791 The￿number￿and￿weighted￿average￿exercise￿prices￿of￿stock￿options￿as￿of￿December￿31,￿2013,￿and￿changes￿during￿the year￿then￿ended￿are￿presented￿below: EUR-denominated USD-denominated Outstanding,￿January￿1,￿2013 Granted Exercised Forfeited Expired Outstanding, December 31, 2013 Exercisable,￿December￿31,￿2013 Number of options 1,128,162 28,308 (358,581) (4,234) (11,353) 782,302 731,452 Weighted average exercise price per ordinary share (EUR) 16.38 58.35 15.12 20.27 10.11 18.55 16.85 Number of options 494,836 101,400 1 (178,374) (7,311) (3,916) 406,635 325,026 Weighted average exercise price per ordinary share (USD) 19.06 60.86 14.86 23.81 11.33 31.31 23.61 1 USD-denominated￿grants￿include￿79,153￿options￿with￿a￿weighted￿average￿exercise￿price￿of￿USD￿53.07￿which￿have￿been￿assumed￿by￿ASML￿as￿part￿of the￿acquisition￿of￿Cymer. ASML￿ANNUAL￿REPORT￿2013 F-34 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 60￿-￿70 70￿-￿80 80￿-￿90 Total Number of outstanding options at December 31, 2013 - 380,681 185,086 141,192 24,843 25,256 6,156 19,088 - - 782,302 Weighted average remaining contractual life of outstanding options (years) - 2.36 3.11 4.05 7.76 8.80 9.17 9.76 - - 3.46 Range of exercise prices (USD) 0￿-￿10 10￿-￿15 15￿-￿20 20￿-￿25 25￿-￿40 40￿-￿50 50￿-￿60 60￿-￿70 70￿-￿80 80￿-￿90 Total Number of outstanding options at December 31, 2013 20,560 133,117 4,311 80,019 93,456 1,468 9,540 1,383 43,993 18,788 406,635 Weighted average remaining contractual life of outstanding options (years) 1.97 0.90 4.80 3.92 5.72 7.70 8.71 9.07 9.14 9.78 4.23 In￿2013,￿2012￿and￿2011,￿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￿our￿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￿listed￿at￿NYSE Euronext￿Amsterdam￿on￿the￿grant￿date. We￿have￿eight￿different￿share￿plans: • Employee￿plan • Cymer￿employee￿plan • Share￿purchase￿plan • New￿hire￿performance￿share￿plan • Brion￿performance￿share￿plan • Cymer￿performance￿share￿plan • Senior￿management￿performance￿share￿plan • Board￿of￿management￿performance￿share￿plan￿ The￿Share￿purchase￿plan￿has￿no￿service￿and￿vesting￿conditions.￿The￿employee￿plans￿only￿have￿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: Year ended December 31 2013 2012 2011 2013 2012 2011 EUR- denominated USD- denominated Total￿fair￿value￿at￿vesting￿date￿of￿shares￿vested￿during￿the￿year￿(in￿thousands) Weighted￿average￿fair￿value￿of￿shares￿granted 38,280 55.83 16,179 36.15 9,155 28.09 51,798 83.58 5,392 47.71 1,956 39.00 ASML￿ANNUAL￿REPORT￿2013 F-35 A￿summary￿of￿the￿status￿of￿conditionally￿outstanding￿shares￿as￿of￿December￿31,￿2013,￿and￿changes￿during￿the￿year ended￿December￿31,￿2013,￿is￿presented￿below: EUR-denominated USD-denominated Conditional shares outstanding at January 1, 2013 Granted Vested/Issued Forfeited Conditional shares outstanding at December 31, 2013 Number of shares 1,693,610 548,786 (635,753) (62,311) 1,544,332 Weighted average fair value at grant date (EUR) 29.92 55.83 26.94 33.40 40.21 Number of shares 249,094 1,852,320 1 (628,802) (92,292) 1,380,320 Weighted average fair value at grant date (USD) 40.71 83.58 76.12 78.94 79.55 1 USD-denominated￿grants￿include￿1,634,990￿shares￿with￿a￿weighted￿average￿fair￿value￿of￿USD￿83.94￿which￿have￿been￿assumed￿by￿ASML￿as￿part￿of the￿acquisition￿of￿Cymer. Other Plans Employee Purchase Plan Every￿quarter,￿we￿offer￿our￿worldwide￿payroll￿employees￿the￿opportunity￿to￿buy￿our￿shares￿or￿our￿stock￿options￿against fair￿value￿out￿of￿their￿net￿salary.￿The￿fair￿value￿for￿shares￿is￿determined￿based￿on￿the￿closing￿price￿of￿our￿shares￿listed￿at 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,￿we￿will￿pay￿out￿a￿20.0￿percent￿cash￿bonus￿on￿the￿net￿invested￿amount. Deferred Compensation Plans In￿July￿2002,￿we￿adopted￿a￿non-qualified￿deferred￿compensation￿plan￿for￿our￿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￿us￿to￿credit￿additional￿amounts￿to￿the￿participants’￿account￿balances.￿The￿participants divide￿their￿funds￿among￿the￿investments￿available￿in￿the￿plan.￿Participants￿elect￿to￿receive￿their￿funds￿in￿future periods￿after￿the￿earlier￿of￿their￿employment￿termination￿or￿their￿withdrawal￿election,￿at￿least￿three￿years￿after￿deferral. There￿were￿minor￿expenses￿relating￿to￿this￿plan￿in￿2013,￿2012￿and￿2011.￿Cymer￿has￿a￿similar￿non-qualified￿deferred compensation￿plan￿for￿a￿selected￿group￿of￿management￿level￿employees￿in￿the￿United￿States￿in￿which￿the￿employee may￿elect￿to￿defer￿receipt￿of￿current￿compensation￿from￿us￿in￿order￿to￿provide￿retirement￿and￿other￿benefits￿on￿behalf￿of such￿employee￿backed￿by￿Cymer￿owned￿life￿insurance￿policies. As￿of￿December￿31,￿2013,￿and￿2012,￿our￿liability￿under￿deferred￿compensation￿plans￿was￿EUR￿23.5￿million￿and￿EUR￿11.8 million,￿respectively. Pension Plans We￿maintain￿various￿pension￿plans￿covering￿substantially￿all￿of￿our￿employees.￿Our￿employees￿in￿the￿Netherlands, 5,525￿FTEs,￿participate￿in￿a￿multi-employer￿union￿plan￿(PME)￿determined￿in￿accordance￿with￿the￿collective￿bargaining agreements￿effective￿for￿the￿industry￿in￿which￿we￿operate.￿This￿collective￿bargaining￿agreement￿has￿no￿expiration date.￿This￿multi-employer￿union￿plan￿covers￿approximately￿1,296￿companies￿and￿approximately￿146,000￿contributing members.￿Our￿contribution￿to￿the￿multi-employer￿union￿plan￿is￿less￿than￿5.0￿percent￿of￿the￿total￿contribution￿to￿the￿plan as￿per￿the￿annual￿report￿for￿the￿year￿ended￿December￿31,￿2012.￿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￿104.3￿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￿ANNUAL￿REPORT￿2013 F-36 In￿2009,￿because￿of￿a￿low￿coverage￿ratio,￿PME￿prepared￿and￿executed￿a￿so-called￿"Recovery￿Plan"￿which￿was approved￿by￿De￿Nederlandsche￿Bank.￿Under￿the￿terms￿of￿the￿recovery￿plan,￿which￿terminated￿at￿the￿end￿of￿2013,￿a minimal￿coverage￿percentage￿of￿104.3￿percent￿was￿required.￿The￿coverage￿percentage￿of￿the￿multi-employer￿union plan￿increased￿to￿103.4￿percent￿as￿of￿December￿31,￿2013￿(December￿31,￿2012:￿93.9￿percent),￿which￿is￿below￿the requirements￿as￿set￿out￿in￿the￿recovery￿plan.￿However￿we￿have￿no￿obligation￿whatsoever￿to￿pay￿off￿any￿deficits￿the pension￿fund￿may￿incur,￿nor￿have￿we￿any￿claim￿to￿any￿potential￿surpluses.￿The￿coverage￿percentage￿is￿calculated￿by dividing￿the￿funds￿capital￿by￿the￿total￿sum￿of￿pension￿liabilities￿and￿is￿based￿on￿actual￿market￿interest.￿In￿2014￿the pension￿premium￿percentage￿will￿increase￿from￿24.0￿to￿24.1. Our￿net￿periodic￿pension￿cost￿for￿this￿multi-employer￿union￿plan￿for￿any￿period￿is￿the￿amount￿of￿the￿required￿contribution for￿that￿period. We￿also￿participate￿in￿several￿defined￿contribution￿pension￿plans,￿with￿our￿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,￿2013,￿2012￿and￿2011 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 2013 EUR 40,476 19,799 60,275 2012 EUR 34,525 15,773 50,298 2011 EUR 31,819 14,128 45,947 19. 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's￿customers￿may￿be￿subject￿to￿claims￿of infringement￿from￿third￿parties￿alleging￿that￿the￿ASML￿equipment￿used￿by￿those￿customers￿in￿the￿manufacture￿of semiconductor￿products,￿and/or￿the￿methods￿relating￿to￿use￿of￿the￿ASML￿equipment,￿infringes￿one￿or￿more￿patents issued￿to￿those￿third￿parties.￿If￿these￿claims￿were￿successful,￿ASML￿could￿be￿required￿to￿indemnify￿such￿customers￿for some￿or￿all￿of￿the￿losses￿incurred￿or￿damages￿assessed￿against￿them￿as￿a￿result￿of￿that￿infringement. We￿accrue￿for￿legal￿costs￿related￿to￿litigation￿in￿our￿Consolidated￿Statements￿of￿Operations￿at￿the￿time￿when￿the￿related legal￿services￿are￿actually￿provided￿to￿ASML.