ASML International N.V.
Annual Report 2014

Plain-text annual report

Annual￿Report 2014 14 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, 2014 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. 432,935,288 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￿2014 Contents Part I 1 1 1 14 21 21 34 41 44 44 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￿2014 45 55 56 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 57 57 57 58 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 61 61 61 Item 17 Financial Statements Item 18 Financial Statements Item 19 Exhibits ASML￿ANNUAL￿REPORT￿2014 ASML￿ANNUAL￿REPORT￿2014 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￿Annual￿Report￿and￿include￿statements￿with￿respect￿to￿our￿outlook,￿expected￿customer￿demand￿in specified￿market￿segments,￿expected￿sales￿levels￿and￿trends,￿systems￿backlog,￿IC￿unit￿demand,￿expected￿financial results,￿including￿expected￿gross￿margin￿and￿expenses,￿expected￿shipments￿of￿tools,￿productivity￿of￿our￿tools￿and systems￿performance,￿including￿EUV￿system￿performance￿(such￿as￿endurance),￿the￿development￿of￿EUV￿technology￿and the￿number￿of￿EUV￿systems￿expected￿to￿be￿shipped￿and￿recognized￿in￿revenue￿and￿timing￿of￿shipments,￿dividend￿policy and￿intention￿to￿repurchase￿shares,￿purchase￿commitments￿and￿statements￿about￿our￿CCIP. These￿forward-looking￿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￿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.￿Financial￿information￿presented￿in￿our Annual￿Report￿includes￿Cymer￿from￿May￿30,￿2013￿onwards. A￿summary￿of￿all￿abbreviations,￿technical￿terms￿and￿definitions￿(of￿capitalized￿terms)￿used￿in￿this￿Annual￿Report￿is￿set forth￿on￿pages￿D-1￿through￿D-4. ASML￿ANNUAL￿REPORT￿2014 1 Five-Year Financial Summary Year ended December 31 (in thousands, except per share data) 2014 EUR 2013 EUR 2012 EUR 2011 1 EUR 2010 EUR Consolidated Statements of Operations data Net￿sales Cost￿of￿sales 5,856,277 (3,259,903) 5,245,326 (3,068,064) 4,731,555 (2,726,298) 5,651,035 (3,201,645) 4,507,938 (2,552,768) Gross profit Other￿income Research￿and￿development￿costs Selling,￿general￿and￿administrative￿costs 2,596,374 81,006 (1,074,035) (321,110) 2,177,262 64,456 (882,029) (311,741) 2,005,257 - (589,182) (259,301) 2,449,390 - (590,270) (217,904) Income from operations Interest￿and￿other,￿net 1,282,235 (8,600) 1,047,948 (24,471) 1,156,774 (6,196) 1,641,216 7,419 Income before income taxes Provision￿for￿income￿taxes 1,273,635 (76,995) 1,023,477 (7,987) 1,150,578 (4,262) 1,648,635 (181,675) 1,955,170 - (523,426) (181,045) 1,250,699 (8,176) 1,242,523 (220,703) Net income 1,196,640 1,015,490 1,146,316 1,466,960 1,021,820 Earnings per share data Basic￿net￿income￿per￿ordinary￿share Diluted￿net￿income￿per￿ordinary￿share2 Number￿of￿ordinary￿shares￿used￿in computing￿per￿share￿amounts￿(in￿thousands) Basic Diluted2 2.74 2.72 2.36 2.34 2.70 2.68 3.45 3.42 2.35 2.33 437,142 439,693 429,770 433,446 424,096 426,986 425,618 429,053 435,146 438,974 1 2 As￿of￿January￿1,￿2011,￿we￿adopted￿ASU￿2009-13￿"Sales￿Arrangements￿with￿Multiple￿Deliverables"￿which￿converted￿into￿ASC￿605-25￿"Revenue Recognition￿-￿Multiple-Element￿Arrangements".￿The￿ASU￿was￿adopted￿prospectively￿and￿had￿an￿insignificant￿impact￿on￿timing￿and￿allocation￿of revenues. 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￿2014 2 Five-Year Financial Summary 2014 EUR 2013 EUR 2012 EUR 2011 1 EUR 2010 EUR As of December 31 (in thousands, unless otherwise indicated) Consolidated Balance Sheets data Cash￿and￿cash￿equivalents Short-term￿investments Working￿capital2 2,419,487 334,864 4,257,335 Total￿assets 12,203,945 1,154,137 7,512,590 39,426 Long-term￿debt￿(including￿the￿current￿portion￿of￿long-term￿debt) Total￿shareholders’￿equity Share￿capital Consolidated Statements of Cash Flows data Depreciation￿and￿amortization Impairment Net￿cash￿provided￿by￿operating￿activities Purchase￿of￿property,￿plant￿and￿equipment3 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 254,644 10,528 1,025,206 (358,280) (504,756) 849,776 - (16,212) 39,679 - (267,962) - (700,000) - - (928,439) 88,793 2,330,694 679,884 4,156,917 11,513,730 1,074,570 6,922,427 40,092 1,767,596 930,005 3,745,559 7,410,478 759,490 4,066,893 37,470 228,775 13,057 1,054,173 (210,804) (904,856) 1,195,031 (443,712) 4 (368,341) 31,822 - (216,085) - (300,000) 740,445 7 (368,303) 8 (113,111) 563,098 186,620 3,234 703,478 (171,878) (1,379,997) 449,992 (10,292) (1,119,833) 3,907,666 5 (3,728,324) 6 (188,892) - (535,373) - - (545,583) (964,186) 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 1,949,834 - 2,787,220 6,180,358 710,060 2,773,908 39,293 151,444 8,563 940,048 (128,728) - - - (124,903) 31,000 - (86,960) 150,000 - - - 92,702 912,760 Ratios and other data Gross￿profit￿as￿a￿percentage￿of￿net￿sales Income￿from￿operations￿as￿a￿percentage￿of￿net￿sales Net￿income￿as￿a￿percentage￿of￿net￿sales Shareholders’￿equity￿as￿a￿percentage￿of￿total￿assets Income￿taxes￿as￿a￿percentage￿of￿income￿before￿income￿taxes Sales￿of￿systems￿(in￿units) ASP￿of￿system￿sales￿(in￿millions) Value￿of￿systems￿backlog￿(in￿millions) Systems￿backlog￿(in￿units) ASP￿of￿systems￿backlog￿(in￿millions) Value￿of￿booked￿systems￿(in￿millions) Net￿bookings￿(in￿units) ASP￿of￿booked￿systems￿(in￿millions) 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) Closing￿ASML￿share￿price￿in￿EUR￿on￿Euronext￿Amsterdam Volatility￿260￿days￿as￿percentage￿of￿our￿shares￿listed￿on￿Euronext Amsterdam11 Closing￿ASML￿share￿price￿in￿USD￿on￿NASDAQ Volatility￿260￿days￿as￿percentage￿of￿our￿shares￿listed￿on￿NASDAQ12 Dividend￿per￿ordinary￿share￿in￿EUR Dividend￿per￿ordinary￿share￿in￿USD 44.3 21.9 20.4 61.6 6.0 136 31.2 2,772.4 9 82 9 33.8 9 4,902.2 9 157 9 31.2 9 11,318 2,754 11.6 432,935 89.50 27.49 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 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 28.64 107.83 26.01 0.70 13 0.79 13,14 93.70 24.01 0.61 0.84 15 64.39 30.05 0.53 0.69 15 43.3 29.0 26.0 47.4 11.0 222 22.0 1,732.5 10 71 10 24.4 10 2,909.3 10 134 10 21.7 10 7,955 1,935 25.4 413,669 32.48 32.46 41.79 41.83 0.46 0.61 15 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 0.58 15 1 As￿of￿January￿1,￿2011,￿we￿adopted￿ASU￿2009-13￿"Sales￿Arrangements￿with￿Multiple￿Deliverables"￿which￿converted￿into￿ASC￿605-25￿"Revenue Recognition￿-￿Multiple-Element￿Arrangements".￿The￿ASU￿was￿adopted￿prospectively￿and￿had￿an￿insignificant￿impact￿on￿timing￿and￿allocation￿of revenues. 2 Working￿capital￿is￿calculated￿as￿the￿difference￿between￿total￿current￿assets￿and￿total￿current￿liabilities. 3 An￿amount￿of￿EUR￿95.5￿million￿(2013:￿EUR￿115.9￿million,￿2012:￿EUR￿204.8￿million,￿2011:￿EUR￿300.5￿million,￿2010:￿EUR￿214.1￿million)￿of￿the￿additions in￿property,￿plant￿and￿equipment￿relates￿to￿non-cash￿transfers￿from￿inventory,￿other￿movements￿include￿EUR￿1.5￿million￿increase￿(2013:￿EUR￿12.5 million￿decrease,￿2012:￿EUR￿9.6￿million￿decrease,￿2011:￿EUR￿17.7￿million￿decrease￿and￿2010:￿EUR￿nil￿million),￿mainly￿relating￿to￿investments￿not￿yet paid￿and￿inceptions￿of￿finance￿lease￿arrangements.￿Since￿the￿transfers￿between￿inventory￿and￿property,￿plant￿and￿equipment￿are￿non-cash￿events, these￿are￿not￿reflected￿in￿the￿Consolidated￿Statements￿of￿Cash￿Flows￿data.￿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. 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.￿See￿Note 28￿to￿the￿Financial￿Statements. 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￿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￿issuance￿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. 4 5 6 7 8 ASML￿ANNUAL￿REPORT￿2014 3 9 Our￿systems￿backlog￿and￿net￿bookings￿include￿sales￿orders￿for￿which￿written￿authorizations￿have￿been￿accepted￿and￿shipment￿and/or￿revenue recognition￿is￿expected￿within￿12￿months.￿As￿of￿2014￿we￿also￿include￿EUV￿in￿our￿backlog￿starting￿with￿our￿NXE:3350B￿systems.￿As￿a￿result,￿two NXE:3350B￿systems￿are￿now￿included￿in￿our￿systems￿backlog￿and￿net￿bookings.￿Before￿2014,￿our￿systems￿backlog￿and￿net￿bookings￿include￿only sales￿orders￿for￿which￿written￿authorizations￿have￿been￿accepted￿and￿system￿shipment￿and￿revenue￿recognition￿dates￿within￿the￿following￿12￿months have￿been￿assigned.￿This￿change￿has￿no￿impact￿on￿the￿comparative￿figures. 10 From￿January￿1,￿2011,￿we￿value￿our￿net￿bookings￿and￿systems￿backlog￿at￿system￿sales￿value￿including￿factory￿options.￿Prior￿to￿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). 11 Volatility￿represents￿the￿variability￿in￿our￿share￿price￿on￿Euronext￿Amsterdam￿as￿measured￿over￿the￿260￿business￿days￿of￿each￿year￿presented￿(source: Bloomberg￿Finance￿LP). 12 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). 13 Subject￿to￿approval￿of￿the￿AGM￿to￿be￿held￿on￿April￿22,￿2015. 14 The￿exchange￿rate￿used￿to￿express￿the￿proposed￿dividend￿per￿ordinary￿share￿in￿USD￿is￿the￿exchange￿rate￿of￿USD/EUR￿1.13￿as￿of￿January￿30,￿2015. 15 The￿dividends￿per￿ordinary￿share￿in￿USD￿for￿the￿years￿2010,￿2011,￿2012￿and￿2013￿have￿been￿adjusted￿compared￿to￿the￿respective￿Annual￿Reports￿to reflect￿the￿actual￿exchange￿rates￿at￿time￿of￿dividend￿payment. ASML￿ANNUAL￿REPORT￿2014 4 Exchange Rate Information We￿publish￿our￿Financial￿Statements￿in￿euro.￿A￿portion￿of￿our￿assets,￿liabilities,￿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 2015 (through January 31, 2015) Period￿End Period￿Average￿1 Period￿High Period￿Low 1.13 1.16 1.20 1.13 2014 1.21 1.33 1.39 1.21 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 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 2015 December 2014 November 2014 October 2014 September 2014 1.20 1.13 1.25 1.21 1.26 1.24 1.28 1.25 1.31 1.26 2010 1.33 1.33 1.45 1.20 August 2014 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.￿Some￿risks￿may￿not￿yet be￿known￿to￿us￿and￿certain￿risks￿that￿we￿do￿not￿currently￿believe￿to￿be￿material￿could￿become￿material￿in￿the￿future. Risks￿Related￿to￿the￿Semiconductor￿Industry The Semiconductor Industry Is Highly Cyclical and We May Be Adversely Affected by Any Downturn As￿a￿supplier￿to￿the￿global￿semiconductor￿industry,￿we￿are￿subject￿to￿the￿industry's￿business￿cycles,￿of￿which￿the￿timing, duration￿and￿volatility￿are￿difficult￿to￿predict.￿The￿semiconductor￿industry￿has￿historically￿been￿cyclical.￿Sales￿of￿our lithography￿systems￿depend￿in￿large￿part￿upon￿the￿level￿of￿capital￿expenditures￿by￿semiconductor￿manufacturers.￿These capital￿expenditures￿depend￿upon￿a￿range￿of￿competitive￿and￿market￿factors,￿including: • The￿current￿and￿anticipated￿market￿demand￿for￿semiconductors￿and￿for￿products￿utilizing￿semiconductors; • Semiconductor￿prices; • Semiconductor￿production￿costs￿and￿manufacturing￿capacity￿utilization￿for￿semiconductors; • Semiconductor￿equipment￿industry￿capacity; • 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￿2014 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,￿and￿such￿inventory￿obsolescence￿costs￿may￿be￿higher￿with￿our￿newer￿technology systems￿such￿as￿EUV.￿In￿addition,￿industry￿downturns￿generally￿result￿in￿overcapacity,￿resulting￿in￿downward￿pressure on￿sales￿prices￿and￿impairment￿of￿machinery￿and￿equipment,￿which￿in￿the￿past￿has￿had,￿and￿in￿the￿future￿could￿have,￿a material￿adverse￿effect￿on￿our￿business,￿financial￿condition￿and￿results￿of￿operations. The￿financial￿crises￿that￿affected￿the￿international￿banking￿system￿and￿global￿financial￿markets￿in￿2008-2009￿have￿been in￿many￿respects￿unprecedented￿and￿international￿financial￿markets￿and￿the￿global￿economy￿have￿remained￿volatile. Instability￿of￿the￿financial￿markets￿and￿the￿global￿economy￿in￿general￿can￿have￿a￿number￿of￿effects￿on￿our￿business, including￿(i)￿declining￿business￿and￿consumer￿confidence￿resulting￿in￿reduced,￿or￿delayed￿purchase￿of￿our￿products or￿shorter-term￿capital￿expenditures￿for￿our￿products;￿insolvency￿of￿key￿suppliers￿resulting￿in￿product￿delays,￿(ii)￿an inability￿of￿customers￿to￿obtain￿credit￿to￿finance￿purchases￿of￿our￿products,￿delayed￿payments￿from￿our￿customers and/or￿customer￿insolvencies￿and￿(iii)￿other￿adverse￿effects￿that￿we￿cannot￿currently￿anticipate.￿If￿global￿economic￿and market￿conditions￿deteriorate,￿we￿are￿likely￿to￿experience￿material￿adverse￿impacts￿on￿our￿business,￿financial￿condition and￿results￿of￿operations. Conversely,￿in￿anticipation￿of￿periods￿of￿increasing￿demand￿for￿semiconductor￿manufacturing￿equipment,￿we￿must maintain￿sufficient￿manufacturing￿capacity￿and￿inventory￿and￿we￿must￿attract,￿hire,￿integrate￿and￿retain￿a￿sufficient number￿of￿qualified￿employees￿to￿meet￿customer￿demand.￿Our￿ability￿to￿predict￿the￿timing￿and￿magnitude￿of￿industry fluctuations￿is￿limited￿and￿our￿products￿require￿significant￿lead-time￿to￿successfully￿complete.￿Accordingly,￿we￿may￿not be￿able￿to￿effectively￿increase￿our￿production￿capacity￿to￿respond￿to￿an￿increase￿in￿customer￿demand￿in￿an￿industry upturn￿resulting￿in￿lost￿sales,￿damage￿to￿customer￿relationships￿and￿we￿may￿lose￿market￿share. Our Business Will Suffer If We or the Industry Do Not Respond Rapidly to Commercial and Technological Changes in the Semiconductor Industry The￿semiconductor￿manufacturing￿industry￿is￿subject￿to: • Rapid￿change￿towards￿more￿complex￿technologies; • Frequent￿new￿product￿introductions￿and￿enhancements; • Evolving￿industry￿standards; • Changes￿in￿customer￿requirements;￿and • Shorter￿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￿Dry,￿Immersion,￿EUV￿and￿Holistic￿Lithography.￿If￿we￿or￿our￿suppliers￿are￿unable to￿successfully￿develop￿and￿introduce￿these￿products￿and￿technologies,￿or￿if￿our￿customers￿do￿not￿fully￿adopt￿the new￿technologies,￿products￿or￿product￿enhancements￿due￿to￿a￿preference￿for￿more￿established￿or￿alternative￿new technologies￿and￿products,￿due￿to￿the￿failure￿to￿meet￿their￿development￿roadmaps￿which￿require￿our￿new￿technology￿or for￿any￿other￿reason,￿we￿may￿not￿recoup￿all￿of￿our￿investments￿in￿these￿technologies￿or￿products,￿which￿could￿have￿a material￿adverse￿effect￿on￿our￿business,￿financial￿condition￿and￿results￿of￿operations. ASML￿ANNUAL￿REPORT￿2014 6 The￿success￿of￿EUV,￿which￿we￿believe￿is￿critical￿for￿keeping￿pace￿with￿Moore's￿Law,￿which￿postulates￿that￿the￿number of￿transistors￿on￿a￿chip￿doubles￿approximately￿every￿18￿to￿24￿months￿at￿equivalent￿costs,￿remains￿dependent￿on continuing￿technical￿advances￿by￿us￿and￿our￿suppliers,￿particularly￿with￿respect￿to￿technology￿related￿to￿the￿light source,￿source￿power,￿system￿availability,￿and￿scanner￿performance,￿without￿which￿EUV￿tools￿cannot￿achieve￿the productivity￿and￿yield￿required￿to￿economically￿justify￿the￿higher￿price￿of￿these￿tools.￿A￿delay￿in￿the￿developments￿of these￿tools￿or￿a￿delay￿in￿such￿tools￿meeting￿production￿requirements￿could￿discourage￿or￿result￿in￿much￿slower￿adoption of￿this￿EUV￿technology￿and￿could￿delay￿purchases￿of￿these￿tools.￿In￿addition,￿the￿introduction￿of￿alternative￿technologies or￿processes￿by￿our￿competitors￿that￿compete￿with￿EUV￿could￿discourage￿or￿result￿in￿much￿slower￿adoption￿of￿EUV technology.￿If￿the￿technologies￿that￿we￿pursue￿to￿assist￿our￿customers￿in￿producing￿smaller￿and￿more￿efficient￿chips￿are not￿as￿effective￿as￿those￿developed￿by￿our￿competitors,￿or￿if￿our￿customers￿adopt￿new￿technological￿architectures￿that are￿less￿focused￿on￿lithography,￿this￿may￿adversely￿affect￿our￿business,￿financial￿condition￿and￿results￿of￿operations. We Face Intense Competition The￿semiconductor￿equipment￿industry￿is￿highly￿competitive.￿The￿principal￿elements￿of￿competition￿in￿our￿market￿are: • 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-￿strengthening￿of￿the￿euro￿against￿the￿yen￿could result￿in￿a￿loss￿of￿market￿share; • The￿relative￿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",￿and￿Note￿19￿to￿the￿Financial￿Statements. We￿compete￿primarily￿with￿Nikon￿and￿Canon.￿Both￿Nikon￿and￿Canon￿have￿substantial￿financial￿resources￿and￿broad patent￿portfolios.￿Each￿continues￿to￿introduce￿new￿products￿with￿improved￿price￿and￿performance￿characteristics￿that compete￿directly￿with￿our￿products,￿which￿may￿cause￿a￿decline￿in￿our￿sales￿or￿a￿loss￿of￿market￿acceptance￿for￿our lithography￿systems.￿In￿addition,￿adverse￿market￿conditions,￿industry￿overcapacity￿or￿a￿decrease￿in￿the￿value￿of￿the Japanese￿yen￿in￿relation￿to￿the￿euro￿or￿the￿U.S.￿dollar,￿could￿further￿intensify￿price-based￿competition￿in￿those￿regions that￿account￿for￿the￿majority￿of￿our￿sales,￿resulting￿in￿lower￿prices￿and￿margins￿which￿could￿have￿a￿material￿adverse effect￿on￿our￿business,￿financial￿condition￿and￿results￿of￿operations. In￿addition￿to￿competitors￿in￿lithography,￿we￿may￿face￿competition￿with￿respect￿to￿alternative￿technologies￿for￿the￿non- critical￿layers￿or￿for￿all￿layers.￿If￿we￿fail￿to￿keep￿pace￿with￿Moore’s￿Law￿or￿in￿the￿event￿the￿delivery￿of￿new￿technology￿is delayed,￿our￿customers￿may￿opt￿for￿other￿solutions￿in￿IC￿manufacturing￿as￿a￿substitute￿for￿purchasing￿our￿products. In￿the￿future￿the￿IC￿industry￿may￿not￿find￿it￿economically￿or￿technically￿feasible￿to￿maintain￿the￿pace￿of￿Moore's￿Law through￿the￿use￿of￿lithography￿systems,￿which￿could￿result￿in￿our￿customers￿choosing￿solutions￿other￿than￿lithography for￿IC￿manufacturing.￿In￿addition,￿if￿the￿pace￿of￿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￿components￿and￿subassemblies￿used￿in￿our￿systems￿including￿the￿design￿thereof,￿each of￿which￿is￿obtained￿from￿a￿single￿supplier￿or￿a￿limited￿number￿of￿suppliers.￿Our￿reliance￿on￿a￿limited￿group￿of￿suppliers involves￿several￿risks,￿including￿a￿potential￿inability￿to￿obtain￿an￿adequate￿supply￿of￿required￿components,￿reduced control￿over￿pricing￿and￿the￿risk￿of￿untimely￿delivery￿of￿these￿components￿and￿subassemblies. ASML￿ANNUAL￿REPORT￿2014 7 The￿number￿of￿lithography￿systems￿we￿are￿able￿to￿produce￿may￿be￿limited￿by￿the￿production￿capacity￿of￿Zeiss. Zeiss￿is￿our￿single￿supplier￿of￿lenses,￿mirrors,￿collectors￿and￿other￿critical￿optical￿components￿(which￿we￿refer￿to￿as optics).￿If￿Zeiss￿were￿unable￿to￿maintain￿and￿increase￿production￿levels￿or￿if￿we￿are￿unable￿to￿maintain￿our￿business relationship￿with￿Zeiss￿in￿the￿future￿we￿could￿be￿unable￿to￿fulfill￿orders,￿which￿could￿damage￿relationships￿with￿current and￿prospective￿customers￿and￿have￿a￿material￿adverse￿effect￿on￿our￿business,￿financial￿condition￿and￿results￿of operations.￿If￿Zeiss￿were￿to￿terminate￿its￿relationship￿with￿us￿or￿if￿Zeiss￿were￿unable￿to￿maintain￿production￿of￿optics over￿a￿prolonged￿period,￿we￿would￿effectively￿cease￿to￿be￿able￿to￿conduct￿our￿business.￿See￿Item￿4.B.￿"Business Overview￿-￿Manufacturing,￿Logistics￿and￿Suppliers".￿In￿addition￿to￿Zeiss'￿current￿position￿as￿a￿supplier￿of￿optics,￿a number￿of￿other￿critical￿components￿such￿as￿drive￿lasers￿included￿in￿our￿CO2￿lasers￿used￿in￿our￿EUV￿systems￿are available￿from￿only￿a￿limited￿number￿of￿suppliers. Designing￿and￿manufacturing￿some￿of￿these￿components￿and￿subassemblies￿that￿we￿use￿in￿our￿manufacturing processes￿is￿an￿extremely￿complex￿process￿and￿could￿result￿in￿delays￿by￿our￿suppliers.￿A￿prolonged￿inability￿to￿obtain adequate￿deliveries￿of￿components￿or￿subassemblies,￿or￿any￿other￿circumstance￿that￿requires￿us￿to￿seek￿alternative sources￿of￿supply,￿could￿significantly￿hinder￿our￿ability￿to￿deliver￿our￿products￿in￿a￿timely￿manner,￿which￿could￿damage relationships￿with￿current￿and￿prospective￿customers￿and￿have￿a￿material￿adverse￿effect￿on￿our￿business,￿financial condition￿and￿results￿of￿operations. In￿addition,￿as￿we￿develop￿new￿technologies,￿such￿as￿EUV,￿this￿requires￿our￿suppliers￿to￿participate￿in￿the￿development process￿so￿that￿the￿components￿they￿supply￿will￿meet￿the￿requirements￿of￿our￿development￿roadmap,￿and￿this￿may require￿significant￿R&D￿spending￿on￿the￿part￿of￿our￿suppliers.￿If￿our￿suppliers￿are￿unable￿to￿maintain￿their￿development roadmap￿in￿line￿with￿ours,￿this￿may￿delay￿the￿development￿and￿introduction￿of￿new￿products.￿In￿addition,￿our￿suppliers may￿not￿have￿or￿may￿not￿be￿willing￿to￿spend￿sufficient￿financial￿resources￿to￿make￿the￿necessary￿R&D￿expenditures￿to enable￿them￿(and￿therefore￿us)￿to￿continue￿development￿roadmaps.￿In￿this￿case,￿we￿may￿be￿required￿to￿co-invest￿with our￿suppliers￿to￿continue￿the￿R&D￿required￿to￿continue￿development￿roadmaps. A High Percentage of Net Sales is Derived From a Few Customers Historically,￿we￿have￿sold￿a￿substantial￿number￿of￿lithography￿systems￿to￿a￿limited￿number￿of￿customers.￿We￿expect customer￿concentration￿to￿increase￿because￿of￿continuing￿consolidation￿in￿the￿semiconductor￿manufacturing￿industry. Consequently,￿while￿the￿identity￿of￿our￿largest￿customers￿may￿vary￿from￿year￿to￿year,￿sales￿may￿remain￿concentrated among￿relatively￿few￿customers￿in￿any￿particular￿year.￿In￿2014,￿recognized￿sales￿to￿our￿largest￿customer￿accounted￿for EUR￿1,532.1￿million,￿or￿26.2￿percent￿of￿net￿sales,￿compared￿with￿EUR￿2,058.6￿million,￿or￿39.2￿percent￿of￿net￿sales,￿in 2013.￿The￿loss￿of￿any￿significant￿customer￿or￿any￿significant￿reduction￿in￿orders￿by￿a￿significant￿customer￿may￿have￿a material￿adverse￿effect￿on￿our￿business,￿financial￿condition￿and￿results￿of￿operations. Additionally,￿as￿a￿result￿of￿our￿limited￿number￿of￿customers,￿credit￿risk￿on￿our￿receivables￿is￿concentrated.￿Our￿three largest￿customers￿(based￿on￿net￿sales)￿accounted￿for￿EUR￿643.2￿million,￿or￿49.3￿percent￿of￿accounts￿receivable￿and finance￿receivables￿on￿December￿31,￿2014,￿compared￿with￿EUR￿861.4￿million,￿or￿73.3￿percent￿on￿December￿31,￿2013. As￿a￿result,￿business￿failure￿or￿insolvency￿of￿one￿of￿our￿main￿customers￿may￿have￿a￿material￿adverse￿effect￿on￿our business,￿financial￿condition￿and￿results￿of￿operations. We Derive Most of Our Revenues From the Sale of a Relatively Small Number of Products We￿derive￿most￿of￿our￿revenues￿from￿the￿sale￿of￿a￿relatively￿small￿number￿of￿lithography￿equipment￿systems￿(136￿units￿in 2014￿and￿157￿units￿in￿2013),￿with￿an￿ASP￿per￿system￿in￿2014￿of￿EUR￿31.2￿million￿(EUR￿35.6￿million￿for￿new￿systems￿and EUR￿5.8￿million￿for￿used￿systems)￿and￿an￿ASP￿per￿system￿in￿2013￿of￿EUR￿25.4￿million￿(EUR￿27.4￿million￿for￿new￿systems and￿EUR￿6.9￿million￿for￿used￿systems).￿As￿a￿result,￿the￿timing￿of￿recognition￿of￿revenue￿for￿a￿particular￿reporting￿period from￿a￿small￿number￿of￿system￿sales￿may￿have￿a￿material￿adverse￿effect￿on￿our￿business,￿financial￿condition￿and￿results of￿operations￿in￿that￿period.￿Specifically,￿the￿failure￿to￿receive￿anticipated￿orders,￿or￿delays￿in￿shipments￿near￿the￿end￿of a￿particular￿reporting￿period,￿due,￿for￿example,￿to: • A￿downturn￿in￿the￿highly￿cyclical￿semiconductor￿industry; • Volatility￿in￿the￿Logic￿and￿Memory￿end-markets￿as￿a￿result￿of￿oversupply￿and￿undersupply; • 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￿and￿reduce￿our visibility￿on￿future￿sales￿for￿the￿reasons￿discussed￿above. ASML￿ANNUAL￿REPORT￿2014 8 The Time Window for New Product Introduction is Shorter and is Accompanied by Potential Design and Production Delays and by Significant Costs The￿development￿and￿initial￿production,￿installation￿and￿enhancement￿of￿the￿systems￿we￿produce￿is￿often￿accompanied by￿design￿and￿production￿delays￿and￿related￿costs￿of￿a￿nature￿typically￿associated￿with￿the￿introduction￿and￿transition to￿full-scale￿manufacturing￿of￿complex￿capital￿equipment.￿While￿we￿expect￿and￿plan￿for￿a￿corresponding￿learning-curve effect￿in￿our￿product￿development￿cycle,￿we￿cannot￿predict￿with￿precision￿the￿time￿and￿expense￿required￿to￿overcome these￿initial￿problems￿and￿to￿ensure￿full￿performance￿to￿specifications.￿Moreover,￿we￿anticipate￿that￿this￿learning- curve￿effect￿will￿continue￿to￿present￿increasingly￿difficult￿challenges￿with￿each￿new￿generation￿of￿our￿products￿as￿a result￿of￿increasing￿technological￿complexity.￿In￿particular,￿the￿development￿of￿an￿EUV￿volume￿production￿system￿is dependent￿on,￿and￿subject￿to￿the￿successful￿implementation￿of,￿among￿other￿things,￿technology￿related￿to￿the￿light source,￿source￿power,￿system￿availability,￿scanner￿performance￿and￿other￿technologies￿specific￿to￿EUV.￿There￿is￿a￿risk that￿we￿may￿not￿be￿able￿to￿introduce￿or￿bring￿to￿full-scale￿production￿new￿products￿as￿quickly￿as￿we￿anticipate￿in￿our product￿introduction￿plans,￿which￿could￿have￿a￿material￿adverse￿effect￿on￿our￿business,￿financial￿condition￿and￿results of￿operations. For￿the￿market￿to￿accept￿technology￿enhancements,￿our￿customers,￿in￿many￿cases,￿must￿upgrade￿their￿existing technology￿capabilities.￿Such￿upgrades￿from￿established￿technology￿may￿not￿be￿available￿to￿our￿customers￿to￿enable volume￿production￿using￿our￿new￿technology￿enhancements.￿This￿could￿result￿in￿our￿customers￿not￿purchasing,￿or pushing￿back￿or￿canceling￿orders￿for￿our￿technology￿enhancements,￿which￿could￿negatively￿impact￿our￿business, financial￿condition￿and￿results￿of￿operations. We￿are￿also￿dependent￿on￿our￿suppliers￿to￿maintain￿their￿development￿roadmaps￿to￿enable￿us￿to￿introduce￿new technologies￿on￿a￿timely￿basis,￿and￿if￿they￿are￿unable￿to￿keep￿pace￿whether￿due￿to￿technological￿factors,￿lack￿of financial￿resources￿or￿otherwise,￿this￿could￿prevent￿us￿from￿meeting￿our￿development￿roadmaps. Additionally,￿in￿connection￿with￿our￿EUV￿production,￿we￿have￿made￿advanced￿payments￿to￿suppliers￿that￿we￿may￿not recoup￿if￿we￿do￿not￿reach￿expected￿EUV￿sales￿levels￿in￿the￿future.￿We￿may￿make￿similar￿advance￿payments￿(or￿other investments￿in￿our￿suppliers)￿to￿suppliers￿in￿connection￿with￿EUV￿or￿other￿technologies￿we￿develop,￿and￿we￿may￿not recoup￿those￿advanced￿payments￿or￿other￿investments￿(e.g.￿if￿expected￿sales￿are￿not￿met).￿See￿Note￿9￿to￿our￿Financial Statements. As Lithography Technologies Become More Complex, the Success of Our R&D Programs Becomes More Uncertain and More Expensive Our￿lithography￿systems￿have￿become￿increasingly￿complex,￿and￿accordingly,￿the￿costs￿to￿develop￿new￿products￿and technologies￿have￿increased,￿and￿we￿expect￿such￿costs￿to￿continue￿to￿increase.￿This￿increase￿in￿costs￿requires￿us￿to continue￿obtaining￿sufficient￿funding￿for￿our￿R&D￿programs.￿For￿example,￿we￿obtained￿partial￿funding￿for￿our￿EUV￿R&D program￿through￿the￿CCIP.￿We￿may￿however,￿be￿unable￿to￿obtain￿this￿type￿of￿funding￿from￿customers￿in￿the￿future, in￿which￿case￿we￿may￿be￿unable￿to￿fund￿R&D￿investments￿necessary￿to￿maintain￿our￿technological￿leadership.￿The increasing￿complexity￿of￿new￿technologies,￿which￿leads￿to￿increasing￿cost￿of￿R&D￿programs￿for￿new￿technologies,￿also increases￿the￿risk￿that￿a￿new￿product￿or￿technology￿may￿not￿be￿successful Furthermore,￿as￿the￿innovation￿cycle￿becomes￿more￿complex,￿developing￿new￿technology,￿including￿EUV￿technology, requires￿increased￿R&D￿investments￿by￿our￿suppliers￿in￿order￿to￿meet￿the￿technology￿demands￿of￿us￿and￿our￿customers. Our￿suppliers￿may￿not￿have,￿or￿may￿not￿be￿willing￿to￿invest,￿the￿resources￿necessary￿to￿continue￿the￿development￿of￿the new￿technologies￿to￿the￿extent￿such￿investments￿are￿necessary,￿which￿may￿result￿in￿our￿contributing￿funds￿to￿such￿R&D programs￿or￿limiting￿the￿R&D￿investments￿that￿we￿can￿undertake. 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￿interpreted￿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. ASML￿ANNUAL￿REPORT￿2014 9 A Disruption in Our Information Technology Systems, Including Those Related to Cybersecurity, Could Adversely Affect Our Business Operations We￿rely￿on￿the￿accuracy,￿capacity￿and￿security￿of￿our￿information￿technology￿systems.￿Despite￿the￿measures￿that￿we have￿implemented,￿including￿those￿related￿to￿cybersecurity,￿our￿systems￿could￿be￿breached￿or￿damaged￿by￿computer viruses￿and￿systems￿attacks,￿natural￿or￿man-made￿incidents,￿disasters￿or￿unauthorized￿physical￿or￿electronic￿access. From￿time￿to￿time￿we￿experience￿cybersecurity￿attacks￿on￿our￿information￿technology￿systems,￿which￿are￿becoming more￿sophisticated￿and￿include￿malicious￿software,￿attempts￿to￿gain￿unauthorized￿access￿to￿data,￿and￿other￿electronic security￿breaches￿that￿could￿lead￿to￿disruptions￿in￿critical￿systems,￿unauthorized￿release￿of￿confidential￿or￿otherwise protected￿information￿(including￿confidential￿information￿relating￿to￿our￿customers￿and￿suppliers),￿and￿corruption of￿data.￿Any￿system￿failure,￿accident￿or￿security￿breach￿could￿result￿in￿business￿disruption,￿theft￿of￿our￿intellectual property,￿trade￿secrets￿(including￿our￿proprietary￿technology),￿customer￿or￿supplier￿information￿and￿unauthorized￿access to￿personnel￿information. Moreover,￿there￿can￿be￿no￿assurance￿that￿such￿measures￿we￿have￿implemented￿will￿be￿sufficient￿to￿prevent￿a￿system failure,￿accident￿or￿security￿breach￿from￿occurring.￿To￿the￿extent￿that￿our￿business￿is￿interrupted￿or￿data￿or￿proprietary technology￿is￿lost,￿destroyed￿or￿inappropriately￿used￿or￿disclosed,￿such￿disruptions￿could￿adversely￿affect￿our competitive￿position,￿relationships￿with￿customers￿and￿suppliers￿or￿our￿business,￿financial￿condition￿and￿results￿of operations.￿In￿addition,￿we￿may￿be￿required￿to￿incur￿significant￿costs￿to￿protect￿against￿or￿repair￿the￿damage￿caused￿by these￿disruptions￿or￿security￿breaches￿in￿the￿future. Defending Against Intellectual Property Claims Brought by Others Could Harm Our Business In￿the￿course￿of￿our￿business,￿we￿are￿subject￿to￿claims￿by￿third￿parties￿alleging￿that￿our￿products￿or￿processes infringe￿upon￿their￿intellectual￿property￿rights.￿If￿successful,￿such￿claims￿could￿limit￿or￿prohibit￿us￿from￿developing￿our technology￿and￿manufacturing￿our￿products,￿which￿could￿have￿a￿material￿adverse￿effect￿on￿our￿business,￿financial condition￿and￿results￿of￿operations. In￿addition,￿our￿customers￿may￿be￿subject￿to￿claims￿of￿infringement￿from￿third￿parties,￿alleging￿that￿our￿products￿used by￿such￿customers￿in￿the￿manufacture￿of￿semiconductor￿products￿and/or￿the￿processes￿relating￿to￿the￿use￿of￿our products￿infringe￿one￿or￿more￿patents￿issued￿to￿such￿third￿parties.￿If￿such￿claims￿were￿successful,￿we￿could￿be￿required to￿indemnify￿customers￿for￿some￿or￿all￿of￿any￿losses￿incurred￿or￿damages￿assessed￿against￿them￿as￿a￿result￿of￿such infringement,￿which￿could￿have￿a￿material￿adverse￿effect￿on￿our￿business,￿financial￿condition￿and￿results￿of￿operations. We￿also￿may￿incur￿substantial￿licensing￿or￿settlement￿costs,￿which￿although￿potentially￿strengthening￿or￿expanding￿our intellectual￿property￿rights￿or￿limiting￿our￿exposure￿to￿intellectual￿property￿claims￿of￿third￿parties,￿may￿have￿a￿material adverse￿effect￿on￿our￿business,￿financial￿condition￿and￿results￿of￿operations. From￿late￿2001￿through￿2004,￿ASML￿was￿a￿party￿to￿a￿series￿of￿civil￿litigations￿and￿administrative￿proceedings￿in￿which Nikon￿alleged￿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. Under￿the￿terms￿of￿the￿Nikon￿Cross-License￿Agreement,￿beginning￿on￿January￿1,￿2015,￿the￿parties￿may￿bring￿suit￿for infringement￿of￿certain￿patents￿subject￿to￿the￿agreement,￿including￿any￿infringement￿that￿occurred￿from￿January￿1, 2010￿through￿December￿31,￿2014￿(the￿"Cross-License￿Transition￿Period").￿Damages￿resulting￿from￿claims￿for￿patent infringement￿occurring￿during￿the￿Cross-License￿Transition￿Period￿are￿limited￿to￿three￿percent￿of￿the￿net￿sales￿price￿of applicable￿licensed￿products￿or￿optical￿components. Accordingly,￿from￿January￿1,￿2015,￿both￿Nikon￿and￿we￿are￿no￿longer￿prohibited￿under￿the￿agreement￿from￿bringing claims￿against￿each￿other￿on￿the￿basis￿of￿infringement￿of￿certain￿patents￿subject￿to￿the￿Nikon￿Cross-License￿Agreement. If￿Nikon￿files￿suit￿against￿us￿alleging￿patent￿infringement,￿we￿may￿incur￿substantial￿legal￿fees￿and￿expenses,￿and￿we￿may not￿prevail.￿Similarly,￿if￿we￿file￿suit￿against￿Nikon￿alleging￿patent￿infringement,￿we￿may￿incur￿substantial￿legal￿fees￿and expenses,￿and￿we￿may￿not￿prevail.￿Patent￿litigation￿is￿complex￿and￿may￿extend￿for￿a￿protracted￿period￿of￿time,￿giving rise￿to￿the￿potential￿for￿both￿substantial￿costs￿and￿diverting￿the￿attention￿of￿key￿management￿and￿technical￿personnel. Potential￿adverse￿outcomes￿from￿patent￿litigation￿may￿include,￿without￿limitation,￿payment￿of￿significant￿monetary damages,￿injunctive￿relief￿prohibiting￿the￿sale￿of￿products,￿and/or￿settlement￿involving￿significant￿costs￿to￿be￿paid￿by￿us, any￿of￿which￿may￿have￿a￿material￿adverse￿effect￿on￿our￿business,￿financial￿condition￿and/or￿results￿of￿operations.￿We￿are unable￿to￿predict￿at￿this￿time￿whether￿any￿such￿patent￿suit￿will￿in￿fact￿materialize,￿or,￿if￿so,￿what￿its￿outcome￿might￿be. ASML￿ANNUAL￿REPORT￿2014 10 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,￿19.2￿percent￿of￿our￿2014￿net￿sales￿and￿42.4￿percent￿of￿our￿2013￿net￿sales￿were￿derived￿from￿customers in￿Taiwan.￿Taiwan￿has￿a￿unique￿international￿political￿status.￿The￿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,￿certain￿of￿our￿manufacturing￿facilities￿as￿well￿as￿customers￿are￿located￿in￿South￿Korea.￿There￿are￿tensions between￿the￿Republic￿of￿South￿Korea￿and￿the￿Democratic￿People’s￿Republic￿of￿Korea￿since￿the￿division￿of￿the￿Korean Peninsula￿following￿World￿War￿II.￿The￿worsening￿of￿relations￿between￿those￿two￿countries￿or￿the￿outbreak￿of￿war￿on￿the Korean￿Peninsula￿could￿have￿a￿material￿adverse￿effect￿on￿our￿business,￿financial￿condition￿or￿results￿of￿operations. In￿addition,￿the￿installation￿and￿servicing￿of￿our￿products￿requires￿us￿to￿travel￿to￿our￿customers'￿premises.￿Natural disasters￿could￿affect￿our￿ability￿to￿do￿so.￿For￿example,￿the￿Japanese￿earthquake￿in￿2011￿resulted￿in￿the￿disruption￿of our￿installation￿and￿servicing￿of￿systems￿for￿our￿customers￿in￿Japan.￿Natural￿disasters￿in￿areas￿where￿our￿customers are￿located￿could￿prevent￿or￿disrupt￿the￿installation￿or￿servicing￿of￿our￿systems.￿In￿addition,￿we￿have￿customers￿located in￿Israel.￿If￿the￿geopolitical￿environment￿prevents￿travel￿to￿Israel,￿it￿could￿result￿in￿the￿disruption￿of￿our￿installation￿and servicing￿of￿systems￿for￿our￿customers. Lastly,￿if￿there￿is￿a￿pandemic￿outbreak￿located￿near￿any￿of￿our￿customers,￿it￿could￿result￿in￿the￿disruption￿of￿our installation￿and￿servicing￿of￿systems￿for￿our￿customers￿near￿the￿outbreak.￿Therefore,￿if￿there￿is￿a￿natural￿disaster, geopolitical￿conflict￿or￿pandemic￿that￿prevents￿our￿ability￿to￿travel￿to￿our￿customers'￿premises,￿our￿business,￿financial condition￿and￿results￿of￿operations￿may￿be￿materially￿adversely￿effected. We Are Dependent on the Continued Operation of a Limited Number of Manufacturing Facilities All￿of￿our￿manufacturing￿activities,￿including￿subassembly,￿final￿assembly￿and￿system￿testing,￿take￿place￿in￿cleanroom facilities￿in￿Veldhoven,￿the￿Netherlands,￿in￿Wilton,￿Connecticut￿and￿in￿San￿Diego,￿California,￿both￿in￿the￿United￿States, in￿Pyeongtaek,￿South-Korea￿and￿in￿Linkou,￿Taiwan.￿These￿facilities￿may￿be￿subject￿to￿disruption￿for￿a￿variety￿of￿reasons, including￿work￿stoppages,￿fire,￿energy￿shortages,￿flooding￿or￿other￿natural￿disasters.￿We￿cannot￿ensure￿that￿alternative production￿capacity￿would￿be￿available￿if￿a￿major￿disruption￿were￿to￿occur￿or￿that,￿if￿such￿capacity￿was￿available,￿it could￿be￿obtained￿on￿favorable￿terms.￿Such￿a￿disruption￿could￿have￿a￿material￿adverse￿effect￿on￿our￿business,￿financial condition￿and￿results￿of￿operations.￿In￿addition,￿some￿of￿our￿key￿suppliers,￿including￿Zeiss,￿have￿a￿limited￿number￿of manufacturing￿facilities,￿the￿disruption￿of￿which￿may￿significantly￿and￿adversely￿affect￿our￿production￿capacity. 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. ASML￿ANNUAL￿REPORT￿2014 11 In￿addition,￿a￿portion￿of￿our￿assets￿and￿liabilities￿and￿operating￿results￿are￿denominated￿in￿U.S.￿dollars,￿particularly following￿our￿acquisition￿of￿Cymer￿in￿2013,￿and￿a￿small￿portion￿of￿our￿assets,￿liabilities￿and￿operating￿results￿are denominated￿in￿currencies￿other￿than￿the￿euro￿and￿the￿U.S.￿dollar.￿Our￿Financial￿Statements￿are￿expressed￿in￿euros. Accordingly,￿our￿results￿of￿operations￿and￿assets￿and￿liabilities￿are￿exposed￿to￿fluctuations￿in￿exchange￿rates￿between the￿euro￿and￿such￿other￿currencies,￿and￿changes￿in￿currency￿exchange￿rates￿can￿result￿in￿losses￿in￿our￿Financial Statements.￿In￿general,￿our￿customers￿generally￿run￿their￿businesses￿in￿U.S.￿dollars￿and￿therefore￿a￿weakening￿of￿the U.S.