##### Table of Contents



Form 20-F
 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, 2005
 Commission file number 025566
 ASML HOLDING N.V.
  THE NETHERLANDS
 DE RUN 6501
5504 DR VELDHOVEN
THE NETHERLANDS
 
 
 
 
 484,670,183 Ordinary Shares
(nominal value Eur 0.02 per share)
23,100 Priority Shares
(nominal value Eur 0.02 per share)
 þ o
 o þ
 þ o
 þ o o
 o þ
 o þ
 Richard A. Ely
Skadden, Arps, Slate, Meagher & Flom (UK) LLP
40 Bank Street, Canary Wharf
London E14 5DS England




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##### Table of Contents



Contents
 Part I
    
    
    4Item 1 Identity of Directors, Senior Management and Advisors
    
    
    4Item 2 Offer Statistics and Expected Timetable
    
    
    4Item 3 Key Information
    
    
    4A. Selected Financial Data
    
    
    4B. Capitalization and Indebtedness
    
    
    7C. Reasons for the Offer and Use of Proceeds
    
    
    7D. Risk Factors
    
    
    7Item 4 Information on the Company
    
    
    12A. History and Development of the Company
    
    
    12B. Business Overview
    
    
    13C. Organizational Structure
    
    
    18D. Property, Plants and Equipment
    
    
    18Item 4A Unresolved Staff Comments
    
    
    19Item 5 Operating and Financial Review and Prospects
    
    
    19A. Operating Results
    
    
    21B. Liquidity and Capital Resources
    
    
    31C. Research and Development, Patents and Licenses
    
    
    33D. Trend Information
    
    
    33E. Off-Balance Sheet Arrangements
    
    
    33F. Tabular Disclosure of Contractual Obligations
    
    
    34G. Safe Harbor
    
    
    35Item 6 Directors, Senior Management and Employees
    
    
    35A. Directors and Senior Management
    
    
    35B. Compensation
    
    
    37C. Board Practices
    
    
    37D. Employees
    
    
    41E. Share Ownership
    
    
    42Item 7 Major Shareholders and Related Party Transactions
    
    
    42A. Major Shareholders
    
    
    42B. Related Party Transactions
    
    
    44C. Interests of Experts & Counsel
    
    
    44Item 8 Financial Information
    
    
    44A. Consolidated Statements and Other Financial Information
    
    
    44B. Significant Changes
    
    
    44Item 9 The Offer and Listing
    
    
    44A. Listing Details
    
    
    44B. Plan of Distribution
    
    
    45C. Markets
    
    
    45D. Selling Shareholder
    
    
    45E. Dilution
    
    
    45F. Expenses of the Issue
    
    
    45Item 10 Additional Information
    
    
    45A. Share Capital
    
    
    45B. Memorandum and Articles of Association
    
    
    45C. Material Contracts
    
    
    46D. Exchange Controls
    
    
    48E. Taxation
    
    
    48F. Dividends and Paying Agents
    
    
    52G. Statement by Experts
    
    
    52H. Documents on Display
    
    
    52I. Subsidiary Information
    
    
    52Item 11 Quantitative and Qualitative Disclosures About Market Risk
    
    
    52Item 12 Description of Securities Other Than Equity Securities
    
    
    54Part II
    
    
    55Item 13 Defaults, Dividend Arrearages and Delinquencies
    
    
    55Item 14 Material Modifications to the Rights of Security Holders and Use of Proceeds
    
    
    55
 2




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##### Table of Contents



Item 15 Controls and Procedures
    
    
    55Item 16
    
    
    55A. Audit Committee Financial Expert
    
    
    55B. Code of Ethics
    
    
    55C. Principal Accountant Fees and Services
    
    
    56D. Exemptions from the Listing Standards for Audit Committees
    
    
    56E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers
    
    
    56Part III
    
    
    57Item 17 Financial Statements
    
    
    57Item 18 Financial Statements
    
    
    57Item 19 Exhibits
    
    
    57EX-4.5EX-4.13EX-8.1EX-12.1EX-13.1EX-15.1
 3




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##### Table of Contents



Part I
 Special Note Regarding Forward-Looking Statements
   Presentation of Financial and Operational Information
   
 Item 1
 Identity of Directors, Senior Management and Advisors
  
 Item 2
 Offer Statistics and Expected Timetable
  
 Item 3
 Key Information
 
 A. Selected Financial Data
  4




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##### Table of Contents



Year ended December 31
    
    2001
    
    
    2002
    
    
    2003
    
    
    2004
    
    
    2005(in thousands, except per share data)1
    
    EUR
    
    
    EUR
    
    
    EUR
    
    
    EUR
    
    
    EURConsolidated statements of operations dataNet sales
    
    
    1,589,247
    
    
    
    1,958,672
    
    
    
    1,542,737
    
    
    
    2,465,377
    
    
    
    2.528,967Cost of sales
    
    
    1,558,234
    
    
    
    1,491,068
    
    
    
    1,173,955
    
    
    
    1,559,738
    
    
    
    1,554,772Gross profit on sales
    
    
    31,013
    
    
    
    467,604
    
    
    
    368,782
    
    
    
    905,639
    
    
    
    974,195Research and development costs
    
    
    347,333
    
    
    
    324,419
    
    
    
    305,839
    
    
    
    352,920
    
    
    
    347,901Research and development credits
    
    
    (16,223
    )
    
    
    (26,015
    )
    
    
    (19,119
    )
    
    
    (21,961
    )
    
    
    (24,027
    )Selling, general and
administrative expenses
    
    
    245,962
    
    
    
    263,243
    
    
    
    212,609
    
    
    
    201,629
    
    
    
    201,204Restructuring and merger and
acquisition costs (credits)
    
    
    44,559
    
    
    
    0
    
    
    
    24,485
    
    
    
    (5,862
    )
    
    
    0Operating income (loss)
    
    
    (590,618
    )
    
    
    (94,043
    )
    
    
    (155,032
    )
    
    
    378,913
    
    
    
    449,117Minority interest in net result from
subsidiaries
    
    
    3,606
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0Interest income (expense), net
    
    
    (7,207
    )
    
    
    (36,781
    )
    
    
    (29,149
    )
    
    
    (16,073
    )
    
    
    (14,094
    )Income (loss) from continuing
operations before income taxes
    
    
    (594,219
    )
    
    
    (130,824
    )
    
    
    (184,181
    )
    
    
    362,840
    
    
    
    435,023(Provision for) benefit from
income taxes
    
    
    179,017
    
    
    
    42,779
    
    
    
    59,675
    
    
    
    (127,380
    )
    
    
    (123,559
    )Income (loss) from
continuing operations
    
    
    (415,202
    )
    
    
    (88,045
    )
    
    
    (124,506
    )
    
    
    235,460
    
    
    
    311,464Loss from discontinued operations
before income taxes
    
    
    (103,001
    )
    
    
    (183,624
    )
    
    
    (59,026
    )
    
    
    0
    
    
    
    0Benefit from income taxes
    
    
    39,211
    
    
    
    63,846
    
    
    
    23,316
    
    
    
    0
    
    
    
    0Loss from discontinued
operations
    
    
    (63,790
    )
    
    
    (119,778
    )
    
    
    (35,710
    )
    
    
    0
    
    
    
    0Net income (loss)
    
    
    (478,992
    )
    
    
    (207,823
    )
    
    
    (160,216
    )
    
    
    235,460
    
    
    
    311,464Earnings per share data2, 3Basic income (loss) from continuing
operations per ordinary share
    
    
    (0.89
    )
    
    
    (0.18
    )
    
    
    (0.26
    )
    
    
    0.49
    
    
    
    0.64Basic loss from discontinued
operations per ordinary share
    
    
    (0.14
    )
    
    
    (0.26
    )
    
    
    (0.07
    )
    
    
    0.00
    
    
    
    0.00Basic net income (loss) per ordinary share
    
    
    (1.03
    )
    
    
    (0.44
    )
    
    
    (0.33
    )
    
    
    0.49
    
    
    
    0.64Diluted net income (loss) per ordinary share
    
    
    (1.03
    )
    
    
    (0.44
    )
    
    
    (0.33
    )
    
    
    0.49
    
    
    
    0.64Number of ordinary shares used in
computing per share amounts
(in thousands)Basic
    
    
    465,866
    
    
    
    476,866
    
    
    
    482,240
    
    
    
    483,380
    
    
    
    484,103Diluted
    
    
    465,866
    
    
    
    476,866
    
    
    
    482,240
    
    
    
    484,661
    
    
    
    542,979
 
 1
    
    The selected consolidated data for all periods reflect the effects of our
decision in December 2002 to discontinue our Track business and divest our Thermal business which
we substantially divested in October 2003.2
    
    Net income (loss) per ordinary share amounts have been retroactively
adjusted to reflect the issuance of 47,139,000 ordinary shares in connection with the May 2001
merger with SVG, which was accounted for as a pooling of interests.3
    
    The calculation of the number of ordinary shares used in computing
diluted net income per ordinary share (i) in 2001, 2002, 2003 and 2004 does not assume conversion
of ASMLs outstanding Convertible Subordinated Notes and (ii) in 2001, 2002 and 2003 does not
assume the exercise of options issued under ASMLs stock option plans, as such conversions and
exercises would have an anti-dilutive effect.
 5




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As of December 31
    
    2001
    
    
    2002
    
    
    2003
    
    
    2004
    
    
    2005(in thousands)
    
    EUR
    
    
    EUR
    
    
    EUR
    
    
    EUR
    
    
    EURConsolidated balance sheets dataCash and cash equivalents
    
    
    910,678
    
    
    
    668,760
    
    
    
    1,027,806
    
    
    
    1,228,130
    
    
    
    1,904,609Working capital4
    
    
    1,822,711
    
    
    
    1,662,570
    
    
    
    1,463,308
    
    
    
    1,868,871
    
    
    
    1,785,836Total assets
    
    
    3,643,840
    
    
    
    3,301,688
    
    
    
    2,868,282
    
    
    
    3,243,766
    
    
    
    3,756,023Long-term liabilities
    
    
    1,588,846
    
    
    
    1,233,398
    
    
    
    1,040,556
    
    
    
    1,039,023
    
    
    
    624,203Total shareholders equity
    
    
    1,226,287
    
    
    
    1,315,516
    
    
    
    1,141,207
    
    
    
    1,391,602
    
    
    
    1,711,837Consolidated statements of cash flows dataPurchases of property, plant and equipment
    
    
    (160,427
    )
    
    
    (89,282
    )
    
    
    (48,567
    )
    
    
    (74,979
    )
    
    
    (72,660
    )Depreciation, amortization and impairment
    
    
    138,959
    
    
    
    186,686
    
    
    
    156,900
    
    
    
    93,144
    
    
    
    98,881Net cash provided by (used in)
continuing operating activities
    
    
    (328,017
    )
    
    
    (61,127
    )
    
    
    532,659
    
    
    
    257,147
    
    
    
    713,511Net cash provided by (used in)
discontinued operating activities
    
    
    (35,937
    )
    
    
    (121,039
    )
    
    
    12,736
    
    
    
    (5,880
    )
    
    
    (2,018
    )Net cash provided by (used in)
total operating activities
    
    
    (363,954
    )
    
    
    (182,166
    )
    
    
    545,395
    
    
    
    251,267
    
    
    
    711,493Net cash used in continuing
investing activities
    
    
    (197,693
    )
    
    
    (72,876
    )
    
    
    (49,028
    )
    
    
    (60,398
    )
    
    
    (60,803
    )Net cash used in discontinued
investing activities
    
    
    (33,878
    )
    
    
    (6,434
    )
    
    
    0
    
    
    
    0
    
    
    
    0Net cash used in total investing activities
    
    
    (231,571
    )
    
    
    (79,310
    )
    
    
    (49,028
    )
    
    
    (60,398
    )
    
    
    (60,803
    )Net cash provided by (used in)
continuing financing activities
    
    
    664,290
    
    
    
    21,427
    
    
    
    (68,156
    )
    
    
    18,871
    
    
    
    2,879Net cash provided by (used in)
discontinued financing activities
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0Net cash provided by (used in)
total financing activities
    
    
    664,290
    
    
    
    21,427
    
    
    
    (68,156
    )
    
    
    18,871
    
    
    
    2,879Net increase (decrease) in cash and
cash equivalents
    
    
    (73,522
    )
    
    
    (241,918
    )
    
    
    359,046
    
    
    
    200,324
    
    
    
    676,479Ratios and other dataIncrease (decrease) in net sales (in percent)
    
    
    (40.5
    )
    
    
    23.2
    
    
    
    (21.2
    )
    
    
    59.8
    
    
    
    2.6Gross profit as a percentage of net sales
    
    
    2.0
    
    
    
    23.9
    
    
    
    23.9
    
    
    
    36.7
    
    
    
    38.5Operating income (loss) as a
percentage of net sales
    
    
    (37.2
    )
    
    
    (4.8
    )
    
    
    (10.0
    )
    
    
    15.4
    
    
    
    17.8Net income (loss)
as a percentage of net sales
    
    
    (26.1
    )
    
    
    (4.5
    )
    
    
    (8.1
    )
    
    
    9.6
    
    
    
    12.3Shareholders equity as a percentage
of total assets
    
    
    33.7
    
    
    
    39.8
    
    
    
    39.8
    
    
    
    42.9
    
    
    
    45.6Backlog of new systems (in units) at
year end
    
    
    117
    
    
    
    103
    
    
    
    103
    
    
    
    119
    
    
    
    86Backlog of used systems (in units) at
year end
    
    
    1
    
    
    
    7
    
    
    
    21
    
    
    
    12
    
    
    
    9Backlog of systems (in units) at
year end
    
    
    118
    
    
    
    110
    
    
    
    124
    
    
    
    131
    
    
    
    95Sales of systems (in units)
    
    
    197
    
    
    
    205
    
    
    
    169
    
    
    
    282
    
    
    
    196Number of employees at year end
for continuing operations
    
    
    6,039
    
    
    
    5,971
    
    
    
    5,059
    
    
    
    5,071
    
    
    
    5,055Number of ordinary shares
outstanding (in thousands) at year end
    
    
    466,978
    
    
    
    482,182
    
    
    
    482,514
    
    
    
    483,676
    
    
    
    484,670Stock price ASML at year end5
    
    
    19.52
    
    
    
    7.96
    
    
    
    15.72
    
    
    
    11.81
    
    
    
    16.90Volatility % ASML shares (260 days)6
    
    
    71.0
    
    
    
    89.0
    
    
    
    60.9
    
    
    
    37.4
    
    
    
    26.0
 
 4
    
    Working Capital is calculated as the difference between total current assets,
including cash and cash equivalents, and total current liabilities.5
    