￿In￿2013,￿EUR￿3.2￿million￿estimated￿losses￿were￿recorded￿as￿a￿charge￿to our￿Consolidated￿Statements￿of￿Operations￿(2012￿and￿2011:￿no￿estimated￿losses￿were￿recorded). 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￿and￿Nikon￿agreed￿to￿settle￿all￿pending￿worldwide patent￿litigation￿between￿the￿companies.￿The￿settlement￿included￿an￿exchange￿of￿releases,￿a￿patent￿Cross-License agreement￿related￿to￿lithography￿equipment￿used￿to￿manufacture￿semiconductor￿devices￿and￿payments￿to￿Nikon￿by ASML.￿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 resulting￿from￿claims￿for￿patent￿infringement￿occurring￿during￿the￿Cross-License￿Transition￿Period￿are￿limited￿to￿three percent￿of￿the￿net￿sales￿price￿of￿products￿found￿to￿infringe￿valid￿and￿enforceable￿patents. ASML￿ANNUAL￿REPORT￿2013 F-37 20. 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 2013 EUR (52,753) 44,766 (7,987) 2012 EUR (79,255) 74,993 (4,262) 2011 EUR (129,127) (52,548) (181,675) The￿Dutch￿statutory￿tax￿rate￿was￿25.0￿percent￿in￿2013,￿2012￿and￿2011.￿Tax￿amounts￿in￿other￿jurisdictions￿are￿calculated at￿the￿rates￿prevailing￿in￿the￿relevant￿jurisdictions. The￿reconciliation￿of￿the￿provision￿for￿income￿taxes￿is￿as￿follows: Year ended December 31 (in thousands) 2013 EUR % 2012 EUR % 2011 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￿tax￿incentives Adjustments￿in￿respect￿of￿prior￿years'￿current￿taxes Adjustments￿in￿respect￿of￿prior￿years'￿deferred￿taxes Movements￿in￿the￿liability￿for￿unrecognized￿tax￿benefits Adjustment￿in￿respect￿of￿non-taxable￿pre-existing￿relationship Other￿credits￿and￿non-taxable￿items Provision for income taxes Income before income taxes 1,023,477 (255,869) 23,459 29,430 120,751 5,155 16,164 (7,588) 67,730 (7,219) (7,987) 100.0 1,150,578 (287,644) 9,786 23,532 143,160 18,275 - 95,465 - (6,836) (4,262) 25.0 (2.3) (2.9) (11.7) (0.5) (1.6) 0.7 (6.6) 0.7 0.8 100.0 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 25.0 (1.3) (1.2) (10.9) (0.6) - (0.4) - 0.4 11.0 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.￿It reflects￿the￿provision￿for￿income￿taxes￿that￿would￿have￿been￿applicable￿assuming￿that￿all￿of￿our￿income￿is￿taxable against￿the￿Dutch￿statutory￿tax￿rate￿and￿there￿were￿no￿permanent￿differences￿between￿taxable￿base￿and￿financial￿results and￿no￿Dutch￿tax￿incentives￿are￿applied. 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. The￿increase￿of￿the￿effects￿of￿tax￿rates￿in￿foreign￿jurisdictions￿compared￿to￿2012￿is￿mainly￿explained￿by￿a￿shift￿in￿the￿mix of￿taxable￿income￿across￿tax￿jurisdictions￿as￿a￿result￿of￿the￿acquisition￿of￿Cymer￿as￿per￿May￿30,￿2013. Adjustments in Respect of Tax Exempt Income In￿certain￿jurisdictions￿part￿of￿the￿income￿generated￿is￿tax￿exempted. Adjustments in Respect of Tax Incentives Adjustments￿in￿respect￿of￿tax￿incentives￿relate￿to￿reduced￿tax￿rates￿in￿several￿jurisdictions,￿mainly￿consisting￿of￿the Dutch￿"Innovation￿Box"￿and￿the￿RDA.￿The￿Innovation￿box￿is￿a￿facility￿under￿Dutch￿corporate￿tax￿law￿pursuant￿to￿which income￿associated￿with￿R&D￿is￿partially￿exempted￿from￿taxation.￿The￿RDA￿is￿a￿tax￿incentive￿in￿which￿an￿additional￿tax depreciation￿is￿allowed￿for￿tangible￿assets￿utilized￿for￿research￿and￿development￿purposes. 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. Adjustments in Respect of Prior Years’ Deferred Taxes In￿2013,￿we￿recognized￿a￿tax￿benefit￿of￿EUR￿16.2￿million￿as￿result￿of￿a￿partly￿release￿of￿a￿valuation￿allowance￿for￿NID credits￿or￿NID￿stock￿to￿the￿extend￿we￿expect￿future￿taxable￿profits￿to￿realize￿these￿NID￿credits￿before￿expiration￿of￿those credits. ASML￿ANNUAL￿REPORT￿2013 F-38 Movements in the Liability for Unrecognized Tax Benefits In￿2012,￿the￿effective￿tax￿rate￿was￿impacted￿by￿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)￿whereas the￿movement￿in￿the￿liability￿for￿unrecognized￿tax￿benefits￿in￿2013￿is￿considered￿to￿be￿limited. Adjustments in Respect of Non-Taxable Pre-Existing Relationships In￿2013￿the￿effective￿tax￿rate￿was￿impacted￿by￿the￿settlement￿gain￿recognized￿as￿a￿result￿of￿the￿effectively￿settled￿pre- existing￿relationships￿related￿to￿the￿acquisition￿of￿Cymer￿(see￿Note￿2)￿as￿this￿gain￿does￿not￿represent￿a￿taxable￿item￿for income￿tax￿purposes. 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￿expenses,￿as￿well￿as the￿impact￿of￿(the￿reversal￿of)￿various￿tax￿credits￿on￿our￿provision￿for￿income￿taxes. Income Taxes Recognized Directly in Shareholders' Equity Income￿taxes￿recognized￿directly￿in￿shareholders'￿equity￿(including￿OCI)￿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 2013 EUR (759) (3,110) (3,869) 2012 EUR (1,066) (2,116) (3,182) 2011 EUR 6,257 11 6,268 1 Recognized￿directly￿in￿OCI. Liability for Unrecognized Tax Benefits and Deferred Taxes The￿total￿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 2013 EUR (74,069) (30,176) (104,245) 2012 EUR (59,967) 114,527 54,560 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,￿2013,￿ASML￿has￿a￿liability￿for￿unrecognized￿tax￿benefits of￿EUR￿74.1￿million￿(2012:￿EUR￿60.0￿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,￿2013￿amounted￿to￿EUR￿22.9￿million￿(2012:￿EUR￿21.4￿million). Accrued￿interest￿and￿penalties￿recorded￿in￿the￿Consolidated￿Statement￿of￿Operations￿of￿2013￿amounted￿to￿a￿tax￿charge of￿EUR￿4.1￿million￿(2012:￿tax￿benefit￿of￿EUR￿3.1￿million;￿2011:￿tax￿benefit￿of￿EUR￿9.3￿million). ASML￿ANNUAL￿REPORT￿2013 F-39 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 Increase￿resulting￿from￿acquisition Settlements Lapse￿of￿statute￿of￿limitations Total liability for unrecognized tax benefits 2013 EUR 59,967 6,045 (2,025) 6,796 6,514 (2,964) (264) 74,069 2012 EUR 155,432 4,297 (92,521) 3,255 - - (10,496) 59,967 For￿2012,￿the￿gross￿decreases￿in￿tax￿positions￿in￿prior￿period￿mainly￿relates￿to￿the￿release￿of￿tax￿positions￿after successful￿conclusion￿of￿tax￿audits￿in￿different￿jurisdictions￿(EUR￿92.5￿million). We￿believe￿our￿allowances￿for￿tax￿contingencies￿are￿appropriate.￿We￿estimate￿that￿the￿total￿liability￿for￿unrecognized tax￿benefits￿will￿decrease￿by￿EUR￿0.6￿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￿certain￿of￿our￿major￿tax￿jurisdictions,￿for￿years￿from￿and￿including￿2011￿onwards￿in Hong￿Kong,￿and￿for￿years￿from￿and￿including￿2001￿onwards￿in￿the￿United￿States.￿In￿the￿course￿of￿such￿audits,￿local￿tax authorities￿may￿challenge￿the￿positions￿taken￿by￿us.