￿dollar￿against￿the￿euro￿might￿impact￿the￿ability￿or￿desire￿of￿our￿customers￿to￿purchase￿our￿products. Furthermore,￿a￿strengthening￿of￿the￿euro￿particularly￿against￿the￿Japanese￿yen￿could￿further￿intensify￿price-based competition￿in￿those￿regions￿that￿account￿for￿the￿majority￿of￿our￿sales,￿resulting￿in￿lower￿prices￿and￿margins￿and￿a material￿adverse￿effect￿on￿our￿business,￿financial￿condition￿and￿results￿of￿operations. 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￿with￿the￿goal￿of￿making￿EUV technology￿more￿efficient,￿preventing￿additional￿delays￿in￿the￿introduction￿of￿EUV￿technology,￿and￿simplifying￿the￿supply chain￿of￿EUV￿modules.￿If￿we￿fail￿to￿integrate￿Cymer￿successfully,￿this￿may￿result￿in￿a￿delay￿in￿the￿development￿of￿EUV. Even￿if￿we￿are￿able￿to￿successfully￿integrate￿Cymer,￿there￿is￿no￿assurance￿that￿our￿acquisition￿of￿Cymer￿will￿result￿in successful￿or￿timely￿development￿of￿our￿EUV￿technology. In￿addition,￿in￿connection￿with￿acquisitions,￿anti-trust￿regulators￿may￿impose￿conditions￿on￿us,￿including￿requirements to￿divest￿assets￿or￿other￿conditions￿that￿could￿make￿it￿difficult￿for￿us￿to￿integrate￿the￿businesses￿that￿we￿acquire.￿For example,￿in￿connection￿with￿the￿Cymer￿acquisition￿we￿have￿agreed￿to￿maintain￿Cymer￿Light￿Sources￿as￿a￿stand-alone business. Our Business and Future Success Depend on Our Ability to Attract and Retain a Sufficient Number of Adequately Educated and Skilled Employees Our￿business￿and￿future￿success￿significantly￿depends￿upon￿our￿employees,￿including￿a￿large￿number￿of￿highly￿qualified professionals,￿as￿well￿as￿our￿ability￿to￿attract￿and￿retain￿employees.￿Competition￿for￿such￿personnel￿is￿intense,￿and￿we may￿not￿be￿able￿to￿continue￿to￿attract￿and￿retain￿such￿personnel.￿Our￿R&D￿programs￿require￿a￿significant￿number￿of qualified￿employees.￿If￿we￿are￿unable￿to￿attract￿sufficient￿numbers￿of￿qualified￿employees,￿this￿could￿affect￿our￿ability￿to conduct￿our￿research￿and￿development￿programs￿on￿a￿timely￿basis,￿which￿could￿adversely￿affect￿our￿business,￿financial condition￿and￿results￿of￿operations. In￿addition,￿if￿we￿lose￿a￿key￿employee￿to￿retirement,￿illness￿or￿otherwise,￿particularly￿a￿number￿of￿our￿highly￿qualified professionals￿and/or￿senior￿management,￿we￿may￿not￿be￿able￿to￿timely￿find￿a￿suitable￿replacement.￿Moreover,￿as￿a result￿of￿the￿uniqueness￿and￿complexity￿of￿our￿technology,￿qualified￿engineers￿capable￿of￿working￿on￿our￿systems￿are scarce￿and￿generally￿not￿available￿(e.g.￿from￿other￿industries￿or￿companies).￿As￿a￿result,￿we￿must￿educate￿and￿train￿our employees￿to￿work￿on￿our￿systems.￿Therefore,￿a￿loss￿of￿a￿number￿of￿key￿professionals￿and/or￿senior￿management￿can be￿disruptive,￿costly￿and￿time￿consuming. Furthermore,￿the￿increasing￿complexity￿of￿our￿products￿results￿in￿a￿longer￿learning-curve￿for￿new￿and￿existing employees￿and￿suppliers￿leading￿to￿an￿inability￿to￿decrease￿cycle￿times￿and￿may￿result￿in￿the￿incurrence￿of￿significant additional￿costs. Our￿suppliers￿face￿similar￿risks￿in￿attracting￿qualified￿employees,￿including￿attracting￿employees￿in￿connection￿with￿R&D programs￿that￿will￿support￿our￿R&D￿programs￿and￿technology￿developments.￿To￿the￿extent￿that￿our￿suppliers￿are￿unable to￿attract￿qualified￿employees,￿this￿could￿adversely￿affect￿our￿business,￿financial￿condition￿and￿results￿of￿operations. ASML￿ANNUAL￿REPORT￿2014 12 Hazardous Substances Are Used in the Production and Operation of Our Systems and Failure to Comply with Applicable Regulations or Failure to Implement Appropriate Practices for Customer and Employee Environment, Health and Safety could Subject us to Significant Liabilities Hazardous￿substances￿are￿used￿in￿the￿production￿and￿operation￿of￿our￿lithography￿systems,￿which￿subjects￿us￿to a￿variety￿of￿governmental￿regulations￿relating￿to￿environmental￿protection￿and￿employee￿and￿product￿health￿and safety,￿including￿the￿transport,￿use,￿storage,￿discharge,￿handling,￿emission,￿generation,￿and￿disposal￿of￿toxic￿or￿other hazardous￿substances.￿In￿addition,￿operating￿our￿machines￿(which￿use￿lasers￿and￿other￿potentially￿hazardous￿tools)￿is dangerous￿and￿can￿result￿in￿injury.￿The￿failure￿to￿comply￿with￿current￿or￿future￿regulations￿could￿result￿in￿substantial fines￿being￿imposed￿on￿us￿or￿other￿adverse￿consequences.￿Additionally,￿our￿products￿have￿become￿increasingly complex.￿The￿increasing￿complexity￿requires￿us￿to￿invest￿in￿continued￿risk￿assessments￿and￿development￿of￿appropriate preventative￿and￿protective￿measures￿for￿health￿and￿safety￿for￿both￿our￿employees￿(in￿connection￿with￿the￿production and￿installation￿of￿our￿systems)￿and￿our￿customers'￿employees￿(in￿connection￿with￿the￿operation￿of￿our￿systems). There￿can￿be￿no￿assurance￿that￿the￿health￿and￿safety￿practices￿we￿develop￿will￿be￿adequate￿to￿mitigate￿all￿health￿and safety￿risks.￿Failing￿to￿comply￿with￿applicable￿regulations￿or￿the￿failure￿of￿our￿implemented￿practices￿for￿customer￿and employee￿health￿and￿safety￿could￿subject￿us￿to￿significant￿liabilities,￿which￿could￿have￿a￿material￿adverse￿effect￿on￿our business,￿financial￿condition￿and￿results￿of￿operations. Risks￿Related￿to￿Our￿Ordinary￿Shares We May Not Declare Cash Dividends at All or in Any Particular Amounts in Any Given Year We￿aim￿to￿pay￿an￿annual￿dividend￿that￿will￿be￿stable￿or￿growing￿over￿time.￿Annually,￿the￿BoM￿will,￿upon￿prior￿approval from￿the￿Supervisory￿Board,￿submit￿a￿proposal￿to￿the￿AGM￿with￿respect￿to￿the￿amount￿of￿dividend￿to￿be￿declared￿with respect￿to￿the￿prior￿year.￿The￿dividend￿proposal￿in￿any￿given￿year￿will￿be￿subject￿to￿the￿availability￿of￿distributable￿profits or￿retained￿earnings￿and￿may￿be￿affected￿by,￿among￿other￿factors,￿the￿BoM’s￿views￿on￿our￿potential￿future￿liquidity requirements,￿including￿for￿investments￿in￿production￿capacity,￿the￿funding￿of￿our￿R&D￿programs￿and￿for￿acquisition opportunities￿that￿may￿arise￿from￿time￿to￿time;￿and￿by￿future￿changes￿in￿applicable￿income￿tax￿and￿corporate￿laws. Accordingly,￿the￿BoM￿may￿decide￿to￿propose￿not￿to￿pay￿a￿dividend￿or￿pay￿a￿lower￿dividend￿with￿respect￿to￿any￿particular year￿in￿the￿future,￿which￿could￿have￿a￿negative￿effect￿on￿our￿share￿price. Restrictions on Shareholder Rights May Dilute Voting Power Our￿Articles￿of￿Association￿provide￿that￿we￿are￿subject￿to￿the￿provisions￿of￿Dutch￿law￿applicable￿to￿large￿corporations, called￿"structuurregime".￿These￿provisions￿have￿the￿effect￿of￿concentrating￿control￿over￿certain￿corporate￿decisions￿and transactions￿in￿the￿hands￿of￿our￿Supervisory￿Board.￿As￿a￿result,￿holders￿of￿ordinary￿shares￿may￿have￿more￿difficulty￿in protecting￿their￿interests￿in￿the￿face￿of￿actions￿by￿members￿of￿our￿Supervisory￿Board￿than￿if￿we￿were￿incorporated￿in￿the United￿States￿or￿another￿jurisdiction. Our￿authorized￿share￿capital￿also￿includes￿a￿class￿of￿cumulative￿preference￿shares￿and￿we￿have￿granted￿"Stichting Preferente￿Aandelen￿ASML",￿a￿Dutch￿foundation,￿an￿option￿to￿acquire,￿at￿their￿nominal￿value￿of￿EUR￿0.09￿per￿share, such￿cumulative￿preference￿shares.￿Exercise￿of￿the￿preference￿share￿option￿would￿effectively￿dilute￿the￿voting￿power￿of our￿outstanding￿ordinary￿shares￿by￿one-half,￿which￿may￿discourage￿or￿significantly￿impede￿a￿third￿party￿from￿acquiring￿a majority￿of￿our￿voting￿shares. 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 and Their Interests May Not Coincide with the Interests of Our Other Shareholders In￿the￿CCIP,￿the￿Participating￿Customers,￿being￿Intel,￿Samsung￿and￿TSMC,￿through￿certain￿wholly-owned￿subsidiaries, acquired￿in￿aggregate￿96,566,077￿ASML￿shares,￿constituting￿22.3%￿of￿ASML's￿issued￿and￿outstanding￿shares￿as￿of December￿31,￿2014.￿In￿the￿CCIP,￿all￿of￿the￿Participating￿Customers￿agreed￿to￿a￿lock-up￿arrangement￿with￿us￿which expire￿in￿the￿first￿half￿of￿2015.￿Once￿the￿contractual￿lock￿ups￿expire,￿the￿Participating￿Customers￿will￿be￿permitted￿to sell￿their￿shares,￿subject￿to￿the￿following￿limitations:￿any￿market￿sales￿are￿limited￿in￿any￿6￿month￿period￿to￿a￿total￿of 4%,￿2.5%￿or￿1.5%￿of￿our￿disclosed￿outstanding￿shares,￿in￿the￿case￿of￿Intel,￿TSMC￿and￿Samsung,￿respectively,￿but such￿limitations￿do￿not￿apply￿to￿underwritten￿sales￿or￿block￿trades.￿The￿sale￿of￿a￿large￿number￿of￿these￿shares,￿or￿the perception￿that￿such￿sales￿may￿occur,￿could￿have￿an￿adverse￿effect￿on￿the￿trading￿price￿of￿our￿shares. ASML￿ANNUAL￿REPORT￿2014 13 Additionally,￿the￿interests￿of￿the￿Participating￿Customers￿may￿not￿always￿coincide￿with￿the￿interests￿of￿other￿holders of￿our￿shares.￿The￿shares￿acquired￿by￿the￿Participating￿Customers￿are￿held￿by￿Dutch￿foundations￿which￿have￿issued depositary￿receipts￿in￿respect￿thereof￿and￿the￿participating￿customers￿may￿only￿vote￿those￿shares￿in￿General￿Meetings in￿exceptional￿circumstances,￿including￿the￿authorization￿of￿certain￿significant￿share￿issuances￿and￿share￿repurchases, the￿approval￿of￿a￿significant￿change￿in￿the￿identity￿or￿nature￿of￿ASML￿or￿its￿business,￿any￿amendment￿to￿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. Item 4 Information on the Company A. History and Development of the Company We￿commenced￿business￿operations￿in￿1984.￿ASM￿Lithography￿Holding￿N.V.￿was￿incorporated￿in￿the￿Netherlands￿on October￿3,￿1994￿to￿serve￿as￿the￿holding￿company￿for￿our￿worldwide￿operations,￿which￿include￿operating￿subsidiaries in￿the￿Netherlands,￿the￿United￿States,￿Italy,￿France,￿Germany,￿the￿United￿Kingdom,￿Ireland,￿Belgium,￿Korea,￿Taiwan, Singapore,￿China￿(including￿Hong￿Kong),￿Japan,￿Malaysia￿and￿Israel.￿In￿2001,￿we￿changed￿our￿name￿to￿ASML￿Holding N.V.￿Our￿registered￿office￿is￿located￿at￿De￿Run￿6501,￿5504￿DR￿Veldhoven,￿the￿Netherlands,￿telephone￿number￿+31￿40 268￿3000. From￿time￿to￿time,￿we￿pursue￿acquisitions￿of￿businesses￿that￿we￿believe￿will￿complement￿or￿enhance￿our￿core lithography￿business:￿these￿have￿included￿the￿acquisitions￿of￿MaskTools￿(business￿unit￿of￿MicroUnity￿Systems Engineering￿Inc.)￿in￿1999,￿Silicon￿Valley￿Group￿Inc.￿in￿2001,￿Brion￿Technologies￿Inc.￿in￿2007,￿Wijdeven￿Motion￿Holding B.V.￿and￿Wijdeven￿Motion￿B.V.￿in￿2012￿and￿Cymer￿Inc.￿in￿2013. Capital￿Expenditures￿and￿Divestures Our￿capital￿expenditures￿(purchases￿of￿property,￿plant￿and￿equipment)￿for￿2014,￿2013￿and￿2012￿amounted￿to￿EUR￿358.3 million,￿EUR￿210.8￿million￿and￿EUR￿171.9￿million,￿respectively.￿The￿increase￿in￿capital￿expenditures￿mainly￿relate￿to￿the construction￿of￿our￿EUV￿production￿facilities￿in￿Veldhoven,￿the￿Netherlands.￿Capital￿expenditures￿are￿primarily￿financed through￿cash￿provided￿by￿operating￿activities.￿See￿item￿4.D.￿"Property,￿Plant￿and￿Equipment"￿for￿our￿expected￿capital expenditures￿in￿2015. B. Business Overview ASML￿makes￿possible￿affordable￿microelectronics￿that￿improve￿the￿quality￿of￿life.￿ASML￿invents￿and￿develops￿complex technology￿for￿high-tech￿lithography￿systems￿for￿the￿semiconductor￿industry.￿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,￿2014,￿we￿employed￿11,318￿payroll￿employees￿(2013:￿10,360)￿and￿2,754 temporary￿employees￿(2013:￿2,865),￿measured￿in￿FTEs.￿ASML￿is￿traded￿on￿Euronext￿Amsterdam￿and￿NASDAQ￿under￿the symbol￿ASML. Our￿Business￿Model For￿our￿business￿strategy,￿see￿Item￿5.￿"Operating￿and￿Financial￿Review￿and￿Prospects￿-￿Executive￿Summary￿-￿Business Strategy". Our￿business￿model￿is￿derived￿from￿our￿"value￿of￿ownership"￿concept￿which￿is￿based￿on￿the￿following￿principles: • Offering￿ongoing￿improvements￿of￿throughput,￿imaging￿and￿overlay￿by￿introducing￿advanced￿technology￿based modular￿platforms,￿advanced￿applications￿and￿Holistic￿Lithography￿solutions￿outside￿the￿traditional￿lithography business,￿each￿resulting￿in￿lower￿costs￿or￿higher￿value￿per￿product￿for￿our￿customers; • Providing￿customer￿services￿that￿ensure￿efficient￿installation￿and￿maintenance,￿superior￿support￿and￿training￿to optimize￿manufacturing￿processes￿of￿our￿customers; • Enhancing￿the￿capabilities￿of￿the￿installed￿base￿of￿our￿customers￿through￿ongoing￿field￿upgrades￿on￿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; and • Providing￿refurbishing￿services￿that￿effectively￿increase￿residual￿value￿by￿extending￿the￿life￿of￿equipment. ASML￿ANNUAL￿REPORT￿2014 14 To￿be￿able￿to￿execute￿our￿business￿model￿we￿seek￿to: • Maintain￿appropriate￿levels￿of￿R&D￿to￿offer￿the￿most￿advanced￿technology￿suitable￿for￿enhancing/following￿Moore's Law,￿as￿well￿as￿achieving￿high-throughput￿and￿low-cost￿volume￿production￿at￿the￿earliest￿possible￿date; • Be￿able￿to￿attract,￿train,￿retain￿and￿motivate￿highly￿qualified,￿skilled￿and￿educated￿employees; • • Expand￿operational￿flexibility￿in￿R&D￿and￿manufacturing￿by￿reinforcing￿strategic￿alliances￿with￿world￿class￿partners, Improve￿the￿availability￿of￿our￿installed￿system￿base;￿and including￿outsourcing￿companies. 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￿cost￿per￿function￿performed￿by￿ICs. Improvement￿in￿the￿design￿and￿manufacture￿of￿ICs￿with￿higher￿circuit￿or￿"packing"￿densities￿has￿resulted￿in￿smaller￿and lower￿cost￿ICs,￿capable￿of￿performing￿a￿larger￿number￿of￿functions￿at￿higher￿throughput￿levels￿and￿with￿reduced￿power consumption.￿We￿believe￿that￿these￿long-term￿trends￿will￿continue￿for￿the￿foreseeable￿future￿and￿will￿be￿accompanied by￿a￿continuing￿demand,￿subject￿to￿ongoing￿cyclical￿variation￿and￿semiconductor￿industry￿volatility,￿for￿production equipment￿that￿can￿accurately￿produce￿advanced￿ICs￿in￿high￿volumes￿at￿the￿lowest￿possible￿cost. See￿item￿4.B.￿"Business￿Overview￿-￿Product￿Development￿and￿Products". Most￿of￿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. See￿Item￿4.B.￿"Business￿Overview￿-￿Product￿Development￿and￿Products". Customers 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￿Logic￿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￿the￿7￿nm￿node￿requirements,￿for￿which￿they￿will￿require￿state-of-the-art￿lithography￿equipment. Product￿Development￿and￿Products General We￿develop￿Lithography￿systems￿and￿related￿products￿for￿the￿semiconductor￿industry.￿Lithography￿systems￿are￿used to￿print￿complex￿circuit￿patterns￿onto￿wafers.￿Wafers￿are￿the￿primary￿raw￿material￿for￿ICs￿and￿this￿printing￿is￿one￿of￿the most￿critical￿and￿expensive￿steps￿in￿wafer￿fabrication.￿Lithography￿systems￿are￿therefore￿a￿significant￿focus￿of￿the￿IC industry’s￿demand￿for￿cost-efficient￿enhancements￿to￿production￿technology.￿Our￿product￿development￿strategy￿focuses on￿the￿development￿of￿product￿families￿based￿on￿a￿modular￿and￿upgradeable￿design. Systems 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. ASML￿ANNUAL￿REPORT￿2014 15 In￿2000￿we￿introduced￿the￿TWINSCAN￿platform,￿which￿is￿the￿basis￿for￿our￿current￿and￿next-generation￿systems,￿which are￿expected￿to￿be￿capable￿of￿extending￿shrink￿technology￿down￿to￿38￿nm￿and￿beyond￿with￿MPT￿techniques.￿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. TWINSCAN￿systems￿also￿include￿immersion￿litography￿systems￿(TWINSCAN￿immersion￿systems).￿With￿a￿TWINSCAN immersion￿system,￿wafer￿measurement,￿including￿focus￿and￿alignment,￿is￿completed￿in￿the￿"dry"￿stage,￿while￿imaging process,￿using￿water￿applied￿between￿the￿wafer￿and￿the￿lens,￿is￿completed￿in￿the￿"wet"￿stage.￿This￿immersion technology￿places￿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;￿this￿technology￿has￿been￿adopted￿by all￿of￿our￿leading￿customers.￿We￿are￿one￿of￿the￿world’s￿leaders￿(measured￿in￿revenues)￿in￿immersion￿technology￿and￿we were￿the￿world’s￿first￿producer￿of￿dual-stage￿design￿TWINSCAN￿systems. We￿have￿developed￿different￿immersion￿systems￿for￿different￿customer￿needs.￿The￿TWINSCAN￿NXT￿platform￿enables next￿generations￿of￿semiconductors￿through￿the￿so-called￿MPT￿which￿requires￿two￿or￿more￿exposures￿per￿layer￿on￿a chip,￿enabling￿precise￿imaging￿patterns￿and￿lines￿by￿using￿our￿TWINSCAN￿NXT￿planar￿wafer￿stage￿and￿breakthrough grid￿metrology.￿During￿2014,￿our￿TWINSCAN￿immersion￿systems￿set￿new￿productivity￿records:￿two￿systems￿each￿imaged more￿than￿1.5￿million￿wafers￿in￿a￿12-month￿period. In￿2014,￿we￿successfully￿ramped￿our￿newest￿immersion￿system,￿the￿NXT:1970Ci￿and￿shipped￿51￿systems,￿which￿offer overlay￿below￿2￿nm,￿focus￿control￿of￿less￿than￿20￿nm￿and￿throughput￿of￿more￿than￿250￿wafers￿per￿hour.￿Approximately 260￿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￿system.￿These systems￿are￿equipped￿with￿EUV￿light￿source￿technology,￿based￿upon￿a￿tin￿plasma,￿producing￿light￿at￿a￿wavelength of￿13.5￿nm￿and￿provide￿imaging￿at￿a￿resolution￿of￿27￿nm.￿The￿NXE￿system￿has￿an￿innovative￿optical￿technology, utilizing￿reflective￿mirrors￿rather￿than￿the￿traditional￿refractive￿optics,￿with￿a￿NA￿of￿0.25.￿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.￿NXE￿systems￿are￿targeted￿for￿production￿of￿ICs￿down￿to minimum￿features￿of￿13￿nm￿with￿single￿patterning,￿addressing￿current￿Memory￿roadmaps￿and￿logic￿processes￿down￿to the￿7￿nm￿node￿with￿extension￿beyond￿this￿possible,￿using￿MPT. The￿success￿of￿EUV￿is￿dependent￿on,￿and￿subject￿to,￿the￿successful￿implementation￿of,￿among￿other￿things,￿technology related￿to￿the￿light￿source,￿source￿power,￿system￿availability,￿scanner￿performance￿and￿other￿technologies￿specific￿to EUV,￿by￿us￿and￿our￿suppliers.￿We￿acquired￿Cymer￿on￿May￿30,￿2013,￿with￿the￿goal￿of￿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,￿and￿accelerate￿the￿introduction￿of,￿EUV technology. In￿2013,￿we￿shipped￿our￿first￿NXE:3300B￿systems.￿The￿NXE:3300B￿system￿is￿the￿successor￿of￿the￿NXE:3100￿system￿and is￿our￿third-generation￿EUV-system.￿A￿NXE:3300B￿system￿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.￿Compared￿to￿the￿NXE:3100￿system,￿the￿NXE:3300B￿system has￿among￿other￿things￿a￿better￿NA￿as￿well￿as￿an￿improved￿light￿source.￿These￿enhancements￿of￿the￿NXE:3300B￿enable the￿improved￿performance,￿in￿the￿same￿manner￿that￿upgrades￿to￿the￿NXT￿platform￿improve￿throughput. Our￿EUV￿program￿showed￿substantial￿progress￿in￿2014.￿All￿installed￿NXE:3300B￿systems￿have￿been￿upgraded￿to￿a￿wafer processing￿capability￿of￿more￿than￿500￿wafers￿per￿day.￿As￿of￿December￿31,￿2014,￿a￿total￿of￿7￿NXE:3300B￿EUV￿systems were￿in￿the￿field.￿We￿achieved￿the￿500-wafer-per-day￿target￿that￿our￿customers￿have￿set￿for￿end￿2014￿and￿demonstrated stable￿source￿operation￿at￿80￿Watts￿running￿continuously￿for￿24￿hours￿at￿a￿customer￿site.￿We￿remain￿on￿target￿to￿deliver systems￿with￿a￿productivity￿of￿1500￿wafers￿per￿day￿in￿2016. TSMC￿ordered￿two￿NXE:3350B￿EUV￿systems￿for￿delivery￿in￿2015￿with￿the￿intention￿to￿use￿those￿systems￿in￿production. In￿addition,￿two￿NXE:3300B￿systems￿already￿delivered￿to￿TSMC￿will￿be￿upgraded￿to￿NXE:3350B￿performance. ASML￿ANNUAL￿REPORT￿2014 16 ASML￿Lithography￿System￿Product￿Portfolio: System PAS 5500 SYSTEMS1 PAS￿5500/450 PAS￿5500/750 PAS￿5500/850 PAS￿5500/1150 TWINSCAN DUV SYSTEMS2 TWINSCAN￿XT:400 TWINSCAN￿XT:450 TWINSCAN￿XT:800 TWINSCAN￿XT:860 TWINSCAN￿XT:1000 TWINSCAN￿XT:1450 TWINSCAN￿XT:1700￿immersion TWINSCAN￿XT:19X0￿immersion TWINSCAN￿NXT:19X0￿immersion TWINSCAN EUV SYSTEMS NXE:3100 NXE:3300 NXE:3350 NXE:3400 Resolution Wavelength Light source Numerical aperture 220￿nm 130￿nm 110￿nm 90￿nm 350￿nm 220￿nm 120￿nm 110￿nm 80￿nm 65￿nm 45￿nm 38￿nm 38￿nm 27￿nm 22￿nm 16￿nm 13￿nm 365￿nm 248￿nm 248￿nm 193￿nm 365￿nm 365￿nm 248￿nm 248￿nm 248￿nm 193￿nm 193￿nm 193￿nm 193￿nm 13.5￿nm 13.5￿nm 13.5￿nm 13.5￿nm i-line KrF KrF ArF i-line i-line KrF KrF KrF ArF ArF ArF ArF EUV EUV 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 0.55-0.80 0.50-0.93 0.65-0.93 0.75-1.20 0.85-1.35 0.85-1.35 0.25 0.33 0.33 0.33 1 2 This￿table￿does￿not￿include￿older￿(including￿used)￿products￿sold￿on￿the￿PAS￿2500,￿PAS￿5000￿and￿PAS￿5500￿systems￿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,￿NXT:19X0￿can￿either represent￿NXT:1950,￿NXT:1960￿or￿NXT:1970. System related products We￿continuously￿develop￿and￿sell￿a￿range￿of￿product￿options￿and￿enhancements￿designed￿to￿increase￿throughput￿and improve￿imaging￿and￿overlay￿to￿optimize￿value￿of￿ownership￿over￿the￿entire￿life￿of￿our￿systems. 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￿additional￿significant￿revenue-generating and￿cost-saving￿opportunities￿to￿our￿customers. Our￿computational￿lithography￿products￿capture￿detailed￿knowledge￿of￿scanner￿design￿and￿real￿performance,￿which enables￿our￿systems￿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.￿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.￿ To￿provide￿a￿total￿solution￿for￿scanner￿control￿we￿offer￿our￿own￿advanced￿wafer￿metrology￿system￿("YieldStar"). This￿wafer￿metrology￿system￿leverages￿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.￿YieldStar￿uses￿scatterometry￿technology for￿overlay￿and￿CD￿measurements.￿YieldStar￿scatterometry￿provides￿high￿overlay￿and￿low￿cost￿wafer￿metrology￿data￿that can￿be￿used￿for￿further￿improving￿the￿performance￿of￿our￿systems. 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￿2014,￿we￿introduced￿the￿fourth￿generation￿YieldStar￿Metrology￿system,￿the￿T250D,￿available￿in both￿stand-alone￿and￿integrated￿version.￿The￿YieldStar￿250D￿contains￿a￿source￿with￿wavelengths￿up￿to￿765nm￿and￿has sensor￿improvements￿whereas￿the￿YieldStar￿200￿series￿enable￿more￿precise￿overlay￿measurement￿of￿thicker￿stacks￿with increased￿sampling￿as￿well￿as￿in-line￿focus￿and￿CD.￿The￿ramp￿in￿shipments￿of￿our￿YieldStar￿metrology￿tool￿continued, with￿a￿total￿of￿199￿systems￿shipped￿to￿all￿major￿customers￿since￿introduction. ASML￿ANNUAL￿REPORT￿2014 17 Furthermore,￿as￿a￿consequence￿of￿the￿acquisition￿of￿Cymer,￿we￿offer￿our￿customers￿OnPulse￿contracts￿by￿providing on-site￿support￿from￿certified￿service￿engineers￿and￿continuous￿real-time￿light￿source￿monitoring.￿These￿contracts￿to enhance￿light￿source￿productivity,￿offer￿our￿customers￿predictable￿light￿source￿running￿costs￿that￿scale￿directly￿with pulse￿utilization. Sales￿and￿Customer￿Support We￿support￿our￿customers￿with￿a￿broad￿range￿of￿applications,￿services,￿and￿technical￿support￿products￿to￿maintain￿and maximize￿the￿performance￿of￿our￿systems￿at￿customer￿sites.￿We￿also￿offer￿refurbished￿systems￿and￿system￿upgrades. We￿market￿and￿sell￿our￿products￿through￿our￿direct￿sales￿force. Our￿account￿managers,￿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,￿by￿means￿of: • Featuring￿customer￿support￿and￿training,￿logistics,￿refurbishment,￿technology￿and￿application￿development￿and￿also producing￿all￿YieldStar￿systems; • Enabling￿sourcing￿of￿equipment￿modules,￿components￿and￿services￿in￿the￿region; • Perform￿as￿a￿training￿center￿to￿develop￿worldwide￿talent￿for￿our￿workforce￿and￿customers. Revenue￿per￿Geographic￿Market￿ In￿2014,￿we￿derived￿64.3￿percent￿of￿net￿sales￿from￿Asia,￿32.3￿percent￿from￿the￿United￿States￿and￿3.4￿percent￿from Europe￿(2013:￿Asia:￿82.5￿percent;￿United￿States:￿13.7￿percent￿and￿Europe:￿3.8￿percent;￿2012:￿Asia:￿70.7￿percent;￿United States:￿23.9￿percent￿and￿Europe:￿5.4￿percent).￿See￿Note￿21￿to￿our￿Financial￿Statements. Manufacturing,￿Logistics￿and￿Suppliers￿ The￿execution￿of￿our￿business￿model￿is￿supported￿by￿outsourcing￿production￿of￿a￿significant￿part￿of￿components￿and modules￿that￿comprise￿our￿lithography￿systems,￿working￿in￿partnership￿with￿suppliers￿from￿all￿over￿the￿world.￿Our manufacturing￿activities￿comprise￿subassembly￿and￿testing￿of￿certain￿modules￿and￿the￿final￿assembly￿and￿fine￿tuning/ testing￿of￿a￿complete￿system￿from￿components￿and￿modules￿that￿are￿manufactured￿to￿our￿specifications￿by￿third￿parties and￿by￿us.￿All￿of￿our￿manufacturing￿activities￿are￿performed￿in￿cleanroom￿facilities￿in￿Veldhoven,￿the￿Netherlands,￿in Wilton,￿Connecticut￿and￿in￿San￿Diego,￿California,￿both￿the￿United￿States,￿in￿Pyeongtaek,￿South￿Korea￿and￿in￿Linkou, Taiwan.￿We￿procure￿system￿components￿and￿subassemblies￿from￿a￿single￿supplier￿or￿a￿limited￿group￿of￿suppliers in￿order￿to￿ensure￿overall￿quality￿and￿on-time￿delivery.￿We￿jointly￿operate￿a￿strategy￿with￿suppliers￿known￿as￿"value sourcing",￿which￿is￿based￿on￿competitive￿performance.￿The￿essence￿of￿value￿sourcing￿is￿to￿maintain￿a￿supply￿base￿that is￿world￿class￿and￿globally￿competitive￿and￿present. Value￿sourcing￿is￿intended￿to￿align￿the￿performance￿of￿our￿suppliers￿with￿our￿requirements￿on￿quality,￿logistics, technology￿and￿total￿costs. Our￿value￿sourcing￿strategy￿is￿based￿on￿the￿following￿strategic￿principles: •￿￿￿￿￿￿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. Zeiss￿is￿our￿single￿supplier￿of￿lenses,￿mirrors,￿collectors￿and￿other￿optical￿components.￿In￿2014,￿27.4￿percent￿of￿our aggregate￿cost￿of￿sales￿were￿purchased￿from￿Zeiss￿(2013:￿27.4￿percent;￿2012:￿28.0￿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￿included￿in￿our￿systems and￿of￿collectors￿included￿in￿our￿EUV￿sources.￿The￿expansion￿of￿this￿production￿capacity￿may￿increase￿their￿lead-time. From￿time￿to￿time,￿the￿number￿of￿systems￿we￿are￿able￿to￿produce￿may￿be￿limited￿by￿the￿capacity￿of￿Zeiss.￿In￿2014￿our production￿was￿not￿limited￿by￿the￿deliveries￿from￿Zeiss. Our￿relationship￿with￿Zeiss￿is￿structured￿as￿a￿strategic￿alliance￿pursuant￿to￿several￿agreements￿executed￿in￿1997￿and subsequent￿years.￿These￿agreements￿define￿a￿framework￿in￿all￿areas￿of￿our￿business￿relationship.￿The￿partnership between￿ASML￿and￿Zeiss￿is￿focused￿on￿continuous￿improvement￿of￿operational￿excellence. Pursuant￿to￿these￿agreements,￿ASML￿and￿Zeiss￿have￿agreed￿to￿continue￿their￿strategic￿alliance￿until￿either￿party provides￿at￿least￿three￿years￿notice￿of￿its￿intent￿to￿terminate. ASML￿ANNUAL￿REPORT￿2014 18 In￿addition￿to￿Zeiss,￿we￿also￿rely￿on￿other￿outside￿vendors￿for￿the￿components￿and￿subassemblies￿used￿in￿our￿systems and￿sources,￿each￿of￿which￿is￿obtained￿from￿a￿limited￿number￿of￿suppliers￿many￿of￿whom￿have￿almost￿exclusive competences￿in￿their￿respective￿industries. See￿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￿throughout￿all￿departments￿and￿facilities in￿Veldhoven,￿the￿Netherlands.￿Our￿fixed￿contracted￿labor￿are￿compensated￿under￿a￿partly￿variable￿salary￿structure through￿ASML’s￿profit￿sharing￿plan.￿In￿facilities￿outside￿the￿Netherlands,￿the￿applicable￿local￿labor￿laws￿and￿regulations provide￿sufficient￿flexibility.￿This￿reinforces￿our￿ability￿to￿adapt￿more￿quickly￿to￿the￿semiconductor￿market￿cycles, including￿support￿for￿potential￿24-hour,￿seven￿days-a-week￿production￿activities.￿By￿maximizing￿the￿flexibility￿of￿our technically￿skilled￿workforce,￿we￿can￿shorten￿lead-times:￿a￿key￿driver￿of￿added￿value￿to￿our￿customers. Research￿and￿Development￿ The￿semiconductor￿manufacturing￿industry￿is￿subject￿to￿rapid￿technological￿changes￿driven￿by￿Moore's￿Law.￿We￿believe that￿continued￿and￿timely￿development￿and￿introduction￿of￿new￿and￿enhanced￿products￿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,￿and￿San￿Diego, California,￿both￿in￿the￿United￿States,￿in￿Pyeongtaek,￿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. On￿July￿9,￿2012￿we￿announced￿our￿CCIP￿to￿accelerate￿our￿development￿of￿EUV￿technology￿and￿450mm￿silicon￿wafer technology.￿This￿program￿created￿risk￿sharing￿with￿some￿of￿our￿largest￿customers￿while￿the￿results￿of￿our￿development programs￿will￿be￿available￿to￿every￿semiconductor￿manufacturer￿with￿no￿restrictions. See￿Item￿10.C.￿"Material￿Contracts￿-￿Customer￿Co-Investment￿Program",￿Item￿5.A.￿"Operating￿Results￿-￿Results￿of Operations￿2014￿Compared￿to￿2013￿-￿Other￿Income"￿and￿Note￿28￿to￿our￿Financial￿Statements. Furthermore￿during￿2013,￿together￿with￿imec￿(an￿independent￿research￿partner),￿we￿established￿an￿advanced￿patterning center￿located￿at￿the￿imec￿campus￿in￿Leuven,￿Belgium.￿Together￿we￿plan￿to￿address￿upcoming￿scaling￿challenges￿due￿to the￿chip￿industry's￿move￿towards￿single￿digit￿nanometer￿dimensions. As￿of￿2014,￿in￿order￿to￿conduct￿fundamental￿and￿applied￿research￿in￿areas￿that￿are￿key￿to￿unlocking￿innovation￿in￿the global￿semiconductor￿industry,￿we￿established￿an￿Institute￿for￿Nanolithography￿in￿Amsterdam,￿the￿Netherlands,￿together with￿FOM/NWO￿and￿UvA/VU. See￿Item￿4.B.￿"Business￿Overview￿-￿Product￿Development￿and￿Products"￿and￿Item￿5.A.￿"Operating￿Results￿-￿Results￿of Operations￿2014￿compared￿to￿2013￿-￿Research￿and￿Development￿costs". 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.￿Under￿the￿Nikon￿Cross-License￿Agreement,￿(i)￿ASML￿granted Nikon￿a￿non-exclusive￿license￿to￿manufacture￿and￿sell￿lithography￿equipment￿under￿patents￿owned￿or￿otherwise sublicensable￿by￿ASML￿and￿(ii)￿Nikon￿granted￿ASML￿a￿non-exclusive￿license￿to￿manufacture￿and￿sell￿lithography equipment￿under￿patents￿owned￿or￿otherwise￿sublicensable￿by￿Nikon.￿These￿license￿grants￿cover￿patents￿having￿an effective￿application￿date￿before￿December￿31,￿2002￿("Class￿A￿Patents"),￿as￿well￿as￿patents￿with￿an￿effective￿application date￿after￿December￿31,￿2002￿that￿were￿issued￿worldwide￿before￿the￿end￿of￿2009￿("Class￿B￿Patents"),￿but￿exclude certain￿specified￿patents￿set￿forth￿in￿the￿Nikon￿Cross-License￿Agreement.￿The￿license￿period￿is￿perpetual￿for￿Class￿A Patents,￿and￿the￿licenses￿for￿Class￿B￿Patents￿terminated￿at￿the￿end￿of￿2009. ASML￿ANNUAL￿REPORT￿2014 19 At￿any￿time￿until￿June￿30,￿2015,￿each￿of￿ASML￿and￿Nikon￿has￿a￿right￿to￿designate￿up￿to￿five￿Class￿B￿patents￿(or￿patents related￿to￿lithography￿issued￿from￿2010￿to￿2015)￿of￿the￿other￿party￿as￿Class￿A￿patents.￿Any￿patents￿acquired￿after￿the date￿of￿the￿Nikon￿Cross-License￿Agreement￿are￿deemed￿Class￿B￿Patents.￿In￿addition,￿pursuant￿to￿the￿terms￿of￿the￿Nikon Cross-License￿Agreement,￿the￿parties￿have￿agreed,￿from￿January￿1,￿2010￿through￿December￿31,￿2014,￿not￿to￿bring suit￿for￿claims￿related￿to￿infringement￿of￿patents￿issued￿and￿not￿perpetually￿licensed,￿including￿the￿Class￿B￿Patents. Under￿the￿terms￿of￿the￿Nikon￿Cross-License￿Agreement,￿beginning￿on￿January￿1,￿2015,￿the￿parties￿may￿bring￿suit￿for infringement￿of￿certain￿patents￿subject￿to￿the￿agreement,￿including￿any￿infringement￿that￿occurred￿from￿January￿1, 2010￿through￿December￿31,￿2014.￿Damages￿resulting￿from￿claims￿for￿patent￿infringement￿occurring￿during￿the￿Cross- License￿Transition￿Period￿are￿limited￿to￿three￿percent￿of￿the￿net￿sales￿price￿of￿applicable￿licensed￿products￿or￿optical components. Accordingly,￿from￿January￿1,￿2015,￿both￿Nikon￿and￿we￿are￿no￿longer￿prohibited￿under￿the￿agreement￿from￿bringing claims￿against￿each￿other￿on￿the￿basis￿of￿infringement￿of￿certain￿patents￿subject￿to￿the￿Nikon￿Cross-License￿Agreement. If￿Nikon￿files￿suit￿against￿us￿alleging￿patent￿infringement,￿we￿may￿incur￿substantial￿legal￿fees￿and￿expenses,￿and￿we￿may not￿prevail.￿Similarly,￿if￿we￿file￿suit￿against￿Nikon￿alleging￿patent￿infringement,￿we￿may￿incur￿substantial￿legal￿fees￿and expenses,￿and￿we￿may￿not￿prevail.￿Patent￿litigation￿is￿complex￿and￿may￿extend￿for￿a￿protracted￿period￿of￿time,￿giving rise￿to￿the￿potential￿for￿both￿substantial￿costs￿and￿diverting￿the￿attention￿of￿key￿management￿and￿technical￿personnel. Potential￿adverse￿outcomes￿from￿patent￿litigation￿may￿include,￿without￿limitation,￿payment￿of￿significant￿monetary damages,￿injunctive￿relief￿prohibiting￿the￿sale￿of￿products,￿and/or￿settlement￿involving￿significant￿costs￿to￿be￿paid￿by￿us, any￿of￿which￿may￿have￿a￿material￿adverse￿effect￿on￿our￿business,￿financial￿condition￿and/or￿results￿of￿operations.￿We￿are unable￿to￿predict￿at￿this￿time￿whether￿any￿such￿patent￿suit￿will￿in￿fact￿materialize,￿or,￿if￿so,￿what￿its￿outcome￿might￿be. In￿connection￿with￿entering￿into￿the￿Nikon￿Cross-License￿Agreement,￿ASML￿entered￿into￿a￿sublicense￿agreement￿with Zeiss￿SMT￿AG,￿effective￿November￿12,￿2004,￿pursuant￿to￿which￿Zeiss￿granted￿ASML￿a￿non-exclusive￿license￿of￿all￿of￿the rights￿it￿received￿from￿Nikon￿under￿the￿Nikon-Zeiss￿Patent￿Cross-License￿Agreement￿between￿Nikon￿and￿Zeiss￿SMT￿AG effective￿November￿12,￿2004. In￿2007,￿ASML￿and￿Zeiss￿signed￿an￿agreement￿with￿Canon￿for￿the￿global￿cross-license￿of￿patents￿in￿their￿respective fields￿of￿semiconductor￿lithography￿and￿optical￿components,￿used￿to￿manufacture￿ICs.￿The￿Canon￿Cross-License Agreement￿expires￿on￿December￿31,￿2016. See￿Item￿3.D.￿"Risk￿Factors￿-￿Risks￿Related￿to￿ASML￿-￿Failure￿to￿Adequately￿Protect￿the￿Intellectual￿Property￿Rights Upon￿Which￿We￿Depend￿Could￿Harm￿Our￿Business"￿and￿"Risk￿Factors￿-￿Risks￿Related￿to￿ASML￿-￿Defending￿Against Intellectual￿Property￿Claims￿Brought￿by￿Others￿Could￿Harm￿Our￿Business". Competition The￿semiconductor￿equipment￿industry￿is￿highly￿competitive.￿The￿principal￿elements￿of￿competition￿in￿our￿market￿are: • The￿technical￿performance￿characteristics￿of￿a￿lithography￿system; • The￿value￿of￿ownership￿of￿lithography￿systems￿based￿on￿purchase￿price,￿maintenance￿costs,￿throughput,￿and customer￿service￿and￿support￿costs; • The￿exchange￿rate￿of￿the￿euro￿particularly￿against￿the￿Japanese￿yen; • 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￿aggressive￿prosecution￿of￿patents.￿Our competitiveness￿depends￿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￿safety,￿environmental￿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.￿The￿impact￿of￿these￿changes￿in￿regulation￿could￿adversely￿affect￿our￿business,￿financial￿condition and￿our￿results￿of￿operations￿even￿where￿the￿specific￿regulations￿do￿not￿directly￿apply￿to￿us￿or￿to￿our￿products. ASML￿ANNUAL￿REPORT￿2014 20 C. Organizational Structure ASML￿Holding￿N.V.￿is￿a￿holding￿company￿that￿operates￿through￿its￿subsidiaries.￿Our￿major￿operating￿subsidiaries,￿each of￿which￿is￿ultimately￿wholly-owned￿by￿ASML￿Holding￿N.V.,￿are￿ASML￿Netherlands￿B.V.,￿ASML￿Systems￿B.V.,￿ASML￿Hong Kong￿Ltd.￿and￿ASML￿US￿Inc. See￿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,￿and￿San￿Diego,￿California,￿both￿in￿the￿United States,￿in￿Pyeongtaek,￿South-Korea￿and￿in￿Linkou,￿Taiwan.￿The￿book￿value￿of￿land,￿buildings￿and￿constructions￿owned amount￿to￿EUR￿973.4￿million￿as￿of￿December￿31,￿2014￿compared￿with￿EUR￿797.5￿million￿as￿of￿December￿31,￿2013.￿See Note￿12￿to￿our￿Financial￿Statements. Subject￿to￿market￿conditions,￿we￿expect￿that￿our￿capital￿expenditures￿(purchases￿of￿property,￿plant￿and￿equipment)￿in 2015￿will￿be￿approximately￿EUR￿410￿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.￿We￿expect￿to￿finance these￿capital￿expenditures￿through￿cash￿generated￿by￿operations￿and￿existing￿cash￿and￿cash￿equivalents. Facilities￿in￿Europe Our￿headquarters,￿main￿manufacturing￿facilities,￿applications￿laboratory￿and￿R&D￿facilities￿are￿located￿at￿a￿single￿site in￿Veldhoven,￿the￿Netherlands.￿This￿state-of-the-art￿facility￿includes￿65￿thousand￿square￿meter￿of￿office￿space￿and￿42 thousand￿square￿meters￿of￿cleanroom￿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 R&D￿and￿manufacturing￿operations￿in￿a￿28￿thousand￿square￿meter￿facility￿in￿Wilton,￿Connecticut,￿and￿a￿5￿thousand square￿meter￿facility￿in￿Santa￿Clara,￿California.￿Furthermore,￿our￿facilities￿in￿San￿Diego￿include￿50￿thousand￿square meters￿of￿buildings￿used￿for￿cleanroom,￿manufacturing,￿R&D￿activities,￿warehousing￿and￿office￿space. 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￿a￿cleanroom￿(approximately￿3￿thousand￿square￿meters)￿and office￿space￿(approximately￿6￿thousand￿square￿meters).￿Our￿facility￿in￿Korea￿comprises￿of￿a￿cleanroom￿(approximately 700￿square￿meters)￿and￿office￿space￿(approximately￿6￿thousand￿square￿meters).￿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￿Pyeongtaek,￿South￿Korea,￿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￿included￿below,￿we￿provide￿an￿update￿on￿the￿Semiconductor￿Equipment￿Industry,￿followed by￿a￿discussion￿of￿our￿Business￿Strategy,￿Profitability,￿ASML￿Operations￿Update￿on￿Key￿Performance￿Indicators￿and Backlog.￿All￿information￿disclosed￿in￿this￿item￿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". ASML￿ANNUAL￿REPORT￿2014 21 Executive Summary Introduction ASML￿makes￿possible￿affordable￿microelectronics￿that￿improve￿the￿quality￿of￿life.￿ASML￿invents￿and￿develops￿complex technology￿for￿high-tech￿lithography￿systems￿for￿the￿semiconductor￿industry.￿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,￿2014,￿we￿employed￿11,318￿payroll￿employees￿(2013:￿10,360)￿and￿2,754 temporary￿employees￿(2013:￿2,865),￿measured￿in￿FTEs.￿ASML￿is￿traded￿on￿Euronext￿Amsterdam￿and￿NASDAQ￿under￿the symbol￿ASML. Semiconductor￿Equipment￿Industry The￿chip-making￿business￿is￿focused￿on￿"shrink",￿or￿reducing￿the￿size￿of￿chip￿designs,￿as￿a￿driver￿of￿cost￿reduction￿and increased￿functionality.