    Closing price of ASMLs ordinary shares listed on the Official Segment of
the stock market of Euronext Amsterdam N.V. (Source: Bloomberg)6
    
    Volatility represents the variability in our share price on the Official
Segment of the stock market of Euronext Amsterdam N.V. as measured over the last 260 business days
of each year presented. (Source: Bloomberg)
 6




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Exchange Rate Information
 
   Calendar period
    
    2001
    
    
    2002
    
    
    2003
    
    
    2004
    
    
    2005
    
    
    2006(Jan. 24)Period End
    
    
    0.89
    
    
    
    1.05
    
    
    
    1.26
    
    
    
    1.35
    
    
    
    1.18
    
    
    
    1.23Average1
    
    
    0.89
    
    
    
    0.95
    
    
    
    1.13
    
    
    
    1.24
    
    
    
    1.24
    
    
    
    1.21High
    
    
    0.95
    
    
    
    1.05
    
    
    
    1.26
    
    
    
    1.36
    
    
    
    1.35
    
    
    
    1.23Low
    
    
    0.84
    
    
    
    0.86
    
    
    
    1.04
    
    
    
    1.18
    
    
    
    1.17
    
    
    
    1.20
 
 1
    
    The average of the Noon Buying Rates on the last business day of each month during
the period presented.
 Months of
    
    July
    
    
    August
    
    
    September
    
    
    October
    
    
    November
    
    
    December
    
    
    January2005
    
    
    2005
    
    
    2005
    
    
    2005
    
    
    2005
    
    
    2005
    
    
    2006 (Jan. 24)High
    
    
    1.22
    
    
    
    1.24
    
    
    
    1.25
    
    
    
    1.21
    
    
    
    1.21
    
    
    
    1.20
    
    
    
    1.23Low
    
    
    1.19
    
    
    
    1.21
    
    
    
    1.20
    
    
    
    1.19
    
    
    
    1.17
    
    
    
    1.17
    
    
    
    1.20
 
 B. Capitalization and Indebtedness
  
 C. Reasons for the Offer and Use of Proceeds
  
 D. Risk Factors
  Risks Related to the Semiconductor Industry
 The Semiconductor Industry is Highly Cyclical and We May be Adversely Affected by Any Future
Downturns
  
    
    the current and anticipated market demand for semiconductors and for
products utilizing semiconductors;
    
    semiconductor prices;
    
    semiconductor production costs; and
    
    general economic conditions.
   7




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Our Business Will Suffer If We Do Not Respond Rapidly to Commercial and Technological Changes
in the Semiconductor Industry
  
    
    rapid change towards more complex technologies;
 
    
    frequent new product introductions and enhancements;
 
    
    evolving industry standards;
 
    
    changes in customer requirements; and
 
    
    continued shortening of product life cycles.
   We Face Intense Competition
  
    
    the technical performance characteristics of a photolithography system;
 
    
    the value of ownership of that system based on its purchase price, maintenance costs, productivity and customer service and
support; and
 
    
    the strength and breadth of our portfolio of patents and other intellectual property rights.
    8




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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
     A High Percentage of Net Sales is Derived from a Few Customers
   The Pace of Introduction of Our New Products is Accelerating and is Accompanied by Potential
Design and Production Delays and by Significant Costs
   9




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We Derive Most of Our Revenues from the Sale of a Relatively Small Number of Products
  
    
    the highly cyclical semiconductor business industry;
    
    unanticipated shipment rescheduling;
    
    cancellation by customers;
    
    unexpected manufacturing difficulties; and
    
    delays in deliveries by suppliers,
   Compliance with Internal Controls Evaluations and Attestation Requirements May Increase Our
Costs and We May Identify Significant Deficiencies or Material Weaknesses
   Failure to Adequately Protect the Intellectual Property Rights upon Which We Depend Could Harm
Our Business
  
    
    intellectual property laws may not sufficiently protect our proprietary rights or may adversely change in the future;
    
    pending patent applications may not be granted or construed as expected;
    
    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.
  Defending Against Intellectual Property Claims by Others Could Harm Our Business
   10




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We Are Subject to Risks in our International Operations
  
    
    potentially adverse tax consequences;
    
    unfavorable political or economic environment;
    
    unexpected legal or regulatory changes; and
    
    inability to effectively protect intellectual property.
   We Are Subject to Environmental Laws and Regulations
  We Are Dependent on the Continued Operation of a Limited Number of Manufacturing Facilities
  Because of Labor Laws and Practices, Any Workforce Reductions That We May Wish to Implement In
Order To Reduce Costs Company-Wide May Be Delayed or Suspended
  Fluctuations in Foreign Exchange Rates Could Harm Our Results of Operations
   11




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Risks Related to Our Ordinary Shares
 The
Price of Our Ordinary Shares is Very Volatile
  Restrictions
on Shareholder Rights May Dilute Voting Power
    
 Item 4
 Information on the Company
 
 A. History and Development of the Company
   Capital Expenditures
  12




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B. Business Overview
  Value of Ownership
  
    
    offering ongoing improvements in productivity, imaging and overlay by
introducing advanced technology based on modular platforms;
    
    providing customer services that ensure rapid, efficient installation
and superior on-site support and training to optimize manufacturing
processes and improve productivity;
    
    maintaining appropriate levels of research and development to offer
the most advanced technology suitable for high-throughput and low-cost
volume production at the earliest possible date;
    
    enhancing the capabilities of the installed base through ongoing field
upgrades of key value drivers (productivity, imaging and overlay)
based on further technology developments;
    
    reducing the cycle time between customer order of a system and the use
of that system in volume production on-site;
    
    expanding operational flexibility in research and manufacturing by
reinforcing strategic alliances with world-class partners;
    
    improving the reliability and uptime of our installed system base; and
    
    providing re-marketing services that effectively increase residual
value by extending the life of equipment.
 Market and Technology Overview
      13




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Products
        Current ASML Lithography product portfolio of Steppers and Step & Scan Systems
 Feature Size
    
    Wavelength of LightFeature size =
    
    Wavelength = length of light going through projection lens;Resolution =
    
    The shorter the wavelength, the smaller the line width
 14




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Size of line
    
    and the finer the pattern on the ICwidth in Nanometer365 nm (i-line)
    
    248 nm (KrF)
    
    193 nm (ArF)700
    
    PAS 5500/22350
    
    PAS 5500/125300
    
    PAS 5500/275280
    
    PAS 5500/400AT:400XT:400 and XT:450150
    
    
    
    PAS 5500/350130
    
    
    
    PAS 5500/750AT:750 and XT:760120
    
    
    
    PAS 5500/800110
    
    
    
    PAS 5500/850 and AT:850100
    
    
    
    XT:860100
    
    
    
    
    
    PAS 5500/1100 and AT:110090
    
    
    
    
    
    PAS 5500/1150 and AT:115080
    
    
    
    
    
    AT:120070
    
    
    
    
    
    XT:1250 and XT:1250i65
    
    
    
    
    
    XT:1400 and XT:1400i45
    
    
    
    
    
    XT:1700i
 
 Sales and Customer Support
   Customers and Geographic Markets
  Manufacturing, Logistics and Suppliers
   
    
    maintaining long-term relationships with our suppliers;
    
    sharing risks and rewards with our suppliers;
    
    dual sourcing of knowledge, globally, together with our suppliers; and
    
    single, dual or multiple sourcing of products, where possible or required.
  15




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Research and Development
     16




---



##### Table of Contents



Intellectual Property
   Patent litigation with Nikon
   Patent litigation with Ultratech Stepper, Inc
     17




---



##### Table of Contents



Competition
  Government Regulation
  
 C. Organizational Structure
  
  
 D. Property, Plants and Equipment
    Facilities in Europe
  18




---



##### Table of Contents



Facilities in the United States
   Facilities in Asia
  
 Item 4A
 Unresolved Staff Comments
  
 Item 5
 Operating and Financial Review and Prospects
 Executive Summary
   Semiconductor equipment industry update
      Year ended December 31
    
    2000
    
    2001
    
    2002
    
    2003
    
    2004Total units shipped
    
    1,182
    
    789
    
    413
    
    456
    
    694Total Value (in Millions USD)
    
    5,321
    
    3,792
    
    2,817
    
    3,229
    
    5,268
  19




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##### Table of Contents



ASML operations update on key performance indicators
          Year ended December 31
    
    2003
    
    
    
    
    
    
    2004
    
    
    
    
    
    
    2005(in millions)
    
    EUR
    
    
    
    
    
    
    EUR
    
    
    
    
    
    
    EURGrowthSystems shipped  number
    
    
    169
    
    
    
    
    
    
    
    282
    
    
    
    
    
    
    
    196Systems shipped  value
    
    
    1,279
    
    
    
    
    
    
    
    2,175
    
    
    
    
    
    
    
    2,228Systems shipped  ASP
    
    
    7.6
    
    
    
    
    
    
    
    7.7
    
    
    
    
    
    
    
    11.4Systems backlog  number
    
    
    124
    
    
    
    
    
    
    
    131
    
    
    
    
    
    
    
    95Systems backlog  value
    
    
    993
    
    
    
    
    
    
    
    1,691
    
    
    
    
    
    
    
    1,434Systems backlog  ASP
    
    
    8.0
    
    
    
    
    
    
    
    12.9
    
    
    
    
    
    
    
    15.1ProfitabilityNet sales
    
    
    1,543
    
    
    
    
    
    
    
    2,465
    
    
    
    
    
    
    
    2,529Gross profit
    
    
    369
    
    
    
    23.9
    %
    
    
    906
    
    
    
    36.7
    %
    
    
    974
    
    
    
    38.5
    %R&D1
    
    
    287
    
    
    
    
    
    
    
    331
    
    
    
    
    
    
    
    324SG&A
    
    
    213
    
    
    
    
    
    
    
    202
    
    
    
    
    
    
    
    201Restructuring
    
    
    24
    
    
    
    
    
    
    
    (6
    )Operating income (loss)
    
    
    (155
    )
    
    
    (10.0
    %)
    
    
    379
    
    
    
    15.4
    %
    
    
    449
    
    
    
    17.8
    %Net income (loss)1
    
    
    (160
    )
    
    
    (10.4
    %)
    
    
    235
    
    
    
    9.6
    %
    
    
    311
    
    
    
    12.3
    %LiquidityCash and cash equivalents
    
    
    1,028
    
    
    
    
    
    
    
    1,228
    
    
    
    
    
    
    
    1,905Net cash2
    
    
    185
    
    
    
    
    
    
    
    425
    
    
    
    
    
    
    
    1,037Operating cash flow
    
    
    545
    
    
    
    
    
    
    
    251
    
    
    
    
    
    
    
    711
 20




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##### Table of Contents



1
    
    ASML, Nikon Corporation and Carl Zeiss SMT AG have agreed to a
comprehensive settlement of legal proceedings and cross-license of patents related to lithography
equipment. This agreement had the following effects on ASMLs results for the twelve months ended
December 31, 2004 (i) an increase of EUR 49 million in our Research and Development costs and
consequently a decrease in operating income; (ii) a decrease of EUR 33 million in net income.2
    
    Net cash is calculated as the difference between cash and cash equivalents and
convertible subordinated notes.
 ASML financial performance
  Investment in technological leadership
   Operational excellence
   
 A. Operating Results
 Critical accounting policies using significant estimates
  Revenue recognition
  21




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##### Table of Contents



Warranty
  Evaluation of long-lived assets for impairment and costs associated with exit or disposal
activities
 22




---



##### Table of Contents



Inventories
  Trade Receivables
  Restructuring
   23




---



##### Table of Contents



Contingencies and litigation
  Income tax
    24




---



##### Table of Contents



Business strategy
  Customer focus
    Technology leadership
      Operational excellence
    25




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##### Table of Contents



Financial criteria for ASML
  Results of Operations
    Year ended December 31
    
    2003
    
    
    2004
    
    
    2005Total net sales
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Cost of sales
    
    
    76.1
    1
    
    
    63.3
    2
    
    
    61.5Gross profit on sales
    
    
    23.9
    
    
    
    36.7
    
    
    
    38.5Research and development costs
    
    
    19.8
    
    
    
    14.3
    
    
    
    13.8Research and development credits
    
    
    (1.2
    )
    
    
    (0.9
    )
    
    
    (1.0
    )Selling, general and administrative costs
    
    
    13.8
    
    
    
    8.2
    
    
    
    8.0Restructuring and merger and acquisition related charges
    
    
    1.6
    
    
    
    (0.2
    )
    
    
    0.0Operating income (loss)
    
    
    (10.0
    )
    
    
    15.4
    
    
    
    17.8Interest expense, net
    
    
    1.9
    
    
    
    0.7
    
    
    
    0.6Income (loss) from continuing operations before income taxes
    
    
    (11.9
    )
    
    
    14.7
    
    
    
    17.2(Provision for) Benefit from income taxes
    
    
    (3.9
    )
    
    
    5.2
    
    
    
    4.9Income (loss) from continuing operations
    
    
    (8.1
    )
    
    
    9.6
    
    
    
    12.3
 
 1
    
    Includes restructuring charges of EUR 5 million.2
    
    Includes reversal of restructuring charges of EUR 3 million.
 Results of operations from continuing operations 2005 compared with 2004
 Consolidated sales and gross profit
  2004
    
    
    
    
    
    
    
    
    
    
    2005First
    
    
    Second
    
    
    Full
    
    
    First
    
    
    Second
    
    
    FullYear ended December 31
    
    half year
    
    
    half year
    
    
    year
    
    
    half year
    
    
    half year
    
    
    yearNet sales (EUR million)
    
    
    1,070
    
    
    
    1,395
    
    
    
    2,465
    
    
    
    1,448
    
    
    
    1,081
    
    
    
    2,529Net system sales (EUR million)
    
    
    933
    
    
    
    1,242
    
    
    
    2,175
    
    
    
    1,313
    
    
    
    915
    
    
    
    2,228Net service and field option sales (EUR million)
    
    
    137
    
    
    
    153
    
    
    
    290
    
    
    
    135
    
    
    
    166
    
    
    
    301Total systems recognized
    
    
    130
    
    
    
    152
    
    
    
    282
    
    
    
    110
    
    
    
    86
    
    
    
    196Total new systems recognized
    
    
    99
    
    
    
    117
    
    
    
    216
    
    
    
    94
    
    
    
    62
    
    
    
    156Total used systems recognized
    
    
    31
    
    
    
    35
    
    
    
    66
    
    
    
    16
    
    
    
    24
    
    
    
    40Gross profit on sales (% of sales)
    
    
    34.2
    
    
    
    38.7
    
    
    
    36.7
    
    
    
