<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>3
<FILENAME>statannrep.txt
<DESCRIPTION>STATUTORY ANNUAL REPORT 2003
<TEXT>
                                                                   Exhibit 99.1
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Statutory annual report 2003












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Contents

4 Management


6 Report of the Supervisory Board


10 Corporate Governance


15 Management Report


15 US GAAP and Dutch Statutory Financial Report


15 General Developments


16 Corporate Governance


17 Corporate Strategy


20 Significant events


21 Results of operations


27 Statutory Financial Statements 2003


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Management
Board of Management

Doug J. Dunn
(1944)
President, Chief Executive
Officer, Chairman of the
Board of Management;
Appointed in 1999;
British nationality

Peter T.F.M. Wennink
(1957)
Executive Vice President
Finance and Chief Financial
Officer;
Appointed in 1999;
Dutch nationality

Martin A. van den Brink
(1957)
Executive Vice President
Marketing & Technology;
Appointed in 1999;
Dutch nationality

David P. Chavoustie
(1943)
Executive Vice President
Sales;
Appointed in 2000;
U.S. nationality

Stuart K. McIntosh
(1944)
Executive Vice President
Operations and President
Lithography;
Appointed in 2001;
British nationality
5 ASML FINANCIAL REPORT 2003



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Supervisory Board


Henk Bodt
(1938)
(Chairman)
Former Executive Vice
President of Royal Philips Electronics N.V.;
Dutch nationality;
First appointed 1995;
current term until 2004;
Additional functions:
Member of the Supervisory Board of:
o DSM N.V.;
o Delft Instruments N.V.
o NeoPost SA


Jos W.B. Westerburgen
(1942)
Former Company Secretary and Head of Tax of Unilever;
Former member of the Peters Committee on Corporate Governance in the Nether-
  lands;
Dutch nationality;
First appointed in 2002,
current term until 2005;
Additional functions:
Member of the Supervisory Board of:
o Unilever Nederland B.V.
Member of:
o The Association Aegon


Jan A. Dekker
(1939)
Chief Executive Officer of TNO;
Dutch nationality;
First appointed 1997;
Current term until 2006;
Additional functions:
Member of the Supervisory Board of:
o Gamma Holding N.V.;
o Koninklijke BAM-NBM N.V.


Peter H. Grassmann
(1939)
Former President and Chief Executive Officer of Carl Zeiss;
German nationality;
First appointed 1996,
current term until 2006;
Additional functions:
Member of the Supervisory Board of:
o Gambro BV;
o Aradex AG;
o Febit AG;
o IONITY;
Member of the senate of the Max-Planck-society
Member of the Advisory Board of EQT Private Equity Funds Gmbh


Michael J. Attardo
(1941)
Former President and CEO of IBM Microelectronics;
US Nationality;
First appointed 2001,
current term until 2005.


Syb Bergsma
(1936)
Former Executive Vice President Financial Affairs of Akzo Nobel N.V.;
Dutch nationality;
First appointed 1998;
current term until 2004;
Additional functions:
Chairman of the Supervisory Board of:
o UPM Holding B.V.;
o Generali Verzekeringsgroep N.V.;
o Van der Moolen Holding N.V.;
Member of the Supervisory Board of:
o European Assets Trust N.V.;
Chairman of the Board of:
o Stichting Continuiteit Numico
o Stichting administratiekantoor Preferente Financieringsaandelen Ahold
Chairman of the Board of:
o Stichting Preferente Aandelen Wolters Kluwer
o Stichting administratiekantoor preferente Aandelen Oce



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Report of the Supervisory Board

Financial Statements

The Supervisory Board has reviewed the Dutch GAAP statutory financial
statements and the notes therein of ASML Holding N.V. (the "Company") for the
financial year 2003, as prepared by the Board of Management and included in
this Annual Report. Deloitte & Touche, independent auditors, have duly
examined the Company's financial statements, and their Auditors' Report is
included in the Statutory Financial Statements 2003.

The Supervisory Board has adopted these financial statements in accordance
with article 38, paragraph 5 of the Company's Articles of Association. The
Supervisory Board recommends that the General Meeting of Shareholders approves
these financial statements in accordance with the proposal of the Board of
Management.


Supervision and advice

General
The Board of Management of ASML is responsible for the management of the
Company. The role of the Supervisory Board is to oversee and advise the Board
of Management in performing its management tasks and setting the direction of
the Company.

During 2003, ASML solidified its position in the global market for
semiconductor lithography systems, despite an unprecedented third consecutive
year in the industry's worst-ever downturn. The Company strengthened its
organization and enhanced its operations consistent with global market
conditions. ASML management and employees around the world have been preparing
during 2003 to take full advantage of a market upturn when it comes.

We support the Board of Management and the clarity of their commitment to
secure the Company's core semiconductor lithography business. We endorse the
Company's pursuit of technology leadership while intensifying its focus on
customers and maintaining strong control of its cost base.

Strategy and business review
The Supervisory Board has reviewed ASML business policy and decision making
with the Board of Management regarding the Company's strategy, human
resources, organizational issues, financial performance, alliances and
associated business risks, among other matters.

Throughout 2003, the Supervisory Board has been closely involved with the
Board of Management by means of regular meetings, monthly reports and ongoing
consultations. Contrasted with the semiconductor capital equipment market peak
in 2000, the past three years have slumped deeper and longer than ever
experienced in the industry. Facing fierce competitive pressures and other
challenges, the Company has demonstrated creativity and commitment, doing more
work with fewer people and delivering more results with reduced resources.

Strong management control
During 2003, the Supervisory Board noted measurable improvements in
operational efficiencies, cost control, inventory reduction and cash
generation, among other internal aspects of the Company's performance. We see
that the Board of Management continues to motivate and mobilize senior
managers and employees to strive for operational excellence while raising
levels



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of customer satisfaction. We have also noted the Board of Management's
commitment to improve the return on its invested capital.

Human resources
The excellence of any high tech company is a measure of the excellence of its
employees.
Therefore, to maintain its successful track record, the Company continues to
ensure its ability to attract and retain the best talent in the world. The
Supervisory Board is pleased to see that the Board of Management is determined
to preserve and promote the Company's unique culture of individual and team
commitment that makes outstanding accomplishments possible.

Restructuring
The Supervisory Board endorsed the Board of Management's assessment and
intended actions regarding the Company's reorganization and utilization of
resources in view of structural changes and cyclical conditions in the global
semiconductor market. In a painful but necessary measure, the Company
announced in July 2003 a reduction in work force in its lithography operation.
It is critical that ASML calibrates its labor capacity and associated costs
consistent with current and future market conditions.

Despite restructuring, the Company continues to fund research and development
programs appropriately to meet the challenges of offering customers the right
technologies at the right time. However, the Company requires efficiency
improvements in R&D efforts, as it does in the rest of the organization.

Corporate governance

Independent members of the Supervisory Board
Like many Dutch public companies, the Company has a two-tier board structure
where independent, non executive members serve on the Supervisory Board, which
in turn supervises and advises the members of the Board of Management in
performing its management tasks. Supervisory Board members are prohibited from
serving as officers or employees of the Company.

Corporate governance developments
The Supervisory Board assists the Board of Management in its continuing
efforts to ensure that the Company's practices and procedures reflect good
corporate governance and comply with applicable U.S. and Dutch corporate
governance requirements and best practices.

A more detailed description appears in this statutory annual report.

Meetings of the Supervisory Board

The Supervisory Board met six times in the course of 2003. Members of the
Supervisory Board also held two regular meetings with the Works Council in the
Netherlands during 2003. In addition, members of the Supervisory Board met
several times with the Works Council regarding the workforce reduction
announced in July 2003.

The Supervisory Board met once, without the Board of Management present, to
discuss the functioning of the Supervisory Board and its individual members;
the relationship with the Board of Management; the performance and composition
of the Board of Management as well as performance and succession of its
individual members, among other matters.

The Supervisory Board further discussed its own profile and rotation schedule
and reviewed its



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own composition. In addition, there were frequent consultations between the
Supervisory Board and the Board of Management outside their regularly
scheduled meetings.

Composition of the Supervisory Board

Mr. J.A. Dekker and Mr P.H. Grassmann retired by rotation on March 25, 2003
and were reappointed. Mr. H. Bodt and Mr. S. Bergsma will be retiring by
rotation on March 18, 2004. Mr. H. Bodt has informed the Supervisory Board
that he is available for reappointment on March 18, 2004. Mr. S. Bergsma
informed the Supervisory Board that he was not available for reappointment.
The Supervisory Board has furthermore resolved to expand the Supervisory Board
from six to a maximum of eight members. The Supervisory Board would like to
appoint Mr. F. Frohlich and Mr. A. van der Poel, who both fit very well in the
profile of the Supervisory Board as amended.
Mr. F. Frohlich, who has a substantive financial background, would fit ideally
in the profile of the "financial expert," while Mr. A. van der Poel would
bring a wealth of knowledge with his extensive international experience in the
semiconductor industry.

Supervisory Board Committees

The Supervisory Board has a Remuneration Committee and an Audit Committee.
Members of these committees are appointed from and among the Supervisory Board
members. In 2003, the Audit Committee met seven times, each time with the
external auditor present, and the Remuneration Committee met twice.

Audit Committee
Pursuant to the Audit Committee's revised procedures, prior approval of the
Audit Committee is now required for any significant non-audit services to be
rendered by the audit firm.

The implementation of this procedure in 2002 is consistent with revised
independence requirements issued by the Royal Dutch Institute of Chartered
Accountants (Royal NIVRA) and the Sarbanes-Oxley Act and rules proposed by
the SEC. The current members of our Audit Committee are Syb Bergsma
(chairman), Henk Bodt and Jan Dekker.
The members of the Audit Committee are all independent, non-executive members
of the Supervisory Board. As a consequence of certification requirements under
the Sarbanes-Oxley Act, the Audit Committee has also formulated a Control
Enhancement Project to further improve the Company's internal control
framework.


Remuneration Committee
The current members of the Company's Remuneration Committee are Jos
Westerburgen (chairman), Henk Bodt, Syb Bergsma and Michael Attardo.

Remuneration of the Supervisory Board

The remuneration of the Supervisory Board members is described in Note 23 to
the Statutory Financial Statements 2003. The remuneration of the members of
the Supervisory Board is not linked to the financial results of the Company.
None of the members of the Supervisory Board personally maintain a business
relationship with the Company other than as a member of the Supervisory Board.
The General Meeting of Shareholders determines the remuneration of the members
of the Supervisory Board.

Michael J. Attardo owns 34,722 options on shares of the Company. Peter H.
Grassman owns 3,000 shares of the Company. None of the other members of the
Supervisory Board own shares or options on shares of the Company.

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Composition of the Board of Management

The Board of Management consists of five members. There were no changes to the
Board of Management in 2003. Details of the remuneration of the Board of
Management in 2003 are described in Note 23 to the Statutory Financial
Statements 2003.
On January 16, 2004, Doug Dunn announced his decision that he will retire as
President, Chief Executive Officer and Chairman of the Board of Management of
ASML in the course of 2004. The Supervisory Board much regrets but also
respects Doug Dunn's decision and has formed an ad hoc selection committee to
find a successor.

Remuneration of the Board of Management

The Remuneration Committee prepares and the Supervisory Board establishes the
Company's remuneration policy for members of the Board of Management, and it
oversees the development and implementation of compensation and benefits
programs for members of the Board of Management.

In proposing to the Supervisory Board the actual remuneration elements and
levels applicable to the members of the Board of Management, the Remuneration
Committee considers, among other factors, the remuneration policy, the desired
levels of and emphasis on particular aspects of the Company's short and long
term performance and its current compensation and benefits structures and
levels benchmarked against the relevant markets. External compensation survey
data and, where necessary, external consultants are used to benchmark our
remuneration levels and structures. Furthermore, the Remuneration Committee
reviews and proposes to the Supervisory Board corporate goals and objectives
relevant to the compensation of all members of the Board of Management. The
Committee evaluates the performance of members of the Board of Management in
view of those goals and objectives, and makes recommendations to the
Supervisory Board regarding the resulting compensation levels of the members
of the Board of Management based on this evaluation.

The Remuneration Policy for the Board of Management of the Company shall be
submitted to the General Meeting of Shareholders on March 18, 2004 for
discussion and adoption. The remuneration of members of the Board of
Management is described in Note 23 to the Statutory Financial Statements,
which is included in this statutory annual report.

Recognition for ASML employees

2003 was an unprecedented third consecutive year of challenging global market
conditions for everyone at ASML. We support the Board of Management,
underscore their leadership and embrace their strategic insights to help
strengthen and sustain the business success of ASML on behalf of all
stakeholders worldwide.

The Supervisory Board also wishes to recognize the valuable contributions made
by everyone associated with the Company during 2003, and in particular, we
express our gratitude to the employees of ASML.





The Supervisory Board,
Veldhoven, January 30, 2004



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Corporate Governance

ASML continuously monitors and assesses applicable corporate governance rules,
including recommendations and initiatives regarding principles of corporate
governance. These include those that have been developed in the United States
both by NASDAQ and by the U.S. Securities and Exchange Commission ("SEC")
pursuant to the Sarbanes-Oxley Act. Some of those rules and/or principles are
already applicable and have been implemented by ASML over the past years;
others will need to be implemented over the coming years.

In addition, the Tabaksblat Committee in the Netherlands has issued a new
Corporate Governance Code (the "Code") in December 2003, which Code is
effective for ASML as of January 1, 2004. The Code is applicable for all
companies that are admitted to an officially recognized stock exchange and
that are registered in the Netherlands. ASML believes that the Code in
principle aims at similar objectives as the U.S. corporate governance
principles, although differences exist with regard to the approach taken and
areas covered.

The Code contains principles with regard to corporate governance as well as
best practice provisions based on those principles. Beginning with the annual
report over the financial year 2004, companies subject to the Code are
expected to report on the application of the principles in the Code, as well
as on compliance with the best practice provisions.
Reporting is based on the "apply or explain" rule.

The Tabaksblat Committee recommends that the companies concerned outline in
the annual report over the financial year 2003 how they expect to apply the
Code and which issues they foresee in that respect.

ASML's current corporate governance practices

Below is a general overview of ASML's current corporate governance practices
in view of the principles as laid down in the Code. Headings refer to headings
in the Code. For the full text of the principles and best practices, reference
is made to the text of the Code. ASML already applies most of these principles
and is in the process of reviewing in detail whether further implementation of
the principles will take place through the best practices or through other
methods.

The annual report over the financial year 2004 will contain a comprehensive
report in conformance with the Code. Furthermore, in the course of 2004, ASML
will adjust its website in accordance with the requirements of the Code.

I. Compliance with and enforcement of the Code

Principle: Responsibility Corporate Governance
ASML agrees that the Board of Management and the Supervisory Board are
responsible for the corporate governance structure and compliance with the
Code. ASML will continue to include and describe its corporate governance
structure in its annual report and shall to the extent possible adhere to the
Code in this respect.

In addition, ASML welcomes discussions with its shareholders regarding this
subject.

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II. Board of Management

Principle II.1 Role and Procedure
ASML endorses the principle regarding the role and procedure of the Board of
Management as laid down in this paragraph. The Board of Management is
responsible for managing the Company and to achieve its aims, strategy,
policies and results and is accountable for this to the Supervisory Board and
the shareholders. ASML's Supervisory Board has an advisory and supervising
role and focuses especially on: (I) achievement of the Company's objectives,
(II) corporate strategy and risk inherent to the business activities, (III)
the structure and operation of the internal risk management and control
systems, (IV) the financial reporting process and (V) compliance with
legislation and regulations.

The above subjects are frequently discussed between the Board of Management
and the Supervisory Board, in plenary meetings as well as by means of ongoing
individual consultations. In addition, the Supervisory Board is provided with
reports on the (financial) developments in ASML on a regular basis.

Furthermore, ASML's corporate governance structure is intended to: (I) provide
shareholders with regular, reliable and relevant transparent information
regarding ASML's activities, structure, financial situation, performance and
other information; (II) apply high standards for disclosure, accounting and
audit; (III) apply stringent rules with regard to insider trading.

Also because of the requirements dictated by the Sarbanes-Oxley Act, ASML
focuses on its internal control systems. This subject is frequently discussed
with ASML's Audit Committee. In addition, ASML's CEO and CFO are required,
based on the Sarbanes-Oxley Act, to sign a certificate stating that the
Company's disclosure controls and procedures and controls over financial
reporting are adequate and effective for the Company. This certificate along
with ASML's Form 20-F will be filed with the Securities and Exchange
Commission (SEC) in the U.S. ASML is currently also implementing further
procedures and practices to ensure that the financial reporting process is set
up in such a manner that it can be audited, as required per 2005, under
section 404 of the Sarbanes-Oxley Act.

ASML's Code on Ethical Business Conduct includes a so-called whistle blower
procedure. The Principles of Ethical Business Conduct are posted on ASML's
website.

II.2 Remuneration

Principle: Amount and composition of the remuneration
ASML is of the opinion that it complies with the principle laid down in this
paragraph on remuneration. The remuneration of ASML's Board of Management is
based on various criteria, goals and objectives and is benchmarked against the
remuneration packages for board-level executives of other multinational
companies operating in global markets. For more details, reference is made to
the Remuneration paragraph in the Report of the Supervisory Board, as well as
the Remuneration Policy to be adopted in the General Meeting of Shareholders
on March 18, 2004.

Regarding some of the best practice provisions, it should be noted that ASML
respects the existing rights of the members of the Board of Management.

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Principle: Determination and disclosure of remuneration
The remuneration report as disclosed in the annual report on the financial
year 2003 is in compliance with relevant laws and regulations. However, it
does not specifically address the relevant recommendations of the Code, as
these are not yet applicable over the financial year 2003.
ASML expects to report on this subject in accordance with the Code as of the
financial year 2004 and beyond.

II.3 Conflicts of Interest

Principle: Avoidance of conflict of interest
This subject has been addressed to a certain extent in both ASML's Articles of
Association, and ASML's Code on Ethical Business Conduct. ASML's Code on
Ethical Business Conduct will be reviewed to determine whether ASML deems it
necessary to amend the current arrangements, as recommended by the
(Tabaksblat) Code.

III Supervisory Board

Principle III.1 Role and procedure
ASML's Supervisory Board's role, as well as the subjects to be discussed in
the Supervisory Board, is summarized above under II.1. We will review the best
practice provisions related to this subject more in-depth and if deemed
desirable, shall implement these provisions.
However, also referring to the content of the Report on the Supervisory Board,
we believe that we comply with most of the recommendations related to the role
of and the procedures applicable to the Supervisory Board.

The Rules of Procedure of the Supervisory Board shall be reviewed and amended
if necessary and shall subsequently be published on ASML's website.

Principle III.2 Independence
We are of the opinion that we currently comply with this requirement. However,
in the future we may encounter problems with some of the best practice
provisions. The reason is that knowledge of and experience in the
semiconductor industry is very important for ASML's Supervisory Board to be
able to perform their supervising function. Because this industry has
relatively few players, and ASML is a supplier to almost all non-Japanese
semiconductor manufacturers, ASML may want to nominate candidates for the
Supervisory Board who do not fully comply with the criteria as listed under
III.2.2, especially III.2.2.c. In those circumstances, ASML and the candidate
will ensure that any such business relationship does not compromise the
candidate's independence.