￿The￿worldwide￿electronics￿and￿computer￿industries￿have￿experienced￿significant￿growth￿since the￿commercialization￿of￿ICs￿in￿the￿1960s,￿largely￿due￿to￿the￿continuous￿reduction￿of￿cost￿per￿function￿performed￿by￿ICs. Improvement￿in￿the￿design￿and￿manufacture￿of￿ICs￿with￿higher￿circuit￿or￿"packing"￿densities￿has￿resulted￿in￿smaller￿and lower￿cost￿ICs,￿capable￿of￿performing￿a￿larger￿number￿of￿functions￿at￿higher￿throughput￿levels￿and￿with￿reduced￿power consumption.￿We￿believe￿that￿these￿long-term￿trends￿will￿continue￿for￿the￿foreseeable￿future￿and￿will￿be￿accompanied by￿a￿continuing￿demand,￿subject￿to￿ongoing￿cyclical￿variation￿and￿semiconductor￿industry￿volatility,￿for￿production equipment￿that￿can￿accurately￿produce￿advanced￿ICs￿in￿high￿volumes￿at￿the￿lowest￿possible￿cost. See￿item￿4.B.￿"Business￿Overview￿-￿Product￿Development￿and￿Products". The￿costs￿to￿develop￿new￿lithography￿equipment￿are￿high.￿Accordingly,￿the￿lithography￿equipment￿industry￿is characterized￿by￿the￿presence￿of￿only￿a￿few￿suppliers:￿ASML,￿Nikon,￿and￿Canon.￿In￿2014,￿ASML￿was￿one￿of￿the￿world’s leading￿providers￿of￿lithography￿equipment￿(measured￿in￿revenues￿based￿upon￿Gartner￿Dataquest￿fourth￿quarter￿2014 report). Total￿lithography￿equipment￿shipped￿by￿the￿industry￿as￿a￿whole￿in￿the￿six￿years￿ended￿December￿31,￿2014,￿is￿set￿out￿in the￿following￿table: Year ended December 31 2014 1 2013 2 2012 2 2011 2 2010 2 2009 2 Total￿units￿shipped Total￿value￿(in￿millions￿USD) 232 6,854 243 6,085 252 6,058 376 8,225 304 6,416 128 2,485 1 2 Historical￿data￿and￿full-year￿2014￿estimates￿as￿reported￿by￿Gartner￿Dataquest￿in￿its￿fourth￿quarter￿2014￿report. Historical￿data￿are￿based￿on￿figures￿as￿included￿in￿the￿Gartner￿Dataquest￿fourth￿quarter￿2014￿report.￿Where￿appropriate,￿the￿estimates￿as￿included￿in the￿Gartner￿Dataquest￿reports￿in￿prior￿years￿have￿been￿updated￿based￿on￿this￿fourth￿quarter￿2014￿report. For￿the￿year￿2014,￿the￿latest￿indications￿of￿independent￿market￿analysts￿show￿a￿decrease￿in￿total￿lithography￿equipment shipped￿to￿the￿market￿of￿4.5￿percent￿in￿unit￿volume￿and￿an￿increase￿of￿12.6￿percent￿in￿value.￿In￿2014￿ASML￿sold￿136 systems,￿compared￿to￿157￿in￿2013.￿However,￿our￿net￿system￿sales￿also￿increased￿6.3￿percent￿(mainly￿NXE:3300B)￿in 2014￿compared￿to￿2013. Business￿Strategy General The￿long-term￿growth￿of￿the￿semiconductor￿industry￿is￿based￿on￿the￿principle￿that￿the￿power,￿cost￿and￿time￿required for￿every￿computation￿on￿a￿digital￿electronic￿device￿can￿be￿reduced￿by￿shrinking￿the￿size￿of￿transistors￿on￿chips. In￿2014,￿chip￿makers￿routinely￿produced￿electronic￿chip￿features￿with￿geometries￿of￿20￿nm,￿compared￿to￿typical geometries￿of￿10,000￿nm￿in￿the￿early￿1970s,￿resulting￿in￿an￿increase￿in￿the￿number￿of￿transistors￿on￿leading￿chips from￿several￿thousand￿to￿over￿two￿billion.￿This￿trend￿was￿first￿observed￿by￿Intel￿co-founder￿Gordon￿Moore￿in￿1965, and￿is￿referred￿to￿as￿"Moore’s￿Law".￿Moore’s￿Law￿is￿reflected￿in￿ever￿smaller,￿cheaper,￿more￿powerful￿and￿energy- efficient￿semiconductors.￿Smaller￿geometries￿allow￿for￿much￿lower￿electrical￿currents￿to￿operate￿the￿chip.￿This￿has helped￿to￿stabilize￿the￿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￿the￿semiconductor￿industry￿has￿brought￿many￿advantages:￿not￿only￿can information￿be￿more￿widely￿disseminated￿than￿ever￿before,￿affordable￿chip￿intelligence￿has￿also￿enabled￿industry￿and service￿sectors￿to￿create￿and￿distribute￿products￿and￿ideas￿at￿lightning￿speed. ASML￿ANNUAL￿REPORT￿2014 22 Our￿vision￿is￿that￿ASML￿makes￿possible￿affordable￿microelectronics￿that￿improve￿the￿quality￿of￿life.￿What￿we￿do￿to realize￿our￿vision￿is￿to￿invent,￿develop￿and￿manufacture￿high-tech￿lithography,￿metrology￿and￿software￿solutions￿for￿the semiconductor￿industry￿that￿provide￿the￿"patterning"￿of￿chips￿and￿hence￿enable￿the￿creation￿of￿smarter,￿smaller￿and more￿energy-efficient￿chips.￿We￿implement￿our￿vision￿and￿mission￿by￿executing￿our￿business￿strategy￿which￿consists￿of three￿elements: 1.￿Providing￿leading￿technology￿and￿cost-effective￿products￿and￿services￿for￿patterning￿of￿semiconductor￿devices; 2.￿Strong￿relationships￿with￿customers￿as￿well￿as￿suppliers￿and￿peers￿to￿drive￿the￿patterning￿eco-system;￿and 3.￿Develop￿our￿people￿and￿organization￿to￿support￿our￿growing￿business￿and￿industry. When￿executed,￿this￿strategy￿results￿in￿the￿delivery￿of￿lithography￿systems￿which￿enable￿customers￿to￿produce￿chips￿at lower￿costs￿and￿with￿higher￿value￿per￿product.￿The￿superior￿value￿of￿ownership￿offered￿to￿customers￿as￿a￿result￿of￿our strategy￿also￿drives￿our￿own￿financial￿performance,￿aligning￿the￿interests￿of￿ASML￿and￿our￿customers. Leading Technology and Cost Effective Products Our￿customers￿need￿lithography￿scanners￿that￿continuously￿improve￿performance￿in￿three￿areas:￿imaging,￿throughput and￿overlay.￿Because￿the￿image￿of￿the￿electronic￿chip￿circuit￿must￿be￿extremely￿small￿(in￿2014￿chip￿makers￿routinely produced￿electronic￿chip￿features￿with￿geometries￿of￿20￿nm),￿the￿system￿must￿be￿able￿to￿image￿billions￿of￿these￿features every￿second￿and￿it￿must￿be￿able￿to￿do￿that￿with￿extreme￿precision￿of￿just￿a￿few￿nm￿(one￿nm￿is￿four￿silicon￿atoms).￿To realize￿and￿improve￿system￿performance￿for￿our￿customers￿on￿all￿three￿mentioned￿areas￿above,￿ASML￿needs￿to￿deliver the￿right￿technology￿at￿the￿right￿time￿to￿meet￿long-term￿roadmaps￿of￿our￿customers￿which￿often￿extend￿many￿years￿into the￿future￿and￿are￿driven￿primarily￿by￿a￿desire￿to￿maintain￿Moore's￿Law.￿Therefore,￿ASML￿is￿committed￿to￿significant long-term￿investments￿in￿R&D. In￿order￿to￿meet￿the￿imaging,￿throughput￿and￿overlay￿demands￿of￿our￿customers,￿we￿have￿focused￿our￿R&D￿investments on￿three￿core￿programs:￿EUV,￿DUV￿and￿holistic￿lithography￿solutions.￿In￿2014,￿our￿R&D￿costs￿(net￿of￿credits)￿amounted to￿EUR￿1,074.1￿million￿(2013:￿EUR￿882.0￿million;￿2012:￿EUR￿589.2￿million).￿A￿significant￿part￿of￿our￿R&D-budget￿has been￿used￿for￿R&D￿jointly￿developed￿with￿our￿suppliers￿and￿technology￿partners.￿In￿addition,￿as￿part￿of￿the￿CCIP, Participating￿Customers￿are￿funding￿development￿costs￿relating￿to￿lithography￿projects￿and￿in￿2014,￿we￿recognized other￿income￿in￿relation￿to￿the￿contributions￿made￿by￿certain￿Participating￿Customers￿of￿EUR￿81.0￿million￿(2013:￿EUR 64.4￿million;￿2012:￿nil)￿in￿connection￿with￿the￿CCIP. For￿further￿details￿on￿our￿product￿development￿and￿products,￿see￿Item￿4.B.￿"Business￿Overview￿-￿Product￿Development and￿Products". Strong Relations with Customers, Suppliers and Peers Ensuring￿customers￿are￿served￿with￿the￿right￿products￿at￿the￿right￿time￿and￿supported￿by￿excellent￿service,￿is￿key￿to￿our commitment￿to￿a￿long-term￿relationship.￿With￿high-valued￿products,￿customers￿expect￿high-quality￿support￿customized to￿their￿specific￿requirements.￿This￿support￿includes￿service￿engineers,￿equipped￿with￿the￿latest￿technical￿information, to￿ensure￿the￿highest￿level￿of￿system￿performance,￿as￿well￿as￿applications￿specialists￿who￿support￿optimal￿system processing￿and￿new￿product￿implementation. ASML￿aims￿to￿deliver￿lithography￿systems￿with￿the￿lowest￿cost￿of￿ownership. Customer￿satisfaction￿is￿a￿critical￿objective￿of￿ASML.￿We￿have￿account￿teams￿that￿are￿specifically￿dedicated￿to￿customer satisfaction￿throughout￿the￿lifecycle￿of￿our￿products. Through￿2014,￿all￿of￿the￿top￿10￿chipmakers￿worldwide,￿in￿terms￿of￿semiconductor￿capital￿expenditure,￿were￿our customers.￿We￿also￿have￿a￿significant￿share￿of￿customers￿outside￿the￿top￿10.￿We￿strive￿for￿continued￿business￿growth with￿all￿our￿customers.￿We￿expect￿that￿customer￿concentration￿might￿increase￿because￿of￿continuing￿consolidation￿in the￿semiconductor￿manufacturing￿industry. See￿Item￿3.D.￿"Risk￿Factors￿-￿Risks￿Related￿to￿ASML￿-￿A￿High￿Percentage￿of￿Net￿Sales￿Is￿Derived￿from￿a￿Few Customers". In￿2014,￿our￿satisfaction￿ratings￿by￿customers￿surpassed￿every￿lithography￿competitor.￿According￿to￿VLSI￿Research, ASML￿ranks￿second￿among￿the￿large￿semiconductor￿industry￿equipment￿suppliers￿and￿first￿among￿lithography competitors.￿Our￿performance￿has￿consistently￿been￿strong:￿for￿twelve￿years￿in￿a￿row￿we￿have￿both￿ranked￿among￿the top￿5￿semiconductor￿industry￿suppliers￿and￿our￿ranking￿surpassed￿that￿of￿any￿of￿our￿lithography￿competitors. Another￿significant￿pillar￿in￿our￿business￿strategy￿is￿close￿relations￿with￿suppliers.￿They￿provide￿us￿with￿components, modules￿and￿sub-systems￿according￿to￿our￿specifications. ASML￿ANNUAL￿REPORT￿2014 23 Develop our People and Organization to Support our Growing Business and Industry The￿nature￿of￿our￿R&D￿intensive￿business￿depends￿on￿a￿highly￿skilled￿work￿force￿and￿efficient￿organization￿that￿boosts inspiration￿and￿engagement. We￿therefore￿take￿training￿and￿development￿very￿seriously,￿of￿our￿payroll￿and￿non-payroll￿employees￿alike.￿Long-term employability￿through￿continuous￿development￿is￿important￿for￿the￿well-being￿of￿our￿employees,￿for￿ASML￿and￿for society. As￿the￿expectations￿of￿our￿customers￿continue￿to￿increase,￿leading￿to￿more￿complex￿products￿and￿stakeholder interactions,￿it￿is￿essential￿we￿continuously￿look￿for￿efficiencies.￿We￿therefore￿continue￿to￿improve￿our￿organization￿in view￿of￿the￿volatility￿of￿the￿semiconductor￿industry,￿the￿long-term￿growth￿of￿our￿business,￿and￿the￿engagement￿of￿our employees. The￿three￿elements￿which￿make￿up￿our￿business￿strategy￿are￿complemented￿with￿responsible￿behavior￿as￿prerequisite￿in executing￿this￿strategy.￿The￿next￿section￿summarizes￿CR￿within￿our￿company. Corporate Responsibility More￿than￿delivering￿strong￿financial￿performance,￿we￿want￿to￿create￿long-term￿value￿for￿our￿stakeholders￿and￿for society￿as￿a￿whole.￿To￿this￿end,￿we￿identify￿and￿manage￿non-financial￿developments￿that￿are￿material￿to￿our￿business and￿performance.￿Investing￿in￿these￿non-financial￿or￿CR￿themes￿is￿a￿prerequisite￿for￿our￿long-term￿business￿continuity and￿success.￿We￿believe￿that￿we￿can￿significantly￿enhance￿our￿long-term￿performance￿if￿we￿successfully￿manage￿the risks￿associated￿with￿these￿developments￿and￿seize￿the￿opportunities￿they￿offer. In￿2014,￿we￿moved￿CR￿higher￿on￿our￿business￿agenda.￿We￿have￿further￿developed￿our￿new￿CR￿strategy￿and￿policy￿that formulates￿our￿ambitions￿for￿the￿period￿2015-2020.￿It￿sets￿out￿the￿main￿non-financial,￿social￿and￿environmental￿impact areas￿and￿most￿significant￿indicators￿we￿will￿use￿to￿measure￿our￿progress.￿We￿believe￿this￿is￿an￿important￿step￿towards further￿aligning￿our￿CR￿objectives￿with￿our￿business￿strategy￿and￿a￿significant￿step￿towards￿integrating￿financial￿and non-financial￿reporting. To￿celebrate￿our￿company’s￿30th￿anniversary￿on￿April￿1,￿2014￿we￿launched￿'30￿for￿Change',￿a￿global￿initiative￿with￿the ASML￿Foundation￿to￿support￿29￿projects￿reflecting￿ASML's￿diversity￿and￿empowering￿underprivileged￿youth￿through education.￿Our￿employees￿worldwide￿worked￿together￿in￿submitting,￿selecting￿and￿raising￿funds￿for￿the￿charity￿projects. These￿projects￿strengthen￿our￿bonds￿with￿the￿community￿but￿at￿the￿same￿time￿contribute￿to￿employee￿involvement￿and our￿need￿to￿have￿access￿to￿the￿largest￿possible￿pool￿of￿technical￿talent. The￿2014￿CR￿Report￿describes￿our￿CR￿strategy,￿achievements￿and￿contributions￿to￿sustainable￿business￿practices.￿The 2014￿CR￿Report￿can￿be￿found￿on￿our￿Website.￿Information￿on￿ASML's￿Website￿is￿not￿incorporated￿into,￿and￿does￿not form￿a￿part￿of,￿this￿Annual￿Report. Profitability Our￿long￿term￿business￿model￿target￿requires￿us￿to￿achieve￿annual￿income￿from￿operations￿as￿percentage￿of￿net￿sales of￿greater￿than￿30￿percent.￿However￿in￿exceptional￿circumstances,￿as￿evidenced￿by￿the￿financial￿and￿economic￿crisis￿in 2008-2009,￿we￿could￿see￿periods￿with￿income￿from￿operations￿that￿are￿substantially￿below￿our￿minimum￿target￿level. ASML￿ANNUAL￿REPORT￿2014 24 ASML￿Operations￿Update￿on￿Key￿Performance￿Indicators The￿following￿table￿presents￿the￿key￿performance￿indicators￿used￿by￿our￿BoM￿and￿senior￿management￿to￿regularly measure￿performance. Year ended December 31 (in millions) 2014 EUR %1 2013 EUR %1 2012 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 Systems￿backlog￿(in￿units) ASP￿of￿systems￿backlog ASP￿of￿systems￿backlog￿(New) ASP￿of￿systems￿backlog￿(Used) Immersion￿systems￿recognized￿(in￿units)￿3 NXE:3300B￿systems￿recognized￿(in￿units) Profitability Gross￿profit Income￿from￿operations Net￿income Liquidity Cash￿and￿cash￿equivalents Short-term￿investments Operating￿cash￿flow 5,856.3 11.6 4,242.8 1,613.5 136 31.2 35.6 5.8 2,772.4 2 82 2 33.8 2 42.0 2 4.7 2 76 5 2,596.4 1,282.2 1,196.6 2,419.5 334.9 1,025.2 44.3 21.9 20.4 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 - 2,005.2 1,156.8 1,146.3 1,767.6 930.0 703.5 42.4 24.4 24.2 1 2 3 As￿a￿percentage￿of￿net￿sales. Our￿systems￿backlog￿and￿net￿bookings￿include￿sales￿orders￿for￿which￿written￿authorizations￿have￿been￿accepted￿and￿shipment￿and/or￿revenue recognition￿is￿expected￿within￿12￿months.￿As￿of￿2014￿we￿also￿include￿EUV￿in￿our￿backlog￿starting￿with￿our￿NXE:3350B￿systems.￿As￿a￿result,￿two NXE:3350B￿systems￿are￿now￿included￿in￿our￿systems￿backlog￿and￿net￿bookings.￿Before￿2014,￿our￿systems￿backlog￿and￿net￿bookings￿include￿only sales￿orders￿for￿which￿written￿authorizations￿have￿been￿accepted￿and￿system￿shipment￿and￿revenue￿recognition￿dates￿within￿the￿following￿12￿months have￿been￿assigned.￿This￿change￿has￿no￿impact￿on￿the￿comparative￿figures. Included￿in￿the￿total￿number￿of￿immersion￿systems￿recognized￿in￿2014￿are￿48￿units￿of￿our￿most￿advanced￿immersion￿technology￿NXT:1970Ci￿systems (2013:￿4￿and￿2012:￿nil). Backlog We￿started￿2014￿with￿a￿systems￿backlog￿of￿56￿systems.￿In￿2014,￿we￿booked￿orders￿for￿157￿systems,￿and￿recognized sales￿for￿136￿systems￿(including￿5￿NXE:3300B￿systems,￿which￿were￿not￿included￿in￿backlog).￿This￿resulted￿in￿a￿systems backlog￿of￿82￿as￿of￿December￿31,￿2014. As￿of￿December￿31,￿2014,￿our￿systems￿backlog￿was￿valued￿at￿EUR￿2,772.4￿million￿and￿includes￿82￿systems￿with￿an￿ASP of￿EUR￿33.8￿million.￿As￿of￿December￿31,￿2013,￿the￿systems￿backlog￿was￿valued￿at￿EUR￿1,953.3￿million￿and￿included￿56 systems￿with￿an￿ASP￿of￿EUR￿34.9￿million.￿The￿ASP￿of￿our￿systems￿backlog￿mainly￿decreased￿in￿2014￿compared￿to￿2013 as￿a￿result￿of￿a￿shift￿in￿the￿mix￿towards￿KrF,￿partly￿offset￿by￿the￿inclusion￿of￿two￿NXE:3350B￿systems. For￿discussion￿on￿the￿main￿key￿performance￿indicators￿indicated￿above,￿see￿Item￿5.A.￿"Operating￿Results"￿and￿Item￿5.B. "Liquidity￿and￿Capital￿Resources". ASML￿ANNUAL￿REPORT￿2014 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 continuously￿and￿we￿base￿our￿estimates￿on￿historical￿experience￿and￿on￿various￿other￿assumptions￿that￿we￿believe￿to￿be reasonable￿under￿the￿circumstances.￿Actual￿results￿may￿differ￿from￿these￿estimates￿if￿the￿assumptions￿prove￿incorrect. To￿the￿extent￿there￿are￿material￿differences￿between￿actual￿results￿and￿these￿estimates,￿our￿future￿results￿could￿be materially￿and￿adversely￿affected.￿We￿believe￿that￿the￿accounting￿policies￿described￿below￿require￿us￿to￿make￿significant judgments￿and￿estimates￿in￿the￿preparation￿of￿our￿Financial￿Statements.￿Our￿most￿critical￿accounting￿estimates￿include: • Revenue￿Recognition; • • • Contingencies￿and￿Litigation;￿and • Evaluation￿of￿Long-lived￿Assets￿for￿Impairment. Inventories; Income￿Taxes; See￿Note￿1￿to￿our￿Financial￿Statements￿for￿a￿summary￿of￿our￿significant￿accounting￿policies. Results￿of￿Operations￿2014￿Compared￿to￿2013 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￿or￿otherwise￿affect￿our￿results￿of￿operations,￿described￿in￿Item￿3.D.￿"Risk￿Factors". Set￿out￿below￿our￿Consolidated￿Statements￿of￿Operations￿data￿for￿the￿years￿ended￿December￿31,￿2014￿and￿2013: 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 2014 EUR 5,856.3 (3,259.9) 2,596.4 81.0 (1,074.1) (321.1) 1,282.2 (8.6) 1,273.6 (77.0) 1,196.6 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 Set￿out￿below￿are￿our￿Consolidated￿Statements￿of￿Operations￿data￿for￿the￿years￿ended￿December￿31,￿2014￿and￿2013 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 2014 % 100.0 (55.7) 44.3 1.4 (18.3) (5.5) 21.9 (0.1) 21.7 (1.3) 20.4 2013 % 100.0 (58.5) 41.5 1.2 (16.8) (5.9) 20.0 (0.5) 19.5 (0.1) 19.4 ASML￿ANNUAL￿REPORT￿2014 26 Net Sales and Gross Profit The￿following￿table￿shows￿a￿summary￿of￿sales￿data,￿units￿sold,￿gross￿profit￿and￿ASP￿data￿for￿the￿years￿ended￿December 31,￿2014￿and￿2013: Year ended December 31 (in millions EUR, unless otherwise indicated) 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 2014 2013 5,856.3 4,242.8 1,613.5 136 116 20 44.3 31.2 35.6 5.8 5,245.3 3,993.1 1,252.2 157 142 15 41.5 25.4 27.4 6.9 Net￿sales￿increased￿by￿EUR￿611.0￿million,￿or￿11.6￿percent,￿to￿EUR￿5,856.3￿million￿in￿2014￿from￿EUR￿5,245.3￿million￿in 2013,￿mainly￿driven￿by￿the￿increase￿in￿net￿service￿and￿field￿option￿sales￿of￿EUR￿361.3￿million,￿or￿28.9￿percent￿to￿EUR 1,613.5￿million￿in￿2014￿from￿EUR￿1,252.2￿million￿in￿2013.￿The￿increase￿in￿net￿service￿and￿field￿option￿sales￿is￿mainly caused￿by: • The￿full-year￿effect￿of￿Cymer￿in￿2014,￿whereas￿2013￿only￿includes￿Cymer￿for￿seven￿months;￿and • Holistic￿Lithography￿increased￿through￿the￿sales￿of￿integrated￿metrology￿and￿feedback￿loop￿technology. The￿increase￿in￿net￿system￿sales￿of￿EUR￿249.7￿million,￿or￿6.3￿percent,￿to￿EUR￿4,242.8￿million￿in￿2014￿from￿EUR￿3,993.1 million￿in￿2013￿is￿caused￿by￿higher￿NXE:3300B￿system￿sales. The￿increase￿of￿the￿ASP￿of￿our￿systems￿sold￿can￿mainly￿be￿explained￿by￿the￿ASP￿of￿our￿new￿systems￿sold￿which increased￿to￿EUR￿35.6￿million￿in￿2014￿from￿EUR￿27.4￿million￿in￿2013,￿which￿was￿the￿result￿of￿a￿shift￿in￿the￿mix￿of systems￿sold￿towards￿more￿high-end￿system￿types￿(NXE:3300B￿and￿NXT:1970Ci￿systems)￿in￿2014￿compared￿to￿2013. Gross￿profit￿increased￿by￿EUR￿419.2￿million,￿or￿19.3￿percent,￿to￿EUR￿2,596.4￿million￿in￿2014￿from￿EUR￿2,177.2￿million￿in 2013.￿The￿increase￿in￿gross￿profit￿was￿mainly￿driven￿by: • The￿full-year￿effect￿of￿Cymer￿in￿2014,￿whereas￿2013￿only￿includes￿Cymer￿for￿seven￿months; • Holistic￿Lithography￿increased￿through￿the￿sales￿of￿integrated￿metrology￿and￿feedback￿loop￿technology;￿and • 2014￿Includes￿lower￿one-off￿purchase￿price￿accounting￿adjustments￿related￿to￿Cymer. Gross￿profit￿as￿a￿percentage￿of￿net￿sales￿increased￿from￿41.5￿percent￿in￿2013￿to￿44.3￿percent￿in￿2014,￿for￿the￿same reasons￿as￿gross￿profit￿increased,￿partly￿offset￿by￿higher￿EUV￿sales￿(which￿currently￿do￿not￿contribute￿to￿gross￿profit). Other Income Other￿income￿consists￿of￿contributions￿for￿R&D￿programs￿under￿the￿NRE￿funding￿arrangements￿from￿certain Participating￿Customers￿in￿the￿CCIP￿and￿amounted￿to￿EUR￿81.0￿million￿for￿2014￿(2013:￿EUR￿64.4￿million). Research and Development Costs  R&D￿costs￿(net￿of￿credits￿and￿excluding￿contributions￿under￿the￿NRE￿Funding￿Agreements￿from￿certain￿Participating Customers￿in￿the￿CCIP)￿increased￿by￿EUR￿192.1￿million,￿or￿21.8￿percent,￿to￿EUR￿1,074.1￿million￿in￿2014￿from￿EUR￿882.0 million￿in￿2013.￿R&D￿costs￿increased￿mainly￿due￿to￿the￿acceleration￿of￿certain￿R&D￿programs,￿primarily￿EUV￿and￿next- generation￿immersion. Selling, General and Administrative Costs SG&A￿costs￿increased￿by￿EUR￿9.4￿million,￿or￿3.0￿percent,￿to￿EUR￿321.1￿million￿in￿2014,￿from￿EUR￿311.7￿million￿in￿2013. This￿increase￿was￿mainly￿driven￿by￿the￿full-year￿effect￿of￿Cymer￿in￿2014,￿whereas￿2013￿only￿includes￿Cymer￿for￿seven months. Interest and Other, Net Interest￿and￿other,￿net￿decreased￿by￿EUR￿15.8￿million￿in￿2014￿compared￿to￿2013.￿In￿2013￿interest￿and￿other,￿net￿included a￿loss￿on￿the￿partial￿extinguishment￿of￿our￿EUR￿600￿million￿5.75￿percent￿senior￿notes￿due￿2017. ASML￿ANNUAL￿REPORT￿2014 27 Income Taxes The￿effective￿tax￿rate￿increased￿to￿6.0￿percent￿of￿income￿before￿income￿taxes￿in￿2014￿compared￿to￿0.8￿percent￿in￿2013. In￿2014￿the￿tax￿rate￿was￿favorably￿impacted￿by￿settling￿agreements￿entered￿into￿by￿ASML￿Netherlands￿B.V.￿and￿Cymer LLC.,￿prior￿to￿our￿acquisition￿of￿Cymer￿in￿2013,￿at￿different￿tax￿rates.￿In￿2013,￿we￿recognized￿a￿gain￿as￿a￿result￿of￿the accounting￿for￿business￿combinations￿Cymer.￿This￿gain￿is￿not￿recognized￿for￿tax￿purposes￿and￿was,￿apart￿from￿the￿R&D tax￿incentives,￿the￿major￿driver￿for￿the￿change￿in￿the￿effective￿tax￿rate￿in￿2013. Net Income Net￿income￿in￿2014￿amounted￿to￿EUR￿1,196.6￿million,￿or￿20.4￿percent￿of￿net￿sales,￿representing￿EUR￿2.74￿basic￿net income￿per￿ordinary￿share,￿compared￿with￿net￿income￿in￿2013￿of￿EUR￿1,015.5￿million,￿or￿19.4￿percent￿of￿net￿sales, representing￿EUR￿2.36￿basic￿net￿income￿per￿ordinary￿share. Results￿of￿Operations￿2013￿Compared￿to￿2012 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￿2014 28 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￿was￿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￿was￿mainly￿caused￿by￿an￿increased￿ASP￿which￿more￿than￿offset￿the￿lower￿amount￿of￿systems￿sold. The￿increase￿of￿the￿ASP￿of￿our￿systems￿sold￿was￿mainly￿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￿consisted￿of￿contributions￿for￿R&D￿programs￿under￿the￿NRE￿funding￿arrangements￿from￿Participating Customers￿in￿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 in￿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. 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￿was￿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. ASML￿ANNUAL￿REPORT￿2014 29 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￿was￿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￿was￿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. 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￿2,419.5￿million￿as￿of￿December￿31,￿2014￿from￿EUR￿2,330.7￿million￿as of￿December￿31,￿2013￿and￿our￿short-term￿investments￿decreased￿to￿EUR￿334.9￿million￿as￿of￿December￿31,￿2014￿from EUR￿679.9￿million￿as￿of￿December￿31,￿2013. We￿generated￿net￿cash￿from￿operating￿activities￿of￿EUR￿1,025.2￿million,￿EUR￿1,054.2￿million￿and￿EUR￿703.5￿million￿in 2014,￿2013￿and￿2012,￿respectively.￿Lower￿net￿cash￿provided￿by￿operating￿activities￿in￿2014￿compared￿to￿2013￿relates to￿increased￿working￿capital,￿which￿is￿mainly￿due￿to￿a￿decrease￿in￿accounts￿payable.￿Higher￿net￿cash￿provided￿by operating￿activities￿in￿2013￿compared￿to￿2012￿related￿to￿increased￿sales￿levels￿and￿decreased￿our￿working￿capital, mainly￿due￿to￿an￿increase￿in￿accounts￿payable. We￿used￿EUR￿16.2￿million￿for￿investing￿activities￿in￿2014,￿EUR￿368.4￿million￿in￿2013￿and￿EUR￿1,119.8￿million￿in￿2012. In￿2014,￿our￿investing￿activities￿mainly￿related￿to￿the￿purchase￿of￿property,￿plant￿and￿equipment￿of￿EUR￿358.3￿million, mainly￿for￿the￿construction￿of￿our￿EUV￿production￿facilities￿in￿Veldhoven,￿the￿Netherlands.￿This￿was￿offset￿by￿the decrease￿of￿short-term￿investments,￿mainly￿in￿Dutch￿Treasury￿Certificates￿and￿deposits￿with￿the￿Dutch￿government, of￿EUR￿345.0￿million.￿In￿2013,￿our￿investing￿activities￿mainly￿related￿to￿the￿cash￿consideration￿paid￿for￿the￿acquisition of￿Cymer￿of￿EUR￿443.7￿million￿and￿the￿purchase￿of￿property,￿plant￿and￿equipment￿of￿EUR￿210.8￿million,￿mainly￿related to￿further￿expansion￿of￿our￿EUV￿production￿facilities.￿This￿was￿to￿a￿large￿extent￿offset￿by￿the￿decrease￿of￿short-term investments,￿mainly￿in￿Dutch￿Treasury￿Certificates￿and￿deposits￿with￿the￿Dutch￿government,￿of￿EUR￿290.2￿million.￿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. Net￿cash￿used￿in￿financing￿activities￿was￿EUR￿928.4￿million￿in￿2014,￿EUR￿113.1￿million￿in￿2013,￿and￿EUR￿545.6￿million in￿2012.￿In￿2014,￿net￿cash￿used￿in￿financing￿activities￿included￿a￿cash￿outflow￿of￿EUR￿700.0￿million￿for￿our￿regular share￿buyback￿program￿and￿our￿annual￿dividend￿payment￿of￿EUR￿268.0￿million,￿slightly￿offset￿by￿EUR￿39.7￿million￿net proceeds￿from￿issuance￿of￿shares￿in￿connection￿with￿the￿exercise￿and￿purchase￿of￿employee￿stock￿and￿stock￿options. In￿2013,￿net￿cash￿used￿in￿financing￿activities￿included￿the￿net￿cash￿proceeds￿of￿EUR￿740.4￿million￿from￿our￿notes offering￿and￿net￿cash￿proceeds￿of￿EUR￿31.8￿million￿from￿the￿issuance￿of￿shares￿in￿connection￿with￿the￿exercise￿and purchase￿of￿employee￿stock￿options,￿mainly￿offset￿by￿net￿cash￿outflows￿of￿EUR￿368.3￿million￿for￿our￿notes￿tender￿offer and￿unwinding￿of￿related￿interest￿rate￿swaps,￿EUR￿300.0￿million￿for￿our￿regular￿share￿buyback￿program￿and￿EUR￿216.1 million￿for￿our￿annual￿dividend￿payment.￿In￿2012,￿net￿cash￿used￿in￿financing￿activities￿included￿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. Our￿principal￿sources￿of￿liquidity￿consist￿of￿cash￿flows￿from￿operations,￿cash￿and￿cash￿equivalents￿as￿of￿December￿31, 2014￿of￿EUR￿2,419.5￿million,￿short-term￿investments￿as￿of￿December￿31,￿2014￿of￿EUR￿334.9￿million￿and￿available￿credit facilities￿as￿of￿December￿31,￿2014￿of￿EUR￿700.0￿million.￿In￿addition,￿we￿may￿from￿time￿to￿time￿raise￿additional￿capital￿in debt￿and￿equity￿markets.￿Our￿goal￿is￿to￿remain￿an￿investment￿grade￿rated￿company￿and￿maintain￿a￿capital￿structure￿that supports￿this. ASML￿ANNUAL￿REPORT￿2014 30 We￿invest￿our￿cash￿and￿cash￿equivalents￿and￿short-term￿investments￿in￿short-term￿deposits￿with￿financial￿institutions that￿have￿good￿credit￿ratings￿and￿with￿the￿Dutch￿government,￿in￿Dutch￿Treasury￿Certificates￿and￿in￿AAAm-rated money￿market￿funds￿that￿invest￿in￿high-rated￿short-term￿debt￿securities￿of￿financial￿institutions￿and￿governments.￿Our investments￿are￿denominated￿in￿euros. Our￿available￿credit￿facility￿consists￿of￿a￿EUR￿700.0￿million￿committed￿revolving￿credit￿facility￿from￿a￿group￿of￿banks￿that will￿mature￿in￿2018.￿The￿credit￿facility￿contains￿a￿restrictive￿covenant￿that￿requires￿us￿to￿maintain￿a￿minimum￿committed capital￿to￿net￿total￿assets￿ratio￿of￿40.0￿percent￿calculated￿in￿accordance￿with￿contractually￿agreed￿definitions.￿At￿the￿end of￿2014,￿we￿were￿in￿compliance￿with￿the￿covenant.￿Outstanding￿amounts￿under￿this￿credit￿facility￿will￿bear￿interest￿at EURIBOR￿or￿LIBOR￿plus￿a￿margin￿that￿depends￿on￿our￿liquidity￿position.￿No￿amounts￿were￿outstanding￿under￿the￿credit facility￿as￿of￿December￿31,￿2014. We￿have￿repayment￿obligations￿in￿2017,￿amounting￿to￿EUR￿238.2￿million￿and￿in￿2023,￿amounting￿to￿EUR￿750.0￿million, both￿relating￿to￿our￿Eurobonds. ASML￿seeks￿to￿ensure￿that￿cash￿generated￿from￿operations,￿together￿with￿the￿liquidity￿provided￿by￿existing￿cash and￿cash￿equivalents￿and￿short-term￿investments￿and￿its￿borrowing￿capability,￿will￿be￿sufficient￿to￿satisfy￿its￿liquidity requirements￿throughout￿every￿phase￿of￿the￿industry￿cycles. Our￿liquidity￿needs￿are￿affected￿by￿many￿factors,￿some￿of￿which￿are￿based￿on￿the￿normal￿on-going￿operations￿of￿the business,￿and￿others￿that￿relate￿to￿the￿uncertainties￿of￿the￿global￿economy￿and￿the￿semiconductor￿industry.￿Although our￿cash￿requirements￿fluctuate￿based￿on￿the￿timing￿and￿extent￿of￿these￿factors,￿we￿believe￿that￿cash￿generated￿from operations,￿together￿with￿the￿liquidity￿provided￿by￿existing￿cash￿and￿cash￿equivalents￿and￿short-term￿investments￿and our￿borrowing￿capability￿are￿sufficient￿to￿satisfy￿our￿current￿requirements,￿including￿our￿expected￿capital￿expenditures￿in 2015.￿We￿intend￿to￿return￿cash￿to￿our￿shareholders￿on￿a￿regular￿basis￿in￿the￿form￿of￿dividend￿payments￿and,￿subject￿to our￿actual￿and￿anticipated￿liquidity￿requirements￿and￿other￿relevant￿factors,￿share￿buybacks￿or￿capital￿repayment. See￿Notes￿4,￿5,￿15,￿16,￿26￿and￿27￿to￿our￿Financial￿Statements. 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". ASML￿ANNUAL￿REPORT￿2014 31 D. Trend Information In￿EUV,￿we￿have￿made￿significant￿progress￿and￿we￿have￿met￿the￿500-wafer-per-day￿target￿that￿our￿customers￿set￿for us￿in￿2014￿as￿we￿have￿now￿demonstrated￿these￿productivity￿levels￿at￿multiple￿customers￿over￿multiple￿days.￿We￿also demonstrated￿source￿power￿at￿100￿Watts￿with￿96￿percent￿die￿yield,￿a￿key￿factor￿to￿get￿to￿the￿productivity￿levels￿that￿our customers￿need￿for￿volume￿production.￿Our￿2015￿productivity￿target￿remains￿at￿1,000￿wafers￿per￿day￿and￿importantly￿for our￿customers￿and￿for￿our￿EUV￿program,￿we￿received￿the￿first￿2￿orders￿for￿our￿fourth-generation￿NXE:3350B￿systems, the￿first￿of￿which￿is￿planned￿for￿shipment￿mid-year￿2015.￿In￿addition,￿two￿NXE:3300B￿systems￿already￿delivered￿will￿be upgraded￿to￿NXE:3350B￿performance. Looking￿ahead￿to￿the￿first￿half￿of￿2015￿for￿DUV,￿we￿expect￿both￿our￿sales￿to￿the￿Memory￿segment￿and￿our￿service￿and field￿option￿business￿to￿continue￿to￿be￿strong￿and￿sales￿to￿the￿logic￿segment￿to￿increase￿from￿the￿second￿half￿year￿of 2014￿to￿the￿first￿half￿year￿of￿2015. The￿following￿table￿sets￿forth￿our￿systems￿backlog￿as￿of￿December￿31,￿2014￿and￿2013. Year ended December 31 (in millions EUR, unless otherwise indicated) 2014 1 2013 New￿systems￿backlog￿(in￿units) Used￿systems￿backlog￿(in￿units) Total￿systems￿backlog￿(in￿units) Value￿of￿new￿systems￿backlog Value￿of￿used￿systems￿backlog Total￿value￿of￿systems￿backlog ASP￿of￿new￿systems￿backlog ASP￿of￿used￿systems￿backlog ASP￿of￿total￿systems￿backlog 64 18 82 2,687.0 85.4 2,772.4 42.0 4.7 33.8 46 10 56 1,906.2 47.1 1,953.3 41.4 4.7 34.9 1 Our￿systems￿backlog￿and￿net￿bookings￿include￿sales￿orders￿for￿which￿written￿authorizations￿have￿been￿accepted￿and￿shipment￿and/or￿revenue recognition￿is￿expected￿within￿12￿months.￿As￿of￿2014￿we￿also￿include￿EUV￿in￿our￿backlog￿starting￿with￿our￿NXE:3350B￿systems.￿As￿a￿result,￿two NXE:3350B￿systems￿are￿now￿included￿in￿our￿systems￿backlog￿and￿net￿bookings.￿Before￿2014,￿our￿systems￿backlog￿and￿net￿bookings￿include￿only sales￿orders￿for￿which￿written￿authorizations￿have￿been￿accepted￿and￿system￿shipment￿and￿revenue￿recognition￿dates￿within￿the￿following￿12￿months have￿been￿assigned.￿This￿change￿has￿no￿impact￿on￿the￿comparative￿figures. Historically,￿orders￿have￿been￿subject￿to￿cancellation￿or￿delay￿by￿the￿customer.￿Due￿to￿possible￿customer￿changes￿in delivery￿schedules￿and￿to￿cancellation￿of￿orders,￿our￿systems￿backlog￿at￿any￿particular￿date￿is￿not￿necessarily￿indicative of￿actual￿sales￿for￿any￿succeeding￿period. For￿the￿first￿quarter￿of￿2015,￿we￿expect￿net￿sales￿of￿around￿EUR￿1.6￿billion,￿a￿gross￿margin￿of￿around￿47￿percent,￿R&D costs￿of￿about￿EUR￿260￿million,￿other￿income￿of￿about￿EUR￿20￿million,￿which￿consists￿of￿contributions￿from￿participants of￿the￿CCIP￿and￿SG&A￿costs￿of￿about￿EUR￿83￿million. On￿January￿21,￿2015￿we￿announced￿a￿new￿share￿buyback￿program,￿to￿be￿executed￿within￿the￿2015-2016￿timeframe. As￿part￿of￿this￿program,￿we￿intend￿to￿purchase￿up￿to￿EUR￿750￿million￿of￿shares￿which￿we￿intend￿to￿cancel￿upon repurchase.￿In￿addition,￿we￿intend￿to￿purchase￿as￿part￿of￿this￿program￿up￿to￿3.3￿million￿shares￿to￿cover￿employee￿stock and￿stock￿option￿plans.￿This￿buyback￿program￿will￿start￿on￿January￿22,￿2015,￿and￿at￿current￿share￿price￿these￿intended repurchases￿represent￿a￿total￿value￿of￿approximately￿EUR￿1￿billion. 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. ASML￿ANNUAL￿REPORT￿2014 32 F. Tabular Disclosure of Contractual Obligations Our￿contractual￿obligations￿as￿of￿December￿31,￿2014￿can￿be￿summarized￿as￿follows: Payments due by period (in thousands) Total EUR 1 year EUR 2 year EUR 3 year EUR Long-Term￿Debt￿Obligations,￿including￿interest￿expense1 1,311,503 89,209 Operating￿Lease￿Obligations 44,958 29,280 Purchase￿Obligations 1,588,977 1,464,451 - 83,738 Unrecognized￿Tax￿Benefits,￿including￿interest￿expense 45,302 22,590 113,606 12,813 283,058 11,534 10,186 14,092 4 year EUR 54,155 8,256 158 2,858 5 year EUR 27,075 6,961 556 2,367 After 5 years EUR 856,955 10,588 20 51,608 Total Contractual Obligations 3,073,427 1,538,689 194,311 318,870 65,427 36,959 919,171 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￿43.9￿million,￿EUR￿42.0￿million￿and￿EUR￿41.6￿million￿for￿the￿years￿ended￿December￿31,￿2014,￿2013￿and￿2012, respectively. Several￿operating￿leases￿for￿our￿buildings￿contain￿purchase￿options,￿exercisable￿at￿the￿end￿of￿the￿lease,￿and￿in￿some cases,￿during￿the￿term￿of￿the￿lease.￿The￿amounts￿to￿be￿paid￿if￿ASML￿should￿exercise￿these￿purchase￿options￿at￿the￿end of￿the￿lease￿as￿of￿December￿31,￿2014￿can￿be￿summarized￿as￿follows: Purchase options due by period (in thousands) Purchase￿options Total EUR 13,983 1 year EUR - 2 year EUR 13,983 3 year EUR - 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, 2014￿contain￿clauses￿that￿enable￿us￿to￿delay￿or￿cancel￿delivery￿of￿ordered￿goods￿and￿services￿up￿to￿the￿dates￿specified in￿the￿corresponding￿purchase￿contracts.￿These￿terms￿and￿conditions￿that￿we￿typically￿agree￿with￿our￿supply￿chain partners￿gives￿us￿additional￿flexibility￿to￿adapt￿our￿purchase￿obligations￿to￿our￿requirements￿in￿light￿of￿the￿inherent cyclicality￿of￿the￿industry￿in￿which￿we￿operate.￿We￿establish￿a￿provision￿for￿cancellation￿costs￿when￿it￿is￿probable￿that the￿liability￿has￿been￿incurred￿and￿the￿amount￿of￿cancellation￿fees￿is￿reasonably￿estimable. G. Safe Harbor See￿Part￿I￿"Special￿Note￿Regarding￿Forward-Looking￿Statements". ASML￿ANNUAL￿REPORT￿2014 33 Item 6 Directors, Senior Management and Employees A. Directors and Senior Management The￿members￿of￿our￿Supervisory￿Board￿and￿our￿BoM￿are￿as￿follows: Name Arthur￿P.M.￿van￿der￿Poel1,2,3 Fritz￿W.￿Fröhlich1,2,5 Pauline￿F.M.￿van￿der￿Meer￿Mohr1,4 Wolfgang￿H.￿Ziebart3,4 Clara￿(Carla)￿M.S.￿Smits-Nusteling1 Douglas￿A.￿Grose2,3 Johannes￿(Hans)￿M.C.￿Stork3 Peter￿T.F.M.￿Wennink Martin￿A.￿van￿den￿Brink Frits￿J.￿van￿Hout Frédéric￿J.M.￿Schneider-Maunoury Wolfgang￿U.￿Nickl 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 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,￿Chief￿Program￿Officer￿and￿member￿of the￿Board￿of￿Management Executive￿Vice￿President,￿Chief￿Operations￿Officer￿and￿Member of￿the￿Board￿of￿Management Executive￿Vice￿President,￿Chief￿Financial￿Officer￿and￿Member￿of the￿Board￿of￿Management Year of Birth 1948 1942 1960 1950 1966 1950 1954 1957 Term Expires 2016 2015 2017 2017 2017 2017 2018 2018 1957 1960 1961 1969 2018 2017 2018 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 Mr.￿Fröhlich￿is￿to￿retire￿by￿rotation￿at￿the￿2015￿AGM.￿See￿below￿discussion￿of￿nominees￿for￿appointment￿to￿the￿Supervisory￿Board￿at￿the￿2015￿AGM. Mr.￿Bilous￿retired￿from￿the￿Supervisory￿Board￿per￿the￿2014￿AGM.￿Mr.￿Fröhlich￿retired￿by￿rotation￿and￿was￿reappointed￿for a￿period￿of￿one￿year￿in￿line￿with￿the￿Supervisory￿Board's￿rotation￿schedule.￿At￿the￿2014￿AGM￿Mr.￿Stork￿was￿appointed￿as member￿of￿the￿Supervisory￿Board￿for￿a￿period￿of￿four￿years. With￿great￿sadness,￿the￿Supervisory￿Board￿remembers￿the￿late￿Ms.￿Van￿den￿Burg,￿member￿of￿our￿Supervisory￿Board￿and member￿of￿our￿Selection￿and￿Nomination￿Committee￿and￿Remuneration￿Committee,￿who￿passed￿away￿on￿September 28,￿2014.￿Over￿the￿past￿nine￿years,￿Ms.￿Van￿den￿Burg￿was￿an￿engaged￿and￿knowledgeable￿member￿of￿our￿Supervisory Board.￿The￿Supervisory￿Board￿is￿grateful￿for￿the￿time￿she￿dedicated￿to￿ASML. The￿Works￿Council￿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￿Annual￿General￿Meeting￿of￿Shareholders￿held￿in￿2009, Ms.￿Van￿der￿Meer￿Mohr￿was￿appointed￿pursuant￿to￿this￿recommendation￿right,￿and￿at￿the￿2013￿AGM￿she￿was reappointed￿in￿accordance￿with￿this￿recommendation￿right.￿At￿the￿2014￿AGM,￿Mr.￿Stork￿was￿appointed￿pursuant￿to this￿recommendation￿right.￿The￿appointment￿of￿Ms.￿Van￿den￿Burg's￿successor￿at￿the￿2015￿AGM￿will￿be￿based￿on￿this enhanced￿recommendation￿right. The￿Supervisory￿Board￿spent￿considerable￿time￿discussing￿its￿future￿composition,￿in￿view￿of￿the￿rotation￿schedule and￿envisaged￿changes￿in￿2015￿and￿subsequent￿years.￿For￿the￿fulfillment￿of￿vacancies￿several￿factors￿are￿taken￿into consideration.￿The￿Supervisory￿Board￿profile￿includes￿the￿intention￿to￿have￿at￿least￿30￿percent￿representation￿of￿each gender￿in￿ASML's￿Supervisory￿Board.￿This￿aspect￿has￿been￿taken￿into￿account￿in￿the￿process￿that￿has￿led￿to￿the nomination￿of￿the￿following￿three￿new￿Supervisory￿Board￿members￿to￿the￿2015￿AGM:￿Ms.￿A.￿(Annet)￿Aris,￿Mr.￿G.J. (Gerard)￿Kleisterlee￿and￿Mr.￿R.D.￿(Rolf-Dieter)￿Schwalb.￿The￿agenda￿and￿explanatory￿notes￿for￿the￿2015￿AGM￿will￿contain further￿information￿in￿this￿respect. The￿Supervisory￿Board￿reappointed￿Mr.￿Schneider-Maunoury￿for￿another￿period￿of￿four￿years￿upon￿notification￿to the￿2014￿AGM.￿The￿indefinite￿appointment￿term￿of￿Mr.￿Wennink￿and￿Mr.￿Van￿den￿Brink￿was￿converted￿into￿a￿definite appointment￿term￿of￿four￿years￿per￿the￿2014￿AGM.￿Mr.