    39.6
    
    
    
    37.1
    
    
    
    38.5ASP for systems (EUR million)
    
    
    7.2
    
    
    
    8.2
    
    
    
    7.7
    
    
    
    11.9
    
    
    
    10.6
    
    
    
    11.4ASP for new systems (EUR million)
    
    
    8.7
    
    
    
    9.8
    
    
    
    9.3
    
    
    
    13.5
    
    
    
    13.6
    
    
    
    13.5ASP for used systems (EUR million)
    
    
    2.3
    
    
    
    2.9
    
    
    
    2.6
    
    
    
    2.8
    
    
    
    2.9
    
    
    
    2.9
   26




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Research and development
   Selling, general and administrative costs
  Restructuring costs (credits)
 27




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##### Table of Contents



Net interest expense
  Income taxes
  Results of operations from continuing operations 2004 compared with 2003
 Consolidated sales and gross profit
  2003
    
    
    
    
    
    
    
    
    
    
    2004First
    
    
    Second
    
    
    Full
    
    
    First
    
    
    Second
    
    
    FullYear ended December 31
    
    half year
    
    
    half year
    
    
    year
    
    
    half year
    
    
    half year
    
    
    yearNet sales (EUR million)
    
    
    647
    
    
    
    896
    
    
    
    1,543
    
    
    
    1,070
    
    
    
    1,395
    
    
    
    2,465Net system sales (EUR million)
    
    
    515
    
    
    
    764
    
    
    
    1,279
    
    
    
    933
    
    
    
    1,242
    
    
    
    2,175Net service and field option sales (EUR million)
    
    
    132
    
    
    
    131
    
    
    
    263
    
    
    
    137
    
    
    
    153
    
    
    
    290Total systems recognized
    
    
    74
    
    
    
    95
    
    
    
    169
    
    
    
    130
    
    
    
    152
    
    
    
    282Total new systems recognized
    
    
    55
    
    
    
    71
    
    
    
    126
    
    
    
    99
    
    
    
    117
    
    
    
    216Total used systems recognized
    
    
    19
    
    
    
    24
    
    
    
    43
    
    
    
    31
    
    
    
    35
    
    
    
    66Gross profit on sales (% of sales)
    
    
    19.4
    
    
    
    27.2
    
    
    
    23.9
    
    
    
    34.2
    
    
    
    38.7
    
    
    
    36.7ASP for systems (EUR million)
    
    
    7.0
    
    
    
    8.0
    
    
    
    7.6
    
    
    
    7.2
    
    
    
    8.2
    
    
    
    7.7ASP for new systems (EUR million)
    
    
    8.7
    
    
    
    10.0
    
    
    
    9.5
    
    
    
    8.7
    
    
    
    9.8
    
    
    
    9.3ASP for used systems (EUR million)
    
    
    1.8
    
    
    
    2.2
    
    
    
    2.0
    
    
    
    2.3
    
    
    
    2.9
    
    
    
    2.6
      28




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##### Table of Contents



Lithography order backlog
  Research and development
    Selling, general and administrative costs
  Restructuring costs (credits)
   29




---



##### Table of Contents



Net interest expense
  Income taxes
  Discontinued operations
  Year ended December 31
    
    2003
    
    
    2004(in thousands)
    
    EUR
    
    
    EURRevenuesTrack
    
    
    2,514
    
    
    
    0Thermal
    
    
    38,198
    
    
    
    0Total
    
    
    40,712
    
    
    
    0Loss from discontinued operations, net of taxesTrack loss from operations
    
    
    (1,456
    )
    
    
    0Track exit costs
    
    
    (1,944
    )
    
    
    0Thermal loss from operations
    
    
    (21,906
    )
    
    
    0Thermal exit costs
    
    
    (10,404
    )
    
    
    0Total
    
    
    (35,710
    )
    
    
    0
  30




---



##### Table of Contents



Foreign Exchange Management
  New U.S. GAAP Accounting Pronouncements
     
 B. Liquidity and Capital Resources
   31




---



##### Table of Contents



32




---



##### Table of Contents



C. Research and Development, Patents and Licenses
 Research and Development
  Intellectual Property Matters
  
 D. Trend Information
    As of December 31
    
    2004
    
    
    2005Backlog sales of new systems (units)
    
    
    119
    
    
    
    86Backlog sales of used systems (units)
    
    
    12
    
    
    
    9Backlog sales of total systems (units)
    
    
    131
    
    
    
    95Value of backlog new systems (EUR million)
    
    
    1,664
    
    
    
    1,411Value of backlog used systems (EUR million)
    
    
    27
    
    
    
    23Value of backlog of total systems (EUR million)
    
    
    1,691
    
    
    
    1,434ASP for new systems (EUR million)
    
    
    14.0
    
    
    
    16.4ASP for used systems (EUR million)
    
    
    2.2
    
    
    
    2.6ASP for total systems (EUR million)
    
    
    12.9
    
    
    
    15.1
     
 E. Off-Balance Sheet Arrangements
  33




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##### Table of Contents



Variable Interest Entities
   
  Purchase Obligations
  Other Off-Balance Sheet Arrangements
   
 F. Tabular Disclosure of Contractual Obligations
  Total
    
    
    Less than
    
    
    1-3
    
    
    3-5
    
    
    After 51 year
    
    
    years
    
    
    years
    
    
    years(in thousands)
    
    EUR
    
    
    EUR
    
    
    EUR
    
    
    EUR
    
    
    EURLong Term Debt, including interest expense1
    
    
    1,003,796
    
    
    
    537,764
    
    
    
    43,101
    
    
    
    422,851
    
    
    
    80Operating Lease Obligations
    
    
    213,878
    
    
    
    33,032
    
    
    
    53,657
    
    
    
    39,707
    
    
    
    87,482Purchase Obligations
    
    
    676,007
    
    
    
    672,424
    
    
    
    3,583
    
    
    
    0
    
    
    
    0Other Liabilities2
    
    
    18,341
    
    
    
    7,630
    
    
    
    10,711
    
    
    
    0
    
    
    
    0Total Contractual Obligations
    
    
    1,912,022
    
    
    
    1,250,850
    
    
    
    111,052
    
    
    
    462,558
    
    
    
    87,562
 
 1
    
    We refer to Note 11 to the consolidated financial statements for the amounts
excluding interest expense.
 34




---



##### Table of Contents



2
    
    Other liabilities relate mainly to the additional payments to Nikon due in 2006 and
2007 with respect to a cross-license of patents related to lithography equipment. See Item 10.C.
Material Contracts for a summary of the Nikon-ASML Cross License Agreement and the ASML/Zeiss
Sublicense Agreement.
  Total
    
    
    Less than
    
    
    1-3
    
    
    3-5
    
    
    After 51 year
    
    
    years
    
    
    years
    
    
    years(in thousands)
    
    EUR
    
    
    EUR
    
    
    EUR
    
    
    EUR
    
    
    EURPurchase options
    
    
    61,363
    
    
    
    0
    
    
    
    3,358
    
    
    
    2,269
    
    
    
    55,736
 
 G. Safe Harbor
  
 Item 6
 Directors, Senior Management and Employees
 
 A. Directors and Senior Management
  Name
    
    Title
    
    Date of Birth
    
    
    Term ExpiresHenk Bodt1, 2, 3
    
    Chairman of the Supervisory Board
    
    April 30, 1938
    
    
    2007Jan A. Dekker1, 4
    
    Member of the Supervisory Board
    
    May 10, 1939
    
    
    2006Peter H. Grassmann4
    
    Member of the Supervisory Board
    
    November 21, 1939
    
    
    2006Jos W.B. Westerburgen 2, 3
    
    Member of the Supervisory Board
    
    June 24, 1942
    
    
    2009Fritz W. Fröhlich1
    
    Member of the Supervisory Board
    
    March 19, 1942
    
    
    2008Arthur P.M. van der Poel3,4
    
    Member of the Supervisory Board
    
    November 1, 1948
    
    
    2008Ieke C.J. van den Burg2
    
    Member of the Supervisory Board
    
    March 6, 1952
    
    
    2009OB Bilous4
    
    Member of the Supervisory Board
    
    November 7, 1938
    
    
    2009Eric Meurice
    
    President and Chief Executive Officer and
    
    July 30, 1956
    
    
    2008Chairman and Member of the Board ofManagementPeter T.F.M. Wennink
    
    Executive Vice President, Chief Financial
    
    May 30, 1957
    
    
    N/A
    5Officer and Member of the Board ofManagementMartin A. van den Brink
    
    Executive Vice President Marketing
    
    May 21, 1957
    
    
    N/A
    5& Technology and Member of the Boardof ManagementDavid P. Chavoustie
    
    Executive Vice President Sales and
    
    May 7, 1943
    
    
    N/A
    5,6Member of the Board of ManagementKlaus P. Fuchs
    
    Executive Vice President Operations and
    
    December 30, 1958
    
    
    2010
    7Member of the Board of Management
 
 1
    
    Member of the Audit Committee2
    
    Member of the Remuneration Committee3
    
    Member of the Selection and Nomination Committee4
    
    Member of the Technology & Strategy Committee5
    
    There are no specified terms for members of the Board of Management
appointed prior to March 20046
    
    Mr. Chavoustie retired from his position on the Board of Management,
effective December 31, 20057
    
    Mr. Fuchs appointment to ASMLs Board of Management is subject to
notification of the General Meeting of Shareholders, scheduled on March 23, 2006
   35




---



##### Table of Contents



Director and Officer Biographies
 Henk Bodt
  Jan A. Dekker
  Peter H. Grassmann
  Jos W.B. Westerburgen
  Fritz W. Fröhlich
  Arthur P.M. van der Poel
  Ieke C.J. van den Burg
  OB Bilous
  Eric Meurice
  36




---



##### Table of Contents



Peter T.F.M. Wennink
  Martin A. van den Brink
  David P. Chavoustie
  Klaus P. Fuchs
  
 B. Compensation
   Bonus and Profit-sharing plans
  Pension plans
  
 C. Board Practices
 Board Practices
 General
   
    
    provide shareholders with regular, reliable and relevant transparent information regarding our activities, structure,
financial condition, performance and other information, including information on our social, ethical and environmental
records and policies;
    
    apply high quality standards for disclosure, accounting and auditing; and
    
    apply stringent rules with regard to insider securities trading.
 37




---



##### Table of Contents



Two-tier structure
   Board of Management
   Supervisory Board
      38




---



##### Table of Contents



Approval of Board of Management Decisions
  (i)
    
    a transfer of all or substantially all of the business of ASML to a third party;(ii)
    
    entering into or the termination of a long-term joint venture between ASML and a third party,
if this joint venture is material to ASML; and(iii)
    
    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 annual accounts).
 Rules of Procedure
  Directors and Officers Insurance and Indemnification
  Corporate Governance Developments
   
    
    strengthening the role of the Supervisory Board and its committees and to increase its
independence, quality and expertise;
    
    strengthening the role of the shareholders with respect to control on the functioning
of the Board of Management and the Supervisory Board, as well as with respect to
nomination and remuneration of members of the Board of Management and with respect to the
nomination of members of the Supervisory Board;
    
    facilitating and encouraging shareholders to use their voting power and to actively
participate in the General Meeting of Shareholders; and
    
    defining the role of the external auditor vis-à-vis the Supervisory Board as its
principal contact.
 Committees of ASMLs Supervisory Board
  Audit Committee
   
    
    overseeing the integrity of our financial statements and related non-financial
disclosure;
 39




---



##### Table of Contents




    
    overseeing the qualifications, independence and performance of the external auditor;
and
 
    
    overseeing the integrity of our systems of disclosure controls and procedures and the
system of internal controls regarding finance and accounting.
  Remuneration Committee
     Selection and Nomination Committee
   
    
    preparing the selection criteria and
appointment procedures for members of
the Companys Supervisory Board and
Board of Management;
    
    periodically evaluating the scope and
composition of the Board of
Management and the Supervisory Board
and proposing the profile of the
Supervisory Board in relation
thereto;
    
    periodically evaluating the
functioning of individual members of
the Board of Management and the
Supervisory Board and reporting the
results thereof to the Supervisory
Board; and
    
    proposing (re-)appointments of
members of the Board of Management
and the Supervisory Board and
supervising the policy of the Board
of Management in relation to the
selection and appointment criteria
for senior management.
  Technology and Strategy Committee
   40




---



##### Table of Contents



a)
    
    familiarization with and risk assessment and study of potential strategies, required
technical resources, technology roadmaps and product roadmaps; and
 b)
    
    providing advice to the Supervisory Board with respect to matters related thereto.
  Disclosure Committee
   Variations from Certain Nasdaq Corporate Governance Rules
  
    
    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 and 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.
 
    
    ASML does not follow Nasdaqs requirement regarding distribution to shareholders of
copies of an annual report containing audited financial statements prior to the Companys Annual
General Meeting of Shareholders. The distribution of annual reports to shareholders is not
required under Dutch corporate law, 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 report available at our corporate head office in the Netherlands (and at the
offices of our Netherlands listing agent as stated in the convening notice for the meeting) as
from the day of 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.
 
 D. Employees
  41




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##### Table of Contents



E. Share Ownership
  
 Item 7
 Major Shareholders and Related Party Transactions
 
 A. Major Shareholders
  Identity of Person or Group
    
    Amount Owned
    
    
    Percent of ClassCapital Group International, Inc 1
    
    
    51,528,140
    
    
    
    10.6
    %FMR Corp.2
    
    
    54,662,612
    
    
    
    11.3
    %Capital Research and Management Company 3
    
    
    50,572,880
    
    
    
    10.5
    %Members of ASMLs Supervisory Board and
Board of Management, as a group (5 persons) 4
    
    
    654,660
    
    
    
    
    *
 
 *
    
    Less than 1 percent.