Principle III.3 Expertise and composition
Regarding the profile of the Supervisory Board as well as its rotation
schedule, the Supervisory Board is in the process of amending these documents,
which will be available on ASML's website later this year. Regarding the other
best practice provisions, ASML will look into the best method of implementing
these.


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Principle III.4 Role of the chairman of the Supervisory Board and the company
secretary

ASML's current practice is to a large extent in line with the content of this
principle; this will be formalized in the course of this year.

Principle III.5 Composition and role of the three key committees of the
Supervisory Board

The Supervisory Board currently has two committees: an Audit Committee and a
Remuneration Committee. Their roles and functions are described in the
Supervisory Board's Rules of Procedure. For a summary of the role and function
of those committees, the execution of their tasks as well as an overview of
their members, reference is made to the Report of the Supervisory Board.
Regarding the recommendation to establish a Selection and Appointment
Committee: such a committee exists on an ad-hoc basis, but ASML intends to
formalize the institution of such a committee and to amend the Supervisory
Board's Rules of Procedure accordingly in the course of 2004.

Principle III.6 Conflicts of interest
ASML agrees with the principle to avoid any conflicts of interest or any
apparent conflicts of interest between the Company and the Supervisory Board.
However, ASML does not yet have a formal procedure to deal with this subject.
ASML shall formalize this matter in the course of the year.

Principle III.7 Remuneration
The principle that the General Meeting of Shareholders determines the
remuneration of Supervisory Board members and that the remuneration is not
dependent on the results of the company is already current practice within
ASML, including the requirement to report the remuneration in accordance with
current law. We shall further look into the best practice provisions.

Principle III.8 One-tier management structure
This is not applicable for ASML, as ASML has a two-tier structure.

IV. The shareholders and general meeting of shareholders

Principle IV.1 Powers
ASML complies with all legal requirements regarding the participation and the
supply of information to the shareholders, and endorses the principle of full
participation by the shareholders in the system of checks and balances in the
Company. Furthermore, as soon as legally and practically feasible, ASML
intends to facilitate proxy voting. Several of the best practice provisions
are in the process of being implemented; the others will be looked into.

Principle IV.2 Depositary receipts for shares
This is not applicable, as ASML does not have depositary receipts for shares.

Principle IV.3 Provision of information to and logistics of the General
Meeting of Shareholders
ASML subscribes to this principle, and we shall look into the best practice
provisions to determine whether we need to make adjustments to our current
procedures.

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Principle IV.4 Responsibility of institutional investors
ASML endorses this principle, as ASML would like its institutional investors
(as well as other shareholders), to play a more active role in exercising
their "shareholders' rights."

V. The audit of the financial reporting and the position of the internal
auditor function and the external auditor

Principle V.1 Financial reporting
ASML has internal processes in place to ensure that all financial information
to be disclosed will be reported in a timely and complete manner.
Specifically, ASML instituted a Disclosure Committee to support and monitor
such processes. The internal procedures are frequently discussed within the
Audit Committee of ASML's Supervisory Board, including the role of the
external auditor in the publication of the financial reports.

Principle V.2 Role, appointment, remuneration and assessment of the
functioning of the external auditor
The General Meeting of Shareholders appointed ASML's external auditor in 1995.
Up to January 2004, the Audit Committee of the Supervisory Board has approved
the remuneration of the external auditor as well as the non-audit services to
be performed. ASML shall in the course of this year determine whether we deem
it desirable to change this process.

Principle V.3 Internal auditor function
ASML does not have an internal auditor function; ASML feels that the internal
risk and control systems should be fully integrated in the business processes
and that they should fall under the responsibility of the responsible
manager. In light of the requirements under section 404 of the Sarbanes-Oxley
Act, ASML is in the process of implementing internal assessments of internal
controls, which are of an auditing nature. The Disclosure Committee also plays
an important role in this process.

Principle V.4 Relationship and communication of the external auditor with the
organs of the Company
The external auditor issues a report to the Supervisory Board on the
conclusions of the audit of ASML's financial statements. This report is issued
at the same moment that the external auditor issues its management letter to
the Board of Management. Such reports cover the topics as described in the
best practice provisions. Furthermore, ASML will ensure that the external
auditor is invited to the Supervisory Board meeting in which the annual
accounts are being approved.


The Board of Management and the Supervisory Board

Veldhoven, January 30, 2004




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Management Report

In this report the expressions 'ASML', 'the Company' and 'Group' are sometimes
used for convenience in contexts where reference is made to ASML Holding N.V.
and/or any of its subsidiaries in general or where no useful purpose is served
by identifying the particular company or companies.

U.S. GAAP and Dutch Statutory Financial Report

The Company prepares two sets of financial statements, one based on accounting
principles generally accepted in the United States of America ('U.S. GAAP')
and one for Dutch statutory purposes based on accounting principles generally
accepted in the Netherlands ('Dutch GAAP').
The financial statements included in this financial report are based on Dutch
GAAP. The principal difference between ASML's U.S. and Dutch GAAP financial
statements is that, under U.S. GAAP, the 2001 merger between Silicon Valley
Group ("SVG") and ASML was accounted for as pooling of interests while, under
Dutch GAAP, the merger was accounted for under the purchase method.
This has resulted in differences in the presentation of the composition of the
(comparative) statement of shareholders' equity.

The order of presentation of assets and liabilities in this statutory annual
report is based on U.S. GAAP, which is not in compliance with Dutch GAAP.
Doing so, ASML is consistent in presenting its balance sheet with prior year's
statutory annual reports and ensures consistency and transparency for its
Dutch and US shareholders. Under this format, the order of presentation of
assets and liabilities is based on the degree of liquidity.

A copy of our U.S. GAAP Annual Report and other publications (i.e., quarterly
earnings anouncements) can be obtained free of charge at the offices of ASML.
The U.S. GAAP annual report and the quarterly earnings anouncements are also
available on ASML's website at www.asml.com.

General Developments

Business environment - Semiconductor Industry
ASML is the world's leading provider of lithography systems for the
semiconductor industry, manufacturing complex machines critical to the
production of integrated circuits or chips. ASML operates globally, with
activities in Europe, the US and Asia.
The year 2003 was an unprecendented third consecutive year of downturn in the
global semiconductor industry. The semiconductor industry, traditionally one
of the more cyclical industries, continued to suffer from overcapacity that
had resulted from its higher level of capital expenditures during 2000. The
world market for the number of semiconductor lithography systems sold was
around a third of the peak number in 2000, a hangover that has depressed
customer demand for three straight years. Made-to-order chip contractors,
known as foundries, during 2003 continued to spend much less on capital
equipment compared with expenditures in 2000. ASML's customer base, the
world's major semiconductor manufacturers, were cautious and unwilling
throughout 2003 to invest significantly in new chip-making equipment.

ASML within the industry
ASML has been and continues to be a technological leader in the supply of
lithography systems, the critical stage in the manufacturing of complex
integrated circuits (ICs) or chips.

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Nikon Corporation ("Nikon") and Canon Kabushika Kaisha ("Canon"), both based
in Japan, are the Company's main competitors in the global lithography
equipment market.

ASML differentiates itself from its competitors most notably through its
business model and proven value proposition.

The ASML business model is based on outsourcing a significant part of the
components and modules that comprise the Company's lithography systems.
Outsourcing has been at the root of the Company's technology leadership,
working in partnership with suppliers from all over the world. The Company
jointly operates a formal strategy with suppliers known as Value Sourcing that
is based on quality, logistics, technology and total cost. As from 2003
onwards, we are assembling a portion of our components and subassemblies at
our facilities in Wilton, Connecticut, US, which were previously outsourced to
an outside vendor.

The ASML value proposition is known as Value of Ownership, and it consists of
the following:
o  Offering ongoing improvements in productivity and value, by introducing
   advanced technology based on modular platforms;
o Providing customer services that ensure rapid, efficient installation and
  superior on-site support and training to optimize manufacturing processes
  and improve productivity;
o Maintaining appropriate levels of research and development to offer the most
  advanced technology suitable for high-throughput, low-cost volume production
  at the earliest possible date;
o Enhancing the capabilities of the installed base through ongoing field
  upgrades based on new technology developments;
o Reducing the cycle time between customer order of a system and the use of
  that system in volume production on-site; and
o Expanding operational flexibility in research and manufacturing by
  reinforcing strategic alliances with world-class partners.

The Company believes it is well positioned to sustain its market leadership in
2004. In 2003, we introduced the next generation of our TWINSCAN system, the
XT 1250, a high productivity leading edge product using 193-nanometer
wavelength technology for imaging 200 - as well as 300 - millimeter wafer
sizes. We developed and launched the industry's first system based on
immersion technology, the TWINSCAN XT:1250i, an inovative lithography product
that replaces the air over the wafer with fluid to enhance focus and shrink
line widths. During 2003, we delivered the industry's first full-field
semiconductor lithography system using 157-nanometer wavelength technology to
IMEC, Europe's leading chip consortium for independent research and
development.

Corporate governance

The Board of Management reiterates the importance that the Company's practices
and procedures reflect good corporate governance, notably significant elements
such as independence, accountability and transparency, and we continually
monitor and assess proposals, recommendations, initiatives and regulations
regarding principles and practice of corporate governance.

                                      16
<PAGE>
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In the United States, corporate governance rules have been issued by the
NASDAQ stock market and by the U.S. Securities and Exchange Commission
pursuant to the Sarbanes-Oxley Act of 2002. In the Netherlands, the Corporate
Governance Code as prepared by the Tabaksblat Committee has been adopted. The
Dutch code applies to ASML as of January 1, 2004. We refer in respect to this
to Chapter Corporate Governance, which is included in this statutory annual
report.

It should also be noted that the Supervisory Board has adopted in its Rules of
Procedure that it will resolve, in consultation with the Board of Management,
to put on the agenda of the General Meeting of Shareholders any proposal from
shareholders representing more than 1 percent of the Company's share capital,
presented at least 60 days in advance of the General Meeting of Shareholders,
unless substantive Company concerns prevail.

The Company is subject to the relevant provisions of Dutch law applicable to
large corporations ('Structuurregime'). These provisions have the effect of
concentrating control over certain corporate decisions and transactions in the
hands of the Supervisory Board. The Supervisory Board is self-electing,
however the General Meeting of Shareholders and the Works Council each have a
right of recommendation and a right to object to a proposed appointment of a
new member of the Supervisory Board.

Corporate strategy

ASML's commitment is to be the industry's global leader in our core competence
of semiconductor lithography equipment, which images nanometric circuit
patterns on a silicon wafer, the material from which tiny chips (integrated
circuits) are made. We define and direct our business strategy through
technology leadership, customer focus and operational excellence.

Technology leadership
We drive technology leadership along the semiconductor industry roadmap in
close consultation with existing customers and potential new ones. This means
we seek to satisfy the needs of different types of chipmakers by customizing
and configuring products to provide premium value for the owners of ASML
lithography systems. We pursue world class productivity to benefit every type
of customer. This includes high volume, reliability demands associated with
production of memory chips; fast and frequent changeovers required by
foundries or made-to-order chip contractors; complexity of making
microprocessors; and unique specifications set by independent device
manufacturers.

Changing technology and rising capital investments increasingly influence the
equipment choices of chipmakers. Therefore, ASML continually anticipates,
adapts and maintains its product offerings to embrace the stages, speed and
size of growth in different lithography market segments. The Company's product
range for steppers and advanced Step & Scan systems spans the industry's
current wavelength technology for 200 and 300 millimeter wafers alike. Our
proven products cover 365, 248 and 193 nanometer wavelengths, addressing the
range of market needs for leading edge as well as less critical line widths.
Since 2000, we offer the industry's only dual-stage wafer imaging system -
our TWINSCAN platform - that allows exposure of one wafer while simultaneously
measuring another wafer.

Consistent with our strategy to remain at the industry forefront for
chipmaking, in 2003, we shipped the industry's first full-field Step & Scan
tool at the 157 nanometer wavelength.

                                      17
<PAGE>
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In 2003, we also introduced our new immersion lithography system, a pioneering
and promising product that replaces the air over the wafer with fluid to
enhance focus and shrink line widths. Consistent with a business strategy
focused on our core lithography competence, we also strive to enhance
productivity and process performance in the lithography area of chipmaking
where wafers spend most of their overall process time. We form and maintain
strategic alliances with other semiconductor equipment suppliers, allowing us
to offer customers more complete solutions.
For example, we have joint development programs with leading makers of track
equipment in the so-called litho-cluster, where wafer coating and exposure can
couple to better meet demands of chipmakers. We are seeking to jointly develop
an optical maskless lithography system to reduce time to market of new devices
and help solve escalating mask costs, an important factor for new
semiconductor designs that feature advanced and ever smaller critical
dimensions.

ASML also continues to offer solutions for special application markets and to
provide proprietary mask technologies and software products that extend the
limits of optical lithography for semiconductor manufacturing.

ASML's strategic pursuit is to offer technology choice, incremental quality
and sustainable levels of added value. We increase the customization of our
products for customers and strive to provide superior integration of our tools
with theirs.

Customer focus
Customer focus is central to the Company's strategic pursuit of market share
leadership. And ASML's strategic approach to customer focus lies in the
empowerment of multi-discipline account management teams. Our account managers
represent our customers across every function and business process at ASML,
from marketing and technology to logistics and customer support. Doing so
ensures that everyone at ASML is kept informed and involved, as appropriate,
in the Company's customer focus process.

We track and treat levels of customer satisfaction three ways: our own
systematic methods; ratings provided by individual customers using their own
criteria, and independent industry surveys. The Company's commitment to
customers is to develop, install and support technological tools for volume
production. Doing so enables customers to become better competitors and make
more profit in the medium and long term.

Strategically, we engage customers in very early stages of technology
development; we listen to their needs surrounding product introduction and
volume utilization. Together, we create a dynamic and shared roadmap that
begins with a customer need and ends with a customer solution. ASML
professionals continue building customer relationships as we assist in
developing and delivering technology and associated results that are above and
beyond normal expectations. As a result, ASML not only maintains its
technology leadership, but also secures market leadership.

We foster a culture of openness as the core of our customer focus, while
providing customers with confidentiality for their business, financial and
proprietary information. In addition, customer support training provides
leading edge learning solutions to meet customer needs involving operators,
technicians and engineers for service, application, process and specialist
requirements.
The Company's strategy of superior value for owners of ASML systems allows
each customer to operate their chip fabrication facilities - anywhere in the
world - with the highest productivity.

                                      18
<PAGE>
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When customers are satisfied, then they have confidence to commit capital
expenditures: customers repeat purchases of ASML lithography systems and buy
additional products and services from ASML. It also means that customers are
willing to pay premiums consistent with ASML's added value, in the face of
fierce pricing competition from rivals.

Operational excellence
To achieve technology leadership and customer focus, it is also important to
look inward. During 2003, inside ASML we sharpened our strategic focus through
the work of multiple crossfunctional process improvement teams. From an
operational perspective, these process improvement teams are striving to
streamline and integrate main business processes such as new product
introduction, acquisition of orders from customers, fulfillment of orders, and
our post-delivery support and services. We strive to measure the output of
each process, namely its quantified results and how it adds value.

ASML's business strategy includes outsourcing the majority of components and
subassemblies that make up our lithography products. We work in partnership
with suppliers, jointly operating a strategy known as Value Sourcing.

It is based on the QLTC principle that stands for quality, logistics,
technology and total cost. With ASML Value Sourcing, we strive to attain
flexibility, best-of-breed contributions and cost savings. It exemplifies
mutual commitment, alongside shared risk and reward. Selected sourcing from
our own facilities in the Netherlands and in the United States provides an
additional check on supplier performance.

The Company's value of ownership proposition is a strategic driver for
increasing sales.
This means customers assess ASML's added value. Their calculated return on
capital employed in semiconductor fabrication facilities supports ASML's
ability to maintain pricing for our lithography systems. Internally, ASML is
committed to improvements in gross margin by reducing cost of goods.

Operational excellence is a strategic pillar that supports reduction of fixed
and variable costs to increase operating profit and generate cash from working
capital. Operational excellence enhances efficiencies and effectiveness. This
means cost reductions in research and development; selling, general and
administrative expenses; customer support; information technology and
management systems; inventory and work-in-progress; manufacturing and
facilities management; and other activities. Operational excellence
strengthens the Company's ability to offer customers a range of technological
and system choices at the right time.

Operational excellence is an internal strategic condition for increasing
flexibility and reducing our breakeven level for the number of systems that we
manufacture, depending on the mix of products ordered by customers in
different market segments in various regions of the world. With a lower cost
base and a higher capacity for flexibility, ASML can satisfy customer demand
on a timely basis and continue to strengthen our competitive position.

Excellent people help make operational excellence happen. As technology
roadmaps and customer requirements become more demanding, ASML needs the best
talent available: fewer, better qualified, more completely committed people.
The Company's human resource strategy embraces our unique culture of
individual and team commitment that makes outstanding accomplishments
possible.

                                      19
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Given the structural changes and intensified cyclical conditions in the world
market for semiconductor lithography systems, the Company's strategy is to
transform our technology and market success into a sustainable business
success through operational excellence.
This means benchmarking financial results versus peer technology companies. It
also means pursuit of predictable quarterly results that are consistent with
shareholder expectations. In summary, the Company's commitment is to add
measurable value and long-term results to benefit our customers as they
design, produce and price their products.

Financial criteria for ASML
We strive to provide to our shareholders attractive return on their invested
capital. This means that we will continue working on increasing the value of
ownership to our customers resulting in higher average unit sales prices for
our systems. Furthermore, we will continue on controlling our cost base by
focusing on cost of goods reduction programs and controlling research and
development costs and selling, general and administrative expenses. Finally,
we intend to further improve our working capital management. Our working
capital improvement program includes inventory control, early collection of
our receivables and effective management of payments. To reflect our efforts
in achieving return on capital invested by our shareholders, we measure
ourselves, amongst others, on the following financial key performance
criteria: gross margin, operating margin, inventory turns, days sales
outstanding, operating income and market share.

Significant events

Cost containing measures
In December 2002, we announced cost containing measures, including a reduction
in workforce, divestment of our Thermal business and termination of our Track
operations. During the year 2003, we implemented the workforce reduction and
substantially completed the discontinuance of our Track and Thermal
businesses. In July 2003, we announced a further workforce reduction, of which
the majority is planned in the Netherlands. Currently, ASML and its Works
Council are nearing the completion of a joint study on implementing this
workforce reduction in the Netherlands.
As a consequence, the Dutch workforce reduction has been delayed and, any
corresponding cost reductions have been delayed. We believe that by adjusting
labor capacity and increasing operating flexibility, we can reduce our
break-even level by the end of 2004 to approximately 130 new systems from its
current level of approximately 160 new systems, depending upon our product
mix. The break-even level is the minimum number of new systems that need to be
sold in a year in order to achieve net profit in that year.

Patent Litigation with Nikon
Since late 2001, ASML has been a party to a series of litigation and
administrative proceedings in which Nikon alleges ASML's infringement of Nikon
patents relating to photolithography. ASML in turn filed claims against Nikon.
These proceedings are presented in note 17 to the Statutory Financial
Statements. The proceedings are at various stages of advancement, and their
ultimate outcome is therefore uncertain. In each case, however, ASML believes
it has meritorious defenses to Nikon's claims, including that Nikon's patents
are both not infringed and are invalid, as well as valid counterclaims.

The Company intends to vigorously pursue these defenses and counterclaims. If
a final nonappealable decision that was adverse to ASML were to be rendered in
any of these proceedings, however, ASML's ability to conduct sales in one or
more significant markets could be substantially restricted or prohibited,
which in turn could have a material adverse effect on the Company's


                                      20
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financial position or results of operations.