￿Nickl￿was￿appointed￿as￿member￿of￿the￿BoM￿upon￿notification￿to the￿2014￿AGM. There￿are￿no￿family￿relationships￿among￿the￿members￿of￿our￿Supervisory￿Board￿and￿our￿BoM. ASML￿ANNUAL￿REPORT￿2014 34 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￿March￿2007. Mr.￿Van￿der￿Poel￿was￿CEO￿of￿Philips￿Semiconductors,￿a￿member￿of￿the￿Board￿of￿Management￿and￿a￿member￿of￿the Group￿Management￿Committee￿of￿Royal￿Philips￿Electronics￿N.V.￿Currently,￿Mr.￿Van￿der￿Poel￿is￿a￿member￿of￿the￿Board￿of Directors￿of￿Gemalto￿Holding￿N.V.￿and￿the￿Chairman￿of￿the￿Supervisory￿Board￿of￿BDR￿Thermea.￿Mr.￿Van￿der￿Poel￿was￿a member￿of￿the￿Supervisory￿Board￿of￿Royal￿HaskoningDHV￿B.V.￿until￿April￿1,￿2014. Fritz W. Fröhlich Mr.￿Fröhlich￿was￿appointed￿to￿our￿Supervisory￿Board￿in￿March￿2004.￿Mr.￿Fröhlich￿was￿Deputy￿Chairman￿and￿CFO￿of Akzo￿Nobel￿N.V.￿Currently,￿Mr.￿Fröhlich￿is￿the￿Chairman￿of￿the￿Supervisory￿Board￿of￿Randstad￿Holding￿N.V.,￿a￿member of￿the￿Supervisory￿Boards￿of￿Allianz￿Nederland￿N.V.￿and￿Rexel￿S.A.￿and￿a￿member￿of￿the￿Board￿of￿Directors￿of￿Prysmian Group. Pauline F.M. van der Meer Mohr Ms.￿Van￿der￿Meer￿Mohr￿was￿appointed￿to￿our￿Supervisory￿Board￿in￿March￿2009.￿Ms.￿Van￿der￿Meer￿Mohr￿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￿has￿held￿several￿senior￿executive￿roles￿at￿the￿Royal/Dutch￿Shell￿group￿of￿companies￿in various￿areas.￿Currently,￿Ms.￿Van￿der￿Meer￿Mohr￿serves￿as￿President￿of￿the￿Executive￿Board￿of￿the￿Erasmus￿University Rotterdam,￿the￿Netherlands.￿Ms.￿Van￿der￿Meer￿Mohr￿is￿also￿a￿member￿of￿the￿Supervisory￿Board￿of￿Royal￿DSM￿N.V.,￿the Chairperson￿of￿the￿Executive￿Board￿of￿the￿Fulbright￿Center￿and￿a￿member￿of￿the￿Board￿Concertgebouw￿Fonds.￿Ms.￿Van der￿Meer￿Mohr￿was￿the￿Chairperson￿of￿the￿Supervisory￿Board￿of￿Rotterdam￿School￿of￿Management￿until￿December￿1, 2014. Wolfgang H. Ziebart Mr.￿Ziebart￿was￿appointed￿to￿our￿Supervisory￿Board￿in￿March￿2009.￿Mr.￿Ziebart￿was￿President￿and￿CEO￿of￿Infineon Technologies￿A.G.￿Prior￿to￿that,￿Mr.￿Ziebart￿was￿on￿the￿Boards￿of￿Management￿of￿car￿components￿manufacturer Continental￿A.G.￿and￿automobile￿producer￿BMW￿A.G.￿Currently,￿Mr.￿Ziebart￿is￿the￿Group￿Engineering￿Director￿of￿Jaguar Land￿Rover￿Ltd.￿and￿is￿the￿Chairman￿of￿the￿Supervisory￿Board￿of￿Nordex￿S.E. Clara (Carla) M.S. Smits-Nusteling Ms.￿Smits-Nusteling￿was￿appointed￿to￿our￿Supervisory￿Board￿in￿April￿2013.￿Ms.￿Smits-Nusteling￿was￿CFO￿and￿a￿member of￿the￿Board￿of￿Management￿of￿Royal￿KPN￿N.V.￿Ms.￿Smits-Nusteling￿also￿held￿several￿finance￿and￿business￿related positions￿at￿Royal￿KPN￿N.V.￿and￿PostNL.￿Currently,￿Ms.￿Smits-Nusteling￿is￿a￿non-executive￿director￿of￿the￿Board￿of￿Tele2 AB. Douglas A. Grose Mr.￿Grose￿was￿appointed￿to￿our￿Supervisory￿Board￿in￿April￿2013.￿Mr.￿Grose￿was￿CEO￿of￿GlobalFoundries.￿Mr.￿Grose￿also served￿as￿senior￿vice￿president￿of￿technology￿development,￿manufacturing￿and￿supply￿chain￿for￿AMD.￿Prior￿to￿that,￿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￿member￿of￿the￿Board￿of￿Directors￿of￿SBA￿Materials. Johannes (Hans) M.C. Stork Mr.￿Stork￿was￿appointed￿to￿our￿Supervisory￿Board￿in￿April￿2014.￿Mr.￿Stork￿held￿various￿management￿positions￿at￿IBM Corporation,￿Hewlett￿Packard￿Company,￿Texas￿Instruments,￿Inc.￿and￿Applied￿Materials,￿Inc.,￿including￿Senior￿Vice President￿and￿CTO￿of￿Texas￿Instruments,￿Inc.￿and￿Group￿Vice￿President￿and￿CTO￿of￿Applied￿Materials,￿Inc.￿Further,￿Mr. Stork￿was￿a￿member￿of￿the￿Board￿of￿Sematech.￿Currently,￿Mr.￿Stork￿serves￿as￿Senior￿Vice￿President￿and￿CTO￿of￿ON Semiconductor￿Corporation￿and￿is￿also￿a￿member￿of￿the￿Scientific￿Advisory￿Board￿of￿imec. Peter T.F.M. Wennink Mr.￿Wennink￿joined￿ASML￿on￿January￿1,￿1999￿and￿was￿appointed￿as￿Executive￿Vice￿President,￿CFO￿and￿member￿of￿our BoM￿on￿July￿1,￿1999.￿Mr.￿Wennink￿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,￿a￿member￿of￿the￿Supervisory￿Board￿of￿Bank Insinger￿de￿Beaufort￿N.V.￿and￿a￿member￿of￿the￿Advisory￿Board￿of￿the￿Investment￿Committee￿of￿Stichting￿Pensioenfonds ABP￿(Dutch￿pension￿fund￿for￿government￿employees).￿Mr.￿Wennink￿further￿serves￿on￿the￿board￿of￿the￿FME-CWM￿(the employers’￿organization￿for￿the￿technology￿industry￿in￿the￿Netherlands). ASML￿ANNUAL￿REPORT￿2014 35 Martin A. van den Brink Mr.￿Van￿den￿Brink￿joined￿ASML￿when￿the￿company￿was￿founded￿in￿1984.￿Mr.￿Van￿den￿Brink￿held￿several￿positions￿in engineering￿and￿from￿1995￿he￿served￿as￿Vice￿President￿Technology.￿Mr.￿Van￿den￿Brink￿was￿appointed￿as￿Executive￿Vice President￿Product￿&￿Technology￿and￿member￿of￿the￿BoM￿in￿1999.￿On￿July￿1,￿2013,￿Mr.￿Van￿den￿Brink￿was￿appointed as￿President￿and￿CTO.￿Mr.￿Van￿den￿Brink￿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￿UvA,￿the￿Netherlands. Frits J. van Hout Mr.￿Van￿Hout￿joined￿ASML￿in￿1984￿and￿rejoined￿ASML￿in￿2001,￿after￿a￿nine￿years￿absence.￿He￿was￿appointed￿as￿a member￿of￿our￿BoM￿on￿March￿26,￿2009.￿Mr.￿Van￿Hout￿was￿appointed￿as￿Executive￿Vice￿President￿and￿CPO￿on￿July 1,￿2013.￿Prior￿to￿that,￿Mr.￿Van￿Hout￿served￿as￿Executive￿Vice￿President￿and￿CMO,￿Executive￿Vice￿President￿Integral Efficiency,￿Senior￿Vice￿President￿Customer￿Support￿and￿held￿various￿other￿positions.￿From￿1992￿until￿2001,￿Mr.￿Van￿Hout served￿as￿CEO￿of￿the￿Beyeler￿Group￿and￿held￿various￿management￿positions￿at￿Datacolor￿International.￿Mr.￿van￿Hout earned￿a￿Master’s￿degree￿in￿Theoretical￿Physics￿(1981),￿University￿of￿Oxford;￿and￿a￿Master’s￿degree￿in￿Applied￿Physics (1984),￿Eidgenössische￿Technische￿Hochschule,￿Zürich. Frédéric J.M. Schneider-Maunoury Mr.￿Schneider-Maunoury￿joined￿ASML￿on￿December￿1,￿2009,￿as￿Executive￿Vice￿President￿and￿COO￿and￿was￿appointed to￿our￿BoM￿on￿March￿24,￿2010.￿Prior￿to￿joining￿ASML,￿Mr.￿Schneider-Maunoury￿served￿as￿Vice￿President￿Thermal Products￿Manufacturing￿of￿the￿power￿generation￿and￿rail￿transport￿equipment￿group￿ALSTOM.￿Previously,￿Mr. Schneider-Maunoury￿was￿general￿manager￿of￿the￿worldwide￿Hydro￿Business￿of￿ALSTOM.￿Further,￿Mr.￿Schneider- Maunoury￿held￿various￿positions￿at￿the￿French￿Ministry￿of￿Trade￿and￿Industry.￿Mr.￿Schneider-Maunoury￿is￿a￿graduate￿of Ecole￿Polytechnique￿(1985)￿and￿Ecole￿Nationale￿Supérieure￿des￿Mines￿(1988)￿in￿Paris. Wolfgang U. Nickl Mr.￿Nickl￿joined￿ASML￿on￿December￿1,￿2013,￿as￿Executive￿Vice￿President￿and￿CFO￿and￿was￿appointed￿as￿a￿member￿of our￿BoM￿per￿the￿2014￿AGM.￿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.￿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￿our￿2014￿Remuneration￿Report￿(pages￿14,15,16, 18￿and￿19)￿which￿is￿included￿as￿exhibit￿99.2￿on￿Form￿6-K￿furnished￿with￿the￿SEC￿on￿February￿11,￿2015. C. Board Practices General We￿endorse￿the￿importance￿of￿good￿corporate￿governance,￿of￿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￿BoM,￿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￿are￿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￿and￿results￿of￿operations,￿performance￿and￿other￿information,￿including￿information￿on￿our￿social, ethical￿and￿environmental￿matters￿and￿policies; • Apply￿high-quality￿standards￿for￿disclosure,￿accounting￿and￿auditing;￿and • Apply￿stringent￿rules￿with￿regard￿to￿insider￿securities￿trading. ASML￿ANNUAL￿REPORT￿2014 36 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￿BoM.￿Independent,￿non-executive￿members￿serve￿on￿the￿Supervisory￿Board,￿which￿supervises￿and￿advises the￿members￿of￿the￿BoM￿in￿performing￿their￿management￿tasks.￿The￿BoM￿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￿BoM￿on:￿(i)￿the￿achievement￿of￿our￿objectives,￿(ii)￿our￿strategy￿and￿management￿of￿risks￿inherent￿to￿our￿business activities,￿(iii)￿the￿structure￿and￿operation￿of￿internal￿risk￿management￿and￿control￿systems,￿(iv)￿the￿financial￿reporting process￿and￿(v)￿compliance￿with￿applicable￿legislation￿and￿regulations. Supervisory￿Board￿members￿are￿prohibited￿from￿serving￿as￿officers￿or￿employees￿of￿ASML,￿and￿members￿of￿the￿BoM cannot￿serve￿on￿the￿Supervisory￿Board. Board of Management The￿BoM￿consists￿of￿at￿least￿two￿members￿or￿such￿larger￿number￿of￿members￿as￿determined￿by￿the￿Supervisory￿Board. Members￿of￿the￿BoM￿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￿BoM.￿As￿a￿result￿of￿our￿compliance￿with￿the￿Dutch Corporate￿Governance￿Code,￿members￿of￿the￿BoM￿shall￿be￿appointed￿for￿a￿maximum￿period￿of￿four￿years,￿but￿may be￿re-appointed.￿Members￿of￿the￿BoM￿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￿BoM,￿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￿2014￿Remuneration￿Report. For￿more￿details￿on￿the￿BoM,￿see￿Item￿6.A￿"Directors￿and￿Senior￿Management"￿and￿Item￿6.B."Compensation". 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￿of￿Appeal￿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￿of￿Appeal shall￿appoint￿new￿members￿of￿the￿Supervisory￿Board￿at￿the￿request￿of￿the￿BoM. 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￿2014 37 For￿more￿details￿on￿the￿Supervisory￿Board,￿see￿Item￿6.A￿"Directors￿and￿Senior￿Management"￿and￿Item 6.B."Compensation". Approval of Board of Management Decisions The￿BoM￿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￿BoM￿and￿the￿Supervisory￿Board￿have￿adopted￿Rules￿of￿Procedure￿for￿each￿of￿the￿BoM,￿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￿BoM￿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￿broad￿coverage,￿our￿directors￿and officers￿may￿incur￿uninsured￿liabilities.￿ASML￿has￿agreed￿to￿indemnify￿its￿members￿of￿the￿BoM￿and￿Supervisory￿Board against￿any￿claims￿arising￿in￿connection￿with￿their￿position￿within￿ASML,￿provided￿that￿such￿claim￿is￿not￿attributable￿to willful￿misconduct￿or￿intentional￿recklessness. 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￿2014￿Statutory￿Annual￿Report. 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￿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 The￿current￿members￿of￿our￿Audit￿Committee￿are￿Mr.￿Fröhlich￿(Chairman),￿Mr.￿Van￿der￿Poel,￿Ms.￿Smits-Nusteling and￿Ms.￿Van￿der￿Meer￿Mohr,￿each￿of￿whom￿is￿an￿independent,￿non-executive￿member￿of￿our￿Supervisory￿Board￿in accordance￿with￿the￿NASDAQ￿Listing￿Rules.￿The￿Supervisory￿Board￿has￿determined￿that￿Mr.￿Fröhlich￿qualifies￿as the￿Audit￿Committee￿financial￿expert￿pursuant￿to￿Section￿407￿of￿the￿Sarbanes-Oxley￿Act￿and￿the￿rules￿promulgated thereunder.￿Our￿external￿auditor,￿CEO,￿CFO,￿Corporate￿Controller,￿Corporate￿Chief￿Accountant,￿Senior￿Director Corporate￿Risk￿and￿Assurance,￿as￿well￿as￿other￿ASML￿employees￿invited￿by￿the￿Chairman￿of￿the￿Audit￿Committee￿may also￿attend￿the￿meetings￿of￿the￿Audit￿Committee. The￿Audit￿Committee￿assists￿the￿Supervisory￿Board￿in: • Overseeing￿the￿integrity￿of￿our￿Financial￿Statements￿and￿related￿financial￿and￿non-financial￿disclosures; • Overseeing￿the￿qualifications,￿independence￿and￿performance￿of￿the￿external￿auditor;￿and • Overseeing￿our￿disclosure￿controls￿and￿procedures￿(as￿defined￿in￿the￿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)). In￿2014,￿the￿Audit￿Committee￿held￿eight￿scheduled￿meetings,￿either￿in￿person￿or￿via￿conference￿call. ASML￿ANNUAL￿REPORT￿2014 38 Remuneration Committee The￿current￿members￿of￿our￿Remuneration￿Committee￿are￿Mr.￿Ziebart￿(Chairman)￿and￿Ms.￿Van￿der￿Meer￿Mohr,￿each of￿whom￿is￿an￿independent,￿non-executive￿member￿of￿our￿Supervisory￿Board￿in￿accordance￿with￿the￿NASDAQ￿Listing Rules.￿In￿2014,￿the￿Remuneration￿Committee￿held￿four￿scheduled￿meetings￿and￿several￿ad￿hoc￿meetings,￿either￿in person￿or￿via￿conference￿call. For￿details￿on￿the￿Remuneration￿Committee￿See￿Item￿6.B.￿''Compensation''. Selection and Nomination Committee The￿current￿members￿of￿our￿Selection￿and￿Nomination￿Committee￿are￿Mr.￿Van￿der￿Poel￿(Chairman),￿Mr.￿Grose￿and￿Mr. Fröhlich,￿each￿of￿whom￿is￿an￿independent,￿non-executive￿member￿of￿our￿Supervisory￿Board￿in￿accordance￿with￿the NASDAQ￿Listing￿Rules. 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￿BoM; • Periodically￿evaluating￿the￿scope￿and￿composition￿of￿the￿BoM,￿the￿Supervisory￿Board,￿and￿proposing￿the￿profile￿of the￿Supervisory￿Board￿in￿relation￿thereto; • Periodically￿evaluating￿the￿functioning￿of￿the￿BoM￿and￿the￿Supervisory￿Board￿and￿the￿individual￿members￿of￿those boards￿and￿reporting￿the￿results￿thereof￿to￿the￿Supervisory￿Board;￿and • Proposing￿(re-)appointments￿of￿members￿of￿the￿BoM￿and￿the￿Supervisory￿Board,￿and￿supervising￿the￿policy￿of￿the BoM￿in￿relation￿to￿the￿selection￿and￿appointment￿criteria￿for￿senior￿management. The￿Selection￿and￿Nomination￿Committee￿furthermore￿discusses￿imminent￿corporate￿governance￿developments,￿for example￿those￿based￿on￿legislative￿proposals,￿but￿also￿the￿outcome￿of￿the￿Report￿of￿the￿Monitoring￿Committee￿with respect￿to￿compliance￿with￿the￿Code. In￿2014,￿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 The￿current￿members￿of￿our￿Technology￿and￿Strategy￿Committee￿are￿Mr.￿Grose￿(Chairman),￿Mr.￿Stork,￿Mr.￿Van￿der￿Poel and￿Mr.￿Ziebart.￿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,￿but￿are￿not￿entitled￿to￿vote￿in￿the￿meetings. The￿Technology￿and￿Strategy￿Committee￿assists￿the￿Supervisory￿Board￿in￿relation￿to￿the￿following￿responsibilities￿and may￿prepare￿resolutions￿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￿2014,￿the￿Technology￿and￿Strategy￿Committee￿held￿six￿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,￿US￿GAAP,￿IFRS￿as￿adopted￿by￿the￿EU￿and￿the￿Sarbanes-Oxley￿Act.￿The Disclosure￿Committee￿is￿composed￿of￿various￿members￿of￿senior￿management,￿and￿reports￿to￿the￿CEO￿and￿CFO.￿The Disclosure￿Committee￿informs￿the￿Audit￿Committee￿about￿the￿outcome￿of￿the￿Disclosure￿Committee￿meetings. The￿Disclosure￿Committee￿gathers￿all￿relevant￿financial￿and￿non-financial￿information￿and￿assesses￿materiality, timeliness￿and￿necessity￿for￿disclosure￿of￿such￿information.￿In￿addition￿the￿Disclosure￿Committee￿advises￿the￿CEO￿and CFO￿on￿the￿effectiveness￿of￿the￿disclosure￿controls￿and￿procedures￿and￿of￿the￿internal￿control￿over￿financial￿reporting (Sarbanes-Oxley￿Act). During￿2014,￿the￿Disclosure￿Committee￿reviewed￿amongst￿others￿the￿quarterly￿and￿annual￿financial￿result announcements,￿the￿Statutory￿Interim￿Report,￿the￿Annual￿Report￿on￿Form￿20-F￿and￿the￿Statutory￿Annual￿Report.￿In addition,￿the￿Disclosure￿Committee￿also￿advised￿the￿CEO￿and￿CFO￿on￿the￿effectiveness￿of￿the￿disclosure￿controls￿and procedures￿and￿of￿the￿internal￿control￿over￿financial￿reporting￿(Sarbanes-Oxley￿Act). ASML￿ANNUAL￿REPORT￿2014 39 D. Employees The￿following￿table￿presents￿our￿total￿numbers￿of￿payroll￿employees￿and￿temporary￿employees￿as￿of￿December￿31, 2014,￿2013￿and￿2012￿(in￿FTEs),￿primarily￿in￿manufacturing,￿product￿development￿and￿customer￿support￿activities: As of December 31 Payroll￿Employees Temporary￿Employees Employees (in FTEs) 2014 11,318 2,754 14,072 2013 10,360 2,865 13,225 2012 8,497 2,139 10,636 During￿2014,￿the￿average￿number￿of￿payroll￿employees￿in￿FTEs￿employed￿was￿10,942,￿and￿the￿average￿number￿of temporary￿employees￿in￿FTEs￿employed￿was￿2,804.￿The￿increase￿in￿2014￿compared￿to￿2013￿payroll￿employees￿in￿FTEs is￿in￿line￿with￿our￿net￿sales￿growth.￿The￿increase￿in￿employees￿expressed￿in￿FTEs￿in￿2013￿compared￿to￿2012￿was￿mainly due￿to￿the￿acquisition￿of￿Cymer￿as￿per￿May￿30,￿2013. For￿a￿more￿detailed￿description￿of￿our￿payroll￿employee￿information,￿see￿Notes￿18￿and￿22￿to￿our￿Financial￿Statements. Our￿future￿success￿also￿depends￿on￿our￿ability￿to￿attract,￿train,￿retain￿and￿motivate￿highly￿qualified,￿skilled￿and￿educated employees,￿who￿are￿in￿great￿demand.￿We￿are￿particularly￿reliant￿on￿the￿services￿of￿several￿key￿employees,￿including a￿number￿of￿systems￿development￿specialists￿with￿advanced￿university￿qualifications￿in￿engineering,￿optics￿and computing.￿See￿Item￿3.D.￿"Risk￿Factors￿-￿Our￿Business￿and￿Future￿Success￿Depend￿on￿Our￿Ability￿to￿Attract￿and￿Retain a￿Sufficient￿Number￿of￿Adequately￿Educated￿and￿Skilled￿Employees." ASML￿Netherlands￿B.V.,￿our￿operating￿subsidiary￿in￿the￿Netherlands,￿has￿a￿Works￿Council,￿as￿required￿by￿Dutch law.￿A￿Works￿Council￿is￿a￿representative￿body￿of￿the￿employees￿of￿a￿Dutch￿company￿elected￿by￿the￿employees.￿The Board￿of￿Management￿of￿any￿Dutch￿company￿that￿runs￿an￿enterprise￿with￿a￿Works￿Council￿must￿seek￿the￿non-binding advice￿of￿the￿Works￿Council￿before￿taking￿certain￿decisions￿with￿respect￿to￿ASML,￿such￿as￿those￿related￿to￿a￿major restructuring,￿a￿change￿of￿control,￿or￿the￿appointment￿or￿dismissal￿of￿a￿member￿of￿the￿Board￿of￿Management.￿In￿case the￿Works￿Council￿renders￿a￿contrary￿advice￿on￿a￿particular￿decision￿and￿the￿Board￿of￿Management￿nonetheless￿wishes to￿proceed,￿the￿Board￿of￿Management￿must￿temporarily￿suspend￿any￿further￿action￿while￿the￿Works￿Council￿determines whether￿to￿appeal￿to￿the￿Enterprise￿Chamber￿of￿the￿Amsterdam￿Court￿of￿Appeal.￿Other￿decisions￿directly￿involving employment￿matters￿that￿apply￿either￿to￿all￿employees,￿or￿certain￿groups￿of￿employees,￿may￿only￿be￿taken￿with￿the Works￿Council’s￿approval.￿Failing￿approval￿of￿the￿Works￿Council,￿the￿decision￿first￿has￿to￿be￿submitted￿to￿the￿Enterprise Chamber￿of￿the￿Amsterdam￿Court￿of￿Appeal￿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 For￿information￿with￿respect￿to￿the￿grant￿of￿shares￿and￿stock￿options￿to￿our￿employees￿See￿Note￿18￿to￿our￿Financial Statements,￿Item￿6.B.￿"Compensation"￿and￿Item￿7A￿"Major￿Shareholders". ASML￿ANNUAL￿REPORT￿2014 40 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￿our￿members￿of￿the￿BoM￿(which￿includes￿those￿persons￿specified￿in Item￿6.A.￿"Directors,￿Senior￿Management￿and￿Employees"),￿as￿a￿group,￿as￿of￿December￿31,￿2014.￿The￿information￿set out￿below￿with￿respect￿to￿shareholders￿other￿than￿the￿BoM￿is￿solely￿based￿on￿public￿filings￿with￿the￿SEC￿and￿AFM￿on February￿4,￿2015. Identity of Person or Group Capital￿Group￿International,￿Inc1 Stichting￿Administratiekantoor￿MAKTSJAB/Intel2 BlackRock￿Inc.3 Stichting￿Administratiekantoor￿TSMC/TSMC4 The￿Growth￿Fund￿of￿America5 Members￿of￿ASML’s￿Board￿of￿Management￿(5￿persons)6,7 Shares Owned 67,265,695 62,977,877 22,116,072 20,992,625 13,768,843 199,356 Percent of Class8 15.54% 14.55% 5.11% 4.85% 3.18% 0.05% 1 2 3 4 5 6 7 8 As￿reported￿to￿the￿AFM￿on￿April￿25,￿2014,￿Capital￿Group￿International,￿Inc.￿and￿CRMC,￿which￿we￿believe￿to￿be￿an￿affiliate￿of￿Capital￿Group International,￿Inc.,￿indirectly￿have￿605,391,255￿voting￿rights￿corresponding￿to￿67,265,695￿shares￿(based￿on￿nine￿votes￿per￿share)￿of￿our￿ordinary shares￿but￿do￿not￿have￿ownership￿rights￿related￿to￿those￿shares.￿Capital￿World￿Investors￿reported￿on￿a￿Schedule￿13-G/A￿filed￿with￿the￿SEC￿on February￿13,￿2014,￿that￿it￿is￿the￿beneficial￿owner￿of￿45,026,116￿shares￿of￿our￿ordinary￿shares￿as￿a￿result￿of￿its￿affiliation￿with￿CRMC. Stichting￿Adminstratiekantoor￿MAKTSJAB￿owns￿the￿stated￿percentage￿of￿our￿ordinary￿shares￿and￿has￿issued￿corresponding￿depository￿receipts￿to Intel. Based￿solely￿on￿the￿Schedule￿13-G/A￿filed￿by￿BlackRock￿Inc.￿with￿the￿SEC￿on￿October￿8,￿2014.￿The￿July￿2,￿2013￿public￿filing￿with￿the￿AFM￿shows aggregate￿holdings￿of￿various￿BlackRock￿funds￿of￿(based￿on￿total￿number￿of￿issued￿shares￿as￿per￿2￿July￿2013)￿3.68%￿in￿shares￿and￿4.42%￿in￿voting rights. Stichting￿Administratiekantoor￿TSMC￿owns￿the￿stated￿percentage￿of￿ordinary￿shares￿and￿has￿issued￿corresponding￿depository￿receipts￿to￿TSMC. As￿reported￿to￿the￿AFM￿on￿May￿15,￿2014,￿The￿Growth￿Fund￿of￿America￿does￿not￿hold￿voting￿rights￿related￿to￿13,768,843￿shares￿of￿our￿ordinary shares.￿We￿believe￿The￿Growth￿Fund￿of￿America￿to￿be￿a￿fund￿managed￿by￿CRMC￿as￿referred￿to￿in￿footnote￿1￿of￿this￿table.￿Accordingly,￿there￿may be￿overlap￿between￿the￿shares￿reported￿to￿be￿owned￿by￿The￿Growth￿Fund￿of￿America￿and￿the￿shares￿reported￿to￿be￿owned￿by￿Capital￿Group International,￿Inc. Does￿not￿include￿unvested￿shares￿granted￿to￿members￿of￿ASML's￿BoM.￿Further￿information￿required￿by￿Item￿7.A.￿is￿incorporated￿by￿reference￿from ASML’s￿2014￿Remuneration￿Report,￿see￿Item￿6.B.￿"Compensation". No￿shares￿are￿owned￿by￿members￿of￿the￿Supervisory￿Board. As￿a￿percentage￿of￿the￿total￿number￿of￿ordinary￿shares￿issued￿and￿outstanding￿(432,935,288)￿as￿of￿December￿31,￿2014,￿which￿excludes￿5,138,355 ordinary￿shares￿which￿have￿been￿issued￿but￿are￿held￿in￿treasury￿by￿ASML.￿Please￿note￿that￿share￿ownership￿percentages￿reported￿to￿the￿AFM￿are expressed￿as￿a￿percentage￿of￿the￿total￿number￿of￿ordinary￿shares￿issued￿(including￿treasury￿stock)￿and￿that￿accordingly,￿percentages￿reflected￿in￿this table￿may￿differ￿from￿percentages￿reported￿to￿the￿AFM. The￿Intel￿Stichting￿and￿the￿TSMC￿Stichting￿acquired￿the￿shares￿indicated￿above￿as￿part￿of￿our￿CCIP￿in￿the￿second￿half of￿2012.￿These￿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￿their￿respective￿Customer￿Stichtingen,￿except￿in￿certain￿exceptional￿circumstances:￿i) the￿authorization￿of￿certain￿significant￿share￿issuances￿and￿share￿repurchases,￿ii)￿any￿amendment￿to￿the￿Articles￿of Association￿that￿would￿materially￿affect￿the￿specific￿voting￿rights￿of￿Intel￿or￿TSMC,￿iii)￿any￿significant￿change￿in￿the identity￿or￿nature￿of￿ASML￿or￿its￿business,￿iv)￿the￿dissolution￿of￿ASML,￿v)￿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.￿See￿Item￿10.B.￿"Memorandum￿and￿Articles￿of￿Association". As￿of￿December￿31,￿2014,￿82,457,616￿NASDAQ￿shares￿were￿held￿by￿369￿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￿2014 41 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). The￿AFM￿requires￿the￿notification￿of￿any￿gross￿short￿position￿in￿our￿shares.￿For￿the￿notification￿of￿gross￿short￿positions the￿same￿thresholds￿apply￿as￿for￿notifying￿an￿actual￿or￿potential￿interest￿in￿the￿capital￿and/or￿or￿voting￿rights￿of￿a￿Dutch listed￿company,￿as￿referred￿to￿above.￿In￿addition,￿pursuant￿to￿Regulation￿(EU)￿No￿236/2012,￿each￿person￿holding￿a￿net short￿position￿amounting￿to￿0.2￿percent￿of￿the￿issued￿share￿capital￿of￿a￿Dutch￿listed￿company￿is￿required￿to￿report￿it to￿the￿AFM.￿Each￿subsequent￿increase￿of￿this￿position￿by￿0.1￿percent￿above￿0.2￿percent￿will￿also￿need￿to￿be￿reported. Each￿net￿short￿position￿equal￿to￿0.5￿percent￿of￿the￿issued￿share￿capital￿of￿a￿Dutch￿listed￿company￿and￿any￿subsequent increase￿of￿that￿position￿by￿0.1￿percent￿will￿be￿made￿public￿via￿the￿AFM￿short￿selling￿register.￿To￿calculate￿whether￿a natural￿person￿or￿legal￿person￿has￿a￿net￿short￿position,￿their￿short￿positions￿and￿long￿positions￿must￿be￿set-off.￿A￿short transaction￿in￿a￿share￿can￿only￿be￿contracted￿if￿a￿reasonable￿case￿can￿be￿made￿that￿the￿shares￿sold￿can￿actually￿be delivered,￿which￿requires￿confirmation￿of￿a￿third￿party￿that￿the￿shares￿have￿been￿located. The￿AFM￿keeps￿a￿public￿registry￿of￿and￿publishes￿all￿notifications￿made￿pursuant￿to￿the￿FMSA. ASML￿ANNUAL￿REPORT￿2014 42 Non-compliance￿with￿the￿reporting￿obligations￿under￿the￿FMSA￿could￿lead￿to￿criminal￿fines,￿administrative￿fines, imprisonment￿or￿other￿sanctions.￿In￿addition,￿non-compliance￿with￿the￿reporting￿obligations￿under￿the￿FMSA￿may￿lead￿to civil￿sanctions,￿including￿(i)￿suspension￿of￿the￿voting￿rights￿relating￿to￿the￿shares￿held￿by￿the￿offender,￿for￿a￿period￿of￿not more￿than￿three￿years,￿(ii)￿nullification￿of￿any￿resolution￿of￿our￿general￿meeting￿of￿shareholders￿to￿the￿extent￿that￿such resolution￿would￿not￿have￿been￿approved￿if￿the￿votes￿at￿the￿disposal￿of￿the￿person￿or￿entity￿in￿violation￿of￿a￿duty￿under the￿FMSA￿had￿not￿been￿exercised￿and￿(iii)￿a￿prohibition￿on￿the￿acquisition￿by￿the￿offender￿of￿our￿shares￿or￿the￿voting￿on our￿ordinary￿shares￿for￿a￿period￿of￿not￿more￿than￿five￿years. We￿may￿request￿Euroclear￿Nederland￿and￿its￿admitted￿institutions￿as￿well￿as￿intermediaries,￿institutions￿and￿custodians of￿investment￿funds￿(in￿the￿Netherlands￿and￿abroad)￿of￿which￿we￿reasonably￿expect￿that￿they￿hold￿our￿shares￿other than￿as￿beneficial￿owner,￿to￿provide￿certain￿details￿on￿the￿identity￿and￿number￿of￿shares￿held,￿of￿their￿clients￿for￿whom they￿hold￿our￿shares.￿We￿must￿keep￿the￿information￿received￿confidential.￿We￿may￿only￿make￿such￿requests￿during￿a period￿of￿60￿days￿prior￿to￿the￿day￿on￿which￿our￿general￿meeting￿of￿shareholders￿will￿be￿held.￿No￿details￿are￿required￿to be￿given￿in￿respect￿of￿shareholders￿with￿an￿interest￿of￿less￿than￿0.5￿percent￿of￿our￿issued￿share￿capital.￿A￿shareholder who,￿individually￿or￿together￿with￿other￿shareholders,￿holds￿an￿interest￿of￿at￿least￿10￿percent￿of￿the￿issued￿share￿capital may￿request￿us￿to￿establish￿the￿identity￿of￿our￿shareholders￿in￿this￿manner￿so￿that￿we￿can￿forward￿to￿them￿information provided￿by￿such￿shareholder￿in￿respect￿of￿an￿item￿on￿the￿agenda￿for￿the￿general￿meeting.￿This￿request￿may￿only￿be made￿during￿a￿period￿of￿60￿days￿until￿(and￿not￿including)￿the￿42nd￿day￿before￿the￿day￿on￿which￿the￿general￿meeting￿of shareholders￿will￿be￿held. B. 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.￿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￿29￿to￿our￿Financial￿Statements for￿more￿information￿about￿the￿CCIP.￿See￿Note￿29￿to￿our￿Financial￿Statements￿for￿details￿on￿sales￿to￿Intel￿in￿2014￿and outstanding￿balances￿as￿of￿December￿31,￿2014. 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￿BoM￿or￿Supervisory￿Board. C. Interests of Experts & Counsel Not￿applicable. ASML￿ANNUAL￿REPORT￿2014 43 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 BoM￿will,￿upon￿prior￿approval￿from￿the￿Supervisory￿Board,￿submit￿a￿proposal￿to￿the￿AGM￿with￿respect￿to￿the￿amount of￿dividend￿to￿be￿declared￿with￿respect￿to￿the￿prior￿year.￿The￿dividend￿proposal￿in￿any￿given￿year￿will￿be￿subject￿to￿the availability￿of￿distributable￿profits￿or￿retained￿earnings￿and￿may￿be￿affected￿by,￿among￿other￿factors,￿the￿BoM's￿views on￿our￿potential￿future￿liquidity￿requirements,￿including￿for￿investments￿in￿production￿capacity,￿the￿funding￿of￿our￿R&D programs￿and￿for￿acquisition￿opportunities￿that￿may￿arise￿from￿time￿to￿time;￿and￿by￿future￿changes￿in￿applicable￿income tax￿and￿corporate￿laws.￿Accordingly,￿it￿may￿be￿decided￿to￿propose￿not￿to￿pay￿a￿dividend￿or￿to￿pay￿a￿lower￿dividend￿with respect￿to￿any￿particular￿year￿in￿the￿future. For￿2014,￿a￿proposal￿to￿declare￿a￿dividend￿of￿EUR￿0.70￿per￿ordinary￿share￿of￿EUR￿0.09￿nominal￿value￿will￿be￿submitted to￿the￿2015￿AGM. 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￿Euronext￿Amsterdam￿shares.￿The￿principal￿trading￿market￿of￿our￿ordinary￿shares￿is￿Euronext￿Amsterdam. Our￿ordinary￿shares￿also￿trade￿on￿NASDAQ.￿For￿more￿information￿see￿Item￿10.B.￿''Memorandum￿and￿Articles￿of Association''. Our￿shares￿listed￿on￿NASDAQ￿are￿registered￿with￿J.P.￿Morgan,￿our￿New￿York￿Transfer￿Agent,￿pursuant￿to￿the￿terms of￿the￿Transfer￿Agent￿Agreement￿between￿ASML￿and￿J.P￿Morgan.￿Our￿shares￿listed￿on￿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￿Euronext￿Amsterdam￿and￿vice￿versa. Dividends￿payable￿on￿our￿shares￿listed￿at￿NASDAQ￿are￿declared￿in￿euro￿and￿converted￿to￿U.S.￿dollar￿at￿the￿rate￿of exchange￿at￿the￿close￿of￿business￿on￿the￿date￿determined￿by￿the￿BoM.￿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.￿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,￿2014,￿the￿Transfer￿Agent￿reimbursed￿USD 0.8￿million￿of￿expenses￿incurred￿by￿ASML￿(which￿mainly￿comprised￿of￿audit,￿advisory,￿legal￿and￿listing￿fees￿incurred￿due to￿the￿existence￿of￿our￿shares￿listed￿at￿NASDAQ). ASML￿ANNUAL￿REPORT￿2014 44 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￿Euronext￿Amsterdam. Annual Information 2014 2013 2012 2011 2010 Quarterly Information 4th￿quarter￿2014 3rd￿quarter￿2014 2nd￿quarter￿2014 1st￿quarter￿2014 4th￿quarter￿2013 3rd￿quarter￿2013 2nd￿quarter￿2013 1st￿quarter￿2013 Monthly Information February￿(through￿February￿5)￿2015 January￿2015 December￿2014 November￿2014 October￿2014 September￿2014 August￿2014 ASML NASDAQ shares USD ASML Euronext Amsterdam shares EUR High 109.64 100.96 64.68 45.82 38.45 109.64 102.13 94.80 93.36 100.96 98.76 84.08 78.21 103.89 107.60 109.64 105.91 99.68 102.13 96.12 Low 79.90 63.08 40.91 31.08 24.73 90.06 83.28 79.90 84.09 86.94 78.40 66.08 63.08 101.84 100.72 103.35 98.96 90.06 97.21 90.83 High 89.88 74.30 49.36 32.81 29.26 89.88 78.89 69.61 67.76 74.30 73.00 65.55 56.80 90.85 94.78 89.88 85.21 79.45 78.89 72.81 Low 57.57 47.20 31.81 22.28 19.68 70.20 62.20 57.57 62.05 63.87 60.66 50.62 47.20 89.21 84.67 83.15 78.40 70.20 73.57 67.65 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￿BoM￿has￿the￿power￿to￿issue￿ordinary￿and￿preference￿shares￿if￿and￿insofar￿as￿the￿BoM￿has￿been￿authorized￿to￿do so￿by￿the￿General￿Meeting￿of￿Shareholders.￿The￿BoM￿requires￿the￿approval￿of￿the￿Supervisory￿Board￿for￿such￿an￿issue. An￿authorization￿of￿the￿BoM￿to￿issue￿shares￿or￿preference￿shares￿may￿be￿effective￿for￿a￿specified￿period￿of￿up￿to￿five years￿and￿may￿be￿renewed.￿In￿the￿absence￿of￿such￿authorization,￿the￿General￿Meeting￿of￿Shareholders￿has￿the￿power to￿authorize￿the￿issuance￿of￿ordinary￿or￿preference￿shares,￿upon￿the￿proposal￿of￿the￿BoM,￿which￿proposal￿must￿be authorized￿by￿the￿Supervisory￿Board. ASML￿ANNUAL￿REPORT￿2014 45 At￿our￿2014￿AGM,￿our￿shareholders￿authorized￿the￿BoM￿to￿issue￿shares￿and/or￿rights￿thereto￿through￿October￿23,￿2015, up￿to￿an￿aggregate￿maximum￿of￿5.0￿percent￿of￿ASML's￿issued￿share￿capital,￿plus￿an￿additional￿5.0￿percent￿of￿our￿issued share￿capital￿at￿April￿23,￿2014￿that￿may￿be￿issued￿in￿connection￿with￿mergers,￿acquisitions￿and/or￿(strategic)￿alliances. At￿our￿2015￿AGM,￿our￿shareholders￿will￿be￿asked￿to￿extend￿this￿authority￿through￿October￿22,￿2016. 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,￿the￿BoM￿has￿the￿power￿subject￿to￿approval￿of￿the￿Supervisory￿Board,￿to￿restrict￿or￿exclude￿the preemptive￿rights￿of￿holders￿of￿ordinary￿shares.￿At￿our￿2014￿AGM,￿our￿shareholders￿authorized￿the￿BoM￿through￿October 23,￿2015,￿subject￿to￿approval￿of￿the￿Supervisory￿Board,￿to￿restrict￿or￿exclude￿preemptive￿rights￿of￿holders￿of￿ordinary shares￿up￿to￿a￿maximum￿of￿10￿percent￿of￿our￿issued￿share￿capital.￿At￿our￿2015￿AGM,￿our￿shareholders￿will￿be￿asked￿to extend￿this￿authority￿through￿October￿22,￿2016. 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￿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￿BoM￿is￿currently￿authorized,￿subject￿to￿Supervisory￿Board￿approval,￿to￿repurchase￿as￿of￿April￿23,￿2014 through￿October￿23,￿2015,￿up￿to￿a￿maximum￿of￿two￿times￿10.0￿percent￿of￿ASML's￿issued￿share￿capital￿as￿of￿April￿23, 2014,￿at￿a￿price￿between￿the￿nominal￿value￿of￿the￿ordinary￿shares￿purchased￿and￿110.0￿percent￿of￿the￿market￿price￿of these￿securities￿on￿Euronext￿Amsterdam￿or￿NASDAQ.￿At￿our￿2015￿AGM,￿our￿shareholders￿will￿be￿asked￿to￿extend￿this authorization￿through￿October￿22,￿2016. ASML￿ANNUAL￿REPORT￿2014 46 C. Material Contracts 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 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. Development 450mm silicon wafer technology As￿previously￿disclosed,￿in￿November￿2013,￿ASML￿decided￿to￿pause￿the￿development￿of￿450mm￿lithography￿systems until￿customer￿demand￿and￿the￿timing￿related￿to￿such￿demand￿is￿clear.￿We￿have￿agreed￿with￿Intel￿that￿the￿450mm￿NRE funding￿will￿be￿applied￿to￿other￿lithography￿projects,￿including￿generic￿developments￿applicable￿to￿both￿300mm￿and 450mm.￿We￿believe￿that￿our￿450mm￿development￿activities￿can￿be￿restarted￿if￿and￿when￿the￿industry￿demands￿the introduction￿of￿450mm. In￿addition￿to￿the￿funding￿commitments￿described￿above,￿the￿Participating￿Customers￿have￿invested￿in￿96,566,077￿of our￿ordinary￿shares,￿the￿proceeds￿of￿which,￿totalling￿EUR￿3.85￿billion,￿were￿returned￿to￿the￿holders￿of￿ordinary￿shares (excluding￿the￿Participating￿Customers)￿through￿a￿synthetic￿share￿buyback￿executed￿in￿November￿2012.￿For￿further information￿regarding￿the￿synthetic￿share￿buyback,￿see￿Note￿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￿62,977,877￿of￿our￿ordinary￿shares.￿A￿description￿of￿the shareholders￿agreement￿and￿NRE￿Funding￿Agreements￿between￿ASML￿and￿Intel￿is￿set￿out￿below.￿The￿shareholders agreements￿and￿the￿NRE￿Funding￿Agreements￿between￿ASML￿and￿the￿other￿program￿participants￿-￿TSMC￿(which acquired￿20,992,625￿of￿our￿ordinary￿shares￿and￿made￿an￿EUR￿276￿million￿funding￿commitment)￿and￿Samsung￿(which acquired￿12,595,575￿of￿our￿ordinary￿shares￿and￿made￿an￿EUR￿276￿million￿funding￿commitment)￿are￿on￿substantially￿the same￿terms￿as￿those￿agreed￿with￿Intel.￿Shares￿were￿acquired￿by￿Dutch￿foundations￿("Stichtingen￿)￿established￿for￿each participant. Investment Agreement Pursuant￿to￿the￿Intel￿Investment￿Agreement￿between￿ASML￿and￿Intel,￿dated￿July￿9,￿2012,￿ASML￿agreed￿to￿issue￿to￿a foundation￿established￿for￿the￿Intel￿Stichting￿ordinary￿shares￿equal￿to￿15￿percent￿of￿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￿Euronext￿Amsterdam￿for￿the￿twenty￿trading￿days￿up￿to￿and￿including￿July￿6,￿2012. Under￿the￿Intel￿Investment￿Agreement,￿ASML￿has￿agreed￿to￿indemnify￿Intel,￿and￿its￿affiliates￿for￿certain￿losses￿and expenses￿related￿to￿breaches￿of￿representations,￿warranties,￿covenants￿and￿agreements￿in￿the￿Investment￿Agreements and￿with￿respect￿to￿certain￿legal￿proceedings￿related￿thereto,￿subject￿to￿certain￿limitations. ASML￿ANNUAL￿REPORT￿2014 47 Shareholder Agreement In￿connection￿with￿the￿issuance￿of￿shares￿pursuant￿to￿the￿Intel￿Investment￿Agreement,￿on￿September￿12,￿2012￿ASML, Intel￿and￿the￿Intel￿Stichting￿entered￿into￿a￿Shareholder￿Agreement￿which￿governs￿certain￿matters￿relating￿to￿the￿holding of￿and￿further￿investment￿by￿Intel￿in￿ordinary￿shares￿of￿ASML,￿directly￿and￿indirectly￿through￿the￿Intel￿Stichting,￿including the￿matters￿described￿below. Voting Restrictions Pursuant￿to￿the￿Intel￿Shareholder￿Agreement,￿Intel￿(and￿the￿Intel￿Stichting)￿will￿not￿be￿entitled￿to￿vote￿the￿ordinary￿shares that￿were￿acquired￿by￿the￿Intel￿Stichting￿as￿part￿of￿the￿CCIP￿or￿any￿other￿ordinary￿shares￿otherwise￿transferred￿to￿the Intel￿Stichting￿(under￿the￿circumstances￿described￿under￿"Standstill;￿Additional￿Purchases"￿below)￿prior￿to￿a￿Shareholder Agreement￿Termination￿Event￿(as￿defined￿below),￿except￿when￿a￿Suspension￿Event￿(as￿described￿below)￿occurs￿and is￿continuing￿or￿where￿the￿following￿matters￿are￿proposed￿at￿any￿General￿Meeting￿(the￿"Voting￿Restrictions"):￿(i)￿an issuance￿of￿ASML￿shares￿or￿grant￿of￿rights￿to￿subscribe￿for￿ASML￿shares￿representing￿25￿percent￿or￿more￿of￿the￿issued and￿outstanding￿share￿capital￿of￿ASML￿or￿the￿restriction￿or￿exclusion￿of￿pre-emption￿rights￿relating￿thereto￿(in￿each case,￿on￿an￿aggregate￿basis￿during￿the￿preceding￿12￿months)￿or￿the￿designation￿of￿the￿BoM￿as￿the￿authorized￿body to￿resolve￿on￿these￿matters;￿(ii)￿an￿authorization￿to￿repurchase￿25￿percent￿or￿more￿of￿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 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. ASML￿ANNUAL￿REPORT￿2014 48 In￿addition,￿Intel￿may￿not￿(even￿after￿the￿Lock-Up￿Restriction￿has￿ended),￿without￿written￿consent￿of￿ASML,￿transfer on￿Euronext￿Amsterdam,￿NASDAQ￿or￿another￿securities￿exchange￿more￿than￿(i)￿in￿respect￿of￿Intel,￿4￿percent￿of￿the outstanding￿shares￿of￿ASML￿during￿any￿six￿month￿period￿(the￿relevant￿percentage￿is￿1.5￿percent￿for￿Samsung￿and￿2.5 percent￿for￿TSMC);￿the￿foregoing￿restriction￿does￿not￿apply￿to￿block￿trades￿or￿underwritten￿offerings.￿There￿are￿also restrictions￿on￿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￿where￿the￿shareholders￿of￿ASML￿prior￿to￿such a￿transaction￿are￿no￿longer￿entitled￿to￿exercise￿at￿least￿50￿percent￿of￿the￿votes￿in￿the￿General￿Meeting￿following￿such transaction,￿(ii)￿in￿the￿event￿of￿a￿delisting￿of￿our￿shares￿listed￿at￿Euronext￿Amsterdam￿or￿delisting￿of￿our￿shares￿listed￿at NASDAQ￿(except￿for￿certain￿voluntary￿delistings￿from￿NASDAQ),￿(iii)￿the￿winding￿up￿or￿liquidation￿of￿ASML,￿or￿(iv)￿in￿the event￿that￿all￿Depositary￿Receipts￿are￿exchanged￿for￿ASML￿shares￿and￿Intel￿does￿not￿acquire￿ASML￿shares￿in￿excess￿of 4.99￿percent￿of￿the￿outstanding￿ASML￿shares￿within￿18￿months￿of￿such￿exchange￿(see￿"Standstill;￿Additional￿Purchases" above). NRE Funding Agreements On￿July￿9,￿2012,￿ASML￿and￿Intel￿entered￿into￿two￿NRE￿Funding￿Agreements￿pursuant￿to￿which￿Intel￿has￿agreed￿to fund￿certain￿of￿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. 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-Dutch￿residents￿to￿hold￿or￿vote￿ordinary￿shares.￿Cash￿distributions,￿if￿any,￿payable￿in￿euros￿on our￿shares￿listed￿at￿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￿BoM￿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. ASML￿ANNUAL￿REPORT￿2014 49 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. 