￿ 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 Acquisitions￿through￿business￿combinations 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 2013 EUR 114,527 (201,381) 53,084 3,594 (30,176) 2013 EUR 124,431 139,513 263,944 (3,494) (290,626) (294,120) (30,176) 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 ASML￿ANNUAL￿REPORT￿2013 F-40 The￿composition￿of￿total￿deferred￿tax￿assets￿and￿liabilities￿in￿the￿Financial￿Statements￿is￿as￿follows: Deferred tax assets composition of temporary differences (in thousands) Capitalized￿R&D￿expenditures Inventories Deferred￿revenue Provisions Installation￿and￿warranty￿reserve Tax￿effect￿carry-forward￿losses Fixed￿assets Restructuring￿and￿impairment Alternative￿minimum￿tax￿credits1 Share-based￿payments Other￿temporary￿differences Total2 Acquisitions through business combinations EUR - 10,258 41,679 7,148 - 754 4,140 - - 9,365 16,701 90,045 Consolidated Statements of Operations EUR 5,882 9,269 (43,035) 17,960 (174) 61,551 325 (791) 1,349 5,939 (14,487) 43,788 January 1, 2013 EUR 27,403 28,167 20,572 21,528 7,151 5,557 7,798 4,336 5,227 1,433 13,966 143,138 Effect of changes in exchange rates EUR (1,155) (1,033) (2,807) (1,176) (275) (580) (478) (184) (234) (586) (4,519) (13,027) December 31, 2013 EUR 32,130 46,661 16,409 45,460 6,702 67,282 11,785 3,361 6,342 16,151 11,661 263,944 1 2 Alternative￿minimum￿tax￿credits￿relate￿to￿prepaid￿US￿taxes￿which￿are￿credited￿against￿future￿taxable￿profits￿after￿the￿carry-forward￿losses￿used. Valuation￿allowances￿recognized￿in￿relation￿to￿deferred￿tax￿assets￿as￿at￿December￿31,￿2013￿amounted￿to￿EUR￿25.0￿million￿(2012:￿EUR￿30.5￿million) Deferred tax liabilities composition of temporary differences January 1, 2013 Acquisitions through business combinations Consolidated Statements of Operations Effect of changes in exchange rates December 31, 2013 (in thousands) Intangible￿fixed￿assets Fixed￿assets Borrowing￿costs Other￿temporary￿differences Total EUR - (25,890) (1,958) (763) (28,611) EUR (286,337) (4,786) - (303) (291,426) EUR 8,730 12,517 135 (12,086) 9,296 EUR 15,702 567 - 352 16,621 EUR (261,905) (17,592) (1,823) (12,800) (294,120) Deferred tax assets composition of temporary differences (in thousands) Capitalized￿R&D￿expenditures Inventories Deferred￿revenue Provisions Installation￿and￿warranty￿reserve Tax￿effect￿carry-forward￿losses Fixed￿assets Restructuring￿and￿impairment Alternative￿minimum￿tax￿credits1 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 5,028 950 16,728 159,455 Consolidated Statements of Operations EUR (6,465) (7,351) (3,083) 7,296 (1,508) (2,219) 1,454 (733) 229 516 (1,138) (13,002) Effect of changes in exchange rates EUR (506) (302) (237) (283) (113) 41 (151) (77) (30) (33) (1,624) (3,315) December 31, 2012 EUR 27,403 28,167 20,572 21,528 7,151 5,557 7,798 4,336 5,227 1,433 13,966 143,138 1 Alternative￿minimum￿tax￿credits￿relate￿to￿prepaid￿US￿taxes￿which￿are￿credited￿against￿future￿taxable￿profits￿after￿the￿carry-forward￿losses￿used. Deferred tax liabilities composition 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 rates EUR 183 - (45) 138 December 31, 2012 EUR (25,890) (1,958) (763) (28,611) ASML￿ANNUAL￿REPORT￿2013 F-41 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￿and￿NID￿stock￿in￿Belgium. Net￿operating￿losses￿qualifying￿as￿tax￿losses￿under￿United￿States￿federal￿tax￿laws￿were￿incurred￿during￿2013.￿Net operating￿losses￿qualifying￿as￿tax￿losses￿under￿United￿States￿federal￿tax￿laws￿incurred￿by￿United￿States￿group companies￿can￿in￿general￿be￿offset￿against￿future￿profits￿realized￿in￿the￿20￿years￿following￿the￿year￿in￿which￿the￿losses are￿incurred. 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,￿2013,￿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￿federal￿tax￿laws￿as￿of￿December￿31,￿2013,￿is￿EUR￿67.5￿million￿tax￿basis or￿EUR￿23.6￿million￿tax￿effect.The￿total￿amount￿of￿losses￿carried￿forward￿under￿United￿States￿state￿tax￿laws￿as￿of December￿31,￿2013,￿is￿EUR￿254.3￿million￿tax￿basis￿or￿EUR￿7.9￿million￿tax￿effect. NID￿stock￿in￿Belgium￿can￿generally￿be￿offset￿against￿future￿profits￿realized￿in￿the￿7￿years￿following￿the￿year￿in￿which￿the NID￿Stock￿occurs.￿The￿total￿amount￿of￿NID￿stock￿is￿EUR￿47.6￿million￿taxable￿base￿and￿EUR￿16.2￿million￿tax￿effect. ASML￿ANNUAL￿REPORT￿2013 F-42 21. Segment Disclosure ASML￿has￿one￿reportable￿segment,￿for￿the￿development,￿production,￿marketing,￿sale￿and￿servicing￿of￿advanced semiconductor￿equipment￿systems￿exclusively￿consisting￿of￿lithography￿related￿systems.￿In￿prior￿years￿our￿CEO￿was identified￿as￿CODM.￿As￿a￿result￿of￿ASML's￿change￿in￿leadership￿as￿announced￿on￿April￿17,￿2013,￿our￿CEO￿and￿CTO have￿been￿jointly￿identified￿as￿the￿CODM.￿Both￿the￿CEO￿and￿CTO￿review￿the￿operating￿results￿to￿make￿decisions￿about allocating￿resources￿and￿assessing￿performance.￿The￿change￿in￿leadership￿did￿not￿result￿in￿a￿change￿in￿reportable segments￿compared￿to￿2012. Management￿reporting￿includes￿net￿system￿sales￿figures￿of￿new￿and￿used￿systems￿and￿includes￿sales￿per￿technology. Net￿system￿sales￿for￿new￿and￿used￿systems￿were￿as￿follows: Year ended December 31 (in thousands) 2013 EUR 2012 EUR 2011 EUR New￿systems Used￿systems 3,890,154 102,975 3,620,260 181,372 4,780,720 103,193 Net system sales 3,993,129 3,801,632 4,883,913 The￿increase￿in￿net￿system￿sales￿of￿EUR￿191.5￿million,￿or￿5.0￿percent,￿to￿EUR￿3,993.1￿million￿in￿2013￿from￿EUR￿3,801.6 million￿in￿2012￿is￿mainly￿caused￿by￿an￿increased￿ASP￿which￿more￿than￿offsets￿the￿lower￿amount￿of￿systems￿sold. Net￿system￿sales￿per￿technology￿was￿as￿follows: Year ended December 31 (in thousands) 2013 EUV ArFi ArF￿dry KrF I-line Total 2012 EUV ArFi ArF￿dry KrF I-line Total 2011 EUV ArFi ArF￿dry KrF I-line Total Net system sales in units Net system sales in EUR 1 77 2 64 13 157 1 72 4 78 15 170 3 101 11 87 20 222 60,100 3,120,719 38,019 720,053 54,238 3,993,129 43,700 2,715,221 81,428 908,244 53,039 3,801,632 119,300 3,549,122 228,909 926,572 60,010 4,883,913 For￿geographical￿reporting,￿net￿sales￿are￿attributed￿to￿the￿geographic￿location￿in￿which￿the￿customers’￿facilities￿are located.￿Long-lived￿assets￿are￿attributed￿to￿the￿geographic￿location￿in￿which￿these￿assets￿are￿located. We￿have￿re-evaluated￿the￿risk￿and￿uncertainties￿associated￿with￿our￿geographic￿areas.￿This￿resulted￿in￿a￿definition change￿of￿"Long-lived￿assets"￿included￿in￿the￿geographical￿reporting￿disclosure.￿As￿of￿December￿31,￿2013￿Long-lived assets￿only￿consist￿of￿Property,￿Plant￿and￿Equipment.￿We￿have￿adjusted￿our￿prior￿period￿amounts￿for￿comparability reasons.￿None￿of￿these￿changes￿impact￿our￿previously￿reported￿consolidated￿total￿net￿sales,￿gross￿profit,￿income￿from operations,￿net￿income￿or￿earnings￿per￿share. ASML￿ANNUAL￿REPORT￿2013 F-43 Net￿sales￿and￿long-lived￿assets￿(consisting￿of￿property,￿plant￿and￿equipment)￿by￿geographic￿region￿were￿as￿follows: Year ended December 31 (in thousands) 2013 Japan Korea Singapore Taiwan Rest￿of￿Asia Netherlands Rest￿of￿Europe United￿States Total 2012 Japan Korea Singapore Taiwan Rest￿of￿Asia Netherlands Rest￿of￿Europe United￿States Total 2011 Japan Korea Singapore Taiwan Rest￿of￿Asia Netherlands Rest￿of￿Europe United￿States Total Net sales EUR 201,664 1,286,509 139,313 2,221,426 478,234 11,525 187,030 719,625 5,245,326 292,309 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 Long-lived assets EUR 3,340 16,155 1,109 48,427 3,742 969,192 2,600 173,275 1,217,840 19,585 17,664 968 50,372 2,073 869,736 1,571 67,954 1,029,923 69,001 16,250 1,167 46,418 1,496 851,612 1,198 66,468 1,053,610 In￿2013,￿net￿sales￿to￿the￿largest￿customer￿accounted￿for￿EUR￿2,058.6￿million,￿or￿39.2￿percent,￿of￿net￿sales￿(2012:￿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).￿Our￿three￿largest customers￿(based￿on￿net￿sales)￿accounted￿for￿EUR￿861.4￿million,￿or￿73.3￿percent,￿of￿accounts￿receivable￿and￿finance receivables￿at￿December￿31,￿2013,￿compared￿with￿EUR￿535.1￿million,￿or￿58.9￿percent,￿at￿December￿31,￿2012. Substantially￿all￿of￿our￿sales￿were￿export￿sales￿in￿2013,￿2012￿and￿2011. 