Other events
In May 2003, ASML completed an offering of EUR 380 million principal amount of
its 5.50 percent Convertible Subordinated Notes due 2010, with interest
payable annually on May 15 of each year, commencing on May 15, 2004. The notes
are convertible into an aggregate of 26,573,426 ordinary shares at a
conversion price of EUR 14.30 per share, subject to adjustment, at any time
prior to maturity. Unless previously converted, the notes are redeemable at
100 percent of its principal amount on May 15, 2010. ASML may call the notes
for early redemption at any time after May 22, 2006, provided that ASML's
shares close above 150 percent of the conversion price for twenty trading days
out of a thirty-day trading period.

In July and August 2003, ASML repurchased USD 139.6 million of USD 520 million
principal amount of its 4.25 percent Convertible Subordinated Notes due
November 30, 2004. In October 2003, ASML called for redemption on December 5,
2003, all of the notes that remained outstanding, at a redemption price of
100.85 percent of their principal amount plus accrued interest.
Before December 5, 2003, bondholders converted notes for a total of USD 120
thousand into 1,430 ordinary shares, of which USD 20 thousand were converted
into 536 shares in 2003. On December 5, 2003, the Company redeemed the
remaining USD 380.3 million.

Results of operations

During the year 2003 we continued to face a significant downturn in the
semiconductor industry, which started in 2001. In the last quarter of 2003, we
have seen what may be the beginning of an upturn that is apparent in most
business segments within the semiconductor industry.

Net sales
Total net sales from continued operations decreased from EUR 1,959 million in
2002 to EUR 1,543 million in 2003, a decrease of EUR 416 million or 21.2
percent. The decrease in sales was primarily due to a decreasing number of new
systems recognized, partially offset by an increase in average unit sales
price ("ASP"). The ASP for new systems increased by approximately 6 percent
reflecting a shift in our product portfolio towards an increased share of our
latest technology equipment (TWINSCAN systems), which accounted for 38 percent
of total shipment volume of new systems in 2003 compared to approximately 33
percent in 2002. The number of new systems recognized decreased from 183 units
in 2002 to 126 units in 2003 due to:

o further decline in equipment demand by the semiconductor industry in 2003
  after a modest recovery shown in the first half of 2002 for delivery in the
  second half of 2002; and

o the effect of the accounting treatment of "new technology systems" (see Note
  3 to our Statutory Financial Statements 2003) resulting in additional
  recognition of EUR 138 million of revenues of 13 systems in 2002 that were
  initially deferred in 2001.

The number of used systems sold increased from 22 units in 2002 to 43 in 2003.
This increase reflects the uncertain market conditions in which our customers
seek opportunities to quickly expand production capacity in their existing
production facilities without significant capital expenditures to secure
long-term growth. These systems are used in less critical resolution
capabilities. The ASP for used systems increased by approximately 136 percent
reflecting a shift from our older PAS 2500 towards our newer PAS 5500 family,
including scanner systems. We estimate


                                      21
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that the number of used systems sold will increase in 2004, provided that the
number of systems available on the market for repurchase is not limited.

Gross profit
Gross profit as a percentage of net sales in 2003 was equal to 2002 (23.9
percent). The gross profit on new systems decreased from 24.3 percent to 21.7
percent due to the negative influence of severe price competition (2.2 percent
negative impact on our gross profit), relatively more sales of newer
technology systems having lower gross profit (4.4 percent negative impact on
our gross profit) and under-utilization of our production facilities due to
less sales (2.5 percent negative impact on our gross profit). This decrease in
gross profit was offset by lower repayments of Technical development credits
as this program was fully repaid during 2003 (1.5 percent positive impact on
our gross profit), lower costs of sales due to the replacement of independent
sales agents with our own employees for the purpose of servicing our Asian
customers (1.0 percent positive impact on our gross profit) and a decrease in
charges to provisions for obsolete inventory (4.0 percent positive impact on
our gross profit).

Research and development
Research and development costs decreased from EUR 324 million in 2002 to EUR
306 million in 2003 as a result of more cost-efficient programs and workforce
reductions. The level of research and development expenditures reflects our
continuing effort to introduce several leading edge lithography products for
193 nanometer applications and the newest versions of the TWINSCAN platform,
combined with continued investments in 248 nanometer high numerical aperture
(NA) program, immersion, next generation 157 nanometer lithography solutions
and EUV.

Our future operating results will depend significantly on our ability to
produce products and provide services that have a competitive advantage in our
industry. To do this, we believe that we must continue to make substantial
investments in our research and development efforts. Our research and
development activities are intended to enable our customers to achieve a
higher return on their capital investments and higher productivity through
cost-effective, leading edge technology solutions.

Research and development credits decreased from EUR 26 million in 2002 to EUR
19 million in 2003 due to a decreased volume for research and development
expenditures that qualified for credits. Included in 2002 credits is a
postponed credit (EUR 3.5 million) on 2001 expenditures that was subject to
certain criteria that were only achieved in 2002. We expect the level of
credits in 2004 to be similar or slightly higher than in 2003, although the
precise amount remains subject to further negotiation with the relevant
granting authorities.

Selling, general and administrative costs
Selling, general and administrative costs decreased by 19.0 percent from EUR
263 million in 2002 to EUR 213 million in 2003, mainly as a result of
workforce reductions and decreased legal fees associated with patent
infringement cases. Selling, general and administrative costs as a percentage
of net sales increased from 13.4 percent in 2002 to 13.8 percent in 2003, as a
result of the decline in net sales.

Restructuring costs
On December 18, 2002, ASML announced workforce reductions of approximately 700
positions


                                      22
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worldwide. With respect to this plan, we recorded in 2003
restructuring charges for a total amount of EUR 7 million of which EUR 4
million in cost of sales and EUR 3 million in restructuring costs. As of
December 31, 2003, this plan has been completed.
On July 16, 2003, ASML announced further workforce reductions of approximately
550 positions worldwide of which the majority is planned in the Netherlands.
During 2003, ASML recorded a provision of EUR 15 million as an ongoing benefit
arrangement of which EUR 4 million is included in cost of sales and EUR 11
million is included in restructuring costs. The amount of the provision was
based upon the details of the exit plan agreed on with our Works Council in
the Netherlands for the workforce reductions announced in December 2002.
Currently, the Board of Management and the Dutch Works Council are nearing the
completion of a joint study on implementing these workforce reductions in the
Netherlands. Consequently, the Dutch workforce reduction has been delayed.

During 2003, we recorded restructuring costs of approximately EUR 7 million
relating to the consolidation of our office and warehouse facilities at our
headquarters in Veldhoven as we ceased using certain of our facilities. The
facility exit charges included estimated future obligations for non-cancelable
lease payments and the impairment of property and equipment (primarily
leasehold improvements) for which there are insufficient cash flows to support
the carrying cost.

Net cash flows provided by operating activities
Net cash flows provided by operating activities were EUR 509 million in 2003
compared to EUR 54 million cash used in operating activities in 2002. The
primary reason of the cash provided by operating activities in 2003 has been
changes in working capital, including accounts receivable, inventories and
current assets. Net accounts receivable decreased from EUR 557 million to EUR
314 million. ASML's ratio of accounts receivable to total net sales was 28.4
percent and 20.4 percent in 2002 and 2003, respectively. Gross inventories
decreased by 20.4 percent from December 31, 2002 to December 31, 2003. The
decrease reflects our continuing efforts to reduce our inventory level by
means of cycle time reduction and cost of goods reduction programs.

The provision for obsolescence decreased by 25 percent from December 31, 2003
to December 31, 2002, principally reflecting scrapping of inventories. In 2002
and 2003, ASML paid EUR 4 million and EUR 12 million in taxes, respectively.
In 2003, ASML received EUR 176 million tax refund from the Dutch tax
authorities. We refer to Note 20 to our Statutory Financial Statements.

Net cash flows used in investing activities
Net cash used in investing activities was EUR 80 million in 2002 and EUR 26
million in 2003. The 2002 figure reflected the further expansion of production
facilities during that year as well as expenditure in own use equipment (e.g.,
prototypes, training systems, and demonstration systems), to support sales,
manufacturing and demonstration capabilities relating to new 300 millimeter
product lines. The 2003 figures mainly relate to expenditures in own use
equipment. We expect capital expenditures in 2004 to range between EUR 75
million and EUR 85 million.

Net cash flows used in financing activities
Net cash used in financing activities in 2003 amounted to EUR 68 million. The
2003 amount primarily reflects the complete redemption and repurchase of USD
520 million of 4.25 percent Convertible Subordinated Notes due 2004, partially
offset by the issuance of EUR 380 million of 5.5 percent Convertible
Subordinated Notes due 2010. In 2002, proceeds from financing activities


                                      23
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amounted to EUR 21 million mainly reflecting EUR 27 million in proceeds from
the exercise of stock options and EUR 5 million repayment of long term debts.
In 2004, we have no repayment obligations on our outstanding convertible
notes.
On December 31, 2003, our principal sources of liquidity consisted of EUR
1,028 million of cash and cash equivalents, and EUR 288 million of available
credit facilities.

Management believes that its operating cash flows and working capital,
together with existing cash balances, the availability of existing credit
facilities, and improved working capital management will be sufficient to
finance its scheduled capital expenditures and to fund its working capital for
2004.

Employees
As of December 31, 2003, we had 5,059 employees in our continuing operations,
including temporary contract employees employed primarily in product
development activities at our headquarters in Veldhoven. As of December 31,
2002, the total number of employees in continued operations was 5,971. We rely
on our ability to vary the number of temporary employees to respond to
fluctuating market demand for our products. The average number of temporary
employees during 2003 was 203 compared to 263 during 2002.

Our future success will depend on our ability to attract, train, retain and
motivate highly qualified employees, who are in great demand. We are
particularly reliant for our continued success on the services of several key
employees, including a number of systems development specialists with advanced
university qualifications in engineering, optics and computing. With the
decision to discontinue our Track business and to sell our Thermal business,
we started reducing our workforce at the end of 2002. Furthermore, to manage
the effects of the industry's continuing downturn during 2002, we reduced our
lithography-related workforce by approximately 700 positions worldwide and, in
July 2003 announced a further workforce reduction by approximately 550
positions worldwide, of which the majority is planned in the Netherlands. With
respect to this announcement in July 2003, the Board of Management and the
Dutch Works Council are nearing the completion of a joint study on
implementing these workforce reductions in the Netherlands. Consequently, the
Dutch workforce reduction has been delayed. The average number of employees
from continuing operations during 2002 and 2003 was 5,640 and 5,323,
respectively (excluding non-payroll employees).

The total number of employees per sector as of December 31, 2002 and 2003, are
as follows:

<TABLE>
<CAPTION>

                                                     As of December 31            2002           2003
<S>                                                                              <C>             <C>

                                                Marketing & Technology           1,708           1,507
                                                             Goodsflow           1,416           1,184
                                                      Customer Support           2,090           1,717
                                                               General             588             518
                                                                 Sales             169             133
                                           Total continuing operations           5,971           5,059
                                         Total discontinued operations             712             119
           Total number of employees (including non-payroll employees)           6,683           5,178

</TABLE>

In 2002 and 2003, a total of 2,857 and 2,649 employees, respectively, were
employed in The Netherlands.

                                      24
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Discontinued operations
Results from discontinued operations comprise the results of our Thermal
business, which we substantially divested in October 2003, and our Track
business which we terminated in December 2002. Our decision to discontinue
these businesses was the result of the downturn in the semiconductor market,
which has led to significant losses in these businesses. Substantial future
investments in these businesses would have been required to achieve a positive
contribution to our future financial results.

In December 2002 we reviewed our long-lived assets used in the Thermal
business for potential impairment and recorded no impairment charges. During
2003, we again reviewed our long-lived assets for impairment as we entered
into negotiations with several potential buyers and accordingly recorded
impairment charges of EUR 16 million. In October 2003, we substantially
completed the sale of our Thermal business to a privately held company formed
by VantagePoint Venture Partners. At the time of the sale, no gain or loss was
realized as the net assets were stated at the value equal to the proceeds of
the sale. The net loss of our Thermal business amounted to EUR 32 million in
2003 compared to EUR 61 million in 2002.

The termination of the Track business resulted in an exit plan that included
workforce reduction, fixed asset impairments and inventory write-offs due to
discontinued product lines. The exit plan included the disposal of remaining
assets related to the Track business. In 2002, ASML decided to continue to
service existing customers of its Track business for whom ASML had warranty or
other service obligations. Consequently, customer support related to the Track
business was not included in discontinued operations for 2002. In June 2003,
ASML sold certain of its fixed assets and inventories related to its Track
business to Rite Track. No gain or loss was realized on the sale. The net loss
of the Track business amounted to EUR 3 million in 2003 compared to EUR 59
million for 2002. The net loss for 2002 included total pre-tax estimated exit
costs of EUR 47 million. These exit costs included asset impairments,
inventory write downs, purchase and other commitment settlements and employee
termination costs. The net loss in 2003 relates mainly to impairment charges
recorded on a building in the United States, previously used by our Track
business. This impairment was determined on the difference between the
building's estimated fair value, as indicated by an independent real estate
appraiser and its carrying value.


Doug J. Dunn                                  Peter T.F.M. Wennink
President, Chief Executive Officer,           Executive Vice President Finance
Chairman of the Board of Management           and Chief Financial Officer



ASML Holding N.V.
Veldhoven, January 30, 2004




                                      25
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                                      26
<PAGE>
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ASML Holding N.V.

Statutory Financial Statements 2003


28 Consolidated Balance Sheets


29 Consolidated Statements of Operations


30 Consolidated Statements of Cash Flows


31 Notes to the Consolidated Financial Statements


63 Company-only Balance Sheets


63 Company-only Statements of Operations


64 Notes to the Company-only Financial Statements


66 Other Information



                                      27
<PAGE>

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<TABLE>
<CAPTION>

Consolidated Balance Sheets 1
(After appropriation of net result for the year)

<S>                                                                       <C>          <C>        <C>

                                   As of December 31 2002 2003
                                         (Amounts in thousands)          Note          EUR         EUR
                                                        Assets
                                     Cash and cash equivalents             6       668,760   1,027,806
                                      Accounts receivable, net             7       556,664     314,495
                                              Inventories, net             8       730,025     595,017
                                            Current tax assets            20       178,706           -
                                           Deferred tax assets            20             -      49,590
                                          Other current assets             9       175,095     157,912
                           Assets from discontinued operations             4       106,094       5,007
                                          Total current assets                   2,415,344   2,149,827

                                           Deferred tax assets            20       314,795     325,271
                                                  Other assets             9        61,757      30,711
                                             Intangible assets            10        14,069      14,590
                            Property, plant and equipment, net            11       495,723     347,883
                                                  Total assets                   3,301,688   2,868,282

                          Liabilities and Shareholders' Equity
                                              Accounts payable                     213,423     220,153
                                 Accrued liabilities and other            12       448,848     442,383
                                        Deferred tax liability            20         4,465       2,285
                                         Current tax liability            20        19,947       8,247
                      Liabilities from discontinued operations             4        66,091      13,451
                                     Total current liabilities                     752,774     686,519
                                        Deferred tax liability            20       133,516     169,641
                                    Other deferred liabilities                      15,391      10,850
                                 Convertible subordinated debt            13     1,064,040     842,543
                                          Other long-term debt            13        20,451      17,522
                                             Total liabilities                   1,986,172   1,727,075

                                    Total shareholders' equity                   1,315,516   1,141,207
                    Total liabilities and shareholders' equity                   3,301,688   2,868,282




1   See note 4 "Discontinued operations" and note 5 "Restructuring" to the Consolidated Financial Statements.

</TABLE>




                                      28
<PAGE>

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<TABLE>
<CAPTION>

Consolidated Statements of Operations 1

<S>                                                                      <C>       <C>        <C>
                                For the year ended December 31,                      2002        2003
       (Amounts in thousands, except share and per share data)          Note          EUR         EUR
                                             Net product sales            21    1,740,633   1,356,905
                                             Net service sales                    218,039     185,832
                                               Total net sales                  1,958,672   1,542,737

                                         Cost of product sales             5    1,289,030   1,028,362
                                         Cost of service sales                    202,038     145,593
                                           Total cost of sales                  1,491,068   1,173,955

                                         Gross profit on sales                    467,604     368,782

                                Research and development costs                    324,419     305,839
                              Research and development credits            19      (26,015)    (19,119)
                     Selling, general and administrative costs       263,243      212,609
                                         Restructuring charges             5            -      24,485
                                                Operating loss                    (94,043)   (155,032)

                                               Interest income                     31,177      40,481
                                              Interest expense                    (67,958)    (69,630)
           Loss from continuing operations before income taxes                   (130,824)   (184,181)
                                    Benefits from income taxes            20       42,779      59,675
                           Net loss from continuing operations                    (88,045)   (124,506)

                      Loss from discontinued operations before
                                                  income taxes             4     (183,624)    (59,026)
                                    Benefits from income taxes            20       63,846      23,316
                         Net loss from discontinued operations                   (119,778)    (35,710)

                                                      Net loss                   (207,823)   (160,216)

         Basic and diluted net loss from continuing operations
                                            per ordinary share                      (0.18)      (0.26)
       Basic and diluted net loss from discontinued operations
                                            per ordinary share                      (0.26)      (0.07)
                 Basic and diluted net loss per ordinary share                      (0.44)      (0.33)

               Number of ordinary shares used in computing per
                                 share amounts (in thousands):
                                                         Basic                    476,866     482,240
                                                       Diluted                    476,866     482,240



1  See note 4 "Discontinued operations" and note 5 "Restructuring" to the Consolidated Financial Statements.

</TABLE>



                                      29
<PAGE>

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<TABLE>
<CAPTION>

Consolidated Statements of Cash Flows (1)

                                       For the year ended December 31             2002            2003
                                               (Amounts in thousands)              EUR             EUR

Cash Flows from Operating Activities

<S>                                                                            <C>            <C>

                                   Net loss from continued operations          (88,045)       (124,506)
                Adjustments to reconcile net income to net cash flows
                                           from operating activities:
                                        Depreciation and amortization          166,035         144,800
                                                   Impairment charges           20,651          12,100
                                         Allowance for doubtful debts                -           9,113
                                     Allowance for obsolete inventory          112,164          32,431

          Changes in assets and liabilities that provided (used) cash:
                                                  Accounts receivable          (57,183)        211,627
                                                Deferred income taxes          (22,361)        (79,577)
                                                          Inventories          (77,408)         95,291
                                                         Other assets           31,365          44,945
                                                  Accrued liabilities          (41,683)         (8,948)
                                                     Accounts payable          (71,927)          7,231
                                                        Income taxes           (25,759)        164,826
             Net cash provided by (used) in operating activities from
                                                continuing operations          (54,151)        509,333

                                 Cash Flows from Investing Activities
                           Purchases of property, plant and equipment         (138,587)        (71,440)
                  Proceeds from sale of property, plant and equipment           58,735          48,837
                                        Purchase of intangible assets                -          (3,099)
     Net cash used in investing activities from continuing operations          (79,852)        (25,702)

                                 Cash Flows from Financing Activities
             Proceeds from issuance of Convertible Subordinated Notes                -         380,000
                                   Payment of underwriting commission                -          (8,550)
               Net proceeds from issuance of shares and stock options           26,630           6,360
                                  Redemption and/or repayment of debt           (5,203)       (445,966)
             Net cash provided by (used in) financing activities from
                                                continuing operations           21,427         (68,156)
                                                       Net cash flows         (112,576)        415,475
                          Effect of changes in exchange rates on cash           (1,869)        (69,165)
         Net cash flow provided by (used in) provided by discontinued
                                                           operations         (127,473)         12,736
                 Net increase (decrease) in cash and cash equivalents         (241,918)        359,046
                   Cash and cash equivalents at beginning of the year          910,678         668,760
                         Cash and cash equivalents at end of the year          668,760       1,027,806

                   Supplemental Disclosures of Cash Flow Information:
                                                       Cash paid for:
                                                             Interest           66,614          48,980
                                                                Taxes            3,642          11,974

            Supplemental non-cash investing and financing activities:
                 Conversion of Bonds into 13,634,782 and 536 ordinary
                                 shares respectively in 2002 and 2003          265,411             16



1 See note 4 "Discontinued operations" and note 5 "Restructuring" to the Consolidated Financial Statements.


</TABLE>

                                      30
<PAGE>

--------------------------------------------------------------------------------

Notes to the Consolidated Financial Statements

1. General


ASML Holding N.V. ("the company"), having its legal seat in Veldhoven, The
Netherlands, is a worldwide business engaged in the development, production,
marketing, sale and servicing of advanced semiconductor equipment system
mainly consisting of lithography systems. ASML's principal operations are in
The Netherlands, the United States of America and Asia.