1 Based solely on the Schedule 13-G/A jointly filed by Capital Group
International, Inc. with the Commission on February 11, 2005.2
    
    Based solely on the Schedule 13-G/A filed by FMR Corp. with the Commission
on February 14, 2005.3
    
    Based solely on the Schedule 13-G filed by Capital Research and Management
Company with the Commission on February 11, 2005.4
    
    Four members of our Board of Management own a total of 636,780 options
to purchase ASML shares. Four members of our Board of Management together are also entitled to
conditional performance stock options and conditional performance stock. The ultimately awarded
number of performance stock will be determined in the financial year 2008 and is conditional upon
the achievement of performance targets. See Note 17 to our consolidated financial statements for
information on options held by and conditional performance stock conditionally awarded to members
of our Board of Management on an individual basis. One member of our Board of Management owns
14,880 of our 42




---



##### Table of Contents



Obligations of Shareholders to Disclose Holdings under Netherlands Law
      -
    
    the percentage thresholds that trigger a reporting requirement are: 5, 10, 15, 20, 25, 30, 50 and
70 percent;-
    
    a holder must notify the AFM of the percentages of voting rights
and capital interest held by it if either or both of such percentages
crosses these thresholds (i) immediately, if this is the result of an
acquisition or disposal by it; (ii) within four trading days, if this
is the result of a change in the companys share capital or voting
rights reported in the AFMs public register;-
    
    persons holding 5% or more in voting rights or capital interest must
notify the AFM of any changes in the composition of their interest
since the previous notification within four weeks after December 31;-
    
    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);
 43




---



##### Table of Contents



-
    
    the following shares and votes qualify as shares and votes held by a
person: those directly held by it; those held by its subsidiaries;
those held by a third party for such persons account; those held by a
third party with whom the person has concluded an oral or written
voting agreement; those temporarily held by a third party against
payment. Shares held by the custodian of an unincorporated investment
fund are deemed to be held by such funds manager. Shares held jointly
by more persons are in principle attributed in accordance with their
entitlement. A person acting as an attorney who has discretion in the
exercise of voting rights is deemed to hold these votes. A holder of a
pledge or right of usufruct in respect of shares is deemed to hold
voting rights if he has, or can acquire, the right to vote on the
 shares or, in case of depositary receipts, the underlying shares.
  
 
 B. Related Party Transactions
  
 C. Interests of Experts & Counsel
  
 Item 8
 Financial Information
 
 A. Consolidated Statements and Other Financial Information
 Consolidated Statements
  Legal Proceedings
  Dividend Policy
  
 B. Significant Changes
  
 Item 9
 The Offer and Listing
 
 A. Listing Details
   44




---



##### Table of Contents



Nasdaq
    
    
    Euronext AmsterdamUS$
    
    
    EURHigh
    
    
    Low
    
    
    High
    
    
    LowAnnual Information2001
    
    
    30.62
    
    
    
    9.51
    
    
    
    32.32
    
    
    
    9.702002
    
    
    25.80
    
    
    
    4.95
    
    
    
    29.79
    
    
    
    5.132003
    
    
    20.39
    
    
    
    6.11
    
    
    
    17.04
    
    
    
    5.392004
    
    
    22.32
    
    
    
    12.41
    
    
    
    17.50
    
    
    
    10.262005
    
    
    20.13
    
    
    
    14.44
    
    
    
    17.12
    
    
    
    11.11Quarterly Information1st quarter 2004
    
    
    22.32
    
    
    
    16.48
    
    
    
    17.50
    
    
    
    13.382nd quarter 2004
    
    
    19.37
    
    
    
    15.16
    
    
    
    15.93
    
    
    
    12.683rd quarter 2004
    
    
    16.85
    
    
    
    12.41
    
    
    
    13.90
    
    
    
    10.364th quarter 2004
    
    
    16.61
    
    
    
    12.82
    
    
    
    12.49
    
    
    
    10.261st quarter 2005
    
    
    18.72
    
    
    
    14.48
    
    
    
    14.15
    
    
    
    11.192nd quarter 2005
    
    
    16.91
    
    
    
    14.44
    
    
    
    13.97
    
    
    
    11.113rd quarter 2005
    
    
    18.09
    
    
    
    15.60
    
    
    
    14.70
    
    
    
    13.064th quarter 2005
    
    
    20.13
    
    
    
    16.29
    
    
    
    17.12
    
    
    
    13.58Monthly InformationJuly 2005
    
    
    18.09
    
    
    
    15.60
    
    
    
    14.70
    
    
    
    13.06August 2005
    
    
    17.90
    
    
    
    16.61
    
    
    
    14.58
    
    
    
    13.50September 2005
    
    
    17.57
    
    
    
    16.07
    
    
    
    14.24
    
    
    
    13.18October 2005
    
    
    17.28
    
    
    
    16.29
    
    
    
    14.36
    
    
    
    13.58November 2005
    
    
    19.66
    
    
    
    16.93
    
    
    
    16.76
    
    
    
    13.99December 2005
    
    
    20.13
    
    
    
    19.52
    
    
    
    17.12
    
    
    
    16.46January (through January 24), 2006
    
    
    22.50
    
    
    
    20.45
    
    
    
    18.49
    
    
    
    16.83
  
 B. Plan of Distribution
  
 C. Markets
  
 D. Selling Shareholder
  
 E. Dilution
  
 F. Expenses of the Issue
  
 Item 10
 Additional Information
 
 A. Share Capital
  
 B. Memorandum and Articles of Association
  Current Authorizations to Issue and Repurchase Ordinary Shares
   45




---



##### Table of Contents



Shareholder Approval for Share and Share Option Arrangements for Board of Management
   Cancellation of Priority Shares
  
 C. Material Contracts
 Nikon- ASML Cross License Agreement
 Scope of License
  46




---



##### Table of Contents



Term of License
  Immunity
  Payments
  Termination; Assignment
  ASML/Zeiss Sublicense Agreement
   Employment Agreement with Klaus Fuchs
  47




---



##### Table of Contents



Consultancy Agreement with David Chavoustie
  
 D. Exchange Controls
  
 E. Taxation
 Netherlands Taxation
  General
  Substantial Interest
  Income Tax Consequences for Individual Non-resident Holders on Owning and Disposing of the
Ordinary Shares
  
    
    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;
 48




---



##### Table of Contents




    
    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, respectively 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), respectively (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 wages to which the holding of our ordinary shares was connected;
    
    does not carry out and has not carried out employment activities in the Netherlands, does not
serve and has not served as a director or board member of any entity resident in the Netherlands,
and does not serve and has not served as a civil servant of a Netherlands public entity with which
the holding of our ordinary shares is or 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
  
    
    the holder carries on a business in the Netherlands through a permanent establishment or a
permanent agent in the Netherlands (Netherlands enterprise) and the ordinary shares are
attributable to this permanent establishment or permanent agent, unless the participation exemption
(discussed below) applies; or
    
    the holder has a substantial interest in our share capital, which is not allocable to his
enterprise; or
    
    certain assets of the holder are deemed to be treated as a Netherlands enterprise under
Netherlands tax law and the ordinary shares are attributable to this Netherlands enterprise.
  Dividend Withholding Tax
  
    
    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 Netherlands dividend
withholding tax purposes; and
    
    liquidation proceeds in excess of qualifying average paid-in capital for Netherlands dividend
withholding tax purposes.
  
    
    the participation exemption applies and the ordinary shares are attributable to a business
carried out in the Netherlands;
    
    the dividends are distributed to a qualifying EU corporate holder satisfying the conditions of
the EU Parent-Subsidiary Directive; or
    
    the rate is reduced by a tax treaty.
  49




---



##### Table of Contents



Dividend Stripping Rules
  Gift or Inheritance Taxes
     Value Added Tax
  Residence
  United States Taxation
    50




---



##### Table of Contents




    
    an individual citizen or resident of the United States;
    
    a corporation or other entity treated as a corporation for U.S. federal income tax
purposes created or organized in or under the laws of the United States or of any
political subdivision thereof;
    
    an estate of which the income is subject to U.S. federal income taxation regardless of
its source;
    
    a trust whose administration is subject to the primary supervision of a court within
the United States and which has one or more U.S. persons who have the authority to control
all of its substantial decisions.
  Taxation of Dividends
    Taxation on Sale or Other Disposition of Ordinary Shares
  51




---



##### Table of Contents



Information Reporting and Backup Withholding
   
 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
  52




---



##### Table of Contents



Foreign exchange risk
    Interest rate risk
  Credit risk
    Sensitivity analysis derivative financial instruments
   53




---



##### Table of Contents



Fair Value change1% non-
    
    
    10% weakening offavorable increase
    
    
    euroNotional Amount2
    
    
    Fair Value
    
    
    in interest rate
    
    
    currency(in thousands)
    
    EUR
    
    
    EUR
    
    
    EUR
    
    
    EURAs of December 31, 2004Forward contracts 1
    
    
    82,722
    
    
    
    11,547
    
    
    
    N/A
    
    
    
    (9,441
    )Currency options
    
    
    78,882
    
    
    
    8,803
    
    
    
    N/A
    
    
    
    (7,696
    )Interest rate swaps
    
    
    847,431
    
    
    
    1,978
    
    
    
    (10,407
    )
    
    
    181As of December 31, 2005Forward contracts 1
    
    
    93,260
    
    
    
    (6,508
    )
    
    
    N/A
    
    
    
    (8,942
    )Currency options
    
    
    (29,843
    )
    
    
    (1,369
    )
    
    
    N/A
    
    
    
    3,002Interest rate swaps
    
    
    917,395
    
    
    
    (4,896
    )
    
    
    (3,283
    )
    
    
    (500
    )
  
 1
    
    Includes forward contracts on U.S. dollars, Hong Kong dollars, British
Pounds, Israeli Shekel, Japanese Yen, Singapore dollars and Swiss Francs.2
    
    Net amount of forward and option contracts assigned as a hedge to sales and
purchase transactions, to monetary assets and liabilities and to net investments in foreign
operations.    
 Item 12
 Description of Securities Other Than Equity Securities
  54




---



##### Table of Contents



Part II
 
 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
 Evaluation of Disclosure controls and Procedures
  Changes in Internal Controls over Financial Reporting
  
 Item 16
 
 A. Audit Committee Financial Expert
  
 B. Code of Ethics
 ASMLs Code on Ethical Business Conduct
     
    
    honest and ethical conduct, including the ethical handling of actual or apparent
conflicts of interest between personal and professional relationships;
    
    full, fair, accurate, timely, and understandable disclosure in reports and documents
that ASML files with, or submits to, the SEC and in other public communications made by
ASML;
    
    compliance with applicable governmental laws, rules and regulations;
    
    prompt internal reporting of violations on the Internal Guidelines on Ethical Business
Conduct to an appropriate person or persons identified in these guidelines; and
    
    accountability for adherence to the guidelines.
 55




---



##### Table of Contents



C. Principal Accountant Fees and Services
  Year ended December 31
    
    
    20041
    
    
    20051(in thousands)
    
    
    EUR
    
    
    EURAudit Fees
    
    
    1,014
    
    
    
    1,333Audit-related Fee
    
    
    125
    
    
    
    92Tax Fees
    
    
    738
    
    
    
    448Total
    
    
    1,877
    
    
    
    1,873
 
 1
    
    All fee amounts exclude VAT. Audit fees
  Audit-related fees
  Tax fees
  Year ended December 31
    
    
    20041
    
    
    20051(in thousands)
    
    
    EUR
    
    
    EURCorporate Income Tax compliance services
    
    
    287
    
    
    
    185Tax assistance for expatriate employees
    
    
    253
    
    
    
    186Other tax advisory and compliance
    
    
    198
    
    
    
    77Total
    
    
    738
    
    
    
    448
 
 1
    
    All fee amounts exclude VAT.
  
 D. Exemptions from the Listing Standards for Audit Committees
  
 E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers
  56




---



##### Table of Contents



Part III
 
 Item 17
 Financial Statements
  
 Item 18
 Financial Statements
  
 Item 19
 Exhibits
 Exhibit No.
    
    Description1
    
    Articles of Association of ASML Holding N.V. (English translation)
(Incorporated by reference to Amendment No. 7 to the Registrants Registration
Statement on Form 8-A/A, filed with the Commission on June 30, 2005 )2.1
    
    Paying Agent, Conversion Agent and Registrar Agreement between ASML
Holding N.V. and the Bank of New York relating to the Registrants 5.75% Convertible
Subordinated Notes due 2006 (Incorporated by reference to Exhibit 2.3. of the
Registrants Annual Report on Form 20-F for the year ended December 31, 2001)2.2
    
    Paying Agent, Conversion Agent and Registrar Agreement between ASML
Holding N.V. and the Bank of New York relating to the Registrants 5.50 percent
Convertible Subordinated Notes due 2010 (Incorporated by reference to the
Registrants Annual Report on Form 20-F for the fiscal year ended December 31, 2003)4.1
    
    Agreement between ASML 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) #4.2
    
    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) #4.3
    
    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)4.4
    
    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)4.5
    
    Employment Agreement between ASML Holding N.V. and Klaus Fuchs*4.6
    
    Employment Agreement between ASML Holding N.V. and Eric Meurice
(Incorporated by reference to the Registrants Annual Report on Form 20-F for the
fiscal year ended December 31, 2004)4.7
    
    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)4.8
    
    ASML New Hires and Incentive Stock Option Plan For Management (Version
2003) (Incorporated by reference to exhibit 4.4 to the Registrants Statement on
Form S-8, filed with the Commission on September 2, 2003) (File No. 333-109154)4.9
    
    Nikon-ASML Patent Cross License Agreement, dated December 10, 2004,
between ASML Holding N.V. and Nikon Corporation (Incorporated by reference to the
Registrants Annual Report on Form 20-F for the fiscal year ended December 31,
2004) #4.10
    
    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) #4.12
    
    ASML Option Plan for Management of ASML Holding Group Companies (Incorporated
by reference to the Registrants Registration Statement on Form S-8 filed with the
Commission on June 30, 2005 (file No. 333-126340))4.13
    
    Consultancy Agreement between ASML
Holding N.V. and David Chavoustie *8.1
    
    List of Material Subsidiaries*12.1
    
    Certification of CEO and CFO Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934*13.1
    
    Certification of CEO and CFO Pursuant to Rule 13a-14(b) of the Securities
Exchange Act of 1934 and 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002*
 57




---



##### Table of Contents



Exhibit No.
    