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￿our￿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￿2014 50 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;￿or • 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￿2014 51 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￿U.S.-Netherlands￿Income￿tax￿treaty,￿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;￿or • 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;￿or • 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￿2014￿and￿that￿we￿will￿not￿be￿a￿PFIC￿in￿2015. 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￿our￿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. ASML￿ANNUAL￿REPORT￿2014 52 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￿make￿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 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￿Relief￿Reconciliation￿Act￿of￿2003,￿as￿amended￿by￿the￿Working￿Families￿Tax￿Relief￿Act￿of￿2004,￿the American￿Jobs￿Creation￿Act￿of￿2004,￿and￿the￿American￿Taxpayer￿Relief￿Act￿of￿2012,￿reduces￿to￿20.0￿percent￿the maximum￿tax￿rate￿for￿certain￿dividends￿received￿by￿individuals,￿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. ASML￿ANNUAL￿REPORT￿2014 53 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 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￿SEC￿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￿SEC,￿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￿SEC￿under￿cover￿of￿a￿Form￿6-K. Documents￿we￿file￿with￿the￿SEC￿are￿publicly￿available￿at￿its￿public￿reference￿room￿at￿100￿F￿Street,￿N.E.,￿Washington, DC￿20549,￿United￿States.￿The￿SEC￿also￿maintains￿a￿Website￿that￿contains￿reports￿and￿other￿information￿regarding registrants￿that￿are￿required￿to￿file￿electronically￿with￿the￿SEC.￿The￿address￿of￿this￿Website￿is￿http://www.sec.gov.￿Please call￿the￿SEC￿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". ASML￿ANNUAL￿REPORT￿2014 54 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￿condition￿and￿results￿from operations.￿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￿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￿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,￿Taiwanese￿dollars￿and Japanese￿yen￿and￿to￿a￿limited￿extent￿in￿other￿currencies.￿Therefore,￿we￿are￿exposed￿to￿foreign￿currency￿exchange￿risks. It￿is￿our￿policy￿to￿hedge￿material￿transaction￿exposures,￿such￿as￿forecasted￿sales￿and￿purchase￿transactions,￿and material￿net￿remeasurement￿exposures,￿such￿as￿accounts￿receivable￿and￿payable.￿We￿hedge￿these￿exposures￿through the￿use￿of￿foreign￿exchange￿contracts.￿In￿line￿with￿our￿overall￿risk￿management￿program￿we￿do￿not￿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. 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￿contracts Interest￿rate￿swaps As of December 31 Notional amount EUR 1,219,894 1,013,053 Fair Value Notional amount EUR 986,986 1,013,053 EUR (52,319) 138,367 Fair Value EUR 8,583 51,385 2014 2013 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. ASML￿ANNUAL￿REPORT￿2014 55 Sensitivity￿Analysis￿Financial￿Instruments Foreign Currency Sensitivity We￿are￿mainly￿exposed￿to￿fluctuations￿in￿exchange￿rates￿between￿the￿euro￿and￿the￿U.S.￿dollar,￿the￿euro￿and￿Taiwanese dollar￿and￿the￿euro￿and￿the￿Japanese￿yen.￿The￿following￿table￿details￿our￿sensitivity￿to￿a￿10.0￿percent￿strengthening of￿foreign￿currencies￿against￿the￿euro.￿The￿sensitivity￿analysis￿includes￿foreign￿currency￿denominated￿monetary￿items outstanding￿and￿adjusts￿their￿translation￿at￿the￿period￿end￿for￿a￿10.0￿percent￿strengthening￿in￿foreign￿currency￿rates.￿A positive￿amount￿indicates￿an￿increase￿in￿income￿before￿income￿taxes￿or￿OCI,￿as￿shown. 2014 2013 (in thousands) U.S.￿dollar Japanese￿yen Taiwanese￿dollar Other￿currencies Total Impact on income before income taxes EUR 3,347 1,516 (2,929) (2,183) (249) Impact on OCI EUR 15,913 (10,002) - - 5,911 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 It￿is￿our￿policy￿to￿limit￿the￿effects￿of￿currency￿exchange￿rate￿fluctuations￿on￿our￿Consolidated￿Statements￿of￿Operations. The￿decreased￿effect￿on￿income￿before￿income￿taxes￿in￿2014￿compared￿with￿2013￿reflects￿our￿lower￿net￿exposure￿at year￿end￿2014.￿The￿negative￿effect￿on￿income￿before￿income￿taxes￿as￿presented￿in￿the￿table￿above￿for￿2014￿is￿mainly attributable￿to￿timing￿differences￿between￿the￿arising￿and￿hedging￿of￿exposures. The￿effects￿of￿the￿fair￿value￿movements￿of￿cash￿flow￿hedges,￿entered￿into￿for￿U.S.￿dollar￿and￿Japanese￿yen￿transactions are￿recognized￿in￿OCI.￿The￿U.S.￿dollar￿and￿Japanese￿yen￿effect￿on￿OCI￿in￿2014￿compared￿with￿2013￿is￿the￿result￿of￿an decrease￿in￿outstanding￿purchase￿hedges￿and￿increase￿in￿outstanding￿sales￿hedges. For￿a￿10.0￿percent￿weakening￿of￿the￿foreign￿currencies￿against￿the￿euro,￿there￿would￿be￿approximately￿an￿equal￿but opposite￿effect￿on￿the￿income￿before￿income￿taxes￿and￿OCI. Interest Rate Sensitivity The￿sensitivity￿analysis￿below￿has￿been￿determined￿based￿on￿the￿exposure￿to￿interest￿rates￿for￿both￿derivative￿financial and￿non-derivative￿financial￿instruments￿at￿the￿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 2014 2013 Impact on income before income taxes EUR 17,956 Impact on OCI EUR 941 Impact on income before income taxes EUR 19,969 Impact on OCI EUR 1,183 The￿positive￿effect￿on￿income￿before￿income￿taxes￿mainly￿relates￿to￿our￿cash￿and￿cash￿equivalents￿and￿short-term investments.￿The￿positive￿effect￿on￿OCI,￿is￿mainly￿attributable￿to￿the￿fair￿value￿movements￿of￿the￿interest￿rate￿swaps designated￿as￿cash￿flow￿hedges. For￿a￿1.0￿percentage￿point￿decrease￿in￿interest￿rates￿there￿would￿be￿a￿lower￿opposite￿effect￿on￿income￿before￿income taxes￿and￿OCI￿. 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￿2014 56 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,￿2014,￿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,￿2014,￿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,￿2014￿based￿upon￿the￿framework￿in￿"Internal￿Control￿–￿Integrated￿Framework"￿(2013) 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,￿2014 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 We￿adopted￿"Internal￿Control￿–￿Integrated￿Framework"￿(2013)￿issued￿by￿the￿Committee￿of￿Sponsoring￿Organizations of￿the￿Treadway￿Commission￿as￿of￿January￿1,￿2014.￿This￿adoption￿did￿not￿materially￿affect￿our￿internal￿control￿over financial￿reporting.￿In￿addition,￿during￿the￿year￿ended￿December￿31,￿2014,￿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￿2014 57 Item 16    A. Audit Committee Financial Expert Our￿Supervisory￿Board￿has￿determined￿that￿effective￿March￿18,￿2004,￿Mr.￿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.￿"Board￿Practices". B. Code of Ethics ASML￿fosters￿a￿culture￿of￿integrity￿where￿people￿comply￿with￿the￿law￿and￿with￿our￿Code￿of￿Conduct￿and￿Business Principles.￿We￿promote￿an￿open￿and￿honest￿culture￿that￿encourages￿people￿to￿speak￿up￿about￿irregularities￿and￿where senior￿management￿set￿the￿right￿example. Code of Conduct Our￿Code￿of￿Conduct￿describes￿what￿ASML￿stands￿for￿and￿believes￿in: • We￿respect￿people; • We￿respect￿our￿planet; • We￿operate￿with￿business￿and￿personal￿integrity;￿and • We￿manage￿professionally. The￿Code￿of￿Conduct￿can￿be￿found￿on￿the￿corporate￿governance￿section￿of￿ASML's￿Website. Business Principles The￿Code￿of￿Conduct￿has￿been￿translated￿into￿a￿set￿of￿practical￿Business￿Principles￿for￿all￿employees.￿The￿Business Principles￿help￿to￿drive￿ethical￿and￿balance￿behavior,￿control￿our￿business￿exposures,￿and￿safeguard￿our￿reputation. Employees￿must￿consult￿the￿business￿principles￿for￿their￿day-to-day￿guidance.￿The￿Business￿Principles￿focus￿on￿five areas: 1. Show￿respect￿for￿People￿and￿Planet; 2. Operate￿with￿integrity; 3. Preserve￿intellectual￿property￿and￿other￿assets; 4. Manage￿exposures￿by￿following￿processes;￿and 5. Adhere￿to￿our￿Business￿Principles￿and￿applicable￿laws,￿and￿speak￿up. Code of Conduct Complaints We￿encourage￿our￿employees￿to￿speak￿up￿and￿feel￿free￿to￿raise￿ethical￿issues￿without￿the￿fear￿of￿retaliation.￿ASML￿has a￿procedure￿in￿place￿for￿reporting￿issues￿relating￿to￿a￿(possible)￿breach￿of￿the￿Code￿of￿Conduct,￿including￿complaints￿of a￿financial￿nature￿(Whistleblower’s￿policy).￿For￿those￿employees￿who￿feel￿more￿comfortable￿speaking￿up￿anonymously, there￿is￿an￿external￿Speak￿Up￿line￿available￿(phone￿and￿webmail).￿The￿reporting￿procedure￿for￿(possible)￿Code￿of Conduct￿violations￿can￿be￿found￿on￿the￿corporate￿governance￿section￿of￿ASML's￿Website. For￿more￿information￿about￿this￿topic￿see￿our￿Corporate￿Responsibility￿Report. C. Principal Accountant Fees and Services Deloitte￿has￿served￿as￿our￿independent￿registered￿public￿accounting￿firm￿for￿the￿years￿ending￿December￿31,￿2014￿and 2013.￿The￿following￿table￿sets￿out￿the￿aggregate￿fees￿for￿professional￿audit￿services￿and￿other￿services￿rendered￿by Deloitte￿and￿its￿member￿firms￿and/or￿affiliates￿in￿2014￿and￿2013: Year ended December 31 (in thousands) Audit￿fees￿in￿relation￿to￿annual￿reports Other￿audit￿fees Tax￿fees 2014 Deloitte Accountants B.V. EUR 1,331 61 128 Deloitte Network EUR - 298 81 Principal accountant fees and services 1,520 379 2013 Deloitte Accountants B.V. EUR 1,679 61 128 Deloitte Network EUR - 303 219 1,868 522 Total EUR 1,331 359 209 1,899 Total EUR 1,679 364 347 2,390 ASML￿ANNUAL￿REPORT￿2014 58   Audit fees in relation to annual reports and other audit fees Audit￿fees￿primarily￿relate￿to￿the￿audit￿of￿the￿Financial￿Statements￿as￿set￿out￿in￿this￿Annual￿Report,￿our￿Statutory￿Annual Report,￿limited￿procedures￿on￿our￿quarterly￿results,￿agreed￿upon￿procedures￿related￿to￿the￿remuneration￿report￿and services￿related￿to￿statutory￿and￿regulatory￿filings￿of￿ASML￿and￿its￿subsidiaries. Tax fees The￿tax￿fees￿include￿tax￿compliance￿services￿and￿tax￿advisory￿services. The￿Audit￿Committee￿has￿approved￿the￿external￿audit￿plan￿and￿related￿audit￿fees￿for￿the￿year￿2014. The￿Audit￿Committee￿monitors￿compliance￿with￿the￿Dutch￿and￿US￿rules￿on￿non-audit￿services￿provided￿by￿our independent￿registered￿public￿accounting￿firm,￿which￿outlines￿strict￿separation￿of￿audit￿and￿advisory￿services￿for￿Dutch public￿interest￿entities. 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￿repurchase￿up￿to￿EUR￿1.0￿billion￿of￿our￿own￿shares￿within￿the 2013-2014￿timeframe.￿During￿the￿period￿from￿April￿18,￿2013￿up￿to￿and￿including￿December￿22,￿2014,￿when￿the￿program was￿completed,￿we￿had￿purchased￿14,595,554￿shares￿at￿an￿average￿price￿of￿EUR￿68.51￿per￿share￿of￿which￿9,464,503 shares￿have￿been￿cancelled￿in￿2014,￿and￿the￿remainder￿is￿intended￿to￿be￿cancelled￿in￿2015. The￿following￿tables￿provide￿a￿summary￿of￿shares￿repurchased￿by￿ASML￿in￿2014￿and￿a￿historic￿overview￿of￿previous share￿buyback￿programs,￿respectively: Period January￿20￿-￿31,￿2014 February￿1￿-￿28,￿2014 March￿1￿-￿31,￿2014 April￿1￿-￿30,￿2014 May￿2￿-￿31,￿2014 June￿1￿-￿30,￿2014 July￿1￿-￿31,￿2014 August￿1￿-￿31,￿2014 September￿1￿-￿30,￿2014 October￿1￿-￿31,￿2014 November￿1￿-￿30,￿2014 December￿1￿-￿22,￿2014 Total Period Share￿Buybacks Synthetic￿Share￿Buyback Share￿Buybacks Share￿Buybacks Share￿Buybacks Synthetic￿Share￿Buyback Share￿Buybacks Share￿Buybacks Share￿Buybacks Total / Average1 Total number of shares purchased 547,500 962,536 765,284 739,855 783,500 1,061,649 1,048,739 602,125 736,294 1,004,378 883,971 845,544 9,981,375 Average price paid per Share (EUR) 64.44 63.92 65.55 63.23 59.98 66.52 66.71 70.14 76.62 74.58 81.85 86.06 70.13 Total number of shares purchased as part of publicly announced plans or programs 547,500 1,510,036 2,275,320 3,015,175 3,798,675 4,860,324 5,909,063 6,511,188 7,247,482 8,251,860 9,135,831 9,981,375 Maximum value of shares that may yet be purchased under the program (EUR) 664,718,936 603,190,359 553,029,170 506,251,123 459,253,716 388,627,554 318,664,411 276,431,931 220,019,568 145,116,399 72,765,162 - Year 2006 2007 2007 2008 2011 2012 2012 2013 2014 Total amount paid (in EUR millions) 677.2 1,011.9 359.8 87.6 700.0 3,728.3 535.2 300.0 700.0 4,371.7 Total Number of Shares Purchased 40,385,139 55,093,409 17,000,000 5,000,000 25,674,576 93,411,216 13,478,058 4,614,179 9,981,375 171,226,736 Average Price Paid per Share (EUR) 16.77 18.37 21.16 17.52 27.26 39.91 39.71 65.02 70.13 25.53 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 2.3 35.3 1 Totals,￿average￿and￿percentage￿are￿excluding￿the￿synthetic￿share￿buyback￿executed￿in￿2012￿as￿part￿of￿our￿CCIP.￿The￿percentage￿represents￿the reduction￿of￿shares￿issued￿and￿outstanding￿compared￿to￿January￿1,￿2006. ASML￿ANNUAL￿REPORT￿2014 59 F. Change in Registrant’s Certifying Accountant Based￿on￿mandatory￿firm￿rotation￿required￿under￿Dutch￿law,￿in￿2014￿we￿completed￿our￿proposal￿process￿for￿a￿new auditor￿starting￿January￿1,￿2016.￿Our￿proposal￿is￿subject￿to￿approval￿at￿the￿2015￿AGM. 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￿Annual￿General￿Meeting￿of￿Shareholders￿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￿Annual￿General￿Meeting￿of￿Shareholders.￿The￿distribution￿of￿our Annual￿Report￿to￿shareholders￿is￿not￿required￿under￿Dutch￿corporate￿law￿or￿Dutch￿securities￿laws,￿or￿by￿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￿Reports 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)￿no￿later￿than￿42￿days￿prior￿to￿convocation￿of￿the￿Annual￿General￿Meeting￿of Shareholders.￿In￿addition,￿we￿post￿a￿copy￿of￿our￿Annual￿Report￿on￿our￿Website￿prior￿to￿the￿Annual￿General￿Meeting￿of Shareholders. • ASML￿does￿not￿follow￿NASDAQ’s￿requirement￿to￿obtain￿shareholder￿approval￿of￿stock￿option￿or￿purchase￿plans￿or other￿equity￿compensation￿arrangements￿available￿to￿officers,￿directors￿or￿employees.￿It￿is￿not￿required￿under￿Dutch law￿or￿generally￿accepted￿practice￿for￿Dutch￿companies￿to￿obtain￿shareholder￿approval￿of￿equity￿compensation arrangements￿available￿to￿officers,￿directors￿or￿employees.￿The￿Annual￿General￿Meeting￿of￿Shareholders￿adopts the￿remuneration￿policy￿for￿the￿BoM,￿approves￿equity￿compensation￿arrangements￿for￿the￿BoM￿and￿approves￿the remuneration￿for￿the￿Supervisory￿Board.￿The￿Remuneration￿Committee￿evaluates￿the￿achievements￿of￿individual members￿of￿the￿BoM￿with￿respect￿to￿the￿short￿and￿long-term￿quantitative￿performance,￿the￿full￿Supervisory￿Board evaluates￿the￿quantitative￿performance￿criteria.￿Equity￿compensation￿arrangements￿for￿employees￿are￿adopted￿by￿the BoM￿within￿limits￿approved￿by￿the￿Annual￿General￿Meeting￿of￿Shareholders. H. Mine Safety Disclosure Not￿applicable. ASML￿ANNUAL￿REPORT￿2014 60 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-52 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 4.22 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 Corporation1,2 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￿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￿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￿ANNUAL￿REPORT￿2014 61 Exhibit￿No. 4.25 4.26 4.27 4.28 8.1 12.1 13.1 15.1 101.INS 101.SCH 101.CAL 101.DEF 101.LAB 101.PRE Description 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)) 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.,￿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) 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￿19342 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￿SEC￿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￿10,￿2015￿ /s/￿Wolfgang￿U.￿Nickl Wolfgang￿U.￿Nickl Executive￿Vice￿President,￿CFO￿and￿member￿of￿the￿Board￿of￿Management Dated:￿February￿10,￿2015 ASML￿ANNUAL￿REPORT￿2014 62 Financial Statements Index to Financial Statements F-2 F-3 F-4 F-5 F-7 F-8 Consolidated￿Statements￿of￿Operations Consolidated￿Statements￿of￿Comprehensive￿Income Consolidated￿Balance￿Sheets Consolidated￿Statements￿of￿Shareholders’￿Equity Consolidated￿Statements￿of￿Cash￿Flows Notes￿to￿the￿Consolidated￿Financial￿Statements F-52 Report￿of￿Independent￿Registered￿Public￿Accounting￿Firm ASML￿ANNUAL￿REPORT￿2014 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) 2014 EUR 2013 EUR 2012 EUR Net￿system￿sales Net￿service￿and￿field￿option￿sales 4,242,790 1,613,487 3,993,129 1,252,197 3,801,632 929,923 Total net sales Cost￿of￿system￿sales Cost￿of￿service￿and￿field￿option￿sales 5,856,277 (2,335,512) (924,391) 5,245,326 (2,233,621) (834,443) 4,731,555 (2,198,921) (527,377) Total cost of sales (3,259,903) (3,068,064) (2,726,298) 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 2,596,374 81,006 (1,074,035) (321,110) 1,282,235 (8,600) 1,273,635 (76,995) 2,177,262 64,456 (882,029) (311,741) 1,047,948 (24,471) 1,023,477 (7,987) 2,005,257 - (589,182) (259,301) 1,156,774 (6,196) 1,150,578 (4,262) Net income 1,196,640 1,015,490 1,146,316 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 2.74 2.72 2.36 2.34 2.70 2.68 437,142 439,693 429,770 433,446 424,096 426,986 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￿2014 F-2 Consolidated Statements of Comprehensive Income Notes 4 4 Year ended December 31 (in thousands) 2014 EUR 2013 EUR 2012 EUR Net income 1,196,640 1,015,490 1,146,316 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 230,388 (113,779) 8,063 17,375 6,691 254,454 (5,370) (2,276) (121,425) 214 (7,761) 516 Total comprehensive income, net of taxes 1,451,094 894,065 1,146,832 Attributable￿to￿equity￿holders 1,451,094 894,065 1,146,832 ASML￿ANNUAL￿REPORT￿2014 F-3 Consolidated Balance Sheets Notes As of December 31 (in thousands, except share and per share data) 2014 EUR 2013 EUR 5 5 6 7 8 20 9 7 20 9 10 11 12 13 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 2,419,487 334,864 1,052,504 196,087 43,876 2,549,837 159,460 390,091 7,146,206 55,261 28,760 444,820 2,357,536 723,839 1,447,523 5,057,739 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 Total assets 12,203,945 11,513,730 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 496,236 2,347,799 36,293 4,261 2,354 1,928 2,888,871 1,149,876 237,315 3,638 411,655 1,802,484 625,870 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 Total liabilities 4,691,355 4,591,303 17,￿19 Commitments￿and￿contingencies Cumulative￿Preference￿Shares;￿EUR￿0.09￿nominal￿value; 700,000,000￿shares￿authorized￿at￿December￿31,￿2014￿and￿2013; none￿issued￿and￿outstanding￿at￿December￿31,￿2014￿and￿2013; Ordinary￿Shares￿B;￿EUR￿0.01￿nominal￿value; 9,000￿shares￿authorized￿at￿December￿31,￿2014￿and￿2013; none￿issued￿and￿outstanding￿per￿December￿31,￿2014￿and￿2013; Ordinary￿Shares;￿EUR￿0.09￿nominal￿value; 699,999,000￿shares￿authorized￿at￿December￿31,￿2014; 432,935,288￿issued￿and￿outstanding￿at￿December￿31,￿2014; 699,999,000￿shares￿authorized￿at￿December￿31,￿2013; 440,852,334￿issued￿and￿outstanding￿at￿December￿31,￿2013; Issued￿and￿outstanding￿shares Share￿premium Treasury￿shares￿at￿cost Retained￿earnings Accumulated￿other￿comprehensive￿income Total shareholders’ equity 26 - - - - - - 39,426 3,002,050 (389,443) 4,648,541 212,016 7,512,590 40,092 2,912,862 (364,702) 4,376,613 (42,438) 6,922,427 Total liabilities and shareholders’ equity 12,203,945 11,513,730 ASML￿ANNUAL￿REPORT￿2014 F-4 Consolidated Statements of Shareholders’ Equity Issued and Outstanding Shares Notes (in thousands) Balance at January 1, 2012 Number1 413,669 Amount EUR 38,354 Share Premium EUR 473,043 Treasury Shares at Cost EUR (416,417) Retained Earnings EUR 3,270,703 Accumulated OCI EUR 78,471 Total EUR 3,444,154 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 4 4 26,￿28 26,￿27 26,￿27 18,￿22 18 26 18,￿20 Components of comprehensive income: Net￿income Foreign￿currency￿translation Loss￿on￿financial￿instruments,￿net￿of taxes Total comprehensive income 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 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 Components of comprehensive income: Net￿income Foreign￿currency￿translation Gain￿on￿financial￿instruments,￿net￿of taxes Total comprehensive income CCIP: Fair￿value￿differences5 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, 2014 - - - - 96,566 - (93,411) (13,478) - - 3,819 - - - - - - - - - - - - - - 1,146,316 - - - 8,063 (7,547) 1,146,316 8,063 (7,547) 1,146,316 516 1,146,832 8,691 - (8,691) 3,968,677 (123,416) (3,845,261) (198) (1,030) - 344 - - - - 18,714 (10,222) - 2,116 - - 125,628 (535,175) 294,752 - 66,638 - - - - - - (293,722) - (3,046) (188,892) - - - - - - - - - - 3,977,368 (123,416) (3,728,324) (535,373) - 18,714 53,714 (188,892) 2,116 407,165 37,470 483,651 (464,574) 3,931,359 78,987 2 4,066,893 - - - - - - - - - - (4,614) - - 38,301 - - - (854) - 3,476 - - - - - - 20,956 - - 95,895 2,309,250 - 3,110 - - - - - (300,000) 349,261 - 50,611 - - 1,015,490 - - - (113,779) (7,646) 1,015,490 (113,779) (7,646) 1,015,490 (121,425) 894,065 - - (348,407) - (5,744) (216,085) - - - - - - - - 20,956 (300,000) - 95,895 2,357,593 (216,085) 3,110 440,852 40,092 2,912,862 (364,702) 4,376,613 (42,438) 2 6,922,427 - - - - - (9,981) - - 2,064 - - - - - - - - (852) - 186 - - - - - - 28,086 - - 63,380 (6,250) - 3,972 - - - - - (700,000) 610,698 - 64,561 - - 1,196,640 - - - 230,388 24,066 1,196,640 230,388 24,066 1,196,640 254,454 1,451,094 - - (609,846) - (46,904) (267,962) - - - - - - - - 28,086 (700,000) - 63,380 11,593 (267,962) 3,972 432,935 39,426 3,002,050 (389,443) 4,648,541 212,016 2 7,512,590 1 2 As￿of￿December￿31,￿2014,￿the￿number￿of￿issued￿shares￿was￿438,073,643.￿This￿includes￿the￿number￿of￿issued￿and￿outstanding￿shares￿of￿432,935,288 and￿the￿number￿of￿treasury￿shares￿of￿5,138,355.￿As￿of￿December￿31,￿2013,￿the￿number￿of￿issued￿shares￿was￿446,822,452.￿This￿includes￿the￿number of￿issued￿and￿outstanding￿shares￿of￿440,852,334￿and￿the￿number￿of￿treasury￿shares￿of￿5,970,118.￿As￿of￿December￿31,￿2012,￿the￿number￿of￿issued shares￿was￿419,852,467.￿This￿includes￿the￿number￿of￿issued￿and￿outstanding￿shares￿of￿407,165,221￿and￿the￿number￿of￿treasury￿shares￿of￿12,687,246. As￿of￿December￿31,￿2014,￿accumulated￿OCI,￿net￿of￿taxes,￿consists￿of￿EUR￿200.1￿million￿relating￿to￿foreign￿currency￿translation￿gain￿(2013:￿EUR￿30.2 million￿loss;￿2012:￿EUR￿83.5￿million￿gain)￿and￿EUR￿11.9￿million￿relating￿to￿unrealized￿gains￿on￿financial￿instruments￿(2013:￿EUR￿12.2￿million￿losses; 2012:￿EUR￿4.5￿million￿losses). ASML￿ANNUAL￿REPORT￿2014 F-5 3 4 5 6 7 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. In￿2014,￿EUR￿28.1￿million￿(2013:￿EUR￿21.0￿million)￿is￿recognized￿to￿increase￿equity￿to￿the￿fair￿value￿of￿the￿shares￿issued￿to￿the￿Participating Customers￿in￿the￿CCIP.￿The￿portion￿of￿the￿NRE￿funding￿allocable￿to￿the￿shares￿is￿recognized￿over￿the￿NRE￿Funding￿Agreements￿period￿(2013-2017). 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. ASML￿ANNUAL￿REPORT￿2014 F-6 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 7 Year ended December 31 (in thousands) 2014 EUR 2013 EUR 2012 EUR Cash Flows from Operating Activities Net￿income 1,196,640 1,015,490 1,146,316 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 Inventories1,2 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￿equipment2 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 Repayment￿of￿debt Tax￿benefit￿(deficit)￿from￿share-based￿payments Net cash 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￿and￿other￿paid Income￿taxes￿paid 254,644 10,528 3,502 63,380 133 162,821 (59,050) (164,850) 51,132 (293,404) (112,424) 36,524 (136,192) 11,822 1,025,206 (358,280) (2,952) (504,756) 849,776 - (16,212) (267,962) (700,000) 39,679 - - - (4,128) 3,972 (928,439) 80,555 8,238 88,793 2,330,694 2,419,487 228,775 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) 3 (368,341) (216,085) (300,000) 31,822 740,445 5 (368,303) 6 - (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 4 - - (3,728,324) 7 (2,776) 2,116 (545,583) (961,938) (2,248) (964,186) 2,731,782 1,767,596 (42,439) (124,325) (50,535) (2,278) (37,906) (109,504) An￿amount￿of￿EUR￿30.7￿million￿(2013:￿EUR￿48.2￿million,￿2012:￿EUR￿222.9￿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. An￿amount￿of￿EUR￿95.5￿million￿(2013:￿EUR￿115.9￿million,￿2012:￿EUR￿204.8￿million)￿of￿the￿additions￿in￿property,￿plant￿and￿equipment￿relates￿to￿non- cash￿transfers￿from￿inventory.￿Other￿movements￿include￿EUR￿1.5￿million￿increase￿(2013:￿EUR￿12.5￿million￿decrease,￿2012:￿EUR￿9.6￿million￿decrease), mainly￿relating￿to￿investments￿not￿yet￿paid￿and￿inceptions￿of￿finance￿lease￿arrangements.￿Since￿the￿transfers￿between￿inventory￿and￿property,￿plant and￿equipment￿are￿non-cash￿events,￿these￿are￿not￿reflected￿in￿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. 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.￿See￿Note 28￿to￿the￿Financial￿Statements. Net￿proceeds￿from￿issuance￿of￿notes￿relate￿to￿the￿total￿cash￿proceeds￿of￿EUR￿740.4￿million￿(net￿of￿incurred￿transaction￿costs)￿from￿the￿issuance￿of our￿EUR￿750￿million￿3.375￿percent￿senior￿notes￿due￿2023. 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￿part￿of￿the￿synthetic￿share￿buyback￿in￿November￿2012. ASML￿ANNUAL￿REPORT￿2014 F-7 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￿and￿Asia. Our￿shares￿are￿listed￿for￿trading￿in￿the￿form￿of￿registered￿shares￿on￿NASDAQ￿and￿on￿Euronext￿Amsterdam.￿The￿principal trading￿market￿of￿our￿ordinary￿shares￿is￿Euronext￿Amsterdam. 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￿our￿Consolidated￿Financial￿Statements￿includes￿Cymer￿from￿May￿30,￿2013￿onwards,￿Cymer￿is￿not￿included in￿the￿comparative￿financial￿information￿before￿May￿30,￿2013. 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￿net￿sales￿and￿costs￿during￿the reported￿periods.￿Actual￿results￿could￿differ￿from￿those￿estimates. Principles of Consolidation The￿Consolidated￿Financial￿Statements￿include￿the￿Financial￿Statements￿of￿ASML￿Holding￿N.V.￿and￿all￿of￿its￿subsidiaries and￿the￿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￿50￿percent￿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￿both￿of￿the￿following￿characteristics are￿met:￿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￿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￿2014 F-8 Derivative Financial Instruments We￿principally￿use￿derivative￿financial￿instruments￿for￿the￿management￿of￿foreign￿currency￿risks￿and￿interest￿rate￿risks. We￿measure￿all￿derivative￿financial￿instruments￿based￿on￿fair￿values￿derived￿from￿market￿prices￿of￿the￿instruments.￿We adopt￿hedge￿accounting￿for￿hedges￿that￿are￿highly￿effective￿in￿offsetting￿the￿identified￿hedged￿risks￿taking￿into￿account required￿effectiveness￿criteria. Derivatives￿are￿initially￿recognized￿at￿fair￿value￿on￿the￿date￿a￿derivative￿contract￿is￿entered￿into￿and￿are￿subsequently remeasured.￿The￿method￿of￿recognizing￿the￿resulting￿gain￿or￿loss￿depends￿on￿whether￿the￿derivative￿is￿designated￿as￿a hedging￿instrument,￿and￿if￿so,￿the￿nature￿of￿the￿item￿being￿hedged.￿We￿designate￿certain￿derivatives￿as￿either:￿ • A￿hedge￿of￿the￿exposure￿to￿changes￿in￿the￿fair￿value￿of￿a￿recognized￿asset￿or￿liability,￿that￿is￿attributable￿to￿a particular￿risk￿(fair￿value￿hedge);￿or • 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. 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. ASML￿ANNUAL￿REPORT￿2014 F-9 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￿(applying￿the￿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￿RUs￿for￿the￿purpose￿of￿impairment￿testing.￿The￿allocation￿is￿made￿to￿those￿RUs￿that are￿expected￿to￿benefit￿from￿the￿business￿combination￿in￿which￿the￿goodwill￿arose.￿Goodwill￿is￿tested￿for￿impairment annually￿at￿the￿start￿of￿the￿fourth￿quarter￿and￿whenever￿events￿or￿changes￿in￿circumstances￿indicate￿that￿the￿carrying amount￿of￿the￿goodwill￿may￿not￿be￿recoverable.￿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 accumulated￿impairment￿losses￿(for￿the￿amount￿exceeding￿goodwill).￿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￿our 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 Property, Plant and Equipment Property,￿plant￿and￿equipment￿are￿stated￿at￿cost,￿less￿accumulated￿depreciation￿and￿accumulated￿impairment￿losses. Costs￿of￿assets￿manufactured￿by￿ASML￿include￿direct￿manufacturing￿costs,￿production￿overhead￿and￿interest￿costs incurred￿for￿qualifying￿assets￿during￿the￿construction￿period.￿Depreciation￿is￿calculated￿using￿the￿straight-line￿method based￿on￿the￿estimated￿useful￿lives￿of￿the￿related￿assets.￿In￿the￿case￿of￿leasehold￿improvements,￿the￿estimated￿useful lives￿of￿the￿related￿assets￿do￿not￿exceed￿the￿remaining￿term￿of￿the￿corresponding￿lease. The￿following￿table￿presents￿the￿estimated￿useful￿lives￿of￿our￿property,￿plant￿and￿equipment: Category Buildings￿and￿constructions Machinery￿and￿equipment Leasehold￿improvements Furniture,￿fixtures￿and￿other￿equipment Estimated useful life 5￿-￿45￿years 2￿-￿5￿years 5￿-￿10￿years 3￿-￿5￿years Land￿is￿not￿depreciated. Certain￿costs￿associated￿with￿the￿use￿of￿software￿are￿capitalized.￿These￿costs￿are￿depreciated￿on￿a￿straight-line￿basis over￿the￿period￿of￿related￿benefit,￿which￿ranges￿primarily￿from￿three￿to￿five￿years. ASML￿ANNUAL￿REPORT￿2014 F-10 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￿start￿of￿the￿fourth￿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￿RU.￿This￿test￿is￿based￿on￿a￿two-step￿approach￿for￿each￿RU￿(being an￿operating￿segment￿or￿one￿level￿below￿an￿operating￿segment)￿in￿which￿goodwill￿has￿been￿recorded.￿To￿determine whether￿it￿is￿necessary￿to￿perform￿this￿two-step￿approach￿we￿may￿first￿assess￿qualitative￿factors.￿If￿we￿determine￿that it￿is￿more￿likely￿than￿not￿(a￿likelihood￿of￿more￿than￿50￿percent)￿that￿the￿fair￿value￿of￿a￿RU￿is￿less￿than￿its￿carrying￿amount (including￿goodwill),￿the￿two-step￿impairment￿test￿is￿performed.￿In￿the￿first￿step,￿the￿recoverability￿of￿goodwill￿is￿tested by￿comparing￿the￿carrying￿amount￿of￿the￿RU￿including￿goodwill￿with￿the￿fair￿value￿of￿the￿RU.￿If￿the￿carrying￿amount￿of the￿RU￿is￿higher￿than￿the￿fair￿value￿of￿the￿RU,￿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￿RU￿in￿the￿same￿manner￿as goodwill￿is￿determined￿in￿a￿business￿combination.￿Any￿excess￿of￿the￿carrying￿amount￿over￿the￿implied￿fair￿value￿is recognized￿as￿an￿impairment￿loss. Indefinite-lived￿other￿intangibles￿assets￿are￿tested￿for￿impairment￿annually￿at￿the￿start￿of￿the￿fourth￿quarter￿and whenever￿events￿or￿changes￿in￿circumstances￿indicate￿that￿the￿carrying￿amount￿of￿the￿indefinite-lived￿other￿intangible assets￿may￿not￿be￿recoverable.￿To￿determine￿whether￿it￿is￿necessary￿to￿perform￿a￿quantitative￿test,￿we￿may￿first￿assess qualitative￿factors.￿If￿we￿determine￿that￿it￿is￿more￿likely￿than￿not￿(a￿likelihood￿of￿more￿than￿50￿percent)￿that￿the￿fair value￿of￿the￿asset￿is￿less￿than￿its￿carrying￿amount,￿the￿quantitative￿test￿is￿performed.￿We￿have￿an￿unconditional￿option to￿bypass￿the￿qualitative￿assessment￿for￿any￿indefinite-lived￿intangible￿asset￿in￿any￿period￿and￿proceed￿directly￿to performing￿the￿quantitative￿impairment￿test.￿The￿quantitative￿impairment￿test￿for￿indefinite-lived￿other￿intangible￿assets consists￿of￿a￿comparison￿of￿the￿fair￿value￿of￿these￿assets￿with￿their￿carrying￿amounts.￿Any￿excess￿of￿the￿carrying amount￿over￿the￿fair￿value￿is￿recognized￿as￿an￿impairment￿loss. Finite-lived￿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.￿An￿impairment loss￿is￿recognized￿only￿if￿the￿carrying￿amount￿of￿finite-lived￿other￿intangible￿assets￿and￿property,￿plant￿and￿equipment is￿not￿recoverable￿and￿exceeds￿its￿fair￿value.￿The￿carrying￿amount￿is￿not￿recoverable￿if￿it￿exceeds￿the￿sum￿of￿the (un)discounted￿forecasted￿cash￿flows￿to￿result￿from￿the￿use￿and￿eventual￿disposition￿of￿such￿asset.￿An￿impairment￿loss is￿measured￿as￿the￿amount￿by￿which￿the￿carrying￿amount￿exceeds￿its￿fair￿value. In￿determining￿the￿fair￿value￿of￿long-lived￿assets,￿we￿make￿estimates￿about￿future￿cash￿flows.￿These￿estimates￿are￿based on￿our￿strategic￿plan￿updated￿with￿the￿latest￿available￿projections￿of￿the￿semiconductor￿industry￿and￿our￿income￿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￿our￿WACC.￿It￿is￿possible￿that￿actual￿results￿may￿differ￿from￿our￿plans, estimates￿and￿assumptions.￿Future￿adverse￿changes￿in￿market￿conditions￿may￿also￿require￿impairment￿of￿certain￿long- lived￿assets,￿which￿could￿have￿a￿material￿adverse￿effect￿on￿our￿financial￿condition￿and￿results￿of￿operations. Provisions Provisions￿for￿lease￿contract￿termination￿costs￿are￿recognized￿when￿costs￿will￿continue￿to￿be￿incurred￿under￿a￿contract for￿its￿remaining￿term￿without￿economic￿benefit￿to￿us￿and￿we￿cease￿using￿the￿rights￿conveyed￿by￿the￿contract.￿The provisions￿are￿measured￿at￿fair￿value,￿which￿for￿an￿operating￿lease￿contract￿is￿determined￿based￿on￿the￿remaining￿lease payments￿reduced￿by￿the￿estimated￿sublease￿payments￿that￿could￿be￿reasonably￿obtained. Revenue Recognition ASML￿recognizes￿revenue￿when￿all￿four￿revenue￿recognition￿criteria￿are￿met:￿persuasive￿evidence￿of￿an￿arrangement exists;￿delivery￿has￿occurred￿or￿services￿have￿been￿rendered;￿seller’s￿price￿to￿buyer￿is￿fixed￿or￿determinable;￿and collectability￿is￿reasonably￿assured.￿At￿ASML￿this￿policy￿generally￿results￿in￿revenue￿recognition￿from￿the￿sale￿of￿a system￿upon￿shipment.￿The￿revenue￿from￿the￿installation￿of￿a￿system￿is￿generally￿recognized￿upon￿completion￿of that￿installation￿at￿the￿customer￿site.￿Prior￿to￿shipment,￿systems￿undergo￿a￿FAT￿in￿our￿cleanroom￿facilities,￿effectively replicating￿the￿operating￿conditions￿that￿will￿be￿present￿on￿the￿customer's￿site,￿in￿order￿to￿verify￿whether￿the￿system￿will meet￿its￿standard￿specifications￿and￿any￿additional￿technical￿and￿performance￿criteria￿agreed￿with￿the￿customer,￿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. ASML￿ANNUAL￿REPORT￿2014 F-11 In￿connection￿with￿the￿introduction￿of￿new￿technology,￿such￿as￿NXE:3300B,￿we￿initially￿defer￿revenue￿recognition￿until acceptance￿of￿the￿new￿technology￿based￿system￿and￿completion￿of￿installation￿at￿the￿customer's￿premises. As￿our systems￿are￿based￿largely￿on￿two￿product￿platforms￿that￿permit￿incremental,￿modular￿upgrades,￿the￿introduction￿of genuinely￿"new"￿technology￿occurs￿infrequently,￿and￿in￿the￿past￿15￿years,￿has￿occurred￿on￿only￿two￿occasions:￿2000 (TWINSCAN)￿and￿2010￿(EUV). We￿have￿no￿significant￿repurchase￿commitments￿in￿our￿general￿sales￿terms￿and￿conditions.￿From￿time￿to￿time￿we repurchase￿systems￿that￿we￿have￿manufactured￿and￿sold￿and,￿following￿refurbishment,￿we￿resell￿those￿systems￿to other￿customers.￿This￿repurchase￿decision￿is￿mainly￿driven￿by￿market￿demand￿expressed￿by￿other￿customers￿and￿less frequently￿by￿explicit￿or￿implicit￿contractual￿arrangements￿relating￿to￿the￿initial￿sale.￿We￿consider￿reasonable￿offers￿from any￿vendor,￿including￿customers,￿to￿repurchase￿used￿systems￿so￿that￿we￿can￿refurbish,￿resell,￿and￿install￿these￿systems as￿part￿of￿our￿normal￿business￿operations.￿Once￿repurchased,￿the￿repurchase￿price￿of￿the￿used￿system￿is￿recorded￿in work-in-process￿inventory￿during￿the￿period￿it￿is￿being￿refurbished,￿following￿which￿the￿refurbished￿system￿is￿reflected￿in finished￿products￿inventory￿until￿it￿is￿sold￿to￿the￿customer.￿As￿of￿December￿31,￿2014￿and￿2013,￿ASML￿had￿no￿repurchase commitments. We￿offer￿customers￿discounts￿in￿the￿normal￿course￿of￿sales￿negotiations.￿These￿discounts￿are￿directly￿deducted from￿the￿gross￿sales￿price￿at￿the￿moment￿of￿revenue￿recognition.￿From￿time￿to￿time,￿we￿offer￿free￿or￿discounted products￿or￿services￿(award￿credits)￿to￿our￿customers￿as￿part￿of￿a￿volume￿purchase￿agreement.￿In￿some￿instances these￿volume￿discounts￿can￿be￿used￿to￿purchase￿field￿options￿(system￿enhancements).￿The￿related￿amount￿is￿recorded as￿a￿reduction￿in￿net￿sales￿at￿time￿of￿system￿shipment.￿The￿sales￿transaction￿that￿gives￿rise￿to￿these￿award￿credits￿is accounted￿for￿as￿a￿multiple￿element￿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￿or￿earned.￿The￿amount￿allocable￿to￿a￿delivered￿item￿is￿limited￿to￿the￿amount￿that￿is￿not contingent￿upon￿the￿delivery￿of￿additional￿items￿or￿meeting￿other￿specified￿performance￿conditions￿(the￿non-contingent amount). 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￿utilize￿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￿extended￿and￿enhanced (optic)￿warranty￿contracts.