The financial statements of the company will be filed at the Chamber of
Commerce in Eindhoven, The Netherlands within 8 days after approval of the
General Shareholders' meeting on March 18, 2004.

The accompanying Consolidated Financial Statements are stated in thousands of
euros ("EUR") unless otherwise mentioned.

These Financial Statements, prepared for statutory purposes, have been
prepared in accordance with accounting principles generally accepted in The
Netherlands ("Dutch GAAP"). For internal and external reporting purposes, ASML
follows accounting principles generally accepted in the United States of
America ("U.S. GAAP"). The principal difference between ASML's U.S. and Dutch
GAAP financial statements is that, under U.S. GAAP, the 2001 merger between
Silicon Valley Group ("SVG") and ASML was accounted for as pooling of
interests while, under Dutch GAAP, the merger was accounted for under the
purchase method. This has resulted in differences in the presentation of the
composition of the (comparative) statement of shareholders' equity. We refer
for more information to Note 25 to the Consolidated Financial Statements.

The order of presentation of assets and liabilities in this statutory annual
report is based on U.S. GAAP, which is not in compliance with Dutch GAAP.
Doing so, ASML is consistent in presenting its balance sheet with prior year's
statutory annual reports and ensures consistency and transparency for its
Dutch and US shareholders. Under this format, the order of presentation of
assets and liabilities is based on the degree of liquidity.

On December 18, 2002 ASML announced the proposed divestiture of its Thermal
business, including related customer support activities, and the termination
of its activities in the Track business. As a result of this decision, the
presentation of the Company's financial statements and the notes thereto have
been retroactively adjusted to reflect the effects of the decision to
discontinue these operations. Further reference is made to Note 4.


                                      31
<PAGE>
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2. Principles of Consolidation

All significant intercompany balances and transactions are eliminated in
consolidation. The consolidated financial statements integrally include the
financial statements of the company and the following group companies, which
are economically and organizationally linked to the company:

<TABLE>
<CAPTION>

Name                                             Legal Seat                       Percentage ownership

<S>                                               <C>                                             <C>

ASML Netherlands B.V.                            Veldhoven, The Netherlands                       100%
ASML Finance B.V.                                Veldhoven, The Netherlands                       100%
ASML SARL                                        Montbonnot, France                               100%
ASML MaskTools B.V.                              Veldhoven, The Netherlands                       100%
ASML Korea Co. Ltd.                              Kyunggi-Do, Republic of Korea                    100%
ASML Hong Kong Ltd.                              Hong Kong, SAR                                   100%
ASML Italy S.r.l.                                Milan, Italy                                     100%
ASML (China) Co. Ltd.                            Tianjin, China                                   100%
ASML Japan, Co. Ltd.                             Kawasaki-shi, Kanagawa-Ken, Japan                100%
ASML Ireland Ltd.                                Dublin, Republic of Ireland                      100%
ASML Subholding B.V.                             Veldhoven, The Netherlands                       100%
ASML Shanghai Int. Trading Co. Ltd.              Shanghai Free Trade Zone, China                  100%
ASML Equipment Malaysia Sdn Bhd.                 Penang, Malaysia                                 100%
ASML UK Ltd.                                     Paisley, Scotland                                100%
ASML Germany GmbH.                               Dresden, Germany                                 100%
ASML U.S. Inc.                                   Delaware, United States of America               100%
ASML Singapore Pte. Ltd.                         Singapore                                        100%
ASML MaskTools Inc.                              Delaware, United States of America               100%
ASML Capital US Inc.                             Delaware, United States of America               100%
ASML Information Systems Ltd. (Israel)           Ramat-Gan, Israel                                100%
ASML Participations US Inc.                      Delaware, United States of America               100%
SVG International Service                        California, United States of America             100%
Lehrer Pearson Inc.                              Delaware, United States of America               100%
ASML-Micronic Joint Venture Company Ltd.         Dublin, Ireland                                  100%
SVG Europe Ltd.                                  Radlett, United Kingdom                          100%
ASML Radlett Ltd.                                Radlett, United Kingdom                          100%
SVG Thermal (UK) Ltd.                            Radlett, United Kingdom                          100%
ASML Macau Commercial Offshore Ltd.              Macau China                                      100%
ASML Taiwan Ltd.                                 Hsinchu, Republic of China                       100%

</TABLE>

Assets, shareholders' equity and liabilities of foreign group companies not
denominated in euros are for consolidation purposes translated into euros at
the rates of exchange prevailing at year-end. Income and expenses are
translated at the average rates of exchange for the year. Gains and losses
resulting from the translation are recorded directly in shareholders' equity.

Certain insignificant subsidiaries have been excluded from the table above.


                                      32
<PAGE>
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3. Summary of significant accounting policies

The accounting principles of the company are summarized below. These
accounting principles have all been applied consistently throughout the year
and the preceding year. Assets and liabilities are stated at face value unless
indicated otherwise.

Goodwill

Goodwill represents the excess of the cost of the acquisition over the fair
market value of the identifiable assets and liabilities of SVG. Goodwill has
been deducted from shareholders equity. For fiscal years beginning on or after
January 1, 2001, charging goodwill to equity is no longer allowed by the Dutch
Guidelines for Financial Reporting ('Richtlijnen voor de Jaarverslaggeving').
In 2003, Dutch law has followed in this regard. In 2001, ASML concluded
charging goodwill to equity was appropriate for the following reasons:

o ASML applied the pooling-of-interests method for its U.S. GAAP external
reporting purposes;
o Shifting international standards with respect to goodwill treatment; and
o Delay in Dutch legislative response on this matter.

The Company purchased SVG for EUR 1,772 million using 47 million shares of
ASML. The fair market value of the assets purchased totaled EUR 667 million
resulting in goodwill EUR 1,135 million. This goodwill was charged directly
through shareholders' equity in 2001 (including EUR 30 million merger and
acquisition costs).

This difference has resulted as of December 31, 2002 and 2003 in a different
presentation of the composition of the Shareholders equity between Dutch GAAP
and U.S. GAAP. For more information, we refer to Note 25.

Foreign currency translation

The financial information for subsidiaries outside the euro-zone is generally
measured using local currencies as the functional currency. The financial
statements of those foreign subsidiaries are translated into euros in the
preparation of ASML's consolidated financial statements. Assets and
liabilities are translated into euros at the exchange rate in effect on the
respective balance sheet dates. Income and expenses are translated into euros
based on the average rate of exchange for the corresponding period. The
resulting translation adjustments are recorded directly in shareholders'
equity. Currency differences on intercompany loans that have the nature of a
long-term investment are also accounted for directly in shareholders' equity.

Derivative financial instruments

The Company principally uses derivative foreign currency hedging instruments
for the management of foreign currency risks. The Company accounts for
derivative financial instruments in accordance with accounting principles
generally accepted in the United States. For ASML, these principles in
substance do not differ materially from draft directive 290A of the Dutch
Guidelines for Financial Reporting. Differences between ASML's accounting
policy and current Dutch practice are not material.

Cash Flow Hedges
Forwards and options used to hedge the impact of the fluctuations in exchange
rates on cash flows from purchase activities and sales transactions in
non-functional currencies are treated as cash flow hedges. The critical terms
of the hedging instruments are the same as those for the underlying
transactions, and thus these hedging relationships are perfectly effective.
The changes

                                      33
<PAGE>
--------------------------------------------------------------------------------

in fair value of the derivatives are intended to offset changes in the
expected cash flows from the underlying transactions. The change in the fair
value of cash flow hedges are deferred under accumulated currency translation
and other in shareholders' equity until the underlying exposure is recognized
in the statement of operations.

When the underlying hedged transaction is recognized, the related gain or loss
on the cash flow hedge accumulated in accumulated currency translation and
other is released to the statement of operations. Gains and losses on hedges
on sales transactions are recognized in revenue, while gains and losses on
hedges on forecasted purchase transactions are recognized in cost of sales.
In the event that the underlying hedged transaction does not occur, or it
becomes probable that it will not occur, the gain or loss on the related cash
flow hedge is immediately released from accumulate d currency translation and
other and included in the statement of operations.

Interest rate swaps that are being used to hedge changes in the variability of
future interest receipts are designated as cash flow hedges. The critical
terms of the hedging instruments are the same as those for the underlying
assets. Accordingly, all changes in fair value of these derivative instruments
are recorded as accumulated currency translation and other. The accumulated
changes in fair value of the derivatives are intended to offset changes in
future interest cash flows on the assets.

Fair Value Hedges
Forwards used to hedge accounts receivable, accounts payable and other
monetary assets and liabilities denominated in non-functional currencies are
designated as fair value hedges. Both the changes in the fair value of these
hedges and their underlying exposure are recognized in the statement of
operations.

Interest rate swaps that are being used to hedge the fair value of fixed loan
coupons payable are designated as fair value hedges, with changes in fair
value recorded under interest income and expense in the statement of
operations. The change in fair value is intended to offset the change in the
fair value of the underlying fixed loan coupons, which is recorded
accordingly.

The Company records any ineffective portion of foreign currency hedging
instruments in cost of sales in the statement of operations. Ineffectiveness
of hedging instruments had a positive impact of EUR 0 million, EUR 0.8 million
and EUR 3 million on cost of sales in 2003, 2002 and 2001, respectively. The
ineffective portion of interest rate swaps is recorded in interest income
(expense). The Company did not incur benefits or costs due to ineffectiveness
of interest rate swaps in 2003 and 2002.

Cash and cash equivalents

Cash and cash equivalents consist primarily of highly liquid investments, such
as bank deposits and commercial paper, with insignificant interest rate risk
and remaining maturities of three months or less at the date of acquisition.

Inventories

Inventories are stated at the lower of cost (first-in, first-out method) or
market value.
Cost includes net prices paid for materials purchased, charges for freight and
customs duties, production labor cost and factory overhead. Allowances are
made for slow moving, obsolete or unsaleable inventory.

                                      34
<PAGE>
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Intangible assets

Intangible assets include acquired intellectual property rights that are
valued at cost and are amortized on a straight-line basis over their estimated
useful life of 3 - 10 years.

Property, plant and equipment

Property, plant and equipment are stated at cost, less accumulated
depreciation and amortization. Depreciation is calculated using the
straight-line method based on the estimated useful lives of the related
assets. In the case of leasehold improvements, the estimated useful lives of
the related assets do not exceed the remaining term of the corresponding
lease. The following table presents the assigned economic lives of ASML's
property, plant and equipment:

                                       Category        Assigned economic life
                   Buildings and constructions                   5 - 40 years
                       Machinery and equipment                    2 - 5 years
                     Office furniture/fixtures                    3 - 5 years
                        Leasehold improvements                   5 - 10 years

Certain internal and external costs associated with the purchase and/or
development of internally used software are capitalized when both the
preliminary project stage is completed and management has authorized further
funding for the project, which it has deemed probable to be completed and to
be used for the intended function.

These costs are amortized on a straight-line basis over the period of related
benefit, which ranges primarily from two to five years.

Evaluation of Long-Lived Assets for Impairment

The Company evaluates its long-lived assets, which include property, plant and
equipment and intangible assets, for impairment whenever events or changes in
circumstances indicate that the carrying amount of those assets may not be
recoverable. Recoverability of these assets is measured by a comparison of the
carrying amount of the asset to future discounted net cash flows expected to
be generated by the asset. If those assets are considered to be impaired, the
impairment to be recognized is measured by the amount by which the carrying
amount of the assets exceeds the fair value of the asset. Assets held for sale
are reported at the lower of the carrying amount or fair value less the cost
to sell.

Recognition of revenues, income and expenses

The Company distinguishes between revenues from "new" and "proven" technology
systems.
Revenue for "proven technology" systems is recognized upon shipment, since
title passes to the customer at that moment, and the customer has
unconditionally accepted the system during a factory test prior to shipment.
Revenues on "new technology" systems are deferred until installation and
acceptance at the customer's premises are completed. As soon as a track record
has been established regarding the successful and timely installation and
acceptance of equipment previously identified as "new technology," ASML
considers the equipment to be "proven technology". At that time, ASML changes
the timing of revenue recognition to the shipment date in accordance with its
revenue policy for "proven technology" and recognizes previously deferred
revenue. In the second half of 2002, the TWINSCAN technology, which was
previously identified as "new technology", has been marked "proven
technology."

The fair value of installation services provided to the customers is initially
deferred and is recognized when the installation is completed. Sales from
service contracts are recognized when performed. Revenue from prepaid service
contracts is recognized over the life of the contract.

Cost of sales

Costs of product sales comprise direct product costs such as materials, labor,
cost of warranty,


                                      35
<PAGE>
--------------------------------------------------------------------------------

depreciation, shipping and handling costs and related overhead costs.
Repayments of certain technical development credits, which are calculated as a
percentage of sales, are also charged to cost of product sales (see "Research
and development costs and credits," below). ASML accrues for the estimated
cost of the warranty on its systems, which includes the cost of labor and
parts necessary to repair systems during the warranty period. The amounts
recorded in the warranty accrual are estimated based on actual historical
expenses incurred and on estimated probable future expenses related to current
sales. Actual warranty costs are charged against the accrued warranty reserve.
Costs of service sales comprise direct service costs such as materials, labor,
depreciation and overhead costs relating to providing extended warranty and
maintenance services.

Restructuring

ASML applies the criteria defined in directive 252 of the Dutch Guidelines of
Financial Reporting: "Provisions" in order to determine when a liability for
restructuring or exit costs should be recognized. With respect to employee
termination costs, company recognizes restructuring provisions if prior to
period ending an authorized plan has been communicated to the employees
involved in a sufficient level of detail.

Research and development cost and credits

Costs relating to research and development are charged to operating expense as
incurred. Subsidies and other governmental credits for research and
development costs relating to approved projects are recorded as research and
development credits in the period when the research and development cost to
which the subsidy or credit relates occurs. Technical development credits
(Technische Ontwikkelingskredieten or "TOKs") received from the Dutch
government to offset the cost of certain research and development projects are
contingently repayable, including accrued Interest, as a percentage of the
revenues from future sales, if any, of equipment developed in such projects.
These repayments are charged to cost of sales at the time such sales are
recorded. No repayments are required if such sales do not occur.

Net income per ordinary share

Basic net income (loss) per share is computed by dividing net income (loss) by
the weighted average ordinary shares outstanding. Diluted net income per share
reflects the potential dilution that could occur if options issued under
ASML's stock compensation plan were exercised, and if ASML's convertible loans
were converted. There is no difference between the diluted earnings and the
basic computations for 2002 and 2003 because such conversions and exercise of
stock options would have an antidilutive effect.

Excluded from the diluted weighted average share outstanding calculation are
Cumulative Preference Shares contingently issuable to the preference share
foundation as they represent a different class of stock than the Ordinary
Shares.

Use of estimates

The preparation of the Company's Consolidated Financial Statements in
conformity with generally accepted accounting principles necessarily requires
Management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities
at the balance sheet dates and the reported amounts of revenue and expense
during the reported periods. Actual results could differ from those estimates.

Segment disclosure

Prior to 2002, ASML reported in two business segments, Lithography and Track &
Thermal. As ASML decided in 2002 to terminate its Track business and to divest
its Thermal business, they are presented as discontinued operations and no
longer disclosed as a separate segment. ASML operates in three general
geographic areas (see Note 21).

                                      36
<PAGE>
--------------------------------------------------------------------------------

Income taxes

The asset and liability method is used in accounting for income taxes. Under
this method, deferred tax assets and liabilities are recognized for the tax
effect of incurred net operating losses and for tax consequences attributable
to differences between the balance sheet carrying amounts of existing assets
and liabilities and their respective tax bases. If it is probable that the
carrying amounts of deferred tax assets will not be realized, a valuation
allowance will be recorded to reduce the carrying amounts of those assets.


4. Discontinued operations


Discontinuance of Track and Thermal businesses

On December 18, 2002 ASML announced the proposed sale of its Thermal business
and the termination of its activities in the Track business. Both discontinued
businesses met the criteria of directive 345 "Discontinued operations" and
have been classified accordingly.

In December 2002, the Company reviewed its long-lived assets used in the
Thermal business for potential impairment and recorded no impairment charges.
During 2003, ASML's management again reviewed its long-lived assets for
impairment as the Company entered into negotiations with several potential
buyers and accordingly recorded pre-tax impairment charges of EUR 16.0
million. In October 2003, the Company completed the sale of its Thermal
business to a privately held company formed by VantagePoint Venture Partners.
At the time of the sale, no gain or loss was realized as the net assets were
stated at the value equal to the proceeds of the sale. The net loss of the
Thermal business amounted to EUR 32.3 million in 2003 (2002: EUR 61.2
million).

The termination of the Track business resulted in an exit plan that included
workforce reductions, fixed asset impairments and inventory write-offs due to
discontinued product lines. The exit plan included the disposal of remaining
assets related to the Track business. In 2002, ASML decided to continue to
service its existing customers for whom ASML has warranty or other service
obligations. Consequently, customer support related to the Track business was
not included in discontinued operations for 2002. In June 2003, ASML sold
certain of its fixed assets and inventories related to its Track business to
Rite Track. No gain or loss was realized on the sale. The net loss of the
Track business amounted to EUR 3.4 million in 2003 (2002: EUR 58.6 million).
The net loss from operations for 2002 included total pre-tax estimated exit
costs of EUR 47.0 million. These exit costs included asset impairments,
inventory write downs, purchase and other commitment settlements and employee
termination costs. The net loss in 2003 relates mainly to impairment charges
recorded on a building in the United States, previously used by the Company's
Track business. This impairment was determined on the difference between the
building's estimated fair value, as indicated by an independent real estate
appraiser and its carrying value.

The tax effects arising from, asset impairment costs, employee termination
costs, inventory writeoff and losses from discontinued operations mostly
reside and will remain with ASML U.S. group companies. These losses can be
offset against future profits from continuing operations of these U.S. group
companies.