    Description15.1
    
    Consent of Deloitte Accountants B.V.*
 
 *
    
    Filed at the Commission herewith#
    
Certain information omitted pursuant to a request for confidential treatment filed separately
with the Securities and Exchange Commission 58




---



##### Table of Contents



Signatures
  
 /s/ Eric Meurice
President, Chief Executive Officer and Chairman of the Board of Management
Dated: January 27, 2006/s/ Peter T.F.M. Wennink
Executive Vice President, Chief Financial Officer and Member of the Board of ManagementDated: January 27, 2006
 59




---



##### Table of Contents



Index to Financial Statements
 F-2
    
    Consolidated Statements of Operations for the years ended December
31, 2003, 2004 and 2005F-3
    
    Consolidated Statements of Comprehensive Income (Loss) for the years
ended December 31, 2003, 2004 and 2005F-3
    
    Consolidated Balance Sheets as of December 31, 2004 and 2005F-4
    
    Consolidated Statements of Shareholders Equity for the years ended
December 31, 2003, 2004 and 2005F-5
    
    Consolidated Statements of Cash Flows for the years ended December
31, 2003, 2004 and 2005F-7
    
    Notes to the Consolidated Financial StatementsF-37
    
    Report of Independent Registered Public Accounting Firm
 F-1




---



##### Table of Contents



Consolidated Statements of Operations
 Notes
    
    Year ended December 31

    2003
    
    
    2004
    
    
    2005(in thousands, except per share data)
    EUR
    
    
    EUR
    
    
    EURNet system sales
    
    
    1,279,282
    
    
    
    2,174,908
    
    
    
    2,227,678Net service and field option sales
    
    
    263,455
    
    
    
    290,469
    
    
    
    301,289Total net sales
    
    
    1,542,737
    
    
    
    2,465,377
    
    
    
    2,528,967Cost of system sales
    
    
    999,003
    
    
    
    1,372,056
    
    
    
    1,366,026Cost of service and field option sales
    
    
    174,952
    
    
    
    187,682
    
    
    
    188,7463
    
    Total cost of sales
    
    
    1,173,955
    
    
    
    1,559,738
    
    
    
    1,554,772Gross profit on sales
    
    
    368,782
    
    
    
    905,639
    
    
    
    974,195Research and development costs
    
    
    305,839
    
    
    
    352,920
    
    
    
    347,901Research and development credits
    
    
    (19,119
    )
    
    
    (21,961
    )
    
    
    (24,027
    )Selling, general and administrative costs
    
    
    212,609
    
    
    
    201,629
    
    
    
    201,2043
    
    Restructuring charges (credits)
    
    
    24,485
    
    
    
    (5,862
    )
    
    
    0Operating income (loss)
    
    
    (155,032
    )
    
    
    378,913
    
    
    
    449,117Interest income 1
    
    
    25,413
    
    
    
    27,998
    
    
    
    38,429Interest expense 1
    
    
    (54,562
    )
    
    
    (44,071
    )
    
    
    (52,523
    )Income (loss) from continuing operations before income taxes
    
    
    (184,181
    )
    
    
    362,840
    
    
    
    435,02315
    
    (Provision for) benefit from income taxes
    
    
    59,675
    
    
    
    (127,380
    )
    
    
    (123,559
    )Net income (loss) from continuing operations
    
    
    (124,506
    )
    
    
    235,460
    
    
    
    311,4642
    
    Loss from discontinued operations before income taxes
    
    
    (59,026
    )
    
    
    0
    
    
    
    015
    
    Benefit from income taxes
    
    
    23,316
    
    
    
    0
    
    
    
    0Net loss from discontinued operations
    
    
    (35,710
    )
    
    
    0
    
    
    
    0Net income (loss)
    
    
    (160,216
    )
    
    
    235,460
    
    
    
    311,464Basic net income (loss) from continuing operations per ordinary share
    
    
    (0.26
    )
    
    
    0.49
    
    
    
    0.64Basic net income (loss) from discontinued operations per ordinary share
    
    
    (0.07
    )
    
    
    0.00
    
    
    
    0.00Basic net income (loss) per ordinary share
    
    
    (0.33
    )
    
    
    0.49
    
    
    
    0.64Diluted net income (loss) from continuing operations per ordinary share
    
    
    (0.26
    )
    
    
    0.49
    
    
    
    0.64Diluted net income (loss) from discontinued operations per ordinary share
    
    
    (0.07
    )
    
    
    0.00
    
    
    
    0.00Diluted net income (loss) per ordinary share
    
    
    (0.33
    )
    
    
    0.49
    
    
    
    0.64Number of ordinary shares used in computing per share amounts (in thousands)Basic
    
    
    482,240
    
    
    
    483,380
    
    
    
    484,103Diluted
    
    
    482,240
    
    
    
    484,661
    
    
    
    542,979
 
 1
    
    Reflects netting of intercompany cashpooling activities. F - 2




---



##### Table of Contents



Consolidated Statements of Comprehensive Income (Loss)
 Year ended December 31
    
    2003
    
    
    2004
    
    
    2005(in thousands)
    
    EUR
    
    
    EUR
    
    
    EURNet income (loss)
    
    
    (160,216
    )
    
    
    235,460
    
    
    
    311,464Foreign currency translation, net of taxes
    
    
    (12,318
    )
    
    
    (21,832
    )
    
    
    25,389Gain (loss) on derivative instruments
    
    
    (7,158
    )
    
    
    16,736
    
    
    
    (38,365
    )Comprehensive income (loss)
    
    
    (179,692
    )
    
    
    230,364
    
    
    
    298,488
 
 Consolidated Balance Sheets
 Notes
    
    As of December 31
    2004
    2005(in thousands, except share and per share data)
    EUR
    EURAssetsCash and cash equivalents
    
    
    1,228,130
    
    1,904,6095
    
    Accounts receivable, net
    
    
    503,153
    
    302,5726
    
    Inventories, net
    
    
    717,688
    
    777,20015
    
    Deferred tax assets short term
    
    
    54,554
    
    95,6367
    
    Other current assets
    
    
    175,792
    
    125,8022
    
    Assets from discontinued operations
    
    
    2,695
    
    0Total current assets
    
    
    2,682,012
    
    3,205,81915
    
    Deferred tax assets
    
    
    201,100
    
    206,8847
    
    Other assets
    
    
    25,145
    
    39,796Intangible assets, net
    
    
    31,818
    
    24,9439
    
    Property, plant and equipment, net
    
    
    303,691
    
    278,581Total assets
    
    
    3,243,766
    
    3,756,023Liabilities
and Shareholders EquityAccounts payable
    
    
    343,228
    
    343,9623,10
    
    Accrued liabilities and other
    
    
    453,831
    
    985,62115
    
    Deferred tax liabilities short term
    
    
    1,332
    
    39015
    
    Current tax liabilities
    
    
    10,037
    
    90,0102
    
    Liabilities from discontinued operations
    
    
    4,713
    
    0Total current liabilities
    
    
    813,141
    
    1,419,98315
    
    Deferred tax liabilities
    
    
    200,717
    
    224,21912,13
    
    Other deferred liabilities
    
    
    20,973
    
    17,42611
    
    Convertible subordinated debt
    
    
    802,810
    
    380,23811
    
    Other long term debt
    
    
    14,523
    
    2,320Total liabilities
    
    
    1,852,164
    
    2,044,18612,14
    
    Commitments and contingenciesCumulative Preference Shares, EUR 0.02 nominal value; 900,000,000 shares authorized;none outstanding as of December 31, 2004 and 2005
    
    
    0
    
    0Priority Shares, EUR 0.02 nominal value; 23,100 shares authorized, issued and outstanding as of
December 31, 2004 and 2005
    
    
    1
    
    1Ordinary Shares, EUR 0.02 nominal value; 900,000,000 shares authorized 483,676,483 sharesissued and outstanding as of December 31, 2004 and 484,670,183 as of December 31, 2005
    
    
    9,674
    
    9,693Share premium
    
    
    895,836
    
    917,564Retained earnings
    
    
    351,570
    
    663,034Accumulated other comprehensive income
    
    
    134,521
    
    121,54520
    
    Total shareholders equity
    
    
    1,391,602
    
    1,711,837Total
liabilities and shareholders equity
    
    
    3,243,766
    
    3,756,023
 F - 3




---



##### Table of Contents



Consolidated Statements of Shareholders Equity
 Shares
    
    
    Shares
    
    
    APIC/
    
    
    Retained
    
    
    AccumulatedNumber
    
    
    Amount
    
    
    Share
    
    
    Earnings
    
    
    OtherPremium
    
    
    
    
    
    
    ComprehensiveIncome
    
    
    Total(in thousands)
    
    
    
    
    
    EUR
    
    
    EUR
    
    
    EUR
    
    
    EUR
    
    
    EURBalance at January 1, 2003
    
    
    482,182
    
    
    
    9,644
    
    
    
    870,453
    
    
    
    276,326
    
    
    
    159,093
    
    
    
    1,315,516Components of comprehensive income:Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (160,216
    )
    
    
    
    
    
    
    (160,216
    )Foreign Currency Translation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,318
    )
    
    
    (12,318
    )Gain (loss) on derivative instruments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,158
    )
    
    
    (7,158
    )Issuance of Shares
    
    
    332
    
    
    
    7
    
    
    
    5,376
    
    
    
    
    
    
    
    
    
    
    
    5,383Balance at December 31, 2003
    
    
    482,514
    
    
    
    9,651
    
    
    
    875,829
    
    
    
    116,110
    
    
    
    139,617
    
    
    
    1,141,207Components of comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    235,460
    
    
    
    
    
    
    
    235,460Foreign Currency Translation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (21,832
    )
    
    
    (21,832
    )Gain (loss) on derivative instruments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16,736
    
    
    
    16,736Issuance of Shares
    
    
    1,162
    
    
    
    24
    
    
    
    20,007
    
    
    
    
    
    
    
    
    
    
    
    20,031Balance at December 31, 2004
    
    
    483,676
    
    
    
    9,675
    
    
    
    895,836
    
    
    
    351,570
    
    
    
    134,521
    
    
    
    1,391,602Components of comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    311,464
    
    
    
    
    
    
    
    311,464Tax benefit from stock options
    
    
    
    
    
    
    
    
    
    
    5,919
    
    
    
    
    
    
    
    
    
    
    
    5,919Foreign Currency Translation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25,389
    
    
    
    25,389Gain (loss) on derivative instruments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (38,365
    )
    
    
    (38,365
    )Issuance of Shares
    
    
    994
    
    
    
    19
    
    
    
    15,809
    
    
    
    
    
    
    
    
    
    
    
    15,828Balance at December 31, 2005
    
    
    484,670
    
    
    
    9,694
    
    
    
    917,564
    
    
    
    663,034
    
    
    
    121,545
    
    
    
    1,711,837
 F - 4




---



##### Table of Contents



Consolidated Statements of Cash Flows
 Year ended December 31
    
    2003
    
    
    2004
    
    
    2005(in thousands)
    
    EUR
    
    
    EUR
    
    
    EURCash Flows from Operating ActivitiesNet income (loss) from continued operations
    
    
    (124,506
    )
    
    
    235,460
    
    
    
    311,464Adjustments to reconcile net income to net cash
flows from operating activities:Depreciation and amortization
    
    
    144,800
    
    
    
    90,215
    
    
    
    90,531Impairment charges
    
    
    12,100
    
    
    
    2,929
    
    
    
    8,350Allowance for doubtful debts
    
    
    9,113
    
    
    
    3,085
    
    
    
    1,871Allowance for obsolete inventory
    
    
    32,431
    
    
    
    34,336
    
    
    
    11,811Deferred income taxes
    
    
    (79,577
    )
    
    
    114,701
    
    
    
    17,830Changes in assets and liabilities that provided (used) cash:Accounts receivable
    
    
    211,627
    
    
    
    (192,819
    )
    
    
    203,488Inventories
    
    
    118,617
    
    
    
    (149,215
    )
    
    
    (41,397
    )Other assets
    
    
    44,945
    
    
    
    1,127
    
    
    
    (20,088
    )Accrued liabilities
    
    
    (8,948
    )
    
    
    (5,507
    )
    
    
    46,272Accounts payable
    
    
    7,231
    
    
    
    121,998
    
    
    
    3,406Income taxes payable
    
    
    164,826
    
    
    
    837
    
    
    
    79,973Net cash provided by operating activities from continuing operations
    
    
    532,659
    
    
    
    257,147
    
    
    
    713,511Net cash provided by (used in) operating activities from discontinued operations
    
    
    12,736
    
    
    
    (5,880
    )
    
    
    (2,018
    )Net cash provided by operating activities from total operations
    
    
    545,395
    
    
    
    251,267
    
    
    
    711,493Cash Flows from Investing ActivitiesPurchases of property, plant and equipment
    
    
    (48,567
    )
    
    
    (74,979
    )
    
    
    (72,660
    )Proceeds from sale of property, plant and equipment
    
    
    2,638
    
    
    
    15,137
    
    
    
    13,235Purchase of intangible assets
    
    
    (3,099
    )
    
    
    (556
    )
    
    
    (1,378
    )Net cash used in investing activities from continuing operations
    
    
    (49,028
    )
    
    
    (60,398
    )
    
    
    (60,803
    )Net cash provided by (used in) investing activities from discontinued operations
    
    
    0
    
    
    
    0
    
    
    
    0Net cash used in investing activities from total operations
    
    
    (49,028
    )
    
    
    (60,398
    )
    
    
    (60,803
    )Cash Flows from Financing ActivitiesProceeds from issuance of convertible subordinated notes
    
    
    380,000
    
    
    
    0
    
    
    
    0Payment of underwriting commission
    
    
    (8,550
    )
    
    
    0
    
    
    
    0Net proceeds from issuance of shares and stock options
    
    
    6,360
    
    
    
    20,031
    
    
    
    15,828Redemption and/or repayment of debt
    
    
    (445,966
    )
    
    
    (1,160
    )
    
    
    (12,949
    )Net cash provided by (used in) financing activities from continuing operations
    
    
    (68,156
    )
    
    
    18,871
    
    
    
    2,879Net cash provided by (used in) financing activities from discontinued operations
    
    
    0
    
    
    
    0
    
    
    
    0Net cash provided by (used in) financing activities from total operations
    
    
    (68,156
    )
    
    
    18,871
    
    
    
    2,879Net cash flows
    
    
    428,211
    
    
    
    209,740
    
    
    
    653,569Effect of changes in exchange rates on cash
    
    
    (69,165
    )
    
    
    (9,416
    )
    
    
    22,910
 F - 5




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##### Table of Contents



Year ended December 31
    
    2003
    
    
    2004
    
    
    2005(in thousands)
    
    EUR
    
    
    EUR
    
    
    EURNet increase in cash and cash equivalents
    
    
    359,046
    
    
    
    200,324
    
    
    
    676,479Cash and cash equivalents at beginning of the year
    
    
    668,760
    
    
    
    1,027,806
    
    
    
    1,228,130Cash and cash equivalents at end of the year
    
    
    1,027,806
    
    
    
    1,228,130
    
    
    
    1,904,609Supplemental Disclosures of Cash Flow Information:Cash paid for:Interest
    
    
    48,980
    
    
    
    45,866
    
    
    
    45,141Taxes
    
    
    11,974
    
    
    
    7,430
    
    
    
    15,335Supplemental non-cash investing and financing activities:Conversion of Bonds into 536, 0 and 0 ordinary shares respectively in 2003, 2004 and 2005
    
    
    16
    
    
    
    0
    
    
    
    0
 F - 6




---



##### Table of Contents



Notes to the Consolidated Financial Statements
 1. Summary of significant accounting policies
   Principles of consolidation
  Use of estimates
  Foreign currency translation
  Derivative financial instruments
   F - 7