￿As￿of￿January￿1,￿2011,￿we￿adopted￿ASU￿2009-13￿"Sales￿Arrangements￿with￿Multiple Deliverables"￿which￿converted￿into￿ASC￿605-25￿"Revenue￿Recognition￿-￿Multiple-Element￿Arrangements".￿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:￿i)￿the￿delivered￿products￿or￿services￿have￿value￿to￿the￿customer￿on￿a￿standalone￿basis;￿and￿ii)￿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. ASML￿ANNUAL￿REPORT￿2014 F-12 To￿determine￿the￿selling￿price￿in￿multiple￿element￿arrangements,￿we￿establish￿VSOE￿of￿the￿selling￿price￿for￿installation, training￿services￿and￿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￿extended￿and￿enhanced￿(optic)￿warranty￿contracts￿is￿determined￿on￿the￿basis￿of equivalent￿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￿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. For￿our￿NXE:3300B￿systems,￿we￿are￿unable￿to￿determine￿VSOE￿for￿extended,￿enhanced￿(optic)￿warranty￿contracts￿and installation.￿We￿determined￿for￿NXE:3300B￿systems￿that￿BESP￿is￿the￿appropriate￿reference￿in￿the￿fair￿value￿hierarchy￿for extended￿and￿enhanced￿(optic)￿warranty￿contracts.￿We￿review￿selling￿prices￿periodically￿and￿maintain￿internal￿controls over￿the￿establishment￿and￿updates￿of￿these￿elements. 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;￿or 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￿lessee￿at￿lease￿inception￿over￿any￿related￿investment￿tax￿credit￿retained￿by￿the￿lessor￿and￿expected￿to￿be realized￿by￿the￿lessor. Revenue￿is￿recognized￿at￿commencement￿of￿the￿lease￿term￿of￿a￿sales-type￿lease.￿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￿during￿the￿warranty￿period.￿The￿estimated￿warranty￿costs￿are accounted￿for￿by￿accruing￿these￿costs￿for￿each￿system￿upon￿recognition￿of￿the￿system￿sale.￿The￿estimated￿warranty costs￿are￿based￿on￿historical￿product￿performance￿and￿service￿records.￿We￿calculate￿the￿charge￿of￿average￿service hours￿and￿parts￿per￿system￿to￿determine￿the￿estimated￿warranty￿costs.￿On￿a￿semi-annual￿basis,￿we￿assess,￿and￿update if￿necessary,￿our￿accounting￿estimates￿used￿to￿calculate￿the￿standard￿warranty. The￿extended￿and￿enhanced￿(optic)￿warranty￿on￿our￿systems￿is￿accounted￿for￿as￿a￿separate￿element￿of￿multiple￿element revenue￿recognition￿transactions. Customer Co-Investment Program In￿connection￿with￿the￿CCIP,￿we￿entered￿into￿investment￿agreements,￿Shareholders￿Agreements,￿NRE￿Funding Agreements￿and￿a￿commercial￿agreement￿with￿Participating￿Customers. The￿investment￿agreements,￿Shareholder￿Agreements,￿NRE￿Funding￿Agreements￿and￿commercial￿agreement￿are accounted￿for￿as￿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:￿(1)￿the￿share￿issuance (governed￿by￿the￿investment￿agreements￿and￿the￿Shareholder￿Agreements)￿and￿(2)￿the￿NRE￿funding￿and￿commercial discounts￿and￿credits￿(governed￿by￿the￿NRE￿Funding￿Agreements￿and￿the￿commercial￿agreement￿with￿Intel). ASML￿ANNUAL￿REPORT￿2014 F-13 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￿from￿Intel￿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￿net￿sales,￿any￿charges￿for￿shipping￿and￿handling￿costs.￿The￿related￿costs are￿recognized￿as￿cost￿of￿sales. Cost of Sales Cost￿of￿system￿sales￿and￿field￿option￿sales￿comprise￿direct￿product￿costs￿such￿as￿materials,￿labor,￿cost￿of￿warranty, depreciation,￿shipping￿and￿handling￿costs￿and￿related￿overhead￿costs. Costs￿of￿service￿sales￿comprise￿direct￿service￿costs￿such￿as￿materials,￿labor,￿depreciation￿and￿overhead￿costs. Other Income The￿portion￿of￿the￿NRE￿funding￿from￿TSMC￿and￿Samsung￿not￿allocable￿to￿the￿shares￿issued￿to￿those￿Participating Customers￿under￿the￿CCIP￿is￿recognized￿in￿other￿income￿when￿the￿R&D￿costs￿relating￿to￿lithography￿projects￿are recognized￿over￿the￿NRE￿funding￿period￿(2013-2017). 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￿('government￿grants').￿These￿government￿grants￿that cover￿R&D￿costs￿relating￿to￿approved￿projects￿are￿recorded￿as￿R&D￿credits￿in￿the￿R&D￿costs￿in￿the￿Consolidated Statements￿of￿Operations. Government￿grants￿are￿not￿recognized￿until￿there￿is￿reasonable￿assurance￿that￿ASML￿will￿comply￿with￿the￿conditions and￿that￿the￿grants￿will￿be￿received.￿ 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 Compensation￿expenses￿in￿relation￿to￿share-based￿payments￿are￿recognized￿based￿upon￿the￿grant-date￿fair￿value of￿stock￿options￿and￿shares.￿The￿grant-date￿fair￿value￿of￿stock￿options￿is￿estimated￿using￿a￿Black-Scholes￿option valuation￿model.￿This￿Black-Scholes￿model￿requires￿the￿use￿of￿assumptions,￿including￿expected￿share￿price￿volatility, the￿estimated￿life￿of￿each￿award￿and￿the￿estimated￿dividend￿yield.￿The￿risk-free￿interest￿rate￿used￿in￿the￿model￿is determined,￿based￿on￿an￿index￿populated￿with￿euro-denominated￿European￿government￿agency￿bond￿with￿high￿credit ratings￿and￿with￿a￿life￿equal￿to￿the￿expected￿life￿of￿the￿equity-settled￿share-based￿payments.￿The￿grant-date￿fair￿value￿of shares￿is￿determined￿based￿on￿the￿closing￿price￿of￿our￿shares￿listed￿at￿Euronext￿Amsterdam￿on￿the￿grant-date. ASML￿ANNUAL￿REPORT￿2014 F-14 The￿grant-date￿fair￿value￿of￿the￿equity-settled￿share-based￿payments￿is,￿based￿on￿the￿terms￿and￿conditions,￿expensed over￿the￿vesting￿period,￿based￿on￿our￿estimate￿of￿equity￿instruments￿that￿will￿eventually￿vest.￿At￿each￿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￿for￿the￿differences. Deferred￿tax￿assets￿and￿liabilities￿are￿measured￿using￿enacted￿tax￿rates￿expected￿to￿apply￿to￿taxable￿income￿in￿the years￿in￿which￿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. Contingencies and Litigation In￿connection￿with￿proceedings￿and￿claims,￿our￿management￿evaluates,￿based￿on￿the￿relevant￿facts￿and￿legal￿principles, the￿likelihood￿of￿an￿unfavorable￿outcome￿and￿whether￿the￿amount￿of￿the￿loss￿can￿be￿reasonably￿estimated.￿In￿most cases,￿management￿determined￿that￿either￿a￿loss￿was￿not￿probable￿or￿was￿not￿reasonably￿estimable.￿Significant subjective￿judgments￿were￿required￿in￿these￿evaluations,￿including￿judgments￿regarding￿the￿validity￿of￿asserted￿claims and￿the￿likely￿outcome￿of￿legal￿and￿administrative￿proceedings.￿The￿outcome￿of￿these￿proceedings,￿however,￿is￿subject to￿a￿number￿of￿factors￿beyond￿our￿control,￿most￿notably￿the￿uncertainty￿associated￿with￿predicting￿decisions￿by￿courts and￿administrative￿agencies.￿In￿addition,￿estimates￿of￿the￿potential￿costs￿associated￿with￿legal￿and￿administrative proceedings￿frequently￿cannot￿be￿subjected￿to￿any￿sensitivity￿analysis,￿as￿damage￿estimates￿or￿settlement￿offers￿by claimants￿may￿bear￿little￿or￿no￿relation￿to￿the￿eventual￿outcome.￿Finally,￿in￿any￿particular￿proceeding,￿we￿may￿agree￿to settle￿or￿to￿terminate￿a￿claim￿or￿proceeding￿in￿which￿we￿believe￿that￿it￿would￿ultimately￿prevail￿where￿we￿believe￿that doing￿so,￿when￿taken￿together￿with￿other￿relevant￿commercial￿considerations,￿is￿more￿cost-effective￿than￿engaging￿in￿an expensive￿and￿protracted￿litigation,￿the￿outcome￿of￿which￿is￿uncertain. We￿accrue￿for￿legal￿costs￿related￿to￿litigation￿in￿our￿Consolidated￿Statements￿of￿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. ASML￿ANNUAL￿REPORT￿2014 F-15 The￿basic￿and￿diluted￿net￿income￿per￿ordinary￿share￿has￿been￿calculated￿as￿follows: Year ended December 31 (in thousands, except per share data) Net income 2014 EUR 1,196,640 2013 EUR 1,015,490 2012 EUR 1,146,316 Weighted average number of shares outstanding during the year 437,142 429,770 424,096 Basic net income per ordinary share 2.74 2.36 2.70 Weighted average number of shares outstanding: Plus￿shares￿applicable￿to: Options￿and￿conditional￿shares 437,142 429,770 424,096 2,551 3,676 2,890 Dilutive potential ordinary shares 2,551 3,676 2,890 Adjusted weighted average number of shares 439,693 433,446 426,986 Diluted net income per ordinary share1 2.72 2.34 2.68 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￿ended￿December￿31,￿2014,￿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. New US GAAP Accounting Pronouncements For￿the￿below￿mentioned￿ASUs,￿issued￿in￿2014,￿the￿impact￿on￿our￿Financial￿Statements￿needs￿to￿be￿assessed: • In￿March￿2014,￿FASB￿issued￿ASU￿No.￿2014-09￿"Revenue￿From￿Contracts￿With￿Customers".￿The￿FASB￿and￿the￿IASB initiated￿a￿joint￿project￿to￿clarify￿the￿principles￿for￿recognizing￿revenue￿and￿to￿develop￿a￿common￿revenue￿standard￿for US￿GAAP￿and￿IFRS￿that￿would: • Remove￿inconsistencies￿and￿weaknesses￿in￿previous￿revenue￿requirements; • Provide￿a￿more￿robust￿framework￿for￿addressing￿revenue￿issues; • Improve￿comparability￿of￿revenue￿recognition￿practices￿across￿entities,￿industries,￿jurisdictions￿and￿capital markets; • Provide￿more￿useful￿information￿to￿users￿of￿financial￿statements￿through￿improved￿disclosure￿requirements;￿and • Simplify￿the￿preparation￿of￿financial￿statements￿by￿reducing￿the￿number￿of￿requirements￿to￿which￿an￿entity￿must refer. For￿public￿entities,￿the￿ASU￿is￿effective￿for￿annual￿reporting￿periods￿(including￿interim￿reporting￿periods￿within￿those periods)￿beginning￿after￿December￿15,￿2016.￿Early￿application￿is￿not￿permitted.￿We￿are￿currently￿in￿the￿process￿of determining￿the￿impact￿of￿implementing￿this￿Standard￿on￿our￿Consolidated￿Financial￿Statements. 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￿were￿no￿contingent￿consideration arrangements.￿The￿total￿consideration￿was￿allocated￿to￿other￿intangible￿assets￿of￿EUR￿751.5￿million,￿other￿net￿assets￿of EUR￿287.6￿million￿and￿goodwill￿of￿EUR￿2,058.3￿million. ASML￿ANNUAL￿REPORT￿2014 F-16 Prior￿to￿the￿acquisition,￿supply￿and￿R&D￿arrangements￿existed￿between￿Cymer￿and￿ASML.￿These￿pre-existing relationships￿were￿effectively￿settled￿as￿a￿result￿of￿the￿acquisition￿in￿2013.￿We￿determined￿that￿the￿R&D￿arrangement as￿well￿as￿the￿supply￿arrangements￿(excluding￿EUV)￿were￿at￿current￿market￿terms￿and￿therefore￿no￿gain￿or￿loss￿was recognized.￿We￿determined￿that￿the￿EUV￿supply￿arrangements￿were￿favorable￿to￿ASML￿and￿therefore￿a￿gain￿of￿EUR 178.4￿million￿was￿recognized￿in￿cost￿of￿sales￿within￿our￿2013￿Consolidated￿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. 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￿had￿sufficient￿resources￿to￿complete￿the￿development￿of￿the￿EUV￿light￿source￿and￿as a￿result,￿the￿only￿way￿to￿make￿the￿EUV￿light￿source￿development￿successful￿without￿additional￿delay￿was￿through￿the acquisition￿of￿Cymer.￿We￿believe￿that￿the￿acquisition￿allows￿us￿to￿more￿effectively￿partition￿responsibilities￿between Cymer,￿its￿suppliers￿and￿us￿with￿respect￿to￿EUV￿light￿source￿development,￿thereby￿reducing￿risk￿and￿increasing development￿speed.￿Also,￿synergies￿are￿expected￿from￿the￿combination.￿None￿of￿the￿goodwill￿recognized￿is￿expected￿to be￿deductible￿for￿income￿tax￿purposes. In￿the￿period￿between￿the￿date￿of￿acquisition￿and￿December￿31,￿2013￿Cymer￿contributed￿EUR￿178.7￿million￿to￿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). In￿2013,￿we￿incurred￿EUR￿7.8￿million￿transaction￿costs￿relating￿to￿the￿acquisition￿of￿Cymer.￿These￿costs￿are￿included￿in SG&A. 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￿in￿an￿active￿market￿for￿similar￿assets￿or￿discounted￿cash￿flow￿analysis. The￿principal￿market￿in￿which￿we￿execute￿our￿derivative￿contracts￿is￿the￿institutional￿market￿in￿an￿over-the-counter environment￿with￿a￿high￿level￿of￿price￿transparency.￿The￿market￿participants￿usually￿are￿large￿commercial￿banks.￿The valuation￿inputs￿for￿our￿derivative￿contracts￿are￿based￿on￿quoted￿prices￿and￿quoting￿pricing￿intervals￿from￿public￿data sources;￿they￿do￿not￿involve￿management￿judgement. ASML￿ANNUAL￿REPORT￿2014 F-17 The￿valuation￿technique￿used￿to￿determine￿the￿fair￿value￿of￿forward￿foreign￿exchange￿contracts￿(used￿for￿hedging purposes)￿approximates￿the￿NPV￿technique￿which￿is￿the￿estimated￿amount￿that￿a￿bank￿would￿receive￿or￿pay￿to￿terminate the￿forward￿foreign￿exchange￿contracts￿at￿the￿reporting￿date,￿taking￿into￿account￿current￿interest￿rates￿and￿current exchange￿rates. The￿valuation￿technique￿used￿to￿determine￿the￿fair￿value￿of￿interest￿rate￿swaps￿(used￿for￿hedging￿purposes)￿is￿the￿NPV technique,￿which￿is￿the￿estimated￿amount￿that￿a￿bank￿would￿receive￿or￿pay￿to￿terminate￿the￿swap￿agreements￿at￿the reporting￿date,￿taking￿into￿account￿current￿interest￿rates. Our￿Eurobonds￿serve￿as￿hedged￿items￿in￿fair￿value￿hedge￿relationships￿in￿which￿we￿hedge￿the￿variability￿of￿changes￿in the￿fair￿value￿of￿our￿Eurobonds￿due￿to￿changes￿in￿market￿interest￿rates￿with￿interest￿rate￿swaps.￿The￿fair￿value￿changes of￿these￿interest￿rate￿swaps￿are￿recorded￿on￿the￿Consolidated￿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 the￿effective￿portion￿of￿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, 2014 (in thousands) Assets measured at fair value Derivative￿financial￿instruments￿1 Money￿market￿funds￿2 Short-term￿investments￿3 Total Level 1 EUR - 426,742 334,864 761,606 Level 2 EUR 153,803 - - 153,803 Liabilities measured at fair value Derivative￿financial￿instruments￿1 - 67,755 Assets and Liabilities for which fair values are disclosed Long-term￿debt￿4 1,139,628 - 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. Short-term￿investments￿consist￿of￿Dutch￿Treasury￿Certificates. 3 Long-term￿debt￿relates￿to￿Eurobonds,￿further￿details￿see￿Note￿15. 4 As of December 31, 2013 (in thousands) Assets measured at fair value Derivative￿financial￿instruments￿1 Money￿market￿funds￿2 Short-term￿investments￿3 Total Level 1 EUR - 535,000 304,884 839,884 Level 2 EUR 71,620 - 375,000 446,620 Liabilities measured at fair value Derivative￿financial￿instruments￿1 - 11,652 Assets and Liabilities for which fair values are disclosed Long-term￿debt￿4 1,028,238 - Level 3 EUR - - - - - - Total EUR 153,803 426,742 334,864 915,409 67,755 1,139,628 Level 3 EUR Total EUR - - - - - - 71,620 535,000 679,884 1,286,504 11,652 1,028,238 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￿relates￿to￿Eurobonds,￿further￿details￿see￿Note￿15. There￿were￿no￿transfers￿between￿levels￿during￿the￿years￿ended￿December￿31,￿2014￿and￿December￿31,￿2013. Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis In￿2014,￿we￿had￿no￿significant￿fair￿value￿measurements￿on￿a￿nonrecurring￿basis.￿We￿did￿not￿recognize￿any￿impairment charges￿for￿goodwill￿and￿other￿intangible￿assets￿during￿2014.￿See￿Notes￿10￿and￿11￿for￿more￿information. ASML￿ANNUAL￿REPORT￿2014 F-18 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.￿dollars,￿Taiwanese￿dollars￿and Japanese￿yen￿and￿to￿a￿limited￿extent￿in￿other￿currencies.￿Therefore,￿we￿are￿exposed￿to￿foreign￿currency￿exchange￿risk. It￿is￿our￿policy￿to￿hedge￿material￿transaction￿exposures,￿such￿as￿forecasted￿sales￿and￿purchase￿transactions,￿and material￿net￿remeasurement￿exposures,￿such￿as￿accounts￿receivable￿and￿payable.￿We￿hedge￿these￿exposures￿through the￿use￿of￿foreign￿exchange￿contracts.￿In￿line￿with￿our￿overall￿risk￿management￿program￿we￿do￿not￿hedge￿currency translation￿exposures￿resulting￿from￿net￿equity￿investments￿in￿foreign￿subsidiaries. As￿of￿December￿31,￿2014,￿accumulated￿OCI￿includes￿EUR￿16.3￿million￿(2013:￿EUR￿10.7￿million)￿(net￿of￿taxes:￿EUR 14.5￿million;￿2013:￿EUR￿9.5￿million￿loss)￿representing￿the￿total￿anticipated￿gain￿to￿be￿released￿to￿cost￿of￿sales,￿which will￿offset￿the￿EUR￿equivalent￿of￿foreign￿currency￿denominated￿forecasted￿purchase￿transactions.￿All￿amounts￿are expected￿to￿be￿released￿over￿the￿next￿12￿months.￿As￿of￿December￿31,￿2014,￿no￿amount￿(2013:￿no￿amount)￿was￿included in￿accumulated￿OCI￿representing￿the￿total￿anticipated￿gain￿to￿be￿released￿to￿sales,￿which￿will￿be￿offset￿by￿the￿EUR equivalent￿of￿foreign￿currency￿denominated￿forecasted￿sales￿transactions.￿The￿effectiveness￿of￿all￿contracts￿for￿which we￿apply￿hedge￿accounting￿is￿monitored￿on￿a￿quarterly￿basis￿throughout￿the￿life￿of￿the￿hedges.￿During￿2013￿and￿2014, no￿ineffective￿hedge￿relationships￿were￿recognized. Interest Rate Risk Management We￿have￿interest-bearing￿assets￿and￿liabilities￿that￿expose￿us￿to￿fluctuations￿in￿market￿interest￿rates.￿We￿use￿interest rate￿swaps￿to￿align￿the￿interest-typical￿terms￿of￿interest-bearing￿liabilities￿with￿the￿interest-typical￿terms￿of￿interest- bearing￿assets.￿There￿may￿be￿residual￿interest￿rate￿risk￿to￿the￿extent￿the￿asset￿and￿liability￿positions￿do￿not￿fully￿offset. As￿part￿of￿our￿hedging￿policy,￿we￿use￿interest￿rate￿swaps￿to￿hedge￿changes￿in￿fair￿value￿of￿our￿Eurobonds￿due￿to changes￿in￿market￿interest￿rates,￿thereby￿offsetting￿the￿variability￿of￿future￿interest￿receipts￿on￿part￿of￿our￿cash￿and cash￿equivalents.￿During￿2014,￿these￿hedges￿were￿highly￿effective￿in￿hedging￿the￿fair￿value￿exposure￿to￿interest￿rate movements.￿The￿changes￿in￿fair￿value￿of￿the￿Eurobonds￿were￿included￿at￿the￿same￿time￿in￿the￿Consolidated￿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￿2014,￿these￿hedges￿were￿highly￿effective￿in￿hedging the￿cash￿flow￿exposure￿to￿interest￿rate￿movements. Financial Instruments We￿use￿foreign￿exchange￿contracts￿to￿manage￿our￿foreign￿currency￿risk￿and￿interest￿rate￿swaps￿to￿manage￿our￿interest rate￿risk.￿The￿following￿table￿summarizes￿the￿notional￿amounts￿and￿estimated￿fair￿values￿of￿our￿derivative￿financial instruments: (in thousands) Forward￿foreign￿exchange￿contracts Interest￿rate￿swaps As of December 31 Notional amount EUR 1,219,894 1,013,053 Fair Value Notional amount EUR 986,986 1,013,053 EUR (52,319) 138,367 Fair Value EUR 8,583 51,385 2014 2013 ASML￿ANNUAL￿REPORT￿2014 F-19 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 2014 2013 Assets EUR - 141,953 8,777 3,073 153,803 - 115,546 115,546 Liabilities EUR 3,586 - 36 64,133 67,755 2,808 - 2,808 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 Total current portion 38,257 64,947 40,843 9,044 The￿fair￿value￿part￿of￿a￿hedging￿derivative￿financial￿instruments￿that￿has￿a￿remaining￿term￿of￿12￿months￿or￿less￿after 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￿Note￿3. Foreign Exchange Contracts The￿notional￿principal￿amounts￿of￿the￿outstanding￿forward￿foreign￿exchange￿contracts￿in￿the￿main￿currencies￿U.S.￿dollar, Japanese￿yen￿and￿Taiwanese￿dollar￿at￿December￿31,￿2014￿are￿USD￿958.0￿million,￿JPY￿44.8￿billion￿and￿TWD￿6.2￿billion (2013:￿USD￿1,144.0￿million,￿JPY￿2.2￿billion￿and￿TWD￿2.7￿billion). The￿hedged￿highly￿probable￿forecasted￿transactions￿denominated￿in￿foreign￿currency￿are￿expected￿to￿occur￿at￿various dates￿during￿the￿coming￿12￿months.￿Gains￿and￿losses￿recognized￿in￿OCI￿on￿forward￿foreign￿exchange￿contracts￿as￿of December￿31,￿2014￿will￿be￿recognized￿in￿the￿Consolidated￿Statements￿of￿Operations￿in￿the￿period￿during￿which￿the hedged￿forecasted￿transactions￿affect￿the￿Consolidated￿Statements￿of￿Operations. In￿2014,￿we￿recognized￿a￿net￿amount￿of￿EUR￿6.7￿million￿loss￿(2013:￿EUR￿2.3￿million￿gain;￿2012:￿EUR￿8.7￿million￿gain)￿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￿119.3￿million￿loss￿in￿the Consolidated￿Statements￿of￿Operations￿resulting￿from￿derivative￿financial￿instruments￿measured￿at￿fair￿value￿through profit￿or￿loss￿(2013:￿EUR￿62.5￿million￿gain;￿2012:￿EUR￿3.0￿million￿gain). Interest Rate Swaps The￿notional￿principal￿amount￿of￿the￿outstanding￿interest￿rate￿swap￿contracts￿as￿of￿December￿31,￿2014￿was￿EUR￿1,013.1 million￿(2013:￿EUR￿1,013.1￿million). Credit Risk Management Financial￿instruments￿that￿potentially￿subject￿us￿to￿significant￿concentration￿of￿credit￿risk￿consist￿principally￿of￿cash and￿cash￿equivalents,￿short-term￿investments,￿derivative￿financial￿instruments￿used￿for￿hedging￿activities,￿accounts receivable￿and￿finance￿receivables. Cash￿and￿cash￿equivalents,￿short-term￿investments￿and￿derivative￿financial￿instruments￿contain￿an￿element￿of￿risk￿of the￿counterparties￿being￿unable￿to￿meet￿their￿obligations.￿Our￿risk￿management￿program￿focuses￿appropriately￿on￿the current￿environment￿of￿uncertainty￿in￿the￿financial￿markets,￿especially￿in￿the￿euro-zone.￿We￿invest￿our￿cash￿and￿cash equivalents￿and￿short-term￿investments￿in￿short-term￿deposits￿with￿financial￿institutions￿that￿have￿good￿credit￿ratings and￿with￿the￿Dutch￿government,￿in￿Dutch￿Treasury￿Certificates￿and￿in￿AAAm-rated￿money￿market￿funds￿that￿invest in￿high-rated￿short-term￿debt￿securities￿of￿financial￿institutions￿and￿governments.￿To￿mitigate￿the￿risk￿that￿any￿of￿our counterparties￿in￿hedging￿transactions￿is￿unable￿to￿meet￿its￿obligations,￿we￿only￿enter￿into￿transactions￿with￿a￿limited number￿of￿major￿financial￿institutions￿that￿have￿good￿credit￿ratings￿and￿closely￿monitor￿the￿creditworthiness￿of￿our counterparties.￿Concentration￿risk￿is￿mitigated￿by￿limiting￿the￿exposure￿to￿a￿single￿counterparty. ASML￿ANNUAL￿REPORT￿2014 F-20 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. 5. Cash and Cash Equivalents and Short-term Investments Cash￿and￿cash￿equivalents￿at￿December￿31,￿2014￿include￿deposits￿with￿financial￿institutions￿that￿have￿good￿credit ratings￿and￿with￿the￿Dutch￿government￿of￿EUR￿1,200.0￿million￿(2013:￿EUR￿853.5￿million),￿investments￿in￿AAAm-rated money￿market￿funds￿that￿invest￿in￿debt￿securities￿of￿financial￿institutions￿that￿have￿good￿credit￿ratings￿and￿governments of￿EUR￿426.7￿million￿(2013:￿EUR￿535.0￿million)￿and￿interest-bearing￿bank￿accounts￿of￿EUR￿792.8￿million￿(2013:￿EUR 942.2￿million).￿Our￿cash￿and￿cash￿equivalents￿are￿predominantly￿denominated￿in￿euros￿and￿partly￿in￿U.S.￿dollars. Cash￿and￿cash￿equivalents￿have￿insignificant￿interest￿rate￿risk￿and￿remaining￿maturities￿of￿three￿months￿or￿less￿at￿the date￿of￿acquisition.￿Except￿for￿an￿amount￿of￿EUR￿5.1￿million,￿no￿restrictions￿on￿usage￿of￿cash￿and￿cash￿equivalents exist.￿The￿carrying￿amount￿of￿these￿assets￿approximates￿their￿fair￿value. Short-term￿investments￿have￿insignificant￿interest￿rate￿risk￿and￿remaining￿maturities￿longer￿than￿three￿months￿but￿less than￿one￿year￿at￿the￿date￿of￿acquisition. Short-term￿investments￿(classified￿as￿available￿for￿sale￿securities)￿consist￿of￿the￿following: As of December 31, 2014 (in thousands) Dutch￿Treasury￿Certificates Deposits Total As of December 31, 2013 (in thousands) Dutch￿Treasury￿Certificates Deposits Total Cost basis 334,864 - 334,864 Cost basis 304,884 375,000 679,884 Unrealized Gains - - - Unrealized Gains - - - Unrealized Losses - - - Recorded Basis 334,864 - 334,864 Unrealized Losses - - - Recorded Basis 304,884 375,000 679,884 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 2014 EUR 1,054,574 (2,070) 1,052,504 2013 EUR 880,169 (1,848) 878,321 The￿increase￿in￿accounts￿receivable￿as￿of￿December￿31,￿2014￿compared￿to￿December￿31,￿2013￿was￿mainly￿caused￿by￿a change￿in￿products￿towards￿more￿high-end￿system￿types. The￿carrying￿amount￿of￿the￿accounts￿receivable￿approximates￿the￿fair￿value.￿We￿perform￿ongoing￿credit￿evaluations on￿our￿customers'￿financial￿condition.￿We￿periodically￿review￿whether￿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. ASML￿ANNUAL￿REPORT￿2014 F-21 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 Effect￿of￿changes￿in￿exchange￿rates Utilization￿of￿the￿provision Balance at end of year 2014 EUR (1,848) (133) (98) 9 (2,070) 2013 EUR (2,071) (1,062) 128 1,157 (1,848) 1 The￿addition￿for￿the￿year￿is￿recorded￿in￿the￿cost￿of￿sales. 7. Finance Receivables Finance￿receivables￿consist￿of￿receivables￿in￿relation￿to￿sales-type￿leases.￿The￿following￿table￿lists￿the￿components￿of the￿finance￿receivables￿as￿of￿December￿31,￿2014￿and￿2013: 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 2014 EUR 256,703 (5,355) 251,348 198,803 (2,716) 55,261 2013 EUR 302,977 (6,488) 296,489 254,227 (3,755) 46,017 The￿decrease￿in￿finance￿receivables￿as￿of￿December￿31,￿2014￿compared￿to￿December￿31,￿2013￿was￿caused￿by￿a￿change in￿products,￿lower￿number￿of￿high-end￿system￿types￿included￿at￿the￿end￿of￿2014￿compared￿to￿2013.￿At￿December￿31, 2014,￿finance￿receivables￿due￿for￿payment￿in￿each￿of￿the￿next￿five￿years￿and￿thereafter￿are￿as￿follows: (in thousands) 2015 2016 2017 2018 2019 Thereafter Finance receivables, gross EUR 198,803 6,150 36,450 15,300 - - 256,703 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￿2014,￿2013￿and￿2012￿we￿did￿not￿record￿any￿expected￿credit￿losses￿from￿finance￿receivables.￿As￿of￿December￿31, 2014,￿the￿finance￿receivables￿were￿neither￿past￿due￿nor￿impaired. 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 2014 EUR 456,685 1,477,041 927,493 2,861,219 (311,382) 2,549,837 2013 EUR 438,853 1,549,119 666,648 2,654,620 (261,598) 2,393,022 The￿increase￿in￿finished￿products￿in￿2014￿compared￿to￿2013￿is￿mainly￿caused￿by￿a￿change￿in￿products￿towards￿more high-end￿system￿types￿(NXT:1965Ci￿and￿NXT:1970Ci)￿and￿the￿build￿up￿of￿spare￿parts￿to￿service￿our￿NXE:3100￿and NXE:3300B￿systems. ASML￿ANNUAL￿REPORT￿2014 F-22 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 Balance at end of year 2014 EUR (261,598) (162,821) (8,848) 121,885 (311,382) 2013 EUR (267,366) (164,852) 2,532 168,088 (261,598) In￿2014,￿the￿addition￿for￿the￿year￿is￿recorded￿in￿cost￿of￿sales￿EUR￿146.3￿million￿and￿in￿R&D￿costs￿EUR￿16.5￿million (2013:￿cost￿of￿sales￿EUR￿155.4￿million￿and￿R&D￿costs￿EUR￿9.5￿million,￿2012:￿cost￿of￿sales￿EUR￿125.2￿million￿and￿R&D costs￿EUR￿5.7￿million).￿The￿2014￿addition￿for￿the￿year￿mainly￿related￿to￿inventory￿items￿which￿ceased￿to￿be￿used￿due￿to technological￿developments￿and￿design￿changes￿which￿resulted￿in￿obsolescence￿of￿certain￿parts. Utilization￿of￿the￿provision￿mainly￿relates￿to￿the￿sale￿and￿scrapping￿of￿obsolete￿inventories.￿In￿2014,￿2013￿and￿2012, ASML￿made￿insignificant￿profit￿on￿the￿sale￿of￿inventories￿that￿had￿been￿previously￿written￿down. 9. Other Assets Other￿current￿assets￿consist￿of￿the￿following: As of December 31 (in thousands) Advance￿payments￿to￿Zeiss Prepaid￿expenses Operations￿to￿be￿invoiced Derivative￿financial￿instruments VAT Other￿assets Other current assets 2014 EUR 69,307 161,482 40,912 38,257 41,121 39,012 390,091 2013 EUR 99,415 100,077 8,114 40,843 67,381 20,591 336,421 Zeiss￿is￿our￿sole￿supplier￿of￿main￿optical￿systems￿(lenses,￿mirrors,￿collectors￿and￿other￿critical￿optical￿components)￿and, from￿time￿to￿time,￿receives￿non-interest￿bearing￿advance￿payments￿from￿us￿that￿support￿Zeiss'￿work-in-process,￿thereby securing￿lens￿and￿optical￿module￿deliveries￿to￿us.￿Amounts￿owed￿under￿these￿advance￿payments￿are￿settled￿through future￿lens￿or￿EUV￿optical￿module￿deliveries￿which￿explains￿the￿decrease￿in￿2014￿compared￿to￿2013. Prepaid￿expenses￿mainly￿include￿prepaid￿income￿taxes￿on￿intercompany￿profit,￿not￿realized￿by￿the￿ASML￿group￿of￿EUR 58.2￿million￿as￿of￿December￿31,￿2014￿(2013:￿EUR￿45.4￿million).￿The￿increase￿in￿2014￿mainly￿relates￿to￿prepayments￿in relation￿to￿our￿joint￿development￿projects￿with￿one￿of￿our￿research￿partners. 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. ASML￿ANNUAL￿REPORT￿2014 F-23 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 2014 EUR 285,659 115,546 26,172 6,525 5,445 5,473 444,820 2013 EUR 224,123 30,777 20,174 10,950 5,445 7,090 298,559 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￿increase￿in￿the￿advance￿payments￿to￿Zeiss￿in￿2014￿compared￿to￿2013￿is￿mainly￿driven￿by￿a￿prepayment￿under￿an EUV￿agreement. Derivative￿financial￿instruments￿consist￿of￿the￿non-current￿part￿of￿the￿fair￿value￿of￿interest￿rate￿swaps,￿which￿increased￿in value￿as￿a￿result￿of￿the￿decrease￿in￿EURIBOR,￿see￿Note￿4. 10. Goodwill Changes￿in￿goodwill￿are￿summarized￿as￿follows: Year ended December 31 (in thousands) Cost Balance￿at￿beginning￿of￿year Acquisition￿through￿business￿combinations Effect￿of￿changes￿in￿exchange￿rates Balance at end of year 2014 EUR 2,088,589 - 268,947 2,357,536 2013 EUR 149,168 2,058,285 (118,864) 2,088,589 Goodwill￿is￿tested￿for￿impairment￿annually￿at￿the￿start￿of￿the￿fourth￿quarter￿and￿whenever￿events￿or￿changes￿in circumstances￿indicate￿that￿the￿carrying￿amount￿of￿the￿goodwill￿may￿not￿be￿recoverable. Goodwill￿mainly￿relates￿to￿the￿acquisition￿of￿Cymer.￿Within￿ASML￿we￿have￿identified￿two￿RUs,￿which￿are￿RU￿ASML￿and RU￿CLS. As￿of￿December￿31,￿2014￿the￿goodwill￿allocated￿to￿RU￿ASML￿amounts￿to￿EUR￿1,908.3￿million￿(2013:￿EUR￿1,690.7 million)￿and￿for￿RU￿CLS￿this￿amounts￿to￿EUR￿449.2￿million￿(2013:￿EUR￿397.9￿million). For￿2014￿and￿2013,￿the￿fair￿value￿calculations￿of￿the￿RUs￿were￿performed￿by￿discounting￿the￿future￿cash￿flows generated￿from￿the￿continuing￿use￿of￿the￿RUs.￿Cash￿flows￿beyond￿the￿forecasted￿period￿of￿five￿years￿have￿been extrapolated￿using￿a￿0￿percent￿growth￿rate. The￿pre-tax￿WACC￿used￿to￿determine￿the￿expected￿discounted￿future￿cash￿flows￿is￿10.5￿percent￿for￿RU￿ASML￿and￿11.8 percent￿for￿RU￿CLS. Based￿on￿the￿recoverability￿testing￿during￿the￿annual￿goodwill￿impairment￿test,￿we￿believe￿that￿the￿fair￿values￿of￿the￿RUs substantially￿exceed￿their￿carrying￿amounts,￿and￿therefore￿goodwill￿was￿not￿impaired￿as￿of￿December￿31,￿2014. ASML￿ANNUAL￿REPORT￿2014 F-24 11. Other Intangible Assets Other￿intangible￿assets￿consist￿of￿both￿finite-lived￿other￿intangible￿assets￿and￿indefinite-lived￿other￿intangible￿assets. Brands,￿developed￿technology,￿customer￿relationships,￿in-process￿R&D￿and￿other￿were￿obtained￿from￿the￿acquisitions￿of Cymer￿(2013)￿and￿Brion￿(2007). Finite-lived￿other￿intangible￿assets￿consist￿of￿the￿following: (in thousands) Cost Balance,￿January￿1,￿2013 Acquisitions￿through￿business￿combinations Additions Effect￿of￿changes￿in￿exchange￿rates Balance,￿December￿31,￿2013 Additions Effect￿of￿changes￿in￿exchange￿rates Balance, December 31, 2014 Accumulated amortization Balance,￿January￿1,￿2013 Amortization Effect￿of￿changes￿in￿exchange￿rates Balance,￿December￿31,￿2013 Amortization Effect￿of￿changes￿in￿exchange￿rates Balance, December 31, 2014 Brands EUR - 13,280 - (726) 12,554 - 1,621 14,175 - 382 (13) 369 649 107 1,125 Carrying amount December￿31,￿2013 December 31, 2014 12,185 13,050 Intellectual property EUR Developed technology EUR Customer relationships EUR 54,908 - 4,000 - 58,908 2,952 - 61,860 48,028 2,135 - 50,163 2,649 - 52,812 8,745 9,048 49,031 427,797 - (23,380) 453,448 - 52,228 505,676 48,351 18,694 (596) 66,449 30,593 5,039 102,081 386,999 403,595 Other EUR 2,231 - - - 2,231 - - 2,231 2,212 19 - 2,231 - - 2,231 Total EUR 114,903 604,057 4,000 (33,013) 689,947 2,952 73,746 766,645 104,960 27,562 (783) 131,739 43,881 6,612 182,232 8,733 162,980 - (8,907) 162,806 - 19,897 182,703 6,369 6,332 (174) 12,527 9,990 1,466 23,983 150,279 158,720 - - 558,208 584,413 Intellectual￿property￿relates￿to￿licenses￿and￿patents￿purchased￿from￿third￿parties.￿During￿2014,￿we￿acquired￿intellectual property￿from￿third￿parties￿for￿an￿amount￿of￿EUR￿3.0￿million￿(2013:￿EUR￿4.0￿million). During￿2014,￿we￿recorded￿amortization￿charges￿of￿EUR￿43.9￿million￿(2013:￿EUR￿27.6￿million;￿2012:￿EUR￿6.1￿million) which￿were￿recorded￿in￿cost￿of￿sales￿for￿EUR￿41.9￿million￿(2013:￿EUR￿27.0￿million;￿2012:￿EUR￿6.0￿million)￿and￿in￿R&D costs￿for￿EUR￿2.0￿million￿(2013:￿EUR￿0.6￿million￿and￿2012:￿EUR￿0.1￿million). Indefinite-lived￿other￿intangible￿assets￿consist￿of￿the￿following: (in thousands) Cost Balance,￿January￿1,￿2013 Acquisitions￿through￿business￿combinations Additions Effect￿of￿changes￿in￿exchange￿rates Balance,￿December￿31,￿2013 Additions Carrying amount, December 31, 2014 In-process R&D EUR - 147,485 - (8,059) 139,426 - 139,426 As￿of￿December￿31,￿2014,￿the￿indefinite-lived￿other￿intangible￿assets￿amount￿to￿EUR￿139.4￿million￿(2013:￿EUR￿139.4 million)￿and￿are￿allocated￿to￿RU￿ASML. ASML￿ANNUAL￿REPORT￿2014 F-25 During￿2014,￿2013￿and￿2012,￿we￿did￿not￿record￿any￿impairment￿charges￿for￿other￿intangible￿assets. As￿at￿December￿31,￿2014,￿the￿estimated￿amortization￿expenses￿for￿other￿intangible￿assets,￿for￿the￿next￿five￿years￿and thereafter,￿are￿as￿follows: (in thousands) 2015 2016 2017 2018 2019 Thereafter Amortization expenses EUR 46,918 58,355 57,558 56,220 55,706 449,082 723,839 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,￿2013 Acquisitions￿through￿business￿combinations Additions Disposals Effect￿of￿changes￿in￿exchange￿rates Balance,￿December￿31,￿2013 Additions Disposals Effect￿of￿changes￿in￿exchange￿rates Balance, December 31, 2014 Accumulated depreciation and impairment Balance,￿January￿1,￿2013 Depreciation Impairment￿charges Disposals Effect￿of￿changes￿in￿exchange￿rates Balance,￿December￿31,￿2013 Depreciation Impairment￿charges Disposals Effect￿of￿changes￿in￿exchange￿rates Balance, December 31, 2014 Carrying amount December￿31,￿2013 December 31, 2014 847,033 71,040 123,646 (14) (6,605) 1,035,100 222,670 (1,557) 13,275 1,269,488 187,272 47,791 3,619 (5) (1,116) 237,561 52,242 7,403 (90) (1,017) 296,099 797,539 973,389 690,759 48,965 171,895 (90,244) (17,490) 803,885 191,705 (222,836) 26,955 799,709 417,982 114,677 7,997 (42,625) (8,068) 489,963 112,090 2,983 (190,154) 11,950 426,832 313,922 372,877 214,852 1,057 11,543 (336) (1,464) 225,652 6,137 (1,208) 1,229 231,810 158,778 12,415 1,352 (266) (422) 171,857 20,936 - (1,204) 654 192,243 53,795 39,567 Total EUR 2,089,419 124,308 339,252 (92,519) (27,342) 2,433,118 452,262 (326,086) 44,803 2,604,097 1,059,496 197,053 13,057 (44,178) (10,150) 1,215,278 209,504 10,528 (291,898) 13,162 1,156,574 336,775 3,246 32,168 (1,925) (1,783) 368,481 31,750 (100,485) 3,344 303,090 295,464 22,170 89 (1,282) (544) 315,897 24,236 142 (100,450) 1,575 241,400 52,584 61,690 1,217,840 1,447,523 As￿of￿December￿31,￿2014,￿the￿carrying￿amount￿includes￿assets￿under￿construction￿for￿land,￿buildings￿and￿constructions of￿EUR￿201.1￿million￿(2013:￿EUR￿49.3￿million),￿machinery￿and￿equipment￿of￿EUR￿30.2￿million￿(2013:￿EUR￿35.9￿million), leasehold￿improvements￿of￿EUR￿2.8￿million￿(2013:￿EUR￿1.0￿million)￿and￿furniture,￿fixtures￿and￿other￿equipment￿of￿EUR 11.2￿million￿(2013:￿EUR￿13.9￿million).￿As￿of￿December￿31,￿2014,￿the￿carrying￿amount￿of￿land￿amounts￿to￿EUR￿82.9￿million (2013:￿EUR￿79.2￿million). The￿majority￿of￿the￿additions￿in￿2014￿in￿property,￿plant￿and￿equipment￿relate￿to￿the￿further￿expansion￿of￿EUV￿production facilities￿for￿our￿newest￿technology. ASML￿ANNUAL￿REPORT￿2014 F-26 The￿majority￿of￿additions￿in￿2014￿in￿machinery￿and￿equipment￿mainly￿relates￿to￿operating￿leases￿to￿customers, prototypes,￿evaluation￿and￿training￿systems￿which￿are￿similar￿to￿those￿that￿ASML￿sells￿in￿its￿ordinary￿course￿of￿business. These￿systems￿are￿capitalized￿under￿property,￿plant￿and￿equipment￿because￿they￿are￿held￿for￿own￿use,￿for￿operating lease￿and￿for￿evaluation￿purposes.￿These￿are￿recorded￿at￿cost￿and￿depreciated￿over￿their￿expected￿useful￿life￿taking into￿consideration￿their￿residual￿value.￿From￿the￿time￿that￿these￿assets￿are￿no￿longer￿held￿for￿use￿but￿intended￿for￿sale in￿the￿ordinary￿course￿of￿business,￿they￿are￿reclassified￿from￿property,￿plant￿and￿equipment￿to￿inventory￿at￿the￿lower of￿their￿carrying￿value￿or￿fair￿market￿value.￿Since￿the￿transfers￿between￿inventory￿and￿property,￿plant￿and￿equipment are￿non-cash￿events,￿these￿are￿not￿reflected￿in￿the￿Consolidated￿Statements￿of￿Cash￿Flows.￿An￿amount￿of￿EUR￿95.5 million￿(2013:￿EUR￿115.9￿million)￿of￿the￿additions￿relates￿to￿non-cash￿transfers￿from￿inventory￿and￿an￿amount￿of￿EUR 1.5￿million￿(2013:￿EUR￿12.5￿million￿decrease)￿relates￿to￿other￿non-cash￿movements￿(mainly￿capital￿expenditures￿not￿yet paid￿as￿at￿December￿31,￿2014).￿An￿amount￿of￿EUR￿30.7￿million￿(2013:￿EUR￿48.2￿million)￿of￿the￿disposals￿relates￿to￿non- cash￿transfers￿to￿inventory.￿When￿sold,￿the￿proceeds￿and￿cost￿of￿these￿systems￿are￿recorded￿as￿net￿sales￿and￿cost￿of sales,￿respectively,￿identical￿to￿the￿treatment￿of￿other￿sales￿transactions.