                                      37
<PAGE>

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Summarized results of operations for discontinued operations are as follows:
<TABLE>
<CAPTION>

                                               Year ended December 31             2002            2003
<S>                                                                              <C>             <C>
                                                            Revenues
                                                                Track            7,236           2,514
                                                              Thermal          105,929          38,198
                                                                Total          113,165          40,712

                      Loss from discontinued operations, net of taxes
                                           Track loss from operations          (27,991)         (1,456)
                                      Track exit costs (net of taxes)          (30,626)         (1,944)
                                         Thermal loss from operations          (61,161)        (21,906)
                                    Thermal exit costs (net of taxes)                -         (10,404)
                                                                Total         (119,778)        (35,710)

Summarized assets and assumed liabilities from discontinued operations are as follows:

                                                    As of December 31             2002            2003

                                                               Assets
                                                    Intangible assets            4,410               -
                                                Tangible fixed assets           32,994           3,167
                                                          Inventories           34,693               -
                                                          Receivables           33,064           1,840
                                                                Other              933               -
                                                         Total Assets          106,094           5,007

                                                          Liabilities
                                                     Accounts payable           10,463               -
                                                  Accrued liabilities           41,741          13,451
                                            Installation and warranty           13,887               -
                                                    Total Liabilities           66,091          13,451
</TABLE>



ASML organizes its financing activity at the corporate level and does not
allocate funding to individual net assets identified as assets from
discontinued operations. The following table represents cash flows directly
attributable to ASML's discontinued operations.
<TABLE>
<CAPTION>

                                                Year ended December 31            2002            2003
<S>                                                                            <C>              <C>
   Net cash provided by (used in) operating activities of discontinued
                                                            operations        (121,039)         12,736
      Net cash used in investing activities of discontinued operations          (6,434)              -
                Net cash provided by (used in) discontinued operations        (127,473)         12,736
</TABLE>


                                      38
<PAGE>

--------------------------------------------------------------------------------

5. Restructuring

As a result of the industry's prolonged downturn, ASML announced on July 16,
2003 restructuring measures to further reduce costs company-wide by further
reducing its workforce with approximately 550 positions worldwide. The Company
recorded a provision of EUR 15 million of which EUR 3.7 million is included in
cost of sales and EUR 11.3 million is included in restructuring costs. The
Board of Management and the Dutch Works Council are nearing the completion of
a joint study on implementing these workforce reductions in the Netherlands.
Consequently, the Dutch workforce reduction has been delayed.

During 2003, ASML recorded a charge of approximately EUR 7 million in
restructuring costs relating to the consolidation of its office and warehouse
facilities at its headquarters in Veldhoven as the Company ceased using
certain of its facilities. The facility exit charges included:
o estimated future obligations for non-cancelable lease payments (netof
  estimated sublease income of EUR 25 million). The Company's management
  estimated the cost of exiting by referring to the contractual terms of the
  lease agreements and by evaluating the sublease agreements concluded for these
  facilities or, where applicable, by referring to amounts being negotiated; and
o the impairment of property and equipment (primarily leasehold improvements)
  for which there are insufficient cash flows to support the carrying cost.
  The property and equipment impairment was determined based on the difference
  between the assets' estimated fair value and their carrying value.

On December 18, 2002 ASML announced measures to contain costs for its
lithography business, including customer support, to lower the breakeven point
by adjusting labor capacity and increasing operating flexibility. ASML
recorded provisions of EUR 78.5 million during 2002 for slow-moving and
obsolete lithography inventory and impairments of tangible fixed assets that
were recorded as cost of sales. ASML further announced its intention to reduce
its lithographyrelated workforce by approximately 700 positions worldwide
(11.7 percent). The related lay-off costs were largely recorded in 2003 since
the final details on the plan had not been finally determined by December 31,
2002. With respect to this plan, the Company recorded in 2003 restructuring
charges for a total amount of EUR 6.7 million of which EUR 4 million in cost
of sales and EUR 2.7 million in restructuring costs. This restructuring plan
was completed in 2003.

On October 16, 2001, as a consequence of the downturn in the semiconductor
industry, ASML announced cost reductions and a restructuring plan which
resulted in the consolidation of manufacturing facilities and discontinuance
of certain product lines related to SVG. As a result of this restructuring
plan, the Company recorded a restructuring provision in 2001 for an amount of
EUR 402.7 million mainly relating to inventory write-offs, purchase
commitments, fixed asset write-offs and everance payments. This restructuring
provision was recorded in cost of sales for an amount of EUR 399.6 million and
in restructuring costs for an amount of EUR 3.1 million and was mainly used in
2001 and 2002.

                                      39
<PAGE>

--------------------------------------------------------------------------------

The following table summarizes the restructuring provision as of December 31,
2003 and 2002:

<TABLE>
<CAPTION>

                                                      Purchase       Building     Severance
                                                    commitments   closure costs    payments        Total

<S>                                                    <C>            <C>            <C>          <C>
                 Balance as of December 31, 2001       51,761         2,058          9,181        63,000
                         Utilization of the year      (27,126)       (2,044)        (6,580)      (35,750)
                                     Adjustments       (6,337)        2,116         (1,686)       (5,907)
          Effect of foreign currency translation       (8,272)         (330)          (915)       (9,517)
                 Balance as of December 31, 2002       10,026         1,800              -        11,826
                         Utilization of the year       (4,711)       (3,475)        (6,906)      (15,092)
                                       Additions            -         6,833         22,182        29,015
                                     Adjustments       (3,326)        1,653              -        (1,673)
          Effect of foreign currency translation       (1,111)         (395)            (5)       (1,511)
                 Balance as of December 31, 2003          878         6,416         15,271        22,565
</TABLE>

Adjustments to the 2001 restructuring plan amounting to EUR 5,907 and EUR
1,673 have been recognized in 2002 and 2003 respectively and are classified as
cost of sales. These adjustments relate mainly to more favorable settlement
agreements with vendors on purchase commitments than the Company had
estimated.


6. Cash and cash equivalents

Cash at December 31, 2003 includes short-time deposits for the amount of EUR
702 million (2002: EUR 341 million) and commercial papers for an amount of EUR
176 million (2002: EUR 263 million). No further restrictions on usage of cash
and cash equivalents exist.


7. Accounts receivable

<TABLE>
<CAPTION>

Accounts receivable consist of the following:

                                                      As of December 31             2002           2003

<S>                                                                              <C>             <C>
                                              Gross accounts receivable          556,988        320,691
                                           Allowance for doubtful debts             (324)        (6,196)
                                                Net accounts receivable          556,664        314,495

A summary of activity in the allowance for doubtful debt:

                                                 Year ended December 31             2002           2003

                                           Balance at beginning of year           (2,754)          (324)
                                           Utilization of the provision            2,430          3,241
                                       Additional provision in the year                -         (9,113)
                                                 Balance at end of year             (324)        (6,196)


                                      40
<PAGE>

----------------------------------------------------------------------------------------------------------

8. Inventories


Inventories consist of the following:

                                                     As of December 31              2002           2003

                                                         Raw materials           267,054        229,740
                                                       Work-in-process           366,440        319,209
                                                     Finished products           381,795        259,690
                                              Total inventories, gross         1,015,289        808,639

                  Allowance for obsolescence and/or lower market value          (285,264)      (213,622)
                                                Total inventories, net           730,025        595,017

A summary of activity in the allowance for obsolescence is as follows:

                                                Year ended December 31              2002           2003

                                          Balance at beginning of year          (500,491)      (285,264)
                                                 Provision of the year          (112,164)       (32,431)
                                              Effect of exchange rates            36,673         22,976
                                          Utilization of the provision           290,718         81,097
                                                Balance at end of year          (285,264)      (213,622)


9. Other assets


Other non-current assets consist of the following:

                                                     As of December 31              2002           2003

                                                   Loan to Micronic AB            35,176              -
                                             Compensation plan assets(1)          10,994          8,720
                                                      Prepaid expenses            14,915         16,130
                     Subordinated loan granted to lessor in respect of
                                              Veldhoven headquarters(2)                -          5,445
                                                                 Other               672            416
                                         Total other long-term assets             61,757         30,711

</TABLE>



1 For more information, we refer to Note 14. Employee Benefits.
2 For more information, we refer to Note 16. Contractual obligation and
  commercial commitments.


The loan to Micronic has a notional amount of 320 million Swedish Krona and is
non-interest bearing. The loan is repayable in 2004 or can be converted into 1
million shares of Micronic upon the first request of ASML and has therefore
been classified as other current assets.
Other current assets consist of the following:
<TABLE>
<CAPTION>

                                                     As of December 31            2002           2003

<S>                                                                             <C>            <C>
                                                        Loans to Zeiss          76,443         71,268
                                                                   VAT          34,654         16,528
                                                   Loan to Micronic AB               -         35,242
                                                      Prepaid expenses          43,745         31,813
                                                                 Other          20,253          3,061
                                            Total other current assets         175,095        157,912



                                      41
<PAGE>
-----------------------------------------------------------------------------------------------------
</TABLE>

The non-interest bearing loans to Zeiss are repayable by future shipments of
lenses or can be redeemed in cash depending on the specific contractual terms
of the individual loans.


10. Intangible assets


In 1999, ASML obtained, through its purchase of the business of MaskTools, the
intellectual property rights relating to Optical Proximity Correction
technology. This technology enhances leading edge lithography systems to
accurately and reliably print line widths below 0.2 micron.
These rights have been valued at cost and are amortized on a straight-line
basis over their estimated useful life of 10 years.

In 2003, ASML acquired a patent portfolio, relating to dual stage technology.
This patent portfolio has been valued at cost and is amortized on a
straight-line basis over its estimated life of 3 years.

<TABLE>
<CAPTION>

                                           As of December 31 2002 2003
                                                                  Cost
<S>                                                                  <C>         <C>             <C>
                                                    Balance, January 1           20,475          20,475
                                                             Additions                -           3,099
                                                  Balance, December 31           20,475          23,574

                                              Accumulated amortization
                                                    Balance, January 1            4,200           6,406
                                                          Amortization            2,206           2,578
                                                 Balance, December 31             6,406           8,984

                                            Net book value December 31           14,069          14,590

Estimated amortization expenses relating to intangible assets for the next five years are as follows:
</TABLE>


<TABLE>
<CAPTION>

<S>                                                              <C>                              <C>
                                                                 2004:                            3,653
                                                                 2005:                            3,575
                                                                 2006:                            2,100
                                                                 2007:                            2,100
                                                                 2008:                            2,100
                                                           Thereafter:                            1,062

</TABLE>

                                      42
<PAGE>

--------------------------------------------------------------------------------

11. Property, plant and equipment

Property, plant and equipment consist of the following:

<TABLE>
<CAPTION>



                                                                                  Office
                                 Buildings &      Machinery &     Leasehold     furniture
                                constructions      equipment    improvements     fixtures      Total

                        Cost
<S>                                 <C>            <C>             <C>            <C>       <C>
         Balance, January 1         166,980        598,746         112,819        154,051   1,032,596


--------------------------------------------------------------------------------------------------------
                  Additions             524         48,208           6,209         16,499      71,440
                  Disposals          (2,041)      (125,249)        (21,860)          (372)   (149,522)
          Reclassifications               -         (6,213)          2,845          3,368           -
   Effect of exchange rates         (15,351)       (37,778)         (1,476)        (4,959)    (59,564)
  Balance, December 31, 2003        150,112        477,714          98,537        168,587     894,950

    Accumulated depreciation
         Balance, January 1          60,599        309,111          56,597        110,566     536,873
               Depreciation           4,580         94,639          12,551         22,690     134,460
                  Impairment              -         12,100               -              -      12,100
                   Disposals           (394)       (79,029)        (21,119)          (143)   (100,685)
          Reclassifications               -         (2,612)            205          2,407           -
   Effect of exchange rates          (7,206)       (23,008)           (955)        (4,512)    (35,681)
Balance, December 31, 2003           57,579        311,201          47,279        131,008     547,067

              Net Book Value
          December 31, 2002         106,381        289,635          56,222         43,485     495,723
           December 31, 2003         92,533        166,513          51,258         37,579     347,883
</TABLE>

The balance property, plant and equipment as of December 31, 2003 includes
assets under construction for buildings and constructions of EUR 591,
machinery & equipment of EUR 2,310, leasehold improvements of EUR 38 and
office furniture and fixtures of EUR 8,383.

During 2003, the Company recorded impairment charges of EUR 12.1 million in
cost of sales for own used equipment that was identified as idle capacity.

12. Accrued liabilities and other

Accrued liabilities and other consist of the following:
<TABLE>
<CAPTION>

<S>                                                                 <C>           <C>             <C>
                                                     As of December 31            2002            2003
                                                      Deferred revenue           35,274          44,542
                                             Warranty and installation           69,684          33,331
                                        Materials and costs to be paid           73,620          65,554
                                               Advances from customers          126,860         187,677
                                               Personnel related items           60,814          53,229
                                            Investment credits payable           31,651          12,282
                                                         Restructuring           11,826          22,565
                                                                 Other           39,119          23,203
                                   Total accrued liabilities and other          448,848         442,383

                                      43
<PAGE>

--------------------------------------------------------------------------------------------------------
</TABLE>

13. Long-term debt and borrowing arrangement


The Company's obligations to make principal repayments under long-term debt
and borrowing arrangements as of December 31, 2003, for the next five years
and thereafter, assuming no conversions occur and excluding the fair value of
interest rate swaps used to hedge the fair value of the underlying fixed loan
coupon, are as follows:
                                     2004                               -
                                     2005                           2,317
                                     2006                         466,522
                                     2007                           2,132
                                     2008                             526
                               Thereafter                         381,310
                                    Total                         852,807


Convertible debt securities

The following table summarizes the Company's outstanding Convertible
Subordinated Notes as of December 31, 2002 and 2003, including fair value of
interest rate swaps used to hedge the fair value of the underlying fixed loan
coupon:

                            As of December 31              2002           2003
                      4.25 percent convertible
                               Notional amount          495,757              -
                Fair value interest rate swaps                -              -
                                        Total           495,757              -

                      5.75 percent convertible
                              Notional amount           548,298        455,285
               Fair value interest rate swaps            19,985          8,411
                                        Total           568,283        463,696

                      5.50 percent convertible
                               Notional amount               -         380,000
                Fair value interest rate swaps               -         (1,153)
                                         Total               -         378,847
                        Total convertible debt        1,064,040        842,543

In April 1998, ASML completed an offering of EUR 272 million principal amount
of its 2.5 percent Convertible Subordinated Notes due 2005, with interest
payable annually commencing April 9, 1999. In April 2002, ASML exercised its
option to redeem and did thereby call for redemption on May 3, 2002, all of
the Company's remaining outstanding bonds (EUR 268.5 million) at a redemption
price of 100.00 percent of the principal amount of the bonds plus accrued
interest. Before May 3, 2002, bondholders converted bonds for a total of EUR
265.4 million into 13,634,782 ordinary shares.

In November 1999, ASML completed an offering of USD 520 million principal
amount of its 4.25 percent Convertible Subordinated Notes due November 30,
2004, with interest payable semiannually on November 30 and May 30 of each
year, commencing on May 30, 2000.
In July and August 2003, ASML repurchased USD 139.6 million. In October 2003,
ASML called for redemption on December 5, 2003, all of the bonds that remained
outstanding, at a redemption price of 100.85 percent of their principal amount
plus accrued interest. Before December 5, 2003, bondholders converted bonds
for a total of USD 120 thousand into 1,430 ordinary shares,


                                      44
<PAGE>

--------------------------------------------------------------------------------

of which USD 20 thousand were converted into 536 shares in 2003. On December
5, 2003, the Company redeemed the remaining USD 380.3 million.

In October 2001, ASML completed an offering of USD 575 million principal
amount of its 5.75 percent Convertible Subordinated Notes due October 15,
2006, with interest payable semiannually on April 15 and October 15 of each
year, commencing on April 15, 2002.
The notes are convertible into 30,814,576 ordinary shares at USD 18.66 (EUR
14.77) per share at any time prior to maturity. At any time on or after
October 22, 2004, the notes are redeemable at the option of ASML, in whole or
in part, at 100 percent of its principal amount, together with accrued
interest, provided that the Company's shares close above 130 percent of the
conversion price for twenty trading days out of a thirty-day period. During
2003 none of the notes were converted into ordinary shares.

In May 2003, ASML completed an offering of EUR 380 million principal amount of
its 5.50 percent Convertible Subordinated Notes due 2010, with interest
payable annually on May 15 of each year, commencing on May 15, 2004. The notes
are convertible into an aggregate of 26,573,426 ordinary shares at a
conversion price of EUR 14.30 per share, subject to adjustment, at any time
prior to maturity. Unless previously converted, the notes are redeemable at
100 percent of its principal amount on May 15, 2010. ASML may call the notes
for early redemption at any time after May 22, 2006, provided that ASML's
shares close above 150 percent of the conversion price for twenty trading days
out of a thirty-day period.

Interest rate swaps are used to hedge the risk from interest rate
fluctuations. As of December 31, 2003, deferred interest rate swap proceeds
amounting to EUR 7.3 million have been recorded in the balance sheet as an
addition to the Company's outstanding Convertible Subordinated Notes.

The following table summarizes the estimated fair values of ASML's Convertible
Subordinated Notes:

        As of December 31                2002                        2003
                               Notional                   Notional
                                 Amount   Fair Value       Amount   Fair Value

4.25 percent convertible       495,757       429,467         N/A         N/A
5.75 percent convertible       548,298       467,443      455,285      596,992
5.50 percent convertible         N/A           N/A        380,000      541,975

The fair value of the Company's long-term debt is estimated based on the
quoted market prices as of December 31, 2002 and December 31, 2003,
respectively. These loans do not contain any covenants.

Other long term debt

In February 1997, the Company received a USD 6.5 million (EUR 5.1 million)
loan from the Connecticut Development Authority. The loan has a ten-year term,
bears interest at 8.25 percent, and is secured by the Company's Wilton,
Connecticut, U.S. facility. At December 31, 2003, the Company's outstanding
debt with respect to this loan amounted to USD 2.7 million (EUR 2.1 million).

In 1999, the Company assumed three yen-denominated loans in connection with
its merger with SVG. Approximately EUR 3.7 million (JPY 503 million) is
outstanding at December 31, 2003, which is secured by land and buildings in
Japan, is payable in monthly installments through the


                                      45
<PAGE>
-------------------------------------------------------------------------------

year 2011, bearing interest at 2.5 percent. Approximately EUR 10 million (JPY
1,350 million) and EUR 1.5 million (JPY 200 million) are outstanding at
December 31, 2003. These loans are unsecured, repayable in 2006 and 2007, and
bear interest at 3.1 percent and 2.2 percent, respectively, payable
semi-annually. These loans do not contain any covenants.

Lines of credit

At December 31, 2003, the Company had credit available facilities for a total
of EUR 288 million (2002, EUR 288 million), all of which expire in 2005. These
credit lines bear interest at the European Interbank Offered Rate (EURIBOR)
plus a margin. No amounts were outstanding under these credit facilities at
the end of 2003 and 2002. The credit facilities contain certain restrictive
covenants, including a requirement that the Company maintains a minimum
financial condition ratio of 40 percent, calculated in accordance with a
contractually agreed formula. ASML was in compliance with these covenants at
December 31, 2002 and 2003. ASML does not currently anticipate any difficulty
in continuing to meet these covenant requirements.