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 2013 EUR 835,563 69,839 60,275 52,371 1,018,048 2012 EUR 711,039 58,180 50,298 18,714 838,231 2011 EUR 648,869 52,550 45,947 12,430 759,796 The￿average￿number￿of￿payroll￿employees￿in￿FTEs￿during￿2013,￿2012￿and￿2011￿was￿9,540,￿8,140￿and￿7,627,￿respectively. ASML￿ANNUAL￿REPORT￿2013 F-44 The￿total￿number￿of￿payroll￿and￿temporary￿employees￿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) 2013 2,949 1,098 785 3,658 4,735 13,225 2,865 10,360 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 The￿average￿number￿of￿payroll￿employees￿in￿FTEs￿in￿our￿operations￿in￿the￿Netherlands￿during￿2013,￿2012￿and￿2011￿was 5,112,￿4,620￿and￿4,313,￿respectively. 23. Research and Development Costs R&D￿costs￿(net￿of￿credits￿and￿excluding￿contributions￿under￿the￿NRE￿funding￿agreements￿from￿Participating￿Customers of￿the￿CCIP)￿increased￿by￿EUR￿292.9￿million,￿or￿49.7￿percent,￿to￿EUR￿882.0￿million￿in￿2013￿from￿EUR￿589.1￿million￿in 2012.￿R&D￿spending￿mainly￿increased￿due￿the￿additional￿investments￿in￿EUV￿source￿development￿as￿a￿result￿of￿the acquisition￿of￿Cymer￿and￿further￿investments￿in￿our￿other￿strategic￿programs￿(Immersion￿and￿holistic￿lithography). R&D￿costs￿(net￿of￿credits)￿in￿2012￿(EUR￿589.1￿million)￿were￿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. R&D￿costs￿include￿credits￿for￿an￿amount￿of￿EUR￿16.0￿million,￿EUR￿17.9￿million￿and￿EUR￿25.1￿million￿in￿2013,￿2012 and￿2011￿respectively.￿R&D￿credits￿relate￿to￿worldwide￿(inter-)governmental￿funding￿for￿certain￿strategic￿development programs.￿The￿decrease￿in￿R&D￿credits￿is￿the￿result￿of￿a￿change￿in￿government￿programs￿from￿subsidy￿payments￿to fiscal￿incentives.￿These￿incentives￿lead￿to￿tax￿deductions￿in￿mainly￿Dutch￿and￿United￿States￿tax￿jurisdictions. 24. Interest and Other, Net Interest￿and￿other￿income￿of￿EUR￿9.2￿million￿(2012:￿EUR￿16.6￿million￿and￿2011:￿EUR￿41.2￿million)￿mainly￿relates￿to interest￿income￿on￿deposits,￿short-term￿investments,￿money￿market￿funds,￿bank￿accounts￿and￿on￿finance￿receivables. Interest￿and￿other￿expense￿of￿EUR￿33.6￿million￿(2012:￿EUR￿22.8￿million￿and￿2011:￿EUR￿33.8￿million)￿mainly￿consists of￿net￿interest￿expense￿on￿our￿Eurobonds￿and￿related￿interest￿rate￿swaps,￿interest￿on￿lease￿obligations￿and￿amortized financing￿costs￿of￿in￿total￿EUR￿16.2￿million￿(2012:￿EUR￿10.8￿million￿and￿2011:￿EUR￿14.2￿million),￿and￿EUR￿8.9￿million loss￿on￿the￿partial￿extinguishment￿of￿our￿EUR￿600￿million￿5.75￿percent￿senior￿notes￿due￿2017￿(2012￿and￿2011:￿EUR￿nil million).￿ 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￿1.9￿million￿(2012:￿EUR￿4.2￿million￿and￿2011:￿EUR￿6.8￿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￿we￿are￿able￿to￿produce￿may￿be￿limited￿by￿the￿production￿capacity￿of￿Zeiss.￿Zeiss￿is￿currently￿our sole￿supplier￿of￿lenses,￿collectors,￿and￿other￿critical￿optical￿components￿and￿is￿capable￿of￿producing￿these￿items￿only￿in limited￿numbers￿and￿only￿through￿the￿use￿of￿its￿manufacturing￿and￿testing￿facility￿in￿Oberkochen￿and￿Wetzlar,￿Germany. During￿2013,￿ASML’s￿production￿was￿not￿limited￿by￿the￿deliveries￿from￿Zeiss. ASML￿ANNUAL￿REPORT￿2013 F-45 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,￿2013,￿446,822,452￿ordinary￿shares￿with￿a￿nominal￿value￿of￿EUR￿0.09￿each￿were￿issued￿and￿fully￿paid in,￿of￿which￿5,970,118￿ordinary￿shares￿are￿held￿by￿us￿in￿treasury.￿No￿ordinary￿shares￿B￿and￿no￿cumulative￿preference shares￿are￿issued. 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 as a Result of the Acquisition of Cymer ASML￿and￿Cymer￿completed￿the￿merger￿pursuant￿to￿which￿ASML￿acquired￿Cymer￿on￿May￿30,￿2013.￿As￿a￿result￿of the￿merger,￿each￿share￿of￿Cymer￿common￿stock￿outstanding￿immediately￿prior￿to￿the￿completion￿of￿the￿merger￿was converted￿into￿the￿right￿to￿receive￿USD￿20.00￿in￿cash￿plus￿1.1502￿ASML￿ordinary￿shares.￿As￿per￿December￿31,￿2013, we￿issued￿36,464,576￿ordinary￿shares￿for￿an￿aggregate￿amount￿of￿EUR￿2,346.7￿million￿in￿relation￿to￿the￿acquisition￿of Cymer. Synthetic Share Buyback At￿the￿EGM￿held￿on￿September￿7,￿2012,￿several￿changes￿in￿the￿Articles￿of￿Association￿of￿ASML￿were￿adopted,￿in connection￿with￿the￿Synthetic￿Share￿Buyback￿effectuated￿in￿connection￿with￿the￿CCIP.￿Consequently,￿on￿November￿24, 2012,￿the￿Articles￿of￿Association￿were￿amended￿as￿follows.￿Upon￿the￿first￿amendment￿the￿ordinary￿shares￿to￿be￿held for￿the￿benefit￿of￿the￿participants￿to￿the￿CCIP￿were￿converted￿into￿ordinary￿shares￿M￿and￿all￿other￿ordinary￿shares￿were converted￿into￿ordinary￿shares￿A.￿Upon￿the￿second￿amendment,￿the￿par￿value￿per￿ordinary￿share￿A￿was￿increased￿from EUR￿0.09￿to￿EUR￿9.24￿at￿the￿expense￿of￿the￿share￿premium￿reserve.￿Upon￿the￿third￿amendment,￿the￿nominal￿value￿per ordinary￿share￿A￿was￿reduced￿to￿an￿amount￿of￿EUR￿0.06,￿by￿decreasing￿the￿nominal￿value￿per￿ordinary￿share￿A￿by￿an amount￿of￿EUR￿9.18,￿which￿resulted￿in￿a￿repayment￿of￿the￿same￿amount￿per￿share￿to￿holders￿of￿ordinary￿shares￿into which￿the￿ordinary￿shares￿A￿were￿converted.￿The￿fourth￿amendment￿provided￿for￿the￿consolidation￿of￿the￿ordinary￿shares A￿through￿the￿exchange￿of￿each￿100￿ordinary￿shares￿for￿77￿ordinary￿shares,￿resulting￿in￿an￿increase￿of￿the￿nominal￿value per￿ordinary￿share￿from￿EUR￿0.06￿to￿EUR￿0.09,￿whereby￿the￿aggregate￿difference￿was￿booked￿at￿the￿expense￿of￿the share￿premium￿reserve.￿The￿fifth￿and￿last￿amendment￿provided￿for￿the￿deletion￿of￿the￿share￿class￿M￿for￿participants￿to the￿CCIP￿and￿the￿share￿class￿A￿for￿the￿other￿shareholders.￿The￿ordinary￿shares￿M￿and￿A￿were￿converted￿thereafter￿into ordinary￿shares￿without￿a￿specific￿letter￿mark￿attached￿to￿it. These￿amendments￿in￿substance￿constitute￿a￿Synthetic￿Share￿Buyback￿in￿which￿we￿effectively￿repurchased￿93,411,216 shares￿at￿an￿average￿price￿of￿EUR￿39.91￿for￿a￿total￿amount￿of￿EUR￿3,728.3￿million.￿The￿difference￿of￿EUR￿125.6￿million between￿the￿capital￿repayment￿of￿EUR￿3,728.3￿million￿and￿the￿net￿proceeds￿from￿issuance￿of￿shares￿of￿EUR￿3,853.9 million￿relates￿to￿the￿capital￿repayment￿on￿ASML's￿treasury￿shares￿which￿was￿also￿part￿of￿the￿Synthetic￿Share￿Buyback. Shares Issued in Customer Co-Investment Program In￿connection￿with￿the￿CCIP,￿on￿September￿12,￿2012,￿we￿issued￿62,977,877￿ordinary￿shares￿to￿the￿Stichting￿that￿holds shares￿on￿behalf￿of￿Intel￿and￿12,595,575￿ordinary￿shares￿to￿the￿Stichting￿that￿holds￿shares￿on￿behalf￿of￿Samsung￿and on￿October￿31,￿2012,￿ASML￿issued￿20,992,625￿ordinary￿shares￿to￿the￿Stichting￿that￿holds￿shares￿on￿behalf￿of￿TSMC. We￿received￿an￿amount￿of￿EUR￿3,853.9￿million￿in￿relation￿to￿the￿shares￿issued￿under￿the￿CCIP.￿For￿further￿details￿on￿our CCIP￿see￿Note￿28. ASML￿ANNUAL￿REPORT￿2013 F-46 Ordinary Shares Each￿ordinary￿share￿consists￿of￿900￿fractional￿shares.￿Fractional￿shares￿entitle￿the￿holder￿thereof￿to￿a￿fractional￿dividend but￿do￿not￿entitle￿the￿holder￿thereof￿to￿voting￿rights.￿Only￿those￿persons￿who￿hold￿shares￿directly￿in￿the￿share￿register in￿the￿Netherlands,￿held￿by￿us￿at￿our￿address￿at￿5504￿DR￿Veldhoven,￿de￿Run￿6501,￿the￿Netherlands,￿or￿in￿the￿New￿York share￿register,￿held￿by￿JP￿Morgan￿Chase￿Bank,￿N.A.,￿P.O.￿Box￿64506,￿St.￿Paul,￿MN￿55164-0506,￿United￿States,￿can hold￿fractional￿shares.￿Persons￿who￿hold￿ordinary￿shares￿through￿the￿deposit￿system￿under￿the￿Dutch￿Securities￿Bank Giro￿Transactions￿Act￿(Wet giraal effectenverkeer;￿the￿"Giro￿Act")￿maintained￿by￿the￿Dutch￿central￿securities￿depository Euroclear￿Nederland￿or￿through￿the￿DTC￿cannot￿hold￿fractional￿shares.￿An￿ordinary￿share￿entitles￿the￿holder￿thereof￿to cast￿nine￿votes￿in￿the￿General￿Meeting￿of￿Shareholders.