ASML Reports 1999 Semi-Annual Results.

VELDHOVEN, Netherlands--(BUSINESS WIRE)--July 22, 1999--

ASM Lithography Holding N.V. (ASML) (Nasdaq:ASML) today reported its financial results for the first half of 1999.

ASML realized net sales of EUR 408 million for the six months ended June 30, 1999, compared to net sales of EUR 455 million in the same period in 1998. Unit shipments of ASML's systems were 80 for the first six months in 1999, of which 69 were advanced and 11 earlier generation technology systems. This compares to 98 units shipped in the same period last year, of which five were earlier generation technology systems. The impact on sales of the lower number of unit shipments versus the first half of 1998 was limited due the higher average selling price (approximately 10 percent) of ASML's systems.

Net income for the six months ended June 30, 1999, amounted to EUR 4 million or EUR 0.03 per share, compared to EUR 64 million or EUR 0.46 per share for the comparable period in 1998. As expected, net income for the first half of 1999 still reflects the impact of the industry downturn, which also affected ASML's net earnings in the second half of 1998, when ASML reported a net loss of EUR 2 million or EUR 0.01 per share.

Gross margin in the first half of 1999 was 28.0 percent compared to 42.8 percent in the first half of 1998. More than 75 percent of system sales in the first half of 1999 consisted of ASML's latest models, i.e. models that had not been sold in volume quantities in prior periods. In the comparable period in 1998 such sales accounted for less than 10 percent of total sales. The first shipments of newly developed systems have significantly higher costs that are expected to decrease when the benefits of increased learning curves and volume sales become apparent in subsequent periods. Also, the under-utilization of ASML's production facilities in the first half of 1999 had a negative impact on gross margin as compared to the same period in 1998. Finally, gross margin in the first half of 1999 was negatively impacted by the high introduction costs of the PAS 5500/900 advanced Step & Scan systems, sold for R&D applications.

Research and development expenses in the first six months amounted to EUR 76 million (during the same period 1998: EUR 66 million) reflecting the company's continuing drive to further strengthen its technological leadership. Further building up of the infrastructure to prepare for the next upturn of the IC industry has lead to an increase of EUR 12 million in selling, general and administrative expenses to EUR 58 million. The number of employees increased from 2,364 at year-end 1998 to 2,586 at June 30, 1999, reflecting the company's continued commitment to customer support and research and development.

In the first half of 1999, orders for 133 systems were received, compared to orders for 31 systems in the first half of 1998, and 24 in the second half of 1998, resulting in a backlog of 104 systems at June 30, 1999 (51 units at December 31, 1998). The value of this order book amounted to EUR 616 million, compared to EUR 289 million at the end of 1998.

Commenting on the results, Willem Maris, CEO of ASML said: "The results are in line with our expectation and mark the end of the industry downturn. In the first half year we commenced shipping three new models of advanced products to our customers. Among these were the PAS 5500/900, the industry's first full field 193 nanometer scanner and the PAS 5500/700, the system for the most advanced volume manufacturing. This demonstrates our technology leadership. Customer interest is high, resulting in new customer wins."

"The market is recovering", Willem Maris continued. "Many semiconductor manufacturers have increased their capital expenditure and more new fabs are being announced. Therefore we are now hiring and training people in preparation for the upturn. With the most advanced products currently available and our flexible ASML business model, we expect to grow our market share and benefit fully from the market recovery. We are expecting a gradual improvement of our margins and a strong second half of 1999, leading to a full year result that approximately equals that of last year."

About ASML

ASM Lithography was founded in 1984 and is a world leader in advanced photolithography systems that are essential to the fabrication of modern integrated circuits. The company now has an installed base of more than 1,200 systems at customer sites around the world. Recognized as the world's second largest supplier of wafer steppers and Step & Scan systems, ASML operates demonstration and application laboratories at its corporate headquarters located in Veldhoven, The Netherlands, and at its U.S. headquarters in Tempe, Arizona. Regional sales and service facilities are located worldwide near its customers' premises.