14. Employee benefits


In February 1997, SVG adopted a non-qualified deferred compensation plan that
allowed a select group of management and highly compensated employees and
directors to defer a portion of their salary, bonus and commissions. The plan
allowed SVG to credit additional amounts to participants' account balances,
depending on the amount of the employee's contribution, up to a maximum of 5
percent of an employee's annual salary and bonus.
In addition, interest is credited to the participants' account balances at 120
percent of the average Moody's corporate bond rate. For calendar years 2002
and 2003, participants' accounts were credited at 8.89 percent and 8.50
percent, respectively.
SVG's contributions and related interest became 100 percent vested in May 2001
with the merger of SVG and ASML. During fiscal years 2002 and 2003, the
expense incurred under this plan was EUR 1 million and EUR 0.9 million,
respectively.
As of December 31, 2002 and 2003, the Company's liability under the deferred
compensation plan was EUR 14 million and EUR 9 million, respectively.

In July 2002, ASML adopted a non-qualified deferred compensation plan for its
U.S. employees that allows a select group of management or highly compensated
employees to defer a portion of their salary, bonus, and other benefits. The
plan allows ASML to credit additional amounts to the participants' account
balances. The participants invest their funds between the investments
available in the plan. Participants elect to receive their funds in future
periods after the earlier of their employment termination or their withdrawal
election, at least 3 years after deferral. There were minor plan expenses in
2003. On December 31, 2002 and 2003, the Company's liability under the
deferred compensation plan was EUR 1 million and EUR 2 million, respectively.

Pension plans

ASML and its consolidated subsidiaries maintain various retirement plans
covering substantially all of its employees. Employees in the Netherlands
participate in a multi-employer union plan determined in accordance with the
respective collective bargaining agreements.
This plan is subject to a salary cap. Employees with a salary exceeding this
cap also participate in an ASML defined contribution pension plan.


                                      46
<PAGE>

--------------------------------------------------------------------------------

For employees working outside the Netherlands, ASML maintains a defined
contribution pension plan, with employer contribution based on a percentage of
salary. For employees participating in the United States pension plan, the
Company may make, at its sole discretion, an additional contribution to the
plan if the Company meets certain financial performance criteria. No such
additional contributions were made in 2002 or 2003.

The Company's pension costs for all employees were:

                         Year ended December 31            2002           2003
Pension plan based on multi-employer union plan           15,059         16,514
    Pension plans based on defined contribution            7,265          6,636
                                          Total           22,324         23,150


Bonus plan

ASML has a performance-related bonus plan for senior management, who are not
members of the Board of Management. Under this plan, the ultimate bonus amount
is dependant on the actual performance on corporate, departmental and personal
targets. The bonus for senior management can range between 0 percent and 60
percent of their annual salary. For the year 2002, no bonuses were granted. A
bonus for senior management is accrued for in the statement of operations for
the year ended December 31, 2003 for an amount of EUR 6.5 million, expected to
be paid in the first quarter of 2004.

Profit-sharing plan

ASML has a profit-sharing plan covering all employees. Under the plan,
employees who are eligible receive an annual profit-sharing bonus, based on a
percentage of net income to sales ranging from 0 to 20 percent of annual
salary. The profit-sharing percentage for each of the years 2002 and 2003 was
0 percent.

Stock options

Each year, the Board of Management determines, by category of ASML personnel,
the total available number of options that can be granted in that year. The
determination is subject to the approval of the Supervisory Board and the
holders of priority shares of the Company.

In 1998, the Company issued 3,348,576 options to purchase ordinary shares,
consisting of options to purchase 2,097,831 ordinary shares for eligible
employees of ASML and options to purchase 1,250,745 ordinary shares for key
personnel and management. This issuing of options included a feature whereby
eligible employees were given the right to elect to receive options to
purchase ordinary shares in lieu of distribution under the profit-sharing
plan.
The options have fixed exercise prices equal to the closing price of the
Company's ordinary shares on Euronext Amsterdam on the applicable grant dates.
Stock options granted to eligible employees vested over a three-year period
with any unexercised stock options expiring six years after the grant date.
Stock options granted to key personnel in 1998 vested over a three and four
year period with any unexercised stock options expiring six years after the
grant date.

In 1999, stock options were authorized to purchase up to 3,000,000 ordinary
shares, including a feature whereby eligible employees were given the right to
elect to receive options to purchase ordinary shares in lieu of distribution
under the profit sharing plan. The options have fixed exercise prices equal to
the closing price of the Company's ordinary shares on Euronext on the
applicable grant dates. Granted stock options vested over a three-year period
with any unexercised stock options expiring six years after the grant date.

                                      47
<PAGE>

--------------------------------------------------------------------------------

In 2000, options were authorized to purchase up to 4,500,000 ordinary shares.
Granted stock options vest over a three-year period with any unexercised stock
options expiring six years after the grant date.

In 2001, options were authorized to purchase up to 6,000,000 ordinary shares,
including a feature whereby eligible employees were given the right to elect
to receive options to purchase ordinary shares in lieu of distribution under
the profit sharing plan. Options granted under these plans have fixed exercise
prices that are equal either to the closing price of the Company's ordinary
shares on Euronext on the applicable grant date, or 135 percent of the closing
price of the Company's ordinary shares on Euronext on the applicable grant
dates.
Granted stock options vest over a three-year period with any unexercised stock
options expiring six years after the grant date, with the exception of a
designated part of grants made in July 2001 that have a graded vest of 1/3
(one third) after the first year, 1/3 (one third) after the second year and
1/3 (one third) in the third year. During 2001, 232,520 options to purchase
ordinary shares were granted to the Board of Management. No options were
exercised during 2001 by members of the Board of Management.

In 2002, options were authorized to purchase up to 6,000,000 ordinary shares,
including a feature whereby eligible employees were given the right to elect
to receive options to purchase ordinary shares in lieu of a percentage of
their salary. Options granted under these plans have fixed exercise prices
equal to the closing price of the Company's ordinary shares on Euronext on the
applicable grant dates. A designated part of the granted stock options vest
over a one year period with any unexercised stock options expiring six years
after the grant date. The remaining part of the granted stock options vest
over a three-year period with any unexercised stock options expiring six years
after the grant date.

In 2003, options were authorized to purchase up to 6,000,000 ordinary shares,
including a feature whereby eligible employees were given the right to elect
to receive options to purchase ordinary shares in lieu of a percentage of
their salary. Options granted under these plans have fixed exercise prices
equal to the closing price of the Company's ordinary shares on Euronext on the
applicable grant dates. Granted stock options vest over a three-year period
with any unexercised stock options expiring ten years after the grant date.

Stock Option Extension Plans

In 2002, employees were offered an extension of the option period for options
granted in 1997 up to and including 2000. For the years 1997 up to and
including 1999, this extension is either until October 21, 2008, or October
21, 2005. For 2000, the option period is extended until 2012.
Employees who accepted the extension became subject to additional exercise
periods in respect of their options and a higher strike price.

Financing of stock option plans

Option plans that were issued before 2001 were constructed with a virtual
financing arrangement whereby ASML financed the tax value of the options
granted to employees subject to the Netherlands tax-regime. The loans issued
under this arrangement are repayable to ASML on the exercise date of the
respective option, provided that the option was actually exercised. If the
options expire unexercised, the respective loans are forgiven.


                                      48
<PAGE>

--------------------------------------------------------------------------------

The following two tables have not been restated for discontinued operations:

Stock option transactions are summarized as follows:


                                                                Weighted average
                                             Number of            exercise price
                                               shares            per share (EUR)
  Outstanding, December 31, 2000            17,069,039                28.84
                         granted             5,883,550                32.78
                       exercised            (1,488,107)                9.75
                       cancelled              (265,212)               23.22
  Outstanding, December 31, 2001            21,199,270                26.01
                         granted             4,483,070                19.30
                       exercised            (1,539,132)                9.45
                       cancelled              (266,760)               17.46
  Outstanding, December 31, 2002            23,876,448                25.13
                         granted             2,516,980                 9.66
                       exercised              (335,977)               10.98
                       cancelled            (1,486,427)               21.82
  Outstanding, December 31, 2003            24,571,024                24.58
  Exercisable, December 31, 2003            15,494,969                23.99
  Exercisable, December 31, 2002             9,551,860                14.77
  Exercisable, December 31, 2001             6,870,466                15.22

Information with respect to stock options outstanding at December 31, 2003 is
as follows:
<TABLE>
<CAPTION>
<S>                             <C>                   <C>             <C>                 <C>
                                                                       Weighted            Weighted
          Options                                                       average             average
      outstanding                Number               Number          remaining      exercise price
Range of exercise          outstanding          exercisable         contractual      of outstanding
     prices (EUR)    December 31, 2003    December 31, 2003         life (years)      options (EUR)
      2.35 - 9.29              647,930              177,550                7.91                7.43
     9.30 - 12.79            6,134,015            4,087,415                6.03               11.40
    12.80 - 31.79           11,692,260            7,285,834                3.56               22.51
    31.80 - 47.15            6,096,819            3,944,170                6.30               44.00
            Total           24,571,024           15,494,969                4.97               24.58
</TABLE>


15. Financial instruments


Financial instruments recorded on the balance sheet include cash and cash
equivalents, accounts receivable, accounts payable and convertible
subordinated notes. The carrying amounts of all financial instruments
approximates fair value due to the short-term nature of these instruments,
except for our convertible subordinated notes (See Note 13).

Foreign currency management

The Company uses the euro as its invoicing currency in order to limit the
exposure to foreign currency movements. Exceptions may occur on a customer by
customer basis. To the extent that invoicing is done in a currency other than
the euro, the Company is exposed to foreign currency risk. It is the Company's
policy to hedge material transaction exposures, such as sales transactions and
forecasted cash flows from sales and accounts receivable/accounts payable.
ASML hedges these exposures through the use of foreign exchange options and
forward contracts. The use of a mix of foreign exchange options and forwards
is aimed at reflecting the likelihood of the

                                      49
<PAGE>

--------------------------------------------------------------------------------

transactions occurring. The effectiveness of all outstanding hedge contracts
is monitored closely throughout the life of the hedges.

During the twelve months ended December 31, 2003, no gains or losses were
recognized in cost of sales relating to hedges of forecasted transactions that
did not occur. As of December 31, 2003, EUR 0.7 million of accumulated
currency translation and other represents the total anticipated loss to be
charged to cost of sales, and EUR 3 million is the total anticipated gain to
be released to cost of sales over the next twelve months as the forecasted
revenue and purchase transactions occur.

It is the Company's policy to hedge material re-measurement exposures. These
net exposures from certain monetary assets and liabilities in non-functional
currencies are hedged with forward contracts. Furthermore, the Company uses
forward contracts to hedge its 320 million Swedish Krona loan to Micronic. It
is the Company's policy to manage material translation exposures resulting
predominantly from ASML's U.S. dollar net investments. Up until December 5,
2003, a proportion of ASML's USD 520 million 4.25 percent Convertible
Subordinated Notes due 2004 was assigned to certain of the Company's net U.S.
dollar investments. For the period from December 5, 2003 through December 31,
2003 a proportion of ASML's USD 575 million 5.75 percent Convertible
Subordinated Notes due 2006 was assigned to certain of the Company's net U.S.
dollar investments as ASML's USD 520 million 4.25 per cent Convertible
Subordinated Notes due 2004 has been fully redeemed. As a result, fluctuations
in the Company's balance sheet ratio's resulting from changes in exchange
rates are reduced.

Interest rate management

The Company has both assets and liabilities that bear interest, which expose
the Company to fluctuations in the prevailing market rate of interest. The
Company uses interest rate swaps to align the interest typical terms of
interest bearing assets with the interest typical terms of interest bearing
liabilities. The Company still retains residual financial statement exposure
risk to the extent that the asset and liability positions do not fully offset.
It is the Company's policy to enter into interest rate swaps to hedge this
residual exposure. For this purpose, the Company uses interest rate swaps,
both to hedge changes in market value of fixed loan coupons payable due to
changes in interest rates as well as to hedge the variability of future
interest receipts as a result of changes in market interest rates.

Sensitivity analysis derivative financial instruments

The following table summarizes the Company's derivative financial instruments,
their market values and their sensitivity to changes in foreign exchange rate
or interest rates as of December 31, 2002 and 2003:

<TABLE>
<CAPTION>

                                                             Fair value change       Fair value change
                                                                     from a 1%    resulting resulting
                                                                non-favourable              from a 10%
                                                                   increase in        weakening of EUR
          Derivative       National Amount      Fair Value       interest rate   against other currecy

<S>                         <C>      <C>    <C>       <C>        <C>       <C>         <C>        <C>
        December 31,        2002     2003   2002      2003       2002      2003        2002       2003
   Forward contracts(1) 223,000 (54,173)(2)  845       444         N/A      N/A      5,246     (4,398)
     Currency options    41,000     8,314    782      (217)        N/A      N/A      (12)        (173)
 Interest rate swaps    982,000   981,285   5,684     6,102   (18,659) ( 21,801)       N/A         N/A
( Source: Bloomberg)


(1)  Includes forward contracts on U.S. Dollars, Swedish Krona, British
     Pounds, Israeli Shekel, Japanese Yen and Singapore dollars.
(2)  Net amount of forward contracts assigned as a hedge to sales and purchase
     transactions, and to monetary assets and liabilities.

</TABLE>


                                      50
<PAGE>

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The fair value of forward contracts (used for hedging purposes) is the
estimated amount that a bank would receive or pay to terminate the forward
contracts at the reporting date, taking into account current interest rates,
current exchange rates and the current creditworthiness of the counterparties.

The fair value of currency options (used for hedging purposes) is the
estimated amount that a bank would receive or pay to terminate the option
agreements at the reporting date, taking into account current interest rates,
current exchange rates, volatility and the current creditworthiness of the
counterparties.
The fair value of interest rate swaps (used for hedging
purposes) is the estimated amount that a bank would receive or pay to
terminate the swap agreements at the reporting date, taking into account
current interest rates and the current creditworthiness of the counterparties.

16. Contractual obligation and commercial commitments

The Company has various contractual obligations, some of which are required to
be recorded as liabilities in the Company's consolidated financial statements,
including long- and short-term debt. Others, namely operating lease
commitments and purchase obligations, are generally not required to be
recognized as liabilities on the Company's balance sheet but are required to
be disclosed.

Lease Commitments

The Company leases equipment and buildings under various operating leases.
Operating leases are charged to expense on a straight-line basis. See Tabular
Disclosure of Contractual Obligations below.

The Company has concluded several operating leases for its buildings that
contain a purchase option. The Company is party to a transaction involving a
special purpose vehicle relating to the lessor of the Veldhoven headquarters
building that has been completed in 2003.
Total assets of the special purpose vehicle amount to approximately EUR 54
million and are funded through:

o    equity of EUR 1.9 million;

o    straight loans granted by the shareholders of the special purpose entity
     of EUR 12.3 million, partly redeemable over 15 years and quarterly
     interest-bearing;

o    a third party loan of EUR 34.9 million, partly redeemable over 15 years
     and quarterly interestbearing;

o    a subordinated loan provided by the Company of EUR 5.4 million, recorded
     under non-current assets.

The lease will expire in 2018. The Company has an option to purchase the
property, at a predetermined price scheme, throughout the term of the lease.
The purchase option at the end of the lease term mounts to EUR 24.5 million.

Purchase Obligations

The Company enters into purchase commitments with vendors in the ordinary
course of business to ensure a smooth and continuous supply chain for key
components. Purchase obligations


                                      51
<PAGE>

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include medium to long-term purchase agreements. These contracts differ and
may include certain restrictive clauses. Any identified losses that would
result from purchase commitments that are expected to be forfeited are
provided for in the Company's financial statements. As of December 31, 2003,
the Company had purchase commitments for a total amount of approximately EUR
335 million, which are not recorded on the Company's balance sheet. In its
negotiations with suppliers the Company continuously seeks to align its
purchase commitments with its business objectives.

See Tabular Disclosure of Contractual Obligations below.

Other Off-Balance Sheet Arrangements

The Company has certain additional commitments and contingencies that are not
recorded on its balance sheet but may result in future cash requirements. In
addition to the operating lease commitments and the purchase obligations,
these off-balance sheet arrangements consist of product warranties, a call
option granted to a third party to acquire our optics business at fair value
and guarantees of subsidiary's debt to a third party.
The Company provides guarantees to third parties in connection with
transactions entered into by its subsidiaries in the ordinary course of
business.

Tabular Disclosure of Contractual Obligations

The Company's contractual obligations and commercial commitments as of
December 31, 2003 can be summarized as follows:
<TABLE>
<CAPTION>

                                          Less than             1 - 3             3 -5           After
       Contractual obligations    Total       1year              years           years         5 years

<S>                             <C>          <C>               <C>              <C>            <C>
   Operating Lease Obligations   386,112     47,005            72,448           67,699         198,960
          Purchase Obligations   335,115    300,170            34,945                -               -
 Total Contractual Obligations   721,227    347,175           107,393           67,699         198,960
</TABLE>

Operating lease obligations include leases of equipment and facilities. Rental
expense was EUR 56 million and EUR 53 million for the years ended December 31,
2002 and 2003, respectively.


17. Legal contingencies


ASML is party to various legal proceedings generally incidental to its
business. Since late 2001, ASML has been a party to a series of litigation and
administrative proceedings in which Nikon alleges ASML's infringement of Nikon
patents relating to photolithography. These are discussed below. ASML also
faces exposure from other actual or potential claims and legal proceedings.
Although the ultimate disposition of these other claims and proceedings cannot
be predicted with certainty, it is the opinion of the Company's management
that the outcome of any such other claim that is pending or threatened, either
individually or on a combined basis, is expected not to have a materially
adverse effect on ASML's consolidated financial condition. On occasion,
certain ASML customers have received notices of infringement from third
parties. These notices allege that the ASML equipment used by those customers
in the manufacture of semiconductor products, and/or the methods relating to
use of the ASML equipment, infringes one or more patents issued to those third
parties. ASML has been advised that, if these claims were successful, it could
be required to indemnify such customers for some or all of any losses incurred
or damages


                                      52
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assessed against them as a result of that infringement.
The Company accrues for legal costs related to litigation in its statement of
operations at the time when the related legal services are actually provided
to ASML.

Ultratech case U.S.

On May 23, 2000, Ultratech Stepper, Inc. ("Ultratech") filed a lawsuit in the
United States District Court for the Eastern District of Virginia (which was
subsequently transferred to the United States District Court for the Northern
District of California) against ASML. Ultratech alleged that ASML is
infringing Ultratech's rights under a United States patent, through the
manufacture and commercialization in the U.S. of advanced photolithography
equipment embodying technology that, in particular, is used in Step & Scan
equipment. Ultratech's complaint seeks injunctive relief and damages. On
August 16, 2002, the Court granted ASML's motion for summary judgment of
noninfringement based upon the previously reported favorable interpretation by
the Court as to the scope and meaning of the claims of the asserted patent. A
final judgment on those favorable rulings was subsequently entered in ASML's
favor and ASML's challenge to the validity and enforceability of the patent
was dismissed without prejudice in light of the finding of no infringement.
Ultratech has taken an appeal to the United States Court of Appeals for the
Federal Circuit from the judgment in ASML's favor, where the matter has been
briefed and now awaits oral argument and disposition by the Court.

Management continues to believe that Ultratech's claims are without merit and
that ASML's defenses are strong. ASML will continue to assert these defenses
vigorously.

Nikon case U.S.