￿At￿our￿AGM￿held￿on￿April￿24,￿2013,￿the￿Board￿of￿Management was￿authorized￿from￿April￿24,￿2013￿through￿October￿24,￿2014,￿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￿24, 2013,￿plus￿an￿additional￿5.0￿percent￿of￿our￿issued￿share￿capital￿at￿April￿24,￿2013￿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. 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,￿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. Per￿the￿amendment￿of￿our￿Articles￿of￿Association￿on￿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,￿ASML's￿interests,￿ASML's￿business￿or￿the￿interests￿of￿ASML's￿stakeholders￿are￿at￿stake.￿This￿may be￿the￿case￿if￿a￿public￿bid￿for￿ASML's￿shares￿has￿been￿announced￿or￿has￿been￿made,￿or￿the￿justified￿expectation￿exists that￿such￿a￿bid￿will￿be￿made￿without￿any￿agreement￿having￿been￿reached￿in￿relation￿to￿such￿a￿bid￿with￿ASML.￿The￿same may￿apply￿if￿one￿shareholder,￿or￿more￿shareholders￿acting￿in￿concert,￿hold￿a￿substantial￿percentage￿of￿ASML's￿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 ASML's￿interests,￿ASML's￿business￿or￿ASML's￿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. ASML￿ANNUAL￿REPORT￿2013 F-47 The￿preference￿share￿option￿gives￿the￿Foundation￿the￿right￿to￿acquire￿a￿number￿of￿cumulative￿preference￿shares￿as￿the Foundation￿will￿require,￿provided￿that￿the￿aggregate￿nominal￿value￿of￿such￿number￿of￿cumulative￿preference￿shares shall￿not￿exceed￿the￿aggregate￿nominal￿value￿of￿the￿ordinary￿shares￿that￿have￿been￿issued￿at￿the￿time￿of￿exercise￿of￿the Preference￿Share￿Option￿for￿a￿subscription￿price￿equal￿to￿their￿nominal￿value.￿Only￿one-fourth￿of￿the￿subscription￿price is￿payable￿at￿the￿time￿of￿initial￿issuance￿of￿the￿cumulative￿preference￿shares,￿with￿the￿other￿three-fourths￿of￿the￿nominal value￿only￿being￿payable￿when￿we￿call￿up￿this￿amount.￿Exercise￿of￿the￿preference￿share￿option￿could￿effectively￿dilute the￿voting￿power￿of￿the￿outstanding￿ordinary￿shares￿by￿one-half. Cancellation￿and￿repayment￿of￿the￿issued￿cumulative￿preference￿shares￿by￿ASML￿requires￿the￿authorization￿by￿the General￿Meeting￿of￿Shareholders￿of￿a￿proposal￿to￿do￿so￿by￿the￿Board￿of￿Management￿approved￿by￿the￿Supervisory Board.￿If￿the￿preference￿share￿option￿is￿exercised￿and￿as￿a￿result￿cumulative￿preference￿shares￿are￿issued,￿ASML,￿at the￿request￿of￿the￿Foundation,￿will￿initiate￿the￿repurchase￿or￿cancellation￿of￿all￿cumulative￿preference￿shares￿held￿by￿the Foundation.￿In￿that￿case￿ASML￿is￿obliged￿to￿effect￿the￿repurchase￿and￿cancellation￿respectively￿as￿soon￿as￿possible.￿A cancellation￿will￿have￿as￿a￿result￿a￿repayment￿of￿the￿amount￿paid￿and￿exemption￿from￿the￿obligation￿to￿pay￿up￿on￿the cumulative￿preference￿shares.￿A￿repurchase￿of￿the￿cumulative￿preference￿shares￿can￿only￿take￿place￿when￿such￿shares are￿fully￿paid￿up. If￿the￿Foundation￿will￿not￿request￿ASML￿to￿repurchase￿or￿cancel￿all￿cumulative￿preference￿shares￿held￿by￿the￿Foundation within￿20￿months￿after￿issuance￿of￿these￿shares,￿we￿will￿be￿obliged￿to￿convene￿a￿General￿Meeting￿of￿Shareholders￿in order￿to￿decide￿on￿a￿repurchase￿or￿cancellation￿of￿these￿shares. The￿Foundation￿is￿independent￿of￿ASML.￿The￿Board￿of￿Directors￿of￿the￿Foundation￿comprises￿four￿independent￿voting members￿from￿the￿Dutch￿business￿and￿academic￿communities.￿Former￿chairman￿Mr.￿A.￿Baan￿passed￿away￿on￿April￿5, 2013￿and￿was￿succeeded￿by￿Mr.￿H.￿Bodt.￿As￿of￿June￿1,￿2013,￿the￿members￿of￿the￿Board￿of￿Directors￿of￿the￿Foundation are:￿Mr.￿H.￿Bodt,￿Mr.￿M.W.￿den￿Boogert,￿Mr.￿J.M.￿de￿Jong￿and￿Mr.￿A.H.￿Lundqvist. 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￿R&D￿programs￿and￿for￿acquisition￿opportunities￿that￿may￿arise￿from￿time￿to￿time;￿and￿by future￿changes￿in￿applicable￿income￿tax￿and￿corporate￿laws.￿Accordingly,￿it￿may￿be￿decided￿to￿propose￿not￿to￿pay￿a dividend￿or￿to￿pay￿a￿lower￿dividend￿with￿respect￿to￿any￿particular￿year￿in￿the￿future. For￿2013,￿a￿proposal￿to￿declare￿a￿dividend￿of￿EUR￿0.61￿per￿ordinary￿share￿of￿EUR￿0.09￿nominal￿value￿will￿be￿submitted to￿the￿AGM￿to￿be￿held￿on￿April￿23,￿2014. 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￿24,￿2013,￿the￿AGM￿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￿24,￿2014. On￿April￿17,￿2013,￿we￿announced￿our￿intention￿to￿repurchase￿up￿to￿EUR￿1.0￿billion￿of￿our￿own￿shares￿within￿the 2013-2014￿timeframe.￿During￿the￿period￿from￿April￿18,￿2013￿up￿to￿and￿including￿December￿31,￿2013,￿we￿had￿purchased 4,614,179￿of￿our￿shares￿for￿a￿total￿amount￿of￿EUR￿300.0￿million￿at￿an￿average￿price￿of￿EUR￿65.02￿per￿share.￿These shares￿are￿intended￿to￿be￿cancelled￿in￿2014. ASML￿ANNUAL￿REPORT￿2013 F-48 The￿following￿table￿provides￿a￿summary￿of￿our￿repurchased￿shares￿in￿2013: Period April￿18￿-￿30,￿2013 May￿2￿-￿31,￿2013 June￿1￿-￿30,￿2013 July￿1￿-￿31,￿2013 August￿1￿-￿31,￿2013 September￿1￿-￿30,￿2013 October￿3￿-￿31,￿2013 November￿1￿-￿30,￿2013 December￿1￿-￿31,￿2013 Total Total number of shares purchased Average price paid per Share (EUR) 297,500 389,974 749,434 321,486 283,097 179,146 556,443 962,146 874,953 4,614,179 55.35 61.76 60.39 65.20 67.83 69.06 69.34 66.76 67.25 65.02 Total number of shares purchased as part of publicly announced plans or programs 297,500 687,474 1,436,908 1,758,394 2,041,491 2,220,637 2,777,080 3,739,226 4,614,179 Maximum value of shares that may yet be purchased under the program (EUR) 983,534,770 959,449,401 914,192,630 893,232,250 874,028,834 861,656,533 823,072,791 758,841,727 700,000,036 28. Customer Co-Investment Program Overview On￿July￿9,￿2012,￿we￿announced￿our￿CCIP￿to￿accelerate￿our￿development￿of￿EUV￿technology￿beyond￿the￿current generation￿and￿our￿development￿of￿future￿450mm￿silicon￿wafer￿technology.￿The￿Participating￿Customers￿collectively agreed￿to￿fund￿EUR￿1.38￿billion￿of￿our￿research￿and￿development￿projects￿from￿2013￿through￿2017.￿This￿program created￿risk￿sharing￿with￿some￿of￿our￿largest￿customers￿while￿the￿results￿of￿ASML’s￿development￿programs￿will￿be available￿to￿every￿semiconductor￿manufacturer￿with￿no￿restrictions.￿The￿R&D￿funding￿program￿in￿the￿CCIP￿consists￿of two￿funding￿projects:￿a￿450mm￿technology￿development￿project￿and￿a￿next-generation￿EUV￿development￿project.￿ASML entered￿into￿NRE￿Funding￿Agreements￿with￿the￿Participating￿Customers. 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. Description of Investment Agreements, Shareholder Agreements and NRE Funding Agreements In￿connection￿with￿the￿CCIP,￿ASML￿entered￿into￿an￿investment￿agreement,￿a￿shareholder￿agreement￿and￿NRE￿funding agreements￿with￿each￿of￿the￿Participating￿Customers.￿Intel￿is￿the￿largest￿participant￿in￿the￿program,￿with￿an￿aggregate funding￿commitment￿of￿EUR￿829￿million￿and￿an￿investment￿in￿15￿percent￿of￿our￿ordinary￿shares￿(calculated￿giving￿effect to￿our￿Synthetic￿Share￿Buyback￿in￿November￿2012).￿A￿description￿of￿the￿investment￿agreement,￿shareholders￿agreement and￿NRE￿funding￿agreements￿between￿ASML￿and￿Intel￿is￿set￿out￿below.￿The￿agreements￿between￿ASML￿and￿the￿other participants￿-￿TSMC￿(which￿acquired￿5￿percent￿of￿our￿shares￿and￿made￿an￿EUR￿276￿million￿funding￿commitment) and￿Samsung￿(which￿acquired￿3￿percent￿of￿our￿shares￿and￿made￿an￿EUR￿276￿million￿funding￿commitment)￿are￿on substantially￿the￿same￿terms￿as￿those￿agreed￿with￿Intel.