---



##### Table of Contents



Cash and cash equivalents
  Inventories
  Intangible assets
  Property, plant and equipment
  Category
    Assigned economic lifeBuildings and constructions
    
    5  40 yearsMachinery and equipment
    
    2  5 yearsFurniture, fixtures and other equipment
    
    3  5 yearsLeasehold improvements
    
    5  10 years
  Evaluation of long-lived assets for impairment
  F - 8




---



##### Table of Contents



Revenue recognition
        F - 9




---



##### Table of Contents



Accounting for Shipping and Handling Fees and Costs
  Cost of sales
  Restructuring
    Research and development costs and credits
  Income taxes
  F - 10




---



##### Table of Contents



Contingencies and litigation
  Stock options
   Year ended December 31
    
    2003
    
    
    2004
    
    
    2005(in thousands, except per share data)
    
    EUR
    
    
    EUR
    
    
    EURNet income (loss)As reported
    
    
    (160,216
    )
    
    
    235,460
    
    
    
    311,464Compensation expenses
    
    
    (17,696
    )
    
    
    (12,437
    )
    
    
    (10,022
    )Pro forma
    
    
    (177,912
    )
    
    
    223,023
    
    
    
    301,442Basic net income (loss) per ordinary shareAs reported
    
    
    (0.33
    )
    
    
    0.49
    
    
    
    0.64Pro forma
    
    
    (0.37
    )
    
    
    0.46
    
    
    
    0.62Diluted net income (loss) per ordinary shareAs reported
    
    
    (0.33
    )
    
    
    0.49
    
    
    
    0.64Pro forma
    
    
    (0.37
    )
    
    
    0.46
    
    
    
    0.62
  -
    
    for 2003: no dividend yield, no assumed forfeiture rate,
volatility of 85.2 percent, a
risk-free interest rate of 3.60 percent and an expected life of
two years after the vesting period;-
    
    for 2004: no dividend yield, no assumed forfeiture rate, a weighted average volatility of
68.3 percent, a weighted risk-free interest rate of 3.65 percent and an expected life of two
years after the vesting period;
 F - 11




---



##### Table of Contents



-
    
    for 2005: no dividend yield, no assumed forfeiture rate, a weighted average volatility of
65.6 percent, a weighted risk-free interest rate of 3.10 percent and an expected life of two
years after the vesting period.
 Net income (loss) per ordinary share
   Year ended December 31(in thousands)
    
    2003
    
    
    2004
    
    
    2005Basic weighted average shares outstanding
    
    
    482,240
    
    
    
    483,380
    
    
    
    484,103Diluted weighted average shares outstanding
    
    
    482,240
    
    
    
    484,661
    
    
    
    542,979
  Comprehensive income
  Segment disclosure
  Newly adopted accounting pronouncements
   F - 12




---



##### Table of Contents



2. Discontinued operations
       Year ended December 31
    
    2003
    
    
    2004
    
    
    2005(in thousands)
    
    EUR
    
    
    EUR
    
    
    EURRevenuesTrack
    
    
    2,514
    
    
    
    0
    
    
    
    0Thermal
    
    
    38,198
    
    
    
    0
    
    
    
    0Total
    
    
    40,712
    
    
    
    0
    
    
    
    0
 F - 13




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##### Table of Contents



Year ended December 31
    
    2003
    
    
    2004
    
    
    2005(in thousands)
    
    EUR
    
    
    EUR
    
    
    EURLoss from discontinued operations,
net of taxesTrack loss from operations
    
    
    (1,456
    )
    
    
    0
    
    
    
    0Track exit costs
    
    
    (1,944
    )
    
    
    0
    
    
    
    0Thermal loss from operations
    
    
    (21,906
    )
    
    
    0
    
    
    
    0Thermal exit costs
    
    
    (10,404
    )
    
    
    0
    
    
    
    0Total
    
    
    (35,710
    )
    
    
    0
    
    
    
    0
   As of December 31
    
    2004
    
    
    2005(in thousands)
    
    EUR
    
    
    EURAssetsTangible fixed assets
    
    
    2,695
    
    
    
    0Total Assets
    
    
    2,695
    
    
    
    0LiabilitiesAccrued liabilities
    
    
    4,713
    
    
    
    0Total Liabilities
    
    
    4,713
    
    
    
    0
  3. Restructuring
 Restructuring
Plan 2001
  Restructuring Plan 2002
   Restructuring Plan 2003
  F - 14




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##### Table of Contents



Tabular
Disclosures of Restructuring
  Year ended December 31
    
    2003
    
    
    2004
    
    
    2005(in thousands)
    
    EUR
    
    
    EUR
    
    
    EURInventory and other asset write-offs 1
    
    
    1,810
    
    
    
    0
    
    
    
    0Building Closure cost 2
    
    
    6,833
    
    
    
    0
    
    
    
    0Severance Payments 2
    
    
    22,182
    
    
    
    0
    
    
    
    0Adjustments to prior year plans 2
    
    
    (1,673
    )
    
    
    (8,556
    )
    
    
    0Total restructuring charges
    
    
    29,152
    
    
    
    (8,556
    )
    
    
    0
 
 1
    
    These restructuring charges are directly posted to the related assets2
    
    These restructuring charges correspond to additions and adjustments in
ASMLs restructuring provision.
  Year ended December 31
    
    2003
    
    
    2004
    
    
    2005(in thousands)
    
    EUR
    
    
    EUR
    
    
    EURCost of sales
    
    
    4,667
    
    
    
    (2,694
    )
    
    
    0Restructuring Charges
    
    
    24,485
    
    
    
    (5,862
    )
    
    
    0Total
    
    
    29,152
    
    
    
    (8,556
    )
    
    
    0
  Restructuring plan announced in
    
    2001
    
    
    2002
    
    
    2003
    
    
    Total(in thousands)
    
    EUR
    
    
    EUR
    
    
    EUR
    
    
    EURBalance as of December 31, 2002
    
    
    11,826
    
    
    
    0
    
    
    
    0
    
    
    
    11,826Additions
    
    
    0
    
    
    
    6,911
    
    
    
    22,104
    
    
    
    29,015Utilization of the year
    
    
    (6,086
    )
    
    
    (6,906
    )
    
    
    (2,100
    )
    
    
    (15,092
    )Adjustments
    
    
    (1,440
    )
    
    
    0
    
    
    
    (233
    )
    
    
    (1,673
    )Effect of foreign currency translation
    
    
    (1,506
    )
    
    
    (5
    )
    
    
    0
    
    
    
    (1,511
    )Balance as of December 31, 2003
    
    
    2,794
    
    
    
    0
    
    
    
    19,771
    
    
    
    22,565Utilization of the year
    
    
    (2,323
    )
    
    
    0
    
    
    
    (7,774
    )
    
    
    (10,097
    )Adjustments
    
    
    0
    
    
    
    0
    
    
    
    (8,556
    )
    
    
    (8,556
    )Effect of foreign currency translation
    
    
    114
    
    
    
    0
    
    
    
    0
    
    
    
    114Balance as of December 31, 2004
    
    
    585
    
    
    
    0
    
    
    
    3,441
    
    
    
    4,026Utilization of the year
    
    
    (637
    )
    
    
    0
    
    
    
    (1,122
    )
    
    
    (1,759
    )Adjustments
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0Effect of foreign currency translation
    
    
    52
    
    
    
    0
    
    
    
    0
    
    
    
    52Balance as of December 31, 2005
    
    
    0
    
    
    
    0
    
    
    
    2,319
    
    
    
    2,319
 F-15




---



##### Table of Contents



Purchase
    
    
    Building
    
    
    Severance
    
    
    TotalCategory
    
    commitments
    
    
    closure costs
    
    
    payments(in thousands)
    
    EUR
    
    
    EUR
    
    
    EUR
    
    
    EURBalance as of December 31, 2002
    
    
    10,026
    
    
    
    1,800
    
    
    
    0
    
    
    
    11,826Additions
    
    
    0
    
    
    
    6,833
    
    
    
    22,182
    
    
    
    29,015Utilization of the year
    
    
    (4,711
    )
    
    
    (3,475
    )
    
    
    (6,906
    )
    
    
    (15,092
    )Adjustments
    
    
    (3,326
    )
    
    
    1,653
    
    
    
    0
    
    
    
    (1,673
    )Effect of foreign currency translation
    
    
    (1,111
    )
    
    
    (395
    )
    
    
    (5
    )
    
    
    (1,511
    )Balance as of December 31, 2003
    
    
    878
    
    
    
    6,416
    
    
    
    15,271
    
    
    
    22,565Utilization of the year
    
    
    (914
    )
    
    
    (6,705
    )
    
    
    (2,478
    )
    
    
    (10,097
    )Adjustments
    
    
    0
    
    
    
    3,546
    
    
    
    (12,102
    )
    
    
    (8,556
    )Effect of foreign currency translation
    
    
    36
    
    
    
    78
    
    
    
    0
    
    
    
    114Balance as of December 31, 2004
    
    
    0
    
    
    
    3,335
    
    
    
    691
    
    
    
    4,026Utilization of the year
    
    
    0
    
    
    
    (1,289
    )
    
    
    (470
    )
    
    
    (1,759
    )Adjustments
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0Effect of foreign currency translation
    
    
    0
    
    
    
    52
    
    
    
    0
    
    
    
    52Balance as of December 31, 2005
    
    
    0
    
    
    
    2,098
    
    
    
    221
    
    
    
    2,319
  4. Market risk and derivatives
  Foreign currency management
     F-16




---



##### Table of Contents



Interest
rate management
  Financial
instruments as of December 31, 2005
  As of December 31
    
    2004
    
    
    
    
    
    
    2005}Notional
    
    
    
    
    
    
    NotionalAmount 2
    
    
    Fair Value
    
    
    Amount 2
    
    
    Fair Value(in thousands)
    
    EUR
    
    
    EUR
    
    
    EUR
    
    
    EURForward contracts1
    
    
    82,722
    
    
    
    11,547
    
    
    
    93,260
    
    
    
    (6,508
    )Currency options
    
    
    78,882
    
    
    
    8,803
    
    
    
    (29,843
    )
    
    
    (1,369
    )Interest rate swaps
    
    
    847,431
    
    
    
    1,978
    
    
    
    917,395
    
    
    
    (4,896
    )
  
 1
    
    Includes forward contracts on U.S. dollars, Hong Kong dollars, British
Pounds, Israeli Shekel, Japanese Yen, Singapore dollars and Swiss Francs.2
    
    Net amount of forward and option contracts assigned as a hedge to sales and
purchase transactions, to monetary assets and liabilities and to net investments in foreign
operations.
    Credit
risk
    F-17




---



##### Table of Contents



5. Accounts receivable
  As of December 31
    
    2004
    
    
    2005(in thousands)
    
    EUR
    
    
    EURGross accounts receivable
    
    
    507,970
    
    
    
    306,847Allowance for doubtful debts
    
    
    (4,817
    )
    
    
    (4,275
    )Net accounts receivable
    
    
    503,153
    
    
    
    302,572
  Year ended December 31
    
    2003
    
    
    2004
    
    
    2005(in thousands)
    
    EUR
    
    
    EUR
    
    
    EURBalance at beginning of year
    
    
    (324
    )
    
    
    (6,196
    )
    
    
    (4,817
    )Utilization of the provision
    
    
    3,241
    
    
    
    4,464
    
    
    
    2,413Addition of the year 1
    
    
    (9,113
    )
    
    
    (3,085
    )
    
    
    (1,871
    )Balance at end of year
    
    
    (6,196
    )
    
    
    (4,817
    )
    
    
    (4,275
    )
 
 1
    
    Addition of the year is recorded in cost of sales.
 6. Inventories
  As of December 31
    
    2004
    
    
    2005(in thousands)
    
    EUR
    
    
    EURRaw materials
    
    
    180,936
    
    
    
    163,817Work-in-process
    
    
    416,480
    
    
    
    482,801Finished products
    
    
    283,338
    
    
    
    246,774



Total
inventories, gross
    
    
    880,754
    
    
    
    893,392Allowance for obsolescence and/or
lower market value
    
    
    (163,066
    )
    
    
    (116,192
    )Total inventories, net
    
    
    717,688
    
    
    
    777,200
  Year ended December 31
    
    2003
    
    
    2004
    
    
    2005(in thousands)
    
    EUR
    
    
    EUR
    
    
    EURBalance at beginning of year
    
    
    (285,264
    )
    
    
    (213,622
    )
    
    
    (163,066
    )Addition of the year1
    
    
    (32,431
    )
    
    
    (34,336
    )
    
    
    (11,811
    )Effect of exchange rates
    
    
    22,976
    
    
    
    5,280
    
    
    
    (8,461
    )Utilization of the provision
    
    
    81,097
    
    
    
    79,612
    
    
    
    67,146Balance at end of year
    
    
    (213,622
    )
    
    
    (163,066
    )
    
    
    (116,192
    )
 
 1
    
    Addition of the year is recorded in cost of sales.
  7. Other assets
  F-18




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##### Table of Contents



As of December 31
    
    2004
    
    
    2005(in thousands)
    
    EUR
    
    
    EURCompensation plan assets1
    
    
    7,672
    
    
    
    9,605Prepaid expenses
    
    
    12,028
    
    
    
    7,923Subordinated loan granted to lessor
in respect of Veldhoven headquarters2
    
    
    5,445
    
    
    
    5,445Loan to Micronic 3
    
    
    0
    
    
    
    13,000Other
    
    
    0
    
    
    
    3,823Total other long-term assets
    
    
    25,145
    
    
    
    39,796
 
 1
    
    For further details on compensation plan refer to Note 13.2
    
    For further details on loan granted to lessor in respect of Veldhoven headquarters
refer to Note 12.3
    
    Pursuant to a license agreement between Micronic and ASML, ASML has paid to Micronic
in 2005 an amount of EUR 20 million, of which EUR 13,000 is non-current.
  As of December 31
    
    2004
    
    
    2005(in thousands)
    
    EUR
    
    
    EURAdvance payments to Zeiss
    
    
    72,375
    
    
    
    44,402VAT
    
    
    38,464
    
    
    
    27,047Loan to Micronic 1
    
    
    0
    
    
    
    7,000Prepaid expenses
    
    
    22,703
    
    
    
    16,583Other
    
    
    42,250
    
    
    
    30,770Total other current assets
    
    
    175,792
    
    
    
    125,802
 
 1
    
    Pursuant to a license agreement between Micronic and ASML, ASML has paid to
Micronic in 2005 an amount of EUR 20 million, of which EUR 7,000 is current.
  8. Intangible assets
  As of December 31
    
    2004
    
    
    2005(in thousands)
    