￿The￿cost￿of￿sales￿for￿these￿systems￿includes the￿inventory￿value￿and￿the￿additional￿costs￿of￿refurbishing￿(materials￿and￿labor). As￿of￿December￿31,￿2014,￿the￿carrying￿amount￿of￿machinery￿and￿equipment￿includes￿an￿amount￿of￿EUR￿68.6￿million￿with respect￿to￿evaluation￿and￿operating￿lease￿systems￿(2013:￿EUR￿36.7￿million). The￿majority￿of￿the￿disposals￿during￿2014￿relate￿to￿fully￿depreciated￿long-lived￿assets,￿in￿general￿tooling￿and￿other fixtures,￿which￿have￿been￿retired￿from￿active￿use. During￿2014,￿we￿recorded￿depreciation￿charges￿of￿EUR￿209.5￿million￿(2013:￿EUR￿197.1￿million;￿2012:￿EUR￿179.3￿million) of￿which￿we￿recorded￿EUR￿153.9￿million￿(2013:￿EUR￿144.1￿million;￿2012:￿EUR￿147.7￿million)￿in￿cost￿of￿sales,￿EUR￿36.3 million￿(2013￿EUR￿35.0￿million;￿2012:￿EUR￿15.3￿million)￿in￿R&D￿costs￿and￿EUR￿19.3￿million￿(2013:￿EUR￿18.0￿million;￿2012: EUR￿16.3￿million)￿in￿SG&A￿costs. Variable Interest Entity The￿carrying￿amount￿of￿land,￿buildings￿and￿constructions￿includes￿an￿amount￿of￿EUR￿29.5￿million￿(2013:￿EUR￿30.9 million)￿relating￿to￿our￿headquarters￿in￿Veldhoven,￿the￿Netherlands,￿which￿is￿owned￿by￿Koppelenweg￿II￿B.V.,￿a￿"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￿2014 F-27 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 2014 EUR 1,268,633 411,725 647,317 301,075 67,755 41,508 21,441 2,759,454 411,655 2,347,799 2013 EUR 939,358 440,010 821,959 247,246 11,652 27,475 12,324 2,500,024 283,142 2,216,882 1 The￿main￿part￿of￿the￿non-current￿portion￿of￿accrued￿and￿other￿liabilities￿relates￿to￿down￿payments￿received￿from￿customers￿regarding￿future shipments￿of￿EUV￿systems￿and￿deferrals￿with￿respect￿to￿services. The￿increase￿in￿accrued￿and￿other￿liabilities￿mainly￿relates￿to￿the￿increases￿in￿deferred￿revenue,￿derivative￿financial instruments￿and￿personnel￿related￿items,￿which￿are￿partly￿offset￿by￿a￿decrease￿in￿down￿payments￿from￿our￿customers and￿costs￿to￿be￿paid. Deferred￿revenue￿as￿of￿December￿31,￿2014￿mainly￿consists￿of￿credits￿regarding￿free￿or￿discounted￿products￿or￿services as￿part￿of￿volume￿purchase￿agreements￿amounting￿to￿EUR￿925.2￿million￿(2013:￿EUR￿660.1￿million)￿and￿extended￿and enhanced￿(optic)￿warranty￿contracts￿amounting￿to￿EUR￿313.8￿million￿(2013:￿EUR￿261.2￿million).￿Both￿include￿deferrals with￿respect￿to￿our￿third-generation￿EUV￿systems,￿NXE:3300B.￿The￿total￿deferred￿revenue￿of￿the￿third-generation￿EUV systems,￿NXE:3300B,￿is￿EUR￿102.5￿million￿(2013:￿EUR￿87.6￿million). We￿receive￿down￿payments￿from￿our￿customers￿prior￿to￿shipment￿of￿systems￿included￿in￿our￿current￿product￿portfolio or￿systems￿currently￿under￿development.￿The￿decrease￿in￿down￿payments￿from￿our￿customers￿is￿mainly￿due￿to￿the shipment￿of￿NXE:3300B￿systems. Costs￿to￿be￿paid￿as￿of￿December￿31,￿2014￿include￿an￿amount￿of￿EUR￿124.0￿million￿(2013:￿EUR￿171.2￿million)￿relating￿to the￿expected￿losses￿to￿upgrade￿the￿first￿11￿NXE:3300B￿sources￿in￿the￿field,￿which￿was￿assumed￿by￿ASML￿as￿a￿result￿of the￿acquisition￿of￿Cymer.￿In￿addition,￿costs￿to￿be￿paid￿include￿accrued￿costs￿for￿unbilled￿services￿provided￿by￿suppliers including￿contracted￿labor,￿outsourced￿services￿and￿consultancy. Personnel￿related￿items￿mainly￿consist￿of￿accrued￿management￿bonuses,￿accrued￿profit￿sharing,￿accrued￿vacation￿days, accrued￿vacation￿allowance,￿accrued￿wage￿tax,￿social￿securities￿and￿accrued￿pension￿premiums. 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￿2014￿and￿2013￿are￿as￿follows: Year ended December 31 (in thousands) Balance￿at￿beginning￿of￿year Acquisitions￿through￿business￿combinations Additions￿for￿the￿year Utilization￿of￿the￿reserve Release￿of￿the￿reserve Effect￿of￿exchange￿rates Balance at end of year 2014 EUR 27,475 - 42,420 (22,749) (5,468) (170) 41,508 2013 EUR 21,626 2,978 37,124 (19,924) (13,076) (1,253) 27,475 The￿increase￿of￿the￿total￿standard￿warranty￿reserve￿is￿mainly￿related￿to￿accrued￿warranties￿for￿NXE:3300B￿systems.￿This increase￿is￿included￿in￿cost￿of￿sales. ASML￿ANNUAL￿REPORT￿2014 F-28 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 2014 EUR 6,847 (2,517) - 918 744 5,992 2,354 3,638 2013 EUR 10,254 (2,790) (1,011) 391 3 6,847 2,227 4,620 The￿provision￿for￿lease￿contract￿termination￿costs￿relates￿to￿an￿operating￿lease￿contract￿for￿a￿building￿for￿which￿no economic￿benefits￿are￿expected.￿The￿provision￿for￿lease￿contract￿termination￿costs￿is￿expected￿to￿be￿fully￿utilized￿by 2017. 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 2014 EUR 264,085 841,514 29,507 19,031 1,154,137 4,261 1,149,876 2013 EUR 270,339 751,591 30,936 21,704 1,074,570 4,385 1,070,185 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,￿2014,￿for￿the￿next￿five￿years￿and￿thereafter,￿are￿as￿follows: (in thousands) 2015 2016 2017 2018 2019 Thereafter Long-term debt Less:￿current￿portion￿of￿long-term￿debt Non-current portion of long-term debt EUR 4,261 4,606 242,361 27,997 1,762 755,705 1,036,692 4,261 1,032,431 Eurobonds The￿following￿table￿summarizes￿the￿carrying￿amount￿of￿our￿outstanding￿Eurobonds,￿including￿the￿fair￿value￿of￿interest rate￿swaps￿used￿to￿hedge￿the￿change￿in￿the￿fair￿value￿of￿the￿Eurobonds: As of December 31 (in thousands) Amortized￿cost￿amount Fair￿value￿interest￿rate￿swaps1 Carrying amount 2014 EUR 978,242 127,357 1,105,599 2013 EUR 981,291 40,639 1,021,930 1 The￿fair￿value￿of￿the￿interest￿rate￿swaps￿excludes￿accrued￿interest. ASML￿ANNUAL￿REPORT￿2014 F-29 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￿was￿simultaneously￿terminated￿in￿2013. The￿following￿table￿summarizes￿the￿estimated￿fair￿value￿of￿our￿Eurobonds: As of December 31 (in thousands) Principal￿amount Carrying￿amount Fair￿value1 2014 EUR 988,153 1,105,599 1,139,628 2013 EUR 988,153 1,021,930 1,028,238 1 Source:￿Bloomberg￿Finance￿LP The￿fair￿value￿of￿our￿Eurobonds￿is￿estimated￿based￿on￿quoted￿market￿prices￿as￿of￿December￿31,￿2014.￿Due￿to￿changes in￿market￿interest￿rates￿and￿credit￿spreads￿since￿the￿issue￿of￿our￿Eurobonds￿which￿carry￿a￿fixed￿coupon￿interest￿rate,￿the fair￿value￿deviates￿from￿the￿principal￿amount. 16. Lines of Credit Our￿available￿credit￿facilities￿amount￿to￿EUR￿700.0￿million￿as￿of￿December￿31,￿2014￿and￿EUR￿700.0￿million￿as￿of December￿31,￿2013.￿No￿amounts￿were￿outstanding￿under￿these￿credit￿facilities￿at￿the￿end￿of￿2014￿and￿2013. The￿amounts￿available￿at￿December￿31,￿2014￿and￿2013￿consist￿of￿one￿EUR￿700￿million￿committed￿revolving￿credit facility￿from￿a￿group￿of￿banks￿that￿will￿mature￿in￿2018.￿The￿credit￿facility￿contains￿a￿restrictive￿covenant￿that￿requires￿us to￿maintain￿a￿minimum￿long-term￿committed￿capital￿to￿net￿total￿assets￿ratio￿of￿40.0￿percent￿calculated￿in￿accordance with￿contractually￿agreed￿definitions.￿Long-term￿committed￿capital￿includes,￿among￿other￿things,￿shareholders’￿equity and￿debt￿maturing￿at￿least￿one￿year￿after￿the￿maturity￿date￿of￿the￿credit￿facility,￿while￿net￿total￿assets￿mainly￿comprises total￿assets￿minus￿cash,￿cash￿equivalents￿and￿certain￿short-term￿investments.￿Furthermore,￿adjustments￿are￿made for￿e.g.￿intangibles￿and￿operating￿leases. As￿of￿December￿31,￿2014￿this￿ratio￿was￿82.8￿percent￿(2013:￿89.6￿percent). Therefore,￿we￿were￿in￿compliance￿with￿the￿covenant￿at￿the￿end￿of￿2014￿and￿2013.￿Outstanding￿amounts￿under￿this￿credit facility￿will￿bear￿interest￿at￿EURIBOR￿or￿LIBOR￿plus￿a￿margin￿that￿depends￿on￿our￿liquidity￿position. 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. ASML￿ANNUAL￿REPORT￿2014 F-30 Our￿contractual￿obligations￿as￿of￿December￿31,￿2014￿can￿be￿summarized￿as￿follows: Payments due by period (in thousands) Total EUR 1 year EUR 2 year EUR 3 year EUR Long-Term￿Debt￿Obligations,￿including￿interest￿expense1 1,311,503 89,209 Operating￿Lease￿Obligations 44,958 29,280 Purchase￿Obligations 1,588,977 1,464,451 - 83,738 Unrecognized￿Tax￿Benefits,￿including￿interest￿expense 45,302 22,590 113,606 12,813 283,058 11,534 10,186 14,092 4 year EUR 54,155 8,256 158 2,858 5 year EUR 27,075 6,961 556 2,367 After 5 years EUR 856,955 10,588 20 51,608 Total Contractual Obligations 3,073,427 1,538,689 194,311 318,870 65,427 36,959 919,171 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￿43.9￿million,￿EUR￿42.0￿million￿and￿EUR￿41.6￿million￿for￿the￿years￿ended￿December￿31,￿2014,￿2013￿and￿2012, respectively. Several￿operating￿leases￿for￿our￿buildings￿contain￿purchase￿options,￿exercisable￿at￿the￿end￿of￿the￿lease,￿and￿in￿some cases,￿during￿the￿term￿of￿the￿lease.￿The￿amounts￿to￿be￿paid￿if￿ASML￿should￿exercise￿these￿purchase￿options￿at￿the￿end of￿the￿lease￿as￿of￿December￿31,￿2014￿can￿be￿summarized￿as￿follows: Purchase options due by period (in thousands) Purchase￿options Total EUR 13,983 1 year EUR - 2 year EUR 13,983 3 year EUR - 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, 2014￿contain￿clauses￿that￿enable￿us￿to￿delay￿or￿cancel￿delivery￿of￿ordered￿goods￿and￿services￿up￿to￿the￿dates￿specified in￿the￿corresponding￿purchase￿contracts.￿These￿terms￿and￿conditions￿that￿we￿typically￿agree￿with￿our￿supply￿chain partners￿gives￿us￿additional￿flexibility￿to￿adapt￿our￿purchase￿obligations￿to￿our￿requirements￿in￿light￿of￿the￿inherent cyclicality￿of￿the￿industry￿in￿which￿we￿operate.￿We￿establish￿a￿provision￿for￿cancellation￿costs￿when￿it￿is￿probable￿that the￿liability￿has￿been￿incurred￿and￿the￿amount￿of￿cancellation￿fees￿is￿reasonably￿estimable. We￿have￿a￿non-committed￿guarantee￿facility￿of￿EUR￿25.0￿million￿under￿which￿guarantees￿in￿the￿ordinary￿course￿of business￿can￿be￿provided￿to￿third￿parties. 18. Employee Benefits Our￿bonus￿expenses￿for￿the￿BoM,￿former￿BoM￿and￿senior￿management￿were￿as￿follows: Year ended December 31 (in thousands) 2014 EUR Bonus￿expenses 48,957 2013 EUR 32,698 2012 EUR 16,474 Bonus￿expenses￿include￿an￿amount￿of￿EUR￿3.5￿million￿(2013:￿EUR￿2.1￿million;￿2012:￿EUR￿1.8￿million)￿in￿relation￿to￿the STI￿cash￿bonus￿for￿our￿BoM￿and￿former￿BoM.￿The￿increase￿in￿bonus￿expenses￿in￿2014￿compared￿to￿2013￿is￿mainly attributable￿to￿the￿full￿year￿inclusion￿of￿Cymer. ASML￿ANNUAL￿REPORT￿2014 F-31 We￿have￿a￿performance￿related￿bonus￿plan￿for￿our￿senior￿management,￿who￿are￿not￿members￿of￿the￿BoM.￿Under￿this plan,￿the￿bonus￿amounts￿depend￿on￿actual￿performance￿against￿corporate￿and￿personal￿targets.￿Within￿ASML,￿the bonus￿for￿members￿of￿senior￿management￿can￿range￿between￿0.0￿percent￿and￿75.0￿percent￿of￿their￿annual￿salaries. Within￿Cymer,￿bonuses￿can￿range￿between￿0.0￿percent￿and￿200.0￿percent￿of￿their￿annual￿salary.￿The￿performance￿targets are￿set￿for￿a￿whole￿year.￿The￿bonuses￿over￿2014￿are￿accrued￿for￿in￿the￿Consolidated￿Balance￿Sheets￿as￿of￿December￿31, 2014￿and￿are￿expected￿to￿be￿paid￿in￿the￿first￿quarter￿of￿2015. Our￿bonus￿expenses￿under￿these￿plans￿were￿as￿follows: Year ended December 31 (in thousands) 2014 EUR 2013 EUR 2012 EUR Bonus￿expenses 45,462 30,631 14,588 Profit-sharing Plan We￿have￿a￿profit-sharing￿plan￿covering￿all￿European￿and￿US￿non-sales￿employees￿who￿are￿not￿members￿of￿the￿BoM￿or senior￿management.￿Under￿the￿plan,￿eligible￿employees￿receive￿an￿annual￿profit-sharing,￿based￿on￿a￿percentage￿of￿net income￿relative￿to￿total￿net￿sales￿ranging￿from￿0.0￿to￿20.0￿percent￿of￿their￿annual￿salary.￿The￿profit￿sharing￿for￿the￿years 2014,￿2013￿and￿2012￿was￿16.0￿percent￿or￿EUR￿71.3￿million,￿14.0￿percent￿or￿EUR￿55.9￿million￿and￿18.0￿percent￿or￿EUR 64.5￿million,￿respectively.￿Our￿profit￿is￿also￿one￿of￿the￿criteria￿for￿the￿individual￿variable￿pay￿programs￿for￿employees in￿Asia￿and￿employees￿eligible￿to￿the￿sales￿reward￿plan,￿which￿amount￿to￿EUR￿28.0￿million￿for￿2014￿(including￿EUR￿2.1 million￿for￿the￿sales￿reward￿plan),￿EUR￿25.8￿million￿(including￿EUR￿2.3￿million￿for￿the￿sales￿reward￿plan)￿for￿2013￿and EUR￿24.4￿million￿(including￿EUR￿2.6￿million￿for￿the￿sales￿reward￿plan)￿for￿2012. Share-based Compensation In￿the￿past￿we￿have￿adopted￿various￿share￿and￿option￿plans￿for￿our￿employees.￿Starting￿January￿1,￿2014￿the￿Employee Umbrella￿Share￿Plan￿has￿become￿effective,￿covering￿all￿grants￿made￿as￿of￿that￿date￿for￿our￿employees.￿The￿AGM approves￿each￿year￿the￿maximum￿number￿of￿shares￿that￿can￿be￿used￿by￿ASML￿to￿execute￿share-based￿incentives. Within￿this￿limit,￿the￿Supervisory￿Board￿determines￿the￿maximum￿number￿of￿shares￿that￿is￿granted￿to￿the￿BoM￿in￿line with￿the￿2014￿Remuneration￿Policy￿and￿the￿BoM￿determines￿the￿total￿maximum￿of￿shares￿that￿can￿be￿granted￿in￿that year￿for￿eligible￿employees￿in￿line￿with￿existing￿policies.￿Our￿current￿share-based￿compensation￿plans￿do￿not￿provide cash￿settlement￿of￿options￿and￿shares. The￿total￿gross￿amount￿of￿recognized￿compensation￿expenses￿associated￿with￿share-based￿payments￿(including￿share- based￿payments￿to￿the￿BoM)￿was￿EUR￿63.4￿million￿in￿2014,￿EUR￿52.4￿million￿in￿2013￿and￿EUR￿18.7￿million￿in￿2012. The￿tax￿benefit￿recognized￿related￿to￿the￿recognized￿share-based￿compensation￿costs￿amounted￿to￿EUR￿14.9￿million￿in 2014,￿EUR￿10.7￿million￿in￿2013￿and￿EUR￿0.9￿million￿in￿2012.￿ Total￿compensation￿costs￿to￿be￿recognized￿in￿future￿periods￿amount￿to￿EUR￿69.8￿million￿as￿of￿December￿31,￿2014￿(2013: EUR￿78.9￿million;￿2012:￿EUR￿30.4￿million).￿The￿weighted￿average￿period￿over￿which￿these￿costs￿are￿expected￿to￿be recognized￿is￿calculated￿at￿1.6￿years￿(2013:￿1.6￿years;￿2012:￿2.0￿years).￿ Employee Umbrella Share Plan The￿Employee￿Umbrella￿Share￿Plan,￿effective￿as￿of￿January￿1,￿2014￿covers￿all￿employees.￿Within￿this￿plan,￿we distinguish￿between￿performance￿and￿incentive￿shares.￿Within￿the￿incentive￿category,￿employees￿can￿choose,￿at inception,￿to￿convert￿the￿shares￿into￿options.￿All￿grants￿under￿the￿Employee￿Umbrella￿Share￿Plan￿typically￿have￿a￿three year￿vesting￿period. Share plans Our￿current￿share￿plans￿typically￿include￿a￿three￿year￿service￿period￿and￿some￿plans￿have￿vesting￿conditions￿which are￿based￿on￿performance.￿The￿fair￿value￿of￿shares￿is￿determined￿on￿the￿closing￿trading￿price￿of￿our￿shares￿listed￿at Euronext￿Amsterdam￿on￿the￿grant￿date. ASML￿ANNUAL￿REPORT￿2014 F-32 Details￿with￿respect￿to￿shares￿granted￿during￿the￿year￿are￿set￿out￿in￿the￿following￿table: Year ended December 31 2014 2013 2012 2014 2013 2012 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 56,214 65.71 38,280 55.83 16,179 36.15 76,605 84.62 51,798 83.58 5,392 47.71 A￿summary￿of￿the￿status￿of￿conditionally￿outstanding￿shares￿as￿of￿December￿31,￿2014,￿and￿changes￿during￿the￿year ended￿December￿31,￿2014,￿is￿presented￿below: EUR-denominated USD-denominated Conditional shares outstanding at January 1, 2014 Granted Vested Forfeited Conditional shares outstanding at December 31, 2014 Number of shares 1,544,332 409,626 (847,131) (13,649) 1,093,178 Weighted average fair value at grant date (EUR) 40.21 65.71 34.78 40.83 53.96 Number of shares 1,380,320 475,146 (872,231) (62,020) 921,215 Weighted average fair value at grant date (USD) 79.55 84.62 79.56 79.57 82.16 Option Plans Our￿current￿option￿plans￿typically￿vest￿over￿a￿three￿year￿service￿period￿with￿any￿unexercised￿stock￿options￿expiring￿ten years￿after￿the￿grant￿date.￿Options￿granted￿have￿fixed￿exercise￿prices￿equal￿to￿the￿closing￿price￿of￿our￿shares￿listed￿at Euronext￿Amsterdam￿on￿grant￿date.￿The￿fair￿value￿of￿stock￿options￿is￿determined￿using￿a￿Black-Scholes￿option￿valuation model. The￿Black-Scholes￿option￿valuation￿of￿our￿stock￿options￿is￿based￿on￿the￿following￿assumptions: Year ended December 31 Weighted￿average￿share￿price￿(in￿EUR) Volatility￿(in￿percentage) Expected￿life￿(in￿years) Risk￿free￿interest￿rate Expected￿dividend￿yield￿(in￿EUR) Forfeiture￿rate1 2014 65.0 23.5 5.6 0.5 2.25 - 2013 60.6 27.0 5.6 0.8 2.00 - 2012 39.2 25.6 5.0 2.1 1.45 - 1 For￿the￿years￿ending￿December￿31,￿2014,￿2013￿and￿2012,￿forfeitures￿are￿estimated￿to￿be￿nil. When￿establishing￿the￿expected￿life￿assumption￿we￿annually￿take￿into￿account￿the￿contractual￿terms￿of￿the￿stock options￿as￿well￿as￿historical￿employee￿exercise￿behavior. Details￿with￿respect￿to￿stock￿options￿are￿set￿out￿in￿the￿following￿table: Year ended December 31 2014 2013 2012 2014 2013 2012 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) 13.94 71.69 12,098 2.94 39,020 40,428 14.22 59.53 15,924 3.09 37,441 38,718 8.97 40.45 71,331 3.59 34,438 35,671 18.57 93.19 9,497 3.79 17,942 19,171 21.74 77.25 11,086 3.12 22,781 25,369 11.87 50.88 12,684 3.17 21,882 22,433 ASML￿ANNUAL￿REPORT￿2014 F-33 The￿number￿and￿weighted￿average￿exercise￿prices￿of￿stock￿options￿as￿of￿December￿31,￿2014,￿and￿changes￿during￿the year￿then￿ended￿are￿presented￿below: EUR-denominated USD-denominated Outstanding,￿January￿1,￿2014 Granted Exercised Forfeited Expired Outstanding, December 31, 2014 Exercisable,￿December￿31,￿2014 Number of options 782,302 32,672 (212,530) (1,350) (1,338) 599,756 559,556 Weighted average exercise price per ordinary share (EUR) 18.55 65.68 14.77 21.48 14.70 22.09 19.77 Number of options 406,635 20,654 (129,530) (12,587) - 285,172 246,285 Weighted average exercise price per ordinary share (USD) 31.31 87.98 19.87 31.51 - 40.60 34.98 Details￿with￿respect￿to￿the￿stock￿options￿outstanding￿are￿set￿out￿in￿the￿following￿table: EUR-denominated USD-denominated Range of exercise prices (EUR) 0￿-￿10 10￿-￿15 15￿-￿20 20￿-￿25 25￿-￿40 40￿-￿50 50￿-￿60 60￿-￿70 70￿-￿80 80￿-￿90 90￿-￿100 Total Number of outstanding options at December 31, 2014 - 220,179 160,772 126,712 16,736 23,959 13,593 27,239 10,566 - - 599,756 Weighted average remaining contractual life of outstanding options (years) - 2.28 2.15 2.94 6.77 7.80 8.88 8.93 9.81 - - 3.31 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 90￿-￿100 Total Number of outstanding options at December 31, 2014 14,543 48,397 3,911 66,462 58,168 1,082 8,382 1,281 43,860 15,005 24,081 285,172 Weighted average remaining contractual life of outstanding options (years) 1.07 0.18 3.80 2.97 3.87 6.59 7.73 8.07 8.14 9.22 9.11 4.41 Employee Purchase Plan Every￿quarter,￿we￿offer￿our￿worldwide￿payroll￿employees￿the￿opportunity￿to￿buy￿our￿shares￿or￿our￿stock￿options￿against fair￿value￿using￿their￿net￿salary.￿The￿BoM￿is￿excluded￿from￿participation￿in￿this￿plan.￿The￿fair￿value￿for￿shares￿is￿based on￿the￿closing￿price￿of￿our￿shares￿listed￿at￿Euronext￿Amsterdam￿on￿grant￿date.￿Within￿the￿employee￿purchase￿plan employees￿can￿choose￿to￿convert￿the￿shares￿into￿options.￿The￿fair￿value￿of￿the￿stock￿options￿is￿determined￿using￿a Black-Scholes￿option￿valuation￿model.￿The￿assumptions￿on￿which￿the￿Black-Scholes￿option￿valuation￿model￿is￿used,￿see the￿disclosure￿above￿under￿the￿caption￿"Option￿Plans".￿The￿maximum￿net￿amount￿for￿which￿employees￿can￿participate in￿the￿plan￿amounts￿to￿10.0￿percent￿of￿their￿annual￿gross￿base￿salary.￿When￿employees￿retain￿the￿shares￿and/or￿stock options￿for￿a￿minimum￿of￿12￿months,￿we￿will￿pay￿out￿a￿20.0￿percent￿cash￿bonus￿on￿the￿initial￿participation￿amount. Deferred Compensation Plans In￿July￿2002,￿we￿adopted￿a￿non-qualified￿deferred￿compensation￿plan￿for￿our￿US￿employees￿that￿allows￿a￿select￿group of￿management￿or￿highly￿compensated￿employees￿to￿defer￿a￿portion￿of￿their￿salary,￿bonus,￿and￿commissions.￿The￿plan allows￿us￿to￿credit￿additional￿amounts￿to￿the￿participants’￿account￿balances.￿The￿participants￿divide￿their￿funds￿among the￿investments￿available￿in￿the￿plan.￿Participants￿elect￿to￿receive￿their￿funds￿in￿future￿periods￿after￿the￿earlier￿of￿their employment￿termination￿or￿their￿withdrawal￿election,￿at￿least￿three￿years￿after￿deferral.￿There￿were￿minor￿expenses relating￿to￿this￿plan￿in￿2014,￿2013￿and￿2012.￿Cymer￿has￿a￿similar￿non-qualified￿deferred￿compensation￿plan￿for￿a selected￿group￿of￿management￿level￿employees￿in￿the￿US￿in￿which￿the￿employee￿may￿elect￿to￿defer￿receipt￿of￿current compensation￿in￿order￿to￿provide￿retirement￿and￿other￿benefits￿on￿behalf￿of￿such￿employee￿backed￿by￿Cymer￿owned￿life insurance￿policies. As￿of￿December￿31,￿2014,￿and￿2013,￿our￿liability￿under￿deferred￿compensation￿plans￿was￿EUR￿29.4￿million￿and￿EUR￿23.5 million,￿respectively. ASML￿ANNUAL￿REPORT￿2014 F-34 Pension Plans We￿maintain￿various￿pension￿plans￿covering￿substantially￿all￿of￿our￿employees.￿Eligible￿employees￿in￿the￿Netherlands, 5,802￿FTEs,￿participate￿in￿a￿multi-employer￿union￿plan￿(PME)￿determined￿in￿accordance￿with￿the￿collective￿bargaining agreements￿effective￿for￿the￿industry￿in￿which￿we￿operate.￿This￿collective￿bargaining￿agreement￿has￿no￿expiration date.￿This￿multi-employer￿union￿plan￿covers￿approximately￿1,259￿companies￿and￿approximately￿144,000￿contributing members.￿Our￿contribution￿to￿the￿multi-employer￿union￿plan￿was￿5.7￿percent￿of￿the￿total￿contribution￿to￿the￿plan￿as￿per the￿Annual￿Report￿for￿the￿year￿ended￿December￿31,￿2013.￿The￿plan￿monitors￿its￿risks￿on￿a￿global￿basis,￿not￿by￿company or￿employee,￿and￿is￿subject￿to￿regulation￿by￿Dutch￿governmental￿authorities.￿By￿law￿(the￿Dutch￿Pension￿Act),￿a￿multi- employer￿union￿plan￿must￿be￿monitored￿against￿specific￿criteria,￿including￿the￿coverage￿ratio￿of￿the￿plan's￿assets￿to￿its obligations.￿As￿of￿January￿1,￿2015￿new￿pension￿legislation￿has￿been￿enacted.￿This￿legislation￿results￿in￿amongst￿others, an￿increase￿of￿legally￿required￿coverage￿levels.￿The￿coverage￿percentage￿is￿calculated￿by￿dividing￿the￿funds￿capital￿by the￿total￿sum￿of￿pension￿liabilities￿and￿is￿based￿on￿actual￿market￿interes￿rates.￿The￿coverage￿ratio￿as￿per￿December 31,￿2014￿of￿102.0￿percent￿(December￿31,￿2013:￿103.4￿percent)￿is￿calculated￿giving￿consideration￿to￿the￿new￿pension legislation￿and￿is￿below￿the￿legally￿required￿level.￿We￿have￿however￿no￿obligation￿whatsoever￿to￿pay￿off￿any￿deficits￿the pension￿fund￿may￿incur,￿nor￿have￿we￿any￿claim￿to￿any￿potential￿surpluses. Every￿company￿participating￿in￿the￿multi-employer￿union￿plan￿(PME)￿contributes￿a￿premium￿calculated￿as￿a￿percentage of￿its￿total￿pensionable￿salaries,￿with￿each￿company￿subject￿to￿the￿same￿percentage￿contribution￿rate.￿Although￿the premium￿can￿fluctuate￿yearly￿based￿on￿the￿coverage￿ratio￿of￿the￿multi-employer￿union￿plan,￿for￿the￿5-year￿period 2015-2019￿the￿contribution￿percentage￿has￿been￿fixed￿at￿23.6￿percent￿(2014:￿24.1￿percent).￿The￿pension￿rights￿of￿each employee￿are￿based￿upon￿the￿employee's￿average￿salary￿during￿employment. Our￿net￿periodic￿pension￿cost￿for￿this￿multi-employer￿union￿plan￿for￿any￿period￿is￿the￿amount￿of￿the￿required￿employer contribution￿for￿that￿period. We￿also￿participate￿in￿several￿defined￿contribution￿pension￿plans,￿with￿our￿expenses￿for￿these￿plans￿equaling￿the employer￿contributions￿made￿in￿the￿relevant￿period. Our￿pension￿and￿retirement￿expenses￿for￿all￿employees￿for￿the￿years￿ended￿December￿31,￿2014,￿2013￿and￿2012￿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 2014 EUR 46,542 24,774 71,316 2013 EUR 40,476 19,799 60,275 2012 EUR 34,525 15,773 50,298 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￿and￿legal￿proceedings￿in￿our￿Consolidated￿Statements￿of￿Operations￿at the￿time￿when￿the￿related￿legal￿services￿are￿actually￿provided￿to￿ASML.￿In￿2014,￿EUR￿12.9￿million￿estimated￿losses￿were recorded￿as￿a￿charge￿to￿our￿Consolidated￿Statements￿of￿Operations￿(2013:￿EUR￿3.2￿million￿and￿2012:￿no￿estimated losses￿were￿recorded). From￿late￿2001￿through￿2004,￿ASML￿was￿a￿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. ASML￿ANNUAL￿REPORT￿2014 F-35 In￿2004,￿the￿Nikon￿Cross-License￿Agreement￿was￿signed.￿Under￿the￿Nikon￿Cross-License￿Agreement,￿(i)￿ASML￿granted Nikon￿a￿non-exclusive￿license￿to￿manufacture￿and￿sell￿lithography￿equipment￿under￿patents￿owned￿or￿otherwise sublicensable￿by￿ASML￿and￿(ii)￿Nikon￿granted￿ASML￿a￿non-exclusive￿license￿to￿manufacture￿and￿sell￿lithography equipment￿under￿patents￿owned￿or￿otherwise￿sublicensable￿by￿Nikon.￿These￿license￿grants￿cover￿patents￿having￿an effective￿application￿date￿before￿December￿31,￿2002￿("Class￿A￿Patents"),￿as￿well￿as￿patents￿with￿an￿effective￿application date￿after￿December￿31,￿2002￿that￿were￿issued￿worldwide￿before￿the￿end￿of￿2009￿("Class￿B￿Patents"),￿but￿exclude certain￿specified￿patents￿set￿forth￿in￿the￿Nikon￿Cross-License￿Agreement.￿The￿license￿period￿is￿perpetual￿for￿Class￿A Patents,￿and￿the￿licenses￿for￿Class￿B￿Patents￿terminated￿at￿the￿end￿of￿2009. At￿any￿time￿until￿June￿30,￿2015,￿each￿of￿ASML￿and￿Nikon￿has￿a￿right￿to￿designate￿up￿to￿five￿Class￿B￿patents￿(or￿patents related￿to￿lithography￿issued￿from￿2010￿to￿2015)￿of￿the￿other￿party￿as￿Class￿A￿patents.￿Any￿patents￿acquired￿after￿the date￿of￿the￿Nikon￿Cross-License￿Agreement￿are￿deemed￿Class￿B￿Patents.￿In￿addition,￿pursuant￿to￿the￿terms￿of￿the￿Nikon Cross-License￿Agreement,￿the￿parties￿have￿agreed,￿from￿January￿1,￿2010￿through￿December￿31,￿2014,￿not￿to￿bring suit￿for￿claims￿related￿to￿infringement￿of￿patents￿issued￿and￿not￿perpetually￿licensed,￿including￿the￿Class￿B￿Patents. Under￿the￿terms￿of￿the￿Nikon￿Cross-License￿Agreement,￿beginning￿on￿January￿1,￿2015,￿the￿parties￿may￿bring￿suit￿for infringement￿of￿certain￿patents￿subject￿to￿the￿agreement,￿including￿any￿infringement￿that￿occurred￿from￿January￿1, 2010￿through￿December￿31,￿2014.￿Damages￿resulting￿from￿claims￿for￿patent￿infringement￿occurring￿during￿the￿Cross- License￿Transition￿Period￿are￿limited￿to￿three￿percent￿of￿the￿net￿sales￿price￿of￿applicable￿licensed￿products￿or￿optical components. Accordingly,￿from￿January￿1,￿2015,￿both￿Nikon￿and￿we￿are￿no￿longer￿prohibited￿under￿the￿agreement￿from￿bringing claims￿against￿each￿other￿on￿the￿basis￿of￿infringement￿of￿certain￿patents￿subject￿to￿the￿Nikon￿Cross-License￿Agreement. If￿Nikon￿files￿suit￿against￿us￿alleging￿patent￿infringement,￿we￿may￿incur￿substantial￿legal￿fees￿and￿expenses,￿and￿we￿may not￿prevail.￿Similarly,￿if￿we￿file￿suit￿against￿Nikon￿alleging￿patent￿infringement,￿we￿may￿incur￿substantial￿legal￿fees￿and expenses,￿and￿we￿may￿not￿prevail.￿Patent￿litigation￿is￿complex￿and￿may￿extend￿for￿a￿protracted￿period￿of￿time,￿giving rise￿to￿the￿potential￿for￿both￿substantial￿costs￿and￿diverting￿the￿attention￿of￿key￿management￿and￿technical￿personnel. Potential￿adverse￿outcomes￿from￿patent￿litigation￿may￿include,￿without￿limitation,￿payment￿of￿significant￿monetary damages,￿injunctive￿relief￿prohibiting￿the￿sale￿of￿products,￿and/or￿settlement￿involving￿significant￿costs￿to￿be￿paid￿by￿us, any￿of￿which￿may￿have￿a￿material￿adverse￿effect￿on￿our￿business,￿financial￿condition￿and/or￿results￿of￿operations.￿We￿are unable￿to￿predict￿at￿this￿time￿whether￿any￿such￿patent￿suit￿will￿in￿fact￿materialize,￿or,￿if￿so,￿what￿its￿outcome￿might￿be. 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 2014 EUR (130,425) 53,430 (76,995) 2013 EUR (52,753) 44,766 (7,987) 2012 EUR (79,255) 74,993 (4,262) The￿Dutch￿statutory￿tax￿rate￿was￿25.0￿percent￿in￿2014,￿2013￿and￿2012.￿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) 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 Tax￿effects￿in￿respect￿of￿Cymer￿acquisition￿related￿items Other￿credits￿and￿non-taxable￿items Provision for income taxes 2014 EUR Income before income taxes 1,273,635 (318,409) (1,580) 23,899 159,728 (6,474) 1,325 (9,669) 77,909 (3,724) (76,995) ASML￿ANNUAL￿REPORT￿2014 F-36 % 2013 EUR 100.0 1,023,477 (255,869) 23,459 29,430 120,751 5,155 16,164 (7,588) 67,730 (7,219) (7,987) 25.0 0.1 (1.9) (12.5) 0.5 (0.1) 0.8 (6.1) 0.3 6.0 % 2012 EUR 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 25.0 (0.9) (2.0) (12.4) (1.6) - (8.3) - 0.6 0.4 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￿our￿results￿is￿realized￿in￿countries￿other￿than￿the￿Netherlands￿where￿different￿tax￿rates￿are￿applicable.￿In 2013,￿the￿distribution￿effect￿of￿tax￿rates￿in￿foreign￿jurisdictions￿was￿impacted￿by￿a￿shift￿in￿the￿mix￿of￿taxable￿income across￿tax￿jurisdictions￿as￿a￿result￿of￿the￿acquisition￿of￿Cymer￿as￿per￿May￿30,￿2013. Adjustments in Respect of Tax Exempt Income In￿certain￿jurisdictions￿part￿of￿the￿income￿generated￿is￿tax￿exempted. Adjustments in Respect of Tax Incentives Adjustments￿in￿respect￿of￿tax￿incentives￿relate￿to￿reduced￿tax￿rates￿in￿several￿jurisdictions,￿mainly￿consisting￿of￿the Dutch￿"Innovation￿Box"￿and￿the￿RDA.￿The￿Innovation￿box￿is￿a￿facility￿under￿Dutch￿corporate￿tax￿law￿pursuant￿to￿which income￿associated￿with￿R&D￿is￿partially￿exempted￿from￿taxation.￿The￿RDA￿is￿a￿tax￿incentive￿providing￿for￿an￿additional tax￿deduction￿for￿qualified￿(non-labor)￿cost￿incurred￿for￿R&D￿activities￿performed￿in￿the￿Netherlands. Adjustments in Respect of Prior Years’ Current Taxes In￿2012,￿we￿recognized￿a￿tax￿benefit￿of￿EUR￿18.3￿million￿or￿1.6￿percent￿of￿income￿before￿income￿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￿or￿1.6￿percent￿of￿income￿before￿income￿taxes￿as￿result￿of￿a partly￿release￿of￿a￿valuation￿allowance￿for￿NID￿credits￿or￿NID￿stock￿to￿the￿extent￿we￿expect￿future￿taxable￿profits￿to realize￿these￿NID￿credits￿before￿expiration￿of￿those￿credits. Movements in the Liability for 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￿movements￿in￿the￿liability￿for￿unrecognized￿tax￿benefits￿in￿2014￿and￿2013￿are￿considered￿to￿be￿limited. Tax effects in respect of Cymer Acquisition related items In￿2014￿the￿tax￿rate￿was￿favorably￿impacted￿by￿settling￿agreements￿entered￿into￿by￿ASML￿Netherlands￿B.V.￿and￿Cymer LLC.,￿prior￿to￿our￿acquisition￿of￿Cymer￿in￿May￿2013,￿at￿different￿tax￿rates.￿In￿2013￿we￿recognized￿a￿gain￿as￿a￿result￿of￿the accounting￿for￿business￿combinations￿Cymer.￿This￿gain￿is￿not￿recognized￿for￿tax￿purposes￿and￿was,￿apart￿from￿the￿R&D tax￿incentives,￿the￿major￿driver￿for￿the￿change￿in￿the￿effective￿tax￿rate￿in￿2013. Other Credits and Non-taxable Items Other￿credits￿and￿non-taxable￿items￿reflect￿the￿impact￿on￿statutory￿rates￿of￿permanent￿non-taxable￿items￿such￿as￿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 OCI￿(financial￿instruments) Tax￿(benefit)￿deficit￿from￿share-based￿payments Total income tax recognized in shareholders' equity 2014 EUR 2,977 (3,972) (995) 2013 EUR (759) (3,110) (3,869) 2012 EUR (1,066) (2,116) (3,182) ASML￿ANNUAL￿REPORT￿2014 F-37 Liability for Unrecognized Tax Benefits and Deferred Taxes The￿liability￿for￿unrecognized￿tax￿benefits￿and￿total￿deferred￿tax￿position￿recorded￿on￿the￿Consolidated￿Balance￿Sheets are￿as￿follows: As of December 31 (in thousands) Liability￿for￿unrecognized￿tax￿benefits Deferred￿tax￿position Total 2014 EUR (83,738) 32,715 (51,023) 2013 EUR (74,069) (30,176) (104,245) 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￿conclude￿that￿we have￿adequately￿provided￿for￿uncertain￿tax￿positions.￿However,￿settlement￿of￿these￿uncertain￿tax￿positions￿in￿a￿manner inconsistent￿with￿our￿expectations￿could￿have￿a￿material￿impact￿on￿our￿Financial￿Statements. Consistent￿with￿the￿provisions￿of￿ASC￿740,￿as￿of￿December￿31,￿2014,￿ASML￿has￿a￿liability￿for￿unrecognized￿tax￿benefits of￿EUR￿83.7￿million￿(2013:￿EUR￿74.1￿million)￿which￿is￿classified￿as￿non-current￿deferred￿and￿other￿tax￿liabilities.￿The￿total liability￿for￿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￿of￿December￿31,￿2014￿amounted￿to￿EUR￿24.7￿million￿(2013:￿EUR￿22.9￿million). Accrued￿interest￿and￿penalties￿recorded￿in￿the￿Consolidated￿Statement￿of￿Operations￿of￿2014￿amounted￿to￿a￿tax￿charge of￿EUR￿1.7￿million￿(2013:￿tax￿charge￿of￿EUR￿4.1￿million;￿2012:￿tax￿benefit￿of￿EUR￿3.1￿million). A￿reconciliation￿of￿the￿beginning￿and￿ending￿balance￿of￿the￿liability￿for￿unrecognized￿tax￿benefits￿is￿as￿follows: As of December 31 (in thousands) Balance,￿January￿1 Gross￿increases￿–￿tax￿positions￿in￿prior￿period Gross￿decreases￿–￿tax￿positions￿in￿prior￿period Gross￿increases￿–￿tax￿positions￿in￿current￿period Acquisitions￿through￿business￿combinations Settlements Lapse￿of￿statute￿of￿limitations Total liability for unrecognized tax benefits 2014 EUR 74,069 10,185 (12,743) 12,227 - - - 83,738 2013 EUR 59,967 6,045 (2,025) 6,796 6,514 (2,964) (264) 74,069 We￿conclude￿our￿allowances￿for￿tax￿contingencies￿to￿be￿appropriate.￿Based￿on￿the￿information￿currently￿available, we￿do￿not￿anticipate￿a￿significant￿increase￿or￿decrease￿in￿our￿liability￿for￿unrecognized￿tax￿benefits￿within￿the￿next￿12 months. We￿are￿subject￿to￿tax￿audits￿in￿certain￿of￿our￿major￿tax￿jurisdictions,￿for￿years￿from￿and￿including￿2009￿onwards￿in Korea￿and￿for￿years￿from￿and￿including￿2007￿onwards￿in￿the￿US.￿In￿the￿course￿of￿such￿audits,￿local￿tax￿authorities￿may challenge￿the￿positions￿taken￿by￿us.￿ ASML￿ANNUAL￿REPORT￿2014 F-38 Deferred taxes The￿composition￿of￿total￿deferred￿tax￿assets￿and￿liabilities￿reconciled￿to￿the￿classification￿in￿the￿Consolidated￿Balance Sheets￿is￿as￿follows: January 1, 2014 EUR Consolidated Statements of Operations EUR Effect of changes in exchange rates EUR December 31, 2014 EUR Deferred taxes (in thousands) Deferred tax assets: Capitalized￿R&D￿expenditures R&D￿credits Inventories Deferred￿revenue Accrued￿and￿other￿liabilities Installation￿and￿warranty￿reserve Tax￿effect￿carry-forward￿losses Property,￿plant￿and￿equipment Restructuring￿and￿impairment Alternative￿minimum￿tax￿credits1 Share-based￿payments Other￿temporary￿differences Total deferred tax assets2 Deferred tax liabilities: Intangible￿fixed￿assets Property,￿plant￿and￿equipment Borrowing￿costs Other￿temporary￿differences Total deferred tax liabilities 20,888 11,242 46,661 16,409 45,460 6,702 67,282 11,785 3,361 6,342 16,151 11,661 263,944 (261,905) (17,592) (1,823) (12,800) (294,120) Net deferred tax assets (liabilities) (30,176) Classified￿as: Deferred￿tax￿assets￿-￿current Deferred￿tax￿assets￿-￿non-current Deferred￿tax￿liabilities￿-￿current Deferred￿tax￿liabilities￿-￿non-current Net deferred tax assets (liabilities) 124,431 139,513 (3,494) (290,626) (30,176) (8,186) 29,496 10,639 3,061 (3,630) 5,821 (33,465) (6,102) (1,442) (1,467) (9,203) 14,099 (379) 68,719 (9,232) (64) 4,055 63,478 63,099 1,891 2,623 5,712 1,779 5,520 1,147 5,289 612 364 630 2,417 638 28,622 14,593 43,361 63,012 21,249 47,350 13,670 39,106 6,295 2,283 5,505 9,365 26,398 292,187 (25,955) (2,611) - (264) (28,830) (219,141) (29,435) (1,887) (9,009) (259,472) (208) 32,715 159,460 28,760 (1,928) (153,577) 32,715 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￿of￿December￿31,￿2014￿amounted￿to￿EUR￿25.4￿million￿(2013:￿EUR￿25.0￿million) ASML￿ANNUAL￿REPORT￿2014 F-39 Deferred taxes (in thousands) Deferred tax assets: Capitalized￿R&D￿expenditures Inventories Deferred￿revenue Accrued￿and￿other￿liabilities Installation￿and￿warranty￿reserve Tax￿effect￿carry-forward￿losses Property,￿plant￿and￿equipment Restructuring￿and￿impairment Alternative￿minimum￿tax￿credits1 Share-based￿payments Other￿temporary￿differences Total deferred tax assets2 Deferred tax liabilities: Intangible￿fixed￿assets Property,￿plant￿and￿equipment Borrowing￿costs Other￿temporary￿differences Total deferred tax liabilities Acquisitions through business combinations EUR Consolidated Statements of Operations EUR Effect of changes in exchange rates EUR January 1, 2013 EUR December 31, 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 - (25,890) (1,958) (763) (28,611) - 10,258 41,679 7,148 - 754 4,140 - - 9,365 16,701 90,045 (286,337) (4,786) - (303) (291,426) 5,882 9,269 (43,035) 17,960 (174) 61,551 325 (791) 1,349 5,939 (14,487) 43,788 8,730 12,517 135 (12,086) 9,296 (1,155) (1,033) (2,807) (1,176) (275) (580) (478) (184) (234) (586) (4,519) (13,027) 15,702 567 - 352 16,621 32,130 46,661 16,409 45,460 6,702 67,282 11,785 3,361 6,342 16,151 11,661 263,944 (261,905) (17,592) (1,823) (12,800) (294,120) Net deferred tax assets (liabilities) 114,527 (201,381) 53,084 3,594 (30,176) Classified￿as: Deferred￿tax￿assets￿-￿current Deferred￿tax￿assets￿-￿non-current Deferred￿tax￿liabilities￿-￿current Deferred￿tax￿liabilities￿-￿non-current Net deferred tax assets (liabilities) 103,695 39,443 (271) (28,340) 114,527 124,431 139,513 (3,494) (290,626) (30,176) 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￿of￿December￿31,￿2013￿amounted￿to￿EUR￿25.0￿million￿(2012:￿EUR￿30.5￿million) Tax Effect Carry-forward Losses Deferred￿tax￿assets￿from￿carry-forward￿losses￿recognised￿as￿per￿December￿31,￿2014￿result￿predominantly￿from￿net operating￿loss￿carry-forwards￿incurred￿relating￿to￿NID￿stock￿in￿Belgium￿and￿various￿qualifying￿state￿tax￿losses￿in￿the￿US. NID￿stock￿in￿Belgium￿can￿generally￿be￿offset￿against￿future￿profits￿realized￿in￿the￿7￿years￿following￿the￿year￿in￿which the￿NID￿stock￿occurs.￿The￿total￿amount￿of￿NID￿stock￿is￿EUR￿37.5￿million￿(2013:￿47.6￿million)￿taxable￿base￿and￿EUR￿12.7 million￿(2013:￿EUR￿16.2￿million)￿tax￿effect. Net￿operating￿losses￿qualifying￿as￿tax￿losses￿under￿US￿federal￿tax￿laws￿incurred￿by￿US￿group￿companies￿can￿in￿general be￿offset￿against￿future￿profits￿realized￿in￿20￿years￿following￿the￿year￿in￿which￿the￿losses￿are￿incurred.￿The￿total￿amount of￿losses￿carried￿forward￿under￿US￿federal￿tax￿laws￿as￿of￿December￿31,￿2014,￿is￿EUR￿44.6￿million￿(2013:￿EUR￿67.5 million)￿tax￿basis￿or￿EUR￿15.6￿million￿(2013:￿EUR￿23.6￿million)￿tax￿effect.