ASML is publicly traded on both the Amsterdam Exchanges and on the Nasdaq Stock Market(R) under the symbol "ASML." Please visit the company's web site at http://www.asml.com or email us at [e-mail] for more information on 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. -0-

Summary Consolidated Statements of Operations

For the first half year ended June 30,
(Amounts in thousands except per share data)

                           1997       1998        1999         1999
                           EUR(a)     EUR(a)      EUR(a)       USD(b)

Net sales                 347,840     454,632     407,883     421,998

Costs of sales            208,543     259,912     293,777     303,943
Gross profit on sales     139,297     194,720     114,106     118,055

Research and
 development costs         41,946      66,244      75,907      78,533
Research and
 development credits       (6,862)    (13,298)    (23,087)    (23,886)
Selling, general and
 administrative
 expenses                  23,289      45,549      57,743      59,742
Total expenses             58,373      98,495     110,563     114,389

Operating income           80,924      96,225       3,543       3,666

Gain on sale of
 marketable securities    (14,130)          0           0           0
Interest (income)
 expense, net                (478)        270         674         697
Income before
 income taxes              95,532      95,955       2,869       2,969
Provision for
 income taxes              28,826      32,425        (648)       (670)

Net income                 66,706      63,530       3,517       3,639

Basic net income
 per ordinary share          0.48        0.46        0.03        0.03
Diluted net income
 per ordinary share          0.48        0.46        0.03        0.03
Number of ordinary
 shares used in
 computing per
 share amounts
 (in thousands):
  Basic                   138,000     138,111     138,407
  Diluted                 138,510     138,692     139,307



Ratios and Other Data                        1997      1998      1999

Gross profit on sales as a % of net sales    40.0%     42.8%     28.0%
Operating income as a % of net sales         23.2%     21.2%      0.9%
Net income as a % of net sales               19.2%     14.0%      0.9%
Shareholders' equity as a
 % of total assets                           63.4%     50.0%     50.6%
Total sales of systems (units)               95        98        80
Sales of pre-owned systems (units)            5         5        11
Number of employees                       1,609     2,333     2,586



Summary Consolidated Balance Sheets

                                   Dec. 31,     June 30,     June 30,
                                    1998         1999         1999
(Amounts in thousands)              EUR          EUR(a)       USD(b)

ASSETS
Cash and cash equivalents          150,987       98,050      101,443
Accounts receivable, net           209,448      301,387      311,817
Inventories, net                   389,096      416,103      430,503
Other assets                        51,701       55,170       57,079
Property, plant and equipment      136,590      133,682      138,308
Total assets                       937,822    1,004,392    1,039,150

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities                165,341      223,434      231,167
Convertible subordinated bonds     272,268      272,268      281,690
Shareholders' equity               500,213      508,690      526,293
Total liabilities and
 Shareholders' equity              937,822    1,004,392    1,039,150



Summary Consolidated Statements of Cash Flows

For the first half year ended June 30,
(Amounts in thousands)

                            1997       1998       1999       1999
                            EUR(a)     EUR(a)     EUR(a)     USD(b)

CASH FLOWS FROM
 OPERATING ACTIVITIES:

Net income                  66,706     63,529      3,517      3,639
Depreciation
 and amortization            7,515     15,169     21,805     22,559
Change in assets
 and liabilities           (87,079)  (169,670)   (71,521)   (73,996)
Other adjustments            1,701          0          0          0
Net cash provided by
 (used in) operating
 activities                (11,157)   (90,972)   (46,199)   (47,798)

CASH FLOWS FROM
 INVESTING ACTIVITIES:

Proceeds from sale of
 marketable securities      14,130          0          0          0
Net capital expenditures   (13,191)   (40,293)   (18,505)   (19,145)
Disbursements for loans          0          0      6,807      7,042
Net cash used in
 investing activities          939    (40,293)   (11,698)   (12,103)

CASH FLOWS FROM
 FINANCING ACTIVITIES:

Net proceeds from
 issuance of
 convertible
 subordinated bonds              0    272,268          0          0
Other financing
 activities                      0     (5,208)     4,424      4,577
Net cash provided
 by financing activities         0    267,060      4,424      4,577
Effect of changes in
 exchange rates on cash    (12,035)       260        536        554
Net increase (decrease)
 in cash and
 cash equivalents          (22,253)   136,055    (52,937)   (54,770)


(a)  All figures are unaudited.

(b)  EUR amounts have been translated, solely for the convenience of
     the reader, at the rate of USD 1.00 to EUR 1.0346

-0-

Effective beginning of fiscal year 1999, ASML changed its reporting currency from Dutch guilders to EUR. Prior year balances have been restated based on the exchange rate as of January 1st 1999 (EUR 1.00 to NLG 2.20371). The comparative balances reported in EUR depict the same trends as would have been presented if ASML had continued to present balances in Dutch guilders. Balances for periods prior to January 1st, 1999 are not comparable to the balances of other companies that report in EUR having restated amounts from a different currency than Dutch guilders.

All figures are based on US GAAP. Summary Consolidated Balance Sheets USD.