On December 21, 2001, Nikon Corporation ("Nikon") and two of its United States
subsidiaries filed a so-called Section 337 complaint against ASML with the
United States International Trade Commission (ITC). On January 23, 2002, the
ITC instituted an investigation based on Nikon's complaint. The complaint in
the ITC investigation alleges that ASML's photolithography machines imported
into the United States infringe seven United States patents held by Nikon.
Nikon's patents relate to several different aspects of photolithography
equipment. Nikon seeks to exclude the importation of infringing products. ASML
believes that the asserted patents are both not infringed and invalid. A trial
before an administrative law judge on these issues was completed in November
2002.

On January 29, 2003, the administrative law judge ("ALJ") in the ITC
proceedings ruled that ASML had not violated Section 337. After Nikon and ASML
petitioned for review of the ALJ's decision by the full Commission, the ITC
adopted the ALJ's decision that ASML did not infringe any valid, enforceable
patent of Nikon's and had not violated Section 337.

Nikon has appealed the ITC's decision to the United States Court of Appeals
for the Federal Circuit. ASML's motion to intervene in that appeal was
allowed. A decision from the Court of Appeals in not expected before mid 2004.

On December 21, 2001, Nikon also filed a separate patent infringement action
in the United States District Court for the Northern District of California
alleging infringement of four different Nikon patents and seeking injunctive
relief and damages. On March 22, 2002, Nikon amended its complaint to allege
infringement of an additional patent. On April 8, 2002, ASML answered this
complaint denying infringement, asserting affirmative defenses of invalidity
and unenforceability, and alleging counterclaims.


                                      53
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On April 5, 2002, ASML filed a counterclaim in the ITC action alleging that
Nikon's photolithography machines sold in the United States infringe five ASML
patents. According to ITC procedure, these counterclaims were initially
transferred to the United States District Court for the District of Arizona.
On October 17, 2002, these claims were transferred to the United States
District Court for the Northern District of California, where they are now
pending.

On October 18, 2002, Nikon filed a second patent infringement action in the
United States District Court for the Northern District of California alleging
infringement of six out of the seven patents from the ITC action and two
additional patents. On December 2, 2002, ASML answered this second complaint
denying infringement of these additional patents and asserting affirmative
defenses of invalidity and unenforceability.

ASML intends to vigorously pursue its claims and believes it has meritorious
defenses against Nikon's claims. Discovery in the California litigation is
currently ongoing; however, trial is not expected to commence before late
2004. In the event a final non-appealable decision were to be rendered that
was adverse to ASML, it could substantially restrict or prohibit ASML's sales
(from and into) the United States, which in turn could have a material adverse
effect on the Company's financial position and results of operations, the
amount which currently cannot be estimated.

Nikon case Japan

On July 8, 2003, Nikon withdrew its counterclaim against ASML filed in October
2002, alleging that ASML's photolithography machines infringe 12 Japanese
patents held by Nikon. On November 19, 2003, Nikon filed a new complaint
against ASML and its subsidiary in Japan alleging that ASML's photolithography
machines sold in Japan infringe patents held by Nikon.
This litigation is in the early stage, and a final decision is not expected
before 2006. In the event a final non-appealable decision in the Japanese
proceeding was rendered that was adverse to ASML, it could substantially
restrict or eliminate ASML's ability to achieve future sales growth in Japan,
which could in turn have a material adverse effect on the Company's results of
operations, the amount which currently cannot be estimated.

The patent infringement action filed by ASML on August 19, 2002, seeking
damages and injunctive relief against Nikon to cease the manufacture and sale
of photolithography machines, and another patent infringement action filed by
ASML on January 16, 2003, seeking injunctive relief against Nikon, are still
pending at the Tokyo District Court.

The Company expects a decision by the Tokyo District Court on the first
mentioned case will be rendered around the second quarter of 2004. If the
decision is adverse to ASML, ASML may appeal to the Tokyo High Court. In
January 2004, ASML filed a new complaint against Nikon in the Tokyo District
Court. Final non-appealable decisions in these cases are not expected before
2005.

Nikon case Korea

On October 8, 2002, Nikon filed a patent infringement action against ASML and
its Korean subsidiary in the Seoul District Court alleging that ASML's
photolithography machines infringe five of Nikon's patents, four of which are
related to Nikon's patents asserted in its U.S. litigation. The complaint
seeks to prohibit ASML from the manufacture, use, sale, import or export of
infringing products, the destruction of the manufacturing facilities for these
products and damages.

                                      54
<PAGE>

--------------------------------------------------------------------------------

Exchanges of briefs from both sides have taken place on the preliminary
issues; exchanges of several additional briefs are expected. ASML filed
invalidation actions against two Nikon patents related to this to this
District Court action in April 2003 with the Korean Intellectual Property
Office, and the initial exchanges of briefs have occurred.

On January 15, 2003, ASML filed a complaint against Nikon and its Korean
subsidiary alleging that Nikon infringes one of ASML's patents, seeking
injunctive relief against Nikon to cease the manufacture and sale of
lithography devices that infringe ASML's patent. Nikon Korea and Nikon Japan
filed response briefs denying infringement. Nikon filed an invalidation action
against five ASML patents in July 2003 with the Korean Intellectual Property
Office. ASML submitted a response brief with the Korean Intellectual Property
Office on October 13, 2003.

The District Court decisions on the Korean proceedings are not expected before
2005; the final, non-appealable decisions are not expected before 2006. ASML
intends to vigorously pursue its claims and believes it has meritorious
defenses against Nikon's claims. In the event that a final non-appealable
decision were to be rendered in the Korean proceedings that was adverse to
ASML, it could substantially restrict or eliminate ASML's sales in Korea,
which could have a material adverse effect on the Company's results of
operations, the amount which currently cannot be estimated.


18. Other contingencies


ASML has research and development agreements with the government of the
Netherlands, Ministry of Economic Affairs. In previous years, credits were
received for research and development projects relating to new generations of
semiconductor lithography systems. The agreements require that the majority of
the amounts received are to be repaid, with interest, to the extent that
product sales occur that relate to the research. The amount of the repayment
due is based on a percentage of the selling price of the product and is
charged to cost of sales when such a sale is recorded.

As of December 31, 2002 and 2003, ASML has contingent obligations totaling EUR
12 million and EUR 0 million to repay TOK credits received in previous years.


19. Research and development credits


ASML receives subsidies and credits for research and development from various
sources as follows:

                               As of December 31        2002            2003

       Netherlands government technology subsidy      25,981          19,119
          European community and other subsidies          34               -
            Total subsidies and credits received      26,015          19,119

In 2002 and 2003, ASML recorded EUR 36.1 million and EUR 13.8 million,
respectively, for repayment obligations. For the year 2004, there do not
remain any future repayment obligations for TOKs.


                                      55
<PAGE>
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20. Income taxes


The amounts below include continued and discontinued operations as tax effects
arising from discontinued operations mostly reside and will remain with ASML
group companies.

The components of income before income taxes are as follows:

                  Year ended December 31             2002            2003
                                 Domestic        (206,001)       (288,370)
                                  Foreign        (108,447)         45,163
                                    Total        (314,448)       (243,207)

The foreign component predominantly relates to the U.S.

The Netherlands domestic statutory tax rate is 34.5 percent. The
reconciliation between the provision for income taxes shown in the
consolidated statement of operations, based on the effective tax rate, and
expense based on the domestic tax rate, is as follows:

<TABLE>
<CAPTION>

<S>                                                                          <C>             <C>
                                               Year ended December 31        2002            2003
                            Income tax expense based on domestic rate    (108,485)        (83,906)
                                                  Different tax rates      12,362          (6,568)
                                  Other credits and non-taxable items     (10,502)          7,483
      Provision for income taxes shown in the statement of operations    (106,625)        (82,991)

ASML's provision for income taxes consists of the following:

                                               Year ended December 31        2002            2003
                                                   Domestic - Current          26           2,307
                                                    Foreign - Current       5,668          17,094
                                                  Domestic - Deferred       6,020)        (99,426)
                                                   Foreign - Deferred       6,299)         (2,966)
                                                                Total    (106,625)        (82,991)

Deferred tax assets (liabilities) consist of the following:

                                                    As of December 31      2002            2003
                                      Tax effect carry-forward losses     230,474         294,534
                                                          Inventories         896          49,961
                                   Temporary depreciation investments    (133,516)       (152,745)
                                          Other temporary differences      78,960          11,185
                                                                Total     176,814         202,935

Deferred tax assets (liabilities) are classified in the consolidated financial
statements as follows:

                                                    As of December 31        2002            2003
                                        Deferred tax assets - current           0          49,590
                                    Deferred tax assets - non-current     314,795         325,271
                                   Deferred tax liabilities - current      (4,465)         (2,285)
                               Deferred tax liabilities - non-current    (133,516)       (169,641)
                                                                Total     176,814         202,935


                                      56
<PAGE>

--------------------------------------------------------------------------------------------------
</TABLE>

Deferred tax assets are resulting from net operating loss carry-forwards
incurred predominantly in the U.S. and the Netherlands. Net operating losses
qualified as tax losses under Dutch tax laws incurred by Netherlands group
companies can in general be offset for an indefinite period against future
taxable profits. Net operating losses qualified as tax losses under U.S.
federal tax laws incurred by U.S. group companies can in general be offset
against future profits realized in 20 years following the year in which the
losses are incurred. The possibility to carry forward U.S. federal tax losses
will expire in the period 2021 through 2023. Net operating losses qualified as
tax losses under U.S. state tax laws incurred by U.S. group companies can in
general be offset against future profits realized in 5 to 20 years following
the year in which the losses are incurred. The period of net operating loss
carryforward for U.S. state tax purposes depend on the state in which the tax
loss arose. The possibility to carry forward U.S. state tax losses will expire
in the period 2006 through 2023. The total amount of tax loss carried forward
as of December 31, 2003 is EUR 842 million. Based on its analysis, management
believes that it is probable that all tax losses will be offset by future
taxable income before the statute on loss compensation expires.
The analysis takes into account the projected future taxable income from
operations, possible tax planning alternatives, and the expected outcome of a
bi-lateral Advance Pricing Agreement ("APA") initiated by ASML. Management
believes that it is probable that these negotiations will result in an APA
agreement between ASML and the U.S. and Netherlands tax authorities regarding
inter-company transfers of certain tangible and intangible assets. These
transactions are the result of the realignment of group operations. The APA
negotiations are expected to be finalized before the end of 2004.

Pursuant to Netherlands tax laws, ASML has temporarily depreciated part of its
investment in its U.S. group companies. This depreciation has been deducted
from the taxable base in The Netherlands. The depreciation resulted in a -
temporary - tax refund of EUR 152 million. This temporary depreciation must be
added back on a straight-line basis to the taxable base in the period 2006
through 2010. The net tax effect of this repayment obligation, amounting to
EUR 152 million, is recorded as a long-term deferred tax liability in the
Company's financial statements.


21. Segment disclosure

The Company has only one reporting segment in continuing operations:
lithography. ASML markets and sells its products in the United States, Europe
and Asia principally through its direct sales organization. ASML makes all its
sales into the United States through its U.S. subsidiary and its sales into
Asia primarily through its Hong Kong subsidiary.

The following table summarizes net sales, operating income and identifiable
assets of ASML's operations in Asia, Europe and the United States, the
significant geographic areas in which ASML operates.


                                      57
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<TABLE>
<CAPTION>

                                            Asia        Europe  United States Eliminations Consolidated
<S>                                     <C>            <C>            <C>                    <C>
                               2002
                       Net sales to
            unaffiliated customers      1,066,476      190,196        702,000           -    1,958,672
               Inter-company sales              -     1,580,790       27,971   (1,608,761)           -
                    Total net sales    1,066,476      1,770,986       729,971 (1,608,761)    1,958,672
            Operating income (loss)         5,569     (84,460)        30,392     (45,544)     (94,043)
                Identifiable assets      438,976     3,360,456        630,824 (1,248,732)    3,181,524

                               2003
                       Net sales to
            unaffiliated customers       762,384        220,190       560,163            -   1,542,737
               Inter-company sales         26,897     1,212,740        54,331  (1,293,968)           -
                    Total net sales      789,281      1,432,930      614,494   (1,293,968)   1,542,737
            Operating income (loss)         5,038    (224,608)        95,404     (30,866)    (155,032)
                Identifiable assets      611,477     3,332,335       565,531  (1,660,658)    2,848,685
</TABLE>

Assets, liabilities and capital expenditures by geographical area are not
evaluated by executive management and are not used for the purpose of making
decisions about allocating resources to the segment or assessing its
performance.


22. Personnel

Personnel expenses for all employees were:

                    Year ended December 31             2002            2003
                        Wages and salaries          371,281         326,678
                  Social security expenses           31,897          24,640
           Pension and retirement expenses           22,324          23,150
                                     Total          425,502         374,468

The average wages and salaries per average number of employees decreased in
2003 compared to 2002 as a result of the decline in the USD versus the euro
during 2003.

The average number of employees from continuing operations during
2002 and 2003 was 5,640 and 5,323, respectively (excluding non-payroll
employees). The total number of personnel employed per sector was:



                         As of December 31             2002            2003
                    Marketing & Technology            1,708           1,507
                                 Goodsflow            1,416           1,184
                          Customer Support            2,090           1,717
                                   General              588             518
                                     Sales              169             133
               Total continuing operations            5,971           5,059
             Total discontinued operations              712            1191
                 Total number of employees
         (including non-payroll employees)            6,683           5,178



1 As of January 1, 2004, these employees are transferred to newly
incorporated companies of the buyer of ASML's Thermal business.


                                      58
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In 2002 and 2003, a total of 2,857 and 2,649 employees in the Company's
continuing operations (excluding non-payroll employees), respectively, were
employed in the Netherlands.


23. Board of Management and Supervisory Board remuneration

Board of Management

The total remuneration and related costs (in euro) of the members of the Board
of Management can be specified as follows:

        Year ended December 31                              2002            2003

                     Salaries                          2,016,000       1,912,966
                      Bonuses                                  -       1,052,131
                 Pension cost                            263,000         212,058
                        Total                          2,279,000       3,177,155

The 2003 remuneration and related costs (in euro, except for Mr. Chavoustie,
which is in USD) of the individual members of the Board of Management was as
follows:

                                         Salary            Bonus           Total
                    D.J. Dunn           590,000          324,500         914,500
             P.T.F.M. Wennink           300,000          165,000         465,000
           M.A. van den Brink           375,000          206,250         581,250
                S.K. McIntosh           355,000          195,250         550,250
              D.P. Chavoustie           370,000          203,500         573,500

ASML has a performance-related bonus plan for the Board of Management. Under
this plan, the ultimate bonus amount is dependent on the actual achievement on
corporate targets. These targets are market share, financial and operational
performance parameters relating to return on invested capital parameters.

The 2003 vested pension benefit (in euro, except for Mr. Chavoustie, which is
in USD) of individual members of the Board of Management were as follows:

                                 D.J. Dunn 85,082
                          P.T.F.M. Wennink 30,323
                        M.A. van den Brink 38,198
                            S.K. McIntosh  50,537
                          D.P. Chavoustie  10,000


                                      59
<PAGE>

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Details of options held by members of the Board of Management to purchase
ordinary shares of ASML Holding N.V. are set forth below:
<TABLE>
<CAPTION>


                                    Granted    Exercised                      Share price          Expi-
                          Jan. 1,     during      during  Dec. 31,   Exercise on exercise         ration
                             2003      2003        2003      2003      price         date           date

<S>                       <C>                              <C>           <C>           <C>   <C>
            D.J. Dunn     600,000                      -   600,000       17.51          -     01-04-2005
                           67,500                      -    67,500       58.00          -     20-01-2012
                           30,000                      -    30,000       40.40          -     22-01-2007
                           30,000                      -    30,000       20.28          -     21-01-2008
                           30,000                      -    30,000        7.02          -      2-04-2013
    P.T.F.M. Wennink       30,000                      -    30,000       11.05          -     01-01-2005
                           31,500                      -    31,500       58.00          -     20-01-2012
                           15,660                      -    15,660       40.40          -     22-01-2007
                           50,000                      -    50,000       29.92          -     22-01-2007
                           20,960                      -    20,960       22.12          -     20-07-2007
                           20,000                      -    20,000       20.28          -     21-01-2008
                                      20,000           -    20,000        7.02          -     22-04-2013

  M.A. van den Brink       21,600                      -    21,600       14.87          -     21-01-2005
                           31,500                      -    31,500       58.00          -     20-01-2012
                           19,860                      -    19,860       40.40          -     22-01-2007
                           26,560                      -    26,560       22.12          -     20-07-2007
                           20,000                      -    20,000       20.28          -     21-01-2008
                                      20,000           -    20,000        7.02          -     22-04-2013
     D.P. Chavoustie       60,000                      -    60,000       15.24          -     20-10-2005
                           30,000                      -    30,000       10.42          -     20-10-2005
                           46,800                      -    46,800       14.87          -     20-10-2005
                           67,500                      -    67,500       56.48          -     20-01-2012
                           25,500                      -    25,500       29.92          -     22-01-2007
                           30,240                      -    30,240       22.12          -     20-07-2007
                           20,000                      -    20,000       20.28          -     21-01-2008
                                      20,000           -    20,000        7.02          -     22-04-2013
       S.K. McIntosh       21,000                      -    21,000       40.40          -     22-01-2007
                          250,000                      -   250,000       29.92          -     22-01-2007
                           28,080                      -    28,080       22.12          -     20-07-2007
                           20,000                      -    20,000       20.28          -     21-01-2008
                                      20,000           -    20,000        7.0           -     22-04-2013
</TABLE>

Supervisory Board

During 2002 and 2003, the individual members of the Supervisory Board received
the following remuneration (in euro):

                       Year ended December 31             2002            2003

                                       H. Bodt          40,000          40,000
                               P.H. Grassmann           25,000          25,000
                                   S. Bergsma           25,000          25,000
                                A. Westerlaken          25,000               -
                                  J.A. Dekker           25,000          25,000
                                 M.J. Attardo            25,000         25,000
                           J.W.B. Westerburgen                -         25,000

Members of the Board of Management and/or Supervisory Board are free to
acquire or dispose of ASML shares or options for their own account, provided
they comply with the ASML Insider


                                      60
<PAGE>

--------------------------------------------------------------------------------

Trading Rules 2002. Those securities are not part of members' remuneration
from the Company and are therefore not included.

Insurance and Indemnification

Members of the Board of Management and Supervisory Board, as well certain
senior management members, are insured under the ASML's Directors and Officers
Insurance Policy. Although the insurance policy provides for a wide coverage,
our directors and officers may occur additional uninsured liabilities. ASML
has indemnified its Board of Management and Supervisory Board against any
claims arising in connection with their position as director and officer of
the Company, provided that such claim is not attributable to willful
misconduct, or intentional recklessness.


24. Vulnerability due to certain concentrations


ASML relies on outside vendors to manufacture the components and subassemblies
used in its systems, each of which is obtained from a sole supplier or a
limited number of suppliers. ASML's reliance on a limited group of suppliers
involves several risks, including a potential inability to obtain an adequate
supply of required components and reduced control over pricing and timely
delivery of these subassemblies and components. In particular, the number of
systems ASML has been able to produce has occasionally been limited by the
production capacity of Zeiss. Zeiss is currently ASML's sole external supplier
of lenses and other critical optical components and is capable of producing
these lenses only in limited numbers and only through the use of its
manufacturing and testing facility in Oberkochen, Germany. ASML sells a
substantial number of lithography systems to a limited number of customers.
In 2003, sales to one customer accounted for EUR 314 million or 20 percent of
net sales. In 2002, sales to one customer accounted for EUR 377 million, or 19
percent of net sales. As a result of the limited number of customers, credit
risk on receivables is concentrated.
ASML's three largest customers accounted for 44 percent of accounts receivable
at December 31, 2003, compared to 42 percent at December 31, 2002. Business
failure of one of ASML's main customers may result in adverse effects on its
business, financial condition and results of operations.