￿Shares￿were￿acquired￿by￿Dutch￿foundations￿("Stichtingen") established￿for￿each￿participant. Investment Agreements Pursuant￿to￿the￿Intel￿Investment￿Agreement,￿dated￿July￿9,￿2012,￿ASML￿issued￿to￿Intel￿Stichting￿ordinary￿shares￿equal￿to 15￿percent￿of￿the￿issued￿ordinary￿shares￿with￿simultaneous￿issuance￿by￿the￿Intel￿Stichting￿to￿Intel￿of￿the￿corresponding depositary￿receipts. Pursuant￿to￿the￿TSMC￿Investment￿Agreement,￿dated￿August￿5,￿2012,￿ASML￿issued￿to￿TSMC￿Stichting￿ordinary￿shares equal￿to￿5￿percent￿of￿the￿issued￿ordinary￿shares￿with￿simultaneous￿issuance￿by￿the￿TSMC￿Stichting￿to￿TSMC￿of￿the corresponding￿depositary￿receipts. Pursuant￿to￿the￿Samsung￿Investment￿Agreement,￿dated￿August￿27,￿2012￿ASML￿issued￿to￿the￿Samsung￿Stichting ordinary￿shares￿equal￿to￿3￿percent￿of￿the￿issued￿ordinary￿shares￿with￿simultaneous￿issuance￿by￿the￿Samsung￿Stichting to￿Samsung￿of￿the￿corresponding￿depositary￿receipts. ASML￿ANNUAL￿REPORT￿2013 F-49 The￿subscription￿price￿for￿the￿ordinary￿shares￿under￿the￿Investment￿Agreements￿was￿EUR￿39.91￿per￿ordinary￿share, which￿is￿the￿average￿of￿the￿volume￿weighted￿average￿price￿of￿our￿shares￿listed￿at￿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. Shareholder Agreements In￿connection￿with￿the￿issuance￿of￿shares￿pursuant￿to￿the￿Intel￿Investment￿Agreement,￿on￿September￿12,￿2012￿ASML, Intel￿and￿the￿Intel￿Stichting￿entered￿into￿a￿Shareholder￿Agreement￿which￿governs￿certain￿matters￿relating￿to￿the￿holding of￿and￿further￿investment￿by￿Intel￿in￿ordinary￿shares￿of￿ASML,￿directly￿and￿indirectly￿through￿the￿Intel￿Stichting,￿including the￿matters￿described￿below. The￿Shareholder￿Agreements￿between￿ASML￿and￿the￿other￿program￿participants￿(TSMC￿and￿Samsung)￿are￿on substantially￿the￿same￿terms￿as￿those￿agreed￿with￿Intel.￿ Voting Restrictions Pursuant￿to￿the￿Shareholder￿Agreement,￿Intel￿(and￿the￿Intel￿Stichting)￿will￿not￿be￿entitled￿to￿vote￿the￿ordinary￿shares￿that were￿acquired￿by￿the￿Intel￿Stichting￿as￿part￿of￿the￿CCIP￿or￿any￿other￿ordinary￿shares￿otherwise￿transferred￿to￿the￿Intel Stichting￿(under￿the￿circumstances￿described￿under￿"Standstill;￿Additional￿Purchases"￿below)￿prior￿to￿a￿Shareholder Agreement￿Termination￿Event￿(as￿defined￿below),￿except￿when￿a￿Suspension￿Event￿(as￿described￿below)￿occurs￿and is￿continuing￿or￿where￿the￿following￿matters￿are￿proposed￿at￿any￿General￿Meeting￿(the￿"Voting￿Restrictions"):￿(i)￿an issuance￿of￿ASML￿shares￿or￿grant￿of￿rights￿to￿subscribe￿for￿ASML￿shares￿representing￿25￿percent￿or￿more￿of￿the￿issued and￿outstanding￿share￿capital￿of￿ASML￿or￿the￿restriction￿or￿exclusion￿of￿pre-emption￿rights￿relating￿thereto￿(in￿each case,￿on￿an￿aggregate￿basis￿during￿the￿preceding￿12￿months)￿or￿the￿designation￿of￿the￿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￿CCIP)￿that￿may￿be￿held￿outside￿the￿Intel￿Stichting.￿For￿any￿additional￿ASML shares￿that￿Intel￿(or￿its￿affiliates)￿acquires￿in￿excess￿of￿4.99￿percent￿of￿the￿outstanding￿shares￿of￿ASML,￿Intel￿is￿required to￿deposit￿such￿shares￿with￿the￿Intel￿Stichting￿in￿exchange￿for￿Depositary￿Receipts.￿Shares￿held￿directly￿by￿Intel￿or￿its affiliates￿(and￿which￿not￿required￿to￿be￿deposited￿with￿the￿Intel￿Stichting)￿are￿not￿subject￿to￿the￿Voting￿Restrictions,￿or Lock-Up￿Restrictions￿(as￿defined￿below),￿but￿are￿subject￿to￿the￿Standstill￿Restriction. ASML￿ANNUAL￿REPORT￿2013 F-50 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. 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)￿4￿percent￿of￿the￿outstanding￿shares of￿ASML￿during￿any￿six￿month￿period￿(the￿relevant￿percentage￿is￿1.5￿percent￿for￿Samsung￿and￿2.5￿percent￿for￿TSMC). 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￿our￿shares￿listed￿at￿NYSE￿Euronext￿Amsterdam￿or￿delisting￿of￿our￿shares listed￿at￿NASDAQ￿(except￿for￿certain￿voluntary￿delistings￿from￿NASDAQ),￿(iii)￿the￿winding￿up￿or￿liquidation￿of￿ASML,￿or (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￿Intel￿450mm￿NRE￿Funding￿Agreement￿and￿the￿other relates￿to￿the￿Intel￿EUV￿NRE￿Funding￿Agreement￿(together￿the￿"Intel￿NRE￿Funding￿Agreements").￿Intel￿has￿committed to￿provide￿EUR￿553￿million￿in￿funding￿under￿the￿Intel￿450mm￿NRE￿Funding￿Agreement￿and￿EUR￿276￿million￿in￿funding under￿the￿Intel￿EUV￿NRE￿Funding￿Agreement,￿payable￿over￿the￿respective￿terms￿(2013-2017)￿of￿the￿Intel￿NRE￿Funding Agreements. On￿August￿5,￿2012,￿ASML￿and￿TSMC￿entered￿into￿the￿TSMC￿NRE￿Funding￿Agreement￿pursuant￿to￿which￿TSMC￿will support￿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￿276￿million￿in￿funding￿payable￿over￿the￿term￿(2013-2017)￿of￿the TSMC￿NRE￿Funding￿Agreement. On￿August￿27,￿2012,￿ASML￿and￿Samsung￿entered￿into￿the￿Samsung￿NRE￿Funding￿Agreement￿pursuant￿to￿which Samsung￿will￿support￿ASML’s￿R&D￿costs￿and￿project￿expenditures￿relating￿to￿the￿development￿of￿300mm/450mm￿and EUV￿platforms.￿Samsung￿has￿committed￿to￿provide￿EUR￿276￿million￿in￿funding￿payable￿over￿the￿term￿(2013-2017)￿of￿the Samsung￿NRE￿Funding￿Agreement. ASML￿ANNUAL￿REPORT￿2013 F-51 Under￿the￿NRE￿Funding￿Agreements,￿ASML￿will￿retain￿sole￿control￿over￿the￿development￿of￿450mm￿photo￿lithography equipment￿and￿EUV￿platforms￿and￿will￿own￿all￿intellectual￿property￿created￿by￿ASML￿in￿connection￿therewith.￿The￿NRE Funding￿Agreements￿provide￿that￿if￿ASML,￿in￿its￿reasonable￿discretion,￿determines￿to￿abandon￿either￿the￿450mm￿or￿EUV development￿project,￿as￿a￿result￿of￿technical￿infeasibility￿or￿lack￿of￿sufficient￿industry￿demand,￿or￿if￿the￿then￿remaining funding￿exceeds￿the￿expenditure￿estimate￿for￿the￿development￿project￿(450mm￿or￿EUV)￿then￿the￿parties￿may￿agree￿on￿an alternative￿development￿project,￿and￿if￿no￿alternative￿is￿agreed,￿ASML￿may￿invoice￿the￿Participating￿Customers￿for￿the remaining￿due￿portion￿of￿committed￿funding￿during￿each￿year￿of￿the￿remaining￿funding￿period￿in￿which￿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. 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. For￿further￿details￿regarding￿the￿share￿issuances￿to￿the￿Participating￿Customers￿and￿the￿Synthetic￿Share￿Buyback effectuated￿in￿connection￿with￿our￿CCIP,￿see￿Note￿26. Development 450mm silicon wafer technology In￿November￿2013,￿following￿our￿customers’￿decision,￿ASML￿decided￿to￿pause￿the￿development￿of￿450mm￿lithography systems￿until￿customer￿demand￿and￿the￿timing￿related￿to￿such￿demand￿is￿clear.￿We￿believe￿that￿our￿450mm development￿activities￿can￿be￿restarted￿if￿and￿when￿the￿industry￿demands￿the￿introduction￿of￿450mm.￿Since￿450mm requires￿both￿generic￿developments￿and￿wafer￿size-specific￿developments,￿many￿of￿our￿employees￿involved￿in￿the 450mm￿project￿are￿doing￿work￿that￿is￿just￿as￿relevant￿for￿future￿DUV￿and￿EUV￿platforms.￿The￿teams￿and￿people￿have therefore￿been￿reassigned￿to￿different￿projects. Under￿our￿CCIP,￿we￿are￿party￿to￿a￿450mm￿NRE￿Funding￿Agreement￿with￿Intel￿for￿a￿total￿NRE￿funding￿commitment￿of EUR￿553￿million.￿We￿are￿currently￿in￿discussions￿with￿Intel￿to￿determine￿appropriate￿projects￿to￿which￿to￿apply￿the 450mm￿NRE￿funding. Under￿the￿CCIP,￿we￿are￿also￿party￿to￿EUV￿NRE￿agreements￿with￿Intel￿(total￿funding￿of￿EUR￿276￿million),￿TSMC￿(total funding￿of￿EUR￿276￿million)￿and￿Samsung￿(total￿funding￿of￿EUR￿276￿million),￿all￿of￿which￿funding￿is￿being￿used￿for￿EUV projects. 29. Related Party Transactions On￿July￿9,￿2012,￿we￿announced￿our￿CCIP￿to￿accelerate￿our￿development￿of￿EUV￿technology￿beyond￿the￿current generation￿and￿our￿development￿of￿future￿450mm￿silicon￿wafer￿technology.￿One￿of￿the￿Participating￿Customers,￿Intel, agreed￿to￿fund￿EUR￿829￿million￿for￿our￿R&D￿projects.