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ASML reports 1999 annual results
Press release - Veldhoven, the Netherlands, January 20, 2000
ASM Lithography Holding NV (ASML) today reported its financial results for 1999. In 1999, ASML shipped 217 units, of which 152 were Step & Scan systems and 65 were Step & Repeat systems (or 'wafer steppers'). Of the 217 units, 22 were used and refurbished. This compares to 162 units shipped in 1998, of which seven were used. The significant wafer stepper business is a result of the industry upturn, with customers adding capacity in existing production lines. The number of Step & Scan systems confirms the ASML's success in the advanced technology fabs.
Net sales amounted to €1,197 million for the year ended December 31, 1999, compared to net sales of €779 million in 1998. The upturn in the semiconductor market continued throughout the second half of 1999. The 1999 annual results reflect both this upturn and ASML's strong position in leading-edge products. Bookings amounted to 325 units whereas in 1998 ASML reported 55 bookings. Of these, 192 were received in the second half of 1999, resulting in a backlog of 159 systems at December 31, 1999, with a value of €968 million. At June 30, the backlog was 104 units with a value of €616 million and at December 31, 1998, it consisted of 51 systems with a value of €289 million.
Net income for the year 1999 amounted to €81 million or €0.58 per share, compared to €62 million or €0.45 per share in 1998. Net income of €4 million for the first half of 1999 reflected the impact of the industry downturn while the result of €77 million for the second half of 1999 underlines the industry recovery. Gross margin in 1999 was 33.4% compared to 38.2% in 1998. Gross margin in the second half of 1999 was 36.1%, an improvement of 8.1% from gross margin in the first half, which had been impacted by new product introductions and under-utilized capacity in ASML's production facilities. Initial shipments of newly introduced products involve significantly higher costs that decrease with the ramping up of volume production, as demonstrated in the second half.
Net research and development costs in 1999 amounted to €138 million (1998: €115 million) reflecting ASML's continuing drive to further strengthen its technological leadership in current and next-generation lithography. Further expansion of ASML's infrastructure to support the current upturn of the IC industry led to an increase of €46 million in selling, general and administrative expenses to €140 million. Increased costs for the expansion of ASML's worldwide information technology organization accounted for almost half of the total increase. The remainder of the cost increase was evenly divided between selling expenses, caused by higher net sales levels, facility costs, reflecting the first full year cost of ASML's building expansion, and customer support costs. The latter reflect the increased requests from customers for a broader service scope, including process support and around-the-clock service.
Together with the service requirements for new product introductions, ASML expects that this customer demand will continue in 2000, increasing hiring, training and other customer support costs. The number of employees increased from 2,364 at year-end 1998 to 2,983 at year-end 1999.
Commenting on the results, Doug Dunn, ASML's CEO said: "The results are a little above our expectations and illustrate the start of the industry recovery. In April we commenced shipping PAS 5500/700, the system for the most advanced volume manufacturing, demonstrating our technology leadership. By achieving 59 shipments of this system in the remainder of 1999, we demonstrated our capability for a fast ramp up to volume. Customer interest is high for the whole product line, which underlines the strong fundamentals of the new period of growth. The strong market demand is reflected in the strong order intake in the second half of 1999. On top of market growth, we expect to continue to gain new customers and therefore also market share. Preliminary data from Dataquest indicates that ASML's market share (measured in USD) increased from 29% in 1998 to approximately 37% in 1999.
"To respond to this growth," Doug Dunn continued, "ASML has to continue to ramp up production, as we successfully did from the first to the second half of the year. It is likely that the growth momentum will continue during the year 2000. As we continue to add incremental sales, we expect that because of our flexible business model, net profit growth will exceed net sales growth."
ASML also reported today that it will put on the agenda of the General Meeting of Shareholders on March 23, 2000, a proposal for a three-for-one stock split of its common stock and its priority shares to increase the availability of shares and potentially broaden the base of shareholders.
ASM Lithography, founded in 1984, is a world leader in advanced photolithography systems that are essential to the fabrication of integrated circuits. ASML is publicly traded on both the Amsterdam Exchanges and on the Nasdaq Stock Market under the symbol 'ASML'.
'Safe Harbor' Statement under the Private Securities Litigation Reform Act of 1995: Except for historical information, the matters discussed in this news release that may be considered forward-looking statements may be subject to certain risks and uncertainties that could cause the actual results to differ materially from those projected, including uncertainties in the market, pricing competition, procurement and manufacturing efficiencies, and other risks detailed from time to time in reports filed by the Company with the Securities and Exchange Commission. The Company assumes no obligation to update the information in this release.
- Monique Mols
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