    EUR
    
    
    EURCostBalance, January 1
    
    
    23,574
    
    
    
    45,717Additions
    
    
    22,143
    
    
    
    1,378Balance, December 31
    
    
    45,717
    
    
    
    47,095Accumulated amortizationBalance, January 1
    
    
    8,984
    
    
    
    13,899Amortization
    
    
    4,915
    
    
    
    8,253Balance, December 31
    
    
    13,899
    
    
    
    22,152Net book value, December 31
    
    
    31,818
    
    
    
    24,943
 F-19




---



##### Table of Contents



2006:
    
    
    6,9832007:
    
    
    6,7582008:
    
    
    6,5362009:
    
    
    4,4592010:
    
    
    207Thereafter:
    
    
    0
 9. Property, plant and equipment
 Buildings
    
    
    Machinery
    
    
    
    
    
    
    Furniture,and
    
    
    and
    
    
    Leasehold
    
    
    fixtures and otherconstructions
    
    
    equipment
    
    
    improvements
    
    
    equipment
    
    
    Total(in thousands)
    
    EUR
    
    
    EUR
    
    
    EUR
    
    
    EUR
    
    
    EURCostBalance, January 1
    
    
    140,310
    
    
    
    446,699
    
    
    
    106,650
    
    
    
    182,371
    
    
    
    876,030Additions
    
    
    1,510
    
    
    
    30,289
    
    
    
    15,314
    
    
    
    31,358
    
    
    
    78,471Disposals
    
    
    (24,644
    )
    
    
    (67,064
    )
    
    
    (666
    )
    
    
    (10,016
    )
    
    
    (102,390
    )Effect of exchange rates
    
    
    9,775
    
    
    
    23,900
    
    
    
    731
    
    
    
    3,821
    
    
    
    38,227Balance,
December 31, 2005
    
    
    126,951
    
    
    
    433,824
    
    
    
    122,029
    
    
    
    207,534
    
    
    
    890,338Accumulated depreciationBalance, January 1
    
    
    59,022
    
    
    
    323,079
    
    
    
    60,814
    
    
    
    129,424
    
    
    
    572,339Depreciation2
    
    
    4,141
    
    
    
    48,311
    
    
    
    10,754
    
    
    
    23,317
    
    
    
    86,523Disposals
    
    
    (16,668
    )
    
    
    (46,682
    )
    
    
    (221
    )
    
    
    (8,546
    )
    
    
    (72,117
    )Effect of exchange rates
    
    
    4,892
    
    
    
    16,794
    
    
    
    461
    
    
    
    2,864
    
    
    
    25,011Balance,
December 31, 2005
    
    
    51,387
    
    
    
    341,503
    
    
    
    71,808
    
    
    
    147,059
    
    
    
    611,757Net
Book Value1December 31, 2004
    
    
    81,288
    
    
    
    123,620
    
    
    
    45,836
    
    
    
    52,947
    
    
    
    303,691December 31, 2005
    
    
    75,564
    
    
    
    92,321
    
    
    
    50,221
    
    
    
    60,475
    
    
    
    278,581
 1
    
    Includes as of December 31, 2005 and 2004 assets under construction, respectively,
for buildings and constructions of EUR1,390 and EUR 1,336, machinery & equipment of EUR 1,855 and
EUR 2,592, leasehold improvements of EUR 4,473 and EUR 5,914 and furniture, fixtures and other
equipment of EUR 9,805 and EUR 18,653.2
    
    Includes impairment charges for machinery and equipment
of EUR 8,350
   10. Accrued liabilities and other
 F-20




---



##### Table of Contents



As of December 31
    
    2004
    
    
    2005(in thousands)
    
    EUR
    
    
    EURDeferred revenue
    
    
    87,107
    
    
    
    159,410Warranty
    
    
    19,660
    
    
    
    24,625Materials and costs to be paid
    
    
    79,097
    
    
    
    92,971Current portion of long term debt
    
    
    7,723
    
    
    
    496,353Advances from customers
    
    
    141,516
    
    
    
    99,303Personnel related items
    
    
    83,296
    
    
    
    82,215Investment credits
    
    
    1,450
    
    
    
    1,356Restructuring
    
    
    4,026
    
    
    
    2,319Other
    
    
    29,956
    
    
    
    27,069Total accrued liabilities and other
    
    
    453,831
    
    
    
    985,621
   As of December 31
    
    2004
    
    
    2005(in thousands)
    
    EUR
    
    
    EURBalance, January 1
    
    
    15,496
    
    
    
    19,660Additions
    
    
    27,357
    
    
    
    33,435Usage
    
    
    (20,508
    )
    
    
    (29,804
    )Effect of exchange rates
    
    
    (2,685
    )
    
    
    1,334Balance, December 31
    
    
    19,660
    
    
    
    24,625
 11.
Convertible subordinated notes and other borrowing
arrangements
  2006
    
    
    488,7232007
    
    
    7072008
    
    
    5112009
    
    
    5112010
    
    
    380,511Thereafter
    
    
    80Total
    
    
    871,043
 Convertible
subordinated notes
  As of December 31
    
    2004
    
    
    2005(in thousands)
    
    EUR
    
    
    EUR5.75
percent convertible notesNotional amount
    
    
    421,431
    
    
    
    487,497Fair value interest rate swaps
    
    
    0
    
    
    
    0Total
    
    
    421,431
    
    
    
    487,4975.50
percent convertible notesNotional amount
    
    
    380,000
    
    
    
    380,000
 F-21




---



##### Table of Contents



As of December 31
    
    2004
    
    
    2005(in thousands)
    
    EUR
    
    
    EURFair value interest rate swaps
    
    
    1,379
    
    
    
    238Total
    
    
    381,379
    
    
    
    380,238Total
convertible notes
    
    
    802,810
    
    
    
    867,735
     2004
    
    
    
    
    
    
    2005Notional
    
    
    
    
    
    
    NotionalAs of December 31
    
    Amount
    
    
    Fair Value
    
    
    Amount
    
    
    Fair Value(in thousands)
    
    EUR
    
    
    EUR
    
    
    EUR
    
    
    EUR5.75
percent convertible notes
    
    
    421,431
    
    
    
    478,594
    
    
    
    487,497
    
    
    
    559,5875.50
percent convertible notes
    
    
    380,000
    
    
    
    465,245
    
    
    
    380,000
    
    
    
    510,891
   Other
financial debt
   Lines
of credit
   F-22




---



##### Table of Contents



12.
Commitments, contingencies and guarantees
  Lease
Commitments and Variable Interests
    
  Purchase
Obligations
   Other
Off-Balance Sheet Arrangements
   F-23




---



##### Table of Contents



Tabular
Disclosure of Contractual Obligations
  Total
    
    
    Less than
    
    
    1-3
    
    
    3-5
    
    
    After 51 year
    
    
    years
    
    
    years
    
    
    years(in thousands)
    
    EUR
    
    
    EUR
    
    
    EUR
    
    
    EUR
    
    
    EURLong Term Debt, including interest expense1
    
    
    1,003,796
    
    
    
    537,764
    
    
    
    43,101
    
    
    
    422,851
    
    
    
    80Operating Lease Obligations
    
    
    213,878
    
    
    
    33,032
    
    
    
    53,657
    
    
    
    39,707
    
    
    
    87,482Purchase Obligations
    
    
    676,007
    
    
    
    672,424
    
    
    
    3,583
    
    
    
    0
    
    
    
    0Other Liabilities2
    
    
    18,341,
    
    
    
    7,630
    
    
    
    10,711
    
    
    
    0
    
    
    
    0Total Contractual Obligations
    
    
    1,912,022
    
    
    
    1,250,850
    
    
    
    111,052
    
    
    
    462,558
    
    
    
    87,562
 
 1

    We refer to Note 11 for the amounts excluding interest
expense.2

    Other liabilities relate mainly to the additional payments to Nikon due in 2006 and
2007 with respect to a cross-license of patents related to lithography equipment.
   Total
    
    
    Less than
    
    
    1-3
    
    
    3-5
    
    
    After 51 year
    
    
    years
    
    
    years
    
    
    years(in thousands)
    
    EUR
    
    
    EUR
    
    
    EUR
    
    
    EUR
    
    
    EURPurchase options
    
    
    61,363
    
    
    
    0
    
    
    
    3,358
    
    
    
    2,269
    
    
    
    55,736
 13.
Employee benefits
   Pension
plans
  F-24




---



##### Table of Contents



Year ended December 31
    
    2003
    
    
    2004
    
    
    2005(in thousands)
    
    EUR
    
    
    EUR
    
    
    EURPension plan based on multi-employer union plan
    
    
    16,514
    
    
    
    17,747
    
    
    
    20,143Pension plans based on defined contribution
    
    
    6,636
    
    
    
    8,103
    
    
    
    7,254Total
    
    
    23,150
    
    
    
    25,850
    
    
    
    27,397
 Bonus
plan
  Year ended December 31
    
    2003
    
    
    2004
    
    
    2005(in thousands)
    
    EUR
    
    
    EUR
    
    
    EURBonus expenses
    
    
    6,495
    
    
    
    7,481
    
    
    
    8,555
   Profit-sharing plan
  Stock options
   F-25




---



##### Table of Contents



Number of
    
    
    Weighted averageshares
    
    
    exercise price per share (EUR)Outstanding, December 31, 2002
    
    
    23,876,448
    
    
    
    25.13Granted
    
    
    2,516,980
    
    
    
    9.66Exercised
    
    
    (335,977
    )
    
    
    10.98Forfeited
    
    
    (1,486,427
    )
    
    
    21.82Outstanding, December 31, 2003
    
    
    24,571,024
    
    
    
    24.58Granted
    
    
    2,485,782
    
    
    
    12.35Exercised
    
    
    (875,530
    )
    
    
    9.76Forfeited
    
    
    (561,282
    )
    
    
    17.73Outstanding, December 31, 2004
    
    
    25,619,994
    
    
    
    23.19Granted
    
    
    2,515,089
    
    
    
    11.52Exercised
    
    
    (991,700
    )
    
    
    11.68Forfeited
    
    
    (1,522,674
    )
    
    
    15.04Outstanding, December 31, 2005
    
    
    25,620,709
    
    
    
    23.16Exercisable, December 31, 2005
    
    
    18,251,813
    
    
    
    28.06Exercisable, December 31, 2004
    
    
    19,568,177
    
    
    
    26.65Exercisable, December 31, 2003
    
    
    15,494,969
    
    
    
    23.99
  Weighted
    
    
    WeightedOptions
    
    
    
    
    
    
    
    
    
    average
    
    
    averageoutstanding
    
    Number
    
    
    Number
    
    
    remaining
    
    
    exercise priceRange of exercise
    
    outstanding
    
    
    exercisable
    
    
    contractual
    
    
    of outstandingprices (EUR)
    
    December 31, 2005
    
    
    December 31, 2005
    
    
    life (years)
    
    
    options (EUR)5.29 - 7.94
    
    
    511,988
    
    
    
    80,568
    
    
    
    6.37
    
    
    
    7.378.17 - 12.26
    
    
    8,812,416
    
    
    
    2,152,594
    
    
    
    7.08
    
    
    
    11.2612.75 - 19.13
    
    
    2,592,352
    
    
    
    2,314,698
    
    
    
    3.29
    
    
    
    15.6019.45 - 29.18
    
    
    4,821,922
    
    
    
    4,821,922
    
    
    
    2.03
    
    
    
    20.6029.65 - 44.48
    
    
    4,987,538
    
    
    
    4,987,538
    
    
    
    1.09
    
    
    
    34.3845.02 - 67.53
    
    
    3,894,493
    
    
    
    3,894,493
    
    
    
    6.07
    
    
    
    46.02Total
    
    
    25,620,709
    
    
    
    18,251,813
    
    
    
    4.41
    
    
    
    23.16
 Stock Option Extension Plans
  Financing of stock option plans
  14. Legal Contingencies
  F-26




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##### Table of Contents



Patent litigation with Nikon
   Ultratech case U.S.
     15. Income taxes
  F-27




---



##### Table of Contents



Year ended December 31
    
    2003
    
    
    2004
    
    
    2005(in thousands)
    
    EUR
    
    
    EUR
    
    
    EURIncome tax expense (benefit) from continuing operations
    
    
    (59,675
    )
    
    
    127,380
    
    
    
    123,559Income tax expense (benefit) from discontinued operations
    
    
    (23,316
    )
    
    
    0
    
    
    
    0Total income tax expense (benefit)
    
    
    (82,991
    )
    
    
    127,380
    
    
    
    123,559
   Year ended December 31
    
    2003
    
    
    2004
    
    
    2005(in thousands)
    
    EUR
    
    
    EUR
    
    
    EURDomestic
    
    
    (288,370
    )
    
    
    216,790
    
    
    
    256,874Foreign
    
    
    45,163
    
    
    
    146,050
    
    
    
    178,149Total
    
    
    (243,207
    )
    
    
    362,840
    
    
    
    435,023
  Year ended December 31
    
    2003
    
    
    2004
    
    
    2005(in thousands)
    
    EUR
    
    
    EUR
    
    
    EURIncome tax expense based on domestic rate1
    
    
    (83,906
    )
    
    
    125,180
    
    
    
    137,032Change in statutory tax rate 2
    
    
    0
    
    
    
    14,544
    
    
    
    (2,056
    )Different tax rates 3
    
    
    (6,568
    )
    
    
    (24,477
    )
    
    
    (19,478
    )Other credits and non-taxable items 4
    
    
    7,483
    
    
    
    12,133
    
    
    
    8,061Provision for income taxes shown
in the statement of operations
    
    
    (82,991
    )
    
    
    127,380
    
    
    
    123,559
 
 1
    

Income tax expense based on domestic rate reflects the tax expense that would have
been applicable if all of ASMLs income were derived from the Companys Dutch operations.2
    
At the end of 2004, the Netherlands Government has enacted a tax rate reduction. As a
result of this law change the Netherlands statutory tax rate was planned to be reduced in steps to
30 percent through 2007. This led to a remeasurement of the Companys deferred tax assets and
liabilities, resulting in a one time increase in the tax charge of EUR 15 million in 2004. At the
end of 2005, the Netherlands Government enacted a further tax rate reduction to 29.6 percent in
2006 and 29.1 percent in 2007. This led to an additional remeasurement of the Companys deferred
tax assets and liabilities, resulting in a one time tax benefit of EUR 2 million in 2005, as ASML
has a net deferred tax liability position in the Netherlands tax jurisdiction.3
    
ASMLs results are not solely realized in the Netherlands but also in other countries
where different tax rates are applicable. Different tax rates reflects the adjustment necessary to
give effect to the differing tax rates applicable in these non-Dutch jurisdictions.4
    