￿The￿total￿amount￿of￿losses￿carried￿forward under￿US￿state￿tax￿laws￿as￿of￿December￿31,￿2014,￿is￿EUR￿77.7￿million￿(2013:￿EUR￿254.3￿million)￿tax￿basis￿or￿EUR￿3.7 million￿(2013:￿EUR￿7.9￿million)￿tax￿effect.￿Our￿ability￿to￿use￿US￿state￿tax￿loss￿carry￿forwards￿in￿existence￿at￿December 31,￿2014,￿is￿subject￿to￿varying￿state￿statutes￿(providing￿for￿periods￿of￿between￿5￿and￿20￿years). ASML￿ANNUAL￿REPORT￿2014 F-40 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.￿Its￿operating￿results￿are regularly￿reviewed￿by￿the￿CODM￿in￿order￿to￿make￿decisions￿about￿resource￿allocation￿and￿assess￿performance. Management￿reporting￿includes￿net￿system￿sales￿figures￿of￿new￿and￿used￿systems￿and￿includes￿sales￿by￿technology. Net￿system￿sales￿for￿new￿and￿used￿systems￿were￿as￿follows: Year ended December 31 (in thousands) 2014 EUR 2013 EUR 2012 EUR New￿systems Used￿systems 4,127,433 115,357 3,890,154 102,975 3,620,260 181,372 Net system sales 4,242,790 3,993,129 3,801,632 Net￿system￿sales￿per￿technology￿were￿as￿follows: Year ended December 31 (in thousands) 2014 EUV ArFi ArF￿dry KrF I-line Total 2013 EUV ArFi ArF￿dry KrF I-line Total 2012 EUV ArFi ArF￿dry KrF I-line Total Net system sales in units Net system sales in EUR 5 76 3 38 14 136 1 77 2 64 13 157 1 72 4 78 15 170 299,845 3,477,718 32,611 381,436 51,180 4,242,790 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 The￿increase￿in￿net￿system￿sales￿of￿EUR￿249.7￿million,￿or￿6.3￿percent,￿to￿EUR￿4,242.8￿million￿in￿2014￿from￿EUR￿3,993.1 million￿in￿2013￿(2012:￿EUR￿3,801.6￿million)￿was￿mainly￿caused￿by￿higher￿NXE:3300B￿system￿sales. 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. ASML￿ANNUAL￿REPORT￿2014 F-41 Net￿sales￿and￿long-lived￿assets￿(consisting￿of￿property,￿plant￿and￿equipment)￿by￿geographic￿region￿were￿as￿follows: Year ended December 31 (in thousands) 2014 Japan Korea Singapore Taiwan Rest￿of￿Asia Netherlands Rest￿of￿Europe United￿States Total 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 Net sales EUR 477,110 1,624,059 132,593 1,124,883 405,576 1,334 196,332 1,894,390 5,856,277 201,664 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 Long-lived assets EUR 3,695 16,684 879 60,241 3,807 1,124,632 1,322 236,263 1,447,523 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 In￿2014,￿net￿sales￿to￿the￿largest￿customer￿accounted￿for￿EUR￿1,532.1￿million,￿or￿26.2￿percent,￿of￿net￿sales￿(2013:￿EUR 2,058.6￿million,￿or￿39.2￿percent,￿of￿net￿sales;￿2012:￿EUR￿1,236.1￿million,￿or￿26.1￿percent,￿of￿net￿sales).￿Our￿three￿largest customers￿(based￿on￿net￿sales)￿accounted￿for￿EUR￿643.2￿million,￿or￿49.3￿percent,￿of￿accounts￿receivable￿and￿finance receivables￿at￿December￿31,￿2014,￿compared￿with￿EUR￿861.4￿million,￿or￿73.3￿percent,￿at￿December￿31,￿2013. Substantially￿all￿of￿our￿sales￿were￿export￿sales￿in￿2014,￿2013￿and￿2012. 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 2014 EUR 985,883 81,721 71,316 63,380 1,202,300 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 The￿average￿number￿of￿payroll￿employees￿in￿FTEs￿during￿2014,￿2013￿and￿2012￿was￿10,942,￿9,540￿and￿8,140, respectively. ASML￿ANNUAL￿REPORT￿2014 F-42 The￿total￿number￿of￿payroll￿and￿temporary￿employees￿in￿FTEs￿per￿sector￿was: As of December 31 Customer￿Support SG&A Industrial￿Engineering 1 Manufacturing￿&￿Logistics R&D Total employees (in FTEs) Less:￿Temporary￿employees￿(in￿FTEs) Payroll employees (in FTEs) 2014 3,289 1,240 - 3,846 5,697 14,072 2,754 11,318 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 1 As￿of￿January￿1,￿2014,￿our￿industrial￿engineering￿department￿has￿been￿incorporated￿into￿R&D The￿average￿number￿of￿payroll￿employees￿in￿FTEs￿in￿our￿operations￿in￿the￿Netherlands￿during￿2014,￿2013￿and￿2012￿was 5,589,￿5,112￿and￿4,620,￿respectively.￿The￿increase￿in￿2014￿compared￿to￿2013￿in￿payroll￿employees￿in￿FTEs￿is￿in￿line￿with our￿net￿sales￿growth. 23. Research and Development Costs R&D￿costs￿(net￿of￿credits￿and￿excluding￿contributions￿under￿the￿NRE￿Funding￿Agreements￿from￿certain￿Participating Customers￿in￿the￿CCIP)￿increased￿by￿EUR￿192.1￿million,￿or￿21.8￿percent,￿to￿EUR￿1,074.1￿million￿in￿2014￿from￿EUR￿882.0 million￿in￿2013.￿R&D￿costs￿increased￿mainly￿due￿to￿the￿acceleration￿of￿certain￿R&D￿programs,￿primarily￿EUV￿and￿next- generation￿immersion. R&D￿costs￿(net￿of￿credits￿and￿excluding￿contributions￿under￿the￿NRE￿funding￿agreements￿from￿Participating￿Customers in￿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￿include￿credits￿of￿EUR￿24.1￿million,￿EUR￿16.0￿million￿and￿EUR￿17.9￿million￿in￿2014,￿2013￿and￿2012 respectively.￿R&D￿credits￿relate￿to￿worldwide￿(inter-)governmental￿funding￿for￿certain￿strategic￿development￿programs designed￿to￿stimulate￿high-risk￿research￿for￿the￿medium￿and￿long￿term￿future.￿The￿increase￿relates￿to￿entering￿into￿a number￿of￿strategic￿development￿programs￿providing￿funding￿for￿the￿next￿generation￿immersion￿and￿EUV￿lithography systems￿during￿2014. 24. Interest and Other, Net Interest￿and￿other￿income￿of￿EUR￿14.5￿million￿(2013:￿EUR￿9.2￿million￿and￿2012:￿EUR￿16.6￿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￿23.1￿million￿(2013:￿EUR￿33.6￿million￿and￿2012:￿EUR￿22.8￿million)￿mainly￿consists of￿net￿interest￿expense￿on￿our￿Eurobonds￿and￿related￿interest￿rate￿swaps,￿interest￿on￿lease￿obligations￿and￿amortized financing￿costs￿of￿a￿total￿of￿EUR￿19.9￿million￿(2013:￿EUR￿16.2￿million￿and￿2012:￿EUR￿10.8￿million).￿In￿2013,￿there￿was￿a one-off￿loss￿of￿EUR￿8.9￿million￿relating￿the￿partial￿extinguishment￿of￿our￿EUR￿600￿million￿5.75￿percent￿senior￿notes￿due 2017.￿ Interest￿on￿cash￿pools￿is￿reported￿on￿a￿gross￿basis￿in￿the￿Consolidated￿Statements￿of￿Operations￿under￿both interest￿income￿and￿interest￿expense.￿From￿an￿economic￿and￿legal￿perspective,￿the￿interest￿on￿cash￿pools￿of EUR￿3.2￿million￿(2013:￿EUR￿1.9￿million￿and￿2012:￿EUR￿4.2￿million)￿recorded￿in￿interest￿income￿nets￿off￿against￿the￿same amount￿recorded￿in￿interest￿expense. 25. Vulnerability Due to Certain Concentrations We￿rely￿on￿outside￿vendors￿for￿components￿and￿subassemblies￿used￿in￿our￿systems￿including￿the￿design￿thereof,￿each of￿which￿is￿obtained￿from￿a￿single￿supplier￿or￿a￿limited￿number￿of￿suppliers.￿Our￿reliance￿on￿a￿limited￿group￿of￿suppliers involves￿several￿risks,￿including￿a￿potential￿inability￿to￿obtain￿an￿adequate￿supply￿of￿required￿components,￿reduced control￿over￿pricing￿and￿the￿risk￿of￿untimely￿delivery￿of￿these￿components￿and￿subassemblies. The￿number￿of￿lithography￿systems￿we￿are￿able￿to￿produce￿may￿be￿limited￿by￿the￿production￿capacity￿of￿Zeiss.￿Zeiss￿is our￿single￿supplier￿of￿lenses,￿mirrors,￿collectors￿and￿other￿critical￿optical￿components￿(which￿we￿refer￿to￿as￿optics)￿and is￿capable￿of￿producing￿these￿items￿only￿in￿limited￿numbers￿and￿only￿through￿the￿use￿of￿its￿manufacturing￿and￿testing facility￿in￿Oberkochen￿and￿Wetzlar,￿Germany.￿During￿2014,￿our￿production￿was￿not￿limited￿by￿the￿deliveries￿from￿Zeiss. ASML￿ANNUAL￿REPORT￿2014 F-43 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. As￿at￿December￿31,￿2014,￿438,073,643￿ordinary￿shares￿with￿a￿nominal￿value￿of￿EUR￿0.09￿each￿were￿issued￿and fully￿paid￿up,￿of￿which￿5,138,355￿ordinary￿shares￿are￿held￿by￿us￿in￿treasury.￿No￿ordinary￿shares￿B￿and￿no￿cumulative preference￿shares￿are￿issued. Our￿BoM￿has￿the￿power￿to￿issue￿ordinary￿shares￿and￿cumulative￿preference￿shares￿insofar￿as￿the￿BoM￿has￿been authorized￿to￿do￿so￿by￿the￿General￿Meeting￿of￿Shareholders￿(either￿by￿means￿of￿a￿resolution￿or￿by￿an￿amendment￿to￿our Articles￿of￿Association).￿The￿BoM￿requires￿approval￿of￿the￿Supervisory￿Board￿for￿such￿an￿issue.￿The￿authorization￿by￿the General￿Meeting￿of￿Shareholders￿can￿only￿be￿granted￿for￿a￿certain￿period￿not￿exceeding￿five￿years￿and￿may￿be￿extended for￿no￿longer￿than￿five￿years￿on￿each￿occasion.￿In￿case￿the￿General￿Meeting￿of￿Shareholders￿has￿not￿authorized￿the￿BoM to￿issue￿shares,￿the￿General￿Meeting￿of￿Shareholders￿shall￿have￿the￿power￿to￿issue￿shares￿upon￿the￿proposal￿of￿the BoM,￿provided￿that￿the￿Supervisory￿Board￿has￿approved￿such￿proposal. Shares Issued as a Result of the Acquisition of Cymer A￿subsidiary￿of￿ASML￿and￿Cymer￿completed￿a￿merger￿pursuant￿to￿which￿ASML￿acquired￿Cymer￿on￿May￿30,￿2013.￿As￿a result￿of￿the￿merger,￿each￿share￿of￿Cymer￿common￿stock￿outstanding￿immediately￿prior￿to￿the￿completion￿of￿the￿merger was￿converted￿into￿the￿right￿to￿receive￿USD￿20.00￿in￿cash￿plus￿1.1502￿ASML￿ordinary￿shares.￿As￿of￿December￿31,￿2014, we￿have￿issued￿36,468,733￿ordinary￿shares￿for￿an￿aggregate￿amount￿of￿EUR￿2,347.0￿million￿in￿relation￿to￿the￿acquisition of￿Cymer. Shares Issued in Relation to Share-based Compensation We￿have￿adopted￿various￿share￿and￿option￿plans￿for￿our￿employees.￿Whenever￿ordinary￿shares￿have￿to￿be￿delivered pursuant￿to￿these￿plans,￿we￿typically￿deliver￿treasury￿shares￿that￿we￿purchase￿in￿share￿buy-back￿programs￿for￿this purpose.￿Because￿these￿treasury￿shares￿were￿no￿longer￿available￿in￿the￿course￿of￿2014,￿we￿issued￿new￿ordinary￿shares from￿time￿to￿time￿to￿meet￿our￿delivery￿obligations￿under￿the￿plans.￿As￿of￿December￿31,￿2014,￿we￿issued￿707,195 ordinary￿shares￿with￿an￿aggregate￿fair￿value￿of￿EUR￿51.3￿million￿(2013:￿EUR￿nil￿million;￿2012:￿EUR￿nil￿million)￿in￿relation to￿our￿share￿(option)￿plans￿for￿our￿employees.￿Fair￿value￿is￿determined￿on￿the￿closing￿price￿of￿our￿ordinary￿shares￿at Amsterdam￿Euronext￿at￿the￿date￿of￿respective￿issuance. Synthetic Share Buyback At￿the￿EGM￿held￿on￿September￿7,￿2012,￿several￿changes￿in￿the￿Articles￿of￿Association￿of￿ASML￿were￿adopted,￿in connection￿with￿the￿synthetic￿share￿buyback￿effectuated￿in￿connection￿with￿the￿CCIP. 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￿were￿part￿of￿the￿synthetic￿share￿buyback. ASML￿ANNUAL￿REPORT￿2014 F-44 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. Ordinary Shares Each￿ordinary￿share￿consists￿of￿900￿fractional￿shares.￿Fractional￿shares￿entitle￿the￿holder￿thereof￿to￿a￿fractional￿dividend but￿do￿not￿entitle￿the￿holder￿thereof￿to￿voting￿rights.￿Only￿those￿persons￿who￿hold￿shares￿directly￿in￿the￿share￿register in￿the￿Netherlands,￿held￿by￿us￿at￿our￿address￿at￿5504￿DR￿Veldhoven,￿de￿Run￿6501,￿the￿Netherlands,￿or￿in￿the￿New York￿share￿register,￿held￿by￿JP￿Morgan￿Chase￿Bank,￿N.A.,￿P.O.￿Box￿64506,￿St.￿Paul,￿MN￿55164-0506,￿United￿States, can￿hold￿fractional￿shares.￿Persons￿who￿hold￿ordinary￿shares￿through￿the￿deposit￿system￿under￿the￿Dutch￿Securities Bank￿Giro￿Transactions￿Act￿(Wet giraal effectenverkeer;￿the￿"Giro￿Act")￿maintained￿by￿the￿Dutch￿central￿securities depository￿Euroclear￿Nederland￿or￿through￿the￿DTC￿cannot￿hold￿fractional￿shares.￿An￿ordinary￿share￿entitles￿the￿holder thereof￿to￿cast￿nine￿votes￿in￿the￿General￿Meeting￿of￿Shareholders.￿At￿our￿2014￿AGM,￿the￿BoM￿was￿authorized￿from￿April 23,￿2014￿through￿October￿23,￿2015,￿subject￿to￿the￿approval￿of￿the￿Supervisory￿Board,￿to￿issue￿shares￿and/or￿rights thereto￿representing￿up￿to￿a￿maximum￿of￿5.0￿percent￿of￿our￿issued￿share￿capital￿at￿April￿23,￿2014,￿plus￿an￿additional￿5.0 percent￿of￿our￿issued￿share￿capital￿at￿April￿23,￿2014￿that￿may￿be￿issued￿in￿connection￿with￿mergers,￿acquisitions￿and/or (strategic)￿alliances. Holders￿of￿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.￿Holders￿of￿ordinary￿shares￿have￿no￿pro￿rata￿preemptive￿right￿of￿subscription￿to￿any￿ordinary￿shares￿issued for￿consideration￿other￿than￿cash￿or￿ordinary￿shares￿issued￿to￿employees.￿If￿authorized￿for￿this￿purpose￿by￿the￿General Meeting￿of￿Shareholders￿(either￿by￿means￿of￿a￿resolution￿or￿by￿an￿amendment￿to￿our￿Articles￿of￿Association),￿the￿BoM has￿the￿power￿subject￿to￿approval￿of￿the￿Supervisory￿Board,￿to￿restrict￿or￿exclude￿the￿preemptive￿rights￿of￿holders￿of ordinary￿shares.￿At￿our￿2014￿AGM,￿our￿shareholders￿authorized￿the￿BoM￿through￿October￿23,￿2015,￿subject￿to￿approval of￿the￿Supervisory￿Board,￿to￿restrict￿or￿exclude￿preemptive￿rights￿of￿holders￿of￿ordinary￿shares￿up￿to￿a￿maximum￿of￿10 percent￿of￿our￿issued￿share￿capital.￿At￿our￿2015￿AGM,￿our￿shareholders￿will￿be￿asked￿to￿extend￿this￿authority￿through October￿22,￿2016. Ordinary Shares B In￿2012,￿the￿9,000￿ordinary￿shares￿B￿with￿a￿nominal￿value￿of￿EUR￿0.01￿were￿introduced.￿Every￿holder￿of￿an￿ordinary share￿B￿is￿entitled￿to￿one-ninth￿(1/9)￿of￿a￿dividend.￿Each￿ordinary￿share￿B￿entitles￿the￿holder￿thereof￿to￿cast￿one￿vote￿at the￿General￿Meeting￿of￿Shareholders. Cumulative Preference Shares In￿1998,￿we￿granted￿the￿Preference￿Share￿Option￿to￿the￿Foundation.￿This￿option￿was￿amended￿and￿extended￿in￿2003 and￿2007.￿A￿third￿amendment￿to￿the￿option￿agreement￿between￿the￿Foundation￿and￿ASML￿became￿effective￿on￿January 1,￿2009,￿to￿clarify￿the￿procedure￿for￿the￿repurchase￿and￿cancellation￿of￿the￿preference￿shares￿when￿issued. The￿nominal￿value￿of￿the￿cumulative￿preference￿shares￿amounts￿to￿EUR￿0.09￿and￿the￿number￿of￿cumulative￿preference shares￿included￿in￿the￿authorized￿share￿capital￿is￿700,000,000.￿A￿cumulative￿preference￿share￿entitles￿the￿holder￿thereof to￿cast￿nine￿votes￿in￿the￿General￿Meeting￿of￿Shareholders. The￿Foundation￿may￿exercise￿the￿Preference￿Share￿Option￿in￿situations￿where,￿in￿the￿opinion￿of￿the￿Board￿of￿Directors of￿the￿Foundation,￿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. ASML￿ANNUAL￿REPORT￿2014 F-45 The￿objectives￿of￿the￿Foundation￿are￿to￿look￿after￿the￿interests￿of￿ASML￿and￿of￿the￿enterprises￿maintained￿by￿ASML and￿of￿the￿companies￿which￿are￿affiliated￿in￿a￿group￿with￿ASML,￿in￿such￿a￿way￿that￿the￿interests￿of￿ASML,￿of￿those enterprises￿and￿of￿all￿parties￿concerned￿are￿safeguarded￿in￿the￿best￿possible￿way,￿and￿influences￿in￿conflict￿with￿these interests￿which￿might￿affect￿the￿independence￿or￿the￿identity￿of￿ASML￿and￿those￿companies￿are￿deterred￿to￿the￿best of￿the￿Foundation’s￿ability,￿and￿everything￿related￿to￿the￿above￿or￿possibly￿conducive￿thereto.￿The￿Foundation￿seeks￿to realize￿its￿objects￿by￿the￿acquiring￿and￿holding￿of￿cumulative￿preference￿shares￿in￿the￿capital￿of￿ASML￿and￿by￿exercising the￿rights￿attached￿to￿these￿shares,￿particularly￿the￿voting￿rights￿attached￿to￿these￿shares. The￿Preference￿Share￿Option￿gives￿the￿Foundation￿the￿right￿to￿acquire￿a￿number￿of￿cumulative￿preference￿shares￿as the￿Foundation￿will￿require,￿provided￿that￿the￿aggregate￿nominal￿value￿of￿such￿number￿of￿cumulative￿preference￿shares shall￿not￿exceed￿the￿aggregate￿nominal￿value￿of￿the￿ordinary￿shares￿that￿have￿been￿issued￿at￿the￿time￿of￿exercise￿of￿the Preference￿Share￿Option￿for￿a￿subscription￿price￿equal￿to￿their￿nominal￿value.￿Only￿one-fourth￿of￿the￿subscription￿price is￿payable￿at￿the￿time￿of￿initial￿issuance￿of￿the￿cumulative￿preference￿shares,￿with￿the￿other￿three-fourths￿of￿the￿nominal value￿only￿being￿payable￿when￿we￿call￿up￿this￿amount.￿Exercise￿of￿the￿preference￿share￿option￿could￿effectively￿dilute the￿voting￿power￿of￿the￿outstanding￿ordinary￿shares￿by￿one-half. Cancellation￿and￿repayment￿of￿the￿issued￿cumulative￿preference￿shares￿by￿ASML￿requires￿the￿authorization￿by the￿General￿Meeting￿of￿Shareholders￿of￿a￿proposal￿to￿do￿so￿by￿the￿BoM￿approved￿by￿the￿Supervisory￿Board.￿If￿the Preference￿Share￿Option￿is￿exercised￿and￿as￿a￿result￿cumulative￿preference￿shares￿are￿issued,￿ASML,￿at￿the￿request￿of the￿Foundation,￿will￿initiate￿the￿repurchase￿or￿cancellation￿of￿all￿cumulative￿preference￿shares￿held￿by￿the￿Foundation. In￿that￿case￿ASML￿is￿obliged￿to￿effect￿the￿repurchase￿and￿cancellation￿respectively￿as￿soon￿as￿possible.￿A￿cancellation will￿have￿as￿a￿result￿a￿repayment￿of￿the￿amount￿paid￿and￿exemption￿from￿the￿obligation￿to￿pay￿up￿on￿the￿cumulative preference￿shares.￿A￿repurchase￿of￿the￿cumulative￿preference￿shares￿can￿only￿take￿place￿when￿such￿shares￿are￿fully paid￿up. If￿the￿Foundation￿does￿not￿request￿ASML￿to￿repurchase￿or￿cancel￿all￿cumulative￿preference￿shares￿held￿by￿the Foundation￿within￿20￿months￿after￿issuance￿of￿these￿shares,￿we￿will￿be￿obliged￿to￿convene￿a￿General￿Meeting￿of Shareholders￿in￿order￿to￿decide￿on￿a￿repurchase￿or￿cancellation￿of￿these￿shares. The￿Foundation￿is￿independent￿of￿ASML.￿The￿Board￿of￿Directors￿of￿the￿Foundation￿comprises￿four￿independent members￿from￿the￿Dutch￿business￿and￿academic￿communities.￿The￿members￿of￿the￿Board￿of￿Directors￿of￿the Foundation￿are:￿Mr.￿H.￿Bodt,￿Mr.￿M.W.￿den￿Boogert,￿Mr.￿J.M.￿de￿Jong￿and￿Mr.￿A.H.￿Lundqvist. 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 BoM￿will,￿upon￿prior￿approval￿from￿the￿Supervisory￿Board,￿submit￿a￿proposal￿to￿the￿AGM￿with￿respect￿to￿the￿amount of￿dividend￿to￿be￿declared￿with￿respect￿to￿the￿prior￿year.￿The￿dividend￿proposal￿in￿any￿given￿year￿will￿be￿subject￿to￿the availability￿of￿distributable￿profits￿or￿retained￿earnings￿and￿may￿be￿affected￿by,￿among￿other￿factors,￿the￿BoM's￿views on￿our￿potential￿future￿liquidity￿requirements,￿including￿for￿investments￿in￿production￿capacity,￿the￿funding￿of￿our￿R&D programs￿and￿for￿acquisition￿opportunities￿that￿may￿arise￿from￿time￿to￿time;￿and￿by￿future￿changes￿in￿applicable￿income tax￿and￿corporate￿laws.￿Accordingly,￿it￿may￿be￿decided￿to￿propose￿not￿to￿pay￿a￿dividend￿or￿to￿pay￿a￿lower￿dividend￿with respect￿to￿any￿particular￿year￿in￿the￿future. For￿2014,￿a￿proposal￿to￿declare￿a￿dividend￿of￿EUR￿0.70￿per￿ordinary￿share￿of￿EUR￿0.09￿nominal￿value￿will￿be￿submitted to￿the￿2015￿AGM. 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￿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￿January￿20,￿2014￿up￿to￿and￿including￿December￿22,￿2014,￿when￿the program￿was￿completed,￿we￿had￿purchased￿9,981,375￿shares￿at￿an￿average￿price￿of￿EUR￿70.13￿per￿share.￿Furthermore 9,464,503￿shares￿have￿been￿cancelled￿in￿2014￿and￿the￿remainder￿(5,131,051)￿is￿intended￿to￿be￿cancelled￿in￿2015. ASML￿ANNUAL￿REPORT￿2014 F-46 The￿following￿table￿provides￿a￿summary￿of￿shares￿repurchased￿by￿ASML￿in￿2014: Period January￿20￿-￿31,￿2014 February￿1￿-￿28,￿2014 March￿1￿-￿31,￿2014 April￿1￿-￿30,￿2014 May￿2￿-￿31,￿2014 June￿1￿-￿30,￿2014 July￿1￿-￿31,￿2014 August￿1￿-￿31,￿2014 September￿1￿-￿30,￿2014 October￿1￿-￿31,￿2014 November￿1￿-￿30,￿2014 December￿1￿-￿22,￿2014 Total Total number of shares purchased 547,500 962,536 765,284 739,855 783,500 1,061,649 1,048,739 602,125 736,294 1,004,378 883,971 845,544 9,981,375 Average price paid per Share (EUR) 64.44 63.92 65.55 63.23 59.98 66.52 66.71 70.14 76.62 74.58 81.85 86.06 70.13 Total number of shares purchased as part of publicly announced plans or programs 547,500 1,510,036 2,275,320 3,015,175 3,798,675 4,860,324 5,909,063 6,511,188 7,247,482 8,251,860 9,135,831 9,981,375 Maximum value of shares that may yet be purchased under the program (EUR) 664,718,936 603,190,359 553,029,170 506,251,123 459,253,716 388,627,554 318,664,411 276,431,931 220,019,568 145,116,399 72,765,162 - 28. Customer Co-Investment Program Overview On￿July￿9,￿2012,￿we￿announced￿our￿CCIP￿to￿accelerate￿our￿development￿of￿EUV￿technology￿and￿our￿development￿of future￿450mm￿silicon￿wafer￿technology.￿The￿Participating￿Customers￿collectively￿agreed￿to￿fund￿EUR￿1.38￿billion￿of￿our R&D￿projects￿from￿2013￿through￿2017.￿This￿program￿created￿risk￿sharing￿with￿some￿of￿our￿largest￿customers￿while￿the results￿of￿our￿development￿programs￿will￿be￿available￿to￿every￿semiconductor￿manufacturer￿with￿no￿restrictions. Development 450mm silicon wafer technology As￿previously￿disclosed,￿in￿November￿2013,￿ASML￿decided￿to￿pause￿the￿development￿of￿450mm￿lithography￿systems until￿customer￿demand￿and￿the￿timing￿related￿to￿such￿demand￿is￿clear.￿We￿have￿agreed￿with￿Intel￿that￿the￿450mm￿NRE funding￿will￿be￿applied￿to￿other￿lithography￿projects,￿including￿generic￿developments￿applicable￿to￿both￿300mm￿and 450mm.￿We￿believe￿that￿our￿450mm￿development￿activities￿can￿be￿restarted￿if￿and￿when￿the￿industry￿demands￿the introduction￿of￿450mm. In￿addition￿to￿the￿funding￿commitments￿described￿above,￿the￿Participating￿Customers￿have￿invested￿in￿ordinary￿shares equal,￿in￿aggregate,￿to￿23￿percent￿of￿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￿and￿outstanding￿ordinary￿shares￿with￿simultaneous￿issuance￿by￿the￿Intel￿Stichting￿to￿Intel￿of￿the corresponding￿depositary￿receipts. Pursuant￿to￿the￿TSMC￿Investment￿Agreement,￿dated￿August￿5,￿2012,￿ASML￿issued￿to￿TSMC￿Stichting￿ordinary￿shares equal￿to￿5￿percent￿of￿the￿issued￿and￿outstanding￿ordinary￿shares￿with￿simultaneous￿issuance￿by￿the￿TSMC￿Stichting￿to TSMC￿of￿the￿corresponding￿depositary￿receipts. ASML￿ANNUAL￿REPORT￿2014 F-47 Pursuant￿to￿the￿Samsung￿Investment￿Agreement,￿dated￿August￿27,￿2012￿ASML￿issued￿to￿the￿Samsung￿Stichting ordinary￿shares￿equal￿to￿3￿percent￿of￿the￿issued￿and￿outstanding￿ordinary￿shares￿with￿simultaneous￿issuance￿by￿the Samsung￿Stichting￿to￿Samsung￿of￿the￿corresponding￿depositary￿receipts. The￿subscription￿price￿for￿the￿ordinary￿shares￿under￿the￿Investment￿Agreements￿was￿EUR￿39.91￿per￿ordinary￿share, which￿is￿the￿average￿of￿the￿volume￿weighted￿average￿price￿of￿our￿shares￿listed￿at￿Euronext￿Amsterdam￿for￿the￿twenty trading￿days￿up￿to￿and￿including￿July￿6,￿2012. Based￿upon￿the￿subscription￿price￿(EUR￿39.91)￿included￿in￿the￿Investment￿Agreements,￿the￿equity￿participation￿of￿Intel (15￿percent),￿TSMC￿(5￿percent)￿and￿Samsung￿(3￿percent)￿amount￿to￿EUR￿2,513￿million,￿EUR￿838￿million￿and￿EUR￿503 million,￿respectively. Under￿the￿Intel￿Investment￿Agreements,￿ASML￿has￿agreed￿to￿indemnify￿the￿Participating￿Customers￿and￿their￿affiliates for￿certain￿losses￿and￿expenses￿related￿to￿breaches￿of￿representations,￿warranties,￿covenants￿and￿agreements￿in￿the Investment￿Agreements￿and￿with￿respect￿to￿certain￿legal￿proceedings￿related￿thereto,￿subject￿to￿certain￿limitations. Shareholder Agreements In￿connection￿with￿the￿issuance￿of￿shares￿pursuant￿to￿the￿Intel￿Investment￿Agreement,￿on￿September￿12,￿2012￿ASML, Intel￿and￿the￿Intel￿Stichting￿entered￿into￿a￿Shareholder￿Agreement￿which￿governs￿certain￿matters￿relating￿to￿the￿holding of￿and￿further￿investment￿by￿Intel￿in￿ordinary￿shares￿of￿ASML,￿directly￿and￿indirectly￿through￿the￿Intel￿Stichting,￿including the￿matters￿described￿below. The￿Shareholder￿Agreements￿between￿ASML￿and￿the￿other￿program￿participants￿(TSMC￿and￿Samsung)￿are￿on substantially￿the￿same￿terms￿as￿those￿agreed￿with￿Intel.￿ Voting Restrictions Pursuant￿to￿the￿Shareholder￿Agreement,￿Intel￿(and￿the￿Intel￿Stichting)￿will￿not￿be￿entitled￿to￿vote￿the￿ordinary￿shares￿that were￿acquired￿by￿the￿Intel￿Stichting￿as￿part￿of￿the￿CCIP￿or￿any￿other￿ordinary￿shares￿otherwise￿transferred￿to￿the￿Intel Stichting￿(under￿the￿circumstances￿described￿under￿"Standstill;￿Additional￿Purchases"￿below)￿prior￿to￿a￿Shareholder Agreement￿Termination￿Event￿(as￿defined￿below),￿except￿when￿a￿Suspension￿Event￿(as￿described￿below)￿occurs￿and is￿continuing￿or￿where￿the￿following￿matters￿are￿proposed￿at￿any￿General￿Meeting￿(the￿"Voting￿Restrictions"):￿(i)￿an issuance￿of￿ASML￿shares￿or￿grant￿of￿rights￿to￿subscribe￿for￿ASML￿shares￿representing￿25￿percent￿or￿more￿of￿the￿issued and￿outstanding￿share￿capital￿of￿ASML￿or￿the￿restriction￿or￿exclusion￿of￿pre-emption￿rights￿relating￿thereto￿(in￿each case,￿on￿an￿aggregate￿basis￿during￿the￿preceding￿12￿months)￿or￿the￿designation￿of￿the￿BoM￿as￿the￿authorized￿body￿to resolve￿on￿these￿matters;￿(ii)￿an￿authorization￿to￿repurchase￿25￿percent￿or￿more￿of￿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￿2014 F-48 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￿BoM,￿except￿in￿limited￿circumstances. In￿addition,￿Intel￿may￿not￿(even￿after￿the￿Lock-Up￿Period￿has￿ended),￿without￿written￿consent￿of￿ASML,￿transfer￿on Euronext￿Amsterdam,￿NASDAQ￿or￿another￿securities￿exchange￿more￿than￿4￿percent￿of￿the￿outstanding￿shares￿of ASML￿during￿any￿six￿month￿period￿(the￿relevant￿percentage￿is￿1.5￿percent￿for￿Samsung￿and￿2.5￿percent￿for￿TSMC);￿the foregoing￿restriction￿does￿not￿apply￿to￿block￿trades￿or￿underwritten￿offers.￿There￿are￿also￿restrictions￿on￿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￿where￿the￿shareholders￿of￿ASML￿prior￿to￿such a￿transaction￿are￿no￿longer￿entitled￿to￿exercise￿at￿least￿50￿percent￿of￿the￿votes￿in￿the￿General￿Meeting￿following￿such transaction,￿(ii)￿in￿the￿event￿of￿a￿delisting￿of￿our￿shares￿listed￿at￿Euronext￿Amsterdam￿or￿delisting￿of￿our￿shares￿listed￿at NASDAQ￿(except￿for￿certain￿voluntary￿delistings￿from￿NASDAQ),￿(iii)￿the￿winding￿up￿or￿liquidation￿of￿ASML,￿or￿(iv)￿in￿the event￿that￿all￿Depositary￿Receipts￿are￿exchanged￿for￿ASML￿shares￿and￿Intel￿does￿not￿acquire￿ASML￿shares￿in￿excess￿of 4.99￿percent￿of￿the￿outstanding￿ASML￿shares￿within￿18￿months￿of￿such￿exchange￿(see￿"Standstill;￿Additional￿Purchases" above). NRE Funding Agreements On￿July￿9,￿2012,￿ASML￿and￿Intel￿entered￿into￿two￿NRE￿Funding￿Agreements￿pursuant￿to￿which￿Intel￿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￿2014 F-49 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￿systems. In￿April￿of￿2014,￿ASML￿and￿Intel￿amended￿the￿commercial￿agreement￿so￿that￿Intel￿would￿have￿an￿option￿of￿purchasing either￿450mm￿systems￿or￿300mm￿systems￿in￿addition￿to￿EUV￿systems.￿The￿agreement￿and￿amendment￿set￿forth￿pricing terms￿for￿the￿systems￿as￿well￿as￿milestones￿related￿to￿product￿deliveries,￿and￿provides￿for￿certain￿commercial￿discounts in￿the￿form￿of￿credits￿in￿exchange￿for￿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￿potential￿forecasted￿450mm￿lithography￿equipment￿needs through￿2022. For￿further￿details￿regarding￿the￿share￿issuances￿to￿the￿Participating￿Customers￿and￿the￿synthetic￿share￿buyback effectuated￿in￿connection￿with￿our￿CCIP,￿see￿Note￿26. 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￿2014￿amounted￿to￿EUR￿1,007.6￿million￿(2013:￿EUR￿494.7￿million),￿whereas the￿outstanding￿liability￿as￿of￿December￿31,￿2014￿amounted￿to￿EUR￿386.8￿million￿(December￿31,￿2013:￿EUR￿182.3 million). There￿have￿been￿no￿transactions￿during￿our￿most￿recent￿fiscal￿year,￿and￿there￿are￿currently￿no￿transactions,￿between ASML￿or￿any￿of￿its￿subsidiaries,￿and￿any￿other￿significant￿shareholder￿and￿any￿director￿or￿officer￿or￿any￿relative￿or spouse￿thereof￿other￿than￿ordinary￿course￿compensation￿arrangements.￿During￿our￿most￿recent￿fiscal￿year,￿there￿has been￿no,￿and￿at￿present￿there￿is￿no,￿outstanding￿indebtedness￿to￿ASML￿owed￿or￿owing￿by￿any￿director￿or￿officer￿of ASML￿or￿any￿associate￿thereof. ASML￿ANNUAL￿REPORT￿2014 F-50 30. Subsequent Events Subsequent￿events￿were￿evaluated￿up￿to￿February￿10,￿2015,￿which￿is￿the￿issuance￿date￿of￿this￿2014￿Annual￿Report. There￿are￿no￿subsequent￿events￿to￿report. Veldhoven,￿the￿Netherlands February￿10,￿2015 ￿ ￿ ￿/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,￿CFO￿and￿member￿of￿the￿Board￿of￿Management ASML￿ANNUAL￿REPORT￿2014 F-51 Report of Independent Registered Public Accounting Firm To:￿the￿Supervisory￿Board￿and￿Shareholders￿of￿ASML￿Holding￿N.V.: We￿have￿audited￿the￿accompanying￿balance￿sheets￿of￿ASML￿Holding￿N.V.￿and￿subsidiaries￿(collectively,￿the￿"Company") as￿of￿December￿31,￿2014￿and￿2013,￿and￿the￿related￿consolidated￿statements￿of￿income,￿shareholders'￿equity￿and comprehensive￿income,￿and￿cash￿flows￿for￿each￿of￿the￿years￿in￿the￿three-year￿period￿ended￿December￿31,￿2014.￿We also￿have￿audited￿the￿Company's￿internal￿control￿over￿financial￿reporting￿as￿of￿December￿31,￿2014,￿based￿on￿criteria established￿in￿Internal Control—Integrated Framework (2013) 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￿audits￿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￿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￿its￿inherent￿limitations,￿internal￿control￿over￿financial￿reporting￿may￿not￿prevent￿or￿detect￿misstatements. Also,￿projections￿of￿any￿evaluation￿of￿effectiveness￿to￿future￿periods￿are￿subject￿to￿the￿risk￿that￿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￿its￿subsidiaries￿as￿of￿December￿31,￿2014￿and￿2013,￿and￿the￿results￿of￿its operations￿and￿its￿cash￿flows￿for￿each￿of￿the￿years￿in￿the￿three-year￿period￿ended￿December￿31,￿2014￿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,￿2014,￿based￿on￿criteria established￿in Internal Control – Integrated Framework (2013) issued￿by￿the￿Committee￿of￿Sponsoring￿Organizations￿of the￿Treadway￿Commission. /s/￿Deloitte￿Accountants￿B.V. Eindhoven,￿The￿Netherlands February￿10,￿2015 ASML￿ANNUAL￿REPORT￿2014 F-52 Exhibit Index ASML￿ANNUAL￿REPORT￿2014 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 8.1 12.1 13.1 15.1 101.INS 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 Corporation1,2 ASML/Zeiss￿Sublicense￿Agreement,￿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￿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￿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)) 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.,￿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) 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￿2 Consent￿of￿Deloitte￿Accountants￿B.V.2 XBRL￿Instance￿Document2 ASML￿ANNUAL￿REPORT￿2014 E-2 Exhibit￿No. 101.SCH 101.CAL 101.DEF 101.LAB 101.PRE Description XBRL￿Taxonomy￿Extension￿Schema￿Document￿2 XBRL￿Taxonomy￿Extension￿Calculation￿Linkbase￿Document￿2 XBRL￿Taxonomy￿Extension￿Definition￿Linkbase￿Document￿2 XBRL￿Taxonomy￿Extension￿Label￿Linkbase￿Document￿2 XBRL￿Taxonomy￿Extension￿Presentation￿Linkbase￿Document￿2 1 2 Certain￿information￿omitted￿pursuant￿to￿a￿request￿for￿confidential￿treatment￿filed￿separately￿with￿the￿Securities￿and￿Exchange￿Commission. Filed￿at￿the￿SEC￿herewith. ASML￿ANNUAL￿REPORT￿2014 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￿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￿(Shanghai)￿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) Germany￿(Dresden) France￿(Bernin) UK￿(Edinburgh￿(Scotland)) Israel￿(Ramat-Gan) Ireland￿(Dublin) Italy￿(Avezzano) Hong￿Kong￿SAR Singapore Korea￿(Kyunggi-Do) Japan￿(Kawasaki-shi,￿Kanagawa-Ken) China￿(Shanghai) 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 Taiwan￿(Hsinchu) China￿(Pudong) US￿(Reno,￿Nevada) 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￿2014 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￿10,￿2015 ￿ /s/￿Peter￿T.F.M.￿Wennink Peter￿T.F.M.￿Wennink President,￿CEO￿and￿member￿of￿the￿Board￿of￿Management ASML￿ANNUAL￿REPORT￿2014 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￿10,￿2015 ￿ /s/￿Wolfgang￿U.￿Nickl Wolfgang￿U.￿Nickl Executive￿Vice￿President,￿CFO￿and￿member￿of￿the￿Board￿of￿Management ASML￿ANNUAL￿REPORT￿2014 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,￿2014 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.F.M.￿Wennink Name:￿Peter￿T.F.M.￿Wennink Title:￿President,￿CEO￿and￿member￿of￿the￿Board￿of￿Management Date:￿February￿10,￿2015 ￿ ￿ /s/￿Wolfgang￿U.￿Nickl Name:￿Wolfgang￿U.￿Nickl Title:￿Executive￿Vice￿President,￿CFO￿and￿member￿of￿the￿Board￿of￿Management Date:￿February￿10,￿2015 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￿2014 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.￿333-116337, 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￿10,￿2015,￿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￿the￿Annual￿Report￿on￿Form￿20-F￿of￿ASML￿Holding￿N.V.￿for￿the￿year￿ended December￿31,￿2014. ￿ /s/￿Deloitte￿Accountants￿B.V. Deloitte￿Accountants￿B.V. Eindhoven,￿The￿Netherlands February￿10,￿2015 ASML￿ANNUAL￿REPORT￿2014 E-8 Definitions Name ACE AFM AGM AMD Description ASML￿Center￿of￿Excellence Autoriteit￿Financiële￿Markten;￿the￿Netherlands￿Authority￿for￿the￿Financial￿Markets Annual￿General￿Meeting￿of￿Shareholders￿(held￿on￿April￿23,￿2014,￿April￿24,￿2013￿and￿planned￿for April￿22,￿2015) Advanced￿Micro￿Devices,￿Inc. Annual￿Report Annual￿Report￿on￿Form￿20-F ArF ArFi ASML Argon￿Fluoride Argon￿Fluoride￿Immersion ASML￿Holding￿N.V.￿and￿its￿subsidiaries ASML's￿Website www.asml.com ASP ASU BA BESP BoM Brion Canon Average￿Selling￿Price Accounting￿Standards￿Update Bachelor￿of￿Arts Best￿Estimate￿of￿Selling￿Price Board￿of￿Management 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 Company ASML￿Holding￿N.V. COO CPO CR CRMC Cross-License Transition￿Period CRSB CTO Customer￿Stichtingen Chief￿Operations￿Officer Chief￿Program￿Officer Corporate￿Responsibility Capital￿Research￿&￿Management￿Company The￿period￿between￿January￿1,￿2010￿and￿December￿31,￿2014 Corporate￿Risk￿and￿Sustainability￿Board Chief￿Technology￿Officer Intel￿Stichting￿and￿TSMC￿Stichting￿jointly￿referred.￿Shares￿held￿by￿Participating￿Customers￿in the￿CCIP,￿are￿held￿through￿Foundations￿that￿issued￿to￿the￿Participating￿Customers￿depository receipts￿representing￿shares￿held￿by￿these￿Foundations. Cymer Cymer￿Inc.￿and￿its￿subsidiaries De￿Nederlandsche Bank Deloitte DPT The￿Dutch￿Central￿Bank,￿which￿is￿the￿supervisor￿of￿all￿pension￿companies￿in￿the￿Netherlands Deloitte￿Accountants￿B.V. Double￿Patterning￿Technology ASML￿ANNUAL￿REPORT￿2014 D-1 Name DTC EGM Eurobonds Description Depositary￿Trust￿Company Extraordinary￿General￿Meeting￿of￿Shareholders 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 FAT FIRPTA FMSA FOM Financial￿Accounting￿Standards￿Board Factory￿Acceptance￿Test Foreign￿Investment￿in￿Real￿Property￿Tax￿Act Financial￿Markets￿Supervision￿Act￿('Wet￿op￿het￿financieel￿toezicht'￿(Wft)) Foundation￿for￿Fundamental￿Research￿on￿Matter￿and￿part￿of￿NWO￿('Stichting￿voor Fundamenteel￿onderzoek￿der￿Materie￿en￿onderdeel￿van￿NWO) 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 IASB IC IFRS imec Intel International￿Accounting￿Standards￿Board Integrated￿Circuit International￿Financial￿Reporting￿Standards Interuniversitair￿Micro-Elektronica￿Centrum Intel￿Corporation Intel￿450mm￿NRE Funding￿Agreement Intel￿EUV￿NRE￿Funding Agreement Intel￿Investment Agreement Agreement￿with￿Intel￿related￿to￿the￿development￿of￿450mm￿lithography￿equipment Agreement￿with￿Intel￿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 KrF Logic MBA Internal￿Revenue￿Service Krypton￿Fluoride Micro-processor￿manufacturers￿and￿Foundries Master￿of￿Business￿Administration Memory NAND-Flash￿memory￿and￿DRAM￿memory￿chip￿makers mm MPT NA Millimeter￿(one￿thousandth￿of￿a￿meter) Multiple￿Patterning￿Technology Numerical￿Aperture NASDAQ NASDAQ￿Stock￿Market￿LLC New￿York￿Transfer Agent NID Nikon J.P.￿Morgan￿Chase￿Bank,￿N.A.,￿4￿New￿York￿Plaza,￿New￿York,￿New￿York Notional￿Interest￿Deduction Nikon￿Corporation Nikon￿Cross-License Agreement The￿patent￿Cross-License￿agreement￿between￿Nikon￿and￿ASML￿related￿to￿lithography equipment￿used￿to￿manufacture￿semiconductor￿devices ASML￿ANNUAL￿REPORT￿2014 D-2 Name nm Description 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 NWO NXE Dutch￿Organization￿for￿Scientific￿Research￿('Nederlandse￿Organisatie￿voor￿Wetenschappelijk onderzoek') 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 Participating Customers PFIC PME Preference￿Share Option R&D RDA RET RU RU￿ASML RU￿CLS Samsung Samsung￿Investment Agreement Samsung￿NRE￿Funding Agreement 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 The￿participants￿in￿the￿Customer￿Co-Investment￿Program:￿Intel￿Corporation￿("Intel"),￿Taiwan Semiconductor￿Manufacturing￿Company￿Ltd.￿("TSMC")￿and￿Samsung￿Electronics￿Corporation ("Samsung") 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￿(which￿is￿ASML￿consolidated￿excluding￿RU￿CLS) Reporting￿Unit￿Cymer￿Light￿Sources Samsung￿Electronics￿Corporation The￿investment￿agreement￿between￿ASML￿and￿Samsung The￿NRE￿funding￿agreement￿between￿ASML￿and￿Samsung Sarbanes-Oxley￿Act The￿Sarbanes–Oxley￿Act￿of￿2002￿ SEC SG&A 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-48￿) 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 Agreement￿about￿transfer,￿registrar￿and￿dividend￿disbursement ASML￿ANNUAL￿REPORT￿2014 D-3 Name TSMC TSMC￿Investment Agreement TSMC￿NRE￿Funding Agreement Description Taiwan￿Semiconductor￿Manufacturing￿Company￿Ltd. The￿investment￿agreement￿between￿ASML￿and￿TSMC The￿NRE￿funding￿agreement￿between￿ASML￿and￿TSMC TSMC￿Stichting Stichting￿Administratiekantoor￿TSMC US￿GAAP Generally￿accepted￿accounting￿principles￿in￿the￿United￿States￿of￿America￿ UvA VAT VIE University￿of￿Amsterdam Value-added￿tax￿ Variable￿interest￿entity VIE￿Shareholders Syndicate￿of￿three￿banks￿formed￿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 Works￿Council Works￿Council￿of￿ASML￿Netherlands￿B.V. YieldStar Zeiss Advanced￿wafer￿metrology￿system Carl￿Zeiss￿SMT￿AG ASML￿ANNUAL￿REPORT￿2014 D-4 20 

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