￿In￿addition￿Intel￿also￿agreed￿to￿invest￿in￿ordinary￿shares￿equal￿to 15￿percent￿of￿our￿issued￿share￿capital￿(calculated￿giving￿effect￿to￿our￿Synthetic￿Share￿Buyback￿in￿November￿2012).￿Due to￿the￿equity￿investment,￿Intel￿is￿considered￿a￿related￿party￿of￿ASML￿as￿of￿July￿9,￿2012. The￿total￿net￿sales￿to￿Intel￿(and￿its￿affiliates)￿in￿2013￿amounted￿to￿EUR￿494.7￿million.￿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,￿2013￿amount￿to￿EUR￿(182.3)￿million￿(December￿31,￿2012:￿EUR￿65.0￿million). There￿have￿been￿no￿transactions￿during￿our￿most￿recent￿fiscal￿year,￿and￿there￿are￿currently￿no￿transactions,￿between ASML￿or￿any￿of￿its￿subsidiaries,￿and￿any￿other￿significant￿shareholder￿and￿any￿director￿or￿officer￿or￿any￿relative￿or spouse￿thereof￿other￿than￿ordinary￿course￿compensation￿arrangements.￿During￿our￿most￿recent￿fiscal￿year,￿there￿has been￿no,￿and￿at￿present￿there￿is￿no,￿outstanding￿indebtedness￿to￿ASML￿owed￿or￿owing￿by￿any￿director￿or￿officer￿of ASML￿or￿any￿associate￿thereof. ASML￿ANNUAL￿REPORT￿2013 F-52 30. Subsequent Events Subsequent￿events￿were￿evaluated￿up￿to￿February￿11,￿2014,￿which￿is￿the￿issuance￿date￿of￿this￿Annual￿Report￿2013. There￿are￿no￿subsequent￿events￿to￿report. Veldhoven,￿the￿Netherlands February￿11,￿2014 ￿ ￿ ￿/s/￿Peter￿T.F.M.￿Wennink Peter￿T.F.M.￿Wennink President,￿CEO￿and￿member￿of￿the￿Board￿of￿Management ￿￿ ￿ ￿/s/￿Wolfgang￿U.￿Nickl Wolfgang￿U.￿Nickl Executive￿Vice￿President￿and￿CFO ASML￿ANNUAL￿REPORT￿2013 F-53 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,￿2013￿and￿2012,￿and￿the￿related￿consolidated￿statements￿of￿income,￿comprehensive income,￿shareholders'￿equity,￿and￿cash￿flows￿for￿each￿of￿the￿three￿years￿in￿the￿period￿ended￿December￿31,￿2013￿(all expressed￿in￿euros).￿We￿also￿have￿audited￿the￿Company's￿internal￿control￿over￿financial￿reporting￿as￿of￿December￿31, 2013,￿based￿on￿criteria￿established￿in￿Internal Control — Integrated Framework (1992)￿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,￿2013￿and￿2012,￿and￿the￿results￿of￿their operations￿and￿their￿cash￿flows￿for￿each￿of￿the￿three￿years￿in￿the￿period￿ended￿December￿31,￿2013,￿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,￿2013,￿based￿on￿the￿criteria established￿in￿Internal Control — Integrated Framework (1992)￿issued￿by￿the￿Committee￿of￿Sponsoring￿Organizations￿of the￿Treadway￿Commission. /s/￿Deloitte￿Accountants￿B.V. Eindhoven,￿The￿Netherlands February￿11,￿2014 ASML￿ANNUAL￿REPORT￿2013 F-54 Exhibit Index ASML￿ANNUAL￿REPORT￿2013 E-1 Exhibit Index Exhibit￿No. 1 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 4.17 4.18 4.19 4.20 4.21 4.22 4.23 4.24 4.25 4.26 4.27 4.28 4.29 4.30 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) 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￿Stock￿Option￿Plan￿for￿Incentive￿or￿New￿Hire￿Options￿granted￿to￿Senior￿and￿Executive￿Management￿(Version￿January 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￿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)) Investment￿Agreement￿between￿ASML￿Holding￿N.V.￿and￿Intel￿Corporation,￿dated￿July￿9,￿2012￿(Incorporated￿by￿reference to￿the￿Registrant’s￿Annual￿Report￿on￿Form￿20-F￿for￿the￿year￿ended￿December￿31,￿2012) 450mm￿NRE￿Funding￿Agreement￿between￿ASML￿Holding￿N.V.,￿and￿Intel￿Corporation,￿dated￿July￿9,￿2012￿(Incorporated￿by reference￿to￿the￿Registrant’s￿Annual￿Report￿on￿Form￿20-F￿for￿the￿year￿ended￿December￿31,￿2012)1 EUV￿NRE￿Funding￿Agreement￿between￿ASML￿Holding￿N.V.,￿and￿Intel￿Corporation,￿dated￿July￿9,￿2012￿(Incorporated￿by reference￿to￿the￿Registrant’s￿Annual￿Report￿on￿Form￿20-F￿for￿the￿year￿ended￿December￿31,￿2012)1 Shareholder￿Agreement￿between￿ASML￿Holding￿N.V.￿and￿Intel￿Holdings￿B.V.,￿Intel￿Corporation￿and￿Stichting Administratiekantoor￿MAKTSJAB￿dated￿September￿12,￿2012￿(Incorporated￿by￿reference￿to￿the￿Registrant’s￿Annual￿Report on￿Form￿20-F￿for￿the￿year￿ended￿December￿31,￿2012) ASML￿ANNUAL￿REPORT￿2013 E-2 Exhibit￿No. 4.31 8.1 12.1 13.1 15.1 101.INS 101.SCH 101.CAL 101.DEF 101.LAB 101.PRE Description 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￿Subsidiaries2 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￿20022 Consent￿of￿Deloitte￿Accountants￿B.V.2 XBRL￿Instance￿Document2 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 Certain￿information￿omitted￿pursuant￿to￿a￿request￿for￿confidential￿treatment￿filed￿separately￿with￿the￿Securities￿and￿Exchange￿Commission. Filed￿at￿the￿Commission￿herewith. 1 2 ￿ ASML￿ANNUAL￿REPORT￿2013 E-3 Exhibit 8.1 List of Main Subsidiaries Legal Entity Country of Incorporation Main subsidiaries of ASML Holding N.V.1: ASML￿Netherlands￿B.V. ASML￿MaskTools￿B.V. ASML￿Systems￿B.V. ASML￿Germany￿GmbH ASML￿France￿S.a.r.l. ASML￿(UK)￿Ltd. ASML￿Israel￿(2001)￿Ltd. ASML￿Ireland￿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. Cymer,￿LLC. eLith￿LLC. ASML￿Hong￿Kong￿Logistic￿Services￿Ltd. Cymer￿B.V. Cymer￿Japan,￿Inc. Cymer￿Korea,￿Inc. Cymer￿Singapore￿Pte￿Ltd. Cymer￿Southeast￿Asia￿Ltd. Cymer￿Semiconductor￿Equipment￿(Shanghai)￿Co.￿Ltd. TCZ,￿LLC. TCZ￿Pte￿Ltd. TCZ￿GmbH Netherlands￿(Veldhoven) Netherlands￿(Veldhoven) Netherlands￿(Veldhoven) Germany￿(Dresden) France￿(Montbonnot) UK￿(Paisley￿(Scotland)) Israel￿(Ramat-Gan) 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￿(Wilmington,￿Delaware) US￿(Wilmington,￿Delaware) US￿(Wilmington,￿Delaware) US￿(Dover,￿Delaware) US￿(Wilmington,￿Delaware) US￿(Wilmington,￿Delaware) US￿(Wilmington,￿Delaware) US￿(Reno,￿Nevada) US￿(Wilmington,￿Delaware) Hong￿Kong￿SAR Netherlands￿(Amsterdam) Japan￿(Tokyo) Korea￿(Kyunggi-Do) Singapore￿(Singapore) Taiwan￿(Hsinchu) China￿(Pudong) US￿(Reno,￿Nevada) Singapore￿(Singapore) Germany￿(Oberkochen) 1 All￿of￿our￿subsidiaries￿are￿(directly￿or￿indirectly)￿wholly-owned,￿with￿exception￿of￿eLith￿LLC,￿in￿which￿we￿hold￿an￿interest￿of￿50￿percent. ASML￿ANNUAL￿REPORT￿2013 E-4 Exhibit 12.1 Certification of the Chief Executive 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￿11,￿2014 ￿ /s/￿Peter￿T.F.M.￿Wennink Peter￿T.F.M.￿Wennink President,￿CEO￿and￿member￿of￿the￿Board￿of￿Management ASML￿ANNUAL￿REPORT￿2013 E-5 Certification of the Chief Financial Officer I,￿Wolfgang￿U.￿Nickl,￿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￿11,￿2014 ￿ /s/￿Wolfgang￿U.￿Nickl Wolfgang￿U.￿Nickl Executive￿Vice￿President￿and￿CFO ASML￿ANNUAL￿REPORT￿2013 E-6 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.￿for￿the￿fiscal￿year￿ended￿December￿31,￿2013 as￿filed￿with￿the￿SEC￿on￿the￿date￿hereof,￿Peter￿T.F.M.￿Wennink,￿as￿CEO￿of￿the￿Company,￿and￿Wolfgang￿U.￿Nickl,￿as￿CFO 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￿Exchange￿Act;￿and (2)The￿information￿contained￿in￿the￿Report￿fairly￿presents,￿in￿all￿material￿respects,￿the￿financial￿condition￿and￿results￿of operations￿of￿the￿issuer. ￿ ￿￿ /s/￿Peter￿T.M.F.￿Wennink Name:￿Peter￿T.M.F.￿Wennink Title:￿President,￿CEO￿and￿member￿of￿the￿Board￿of￿Management Date:￿February￿11,￿2014 ￿ ￿ /s/￿Wolfgang￿U.￿Nickl Name:￿Wolfgang￿U.￿Nickl Title:￿Executive￿Vice￿President￿and￿CFO Date:￿February￿11,￿2014 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￿SEC￿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. ASML￿ANNUAL￿REPORT￿2013 E-7 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,￿333-170034,￿333-188938,￿333-190023￿and￿333-192951)￿of￿our￿report￿dated￿February￿11,￿2014,￿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,￿2013. ￿ /s/￿Deloitte￿Accountants￿B.V. Deloitte￿Accountants￿B.V. Eindhoven,￿The￿Netherlands February￿11,￿2014 ASML￿ANNUAL￿REPORT￿2013 E-8 Definitions Name ACE Act AFM AGM AMD Description ASML￿Center￿of￿Excellence The￿Dutch￿Financial￿Markets￿Supervision￿Act￿/￿"Wet￿op￿het￿Financieel￿Toezicht" Autoriteit￿Financiële￿Markten;￿the￿Netherlands￿Authority￿for￿the￿Financial￿Markets Annual￿General￿Meeting￿of￿Shareholders Advanced￿Micro￿Devices,￿Inc. Annual￿Report Annual￿Report￿on￿Form￿20-F ArF ArFi ASML ASP ASU BA BESP Brion Canon Argon￿Fluoride Argon￿Fluoride￿Immersion ASML￿Holding￿N.V.