25. Differences between Dutch GAAP and U.S. GAAP


The ASML Consolidated Financial Statements prepared in accordance with Dutch
GAAP differ from the ASML Consolidated Financial Statements prepared in
accordance with U.S. GAAP. The principal difference is discussed below.

The ASML consolidated Financial Statements for the year ended December 31,
2002 and 2003 do not include any differences anymore for the statements of
operations, nor for total shareholders' equity. However, the composition of
shareholders equity differs in our Dutch GAAP financial statements as compared
to our U.S. GAAP financial statements.


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U.S. GAAP
The merger with SVG is accounted for under the "pooling-of-interests" method.
Under the pooling-of-interests accounting method shareholders' equity has been
restated to reflect the issuance of approximately 47 million ordinary shares
of ASML in exchange for all of the outstanding SVG ordinary shares. The
shareholders' equity subsequent to the merger equals the sum of the
shareholders' equity of ASML and SVG prior to the merger. Resulting from the
conversion rate of 1.286 ASML shares for each SVG share the segregation
between nominal value and share premium has been adjusted. The Combined
Statement of Operations under the pooling-of-interests accounting method
combines the results of ASML and SVG for all years presented.

Dutch GAAP
Under the purchase accounting method the issuance of approximately 47 million
ordinary shares with a fair market value of EUR 1,772 million on October 1,
2000, is accounted for as the consideration paid by ASML. Goodwill represents
the excess of the cost of the acquisition over the fair market value of the
identifiable assets and liabilities of SVG. Goodwill has been deducted from
shareholders equity.



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Company-only Balance Sheets
(After appropriation of net result for the year)

<TABLE>
<CAPTION>

                                                    As of December 31              2002           2003
                                                (Amounts in thousands)             EUR             EUR
                                                               Assets
<S>                                                                            <C>             <C>

                                            Cash and cash equivalents          471,960         411,745
                                         Amounts due from subsidiaries         833,013         674,209
                                                    Current tax asset          178,516               -
                                                    Deferred tax asset               -          27,176
                                                  Other current assets          86,281         113,108
                                                  Total current assets       1,569,770       1,226,238
                                           Investments in subsidiaries         533,017         856,565
                                           Loans due from subsidiaries         364,958               -
                                                   Deferred tax assets           5,485          72,240
                                                          Other assets          50,494          16,208
                                             Total non-current assets          953,954         946,154
                                                         Total assets        2,523,724       2,171,251

                     Liabilities and shareholders' equity
                                        Accrued liabilities and other           10,652          18,526
                                            Total current liabilities           10,652          18,526

                                                Deferred tax liability         133,516         168,975
                                         Convertible subordinated debt       1,064,040         842,543
                                          Total long term liabilities        1,197,556       1,011,518

                 Cumulative Preference Shares, EUR 0.02 nominal value;
                                        900,000,000 shares authorized;
                        none outstanding at December 31, 2002 and 2003               -               -
                   Priority Shares, EUR 0.02 nominal value;
                     23,100 shares authorized, issued and
                            outstanding at December 31, 2002 and 2003                1               1
                  Ordinary Shares, EUR 0.02 nominal value; 900,000,000 shares
                      authorized; 482,182,485 shares issued and
                     outstanding at December 31, 2002 and
                                     482,513,502 at December 31, 2003            9,463           9,650
                                                        Share premium        1,105,303       1,110,679
                                                     Retained earnings         225,019          64,803
                            Accumulated currency translation and other         (24,450)        (43,926)
                                            Total shareholders' equity       1,315,516       1,141,207
                            Total liabilities and shareholders' equity       2,523,724       2,171,251

Abbreviated Company-only Statements of operations

                                       For the year ended December 31              2002           2003
                                              (Amounts in thousands)(euro)          EUR            EUR
                                            Net loss from subsidiaries         (219,887)      (135,390)
                                                      Loss after taxes           12,064        (24,826)
                                                              Net loss         (207,823)      (160,216)


                                      63

<PAGE>
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</TABLE>


Notes to the Company-only Financial Statements


1. General


The description of the company's activities and the group structure, as
included in the notes to the consolidated financial statements, also apply to
the company-only financial statements. In accordance with article 402 Part 9
Book 2 of the Dutch Civil Code the statement of income is presented in
abbreviated form.


2. Summary of significant accounting policies


Significant accounting policies

The accounting policies used in the preparation of the Company-only Financial
Statements is the same as those used in the preparation of the Consolidated
Financial Statements. Please refer to the Notes to the Consolidated Financial
Statements. In addition to those accounting policies, the following accounting
policies for the Company-only Financial Statements are described below.

Financial Fixed Assets

Investments in subsidiaries are stated at net asset value as the Company
effectively exercises influence on significance over the operational and
financial activities of these investments. The net asset value is determined
on the basis of the accounting principles applied by the Company.

Presentation of amounts

Amounts presented in the Company Statements of Operations are presented net of
income taxes. The accompanying Financial Statements include the accounts of
ASML Holding N.V. ASML Holding N.V. follows accounting principles in
conformity with those generally accepted in the Netherlands.


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3. Changes in fixed assets


Changes in fixed assets during 2003 were as follows:

                                                           Loans
                                        Investments in   due from       Other
                                         subsidiaries    subsidiaries   assets

                Balance, January 1         533,017      364,958          50,494
                        Additions           14,831            -           8,550
              Contribution in Kind        495,2541     (364,958)              -
                      Amortization               -                       (7,660)
     Net result from subsidiaries         (135,390)           -               -
       Dividends received                  (15,809)           -               -
Reclassification to current assets               -            -         (35,342)
          Effect of exchange rates         (35,338)           -             166
              Balance, December 31         856,565            -          16,208


1 Includes contribution in kind of loans due from subsidiaries, accrued
  interest due from subsidiaries and current accounts due from subsidiaries.



4. Statement of shareholders' equity

<TABLE>
<CAPTION>
                                                                                   Accumu-
                                                                                     lated
                      Cumulative                                                  currency
                      Preference Priority    Ordinary       share     Retained translation
                          shares   shares      shares      premium    Earnings    and other  Total

<S>                           <C>      <C>      <C>      <C>          <C>       <C>         <C>
     Balance1 January
                2002           -        1        9,339    814,414      432,842   (30,309)    1,226,287
</TABLE>

<TABLE>
<CAPTION>

<S>                           <C>      <C>       <C>      <C>          <C>       <C>         <C>

   Issuance of Shares          -        -          304    290,889            -         -       291,193
     Translation gain
           and other           -        -            -          -            -     5,859         5,859
     Appropriation of
            Net loss           -        -            -          -     (207,823)        -      (207,823)
           Balance 31
       December 2002           -        1        9,643  1,105,303      225,019   (24,450)    1,315,516

     Balance1 January
                 2003          -        1        9,643  1,105,303      225,019   (24,450)    1,315,516
   Issuance of Shares          -        -            7      5,376            -         -         5,383
     Translation loss
            and other          -        -            -          -            -   (19,476)      (19,476)
     Appropriation of
            Net loss           -        -            -          -     (160,216)        -      (160,216)
           Balance 31
       December 2003           -        1        9,650  1,110,679       64,803   (43,926)   (1,141,207)

</TABLE>


Cumulative preference shares consist of 900,000,000 authorized preference
shares of which none are ssued and outstanding at December 31, 2003. The
shares have a par value of EUR 0.02 each.

Priority shares consist of 23,100 authorized priority shares of which 23,100
shares are issued and outstanding at December 31, 2003. The shares have a par
value of EUR 0.02 each.

Ordinary shares consist of 900,000,000 authorized ordinary shares of which
482,513,502 shares are issued and outstanding at December 31, 2003. The shares
have a par value of EUR 0.02 each.


                                      65
<PAGE>

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5. Commitments and contingencies

Joint and several liability

General guarantees as defined in Book 2, Section 403 of The Netherlands Civil
Code have been given by ASML Holding N.V. on behalf of several Group companies
in The Netherlands.
o ASML Netherlands B.V.
o ASML Finance B.V.
o ASML MaskTools B.V.
o ASML Subholding B.V.
The liabilities of these companies to third parties amount to EUR 451 million
(2002, EUR 523 million).

Signing of the Financial Statement

Veldhoven, The Netherlands
January 30, 2004

Prepared by                                         Adopted by
The Board of Management:                            The Supervisory Board:
Doug J. Dunn                                        Henk Bodt
Peter T.F.M. Wennink                                Syb Bergsma
Martin A. van den Brink                             Michael J. Attardo
David P. Chavoustie                                 Peter H. Grassmann
Stuart K. McIntosh                                  Jos W.B. Westerburgen
                                                    Jan A. Dekker


Other information


The additional information below includes a brief summary of the most
significant provisions of the Articles of Association of ASML Holding N.V.
(the "Company").

Adoption of Financial Statements

The Board of Management will submit the Company's annual Dutch statutory
accounts, together with a certificate of the auditor in respect thereof, to
the Supervisory Board for adoption. There upon, these Financial Statements
will be submitted to the General Meeting of Shareholders for approval.

Statements Appropriation and determination of profits

Dividends may be payable out of annual profit shown in the Financial
Statements of the Company as adopted by the Supervisory Board and approved by
the General Meeting of Shareholders of the Company, after payment first of
(accumulated) dividends on any outstanding Cumulative Preference Shares. At
its discretion, however, subject to statutory provisions, the Board of
Management may, with the prior approval of the Supervisory Board and the
Meeting of Priority Shareholders, distribute one or more interim dividends on
the Ordinary Shares before the Financial Statements for any financial year
have been approved by the General Meeting of Shareholders. The Board of
Management, with the approval of the Supervisory Board, may decide that all or
part of the Company's profits should be retained and not be made available for
distribution to shareholders, except for dividends on the Cumulative
Preference Shares. Those profits that are not retained may be distributed to
shareholders pursuant to a shareholders' resolution, provided that the
distribution does not reduce shareholders' equity below the amount of reserves
required by Dutch law. Existing reserves that are distributable in accordance
with Dutch law may be made available to the General Meeting of Shareholders
for distribution upon a proposal by the Board of Management, subject to prior
approval by both the Supervisory Board and the


                                      66
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Meeting of Priority
Shareholders. As regards cash payments, the rights to dividends and
distributions shall lapse if such dividends or distributions are not claimed
within five years following the day after the date on which they were made
available.

The Board of Management with the approval of the Supervisory Board has decided
that the Company's loss for 2003 will be deducted from retained earnings. This
proposal has already been reflected in the 2003 Financial Statements.

Voting rights

The Company is subject to the relevant provisions of Dutch law applicable to
large corporations ('Structuurregime'). These provisions have the effect of
concentrating control over certain corporate decisions and transactions in the
hands of the Supervisory Board. The Supervisory Board is selfelecting, however
the General Meeting of Shareholders and the Works Council each have a right of
recommendation and a right to object to a proposed appointment of a new member
of the Supervisory Board.

Members of the Board of Management are appointed by the Supervisory Board. The
Supervisory Board shall notify the General Meeting of Shareholders of intended
appointments to the Board of Management. General Meetings of Shareholders will
be held at least once a year. The Company does not solicit from or nominate
proxies for its shareholders. However, shareholders and other persons entitled
to attend General Meetings of Shareholders may be represented by proxies with
written authority.

Extraordinary General Meetings of Shareholders may be held as often as deemed
necessary by the Supervisory Board or Board of Management and must be held if
the Meeting of Priority Shareholders or one or more Ordinary or Cumulative
Preference Shareholders jointly representing at least 10 percent of the issued
share capital make a written request to that effect to the Supervisory Board
and the Board of Management specifying in detail the business to be dealt
with.

Resolutions are adopted at General Meetings of Shareholders by an absolute
majority of the votes cast (except where a different proportion of votes are
required by the Articles of Association or Dutch law) and there are generally
no quorum requirements applicable to such meetings. Each Ordinary, Cumulative
Preference and Priority Share confers the right to one vote.

Cumulative Preference Shares

In April 1998, as extended in 2003, the Company has granted to the preference
share foundation 'Stichting Preferente Aandelen ASML' ('the Foundation') an
option to acquire Cumulative Preference Shares in the capital of the Company
(the 'Preference Share Option'). The object of the Foundation is to protect
the interests of the Company and the enterprises maintained by it.
The Cumulative Preference Shares have the same voting rights as Ordinary
Shares but are entitled to dividends on a preferential basis at a percentage
based on the average official interest rate determined by EURIBOR plus 2
percent.

The Preference Share Option gives the Foundation the right to acquire a number
of cumulative preference shares equal to the number of ordinary shares
outstanding at the time of exercise of the cumulative preference share option
for a subscription price equal to their EUR 0.02 nominal value. Only
one-fourth of this subscription price is payable at the time of initial
issuance of the cumulative preference shares. The cumulative preference shares
may be cancelled and repaid by


                                      67
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the Company upon the authorization by the General Meeting of the Shareholders
or a proposal to do so by the Board of Management and the Meeting of Priority
Shareholders. Exercise of the Preference Share Option would effectively dilute
the voting power of the ordinary shares then outstanding by one-half. The
practical effect of any such exercise could be to prevent attempts by third
parties to acquire control of the Company.

Declaration of Independence

The Board of Directors of the Foundation and the Board of Management of the
Company together declare that the Foundation is independent of the Company as
defined in article A2bl of "Bijlage X bij het Fondsenreglement van Euronext
Amsterdam N.V." The Board of the Foundation comprises three voting members
from the Dutch business and academic communities, Mr. R. Selman, Mr. F.
Grapperhaus and Mr. M den Boogert, and one non-voting member; the Chairman of
the Company's Supervisory Board, Mr. H. Bodt.

Priority Shares

A number of special powers have been conferred to the Meeting of Priority
Shareholders under the Articles of Association. Such special powers relate,
amongst others, to changes to the issued capital, amendment of the Articles of
Association and dissolution of the Company. All outstanding priority shares
are held by "Stichting Prioriteitsaandelen ASML Holding N.V.", a foundation
having a self-elected board that must consist solely of members of the
Company's Supervisory Board and Board of Management.

As of December 31, 2003, the board members were:

o Doug J. Dunn
o Henk Bodt
o Syb Bergsma
o Jan A. Dekker
o Peter T.F.M. Wennink

An overview of the other functions held by above persons can be obtained at
the Company's office. In the joint opinion of the Company and the foregoing
members of the board of the priority share foundation, the composition of the
board conforms to Appendix X, Article C10 of the listing and issuing rules of
the Euronext Amsterdam Exchange N.V.

The priority shares are not entitled to dividends but have a preferred right
over all other outstanding preferred and ordinary shares on the return of
their nominal value in the case of winding up the Company. Holders of priority
shares are required to approve certain significant corporate decisions and
transactions of the Company. These decisions and transactions encompass, but
are not limited to, amendment of the Articles of Association, winding up of
the Company, issuance of shares, limitation of pre-emptive rights and
repurchase and cancellation of shares.

Issue of Shares

The Board of Management of the Company has the power to issue Ordinary Shares
and Cumulative Preference Shares if and in so far as the Board of Management
has been authorized to do so by the General Meeting of Shareholders (whether
by means of an authorizing resolution or by an amendment to the Company's
Articles of Association). The Board of Management requires the approval,
however, of the Supervisory Board and the Meeting of the Priority Shareholders
for such an issue. Shareholders have a pro rata pre-emptive right of
subscription to any Ordinary Share issue for

                                      68
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cash, which right may be limited or eliminated. Shareholders have no pro rata
pre-emptive subscription right with respect to any Ordinary Shares issued for
a contribution other than cash. If designated for this purpose by the General
Meeting of Shareholders, the Board of Management has the power, on approval by
the Supervisory Board and the Meeting of Priority Shareholders, to limit or
eliminate such rights.

The Company may repurchase Ordinary Shares, subject to compliance with certain
legal requirements. Any such purchases are subject to the approval of the
Supervisory Board and the authorization of the General Meeting of
Shareholders, which authorization may not be for more than 18 months.


                                      69
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Auditors' report


Introduction

We have audited the financial statements of ASML Holding N.V., Veldhoven, The
Netherlands, for the year 2003. These financial statements are the
responsibility of the company's management.

Our responsibility is to express an opinion on these financial statements
based on our audit.

Scope

We conducted our audit in accordance with auditing standards generally
accepted in The Netherlands. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall presentation of the financial statements. We believe that our audit
provides a reasonable basis for our opinion.

Opinion

In our opinion, the financial statements give a true and fair view of the
financial position of the company as at December 31, 2003 and of the result
for the year then ended in accordance with accounting principles generally
accepted in The Netherlands and comply with the financial reporting
requirements included in Part 9, Book 2 of the Netherlands Civil Code, except
for the compliance with the Annual Accounts Format Decree ('Besluit Modellen
Jaarrekening') as prescribed by article 363.6 of the Netherlands Civil Code
regarding the presentation of the balance sheet (Model B of the Decree).



Deloitte & Touche Accountants

Eindhoven, The Netherlands
January 30, 2004


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Information and Investor Relations


Financial Calendar


March 18, 2004
General meeting of Shareholders at the Evoluon,
Noord Brabantlaan 1A in Eindhoven
The Netherlands

April 21, 2004
Announcement of first quarter results for 2004

July 21, 2004
Announcement of semi-annual results for 2004

October 20, 2004
Announcement of third quarter results for 2004

January 20, 2005
Announcement of annual results for 2004


Fiscal Year

ASML's fiscal year ends as of December 31


Listing

The ordinary shares of the Company are listed on the official market of the
Euronext Amsterdam N.V. and on the Nasdaq Stock Market(R) (NASDAQ) in the
United States, both under the symbol "ASML".


Investor Relations
ASML Investor Relations will supply information or further copies of the
original English Annual Report, including Form 20-F filed with the US
Securities and Exchange Commission. Copies of other publications (i.e.,
quarterly earnings anouncements) can also be obtained free of charge at the
offices of ASML. The financial reports are also available on the ASML website
(www.asml.com).


                                      71
<PAGE>


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ASML worldwide contact information


Corporate                                Corporate
Headquarters                             Communications

De Run 6501                              Phone: +31 40 268 4941
5504 DR Veldhoven                        Fax: +31 40 268 3655
The Netherlands                          e-mail: corpcom@asml.com


Mailing address                          Investor Relations

P.O. Box 324                             Phone: +31 40 268 3938
5500 AH Veldhoven                        Fax: +31 40 268 3655
The Netherlands                          e-mail: investor.relations@asml.com


U.S. main offices

8555 South River Parkway
Tempe, AZ 85284
U.S.A.

77 Danbury Road
Wilton, CT 06897
U.S.A.


Asia main office

Suite 603, 6/F
One International Finance Center
1, Harbour View Street
Central, Hong Kong, SAR


For more information please visit our website www.asml.com



Other available information

Copies of other publications (i.e. the Annual Report on Form 20-F filed with
the U.S. Securities and Exchange Commission and the Amsterdam Exchanges and
quarterly earnings anouncements) can also be obtained free of charge at the
offices of ASML. These financial reports are also available on the ASML
website (www.asml.com).

</TEXT>
</DOCUMENT>