Other credits and non-taxable items reflect the impact on statutory rates of permanent
non-deductible and non- taxable items such as non-deductible taxes and dues, non-deductible
interest expense, and non-deductible meals and entertainment, as well as the impact of various tax
credits on the Companys provision for income taxes.  Year ended December 31
    
    2003
    
    
    2004
    
    
    2005(in thousands)
    
    EUR
    
    
    EUR
    
    
    EURCurrentDomestic
    
    
    2,307
    
    
    
    1,318
    
    
    
    2,216Foreign
    
    
    17,094
    
    
    
    6,375
    
    
    
    4,517DeferredDomestic
    
    
    (99,426
    )
    
    
    96,053
    
    
    
    68,954Foreign
    
    
    (2,966
    )
    
    
    23,634
    
    
    
    47,872Total
    
    
    (82,991
    )
    
    
    127,380
    
    
    
    123,559
 F-28




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##### Table of Contents



As of December 31
    
    2004
    
    
    2005(in thousands)
    
    EUR
    
    
    EURTax effect carry-forward losses
    
    
    184,448
    
    
    
    134,220Inventories
    
    
    22,830
    
    
    
    13,167Temporary depreciation investments
    
    
    (133,262
    )
    
    
    (50,781
    )Other temporary differences
    
    
    (20,411
    )
    
    
    (18,695
    )Total
    
    
    53,605
    
    
    
    77,911
    As of December 31
    
    2004
    
    
    2005(in thousands)
    
    EUR
    
    
    EURDeferred tax assets  current
    
    
    54,554
    
    
    
    95,636Deferred tax assets  non-current
    
    
    201,100
    
    
    
    206,884Deferred tax liabilities  current
    
    
    (1,332
    )
    
    
    (390
    )Deferred tax liabilities  non-current
    
    
    (200,717
    )
    
    
    (224,219
    )Total
    
    
    53,605
    
    
    
    77,911
   F-29




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##### Table of Contents



16. Segment disclosure
    Year ended December 31
    
    2005(in thousands)
    
    EUR300
millimeter new systems
    
    
    1,932,976200
millimeter new systems
    
    
    179,228used systems
    
    
    115,474Total net system sales
    
    
    2,227,678
  Year ended December 31
    
    Net sales
    
    
    Identifiable assets(in thousands)
    
    EUR
    
    
    EUR2003Korea
    
    
    401,157
    
    
    
    15,871Taiwan
    
    
    189,004
    
    
    
    39,845Rest of Asia
    
    
    172,223
    
    
    
    555,761Europe
    
    
    220,190
    
    
    
    1,712,552United States
    
    
    560,163
    
    
    
    524,656Total
    
    
    1,542,737
    
    
    
    2,848,6852004Korea
    
    
    472,112
    
    
    
    11,460Taiwan
    
    
    658,765
    
    
    
    19,344Rest of Asia
    
    
    534,039
    
    
    
    706,709Europe
    
    
    304,051
    
    
    
    2,016,066United States
    
    
    496,410
    
    
    
    455,674Total
    
    
    2,465,377
    
    
    
    3,209,2532005Korea
    
    
    877,681
    
    
    
    12,839Taiwan
    
    
    457,942
    
    
    
    14,013Rest of Asia
    
    
    368,301
    
    
    
    769,274Europe
    
    
    217,944
    
    
    
    2,498,299United States
    
    
    607,099
    
    
    
    436,655Total
    
    
    2,528,967
    
    
    
    3,731,080
  F-30




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##### Table of Contents



17. Board of Management and Supervisory Board remuneration
 Board of Management
  Base salary, short-term performance cash bonus
  2003
    
    
    2004
    
    
    2005Year ended December 31
    
    EUR
    
    
    EUR
    
    
    EURSalaries
    
    
    1,912,966
    
    
    
    2,176,085
    
    
    
    1,860,359Bonuses1
    
    
    1,052,131
    
    
    
    1,305,651
    
    
    
    905,488Pension cost
    
    
    212,058
    
    
    
    486,045
    
    
    
    218,791Other benefits
    
    
    189,873
    2
    
    
    827,574
    3
    
    
    227,798
    2Total
    
    
    3,367,028
    
    
    
    4,795,355
    
    
    
    3,212,436
  1
 2
 3
  Received Base
    
    
    Earned Cash1
    
    
    Other
    
    
    TotalSalary
    
    
    Bonus
    
    
    benefits2EUR
    
    
    EUR
    
    
    EUR
    
    
    EURE. Meurice3
    
    
    630,000
    
    
    
    306,600
    
    
    
    89,260
    
    
    
    1,025,860P.T.F.M. Wennink
    
    
    353,100
    
    
    
    171,607
    
    
    
    43,877
    
    
    
    568,584M.A. van den Brink
    
    
    441,375
    
    
    
    214,508
    
    
    
    40,788
    
    
    
    696,671D.P. Chavoustie5
    
    
    369,217
    
    
    
    179,439
    
    
    
    42,957
    
    
    
    591,613K. Fuchs4
    
    
    66,667
    
    
    
    33,334
    
    
    
    10,916
    
    
    
    110,917
  1
 2
 3
 4
 5
  1
 F-31




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##### Table of Contents



E. Meurice
    
    
    61,807P.T.F.M. Wennink
    
    
    35,882M.A. van den Brink
    
    
    45,151D.P. Chavoustie 2
    
    
    69,150K. Fuchs
    
    
    6,801
  1
 2
 Performance Stock Options
  Granted
    
    
    
    
    
    
    
    Share priceduring
    
    Exercised
    
    Dec. 31,
    
    Exercise
    
    on exercise
    
    Expiration01-Jan-05
    
    2005
    
    during 2005
    
    2005
    
    price
    
    date
    
    dateE. Meurice
    
     125,000
    
    
    
    
    
     125,000
    
     10.62
    
    
    
    15-10-201412,500
    
     
    
     12,500
    
     11.52
    
     
    
     21-01-2015P.T.F.M. Wennink
    
     31,500
    
     
    
    
    
     31,500
    
     58.00
    
    
    
     20-01-201215,660
    
     
    
    
    
     15,660
    
     40.40
    
    
    
     22-01-200750,000
    
     
    
    
    
     50,000
    
     29.92
    
    
    
     22-01-200720,960
    
     
    
    
    
     20,960
    
     22.12
    
    
    
     20-07-200720,000
    
     
    
    
    
     20,000
    
     20.28
    
    
    
     21-01-200820,000
    
     
    
    
    
     20,000
    
     7.02
    
    
    
     22-04-201320,000
    
     
    
    
    
     20,000
    
     14.23
    
    
    
     23-04-2014M.A. van den Brink
    
     31,500
    
     
    
    
    
     31,500
    
     58.00
    
    
    
     20-01-201219,860
    
     
    
    
    
     19,860
    
     40.40
    
    
    
     22-01-200726,560
    
     
    
    
    
     26,560
    
     22.12
    
    
    
     20-07-200720,000
    
     
    
    
    
     20,000
    
     20.28
    
    
    
     21-01-200820,000
    
     
    
    
    
     20,000
    
     7.02
    
    
    
     22-04-201320,000
    
     
    
    
    
     20,000
    
     14.23
    
    
    
     23-04-2014D.P. Chavoustie
    
     60,000
    
     
    
     30,000
    
     0
    
     14.17
    
     14.40
    
     20-10-200530,000
    
     
    
     30,000
    
     0
    
     8.47
    
     14.50
    
     20-10-200546,800
    
     
    
     46,800
    
     0
    
     12.08
    
     14.50
    
     20-10-200567,500
    
     
    
    
    
     67,500
    
     45.91
    
    
    
     20-01-201225,500
    
     
    
    
    
     25,500
    
     29.92
    
    
    
     22-01-200730,240
    
     
    
    
    
     30,240
    
     22.12
    
    
    
     20-07-200720,000
    
     
    
    
    
     20,000
    
     20.28
    
    
    
     21-01-200820,000
    
     
    
    
    
     20,000
    
     7.02
    
    
    
     22-04-201320,000
    
     
    
    
    
     20,000
    
     14.23
    
    
    
     23-04-2014
  Conditional Performance Stock Options
  F-32




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##### Table of Contents



Number of performance stock options which will beawarded in 2006 for 2005 actual achievementE. Meurice
    
    
    57,770P.T.F.M. Wennink
    
    
    32,379M.A. van den Brink
    
    
    40,473D.P. Chavoustie
    
    
    33,857K. Fuchs
    
    
    6,113
    1
 
 1
  Conditional Performance Stock
  Maximum number of performance stockto be awarded in 2008E. Meurice
    
    
    36,972P.T.F.M. Wennink
    
    
    20,721M.A. van den Brink
    
    
    25,902D.P. Chavoustie
    
    
    21,668K. Fuchs
    
    
    3,912
    1
 
 1
 Supervisory Board
    Year ended December 31
    
    2004
    
    
    2005EUR
    
    
    EURH. Bodt
    
    
    60,000
    
    
    
    70,000P.H. Grassmann2
    
    
    25,000
    
    
    
    25,000S. Bergsma1
    
    
    45,000
    
    
    
    0J.A. Dekker
    
    
    35,000
    
    
    
    45,000M.J. Attardo2
    
    
    35,000
    
    
    
    35,000J.W.B. Westerburgen
    
    
    35,000
    
    
    
    45,000F. Fröhlich3
    
    
    0
    
    
    
    35,000A. van der Poel3
    
    
    0
    
    
    
    25,000
 F-33




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##### Table of Contents



1
    
    Membership ended March 18, 2004.2
    
As of December 31, 2004, Mr. Attardo owns 19,290 options on shares of the
Company. During 2004, Mr. Attardo exercised 15,432 options on
shares of the Company. As of December 31, 2004 and 2005,
Mr. Grassmann owns 3,000 shares of the Company.3
    
Membership started March 18, 2004.  H. Bodt
    
    
    70,000P.H. Grassmann
    
    
    35,000J.A. Dekker
    
    
    45,000OB Bilous2
    
    
    45,000J.W.B. Westerburgen
    
    
    45,000F. Fröhlich
    
    
    40,000A. van der Poel
    
    
    45,000H.C.J. van den Burg2
    
    
    35,000
 
 1
    
Membership ended March 25, 2005.2
    
Membership started March 25, 2005.  18. Selected operating expenses and additional information
  Year ended December 31
    
    2003
    
    
    2004
    
    
    2005(in thousands)
    
    EUR
    
    
    EUR
    
    
    EURWages and salaries
    
    
    326,678
    
    
    
    345,026
    
    
    
    347,956Social security expenses
    
    
    24,640
    
    
    
    24,517
    
    
    
    27,423Pension and retirement expenses
    
    
    23,150
    
    
    
    25,850
    
    
    
    27,397Total
    
    
    374,468
    
    
    
    395,393
    
    
    
    402,776
  As of December 31
    
    2003
    
    
    2004
    
    
    2005Research and development
    
    
    1,507
    
    
    
    1,401
    
    
    
    1,337Goodsflow
    
    
    1,184
    
    
    
    1,207
    
    
    
    1,215Customer Support
    
    
    1,717
    
    
    
    1,818
    
    
    
    1,872General
    
    
    518
    
    
    
    509
    
    
    
    497Sales
    
    
    133
    
    
    
    136
    
    
    
    134Total continuing operations
    
    
    5,059
    
    
    
    5,071
    
    
    
    5,055Total discontinued operations
    
    
    119
    1
    
    
    0
    
    
    
    0Total number of employees
(including non-payroll employees)
    
    
    5,178
    
    
    
    5,071
    
    
    
    5,055
 
 1
    
As of January 1, 2004, these employees were transferred to newly
incorporated companies of the buyer of ASMLs Thermal business.  19. Vulnerability due to certain concentrations
  F-34




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##### Table of Contents



20. Capital stock
 Share capital
   Ordinary shares
    Cumulative preference shares
  F-35




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##### Table of Contents



Declaration of Independence
  Priority shares
   
    
    Eric Meurice
    
    Peter T.F.M. Wennink
    
    Henk Bodt
    
    Jos W.B. Westerburgen
    
    Jan A. Dekker
   
 
 
 F-36




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
    
 F-37




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##### Table of Contents



Exhibit Index
 Exhibit No.
    
    Description1
    
    Articles of Association of ASML Holding N.V. (English translation)
(Incorporated by reference to Amendment No. 7 to the Registrants Registration
Statement on Form 8-A/A, filed with the Commission on June 30, 2005 )2.1
    
    Paying Agent, Conversion Agent and Registrar Agreement between ASML
Holding N.V. and the Bank of New York relating to the Registrants 5.75% Convertible
Subordinated Notes due 2006 (Incorporated by reference to Exhibit 2.3. of the
Registrants Annual Report on Form 20-F for the year ended December 31, 2001)2.2
    
    Paying Agent, Conversion Agent and Registrar Agreement between ASML
Holding N.V. and the Bank of New York relating to the Registrants 5.50 percent
Convertible Subordinated Notes due 2010 (Incorporated by reference to the
Registrants Annual Report on Form 20-F for the fiscal year ended December 31, 2003)4.1
    
    Agreement between ASML 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) #4.2
    
    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) #4.3
    
    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)4.4
    
    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)4.5
    
    Employment Agreement between ASML Holding N.V. and Klaus Fuchs*4.6
    
    Employment Agreement between ASML Holding N.V. and Eric Meurice
(Incorporated by reference to the Registrants Annual Report on Form 20-F for the
fiscal year ended December 31, 2004)4.7
    
    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)4.8
    
    ASML New Hires and Incentive Stock Option Plan For Management (Version
2003) (Incorporated by reference to exhibit 4.4 to the Registrants Statement on
Form S-8, filed with the Commission on September 2, 2003) (File No. 333-109154)4.9
    
    Nikon-ASML Patent Cross License Agreement, dated December 10, 2004,
between ASML Holding N.V. and Nikon Corporation (Incorporated by reference to the
Registrants Annual Report on Form 20-F for the fiscal year ended December 31,
2004) #4.10
    
    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) #4.12
    
    ASML Option Plan for Management of ASML Holding Group Companies (Incorporated
by reference to the Registrants Registration Statement on Form S-8 filed with the
Commission on June 30, 2005 (file No. 333-126340))4.13
    
    Consultancy Agreement between ASML
Holding N.V. and David Chavoustie *8.1
    
    List of Material Subsidiaries*12.1
    
    Certification of CEO and CFO Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934*13.1
    
    Certification of CEO and CFO Pursuant to Rule 13a-14(b) of the Securities
Exchange Act of 1934 and 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002*15.1
    
    Consent of Deloitte Accountants B.V.*