￿and￿its￿subsidiaries Average￿selling￿price Accounting￿Standards￿Update Bachelor￿of￿Arts Best￿Estimate￿of￿Selling￿Price Brion￿Technologies,￿Inc. Canon￿Kabushiki￿Kaisha Canon￿Cross-License Agreement ASML￿and￿Canon￿signed￿a￿global￿patent￿cross-license￿agreement￿related￿to￿the￿field￿of semiconductor￿lithography CCIP CD CEO CFO CMO Customer￿Co-Investment￿Program Critical￿Dimension Chief￿Executive￿Officer Chief￿Financial￿Officer Chief￿Marketing￿Officer Code￿of￿Conduct Code￿of￿ethics￿and￿conduct CODM Chief￿Operating￿Decision￿Maker Commission The￿United￿States￿Securities￿and￿Exchange￿Commission Company ASML￿Holding￿N.V. CPO CRMC Cross-License Transition￿Period CRSB CTO Chief￿Program￿Officer Capital￿Research￿&￿Management￿Company The￿period￿between￿January￿1,￿2010￿and￿December￿31,￿2014 Corporate￿Risk￿and￿Sustainability￿Board Chief￿Technology￿Officer Customer￿Stichtingen Intel￿Stichting￿and￿TSMC￿Stichting￿jointly￿referred.￿Shares￿held￿by￿Participating￿Customers￿in the￿CCIP,￿are￿held￿through￿Foundations￿that￿issued￿to￿the￿Participating￿Customers￿depository receipts￿representing￿shares￿held￿by￿these￿Foundations. Cymer Formerly￿known￿as￿Cymer,￿Inc. De￿Nederlandsche Bank DPT DTC EGM the￿Dutch￿central￿bank,￿which￿is￿the￿supervisor￿of￿all￿pension￿companies￿in￿the￿Netherlands Double￿patterning￿technology Depositary￿Trust￿Company Extraordinary￿General￿Meeting￿of￿Shareholders ASML￿ANNUAL￿REPORT￿2013 D-1 Name EUR Euro Eurobonds Description Euros Euros Our￿EUR￿600￿million￿5.75￿percent￿senior￿notes￿due￿2017￿and￿our￿EUR￿750￿million￿3.375￿percent senior￿notes￿due￿2023 Euroclear￿Nederland Nederlands￿Centraal￿Instituut￿voor￿Giraal￿Effectenverkeer￿B.V. EUV Extreme￿Ultraviolet Exchange￿Act US￿Securities￿Exchange￿Act￿of￿1934 FASB FMSA FOM Financial￿Accounting￿Standards￿Board Financial￿Markets￿Supervision￿Act￿('Wet￿op￿het￿financieel￿toezicht'￿(Wft)) Foundation￿for￿Fundamental￿Research￿on￿Matter Foundation Stichting￿Preferente￿Aandelen￿ASML FTEs Full-time￿equivalents holistic￿lithography Optimize￿the￿scanner￿performance￿by￿taken￿into￿account￿the￿entire￿chip￿creation￿process,￿from design￿to￿volume￿manufacturing IC imec Intel Intercircuit Interuniversitair￿Micro-Elektronica￿Centrum Intel￿Corporation Intel￿450mm￿NRE Funding￿Agreement Intel￿EUV￿NRE￿Funding Agreement Intel￿Investment Agreement Agreement￿related￿to￿the￿development￿of￿450mm￿lithography￿equipment Agreement￿related￿to￿the￿development￿of￿EUV￿lithography￿equipment The￿investment￿agreement￿between￿ASML￿and￿Intel Intel￿NRE￿Funding Agreements The￿Intel￿Funding￿Agreements￿related￿to￿the￿development￿of￿450mm￿and￿EUV￿lithography equipment Intel￿Stichting Stichting￿Administratiekantoor￿MAKTSJAB IRS KPI KrF Logic MBA Memory NA NASDAQ New￿York￿Transfer Agent NID Nikon Internal￿Revenue￿Service Key￿Performance￿Indicator Krypton￿Fluoride Micro-processor￿manufacturers￿and￿Foundries Master￿of￿Business￿Administration NAND-Flash￿memory￿and￿DRAM￿memory￿chipmakers Numerical￿aperture NASDAQ￿Stock￿Market￿LLC J.P.￿Morgan￿Chase￿Bank,￿N.A.,￿4￿New￿York￿Plaza,￿New￿York,￿New￿York Notional￿Interest￿Deduction Nikon￿Corporation Nikon￿Cross-License Agreement A￿patent￿Cross-License￿agreement￿between￿Nikon,￿ASML￿and￿Zeiss,￿related￿to￿lithography equipment￿used￿to￿manufacture￿semiconductor￿devices nm Nanometer￿(one￿billionth￿of￿a￿meter) Non-Resident￿Holder a￿holder￿of￿ordinary￿shares￿who￿is￿not,￿or￿is￿not￿deemed￿to￿be,￿a￿resident￿of￿the￿Netherlands￿for Dutch￿tax￿purposes NPV NRE Net￿Present￿Value Non￿Recurring￿Engineering NRE￿Funding Agreements The￿Intel￿NRE￿Funding￿Agreements,￿the￿TSMC￿NRE￿Funding￿Agreement,￿and￿the￿Samsung￿NRE Funding￿Agreement ASML￿ANNUAL￿REPORT￿2013 D-2 Name NWO NXE Description Netherlands￿Organisation￿for￿Scientific￿Research NXE￿platform;￿a￿new￿platform￿utilizing￿the￿concepts￿of￿the￿TWINSCAN￿platform￿with￿complete new￿technologies￿in￿three￿areas:￿light￿source,￿lens￿system,￿and￿vacuum￿body NXE:3100 NXE:3300B Second-generation￿EUV￿systems Third-generation￿EUV￿systems NXT OCI OPC TWINSCAN￿NXT￿systems;￿an￿improved￿version￿of￿the￿TWINSCAN￿systems,￿introducing￿new stages￿and￿stage￿position￿control￿technology,￿which￿enables￿improved￿imaging￿and￿overlay. Other￿Comprehensive￿Income Optical￿Proximity￿Correction Participating￿customers Collective￿of￿the￿participants￿of￿the￿Customer￿Co-Investment￿Program;￿Intel￿Corporation (“Intel”),￿Taiwan￿Semiconductor￿Manufacturing￿Company￿Ltd.￿(“TSMC”)￿and￿Samsung Electronics￿Corporation￿(“Samsung”) PFIC PME Preference￿Share Option R&D RDA RET RU RU￿ASML Samsung Samsung￿Investment Agreement Samsung￿NRE￿Funding Agreement SEC SG&A Passive￿Foreign￿Investment￿Company Bedrijfstakpensioenfonds￿Metalektro An￿option￿to￿acquire￿cumulative￿preference￿shares￿in￿our￿capital Research￿and￿Development Research￿and￿Development￿Deduction￿("Research￿and￿Development￿Aftrek") Resolution￿Enhancement￿Techniques Reporting￿Unit Reporting￿Unit￿ASML Samsung￿Electronics￿Corporation The￿investment￿agreement￿between￿ASML￿and￿Samsung ASML￿and￿Samsung￿entered￿into￿the￿Samsung￿NRE￿funding￿agreement The￿United￿States￿Securities￿and￿Exchange￿Commission Selling,￿General￿and￿Administrative Shareholder￿Agreement In￿connection￿with￿the￿issuance￿of￿shares￿pursuant￿to￿the￿Intel￿Investment￿Agreement,￿on September￿12,￿2012￿ASML,￿Intel￿and￿the￿Intel￿Stichting￿entered￿into￿a￿shareholder￿agreement (we￿refer￿to￿page￿F-50) SMO STI Source-Mask￿Optimization Short-term￿incentive the￿Intel￿Investment Agreement The￿investment￿agreement￿between￿ASML￿and￿Intel TPE Third-Party￿Evidence Transfer￿Agent Agreement Treaty TSMC TSMC￿Investment Agreement TSMC￿NRE￿Funding Agreement Agreement￿about￿transfer,￿registrar￿and￿dividend￿disbursement The￿Tax￿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 Taiwan￿Semiconductor￿Manufacturing￿Company￿Ltd. The￿investment￿agreement￿between￿ASML￿and￿TSMC ASML￿and￿TSMC￿entered￿into￿the￿TSMC￿NRE￿funding￿agreement TSMC￿Stichting Stichting￿Administratiekantoor￿TSMC U.S.￿dollars US￿GAAP United￿States￿dollars Generally￿accepted￿accounting￿principles￿in￿the￿United￿States￿of￿America￿ ASML￿ANNUAL￿REPORT￿2013 D-3 Name USD UvA VIE Description United￿States￿dollars University￿of￿Amsterdam Variable￿interest￿entity VIE￿Shareholders Syndicate￿of￿three￿banks￿solely￿for￿the￿purpose￿of￿leasing￿the￿headquarter￿in￿Veldhoven VLSI￿Research An￿independent￿industry￿research￿firm￿that￿surveyed￿customers￿representing￿95.0￿percent￿of￿the world’s￿total￿semiconductor￿market VSOE VU WACC Wavelength Vendor-Specific￿Objective￿Evidence VU￿University￿Amsterdam Weighted￿Average￿Cost￿of￿Capital 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 Wijdeven￿Motion Wijdeven￿Motion￿Holding￿B.V.￿and￿Wijdeven￿Motion￿B.V.￿together XT XT:1700i YieldStar Zeiss Second￿-￿generation￿TWINSCAN,￿for￿200￿nm￿and￿300￿mm￿wafer￿sizes. TWINSCAN￿XT:1700i Advanced￿wafer￿metrology￿system Carl￿Zeiss￿SMT￿AG ASML￿ANNUAL￿REPORT￿2013 D-4 20 

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